NZX Limited v Ralec Commodities Pty Limited

[2015] NZHC 1130

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2011-485-1299 [2015] NZHC 1130

BETWEEN

NZX LIMITED

Plaintiff/First Counterclaim Defendant

AND

RALEC COMMODITIES PTY LIMITED First Defendant/First Counterclaim Plaintiff

RALEC INTERACTIVE PTY LIMITED Second Defendant/Second Counterclaim Plaintiff

GRANT DAVIS THOMAS Third Defendant

GRANT THOMAS NOMINEES PTY LIMITED

Fourth Defendant

DOMINIC LUKE PYM Fifth Defendant

PYM FAMILY PTY LIMITED Sixth Defendant

NZX HOLDING NO 4 LIMITED Second Counterclaim Defendant

MARK RHYS WELDON Third Counterclaim Defendant

On papers
Judgment:	25 May 2015

SUPPLEMENTARY JUDGMENT OF DOBSON J (Ralec claim to litigation privilege)

NZX LTD v RALEC COMMODITIES PTY LTD [2015] NZHC 1130 [25 May 2015]

[1]      At [82] to [102] of my 23 February 2015 judgment, I determined most of a challenge brought by NZX to Ralec’s claim for litigation privilege in respect of certain categories of documents.

[2]      I was not adequately informed to make a decision in respect of documents for which litigation privilege was claimed in the period between March and November

2010. I accordingly directed Ralec to provide copies of those documents for my consideration.  At that stage, the nature and quantity of the documents had not been specified.

[3]      On 24 April 2015, Ralec’s solicitors delivered to the Registry two substantial volumes containing 124 documents that fell within the category I had indicated I should consider.

[4]      I have now considered all of those documents, and in light of their content have also reconsidered the affidavits filed by Messrs Thomas and Pym in support of Ralec’s claim for litigation privilege.

[5]      As with other aspects of the disputes over discovery in these proceedings, there is a risk that resources committed to detailed analyses on such points will be disproportionate to the materiality of the issues in dispute.   In resolving this last aspect  of  the  claim,  the  further  analysis  is  to  be  read  in  conjunction  with  the reasoning in my February judgment.

[6]     In that judgment, I noted the unusually long lapse between initial communications that raised some prospect of litigation, and the subsequent commencement  of  litigation  which  was  some  15  months  in  the  case  of NZX’s claims, and 20 months in the case of Ralec’s counterclaim.

[7]      To sustain the claim for litigation privilege in relation to the documents, I have to be satisfied that the dominant purpose for preparing each document was to prepare for an existing or apprehended proceeding.1    That is a question of fact.2    I

have considered the content of each of the documents in light of the claim for Ralec

1      Evidence Act 2006, s 56, cited at [83] of my 23 February 2015 judgment.

2      See Fresh Direct Ltd v J M Batten and Associates (2009) 20 PRNZ 126 (HC) at [48].

that this was its dominant purpose, and in light of the context provided by Messrs

Thomas and Pym’s affidavits.

[8]      A substantial majority of the documents are communications between Messrs Thomas and Pym after Mr Thomas had ceased to be an executive working for the businesses  from  23 April  2010,  and  was  therefore  excluded  from  the  on-going planning and debates as to how they were to be developed.   To the extent that Mr Thomas made suggestions for communications of this type issuing in Mr Pym’s name, Mr Thomas’s contributions were consistent with the intentions evident from the  terms  of  Mr Pym’s  draft.    First,  to  record  the  quality  of  the  efforts  being undertaken by Ralec personnel in developing the businesses; and secondly to signal what resources they considered NZX should be committing to fund and provide for appropriate developments.

[9]      I have made  every allowance  for the few documents  in April  2010  that implicitly recognised  that  Ralec  might  have  to  enforce  its  contractual  rights  to financial and other support from NZX to optimise the prospects for further consideration under the sale and purchase agreement.  This involved an unstated aim of creating a document trail that might later be useful in such a claim against NZX. Mr Pym placed particular reliance on a document headed “Key legal strategy points”

prepared in mid-April 2010.3     Even so, I cannot be satisfied that the dominant

purpose of the exchanges thereafter was to prepare for apprehended litigation.

[10]     None of the documents in question refer to the prospect of court proceedings. Their terms consistently reflect an intention to pressure NZX to perform what Ralec perceived to be NZX’s on-going contractual obligations, rather than alleging that NZX was in default.   There is nothing in the nature of a letter before claim that conventionally precedes the commencement of proceedings.  By November 2010, at the end of the period in which the documents were created, NZX’s proceedings were

still seven months away and Ralec’s counterclaim was 13 months away.

3 Affidavit of Dominic Luke Pym, affirmed 19 December 2014 at [52].

[11]     I dealt in my February judgment with the single NZX document in this period that went closest to putting Ralec on notice of its intention to sue.4    None of the documents that I have now inspected advance that prospect.

[12]     I have upheld the claim to litigation privilege in respect of four documents created  between  15  and  27 April  2010  (RACD.00108.00,  00088.00,  00111.00,

00112.00 and 00112.01).  They can be categorised as scoping documents focusing on the extent of the vendor’s rights under the contract and steps that might be taken to enforce such rights by action against NZX.  I am mindful that they provide a context for all the later documents, and might arguably colour the nature of those later documents.

[13]     However, that argument is not open to Ralec.  The purpose of the subsequent documents clearly reflect a different purpose, namely to encourage co-operation and support by NZX, without threatening proceedings if it is not forthcoming.

[14]     I have upheld privilege in one note on the terms of the sale and purchase agreement (RACD.00188.02), but disallowed the privilege claim in respect of two other notes comprising extracts from the sale and purchase agreement (RACD.00191.03 and RACD.00072.00).   The latter two notes do not include comments relevant to attempts to enforce rights under the agreement, whereas the first note does.

[15]     I have set out in a schedule attached to this judgment those documents in respect of which I uphold the claim to litigation privilege by reference to the tab numbers in the folders provided to me, and their discovery document  ID.   The remainder of the documents in those folders are to be discovered on behalf of Ralec

on an open basis.

Solicitors:

Bell Gully, Wellington for plaintiff and counterclaim defendants

Duncan Cotterill, Wellington for defendants and counterclaim plaintiffs

Dobson J

4      At [94]–[97].

Schedule

Tab No	Discovery Document ID No
4	RACD.00108.00
5	RACD.00088.00
7	RACD.00111.00
8	RACD.00112.00
9	RACD.00112.01
77	RACD.00188.00
79	RACD.00188.02
83	RACD.00071.00
84	RACD.00187.00
96	RACD.00053.00
99	RACD.00206.00
100	RACD.00039.00
101	RACD.00207.00
108	RACD.00209.00