CATALYST CONSULTING LIMITED AND THE ATTORNEY-GENERAL
[2024] NZHC 2600
•10 September 2024
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2022-485-769 [2024] NZHC 2600
BETWEEN CATALYST CONSULTING LIMITED
Plaintiff
AND
THE ATTORNEY-GENERAL
Defendant
Hearing: 10 July 2024 Appearances:
A M Glenie for Plaintiff/Applicant
S M Kinsler and C L Burbidge for Defendant/Respondent
Judgment:
10 September 2024
JUDGMENT OF ASSOCIATE JUDGE SKELTON
TABLE OF CONTENTS
Background [9]
Pleadings [33]
Particular discovery — legal principles [38]
Assessment of Catalyst’s requests for particular discovery [46]
Category A: locations not searched by MSD [47]
Category B: documents relating to fifth cause of action (breach of Fair Trading Act 1986) [75] Category D: redactions and omissions regarding other respondents to CROIs [82] Category E: report [91]
Category F: quantum documents [93]
Privilege issues [101]
Waiver of privilege [102]
Collateral waiver [122]
Disallowance of privilege [127]
Result [138]
CATALYST CONSULTING LIMITED v THE ATTORNEY-GENERAL [2024] NZHC 2600
[10 September 2024]
[1] This is an interlocutory application for particular discovery and for an order setting aside a claim to privilege under rr 8.19 and 8.25 of the High Court Rules 2016.
[2] Catalyst Consulting Ltd (Catalyst) is the plaintiff in the substantive proceeding and the applicant in this interlocutory application. The defendant and respondent in this application is the Attorney-General, representing the Ministry of Social Development | Te Manatū Whakahiato Ora (MSD).
In the proceeding, Catalyst brings a claim against MSD concerning:
(a)MSD’s procurement process in early 2019 for the procurement of architectural design services and project management services; and
(b)events which followed the procurement processes including:
(i)MSD’s responses to Catalyst for requests for information under the Official Information Act 1982 (OIA);
(ii)MSD seeking a legal review about the procurement processes following Catalyst having raised concerns about the processes; and
(iii)MSD’s communications with Catalyst about its concerns following receipt of the review.
[4] The crux of the dispute is Catalyst’s allegation that there is an inconsistency between key documents produced for the procurement processes, being procurement plans and calls for registration of interest (CROIs), as to whether the processes were to involve a one-stage or two-stage evaluation process and the relevant evaluation criteria.
[5] Catalyst’s claims against MSD allege breaches of the process contracts for procurement of the architectural design services and project management services, misrepresentation under s 35 of the Contract and Commercial Law Act 2017 (CCLA), and misleading and deceptive conduct under s 9 of the Fair Trading Act 1986 (FTA).
[6]In the current application, Catalyst seeks orders for:
(a)Particular discovery of the following documents:
(i)discoverable documents that may be found as a result of further specific searches of various staff members electronic and physical files;
(ii)documents relating to paragraphs 62(b) and 63(c)–(f) of the amended statement of claim;
(iii)discovery of metadata in relation to the procurement plans for the procurement processes relating to allegations under the fifth cause of action;
(iv)copies of internal communications relating to the procurement processes;
(v)unredacted copies of specific documents that have been disclosed with redactions relating to evaluation of other respondents and any documents omitted on the basis they contain material relating to evaluation of other respondents;
(vi)a full copy of the “independent review” report prepared by a barrister for which privilege is claimed; and
(vii)documents recording the amounts spent on the services by MSD under the actual contracts for the services awarded by MSD.
(b)Catalyst also seeks an order that MSD’s claim for privilege in relation to the independent review report be set aside on the basis that privilege should be disallowed because the report was compiled or prepared for a dishonest purpose, or because privilege has been waived.
[7] In the course of the hearing, Mr Glenie, for Catalyst, advised that Catalyst did not require any determination in relation the documents relevant to paragraphs 62(b) and 63(c)–(f) of the amendments statement of claim.1 Mr Glenie also advised that Catalyst does not require any determination in relation to the internal communications relating to the procurement processes.2
[8] MSD opposes the orders sought. MSD contends that it has carried out reasonable searches for documents having regard to the need for discovery to be proportionate, and that the particular discovery orders sought by Catalyst lack the specificity required for an order pursuant to r 8.19. MSD also contends that the orders sought are oppressive as they are disproportionate. MSD says there is no reason to think that further searches will produce material of sufficient relevance to justify the additional costs and time of further discovery. MSD also opposes an order setting aside privilege in the legal review report. MSD says it has not waived privilege, and has not made or received any communication, or had any information compiled or prepared, for a dishonest purpose.
Background
[9] On or around 19 December 2018, MSD’s Procurement Board endorsed a proposal for MSD to conduct procurement processes for architectural design services and project management services. Catalyst was the incumbent provider of these services.
[10] During January 2019, MSD personnel prepared draft procurement plans and CROIs for the procurement processes.
[11] On or around 23 January 2019, MSD finalised the procurement plans for each process. The plans set out a two-step procurement process whereby:
(a)tenderers would submit a written registration to be assessed against certain criteria for short-listing; and
1 This is Category B, item 6 in Catalyst’s schedule attached to its amended application for further and better particulars dated 25 June 2024.
2 This is Category C, item 8 in Catalyst’s schedule.
(b)short-listed respondents would be interviewed and assessed against different criteria.
[12] At the second stage, price was to be one of evaluation criteria and was given a 40 per cent weighting.
[13] The plans were not provided to tenderers. MSD says that this was because they were internal planning documents.
[14] On 24 January 2019, MSD invited tenderers including Catalyst, to respond to MSD’s CROI for architectural services. On 25 January 2019, MSD invited tenderers, including Catalyst, to respond to MSD’s CROI for project management services.
[15] Catalyst contends that the CROIs were irreconcilable with the plans because the CROIs only included one set of evaluation criteria. MSD contends that the CROIs envisaged a two-step procurement process but only provided the evaluation criteria and weighting for step one (shortlisting). MSD also contends that the CROIs provided that MSD could change the evaluation criteria on notice to tenderers provided tenderers were given a reasonable time to respond to the change.
[16] On 4 February 2019 Catalyst submitted two written registrations in response the CROIs. Other respondents also submitted registrations by that date.
[17] On 7 February 2019 MSD notified Catalyst that it had been shortlisted for an interview in respect of both procurement processes. Other respondents were also notified. For that stage, Catalyst ranked highest for architectural design services and second highest for project management services.
[18] MSD says that an internal moderation meeting was held on 7 February 2019 which resulted in the planned evaluation criteria for step-two being amended so that price was excluded as an evaluation and weighting criteria for the interview.
[19] On 8 February 2019 (with the interview to take place on Monday 11 February 2019), MSD notified Catalyst and all other shortlisted tenderers of interview details
and provided interview instructions including the interview criteria as amended from the plans to exclude price.
[20] On 11 February 2019, Catalyst participated in the interview. All other shortlisted tenderers also interviewed that day.
[21] On 27 February 2019, Catalyst was informed it had not been successful in either procurement process. Catalyst scored lowest for both services.
[22]On 18 December 2019, Catalyst wrote to MSD making requests under the OIA.
[23] On 20 March 2020, MSD responded to the OIA requests, providing documents relating to the CROIs, including the CROIs. The procurement plans were not disclosed. MSD submits that it is not clear if the procurement plans should have been included in the response. Further, following an investigation requested by Catalyst, MSD says it is unclear why the procurement plans were not included as the records do not indicate how decision-makers at the time determined which documents fell within the scope of the request. Catalyst contends the plans were captured by the requests.
[24] Subsequently, there was correspondence between the parties with regard to Catalyst’s concerns based on the documents that had been released.
[25] On 9 June 2021, MSD informed Catalyst that MSD was arranging for an external barrister to undertake a review of the relevant procurement processes.
[26] Between 9 June 2021 and 22 June 2022, the parties corresponded extensively about the review. Catalyst was encouraged to engage with the reviewer but saw little point in doing so as it had concerns about the integrity of the process.
[27]On 19 January 2022, MSD advised Catalyst that:
As you are aware, as a result of your claims, MSD engaged [the reviewer] to undertake an independent review of its procurement processes. We have now received and considered … [the reviewer’s] final report and remain satisfied that your concerns are unfounded and that no further action by the Ministry is required.
[28] On 26 January 2022, Catalyst made a request under the OIA to MSD seeking a copy of the report together with any communications between MSD and the reviewer relating to the review. MSD responded to the second OIA request on 21 March 2022 maintaining privilege over the information sought.
[29]On 10 May 2022, Catalyst made a complaint to the Ombudsman.
[30] On 22 June 2022, MSD released a summary of the report (dated 29 October 2021) to Catalyst.
[31]On 15 November 2022, Catalyst commenced this proceeding.
[32] On 22 June 2023, MSD filed and served its affidavit of documents. MSD discovered the procurement plans.
Pleadings
[33] The first and second causes of action allege breaches of two process contracts in that MSD:
(a)failed to disclose its intention to assess responses using the two-stage evaluation methodology set out in the procurement plans;
(b)failed to evaluate Catalyst’s responses in accordance with the evaluation approach set out in cls 3 and 4 of the CROIs;
(c)failed to evaluate Catalyst’s responses by reference to the original criteria set out in the CROIs;
(d)failed to give Catalyst due notice or a reasonable time to respond when purporting to change the evaluation criteria from the original criteria to the new criteria; and
(e)otherwise failed to evaluate the responses fairly, reasonably transparently and in good faith, including by failing to give Catalyst
due notice or a reasonable time to respond to the purported changes in the criteria, offering Catalyst only a single interview for both responses, scoring Catalyst identically at the interview for both responses, scoring Catalyst poorly for not bringing its lead architect to the interview (when this had not been clearly communicated as a requirement), and failing to consider Catalyst written submissions.
[34] The third and fourth causes of action allege breach of s 35 of the CCLA for pre-contractual misrepresentations, specifically that by sending the CROIs and inviting Catalyst to respond without also including the plans:
(a)MSD represented that it intended to and would apply the evaluation approach and the original criteria as set out in the CROIs; and
(b)MSD offered to enter into process contracts with Catalyst on the basis of the evaluation approach in the CROIs.
[35]The fifth cause of action for breach of s 9 of the FTA alleges that:
(a)MSD acted ‘in trade’ when carrying out the procurement processes, and when it sought the legal review and made certain communications to Catalyst (referred to by Catalyst in the claim as the dispute resolution processes);
(b)MSD’s conduct was misleading and deceptive in that:
(i)it made the representations referred to above which were untrue;
(ii)it did not provide the procurement plans, refer to their existence or disclose their existence to Catalyst prior to discovery;
(iii)encouraged Catalyst to assist MSD in carrying out the independent review while refusing to commit to provide a copy of the report to Catalyst when it became available;
(iv)on 19 January 2022, it represented to Catalyst that the review had concluded and Catalyst’s concerns were unfounded and no further action by MSD was required, when it did not honestly and could not reasonably have believed that was the true outcome of the review or the true position; and
(v)on 22 June 2022, it represented to Catalyst that the summary of the report concluded that Catalyst’s concerns were unsubstantiated and MSD’s processes where fair and transparent when it did not honestly and could not reasonably have believed that was the true outcome of the review or the true position.
[36] Catalyst contends it has suffered loss as a result of these alleged breaches, being the loss of opportunity to earn profit during the first and second three-year terms of the actual contracts of service if Catalyst had won the tender processes. In respect of the fifth cause of action only, Catalyst says it has also suffered loss in commencing this proceeding only on a narrow ‘process contract’ basis due to the plans not being provided until MSD provided discovery on 22 June 2023.
[37] MSD denies liability for the alleged breaches. To the extent a court may find otherwise, it relies on the exclusion and limitation of liability provisions contained in the CROIs, and says Catalyst is estopped from bringing the claim and the remedies it seeks because it did not query or otherwise raise any concerns about the interview process and associated criteria and instructions despite participating in the process at the time, and MSD relied on Catalyst’s conduct in proceeding to evaluate its responses.
Particular discovery — legal principles
[38] A summary of the widely accepted legal principles in relation to applications under r 8.19 of the High Court Rules is set out in Lighter Quay Residents’ Society Inc v Waterfront Properties (2009) Ltd:3
3 Lighter Quay Residents’Society Inc v Waterfront Properties (2009) Ltd [2017] NZHC 818 at [16] (footnotes omitted) (the “four-stage” approach was initially outlined in Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd [2015] NZHC 2760, [2018] NZAR 600 at [14]).
[16] … The relevant principles are:
(a)Existence of the document does not have to be established on the balance of probabilities on a “more likely than not” basis. A lower threshold is required, which may vary given the relevance of the documents and issues of proportionality.
(b)While there is a presumption that affidavits of documents filed are conclusive, an application under r 8.19 is a proper way to circumvent the conclusiveness rule. The party seeking further discovery has to establish that the existing affidavit of documents is incomplete.
(c)Whether a document “should have been discovered” should be determined by reference to the “adverse documents” test in r 8.7, or any stricter test imposed under tailored discovery pursuant to r 8.8.
(d)A four-stage approach is convenient:
(i)Are the documents relevant, and if so how important will they be?
(ii)What are the grounds, and what is the probative valueof those grounds, for the belief that the documents sought exist?
(iii)Is discovery proportionate?
(iv)Weighing and balancing these matters, is an order appropriate?
[39] The first three stages are necessary to establish, but not of themselves sufficient conditions of jurisdiction as they are still subject to the balancing exercise in the fourth stage.4
[40] The documents sought must be described with some specificity.5 The description “accounting and other documents” has previously been held on earlier wording of the rule referring to “documents or a class of documents” to be insufficient.6
[41] Relevance is assessed according to matters in issue identified in the pleadings.7 A party is not required to disclose documents that are no more than background, or
4 Lyttelton Port Company Ltd v Aon New Zealand [2016] NZHC 2996 at [8].
5 Jessica Gorman and others McGechan on Procedure (online ed, Thomson Reuters) at [HR8.19.03].
6 Australia Mutual Provident Society v Architectural Windows Ltd [1986] 2 NZLR 190 (HC) at 201–
202.
7 Robert v Foxton Equities Ltd [2014] NZHC 726, [2015] NZAR 1351 at [8], citing ANZ National Bank Ltd v Tower Insurance Ltd (2009) 15 ANZ Insurance Cases 61–816 (HC) at [18]–[24];
documents relating to matters that are no longer in issue, for example if a matter is common ground.8 The Court does not try the merits of the case before deciding relevance. Instead, it assumes that the case of the party seeking discovery is true.9
[42] To establish belief that documents exist requires the applicant to establish a prima facie indication that the documents concerned are or have been in the party’s control.10
[43] Assessing proportionality involves balancing the time and costs of making the discovery against the potential value of discovery.11 This cost/benefit analysis involves considering the chances of finding relevant documents and their degree of relevance. If documents will only be of marginal relevance, their discovery is more likely to be regarded as disproportionate. Broader considerations such as the amount at issue, the resources of the parties, and delay to the proceedings, are also relevant.12
[44] Also relevant to assessing proportionality is r 8.14 of the High Court Rules, which states that a party must make a reasonable search for documents within the scope of the discovery order. There is no absolute obligation to seek out and discover every arguable document.13 What amounts to a reasonable search depends on the circumstances, including the factors set out in r 8.14(2) as follows:
(a)the nature and complexity of the proceeding; and
(b)the number of documents involved; and
(c)the ease and cost of retrieving a document; and
(d)the significance of any document likely to be found; and
(e)the need for discovery to be proportionate to the subject matter of the proceeding.
Southland Building Society v Barlow Justice Ltd [2013] NZHC 1125 at [12]–[14]; and
New Zealand Rail Ltd v Port Marlborough New Zealand Ltd [1993] 2 NZLR 641 (CA) at 644.
8 RHH Ltd v Anderson (No 2) [2018] NZHC 2032 at [12].
9 At [12].
10 Gorman, above n 5, at [HR8.19.03(2)]; and Lyttelton Port Company Ltd v Aon New Zealand, above n 4, at [13].
11 Southland Building Society v Barlow Justice Ltd , above n 7, at [17], citing Karam v Fairfax
New Zealand Ltd [2012] NZHC 887 at [137]–[142].
12 NSK Ltd v General Equipment Co Ltd [2015] NZHC 1979 at [22]–[23].
13 At [24].
[45] The Court retains an overriding discretion as to whether to make an order under r 8.19.14
Assessment of Catalyst’s requests for particular discovery
[46] I now turn to consider the various categories of documents sought by Catalyst in the application as set out above at [6] and [7].
Category A: locations not searched by MSD
[47] This category seeks “discoverable documents” in the Outlook inboxes and physical files of various MSD staff members.
[48] As a general point, MSD contends that Catalyst’s request for “discoverable documents” lacks specificity. However, this category involves requests for MSD to search the Outlook inboxes and physical files of specific staff members for specific date ranges using specific search terms to identify any relevant documents. MSD has undertaken similar searches as part of its discovery obligations. I do not consider that the requests lack specificity.
[49] MSD has also produced evidence as to the searches that it has already undertaken for relevant documents prior to and after the commencement of this proceeding. These searches included searches of the Lead Category Manager’s Outlook inbox using the following search terms without a date range: “project management”, “architectural services”, “Colin Depree”, “Nigel Shaw”, “architectural design management”, “architectural management”, “architectural services management” and “consultancy services”. MSD says that the Lead Category Manager was responsible for holding all master copies of documents for the relevant procurement process. MSD also says that it searched for, and arranged for a review of, the Lead Category Manager’s physical file created for the purpose of the procurement process and concerns raised by Catalyst.
[50] MSD also searched the Commercial Operation group’s electronic database, including the folders that contained the minutes of Procurement Board meetings for
14 Robert v Foxton Equities Ltd, above n 7, at [8(e)].
the period 1 January 2016 to 31 December 2021. On request of Catalyst and without prejudice to its position that its initial searches were proportionate and reasonable, MSD also searched all the evaluation panellists’ MSD Outlook inboxes, which had been deactivated, for “project management”, “architectural services” and “Catalyst”.
[51] MSD contends that the further searches requested by Catalyst are oppressive as they are disproportionate. MSD says that all key documents have been discovered and further searches are only likely to produce documents of marginal relevance.
[52] The first request relates to Vaughan Crouch, General Manager – Property and Facilities, and requires a search of his Outlook inbox and physical files for the period between 1 November 2018 to 31 December 2020.
[53] With regard to Mr Crouch, MSD says that the initial searches captured relevant documents provided by Mr Crouch. Following this application being made, MSD agreed to a further search of Mr Crouch’s Outlook inbox for the period 1 January 2019 to 31 March 2019. MSD say that this covers the procurement processes which began on 23 January 2019 and ended on 27 February 2019. The search terms were “project management”, “architectural services” and “Catalyst”. Discoverable documents located from these searches were discovered on 24 May 2024. MSD says that no additional key documents were located from the search.
[54] MSD submits that the further search sought by Catalyst in the broader date range is outside the range of issues in dispute on the pleadings. Mr Kinsler, for MSD, submits that any search pre-2019 is unlikely to capture any discoverable documents given that the preparation of the procurement processes is irrelevant to the issues in dispute in the proceeding, and this will be merely background information.
[55] It seems to me that the procurement processes began in late 2018 when the MSD Procurement Board endorsed a proposal to carry out the processes in accordance with the MSD Procurement Policy. The Procurement Policy dated November 2017 has been discovered by MSD as a relevant document. Mr Crouch was senior manager with managerial responsibility for the procurement processes. It seems likely that he was involved in the endorsement process in late 2018 and any documents sent to him
would likely be significant to the process. Catalyst has alleged that MSD breached the process contracts including by failing to disclose its intention to assess responses using the two-stage methodology set out in the plans. This is denied by MSD. There may be documents in the late 2018 period which are relevant to MSD’s intention regarding the assessment methodology. In this regard, I note MSD’s submissions that the procurement plans are not part of the process contracts and not relevant to the allegations of breach of the process contracts.15 However, in the context of an application for particular discovery, the Court will not usually assess proportionality by reference to the merits of the claim. Rather, unless and until a claim is struck out as untenable, a party is entitled to pursue discovery of documents relevant to their claim within the framework for discovery as defined by the pleadings.16
[56] The date range for the requested search goes out to 31 December 2020 in part because Mr Crouch signed the OIA response to Catalyst on 20 March 2020. Catalyst alleges that in doing so, Mr Crouch failed to disclose the plans to Catalyst which is relevant to the fifth cause of action for breach of s 9 of the FTA. MSD contends that it is not disputed that the plans were not provided and therefore any material around the response to the first OIA request is not discoverable, and the search is unlikely to produce documents of any relevance to the issues in dispute. I agree with MSD that in respect of the FTA cause of action it is not necessary to show any intention to mislead or deceive and Catalyst has not made any such allegation against MSD.17 However, given the scope of the first OIA request, Mr Crouch’s Outlook inbox and physical files may contain documents or correspondence relating to the preparation of the response to the OIA request which are relevant to issues in the proceeding.
[57] Mr Crouch was also involved in correspondence with Catalyst in the period 5 November 2020 to 24 December 2020 in relation to the concerns raised about the alleged changes in the evaluation criteria, the interview time, and whether Catalyst’s bids were treated separately. This relates directly to the alleged breaches of the process contracts. Mr Crouch’s Outlook inbox and physical files may contain documents and
15 MSD rely on Pratt Contractors Ltd v Transit New Zealand [2003] UKPC 83, [2005] 2 NZLR 433 at [44]; and Transit New Zealand v Pratt Contractors Ltd [2002] 2 NZLR 313 (CA) at [90]–[92].
16 Xu v Meng [2023] NZHC 2915 at [15]; and Hager v Attorney-General [2014] NZHC 3293 at [29]– [30].
17 Commerce Commission v Viagogo AG [2021] NZHC 1398 at [25].
or correspondence relating to the preparation of the response dated 24 December 2020 which are relevant to issues in the pleadings.
[58] In summary, I consider that there are grounds to believe that a further search of Mr Crouch’s Outlook inbox and physical files will identify documents which are of more than background or marginal relevance, but I consider that the further search should be for more specific date ranges than requested. On this basis, I consider that the number of documents requiring review is likely to be low, and given the potential relevance of the documents, and the resources of MSD, I do not consider that a further search is disproportionate. A further search should not delay the trial, although there may need to be amendment to the pre-trial timetable.
[59] Weighing and balancing the relevant considerations, it is appropriate to make an order for MSD to undertake a further search of Mr Crouch’s Outlook inbox and physical files for the periods 1 November 2018 to 31 December 2018 (the endorsement period); 18 December 2019 to 20 March 2020 (the period of the first OIA request) and 1 November 2020 to 31 December 2020 (the period of the response to Catalyst’s concerns). The physical files should be searched by subject matter. The search terms to be used for the Outlook inbox search are all the terms previously used by MSD in undertaking searches as follows:
“project management”, “architectural services”, “architectural design services”, “architectural design management”, “architectural management”, “architectural services management”, “design services”, “consultancy services”, “Colin Depree”, “Nigel Shaw” and “Catalyst”.
[60] The next request is for searches of the Outlook inboxes and physical files of Judy Heathcoat (Lead Category Manager), Max Fudakowski-Stanley (Project Manager) and Desinee Tsinas (panellist and responsible for evaluation criteria and methodology) for the period 1 November 2018 to 31 December 2018. Catalyst contends that these people were principally responsible within MSD for preparing the plans and CROIs, and are likely to have been involved in putting forward the procurement proposal for endorsement by the Procurement Board in late 2018.
[61] MSD raises the same arguments against further searches of the Outlook inboxes and physical files of these people in late 2018 as raised in relation to
Mr Crouch. However, for the same reasons as set out above at [55] and [58] above, I consider it is appropriate that an order be made requiring a search of the Outlook inboxes and the physical files of Max Fudakowski-Stanley and Desinee Tsinas for the period 1 November 2018 to 31 December 2018. Again, the search of the physical files should be by subject matter and the search terms to be used for searches of the Outlook inboxes are set out at [59]. With regard to Judy Heathcoat, Lead Category Manager, I note that MSD has already undertaken searches of her Outlook inbox, without date ranges, using most of the search terms referred to above, and has also undertaken a search of her physical files. Therefore, the order is limited to a further search of Ms Heathcoat’s Outlook inbox for the date range 1 November 2018 to 31 December 2018 using the additional search terms “architectural design services”, “design services” and “Catalyst”.
[62] The next request is for searches of the Outlook inboxes and physical files of Belinda Sarbutts between 1 November 2018 to 31 March 2019. Ms Sarbutts had administrative responsibility for the procurement processes and is named in the plans as “Administrative Support” for the procurements. Catalyst submits that, on 25 February 2019, Ms Sarbutts indicated in an email that she was responsible for “saving down” documents relevant to the process. Catalyst contends that given Ms Sarbutt’s administrative responsibility she was likely provided with documents that were significant to the procurements.
[63] MSD contend that Ms Sarbutts did not play a role in the evaluation of procurement processes and simply provided administrative support. MSD say again that any searches pre-2019 is merely background information. As all key documents have been discovered, any further search is likely only to produce documents of marginal relevance (if any).
[64] As noted above, there have already been searches of the Outlook inbox and physical files of Judy Heathcoat, Lead Category Manager, without date ranges, using most of the search terms referred to above. I have now ordered a further search of Ms Heathcoat’s Outlook inbox for the period 1 November 2018 to 31 December 2018 using additional search terms. MSD says that the Lead Category Manager was responsible for holding all master copies of documents for the relevant procurement
processes. In the circumstances, given the searches of the Lead Category Manager’s inbox and physical files, I do not consider that there are sufficiently probative grounds for belief that additional relevant documents (beyond background documents or documents of marginal relevance) will be identified as a result of the requested search of Ms Sarbutt’s Outlook inbox and physical files. The email from Ms Sarbutt’s dated 25 February 2019 refers specifically to Procurement Board minutes for the meeting on 21 February 2019 and related papers and it is apparent that MSD has already undertaken searches of the folders in its electronic database that contained the minutes of the Procurement Board meetings, in addition to the searches of the Lead Category Manager’s inbox and files. I consider that the requested search is disproportionate. Weighing and balancing all relevant considerations, I do not consider that it is appropriate for an order to be made for search of Ms Sarbutt’s Outlook inbox and physical files.
[65] The next request is for searches of the Outlook inboxes of members of MSD’s Procurement Board between 1 November 2018 to 31 March 2019. The relevant members are Ranjit Singh, Harry Lotz, Paul Jenkins, Janet Green, Mark Coulston, Danielle Rolls, Charlie Howe, Dave Weaver and Jo Toon.
[66] MSD contend that none of the procurement board members played any role in the evaluation of the procurement processes underlying the issues in dispute. Therefore, the further searches are only likely only to produce irrelevant documents or documents of marginally relevance, if any. Further, only Janet Green, Mark Coulston and Dave Weaver are still employed by MSD, so any further searches of the emails of the other members would be limited to deactivated Outlook accounts.
[67] Catalyst contends that these members of the Procurement Board were involved in the meeting on 21 February 2019. They received reports from the procurement team and took an active role in critiquing the reports. Further, as noted above, the MSD Procurement Board endorsed the proposed procurement on 19 December 2018.
[68] I do not consider that there are sufficiently probative grounds for belief that additional relevant documents (beyond background documents or documents of marginal relevance) will be identified as a result of the requested search. It seems to
me that the relevant documents would have been identified by the searches that have already been undertaken, including the searches of Lead Category Manager’s inbox and files, and the folders of the MSD electronic database which contained the minutes of Procurement Board meetings, or will be identified by the further searches I have ordered above in relation to the period 1 November 2018 to 31 December 2018. The views of the members of the Procurement Board are recorded in the minutes. I consider that the requested search is disproportionate. Weighing and balancing all relevant considerations, I do not consider that it is appropriate for an order to be made for search of the Outlook inboxes of the members of the Procurement Board.
[69] The next request is for a search of the Outlook inbox or physical file relating to Rupert Ablett-Hampson between 1 January 2019 to 19 January 2022. Catalyst submit that Mr Ablett-Hampson was MSD’s Chief Legal Advisor in the relevant period up until an unknown date between 17 September 2021 and 19 January 2022. Catalyst submit he was involved in briefing the barrister in September 2021 to carry out the review of the procurement processes. Catalyst contends that he must therefore have received from other MSD personnel copies of documents (which could not themselves be privileged), for the purpose of providing them to the barrister. Catalyst submits that in the amended statement of defence, MSD has claimed privilege and therefore denied that it provided the plans to the reviewer on or around September 2021. MSD also denies that it engaged in misleading and deceptive conduct by representing to Catalyst on 19 January 2022 and 22 June 2022 that the reviewer had concluded that Catalyst’s concerns were unfounded and that MSD’s processes were fair and transparent and no further action was required. Catalyst submits that in these circumstances, the Court and Catalyst are entitled to know what underlying documents were available to Mr Ablett-Hampson (and specifically whether the plans were available to him), and what underlying documents were then provided to the reviewer.
[70] Catalyst has made essentially the same request in relation to the Outlook inbox and physical files of Hayley Evans for the period 17 September 2021 to 17 November 2022. Catalyst says that Ms Evans was MSD’s Chief Legal Advisor from an unknown date between 17 September 2021 and 19 January 2022 and was involved in continuing to brief the reviewer in carrying out the review.
[71] MSD contends that these searches seek material which is subject to legal communications and litigation privilege, which has not been waived. MSD says that previous searches captured relevant documents of the Chief Legal Advisors. MSD says that the Chief Legal Advisors were not involved in the evaluation of the procurement processes, so any further documents captured by these searches are likely to be irrelevant or of marginal relevance.
[72] It seems to me that the main purpose of this request is to identify documents recording whether the plans were provided to the Chief Legal Advisors, and whether the plans were provided to the reviewer. Any such documents are relevant to issues in the pleadings identified above. There are grounds for the belief that such documents exist as it would be expected that the Chief Legal Advisors would have been provided with key documents (including internal documents) relevant to the procurement processes, such as the procurement plans, and some documents were then provided to the reviewer. I do not consider that a search of the Chief Legal Advisors’ Outlook inboxes and physical files for such documents is disproportionate.
[73] Weighing and balancing the relevant considerations, I consider it is appropriate to make an order that MSD is to undertake searches of the Chief Legal Advisors’ Outlook inboxes and physical files for the period 1 January 2021 to 19 January 2022 (for Mr Ablett-Hampson), and 17 September 2021 to 22 June 2022 (for Ms Evans), to identify any documents recording whether the plans were provided to the Chief Legal Advisors, and whether the plans were then provided to the reviewer. In my view, these date ranges cover the period that the plans may have been provided to the Chief Legal Advisors in connection with the review, and then provided to the reviewer. Mr Ablett-Hampson advised Catalyst that he had “instructions to arrange for an external party to undertake a review” on 9 June 2021. Ms Evans advised Catalyst of the outcome of the review on 19 January 2022 and subsequently provided Catalyst with a summary of the reviewer’s report (dated 29 October 2021) on 22 June 2022. Again, the search of the physical files should be by subject matter and the search terms to be used for searches of the Outlook inboxes are set out at [59].
[74] MSD submits that any documents identified are likely to raise issues of legal communications and/or litigation privilege. The issue of privilege in relation to any relevant documents identified is addressed below.
Category B: documents relating to fifth cause of action (breach of Fair Trading Act 1986)
[75] Under this head, Catalyst initially sought electronic copies of the plans.18 However, Mr Glenie advised during the hearing that Catalyst does not require any determination in relation to further discovery of electronic copies of the plans because MSD says it has discovered all electronic copies of the plans.
[76] Catalyst continues to seek discovery of a document recording metadata for the electronic copies of the plans that have already been discovered, showing where each copy was stored, what actions were taken in respect of it between the date of its creation and the date of discovery (for example, whether the plan was viewed, edited or deleted), and by whom.
[77] Catalyst submits that MSD has denied the allegations in paragraph [37] of the amended statement of claim. Therefore, there are issues as to whether MSD, in connection with the independent review, had the plans in its control, considered the plans, knew that it had not provided the plans, or referred to them or disclosed their existence to Catalyst, and provided the plans to the reviewer. Catalyst submits that whether the plans were in MSD’s control between 19 December 2019 and 22 June 2023 (when the plans were discovered) is in issue in the proceedings.
[78] MSD confirms that for documents held in its electronic document and records management system, Objective, it holds an audit trail which includes viewing, editing and deleting of documents. MSD says that to follow a particular document, a searcher might be able to cross-reference audit trail information in Objective with email metadata from MSD’s Risk and Assurance Forensic Tool. But it may not always be possible for these searches to be run or for the metadata to be found. However, MSD submits that it is a matter of common ground that the plans were not provided to
18 Category B, item 7.
Catalyst until 22 June 2023, and metadata for each electronic copy of the plans has no relevance to any of the issues in dispute apart from whether the plans were provided to the reviewer at paragraph [37] of the amended claim. MSD contends that it is highly unlikely that the Objective audit trail will demonstrate whether the reviewer viewed, edited or deleted plans as the reviewer was not an employee of MSD and the document management system was internal to MSD. MSD submits that the request is an attempt to circumvent its claim to privilege, and it is onerous as it is broadly framed to capture when any person viewed, edited or deleted the plans for a period of approximately three and a half years.
[79] It seems to me that the request for metadata relating to the plans is relevant to the issue in the pleadings as to whether MSD provided the plans to the reviewer. There are grounds for belief that a document recording relevant metadata exists or can be generated. I consider that discovery of metadata for electronic copies of the plans is proportionate if it is confined to the period during which the plans may have been provided to the Chief Legal Advisors in connection with the review and then to the reviewer.
[80] Weighing and balancing the relevant considerations, it is appropriate for an order to be made for discovery of metadata for the electronic copies of the plans between 1 January 2021 and 22 June 2022. This date range covers the period during which the plans may have been provided to the Chief Legal Advisors in connection with the review and then provided to the reviewer. Mr Ablett-Hampson advised Catalyst that he had “instructions to arrange for an external party to undertake a review” on 9 June 2021. Ms Evans advised Catalyst of the outcome of the review on 19 January 2022 and subsequently provided Catalyst with a summary of the reviewer’s report (dated 21 October 2021) on 22 June 2022.
[81] MSD submits that any metadata recording whether the plans were provided to the reviewer will be subject to claims for legal communications and/or litigation privilege. As noted above, privilege in respect of documents relating to the review is addressed below.
Category D: redactions and omissions regarding other respondents to CROIs
[82] Catalyst seeks unredacted copies of specific documents listed in its schedule attached to the amended application for particular discovery.19 The redactions in these documents were made by MSD to remove “irrelevant material”, being material related to MSD’s evaluation of other tenderers. Catalyst also seeks full copies of any documents omitted from discovery on the basis they only contained material which related to MSD’s evaluation of other tenderers.20
[83]There are two issues in relation to these documents.
[84] First, Catalyst contends that there are different versions of some of these redacted documents, for example MSD.001.00151, which have not been discovered. Catalyst submits that all different versions of these documents should be discovered.
[85] I agree that all different versions of these documents should be discovered. To the extent that has not occurred, then an order is made for MSD to discover any other versions of these redacted documents not discovered.
[86] Secondly, Catalyst contends that there have been redactions made to each of the documents listed which obscure comments made by MSD in relation to other participants in the procurement processes, and do not allow Catalyst to assess whether MSD breached its duties by failing to treat Catalyst as it treated other participants. In this regard, Catalyst refers to the following passage from Pratt Contractors Ltd v Transit New Zealand:21
… The duty to act fairly meant that all tenderers had to be treated equally. One tenderer could not be given a higher mark than another if their attributes were the same. But Transit was not obliged to give tenderers the same mark if it honestly thought that their attributes were different. …
[87] MSD submits that it has discovered all overall scores of other tenderers, and all information provided to all tenderers and the timing of that information provided to all tenderers, evidencing whether respondents were treated fairly by MSD. MSD
19 Category D, item 9.
20 Category D, item 10.
21 Pratt Contractors Ltd v Transit New Zealand, above n 15, at [47].
contends that that is the type of information previously held by the courts to be relevant when considering a duty on the party offering the tender to act in good faith to treat tenderers fairly, which requires tenders to be treated equally.22 MSD submits that the detailed evaluations of other tenderers’ responses are redacted as it is not relevant to the issues in the amended claim. MSD submits that, similarly, documents solely evidencing the evaluation of other tenderers’ responses are irrelevant.
[88] Catalyst has alleged breach of the process contracts by failing to evaluate its responses fairly, reasonably, transparently and in good faith, in particular: by failing to give Catalyst due notice or a reasonable time to respond to the purported changes in the evaluation criteria; offering Catalyst only a single interview for both responses; scoring Catalyst identically at the interview for both responses; scoring Catalyst poorly for not bringing its lead architect to the interview (when this had not been clearly communicated as a requirement); and failing to consider Catalyst’s written submissions. MSD denies these allegations.
[89] Catalyst has been provided with evaluation reports showing the scores of all other tenderers for each assessed attribute in responding to the CROIs and at the interviews, and the overall scores of all other tenderers. Catalyst has not alleged unfairness because other tenderers were given higher scores in respect of any particular attributes.
[90] It seems to me that the issues in the pleadings so far as equal treatment of tenderers is concerned are whether all tenderers were given the same notice with regard to the interview criteria and whether there was any unfairness in Catalyst only being given a single interview for both responses. Comments made by MSD in relation to evaluation of other tenderers are not obviously relevant to these issues. Therefore, I do not consider that the request for further discovery under this head is proportionate. Weighing and balancing the relevant considerations, I do not consider it is appropriate for an order to be made for MSD to provide unredacted copies of the
22 MSD refers to Transit New Zealand v Pratt Contractors Ltd [2002] 2 NZLR 313 (CA); Pratt Contractors Ltd v Transit New Zealand, above n 15; Onyx Group Ltd v Auckland City Council (2003) 11 TCLR 40 (HC); and Pratt Contractors Ltd v Palmerston North City Council [1995] 1 NZLR 469 (HC).
relevant documents, or for MSD to provide copies of documents which have not been discovered because they only contain evaluation of other tenderers.
Category E: report
[91] Catalyst seeks a full copy of the independent review report received by MSD on an unknown date prior to 19 January 2022.
[92] MSD has discovered the report but has claimed legal communications and litigation privilege in relation to it. The issue of whether privilege has been waived or should be disallowed in respect of the report is considered below.
Category F: quantum documents
[93] Catalyst seeks documents recording the amounts spent on the services that were the subject of the procurement processes since 2019. It contends that these documents are required in order for it to substantiate its losses with regard to the loss of opportunity. It says that Catalyst’s lost profit depends on the amount that MSD would have spent on architectural services and project management services during the first and second terms.
[94] MSD contends that the amount spent to date on the actual services contracts is not relevant to Catalyst’s claim as the successful tenderers entered into contracts on different terms and conditions and for different prices than those submitted by Catalyst in its tender.
[95] Catalyst submits that it needs to know the amounts spent by MSD under the actual contracts of service for each year following the date the contracts were let in 2019. It submits that its rates and prices were set out in its registrations of interest, but they are not determinative of the profit that Catalyst would have received based on the work in fact ordered by MSD during the course of the contracts. Catalyst contends that in order to quantify its lost profit, it needs to determine revenue it would have received by reference to the revenue in fact received by the successful tenderers. Catalyst contends that its profits were to be derived by earning a margin on the
amounts spent by MSD and therefore, to calculate the loss of profit, it is necessary to know the amount spent.
[96] In Pratt Contractors Ltd v Palmerston North City Council,23 the loss of profits claim for breach of the tender contract was based on a percentage of the tender price which Pratt had tendered. However, the defendant contended that even if Pratt had been awarded the contract it would not have made the profit claimed. The defendant called evidence to establish that the successful tenderer had in fact made a substantial loss on the contract.
[97] It is not possible for me to determine at this stage how Catalyst’s claim for “loss of opportunity to earn profits” should properly be assessed and determined and therefore whether documents recording the amounts spent on the services since 2019 will ultimately be relevant. That is a trial issue which will no doubt be assisted by expert evidence and detailed submissions. However, for the purposes of discovery, Catalyst’s claim for loss is in issue and Catalyst contends that the documents requested are necessary in order to quantify and substantiate its claim.
[98] It is apparent from the affidavit evidence that, in response to OIA requests by Catalyst, MSD has already provided information as to the amounts spent on the project management services and architectural services for the financial years ending 30 June 2019 to 30 June 2023. For discovery purposes, MSD disputes the relevance of this information to Catalyst’s claim. However, Catalyst says that it is entitled to discovery of the source documents verifying the amounts spent.
[99] As indicated, I consider that such documents are relevant for the purposes of discovery, although I emphasise that I am not making any finding as to the ultimate relevance of the documents. There are grounds for belief that such documents exist as MSD must have financial records recording the amounts spent on the relevant contracts. I do not consider that discovery of these documents is disproportionate. MSD is only required to discover documents recording the annual spend on the relevant services since 2019 which information has already been provided in response to OIA requests.
23 Pratt Contractors Ltd v Palmerston North City Council , above n 22, at 487–489.
[100] Weighing and balancing the relevant considerations, I consider it is appropriate to order that MSD discover source documents recording the amounts actually spent on the project management services and the architectural services for the financial years ended 30 June 2019 to 30 June 2023. If documents are available for the financial year ended 30 June 2024, then these documents should also be discovered. MSD has not raised any issues with regard to confidentiality or commercial sensitivity in this regard. If any such issues arise, and these issues cannot be resolved between the parties, then leave is given to seek further directions or orders as appropriate.
Privilege issues
[101] MSD has discovered the independent reviewer’s full report24 but claimed legal communications and litigation privilege. Catalyst challenges the claim to privilege under r 8.25 of the High Court Rules on the basis that privilege has been waived under s 65(2) of the Evidence Act 2006 or that the claim to privilege should be disallowed under s 67 of the Evidence Act.
Waiver of privilege
[102] Catalyst recognised that the review involved MSD taking external legal advice. On 17 September 2021, Catalyst’s lawyers emailed MSD stating “Catalyst has no objection to MSD taking legal advice from [the reviewer], and keeping her advice privileged.”
[103] However, Catalyst contends that MSD has subsequently waived privilege in the review report under s 65(2) of the Evidence Act which provides:
65 Waiver
(1)A person who has a privilege conferred by any of sections 54 to 60 and 64 may waive that privilege either expressly or impliedly.
(2)A person who has a privilege waives the privilege if that person, or anyone with the authority of that person, voluntarily produces or discloses, or consents to the production or disclosure of, any
24 See Carter v Coroner’s Court at Wellington [2015] NZHC 1467, [2016] 2 NZLR 133 at [29]: documents that contain legal advice in relation to the controversy between the parties are sufficiently relevant to require such advice to be discovered, not because the advice would tend to prove anything of consequence in the proceeding but because the advice is relevant in the wider common usage sense.
significant part of the privileged communication, information, opinion, or document in circumstances that are inconsistent with a claim of confidentiality.
[104] Catalyst contends that the waiver occurred on two occasions in 2022. On the first occasion, on 19 January 2022, the Chief Legal Advisor stated:
As you are aware, as a result of your claims, MSD engaged [the reviewer], Barrister, to undertake an independent review of its procurement processes. We have now received and considered [the reviewer’s] final report and remain satisfied that your concerns are unfounded and that no further action by the Ministry is required.
[105] Subsequently on 22 June 2022, the Chief Legal Advisor wrote to Catalyst stating:
In order to assist us both in bringing this matter to a pragmatic resolution, the Ministry has reconsidered your request and we have decided to provide you with the attached summary of [the reviewer’s] report.
In providing this report to you, we need to make it clear that MSD does not consider that the contents of the summary report are privileged. By providing you this summary, MSD is not waiving privilege in [the reviewer’s] full report (and nor could it, as a waiver of Crown advice privilege would require the consent of the Attorney General).
As you will see, the summary report concludes that each of Catalyst’s concerns are unsubstantiated and that MSD’s processes were fair and transparent. The Ministry considers the summary report adequately addresses any public interest factors which may favour release of [the reviewer’s] full report.
[106] My consideration of the waiver issue is focussed on the release of the summary of the full report.
[107] The first issue is whether the legal advice and litigation privilege in the report can be waived by an MSD employee for the purposes of s 65(2). There is conflicting authority in the High Court on this issue.25 In my view, the preferred approach is as set out by Williams J in Carter v Coroner’s Court at Wellington. Justice Williams held that:26
25 Bain v Minister of Justice [2013] NZHC 2123, [2014] NZAR 892 at [123]–[124] and [136]–[137]; and Carter v Coroner’s Court at Wellington, above n 24, at [64] and [68].
26 Carter v Coroner’s Court at Wellington, above n 24, at [64] and [68]–[69]. See also Matthew Downs (ed) Cross on Evidence (online ed, Thomson Reuters) at [EVA65.3].
[64] I find myself unable to agree with the conclusion that the Attorney- General is the only officer who can waive privilege asserted by the Crown, and must do so personally. To the extent that finding relies on the Cabinet Manual and the Cabinet Directions, I do not consider them to be legitimate sources of law, although they both contain commentaries on relevant legal doctrine. …
…
[68] I was directed to no authority either here or elsewhere in the Commonwealth other than Bain (with its reliance on the Cabinet Manual and the Cabinet Directions) as suggesting that only the Senior Law Officer of the Crown is able to waive Crown legal advice privilege. Against that are the plain terms of s 65(2) which allow waiver to be by “anyone with an authority” of the privilege holder. It seems to me that whether authority for that purpose exists in any particular situation will, as always, be a matter of assessing all of the relevant circumstances. The fact that the privilege is claimed by the corporate Crown, as it were, will be relevant, but not determinative.
[69] There is certainly no justification for taking the Crown outside the rules in s 65(2) in this respect. Indeed, given the Crown’s widespread litigation activity, the effect of such an exception would be to undermine the policy of s 65(2). As s 3 provides, the Evidence Act binds the Crown too.
[108] In Carter, the relevant person was the Detective Superintendent who was in charge of the investigation. The Court held that, because he was a senior police officer, the Detective Superintendent must be taken to have been invested with all powers necessary to resolve the investigation, and it must therefore be implied in his rank, function and duties in the circumstances of the case that he had the authority necessary to waive privilege.
50 Icepak Group Ltd v QBE Insurance (International) Ltd [2013] NZHC 3511 at [45].
51 At [46] (emphasis omitted), quoting BBGP Managing General Partner Ltd v Babcock & Brown Global Partners [2011] 2 All ER 297 (ChD) at [62], endorsed in Rollex Group (2010) Ltd v Chaffers Group Ltd, above n 43, at [41].
regard to the plans and the review. Catalyst’s allegations of misleading and deceptive conduct include allegations that MSD “did not honestly and could not reasonably have believed” what it represented to Catalyst about the outcome of the review.
Result
[138] I make orders for MSD to undertake further searches and provide further discovery as set out at paragraphs [59], [61], [73], [80], [85] and [100] above.
[139]Within 20 working days of the date of this judgment, MSD is to:
(a)file an affidavit of documents:
(i)stating the outcome of the searches in paragraphs [59], [61] and [73]; and
(ii)listing relevant documents identified by the searches and the documents required to be discovered under paragraphs [80],
[85] and [100] and stating, if they have been but are no longer in MSD’s control, its best knowledge and belief as to when the documents ceased to be in its control and who now has control of them; and
(iii)serve that affidavit on Catalyst; and
(b)if the documents are within MSD’s control, make those documents available to Catalyst for inspection in accordance with r 8.27 of the High Court Rules.
[140] The privilege claimed by MSD for the full report prepared by the independent reviewer for MSD dated 29 October 2021 is set aside under r 8.25(3)(a) of the High Court Rules on the basis of waiver under s 65(2) of the Evidence Act. The report is to be made available to Catalyst for inspection in accordance with r 8.27 of the High Court Rules within five working days of the date of this judgment.
[141] Any privilege claimed by MSD for relevant documents identified by the further search required by paragraph [73] above, and in respect of any relevant metadata discovered pursuant to the order in paragraph [80] above, is set aside under r 8.25(3)(a) of the High Court Rules on the basis of limited collateral waiver as set out in paragraph
[126] above.
[142]With regard to costs, my preliminary views are that:
(a)Catalyst has been successful overall and is therefore entitled to costs on a 2B basis;
(b)Catalyst is not entitled to increased or indemnity costs;52 and
(c)scale costs that would otherwise be awarded should be reduced taking into account r 14.7(d) of the High Court Rules.
[143] The parties should endeavour to agree costs based on my preliminary views. However, if costs cannot be agreed then the parties may file memoranda (not exceeding three pages — excluding costs schedules) and costs will be determined on the papers.
[144] The proceeding is to be listed in the Associate Judge’s Chambers List for a case management conference on 8 October 2024 at 9.00 am. The purpose of the conference is to monitor progress and to make any amendments to the pre-trial timetable that may be required as result of the discovery orders made above. The parties are to file a joint memorandum or, if necessary, separate memoranda at least two working days in advance of the conference seeking appropriate directions.
Associate Judge Skelton
Solicitors:
K3 Legal Ltd, Auckland for Plaintiff Meredith Connell, Wellington for Defendant
52 Lepionka & Co Investments Ltd v Gibson Sheat [2023] NZHC 2745 at [3] and [7].
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