Witnesses
immunity from legal action extends to those examined under oath by liquidators,
the High Court ruled.
Any person giving evidence in court
enjoys legal immunity from civil action whether or not the evidence given was
true or false, or given in good faith or with malice. The immunity rule rule is not designed to
encourage lying, but to protect witnesses from vexatious litigation like threats
of defamation actions intended to discourage them from giving evidence. The immunity rule does not protect witnesses
from criminal prosecution for perjury: deliberately giving false evidence.
In a landmark case, the High Court ruled
witness immunity extends to court-like procedures such as a liquidator’s
statutory power to demand information about insolvent companies. The Companies Act empowers liquidators to
summon witnesses, put them on oath and force answers to questions about a
company in liquidation.
Questions about the extent of witness
immunity followed the liquidation of EBR Holdings Ltd. Attempts to sue its shareholders for current
account debts recorded in the company’s financial records foundered when Mr
Nigel Harrison, a chartered accountant from west Auckland acting for the
company intervened, stating in an affidavit that the shareholder current
account debts had been substantially repaid.
The liquidators subsequently questioned Mr Harrison under oath. They allege Mr Harrison’s evidence was
incorrect and further that he knew it was incorrect. The shareholders’ current account debts with
the company were claimed to be repaid by way of a set off against debts owed by
the company to third parties. The
liquidators sued Mr Harrison and his accounting practice claiming damages for
the time and money spent on the earlier aborted debt recovery action against
the company’s shareholders.
Justice Brewer ruled witness immunity
applied to Mr Harrison’s evidence in respect of both the original debt
collecting action against EBR shareholders and the subsequent statements made
under oath at the liquidators’ examination.
The liquidators could not sue to recover their wasted time and costs,
even if Mr Harrison’s evidence was wrong.
EBR
Holdings Ltd v. McLaren Guise – High Court (21.08.15)
15.091