Wheki v Ministry of Social Development
[2020] NZHC 412
•5 March 2020
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CRI-2019-409-202
[2020] NZHC 412
JACQUELINE GAYE WHEKI v
MINISTRY OF SOCIAL DEVELOPMENT
Hearing: 5 March 2020 Counsel:
N R Wham for Appellant
S Mallett and E F Sharpe-Davidson for Respondent
Judgment:
5 March 2020
JUDGMENT OF CHURCHMAN J
Introduction
[1] Ms Wheki (the appellant) is charged with 17 charges of using a document under s 228 of the Crimes Act 1961, and one charge of obtaining by deception under s 240 of that Act. These charges all relate to allegations of benefit fraud committed by the appellant against the Ministry of Social Development (MSD) (the respondent), relating to the appellant’s alleged failure to disclose to the respondent that she was employed and in a relationship.
[2] The particular issue now before the Court is an appeal by the appellant against a reserved pre-trial decision of Judge Kellar in the District Court on 5 December 2019. The decision concerned the admissibility of evidence obtained from third parties by the respondent pursuant to s 11 of the now repealed Social Security Act 1964 (the Act).
WHEKI v MINISTRY OF SOCIAL DEVELOPMENT [2020] NZHC 412 [5 March 2020]
The Judge found that in obtaining the evidence through exercise of its powers under s 11 of the Act, the respondent did not act unlawfully.1
[3] The Judge further found that even if the respondent had acted unlawfully, then the improperly obtained evidence was still admissible under s 30 of the Evidence Act 2006, because the exclusion of the evidence was not proportionate to the impropriety of the appellant, considering the need for an effective and credible system of justice.2
[4] The appellant now appeals the pre-trial District Court decision on the basis that the Judge erred in fact and in law. The respondent opposes the appeal.
Background
Relevant statutory provisions
[5] Section 11 of the Act allows for the Chief Executive of the MSD to require any person to provide to the MSD any information or documents that are required for the purposes specified in s 11(2) of the Act.3 This included determining whether a person who was in receipt of a benefit or payment was entitled to receive it.4
[6]Section 11(1) provides:
(1)Subject to this section and to the code of conduct established under section 11B, the chief executive, for any purpose specified in subsection (2), may by notice in writing require any person (including any person who is an officer or employee in the service of the Crown in a government department or public body (other than as an officer of a court), in his or her official capacity):
(a)to provide the department or a specified employee of the department with such information as the chief executive requires; or
(b)to produce to the department or to a specified employee of the department any document in the custody of or under the control of that person, and to allow copies of or extracts from any such document to be made or taken; or
1 Ministry of Social Development v Wheki [2019] NZDC 24320 at [51].
2 Above n 1, at [52].
3 Social Security Act 1964, s 11(1) (now repealed).
4 Social Security Act 1964, s 11(2). See sch 6 of the Social Security Act 2018 for the current corresponding provision.
(c)to furnish to the department or to a specified employee of the department any copies or extracts from any document or record in the custody or under the control of that person—
within a period (being not less than 5 working days after the notice is given) and in the manner specified in the notice, and without charge.
[7] Section 11(1) states that these powers are subject to the Code of Conduct established under s 11B of the Act.5
[8] In the District Court pre-trial decision, the Judge summarised the relevant clauses of the Code of Conduct applicable to the exercise of s 11 powers:6
[7]Clause 3.1 of the Code of Conduct provides:
3.Steps to be taken prior to giving a section 11 notice
3.1When seeking information or documents about a beneficiary and/or any other person, the officer must, –
(a)first request the information or documents from the beneficiary and/or that other person, and
(b)give the beneficiary and/or that other person a reasonable time to provide the information or documents and inform the beneficiary and/or that other person of that time –
Except where the officer has reasonable grounds to believe that compliance would prejudice the maintenance of the law.
[8]The Code of Conduct defines the phrase “prejudice to the maintenance of law” as including:
… An action that would, or would be likely, to prejudice the prevention, detection, investigation, prosecution or punishment of an offence; or the imposition of a pecuniary penalty.
[9]Appendix A of the Code of Conduct goes on to state:
The definition of the term “prejudice to the maintenance of the law” includes situations where the Ministry believes that asking the individual for their information before going to a third party would prejudice our investigation. This can be on the basis of the delay it would cause, the risk of alterations to documents, or the risk of colluding with other parties.
[10]The Chief Executive and every officer acting under her or his delegation must comply with the Code of Conduct whenever the Ministry wishes to obtain information or documents. If the Ministry fails to comply with the Code of Conduct, the requirements of s 11B
5 Social Security Act 1964, s 11B.
6 Ministry of Social Development v Wheki, above n 1, at [7]-[10].
will not have been met and the exercise of the power to obtain information or documents from third parties under s 11 of the Act will be unlawful and therefore improperly obtained.
[9]The critical issue therefore, as observed by the District Court Judge, is:7
…whether the officer of the Ministry had reasonable grounds to believe that compliance with clause 3.1 of the Code of Conduct would prejudice the maintenance of law.
[10] In 2019, the Privacy Commissioner conducted an inquiry into the MSD’s exercise of its s 11 powers and its subsequent compliance with the Code of Conduct in that exercise.8 The Commissioner found that MSD had wrongfully applied the “prejudice to the maintenance of the law” exception, instituting an effective “blanket policy” of issuing s 11 notices in all cases deemed to be “high risk”, rather than considering whether there would be any prejudice to the maintenance of the law in each individual fraud investigation where a s 11 notice had been issued.9
[11] In his pre-trial decision, the Judge noted this report and then detailed evidence of the MSD’S approach to “high risk” cases. In short, allegations involving potential fraud can be provided to a Client Integrity Officer through a call to a specific MSD 0800 number. The Client Integrity Officer inputs the information into MDS’s Investigation Management System. This system incorporates a Decision Support Tool which allocates a score to the information which is obtained as a result of the allegation. The score determines the priority allocated to the allegation, which in turn determines the speed and actions which the MSD will take when investigating the allegations. Cases with a “high” score are confirmed as such by a Fraud Manager, and then allocated to the Fraud Intervention Service Team. Post-2012, once an investigator in the Fraud Intervention Service Team concluded that further investigation was warranted, MSD determined that the prejudice to the maintenance of the law exception could apply. Consequently, requests for information or documents under s 11 were made directly to third party sources without first approaching the beneficiary (which had occurred prior to 2012).10
7 Ministry of Social Development v Wheki, above n 1, at [11].
8 Privacy Commission Inquiry into the Ministry of Social Development’s Exercise of Section 11 (Social Security Act 1964) and Compliance with the Code of Conduct (May 2019).
9 At [13].
10 At [14].
Factual background
[12] In July 2015, the respondent received information from an anonymous source that the appellant was working 30 hours a week at the Racecourse Hotel and was in a married relationship.11
[13] In April, June and July of 2016, it received information from IRD via its information sharing programme that the appellant had received income from the Racecourse Hotel.
[14] From July 2016 onwards, the respondent issued a number of s 11 notices and requests concerning the appellant to different third party sources. These included notices to the banks of the appellant and her alleged partner requesting bank records, to the appellant’s alleged employer, between 19 January 2017 and 3 February 2017, from 15 different entities including the Canterbury District Health Board, Selwyn Street Medical, the New Zealand Land Transport Agency, and Vodafone. All but one of these entities provided information.12
[15] Ms Walsh, who is employed by the respondent as an Investigator in the Fraud Intervention Services Team and was assigned the appellant’s case in January 2017, met with Ms Wheki on 22 May 2017 to inform her of the investigation. Ms Wheki admitted to Ms Walsh that she had not advised Work and Income that she was in a marriage relationship. The appellant was charged with 17 charges of using a document under s 228 of the Crimes Act 1961, and one charge of obtaining by deception under s 240 on 7 December 2017.
District Court pre-trial decision
[16] The case for Ms Wheki, as summarised by the District Court Judge, was that the respondent had adopted a blanket policy of applying the prejudice to the maintenance of the law exception in relation to high scoring benefit fraud allegation cases that warranted further investigation.13 The approach by the respondent in
11 At [20].
12 At [20].
13 At [22] and [25].
applying a blanket policy to the prejudice to the maintenance of the law exception for these cases was in breach of the Code of Conduct governing the exercise of powers under s 11, and thus evidence obtained from third parties through s 11 in this case was unlawfully, or improperly obtained and inadmissible.14
[17] The Judge found that the respondent had not applied a blanket policy to issuing s 11 notices in this case. The Judge held that the appellant fell within the high-scoring, high-risk category and the respondent already had substantial information to warrant further investigation, such as documents from Inland Revenue evidencing employment-related income, and tenancy documents indicating that the appellant’s alleged partner was the landlord of the property in which she was living.15
[18] The Judge was satisfied that the respondent had reasonable grounds to believe that compliance with the Code of Conduct by contacting the appellant for information or documents would have prejudiced the maintenance of the law in this case, allowing them to lawfully invoke the exception.16
[19] The Judge found that if he was wrong and the respondent did unlawfully apply the prejudice to the maintenance of the law exception, then the evidence was improperly obtained.17 However, the Judge further found that upon applying s 30(2)(b) of the Evidence Act 2006, the exclusion of the improperly obtained evidence would not be proportionate to the impropriety, considering the need for an effective and credible system of justice.18
[20] In coming to this final conclusion, the Judge considered the factors under s 30(3)(a)-(e) of the Evidence Act. While the Judge did not expressly say so, he indicated that this was not a significantly serious intrusion into the appellant’s reasonable expectation of privacy under s 30(3)(a). The Judge further held that the impropriety was not deliberate, reckless or done in bad faith under s 30(3)(b), that the
14 At [22] and [25].
15 At [29]-[31].
16 At [33].
17 At [34].
18 At [52].
evidence was reliable under s 30(3)(c), and that the offence was relatively serious due to the number of charges and persistent offending under s 30(3)(d).
[21] Finally, the Judge acknowledged that there may have been other investigatory techniques not involving any breach of the appellant’s rights that were known to be available but not used, as the respondent could have sought the information and documents directly from the appellant.
Submissions of the parties
The appellant
[22] Ms Wham, counsel for the appellant, submitted that the District Court Judge had erred in both fact and law in his pre-trial decision. With regard to errors of fact, counsel submitted that the Judge:
(a)wrongly found that general cases assigned to the “High work queue” (high-scoring cases) involve allegations of offending for more than three years, as the evidence indicated that there were other allegations that would result in a matter being regarded as high regardless of the length of the alleged fraud;
(b)found that the Decision Support Tool categorisation of the appellant’s case as high-scoring was analysed by a fraud investigator before the prejudice to the maintenance of the law exception was invoked. This was false because Ms Hall (who worked on the appellant’s case before Ms Walsh) was not a trained investigator; and
(c)erred in stating that it was misleading to say that there is no finding of fraud in cases where the prejudice to the maintenance of the law exception is applied which do not result in charges being filed.
[23] With regard to errors of law, counsel for the appellant submitted that the s 11 evidence was both improperly or unlawfully obtained, and that on balance it should be excluded or deemed inadmissible.
[24] Counsel submitted that the s 11 evidence was improperly obtained because the respondent did not establish reasonable grounds for belief that compliance with the code would prejudiced the maintenance of the law. Counsel noted that neither of the staff responsible for sending the s 11 notices recorded grounds for believing that making requests for information directly to the appellant would prejudice the maintenance of the law, and that there was no evidence that the appellant had previously failed to respond to requests for information which could inform reasonable belief. Consequently, because there was no reasonable belief, the evidence was obtained unlawfully.
[25] Furthermore, counsel for the appellant submitted that under the balancing test espoused in s 30(2)(b) and following consideration of the s 30(3) factors, exclusion of the s 11 evidence was proportionate to the impropriety. This was because applying:
(a)s 30(3)(a), the appellant had a reasonable expectation of privacy in the information sought due to its personal nature, and that this right to privacy was breached through a serious intrusion by the respondent who obtained a vast amount of personal information and unnecessarily alerted third parties to the fact that the appellant was in receipt of a benefit. Counsel referred in particular to the fact that requests were sent to a medical centre and the DHB, and also noted that information in bank statements could disclose personal life choices that the appellant had made;
(b)s 30(3)(b), the respondent’s approach to issuing s 11 notices for all high-scoring cases warranting further investigation was a blanket policy that indicated recklessness and impropriety by failing to undertake a case-by-case analysis;
(c)s 30(3)(c), it was acknowledged that the nature and quality of evidence was reliable;
(d)s 30(3(d), the allegations were only moderately serious, and that there was no identifiable victim;
(e)s 30(3)(e), there were other investigatory techniques available, by way of requesting the information from the appellant directly; and
(f)s 30(3)(h), that there was no urgency in obtaining the evidence, and that it was obtained by s 11 notice for ease rather than speed.
The respondent
[26] Counsel for the respondent opposed the submission of counsel for the appellant that the District Judge had made a number of factual errors. With regard to the first alleged factual error, counsel submitted that the Judge was not suggesting that only offending of three years or more could be assigned to the high work queue, but that this was one type of allegation that did get assigned to the high work queue.
[27] With regard to the second alleged factual error, counsel conceded that Ms Hall was not a trained investigator, but submitted that nothing turned on this, as Ms Hall would have had knowledge and understanding of the case at the time she issued the s 11 notices, and that 22 out of the 25 notices were issued by Ms Walsh.
[28] With regard to the third alleged factual error, counsel submitted that this statement was an accurate assessment by the Judge and not an error.
[29] Counsel for the respondent further submitted that the respondent had reasonable grounds to believe that complying with the Code of Conduct by obtaining the s 11 evidence directly from the appellant would prejudice the maintenance of the law, because there was a risk of the defendant altering documents or information and a risk of the investigation being delayed. In support of this proposition, counsel noted that the MSD records indicated that the appellant had been the subject of two previous investigations where it was found that she had failed to advise the respondent of her correct circumstances. According to counsel, this evidenced a real risk that further misleading or incorrect information would be proffered if the s 11 evidence was obtained directly from the appellant. Consequently, the exercise of s 11 through the prejudice to the maintenance to the law exception in this case was lawful.
[30] Counsel finally submitted that even if the evidence was improperly obtained, it was still admissible under s 30(2)(b) of the Evidence Act because applying:
(a)s 30(3)(a), the right to privacy was breached, but not in a significant manner. This was not a situation where there was an unlawful search of a person’s home, which would be treated more seriously.19 Also, there was no heightened privacy interest of the information gathered, as the evidence related primarily to bank records and payslips, as opposed to intimate text messages, photos or health records. In relation to the medical centre and DHB, counsel noted that no personal health information had been sought, only information about who the appellant had identified as her next of kin;
(b)s 30(3)(b), the issuing of the s 11 notices was not deliberate, reckless or done in bad faith;
(c)s 30(3)(c), the nature and quality of the evidence was reliable;
(d)s 30(3)(d), the offending was relatively serious as there was a number of charges and persistent offending; and
(e)s 30(3)(e), the respondent conceded that it could have sought the information directly from the appellant as an alternative investigatory technique, but that this risked the defendant declining to give the information or giving misleading information;
Approach on appeal
[31] Under s 215 of the Criminal Procedure Act 2011, a defendant or prosecutor may, with leave of the first appeal court, appeal to that Court against a pre-trial decision as to admissibility of evidence.20
[32]Section 221 of the Act provides:
19 R v Williams [2007] NZCA 52 at [113].
20 Criminal Procedure Act 2011, s 215(2)(a).
A first appeal court must determine a first appeal under this subpart by—
(a)confirming the decision appealed against; or
(b)varying the decision appealed against; or
(c)setting aside the decision appealed against and making any other order it considers appropriate.
Relevant law
[33] Section 30 of the Evidence Act 2006 governs the admissibility of improperly obtained evidence:21
(1)This section applies to a criminal proceeding in which the prosecution offers or proposes to offer evidence if—
(a)the defendant or, if applicable, a co-defendant against whom the evidence is offered raises, on the basis of an evidential foundation, the issue of whether the evidence was improperly obtained and informs the prosecution of the grounds for raising the issue; or
(b)the Judge raises the issue of whether the evidence was improperly obtained and informs the prosecution of the grounds for raising the issue.
(2)The Judge must—
(a)find, on the balance of probabilities, whether or not the evidence was improperly obtained; and
(b)if the Judge finds that the evidence has been improperly obtained, determine whether or not the exclusion of the evidence is proportionate to the impropriety by means of a balancing process that gives appropriate weight to the impropriety and takes proper account of the need for an effective and credible system of justice.
(3)For the purposes of subsection (2), the court may, among any other matters, have regard to the following:
(a)the importance of any right breached by the impropriety and the seriousness of the intrusion on it:
(b)the nature of the impropriety, in particular, whether it was deliberate, reckless, or done in bad faith:
(c)the nature and quality of the improperly obtained evidence:
21 Evidence Act 2006, s 30.
(d)the seriousness of the offence with which the defendant is charged:
(e)whether there were any other investigatory techniques not involving any breach of the rights that were known to be available but were not used:
(f)whether there are alternative remedies to exclusion of the evidence that can adequately provide redress to the defendant:
(g)whether the impropriety was necessary to avoid apprehended physical danger to the Police or others:
(h)whether there was any urgency in obtaining the improperly obtained evidence.
(4)The Judge must exclude any improperly obtained evidence if, in accordance with subsection (2), the Judge determines that its exclusion is proportionate to the impropriety.
(5)For the purposes of this section, evidence is improperly obtained if it is obtained—
(a)in consequence of a breach of any enactment or rule of law by a person to whom Section 3 of the New Zealand Bill of Rights Act 1990 applies; or
(b)in consequence of a statement made by a defendant that is or would be inadmissible if it were offered in evidence by the prosecution; or
(c)unfairly.
[34] Section 30(2) requires this Court to apply a two-step test in considering the admissibility of s 11 evidence in this case. Firstly, the Court must find on the balance of probabilities, whether or not the evidence was improperly obtained.22 Secondly, if the Court finds that the evidence has been improperly obtained, then it must determine whether the exclusion of the evidence is proportionate to the impropriety through a balancing process that gives appropriate weight to the impropriety and takes proper account of the need for an effective and credible system of justice.23
[35] Section 30(5)(c) defines improperly obtained evidence as evidence that has been obtained unfairly.24 In R v Chetty, a majority of the Supreme Court held that
22 Evidence Act 2006 s 30(2)(a).
23 Evidence Act 2006, s 30(2)(b).
24 Evidence Act 2006, s 30(5)(c).
there “must almost always be” a causative link between the unfairness and the impugned evidence.25
[36] In R v Alsford, the Supreme Court considered whether evidence was improperly or unfairly obtained through a potential breach of the Privacy Act 1993. While acknowledging that the privacy principles espoused in the Act may be relevant to the assessment whether evidence has been obtained unfairly in terms of s 30(5)(c) or the balancing test under s 30(2), it observed that even where the information at issue is personally sensitive and the breach of the privacy principles is serious, those circumstances may be of little independent significance to the s 30 analysis.26 However, it ought to be noted that the Court was specifically referring to the privacy principles in the Privacy Act 1993, as opposed to the right to privacy as a whole.
[37] With regard to the second part of the balancing test under s 30(2), a Court may have regard to the matters set out in s 30(3) when determining whether or not the exclusion of the evidence is proportionate to the impropriety.
[38] In Makaea v R, the Court of Appeal ruled that in the context of s 30(3)(a), the length of a production order in relation to the cell phone number of the appellant was disproportionate to the evidence the order was based on.27 The Court found that a seven day period was appropriate, and that evidence obtained outside that seven day period was improperly obtained.28 The Court held that the breach of the appellant’s privacy rights was moderate to serious, and amounted to an intrusion of the appellant’s reasonable expectation of privacy.29 However, the Court ruled that as the respondents had obtained the evidence within the seven day period, it could be admitted.
[39] With regard to s 30(3)(c), Blanchard J in Hamed v R observed that if improperly obtained evidence is reliable and probative evidence of guilt, this favours its admissibility.30
25 R v Chetty [2016] NZSC 68 at [47].
26 R v Alsford [2017] NZSC 40 at [39]-[40].
27 Makaea v R [2018] NZCA 284.
28 Makaea v R, above n 27, at [39]-[40].
29 At [45].
30 Hamed v R [2011] NZSC 101 at [201].
[40] With regard to s 30(3)(d), the Court of Appeal in Underwood v R made a number of observations to assist in defining a serious offence:31
(a)seriousness should be treated, like other s 30(3) criteria, as an evaluative consideration;
(b)the penalty need not be used to gauge seriousness, although judges may sometimes find it appropriate;
(c)the assessment of seriousness requires a long-term perspective of the administration of justice, in which trials generally should be conducted on their merits but systemic integrity is paramount; that being so, seriousness cannot take primacy over other considerations;
(d)seriousness does not justify admission where the breach of rights causes an unfair trial;
(e)a grave breach of an important right may justify exclusion although the evidence would not result in an unfair trial; and
(f)the balancing exercise calls for explanation about the s 30(3) criteria which apply to the case at hand. Where seriousness of the offence counts it should be mentioned, and an explanation is needed where seriousness depends on the facts and may tip the balance.
Analysis
[41] Counsel for the appellant rightly observed in submissions that the exercise of powers under s 11 is an intrusion into the privacy of the person who is being investigated. However, this does not appear to be a case where the evidence was improperly obtained, and even if it was, the s 30(2)(b) balancing test falls in favour of the respondent.
31 Underwood v R [2016] NZCA 312 at [49].
[42] As held by the District Court Judge in the pre-trial decision, the respondent did not apply a blanket policy of issuing s 11 notices in this case. Instead, the appellant had been designated as a high scoring or high risk category by the Decision Support Tool, which had been confirmed by Ms Hall, who even though not a trained fraud investigator, had a knowledge and understanding of the file. Further, the majority of the s 11 notices were issued by Ms Walsh, an experienced investigator, and given the appellant’s previous investigations, they had reasonable grounds to believe that compliance with the Code of Conduct by first seeking the information from the appellant would have prejudiced the maintenance of the law in this case. Consequently, they were entitled to invoke the exception, and hence the s 11 evidence cannot be considered to have been obtained unfairly or improperly.
[43] I do not accept Ms Wham’s submission that Ms Wheki’s history of previously having been dishonest with the respondent and unlawfully receiving payments of
$43,351.69 and $6,659.51 respectively is irrelevant. This demonstrates that she is someone with a propensity for significant dishonesty in relation to her dealings with the respondent. An approach to her directly to obtain information may well have prompted her to attempt to conceal or alter information based on her prior established pattern of dishonesty.
[44] Even if the evidence was improperly obtained, the appellant would fail under the s 30(2)(b) balancing test. Sections 30(3)(a)-(d) all fall in favour of the respondent. With regard to s 30(3)(a), while the right to privacy is undoubtedly an important one as observed in Makaea v R, the intrusion by the respondent is not as serious as in that case, which involved a significant foray into the user’s personal communications through their phone.32
[45] With regard to s 30(3)(b), the District Court Judge was correct in finding that the alleged impropriety in this case was not deliberate recklessness, or done in bad faith. As noted above, the respondent had reasonable grounds to believe that compliance with the Code of Conduct by first seeking the information from the
32 Makaea v R, above n 27, at [45].
appellant would have prejudiced the maintenance of the law, particularly given the past investigations into the appellant.
[46] With regard to s 30(3)(c), both parties acknowledged the reliability of the s 11 evidence.
[47] With regard to s 30(3)(d), the offence was relatively serious, particularly given the persistence of the offending and the number of charges.
[48] As noted by the District Court Judge, it is accepted that the respondent could have used other investigatory techniques not involving any breach of the appellant’s rights, through simply requesting the information directly from the appellant. However, it has already been stated that the respondent did not act unlawfully in choosing not do this, because of the concern that compliance with the Code of Conduct may have prejudiced the maintenance of the law in this case.
Conclusion
[49] For these reasons, there was no error in the decision appealed from, and the appeal is dismissed.
Churchman J
Solicitors:
Crown Solicitor’s Office, Christchurch
cc: Michael Starling Barrister, Christchurch
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