Ipsofactoj.com: International Cases [2004] Part 1 Case 10 [NZCA]


COURT OF APPEAL, NEW ZEALAND

Coram

Tranz Rail Ltd

- vs -

The Commerce Commission

KEITH J

BLANCHARD J

TIPPING J

MCGRATH J

ANDERSON J

10 OCTOBER 2002


Judgment

Tipping J

(delivered the judgment of the court)

INTRODUCTION

  1. This appeal from Hammond J concerns the validity of a search warrant. The warrant was issued by a District Court Judge pursuant to s98A(2) of the Commerce Act 1986 (the Act). It authorised Mr. Mladenovic, an employee of the respondent, the Commerce Commission (the Commission) to search the business premises of the appellant, Tranz Rail Ltd (Tranz Rail). The warrant described the purpose of the search in these terms:

    for the purpose of ascertaining whether or not Tranz Rail Ltd or any of its related entities or any employee of theirs have engaged in or are engaging in conduct that does or may constitute contraventions of sections 27 and/or 36 of the Commerce Act 1986.

  2. Section 98A(2) of the Act authorises specified judicial officers, namely a District Court Judge, a Justice of the Peace, a community magistrate or a Court registrar (not being a constable), to issue a search warrant if satisfied that there are reasonable grounds to believe that it is necessary, for the purpose of ascertaining whether or not a person has engaged in or is engaging in conduct that constitutes or may constitute a contravention of the Act, for an employee of the Commission to search any place.

  3. By issuing the warrant in the present case, the District Court Judge professed herself as being so satisfied. Tranz Rail challenged that conclusion in the High Court and also contended that the warrant was invalid for two other reasons;

    • first because the Commission had been guilty of material non disclosure in the affidavit setting out the grounds on which the warrant was sought and

    • second because its purpose was expressed too broadly.

    The High Court declined to grant the declaration of invalidity which Tranz Rail was seeking on its application for judicial review. This appeal has followed on essentially the same three grounds, namely lack of evidence that the warrant was "necessary" in terms of s98A(2), material non disclosure, and the unjustified width of the warrant. The nature of the proceeding does not require the Court to address any issues relating to admissibility of evidence.

    BACKGROUND

  4. In late 2000, the Commission began an investigation into suspected contraventions by Tranz Rail of ss27 and 36 of the Act. It did so following a complaint by the Road Transport Forum of New Zealand. The complaint concerned Tranz Railís pricing structures. In broad terms, the Commissionís concerns were that Tranz Rail may have exploited a dominant position by adopting a predatory pricing regime to eliminate the "Topcat" Cook Strait Ferry operation or to substantially lessen competition in the relevant market. There was also concern as to whether Tranz Rail had exploited a dominant position to induce freight movers to choose rail over road transport. The third area of concern related to the possibility that Tranz Rail and Incat (the lessors of Topcat) had entered into a collusive arrangement to the effect that Tranz Rail would lease an Incat vessel if Incat terminated the Topcat lease. It is fair to Tranz Rail to note that it has consistently denied that there was any foundation for concern in any of these respects.

  5. The Commissionís investigation was initially undertaken in an informal way. It did not issue any notice under s98 of the Act, the text of which is set out below. Broadly that section enables the Commission, where it considers it necessary or desirable for the purpose of carrying out its functions and exercising its powers, to give notice to any person requiring that person to furnish to the Commission any information or class of information that may be specified in the notice, or to furnish any document or class of documents so specified, or to appear before the Commission to give evidence, either orally or in writing, and to produce any documents or class of documents.

  6. Instead of using s98 the Commission sought interviews with Tranz Rail personnel on a voluntary basis. Tranz Rail was willing to comply and on the evidence filed for the purpose of these proceedings appears to have adopted an entirely co-operative attitude. There were three substantial interviews each lasting approximately two hours. They were conducted between Commission staff and relevant senior Tranz Rail personnel and took place on 21 December 2000, 16 January 2001 and 20 February 2001. From Tranz Railís perspective nothing further happened, following the third meeting, until 27 March 2001 when officers of the Commission appeared at Tranz Railís Bunny Street premises in Wellington to execute the search warrant now in issue.

  7. The Commission had made application for the warrant on 16 March 2001. That application was supported by an affidavit sworn by Mr. Mladenovic. Judge Thompson declined to issue a warrant on the basis of the papers before him. He minuted them to the effect that he had to be satisfied that it was "necessary" for the search to be made. He added:

    Implicitly this requires excluding the possibility of a requisition by the Commission under section 98. The reasons why the applicant believes this to be an inadequate possibility are scanty, to say the least. Further explanation is required on that point.

    The Judge dealt with the matter with commendable promptness on the same day as the application was made.

  8. A week later the Commission filed a further affidavit from Mr. Mladenovic sworn on 23 March 2001. This second affidavit contained two main additions.

    • Firstly, a sentence was inserted in paragraph 11 whereby Mr. Mladenovic advised the Court: "In interviews, representatives of both Tranz Rail and Incat have denied such a deal was struck". This was all Mr. Mladenovic said about the very substantial discussions that had already taken place between the Commission and Tranz Rail in the three meetings referred to above. In substance this is the source of the allegation of material non disclosure.

    • Secondly, in a re-arranged and expanded paragraph 17 Mr. Mladenovic deposed:

    I have given consideration to the range of information gathering tools available to the Commission to obtain the evidence referred to in paragraphs 15 and 16, required to assist the Commission in determining whether or not contraventions of sections 27 and/or 36 of the Act have occurred. This includes the power given to the Commission under section 98 of the Act to require any person to supply information or documents or give evidence. If Tranz Rail or any of its employees have engaged in or are engaging in conduct that does or may constitute contraventions of the Act as discussed above, there exist in my view strong incentives for Tranz Rail and/or its employees to not willingly cooperate with the Commission in the provision or disclosure of direct evidence of the contraventions. The reasons for these may include the pecuniary penalties provided for under the Act in respect of both body corporates and persons for contraventions of the Act discussed above, the possibility of internal disciplinary or dismissal actions being taken against employees of Tranz Rail and the potential for repercussions from customers of Tranz Rail. I understand that from previous investigations by the Commission where alleged collusion has been the primary reason for investigating, the Commissionís experience suggests that the Commission is less likely to obtain direct evidence of contraventions of the Act where it does not use its power to search under section 98A of the Act. As a result of the above I believe that obtaining the evidence referred to in paragraphs 15 and 16 will be most likely and effectively achieved if in the first instance the Commission carries out a search of the place of business of Tranz Rail at the address described in paragraph 14, under a warrant authorised in accordance with section 98A of the Act.

    [emphasis added]

  9. The papers were not put back in front of Judge Thompson to whose minute the Commission was responding. There is nothing to show why they were put in front of another Judge. It is ordinarily desirable, unless there are good reasons, for a matter such as this to be put back in front of the original Judge. Be that as it may, the second Judge issued the warrant in the form in which it was sought and without any conditions as to execution as may be imposed under s98B(3).

    THE WARRANT

  10. Section 108 of the Act empowers the making of regulations prescribing forms for the purposes of the Act and requiring the use of such forms. We were advised that no forms have been prescribed and specifically no form of search warrant. Hence the Commission used a form which it had drafted for the purpose. It was in these terms:

    IN THE DISTRICT COURT

    HELD AT WELLINGTON

    IN THE MATTER of the Commerce Act 1986

    AND

    IN THE MATTER of an application for an order

    authorising the exercise of the statutory powers

    set out in section 98A of the Commerce Act 1986.

     

    SEARCH WARRANT

    (Section 98A Commerce Act 1986)

    I am satisfied on application made on oath that there are reasonable grounds to believe that this warrant is necessary for the purpose of ascertaining whether Tranz Rail Ltd or any of its related entities or any employee of theirs have engaged in or are engaging in conduct that does or may constitute contraventions of sections 27 and/or 36 of the Commerce Act 1986.

    I accordingly authorise you, Alec Mladenovic, an employee of the Commerce Commission:

    to enter and search the place of business occupied or used by Tranz Rail Ltd or any of its related entities situated at Wellington Railway Station, Bunny Street, Wellington on one occasion within 30 days of the date of issue of this warrant at a time that is reasonable in the circumstances;

    to use such assistance as is reasonable in the circumstances

    to use such force for gaining entry and for breaking open any article or thing as is reasonable in the circumstances;

    to search for and remove documents or any article or thing that you believe on reasonable grounds may be relevant to the Commissionís investigation;

    where necessary, to take copies of documents, or extracts from documents, that you believe on reasonable grounds may be relevant to the Commissionís investigation;

    where necessary, to require a person to reproduce, or assist any person executing this warrant to reproduce, in usable form, information recorded or stored in a document;

    for the purpose of ascertaining whether or not Tranz Rail Ltd or any of its related entities or any employee of theirs have engaged in or are engaging in conduct that does or may constitute contraventions of sections 27 and/or 36 of the Commerce Act 1986.

    Dated at Wellington this 23rd day of March 2001

    "Signed"

    District Court Judge

    Deputy Registrar (not being a Constable)

    The words reproduced in bold type are in bold in the original signed warrant. The words we have underlined are in ordinary type in the warrant but have been emphasised because of their relevance to the generality issue.

  11. On the execution of the warrant the Commission removed a substantial quantity of documents from Tranz Railís premises. Many of them, at least from Tranz Railís point of view, appeared to be completely irrelevant to any question of a breach of either s27 or s36 of the Act. It took Tranz Rail a long time to obtain from the Commission copies of the papers upon the basis of which the warrant was issued. It is not necessary, for present purposes, to go into that matter and we can turn now to the relevant legislative provisions.

    LEGISLATIVE PROVISIONS

  12. All the following sections are in Part VII of the Act which is headed Miscellaneous Provisions. Section 98 is in these terms:

    98.

    Commission may require person to supply information or documents or give evidence

    Where the Commission considers it necessary or desirable for the purposes of carrying out its functions and exercising its powers under this Act, the Commission may, by notice in writing served on any person, require that personó

    (a)

    To furnish to the Commission, by writing signed by that person or, in the case of a body corporate, by a director or competent servant or agent of the body corporate, within the time and in the manner specified in the notice, any information or class of information specified in the notice; or

    (b)

    To produce to the Commission, or to a person specified in the notice acting on its behalf in accordance with the notice, any document or class of documents specified in the notice; or

    (c)

    To appear before the Commission at a time and place specified in the notice to give evidence, either orally or in writing, and produce any document or class of documents specified in the notice.

  13. Section 98A, which gives the Commission a power to search but only in terms of a judicially issued warrant, provides:

    98A.

    Power to search

    (1)

    The Commission may, from time to time, authorise an employee of the Commission to search under a warrant issued under subsection (2) of this section any place named in the warrant for the purpose of ascertaining whether a person has engaged in or is engaging in conduct that constitutes or may constitute a contravention of this Act, not being a contravention of section 99A of this Act.

    (2)

    A District Court Judge[, Justice, or Community Magistrate], or a Court Registrar (not being a constable) who is satisfied on application made on oath by a person who is authorised under subsection (1) of this section that there are reasonable grounds to believe that it is necessary for the purpose of ascertaining whether or not a person has engaged in or is engaging in conduct that constitutes or may constitute a contravention of this Act, not being a contravention of section 99A of this Act, for an employee of the Commission to search any place may, by warrant, authorise that employee to search a place specified in the warrant.

    (3)

    A person who applies for a warrant shall, having made reasonable inquiries, discloseó

    (a)

    Details of every previous application for a warrant to search the place that the person knows has been made within the preceding 28 days; and

    (b)

    The result of the application.

  14. It is also appropriate to set out the terms of s98B which have some relevance to the issues which require determination:

    98B.

    Powers conferred by warrant

    (1)

    A warrant issued under section 98A of this Act authorises the person named in itó

    (a)

    To enter and search the place specified in the warrant on one occasion within 30 days of the date of issue of the warrant at a time that is reasonable in the circumstances:

    (b)

    To use such assistance as is reasonable in the circumstances:

    (c)

    To use such force for gaining entry and for breaking open any article or thing as is reasonable in the circumstances:

    (d)

    To search for and remove documents or any article or thing that the person executing the warrant believes on reasonable grounds may be relevant:

    (e)

    Where necessary, to take copies of documents, or extracts from documents, that the person executing the warrant believes on reasonable grounds may be relevant:

    (f)

    Where necessary, to require a person to reproduce, or assist any person executing the warrant to reproduce, in usable form, information recorded or stored in a document.

    (2)

    A person assisting the person executing the warrant also has the powers referred to in paragraphs (c), (d), and (e) of subsection (1) of this section.

    (3)

    The warrant shall be executed in accordance with such reasonable conditions as may be specified in the warrant when it is issued.

  15. Section 98C, which need not be reproduced in full, requires anyone executing a warrant issued under s98A to have possession of the warrant; to produce it on initial entry and, if requested, at any subsequent time; to identify himself or herself to the owner, occupier or person in charge of the place the subject of the search, if that person is present; and to produce evidence of his or her identity. Various other provisions follow in later sections concerning other aspects of searches pursuant to s98A but they are of no direct relevance to the present case.

    HIGH COURT JUDGMENT

  16. Hammond J discussed in some detail the general question of investigatory powers and the way in which they can be formulated. We do not find it necessary to enter into a similar discussion. The Judge then referred to the circumstances of the present case and the way Tranz Rail had pleaded its application for judicial review of the decision to issue the warrant and the warrant itself. He came next to the non disclosure issue. He held it would have been desirable for greater detail to have been given of the meetings between Commission staff and Tranz Rail personnel. He took the view that the Commission had put forward "the barest minimum". He considered there was "(just) sufficient disclosure". He also held that there was force in the Commissionís stance that the Judge who issued the warrant could not reasonably have reached a different view had there been full disclosure. This was in essence close to a finding that any non disclosure was immaterial.

  17. As to whether the warrant was "necessary" in terms of s98A(2), the Judge noted counselís submissions and then said that the meaning of the word "necessary" had to be determined in its statutory context, having regard to the purposes of the Act. He also observed that s21 of the New Zealand Bill of Rights Act 1990, which protects every person from unreasonable search and seizure, had to be borne in mind. Hammond J noted aspects of the Commissionís functions and purposes relevant to that aspect of the matter, namely the public interest focus of the Commissionís functions, the fact that its regulatory role was not "truly of a criminal character" and that privacy considerations were relevant but difficult. The Judge did not consider there was any necessary (his emphasis) relationship between s98 and 98A, as investigative techniques. Without committing himself to any definition of or test for the word "necessary" the Judge said of this particular case:

    In a nutshell it seems to me that what Mr. Mladenovic was putting to the court in his second affidavit was, "we have got as far as we can get following the procedures we have in fact followed". The affidavit is not well drawn. Perhaps the Commission officers underestimated the degree to which their actions might be subject to scrutiny; perhaps Commerce Commission staff do not have the same degree of field experience as, for instance, police officers who routinely have to draw affidavits supporting interception warrants, or warrants for criminal purposes. But that said, the material contained in the affidavit was in my view sufficient to enable a judicial officer to be satisfied that the warrant was "necessary".

  18. The Judge turned next to the question of the width of the warrant. He noted Tranz Railís argument as being that the warrant was unreasonably wide, vague and general, and that the method of its execution did not, as the Commission was contending, cure those defects. He noted Mr. Pikeís acceptance for the Commission that, in Summary Proceedings Act terms, the warrant was likely to be regarded as too general to be valid. It is not entirely clear from the judgment whether Mr. Pike conceded in the High Court, as he did in this Court, that the warrant was also too widely drawn for Commerce Act purposes. That was a proper concession on Mr. Pikeís part. We will address below his argument as to why the warrant should nevertheless not be declared to be invalid. After further discussion of counselís submissions Hammond J concluded on this aspect of the case:

    There is much to be said for both points of view. However, I take the view that, at least in the circumstances of this case, the warrant and the results of it should not be impugned in a way which will preclude this investigation from now continuing.

    It will be observed that I have expressed myself in normative terms. This is deliberate. The warrant was broader than is desirable; and that had some downstream effects in relation to the sheer quantity of (irrelevant) material which was in fact uplifted. But I thought it right to remind counsel, at the end of argument, that what is before me is an application for discretionary relief, in the form of declarations.

  19. As noted earlier, the Judge decided not to grant relief. He said he was not persuaded that it was a case in which the Court should interfere by way of judicial review, in the form sought, i.e. by granting declaratory relief. It must be said, with respect, that the reasons why the Judge decided to exercise his discretion against granting relief are not entirely clear. We infer that it may have been because the Judge did not think any great harm had been done in a practical sense.

    NON DISCLOSURE

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

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

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

  22. Hammond J described the information put forward by the Commission regarding its discussions with Tranz Rail as the barest minimum. There was in his view only just sufficient disclosure. We consider the Judge was being charitable to the Commission in this appraisal. The single sentence which Mr. Mladenovic added in his second affidavit Ė "In interviews, representatives of both Tranz Rail and Incat have denied such a deal was struck" Ė was substantially less than the full and candid disclosure required. The plural "interviews" reads naturally as a reference to a single interview with Tranz Rail and a single interview with Incat. The terse reference to denial of a collusive deal is apt to give the impression that the denial was peremptory. In no way was the judicial officer made aware that there had been three meetings lasting some six hours in all, during which a substantial number of questions had been asked and answered. Indeed some documents had been handed over on request and there had been no refusal to supply any documentary material. Specific documents to which the search was directed had not even been requested.

  23. The discussions between the parties had been going on for some months. Had there been an intent to conceal or destroy material information, more than enough time had elapsed for this to be done. We make no suggestion that Tranz Rail would do any such thing. It is the time frame and the possibility for this to have occurred which was not disclosed. Furthermore, the unhappy use of the phrase "in the first instance" near the end of paragraph 17 of Mr. Mladenovicís affidavit was misleading. We do not say deliberately so. But it was apt to reinforce the impression of a rather peremptory denial of collusion followed by what was virtually the first step vis-ŗ-vis Tranz Rail in the Commissionís investigation process. That was far from being the case. All in all we are driven to the view that the disclosure of prior communications between the Commission and Tranz Rail was well short of being the full and candid disclosure which the law requires in present circumstances.

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

  25. Certainly there will be cases when it can be said that although something relevant has not been disclosed the non disclosure can have made no difference. We do not consider this to be one of those cases. The information which the Commission failed to disclose was clearly relevant to whether the issue of a warrant was necessary. It was also relevant to the judicial officerís ultimate discretion whether to issue a warrant in the circumstances and, if so, whether conditions of execution should be imposed. We do not consider it right to say that the non disclosure could not possibly have made any difference. For this reason we consider that there was material non disclosure. We will leave, until after we have discussed the other grounds, consideration of what the effect of that non disclosure should be.

    WAS THE WARRANT "NECESSARY"?

  26. The first and key point concerns what the Act means by "necessary" in s98A(2). There is an immediately obvious contrast between s98 and s98A in respect of their threshold requirements. A s98 notice may be given if necessary or desirable. A s98A search warrant may be issued only if there are reasonable grounds to believe it is necessary. The search warrant must be considered necessary "for the purpose of ascertaining" whether a relevant contravention has occurred or is occurring. In its statutory setting we consider the concept of necessity in s98A(2) must imply some consideration of what other investigative tools, such as a s98 notice, are reasonably available before a warrant is issued. The word necessary in its context imports this comparative element. The Commission does not appear to have recognised this. Mr. Smith for Tranz Rail properly accepted that the giving of a s98 notice was not intended to be a mandatory precursor to the issue of a s98A search warrant. But, as Judge Thompson indicated in his minute, the question of the efficacy of a s98 notice is a relevant consideration. While general concerns such as those expressed by Mr. Mladenovic about the likely or possible attitude of those facing an investigation such as the present are of some general relevance, the Commission in its evidence in support of the application for a warrant should also advise the judicial officer whether it has any specific concerns about concealment or destruction in the particular case. The absence of specific evidence of this kind will not necessarily be fatal to the application as there may be nevertheless be sufficient other evidence to establish the requisite necessity.

  27. In determining the meaning of the word necessary in s98A(2), it must be borne in mind, as Hammond J indicated, that s21 of the Bill of Rights protects everyone, including corporate bodies (see s29), from unreasonable search and seizure. Also relevant is s6 of the Bill of Rights and the need to recognise Bill of Rights considerations in construing and applying other legislation: see Moonen v Film & Literature Board of Review [2000] 2 NZLR 9 at 16 (paragraph [16]). Although expectations of privacy may not be as great in the commercial world as they are in the domestic sphere, corporations as well as human beings do have legitimate privacy expectations. While the extent of those expectations must be measured against the legislative and regulatory environment in which the corporation operates, it is not appropriate to deny to corporations any privacy expectations. Parliament must have had these considerations in mind when making a s98A warrant obtainable only if necessary, as opposed to a s98 notice which may be given on the lesser basis of desirability. It is also important to note that the word "necessary" must be construed in such a way as to make the legislation workable. Search warrants under s98A must be reasonably attainable. Too high a threshold would frustrate the purpose of the legislation.

  28. It is useful to bear the foregoing discussion in mind when interpreting s98A(2) and thereby moving from the abstract to the concrete. The subsection requires evidence giving the judicial officer reasonable grounds to believe that a search warrant is necessary to ascertain whether there has been a contravention of the Act. Behind the deceptively simple word "necessary" lie four linked but separately recognisable considerations. 

    • First, there must be evidence giving rise to at least a reasonable suspicion that a contravention of the Act is taking or has taken place.

    • Second, access to the documents or other materials the subject of the proposed search, must be reasonably required for the purpose of the Commissionís investigation. In this respect the compass of the warrant (a subject we address below) must be no greater than is reasonably required. 

    • Third, the proposed search warrant must have a realistic prospect of bearing fruit as regards its proposed subject matter and location. 

    • Fourth, and this will often be the most problematic factor, there must be no other reasonable way of gaining access to the subject matter of the search.

  29. The question whether there is any other reasonable way of gaining such access is the vehicle by which the various balancing factors, which we have earlier discussed, are brought into play. Privacy considerations can be matched against the need to make the search warrant regime effective while, at the same time, respecting the relatively high threshold which Parliament has imposed. If, for example, the prior use of a s98 notice would involve a real risk of frustrating or impeding the Commissionís investigation, the s98 alternative will not be a reasonable one. The approach outlined is consistent with s21 of the Bill of Rights. If there is a reasonable alternative to a search warrant, a search by warrant can be seen as an unreasonable search, and thus an inappropriate invasion of the privacy expectations which s21 engenders. If there is no other reasonable alternative to a search warrant, and the other criteria are met, the resulting search will be a reasonable one justifying the invasion of privacy involved. The search will then, in statutory terms, be necessary.

  30. We will address the question of necessity in the present case on the four-fold basis we have set out and on the basis of the facts as they should have been disclosed. It is not helpful to focus on the limited disclosure which the Commission provided. It has never been seriously in issue that the material which the Commission provided in support of its application for the warrant, gave rise to at least a reasonable suspicion of a relevant contravention by Tranz Rail. Access to materials of the kind referred to in Mr. Mladenovicís affidavit was reasonably required for the purpose of the Commissionís investigation, albeit the warrant as issued was, as we discuss below, of unnecessary and unreasonable width as a result of its lack of subject matter specificity. The third question is a little more difficult. Was there a realistic prospect the warrant would bear fruit as regards its proposed subject matter and location? The location point is easy. The premises to be searched were certainly where such documents as those in issue were likely to be found. They were Tranz Railís Head Office. Was there a realistic prospect that relevant documents would be found there? The risk that they, or some of them, had been destroyed or concealed elsewhere was certainly a factor. But there would be something rather unsatisfactory in proceeding on the premise that Tranz Rail might have indulged in such destruction or concealment, and allowing that possibility to be used as a basis for saying a search of its premises was not necessary. Appropriately, Mr. Smith put forward no such argument. In present circumstances, we consider there was a realistic prospect that a search warrant directed to Tranz Railís Head Office would bear fruit.

  31. That brings us to the fourth question. It is here that the parties primarily joined issue, albeit they did not define the elements of necessity as we have done. The question is whether the Commission established, on all the material facts, that there was no other reasonable way of gaining access to the subject matter of the proposed search. That question in this case really comes down, as Judge Thompson indicated, to whether it was reasonable for the Commission to have used the s98 procedure first. Was a search warrant necessary when this other investigative method had not been used? On the basis of the material provided in Mr. Mladenovicís affidavit, and the impression given by that material, the Judge who issued the warrant could well have inferred that the Commission had been met with a simple denial of any contravention and an unwillingness by Tranz Rail to take part voluntarily in any investigation. Had that been the true position, the Judge could have concluded that it was unreasonable to expect the Commission to go down the s98 route or indeed take any other step before obtaining the search warrant. But when the point is addressed against the true facts, the position is by no means the same.

  32. The matter had been under investigation for three months. Tranz Rail had taken part in three two hour meetings; many questions had been answered, and various documents had been handed over. There had been no request to hand over further documents. Against that background the justification for the peremptoriness of a warrant, as against a s98 notice, is not immediately obvious. If the Commissionís fear was of destruction or concealment, as appears to have been the case, two points are relevant. First, the evidence supporting such fear was entirely general; no concerns specific to the case were advanced.

  33. Second, in its application for the search warrant, the Commission moved straight from voluntary co-operation to the most intrusive step available to it without giving any satisfactory explanation why the intermediate step of a s98 notice would not be sufficient and despite Judge Thompsonís direct reference to the point. During the meetings the Commission had openly raised with Tranz Rail its concerns about contravening conduct. At that point the Commission presumably had no significant concerns about concealment or destruction. Tranz Rail would have been able to act in that way if so minded.

  34. On these earlier occasions the Commission was content to receive documents and information on an informal basis as an appropriate means of ascertaining whether there had been contravening conduct. The need for a s98A warrant, as opposed to a notice under s98, after what appears to have been a fairly leisurely approach to the investigation, is not self-evident nor, as we have said, was it adequately explained. In all these circumstances we consider a notice under s98 was a reasonable alternative to a s98A warrant. Hence the warrant issued was not necessary according to the proper meaning of that word. We should add that a warrant of the width sought and obtained was certainly not necessary, either in terms of the third criterion or the fourth.

  35. We are mindful of the difficulties for the Commission in the inherent tension which exists in respect of the different ways in which it may choose to investigate possible contraventions. If it goes straight to a s98A warrant, it will be asked to justify that course as against the less intrusive steps of voluntary co-operation and a s98 notice. If it seeks voluntary co-operation initially and then moves, as here, straight to seeking a warrant, it will be asked to justify that change of approach. Judicial scrutiny is involved when a warrant is sought because of Parliamentís wish to have a Judge control the balance between privacy considerations and the public interest in having the Commission properly investigate possible contraventions.

  36. The inherent tension to which we have referred must ultimately be resolved by the Court. The Judge must balance the competing interests in accordance with the circumstances of each particular case. To do this the Court is heavily reliant on the way in which applications for s98A warrants are presented by the Commission. Candid and full disclosure will enable the Court to understand the Commissionís concerns and its reasons for seeking a warrant, either immediately or after earlier investigative steps have been undertaken. In this particular case, and for the reasons given, we have found that the warrant was not shown by the Commissionís application and the evidence supporting it to have been necessary. We turn now to the related topic of whether the warrant was in any event invalid on account of its width and generality.

    THE GENERALITY OF THE WARRANT

  37. For centuries the law has set its face against general warrants and held them to be invalid. Entry onto or into premises pursuant to an invalid warrant is unlawful and a trespass: Leach v Money (1765) 19 State Tr 1002; Chic Fashions (West Wales) Ltd v Jones [1968] 2 QB 299, [1968] 1 All ER 229 CA; and Auckland Medical Aid Trust v Taylor [1975] 1 NZLR 728, 733 per McCarthy P. A general warrant in this context is a warrant which does not describe the parameters of the warrant, either as to subject matter or location, with enough specificity.

  38. A good, if rather extravagant, example of a general warrant can be taken from the words of s98A(2) itself. While the subsection speaks of searching "any place", a warrant authorising the search of "any place" would obviously be hopelessly general and thus invalid. The same can be said of the words in s98A(2) "conduct that constitutes or may constitute a contravention of this Act". A warrant which described the purpose or compass of the search at that level of generality would also be hopelessly general and invalid. The legislation itself is expressed in these general terms for obvious reasons. Any place and any contravention will qualify. But it would be naÔve in the extreme to draft a particular warrant in such general terms. Parliament cannot possibly have intended that consequence. The warrant in the present case is only slightly more specific than this example. While the place is properly identified, the nature of the contravention in issue is not. The language of the warrant is simply "conduct that does or may constitute contraventions of section 27 and/or 36 of the Commerce Act 1986". The reference to ss27 and 36 is little more illuminating than if the warrant had simply said "contraventions [note the plural] of the Commerce Act 1986".

  39. Reference should be made here to s98B. Both paragraph (d) and paragraph (e) give to the person executing the warrant powers which are based on that personís belief on reasonable grounds as to what may be articles, documents or things relevant to the investigation. The concepts of relevance, and reasonable grounds for belief in relevance, must be based on the premise that the warrant itself will delineate its ambit with reasonable specificity. Thus both the underlying common law and the statutory provisions point in the same direction.

  40. A search warrant is a document evidencing judicial authority to search. That authority must be as specific as the circumstances allow. Anything less would be inconsistent with the privacy considerations inherent in s21 of the Bill of Rights. Both the person executing the warrant, and those whose premises are the subject of the search, need to know, with the same reasonable specificity, the metes and bounds of the Judgeís authority as evidenced by the warrant: see McMullin J in Auckland Medical Aid Trust at 749; and also McCarthy P at 736. The point is reinforced by s98C of the Act which requires production of the warrant on execution.

  41. Judges who issue warrants which are not as specific as reasonably possible are not balancing the competing interests appropriately. An irony of the present case is that the Commission found it possible to brief its search party in writing and in some detail about what they were supposed to be looking for, yet no attempt was made at similar detail in the terms of the warrant.

  42. For these reasons Mr. Pikeís concession that the warrant was too widely drawn was properly made; indeed it was inevitable. It follows, as Mr. Pike again properly conceded, that the warrant was also invalid on account of its generality. The question becomes what, if any, relief should be granted to Tranz Rail on account of that invalidity.

    RELIEF

  43. When addressing the question of relief, it must be remembered that the warrant in this case was invalid not only because of its generality but also because, on the facts as they should have been disclosed, it was not necessary and there was therefore no jurisdiction to issue it. The warrant was therefore doubly invalid. We regret we cannot share Hammond Jís view that relief should not be granted. He, of course, took a different view of non disclosure and materiality. Furthermore, there can be no basis for saying, as Hammond J may have thought, that a formal declaration of invalidity would preclude further investigation by the Commission. It can always issue a s98 notice if it sees fit.

  44. It would be unusual for the Court to say, in the course of its reasoning, that the warrant was invalid but then decline to make a formal declaration to that effect: see New Zealand Employers Federation Inc v National Union of Public Employees [2002] 2 NZLR 54. The most important point of all is perhaps that to decline formally to declare the warrant invalid, would be to exercise the Courtís discretion in a way difficult to reconcile with the principle that general warrants of the present kind are fundamentally deficient: see McCarthy P in Auckland Medical Aid Trust at 738. He spoke of such a warrant as a miscarriage of justice (in terms of s204 of the Summary Proceedings Act 1957). In that case the warrant authorised the search and seizure of all the medical records held by the Trust, not just those of a patient or specified patients whose termination of pregnancy was suspected of having been unlawful. Such generality was said to constitute more than just a defect or irregularity: see Richmond J at 742 and McMullin J at 743.

  45. Mr. Pike endeavoured to save the day for the Commission by submitting that the warrant should not be formally invalidated because it had been executed in a reasonable and responsible manner. We are not sure we can accept the premise. Even if we did, we cannot see how its mode of execution can cure a fundamentally deficient warrant. Furthermore, its mode of execution cannot retrospectively validate a warrant issued without jurisdiction. For these reasons we consider the Judge should have made the formal declarations which Tranz Rail sought in the High Court.

    FORMAL ORDERS/COSTS

  46. The appeal is allowed. The order made by Hammond J, refusing to grant Tranz Rail relief, is set aside. In its place we substitute declarations that:

    1. The search warrant issued on 23 March 2002 to Mr. Mladenovic by a Judge of the District Court is invalid.

    2. The Commission is not entitled to retain the documents seized pursuant to the purported authorisation of the warrant.

    Tranz Rail is entitled to costs in this Court which we fix at $5000, plus disbursements to be settled if necessary by the Registrar. Tranz Rail is also entitled to costs in the High Court. They are to be fixed by that Court if the parties cannot agree.


Cases

R v McColl (1999) 17 CRNZ 136; R v Burns (Darryl) [2002] 1 NZLR 204; Moonen v Film and Literature Board of Review [2000] 2 NZLR 9; Leach v Money (1765) 19 State Tr 1002; Chic Fashions (West Wales) Ltd v Jones [1968] 2 QB 299, [1968] 1 All ER 229 CA; Auckland Medical Aid Trust v Taylor [1975] 1 NZLR 728; New Zealand Employers Federation Inc v National Union of Public Employees [2002] 2 NZLR 54

Legislations

Commerce Act 1986: s.98, s.98A, s.98B

Representations

Russell McVeagh, Wellington, for Appellant

Crown Law Office, Wellington, for Second Respondent


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