Walker v Delta Community Support Trust [2014] NZEmpC 187 (30 September 2014)

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IN THE MATTER OF	a challenge to a determination of the Employment Relations Authority
AND IN THE MATTER	of a challenge to objection to disclosure
BETWEEN	FIONA WALKER Plaintiff
AND	DELTA COMMUNITY SUPPORT TRUST _Defendant

Hearing:	(by documents dated 21 March, 16 May, 30 May, 27 June and 14 July 2014)
Counsel:	L Ryder, counsel for the plaintiff R Coltman, counsel for the defendant
_Judgment:	_{30 September 2014}

[1] This interlocutory judgment determines a challenge to objection to disclosure of multiple documents.

[2] The plaintiff was employed by the defendant from 2000 until her dismissal on

21 May 2012. She pursued personal grievances alleging that a suspension prior to her dismissal was unjustifiable and that she had been unjustifiably dismissed. The Authority determined both issues in favour of the defendant.1 The plaintiff has

[3] Although the challenge was instituted in July 2013, the matter has been the subject of a number of procedural difficulties to this point.

[4] First, the pleadings took some time to be refined, with an amended statement of claim being filed on 14 October 2013, and an amended statement of defence on

[5] Secondly in February 2014, the plaintiff instituted a disclosure process based on a list of documents which had been filed and served on the defendant on

[6] Following a sequence of directions from the Court which needed to be issued so that there could be a proper focus on the issues between the parties, the following were placed before the Court for its consideration and determination:

Litigation privilege or solicitor/client privilege was claimed for a substantial number of documents.

30 May 2014, which challenged the above objections to disclosure, and sought an order declaring those objections to be ill-founded under reg 45 of the Employment Court Regulations 2000 (the Regulations). The plaintiff’s challenge related to some 322 disputed documents (approximately 2,600 pages). The defendant filed and served a notice of opposition dated 27 June 2014, objecting to disclosure of documents on the grounds of privilege.

[7] Both parties submitted that the Court should inspect the disputed documents under reg 45(2) of the Regulations; to that end 12 Lever Arch files containing the disputed documents were filed.

[8] The background to this issue is that during the investigation meeting, the Authority Member requested that a check be made of Trust records to ascertain whether there were documents that should be produced to the Authority. The plaintiff states that this arose because the Authority was told that members of the Board communicated with each other mainly by email in the course of their deliberations over the employment relationship problem. Rev King obtained documents at short notice; a “medium-sized box” of papers was brought to the investigation meeting. The plaintiff says it was agreed that following the hearing that day, the defendant’s lawyer would consider the documents together with Rev King and Mr Weir, and the lawyer would provide relevant copies to the plaintiff’s lawyer. A portion of the documents were then provided that evening to the plaintiff’s lawyer. It was in this context that a claim for privilege was first made.

[9] The plaintiff states that amongst the documents provided were some which “provided an insight into the Trust’s approach to the investigation”. She said that she relied on these to show that the Trust did not approach the investigation in an open and fair manner. In the main she seeks disclosure of documents – emails – which were sent to and from Board members by Mr Weir who was liaising with the Trust’s lawyer.

[10] In this judgment it is necessary first to outline a brief chronology so as to provide the context within which the disputed documents arose. I shall then consider the legal issues arising from counsel’s submissions. Finally reference will be made to a schedule prepared by the Court which identifies the documents where the objection to disclosure is not upheld in light of the relevant principles.

[11] On this occasion I have considered it appropriate to exercise the Court’s discretion to inspect the documents in issue. Although, as the Court of Appeal has warned, inspection should never occur “as a matter of automatic practice”,2 a Judge will generally be prepared to inspect a document to decide an objection where the

_{parties request it, in the interests of getting to the truth of the
matter.}3 _{There are}

3 Guardian Royal Exchange Assurance of New Zealand Ltd v Stewart [1985] 1 NZLR 596 (CA) at

numerous examples in this Court where such a practice has been adopted.4 That said, where there are multiple folders of documents, as here, the process of inspection is necessarily time-consuming. The Court will usually wish to be satisfied that responsible efforts have been made to resolve the issues directly between the parties, who after all have primary knowledge of the factual matrix.

[12] It was appropriate for the Court to conduct an inspection in this case because of the way in which the issue developed at the investigation meeting. Documents were disclosed in a manner which did not generate confidence in the process of disclosure. It was accordingly necessary to undertake independent scrutiny of the contested documents.

[13] The defendant is a Christian community-based organisation, registered as a Charitable Trust. It is administered by a Board containing five members. In the relevant period Ms Slot-Brand was the Board Chair; in May 2012 she was succeeded by Rev King, as Acting Chairperson. Mr Weir was the Trust Service Coordinator.

[14] Rev King provided evidence to the Court for the purposes of this interlocutory application, as follows:

6. I recall it was around Friday 24 February 2012 that the Board was notified by Mr Weir that allegations had been made against Fiona Walker by one of her staff regarding cash handling and financial reporting.

7. On or about 24 February 2012 the Board directed Mr Weir to seek legal advice on behalf of the Trust in relation to the processes that the Trust would be required to carry out in its investigation of the allegations that had been made against Mrs Walker.

8. Mr Weir at the time of the investigation was a paid employee of the Trust and was in effect its general manager. At the Board’s direction, he sought legal advice from Cavell Leitch Law who from that point on provided advice in relation to the Trust’s employment issues with Mrs Walker.

certain allegations had been made against her that required investigation. Mrs Walker was provided with a letter setting out the allegations and she was asked to attend an investigation meeting with a legal representative or support person.

10. The investigation meeting was to have occurred on 29 February 2012 but this did not occur because Ms Ryder (Mrs Walker’s solicitor) informed the Board that Mrs Walker was too ill to attend the investigation meeting.

11. On 7 March 2012, Ms Ryder wrote to the Board stating that Mrs Walker was stressed because of the investigation and was seeking medical advice. ...

14. Unfortunately, at no point during the investigation process did Mrs Walker meet with us to discuss the issues that the Trust had raised with her about her conduct. What this meant was that all of the correspondence between the parties was through their respective legal representatives.

15. Mr Weir was tasked by the Board to arrange, correspond and rely the Trust’s lawyer’s advice to the Board and in turn relayed our Board members’ questions and enquiries back to him. On several occasions our lawyer attended Board meetings to speak directly to us in relation to this matter.

16. On 21 May 2012, Mrs Walker was informed, through her solicitor, that the Trust had concluded that her actions constituted serious misconduct and that her employment would be terminated. ...

17. By letter dated 23 May 2012, Ms Ryder informed the Trust that she was raising a personal grievance on behalf of Mrs Walker for unjustified dismissal. ...

(3) The only grounds upon which objections may be based are that the document or class of documents–

[16] The relevant category in this instance is legal professional privilege. That term is undefined in the Regulations, but it is well accepted that it encompasses the conventional categories of solicitor/client privilege, and litigation privilege.5

Historically, this Court has drawn a distinction between litigation privilege (available to both practising lawyers and lay-advocates) and solicitor/client privilege (available only to practising lawyers),6 although that distinction does not arise here.

[17] Sub-part 8 of Part 2 to the Evidence Act 2006 (EA) codifies principles relating to privilege. Although not expressly applicable, the provisions of the EA form an instructive guide as to the Court’s exercise of its powers regarding the admissibility of evidence. As was observed by Chief Judge Colgan in Maritime

[14] Just what amounts to “strictly legal evidence” is uncertain but does not need definitive resolution in this case. It was common ground that the law of evidence in New Zealand (“legal evidence”) is now largely codified in the Evidence Act 2006. Although the Employment Court is notable by its absence from the schedule of Courts to which the Evidence Act applies expressly, the Evidence Act’s principles and contents are nevertheless an important source of reference whenever the admissibility of evidence is challenged or otherwise in question. They will affect and guide the exercise of the equity and good conscience test under s 189(2) of the Employment Relations Act.

[18] I therefore turn to consider a number of provisions of the EA which are relevant in the present case.

[19] Section 54 of the EA, under the title “Privilege for communications with legal advisers”, defines solicitor/client privilege. It relevantly states:

5 See for example Witcombe v Clerk of the House of Representatives (2008) 6 NZELR 186 at [29]

_{where both species of legal professional privilege were claimed
uncontroversially.}

6 New Zealand Seafarers’ Union Inc v Silver Fern Shipping Ltd (No 3) [19983] 3 ERNZ 1027 (EmpC) at 1031.

7 Maritime Union of New Zealand Inc v TLNZ Ltd [2007] ERNZ 593 (EmpC) at [14]. In Morgan v Whanganui College Board of Trustees [2014] NZCA 340, (2014) 10 NZELC 79-041 at [24] the Court of Appeal made a similar point when it stated that the Authority “must be guided by settled principles of common law and relevant provisions of the Evidence Act 2006, even though it does not govern proceedings in the Authority.”

1. A person who obtains professional legal services from a legal adviser has a privilege in respect of any communication between the person and the legal adviser if the communication was–

[20] It is clear from Rev King’s affidavit that on 24 February 2012 the Board directed Mr Weir to seek legal advice on behalf of the Trust. He was, in effect, the Board’s general manager. He sought legal advice from Cavell Leitch Law on behalf of the defendant, which included its governance body, the Board. The day-to-day relationship was between Mr Abdinor of Cavell Leitch Law on the one hand, and Mr Weir, the Services Coordinator of the defendant on the other.

a) All communications between Mr Abdinor and Mr Weir were intended to be confidential.

b) They were made in the course of and for the purpose of obtaining professional legal services from a legal adviser, or in the course of and for the purpose of the legal adviser giving such services.

[22] It is well established that “legal advice is not confined to telling the client the law, it must include advice as to what should prudently and sensibly be done in the relevant legal context”.8 This means that draft documents needing lawyer and client input will be protected.

Mr Abdinor were for the purposes of obtaining or giving a professional legal service, and are accordingly privileged.

8 Balabel v Air India [1988] Ch 317 (CA) per Taylor LJ, aff ’d Three Rivers District Council v

[24] A substantial number of the disputed documents are copies of the same documents circulated amongst the defendant’s Board members by Mr Weir. It is submitted for the plaintiff that communications between Board members themselves, and between members of the Board and Mr Weir, do not attract privilege because they are not communications with a legal adviser.

[25] This is a submission which must be considered against the criteria of the EA. Section 51(4) provides that a reference to other provisions of the sub-part in the EA to a communication made or received by a person or an act carried out by a person “includes a reference to a communication made or received or an act carried out by an authorised representative of that person on that person’s behalf.”

[26] From the pleadings I infer that the Board is incorporated under the Charitable Trusts Act 1957; s 11(2) of that Act constitutes the Board as a body corporate, consisting of the persons who are for the time being Trustees of the Trust. The Board is accordingly “a person” for the purposes of s 51(4) and indeed for the purposes of other provisions in sub-pt 8. It was the body seeking legal advice and was the client of Cavell Leitch Law.

[27] In short an instruction relating to the provision of legal advice by a third person to his or her authorised representative who then communicates with a lawyer is privileged. In the present case, where an instruction was given by one or more Board members to Mr Weir, those communications, as well as Mr Weir’s communications with Cavell Leitch Law were protected. So also were communications from Cavell Leitch Law to Mr Weir when he passed them on to Board members.

[28] The fact that some documents contain information which is irrelevant or unnecessary to the matter on which legal advice was being sought – as is the case with regard to some “strings” of emails for which solicitor/client privilege is claimed

[29] A particular category of documents which should be mentioned is where privilege has been claimed for documents that were attached to intra-lawyer communications, to and from Cavell Leitch Law. Counsel for the defendant submits that where disclosure of copies of unprivileged documents are sent to a legal adviser to assist in his/her preparation of advice, such documentation is covered by legal professional privilege. This issue was discussed in Sumitomo Corp v Credit Lyonnais Rouse Ltd where it was held that where a solicitor has copied or assembled a selection of third-party documents, the selection will be privileged if its production

would “betray the trend of the advice which he is giving the client”.10 This principle

has been followed by the High Court in New Zealand, in Maruha Corp v Amaltal Corp (No 2).11 In this case Cavell Leitch Law forwarded copies of documents received by it to Mr Weir, which were then forwarded to Board members. Whilst any comment with regard to responses made by Cavell Leitch Law is clearly privileged, I am of the view that the separately listed unprivileged documents themselves do not betray a trend of advice being given; I have concluded that the attachments are not in that context privileged.

[30] A separate ground of privilege claimed for the contested documents relates to litigation privilege. This privilege is defined in s 56, which relevantly provides:

1. Subsection (2) applies to a communication or information only if the communication or information is made, received, compiled, or prepared for the dominant purpose of preparing for a proceeding or an apprehended proceeding (the proceeding).

2. A person (the party) who is, or on reasonable grounds contemplates becoming, a party to the proceeding as a privilege in respect of–

[31] Here, the Board of the defendant is a “party” since it constitutes the body corporate. Accordingly communications in this case should be analysed as follows:

b) A communication between the Board’s legal adviser and Mr Weir, is privileged under s 56(2)(b).

[32] The primary issue here, however, relates to the point in time at which it could be said that preparatory materials came into existence for the dominant purpose of preparing for a proceeding or an apprehended proceeding. This is an issue of fact.

a) Litigation privilege applies from 1 March 2012, since this was the time when the plaintiff engaged a lawyer to represent her, and communications thereafter only occurred via the lawyers.

b) On 7 March 2012, the plaintiff’s solicitor advised that she was suffering from employment related stress, and this was confirmed by a medical certificate submitted on 8 March 2012.

c) A personal grievance was reasonably in contemplation from the plaintiff’s conduct and the communications made, and from the point that the plaintiff claimed workplace stress.

d) The scope of the preparatory materials includes client drafts and other working papers that do not fall within solicitor/client privilege after

a) Litigation was signalled with respect to the fact of the plaintiff’s suspension on 13 March 2012. However, that was a narrow and confined issue. Litigation as to a dismissal following investigation of allegations was not in contemplation at the time and could not be apprehended until such point as a decision was made to terminate the plaintiff’s employment.

b) Even if the possibility of a claim occurred to the defendant, the existence of such a possibility was not the dominant purpose for the creation of the documents.

c) The date at which that point was reached is a matter for the Court to determine on the evidence; I infer that the plaintiff submits in effect that such a privilege would not arise until a decision to dismiss was made on 21 May 2012.

[35] The leading case on s 56 of the EA is Jeffries v Privacy Commissioner where the Supreme Court emphasised that the purpose of the informant in providing information is not determinative.13 The Court said:14

What matters is the character of the information made, received, compiled or prepared by or on behalf of the party whose privilege it is. If it is for the dominant purpose of preparing for a proceeding, the information is within the scope of the privilege.

[36] It is also the case that since s 56 is a codification of the previous common law position with regard to dominant purpose, the general principles on that topic having been established by the Court of Appeal in General Accident, Fire & Life Assurance Corp Ltd v Elite Apparel Ltd15 and Guardian Royal Exchange Assurance of New

[37] The defendant submitted that recent dicta from the Court of Appeal should be relied on for determining when litigation should be regarded as being in reasonable

reviewed the rule which protects without prejudice communications from admission as evidence in Court proceedings and held that, in the employment context, such protection attaches from the point where there is a serious problem in the employment relationship that could give rise to litigation, the result of which might be affected by an admission made during negotiations.17 There is no indication that the Court of Appeal intended its decision to apply to situations other than those involving the protection of without prejudice communications. It reviewed authorities and policy considerations relating only to that type of communication; it

did not consider authorities and policy considerations relating to other types of privilege. Accordingly, I do not consider it appropriate to apply Morgan to the topic of litigation privilege.

[38] I now apply the relevant principles. Following the instruction of Cavell Leitch Law by the defendant on 27 February 2012, the plaintiff instructed her own lawyer on 1 March 2012. Although an investigative meeting was to have occurred on 29 February 2012 this was initially postponed until 6 March 2012; then the plaintiff’s lawyer requested an alternate date. At that time the plaintiff became medically unfit for work, and the meeting never took place.

[39] Also relevant is the seriousness of the allegations; significant dishonesty was asserted. Mrs Walker became very stressed by that assertion, to the point that she could not participate further in the process except via her lawyer. On

14 March 2012, a personal grievance relating to the suspension was raised by the

[40] I hold that from that time onwards, it was apparent that the employer’s decisions were very likely to be tested, so that a reasonable person placed in the position of the defendant possessed of the same information would regard the future commencement of litigation as being probable.18 The character of the documents made, received, compiled and prepared by or on behalf of the defendant had, as its dominant purpose, preparation for a proceeding which could be regarded as probable

[41] The Court’s inspection of the documents has been to apply the above principles to the disputed documents. In summary:

b) That privilege protects not only communications between Mr Weir and Cavell Leitch Law, but between Mr Weir and Board members, and between individual Board members, as the corporate body which was the client of Cavell Leitch Law.

c) Solicitor/client privilege has been considered in respect of each disputed document.

d) Litigation privilege under s 56 applies, also, for the range of preparatory materials that were made, received, compiled or prepared as from 14 March 2012, which I accept were for the dominant purpose of preparing for an apprehended proceeding.

e) Accordingly, all the contested documents which were created on or after 14 March 2012 have been considered in respect of both the claimed privileges. There are a small number of documents where only one of the privileges apply; for example:

Documents dated prior to 13 March 2012 have been considered only in respect of solicitor/client privilege.

In respect of documents dated after 13 March 2012, some qualify only for litigation privilege – such as JK 0087A-B, and JK 0089A-H.

[42] There is one final issue raised by the defendant. It is submitted that the plaintiff retains a privileged document which was inadvertently disclosed during the investigation meeting. The document is attached to Mrs Walker’s affidavit. The Court has been invited by counsel for the defendant to review its status to determine if it is privileged and, if so, to make an order that the plaintiff return it and destroy all copies which she retains. It is said that such an order should be made under s 53(4) of the EA. The section provides that if a protected document is in the protection of a

person other than a person able to claim a privilege, a Judge may order that the communication, information, opinion or document not be disclosed in a proceeding.

[43] In Hart v Bankfield Farm Ltd the High Court noted that the section does not specify the factors which a Judge is to take into account in exercising the discretion. It was held that the particular circumstances need to be considered, in particular, whether the interests of justice required the Court to make an order of the kind that the document not be disclosed.19

[44] Rev King states in his affidavit that he did not think the Trust would have intended to disclose documents that discussed the legal advice the Trust had received. I have already summarised the circumstances in which documents came to be disclosed during the course of the Authority investigation meeting.20 Although it is obvious that the circumstances of disclosure were somewhat pressured, it is also clear that an opportunity was taken by counsel for the defendant to consider the documents with Mr Weir and Rev King before they were disclosed to the plaintiff’s lawyer on what was apparently the evening of the second day of the investigation

meeting. There is no direct evidence from the lawyer involved suggesting that the document was released in error. Had there been a mistake, there was an opportunity to raise that on the third day of the investigation meeting, or in the sequence of submissions that were filed and served following the hearing. In the absence of any explanation as to the contrary I conclude that there was an express waiver under s 65(1) of the EA, but only of the contents of that email and not in respect of any aspect of the legal advice given beyond what is referred to in the email.

[45] A final point is that the section relied on by the defendant permits a Judge to order that the document not be disclosed in a proceeding; it does not provide for the making of an order that documents be returned and/or destroyed. Even were it to be considered that such a jurisdiction exists (for instance by utilising the Court’s equity and good conscience jurisdiction under s 189), I would not have been disposed to

_{exercise it in the present case for the reasons mentioned in the
previous paragraph.}

[46] The objections in respect of the documents identified in the schedule annexed to this judgment are ill-founded in terms of reg 45(1). It follows that all other documents are protected by solicitor/client privilege or litigation privilege, or both. The documents identified in the schedule are to be disclosed to the plaintiff within seven days of the date of this judgment.

[47] Each party has been partially successful only; my provisional view is that costs should lie where they fall in respect of this interlocutory application. If either party wishes to submit otherwise, however, they should file an appropriate memorandum and evidence 14 days after the date of this judgment; the other party should respond with an appropriate memorandum and evidence 14 days thereafter.

[48] The substantive proceeding should now be advanced expeditiously. Counsel previously submitted that the matter was appropriate for a Judicial Settlement Conference. Counsel are to advise the Court within 14 days of the date of this judgment by joint memorandum as to whether that remains the position. If such confirmation is given, a date and directions for such a conference will be given.

Employment Court of New Zealand

Walker v Delta Community Support Trust [2014] NZEmpC 187 (30 September 2014)