6 LawTalk | 781 | 23 Sept 2011

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mediation for financial related disputes

Tony Davis

By Ron McQuilter*

When a lawyer calls their Private Eye their “gumshoe”, the PI will smile. To

the PI it’s an endearing term that tells them the lawyer knows exactly what his PI can do and how the case can be assisted by the synergy of two professionals working for a common goal.

The legal profession has forever used investigators to help build their case, as many television programmes have demonstrated so vividly.

Today, every prosecution agency in the world has investigators working alongside their lawyers, the most prominent being the SFO, where a team approach to every file is adopted with a lawyer, accountant and investigator reporting to a supervisor and then the director.

In my 28 years in New Zealand, I have witnessed first-hand good and bad examples of what should always be a positive synergy. Certainly, most complex or large insurance claims could not be handled without this team approach. Likewise most large or complex criminal defence cases often involve a former police officer, usually working on legal aid assisting the defence.

But what about commercial files, litigation and business legal issues and exactly when should you as a lawyer decide to call on your gumshoe? Even more pertinent, how has the gumshoe developed since Ironside’s day? The new PI Act has certainly changed the landscape.

One case started with a request just to assist with lodging a complaint to police, the work having already been done by a junior lawyer. When the gumshoe looked

PI Ron McQuilter at work.

Getting the best from your gumshoe

at the complaint, it was obvious the offender, a company manager, was only answering questions put to him and that the questions might have been expanded on and the information in response checked. The result was a $500,000 fraud case where about $50,000 was actually recovered.

The law firm’s client was stoked, if that was possible given the size of the scam, the offender was actually happy, his rationale was knowing the matter had been dealt with fully, and the gumshoe, well he just did what he did best.

Another example involved a dispute between owners of a large and successful firm where evidence from the gumshoe helped broker a deal. This is mentioned because with the new trend towards “mediation” and people being frightened off litigation due to costs, gumshoes are increasingly being used to obtain bargaining ammunition for the lawyer to have in their arsenal. Properly informed lawyers are, of course, able to run a better mediation case for their client.

Gumshoes should produce value to the case, usually by way of information gathering and arguably interviewing or bringing on board witnesses. A good partnership will often see your gumshoe obtaining an initial statement which is then turned into a brief. It’s well known that significant witnesses should be committed to a statement as soon as possible and gumshoes are trained to do just that, on the spot, either in writing or more commonly by way of digital recording. In many fraud prosecutions nowadays, the charge is s228 Crimes Act “Dishonestly taking or using a document” and under the Crimes Act a recorded interview is “a document”, making the recording a very valuable exhibit.

“Information gathering by gumshoes” has always been a subjective phrase and

stories abound about gumshoes accessing confidential information or even setting people up.

Today the internet is the gumshoe’s greatest immediate tool with sites such as Veda and Information Logistics. However, gumshoes by definition need to be able to sneak quietly around the information highway. They should have a wealth of local knowledge, contacts and sources, but importantly they must today be very cyber savvy. Why else would you use them?

The introduction of the Private Security Personnel and Private Investigators Act 2010 on 1 April this year was a welcome 37 years overdue change. Under this legislation, gumshoes can now record conversation and take photographs whereas they had been barred previously.

While there were only a few cases of a gumshoe being prosecuted under s52 of the old Act, there were a number of significant court rulings. In one case, photographic evidence of a car ferry berthing was ruled inadmissible by the High Court because the gumshoe did not have the written permission of the ferry owner, even though no actual person was filmed (oral decision of Baragwanath J, Pacific Ferris Ltd v Artnl Harbour Berths Ltd, CIV-2004-404-4095, 16 February 2006).

This has all changed, though, and with the introduction of the new Act gumshoes are now able to give greater assistance to the legal profession.

Cases are won by the lawyer who has the best intelligence, is fully informed on all aspects of the case and who has used the best tools available in preparation.

Gumshoes are the lawyer’s feet on the ground.

*Ron McQuilter CFE is managing director of private investigation company Paragon Investigations New Zealand.