DOTCOM v HER MAJESTY’S ATTORNEY-GENERAL ON BEHALF OF THE GOVERNMENT COMMUNICATIONS SECURITY BUREAU [2018] NZCA 220

DOTCOM v HER MAJESTY'S ATTORNEY-GENERAL ON BEHALF OF THE GOVERNMENTCOMMUNICATIONS SECURITY BUREAU [2018] NZCA 220 [27 June 2018]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA512/2017[2018] NZCA 220BETWEEN KIM DOTCOMAppellantAND HER MAJESTY'S ATTORNEY-GENERALON BEHALF OF THE GOVERNMENTCOMMUNICATIONS SECURITYBUREAURespondentHearing: 28 March 2018Court: Cooper, Asher and Clifford JJCounsel: R M Mansfield and S L Cogan for AppellantD J Boldt and S L Graham for RespondentJudgment: 27 June 2018 at 11 amJUDGMENT OF THE COURTA Mr Dotcom's appeal against the High Court's issue estoppel ruling isallowed.B The parties are to liaise with the Registry to organise the hearing of thebalance of the appeal.C Costs are reserved and are to be dealt with at the end of that hearing.____________________________________________________________________REASONS OF THE COURT(Given by Clifford J)Introduction[1] In 2013 the appellant, Kim Dotcom, commenced these proceedings against theGovernment Communications Security Bureau (the GCSB) and the police fordamages for admittedly illegal surveillance and search activities those agencies hadcarried out. Issues as to discovery arose. The respondent discovered material obtainedby the GCSB pursuant to unlawful surveillance activities which had been passed onto the police. The GCSB declined to discover the other material which had beenobtained pursuant to unlawful intercepts but not provided to the police (the rawintercept material). It did so on the basis that previously this Court had, in a decisioninvolving a similar application in related proceedings, determined the issue againstMr Dotcom.1 The GCSB agreed Mr Dotcom was therefore estopped from arguing thatissue in these proceedings.[2] That issue came before Gilbert J in the High Court. There, the GCSB arguedthat if an issue estoppel did not apply, then the raw intercept material was notdiscoverable in any event as it was not relevant. Furthermore, the GCSB relied ons 70 of the Evidence Act 2006 to oppose discovery if the Court ruled that the rawintercept material was discoverable as relevant.2[3] Gilbert J determined that an issue estoppel did arise.3 Even if that had not beenthe case, the Judge determined that the raw intercept material was not discoverable asit was irrelevant. Furthermore, the Judge granted the GCSB's s 70 application asregards the raw intercept material and certain parts of the otherwise discoverablematerial (that is, the material provided to the police, which had been redacted by thepolice and the GCSB in the discovery process up to that point).[4] Mr Dotcom appealed to this Court. That appeal was divided into two parts.First, Mr Dotcom's challenge to the High Court's issue estoppel decision was to be1 Attorney-General v Dotcom [2013] NZCA 43, [2013] 2 NZLR 213 [Court of Appeal decision].2 Section 70 of the Evidence Act 2006 provides for a judge to direct otherwise discoverable materialnot be disclosed in the public interest.3 Dotcom v Attorney-General [2017] NZHC 1621 [High Court decision]. The police were initiallyincluded as a respondent to this appeal. After a settlement was reached, Mr Dotcom abandonedthis aspect of the appeal.heard first. Then, and depending on the outcome of that appeal, the question of theappeals on the relevance and s 70 issues would be considered, if necessary.[5] This judgment concerns the first of those matters: Mr Dotcom's appeal againstthe decision of Gilbert J that he faced an issue estoppel on his application for discoveryof the redacted source material.[6] In arguing that aspect of his appeal, Mr Dotcom says his application fordiscovery against the GCSB in these proceedings raises different issues from thosepreviously ruled on by this Court. Hence no issue estoppel arises.Background[7] On 20 January 2012, and in circumstances which have now receivedconsiderable publicity, the police executed search warrants at Mr Dotcom's home.Mr Dotcom, and others affected, challenged the legality of those police actions injudicial review proceedings (the 2012 proceedings).[8] In the 2012 proceedings, and as relevant, Mr Dotcom initially soughtdeclarations that the search warrants were invalid. At that point, the GCSB was not arespondent. As the 2012 proceedings progressed, however, the matters in issueexpanded considerably. The High Court found that the warrants were invalid.4 Indoing so, it commented negatively on the way the warrants had been executed.Mr Dotcom's attention then turned to the reasonableness of the searches. He soughtleave to amend his statement of claim to include that issue, and to add a claim forpublic law damages (Baigent damages). The Crown consented to the enlargement ofthe judicial review proceedings to include the reasonableness of the searches, butopposed the application for leave to add a claim for Baigent damages.[9] That application was heard at what became known as "the remedies hearing".During that hearing it emerged for the first time that the GCSB had been monitoringMr Dotcom. Thereafter Mr Dotcom applied to join the GCSB and include in the 20124 Dotcom v Attorney-General [2012] NZHC 1494, [2012] 3 NZLR 115 at [144(a)].proceedings a claim for Baigent damages for the breach of rights the GCSB's illegalactions caused.[10] From the outset, the Crown acknowledged the illegality of the GCSB's actions:as Mr Dotcom was a permanent resident of New Zealand, the GCSB was not entitledto monitor his activities as it had. But, as the police had done, the GCSB opposed theinclusion of a Baigent damages claim in the 2012 proceedings. The Crown alsoaccepted that the information the GCSB had, as a result of it monitoring activities,provided to the police should be discovered. That material, it was agreed, could beprovided to the Court appointed special counsel, Mr Grieve QC, for consideration inMr Dotcom's interests. But discovery of the raw intercept material, the source of thematerial provided to the police, could not be agreed. The GCSB's opposition toMr Dotcom's applications to expand the 2012 proceedings to include a claim forBaigent damages against the GCSB, and for discovery in those proceedings of the rawintercept material, came before Winkelmann J. Winkelmann J joined the GCSB andgranted both those applications.5[11] The Crown appealed. It did so on the basis that s 10 of theJudicature Amendment Act 1972 reflected a procedural bar to the inclusion of claimsfor Baigent damages in judicial review proceedings. On the discovery issue, all thatwas relevant for the Baigent damages claim was the information the GCSB hadprovided to the police. As that had already been discovered, there was nothing furtherfor the GCSB to discover.[12] On appeal, this Court acknowledged that generally it would not be appropriateto include claims for Baigent damages in judicial review proceedings.6 And thepractice was not to be encouraged. But that proposition was not one of universalapplicability.[13] For various reasons, the circumstances applying as regards the2012 proceedings did make that appropriate.7 In particular, the Judge had already5 Dotcom v Attorney-General [2012] NZHC 3268.6 Court of Appeal decision, above n 1, at [50].7 At [50].heard extensive evidence, including cross-examination, relating to factual events.Pragmatically, it made sense for the Baigent damages claim against the GCSB toproceed in the 2012 proceedings alongside Mr Dotcom's judicial review application.The Crown's appeal was dismissed to that extent. But its appeal against the discoveryorder was allowed (this Court's discovery decision). As this Court put it, given thelimited nature of the inquiry required in a claim for Baigent damages, and the GCSB'sadmission of illegality, discovery of the raw intercept material was not required for adetermination of the quantum of public law damages payable in the 2012 proceedingsby the GCSB.8[14] Mr Dotcom did not challenge that decision. Rather he then commenced theseproceedings (which we now refer to as the 2013 proceedings). In these proceedings,and in response we infer to reservations expressed by this Court in its Baigentdiscovery decision, Mr Dotcom made a Baigent damages claim against the GCSB andthe police based on, but severed from the judicial review proceedings. The 2013proceedings focus on the illegality of the surveillance and searches involved.[15] Importantly on this appeal, in addition Mr Dotcom alleges breach of privacyand negligence, and seeks common law damages (including aggravated and exemplarydamages) for both those civil wrongs.[16] The question of discovery by GCSB in the 2013 proceedings then came beforeGilbert J in the High Court. The Judge ruled that this Court's discovery decisioncreated an issue estoppel on the point.9 Referring to the 2012 proceedings as theyinvolve the GSCB, the Judge reasoned:[25] I do not accept Mr Mansfield's submission that the currentproceedings "differ greatly" from the earlier proceeding. That there are nowthree causes of action against GCSB (unlawful and unreasonable surveillance,negligence and invasion of privacy) does not alter the scope of discovery.These causes of action are all founded on the same admitted conduct, namelythe unlawful interception of Mr Dotcom's communications. The only liveissue remains the question of relief, particularly the quantum of damages tobe awarded. If the raw communications were not relevant and discoverablein relation to the compensatory damages that should be awarded, I am unableto see how they could become relevant merely because aggravated andexemplary damages are now also claimed 8 At [56].9 High Court decision, above n 3.[17] Notwithstanding that determination, the Judge went on to consider the verydetailed questions of relevance as argued by the Crown and the Crown's s 70application. Those issues were, in fact, the basis of by far the larger part of hisjudgment.Appeal[18] As originally filed, Mr Dotcom's appeal against Gilbert J's decision would firsthave had us reconsidering this Court's discovery decision. We could not see anyreason to do so. Responsibly, Mr Mansfield of his own initiative did not pursue thatargument before us. Rather he focussed his argument on Mr Dotcom's alternative,and much narrower, point: the inquiry into common law damages for breach of privacyand negligence required in the 2013 proceedings is a different and broader inquiry thanthe inquiry required into Baigent damages in the 2012 proceedings. This Court'sdiscovery decision only addressed the question of discovery in that narrower context.The ratio of that decision was limited to that context. Hence that decision did not giverise to an issue estoppel here.[19] For the Crown, Mr Boldt argued that the two inquiries were essentiallycoextensive. Accordingly, and as Gilbert J had decided, this Court's discoverydecision had indeed created an issue estoppel in the 2013 proceedings.Analysis[20] The core of the reasoning in this Court's discovery decision is best seen at twopoints in that judgment.[21] First, with reference to the Crown's submissions, the Court said:[56] Mr Boldt argued that there was no basis for discovery of theinformation described in paragraph (f) that related to the first and fourthrespondents. He said that discovery must be relevant to a live and pleadedissue. We agree. He argued that in this case there was no live and pleadedissue to which the discovery could be said to relate. That is because the GCSBaccepts that it acted unlawfully in undertaking surveillance of the first andfourth respondents, given that they were New Zealand residents, and hadalready indicated to the Court that it would consent to a declaration to thateffect being made. That meant that the only live issue between the GCSB andthe respondents is the level of Baigent compensation. In light of the limitednature of the inquiry required to determine the appropriate level ofcompensation there was no reason why full disclosure of all of the materialobtained by the unlawful interception undertaken by the GCSB would benecessary.[22] Secondly, and having noted that none of the reasons said by Mr Dotcom tojustify discovery challenged Mr Boldt's argument as to the absence of a materialdispute between the parties, it concluded:[60] In the absence of the identification of any matter in dispute before theCourt to which the disclosure could relate, we do not see any proper basis forthe making of [the] disclosure order [sought]. We do not accept that it issufficient for counsel to say that he or she needs to see the information beforehe or she can identify whether it is relevant or not. In the present case, wherethere is no dispute about the illegality of the surveillance undertaken by theGCSB, and in light of the relatively limited scope of the inquiry into the levelof compensation, we can see no proper basis for an order We accordinglyallow the appeal.[23] Notwithstanding this apparent acceptance of the Crown's submissions as to thelimited nature of the inquiry required to assess Baigent damages, before us Mr Boldtargued that the Supreme Court's decision in Taunoa v Attorney-General showed theinquiry into Baigent damages was in fact a broad one, which was not materiallydifferent from that into common law damages of the sort Mr Dotcom was nowclaiming from the GCSB.10 In doing so, Mr Boldt placed particular reliance on thefollowing comments made by Tipping J in the course of his judgment:11The other principal ingredient of an effective remedy is compensation.Everything relevant to compensating for what the plaintiff has suffered as aresult of the breach is potentially available here. Economic loss clearlyqualifies, as does compensation for non-economic or intangible damage ordetriment. Nothing should be allowed under any head which is covered bythe accident compensation legislation, but otherwise compensation for all lossor damage, direct or indirect, is potentially capable of playing a part in theremedial package.[24] Mr Boldt also drew our attention to Tipping J's view that there should beconsistency between the scope of the Court's powers to award damages for NewZealand Bill of Rights Act 1990 (NZBORA) breaches and those of the Human Rights10 Taunoa v Attorney-General [2007] NZSC 70, [2008] 1 NZLR 429 at [322] (footnote omitted).11 At [322].Tribunal under s 92M of the Human Rights Act 1993.12 Given the broad scope of thes 92M power, that view was significant here.[25] The breadth of the approach Tipping J favoured was, Mr Boldt submitted,reinforced by this observation:13It is often said that the purpose of compensation is to restore the plaintiff, asfar as the court can do so, to the position that he or she would have been inhad the breach not occurred.[26] Mr Boldt also drew our attention to remarks made by the Chief Justice andMcGrath J in the course of their judgments, favouring a broad approach to theinquiry.14[27] We acknowledge those aspects of the decisions in Taunoa. But, as ever, contextis important. In Taunoa, the Crown challenged the decision to award Baigent damagesmade by the High Court and, if unsuccessful as to that, the quantum of those awards.The Crown's general argument was that Baigent damages served an entirely differentpurpose from common law damages. The latter were primarily compensatory,whereas the former were vindicatory and declaratory. The emphasis with Baigentdamages — the Crown argued — was on identifying and fixing the issue, rather thancompensating those who had suffered a breach of the NZBORA. As to quantum, theCrown argued that, in Dunlea v Attorney-General15 and Wilding v Attorney–General,16the courts had wrongly approached the question on the basis that public lawcompensation and damages for tort should be assessed according to the same scales.That approach, followed by the High Court in the Taunoa claims, failed to take accountof the nature of a public law claim for breach of the NZBORA and the purpose ofrelief. Thus, as regards both purpose and calculations, the approaches to be taken toBaigent and common law damages were dichotomous.12 Section 92M of the Human Rights Act 1993 empowers the Human Rights Tribunal to awarddamages in respect of the loss (pecuniary or otherwise), humiliation, or injury suffered by thecomplainant.13 At [323].14 At [109] per Elias CJ and [370] per McGrath J.15 Dunlea v Attorney-General [2000] 3 NZLR 136 (CA).16 Wilding v Attorney–General [2003] 3 NZLR 787 (CA).[28] The Supreme Court unanimously held that awards of Baigent damages werecalled for. But the Crown's argument that the amounts awarded were in some casesexcessive succeeded: only the Chief Justice would have dismissed that aspect of theCrown's appeal.[29] On the present appeal, Mr Boldt argued that, in reaching those conclusions, theSupreme Court had rejected the Crown's "dichotomy" argument and held theapproaches to Baigent and common law damages were alike. Indeed, Mr Boldtargued, that they were identical. Thus, the inquiry involved in determining quantumwas no different and outcomes would be broadly equivalent (if not identical).[30] We are satisfied that is not an accurate reading of Taunoa. Delivering theleading judgment for the majority, Blanchard J summarised the correct approach to thequestion of appropriate remedy in claims for breaches of NZBORA rights:(a) The Court must provide an effective remedy: taken overall, the remedyor remedies must be sufficient to deter and also to vindicate.17(b) The purpose of a monetary award was not to punish the State or itsofficials: monetary awards would be made to ensure sufficientvindication of, and solace to, the victim.18(c) If those outcomes were achieved by damages awarded under otheravailable private causes of action, Baigent damages may be "entirelyunnecessary or inappropriate".19(d) Where Baigent damages were considered necessary, the Court shouldnot proceed on the basis of any equivalence with the quantum of awardsavailable in tort.20 Nor did Baigent damages perform the sameeconomic or legal function as common law damages or equitablecompensation.21 Fixing of levels of Baigent damages was far from an17 Taunoa v Attorney-General, above n 10, at [253]–[254].18 At [255].19 At [256].20 At [258].21 At [259].exact science. The figure to be chosen had to be one which responsiblemembers of New Zealand society would feel comfortable with.Breaches involving systemic failures would call for a greater responsethan individual misconduct by an official.22(e) Fixing the level of monetary sanction for an individual plaintiff was themost difficult issue.23 Amounts should not be so small as to seemderisory. That might trivialise the breach. On the other hand,internationally awards of damages in this area do not generallyapproach the level of damages in tort and can best be described asmoderate in amount. That was, Blanchard J considered, the rightapproach in New Zealand — although what was "moderate" had to bejudged according to New Zealand conditions.24[31] In our view, the remarks of the Chief Justice and Tipping J that Mr Boldtreferred to do not alter that analysis. Tipping J broadly adopted Blanchard J'sapproach, as did the other members of the majority. The Chief Justice differedprincipally on the question of quantum. The comments of Tipping J quoted earlierwere general observations about the function of damages, and not directed to thedistinction between Baigent damages, and common law damages or equitablecompensation. The statements of Blanchard J were directed to that issue. There is noinconsistency.[32] We accept, as Mr Boldt fairly submitted, that in Taunoa all the Judges rejectedthe minimalist approach the Crown argued as to both the availability and quantum ofBaigent damages. But, as we think is clear, in doing so none of Judges adopted theapproach advanced by Mr Boldt in this appeal. That is, when the Supreme Courtrejected the Crown's "dichotomous" argument it did not go to the other extreme andfind that when considering claims for Baigent and common law damages theapproaches to availability and quantum were alike.22 At [263].23 At [264].24 At [265].[33] Rather, the Court affirmed the by then well-understood position that differentprinciples determine the availability and quantum of Baigent damages as distinguishedfrom common law damages generally even where the claims for both arise out of thesame set of facts and circumstances.[34] This Court's reference in its Baigent discovery decision to an inquiry of"limited scope" reflects that analysis. What Taunoa makes very clear is that thereremain important differences between Baigent damages and common law damages.Nor, in that analysis, can it be said that the inquiry into, nor the outcome as to, quantuminvolve the same considerations.[35] We accordingly agree with the submission made by Mr Mansfield that the ratioof this Court's discovery decision is limited to a discovery application made for thepurposes of pursuing a claim for Baigent damages, where liability is admitted.Therefore, that decision does not create an issue estoppel for Mr Dotcom's applicationfor discovery by the GCSB in the 2013 proceedings. The issue that was dealt withthere was different from that which now arises.[36] In reaching that conclusion we emphasise that estoppel is a substantivedoctrine, and not one of form. The inquiry turns on the substance of the issue indispute, and not the form of the proceeding or the manner in which those issues arepresented. Having said that, the purpose of estoppel is specific: it is to preclude aparty from repeated argument of the same substantive issue.25 In our view, and asMr Mansfield argued, the substantive issues as to quantum raised by the 2013proceedings are — as our analysis demonstrates — different from those raised by the2012 proceedings. It is for that substantive reason that an issue estoppel does not arise.We also note that the rationale behind the principle of issue estoppel is less powerfulin an interlocutory context, as here.26[37] As a result, Mr Dotcom may now pursue the second part of this appeal. Theparties are to liaise with the Registry to organise this.25 Joseph Lynch Land Co Ltd v Lynch [1995] 1 NZLR 37 (CA) at 42.26 Greymouth Petroleum Holdings Ltd v Empresa Nacional Del Petróleo [2017] NZCA 490, [2017]NZAR 1617 at [51].Result[38] Mr Dotcom's appeal against the High Court's issue estoppel ruling is allowed.[39] The parties are to liaise with the Registry to organise the hearing of the balanceof the appeal.[40] Costs are reserved and are to be dealt with at the end of that hearing.Solicitors:Anderson Creagh Lai Ltd, Auckland for AppellantCrown Law Office, Wellington for Respondent