The David Parker affair

OK, first of all we congratulate Parker on his integrity on stepping down, and secondly being cleared by the Companies Office investigation. But with respect, we think the legal opinion provided by the Crown Law office in Auckland is seriously flawed, and raises fresh questions about the Queens Park Mews Ltd inquiry.

There are a lot of i's that weren't dotted and t's not crossed by Parker and the Official Assignee.

First if you check the Companies Act, s196(2), you will find that shareholders, including the OA, cannot "waive" the right to further resolutions. The waiver for an audit expires each year, and must be renewed each year, by law.

In other words, the OA acted "ultra vires" or outside his powers and, in fact, outside the law.

On the face of it, I'm not sure that the OA letter of 99 gets either Parker or the OA off the hook, regardless of Labour's jubilation.

As a lawyer, Parker would be required to know that little fact.

Interestingly, even Crown Law don't go so far as to say that the OA's "purported" waiver was legally effective.

Secondly, if he genuinely believe Hyslop was not a shareholder, why did he continue to file returns for years falsely stating that he was? If the returns were not false because Hyslop didn't have to be consulted because he was no longer a shareholder, then arguably they were false by continuing to list Hyslop as a shareholder.

Thirdly, a decision not to prosecute on the late filing of returns. I've been given gazette files suggesting about a dozen such prosecutions a week of ma and pa kettle. Presumably the Companies Office will no longer prosecute ordinary Joe Public on these technical breaches any more.

Fourthly, if the transfer of shares did not legally take place, and it is agreed they did not, then by virtue of s78 of the Insolvency Act and s89 of the Companies Act it appears the shares did indeed re-vest in Hyslop by virtue of the company continuing to list him as a shareholder after his discharge from bankruptcy.

S78 of the Insolvency Act says that the OA can transfer the shares to either another party or the bankrupt, and that if no transfer is effected then the company can either sell them, which it failed to do, or cancel them (but only with permission of the Court).

Instead, the Company has listed the now-discharged Russell Hyslop as owner of the shares for the five years following his release from bankruptcy.

By that act alone, the Company and its director could be said to have re-vested the shares in Hyslop himself.

Look, good on David Parker for avoiding the gallows based on a Crown Law office opinion, and it may well show the pointlessness of the Companies Act in this regard. Nonetheless, Parker was at best careless with the legal niceties, and Investigate is comfortable with its story and its analysis of the legal issues. Filing the proper documents, without mistakes, is a strict liability offence, much like a speeding ticket. To file returns with a false shareholder for five years seems to me to still be a breach of s377 of the Companies Act.

THE CROWN LAW ANALYSIS

Turning now to the Crown Law legal opinion which lies at the centre of this, it appears to me to be well and truly stretching the law, possibly beyond its limits, to justify its stance. An example, and an important one, is the aforementioned letter from the OA in 1999 purporting to "waive" the requirement for future shareholders' resolutions.

As I've demonstrated above, such a purported waiver is illegal, flying in the face of a specific Companies Act requirement that fresh resolutions MUST be passed each year, in writing, and that a previous written resolution lapses as the new year rolls over.

Crown lawyer Mark Woolford argues at p14 of his release that the point is not material to his decision not to prosecute, because the real issue is the factual position of the shareholding, and whether David Parker knew it to be false or misleading when he filed it.

With respect to Crown Law, and I have clashed with them previously and won, Investigate disagrees with its analysis on this occasion too.

Here's why: Neither Parker nor ourselves knew of the 1999 letter when we published the article. That much is obvious. But commentators have mistakenly assumed Investigate did no research into the status of the shares given Hyslop's bankruptcy. In fact, we did.

To us the issues in a legal sense were very, very simple: If Hyslop's shares had not re-vested in him after his discharge from bankruptcy, then why on earth did the company's annual return and in fact its own share register record that Hyslop continued to be the lawful owner after the bankruptcy discharge?

S89 of the Companies Act specifies that the share register is the final proof of legal title, barring a specific declaration by the High Court to the contrary. The share register says Russell Hyslop is, to this day, a one third shareholder. By disclaiming any interest in the shares himself, the OA effectively handed them back to the company. But instead of following proper legal procedure, dotting the i's etc, to either cancel them or sell them under s78(5) of the Insolvency Act, the company chose to list Hyslop as the ongoing shareholder.

Like it or lump it, that is an act of the company that goes towards establishing legal and beneficial ownership.

Now Woolford from Crown Law hasn't actually tackled this point in his analysis. From what I can see, it hasn't even occurred to him. He hasn't followed the money - the ownership of the shares - through all the logical steps. Sure, Hyslop was bankrupted and the OA took over. Sure, the OA could have sold them, but didn't. Sure, the OA could have expressly legally transferred the shares back to either Hyslop or QPML, but didn't. In the absence of either of those actions, the Insolvency Act appears to suggest the company becomes the lawful owner again, but according to High Court cases in practice it is usually the former bankrupt who picks up the rights.

Here's what Justice Hammond in the High Court judge ruled in Re Hobbs, HC Hamilton, b407/98:

Sometimes an Official Assignee will become legally saddled with property that he or she does not want, it being thought to be worthless. Fair J advanced an example in Re Hartnell [1948] GLR 1 at p2, when he said. 'There may be machinery used for gold-mining which is very often of great value, but in a site difficult of access and so not worth the trouble of getting it out from the position'.

There are two ways in which an Official Assignee can extract himself or herself from that kind of dilemma: by formal disclaimer under ss75 and 78 of the Insolvency Act 1967, or (apparently) by the invocation of the doctrine of abandonment.

Under the existing law the latter occurs when the OA evinces an intention to abandon the propery, and has under s86 sufficiently manifested that intention. The authorities are reviewed in Re Butler-Harrison, NZLR 427.

Those authorities were determined when the Bankruptcy Act 1908 was in force. It was not suggested before me that the the repeal of that Act (by the Insolvency Act 1967) has somehow altered the position. Indeed, the doctrine of abandonment is apparently a judicial doctrine and does not turn upon any particular statutory provision.

The effect of the doctrine is that the property so abandoned becomes 'nobody's property'. INdeed, it could be taken up by a passer-by, for no value, and the possessory right of the first finder being good against all the world would presumably then apply...

In practice, commonly a bankrupt or former bankrupt takes over the proprietary rights in property which has been so abandoned by the Official Assignee. It was common ground by all counsel before me that this represents the present law..

This High Court ruling, and others like it, were not referred to by Crown Law, but clearly are material in determining whether Hyslop is in fact the rightful owner of the shares.

Clearly in the 1993 case, all counsel on both sides agreed that the former bankrupt took up the reins again, and that "this represents the present law".

This in my view is probably reflective of Parker's own understanding in 2000 when Hyslop was discharged as a bankrupt, and would explain why he made no attempt to excise Hyslop from the share registry.

The NZ Court of Appeal has likewise, in Edmunds Judd v Official Assignee, agreed that property abandoned by an OA can re-vest in the former bankrupt who owned it, even without the extra help of having the ex-bankrupt's name placed on the annual return as the owner for five years.

Now either of the two scenarios above work for me: either Hyslop could own the shares by virtue of abandonment, as per the High Court opinion, or he could own the shares because legally they became the company's property at s78(5) of the Insolvency Act but that the company legally gave them back to Hyslop by continuing to name him in the share registry and in annual returns.

No matter how you look at it, Labour's brightest legal mind remains in a quagmire of his own making. A mere Crown Law office opinion does not, of itself, determine ownership of Hyslop's shares. From my perspective, I think he still owns them, and I think Parker thought that too, right up until Crown Law told him otherwise.

Comments

[Matt]

HARHAR HAR HAR- just heard you get shredded by Sean Plunkette on Morning Report! GO Sean - gotta hand to to him - he always makes sure he gets a straight answer to a straight question - even from someone as bent ourt of shape as YOU!
You have egg on your face bigtime you loser!

[NotSaying]

A Crown Law office opinion ended up in us selling a business as we couldn't afford to test this "opinion" in court.

These "opinions" are very dangerous. They are essentially the Crown's best guess as to what the outcome of a court case might be - if they have no agenda. It is a warning, not actually established case law.

But if the Crown do have an agenda, its "opinion" is essentially a stand-over tactic. It's absurd to test the opinion in court where you have to pay for the case while the Crown has deep pockets to defend its opinion paying for the case with everyone's money - our taxes.

Here's our hard won experience - be careful not to establish a business when there is no case law in your particular area of commerce. It exposes you to the risk of the Crown turning up one day and saying, in effect, "we've decided this is now illegal, and if you don't agree (to stop), we'll take you to court to see if our opinion stands up"

[ian]

Matt, if that was a "shredding" then I'm the Pope.

Even National Radio staff were embarassed by it, which is why they've come back to me for more interviews since.

If you want to see a real interview "shredding", you should read this:
http://www.thebriefingroom.com/archives/2006/03/investigate_jul_1.html

[stan]

gee Matt, you sound like a very mature boy

[hyslop]

Today on the 7.30 was included a news item to which Mr David Parker made the statement.

“one would have to question the motives of people who drooled over records that were years old”

My motives were very simple. They were that of Justice and to ensure that the law was complied with.

My “motive” was to try in some small way to prevent what happened to me in 1997 happening to others. If one alleges solicitor client conflict of interest one should be permitted to have those allegation heard in a court of law and not disclaimed via the official assignee. That procedure is absolutely out of order.

Perhaps Mr Parkers comment could be likened to those of president Nixon in Watergate , or the perpetrators of the Lake Alice affair, or Arthur Allan Thomas.

My “Drooling” was for no other reason than to record injustices in an attempt to correct them

Just for the record. Why did I want an audit. Mr parker was the company accountant via his degree in accountancy.

[Jimmy D]

I think Matt must have been listening to a different interview - Sean did a terrible job. Constantly talking over the top of Ian, not letting him explain himself and then finally, dumping him off the air when Ian reaffirmed that David Parker did file false documents with the Companies Office, even though he has been cleared.

[Billy]

Whatever the rights and wrongs of the story, Plunket was a disgrace this morning. He didn't let Ian answer any question. Somewhat ironic, given his point seemed to be that the original story lacked balance.

[dave]

I agree, Plunket was terrible, where was the balance in that interview?
Maybe he should go the way of Plunket line.

[Shane Ponting]

I read on Xtra David Parker "might" sue Ian. Now that would be funny.....

[DenMT]

This is terribly off-topic, but I just wasted twenty-odd minutes of my life reading the interview Mr Wishart so proudly vaunted as a 'real interview "shredding"'...

It redeemed itself only through these particular comic gems:

"LUSH: Unfortunately many young people don't plan their first sexual
experience, and this campaign aims to help young people think realistically and be ready to protect themselves.?
INVESTIGATE: OK, if this campaign is about making young people think realistically, where is the evidence on your website that you are telling them there is still, for example, an 80% chance they're going to get syphilis?"

And...

"INVESTIGATE: So I'll ask the question again: Are you prepared to start giving much more information about the failures of condoms based on the scientific evidence to date, so that people can make informed decisions for themselves? You say abstinence doesn't work, but if people knew that every time they had sex there was a real 50% chance of their penis dropping off, do you think the abstinence rates would actually grow?"

A large proportion of New Zealand finds your views impossible to take seriously, Wishart. Deal with it.

[Irwin Maurice Fletcher]

DenMT - Strange how after that issue, a Family Planning rep came onto BFM and admitted that the Hubba campaign wasn't accurate -

--snip--

95BFM's Noelle McCarthy has gained an admission from Family Planning that the No Rubba No Hubba safe sex campaign may not be accurate.

Speaking to McCarthy on BFM's The Wire this afternoon*, Family Planning's Dr Christine Roke conceded that the chances of catching Chlamydia, gonorrhea or herpes through a condom may be as high as 60%, as outlined in the latest Investigate magazine.

"But I would have thought that even 40% protection still made condoms worth using," Dr Roke told McCarthy.

The BFM news director asked however whether the Hubba website and TV ads were being "honest" to young people when the chances of infection when using a condom were still so high.

Dr Roke then admitted that the Hubba campaign "may not be accurate enough".

The Family Planning spokeswoman then stunned listeners by adding that "abstinence is the best protection".

--snip--

Also, if you can find a copy of the particular Investigate that the story you read was in, you'll find a list of references that Ian used for his info. There are about 15 references from respected medical journals which state that condoms don't stop STD's (maybe apart from AIDS). There anren't any that say condoms do, because, well, there isn't any evidence to support it!!

[Matt]

'morning Pontiff!

Plunkette did a good job - he spoke over the top of you because you repeatedly refused to answer the question put to you.

He has more tenacity than all the other journos in the country put together.

[Ian]

Actually Matt, Morning Report spent the best part of the hour bagging me, then invited me to respond.

When I tried to respond in context, not just to that question but a range of defamatory allegations, I was shouted down by a buffoon who couldn't take the heat.

Plunket knows he could never take me on in an interview sense, so he indulges in the last refuge of the desperate interviewer sensing he has a tiger by the tail - cut the line.

If you continue to think that was a shredding, then give me a substantive legal response to every point I've made in the post above. Because unless you can take me down legally, you can't take me down at all. And a performing seal on Morning Report doesn't change that reality one iota.

[Nigel]

I think you do a great job Ian. Keep it up.

[Meds]

In relation to all the attacks Ian's been receiving from the so called "peace loving liberals"... didn't Christ say something about those who follow him will be persecuted as he was?

[phil]

Ian, why did you not approach Parker before you went to print? Is it normal journalistic practice to seek balance in an article?

[ian]

Phil. Ethically, we were not seeking his opinion, or even an explanation, we were simply reporting a fact: that documents he had filed with the Companies Office as a matter of public record, were false in material particulars.

He was the Attorney-General. There is enormous public interest in the fact of it. The "why" of it was secondary, and a role for the daily media to flesh out, rather than a monthly magazine.

There was nothing he could have added that would have changed the facts of the case, facts that remain true to this day. So while the benefits of approaching him were negligible, the risks of doing so were enormous in terms of a potential gagging writ or injunction.

We decided to make doubly sure we had our facts right to a criminal proof standard, and we published.

Perhaps the best summary of the position is this:

"Most of the best investigative journalism that has actually been published would violate Wikipedia's policies. For example, Neutral Point Of View would exclude Seymour Hersh as well as the great early 20th-century muckrakers such as Lincoln Steffens and Upton Sinclair. Consider the line in the movie version of "All the President's Men" where Jason Robards, in the role of Ben Bradlee, tells Bob Woodward and Carl Bernstein, "Goddammit, when is somebody going to go on the record in this story? You guys are about to write a story that says the former Attorney General, the highest-ranking law enforcement officer in this country, is a crook! Just be sure you're right." Saying that the attorney general is a crook is clearly a point of view, and the standard that Bradlee demands is not, "be sure that you respectfully represent all opinions." Instead, he says, "be sure you're right."

"As groups like Wikinews work to encourage the emergence of online citizen journalism, it helps to understand the historical antecedents of what they are trying to create. Contrary to the official mythology taught in journalism schools, "objectivity" in the sense of "nonpartisanship" has not been the norm for journalism, either in the U.S. or anywhere else. The first newspaper published in the American colonies, "Publick Occurrences," was regarded as seditious literature. So were the "New England Courant," published later by James Franklin (Ben's brother); "The New York Weekly," published by John Peter Zenger; the "Massachusetts Spy," published by Isaiah Thomas (which covered the first armed clash between the Patriots and British and coined the phrase, "the shot heard 'round the world"); and the "Independent Advertiser" published by American revolutionary and radical propagandist Samuel Adams. After the American revolution, many U.S. newspapers aligned themselves with Federalists like Alexander Hamilton and James Madison. (The Federalist Papers were first published in newspapers.) Other important editors and newspapers supported the opposition to the Federalists which formed around Thomas Jefferson. Subsequent newspapers with names like "The Liberator" and "Freedom's Journal" were important advocates for the abolition of slavery, women's suffrage, education, temperance and other social reforms. William Randolph Hearst and Joseph Pulitzer built their publishing empires by crusading for causes including trust-busting, popular election of senators and the graduated income tax. It is precisely through serving as vehicles for the expression of non-neutral points of view that these journalistic institutions served their communities and helped bring about many of the social advances that we enjoy today."

Sourced from http://www.prwatch.org/node/3122

[phil]

You said

"There was nothing he could have added that would have changed the facts of the case, facts that remain true to this day. So while the benefits of approaching him were negligible, the risks of doing so were enormous in terms of a potential gagging writ or injunction."

I may be accused of being a troll, but would not Parker's opinion of the facts, or at least the facts as laid out in the article, have been a worthwhile and valid addition to the article? The reaction of the man is often the most interesting part of the story. I presume his accuser was quoted. Why wasn't Parker?

As regards the threat of gagging writ or injunction, is this not the risk you take when you start an investigative piece? Other media have to take this risk, and yes, they are injuncted. Isn't that just part of a judicial process?

No reasonable person expects an investigative article to always be objective and impartial, but there seemed no good reason in this instance for there to be no attempt at even paying lip service to fairness and balance.

[Belt]

Hey, Ian ownes a magazine. Where did he sign a contract to provide balance? (Fairness? Define THAT before demanding it). He has no obligation to follow any of your imagined rules phil. He just has to ensure he doesn't run foul of defamation laws, the rest is all about getting people to buy magazines.

What I do suspect, and we won't know for sure until some years into a non-Labour led Government, is that Ian has an axe to grind when it comes to Labour:

- Lesbian Prime Minister
- Tamihere interview
- Benson Pope
- Parker

(I never actually thought I'd write the phrase "lesbian Prime Minister", but there you go, another first :)

[hyslop]

I gave Ian an interview that contained certain facts. alot more than what he printed. He did go easy on parker believe me