Haines Planning Consultants Limited v Shah Homes Limited
[2016] NZHC 291
•26 February 2016
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2014-004-001676 [2016] NZHC 291
BETWEEN HAINES PLANNING CONSULTANTS
LIMITED Plaintiff
AND
SHAH HOMES LIMITED Defendant
Hearing: 22 February 2016 Appearances:
K W Berman for the Plaintiff
M S Sahu Khan for the DefendantJudgment:
26 February 2016
RESERVED JUDGMENT OF ASSOCIATE JUDGE SARGISSON
This judgment was delivered by me on 26 February 2016 at 4.00 p.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date.......................................
Solicitors:
Gaze Burt, Auckland
Singhs Lawyers, Auckland
K W Berman, Auckland
HAINES PLANNING CONSULTANTS LIMITED v SHAH HOMES LIMITED [2016] NZHC 291 [26 February 2016]
[1] The plaintiff’s interlocutory application for further particulars and other
orders was before the Court for a defended hearing on 22 February 2016.
[2] The defendant provided the further particulars requested in an amended statement of claim and counterclaim that it filed on 18 January 2016.
[3] The aspects of the plaintiff’s application that are opposed and remain for determination relate to the defendant’s discovery. The first order sought is an order for particular discovery against the defendant. The second is an order setting aside the defendant’s claim for privilege and confidentiality. Additionally, the issue of costs on the plaintiff’s application requires determination.
Background
[4] The plaintiff, Haines Planning Consultants Limited, is a resource management planning consultancy practice. The defendant, Shah Homes Limited, is a property developer.
[5] The particular project that this proceeding concerns is a subdivision and development that was proposed for a large property at Hulme Place, Henderson.
[6] Sometime prior to engaging Haines in 2012, Shah had engaged a number of specialist consultants, including specialists in engineering, surveying and other disciplines, to assist with a resource consent application under the Resource Management Act 1991. The consultants were required to undertake investigations and to prepare reports required to support Shah’s resource consent application, including an Assessment of Effects on the Environment Report, and to guide the design formulation of Shah’s proposed subdivision and development. The consent application was for combined land use and subdivision consents.
[7] In Shah’s second amended statement of defence and counterclaim it alleges that it incurred expenditure of around $370,000 for these specialist consultants, which was wasted because of Haines’ negligent performance of the tasks it was
engaged to undertake. Shah pleads that the result was that the consent application was rejected by Auckland Council as incomplete under s 88.
[8] None of this (except the allegations of negligence) is in dispute. What happened next is disputed. Haines says that following its intervention, the Council’s decision to reject Shah’s application was revoked; the Council accepted the consent application as complete and sought additional information pursuant to s 92 of the Resource Management Act. Haines also says that it ceased to act as planning consultant (which is not disputed), and that it took this action because of Shah’s failure to pay its outstanding invoices (which is disputed). Shah, on the other hand, denies that the Council accepted the application as complete, and contends that it had to take over the consent process for the subdivision and development of the Hulme Place property (having wasted $370,000 worth of expenditure on consultants).
[9] It is unclear whether Shah continued with the same application, or whether it made a new application (counsel for Shah does not know which). At the hearing counsel for Shah said he was unable to say whether the “restart” involved the original proposal or a new or modified proposal, but he confirmed that Shah has proceeded with further work on a subdivision and development proposal for the property. Haines submits it can only assume that Shah has engaged other professional planners and that it continued with or replaced the other consultants. It says that whatever the current position is, Shah has the onus of proving the expenditure on these consultants was wasted.
[10] Whatever happened, it is material to the allegation of wasted cost to examine whether or not the previous work was utilised, and if not, the reasons for that.
Discussion
[11] The allegation of wasted cost (which Shah pleads as an affirmative defence)
is key to the dispute about the plaintiff’s request for particular discovery.
[12] Haines seeks discovery of all documents relating to the progress of Shah’s consent application subsequent to its departure, as set out in Schedule 2 of its interlocutory application. The documents are described in the following terms:
All documents relating to the subsequent progress of the defendant’s resource consent application, and the steps it has taken towards obtaining the necessary consents. This includes all correspondence, file notes, drafts, reports, drawings / plans etc pertaining to other professional planners / consulting organisations subsequently engaged by the defendant, including (but not limited to):
i. Other professional planners / consulting organisations subsequently engaged by the defendant, including (but not limited to):
1. Mr Chris Kitson, Consultant Planner
2. Thresher Urban Design and Landscape Architecture
3. Houston Architects Ltd
4. Stephen Neate Landscape Design Consultant
5. EMACS Limited
ii. Meetings and any other forms of engagement with Auckland Council planning staff, including the Housing Project Office.
[13] Counsel for Haines submits that as Shah’s claim for “wasted” expenditure is based on the $370,000 allegedly spent on consultants, the essential point is that such expenditure cannot be wasted expenditure if:
(a) Shah is proceeding with the original application, or with a new application which either relies upon or could reasonably have utilised the work of those consultants.
(b)If the work already done was simply abandoned and work was commenced afresh by new consultants, there is an issue as to whether Shah took proper steps to mitigate the loss suffered by that action.
[14] He says documents that came into being following Haines and Shah’s parting ways that indicate whether or not the consultants’ work has been utilised (and if not used, the reasons for that) are documents that must be discovered pursuant to rule 8.7
of the High Court Rules and the order made for standard discovery in September
2015.
[15] At the hearing Mr Sahu Khan submitted initially that such documents are not discoverable as once Haines terminated the parties’ relationship (allegedly wrongfully), whatever Shah did is nothing to do with this proceeding. However, in the course of discussion between myself and counsel, he acknowledged that whether or not any of the previous consultants’ engagement continued, and whether or not any of their work was or could reasonably have been utilised, is a matter for evidence at trial.
[16] That seems to me to be precisely the point. Shah has the onus of establishing whether its expenditure of $370,000 on consultants was wasted. It pleads that it was. Whether it retained or replaced those consultants, and whether it used or discarded their work, are material to whether that expenditure was wasted. Documents that relate to such matters are likely to adversely affect either Shah’s or Haines’ case, and by extension may also support either party’s case. As such they are discoverable under r 8.7.
[17] Counsel for Haines seeks that if an order for particular discovery is made, it should incorporate a direction that Shah file a new affidavit as to documents to cover all of its discovery in compliance with the listing and exchange protocol in Part 2 of Schedule 9 to the High Court Rules. He submits such a direction is necessary because the defendant has filed several affidavits as to documents which fail to adopt a consistent approach to the listing of documents or to the use of electronic disclosure. It is necessary, he contends, to “pull all documents into one new document” to avoid the current confusion.
[18] At the hearing counsel for Shah did not concede that there should be an order for particular discovery, but he said on the assumption that an order is made, he takes no issue with an order in the terms that Haines seeks, and says that 14 days would be a sufficient period to comply. He submitted however that there is no need to provide an affidavit covering the discovery already provided by way of affidavit. He said the
two affidavits filed to date cover the same documents, and electronic copies have been provided already.
[19] I am satisfied in the circumstances that there should be an order under r 8.19 for particular discovery of additional documents as sought by the plaintiff, and that inspection of such documents should be provided electronically. I am not presently convinced that an affidavit comprising all previous discovery is needed, but will reserve leave should problems remain.
[20] I turn next to whether orders relating to privilege and/or confidentiality are required. In this respect the plaintiff’s application seeks an order setting aside or modifying the defendant’s claim for privilege or confidentiality in respect of the following:
The documents listed under category P2 of the defendant’s revised affidavit of documents, namely “Emails, letters, files, notes, drafts, etc” between Shah Homes Ltd and its agents, Imtiyaz Hussein and Imraan Hussein dating from August 2013 – 13 June 2014.
[21] At the hearing Mr Sahu Khan did not press any claim to privilege in opposition to the application. Rather, he relied on a claim for confidentiality on the basis that the documents in question comprise internal company documents that are meant to be confidential. He submits that he relies on “the common law proposition” that internal confidential documents of a company need not be discovered, or at least need not be made available for inspection if confidentiality is claimed. He rejected my enquiry as to whether the appropriate course would be a qualified, yet adequate, restriction on access, assuming there was a genuine case for confidentiality.
[22] I do not accept Mr Sahu Khan’s submission. It conflates a claim to confidentiality with a claim to privilege, and would deprive an opposing party of reasonable access to documents that it is entitled to under r 8.7. The question is whether there is a sufficient case for confidentiality to warrant some restrictions on access; and if so, what would be an adequate constraint while still allowing the opposing party sufficient access for the purpose of its case. The defendant has
simply not made out a case for confidentiality. Nor has it proposed reasonable restrictions.
Result
[23] I make orders on the plaintiff’s application as follows:
(a) The defendant is to file and serve a further affidavit on discovery stating whether the documents set out in Schedule 2 of the plaintiff’s interlocutory application dated 11 November 2015 are or have been in the defendant’s control, the defendant’s best knowledge and belief as to when the documents ceased to be in the defendant’s control and who now has control of them; alternatively, if the documents are in the defendant’s control, to make those documents available to the plaintiff for inspection. The affidavit is to be in compliance with High Court Rule 8.15 and 8.16 and the listing and exchange protocol set out in Part 2 of Schedule 9.
(b) The affidavit is to be filed and served by 11 March 2016.
(c) I set aside the defendant’s claim for privilege and confidentiality made in the revised affidavit of documents dated 14 October 2015 in respect of the documents set out in Schedule 3 of the plaintiff’s interlocutory application dated 11 November 2015.
[24] The remaining issue is one of costs. I am satisfied that the plaintiff is entitled to costs on the application, for these brief reasons:
(a) The plaintiff is entitled to costs as the successful party under the statutory costs regime.
(b)It was forced to resort to a formal application to get the particulars it was entitled to; and it has demonstrated its entitlement to particular discovery and to have the claims to privilege and confidentiality set aside. It is entitled to reasonable compensation for the costs involved.
(c) The only real argument raised by counsel for the defendant at the hearing in opposition to a costs order was that the discovery the plaintiff seeks concerns disputed issues of fact that will have to be determined at trial, and therefore costs should be reserved.
(d)Mr Sahu Khan is correct that such issues must be determined at trial, but discovery is intended to ensure that documentary material relevant to them will be disclosed before trial in order to avoid either party being taken by surprise or ambushed.
[25] Ordinarily costs in a case such as this would be on a 2B basis. Here the plaintiff seeks an uplift of 50% on the basis of counsel’s assurance to the Court that actual costs are somewhere between $20,000 and $25,000. I do not think counsel’s assurance is a sufficient basis on which to order an uplift of 50%, but it is clear from the documents that have been filed that the plaintiff has been put to attendances well in excess of those for which 2B costs would be adequate compensation. In the circumstances I am prepared to order an uplift of 25%.
[26] Accordingly I make an order for costs in the sum of $10,704 pursuant to r 14.6(3)(b). I also allow disbursements totalling $754.97. Payment is to be made not later than 21 March 2016.
Other orders
[27] During the course of the hearing counsel agreed that there are two additional categories of documents that should be disclosed as follows:
(a) By the defendant: all of the invoices making up the overall counterclaim for $370,000. Shah is to list such documents in its new affidavit as to documents.
(b)By the plaintiff: all of the correspondence, diary or file notes or other documents supporting the factual matters referred to at paras 2.9, 2.10 and 2.12 of Mr Berman’s written submissions. These are documents
that relate to the claim that a junior Auckland Council planner purported to reject Shah’s application as incomplete under s 88 of the Act; and documents that refer to the intervention of Haines leading to the Council’s decision to revoke the purported rejection, and the Council’s acceptance of the consent application as complete and its decision to seek additional information pursuant to s 92.
[28] Haines is to file and serve a supplementary affidavit as to documents listing these documents if it has not already included them in its affidavit as to documents, by not later than 10 March 2016.
[29] Counsel have also agreed on a further direction: that Haines is to file and serve an amended statement of defence to Shah’s revised counterclaim within 14 days of Shah’s new discovery, and that Shah has a further 7 days to file a reply to any affirmative defences. I direct accordingly.
[30] Leave is reserved to Haines to seek further orders for a further ‘all- encompassing’ affidavit as to documents if, after the supplementary affidavit is provided, such is needed to avoid confusion. A memorandum may be filed and
served on 2 days’ notice for the purpose.
Associate Judge Sargisson
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