JEFFRIES V THE ATTORNEY-GENERAL HC WN CIV-2006-485-2161

JEFFRIES V THE ATTORNEY-GENERAL HC WN CIV-2006-485-2161 19 March 2008IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY CIV-2006-485-2161UNDER the Judicature Amendment Act 1972 and section 27 New Zealand Bill of Rights Act IN THE MATTER OF decisions under the Former Overseas Investment Act 1973, the Overseas Investment Act 2005 and the Official Information Act 1982 BETWEEN WILLIAM PATRICK JEFFRIES Plaintiff AND THE ATTORNEY-GENERAL, SUED ON BEHALF OF THE MINISTER OF FINANCE, THE MINISTER FOR LAND INFORMATION NEW ZEALAND AND THE REGULATOR BEING THE CHIEF EXECUTIVE OF LAND INFORMATION NEW ZEALAND Defendant Hearing: 12 March 2008 Counsel: D H O'Leary for plaintiff H S Hancock & D McDonald for defendant Judgment: 19 March 2008RESERVED JUDGMENT OF DOBSON J[1] This is one of a pair of proceedings being pursued by Mr Jeffries. The present case is against the Attorney-General in respect of those responsible for administering the law governing investment in New Zealand by foreigners. The other proceeding is against the Privacy Commissioner and arises out of related factual matters. Both proceedings are set down for consecutive hearing before Justice Ronald Young in the week beginning 5 May 2008.[2] There is presently outstanding an application, part-heard by Justice Ronald Young, for leave to amend the Statement of Claim in the Privacy Commissioner proceeding. [3] Both proceedings were called on 12 March and counsel for Mr Jeffries had filed Memoranda on 29 February and 5 March, asking that the issue of amended pleadings be determined by me. Having reflected on the concerns expressed in those Memoranda, I indicated that I would not entertain any argument on the interlocutory application which was part-heard by the Judge who will hear the substantive proceedings. Ms Baltakmens, who appeared for the Privacy Commissioner, was given leave to withdraw. [4] The interlocutory matter scheduled for argument was an application in the present proceedings seeking orders that parts of an affidavit filed on behalf of the defendant by Johanna Annelies McClure be not read on argument of the judicial review. Ms McClure is a barrister and solicitor who held the position of "Manager Applications" within the Overseas Investment Commission from 2 February 2004 to 31 July 2005. On 1 August 2005, she was appointed as Chief Executive of the Overseas Investment Commission. On 25 August 2005 the Overseas Investment Act 1973 was repealed, to be replaced by the Overseas Investment Act 2005. That Act provided that it was to be administered in a department of government at the discretion of the Minister of Finance who initially appointed Land Information New Zealand ("LINZ") to discharge that responsibility. On this change occurring, Ms McClure was appointed as Manager of the Overseas Investment Office ("OIO") which was created as a team within the Regulatory Group at LINZ. She continues to hold that position. [5] The application for judicial review criticises a number of steps, all characterised as decisions that were taken between 2000 and 2005 by various persons relating to Overseas Investment consents for an American family ("the Powells") purchasing land in New Zealand, as well as a 2006 decision to release to the Powells a letter characterised as a confidential legal opinion, written by Mr Jeffries to the Attorney-General and Minister of Finance.[6] In support of his challenge, Mr Jeffries has completed a 16 page affidavit, annexing a somewhat larger volume of documents than the 296 pages annexed by Ms McClure. Mr Jeffries' affidavit reviews the course of dealings between the Powells and those acting for them, and the Overseas Investment Commission/Overseas Investment Office. (References to each organisation hereafter are to "OIC".). Mr Jeffries' perspective, through part of the period, was that of a professional adviser retained by New Zealand businesses that had carried out work for the Powells, but had disputes with them over payment. [7] The McClure affidavit runs to 41 paragraphs over 19 pages. It is intended to constitute all the evidence the Attorney-General will rely on to respond to the wide ranging criticisms made in the proceedings. The introductory paragraphs include the formal averment:I am authorised to make this affidavit on behalf of the Defendant. I am familiar with these proceedings and with the OIC's and OIO's decision- making process regarding Marc and Ivy Powell's21 April 1999 application for statutory consent.[8] As has become relatively common in responding to judicial review criticisms of a course of conduct by a government agency over a period, one deponent has assumed responsibility to answer criticisms and provide explanation, without necessarily having contemporaneous, first-hand knowledge of how matters were handled throughout the whole period in issue. Without it necessarily making the practice correct, I have approached the challenges to the admissibility of the McClure affidavit, having a familiarity with this practice and some appreciation of how it plays out when judicial review challenges are argued. [9] Where the absence of first-hand knowledge is material, and especially where a reconstruction is not corroborated by documents, then this "institutional" form of response is weakened accordingly. However, the admissibility of evidence on both sides of judicial review is often approached on a relatively liberal basis. [10] This is not to suggest that any different rules do, or should, apply. However, there is scope for a degree of pragmatism. Where personal imputations are raised, the Court will not be impressed with de-personalised evidence that avoids a first-hand answer where that can reasonably be expected. There has been an evolving approach to the expectation of senior decision-makers deposing to their personal input to a challenged decision. However, sometimes the process leading to a challenged decision is more institutional than personal, and evidence may legitimately reflect that. [11] In this application, specified passages in 32 paragraphs of the McClure affidavit are challenged as inadmissible on the grounds that they are hearsay, submission and/or opinion (including opinion as to an ultimate issue). [12] The objections invite strict application of provisions of the Evidence Act 2006 ("the Act") which sets the parameters on admissibility of evidence. For instance, Ms McClure expresses a number of statements in terms of her belief. Two such challenged passages appear in the underlined parts of paragraphs 31 to 34:31. Condition 5(a) is a standard condition that had been used, in various forms, approximately 2000 times before by the OIC. The basis on which the OIC imposed the condition, and the basis on which I believe Ministers imposed the condition, was that it created four possible obligations. An applicant would need to determine, by reference to regulations 5 and 8 of the Overseas Investment Regulations 1995, why consent was needed in order to determine which of the four obligations applied. 32. In this case, I believe that only the third of the four obligations applied to the Powells, namely, that they must acquire and transfer the property by 21 May 2000. 33. I explained this to the plaintiff in a letter dated 6 December 2005, which is annexed as Exhibit "A3" to the plaintiff's affidavit. 34. The Powells complied with condition 5(a) by purchasing the land on 6 July 1999. The Powells complied with condition 5(b) by notifying the OIC of the sale, purchase price and purchase structure on 7 July 1999. A copy of Tony Southall's facsimile of 7 July 1999 isannexed and marked "D" to this affidavit.[13] This is attacked as constituting opinion evidence, rendered inadmissible by s 23 of the Act and not able to be saved by ss 24 or 25 of the Act. The passages in paragraphs 32 and 33 are further challenged on the ground that they constitute opinions going to the ultimate issue and, in respect of all of them, they are said to be objectionable as submissions that ought to be excluded from evidence.[14] The point is taken that Ms McClure has no first-hand knowledge of what OIC was doing before her arrival in February 2004, and that there are others who were responsible for challenged conduct before her arrival who could reasonably be expected to depose to what was done. There are 19 passages challenged on the ground of hearsay, of which paragraph 31 quoted above is an example. [15] The two executives identified with the alleged "decisions" were Messrs Hill and Dawe. Although there is no evidence about their relative availability, I was advised by Mr Hancock from the bar that Mr Dawe is currently working in Washington, DC and that, whilst Mr Hill is in Wellington, he is not in good health. [16] Three passages are objected to as irrelevant to the pleaded criticisms. Two of those (paragraphs 41 and 72) depose to consideration by OIC of allegations that the Powells had made false and misleading representations in their application to OIC. Mr O'Leary submitted that an allegation of false and misleading conduct by the Powells did not form part of the pleaded criticisms against OIC and comments on this topic were therefore irrelevant and should be struck out. [17] It is not uncommon for plaintiffs in judicial review to range widely in their own analyses of conduct by the government agencies being sued, and in the process to make criticisms on points not directly related to their pleadings. Although in a majority of cases, the Court is likely to wish that the agency or individuals impugned should not have "risen to the bait", so as to leave the irrelevant unanswered, a concern not to leave such criticisms as to competence or ethical standards unanswered is itself understandable. Certainly, prior to the substantive hearing, it is often prudent to respond so as to preclude an argument that criticisms were left unanswered. [18] This is such a case. A relatively prominent part of Mr Jeffries' narrative includes reference to a detailed analysis he undertook in June 2005. That includes comments that government agencies were "plainly deceived by false representations in their [the Powells'] applications to those agencies in 1999,". Mr Jeffries' June 2005 analysis also takes strong issue with the findings of a review by a Wellington Queen's Counsel to the effect that there was no evidence of falserepresentation in the Powells' application (see exhibit Z to Mr Jeffries' 10 December 2007 affidavit, paragraphs 54, 108-113). [19] Mr Jeffries has certainly undertaken a very extensive narrative, the detail of which he presumably justifies as providing context for the factual matters that go more directly to his pleaded criticisms. It would risk double standards to deny the defendant a comparable opportunity to respond. [20] The nature of the plaintiff's concerns can be illustrated by considering his objection to two further passages in the McClure affidavit:47. The OIC did not advise the Ministers of the Powells failure to invest $150,000.00 in 'brand development' because this was not a condition of their consent to purchase the land. As such, the Powells' not investing the $150,000.00 in 'brand development' did not amount to a breach of the conditions of the Ministers' consent. 67. The plaintiff has characterised paragraph 7(a) as a condition of consent. This is not so. Paragraph 7(a) is a 'reporting requirement' as disclosed by the heading under which it appears in the reporting letter. Unlike consent conditions, which are imposed by the decision-maker pursuant to regulation 14(1)(b) of the Overseas Investment Regulations 1995, reporting requirement 7(a) was imposed by the OIC under regulation 20 of the 1995 Regulations.[21] All of both paragraphs are objected to as containing submission, and in the first also on the basis that it is opinion going to the ultimate issue. The diminishing weight given to this latter ground of objection in recent years (see eg Attorney- General v Equiticorp Industries Group Ltd (in statutory management) [1995] 2 NZLR 135, 139) is now confirmed by s 25(2)(a) of the Act which provides than an opinion by an expert is not inadmissible simply because it is about an ultimate issue to be determined in the proceedings. [22] Mr Jeffries would prefer the argument to occur without the Court having such explanations before it. I was far from persuaded that his case would be advanced by the exclusion of such paragraphs. They represent a commitment on behalf of the defendant, to an explanation for the lawfulness of the conduct undertaken. If that explanation is at odds with contemporaneous documents, then such inconsistency is fertile ground for submitting that the defendant's explanation should be rejected.Any such rejection of evidence clearly advantages the plaintiff's case overall, and in a way that would not arise if the unsustainable evidence had not been adduced at all. However, more likely to be material is the reasonableness or correctness of the legal proposition on which the explanation depends. The argument has a focus which it would lack if the paragraphs are excluded. [23] Of course the Court will not accept unquestioningly the explanation of a senior civil servant who is defending the lawfulness of administrative actions. Successful judicial review challenges routinely involve a rejection of the explanation that has been offered. It would be unhelpful to the Court if strict rules of evidence required the exclusion of such evidence, prior to the hearing. Despite a debate with Mr O'Leary about the effect of such evidence, I was not persuaded that his client's case is prejudiced in any material way by the retention of such passages. Indeed, that is my view on all the challenged passages. The points to be made against them may well avail Mr Jeffries in denying any weight should be given to them, but they do not constitute grounds for pre-emptive exclusion. [24] The authorities on such applications create a relatively high threshold for any exclusion: the headnote from Donovan v Graham (1991) 4 PRNZ 311 for instance makes the following relevant points:• The Court has to act in a manner which will best promote the interests of justice.• The Judge has to bear in mind the risks relating to the premature exclusion of evidence as well as the desirability of keeping the case within bounds and open to efficient disposal.• Although affidavits should not be allowed to mushroom, the Court should not become buried in extensive interlocutory battles over evidential points of trivial importance. A pragmatic approach will often be the most appropriate.• In the context of a summary of a District Court transcript, it was better to adopt a pragmatic and liberal, rather than a technical, approach. There wasno great risk of harm and the trial Judge might well find the summaries of assistance.• Evidential dogma should not impede sensible resolution in a Judge alone trial. [25] Here, the factual matters and the course of dealings by the government agencies with the Powells cover substantial ground, over a period of years. Mr Jeffries' narrative is extensive. The response should be expected to meet it. The judicial review is set down for hearing in some six weeks before an experienced Judge who has been exposed to the issues via interlocutory arguments. I see no justification for pre-emptively confining the evidence, and accordingly the application is dismissed. [26] I was asked to make whatever alterations to the timetable that might be appropriate, in light of my decision. Although it is less than ideal that the extent of unavailability of Messrs Dawe and Hill is not verified by affidavit, and the transition of Ms McClure's responsibilities to LINZ from August 2005 is somewhat opaque in the narrative of her affidavit, those points do not warrant any orders in relation to the defendant's evidence. [27] The only aspect that needs to be addressed is the date for any affidavit in reply from Mr Jeffries. Seven days from delivery of my judgment was proposed. Given the pending Easter break, I direct that any such affidavit is to be filed and served by Thursday, 3 April 2008. _________________Dobson JSolicitors: Duncan Cotterill, Wellington for plaintiff Crown Law Office, Wellington for defendant