Bushline Trustees Limited v ANZ Bank New Zealand Limited
[2016] NZHC 1818
•8 August 2016
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2014-404-001276 [2016] NZHC 1818
BETWEEN BUSHLINE TRUSTEES LIMITED AND
STEPHEN DANIEL COOMEY AS TRUSTEES OF BUSHLINE TRUST ONE
BUSHLINE TRUSTEES LIMITED AND SHARON LOUISE COOMEY AS TRUSTEES OF BUSHLINE
TRUST TWO Plaintiffs
AND
ANZ BANK NEW ZEALAND LIMITED Defendant
AND
ROBERT LEWIS ENGLAND Third Party
Hearing: 1 August 2016 Appearances:
M Branch and K Shaw for the Plaintiffs
S M Hunter and R M A Jones for the Defendant
D Turnbull for the Third PartyJudgment:
8 August 2016
JUDGMENT OF HINTON J
This judgment was delivered by me on 8 August 2016 at 9.30 am pursuant to Rule 11.5 of the High Court Rules
……………………………………………………………………
Registrar/Deputy Registrar
Solicitors/Counsel: Harkness Henry, Hamilton Chapman Tripp, Auckland
Stephen Hunter, Barrister, Auckland
D Turnbull, McElroys, Auckland
BUSHLINE TRUSTEES LIMITED AND STEPHEN DANIEL COOMEY AS TRUSTEES OF BUSHLINE TRUST ONE BUSHLINE TRUSTEES LIMITED AND SHARON LOUISE COOMEY AS TRUSTEES OF BUSHLINE TRUST TWO v ANZ BANK NEW ZEALAND LIMITED [2016] NZHC 1818 [8 August 2016]
Issues
[1] There are three issues to be decided: (a) whether to have a split trial; (b) particular discovery; and
(c) release from the implied undertaking in relation to discovered documents.
[2] The defendant opposes each application. The third party abides the decision of the Court.
Brief background
[3] The plaintiffs are trustees of trusts which operate a farming partnership. The defendant, ANZ Bank New Zealand Ltd (ANZ), sold interest-rate SWAP products to the plaintiffs.
[4] The plaintiffs have brought proceedings to recover losses alleged to have flowed as a result of entering into the SWAP contracts. These are pleaded to include not only payments required under the SWAPs themselves, of $1.9 million, but also losses to the Trusts’ farming operations of $5.6 million.
[5] There are a number of causes of action. The first is negligent misstatement. The statement of claim contends that ANZ owed duties to the plaintiffs to exercise care and skill that a reasonable banker advising on SWAP transactions would exercise, including a duty to provide a full explanation as to the effect of, and alternatives to, SWAPs. The duty to advise is pleaded as ongoing. The plaintiffs say ANZ breached that duty, particularly in representations made at meetings in March 2008. The related causes of action are in contract and under various statutory provisions.
[6] This proceeding is set down for a 10 day hearing in February 2017 and has been timetabled through to that date.
[7] There are two similar proceedings brought against ANZ, including Cygnet Farms Ltd v ANZ Bank (New Zealand) Ltd, which is set down for a seven-day hearing commencing on 22 August 2016. Counsel for the plaintiffs are involved in each of the three proceedings.
First issue - split trial
[8] The plaintiffs seek to divide the trial into issues of liability and quantum.
[9] The essence of the plaintiffs’ argument for a split trial is that there would be real time and cost savings, to the extent that a trial as to liability narrowed the issues. This is said to apply particularly in respect of the plaintiffs’ reply briefs on quantum. The pleading of ongoing duty to give advice, leads to many potential dates of damage calculation, which Mr Branch, for the plaintiffs, says is a very costly exercise.
[10] There is a presumption that all live issues in a proceeding will be determined at a single trial. The plaintiffs have to demonstrate there is good reason for a proceeding to be split.1
[11] Split trials have limited appeal in cases such as this, where there is an overlap between questions of liability and quantum and a double-up in the witnesses likely to be involved in each. Mr Branch is not advocating any strong chance of the trial on liability disposing of the proceeding. Also, there is a trial date already allocated and, if the 10-day estimate is accurate, the entire case should be disposed of in a standard and efficient manner.
[12] Mr Branch acknowledges that the judgment in Cygnet Farms will most likely narrow the issues in the present proceeding and therefore achieve a similar effect to the split trial application. He points out, however, that the timetable in the present proceeding is such that the quantum reply briefs will likely have to be completed
before the Cygnet Farms judgment is released.
1 KPMG New Zealand v Gemmell HC Auckland CIV-2008-404-4288, 27 March 2009.
[13] Mr Hunter, for the defendant, agrees that the timetable in this proceeding can be extended in such a way, that there is a good prospect that the Cygnet Farms judgment will be available in advance of the work to be carried out on the plaintiffs’ reply briefs.
[14] On that basis, Mr Branch withdraws the application for a split trial. [15] The replacement timetable in this proceeding is as follows:
(a) The plaintiffs’ briefs are to be served by 9 September 2016 (in place of 26 August 2016).
(b)The defendant’s briefs are to be served by 21 October 2016 (in place of 7 October 2016).
(c) The third party’s briefs are to be served by 25 November 2016 (in place of 11 November 2016).
(d)The plaintiffs’ reply briefs are to be served by 24 December 2016 (in place of 25 November 2016).
[16] Other dates in the existing timetable remain unchanged.
Second issue - particular discovery
[17] Ms Shaw, for the plaintiffs, says that some matters have been resolved since this application was filed. There are three outstanding issues.
Interest Rate SWAPs brochure/presentation
[18] The plaintiffs seek that ANZ provide all versions in its possession, used New Zealand-wide in 2007-2008, of an Interest Rate SWAPs brochure. The original request was for all versions used in the Taranaki area, but this has been expanded because ANZ has pointed out, it would be too difficult to identify the versions used specifically in the Taranaki area.
[19] In response, Mr Hunter says that ANZ is confident it has discovered all versions used or edited by the relevant ANZ employee, Mr Esquilant. If he is wrong in that, Mr Hunter has no difficulty in confirming that all such versions will be discovered promptly. He says it would not be possible to provide all versions of the document that were in existence nationwide, as this was not a brochure as such, but rather a document printed on a piece of paper which could be edited. Potentially all individual dealers had done so.
[20] Mr Branch, in reply, says the plaintiffs would accept Mr Hunter’s proposal, but they do not yet have from ANZ, all versions used or edited by Mr Esquilant.
[21] I therefore order that ANZ provides all versions of the Interest Rate SWAPs brochure/presentation used or edited by its employee, Mr Esquilant, in 2007-2008.
Suitability reports
[22] The second outstanding issue in terms of the plaintiffs’ application for
particular discovery is that the plaintiffs seek (adapted from (c)(xiii)):
(a) all ANZ documents around the development of suitability reports
(including all emails to the relevant Treasury staff); and
(b)all other ANZ documents discussing issues and policies around the suitability of SWAPs, including after 2008.
[23] The wording of paragraph (c)(xiii) of the application is: “All ANZ documents regarding assessment of client suitability for derivatives (and policies behind) and documents relating to assessment of levels of sophistication and understanding of derivatives between 2005-2013.”
[24] In either form, the boundaries of the documents sought are not very clear. The plaintiffs’ position is that the request is aimed only at generic documents. More specifically, the plaintiffs say they seek ANZ policy documents, training material and internal emails regarding suitability for SWAPs.
[25] Mr Hunter’s response is that ANZ accepts it should discover any ANZ documents relating to general client assessment and suitability for SWAPs during the period leading up to the plaintiffs’ entering into the SWAPs, which is 2005-2008. He adds, so as not to mislead, that his understanding is there are no such documents. Mr Hunter opposes the provision of any such documents after 2008, as not relevant.
[26] In my view, the post-2008 documents could be relevant. I note Mr Hunter’s point that the plaintiffs do not claim they were “unsuitable” for SWAPs. Their claim is premised rather on the representations allegedly made at the March 2008 meetings. In my view, that is taking too narrow an approach to relevance. If ANZ had brought in a suitability/assessment policy, or materially changed an existing policy, after the plaintiffs had entered into the SWAPs, that could be relevant, for example, as to whether ANZ breached a duty of care.
[27] I therefore order that ANZ provides all ANZ documents relating to general client assessment and suitability for SWAPs between 2005 and 2013.
ANZ affidavit
[28] The third outstanding issue Ms Shaw raises is, as she says, not strictly a discovery issue. There have apparently been differences in the approach taken by Ms Hedley, the ANZ employee engaged in discovery, across the three proceedings.
[29] Ms Hedley has sworn an affidavit already, addressing the concerns raised. The plaintiffs want Ms Hedley to properly outline the steps she has taken to support evidence that ANZ “amended and updated the disclosures of its staff, and distributed a ‘book’ of all advisers’ statements to all clients in bulk”.
[30] Mr Hunter confirms that ANZ has no difficulty in clarifying what it has done and will therefore agree to the order as sought, providing it is not tailored to an affidavit by Ms Hedley, as she could be away on maternity leave.
[31] The plaintiffs agree to that course of action.
[32] I therefore order that ANZ provides an affidavit sworn by Ms Hedley or another appropriate employee, properly outlining the steps ANZ has taken to support evidence that ANZ “amended and updated the disclosures of its staff, and distributed a ‘book’ of all advisers’ statements to all clients in bulk”.
Third issue - release of implied undertaking
[33] The plaintiffs seek to be released from the implied undertaking in relation to discovery, so that documents discovered by ANZ in this proceeding can be used in the Cygnet Farms proceeding, due to be heard shortly. If ordered, the plaintiffs would seek to rely on the release across the three sets of proceedings.
[34] Mr Branch says he wants to be able to show to a witness in the Cygnet Farms proceeding, any document that might be relevant in this proceeding, without having to first check with Mr Hunter as to release from the undertaking.
[35] He gives as an example, applying in the reverse direction, that in the Cygnet Farms proceeding, ANZ has discovered 2.5 years of weekly updates of market reviews, which he wishes to be able to show to the parties in the present proceeding.
[36] Mr Hunter is strongly opposed to a general release from the implied undertaking. I agree this would be wrong in principle. The proceedings are similar, but not identical. For example, the present proceeding includes a claim of an ongoing duty to advise, and a third party claim against the solicitor representing the plaintiffs. Neither of these features is present in Cygnet Farms, as I understand it.
[37] Mr Hunter says ANZ’s proposal is, and has been, that the plaintiffs can identify any document they consider discoverable in one of the other proceedings; counsel for ANZ can respond and, if not agreed, the court can then give a ruling as to that document.
[38] Mr Hunter accepts in principle that generic bank documents, including the documents Mr Branch has referred to by way of example, should be readily able to
be cross-referenced. He accepts that the request could be by category and/or comprehensive, by reference to the discovery list or a common bundle. He undertakes that ANZ will take a co-operative attitude and will respond promptly to any query. He says he has given that, or a similar, assurance to Fogarty J in the course of the hearing in Cygnet Farms on 22 June 2016.
[39] Mr Branch agrees that the plaintiffs will proceed on that basis, and will not pursue the application for a general release from the plaintiffs’ implied undertaking, at least unless that subsequently becomes necessary. He says, in any event, there is no urgency now around access to documents in this proceeding for purposes of Cygnet Farms, as he believes they now have all relevant documents, through discovery in that proceeding.
[40] No order is required in this regard.
Orders
[41] I make orders as set out in paragraphs [15], [16], [21], [27] and [32] of this judgment.
[42] Neither party made any reference to costs and, in circumstances where issues were largely and sensibly resolved, no order is appropriate.
-------------------------------------- Hinton J
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