R v Middeldorp
[2015] NZHC 1137
•7 May 2015
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CRI-2013-085-10823
CRI-2013-085-10822 [2015] NZHC 1137
THE QUEEN
v
JOHANNES HENDRIK MIDDELDORP NOELENE KAY BANTON
Hearing: 18 February 2015 - 1 April 2015 Counsel:
G J Burston, P W Gardyne and M J Ferrier for the Crown
J Bioletti for Mr Middeldorp
B Hunt and A Courtney for Ms BantonJudgment:
7 May 2015
Reasons :
26 May 2015
JUDGMENT OF MALLON J (Challenge to covert search)
Table of Contents
Introduction ....................................................................................................................................... [1] The voir dire evidence ....................................................................................................................... [4] Unreasonable search? ..................................................................................................................... [28] October search ................................................................................................................................. [36] Any other downstream contamination? ........................................................................................ [46]
Conclusion........................................................................................................................................ [53]
R v MIDDELDORP and BANTON [2015] NZHC 1137 [7 May 2015]
Introduction
[1] Following a judge alone trial before me, Noelene Banton and Johannes Middeldorp were convicted on charges of dishonestly reproducing documents with intent to cause loss. In my judgment (reasons for verdicts)1 I referred to a challenge that had been made to a covert search conducted at their home on 22 August 2012.2
[2] Counsel for Ms Banton contended that:
(a) the covert search conducted at Mr Middeldorp and Ms Banton’s home on 22 August 2012 was unlawful and the evidence seized as a result was inadmissible in the trial;
(b) the illegality of the covert search tainted the subsequent 24 October
2012 search with the result that the evidence seized during the
October search was also inadmissible; and
(c) the illegality of the covert search also contaminated other evidence at the trial because it was used directly and indirectly in the trial.
[3] In my judgment I noted that the Crown had not relied on evidence obtained from the 22 August 2012 search at the trial and that I had not relied on evidence from that search in my reasons for my verdicts. I said that I was satisfied that, even if there were concerns about the 22 August 2012 search, it did not taint the 24 October
2012 search so as to render evidence obtained from that search inadmissible. I also said that I was satisfied that the evidence obtained from that search was not directly or indirectly used at the trial to the prejudice of either defendant. This judgment sets out my reasons for those conclusions.
The voir dire evidence
[4] In light of the challenge I heard extensive evidence about the circumstances in which the covert search came to be carried out, the manner in which it was carried
1 R v Middeldorp [2015] NZHC 951.
2 At [10].
out, and what happened to the information obtained from that search.3 This evidence was relevant to whether the covert search was an unreasonable search4 and whether, on a balancing exercise, it would be admissible in that event.5
[5] A joint investigation was commenced by the Serious Fraud Office (SFO), the Organised and Financial Crime Agency of New Zealand (OFCANZ)6 and the Commerce Commission into a scam advertising operation. The investigation targeted several individuals, including Ms Banton and Mr Middeldorp. As part of that investigation, telephone conversations were intercepted pursuant to surveillance warrants authorised by the High Court. The police understood from an intercepted telephone conversation between Mr Middeldorp and Mr Hendon (one of the other targets of the investigation) that Mr Middeldorp was growing cannabis at his home
and that it was ready for harvesting. Based on that conversation the police understood that he was doing more than simply “growing pot in the windowsill.” They also understood that Mr Middeldorp was contemplating putting his house up for sale, but that this would need to wait while he attended to the cannabis.
[6] At this time the investigation against Ms Banton, Mr Middeldorp and the other individuals had not reached its intended termination date. It was decided that a search warrant in respect of the suspected cannabis offending should not wait until the investigation termination date. That was because of the concern that the evidence of cannabis offending might have been gone by then. A decision was also made to take the opportunity, while at Mr Middeldorp and Ms Banton’s home lawfully for the purposes of executing the cannabis search warrant, to obtain evidence in relation to the suspected fraudulent advertising operation. This was to guard against the risk that relevant evidence might be lost before the fraud investigation had concluded. A decision was made to apply for a search warrant directed at electronic records at Mr Middeldorp and Ms Banton’s home. It was to be
executed covertly, so as not to jeopardise the on-going investigation.
3 The evidence was heard during the course of the trial but on the basis that it was voir dire evidence relevant only to the challenge to the search.
4 New Zealand Bill of Rights Act 1990, s 21.
5 Evidence Act 2006, s 30.
6 A division of the New Zealand Police.
[7] Detective Sergeant Humphries, the officer in charge of obtaining the covert search warrant, did not obtain specific legal advice about this. He understood that such warrants had been previously sanctioned by the courts. Police procedures required approval at a high level if a covert warrant was to be employed. This approval related to tactics rather than legality. Approval was obtained in accordance with police procedures.
[8] The application for the covert warrant specifically stated that it was to be executed covertly at the same time that the cannabis warrant was executed overtly. The application also said that it was intended that Mr Middeldorp and Ms Banton would not be informed of the search and copying of the electronic records until the conclusion of the fraud investigation. The application did not provide information about the use to which the cloned information would be put, the persons who would have access to it, or the protections that would apply to any private or legally privileged information within the cloned information. Nor did it state that a subsequent search of electronic records was intended to occur on termination of the fraud investigation.
[9] The applications for the cannabis warrant and the covert warrant were taken to the District Court at Manakau on 21 August 2012. The Deputy Registrar read the applications and approved them. The police notebook recorded that she spent
16 minutes reading the affidavit in support of the cannabis warrant. There was no record of how long she took to read the affidavit in support of the covert warrant. She raised no questions about the application for the covert warrant. No conditions were imposed about access to the cloned information, nor specifically about protections for private or legally privileged information.
[10] Officers involved in the search were briefed at 6 am the next day (22 August
2012). At 7.15 am the officers arrived at Mr Middeldorp and Ms Banton’s house. Mr Middeldorp was outside burying the couple’s dog who had just passed away. Both Mr Middeldorp and Ms Banton were distressed about their dog’s passing. Mr Middeldorp and Ms Banton were informed that the police were there to execute a search warrant for cannabis. They were informed of their rights. Mr Middeldorp said that there was no need to turn the house upside down as he would show the
officers the three places where the cannabis was located, which he proceeded to do. At around 8.05 am Mr Middeldorp and Ms Banton left the address with two officers.
[11] Detective Andrews was one of the officers conducting the search. His role was to search the house in respect of both warrants. He began taking photographs of the house and its contents at 8.15 am. From that time until 3.18 pm he was engaged in taking these photographs and seizing the cannabis exhibits. These were not the forensic photographs of the cannabis evidence.7 A forensic photographer arrived at
9.10 am for that purpose.
[12] Detective Andrews took an extensive number of photographs in the course of the day. Most of these were of magazines, invoices and other work books and papers relevant to the suspected fraudulent advertising operation. Detective Andrews’ evidence was that these items were also relevant to the cannabis warrant. That was because sources of income, legitimate or illegitimate, were potentially relevant to asset recovery if an indictable charge were to be laid. However my assessment of these photographs is that it is unlikely that many of them would have been obtained were it not for the suspected fraudulent advertising operation.
[13] Twenty three cannabis plants and nine cuttings were located in the search. This was less than the police anticipated finding on the basis of the intercepted telephone discussion which had led to the search. Detective Andrews finished seizing the exhibits at 2.22 pm. He continued taking photographs of the information relevant to the fraudulent advertising operation until 3.18 pm.
[14] Meanwhile Mr Jacobs, who at that time was employed by the Electronic Crime Laboratory (ECL, a division of the police), was engaged in cloning8 electronic information from the computer devices at the house. He arrived at Mr Middeldorp and Ms Banton’s home and began the cloning process at 8.33 am. The copying was
interrupted because Mr Middeldorp and Ms Banton returned to the property at
7 Detective Andrews’ evidence was that the photographs were taken for two reasons. First, they served as a record of the premises (for example, it meant that he did not have to sketch the premises). Secondly, he said that the police always took their own photographs in case they could not get a proper photographer, or in case a photographer got called away.
8 Mr Taylor explained that cloning entailed electronically making a forensic copy of the information that was held bit by bit.
3.50 pm.9 To the surprise of Detective Sergeant Humphries and Detective Andrews, by this time Mr Middeldorp had been charged, taken to court, entered a guilty plea and been sentenced. Charges against Ms Banton were not pursued.
[15] Detective Sergeant Humphries consulted with Mr Jacobs about how long the cloning would take to be completed. Mr Jacobs said that the cloning was still going and he could not say how long it would take. Detective Sergeant Humphries made the decision to halt the cloning process at around 4 pm rather than leave Mr Middeldorp and Ms Banton waiting outside any longer. The police handed back the keys to the property and left the address at 4.25 pm.
[16] Mr Jacobs did not give evidence.10 However, the cloning process made an electronic record of the files that were copied, the locations from which they were copied, and the times when copying began and ended. From that information Matthew Taylor, the regional manager of the northern division of the ECL, was able to give evidence of these details. In summary:
(a) Cloning was carried out of five devices described as the “XP desktop computer”, “server-qmi”, “nolene-pc”, “seagate hard drive”, and “graphics department 3”.11
(b)There was complete cloning of one location in the “XP desktop computer” device, being the Documents and Settings folder of its C drive. That folder contained all the user account profiles on that computer.
(c) There was complete cloning of one location in the “graphics- department-3” device, being the Documents and Settings folder of its C drive. Mr Taylor was not able to say what sort of device this was.
Cloning of this device occurred via network connection.
9 Counsel for Ms Banton suggested in her submissions that Ms Banton may have attempted to return earlier in the day. However there was no evidence to support this submission.
10 The reasons for this were explained in Matthew Taylor’s evidence.
11 Evidence was given as to the time these processes began and ended, and the electronic verification process that was involved.
(d)There was complete cloning of two locations in the “nolene-pc” device, being the “users” and the “scan” folders. The “scan” folder contained a sub-folder named “old scans”. Cloning of this device occurred via network connection.
(e) There was complete cloning of the “seagate hard drive” device, being
an external hard drive.
(f) There was incomplete cloning of three locations in the “server-qmi” device, being the “data” folder within the C drive (the operating system drive), the D drive and the E drive. Cloning of this device occurred via network connection. It was incomplete because it was manually interrupted prior to its completion.
[17] Mr Taylor explained from the electronic information that where the cloning of the folders/sub-folders had been completed ((b), (c), (d) and (e) above), a verification process was completed as part of the cloning procedure. The verification process guaranteed the integrity of the copy made as being an exact copy of the segment that was copied. This was not the case when the cloning was interrupted manually, as was the case with the “server-qmi” device ((f) above). Mr Taylor also explained that any time you interact with a computer there will be some change. He referred to a small footprint being left behind, but he noted that computer cloning was non-invasive and was not likely to damage the information already on the computer itself.
[18] The cloned electronic information was then stored at the ECL. Mr Taylor gave evidence about how this was done. From ECL’s electronic records about the cloned information, he was able to say that Mr Jacobs did the cloning, analysing and reporting on the case and that he did not have anyone working under him. The electronic information was archived on 21 March 2013. Archiving occurs when the officer in charge informs the ECL that no further analysis is required, or when there has been no contact from the officer in charge after a period of time. The job sheet on the management system for this case had an entry dated 16 January 2014 noting
that “[n]o charges laid at this stage from what was in NIA. NFA pending further request.”12
[19] Before archiving, any staff member theoretically would be able to access the data if they wished. However such access was unlikely. Before the information could be analysed, it needed to be exported using a software programme so that it could be viewed in its native form. The information was exported to an O drive specific to the case. If a staff member wanted to view that information they would have to log onto that computer by which Mr Jacobs accessed the information when he was not using it. This would leave a record. Staff had their own very busy case loads without looking at other employees’ cases. Moreover staff were subject to the general security policy stipulating that any access to a police computer system, including for electronic crime, had to be for legitimate work purposes and not for personal use. A breach of this policy would normally result in dismissal. All staff were required to hold a security clearance and as part of that were required to have training on acceptable use of the police computer system. Once the information was archived it remained theoretically possible for someone to access the information. However they would leave a footprint if they did so and they remained subject to the general security policy prohibiting unauthorised use.
[20] At some stage prior to 3 September 2012 the SFO received a full copy of the cloned material. Clive Hudson gave evidence about this. He was employed by the SFO in the management of their electronic material. The information received from the ECL was in the ECL’s format. Mr Hudson loaded the information onto the SFO’s specialist machines and used a special computer software package to enable the information to be displayed in a readable form. The information was on a specific hard drive separate from the SFO network. This was to enable police asset recovery staff to search the information. This search was for the purposes of possible recovery of assets that were obtained from the proceeds of crime.
[21] Two police employees travelled to the SFO’s offices in Auckland on 26
September 2012 to search the information for that purpose. They searched the
12 NIA stands for the National Intelligence Application, the police computer system. NFA stands for no further action.
information using keyword searches. They tagged items that were potentially relevant. The next day they went through the email folders individually and tagged any items of potential relevance to asset recovery. Mr Hudson exported the information tagged by the police employees. After this, the case-specific hard drive was closed down and the information was held in a secure unit at the SFO.
[22] Sergeant McIvor (at that time Detective McIvor) was assigned to the fraudulent advertising investigation in July 2012. One of her tasks was to prepare the applications for the search warrants that were to be executed at the time the investigation was to be terminated. She commenced work on these in either late July or early August. She was one of the officers who attended the search on 22 August
2012. Her role in that search was as a searcher in respect of the cannabis. The application for the search warrants to be executed on termination was dated 17
October 2012. The places in respect of which warrants were sought included
Mr Middeldorp and Ms Banton’s home.
[23] The application set out Detective McIvor’s belief that Mr Middeldorp and Ms Banton (and others who were specified) were engaged in fraudulent “pro forma invoicing”. It set out why that was believed to involve the commission of the offence of dishonestly using a document13 and the grounds for that belief.14 The application included a summary of the methodology, the choice of targets and techniques believed to be involved in the fraudulent pro forma invoicing, and why
this was believed to constitute the offence of dishonestly using a document.
[24] In relation to Mr Middeldorp and Ms Banton in particular, the information providing grounds for belief of their involvement included:
(a) information about their physical address, email addresses, post office boxes and companies with which they were associated;
(b)information from conversations intercepted pursuant to surveillance warrants;
13 Crimes Act 1961, s 228.
14 It also set out the basis on which it was believed that Mr Middeldorp, Ms Banton and others were participating in an organised criminal group (Crimes Act 1961, s 98A).
(c) information obtained from the covert search on 22 August 2012;
(d) information obtained from businesses who had referred invoices to the
Commerce Commission; and
(e) other information linking Mr Middeldorp and Ms Banton to other subjects referred to in the application.
[25] The information about what was found in the 22 August 2012 covert search was set out in four paragraphs of a 357 paragraph application. These paragraphs referred to “[a]n initial summary from the Police Electronic Crime lab technician” of “approximately 22,000 emails located on the hard drive” in respect of which a full analysis was yet to have been conducted. The application said that a sample of emails showed (amongst other relevant things) annoyed recipients of invoices asking for the invoice to be cancelled because they had not asked for the service and some demanding to see copies of the magazines. Detective McIvor said that this part of the application was a “cut and paste” of an email she had received from Mr Jacobs. The application also noted items of interest that she had seen during the 22 August
2012 search (for example, publications, invoices and the contents of a book entitled
“trade secrets” which was next to a laptop on the dining room table).
[26] The application included as an appendix an affidavit from Mr Hudson which outlined his processes to recover the electronic forensic evidence. This type of information was not included in the earlier August application.
[27] The search warrant in respect of Mr Middeldorp and Ms Banton’s home was granted. It was executed on 24 October 2012. Electronic clones of the computers were taken by the SFO pursuant to the warrant. A case, separate from the case that had been created for the August information, was created at the SFO for the information obtained from the October warrant.15 The information obtained
pursuant to the October warrant was analysed and used as evidence at the trial.
15 Consistent with the evidence that the information from the August search was archived by ECL
and noted “NFA”.
Unreasonable search?
[28] The covert search warrant was issued pursuant to s 198 of the Summary
Proceedings Act 1957. At the relevant time it provided:
198 Search warrants
(1) Any District Court Judge or Justice or Community Magistrate, or any Registrar (not being a constable), who, on an application in writing made on oath, is satisfied that there is reasonable ground for believing that there is in any building, aircraft, ship, carriage, vehicle, box, receptacle, premises, or place—
(a) Any thing upon or in respect of which any offence punishable by imprisonment has been or is suspected of having been committed; or
(b) Any thing which there is reasonable ground to believe will be evidence as to the commission of any such offence; or
(c) Any thing which there is reasonable ground to believe is intended to be used for the purpose of committing any such offence—
may issue a search warrant in the prescribed form.
...
(3) Every search warrant to search any building, aircraft, ship, carriage, vehicle, premises, or place shall authorise any constable at any time or times within one month from the date thereof to enter and search the building, aircraft, ship, carriage, vehicle, premises, or place with such assistants as may be necessary, and, if necessary, to use force for making entry, whether by breaking open doors or otherwise; and shall authorise any constable to break open any box or receptacle therein or thereon, by force if necessary.
(4) Every search warrant to search any box or receptacle shall authorise any constable to break open the box or receptacle, by force if necessary.
(5) Every search warrant shall authorise any constable to seize any thing referred to in subsection (1) of this section.
...
(7) Every search warrant may be executed at any time by day or by night.
(8) It is the duty of every one executing any search warrant to have it with him and to produce it if required to do so.
[29] The essence of the submission for Ms Banton is as follows. There is Court of Appeal authority holding that it is lawful to conduct a search of premises pursuant to a warrant issued under s 198 when those premises are expected to be unoccupied.16
In that situation, if the occupant returns to the premises during the search, the searching officers may be required to produce the authority for what they are doing. However the position is submitted to be different where it is intended to execute a covert search warrant at the same time as an overt one. In such a case the searching officers actively mislead the occupants of the premises as to the reason for their presence. The person being searched may never learn of the search and may not have a proper opportunity to exercise their rights in respect of that search.
[30] The Crown makes three submissions about why this distinction is not valid:
(a) Mr Middeldorp and Ms Banton were not denied the right to challenge the warrant. Rather they were denied the right to challenge the warrant only whilst it was being executed.
(b)If the distinction is valid, the police could have simply waited until a time when they knew the premises would be unoccupied to execute the covert warrant (for example when Mr Middeldorp and Ms Banton were on a “leads run”).17
(c) The argument is theoretical because Mr Middeldorp and Ms Banton did not challenge the cloning of their computers that occurred during
the 24 October 2012 search.
16 Hodgkinson v R [2010] NZCA 457. See also the Law Commission Search & Surveillance Powers (NZLC R97, 2007) at 6.36 to 6.45 which refers to earlier authorities. The decision in Dotcom v Attorney-General [2014] NZSC 199 does not directly address this issue. It is relevant, however, because it deals with a warrant authorising the cloning of electronic evidence where the warrant lacked particularity as to the relevant offences and the material to be seized, and did not contain conditions for the sorting of relevant information from other information. The majority’s view was that conditions in advance were not generally necessary. The opportunity for judicial oversight would arise in the context of the trial process.
17 A “leads run” is a method of obtaining legitimate publications from which advertisements can be copied and used to target advertisers with false invoices.
[31] There is some force in the Crown’s response to the distinction claimed on behalf of Ms Banton.18 That said I am uneasy about the covert search that was undertaken here. The application for the covert warrant and the issue of the warrant appear to have been approached in the same way as a covert warrant for drugs offending might have been. However the cloning of electronic records from computers in a private home:19
… raise[s] special privacy concerns, because of the nature and extent of information that they hold, and which searchers must examine, if a search is to be effective.
[32] The application did not set out how the electronic records were to be obtained, whether anyone would have access to the information before Mr Middeldorp and Ms Banton were informed of the warrant, nor what protections there would be for any privileged, private or irrelevant information. The Deputy Registrar did not discuss this with the applicant and she did not impose any conditions on the use to which the evidence might be put prior to Mr Middeldorp and Ms Banton being informed of the covert search.
[33] When the officers arrived at Mr Middeldorp and Ms Banton’s home they were misled about the authority which had been granted to the police to be on their property. This seems different from the situation where a search is undertaken of unoccupied premises. In that situation, if the occupiers return during the search, the officers can produce the search warrant and the occupiers can take steps to protect their rights. In the present case s 198(8) is rendered somewhat meaningless. The covert search warrant would not need to be produced because Mr Middeldorp and Ms Banton were misled into thinking that the police were only present pursuant to the authority of the cannabis warrant.
[34] It was intended that Mr Middeldorp and Ms Banton would be informed of the covert search when the investigation was completed although this was not made a
condition of the warrant. Further, in the meantime, the information obtained was
18 As the Law Commission notes, above n 16 at 6.45, the privacy implications and the protective or visibility features of a search that are absent in a covert search (that is, one deliberately undertaken without the knowledge of the occupier) are equally absent in other cases where a search is conducted in the absence of an occupier.
19 Dotcom v Attorney-General, above n 16, at [191].
accessed by the police and the SFO, albeit for limited purposes. Mr Middeldorp and Ms Banton did not have the opportunity to exercise their rights in respect of that search, including seeking to ensure that there were protocols concerning private or legally privileged information, before that use was made of the evidence obtained from the search.
[35] It is not, however, necessary to reach a firm view on whether these matters meant that the search was unreasonable in breach of s 21 of the New Zealand Bill of Rights Act 1990 (NZBORA). That is because of the view I have reached about the effect of any such breach on the downstream evidence which I now discuss.20
October search
[36] The electronic evidence relied on by the Crown at the trial was sourced from the clones obtained from the 24 October 2012 search.21 A breach of s 21 of the NZBORA arising from the 22 August 2012 search may nevertheless taint that evidence if there is a real and substantial connection between the breach and the evidence relied upon.22 Where there is a gap between the breach and subsequently obtained evidence, the question is whether the evidence would not have been obtained but for the breach. If that is so, then the evidence is affected by the breach unless it can nevertheless be said to be independent of the earlier breach, or the connection between them is so attenuated that it could not sensibly be considered as having caused the evidence to be obtained.23
[37] I am satisfied that, prior to the decision to obtain the covert search warrant, it was intended to undertake a search of the electronic records of Mr Middeldorp and Ms Banton at termination of the investigation. The decision to carry out the covert warrant did not change that intention. Having reviewed the application for the October search, I am also satisfied that, if the information about the August search
had not been included, the search warrant would still have been granted on the basis
20 That is also the case with the submission made only in passing that there was a paucity of evidence to support the covert search warrant.
21 This was confirmed by Mr Woolford and Mr Hudson.
22 R v Williams [2007] NZCA 52, [2007] 3 NZLR 207 at [79] and [100].
23 At [241] to [244]; applied in R v D (CA287/2010) [2011] NZCA 69 at [50] to [54]. See also R v
Pou [2002] 3 NZLR 637 (CA) at [21], [22] and [25].
of all the other information in the October application. That is to say that, without the information about the August search, the other information set out in the October application provided a more than sufficient basis to conclude:
(a) that there were reasonable grounds to suspect that an offence under s
228 of the Crimes Act was being committed; and
(b)that there were reasonable grounds to believe that a search of Mr Middeldorp and Ms Banton’s home would find evidential material in respect of the offence.24
[38] In particular, the application noted that during the surveillance period, Mr Middeldorp and Ms Banton made telephone contact with approximately 250 entities and that they had each used several false names. This was consistent with the suspected methodology as described earlier in the application.
[39] The application also referred to intercepted conversations between Mr Middeldorp and Mr Hendon. Mr Hendon was one of the subjects of the investigation. The application provided substantial information about the grounds on which Mr Hendon was believed to be involved in a fraudulent advertising operation. The application noted that there was a significant amount of contact between Mr Middeldorp and Mr Hendon during the surveillance period. Mr Hendon was one of Mr Middeldorp’s top 10 contacts during the surveillance period. In the intercepted communications they discussed their daily business, how many sales they had made each week, what their account balances were, which clients were paying and which were to be avoided, and various aspects of “lead runs”.
[40] The application also referred to intercepted conversations between Ms Dow and Mr Middeldorp and Ms Banton. Ms Dow was also a subject of the investigation. She was believed, on the basis of intercepted communications, to have assisted Mr Hendon in opening bank accounts for his pro forma invoicing operation. In her conversations with Mr Middeldorp and Ms Banton she discussed selling advertising
for them and how that was to do be done. This was consistent with the suspected
24 The search was issued under the Search and Surveillance Act 2012, s 6 (which came into force on 1 October 2012).
methodology as described earlier in the application. She contrasted this work with
another business proposal which she described as “legit”.
[41] The application also referred to intercepted conversations between Mr Middeldorp and Mr Samut. Mr Samut was also one of Mr Middeldorp’s top 10 contacts. Mr Samut was described as operating an accounting business. He provided accounting services to Mr Middeldorp and Mr Hendon’s companies, and he set up companies for them.
[42] The application also provided information about two complainants who had received invoices which they had referred to the Commerce Commission. One of those complainants had received invoices in respect of a publication named The Local Business Guide. An article in the Dominion Post in 2009 about pro forma invoicing fraud had warned that this was a fraudulent publication. Contact details on the invoices linked this publication to Mr Middeldorp and Ms Banton. One of these was an email address which was known to be used by them as a result of the covert search on 22 August 2012. However, putting that link to one side, the invoices were also linked to Mr Middeldorp and Ms Banton through the company name on the invoices of which Ms Banton was the sole director, the PO Box number on the invoices which was used by Mr Middeldorp and the phone numbers on the invoices which were allocated to Mr Middeldorp. Additionally, this complainant also received a “proof copy” fax for advertising in a publication linked to Mr Hendon.
[43] The other complainant had received a “fax proof” for advertising in a publication named Find a Business. Enquiries about the PO Box and phone and fax numbers shown on the document linked these to Mr Middeldorp. Ms Banton had a bank account in the name of “Find a Business Limited.”
[44] Overall, these matters (at [38] to [43]) set out a strong basis for the belief that
Mr Middeldorp and Ms Banton were engaged in fraudulent advertising and as such had committed the offence of dishonestly using a document.25 They also provided a
25 Crimes Act 1961, s 228. The application was also made on the basis that there were reasonable grounds to believe that the defendants were participating in an organised criminal group, which is an offence under s 98A of the Crimes Act 1961. As the application would have been granted in respect of the suspected s 228 offending without the evidence from the 22 August 2012 search, it is not necessary to consider the s 98A basis.
strong basis for the belief that a search of their home would find evidential material in respect of that offence.
[45] In these circumstances I am satisfied that there is no real and substantial connection between any breach of s 21 in respect of the 22 August 2012 search and the evidence obtained from the 24 October 2012 search. The evidence from the October search would have been obtained regardless of the August search. The evidence obtained from the 24 October 2012 search was not tainted by the 22 August
2012 search. It was therefore not “improperly obtained”. As a result it is not necessary to conduct the balancing process that applies to improperly obtained evidence.26 This also deals with the submission for Ms Banton that there were insufficient grounds for the October search.
Any other downstream contamination?
[46] Counsel for Ms Banton submits that the information gathered during the covert search was used directly and indirectly in the trial. This submission relates to the police video interview of Ms Banton upon her arrest at the time of the October search. In the course of that interview information obtained at the time of the August search was put to Ms Banton and she was asked to explain or comment on it. Counsel for Ms Banton submits that, because of this, evidence from the August search “contaminate[d] the trial evidence.”
[47] Before the video interview was played during the trial, the Crown advised that it did not intend to adduce those parts of the interview. Counsel for Ms Banton submitted that it was not open to the Crown to adduce some parts of the interview but not others. This submission was reiterated in the closing submissions on the illegality of the August search.
[48] Counsel for Ms Banton submits that the interview must be adduced in full because it shows that the August search “forms part of the evidence that led to the termination warrant.” However, while evidence from the August search was part of
the sequence of events leading to termination, termination warrants were always
26 Evidence Act 2006, s 30.
envisaged. Detective McIvor had been working on them before 22 August 2012. The covert warrant was not intended to replace those warrants. The covert warrant was sought only because the cannabis warrant provided an opportunity to obtain evidence pending termination. As discussed above, even without the evidence obtained from the August search, the application for the October search warrant would have been granted. Similarly, Ms Banton and Mr Middeldorp would have been arrested even if the August search had not been carried out.
[49] Counsel for Ms Banton further submits that the August search contaminated the trial because its use in the video interview “demonstrates the prejudice to the defendants as a result of that information being available to the police.” The submission as developed was that Ms Banton was misled because she was not told of the covert search until near the end of the interview. Had she been told of the covert search earlier, she may have exercised her rights (to remain silent and to speak to a lawyer) differently.
[50] I consider there was no prejudice to Ms Banton as claimed. To the extent that information from the August search was put to Ms Banton, the Crown did not seek to adduce that evidence. It was entitled to take that approach. The Crown is entitled to make decisions about the evidence it will adduce to prove the charges.27 The evidence it elected not to adduce was not exculpatory and so “editing” the interview was not unfair to Ms Banton in that way.28
[51] Nor does prejudice arise because Ms Banton answered a number of questions during her interview without knowing that the police had carried out the covert search. Ms Banton knew she was under arrest for using a document and
participating in a criminal group for “pro forma invoicing fraud” and she was aware
27 See, for example, R v Pou, above n 23, where the Crown elected not to rely on evidence obtained during an unlawful search. I note that if the evidence from the August search was improperly obtained and if exclusion of the evidence was appropriate under s 30 of the Evidence Act 2006, then the Crown would be entitled to adduce the admissible part of the statement under s 91 of the Evidence Act 2006 subject to my direction. There is no basis for a different approach when the evidence is subject to an admissibility challenge and, without requiring a ruling from the Court on that issue, the Crown elects not to adduce the evidence as was the case here.
28 As this was a judge alone trial it was not necessary to formally edit the statement. The parts of the statement relevant to the admissibility challenge were part of the voir dire evidence that was heard during the trial. It was therefore convenient to leave the statement in an unedited form on the understanding that the Crown was not adducing those parts of the statement for the purposes of the trial.
of her rights. There is no requirement for the police to disclose all the evidence in their possession before a defendant decides whether to exercise their rights. For example the SFO and the police also had the evidence from the surveillance warrants. This evidence was also not disclosed to Ms Banton until later in the interview. There is no suggestion that this rendered the interview unfair. Moreover, as discussed in my reasons for my verdicts, I had other concerns about the interview but Ms Banton did not wish to have it ruled inadmissible. Nevertheless I did not rely on anything in the interview that was to Ms Banton’s disadvantage.
[52] For completeness I note that submissions were made that the covert search did not follow best practice for the cloning of electronic records. However there is nothing to suggest that this somehow contaminated the electronic records. The evidence was that the cloning process was non-invasive and not likely to damage any information on the computer. Evidence was not adduced to indicate otherwise.
Conclusion
[53] Even if there are concerns about the covert search, it did not render the downstream evidence that was adduced at trial inadmissible or otherwise contaminate the evidence at trial.
Mallon J
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