I was intrigued to read media reports at the end of July, that the High Court had dismissed an application by the FMA for issue of a new or enlarged (depending on which report I read) search warrants in conjunction with its investigations into Du Val. Having heard quite a bit from my litigation colleagues about the Pikia (Court of Appeal) decision in 2024, it was a bit frustrating not to be able to get the decision of Anderson J until last week.
Having raced through the decision (which seems to have different citations – but I believe will be cited as Re Reid [2025] NZHC 2010), it seems that the FMA applied for new search warrants to authorise searches of material it had already seized under earlier warrants, and that this application was spurred by Pikia (in which the Court of Appeal found that search warrants issued to the SFO were overly broad and therefore invalid).
Whilst the technicalities of search warrants are outside my experience, but because of the overlap with the moves to grant the FMA wider powers to undertake warrantless searches, currently before Parliament, I did a bit of reading.
A little bit of background
As has been reported widely in the media, the FMA had seized an array of material relating to the Du Val group, including documents, devices, and data (some of it cloud-based) from Du Val entities and personnel. This material has been seized under search warrants issued in February and August 2024 (Initial Warrants) and related to what is an ongoing investigation in respect of breaches, primarily of the FMC Act.
The FMA has the ability to apply to the Court, under the Financial Markets Authority Act 2011, for search warrants. The Search and Surveillance Act 2012 also applies to this process.
Clearly, the August 2024 decision of the Court of Appeal in Pikia caused the FMA to have doubts about whether its intended searches of data extracted from the Du Val devices were lawful under the Initial Warrants. Consequently, the FMA applied for five new search warrants relating to this data (New Warrants). Informed by the Pikia decision, the framework for the New Warrants was more specific about the evidential material the FMA was looking for and the suspected contraventions of financial markets legislation (including the time periods to which they related).
The FMA submitted that:
- the High Court had jurisdiction to issue the New Warrants because they were sought to search electronic data in the FMA’s possession – rather than the act of seizing the data from the devices (which had already occurred); and
- the possibility of successive warrants is contemplated under the Search and Surveillance Act.
Decision
Anderson J acknowledged that ‘search’ and ‘seizure’ and can be separate, discrete, acts – but said that ‘search’ related to both searching for a device at its location and searching the material held on or accessed through that device. The FMA sought the New Warrants to have the search power over the data on the devices it had already obtained. This, the judge held, was already authorised by the Initial Warrants.
The FMA submitted that the Search and Surveillance Act anticipates the possibility of successive warrants and cited earlier case authority as establishing that a warrant can be sought to search electronic material already in an investigating agency’s possession.
Declining the FMA’s application, the judge said that the Search and Surveillance Act prevented ‘forum shopping’ for warrants and ensures that there weren’t similar or overlapping warrants issued for the same place or thing. The material subject of both warrants was the same, and they could not co-exist – because of the risk of confusion as to which warrant governs. And that the cases cited by the FMA were for a narrower fact scenario where an extension of a search power was required to search material on a device.
If the Initial Warrants were valid (which the FMA said they were) then the New Warrants were not required. But, if the Initial Warrants were invalid, then the FMA had no power to access the data it intended to obtain by searching the devices seized. And the New Warrants could not be issued where their only use was if the material was seized unlawfully (under the Initial Warrants) because this would be contrary to the purposes of the Search and Surveillance Act – and the Court would not risk being seen as assisting a potentially invalid act by an investigating body.
To issue a new warrant reduces the incentive on the investigating agency to take care when defining the proper scope of the warrant in the first instance.
Instead, the appropriate avenue for challenging a search warrant is after charges have been laid, when a defendant can apply for a pre-trial ruling or contest the admissibility of evidence from search warrants during the trial itself – on the basis it was improperly obtained.
Takeaways
My litigation colleagues suggest that both Pikia and this latest decision of Anderson J. provide important reminders of the role of the courts in overseeing the use of regulatory powers.
The decision also helps put a spotlight on current moves to give the FMA additional powers, including the power to conduct warrantless searches.
During the hearing, counsel for one of the former Du Val personnel submitted that the FMA’s application was a waste of the Court’s time before charges had been brought. Without being quite so direct, the judge may have agreed when she accepted that there was some force in the argument against pre-trial applications by an investigating agency for search powers already conferred, over evidential material that it already held, and where there are concerns about the breadth of the Initial Warrants. And that it is not a proper exercise of the Court’s jurisdiction under the Search and Surveillance Act to seek to insulate an investigating agency from any deficiencies in the Initial Warrants.
It seems likely that the FMA did not help itself when seeking to have a bob each way, by submitting that it needed rescuing – whilst taking the position that the Initial Warrants were valid.
Ultimately, the FMA seems to have only succeeded in ensuring that the admissibility of the evidence will be subject to challenge, down the track, if charges are laid. Perhaps, in light of Pikia, there was a certain inevitability to this, and the knock-on effect of the Court of Appeal decision is that defendants in proceedings brought by regulatory/investigating agencies will routinely challenge the admissibility of evidence obtained by search warrant.
Perhaps counterintuitively, this throws further shade on the proposals currently before Parliament to grant the FMA to conduct warrantless and without-notice on-site inspections. The FMA already has expansive powers to enter and search premises without notice, subject to first obtaining a search warrant. Opponents of an expansion of those powers have argued that there was no evidence to suggest that the existing powers are inadequate and that the Courts provide a vital (constitutional) guard rail on the grant of search warrants.
In light of the Du Val decision, I am left wondering why the FMA would exercise any new power (if granted) – when it is likely to be the subject of intense scrutiny by the Courts. Pragmatically, aren’t they better to have the buttress of a warrant that has already undergone some judicial scrutiny as a first line of defence?
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