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Reserve Bank of New Zealand Amendment Bill (Consistent) (Sections 21, 25(c)) [2007] NZBORARp 41 (1 November 2007)
Last Updated: 5 January 2019
Reserve Bank of New Zealand Amendment Bill
1 November 2007 Attorney-General LEGAL ADVICE
CONSISTENCY WITH THE NEW ZEALAND BILL OF RIGHTS ACT 1990:
RESERVE BANK OF NEW ZEALAND AMENDMENT BILL
- We
have considered whether the Reserve Bank of New Zealand Amendment Bill (the
"Bill") (PCO 8166sg/8) is consistent with the New Zealand
Bill of Rights Act
1990 ("Bill of Rights Act"). We understand that the Bill will be considered by
the Cabinet Legislation Committee
at its meeting on Thursday, 8 November
2007.
- The
amendments in the Bill can basically be divided into two categories. Firstly,
those amendments that relate to the institutional
arrangements for prudential
regulation. These include measures regarding:
- the purpose,
functions and accountability of the Reserve Bank of New Zealand (the "Reserve
Bank");
- the provision of
policy advice by the Reserve Bank to the Minister of Finance; and
- the ability of
the Minister of Finance to direct the Reserve Bank to have regard to certain
government policy.
- Secondly,
those amendments that relate to the regulation of specified deposit takers. The
objectives for the regulation of deposit
takers are to promote a sound and
efficient financial system and avoid the damage that may occur if a deposit
taker fails.
- We
have concluded that the Bill does not appear to be inconsistent with the rights
and freedoms affirmed in the Bill of Rights Act.
- In
reaching this conclusion, we considered potential issues of inconsistency with
sections 21, and 25(c) of the Bill of Rights Act.
Our analysis of these
potential issues is set out below.
- Where
an issue arises, a provision may nevertheless be consistent with the Bill of
Rights Act if it can be considered a reasonable
limit that is justifiable in
terms of section 5 of that Act.[1] We have
reached the conclusion that, upon consideration of these issues under section 5
of the Bill of Rights Act, the Bill appears
to be consistent with the rights and
freedoms contained in the Bill of Rights Act.
ISSUES UNDER THE BILL OF RIGHTS ACT
Section 21: the right to be secure against
unreasonable search and seizure
- Section
21 of the Bill of Rights Act provides:
Everyone has the right to be secure against unreasonable search or
seizure, whether of the person, property, or correspondence or
otherwise.
- There
are two limbs to the section 21 right. First, section 21 is applicable only in
respect of those activities that constitute a
"search or seizure". Second, where
certain actions do constitute a search or seizure, section 21 protects only
against those searches
or seizures that are "unreasonable" in the
circumstances.
- New
Part 5D, to be inserted by clause 11 of the Bill, contains powers of search and
seizure that require scrutiny for compliance with
section 21.
Clause 11, new section 157ZH – Bank may require report
relating to deposit taker
- Clause
11, new section 157ZH provides that for the purpose of investigating whether a
deposit taker is complying with the requirements
of new Part 5D, or regulations
made under that Part, the Reserve Bank may require the deposit taker to supply a
report or series
of reports prepared by a person approved or appointed by the
Reserve Bank on matters relating to the business, operation, or management
of
the deposit taker. If requested, the deposit taker must provide the approved or
appointed person with access to the accounting
and other records of the deposit
taker and must provide information relating to those records.
- A
requirement to produce documents under statutory authority constitutes a search
for the purposes of section 21 of the Bill of Rights
Act.[2] However, we consider that new section
157ZH is reasonable, and therefore consistent with section 21, because:
- the purpose of
the inspection power is limited to ensuring compliance with the regulatory
regime established by new Part 5D and any
regulations made under that Part.
Because of the significant damage to the financial system and harm to individual
investors that
could result from the failure of a deposit taker, we agree that
it is important to have effective monitoring measures to ensure that
deposit
takers are acting in a lawful and responsible manner;
- a deposit taker
is not required to provide any information or produce any document that would be
privileged in a court of law, or
result in a breach of an obligation of secrecy
or non-disclosure under an enactment (other than the Official Information Act
1993
or the Privacy Act 1993) (see clause 11, new section 157ZJ); and
- this section
would not apply where the Reserve Bank has reasonable cause to believe a deposit
taker has committed an offence. In this
situation, new section 157ZI (Power to
obtain information and documents), and the procedural safeguards attached to it,
would apply.
Clause 11, new sections 157ZI (Power to obtain
information and documents)
- Clause
11, new section 157ZI enables the Reserve Bank to:
- require a
deposit taker to supply specified information, papers, documents, records or
things within a certain time; or
- appoint a
suitably qualified person to (in accordance with a search warrant) enter and
search any place and inspect, remove, and take
copies of any information,
papers, documents, records or things in the possession, custody, or control of
any person.
- We
consider that the powers in new section 157ZI are reasonable, and therefore
consistent with section 21 of the Bill of Rights Act,
because:
- the provision
only applies where the Reserve Bank has reasonable cause to believe that a
deposit taker has committed an offence under
new Part 5D;
- the significant
damage to the financial system and individual investors that could result from
the failure of a deposit taker make
it essential that the regulatory regime is
complied with. The integrity of the regime is dependent upon the Reserve Bank
being able
to effectively gather evidence of non-compliance;
- a deposit taker
is not required to provide any information or produce any document that would be
privileged in a court of law, or
result in a breach of an obligation of secrecy
or non-disclosure under an enactment (other than the Official Information Act
1993
or the Privacy Act 1993) (see clause 11, new section 157ZJ);
- a person
appointed under new section 157ZI to enter and search any place may only do so
with prior authorisation by search warrant
issued by a High Court judge (see
clause 11, new section 157ZL);
- in issuing a
search warrant, the High Court judge must be satisfied that there is reasonable
cause to believe that a deposit taker
has committed an offence under new Part
5D; and
- new Schedule 4
establishes a robust procedure for the issuing of a search warrant, and puts in
place recognised safeguards for a warrant’s
execution, such as clear
parameters on the powers conferred by a search warrant and the powers granted to
persons called to assist;
the requirement for the person executing the warrant
to produce evidence of authority and evidence of identity; and the requirement
to produce an inventory of items seized.
Section 25(c) – the right to be presumed innocent until proved
guilty
- Section
25(c) of the Bill of Rights Act provides:
Everyone who is charged with an offence has, in relation to the
determination of the charge, the right to be presumed innocent until
proved
guilty according to law.
- Section
25(c) protects the right of an individual not to be convicted where reasonable
doubt as to his or her guilt exists, meaning
the prosecution must prove beyond
reasonable doubt that the defendant is guilty. Reverse onus offences give rise
to an issue of inconsistency
with section 25(c) because the defendant is
required to prove (on the balance of probabilities) an excuse to escape
liability; whereas
in other criminal proceedings a defendant must merely raise a
defence in an effort to create reasonable doubt. Where a defendant
is unable to
prove an excuse, then he or he could be convicted even though reasonable doubt
exists as to his or her guilt.
- The
Bill contains one reverse onus offence. Clause 11, new section 157ZQ(h)
establishes that every deposit taker commits an offence
who without reasonable
excuse, obstructs or hinders an authorised person in the execution of any powers
conferred on that person
by or under new Part 5D, or regulations made under new
Part 5D. In our view, clause 11, new section 157ZQ(h) constitutes a justified
limitation on the right to be presumed innocent as affirmed by section 25(c) of
the Bill of Rights Act.
- In
reaching this view, we note that the objective behind the offence is to ensure
that persons authorised by the Reserve Bank have
unobstructed access to
information about a deposit taker. Access to this information will allow the
Reserve Bank to
effectively monitor and enforce deposit
takers’ compliance with the regulatory requirements of new Part 5D. Given
the significant
damage to the financial system and harm to individual investors
that could result from the failure of a deposit taker, we consider
that this is
an important aim.
- We
note the Reserve Bank’s explanation that this offence is essential to the
efficient enforcement of the law. The offence has
been cast with a reverse onus
because, while a person may have good reason for failing to cooperate with the
search, those reasons
are peculiarly within the realm of the individual’s
knowledge.
- Given
that this is a regulatory offence, it is rational that the defendant be required
to prove a reasonable excuse, as the defendant
is best placed to adduce evidence
as to the reasons for failure to comply with this requirement.
- Under
clause 11, new section 157ZT(2) every deposit taker who commits an offence under
new section 157ZQ is liable, on summary conviction:
- in the case of
an individual, to imprisonment for a term not exceeding 12 months or to a fine
not exceeding $100,000 or both; and
- in the case of a
body corporate, to a fine not exceeding $1,000,000.
- Although
the penalties are significant, they must be viewed in the context of the harm to
individual investors and the wider financial
sector occasioned by the failure of
a deposit taker. Obstructing authorised access to vital information about a
deposit taker may
serve to intensify the risk of failure.
CONCLUSION
- Overall,
we have concluded that the Bill does not appear to be inconsistent with the Bill
of Rights Act. In reaching this conclusion,
we have given particular emphasis to
the purpose of the legislation, and the need to create a workable scheme for the
regulation
of deposit takers.
Melanie Webb Manager – Ministerial Advice Office of Legal
Counsel
|
Stuart Beresford
Acting Manager
Bill of Rights/Human Rights
|
Footnotes
- In
applying section 5, the Ministry of Justice has regard to the guidelines set out
by the Court of Appeal in Ministry of Transport (MOT) v Noort [1992] NZCA 51; [1992] 3
NZLR 260; Moonen v Film and Literature Board of Review [1999] NZCA 329; [2000] 2 NZLR 9;
and Moonen v Film and Literature Board of Review [2002] NZCA 69; [2002] 2 NZLR 754; as
well as the Supreme Court of Canada’s decision in R v Oakes [1986]
1 S.C.R. 103.
- New
Zealand Stock Exchange v Commissioner of Inland Revenue [1992] 3 NZLR 1
(PC).
In addition to the general disclaimer for all documents on this
website, please note the following: This advice was prepared to assist
the
Attorney-General to determine whether a report should be made to Parliament
under s 7 of the New Zealand Bill of Rights Act 1990
in relation to the Reserve
Bank of New Zealand Amendment Bill. It should not be used or acted upon for any
other purpose. The advice
does no more than assess whether the Bill complies
with the minimum guarantees contained in the New Zealand Bill of Rights Act. The
release of this advice should not be taken to indicate that the Attorney-General
agrees with all aspects of it, nor does its release
constitute a general waiver
of legal professional privilege in respect of this or any other matter. Whilst
care has been taken to
ensure that this document is an accurate reproduction of
the advice provided to the Attorney-General, neither the Ministry of Justice
nor
the Crown Law Office accepts any liability for any errors or omissions.
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