Breach of disclosure requirements aborts complex financial crime trial

The High Court(1) recently aborted the trial of four company directors of two failed finance companies after the prosecution disclosed an unprecedented number of previously undisclosed documents at an advanced stage of the trial. The court's careful examination of the principles for aborting a single-judge trial will be useful in similar cases, in light of the fact that, because complex commercial criminal cases involve immense numbers of documents, disclosure failures can occur.

Background

The trial began in August 2016. In October 2016, during the prosecution's case, the crown disclosed a further 171 documents following cross-examination of a prosecution witness. However, when it did so, it failed to provide a list of the further 14,619 documents, which it considered were able to be withheld under the Criminal Disclosure Act 2008. The failure was conceded to be a breach of the act, which entitles defendants to know "as soon as is reasonably practicable" of withheld documents so that they may challenge the grounds on which they have been withheld.

The list was not provided to defence counsel until late March 2017 at which point the prosecution had closed its case and the evidence of the third defence witness was drawing to a close. The trial was then adjourned to enable counsel to consider the list and resolve disclosure issues. Over the ensuing few months, disclosure of over 5,000 of the listed documents was given. It was expected to take a further two months to address issues of disclosure of the remaining documents and rulings were likely to be required. In May 2017, the defence applied to abort the trial on the grounds of prejudice.

Decision

As mistrials were rare in single-judge proceedings, there were few precedents. To establish the relevant principles, the judge considered other remedies, such as stays of prosecution, mistrials in jury trials and appeals against convictions arising from single-judge trials. He held that the power to declare a mistrial was within the court's inherent jurisdiction; although less extreme than a stay, a mistrial was nevertheless an extreme remedy, the exercise of which required caution. The following principles applied:

• Part of the rationale for exercising caution was the need to uphold the separation of the judiciary and the executive. The executive was responsible for exercising the discretionary public power to initiate and continue prosecution. Aborting a trial, like staying a prosecution, effectively amounted to a judicial review of the exercise of that discretion.
• The test for aborting a single-judge trial was the same as for aborting a jury trial – namely, whether there was reasonable danger or apprehension of an unfair trial; it is a forward-looking assessment.
• In the context of non-disclosure, the ultimate question was whether the non-disclosure likely gave rise to prejudice which was more than negligible.
• The dearth of examples of aborted judge trials in New Zealand arose, not from a stricter test, but from the greater flexibility in such trials to accommodate changes in the proceedings which might otherwise prejudice defendants. For example, a single-judge trial could be adjourned to allow further disclosure. Similarly, disclosure of inadmissible evidence was considered less likely to affect judges than juries, as the former were used to hearing questions of inadmissibility alongside admissible evidence.
• Nevertheless, the impact that disclosure, if properly made, might have had on the overall presentation of the defence case, on strategic decisions as to priority and narrative and on the approach to cross-examination, remained relevant in single-judge cases. There would be instances where a judge could not compensate for errors or occurrences in the trial.
• The volume of the non-disclosed documents was not decisive – a single document could be crucial to a defence case.
• Conversely, although a large volume of undisclosed relevant documents could be ameliorated by time and the additional time would lead to a longer trial, this alone would not necessarily cause a miscarriage of justice. For a mistrial, the trial length must be so great as to produce an unfair trial, and there is no notional maximum trial time.

In order to assess whether the breach of disclosure requirements in the present case met the test for aborting the trial, the judge considered the potential impact of three example documents that had recently been disclosed, as well as the wider consequences of the breach:

• Email correspondence with an independent expert, which arguably supported part of the defence case that there was an element of selectiveness and predetermination in the evidence compiled and conclusions reached by the prosecution's experts;
• A draft report by the prosecution's experts regarding the appropriate accounting standards to use, which might have advanced the defence's case of selectiveness and predetermination when questioning prosecution witnesses; and
• A draft brief of evidence for the receiver or liquidator of a number of companies associated with the first defendant, in the margin of which the witness had made notes that called into question the accuracy of a section of the brief of evidence. That section of the brief had been crossed out in the final brief with no explanation, and not led in evidence. The judge could not rule out the possibility that the defence may have been able to advance its case through crossexamination of the witness about the notes that he had written on the draft, if it had been available.

In his view, each document demonstrated the potential impact of the breach.

More generally, the judge noted that, if the trial were to proceed, there would be a further delay of several months before it could resume, and it was unclear how long it would then take if it did so. He considered that unnecessary delay had already caused needless complexity in the trial. In this respect he contrasted the present trial with that in Kellard v R,(2) in which the UK Court of Appeal held that, while the range and weight of evidence was large, its summary and presentation meant that it could be readily understood. The present trial had not featured a straightforward presentation of evidence and a clear issue to be decided. The changes to the evidence called, and the numerous adjournments, had already made it increasingly complex and difficult to understand. The disclosure problems were still not resolved and future adjournments, recall of witnesses and disjointed revisiting of evidence would make matters worse.

Even if the crown were correct that the number of undisclosed documents was exaggerated by several thousand (because of duplicates in the list), the cumulative effect of the undisclosed documents could have made a difference to the defence. In reaching this conclusion, the judge took the following into account:

• the timing of the late disclosure – if it had been disclosed within the first three months of trial (when the existence of further documents was first revealed during cross-examination) any prejudice could have been cured by an adjournment at that time;
• a lengthy adjournment at this time would have a prejudicial effect on the defendants' right to present an effective defence;
• the case could not be rerun (in a way that would allow the defence to run its case as it would have, if the documents had been available from the beginning) and the defence was entitled to prepare and present its case with full knowledge of all documentation that both helped and hindered its case; and
• the prejudice could not be cured by recalling witnesses. Cross-examination of witnesses for a second or third time is disjointed and less likely to be effective.

Accordingly, the judge considered that the crown's breaches of the Criminal Disclosure Act had restricted the choices open to the defence in respect of the presentation of their case, both in manner and extent. A mistrial was declared accordingly.

Comment

As the judge noted at the beginning of the judgment, quoting the lord chief justice of England,(3) the quantity of documents in fraud cases are liable to be immense and problems of disclosure intractable. Defendants have a right to disclosure of relevant documents, but equally the burden of disclosure on the prosecution is enormous. The volume of late disclosure in this case was described as "seemingly unprecedented", and the issues with which the judge grappled as a result will be a useful benchmark in future cases. In addition to drawing together key principles from analogous cases to set out a test for aborting single-judge trials for non-disclosure, it sets out some of the practical considerations that might be relevant in relation to specific documents, in determining whether the threshold for prejudice has been met.

Endnotes

(1) R v Bublitz, McKay, Blackwood and Morrrison [2017] NZHC 1059.
(2) [1995] 2 CP App R 134 at 149.
(3) Control and Management of Heavy Fraud and other Complex Criminal Cases – A Protocol Issued by the Lord Chief Justice of England and Wales (Ministry of Justice, March 22 2005) at [4].

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