Mitre 10 (New Zealand) Limited v Thistle Dome Holding Limited

[2015] NZHC 2719

IN THE HIGH COURT OF NEW ZEALAND MASTERTON REGISTRY

CIV-2015-435-11 [2015] NZHC 2719

UNDER	the Property Law Act 2007
IN THE MATTER	of an application to determine the meaning and effect of s 233 of the Act
BETWEEN	MITRE 10 (NEW ZEALAND) LIMITED Applicant
AND	THISTLE DOME HOLDINGS LIMITED Respondent

Hearing:	29 October 2015
Counsel:	T F Cleary for Applicant K P Sullivan for Respondent
Judgment:	4 November 2015

RESERVED JUDGMENT OF COLLINS J

I direct that the delivery time of this judgment is

3.30 pm on the 4th day of November 2015

MITRE 10 (NEW ZEALAND) LIMITED v THISTLE DOME HOLDINGS LIMITED [2015] NZHC 2719 [4 November 2015]

Introduction

[1]      This judgment explains why I am ruling Mitre 10 (New Zealand) Limited (Mitre 10) has properly claimed privilege in relation to 19 emails which it has identified in its list of documents.

[2] Privilege cannot however be claimed in relation to four emails. I explain which emails must be disclosed and the reason why I have reached this conclusion in [17].

Background

[3]      In 2004 Thistle Dome Holdings Limited (Thistle Dome) acquired the land and buildings at 140-158 John Kennedy Drive, Palmerston North (the property).  On

3 March 2007 Mitre 10 agreed to lease the property for a term of 15 years with rights of renewal.  Mitre 10 used the property as retail premises.  This arrangement ceased in late 2011 when Mitre 10 moved its retail business but continued to use part of the property as a warehouse.

[4]      Thistle Dome alleges that after Mitre 10 ceased to use the property for retail purposes, the property fell into a state of disrepair.   Mitre 10 disputes these allegations.

[5]      The lease contained a dispute resolution clause which states:

45.1UNLESS any dispute or difference is resolved by mediation or other agreement, the same shall be submitted to the arbitration of one arbitrator who shall conduct the arbitral proceedings in accordance with the Arbitration Act 1996 …

[6]      On 25 March 2014 Advanced Property Group Limited (Advanced Property)

made an offer to Thistle Dome to purchase the property for $12.25 million.   On

28 March 2014 Thistle Dome accepted the offer from Advanced Property and also informed Advanced  Property  that  it  was  considering  pursuing  its  rights  against Mitre 10 because it believed the sale price was not sufficient to compensate Thistle Dome for the alleged breaches of the lease by Mitre 10.  Originally settlement was scheduled for 11 April 2014.  Settlement date was extended to 30 April 2014.

[7]      On 1 April 2014 Advanced Property nominated Mitre 10 Holdings as the purchaser under the agreement.  Mitre 10 Holdings is a wholly owned subsidiary of Mitre 10.

[8]      On 10 April 2014 Thistle Dome served Mitre 10 with an arbitration notice under the lease.

[9]      Mitre 10 has filed in this Court an originating application challenging the validity of the arbitration notice issued by Thistle Dome.   That application is scheduled to be heard by Brown J on 25 November 2015.

[10]     Mitre 10 has provided discovery of documents relating to the negotiations and sale of the property.   Mitre 10 has however claimed privilege in relation to

23 emails on the basis that they were subject to legal advice privilege and common interest privilege.   Thistle Dome has challenged the appropriateness of Mitre 10 claiming privilege in relation to those documents.

Inspection

[11]     Mr Cleary, who appeared for Mitre 10 in the hearing before me, accepted I have  an  “unfettered”  discretion  to  inspect  the  documents  in  issue.    Mr Cleary submitted however I should not assume the need to inspect the documents.   He adopted  as  a  starting  point  the  following  observations  in  Westminster  Airways

Limited v Kuwait Oil Co Limited in which it was said:1

The question whether the court should inspect the documents is one which is a matter for the discretion of the court, and primarily for the judge of first instance.  Each case must depend on its own circumstances; but if, looking at the affidavit, the court finds that the claim to privilege is formally correct, and that the documents in respect of which it is made are sufficiently identified and are such that, prima facie, the claim to privilege would appear to be properly made in respect of them, then, in my judgment, the court should, generally speaking, accept the affidavit as sufficiently justifying the claim without going further and inspecting the documents.

1      Westminster Airways Limited v Kuwait Oil Co Limited [1951] 1 KB 134 at 146.

[12]     A similar approach was taken by the Court of Appeal in General Accident

Fire & Life Assurance Corporation Ltd v Elite Apparel in which it was said:2

[The Court] should [not undertaken inspection] as a matter of automatic practice, for usually of course a Court does not look at documents withheld from the other party.

[13]     There are two features to this case which distinguish it from the situation the Court of Appeal had in mind in the General Accident case.  First, in this case Thistle Dome, the party from whom the documents have been withheld, is the entity that has invited me to inspect the documents in question.  Thistle Dome has done this appreciating they may never get to see the documents in question.  Second, I will not be the trial Judge and there is accordingly no risk of me being unconsciously influenced by seeing documents which I might have to expunge from my mind if I were the trial Judge.

[14]     In the circumstances of this case I concluded that it would be in the overall interests of justice if I inspected the documents in question.   I did so because I wanted to be sure my decision was based on the best information available to me and because I wished to ensure that if I upheld the claim for privilege no injustice would inadvertently be caused to Thistle Dome.

[15]   Having  examined  the  documents  I am  satisfied  19  emails  are communications are between Advanced Property and its external law firm, Morgan Coakle, and relate directly to the agreement between Advanced Property and Thistle Dome for the sale and purchase of the property and the nomination of Mitre 10 as the purchaser.  The 19 emails I have examined fall broadly within the category of documents generated for the purpose of obtaining legal advice in relation to the sale and purchase of the property.   The 19 emails I have examined are encompassed

within the category identified by Taylor LJ in Balabel v Air India where he said:3

Although originally confined to advice regarding litigation, the privilege was extended to non-litigious business. Nevertheless, despite that extension, the purpose and scope of the privilege is still to enable legal advice to be sought and given in confidence. In my judgment, therefore, the test is whether the

2      General Accident Fire & Life Assurance Corporation Ltd v Elite Apparel [1987] 1 NZLR 129 (CA) at 133.

3      Balabel v Air India [1988] 2 All ER 246 (CA) at 254-255.

communication or other document was made confidentially for the purposes of legal advice. Those purposes have to be construed broadly. Privilege obviously attaches to a document conveying legal advice from solicitor to client and to a specific request from the client for such advice. But it does not follow that all other communications between them lack privilege. In most  solicitor  and  client  relationships,  especially  where  a  transaction involves protracted dealings, advice may be required or appropriate on matters  great  or  small  at  various  stages. There  will  be  a  continuum  of communication and meetings between the solicitor and client. … Where information is passed by the solicitor or client to the other as part of the continuum aimed at keeping both informed so that advice may be sought and given as required, privilege will attach. A letter from the client containing information may end with such words as 'please advise me what I should do'. But, even if it does not, there will usually be implied in the relationship an overall expectation that the solicitor will at each stage, whether asked specifically or not, tender appropriate advice. Moreover, legal advice is not confined to telling the client the law; it must include advice as to what should prudently and sensibly be done in the relevant legal context.

…

In effect, therefore, the 'purpose of legal advice' test will result in most communications   between   solicitor   and   client   in,   for   example,   a conveyancing transaction being exempt from disclosure, either because they are privileged or because they are immaterial or irrelevant.

[16]     The  19  emails  I  have  examined  are  governed  by  s 54  of  the  Evidence Act 2006, which provides a person who obtains legal services from a legal adviser has a privilege in respect of any communications between the person and his or her legal adviser if the communication was “intended to be confidential” and “made in the course of and for the purpose of the person obtaining professional legal services from the legal adviser”.

[17]     I am satisfied however that four emails, identified as documents IH.001, IH.002, IH.003 and IH.004 do not appear to have been generated for the purposes of obtaining legal advice in relation to the sale and purchase of the property, although I do note that Morgan Coakle was included in the chain of correspondence in relation to IH.003.   In my assessment, those four emails fall within the category of administrative documents relating to settlement and do not attract legal advice privilege.

Common interest privilege

[18]     The key issue in this case is whether Mitre 10 had common interest privilege in the 19 emails I have concluded were the subject of Advance Property’s legal advice privilege.

[19]     In Fresh Direct Ltd v J M Batten and Associates Wylie J explained:4

Common interest privilege is concerned with the effect of the confidential communication of a privileged document to a person who has a common interest in its subject matter … in connection with which the document was brought into being.  The importance of common interest privilege lies in a client’s ability to voluntarily share privileged information with those with whom he shares a sufficient identity of interest in the subject matter of the information without there being a resultant waiver or loss of privilege  …

[20]     Common interest privilege arises in this case if:

(a)      Advance Property has privilege in the emails in question;

(b)Advance  Property  and  Mitre  10  have  a  common  interest  in  the information that is privileged; and

(c)       the common interest which the parties share are closely related if not identical.5

[21]     In the present case I am very satisfied Mitre 10 had a common interest in the

19 emails which I have examined. That interest was sufficiently close if not identical to Advance Property’s interest in those emails.  Mitre 10 and Advance Property had a common  interest  in  the  sale and  purchase of the property.    For  all  intents  and purposes Advance Property was acting as Mitre 10’s agent.  All of the usual criteria for common interest privilege are established in relation to the 19 emails that I have examined and which I have concluded were subject to Advance Property’s legal

advice privilege.

4      Fresh Direct Ltd v J M Batten and Associates (2009) 20 PRNZ 126 (HC) at [68].

5      Winterthur Swiss Insurance Co v AG (Manchester) Ltd (in liq) [2006] EWHC 839 (Comm)

at [78].

Conclusion

[22]     Mitre 10 has properly claimed privilege in relation to 19 of the 23 emails in dispute.

[23]     Thistle Dome Holding Limited is entitled to access the four emails which I

have identified in [17]. [24] Costs are reserved.

“D B Collins J”

Solicitors:           Greenwood Roche Chisnall, Auckland, for Applicant

WCM Legal, Wellington, for Respondent