Commissioner of Police v Cotton
[2018] NZHC 2577
•2 October 2018
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2016-404-000658
[2018] NZHC 2577
BETWEEN COMMISSIONER OF POLICE
Applicant
AND
SHEREE DENA COTTON
Respondent
Hearing: 27 September 2018 Appearances:
L Fraser for the Applicant
S Elliott for the Respondent
Judgment:
2 October 2018
JUDGMENT OF PALMER J
This judgment was delivered by Justice Palmer on 2 October 2018 at 3.30 pm
pursuant to R 11.5 of the High Court Rules Registrar / Deputy Registrar Date……………………
Counsel/Solicitors:
Mr S Elliott, Barrister, Auckland Legal Services Agency, Auckland Meredith Connell, Auckland
COMMISSIONER OF POLICE v COTTON [2018] NZHC 2577 [2 October 2018]
Summary
[1] Ms Sheree Cotton seeks relief from a forfeiture order in respect of her claimed relationship property interest in a house. In opposing that, the Commissioner of Police (the Commissioner) seeks to rely on without prejudice correspondence. Ms Cotton objects on the basis the correspondence is privileged. I find it is privileged, she did not waive privilege and the correspondence must not be disclosed.
What happened?
Restraint of assets
[2] In March 2016, the Police searched a property in Ranui, Auckland, registered in the name of Mr Eddie Cotton and found a cannabis growing facility. In April 2016, the Commissioner of Police obtained restraining orders over the property, a vehicle registered in the name of Mr Eddie Cotton and $153,000 in cash.
[3] Ms Sheree Cotton, also known as Ms Sheree Edwards, is Mr Cotton’s former wife and, they say, current de facto partner. In June 2016, further restraining orders were made over two Bonus Bond accounts, one in Ms Cotton’s name and one in Mr Cotton’s name, and over a Mitsubishi vehicle registered in her name. In June 2016, the Commissioner applied to sell the Mitsubishi. In November 2016, Ms Cotton applied to vary the restraining orders to release the Mitsubishi.
Settlement
[4] The Commissioner and Ms Cotton sensibly negotiated a settlement of their respective applications, including via correspondence marked “without prejudice save as to costs”. On 16 January 2017, the Commissioner, Mr Cotton and Ms Cotton filed a joint memorandum of counsel recording the parties had “entered discussions with a view to settling the question of restraint, Ms Edwards’ application and forfeiture in respect of Ms Edwards’ property” which was identified as the Mitsubishi and Bonus Bonds.1 They jointly sought the court’s approval of a settlement under s 95 of the Criminal Proceeds (Recovery) Act 2009 (the Act). The proposed settlement provided
1 Joint memorandum of counsel of 16 January 2017 at [3.1].
the Bonus Bonds and Mitsubishi would vest in the Crown, $5,000 would be paid to Ms Cotton, Ms Cotton would not pursue her variation application, the Commissioner would not pursue his forfeiture application and costs would lie where they fell. The parties jointly submitted the proposed settlement was consistent with the purposes of the Act and in the overall interests of justice. On 19 January 2017, Heath J approved the proposed settlement.2 The result was recorded in court orders.
Application for relief from forfeiture
[5] On 1 May 2018, the court approved a settlement between the Commissioner and Mr Cotton under s 95 of the Act, including a forfeiture order over a house owned by Mr Eddie Cotton. On 16 August 2018, represented by new counsel, Ms Cotton applied for relief from that order, under ss 62–67, on the basis she has a relationship property claim over the house. The Commissioner submits Ms Cotton has no standing to bring her application, and should be estopped from doing so, because she has already settled her claims. He relies on Heath J’s judgment giving effect to the settlement agreement. The Commissioner has filed a supporting affidavit by Detective Nicholas Davenport which refers to, and exhibits, the without prejudice correspondence between the Commissioner and Ms Cotton.
[6] A one hour hearing is scheduled for 18 October 2018 to determine whether Ms Cotton is precluded from applying for relief from the forfeiture order.
[7] In the meantime, Ms Cotton seeks urgent directions that the correspondence is privileged and inadmissible and it, and references to it, should be removed from Detective Davenport’s affidavit. I heard argument from counsel about this in the duty list on 27 September 2018.
Relevant law of privilege
[8] Section 53 of the Evidence Act 2006 (the Act) provides a person who has privilege in a communication or information has the right to refuse to disclose, and the right to prevent disclosure, the communication, the information in it and any opinion
2 Commissioner of Police v Cotton [2017] NZHC 21.
formed by a person based on them. Section 53(4) empowers a judge to order the communication, information or opinion not be disclosed in a proceeding.
[9] Relevantly, s 57(1) deals with privilege in the context of settlement negotiations. It provides that “a person who is a party to … a dispute of a kind for which relief may be given in a civil proceeding has a privilege in respect of communication between that person and any other person who is a party to the dispute if the communication: (a) was intended to be confidential: and (b) was made in connection with an attempt to settle or mediate the dispute between the persons.
[10]Section 57(3) provides s 57 does not apply to:
(b) evidence necessary to prove the existence of such an agreement in a proceeding in which the conclusion of such an agreement is in issue; or
…
(d) the use in a proceeding of a communication or document made or prepared in connection with any settlement negotiations or mediation if the court considers that, in the interests of justice, the need for the communication or document to be disclosed in the proceeding outweighs the need for the privilege, taking into account the particular nature and benefit of the settlement negotiations or mediation.
[11] In Sheppard Industries Ltd v Specialized Bicycle Components Inc, the Court of Appeal admitted evidence of without prejudice correspondence in a mediation context where there was no written settlement agreement.3 The Court considered such evidence to be admissible where it goes to whether there is a genuine settlement agreement or goes to its meaning.4 The Court said that reinforces, rather than undermines, the policy underlying the without prejudice rule that parties should be encouraged to settle rather than litigate disputes.5
[12] Section 65(3)(a) provides a person waives privilege by acting so as to put the privileged communication in issue in a proceeding.
3 Sheppard Industries Ltd v Specialized Bicycle Components Inc [2011] NZCA 346, [2011] 3 NZLR 620.
4 At [42].
5 At [43].
Submissions
[13] Mr Elliott, for Ms Cotton, submits the correspondence is privileged and cannot be produced in the proceeding without Ms Cotton’s consent, which she has not given. He submits the exceptions in s 57(3)(b) and (d) do not apply. He submits this is not a contract case where pre-contractual negotiations are relevant, there is no ambiguity in the settlement orders and nothing in the correspondence supports it being a full and final settlement. He submits the issue is appropriately resolved before the hearing. He seeks directions the correspondence is privileged and requiring it, and references to it, to be removed from the affidavit and an amended copy filed.
[14] Mr Fraser, for the Commissioner, submits the correspondence is not privileged under s 57(3)(b) as there is a dispute as to whether an agreement exists requiring Ms Cotton not to take any further part in the Commissioner’s proceedings. He submits it should fall under the s 57(3)–(d) exception in the interest of justice. That is because, at the hearing of the estoppel application, the Commissioner has to establish the Commissioner had a reasonable belief the settlement was “full and final” and the property identified in the settlement memorandum was the only restrained property in which Ms Cotton had an interest. The Commissioner also has to establish he reasonably relied on the belief to his detriment and it would be unconscionable for Ms Cotton to depart from that position. He submits the correspondence is relevant and necessary to determine that. Alternatively, if the communications are privileged, Mr Frasesr submits, privilege has been waived by Ms Cotton putting in issue the interpretation of the settlement agreement. He seeks directions to that effect, meaning the communications are admissible for the purpose of determining the relief application.
Can the Commissioner rely on the documents?
[15] There is no dispute the correspondence is privileged and not disclosable unless one of the exceptions in s 57 applies. I do not consider the exception in s 57(3)(b) applies because it is not, here, necessary to prove the existence of the settlement agreement. The parties agree the settlement agreement exists. It was cited and relied upon by Heath J in his judgment approving settlement. The dispute is as to its interpretation, not its existence.
[16] It is possible the exception under s 57(3)(d) might apply. A settlement agreement is a contractual document, as noted by the Court of Appeal in Sheppard Industries Ltd.6 Section 95’s requirement that settlement agreements under the Act are not binding unless approved by the High Court does not alter that character. But it does mean settlement itself is the effect not only of the agreement but also of the judgment approving the agreement. That may impact on what is required for an estoppel argument to succeed. Because that is not before me here and it will be considered at the forthcoming hearing, I do not consider that further.
[17] In any case, however, I do not consider the correspondence, which I have reviewed, adds anything material to the facts or the understandings of the parties that are reflected in the settlement agreement itself. It does not assist in interpreting the meaning of the settlement agreement. There is no need for the correspondence to be disclosed, and certainly not enough of a need to outweigh the need for privilege. Accordingly, s 57(3)(d) does not apply to the correspondence here.
[18] For the same reasons, I do not consider Ms Cotton has waived privilege. She has put in issue the interpretation of the settlement agreement but not the correspondence, which does not add anything material to the agreement.
Result
[19] I direct the without prejudice correspondence between Ms Cotton and the Commissioner is privileged and inadmissible at the hearing scheduled for 18 October 2018. Detective Davenport’s affidavit should be revised as soon as practicable, to omit the correspondence at annexes one to four and the references to its substance in paragraphs 3.1 to 3.9 in preparation for that hearing.
Palmer J
6 At [41].
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