30 June 2023

Fraud Prosecution: Morrison & Blackwood v. FMA

 

With criminal prosecutions unsuccessful following New Zealand’s longest running fraud trial, Richard Blackwood and Lance Morrison sued for Bill of Rights damages.  Damages awarded of $10,000 for Morrison and $15,000 for Blackwood will not cover legal fees for their day in court.  Each had previously incurred over $200,000 in legal costs defending FMA prosecutions involving allegations Viaduct Capital and Mutual Finance had rorted government guarantees on offer after the 2008 global financial crisis at a $3.38 million cost to taxpayers.    

Charged alongside Blackwood and Morrison were Paul Bublitz, Bruce McKay, Nick Wevers and Peter Chevin.  These prosecutions were not Financial Markets Authority’s finest hour.  Nine months into the trial, proceedings came to screeching halt; aborted by the trial judge when FMA ‘fessed up to holding nearly 15,000 documents which it had inadvertently failed to disclose as part of pre-trial Criminal Disclosure Act procedures.  The defendants were hopelessly prejudiced, the trial judge ruled.  They did not have the chance to properly prepare their defence and were at a disadvantage in cross-examining witnesses when prosecutors were sitting on undisclosed information.

It was a further year before a second trial started.  This was four years after charges were first filed.

Charges against Mr Morrison were withdrawn at the second trial, on grounds of his presumed lesser culpability, his age and poor health.  His legal fees to that date were some $213,000.  He was awarded $85,000 contribution towards these costs.

Mr Blackwood was convicted after the second trial, sentenced to nine months home detention.  This conviction was subsequently overturned by the Court of Appeal.  His legal fees across two trials came to $284,500.  A $100,000 contribution was awarded towards his costs.

Both then sued, claiming damages: for the failure to make proper initial disclosure under the Criminal Disclosure Act; and for a claim under the Bill or Rights Act that they did not get a fair trial.

They gave evidence of the reputational damage suffered to their personal and professional standing once charges were laid.  Mr Morrison told of being forced at one stage to live in a tent, surrounded by his personal belongings and boxes of documents while having to prepare for court with no power and no reliable internet.  Mr Blackwood told of residing at one stage during the first trial in a friend’s caravan, using a bathroom in a converted garage.

Justice McQueen ruled against their claim for general damages under the Criminal Disclosure Act.  But they were entitled to damages under the Bill of Rights Act, she ruled.  Exceptional circumstances in the aborted first trial was for both of them a breach of the right to a fair trial; the long delay before the second trial was for Mr Blackwood a breach of his right to trial without undue delay.

FMA said its delay in disclosing documents was inadvertent.  A right to damages does not require proof documents were deliberately withheld, Justice McQueen ruled.

Morrison & Blackwood v. Financial Markets Authority – High Court (30.06.23)

23.106