Serco New Zealand Limited v Chief Inspector of Corrections [2016] NZHC 1859 (11 August 2016)

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UNDER	Judicature Amendment Act 1972
IN THE MATTER OF	An application for judicial review
BETWEEN	SERCO NEW ZEALAND LIMITED Plaintiff
AND	THE CHIEF INSPECTOR OF CORRECTIONS First Respondent
AND	THE CHIEF EXECUTIVE OF THE DEPARTMENT OF CORRECTIONS Second Respondent

SERCO NEW ZEALAND LIMITED v THE CHIEF INSPECTOR OF CORRECTIONS [2016] NZHC 1859 [11

Introduction [1] Serco’s application for judicial review [7] The legislative setting [12] The Chief Inspector’s investigative process

B. Fact-gathering [25] C. Engagement with Serco [27] D. The interviews [34] E. Summary of Chief Inspector’s report [39] Natural justice

B. Serco’s claims of breach of natural justice [49] Was there a proper basis for the Chief Inspector’s findings? [56] Did Serco have a proper opportunity to respond? [74] Conclusions on breach of natural justice [91]

Error of law [92] A. Failure to take account of relevant considerations? [98] B. Irrelevant considerations taken into account? [102] C. Error of law — conclusion [111] Unreasonableness [114] Summary [120] Result [123]

[1] Footage uploaded to YouTube showing fighting between prisoners at Mt Eden Corrections Facility (MECF) came to the attention of the Department of Corrections in July 2015. The footage indicated the presence of an organised “fight club” at MECF which had, since April 2011, been managed under contract by Serco New Zealand Ltd (Serco).

[2] The Department took steps. On 23 July 2015 the Chief Executive of the Department of Corrections announced that he had asked the Chief Inspector of Corrections to investigate a series of serious allegations involving the operation of the facility including assaults among prisoners. On 24 July the Department decided to invoke the “step-in” clause under the prison management contract so that it could place a management team into the prison to oversee operations.

[3] By terms of reference dated 27 August 2015 the Chief Inspector was instructed to conduct a full investigation into the possible existence of a “fight club” at MECF and prisoners’ access to contraband, in particular, cell phones.

[4] The Chief Inspector completed his investigation and, on 16 December 2015, produced his report.

[5] The report made a number of findings critical of Serco’s operation of MECF. One of the findings was that the YouTube footage provided irrefutable evidence that organised fighting was occurring at MECF. The Chief Inspector was of the opinion that organised fighting was occurring at least once a week during certain periods in the months to which his investigation related.

[6] Prior to the completion of the investigation Serco filed an application for judicial review and for interim orders restraining the Department from taking further steps to finalise the report or publish it pending further orders of the Court. Undertakings to that effect were given and remain in place until delivery of this judgment.

[7] Serco accepts the majority of the Chief Inspector’s recommendations and has already taken steps to implement change in anticipation of the recommendations being published. Serco draws a distinction, however, between the recommendations and the body of the report.

[8] Serco’s position is that the report has been finalised in breach of natural justice and its finalisation is in error of law and unreasonable. The breach of natural justice is said to arise, in particular, because the Chief Inspector did not provide information which would allow Serco to identify and provide comment on the incidents referred to in the report.

(b) a declaration that the Chief Inspector should provide to Serco the notes of the interviews which the Chief Inspector conducted; and

(c) declarations that the report should not be finalised or published until Serco has copies of the notes of all interviews undertaken in the course of the investigation and Serco has been provided with a reasonable period of time to review the additional information and respond to the Chief Inspector and that response has been adequately considered.

[10] The Supreme Court’s most recent observation about the purpose and limits of

Judicial review is a supervisory jurisdiction which enables the courts to ensure that public powers are exercised lawfully. In principle, all exercises of public power are reviewable, whether the relevant power is derived from statute, the prerogative or any other source. The courts acknowledge limits, however. These limits are reflected primarily in the notions that the case must involve the exercise of a public power, that even if the court has

jurisdiction, the exercise of power must be one that is appropriate for review and that relief is, in any event discretionary.

[11] It is relevant also to observe in the context of this application for review that the mere fact that a person has been criticised by a body amenable to judicial review does not make the criticism reviewable. The criticism must be legally invalid before the Court will intervene.²

[12] Understanding the statutory context in which the investigation took place assists in a proper appreciation of the powers, functions and obligations of the inspectors of corrections.

[13] The Corrections Act 2004 establishes a corrections system and principles that guide the operation of the corrections system.³One of the purposes of the corrections system, of which the inspectors are a part, is to ensure that sentences of imprisonment are administered in a safe, secure, humane and effective manner.⁴A guiding principle of the corrections system is that people under control or supervision are treated fairly and to that end an effective complaints regime must be available.⁵

[14] The Chief Inspector is the senior of a number of inspectors of corrections who the Chief Executive must appoint.⁶Inspectors have broad powers of inspection and inquiry in respect of those who are subject to sentences or other kinds of control or supervision.⁷

[15] One of the powers and functions of an inspector is to inquire into any matter referred to him or her by the Chief Executive. In this case the Chief Inspector was

_{inquiring into a matter referred to him by the Chief Executive pursuant
to s 29(1)(e).}

[16] In instructing the Chief Inspector to investigate the Chief Executive was acting pursuant to his powers and functions which, among others, are to ensure the safe custody and welfare of prisoners, to inquire into the treatment of persons under control or supervision, and to inquire into abuses or alleged abuses in prison.⁸

[17] While the Chief Inspector’s report was prepared pursuant to a reference and not a complaint, the complaints regime can be seen as providing a sense of the role of inspectors more generally. The complaints system also has the objective of protecting interests of prisoners. The objectives include ensuring:⁹

(a) that those who wish to complain know how to, and that complaints can be made without fear of adverse consequences.

(b) identities of complainants are disclosed only to the extent necessary to assist in investigation of complaints.

[18] Prisoners are always entitled to an interview with an inspector when an inspector is attending a prison for the purposes of holding interviews, and must not be made to disclose to those with direct control of them why they have requested an interview with an inspector.¹⁰

[19] The exercise of the statutory powers that resulted in the investigation and report are to be regarded in the context of these office-holders’ responsibilities to ensure that those deprived of liberty are treated with humanity and respect for the inherent dignity of the person,¹¹and to observe the prisoners’ right to not be subjected to torture or to cruel, degrading, or disproportionately severe treatment or punishment.¹²

[20] The Act focuses the role of inspectors squarely upon the wellbeing of persons subject to coercive state power. The powers and functions of the inspectorate are to

principles that guide its operation. Importantly, the objectives — including the obligation of fairness¹³— which Parliament has established in the complaints system ought not to be compromised simply because an inspector is exercising powers and functions beyond the complaints regime.

[21] The initial terms of reference dated 19 July 2015 required the Chief Inspector to investigate and report on the possible existence of organised prisoner-on-prisoner fighting and the management of prisoners more generally. The Chief Inspector was to make such recommendations for the improvement of systems, procedures and

[22] Modified terms of reference dated 27 August 2015 expanded the investigation to include a review of the Department’s monitoring arrangements and —

To investigate prisoner safety and welfare in general at MECF and review prisoner complaints, particularly those related to serious assaults.

[23] Phase one of the investigation was to be completed and a report presented by

30 October 2015. The investigation was to pay particular attention to the preceding three-month period, that is June, July and August 2015.

[24] Phase two involved a review of the adequacy of controls designed to address prisoner violence and access to cell phones operating in other New Zealand prisons.

_{The phase two investigation and report was to be completed by 30
November 2015.}

[25] The Chief Inspector and his staff conducted interviews with 48 prisoners or ex-prisoners and 42 members of Serco staff including prison officers, duty supervisors, senior management and the Prison Director and Deputy Director.

[26] The fact-gathering phase included review of documentary records, many of which remained in Serco’s custody during the investigation. These records included CCTV footage recorded by Serco, Serco’s incident reports, and its operating policies, standards and procedures. The Chief Inspector also reviewed prisoner information held on the Department’s central database and liaised with the Department’s Operational Intelligence Team, Contract Management Team and the New Zealand Police. Complaints made to the inspectorate and those contained on Serco’s internal system were reviewed. And the Chief Inspector placed considerable reliance on the six videos on YouTube. Under his oversight prisoners shown in the footage were identified and interviewed.

[27] On 8 September 2015 the Chief Inspector wrote to Serco indicating that he would provide copies of his draft report for comment. He established a timeline for that process. Serco replied, agreeing in principle, although warning:

The failure to either provide Serco with the opportunity to review the report in its entirety prior to any public release, or to provide Serco with the opportunity to submit an additional response once it has seen all four parts of the report, will be regarded as unreasonable, unfair and a breach of natural justice.

[28] Serco undertook a parallel investigation during this time but declined to provide its report to the Chief Inspector. Nor is it before the Court.

[29] During the period between 8 September and 30 October 2015 the Chief Inspector provided the draft report in tranches. Serco saw and commented on all drafts. A draft of the full report was provided on 3 November and Serco responded within a tight three-day deadline. On 25 November 2015 Serco

[30] Upon receiving the first tranche it was apparent to Serco that the Chief Inspector relied upon oral evidence including from prisoners. In the report their evidence was presented anonymously. In its first response Serco outlined its concern, among many others, that the Chief Inspector was intending to rely on such evidence.

[31] Serco requested access to the interview notes. Serco, the Chief Inspector and the Chief Inspector’s counsel corresponded during October and November 2015 about provision of the interview notes. The Chief Inspector declined to provide the interview notes on the basis that the interviews were subject to undertakings of confidentiality and that Serco did not need the notes in order to have a fair opportunity to respond to the draft report.

[32] The Chief Inspector eventually contacted the 90 interviewees seeking their consent to the notes of their interview being given to Serco on an anonymised basis. Anonymised interview notes from the 15 who consented were subsequently released to Serco.

[33] The Chief Inspector deposed that in the course of preparing the Phase One report he personally read and considered all of Serco’s responses to the various drafts.

[34] In his affidavit the Chief Inspector approximately outlined his 20 years experience in the inspectorate. He has been responsible for conducting 32 deaths-in- custody investigations and many other special investigations. He deposed, from his experienced perspective, that “prisoners, are extremely nervous about the possibility that any statement will be attributable to them”. That is because prisoners have reason to fear reprisal from fellow prisoners and staff alike if they are known to have provided information about the misconduct of either. There is a strong desire to avoid being labelled a ‘nark’. Also, prisoners are typically wary of authority figures

(often attributing the fact of their incarceration to a negative experience with police interviewers).

[35] Obtaining information requires, then, skilful, subtle and indirect methods of questioning. Inspectors often take a thematic rather than question-based approach to interviews. Prisoners will not often tolerate being recorded and are liable to terminate an interview if detailed notes are taken. Prisoners cannot usually be pressed for further explanation or detail. This does not mean the information is not of value but the Chief Inspector’s evidence was that it was important to bear in mind the nature of evidence from prisoners when preparing the report.

[36] The upshot is that interview notes are often brief and recorded after the interview. Assessing the credibility of an interviewee presents a further challenge and requires significant experience. To that end the Chief Inspector appointed experienced personnel to assist in the conduct of the interviews.

[37] Beyond assessment of credibility the information obtained needed to be treated with caution and appropriately weighted, the Chief Inspector deposed. Accordingly steps were taken:

(a) to ensure the prisoner was in the unit he claimed knowledge of at the time of the events he described;

(e) to cross-reference statements against other documentary information; (f) to take into account when weighing the interviewee’s evidence the

[38] The Chief Inspector’s affidavit evidence was that interviews with staff do not usually present the same challenges. That said, with the exception of three senior staff members, Serco staff would only speak to the inspectorate on the basis that their statements and details would not be released to Serco. Following the Chief Inspector’s approach to interviewees for permission to release anonymised notes a large number expressly refused.

[39] The Chief Inspector produced a 92-page report containing 10 parts: the context and methodology; findings as to the prevalence of organised fighting and staff knowledge; supervision and security; contraband cell phones; remedial action; prisoner welfare; monitoring; findings; recommendations; and an account of Serco’s responses.

[40] The Chief Inspector made 35 findings, some 16 of which related to organised fighting. The remaining findings related to aspects of the terms of reference going beyond the issue of organised fighting.

[41] There were 21 recommendations most of which, as I have mentioned, Serco has accepted.

[42] The Chief Inspector included a note describing the spectrum of fighting activity relevant to his investigation and the terminology he used:

Serco has advised that unacceptable fighting activity exists on a spectrum including:

(i) ‘Sparring’, consisting of pre-fight training and rehearsing, for which injuries are less common and, where sustained, less serious.

(ii) ‘Contender fighting’, being organised fighting between two participants, usually organised by a gang member, and usually involving willing participants. Fights are planned and take place in cells, out of sight of prison officers and CCTV cameras. Injuries sustained in these fights can be serious.

(iii) ‘Fight club’, being organised fighting usually involving gangs and gang-affiliated prisoners, in which participants are either willing or unwilling. Like ‘contender fights’ these fights

usually take place in cells, out of sight of prison officers and CCTV cameras or in an exercise yard during periods of non-supervision. Other prisoners housed in the same unit will usually know that a fight is to occur and can sometimes be engaged to distract prison officers to ensure that the fighting is not detected. Injuries sustained in these fights can be serious.

[43] Two principles of natural justice are germane to the exercise of an investigative function such as that undertaken by the Chief Inspector in this case. First, natural justice requires that a finding be based upon evidence that has some probative value. In Re Erebus Royal Commission (Re Erebus) Lord Diplock

The technical rules of evidence applicable to civil or criminal litigation form no part of the rules of natural justice. What is required ... is that the decision to make the finding must be based upon some material that tends to logically show the existence of facts consistent with the finding and that the reasoning supportive of the finding, if it be disclosed, is not logically self- contradictory.

[44] Second, natural justice requires also that a person against whom an adverse finding might be made has notice of that possibility and an opportunity to bring relevant evidence and have that evidence fairly considered.¹⁶Again, Lord Diplock

... any person represented at the inquiry who will be adversely affected by the decision to make the finding should not be left in the dark as to the risk of the finding being made and thus deprived of any opportunity to adduce additional material of probative value which, had it been placed before the decision-maker, might have deterred him from making the finding even though it cannot be predicted that it would inevitably have had that result.

New Zealand Court of Appeal in A v Attorney-General.¹⁸Ms Rebstock was asked to undertake an investigation into an apparent unauthorised disclosure of Cabinet

¹⁵Re Erebus Royal Commission, Air New Zealand v Mahon [1983] NZLR 662 (PC) [Re Erebus]

¹⁶Re Erebus, above n 15, at 671; Ali v Deportation Review Tribunal [1997] NZAR 208 (HC)

papers. Her draft report included a finding of a “strong suspicion” that “A” may have leaked the Cabinet papers. Extracts of the draft report had been provided to “A” for comment along with transcripts of his interviews and a five-page letter from Ms Rebstock outlining her tentative conclusion and the facts supporting it.

[46] “A” had consistently requested additional material which requests were declined. He filed an application for judicial review. The High Court held that the level of disclosure had been adequate but if the report were to be publicly released further disclosure was required. There was an appeal and cross appeal. In the course of the hearing the parties summarised their respective positions. “A” required, among other information, the “source information” from the photocopier/scanner from which the leak was said to have originated. He also requested the report of a forensic examination of two hard drives which he used and the log of the printer nearest to his workplace. The respondent maintained “A” was not entitled to this material as part of the investigation’s natural justice process. The respondent’s

In the context of administrative inquiries, ... expanding the natural justice right to all source data relied on (where, as it is submitted is the case here, the material is adequately summarised and explained to the appellant in the draft report) should be avoided, even on a one-off basis.

[47] Applying Re Erebus and Daganayasi v Minister of Immigration,²⁰the Court of Appeal confirmed that before an adverse decision is made natural justice requires disclosure of the substance of any prejudicial content in a report and a fair opportunity to correct or contradict that content. There was no question that “A” faced serious allegations and he was entitled to have clear information about the evidence on which Ms Rebstock based her proposed finding.²¹

[48] The Court of Appeal determined that the information given to “A” provided a sufficient basis for him to know the case against him and respond to it. Natural justice did not require that “A” be given the source data so that he could check and

We do not see that as a necessary component of the obligation to meet the principles of natural justice: what is required is that the appellant be told of the evidence against him so that he can respond, not so that he can second guess the investigation.

Chief Inspector failed to provide Serco with any, or sufficient, information (including specific details of time, place, and circumstances) to enable Serco to adequately respond to the allegations made in the Investigation Report.

[50] More particularly, Serco strongly objects to the Chief Inspector’s partial reliance on anonymous statements by interviewees and has consistently pressed for the disclosure of notes of all interviews undertaken in the course of the investigation. As “the reports of the referee, or at least the substance of any prejudicial contents”, were required to be disclosed in Daganayasi v Minister of Immigration²³so too, Serco submits, must the notes of interviews conducted by the Chief Inspector and his staff be provided to Serco. By refusing to provide the information the Chief Inspector has failed to provide Serco with sufficient detail of the allegations

made against it and Serco has therefore been denied a fair opportunity to respond to the allegations.

[51] Mr Wilson, counsel for Serco, submitted that the report draws heavily on the claims made in the interviews. The interview notes are the “only possible source of information” about the claims and allegations against Serco and Serco is entitled to know more about the information from the interviews. Mr Wilson further submitted that the report itself—

contains no context or supporting documentation to evidence the claims made and, to Serco’s knowledge, the Chief Inspector holds no other supporting evidence.

[52] Serco also takes issue with the Chief Inspector’s various categorisations over

time of the confidential nature of the interview process. At one point in the process

_{the Chief Inspector said “strict undertakings as to
anonymity” had been given to}

interviewees. The report itself states that the majority of interviewees, particularly prisoners, asked not to be identified and were given undertakings that statements they made would not be attributable to them.

[53] Serco does not accept that strict undertakings as to anonymity were given as the Chief Inspector contended.

[54] Serco’s contentions of breach of natural justice are essentially advanced under three heads of argument:

(b) Natural justice requires that the interview notes be given to Serco (which accepts the sensitivity of the information and previously offered to restrict access to a small group of individuals assisting Serco in its responses (though the orders now sought contain no such restriction)).

[55] When I come to assess whether or not Serco wad denied a proper opportunity to respond I will address (b) and (c) together under that head as they are interrelated.

Organised fighting in the form of ‘sparring’ occurred frequently in full view of CCTV cameras, with 12 incidents recorded on CCTV in the 26 days between 18 June 2015 and 13 July 2015.

[57] Serco did not challenge that finding during the consultation process or, in fact, in its application for judicial review.

It is likely that organised fighting in the form of ‘contender fighting’ or ‘fight club’ occurred at least once a week, during certain periods in the months the subject of this Investigation. CCTV footage, MECF documentary records, and the YouTube Footage, show five incidents, and two probable separate incidents, occurred at MECF between 11 June 2015 and 4 July 2015. Of the

12 prisoners who were prepared to comment on the frequency of this activity, one said it happened weekly, and the others said that it occurred

more frequently than that, including four who said it occurred daily or almost every day, in the units in which they were housed.

[59] Mr Heron QC, counsel for the respondents, submitted that Serco accepted this finding in its final consultation response but has now reversed its position. Mr Heron is quite accurate. Serco’s response to the final report was provided in a

48-page document dated 25 November 2015 to the Chief Inspector. The first part was a 13-page letter setting out Serco’s serious concerns about aspects of the report including that many findings were not supported by evidence; prejudicially selective information had been both included and excluded; evidence had been weighted such as to present Serco “in the worst possible light”; interviews were relied upon; that natural justice required release of all of the interview notes; and, more generally, Serco recorded that it did not accept that the interviews, without further information, were credible, straightforward, truthful or reliable. The remainder of the document consisted of a 35-page table containing Serco’s detailed responses to particular statements or findings in the report.

Serco accepts the finding that ‘it is likely that organised fighting was occurring at least once a week during certain periods’, but rejects any expansion of this to signify that a wider, systemic problem existed at MECF.

Serco accepts organised fighting occurred on a regular basis during certain periods of time. It does not accept that organised fighting always occurred on a regular basis.

[61] The Chief Inspector did not make a “certain” finding about frequency. He said “it is likely” that ‘contender fighting’ or ‘fight clubs’ occurred at least once a week during certain periods in the months under investigation. Serco does not agree that the prisoner statements can be relied on to draw even this conclusion as to the

frequency of organised fighting and indeed objected to the use of anonymous statements for any purpose.

[62] This stance persistently overlooks that the Chief Inspector relied on primary evidence for his conclusions and that the prisoner interviews were corroborative. The Chief Inspector emphasised this throughout his report. Because of its importance I reproduce in full the bases for the Chief Inspector’s finding:

88. MECF’s records of organised fighting are in my view most consistent with a prevalent underlying organised fighting problem, of which most incidents were not detected or recorded by Serco.

a) The CCTV footage and YouTube footage also shows that organised fighting other than sparring occurred regularly at MECF, with four confirmed instances, and two probable separate instances, in the period from 11 June 2015 to 4 July

2015 (noting that CCTV footage does not record what happens in cells). This does not include the two organised

fighting events in the YouTube Footage, for which Serco has been unable to provide a date.

b) MECF documentary records state that three prisoners were charged with fighting on 11 June 2015, which means that, combined with the evidence of the CCTV footage and YouTube Footage, there were five confirmed, and two probable instances of organised fighting in the less than four weeks between 11 June 2015 and 4 July 2015.

c) In my view the demeanour of the fighters and spectators in the YouTube Footage and in CCTV videos is consistent with a regular occurrence of this type of organised fighting. The prisoners that appear in these videos appear totally unsurprised at what is taking place, and seem to treat it as an ordinary part of life at MECF.

d) Prisoner interviews are consistent with organised fighting other than sparring having occurred on a regular basis, and at least as often as weekly during certain periods of time in the months which are the subject of the Investigation.

91. Based on the above, I conclude that organised fighting other than sparring is likely to have occurred on a regular basis, and at least as often as weekly during certain periods of time in the months which are the subject of the Investigation.

[63] Manifestly, the Chief Inspector’s findings were based upon material that tended to “logically show the existence of facts” consistent with his findings. And his reasoning, and the inferences he drew, were logically available to him.²⁴

[64] As to prisoner interviews ((d) above) the Chief Inspector addressed in his report Serco’s contentions that prisoner statements are anonymous, generalised, unable to be verified, inconsistent, made by prisoners with little or no incentive to be truthful, and were made by only a small subset of prisoners interviewed. The Chief Inspector discussed these objections with the investigators who informed him they considered the prisoners in general to be straightforward and truthful when discussing the presence of organised fighting. The Chief Inspector stated every interview was conducted by an investigator with extensive experience interviewing prisoners and he had confidence in their judgements of prisoner demeanour. Where an interviewer had concerns about a prisoner’s credibility, this had been noted.

[65] The Chief Inspector addressed each of Serco’s concerns. It is not necessary to recite in this judgment his detailed responses. He was satisfied that the statements were reliable. There were compelling reasons why prisoner statements could not be verified by reference to documentary evidence. By its very nature organised fighting is covert. MECF documentary records suggested a prevalent underlying problem but because of the lack of formal MECF records of organised fighting the Chief Inspector considered prisoner statements to be in fact some of the best available evidence of the prevalence of the problem and, importantly, consistent with CCTV footage from the period available.

[66] Ultimately the Chief Inspector concluded that, when considered in the context of the CCTV footage and YouTube footage, the prisoner statements about the frequency of organised fighting were credible evidence that it was likely to have occurred on a regular basis and at least as often as weekly during certain periods of time in the months covered by the investigation. In this part of the report the Chief Inspector recorded a consensus among interviewees — those who were prepared to comment — that organised fighting occurred regularly with multiple

_{interviewees stating that the fights had been occurring as frequently as
daily. The}

Chief Inspector set out the prisoners’ various estimates of frequency but he also considered that frequency could be inferred from prisoners’ statements as to the number or frequency of fights they watched or participated in. This evidence was set out in the report.

[67] Importantly, where possible, the Chief Inspector used oral evidence from prisoners “solely for the purpose of corroborating conclusions available from other evidence, such as documentary records and CCTV footage”.

[68] While that material was not the only evidence supporting his findings it was highly relevant to the investigation and the Chief Inspector considered its absence would impact on his ability to carry out his statutory function. He deposed that it would have been impossible to gather many, if not all, of the statements obtained in the absence of agreements as to confidentiality. Therefore his reliance was both permissible and legitimate.

[69] Serco also challenged for want of evidence other findings in the report such as that food contaminated by animals had been served to prisoners and had been stored in an uncovered and sanitary manner and also that it was likely some prisoners had been denied their right to call their legal adviser for significant periods of time. I have examined each alleged insufficiency of evidence and find the concerns unfounded. I refer to two examples.

(a) As to food contamination the MECF kitchen was visited by the inspectorate and the Ombudsman on 31 July 2015. The report described the unsanitary and disorganised state it was found to be in. Following that visit external contractors were brought in to clean the facility and equipment. Furthermore, CCTV footage observed by the investigators revealed unsanitary habits among kitchen workers including, in particular, leaving food in areas where it could be contaminated by animals. There was footage of birds eating bread that had been placed on top of trolleys awaiting delivery to the housing units. The Chief Inspector was entitled to conclude, as he did, that this food was very likely to have been served to prisoners

		having been placed on the top of the trolleys awaiting delivery to their units.
	(b)	As to the finding that many prisoners were denied their right to call their legal advisor for significant periods of time of time Serco
		accepted in its response to the draft report that it would improve its performance in this area. But now the finding is challenged as lacking
		a proper evidential basis. The Chief Inspector recorded in his report that there had been 20 complaints to Serco via its CMS kiosk system
		but only three complaints to the inspectorate in 2015 about access to phones. He noted complaints to the inspectorate typically only occur
		when prisoners have failed to resolve their complaint with Serco and wish to take the matter further. Interviews with Serco management
		confirmed there has been issues with the system and these issues were detailed in the report.
[70]	It is	apparent that the Chief Inspector approached his investigation

methodically and was attuned to the importance of assessing the strength and reliability of the factual information from which he drew his conclusions. His report and the evidence reflect a conscientious awareness of his obligations to Serco and that Serco should have every reasonable opportunity to contribute to the investigation and ultimate findings.

[71] What is also apparent is that Serco approaches what it considers to be disputed facts as though this were civil litigation and that evidence may be contested to the point where findings, if not conclusively established by the facts, should be withdrawn. But, as Mr Heron submitted, the inquiry was not a court of law and the Chief Inspector’s role was to investigate and report. This he did and the evidence shows Serco was given a level of detail and information that was full and expansive and afforded it every opportunity to comment on the essence of the findings.

[72] It is telling that in its response to the final draft report Serco accepted the

finding that “it is likely that organised fighting in the form of ‘contender fighting’ or

‘fight club’ was occurring at least once a week during certain periods” yet now takes

the position that the finding was not available to the Chief Inspector other than on the basis of objectionable oral information.

[73] This brings me to the next limb of the natural justice argument: that because the notes of interviews were withheld from Serco it was deprived of a proper opportunity to respond to the issues raised in the drafts of the report.

[74] Serco objected strongly to the Chief Inspector’s partial reliance on anonymous statements of interviewees and pressed for disclosure of complete interview notes, anonymised or otherwise. Allied to this part of Serco’s case is Serco’s rejection of the Chief Inspector’s earlier assertions that undertakings as to confidentiality were given.

[76] The Chief Inspector and other investigators and officers deposed that the interviews did include discussion about confidentiality. A Serco employee who was interviewed deposed that there was no discussion of confidentiality at the beginning of his interview.

[77] In his affidavit the Chief Inspector described the interviews as being “subject to an understanding of confidentiality”. This seems more likely than not particularly when one considers the prisoner interests that the legislation has specifically safeguarded in pt 2, subpt 6:²⁵

[78] The Chief Inspector asked interviewees whether they consented to their interview notes being provided to Serco on an anonymised basis. Only a few agreed. It seems obvious that interviewees expected the information would be confidential. But it is not necessary to resolve the factual dispute about the precise nature of the

[79] The fact is prisoners have reasonable concerns for their safety. Revelation of the identity of informants can lead to retribution by staff or other prisoners.

[80] A key theme of the Corrections Act is the protection of prisoner safety. That interest informs the shape and content of natural justice entitlements in these circumstances.

[81] As regards the interviews with staff, a more general point may be made about natural justice entitlements and inquiries (though it is equally applicable to the interviews with prisoners). Preserving confidences of informant witnesses is generally good policy in the context of investigations carried out in the public interest and it is a recognised justification for limiting disclosure of evidence. The

[82] Accordingly, whether there were in fact express undertakings of confidentiality comes second to the compelling public interest, recognised by the statute and the common law, in protecting the identity of prisoner and staff witnesses.

[83] In A v Attorney-General the Court of Appeal considered that the letter provided to “A”, containing information about the copying and scanning of documents with the precise times when “A” logged receipt of Cabinet papers and when copying and scanning occurred, provided a proper basis for “A” to know the case against him and respond to it.²⁷The Court of Appeal rejected the submission that the source data was needed so it could be checked and corrected holding that

_{such an opportunity was not a necessary component of the obligation to
meet the}

principles of natural justice. What was required was that the appellant be told of the evidence against him so he could respond not so that he could second guess the investigation.

[84] Mr Wilson sought to distinguish this case. He submitted that “A” already knew the precise times on which it was alleged he had scanned the Cabinet papers. The photocopier data added very little. But here Serco has not been provided with the precise times and evidence as to when the events are alleged to have occurred. Serco’s position is that without the interview notes it cannot identify the incidents referred to in the report and cannot therefore provide comment on those incidents.

[85] This point is borne out, Mr Wilson submitted, by the course of the draft exchanges between the Chief Inspector and Serco. There were several instances where Serco’s opportunity to bring further evidence resulted in changes to the report. It follows that had Serco been given the interview notes it would have been able to make effective contributions that could have changed the Chief Inspector’s findings.

[86] In response to a query about how the interview notes might assist Serco Mr Wilson said Serco could check which units the interviewee prisoners were in to “identify individual units, potential patterns, [and then] interview staff”. Elaborating on patterns Mr Wilson submitted —

if all of the prisoners making a certain allegation were located in the same place at the same time in the same housing unit, then that might suggest that the allegation, rather than being site-wide, was confined to a specific unit, which could allow you then to look at things like the personnel who were staffing that unit. It might allow you to identify who else was in that unit.

[87] The notes would not have allowed Serco perfection in its responses, Mr Wilson submitted, but “would have enabled Serco to look and to examine and to consider whether it had anything that could assist the Chief Inspector in this process.”

[88] I accept, and prefer, the Chief Inspector’s own assessment of whether Serco could have materially assisted his investigation were it to have the confidential information it sought. The Chief Inspector did not believe that disclosing the

confidential information to Serco would materially assist it to respond to his report for several reasons:

(a) He had confirmed that the prisoners interviewed were in the units that they claimed.

(b) He had taken into account whether, in relation to consistent statements made by prisoner interviewees, prisoners were housed in the same prisons at the time of the interviews which may have resulted in collusion.

(c) While Serco had no medical records relating to organised fighting, to the extent that information about organised fighting might be inferred from records of injuries, insults and fighting generally, that information had been set out in graphs elsewhere in the report.

(d) The Chief Inspector had confirmed that no complaints of organised fighting were made by any prisoners to Serco. In a context where a number of episodes of organised fighting were captured on CCTV the absence of records did not prove an absence of fighting. The Chief Inspector considered the lack of other records of the fighting captured by CCTV in June and July 2015, and in the YouTube footage, illustrated the point clearly.

[89] In my view Serco’s proposed analysis of the interview material would be to effectively second guess the investigation and to that extent has parallels with the unsuccessful argument by the applicant in A v Attorney-General: Serco’s request appears to be more in the nature of a fishing expedition than a requirement for disclosure to ensure its natural justice entitlements are met.

[90] To my mind Serco’s complaints under this head approach a level of grievance more commonly associated with an impoverished consultation process. While consultation may be required as part of the duty of fairness in an inquiry context, Serco’s entitlement was to be appraised of any potentially adverse finding against it

and to have the opportunity of adducing material of probative value which might contradict or correct relevant statements potentially adverse to Serco.²⁸If consultation is “an opportunity for persuasion”²⁹that is a different kind of opportunity from the opportunity to comment on and correct factual information that is to be relied on to one’s prejudice.

[91] I am satisfied that the Chief Inspector’s process afforded to Serco its full entitlement to natural justice. Relevantly, Serco accepted what it describes as the core finding, that organised fighting was likely to have occurred on a regular basis in the months the subject of the investigation.

(d) In any event there are compelling public interest reasons, recognised in Re Pergamon Press Ltd and also derived from the Corrections Act,³⁰why the interview notes should not be disclosed.

If the alleged error of law materially affects a matter of substance relating to a finding on one of the terms of reference it is in general reviewable. The reason for exercising the power of review is the stronger if that error damages the reputation of any person directly concerned in the inquiry.

²⁸_{Daganayasi v Minister of Immigration, above n 20,
at 143; Re Erebus, above n 15, at 671.}

[93] Serco claims that the Chief Inspector overlooked certain matters which he was in fact bound to take into account, and took into account certain matters that were irrelevant. Thus the Chief Inspector is said to have fallen into legal error.

[94] Two principles are to be kept in mind. First is the distinction between the relevance of a consideration and the weight to be given to a relevant consideration.³²

_{The latter is for the decision-maker,}³³_{subject
to the possibility that a weighting}

[95] Second, what is relevant and irrelevant for the Chief Inspector when investigating a referral from the Chief executive is to be identified from the statute. A Court will only hold a decision to be invalid on the basis of a failure to take into account a relevant consideration if the consideration was, as a matter of legal obligation, required to be taken into account. That obligation will most typically arise expressly, or impliedly, from the operative statute. It is not sufficient that the consideration is one that may properly be taken into account or even one that many

[96] Mr Heron submitted that the question for the Court was whether, bearing in mind the Chief Inspector’s statutory powers and his terms of reference, the matters raised by Serco were required to be taken into account. In Mr Heron’s submission all the matters raised were either in fact dealt with or not so squarely within the terms of reference that by not addressing them the Chief Inspector erred in law.

[97] In my view, this aspect of Serco’s case is properly analysed in terms of whether the Chief Inspector has exceeded his terms of reference and accordingly erred in law. I acknowledge—³⁵

the importance of ensuring the integrity of the essential findings of a report in its answers to the terms of reference. There is a legitimate public interest

³²Waitakere City Council v Estate Homes Ltd [2006] NZSC 112, [2007] 2 NZLR 149 at [66]; Health Advocates Trust v Director of Health and Disability Services Consumer Advocacy [2008] NZCA 67 at [41].

in those findings being properly based in law if the purposes of the report are to be achieved.

[98] Serco’s case was that the Chief Inspector failed to take account of: (a) the history of organised fighting at MECF;

(b) the level of ongoing violence at MECF; (c) the role of gangs in organised fighting;

(d) the level of violence at other prisons in the New Zealand estate; (e) concessions made by Serco;

[99] I accept the submission for the respondents that the Chief Inspector either accounted for the matters Serco identifies, or was not required to by his terms of reference. Section 156(1) of the Act permits an inspector of corrections to investigate a complaint in any manner that the inspector considers appropriate. While the scope of the Chief Inspector’s investigation was bounded by the terms of reference he had a wide discretion as to the witnesses he would interview, the evidence he would review and the weight he would accord to particular evidence.

[100] I am confident that the so-called relevant considerations were not made mandatory or obligatory by either the Act or the terms of reference. And if they were the evidence shows the Chief Inspector considered them:

(a) History of organised fighting: The Chief Inspector did in fact refer to two previous reports of investigations into organised fighting but Serco regards the references as inadequate because they are only “scene-setting”. The criticism goes to weight, a matter for the Chief Inspector.

(b) Ongoing violence: The terms of reference specify a time frame, the three months preceding, for “particular attention”. At the hearing Mr Wilson submitted that the term of reference do not prevent the Chief Inspector from reaching beyond that three-month period. I agree. But they certainly do not require him to.

(c) Role of gangs: The report makes at least a dozen references to the role of gangs in organised fighting. The complaint is really that the references were not prominent enough, or perhaps do not attribute enough blame to gangs, and not that a relevancy was not taken into account.

(d) Violence at other prisons: The terms of reference divide the investigation into two phases the latter of which expressly includes “adequacy of controls designed to address prisoner violence ... operating in other New Zealand prisons”. The level of violence at other prisons in the New Zealand estate is, on a plain reading of the terms of reference, a matter for the second phase of the investigation. By implication it is not a matter for the first phase with which this application is concerned, such that it could be a mandatory relevant consideration. But it is also beyond the terms of reference which at the most general level directed the Chief Inspector to investigate “the potential existence of organised prisoner on prisoner fighting (fight club) at [MECF]” (emphasis added).

(e) Concessions and complimentary evidence: The Chief Inspector was alive to Serco’s concern that he had not adequately complimented it and addressed the point in his report:

This Report, although relatively wide-ranging in parts, is not intended to be an exhaustive review of all aspects of prisoner welfare at MECF. Accordingly, while it identifies various areas of concern, it does not recite the areas in which no concerns have been identified, and in which Serco may in fact be performing well.

[101] This ground of review is, in fact, a complaint about the Chief Inspector’s approach to the evidence before him: the weight or emphasis he gave to particular evidence, the inferences he drew and the conclusions he reached. The statement of claim reveals that to be Serco’s real concern. Serco pleads that the matters now argued as disregarded were not “sufficiently taken into account”.

[102] Although not pleaded, Mr Wilson submitted that the Chief Inspector took into account a range of irrelevant factors for example:

(a) uncorroborated oral evidence that organised fighting likely occurred on a regular basis and at least as often as weekly;

(b) evidence from Prisoner P who the interviewer regarded as self-serving and whose evidence was not considered worthwhile.

[103] It is unnecessary to address each of the examples given under this ground of review which I consider to lack merit. One example illustrates the point. Serco complains that Prisoner P’s oral evidence should not have been taken into account. The interviewer, Mr Phelan, explained in his affidavit that he passed on to the Chief Executive his assessment of this witness’s credibility. It appeared to Mr Phelan that the prisoner’s motivation for the interview appeared to be so that he could complain about an assault. Mr Phelan recorded on the interview notes that his only reason for agreeing to be interviewed was self-serving and that no worthwhile information was forthcoming. Mr Phelan deposed that in fact the prisoner did provide valuable information about the fights at MECF. He did not provide worthwhile information connected with his assault complaint and Mr Phelan’s note was not intended to suggest otherwise.

[104] Nor is there any merit in the claim that the report’s core finding — that organised prisoner fighting occurs regularly and at least as often as weekly — is a finding only available to the Chief Inspector based on his oral sources of information.

[105] Serco expressly accepted this finding in its final consultation response. Yet it rejects the finding now as being in error of law because Serco resists any degree of reliance by the Chief Inspector on the interview evidence. As I have held this complaint is without merit.

[106] The remainder of Serco’s arguments under this head of review fail for similar reasons. Serco has not shown that the Chief Inspector has considered a matter that he ought not to have considered much less that such an impermissible consideration influenced his approach or his findings. This part of Serco’s case is, in substance and effect, a further complaint about weight. And, again, that is evidenced by the statement of claim. Serco pleads that the Chief Inspector consistently gave “undue weight” to information critical of Serco while minimising the responsibility of others and that the Chief Inspector placed “inappropriate reliance” on irrelevant factors such as information from prisoners including Prisoner P.

[107] I return to the complaint that oral evidence from prisoners was uncorroborated. In my view, to hold that evidence from prisoners amounts to an “irrelevant consideration” unless it can be corroborated in the way Serco seeks would hinder the ability of the inspectors to fulfil their statutory obligations and role in the corrections system, one of the purposes of which, it needs to be remembered, is to ensure that sentences of imprisonment are administered in a safe, secure,

[108] Although Serco has not pleaded that any finding was outside the terms of reference it did advance such an argument at the hearing. I briefly address the arguments.

[109] Serco submits that the following findings are outside the Chief Inspector’s

(a) It is likely many prisoners at MECF have been denied their right to call their legal adviser for significant periods of time.

(b) Following its decision to require prisoners to use prisoner-designated phones for calls to lawyers Serco failed to adequately resource the process to ensure calls could be made in a timely manner.

(d) Prisoners had been served food contaminated by animals and food had been stored in uncovered and unsanitary manner.

(e) Meal delivery practices were not sufficient to ensure all prisoners received a meal and that the meals delivered were appropriately heated.

[110] While the catalyst for the inquiry was the awareness of incidents of fighting in MECF the terms of reference did not confine the Chief Inspector to investigating and reporting on those events. Other terms expanded the scope of the investigation to include standards, procedures, operational systems and work practices. Importantly, the Chief Inspector was to “investigate prisoner safety and welfare in general at MECF and review prisoner complaints”. While he was to investigate prisoner safety and welfare generally he was to have particular focus on complaints related to serious assaults.

[111] The areas which the Chief Inspector investigated, and his associated findings, were within the legitimate scope of the Chief Inspector’s inquiry. He regarded, for example, the concerns raised by prisoners about their inability to telephone their legal adviser as denying “their fundamental right” to call their lawyer and an aspect of prisoner welfare. As with other matters relating to work practices and internal controls they were matters relating to prisoner welfare and were examined on that basis. He did not exceed his terms of reference.

[112] The Chief Inspector did not fail to account for relevant factors or take into account irrelevant factors.

[114] Serco’s case under this head of review is that the Chief Inspector has an obligation to act reasonably which entails making findings only where there is sufficient evidential foundation. That obligation extends to an obligation on the Chief Inspector to properly “inform himself”, an obligation which he breached because he consistently failed to inquire into claims and allegations many of which were highly contentious and inflammatory.

[115] In the course of his argument Mr Wilson acknowledged that the unreasonableness relied on by Serco overlapped sufficiently with the first two grounds of review (insufficient evidential foundation and failure to take account of relevant considerations) that lawfulness could be analysed under either head.

[116] For the respondents Mr Heron submitted that Serco was “simply wrong” in its claim that there was no sufficient evidence on which to base the findings which Serco impugns. Mr Heron cross-referenced his written submissions to the factual bases available to the Chief Inspector for the findings he reached.

[117] Accepting unreasonableness as a ground upon which the Chief Inspector may be reviewed in the conduct of his investigation and preparation of his report I suggest the intensity of review must be minimal.³⁷I reach this view in light of the nature and consequences of the public function which he, and the inspectors of corrections, are performing when undertaking their inquiries.

(b) They may investigate complaints in any manner they consider appropriate.³⁸

³⁷Air New Zealand Ltd v Wellington International Airport Ltd [2008] NZHC 1781; [2009] NZAR 138, [2009] NZCCLR 15 (HC) at [33]: “There is a spectrum of review intensity under the head of unreasonableness.”

(d) They are expected to exercise judgement and a significant discretion bounded in this instance by broad terms of reference.

(e) Frequently the findings reached and recommendations made will call for a high degree of subjective evaluation.

(f) Crucially, the complaints system — and therefore the inspectors — must ensure identities of complaints are disclosed only to the extent necessary to assist in the investigation of complaints and that complaints may be made without fear of adverse consequence.³⁹

[118] In these circumstances, if the terms of reference have not been exceeded and if natural justice entitlements have been effected and findings have been reached on the basis of material which tends logically to support the finding, there remains little scope for judicial review on the ground of unreasonableness. The two broad bases advanced in support of this cause of action, namely, that there was an insufficient evidential foundation for a number of findings and the “decision-maker” failed to inform himself, cannot meet the threshold of unreasonableness which it is necessary to meet in light of my conclusions about the quality of the Chief Inspector’s process and his report.

[119] Furthermore, even if the Chief Inspector made findings based solely on the oral evidence of prisoners and staff it is not correct to suggest that such findings would lack an evidential basis and therefore would be “unreasonable”. Interviews with prisoners may indeed provide sufficient and probative evidence. Serco’s stance would severely curtail the Chief Inspector’s ability to inquire into the (mis)treatment of prisoners. There will undoubtedly be situations in which mistreatment or other events of concern occur which cannot be investigated by documentary evidence

[120] As I observed at the outset Serco accepts most of the recommendations but draws a distinction between the recommendations and the body of the report. Mr Wilson described the body of the report as

a collection of unsubstantiated claims and allegations drawn together in such a way as to wilfully portray Serco in the worst possible light and to minimise any criticism of the Department. It includes findings that are not supported by any evidence ... The Report’s tone and language are deliberately controversial, sensational and prejudicially selective.

[121] I consider that description to be unfounded and inaccurate. What has happened is this: concerning footage showing the likely presence of a ‘fight club’ at MECF came to light. As he was asked, the Chief Inspector reported rapidly following a thorough investigation. He was consistently objective, balanced and concerned to meet his obligations of fairness to Serco.

[122] To my mind the report itself is measured and temperate and Serco’s description of it is wholly unwarranted. The investigation was fair and the report is without error.

[123] For the reasons given the application for review is dismissed. The suppression orders are lifted.

[124] The respondents are entitled to costs. If costs cannot be agreed the parties may file memoranda.

TERMS OF REFERENCE FOR THE INVESTIGATION OF THE CIRCUMSTANCES SURROUNDlNG ORGANISED PRISONER ON PRISONER FIGHTING

(Fight Club) AND ACCESS TO CELL PHONES AT MOUNT EDEN CORRECTIONS FACILITY (MECF)

On 15 July 2015 the Department of Corrections became aware that a series of video clips showing organised fighting between prisoners at MECF had been uploaded to YouTube which appears to indicate the presence of a "fight Club" operating at MECF.

Subsequent video footage has also been released which indicates prisoner access to

An internal Investigation into these events is being completed by Serco management. Police have also been advised and may conduct their own investigation.

The Department of Corrections believes that it is appropriate that the possible existence of organised prisoner on prisoner fighting "fight club" and access to contraband, including cell phones, be fully investigated by the Chief Inspector of Corrections.

The Investigation team will be led by Chief Inspector Andy Fitzharris and assisted by

The Office of the Ombudsman has been invited to monitor and review the Investigation. Full cooperation will to be afforded to the Ombudsman's investigator, who may also independently report on any matter concerning the incidents or its subsequent Investigation.

The Investigation will have access to all relevant information, documentation, premises and persons pertaining to the events, and may, with the approval of the Chief Inspector, call on such additional or specialist assistance to the Investigation as may be appropriate.

1. To investigate and report on the circumstances surrounding the events, as depicted on YouTube, and the potential existence of organised prisoner on prisoner fighting (fight club) at MECF.

The Investigation will pay particular attention to the last 3 month period to determine:

• Whether this type of activity is widespread across the site or limited to specific Units.

• The adequacy of controls and procedures to prevent access to, and the use of, cell phones.

• Whether staff and management had knowledge of the existence of a 'fight club' operating, and any involvement by staff in its operation.

• Levels of supervision and security operating that would allow this activity to occur without staff intervention.

• What information was available to management through Intel, staff reports or Health Services which may indicate that prisoners may be involved in unreported fighting.

• Whether incidents of prisoner on prisoner violence was being under- reported.

• Review any actions taken previously by MECF to address prisoner violence or access to contraband.

• What actions management have subsequently implemented to prevent this type of activity.

2. To investigate and report on the extent to which the standards, procedures, operational systems, work practices and internal controls for the proper management of prisoners were in place and being complied with.

3. To make such recommendations for the improvement of promulgated standards, procedures, operational systems, work practices and internal controls as may be necessary, arising out of the findings of the Investigation.

4. To review the Department of Corrections prison monitoring arrangements at MECF. This will include the Corrections monitors' areas of focus, access to essential information, reporting and escalation arrangements and their interactions between Serco management and Corrections management.

6. To review the adequacy of controls designed to address prisoner violence and access to cell phones operating in other New Zealand prisons. Investigate any similar reported incidents of cell phone use in other New Zealand prisons.

Hearing:	15-16 February 2016
Counsel:	H J P Wilson and L Clark for Plaintiff M R Heron QC and J K Gorman for First and Second Respondent
_Judgment:	_{11 August 2016}

High Court of New Zealand Decisions

Serco New Zealand Limited v Chief Inspector of Corrections [2016] NZHC 1859 (11 August 2016)

High Court of New Zealand

Serco New Zealand Limited v Chief Inspector of Corrections [2016] NZHC 1859 (11 August 2016)