A real-estate agent was awarded more than$75,000 in Baigent damages because his fair trial rights were breached during an Inland Revenue tax investigation.
Richard Parore, a self-employed real estate agent, filed for bankruptcy in April 2009 and was discharged in October 2014. Despite being bankrupt, Parore continued working as a real estate agent during which he continued to file Goods and Services Tax (GST) returns and pay GST for the first two years of his bankruptcy. However, the Commissioner of Inland Revenue alleged that Parore failed to pay GST and did not file income tax returns for the years 2012 to 2017. The Commissioner claimed that Parore traded without the Official Assignee’s consent and commenced an audit of his tax affairs in March 2017.
The civil tax dispute began in January 2018 when an Inland Revenue officer advised Parore that he was required to be registered for GST and to file GST returns. The officer also notified Parore the Commissioner would be issuing default GST assessments against him, and the possibility of prosecution for failing to register for GST. At the same time, and unbeknownst to Parore, the officer signed a memorandum that recommended prosecution for Parore’s alleged offences. In March 2018, Parore filed a Notice of Proposed Adjustment (NOPA) which set out his defence for the various GST tax periods during his bankruptcy. After a meeting between Parore and the Inland Revenue officer in June 2018, the Commissioner decided to proceed with prosecution and the civil process was ‘parked’ pending the outcome of the criminal proceedings.
In August 2019, the Commissioner filed charges against Parore, alleging that he evaded or attempted to evade GST assessment or payment. The charges related to various GST periods, including those during and after Parore’s bankruptcy. The trial was interrupted by several appeals from both parties. However, before the trial judge could deliver a verdict, Parore applied to stay all charges laid against him.
In their stay judgments, both the District Court Judge and High Court Judge concluded Parore’s fair trial rights were breached. Parore was compelled to provide a NOPA to protect his position regarding the default tax assessments issued by the Commissioner, which effectively forced him to disclose his defence before the criminal trial began.
Parore issued a claim for compensation, known as Baigent damages, in relation to his rights under the New Zealand Bill of Rights Act 1990 (“BORA”) being breached.
The Commissioner's actions were deemed a risk to fair trial rights and the integrity of the judicial process. The breach involved Parore's right to silence, the right not to be compelled to disclose a defence, the right to put the prosecution to proof, and the right to require the prosecution to prove its case beyond reasonable doubt. Gwyn J adopted the reasoning of the previous stay judgments, concluding that once Parore filed the NOPA, there was no proper way to lay charges against him because the information in the NOPA inevitably had to form part of the criminal proceedings. Furthermore, it was wrong for the Commissioner to go back on the decision regarding the civil dispute and lay charges against Parore, because in doing so, he essentially made Parore a witness against himself. This violated Parore's right to silence under s 25(d) of BORA and denied him a fair trial.
Previous court decisions have established the risk of BORA violations when the civil tax process precedes a criminal trial. The Commissioner was aware of this risk in the present case. Evidence showed the Commissioner's staff discussed the relevance of previous court decisions to Parore’s case almost a year before charges were filed. Gwyn J considered this fact to be inconsistent with any suggestion that the BORA breaches against Parore had been inadvertent. Her Honour characterised the breach as “highly reckless” due to the Commissioner’s failure to act on this knowledge.
Gwyn J held the breach caused damage to Parore because the entire process, from the outset, violated his rights. Even if the trials had proceeded and he had been acquitted, his rights would still have been violated. The damage Parore suffered resulted directly from the breach of his rights, and rendering a distinction between the breach and the impact of the trial process would be artificial. A fair trial was already an impossibility by the time the charges were laid as Parore’s rights had been compromised.
Counsel for Parore argued the stay was inadequate because, while it brought an end to the continued violation of Parore’s rights, it did not remedy the harm that he had already suffered. Gwyn J noted that the previous High Court Judge stated their purpose in granting the stay was not to vindicate Parore’s rights, nor was it to discipline the Commissioner for that breach. Rather, “it served to recognise the importance of fair trial rights and the administration of criminal justice in this country generally”. Further, while the stay vindicated Parore’s right not to be tried any further, he had already been through two trials before the stay was ultimately granted. Thus, Gwyn J was satisfied the stay was an insufficient remedy for Parore.
Parore sought declaratory relief in the following terms:
“That the Commissioner of Inland Revenue has breached Mr Parore’s rights to silence as guaranteed by s 25(d) of the New Zealand Bill of Rights Act 1990 by filing charges against him after compelling him to provide information and then by continuing that prosecution until it was stayed”.
Counsel for the Commissioner argued a declaration was unnecessary as there have already been findings of a breach by the Commissioner in both the District Court and High Court. Gwyn J disagreed with the Commissioner and held that the declarations sought were necessary to communicate the nature of the breach Parore suffered.
The Court then had to consider whether Bill of Rights damages could include a reimbursement of costs. Parore incurred over $70,000 in legal costs throughout the criminal proceedings. Previous court decisions have disallowed claiming litigation costs as damages, except for a few established exceptions. The Commissioner argued the costs are a consequence of the decision to charge, not the breach of Parore’s rights. Gwyn J rejected this argument and held damages were necessary to provide effective redress for the breach of Parore’s rights, concluding the Commissioner’s breach was a “sufficiently substantial cause” of Parore’s loss. Parore sought additional damages for the emotional harm he suffered and was awarded a separate sum of $5,000.
Parore was awarded over $75,000 in Baigent damages for the breach of his fair trial rights under BORA and the emotional harm he suffered. A declaration was made to this effect.
For further information on this case or similar issues, please contact Brigitte Morten, Director.
