Minister of Education v H Construction North Island Ltd
[2018] NZHC 20
•26 January 2018
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2013-404-1504 [2018] NZHC 20
IN THE MATTER OF the Botany Downs Secondary College BETWEEN
MINISTER OF EDUCATION First Plaintiff
SECRETARY OF EDUCATION’ Second Plaintiff
BOARD OF TRUSTEES OF THE BOTANY DOWNS SECONDARY COLLEGE
Third Plaintiff
AND
H CONSTRUCTION NORTH ISLAND LIMITED (formerly known as HAWKINS CONSTRUCTION NORTH ISLAND LIMITED)
Defendant
Hearing: 14 December 2017 Appearances:
M Davies and W Potter for the Plaintiffs
A Skelton and M Broad for the DefendantJudgment:
26 January 2018
JUDGMENT OF ASSOCIATE JUDGE R M BELL
This judgment was delivered by me on 2017 at am/pm pursuant to Rule 11.5 of the High Court Rules
………………………………………………….
Registrar/Deputy Registrar
Solicitors: Meredith Connell, Auckland, for the plaintiffs
Kensington Swan, Auckland and Wellington, for the Defendant
Counsel: Andrew Skelton, Wellington for the Defendant
MINISTER OF EDUCATION v H CONSTRUCTION NORTH ISLAND LIMITED (formerly known as
HAWKINS CONSTRUCTION NORTH ISLAND LIMITED) [2018] NZHC 20 [26 January 2018]
[1] This judgment is on the defendant’s application heard on 14 December 2017 for further discovery and challenging privilege claimed by the plaintiff. On
20 December 2017 I gave a minute giving the results but without reasons. I now give reasons. That comes with a qualification. In some cases on further consideration I can no longer support the results. Rather than give bad reasons or no reasons, I have changed my decision.
[2] The defendant’s application of 31 October 2017 sought these orders:
(a) further discovery by the plaintiffs;
(b)setting aside the plaintiffs’ claim for privilege in some discovered documents;
(c) requiring the plaintiffs to file an amended reply to the statement of defence; and
(d) leave to file and serve a counterclaim.
[3] The first hearing was on 24 November 2017.1 At the parties’ request, I did not deal with the application for further discovery or the defendant’s challenge to privilege claimed for a report by Babbage Consultants Ltd dated 18 December 2009. I directed the hearing of 14 December to deal with the matters not addressed on 24 November
2017. The scope of the defendant’s application for further discovery has narrowed. It has also added to the documents for which it challenges privilege. The plaintiffs filed two further affidavits in opposition.
Discovery so far
[4] In May 2015 the parties agreed on standard discovery. Since then no-one has applied for discovery on a different basis. The plaintiffs filed their first affidavit of
documents on 1 December 2015. It runs for 99 pages and lists about 1,700 documents.
1 I gave a decision on 15 December 2017: Minister of Education v H Construction North Island Ltd
[2017] NZHC 3147.
They filed a supplementary affidavit in September 2016 listing about 60 documents. They filed a second supplementary affidavit of documents on 9 November 2017. It is
72 pages long, and lists a further 1,100 documents. Some of those documents only became discoverable because of fresh affirmative defences recently pleaded by the defendant. The plaintiffs filed a third supplementary affidavit of documents on
1 December 2017. It is about 16 pages long and lists about another 150 documents. It was intended to address at least some of the matters the defendant raised in its application of 31 October. For good measure the plaintiffs filed a fourth supplementary affidavit of documents on 21 December with about 120 more documents.
The application for further discovery
[5] The defendant applies under r 8.19 of the High Court Rules. In Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd, Asher J stated a four-stage approach for r 8.19 applications:2
(a) Are the documents sought relevant? And if so, how important will they be?
(b)Are there grounds for belief that the documents sought exist? This will often be a matter of inference. How strong is that evidence?
(c) Is discovery proportionate, assessing proportionality in accordance with part 1 of the discovery checklist in the High Court Rules?
(d)Weighing and balancing these matters, in the court’s discretion applying r 8.19, is an order appropriate?
Asher J’s test helpfully identifies the issues in an application under r 8.19 but for this case it is not necessary to work through each stage.
2 Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd [2015] NZHC 2760 at [14].
[6] A party required to make discovery is required to disclose documents only if they are relevant to an issue in the proceeding. The pleadings set the bounds of discovery. In assessing relevance, the case of the party seeking discovery is assumed to be true, not the case of the party required to make discovery. Under standard discovery, documents are to be disclosed if they or the information in them are capable of being used in evidence, either because they support the case of the party making discovery or of any other party, or because they are adverse to the case of the discovering party or any other party. That does not mean that the documents will be bound to be used in the hearing. Under the standard discovery test it is not necessary to disclose documents which are only part of the background nor documents which may lead to a train of inquiry enabling a party to advance his own case or to damage that of his opponent. Generally, documents which are to be used only to attack the credibility of another party’s witnesses are not ordered to be disclosed.
[7] The further discovery sought in the application of 31 October 2017 fell into four general groups:
(a) Maintenance documents;
(b) contract documents;
(c) building reports; and
(d) documents about proposed remedial work.
[8] The defendant now says that the plaintiffs have not made complete discovery of documents under these heads in its application:
A documents relating to the maintenance and upkeep of Botany Downs
Secondary College;
Bthe ministry’s policies and procedures in relation to maintenance of this college and schools generally and any reviews of such policies and procedures of this school or schools generally; and
Gdocuments referred to by the ministry’s head of infrastructure service reported in an article in the New Zealand Herald.
[9] The basis for seeking discovery of maintenance documents is the defendant’s contributory negligence defence. Its statement of defence of 16 October 2017 says:
119. To the extent that there are defects and the plaintiffs have suffered damage and loss (which is denied), then the defendant relies on s 3 of the Contributory Negligence Act 1947 and says that such damage and loss has been suffered by the plaintiffs as a result of partly the fault of one or more of the plaintiffs as is set out I the following paragraphs:
Maintenance
120.The plaintiffs needed to undertake the maintenance obligations set out in schedule 2.
121.The first and second plaintiffs have not implemented an effective policy or régime or funding for ensuring that such maintenance was implemented.
122.The plaintiffs, and in particular the third plaintiff, have not implemented the maintenance obligations set out in Schedule 2.
…
124.Any damages recoverable by the plaintiffs should be reduced to such extent that the court thinks just and equitable having regard to the plaintiffs’ share in the responsibility for the damage.
[10] Schedule 2 of the statement of defence lists some of the defects alleged by the plaintiffs, states the alleged cause, sets out standard maintenance required for that part of a building and adds other comments. As an example, one defect is “Poorly formed roof to tilt-slab junctions”. The cause is “inadequate flashing construction and poor application of sealant”. The standard maintenance is:
Inspect joints a minimum of annually:
Check sealants and flashings for bond to adjacent surfaces and/or deterioration;
Arrange for any defective sealants to be replaced
[11] For documents under A, the defendant says that the plaintiffs, especially the school, have not disclosed any condition assessment reports apart from one dated 1
May 2013, any annual reviews of ten-year property plans, any documents as to the
procurement of a project manager, including any review of the performance of a project manager, and no records of work carried out by the school’s caretaker.
[12] Condition assessment reports are said to be required under the Ministry of Education’s property occupancy document, under which the ministry sets terms and conditions for state schools to occupy school properties and buildings.3 Among the terms the school board is responsible for maintenance. The board must engage a property manager to carry out, or review and certify, a condition assessment of the school buildings and facilities before preparing, or reviewing and certifying, a ten- year property plan. The condition assessment report must be updated every five years. The defendant also refers to a statement of evidence of a ministry official that ten-year property plans, which include all maintenance and capital property planning requirements for a school over ten years, must be reviewed annually. It also refers to another part of the property occupancy document that requires the school board to appoint a project manager for all work on school buildings and to follow a contestable procurement process in appointing the manager.
[13] The plaintiffs’ answer is simple and unsurprising. They have checked again for these documents but have not found any. They accept that at trial the defendant may criticise their performance of their maintenance responsibilities because of this apparent lack of paper work, but they cannot now produce those documents. In the circumstances where the plaintiffs have clearly gone to many efforts to find documents, I accept that they do not have them and therefore cannot order them to disclose what they do not have.
[14] But there is another aspect. I query the relevance of the documents. They are remote from the matters to be proved for the contributory negligence defence. The defendant has pleaded that damage arising from some defects is attributable also to poor maintenance by the school. It has pleaded objective maintenance standards that are independent of any obligations a school has to meet under the education legislation and any requirements imposed by the ministry. Its case will be that any school would
look after its buildings according to those objective standards, and that the damage
3 The statutory basis is the Education Act 1989, s 70 (now repealed by the Education (Update) Amendment Act 2017, s 45).
alleged would not have occurred or would be reduced if the school had followed the maintenance standards it contends for. No doubt it will try to prove its case by circumstantial evidence.4 It will not be able to prove the school did not follow the maintenance standards directly but will say that it can be inferred from the nature and extent of the damage. Its case is likely to focus on the actual damage alleged, the causes of the damage and proving its maintenance standards.
[15] Given that case, it will not have to try very hard to show that a school is required to maintain its buildings. The point is probably self-evident, but the plaintiffs already accept it and documents such as the property occupancy document recognise it anyway, as does a statement of evidence of a ministry official. Because they are public bodies the ministry and the school take bureaucratic measures – policies, directives, guidelines, reviews, audits and reports – to document and review their performance, including in property maintenance. While those are desirable for the self-management of schools and departmental oversight of education, complete disclosure of all the paperwork associated with property maintenance adds little if anything to what must be considered for the contributory negligence defence. Suppose that the school and the ministry kept immaculate records of condition assessment reports and annual reviews, whatever the content of those reports (showing no matters for attention or otherwise), it would make no difference to the defendant’s case on circumstantial evidence. Likewise scanty records will not doom the plaintiffs if the defendant cannot make out its case for inferred negligence.
[16] In the hearing I asked why the defendant had not disclosed all its paperwork for quality assurance and avoiding building defects - awareness of water ingress risks, staff training, contractor selection and monitoring, and the like - if it was arguing the plaintiffs should make comparable disclosure. The response was that the plaintiffs’ pleadings had not put the defendant’s quality assurance measures in issue. The point here is that like most plaintiffs in building defects cases, the plaintiffs here have not bothered going down these rabbit holes. They intend to prove their case without exhaustively examining the defendant’s paperwork on quality assurance. They will
rely on proof of defects caused by the defendant during construction. Just as plaintiffs
4 See Helicopter Finance Ltd v Tokoeka Properties Ltd [2012] NZHC 686 at [21]-[22] for the use of circumstantial evidence to prove negligence.
do not need to pursue defendants’ paperwork on quality assurance, defendants running a contributory negligence defence based on poor maintenance do not need to inspect high-level documents about property management. The absurdity of the defendant’s quest became clear when it sought disclosure of documents about the appointment of project managers. Any inquiry into the processes used to select a project manager is a waste of time. Aside from accepting that the plaintiffs do not have the documents sought by the defendant, I reject the request as being no more than “line of inquiry” relevant under the Peruvian Guano test, or, if there were some greater relevance, as disproportionate.
[17] The defendant says that the school has not disclosed a caretaker’s log or record of maintenance work. It notes from its search of the ministry’s website that there is a standard maintenance assessment form and caretaker checklist. It also refers to an email of March 2011 by a property manager at the school which refers to adding information to “Tasktracker”.
[18] The ministry’s project manager has followed up on this. The property manager is no longer with the school. The school no longer uses the software system, Tasktracker, and has no record of it. She has contacted the property manager and asked her to access any historical documents regarding the school, but she is not confident that the manager would be able to do so over the summer break. In an earlier affidavit of 14 November 2017 she said all documents recording maintenance in the control of the school and the ministry had been disclosed.
[19] Records of actual maintenance work by the school are relevant to the contributory negligence defence. I accept the plaintiffs’ case that while searches and inquiries have been made, there are no more documents to be disclosed under this head. I also accept that a template for a caretaking checklist on the ministry website does not give cause to disbelieve the plaintiffs that the school has not used that form. Therefore I make no order for a further affidavit as to this class of documents. At the same time I note that at trial the defendant may be able to submit that inferences may be drawn from the absence of such documents.
[20] Documents under B are the Ministry’s policies and procedures in relation to maintenance of this college and schools generally and any reviews of such policies and procedures of this school or schools generally. The defendant relies on paragraph
121 of its statement of defence for the relevance of these documents. It says that the ministry has discovered some general policy documents and checklists, but no internal or external reviews on the adequacy of the policies. The ministry’s project manager says that the property occupancy document sets out the ministry’s policy on maintenance requirements and has been discovered. She does not specifically say that the ministry does not have further documents about school maintenance in its control. I assume that there may be.
[21] Even so, I do not order further discovery under this head. The property occupancy document makes it clear that the school, not the ministry, is responsible for property maintenance. The school funds maintenance from its operations grant provided by the ministry, along with other expenditure to run the school. The ministry does not carry out maintenance. Given that the contributory negligence defence is about lack of maintenance by the school causing or exacerbating damage in relation to specific defects, ministry policy documents are peripheral. They are not relevant under the adverse documents test and it would in any event be disproportionate to require them to be disclosed. Paragraph 121 of the statement of defence does not make them relevant because that pleading is misguided. It is disproportionate to require discovery for pleaded issues that can never succeed at trial.
[22] For documents under G, the defendant refers to an article in the New Zealand Herald of 17 August 2017 headed, “Repair plans for leaky school buildings cut back dramatically.” The article reports that the ministry estimates that just over 1,000 school buildings have leaks that need attention and that many can be fixed with cheaper, targeted repairs instead of a full reclad. The head of the education infrastructure service is quoted as saying that a comprehensive review of work completed over the past six years showed that in many cases most of the building work and associated spending was not well targeted. Any defendant in a leaky building case faced with a huge claim based on full costs of a reclad will always be interested in documents in the control of a plaintiff which might weaken the case for the scope of
remedial work. This defendant is suspicious that the plaintiffs do not intend to go ahead with the remedial work, the basis for the greater part of their damages claim.
[23] In response the ministry’s project manager says that the review in the article was a pilot project that excluded any buildings that are the subject of legal proceedings, including Botany Downs Secondary College. She refers to a weathertightness bulletin, discovered in the third supplementary affidavit of documents, which explains that schools involved in litigation are treated on a case by case basis. The plaintiffs also note that the defendant has not pursued another part of its discovery application (F) under which it sought disclosure all documents relating to proposed remedial work (including budgets, planning for the works, engagement of consultants, ten-year property plans). The plaintiffs have apparently not disclosed such documents and the defendant no longer contends that there are documents under this head to be inspected.
[24] The review documents referred to in the Herald article are not relevant under the adverse documents test. They are high level documents that do not deal specifically with this school. While the scope of remedial work is properly in issue, that will turn on evidence from qualified witnesses as to what is required for this school. Those experts can be expected to be familiar with any technical literature on repairing distressed leaky buildings. The review documents are not part of that technical literature. While they might have come in under a line of inquiry test, such policy documents will not assist in deciding the scope of repair in this case.
[25] For the reasons given, I am satisfied that no orders for further discovery are required. The plaintiffs are not required to file another affidavit of documents.
The continuation of the application under r 8.25
[26] In my decision of 15 December 2017 I gave privilege rulings on documents dating from September 2012 to July 2014. I found that they were subject to litigation privilege, which had not been waived. There were no other privilege claims. This time the documents are in two periods: August 2008 to January 2010, and January
2012 to October 2012. In the first period settlement negotiations privilege is also in issue. Litigation privilege is in issue in both periods. As before, I was provided with
copies of the documents for inspection. The defendant already had some, having received them on a without prejudice basis. Where the defendant has received documents already, the question is not whether the defendant can inspect them but whether it can use them at the hearing. All the documents in this part of the decision deal with Stage 1 buildings, the gym and performing arts centre.
The first period
[27] The first period came to an end long before the start of this proceeding in March
2013. The plaintiffs had not instructed their lawyers. They knew that there were defects in the buildings in Stage 1. They tried to resolve the problems by instructing experts, Babbage Consultants Ltd, to investigate the defects and by negotiating with the defendant and with the architect. This can be seen in minutes of four meetings prepared by Babbage dated 21 January 2009, 19 February 2009, 9 September 2009 and 13 January 2010. While officials from the ministry did not attend the meetings, they were on the distribution lists for the minutes. Babbage represented the ministry’s interests in the discussions with the defendant and the architect.
[28] The defendant accepts that the first two meetings are subject to settlement negotiation privilege under s 57 of the Evidence Act 2006. It could hardly do otherwise. The minutes identify them as without prejudice meetings. Their purpose was to agree causes and settle on a way forward. Legal proceedings were referred to as an alternative to a negotiated solution in the meeting of 21 January 2009. The second meeting discussed defects. Its purpose was to “agree on what we can agree and present further information collated since the last meeting and the site inspection”. The minutes record discussion of defects, with varying acceptance of responsibility by the architect and the defendant.
[29] The defendant does not however accept that settlement negotiation privilege applies to the minutes of 9 September 2009 and 13 January 2010. The minutes are not
said to be without prejudice. That of course is not determinative.5 Communications
5 NZ Institute of Chartered Accountants v Clarke [2009] 3 NZLR 264 (HC) at [45], citing South Shropshire District Council v Amos [1986] 1 WLR 1271 (CA), Buckinghamshire County Council v Moran [1990] Ch 623 9CA), Telecom New Zealand Ltd v Sintel-Com Ltd [2007] NZCA 499, [2008] 1 NZLR 780.
that start on a without prejudice basis may continue as such even if each is not so labelled. The content of the minutes is consistent with earlier discussions – to explore defects further and share information with a view to reviewing potential solutions. I find the third and fourth meetings were part of a settlement process, which did not involve lawyers but which sought to resolve disputes as to building and design defects by investigation, reporting and looking for agreed remedial steps. They were intended to be confidential.
[30] Both sides have copies of these minutes. It is unlikely that the minutes would be used in evidence. The last two minutes do not show any admissions by the defendant that the plaintiffs might wish to use in evidence against it. Instead the finding of settlement negotiation privilege for communications between the parties during the first period sets the context for considering privilege claims for other documents.
[31] The plaintiffs claim litigation privilege for documents prepared in this period. Litigation privilege applies when the dominant purpose in making a document is preparing for a proceeding. The defendant relevantly cited Guardian Royal Exchange Assurance of New Zealand Ltd v Stuart.6 The minutes of the first meeting show that the ministry’s representatives did have legal proceedings in mind as a possible course if a satisfactory outcome could not be negotiated. But that prospect had second place to the settlement process. The purpose of investigating defects and reporting on them with a view to working out agreed solutions was primary. In some cases reports of investigations of defects may have an inseparable duality of purpose – both settlement and litigation.7 But when the ministry had not instructed its lawyers and went through a separate process of gathering evidence for this proceeding in 2012, it is harder for the plaintiffs to say that litigation was the dominant purpose of documents in the first period.
[32] Now for the documents.
6 Guardian Royal Exchange Assurance of New Zealand Ltd v Stuart [1985] 1 NZLR 596 (CA).
7 Just as I found such duality of purpose in my decision of 15 December 2017, Minister of Education v H Construction North Island Ltd [2017] NZHC 3147 at [18].
BDS.SUPP.05.003 Babbage engagement letter of 28 August 2008
[33] This is a letter from Babbage Consultants Ltd to a ministry official setting out its terms of engagement, including scope of services, which were to include working with original contractors and design teams. Babbage was to meet relevant parties, assess documentation, make intrusive inspections, take samples and arrange analysis, prepare an assessment report, which would include a liability assessment. The letter is no more than background to Babbage becoming involved in the settlement process. Under the adverse documents test it is not relevant to any of the substantive issues. A party’s contractual arrangements with its consultants are peripheral. The document is not relevant and did not need to be disclosed. For another case where the ministry needlessly disclosed irrelevant documents in a leaky school proceeding, see Minister of Education v IT Architects Ltd.8 The argument came up only because the plaintiffs claimed privilege for the letter. In my minute of 20 December I said that litigation privilege applied. On further reflection the letter can be seen as part of the engagement for the settlement process with litigation a more distant prospect. All the same, the letter does not need to be disclosed.
Babbage minutes of meetings of 21 January 2009, 19 February 2009, 9 September
2009 and 13 January 2010
[34] All the minutes are subject to settlement negotiation privilege under s 57 of the Evidence Act. That is for the reasons given above. The third and fourth minutes do not seem relevant under the adverse documents test for any substantive issue.
BDS.01.1621 – report by Babbage Consultants Ltd dated 20 July 2009
[35] This is called a defect diagnosis report. The front page of the report says, “Legally privileged”. The stated reason for the report is to verify potential responsibility for defective materials, design and workmanship. It was produced only for the use of the ministry, the school board and their lawyers. It includes a table of
defects, associated damage and relevant breaches of the Building Code. Another table
8 Minister of Education v IT Architects Ltd [2014] NZHC 1541.
lists parties likely responsible at different stages – design, construction, practical completion and remedial works. The defendant has not seen the report.
[36] In my minute of 20 December 2017 I said that the report was not subject to litigation or settlement negotiation privilege. I confirm my finding as to litigation privilege, as court proceedings were not the dominant purpose of the report. They were secondary only. Instead the report was prepared for the settlement process. Babbage prepared the report after the “without prejudice” meetings of early 2009 and before the meeting at the end of the year. It dealt with matters in dispute with the architect and the defendant. It was intended to inform the ministry and the school of defects and those responsible for them to assist in negotiating a settlement. The report was confidential – its circulation was restricted to the ministry, the school and legal advisers. The defendant did not receive a copy.
[37] My rejection of settlement negotiation privilege was mistaken. I overlooked s
57(2) of the Evidence Act:
A person who is a party to a dispute of a kind for which relief may be given in a civil proceeding has a privilege in respect of a confidential document that the person has prepared, or caused to be prepared, in connection with an attempt to mediate the dispute or to negotiate a settlement of the dispute.
The report clearly comes within the section and is therefore subject to that privilege.
[38] The defendant runs a waiver argument based on the minutes of the meeting of
9 September 2009, which include this:
DC (a Babbage representative) confirmed that the non-intrusive inspection report would be supplied for those who request a copy for review with prior approval of the MOE.
[39] That is not a waiver of privilege for these reasons:
(a) Any supply of the report was subject to the approval of the ministry, but there is no evidence that it consented to disclosure;
(b)The time for any disclosure of the report was during the settlement process. As that failed, the defendant can hardly ask for documents
afterwards, when it did not request them when the parties were exploring out of court resolution. It can no longer say that it is entitled to the report for the purpose for which it was prepared.
BDS.SUPP.0056 – Babbage Consultants report of December 2009
[40] This is also called a defect diagnosis report and is said to be legally privileged. It is much longer than the July report. It was made after intrusive investigations. It was forecast in the minutes of 9 September 2009. The purpose of that meeting was to “explore and agree ways forward in relation to investigation and furthering an intrusive understanding of the defects cause and effect.” It goes through defects and makes recommendations as to the scope of remedial work. It suggests that many of the deficiencies were systematic rather than isolated. The defendant has a copy, received in the settlement process.
[41] As with the July report I find that the document is not subject to litigation privilege because the dominant purpose test is not satisfied. The defendant says that the report is not subject to settlement negotiation privilege because it says that by late
2009 when it received the report the parties were no longer discussing settlement. I do not accept that for the reasons given above as to the settlement process continuing into 2010. Privilege under s 57 applies. While the defendant received the report, that was on a “without prejudice” basis which bars it from using it in evidence at the hearing.
The second period
BOT.01.003 – Sinclair Knight Merz report of 26 January 2012
[42] In the period January 2012 to October 2012 the plaintiffs claim only litigation privilege. In my decision of 15 December 2017 I found that the ministry apprehended litigation at least from September 2012.9 Here it is necessary to consider the start of
2012. Sinclair Knight Merz, consulting engineers, reported to ministry officials on an
investigation of water intrusion into the school’s gym and performing arts centre
9 Minister of Education v H Construction North Island Ltd [2017] NZHC 3147 at [14].
during rain. The report found that Building Code requirements had not been met and recommended remedial work with estimated costs. By way of disclaimer, it noted that Alexander & Co had been commissioned to carry out a water tightness survey of the gym but the report does not allow for comments that come from Alexander & Co’s investigation. The report does not state expressly that it is prepared for legal proceedings or is legally privileged.
[43] The defendant puts the plaintiffs to proof on litigation privilege. It has not adduced any evidence of its own. The two main questions under s 56 of the Evidence Act are dominant purpose and apprehension of a proceeding. Because of the evidence of the ministry’s project manager I find that both are satisfied. She says that she took over responsibility for the school’s claim in early 2012. While there had been negotiations with the defendant, they had stalled. She considered that there was potentially a substantial legal claim against the defendant. She instructed Alexander
& Co to give reports on the Stage 1 buildings to provide information to prepare proceedings. I have already held that the Alexander & Co reports are subject to litigation privilege. The Sinclair Knight Merz report shows that Alexander & Co had already been instructed by January 2012. Accordingly the plaintiffs apprehended litigation at least from then.
[44] As to the purpose of the Sinclair Knight Merz report, this is one of those duality of purpose cases, similar to Re High Grade Traders10 and Carter Holt Harvey Ltd v Genesis Power Ltd.11 While both Alexander & Co and Sinclair Knight Merz reports identified defects and dealt with remedial works, that advice was required for the planned proceeding. That satisfies the purpose test. It would be odd to say that litigation privilege applies to the Alexander & Co reports but not to the Sinclair Knight Merz report when they were commissioned at the same time and for the same purpose.
[45] The remaining documents are from October 2012, when litigation was apprehended. They all have something to do with preparing for the proceeding started
in March 2013, but not all of them are relevant under the adverse documents test.
10 Re High Grade Traders [1984] BCLC 151 (CA) at 173- 174.
11 Carter Holt Harvey Ltd v Genesis Power Ltd (No.7) HC Auckland CIV-2001-404-1974, 6 May
2008 at [29].
BDS.01.1629 – email from Ministry to the school of 10 October 2012
[46] In this email a ministry official tries to set up a meeting with Mr Leach at the school to discuss information he may be able to give. Records of steps taken to obtain evidence are not relevant under the adverse documents test.
BDS.01.1634
[47] This shows two emails dated 5 October and 11 October 2012 between the ministry and Mr Leach asking for information. It is similarly not relevant.
BDS.01.1631 email chain of October 2012
[48] This email chain shows some of the emails in BDS.01.1634 but includes two further emails. One of them is an email dated 11 October 2012 from Mr Ian Marshall (no longer with the school) giving information as to the defendant’s performance which could be used in evidence. It is part of the evidence-gathering for this proceeding and is subject to litigation privilege. The other emails are irrelevant.
BDS.01.1630 – email chain of 11 October 2012
[49] This chain of three emails between the ministry and the school deals with gathering information for the proceeding, but the content of the emails and the emails themselves could not be used in evidence. They are not relevant.
BDS.01.1635 – email of 11 October 2012
[50] The issue here is whether the plaintiffs have waived privilege. The email from Mr Marshall to the school dated 11 October 2012 has information that could be used in evidence. It is part of the plaintiffs’ evidence gathering for the proceeding. It would ordinarily be subject to litigation privilege. The defendant however says that the plaintiffs have waived privilege because the same document was included in the open section of an affidavit of documents as BDS.01.1633. The plaintiffs say that was a mistake.
[51] Section 65(4) of the Evidence Act says:
A person who has a privilege in respect of a communication, information, opinion, or document that has been disclosed to another person does not waive the privilege if the disclosure occurred involuntarily or mistakenly or otherwise without the consent of the person who has the privilege.
In Body Corporate 191561 v Argent House Ltd Asher J discussed the subsection:12
Involuntary disclosure
[38] The word “involuntarily” is not defined in the Act. The concept of something being involuntary arises when the act is other than a conscious act of will. Thus if a document is disclosed by it accidentally falling out of a suitcase and being found by the other party, or if it is inadvertently left attached to a non-privileged document there will be no waiver. The disclosure will be involuntary.
…
Mistakenly
[39] In the Act “mistakenly” is not defined. The New Zealand Oxford Dictionary defines a mistake as “an incorrect idea or opinion; a thing incorrectly done or thought …, mistaken is wrong in opinion or judgment”. Mistaken is defined as “wrong in opinion or judgment”.
…
[42] I conclude that the mistake must be a mistake as to the act of disclosure itself rather than the implications of it. Thus, a mistake in the handing over of a group of documents which were thought to contain all non-privileged material, but which unbeknownst to the discloser contained privileged material, would be the sort of mistake envisaged. It would be a voluntary but mistaken act. It would be unintentional. However, if the mistake was a deliberate handing over of a document without a consideration that it was privileged, or forgetting that it was privileged, that would not be the sort of mistake covered by the section.
[52] The plaintiffs have the burden of proving that any disclosure of privileged material was mistaken in the sense explained by Asher J. They have not given any evidence to support their assertion of mistake. In the absence of that evidence I cannot
find mistake. Privilege has been waived and the document may be used.
12 Body Corporate 191561 v Argent House Ltd (2008) 19 PRNZ 500 (HC).
BDS.01.1632 – Marshall email of 11 October 2012
[53] This email from Mr Marshall to the school has information that may be used in evidence and was given as part of the evidence gathering for the proceeding. It is subject to litigation privilege. There is no question of waiver.
[54] The outcome of the defendant’s challenge to privilege claimed by the plaintiffs is:
(a) The minutes of meetings in 2009 and 2010 and documents BDS.01.1621 and BDS.SUPP.0056 are subject to settlement negotiation privilege and cannot be used at the hearing.
These documents are not relevant, whether or not they are subject to privilege: BDS.SUPP.05.003, BDS.01.1629, BDS.01.1634, BDS.01.1631 (except for the Marshall email of 11 October 2012), BDS.01.1630. They did not need to be included in the affidavits of documents and do not need to be inspected or used at the hearing.
(b)These documents are subject to litigation privilege: BOT.01.003, BDS.01.1632 and the Marshall email in BDS.01.1631. They cannot be inspected or used in evidence.
(c) Privilege has been waived for BDS.01.1635. It may be used in evidence.
No further discovery
[55] In the hearing I discussed imposing a cut-off date for further discovery. Notwithstanding the close of pleadings date, each side filed further affidavits of documents, mainly because of complaints of inadequate disclosure by the other. There needs to be finality in discovery so that each side can prepare for the hearing knowing that the other side will not disclose further documents. From the date of this decision no further affidavits of documents are to be filed by any party. That is subject to the
trial judge’s discretion under r 8.31 to allow an undiscovered document to be used at the hearing. No party should assume that leave will be granted as a matter of course.
Costs
[56] The plaintiffs have been mainly successful and are entitled to costs on the hearing. I allow for second counsel. Notwithstanding that, I reserve costs to await the outcome of the substantive hearing. That is because the parties now need to use available time to prepare for trial instead of dealing with costs. That does not stand in the way of the parties resolving costs themselves. If they do not, costs may be decided after the substantive hearing by the trial judge or myself.
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Associate Judge R M Bell
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