Professional Documents
Culture Documents
First plaintiff
Second plaintiff
First defendant
Second defendant
STATEMENT OF CLAIM
DATED 22 DECEMBER 2017
Third defendant
Fourth defendant
Fifth defendant
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PARTIES
3. The first plaintiff is the beneficial owner of 100 per cent of the
shares in Vestor Limited, a Hong Kong registered company.
Vestor owns 34,001 out of 50,000 shares (approximately 68 per
cent) of the shares in the second plaintiff.
6. The third defendant is named for and on behalf of the Crown Law
Office (Crown Law) as the central authority under the Extradition
Act 1999, and counsel for the United States in the Extradition
Proceeding and other proceedings.
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FACTUAL BACKGROUND
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13. Since not later than March 2010, New Zealand, the United States,
and the Studios (and associated persons and entities) have
discussed and sought to co-operate in their mutual best interests
on matters including (but not limited to):
16. Also in March 2010, the Studios lodged a formal complaint with
the DOJ in respect of the second plaintiff.
17. In or about October 2010, the FBI contacted the New Zealand
Security Intelligence Service (NZSIS) to seek its assistance with
the FBI’s investigation into the first and second plaintiffs, amongst
others.
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19. The Minister for Arts, Culture and Heritage was at all relevant
times the Hon Christopher Finlayson, who was also the Attorney-
General at all relevant times.
20. Immigration New Zealand (INZ) processed and approved the first
plaintiff's residence application on or about 1 November 2010
following "political pressure".
23. On or about 13 October 2010, the NZSIS put the first plaintiff’s
application for residence on hold following being alerted to the FBI
investigation.
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27. The NZSIS removed its objection to the first plaintiff being granted
residence on or around 28 October 2010:
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31. During 2011, Police and the FBI liaised on an ongoing basis in
respect of the FBI's investigation into the first plaintiff.
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(c) various other matters for which the FBI requested Police
assistance, including information as to property and
financial records.
(d) that the potential benefits to Police from assisting the FBI
included:
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(c) that the FBI investigation was ongoing, and the FBI
requested Police assistance.
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EXTRADITION TOPICS
Timing required/available to
accomplish by 21st January 2012
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Administrative procedures
Staff required/available
Priorities
FBI requirements
NZ Police requirements
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Indictment
54. On 5 January 2012, the United States District Court for the
Eastern District of Virginia issued an indictment dated 5 January
2012 (Indictment) charging the plaintiffs (amongst others) with:
56. On 5 January 2012, the United States District Court for the
Eastern District of Virginia issued an arrest warrant for the first
plaintiff on charges contained in the Indictment (US Arrest
Warrant).
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Article XI
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66. The First McMorran Affidavit did not set out any basis for the
allegation that the offences for which the first plaintiff was sought
in the United States were extradition offences.
67. The predicate offence relied upon by the United States for the
offences in the Indictment was criminal copyright infringement.
(emphasis added)
69. Under s 20(1)(c) of the Extradition Act 1999 the District Court
Judge was required to be satisfied that (amongst other criteria)
there were reasonable grounds to believe that the offence for
which the first plaintiff was sought was an extradition offence.
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I am satisfied that –
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72. The Arrest Warrant did not identify any offence, whether under
section 131 of the Copyright Act 1994 or otherwise, that was
alleged to be the New Zealand equivalent of the United States
copyright offences.
75. On 20 January 2012, while the first plaintiff was in custody and
unable to respond, the Police issued three press releases
regarding the execution of the Arrest Warrants.
76. The press releases were misleading and intended to, and did,
create a narrative that cast the plaintiffs in an unfavourable light,
and the United States and Police in a favourable light, in the eyes
of the public, not only in New Zealand but also internationally.
77. The first plaintiff was then detained in a remand facility until 22
February 2012.
78. On 22 February 2012, the District Court ordered that the first
plaintiff be remanded on bail subject to a range of conditions.
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Article IX
88. Each of the Attorney-General, Crown Law and the Police owed an
ongoing correlative duty to the extradition court to use their best
endeavours to ensure that the United States complied with its
duty of candour.
1
Dotcom v United States of America [2014] 1 NZLR 355, at [101].
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(ii) the offence for which the first plaintiff was sought
was an extradition offence under the Extradition Act
1999.
(b) Any defence that might have been available to the first
plaintiff.
90. This duty applied not only at the time the Arrest Warrant
Application was made and heard but also continued to apply after
the Arrest Warrant was issued.
91. In making the Arrest Warrant Application, the United States, the
Attorney-General, Crown Law and the Police:
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93. The Arrest Warrant was therefore issued on the basis of material
non-disclosure by Crown Law.
(a) the process by which the first plaintiff was brought before
the extradition court, and the resulting Extradition
Proceeding, was not in accordance with New Zealand law;
and
(b) as a result, the first plaintiff was deprived of his right under
section 27 of the New Zealand Bill of Rights Act 1990 to a
fair hearing of the Arrest Warrant Application in light of all
relevant facts.
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95. Accordingly, the Arrest Warrant, and all steps taken pursuant to it,
are therefore unlawful and invalid.
(a) The warrant on which the United States relied for the
purposes of s 20(1)(a) of the Extradition Act 1999 was the
US Arrest Warrant.
(b) The offences for which the first plaintiff was sought, and on
which the United States relied for the purposes of s
20(1)(c) of the Extradition Act 1999, were those in the
Indictment.
98. For the purposes of s 20(1)(c) of the Extradition Act 1999, the
Arrest Warrant Memorandum alleged that the conduct alleged to
comprise the predicate offence of criminal copyright infringement
under count two would, had it occurred in New Zealand, amount
to an offence under s 131 of the Copyright Act 1994.
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102. For the purposes of s 20(1)(c) of the Extradition Act 1999, the
Arrest Warrant Memorandum alleged that the conduct alleged to
comprise the criminal copyright infringement under count four
would, had it occurred in New Zealand, amount to an offence
under s 131 of the Copyright Act 1994.
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that the offence for which the first plaintiff was sought under count
four was an extradition offence.
106. For the purposes of s 20(1)(c) of the Extradition Act 1999, the
Arrest Warrant Memorandum alleged that the conduct alleged to
comprise the criminal copyright infringement under count five
would, had it occurred in New Zealand, amount to an offence
under s 131 of the Copyright Act 1994.
110. For the purposes of s 20(1)(c) of the Extradition Act 1999, the
Arrest Warrant Memorandum alleged that the conduct alleged to
comprise the racketeering offence under count one would, had it
occurred in New Zealand, amount to an offence under s 98A of
the Crimes Act 1961 (paragraph 33).
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116. For the purposes of s 20(1)(c) of the Extradition Act 1999, the
Arrest Warrant Memorandum alleged that the conduct alleged to
comprise the money laundering offence under count three
amounted to an offence under:
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Superseding indictment
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122. Under United States law, the effect of the Superseding Indictment
was to dismiss the Indictment.
(f) Counts 9-13: Fraud by wire and aiding and abetting fraud
by wire.
126. The US Arrest Warrant on the basis of which the District Court
issued the Arrest Warrant was superseded and therefore ceased
to be of legal effect on 16 February 2012.
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128. Even if it was valid at the point it was issued (which is denied), the
Arrest Warrant pursuant to which the first plaintiff was brought
before the Extradition Court and the Extradition Proceeding was
commenced has been invalid at all times since 16 February 2012.
131. The Request for Surrender was expressly made on the basis of:
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(emphasis added)
135. The US Request for Surrender was made on the basis of the
Superseding US Arrest Warrant.
136. The US Request for Surrender therefore did not comply with s 18
of the Extradition Act 1999 and was invalid.
Whereas
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139. The Request for Surrender was made, and the Minister’s Notice
under s 23(4) of the Extradition Act 1999, was given on the basis
of:
140. The Minister’s Notice was therefore invalid for the purposes of s
23(4)(a) of the Extradition Act 1999 because it stated that a
request for surrender of the first plaintiff had been transmitted to
the third defendant under s 18 of the Extradition Act 1999 when,
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142. No valid notice under s 23(4)(a) of Extradition Act 1999 has ever
been submitted.
Article XI
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(emphasis added)
145. No valid request for surrender having been received from the
United States before the expiration of 45 days from the date of the
first plaintiff’s arrest, the first plaintiff should have been set at
liberty but was not.
147. As a result of this breach of the duty of candour, the first plaintiff
has not been set at liberty, and the Extradition Proceeding has
proceeded for approximately six years, and continues to proceed,
despite the fact that:
(b) 45 days have passed from the date of the first plaintiff’s
arrest.
148. Accordingly, even if the Arrest Warrant was valid when issued
(which is denied), the Extradition Proceeding has been invalid and
ultra vires since the expiry of 45 days from 20 January 2017.
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152. The 31 October 2013 letter raised for the first time predicate
offences under the Crimes Act 1961.
153. Accordingly, by not later than 31 October 2013, the United States,
the Attorney-General, and Crown Law knew that the alleged
conduct would not constitute an offence under s 131 of the
Copyright Act 1994 had it been carried out in New Zealand.
RESTRAINING ORDERS
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158. The First Foreign Restraining Order purported to restrain all of the
plaintiffs’ material assets in New Zealand and Hong Kong.
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167. On 30 January 2012, the High Court granted the interim foreign
restraining order over the first plaintiff’s assets.
170. On 16 March 2012, the High Court ordered the registration orders
made on 18 January 2012 were null and void and of no legal
effect.
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175. On 18 April 2012, the High Court granted the Third Registration
Application for registration of the First and Second Foreign
Restraining Orders.
178. Subject to variations ordered by the High Court, the first plaintiff’s
assets remained restrained under the 18 April 2012 restraining
orders until their expiry three years later on 18 April 2015.
179. From 18 April 2015, the first plaintiff’s New Zealand assets have
been frozen pursuant to freezing orders granted in favour of the
Studios under Part 32 of the High Court Rules in CIV-2014-404-
1272 Twentieth Century Fox Film Corporation & Ors v Dotcom &
Ors.
182. On 17 January 2012 (Hong Kong time) the Secretary for Justice
of Hong Kong filed an ex parte originating summons in the High
Court of the Hong Kong Special Administrative Region Court of
First Instance in HCMP 116/2012 seeking a restraint order over
the plaintiffs’ Hong Kong assets as set out in the draft order
exhibited to the affirmation of Yu Yat-Ming Sunny dated 17
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183. The application for the Restraint Order was made under s 27 of
the MLAO. Section 27 provides:
7. Restraint orders
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5. Refusal of assistance
190. Accordingly, before seeking the Restraint Order, the Secretary for
Justice was required to be reasonably of the opinion that the
conduct alleged to constitute the criminal offence would have
constituted a criminal offence if it had taken place within Hong
Kong.
191. The High Court of Hong Kong was required to be satisfied that
there were reasonable grounds for believing that an external
confiscation order may be made in the United States. A post-
conviction forfeiture order as contemplated by the Indictment and
Superseding Indictment could not be obtained without the first
plaintiff first being:
(a) arrested;
(c) convicted.
Duty of candour
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194. At 9:45 a.m. on 18 January 2012 (Hong Kong time), the Restraint
Order application was heard before the Honourable Mrs Justice V
Bokhary in chambers.
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COURT: Yes.
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197. The Restraint Order was granted by the High Court of Hong Kong
on the terms sought by the Secretary for Justice after a 13 minute
hearing.
198. In granting the Restraint Order, the High Court of Hong Kong
attached significant weight to the submission that, although the
first plaintiff had not yet been arrested, he soon would be.
199. The only evidence filed by the Secretary for Justice in support of
the Restraint Order application was the Sunny affirmation.
200. The only reference in the Sunny affirmation to the arrest of the
first plaintiff is at paragraph 30:
201. At the time the Sunny affirmation was made, the Arrest Warrant
had not been issued.
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206. Had this information been disclosed to the Secretary for Justice
and/or the United States, there would have been no valid basis for
the opinion expressed at paragraph 32 of the Sunny affirmation
that:
207. Had this information been disclosed to the High Court of Hong
Kong at or before the hearing on 18 January 2017, it would have
concluded that there were no reasonable grounds for believing
that an external confiscation order may be made in the United
States proceeding because there were no reasonable prospects
of the first plaintiff being arrested in New Zealand.
208. But for the non-disclosure of this information the High Court of
Hong Kong prior to issuing the Restraint Order, it would not have
granted the Restraint Order.
Superseding indictment
210. The duty of candour to which the Secretary for Justice was
subject was an ongoing duty.
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(b) The Arrest Warrant was therefore no longer valid (if it ever
was); and
212. In these circumstances, the High Court of Hong Kong would have
discharged the Restraint Order.
213. Each of the Attorney-General, Crown Law and the Police owed
the first plaintiff a duty of care in seeking and maintaining the
Arrest Warrant.
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215. The plaintiffs have suffered loss as a result of the Arrest Warrant
being unlawfully issued.
218. As a result of being on bail for approximately six years, and the
ongoing threat of extradition and imprisonment, the first plaintiff
has suffered loss of:
(b) reputation.
Legal costs
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222. At the same time, the second plaintiff’s officers (including the first
plaintiff) were in custody and their assets were restrained such
that they were unable to either fund the business in the short term
or take legal action to challenge the Restraint Orders.
224. At the time the Restraint Orders were granted, second plaintiff
was preparing to list on the Stock Exchange of Hong Kong at a
conservative valuation of not less than US$2.6 billion based on:
225. But for the Restraint Order, the second plaintiff would have
continued to increase its registered user base and increase in
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(a) The second plaintiff has lost profits from Megaupload, and
all companies within the Megaupload group of companies,
since January 2012.
227. At the relevant time, the first plaintiff had an option to purchase
the property that he was then leasing at 186 Mahoenui Valley
Road, Coatesville (Property) on the expiration of the lease in
February 2013.
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229. In anticipation of exercising the option, the first plaintiff had made
improvements to the Property at a cost of approximately NZ$9.5
million.
230. The purchase price for the Property under the option was US$18
million or approximately NZD$21.6 million as at February 2013.
231. As a result of the restraining order, the first plaintiff was unable to
exercise the option to purchase the Property.
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(f) Costs.
233. The Attorney-General and Crown Law owed the plaintiff a duty of
care in the exercise of their role as Central Authority under the
Extradition Act 1999 and US-NZ Treaty.
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(f) Costs.
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Public office
Malice
238. The Attorney-General, Crown Law and the Police knew or were
recklessly indifferent to the fact that the Arrest Warrant was
unlawful and would, if issued, cause harm to the plaintiffs
because:
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(f) Costs.
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242. The United States, the Attorney-General, Crown Law and/or the
Police procured the Provisional Arrest Warrant.
243. The United States, the Attorney-General, Crown Law and/or the
Police did not have reasonable and probable cause to apply for
the Arrest Warrant because:
(b) They lacked any bona fide subjective belief that they were
placing before the District Court Judge material sufficient to
meet the requirements of s 20 of the Extradition Act 1999.
In particular, they knew or were recklessly indifferent to
whether on the basis of the information presented to him
the District court Judge could reasonably be satisfied that
there were reasonable grounds to believe that the offence
for which the person was sought is an extradition offence
for the purposes of s 20(1)(c).
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(b) They lacked any bona fide subjective belief that the District
Court Judge had had material before him sufficient to
believe that a warrant for the first plaintiff’s arrest had been
validly issued in the United States for the purposes of s
20(1)(a) of the Extradition Act 1999.
Malice
(iii) winning favour with the Studios for the New Zealand
Government.
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(f) Costs.
Documents for service on the plaintiff may be left at the address for
service or may be:
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