Watchdog ordered to pay $50,000

Four finance company bosses whose trial on financial crime charges was aborted after an ‘‘unprecedented’’ mistake by the Financial Markets Authority (FMA) have been awarded damages.

The FMA has been ordered to pay Paul Bublitz and co-defendants Richard Blackwood, Bruce McKay and Lance Morrison $10,000 each for failing to disclose thousands of documents before the trial. It was also ordered to pay $10,000 to the Ministry of Justice.

It was only a partial legal victory for the men, three of whom face a retrial due to start on July 16, as they had sought more than $2 million.

At the trial the four men denied charges of theft by a person in a special relationship, making false statements to a trustee, and false statements by a promoter in relation to the collapse in 2010 of Mutual Finance and Viaduct Capital, which owed investors more than $17m.

Bublitz and his co-defendants were first charged in March 2014, but the trial, which began in August 2016, was aborted after it emerged the Crown, and the FMA as prosecuting authority, failed to disclose 14,619 documents.

In the High Court at Auckland, Justice Mark Woolford ruled there was a reasonable risk of miscarriage of justice.

Bublitz had asked for costs totalling $1,527,283.49 under section 364 of the Criminal Procedure Act.

In his judgment of March 9, the judge said: ‘‘His motivation for doing so, prior to the retrial, is clearly his wish to be able to retain and pay for counsel of his choice at the retrial. He exhausted his funds in the fifth month of the first trial and had to accept a legal aid grant to fund his continued representation by counsel.’’

‘‘I accept Mr Bublitz’s costs are actual and reasonable, as are Mr Blackwood’s and Mr Morrison’s.’’

But section 364 was not intended to compensate defendants for their actual and reasonable costs, the judge said.

‘‘It was primarily intended as a sanc- tion for non-compliance.

‘‘Given this, I consider an award in excess of $1m would be completely outside the realm of what Parliament intended. If an inadvertent error on the part of defence counsel, or one of the defendants, resulted in the trial being aborted, it would be unthinkable to suggest they should then compensate the Crown for its actual costs.’’

The overall costs order of $50,000 was enough to censure the FMA for its noncompliance.

‘‘While not anywhere near what the defendants sought, a large sum is warranted to sanction the failure.’’

Blackwood asked for $475,913.24, but was also awarded $10,000. Morrison asked for $212,992.90, but was awarded $10,000, and $75,000 towards the cost of his defence. The charges against Morrison were dismissed in June last year.

McKay, who had withdrawn his application for costs, was awarded $10,000.

Many of the charges the men faced were dismissed during their aborted trial.