Oceanic Holdings (International) Limited v Air Transport World Freight Limited HC Auckland CIV-2008-404-000751
[2011] NZHC 103
•21 February 2011
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2008-404-000751
BETWEEN OCEANIC HOLDINGS (INTERNATIONAL) LIMITED Plaintiff/Respondent
ANDAIR TRANSPORT WORLD FREIGHT LIMITED
Defendant/Applicant
Hearing: 8 February 2011
Counsel: B R D Cuff for the Plaintiff/Respondent
P Barratt for the Defendant/Applicant
Judgment: 21 February 2011
JUDGMENT OF WOOLFORD J
This judgment was delivered by me on Monday, 21 February 2011 at 11.00am pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors/Counsel:
Jones Fee, DX CP 20539, Auckland 1140.Parker & Associates, PO Box 23270, Wellington 6011.
OCEANIC HOLDINGS (INTERNATIONAL) LIMITED V AIR TRANSPORT WORLD FREIGHT LIMITED HC AK CIV-2008-404-000751 21 February 2011
Introduction
[1] The plaintiff is in the mobile telecommunications business. It claims damages against the defendant, an international freight company, in respect of the loss through fire of 20,000 mobile telephones at a holding yard near Brisbane when the telephones were in transit from Sydney to Port Moresby.
[2] The plaintiff also commenced action against other parties in Queensland – Rancroft Transport Pty Ltd and a truck driver employed by Rancroft, Scott Callen. It reached a settlement in those proceedings and made a net recovery of $444,369.92. It now claims $610,228.10 from the defendant, being the cost of the telephones less the amount received from settlement of the proceedings in Queensland.
[3] The defendant’s solicitor has been provided with a redacted copy of the deed of settlement executed in the Queensland proceedings. It has not been formally discovered. The defendant seeks discovery of the deed and all documents discovered by the defendants in the Queensland proceedings. The defendant’s application for particular and other discovery is opposed by the plaintiff.
Defendant’s submissions
[4] As to the deed of settlement, the defendant submits it should be discovered and produced for inspection because:
(a) It relates to the loss which the plaintiff claims to have suffered;
(b) The deed may contain information which assists the defendant’s case
or damages that of the plaintiff; and
(c) The plaintiff has reduced its claim against the defendant taking into consideration the amount received from the settlement of the Queensland proceedings.
[5] The defendant says it is unable to ascertain from the redacted version of the deed whether the settlement sum included a contribution to legal fees and investigation costs. The defendant says it is entitled to know whether the claim against it should be reduced by the full settlement sum rather than the lesser sum by which the plaintiff has currently reduced it.
[6] In addition, the defendant says that in settling the Queensland proceedings, the plaintiff may have provided releases in favour of the Queensland defendants. The defendant says it is entitled to know whether there are such releases and the terms on which they were given as they may impact on its own liability. The release of one joint tortfeasor releases all the others. The defendant says the facts alleged by the plaintiff make the defendant a joint tortfeasor with the Queensland defendants.
[7] The defendant also submits that it would be usual for a settlement agreement to contain an indemnity by the plaintiff in respect of the settling defendants in relation to any claim that may be brought against those defendants by the present defendant. It says that it has a clear entitlement to claim contribution or indemnity from the Queensland defendants. The existence or otherwise of an indemnity in favour of those parties by the plaintiff it says is relevant to the defendant’s consideration of whether or not to seek contribution or indemnity.
[8] The defendant also seeks discovery of all documents discovered by the defendants in the Queensland proceedings. Although it has acknowledged that there is an implied undertaking on the part of parties who receive documents through discovery not to use those documents for collateral or ulterior purposes it submits that the implied undertaking can in appropriate cases be released or modified by the Court.
[9] The defendant says that the factual and legal issues are the same in both sets of proceedings and include the scope and alleged breach of the duty of care alleged to be owed to the plaintiff. The plaintiff has said that the Queensland defendants were negligent and that the defendant is vicariously liable for that negligence. It concludes by submitting that the release or modification of the undertaking not to
use those documents for collateral or ulterior purposes is necessary to secure the just, speedy and inexpensive determination of the proceedings.
Plaintiff ’s submissions
[10] The plaintiff says that it is clear from the redacted version of the deed of settlement provided to the defendant that it is subject to a confidentiality clause and there is no good or substantial reason why disclosure of the terms of the deed should be made outside of the redacted version already provided.
[11] The plaintiff says that the redacted version of the deed clearly shows that the deed settled all claims against the Queensland defendants which included the plaintiff’s claim for investigation and legal costs incurred in pursuing the Queensland action. It says that it has accordingly made the appropriate amendments to its claim in these proceedings.
[12] As to the existence of an indemnity, the plaintiff says that the existence of such an indemnity is not a relevant purpose for the discovery of a document or good reason to set aside valid claims for confidentiality. The only relevance of a contractual indemnity in a settlement agreement to the defendant would be the creditworthiness of the Queensland defendants. It says that if the defendant wished to make a claim for contribution from the Queensland defendants it could have done so and any indemnity in favour of those parties by the plaintiff does not affect these rights.
[13] In reply to the defendant’s submission that it may be a joint tortfeasor with the Queensland defendants, the plaintiff says that the defendant is a concurrent tortfeasor as opposed to a joint tortfeasor and that there can be no release of concurrent tortfeasors by settlement of separate proceedings as is clearly stated in
Allison v KPMG Peat Marwick.[1]
[1] [2000] 1 NZLR 560 (CA).
[14] The plaintiff points to the difference in the claims made in the New Zealand and Queensland proceedings noting that the claim against the Queensland defendants
was as actual bailees and carriers of the telephones. It says that it is clear from a simple reading of the two pleadings that the causes of action against each of the Queensland defendants and the defendant are separate. In the present case it says that there is a coincidence of separate acts by the Queensland defendants and the defendant giving rise to separate and different causes of action, which by their conjoined effect have caused loss to the plaintiff. Accordingly, the Queensland defendants and the defendant are concurrent tortfeasors.
[15] As to the discovered documents in the Australian proceedings, the plaintiff notes that the implied undertaking not to use discovered documents otherwise than for the purposes of the litigation is acknowledged by the defendant. This is affirmed by the New Zealand Court of Appeal in Wilson v White.[2] The plaintiff says that in accordance with this implied undertaking it has not and cannot discover the Queensland defendants’ documents it received in the Queensland proceedings in these proceedings.
[2] [2005] 3 NZLR 619.
[16] The plaintiff also notes that the defendant does not appear to have taken any steps prior to making application to obtain these documents for itself from the Queensland defendants with whom it has a business/contractual relationship. The plaintiff has no relationship with them apart from having commenced proceedings against them.
[17] While the plaintiff did itself acknowledge that this implied undertaking may be released or modified in approved circumstances, the Court of Appeal in Wilson v White noted the importance of the undertaking.
Legal principles
[18] Where there are grounds for believing that a party to a proceeding has not discovered a document or documents that should have been discovered, r 8.24 of the High Court Rules enables the Court to order the party to file and serve an affidavit
stating whether the document or documents are or have been in the party’s control.
[19] Rule 8.31 enables a party to challenge a claim to privilege or confidentiality made in an affidavit of documents. It provides:
8.31 Challenge to privilege or confidentiality claim
(1) If a party challenges a claim to privilege or confidentiality made in an affidavit of documents, the party may apply to the court for an order setting aside or modifying the claim.
(2) In considering the application, a Judge may require the document under review to be produced to the Judge and inspect it for the purpose of deciding the validity of the claim.
(3) The Judge may—
(a) set aside the claim to privilege or confidentiality; or (b) modify the claim to privilege or confidentiality; or (c) dismiss the application; or
(d) make any other order with respect to the document under review that the Judge thinks just.
[20] There is a trend towards more openness in litigation. As the Court of Appeal noted in General Accident Fire & Life Assurance Corporation Ltd v Elite Apparel Ltd:[3]
Any perceived movements in the law on discovery and inspection of documents are towards the freeing up of the rules with the object that the parties and the Court will have access to as much information as will best ensure the doing of justice consistent with the maintenance of secrecy for what is the other party's brief.
[3] [1987] 1 NZLR 129 at 131
[21] Further, confidentiality on the grounds of commercial sensitivity is not a ground for opposing discovery. The sole test is relevance. Rule 8.20(2)(e) does, however, recognise the prospect of restrictions which can imposed by a Court on the use of confidential documents.
Discussion
[22] As to the deed of settlement, I am advised by the plaintiff’s counsel that there is no further clause in the deed which refers to the quantum of the claim. In those
circumstances, disclosure of the unredacted deed is unnecessary to enable the
defendant to argue that the claim against it should be reduced by the full settlement sum rather than the lesser sum by which the plaintiff has currently reduced it.
[23] The possibility that the unredacted deed may contain an indemnity in respect of the Queensland defendants is also not, in my view, a relevant purpose for discovery of it. I agree with the plaintiff’s submission that the defendant is able to make a claim for contribution from the Queensland defendants and any indemnity given to them does not affect this right.
[24] However, it is the possibility that the unredacted deed contains a release of the Queensland defendants rather than an undertaking not to sue, that is, in my view, decisive on the issue of its discoverability. Plaintiff’s counsel did not advice me whether or not the unredacted deed contained a release. Instead, he argued that the Queensland defendants were concurrent tortfeasors and not joint tortfeasors. However, if they were not concurrent tortfeasors but joint tortfeasors then, of course, a release given to them would release the defendant.
[25] However, I do not propose to determine that issue in an interlocutory application for further and other discovery. In my view, the defendant should have the opportunity at the substantive trial to argue that it is a joint tortfeasor. If it is a joint tortfeasor, it is undoubtedly relevant to the issue of its liability whether or not a release has been given to the Queensland defendants. The unredacted deed is, therefore in my view, relevant and discoverable for that purpose.
[26] As to the documents discovered by the Queensland defendants in the Queensland proceedings, I note the definition of control in r 1.3 of the High Court Rules as follows:
control, in relation to a document, means—
(a) possession of the document; or
(b) a right to possess the document; or
(c) a right, otherwise than under these rules, to inspect or copy the document
[27] McGechan on Procedure[4]is of the view that the r 1.3 scope of possession, right to possess or a right other than under the rules to inspect or copy the document is probably consistent with earlier formulations of ―possession, custody and power‖ of the party. It certainly extends to documents that others are entitled to have in their custody, but in respect of which the party has the lesser entitlement of access to inspect, or copy.
[4] HR8.18.02(1)
[28] In Lonrho Ltd v Shell Petroleum Company Limited,[5] Lord Diplock stated:
the expression "power" must, in my view, mean a presently enforceable legal right to obtain from whoever actually holds the document inspection of it without the need to obtain the consent of anyone else.
[5] [1980] 1 WLR 627
[29] The documents discovered by the Queensland defendants are therefore, in my view, in the control of the plaintiff.
[30] As to their discoverability in the present proceeding, I am persuaded by the fact that the Queensland defendants would have been parties to this proceeding but for an accident of geography. If the loss had occurred in New Zealand, then the plaintiff would undoubtedly have joined them in the present proceedings. If they had not, the defendant would have joined them in any event. If the Queensland defendants were part of the proceedings, the defendant would be entitled as of right to discovery of the relevant documents possessed by them.
[31] The facts of both sets of proceedings are the same and it would be artificial to try and separate them. It is in the interests of justice that consistent results be arrived at in both sets of proceedings. If it is necessary to do so, I release the plaintiff from the implied undertaking that the discovered documents are not to be used for collateral or ulterior purposes. Such a release would not occasion injustice to the Queensland defendants. They have settled the claim brought against them by the
plaintiff.
Decision
[32] In its application dated 22 September 2010, the defendant, although not referring to r 8.31, seeks orders requiring the plaintiff produce for inspection the unredacted copy of the settlement agreement and setting aside the plaintiff ’s claim to confidentiality in relation to it. Further, the application specifically seeks an order requiring the plaintiff to file and serve an affidavit stating whether the documents discovered by the Queensland defendants are, or have been, in the plaintiff ’s control.
[33] I, therefore, make the following orders:
(a) The plaintiff is to produce for inspection a complete and unredacted copy of the settlement agreement dated 11 June 2010 referred to in para 20 of the amended statement of claim. The plaintiff ’s claim to confidentiality in relation to the unredacted settlement agreement is set aside but only to the extent of dissemination to the defendant and its counsel. The defendant is not to disseminate the unredacted settlement agreement any further.
(b)The plaintiff is to file an affidavit stating whether the following documents are, or have been, in the plaintiff’s control and, if they have been but are no longer in the plaintiff ’s control, the plaintiff’s best knowledge or belief as to when the documents ceased to be in the plaintiff’s control and who now has control of them and to serve the affidavit on the defendant.
All documents discovered by Rancroft Transport Pty Ltd and
Scott Callen in the Queensland proceedings. [34] Costs are reserved.
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Woolford J
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