R v Harris
[2021] NZHC 468
•11 March 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CRI 2019-004-011829
CRI 2019-004-011837
[2021] NZHC 468
THE QUEEN v
PETER ALAN HARRIS
&
CARDEN JAMES MULHOLLAND
Hearing: 25 & 26 November 2020 Appearances:
B H Dickey and J A P Hilario for the Crown R S Reed QC and T Hu for Mr Harris
D P H Jones QC and D C S Morris for Mr Mulholland P F Wicks QC for the Reserve Bank
Judgment:
11 March 2021
JUDGMENT OF VAN BOHEMEN J
This judgment was delivered by me on 11 March 2021 at 3.30pm and
re-delivered by me on 19 March 2021 in accordance with High Court Rules 2016, r 11.10
…………………………
Registrar/Deputy Registrar
Solicitors/Counsel: Meredith Connell, Auckland
Cook Morris Quinn, Auckland Lee Salmon Long, Auckland D P H Jones QC, Auckland
R S Reed QC, Auckland
Copyto: Serious Fraud Office, Auckland Reserve Bank of New Zealand
R v HARRIS & MULHOLLAND [2021] NZHC 468 [11 March 2021]
Introduction
[1] The defendants, Peter Alan Harris and Carden James Mulholland, apply for the following orders under the Criminal Disclosure Act 2008 (CD Act):
(a)An order under s 30(1)(a)(i) that information in the possession of the Reserve Bank of New Zealand (RBNZ) be disclosed to the defendants (the first application);
(b)An order under s 30(1)(a)(ii) that information in the possession and control of the Serious Fraud Office (SFO) that has been withheld by the SFO be disclosed to the defendants (the second application);
(c)An order under s 30(1)(b) that documents over which the RBNZ has claimed legal privilege be disclosed to the defendants (the third application).
[2] In addition, Mr Harris applies for a declaration or other remedy that recognises that the SFO breached Mr Harris’s right to be free from unlawful search and seizure in accordance with s 21 of the New Zealand Bill of Rights Act 1990 by accessing documents stored on the SFO’s database which are subject to legal privilege held by Mr Harris.
[3] The applications were heard on 25 and 26 November 2020. During the hearing, a Crown witness, Joanne Pettifer, a forensic accountant at the SFO, undertook to see whether she could locate documents relevant to the orders in [1](a) and (c) above. It was agreed that time should be allowed for those documents to be located and, if located, for further submissions to be filed in relation to those orders.
[4] By affidavit sworn on 30 November 2020, Ms Pettifer said that she had located various documents, copies of which were annexed as exhibits. Further submissions were filed as follows:
(a)On 4 December 2020 by counsel for the defendants;
(b)On 9 December 2020 by counsel for the Crown and by counsel for the RBNZ;
(c)On 15 December 2020, by counsel for the defendants in reply to counsel for the Crown.
[5] This judgment deals only with the first disclosure application. My judgment on the other applications will follow as soon as possible.
The charges and other relevant background
[6]Mr Harris and Mr Mulholland are charged with offences under:
(a)Sections 220(1)(b) and 223(a) of the Crimes Act 1961, theft by a person in a special relationship (maximum penalty seven years’ imprisonment; five charges against Mr Harris; one charge against Mr Mulholland as a secondary party);
(b)Sections 240(1)(a) and 241(a) of the Crimes Act, obtaining by deception or causing loss by deception (maximum penalty seven years’ imprisonment; two charges against Mr Harris; one charge against Mr Mulholland as a party); and
(c)Section 260 of the Crimes Act, false accounting (maximum penalty 10 years’ imprisonment; one charge against Mr Harris; one charge against Mr Mulholland as a party).
[7] The basis of the charges under ss 220 and 223 of the Crimes Act is that Mr Harris, while Managing Director and Chief Executive Officer of CBL Insurance Ltd (CBLI), and Mr Mulholland, while Chief Financial Officer of CBLI, did not comply with directions made to CBLI by the RBNZ in the exercise of its powers under ss 143 and 144 of the Insurance (Prudential Supervision) Act 2010 (IPS Act). The charges under ss 240, 241 and 260 of the Crimes Act relate to dealings by Mr Harris and Mr Mulholland concerning the National Bank of Samoa in what was referred to in submissions as the Samoa transaction.
[8] The charges were filed by the SFO on 23 December 2019 following an investigation by the SFO in the exercise of its powers under the Serious Fraud Office Act 1990 (SFO Act). In investigating CBLI, the SFO cooperated with the RBNZ which had been investigating CBLI in the exercise of its powers under the IPS Act. The two agencies signed a memorandum of understanding (MOU) setting out terms of reference between the SFO and the RBNZ concerning the investigation into CBLI. The SFO and RBNZ also made a number of public statements about the fact they were each investigating matters relating to CBLI and that the RBNZ was cooperating with the SFO and also with the Financial Markets Authority (FMA) in the latter’s investigation relating to issues of market conduct and disclosure by CBLI.
[9] Although the Crown has assumed responsibility for the prosecution of Mr Harris and Mr Mulholland, it is accepted that the “prosecutor” for the purposes of the disclosure obligations in the CD Act is the Director of the SFO.
Relevant provisions of the Criminal Disclosure Act
[10]Section 3(1) of the CD Act provides that:
The purpose of this Act is to promote fair, effective, and efficient disclosure of relevant information between the prosecution and the defence, and by non- parties, for the purposes of criminal proceedings.
[11] Section 6(1) defines “prosecutor” as the person who is for the time being in charge of the file or files relating to a criminal proceeding.
[12] Section 8 defines “relevant” to mean information or an exhibit that tends to support or rebut, or has a material bearing on, the case against the defendant.
[13] Section 12 sets out the obligations on the prosecutor when making the initial disclosure of information.
[14] Section 13 requires the prosecutor to disclose any relevant information, including the standard information described in s 13(3), as soon as is reasonably practicable after a defendant has pleaded not guilty.
[15] Section 16(1) sets out the grounds on which a prosecutor may withhold relevant information to which a defendant would otherwise be entitled under the Act.
…
(j)the information could be withheld under any privilege applicable under the rules of evidence.
[16] Section 24 provides that defendant may apply to the Court for an order granting a hearing to determine whether information held by a person or agency other than the prosecutor should be disclosed to the defendant. Section 24(3) prescribes the matters that must be contained in any such application.
[17] Section 25 provides that the Court may grant such an application for a hearing if satisfied that all or part of the information is likely to be held by that person or agency and appears to the Court to be relevant.
[18] Sections 26 to 29 deal with the hearing and determination of an application for non-party disclosure.
[19] Section 30 provides that a defendant may apply to the Court for an order that a particular item of information or type of information in the possession or control of the prosecutor be disclosed on the grounds that:
(a)the defendant is entitled to the information under section 12, 13, or 14, as the case may be, and—
(i)the prosecutor failed to disclose the information; or
(ii)the prosecutor refused under section 14, 16, 17, or 18 to disclose the information, and—
(A)none of the reasons described in section 16, 17, or 18 for which information could be withheld applies to the information; or
(B)in the case of a refusal under section 17, the information ought to have been disclosed under section 17(3); or
(C)in the case of a refusal under section 18, the information ought to have been disclosed under section 18(2); or
(b)even though the information may be withheld under this Act, the interests protected by the withholding of that information are outweighed by other considerations that make it desirable, in the public interest, to disclose the information.
[20] Section 30(2) provides that the Court may order that the information requested by a defendant be disclosed if satisfied that the defendant is entitled to the information or that the information should be disclosed under s 16(1)(b).
[21] In R v Sullivan (No 10), Heath J said disclosure is required to promote an accused person’s rights to a fair trial and to equality of arms.1 The Judge referred in that context to the report of the Law Commission on Criminal Prosecution in which the Law Commission said:2
A person accused of a crime must be made aware of the nature and extent of the allegation; without adequate disclosure, a defendant will be unable to prepare their defence properly. The extent to which defendants should be entitled to disclosure of information depends on a fair balance between the general public interest and the important personal rights of individual citizens. Defendants should not be handicapped by a lack of relevant information and by an imbalance of resources available to them in preparing a case compared with the resources at the disposal of the State …
The first application
[22] The defendants’ application under s 30(1(a)(i) is for an order that information in the possession of the RBNZ be disclosed to the defendants. The grounds stated for the application include:
(a)Relevant information in the hands of the RBNZ is missing from the SFO disclosure;
(b)The SFO investigation of CBLI was a joint investigation with RBNZ and, given the RBNZ’s central role, primary disclosure obligations under the CD Act attach to the RBNZ directly.
[23] The background to the application is that the RBNZ has provided its file concerning CBLI and other related information to the SFO but the SFO has disclosed
1 R v Sullivan [2014] NZHC 1105, at [9].
2 Law Commission Criminal Prosecution (NZLC R 66, 2000) at ch 8, para 193.
to the defendants from that file and other information only the information that the SFO considers relevant and required to be disclosed to the defendants under the CD Act. The defendants acknowledge that the SFO has disclosed approximately 19,000 documents (some of which are duplicates) in an initial disclosure and that in October 2020, the SFO disclosed a further 1,813 documents from the RBNZ. In November 2020, the SFO disclosed a number of additional RBNZ documents.3
[24] Nonetheless, the defendants say that there are relevant RBNZ documents that have not been disclosed by the SFO and they have produced a schedule of documents which they say fall into this category. The schedule was attached to the defendants’ submissions.
[25] In their written submissions, Ms Reed and Mr Jones, counsel for Mr Harris and Mr Mulholland respectively, say that the first application is not an application for non- party disclosure. Nor it is an application for disclosure of specific documents. Rather, the application is for disclosure of the entire RBNZ file on CBLI, to be disclosed by the RBNZ as a party to the proceeding, pursuant to s 30(a)(i) of the CD Act. The application is based on the contentions that that the RBNZ is either a co-prosecutor with the SFO or is the agent of the SFO. However, in closing, Ms Reed invited the Court to use the hearing on the first application as the first stage hearing on an application for non-party disclosure under s 24 if the Court should decline to make an order for disclosure by the RBNZ as a party.
[26] In order to assess the defendants’ contentions that the RBNZ is either a co- prosecutor with the SFO or the SFO’s agent, it is necessary to set out briefly the RBNZ’s functions and powers under the IPS Act and the sequence of the investigations by the RBNZ and SFO into CBLI.
The RBNZ’s functions and powers under the IPS Act
[27] The RBNZ’s functions under the IPS Act, as set out in s 12 of that Act, include undertaking prudential supervision of licensed insurers and taking appropriate action
3 In her affidavit sworn on 23 November 2020, Ms Pettifer says the SFO has disclosed to the defendants approximately 20,000 documents from the RBNZ from approximately 3.67 million documents disclosed by the SFO in these proceedings.
in respect of licensed insurers and other persons that have failed, are failing, or are likely to fail to comply with the Act are otherwise in financial or other difficulties.
[28] Part 3 of the IPS Act sets out the powers of the RBNZ in relation to prudential supervision of licensed insurers. For present purposes it is enough to note that:
(a)Under s 121, the RBNZ is required to undertake prudential supervision of licensed insurers in accordance with pt 3;
(b)Under s 143, the RBNZ may give an insurer a direction in writing if it has reasonable grounds to believe that certain circumstances apply. These include:
(i)The insurer has failed, is failing or is likely to fail to maintain a solvency margin;
(ii)The business of the insurer has not been conducted in a prudent manner; and
(iii)The insurer or any director or officer of the insurer has failed, is failing or is likely to fail to comply with direction, condition or requirement imposed by or under the IPS Act;
(c)Under s 145, the RBNZ may give a written direction to an associated person of a licensed insurer in the circumstances provided for in that section.
(d)Section 148 provides that it is an offence to fail to comply with a direction given under sub-pt 2 of pt 4. An individual who commits such an offence is liable on conviction to a term of imprisonment not exceeding three months or to a fine not exceeding $200,000 or both.
RBNZ investigation into CBLI
[29] Nicholas McBride, General Counsel for the RBNZ, said that the RBNZ had engaged with CBLI since 2016 because of concerns with CBLI’s business strategy. In July 2017, the RBNZ gave notice to CBLI that it was commencing an investigation into CBLI under s 130 of the IPS Act and issued a direction as to its solvency requirements. Further directions were issued to CBLI in January and February 2018.
[30] On 23 February 2018, the RBNZ appointed interim liquidators of CBLI following breaches of the directions and advice from CBLI that it was likely to breach its solvency ratio.
[31] According to Mr McBride, once the interim liquidators had been appointed, the RBNZ considered whether to take enforcement action under the IPS Act for breaches of the directions. However, in March 2018, the RBNZ became aware that the SFO was conducting an investigation into the failure of CBLI.
The SFO issues s 5 notice to the RBNZ
[32] On 15 March 2018, the SFO issued a notice under s 5 of the SFO Act requiring the RBNZ to provide a copy of any report compiled since July 2017 into the financial position or solvency of CBLI. Mr McBride replied on behalf of the RBNZ on 29 March 2018 in a letter which:
(a)Enclosed documents in response to the SFO Notice;
(b)Advised that the documents were confidential to the RBNZ; and
(c)Proposed that the RBNZ cooperate with the SFO on a more informal basis that recognised the agencies’ statutory interests rather than respond to formal notices.
The SFO and the RBNZ talk
[33] On 4 April 2018, Ms Pettifer spoke by telephone to Mr McBride and other RBNZ staff. A file note of the call recorded that it appeared the SFO and RBNZ were
looking at the same conduct by CBLI, that Ms Pettifer was positive about the SFO and RBNZ working together and that Ms Pettifer would need the permission of her director before she could talk more openly with the RBNZ, which would take about a week, after which the RBNZ should reconsider its enforcement strategy.
[34] On 12 April 2018, there was a telephone conference call involving Ms Pettifer for the SFO, Mr McBride and Emma Cameron for RBNZ and Helena Lewis for the FMA. Ms Cameron’s file note of the call was in evidence at the hearing. Ms Pettifer provided a worksheet dated 12 April 2018 recording the call which was annexed to her affidavit sworn on 30 November 2020 and filed after the hearing. In her affidavit, Ms Pettifer stated that the worksheet had been withheld from disclosure for reasons of privilege but that the SFO had agreed to waive privilege in relation to the worksheet. The worksheet was not addressed in the supplementary submissions filed in December 2020.
[35] Ms Cameron’s file note is more detailed than Ms Pettifer’s worksheet. Both documents record the three agencies’ representatives discussing the merits of the agencies working together, particularly the SFO and the RBNZ. Ms Cameron’s file note records that the RBNZ and FMA representatives shared with Ms Pettifer some information they had gathered abut CBLI and their views of what that information revealed about the conduct of CBLI. This included information about the Samoa transaction in response to a question from Ms Pettifer about that transaction.
The SFO and the RBNZ conclude the Memorandum of Understanding
[36] On 3 and 4 May 2018, Geoffrey Bascand, the Deputy-Governor of the RBNZ, and Rebecca Rolls, the General Manager, Investigations of the SFO signed the MOU setting out terms of reference between the SFO and the RBNZ concerning the investigation into CBLI. Relevant provisions of the MOU included:
(a)Clause 1, headed “Situation”, recorded that the SFO and RBNZ were considering possible offending resulting from the failure of CBLI to comply with the directions issued by the RBNZ and that the two agencies had agreed a joint approach to be the most appropriate way of investigating the matter.
(b)Clause 2, headed “Mission”, set out the objectives of the “joint investigation” which included prosecuting any individuals responsible for criminal offences or offences against the IPS Act. It also stated that:
· The scope of the investigation would be limited in the first instance to transactions that breached the RBNZ directions but that consideration might be given to expanding the scope of the investigation if additional possible offending was discovered in the course of the investigation;
· Approval of an expanded joint investigation was the responsibility of the Director of the SFO (the Director).
(c)Clause 3, headed “Execution”, set out “broad initial areas of responsibility” which included that:
· The RBNZ was to collate and present evidence already in its possession;
· Gathering of additional evidence was the responsibility of the SFO;
· Analysis of future evidence would be a joint effort using SFO analysis tools.
(d)Clause 4, headed “Administration”, provided that the investigation was to be led by the SFO, but said the investigation would be collaborative and consultative to the extent possible. It also stated that:
· Protecting the integrity of the SFO’s criminal investigation remained paramount and it might not be appropriate for the SFO to share information with the RBNZ while enquiries were on-going;
· Custody of investigation documents would be the responsibility of the SFO;
· The SFO would need to collect information from a number of sources, including the RBNZ, and that it might be appropriate for the SFO to issue notices under s 9 of the SFO Act to compel the production of information and documents, in particular when confidentiality might otherwise prevent production;
· The investigation would be primarily conducted using the powers and conditions of the SFO Act;
· The SFO and RBNZ would consult on all public communications concerning the investigation and that the investigation would be branded as a joint effort between both agencies;
· Production of the final investigation report would be the responsibility of the SFO operational lead;
· The decision to commence a criminal prosecution lay with the Director and any criminal investigation arising from the investigation would be conducted by the SFO;
· Should the Director decide insufficient information existed to bring a criminal prosecution pursuant to the Crimes Act but the RBNZ concluded that sufficient information existed to bring action pursuant to IPS Act, the RBNZ could bring such action using information gained during the investigation. However, both agencies would consult on any proposed charges before any decision was made to prosecute, whether by the SFO or the RBNZ.
The SFO issues s 9 notices to the RBNZ
[37] On 7 May 2018, the SFO issued the RBNZ a notice under ss 9 and 33 of the SFO Act requiring the RBNZ to produce all documents relating to any directions issued by the RBNZ to CBLI between July 2017 and February 2018 and any response to the directions.
[38] On 19 July 2018, the SFO issued the RBNZ a further notice under ss 9 and 33 of the SFO Act requiring the RBNZ to produce:
(a)The RBNZ file relating to CBLI, commencing when CBLI applied for a licence pursuant to the IPS Act;
(b)All text messages sent or received by any RBNZ employee to anyone related to CBLI;
(c)Copies of any notebook entries made by any RBNZ employee in relation to CBLI;
(d)All pleadings and affidavit evidence filed or prepared in relation to the CBLI liquidation; and
(e)All CBLI related emails to or from three named RBNZ staff.
Public statements by the SFO and the RBNZ about the investigation into CBLI
[39] On 27 June 2018, in the period between the two s 9 notices, the SFO and RBNZ each issued media releases headed “Serious Fraud Office and Reserve Bank investigating CBLI Insurance matters”. The releases stated that the SFO and the RBNZ were “each investigating matters relating to CBLI Insurance and associated entities.” The releases also stated that the RBNZ was cooperating with the SFO investigation and was also cooperating with the FMA’s investigation relating to issues of market conduct and disclosure by CBLI Corporation.
[40] On 17 December 2019, the day the SFO laid the charges against the defendants, SFO issued a media release stating that following an investigation by the SFO and the RBNZ into CBLI and associated entities, the SFO had that day filed criminal charges.
Evidence of nature of SFO and RBNZ cooperation
[41] In his affidavit, Mr McBride said the RBNZ had no input into the charges laid by the SFO or into the evidence to be led in support of those charges or into the SFO’s strategy for the prosecution. He said the RBNZ had responded to notices issued by
the SFO and had answered questions asked of it. Mr McBride also said the RBNZ had not undertaken any investigation on behalf of the SFO. He said the RBNZ had undertaken its own investigation into CBLI under its statutory powers of investigation prior to the SFO becoming involved. It had provided the results of that work to the SFO under the notices issued by the SFO.
[42] In cross-examination by Ms Reed, Mr McBride agreed that the investigation had been branded as a joint investigation by the SFO and the RBNZ and that the RBNZ had cooperated with the SFO throughout the investigation and had been briefed by the SFO on the charges before they were filed. He also said that the criminal investigation had been conducted primarily by the SFO. He described the RBNZ’s engagement as primarily being responsive to requests for information from the SFO and said there were long periods when the RBNZ had not heard from the SFO. He also said that on at least two occasions, he had chased up the SFO for a progress report. The briefing before the laying of the charges was a briefing and not a consultation, and the RBNZ had had no input into the advice to the Director of the SFO on the charges.
[43] Mr McBride also said that all the RBNZ staff who gave evidence in the investigation once the SFO was involved had been issued with notices under the SFO Act. In re-examination by Mr Dickie, counsel for the SFO, Mr McBride said that, despite what was stated in the MOU, the RBNZ had not been involved in a joint analysis of evidence with the SFO and had not assisted the SFO in interviewing witnesses beyond providing its own staff as witnesses and a venue for those interviews. Mr McBride also said the RBNZ had provided some analysis to the SFO on potential charges under the IPS Act and had had discussions with the SFO about whether such charges might be laid, but the consensus was that such charges would not assist the SFO prosecution. Mr McBride also said the RBNZ had not sought to use the results of the SFO investigation as a basis for it bringing charges under IPS Act.
[44] Ms Pettifer, who was the SFO’s primary point of contact with the RBNZ during the investigation into CBLI, largely confirmed Mr McBride’s account of the level and nature of the interactions between the SFO and the RBNZ. She said that, despite the cooperation envisaged in the MOU, in practice the SFO conducted the investigation
and did not ask for the RBNZ’s assistance beyond the information and witnesses provided in response to SFO notices. She had provided updates of the investigation to Mr McBride and had sought and received information on occasion, such as the RBNZ’s solvency standard for non-life insurance insurers. But Ms Pettifer was clear that the SFO had run its own investigation and reached its own conclusions about what charges to lay without the input of the RBNZ.
Submissions for the defendants
[45] Ms Reed submitted that there was no doubt that the RBNZ was a joint investigator with the SFO and not just by name. It was unusual for the SFO to agree to share information with another agency, given the secrecy requirements in the SFO Act. The basis of the SFO charges was a breach of the RBNZ directions and the evidence established that the RBNZ had been keen to assist the SFO, as shown by the meeting of SFO, RBNZ and FMA officials on 12 April 2018. Ms Reed submitted that the RBNZ was “in the tent” with the SFO for the purpose of getting access to information from the SFO that would otherwise not be available to it.
[46] Ms Reed submitted that the SFO had the RBNZ at its disposal if needed, and could rely on the RBNZ’s documents, information and technical expertise. Even if the SFO had not called on the RBNZ for significant assistance, that assistance had been available throughout the SFO investigation and explains the nature of the relationship between the two bodies. When the SFO had become involved, the RBNZ had an investigation package ready and waiting for the SFO, and the SFO had been able to amalgamate the results of the RBNZ’s investigation into its own investigation, and knew it could call on the RBNZ for on-going assistance. Ms Reed says the fact the SFO chose to issue s 9 notices to obtain the information it received from the SFO does not change the nature of the relationship with the RBNZ.
[47] In her closing submissions, Ms Reed said the defendants were not arguing that the RBNZ was the prosecutor; their case was that the RBNZ was the agent of the SFO or under the control of the SFO which could request what it wanted from the RBNZ without the need for an SFO notice. Ms Reed said that is established by the MOU which, in effect, made the SFO and the RBNZ the agent of each other.
[48] In her written submissions, Ms Reed referred to R v Sullivan4 in which Heath J held that any information in the possession of a third party that is the agent of or under the control of the prosecuting agency must be disclosed by the prosecutor under s 13 of the CD Act. Ms Reed submitted that on the analysis made by Heath J in that case, the RBNZ was the agent of the SFO such that any information held by the RBNZ had to be disclosed as part of the SFO’s disclosure obligations.
Discussion
[49]I am satisfied that the RBNZ is not a co-prosecutor with the SFO.
[50] The evidence of Mr McBride and Ms Pettifer was that the MOU was not implemented to its full extent and that the principal cooperation provided by the RBNZ to the SFO was the provision of information and witnesses pursuant to orders made under s 9 of the SFO Act.
[51] However, even if the MOU had been given full effect, the RBNZ would not have been a co-prosecutor with the SFO. While cl 2 of the MOU envisaged a joint investigation to, among other things, prosecute individuals responsible for criminal offences or offences against the IPS Act, the MOU also states that the criminal investigation was to be led by the SFO, that preserving the integrity of the SFO’s criminal investigation was paramount and that any decision to commence a criminal prosecution remained with the Director of the SFO.
[52] I consider that the arrangements envisaged in the MOU were that the two agencies, which had separate statutory powers and responsibilities, but which had a common interest in CBLI, agreed to work together to determine whether either of them had grounds for taking action against CBLI under their respective statutory powers. However, the SFO would lead the investigation and would exclude the RBNZ if it considered this was necessary to preserve the integrity of the SFO’s criminal investigation. Under the envisaged arrangements, the two agencies were co-equals in the sense they had separate statutory roles and responsibilities. But as far as the criminal investigation was concerned, the SFO would be in charge.
4 R v Sullivan, above n 1.
[53] Nor did the MOU make the RBNZ the agent of the SFO in the sense discussed in R v Sullivan. In his decision, Heath J said:5
As I see it, the real issue is whether the Authority generated or received disclosable information while undertaking investigative functions on behalf of the Serious Fraud Office. If it did, then the Serious Fraud Office (as principal) had the ability to call for that information from the Authority (as its agent).
[54] In this case, the RBNZ did not undertake in the MOU to generate or receive disclosable information while undertaking investigative functions on behalf of the SFO. Under cl 3 of the MOU, the RBNZ was to collate and present information already in its possession while the gathering of additional evidence was the responsibility of the SFO. The cooperation agreed to in the MOU did not extend to the RBNZ generating or receiving disclosable information while the MOU was in operation nor undertaking investigative functions on behalf of the SFO.
[55] Heath J also said that, even in a principal and agent relationship, any information that comes into the possession of the agent as a result of inquiries undertaken for purposes other than the prosecution does not fall within the ambit of the prosecutor’s obligations of discovery and could be obtained only under the non- party disclosure provisions of the CD Act.6 Heath J gave the example of evidence gathered by the FMA for the purpose of determining whether to exercise its own power to bring civil proceedings.7
[56] The evidence of Mr McBride and Ms Pettifer was that, apart from information shared in informal discussions that took place on what appear to have been relatively few occasions, the primary information provided by the RBNZ was information generated and received before the RBNZ had agreed to cooperate with the SFO and for the purpose of the RBNZ exercising its own functions and powers under the IPS Act. It was not information generated or received for or on behalf of the SFO.
[57] Ms Reed submitted that the distinction drawn by Heath J cannot be made in the present case because the information that the RBNZ generated when carrying out
5 At [17].
6 At [20].
7 Ibid.
its own investigations was precisely the information that it then handed over the SFO and which formed the basis of the SFO’s charges.
[58] I do not agree. Heath J was making it clear that the principal’s disclosure obligations in respect of its agent extended only to information that had been generated and received by the agent when acting as agent. In this case, most of the information the SFO received from the RBNZ was generated well before any there was any relationship between the two bodies. The nature of that information and the fact the information may have formed the basis of the SFO’s charges does not affect the relationship between the SFO and the RBNZ and does not make the RBNZ the SFO’s agent
[59] Furthermore, as Mr Dickey, counsel for the Crown, said in closing, s 6 of the CD Act defines the “prosecutor” as “… the person who is for the time being in charge of the file or files relating to a criminal proceeding …”. There was no file relating to a criminal proceeding until the SFO took an interest in CBLI in March 2018. It follows that any information generated or received by the RBNZ cannot have been for the purposes of the prosecution. That information is relevant, as Mr Dickey accepts in his further submissions filed after the hearing, but that relevance does not make the RBNZ the SFO’s agent.
[60] For all these reasons, I conclude that the RMNZ was not the SFO’s agent for the purpose of the prosecutor’s disclosure obligations under s 13 of the CD Act. That conclusion is not affected by the SFO’s apparent preparedness to share information more freely with the RBNZ than it might usually have done, or by the RBNZ’s preparedness to provide information with the SFO without formal notices being issued under the SFO Act. The fact that the SFO shared information with the RBNZ does not make the RBNZ the SFO’s agent. Nor does the willingness of the RBNZ to provide information voluntarily to the SFO make the RBNZ the SFO’s agent or subject to the control of the SFO.
[61] This conclusion is not affected by the evidence of the meeting of SFO, RBNZ and FMA representatives in April 2018 before the MOU was concluded and before the s 9 notices were issued, or by the evidence of media releases concerning the joint
investigation, or by the fact that counsel for the RBNZ told the High Court in July 2018 in the application to liquidate CBLI that the RBNZ and SFO were carrying out a joint investigation into possible criminal conduct involving CBLI, or by the fact that on one occasion in 2019, Ms Pettifer told the receiver of CBLI that the SFO was still working with the RBNZ. The two notes of the meeting in April 2018 show it was a preliminary, information sharing meeting. No decisions were made about the future conduct of the three bodies in their respective investigations into CBL. Ms Pettifer stated that the scope of any SFO investigation would be determined by the Director of the SFO. The media releases, the legal submissions of the RBNZ’s counsel’s in the liquidation proceeding and what Ms Pettifer said to a receiver appointed by the RBNZ do not affect or prove the relationship between the two bodies. That is established by the terms of the MOU and the conduct of the two bodies.
[62] Accordingly, I dismiss the defendants’ application for an order for disclosure under s 16(1)(a) of the CD Act.
Should the Court make an order for a non-party disclosure hearing?
[63] Ms Reed invited me, if I dismissed the first application, to treat the hearing on the application as a first stage hearing on an application for non-party disclosure. Mr Wicks, counsel for the RBNZ, did not agree with this approach and referred to the requirements of s 24(3), (4) and (5), of the CD Act, with which there has not been full compliance. He said the Crown had not had an opportunity to make written submissions and the Court had not considered whether to seek written submissions from the RBNZ. On the other hand, in his opening submissions, Mr Dickey submitted that it would be the best use of the Court’s time to treat the hearing as a s 24 application.
[64] The discussion in the hearing of the first application was primarily about whether the RBNZ was required to disclose, as the agent for the SFO, the entire RBNZ file on CBLI. There is some ambiguity about what constitutes “the RBNZ file on CBLI.” Mr McBride’s evidence was that the RBNZ had already given the SFO the whole of its CBLI file, as it was required to do by the s 9 notice issued on 19 July 2019. I apprehend, therefore, that Ms Reed has used the term “the RBNZ file on CBLI” to embrace everything that the RBNZ has regarding CBLI, including any
CBLI-related emails on any PST file of any RBNZ employee. That is because a number of the documents in the schedule attached to defence counsels’ opening submissions concerned information on the PST files of RBNZ staff that were not required to be disclosed under the s 9 notice.
[65] Any application for non-party disclosure would be for an order to disclose identified information that the RBNZ that has not provided to the SFO. I proceed on the basis that the information being sought is that identified in the schedule attached to defence counsels’ opening submissions and on which Mr McBride was cross- examined and re-examined. The question for consideration, therefore, is whether there is sufficient evidence before me to conclude that the information identified in the schedule exists and is relevant.
[66] Mr Dickey said in his opening submissions that, given the scope of the notices issued under ss 5 and 9 of the SFO Act, it was unlikely that any information not provided to SFO was relevant to the proceeding.
[67] In answer to questions in cross examination, Mr McBride said he had not checked or did not know whether:
(a)Mr Bascand had pages in his notebook other than those provided to the SFO that might refer to CBLI;
(b)There may be information about CBLI in the PST files (ie files of individual email accounts) of RBNZ staff whose PST files were not provided to the SFO – although, in relation to specific cases Mr McBride considered it “extremely unlikely” or “very unlikely”, even if it were possible; or
(c)There may have been communications with Samoan authorities on the PST files of RBNZ staff that was not included in the PST files that were provided to the SFO, but Mr McBride said he had no reason to think such information existed.
[68] These responses do not provide an evidential basis for the Court to find that the information exists or, if it does exist, that it is relevant.
[69] In response to a question in cross-examination, Mr McBride said that his test for whether information or a person’s involvement with CBLI was “material” was whether:
… it would have some impact on the potential breaches by CBL, the actions that were material and influenced by the bank’s actions in respect of CBL and something that we would want the SFO to be aware of, so they can conduct their investigation and bring charges.
[70] Mr McBride’s test falls some way short of the definition of “relevant” in s 8 of the CD Act, which requires consideration of whether information tends to support or rebut, or has a material bearing on, the case against a defendant. However, given the terms of the s 9 notices – to provide all documentation relevant to the RBNZ’s directions to CBLI and to provide “the Reserve Bank of New Zealand file” relating to CBLI – Mr McBride’s answer does not provide a basis for concluding that there is relevant information that may rebut or have a material bearing on the case against the defendants that has not been disclosed.
[71] For these reasons, I do not consider I have any adequate basis for making an order granting a hearing to determine whether the information identified in the Schedule should be disclosed to the defendants. That is, even if I had been persuaded to consider the first application to be an application under s 24 of the CD Act, and I am not so persuaded, I am not persuaded that there is relevant evidence in the possession of the RBNZ to make an order under that section.
G J van Bohemen J
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