NEW ZEALAND FIRST PARTY v THE DIRECTOR OF THE SERIOUS FRAUD OFFICE [2020] NZHC 2502

NEW ZEALAND FIRST PARTY v THE DIRECTOR OF THE SERIOUS FRAUD OFFICE [2020] NZHC 2502[24 September 2020]ORDER PROHIBITING PUBLICATION OF THE JUDGMENT, THEAPPLICATION AND ALL MATTERS RELATING TO IT UNTIL 5 PM FRIDAY25 SEPTEMBER 2020 UNLESS THE COURT OTHERWISE ORDERS.IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2020-404-1721[2020] NZHC 2502BETWEEN NEW ZEALAND FIRST PARTYApplicantAND THE DIRECTOR OF THE SERIOUSFRAUD OFFICERespondentHearing: 23 September 2020Appearances: A F Pilditch for the applicantJ C L Dixon QC and R J Williams for the respondentJudgment: 24 September 2020JUDGMENT OF PALMER JThis judgment was delivered by me on Thursday, 24 September 2020 at 11.00am.Pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarSolicitors:A F Pilditch, Barrister, AucklandJ C L Dixon QC, AucklandCook Morris Quinn, AucklandSerious Fraud Office, AucklandSummary[1] The Director of the Serious Fraud Office (SFO) intends to issue a publicstatement announcing that the SFO has filed a criminal charge of "obtaining bydeception" against two defendants in the New Zealand First Foundation (theFoundation) electoral funding case. The two defendants are not Ministers, sitting MPs,candidates at the election or members of their staff. The New Zealand First Party (NZFirst) applies for orders prohibiting the Director from issuing the statement until aftera government has been formed following the General Election on 17 October 2020.NZ First also applies for this application and all matters relating to it to be suppresseduntil the same time.[2] I do not consider NZ First's case for judicial review is particularly strong, onthe basis of the evidence and information before me. There is no evidence before methat the Director's decision to issue the public statement was influenced by politicalconsiderations or that the timeframe she announced for the investigation's completionwas set because of the election. I accept there is a risk of confusion and a negativeimpact on its electoral prospects. However, I consider there is a significant publicinterest in the New Zealand voting public being informed during an election campaignabout criminal charges of serious fraud against people or organisations related topolitical parties. Ultimately, I consider the public interest in transparency outweighsthe inconvenience of the announcement to NZ First. It will be up to the political systemincluding the media, rather than the judicial system, to ensure the transparency of theannouncement is not obscured by confusion and misinformation.[3] In order to allow NZ First to consider this judgment and its position, I make aninterim order suppressing the judgment, the application and all matters relating to it,which lapses at 5 pm Friday 25 September 2020 unless the Court otherwise orders.What happened?SFO statements[4] NZ First is a registered political party. The Foundation is a trust withassociations with NZ First, according to NZ First's counsel, Mr Pilditch. On 18February 2020, the SFO issued a press release announcing it had commenced aninvestigation in relation to the Foundation. The leader of NZ First, the Rt Hon WinstonPeters, said publicly the same day that NZ First will "cooperate to the full".1[5] Subsequently, the SFO used its powers under the Serious Fraud Office Act1990 to obtain information from a number of individuals. The legality of someexercises of those powers are disputed by Cook Morris Quinn, the solicitors acting forsome of those individuals and for NZ First.[6] On 21 April 2020, the Director of the SFO said to media:2The SFO's pre-lockdown timetable for the investigation in relation to the NewZealand First Foundation would see us completing the investigation before theSeptember election date.At this stage we are progressing the investigation under the current lockdownrestrictions and are still on track to complete it within that timeframe.However, our actual completion date will be dependent upon our ability toconduct certain interviews as well as other tasks which can only be completedat lower alert levels and the cooperation of those who hold informationrelevant to our investigation.[7] The election was, at that time, expected to be held on 19 September 2020.Correspondence between Cook Morris Quinn and the SFO[8] In letters to the SFO on 1, 14 and 17 July 2020, NZ First's lawyers, CookMorris Quinn objected to the SFO indexing the timing of the investigation into theFoundation to the election. The second letter questioned the lack of a public statementconcerning the timing of the investigation into the Labour Party which had beenannounced by then. I quote passages from the third letter that reflect the submissionsby NZ First's counsel at the hearing before me:38 As we expressed in our 1 July 2020 letter it is difficult to fathom whythere was any need for the Director to make public statements about the1 Jason Walls "Serious Fraud Office investigation into NZ First Foundation underway" The NewZealand Herald (online ed, 18 February 2020).2 This is the text quoted by the Director in her letter to Cook Morris Quinn of 27 July 2020. SeeThomas Coughlan "SFO will complete NZ First Foundation investigation before election" Stuff(online ed, 21 April 2020) and Guyon Espiner "SFO decision over NZ First Foundation will comebefore election" RNZ (online ed, 21 April 2020).3 Cook Morris Quinn to Serious Fraud Office, 17 July 2020, at [8].Investigation, let alone communicate that a charging decision would bemade prior to the general election. The timing of a general election is awholly irrelevant consideration for the Director, a Chief Executive of aState Sector agency, to take into account in the conduct of aninvestigation and a charging decision. The proper course is for theDirector to disregard as extraneous and irrelevant any political eventincluding the general election, and to make a decision, based on theInvestigation, when the Investigation is completed in a timely way andwhen all the facts are known and all matters are considered. Whether ornot that point is reached before or after the general election is immaterial,and the Director never should have committed to making a decisionwithin any specified timeframe referenced to the general election forthese reasons.9 Based on the public statements made by the Director we conclude that:she is expediting the Investigation and a prosecution decision so it can bemade prior to the general election, but there is no intention by her tocomplete the Labour Party investigation prior to the general election.Contrary to the statement that she is acting consistently, this clearlydemonstrates inconsistency of treatment by the Director between twopolitical parties being investigated in relation to the same issue.13 If the Director decides to charge any person following the Investigation,at law that simply amounts to an unproven and untested allegation againsta person or people who have the presumption of innocence. The decisionof the Director to charge a person or people is not, and cannot, resolvethe issues underpinning the prosecution because only the criminal courtcan do that. Further, based on the matters raised by the ElectoralCommission with NZ First, any prosecution is highly likely to be foundedon disputed interpretations of the law.14 On the other hand this is not the way that a prosecution decision wouldbe portrayed by the media or other political parties in the lead up to thegeneral election, as the Director will well know. An adverse prosecutiondecision will, in the minds of the electorate, adversely impact on NZFirst's electoral campaign irrespective of the legal and factual merits ofthat allegation, which would not be tested at trial until 2021 or 2022, andcould not be addressed publicly until after a trial. It is a smear, and onethat NZ First could not respond to due to the proceedings being subjudice.[9] On 27 July 2020, the Director of the SFO wrote to NZ First's solicitors, saying:2 We categorically deny that our treatment of the investigation into the NewZealand First Foundation (NZFF) has been different to our treatment ofthe investigation into Labour Party donations or that it has beenmotivated by bias. The assumptions upon which you proceed in thisregard are baseless. We note that the NZFF investigation was announcedon 18 February 2020 and it was not until 21 April 2020 that a statementwas made regarding the timeframe for the completion of theinvestigation.3 We will be making decisions about the New Zealand First Foundationmatter in accordance with our usual processes.4 The media release relating to the Labour investigation is on the SFOwebsite. It was published there on 13 July 2020.https://www.sfo.govt.nz/sfo-commences-investigation-in-relation-to-labour-party-donations[10] Cook Morris Quinn wrote further letters to the SFO on 4 and 10 August 2020.The 4 August 2020 letter, among other things, complained no explanation for theurgency of the investigation had been provided, advised they had been instructed totake judicial review proceedings, and reiterated points made in previous letters. On 6August 2020 the SFO apparently wrote to Cook Morris Quinn but I have not beengiven that letter. The 10 August 2020 letter from Cook Morris Quinn to the SFOrequired the Director to confirm whether or not she intended to make public a decisionon the investigation before the election, citing a report to that effect, and saying:Self-evidently, an adverse prosecution decision made about an investigationclosely related to a political party, made within less than four weeks of ageneral election, will influence the vote. It will do so without opportunity forthose charged, or the New Zealand First Party, to respond to any unprovenallegations reflected in an adverse charging decision. We see strong parallelsbetween this course of action and that of FBI Director James Comey's letterto Congress on 28 October 2016. There can be little doubt that the publicationof this event destroyed Hillary Clinton's electoral prospects(https://fivethirtyeight.com/features/the-comey-letter-probably-cost-clinton-the-election/), despite Ms Clinton subsequently being vindicated. Once theuntested, and ultimately fallacious allegation was published, the damage wasdone. Similar observations can be made about the ultimately unfoundedallegations against New Zealand First investigated by the SFO in 2008. Theseinstances demonstrate the point that 'politically loaded' disruptions havedisproportionate effects during campaign periods.[11] On 12 August 2020, the Director of the SFO wrote to NZ First's solicitorsadvising:As we have previously informed you in our letter of 27 July 2020, we will bemaking decisions about the New Zealand First Foundation matter inaccordance with our usual processes. At this stage we don't know when or ifan announcement will be made but we will contact you prior to any publicannouncement of the outcome of the investigation.[12] On Monday 17 August 2020, the Prime Minister announced the election wouldbe delayed and held on Saturday 17 October 2020. That is now just over three weeksaway. Advance voting will be possible from Saturday 3 October 2020, in just overone week.A proposed further statement[13] Around 10.25 am on Wednesday 23 September 2020, an SFO investigatoradvised NZ First's solicitors that the Director intended to make a press release "mid-afternoon" that day, regarding charges being laid in SFO's investigation into theFoundation. He advised no charges would be laid against any sitting Members ofParliament (MPs) or party personnel. At 11.09 am Cook Morris Quinn requested acopy of the intended press release.NZ First application[14] At 11.42 am on Wednesday 23 September 2020, Cook Morris Quinn advisedthe SFO that NZ First had instructed it to apply urgently to the High Court for interimrelief prohibiting the Director from making the intended press release. It invited awritten undertaking or other confirmation that the press release would not bedistributed until arrangements had been made with the court to deal with theapplication. The SFO did not reply.[15] NZ First foreshadows an application for judicial review to challenge theDirector's decision to complete the investigation before the election because it takesinto account the date of the election, which it says is irrelevant, and fails to take intoaccount the impact of the announcement on the election, which it says is relevant. NZFirst has not yet filed a statement of claim.[16] In the meantime, NZ First applies for interim orders, with a supporting affidavitattaching correspondence between the parties, as outlined above (but without anundertaking as to damages). The interim orders sought are:(a) to prohibit the Director from issuing a press release about theinvestigation into the Foundation until after a government has beenformed following the General Election on 17 October 2020; and(b) that this application and all matters relating to it are suppressed and tobe kept confidential until after a government has been formed followingthe General Election on 17 October.[17] The application came to me as Duty Judge at 1.37 pm on Wednesday 23September 2020. At 1.53 pm, I directed the application be served on the SFO on aPickwick basis. I heard argument by the parties from 3.45 pm until around 5.30 pmon Wednesday 23 September 2020.[18] Mr Dixon QC, for the SFO, advises that the Director proposes to make thefollowing public statement:SFO files charges in relation to NZ First FoundationThe SFO has filed a charge of "Obtaining by deception" against twodefendants in the New Zealand First Foundation electoral funding case.As the defendants have a right to apply for name suppression, we are unableto name them at this time. We note, however, that neither defendant is acandidate in the upcoming election.The SFO has no further comment.[19] Mr Dixon advised that the SFO would be prepared to add that neither defendantis a Minister, a sitting MP, a candidate or a member of the staff of a Minister or MP.Submissions[20] Mr Pilditch, for NZ First, submits:(a) Publicity in the sensitive time close to an election can influence voters'decisions and needs to be considered carefully, as noted in Dunne vCanwest.4 Publication of the outcome of the SFO's investigationand/or this application is likely to impact on the outcome of the electionbecause the election campaign is underway and early voting and theelection itself will be held soon. An article on the Politik websitereports concerns within NZ First that the SFO investigation could derailthe party's election campaign. Media articles handed to me by Mr4 Dunne v CanWest TVWorks Ltd [2005] NZAR 577 at [34].Dixon are replete with connections between NZ First and individualmembers who may be under investigation. The announcement will notname the individuals who may be facing charges so the public mayincorrectly believe charges have been laid against sitting MPs or theirstaff and the general public is unlikely to distinguish between NZ Firstand the Foundation. The announcement will clearly be damaging andhave an impact on the electorate and the presumption of innocence isonly honoured in the breach by the media.(b) The investigation has been a rush. The only inference NZ First canmake is that the Director made a commitment to the media about thetiming of the investigation indexed to the election. That is an irrelevantconsideration and amounts to arbitrariness in the provision ofinformation. The only relevant timing issue is the legal limitationperiod. Mr Pilditch would prefer to rely on affidavit evidence but needsto advance the application today. It is not satisfactory for a publicofficer to leave it to the morning of the day of issue of a press releaseto advise NZ First of the timing.(c) Section 20 of the Serious Fraud Office Act 1990 prevents judicialreview of decisions by the Director to investigate or take proceedingsbut not her decisions to make media statements, which are powersexercised in performance of her statutory functions. There is nostatutory requirement to make public statements about the outcome ofinvestigations and many regulatory authorities do not, though MrPilditch accepts it is the usual practice of the Director of the SFO. Thereis no pressing urgency on the Director to make the statement now.(d) There is no prejudice to the Director if publication of the chargingdecision is delayed. There is a distinction between what is in the publicinterest and what the public finds interesting. There may be publicinterest in knowing what is happening with enforcement agencies'investigations and in knowing what politicians are doing during anelection campaign. But at their highest here, the charges are unprovenallegations against defendants who are presumed innocent, the meritsof which will not be decided for many months. Against that,publication of the charging decision will be front page news, theconstant focus of questions to the leader of NZ First and he will not bein a position to respond because the charges will be sub judice and hewill be bound by SFO secrecy provisions.(e) The prohibition on publication should ideally be until a newgovernment is formed. Alternatively, it could be until the firstappearance in Court of the defendants who are charged, on 29 October2020. But, at the least, the prohibition should be until the election on17 October 2020.[21] Mr Dixon QC, for the SFO, opposed any interim orders being granted,submitting:(a) The decision to issue a statement is a consequential or implied powerto make a public statement about the filing of charges which is a matterof public record. That is part of the ordinary practice of the Director,especially when there is public interest in an investigation and it is inthe public arena, as this investigation is. In April, the Directorresponded to a media inquiry about whether the investigation would becompleted before the election by saying, on the pre-COVID-19timetable, the SFO expected it would be complete by the Septemberelection. As it happens, it was not complete before the first date set forthe election. Usually the SFO is criticised for being too slow in itsinvestigations but here, where it has been consistent with the intendedtimeframe, it is accused of moving too quickly.(b) The SFO may be damned if it does make an announcement and damnedif it does not. But it is inconsistent to argue that the SFO cannot takeinto account the pending election in the timing of the investigation butshould have taken it into account in announcements about the filing ofcharges. There is a public interest in open justice, in seeing theoutcomes of investigations by the SFO and what charges are laid,especially where that concerns donations to a political party. MrPilditch says all that should be kept from the public for the benefit ofNZ First in not being damaged by publicity. But that disregards thedamage to the public interest by a lack of publicity and voters not beingmore informed by knowing that charges have been filed but not againstcandidates for public office. The publicity may even be helpful to NZFirst in that respect.(c) NZ First could potentially apply to the District Court for suppressionof its identity as a connected person under s 202 of the CriminalProcedure Act 2011. But that would not enable suppression of thenature of the case against the defendants. That is a factor I should takeinto account in exercising my discretion.(d) Even if the SFO were determined to file charges prior to the electionand moved to complete the investigation more quickly than it ordinarilywould in order to do so, there is nothing wrong with that as long asthere is a proper basis for the charges. Mr Pilditch's arguments seek toinhibit information about a matter of public record being before thepublic. Given the application is for the point at which a newgovernment is formed, the natural corollary is that it would also keepthe information from other political parties which may or may not wantto form a government with NZ First if in a position to do so.(e) Those who have not been charged may wish to make their own publicstatements. If the interim orders were granted and the SFO receives amedia inquiry, as it will, it could not respond, which would inevitablycause the existence of the injunction to become known. Media reportsto date have clearly distinguished between NZ First and the Foundation,so that concern is irrelevant. There is no parallel with theComey/Clinton situation because Mr Comey announced he was re-opening an investigation, not that he was filing charges against peoplewith a connection to Mrs Clinton but not filing charges against MrsClinton.Should the SFO's public statement be prohibited?[22] Under s 15 of the Judicial Review Procedure Act 2016, the Court may makeinterim orders "if, in its opinion, it is necessary to do so to preserve the position of theapplicant". The Court has a wide discretion to consider all the circumstances of thecase in deciding whether to grant interim relief.5 Making interim orders involvesconsidering the seriousness of the question to be argued and the strength of theapplicant's case, the balance of convenience between the parties and the overall justiceof the case.[23] I accept it is possible for a Court to judicially review the Director's decision toissue a public statement about these charges. The SFO did not argue otherwise. Thedecision may not be explicitly provided for in statute, but it relates to the Director'sfulfilment of her statutory functions, is public in nature and has real worldconsequences. In Dunne v Canwest TVWorks Ltd, a decision about publicity whichcould influence voters' decisions in an election campaign was held to be judiciallyreviewable.6 Similarly, I have no difficulty with the seriousness of the issues to beargued. I do not regard the potential parallel application to the District Court asparticularly relevant.[24] Mr Pilditch referred to Morgan v Television New Zealand Ltd which was alsodecided in the context of the urgency of an election campaign.7 There, Venning J heldthat, where an application for interim relief will effectively determine the proceeding,the Court should take a more robust attitude to assessing the prospects of the applicantsucceeding in the substantive proceeding.8 The interim relief sought here does notformally determine the foreshadowed application for judicial review. But the interimrelief does appear to be a driving factor in the pursuit of substantive proceedings, so Itreat the merits of the case relatively robustly.5 Carlton & United Breweries Ltd v Minister of Customs [1986] 1 NZLR 423 (CA) at 430.6 Dunne v CanWest TVWorks Ltd, above n 4.7 Morgan v Television New Zealand [2017] NZHC 2178, [2017] NZAR 1485.8 At [37], citing McKay Electrical (Whangarei) Ltd v Hinton [1996] 1 ERNZ 501 (CA) at 507;Wilfred v Gan [2013] NZCA 457 at [21].[25] I do not consider NZ First's case is particularly strong, on the basis of theevidence and information before me. As I observe below, there may be a sustainableargument that the SFO, as part of the politically neutral public service, must not beinfluenced by political considerations in its decisions, especially regarding criminallaw enforcement. But there is no evidence before me that the Director's decision wasinfluenced by political considerations. And the Director's statement on 21 April 2020about the timetable for the investigation of the Foundation simply said that the SFO'spre-lockdown timetable "would see us completing the investigation before theSeptember election date" and they were then "on track to complete it within thattimeframe". The election was presumably mentioned in relation to the timeframe forthe investigation because that was the subject of the media question to which theDirector was responding. There is no evidence before me that the timeframe indicatedby the Director was set because of the election, let alone because of politicalconsiderations. As it happens, the investigation was not completed by the Septembertimeframe, but a week or so later.[26] I also have difficulty with the foreshadowed substantive ground of judicialreview that the Director's decision must take into account the impact of theannouncement on the election. The political neutrality of the public service is anestablished constitutional convention in New Zealand, a fundamental feature of thepublic service reforms of 1912, explicitly recognised in the purpose of the State SectorAct 1988 in s 1A and is the first of five public service principles explicitly recognisedby s 12 of the newly passed Public Service Act 2020. In the context of lawenforcement, political neutrality seems likely to mean that a department must approachinvestigations into issues that are relevant to politicians in the same way as itapproaches investigations into issues that are not. Both counsel accept the SFO has ausual practice of making public announcements about the outcomes of investigations.The SFO website suggests it is a very common practice. For the SFO not to adhere tothat practice because the subject of the investigation is political, as NZ First'sforeshadowed ground of judicial review might suggest, could well be at odds with theprinciple of the political neutrality of the public service.[27] I accept there is a risk of confusion from the announcement. NZ First iscurrently engaged in an election campaign. Early voting starts in just over a week.Election day is in just over three weeks' time. The media articles before me indicatethere is significant interest by the media and public commentators in the potential forcriminal charges brought by the SFO in relation to the Foundation to impact negativelyon NZ First's electoral prospects. There is a risk of that. Against that is the possibilitythat a public statement by the SFO that it is not charging any Ministers, sitting MPs,candidates or their staff may assist NZ First's electoral prospects. But there is littletime in which to get that message through and, no doubt, explaining is often losing inpolitics.[28] However, I consider there is a significant public interest in the New Zealandvoting public being informed during an election campaign about criminal charges ofserious fraud against people or organisations related to political parties. The sameapplies to charges related to any political party, as NZ First argues in itscorrespondence with the SFO; though I am not aware of the intended timeframes forany other politically-related investigations by the SFO. The value of transparencyweighs heavily against the Court interfering with the decision of the Director of theSFO to make the public announcement at issue here. The proposed statement is briefand factual. The Director is accountable for the decision to issue it, including via theforeshadowed substantive judicial review proceeding. But that does not requireinterim orders by the Court; particularly interim orders that would conceal a politicallyrelevant fact from the public during an election campaign, let alone from potentialcoalition partners during the formation of government.[29] This factor is reinforced by the right of everyone to freedom of expression,including the freedom to receive information of any kind in any form, under s 14 ofthe New Zealand Bill of Rights Act 1990. Under s 5, that is only subject to suchreasonable limits prescribed by law as can be demonstrably justified in a free anddemocratic society. Based on the considerations above, I do not consider the proposedinterim orders are a reasonable limit on the freedom of the New Zealand public toreceive information that can be demonstrably justified in a free and democratic society.[30] Ultimately, I consider the public interest in transparency outweighs theinconvenience of the announcement to NZ First. I do not consider the Court is justifiedin inhibiting the value of that transparency for the New Zealand public. It will be upto the political system including the media, rather than the judicial system, to ensurethe transparency of the announcement is not obscured by confusion andmisinformation.Result[31] I decline the application for interim orders. Costs of the application will liewhere they fall, given the urgency with which the application was dealt with by allparties and the seriousness of the interests at stake.[32] Mr Pilditch indicated, if the decision went against NZ First, he would needtime to consider the decision and get instructions, including about whether to continueto seek suppression of the application and, I infer, whether to appeal. For that purpose,he requested that the existence of the application be suppressed for a few days aftermy judgment. Otherwise, the right to appeal would be rendered nugatory. Mr Dixonagreed that suppression of the existence of the application should lapse within 48 hoursto allow Mr Pilditch to obtain instructions. But that period would fall over theweekend.[33] I accept suppression of the application and this judgment for a brief period iswarranted in order to allow NZ First to consider the judgment and its position. But theurgency and significance of the issues, the conclusion I have reached, and the interestsof NZ First and the public in allowing as much time as possible for clarification of thesituation before the election, suggest a slightly faster timetable than counsel proposed.I make an interim order suppressing this judgment, the application and all mattersrelating to it, which lapses at 5 pm Friday 25 September 2020 unless the Courtotherwise orders.Palmer J