A former IRD solicitor is suing deputy Solicitor-General Matthew Palmer, and the Crown Law Office for alleged defamation.
Lysette du Claire claims that letters and emails sent by Dr Palmer to the IRD "destroyed her reputation and her career."
Ms du Claire, who is seeking substantial damages, also alleges malfeasance
in public office.
She alleges that her health suffered as a result of the stress and that the ultimate consequence of Dr Palmer's actions was that she was dismissed by the IRD in November last year.
Ms du Claire had been involved in a tax avoidance case, which also involved the Serious Fraud Office.
In his emails and letters to the IRD, Dr Palmer said that Ms du Claire had ignored his advice on the case.
He said she deliberately sought to undermine advice with which she did not agree which appeared "designed to embarrass the Solicitor-General".
He said that he and another deputy Solicitor-General, as well as other lawyers in the tax and commercial team, would refuse to work with her again.
The IRD tried to smooth things over, responding that Ms du Claire did not act deliberately to inaccurately record the views of the Solicitor-General or to embarrass him or his office.
However, Dr Palmer replied that he was "not convinced" and that he continued to have significant concerns about Ms du Claire's actions.
He then set out a series of conditions under which Crown Law would be prepared to continue to work with Ms du Claire.
At a preliminary hearing in the High Court at Wellington, Justice Alan MacKenzie refused an application by the defendants for Ms du Claire to pay security for court costs due to her "impecuniosity".
He also declined a summary judgment application by Ms du Claire.
Dr Palmer and the Crown were given 28 days to file statements of defence.
- NZPA
