Haddon v The Conveyancing Shop - [2012] NZHC 1439

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-2226 [2012] NZHC 1439

BETWEEN GARY FRANCIS HADDON AND BARBARA GALE HADDON Plaintiffs

ANDTHE CONVEYANCING SHOP First Defendant

AND T INGLIN
Second Defendant

Hearing: 15 May 2012

Appearances: Mr C S Henry for Plaintiffs
Mr E Cox and Ms K Mortimer for Non-Party

Judgment: 22 June 2012

JUDGMENT OF ASSOCIATE JUDGE DOOGUE

This judgment was delivered by me on
22.06.12 at 4 p.m., pursuant to

Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Counsel:
Mr C S Henry, Barrister, P O Box 616, Orewa – chenry@barrister@xtra.co.nz for plaintiffs

Gibson Sheat, P O Box 2966, Wellington – edward.cox@gibsonsheat.com / Katie.mortimer@gibsonsheat.com for non-party

HADDON V THE CONVEYANCING SHOP & Anor HC AK CIV-2011-404-2226 [22 June 2012]

Introduction

[1] The plaintiffs have brought proceedings arising out of unfortunate circumstances. In 2007, the plaintiffs had executed a mortgage in favour of GE, securing a debt the plaintiffs had entered into with family members. GE sold this property via a forced mortgagee sale. The defendants, The Conveyancing Shop, were the lawyers who acted for the plaintiff in relation to executing the mortgage.

[2] The plaintiffs’ claim that the solicitors did not take proper steps to protect their interests in relation to the advances from GE. Specifically, the plaintiffs’ allege that there was a risk that the family members primarily responsible for servicing the loan were of doubtful credit-worthiness, and that there was a risk that the loan might fall into arrears. If the defendant had properly discharged its obligations, the plaintiffs contend that they would not have entered into the agreement.

[3] The plaintiffs now seek a non-party discovery order against GE. GE raises a number of issues that arise in the application:

a) The plaintiffs have not identified the additional documents sought with sufficient specificity. The plaintiffs have not shown that there are any grounds for thinking that such documents not in the parties control, are in GE’s control, and that such documents are necessary to resolve any outstanding issues in the litigation;

b)The documents sought are not relevant to the matters in question in the proceeding against the defendants;

c) The application is a fishing expedition, given the substantial litigation history between the plaintiffs and GE, it is clear the application is a pre-cursor to attempts to join GE to the proceedings where there is no basis to do so;

d) The discovery sought is not necessary; and

e) The plaintiffs’ application is technically deficient, in that it relies on the first plaintiff’s affidavit filed in another proceeding, without first seeking leave.

Which rules apply?

[4] The first point arising at the hearing, though, was whether the present application was to be decided under r 8.26 of the previous High Court Rules (that is, the Rules in effect prior to the enactment of Part 8 of the current Rules by the High Court Amendment Rules (No 2) 2011)), or the current r 8.21.

[5] The application for non-party discovery filed by…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2012] NZHC 1439
Decision Date: 22 June 2012

CaseChat Overview and Summary

The High Court of New Zealand considered the case of Haddon v The Conveyancing Shop, which arose from the plaintiffs' mortgage of their property to GE, which was subsequently sold by the latter. The plaintiffs alleged that the defendant solicitors failed to adequately protect their interests regarding the loan from GE, specifically concerning the creditworthiness of the family members who were primarily responsible for servicing the loan. The plaintiffs sought a non-party discovery order against GE. GE contested the application on various grounds, including the lack of specificity in the documents sought, their irrelevance to the proceedings, and the technical deficiencies of the application.

The court first determined whether the previous or current High Court Rules should apply to the case. The court concluded that the new Rules, which were in effect from 1 February 2012, applied to the present application as there was no transition provision indicating otherwise. The relevant test for non-party discovery was therefore the "adverse documents" test found in the current r 8.21.

The court then examined the categories of documents sought by the plaintiffs. The court held that documents related to the creditworthiness of the borrowers and the defendants' advocacy of the loan were relevant to the proceedings. However, documents that GE sent to third parties, such as United Home Loans, and any correspondence between GE and the defendants were not relevant, as there was no evidence establishing that such documents existed.

In conclusion, the court directed GE to provide an affidavit of documents within 28 days of the date of the order, giving discovery of any credit reports concerning the borrowers, any reports of registered valuers relating to property that was to be available as security for the loan, and any documents that are communications between GE and the defendant that refer to the borrowing arrangement and the plaintiffs' part in it. The court also directed that the plaintiffs must take certain steps to ensure that the costs of complying with the order would be met by the Legal Services Agency before the order takes effect.

This case highlights the importance of applying the correct legal rules and tests when considering non-party discovery applications. The court carefully considered the relevance of the documents sought and the potential implications for the non-party in making its decision.

Orders