Serco New Zealand Ltd v The Chief Inspector of Corrections

• Jurisdiction: New Zealand
• Judge: Clark J
• Judgment Date: 11 August 2016
• Neutral Citation: [2016] NZHC 1859
• Docket Number: CIV 2015-485-875
• Court: High Court
• Date: 11 August 2016

Under Judicature Amendment Act 1972

In the Matter of An application for judicial review

Between

Serco New Zealand Limited

Plaintiff

and

The Chief Inspector of Corrections

First Respondent

and

The Chief Executive of the Department of Corrections

Second Respondent

[2016] NZHC 1859

CIV 2015-485-875

IN THE HIGH COURT OF NEW ZEALAND

WELLINGTON REGISTRY

Application for judicial review of a report of the respondent which the applicant alleged was in breach of natural justice and its finalisation was in error of law and unreasonable — Youtube footage showed prisoners fighting at Mt Eden Corrections Facility managed by the applicant under contract, indicated the presence of an organised fight club — after an initial investigation, Department of Corrections decided to invoke the “step-in” clause under the prison management contract so that it could place a management team into the prison to oversee operations — the respondent completed his investigation and produced his report — whether the applicant's rights of natural justice had been breached — whether there had been an error of law by taking into account irrelevant considerations.

Counsel:

H J P Wilson and L Clark for Plaintiff

M R Heron QC and J K Gorman for First and Second Respondent

JUDGMENT OF Clark J

Table of Contents

	Para No
Introduction	[1]
Serco's application for judicial review	[7]
The legislative setting	[12]
The Chief Inspector's investigative process
A. The terms of reference	[21]
B. Fact-gathering	[25]
C. Engagement with Serco	[27]
D. The interviews	[34]
E. Summary of Chief Inspector's report	[39]
Natural justice
A. Applicable principles	[43]
B. Serco's claims of breach of natural justice	[49]
Was there a proper basis for the Chief Inspector's findings?	[56]
Did Serco have a proper opportunity to respond?	[74]
Conclusions on breach of natural justice	[91]
Error of law	[92]
A. Failure to take account of relevant considerations?	[98]
B. Irrelevant considerations taken into account?	[102]
C. Error of law — conclusion	[111]
Unreasonableness	[114]
Summary	[120]
Result	[123]

Introduction

1 Footage uploaded to YouTube showing fighting between prisoners at Mt Eden Corrections Facility (MECF) came to the attention of the Department of Corrections in July 2015. The footage indicated the presence of an organised “fight club” at MECF which had, since April 2011, been managed under contract by Serco New Zealand Ltd (Serco).

2 The Department took steps. On 23 July 2015 the Chief Executive of the Department of Corrections announced that he had asked the Chief Inspector of Corrections to investigate a series of serious allegations involving the operation of the facility including assaults among prisoners. On 24 July the Department decided to invoke the “step-in” clause under the prison management contract so that it could place a management team into the prison to oversee operations.

3 By terms of reference dated 27 August 2015 the Chief Inspector was instructed to conduct a full investigation into the possible existence of a “fight club” at MECF and prisoners' access to contraband, in particular, cell phones.

4 The Chief Inspector completed his investigation and, on 16 December 2015, produced his report.

5 The report made a number of findings critical of Serco's operation of MECF. One of the findings was that the YouTube footage provided irrefutable evidence that organised fighting was occurring at MECF. The Chief Inspector was of the opinion that organised fighting was occurring at least once a week during certain periods in the months to which his investigation related.

6 Prior to the completion of the investigation Serco filed an application for judicial review and for interim orders restraining the Department from taking further steps to finalise the report or publish it pending further orders of the Court. Undertakings to that effect were given and remain in place until delivery of this judgment.

Serco's application for judicial review

7 Serco accepts the majority of the Chief Inspector's recommendations and has already taken steps to implement change in anticipation of the recommendations being published. Serco draws a distinction, however, between the recommendations and the body of the report.

8 Serco's position is that the report has been finalised in breach of natural justice and its finalisation is in error of law and unreasonable. The breach of natural justice is said to arise, in particular, because the Chief Inspector did not provide information which would allow Serco to identify and provide comment on the incidents referred to in the report.

9 The relief Serco seeks includes:

• (a) an order quashing the report;

• (b) a declaration that the Chief Inspector should provide to Serco the notes of the interviews which the Chief Inspector conducted; and

• (c) declarations that the report should not be finalised or published until Serco has copies of the notes of all interviews undertaken in the course of the investigation and Serco has been provided with a reasonable period of time to review the additional information and respond to the Chief Inspector and that response has been adequately considered.

10 The Supreme Court's most recent observation about the purpose and limits of judicial review is usefully set out at this point: 1

Judicial review is a supervisory jurisdiction which enables the courts to ensure that public powers are exercised lawfully. In principle, all exercises of public power are reviewable, whether the relevant power is derived from statute, the prerogative or any other source. The courts acknowledge limits, however. These limits are reflected primarily in the notions that the case must involve the exercise of a public power, that even if the court has

jurisdiction, the exercise of power must be one that is appropriate for review and that relief is, in any event discretionary.

11 It is relevant also to observe in the context of this application for review that the mere fact that a person has been criticised by a body amenable to judicial review does not make the criticism reviewable. The criticism must be legally invalid before the Court will intervene. 2

The legislative setting

12 Understanding the statutory context in which the investigation took place assists in a proper appreciation of the powers, functions and obligations of the inspectors of corrections.

13 The Corrections Act 2004 establishes a corrections system and principles that guide the operation of the corrections system. 3 One of the purposes of the corrections system, of which the inspectors are a part, is to ensure that sentences of imprisonment are administered in a safe, secure, humane and effective manner. 4 A guiding principle of the corrections system is that people under control or supervision are treated fairly and to that end an effective complaints regime must be available. 5

14 The Chief Inspector is the senior of a number of inspectors of corrections who the Chief Executive must appoint. 6 Inspectors have broad powers of inspection and inquiry in respect of those who are subject to sentences or other kinds of control or supervision. 7

15 One of the powers and functions of an inspector is to inquire into any matter referred to him or her by the Chief Executive. In this case the Chief Inspector was inquiring into a matter referred to him by the Chief Executive pursuant to s 29(1)(e).

16 In instructing the Chief Inspector to investigate the Chief Executive was acting pursuant to his powers and functions which, among others, are to ensure the safe custody and welfare of prisoners, to inquire into the treatment of persons under control or supervision, and to inquire into abuses or alleged abuses in prison. 8

17 While the Chief Inspector's report was prepared pursuant to a reference and not a complaint, the complaints regime can be seen as providing a sense of the role of inspectors more generally. The complaints system also has the objective of protecting interests of prisoners. The objectives include ensuring: 9

• (a) that those who wish to complain know how to, and that complaints can be made without fear of adverse consequences.

• (b) identities of complainants are disclosed only to the extent necessary to assist in investigation of complaints.

18 Prisoners are always entitled to an interview with an inspector when an inspector is attending a prison for the purposes of holding interviews, and must not be made to disclose to those with direct control of them why they have requested an interview with an inspector. 10

19 The exercise of the statutory powers that resulted in the investigation and report are to be regarded in the context of these office-holders' responsibilities to ensure that those deprived of liberty are treated with humanity and respect for the inherent dignity of the person, 11 and to observe the prisoners' right to not be subjected to torture or to cruel, degrading, or disproportionately severe treatment or punishment. 12

20 The Act focuses the role of inspectors squarely upon the wellbeing of persons subject to coercive state power. The powers and functions of the inspectorate are to be exercised consistently with the purpose of the corrections system and the

principles that guide its operation. Importantly, the objectives — including the obligation of fairness 13 — which Parliament has established in the complaints system ought not to be compromised simply because an inspector is exercising powers and functions beyond the complaints regime

The Chief Inspector's investigative process

A. The terms of reference

21 The initial terms of reference dated 19 July 2015 required the Chief...