Rae v Commissioner of Police
[2025] NZCA 75
•26 March 2025 at 11.30 am
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA819//2024 |
| BETWEEN | DAVID CHARLES RAE |
| AND | COMMISSIONER OF POLICE |
| Court: | Katz and Palmer JJ |
Counsel: | Applicant in person |
Judgment: | 26 March 2025 at 11.30 am |
JUDGMENT OF THE COURT
AThe application for leave to appeal is declined.
BThe applicant must pay the respondent costs for a standard application on a band A basis and usual disbursements.
____________________________________________________________________
REASONS OF THE COURT
(Given by Katz J)
Introduction
The Commissioner of Police has applied to the High Court for civil forfeiture orders under the Criminal Proceeds (Recovery) Act 2009 (the CPRA). Forfeiture is sought of funds in excess of $10 million held in New Zealand bank accounts. The Commissioner alleges those funds are connected to money laundering activities undertaken by Mr Rae in relation to with two Medicare fraud schemes in the United States.[1]
[1]The factual background to the Medicare fraud schemes is set out at [6]–[18] of the High Court’s judgment granting an application by the Commissioner for an on-notice restraining order under the CPRA: Commissioner of Police v Rae [2020] NZHC 3132 [High Court restraint decision].
Mr Rae applied for a non-party discovery order against the United States Government under r 8.21 of the High Court Rules 2016. Grice J declined the application.[2] Mr Rae then unsuccessfully applied to the High Court for leave to appeal that decision.[3] He now applies to this Court for leave to appeal. The Commissioner opposes the application for leave.
The disclosure and leave judgments
[2]Commissioner of Police v Rae [2024] NZHC 1384 [non-party discovery judgment].
[3]Rae v Commissioner of Police [2024] NZHC 3417 [leave judgment].
Mr Rae pleaded guilty to charges of money laundering in the United States in connection with the Medicare fraud schemes. However, the grounds on which he proposes to defend the Commissioner’s application for civil forfeiture orders include that he was not guilty of that offending and was unaware of the underlying criminality of the schemes.
In support of this defence, Mr Rae sought non-party discovery orders under r 8.21 of the High Court Rules in relation to testimony, documents and other evidence provided to the grand jury in the United States, as well as documents relating to prosecution decisions and investigations in the United States. Gwyn J directed that, in the first instance, submissions on the non-party discovery application should address the issue of relevance, rather than whether the High Court has jurisdiction to make and enforce discovery orders against the United States Government, or whether the documents were practically available.
Unlike ordinary discovery under r 8.5, the power to make a non-party discovery order under r 8.21 is discretionary.[4] Such an order must be necessary, in the
sense that:[5]… other sources of evidence are unlikely to be sufficient because they are materially incomplete or unreliable. And that the documents sought may make a real difference, and are not merely marginal.
[4]Vector Gas Contracts Ltd v Contact Energy Ltd [2014] NZHC 3171, [2015] 2 NZLR 670 at [28].
[5]At [30].
Mr Rae sought discovery of 16 categories of documents,[6] which the Judge summarised as falling within the following three broad categories:
(a)Documents about the “sting” provision offending: These documents were said to evidence whether Mr Rae had in fact committed the offences he had admitted under the “sting” provision. Grice J concluded these documents were not relevant as the forfeiture application relied on different offences, as there is no equivalent offence under New Zealand law.[7]
(b)Documents about the company Cargill Consulting Ltd: Mr Rae said these documents would refute that he controlled or owned Cargill and also the proposition that it was a shell company. Grice J concluded these documents were neither material nor necessary because the Commissioner was not seeking to rely on Mr Rae’s ownership or control of Cargill nor any suggestion it was a shell company.[8]
(c)Documents relating to various prosecutorial decisions in the United States: Mr Rae sought these documents to establish that he was not guilty of offences for which he was convicted in the United States. Grice J concluded the evidence of prosecutorial decisions was not reasonably necessary for Mr Rae to challenge his convictions, although it was open to him to deny his guilt of the offences by giving evidence and explaining the situation.[9]
[6]Summarised at [21] of the non-party discovery judgment, above n 2.
[7]At [59]–[64].
[8]At [65]–[77].
[9]At [78]–[84].
The Judge found that the documents sought were not “material and necessary” and therefore did not meet the test for non-party discovery.[10] The application was therefore declined.[11] The Judge also addressed the claim “[p]ermeating Mr Rae’s defence” that the Commissioner had acted in bad faith.[12] She considered that there was nothing to indicate bad faith on the part of the Commissioner and that, in seeking to find evidence of bad faith, Mr Rae was seeking to embark on a “fishing expedition”.[13]
[10]At [48] and [91].
[11]At [92].
[12]At [85].
[13]At [86]–[91].
The Judge noted that even if she was wrong on whether the documents were material and/or necessary, she would nevertheless have exercised her discretion to decline the application for discovery. Even putting aside the jurisdictional issues, granting the application would “require the Court to embark on a relitigation of the United States proceedings and the decisions made by authorities in the context of criminal proceedings”.[14]
[14]At [93].
Mr Rae applied unsuccessfully to the High Court for leave to appeal. The Judge noted the proposed grounds of appeal “largely restate matters brought up in his submissions on his application for non-party discovery”, nor did they “prevent Mr Rae from raising a defence, as the documents sought either relate to matters which are uncontested or for which he can adduce other relevant evidence”.[15]
Legal principles
[15]Leave judgment, above n 3, at [65]–[66].
The decision that Mr Rae seeks leave to appeal was made on an interlocutory application.[16] Mr Rae therefore requires leave to appeal.[17] The relevant considerations for a grant of leave were set out in Greendrake v District Court of New Zealand as follows:[18]
(a) a high threshold exists;
(b) the applicant must identify an arguable error of law or fact;
(c)the alleged error should be of general or public importance warranting determination or otherwise of sufficient importance to the applicant to outweigh the lack of general or precedential value;
(d) the circumstances must warrant incurring further delay; and
(e)the ultimate question is whether the interests of justice are served by granting leave.
Mr Rae’s submissions
[16]Senior Courts Act 2016, s 4(1) definition of “interlocutory application”, para (a).
[17]Section 56(3) and (5).
[18]Greendrake v District Court of New Zealand [2020] NZCA 122 at [6].
Mr Rae’s proposed grounds of appeal (as set out in his submissions) are that the High Court:
(a)misapplied the test for non-party discovery by taking an overly restrictive approach to whether non-party discovery was “necessary”;
(b)failed to consider the relevance and necessity of the documents sought in the context of s 47 of the Evidence Act 2006 (which concerns evidence of convictions in civil proceedings), including the “unchallenged” evidence of Mr Touger (Mr Rae’s United States attorney), and therefore created an unjust precedent;
(c)incorrectly concluded that the documents sought would not materially alter the applicant’s ability to challenge the forfeiture application;
(d)placed undue weight on procedural concerns and the “potential inconvenience” to the United States, at the expense of the interests of justice; and
(e)disregarded the fact that the forfeiture application is based on an international investigation, making foreign discovery necessary.
Mr Rae submits that these errors constitute arguable questions of law and that the proposed appeal has a reasonable prospect of success. He argues that the application of both the test for non-party discovery and s 47 of the Evidence Act are of significant legal importance and the High Court’s approach creates a precedent which risks unduly restricting access to exculpatory material. In this case, he submits, the refusal of non-party discovery significantly impairs the right to a fair hearing, as the effect of the decision is that the Commissioner can “cherry-pick” documents from the United States Government without disclosing potentially exculpatory documents. Although an appeal would delay the hearing of the forfeiture application, he submits that the delay is outweighed by the need to ensure the trial proceeds on a complete evidentiary basis.
Should leave be granted?
The Judge clearly identified the correct legal test for ordering non-party discovery and there is no obvious error in the manner that she applied it. The merits of the proposed appeal are therefore weak. In reality, it appears that the proposed appeal is an attempt to relitigate the Judge’s largely factual evaluation of the relevance of the documents.
As regards Mr Rae’s first three proposed grounds of appeal, the Judge carefully considered whether the documents sought were relevant and necessary. She expressly considered Mr Touger’s opinion that the requested categories of documents were relevant.[19] However, as the Judge correctly observed in the leave decision, the relevance of the material sought was a question of law for the Court, not a matter of opinion.[20] She noted that the documents sought by Mr Rae primarily relate to United States offending to which he has already pleaded guilty. The forfeiture application, on the other hand, is based on alleged offending in New Zealand — namely domestic money laundering.[21]
[19]Non-party discovery judgment, above n 2, at [41] and [62].
[20]Leave judgment, above n 3, at [33].
[21]Non-party discovery judgment, above n 2, at [83].
Mr Rae’s arguments regarding s 47 of the Evidence Act are also flawed. The High Court decision does not enable the Commissioner to circumvent s 47, as Mr Rae suggests. Section 47 does not render the United States convictions inadmissible but rather provides that they do not constitute conclusive proof of an offence in civil proceedings, since convictions entered by United States courts are not included in the Evidence Act’s definition of conviction.[22]
[22]Evidence Act 2006, s 4(1) definition of “conviction”, para (a).
Nor does the Judge’s approach create a precedent that risks unjustly restricting access to critical exculpatory evidence. In cases where it can be established that exculpatory evidence likely exists, and it is material to the defence, the legal test for non-party discovery will likely be met. Those criteria have not been met here. Nor does it appear that Mr Rae’s ability to mount a proper defence will be impaired by the refusal of non-party discovery. If Mr Rae wishes to contend that he is not in fact guilty of the United States offending, notwithstanding his guilty pleas, he will be able to address that in his evidence and offer any explanations he wishes to provide for his guilty pleas. Mr Rae’s decisions and motivations for pleading guilty to the United States charges are a matter within his personal knowledge.
In respect of the fourth proposed ground of appeal, we note that the High Court did not refer to the “potential inconvenience” to the United States. Rather, the Judge noted the inconsistency of a “wide-ranging investigation ... of United States procedures and evidence” with the objective of the High Court Rules to secure the “just, speedy, and inexpensive determination” of proceedings.[23]
[23]Non-party discovery judgment, above n 2, at [93]; and High Court Rules 2016, r 1.2.
Mr Rae’s assertion that the Judge disregarded the fact that the forfeiture application arises in the context of an international investigation is also clearly incorrect. Further, putting any jurisdictional issues to one side, the fact that non-party discovery is sought against a foreign entity does not alter the relevant legal test. The international element was only peripherally relevant to the required analysis and did not somehow make discovery necessary.
In conclusion, it is our view that the proposed grounds of appeal do not identify any error capable of bona fide or serious argument, let alone one of general or public importance. Rather, the proposed appeal appears to largely be an attempt to relitigate the Judge’s factual evaluation.
Even if, contrary to our view, one or more of the grounds of appeal was seriously arguable, we would decline leave as the circumstances do not justify further delay. The legitimacy of any claim of prejudice to fair trial rights must be viewed in the context of the diligence with which a discovery application is prosecuted.[24] Mr Rae’s application for non-party discovery was extremely belated. In September 2021, Mr Rae, through his then counsel, confirmed that the forfeiture application was ready for hearing. No concerns were raised regarding the adequacy of discovery at that time. The forfeiture application is scheduled for hearing in two months’ time (May 2025). Granting leave to appeal would inevitably result in that hearing having to be adjourned.
Result
[24]100 Investments Ltd v Walker [2024] NZHC 93 at [39]–[42].
The application for leave to appeal is declined.
The applicant must pay the respondent costs for a standard application on a band A basis and usual disbursements.
Solicitors:
Luke Cunningham Clere, Wellington for Respondent
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