Deborah Hart: Craig case underlined that secrecy matters in agreed settlements - Deborah Hart

former Conservative Party leader Colin Craig. Photo / Nick Reed
former Conservative Party leader Colin Craig. Photo / Nick Reed

• Deborah Hart is the executive director of the Arbitrators' and Mediators' Institute of New Zealand

"Negotiations and love songs," Paul Simon once sang, "are often mistaken for one and the same." If a confidential agreement has been hammered out in the context of either, however, you really wouldn't want to be singing about it, as the former Conservative Party leader Colin Craig has now famously discovered.

In March, Mr Craig was ordered to pay his erstwhile press secretary, Rachel MacGregor, a record $120,000 in damages after it was found that he had comprehensively breached their confidential settlement for his own benefit, according to a withering finding by the Human Rights Review Tribunal.

Ms MacGregor made a claim to the tribunal believing Mr Craig had broken the terms of a mediated deal reached after she complained to the Human Rights Commission that he had sexually harassed her.

The tribunal agreed, finding she suffered significant humiliation, loss of dignity and injury to feelings. It ordered Mr Craig to pay her $128,780 in damages and costs, with $120,000 for humiliation, loss of dignity and injury to feelings arising from his remarks about the confidential agreement.

These findings were only published after the lengthy defamation case involving Mr Craig.

Understandably, perhaps, much of the public attention lingered on the defamation case, although this other one may ultimately contain the most salutary lesson.

After all, defamation can be delicately defined. What one jury might see as the grossest injury to somebody else's reputation, another might see differently. The principle is unambiguous but nailing it down can be elusive. But confidentially mediated settlements are always what they are and always mean what they say.

And why not? One of the mainstays of mediation is confidentiality. It just doesn't usually work without it. Parties have to be able to talk with the confidence that what they say in the mediation room will not be shared.

A confidentiality clause is a standard term in mediations. It usually says that both the terms of the settlement, and the fact that settlement has been reached in the first place, are strictly, utterly and irrevocably confidential to the parties and their representatives, except in highly unusual cases - this was not one - where disclosure may be required by law. And the principle is universal in developed nations.

As a successful businessman who once put himself forward to become a lawmaker, it's astonishing that Colin Craig apparently didn't know this, either through his own experience or that of his friends, or simply by doing a fast computer search.

In America last month, a bankruptcy case involving Caesars Entertainment Corp was thrown into disarray after a mediator quit because he said he was under too much pressure to disclose information about the discussions.

"Apparently the court did not find my progress report helpful because I didn't breach the confidentiality of the mediation and testify in open court or describe the discussions and proposals exchanged," the mediator, Joseph Farnan, wrote in his letter of resignation.

"Either the court misspoke, or doesn't understand how such disclosures would be viewed by participants and the markets."

Something of the same order occurred in Washington this past week after attorneys for a former investigator with the House Select Committee on Benghazi issued a cease-and-desist letter alleging that Republican committee chairman violated confidentiality terms of a mediation between the parties.

What then is to be said about this most recent case closer to home?

Hayden Wilson, counsel for Ms MacGregor, probably summed it up well when he said that, while the case was unique in a lot of ways and the circumstances are unlikely to be repeated, "it does show that the Human Rights Review Tribunal, in addition to responding to the effect on complainants, is also willing to protect the integrity of the resolution processes before the Human Rights Commission.

"The Tribunal comprehensively rejected Mr Craig's argument that he was entitled to breach the confidentiality provisions of the settlement and the HRA."

Even if Mr Craig's argument that Ms MacGregor had breached confidentiality had been upheld, and the Tribunal found it had no evidential foundation, a retaliatory breach, much less one on this scale, was not the right response, according to Mr Wilson. There are processes under the Act, such as further mediation or proceedings before the Tribunal, that can and should be used instead, he said.

Confidential mediation settlements, to borrow another Paul Simon line, are all about the sounds of silence.

- NZ Herald

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