Sean Miller v Fonterra Co-Operative Group Ltd

• Jurisdiction: New Zealand
• Judgment Date: 19 March 2012
• Date: 19 March 2012
• Docket Number: ARC 45/09
• Court: Employment Court

IN THE MATTER OF proceedings removed

AND IN THE MATTER OF an application for orders regarding admissibility of affidavit evidence and certain documents

Between

Sean Miller

Plaintiff

and

Fonterra Co-Operative Group Limited

Defendant

[2012] NZEmpC 49

ARC 45/09

IN THE COURT OF APPEAL OF NEW ZEALAND AUCKLAND

Appeal from a High Court decision dismissing an application for habeas corpus. Appellant was initially detained under s10 Mental Health (Compulsory Treatment and Assessment) Act 1992 (“MHA”) (certificate of preliminary assessment) and then under s13 MHA (further assessment and treatment for 14 days). An application under Part 2 MHA (compulsory treatment orders) for a compulsory treatment order was due to be heard the next day and had been made before the application for a writ of habeas corpus was sought. The application for habeas corpus was made primarily on the grounds that the initial detention under s10 was unlawful because there was no factual basis on which to believe the appellant was “mentally disordered” — whether the High Court erred in failing to determine whether the s10 MHA initial detention was unlawful or invalid.

Counsel:

Tony Drake, counsel for Mr Miller

John Rooney, counsel for Fonterra Co-Operative Group Limited

1 The defendant applies for orders that certain documents be ruled inadmissible. The application is opposed.

2 The application arises in the context of a claim brought by Mr Miller against his former employer, Fonterra Co-operative Group Limited (Fonterra). He held positions in Kiwi Co-operative Dairies Limited (Kiwi) and then with the defendant company following amalgamation in October 2001. He, along with a number of other employees, was the subject of investigation by the Serious Fraud Office and was subsequently charged. The charges arose out of what has become colloquially known as “Powdergate”. Mr Miller was ultimately discharged without conviction. He essentially claims that he was drawn into litigation that he should never have been involved in, that Fonterra has an obligation to indemnify him against losses he says he suffered and that his employer was in breach of contract.

3 Mr Miller wishes to use certain documentation in his proceedings in this Court. The documentation falls into three categories:

• (a) A witness statement and transcript of evidence given in District Court proceedings by one of the defendant's former counsel (Mr Mehrtens) (document 76);

• (b) Three documents which are said to contain legal advice and which were created in contemplation of litigation (documents 47, 54 and 57);

• (c) An affidavit from a deponent (Mr Young) who has since passed away.

The documentation

4 In 2002, the Serious Fraud Office compelled Fonterra to disclose a number of documents to it, including documents 47, 54 and 57. This was done pursuant to s 9 of the Serious Fraud Office Act 1990. On 5 November 2002, Fonterra waived privilege over the documentation provided to the Serious Fraud Office “insofar as it attaches to any of the documents solely for the purposes” of the investigation.

5 Document 47 is a memorandum from legal advisers (Mr Harmos and Mr Gailbraith QC) to Fonterra dated 1 November 2002 relating to the stance taken on behalf of Fonterra in a meeting with the Serious Fraud Office. Document 54 comprises emails from Mr Mehrtens (then a partner with Russell McVeagh) to Fonterra containing advice on dealing with employees of Fonterra charged on related matters. Document 57 is a memorandum from Mr Smith (a partner with Russell McVeagh) to Mr Mehrtens analysing the application of the Dairy Board Act 1961 to Fonterra's situation and prepared for the purpose (Fonterra says) of giving advice to it.

6 In 2004, former employees of Fonterra, including Mr Miller, were charged with criminal offending by the Serious Fraud Office. A depositions hearing in the District Court followed. Mr Mehrtens was subpoenaed by the Serious Fraud Office to give evidence, which he did on 16 May 2005.

7 Mr Mehrtens initially declined to answer questions at the District Court hearing, on the basis of legal professional privilege. There was a brief adjournment, from 2.50pm to 3.15pm. Mr Matthews (General Counsel for Fonterra) was contacted and a request was made that he waive privilege on behalf of Fonterra to enable Mr Mehrtens to give evidence. Mr Matthews sought advice on the issue from Mr Smith, and he subsequently agreed to a limited waiver, which was expressed to be strictly for the purpose of Mr Mehrtens giving evidence in the Serious Fraud Office proceedings in the District Court.

8 The limited nature of the waiver is reflected in an email from Mr Smith to Mr Mehrtens. That email was sent at 3.22pm on 16 May 2005. It recorded that Fonterra had waived privilege in the documents it had provided to the Serious Fraud Office (which included documents 47, 54 and 57) for its investigation and prosecution but that:

The waiver is limited to these purposes. This releases you from your duty as a lawyer in respect of privilege to Fonterra in relation [to] this prosecution and any co-existing duty of confidentiality in relation to this prosecution. I have asked Gus Andre-Wiltens to make this clear to the Court and he has agreed to do so.

9 Mr Andre-Wiltens was counsel for the Serious Fraud Office.

10 The transcript of the depositions hearing (document 76) does not record that counsel did make this clear. While it appears that the transcript does not reflect a verbatim record of the exchanges with counsel, Mr Miller (who was present in Court on the day in question) says that Mr Andre-Wiltens did not advise the Court that Fonterra had given a limited waiver.

Parties’ submissions

11 The defendant submits that documents 47, 54 and 57 are privileged, that privilege in them has not been waived, and that Mr Mehrtens's statement and the transcript of evidence given in Court are inadmissible as they contain hearsay and relate to privileged matters, over which privilege has not been waived.

12 The plaintiff submits that privilege has been waived. In this regard it is said that whatever Fonterra thought the position was in relation to the scope of waiver, that was not communicated in Court and nor was there any agreement with others present in Court (including the public and the media) as to the basis on which the evidence was being given. It is submitted that, absent such agreement or suppression orders having been made, there was effectively a wholesale waiver of privilege.

13 The plaintiff further submits that the Evidence Act 2006 does not apply to proceedings in the Employment Court and nor does it, in any event, apply to Mr Mehrtens's statement and transcript of evidence which was made prior to the Evidence Act coming into force. 1

14 Mr Drake, counsel for the plaintiff, also developed an argument that if the Evidence Act 2006 did apply, the transcript and statement were admissible. He said that Mr Mehrtens would be summonsed to give evidence in this Court. If he declined to answer questions, his previous statement in the District Court would be put to him. In these circumstances, it was submitted that the previous statement would be admissible under the Evidence Act 2006 as a previous statement.

Does the Evidence Act 2006 apply?

15 It is clear that the Employment Court has a very broad discretion to admit or to refuse to admit evidence. The interests of justice in the particular case will be the ultimate determiner. 2 While the Court has the power to admit such evidence as in equity and good conscience it thinks fit, 3 there is a recognised utility in having

regard to how the courts of ordinary jurisdiction deal with issues relating to the admission of evidence and “what, if anything, the Evidence Act says about it.” 4 I consider that the desirability of this approach is particularly pronounced where, as here, significant but uncertain issues arise in relation to waiver of privilege. In my view, there is a broader public interest in a consistency of approach, and of lawyers being in a position to advise their clients with a degree of certainty

16 Counsel for the plaintiff referred to Todd Pohokura Ltd v Shell Exploration NZ Ltd 5 and Fresh Direct Ltd v J M Batten & Associates 6 as authority for the proposition that ss 54 and 56 of the Evidence Act 2006 do not apply retrospectively to communications made before the Act came into force. The privileges at issue in those cases (legal professional privilege (now s 54) and litigation privilege (now s 56)) were held to be substantive legal rights which existed prior to the introduction of the Evidence Act. 7

17 While not referred to by counsel, the Court of Appeal considered the issue of waiver of privilege in R v Bain, 8 in terms of s 65 of the Evidence Act 2006. The limited waiver at issue in that case had occurred before the Evidence Act 2006 came into force. The Court observed that privilege might be thought to be substantive rather than procedural, so there was scope for the question as to whether the waiver issue should be determined under the Evidence Act. However, the Court stated that this was a “dry debate as there is no indication that s 65 was intended to change the existing law in any material respect.” 9

Privilege

18 At common law, confidential communications between a client and his/her legal adviser, made for the purpose of obtaining or giving legal advice, were in

general protected from disclosure without the client's consent or waiver. 10 Litigation privilege provided protection against disclosure of communications between a person or his or her legal adviser, and a third party for the purposes of pending or contemplated adversarial litigation. 11 A “mere vague apprehension of litigation … is not sufficient” but if documents are created in the “bona...