A (A Firm of Solicitors) v District Court at Auckland [2012] NZCA 246; [2012] 2 NZLR 844 (14 June 2012)

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ORDER AS SET OUT IN [97] OF THE REASONS OF THE COURT PROHIBITING PUBLICATION OF VARIOUS DETAIILS.

A (A FIRM OF SOLICITORS) V THE DISTRICT COURT AT AUCKLAND COA CA67/2012 [14 June 2012]

	Para No
Introduction	[1]
Factual background	[5]
Statutory framework	[19]
Availability and limits of judicial review	[28]
First question: Did the application by the police for a search warrant meet the requirements of s 44 such that the District Court could lawfully issue the warrant?	[32]
Second question: Did the application for the search warrant contain material misrepresentations such that the warrant could not have issued had it not done so?	[47]
Third question: Should the second respondent have disclosed to the District Court, when it applied for the warrant, that the NZ SFO was supplying assistance on the same matters at the request of the UK SFO and would serve notices on X, requiring him to attend a compulsory interview and deliver up the same documents, pursuant to s 9 of the Serious Fraud Office Act 1990 (SFOA)?	[57]
Fourth question: Would the warrant have issued, as it did, had the police disclosed that the NZ SFO was supplying assistance on the same matters at the request of the UK SFO and the person nominated, with the application for the warrant, to clone and search A’s electronic records is an employee of the NZ SFO?	[69]
Fifth question: Was the warrant, as issued by the District Court, sufficiently specific in terms of identifying what material fell within its parameters?	[88]
Result	[94]
_{Non-publication}	[97]

[1] The appellant (A) is a firm of solicitors. On 2 August 2011 a District Court Judge granted an application by the police for a search warrant. The warrant authorised the police to search A‘s offices for hard copy and electronic documents. The warrant was executed on 8–9 August 2011 by the police, assisted by the New Zealand Serious Fraud Office (NZ SFO).

[2] A applied to the High Court for judicial review of the District Court Judge‘s decision to grant the warrant.¹In a judgment delivered on 22 December 2011, Brewer J dismissed that application.²This is an appeal by A against that judgment.

[3] We will deal with the appeal under the five main questions that it posed. Under each question we will outline what Brewer J decided and why, and then summarise the arguments put to us about that decision, before giving our answer to the question. In the course of doing that we will refer to the authorities relevant to each issue.

[4] First, some factual background is needed, as is an outline of the relevant statutory scheme.

[5] On 10 January 2011 the Attorney-General received from the Serious Fraud Office of the United Kingdom (UK SFO) a request that New Zealand provide assistance under this country‘s Mutual Assistance in Criminal Matters Act 1992 (MACMA), in the form of search warrants and compulsory notices.

[6] The request related to an investigation into so-called ―boiler room‖ frauds perpetrated by the Price Stone Group. These frauds involved Madrid based salespeople purporting to be legitimate shareholders using pressure selling tactics to persuade United Kingdom investors to buy shares in a range of companies. The frauds had generated over USD 100 million from the sales of worthless shares to unsuspecting investors. The fraudsters had established an extensive global network of accounts through which the funds were ―laundered‖.

[7] The United Kingdom Financial Services Authority (FSA) had issued alerts concerning the Price Stone Group in 2005 and 2006. Almost 1,000 complaints were made by investors to the FSA. Some 57 full statements had been taken from

_{investor witnesses and a further 144 witness statement questionnaires
prepared.}

¹The District Court at Auckland abided the High Court‘s decision, as it did the decision of this

²A v District Court at Auckland HC Auckland CIV-2011-404-4796, 22 December 2011.

[8] Seven of the people involved in running the boiler rooms had been charged in the United Kingdom. Investigations into other suspects were continuing in the United Kingdom. A Mr J had pleaded guilty in Hong Kong to charges of money laundering proceeds from the Price Stone Group and had been sentenced to five years and six months imprisonment.

[9] X is a partner in A, the appellant firm of solicitors. The UK SFO‘s request detailed a longstanding association between X and individuals under investigation for suspected involvement in the fraud. The application described X as having:

... a longstanding association [with] the conspirators as an adviser, and advocate and intermediary with independent banks, civil litigator and a representative of those alleged to be involved in the conspiracy accused of criminal conduct.

The request stated that X had carried out the role of Group counsel, describing himself as ―global legal counsel‖, and providing advice to all tiers of the fraudulent enterprise.

[10] The UK SFO request listed the crimes being investigated as fraud, obtaining money and property by deception, money laundering and corruption – all offences punishable by a term of two years or more imprisonment. The UK SFO application requested help in obtaining warrants to search A‘s premises and X‘s residence and to seize material relating to the investigation for use in criminal proceedings. It stated that the request was subject to coordination with the United Kingdom and Australian authorities in relation to the timing of the searches, and was ―additionally subject to New Zealand‘s [laws] on legal professional privilege and any related exceptions for material relating to the furtherance of fraud or crime generally‖. The request then summarised the material sought from the searches.

[11] The UK SFO also requested that X be interviewed under compulsion in relation to his involvement with each of the suspects, defendants and other entities listed in the request to establish:

3) His knowledge, understanding or evidence of the role of each person, firm or entity as it relates to the fraud under investigation;

4) His knowledge, understanding or evidence as to the beneficial and legal ownership and control of each firm or entity.

Again, that interview request was specifically made subject to New Zealand‘s laws

18 April 2011. These added names to the lists of individuals or incorporated entities under investigation, added a further offence to those in respect of which evidence was sought, and provided some additional facts relating to one of the additional entities named, a firm of Australian lawyers.

[13] On 15 February 2011 the Attorney-General emailed the officer managing the case at the UK SFO. That email was responded to by the UK SFO at length on

14 April. The 15 February email was not before Brewer J, but the 14 April response was. From that response, Brewer J inferred that the 15 February email raised queries about the propriety of or necessity for the searches.³In its 14 April response, the UK SFO withdrew its request for a warrant to search X‘s residence. It accepted that there may not be sufficient grounds to apply for that. The response stated:

A review has taken place as to the appropriate stance to take in relation to [X] but our position remains that we consider a search of [X‘s] business premises to be appropriate due [to] there being a real risk that [X] would not fully comply with a compulsory notice.

[14] On 8 July 2011 the Attorney-General authorised the New Zealand Police to apply for a search warrant. The authorisation was in writing, addressed to two named police detectives. It recited the request from the UK SFO, listing the material sought and the individuals, firms and corporate entities under investigation. It also listed the seven individuals already charged. The authorisation concluded:

a) That the request relates to a criminal matter in the United Kingdom, namely a criminal investigation into an allegedly fraudulent investment scheme, involving charges of conspiracy to defraud by

way of false representation, obtaining property by deception, obtaining a money transfer by deception, general prohibition upon unregulated activity, money laundering and punishment of corrupt transactions with agents.

c) That there are reasonable grounds for believing that the items listed above are relevant to the proceedings and are located in New Zealand.

I hereby authorise you to apply to a District Court Judge for a search warrant in accordance with s 44 of the Mutual Assistance in Criminal Matters Act

[15] The application for the search warrant was made by Detective Traviss. It extended to some 42 pages, 24 of which were appendices. The application itself introduced and backgrounded the fraudulent scheme, in particular describing the money trail involved. It identified the alleged fraudsters, and described their role. In particular, it described X and his alleged role, the extent of which it stated ―is still under review‖. It listed examples of X‘s alleged involvement in the fraudulent scheme.

(d) Appendix D – a description of the documentary evidence (physical and electronic) that it was believed would be located in A‘s offices and which will be evidence of the activities of the individuals, entities and defendants listed in Appendix A; and

(e) Appendix E – a table of the links between X and suspected individuals and entities.

[17] The content of the application was largely taken verbatim (or as Mr McAnally termed it ―cut and pasted‖) from the UK SFO‘s three successful requests for assistance and its email of 14 April 2011.

[18] The following were lodged with the District Court with the application for the search warrant:

(a) An affidavit sworn on 27 July 2011 by Mr C R Hudson. He described himself in his affidavit as ―a Senior Forensic Accountant and Electronic Forensic Investigator employed by the Serious Fraud Office‖ (in New Zealand). He was going to clone A‘s computer. He set out the process for forensically copying electronic data.

(b) A comprehensive supporting memorandum of counsel for the applicant dated 27 July 2011. That listed the documents that had been filed in the District Court, set out the relevant statutory provisions, summarised the relevant case law, and described the process of cloning a computer hard drive. It also summarised the principles of legal professional privilege, and related them to the application, in particular by referring to the proposed conditions designed to protect privilege.

and the search warrant was issued by the District Court under s 44. These provide:

(1) A ... foreign country may request the Attorney-General to assist in obtaining an article or thing by search and seizure.

(2) Where, on receipt of a request made under subsection (1) of this section by a foreign country, the Attorney-General is satisfied—

(a) That the request relates to a criminal matter in that foreign country in respect of an offence punishable by imprisonment for a term of 2 years or more; and

(b) That there are reasonable grounds for believing that an article or thing relevant to the proceedings is located in New Zealand,—

the Attorney-General may authorise a member of the Police, in writing, to apply to a District Court Judge for a search warrant in accordance with section 44 of this Act.

(1) Any District Court Judge who, on an application in writing made on oath, is satisfied that there are reasonable grounds for believing that there is in or on any place or thing—

(a) Any thing upon or in respect of which any offence under the law of a foreign country punishable by imprisonment for a term of 2 years or more has been, or is suspected of having been, committed; or

(b) Any thing which there are reasonable grounds for believing will be evidence as to the commission of any such offence; or

(c) Any thing which there are reasonable grounds for believing is intended to be used for the purpose of committing any such offence—

(2) An application for a warrant under subsection (1) of this section may be made only by a member of the Police authorised under section

[20] Enactment of the MACMA 20 years ago was a response to the rising tide of transnational crime resulting from the ease with which criminals could travel and transmit the proceeds of crime. It is one of a number of agreements and arrangements designed to facilitate international mutual assistance in dealing with crime.⁴

[T]he Bill is designed to make easier the provision and obtaining by New Zealand of international assistance in criminal matters. It gives effect to a Commonwealth scheme relating to mutual assistance that was adopted at the Commonwealth Law Ministers‘ meeting in Harare in 1986, but it does not restrict co-operation to Commonwealth countries. In particular, the Bill provides an international dimension to the Proceeds of Crime Act 1991 for the tracing, seizing, and confiscation of the proceeds and instrumentalities of crime.

―Central Authority‖. Implicit in art 3(1) is significant reliance on the Central Authority of the other country. Article 5 requires each country to designate a Central Authority. In New Zealand this is the Attorney-General.⁷In this case, the request for assistance was received from the United Kingdom Central Authority, which is the Judicial Co-operation Unit of the Home Office.

[23] Article 6(2) of the Harare Scheme provides that the Central Authority of the requesting country shall, if satisfied that the request can properly be made under the Scheme, transmit it to the Central Authority of the requested country ―and shall ensure that the request contains all the information required‖ by the Scheme. Implicit if not explicit in that is a requirement that the requesting country check the accuracy and adequacy of information it provides to the other country.

[24] There is no requirement in the MACMA for the Central Authority of the requesting country to provide information under oath. Counsel for the second respondent told us, and we accept, that New Zealand neither requests, nor is requested, to include the information upon which the search warrant application is based in an affidavit. Counsel explained that the provision of documents in affidavit form is not part of the international practice of criminal mutual assistance.

[25] The requirement in s 44(1) of the MACMA that the application for a search warrant be made in writing on oath is very similar to that in s 198 of the Summary Proceedings Act 1957. But, unlike the Summary Proceedings Act, s 44(2) provides that an application for a warrant may be made only by a member of the police

⁶Scheme Relating to Mutual Assistance in Criminal Matters within the Commonwealth (Harare

[26] The United Nations Model Treaty on Mutual Assistance in Criminal Matters⁸also influenced the MACMA. Article 18 of the Model Treaty provides that a request for assistance and the documents in support, as well as documents or other materials supplied in response to such a request, ―shall not require certification or authentication‖.

[27] The approach a New Zealand court should take in dealing with a request under the MACMA is demonstrated by this Court‘s decision in Solicitor-General v Bujak.⁹Disagreeing with the High Court‘s approach, and accepting the evidence of the Polish Public Prosecutor, this Court allowed the appeal and ordered that the foreign restraining order issued by a Polish court against the respondent be registered in New Zealand under the MACMA.¹⁰

[28] The first issue for Brewer J was whether the issuing of the search warrant was amenable to judicial review. The Judge held it was, but that relief would be appropriate:¹¹

... only if the applicants satisfy me that there was a fundamental defect in the search warrant or its execution.

[29] The correctness of that approach is rightly not challenged on this appeal. It

[30] This application for judicial review prompts us to reiterate two points made in Gill. The first is ―that judicial review is not the appropriate forum in which to adjudicate upon the strength of a possible criminal case‖.¹³Similarly, it is not the occasion to adjudicate upon the extent of, or any criminality involved in, X‘s

_{involvement in the criminal activities under investigation in the United
Kingdom.}

⁸_{Model Treaty on Mutual Assistance in Criminal Matters GA
Res 45/117, A/Res/45/117 (1990).}

¹⁰An appeal to the Supreme Court against this decision was dismissed: Bujak v Solicitor-General

[31] The second point is one the Court made by endorsing this passage¹⁴from the judgment of Jowitt J in R v Chief Constable of the Warwickshire Constabulary, ex parte Fitzpatrick:¹⁵

Judicial review is not a fact finding exercise and it is an extremely unsatisfactory tool by which to determine, in any but the clearest of cases, whether there has been a seizure of material not permitted by a search warrant. ...

First question: Did the application by the police for a search warrant meet the requirements of s 44 such that the District Court could lawfully issue the warrant?

[32] The gist of A‘s case on this first question on appeal is that the application for a search warrant did not meet the ‗threshold‘ requirements of s 44. For A Mr McAnally contends that the application was one ―made on oath‖ in form only. His argument is that Detective Traviss had done no more than swear to his belief in the information provided to him by the UK SFO which comprised, almost verbatim, the content of the application.

[33] Mr McAnally submitted that the consequence was that the application did not comply with the requirements for an application for a search laid down by this Court in R v Williams:¹⁶

Applicants for a search warrant must state that they personally believe in the truth of the facts they are including in the application, or it must be obvious to someone reading the warrant that the applicant personally believes the facts to be true ... The person applying for the warrant does not need to have personal knowledge of the facts set out in the application. However, where he or she does not have personal knowledge, the basis for believing in the truth of the facts must be set out. 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 must assess its reliability and cogency ...

[34] Mr McAnally also submitted that Detective Traviss had not scrutinised or tested the information he deposed to, as required by Williams:¹⁷

As a general check, an applicant should scrutinise the grounds on which he or she applies for a warrant and consider, taking the role of devil‘s advocate, whether the grounds provide a sufficient basis for a warrant to be issued ...

[35] Mr McAnally went on to point out that the Detective, in his affidavit in the High Court, had confirmed ―that the application was based solely on information supplied by the UK SFO‖. So the Detective accepted that he had done nothing to satisfy himself that the application contained a full disclosure of all relevant facts, another requirement stipulated in Williams.¹⁸The Detective had therefore not taken responsibility for the application and supplied the District Court with an evidential basis upon which it could decide whether or not to issue a search warrant.

[36] The Court drew Mr McAnally‘s attention to the following paragraph in the search warrant application, and inquired what more the Detective could state, or what more he could have done:

102. Due to [X‘s] integral legal role in relation to [the chief suspect‘s] multiple interests, and the fact that he has also acted for Hertzberg [and a named suspect], I believe that documents relating to whole or part of the fraudulent enterprise are located at the address that is the subject of this application, and that they may relate to all or any of the named individuals and entities.

[37] Mr McAnally responded that the Detective needed to say what documents he believed would be located, and how and why he thought they may relate to the alleged fraud. Mr McAnally also submitted that the Detective should have ensured that there were no material changes to the position outlined in the search warrant application. He gave one example of this. The application stated:

47. Additionally, a [Ms K] is seen from the same evidence to be/have been the assistant to [X] and written or sent many of the relevant communications.

Mr McAnally put it to us that the Detective should have contacted A and ascertained whether Ms K still worked there (he informed us she had not for several years). Certainly, the Detective could have made that inquiry but the response to it, whatever it was, could hardly have affected the Judge‘s decision. Further, an inquiry such as that essentially second-guessed the UK SFO‘s own inquiries.

[38] The Court also asked Mr McAnally what he pointed to as indicating that the Detective had not scrutinised the contents of the application. Mr McAnally pointed to three things:

By contrast, Appendix A, naming the suspects and their alleged role, included X (his name was second on the list of 26 suspects).

Material in the SFO‘s possession indicates that [X] has set up the myriad of corporate entities which provide a veil behind which [the chief suspect] disguises his fraudulent activities.

There are no identified payments being made to [X] for the legal services that he provided to [the chief suspect or his associates] save for a payment of US$480,044.55 in 2007. This lack of an identifiable payment mechanism raises the question as to whether [X] is receiving payment through other means.

Mr McAnally drew our attention to the affidavit sworn in the High Court by X, in which he refutes (b) and (c).¹⁹

[39] We agree with Brewer J‘s rejection of these arguments, and largely for the

reasons he gave.²⁰Our view is that the Judge was right to hold that Detective

Traviss, in the circumstances of this case, was entitled to rely upon the unsworn statements supplied to the Attorney-General by the UK SFO. He was not required to take further steps to satisfy himself that the information was correct. In particular, because of the statutory scheme we have outlined in [19] to [27] above, the Detective was not required to insist that the information be included in an affidavit sworn by an officer of the UK SFO, or upon some other form of verification. The focus of the statutory scheme is upon cooperation and reliance.

[40] Brewer J rightly rejected any suggestion that a foreign law enforcement authority such as the UK SFO should be given preferential treatment, in that a lower standard of scrutiny should apply to its request for a search warrant. As Brewer J pointed out,²¹this Court disposed of any such suggestion in Solicitor-General v

[41] But to hold that a New Zealand police officer is entitled to rely on the content of a detailed request for assistance from an agency such as the UK SFO is not inconsistent with Williams principles. As Brewer J pointed out, ―the context in which the comprehensive information was supplied indicated its reliability‖.²³This Court made that very point in Williams: ―[t]he source and nature of the information itself may affect reliability.‖²⁴

[42] We also consider the Detective was entitled to place reliance on the Attorney- General‘s authorisation of the application, and rightly referred to that authorisation in the application, and annexed it.²⁵We accept Mr McAnally‘s submission that the Attorney-General‘s role, which is spelt out in ss 27 and 30 of the MACMA, differs from that of a police officer making an application under s 44. Nonetheless, the context in which the Detective considered the material from the UK SFO and prepared the application included the fact that the Attorney-General had authorised

_{the application. We think the Attorney-General‘s role can be
viewed as a screening}

or check process. It is significant that the Attorney-General did raise at least one concern with the UK SFO.²⁶

[43] Lastly, we do not think there is practical sense in Mr McAnally‘s suggestions as to the further steps the Detective should have taken. The type of documents that the search might locate, and their relevance to the fraud investigation, would have been readily apparent to the District Court Judge. We deal with the points made by Mr McAnally in [38] above in the next section of this judgment.

[44] In its judgment in R v T²⁷this Court referred to the guidance as to best practice for those applying for search warrants that it had provided in Williams. The Court then made this observation:

[9] ... But the courts must not lose sight of the fundamental principle that an application for a warrant under s 198 of the Summary Proceedings Act 1957 must be supported by evidence which affords the issuing officer with reasonable grounds to believe that evidence associated with the commission of an offence is at the stated location. Where the application provides such evidence with reasonable specificity, the material supplied is not misleading or selective and the power of search which is sought is not unduly wide, there will be little or no scope for a successful challenge.

[45] Here, on the basis of the material that was before him, we are satisfied that the District Court Judge could be satisfied that there were reasonable grounds for believing that relevant evidence was at A‘s offices. We reject Mr McAnally‘s argument that the material before the Judge did no more than demonstrate that X had acted professionally for individuals for entities implicated in the fraud.

Second question: Did the application for the search warrant contain material misrepresentations such that the warrant could not have issued had it not done so?

[47] This second appeal question is based on three alleged misrepresentations about X in the application:

(b) The statement set out in [38](b) above – that X had set up ―the myriad of corporate entities‖ involved in the fraudulent scheme.

(c) The statement set out in [38](c) above – the questionable situation that there were no identified payments to X for his legal services other than USD 480,044.55 in 2007.

[48] Compounding this, in Mr McAnally‘s submission, was the juxtaposition of misrepresentation (c) to paragraphs 58–61 of the application, which described a firm of UK solicitors, the senior partner of which was implicated in the frauds. Paragraph

... unbeknown to other partners within [this firm], the Senior Partner of the firm was also receiving a 4% commission on all sales turnover of the Boiler Rooms.

[49] Mr McAnally submitted that the District Court Judge had wrongly been told that X was a suspect, was receiving proceeds (rather than legitimate solicitor‘s fees) and had set up the ―myriad‖ of corporate entities involved in the large scale fraud, when another UK solicitor had been similarly involved. He contended this distorted the picture from one of a solicitor who had, in the course of his practice, acted for persons implicated in crime, to one of a solicitor suspected of being a party to that crime. Had the correct position been put to the District Court Judge, a warrant would not have been issued. The warrant that was issued was therefore unlawful.

[50] We deal first with alleged misrepresentation (a). We agree with Brewer J‘s

[71] It is unfortunate that appendix A to the application for the warrant listed [X] as a suspect. However, that was not what was said in the body of the affidavit. Although the appendix A error might have added to an impression that [X] was personally complicit in fraudulent dealings, I am satisfied that had appendix A omitted [X‘s] name it would have made no difference whatsoever to the decision of the District Court Judge. The purpose of the search warrant was to obtain the records of [A] relating to its dealings with the named persons and entities.

[51] We add one observation. Insofar as there was inconsistency between the statement in paragraph 38 of the application that X‘s ―role in this matter is still under review‖, and the naming of X in Appendix A as a suspect who ―[a]cts for [the main suspect] and receives proceeds‖, that inconsistency was clear to the District Court Judge on the face of the application. Had the Judge considered it necessary to clarify the position, he could and doubtless would have sought clarification.

[52] As to alleged misrepresentations (b) and (c), Mr McAnally submits these are misrepresentations because X, in the affidavit he made in the High Court, refutes them.

[53] Each of (b) and (c) accurately states information provided to the Detective by the UK SFO. We have already upheld Brewer J‘s view that the Detective was entitled to rely on that information without taking further steps to verify it. In the affidavit X swore on 21 October 2011, X expresses the belief that the UK SFO does not have all the chief suspect‘s banking records, but ―only a small portion of the same‖.²⁸That may or may not be correct. The application adequately conveyed to the District Court Judge that the UK SFO‘s investigation was an on-going one. For example:

13. Information obtained to date during the SFO investigation suggests that the Price Stone Group sold approximately US 100m of mainly worthless shares to UK investors, largely in the form of a number of restricted United States securities.

33. Financial enquiries (by the SFO) are ongoing domestically and with the assistance of overseas partners.

[54] The fact that X refutes (b) and (c) in his affidavit in the High Court does not convert (b) and (c) into misrepresentations contained in the search warrant application. This is a neat demonstration of the limits of judicial review summarised in [31] above. It was neither possible nor appropriate for Brewer J to determine the

[55] We agree with Brewer J‘s conclusion that A has not established that the combined effect of errors or inaccuracies (one actual, the others alleged) in the search warrant application makes it more probable than not that the District Court Judge would not, or should not, have issued the warrant.

Third question: Should the second respondent have disclosed to the District Court, when it applied for the warrant, that the NZ SFO was supplying assistance on the same matters at the request of the UK SFO and would serve notices on X, requiring him to attend a compulsory interview and deliver up the same documents, pursuant to s 9 of the Serious Fraud Office Act 1990 (SFOA)?

[58] The search warrant application did not mention that at the time the warrant was applied for the NZ SFO had been enlisted to assist the UK SFO and had decided to serve s 9 SFOA notices on X. Those notices had been signed on 3 August 2011 and were served on X when the warrant was executed at A‘s offices on 8 August.

[59] Mr McAnally submitted that this was a highly relevant omission, given that X‘s involvement with any relevant entities was limited to him having acted for them in a professional capacity. He argued that the District Court Judge could not properly decide to issue the warrant without having that information. Consequently, the decision to issue the warrant was fundamentally defective, though not through the District Court Judge‘s making.

[60] Relying on A Firm of Solicitors v District Court at Auckland,²⁹A submitted that the omission to inform the District Court Judge about the s 9 notices to X required the setting aside of the search warrant.

[61] A Firm of Solicitors involved a warrant issued under s 10 of the SFOA to search the premises of a firm of solicitors suspected of fraud. The application for the

²⁹A Firm of Solicitors v District Court at Auckland [2004] 3 NZLR 748 (HC) and [2006] 1 NZLR

search warrant did not disclose that two partners of the firm had accepted, when interviewed, that they had documents relevant to the inquiry in their control, and that they had agreed to cooperate.

[62] This Court upheld Heath J‘s view that the omitted information was material and should have been disclosed.³⁰For one thing, it was relevant to the Judge‘s inquiry whether service of a notice under s 9 might seriously prejudice the investigation, which was the relevant prerequisite to obtaining a search warrant: s 10(2)(a)(iv).³¹

[63] A Firm of Solicitors is distinguishable. The warrant there was issued under s 10 of the SFOA. The warrant here was issued under s 44 of the MACMA which contains no requirement that the Judge consider the potential prejudice to the investigation or the feasibility of using the compulsory examination notice procedure before a warrant could be issued. Indeed, as Mr Ebersohn pointed out, compulsorily interviewing a witness is not a specified form of assistance under the MACMA.

[64] Brewer J held that it was for the investigating authority and not for the District Court Judge to decide whether the police should take a less intrusive or a different approach to its investigation. He also held that whether the UK SFO had grounds to believe that X would not comply with a compulsory notice was irrelevant. Again, it was for the UK SFO to decide whether to apply for a search warrant. The Judge‘s concern was to decide whether the application for a search warrant should be granted, on the s 44 criteria.

[65] That led Brewer J to the conclusion that it would not have materially affected the District Court Judge‘s decision had the investigating authority stated in the application that it intended to use the s 9 SFOA procedure in respect of evidence not secured by the search warrant.

[66] We agree with those conclusions. The District Court Judge‘s sole concern was whether the search warrant application presented to him met the s 44 threshold.

[67] A further point is that there is not a complete overlap between a search warrant under s 44 of the MACMA and a s 9 SFOA notice. The former enabled the police to clone A‘s computer; a s 9 notice would not have achieved that. For that further reason, there is no force in the argument that knowing of the SFO‘s intention to serve a s 9 notice would have affected the way the Judge exercised his discretion to issue a search warrant. It is anyway not compelling to speculate whether the Judge may have said: ―I am not prepared to issue a warrant now. I want to wait and see what the outcome of the s 9 notices is.‖ That is because it is irrelevant, to the critical issue of whether the threshold for issue of a warrant had been made out, that the SFO had decided to serve a s 9 notice.

Fourth question: Would the warrant have issued, as it did, had the police disclosed that the NZ SFO was supplying assistance on the same matters at the request of the UK SFO and the person nominated, with the application for the warrant, to clone and search A’s electronic records is an employee of the NZ SFO?

[69] The person nominated in paragraph 107 of the search warrant application to clone and search A‘s electronic records was Mr C R Hudson. We refer to his affidavit filed with the application in [18](a) above. In addition to setting out his qualifications and experience, and describing the forensic copying process and the process for searching the clone, Mr Hudson gave these undertakings in his affidavit of 27 July 2011:

38. I will be the computer forensics specialist who attends at the premises at [an address] if a search warrant pursuant to section 44 of the Mutual Assistance in Criminal Matters Act 1992 is granted.

39. I acknowledge that a search of a business premise involving the forensic imaging of electronic data has the potential to adversely impact on the business. I undertake to minimise as far as possible the impact on the subject‘s business when I assist with the execution of the search warrant.

40. I undertake that I will not disclose any of the information on the clone or clones to any person, accept in accordance with the terms of the warrant.

[70] Mr McAnally submitted that the non-disclosure of the involvement of the NZ SFO (the point dealt with in answering the third question above) also invalidated the search warrant. He submitted that the warrant was unlawful to the extent that it did not require that the cloning and subsequent search of A‘s electronic records be undertaken by a suitably qualified and independent person.

[71] That argument relies on this passage in this Court‘s judgment in A Firm of

[108] ... It would be necessary to ensure that the cloning exercise, and the subsequent extraction of evidential material, was undertaken by an appropriately qualified and independent expert. ...

[72] In A Firm of Solicitors this Court had earlier held that the warrant was deficient, in that it did not contain terms providing protection from disclosure of privileged material.³²The SFO had given undertakings that the clones taken by it would only be accessible by a password known to the independent computer expert until claims to privilege had been determined, but those undertakings were not included in the terms of the warrant.

[73] Mr McAnally submits that the warrant issued here is invalid on its face because it made no provision for any part of the cloning or subsequent search to be undertaken by a sufficiently qualified and independent person. Although Mr Hudson may have been sufficiently qualified, he was not independent because he was employed by the NZ SFO, which was involved in the investigation, in particular in interviewing X. Mr McAnally made the further point that the non-disclosure of the NZ SFO‘s involvement prevented the District Court Judge from even considering whether Mr Hudson was independent. Had the Judge known of the NZ SFO‘s involvement, he could not possibly have issued the warrant in the terms that he did.

[74] These arguments did not appeal to Brewer J, who dismissed them in this way:

[78] Finally, the pleading that the NZ SFO should not have been involved in any way whatsoever with the cloning of the appellant‘s electronic server in my view misunderstands the nature of the execution of a search warrant. The execution of a search warrant involves the State seeking access to

material. There was no deception or pretext here. The involvement of the NZ SFO was still as a result of the request by the UK SFO. I do not think that Mr Hudson‘s involvement was inappropriate: the cloning of a computer does not entail the expert viewing the data in any way. In any event, after an urgent application to this Court, another computer expert was brought in in place of Mr Hudson so there could be no prejudice occasioned to the applicant by his involvement.

[75] We broadly agree with the Judge. First, although the NZ SFO‘s involvement in terms of the s 9 SFOA notice was not disclosed to the Judge, the fact that the NZ SFO was to be involved in executing the warrant was disclosed. The last paragraph of the search warrant application stated:

109. The Auckland Police Financial Crime Unit will execute the warrant and in doing so will receive assistance from the New Zealand Serious Fraud Office in accordance with s 46(2) of the Mutual Assistance in Criminal Matters Act 1992.

[76] We also think Mr Hudson‘s position was adequately put before the Judge. Certainly, as Brewer J held, ―there was no deception or pretext here‖.³³

[77] Secondly, unlike the position in A Firm of Solicitors, we consider the warrant here did contain adequate protections against the disclosure of privileged material. Those protections are detailed in paragraph 3 of the warrant, as they relate both to hard copy material and cloned material seized.

[78] When applying for the warrant, the police were alive to the issue of legal professional privilege, and aware of this Court‘s decision in A Firm of Solicitors. The topic was addressed in counsel‘s memorandum supporting the search warrant application.³⁴A Firm of Solicitors was drawn to the Judge‘s attention, as were the relevant cases since A Firm of Solicitors.³⁵The High Court‘s decision in Webb Ross Johnson v District Court at Whangarei³⁶was also referred to, as was s 24 of the SFOA, which deals with legal professional privilege. Counsel‘s memorandum

_{advised the Judge that the conditions in paragraph 3 of the draft
warrant set out a}

³⁶Webb Ross Johnson v District Court at Whangarei HC Whangarei CP1/99, 5 February 1999.

49. After identifying relevant material on the clone, the New Zealand Police will provide a list of material (or copies of that material) to the occupiers to enable them to decide if they wish to assert privilege: (Search Warrant condition [3.10]).

50. If privilege is claimed, or maintained, in respect of any of the material, the New Zealand Police will have no further access to the material for the purposes of the investigation, until it has been resolved between the parties or by order of the Court: (Search Warrant condition [3.11]).

There was similar advice in respect of hard copy material, and a reference to Search

11 am on Monday 8 August 2011. With the cooperation of X and his staff the hard copy material covered by the warrant was seized and the police made a decision to treat all of this as initially privileged. It was taken to the Auckland District Court at

5 pm on 8 August. Mr Hudson advised Detective Traviss that cloning A‘s computer could potentially take between eight to 12 hours and that all the firm‘s staff connected to the server would need to log off their computers during the cloning period. After taking legal advice, the Detective decided to delay commencing the cloning until 5 pm when work had ceased for the day. At about 4 pm Mr Hudson asked the Detective if it was possible to start cloning X‘s laptop and that began.

[80] In the meantime, counsel for A had applied to the High Court urgently, orally. The application was heard by Wylie J who, in a minute issued on 8 August, described the application as one for ―various orders from this Court in relation to a search warrant which was served on [A] pursuant to the [MACMA]‖. The relevant part of the Judge‘s minute is:

[8] In the circumstances, I make an order by consent directing that the cloning of [A‘s] computer hard drive is to be undertaken by Ms Payne, in the presence of such officer or assistant as the police shall nominate.

[81] We pause here to observe that Wylie J‘s order is properly interpreted as one amending the search warrant. It was not an interim order made under s 8 of the Judicature Amendment Act 1972. The application made to Wylie J late on 8 August

2011 was not made in a proceeding seeking judicial review. That application came later, when the statement of claim was filed on 15 August 2011.

[82] Shortly after 5 pm counsel advised the Detective of Wylie J‘s order. Ms Payne (who had been nominated to the Judge by A and was to be paid by A) was then assigned to that task. After the process of cloning the hard drive of A‘s server failed during the night of 8/9 August, that process was eventually completed during the night of 9/10 August and the cloned hard drives were deposited with a Registrar of the High Court at Auckland. That was in accordance with a further order Wylie J had made. Thus, some of the cloning of X‘s laptop and all of the cloning of the hard drive of A‘s server was carried out by an independent electronic forensic expert.

[83] Mr McAnally submitted that that did not overcome the invalidity of the warrant from the time of its issue, resulting from it specifying that Mr Hudson was to do the cloning. Mr McAnally argued that it was fortunate that any prejudice to A was averted, because A was a sophisticated and well resourced party that was able to act immediately and obtain orders from the High Court. But what if that had not been the position?

[84] We do not accept Mr McAnally‘s submission that the warrant here was invalid from the outset. The position here differs from that in A Firm of Solicitors. In A Firm of Solicitors the computer hard drive had been removed, to allow for cloning to take place off-site.³⁸The passage in [108] of this Court‘s judgment set out in [71] above, on which Mr McAnally based his argument, applies to a situation where ―no practical alternative existed‖ to the removal of the hard drive or subsequent cloning and extraction of relevant (and non privileged) material off-site. That is the situation that the Court was addressing in that part of its judgment.³⁹We

³⁸This is clearly stated at [102] of this Court‘s judgment in A Firm of Solicitors v District Court at

Similar considerations would apply to the cloning of a computer hard drive at the site of the search, and the subsequent removal of the clone.

[85] We do not think that is correct where, as in the present case, the cloning exercise is a purely mechanical, copying one, and does not use key word searches or screening. In his affidavit in the High Court sworn on 3 November 2011, Mr Hudson deposed:

4. ... As [X] notes with reference to my worksheet in his affidavit at page 45, the cloning process does not involve searching, or in fact viewing, the data in any way.

[86] We can see no sound reason why the sort of purely mechanical cloning exercise that was undertaken on-site here need be carried out by an independent expert. It is for that reason that we reject Mr McAnally‘s submission that the warrant‘s stipulation of Mr Hudson as ‗cloner‘⁴¹rendered it invalid.

Fifth question: Was the warrant, as issued by the District Court, sufficiently specific in terms of identifying what material fell within its parameters?

[88] This is the way in which Appendix 2 to the search warrant spelt out what the warrant authorised the police to search for and seize:

1. All relevant physical and electronically stored documents at [address given].

It will be necessary to clone Electronic media (including floppy discs, hard drives, CDs) and Hand held computers, or other electronic storage devices for the purpose of searching for the electronic documents outlined below. While these electronic items are to be seized to allow them to be searched for relevant evidence, they are not, themselves, items of evidence relevant to the investigation.

2.1 Any material relating to the incorporation, management, ownership and control of the persons, firms and entities listed at paragraph 3.1 to 3.58 below;

2.2 Any material revealing the accounts, creditors or debtors of the persons, firms and entities listed at paragraph 3.1 to 3.58 below;

4.1 to 4.26 below or defendants listed at paragraph 5.1 to 5.7 below from the persons, firms and entities listed at paragraph 3.1 to 3.58

2.4 Evidence relating to client accounts of [A] relating in whole or in part to the persons, firms and entities listed at paragraph 3.1 to 3.58 below.

by paragraph 2. He also submitted that warrant was deficient in that it lacked any:

(b) Any reference to the alleged false representations and to the type of documents they were likely to be found in.

[90] Brewer J interpreted paragraph 2 as limiting paragraph 1, in that paragraph 2 must be read as determining what documents are ―relevant‖.⁴²We agree, because it is the only sensible interpretation of the two paragraphs. What the second part of paragraph 1 says is that it will be necessary to clone A‘s computers to get at all the material specified in paragraph 2 that is recorded electronically.

[91] The error in the warrant describing X as a ―suspect‖ surfaces in paragraph 2.3. But, in terms of specificity, it is of no moment because it was clear that 2.3 was referring to X. He was named at paragraph 4.2 of appendix D.

[92] We do not accept Mr McAnally‘s submission that the warrant was deficient for lack of temporal limits or further specification of the target documents. The identifying of the target persons, firms and entities effectively substituted for temporal limits, and paragraphs 2.1 to 2.4 sufficiently identified the type of material to be searched for.

[94] The consequence of our answers to the five questions posed on this appeal is that the appeal is dismissed.

[95] That means that further execution of the warrant is back in the hands of the District Court. One of the applications A made to Wylie J on 8 August 2011 was that the warrant be transferred to the High Court. Wylie J declined that application, on the basis that jurisdiction in respect of applications under the MACMA is entrusted to the District Court.

[96] The appellant is to pay the second respondent costs for a standard appeal on a band A basis with usual disbursements.

[97] The appellant sought non-publication orders in this Court reflecting those made in the High Court. There was no opposition to this course from the second respondent. We consider it is appropriate, given the investigation is in its early stages, to maintain (with one minor change) the orders made in the High Court. Accordingly, we order that no details having the capacity to identify the appellant by reference to its name, members, partners, clients or otherwise are to be published. Any judgment, report or professional publication must identify the appellant generically as ―(A) or A firm of solicitors‖. Further, the Court file in this proceeding

Court of Appeal of New Zealand

A (A Firm of Solicitors) v District Court at Auckland [2012] NZCA 246; [2012] 2 NZLR 844 (14 June 2012)