Erceg v Erceg [2014] NZHC 2601 (22 October 2014)

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UNDER	Part 18 of the High Court Rules
IN THE MATTER	of the Estate of the late Michael Anthony Erceg
AND
IN THE MATTER	of the Erceg Family Trust
BETWEEN	MILLIE MARTHA ERCEG Plaintiff
AND	LYNETTE THERESE ERCEG and DARRYL EDWARD GREGORY First Defendants LYNETTE THERESE ERCEG Second Defendant

Hearing:	10 October 2014
Appearances:	G Illingworth QC and D G Collecutt for Plaintiff A R Galbraith QC and J Anderson for Defendants
_Judgment:	_{22 October 2014}

This judgment was delivered by me on 22 October 2014 at 4.45 pm, pursuant to Rule 11.5 of the High

[1] The plaintiff applies for an order that the evidence of Ivan Erceg be given by way of video link. The application is opposed by the defendants.

[2] The background to these proceedings has been set out in earlier interlocutory applications. It is unnecessary to repeat it for the purposes of this application. There is a substantive fixture scheduled for hearing (two weeks) commencing on 9

[3] The plaintiff applies for an order that the evidence of Ivan Erceg be given by way of video link. The application is advanced on the basis that Ivan Erceg is an important witness in the proceeding, he is permanently resident outside New Zealand, is unwilling to travel to New Zealand for trial “under present circumstances” and that the plaintiff will suffer extreme prejudice if she is unable to adduce the evidence of Ivan Erceg.

[5] The defendants oppose the application. They accept Ivan Erceg is an important witness but submit that supports the need for his evidence to be given in person in New Zealand. His veracity and credibility as a witness will be a primary evidential issue.

[6] The defendants argue the reasons advanced by the plaintiff for Ivan Erceg’s reluctance to return to New Zealand are not compelling and do not outweigh the importance of his presence. They consider that Ivan Erceg is effectively driving the proceeding and will be the person who most benefits from any success by the plaintiff in this proceeding.

[7] The defendants also raised a number of procedural issues relating to the application, namely:

(c) there were practical issues as to the effect of the time difference between Italy where it was suggested the evidence would be given, and New Zealand; and

(d) it was not clear there would be appropriate sanctions for perjury in the event Ivan Erceg gave false evidence.

[8] The plaintiff’s advisers have sought to address a number of the practical issues identified by the defendants. The application is now advanced on the basis that the evidence will be given by video link from the west coast of the United States, either Los Angeles or San Francisco. That addresses the disconnect in time between the Court’s hours and the time of day the evidence would be given and also the issue of the sanction for perjury. Omni Marketing Group, Asia Pte Ltd v Transactor Technologies Ltd confirms that false or perjured evidence given by video link for the purposes of a New Zealand Court hearing will support a prosecution for

[9] I accept that the suggested venue and protocol address a number of the practical issues. The application really turns on a matter of principle.

Unless otherwise directed by the court or required or authorised by these rules or by an Act, disputed questions of fact arising at the trial of any proceeding must be determined on evidence given by means of witnesses examined orally in open court.

¹Omni Marketing Group, Asia Pte Ltd v Transactor Technologies Ltd HC Auckland CIV-2007-

[11] Despite r 9.51, s 103(1) of the Evidence Act 2006 provides that the Court may direct the evidence be given in an alternative way. Section 103(3) sets out the grounds on which such a direction may be made. In the present case the plaintiff relies on s 103(3)(i):

[12] As noted by Stevens J in Deutsche Finance New Zealand Ltd v CIR the s 103(3) considerations are permissive rather than mandatory.²However, under s 103(4) the Court must take into account the need to ensure the fairness of the proceeding, the views of the witness and any other factor that is relevant to the just determination of the proceeding.³

[13] Mr Illingworth referred to the following comments of Hugh Williams J in granting an application:⁴

Technological advancement is such that the next generation of Judges is likely to regard cases such as the present as being antediluvian as the precedent mentioned.

[14] With respect, however, the basis of the adversarial system of justice is the judge or jury’s assessment of the evidence of the witnesses on crucial matters of fact tested by cross-examination. The theatre of the courtroom will always have a place in that adversarial system. The effect of the pressure that exists in a courtroom on a witness’ evidence although perhaps difficult to articulate or define, is an important element of that process.

[15] Where there is good reason for a witness’ absence from New Zealand or if they are not an important or crucial witness, s 103 enables the Court to accommodate the situation. Modern technology undoubtedly facilitates that process. However, the stage has not been reached where a witness may determine whether he or she will give evidence by video link. It is for the Court to make that direction in the context

²Deutsche Finance New Zealand Ltd v CIR HC Auckland CIV-2006-404-2535; CIV-2007-404-

⁴Inverness Medical Innovations Inc & Anor v MDS Diagnostics Ltd & Anor HC Auckland CIV-

[16] The context of this application is that the plaintiff and defendants are resident in New Zealand. All relevant issues arising in relation to the matter took place in New Zealand. Although Ivan Erceg now lives overseas, he formerly lived in New Zealand. While he regards Italy as his primary place of residence he has apparently had a residence in Monaco and also travels to the United States of America.

[17] Ivan Erceg will be an important witness. Although he is a non-party he has been directed to swear a list of documents in this case. His evidence will be central in the proceedings. He was a party to a number of the discussions with the defendants that the plaintiff relies on.

[18] Ivan Erceg’s absence from New Zealand during the trial has arisen because he now lives overseas and has decided not to return to New Zealand. It is his choice not to do so. It would be as easy and more cost efficient for him to travel to New Zealand to give evidence as it would be for him to travel from Europe to the United States and make the arrangements for the video link. He obviously has connections and family in New Zealand, principally his mother whom he supports in this case. One would expect in the circumstances he would be willing to return to New Zealand to give evidence. If the matter rested there, the application would be declined.

[19] However, there is a further important feature to consider. It is the reason Ivan Erceg gives for not wanting to return to New Zealand. In her affidavit in support of the application the plaintiff deposed to Ivan Erceg’s ongoing dispute with the Commissioner of Inland Revenue. She says:

6. For reasons that are beyond my knowledge, SYL’s business failed after Michael’s death. In late 2007 Ivan learned that there was a debt owing to the Inland Revenue Department (IRD) for unpaid PAYE. The managing director then resigned. Ivan returned to New Zealand and arranged for an audit to be carried out. It was then determined that a large amount was owing to the IRD.

7. A settlement was negotiated as part of which Ivan made a personal payment of over $1 million. Although the matter was fully settled, the Inland Revenue Department then pursued Ivan personally and a warrant was issued for his arrest although no court papers were ever served on him. By that time Ivan had already left New Zealand and he lived overseas ever since.

8. I am aware that Ivan is attempting to have various IRD issues resolved, with assistance from a New Zealand lawyer, but there is no guarantee that this will be successful before February next year. Unless and until his dispute with IRD is resolved, Ivan is not willing to come back to New Zealand and, of course, I cannot force him to do so.

[20] Somewhat surprisingly, Ivan Erceg did not directly address the matter of the warrant in his affidavit other than to say that he confirmed what the plaintiff said in her affidavit as correct. He then goes on to note:

16. It is correct that I am unwilling to return to New Zealand under present circumstances and I believe I currently have good reason for not doing so. I confirm that I did approach Mr Mark Sullivan (who is a partner in the firm of Jackson Russell, solicitors, who act for the defendants) to arrange funds to be placed into Geoff Clews account so that he could be engaged. Mr Sullivan’s reply in 2010 was that assistance was no longer available as Mr Bruce Gray QC was no longer acting. As I was unable to provide funds to engage Mr Clews, progress towards resolution of my dispute with IRD remains slow. Because of the settlement of the PAYE dispute with IRD, I regard it as grossly unfair that I am still being pursued personally over that issue.

[21] In short the application was advanced on the basis that, because at some stage in the past an arrest warrant was issued, then if Ivan Erceg was to return to New Zealand to give evidence he would be arrested.

[22] Mr Illingworth relied on Polanski v Condé Nast Publications Ltd.⁵In Polanski Mr Polanski brought defamation proceedings against the defendant in the United Kingdom. Mr Polanski lived in France. He sought leave to give his evidence by video link because he had been convicted of criminal offending in the United States of America and faced the possibility of arrest and extradition if he travelled to the United Kingdom to give evidence. As Lord Nicholls recognised, at first sight the proposition may seem unattractive that a person can, at one and the same time, evade justice in respect of criminal conduct yet seek the assistance of the courts in

protection of their own civil rights.⁶However, as Lord Nicholls went on to confirm

[23] As Lord Hope put it, the effect of refusing the order would not be to assist the normal processes of the law. Its effect would be to deny the plaintiff’s right to access to justice.

[24] After hearing from counsel I indicated that, given the reframed application, namely the protocol proposed and that the evidence be given by way of video link in either San Francisco or Los Angeles the real issue in this case was whether there was sufficient evidence that if Ivan Erceg was to return to New Zealand he still faced the risk of arrest. The evidence was not clear on that issue. At the conclusion of the hearing I adjourned the matter part-heard to enable further inquiries to be made in light of the unsatisfactory nature of the evidence as it stood at that time.

[25] The Court subsequently received further evidence by affidavit from Mr Hucker, a solicitor who was instructed to act for Ivan Erceg in the preparation of his list of documents. Mr Hucker says:

7. On 6 May 2014 I forwarded to the legal team at IRD a consent form from Mr Erceg as to his tax affairs and an email consent. On or around 5 June 2014 I had a discussion with a solicitor in the inhouse legal team at the Inland Revenue Department who confirmed that the arrest warrant for Mr Erceg remained outstanding and was informed that Mr Erceg would be arrested immediately upon his arrival in New Zealand should he return.

Ivan Erceg. My agent has confirmed that the Court has advised that there is an active warrant in relation to Mr Erceg and advises that the

15. Based on the state of the responses from the Inland Revenue Department to date and given that Mr Erceg at this stage is dependent upon the exercise of departmental prosecutorial discretion in his favour I do not consider that there is a likelihood of resolution prior to the fixture. There is nothing in the responses to date from the Inland Revenue Department that would suggest that there is a reasonable possibility and/or prospect of resolution. The firmness of the response that they intend to continue with the prosecution has not wavered.

[26] On the basis of that further evidence I accept that there is a real risk to Ivan Erceg that he will be arrested if he returns to New Zealand to give evidence in support of his mother’s case.

[27] In light of the reasoning of the majority in Polanski and the further information in Mr Hucker’s affidavit I accept there is good reason for Ivan Erceg not to want to return to New Zealand.

[28] In the present case the position is even stronger from the plaintiff’s point of view. It will be the plaintiff who will be disadvantaged in pursuit of her claim if Ivan Erceg refuses to return to New Zealand. It is the plaintiff, not Ivan Erceg who will not be able to present her best case.

[29] For those reasons the application is granted, but on the following conditions: (a) the evidence is to be given by video link from either San Francisco or

(b) the evidence is to be given in accordance with the protocol attached to this judgment;

The costs of and associated with the video link will not be costs in cause. The order is effectively an indulgence sought by the plaintiff because of the difficulty with her witness, Ivan Erceg. The defendant should not have to bear the costs of that whatever the outcome of the substantive case.

[30] Although the plaintiff has ultimately succeeded, for the reasons given above as initially advanced before the Court there was insufficient evidence to support the

application. The application was also refined during the course of preparation for

_{hearing. In the circumstances costs are to lie where they fall on this
application.}

1. The plaintiff shall make arrangements for the video-link and any related matters with the Registrar of the High Court at Auckland and shall co-operate with the Registrar to ensure that this mode of evidence can be used.

2. The video-link conference room in San Francisco or Los Angeles (the Venue) must be such as to allow a reasonable part of the interior of the room in which the witness is situated to be shown on the screen, yet retain sufficient proximity to depict the witness himself.

3. The witness in giving his evidence shall either be sitting at a plain desk or standing at a lectern.

4. A copy of the paginated common bundle of documents is to be made available to the witness in the Venue, and all written materials or exhibits already discovered between the parties that the witness is to be referred to in the course of his evidence must be clearly identified.

5. If issues regarding any redacted documents have not been resolved prior to trial, the question of the redaction of any particular document can be argued.

6. Counsel for the plaintiff and the defendants are to ensure that full copies of any documents discovered by their clients where redaction is challenged (and remains unresolved) are available to be faxed to the witness during the video conference.

7. A facsimile machine is to be located in the Auckland Court and the Venue for the video conference.

8. The video-link facilities are to include a separate camera and monitor for documents.

9. The witness’ evidence shall be given, and subject to cross-examination, from

10. At all times during the course of the video conference, the Court may terminate the video conference if it is so unsatisfactory that it is unfair to any party to continue.

11. Leave is reserved for counsel to apply to revoke the order for video-link if it becomes necessary.

12. Subject to the proviso below, the only persons to be present in the Venue (other than the witness) are to be those operating the video and facsimile facilities and a notary public to assist with the implementation of any directions or requests given or made by the Judge hearing the evidence. However, leave is reserved to the defendants (if they so choose) to have one representative present to observe the giving of evidence by the witness.

13. All costs arising out of the presentation of the evidence by video-link shall initially be borne by the plaintiff but leave is reserved to the plaintiff to argue the issue of costs arising (including costs of the application and costs of the video-link itself).

14. The witness shall swear his witness statement before a lawyer or notary public and a copy of the sworn statement shall be provided to the Court prior to the giving of the witness’ evidence. A lawyer or notary public shall be present at the Venue where the evidence is taken.

15. Counsel for the plaintiff is to write a written memorandum with the Court before the commencement of the hearing as to:

15.2 confirming that the witness has received written instructions from senior counsel as to the New Zealand requirement that there be no communication with anyone during cross-examination of the witness. The written instructions are to be referred to counsel for the defendant beforehand.

High Court of New Zealand Decisions

Erceg v Erceg [2014] NZHC 2601 (22 October 2014)