Crown’s disclosure error ‘unprecedented’

FMA reviewing systems after judge aborts trial over list of withheld files

The amount of information prosecutors provided late to the defendants in the now-aborted Viaduct Capital and Mutual Finance trial appears “unprecedented in New Zealand”, says a High Court judge.

The Financial Markets Authority, which was the prosecutor in the case, says it is reviewing its processes after the nine-month-long trial was aborted this month.

The four company directors who were facing charges had not, as of Monday afternoon, been told whether they will face any further action.

Paul Bublitz, Bruce McKay, Richard Blackwood and Lance Morrison were on trial in the High Court at Auckland before Justice Mark Woolford.

McKay and Blackwood served as directors of Viaduct Capital while Morrison and Bublitz were on Mutual Finance’s board.

The firms went into receivership in 2010, owing investors $17 million.

Bublitz, according to prosecutors when the trial began, allegedly used the two finance companies to support his property investments.

The other defendants in the case were accused of helping him. All four deny the allegations against them.

Their judge-alone trial was originally expected to take 12 weeks when it started last August but stretched on and the FMA’s prosecution was whittled down several times.

After aborting the trial this month, Justice Woolford has now released his full reasons on why he made that decision.

The judge said a list detailing 14,619 documents withheld by prosecutors — for reasons such as irrelevancy or litigation privilege — was not provided to the defendants until March this year.

This breaches criminal disclosure rules as defendants are entitled to know “as soon as is reasonably practicable” when documents are withheld so they can push to get them if they wish.

The document list was provided by the Crown on March 23 and the trial ground to a halt shortly after that as the defence was of the view that many of the 14,619 documents should be disclosed.

Although more than 5000 documents have since been shared with defendants, the quartet were successful in their bid to abort the trial.

Justice Woolford said the Crown was clearly in breach of the disclosure rules.

“The breach was particularly problematic given it began to be rectified only after the principal defendant’s case was nearly complete . . . not only is the Crown required to disclose information to allow for equality of arms, but also because of the practical reality that the information relevant to the trial is in its hands. The obligation is further strengthened by the nature of the prosecutorial role. Crown prosecutors are required to act fairly,” the judge said.

The errors in disclosure were the responsibility of the Crown, he said.

“Non-compliance with disclosure obligations was inadvertent. Nonetheless, the scope of non-compliance was extensive. The volume of late disclosure is seemingly unprecedented in New Zealand,” he said.

Justice Woolford, in considering whether or not to abort the trial, had to weigh up whether there was a real risk that the disclosure breach led to unfairness for the defendants.

While arguably none of the documents by themselves would have made a difference to the outcome, the judge said he believed the cumulative effect of them may have.

He also considered the impact of the delays and complications of the trial to date.

One of the biggest factors in granting the application to abort the trial was the timing of the late disclosure.

If the document lists were disclosed during the first three months of the trial, the situa-

There is no suggestion of any bad faith. FMA spokesman

tion could have been remedied.

“The case cannot be rerun,” he said.

“Although the issues raised in the late disclosure were live in the trial, the defence is entitled to prepare and present its case with full knowledge of all relevant documentation . . . it is my view that the Crown breaches of the Criminal Disclosure Act have restricted the choices open to the defence in respect of the presentation their case, both in manner and extent,” Justice Woolford said.

“I am of the view that there was a real possibility of unfairness to the defendants if the trial was to proceed,” the judge said.

An FMA spokesman this week said that the issues over disclosure were inadvertent.

“There is no suggestion of any bad faith,” he said. “We will consider our processes concerning disclosure in light of the issues that have arisen during the course of this trial.”