Longevity Developments Limited (in liquidation) v Kilpatrick
[2023] NZHC 963
•28 April 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-002760
[2023] NZHC 963
BETWEEN LONGEVITY DEVELOPMENTS LIMITED (IN LIQUIDATION)
PlaintiffsAND
ROBERT KILPATRICK
Defendant
CIV-2019-404-000374 BETWEEN
ROBERT KILPATRICK
PlaintiffAND
ANTHONY RONALD DAMIAN CORIN
Defendant
Hearing: 20 March 2023 Appearances:
A J P Holmes for A Corin Defendant in Person
Judgment:
28 April 2023
JUDGMENT OF ASSOCIATE JUDGE GARDINER
This judgment was delivered by me on 28 April 2023 at 11.30 a.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date.......................................
Solicitors:
Ponsonby Law Ltd, Auckland A J B Holmes, Auckland
LONGEVITY DEVELOPMENTS LTD v KILPATRICK [2023] NZHC 963 [28 April 2023]
Introduction
[1] Robert Kilpatrick and Anthony Corin agreed to develop a property at Redoubt Road, Manukau. They entered into a ‘Heads of Agreement’. They intended that Onestop Projects Limited (OPL) (now in liquidation), a construction company owned and controlled by Mr Corin, would build the property’s housing and infrastructure.
[2] Mr Kilpatrick and Mr Corin discussed other development opportunities, including at Kivell Close, Cardigan Street, and Matapan Road. Mr Kilpatrick says that he introduced Mr Corin to the owners of these properties, but discussions with Mr Corin and/or OPL did not progress. Mr Corin claims that these opportunities, and other projects at Pilkington Road and Yates Road were part of the joint venture arrangement between he and Mr Kilpatrick.
[3] After around one year of working together, the relationship between Mr Kilpatrick and Mr Corin broke down.
[4] In this proceeding Mr Kilpatrick claims from Mr Corin repayment of $250,000 he loaned to another of Mr Corin’s companies, Longevity Developments Limited (in liq), a loan which Mr Corin guaranteed. He claims, if there was a joint venture and/or other fiduciary relationship between he and Mr Corin (which he denies), that Mr Corin breached his fiduciary obligations by taking unauthorised drawings, engaging in improper conduct, removing Mr Kilpatrick as shareholder and director of OPL, excluding Mr Kilpatrick from development projects, and failing to account to Mr Kilpatrick for his share of the profits received from those projects. Mr Kilpatrick seeks an account of the profits made by Mr Corin in breach of the alleged joint venture and/or other fiduciary relationship, and compensation for the unauthorised drawings.
[5] Mr Corin counterclaims against Mr Kilpatrick for breach of fiduciary duty by excluding Mr Corin from the projects they were pursuing, including those described above.
[6] A further area of dispute concerns an agreement with an Australian company, Formcraft Pty Ltd, for the exclusive right to distribute its construction products in New Zealand. Mr Corin says he introduced that opportunity to Mr Kilpatrick and his
acquaintance Mr Ede. He says that the three of them formed Formcraft New Zealand Limited which entered into a distribution agreement with Formcraft Pty Ltd under which Formcraft New Zealand was appointed as the sole distributor of the products in New Zealand. Mr Corin claims that after the relationship between he and Mr Kilpatrick broke down, Mr Kilpatrick and Mr Ede formed a new entity, Formdeck NZ Limited, and entered into a distribution agreement with Formcraft Pty Limited.
[7] Mr Corin has filed an interlocutory application for further discovery from Mr Kilpatrick. He claims Mr Kilpatrick has failed to discover relevant documents. He also challenges Mr Kilpatrick’s claim to confidentiality and legal professional privilege over certain documents.
[8] Mr Kilpatrick initially opposed the application but during the hearing agreed to a substantial portion of the orders sought. It is relevant to note that Mr Kilpatrick has already sworn three affidavits of documents, prepared by his former solicitors.1 He now represents himself.
Legal principles
Orders for particular discovery
[9] Under r 8.19 of the High Court Rules 2016, a Court may make an order for particular discovery after the proceeding has commenced, where:
…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…
[10] The starting point is that a document or class of documents will only be discoverable if relevant to the matters at issue before the Court. Only then can it be said that, in terms of the rule, they should have been discovered.2
1 Dated 14 January 2022, 15 February 2022 and 5 September 2022.
2 Robert v Foxton Equities Ltd [2014] NZHC 726, [2015] NZAR 1351 at [8a)].
[11] The Court usually follows a four-stage approach in considering applications under r 8.19.3 First, are the documents relevant to issues before the Court, and if so, how important will they be? Secondly, are there grounds for belief that the documents exist? This will often be a matter of inference. Thirdly, would the time and cost of discovery be proportionate to its potential value? Fourthly, weighing and balancing these matters, and in the Court’s discretion, is an order appropriate?
[12] This Court has previously observed that relevance is to be assessed according to the pleadings.4 In determining relevance, it is the case of the party seeking discovery that must be assumed to be true, not the party from whom discovery is sought. Further, the party seeking particular discovery has the onus of establishing that the party from whom discovery is sought is in control of document that should have been discovered under standard discovery.5
[13] The threshold embodied in “grounds for belief” is not high; all that is necessary is to show is that there is some credible evidence which, assessed objectively, indicates that the documents that are sought exist.6
Privilege and confidentiality
[14] Confidentiality is not a ground for resisting discovery and relevant confidential documents must be listed.7 Rule 8.15(2)(f) of the High Court Rules 2016 permits discovering parties to state in affidavits of documents any restrictions proposed to protect the claimed confidentiality of a document. Parties under r 8.28(3) can limit the inspection of confidential documents to persons specified in the affidavit of documents.
[15] Parties are protected from making privileged documents available for inspection by r 8.28. Parties must make documents containing privileged and non- privileged information available for inspection but may redact privileged information
3 Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd [2015] NZHC 2760, [2018] NZAR 600 at [14]; and Jessica Gorman and others McGechan on Procedure (online ed, Thomson Reuters) at [HR8.19.03].
4 Robert v Foxton Equities Ltd, above n 2 at [8(b)].
5 At [8(c)].
6 Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd, above n 3at [12].
7 McGechan on Procedure (online ed, Thomson Reuters) at [HR8.15.03].
and make it unreadable.8 Parties can limit the inspection of documents to the persons specified in the affidavit of documents.9
[16] Rule 8.25 enables parties to challenge claims to privilege or confidentiality. Parties may apply to the Court for an order setting aside or modifying the claim. Judges may inspect the document to determine validity, set aside or modify the claim, dismiss the application, or make any other just order.
[17] The Court uses its inherent power to control the inspection of documents and ensure the protection of confidential information.10 Section 69 of the Evidence Act 2006 also gives the Court an overriding discretion to protect confidential information and communications if in the public interest.
[18] The onus is on the party claiming confidentiality to establish that each document is confidential.11 Then “the interests of justice in ensuring that a party is able to prepare and present its case should be balanced with the interests of another party in safeguarding its confidential information in a competitive market”.12
[19] I now turn to the categories of documents identified in the schedules to Mr Corin’s interlocutory application.
Schedule A: Documents Mr Kilpatrick has not discovered, but should have discovered
Part 1: Documents referred to or attached to discovered documents
[20] Mr Kilpatrick has discovered an email from Geoff Bennett to Ashley Thompson and Mr Kilpatrick dated 25 October 2018 (document reference KIL1448.001) but has not discovered the attachments to the email. Mr Kilpatrick says that he does not know why the attachments have not been discovered and will search for these attachments and discover them.
8 High Court Rules 2016, r 8.28(2).
9 High Court Rules 2016, r 8.28(3).
10 Jessica Gorman and others McGechan on Procedure (online ed, Thomson Reuters) at [HR8.25.01] citing Vector Gas Contracts Ltd v Contact Energy Ltd [2014] NZHC 3171 at [32].
11 Talley’s Group Ltd v Biomex Trustees Ltd [2021] NZHC 2922 at [41].
12 Payment Express Ltd v Paymark Ltd [2019] NZHC 2027 at [19].
[21] Mr Kilpatrick has discovered an email to Chris Stevens dated 27 August 2018 (reference KIL1236.001) in which he says that he will “try and get the minutes of the Redoubt Road meeting on Friday for you”. These meeting minutes, if they exist, are relevant. Mr Kilpatrick agrees to search for these minutes and discover any minutes he does identify to Mr Corin.
[22] The documents within item 3 concern a project at Pilkington Road. Mr Corin claims that this project was within the scope of the joint venture. Mr Kilpatrick denies this, and furthermore, says that he was not involved in this project.
[23] As noted, when determining relevance for the purpose of discovery, it is the case of the party seeking discovery that is assumed to be true. Mr Corin has put the circumstances around Pilkington Road into issue in this proceeding. Therefore, any documents concerning this project that are or were under Mr Kilpatrick’s control are relevant and should be discovered. This conclusion applies to documents under the control of Mr Kilpatrick concerning the other disputed development projects too.
[24] Mr Kilpatrick is to search all his records including his email mailbox (as defined at 4(c) of his affidavit of documents dated 14 January 2022, to include five email accounts) for documents relating to Pilkington Road, including those set out at item 3 of Schedule A to the interlocutory application.
[25] The documents within item 4 concern the Yates Road development. I note that in his first affidavit of documents, Mr Kilpatrick deposes that his solicitors have undertaken a search of all his email accounts using the term “Yates” and provided discovery of the documents identified. Accordingly, Mr Kilpatrick is not required to undertake a further search of his email records for documents relating to Yates Road. However, he must provide discovery of any other correspondence outside these email records, including those items described at item 4 of Schedule A.
[26] Mr Yates is also required to search for and discover the documents identified at item 5 of Schedule A.
Part 2: Documents referred to by Mr Kilpatrick in pleadings
[27] At paragraph 2.10 of his reply to Mr Corin’s counterclaim, Mr Kilpatrick says that he or his company Arkcon on an accountant’s advice claimed GST input credits in respect of the invoices paid to OPL. If there is any written advice from the accountant, it is plainly relevant to an issue in dispute in this proceeding and the advice should be discovered by Mr Kilpatrick. Mr Kilpatrick is to undertake a search for any written advice.
[28] At paragraph 2.9(c) of his reply, Mr Kilpatrick states that he paid invoices issued by OPL as loans provided at Mr Corin’s request. Mr Kilpatrick has, apparently, not discovered any written requests by Mr Corin for loans. Mr Kilpatrick is to undertake a search for any written requests and discover any that he identifies.
Part 3: Documents filed with the IRD
[29] There is a dispute about the nature of the payments by Mr Kilpatrick and/or his company, Arkcon, to OPL. Mr Kilpatrick claims that the advances were loans and Mr Corin claims that they were for management fees and disbursements in relation to the development projects. Therefore, the nature of these payments is in issue.
[30] It is common ground that Mr Kilpatrick or his company, Arkcon, claimed GST input credits in respect of the invoices paid by Mr Kilpatrick or Arkcon to OPL.13 Mr Corin says that Mr Kilpatrick should discover the GST returns which include GST input credits claimed in respect of the disputed invoices.
[31] Mr Kilpatrick agrees to discover these documents in Part 3 of an affidavit of documents (the confidential part) on the basis that copies of these documents will be provided to Mr Corin’s legal counsel and accounting expert (if any) but will not be provided to Mr Corin or anyone else.
13 Statement of defence to amended statement of claim and first amended counterclaim, dated 16 September 2022, at 2.7(d).
Part 4: Documents on software systems
[32] For the same reasons Mr Kilpatrick is required to discover the categories of documents identified at items 9, 10 and 11 of Part 3 of Schedule A to the interlocutory application. If the documents contain confidential informtaion about his company Arkcon, these documents can be provided in the same way as the GST returns.
Part 5: Further search terms
[33] The original search terms used by Mr Kilpatrick’s former solicitors do not include “Formcraft”, “Formdeck”, or “Pilkington”.14 Mr Kilpatrick is to conduct a search of his email inboxes using these terms, and discover any further documents identified.
Part 6: Documents in other repositories
[34] Mr Corin submits that from January 2018, Mr Kilpatrick appears to have used his former Cremer Construction email address to pursue the development projects and forwarded information about the projects to this address. ‘Buildertrend’ is a software platform used by the joint venture initially, and then by Mr Kilpatrick to undertake the Cardigan Road project. Mr Corin contends that Mr Kilpatrick does not appear to have performed a search of his former Cremer Construction email address, or of ‘Buildertrend’.
[35] Mr Kilpatrick confirms that he used the Buildertrend platform for the Cardigan Street project. He maintains that the Cardigan Street project was not part of the joint venture with Mr Corin, and that he “started from scratch” with an architect. He terminated his subscription to Buildertrend some time ago, so he does not have access to the information on the platform concerning the Cardigan Street project.
[36] As I have explained, Mr Kilpatrick is required to discover these documents even though he maintains that the project was outside the arrangement with Mr Corin. For the purposes of discovery, Mr Corin’s case is assumed to be true.
14 Affidavit of documents of Robert Kilpatrick, dated 14 January 2022, at [4](d)(1).
[37] Mr Kilpatrick is directed to request access to his former email account at Cremer Construction and provide discovery of any documents or correspondence relating to the disputed projects, namely Formdeck NZ Limited, Cardigan Street, Redoubt Road, Matapan Road, Kivell Close, Yates Road, and Pilkington Road.
[38] He is to ascertain if he can access the records on Buildertrend concerning the Cardigan Street project. Mr Kilpatrick is to confirm when he terminated his arrangement with Buildertrend in relation to the Cardigan Street project.
[39] I asked counsel for Mr Corin to refine the documents requested from the Buildertrend software as it is too wide, being all documents on the platform used by Mr Kilpatrick to complete joint venture projects. In a memorandum dated 20 March 2023 the list was refined. However, I consider that the request is still too wide and places a disproportionate burden on Mr Kilpatrick. Mr Corin’s counsel is to file a further memorandum proposing a more refined list and explaining why each of the subcategories sought are said to be relevant to an issue in the case.
[40] Mr Kilpatrick also mentioned that he has paper documents concerning the Cardigan Street project. He must discover all these documents.
Schedule B: Documents claimed as confidential
[41] In his affidavit of documents, Mr Kilpatrick claims confidentiality for KIL1097.001, which is a travel reservation with Virgin Australia for Michael Schock, a managing director of Formcraft Pty Limited in Australia. Mr Corin challenges the confidentiality of this record. Mr Kilpatrick accepts that this document is not confidential.
Schedule C: Documents claimed as privileged
[42] Mr Corin challenges the claim to privilege in several the documents listed in Part 2 of Mr Kilpatrick’s affidavit of documents. The documents concerned are listed at Schedule C of the interlocutory application.
[43]Mr Corin challenges privilege on three grounds:
(a)some of the documents were sent and received by individuals who are not lawyers listed on the New Zealand Law Society’s register;
(b)other documents appear, from their description, to indicate an exchange of non-privileged documents;
(c)there is no apparent basis for the claim to litigation privilege in the four emails sent between Mr Kilpatrick and Mr Ede, Mr Cremer, Mr Bennett, and Mr Bolt between January/February 2018 or November 2018, before this proceeding was filed.
[44] These claims to privilege were made by Mr Kilpatrick’s former solicitors. As a pragmatic solution, Mr Kilpatrick is to file with the Court copies of these documents (all the documents listed in Schedule C to the interlocutory application) for my attention. He should not serve a copy of these documents on Mr Corin. I will assess whether the claim to privilege is justified.
Result
[45]I order Mr Kilpatrick to:
(a)file and serve an affidavit of document stating whether the documents identified in the schedule attached to this judgment:
(i)are or have been in his control; and
(ii)if they have been but are no longer in his control, stating when, to his best knowledge and belief, the document ceased to be in his control and who now had control of them;
(b)produce for inspection any of the documents in the schedule that are in his control;
(c)list document KIL1097.001 in the open part of the affidavit on the basis that the prior claim to confidentiality is set aside by consent;
(d)file with the Court copies of the documents for which privileged is challenged (all the documents listed in Schedule C to the interlocutory application) within 20 working days.
[46]Except for 45(d) Mr Kilpatrick is to comply with these orders by 9 June 2023.
[47] I direct Mr Corin to file a further memorandum proposing a more refined list of documents requested from the Buildertrend software and explaining why each of the documents or groups of documents are said to be relevant to an issue in the case within 15 working days.
[48] As to costs, the general principle is that the successful party is paid their costs. Mr Corin has been substantially successful and therefore Mr Kilpatrick is to pay his costs on a scale 2B basis and reasonable disbursements.
Associate Judge Gardiner
Schedule One:
Documentation Description
Location in judgment Location in interlocutory application 25/10/18 Email Attachments Attachments to the email dated 25
October 2018 between GeoffBennett and Ashley Thompson (reference
KIL1448.001)
Schedule A, Part 1 Schedule A, Part 1, item 2 Minutes from the Redoubt Road Meeting Minutes referred to in 27 August 2018 email from Chris Stevens (reference KIL1236.001) Schedule A, Part 1 Schedule A, Part 1, item 2 Related to the 200 Pilkington Road project that are or were under Mr Kilpatrick’s control This includes a search of Mr Kilpatrick’s email mailbox for documents relating to 200 Pilkington Road. Includes
correspondence with Rossie Wang, David Cremer, Cremer Construction Limited and Cremer
Development
Limited. Includes invoices rendered, invoices received, product orders and
any other accounting information relating to the profitability of the project.
Schedule A, Part 1 Schedule A, Part 1, item 3 Regarding the Yates Road development Includes correspondence with Rossie Wang, David Cremer, Cremer Construction
Limited, Cremer Development
Limited and Cremer Lifts Limited.
Includes invoices rendered, invoices
Schedule A, Part 1 Schedule A, Part 1, item 4
received, product orders and any other accounting
information relating to the profitability of the project. No
further search of email mailbox required.
Related to the supply of any Formcraft formwork product, or similar product for the 200 Pilkington Road
project and the Yates Road development
This includes the amount paid by Arkcon for the product (if any) and the amount charged to Rossie Wang or a
related entity for the product.
Schedule A, Part 1 Schedule A, Part 1, item 5 Written accountant’s advice regarding
claimed GST input credits for invoices paid to Onestop Project Limited
(OPL)
Related to Mr Kilpatrick’s reply at paragraph 2.10 of his reply to Mr Corin’s counterclaim Schedule A, Part 2 Schedule A, Part 2, item 6 Written requests from Mr Corin for loans from Mr Kilpatrick Related to Mr Kilpatrick’s reply at paragraph 2.9(c) of his reply to Mr Corin’s
counterclaim.
Schedule A, Part 2 Schedule A, Part 2, item 7 GST returns for Mr Kilpatrick or Arkcon between 1
December 2015 and
31 March 2017Includes GST input credits regarding
invoices rendered by OPL and/or
Longevity Developments Limited to Mr Kilpatrick
Schedule A, Part 3 Schedule A, Part 3, item 8 GST Audit Reports generated from the Xero or other accounting software system from 1
December 2015 to
31 March 2018Includes GST input credits for Mr Kilpatrick or Arkcon concerning invoices rendered by OPL or Longevity
Developments Limited to Mr Kilpatrick
Schedule A, Part 4 Schedule A, Part 3, item 9 Journal entries and activity records generated from the – Schedule A, Part 4 Schedule A, Part 3, item 10
Xero or other accounting software system that regard
the amounts Mr Kilpatrick claims to have loaned to OPL
Journal entries and activity records created using the Xero or other accounting software system that regard payments made over the relevant time period coded as “631 Joint Venture”
or “633 Formcraft”
Related to the document referred to as KIL1236.001 Schedule A, Part 4 Schedule A, Part 3, item 11 Documentation resulting from searches of the listed terms of Mr
Kilpatrick’s email mailbox
The search terms:
· Formcraft
· Formdeck
· Pilkington
Schedule A, Part 5 Schedule A, Part V, items 12,13 and 14 Documentation resulting from a search of Mr Kilpatrick’s former email account at Cremer
ConstructionIncludes documentation or correspondence relating to the disputed projects
including Formdeck NZ Limited, Cardigan Street, Redoubt Road,
Matapan Road, Kivell Close, Yates Road and Pilkington
Road.
Schedule A, Part 6 Schedule A, Part VI, item 18 Paper documents concerning the Cardigan Street project As mentioned by Mr Kilpatrick Schedule A, Part 6 –
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5
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