Sean Miller v Fonterra Co-Operative Group Ltd

 
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[2012] NZEmpC 49

IN THE COURT OF APPEAL OF NEW ZEALAND AUCKLAND

ARC 45/09

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
Counsel:

Tony Drake, counsel for Mr Miller

John Rooney, counsel for Fonterra Co-Operative Group Limited

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.

PUBLICATION OF THE NAME OR IDENTIFYING PARTICULARS OF THE APPELLANT IS PERMANENTLY PROHIBITED.

The issues were: whether the Evidence Act 2006 (“EA”) applied to the Employment Court (“EC”), whether the documents were privileged under s54 EA (privilege for communications with legal advisers) and s56 EA (privilege for preparatory materials for proceedings), whether Fonterra had waived privilege and whether Y's affidavit was admissible as a hearsay statement pursuant to s18 EA (general admissibility of hearsay).

Held: The EC had a very broad discretion to admit or refuse to admit evidence under s189(2) Employment Relationships Act 2000 (“ERA”) (Court may admit evidence as in equity and good conscience it thinks fit, whether strictly legal evidence or not). The interests of justice were the ultimate determiner (Auckland District Health Board v Bierre).

However there was 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 EA said about it (Ravnjak v Wellington International Airport Ltd). The desirability of that approach was particularly pronounced where significant but uncertain issues arose in relation to waiver of privilege.

Previous authorities had held that legal professional privilege and litigation privilege were substantive legal rights which existed prior to the introduction of the EA and that there was no indication s65 EA (waiver) was intended to change the existing law in any material aspect. At common law, confidential communications between a client and their legal adviser, made for the purpose of obtaining or giving legal advice were generally protected from disclosure without the client's consent or waiver. Litigation privilege provided protection against disclosure of communication between clients and their legal adviser for the purposes of pending or contemplated adversarial litigation. The common law position was largely reflected in s54 EA and s56 EA.

There was no question that the relationship of solicitor/client existed at the time the documents were made. The documents had been prepared for the purpose of providing legal advice and prepared in contemplation of legal proceedings and were prima facie subject to privilege.

Each of the documents had been provided to the SFO under compulsion. Failing to ask for the documents to be returned fell well short of conduct amounting to waiver. It was clear that Fonterra had granted a limited waiver which did not amount to a general waiver. The fact that part of the evidence had been heard in open court was not fatal and Fonterra had asserted its limited waiver at the time the evidence was given. The documents were subject to professional privilege and litigation privilege and could not be used by M.

Y's affidavit comprised a hearsay statement and was admissible in any proceeding if the circumstances relating to the statement provided reasonable assurance that the statement was reliable and the maker was unavailable as a witness pursuant to s18 EA. Factors relevant to the determination of its reliability under the EA included: the nature of the statement; its contents; the circumstances relating to the making of the statement; the circumstances relating to the veracity of the person making the statement and the circumstances relating to its accuracy under s16 EA (interpretation). Y's statement was contained in a formal document. He undoubtedly had extensive experience and knowledge of the dairy industry and had some involvement in events relevant to M's claim. The affidavit was internally consistent, and there was nothing that suggested Y's veracity was in issue. The fact that the statement did not specifically address allegations, or that it pre-dated the filing of the proceeding, did not of itself make it unreliable.

Y had sworn his affidavit in the knowledge it would be available to be used in M's proceeding. While the EC was not required to apply the provisions of the EA they provided useful guidance. Under s8 EA (general exclusion) the Court must exclude evidence if its probative value was outweighed by the risk the evidence would have an unfairly prejudicial effect. The ability to cross-examine witnesses was part of the right to a fair hearing; however it was not an absolute right. There was a risk of prejudice to Fonterra in admitting Y's affidavit. However M would be substantially prejudiced if he could not rely on the affidavit. It would frustrate Y's contention that his evidence be taken into account which ran contrary to s189 EA (equity and good conscience). Any prejudice to Fonterra could be managed in terms of the weight that was accorded to it at the hearing.

Affidavit was admissible but the weight to be given to it was a matter for the trial judge.

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...

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