Key aspects of Court of Appeal decision
Key aspects of the decision were:
On conviction
- The Court of Appeal gave short shrift to the argument regarding the meaning and purpose of the “intent to influence” wording in section 105(2) advanced by Mr Borlase. They considered it “contrary to the plain words”, and in strong language made clear their view that the purpose of the section is not to require proof of the additional element of an intention to influence the official to act in a certain way, whether proper or improper. Nor did they consider that there is any need for an inquiry into “motives or consequential events”.
- The Court of Appeal also re-emphasised that while “bribe” in terms of the Crimes Act is a morality-neutral term, the concept of impropriety is introduced via the word “corruptly”. This is established by evidence of payment to an official of a financial benefit, knowing that its receipt is fundamentally inconsistent with the public official’s duties.
- In this case, the “corruption” element existed because payments, additional to and outside of the official’s salary, were made to the official by Mr Borlase, via “bogus contractual arrangements designed to disguise their true nature”. That was enough for the Court to conclude that both the official and payer knew that receipt of the benefits was fundamentally inconsistent with Mr Noone’s official duties, and therefore the parties acted corruptly.
On sentencing
- The Court upheld both sentences, noting that while each offence might not be the most serious of its kind, the cumulative pattern of offending over the seven years demonstrated “criminality on a serious scale” and “generic and
systemic corruption with a tendency to undermine confidence in the administration of public affairs”.
- The Court did not agree that “outright bribery” will always be a greater evil than “long-term investment in the corruption of the public service to one’s commercial advantage”.
- The correct inquiry in sentencing Mr Borlase as the payer of bribes is into what benefit he believed he was deriving from the corrupt arrangements; clearly it was one of real value. All considered, this was clearly not just the minor provision of benefits for marketing or relationship management.
Overall, the tenor of the Court’s view on the Borlase and Noone relationship can be seen from its statement that it is implicit in this sort of arrangement that the payer’s intention is to influence the recipient to act improperly. As the Court noted “Otherwise, it might be rhetorically asked, what would be the purpose of the payments?” “It is trite that an astute businessman would not provide financial benefits on this scale unless he believed he was enjoying an appropriate return”.
What does this mean for New Zealand organisations?
This decision is as expected, and also reflected the tone of the Court of Appeal hearing itself. There will be little sympathy, or time given to legalistic arguments, against a backdrop of $1.15m of payments over seven years for sham, non-existent, undisclosed “consultancy services” (and gifts) to a public official.
The additional risk for those involved in corruption is the prospect of having assets seized under the Criminal Proceeds (Recovery) Act 2009, as Mr Borlase is presently facing the prospect of, and as also affecting a residential property in the Ngatata Love/Lorraine Skiffington case.
The court’s reasoning
McColl JA (with whom Beazley JA and Macfarlan JA agreed) examined the line of cases dealing with the prevention principle. The court explained it by reference to McLure P’s observation (in Spiers Earthworks)[4] that the prevention principle may be a manifestation of the obligation to cooperate implied as a matter of law in all contracts.
The court went on to affirm that the reasoning in Peninsula Balmain applied to this case. That is, in order to claim liquidated damages, Probuild was obliged to extend time for delays it had caused. Importantly, though, the contract in this case did not have a superintendent or some other independent certifier. Rather, it was Probuild itself which held the power to unilaterally extend time. There was (it seems) no express obligation on Probuild to act honestly and fairly.
BuildLaw | Dec 2017 38