Juken New Zealand Limited v Red Stag Timber Limited
[2022] NZCA 184
•13 May 2022 at 9 am
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA65/2022 [2022] NZCA 184 |
| BETWEEN | JUKEN NEW ZEALAND LIMITED |
| AND | RED STAG TIMBER LIMITED |
| Court: | Gilbert and Courtney JJ |
Counsel: | A R Galbraith QC and C L Bryant for Appellant |
Judgment: | 13 May 2022 at 9 am |
JUDGMENT OF THE COURT
AThe respondent’s application for leave to bring a cross-appeal against the High Court judgment ([2021] NZHC 2662) declining (in part) its application for particular discovery is declined.
BThe respondent must pay costs to the appellant for a standard application on a band A basis and any usual disbursements.
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REASONS OF THE COURT
(Given by Gilbert J)
Juken New Zealand Ltd (Juken) and Red Stag Timber Ltd (Red Stag) are competitors in the market for the supply of timber products. Red Stag has issued proceedings in the High Court at Auckland alleging Juken made false and misleading representations in breach of ss 9, 10 and 13 of the Fair Trading Act 1986 (FTA) concerning one of its products — a laminated veneer framing product called “J‑Frame” typically used for wall frames and roof trusses in residential homes. Red Stag claims that J-Frame did not comply with relevant treatment standards, contrary to Juken’s representations. The representations are said to have allowed Juken to obtain a greater share of New Zealand’s timber framing market and depressed the price of timber framing products generally. Red Stag seeks damages for the losses it claims to have suffered.
Juken disputes Red Stag’s interpretation of the requirements of the relevant standards and denies that its representations were false or misleading.
The proceeding, which was originally filed in 2017, has had a complex and lengthy procedural background, but now has a trial date scheduled for February 2024.
In a judgment delivered on 6 October 2021, Gault J determined various interlocutory applications brought by the parties.[1] The Judge:[2]
(a)granted leave to Juken to apply for summary judgment;
(b)dismissed Juken’s application for strike out and summary judgment;
(c)dismissed Red Stag’s application for an order requiring Juken to file a more explicit pleading;
(d)declined (in part) Red Stag’s application for particular discovery;
(e)dismissed Red Stag’s application to set aside Juken’s confidentiality claims; and
(f)dismissed Red Stag’s application to set aside Juken’s privilege claim.
[1]Red Stag Timber Ltd v Juken New Zealand Ltd [2021] NZHC 2662 [High Court judgment].
[2]At [124].
Juken applied for leave to appeal to this Court against the refusal to strike out Red Stag’s claim for the period prior to December 2012. Red Stag opposed leave. However, if leave was granted, it sought leave to cross-appeal against one aspect of the judgment on its application for particular discovery, namely the Judge’s refusal to require Juken to discover internal correspondence regarding its interpretation of the applicable standards. The Judge reasoned:[3]
… in the context of this FTA misrepresentation case where the relevance of the proper interpretation of the pleaded building standards and requirements is whether the representation was false, I do not consider that internal correspondence regarding [Juken’s] view of the proper interpretation is of actual and direct relevance.
[3]At [95].
The Judge did, however, direct Juken to discover internal correspondence containing consumer or industry views of the proper interpretation of the pleaded standards. This was because the Judge considered the understanding held by consumers and the industry of what the standards required, irrespective of strict compliance, could be relevant.[4]
[4]At [96].
In a judgment delivered on 4 February 2022, the Judge granted leave to appeal as sought by Juken but declined Red Stag’s application for leave to cross-appeal.[5] The Judge did not consider there was an arguable error as contended by Red Stag. In any event, the Judge said he would decline leave on the basis that the issue was not of general or public importance, and he considered it was not of sufficient importance to Red Stag to justify the proposed appeal.[6]
[5]Red Stag Timber Ltd v Juken New Zealand Ltd [2022] NZHC 103 [Leave judgment].
[6]At [25].
Juken’s appeal is scheduled to be heard on 14 June 2022.
Red Stag now seeks leave from this Court to pursue its proposed cross-appeal on the narrow discovery issue. Juken opposes leave.
The principles to be applied in determining whether leave should be granted for an appeal against an interlocutory order are well-settled. Leave should only be granted where the significance or implications of an arguable error of fact or law, either for the particular case or as a matter of precedent, warrant the further delay and expense of the proposed appeal.[7] The threshold for leave is a high one. The ultimate question is whether the interests of justice are best served by granting or declining leave.[8] Also relevant in this case is the general principle that appeal courts will exercise particular restraint in respect of appeals from case management decisions, including those relating to discovery.[9] This is because the judge assigned to manage a complex proceeding such as this gains a familiarity with the case and is best placed to make case management decisions to enable its efficient and just disposition. An appeal court does not share this advantage.
[7]Ngai Te Hapū Inc v Bay of Plenty Regional Council [2018] NZCA 291 at [16]; citing Meates v Taylor (1992) 5 PRNZ 524 (CA) at 526.
[8]Greendrake v District Court of New Zealand [2020] NZCA 122 at [6].
[9]Houghton v Saunders [2019] NZCA 506 at [50]; and James Hardie New Zealand Ltd v White [2020] NZCA 142, (2020) 25 PRNZ 691 at [55].
Red Stag submits that the Judge overlooked the purpose of discovery when determining its application. It claims the Judge treated the question of relevance as a merely technical or procedural question, rather than one that may determine whether justice is done between the parties. Red Stag asserts the Judge made two specific errors. First, he failed properly to assess relevance by identifying the issues arising on the pleadings. Red Stag says the case turns on the industry’s and the public’s understanding of the representation. It says that because Juken is itself part of the industry, its understanding is as relevant to the overall assessment as that of any other market participant. For that reason, Red Stag argues that the Judge’s distinction, between consumer or industry views on the one hand and Juken’s views on the other, was artificial. Red Stag also argues that a defendant’s intention to mislead or deceive can be a factor supporting a conclusion that its conduct was likely to mislead or deceive. Further, a defendant’s degree of blameworthiness can be relevant to the damages assessment under the FTA. Secondly, Red Stag argues that the Judge failed to apply the adverse document test, instead using a test akin to the relevance test for admissibility under s 7 of the Evidence Act 2006.
Red Stag argues that its proposed appeal is not only significant in the context of the present proceeding, it raises a question of law concerning the scope of discovery generally that will impact on future civil proceedings. Red Stag claims that differing approaches have been adopted in the High Court and it is desirable that any inconsistency be resolved by this Court.[10]
[10]Referring to Attorney-General v Institution of Professional Engineers New Zealand Inc [2018] NZHC 74, [2018] NZAR 275; Westgate Town Centre Ltd v Auckland Council [2021] NZHC 858; Todd Petroleum Mining Company Ltd v Vector Gas Trading Ltd [2017] NZHC1129; Commerce Commission v Viagogo AG [2021] NZHC 1398; and Minister of Education v James Hardie New Zealand [2019] NZHC 245.
For the brief reasons that follow, we are not persuaded that Red Stag’s proposed appeal meets the high threshold to justify the grant of leave.
First, we do not consider the proposed appeal has sufficient prospects of success to justify the additional costs that would be consumed in its pursuit. In particular, we do not consider it to be seriously arguable that the Judge overlooked the purpose of discovery in determining the application or that he failed to identify the issues disclosed by the pleadings to which the documents are said to be relevant. As the Judge observed, there does not appear to be any issue on the pleadings as to whether the representations were made. The critical issue on liability is whether the representations were misleading or deceptive or likely to mislead or deceive. The question of whether Juken’s conduct was misleading or deceptive in breach of the FTA must be determined objectively. The subjective views held from time to time (one way or the other) by Juken personnel are not relevant to this assessment. We do not accept Mr Flanagan’s submission for Red Stag that such documents go to the issues at the heart of the case. If Red Stag’s interpretation of the standards is correct, Juken’s misrepresentations as to compliance are likely to have been misleading or deceptive whether it knew this or not. We agree with the Judge there is a logical distinction between documents showing the market’s understanding of the representations and those that merely reveal the internal views held by Juken from time to time (or, for that matter, Red Stag). In any event, we see no seriously arguable error of fact or law in the Judge’s decision declining to order discovery of these documents.
Secondly, the proposed appeal does not, in our assessment, raise any issue of general or public importance. The Judge recorded it was common ground that the test for relevance for standard discovery is the adverse documents test which includes documents that adversely affect that party’s case or support another party’s case.[11] The Judge considered actual and direct relevance on the pleadings was required.[12] In this respect, he adopted the same formulation used in other decisions,[13] correctly noting that the test is narrower than the former Peruvian Guano test which extended to documents that might be relevant to issues in the proceeding or may lead to a train of inquiry.[14] There is no dispute that the adverse documents test was the applicable test for relevance or that this test is considerably narrower than the former Peruvian Guano test. Whether there are inconsistencies in the shorthand labels used to describe this test is somewhat beside the point. The issue on any appeal will be whether the correct test was applied in the particular circumstances. We see no question of general or public importance arising in the proposed appeal.
[11]High Court judgment, above n 1, at [84].
[12]At [85].
[13]Pyne Gould Corporation Ltd v Bath Street Capital Ltd [2020] NZHC 1247 at [13]; nd Sellman v Slater (No 6) [2018] NZHC 3057 at [46], citing Chatfield & Co Ltd v Commissioner of Inland Revenue [2016] NZCA 614, (2016) 27 NZTC 22-084 at [21].
[14]The Compagnie Financiere et Commerciale Du Pacifique v The Peruvian Guano Co (1882) 11 QBD 55 (CA) at 63.
It follows that leave for the proposed cross-appeal must be declined despite the fact that it would not further delay the proceeding given Juken’s appeal.
Result
The respondent’s application for leave to bring a cross-appeal against the High Court judgment declining (in part) its application for particular discovery is declined.
The respondent must pay costs to the appellant for a standard application on a band A basis and any usual disbursements.
Solicitors:
Hesketh Henry, Auckland for Appellant
Meredith Connell, Auckland for Respondent
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