Everest Serviced Apartments Ltd v Body Corporate 511909
[2021] NZHC 1725
•9 July 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-1191
[2021] NZHC 1725
BETWEEN EVEREST SERVICED APARTMENTS LIMITED
Plaintiff
AND
BODY CORPORATE 511909
First Defendant
STRATA TITLE ADMINISTRATION LIMITED
Second Defendant
Hearing: 24 May 2021 Appearances:
MJF Taylor and LH Mau for the Plaintiff E St John for the First Defendant
S Connolly for the Second Defendant
Judgment:
9 July 2021
Reissued:
19 July 2021
RE-ISSUED JUDGMENT OF ASSOCIATE JUDGE SUSSOCK
This re-issued judgment was delivered by me on 19 July 2021 at 12.30pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors/Counsel:
Russell McVeagh, Auckland Duncan Cotterill, Auckland
E St John, Barrister, Auckland
EVEREST SERVICED APARTMENTS LTD v BODY CORPORATE 511909 [2021] NZHC 1725
Introduction
[1] This is an application for further and better discovery orders by the plaintiff against both defendants in this proceeding.
[2] The proceeding was originally due to be heard on 15 March 2021 but was adjourned on the day as counsel for the second defendant was unable to attend.
[3] Since the adjournment of the hearing, there has been further correspondence between the parties and the issues have narrowed to the following:
(a)Have the defendants provided sufficient particulars of the searches undertaken?
(b)What is the scope of discovery required by category 4 in the tailored discovery categories?
(c)Are the defendants required to obtain documents held by former committee members or former employees?
[4] During the course of the hearing it became clear that it would be difficult to make orders in respect of category 4 in the absence of further evidence from the parties as to the number of documents that fall within category 4. I answer the question as to the scope of category 4 but make orders below allowing further submissions to be filed if matters cannot be agreed.
[5] As discussed at the hearing, the best outcome would be for the parties to agree on the steps necessary to comply with the discovery obligations for category 4. This will require discussion and further investigation of the appropriate search terms and the numbers of documents that will be caught by those terms. This is in line with the obligation to cooperate to ensure that discovery is proportionate and facilitated by agreement on practical arrangements as required by r 8.2 of the High Court Rules 2016.
Background
[6] Everest operated a hotel business in the unit title development, Park Residences in the Auckland CBD. Park Residences is on the corner of Albert and Swanson Streets and contains over 200 residential units. It was completed and occupied from 2018. Everest’s business operation involved leasing approximately 50 units from various unit owners and Park Residences.
[7] Body Corporate 511909 (“Body Corporate”) is the body corporate for the residential parts of Park Residences.
[8] Strata Title Administration Ltd (“Strata”) is engaged by the Body Corporate to undertake various management duties for the Body Corporate.
[9] Everest claims that the Body Corporate and Strata decided that they wanted Everest to leave Park Residences, and to that end pursued a malicious and unlawful campaign which resulted in the apartment owners declining to renew their leases. Everest alleges that this has meant that Everest had to close its business which it did on or about 31 March 2019.
[10]Everest commenced these proceedings on 20 June 2019.
[11] On 20 May 2020, Gault J dismissed Strata’s strike-out application with costs. The plaintiff was ordered to file a further amended statement of claim and Strata an amended defence to follow.1
[12]No trial date has yet been set.
[13] The parties agreed in June 2020 that tailored discovery was appropriate setting out the agreed categories in a joint memorandum dated 18 June 2020. Associate Judge Andrew made a discovery order on that basis on the same date.
1 Everest Serviced Apartments Ltd v Body Corporate 511909 [2020] NZHC 1091.
[14] The tailored discovery order required the discovery of documents “created, modified, sent or communicated” between 1 February 2018 and 30 June 2019. Ten categories of documents were set out, including:
(a)those under category 4 being “Documents relating to the proposed or actual actions of the Body Corporate and/or Strata, insofar as they relate to Everest or the unit owners from whom Everest took leases being units [all units with whom Everest had leases] (including, without limitation, all communications between the Body Corporate and/or Strata and/or PRML2 on the one hand, and Everest and/or the unit owners (including the owners’ agents) from whom it took leases on the other, the Body Corporate Rules, Body Corporate Minutes and Annual General Meeting Minutes)”;
(b)those under categories 5 to 9, being more specific categories of documents relating to particular acts or communications.
[15] By timetabling directions made on 18 June 2020,3 and amended on 6 October 20204 the parties were to:
(a)serve affidavits of documents with electronic copies of open documents by 24 July 2020;
(b)complete inspection by 14 August 2020; and
(c)file and serve any interlocutory application arising out of discovery by 4 November 2020;
[16] Further, a case management conference was to be held on the first available date after 24 November 2020.
2 Park Residences Management Limited, an entity engaged by the Body Corporate as a building manager.
3 Minute of Associate Judge Andrew dated 18 June 2020.
4 Minute of Associate Judge Gardiner dated 6 October 2020.
[17] Everest filed its affidavit of documents on 24 July 2020, the Body Corporate on 3 August 2020 and Strata on 8 August 2020.
[18] The Body Corporate’s affidavit records that the vast majority of the Body Corporate’s documents are managed and stored by Strata, the Body Corporate manager, and that to avoid duplication Strata will discover those documents.
[19] Strata’s affidavit stated that it was discovering documents from its cloud-based server, maintained via the Rockend software application but that Strata maintained a separate cloud-based storage system which Strata was not able to access at that time. The affidavit recorded that once access issues were resolved, a further supplementary affidavit would be sworn. Strata subsequently filed a supplementary affidavit, sworn on 11 September 2020, discovering documents from Strata’s other cloud-based storage system.
[20] On 15 October 2020, Everest’s solicitors wrote to both the Body Corporate and Strata separately identifying deficiencies with the defendants’ discovery. The deficiencies included a lack of information in the affidavits as to the steps that had been taken to comply with discovery obligations and gaps in the discovery provided. The letters asked for further affidavits to be filed remedying these issues.
[21] The defendants’ lawyers did not respond substantively to this correspondence or provide the further discovery requested and so on 3 November 2020 Everest filed this application. Everest set out in appendices to the application the categories of documents it was seeking from each of the Body Corporate and Strata.
[22] A further supplementary affidavit of documents was filed on behalf of Strata on 28 April 2021 following the location of previously undiscovered documents by Stata’s solicitors. The affidavit refers to keyword searches being run across the files but records that this “is unlikely to have been as efficient as simply retrieving complete copies of the files”. The affidavit does not refer to the key words used.
[23] An updating affidavit was filed on behalf of Everest just prior to the rescheduled hearing annexing correspondence with the Body Corporate’s solicitor indicating that the Body Corporate had agreed to provide the documents requested by Everest on a pragmatic basis. No further affidavit had been sworn on behalf of the Body Corporate by the time of the hearing, however, and counsel for the Body Corporate opposed the orders sought at the hearing.
[24] The categories of documents sought by Everest have been further updated since the adjournment of the original hearing, with those now sought set out in Schedules 1 and 2 to this judgment, Schedule 1 relating to the Body Corporate and Schedule 2 to Strata.
[25] Everest’s application is brought on the basis that the documents sought fall within the original tailored discovery orders, relying on r 8.19. The application further relies on r 8.17, which provides for variations to discovery orders, to the extent that discovery of the documents listed in the appendices requires a variation. In addition, Everest seeks orders that the defendants set out proper particulars of the searches performed for the purposes of complying with their discovery obligations as Everest says the defendants have not complied with r 8.15(2)(c).
Legal principles regarding discovery
[26] Rules 8.5 and 8.6 provide that a judge must make either a standard or tailored discovery order at the first case management conference unless the proceedings can be justly disposed of without discovery or there is good reason to make the order later.
[27] Rule 8.7 defines standard discovery and r 8.8 tailored discovery (as ordered here), which “must be ordered when the interests of justice require an order involving more or less discovery than standard discovery.”
[28] Rule 8.9(f) provides a presumption that tailored discovery is in the interests of justice where the parties agree on tailored discovery, as the parties did here.
[29] Rule 8.12 then sets out the choice of discovery orders that may be made and the details, providing:
8.12 Orders that may be made
(1)At the case management conference the Judge may, under rule 8.5, make—
(a) an order dispensing with discovery; or
(b)an order for standard discovery; or
(c)an order for tailored discovery, setting out categories (by, for example, subject headings and date periods) or another method of classification by which documents are to be identified.
(2)The discovery order may—
(a)incorporate the listing and exchange protocol set out in Part 2 of Schedule 9; or
(b)vary that protocol; or
(c) contain other obligations that are considered appropriate.
(3)The discovery order may include specific directions as to the manner of discovery.
…
[30] Rule 8.13 requires solicitors to take reasonable care to ensure that a party understands its discovery obligations and that it fulfils those obligations.
[31] Rule 8.14 is important as it requires parties to make a reasonable search for documents within the scope of a discovery order. What is reasonable depends on the circumstances, with the rule providing that considerations will include the:
(a)nature and complexity of the proceeding;
(b)number of documents involved;
(c)ease and cost of retrieving them;
(d)significance of any document likely to be found; and
(e)need for proportionality.
[32] Rule 8.15 requires each party to file and serve an affidavit of documents and sets out in r 8.15(2) the details the affidavit must include as follows:
8.15 Affidavit of documents
(1)Each party must file and serve an affidavit of documents that complies with this rule, subject to any modifications or directions contained in a discovery order.
(2)In the affidavit of documents, the party must—
(a)refer to the discovery order under which the affidavit is made; and
(b)state that the party understands the party’s obligations under the order; and
(c)give particulars of the steps taken to fulfil those obligations; and
(d)state the categories or classes of documents that have not been searched, and the reason or reasons for not searching them; and
(e)list or otherwise identify the documents required to be discovered under the order in a schedule that complies with rule 8.16 and Part 2 of Schedule 9; and
(f)state any restrictions proposed to protect the claimed confidentiality of any document.
(3)The affidavit may be in form G 37.
(4)Each party must file and serve the affidavit of documents within such time as the court directs or, if no direction is made, within 20 working days after the date on which the discovery order is made.
[33] Rule 8.16 then sets out the documents that must be listed or otherwise identified in the schedule of documents appended to the affidavit. These include all documents in the control of the parties, whether privileged or not, documents that are no longer in the control of the parties and who now has them and documents that have not been in a party’s control but which would be discoverable if they had been.
[34] Rule 8.17 allows a party to apply for a variation to a discovery order where compliance or attempted compliance has revealed a need for variation or where there has been a change in circumstances justifying reconsideration.
[35] Finally, r 8.18 confirms that the party’s discovery obligations are continuing. Importantly, r 18(2) expressly requires a party to discover any documents that a party becomes aware of in the course of complying with a tailored discovery order, that although not required to be discovered under the order:
(a)adversely affect that party’s own case;
(b)adversely affect another party’s case; or
(c)support another party’s case.
Have the defendants provided sufficient particulars of the searches undertaken?
[36] Rule 8.15(2)(c) requires that the affidavit of documents gives particulars of the steps taken by a party to fulfil its discovery obligations.
[37] It was submitted on behalf of the defendants that they may not be required to comply with r 8.15 either because tailored discovery was ordered or because the discovery order in this case may have modified the requirement to comply with this rule.
[38] It is clear from the discussion of the discovery rules above that r 8.15 applies both where standard and tailored discovery is ordered. Rule 8.15 is in the midst of other discovery rules, 8.12 to 8.18, that apply generally to both standard and tailored discovery. All of these rules simply refer to “discovery orders” rather than a “standard discovery order” or “tailored discovery order” as they would need to if they only applied to one type of discovery.
[39] Considering the particular discovery order made in this case, Associate Judge Andrew directed in his 18 June Minute that:
The parties are to provide tailored discovery in terms of Schedule A to the joint memorandum of 18 June 2020. The listing and exchange protocol set out in Schedule 2 of Part 9 of the High Court Rules is to apply subject to the changes set out in Schedule B to the memorandum of 18 June 2020.
[40] The modifications referred to in the second part of the order above only modify the listing of the documents and not the matters required to be set out in the affidavit itself by r 8.15(2).
[41] There is no question therefore that r 15(2)(c) must be complied with in this case and so the steps taken to comply with discovery obligations must be set out.
[42] Discovery obligations include making a reasonable search for documents within the scope of the discovery order.5 Rule 8.14(2) explains that what amounts to a reasonable search depends on the circumstances.
[43] Furthermore, cl 3 of pt 1 of the Discovery Checklist and the Listing and Exchange Protocol6 requires the parties, where tailored discovery is appropriate, not only to agree the categories7 but also to seek agreement on the methods and strategies for locating documents.8 The language of the clause is mandatory:
3(2) The parties must—
…
(ii)methods and strategies for locating documents: seek agreement on what methods and strategies are appropriate to conduct a reasonable and proportionate search for the documents as identified in paragraph (a), including (but not limited to) the following:
(A)appropriate keyword searches; and
(B)other automated searches and techniques for culling documents (including concept searching, clustering technology, document prioritisation technology, email threading, and any other new tool or technique); and
(C)a method to be used to identify duplicate documents; and
(D)whether specialist assistance is required to locate documents efficiently and accurately;
…
[44] Clause 3(2) therefore requires the parties to endeavour to agree a proposed discovery order by agreeing the categories and agreeing the methods and strategies. It appears that in this case, although the parties agreed the categories, the second part of this exercise, agreeing the methods and strategies for locating the documents, was not done.
[45] The steps that the Body Corporate took to comply with its discovery obligations are then only set out very generally in its affidavit of documents, with Mr Pathak deposing on behalf of the Body Corporate as follows:
5 High Court Rules 2016, r 8.14.
6 Schedule 9.
7 Schedule 9, cl 3(2)(a)(i).
8 Schedule 9, cl 3(2)(a)(ii).
Obligations
4.To enable the First Defendant to comply with the discovery order, the Body Corporate has:
4.1Contacted members of the Body Corporate Committee and requested they undertake reasonable searches of any electronic databases and communication portals they have and extract relevant documents they hold;
4.2Conducted searches of any hard copy documents that they hold; and
4.3Instructed Counsel to review all documents’ relevance to the proceeding.
[46] Mr Pathak’s affidavit does go on to say that the vast majority of the Body Corporate’s documents are managed and stored by Strata, the Body Corporate manager, and that to avoid duplication Strata will discover those documents.
[47]In Strata’s affidavit of documents, Mr Wilson deposes:
5.In order to fulfil those obligations, I have diligently searched for all documents required to be discovered under the discovery order, and I have also taken the following particular steps:
5.1I have searched Strata’s cloud-based server, where it stores documents in respect of Body Corporate 511909/Park Residences, as well as the head body corporate – Body Corporate 511899, maintained via the Rockend software application;
5.2I have searched Strata’s email archive, which was maintained on a hard drive at Strata’s Auckland premises until December 2019;
5.3I have enlisted assistance to search and provide all documents to Strata’s solicitors.
6.For clarity I note that Strata does not retain any relevant physical documents for the Park Residences building.
[48] As referred to above, Strata’s affidavit then refers to the further documents held in cloud-based storage that Strata was having difficulties accessing and said a further affidavit would be filed once the issues were resolved as referred to above.
[49] Strata’s supplementary affidavit sworn on 11 September 2020 did not go into any further detail as to the steps taken, simply recording that the documents listed in that affidavit had been retrieved from cloud-based storage maintained by Strata.
[50] Strata then filed a further supplementary affidavit following the discovery of a set of documents that had not been included in the discovery exercise. As referred to above, the further supplementary affidavit refers to keyword searches being run across the files but does not refer to the key words used.
[51] In the affidavit filed in support of the plaintiff’s application, Ms Robertson annexes correspondence between lawyers for the plaintiff and for the defendants. The plaintiff’s lawyers wrote on several occasions to the defendants’ lawyers setting out the documents that Everest considered were missing and seeking explanations. However, other than a holding response from the second defendant’s lawyers, there appears to have been no response prior to the application for further and better discovery being filed.
[52] Strata’s lawyers did respond following the filing of the application, essentially saying that all documents had been discovered. The response recorded that Strata did not issue any “formal communications with the Body Corporate committee members or Park Residences Management Limited via WeChat, nor by text message”. It went on to say that there was some correspondence via WeChat with Chinese speaking unit owners but that the only Chinese speaking employee that worked on Park Residences at the time, Ms Danli Ge, was no longer employed by Strata.
[53] Everest pleads five causes of action in its current statement of claim. These include causing loss by unlawful means, conspiracy by unlawful means, conspiracy to injure and injurious falsehood, and require intention or agreement (or both) to be proved. Although Everest has included some particulars of these allegations in the pleading, it relies on discovery to add further particulars (as referred to in the statement of claim).
[54]Counsel for Everest submitted:
Such intentions [to cause loss to Everest] may not have been openly or frequently expressed. They are likely to have been reserved for exchanges believed to have been informal or private. They are therefore most likely to be found in communications (whether by way of exchange of email or message, including text messages and other platforms such as WeChat) between the Body Corporate Committee members.
[55] Counsel for Strata suggested that submission is problematic for Everest, as apparently confirming that Strata does not think that it will find what it is looking for in any of the other categories of discovery. In both of the defendants’ submission, this suggests a fishing expedition.
[56] The classic definition of a fishing expedition is from AMP Society v Architectural Windows Ltd:9
… an applicant is fishing when he seeks to obtain information or documents by interrogatories or discovery in order to discover a cause of action different from that pleaded or in order to discover circumstances which may or may not support a baseless or speculative cause of action.
[57] The documents that Everest is seeking to obtain are documents relevant to its currently pleaded causes of action. Everest’s pleading has survived a strike out application with Gault J holding that the causes of action are not so clearly untenable that they cannot possibly succeed.10 The causes of actions cannot therefore be characterised as baseless or speculative at this stage.
[58] Furthermore, Gault J did not rule out that it may be appropriate in some cases for a pleading to refer to further particulars to be provided after discovery. Everest refers to such a possibility in its second amended statement of claim and it is documents that assist with those further particulars that Everest is seeking on discovery. That cannot be described as a fishing expedition.
9 AMP Society v Architectural Windows Ltd [1986] 2 NZLR 190 (HC) at 196.
10 Everest Serviced Apartments Ltd v Body Corporate 511909 above n 1, at [21] and [25]-[27].
[59] Given the causes of action pleaded and the tailored discovery categories agreed it would be expected that the Body Corporate and Strata would discover significantly more documents than Everest. Counsel for Everest indicated at the hearing, however, that Everest had discovered approximately 1107 documents, while the Body Corporate and Strata had discovered 449 and 417 respectively. This is surprising given the discovery categories.
[60] Furthermore, counsel for Everest submits that the Body Corporate has not discovered a single email, text or other communication between the Body Corporate committee members over the relevant 17 month period. Everest acknowledges that a possible explanation is that there is no such correspondence but until the practical steps undertaken have been particularised, Everest submits it is hard to accept that this is the case.
[61] The Court of Appeal commented on r 8.15(2)(c) in James Hardie New Zealand Ltd v White11:
Nor does r 8.15(2)(c) assist the claimants. That limb of r 8.15 is concerned with the document location process. The document location process needs to be described in sufficient detail that the party receiving discovery is assured that the categories specified in the tailored discovery order have been applied, and the methods and strategies specified in that order have been followed. If insufficient details of these matters is provided in the affidavit of documents, the deponent can be required to file a further affidavit providing more detail about the document location process and verifying that the process set out in the court’s order has been followed.
[62]In Ballantyne Trustees Ltd v HFK Ltd Associate Judge Paulsen commented:12
Broadly, in a case of this size and complexity it would be expected that there would be evidence on behalf of all parties of the following matters:
(a)the information technology (IT) assistance (if any) obtained to undertake the discovery process;
(b)the steps taken to identify individuals/entities likely to ever have relevant documents in their control or to know where they were likely located;
(c)the enquiries of such individuals/entities;
11 James Hardie New Zealand Ltd v White [2020] NZCA 142 at [76].
12 Ballantyne Trustees Ltd v HFK Ltd [2021] NZHC 388 at [34].
(d)the sources of documents identified as containing relevant documents, such as paper files, electronic files, databases and communication devices; and
(e)the steps taken to locate relevant documents within those sources including, in the case of electronic documents, appropriate keyword searches and other automated searches techniques.
[63] The claim in Ballantyne was for a significantly greater sum than in these proceedings, being for approximately $23.5 million compared to the present $2.8 million. However, the cost of setting out the steps is not significant and will fulfil the purpose of r 15(2)(c) as described by the Court of Appeal in James Hardie discussed above.
[64] Once those steps have been described, if Everest still does not consider that the defendants’ discovery is sufficient, then further discussions can be had between counsel with the potential for a further application if necessary. The steps taken must be described with sufficient particularity in the first place, however, to allow Everest to make that assessment.
[65] Further support for this approach is found in Pyne Gould Corp Ltd v Bath Street Capital Ltd.13 In that case, like Ballantyne, the plaintiff was claiming significantly more than in these proceedings, but the principles still apply. Katz J confirmed that what was reasonable was context specific but required details of the steps taken to be clearly set out. There, like here, the methods and strategies for locating documents was not agreed by the parties in advance as required by cl 3 of pt 1 of sch 9, leading to similar issues as have arisen in this case.
[66] From the above, there is no question that where the parties have set out in their affidavit of documents that there is a pool of documents in respect of which they have conducted searches for documents, that they should set out what the key words used for the searches are.
13 Pyne Gould Corp Ltd v Bath Street Capital Ltd [2020] NZHC 1247.
[67] Currently, the steps that the defendants have undertaken are set out in various affidavits and correspondence. The orders made at the end of the judgment require further affidavits to be filed on behalf of the defendants setting out the steps in more detail and in one place, so that Everest is in a position to assess whether the defendants’ discovery obligations have been complied with.
What is the scope of discovery required by category 4 in the tailored discovery categories?
[68] In Pyne Gould14 the question of whether the parties are obliged to discover all documents within the discovered categories is considered. Katz J reviews the authorities, noted as relatively sparse, and concludes that once the categories are agreed, unless the category expressly includes a test for relevance, the parties are obliged to discover all documents in that category. Her Honour held:15
The overall scheme of the rules envisage that parties will (and should) turn their minds to issues of relevance at the time the relevant categories are negotiated. The rules do not appear to envisage a secondary relevance filter being applied to agreed categories. Ideally, the categories should be carefully formulated to capture only documents the parties agree are relevant (albeit it is open to the parties to take a broader view of relevance than they would for standard discovery). The cost and efficiency gains associated with tailored discovery may be lost if this is not done and significant disputes about relevance arise later, as has occurred in this case.
[69] Category 4 of the tailored discovery order is drafted broadly, covering all documents (as defined in r 1.3) within a 17 month period which relate to Park Residences business. Everest says that Strata has misunderstood Everest’s position to be that the category covers “almost any document generated by Strata”. Everest says that is not correct, the category is bounded in time and in relation to Park Residences business. Furthermore, it only includes documents relating to Everest or the units leased by Everest as listed in category 4 and not, for example, documents that only relate to specific units not on the list. The example given by the plaintiff of a document that would not be included in the category is a letter to a unit owner that does not lease to Everest regarding arrears in Body Corporate levies.
14 Pyne Gould Corp Ltd v Bath Street Capital Ltd, above n 13.
15 At [43].
[70] Categories 5 to 9 are in fact subsets of category 4 but Everest says this was just to ensure that the relevant documents were discovered.
[71] It appears from the correspondence between counsel that Strata, at least, has been applying a relevance test once a document is located that falls within the category as happened in Pyne Gould. This does not comply with the discovery obligations for the reasons set out above.
[72] Furthermore, in deciding relevance for discovery the case of the party seeking discovery is assumed to be true.
[73] And nor should the discovery by Strata only include documents issued formally by Strata as the correspondence from Strata’s lawyers referred to above at
[52] suggests. The tailored discovery order defines “documents” by the definition in r
1.3 of the High Court Rules which is extremely broad:
Document means—
(a) any material, whether or not it is signed or otherwise authenticated, that bears symbols (including words and figures), images, or sounds, or from which such symbols, images, or sounds can be derived, and includes –
(i)a label, marking, or other writing that identifies or describes a thing of which it forms part, or to which it is attached;
(ii)a book, map, plan, graph, or drawing;
(iii)a photograph, film, or negative; and
(b) information electronically recorded or stored, and information derived from that information.
[74] As referred to above, there is no question that any messages on WeChat which fall within the tailored discovery categories are required to be discovered by the Body Corporate and Strata and for the steps taken by the defendants to acquire those documents to be set out in the affidavits of documents filed.
[75] Counsel for the second defendant submitted that the use of the term “formal communications” in its affidavit of documents merely reflects Strata’s disinclination to conduct its business on internet chat platforms and that Everest’s focus on the use of this term is pedantic and its interpretation wrong. In the absence of a clear
explanation of the steps that Strata has undertaken to comply with its discovery obligations, however, it is not clear whether internet chat platforms and personal phones have been searched for relevant documents. This is exactly why it is necessary for those steps to be clearly set out.
[76]In Pyne Gould Katz J held in relation to “lost” documents:16
If electronic (or other) documents have been “lost” due to the passage of time, an explanation should be provided for this. If documents are said to be no longer recoverable the relevant party must explain why they are not recoverable and what steps have been taken to recover them.
(footnote omitted)
[77] This would apply equally to documents that have not been retained and as expressly required by r 8.16(1)(d). The defendants’ affidavits explain this at a high level in respect of the formal retention of documents but it should be set out by individual committee members or employees in relation to their emails, texts and WeChat messages, which are all “documents” as defined in r 1.3 of the High Court Rules and referred to in the tailored discovery categories agreed and then ordered.
[78] Where ordinarily the Court would be required to go through the four step test in Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd17 to determine whether further discovery should be ordered, here it is clear on the face of the documents filed that the defendants have not complied with their original discovery obligations. As counsel for the plaintiff submitted, the plaintiff should not be required to work out from the many documents filed and letters written what the position is. The affidavit of documents should set out in one place a sufficiently detailed explanation of the steps that have been undertaken in fulfilling discovery obligations.
[79] The defendants resisted the orders in relation to category 4 on the basis of proportionality but they did not file evidence of the number of documents that would be captured by category 4, or by any combination of search terms, except as a rough estimate.
16 Pyne Gould Corp Ltd v Bath Street Capital Ltd, above n 13, at [31].
17 Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd [2015] NZHC 2760, [2018] NZAR 600 at [14].
[80] Moreover, the tailored discovery categories were agreed and have been ordered so proportionality is strictly not a factor. In an effort to ensure that the orders made below are practical, however, the parties are required to endeavour to agree on the methods and strategies appropriate to capture the relevant documents to ensure the steps necessary are reasonable.
[81] The defendants further submitted that the plaintiff was holding the defendants to a standard that it had not complied with itself. The nature of the claim brought by the plaintiff suggests that less formal documents may be relevant to the defendants’ discovery but not the plaintiffs. As the cases say, context is everything and it may be that what is appropriate for the defendants is not required from the plaintiff.
[82] Furthermore, no application had been filed by the defendants. Counsel for the second defendant did attempt to make an oral application but it is not appropriate to grant leave for or to determine such an application in the absence of sufficient notice to the plaintiff. If it is necessary for the steps taken by the plaintiff to be set out in more detail in its affidavit of documents (and it is not clear that it is at this stage), I would hope that agreement could be reached between the parties during the discussions required by the orders below.
Are documents held by former committee members and former employees discoverable?
[83] The plaintiff relied on the principles of agency to say that documents falling within the tailored discovery categories and held by former committee members and former employees are discoverable by the Body Corporate and Strata respectively.
[84] In response, the Body Corporate submitted that committee members’ obligations are set out in the Unit Titles Act 2010. Unless that Act describes such an obligation then it did not exist. Mr St John further emphasised that the Body Corporate members were volunteers and that there was no requirement by law to keep records. This, however, does not address the position where those former Body Corporate committee members do have documents that fall within the discovery categories agreed.
[85] Associate Judge Bell considered this question in the context of a body corporate in Body Corporate 207624 v Grimshaws:18
Grimshaws correctly submitted that I was wrong in my earlier decision to doubt that the body corporate had control of documents of former committee members relating to body corporate business. Referring to Equiticorp Industries Group Ltd v Hawkins,19 it showed that on the expiry of an agency an agent is under a duty to deliver to their principal all documents that came into existence for the purpose of the agency relationship.
[86] I agree that the documents held by former committee members are discoverable on this basis. A request for documents should be made to the former Body Corporate committee members and should include a request for all types of documents that fall within the definition at r 1.3 and the tailored discovery categories agreed which will include email, text and WeChat messages.
[87] The same agency principles apply in respect of former employees of Strata. Strata has referred to its former employee, Ms Ge, as corresponding by WeChat so Strata is required to ensure copies of any WeChat messages from her that fall within the discovery categories are discovered.
[88] The order below for the parties to endeavour to agree the methods and strategies appropriate should include agreement on whether affidavits from individual committee members or employees are required.
Result
[89]I make the following orders in respect of Everest’s discovery application:
(a)the parties are to endeavour to agree the methods and strategies that are appropriate to conduct a reasonable and proportional search for documents in the agreed tailored discovery categories in light of the findings in this judgment and with reference to the matters set out in sch 9 of the High Court Rules and the specific categories of documents set out in the Schedules to this judgment;
18 Body Corporate 207624 v Grimshaws [2021] NZHC 16 at [35].
19 Equiticorp Industries Group Ltd v Hawkins (No 14) [1994] 2 NZLR 738 (HC).
(b)a joint memorandum outlining the agreed search methodology and proposed timetable for the completion of further discovery and inspection is to be filed by 23 July 2021. Failing agreement, the parties are to file separate memoranda on that date with their proposed search methodology and timetable directions. I will then make a decision on the papers, unless further input from counsel is required;
(c)in the affidavits of documents filed on behalf of the defendants following the further searches, the deponents are to outline the steps taken to complete discovery (although this should be clear given the agreement the parties should have reached by this stage as outlined above) including the search terms used, the parties or individuals documents were requested from and, if those parties or individuals no longer have documents, affidavits from those individuals setting out the attempts made to retrieve the documents and why they no longer have them;
(d)all documents from former committee members and former employees fall within the control of the Body Corporate and Strata. The defendants are, therefore, required to discover these documents in order to comply with their discovery obligations.
Costs
[90] As the plaintiff has succeeded, in the usual course it would be entitled to costs. I did not, however, hear from the parties on costs and so ask that they confer and attempt to agree matters.
[91] It may be that there ought to be some reduction as the parties must both take responsibility for not complying with cl 3 of pt 1 of sch 9 when agreeing the tailored discovery categories which may have avoided many of the issues that have arisen. The correspondence in relation to the tailored discovery categories is not before me, however, so I am not in a position to determine whether both parties were at fault. Furthermore, I note the defendants’ delayed responses and staggered affidavits of documents have certainly made it a more protracted and costly exercise than necessary.
[92] If agreement cannot be reached, the plaintiff may file a memorandum within 15 working days of this judgment and the defendants within 20 working days. Memoranda are to be of no more than five pages with costs to be determined on the papers.
Associate Judge Sussock
SCHEDULE 1
Categories of documents sought from Body Corporate
1.Correspondence between the Body Corporate Committee members;
2.Correspondence to or from the Body Corporate Committee members, or Strata and/or Park Residences Management Limited, in connection with the preparation of meeting agenda;
3.Other correspondence to or from the Body Corporate Committee members, Strata and/or Park Residences Management Limited, including:
(a)after committee meetings to follow up on action points;
(b)in relation to instructions to Strata and/or Park Residences Management Limited, for example in their preparation of letters to go to unit owners;
4.In relation to committee meetings:
(a)agenda and meeting minutes relating to the committee meeting of 26 June 2018;
(b)agenda relating to the committee meeting of 17 April 2019; and
(c)agenda relating to the committee meeting of 5 June 2019;
5.All contemporaneous meeting notes (whether handwritten or otherwise);
6.All Building Manager's reports; and
7.Correspondence from or to Body Corporate Committee members, Strata and/or Park Residences Management Limited, on the WeChat platform and by way of text messages.
In all cases, insofar that such documents:
(a)were created, modified, sent or communicated between 1 February 2018 and 30 June 2019; and
(b)relate to the proposed or actual actions of the Body Corporate and/or Strata with respect to Everest or the unit owners from whom Everest took leases being units 102, 103, 105, 111, 209, 212, 213, 302B, 309, 310, 311, 402A, 402B, 405, 408A, 408B, 501, 504A, 504B, 506, 510, 511, 603, 606, 610, 704A, 704B, 805, 806, 906, 1106, 1107, 1202A, 1202B, 1204A, 1204B, 1206, 1207, 1308B, 1408A, 1408B, 1504, 1701, 1705, 1805, 1902, 2005, 2105, 2403, 2604, 2801, 2804, 3002 and 3004.
SCHEDULE 2
Categories of documents sought from Strata
1.Correspondence to or from Strata in connection with the preparation of meeting agenda;
2.Other correspondence to or from Strata, including:
(a)after committee meetings to follow up on action points;
(b)in relation to instructions to Strata and/or Park Residences Management Limited, for example in their preparation of letters to go to unit owners;
(c)the emails between Strata and body corporate committee members that were discovered by the Body Corporate;
3.Agenda and meeting minutes in relation to the committee meetings of:
(a) agenda and meeting minutes relating to the committee meeting of 26 June 2018;
(b) agenda relating to the committee meeting of 17 April 2019; and
(c) agenda relating to the committee meeting of 5 June 2019;
4.All contemporaneous meeting notes (whether handwritten or otherwise);
5.All Building Manager's reports; and
6.Correspondence from or to Body Corporate Committee members, Strata and/or Park Residences Management Limited, on the WeChat platform and by way of text messages;
In all cases, insofar that such documents:
(a) were created, modified, sent or communicated between 1 February 2018 and 30 June 2019; and
(b) relate to the proposed or actual actions of the Body Corporate and/or Strata with respect to Everest or the unit owners from whom Everest took leases being units 102, 103, 105, 111, 209, 212, 213, 302B, 309, 310, 311, 402A, 402B, 405, 408A, 408B, 501, 504A, 504B, 506, 510, 511, 603, 606, 610, 704A, 704B, 805, 806, 906, 1106, 1107, 1202A, 1202B, 1204A, 1204B, 1206, 1207, 1308B, 1408A, 1408B, 1504, 1701, 1705, 1805, 1902, 2005, 2105, 2403, 2604, 2801, 2804, 3002 and 3004.
3
6
1