Leave to appeal is granted and the appeal is allowed. The evidence obtained as a result of the execution of the search is inadmissible.
____________________________________________________________________

REASONS OF THE COURT

(Given by Ronald Young J)

Introduction

[1] On 11 September 2007, Judge Sharp in the District Court heard and determined a pre-trial challenge (pursuant to s 344A of the Crimes Act) to the admissibility of evidence obtained as a result of the execution of a search warrant at the appellant’s address. The Judge concluded that the search warrant was properly obtained and the evidence found as a result from his computer and CD-ROMs was admissible.
[2] The appellant now faces trial on 16 counts of importing objectionable material contrary to s 209(1)(c) of the Customs and Excise Act 1996.
[3] This appeal is based on the claim that the Judge wrongly rejected the appellant’s claims that:

(a) the information in the search warrant application was not reliable;

(b) the applicant omitted to include relevant information in the application; and

(c) there was an inexcusable and unexplained delay between Customs obtaining the relevant information and the application for the warrant.

[4] These failures, separately or together, the appellant says, should have satisfied the Judge that the search was unlawful and that the evidence was therefore improperly obtained and inadmissible.
[5] The search warrant here was applied for and obtained pursuant to s 167 of the Customs and Excise Act. The test, as with the Summary Proceedings Act 1957, is that there is in the relevant premises;

167 Search warrants

(1) . . .

(a) any thing that there are reasonable grounds to believe may be evidence of—

(i) the commission of an offence against this Act or regulations made under this Act; or

(ii) the unlawful exportation or importation of goods; or

(b) any thing that there are reasonable grounds to believe is intended to be used for the purpose of—

(i) committing an offence against this Act or regulations made under this Act; or

(ii) unlawfully exporting or importing goods; or

Background

[6] In 2003 the United States Bureau of Immigration and Customs (“the Bureau”) began investigating child pornography sites. Part of that investigation involved obtaining access to businesses used as clearing houses for those who wished to access child pornography internet sites using credit cards. The clearing houses provided a method by which those wishing to access such sites could do so without revealing their name, address or credit card details. Customers wishing to subscribe to a chosen site sent their credit card details to the clearing house along with an operating email address to which their membership account details were sent. When a subscription transaction was verified, a customer received an anonymous account name and password that allowed them to access child pornography sites.
[7] In August 2004, Customs in New Zealand received information from David Nguyen, a Singapore-based investigator with the Bureau, about New Zealanders who were said to have used such credit card clearing houses to access internet sites. Once Customs received this information, they made inquiries within New Zealand relating to the information they had received.
[8] In January 2005, a Customs officer applied for a search warrant for the appellant’s address, focusing especially on, but not limited to, his computers, other electronic devices and bank and credit card statements. The search warrant was executed in February 2005 and it is the evidence found in that search that is the basis for the prosecution of the appellant.

Insufficient reliable information and omission of relevant information

Appellant and respondent’s submissions

[9] The appellant’s case is that the information in the Customs officer’s application for the search warrant, relating to the overseas investigations, is hearsay and may be multiple hearsay. The appellant points out that Mr Nguyen, who provided the information, was no more than a conduit who had no personal knowledge of any of the information that he provided.
[10] The appellant says that the applicant for a search warrant must establish the reliability of the information provided, either by establishing the reliability of those who have provided the information, or by conducting independent checks on the information, which confirm its reliability. The appellant says that the affidavit does not reveal from whom or how the information about the appellant was obtained from the clearing house company other than that it was at the instigation of the Bureau.
[11] The appellant’s case is that the reliability of the informants is not established because there is no information contained in the application as to exactly who the informants are.
[12] The respondent says that the appellant relies for these submissions on this Court’s observations in R v Williams [2007] 3 NZLR 207 at [215] where the Court said:

Where an applicant relies on information of which he or she does not have personal knowledge, the source of that information must be clearly stated so that the issuing officer may assess its reliability and cogency.

[13] The respondent says that these observations were intended to apply where information was received from anonymous lay informants and were not intended to apply to information received as a result of co-operation between international law enforcement agencies.
[14] The Judge in the District Court responded to this submission by acknowledging the application was hearsay and perhaps double hearsay or more. She said, however, that the Court should give some credence to the fact this was an international investigation and that search warrants in other countries had been granted based on similar evidence. She said:

I believe that this Court is able to take judicial notice of the fact that a Customs Officer from New Zealand received information from, on the face of it, a credible formal governmental agency from another country and acted on the receipt of that. I do not believe that it would have added anything much to the search warrant application if in fact the author of it had provided specifics of the occasions upon which and the exact detail of the information received on those occasions from ICE or any other foreign governmental agency.

Discussion

[15] We do not accept the Judge’s approach nor the Crown view. There is no logical reason to distinguish between information from New Zealand enforcement agencies used to support an application for a search warrant and information from overseas enforcement agencies contained in such an application. When the information provided in a search warrant application is not personally known by the applicant, the issuing officer needs to be satisfied the information is reliable. The reliability of the information can be established by the applicant identifying the source of the information and describing why the issuing officer can be satisfied that, given the source, the information is reliable. The reliability of information might also be established by independent verification of some or all of the information.
[16] Here the agent, Mr Nguyen, who supplied the information to New Zealand Customs, appears to have had no personal knowledge of the information he provided. The New Zealand Customs officer who made the application had no personal knowledge of the information which came from the Bureau.
[17] The application does not make it clear how the appellant’s details, including the details of the transaction, his name, address and telephone number, and his credit card number, were obtained. There was no evidence as to whether the information was obtained by covert electronic means or by an employee of the clearing house. If, for example, it was clear that the information was obtained by covert electronic means through agents of the Bureau, then that may be good reason to assume reliability. If, however, the information was obtained through an informant, then that person’s reliability would need to be established.
[18] We therefore agree with the appellant that the application does not establish reliability of the information provided by establishing the reliability of whoever provided the information.
[19] The application does, however, attempt to establish the reliability of the information by pointing to its use in other countries and to New Zealand Customs’ own inquiries within New Zealand.
[20] As to the use of similar information overseas, the application said:

The information source has proven reliable as evidenced by the provision and application of similar information to Australian law enforcement agencies resulting in search warrants in September-October 2004 from which child pornography obtained over the Internet was found located on home and business computers.

[21] Without more detail relating to the information provided to the Australian law enforcement agencies and its claimed reliability, this does not establish the information as reliable.
[22] The application records that the information relating to the appellant, provided to New Zealand Customs by the Bureau, was:

A subscription for a period of 30 days to the site “online-sharing-community” at the website URL http://www.onlinesharingcommunity.com/signup.html was paid for on credit card number 4548600993087129 on or about 14 December 2002. The amounts of USD $45.00 and USD $7.95 were debited.

The members login number assigned was “me01597111” and members password was “2WqQZkH8”.

The payer details recorded at Regpay were for ROCK Russell, 112 Whitney St, Auckland. The contact details recorded were 1. Phone numbers 8281869 and 2. Return e-mail address of rockhome@ihug.co.nz.

[23] The application then states:

The New Zealand Customs Service has undertaken enquiries (refer paragraphs 12 to 13) to establish the true entity of the credit card holder, the veracity of the transactions reported, and the personal details furnished to RegPay by the subscriber.

Enquiries have established that VISA card 4548 6009 9308 7129 is recorded for Russell ROCK at 112 Whitney Street, Blockhouse Bay, Auckland. The recorded contact numbers are 09 828 1869 or 09 524 4622.

White Pages enquiries note the contact number 09 828 1869 returns to ROCK R at 1/112 Whitney Street, Blockhouse Bay, Auckland.

[24] What the application therefore does to establish reliability is compare the information that it was provided about Mr Rock by the US authorities with information about Mr Rock obtained independently from New Zealand sources.
[25] Part of the material relied upon by the applicant to establish the reliability of information received was a comparison of the credit card number and subscription debit supplied by the Bureau (that credit card was used on 14 December 2002 to pay for a subscription to the relevant site) and the credit card number, subscription and purchase details as discovered by enquiry from the appellant’s New Zealand bank. This information raises the appellant’s second point on appeal regarding the claim that relevant information was omitted from the application.
[26] Paragraph [8] of the application details the debit of the subscription to the internet site from a credit card number “on or about” 14 December. At [11] of the application, Customs report they have undertaken New Zealand inquiries to see if they can confirm the information provided to them by the Bureau. Part of the enquiry was to establish “the veracity” of the transactions reported.
[27] Paragraph [12] mentions that the inquiries in New Zealand have established that the same credit card number as supplied by the Bureau is recorded for Mr Rock and other details relating to his residence and contact telephone numbers also match the information from the Bureau.
[28] It is common ground between the Crown and the appellant that Customs knew, but did not include in the application, that the appellant’s Visa credit card statement up to and including the period to 21 December 2002 did not show the purchase of any subscription on 14 December 2002. After the execution of the search warrant, Customs obtained a copy of the appellant’s credit card statement for the period after 21 December 2003. This showed debits which matched those identified by the Bureau relating to the purchase of the subscription.
[29] After the completion of the hearing, we asked counsel for the respondent to file an affidavit

... explaining exactly what steps were taken and when to obtain the details of Mr Rock’s credit card transactions (both initially and subsequently) and what time periods the enquiries covered. This should include an explanation as to why the affidavit in support of the warrant did not disclose that an enquiry about credit card transactions within a limited time period had not disclosed the relevant debit, and the circumstances under which Customs made a further request to the bank covering a wider period and obtained the information.

[30] Mr Glenn Aitu, a senior investigator at New Zealand Customs and the deponent of the affidavit in support of the search warrant has sworn the affidavit. As to the search of the appellant’s credit card statements, before the application for the search warrant, Mr Aitu states:

Because the US information specified that the payment in respect of the membership to the supplier was on or about 14 December 2002, I requested details of transactions for one day prior to and at least one week post that date.

The Bank duly responded with the information producing a Visa statement showing an opening balance date of 22 November 2002 and a closing date 21 December 2002. This statement met the requirements that I had specified in my requisition. It did not, however list any transactions.

[31] As to why the original affidavit did not disclose that the information from the bank did not confirm any credit card entry, Mr Aitu said:

I did not include any reference to the statement obtained from the ASB Bank in the application because the statement did not include any relevant transactions. I did not, at the time, consider it necessary to include the details of a negative enquiry in the application.

With the benefit of hindsight and having considered the legal position more carefully, I consider that I should have made reference in the application to the absence of any relevant transaction on the statement. In failing to refer to that fact it was certainly not my intention to mislead the Registrar in any way.

[32] Mr Aitu said that after the search warrant was executed and Mr Rock had been interviewed he “confirmed his subscription”. That admission, together with other enquiries, which revealed later entries for subscription payments on credit card statements, triggered a further enquiry for credit card statements to 31 January 2003. This credit card statement showed a debit transaction on 22 December 2002 for $US52.95 matching the information from the United States Bureau.
[33] The Judge in the District Court, in dealing with this issue, said:

Certainly the missing credit card statement, had it been included, would not have shown that, but I do not seriously think that that would have mattered because it is a matter of common sense and knowledge for everybody and anybody that uses credit cards (which would have to be most of the population these days) that credit card debits do not show on a statement for a period of at least two weeks, and this particular missing credit card statement is for the period ending 21 December whereas the transaction occurred on 14 December 2002. I do not believe that that is a valid challenge either.

[34] We do not think it is a question of common-sense or general knowledge. We rather doubt that it is a well-known fact that credit card purchases do not show up on a credit card for 14 days. The point the appellant makes is that it is of relevance to the reliability of the information provided by the Bureau that no transaction for the purchase of the subscription on 14 December showed up on the only credit card statement in the possession of the applicant. It was therefore important information, which the issuing officer should have known. The appellant stresses that this was an ex parte application and there is a high responsibility on applicants in such circumstances to provide all relevant details. See Director of Serious Fraud Office v A Firm of Solicitors [2006] 1 NZLR 586 at [43].
[35] In addition, the appellant says that para (11) of the application is misleading even if not deliberately so. It implies that the “veracity” of the debits to the credit card for the purchase of subscriptions were confirmed by the New Zealand enquiries when Customs knew this was not correct.
[36] Two issues arise. We agree with the appellant that the information relating to the credit card statement should have been provided as part of the information to the Judge. This was a serious omission. As this Court said in R v Williams at [111]:

As a general rule, misleading applications, which have left out material that may have led to the warrant being refused, or which have included misleading material, will be regarded more seriously than merely deficient applications.

[37] And this Court in Tranz Rail Ltd v Wellington District Court [2002] 3 NZLR 780 said:

[21] An application for a search warrant in whatever context is almost always made on an ex parte basis – that is, without notice to the party whose premises are to be the subject of the proposed search. For this reason the judicial officer to whom the application is made is entitled to expect that the applicant will make full and candid disclosure of all facts and circumstances relevant to the question whether the warrant should be issued. A failure to make such disclosure runs the risk that any warrant obtained will be held to be invalid. The observations made by this Court in the criminal context which prevailed in R v McColl [1999] NZCA 131; (1999) 17 CRNZ 136 at pp 142 – 143 are just as apposite in a context such as the present:

“. . . the applicant should lay before the judicial officer all facts which could reasonably be regarded as relevant to the judicial officer’s task. An applicant should not present the judicial officer with a selective or edited version of the facts. There is an obligation on the applicant to be candid and to present the full picture to the judicial officer, not just the conclusion which the judicial officer is asked to draw, supported by so much of the factual background as the applicant chooses to disclose.”

[22] Equally apposite are this Court’s observations broadly to the same effect in R v Burns (Darryl) [2002] 1 NZLR 204 at p 209. The judicial officer, when deciding whether to issue the warrant, is an important part of a judicial process which is designed to strike the right balance between the interests of the applicant and those of the party to be searched. That balance must be struck according to the criteria pertaining to the issue of the warrant in question. In order that the judicial officer’s function may be properly performed the applicant is obliged to set out, in the evidence supporting the application, all matters known to the applicant which might be relied on by the target of the warrant if that person had the opportunity to appear in opposition. This is no more than the ordinary ex parte rule applied to applications for search warrants of the present kind.

. . .

[25] Hammond J was inclined to the view that even if some non-disclosure was involved it was not material because fuller disclosure could not have led to any different outcome. Mr Pike pressed the same argument again in this Court. We cannot accept it. A failure to observe the duty to make full and candid disclosure should not be excused too readily on the basis of immateriality. To do so would tend to undermine the duty to put the judicial officer in possession of all the potentially relevant facts, so that it is the judicial officer who decides what is relevant at the margins, rather than the applicant.

[38] And further in Williams this Court said:

[214] In general, an applicant’s job is to provide all the facts that may be relevant to the issuing officer’s decision to issue the warrant (see Tranz Rail at para [21] and R v Butler (Court of Appeal, CA 439/00, 10 April 2001) at para [31]). It is important that the applicant does not present only selected facts, or leave out things that the applicant thinks may mean the issuing officer is less likely to issue the warrant (see Butler at para [4]). The applicant officer must give the issuing officer the full picture (see McColl).

[39] It could be argued that the information withheld in this case was neutral in that it neither confirmed nor disputed the claimed credit card payment of the subscription by the appellant. However, the absence of any entry for 14 December on the appellant’s credit card statement to 21 December undoubtedly detracted from the reliability of the crucial subscription credit card information provided by the Bureau. This was a failure by the applicant to give the issuing officer the full picture.
[40] As this Court said in Director of SFO in response to an argument from the respondent that no reasonable Judge who considered the application would take a different view if they had known the undisclosed information:

[42] The difficulty with that argument is that it ignores the fact that the judgment as to the materiality of the information was to be exercised by the issuing Judge, not by us. It is not for us, and still less for the director, to second-guess that judgment. Essentially, Ms McDonald asked us to conclude that no Judge, even when fully informed, could conclude that the s 10(2)(a)(iv) test was not met. But that argument ran up against the fact that the High Court Judge in the present case did reach exactly that conclusion. While we may not agree with the High Court Judge’s assessment, the fact that he made that assessment illustrates the difficulty which Ms McDonald faced with this argument.

[43] We reiterate that an application for a search warrant is an ex parte application, and the onus on the applicant reflects the reality that the “other party” will not have an opportunity to be heard. The test was expressed in both Tranz Rail and McColl as an obligation to provide “all facts which could reasonably be regarded as relevant” to the task of the issuing Judge.

[41] In this case there was more than simply a failure to include relevant information in the application. Here, there was misleading information provided.
[42] We agree with the appellant that the applicant’s comments at [12] about a check on the “veracity” of the credit card entry were misleading even if they were unintentional. Although the paragraph does not expressly say the check on the appellant’s credit card statement confirmed the truth of the information from the Bureau it clearly leaves that impression. This was not a situation where the Customs Officer did not know whether the US information had been confirmed in New Zealand. The officer knew, on the information he had available, that the credit card debit had not appeared on the appellant’s statement.
[43] To mislead an issuing officer, even if not deliberately, is a serious matter. Given the ex parte nature of search warrant applications, issuing officers must be able to trust completely the accuracy of State agencies seeking such search warrants. We accept here there is no deliberate deceit. But the failure to inform the issuing officer of the lack of verification of the transaction was, in the circumstances, a serious deficiency which conveyed a misleading impression.
[44] In this case, the Crown has said it wishes to use the evidence obtained from the search warrant to support the prosecution of the appellant. The appellant gave the prosecution notice (pursuant to s 344A of the Crimes Act) that it challenged the admission of the evidence on the grounds it was improperly obtained, thus triggering s 30 of the Evidence Act 2006.
[45] Section 30(2) identifies the Judge’s task when such a challenge is raised. It provides as follows:

30 Improperly obtained evidence

. . .

(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 but also takes proper account of the need for an effective and credible system of justice.

[46] Here the Judge concluded that the evidence had not been improperly obtained. She did not consider the issuing officer could have been misled by the application. For the reasons given, we do not consider, as a general proposition, that is the appropriate test to apply. And in any event we disagree with her factual conclusion. It is therefore necessary for us to consider whether, pursuant to s 30(2)(a), the evidence was improperly obtained and, if so, whether or not exclusion of the evidence is proportionate to the impropriety, undertaking the statutory balancing test.
[47] We are satisfied the evidence was improperly obtained in terms of s 30(5)(c). In this case, the evidence was obtained “unfairly” because it failed to provide relevant information to the issuing officer and, in the circumstances, was misleading in relation to a material fact.
[48] We therefore turn to those factors in s 30(3) of the Evidence Act relevant to whether the evidence is admissible.
[49] Section 30(3) provides:

30 Improperly obtained evidence

. . .

(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:

(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 which 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.

[50] In this case, we first combine consideration of s 30(3)(a), (b), (g) and (h).
[51] Here the evidence obtained as a result of the execution of the improperly obtained search warrant was from the appellant’s computer and other material held in his home. Execution of the search warrant therefore required entry into the appellant’s home and access to his personal computer. This was, therefore, a substantial intrusion into the appellant’s privacy.
[52] While we have accepted that the applicant for the search warrant did not act deliberately or in bad faith, there was, at the least, a significant carelessness. It was, in the circumstances, a serious breach of the duty to provide all relevant information and conveyed a misleading impression.
[53] There is no suggestion subsection (g) applies to this case. As to subsection (h) there was no urgency in obtaining the information from the search warrant. Customs had already waited six months, from receipt of the information from the Bureau, to make the application. The reasons for this delay are dealt with at [58]. Indeed a small further delay to obtain accurate information about the credit card debits would have avoided the current difficulties.
[54] Subsection (3)(c), (d), (e) and (f) can also be considered collectively. The evidence obtained as a result of the execution of the search warrant is real evidence of high quality. It is the only evidence to support the prosecution of the appellant on these charges. There were no other investigatory techniques open to Customs to discover whether the appellant had indeed been accessing objectionable sites. A search warrant had to be obtained to access the appellant’s computer, computer equipment and CD-Roms if the evidence was to be obtained. This is not a case where an alternative remedy to exclusion of the evidence could reasonably be available to the appellant.
[55] We do not consider that the fact that it is now known the information supplied by the Bureau about the credit card debits is accurate can influence the admissibility of this evidence. As this Court said in Williams:

[112] Such a concession is not designed to encourage a general fishing through of police files for information that might have justified the application if the officer preparing the warrant had bothered to seek it out. It is confined to information that the particular officer applying for the warrant had at the time. It is also not designed to allow an ex post facto justification for a search on the basis of after-acquired material, although after-acquired material may be relevant to the question of inevitability discussed later (see below at paras [125] – [129]). The concession is also not to be taken as suggesting that it is acceptable for the police not to put forward proper grounds in their warrant applications or for judicial officers to issue warrants on insufficient grounds. Indeed, seriously inadequate warrant applications can lead to a finding of police misconduct which in itself can lead to exclusion of the evidence (see below at paras [119] – [121] and para [127]). It would tend to subvert the quasi-judicial process involved in the issue of search warrants if wholly inadequate information is later supplemented by a claim that the police in fact possessed information that would have justified the issue of a search warrant (see R v Pineaha (2001) 19 CRNZ 149 at para [8]).

[56] This is not a case where the Crown can claim inevitability of discovery of the evidence by some other means. Beyond the execution of the search warrant, there was no other means to obtain this information.
[57] We consider, therefore, that the balance favours exclusion of the evidence. Exclusion here is proportionate to the impropriety giving weight also to the need for an effective and credible justice system. As we have previously said, the disclosure was not simply a failure to provide relevant information but involved misleading information. To find that the balance favoured admissibility would, in such a case as this, reduce the words of this Court in the Williams and Director of Serious Fraud Office cases to little more than foot-stamping. In concluding that the evidence obtained is inadmissible, we accept that the prosecution of the appellant is unlikely to be able to proceed. That is to be regretted, but it underlines the vital obligation in such applications for applicants to provide all relevant information to an issuing officer and not to mislead that officer about vital information.

Delay

[58] Customs first received the information from the Bureau on 26 August 2004. The search warrant was applied for in January and executed in February 2005, six months later. The appellant submits that this was an unexplained and unacceptable delay and therefore the issuing Court could not have been satisfied that the information supplied was still current. Without current information the issuing court could not have issued this search warrant.
[59] We accept the respondent’s submission that the reason for the delay was implicit in the application itself. Customs received a significant amount of information about a number of persons within New Zealand apparently accessing objectionable internet sites. For appropriate reasons, as we have identified, Customs wanted to carry out its own checks in New Zealand to establish the reliability of the information received. In addition, information stored in computers, as it was here, is likely to be less vulnerable to becoming outdated and therefore less likely to affect the reliability of the information. We therefore reject this ground of appeal.

Conclusion

[60] We are therefore satisfied the evidence from the search warrant was improperly obtained and that the balance of the s 30(3) factors favours the rejection of the evidence as inadmissible.

Solicitors:
Crown Law Office, Wellington

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