Lyttelton Port Company Limited v Aon New Zealand
[2017] NZHC 3017
•6 December 2017
THERE IS A RESTRICTION ON PUBLICATION OF THIS JUDGMENT AS SET OUT IN [80]. IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2015-409-000428
[2017] NZHC 3017
BETWEEN LYTTELTON PORT COMPANY LIMITED
PlaintiffAND
AON NEW ZEALAND
Defendant
Hearing: 28 November 2017 Appearances:
N R Campbell QC and S D Williams for Plaintiff Z Kennedy and N Frith for Defendant
Judgment:
6 December 2017
JUDGMENT OF DUNNINGHAM J
Introduction
[1] Lyttelton Port Company Limited (LPC) suffered significant earthquake damage to its assets, as well as business losses, as a result of the Canterbury earthquakes.
[2] LPC is now suing the defendant, Aon, an insurance broker, for various breaches of duties it owed under its broker agreement and in tort, including failing to arrange appropriately worded full reinstatement cover for LPC’s assets and appropriate business interruption insurance, for the period 1 July 2010 to 30 June 2011. LPC claims damages of nearly $200,000,000.1
1 Being the shortfall between the amount LPC says it should have been paid if it had appropriate
LYTTELTON PORT COMPANY LIMITED v AON NEW ZEALAND [2017] NZHC 3017 [6 December 2017]
[3] Aon applied to join LPC’s solicitor as a third party to this proceeding relying on two documents provided by LPC in the discovery process. LPC objected to Aon’s use of the documents, asserting they were privileged and that they had been inadvertently disclosed.
[4] Aon’s application to join LPC’s solicitor and its application to set aside LPC’s claims to privilege on the two documents, were heard before Associate Judge Christiansen. The Associate Judge dismissed both applications.2 In a subsequently issued minute, he recalled the unredacted version of his judgment and directed Aon to return all copies of the privileged documents to LPC’s solicitors.3 Aon has applied to review both the Associate Judge’s decision and his subsequent directions.
[5] The present applications arise out of Aon’s applications for review. Aon now applies:
(a)to transfer both its review applications to the Court of Appeal (the transfer application);4 and
(b)for a stay of the directions that require it to return the unredacted judgment and all copies of the privileged documents, until the review application is determined (the stay application).
[6]LPC opposes both applications.
Procedural background
[7] Before addressing the two applications it is necessary to provide some further detail of the procedural background to explain how they have arisen out of Aon’s applications for review.
cover and the amount it received in a settlement reached with its insurers.
2 Lyttelton Port Company Limited v Aon New Zealand [2017] NZHC 2215.
3 Minute of Associate Judge Christiansen dated 19 October 2017.
4 Initially Aon applied to transfer just the review of the substantive judgment. At a subsequent case management conference on 30 October 2017, the parties advise that the Court directed that the review of the 19 October 2017 minute also be subject to the transfer application.
[8] Aon applied to join LPC’s solicitor as a third party to this proceeding in May 2017 on the grounds that he provided legal advice to LPC on the wording of the insurance policy. If Aon was found liable in respect of any alleged breaches of duty, then LPC’s solicitor was similarly liable, and Aon would be entitled to a contribution from him.
[9] LPC opposed that application on various grounds, including that the application relied on two documents over which LPC claimed privilege even though these documents had been disclosed to Aon’s solicitors during the discovery process.
[10] The first document (LPC.00040) was an email communication between LPC’s claims consultant to LPC’s Chief Financial Officer and its solicitor. It was marked “private, confidential and privileged”. The second document (LPC.01596) was an email between LPC’s Chief Financial Officer and the Chairman of LPC’s Board, which included a communication of legal advice that Aon accepts was a privileged communication. However, it maintains that privilege was waived and the balance of the document was not privileged.
[11] Aon’s applications to set aside LPC’s claims to privilege and to join LPC’s solicitor as a third party were heard on 22 August 2017. In his judgment delivered on 14 September 2017, Associate Judge Christiansen upheld LPC’s claim to privilege in the documents and declined the application for leave to join a third party.
[12] The decision set out the text of both LPC.00040 and LPC.01596, and contained discussion about the content of both documents and its relevance to the issues raised. LPC promptly filed a memorandum with the Court raising its concerns about releasing the decision in its current form and sought that the decision be issued in redacted form. The Court issued a minute which stated that the Court was prepared to arrange for publication of a redacted version and requested that counsel provided a marked-up version of the judgment showing where redactions were required.5
5 Minute of Associate Judge Christiansen dated 15 September 2017.
[13] Counsel for LPC filed a copy of the decision with its proposed redactions and copied that to Aon’s solicitors. On the same day, 15 September 2017, the Court issued a redacted version of the judgment, stating that “this version will be the only one released to the publishers”.
[14] Aon immediately objected to the Court’s decision to reissue the judgment with redactions and submitted that a formal application was required which it could then respond to, particularly as it considered that a number of proposed redactions were not of privileged material and were inappropriate.
[15] On 21 September 2017, the Court issued a further minute seeking LPC’s response to Aon’s memorandum and suspending publication of the decision.
[16] On that day Aon filed its application for review of the 14 September decision (the first review application). A notice of opposition was filed by LPC on 4 October 2017.
[17] On 18 October 2017, LPC filed a memorandum which sought an order recalling the unredacted version of the decision and requested that Aon return all copies of the privileged communications.
[18] On 19 October 2017, and without hearing from Aon, Associate Judge Christiansen issued a minute in which he:
(a)ordered the recall of his unredacted judgment of 14 September 2017;
(b)expressed the view that it is “inappropriate and unnecessary for the defendant to retain the unredacted form of the judgment or refer to the content of the privilege communications in its submissions on review”, but that, on the first review application, “the plaintiff can hand up the privileged documents for the Court to review in the usual way”;6 and
6 At [13] and [15].
(c)directed Aon to return all its copies of the privileged communications to the plaintiff’s solicitors.7
[19] On 27 October 2017, Aon filed its application for review of the 19 October 2017 minute (the second review application) and the stay application. On 30 October 2017, Aon filed the transfer application. On 3 November 2017, Aon filed its opposition to those applications.
The transfer application
Legal principles applying to transfer applications
[20] As this proceeding was filed in June 2015, the Judicature Act 1908 applies and the proceeding must be continued, completed and enforced under this Act.8
[21] Section 64 of the Judicature Act 1908 grants the High Court a discretion to transfer a proceeding to the Court of Appeal. That section provides:
64 Transfer of civil proceedings from High Court to Court of Appeal
(1)If the circumstances of a civil proceeding pending before the High Court are exceptional, the High Court may order that the proceeding be transferred to the Court of Appeal.
(2)Without limiting the generality of subsection (1), the circumstances of a proceeding may be exceptional if—
(a)a party to the proceeding intends to submit that a relevant decision of the Court of Appeal should be overruled by the Court of Appeal:
(b)the proceeding raises 1 or more issues of considerable public importance that need to be determined urgently, and those issues are unlikely to be determined urgently if the proceeding is heard and determined by both the High Court and the Court of Appeal:
(c)the proceeding does not raise any question of fact or any significant question of fact, but does raise 1 or more questions of law that are the subject of conflicting decisions of the High Court.
7 At [16].
8 Schedule 5, cl 10(1) of the Senior Courts Act 2016.
(3)In deciding whether to transfer a proceeding under subsection (1), a Judge must have regard to the following matters:
(a)the primary purpose of the Court of Appeal as an appellate court:
(b)the desirability of obtaining a determination at first instance and a review of that determination on appeal:
(c)whether a full court of the High Court could effectively determine the question in issue:
(d)whether the proceeding raises any question of fact or any significant question of fact:
(e)whether the parties have agreed to the transfer of the proceeding to the Court of Appeal:
(f)any other matter that the Judge considers that he or she should have regard to in the public interest.
(4)The fact that the parties to a proceeding agree to the transfer of the proceeding to the Court of Appeal is not in itself a sufficient ground for an order transferring the proceeding.
(5)If the High Court transfers a proceeding under subsection (1), the Court of Appeal has the jurisdiction of the High Court to hear and determine the proceeding.
[22]In summary, therefore, s 64 provides for transfer where:
(a)the circumstances of the proceeding are “exceptional”; and
(b)the Court is satisfied that transfer is appropriate having regard to the matters set out in s 64(3).
Are there exceptional circumstances?
Aon’s submissions
[23] Aon argues that the circumstances of the first review application are exceptional as it will not involve the determination of any significant questions of fact but instead raises two questions of law that are the subject of conflicting decisions of the High Court.9 These are:
9 Thus meeting the test for exceptional circumstances in s 64(2)(c).
(a)the legal test for determining whether a communication between a third party and a solicitor attracts privilege under s 54 of the Evidence Act 2006; and
(b)the test for determining when a privileged (or partly privileged) document has been disclosed “mistakenly” for the purposes of s 65(4) of the Evidence Act 2006.
[24] Aon is challenging the finding that document LPC.00040 is privileged for the purposes of s 54 of the Evidence Act 2006. Aon says it is not met in the present case where LPC’s claims consultant simply passed on documents to the solicitor but was not authorised to request and obtain legal advice on behalf of LPC. The relevance of this in Aon’s submission, is that while what occurred may satisfy the test in Brandlines Ltd v Central Forklift Group Ltd,10 it does not meet the more narrow formulation which it says was articulated in the subsequent decision of Kōs J in Robert v Foxton Equities Ltd.11
[25] Specifically, in Brandlines Ltd, Associate Judge Gendall (as he was then) said:12
… it is clear from the New Zealand authorities cited to me that there are two requirements that must be fulfilled in this country: that the third party acted as an agent in communicating with the client’s solicitor; and that the communication was for the purpose of obtaining or providing legal advice. It may well be that these two questions are inter-related to some extent. Nevertheless, they raise separate issues and should be considered as such. It is not sufficient, therefore, that the third party passes on information to the client’s solicitor for the purpose of enabling legal advice to be given.
In addition, the third party must have been authorised to assume – and must have assumed – the role of the client in communicating the information to the solicitors: the third party must have acted as the “man on the spot”, as the client “alter ego”, and on its behalf. A third party does not qualify as an agent if it acted as an “independent contractor”…
[26]However, he also said:13
10 Brandlines Ltd v Central Forklift Group Ltd HC Wellington CIV-2008-485-2803, CIV-2009- 485-384, 11 February 2011.
11 Robert v Foxton Equities Ltd [2014] NZHC 726, [2015] NZAR 1351.
12 At [33]-[34].
13 At [35].
Accordingly, I do not accept the defendant’s submission that, to fall under the agency concept for the purposes of solicitor-client privilege, the investigators, advisers and experts in this case ought to have had the capacity to instruct and/or receive legal advice from the solicitors in question on the client’s behalf.
[27]In Robert v Foxton Equities Ltd, Kōs J held that:14
Given that privilege is now codified in the Evidence Act 2006, it is important to focus on the words of the statute. They support the view that to be an agent for the purposes of privilege, a person must be given authority to communicate with a solicitor to obtain legal advice, and actually do so.
[28]Accordingly he concluded:15
A third party to whom the privilege attaches must be operating under an agency agreement that encompasses them obtaining professional legal services.
[29] Aon argues that these two formulations are in conflict. It says that the test in Foxton Equities requires an agent to be operating under an agency agreement that authorises the agent to obtain legal services, whereas the test in Brandlines does not. It says this conflict was identified in the subsequent decision of Aquaheat NZ Ltd v Hiseat Ltd (in liq and rec), where Associate Judge Sargisson noted:16
Arguably the formulation in Foxton Equities is narrower than that in
Brandlines, especially given the later comment in Foxton Equities that:
[a] third party to whom the privilege attaches must be operating under an agency agreement that encompasses them obtaining professional legal services.
[30] Aon says resolution of this conflict is of central importance to the first review application. It submits that, in this case, there is no evidence of an agency agreement under which LPC’s claims consultant was given authority to communicate with LPC’s solicitor to request or obtain legal advice on LPC’s behalf. Aon says that distinction is important because, if that is a requirement, it would effectively determine whether LPC.00040 is capable of sustaining LPC’s claim to privilege.
14 At [40].
15 At [41].
16 Aquaheat NZ Ltd v Hiseat Ltd (in liq and rec) [2014] NZHC 1173, [2014] NZCCLR 21 at [44].
[31] Aon’s proposed second question of law relates to the legal test for when a document has been “mistakenly” disclosed for the purposes of s 65(4) of the Evidence Act 2006. Aon says that Body Corporate No. 191561 v Argent House Ltd17 and Pernod Ricard New Zealand Ltd v Lion Beer, Spirits and Wine (NZ) Ltd18 both endorse the view that s 65(4) does not preserve privilege where a document containing privileged material is deliberately handed over. For example, in Argent House, Asher J held:19
… if the mistake was a deliberate handing over of a document without a consideration that it was privilege, or forgetting that it was privilege, that would not be the sort of mistake covered by that section.
[32]Similarly, Allan J said in Pernod Ricard that:20
Section 65(4) was not intended to preserve privilege where a document is knowingly and deliberately disclosed after close attention has been given to its status for privilege purposes.
[33] However, in Station Properties Ltd v Lever Action Ltd, Associate Judge Abbott held that privilege had not been waived where a document had been handed over which contained a single privileged phrase in the middle of an email, saying it “could easily have been overlooked”.21
[34] Aon says that Associate Judge Christiansen essentially adopted the Station Properties approach, holding that there was no waiver given the solicitor’s evidence of it being “an inadvertent mistake in the nature of an oversight” which the Court held was “understandable, given the number of documents that were viewed in the discovery process”.22 Aon says that, as there was a conflict between the test articulated in Argent House and Pernod Ricard on the one hand, and Station Properties on the other, and it is appropriate the matter is resolved by the Court of Appeal.
17 Body Corporate No. 191561 v Argent House Ltd (2008) 19 PRNZ 500 (HC).
18 Pernod Ricard New Zealand Ltd v Lion Beer, Spirits and Wine (NZ) Ltd [2012] NZHC 2801.
19 At [42].
20 At [49].
21 Station Properties Ltd v Lever Action Ltd CIV-2009-404-000354, 27 May 2011 at [46].
22 At [45].
[35] While it was not suggested that the second review application on its own raised exceptional circumstances, the two applications were inextricably linked as the second review application would determine how the first would proceed and thus Aon submitted they should be transferred together.
LPC’s submissions
[36] LPC, on the other hand, says that the alleged conflicts between the decisions discussed by Aon are more illusory than real and, in any event, the legal issues they raise do not play the pivotal role in the outcome that is suggested by Aon. In reality, Aon is simply challenging the Associate Judge’s factual findings and these are matters which can readily be decided by the High Court.
[37] In respect of the first question of law that Aon says the first review application raises, the relevant legal test is the statutory test in s 51(4) Evidence Act 2006. It requires the Court to decide whether the email in question, LPC.00040, was “a communication made or received or an act carried out by an authorised representative of that person on that person’s behalf”. In this case, LPC says the Associate Judge made a factual finding that the email was sent for the purpose of obtaining legal advice from LPC’s solicitor and the sender of the email had been instructed by LPC to do so. This, in LPC’s view, was a routine application of the statutory test and the factual findings were based on the evidence before the Associate Judge.
[38] In any event, LPC says there is no conflict between the two decisions to which Aon refers. Brandlines Ltd was explicitly considered by Kōs J in Robert v Foxton. He did not distinguish or disavow any aspect of that decision. LPC says that both decisions are consistent, making it clear that the third party must have been authorised by the client to make the communication for the purpose of obtaining legal advice on behalf of the client. In the present case, the first review application will not call into question the correct legal test under the Evidence Act 2006. It will merely challenge the Associate Judge’s factual findings that the LPC’s claims consultants had been authorised by LPC to send the email to their solicitors and that the email was sent for the purpose of obtaining legal advice from the solicitors.
[39] In relation to the second alleged question of law, regarding the test under s 65(4) Evidence Act 2006 for when a document has been mistakenly disclosed, LPC says the Judge’s decision did not rely on s 65(4). Rather it was based on an application of s 65(2) and whether the documents in question had been disclosed in circumstances that were “inconsistent with a claim of confidentiality”. Section 65(4) is simply one subset of circumstances in which disclosure would not waive the privilege. Indeed, Aon’s review application asserts that the Judge “erred in law in determining that privilege had not been waived under s 65(2)”, and does not refer to s 65(4).
[40] In any event, again LPC says the decisions on s 65(4) are not in conflict. They illustrate nothing more than that the application of the legal test will produce different results depending on the facts before the Court. The Associate Judge in Station Properties accepted the distinction drawn in Argent House between a mistake “as to the implications of disclosure rather than the act of disclosure itself” and considered that on the facts before him the mistake was as to the act of disclosure.23
Analysis
[41] In my view, Aon is wrong to suggest that there are conflicting High Court decisions on the issue of when a communication between a third party and a solicitor attract privilege under s 54. There is no suggestion in Foxton Equities that the High Court is departing from Brandlines. Foxton Equities simply gives clear expression to the authority which the person acting as an agent must have. In Brandlines, Associate Judge Gendall says “the third party must have been authorised to assume – and must have assumed – the role of the client in communicating the information to the solicitor”.24 Kōs J expresses this in not dissimilar terms, saying that “to be an agent for the purposes of privilege a person must be given authority to communicate with a solicitor to obtain legal advice, and actually do so”.25
[42] While Aquaheat is relied on by Aon to suggest the two decisions are in conflict, Associate Judge Sargisson does not make that claim. She simply says that
23 At [43]-[46].
24 At [34].
25 At [40].
“arguably the formulation in Foxton Equities is narrower than that in Brandlines”. Under either case, the third party must have been authorised by the client to communicate with the solicitor to obtain legal advice. Whether that is the case in any particular question is a matter of the question of fact. In this case, it will be determined by considering whether the affidavit evidence as to the scope of instructions given to LPC’s claims consultant means he is the authorised representative of the client in terms of s 51(4). In my view, this does not raise a question of law on which there are conflicting decisions such as would warrant this case being transferred to the Court of Appeal as an exceptional case.
[43] I also accept, as LPC submits, that the Associate Judge’s decision engaged s 65(2) not s 65(4) Evidence Act 2006. His primary finding is that LPC did not disclose the document in circumstances that were inconsistent with its claim of confidentiality, saying:
[48] The Court does not accept that LPC has acted inconsistently with its claim of confidentiality, either as to LPC.00040 or to this attachment referred to in that document.
[49] For similar reasons the Court dismisses claims of waiver affecting LPC.01596…
[50] The Court agrees that LPC acted consistently with continued claims for confidentiality in relation to both documents, including attachments and that fairness dictates that privilege has not been waived under s 65(2). Alternatively, the disclosure of those documents was mistaken in terms of s 65(4), and privilege has not been waived.
This makes it clear that s 65(4) was quite secondary in the Judge’s reasoning.
[44] Furthermore, to the extent that the Judge’s reasoning on s 65(4) may arise on review, I accept LPC’s submission that the decisions are not in conflict. In Pernod Ricard, Allan J explained that the subsection “is directed at the not uncommon situation of an administrative error or procedural mishap, where a party handing over or disclosing a document never intends to do so”.26 Accordingly, he said “s 65(4) was not intended to preserve privilege where a document is knowingly and deliberately disclosed after close attention has been given to its status for privilege
26 At [49].
purposes”.27 He held that, on the facts in that case, the relevant documents had been handed over after such attention had been given to their status for privilege purposes. In Station Properties, Associate Judge Abbott concluded, albeit obiter, that disclosure in that case had occurred mistakenly and, by implication, it was not a situation such as arose in Pernod Ricard, where close attention had been given to its status for privilege purposes.28 There is, therefore, no material conflict between the decisions; each turns on its facts.
[45] In light of these findings, I do not consider that there are exceptional circumstances. The appeals do not raise questions of law which are the subject of conflicting High Court decisions. Rather, Aon wishes to argue that the law has not been correctly applied to the facts set out in the affidavit evidence. That is something which is ordinarily dealt with on review to the High Court under the Judicature Act 1908. Given that finding, it is not strictly necessary to address the matters in s 64(3). However, I do so briefly, for completeness.
Do the matters set out in s 64(3) of the Act support the transfer of the review application to the Court of Appeal?
[46] Section 64(3) of the Act requires the Court to have regard to six factors when deciding whether to transfer proceedings. The parties here do not suggest that a full Court of the High Court should hear the matter.29 Furthermore, the parties have not agreed to transfer the proceeding to the Court of Appeal.30 That leaves the following matters to be addressed:
The primary purpose of the Court of Appeal as an appellate Court (s 64(3)(a))
[47]
While I accept Aon’s submissions that the decision constitutes a fully reasoned decision of the High Court at first instance and so transfer to the Court of Appeal would be appellate in nature, I also note that under the Judicature Act the presumption is that review of decisions of Associate Judges is within the jurisdiction of the High Court and not the Court of Appeal. While that changes under the27 At [49].
28 The conclusion was obiter as it was held there was no waiver of privilege because the disclosure was not with the consent of the person who had the privilege.
29 Section 64(3)(c).
30 Section 64(3)(e).
Senior Courts Act 2016, that does not alter the position under the earlier Act. In my view, this is a neutral factor. In the absence of exceptional circumstances, the legislation anticipates that review will be conducted by the High Court with only a limited right of appeal to the Court of Appeal.
The desirability of obtaining a determination at first instance and a review of that determination on appeal (s 64(3)(b))
[48] The same considerations arise under this heading as under the previous heading. In the absence of special circumstances the Act anticipates that a review will be conducted by the High Court.
Whether the proceeding raises any questions of fact or any significant question of fact (s 64(3)(d))
[49] The need for a prolonged enquiry into the facts would militate against a transfer.31 However, in this case, the decision was made by reference to affidavit evidence only and the review would proceed on the same evidence. The Court of Appeal would not be required to undertake a prolonged enquiry into the facts. This is, in substance, the absence of a factor which would otherwise point against transfer.
Any other matter that the Judge considers that he or she should have regard to in the public interest (s 64(3)(f))
[50] Aon considers the review application raises an issue of public importance, being the significance of a subsequently agreed policy wording to an insurance contract formed under the slip system on the date of renewal. While the Judge made an observation on this issue, I do not consider it was material to his decision. In any event, I do not consider Aon is correct to characterise his statement as suggesting that the policy wording that is subsequently negotiated and agreed has little significance in establishing the terms of cover to which the insurers have been bound. I accept LPC’s views that it simply reflects that there was no obligation to extend cover in respect of already damaged assets beyond the cover which had already been agreed in the placing slips.
31 Re Erebus Royal Commission [1981] 1 NZLR 614 at 616.
[51] Finally, it is suggested that it would avoid cost delay and waste of Court resources to transfer the appeal. Aon says that given the significance of the issues addressed in the decision and the size of LPC’s claim in the substantive proceedings, it is likely that one or both of the parties would seek leave to appeal the decision in the first review application to the Court of Appeal. Removing it now would avoid the needless expense, delay and waste of Court resources associated with hearing a review application in the High Court, followed by the subsequent application for leave, and an appeal, or appeals, to the Court of Appeal. Aon points out this was a factor which influenced Fogarty J to transfer the proceedings in Grey District Council v Blain.32
[52] However, as LPC points out, there is no certainty that if the application was heard in the High Court the unsuccessful party would seek leave to appeal or, if it did, that it would meet the high test for leave. Therefore, it can not be assumed that a transfer is required to avoid cost and delay.
[53] I accept that given the amount at stake, and the importance of the issues to the parties, there is a very real prospect that the unsuccessful party will seek to appeal the decision on review to the Court of Appeal. Had there been exceptional circumstances, I considered this factor would have pointed towards a transfer.
[54] Overall, in my view, the discretionary factors would have supported, to a moderate degree, the transfer of proceedings if there had been exceptional circumstances as claimed by Aon.
Aon’s application for a stay of the orders in the 19 October minute
Legal principles applying to stay application
[55] An application for a stay of enforcement pending the review of an Associate Judge’s decision is analogous to a stay pending appeal.33 The Court must balance the right of the successful party to the benefit of the judgment against the
32 Grey District Council v Blain [2013] NZHC 976 at [21].
33 Stor-Co Mini Storage Systems Pty Ltd v Parnell Storage Lease Ltd HC Auckland CIV-2008-404- 2202, 21 January 2009.
need to preserve the position if the review is successful.34 Factors to be taken into account in this balancing exercise include:35
(a)whether the appeal may rendered nugatory by the lack of a stay;
(b)the bona fides of the applicant as to the prosecution of the review;
(c)whether the successful party will be injuriously affected by the stay;
(d)the effect on third parties;
(e)the novelty and importance of the questions involved;
(f)the public interest in the proceeding; and
(g)the overall balance of convenience; and
(h)the apparent strength of the review application.
[56] At the telephone conference on 30 October 2017, Nation J made an order directing that the defendant was:
entitled to retain the unredacted version of the judgment of 14 September 2017 and the documents which are in dispute pending the order of the Court on the application for stay but solely for the purpose of arguing the applications for stay and transfer.
Aon’s submissions
[57] Aon seeks a stay of the Associate Judge’s orders in the 19 October 2017 minute so that it can argue the second review application. It sees this as essentially an extension of the orders made by Nation J on 30 October 2017.
[58]
Aon says that unless there is such a stay, its ability to argue the second review application would be rendered nugatory. In particular, Aon says it will prevent it from having access to the complete evidentiary record and the unredacted version of34 Keung v GBR Investment Ltd [2010] NZCA 396.
35 Keung v GBR Investment Ltd, above n 34, at [11].
the 14 September hearing decision and from referring to the content of the documents in its submissions on review. This would make it impossible for Aon to make detailed submissions as to the extent to which privilege would apply to the documents, if indeed some parts are privileged. If it could not refer to the documents in the second review application that, in turn, would affect its ability to run the first review application as it is seeking access to the documents and the judgment in the second review application for that purpose.
[59] In respect of the other considerations which apply to the grant of a stay, Aon considers they support the grant. In particular, Aon says that LPC will not be prejudiced if the stay application is granted. Given there is no suggestion that Aon would use the documents for any purpose other than the proceeding and an undertaking has been given that it will not do so, it says LPC can not point to any prejudice over and above that which stems from the initial disclosure. Furthermore, no relevant third parties would be detrimentally affected by a stay and the balance of convenience favours it.
LPC’s submissions
[60] LPC submits that, in respect of the stay sought in relation to [13] of the Judge’s minute, that paragraph does not contain an order or direction but merely a reason, so it cannot be the subject of a stay. While at [12] the Court ordered the recall of the unredacted version of the judgment, in [13] it simply stated that “the Court considered it is inappropriate and unnecessary for the defendant to retain the unredacted form of the judgment or refer to the content of the privileged communications in its submissions on review”.
[61] In respect of the direction made at [16] of the minute which required the defendant to return all its copies of the privileged communications to the plaintiff’s solicitors, LPC argues that the legal test supports its position and in particular, a refusal to grant a stay would not render the second review application nugatory.
[62] LPC says that Aon is only seeking a stay in relation to the second review application and the Court must focus on whether that would be rendered nugatory if a stay is not granted. It says that Aon largely sidesteps that question and instead
focuses on whether the first review application would be rendered nugatory if a stay was not granted. LPC goes on to say that the return of the documents would not render Aon’s second review application nugatory because that is the usual position which applies to parties who challenge claims to privilege and such challenges are made without referring to the content of the privileged document itself. Instead it would be retained by the privilege holder with a copy handed up to the Judge if the Judge wished to see the document. It says that the claim to be severely and unjustifiably prejudiced by having to make submissions on the privileged status of the documents without referring to the content of them is therefore overstated.
[63] In any event, LPC says that Aon can make its submissions without having the documents themselves. For example, with LPC.00040, the issue of whether the email attracts privilege turns on the status of the parties to the email and the purpose of the email. That can be argued without access to the email itself.
[64] Equally, in relation to LPC.01596, there is no dispute that it contains a privileged communication and the only issue is waiver. Again, that can be argued without reference to the content of the privileged communication.
[65] If Aon’s second review application will not be rendered nugatory, then LPC says there is nothing in the other factors which would point to the stay being granted. It says there is no merit to Aon’s submission that LPC’s stance is to give it a “tactical” advantage. LPC is simply asking for what it is entitled to following the Court’s findings that the documents were privileged and its directions requiring Aon to return them.
[66] LPC says there is no obligation on it to show that it will be injuriously affected by the stay. However, it is entitled to the protection afforded by legal professional privilege and the fact that Aon holds and is now using those privileged communications against LPC’s interest in this litigation is inherently prejudicial to LPC. LPC cites authority which confirms that legal professional privilege is not simply a mere interest to be balanced and weighed against other interests.36
36 B v Auckland District Law Society [2004] 1 NZLR 326 (PC).
[67] LPC also says that there is an adverse effect on third parties if the stay is granted in that LPC’s former solicitor is prejudiced by Aon’s use of privileged documents in its ongoing attempts to issue a third party notice against him. Finally, it says that the second review application does not have merit. The Associate Judge had inherent jurisdiction to make the direction that Aon return the privileged documents and the direction necessarily follows from the decision. It does not, as Aon suggests, constrain what the Court can do on review or appeal.
[68] Taking all those matters into account, LPC says the balance of convenience favours it. The direction made by the Associate Judge is a straight forward consequence of the documents being held to be privileged. If a stay was granted, LPC suggests that would set an unfortunate precedent and would tend to reward the “use first and argue later” approach adopted by Aon.
Analysis of stay application
[69] While LPC argues that [13] contains no ruling or direction, it is clear that the statement in [13] is a logical extension of [12] and reiterates the order made in [12] requiring the unredacted version of the judgment to be returned, by making it clear that the Court will not permit Aon to retain the unredacted judgment even for the purpose of Aon’s review application. I therefore consider the application for stay does encompass the direction to return the unredacted version of the judgment.
[70] The most critical question is whether the second review application will be rendered nugatory if a stay is not granted. That review application is essentially challenging the Associate Judge’s decisions to recall the unredacted version of the judgment and require the return of all copies of the privileged documents, when in Aon’s view they are required to argue the first review application. Whether they will be available for the first review application is not for consideration now, but is for determination in the second review application.37
37 The reference to it being the “second” review application is, of course, a reference to the order in which they were filed, and not the order in which they will be heard as, logically, the second review application must be determined prior to the first review application.
[71] In my view, the second review application would not be rendered nugatory if the documents had to be returned and the judgment recalled, as it would still be possible, albeit difficult, for Aon to make submissions relying on its knowledge of the documents and the unredacted version of the judgment. However, simply because it is technically possible for counsel to make submissions based on recall of the documents and the unredacted version of the decision, it would lead to a highly artificial hearing where, as LPC says, the Judge would have access to the unredacted judgment in the documents, but the defendant would not, and the Judge would have to ensure he or she was linking the plaintiff’s submission to the relevant part of the document or judgment. That would not, in my view, be a desirable approach.
[72] I also do not consider that the authorities on the importance or paramountcy of legal professional privilege are relevant in this case. The cases relied on by LPC addressed circumstances where there was no question that legal professional privilege applied and had not been waived, but considered whether the privilege should be overridden in what was considered the public interest. This is not such a case. Instead, in the context of these review applications, the questions are whether legal professional privilege arises at all or if it has, whether it has been waived. Aon seeks no more than to argue that the review application should be conducted on the same basis as the original applications, where it had access to the documents, and to the Judge’s full reasoning in relation to those documents. Thus, while I have held that the second review application would not be rendered nugatory, it would be sufficiently difficult to run the hearing in such circumstances that this consideration points in favour of the stay being granted.
[73] In terms of the other considerations, I am not prepared to conclude that either party is not acting in good faith. There is a lot at stake for both parties, and it is understandable that each party has taken the position it has. I also do not consider that LPC will be injuriously affected by the stay. It is a stay for a very limited purpose. All judgments of the Court give rise to substantive legal rights, but the Court recognises that they may be stayed for certain purposes while litigation is continuing on the issues. Furthermore, LPC acknowledges that the Judge may have access to these documents. Thus, to the extent they are being used to argue for
outcomes which are not in LPC’s interests, that will not be avoided by declining the stay.
[74] I do not consider there is a relevant effect on third parties. Aon will only be able to issue a third party notice if, in the end, the documents are held to be not privileged or that any privilege has been waived.
[75] In terms of the merits of the second review application, I am not prepared to express a view beyond saying it is, at least, arguable.
[76] Finally, in terms of the balance of convenience, I consider that given the limited use the documents and the unredacted version of the judgment will be put to, as against the inconvenience of proceeding on the second review application without them and the lack of any prejudice to LPC in granting the stay, weighs in favour of the stay being granted. It is, of course, only for the purpose of arguing the second review application. Whether or not the documents can then be used in the first review application depends on the outcome of that application.
Outcome
[77] I decline the application for transfer because there are no “exceptional circumstances” as required by s 64 of the Judicature Act 1908.
[78] I order that the orders and rulings in the 19 October minute are stayed pending the determination of Aon’s application for review of that minute.
[79] I reserve the issue of costs, although, as each party has had a measure of success, my clear view is that this is a case where costs should lie where they fall.
[80] Finally, although I have endeavoured to be careful in this judgment to avoid disclosure of any material which is arguably privileged, out of an abundance of caution this judgment is not to be published until final disposition of the applications for review which are referred to in this judgment or as otherwise ordered by the Court.
Solicitors:
Chapman Tripp, Christchurch
Minter Ellison Rudd Watts, Auckland
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