McConnachie v Bay of Plenty Regional Council
[2024] NZHC 2744
•18 December 2024
IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY
I TE KŌTI MATUA O AOTEAROA
TE ROTORUA-NUI-A-KAHUMATAMOMOE ROHE
CIV-2023-463-0006
[2024] NZHC 2744
BETWEEN DAVID PAUL McCONNACHIE and FIONA DORIS McINTOSH
First Plaintiffs
JOHN McNEILL
Second PlaintiffMICHAEL GRANT MEAD
Third PlaintiffKARL DAVID STEVENSON
Fourth PlaintiffEDGECUMBE SUPERMARKET LIMITED
Fifth Plaintiff
AND
BAY OF PLENTY REGIONAL COUNCIL
Defendant
CIV-2023-463-0024 BETWEEN
GLEN POTANGO RANGIAHO
Representative First PlaintiffIAG NEW ZEALAND LIMITED
Second Plaintiff
VERO INSURANCE NEW ZEALAND LIMITED
Third PlaintiffAA INSURANCE LIMITED
Fourth Plaintiff
TOWER LIMITED
Fifth Plaintiff
McCONNACHIE v BAY OF PLENTY REGIONAL COUNCIL [2024] NZHC 2744 [18 December 2024]
QBE INSURANCE (AUSTRALIA) LIMITED
Sixth Plaintiff
AND
BAY OF PLENTY REGIONAL COUNCIL
First Defendant
WHAKATANE DISTRICT COUNCIL
Second Defendant
Hearing: On the papers Appearances:
Grant Shand for the Plaintiffs in the 006 Proceeding
M Ring KC/Tanya Wood for Plaintiffs in the 024 Proceeding Campbell Walker KC / Shyrelle Mitchell for the Defendant
in the 006 proceeding
Judgment:
18 December 2024
JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR
[Application for an order to answer interrogatories]
This judgment was delivered by me on 18 December 2024 at 11:00am
pursuant to Rule 11.5 of the High Court Rules
…………………………. Registrar/Deputy Registrar
Solicitors:
Shine Lawyers (Hamish Davies), Auckland, for the Plaintiffs in the 06 Proceeding Duncan Cotterill (Tanya Wood), Auckland, for the Plaintiffs in the 24 Proceeding Heaney & Partners (Shyrelle Mitchell), Auckland, for the Defendant in 06 Proceeding
Counsel:
Grant Shand, Auckland, for the Plaintiffs in the 06 ProceedingCampbell Walker KC, Auckland, for the Defendant in the 06 Proceeding Michael Ring KC, Auckland, for the Plaintiffs in the 24 Proceeding
Introduction
[1] The plaintiffs in proceeding CIV-2023-463-0006 (the 06 proceeding) have applied for orders that Bay of Plenty Regional Council (the BOPRC) and IAG New Zealand Limited (IAG) answer specific interrogatories. IAG is a plaintiff in further High Court proceedings against BOPRC arising from the Edgecumbe floods in 2017. IAG, together with a number of other plaintiffs, are plaintiffs in proceeding CIV- 2023- 463-0024 (the 24 proceeding).
[2] In each statement of claim the purported representative plaintiff(s), plead that they are representative of others in a similar position. The extant statements of claim are:
1.in the 06 proceeding, the first amended statement of claim dated 18 August 2023, paragraphs 7 to 10; and
2.in the 24 proceeding, the fourth amended statement of claim dated 16 April 2024, paragraph 3.
[3]BOPRC denies the claims.
[4] Based on the statements of claim and the statements of defence there is a cross- over of class members issue that the Court will need to resolve. In April 2024, BOPRC waived a limitation defence and consented to the insureds of Vero Insurance New Zealand Limited (Vero), AA Insurance Limited (AA Insurance), Tower Limited (Tower) and QBE Insurance (Australia) Limited (QBE) being within the proposed 24 proceeding class, and the insurers themselves being joined as plaintiffs in the 24 proceeding.
[5] Each of the plaintiffs in the 06 proceeding and the 24 proceeding have made applications for representative orders under r 4.24 of the High Court Rules 2016 (the Rules). The applications are to be heard together by the same Judge. The plaintiffs in each of the proceedings have express rights to oppose each representative order with
evidence, pleadings and submissions. BOPRC has filed and served notice(s) of opposition and evidence in opposition to the representative application(s).
Interrogatories
[6] The plaintiffs in the 06 proceeding have asked the following interrogatory of IAG:
In the period from 1 April 2017 to 1 April 2023 did you underwrite liability insurance to cover any claims/liabilities of/for BOPRC?
[7] The plaintiffs in the 06 proceeding have asked BOPRC the following interrogatories:
Insurance
1. In the period 1 April 2017 to 1 April 2023 did IAG New Zealand Ltd underwrite liability insurance for you to cover any claims/liabilities?
Limitation Waiver
2.Is there any document that records the waiver by you of the application of the relevant limitation period applicable to claims by/for the third to sixth plaintiffs in 0024 in relation to the Edgecumbe floods of 2017?
3. If the answer to 4 is yes, in relation to each document:
(1)what is the relevant document?
(2)what is the date of the document?
4. Who of, or for, the BOPRC made the decision to waive the application of the application of the relevant limitation period applicable to claims by/for the third to sixth plaintiffs in 0024 in relation to the Edgecumbe floods of 2017?
5. On what date did the person in 6 make the decision?
6. Is the decision recorded in writing?
7. If the answer to 6 is yes:
(1)what is the relevant writing?
(2)what is the date of the writing?
8. What is the benefit to/for the BOPRC and/or its ratepayers from the waiver by you of the application of the relevant limitation period
applicable to claims by/for the third to sixth plaintiffs in 0024 in relation to the Edgecumbe floods of 2017?
Legal principles
[8]Rule 8.38 of the Rules provides:
8.38 Order to answer
(1)A Judge may, at any stage of any proceeding, order any party to file and serve on any other party (whether the interrogating party or not) a statement prepared in accordance with rule 8.39 in answer to interrogatories specified or referred to in the order.
(2)The interrogatories must relate to matters in question in the proceeding.
(3)The order may require the statement to be verified by affidavit.
(4)The Judge must not make an order under subclause (1) unless satisfied that the order is necessary at the time when it is made.
[9] As summarised in Aivita Healthy NZ Ltd v Unipharm Healthy Manufacturing Co Ltd, the objects of interrogatories are to:1
1. obtain admissions;
2. reveal weaknesses in the other party’s case;
3. obtain information as to material facts which the applicant has to prove in support of its case;
4. ascertain details of aspects of the other party’s case so as to reduce surprise when statements of evidence are served or at trial;
5. obtain clarification of the other party’s case and limit the other party’s ability to depart from its case as clarified; and
1 Aivita Healthy New Zealand Ltd v Unipharm Healthy Manufacturing Co Ltd [2021] NZHC 1401 at [36], citing Ash v Singh [2019] NZHC 2790 at [179] and Wright v Attorney-General [2021] NZHC 18, 2 NZLR 201 at [11].
6. narrow the issues between the parties and thus reduce the expense and length of the trial, including the expenses in earlier stages of litigation such as disclosure of documents and statements of witnesses.
Basis of the application
[10] Mr Shand, for the 06 plaintiffs, submits the application is based on rr 8.38, 1.2 and 1.6 of the Rules, and the inherent jurisdiction of the Court.
[11] In respect of r 1.2, Mr Shand notes the objective of the Rules is to secure the just, speedy, and inexpensive determination of any proceeding or interlocutory application. He submits that there is flexibility in the application of the Rules, as expressed by Jeffries J in Schmidt v Bank of New Zealand Ltd where Jeffries J said:2
Procedural rules are the servants of Court proceedings to achieve just, speedy, and at the least cost, expedition of cases. The construction of Court rules should always be approached with care but with a readiness to apply them to meet the justice of the case which is manifest before a Court.
…
Procedural rules are to a very significant degree generalised in their words, for they are to cover all situations for which they are to be applied.
[12] As to r 1.6, Mr Shand submits that this rule can be used to fill any gaps to achieve a just result where there is no precise rule.
[13] As to the inherent jurisdiction of the Court, Mr Shand submits the Court may draw upon its residual jurisdiction as necessary whenever it is just or equitable to do so. In particular, to ensure the observance of due process of law, or to prevent vexation or oppression, or do justice between the parties and to secure a fair trial between them, citing Siemer v Solicitor-General.3 He submits that, except to the extent modified by statute and the Rules, the Court continues to have inherent jurisdiction and powers to determine its own procedure. The inherent jurisdiction is not ousted by the adoption of the Rules but is regulated by the Rules, so far as they extend, and to the extent the Rules do not cover a situation, the inherent jurisdiction supplies the deficiency.
2 Schmidt v Bank of New Zealand Ltd [1991] 2 NZLR 60 at 63.
3 Siemer v Solicitor-General [2010] NZSC 54, [2010] 3 NZLR 767 at [29].
Opposition to the application
[14] The opposition to the application by BOPRC and IAG is based on the following:
1. The application contravenes the express requirements in:
(i)r 8.38(1), because the plaintiffs in the 06 proceeding and IAG are not “parties” to the same proceeding; and/or
(ii)r 8.38(2), because BOPRC’s insurance position is not relevant to the matter in question in the 06 proceeding, that is to any issues arising out of the pleading (or to any liability or quantum issues); and/or
(iii)r 8.38(4), because the order could not possibly be necessary at the time that it would be made, given the plaintiffs in the 06 proceeding:
(A)claim they are entitled to, and have sought, the same order against BOPRC; and/or
(B)that IAG’s refusal to answer has already entitled them to draw an adverse inference about the insurance position.
2. Neither rr 1.2 and1.6 nor the Court’s inherent jurisdiction can authorise the Court to make an order that contravenes the express requirements of the Rules.
[15] BOPRC, in addition to raising the same grounds of opposition to the interrogatories as IAG, also opposes the application in relation to the interrogatories relating to the BOPRC’s waiver of the limitation defence on the basis that BOPRC is entitled to decline to answer the interrogatories on the grounds of privilege pursuant to s 56(2) of the Evidence Act 2006.
[16]I deal with each of the grounds of opposition in turn.
Submissions of plaintiffs in the 06 proceeding
“Any other party”
[17] In response to the argument by IAG that r 8.38 only authorises the Court to order “any other party” to a proceeding to file and serve an answer to an interrogatory that has been asked by a party to the same proceeding, Mr Shand submits that this is a very rigid view and literal interpretation of r 8.38 and that interpretation is inappropriate in the context in which the application has been made. He submits that the 06 proceeding and the 24 proceeding claims are clearly interrelated, and the question relates to an important matter in question in both proceedings. He submits the Court can use rr 1.2 and 1.6 to give an order that IAG answer the interrogatory. Additionally, he submits the Court can rely on its inherent jurisdiction to order the answer, relying on the interests of justice and the need to fill in the gaps in the Rules.
[18] In support of these submissions, Mr Shand refers to the Australian cases of Barker & Taylor Pty Ltd v Cablemakers (ACT) Pty Ltd,4 Cojuanco v Routley,5 and Murex Diagnostics Pty Ltd v Chiron Corporation (No 2).6 In summarising these decisions Mr Shand submits that:
1. In Barker & Taylor Pty Ltd, the Court considered an application by a cross- defendant to interrogate a plaintiff where there was no issue between them. It was noted that, where an order exists for parties to be opposed to each other, there could be interrogatories between them and the Court could order interrogatories in reliance on the equivalent of rr 1.2 and 1.6.
2. In relation to the Cojuanco decision, the Court decided that a cross-claim defendant was entitled to interrogate a plaintiff even though there were no claims and no issues between them so long as it was about a matter in
4 Barker & Taylor Pty Ltd v Cablemakers ACT Pty Ltd [1982] 1 NSWLR 719.
5 Cojuanco v Routley [1983] 1 NSWLR 723.
6 Murex Diagnostics Pty Ltd v Chiron Corporation (No 2) [1995] 133 ALR 737.
question in the proceeding, and the relevant rule in question was similarly worded to r 8.38.
3. In Murex Diagnostics Pty Ltd decision, the Cojuanco decision was followed in deciding that a Court could order particular discovery from an entity where the document related to a matter in question in the proceeding without having to relate it to a matter in question between them.
[19] Mr Ring KC, for IAG, submits that for the interrogatory to be valid, it must be made to “any other party”. He submits that “party” means a plaintiff, defendant, or other person joined to “a proceeding” (r 1.3(1)), and then it follows that “any other party”, which is not defined, must also refer to the plaintiff, defendant, or other persons joined to the same proceeding. Mr Ring refers to the decision in Clarke v Ellerman, Bucknall and Co Ltd, where the Court said “there is be some “right to be adjusted in the action between them” which means “right as to which, when the case is tried, there will be a judicial decision between these parties”.7
[20] Mr Ring submits that even being in the same proceedings is not necessary enough to qualify as “any other party” for this purpose. He refers to the decision in Black v New Zealand Law Practitioners Disciplinary Tribunal where the High Court held that the Tribunal itself, which was wrongly named as the first defendant instead of first respondent, was not a “party” to a judicial review proceeding of its own decision, in terms of the identically worded predecessor provision to r 8.38.8 He submits that a party to a different proceeding altogether, in this case the 24 proceeding, could not possibly be “any other party” in terms of r 8.38(1).
Matter in question
[21] Mr Shand submits that the answer concerning IAG being the insurer of BOPRC is important in the 06 proceeding because in its application IAG wants the Court to give IAG the sole right to bring claims for any person insured by it in the 2017 Edgecumbe floods. He submits that IAG is asserting that the insured has no rights to
7 Clarke v Ellerman, Bucknall & Co Ltd [1930] NZLR 722 at 728.
8 Black v New Zealand Law Practitioners Disciplinary Tribunal (1997) 12 PRNZ 52.
choose to be involved in the 06 proceeding and that IAG has sole rights to make all decisions on the claims, including settlement.
[22] Mr Shand submits that his understanding is that IAG insures BOPRC for its liabilities from the Edgecumbe floods. Further, IAG’s failure to deny that insurance cover existed when the other four insurers, who are also plaintiffs in the 24 proceedings, each denied coverage existed also leads to the inference that IAG did insure BOPRC.
[23] Mr Shand submits that if it is correct that IAG insures BOPRC then there is a conflict of interest in IAG being the effective plaintiff and the insurer of BOPRC. He submits the existence of a conflict is a relevant factor against the 24 proceeding being certified as a class action, and that in considering a class and a representative the Court must be satisfied they will at least “vigorously and capably prosecute the interest of the class”.9
[24] Mr Shand submits that whether IAG insures BOPRC is essential relevant information for the Court hearing the applications and also for property owners who have rights to decide whether to “opt in” or to “opt out” to either proceeding.
[25] In relation to the interrogatories directed to BOPRC regarding the waiver of the limitation defence, Mr Shand submits that the efficacy and integrity of the limitation waiver affects the class in each proceeding. The insureds of Vero, QBE, AA Insurance and Tower are part of the class in the 06 proceeding and were not part of the class in the 24 proceeding before the limitation waiver was given. He submits it is difficult to understand the decision to voluntarily be exposed to a claim for in excess of $24.5 million rather than rely on a limitation defence is in the best interests of the BOPRC and its ratepayers.
[26]Mr Shand submits that:
1. BOPRC is within the Local Government Act 2002, and a local authority has limited powers and specific obligations under that Act.
9 Western Canadian Shopping Centres Inc v Dutton 2001 SCC 46, [2001] 2 SCR 534 at [41].
2. BOPRC also has a fiduciary duty to act in the best interests of the ratepayers, citing Mackenzie District Council v Electricity Corporation of New Zealand.10
3. The decision by BOPRC to waive the limitation period and assume exposure to claims of about $24.5 million is arguably a breach of its fiduciary duties and in breach of the Local Government Act 2002. Accordingly, it should be set aside.
[27] Mr Shand submits that the question about the waiver, the efficacy of which affects who is in which class, is a matter in question in the 06 proceeding, and if the waiver is set aside then the insureds in the 24 proceeding class are in the 06 proceeding class, as they were originally.
[28] Mr Ring submits that an interrogatory only relates to a “matter in question in the proceeding”, in accordance with r 8.38(2), if it is relevant to an issue in the case:
1. to be determined by the pleadings; and
2. such that the answer will be admissible in the evidence at any trial.
[29] He submits that in the present case this requirement cannot be satisfied with interrogatories only directed at an issue in an interlocutory application, and/or unless the interrogator is directing the interrogatory to another party in the same proceeding.
[30] Mr Ring submits that interrogatories cannot be directed to interlocutory matters, such as discovery. He submits that:
1. One party to a proceeding is not entitled to serve interrogatories on another party to the same proceeding unless there are rights between them that require adjustment and will be adjusted at the trial of the proceeding or
10 Mackenzie District Council v Electricity Corporation of New Zealand [1992] 3 NZLR 41 at 47.
afterwards — because this is inherent in the meaning of “party” in this context, citing the Clarke v Ellerman, Bucknall & Co Ltd decision; 11
2. However if this qualification is satisfied, as between one such “party” and another such “party”, the interrogator is entitled to ask about any issue in the case not just about issues between them.
[31] He submits it is self-evident that where the interrogator and the interrogatee are part of different proceedings, these requirements can never be satisfied.
[32] As to the Australian authorities relied upon by Mr Shand, Mr Ring submits that the three decisions are all examples of discovery/interrogatories between parties to the same proceeding; and are all in respect of liability (not interlocutory) issues in the proceeding, not necessarily between these parties but at least indirectly affecting their rights and liabilities. He submits none of these cases expressly referred to New Zealand position that was referred to by the Court of Appeal in Clarke v Ellerman, Bucknall & Co Ltd that there also had to be a pending adjustment of rights in order to satisfy the meaning of “any party” and “any other (or “opposite”) party” respectively. He submits that there is nothing in the Australian cases referred to by Mr Shand to suggest that the principles and/or outcome would have been the same if the interrogator or interrogatee had been parties to different proceedings.
[33] Applying these principles to the present case, Mr Ring submits that the plaintiffs in the 06 proceeding and the plaintiffs in the 24 proceeding have divergent interests only in respect of the class, being whom their respective proceedings will ultimately represent and which the r 4.24 applications will determine. He submits that once the r 4.24 applications are resolved they will no longer have any divergent interest and the plaintiffs in the 06 proceeding will not be seeking judgment against any of the plaintiffs in the 24 proceeding and vice versa.
[34] Mr Walker makes similar submissions to Mr Ring, namely that the interrogatories do not relate to any matter in question in the 06 proceeding. He submits:
11 Clarke v Ellerman, Bucknall & Co Ltd [1930] NZLR 722 at 728.
1. The 06 proceeding and the 24 proceeding are separate proceedings, and while they are being case managed together, there is no order for them to be heard together, and even if there had been, they would remain separate proceedings.
2. The separate r 4.24 interlocutory applications in the two proceedings are being heard together, for the practical reason that they relate to the same facts and the respective plaintiffs are representing classes that overlap. Leave has been given, by agreement, for the 06 plaintiffs to make submissions on the 24 proceeding plaintiffs’ application and vice versa. However, the fact that the 06 plaintiffs have been permitted to make submissions on the application in the 24 proceeding, even though they are not a party to it, does not render that application, or any matter arising in respect of it, a matter in question in the 06 proceeding.
3. The interrogatories must relate to a matter in question in the proceeding as prescribed by r 8.38(2). The Court of Appeal described the nature, purpose and permissible scope of interrogatories in the decision of Todd Pohokura Ltd v Shell Exploration NZ Ltd, where the Court said:12
An interrogatory is a question asked before trial for the purposes of the asking and answering on oath or affirmation which is admissible evidence at trial. Like all questions, it must be directed towards advancing one side’s case or damaging the other’s case. It must accordingly be relevant to an issue raised on the pleadings or a fact in the dispute for determination.
[35] Mr Walker also refers to Wright v Attorney-General, where Associate Judge Bell applied the principles set out in Todd Pohokura Ltd.13
1. The whole purpose of an interrogatory is to enlist an answer that would be admissible in evidence at trial, and such answer would only be admissible if it were relevant to an issue arising out of the pleadings.
12 Todd Pohokura Ltd v Shell Exploration Ltd [2009] NZCA 561 at [14].
13 Wright v Attorney-General [2021] NZHC 18, [2021[ 2 NZLR 201 at [44]–[45].
2. Counsel has not found any authority holding that interrogatories may be proposed under r 8.34(1) in relation to the matter in issue only in an interlocutory dispute, and certainly not an interlocutory dispute in another proceeding.
3. Paragraphs 7 and 8 of the amended statement of claim in the 06 proceeding claim there are other residents or owners in a similar position to the representative plaintiffs, which BOPRC denies for insufficient knowledge. None of the eight interrogatories go that issue. The eight interrogatories do not go to the question of whether other residents or property owners in each case were or are in the same positions as the 06 proceeding plaintiffs, or whether the 06 proceeding plaintiffs sue as representatives in that proceeding. These will not be issues at trial because the r 4.24 application, including whether the representative claimants have the same interests in the subject matter of the proceeding, will be determined as an interlocutory matter. Even if these were issues at trial, answers to the eight interrogatories would not be admissible in evidence because they would not relate to those issues. The question of whether BOPRC was insured by IAG for liability, and how and why BOPRC waived the limitation in the 24 proceeding are irrelevant to whether other people in Edgecumbe are in the same position as the plaintiffs in the 06 proceeding; or whether the plaintiffs in the 06 proceeding are suing as their representatives in the 06 proceeding, in accordance with r 4.24.
Necessary
[36] Pursuant to r 8.38(4), for the Court to have the jurisdiction to order an answer to an interrogatory, the order must be “necessary at the time when it is made”.
[37] Mr Ring submits that the plaintiffs in the 06 proceeding cannot satisfy the test that the answers to the interrogatory to IAG are necessary because:
1. by the same application, the plaintiffs in the 06 proceeding are seeking an order that BOPRC answers the same interrogatory as they have directed to IAG; and
2. in any event, the plaintiffs in the 06 proceeding state that IAG’s failure to deny that it insured BOPRC “leads to an inference that IAG did insure BOPRC” anyway.
[38] Mr Ring submits that the plaintiffs in the 06 proceeding rely on the test set out in Wright v Attorney-General where Associate Judge Bell held that:14
The test is not a stringent one. The party wishing to interrogate must show that there is a good reason for them.
[39] Mr Ring casts doubt on the “good reason” test postulated by Associate Judge Bell in the Wright case, but in any event submits that the plaintiffs in the 06 proceeding have an alternative means of obtaining the information from BOPRC. Therefore, it is unnecessary for IAG to answer the interrogatory.
Rules 1.2, 1.6 and inherent jurisdiction
Rule 1.2
[40] Mr Ring refers to Mr Shand’s argument that r 1.2 can prevail even if the requirements of r 8.38 cannot be satisfied because resort to r 1.2 is necessary to avoid an injustice and/or because of “the flexibility with which the Courts approach procedural rules”. He submits that r 1.2 is an aid to interpreting other rules and not a stand-alone substitute for another rule, such as r 8.38, if r 8.38’s specific requirements cannot be satisfied.15
14 Wright v Attorney-General [2021[ NZHC 18, [2021] 2 NZLR 201 at [19].
15 Andrew Beck and others McGechan on Procedure (online ed, Thomson Reuters) at [HR1.2.01] and [HR1.2.3] citing Pymouth Hotel Ltd v Broadcasting Corporation of New Zealand HC Wellington 564/85, 2 May 1986 at 5.
Rule 1.6
[41] In relation to Mr Shand’s argument that r 1.6 can be used to fill in any gaps to achieve the objects set out in r 1.2, Mr Ring submits that, as with r 1.2, 1.6 is not the stand-alone substitute for another rule, such as r 8.38, if r 8.38’s specific requirements cannot be satisfied. He submits this is directly contrary to authority.16
Inherent jurisdiction
[42] As to Mr Shand’s argument that the Court can rely on the Court’s inherent jurisdiction to make the orders sought, Mr Ring submits that the authorities cited by Mr Shand do not support the proposition for which they are cited. In particular, he submits the decision in Mafart v Television New Zealand Ltd17 makes it clear that the inherent jurisdiction is not ousted by the adoption of the rules, but is regulated by the rules so far as they extend. And to the extent the rules do not cover a situation, the inherent jurisdiction supplies the deficiency.18
[43] Accordingly, Mr Ring submits that the inherent jurisdiction cannot be used by the Court to order the answer to the interrogatories when the requirements of r 8.38 cannot be met.
[44] Mr Walker makes similar submissions, namely that the Court’s inherent jurisdiction should only be used to supplement the rules where they do not cover the situation, citing the Mafart decision. He submits that in the present case there is no gap and the Rules cover this situation. He submits that r 8.34 is prescriptive as to when interrogatories can be issued, who may issue the interrogatories, and against whom the interrogatories may be issued. The 06 plaintiffs’ interrogatories do not comply with those prescriptions and the Court is not permitted to ignore an overriding express rule governing this situation.
16 At [HR1.6.02].
17 Mafart v Television New Zealand Ltd [2006] NZSC 33,[2006] 3 NZLR 18 at [10]–[16].
18 At [16]–[17].
BOPRC litigation privilege
[45] Mr Walker submits that, in addition to supporting the arguments put forward by IAG that the interrogatories are impermissible, BOPRC is entitled to decline to answer the interrogatory relating to the waiver of limitation on the basis that that information is protected by litigation privilege under s 56(2)(c) of the Evidence Act 2006.
[46] Mr Walker notes it is common ground that litigation privilege under s 56 requires two essential elements:
1. that at the date the document was prepared, litigation was reasonably apprehended; and
2. the document was prepared for the dominant purpose of preparing for litigation.
[47] Mr Walker submits that these two requirements are met in respect of the interrogatories regarding the waiver of limitation as:
1. The information sought by the plaintiffs in the 06 proceeding as to how and why BOPRC waived the limitation in the 24 proceeding came into existence while litigation was on foot. Therefore, the first criteria is met.
2. Information about how and why BOPRC waived the limitation in the insurer proceeding is directed to litigation strategy and any documents in that regard were therefore prepared for the dominant purpose of preparing for litigation in the 24 proceeding.
[48] Accordingly, he submits that BOPRC is entitled to refuse to answer the interrogatories pursuant to r 8.40(1)(c).
Conclusion on interrogatories
[49] I am of the view that the plaintiffs in the 06 proceeding’s application for an order that the interrogatories be answered by IAG and BOPRC should be dismissed.
[50]The reasons for my view are:
1. The interrogatory directed to IAG does not comply with r 8.38 of the Rules. IAG is not a “party” in the 06 proceeding within the principle expressed in the decision of Clarke v Ellerman, Bucknall and Co Ltd.19 There must be some right to be adjusted between the plaintiffs in the 06 proceeding and IAG which, when the case is tried, will be the subject of a judicial decision between the parties. The issue of whether or not IAG insures BOPRC does not go to an issue that will be determined in the judgment in the 06 proceeding.
2. While there is overlap to the extent the 06 proceeding and the 24 proceeding are being case-managed together and the 06 plaintiffs have the right to make submissions and file evidence in respect of the r 4.24 application in the 24 proceeding and vice versa, this does not make IAG a party to the 06 proceeding for the purposes of r 8.38(1).
3. The issue of whether IAG insures BOPRC is an interlocutory matter and will be disposed of on determination of the r 4.24 applications made in each of the proceedings. It is therefore not “a matter in question” in either the 06 proceeding or the 24 proceeding which will be determined at trial resulting in an adjustment of rights between the parties. It does not relate to the pleadings at paragraphs 7 and 8 of the amended statement of claim in the 06 proceeding or paragraph 3 in the statement of claim in the 24 proceeding.
4. Rules 1.2 and 1.6 are intended to fill in gaps where situations are not dealt with by the Rules. They are not intended to override the requirements of
19 Clarke v Ellerman, Bucknall & Co Ltd [1930] NZLR 722.
express rules, in this case r 8.38. It cannot be used in the manner in which Mr Shand submits, to allow an order to be made to answer the interrogatories which do not comply with r 8.38.20 Similarly the Court’s inherent jurisdiction is available where the Rules do not cover the circumstances in question.21 In this instance there are express requirements in the Rule which the interrogatories do not comply with.
5. As to the interrogatories which are directed to BOPRC regarding the waiver of limitation, an order should not be made for BOPRC to answer these interrogatories as they do not relate to a matter in question in the 06 proceeding, as required by r 8.38(2). They do not relate to whether other people in Edgecumbe are in the same position as the plaintiffs in the 06 proceeding as set out in the pleadings.
6. As to BOPRC’s claim of litigation privilege in respect of answers to the interrogatories relating to the waiver of the limitation defence, it is not necessary for this judgment to determine whether litigation privilege applies as I have determined that BOPRC does not have to answer these on other grounds. However, I make the following comments:
(i)The documents relating to the reasons as to how, why and by whom the waiver of limitation was given by BOPRC were prepared when proceedings were apprehended, and are therefore covered by litigation privilege. I do not accept Mr Shand’s submission that ss 4 and 5 of the Local Government Official Information Meetings Act 1987 automatically overrides litigation privilege. The Act is aimed at promoting general transparency to the public of information held by local authorities. It is also noted that s 5 states “unless there is a good reason for withholding” the relevant information. Litigation privilege would be a good reason.
20 McGechan on Procedure, above, n 15 at [HR1.2.01].
21 At [HR.1.6.01].
(ii)The absence of mention of litigation privilege in the affidavit of Ms Annabel Taylor or in the notice of opposition, is in my view not fatal to BOPRC raising the litigation privilege in its opposition to the plaintiffs in the 06 proceeding’s application.
Costs
[51] IAG is seeking indemnity costs, if costs are awarded personally against the solicitors and counsel in the 06 proceeding, or 2B costs if costs fall on the 06 plaintiffs themselves in respect of opposing the application.
[52] BOPRC are seeking costs on an indemnity basis, or alternatively on a 3B basis together with a 50 per cent uplift in respect of opposing the application.
Increased and indemnity costs
[53] The Court may order a party to pay increased costs if it has contributed unnecessarily to the time or expense of determining an interlocutory step in the proceeding by:
1. taking or pursuing an unnecessary step or argument that lacks merit; and
2. failing without reasonable justification to accept a legal argument.
[54] The Court may order a party to pay indemnity costs if it has acted vexatiously, frivolously, improperly or unnecessarily in commencing or continuing an interlocutory step in a proceeding. In summary:22
1. increased costs may be ordered where there has been a failure by a party to act reasonably; and
2. indemnity costs may be ordered where a party has behaved very badly or very unreasonably.
22 Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009[ 3 NZLR 400 (CA) at [27].
Costs against practitioners
[55] As noted, IAG are seeking that costs be awarded against the solicitors and counsel in the 06 proceedings. As authority for the Court’s jurisdiction to make an award of costs against a non-party, and in appropriate cases against the party’s solicitors and counsel, Mr Ring relies on the decision of Harley v McDonald where the Court said:23
… upon the principle that, as officers of the Court, solicitors owe a duty to the Court, while the Court for its part has a duty to ensure that its officers achieve and maintain an appropriate level of competence and do not abuse the Court’s process.
[56] Mr Ring in the present case relies on the following factors as justification to award costs against the solicitors and counsel in the 06 proceedings:
1. The solicitors and counsel embarked on a novel procedure that directly contravened the plain wording of a specific High Court Rule, in multiple obvious respects, each one of which was fatal.
2. The solicitors relied on arguments that:
(i)were not supported by any authority and were in fact contrary to authority including binding Court of Appeal judgments;
(ii)cited authority for the opposite proposition than that which they had plainly stated, including binding Court of Appeal judgments;
(iii)omitted from the cited extract that purportedly stood for the proposition, the passage that expressly contradicted the proposition; and
23 Harley v McDonald [2001] UKPC 18, [2002] 1 NZLR 1 at [45],
(iv)advanced arguments that the Court of Appeal had previously held were not seriously arguable, in a case where counsel for the 06 plaintiffs had also been counsel advancing the argument.
3. The correct legal position, together with references to most of the supporting authorities, was readily available in the commentaries on McGechan on Procedure.
4. On numerous occasions IAG’s solicitors brought all its arguments and many of the key authorities directly on point to the practitioners’ attention and were unsuccessful in avoiding the application being brought.
5. Despite being aware of contrary authorities relied on by IAG and propositions they stood for, they did not attempt to distinguish, explain or even cite them.
[57] IAG are seeking costs against the solicitors and counsel in the 06 proceedings equal to 50 per cent of actual costs incurred, amounting to $59,750.21.
BOPRC’s position
[58] Mr Walker, seeks costs on an indemnity basis that the 06 proceeding plaintiffs have acted vexatiously, improperly and unnecessarily in commencing and continuing the interlocutory application for answers to the interrogatories. Alternatively, he seeks 3B costs with a 50 per cent uplift as the plaintiffs in the 06 proceeding took or pursued an unnecessary step or an argument that lacks merit.
Conclusion on costs
[59] I am of the view that the conduct of the solicitors and counsel in the 06 proceeding does not justify costs being awarded personally against the practitioners. Accordingly, 2B costs are awarded to IAG as sought.
[60] In my view, BOPRC are entitled to increased costs in respect of opposing the application for the following reasons:
1. The application is contrary to the express terms of the Rules and this was made apparent to the solicitors and counsel for the plaintiffs in the 06 proceeding.
2. The clear authorities in New Zealand dealing with the application of r 8.38 and other relevant Rules were not taken account of by the plaintiffs in the 06 proceeding despite the authorities being brought to their attention.
3. The applications were without merit and should not have been pursued following the responses from opposing parties.
Orders
[61]I make the following orders:
1. The application by the plaintiffs in the 06 proceeding for an order that IAG answer the interrogatory directed to it is dismissed.
2. The application against BOPRC to answer the eight interrogatories directed to it is dismissed.
3. The plaintiffs in the 06 proceeding are to pay costs of IAG’s opposition to the application on a 2B basis together with disbursements.
4. The plaintiffs are to pay the costs of BOPRC on a 2B basis, together with a 50 per cent uplift together with disbursements.
…………………………….. Associate Judge Taylor
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