Minister of Education v Carter Holt Harvey Limited
[2020] NZHC 1979
•7 August 2020
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2013-404-1899
[2020] NZHC 1979
UNDER Consumers Guarantees Act 1993, the Fair Trading Act 1986, the Building Act 2004 BETWEEN
MINISTER OF EDUCATION AND OTHERS
First to Fourth Plaintiffs
AND
CARTER HOLT HARVEY LIMITED
Defendant
AND
AUCKLAND COUNCIL AND OTHER TERRITORIAL AUTHORITIES LISTED IN SCHEDULE 1 TO THE FIRST
AMENDED STATEMENT OF CLAIM BY THIRD DEFENDANT AGAINST FIRST TO FIFTIETH THIRD PARTIES
First to Fiftieth Third Parties
Hearing: 22 July 2020 Counsel:
NF Flanagan, J Carlyon, EC Rutherford and KM Moon for plaintiffs
DM Salmon, M Heard, ED Nilsson and HAT Bush for defendant
Judgment:
7 August 2020
JUDGMENT (No. 11) OF FITZGERALD J
[As to application for leave to bring discovery application ]
This judgment was delivered by me on 7 August 2020 at 3:30pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar ………………………………. Date……………
Solicitors: Meredith Connell, Auckland
LeeSalmonLong, Auckland
Minister of Education v Carter Holt Harvey Limited [2020] NZHC 1979 [7 August 2020]
Introduction
[1] By (amended) notice of interlocutory application dated 6 July 2020, the defendant (Carter Holt) seeks leave to file an interlocutory application seeking further discovery and other related orders against the plaintiffs (referred to collectively as the Ministry).1
[2]In its substantive application, Carter Holt seeks the following orders:
(a)An order requiring the Ministry to conduct further searches for certain categories of documents set out in a schedule to the application, namely:
(i)correspondence between the Ministry and non-parties relating to contemplated potential claims/court proceedings against non- parties regarding weathertightness or durability issues in respect of buildings featuring Shadowclad at Snells Beach School;
(ii)the terms of the agreement or agreements entered into to resolve claims against parties other than Carter Holt, and documents relevant to what those terms are, again in relation to weathertightness or durability issues in respect of buildings featuring Shadowclad at Snells Beach School;
(iii)expert reports relating to contemplated or potential claims or court proceedings against non-parties regarding weathertightness or durability issues in respect of buildings featuring Shadowclad at Snells Beach School (of which there are approximately 17 in number, and which have already been discovered by the Ministry but over which litigation privilege has been claimed); and
1 Carter Holt’s application was originally filed on 30 June 2020 but did not seek leave. Leave is required given the close of pleadings date in this matter was in October 2019.
(iv)two particular documents in relation to Oakura School, again already discovered by the Ministry but over which it claims litigation privilege.
[3] If leave is granted, Carter Holt will also seek orders that the Ministry files an affidavit of documents in relation to the above documents and makes them available to Carter Holt for inspection.2
[4] The final aspect of Carter Holt’s proposed substantive application is an order that:
… the plaintiffs carry out a review of all inspection reports that post-date 2013 in respect of which litigation privilege has been claimed in this proceeding and disclose all relevant reports which were not prepared for the dominant purpose of litigation.
[5] In the balance of this judgment, I will refer to the documents referred to at [2](a)(i) and (ii) above as the “Snells Beach claim documents”, the documents referred to at [2(a)(iii)] above as the “Snells Beach reports” and the documents referred to at [2(a)(iv)] as the “Oakura School reports”.
Approach to applications for leave
[6]The principles were not in dispute and may be stated relatively briefly.3
[7] Rule 7.7 of the High Court Rules 2016 requires a party to seek leave before bringing an interlocutory application after the close of pleadings.
[8] The Court of Appeal in Elders Pastoral Ltd v Marr set out the test for when leave to take steps after the close of pleadings will be granted.4 The applicant must show that the following “three formidable hurdles” are met:5
(a)it is in the interests of justice to grant leave;
2 Though given the Snells Beach and Oakura School reports have already been discovered by the Ministry (but in the privileged section of its affidavit of documents), the foreshadowed application would strictly be an application to set aside privilege in those documents.
3 I draw the following principles from the parties’ helpful written submissions.
4 Elders Pastoral Ltd v Marr (1987) 2 PRNZ 383 (CA) at 385.
5 At 385.
(b)granting leave will not significantly prejudice the other parties; and
(c)granting leave will not cause significant delay.
[9] In determining whether leave should be granted, this Court has noted that the closer an application for leave is to trial the more formidable these hurdles become.6 Carter Holt also accepts that the timing of the application and the reasons for delay will also be relevant.7
[10] Ultimately, the overall objective is to ensure the just, timely and inexpensive determination of the proceeding.8 I have taken the approach that if interlocutory applications are to proceed during the course of the trial, they are to be as narrowly confined as the interests of justice allow; the parties and their counsel ought not to be unnecessarily distracted by ongoing interlocutory skirmishes during the substantive hearing.
The parties’ respective submissions
Carter Holt’s submissions
[11] Carter Holt acknowledges that its application was made relatively close to the start of the trial (due to commence on 3 August 2020, and at the date of this judgment, having already commenced). It also accepts that in relation to at least aspects of its application, there has been some delay.9 It says, however, that there are reasons for that delay and importantly, the application is unlikely to place any real or significant burden on the Ministry or otherwise disrupt the trial.
[12] Carter Holt says its proposed application is narrow and targeted, and the documents sought are easily identifiable (as noted, many already having been listed in the Ministry’s affidavit of documents). Carter Holt also emphasises that Snells Beach School (being what it says is an example of a well-built school clad in direct fix
6 NZ Iron Sands Holdings Ltd v Toward Industries Ltd [2019] NZHC 2883 at [33]; and Lyttleton Port Co Ltd v Aon New Zealand [2019] NZHC 726 at [22].
7 Monster Energy Company v Ox Group Global Pty Ltd [2016] NZHC 2124 at [28].
8 Body Corporate 366611 v Downer New Zealand Ltd [2019] NZHC 2656 at [25].
9 For example, its position that a Ministry witness, Mr Mitchell, has put certain documents in issue by his reply evidence, which was served on Carter Holt in early March 2020.
Shadowclad which is performing well) is an important part of its evidence in response to the Ministry’s claim. Carter Holt therefore says the documents relating to Snells Beach School are not of marginal or tangential relevance only.
[13] Turning to the Snells Beach claim documents, Carter Holt acknowledges that in an earlier judgment in these proceedings, I declined to order discovery of claims documents per se.10 But Carter Holt points out that I did so not because the documents were irrelevant, but because discovery of claim documents in relation to all schools the subject of the Ministry’s claim would be disproportionate. Carter Holt says the Snells Beach claim documents are relevant in at least two ways. First, documents concerning weathertightness issues at schools clad in direct fix Shadowclad are inherently relevant to the matters in issue in these proceedings. In this context, Carter Holt says that even if the Snells Beach claim documents say nothing about the cladding at the school, that in and of itself speaks volumes and is supportive of Carter Holt’s case, namely that when installed and maintained correctly, direct fix Shadowclad will perform.
[14] The second basis advanced for relevance is that a Ministry witness, Mr Mitchell, has put the documents in issue. In responding to Carter Holt’s evidence noting that Snells Beach School was withdrawn from the claim, Mr Mitchell states:
I have made some inquiries within the Ministry and I understand that the buildings at Snells Beach School were originally part of this claim, but were removed from the claim because they were subject to a claim against those involved with the design and construction of those buildings. Proceedings were not issued, but negotiations were carried out with the relevant parties with the expectation that proceedings would be issued if no resolution was reached.
[15]Carter Holt says it must be entitled to test Mr Mitchell’s evidence on that point
– including by reference to the underlying documents.
[16] Turning to the Snells Beach and Oakura School reports, Carter Holt says that at a hearing before me on 2 – 5 June 2020 (the June hearing) counsel for the Ministry (Mr Flanagan) agreed to waive privilege over all expert reports on the schools addressed in the claim. Carter Holt therefore says privilege has been waived in the
10 Minister for Education v James Hardie New Zealand [2019] NZHC 245 at [129].
Snells Beach and Oakura School reports. Further and in any event, some expert reports over which litigation privilege had been claimed by the Ministry were provided to Carter Holt at the June hearing, and Carter Holt says that at least one of them gives rise to concern as to the basis upon which the Ministry has claimed privilege in all post-2013 expert reports. Carter Holt says this provides a proper foundation for ordering the Ministry to conduct a review of those reports.
[17] On the basis of the above, Carter Holt says it is in the overall interests of justice to grant leave.
The Ministry’s submissions
[18] The Ministry says there is no proper basis upon which leave ought to be granted.
[19] The Ministry first points to what it says is significant and unexplained delay in Carter Holt bringing the application. It says that well before December 2019, when Carter Holt served its own evidence on the Ministry, Carter Holt must have been aware of the importance of Snells Beach School to its own case, yet it made no effort to pursue the Snells Beach claim documents until June 2020. It also notes that Carter Holt was served with the Ministry’s reply evidence (which included Mr Mitchell’s reply brief) on 2 March 2020, yet Carter Holt again took no steps in relation to pursuing the materials until June of this year. The Ministry also notes that despite the reliance on the waiver given at the June hearing, Carter Holt still delayed making its application for a number of weeks. The Ministry says that even that delay ought to be considered significant given the proximity to trial.
[20] Adding to this unexplained delay, the Ministry says the merits of Carter Holt’s proposed application are weak. In relation to the Snells Beach and Oakura reports, the Ministry says they have already been discovered by the Ministry, they are privileged and privilege has not been waived. The Ministry says the waiver of privilege offered at the June hearing did not extend to those reports, given the waiver extended only to inspection reports for the 18 additional schools referred to in the Ministry’s evidence. That this was so is confirmed by the reason for the waiver being given in the first place, namely to ameliorate any potential prejudice to Carter Holt as a result of the
18 school buildings being included in the Ministry’s evidence when Carter Holt had not had an opportunity to inspect all of them. The Ministry says that:
(a)Snells Beach School is not one of the 18 schools referred to in the Ministry’s evidence and thus was not the subject of the waiver; and
(b)the Oakura School reports are not inspection reports (to which the waiver was directed), but are reports prepared by expert advisers to the Ministry on the instruction of Meredith Connell (the Ministry’s solicitors) for the purposes of these proceedings.
[21] In relation to the Snells Beach claim documents, the Ministry says they are not relevant to the pleaded issues, or if they have any relevance, it is of limited or marginal value. The Ministry says that given the Snells Beach claim documents relate to claims against third parties and not Carter Holt, they are by definition concerned with matters other than Shadowclad’s alleged inherent defects.
[22] The Ministry also disputes the suggestion that Mr Mitchell’s evidence puts the documents in issue. The Ministry accepts that had the Snells Beach School buildings been removed from the claim for reasons relating to the claim, the documents would be relevant and they would have been discovered. But the Ministry says the reason for them being removed (as explained by Mr Mitchell) has nothing to do with the claim. The Ministry submits that relevance cannot be “created” by Carter Holt making an (irrelevant) allegation in its own evidence to which a Ministry witness simply responds.
[23] In relation to the proposed order to review all post-2013 expert reports over which litigation privilege has been claimed, the Ministry says the Court has already heard and determined an extensive application by Carter Holt to set aside privilege in such reports, and as a consequence of the judgment on that application, the Ministry has already conducted a further review.11 The Ministry says the report on which Carter Holt now relies to cast doubt on the Ministry’s claims of litigation privilege is properly the subject of a privilege claim. The Ministry emphasises that the face of a document
11 Minister of Education v James Hardie New Zealand [2019] NZHC 3487.
is often an unreliable guide to the question of privilege, and there is no real suggestion or evidence that the Ministry has misinterpreted the principles from my earlier judgment on litigation privilege.
Discussion
[24] Much of the parties’ submissions focussed on the merits of Carter Holt’s proposed application. While the merits will be relevant to an application for leave (as leave should not be granted to pursue hopeless, and late, interlocutory applications), I am conscious this is a leave application only and it is therefore not necessary or appropriate for me to reach any final views on the merits (unless, of course, they are dispositive of the question of leave).
[25] Turning first, however, to the question of delay, I agree with the Ministry that there has been some delay in Carter Holt bringing some aspects of its proposed application. Certainly in relation to the Snells Beach claim documents, Carter Holt has been on notice for some time of the importance of Snells Beach School to its own case. But I also accept that in relation to the Snells Beach and Oakura School reports, whether privilege has properly been claimed in relation to them (and other post-2013 reports) was brought into sharper focus as a result of the disclosure of reports to Carter Holt at the June hearing. And the waiver arguments obviously stem from the waiver given at the June hearing.
[26] Standing back and in the overall context of these proceedings, I do not consider delay to be particularly material to (and certainly not determinative of) whether leave ought to be granted.
[27] In my view, the more material factors are whether granting leave will cause any significant delay to the proceedings or significant prejudice to the Ministry, balanced against the merits of the proposed application.
[28] The substantive trial is already underway, meaning there will not be any delay to the trial itself. Further, to the extent leave is granted, and even assuming the substantive application is granted, I am not persuaded there would be “significant” prejudice to the Ministry. In relation to the Snells Beach claim documents, collating
and considering the documents would not be a very onerous task, given the materials are limited to one school and are therefore likely to be relatively tightly confined. Indeed, there is no evidence before me to suggest that the task of collating the documents would be onerous.
[29] In relation to the Snells Beach and Oakura School reports, the issue will largely be one of legal argument, perhaps supplemented by some (likely relatively brief) affidavit evidence on the substantive application. Each party also has reasonably large legal teams working on these proceedings, so that the “heavy lifting” to prepare for and deal with the substantive application can presumably be handled by team members other than those deeply involved in the substantive hearing at this time.
[30] These observations do not, however, apply to paragraph [1(c)] of the amended application, namely that the Ministry carry out a review of all inspection reports post- dating 2013 in respect of which litigation privilege has been claimed. Compliance with any order to this effect would no doubt involve significant work on the part of the Ministry and its advisers. Moreover, I accept the Ministry’s submission that this work has in fact already been done, such that the order now sought would require the Ministry to repeat that substantive exercise. That in and of itself is prejudice.
[31] Do then the merits of the proposed application tip the balance one way or the other? As a preliminary point, there is no dispute that documents concerning weathertightness issues at Snells Beach and Oakura Schools are relevant. That is the reason why the expert reports in relation to the two schools have been discovered by the Ministry – albeit with litigation privilege claimed in relation to them.
[32] In relation to the Snells Beach claim documents, I have already ruled that claims documents per se may be of some relevance. As Carter Holt notes, my earlier ruling that all such documents did not need to be discovered by the Ministry was influenced by issues of proportionality. Given the application concerns one school only, proportionality issues do not arise. Further, Snells Beach School is now known to be of central relevance to Carter Holt’s case.
[33] It is therefore arguable that the Snells Beach claim documents are of some relevance to a school of considerable importance to Carter Holt’s case. And while I have some sympathy for the submission that relevance cannot be “created” by a party including (irrelevant) allegations in its own evidence to which the other party then responds, I consider it not unarguable that Mr Mitchell’s evidence has put the reason why the Snells Beach School was withdrawn from the claim in issue. There is also a live issue in my view as to whether his reply brief waived privilege in documents on that particular topic.
[34] The case for setting aside privilege in the Snells Beach reports is weak. The waiver given at the June hearing did not in my view extend to those reports. The waiver was tied to and for the purpose of ameliorating prejudice in relation to additional schools referred to in the Ministry’s evidence given Carter Holt had not inspected all of them. Snells Beach School does not fall within that category.
[35] Turning to the Oakura School reports, given the purpose of the waiver of privilege given at the June hearing, it logically related to reports which provide information on the condition of a particular school building at the time of inspection by the Ministry’s experts. The Ministry says the Oakura School reports are not “inspection reports”. There may be a fine semantic distinction between an “inspection report” and a report which provides information on the condition of a particular building at the time of inspection by the Ministry’s experts. But the relevant point for present purposes is that there is no evidence (as opposed to statements in correspondence and submissions) before the Court explaining the nature of the Oakura School reports and why they fall outside the scope of the waiver. For that reason, I conclude that whether the Oakura School reports were captured by the waiver of privilege given at the June hearing is arguable.
[36] The argument that privilege has wrongly been claimed over the Snells Beach and Oakura reports is weak. This argument relies on concerns said to arise from one of the reports provided to Carter Holt at the June hearing. I accept that on the face of the document (and in particular, its stated purpose), there may be grounds to suggest
litigation privilege ought not to have been claimed over it.12 But in relation to documents of this kind, authored by non-lawyers, the nature and content of the document can sometimes be an unreliable pointer to whether the document is privileged (particularly when litigation privilege is in issue). Rather, privilege must be assessed by taking into account the broader context in which the document came into existence. The limitations around, for example, the Court inspecting documents to assess privilege claims in the absence of that broader information and context was recently noted by one United Kingdom commentator.13 In addition, three reports were provided to Carter Holt at the June hearing. Carter Holt relies on only one for its present argument. It presumably sees nothing in the other two reports as giving rise to concern. There would need to be considerably more, in my view, to suggest the Ministry has fundamentally misapplied the principles of litigation privilege to post- 2013 reports before ordering it to conduct another review of the validity of those privilege claims.
[37]Bringing these threads together, I conclude as follows:
(a)Leave is granted to Carter Holt to pursue its application in relation to the Snells Beach claim documents. The documents are limited in scope, may well have some relevance to an important aspect of Carter Holt’s case and there is little prejudice to the Ministry in the application being pursued (or complying with it if it is granted).
(b)Leave is granted to Carter Holt to pursue its application in relation to the Oakura School reports, but solely on the basis that those reports fall within the scope of the waiver given at the June hearing. The two reports are relevant, it is arguable they were captured by the waiver given at the June hearing and again there is little prejudice to the Ministry in the application being pursued (or complying with the relevant orders if the application is granted).
[38]The application for leave is otherwise dismissed.
12 A point not seriously disputed by the Ministry in its submissions on the leave application.
13 Charles Hollander Documentary Evidence (13th ed, Sweet and Maxwell, London, 2018) at [7-64].
Costs
[39] I would expect the parties to be able to agree the costs outcome of an application such as this. To the extent it assists, a preliminary and non-binding view is that as Carter Holt has had some success on the application, it is entitled to a scale costs award, but discounted somewhat to reflect those aspects of the application on which it was unsuccessful.
[40] If costs cannot be agreed, Carter Holt may file a costs memorandum within 10 working days of this judgment, with the Ministry to file a memorandum in response within a further five working days.
Fitzgerald J
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