R v Douglas [2012] NZHC 603 (30 March 2012)

Last Updated: 20 January 2013

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CRI 2011-004-012988 [2012] NZHC 603

THE QUEEN

v

WAYNE LESLIE DOUGLAS NEAL MEDHURST NICHOLLS OWEN FRANCIS TALLENTIRE

Hearing: 30 March 2012

Appearances: No Appearance by the Crown

Mr Bray QC for the Accused

No Appearance for Ernst & Young

Judgment: 30 March 2012

_{[ORAL] JUDGMENT OF WYLIE J}

R V DOUGLAS & ORS HC AK CRI 2011-004-012988 [30 March 2012]

[1] Messrs Douglas, Nicholls and Tallentire face various charges under s 220 of the Crimes Act 1961.

[2] The defendants have sought non-party disclosure in respect of information held by Ernst & Young. The application was filed on 15 March 2012, together with a supporting affidavit sworn by a Ms Carole Jost.

[3] Ernst & Young have cooperated throughout with the defendants and it was initially anticipated that no Court orders or hearing would be necessary.

[4] Three files held by Ernst & Young were identified as being likely to contain relevant information. Two of the files were made available. The third file was a file opened for Capital + Merchant Group Limited (in liquidation). There was a concern that tax privilege in relation to information on the file might be lost if consent to access was given. The liquidator felt that he was unable to consent to the release of the information and that a Court order should be made.

[5] Normally, the person from whom known disclosure is sought can expect that there will be a non-party disclosure hearing directed by the Court pursuant to s 25 of the Criminal Disclosure Act 2008.

[6] Mr Gray QC who appeared for all defendants this morning has spoken to the solicitors for Ernst & Young. He advised as follows:

(a) Ernst & Young do not seek a non-party discovery hearing; (b) The firm waives its right to such a hearing;

(c) The firm does not oppose the substance of the orders sought by the defendants, and

(d) The firm takes no position in relation to the relevance of the documents sought by the defendants.

[7] In the circumstances, it seems to me that there is nothing to be achieved by directing a non-party disclosure hearing. Rather, I can proceed directly to determine whether or not the defendants are entitled to non-party disclosure in relation to the file opened for Capital + Merchant Group Limited (in liquidation) containing documents that may arguably attract tax privilege.

[8] A memorandum has been filed by the defendants. It is signed by the liquidator. There is a separate memorandum from Ernst & Young confirming that that firm is “largely” in agreement with the matters contained in the memorandum. The only area of potential disagreement appears to be in relation to the relevance of the documents on the file.

[9] The defendants say that the information in the file is relevant to their defence of the proceedings as it relates to tax advice on the appropriate structure of the corporate group and its transactions, and that this is likely to be a key issue at the forthcoming hearing. There was no appearance by the Crown this morning. It was aware of the hearing date and insofar as I am aware, it does not oppose this assertion. On the limited information available to me, I am satisfied that it is in the public interest and the interests of justice that access should be provided to the information held by Ernst & Young so that the defendants can mount a fair defence to the charges against them.

[10] I am also satisfied that it is appropriate to grant access to the information subject to conditions protecting the possible tax privilege that may attach to the documents in the file.

[11] Accordingly, I make an order directing Ernst & Young to disclose the file opened for Capital + Merchant Group Limited (in liquidation), which contains the material that may attract tax privilege. That order is made subject to the following conditions:

(a) Any tax privilege in the tax documents is not waived;

(b) The documents are to be kept confidential by the defendants and their solicitors and legal advisors, and

(c) While copies of the documents may be made, the copies are only to be used for the purpose of the pending criminal proceedings.

[12] Mr Gray has advised that in the event that it is necessary to cross-examine in relation to documents that may be subject to tax privilege, or to call evidence in relation to the documents, an appropriate application will be made for suppression orders at that point of time.

[13] I record that at Mr Gray’s request, this morning’s hearing was held in chambers. A Mr Fletcher, who is a business writer for the New Zealand Herald, was granted leave to remain in the back of the Court. I made an order that Mr Fletcher and the media are not to publish any material disclosed at this morning’s hearing.

_{Nor is Mr Fletcher to disclose such information to any other person or entity.}

_{Wylie J}

Distribution:

NRW Davidson QC: [e-mail] N Williams: [e-mail] M Thomas: [e-mail]

BD Gray QC: [e-mail]

C Browne: [e-mail]

R Sussock: [e-mail]

T Mullins: [e-mail]

S Bonney: [e-mail]

M Toulmin: [e-mail]

H Fletcher: [e-mail]