Jones v Auckland Council

[2012] NZHC 29

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2010-404-2338 [2012] NZHC 29

UNDER  Part 30 of the High Court Rules

IN THE MATTER OF     a decision to sell WESTPARK MARINA land and a decision as to the volume of dredging required at Westpark Marina

BETWEEN  ALAN JAMES JONES, CHRISTOPHER JOHN GEDYE, CHARLES ANDREW HOWARTH, BRENT ALEXANDER IVIL AND ALAN SEFTON (AS TRUSTEES OF THE WESTPARK MARINA ASSOCIATION TRUST)

Plaintiffs

ANDAUCKLAND COUNCIL First Defendant

ANDWESTPARK MARINA LIMITED Second Defendant

Hearing:         27 January 2012

Appearances: D B Hickson for Plaintiffs

M E Casey QC with A J Davidson for First Defendant
No apperance for Second Defendant

Judgment:      27 January 2012

ORAL JUDGMENT OF ASSOCIATE JUDGE R M BELL

Solicitors:

D B Hickson, P O Box 56613 Auckland 1445, for plaintiffs

Email:    [email protected]

Kevin McDonald & Associates, P O Box 331-065 Auckland 0740

Email:    [email protected]

Copy for:

Matthew E Casey QC/A J Davidson, P O Box 317 Auckland 1140, for first defendant

Email:    [email protected]  /  [email protected]

Michael J Ruffin, P O Box 1662 Auckland 1140, for second defendant

Email:    [email protected]

JONES AND OTHERS (AS TRUSTEES OF THE WESTPARK MARINA ASSOCIATION TRUST) V AUCKLAND COUNCIL HC AK CIV-2010-404-2338 27 January 2012

Case Officer:        [email protected]

[1]       The plaintiffs apply for particular discovery against the first defendant under r 8.24 of the High Court Rules:

8.24Order for particular discovery against party after proceeding commenced

If at any stage of the proceeding it appears to a Judge, from evidence or from the nature or circumstances of the case or from any document filed in the proceeding, that there are grounds for believing that a party has not discovered 1 or more documents or a group of documents that should have been discovered, the Judge may order that party—

(a)       to file an affidavit stating—

(i)        whether  the  documents  are  or  have  been  in  the  party's control; and

(ii)      if they have been but are no longer in the party's control, the party's best knowledge and belief as to when the documents ceased to be in the party's control, and who now has control of them; and

(b)       to serve the affidavit on any other party.

[2]       The documents that the plaintiffs ask the first defendant to discover are set out in a schedule to the application for discovery:

1The agreement for sale and purchase entered into between Waitakere Properties Limited as vendor and The Cove Limited as purchaser in respect of Lot 3, Deposited Plan 110480, Westpark Marina, Clearwater Cove, Hobsonville, in or about late 1999.

2The agreement for sale and purchase entered into between Waitakere Properties Limited as vendor and The Cove Limited as purchaser in respect   of   Lot   4   Deposited   Plan   110480,   Westpark   Marina, Clearwater Cove, Hobsonville, in or about late 1999.

3All    correspondence    between    Waitakere    Properties    Limited, Waitakere City Council, Westpark Marina Limited and The Cove Limited and any other party whatsoever, touching on or concerning the aforementioned agreements for sale and purchase.

4         The report prepared by Waitakere Properties Limited in or about

2000 concerning its activities in connection with the development and sale of properties vested in Waitakere Properties Limited by

Waitakere  City  Council  pursuant  to  a  Deed  of  Trust  dated  20

November 1998.

5The distribution accounts prepared by Waitakere Properties Limited in or about 1999 or 2000 in respect of the sale of Lots 3 and 4, Deposited Plan 110480, Westpark Marina, Clearwater Cove, Hobsonville.

6The minutes and agendas of meetings of the former Waitakere City Council in its committees during the period 1998 to 2001 which contain entries touching on or concerning the sale of Lots 3 and 4, Deposited Plan 110480, Westpark Marina, Clearwater Cove, Hobsonville in or about late 1999.

[3]      The first defendant opposes on a number of grounds:

1.It has taken all reasonable steps and made extensive efforts to locate documents relevant to the proceeding;

2.All such documents have been available to the plaintiffs by providing their representative with access to Council records before the proceedings were started and providing copies of documents to the plaintiffs‟ solicitor;

3.The documents already provided are sufficient, and the further documentation sought by the plaintiffs will not assist in deciding the issue of liability, which is the only matter for determination at this stage; and

4.If made, the order for discovery would be oppressive and would result in  disproportionate  costs  to  the  first  defendant  compared  to  the claimed potential relevance of the documentation sought.

[4]      The background to the matter is that the plaintiffs are attacking transactions of the former Waitakere City Council in the late 1990s.  With the passage of time, and with the reorganisation of local government in Auckland, it has proved difficult to locate all documents which might have been readily available if the proceeding had been initiated shortly after the transactions were carried out.  It is those practical

problems  that  face  the  court  and  the  parties  in  dealing  with  this  discovery application.

[5]      On 29 October 2010, Mackenzie J gave a decision[1]  dismissing applications by the defendants to strike out the statement of claim.  His decision gives a useful background to the litigation, and I draw on that.

[1] Jones v Waitakere City Council HC Auckland CIV-2010-404-2338 29 October 2010.

[6]      The plaintiffs are the trustees of the Westpark  Marina Association Trust which was established to represent the interests of berth-holders at Westpark Marina in the Upper Waitemata Harbour near Hobsonville.   They seek judicial review of certain decisions of the Council relating to the marina.  They also seek relief against both the Council and Westpark Marina Ltd, the operator of the marina, for alleged breaches of an alleged trust said to exist in favour of the berth-holders.  They also challenge Council decisions on costs of dredging.

[7]      The  marina  comprises  a  boat  harbour,  sea  walls,  and  associated  shore facilities on land reclaimed from the Waitemata Harbour.   The reclamation and construction  of  the  marina  was  authorised  by  a  local  Act  of  Parliament,  the Waitemata City Council (West Harbour) Empowering Act 1979.  That was a special Act of Parliament under s 175 of the Harbours Act 1950, authorising a reclamation. The Waitemata City Council (formerly the Waitemata County Council) was the local authority within whose territorial jurisdiction the site of the marina was located during the 1970s.

[8]      Under the local government re-organisation in 1989, the Waitemata City Council was replaced by the Waitakere City Council and that Council has, in turn, been taken over by the Auckland Council under the Local Government (Auckland Council) Act 2009.   The Empowering Act 1979 vested 39 hectare of seabed at Clearwater Cove in the upper Waitemata Harbour in the Auckland Harbour Board, and authorised the Waitemata City Council to reclaim not more than 12.5 hectares of land to construct a boat harbour.  Following reclamation, the reclaimed land was to be transferred to the Council for a boat harbour.  The development of the marina was

subject  to  contractual  arrangements  between  the  Harbour  Board  and  the  City

Council, entered into in accordance with provisions of the Empowering Act.  Under those arrangements, the Harbour Board was to issue a licence for the marina seabed to the Council, which would issue a sub-licence to the marina operator.  Westpark Marina Ltd is the marina operator.

[9]      Briefly,  the  contractual  arrangements  entered  into  between  the  Auckland

Harbour Board and the Council in1983 under the Empowering Act provided that:

1.the Council would not itself undertake the development of the boat harbour but would sponsor its development by contracting with the developer;

2.the Auckland Harbour Board would grant a licence to the Council, which would in turn grant a sub-licence to the developer, to enable the reclamation and associated development of the boat harbour to proceed subject to Harbour Board approval; and

3.on completion of the boat harbour development, the reclaimed land would be transferred without consideration from the Harbour Board to the Council, and the Harbour Board would grant the Council a licence to the remainder of the foreshore and seabed occupied by the boat harbour.  The Council would grant a lease of the reclaimed land and a sub-licence of the foreshore and seabed areas to Westpark Marina Ltd.

[10]     In  a  later  approval  of  the  development,  including  a  subdivision  of  the reclaimed land into a number of lots, the Harbour Board specified that several lots were to be “irrevocably tied to seabed licences (while in force) to be held in common by the marina operator”.  These lots included lots 3 and 4 with which this proceeding is concerned.

[11]     Licences and sub-licences were entered into in 1987.  Leases of lots 3 and 4 from the Council to Westpark Marina Ltd were registered in 1988.   It was a requirement  of  the  development  sub-licence  between  the  Council  and  Westpark

Marina Ltd in 1985 that the leases of lots 3 and 4 amongst others should contain a provision that the lessee should at all times be the same person as the sub-licensee of the seabed and foreshore areas.

[12]     In 1998, the Waitakere City Council transferred lots 3 and 4 to Waitakere Properties Ltd.   Waitakere Properties Ltd was a wholly-owned subsidiary of Waitakere  City  Holdings  Ltd.     Waitakere  City  Holdings  Ltd  and  Waitakere Properties Ltd were LATEs - local authority trading enterprises.  They were Council wholly-owned companies.   Waitakere Properties Ltd further subdivided lot 3 and from  late 1999  on,  subdivided lots  were on-sold  for residential  development  to purchasers unconnected with the Council.   Lot 4 was at about the same time transferred to The Cove Ltd, a company unconnected with the Council, and that company subdivided lot 4 and on-sold the residential lots.   The Cove Ltd is a company associated with Mr Brent Alexander Ivil, one of the plaintiffs.

[13]     The essence of the plaintiffs‟ claim is that in terms of the Empowering Act and the deeds entered into as part of the development arrangements, lots 3 and 4 were to be irrevocably tied to the seabed licence and were to be held by the Council for the purposes of a boat harbour.  The plaintiffs seek relief against both the Council and against Westpark Marina Ltd, arising from the sale of lots 3 and 4:

1.   They seek judicial review of the decision of the Council to transfer lots 3 and 4 to Waitakere Properties Ltd with a view to disposing of lots 3 and 4 to a party other than a marina operator and for use other than for a boat harbour.   The plaintiffs seek a declaration that that decision was ultra vires and illegal.

2.   They also allege that the Council held the freehold estate of lots 3 and 4 on  trust  for,  amongst  others,  the  berth-holders  represented  by  the plaintiffs.  The plaintiffs assert that as trustee the Council was required to hold the freehold estate in lots 3 and 4 in perpetuity for use as a boat harbour, and that the sale of the lots to a party other than the marina operator for purposes other than for use as a boat harbour and associated

facilities, was a breach of trust which has caused damage to the plaintiffs. They seek damages.

[14]     For this case it is not necessary for me to consider claims against Westpark

Marina Ltd as the marina operator.  No discovery has been sought against it.

[15]     There is also a cause of action seeking a judicial review of decisions made relating to dredging of the boat harbour.   That part of the plaintiffs‟ claim is not relevant for the present application.

[16]     The Auckland Council largely admits that the development of the marina under the Empowering Act, with the associated approvals, leases and licensing, all proceeded as the plaintiffs allege.   It admits that the Waitakere City Council transferred lots 3 and 4 to Waitakere Properties Ltd in 1998 and that Waitakere Properties Ltd on-sold the properties as alleged by the plaintiffs.  It says that it was empowered to do so and, while it is not stated in its pleadings, I understand that it relies on s 230 of the Local Government Act 1974.

[17]     While admitting the transactions, the Auckland Council denies they were ultra vires or illegal.  As to the second cause of action, it does not accept that there was a trust in the terms alleged by the plaintiffs, and it also says that in any event there was no breach of trust.  The plaintiffs‟ allegation of breach of trust turns on the allegations in the first cause of action, that the disposal of lots 3 and 3 was unauthorised.  The Council also says that, even if there were a breach of trust, the plaintiffs have not suffered any loss so as to give them any right to claim damages.

[18]     In a minute of 14 July 2011, Venning J directed that there were to be split hearings, with the first hearing to determine liability and the second to determine any damages question, if required.  For the present application, the plaintiffs‟ discovery application is directed only at discovery for determining liability.

[19]     Mr Ogilvie has sworn a narrative affidavit for the plaintiffs, to which he has exhibited a number of documents which he has obtained by approaching the Council directly.  These include:

1.An extract from minutes of the Waitakere City Council‟s Corporate Affairs Committee of 11 February 1998 giving approval for a public notice to be given under s 230 of the Local Government Act of the Council‟s  intention  to  vest  the  fee  simple  estate  of  the  on-shore portion of Westpark Marina in Waitakere Properties Ltd.

2.The minutes of a Council meeting of 8 April 1988 approving the transfer of the properties.

There is no dispute that Waitakere Properties Ltd later on-sold the properties, and that is apparent from the Council records exhibited to Mr Ogilvie‟s affidavit.

[20]     Mr  Graham  Wakefield,  now  a  consultant,  had  been  employed  by  the Waitemata City Council and the Waitakere City Council from 1979 to 2003 in various roles.   In particular, from 1987 to 2003 he held a dual role as corporate secretary and corporate solicitor.   He was responsible for reports that led to the Council approving the transfers.  He is one of the people in the Council who dealt with the plaintiffs on their requests for documentation.  In his substantive affidavit, Mr Wakefield says that he has made extensive enquiries of numerous sources to try to obtain documents that might assist in shedding light on the exact chain of events that led to the sale of lots 3 and 4.  His affidavit describes the enquiries he has made. In particular, he says he has tried to track down records of Waitakere Properties Ltd. He says:

I understand that if such files of WPL exist they are held in a large store- room known as the „bunker‟ at the ex-Waitakere City Council offices at Henderson.  I understand  that  approximately  150  to  200  boxes  of  WPL documents are held in the bunker, which may contain information relating to the relevant time-frames. The boxes are unlabelled and a full check of their contents would take considerable time. Such a search has not been undertaken at this stage but Council staff  have investigated a representative sample of about 15 of the boxes but have not found anything relating to the sale of lots 3 and 4.

[21]     He  says  that  he  spent  some  time  himself  searching  agenda  records  and minutes for the period 1998 to 2001 but has not located anything material to the disposal of lots 3 and 4.  He says that the Council has looked at the documentary record for cases where the sale of lots 3 and 4 was commented on.  He says that apart

from observing that event as a historical fact, there is nothing in that material that tells anything more than the documents already exhibited to Mr Ogilvie‟s and his own affidavits.  He says that the search for contemporaneous documents has been hampered by the passing of time since the events in question, because of changes in staff and legal counsel over that period, the fact that neither Waitakere Properties Ltd nor the Waitakere City Council still exist, and that record-keeping may not have been ideal.  He says that the level of record-keeping by individual Council staff on keeping records was haphazard and incomplete.

[22]     In effect, the Auckland Council is saying that the documents sought in the discovery application might exist.  It does not deny the existence of the documents. It would like to obtain those documents itself in any event, but to locate those documents now would require an exhaustive and time-consuming search of cartons of unlabelled documents.

[23]     For their part, the plaintiffs do not accept that the problem is as great as Mr Wakefield makes out.  In his reply affidavit, Mr Ogilvie identifies that councils do have an archival system, and do have a way of locating identified files, and a system where numbers are allocated for particular files.  The plaintiffs believe that a suitably diligent search would locate the records.

[24]     As a late development, in the course of the hearing Mr Hickson volunteered that  the plaintiffs  themselves  were prepared  to  go  into  the „bunker‟ and,  under supervision,  undertake  a  search.     Mr  Casey  indicated  that  he  did  not  have instructions to deal with that proposal.

[25]     There are two significant considerations for this application:

1.        The degree of relevance of the documents sought by the plaintiffs;

and

2.The  alleged  inconvenience  and  difficulty  in  now  locating  the documents where exhaustive searches might be required.

[26]     On relevance, the plaintiffs invoke the Peruvian Guano test.[2]  They say that the agreements for sale and purchase are relevant because they could throw light on the case.   They claim that those documents are central to the claims for judicial review and breach of trust.   The plaintiffs also suggest that the agreements might contain terms or references to matters that could give rise to a train of enquiry to advance  the  plaintiffs‟ case  and  they  suggest  that  the  person  who  signed  the documents could be an important witness.

[2] Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Ltd (1882) 11 QBD 55 at 63.

[27]     As to correspondence concerning the sale of the land, the plaintiffs say that the correspondence could throw light on the legal reasoning adopted by the Council at the time to justify the sales.  They say that the Waitakere Properties Ltd report and distribution of proceeds of sale are relevant on liability issues as apparently evidencing the plans of the Council and Waitakere Properties Ltd in dealing with the lots transferred to it.   They say that agendas and minutes of Council meetings are relevant in terms of evidencing decisions of the Council.

[28]     Relevance  has  to  be  assessed  by  reference  to  what  is  in  issue  in  the proceeding.  The documents for which discovery is sought relate to the disposal of lots 3 and 4 within the reclaimed land.   If the Council were denying that it had transferred lots 3 and 4 to Waitakere Properties Ltd, or that Waitakere Properties Ltd disposed of the properties, then the documents sought would have greater relevance. But as the disposal of properties is not in issue, the matter is rather whether the transfers were legally valid.  That is a question of law, not a question of fact.

[29]     To determine that question of law the plaintiffs already have and have put in evidence the relevant documents they need to make out their case.   In particular, paragraph 33 of the second amended statement of claim lists documents which are relied on to show that the council‟s decisions were ultra vires.  The validity of the transfers will stand or fall on the matters identified in paragraph 33 of the statement of claim, for which documentation is already available.  The validity will not turn on

the subjective considerations of councillors or council staff.

[30]     In considering this relevance question, I find that the comments of Priestley J

in Air New Zealand v Auckland International Airport[3] are useful:

In  some  judicial  review  cases discovery may be  unnecessary.  In  others, limited discovery may assist.  In some cases it is conceivable that discovery in the nature of general discovery might be required. Issues such as these should be determined on a case by case basis in the exercise of the Courts‟ powers under s 10(2)(i) of the Judicature Amendment Act 1972.

[3] Air New Zealand v Auckland International Airport (2001) 16 PRNZ 783 at [35].

[31]     I have also found pertinent His Honour‟s comments[4] as to the time, effort and cost of discovery as being relevant matters in determining to what extent discovery should be required.

[4] At [36]-[46].

[32]     Bearing in mind that I am only required to decide what documents need to be disclosed for liability purposes, I find that the documents which the plaintiffs seek have, at best, marginal relevance.

[33]     Against that must be taken into account the Council‟s plea that it has already made  extensive  enquiries  and  that  to  go  through  all  the  boxes  referred  to  by Mr Wakefield in his affidavit would be a long, exhausting, and possibly a fruitless process.

[34]    There is authority that these kinds of considerations can be relevant in determining how discovery ought to be directed.  Such authority goes back to 1873 in Elmer v Creasy,[5] where Lord Chancellor Selbourne said:

The court may be trusted to exercise a proper control over any attempt on the plaintiff‟s part to press for any such minuteness of discovery as would be either vexatious or unreasonable, as indeed it can do in every case in which it is satisfied that any kind of discovery is required vexatiously or oppressively.

[5] Elmer v Creasy (1873) LR 9 Ch 69 at 73-74 per Selbourne LC.

[35]    Bray on Discovery, a text written in 1885, indicates that the expense, inconvenience and trouble in obtaining documents is not a stand-alone objection to making discovery but it does go to the court‟s discretion as to how far it directs

discovery:[6]

[6] Bray on Discovery (1885) (Reeves and Turner, London) at 298.

The following matters do not independently or by themselves constitute objections to discovery which is clearly material for the determination of an issue immediately and certainly about to come on for trial ... though they are elements which would be taken into consideration by the court where the discovery is not so clearly material ...

(a)  Expense, inconvenience, trouble ...

[36]     An Australian text, Cairns‟ The Law of Discovery in Australia,[7] says:

The court has an inherent jurisdiction to prevent litigation being conducted oppressively. This can be used to stop oppressive requests for discovery. Production of documents may be oppressive when a large bulk has to be produced and the work is not justified by the benefit that will be derived. ...

[7] Cairns: The Law of Discovery in Australia (1984) at 131.

[37]     Similarly, a modern English text on discovery, Disclosure by Paul Matthews and Hodge M Malek QC, deals with the same point[8] and refers to the case law before the Civil Procedure Rules (although it indicates that the same approach would apply under the Civil Procedure Rules).  The approach set out in that text is consistent with earlier authorities.  There is a helpful citation from the case, Molnlycke AB v Proctor and Gamble (No.3):[9]

“An order may be refused on the ground that it is unduly oppressive to the party giving discovery. The court takes account of such considerations as the value of the discovery to the person seeking it and the burden imposed on the party giving it, with a view to restricting the volume of documents and the labour and expense involved to that which is necessary for fairly disposing of the issues in the case.”

[8] Paul Matthews and Hodge M Malek QC Disclosure (London, Sweet & Maxwell 2007) at 206 para 8.20.

[9] Molnlycke AB v Proctor and Gamble (No.3) [1990] RPC 498 at 503.

[38]     Those considerations are pertinent in this application.  If I were to uphold the plaintiffs‟ application in the terms in which it was filed, I may be subjecting the council to a very lengthy search of documents which are held in the boxes in the bunker.    It  was  suggested  that  each  box  might  take  one  hour  to  go  through thoroughly.  It is foreseeable, then, that a diligent search might take a month or more for someone working full-time.  It was suggested that a charge-out rate of $200 per hour might be applied.  That may be overstating it, but the commitment of time for documents of only marginal relevance means that discovery which would require

those kind of steps, is disproportionate to the issues in this case.

[39]     I bear in mind that there are some cases where lengthy enquiries are required and where extensive steps may have to be taken to obtain documents.   Smellie J dealt with such a case in the Equiticorp[10] litigation, where he required the Crown to obtain documents from its agent in London and he contemplated that the Crown might  have  to  issue  proceedings  in  the  High  Court  in  London  to  obtain  the documents of its agent.  He considered that was necessary to ensure that those steps were to required to ensure that discovery was carried out properly.   But this is not the Equiticorp case, and such extensive requirements are not needed here.

[10] Equiticorp Industries Ltd v Hawkins [1994] 2 NZLR 738.

[40]     But for Mr Hickson‟s proposal while making submissions, I would have dismissed the application.  Mr Hickson offered what he hoped would be a practical alternative, namely that the plaintiffs would themselves undertake a search of the bunker and go through the documents to find what would be required.

[41]     Mr Casey was placed in difficulty because the matter was only advanced in the course of the hearing and he did not have instructions.  It may be that the parties can work out some suitable arrangement.  It may save time.  Mr Hickson believes that the enquiries can be more focussed.  If the plaintiffs were to search the cartons of files themselves, I would expect such an exercise to be supervised by a suitable Council employee, and I would expect the plaintiffs to meet those costs.   I also accept that there needs to be protection against misuse of documents.  For example, documents  which  might  go  to  the  privacy  of  persons,  should  not  be  used  for purposes unconnected with this litigation.  If an arrangement like that can be worked out, then that may allow the plaintiffs to obtain documents, albeit of marginal relevance, without imposing undue cost and expense on the Council.  I do not give any directions as to that today.     Instead, what I intend to do is to adjourn this application to a chambers list, to allow the parties to see whether some proposal along those lines can be worked out.

[42]     I adjourn this matter to Friday, 23 March 2012 at 2:15pm to see whether the parties have been able to work out some arrangements themselves.

[43]     I have also discussed briefly with the parties what further case management directions are required  for the case.   Mr Hickson indicates that  he will file an amended pleading to tidy up some aspects of the plaintiffs‟ case but will not be advancing any new matters.  He also says that an affidavit in reply will be required but that can only be done once any further discovery has been attended to.

[44]     I hope that by 23 March 2012 the parties will be in a position to discuss arrangements for hearing which should include discussions as to estimates of hearing time required and whether cross-examination will be required.  Given that the matter is not fully completed, I do not propose to make any order for costs on this application as at present.

[45]     Mr  Casey has  pointed  out  that  Associate  Judge  Abbott  allocated  a  case management conference for 28 February 2012.  Because of the direction that I have just  given  such  a  conference  may  not  be  useful.    Accordingly  I  vacate  that conference, and I will deal with case management directions on 23 March 2012.

............................................

Associate Judge R M Bell