No 317 Limited v Canterbury Regional Council
[2015] NZHC 186
•17 February 2015
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2012-409-002607 [2015] NZHC 186
BETWEEN NO 317 LIMITED
Plaintiff
AND
CANTERBURY REGIONAL COUNCIL Defendant
Hearing: 11 February 2015
(with further submissions in the form of orders, 16 February
2015 and 17 February 2015 (twice))Appearances:
CR Carruthers QC and P A Cowey for Plaintiff
M Colson and K J Dobbs for DefendantJudgment:
17 February 2015
JUDGMENT OF ASSOCIATE JUDGE OSBORNE
on discovery applications
Introduction
[1] The trial of this proceeding is to commence on 9 March 2015.
[2] After the close of pleadings (6 August 2014) the plaintiff filed the application for two sets of discovery orders which are the subject of this judgment.
[3] This interlocutory hearing was convened at the first available point and this judgment will be necessarily brief to ensure that disruption to trial preparation is minimised.
Leave
[4] The plaintiff requires leave to make the application because pleadings have closed.1 The defendant (ECAN) opposes the granting of leave.
1 High Court Rules, r 7.7(1).
NO 317 LIMITED v CANTERBURY REGIONAL COUNCIL [2015] NZHC 186 [17 February 2015]
[5] I heard submissions both on the leave issue and on the substance of the applications at the one hearing. Having heard a half-day argument, I am satisfied that justice required that the Court consider the substance of both applications and not allow them to be defeated at the leave threshold.
[6] ECAN, in opposition, raises concerns as to the time and cost which would be involved for ECAN if further discovery were ordered. ECAN personnel would be involved at a time when the parties are preparing for hearing. There was, however, no evidence that the trial date itself would be jeopardised. The possible impact on ECAN’s preparation can be taken into account, upon the basis of proportionality, in the specific detail of any additional discovery ordered.
[7] I therefore grant leave to the plaintiff, No 317 Limited (“No 317”), to make the interlocutory applications which are the subject of this judgment.
Additional discovery
The application itself
[8] In No 317’s application, dated 3 November 2014, additional discovery was sought as “Order 2” encompassing three categories of documents.2 The first two categories identified in the application were not pursued at the hearing and I dismiss the application in that regard.
[9] The remaining application was in terms for an order that ECAN provide further and better discovery of:
The RTT database and monitoring database for the period January to May
2008, including details of RedBus and Leopard.
The litigation context
[10] No 317 once ran bus services. Some of the services were run pursuant to contracts administered by ECAN as the Regional Council of the Canterbury region.
2 The original interlocutory application, dated 10 September 2014, sought “further and better discovery” of five categories of documents. These were condensed to three categories after the conference on 23 September 2014.
In June 2010, No 317 entered into two additional bus service agreements with
ECAN. The services under those agreements were commenced on 1 November
2010 with the agreements expiring in June 2016. No 317 claims that ECAN unlawfully threatened in November 2010 to terminate the contracts unless No 317’s business was sold to a third party. No 317 then so sold its business to GoBus Holdings Ltd. It sues for what it says are damages of $6,000,000.
No 317’s attack on the quality of ECAN’s decision-making
[11] The Court was first asked to deal with orders for tailored discovery in February 2014. In my judgment at that time, the relevant part of the discovery order then made was that ECAN provided a list of documents covering:3
1.ECAN’s documented (including electronic) record of any perceived conduct of Red Bus Limited (Red Bus) and/or Leopard Coachline Limited (Leopard) in the period 1 June 2010 to 19 November 2010 which the creator of the document recorded as constituting a possible breach of contract and/or justifying consideration of a Minor Breach Notice, a Penalty or a Termination of Contract
2.Any document showing a decision of any officer or employee of ECAN in relation to ECAN’s action on possible breaches of contract by Red Bus or Leopard in the period 1 June 2010 to 18 November
2010.
3.The “breaches” referred to in 1 and 2 above are limited to those of the same nature as breaches by No 317 in the period for which ECAN issued Minor Breach Notices, deducted Penalties, or issued its 19 November 2010 Notice.
[12] I explained the decision to order those categories of documents in my judgment thus:
Discussion – the quality of ECAN’s decision-making
[32] I start with the pleadings as the most important guide to the relevance of documents sought.
[33] No 317’s pleading expressly (and correctly) refers to ECAN’s right
to terminate contracts 324 and 325 if –
… in the reasonable opinion of ECAN [No 317] substantially failed
to comply with the contract terms.
3 No 317 Ltd v Canterbury Regional Council [2014] NZHC 276 at [107].
[34] The Contracting Manual contains a parallel provision in relation to ECAN’s right to issue Minor Breach of Contract Notices and to impose penalties. ECAN has the right to take either of those steps under the contracts –
… where in the reasonable opinion of [ECAN] the nature or quantity of non compliance does not constitute a serious breach but still warrants the issue of a formal breach notice.
[35] Thus when one moves away from the interpretation of the contract to matters relating to the implementation of its terms – including whether ECAN reached the point of having the required standard of opinion in relation to any of the material events – the reasonableness of ECAN’s opinion is fundamental. Material which will enable counsel for No 317 to test the reasonableness of ECAN’s opinion is material that should be available to No 317 subject to any questions of proportionality of discovery.
[36] In its discovery application No 317 sought a number of documents which Mr Cowey himself described as “historical”. Historical documents would have marginal relevance, if any.
[37] No 317 on its pleadings seeks damages in relation to penalties imposed by ECAN from June 2010 with deductions made from payments through to November 2010. No 317’s case culminates in a notice said to have been issued by ECAN around 19 November 2010, it being notice of ECAN’s intention to terminate contracts 324 and 325.
[38] I accept that a trial Judge might properly allow counsel for No 317 to test the reasonableness of ECAN’s decision-making in relation to minor breaches, penalties and termination by reference to any decisions made in relation to similar operators for the same type of alleged breach during the same period. Beyond that, evidence in relation to possible breaches by other operators would be of marginal relevance and would not appropriately be the subject of a discovery order on grounds of proportionality. Furthermore, I do not regard documents which might speak generally of the performance of other operators as falling within a category of proportionate discovery. That includes documents such as the assessments of tenders which ECAN received or had prepared when the awarding of new contracts was being considered. Any ordered discovery should be focussed specifically on detected breaches in the period June to November 2010 and on the response of ECAN. Such documents will permit No 317 and its counsel to understand how such detected breaches were dealt with and, if appropriate, to cross- examine and to make submissions.
[39] I am satisfied that No 317 is entitled to some discovery within the categories sought and the orders I make reflect an entitlement to documentation specifically relevant to breaches and decisions thereon.
[13] Thus, on No 317’s own case, I refused to order discovery for any period earlier than June to November 2010 because of the marginal relevance of any earlier breaches and a consequential lack of proportionality if discovery were ordered.
[14] No 317’s only pleading at that time (and at the current time, in terms of the second amended statement of claim) which incorporates reference to ECAN’s conduct earlier than 2010 is a paragraph which begins:
The defendant’s unlawful conduct pleaded above, followed a pattern of
previous unlawful behaviour.
Particulars:
(a) In June 2008 the defendant unlawfully notified the plaintiff that it intended to terminate a contract due to “missed trips”. This amounted to treating the plaintiff differently from other passenger transport service operators. The plaintiff sought the relevant records under the Official Information Act to demonstrate this. The defendant withdrew its notice to terminate on the basis that the plaintiff withdrew its Official Information Act request.
(b) …
[15] In his submissions for ECAN, Mr Colson effectively embraced my February
2014 conclusions as to the “marginal relevance” of documents relating to the comparative performance of operators in 2008. He referred to documents from that period as being “contextual” by which I took him to mean that they were not central to the material allegations in the proceeding.
[16] As developed by Mr Carruthers QC, the concern of No 317 is that, notwithstanding my February 2014 conclusion as to “marginal relevance”, ECAN may intend to rely on evidence as to the comparative performance of operators in the January to May 2008 period.
[17] In particular, Clive Peter, a director of No 317, has deposed:
(a) The defendant’s proposed evidence compares the plaintiff ’s performance with that of other bus operators in the period from January to May 2008.
(b)Raw performance data of all operators (the RTT database) was provided to the plaintiff, but only for the period from June to November 2010.
(c) The RTT data provided by the defendant for the January to May 2008 period is data that has been collated by the defendant. It is the plaintiff’s position that this data does not accurately reflect the raw performance data of each operator.
(d)In order to assess the defendant’s claim regarding comparative performance, the plaintiff needs to have access to the RTT data for all three operators for the period from January to May 2008.
[18] ECAN does not challenge Mr Peter’s assertion as to the content of ECAN’s proposed evidence. Mr Colson noted an objection as to No 317’s reliance upon the content of any briefs of evidence given the provisions in the High Court Rules as to the use to which unread briefs may be put. I do not find anything in the Rules that precludes the Court from considering briefs where reference to the briefs directly bears upon the relevance of documents which are sought through discovery. The just, speedy, and inexpensive determination of proceedings sensibly calls for such material to be considered prior to trial, when appropriate orders may be made and implemented before trial, rather than at trial when any need for additional discovery could be hugely disruptive.
[19] David Stenhouse, the Public Transport Manager of ECAN, gave evidence in opposition. He records that what ECAN has given discovery of for the first six months of 2008 are what ECAN titles “KP Indicator Reports”. He exhibits an example of a KP Indicator Report for a period in May 2008 which records 55 “total non-compliance issues” for No 317 with nine such issues for Leopard and 48 such issues for RedBus.
[20] Mr Carruthers characterises the briefed evidence of ECAN as involving an assertion that No 317’s performance in the January to May 2008 period was materially worse than the performance of either RedBus or Leopard.
Discussion
[21] Although in my February 2014 judgment I described material relating to the
2008 period as of “marginal relevance”, it now appears that ECAN (unless it elects
not to call part of its brief evidence at trial) intends to put material before the Court as to the comparative performance of three operators (including the plaintiff). That can only be on the basis that the material will be asserted to be relevant, as every brief must be confined to the matters in issue.4
[22] It appears that ECAN intends to base its evidence of comparison upon the “KP Indicators Report”. That is clearly one source of contemporary documents on which to base some analysis.
[23] It is common ground that ECAN also operated what is referred to as the
“RTT data base” (recording real time information).
[24] In his submissions, Mr Colson noted that, in respect of the request for the
RTT database, the evidence indicates:
(a) There is no GPS data available from the Real Time Information System; that data is deleted (irretrievably) on a 28-day rolling basis; and
(b)There may be data from the Trip Exceptions analysis database available but third party providers would need to restore back-up tapes labelled as containing data from 2008. Restoring that data would involve replicating work done earlier this year to restore data for the period June to November 2010 (pursuant to the Court order in February).
[25] To illustrate No 317’s concern as to the information taken by ECAN from the KPI tables as compared to information that might be available from the RTT database, Mr Carruthers handed up a table, in the course of submissions. This table purports to suggest that for the November 2010 period (which has been covered by discovery of both KPI and RTT information documents), the KPI information (reflecting comparatively poorly on No 317) is at odds with the RTT information
(showing Leopard and RedBus performing comparatively worse).
4 High Court Rules, r 9.7(4)(g).
[26] Mr Colson objected to any reliance on the table submitted by Mr Carruthers but I did not find anything to turn on the acceptability or otherwise of that table. What the table illustrates is the understandable desire of No 317 to test any KPI information on which ECAN may choose to rely against any available RTT information. Because of previous discovery orders that can be done for periods in
2010 but cannot be done for the 2008 period.
[27] Having regard to the developments since my judgment in February 2014, there is demonstrable relevance to the documentation sought by No 317. The way in which ECAN apparently intends to develop its case must be taken to involve a recognition of relevance.
[28] Mr Colson, in his submissions, submitted that a requirement upon ECAN to make the additional documents available between now and trial would add undue and disproportionate pressure to preparation time. I do not find anything in the affidavit of Mr Stenhouse to allow me to make a positive conclusion as to disproportionality. In fact, at one point Mr Stenhouse refers to the in-house restoration of archive data involving work by a third party software provider, which I take to be a concern as to cost rather than as to the pressure on individuals at ECAN or within the ECAN litigation support team.
[29] I therefore find the subject matter of information requested by No 317 (relating to 2008) to be relevant and an order for discovery to be proportionate.
[30] An order will be made for discovery of the classes of information which the evidence indicates should be accessible albeit with some difficulty and expense for the defendant. Proportionality and the closeness of trial weigh heavily against ordering a more general form of discovery in relation to the 2008 period and a broader form of discovery will therefore not be ordered.
The privileged documents application
The application itself
[31] ECAN made discovery of an email chain of October 2010 but with redactions of content containing legal advice. ECAN also claimed legal professional privilege in relation to a separate memorandum of legal advice.
[32] By its application No 317 seeks an order setting aside redactions in the emails and requiring production of the legal advice memorandum.
The interlocutory background
[33] In September 2014, No 317 applied for an order setting aside redactions in a number of the documents discovered by ECAN. ECAN had redacted the material upon the basis that it contained legal advice and was subject to legal professional privilege.
[34] By consent I directed pursuant to r 8.25(2) of the High Court Rules that the plaintiff produce to me for inspection the documents which were the subject of the application. On 23 September 2014, counsel for ECAN provided the documents under cover of a memorandum. In doing so, counsel attached an additional document. Counsel had agreed between themselves that although the particular document had not been specifically discussed with me at the prior telephone conference, the document should be added to the documents submitted to the Court for decision.
[35] Mr Colson’s memorandum stated in relation to this document:
This does not form part of the application but has been referred to in correspondence. In order to assist in expediting matters, this email is therefore put before the Court. It is not considered relevant and is also privileged. The context is that both CBSL and another operator, Leopard, were unable to perform the November 2010 contracts that had been awarded to them on the terms on which they were awarded. That is, the buses they had intended to use on the routes from 1 November were not ready in time. There is a detailed legislative scheme which governs this area which meant that ECan had to determine how to deal with this issue as a matter of law. There was considered to be legal risk at this time as one of the operators who was unsuccessful in tendering for the November contracts had threatened to
sue ECan. ECan obtained legal advice from Bell Gully … A similar issue arose for Leopard. ECan then shared the relevant part of the CBSL legal advice with NZTA (implicitly, on a confidential or common interest basis) to assist in obtaining the variation for Leopard. ECan therefore considers this email is privileged or – in any event – irrelevant as it relates to Leopard and does not relate to an issue in this proceeding.
(The Court has redacted that part of the memorandum which deals with the content of the legal advice).
[36] On the same day as the memorandum was received, I ruled upon ECAN’s
privilege claims. I ruled in relation to the additional document:
[6] Although that covers the documents which were expressly the subject of the application, counsel for the defendant have included in the material provided to me for inspection an additional document (rev.
003.02175). Counsel explain that this document had been referred to “in correspondence”. Counsel for the defendant record that they did not
consider the document relevant but that in any event privilege is claimed in
relation to it.
[7] I have inspected that document also. It again identifies the obtaining of legal advice and the content of that advice. It is privileged. The withholding of the entire document was justified upon that basis (regardless of any issue of relevance or irrelevance).
[37] The nub of No 317’s complaint was (and remains) that ECAN should not be permitted to assert privilege over legal advice which had been passed on to the New Zealand Transport Agency (NZTA) in the context of correspondence relating to an exemption in respect of NZTA Competitive Pricing Procedures. But, as Mr Colson submits, the parties had agreed to include in the interlocutory issues for determination the question of whether legal professional privilege had been waived (as well as whether it existed in the first place).
[38] I then, by my ruling of 23 September 2014, upheld the claim of privilege in its entirety.
Issue estoppel
[39] ECAN asserted a number of grounds of opposition. I need deal only with one
– issue estoppel.
[40] I accept as accurate the following summary of legal principle relating to issue estoppel as submitted by Mr Colson and not challenged by Mr Carruthers:
Issue estoppel is concerned with the prior resolution of issues; “once an issue has been raised and distinctly determined between the parties, then, as a general rule, neither party can be allowed to fight that issue all over again”.5
It operates in subsequent proceedings in the same suit in which the issue has been determined.6 The question is whether it is reasonable to regard the earlier decision of the Court as a final determination of the particular issue which the plaintiff now wishes to raise.7
Issue estoppel has also “been extended to cover not only the case where a particular point has been raised and specifically determined in the earlier proceedings, but also that where in subsequent proceedings it is sought to raise a point which might have been but was not raised earlier”.8 This has been described as the “wider sense in which the doctrine may be appealed to” whereby “it becomes an abuse of process to raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings”.9 (That equally applies here).
[41] Upon the basis of the interlocutory application which was before the Court in September and the ruling which I made, I accept Mr Colson’s submission that there was a final determination of the privileged status of the additional document provided to me for ruling.
[42] As Mr Colson submitted, if in making my ruling I was arguably incorrect and should have dealt directly with issues relating to waiver of privilege, those are matters which No 317 (if it disagreed with the result) was entitled to have reviewed under r 7.49 of the High Court Rules or by appeal to the Court of Appeal.
[43] The additional memorandum of legal advice, the discovery of which is now sought by No 317, was not a subject of the September application and ruling. However, any claim to waiver of privilege arises from precisely the same series of
communications and in the same circumstances as the waiver claim for the document
5 Joseph Lynch Land Co Ltd v Lynch [1995] 1 NZLR 37 (CA), citing Fidelitas Shipping Co Ltd v V/O Exportchleb [1965] 2 All ER 4 (CA) at 9. Joseph Lynch was recently cited by the Supreme Court in Arbuthnot v Chief Executive of the Department of Work and Income [2007] NZSC 55 as good authority on issue estoppel, as was Arnold, below.
6 Arnold v NatWest Bank Plc [1991] 2 AC 93 (HL) per Lord Keith of Kinkel, citing Fidelitas
Shipping Co Ltd v V/O Exportchleb [1966] 1 QB 630 (CA).
7 Joseph v Lynch, above n 4, at 43.
8 Arnold, above n 5, at 106.
9 Arnold, above n 5, at 107 citing Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC
581 (PC).
ruled upon. As such, it is covered by the broader sense of issue estoppel referred to by the Court of Appeal in Joseph Lynch Land Co Ltd v Lynch to which Mr Colson referred in the submissions I have quoted.10 The considerations applying to the legal advice memorandum are precisely parallel to those which applied to the document on which I ruled. Issue estoppel applies to that document also.
Outcome
[44] The application will be dismissed to the extent it relates to the legally privileged documents.
Costs
[45] Counsel accepted at the conclusion of their submissions that any award of costs should appropriately be on a 2B basis, with costs following the event.
[46] In the event, there were two aspects to the application requiring approximately similar evidence and similar time at hearing. No 317 has succeeded on one and failed on the other. It is appropriate that there be no order as to costs.
Orders
[47] I order:
(a) The defendant is to provide, by way of further and better discovery:
(i)a data extract from the Trip Exceptions Database for the period January to May 2008 and in respect of the plaintiff, RedBus and Leopard; and
(ii)a data extract from the Access Database for the period January to May 2008 and in respect of the plaintiff, RedBus and
Leopard.
10 Joseph v Lynch, above n 4.
(b)Counsel for the defendant is to make available copies of any documents covered by Order no 1 initially on an informal basis as soon as the defendant is reasonably able to assemble any documents, as and when the documents become available.
(c) In any event, the defendant is to file and serve a supplementary verified list of documents covered by “Order 1” (such as the defendant has been able to assemble) no later than 23 February 2015 and is to file and serve, if further documents are subsequently located, a further supplementary verified list of documents when those additional documents become available.
(d)Leave is reserved to counsel to request supplementary (but not different) orders as to the additional discovery if it becomes necessary.
(e) The plaintiff’s application for orders setting aside redactions and providing discovery of legal opinions is dismissed.
(f) There is no order as to costs or disbursements.
Solicitors:
ParryField Lawyers, Christchurch
Bell Gully, Wellington
Associate Judge Osborne
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