James Farmer

Legal Commentary

2014 - Roaring Past

Wednesday, June 04, 2014

I have just realised that it is over 6 months since I last posted a commentary.  Maybe that one was a bit on the boring side – Counterfactual analysis and section 36 of the Commerce Act.  All a bit overdone, even for those enthusiastic about the subject.  Nobody has pointed out to me that so much time has gone by, so maybe that suggests that nobody has noticed.

Admittedly, I’ve been busy since then with a range of very interesting hearings so far in 2014, at all levels of the Judicial hierarchy, including being a witness in a criminal case in the District Court (more about which below).

I did have what was to be a 4 week hearing in the Employment Court set down for hearing in the run up to Christmas, acting for Ports of Auckland in a long run dispute with the Maritime Union, which received a lot of publicity earlier.  The hearing was adjourned when what seemed to be a workable interim settlement was reached but is now re-set for the end of this year.  Industrial relations can so often be one of those intractable situations which the law so often doesn’t really cope with.  I spent a lot of my time in Cambridge a long time ago studying this, with particular reference to the attempt by Ted Heath’s Conservative Government to introduce more legal structure into the conduct of industrial relations through the Industrial Relations Act of 1971 and the establishment of the National Industrial Relations Court, presided over by a High Court Judge.  Interestingly, years later when I first read the Employment Relations Act of 2000 that Margaret Wilson, as Minister of Labour in a Labour Government, caused to be enacted, I was struck with the similarities to the UK Act of 20 years earlier.

The new calendar year started horribly early – still January - with a strike out application brought by Carter Holt Harvey, a major manufacturer of cladding, against a claim brought by the Ministry of Education (for whom I acted) in respect of alleged cladding failure on 3000 schools throughout the country.  This was not, we (or, more accurately, Nick Flanagan of Meredith Connell, who I was working with) were at pains to say, a leaky building case but rather a product liability case.  That brought into focus the Building Act, the common law of tort with yet further argument (subsequent to the Supreme Court Judgments in Sunset Terraces and in Spencer on Byron) as to how far the tort of negligence extends in this area.  It brought to mind Ralph Nader’s classic 1965 work “Unsafe at Any Speed” in which he argued that General Motors should be liable for all consequential injuries and damage caused as a result of safety defects in the Chevrolet Corvair and other American sports saloons of the time.   While Nader was not mentioned in the hearing, the strike out application failed, Justice Asher dismissing it.  Carters have since appealed to the Court of Appeal.

Next was the hearing in the Supreme Court of the appeal by the Lombard directors against the home detention orders made by the Court of Appeal under the Securities Act in substitution for the far less invasive community service orders made by the trial Judge.  The Supreme Court had refused the application for leave to appeal the Court of Appeal’s dismissal of the appeals against the convictions.  It did however grant leave to appeal the sentences and in a subsequent Judgment allowed the appeals and restored the trial Judge’s orders.  This Judgment had been keenly awaited not only by the appellants but by the business community generally as giving guidance from the highest court of the land to how honest directors should be treated in relation to offences of strict liability.  The time must surely have come to examine the efficacy of the corporate model and the role that directors play in it. 

That was to be followed shortly afterwards by another appeal to the Supreme Court in a tax avoidance case relating to the use of optional convertible notes, a case known as Alesco.  I was to appear for the Commissioner of Inland Revenue – the “dark side” as some of my tax lawyer friends would say.  However, a settlement that was sensible to both sides was reached shortly before the hearing was scheduled to take place.  Non lawyers are fond of saying that lawyers are motivated to take cases to a hearing at all costs so that they can earn the fees that the hearing generates.  Not true, in my experience.  Most lawyers are busy enough to appreciate the break and the opportunity to catch up on other work that a settlement provides.

Incidentally, I believe that the ability of a barrister to act sometimes for the Government and sometimes against it provides real benefits not only to the barrister, in terms of being able to see both sides of disputes between citizen and the State, but also to the Government or Government agency in terms of receiving advice from a lawyer who has acted for and been exposed to the views of both sides.  At a recent dinner held by the New Zealand Bar Association and the New Zealand Law Society, the Solicitor General, Mike Heron QC, made the very valid point that Crown Law Office lawyers should be rotated so that they did not always stay in the same position, acting for the same Ministry or Government agency.  That has not always been the case at Crown Law and there may still be remnants where there are counsel who have acted for the same Ministry client for many years.

Next came a one day application for leave to appeal – run of the mill stuff, except that we lost.  Following that was my long awaited appearance as a witness in a criminal fraud case in the Hamilton District Court.   My written brief on the day was taken by defence counsel “as read” so, although present in court, I was denied the opportunity to be cross examined.  Very frustrating.  Most lawyers of course imagine that they will be superb witnesses.  The reality is the reverse – too clever by half, trying to anticipate where the questioning is going, making long speeches, expressing opinions and advocating the cause, doing all the things that we tell lay witnesses not to do. I would probably have been no different. The defendant eventually pleaded guilty at the end of the prosecution case and, despite having stolen $60,000 received a mere 100 hours community service and ordered to pay the money back at $100 a week. Perhaps the Sensible Sentencing Trust has a point.

I have to say about this case that I was hugely impressed with the Police, both the quality of the prosecutor and the police investigator but more especially the way that they kept everybody informed in the whole process leading up to trial and the considerate way in which the complainants and witnesses were dealt with on the day.

From crime to economic regulation, this time acting for the Commerce Commission defending an appeal by Chorus against the Commission’s regulated price on broadband pricing.  Chorus’ problem was that its appeal was restricted to points of law.  Justice Stephen Kos dismissed the appeal in due course but Chorus have appealed further.  The hearing in the Court of Appeal is to take place at the end of July.

The following week was virtually the whole week in the Court of Appeal in a Companies Act shareholder oppression cases.  These cases tend to be more intractable than even relationship property disputes between the famous and wealthy, as I learned many years ago when acting for one of the Vujnovich brothers in a dispute with the other 2 brothers that went all the way to the Privy Council.  The Court of Appeal hearing was then followed, almost immediately, by a lengthy arbitration hearing to determine the value of the company, as ordered by the trial Judge.  Company valuations are not to everybody’s taste but they do tend to bring together a range of expert witnesses that provides the lawyer who is even half interested with a challenge on cross examination that, if executed well, can be very satisfying.

From company valuations next to a mediation of a human rights compensation claim, the sequel to the pro bono case which a group of us took against the Ministry of Health on behalf of Margaret Spencer and her adult Down Syndrome son Paul, both really delightful people who have endured many years of hardship. The High Court had upheld our judicial review application last October ruling that the amendments that were made under urgency on Budget night last year to the New Zealand Public Health and Disability Act 2000 did not disentitle Mrs Spencer (as the Ministry of Health clearly intended) from claiming to be eligible to be paid as a care giver notwithstanding her family status.

I will say nothing about this particular mediation of course but what I will say is that as a society we have to do a lot more to deal with issues of disability in the community.  Whatever the disability – be it intellectual or physical or mental – the consequences for the disabled person, who will almost always have been dealt a cruel fate by Nature through no fault of his or her own, and for the parents and other family members are massive.

I will also take the opportunity to add a few comments about mediation generally.  As a traditional litigation lawyer, I greeted the advent of mediation and alternative dispute resolution with some degree of scepticism.  This was not based on any view that it was not usually in the interests of all parties to achieve a settlement without going to trial but rather with the fact that the whole LEADR movement seemed to be unduly formal and constituted a rule-based structure that could well be unnecessarily expensive.  In my view, that has proved to be the case.  A whole day or more to get to the point of a settlement or no settlement and on to trial anyway?  Fine if you have settled at a proper level.  But just extra expense (not inconsiderable) if you haven’t and a sense of grievance if you have been bulldozed into a settlement that doesn’t really seem fair by being kept there until all hours until exhaustion and pressure (subtle and not so subtle) prevails. Those who do benefit from mediation are the professional and regular defendants (insurers and those sued in respect of leaky buildings).  They know how to play the game.

The Spencer v. Ministry of Health mediation was followed by a family trust hearing in the High Court in Wellington where 2 sides of a family have been warring on and off for 60 years.  Again one of those intractable situations.  Maybe this is an area where mediation does have a genuine part to play, particularly given the ongoing relationship between parties that subsists after the particular dispute has been determined.

After two Sports Tribunal hearings this week, there will be a break for a few weeks before starting a 4 week arbitration hearing over the sale of a business.

In reviewing those cases, what struck me was their variety.  It may be that some lawyers revel in becoming absolute specialists who know more about some esoteric area of the law than almost anyone else on the planet.  But, while accepting the advantages and the efficiencies that specialisation accords, from a personal point of view being involved in cases covering a reasonably broad spectrum certainly provides constant stimulation and challenge and therefore makes survival as a practising lawyer easier.

That last comment brings me back to my increasing obsession with the crazy conditions under which lawyers operate, especially in large urban practices, and the huge personal toll that is taken on their health and well-being.  But that is another topic for another day.

Georgia Racing

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