This cheery chappie is J. Stephen Kos, a Supreme Court judge. He has been giving talks about how he got his job, and even his own record.
One of his big achievements was to take a big case to the Privy Council in London, which was New Zealand's highest appeal court before 2004. In 1992, working with London solicitors Herbert Smith, he got the law on bribes changed in a case about a New Zealand lawyer called Warwick Reid. He gave a talk about it to the Society of Trusts and Estates Practitioners, a worldwide lawyers' organisation.
Reid had been employed by the British government in Hong Kong, which was then still a British Colony. As Acting Chief Prosecutor, Reid took millions of dollars in bribes to let corrupt businessmen off in court. He was prosecuted and became a police informer to get a shorter sentence. But while Reid was still in prison, the British government claimed land in Tauranga that was bought in the names of Reid's wife and their solicitor. When Reid did not pay $12,000,000 he was ordered to pay them, the British government through its solicitors Herbert Smith contacted Stephen Kos, a partner in Russell McVeagh in Wellington, wanting to claim that land. Stephen Kos advised putting a caveat on the land.
Then the solicitor Stephen Kos had to try to justify that, because to file a caveat you need a claim that relates to the property itself. The law said that bribes belonged to the person who took the bribe (even if they were convicted and sentenced for it). It was not even clear that the bribes had been used to buy the land. So there was no clear legal or factual connection between the bribes and the land. The controversial process whereby the authorities can confiscate money and property that a person cannot prove was honestly obtained had not yet come into operation. As SCJ Kos has been telling us, he found a way round that apparently before it happened, and the Privy Council made new law of it.
The Privy Council said that where bribes are taken by an employee, and they perform their employment duties wrongfully, the bribe belongs to the employer. The case report explains that in circular terms, saying because the bribes are given dishonestly, they cannot belong to the bribee, who must therefore be a trustee of them. It kind of makes sense because they don't discuss the implications. Money is a particular sort of property, called "fungible". It's valuable not as property in itself but for what it can buy. The Privy Council case said that didn't matter, and the British government could claim the land in Tauranga.
That's less difficult to follow if you realise that the Privy Council case also accepts as facts things it agrees have not been established as facts, such as that the bribe money was used to buy the land in Tauranga. It seems by then the Reids were not arguing with the way the case was going. Their solicitor completely vanished.
It was a controversial case for a long time. A very respected English lawyer, Professor Peter Birks, warned that it had very wide implications because it changed the way money could be claimed, in various contexts. The Privy Council had said it could not see any reason why an employee who received a bribe from a third party should legally own it, and said they were a trustee for their employer. That was a new use of the idea of the "trust" and made a new category of people "trustees", and blurred the line between property matters and money claims, where they passed through an employee.
Even Professor Birks did not follow the argument through to its obvious use though. If the bribe is received dishonestly by the employee, and so belongs to the employer, that legalises the employer taking bribes.
In Reid's case, he was prosecuted, but that was because his employer objected to him taking bribes. But it was sorted for Reid to join the authorities, to return to New Zealand with a military escort and to receive an $800,000 "handshake", and for his wife to go and work as an accountant for international firm KPMG. But if an employer wanted to take bribes, it could now arrange to receive them legally, and the employee - perhaps a director - would decide not to prosecute himself ... and it would all be "confidential", so the public would not find out.
Of course it would not be just government employers that could do that. Any employer could adopt "dirty" money that had been improperly obtained by its employee, and when it was adopted it would miraculously become "clean". It works best in the public service because the employees can pay each other and outside lawyers as well, out of public funds. But there is always a risk that an honest public servant will see the transaction and report it.
Stephen Kos moved from being a solicitor to setting up a barristers' chambers. It has been notable for including lawyers who have developed New Zealand's remarkable employment law system, which allows employers and employees to get contracts to commit crimes and hide the evidence made into anonymised court orders. That move happened when honest people started reporting corruption, especially where IT expect Geoffrey Brown reported corruption in Tauranga City Council - Judge Bruce Corkill sent him to prison for that. Stephen Kos's barristers went on to ask (for a fee) employment judges to make orders against third parties, so it's not just employers and employees any more. The judges have done it and the Supreme Court, where SCJ Kos now has his job, have confirmed it as part of New Zealand law.
In case anyone thought SCJ Kos wasn't on a mission, he has also given talks about the development of fiduciary duties. He uses employment terms such as "trust and confidence" when he is talking about property law generally. It is clever to subtly change the meaning of words. It's not actually that subtle but since it has not been criticised, that doesn't matter. In fact, SCJ Kos compares his work to Aristotle's.
The technique is not unique to New Zealand, but having courts and government do it so openly is unusual.
The first publicised scandals were about covering up sex offences in England. There were organised paedophilia investigations starting decades ago, and then the international #MeToo movement and a parliamentary inquiry about workplace harassment in England. Harvey Weinstein, discussed in the UK parliamentary inquiry because of the coverup organised by his London lawyers, went to prison for over twenty years. The famous Jeffrey Epstein case in the USA relied on a similar court order covering up his paedophile convictions, enabling him to go on to commit more. That exposed Prince Andrew in the UK and sent Boris Johnson's old friend Ghislaine Maxwell to prison as well. These enquiries exposed a number of New Zealanders, but that was not reported. Rapists were and are still routinely protected and enabled in New Zealand. Supreme Court judges do not want to let that go.
What was reported was New Zealand's attempt to fight back against exposure. New Zealand sent ex-judge Lowell Goddard to remove evidence sessions from the organised child abuse inquiry in London, but she was disgraced within a year and a half. Then Andrew Little tried to get countries together to agree to "respect" New Zealand's suppression orders like the one protecting the murderer of British backpacker Grace Millane. The other countries actually realised what New Zealand was doing and rejected it, but many New Zealanders did not realise that Minister Little failed to do anything except expose things about New Zealand that hadn't previously been noticed. Kiwis remained "proud" of their suppression orders and did not see them as enabling crime or being corrupt or corrosive.
After the Harvey Weinstein scandal, the authorities in England tried to act against lawyers using private contracts to enable criminal offences. Some Kiwis who were lawyers in the UK had to resign from their UK roles. The connection between New Zealand and the lawyers who helped the British government and ultimately their man Warwick Reid just moved to other places for the transfer of "research" money.
After the Weinstein and Epstein scandals, now the US courts have decided to open Jeffrey Epstein's files. His associates had relied on the court ordering them to be hidden. In New Zealand, employment Judge Corkill extended employment powers to legalising agreements to destroy evidence instead, even if he did not seem to have a judicial warrant at the time.
In the UK, the Law Society first helped extend legal privilege to lawyers obtaining information from conflicting parties, saying it was defending legal privilege. After the party they assisted was exposed as involved in "criminal activities including corruption, money laundering, theft and embezzlement", that was defended by their own in-house lawyer ... from New Zealand. The opposing party, the Serious Fraud Office, did not appeal. It was advised by its in-house head of fraud lawyer ... from New Zealand.
As Leighton Associates has reported, there has been another change of attitude in the UK. In New Zealand it has become routine to cover up crimes using contracts and court orders. Everyday access to that technique is provided through the secrecy of employment "mediation" procedures which are publicly visible and which ACAS in the UK has described as "corrupt". The technique of government employers hiding evidence and attacking the innocent while giving themselves money and honours is a public scandal in the UK. And where the lawyers have helped themselves make money while they help their clients do dodgy things secretly, now in the UK the lawyers are being called out too.
A lot of people in very high places must be rather scared about how countries react when they realise what lawyers have been getting away with, helped by judges who say it's all now a legal secret.
Not apparently SCJ Kos, though. He is providing helpful confirmation of how money transfers and legal secrecy were developed in New Zealand, and even his own part in it. His position is rational if you rely on New Zealand being entitled as a sovereign state to run its legal system any way it likes. Obviously while other states cooperate, that works. But it may not work forever, and there may be trouble ahead.
Leighton Associates will continue to watch developments and report on them.
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