Li v Yeung
[2024] NZHC 2352
•21 August 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-2473
[2024] NZHC 2352
BETWEEN KAREN KAYAN LI
First Plaintiff
HUI LING (CATHERINE) KWOK
Second PlaintiffAND
LAM YEUNG
First Defendant/Respondent
YUHONG (CATHERINE) GAO
Second Defendant
Hearing: On the papers Appearances:
AME Parlane for the Plaintiffs
NJ Scampion and JAR Barrow for the First Defendant OV Collette-Moxon for the Second Defendant
Judgment:
21 August 2024
JUDGMENT OF FITZGERALD J
[As to waiver of privilege]
This judgment was delivered by me on 21 August 2024 at 4.00pm, pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
………………….……………
Solicitors: Parlane Law, Auckland
Tompkins Wake, Auckland Martelli McKegg, Auckland
To:N Scampion, Auckland J Barrow, Auckland
O Collette-Moxon, Auckland
LI v YEUNG [2024] NZHC 2352 [21 August 2024]
Introduction
[1] This judgment determines whether statements contained in an affidavit sworn by the second plaintiff, Ms Kwok, put certain privileged communications into issue in this proceeding and thus amounted to a waiver of privilege in those communications.
Background
[2] In a judgment delivered on 1 June 2023 (the judgment), I granted the plaintiffs’ application to continue this proceeding as a representative proceeding pursuant to r 4.24 of the High Court Rules 2016 (the Rules). I also declined the plaintiffs’ application for asset preservation orders against each of the defendants pursuant to s 522 of the Financial Markets Conduct Act 2013 (FMCA).1
[3] The underlying proceeding concerns what the plaintiffs allege to have been a “ponzi-scheme” that they and other members of their community invested in but lost their investments. The plaintiffs say that the defendants were central to the promotion of the scheme in New Zealand. They allege that the defendants engaged in misleading and deceptive conduct in relation to the scheme, in contravention of both the FMCA and the Fair Trading Act 1986.
[4] The defendants deny that they were central to the promotion of the scheme in New Zealand and say that, like the plaintiffs (and those other investors in the scheme whom the plaintiffs represent), they too lost considerable sums of money from investing in the scheme.
[5] Following delivery of the judgment, the defendants sought leave to appeal against that aspect of the judgment permitting the proceeding to continue as a representative proceeding.2 The defendants also sought a stay of the proceeding pending their appeal being determined (if leave to appeal were granted). The plaintiffs did not oppose leave to appeal or the stay being granted and on 18 August 2023, I made such orders by consent. The second defendant’s notice of appeal was filed in
1 Li v Yeung [2023] NZHC 1373.
2 Leave being required pursuant to s 56(3) of the Senior Courts Act 2016, given the judgment was a decision on an interlocutory application.
the Court of Appeal on 13 September 2023, and the first defendant’s notice of appeal was filed two days later.
[6] On 2 October 2023, the plaintiffs filed a notice of cross-appeal in the Court of Appeal. The proposed cross-appeal was against that aspect of my judgment declining to grant the plaintiffs’ application for asset preservation orders. On 14 November 2023, the Court of Appeal directed that the cross-appeal could not be filed without leave to cross appeal first having been determined in the High Court.
[7] Approximately six months later (nearly a year after the judgment had been delivered), on 20 May 2024, the plaintiffs filed an application in this Court for a temporary lifting of the stay and for leave to cross appeal. An affidavit sworn by the second plaintiff, Ms Kwok, was filed in support of the application. Two paragraphs within her affidavit are said to have given rise to waiver of privilege. It is helpful to set out those paragraphs in full. Ms Kwok said:
We were out of time filing the cross-appeal because our old lawyers, Shine Lawyers, did not tell us about the strict time limits to file the cross-appeal. This is one of the reasons we changed lawyers. Our previous lawyer, Mr Hamish Davies of Shine Lawyers also consented to granting leave for Ms Gao and Ms Lam’s appeal of the Representative Proceeding Order that we won, yet he did not seek leave for us. We do not know why this happened. We do not want to be penalised or disadvantaged by this. We think that Ms Lam and Ms Gao should consent to us appealing since our previous lawyer, Mr Davies, gave the same consent to them, as this is only fair. Our group has been fighting a long time for justice because of this ponzi scheme. We ask the court helps us get justice.
Why we want to appeal the asset preservation ruling
We want to appeal the ruling on asset preservation orders because we want to be sure that there are assets available for the defendants to pay us [if] we are successful in our case.
[8] On 6 June 2024, the first defendant filed a notice of opposition to the plaintiffs’ application (together with a supporting affidavit of Ms Yeung). The grounds of opposition included the plaintiffs’ delay in seeking leave to cross appeal, and that “the delay in seeking leave to appeal is not, as alleged, apparently explicable by erroneous legal advice provided by the plaintiffs’ former lawyers”. The first defendant’s notice of opposition also stated:
The Plaintiffs have not provided copies of the advice they claim to have received (or the documents surrounding a failure to advise) about timeframes for appeal and upon which fact they intend to rely as to why they did not adhere to the original deadline for filing and serving an application for leave to appeal on 30 June 2023. The First Defendant also says privilege has been waived in that otherwise privileged material.
It is irrelevant that the Plaintiffs consented to the First Defendant’s own application for leave to appeal; the Plaintiffs did not, at that time, request from the First Defendant for leave to appeal the asset preservation order. The two requests are not connected.
[9] On 7 June, the second defendant filed a notice of opposition. The grounds of opposition also included the delay in the plaintiffs seeking leave to cross appeal, and further stated:
The reasons asserted by the plaintiffs for their excessive delay variously either do not exist, are wrong, are irrelevant, lack credibility and/or are inadequately explained and so should be ignored, or are trivial; and therefore, there is no acceptable reason for such delay by the plaintiffs.
[10] Two affidavits were filed in support of the second defendant’s notice of opposition, one being sworn by Ms Hills, a director of Shine Lawyers (the plaintiffs’ previous lawyers). In her affidavit, Ms Hills sets out the extract from Ms Kwok’s affidavit as replicated at [7] above, and goes on to say:
I will explain what happened concerning the possibility of an appeal or cross-appeal against the judgment, and the allegation Shine Lawyers did not advise about “… the strict time limits to file the cross-appeal”. First, since this affidavit is given at the request of the lawyers for the second defendant to respond to the above allegations by the plaintiffs, I rely on the following matters:
(a) any privilege in communications between lawyers at Shine and the plaintiffs in the period following the judgment, including any advice about an appeal or cross-appeal from the judgment, is waived by the plaintiffs under s.65(3)(a) of the Evidence Act 2006. By relying on an allegation that Shine failed to advise them about time limits for a cross-appeal in support of their leave application now, they are putting in issue in this proceeding the advice they received following the judgment, and the circumstances surrounding that advice; and …
(emphasis added)
[11] Based on the stated view that privilege had been waived, Ms Hills’ affidavit goes on to discuss, and exhibits, a number of communications between the plaintiffs
and their (then) lawyers at Shine Lawyers, being Ms Parlane and, from mid-June 2023, Mr Davies. The exhibits comprise:
(a)An email from Ms Parlane to the plaintiffs dated 2 June 2023 (exhibit A). Ms Parlane’s email circulated the judgment and explained its outcomes and the immediate next steps to be taken. Her email also discussed the prospects of obtaining litigation funding without the asset preservation orders, and suggested a meeting with the plaintiffs. The email did not address any potential appeal against the judgment (by either the plaintiffs or defendants).
(b)A letter from Mr Davies to the plaintiffs dated 27 June 2023, providing further advice on a number of matters following delivery of the judgment (exhibit B).3 The letter addressed submitting draft representative orders to the Court for review, set out the dates for the filing of costs memoranda, advised the date by which any appeal against the judgment would need to be filed (said to be 29 June 2023), advised that the second defendant had filed an application for leave to appeal, provided advice on a possible cross-appeal, stated that any cross-appeal would need to be filed by 29 June 2023, and asked that the plaintiffs “urgently confirm [their] instructions on this”. Mr Davies’ letter also went on to address the prospects of litigation funding being secured, gave advice on possible next steps in the litigation overall, and addressed payment arrangements between the plaintiffs and Shine Lawyers. In the “conclusion” section of the letter, Mr Davies again sought instructions on filing a cross-appeal.
I pause to interpolate that it is not in dispute that the advice that any cross-appeal would need to be filed by 29 June 2023 was incorrect. As the second defendant had already filed an application for leave to appeal, which had been served on the plaintiffs on 26 June 2023, any
3 Ms Parlane then no longer working with Shine Lawyers.
application for leave to cross appeal was required to be filed on or before 10 July 2023.4
(c)A letter from Mr Davies to the plaintiffs dated 25 July 2023 providing a further update (exhibit C). This noted that both defendants had sought leave to appeal and it gave advice to the effect that the plaintiffs ought not to oppose leave being granted, explained the cost consequences of opposing the appeals themselves (rather than the applications for leave to appeal), and sought the plaintiffs’ urgent instructions on whether to oppose the applications for leave to appeal. The letter also went on to set out the terms of Shine Lawyers’ engagement with the plaintiffs. The letter also addressed funding arrangements between Shine Lawyers and the plaintiffs. In the “conclusion” section of the letter, Mr Davies sought the plaintiffs’ instructions on whether they “[did] not oppose the defendants’ application seeking leave to appeal”, and also on a potential meeting with the defendants.
(d)Finally, an email from the plaintiffs to Mr Davies, confirming that “the group have agreed not to oppose the application seeking leave to appeal” (exhibit D). The email also addressed the suggested meeting with the defendants.5
[12] Following Ms Hills’ affidavit being served, Ms Parlane, who had by then been re-engaged to act for the plaintiffs, raised concerns about the affidavit disclosing privileged communications. Mr Collette-Moxon, for the second defendant, responded that Ms Kwok’s affidavit had put the privileged communications in issue and thus had waived privilege in them. Before further steps were taken on the plaintiffs’ application for leave to cross appeal, I directed that the question of waiver of privilege would need to be determined, so that it was clear what evidence was properly before the Court on that application. Pending the question of waiver being determined, I directed the Registry to remove Ms Hills’ original affidavit from the file and to place it in a sealed
4 High Court Rules 2016, r 20.22(3).
5 An email from Mr Davies to counsel for the defendants, confirming that the plaintiffs did not oppose the defendants’ applications for leave to appeal, is also exhibited to Ms Hills’ affidavit (exhibit E). It is not a privileged communication.
envelope labelled “Affidavit not to be read pending further order of the Court”. I also made timetable orders for the filing of submissions on the waiver issue, and confirmed that I would determine the matter on the papers.
Plaintiffs’ submissions
[13] Ms Parlane submits that Ms Hills’ affidavit breaches rules of “courtesy, privilege, and confidentiality”. She says that while Ms Hills’ affidavit included the admission of incorrect legal advice pertaining to the time frame for filing a cross-appeal, the affidavit should not have included the other material traversed in the body of the affidavit or attached to it as exhibits. Ms Parlane says that if Ms Kwok waived any privilege, it only extended, at most, to any advice given by Shine Lawyers to the plaintiffs about the date for filing an application for leave to cross appeal.
[14] Ms Parlane also takes issue with the fact that Ms Hills, rather than Mr Davies, provided the affidavit, given that Ms Hills had not been involved in the file to that point. She submits that the request for evidence on the plaintiffs’ application for leave made by Mr Collette-Moxon, on behalf of the second defendant, was clearly made to Mr Davies and not Ms Hills and, as such, Ms Hills, who had not acted in the proceedings, was not obliged to give evidence pursuant to r 13.7 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008.6
[15] Ms Parlane further says that the key question is whether Ms Kwok had put into issue what she describes as “quite an exposé of legal advice the [plaintiff] group received spanning the period of time following the delivery of the decision on 1 June 2023”. She submits that it appears that Ms Hills incorrectly relied on the defendants’ counsel to conclude that Ms Kwok had waived privilege in the broad scope of advice addressed in and exhibited to her affidavit. Ms Parlane submits that the privileged communications exhibited to Ms Hills’ affidavit go well beyond the statements made by Ms Kwok in her affidavit, as set out at [7] above. She accordingly submits that any advice not relating to the timeframes for seeking leave to cross appeal has not been
6 Rule 13.7 provides: “Where a lawyer is approached to give evidence in a court proceeding that relates to a matter in which the lawyer acted, the lawyer must not be obstructive and must, subject to the rules of privilege and the duty of confidence, provide all information relevant to the matter in issue to any party to the proceeding and to the court that the lawyer would be obliged to provide if subpoenaed as a witness.”
put in issue. She further submits that Ms Kwok’s reference to Mr Davies confirming that the plaintiffs did not oppose the defendants’ application for leave to appeal was already mentioned in a court minute dated 18 August 2023, such that Ms Kwok has not put any related advice “in issue”.
Second defendant’s submissions
[16] Mr Collette-Moxon submits that Ms Kwok has put privileged communications in issue, and that the waiver of privilege was broad and encompassing. He submits that Ms Hills’ original affidavit should remain on the file as it discloses evidence which contradicts key aspects of Ms Kwok’s affidavit, which in turn raises issues of Ms Kwok’s credibility which should be before the Court of Appeal (on the appeal against the representative orders), and that the affidavit is relevant to the plaintiffs’ extant application for leave to cross appeal. Mr Collette-Moxon nevertheless annexes to his submissions a further version of Ms Hills’ affidavit with some, albeit relatively minor, redactions which he suggests could appropriately be made.
[17] Mr Collette-Moxon then sets out six key statements from paragraphs four and five of Ms Kwok’s affidavit (set out at [7] above), which he submits brought all the privileged material covered in Ms Hills’ affidavit into issue. Those statements are that:
(a)The plaintiffs were out of time because Shine Lawyers did not tell them about the time-limit to seek leave to cross appeal (statement A).
(b)That absence of advice was one of the reasons why the plaintiffs changed lawyers (statement B).
(c)The plaintiffs do not know why Shine Lawyers consented to the defendants having leave to appeal but also didn’t ask the defendants to consent to them having leave to cross appeal (statement C).
(d)The plaintiffs do not want to be penalised or disadvantaged by Shine Lawyers not having asked the defendants to consent to them having such leave (statement D).
(e)The plaintiffs think the defendants should now consent to them having such leave, as this would be fair (statement E).
(f)The plaintiffs want to appeal the ruling on asset preservation orders because they want to be sure that there are assets available in the event their claims are successful (statement F).
[18] Mr Collette-Moxon goes on to address each statement and why, in his submission, the statement put related privileged advice in issue. He says:
(a)In relation to statement A, Ms Kwok has put into issue any advice received on the time for seeking leave to cross appeal, given the suggested absence of advice is relied upon by the plaintiffs to explain their delay in seeking leave.
(b)In relation to statement B, he submits that the same absence of legal advice on the timeframes for filing a cross-appeal is asserted by Ms Kwok to be a reason why the plaintiffs changed lawyers. He submits this statement was made to “lend credibility” to statement A and, in relying on this statement in the affidavit, the plaintiffs “injected into evidence and so relied on privileged material, namely, the reasons why the plaintiffs decided to change lawyers.” In relation to both statements A and B, Mr Collette-Moxon says that “the plaintiffs opened the door and the defendants must see all related and contextual material”.
(c)In relation to statements C and D, Mr Collette-Moxon submits that Ms Kwok has asserted that the plaintiffs did not know why Mr Davies consented to the defendants’ application for leave to appeal (statement C), which he says is in turn relied on to underpin statement D. He submits that these statements inject into evidence “the reasons why their lawyers had not sought the defendants’ consent to a cross-appeal, and what the plaintiffs actually think about it.” Mr Collette-Moxon goes on to submit that:
… asserting a total absence of knowledge about why their lawyers failed to do something, means the other party must see all information relating to why exactly those lawyers did not do that thing, including all related contextual material, to be fully informed to either accept or properly and fully rebut the point.
(d)In relation to statement E, Mr Collette-Moxon submits that it, in conjunction with statements C and D, relies on privileged material, namely whether and, if so, how the plaintiffs consider that what their lawyers did, or did not do, was really the fault of their lawyers. He says that statements C, D, and E effectively advance reasons to excuse the very late filing of the application for leave to cross appeal, said to be matters not within the plaintiffs’ control and for which they say they should not be blamed. He submits that since there has been an “opening [of] the door” to privileged communications in this way, the defendants ought to see all related and contextual material.
(e)Finally, in relation to statement F, Mr Collette-Moxon says that by stating why the plaintiffs now wish to advance a cross-appeal, the only “rational purpose” of that statement is that the same reason for wanting to cross appeal would have caused the plaintiffs to apply earlier were it not for their lawyers’ failures. Mr Collette-Moxon submits:
By relying on this affidavit, including statement F in conjunction with all prior statements A to E, the plaintiffs injected into evidence and so relied on privileged material, namely, to say that their lawyers’ failures to apply were causative and mattered because of this underlying reason given in statement F. This puts directly in issue whether the plaintiffs really want to seek asset-preservation orders now for the reason Ms Kwok gave explicitly (i.e., to secure assets after judgment), and whether their lawyers had any other reasons to consider the plaintiffs did not actually want to apply any earlier (i.e., such that their lawyers’ failures, if proved, would not matter). This means the other party must see all information relating to these questions, including all related and contextual material, to be fully informed to either accept or properly and fully rebut the point.
(emphasis in original)
[19] Having waived privilege in the manner submitted above, Mr Collette-Moxon submits that the waiver extents to all material necessary to provide the full and complete picture to the opposing party, preventing the privilege-holder from “cherry
picking” what to include or exclude. On this basis, and save for some relatively minor redactions, Mr Collette-Moxon submits that the content and exhibits to Ms Hills’ affidavit do not extend beyond material in which privilege has been waived. Several paragraphs of Ms Hills’ affidavit that are not suggested to be redacted include those addressing Shine Lawyers’ fee arrangements with the plaintiffs. Mr Collette-Moxon says that these are relevant to the question of why the plaintiffs changed lawyers which, he says, was put into issue by Ms Kwok suggesting that the plaintiffs only changed lawyers because of the lack of advice regarding time limits.
[20] Responding to the plaintiffs’ substantive submissions, Mr Collette-Moxon submits that there was no issue with Ms Hills deposing the affidavit rather than the former lawyers who had dealt with the file, and that it is understandable, given the circumstances, that a senior lawyer from the firm would provide the evidence. He further notes that no impediment arises from Ms Hills providing the affidavit, given the material it addresses is predominantly written communications in any event, there being no factual issue or dispute about the content of those communications. Mr Collette-Moxon also submits that there is not any apparent issue with the seriousness with which Ms Hills approached the question of whether privilege had been waived. He concludes by submitting that the Court could seek further input from Ms Hills as to the approach taken to her affidavit if there remains any residual concern.
Law on privilege and waiver
[21] Pursuant to s 54 of the Evidence Act 2006, communications between a legal adviser and the person who requested or obtained the professional legal services of that legal adviser are privileged if they were intended to be confidential and were made in the course of, and for the purpose of, obtaining or giving legal advice.7 A person who has privilege conferred by s 54 in respect of any communication or information has the right to refuse to disclose in a proceeding the communication and any opinion based on that communication.8 Unlike many other forms of privilege, legal advice privilege is “sacrosanct” and almost entirely unqualified.9
7 Evidence Act 2006, s 54(1).
8 Section 53(1).
9 Guardian Royal Exchange Assurance of New Zealand Ltd v Stuart [1985] 1 NZLR 596 (CA) at 601; and B v Auckland District Law Society [2003] UKPC 38, [2004] 1 NZLR 326 at [37].
[22] The law on the waiver of privilege is well settled. Section 65 of the Evidence Act sets out that privilege may be waived expressly or impliedly. Pursuant to s 65(3), a person waives privilege if they act “so as to put the privileged communication, information, opinion, or document in issue in a proceeding.” The test to be applied is whether, in all the circumstances, the conduct is inconsistent with maintaining the confidentiality of the privileged material in a way that could lead to injustice if the privilege is upheld.10 This Court in Astrazeneca Ltd v Commerce Commission, relying on Ophthalmological Society v Commerce Commission, held that:11
Waiver occurs where a party both asserts reliance upon the privileged communication and also seeks to inject the substance of the communication in evidence. At that point an abuse of the privilege exists. The claimant cannot have the benefit of reliance upon the substance of the advice and still seek to shield that advice from disclosure to the other side. To permit this would give rise to unfairness in the required sense, in that the party’s conduct would be offensive to the trial process.
[23]The Court of Appeal in Ophthalmological Society held that:12
[30] The fairness factor has, however, rightly been treated as of particular importance in cases where partial disclosure of legal advice raises questions over whether natural justice requires disclosure of the whole advice. In the end, however, as Mann v Carnell makes plain, it is the Court’s objective judgment as to the consistency of the conduct with maintaining the privilege which must be assessed in all the circumstances. That requires close analysis of the particular context: what is the issue in relation to the privilege; how does the evidence relate to that issue and is there inconsistency that could lead to injustice if the privilege is upheld.
[24]If a privileged communication has been put into issue:13
… waiver generally extends to all connected documents, and the enquiry becomes whether there is a commonality of issues addressed by the connected documents. A party to a privileged communication is not entitled to make selective disclosure that can leave the inspecting party, and potentially the Court, with a misleading picture.
10 Ophthalmological Society v Commerce Commission [2003] 2 NZLR 145 (CA) at 154. This test, although enunciated in a pre-Evidence Act decision, is still applicable to a consideration of both ss 65(2) and 65(3)(a). Also see Astrazeneca v Commerce Commission (2008) 12 TCLR 116 (HC) at [31]–[39]; and Houghton v Saunders (2009) 19 PRNZ 476 (HC) at [55].
11 Astrazeneca v Commerce Commission, above n 10, at [39].
12 Ophthalmological Society v Commerce Commission, above n 10.
13 Westgate Town Centre v Auckland Council [2021] NZHC 858 at [49] (footnotes omitted), referring to Pacific Pine Ltd v KRTA Ltd HC Gisborne CP34/89, 24 June 1993 at [28]–[30], in which the Court adopted the approach of waiver extending beyond the “principal document” to subsequent communications addressing “the same subject matter”.
[25]The authors of Cross on Evidence make a similar point:14
Once privilege is waived with respect to particular documents recording a privileged communication, then it is waived with respect to other records of the same privileged communication as well. This principle of “collateral waiver” prevents a party from “cherry picking” which records of a particular privileged communication will be introduced as evidence in the case, and which will be held back. Collateral waiver has a broad effect. It extends further than requiring disclosure of all records of the particular communication with respect to which privilege has been waived. Collateral waiver will also apply to all other privileged communications and documents dealing with the same issue. A party will not be entitled selectively to waive privilege for only some of the material relating to the relevant issue, and thus rely on material favourable to its case, while keeping unfavourable material confidential. The issues in this context are the specific propositions that the party offering privileged material in evidence seeks to support with the privileged material offered. The collateral waiver does not extend to requiring all documents on a solicitor’s file to be disclosed if privilege for some documents on the file is waived.
Discussion
[26] It is first helpful to recall the issues that will need to be determined on the plaintiffs’ application for leave to cross appeal. This is because to the extent there has been a waiver of privilege, the second defendant seeks to put privileged communications before the Court as evidence on the plaintiffs’ application for leave to cross appeal. It is trite, but any such evidence, even if there has been a waiver, must be relevant to the issues to be determined. If the evidence is not relevant, it will not be admissible.15
[27] The first issue that will need to be determined is whether the time period set out in r 20.22 for the plaintiffs to file an application for leave to cross appeal (namely within 10 working days of being served with an application for leave to appeal)16 ought to be extended. This brings in to play the Court’s discretion under r 1.19 to extend time periods set out in the High Court Rules. In the context of the present application, considerations at this stage of the enquiry will include the length of the delay, the reason(s) for the delay, the apparent merits of the application for leave to cross appeal
14 Andru Isac (ed) Cross on Evidence (online ed, LexisNexis) at [EVA65.5] (emphasis added, footnotes omitted).
15 Evidence Act, s 7(3).
16 High Court Rules, r 20.22(3).
(if an extension is granted), and whether any party will suffer any unfair prejudice as a result of an extension being granted.
[28] If an extension of time is granted, the following matters will be relevant to whether leave to appeal ought to be granted (if an extension of time is first granted):17
(a)Whether the appeal is not likely to be overtaken by the substantive hearing or cannot otherwise be considered as effectively in a substantive appeal.
(b)Whether the appellant is likely to be prejudiced by a postponement to the substantive appeal.
(c)Whether the appeal may be dispositive of the case in law or as a practical matter.
(d)Whether the arguments on the proposed appeal are capable of bona fide and serious argument.
(e)Whether the issue concerns a decision of sufficient significance to the parties or a question of law or general principle of sufficient importance as to outweigh the cost and delay of an appeal.
[29] Turning then to the question of waiver, it is convenient to set out again the relevant aspects of Ms Kwok’s affidavit:
We were out of time filing the cross-appeal because our old lawyers, Shine Lawyers, did not tell us about the strict time limits to file the cross-appeal. This is one of the reasons we changed lawyers. Our previous lawyer, Mr Hamish Davies of Shine Lawyers also consented to granting leave for Ms Gao and Ms Lam’s appeal of the Representative Proceeding Order that we won, yet he did not seek leave for us. We do not know why this happened. We do not want to be penalised or disadvantaged by this. We think that Ms Lam and Ms Gao should consent to us appealing since our previous lawyer, Mr Davies, gave the same consent to them, as this is only fair. Our group has been fighting a long time for justice because of this ponzi scheme. We ask the court helps us get justice.
17 Li v Chief Executive of the Ministry of Business, Innovation and Employment (No 2) [2018] NZHC 1171, [2018] NZAR 1134 at [21].
Why we want to appeal the asset preservation ruling
We want to appeal the ruling on asset preservation orders because we want to be sure that there are assets available for the defendants to pay us [if] we are successful in our case.
[30] Despite the extensive submissions filed on the present issue, I consider the issues for determination to be narrow and relatively straightforward.
[31] First, I consider it plain that Ms Kwok has put in issue any advice the plaintiffs received on the time period within which they needed to file any application for leave to cross appeal (or any cross-appeal). Ms Kwok expressly states that the plaintiffs were not advised of the time periods involved, and relies on that to explain the delay in applying for leave. She has therefore put in issue any privileged communications giving advice on the timeframes for filing an application for leave to cross appeal. It is immaterial to the question of waiver that the advice that was actually given on that topic was incorrect.
[32] Second, I do not consider Ms Kwok has put in issue any privileged communications concerning the reasons why the plaintiffs changed lawyers. As a preliminary point, why the plaintiffs changed lawyers is irrelevant to the current application. The fact there was a change in lawyers is not relied upon to explain the delay in seeking leave to cross appeal. Further, and most importantly for the purposes of waiver, the mere fact that Ms Kwok states that one reason why the plaintiffs changed lawyers was a stated lack of advice on the timeframe to cross appeal (or apply for leave to cross appeal) does not itself put any privileged communications in issue (beyond that already waived for the reasons set out at [31] above).
[33] Third, I am satisfied that Ms Kwok has put in issue any privileged communications relating to why Mr Davies confirmed the plaintiffs did not object to the defendants’ application for leave to appeal, and what the plaintiffs knew about this. Ms Kwok expressly says that the plaintiffs do not know why Mr Davies consented. However, Mr Davies gave express advice on that point (to the effect there were no grounds for the plaintiffs to oppose leave being granted) and sought the plaintiffs instructions on that point, and the plaintiffs confirmed their instructions that they would not oppose the defendants’ application for leave to appeal. It is debatable
whether evidence on this topic is relevant to the application. As the first defendant’s notice of opposition states, the fact that the plaintiffs did not oppose the defendants’ applications for leave to appeal is irrelevant to whether the plaintiffs should now be granted an extension of time to apply for leave to cross appeal (and, if an extension is granted, whether leave to cross appeal should be granted). Nevertheless, Ms Kwok herself has linked the two matters in her affidavit, and expressly put in issue why Mr Davies consented to the defendants’ applications and what the plaintiffs knew about that. In doing so, I am satisfied Ms Kwok put privileged communications relating only to that point in issue.
[34] Beyond what is stated above, I do not consider Ms Kwok has put any other privileged communications in issue. Ms Kwok’s views or musings on what is or is not fair, on not wanting to be prejudiced, and on why the plaintiffs now wish to cross appeal against the asset preservation orders, are not only irrelevant to the application (and indeed are inadmissible in any event, being statements of belief, intention, and akin to submissions), but do not put in issue any privileged communications between the plaintiffs and Shine Lawyers. I am bound to observe that I find the approach taken on behalf of the second defendant in suggesting that statements B, D, E, and F in Ms Kwok’s affidavit put privileged communications in issue to be somewhat strained and artificial.
[35] Finally, I am clear in my view that the waivers of privilege referred to at [31] and [33] above do not extend to the quite broad privileged communications that have been disclosed by Ms Hills’ affidavit. As can be seen from Ms Hills’ affidavit set out at [10] above, an approach appears to have been adopted that privilege in any advice concerning the judgment, and steps to be taken following it, has been waived. That cannot be right. The waiver only extends to particular advice which has been put in issue, as well as any other privileged communications which address the same issue (so as to prevent the “cherry picking” referred to in the above extract from Cross on Evidence). Waiver of privilege in communications addressing the time period for filing an application to cross appeal (or for leave to cross appeal) and whether the plaintiffs should oppose the defendants’ applications for leave to appeal, does not waive privilege in broader, unconnected advice on other matters such as:
(a)Ms Parlane’s general advice contained in her email of 2 June 2023 about the outcome of the judgment and the immediate next steps to be taken as a result of it, unconnected with any appeals;
(b)advice on costs awards (also addressed in Ms Parlane’s email of 2 June 2023);
(c)any advice contained in Mr Davies’ letter dated 27 June 2023 about next steps to be taken in the proceedings more generally, or advice on costs, litigation funding, and future conduct and strategy concerning the proceedings; and
(d)any advice contained in Mr Davies’ letter dated 25 July 2023 concerning the payment of fees by the plaintiffs and a potential meeting with the defendants.
[36] Nor are any of these matters relevant to the issues to be determined on the present application in any event.
[37] Standing back, there is nothing unfair or inconsistent in Ms Kwok putting in issue advice about the timeframe for filing an application to cross appeal (or for leave to cross appeal), or advice about whether the plaintiffs should oppose the defendants’ application for leave to appeal, yet maintaining privilege/confidentiality in advice given by Shine Lawyers on a range of other matters concerning this litigation. No misleading picture is presented to the Court (or to the defendants) by privilege being maintained in respect of advice on those other topics.
[38] I am therefore satisfied that the content of and, in particular, the exhibits to Ms Hills’ affidavit go far beyond the quite narrow privileged communications that Ms Kwok impliedly waived privilege in as a result of the contents of paragraph four of her affidavit.
[39] Finally, I consider the issues raised about whether Ms Hills or Mr Davies ought to have sworn the affidavit to be somewhat of a red herring. Irrespective of who swore the affidavit, consideration would need to have been given to whether privilege had been waived in any of Shine Lawyers’ correspondence with the plaintiffs. If there was a valid waiver of privilege, and assuming the relevant correspondence was otherwise admissible, then on an application such as this, I do not consider it to be an issue that Ms Hills put that correspondence in evidence by way of her affidavit rather than Mr Davies. As Mr Collette-Moxon notes, the relevant evidence is the written correspondence between Shine Lawyers and the plaintiffs. The evidence is not of disputed factual matters that ought to be addressed by a person who can give admissible first-hand evidence about such factual matters. On interlocutory applications, legal correspondence is frequently admitted via affidavits of persons not directly involved in the correspondence concerned, for example, legal secretaries.
[40] For completeness, I also offer the following observations on how the issues arising and addressed in this judgment might be avoided. If a party considers another party has waived privilege in particular communications by putting those communications in issue in a proceeding, that ought to be raised with the party which would otherwise claim privilege. If the issue of waiver is in dispute, that can be determined by the Court prior to any potentially privileged communications being disclosed to the other party (or parties). To the extent the Court concludes that privilege in respect of certain advice or communications has been waived, the Court can give directions on the scope of material that is to be disclosed to the other party or which may be adduced in evidence. That avoids the unfortunate scenario which arose in this case, namely the defendants being privy to communications between Shine Lawyers and the plaintiffs on a range of matters in respect of which privilege was not waived.
Next steps
[41] Ms Hills’ original affidavit and its exhibits will therefore need to be removed from the court file and replaced with an affidavit which omits the following aspects of the original affidavit (in which privilege has not been waived):
(a)All of paragraph 2.3 of Ms Hills’ affidavit, and exhibit “A” (in its entirety);18
(b)All of exhibit “B”, other than:
(i)the addresses, salutations, and sign-off;
(ii)the opening words to paragraph 5, and sub-paragraph (b);
(iii)the last sentence of paragraph 11 (commencing “As we referred to above…”); and
(iv)the opening words to paragraph 17, and sub-paragraph (a).
(c)All of exhibit “C”, other than:
(i)the addresses, salutations, and sign-off;
(ii)the heading “Appeal” and paragraphs 3 to 6; and
(iii)the opening words to paragraph 9, and sub-paragraph (b).
(d)The text in exhibit D commencing at “In regard to meeting with the defendant” and ending at “once we have come to agreement” (so the only substantive text remaining in the email is the first sentence).19
[42] The Registry is accordingly directed to retain Ms Hills’ original affidavit in the envelope referred to at [12] above, and is further directed to remove the version of Ms Hills’ affidavit attached as an annexure to Mr Collette-Moxon’s submissions dated 16 July 2024 and to place it in the same envelope. The envelope is to be re-sealed and is to have the following wording added to it: “Contains privileged material. Not to
18 The remainder of Ms Hills’ affidavit, rather than its exhibits, does not otherwise disclose privileged communications, or if it does, addresses material which I am satisfied Ms Kwok waived privilege in (paragraphs 2.6 and 2.7 of Ms Hills’ affidavit).
19 As noted earlier, exhibit E to Ms Hills’ affidavit is not a privileged communication and can remain as an exhibit to Ms Hills’ replacement affidavit.
be opened or inspected without prior leave of a Judge. See judgment of Fitzgerald J dated 21 August 2024.”
[43] The second defendant is to file a further version of Ms Hills’ affidavit which reflects those directions at [41] above. This is to be filed on or before 28 August 2024. Mr Collette-Moxon should also take steps to ensure that neither he, his instructing solicitors, the first or second defendants, nor their counsel/instructing solicitors, retain any copies of Ms Hills’ original affidavit, or that version annexed to his submissions dated 16 July 2024.
[44] To the extent any aspects of the plaintiffs’ application for an extension of time and for leave to cross appeal remain “live” (it being understood that agreement may have been reached on the application, at least as between the plaintiffs and the second defendant), on or before 11 September 2024, the plaintiffs are to file:
(a)any affidavit(s) in reply; and
(b)any further submissions they wish to make in support of their application (that is, in addition to those submissions set out in Ms Parlane’s memorandum dated 20 May 2024).
[45] Within a further 10 working days of the above materials being filed, the defendants (to the extent the plaintiffs’ application remains on foot in relation to that defendant) are to file any submissions to be made in opposition to the application.
[46] Counsel are reminded of the 10-page limit for submissions on interlocutory applications.
[47] I will thereafter determine any outstanding aspects of the plaintiffs’ application for an extension of time and for leave to cross appeal on the papers.
[48] Finally, the parties should seek to agree the costs of determining the waiver of privilege issue. My preliminary but non-binding view is that an appropriate outcome may be that costs lie where they fall. I have concluded that Ms Kwok did put some privileged communications in issue, though I have rejected the second defendant’s
contention that the waiver extends to all the materials exhibited to Ms Hills’ affidavit. Given I have concluded that the scope of the waiver was considerably narrower than as contended for by the second defendant, my preliminary and non-binding view is that it would not be appropriate to award the second defendant costs.
[49] If, despite these views, the parties cannot agree costs, any party seeking costs may file a costs memorandum within 10 working days of the date of this judgment. Any memoranda in response are to be filed within a further five working days. No memorandum is to be longer than three pages (excluding any accompanying schedules of costs claimed). I will thereafter deal with costs on the papers.
Fitzgerald J
4
0