Body Corporate 207624 v Grimshaw & Co

[2022] NZHC 1510

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2018-404-2107

[2022] NZHC 1510

BETWEEN

BODY CORPORATE 207624

Plaintiff
-Te Kaitono

AND

GRIMSHAW & CO

Defendant

-Te Kaiurupare

Hearing:

-Nohoanga

On the papers

Appearances:

-Kanohi kitea

D R Bigio QC and A G Holden for the Plaintiff P J L Hunt and J Heard for ht eDefendant

Judgment:

-Whakataunga

29 June 2022

JUDGMENT OF HARVEY J

Te Whakataunga o Te Kaiwhakawā Mātāmua Harvey

This judgment is delivered by me on 28 June 2022 at 10.30am pursuant to r 11.5 of the High Court Rules.

.....................................................

Registrar / Deputy Registrar

Counsel/Solicitors:

D R Bigio QC, Auckland Wilson Harle, Auckland McElroys, Auckland

BODY CORPORATE 207624 v GRIMSHAW & CO [2022] NZHC 1510 [29 June 2022]

Introduction

Hei korero tīmatanga

[1]                  By judgment dated 3 June 2022, Grimshaw’s interlocutory application for discovery of legal advice was dismissed.1

[2]                  Eleven days later, on 14 June 2022, Grimshaw filed an application for leave to appeal that aspect of the judgment to the Court of Appeal. This application is made in circumstances where a four-week trial for the substantive proceeding is scheduled to commence on 18 July 2022.

[3]                  On 15 June 2022, the Body Corporate filed their notice of opposition to Grimshaw’s application for leave to appeal. Later that day, a timetabling minute was issued for the filing of submissions and confirming that the decision would be made on the papers as soon as practicable.2

Background

Kōrero whānui

[4]                  As set out above, in the 3 June 2022 judgment, the Body Corporate issued proceedings against its former solicitors, Grimshaw & Co for breach of contract and negligence. Grimshaw acted for the Body Corporate in leaky building litigation and achieved a settlement of some $20 million. The substantive proceedings relate to that firm’s subsequent conduct in the distribution of those funds.

[5]                  There have been several discovery related issues between the parties. As Bell AJ summarised in his judgment of 29 January 2020, early in the proceedings the parties agreed that tailored discovery was appropriate.3 The 3 June 2022 judgment was issued regarding the final determination on discovery, whether further discovery was necessary and to what extent.

[6]                  Prior to that, on 21 June 2021, Grimshaw applied for orders that the Body Corporate must discover advice given to it by its former solicitors, Gilbert Walker,

1      Body Corporate 207624 v Grimshaw & Co [2022] NZHC 1315.

2      Body Corporate 207624 v Grimshaw & Co HC Auckland CIV-2018-404-2107, 15 June 2022 (Minute of Harvey J).

3      See Body Corporate 207624 v Grimshaw & Co [2020] NZHC 34 at [24].

because the Body Corporate had waived privilege as reliance was being placed on it, and a Mr Powell, the Body Corporate’s witness, had referred to it in his evidence dated 26 February 2021.

[7]                  In the judgment, applying s 65 of the Evidence Act 2006, the Court found that privilege had not been waived and refused Grimshaw’s application for disclosure:

[26]      … I also accept Mr Bigio’s submission that the Gilbert Walker advice was simply referred to in evidence by Mr Powell and that mere reference to the contents of that opinion is insufficient to waive privilege. The Body Corporate also did not expressly or impliedly assert any reliance on Gilbert Walker’s advice. Moreover, as foreshadowed, it was argued that the disclosed content of the advice is not relevant to any issue and, accordingly, there is no unfairness or injustice in the claim to privilege being maintained.

[27]      The Body Corporate argued that the trigger for it obtaining the advice from Gilbert Walker was the challenge to the CDA by owners and Grimshaw’s recognition, in those circumstances, that it had a conflict. In addition, the Body Corporate submitted that the application is premature as the advice has not been ‘injected into evidence’ because a brief is not evidence until read and, on that basis alone, disclosure is precluded. I agree. Accordingly, and for the reasons discussed, Grimshaw’s application for disclosure of the Gilbert Walker opinion is declined.

Submissions

Ngā tāpaetanga o te Kaitono me te Kaiurupare

[8]                  In summary, Grimshaw seeks leave to appeal the decision on three principal grounds. First, that the appeal is not likely to be overtaken by the substantive hearing and cannot otherwise be considered as effectively in the context of an appeal of a substantive decision. The advice concerns the key issue in the proceeding and needs to be available to the trial Judge and to counsel for the hearing. Second, the arguments in the appeal are capable of bona fide and serious argument, as Mr Powell’s brief of evidence has injected the substance of Gilbert Walker’s advice into the proceedings. Third, the issue on appeal concerns a decision of sufficient significance to the parties to outweigh the cost and delay of the appeal, particularly as the appeal is on a discrete point and will only take an hour to hear at relatively low cost to the parties.

[9]                  Grimshaw submitted that the Gilbert Walker legal advice is central to its case: the Body Corporate chose to discover documents referring to that advice and then to expressly refer to the advice in Mr Powell’s brief of evidence. Grimshaw accepted

that Mr Powell’s brief of evidence does not expressly refer to the Body Corporate relying on the Gilbert Walker advice but that it is clear from other documents that it did and continues to do so. That the Body Corporate chose to refer to the Gilbert Walker advice in a brief is enough to trigger the requirements of ss 65(2) (voluntary disclosure) and 65(3) (putting privileged communications at issue). This is, Grimshaw contended, a case of injecting the substance of the advice into the proceeding as Mr Powell refers to the content of the advice, rather than merely its existence.

[10]              Grimshaw argued that the Gilbert Walker advice will be referred to in evidence at the hearing and therefore needs to be considered by the Judge at trial and by counsel before then. Finally, the merit and importance of the advice is not outweighed by issues of cost and delay, as the appeal can be dealt with in an hour at low cost and poses no threat to the trial itself.

[11]              In response, the Body Corporate submitted that the application must be declined on five grounds. First, that there is no justification for Grimshaw’s prejudicial delay in seeking leave to appeal, and its earlier delay in bringing its substantive application. Secondly, it is settled law that privilege cannot be waived by way of a brief of evidence until that evidence is read at trial.

[12]              Thirdly, the proposed appeal is not capable of bona fide or serious argument, as the Body corporate will not waive privilege unless it asserts reliance in the substance of the advice in the proceeding. It will not do so as the substance of the advice is not relevant to any issue. Fourthly, there is no prejudice to Grimshaw if the matter is not deal with as a pre-trial appeal. Any unfairness would only arise when the Body Corporate relies on the substance of the advice in the proceeding, which it will not. Fifthly, there is no specific or general significance to the proposed appeal.

Legal principles

Ngā mātāpono o ngā ture

[13]              Section 56(3) of the Senior Courts Act 2016 provides that a party must apply for leave to appeal any order or decision made on an interlocutory application in any civil proceeding except a successful summary judgment or strike out.4

[14]              Counsel have highlighted the relevant principles as set out by Palmer J in Li v Chief Executive, Ministry of Business, Innovation and Employment, in which he stated that the wider purpose behind s 56(3) is to lessen tactical delays and enhance the efficiency of the administration of justice.5 His Honour summarised:

[21]      Pulling all these strands together, I consider the text, purpose, context and case law of s 56 suggests an application to appeal an interlocutory decision under s 56(3) is likely to be granted if:

(a)the appeal is not likely to be overtaken by the substantive hearing or cannot otherwise be considered as effectively in the context of an appeal of the substantive decision; or

(b)the appellant is likely to be prejudiced by a postponement to the substantive appeal; or

(c)the appeal may be dispositive of the case in law or as a practical matter; and

(d)the arguments in the appeal are capable of bona fide and serious argument; and

(e)the issue on appeal concerns a decision of sufficient significance to the parties or a question of law or general principle of sufficient importance as to outweigh the cost and delay of the appeal.

[15]He further considered that the test could be stated “more pithily” stated:

[22] … an application to appeal an interlocutory decision under s 56(3) is likely to be granted where: (a) there is good reason to consider it before, or separately to, the substantive appeal; and (b) it is sufficiently meritorious in substance and relates to a sufficiently important issue as to outweigh the cost and delay of appeal.

4      Senior Courts Act 2016, s 56(3).

5      Li v Chief Executive, Ministry of Business, Innovation and Employment [2018] NZHC 1171 at [20].

[16]The Court of Appeal summarised the relevant principles in Tomar v Tomar:6

[6]        In Finewood Upholstery Ltd v Vaughan, Fitzgerald J appropriately observed that the requirement for leave to appeal should serve as a filtering mechanism to ensure that unmeritorious appeals of interlocutory orders, or appeals of interlocutory orders of no great significance to either the parties or more generally, do not unnecessarily delay the proceedings in which the orders were made. The following considerations were recognised as relevant on an application for leave to appeal:

(a)A high threshold exists.

(b)The applicant must identify an arguable error of law or fact.

(c)The alleged error should be of general or public importance warranting determination or otherwise of sufficient importance to the applicant to outweigh the lack of general or precedential value.

(d)The circumstances must warrant incurring further delay.

(e)The ultimate question is whether the interests of justice are served by granting leave.

[7]        This Court in Ngai Te Hapu Inc v Bay of Plenty Regional Council indicated that considerations similar to the principles applicable to applications under the former s 24G of the Judicature Act 1908, as explained in Meates v Taylor [Leave], apply to applications under s 56(5) of the Senior Courts Act, stating:

We agree that leave to appeal should only be granted where the significance or implications of an arguable error of fact or law, either for the particular case or for the applicant or as a matter of precedent, warrants the further delay which the appeal process would involve.

[17]The core principle is that for leave to appeal the threshold is high.

Discussion

Kōrerorero

[18]              I do not consider that the arguments in the appeal are capable of bona fide and serious argument. Grimshaw’s asserted belief that the advice will be referred to in evidence at the hearing is speculative and has been expressly denied by the Body Corporate. As Mr Bigio argued, the law is settled that waiver of privilege cannot occur

6      Tomar v Tomar [2021] NZCA 419 at [6] and [7]; citing Finewood Upholstery Ltd v Vaughan [2017] NZHC 1679 at [13]; and Ngai Te Hapu Inc v Bay of Plenty Regional Council [2018] NZCA 291 at [17]. See also Greendrake v District Court of New Zealand [2020] NZCA 122 at [6] – [7] where the Court of Appeal expressed the principles in essentially identical terms.

in a brief of evidence,7 and remains until the evidence is given at trial.8 Moreover, mere reference to the advice has not waived privilege where the advice is not critical to an issue. As the Body Corporate contended, the advice is part of the chronology of the proceedings, nothing more. Allowing an application for leave to appeal in these circumstances would provide limited if any benefit to the proceedings.

[19]              Even if I am wrong, Grimshaw’s submission that an appeal would not prejudice the parties or the trial fixture in any material way is unsustainable. There are less than four weeks to the four-week substantive trial at a time when fixtures are at a high premium. If leave were granted, an appeal would require allocation of a hearing date, the filing of submissions, and the time for the Court of Appeal to both hear the appeal and issue judgment. In short, it is likely that any proposed appeal at this late stage would prejudice the trial date, an outcome that should be avoided. Importantly, any appeal would also absorb valuable resources from both parties at a time when they should, as a priority, be deploying those assets for the trial.

[20]              I also do not consider that the declining of leave will cause any prejudice to Grimshaw. As the Body Corporate has intimated, if the advice is put in issue during the hearing, Grimshaw can make submissions on the point at that time. Where the advice is not in evidence, there is no prejudice to Grimshaw or to the trial Judge in not receiving the advice prior to the hearing. If the Body Corporate does rely on the advice during the trial, the issue of waiver may again become relevant. At this stage, it is not.

[21]              In my assessment, the issue raised is not of sufficient importance to outweigh the impacts of the cost and delay of an appeal so close to trial. Taking all the relevant circumstances into account, I do not consider that any party would be benefit from having their focus diverted from the substantive hearing by this proposed appeal.

Decision

Whakataunga

[22]The application for leave to appeal is declined.

7      High Court Rules 2016, r 9.14(a).

8      Capital + Merchant Finance Ltd v Perpetual Trust Ltd [2015] NZHC 1233 at [20] – [22].

Costs

Whakataunga Utu

[23]The Body Corporate, as the successful party, is entitled to costs on a 2B basis.

Harvey J