Banicevich v AMP Services (NZ) Ltd
[2014] NZHC 2477
•8 October 2014
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2013-404-5272 [2014] NZHC 2477
BETWEEN GREGORY IVAN BANICEVICH
Plaintiff
AND
AMP SERVICES (NZ) LTD First Defendant
THE NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA LTD
Second Defendant
Hearing: 3 October 2014 Counsel:
MC Black for Plaintiff
D McLellan QC and D Durovich for DefendantsJudgment:
8 October 2014
JUDGMENT OF BREWER J
This judgment was delivered by me on 8 October 2014 at 4:45 pm pursuant to Rule 11.5 High Court Rules.
Registrar/Deputy Registrar
Solicitors: Hammonds Law (Dargaville) for Plaintiff
Kensington Swan (Auckland) for Defendants
Counsel: Michael C Black
Daniel McLellan QC
BANICEVICH v AMP SERVICES (NZ) LTD [2014] NZHC 2477 [8 October 2014]
Introduction
[1] The plaintiff sues the defendants for $2 million which he claims they are liable to pay him under the terms of an insurance policy. The insurance policy indemnifies the plaintiff against major trauma. The plaintiff contends that he has a medical condition that qualifies as a major trauma. The defendants contend that the insurance policy was cancelled in 2011 and so no liability arises. The trial of these issues is scheduled to commence on 10 November 2014.
[2] The plaintiff says that the defendants should make further discovery. The defendants deny that and say, to the contrary, that the plaintiff should make further discovery. I heard argument from both sides and I now give my decisions. There is a need for urgency given the proximity of the trial date and the fact that the defendants have not yet completed their briefs of evidence. Accordingly, I will give only brief reasons for my decisions.
[3] During the course of the hearing counsel, responsibly and appropriately, were able to narrow their differences. I take the issues to be decided from the advice given to me by counsel immediately after the morning adjournment.
Issues
For the plaintiff
[4] The plaintiff’s notice of application for further and better discovery, dated
12 September 2014, seeks discovery of five categories of documents:
(a) Category 1 – the defendants do not oppose an order for discovery being made for this category. They ask for five working days to make the discovery.
(b) Categories 2 and 3 – these read:
2. All emails and any other correspondence or internal memoranda held by the defendants concerning the plaintiff’s policy, reinstatement and subsequent cancellation for the period from 1st August 2011 to 31st December 2011 and 1st
August 2013 to 31 December 2013 which were exchanged or sent between:
(a) The defendants’ employees, including Fuia Webster, Amy Lightfoot, Sheree Lawrence, Wanda Borowicz, Melanie Quirk and Stephanie Carrington from 1st November 2011 to 31st December 2011 and also for the period when the claim was submitted and being considered from 1st August 2013 to 31st December 2013 (or such other period which involved the Policy and claim referred to above, which is within the defendants’ knowledge).
(b) All communications and dealings with Truman McCarthy and the defendants’ Distribution Management (who Mr McCarthy reported to), the head of Underwriting and any of the internal operational management team within the defendants in November and December 2011 (or thereafter) which considered the circumstances involving the plaintiff’s Policy.
3. Any internal memoranda or other communications relating to the defendants’ practices and procedures in forwarding and sending policy notifications to its policy holders, whether by post or email or other means following the plaintiff’s concerns regarding the same as referred to in the plaintiff’s replies.
The defendants oppose a discovery order for these categories on the basis that discovery under these categories has been made and confirmation has been given that the discovery is comprehensive and complete.
(c) Category 4 – this category reads:
The defendants’ internal memoranda, communications and practices concerning its “risk allowance” policy and application involving premium payments. This is to include representative examples of the application and use of this practice with regard to policy holders.
The defendants do not oppose an order in relation to the first sentence. They ask for five working days to make discovery. The defendants do oppose making discovery in accordance with the second sentence. Mr McLellan QC submits that this demand for discovery is unlimited by time, policy type and scope. It would require his clients to decide what are “representative examples”, something which would, almost
certainly, give rise to dispute. Further, the product would be inadmissible as evidence since the conduct of the defendants towards third parties is irrelevant to the issues the Court will have to decide in this case.
(d)Category 5 – the defendants do not oppose an order being made in relation to this category. Again, five working days will suffice for discovery to be made.
For the defendants
[5] The defendants’ notice of application is dated 19 September 2014. They seek “unless orders” because, they say, the discovery sought is already required by a consent order made on 5 September 2014. Since the filing of the application, further discovery by the plaintiff has left at issue the categories of documents described in paras 4, 5, 6, 7, 8 and 9 of the schedule to the application:
(a) Categories 4 and 5 – the plaintiff does not object to an order in respect of these categories. The plaintiff will provide the documents by
7 October 2014.
(b) Category 6 – this category reads:
All documents relating to or showing dealings between any of the plaintiff, Mr Thomas Weston, any other employees or agents of Whiteman Group, and any other person regarding:
a AXA insurance policy P901369742 in November and
December 2011
b the request that the payment made by the plaintiff to
AXA on 21 November 2011 be refunded.
Mr Black, on behalf of the plaintiff, gives his ground of opposition as the fact that discovery in this category has already been made and the plaintiff has deposed to that. The defendants’ request for a supplementary affidavit setting out in detail the steps that were taken to locate documents in this category is unreasonable.
(c) Category 7 – this category reads:
All documents relating to or showing the plaintiff’s financial position (for the period commencing September 2010 and concluding September 2013) including all bank statements, tax returns, credit card statements, and the financial statements of the plaintiff’s farming and insurance businesses (but not including those financial records listed in the plaintiff’s affidavit sworn 12 September 2014.
Mr Black submits that documents in this category are insufficiently relevant to issues in the case for such an enormous discovery effort to be reasonable and proportionate. There are, apparently, eight “banana boxes” of folders containing thousands of documents which might fall within this category. The defendants are welcome to inspect them and take copies of any documents they think to be relevant.
(d)Category 8 – the defendants no longer seek a specific order in relation to this category.
(e) Category 9 – this category reads:
To the extent that hard and electronic copies of the above documents are no longer within the plaintiff’s control, the defendants seek copies of all and any hard drives, computers and any external storage devices used by the plaintiff during the period November 2010 to December 2011.
The plaintiff’s submissions in relation to this category are the same as
for category 7.
Decisions
[6] This proceeding is subject to a standard discovery order. Each party is required to disclose the documents that are or have been in the party’s control and that are:1
(a) documents on which the party relies; or
(b) documents that adversely affect that party’s own case; or
(c) documents that adversely affect another party’s case; or
(d) documents that support another party’s case.
[7] A party must make a reasonable search for documents within the scope of the discovery order.2 What is a “reasonable search” depends on the circumstances, including the need for proportionality. Schedule 9 provides assistance to parties in this regard.
[8] Obviously, a party’s affidavit of documents must contain sufficient information to enable other parties, and the Court, to assess whether a reasonable search has been undertaken. Rule 8.15(2)(c) requires a party to give particulars of the steps taken to fulfil its discovery obligations.
The plaintiff ’s applications
[9] In respect of category 1 in the schedule to the plaintiff’s notice of application, I order the defendants are to discover, by 15 October 2014, copies of all their documents for the period July 2011 to December 2011 pertaining to the plaintiff’s insurance policy as follows:
(a) Internal payment records (and documents); (b) Its reconciliations;
(c) Banking methods or procedures for recording premium payments and non-payments;
(d)Internal communications or records which addressed and considered the payments or non-payments of premiums.
[10] I decline to make discovery orders for categories 2 and 3 as described in the schedule to the plaintiff’s notice of application. I do so because I accept the submission of counsel for the defendants that their affidavit of documents confirms
that discovery under these categories has been made and gives sufficient detail to found a conclusion that the discovery is comprehensive and complete.
[11] With respect to category 4, I order the defendants to disclose, by 15 October
2014, their internal memoranda, communications and practices concerning its “risk allowance” policy and application involving premium payments.
[12] I decline to order the defendants to discover “representative examples of the application and use of this practice with regard to policyholders”. I do so because:
(a) It is not clear to me how such examples might be relevant to any issue in this case. If cross-examination were to establish relevance then application can be made to the trial Judge who would decide it having regard to the interests of justice.
(b)I do not think it is appropriate within the framework of discovery to require a party to go through a process to identify and select “representative examples” of documents pertaining to non-parties. There would have to be redactions to preserve privacy rights and it is easy to see the potential for disputes over the selection criteria. Again, this issue is best left to the trial Judge to determine if it arises.
[13] I order the defendants to discover, by 15 October 2014, the documents
pertaining to category 5 in the schedule to the plaintiff’s notice of application, being:
All information and communications forwarded by the defendants to AXA
advisers concerning the defendants’ practice or policy in:
(a) Reinstating policies.
(b) The lapsing or cancellation of policies in the event of premium payments not being met or paid within three months or any other period.
(c) That when three or more reinstatements occur due to missed premiums, that this must result in the Policy being cancelled and/or with full medical underwriting.
(d) The defendants’ communications or information that required
advisers to ensure the Policyholders are required to be informed and
notified of procedural changes and the manner in which this is to occur.
The defendants’ applications
[14] On 28 August 2014, the defendants filed an application for orders that the plaintiff provide particular and further discovery. They coupled this with an application for an “unless order” if certain of the documents were not discovered as ordered.
[15] On 3 September 2014, the parties filed a joint memorandum of counsel in which, by consent, they sought orders which included:
e The plaintiff give further discovery, and facilitate inspection, by
12 September 2014, on the terms set out in paragraphs 1(a) and (b)
of the application.
[16] Paragraphs 1(a) and (b) are as follows:
Discovery
aThe plaintiff, within 5 working days of this application being determined, file and serve an affidavit of documents which complies with Rule 8.15, and which discloses all documents that are or have been in his power or control and which relate to:
ithe medical conditions alleged at paragraphs 14-17 of the amended statement of claim including all medical reports, test results, and correspondence.
ii dealings between any of the plaintiff, Mr Thomas Weston, any other employees or agents of Whiteman Group, and any other person regarding:
AAXA insurance policy P901369742 in November and December 2011
B the request that the payment made by the plaintiff to
AXA on 21 November 2011 be refunded.
iii the plaintiff’s financial position (for the period commencing September 2010 and concluding September 2013) including all bank statements, tax returns, credit card statements, and the financial statements of the plaintiff’s farming and insurance businesses. [This order is sought based on an assumption that the plaintiff will deny paragraphs 45(c) and
66 of the second amended statement of defence and counterclaim dated 5 August 2014.]
iv the matters pleaded at paragraphs 37-75 of the second amended statement of defence and counterclaim (to the extent that such documents have not already been disclosed).
Inspection
b The plaintiff, when complying with the orders sought numbered
1(a)(i)-(iv) (whether in whole or part), immediately provide the defendants with electronic or hard copies of the documents
disclosed.
[17] In respect of categories 4 and 5 in the schedule to the defendants’ notice of application for “unless orders”, I order the plaintiff to make discovery, by 15 October
2014, of the following:
(a) The insurance policies (including the AIA one but not including the AXA policy) referred to in the email from Thomas Weston to Professor John Windsor dated 5 March 2013.
(b)All documents relating to the formation, performance (including payment of premium), and claim made on the insurance policy held by the plaintiff with AIA.
[18] I accept that this is a repetition in part of the consent order made by the Court on 5 September 2014. Because the plaintiff does not object to making the discovery, and indeed should have made it prior to the delivery of this judgment, I do not think it necessary to go to the last resort of an “unless order”. However, I will make one on the application of the defendants if this further order is not complied with.
[19] With reference to category 6 of the schedule to the defendants’ notice of application, I accept that the documents are within the terms of the consent order made on 5 September 2014. However, the issue here is not that they have not been discovered but that the defendants submit they are unable to assess from the plaintiff’s affidavits of documents whether a reasonable search has been made to locate them.
[20] The affidavit of documents by the plaintiff dated 24 March 2014 is almost pro forma. It does not contain any real particulars of the steps taken to fulfil the plaintiff’s discovery obligations.
[21] The plaintiff filed a supplementary discovery affidavit dated 12 September
2014. It does not refer to the category 6 documents. The plaintiff filed a further affidavit dated 25 September 2014 in opposition to the defendants’ current application. In relation to this category, he deposes:3
Item 6: Documents between myself and Mr Thomas Weston
11. Any correspondence under this category was provided in the first list of documents. It has been provided again in the ring binder under section 5.
12.I also confirm that Mr Weston’s statement of evidence dated the 18th September 2014 at paragraphs 12 and 13 confirm that there are no other emails other than that which has already been discovered in the proceeding. Mr Weston’s evidence also lists all his emails at paragraphs 4 to 11.
[22] I decline to make an order in relation to category 6 given the plaintiff’s further affidavit. Again, if cross-examination at the trial gives cause to apprehend that reasonable steps were not taken to find the documents described then that will be a matter for the trial Judge.
[23] The defendants’ application in respect of category 7 relates to the disclosure of financial information pertaining to the plaintiff’s financial position for a three year period from September 2010 to September 2013.
[24] I accept that these documents are already the subject of the 5 September 2014 consent order. There is no explanation as to why the order has not been complied with. It is trite to observe that counsel have a professional responsibility to either comply with Court orders or apply for variation or absolvement. I infer that the plaintiff decided that the effort necessary to comply with the order would be
unreasonable and disproportionate.
3 Affidavit of Gregory Ivan Banicevich in opposition to defendants’ application for further
discovery and unless orders, dated 25 September 2014.
[25] I disagree. It is clear that the plaintiff’s financial position will be of significance to the determination of the case. The defendants plead, to the effect, that the plaintiff was not genuinely entering into contracts of insurance but was, instead, gaming the system to obtain commissions and to avoid paying full premiums. It is alleged that he lacked the financial ability to pay the premiums he contracted to pay. The defendants are, accordingly, entitled to his records showing his financial position for the three years in question.
[26] I order that the plaintiff must, by 15 October 2014, file and serve an affidavit of documents which complies with r 8.15, and which discloses all documents that are or have been in his power or control and relate to the matters appearing in paragraph
7 of the schedule to the notice of application by first and second defendants for unless orders dated 19 September 2014.
[27] The plaintiff must, when complying with this order, provide the defendants with electronic or hard copies of the documents disclosed in the affidavit.
[28] Unless the plaintiff fully complies with this order:
(a) His amended statement of claim dated 9 May 2014 and his reply to the defendants’ second amended statement of defence and counterclaim dated 10 September 2014 will be struck out.
(b) Judgment, in relation to the plaintiff’s claim, will be entered for the
defendants on their defences.
(c) Judgment will be entered for the second defendant on its counterclaim.
[29] I have made this “unless order” because of the unexplained failure by the plaintiff to comply with the consent order of 5 September 2014 and because the discovery might be important to the defendants’ case. However, I anticipate that the “unless order” will be complied with and it is in the interests of the parties that the
plaintiff provide any further briefs of evidence. Accordingly, I decline to order that he be barred from doing so.
[30] Category 9 in the schedule to the defendants’ notice of application refers to
electronic media. They were not part of the consent order of 5 September 2014.
[31] I confess that I do not understand how the plaintiff could copy “all and any hard drives, computers and any external storage devices used by the plaintiff during the period November 2010 to December 2011”. However, in his submissions, Mr McLellan explained that the defendants’ concern is that the plaintiff’s affidavit of documents is deficient because it does not disclose what searches have been made to locate the hard and electronic copies of the documents covered by the consent order of 5 September 2014.
[32] Accordingly, I order the plaintiff, by 15 October 2014, to file and serve a supplementary affidavit of discovery setting out, in particular detail, the steps taken to locate electronic copies of the documents covered by the consent order of
5 September 2014 which are no longer within the plaintiff’s control. The affidavit is to identify the electronic storage devices (hard drives, computers and external storage devices) used by the plaintiff during the period November 2010 to December
2011. There must be a description of what steps have been taken to search such storage devices.
[33] I decline to make this the subject of an “unless order”. However, if, despite compliance with rr 8.2 and 8.13, the defendants remain unsatisfied with the plaintiff’s response to this order, I will entertain, on notice, a renewal of the “unless order” application.
[34] All orders for discovery made herein are to be complied with by way of supplementary affidavits of discovery complying with r 8.15.
Costs
[35] The general rule is that costs on interlocutory applications will be awarded as they are decided.
[36] In this case, because both parties have gained some success, and because the true relevance to the proceeding of these interlocutory applications will not be known until the determination of the case, I reserve costs and they will be
determined by the trial Judge as part of the enquiry into costs in the proceeding.
Brewer J
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