Introduction

In November 2017, the Supreme Court released its decision in Osborne v Worksafe New Zealand [2017] NZSC 175 (2017) 15 ELRNZ 365 (Osborne SC). The agreement between Worksafe and Mr Peter Whittall for the withdrawal of charges in exchange for a voluntary payment of $3.41 million to victims of the Pike River disaster was an agreement to stifle the prosecution and was unlawful.

The Supreme Court’s decision presents challenges to the legality of the Police’s Adult Diversion Scheme (diversion) – a scheme where often charges are withdrawn against defendants in exchange for the payment of money to victims or charities.

Osborne

Mr Whittall had faced charges under the Health and Safety in Employment Act 1992 as a director of Pike River Coal Limited (PRCL). As a result of the Pike River disaster that claimed 29 lives, PRCL was found guilty of health and safety charges and ordered to pay $3.41 million in reparations to the survivors and families of the Pike River disaster.  PRCL was in receivership and could not pay.

Mr Whittall (through his counsel) offered to pay the $3.41 million to the survivors and families if the prosecuting agency, Worksafe, did not proceed with the charges against him. Mr Whittall was also willing to meet with the families and survivors and express his sympathies.  There was a period of negotiation.  Worksafe sought legal advice.  Ultimately, Worksafe accepted the agreement and offered no evidence on the charges.

Two family members of the disaster victims sought judicial review of Worksafe’s decision.

All courts and all parties agreed that a payment that was solely in exchange for the withdrawal of charges is unlawful (Osborne SC at [70] and see the cases cited at footnote 69). A person cannot buy their way out of criminal charges.  The issue was whether Mr Whittall’s agreement was an agreement to stifle prosecution (and therefore unlawful) or involved a permissible exercise of prosecutorial discretion.

The Court of Appeal held that there was no agreement to stifle the prosecution (Osborne v Worksafe New Zealand [2017] NZCA 11, [2017] 2 NZLR 513 (Osborne CA)). The Court’s conclusion was based on a number of contextual factors.  These included that it was Mr Whittall (and not Worksafe) who suggested the payment; that the Worksafe official who approved the agreement had not taken part in the negotiations and made the decision with a “fair and honest mind” (Osborne CA at [71] citing Jones v Merionethshire Permanent Benefit Building Society [1892] 1 Ch 173 (CA) at 183); that the decision was taken in light of an assessment of a low likelihood of success at trial; reparation was unlikely to be ordered against Mr Whittall; and that simply because there had been a negotiation did not mean that a bargain had been struck (at [68]). A “conditional reparation undertaking” could be a legitimate factor in the final decision to prosecute (at [68]).

The Supreme Court disagreed. It found that none of these factors could mitigate what was at its heart a payment of money in exchange for the withdrawal of charges.  As Elias CJ (writing for herself, William Young, Glazebrook and O’Regan JJ) stated:

[93] The payment to be used for reparations was conditional on the withdrawal of the charges. This “central arrangement” had been acknowledged by and known to WorkSafe and its advisers throughout. It was the essence of the payment arrangement, treated as such in the 7 December exchange of correspondence … Offering no evidence was understood to be “the essential feature” on which the proposal to pay reparation was based. No formal offer was presented on behalf of Mr Whittall until WorkSafe had indicated through its counsel that the essential exchange would not be rejected out of hand. It was immaterial that it was Mr Whittall who put forward the conditional reparation payment in the first place. …

For the majority, the presence of the withdrawal of charges on one side, and the payment of money on the other, meant the arrangement was an impermissible bargain (at [94]).

Writing separately, Ellen France J agreed that there had been an agreement to stifle prosecution but added that she “would not want to foreclose for consideration where it arises the place of reparation in prosecution decisions. In other cases the approach may not always be as clear cut as this one” (at [106]).  It is unclear whether her Honour was referring to diversion, though the comments seem prescient.

Diversion

Diversion is a Police initiative. The purpose of the scheme is described in the Adult Diversion Scheme Policy (Policy) at 3 (accessed 22 January 2018):

The Police Adult Diversion Scheme (diversion) is a lawful way to exercise prosecutorial discretion instead of full prosecution through the court system. It is an alternative means of processing some offences and/or offenders through the courts. …

Diversion enables eligible offenders to complete diversion activities within a given timeframe to avoid both a full prosecution and the possibility of receiving a conviction. This means that judicial time is able to be reserved for more serious offences and offenders.

The Policy describes the primary purposes of the diversion as rehabilitation and reparation (Policy at 4). The Policy gives examples of reparation as the payment of money to compensate a victim, making good damage done to property, and writing an apology letter (Policy at 4).

Diversion is offered to (usually) first time offenders who have been charged with low level crimes. A defendant must be willing to accept responsibility for their actions before diversion will be granted.  The Police will also seek victim input.

If a diversion officer deems an offence and offender suitable for diversion then the officer draws up a “diversion agreement”. Among other things the diversion agreement must include (Policy at 18):

• the offender’s acceptance of responsibility;
• the agreed diversion conditions;
• a recognition that if the diversion conditions are completed then the diversion officer will withdraw the charge.

One of the possible diversion conditions is payment of money (either to the victim directly as compensation, or as a donation to a relevant charitable organisation). Diversion conditions are selected by the diversion officer.  That is, they are presented by the prosecuting organisation as the conditions that, if fulfilled, will result in a prosecution being withdrawn.  A defendant signs the written diversion agreement if they agree with it and then fulfils the conditions.  In the 2016/2017 financial year, 4,589 defendants were granted diversion (Police Annual Report 2016/2017, at 60).  The benefits of diversion include “the avoidance of stigmatising processes such as prosecution and formal court orders [and] an expedient and low level response” (N Lynch Youth Justice In New Zealand (2^nd ed, Thomson Reuters, Wellington, 2016) at [5.8] in the context of diversion for youth but applicable to adult diversion).

Not every diversion arrangement will involve the payment of reparation. For example, the offence may not have an identifiable victim to whom money could be paid.  However, given that reparation is a primary purpose of diversion, it is reasonable to think that many diversion agreements will have as a condition the payment of money.  Osborne raises questions regarding the legality of those diversion agreements that have the payment of money as a condition.

Application of Osborne

Diversion involving payment would appear to be directly at odds with the principles underpinning the majority judgment in Osborne. Diversion agreements are just that: agreements.  The parties have bargained for the withdrawal of a prosecution.  On the Supreme Court’s reasoning, the presence of a payment condition makes that agreement unlawful.

In Hayes v Logan [2005] NZAR 150 (HC) Miller J characterised diversion agreements that involve the payment of money as agreements bargained for in order to bring about the end of a prosecution. While diversion agreements that do not involve money may be seen as “indulgences” from Police (at [30]):

[30] … the scheme also envisages that commitments may be made on both sides. The offender may make reparation or undertake community service on the strength of a police promise to take steps to have the information withdrawn. The scheme emphasises restorative justice which involves the victim in the decision to offer diversion. The element of bargain is even stronger when the offender agrees to pay reparation to the victim, as in this case.

[31] Mr Powell resisted the description of diversion as an agreement. But in The Wealth of Nations Adam Smith said (at page 13) that man possesses an innate “propensity to barter, truck and exchange one thing for another”. I conclude that diversion in this case is aptly described as an agreement, in that the elements of a simple bargain were clearly present. Mr Hayes agreed to pay $2,000 to [the complainant], and on payment and the giving of an official warning police agreed to withdraw all charges against him in relation to the incident.

Such a conclusion is reinforced by the terms of the Policy itself. The Policy records that “All reparation must be paid before the prosecution agree to withdraw a charge. If this is not done … then prosecution against the offender will be continued.” (Policy at 20).  The fact that a payment condition is non-negotiable in this way emphasises the centrality of the payment condition to the withdrawal of the charge.

Diversion agreements take into account a range of other factors. These include victims’ views, the seriousness of the charge, and the need for reparation.  They may also include other non-negotiable conditions such as an apology to a complainant.  Under the Court of Appeal’s approach these factors had the potential to contextualise (and perhaps salvage) a payment of money as part of a wider, principled agreement.  However, the Supreme Court majority will seemingly not look past a payment condition at least where it is a central or dominant feature.  The presence of a payment condition in exchange for withdrawal of a prosecution would make a diversion agreement unlawful.  Even the Court of Appeal might struggle with the expressly conditional nature of a diversion payment.  It is difficult to characterise the requirement for payment as a “conditional reparation undertaking” rather than the price of withdrawal of a charge.

Distinguishing diversion agreements from Osborne?

One possible point of distinction is that a diversion agreement requires a person to admit responsibility (if not guilt) for the conduct with which they are charged. In this way, a diversion agreement could be seen not as a payment of money in exchange for escaping a charge, but rather as a legitimate, non-judicial means of holding someone to account in a meaningful way.  Put another way, if a diversion agreement is an end in itself, rather than a means to end, the proceedings then the inclusion of a payment may not be a hallmark of stifling prosecution.

However, s 148 of the Criminal Procedure Act 2011 requires a court to dismiss a charge when informed that a defendant has successfully completed a programme of diversion. The dismissal is made under s 147 of the Act, which is deemed an acquittal (s 147(6)).  If a completed diversion agreement necessarily results in an acquittal then what the parties bargain for assumes even greater importance.  Payment does not result in a withdrawal of charges.  Payment buys an acquittal.  That is more serious than in Osborne.

Nor is s 148 a Parliamentary lifering thrown to diversion agreements. Section 148 is silent on the permissible content of diversion agreements.  Osborne still guides what may be included lawfully in those agreements.

Furthermore, although diversion is restricted to low level criminal offences, this does not change the fundamental character of what the Supreme Court would say is being bargained for. Obviously, more people may be able to afford $500 reparation rather than $3.41 million.  In that sense, the prospect of payment for diversion is less inequitable than in Osborne.  However, the focus is on whether justice has been purchased, not the price tag.

Finally, Osborne cannot be distinguished on the basis that it is the Police that propose the diversion agreement. Indeed, Osborne implicitly considers that this would be worse as it is the public body actively suggesting that a prosecution would be withdrawn in exchange for a payment (see discussion of this point in Osborne SC at [93]).

Conclusion

Osborne raises real questions over the legality of diversion agreements that involve the payment of money. Given that one of the two key purposes of diversion is reparation, the judgment appears to strike at the heart of the popular scheme as it is currently conceived.  The Supreme Court’s decision would appear to seriously challenge any diversion agreement that includes the payment of money.

Reflection is called for. If diversion fails the test in Osborne but is a principled, beneficial, and well-regarded programme, then the issue may lie not with diversion but with the absolutist quality of the Supreme Court’s majority decision.  Ellen France J’s minority decision (or possibly the Court of Appeal decision) may, in time, be vindicated as the basis by which the lawfulness of these types of agreements should be assessed.

This post has been removed because you can now read an article based on this post at [2018] NZLJ 189.

 

Important note regarding suppression

The defendant in this case still has name suppression, so I have anonymised the case name as Z.  When or if the suppression is removed I will edit this post.

I also cannot link the decision because I am bound by the suppression order, and also everyone else is to, so the only place to find a copy is behind a paywalled legal database.

Overview

Z v R contains guidance from the Court of Appeal on the application of one part of the balancing test in s 30 of the Evidence Act 2006 (Act).  The “seriousness of the offence” should no longer necessarily be assessed by looking to the likely penalty.  Further, if the offence is serious then the s 30(3)(d) factor favours admission.  If the offence is not serious then the factor is neutral.

Facts

Mr Z was charged with possession of objectionable material (indecent images of children).

The evidence had been improperly obtained as the Police acted on a search warrant that had been issued without proper authority.

Therefore admissibility depended on the balancing test in s 30(2) of the Evidence Act 2006.

In the District Court, Judge Harvey ruled the evidence admissible.  Mr Z appealed.

Issues

The Court of Appeal considered the s 30(3)(d) criterion “the seriousness of the offence with which the defendant is charged”.  That factor is one of many in the familiar list of factors to consider when determining whether improperly obtained evidence is admissible. But how to interpret it?

In particular:

• What did Parliament mean by “serious”?
• Does it “cut both ways”? That is, if an offence is not very serious, then does this factor favour exclusion?

The old law

In R v Williams [2007] NZCA 52, [2007] 3 NZLR 207 the Court of Appeal said that an offence could be considered serious for the purposes of s 30 if the sentencing starting point was likely to be around four years’ imprisonment.

The (present-day) Court of Appeal on R v Williams

Appellate courts can either accept the s 30(2) admissibility test as a discretionary decision and in doing so accept inconsistency and unpredictability in the outcomes, or they can “impose a structured methodology” to the balancing exercise (Z v R at [16]).

Williams represented an attempt to impose that structure on the s 30(3) factors.

Then Hamed

Next was Hamed v R [2011] NZSC 101, [2012] 2 NZLR 305. Five judges wrote separately.  On some s 30(3) factors clear rationes emerged.  But there was no consensus on how the “seriousness of the offence” factor was to be interpreted.  Indeed, it’s difficult to see how five people could be more apart…

• Elias CJ: look to the particular offending, have regard to the maximum sentence but not a determinative factor, seriousness itself does not always demand admissibility.
• Blanchard J: look to both maximum sentence, and the likely sentence in that particular case.
• Tipping J: look to maximum sentence as that is what legislature intended and all a court needs to carry out a comparison as it is only one factor in a multi factor test, rejected the Williams four year rule of thumb. Also, all offences punishable by imprisonment seem sort of serious to me.
• McGrath J: agreed with Blanchard J’s test but applied it to come to a different outcome in the same case (!).
• Gault J: the s 30(3) factors are value judgments that depend on the inclination of particular judges.

Back to Z v R

Given that no clear ratio on “seriousness of the offence” emerged from the Supreme Court, the Court of Appeal had to consider the term itself.

The Court surveyed the legislative history (and Canadian authority on which our test is based). That revealed that the considerations for the “seriousness” factor were historically one-way.  It works to get evidence of serious crimes in.  It is a factor that, when triggered, favours admissibility.

But, says the Court, “if allowed too much rein s 30(3)(d) could run away with the balancing exercise, excusing almost any breach of rights where the offence is serious enough. For this reason appellate courts have consistently and firmly insisted that it must not take primacy.” (at [33]).

So, it is just one of the many factors in s 30(3).

Cutting both ways?

The Court observed that other courts have considered that the s 30 test “cuts both ways” for admissibility. The Court clarified that this meant that some factors in s 30(3) that favour exclusion may assume greater importance in serious cases (eg. the nature the impugned right and the nature of the breach).

But s 30(3)(d) – the seriousness factor – only works in one direction. If an offence is serious, s 30(3)(d) will favour admission.  The absence of seriousness does not favour exclusion.

What does seriousness mean? (Or, “no more thumbs”)

Williams says look to penalty (specifically, likely starting point). But penalty (either starting point or statutory maximum) is a poor way of assessing seriousness because (at [43]):

• Sentencing starting point is set by reference to aggravating factors, but under s 30(2) even just one of the aggravating factors may make an offence “serious”.
• The sentencing exercise and the admissibility exercise have different concerns. At sentencing the Court focuses on the particular offence and the particular offender.  Under s 30(2) the Court is concerned with the administration of justice (and may focus more on general public safety concerns).
• Where an offender has multiple charges, the Court may assess seriousness using a charge that would not be the lead offence at sentencing.
• Admissibility decisions often affect a group of co-offenders, and generally the s 30(2) inquiry will be a general one, rather than focusing on each individual (except where co-offenders’ rights have been breached in different ways).

But if you have to use penalty, what should you use: starting point, maximum sentence, or likely end sentence?

Definitely not end sentence – that is dictated by personal factors such as guilty plea that have no relation to the question of admissibility. Further, the end sentence is determined by things like pre-sentence reports that a judge determining admissibility simply will not have (at [47]).

Starting point is better than the statutory maximum

The Court of Appeal considered that the starting point was a better guide to seriousness than the statutory maxim for the following reasons:

• Admissibility is a case-specific balancing exercise, so the statutory reference to the “offence” in s 30(3)(d) means the particular offence. (cf Tipping J in Hamed)
• The maximum sentence is only a rough guide, and maximums change not infrequently. The maximum is going to be reflected in the starting point anyway.
• Using the maximum may give the s 30(3)(d) factor too much weight.
• Using the maximum may be simpler in theory, but trial judges routinely assess the nature and apparent strength of a Crown case when making pre-trial decisions: this sort of provisional assessment is within the wheelhouse of trial judges.

But no need to assess seriousness by having recourse to penalty. It is an evaluative exercise

Ultimate guidance on seriousness

[49] For these reasons, we conclude that the four-year starting point adopted in Williams as a standard or guide to seriousness of the offence in s 30(3)(d) should no longer be used. Rather, seriousness should be treated, like other s 30(3) criteria, as an evaluative consideration. Penalty need not be used to gauge seriousness, although judges may sometimes find it appropriate. When assessing seriousness it is always necessary to bear in mind the points discussed at [33]-[37] above; in summary, the assessment requires a long-term perspective of the administration of justice, in which trials generally should be conducted on their merits but systemic integrity is paramount; that being so, seriousness cannot take primacy over other considerations, seriousness does not justify admission where the breach of rights causes an unfair trial, and a grave breach of an important right may justify exclusion although the evidence would not result in an unfair trial.

(footnote omitted)

Applied to the facts of this case

The likely starting point for Mr Z’s alleged offending may have been around two years’ imprisonment.  The Court of Appeal said that it did not find the level of penalty a very sueful guide (at [52]).

Child pornography intrinsically serious. The images involved vulnerable victims, there were 1,650 images, and there is a market for the images that must be vigorously suppressed.

So it is correct to say that in Mr Z’s case the offending is intrinsically serious albeit the images are not the worst of their kind.

The seriousness of the offence should be accorded “low to moderate” weight in the balancing exercise.

After considering the other matters (nature of the breach etc) the Court agreed with Judge Harvey that the evidence was admissible.

Commentary

The most useful takeaway from the decision is its confirmation that seriousness really “cuts one way” in the balancing exercise. If an offence is serious, then the s 30(3)(d) factor favours admission, if it’s not, then the factor is neutral.

The Court counselled caution about letting the seriousness factor dominate though. It is clearly not a wide licence for admission.  It should not be seen as increasing the overall likelihood of admission in serious cases.  As the Court pointed out, in serious cases the other s 30(3) factors will also be strong.  It will be a case of turning every speaker up to 11: you do not get any change in the overall balance.

Where it will have an effect is cases where the offence is of low seriousness. Defence cannot say “oh this isn’t very serious, so this factor favours exclusion.”  Now, the factor is neutral.

The decision also probably gives greater licence to argue what is or is not serious. Seriousness is no longer tied to the penalty rule of thumb.  Whichever side is assisted by penalty can (and still will) argue that.  But you can have a better crack at arguing your side under the guise of “seriousness is an evaluative exercise”.

This slightly favours the prosecution as one can always make the argument that there are certain public safety elements in any type of offence that mean the offence is serious.

However the effect will be limited, because this decision has “freed up” the assessment of seriousness. And at the same time has confirmed that in cases involving “serious” offending, the other s 30(3) factors that might favour exclusion will be more at play.  So, any time the Crown tries to say “look, this is really serious” in a bid to get s 30(3)(d) into play, the defence can say “yes, they’re right, but that only increases the importance of these other factors that favour exclusion.”