NZ Iron Sands Holdings Limited v Toward Industries Limited
[2019] NZHC 1789
•26 July 2019
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2017-404-001975
[2019] NZHC 1789
BETWEEN NZ IRON SANDS HOLDINGS LIMITED
Plaintiff
AND
TOWARD INDUSTRIES LIMITED
First Defendant
TAHAROA IRONSANDS LIMITED
Second Defendant
Hearing: 22 July 2019 Appearances:
M D O’Brien QC and M H A Ho for Plaintiff
J A McKay and R M Irvine-Shanks for First Defendant D P McKenzie for Second Defendant
Judgment:
26 July 2019
JUDGMENT OF WYLIE J
[Security for costs – Interrogatories]
This judgment was delivered by Justice Wylie On 26 July 2019 at 4.00 pm
Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar
Date:…………………………
Solicitors:
Gilbert Walker, Auckland Chapman Tripp, Auckland
Minter Ellison Rudd Watts, Wellington
Counsel:
M D O’Brien QC, Auckland
NZ IRON SANDS HOLDINGS LTD v TOWARD INDUSTRIES LTD [2019] NZHC 1789 [26 July 2019]
Introduction
[1] These proceedings are due to proceed to trial on 21 October 2019. It is estimated that the hearing will last four weeks.
[2]The close of pleadings date was 7 June 2019. On that day:
(a)the first defendant, Toward Industries Ltd (“TIL”), applied for further security for costs; and
(b)the plaintiff, NZ Iron Sands Holdings Ltd (“NZIS”), served a notice on TIL, requiring it to answer interrogatories within 10 working days.
[3] Three days later, on 10 June 2019, an application was made by the second defendant, Taharoa Ironsands Ltd (“Taharoa”), also seeking increased security. Taharoa did not apply for leave to file its application after the close of pleadings date, but no party took issue with its failure to do so.
[4] The 10 working day period within which NZIS required that its interrogatories should be answered, expired on 21 June 2019. TIL declined to answer the same on the basis that they had been left too late. As a result, on 4 July 2019, NZIS filed an application seeking leave to apply and an order that TIL answer the interrogatories.
[5] NZIS has filed a notice of opposition to the two applications for increased security. TIL has filed a notice of opposition to NZIS’s application regarding interrogatories.
[6] I deal with the applications in turn. There are also some housekeeping matters which need to be addressed.
Applications for increased security
The security sought
[7] On 19 December 2017, I granted orders by consent requiring NZIS to pay security for costs to cover the first two stages in the proceeding up to the
commencement of witness briefing. Security was for both defendants and it was to be paid in three tranches, as follows:1
(a)there was to be a payment of $80,000 to cover the period through to completion of discovery and inspection. At the time the consent order was made, that payment had already been made and it was held in the plaintiff’s solicitors trust account. It was paid to the Registrar on 22 December 2017;
(b)a further payment of $80,000 was to be made to cover the subsequent period up to the commencement of preparation of the evidence for the trial. This sum was paid to the Registrar on 15 July 2019; and
(c)a payment of $60,000 for initial experts’ costs was to be paid on 31 March 2018. There was a delay in making this payment. It was paid on 9 April 2018.
The parties also agreed that security in respect of witness briefing, trial preparation, and the trial itself (jointly “stage three costs”) was to be addressed at a later date when the proceedings were more advanced.
[8] The parties have sought to agree security for the stage three costs. When the two applications for increased security were filed by TIL and Taharoa, NZIS was offering to pay $300,000 towards the stage three costs. By the time the matter was before me, NZIS had increased that offer to $400,000. The offer was declined by both defendants. TIL is seeking further security in the sum of $395,200. Taharoa is seeking further security in the sum of $245,200. The combined total is $640,400.
[9]The respective claims are based on:
(a)scale costs (calculated on a 3C basis and prior to recent amendments to the High Court Rules).2 Scale costs on a 3C basis total $145,200 for
1 Minute dated 19 June 2019.
2 High Court Amendment Rules 2019, 2019/150.
each defendant. Under the recent amendments to the rules, which come into effect on 1 August 2019, daily recovery rates are increased and the time allocations for several steps in civil proceedings are amended, to differentiate between the time allocations for hearings on the affidavits and witness hearings. Counsel advised that under the rules as amended scale costs on a category 3 basis will be $202,975 for each defendant – an increase of $57,775 per defendant.
(b)anticipated expert fees. TIL has engaged five expert witnesses. It seeks security of $50,000 per expert – a total of $250,000. Taharoa has to date engaged one expert, but it is contemplating engaging another. It also seeks an allowance of $50,000 per expert – a total of $100,000.
Relevant provisions
[10] The jurisdiction to require a plaintiff to provide security for costs is found in r 5.45 of the High Court Rules. Relevantly, it provides as follows:
5.45 Order for security of costs
(1)Subclause (2) applies if a Judge is satisfied, on the application of a defendant,—
(a)…
(b)that there is reason to believe that a plaintiff will be unable to pay the costs of the defendant if the plaintiff is unsuccessful in the plaintiff’s proceeding.
(2)A Judge may, if the Judge thinks it is just in all the circumstances, order the giving of security for costs.
(3)An order under subclause (2)—
(a)requires the plaintiff or plaintiffs against whom the order is made to give security for costs as directed for a sum that the Judge considers sufficient—
(i)by paying that sum into court; or
(ii)by giving, to the satisfaction of the Judge or the Registrar, security for that sum; and
(b)may stay the proceeding until the sum is paid or the security given.
…
[11] In order to determine the applications for security in this case, I am required to consider the following:3
(a)have the defendants satisfied me that there is reason to believe NZIS will be unable to pay their costs if the claims are unsuccessful;
(b)in all the circumstances of this case, is it just that I should order that security be given;
(c)if so, what amount is appropriate and when should it be provided; and
(d)should I stay the proceedings until such time as security has been provided.
[12] It was common ground that whether or not a Court should order security and if so, the quantum of security, are discretionary. They are matters for the Judge as he or she thinks fit in all the circumstances. The discretion is not fettered by constructing “principles” from the facts of previous cases.4
Analysis
[13] Here, there is no dispute that r 5.45(1)(b) is engaged. The plaintiff company was incorporated on 3 August 2016. It has not traded at any stage. Rather, it is a special purpose vehicle which was put in place for the purpose of undertaking the transaction at issue in these proceedings. It has one shareholder. That shareholder has not traded either. It in turn has six shareholders. They are said to be “predominantly high net worth” individuals.
3 Busch v Zion Wildlife Gardens Ltd (in rec and liq) [2012] NZHC 17.
4 A S McLachlan Ltd v MEL Network Ltd (2002) 16 PRNZ 747 (CA) at [13].
[14] In effect NZIS accepts that, in its own right, it is unable to meet any adverse costs award.
[15] Nor was there any argument that an order giving security is just in the circumstances of this case. NZIS has substantial backers. There is no suggestion that an award, even of substantial security, would prevent it from pursuing the claim. There is no suggestion that NZIS’s lack of funds results from TIL’s or Taharoa’s actions. There is no assertion of delay by TIL or Taharoa in applying for security. Nor is there any suggestion that the conduct of any one or more of the parties is relevant to the exercise of the discretion.
[16]The only issue between the parties was as to quantum.
[17] Assessing quantum is a highly discretionary exercise, rather than a mathematical calculation.5 The Court must endeavour to fix an amount that is appropriate in the interests of justice, and having regard to all the circumstances of the case. Security is not necessarily to be fixed by reference to likely costs awards. Rather, security is to be fixed in such sum as the Court thinks fit in all the circumstances.6 Relevant circumstances can include:
(a)the amount or nature of the relief claimed;
(b)the nature of the proceeding, including its complexity;
(c)the estimated trial duration;
(d)probable costs payable;
(e)estimated actual costs;
(f)the funding available to the plaintiff, particularly where the plaintiff is a nominal plaintiff representing the interests of other parties;
5 Sharp v Pillay [2017] NZHC 647 at [17].
6 A S McLachlan Ltd v MEL Network Ltd, above n 4.
(g)the merits of the dispute, acknowledging that in many cases there will be a very real limit as to how far such enquiry can be taken. In complex matters, any assessment will necessarily be no more than a matter of impression, and cannot be a definite indicator of the ultimate outcome after trial.7
[18] There are a number of examples of security orders made by the Court set out in McGechan on Procedure.8 Mr O’Brien QC, for NZIS, took me through those examples, noting that security ordered has ranged from approximately 50 per cent of the amount sought, up to approximately 90 per cent of the amount sought, depending on the circumstances of each case. I consider that these various examples are, at best, of limited assistance; they offer general guidance only. They cannot substitute for a careful assessment of the circumstances of this case.9
[19]Relevantly, I note as follows:
(a)NZIS is seeking $506.08 million by way of damages. It has done so in reliance on adjustments to a cashflow model provided to it by TIL. NZIS’s claim is essentially a loss of a chance claim.
(b)The proceedings are undoubtedly complex. Liability will turn on a fine analysis of complicated and detailed commercial agreements. If NZIS succeeds in establishing liability, the Court will then need to consider the loss (if any) to NZIS. The Court will have to consider the percentage chance that the sale to NZIS of the shares in Taharoa would have been completed but for TIL’s and Taharoa’s alleged conduct. The Court will also have to determine what deduction (if any) is appropriate from the loss claimed. NZIS has pitched its claim at 100 per cent of the estimated loss. The parties will be required to provide evidence and submissions to assist the Court in determining all of these various core issues.
7 A S McLachlan Ltd v MEL Network Ltd, above n 4 at [21].
8 A C Beck and others McGechan on Procedure (online ed, Thompson Brookers) at [HR5.45.10].
9 A S McLachlan Ltd v MEL Network Ltd, above n 4 at [14].
(c)As noted at the outset of this judgment, the trial is estimated to take four weeks.
(d)As noted above at [9(a)], costs payable on a category three basis, under the amendments to the rules, for the stage three matters, will be in the vicinity of $200,000 per defendant. It seems to me that this is the better figure to use for analysis because the majority of the costs for which security is sought will be incurred under the amended costs regime.
(e)Neither defendant has given me its estimated actual costs going forward. Ms Morrison, for TIL, does say in her supporting affidavit that TIL’s actual costs to date in respect of the stage one and two matters well exceed the security already posted by NZIS. Further, she says that TIL has already incurred costs of more than $250,000 in respect of expert witnesses. It has not as yet filed its experts’ briefs and they will of course have to appear at the hearing.
(f)NZIS is not funded by a litigation funder in the usual sense. However, it is a nominal entity, representing the interests of high net worth individuals. They will receive the benefit of any damages recovered but they are not directly exposed to the risk of costs (although it needs to be noted that TIL has signalled that it may apply to the Court for non- party costs orders in the event it is successful in the proceeding). The Courts have accepted that where professional litigation funders are involved, that have no personal rights at stake, and which take part of the proceeds of any claim, security ordered should “tend towards relatively full security”.10
(g)As for the merits, there are five causes of action pleaded – one alleging breach of contract against TIL in relation to the initial sales process; another alleging breach of contract by Taharoa; the third alleging misrepresentation and misleading or deceptive conduct by both TIL and
10 Houghton v Saunders [2013] NZHC 1824 at [125]; And see, Walker v Forbes [2017] NZHC 1212 at [92]; Saunders v Houghton [2009] NZCA 610, [2010] 3 NZLR 331 (CA) at [36].
Taharoa; the fourth alleging misleading or deceptive conduct by TIL in relation to the fulfilment of the conditions precedent in the share sales agreement; and the fifth alleging misleading or deceptive conduct by TIL in the extended sales process. There are five affirmative defences, asserting first that TIL and NZIS were parties to a deed of release, secondly, that the share sale agreement contained a limitation on liability clause, thirdly, that the share sale agreement was validly terminated, fourthly, that NZIS is estopped from challenging the validity of the notice of termination given, and fifthly, that NZIS failed to notify the defendants of its intention to make a claim as required by the share sale agreement. All counsel endeavoured to persuade me that the merits were in their client’s favour, but ultimately all accepted that I could not properly reach a conclusion on this issue. While I have heard a number of interlocutory applications in regard to this matter, I have not seen the evidence adduced by the plaintiff, nor, obviously, the evidence to be adduced by the defendants. I am in no position to make an informed assessment as to the merits of the claims made or of the affirmative defences raised in response. The merits of this case at this stage are so diffuse that I found this factor of little or no assistance.
[20] Mr O’Brien properly accepted that looking forward, the matter can be categorised on a 3C basis under the present High Court Rules, and as a category 3 proceeding under the amendments to the rules. He submitted that security should not necessarily equate to any likely costs award in the event the plaintiff is unsuccessful. In his written submissions he suggested that security had been “overpaid” for the earlier stages of the proceeding, and that the overpayment should be applied to the stage three costs. Mr O’Brien also suggested that if full 3C scale costs are applied from the outset, to cover everything, they would total $451,440 for each defendant. He argued that the total amount now claimed is excessive when this is taken into account.
[21] I did not find these submissions of much help. First, I am required to consider security looking forward, and in relation to the stage three costs. Secondly, security paid in the past was fixed by consent. What was appropriate for the costs then incurred
was agreed between the parties. Thirdly, the submission that costs to date have been “overpaid” by the security provided faces difficulties given Ms Morrison’s uncontradicted assertion, noted above at [19(e)]. Finally, not all of the work done to date can properly be categorised for costs purposes as 3C. Nor will the old scale for category 3C matters apply going forward, at least as from 1 August 2019.
[22] Mr O’Brien accepted that an allowance of $50,000 per expert is appropriate in the round, but he criticised the number of experts which TIL proposes to call. He noted, for example, that TIL is proposing to call two technical mining experts, suggesting that only one is required. He also suggested that Tahaora and TIL should share experts, and that the appropriate allowance for experts is $150,000 for both TIL and Taharoa, or perhaps $200,000, which would allow for four experts between the defendants.
[23] I do not accept the argument that the defendants should be constrained by the plaintiff’s views in determining what witnesses are necessary. It is not for a plaintiff to dictate how a defendant should respond to a claim, particularly a claim seeking $506 million. Both defendants are sued separately and for the full amount. Their roles and interests are different. They should not feel constrained in resisting the claim as they see fit. I made it clear to the parties, and counsel for the defendants accepted, that if I ultimately conclude that witnesses have been called for no good reason, and that duplication has occurred which could have been avoided, this could well sound in costs against the party that has wasted the Court’s time. There is however nothing at this stage to suggest that either defendant is calling experts needlessly. I do note that Tahaora has to date only engaged one expert, that it is contemplating calling a second expert, but that it has not yet finally determined whether it will do so. To my mind this is relevant to the security it seeks.
Result
[24] Taking all of these various matters into account, I am satisfied that relatively high security should be ordered. I am particularly mindful of the fact that the plaintiff is a special purpose entity, being funded by a number of high net worth individuals. The situation is akin to that of a litigation funder. I am also mindful of the fact that
since the applications were filed, the cost and time allowances set out under the High Court Rules have increased. Further, for the steps remaining in this proceeding, banding will no longer apply. In my judgment, it is appropriate to order security in the amount sought by TIL and Taharoa, subject to the exception noted below. While ordering security in the sum sought represents 100 per cent of estimated 3C costs, it is a rather lesser percentage of estimated category three costs under the amendments to the High Court Rules, and it is the costs schedules as amended which will be relevant for most of the steps required to be taken. The one exception relates to the experts’ costs claimed by Taharoa. It has to date retained one expert. Accordingly, I allow it
$50,000 security for that expert. I reserve leave to it to apply for further security, in the event that it decides to retain further experts.
[25]Accordingly, I fix security in the following sums:
(a)in favour of TIL – $395,200;
(b)in favour of Taharoa – $195,200.
[26] No counsel addressed me in relation to the timing of the payments required, nor whether a stay should be ordered.
[27] Both TIL and Taharoa in their respective notices of application, sought that NZIS should be required to pay any further security ordered within 10 working days of the date of the Court’s order, or within such other time as the Court directed. They also sought that proceedings should be stayed if security is not paid within the time fixed by the Court. NZIS in its notice of opposition stated that it was opposed to the making of these orders, but it did not specifically address the same, nor suggest an alternative.
[28] In the absence of submissions to the contrary, I can see no reason why the orders sought should not be made. Accordingly, I direct that the security I have ordered is to be paid to the Registrar within 10 working days of the date of this judgment, and that the proceeding is to be stayed if the security is not paid within that timeframe.
Costs
[29] Both TIL and Taharoa are entitled to costs and disbursements on their respective applications. It is my preliminary view that costs in favour of each should be fixed on a 2B basis, with allowance for one counsel only. Notwithstanding the amount at issue in the substantive proceedings, and the complexity of the issues ahead, the security applications were straightforward. If counsel agree, I anticipate that they will be able to agree costs relatively readily. If not, I make the following directions:
(a)any memoranda seeking costs are to be filed within 10 working days of the date of this judgment;
(b)any memorandum in reply is to be filed within a further 10 working days;
(c)memoranda are not to exceed five pages in length.
I will then deal with the issue of costs and disbursements on the papers, unless I require the assistance of counsel.
Interrogatories
The notice
[30] The notice requiring TIL to answer interrogatories was filed and served on 7 June 2019. It called for the interrogatories to be answered within 10 working days. It also required that the answers be verified by affidavit. At 5.20pm on the last day by which a response was required, TIL’s solicitors advised NZIS that TIL was declining to answer the interrogatories.
[31] The interrogatories posed raise 18 questions – a number of which are broken into sub-questions. If some questions are answered in the affirmative, there are potentially 42 questions requiring answers. The questions primarily relate to two issues in respect of which Mr Thirunavukarasu deposes TIL has provided little or no discovery. Both are said to be important to NZIS’s case at trial. They concern charter rates charged by the shipper (relevant to the issue of whether or not TIL complied with
its obligations under the share sale agreement in respect of one of the conditions precedent), and communications with the ultimately successful purchaser about the extended sales process (relevant to whether or not TIL had changed its stance and decided to re-tender the sale of the shares when it was supposed to be endeavouring to fulfil the conditions precedent). It is clear from Mr Thirunavukarasu’s affidavit filed in support, that the interrogatories were posed as a result of materials disclosed in the course of discovery.
The submissions
[32] Mr O’Brien, for NZIS, accepted that the interrogatories were filed relatively late. He pointed out however that discovery was attended to on a staged basis, and that NZIS only got all of the open documents in late March 2019. In the circumstances he submitted that the questions posed were not too late. He put it to me that between March and June, NZIS’s focus was on preparing its briefs and on discovery. He further argued that the interrogatories were posed well ahead of trial – by some four and a half months – and that they should not be hard for TIL to answer, given that it will or should be preparing evidence relevant to the questions posed. In response to TIL’s assertion in its notice of opposition that the answers will be given in the briefs of evidence to be filed, he submitted that NZIS cannot be assured of this, and that it does not at this stage know what the evidence will cover. He also submitted that there is no obvious detriment or prejudice to TIL in requiring it to answer the questions posed.
[33] Mr McKay, for TIL, argued that NZIS left its interrogatories too late, and that it would be improper, disruptive and prejudicial to TIL to allow NZIS to belatedly require TIL to answer the interrogatories whilst it is immersed in preparing its evidence for the trial. He argued that the interrogatories could and should have been sought much earlier, and that the subject matter can and will be covered in TIL’s briefs of evidence that are due to be served on 23 August 2019. It was suggested that NZIS will not be hampered in its preparation for trial, and that it is unreasonable to require TIL to coordinate a response to the interrogatories while also preparing its evidence on the same topics. It was put to me that the proper course is for the topics raised to be addressed by TIL in its briefs of evidence.
Analysis
[34] Mr McKay did signal that TIL may object to some of the questions posed. I note it has not, however, done so to date, notwithstanding that the course was open to it under r 8.40. I therefore do not pay any great heed to this submission.
[35] I deal first with the application for leave. Rule 7.7 provides that no interlocutory application can be made, or step taken, after the close of pleadings date, without the leave of a Judge. In determining whether or not to grant leave, there are “three formidable hurdles”,11 which any applicant must get over:
(a)Is granting leave in the interests of justice?
(b)Will granting leave significantly prejudice the other parties?
(c)Will granted leave cause significant delay?
Very little weight can be placed on “disciplinary” grounds.
[36] In the present case, I am satisfied that leave should be granted to NZIS to make its application.
(a)the notice to answer interrogatories was given prior to the close of pleadings date, albeit at the very last moment;
(b)it is in the interests of justice to grant leave. Obtaining answers to interrogatories can have distinct advantages for a trial. Granting leave will enable the Court to consider whether or not to order that the interrogatories be answered under r 8.38. Denying leave would deprive the Court of that opportunity;
(c)granting leave does not prejudice TIL. It simply opens for argument whether or not TIL should be ordered to answer;
11 Elders Pastoral Ltd v Marr (1987) 2 PRNZ 383 (CA) at 385.
(d)there can be no suggestion that granting leave would cause significant delay. The application for leave, and for an order seeking that the interrogatories be answered, has been dealt with at the same time as TIL’s and Taharoa’s applications seeking increased security. There has been little additional distraction to TIL.
Accordingly, leave to bring the application is granted.
[37] I now turn to whether TIL should be ordered to answer the interrogatories posed under r 8.38.
[38] An interrogatory is a question asked before trial, for the purpose of eliciting an answer on oath or affirmation which is admissible in evidence at trial. Like all questions, it must be directed towards advancing one side’s case or damaging the other’s case. It must be relevant to an issue raised on the pleadings or a fact in dispute for determination.
[39] Under r 8.38(2), any interrogatories the Court orders be answered, must relate to matters in question in the proceeding. Here, the only evidence in relation to this issue is the affidavit in support from Mr Thirunavukarasu. His assertions in this regard are not challenged. Nor did TIL in its submissions deny that the interrogatories posed relate to matters in question. Rather, its response was to say that the questions posed will be dealt with in evidence and that NZIS has left it too late to seek interrogatories. These were its principle arguments in resisting the order sought.
[40] A notice requiring interrogatories to be answered may only be served after the statement of defence has been filed.12 It should not however be left too late. Generally, it should be done well before the close of pleadings date, but there is no impediment in the rules to interrogatories being administered after that date if leave is obtained. Indeed, the Court has so ordered on occasion.13 Counsel referred me to the decision of Associate Judge Bell in RHH Ltd v Anderson (No 3).14 The Court was there dealing with an application under r 7.7 to grant leave for the taking of further steps – including
12 Rule 8.34(1).
13 See, for example, Sealegs International Ltd v Zhang [2017] NZHC 1789 at [13] and [48]-[52].
14 RHH Ltd v Anderson (No 3) [2018] NZHC 2045.
a request that the defendants be directed to answer interrogatories after the close of pleadings date. In an oral judgment, the Associate Judge declined leave. He noted that the notice posing the interrogatories had been given prior to the close of pleadings date, but that the application seeking to require that the notice be complied with had been filed after that date. He also observed that there had been significant breaches of other timetable orders put in place. He was concerned that the Court was regularly being required to deal with various interlocutory matters after the pleadings had closed. The Associate Judge expressed general concern in this regard and observed that a tendency has developed for interlocutory applications to be brought when cases have reached an advanced stage. He commented that the close of pleadings date has a clear purpose and that it should not be subject to disruption from interlocutory matters. The Associate Judge noted that interrogatories are not an invariable step in proceedings, and that often the exchange of evidence will provide answers, especially with pre-trial exchanges. Turning to the case before him, the Associate Judge considered that the defendants already faced significant burdens in readying for trial, and that if they were required to answer interrogatories, this would be an added inconvenience, disruptive to their trial preparation.
[41] RHH does not lay down an immutable principle. It is very much a case confined to its facts. It is noteworthy that the applicant in RHH had had some three months after discovery to apply for interrogatories, and there were some 91 questions posed. Importantly, there were a number of other interlocutory applications outstanding. This plainly troubled the Associate Judge. Further, I respectfully disagree with one matter raised by Associate Judge Bell and with the same issue raised in the submissions advanced for TIL – namely that the exchange of evidence can answer the matters raised in interrogatories.
[42] I do not consider that evidence is a substitute for interrogatories. This is not a basis on which a party can object to answering interrogatories under r 8.40 (although I acknowledge that objections are not limited to the grounds set out in that rule). While interrogatories as to the evidence that a party intends to adduce, the contents of briefs of evidence, or the way in which the party intends to prove its case, are not permitted, it is not a valid objection to say that interrogatories are unnecessary or inappropriate, merely because they seek to obtain an admission of fact that might also be proved by
a witness at trial. Nor is it a valid objection that a person interrogated is to appear as a witness. Depending on the circumstances, it may be that an interrogatory will limit the scope of a witness’s evidence, thus saving time and expense. It may go further and make it unnecessary for a witness or certain witnesses to be called.15 Answers to interrogatories are evidence.16 They are an exception to the settled manner of adducing evidence, and in particular, to a defendant’s right not to call evidence at trial.17 They are admissible against the party providing them.18 No party can ever be sure that witnesses will come up to brief. An answer to an interrogatory gets past that potential problem. A party is not precluded from adducing evidence which is inconsistent with an answer to an interrogatory. This however is rare. It raises obvious credibility issues, and where it happens, the Judge will have to consider and evaluate all of the available evidence. It follows that, in my view, interrogatories are distinct from briefs of evidence, and they have a valuable role to play in civil proceedings.
[43] This brings me back to the other central argument advanced for TIL – namely, that NZIS was too late in giving its notice of interrogatories. In my judgment, there is nothing in this argument. NZIS accepts that it was late in giving notice, but as I have already noted, that does not preclude notice being given, even after the close of pleadings date. It is neither appropriate nor necessary to denounce NZIS’s acknowledged delay, if it is nevertheless in the interests of justice that the answers be given, giving them will not significantly prejudice TIL, and giving them will not cause further delay.
[44] For the reasons I have set out, requiring TIL to answer the interrogatories posed is in the interests of justice. It has potential advantages for the trial. It may avoid the need to call witnesses or shorten their briefs of evidence. It is not inconceivable that it could lead to an informed discontinuance or to settlement. There is no evidence of any prejudice to TIL. The submission that there is prejudice is made in a factual vacuum. No affidavits have been filed by TIL bearing on that issue. I also note that the notice to answer interrogatories was given on 7 June 2019 – some four and a half
15 Bank of New Zealand v Gardner (1990) 2 PRNZ 278 (HC) at 281.
16 High Court Rules 2016, r 8.44.
17 Todd Pohokura Ltd v Shell Exploration NZ Ltd [2009] NZCA 561.
18 Equiticorp Industries Ltd (in statutory management) v Attorney-General (1995) 8 PRNZ 282 (HC).
months before trial. There was ample time for TIL to answer the interrogatories. That time is now getting tighter is attributable, in part, to TIL’s refusal to answer in a timely fashion. Nor is there likely to be any delay if TIL is required to answer the interrogatories. TIL is in the process of preparing its briefs of evidence. It has until 23 August 2019 to do so. The issues posed by the interrogatories have been obvious for some time, and TIL must have given consideration to the same in preparing its evidence.
[45] Under r 8.38, before making an order requiring that the interrogatories notified be answered, the Court must be satisfied that the order is necessary at the time when it is made. This is a protection for the party whom it is sought to interrogate.19 The effect of the rule is that the Court must be concerned to order only those interrogatories which are proper and reasonable, and not to order interrogatories which are not reasonable and proper at the time the order is made.20
[46] Here, for the reasons I have discussed above, the interrogatories are necessary. The answers given will better inform the plaintiff. They may assist in speeding up the trial. TIL did not suggest that the interrogatories contained in the notice given are improper or unreasonable. Rather, through its submissions, it indicated that it is preparing evidence which will answer them. I have considered the questions posed in the notice, and there is nothing to me which is obviously improper or unreasonable.
[47]I am satisfied that the various matters set out in r 8.38 are satisfied.
Result
[48] Accordingly, I order TIL to answer the interrogatories contained in the notice given by NZIS and dated 7 June 2019. TIL is to verify its answers by affidavit. The answers are to be provided on or before 23 August 2019.
19 Todd Pohokura Ltd v Exploration NZ Ltd, above n 17 at [16].
20 Lang v Australian Coastal Shipping Commission [1974] 2 NSWLR 70 (SC) at [73].
Costs
[49] NZIS is entitled to costs and disbursements on the application. It is my preliminary view that costs should be fixed on a 2B basis, although I note that there may be an argument that any costs award should be reduced, given that NZIS had to seek the Court’s indulgence. If counsel are unable to agree costs, then I direct as follows:
(a)any memorandum seeking costs is to be filed within 10 working days of the date of this judgment;
(b)any memorandum in reply is to be filed within a further 10 working days;
(c)memoranda are not to exceed five pages in length.
I will then deal with the issue of costs and disbursements on the papers, unless I require the assistance of counsel.
Ancillary matters
[50]There were two ancillary matters raised.
[51] First, I had a brief discussion with counsel regarding the materials to be made available to the Associate Judge who will be considering the documents to be provided by TIL, in respect of which privilege has been claimed. TIL’s solicitors had prepared and filed a table of the submissions TIL proposes should be put before the Associate Judge. TIL maintained that the table is necessary, to enable the Associate Judge to fully understand why privilege has been claimed in respect of some of the documents. NZIS was opposed to this material going before the Associate Judge. As I indicated in my initial minute, I am only prepared to make available to the Associate Judge documents agreed by the parties. Beyond that, it will be for the Associate Judge to determine what materials he or she requires to see, and whether or not he or she needs to hear from counsel. I am not prepared to interfere in that process. I indicated to the parties that I would prepare a minute recording TIL’s desire to make submissions, but
leaving it to the Associate Judge to decide whether or not that is necessary. Both parties agreed that that is appropriate.
[52] Secondly, TIL has filed a notice under r 9.11 objecting to various passages in the evidence of a number of the witnesses NZIS proposes to call. I indicated to counsel that it would be preferable that they should resolve any evidential difficulties between themselves. I noted that I have not seen the briefs of evidence, and that unless the issues are fundamental, it would be my preference to leave any objections to trial.
Wylie J
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