NZH Limited v Ramspecs Limited
[2015] NZHC 2396
•1 October 2015
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2014-404-2563 [2015] NZHC 2396
BETWEEN NZH LIMITED
First Plaintiff
TRANSPORT HYDRAULIC SOLUTIONS NZ LIMITED Second Plaintiff
TRANSPORT HYDRAULIC SOLUTIONS (GLOBAL) NZ LIMITED Third Plaintiff
AND
RAMSPECS LIMITED First Defendant
GAVIN BROKENSHIRE Second Defendant
R A MCLEAY Third Defendant
NUPHLO PUMPS LIMITED Fourth Defendant
Hearing: 14 August 2015 Appearances:
C L Elliott QC and B R Webster for Plaintiffs H L Thompson for First to Third Defendants S Aymeric for Fourth Defendant
Judgment:
1 October 2015
JUDGMENT OF M PETERS J
This judgment was delivered by Justice M Peters on 1 October 2015 at 5 pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date: ...................................
NZH LIMITED v RAMSPECS LIMITED [2015] NZHC 2396 [1 October 2015]
[1] This judgment determines whether documents in the control of the Plaintiffs
(“NZH”) and the Fourth Defendant (“Nuphlo”) are privileged.
[2] The particular issue which arises is whether the privilege provided for in s 56
Evidence Act 2006 (“Act”), referred to as “litigation privilege”, survives the determination of the proceeding which gave rise to the privilege in the first instance.
[3] NZH and Nuphlo have asserted that Nuphlo has “litigation privilege” in documents prepared for the dominant purpose of an earlier proceeding brought by Nuphlo against the First to Third Defendants (“Ramspecs”, “Mr Brokenshire” and “Mr McLeay”, together the “Defendants”) and others (“Nuphlo’s proceeding”).
[4] The Defendants submit that such privilege came to an end when Nuphlo discontinued its proceeding in October 2014.
[5] For reasons set out below, I consider that Nuphlo continues to have litigation privilege in the relevant documents. That said, I am not satisfied that the privilege has properly been claimed in respect of all documents sought to be withheld and I make directions as to that matter at the end of this judgment.
Background
[6] Nuphlo designs and manufactures pumps. NZH designs and supplies hydraulic systems which incorporate those pumps. The two companies enjoy a close relationship and, although a defendant to this proceeding, Nuphlo is supportive of NZH’s case.
[7] The Defendants are in competition with NZH.
[8] Nuphlo commenced its proceeding in February 2014, alleging breach of copyright and breach of confidence. The parties settled that proceeding in October
2014, following which Nuphlo discontinued.
[9] Nuphlo is a party to this proceeding because s 124(1) Copyright Act 1994
(“Copyright Act”) provides:
124 Exercise of concurrent rights
(1) Where proceedings for infringement of copyright brought by the copyright owner or an exclusive licensee relate (wholly or partly) to an infringement in respect of which the copyright owner and the exclusive licensee have concurrent rights of action, the copyright owner or, as the case may be, the exclusive licensee may not, without the leave of the court, proceed unless the other is either joined as a plaintiff or added as a defendant.
[10] Had Nuphlo complied with s 124, NZH would have been joined as a party to Nuphlo’s proceeding. Although Mr Messenger of Nuphlo describes s 124 as a “procedural formality” and complains that Nuphlo must participate in this litigation, in fact s 124 is intended to avoid a multiplicity of proceedings – the very thing the Defendants, and the Court, now face.
[11] At about the time the parties settled Nuphlo’s proceeding, NZH commenced this one.1 In those circumstances, the Defendants are suspicious of collusion between NZH and Nuphlo and whether NZH and Nuphlo “staggered” their proceedings to cause maximum inconvenience and cost to the Defendants, ie that this proceeding is an abuse of the process of the Court. NZH and Nuphlo deny that this is the case.
NZH’s case
[12] NZH’s case against the Defendants is that:
(a) at all material times Nuphlo has owned copyright in its pumps and
NZH in its systems; and
(b)at all material times the First and Second Plaintiffs have been the exclusive distributor, and the First and Third Plaintiffs the exclusive master licensee, of Nuphlo products (including the pumps) in New Zealand; and
(c) the Defendants have infringed copyright; have breached a duty of confidence owed to NZH; and that the Defendants, or any two of
them, have conspired against the Plaintiffs and implemented that
conspiracy by unlawful means.
Discovery
NZH
[13] On 5 February 2015, and by consent, I ordered NZH and the Defendants to give “standard discovery”. Standard discovery requires a party to disclose documents that are or have been in its control and which otherwise meet the criteria in High Court Rules, r 8.7.
[14] NZH’s director, Mr Lyons, has sworn two affidavits of documents, one of
23 March 2015 and an amended affidavit of 16 April 2015. In the second of these affidavits, Mr Lyons claims privilege as follows:2
1 [NZH] object to producing the documents listed in Part 2 … on the
grounds that they are privileged ...
(b) Documents marked 2 consist of:
...
(iii) Communications between [NZH], third parties and
[Nuphlo]; or
(iv) Communications between [NZH’s] solicitors, third
parties and counsel for [Nuphlo]; or
...
(vii) Communications between parties with a common interest; and
(viii) Were made after litigation was in contemplation for the dominant purpose of enabling [NZH or its solicitors] to assist in the preparation or conduct of contemplated or existing litigation.
[15] The documents are said to be dated between 25 November 2013 and 8 April
2015.
Nuphlo
[16] I ordered Nuphlo to give tailored discovery of drawings, correspondence and other documents relating to the design of various pumps.
[17] Mr Messenger of Nuphlo has also sworn two affidavits. Neither complies with r 8.16(1) and neither refers to documents for which Nuphlo claims privilege.
[18] The service of the affidavits of documents led to correspondence between the parties and ultimately to the application presently before the Court. By that application, the Defendants seek two orders against Nuphlo. The first is an order declaring that any privilege Nuphlo had in respect of communications or information prepared (etc) for the dominant purpose of its proceeding ended on 16 October 2014 when the case settled. The second is an order requiring Nuphlo to provide standard discovery of those communications or that information. Although these orders are sought pursuant to r 8.25, which allows a party to challenge a claim for privilege, Nuphlo has not in fact made any such claim because its affidavits simply do not address the matter.
[19] Accordingly, it was agreed at the hearing that the Defendants’ application should be amended to seek an order requiring Nuphlo to give discovery of documents subject to litigation privilege in its own proceeding and an order setting aside any claim for litigation privilege made by NZH in respect of the same documents.
Section 56
[20] The relevant parts of s 56 provide:
56 Privilege for preparatory materials for proceedings
(1) Subsection (2) applies to a communication or information only if the communication or information is made, received, compiled, or prepared for the dominant purpose of preparing for a proceeding or an apprehended proceeding (the “proceeding”).
(2) A person (the “party”) who is, or on reasonable grounds contemplates becoming, a party to the proceeding has a privilege in respect of—
(a) a communication between the party and any other person:
(b) a communication between the party's legal adviser and any other person:
(c) information compiled or prepared by the party or the party's legal adviser:
(d) information compiled or prepared at the request of the party, or the party's legal adviser, by any other person.
[21] The principal points which appear from s 56 are:
(a) it is the party to the proceeding (actual or reasonably apprehended) that has the privilege, ie Nuphlo in the context of its proceeding and NZH in the context of this proceeding;
(b)the privilege is in a communication between, or information compiled by or at the request of, the parties referred to in s 56(2);
(c) the communication or information must be made, compiled etc for the dominant purpose of the proceeding, actual or apprehended.
[22] “Proceeding” and “court” are defined in s 4 of the Act:
proceeding means—
(a) a proceeding conducted by a court; …
(b) …
court includes the Supreme Court, the Court of Appeal, the High Court, and any District Court
[23] As I have said, the Defendants submit that litigation privilege in a communication or in information ceases when the litigation giving rise to the privilege terminates.3 This proposition derives from a decision of the Supreme Court of Canada, Blank v Canada (Minister of Justice).4 The rationale for the decision is that the need for privacy in the communication ceases on conclusion of the litigation,
and so does the privilege.
3 Reid v New Zealand Fire Service Commission [2010] NZCA 133, (2010) 19 PRNZ 923;
Osborne v Worksafe New Zealand [2015] NZHC 264, [2015] NZAR 293 at [20].
4 Blank v Canada (Minister of Justice) [2006] 2 SCR 319.
[24] As to when litigation can be said to conclude or terminate, and this is important in the present case, in Blank the Court said that the privilege would continue while “litigants or related parties remain locked in what is essentially the same legal combat”.5 This combat includes “separate proceedings that involve the same or related parties and [which] arise from the same or a related cause of action
... Proceedings that raise issues common to the initial action and share its essential
purpose would in my view qualify as well”.6
[25] This is important in the present case because I consider the present proceeding and Nuphlo’s proceeding to be part of the “same legal combat” in the sense referred to in the passage I have quoted. The proceeding involves largely the same parties, issues and purpose.
[26] Accordingly, even on Blank, Nuphlo’s privilege would subsist in the present litigation and I am not able to make the orders the Defendants seek.
[27] This makes it unnecessary for me to discuss in any detail the parties’ helpful submissions as to whether Blank does represent the law in New Zealand, and the various authorities to which counsel referred.7 I shall mention only those matters which might be helpful to anyone reading this judgment in the future.
[28] First, the two most significant New Zealand authorities which discuss Blank are Reid v New Zealand Fire Service Commission and Houghton v Saunders.8 In Reid the Court of Appeal granted Mr Reid leave to appeal on this question of law:9
... does litigation privilege come to an end when the proceeding that gave rise to it and any related proceedings are complete.
[29] Nothing came of that however, because Mr Reid did not pursue the point.
5 At [34].
6 At [39].
7 Osborne v Worksafe New Zealand, above n 3; A v Attorney-General [2009] NZCA 490; Snorkel
Elevating Work Platforms Ltd v Thompson HC Palmerston North CIV-2005-454-847, 5 April
2007; Reid v New Zealand Fire Service Commission, above n 3; and Houghton v Saunders[2013] NZHC 1824.
8 Reid v New Zealand Fire Service Commission, above n 3; and Houghton v Saunders, above n 7.
9 Reid v New Zealand Fire Service Commission, above n 3, at [19].
[30] In Houghton v Saunders, French J said that she agreed with the rationale underlying Blank but recognised the qualification as to when litigation is to be taken as terminating for the purpose of litigation advice privilege:10
[21] I agree with the rationale explained in Blank for the distinction between the two forms of privilege. Conceptually, a privilege recognised because of the need for a “zone of privacy” while proceedings are on-going comes to an end when the proceedings do. However, that proposition must, in the interests of justice, be subject to an exception where there is a relevant connection between one set of proceedings and another, whilst the other litigation continues. If the subject matter is sufficiently inter-related, the litigation strategy in one set of proceedings will have a bearing on the litigation strategy in the others. It would frustrate the purpose of litigation privilege if it was brought to an end when either of the proceedings terminated, thereby breaching the “zone of privacy” reasonably expected in the on-going proceedings. ...
[31] Secondly, counsel for NZH rejected the submission that Blank represents the law in New Zealand. Counsel submitted that, in New Zealand, the maxim “once privileged, always privileged” applies. Certainly that appears to be the rule in England, as appears in Phipson on Evidence:11
As privilege is a substantive right, if the circumstances of the creation of the document are such as to attract privilege, whether legal advice or litigation privilege, privilege will be an answer to any subsequent request for the document, whether in proceedings or otherwise. The principle “once privileged always privileged” applies. This means that if a document is privileged in one action, the party entitled to assert that privilege or his successor in title may assert the same privilege in a subsequent action in which the document is relevant. There is no requirement of identity or substantial identity of the subject-matter in the different proceedings.
[32] Thirdly, neither the Defendants nor NZH made submissions as to how the Act falls to be interpreted on this particular issue. However, most if not all of the “privilege” provisions in the Act – ss 54, 56, 57, 58, 59 and 60 – provide that a party “has” a privilege in the subject matter and s 53, which provides for enforcement, does not suggest that the privilege ceases.
Further matters
[33] I turn now to the point I mentioned at the outset which is that I am not wholly convinced that all the documents said to be privileged are privileged in fact. For
instance, in an affidavit in opposition sworn on 25 June 2015,12 Mr Lyons for NZH suggests that documents have been withheld because they are confidential or are “updates” or “enquiries”. Mr Messenger’s brief affidavit in opposition suggests that the documents or some of them merely reflect the close relationship between the two companies.13
[34] I ask the case officer to convene a telephone conference with counsel next week to determine whether the Defendants wish to pursue the matters I have mentioned in [33] and, if so, how best to do so. One option would be for counsel for NZH and Nuphlo to undertake a review all documents to ensure that privilege has been properly claimed and to advise if not. If that exercise were to be undertaken, documents, if any, relevant to the Defendants’ “collusion” argument, which NZH and Nuphlo deny, could be identified.
Conclusion
[35] Such litigation privilege as Nuphlo had in communications or information prepared, compiled etc for the dominant purpose of its proceeding against the Defendants continues. I decline to make the orders sought by the Defendants. I ask the case officer to convene a conference with counsel early next week to discuss the matters referred to in [34] above. Matters of costs are also to be discussed at that conference.
..................................................................
M Peters J
Solicitors: Morgan Coakle, Auckland
McMahon Butterworth Thompson, Auckland
James & Wells, Auckland
Counsel: C L Elliott QC, Auckland
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