IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY
CRI-2016-404-000088
[2016] NZHC 1596
UNDER THE

Costs in Criminal Cases Act 1967

BETWEEN

JOHN ARCHIBALD BANKS

Applicant

AND

THE QUEEN
Respondent

Hearing:

7 July 2016

Appearances:

D P H Jones QC for the Applicant

J R Billington QC and M Wong for the Respondent

Judgment:

14 July 2016

JUDGMENT OF WYLIE J
This judgment was delivered by Justice Wylie
on 14 July 2016 at 2.00pm
Pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date:

Solicitors/counsel:
D P H Jones QC/Parlane Law, Auckland
J R Billington QC, Auckland/Crown Law, Wellington

BANKS v THE QUEEN [2016] NZHC 1596 [14 July 2016]

Introduction
[1]

The applicant, Mr John Banks, seeks the costs of his defence, in relation to

criminal proceedings brought against him by the Crown, from 3 December 2013
(being the date of a judgment by Heath J dismissing an application for review1) to 1
August 2014, when he was sentenced by me.2

Mr Banks seeks payment of

indemnity costs ($190,210) or, in the alternative, costs in such sum, in excess of the
scale of costs prescribed by the Costs in Criminal Cases Act 1967, as the Court
considers just and reasonable.
[2]

The application is opposed by the Crown.

[3]

Mr Banks filed an affidavit. So did Mr Michael Heron QC, who, at all

relevant times, was the Solicitor-General and the Chief Executive Officer of the
Crown Law Office.

Neither Mr Banks nor Mr Heron were called for cross

examination. Rather the hearing before me was confined to the presentation of

submissions.
[4]

The key issues were:

(a)

should Mr Banks receive an award of costs, following on from his

acquittal?; and

(b)

if Mr Banks should receive an award of costs, what should be

awarded?

Factual Background
[5]

Mr Banks was a candidate in the 2010 Auckland mayoral election. In the

course of his electoral campaign he raised substantial funds to assist in meeting the
costs involved. Ultimately his campaign was unsuccessful. Nevertheless, as a
candidate in a local election, Mr Banks was required to file a return of electoral
expenses.3
[6]

A return was prepared on Mr Banks behalf. He signed it and it was filed on

9 December 2010.
1
2
3

Banks v Auckland District Court [2013] NZHC 3221, [2014] NZAR 591; See below at [21].
R v Banks [2014] NZHC 1807; See below at [26].
Local Electoral Act 2001, s 109.

[7]

Pursuant to the legislation then in force, the candidate was required to

disclose in the return any electoral donation of more than $1,000 made by a single
donor. Further, the donors name and address had to be disclosed, unless the donor
made the donation anonymously. A donation was made anonymously if it was made
in such a way that the candidate did not know who made it.4
[8]

The return signed by Mr Banks disclosed many donations, including a

number of donations of $15,000. Many of these were recorded as being anonymous.

It also disclosed five donations of $25,000. All were recorded as being anonymous.
None of the disclosed donations were attributed to Skycity Management Ltd (Sky
City) or to Megastuff Ltd (Megastuff).
[9]

Pursuant to the legislation then in force, it was an offence to transmit a return

of expenses knowing it to be false in any material particular.5

[10]

Sometime after Mr Banks filed the return, it emerged that $15,000 had been

donated to his campaign by Sky City and that two donations each of $25,000 had
been made by Megastuff on behalf of Mr Kim Dotcom. It was alleged that Mr
Banks knew who made these donations, but that they had been declared in the return
as being anonymous.
[11]

A police investigation was commenced in May 2012. The investigation

centred on whether the donations made to Mr Banks campaign by Sky City and
Megastuff had been accurately recorded in the return and, if not, whether Mr Banks
had filed the return knowing it to be false. Mr Banks was interviewed twice as part
of the investigation. A witness statement was taken from Mr Banks wife, Amanda
Banks. Witness statements were also taken from a number of others including Mr
Dotcom, his then wife, Mona Dotcom, and his then security advisor, Mr Wayne
Tempero.
[12]

The police investigation concluded in July 2012. The investigating officer

recommended that no prosecution should proceed.

4
5

Section 109.
Section 134(1).

This recommendation was

accepted, with the police taking the view that there was insufficient evidence to
charge Mr Banks.6
[13]

A private prosecution was then initiated by Mr Graham McCready. He swore

an information against Mr Banks.

[14]

In November 2012, Judge I G Mill, in the District Court at Wellington, found,

on the basis of the material obtained by the police in the course of their investigation,
that there was a sufficient case to be tested in Court.7 He directed that a summons
should issue.
[15]

It later transpired that the first information was defective and a second

information was then laid by Mr McCready.

In April 2013, Judge Mill again

concluded that there was substance to Mr McCreadys allegation and he issued a

fresh summons against Mr Banks.8 This summons was served on Mr Banks in May
2013.
[16]

Mr McCready had earlier written to the Solicitor-General asking him to

intervene in the prosecution.

In June 2013, the Solicitor-General advised Mr

McCready that, at that stage, he considered it inappropriate to intervene, but that he

would re-assess the matter if Mr Banks was committed.
[17]

Mr Banks applied for a discharge under the then applicable provision s 347

of the Crimes Act 1961 on the basis that the prosecutor was unable to prove that he
filed the return knowing it to be false.
[18]

Mr McCready applied for oral evidence orders in respect of various

prospective witnesses. Mr McCreadys application was heard by Judge E P Paul in

the District Court at Auckland in September 2013. It was largely successful. In the
course of his decision Judge Paul noted that, if the witnesses gave evidence

7
8

A subsequent review by the Independent Police Conduct Authority concluded that the polices
decision was based on too narrow a view of the knowledge element required by s 134(1) of the
Local Electoral Act see David Carruthers Police investigation into complaints about John
Banks return of expenses and donations at the conclusion of the 2010 Auckland Super City
Mayoral election (Independent Police Conduct Authority, 28 May 2015)..
McCready v Banks [2014] DCR 138 (DC).
McCready v Banks DC Wellington CRI-2012-085-9093 and CRI-2012-085-7894, 16 April 2013.

consistent with their written statements, there would be a prima facie case against Mr
Banks.9
[19]

The evidence was adduced by Mr McCready before Judge J P Gittos in

October 2013. Judge Gittos concluded that sufficient evidence had been presented to
justify Mr Banks committal and that the evidence was such that a reasonable
tribunal could convict Mr Banks on it. He committed Mr Banks for trial.10
[20]

Following committal, the Solicitor-General took over the conduct of the

prosecution. He did so at Mr McCreadys request, and with Mr Banks consent. The

then Crown Solicitor in Auckland knew Mr Banks personally. Another partner in the
Auckland legal firm holding the Crown warrant was leading an extradition case
against Mr Dotcom, who was a key Crown witness in the case against Mr Banks. As
a result, and also because Mr Banks was then a Minister of the Crown, Mr Paul
Dacre QC was appointed to prosecute the case. He was independent of any of the
parties and of prospective Crown witnesses.
[21]

Mr Banks applied for judicial review of the committal decision.

application was heard by Heath J. He dismissed it on 3 December 2013,

11

This

and the

proceedings were transferred to this Court for hearing.12

[22]

Mr Banks application for a discharge under s 347 of the Crimes Act was

heard by me on 4 April 2014. I dismissed it.13

[23]

The matter proceeded to trial on 19-29 May 2014, again before me, sitting as

a Judge alone.
[24]

Mr Banks faced a single charge alleging that he had breached s 134(1) of the

Local Electoral Act. The indictment read as follows:

The Solicitor-General charges that John Archibald Banks on or about the 9th
day of December 2010 at Auckland, being a candidate, transmitted a return

9
10

11
12
13

McCready v Banks DC Auckland CRN 12085501798, 6 September 2013 at [14].

New Zealand Private Prosecution Service Ltd v Banks DC Auckland CRN 120 8550 1798, 16
October 2013. [By this stage the private prosecution commenced by Mr McCready had been
taken over by a company formed by him New Zealand Private Prosecution Service Ltd].
Banks v Auckland District Court, above n 1.
R v Banks [2013] NZHC 3223.
R v Banks [2014] NZHC 696.

of electoral expenses knowing it to be false in one or more material

particulars.
Particulars: The return of electoral expenses and donations for the 2010
Auckland mayoral election signed by the said John Archibald Banks listed as
anonymous the following donations and in respect of which he knew the
identity of the donor:
a) Donation in the sum of $15,000 made by Skycity Management Ltd and
received on or about 24 May 2010;
b) Donation in the sum of $25,000 made by Megastuff Ltd on behalf of
Kim Dotcom and received on or about 14 June 2010;
c) Second donation in the sum of $25,000 made by Megastuff Limited on
behalf of Kim Dotcom and received on or about 14 June 2010.

[25]

I delivered my verdict on 5 June 2014.14 I was not satisfied that the particular

relating to the Sky City donation was proved.

I did, however, find that the

particulars relating to the two Megastuff donations were proved. Critical to this
finding was my acceptance of much of the evidence of Mr and Mrs Dotcom and Mr
Tempero. The thrust of their evidence was:
(a)

that during a lunch at the Dotcom residence attended by Mr and Mrs

Banks in June 2010, there was a discussion about the mayoral
campaign;

(b)

that Mr Dotcom agreed to donate $50,000 to the campaign; and

(c)

that Mr Banks asked that the $50,000 donation be split into two
$25,000 cheques, so that they could be treated for disclosure purposes
as being anonymous.

I accepted evidence given by Mrs Banks and another defence witness, Mr Scott
Campbell (who was Mr Banks handler), that the lunch was held on 5 June 2010,
and not 9 June 2010 as asserted by Mr Dotcom. I rejected evidence given by Mrs
Banks that the lunch was attended by two American businessmen and that there was
no discussion at the lunch about electoral donations.

14

R v Banks [Reasons for verdict] [2014] NZHC 1244, [2014] 3 NZLR 256.

[26]

I sentenced Mr Banks on 1 August 2014.15 Five days later, Mr Banks filed a

notice of appeal with the Court of Appeal.

[27]

On 5 September 2014, Mr Banks filed an application with the Court of

Appeal seeking to adduce fresh evidence, namely an affidavit from Mrs Banks, and
affidavits from two American businessmen Mr David Schaeffer and Mr Jeffery
Karnes. They deposed that they were at the lunch on 5 June 2010 and that donations
to Mr Banks mayoral campaign had not been discussed. Rather the discussion
involved Mr Dotcoms former business, Megaupload, the internet, and a plan to
build a sub-sea fibre optic cable between the United States and New Zealand.
[28]

Mr Dacre was conducting the appeal for the Crown. He instructed another

barrister, Mr Rowan Butler, to interview Mr Dotcom about the affidavits which Mr

Banks was seeking to put before the Court of Appeal.
[29]

Mr Butler met with Mr Dotcom and his then counsel on 29 September 2014.

After the meeting Mr Butler prepared a memorandum recording what had been
discussed. In short, Mr Dotcom confirmed to Mr Butler that the evidence from
Messrs Schaeffer and Karnes was correct. Mr Dotcom said that there had been a
second luncheon meeting on 9 June 2010, attended by Mr and Mrs Banks, at which
the electoral donations were discussed, and that the two cheques, each of $25,000,
drawn on Megastuffs account, were written and dated on that same day.
[30]

Mr Butler promptly sent the memorandum to Mr Dacre. Mr Dacre did not

then disclose Mr Butlers memorandum to anyone at the Crown Law Office. Nor did
he disclose it to Mr Banks or defence counsel.
[31]

The Court of Appeal heard the conviction appeal on 29 October 2014. It was,

of course, unaware of Mr Butlers memorandum and what it recorded. It issued its

judgment on 28 November 2014. It granted Mr Banks application to adduce the
evidence of Messrs Schaeffer and Karnes. It expressed the view that their evidence
appeared to be credible and cogent. It noted that the Crown relied for proof of Mr
Banks knowledge of the falsity of the return on what was said at the lunch. It was
satisfied that, if the evidence of Messrs Schaeffer and Karnes had been accepted at

15

R v Banks [2014] NZHC 1807.

trial, it might well have led me to conclude that the Crown had failed to prove Mr
Banks knowledge to the requisite standard. It also observed that had the evidence
been called, I may have rejected the evidence of Mr and Mrs Dotcom and Mr
Tempero. It allowed the appeal, set aside the conviction, and ordered a new trial.16
[32]

On the same day, Mr Dotcom posted a tweet, saying Fun fact for the

Court of Appeal: Meeting with US Businessmen & John Banks about Pacific Fibre
Cable took place days before donation meeting.
[33]

In January 2015, the Solicitor-General decided not to stay the prosecution,

and shortly thereafter the re-trial was set down for two weeks, to commence on 20
July 2015.
[34]

The memorandum prepared by Mr Butler was disclosed by Mr Dacre to the

Crown Law Office on 27 January 2015 and to Mr Banks defence counsel on 27

February 2015.
[35]

A few days later, on 2 March 2015, Mr Banks filed a memorandum in this

Court relating to the disclosure of Mr Butlers memorandum and advising that a

further s 347 application would be made. Further, on 12 March 2015, a recall
application was filed by Mr Banks with the Court of Appeal. This application was
opposed by the Crown.
[36]

On 22 April 2015, an additional brief of evidence from Mr Dotcom was

disclosed to the defence. Mr Dotcom asserted in the additional brief that there had
been a further lunch on 9 June 2010, and that the cheques had been signed at that
lunch. He said that he was not sure whether or not Mrs Banks was present.
[37]

The recall application was heard by the Court of Appeal on 28 April 2015.

On 19 May 2015, it allowed the recall application, cancelled the order for a re-trial
and directed that a verdict of acquittal be entered.17 It considered that it had been
misled and that there had been a serious error of process. The Court noted that the
Crown case on appeal had two limbs first, that it did not matter when the lunch
was held, and second, that the lunch was held on 5 June 2010 and that the discussion

16
17

Banks v R [2014] NZCA 575.

Banks v R [2015] NZCA 182.

attributed to Mr Dotcom and Mr Banks took place then. The Court considered that
the evidence of Messrs Schaeffer and Karnes was such that no reasonable fact finder
could conclude that there was a discussion about donations during the lunch on 5
June 2010. Although it was not part of the Crown case that the lunch was held on 9
June 2010, the Court noted the defence evidence at trial that Mr and Mrs Banks
could not have attended a lunch with Mr Dotcom on 9 June 2010 because both were
otherwise engaged on that day. It recorded that the Crown had not challenged that
evidence at trial, and that it had been accepted by me. The Court also noted:
(a)

the assertion by the Crown that there may have been another meeting
between Mr Dotcom and Mr Banks, which Mrs Banks may not have
attended, and that the donations may have been discussed at this
alternative meeting;

(b)

the defence response, namely:

(i)

that the evidence at trial traversed the limited contact between

Mr Dotcom and Mr Banks;

(ii)

that it was established that they met on four occasions only,

including the lunch held at Mr Dotcoms house in June 2010,
which Mrs Banks attended; and

(iii)

that there had been no suggestion at trial that the discussion

about donations had been held at any of the other three
meetings when Mr Dotcom met with Mr Banks, or on any
other occasion.

The Court observed that the suggestion that there was another occasion (other than
the lunch on 5 June 2010) when Messrs Dotcom and Banks may have met and
discussed electoral donations would be an entirely new account, inconsistent not
only with the evidence at trial, but also with Mr Butlers memorandum.
[38]

Mr Banks subsequently made an application for costs to the Court of Appeal.

That application sought costs both in this Court and in the Court of Appeal.

However, the Court of Appeal indicated that it would not deal with costs in this
Court, and that this was a matter best dealt with this jurisdiction.
[39]

The Court of Appeal costs application was subsequently settled. There is no

judgment from the Court of Appeal and I do not know the terms of the settlement.
Costs in Criminal Cases Act 1967
[40]

The application for costs in this Court is brought pursuant to the Costs in

Criminal Cases Act 1967. Relevantly, s 5 of that Act provided as follows:18

18

Costs of successful defendant

(1)

Where any defendant is acquitted of an offence or where the

information charging him with an offence is dismissed or withdrawn,
whether upon the merits or otherwise the Court may, subject to
any regulations made under this Act, order that he be paid such sum
as it thinks just and reasonable towards the costs of his defence.

(2)

Without limiting or affecting the Court's discretion under subsection

(1) of this section, it is hereby declared that the Court, in deciding
whether to grant costs and the amount of any costs granted, shall
have regard to all relevant circumstances and in particular (where
appropriate) to
(a)

Whether the prosecution acted in good faith in bringing and

continuing the proceedings:

(b)

Whether at the commencement of the proceedings the

prosecution had sufficient evidence to support the conviction
of the defendant in the absence of contrary evidence:

(c)

Whether the prosecution took proper steps to investigate any

matter coming into its hands which suggested that the
defendant might not be guilty:

(d)

Whether generally the investigation into the offence was

conducted in a reasonable and proper manner:

(e)

Whether the evidence as a whole would support a finding of

guilt but the information was dismissed on a technical point:

(f)

Whether the information was dismissed because the

defendant established (either by the evidence of witnesses
called by him or by the cross-examination of witnesses for
the prosecution or otherwise) that he was not guilty:

(g)

Whether the behaviour of the defendant in relation to the

acts or omissions on which the charge was based and to the

Section 5 was amended as from 1 July 2013 to take into account the Criminal Procedure Act
2011.

investigation and proceedings was such that a sum should be

paid towards the costs of his defence.

[41]

(3)

There shall be no presumption for or against the granting of costs in

any case.

(4)

No defendant shall be granted costs under this section by reason only

of the fact that he has been acquitted or discharged or that any
information charging him with an offence has been dismissed or
withdrawn.

(5)

No defendant shall be refused costs under this section by reason only

of the fact that the proceedings were properly brought and continued.

The following principles have emerged from the case law:

(a)

while success in the proceeding is a jurisdictional prerequisite to an

application, the fact of success is neutral when the discretion whether
or not to award costs is exercised;19

(b)

the Court has a broad discretion;20

(c)

the seven matters set out in s 5(2), or as many as are appropriate, are
to be considered;21

(d)

the expression shall have regard to contained in s 5(2) is not

synonymous with the expression shall take into account;22

(e)

the matters set out in s 5(2)(a) to (e) refer in a general way to the
propriety, conduct and strength of the prosecution case. Affirmative
answers might tend to inhibit or weigh against an award of costs or
diminish the quantum of the same;23

(f)

the terms proper steps and in a reasonable and proper manner in s

5(2)(c) and (d), respectively, mean something less than would be

19
20

21

22
23

McLeod v R [2016] NZHC 221 at [10].

Solicitor-General v Moore [2000] 1 NZLR 533 (CA); R v Reid [2007] NZSC 90, [2008] 1 NZLR
575.
R v CD [1976] 1 NZLR 436 (SC) at 437; R v Connolly (2007) 23 NZTC 21,172 (CA) at [11][17]; Delamere v Serious Fraud Office [2009] NZCA 142, [2009] 3 NZLR 94 at [27].
R v CD, above n 21, at 437.
At 437.

adopted by a reasonably prudent prosecutorial authority.

It is a

difficult burden to surmount;24

(g)

the fact that a prima facie case is established at a preliminary hearing,

or that a Judge refuses a discharge, is likely to support the conclusion
that there was sufficient evidence at the commencement of the
proceeding;25

(h)

the matters set out in s 5(2)(g) are concerned with behaviour justifying
an award, and not with behaviour disqualifying an award;26

(i)

the factors set out in s 5(2) are qualified by the words without
limiting the Courts discretion.

Regard should be had to all

relevant circumstances, and not simply those set out in s 5(2)(a)-(g).27

There is a danger in narrowing relevant considerations by reference to
the wording of s 5(2) or in trying to fit particular circumstances into
one of its subparagraphs;28
(j)

costs are not to be awarded only because the defendant has been
acquitted.

An applicant must be able to point to some relevant

circumstances, either within the criteria, or otherwise, that justify an

award.29
[42]

The essence of the discretion was distilled by Hardie Boys J in R v Margaritis

as follows: 30
The various criteria in s 5 really come down to two questions: was the
prosecution reasonably and properly brought and pursued; did the accused
bring the charge on his own head.

This observation is a pithy summary and it has been cited in numerous subsequent
cases. It is, however, no substitute for the statutory provisions.

24
25
26
27
28
29

30

Long v R [1996] 1 NZLR 377 (HC) at 381.

R v Sotheran HC Palmerston North T31/00, 2 May 2002 at [34].
R v AB [1974] 2 NZLR 425 (SC) at 432; R v CD, above n 21 at [438].
Cavanagh v Police [2013] NZHC 2232 at [19].
Solicitor-General v Moore, above n 20, at [32]-[33].
Jones v Civil Aviation Authority [2009] NZCA 240 at [17], citing R v Gillespie (1993) 10 CRNZ
668 (HC) at 672-673.
R v Margaritis HC Christchurch T66/88, 14 July 1989 at 8.

Submissions
[43]

Mr Jones QC, acting for Mr Banks, submitted that the key evidence called by

the Crown, and relied on by me in entering a conviction in relation to the Megastuff

donations, was fabricated, and that as a result Mr Banks has suffered a grave
injustice. He submitted that Mr Banks was not guilty of the charge he faced at trial,
that he has subsequently proved his innocence, and that he has been acquitted. He
said that, in terms of s 5(1) of the Act, it is just and reasonable in the circumstances
of this case that Mr Banks should receive a costs award.

He argued that the

prosecution was fundamentally flawed because the evidence was fabricated, and that
it was left to Mr Banks to establish at trial a number of key facts which the Crown
had failed to address either properly or at all. In particular, he referred to the date of
the lunch, where the Megastuff cheques were banked, and how the Sky City
donation was provided to the campaign treasurer who was responsible for handling
finances Mr Lance Hutchison. He argued that, once the Crown took over the
prosecution, it took no steps to investigate further. He put it to me that there were
obvious enquiries that should have been made. Importantly, he noted that both Mr
and Mrs Banks, in their statements to the police, said that there were additional
people present at the lunch with Mr Dotcom, and in particular that Mrs Banks said
that there were two American businessmen present. He noted that no enquiries were
carried out by the Crown to identify who those businessmen were, despite the fact
that their identities would have been known, certainly to Mr Dotcom, and perhaps to
Mrs Dotcom. He argued that the Americans evidence, when it was ultimately
obtained by Mrs Banks, disproved the Crown case. He noted that Mr Dotcom has
accepted the evidence of the two Americans, and that it follows that Mr Dotcoms
evidence, Mrs Dotcoms evidence and Mr Temperos evidence was a concoction
which misled the Court.
[44]

Mr Billington QC, for the Crown, argued that this was a case that had to go to

trial. He noted that three District Court and two High Court Judges considered that
there was a prima facie case prior to trial, and that Mr Heron, in his capacity as
Solicitor-General, personally reviewed the prosecution on two occasions, with the
benefit of thorough advice, and that he also concluded that it should go to trial. He
argued that the prosecution was reasonably and properly brought, and that Mr Banks
has failed to discharge the onus on him to point to cogent relevant circumstances

justifying an award of costs. He accepted that the evidence of Messrs Schaeffer and
Karnes was critical, but argued that prior to Mr Dotcom accepting that that evidence
was correct, neither the defence, nor the Crown, appreciated its significance. He
noted that both were aware that Mrs Banks had asserted that two American
businessmen were present, but that the defence took no steps to seek out the
Americans evidence prior to trial.

He submitted that the significance of the

evidence only became apparent once it was ultimately obtained and the Crown
became aware of it, and that only then did it become apparent that the evidence may
well have affected the credibility of Mr and Mrs Dotcom and Mr Tempero. He
submitted that there was nothing in the case before that point which should have put
the Crown on notice, or which required it to make further enquiry.
Analysis
[45]

The charge was brought under s 134 of the Local Electoral Act, which

provided, in 2010, as follows:

134 False Return
(1)

[46]

Every candidate commits an offence who transmits a return of

electoral expenses knowing that it is false in any material
particular, and is liable on conviction on indictment to
imprisonment for a term not exceeding 2 years or to a fine not
exceeding $10,000.

There were then four elements to the offence:31

(a)

was the person whose conduct is under scrutiny a candidate?;

(b)

did the candidate transmit a return of electoral expenses?;

(c)

was the return of electoral expenses false in any material particular?;

and

(d)

did the candidate know that the return of electoral expenses was false
in any material particular at the time of the transmission?

[47]

At trial there was no dispute about the first and second elements. 32 The

dispute was in relation to the third and fourth elements. The Crown alleged that the
31

R v Banks, above n 14, at [28].

falsity was the recording of three donations as coming from anonymous donors when
Mr Banks in fact knew who the donors were.
Jurisdictional threshold
[48]

Mr Banks has been acquitted of the charge.33 It follows that the jurisdictional

threshold contained in s 5(1) of the Act is met, and that the Court has jurisdiction to
order that he be paid such sum as it thinks just and reasonable towards his costs. The
acquittal of itself does not entitle Mr Banks to an award of costs. Rather, the Court is
required to have regard to all relevant circumstances and in particular those listed in
s 5(2) of the Act.
[49]

Here, Mr Banks has sought his actual costs. There is no breakdown as

between the Sky City particular and the Megastuff particulars.

[50]

It is, however, helpful to consider each particular in turn.

The Sky City donation

[51]

I consider, first, the Crowns conduct in taking over and initially pursuing the

prosecution.
[52]

Prior to trial, the Crown had a witness statement from Ms Anna McKinnon,

who was Executive Assistant to Mr Nigel Morrison, the then Managing Director and
Chief Executive of Sky City. She said that she organised a meeting between Mr
Morrison and Mr Banks. It also had a witness statement from Mr Morrison. He said
that he met with Mr Banks in May 2010, together with another person, in his office
at Sky City. He said that during the meeting he handed Mr Banks a cheque for
$15,000, enclosed in a Sky City envelope, by way of a donation to his mayoral
campaign.
[53]

The Crown had witness statements about the drawing of a cheque for

$15,000, the fact that a first cheque had to be cancelled, and that a new cheque had to
be written, because the first cheque was in Mr Banks personal name, whereas the
second cheque was made out to Team Banksie 2010.

32
33

At [82] to [83].
Banks v R, above n 17.

[54]

In his police interviews, Mr Banks said that he had no recollection of the

meeting with, or of receiving any cheque from, Mr Morrison.

[55]

The campaign treasurer, Mr Hutchison, in his witness statement, said that he

believed he received the Sky City cheque in the mail, but that, if it did not come in
the mail, it would have come from one of the team i.e. Mr Banks campaign
team. He said that he recalled ringing a person who he knew worked in the legal
department at Sky City, and asking that person whether Sky City wanted the
donation to be anonymous, or to have its name on the donations ledger. He said that
the advice he was given was that Sky City wanted its donation to remain anonymous.
In a further witness statement, he said that the person he rang would have been Mr
Peter Treacy.
[56]

The Crown had a witness statement from Mr Treacy. He did not refer to any

discussion with Mr Hutchison. Rather, he said that Sky City did not stipulate to Mr
Banks that the donation he received was to remain anonymous.
[57]

In addition, the Crown had the judgments of Judge Mill (x 2), Judge Paul and

Judge Gittos.
[58]

In my judgment, the Crown acted in good faith in taking over the conduct of

the private prosecution from Mr McCready (and his company) and in initially
continuing the prosecution (s 5(2)(a)). It had, when it took over the proceeding,
sufficient evidence to support Mr Banks conviction in the absence of contrary
evidence (s 5(2)(b)). As matters progressed it gained the benefit of Heath Js
judgment on Mr Banks application for review, and my judgment on the s 347
application.
[59]

These matters of themselves do not compel the conclusion that Mr Banks

should be refused an award s 5(5). It is necessary to consider the additional

statutory considerations and any other relevant circumstances.
[60]

There was no evidence before me to suggest that any material came into the

Crowns hands which suggested that Mr Banks might not be guilty in relation to the
Sky City donation, and which the Crown should have taken proper steps to
investigate (s 5(2)(c)). Rather, the Crown relied on the investigation undertaken by

the police. As Mr Jones pointed out, it did not further investigate the matter, but in
my view it acted reasonably and properly in not doing so given the materials and
information it had (s 5(2)(d)).
[61]

It cannot be said that the charge was dismissed on a technical point (s

5(2)(e)). At trial, I was satisfied beyond reasonable doubt that Mr Banks did know
that he received a donation from Sky City.34 In doing so, I accepted the evidence of
the various Sky City witnesses, and also the evidence of Mr Hutchison. All were
called by the Crown.

I also accepted the evidence of Mr Banks handler, Mr

Campbell, who was called by the defence. I was satisfied that the electoral return
was false in a material particular, because it declared the Sky City donation as
anonymous in circumstances where Mr Banks knew that Sky City had made a
donation to his mayoral campaign, and where it could reasonably be inferred that Mr
Banks would have known that the donation was for a sum in excess of $1,000. I was
not, however, sure that Mr Banks actually knew that the return was false in relation
to the Sky City donation. I considered that Mr Banks might have thought that Mr
Hutchison knew enough to record that the donation came from Sky City, and that he
might have abstained from further enquiry when he signed the return, simply
because he was careless, and not because he knew what the answer was going to be.
I was not persuaded beyond reasonable doubt that Mr Banks knew that the return
was false because it did not record Sky Citys name as a donor to the campaign in the
sum of $15,000.35
[62]

All evidence the Crown called in relation to the Sky City donation was

accepted by me. What was in issue was whether or not that evidence was sufficient
to prove beyond reasonable doubt that Mr Banks knew of the falsity in the return.
That issue could not be resolved without a trial.
[63]

Mr Jones submitted that the defence had to adduce evidence filling an

evidential gap namely how the envelope containing the donation cheque came into
Mr Hutchisons hands. He noted that the defence called Mr Campbell, and that it
was his evidence that he received the envelope from Mr Banks after Mr Banks met

34
35

R v Banks, above n 14, at [86]-[100].

At [141]-[147].

with Mr Morrison at Sky City, and that Mr Banks told him to give it to Mr
Hutchison. Mr Jones relied on s 5(2)(f).
[64]

Mr Jones is correct that Mr Campbells evidence did assist in clarifying the

evidential trail, but it was not a point of any significance at the trial. What was more
important was that I was able to infer, from the evidence overall, that the fact that a
meeting was going to be held between Mr Morrison and Mr Banks was known by
various persons in Mr Banks campaign team, and that the instructions to issue a new
cheque in the name Team Banksie 2010 were likely to have come from somebody
within Mr Banks campaign team. I considered that it must have been known to
members of the campaign team that Sky City was going to make a donation to the
campaign. In my judgment it was a reasonable possibility that Mr Banks may have
believed that Mr Hutchison did know enough about the donation to record in the
return that it came from Sky City.36
[65]

Mr Banks did not establish that he was not guilty. Rather, the Crown failed to

prove the Sky City particular against him beyond reasonable doubt.

I do not

consider that s 5(2)(f) assists Mr Banks in his application for costs.

[66]

It is also noteworthy that I found that it was unfortunate that Mr Banks did

not give rather fuller instructions to Mr Campbell and/or Mr Hutchison, and that Mr
Banks may have abstained from further enquiry when he signed the return because
he was careless, and not because he knew what the answer was going to be. Those
findings have not been challenged and they were not criticised by Mr Jones in his
submissions on the costs application. Mr Banks behaviour relevant to the Sky City
donation does not support an award of costs in his favour (s 5(2)(g)).
[67]

There were no other relevant circumstances put forward by Mr Banks in

relation to the Sky City donation, and there are none that are obvious to me.
[68]

In my judgment, the Crowns conduct in relation to the Sky City donation

was appropriate and unexceptional. Mr Banks is not entitled to costs under s 5 of the
Act by reason only of the fact that he has been acquitted (s 5(4)), and there is nothing

36

At [144].

which Mr Banks can point to which entitles him to an award of costs in regard to this
aspect of the matter.
The Megastuff donations
[69]

Again I first consider the Crowns conduct in taking over and initially

pursuing the prosecution.

[70]

Mr Dotcom had given a witness statement. He said that, on 9 June 2010, Mr

Banks and his wife came to his Coatesville mansion for lunch. He said that, at the
lunch, he offered to donate $50,000 to Mr Banks mayoral campaign, and that the
offer was promptly accepted. Mr Dotcom said that, in Mr Banks presence, he
instructed Mr Tempero to ask his chief financial officer, Mr McKavanagh, to prepare
a cheque. Mr Dotcom said that Mr Banks intervened and asked that the cheque
should be split into two cheques, each of $25,000, so that he would not have to
declare where they came from. Mr Dotcom said that he was a little offended by this
explanation, as he felt that it implied that Mr Banks did not want to be seen to be
associated with him. Mr Dotcom said that he told Mr Banks that he did not have a
problem with it being known that he had made a donation to him, and that Mr Banks
responded that he wanted to help Mr Dotcom, and that he could help him more
effectively if no-one knew about the donation.
[71]

Mr Dotcoms version of what happened at the lunch was supported in witness

statements given by Mrs Dotcom and by Mr Tempero.

[72]

Mr Dotcom also said, in his witness statement, that two cheques were

prepared by Mr McKavanagh, that they were made out to Team Banksie, and that he
signed them. Mr Dotcom could not remember whether the cheques were signed
during or after his meeting with Mr Banks.
[73]

Mr McKavanagh said, in his witness statement, that he took the two cheques

with him because he was going to the South Island on holiday. He said that he
posted them from Queenstown. He could not remember who he posted them to.
[74]

Mr Tempero said that, at around this time, he had a conversation with Mr

Banks, and that he would have asked Mr Banks whether the cheques had cleared or

not. He said that Mr Banks confirmed that the cheques had been cleared, and that
he, in turn, told Mr McKavanagh of this.
[75]

Mr Dotcom, in his witness statement, said that he had a telephone discussion

with Mr Banks a few days later. He said that, during the course of this conversation,
he asked Mr Banks whether or not he had received his donation, and that Mr Banks
acknowledged that he had and thanked Mr Dotcom for it.
[76]

Mrs Dotcom confirmed this conversation in her witness statement.

[77]

When Mr Banks was interviewed by the police, he denied any actual

knowledge of the Megastuff donations. He did accept, however, that he had a

discussion about donations with Mr Dotcom. He said that, on the day of the lunch,
he and Mr Dotcom went into a conservatory. The relevant parts of the interview
proceeded as follows (B is Mr Banks):
B

So I called him aside and we went out to his conservatory

and I said, I need some support from you. Im raising a lot
of money $25,000 lots. And he offered me 200,000. Plus he
says I can give you quite a lot of access to social media

So I asked him for 25 thous, thousand dollars and I think he

said something like, I could fund all of this campaign.
That wouldve been a worry actually from anyone. We
thought that $25,000 was a good number about right to ask
from high networthers. And I said to him you can, if you
want give me more with other entities and I mentioned the
Pacific Cabling Company. I dont know whether he said, yes
Ill support you, I dont know whether he said, no. But he
sort of got up and wandered around. While he was talking he
was wandering around a little so, he was looking at me like
this as he was wandering around he didnt sit here looking at
me like this, he was just sort of wandering around and
looking at pictures of himself and going into a room where
there were racing cars going round and looking at goldfish.
A very strange man

[Interviewer]

See, this offer of money then, when you say you were
shocked by amounts that which was talked about because he
talked about funding the whole campaign. Um, you said
$25,000.
Yes.

[Interviewer]
B
[Interviewer]
B

You said to him. Um, what was his reaction to, to that?
Nonplussed, not excited, no interest. I dont even recall him
saying yes.
And who was present with you at the time when this offer
was made from him?
I think just him and I sitting on a bench in a conservatory
with a huge, I remember a statue of a fighting warrior on
was standing there in about 600 kgs of steel, quite
intimidating, but he was wandering around. He, he wasnt
interested in the conversation, I think he heard but it wasnt
something that was really quite interested in.

A little later, Mr Banks answered as follows:

B
[Interviewer]
B

[Interviewer]

B
[Interviewer]
B
[Interviewer]
B

And of course it was at that lunch that I discussed the

donations.
And who was it to, I may have missed, just to clarify who
was it that raised that idea of donations?
Um, during the lunch I called aside DOTCOM to go out into
the conservatory because there was something I wanted to
discuss with him. I dont remember what I said, I raised it
then.
And youve said that during the meeting obviously hes um,
offered you $200,000 and youve explained that you thought
that was a, - well just went nah, nah.
- outrageous amount?
Well I wouldnt have said that I wouldve just said, Nah,
nah, nah.
Um, and that you also made mention that he could fund your
whole campaign.
No, no, no, the mention to fund the whole campaign I think
came from Wayne TEMPERO

Mr Banks also accepted that he told Mr Dotcom he could make any donation
anonymously:
[Interviewer]
B
[Interviewer]

What have you told your team, Lance Aaron, Michelle,

about this, the possible donation?
Nothing, nothing
Why havent you mentioned it to them Mr BANKS?

[Interviewer]
B

Well I wanted him to make it, ah, and I, I told him he could
make it anonymous. I gave him slips, I think on that day, I
think on that day I gave TEMPERO , ah, a number of slips
And the reason for giving him the slips?
Oh, I wanted the money

There is also the following passage a little later in the interview:

B

Well I dont think DOTCOM, I dont remember DOTCOM

ringing up and asking it to be anonymous. DOTCOM was
told it could be anonymous, DOTCOM, ah, lodged that
anonymously. I dont have any knowledge of DOTCOM
ringing me up and saying is this anonymous or Lance, or
anyone else, no. No. Most people know that if they lodge
some money it can be done anonymously and its anonymous
and I respect it, its not anonymous for me because for all of
these people I couldnt careless if they werent
anonymous
(Italics added)

[78]

In her witness statement, Mrs Banks said that there was a discussion at the

lunch about the internet being used to assist Mr Banks electoral campaign.
[79]

The police also had a witness statement from an independent witness, Mr

Greg Towers, who was Mr Dotcoms solicitor at the time. In early 2012, Mr Dotcom
had been arrested and remanded in custody.

Mr Dotcom suffered from back

problems and Mr Towers said, in his witness statement, that he was asked by Mr
Dotcom to contact Mr Banks, who was by that time a member of Parliament, and
seek his assistance in obtaining an additional mattress for Mr Dotcom. Mr Towers
said that, on 8 February 2012, Mr Banks called him back in response to a message he
had left for him. He said that Mr Banks told him that, as much as he wanted to
publicly support Mr Dotcom, it might backfire if the election support became
known.
[80]

The Crown also had the two cheques drawn on Megastuffs account, each of

$25,000.
[81]

The Crown would have been aware of the various District Court judgments

and the two High Court judgments I have already referred to.

[82]

In my judgment, the Crown acted in good faith in taking over and initially

continuing the proceedings against Mr Banks in relation to the Megastuff donations

(s 5(2)(a)). When the conduct of the proceedings was taken over by the Crown,
there was sufficient evidence to support a conviction being obtained against Mr
Banks in the absence of contrary evidence (s 5(2)(b)).
[83]

I now turn to s 5(2)(c)).

[84]

Mr Jones submitted that the Crown should have taken further steps to

confirm the date of the lunch, and that it should have sought to get further evidence
from the two American businessmen, who Mrs Banks had said were at the lunch.
[85]

I do not consider that there is anything in this argument.

[86]

In Mr Banks police interview, he said that the lunch was in early June 2010.

Mrs Banks said the same in her witness statement. The date of the lunch was not
then of any great moment. The defence subsequently made enquiries and it was able
to establish at trial that the lunch was on 5 June 2010, and not 9 June 2010 as
asserted by Mr Dotcom. It did not, however, put the Crown on notice of this. From
the Crowns perspective, and at the time, the precise date was not a matter of any
moment, particularly given Mr Banks police interview.
[87]

Mr Jones submitted that the Crown should have taken further steps to

ascertain the identity of the two American businessmen and that, had it done so, it
would have become obvious that there were potential credibility problems with Mr
and Mrs Dotcoms evidence and with Mr Temperos evidence.
[88]

This submission has to be seen in context. In his police interview, Mr Banks

said that there were numerous:

business looking people um, I think from Germany, England and America,
and the topic of the conversation at lunch was mainly about the investment
in the Pacific communications link that they were investors in. As well as
that, um, Kim Dotcoms internet business that I couldnt understand

Mrs Banks was rather more specific in her witness statement. She said that there
were two or three other people there. She said that two of them were American
guys who were talking about the Pacific cabling .

[89]

I accept that the Crown could have asked Mr Dotcom about the other people

said to have been present and then sought to track them down.

Importantly,

however, there was nothing available to the Crown at the time which suggested that
the evidence of Mr Dotcom, Mrs Dotcom and Mr Tempero may have been suspect. I
do not consider that, in the circumstances as they then stood, the Crown was bound
to seek out the others who were said to have been present at the lunch.
[90]

The Court of Appeal, in its first judgment, stated as follows:37

Mr Jones sought to persuade us that the new evidence was fresh. To that end
Mrs Banks was called before us for cross-examination on her affidavit. She
frankly acknowledged that she could have made the same inquiries before
trial but did not think it necessary. She said that I didnt think I would not
be believed. Before trial she told Mr Banks solicitors what she knew of the
two Americans, including the discussion about the trans-Pacific cable. It
seems obvious that the importance of the evidence was not adequately
appreciated by Mr and Mrs Banks or their legal advisors, perhaps because
they assumed too readily that the Crown witnesses could be discredited.
There is no evidence that any substantive inquiries were made. The
evidence is not fresh.

[91]

The Crown also did not appreciate the significance of such evidence as the

American businessmen might have been able to give, presumably because it

assumed that the Crown witnesses would be believed. From its perspective, the
evidence of Mr and Mrs Dotcom and Mr Tempero was in part supported by what Mr
Banks had said in his police interview.

It was also supported by Mr Towers

evidence, and the Crown could reasonably have assumed that Mr Towers was likely
to be considered a reliable witness.
[92]

The significance of the American businessmens evidence only became

apparent once it was obtained and when Mr Dotcom accepted that it was correct.
Only then was the reliability of Mr Dotcoms, Mrs Dotcoms and Mr Temperos
evidence at trial thrown into question, and only then did the Crown case start to
unravel.
[93]

The Americans evidence was made available to the Crown in early

September 2014. Mr Dotcoms acceptance of the Americans evidence occurred on

29 September 2014, when he met with Mr Butler. Mr Dacre was acting for the
Crown and it is fixed with his knowledge from the time he acquired it, although in
37

Banks v R, above n 16, at [27].

fact he did not promptly advise the Crown Law Office. Indeed, Mr Heron only
became aware of Mr Butlers memorandum recording Mr Dotcoms acceptance of
the American businessmens evidence on 27 January 2015. Mr Banks is seeking
costs for the period commencing 3 December 2013 and ending 1 August 2014. The
evidence and Mr Dotcoms change in position fall well after 1 August 2014. Prior to
1 August 2014 there was, in my judgment, nothing to put the Crown on notice of the
potential difficulty in its case. There was no matter which came into the Crowns
hands at the relevant time which suggested that Mr Banks might not be guilty (s
5(2)(c)).
[94]

In my view, the Crowns investigation into the offence charged was

conducted in a reasonable and proper manner, and by reference to the material which
was before it at all relevant times (s 5(2)(d)).
[95]

Again, my conclusion in regard to these matters does not compel the

conclusion that Mr Banks should not receive a costs award (s 5(5)), and again I go
on to consider other matters.
[96]

Mr Banks was acquitted by the Court of Appeal, but not on a technical point

(s 5(2)(e)). Rather, the Court acquitted Mr Banks because it considered that on the
state of the evidence before it, no reasonable fact finder could be satisfied of Mr
Banks guilt beyond reasonable doubt.
[97]

Mr Jones relied on s 5(2)(f).

[98]

Defence counsel cross examined Mr Dotcom at trial about each of the limited

number of occasions on which he and Mr Banks had met and Mr Banks called
evidence from his wife and Mr Campbell which established that the lunch was held
on 5 June 2010. Mrs Banks and Mr Campbell were not cross examined in relation to
their respective assertions, and I accepted their evidence. The limited number of
occasions on which Mr Banks and Mr Dotcom met, and the date of the lunch,
became important when the defence obtained the affidavits from Messrs Schaeffer
and Karnes confirming that they attended the lunch on 5 June 2010, and that the
issue of donations was not discussed at that lunch. That evidence was not, of course,
before me at trial. It did, however, find favour with the Court of Appeal, and
ultimately it resulted in Mr Banks acquittal. But for Mrs Banks efforts in tracking

down the Americans, and in obtaining the affidavits from them, it is likely that the
conviction entered by me would have stood.
[99]

Given the broad discretion invested in me, I am conscious of the danger of

focussing too narrowly on the wording of s 5(2) but, in my judgment, s 5(2)(f) is not
engaged.
[100] First, as I have already noted, Mr Banks seeks costs for the period 3
December 2013 to 1 August 2014. The evidence which the Court of Appeal relied
on to acquit was raised before the Court of Appeal, and well outside that timeframe.
Costs in the Court of Appeal were settled between the parties. Secondly, this is not a
situation where Mr Banks established that he was not guilty. Rather, the Court of
Appeal, relying on the Americans evidence and Mr Dotcoms acceptance of the
same, found that no reasonable fact finder could be satisfied beyond reasonable
doubt that Mr Banks was guilty.
[101] It was also asserted by Mr Jones that it was left to Mr Banks to establish that
Mr McKavanaghs version of events, in particular when he said that he took the
Megastuff cheques to Queenstown, and posted them from there, was untrue. Mr
Jones is correct in this assertion, but I do not consider that this is particularly
relevant. I did not accept Mr McKavanaghs evidence at trial, and it was not a matter
which played any great part in my Reasons for Verdict judgment.
[102] I do not consider that, on the facts of this case, s 5(2)(f) assists Mr Banks.
[103] I accept, of course, that no person accused of a crime is required to establish
his or her innocence. It is, however, relevant that Mr Banks could have called
Messrs Schaeffer and Karnes himself. He did not do so. He could have made
application under s 368(2) of the Crimes Act, which was then in force, asking me to
direct the calling of those witnesses. Again, he did not do so. Mr Banks has to bear
some responsibility for what had occurred at trial and in my judgment his behaviour
in regard to the proceedings does not support an award of costs in his favour (s
5(2)(g)).
[104] There was one other factor which Mr Jones referred to repeatedly in his
submissions. It was asserted that Mr and Mrs Dotcoms evidence, and Mr Temperos

evidence, was a fabrication. I do not accept that the matter is that simple. As a
result of the acquittal entered by the Court of Appeal, the matter has not been retried.
Mr and Mrs Dotcom and Mr Tempero have not been charged with perjury, insofar as
I am aware, and it cannot be baldly asserted that their evidence, and Mr Temperos
evidence, was fabricated. At best, from Mr Banks perspective, it can be said that the
evidence that they gave at trial is inconsistent with the affidavits of the two American
businessmen, and further that Mr Dotcoms acceptance of these affidavits throws
into significant doubt the evidence which he, Mrs Dotcom and Mr Tempero gave at
trial. While there was however other material which supported their evidence, it
became a case where no reasonable fact finder could be sure that Mr Banks was
guilty.
[105] In the exercise of the discretion conferred on me, and for the reasons I have
set out, I do not consider that Mr Banks is entitled to an award of costs in respect of
the Megastuff donations.
Result
[106] Mr Banks application for an award of costs is declined.
[107] As a result, I do not need to go on to consider quantum and I do not do so.
Mrs Banks
[108] In my Reasons for Verdict judgment, I recorded that I did not consider Mrs
Banks to be a reliable witness in regard to certain aspects of her evidence given at
trial in particular whether there were any American businessmen at the lunch and
whether the subject of electoral donations was discussed.
[109] A Court can, of course, only deal with a case on the evidence before it, and I
did not have the evidence of the American businessmen before me at the time.
[110] I have since read the affidavits of the American businessmen which have now
been filed. I am also aware that Mr Dotcom accepts the same. Based on what I now
know, I accept that I was in error when I made an adverse finding as to Mrs Banks
credibility in relation to the matters I have noted above. I appreciate that my finding
will have upset her and caused her significant embarrassment and distress. This
distress was, no doubt, compounded by the considerable media coverage given to the

trial and to my Reasons for Verdict judgment.

It is appropriate that I should

acknowledge my error, and I do so.

__________________________________
Wylie J