Minister of Education v James Hardie New Zealand

[2019] NZHC 245

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2013-404-1899

[2019] NZHC 245

UNDER

The Consumer Guarantees Act 1993, the Fair Trading Act 1986, the Building Act 1991 and the Building Act 2004

BETWEEN

THE MINISTER OF EDUCATION and

Others
First to Fourth Plaintiffs

AND

JAMES HARDIE NEW ZEALAND

First Defendant

STUDORP LIMITED
Second Defendant

CARTER HOLT HARVEY
Third Defendant

………………………………….../continued

Hearing:	4 and 5 December 2018
Counsel:	JA Farmer QC, NF Flanagan and J Carlyon for plaintiffs JG Miles QC, M Heard and ED Nilsson for third defendant TC Weston QC and JRJ Knight for third parties
Judgment:	25 February 2019

JUDGMENT OF FITZGERALD J

[As to discovery/admissibility of evidence]

This judgment was delivered by me on 25 February 2019 at 4 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar………………………………….               Date…………………………………….

Solicitors:           Meredith Connell, Auckland

LeeSalmonLong, Auckland Simpson Grierson, Auckland

The Minister of Education v James Hardie New Zealand [2019] NZHC 245 [25 February 2019]

Defendants continued

CSR BUILDING PRODUCTS (NZ) LIMITED

Fourth 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

CONTENTS

Introduction and summary of issues  [1]

Admissibility of disputed evidence

Nature of the evidence to be called – more detail  [11]

Carter Holt’s submissions on why the disputed evidence is relevant and admissible             [14]

The Ministry’s submissions on why the disputed evidence is irrelevant and

inadmissible  [21]
Approach to determining admissibility  [25]

Discussion  [31]

Disputed discovery categories

Introduction and approach  [45]

Discovery sought from the Ministry

Category 1 - contracts  [56]

Category 2(a) – policies regarding procurement  [70]

Category 2(b) – policies regarding approach to construction costs  [75] Category 2(c) – records of purchase of Shadowclad products on school buildings  [80]

Category 2(d) – documents relating to management of construction or remediation of

school buildings  [84]

Category 2(e) – all records regarding construction works, relocation, remediation or demolition of school buildings  [96]

Category 2(f) – reasons for buildings having been removed from the claim  [104] Category 3(a) – Ministerial briefing papers regarding weathertightness issues  [108] Category 3(b) – Documents produced by or submitted to Property Management

Group  [114]
Category 3(c) – documents relating to the Auckland and National surveys  [118]

Category 3(d) – reports and other documents generally concerning the failure of

school buildings  [123]
Category 3(e) – reports etc regarding direct fix buildings not included in claim              [126]

Category 3(f) – documents relating to claims/court proceedings against non-parties

regarding weathertightness issues in school buildings featuring Shadowclad                  [129] Category 3(g) – all reports by or to the Ministry’s Building Improvement Programme [132] Category 3(h) – the Ministry of Education’s Property Management Group

Compliance Audit  [136]

Category 3(i) – documents relating to the remediation policy explained in the

Ministry’s “Weathertightness Bulletin”  [139]
Categories 3(j) and (k) – materials concerning maintenance  [143]

Category 3(l) – documents provided to the Auditor-General  [151] Category 3(m) – operational or similar manuals relating to each School Building  [154]

Discovery sought from Carter Holt  [158]

Category 1 – marketing materials  [159]
Category 3 – durability of Shadowclad  [168]

Category 4 – audits, appraisals etc regarding Shadowclad  [173] Category 5 – documents relating to whether and how Shadowclad complies with the

Building Code and/or Recognised Building Standards  [176]
Category 6 – testing and test results  [181]
Category 7 – documents relating to the Specifications  [184]

Result and orders  [188]

Introduction and summary of issues

[1]                 The plaintiffs (the Ministry) sue the third defendant (Carter Holt) in relation to Carter Holt’s cladding product “Shadowclad”. The Ministry’s claim relates to approximately 833 school buildings clad in whole or in part with Shadowclad.1

[2]                 The Ministry says Shadowclad is inherently defective and not fit for purpose. It says Shadowclad, when directly fixed to school buildings, routinely causes or will cause the buildings to leak and thus fail to achieve compliance with Recognised Building Standards,2 the weathertightness aspects of the Building Code and related provisions of the Building Acts.3

[3]                 Carter Holt denies Shadowclad is inherently defective and says it is entirely fit for purpose. It says the reason school buildings are leaking is because of faulty installation of Shadowclad, poor maintenance and construction and/or design defects. Carter Holt has joined 54 territorial authorities to the claim, seeking contribution to any loss for which it may be liable to the Ministry.4

[4]                 As I have said in an earlier judgment in these proceedings, the proceedings are extremely large, probably the largest claim currently before the High Court.5 Trial staging is accordingly necessary and has been ordered. In my earlier judgment (the Separate Question Judgment), I directed that three key issues be determined at a Stage 1 trial:

(a)First, whether the Shadowclad product is defective in fact (in the sense alleged by the Ministry);

1      The claim relates to school buildings where Shadowclad has been directly fixed to the building structure. The claim does not include buildings where Shadowclad has been installed with a cavity.

2      As defined in the claim.

3 Both the Building Act 1991 and Building Act 2004, as applicable to any given school building.

4      A number of the territorial authorities have in turn joined further parties, such as architects, builders and the like.

5      Minister of Education v James Hardie Ltd [2018] NZHC 1481 at [4] [Separate Question Judgment].

(b)Second, whether Carter Holt owes the Ministry a tortious duty of care to design, manufacture and supply the product for use on the school buildings that complied with Recognised Building Standards, the Building Code and the Building Acts; and

(c)Third, if Carter Holt does owe the Ministry such a duty of care, whether it breached that duty by designing, manufacturing and/or supplying the product for installation on the school buildings.6

[5]                 These issues are common across all buildings in the claim. If Carter Holt is successful on any one or more of them, the Ministry’s claim against it will fail.

[6]                 Issues of causation, damage and loss are specific to individual buildings and will need to be determined on a building-by-building basis. These issues will be determined (assuming the Ministry is successful at the Stage 1 trial) in later stages of the proceedings.

[7]                 The Stage 1 trial has been allocated a six-month fixture commencing in April 2020.7 The parties are presently embarking on the discovery process, and have already commenced briefing their evidence. An issue has arisen as to the relevance and therefore admissibility of certain evidence Carter Holt proposes to call at the Stage 1 trial. At a high level, this is evidence in relation to individual school buildings and what Carter Holt says is really causing the buildings to leak, namely poor installation of Shadowclad and/or the buildings’ design, construction and maintenance. I will refer to this evidence as the “disputed evidence”. The Ministry says the disputed evidence is irrelevant to the central question of whether Shadowclad is inherently defective (or to any of the other issues to be determined at the Stage 1 trial) and is therefore inadmissible. The parties accordingly seek a ruling on its admissibility.

6      The parties are in the process of agreeing a more detailed list of “sub-issues” to be determined at the Stage 1 trial. Good progress is being made in this regard, though the list is not yet finalised. Any remaining areas of disagreement do not alter or otherwise affect the findings made in this judgment.

7      The duration of six months is somewhat nominal at this stage. The hearing time may reduce as the parties further refine the issues and have a clearer view of the nature and extent of evidence to be led.

[8]                 The parties recognise it is unusual to seek a ruling on admissibility in advance of the evidence being available for the Court to review. Indeed, in civil proceedings, the High Court Rules envisage objections to the admissibility of evidence being raised after the briefs of evidence have been served.8 But given the type and nature of the disputed evidence is tolerably clear, and given the scope of these proceedings and therefore the likely volume of evidence to be adduced, both parties consider it would assist if the Court were to give a ruling now on the question of admissibility.

[9]                 As to discovery, the parties have agreed a number of tailored discovery categories, but some remain in dispute. Rulings are therefore required. Some of the discovery disputes relate to the same questions of relevance which arise in respect of the disputed evidence. The remaining areas in dispute concern the scope and proportionality of the discovery sought.

[10]              I deal first with the question of the admissibility of evidence and then the disputed discovery categories.

Admissibility of disputed evidence

Nature of the evidence to be called – more detail

[11]              Carter Holt proposes to call evidence to directly rebut the Ministry’s evidence that Shadowclad is inherently defective. It also proposes to call building specific evidence drawn from detailed visual and invasive inspections of school buildings by expert building surveyors. Carter Holt says that it intends to lead evidence of the surveyors’ findings in two different formats:

(a)First, general conclusions drawn from the inspections, including the prevalence of various types of installation defects and associated damage.

(b)Second, more detailed evidence relating to individual buildings, considering the specific causes of damage or deterioration, and whether

8      High Court Rules 2016, r 9.11.

those include any of the alleged inherent defects pleaded by the Ministry.

[12]In relation to (b) above, Carter Holt proposes to lead evidence as follows:

(a)In relation to each of the pleaded defects in Shadowclad:

(i)Whether the pleaded defect has manifested in fact on the buildings in question;

(ii)The likely reasons for and extent of water ingress; and

(iii)The extent to which Shadowclad and other building elements were installed or maintained, as the case may be, in accordance with Carter Holt’s installation guides, industry literature and good building practices.

(b)In relation to the Ministry’s allegation that the pleaded defects in Shadowclad result in buildings routinely failing to comply with the functionality and performance requirements of the Building Code:

(i)Whether the alleged defects have been encountered on school sites;

(ii)Whether they have caused the buildings to fail to meet the performance requirements of the Building Code; and

(iii)Whether any such failures support a finding that the defect results in “routine” failure.

[13]              The Ministry does not object to Carter Holt leading evidence in relation to specific buildings per se. I also made it clear that my Separate Question Judgment does not prevent such evidence being led.9 The Ministry does not object therefore, to

9 Minute in these proceedings dated 23 August 2018 at [3].

Carter Holt leading evidence of the type set out at [12](b) above. It objects, however, to Carter Holt’s proposed evidence set out at [12](a)(ii) and (iii) above, being the disputed evidence.10

Carter Holt’s submissions on why the disputed evidence is relevant and admissible

[14]              Carter Holt says that the question of whether Shadowclad is inherently defective will involve addressing whether:

(a)It is inherently prone to excessive moisture absorption, above levels that the preservative treatment can cope with;

(b)It has a number of design flaws that cause (or will cause) water ingress and resulting damage;

(c)The Shadowclad literature is defective and either lacks sufficient detail to allow competent builders to install the product in a weathertight manner, or includes details which, if followed, create pathways for problematic water ingress;

(d)It is too difficult for competent builders to install in real world conditions;

(e)It has to be maintained to a frequency or standard that is impractical; and

(f)It has defects which, individually or collectively, cause (or will cause) buildings to routinely fail to comply with applicable standards, being the requirements of the Building Code, the Building Acts and Recognised Building Standards.

[15]              Carter Holt says answering these questions will require evidence of real-world performance of Shadowclad as installed, and whether the alleged defects or other

10     The Ministry accepts evidence directed to [12](a)(i) is relevant. It is, in effect, incorporated into the evidence summarised at [12](b).

issues have caused some buildings clad in the product to fail. Carter Holt says that any approach to the above questions which does not include this type of evidence will be artificial and would fail to engage with the real question for the Stage 1 hearing, namely whether the product works.

[16]              Carter Holt emphasises the performance-based nature of the Building Code. It says that a suggested defect in a building material or product is only a “defect” if it causes non-compliance with the Code’s requirements when installed on otherwise compliant buildings. Carter Holt refers to the manner in which many of the alleged inherent defects have been framed as leading to an assessment of performance in accordance with the Building Code’s weathertightness requirements.

[17]              Carter Holt accordingly submits that evidence that specific buildings have failed to comply with the Code requirements not because of characteristics of Shadowclad, but as a result of issues relating to design, construction and/or Shadowclad’s installation, will have a “tendency to disprove” the Ministry’s allegations that the pleaded defects in Shadowclad exist and result in routine non- compliance. To put it another way, Carter Holt says that determining whether the alleged defect in Shadowclad has led to water ingress “necessarily includes assessing whether there are other sources of water ingress at the relevant location, so that they can either be confirmed or eliminated as the source of unacceptable moisture ingress”. It says the disputed evidence will be directed at specific locations where the characteristic which is said to be an inherent defect exists.

[18]              Carter Holt also points to the type of “real world” evidence the Ministry intends to lead (i.e. in addition to laboratory-style evidence), and says its experts must be permitted to respond fully to it. It notes that the Ministry intends to lead “real world” evidence in relation to four school buildings, but the Ministry suggests Carter Holt’s building specific evidence should be limited to those four buildings. Carter Holt says there is no principled basis for its evidence being limited in that way, particularly given the Ministry’s claim is not limited to those four buildings.

[19]              Carter Holt cannot say at this stage how many buildings will be the subject of its “building specific” evidence. However, the following points emerged from its submissions:

(a)The evidence will not necessarily be limited to buildings which are the subject of the Ministry’s claim. It is likely to call some evidence of Shadowclad’s performance on other buildings, given the Ministry’s allegation that the product is inherently defective “from the moment it leaves the factory”. It says evidence of Shadowclad performing satisfactorily on other buildings will tend to disprove the Ministry’s allegation of inherent defects.

(b)As noted above, it will not be limited to the four buildings in respect of which the Ministry’s experts will give evidence.

(c)It will not however, be as extensive as 167, being the number of buildings which Carter Holt’s experts considered would need to be examined to provide statistically sound findings in  relation  to  all 833 buildings in the claim.

(d)As Mr Miles QC, senior counsel for Carter Holt, put it at the hearing, “whether it is in relation to four or 40 (but not 167) buildings”, the evidence will be whatever is considered necessary by Carter Holt’s experts to be able to express a clear view about what is really causing the problems in the buildings.

[20]              Finally, in his oral submissions at the hearing, Mr Miles characterised the disputed evidence as “supporting” type evidence. He referred to Carter Holt’s experts’ “primary evidence” as their view that they have not seen any evidence of Shadowclad itself, when properly installed and maintained, causing undue water ingress. In support of that primary evidence, Mr Miles says the experts will point to a range of other matters causing the water ingress, which will support their conclusion that there is no inherent problem with the product itself.

The Ministry’s submissions on why the disputed evidence is irrelevant and inadmissible

[21]              Mr Farmer QC, senior counsel for the Ministry, confirmed there is no dispute that performance is an ingredient of the Ministry’s claim; namely that Shadowclad is inherently defective and therefore will routinely cause buildings to fail to meet performance standards provided by the Building Code. Mr Farmer also confirmed there is no dispute Carter Holt can lead evidence of specific buildings clad in Shadowclad for many years but which do not show any or undue water ingress. Carter Holt will presumably argue this is persuasive evidence that the product works.

[22]              At the heart of the Ministry’s objection to the disputed evidence is that it extends beyond evidence about whether Shadowclad is causing or will cause buildings to fail, given it will seek to demonstrate that particular buildings have failed for causes other than Shadowclad. The Ministry says the evidence summarised at [12](a)(ii) and

(iii) above is therefore conceptually different to that summarised at [12](b).

[23]              Mr Farmer emphasises that the Ministry does not dispute that water ingress in some buildings has been caused by reasons other than the alleged inherent defects in Shadowclad. He submits, however, that there is a fundamental non sequitur in Carter Holt’s approach to the disputed evidence. The fact Carter Holt might be able to show that water ingress in some school buildings has been caused by Shadowclad’s faulty installation (or some other external cause) does not disprove that Shadowclad is defective on the same buildings or other buildings. In other words, it does not follow that because water ingress on any particular building might have been caused by, say, faulty installation, Shadowclad as a product works. The Ministry’s position is that Shadowclad causes or will cause buildings to fail irrespective of whether other causes of failure also exist in those buildings.

[24]              Mr Farmer further says that even if the disputed evidence has some probative value, it is outweighed by the very real risk of detracting from the required focus on the Ministry’s product liability claim and will needlessly prolong the Stage 1 hearing as a result.

Approach to determining admissibility

[25]              It is common ground that ss 7 and 8 of the Evidence Act 2006 are the starting point for analysis of the admissibility of evidence. Section 7 states:

7Fundamental principle that relevant evidence admissible

(1)All relevant evidence is admissible in a proceeding except evidence that is—

(a)inadmissible under this Act or any other Act; or

(b)excluded under this Act or any other Act.

(2)Evidence that is not relevant is not admissible in a proceeding.

(3)Evidence is relevant in a proceeding if it has a tendency to prove or disprove anything that is of consequence to the determination of the proceeding.

[26]The test for relevance accordingly involves two limbs:11

(a)First, probative value: whether the evidence has a logical tendency to prove or disprove the proposition for which it is offered; and

(b)Second, materiality: whether the evidence offered is about a matter of fact at issue in the case.

[27]              The threshold for relevance is relatively low, being evidence which “has a tendency, if only a slight tendency, to prove something of consequence to the determination of the proceedings”.12

[28]              Assuming the evidence is relevant for the purposes of s 7, admissibility then turns on an assessment of the evidence under s 8 of the Act. Section 8 provides:

8General exclusion

(1)In any proceeding, the Judge must exclude evidence if its probative value is outweighed by the risk that the evidence will—

(a)have an unfairly prejudicial effect on the proceeding; or

11     Elisabeth McDonald and Scott Optican (eds) Mahoney on Evidence: Act and Analysis (4th edition, Brookers, Wellington, 2018) at [EV7.02].

12     Wi v R [2010] 2 NZLR 11 (SC) at [19].

(b)needlessly prolong the proceeding.

(2)In determining whether the probative value of evidence is outweighed by the risk that the evidence will have an unfairly prejudicial effect on a criminal proceeding, the Judge must take into account the right of the defendant to offer an effective defence.

[29]              The primary issue in the present case under s 8 is whether the probative value of the disputed evidence (if relevant for the purposes of s 7), is outweighed by the risk that it will “needlessly prolong” the proceedings.

[30] It is also uncontroversial that relevance and thus admissibility falls to be determined by the issues requiring determination, in this case at the Stage 1 trial.13 Relevance cannot be determined in a vacuum. The issues for determination at the Stage 1 trial are set out at [4] above. The cause (or causes) of particular water ingress and any consequent damage to any given building is not to be determined at the Stage 1 trial.

Discussion

[31]              A core theme of Carter Holt’s argument is that the pleaded inherent defects (or as it would frame them, the pleaded “characteristics”) are only “defects” to the extent they routinely cause or will cause performance failure in the context of the Building Code and Building Acts. Carter Holt says evidence the alleged performance failure is being caused by factors other than Shadowclad will therefore be relevant at the Stage 1 trial.

[32]              I accept that whether any given “characteristic” of a product renders the product defective cannot be considered in a vacuum. Whether a characteristic renders the product defective will depend on the purpose for which the product is produced and is to be ordinarily used. Taking an unrelated example, a car tyre with a specialised tread suitable only for dry weather conditions will be unfit for purpose if it is marketed for use (and is used) as an all-weather tyre, when in wet conditions it routinely causes the vehicle to lose traction and control. It would be fit for purpose, however, if marketed and sold for the sole purpose of use in dry weather conditions when road

13     O v R [2018] NZCA 434 at [10], Williams v R [2017] NZCA 329 at [40].

traction and control can routinely be maintained. Or to take the example of a product subject to considerable product liability litigation in North America, silicone breast implants.14 In one sense, the obvious purpose of such a product is breast augmentation. But the purpose must be to achieve breast augmentation in a manner which does not pose serious risks to health. An implant which is capable of routinely posing serious health risks from its ordinary use is not fit for purpose and is therefore defective.

[33]              While Carter Holt speaks of “characteristics” rather than “defects”, the Ministry’s framing of the issue is not in fact dissimilar. The pleaded inherent defects are said to be “defects” given they render Shadowclad unfit for purpose, in the sense that when directly fixed on “Light Buildings” they routinely:

(a)cause (or will cause) the buildings to fail to comply with Recognised Building Standards and the weathertightness aspects of the Building Code and Building Acts; and

(b)interfere with staff and students’ health and safety, as a result of mould spore build up.15

[34]              As I found in my Separate Question Judgment, whether a product such as Shadowclad is defective in fact can and in this case ought to be determined separately from the question of the cause of damage to any particular school building. As I also noted in my Separate Question Judgment, this approach has been adopted in large scale product liability litigation in North America. For example, Huddart JA stated in Harrington v Dow Corning Corp that:16

At the risk of over-simplifying a complex decision path, I venture to suggest that the first step in every product liability case alleging negligent design,

14     Harrington v Dow Corning Corp (2000) 193 DLR (4th) 67 (BCCA).

15 The Ministry’s claim has been framed as Shadowclad not being “fit for purpose” in this way in earlier judgments in these proceedings: see, for example, Carter Holt Harvey Ltd v Minister of Education [2015] NZCA 321 at [27], [42] and [50] [CA strike-out judgment]; and Carter Holt Harvey Ltd v Minister of Education [2016] NZSC 95, [2017] 1 NZLR 78 at [15], [67] [SC strike- out judgment]. In its submissions for this hearing, the Ministry framed this aspect of the Stage 1 issues as “whether Shadowclad has the pleaded inherent defects and, if so, whether those defects routinely cause buildings to fail.”

16 Harrington v Dow Corning Corp, above n 14, at [42] per Huddart JA, with whom Rowles and  Ryan JJA concurred. (Finch and Esson JJA dissented.) The issues of whether the product caused the injuries to the individual plaintiffs and the assessment of the damages sought were described as the last issues for determination.

manufacture, or marketing is the determination of whether the product is defective under ordinary use or, if non-defective, has a propensity to injure. Some American authorities referred to this step as “general causation”, whether a product is capable of causing the harm alleged in its ordinary use.

[35]                In a similar vein, it is inherent in the High Court and Court of Appeal’s judgments in Cridge that the question of whether the cladding product in that case is inherently defective could be determined without reference to the individual issue of causation.17

[36]              As noted, the Ministry does not dispute that Carter Holt is entitled to lead evidence in relation to particular school buildings. To the extent the Ministry says, however, that evidence relating to particular buildings must be limited to the school buildings about which it will give evidence (see [18] above), I disagree. As a matter of trial fairness, so long as the evidence Carter Holt proposes to adduce is relevant and otherwise admissible, it cannot be constrained by the Ministry’s evidence.18

[37]              Is, therefore, the disputed evidence relevant and otherwise admissible? In a simple way, relevance can be tested by applying the following sequence of logic:19

(a)Some school buildings have already suffered undue water ingress;

(b)Factors such as faulty design, construction and/or poor installation of Shadowclad are causing the undue water ingress; therefore

(c)Shadowclad is not a defective product in the sense alleged by the Ministry.

[38]              I accept Mr Farmer’s submission that there is a non sequitur in the above reasoning. Ultimately, I understood Mr Miles to accept this, acknowledging that evidence to the effect that other factors are causing undue water ingress would “beg the question” of whether Shadowclad was also a reason for that outcome.

17     Cridge v Studorp Ltd [2016] NZHC 2451 and Cridge v Studorp Ltd [2017] NZCA 376.

18     I do not understand the Ministry to in fact dispute this as a matter of principle.

19     McDonald and Optican, above n 11, at [EV7.02].

[39]              That must be right. For example, evidence that Shadowclad has been improperly installed on dozens of buildings causing undue water ingress does not, in and of itself, say anything about whether Shadowclad as a product is contributing to the water ingress, or will in the future cause water ingress. All it demonstrates is that an allegedly faulty product has also been installed in a faulty manner and the latter is causing undue water ingress. Or using the car tyre and silicone breast implant examples referred to above, evidence that a faulty braking system is routinely causing some vehicles to lose road traction in wet conditions does not, in and of itself, say anything about whether the tyre on the same vehicle is also contributing to those effects, or even once the braking system is fixed, it will routinely have such effects. Nor does evidence that other external factors are causing serious health issues in a woman who has silicone breast implants mean the silicone breast implants are not also causing or contributing to (or will in due course cause or contribute to) the same health issues.

[40]                I do not agree with the Ministry, however, that the evidence Carter Holt proposes to lead is wholly irrelevant. The purpose for which it is to be led is in my view important. As noted above, Mr Miles says Carter Holt’s experts’ primary evidence will be that they have seen nothing to suggest any observed undue water ingress is the result of Shadowclad’s alleged inherent defects (at least when properly installed and maintained). In support of that primary evidence, Carter Holt’s experts wish to also be able to say, in effect, that the Court can have confidence in their view that Shadowclad performs as intended because they can explain the observed water ingress by pointing to other factors. In this way, and as I understood Carter Holt to have advanced its argument, the disputed evidence is only to be deployed in the context of and for the purpose of supporting its experts’ primary evidence that the pleaded defects in Shadowclad do not routinely, or will not routinely, lead to undue water ingress in buildings to which it is affixed.

[41] Ultimately, and subject to any objection it might raise on the basis of s 8 of the Evidence Act once it sees the disputed evidence, the Ministry accepts that evidence of the type described at [12](b) above is relevant at the Stage 1 trial, including whether the pleaded inherent defects have caused buildings to fail to meet the performance requirements of the Building Code. To bolster its primary evidence that the pleaded

inherent defects have not caused the buildings to fail, Carter Holt ought to be permitted to adduce supporting or corroborative evidence which suggests the failures are being caused wholly by other factors. I therefore accept that in a general sense, the disputed evidence, at least when deployed in the manner discussed, has some probative value in the context of the issues to be determined at the Stage 1 trial.

[42]              The Ministry is right, however, to be concerned that such evidence might seek to bring the issue of individual causation back into the Stage 1 trial. The Stage 1 trial is not concerned with detailed consideration of, or the making of findings on, the various causes of water ingress in particular school buildings. Detailed evidence of other causes of water ingress in a large number of individual buildings risks diverting attention from what will be a key question at the Stage 1 trial and the most probative evidence in relation to it – namely evidence directed to whether Shadowclad as a product is fit for its intended purpose.

[43] Given my observations at [40] above, I decline to rule the disputed evidence inadmissible. I am not prepared, however, to make any formal rulings at this stage on its admissibility, other than to record I am satisfied as a matter of principle that the evidence (when adduced for the purpose outlined at [40] to [41] above) has some, albeit reasonably limited, probative value for the purposes of s 7 of the Evidence Act. Beyond this, I do not consider it appropriate or even possible to engage on the s 8 issues without visibility of the scope and volume of the evidence concerned. That will need to await any challenge the Ministry might choose to bring pursuant to r 9.11 once Carter Holt’s briefs of evidence have been served.20 The s 8 analysis will also depend on whether any risk that the disputed evidence needlessly prolongs the proceedings can be managed in other ways, such as requiring expert caucusing prior to and at the hearing itself.

[44]              I consider the key issue on which the Court can and must rule at this stage is how the dispute over relevance flows through and into the disputed discovery categories, to which I now turn.

20     High Court Rules 2016, r 9.11.

Disputed discovery categories

Introduction and approach

[45]              The parties agreed that tailored discovery is appropriate. The parties have engaged (to a certain extent at least) on the document categories and have agreed some of them. As noted, however, a number remain in dispute and rulings are required. The parties’ respective positions on the disputed categories are set out in Schedule 1 (discovery by the Ministry) and Schedule 2 (discovery by Carter Holt) to this judgment.

[46]              In Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd, Asher J set out a four-step analysis in discovery disputes:21

(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?

[47]              The Court should also consider whether the disputed issue could be proved more simply, cheaply and expeditiously by other means (for example, by notices to admit facts or answers to interrogatories).22

[48]              The issues in relation to the disputed categories in this case are varied, such that it is necessary to address them on a category-by-category basis. An overriding observation on proportionality is, however, appropriate.

[49]              In a case of this kind, it is possible for discovery to become oppressive and ultimately overwhelming. The need for close attention in this proceeding to case management, including in the context of the production of documents, was recognised

21     Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd [2015] NZHC 2760, [2018] NZAR 600 at [14].

22     Reeder v Reeder [2013] NZHC 646 at [44].

by the Court of Appeal in its strike-out judgment in these proceedings.23 Asher J also made a number of observations in Commerce Commission v Cathay Pacific on proportionality in large scale discovery, which I have found helpful and with which I respectfully agree.24

[50]His Honour’s observations can be summarised as follows:

(a)The concept of proportionality is central to tailored discovery.25

(b)The starting point for tailored discovery is an assessment of the issues for determination (which will be determined by the pleadings).26

(c)An assessment of proportionality will need to take into account the chances of finding relevant documents and “their degree of relevance”, which must then be balanced against the cost (and I would add, other logistical implications) of carrying out the discovery process.27

(d)Broader considerations such as the amounts in issue, the parties’ respective resources and delay to the proceedings may also be relevant, but as in many very large scale commercial proceedings, these factors are unlikely to be determinative.28

(e)Where there is no specific evidence of the potential cost (or, I would add, other practical implications) involved in giving the discovery sought, Judges may take into account their own experience and understanding of what is practical without detailed affidavit evidence.29

(f)In any complex tailored discovery exercise, there must always be a measure of “give and take” between the parties.30

23     CA strike-out judgment, above n 15, at [179]-[180].

24     Commerce Commission v Cathay Pacific Airways Ltd [2012] NZHC 726.

25 At [12].

26 At [13].

27 At [18].

28 At [18].

29 At [27].

30 At [32].

[51]              A final overriding point is that, perhaps in recognition that some of its proposed categories for discovery by the Ministry are framed in broad terms, Carter Holt suggested an “iterative” approach to discovery on some categories. While not ruling that out where required and appropriate (particularly in a proceeding of this kind), I consider it important the parties have as much certainty as possible now in relation to the documents to be discovered for the Stage 1 trial. Leaving a large range of categories open to an iterative approach may give rise to considerable uncertainty over the scope and types of searches to be carried out. If searches have to be carried out again or revisited if a further “iteration” of a document category is ordered, this will lead to unnecessary cost and delay to the discovery process.

[52]              Accordingly, to the extent possible, I have sought to make final orders on the discovery categories which remain in dispute. Either party could then apply for further discovery, if it could demonstrate relevance and proportionality, in light of what is produced pursuant to the agreed and ordered discovery.

[53]              In relation to some categories however, it was clear to me that the parties had not completed their discussions and engagement on the content and scope of the proposed discovery. For this reason, I have not made discovery orders in relation to some of the categories, but instead offered views on relevance and proportionality and directed the parties to continue their engagement on these matters. In this context, I remind the parties of their obligations under r 8.2 to cooperate in the discovery process (which is crucial in a proceeding of this kind), including by facilitating agreement on practical matters. There is also an expectation in the Schedule 9 discovery checklist that the parties will confer and seek to agree matters such as the scope of searches, the manner in which searches will be carried out, and so on.

[54]              To the extent any further rulings are required on the disputed categories, I envisage a “round table” type conference with the parties and their solicitors to reach a concluded position.

[55]              I start by examining the disputed document categories for discovery by the Ministry.31

Discovery sought from the Ministry

Category 1 - contracts

[56]              The parties’ respective positions are set out in Schedule 1. There is no dispute the contractual arrangements are relevant and ought to be discovered. Indeed, the contractual “chain” assumed a key focus of the argument (and Carter Holt’s argument in particular) on the existence of a duty of care on Carter Holt’s strike-out application.32

[57]              The contractual chain is said by Carter Holt to involve a head contract between the Ministry and a head contractor for the construction of the school; and that head contractor’s (or a sub-contractor’s) contractual arrangements for the supply of various building materials, including Shadowclad, from either a merchant or directly from Carter Holt. In the case of Carter Holt’s supply to a merchant, there will also be a contractual arrangement between those two parties.33

[58]               The disagreement between the parties is whether every contractual arrangement for every school building in the claim must be discovered, including those unrelated to Shadowclad (Carter Holt’s position), or whether the contractual arrangements ought to be limited to contracts concerning the supply of Shadowclad and some form of sampling approach is sufficient (the Ministry’s position).

[59]              Carter Holt says the Supreme Court envisaged the former when commenting on the contractual matrix arguments in its strike-out judgment,34 and that a sampling

31 I should emphasise that I have only briefly summarised the parties’ respective submissions on each category (including the categories of documents sought from Carter Holt). I have carefully considered the competing submissions however, and mean no disrespect to the helpful submissions by summarising them in such a truncated form.

32 Minister of Education v Carter Holt Harvey Ltd [2014] NZHC 681 at [25]; CA strike-out judgment, above n 15, at [27]-[29]; SC strike-out judgment, above n 15, at [20].

33 SC strike-out judgment, above n 15, at [20]. Presumably only the head contract between the Ministry and the head contractor will be in the Ministry’s possession, power or control for the purposes of discovery.

34     At [23], [26] and [61].

approach is not appropriate given the lack of evidence on what would be sufficient for a properly representative sample.

[60]              The Ministry, on the other hand, says that whether a duty of care exists between Carter Holt and the Ministry:

… is to be assessed at a general level, having regard to the plaintiffs as a class and the general relationship between the parties. That does not require an analysis and discovery of each individual contract.

[61]              The Ministry further says there were four main types of contracts by which school buildings were constructed, and a sample of each of those types of contracts has already been provided to Carter Holt.

[62]              As a preliminary point, the Supreme Court’s comments about considering likely plaintiffs “as a class” were made in the context of assessing vulnerability (being one aspect of the proximity analysis) and not the examination of the contractual matrix (being another aspect of the proximity assessment). I agree with Carter Holt that both the Court of Appeal and Supreme Court envisaged a much more complete picture of the contractual matrix being available at trial in order to inform the duty of care question.35

[63]              But I do not read the Supreme Court’s comments in particular as mandating discovery of every contract in relation to every school within the claim. Plainly the Supreme Court was not considering matters of case management, discovery and proportionality. Rather, the Court at trial will need to be satisfied it is in possession of sufficient material to provide it with a clear and robust picture of the overall contractual picture in relation to the schools that make up the claim. Certainly when specifically considering case management issues, the Court of Appeal envisaged the possibility of identifying categories of contractual documents to be disclosed.36 In a similar context, the High Court in Cridge was of the view that in the context of the proximity and policy analysis, variations between the individual claimants would unlikely be material to the existence or otherwise of a duty of care.37 Similar

35     At [23], [26] and [61]; CA strike-out judgment, above n 15, at [56]-[60].

36     CA strike-out judgment, above n 15, at [180].

37     Cridge v Studorp Ltd, above n 17, at [62].

observations were made by the Court of Appeal in Cridge.38 The contractual matrix is also only one of a range of factors to be considered when conducting the proximity analysis.

[64]              Given the matters addressed in the preceding paragraph, a sampling or categorisation approach is in my view appropriate, at least in the first instance. This is particularly so when proportionality is added to the mix. Discovery of every contract for the construction or remediation of each school building in the claim could potentially require disclosure of thousands of contractual documents.39 A robust sampling or categorisation approach ought to inform the parties and the Court whether the contractual position in this case was, as envisaged by the Court of Appeal from the (limited) materials before it, “diffuse and decentralised”, or more akin to the short and closely negotiated arrangements in cases such as Rolls Royce.40

[65]              I do not propose to make final orders as to the detail of the approach to be adopted. There was no evidence before me as to the potential range of contracts involved or how a robust sample might be ascertained. To the extent the Ministry suggests that one example of the four main types of contracts involved is sufficient, I disagree. That strikes me as extremely limited in a case of this kind, and potentially even more limited than the materials before the courts on the strike-out application.

[66]                I would expect sophisticated parties such as these, complying with their obligation under the High Court Rules to cooperate on matters concerning discovery, will be able to agree suitable sampling arrangements. If they cannot, then with further detail before me as to the competing approaches, I will make formal orders. I have already made it clear that the four-contract approach suggested by the Ministry is insufficient. I do not envisage, however, a sample of contracts for literally hundreds of individual school buildings.

[67]              I accept the contractual arrangements are an important aspect of the material that will need to be before the Court when assessing duty of care. Accordingly, once

38     Cridge v Studorp Ltd, above n 17, at [28]-[31].

39     There being 833 buildings in the cliam and there potentially being multiple contracts per building falling within the scope of the proposed discovery category.

40     Rolls-Royce New Zealand Ltd v Carter Holt Harvey Ltd [2005] 1 NZLR 324 (CA).

a robust sample of the contracts involved has been discovered, and if it is apparent that, for example, there is a very significant variation in the types and styles of contracts involved, I do not rule out that further discovery of contractual materials might be required. This is therefore a category where a staged approach may be appropriate.41

[68]              In terms of the second aspect of dispute over this category, I accept the Ministry’s position that the contracts involved should be those which resulted in the installation of Shadowclad. The contractual matrix is to be considered in the context of a proximity analysis, which focuses on the closeness between the parties and the salient features of their relationship.42 Thus, the contractual arrangements for the construction, alteration or remediation of schools within the claim are only relevant in the context of a contractual chain leading to Carter Holt – and thus the supply of Shadowclad for installation on the school buildings. For example, contracts for an addition to a school building to be built from brick, or the remediation of a school roof will not inform the contractual matrix analysis.

[69]  There will therefore be a discovery order in the terms proposed by the Ministry for this category, subject to the above observations on the sampling approach to be adopted.

Category 2(a) – policies regarding procurement

[70]              This category concerns the approach to procurement, design and construction of school buildings involving Shadowclad. The category is largely agreed, save that Carter Holt seeks discovery of not only any relevant policies, manuals, guidelines or similar documents, but also “the advice underpinning those policies”.

[71]              The Ministry is concerned Carter Holt seeks such documents on a building-by- building basis. I do not understand that to be Carter Holt’s position. But I do not agree the Ministry ought to search for and discover any “advice” which underpins any “policies, manuals, guidelines, or similar documents” falling within this category.

41     See the discovery checklist in the High Court Rules 2016, sch 9, cl (3)(1)(b)(ii).

42     See, for example, CA strike-out judgment, above n 15, at [45].

What might be relevant in the duty of care analysis is the overall policy or approach to procurement of school buildings involving Shadowclad, rather than underlying documents which might have in some way informed the policy actually adopted.

[72]              Carter Holt also seeks policies and other similar documents relating to the purchase of cladding generally for use on school buildings, i.e. irrespective of whether the documents concern Shadowclad.

[73]              The Ministry accepts that to the extent the documents concern Shadowclad, they must be searched for and discovered, and would expect that many such documents will also comment on other cladding products (which it would not propose to redact). But it objects to specifically searching for documents which do not relate to or otherwise discuss Shadowclad.

[74]              I accept the Ministry’s approach as an appropriate balance between degrees of relevance and proportionality. Policies and the like relating to the purchase of cladding generally for use on school buildings and which do not discuss Shadowclad are unlikely to shed any material light on the various proximity and policy factors to be considered at the Stage 1 trial. There is accordingly a tailored discovery order for category 2(a) in accordance with the Ministry’s formulation in Schedule 1.

Category 2(b) – policies regarding approach to construction costs

[75]              Again, the Ministry is concerned Carter Holt seeks such documents on a building-by-building basis. It says that to the extent the reports, policies, guidelines or investigations or similar documents are looked at a more generic or high level, then they will be produced under Category 2(a). The Ministry further says that to the extent these documents are said to be relevant to vulnerability, rather than Carter Holt’s affirmative defence of lack of maintenance, then it is not necessary or proportionate to separately search for the documents.

[76]              Carter Holt says that documents falling within this category are directly relevant to the question of the plaintiffs’ vulnerability, which will be a key issue at the Stage 1 trial. It says that:

Their level of knowledge of how alternative approaches to procurement, such as a focus on lowest cost, may impact the risks involved.

[77]              The Supreme Court was clear, however, that vulnerability is not to be assessed by reference to the plaintiffs involved in any given claim, but by reference to the “likely plaintiffs as a class”.43 In this context, Carter Holt will argue that the plaintiffs in this case, essentially the Crown, are “in a class of their own”. While Carter Holt is of course entitled to pursue such an argument, it is not clear how documents sought in category 2(b), at least as a separate and specific category, will be relevant in any material sense to that issue. The point remains, as the Court of Appeal in Cridge observed with reference to the Supreme Court’s judgment in these proceedings, that the key proximity and policy considerations are of a general nature and not particular to the individual parties.44

[78]              I accordingly accept that to the extent documents falling within Carter Holt’s proposed category 2(b) are located when searching for documents falling within category 2(a), they ought to be discovered. But I do not consider it proportionate to require the Ministry to separately search for them.

[79]              There is accordingly an order that to the extent documents responsive to Carter Holt’s proposed category 2(b) are located during the search for documents responsive to category 2(a), they are to be discovered. But the Ministry is not required to separately search for category 2(b) documents.

Category 2(c) – records of purchase of Shadowclad products on school buildings

[80]              This category relates to evidence of direct purchase of Shadowclad by the Ministry.

[81]              While the framing of this category is not in dispute, the Ministry again says it should not be required to separately search for such documents. It accepts, however, that to the extent it discovers evidence of direct purchase when looking for other documents, it will be discovered.

43     SC strike-out judgment, above n 15, at [54].

44     Cridge v Studorp Ltd, above n 17, at [29]-[30].

[82]              The Ministry says the issue is one of proportionality. Ms Carlyon, who presented the Ministry’s submissions on discovery, provided me with a copy of an earlier affidavit in these proceedings filed by Carter Holt, which suggests a search for any “direct supply” documents is unlikely to yield any particular results other than perhaps a handful of examples.45 She also took me to paragraph 31(c) of Carter Holt’s statement of defence, in which Carter Holt acknowledges the Ministry’s case is one of indirect supply.

[83]              Given the available evidence suggests there were very limited instances of direct supply, and the Ministry’s case is one of indirect supply, I agree a handful of examples of direct supply is highly unlikely to alter the duty of care analysis. Given the low degree of relevance, I accept that, while any such documents located when searching for other categories ought to be discovered, separate searches are not required. There will be an order to that effect.

Category 2(d) – documents relating to management of construction or remediation of school buildings

[84]              Carter Holt seeks all manuals, guidelines or the like, and all “records” relating to the management of construction or remediation of the school buildings, and all advice underpinning those policies.

[85]               The Ministry again says it should not have to search for such documents as a separate category. It says that to the extent manuals, guidelines or similar documents concerning the management of construction of school buildings involving Shadowclad exist, they will be discovered under category 2(a). The Ministry’s real concern is the documents sought relating to remediation. The Ministry asks, rhetorically, what can policies, manuals or guidelines concerning remediation tell you about the Shadowclad product itself and whether it is inherently defective?

[86]              Mr Miles produced a document at the hearing, the Ministry of Education’s “Weathertightness Remediation and Regulatory Strategy”. Mr Miles noted a number

45 The affidavit, sworn by Carter Holt’s general counsel, details searches Carter Holt has made for documents in relation to direct supply of Shadowclad to schools (other than supplies of less than 10 sheets, which are presumed to have been purchased for minor repairs). Only three instances of supply involving more than 10 sheets were located.

of matters in relation to the document. He first pointed to various statements in the document to the effect that “no one can be required to achieve performance criteria that are additional to, or more restrictive than, the performance criteria prescribed in the Building Code in relation to that work”. Mr Miles says this is inconsistent with any suggestion by the Ministry that liability in respect of Shadowclad can extend beyond ensuring compliance with the Code. Mr Miles accordingly submits that these aspects of the Weathertightness Remediation and Regulatory Strategy document corroborate Carter Holt’s position that if a party complies with an acceptable solution under the Building Code, it cannot face additional liability in relation to its product. I view these matters, however, as being directed to legal argument for development at the Stage 1 trial, rather than relating to discovery.

[87]              Mr Miles pointed to further extracts in the document more directly related to the discovery argument, including the statement that:

A significant finding from the completed remediation work to date was that a high proportion of the building work and associated expenditure was directed towards building elements that had not actually failed.

[88]              The document goes on to explain that as a result “the Ministry has revised the focus of the remedial work to addressing actual and proven weathertightness failure”. On the basis of these and similar statements in the document, Mr Miles says documents relating to remediation will be relevant at the Stage 1 trial. That is because the document suggests the Ministry’s position that all schools clad in Shadowclad must be remediated (given Shadowclad is inherently defective) is wrong, thereby undermining the proposition that Shadowclad suffers from inherent defects in the first place. To further support the proposition that documents concerning remediation are relevant to the Stage 1 trial, Mr Miles gave the hypothetical example of a document or report stating, in effect, “the cladding does not need to be remediated because it is not as bad as we thought”, submitting that such a document would plainly be relevant and discoverable.

[89]              Mr Farmer objected to Carter Holt’s reliance at the hearing on the Weathertightness Remediation and Regulatory Strategy document, which had not been heralded and which meant he and his instructing solicitors had not taken instructions on it or provided evidence as to its context and effect. However, having reviewed the

document and taken instructions overnight, Mr Farmer submitted the document says nothing of any relevance to the Stage 1 trial in any event. He pointed to the introductory section of the document, which explains that:

The Ministry has decided that factors that might lead to future weathertightness failure of building elements will not be included in the scope of remedial work, unless the factor is likely to cause imminent failure of a building element and supporting observational and photographic evidence is provided.

[90]                Mr Farmer says this and other similar extracts make it clear that there has been a policy change to remediation driven by budgetary constraints, namely that buildings showing actual weathertightness failures will be remediated first, followed those showing imminent failure. Mr Farmer submits this says nothing at all about whether the alleged inherent defects in Shadowclad exist per se and routinely cause, or will cause, school buildings to fail. Rather, the document confirms a policy change as to the order in which buildings with weathertightness issues will be fixed.

[91]              Mr Farmer also noted that to the extent the document refers to causes of weathertightness failure other than the alleged inherent defects in Shadowclad, then the Ministry’s position has always been that many school buildings suffer from a range of defects which cause weathertightness issues, including Shadowclad. He pointed to the document’s summary of contributing factors leading to weathertightness failures, which are said to include “material selections that were not fit for purpose”.

[92]              Having reviewed the Weathertightness Remediation and Regulatory Strategy document, I am not satisfied it provides a sound foundation for requiring discovery of all records or advice concerning the management of remediation of school buildings. I accept Mr Farmer’s submission that, on its face, the document appears to reflect a policy change around remediation, rather than an acknowledgment that Shadowclad is not inherently defective as alleged. I also accept and record the Ministry’s acknowledgement that documents of the type given in Mr Miles’ hypothetical example would be discoverable by the Ministry under categories 3(a), 3(b) and 3(c) in any event.

[93]              Carter Holt further submits that documents concerning remediation will “tend to demonstrate what was remediated and why, which goes to the question of whether there were inherent defects as alleged”. In this context, however, documents would be required on a building-by-building basis (i.e. rather than documents regarding the “management” of remedial works) and would presumably involve a process of “reverse engineering” the remedial works carried out back to the alleged defect being remedied.

[94]              In the context of the matters discussed in the preceding paragraphs, I do not consider a broad category seeking “all advice” and “all records” relating to the management of remediation of school buildings generally will lead to discovery of documents with any significant relevance to the issues to be determined at the Stage 1 trial. In the broad manner in which it is framed, the category is more akin to a fishing expedition. Further, to the extent Carter Holt seeks such documents to support and bolster its experts’ primary evidence that Shadowclad does not routinely cause buildings to fail (by pointing to other causes which explain the water ingress), those documents are more appropriately discovered in response to other, more focussed categories (such as categories 3(a), 3(b) and 3(c) discussed below).

[95]              I accordingly decline to make a discovery order in terms of Carter Holt’s proposed category 2(d).

Category 2(e) – all records regarding construction works, relocation, remediation or demolition of school buildings

[96]This is an extremely broad category. Carter Holt seeks discovery of:

All records relating to the construction works that involved the installation of Shadowclad products on the School Buildings (including construction and design contracts, building consent documentation, and all other records of construction), as well as records concerning the relocation, remediation or demolition of any building included in the claim at any time, whether held by the plaintiffs or the relevant Boards of Trustees.

[97]                  Contractual documents are already the subject of category 1 discussed above. The Ministry has also provided Carter Holt with the school building consent files, though I note Carter Holt’s position that some of the files are incomplete. To the extent

the consent files are within the Ministry’s possession, however, my understanding is that everything has been provided.46

[98]              In relation to the balance of this category, Carter Holt effectively seeks discovery of all records concerning the construction, relocation or remediation of each building in the claim. Carter Holt says such documents are relevant on the same basis it said the disputed evidence is relevant.

[99]              Given my observations on the relevance of the disputed evidence, I do not agree the Ministry ought to be required to give discovery of the documents sought in this category. Ultimately, how any particular school building was constructed, remediated, relocated or demolished does not tend to prove or disprove that Shadowclad suffers from the inherent defects as pleaded, or whether those defects (if they exist) routinely cause or will cause buildings to fail. And to the extent documents falling within this category have any degree of relevance, that relevance is well outweighed in my view by the proportionality of requiring discovery of such a broad and unconstrained body of material.

[100]          Carter Holt says proportionality is not the issue which the Ministry makes it out to be, given each separate Board of Trustees has discovery obligations. Carter Holt therefore says that to require each school Board to search for all construction and other related records is not an overly onerous task, particularly in a claim of this magnitude.

[101]          Construction and related materials can extend to very large numbers of documents, and I have no doubt that would be the case even in respect of relatively modest school buildings. There must also be control and oversight of the searches carried out, collation of any documents located, all documents reviewed for relevance, privilege and so on, and listing and preparing the documents for discovery and inspection. Accordingly, while I accept that some searches can be “spread” over the school Boards, proportionality issues still exist in a category of this type, particularly given what I consider to be the documents’ limited relevance to the Stage 1 issues.

46     I was informed at the hearing that Carter Holt is sourcing missing consent documents directly from the relevant territorial authorities.

[102] Again, to the extent Carter Holt seeks documents which will support and bolster its experts’ evidence that Shadowclad does not routinely cause buildings to fail (by pointing to other causes which explain the water ingress), then more focused document categories are appropriate. Again, and as noted at [94] above, more targeted document categories such as 3(a), 3(b) and 3(c) are likely to capture relevant documents in a more managed and proportionate way.

[103]          I accordingly decline to make a discovery order in the terms proposed by Carter Holt as category 2(e).

Category 2(f) – reasons for buildings having been removed from the claim

[104]              Carter Holt seeks discovery of all documents evidencing the reasons for removing school buildings from the claim, as well as all advice underpinning that removal. It says such documents are relevant to the Ministry’s position that Shadowclad is defective “when it leaves the factory” and will inevitably or routinely fail. If that is correct, Carter Holt says the alleged defects and resulting water ingress ought to be present in every building clad in Shadowclad. If that is the case, documents indicating why buildings clad in Shadowclad have been removed from the claim will be relevant to whether the alleged inherent defects exist.

[105]          The Ministry says there is no suggestion buildings have been removed from the claim for reasons relevant to issues to be determined at the Stage 1 trial. It says that if they had been, there would be no issue that the documents would be discoverable in response to the other document categories which the Ministry must discover. The Ministry also notes that its pleaded claim is limited to Shadowclad being unfit for purpose when installed without a cavity on “Light Buildings”.47

[106]          I do not consider the Ministry ought to be required to discover documents responsive to a separate category in the terms set out in proposed category 2(f). To the extent any such reasons are relevant to the discovery categories agreed or ordered in this judgment, then they must be discovered. The Ministry says there are no such relevant documents. Carter Holt says it wishes to test this. But in the context of

47 Sixth Amended Statement of Claim, at [40].

discovery, and in the absence of material which suggests relevant documents exist but have not been discovered, the other party, and the Court, must, at least in the first instance, rely on the disclosing party and its solicitors’ views on relevance.48

[107]          Further, to the extent documents are sought relating to other causes of water ingress, as flagged earlier in this judgment, such documents are properly discovered in response to categories targeted to those materials, particularly given my conclusion that such documents are likely to have a reasonably limited degree of relevance to the matters to be determined at the Stage 1 trial.49

Category 3(a) – Ministerial briefing papers regarding weathertightness issues

[108]          By way of category 3, Carter Holt seeks discovery of “documents relating to the identification of weathertightness issues in school buildings by the plaintiffs or relevant Boards of Trustees, and the cause of those issues, namely….”, and then proceeds to list 13 sub-categories.50

[109]          Sub-category 3(a) seeks discovery of Ministerial briefing papers and associated advice regarding weathertightness issues in school buildings and the extent and cause of such issues. The Ministry agrees with the proposed category, other than it ought to be qualified by the words “in so far as they concern cladding materials”.

[110]          For the reasons outlined in the first part of this judgment on the disputed evidence, I do not consider evidence – and thus documents – concerning other causes of weathertightness issues in schools to be wholly irrelevant, though the evidence – and thus documents – have limited probative value to the Stage 1 issues. This requires careful management of the discovery of such documents (taking into account those matters set out at paragraphs (a), (c) and (d) from Assa Abloy set out at [46] above).

48 A process of “self-assessment” which is not disturbed without reason  being  shown.  See McGechan on Procedure (online looseleaf ed, Thomson Reuters) at [HR8.15.04] citing BNZ Investments Ltd v Commissioner of Inland Revenue [2008] 1 NZLR 598 (CA) at [28].

49     See above at [94], [102] and below at [108] for the discussion of categories 3(a), (b) and (c).

50 Given the reference in the opening words of category 3 to “namely”, the documents sought by Carter Holt are to be defined by the text of the 13 sub-categories, and not by the broad scope of the opening words to category 3. Those opening words would include documents concerning weathertightness issues in schools generally, i.e. not limited to those clad in Shadowclad.

[111]          Category 3(a) is relatively confined, given it is limited to Ministerial briefing papers and related advice. Given the Ministry’s position in relation to Shadowclad (at least when used in a direct fix manner), it seems likely that many briefings and advice documents will discuss cladding materials. Ms Carlyon confirmed that if the category is qualified as suggested by the Ministry, it would not seek to redact those aspects of responsive documents which discuss other causes of weathertightness issues.

[112] On balance, and given the confined nature of this category, I am not persuaded it needs to be qualified as the Ministry suggests. I have already set out why expert evidence as to other causes of water ingress (when used in the manner and for the purpose outlined at [40] above) has some, albeit limited, probative value to the Stage 1 issues. For example, and accepting it is a somewhat extreme example, if none of the Ministerial briefings or related advice discuss cladding giving rise to weathertightness issues, that would have some relevance to whether, for example, the alleged defects in Shadowclad have been encountered on school sites. Given the targeted nature of category 3(a), I also do not consider proportionality issues arise in the same sense discussed in relation to earlier categories.

[113]          There will accordingly be an order for tailored discovery by the Ministry in the form of Carter Holt’s proposed category 3(a).

Category 3(b) – Documents produced by or submitted to Property Management Group

[114]           The competing proposals in this category are set out in Schedule 1 to this judgment. Again, the issue is whether the category should be restricted to documents relating to cladding.

[115]          For the same reasons given in relation to category 3(a), I do not consider category 3(b) as a whole ought to be qualified by being limited to cladding. The category is framed in a more targeted manner than some of the categories discussed earlier. But some constraints are, in my view, necessary, given the broader scope of this category compared to category 3(a); it seeks discovery of “all documents produced by or submitted to the Property Management Group”, which would include all emails and other such informal documents, irrespective of whether they relate to buildings clad in Shadowclad or are included in the Ministry’s claim.

[116]          I consider an appropriate balance is to reframe the category to relate to “reports or similar types of other formal documents produced by or submitted to the Property Management Group….”, with any other “documents produced by or submitted to the Property Management Group…” being confined to documents relating to cladding as proposed by the Ministry.

[117] There will accordingly be an order for tailored discovery by the Ministry in the form set out at [116] above.

Category 3(c) – documents relating to the Auckland and National surveys

[118]          The reference to the “Auckland and National Surveys” is a reference to wide- ranging surveys carried out in response to weathertightness concerns in school buildings. Affidavit material filed in these proceedings describes the Auckland survey as comprising a visual survey of 1,074 school buildings at 199 schools in the Auckland area, and the National survey as a visual survey of 6,130 school buildings at 1,592 schools across New Zealand.

[119]          Given the very broad terms in which this category is framed,51 the breadth of the Auckland and National surveys, and that they were not limited to buildings clad in Shadowclad, I consider the category ought to be more refined than as proposed by Carter Holt. Ultimately I understood Mr Miles to accept that the category as presently framed was too wide, when suggesting that an “iterative” approach to it might be warranted.

[120]          Subject to some specific observations in the following paragraphs, I consider it appropriate to frame at least the broader aspects of this category by reference to documents relating to cladding.52 I accept Carter Holt’s position that the category also ought to include reports of findings from individual buildings surveyed, but only insofar as they relate to buildings now included in the Ministry’s claim. By definition, those reports ought to relate to cladding, given the buildings have been included in the

51 For example, by reference to all “documents” and “correspondence”, which would include formal reports, but also informal letters, emails and the like.

52 Again, Ms Carlyon confirmed at the hearing that if a document relates to cladding as an identified cause of weathertightness issues, the Ministry would not redact any discussion in that document of other causes of weathertightness issues.

claim. And while the Ministry objects to discovery of such documents on a “building- by-building” basis, the reports are likely to be relevant to, for example, the question of whether the alleged defects have been encountered on school sites, evidence which the Ministry accepts is relevant for the Stage 1 trial. The individual building reports are also a defined sub-category of documents which, while no doubt voluminous, simply reflects the sheer number of buildings included in the Ministry’s claim.

[121]          To the extent a document responds to this category solely on the basis that it “records the terms of reference”, I do not consider such a document relevant, or to have a sufficient degree of relevance to warrant discovery, given the terms of reference themselves are to be discovered.

[122]          There will accordingly be an order for discovery by the Ministry of category 3(c) documents in the following terms:

Documents relating to the Auckland and National Surveys, namely:

(a)the terms of reference;

(b)correspondence between Prendos or Hampton Jones and the plaintiffs regarding the surveys and the identified causes of building failures;⁵³

(c)internal Ministry documents and correspondence concerning the results of the surveys and identified causes of building failures;

(d)internal Ministry documents and correspondence relating to follow up actions taken or contemplated in light of the surveys; and

(e)reports of findings from surveys of individual buildings which remain the subject of the Ministry’s claim,

save that in the case of sub-categories (c) and (d) above, only documents which relate to cladding are to be discovered.

Category 3(d) – reports and other documents generally concerning the failure of school buildings

[123]Carter Holt seeks discovery of:

Reports and other documents concerning the failure of school buildings (including buildings not included in the claim) and the reasons for such failure (including documents prepared for the purposes of the Ministry’s ongoing remediation programme).

53     It is expected that this will be a fairly confined set of documents.

[124]          Given my observations on the limited probative value of evidence of other causes of weathertightness issues in school buildings (at the Stage 1 trial), this category is overly broad and disproportionate. As framed, category 3(d) is not limited to buildings included in the Ministry’s claim or even clad in Shadowclad. The framing of the category by reference to “other documents” also exacerbates its breadth. To the extent documents are sought regarding remediation, I refer to my earlier observations at [92] and [94] above in relation to Carter Holt’s reliance on the Weathertightness Remediation and Regulatory Strategy document.

[125]          I accordingly decline to make a tailored discovery order in terms of proposed category 3(d).

Category 3(e) – reports etc regarding direct fix buildings not included in claim

[126]          Carter Holt seeks discovery of “all reports, construction records and other documents relating to the performance of school buildings clad in direct fix Shadowclad but never included in the claim.”

[127]          Ms Carlyon did not suggest such documents have no relevance whatsoever. I accept that, given the Ministry’s claim is that Shadowclad, when installed by way of direct fix on a “Light Building” is inherently defective and unfit for purpose, evidence of its performance on such buildings which are not included in the claim will be relevant to the Stage 1 issues. Ms Carlyon raised, however, a proportionality issue, particularly in relation to “construction records” and “other documents”, which could lead to very large numbers of documents. Ms Carlyon also noted that the Ministry does not have a centralised record of buildings clad in Shadowclad, which presumably gives rise to issues as to how to go about searching for documents responsive to this category.

[128]          I consider an appropriate approach is to limit this category of document in the first instance to “all reports” relating to the performance of school buildings clad in direct fix Shadowclad that were never included in the claim. There is an order to that effect. Given there was no evidence before me, however, as to the difficulties or particular steps required by the Ministry to search for such documents, I do not make any further orders or observations on those issues in this judgment. I remind the

parties of their obligation of cooperation, including in relation to practical matters such as the scope and manner of searches for documents. If agreement cannot be reached on the extent and nature of searches to be carried out by the Ministry to respond to this category, then the parties may bring the matter back to me for formal orders.

Category 3(f) – documents relating to claims/court proceedings against non-parties regarding weathertightness issues in school buildings featuring Shadowclad

[129]          I am not persuaded that such documents have any material degree of relevance when balanced against proportionality issues involved. The Court can take judicial notice of the fact that weathertightness claims and proceedings typically lead to very significant amounts of documents. Carter Holt did not point to any particular claims or proceedings it had in mind and why it says they might be relevant to whether Shadowclad has the inherent defects as pleaded. The category is also not limited to claims involving buildings which are the subject of these proceedings, or where Shadowclad has been installed in a direct fix way. And as noted, the Ministry does not dispute that many school buildings clad in Shadowclad also suffer from other defects.

[130]          As matters presently stand, therefore, I consider category 3(f) to be more akin to a fishing expedition and disproportionate in any event. This is particularly so given I have ordered discovery of documents relating to other identified failures in school buildings through more targeted categories, including individual survey reports from the National and Auckland surveys relation to the buildings the subject of this claim.

[131]I accordingly decline to make a discovery order in terms of category 3(f).

Category 3(g) – all reports by or to the Ministry’s Building Improvement Programme

[132]          The dispute between the parties is whether this category should be qualified by the reports relating to cladding, or whether it extends to reports relating to “other weathertightness issues”.

[133]          Ms Carlyon said that as the Ministry’s Building Improvement Programme was almost exclusively addressed to weathertightness issues, the proposed category would

effectively capture every report relating to that programme. That would include weathertightness issues in buildings not clad in Shadowclad (for example clad in fibre cement, brick etc) and not limited to buildings the subject of this claim. Carter Holt, on the other hand, raises the same points raised in a number of other categories, to the effect that its case is that it is not Shadowclad which is causing school buildings to fail, but other matters.

[134]          I accept the Ministry’s position that, as framed by Carter Holt, category 3(g) is too broad when considering the degree of relevance of documents responsive to it, particularly given it is not limited to buildings clad in Shadowclad or falling within the claim. I accept that reports, insofar as they relate to cladding, may have some relevance to the issues for determination at the Stage 1 trial and provides an appropriate qualification.

[135]          There is accordingly an order for discovery by the Ministry in terms of the Ministry’s formulation of this category. This order is predicated on the confirmation given at the hearing that to the extent reports discuss weathertightness issues other than cladding, that material will not be redacted.

Category 3(h) – the Ministry of Education’s Property Management Group Compliance Audit

[136]          Carter Holt seeks discovery of the Ministry’s Property Management Group Compliance Audit and related summary, as well as “all documents underpinning the audit”.

[137]          The Ministry objects to this category, noting the Audit is publicly available. The Ministry further says the audit relates to the Ministry’s management of property generally, including matters such as whether the existing property supports modern teaching and learning practices and how property fits within the Ministry’s wider objectives. The Ministry says these issues are not relevant to any stages of this proceeding, let alone Stage 1, and any “documents underpinning” the audit which might be relevant will be captured by other appropriately targeted discovery categories.

[138]          On that basis, Carter Holt confirmed it does not pursue this category at this time. I accordingly make no orders in relation to it.

Category 3(i) – documents relating to the remediation policy explained in the Ministry’s “Weathertightness Bulletin”

[139]Carter Holt seeks copies of:

Expert reports, briefing papers and similar documents underpinning the promulgation of the policy for weathertightness remediation explained in the Ministry’s “Weathertightness Bulletin” Issue 1, January 2017 and recorded in the Ministry’s “Weathertightness Remediation and Regulatory Strategy”.

[140]          This category gives rise to the same issues discussed in relation to the Weathertightness Remediation and Regulatory Strategy document, and Carter Holt’s submission that “all advice” and “all records” relating to the management of remediation of school buildings generally will be relevant to the Stage 1 issues.

[141]          Again, I am not persuaded that expert reports, briefing papers and similar documents underpinning the remediation policy are relevant, or sufficiently relevant, that a category of this nature is proportionate for discovery. As noted above, the contents of the strategy document indicate an ordered approach to remediation given budgetary constraints, and the Weathertightness Bulletin states that buildings the subject of litigation are excluded from the policy in any event. Further, to the extent the Weathertightness Remediation and Regulatory Strategy document states that common causes of water ingress in school buildings include poor workmanship and installation of building materials, then that is not disputed by the Ministry. It does not, however, say anything about whether Shadowclad as a product is fit for purpose and is or will contribute to such issues. And as noted, other categories (such as 3(a), (b),

(c) and (g)) provide more targeted categories for the discovery of documents touching on other causes of water ingress in buildings the subject of this claim.

[142]I accordingly decline to make an order for discovery in terms of category 3(i).

Categories 3(j) and (k) – materials concerning maintenance

[143]          In category 3(j), Carter Holt seeks discovery of “maintenance manuals relating to each School Building (including buildings removed from the claim)” and in category 3(k), “maintenance records for the painting, external cleaning, and any external repairs on each School Building (including buildings removed from the claim)”.

[144]          Carter Holt did not make any particular submissions on why these categories are relevant, other than to note that whether Shadowclad’s maintenance requirements in the Specifications are too onerous is a Stage 1 issue, and thus documents assessing the reasons for failure to comply with those maintenance requirements are relevant.

[145]          Poor maintenance is an affirmative defence pleaded by Carter Holt. But issues concerning alleged poor maintenance, and the extent to which it might have contributed to a building’s weathertightness issues, are not to be determined at the Stage 1 trial.

[146]          While it is correct that whether the Specifications are defective is a Stage 1 issue, given the nature of the sub-issues arising under that issue, I am not satisfied the very broad range of documents sought by Carter Holt in this category will be relevant to those issues. For example, on the basis of the current draft of issues for determination, a question for determination at the Stage 1 trial will be:

Does Shadowclad have to be maintained to a standard and frequency that is impractical, and if so is that a defect?

(i)Is the requirement to annually inspect joints, corners, jointers, flashing and sealants impractical, and if so is that a defect?

(ii)Is the requirement as to maintenance of paint coatings impractical and if so is that a defect?

[147]          These types of issues will no doubt be informed by expert evidence as to the nature of the maintenance requirements and whether they are realistic and feasible. How any given school building has actually been maintained will not inform the determination of these issues. Further, even if actual building maintenance (on a building-by-building basis) sheds any light on whether the maintenance requirements

in the Specifications are defective, the sub-categories in their present form are overly broad and disproportionate. For example, records of “any external repairs on each School Building (including buildings removed from the claim)” could capture documents concerning minor repairs to broken glass or gutters and the like, which are irrelevant to whether Shadowclad’s maintenance requirements are onerous.

[148]          The one exception to the above is maintenance manuals for school buildings. For example, if a Ministry-wide maintenance manual included requirements for inspection and maintenance of cladding similar to those contained in the Shadowclad Specifications, such documents could inform whether the Specifications are indeed “onerous”. I therefore view maintenance manuals in a different category to documents relating to actual maintenance.

[149]          Carter Holt seeks maintenance manuals relating to each school building (including buildings removed from the claim). No information was before me as to the proportionality or otherwise of such a request, or whether, for example, there may be “generic” or centralised manuals. As matters currently stand, and what I presently perceive to be a relatively low “degree of relevance” of such materials, a robust sample of maintenance manuals, to the extent they are not “generic,” is likely to be appropriate.

[150]          I do not propose to make formal orders at this stage on the precise formulation of a category regarding maintenance manuals. Having regard to their obligation of cooperation, the parties are to discuss the proposed category in light of my observations and seek to agree appropriate parameters. To the extent they are unable to do so, either party may bring this matter back before me for formal orders.

Category 3(l) – documents provided to the Auditor-General

[151]          Carter Holt seeks discovery of “all documents provided by the plaintiffs to the Office of the Auditor-General for the purposes of the compilation of the report ‘Managing the school property portfolio’ dated 21 July 2017”.

[152]          Neither party made any substantive submissions to me as to what the “Managing the school property portfolio” report relates to (other than that it in some way relates to maintenance of school buildings), or its relevance to the Stage 1 issues.

[153]          In light of the above, I am not in a position to make any formal orders on this proposed category. If, in light of the discovery orders and other observations made in this judgment, the parties cannot reach agreement on this category, then again, I reserve leave for either party to bring this category back before me to fully consider what orders, if any, should be made in relation to it.

Category 3(m) – operational or similar manuals relating to each School Building

[154]          Carter Holt seeks discovery of “operational or similar manuals in relation to each school building (including buildings removed from the claim) specifying any internal or external moisture management measures”.

[155]          Again, neither party made substantive submissions before me on the relevance and proportionality of this category, other than Carter Holt’s statement that such documents are “relevant to the capabilities of the State as a plaintiff seeking imposition of a duty of care”. It is presumed this suggests the documents are relevant to an assessment of vulnerability as part of the proximity analysis.

[156] Absent further information from the parties on this proposed category, I am not persuaded that operational or other manuals in relation to individual school buildings will be relevant to the question of vulnerability. As noted at [77] above, that question is not to be determined by reference to the actual parties to the proceedings, but by reference to likely plaintiffs as a class. Further and in any event, it is not clear to me, at least on the basis of the materials currently before the Court, how manuals specifying internal or external moisture management measures would differ from maintenance manuals in general.

[157]          For these reasons, I decline to make any orders at this time on proposed category 3(m).

Discovery sought from Carter Holt

[158]          The remaining areas of dispute in relation to discovery to be given by Carter Holt are more limited.

Category 1 – marketing materials

[159]The Ministry seeks discovery of the following marketing related materials:

Documents relating to the marketing of Shadowclad, including:

(a)Marketing strategy papers;

(b)Advice from external agencies regarding the marketing of Shadowclad;

(c)Marketing material directed at architects, builders and/or developers, including training or instruction manuals provided by Carter Holt;

(d)Marketing materials directed at trade supplies stores;

(e)Sales data and/or reports, but excluding data of a day to day nature;

(f)Any analysis of sales data.

[160]          The Ministry confirms that only marketing materials used in New Zealand are sought.

[161]          Carter Holt accepts that some marketing materials may be relevant to the questions of duty and breach. That must be right. For example, many of the factors pleaded by the Ministry as providing the basis for a duty of care relate to Carter Holt’s promotion and marketing of Shadowclad.

[162]          In its written submissions filed prior to the hearing, Carter Holt said “it was in the process of reviewing historic marketing practices with the view to updating the plaintiffs and the Court on proposed categories of documents in due course.” At the hearing, and by reference to Schedule 2, Carter Holt says that a sampling approach of actual marketing materials is appropriate, given the period over which Shadowclad has been marketed in New Zealand (namely from 1989 to 2013). It further says it is not aware of marketing strategy papers during the relevant period, and does not accept they are relevant in any event.

[163]          I accept that a sample approach is appropriate in relation to actual marketing materials (such as advertisements, brochures, campaigns in trade publications and the like), given the very lengthy period over which the marketing has taken place. However, I do not accept the category should be limited to marketing materials directed to the two sets of persons or entities Carter Holt suggests. Carter Holt’s proposal is that discovery of a sample of marketing materials is limited to those directed to architects and trade supply stores, but also says that it “primarily markets the product to suppliers and builders through limited campaigns in trade publications”.

[164]          Like the proposed sample of contractual materials, I do not intend to make formal orders in this judgment as to the sampling approach to be adopted. Again, and complying with their duty of cooperation, I would expect sophisticated parties such as these, and their respective legal advisers, to be able to reach agreement on the parameters of the sampling approach to be adopted. If they cannot, and with information as to the competing proposals, the matter would need to be brought back before me for orders.

[165]          For similar reasons why marketing materials themselves are relevant, I also consider documents relating to any overarching marketing strategy or approach adopted by Carter Holt to be relevant. I accept Mr Miles’ submission that where the sole issue is whether marketing material is misleading, an objective approach is adopted and internal marketing strategy papers are unlikely to assist. But the issue of duty of care is different. For example, Carter Holt’s knowledge of its likely customer base and whether that might include end users such as schools is in issue.54 Further, Carter Holt’s approach or strategy in relation to marketing Shadowclad, i.e. rather than simply the actual marketing materials, may inform what Carter Holt understood purchasers and end-consumers of Shadowclad wanted from the product, and what types of buildings it was to be used on. Such matters will be relevant to questions of foreseeability and proximity.

[166]          I note Carter Holt’s submission that as far as it is presently aware, there are no marketing strategy or similar papers existing within the relevant period. That may

54     Sixth amended statement of claim, at [33] and [52]; see also CA strike-out judgment, above n 15, at [48]; SC strike-out judgment, above n 15, at [18]-[19].

well be the case and therefore there is nothing for Carter Holt to discover in response to this category. But that does not mean there ought not to be such a category in the first place. The nature and extent of searches Carter Holt has carried out to date is not clear from the materials before the Court. The same observation applies to any higher level sales data55 and/or reports in respect of Shadowclad, and any analysis by Carter Holt of that data.

[167]          There will accordingly be an order for discovery in the terms of the Ministry’s formulation of category 1, save that:

(a)The category should expressly confine the materials to marketing in New Zealand, as Ms Carlyon confirmed at the hearing;

(b)From the parties’ materials, it appears the category is intended to relate to a particular time period only, which should be reflected in the category;

(c)The opening words ought to end with “namely” rather than “including” (as otherwise the category is in fact unconstrained in the types of marketing materials that will be responsive to it); and

(d)Sub-paragraphs (c) and (d) will need to reflect the sampling approach discussed at [163] above.

Category 3 – durability of Shadowclad

[168]          Carter Holt accepts that documents relating to the durability of Shadowclad are relevant, but says this category is overly broad and unworkable. It says any relevant documents will be responsive to categories 4 or 7 in any event.

55 Ms Carlyon confirmed that the Ministry does not seek documents along the lines of “10,000 sheets of Shadowclad being sold to Carters in New Plymouth”. Rather, the sales data materials are more high level materials, if they exist within Carter Holt, demonstrating which consumers are using the Shadowclad product; for example, whether schools are a big user, which the Ministry will submit will be informative of the duty of care question.

[169]          The Ministry says that Shadowclad’s durability is a key issue for determination at the Stage 1 trial. For example, in the pleaded schedule of defects to the Ministry’s claim, defect 4 relates solely to durability. Ms Carlyon also noted that the concept of “durability” emanates from Carter Holt itself, as reflected in certain marketing materials referenced in the statement of claim.

[170]          Documents concerning Shadowclad’s durability are clearly relevant. It is also not immediately apparent that all such documents would be responsive to category 4 and/or category 7. Category 4 relates to specific types of documents, namely internal and external audit processes; BRANZ appraisals; testing of Shadowclad; and Shadowclad operations manuals. While it is correct that many such documents might refer to or discuss Shadowclad’s durability, other documents concerning durability may nevertheless exist outside those particular classes of documents. Similar observations apply to category 7. That category concerns documents relating to Shadowclad’s specifications, their development, revision and any concerns in relation to them. This may not capture more general papers or documents concerning Shadowclad’s durability.

[171]          Given documents relating to durability are relevant, the issue is one of proportionality. As noted, Carter Holt says this is an unworkable category, though does not elaborate why. As with all other categories, the parties are expected to work together to agree matters as word search terms, scope of searches and so on to ensure searching for documents responsive to categories either ordered or agreed is proportionate.

[172]          There is accordingly a discovery order in terms of category 3 as proposed by the Ministry, but subject to the observations above that the steps to be taken by Carter Holt to search for documents responsive to this category are yet to be finalised.

Category 4 – audits, appraisals etc regarding Shadowclad

[173]          This category is largely agreed. The Ministry proposes to add to the end of sub-category 4(c)(ii) the words “including documents relating to instances where testing requirements were not met”. Carter Holt confirmed that any such documents

would be responsive to sub-category (c)(ii) without the additional words. I agree. The additional words are not required.

[174]          Carter Holt proposes to add to the text of sub-category (e)(i) the qualifier “relevant to the alleged inherent defects as pleaded by the plaintiffs”. Ms Carlyon accepted as a matter of principle that the complaints must be relevant to the alleged defects. But she said that a document on its face may not appear to relate to the inherent defects and given Carter Holt says in affidavit material that the level of complaints is low, discovery of all complaints will not be onerous.

[175]          I do not consider that approach is appropriate. Ultimately the documents must be relevant. Whether a document is relevant on its face is something reviewing solicitors will regularly confront in any discovery exercise. Given enquiries or complaints about Shadowclad which are unrelated to the pleaded inherent defects will be irrelevant, I agree it is appropriate to add the words proposed by Carter Holt. There is an order to that effect.

Category 5 – documents relating to whether and how Shadowclad complies with the Building Code and/or Recognised Building Standards

[176]          Carter Holt says this is an unworkable category and that relevant documents will be discovered in response to other categories in any event. It also says that no “in service history analysis” has been carried out (as referenced at sub-category (a) of the Ministry’s proposed category).

[177]          Having considered the parties’ submissions, I am not satisfied I am in receipt of sufficient material to make a ruling on this category. As a preliminary observation, however, I have some sympathy with Carter Holt’s position that the category is somewhat unworkable, given it is framed by way of a conclusory statement in its opening words, to which all technical, specification and other similar documents would respond. It may be that the documents sought by the Ministry could more appropriately be framed along the lines of “documents discussing or commenting on whether and how Shadowclad complied with the Building Code and/or Recognised Building Standards”. As a matter of principle, documents responsive to a category of that type would in my view be relevant, in the context of the Court’s consideration of

whether Shadowclad is defective in fact and whether Carter Holt breached any duty of care owed by it.

[178]          In addition, sub-category (d) in its present form is more akin to a legal question or conclusion. Again, it may be that what the Ministry seeks is “documents discussing or commenting on the relationship between NZS3604 and the Shadowclad specifications”. If that were the case, the Ministry would need to explain the relevance of any subjective views or comments by or within Carter Holt in that regard.

[179]          Other aspects of the category are, in my view, framed in an overly broad way, such as sub-category (e), “documents relating to Carter Holt’s involvement in the Cladding Institute of New Zealand (now the Building Enclosure Council New Zealand) including…”. While no doubt not sought by the Ministry, documents such as membership applications or meeting requests could potentially be captured by this sub-category.

[180]          I am therefore not prepared to make a formal discovery order in the terms proposed by the Ministry at category 5. Taking into account, however, my observation that documents discussing or commenting on whether and how Shadowclad complies with the Building Code and/or Recognised Building Standards are likely to be relevant (and may not be responsive to categories 4 and 7), the parties are to re-consider a more appropriately framed category 5. Leave is again reserved to the parties to bring the matter back before me for further orders.

Category 6 – testing and test results

[181]          In relation to sub-category (c), Ms Carlyon confirmed the Ministry is content, in principle at least, to receive a sample of documents evidencing the results of Shadowclad compliance testing.

[182]          In terms of the remaining area of dispute, being the Ministry’s proposed sub- category (e), documents discussing actual non-compliance with treatment results, and concerns expressed about the adequacy or effectiveness of preservative treatment, are in my view relevant (both to whether Shadowclad is defective in fact and the question

of breach), and will not necessarily be captured by other categories for discovery by Carter Holt.56

[183]          Again, given the parties’ incomplete discussions on these categories, I do not propose to make formal discovery orders. In the event that, despite further engagement, this category cannot be resolved, it may be brought back before me for a final ruling.

Category 7 – documents relating to the Specifications

[184]          This category is also largely agreed.57 Carter Holt objects, however, to it extending to the reasons for any actual or contemplated revisions to the Specifications.

[185]          The Ministry says that instances where changes to the Specifications were contemplated but not implemented will have been for a reason, which will be relevant to the assessment of whether Shadowclad is defective in fact. As I understand Carter Holt’s position, it does not object in principle to the relevance of such material, but says this aspect of the category is not clearly defined and so not capable of targeted searching.

[186]          I accept that in principle the concept of “contemplated” changes to Specifications could be relevant. I have, however, some sympathy with Carter Holt’s position that as presently framed, this aspect of the category is too vague. For example, a change simply “contemplated” by one person and noted in writing, with nothing further being done about it, will be of little or no relevance to the Stage 1 issues. That may not be so, however, in the case of formal and defined changes proposed but which were not implemented for particular reasons. I also accept Carter Holt’s position that only proposed changes which relate to the pleaded defects will be relevant.

56     I agree with Carter Holt that documents “evidencing” non-compliance would be captured by the category concerning actual test results.

57     The Ministry accepts that the reference to “advice” in sub-category (b) should be qualified by “non-legal” advice.

[187]          Again, the parties’ engagement on these matters is incomplete and they are encouraged to work to finalise the terms of this aspect of the category. As a matter of principle however, I accept the Ministry’s position on relevance. The category could perhaps be clarified to make it clear that, if my understanding of what the Ministry seeks is correct, only “formal” or similar proposed changes to the Specifications are to be captured, and only those which relate to the pleaded defects in any event.

Result and orders

[188]On the admissibility of the disputed evidence:

(a)I decline to rule the disputed evidence inadmissible as a matter of principle. The evidence has some, albeit limited, probative value for the purposes of s 7 of the Evidence Act.

(b)Whether the disputed evidence is inadmissible under s 8 of the Act cannot be determined at this time. This will depend on the nature, scope and volume of the evidence Carter Holt proposes to call. Any rulings in that regard will need to await the service of Carter Holt’s briefs of evidence.

[189]On discovery:

(a)There are orders relating to the tailored discovery categories as set out at [69], [74], [79], [83], [113], [117], [122], [128], [135], [167], [172] and [175] above.

(b)I decline to make orders for discovery of documents by the Ministry and Carter Holt as set out at [95], [103], [106], [125], [131], [138],

[142] and [157] above.

(c) As noted at [128], [150], [153], [180], [183] and [187] above, several categories of documents require further discussion and refinement by the parties. In relation to those categories, the parties are to file a joint memorandum within 20 working days of this judgment indicating

whether agreement has been reached on the outstanding categories. In the event any further orders are required, I envisage holding a “round table” case management conference with the parties and their solicitors to finalise the terms of any remaining categories in dispute.

[190]On costs:

(a)The parties are encouraged to seek to agree costs of the admissibility and discovery applications. A preliminary and strictly non-binding view is that given there has been a measure of success and failure by both parties, an appropriate outcome may be that costs lie where they fall.

(b)If the parties cannot agree costs:

(i)Any party seeking costs may file a memorandum to that effect within 15 working days of this judgment; and

(ii)Any memorandum in response is to be filed within a further five working days.

(iii)I will thereafter determine costs on the papers. On the materials currently before the Court, I see no basis for increased or indemnity costs.

[191]          In terms of next steps more generally, the parties are to confer on appropriate timetabling and any other appropriate orders in the lead up to the April 2020 hearing. The Registry is directed to schedule a two-hour face-to-face case management conference before me on the first available date after 11 March 2019. Counsel should notify the Registry as soon as possible of any dates on which they will not be available.

The parties are to file case management memoranda at least two working days in advance of the conference. In addition to the “standard” steps to be taken in the lead up to the Stage 1 trial, the parties are also to consider and discuss what steps or

processes might be put in place for expert caucusing both prior to and during the trial.

Fitzgerald J