Minister of Education v Higgs Construction Limited
[2016] NZHC 1766
•1 August 2016
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2012-404-002650 [2016] NZHC 1766
IN THE MATTER of ARANUI HIGH SCHOOL
Christchurch
BETWEEN
MINISTER OF EDUCATION First Plaintiff
SECRETARY FOR EDUCATION Second Plaintiff
BOARD OF TRUSTEES OF ARANUI HIGH SCHOOL
Third Plaintiff
AND
HAWKINS CONSTRUCTION NORTH ISLAND LIMITED
First Defendant (DISCONTINUED)
HIGGS CONSTRUCTION LIMITED Second Defendant
IAN KRAUSE ARCHITECTS LIMITED Third Defendant
PAUL FRANCIS SAVAGE
Fourth Defendant (DISCONTINUED)CHRISTCHURCH CITY COUNCIL First Third Party
Hearing: 26 July 2016 Appearances:
W Potter and R Gibson for First, Second and Third Plaintiffs
K W Clay and M Pozza for Second DefendantJudgment:
1 August 2016
JUDGMENT OF ASSOCIATE JUDGE MATTHEWS
on Second Defendant's Application for Further Discovery
MINISTER OF EDUCATION & ORS v HIGGS CONSTRUCTION LTD & ORS [2016] NZHC 1766
[1 August 2016] (Second Defendant’s application for further discovery)
[1] The second defendant applies for an order directing that the plaintiffs give further discovery of documents in three categories. More wide-ranging additional discovery was sought in the application which the second defendant filed in January
2016, but since then counsel have resolved issues relating to the majority of the categories of documents referred to initially, and the application in respect of one category has been adjourned for further consideration if necessary.1
[2] The plaintiffs sue on behalf of the Crown as owner of a building at Aranui High School in Christchurch, described as the administration block. They say that the building was designed by the third defendant and built by the second defendant. Initially the plaintiffs also sued in relation to the performing arts block at Aranui High School which was designed by the third defendant but built by another party. Those aspects of the plaintiffs’ claim have been resolved. The case now concerns only the administration building. In short the plaintiffs say that due to faulty design and/or faulty construction the building leaked. As presently pleaded the plaintiffs seek to recover their assessment of the cost of remediating the block, which is presently calculated to be $1,467,000 plus GST. However, they accept in their pleading that as the building, initially completed in 2002, was substantially damaged in the Canterbury earthquake sequence in 2010 and 2011, it will be demolished and replaced, rather than repaired.
[3] In a comprehensive statement of defence the second defendant broadly denies liability to the plaintiffs on the basis that it has not breached the duty of care it is alleged to have owed to the plaintiffs. It raises other defences, which need not presently be recorded, save to say that because the building has been so substantially damaged by the earthquakes that it will not now be repaired, the second defendant pleads that the plaintiffs have not suffered and will not suffer the loss claimed. I says that if damages were to be sought on the basis of diminution in value, no loss has been incurred by the plaintiffs either, because the value of the building was not
diminished.
1 Minister of Education v Hawkins Construction North Island Ltd HC Auckland CIV-2012-404-
002650, 27 July 2016.
First category of documents: document relating to the calculations of the plaintiffs’
alleged losses in the schedule attached to the second amended statement of claim
[4] The current pleading of the plaintiffs is the second amended statement of claim. Annexed to it is Schedule 1, a statement of particulars described as the estimated cost of remediating the administration block defects and the administration block damage, in a total sum of $1,467,000 plus GST. The schedule covers some 10 pages and contains columns giving a description of work required, followed by columns for quantities, units and rates, and concluding with a column headed “Amount” in which figures for each item are given. In essence, it is a breakdown of the total estimated costs of remediation.
[5] Reference to the schedule is made in paragraph 54 where it is pleaded that the cost of remediating the administration block defects and damage has been estimated to be not less than the sum stated, as set out in the schedule. The pleading does not contain any indication of who has made this estimate, either in paragraph 54 or the schedule, or indeed elsewhere.
[6] The second defendant seeks an order that further documents be discovered. Mr Clay describes these as “the underpinning documentation” which he maintains the second defendant is entitled to in order to assess the accuracy and the basis of the calculations which led to the preparation of the schedule. He accepts that such documentation would initially have been privileged under s 56 of the Evidence Act
2006, as having been prepared for the dominant purpose of preparing for this case. He says, however, that this privilege has been waived under s 65, which provides:
65 Waiver
(1) A person who has a privilege conferred by any of sections 54 to 60 and
64 may waive that privilege either expressly or impliedly.
(2) A person who has a privilege waives the privilege if that person, or anyone with the authority of that person, voluntarily produces or discloses, or consents to the production or disclosure of, any significant part of the privileged communication, information, opinion, or document in circumstances that are inconsistent with a claim of confidentiality.
(3) A person who has a privilege waives the privilege if the person –
(a) acts so as to put the privileged communication, information or opinion, or document in issue in a proceeding; or
(b) institutes a civil proceeding against a person who is in possession of the privileged communication, information, opinion, or document the effect of which is to put the privileged matter in issue in the proceeding.
(4) 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.
(5) A privilege conferred by section 57 (which relates to settlement negotiations or mediation) may be waived only by all the persons who have that privilege.
[7] The plaintiffs say that the material sought by the second defendant is privileged and that the privilege has not been waived. In Astrazeneca Ltd v Commerce Commission,2 Panckhurst J said:
To my mind the judgments in Opthalmological Society and Shannon indicate where the boundaries of s 65(3)(a) lie. While the former espouses a test based on the Court’s objective judgment as to the consistency of the claimant’s conduct with maintaining the privilege, the discussion in Shannon elucidates the principles which underpin that test. The mere relevance of a privileged communication to an issue in the case provides no basis for waiver. Even a party’s asserted reliance upon a privileged communication is generally insufficient. Waiver occurs where a party both asserts reliance upon the privileged communication and also seeks to inject the substance of the communication in evidence. At that point an abuse of the privilege exists. The claimant cannot have the benefit of reliance upon the substance of the advice and still seek to shield that advice from disclosure to the other side. To permit this would give rise to unfairness in the required sense, in that the party’s conduct would be offensive to the trial process.
[citations omitted]
[8] Applying this approach, the issue to be decided is whether the plaintiffs have both asserted reliance on the draft statement and sought to inject the substance of it in evidence, thereby abusing the privilege which otherwise existed.
[9] It is plain from reading the schedule that a detailed assessment has been undertaken by some person or persons of each step required in order to carry out remedial work on the administration block in respect of water ingress. Plainly, measurements have been taken, quantities of materials calculated, and labour input
estimated. These are tasks commonly undertaken by quantity surveyors. There
2 Astrazeneca Ltd v Commerce Commission (2008) 12 TCLR 116 at [39].
seems little doubt that the schedule will have either been prepared by a quantity
surveyor, or prepared by reference to a quantity surveyor’s report.
[10] Behind such a report there will be records of the work undertaken to produce it including records of such matters as measurements, applicable rates and so forth. As I understand the position Mr Clay seeks discovery of all these materials.
[11] Counsel for the plaintiffs argues that the communications that the plaintiffs received from their professional advisor from which the schedule is derived have not been relied upon, and there has not been any attempt to inject their substance into the proceeding, in terms of Astrazeneca.
[12] In my opinion it is sufficiently clear that a communication or communications from the plaintiffs’ professional advisors in relation to the defects in the building, and assessment of the quantum of repairing those defects, are relied upon in this proceeding. They form the entire substance of the plaintiffs’ present assessment of the loss they have incurred, which they claim to recover from the second defendant.
[13] Of more difficulty, however, is whether the plaintiffs have sought to inject the substance of those communications into evidence. Plainly they have sought to inject part of that material, by setting it out in the schedule, assuming that the schedule accurately represents the assessment of cost which the plaintiffs have received. In my opinion the second defendant is entitled to such part of the report or reports provided to the plaintiffs as relates to the figures in the columns in the schedule. In my opinion the plaintiffs have sought to inject the substance of this part of the communication(s) they have received into evidence, because the substantiation of the quantum of the plaintiffs’ claim will be based on evidence derived from this material.
[14] I have not seen the communication or communications in issue, at this point. Following this judgment counsel for the plaintiffs will make available the communications described but, if necessary, redacted in relation to material within them which goes beyond the scope of the discovery which I consider is appropriate. Necessarily I reserve leave for the second defendant to seek further directions if the
extent of discovery ordered requires further definition. In that event I will need to review the communications and will direct production to me under r 8.25 of the High Court Rules.
[15] I do not think that the plaintiffs have waived the privilege attaching under s 56 to any further documentation, by their pleading as it stands. In this category would be such documents as communications of instructions to advisors, notes relating to those instructions, and so forth. Nor do I find documents recording the plaintiffs’ advisors’ calculations, undertaken for the purposes of this litigation and therefore privileged, to be discoverable as privilege in respect of these has not been waived either in terms of Astrazeneca.
Second category of documents: annual property plans prepared by or on behalf of the Board of Trustees of Aranui School showing the annual maintenance requirements for the administration block, as required under the school’s Property Occupancy Document (POD)
[16] It is accepted that the Board of Trustees of the school is required under both the POD and the Education Act 1999 to have annual property plans. Mr Clay says these are relevant and discoverable; the plaintiffs accept that position. They say, however, that this issue has been addressed in the affidavit of Ms T D Halpin sworn on 17 February 2016 and in correspondence: no such property plans have been retained which can be discovered. Mr Clay describes this as extraordinary and pursues his application.
[17] Whether it is extraordinary or not, in the absence of a reason to doubt the evidence of Ms Halpin, the plaintiffs have adequately complied with their discovery obligations in relation to documents within this category, and I decline to make any further order. To do so would be futile.
Third category of documents: letters of instruction given by the plaintiffs and/or their solicitors to Prendos, quantity surveyors and valuers
[18] It is common ground that Prendos is an advisor to the plaintiffs in relation to the administration block at Aranui High School. Mr Clay says that letters of instruction are discoverable. He relies on S v W, in which Associate Judge R M Bell
said “On privilege, it is common ground that solicitors’ formal letters of instructions
to the expert witnesses will be disclosed.”3
[19] However, the judgment contains a lengthier discussion of the position. After setting out s 56 of the Evidence Act, his Honour said:4
Communications between the respondent’s lawyers and the respondent’s medical experts for this proceeding are privileged under s 56(2)(b). Information compiled and prepared by the respondent’s medical experts at the request of the respondent or his lawyers for this proceeding is privileged under s 56(2)(d). Under s 53(1)(c) the respondent has privilege in any opinion formed by his medical experts based on privileged information within s 56. Privilege may be claimed within ss 53 and 56 notwithstanding the Australian decision.
[20] Reference to the Australian decision is to Australian Securities and
Investments Commission v Southcorp Ltd.5
[21] Against this passage, with which I respectfully agree, it is difficult to see what is meant by the sentence relied upon by Mr Clay. In any event, it only records the position of counsel in S v W.
[22] In my opinion, therefore, any letters or other communications of instruction to Prendos are privileged. In fact, counsel for the plaintiffs advises that neither the plaintiffs nor Prendos are able to locate any communications within the category sought. I decline to make the order sought.
Outcome
[23] Discovery is directed in relation to the first category of documents, in the terms stated, but the application in relation to the second and third categories of
documents is dismissed.
3 S v W CIV-2011-404-3775 HC Auckland, 13 July 2012 at [52].
4 At [53].
5 Australian Securities and Investments Commission v Southcorp Ltd [2003] FCA 804, (2003) 46
ACSR 438 at 442.
[24] The second defendant has enjoyed a limited measure of success, as have the
plaintiffs. On this application, costs will lie where they fall.
J G Matthews
Associate Judge
Solicitors:
Meredith Connell, Auckland
Helmore Ayers, Christchurch
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