Mau Whenua Incorporated v Mulligan
[2021] NZHC 558
•18 March 2021
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2019-485-366
[2021] NZHC 558
BETWEEN MAU WHENUA INCORPORATED
Plaintiff
WHAREAHURU GILBERT and MARTHA HINEONE GILBERT
Second Plaintiffs
KAREN MARAMA PARATA, MABEL URU TANIRAU and
ROGAN RAWIRI HOHAPE TANIRAU
Third PlaintiffsAND
WAYNE THOMAS MULLIGAN, JOHN FREDERICK COFFEY,
HOLDEN HOHAIA, TOA WOODBINE POMARE, MAHINA HABEER- PUKETAPU, KIM SKELTON,
PAORA JENKINS-MEPHAM and HUIA PUKETAPUFirst Defendants
PETER SAMUEL JACKSON, HANNAH MARY BUCHANAN, HOWARD KEVIN TAMATI, NEVILLE MCCLUTCHIE BAKER, MORRIS TE WHITI LOVE and
IHAKARA JAMES PUKETAPU-DENTICE
Second DefendantsSHELLY BAY INVESTMENTS LIMITED
Third DefendantSHELLY BAY TAIKURU LIMITED
Four Defendant
On the papers:
MAU WHENUA INCORPORATED v WAYNE THOMAS MULLIGAN, JOHN FREDERICK COFFEY, HOLDEN HOHAIA, TOA WOODBINE POMARE, MAHINA HABEER-PUKETAPU, KIM SKELTON, PAORA JENKINS-MEPHAM and HUIA PUKETAPU [2021] NZHC 558 [18 March 2021]
Counsel: V L Heine, C J Curran and M W McMenamin for Plaintiffs
T Cooley for First and Second Defendants
L Clark and S Jones for Third and Fourth DefendantsJudgment:
18 March 2021
JUDGMENT OF CHURCHMAN J
Introduction
[1] Following the discontinuance of these proceedings, counsel for the plaintiff filed a memorandum on 3 March 2021 advising the Court that the parties have resolved all issues as to costs. However, in their 3 March 2021 memorandum, counsel for the plaintiff raised an additional issue out of an “abundance of caution”.
[2] Counsel for the plaintiff stated that they have been instructed to transfer information held as counsel in this proceeding to new counsel, and understand that this instruction has been given to enable new counsel to provide the plaintiffs with fresh legal advice in respect of claims they had sought to advance through this proceeding, prior to its discontinuance. They noted their obligation under r 4.4.1 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (Rules of Conduct and Client Care), whereby upon changing lawyers a client has the right either in person or through the new lawyer to uplift all documents, records, funds, or property held on their behalf.
[3] However, counsel have also acknowledged that they are subject to the requirements of r 8.30(4) of the High Court Rules 2016 (the Rules), which is set out below. They therefore seek a direction from the Court that they are released from their undertaking under r 8.30(4) of the Rules for the limited purposes of transferring the information held in their capacity as counsel in the discontinued proceeding to new counsel, so that the plaintiffs can take fresh legal advice.
Position of the parties
[4] Counsel for the defendants jointly oppose the directions sought by counsel for the plaintiffs. In a memorandum dated 12 March 2021, counsel for the first and second defendants submitted that the plaintiffs appear to be seeking to use the documents discovered by the defendants for a collateral purpose, and that it is inappropriate for the Court to resolve this issue by way of exchange of formal memoranda between parties – the plaintiffs should instead file a formal interlocutory application (supported by affidavit evidence) for leave to use the documents for a collateral purpose, setting out the orders sought and the grounds justifying those orders. The affidavit evidence should also include the name of the new counsel engaged by the plaintiffs, details of the specific documents sought, reasons why those specific documents are sought and the means by which confidential information in those documents will be kept confidential.
[5] Counsel for the first and second defendants referred to r 8.30 of the Rules, and noting the case of Wilson v White, submitted that r 8.30 provides that a party who obtains documents on discovery is only entitled to use those documents for the purposes of the proceeding, and may not use the documents for collateral or ulterior purposes.1
[6] Counsel stressed that this implied undertaking was of such significance that a Court will not ordinarily release a lawyer from the prohibition on collateral use unless there are special circumstances where the release will “not occasion injustice to the person giving discovery”,2 but acknowledged that when a party seeks to use documents in a closely related proceeding then this may justify permission being granted by the Court.
[7] According to counsel, in this instance, the Court is not yet able to consider the close connection or otherwise between the discontinued proceeding and a possible separate, future proceeding that has not yet been commenced, and therefore any
1 See Wilson v White [2005] 3 NZLR 619 at [20].
2 Counsel referred to Crest Homes plc v Marks [1987] 1 AC 829 (HL) at 860.
application for leave to use the documents discovered in this proceeding for another future proceeding would be premature.
[8] It was submitted that the reason of obtaining “fresh legal advice” provided by counsel for the plaintiffs did not constitute a “special circumstance” justifying the Court in releasing the plaintiffs from their undertaking given on discovery. If counsel for the plaintiffs were released from their undertaking, then that would cause injustice to the defendants, who had a legitimate expectation that the documents discovered in discontinued proceeding would only be used for that proceeding, and not for the purpose of the plaintiffs obtaining legal advice on the merits of commencing another proceeding, particularly considering that there were confidential documents discovered on a counsel-and-expert-only basis.
[9] Counsel for the third and fourth defendants took a similar position to counsel for the first and second defendants. They submitted that while counsel for the plaintiffs had referred to r 4.4.1 as imposing an obligation on them to provide all documents that they hold to the plaintiffs upon termination of their retainer, that rule was “subject to any statutory provisions to the contrary”. Rule 8.30(4) was such a statutory provision, and counsel submitted that the Rules of Conduct and Client Care should not be used to “defeat counsel’s or parties’ obligations relating to the use of discovery documents”.
[10]Counsel submitted that if the plaintiffs wished to pursue the issue, they must:
(a)file an application in the usual way, with the defendants to be given the opportunity to make further submissions on the matters of fact and law raised in that application; and
(b)if the Court grants the application in principle notwithstanding the defendants’ opposition, the plaintiffs must identify the new counsel instructed and arrange for them to provide an undertaking to the Court and the third and fourth defendants that:
(i)they understand their obligations in relation to the use of documents obtained as part of discovery and will comply with them at all times; and
(ii)they will comply with the access restrictions on the confidential documents discovered by the third and fourth defendants at all times.
[11]As to costs, counsel noted:
Shortly before the plaintiff’s memorandum was filed, the parties resolved all issues relating costs. At that time, the plaintiffs did not give any indication that further proceedings were being contemplated (if indeed that is the case).
Accordingly, the third and fourth defendants reserve all rights in relation to the costs associated with responding to the memorandum dated 3 March 2021 and any further application to the Court in the event one is filed.
[12] In a memorandum in reply dated 15 March 2021, counsel for the plaintiffs stressed that the directions they were seeking from the Court were limited in scope, in that they were only seeking a release from their r 8.30(4) undertaking for the purposes of transferring information to new counsel (who they named as Mr Felix Geiringer) and taking fresh legal advice in respect of the claims the plaintiffs sought to advance through the discontinued proceedings.
[13] While counsel for the plaintiffs accepted that a release from the undertaking would be premature at this point (given that any future proceeding has not yet commenced), it would carry out an important function: the receipt of informed legal advice by a client from a new counsel of their choosing.
[14] It was submitted that if the position taken by the first and second defendants was to be adopted, then this would bring about a peculiar “circular” situation whereby the plaintiffs would be entitled to commence proceedings through their new counsel arising out of the same facts as those relating to the discontinued proceeding, but could not take legal advice informed by the information in the discontinued proceedings.
[15] In terms of confidentiality, counsel noted that interlocutory orders and directions may be subject to any just terms or conditions,3 and concerns about confidentiality could properly be addressed in this manner.
[16] Therefore, counsel for the plaintiffs again requested the granting of the direction sought in their memorandum of 3 March 20201.
Relevant law and analysis
[17] Rules 4.4 and 4.4.1 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 provide:
4.4A lawyer has no proprietary interest in a client and must not exert undue pressure on a client not to terminate a retainer or to re-engage the lawyer after termination of the retainer.
4.4.1Subject to any statutory provisions to the contrary, upon changing lawyers a client has the right either in person or through the new lawyer to uplift all documents, records, funds, or property held on the client’s behalf. The former lawyer must act upon any written request to uplift documents without undue delay subject only to any lien that the former lawyer may claim.
[18]Additionally, r 8.30(4) of the Rules dictates that:
8.30 Use of documents
(1)A party to whom a document has been made available electronically or is produced for inspection under rule 8.27 or 8.29 may make copies of the document.
(2)On the application of a party to whom a document is produced for inspection under rule 8.27 or 8.29, a Judge may order the person who has control of the document to give the applicant a legible copy.
(3)An order under subclause (2) may be made on any terms the Judge thinks just, and, in particular, the Judge may order that—
(a)the applicant pay the reasonable expenses of the other party:
(b)the document be marked to the effect that it is a copy given for purposes of inspection only.
(4)A party who obtains a document by way of inspection or who makes a copy of a document under this rule—
3 See r 7.45 of the Rules.
(a)may use that document or copy only for the purposes of the proceeding; and
(b)except for the purposes of the proceeding, must not make it available to any other person (unless it has been read out in open court).
[19] In Hally Labels Ltd v Powell, Associate Judge Osborne comprehensively articulated the current law concerning the prohibition on collateral use of discovered documents.4
[20] That case also concerned the use of discovered documents from a discontinued proceeding, although the proceeding which the plaintiff sought to use those documents for had advanced to a much later stage than in the current circumstances.5
[21] In that case, the two competing public interests underlying the prohibition were noted:6
The courts’ approach to discovery and to the collateral use prohibition can be traced to a balancing of two competing public interests. First, the public interest in full disclosure so that the Court can get at the truth of a dispute. Secondly, the public interest in preserving and protecting confidential information. As Lord Denning MR explained in Riddick v Thames Board Mills Ltd:
“Compulsion is an invasion of a private right to keep one's documents to oneself. The public interest in privacy and confidence demands that this compulsion should not be pressed further than the course of justice requires. The courts should, therefore, not allow the other party — or anyone else — to use the documents for any ulterior or alien purpose. Otherwise the courts themselves would be doing injustice. … In order to encourage openness and fairness, the public interest requires that documents disclosed on discovery are not to be made use of except for the purpose of the action in which they are disclosed.”
[22] Associate Judge Osborne also adopted the conclusion of Williams J in Telstra New Zealand Ltd v Telecom New Zealand Ltd, namely that r 8.30 codified the prohibition on collateral use of documents and replaced the implied undertaking to the Court to not use discovered documents for collateral purposes.7
4 Hally Labels Ltd v Powell [2013] NZHC 900.
5 See [40].
6 At [6] (footnotes omitted).
7 At [18]. See also Telstra New Zealand Ltd v Telecom New Zealand Ltd (1999) 14 PRNZ 108 (HC).
[23] However, the exception to this prohibition through the Court granting permission to counsel for use of discovered documents for a collateral purpose survived this codification. As noted by Associate Judge Osborne, who referred to the Court of Appeal decision of Wilson v White, that exception was recognised as remaining within New Zealand law.8
[24] Given that the court permission exception is still present in New Zealand law, a critical factor influencing this Court’s decision to grant permission and leave to use the documents for a collateral purpose is whether there is a strong or close factual connection between the existing proceeding and proposed proceedings.9 Associate Judge Osborne articulated this approach as follows:10
While the Court's overarching approach to any leave application is that articulated by Burchett J in Holpitt, as adopted by Rodney Hansen J in Telstra NZ v Telecom NZ, a strong factual connection between the existing proceeding and the other proceeding has been recognised as a particular situation which may lean in favour of the granting of leave. As Associate Judge Doogue observed in Hunter Grain Ltd v Price:
“… it would seem that some assessment is to be made of the closeness of connection between the two sets of proceedings. Such an approach would constitute a relevant mechanism for testing whether or not the controlling principle which governs the use of discoverable documents should be applied in its full rigour or whether a departure is justified. While it might not be permissible in transactions resulting in cases that have a remote connection between each other to decline leave, it seems fair and reasonable that a different approach be taken where there is a close factual connection between the two matters. There is such a connection here.”
[25] Therefore, because the Court will consider the strength of the factual connection between the discontinued and current/future proceedings when a party applied to use documentation from one proceeding to another, evidence detailing what that current/future proceeding might entail will be critical to the Court’s determination of whether to grant leave.
8 At [27]-[28]. See also Wilson v White, above n 1, at [47].
9 Croser v Focus Genetics Ltd Partnership (2548500) [2019] NZHC 2995 at [66]; and Hally Labels Ltd v Powell, above n 3, at [44]-[46].
10 At [44]. See also Hunter Grain Ltd v Price HC Tauranga CIV-2008-470-000192, 23 April 2010 at [39].
[26] It is therefore appropriate, and was articulated as such in Hally Labels, that leave is sought by interlocutory application, rather than through memoranda filed by the parties. While the Court does have inherent jurisdiction to permit the use of discovered documents in other proceedings,11 it is preferable and more consistent with r 8.30(4) and the case law surrounding that rule, that the Court is fully informed of the factual context between the proceedings and the parties before it grants leave. Counsel for the third and fourth defendants referred to Associate Judge Osborne’s observation at [36] of Hally Labels, which supports this conclusion (footnotes omitted):
Mr Patterson has chosen in this case to seek leave by filing a memorandum. It may be appropriate in the interests of securing the “just, speedy, and inexpensive determination” of the issue, to allow requests for some types of leave to be initiated by memorandum. But in relation to matters of obvious importance to parties engaged in litigation, such as the ownership and privacy of their documents which are produced under some compulsion, the Court should generally expect that leave be sought by interlocutory application. Such an approach lends itself to the courts being fully informed and interested parties being fully heard, in relation to the relief sought, the grounds justifying the relief, and any particular rules or principles of law which are applicable. Such information is required for any interlocutory application by r 7.19(1) High Court Rules.
[27] Three other brief observations are worth making. Firstly, I note [30] of Hally Labels, where Associate Judge Osborne observed:
A “party agreement” exception, as a third exception to the collateral use prohibition, also lends itself to the just, speedy and inexpensive determination of the departure from the prohibition. Given the consent of the affected parties, an additional requirement of a Court application would add a layer of delay and expense that is demanded neither by the interests of the parties in relation to their privacy or the interests of the Court in relation to the protection of the Court’s processes.
[28] It may be valuable for counsel and for the parties to consider whether a “party agreement” could be reached and produced to the Court as to the collateral use of the documents, which could also include a suggested arrangement as to the use and access to confidential information within the documents. If this cannot be achieved and produced to the Court, then the parties should revert back to the above conclusion that an interlocutory application for leave should be filed.
11 Croser v Focus Genetics Ltd Partnership (2548500), above n 8, at [64]. See also 7.43(2)(b) of the Rules.
[29] Secondly, I acknowledge that r 4.4.1 of the Rules of Conduct and Client Care place counsel for the plaintiff in a potentially awkward position, in that they are required to uplift documents relating to the discontinued proceeding “without undue delay”, but also likely will experience some delay due to this current ongoing dispute between the parties as to the documents. However, I accept the submission of counsel for the third and fourth defendants that r 8.30(4) constitutes a statutory provision which amounts to an exception from that obligation under r 4.4.1.
[30] I therefore consider that any delay in the transferral or uplift of the documents by counsel for the plaintiffs would not be undue when they are following the proviso under r 4.4.1 that it is “subject to any statutory provisions to the contrary”. I note the case of Wilson v Legal Complaints Review Officer, where Hinton J, referring to the Supreme Court decision of R v Williams,12 defined undue delay as a delay that is inappropriate or unjustifiable (the latter word in turn meaning inexcusable or unacceptable).13 In this case, a delay as a result of appropriately following a statutory provision is not unjustifiable or inappropriate.
[31] Finally, I note r 15.24 of the Rules, which dictates that a plaintiff who has discontinued a proceeding against a defendant and intends to commence a new set of proceeding against that defendant (arising out of the same or substantially similar facts) may not commence that new proceeding until the plaintiff has paid any costs ordered against it relating to the first proceeding. Because counsel for the defendants have now indicated through memoranda that they reserve their rights in relation to costs relating to the filing of this memorandum and opposing any formal application for leave that may be filed, but that the parties have agreed the costs payable by the plaintiffs to the defendants, counsel will need to provide greater clarity as to whether the costs of the discontinued proceeding have actually been paid, and if not whether the current position as to costs has changed.
[32]As a result of the conclusions above, I make the following orders:
12 See R v Williams [2009] NZSC 41 at [12].
13 Wilson v Legal Complaints Review Officer [2016] NZHC 2288 at [41]-[43].
(a)counsel are to attempt to make contact between the parties in order to attempt to reach a “party agreement” as described in [28] above, and present this to the Court by 26 March 2021 if an agreement is reached;
(b)if an agreement cannot be reached, the plaintiffs are to file an interlocutory application accompanied by affidavits setting out the factual context of the case, which includes detail of the proposed new proceeding, the new counsel engaged, and the factual connection between the discontinued and current proceedings by 10 April 2021; and
(c)counsel for the defendants are to file submissions in response by 24 April 2021, and also detail the current position of the defendants as to costs.
Churchman J
Solicitors:
Russell McVeagh, Wellington for Plaintiffs
Brookfields Lawyers, Auckland for First and Second Defendants Dentons Kensington Swan, Wellington for Third and Fourth Defendants
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