Phillimore Imperial Limited v St John's College Trust Board
[2018] NZHC 2145
•21 August 2018
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2016-404-3288
[2018] NZHC 2145
UNDER The Declaratory Judgments Act 1908 IN THE MATTER
of the renewal of memorandum of lease L C77194.2
BETWEEN
PHILLIMORE IMPERIAL LIMITED
Plaintiff
AND
ST JOHN’S COLLEGE TRUST BOARD
Defendant
Hearing: 17 May 2018 Counsel:
JG Miles QC and JK Stewart for plaintiff L McEntegart and CL Bryant for defendant
Judgment:
21 August 2018
JUDGMENT OF FITZGERALD J
[Review of Associate Judge’s decision]
This judgment was delivered by me on 21 August 2018 at 2 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: MinterEllisonRuddWatts, Auckland
Hesketh Henry, Auckland
Phillimore Imperial Limited v St John’s College Trust Board [2018] NZHC 2145 [21 August 2018]
Introduction
[1] Phillimore Imperial Ltd (Phillimore) applies for review of Associate Judge Christiansen’s judgment dated 21 November 2017 in which he ordered Phillimore to give discovery of various categories of documents.1
[2] The underlying proceedings concern the proper interpretation of a ground lease of which St John’s College Trust Board (St John’s) is lessor and Phillimore is lessee, and the scope of certain lessee’s works with reference to that lease.
[3] In summary, over the period 2010 to 2011, Phillimore carried out works to buildings erected on the leased land, in conjunction with works to buildings located on adjacent freehold property owned by Phillimore. Under the lease, rent reviews are to be carried out every 21 years. If, however, Phillimore undertakes a “major redevelopment” of the buildings on the leasehold land, then rent reviews are to be carried out every seven years. The parties disagree on whether the works carried out by Phillimore are a “major redevelopment”.
[4] Phillimore commenced these proceedings in 2016, seeking declaratory relief in relation to the proper interpretation of the lease and its application to the works it undertook. The parties were ordered to give standard discovery and did so. St John’s was dissatisfied with the discovery given by Phillimore. In August 2017, it filed an application for particular discovery, seeking orders that Phillimore discover various categories of documents St John’s says are relevant to issues arising on the pleadings. In his judgment, Associate Judge Christiansen granted all the discovery orders sought by St John’s.
[5] Phillimore says the Associate Judge was wrong to make the orders he did because they are contrary to relevant principles governing discovery. In particular, Phillimore says the documents to be discovered are not relevant to the issues to be determined at trial and much of the discovery ordered is disproportionate in any event.
1 Phillimore Imperial Ltd v St John’s College Trust Board [2017] NZHC 2854.
Background – more detail
[6] Phillimore leases land from St John’s pursuant to a lease executed on 23 November 1993. The leased land is at 44 Queen Street. The buildings on the leasehold land are called the Imperial Building and the Boathouse. Phillimore also owns adjacent land at 48–56 Queen Street. The Imperial Building straddles both the leasehold and freehold land, while the Boathouse is located entirely on the leasehold land. A third building owned by Phillimore, the “Everybody’s Building,” is located on the adjacent freehold land at 56 Queen Street.
[7] In 2010 to 2011, Phillimore undertook what it refers to as a “restoration and refurbishment project” of the Imperial Building, the Boathouse and the Everybody’s Building. Phillimore defines its position on the scope, timeframe, cost and purpose of the restoration project in its statement of claim as follows:
(a)Over 2010-2011, it undertook a restoration project that involved refurbishing the Imperial Building, the Boathouse and the Everybody’s Building, and reinstating a thoroughfare between Queen Street and Fort Lane called “Imperial Lane” (collectively defined in the claim as the “restoration project”). (Paragraph 31)
(b)The contract price for the restoration project was $7.3 million, with additional consultant’s costs of approximately $2.7 million. (Paragraph 33)
(c)The works did not involve a major demolition and re-build on the leasehold land, and in summary, the works undertaken to the half of the Imperial Building located on the leasehold land and to the Boathouse involved:
(i)refurbishment of the existing circulation and service core, including replacement of the existing lift, main stairs and toilet facilities with new;
(ii)demolition of the existing basement carpark ceiling to create a new ramp accessing Fort Lane and improved access to the existing basement;
(iii)external alterations to the Fort Lane façade of the Boathouse giving access to Imperial Lane, which effectively reinstated an original food hall (circa 2000) and shopping arcade that used to give access from Queen Street through to Fort Lane;
(iv)replacement of two existing floors in the Boathouse to comply with Building Code seismic standards as the originals were deemed structurally unsound;
(v)installation of two sash-type windows on the northern façade of the Imperial Building at Level 6; and
(vi)general interior refurbishment including some removal of existing carpet, underlay and sheets of gib board to expose original brickwork and masonry.
(Paragraph 35)
(d)The principal purposes of the restoration project were to preserve the structural integrity of the buildings, and to improve access and circulation around them. As a result, the claim pleads that the buildings themselves are not substantially different to their original state, rather their various parts are have become more accessible. (Paragraph 37)
[8] Phillimore seeks a declaration that “the works carried out by Phillimore to the buildings [on the leasehold land] do not constitute a ‘major redevelopment of the buildings erected on the said land’ as that term is used in clause 20 of the lease”.
[9] In broad terms, St John’s denies these aspects of the statement of claim, including, in relation to paragraphs 33 and 35, on the basis of having insufficient knowledge of the matters pleaded.
[10] In its submissions on review, Phillimore refers to the works described in paragraph 35 of the statement of claim as the “base build works”. It further says in its submissions that tenancy fit-out works (namely interior works after the base build construction) do not form part of the restoration project. For that reason, tenancy fit- out works do not form part of the scope of works pleaded in the statement of claim.
[11] On 4 May 2017, Associate Judge Sargisson made an order for standard discovery in accordance with High Court Rule 8.7. As noted earlier, St John’s was not satisfied with the discovery given by Phillimore, which largely comprised the documents and information from the Auckland Council file concerning the works — applications for resource consent, demolition consent, building consents and code of compliance certificates. As a result, by application dated 25 August 2017, St John’s sought 16 categories of documents by way of further discovery from Phillimore. A schedule setting out those categories of documents is attached to this judgment.
[12] Without prejudice to its position on the review, and maintaining its position that the documents are not strictly discoverable under the High Court Rules, Phillimore has nevertheless discovered or otherwise responded to several of the categories of documents sought. It is necessary therefore to deal only with the categories which remain in dispute.
The Associate Judge’s judgment
[13] Associate Judge Christiansen’s judgment was delivered at a time when the substantive hearing in this matter was fast approaching.2 It is most likely for that reason that, while setting out the background to the claim, the substance of each party’s application3 and the factual issues for consideration on the proceedings, the Associate Judge then moved directly to his conclusions on each of the discovery applications. For example, in the context of St John’s application, and while recognising that the discovery sought was “extensive”,4 other than stating that “the Court is satisfied there is proper reason to justify discovery to the extent sought,” the judgment contains no
2 It was subsequently adjourned and now has a substantive fixture in February 2019.
3 Phillimore had also filed an application for particular discovery by St John’s; Associate Judge Christiansen’s decision on that application is not, however, pursued by Phillimore on review.
4 Phillimore Imperial Ltd v St John’s College Trust Board [2017] NZHC 2854 at [14].
separate reasoning or analysis as to why the Associate Judge considered the relevant discovery ought to be given. While that is understandable (given the impending substantive hearing and the desire to ensure the parties had a prompt result), it hampers this Court’s approach on review. In short, there is no basis upon which to ascertain why the Associate Judge reached the conclusions he did.
[14] Ultimately, and by reference to the Schedule attached to this judgment, Associate Judge Christiansen ordered Phillimore to give discovery of items 1, 4, 5, 10, 11, 12, 13, 14, 15 and 16.5 The Associate Judge also ordered Phillimore to discover:6
(a)supporting documentation referred to in the contract instructions issued by Phillimore’s engineers or project managers (forming part of item 8);
(b)the “documents referred to in ATC243 and Schedule D to the amended 2011 construction contract” (being part of item 9, namely 9(i)); and
(c)details of any separate contractors used on the project including the scope of works and costs paid to those contractors (also forming part of Item 9, namely 9(ii)).
[15]The matters remaining in dispute are items 5, 8, 9(i), 9(ii), 11, 14 and 15.
Phillimore’s overarching concern and St John’s response
[16] I have addressed below each of the disputed discovery categories and summarised the parties’ respective positions in relation to them. For present purposes, I summarise Phillimore’s overarching concern in relation to the discovery ordered by the Associate Judge and St John’s response.
[17] In summary, Phillimore says that given the issues arising on the pleadings, the Court determining its claims will simply need to know the state of the buildings before Phillimore’s works (as pleaded) and the state of the buildings after those works. Having ascertained those factual matters, it will then be a question of interpreting cl 20
5 At [15].
6 At [16](d) and (e).
of the lease (a legal issue), and then assessing whether the works in fact carried out by Phillimore constitute a “major redevelopment” for the purposes of the lease.
[18] Mr Miles QC, counsel for Phillimore, explains that a key ground of Phillimore’s objection to St John’s discovery requests, and the Associate Judge’s orders, is that documents relevant to what happened to the buildings “on the way through” the construction process are not relevant to the issues the Court will need to determine. Taking a very simple (and hypothetical) example, if the pleaded “works” involved placing a new wall in one aspect of the building, Mr Miles submits that the individual steps taken by the builder to bring about that new wall are not relevant to whether a “major redevelopment” has taken place. Rather, it is only the end result, namely the fact there is now a new wall, which is relevant. Nor, says Mr Miles, is the cost to install the new wall relevant. One builder might be cheap; another may be expensive. Again, only the end result, that there is in fact a new wall, is what the Court would need to consider when assessing whether a “major redevelopment” had occurred.
[19] Mr Miles also submits that construction projects give rise to large volumes of documents, including in relation to the detailed construction steps. Proportionality concerns are therefore particularly acute in a case such as this.
[20] Mr Miles further submits that the fact St John’s has pleaded a bare denial in response to many aspects of the pleaded claim cannot itself give rise to an obligation to discover documents which are ultimately not required to determine the issues arising on the claims. For example, St John’s had denied Phillimore’s pleading at paragraph 35 of the statement of claim about what the works actually involved. It has not, however, advanced an alternative view as to what works should be taken into account when assessing whether a “major redevelopment” has been carried out (for example, whether internal tenancy fit-outs ought to form part of the works to be considered). As a result, Phillimore says while it is put to proof in demonstrating those pleaded works actually came about, St John’s bare denial cannot require Phillimore to go further and give voluminous discovery of precisely how the works came about (not being relevant to the issues for determination), or to give discovery of matters not arising on the pleadings, such as tenancy fit-outs.
[21] St John’s, on the other hand, emphasises that discovery is an essential part of civil procedure. It ensures both parties have access to documents necessary for the pursuit or defence of their case. St John’s says this is particularly important in a case such as this, where the information relevant to the issues in dispute is largely held by Phillimore rather than St John’s.
[22] In response to the pleading point raised by Phillimore, Mr McEntegart, counsel for St John’s, submits that as Phillimore has not pleaded a “private dictionary” meaning of the concept “major redevelopment” (for example, that it is limited to physical changes to the fabric of the building), it is not required to respond with its own pleaded interpretation of that concept.7 Rather, St John’s submits that, based on evidence from a property investment manager filed in support of its application, matters such as the cost of a redevelopment, together with changes in income, use and vacancy rates, are “indicia” of whether a major redevelopment has come about. It says those matters are simply common sense. St John’s accordingly frames one of the issues to be determined at trial as “how the buildings have changed in terms of their functionality, use, value and any other relevant measures”. Associate Judge Christiansen adopted St John’s framing of the issues for determination, including this particular issue. St John’s notes that many of the categories of documents it seeks are directed to this issue.
[23]St John’s further submits:
The plaintiff is entitled to argue that only “base build” costs [or works] are relevant to the issue of whether there has been a major redevelopment. However, the defendant is entitled to the information necessary to contest this argument, should it choose to do so. Withholding the information altogether, to prevent the defendant from contesting the plaintiff’s pleaded factual points of reference for determining whether its works constituted a major redevelopment, is inimical to the discovery process and the interests of justice.
Approach to review
[24] Despite the Senior Courts Act 2016 coming into force on 1 March 2017 (pursuant to which challenges to Associate Judges’ decisions are now by way of appeal
7 High Court Rules 2016, r 5.19.
to the Court of Appeal),8 review by a High Court Judge of an Associate Judge’s decision made in chambers remains available in proceedings commenced prior to the Act coming into force.9 It is for that reason Phillimore’s challenge to Associate Judge Christiansen’s decision proceeds by way of review rather than appeal.
[25] Pursuant to (former) r 2.3(4)(a), the review proceeds as a rehearing.10 The starting point is of course the decision being reviewed itself. The Court on review will nevertheless form its own view of the merits, though Phillimore accepts that it has the burden of persuading the Court that the Associate Judge was wrong, the judgment under review rested on insupportable findings of fact or that it applied the wrong principles of law.11
[26] As Phillimore submits, and I accept, the fact Associate Judge Christiansen did not record any detailed reasons or analysis for the conclusions he reached does not mean the decision under review is to be ignored. But it will mean the presumptive weight to be attached to the judgment will be lessened, and may well be minimal.12
Approach to discovery
[27] Relevance is central to discovery. As observed by Kós J in Robert v Foxton Equities Limited, “[a] document should be discovered if it is relevant to matters which will actually be in issue before the Court.”13
[28] St John’s application was for particular discovery. In Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd, Asher J set out a four-step analysis for such an application, requiring the Court to ask the following four questions:14
8 Senior Courts Act 2016, s 27.
9 Schedule 5, cl 11(2) and (3)(b). See also Sutcliffe v Tarr [2017] NZCA 360, [2018] 2 NZLR 92.
10 High Court Rule 2.3(4) provides that the review proceeds by way of a rehearing when the decision being reviewed was made “following a defended hearing and is supported by documented reasons”. Associate Judge Christiansen’s decision was made following a defended hearing, and is set out in his written judgment. And although there is a paucity of reasons or analysis for the conclusions he reached, neither party suggested this took the review into a “full rehearing” for the purposes of r 2.3(5).
11 Grey District Council ex parte Banks [2017] NZHC 1110 at [12]; Shirley v Wairarapa District Health Board [2006] NZSC 63, [2006] 3 NZLR 523 at [15].
12 Wilson v Neva Holdings Ltd [1994] 1 NZLR 481 (HC) at 485.
13 Robert v Foxton Equities Ltd [2014] NZHC 726, [2015] NZAR 1351 at [8].
14 Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd [2015] NZHC 2760, [2018] NZAR 600 at [14].
(a)Are the documents sought relevant, and if so how important will they be?
(b)Are there grounds for belief that the documents sought exist? This will often be a matter of inference. How strong is that evidence?
(c)Is discovery proportionate, assessing proportionality in accordance with Part 1 of the Discovery Checklist in the High Court Rules?
(d)Weighing and balancing these matters, in the Court’s discretion applying r 8.19, is an order appropriate?
[29] An order for particular discovery is made to compel discovery of documents that “should have been discovered”.15 The parties were ordered in this case to give standard discovery. Standard discovery requires each party to disclose documents that are or have been in that party’s control and that are relied on by that party or adversely affect that party’s case, or that support or adversely affect another party’s case (the “adverse documents test”). As such, whether the documents “should have been discovered” will ordinarily be determined by reference to the adverse documents test (or any stricter obligation imposed by tailored discovery).16
[30] Finally, the adverse documents test will also be governed by issues of relevance to matters arising on the pleadings: the parties’ respective “cases” will, after all, be determined or framed by the pleadings.
Analysis
What are the issues arising on the pleadings?
[31]As the pleadings presently stand, the following key issues arise:
(a)First, what works were actually carried out by Phillimore to the buildings located on the leasehold land?; and
(b)Second, did those works amount to a “major redevelopment”?
[32] As noted earlier, Phillimore pleads (at paragraph 35 of the statement of claim) the scope of the works it says were carried out (works occurring within the existing
15 High Court Rules 2016, r 8.19 (which was in the same form when the proceedings were filed).
16 Lighter Quay Residents’ Society Inc v Waterfront Properties (2009) Ltd [2017] NZHC 818 at [16].
structure of the buildings on the leasehold land), including that they do not involve a major demolition and rebuild. It also pleads (at paragraph 37) that the buildings are not substantially different to their original state, other than their various parts having become more accessible. Phillimore then seeks a declaration that those works do not constitute a “major redevelopment” for the purposes of cl 20 of the lease. Phillimore says that through this pleading it has advanced its interpretation of cl 20 of the lease.
[33] Phillimore submits that r 5.19(3) requires a defendant, if it takes a contrary view as to the interpretation of a contract, to plead that contrary interpretation. It notes that pursuant to r 5.19(1), a bare denial will be treated as only denying the making of the contract in fact. Phillimore further submits that even putting aside r 5.19, matters on which St John’s seeks discovery (such as the scope and costs of tenancy fit-out works, changes in vacancy rates and income generated from the buildings) do not arise on the pleadings in their current form.
[34] As matters currently stand, St John’s simply denies that the works defined in Phillimore’s statement of claim do not give rise to a major redevelopment. No contrary case has been advanced by St John’s, for example, that a broader scope of works needs to be taken into account when considering whether a major redevelopment has occurred, or that other matters, such as those listed above, are relevant to that issue.
[35] I accept the submission that, without more, the bare denial of Phillimore’s case cannot itself give rise to issues on the pleadings requiring discovery. To put it another way, those bare denials do not frame or advance the respondent’s own case for the purposes of the adverse documents test.
[36] I am therefore satisfied that if St John’s seeks discovery of documents relating to tenancy fit-outs, the use to which the buildings are now put and so on, it would need to put those matters in issue by way of its pleading. Were it to do so, discovery by Phillimore would be framed by the respondent’s case, rather than limited by Phillimore’s preferred approach.17
17 Cares Appliances Ltd v Smith City (Southern) Ltd [2014] NZHC 1979 at [16]–[21]; Kawarau Village Holdings Ltd v Yuen [2015] NZHC 1379 at [38]; Dold v Murphy [2018] NZHC 994 at [31]–[32].
[37] It follows that I take a different view to the Associate Judge as to the issues to which the pleadings, in their form at the time of his judgment, give rise. These were stated in Associate Judge Christiansen’s judgment as follows:18
(a)What were the buildings like pre-development?
(b)What were they like following redevelopment?
(c)The cost of redevelopment.
(d)How the buildings have changed in terms of their functionality, use, value and any other relevant matters.
[38] Phillimore accepts, and I agree, that issues (a) and (b) arise on the pleadings as they currently stand. However, on the current pleadings, issue (c) is confined to St John’s putting Phillimore to proof of what Phillimore says the costs of the pleaded works were. Moreover, in terms of (d), the pleadings do not presently give rise to an issue to which the functionality, use and value of the buildings are relevant. Further, there is nothing by which to assess or consider what “any other relevant matters” (as referred to in issue (d)) might be in any event. In other words, relevant to what?
[39] It is against this backdrop that I have considered Phillimore’s application for review. As Phillimore notes in its submissions filed after the review hearing, were there to be a narrowing of the discovery categories ordered in Associate Judge Christiansen’s judgment, and St John’s were to re-plead its defence to advance its case in relation to cl 20, then Phillimore will revisit its discovery obligations under r 8.7. As matters presently stand, however, St John’s has not re-pleaded its defence and I must therefore confine my review of Associate Judge Christiansen’s judgment to the pleadings as they existed at the time of that judgment.
[40] With those points of principle in mind, I now turn to consider the remaining categories of documents in dispute.
18 Phillimore Imperial Ltd v St John’s College Trust Board [2017] NZHC 2854 at [9]. These issues were taken directly from the respondent’s submissions in support of its application for particular discovery.
Item 5: photograph booklet prepared by Canam Construction
[41] Phillimore does not object to giving discovery of this item on the basis of proportionality. Rather, it submits that the booklet relates to the “overall” restoration project not “necessarily” the works on the leasehold land, and that it contains a “random” selection of photographs taken “mainly” during construction.
[42] The Court has not seen a copy of the photograph booklet, but from the content of Phillimore’s submissions, it seems that at least parts of it relate to the works to the buildings on the leasehold land (which formed a part of the overall restoration project), and at least parts of it relate to, or show, the buildings before and after the pleaded works.
[43] In light of the above, I am not satisfied the Associate Judge was in error in exercising his discretion to order discovery of this item. The mere fact aspects of the booklet may not be relevant to the issues arising on the pleadings is not itself a reason it ought not to be disclosed. Many documents disclosed by way of discovery will contain aspects that are not relevant (which are only properly redacted if they are truly severable from relevant aspects). Further, that the collection of photographs is “random” or “subjective” is also not a reason for concluding the material is irrelevant. Again, most documents, and their contents, which are given by way of discovery will be subjective in nature, recording a particular person or party’s views or thoughts. Those issues go more to the weight the Court should attach to such evidence, rather than to its relevance per se.
[44] The Associate Judge’s order that Phillimore give discovery of this item is accordingly upheld.
Items 8 and 9(i): supporting documentation referred to in contract instructions, and documents referenced in ATC243 and Schedule D to construction contract
[45] Phillimore submits that in order to resolve these disputed categories, it has discovered a variations register which forms part of the contractual documentation for the restoration project, and contract instructions (numbered 1 to 293) issued from
11 October 2011 to 22 December 2011 (plus two from 2012).19 Phillimore also says that its response to item 7 (provision of plans, elevations or other architectural drawings of the completed works) should also resolve this item.
[46] In terms of further documentation, Phillimore says there is a large volume of material which could be said to form part of the “supporting documentation” to the contract instructions, including:
(a)consultant advice notices (of which there are more than 300);
(b)advice to consultants (of which there are more than 500);
(c)shop drawing reviews and site reports (of which there are over 60);
(d)documents referenced in ATC 243 and Schedule D to the contract amendment, of which there are at least 412.
[47] Phillimore states that it has also received approximately 1500 CAD files and drawings from Buller George Turkington (the consulting engineers), and approximately 4000 CAD files from Fearon Hay (the architects). It says that it would be time-consuming, expensive and ultimately disproportionate to the matters in issue to instruct its solicitors and litigation support providers to collate, upload and formally list the thousands of documents sought by St John’s. In any event, it says, the documents relate to the construction process across the whole of the restoration works, not just those on the leasehold land which are the subject of the claim.
[48] Phillimore further submits that neither St John’s nor the Court needs to review every construction instruction, drawdown report or similar detailed construction materials to be properly informed of what has in fact happened to the buildings — namely the end result of the works. On this basis, it says the discovery request is disproportionate and much relates to the construction process “on the way through”, rather than the “end result” of the pleaded works.
19 It is the documents supporting these contract instructions which form part of category 8 of documents requested.
[49] St John’s submits that the construction project was complex and the scope of works was amended part way through the project. It notes there were also numerous variations (though it has been provided with the variations register). St John’s submits that discovery of the documents sought is appropriate so it (and the Court) can properly understand what was actually done to the buildings.
[50]I accept that in principle, the construction documents referred to at [46] and
[47] above may be relevant to the matters arising on the pleadings, namely the scope of the works as pleaded — what has in fact happened to the buildings. Some of them will presumably explain, provide further detail in relation to or otherwise demonstrate the state of the buildings before the works were carried out, and the state of the buildings after the works were completed.
[51] But issues of proportionality in a case such as this are important. Construction projects typically give rise to vast amounts of documentation and information, most of which is irrelevant, or only tangentially relevant, to the matters truly in issue, even when the claim concerns construction defects. This case is, of course, considerably narrower, concerning only whether works in fact carried out gave rise to a “major redevelopment” of the buildings
[52] Accordingly, in terms of the first question set out in Asher J’s four-step test on an application for particular discovery,20 I accept that many of these very detailed construction documents are unlikely to be highly relevant to the matters in issue. Indeed some will relate to works on the freehold building, which are wholly irrelevant for the purposes of the claim. Further, in terms of the third question in the four-step test (proportionality), giving full discovery of the documents sought versus their likely relevance would in my view be disproportionate. The Court should also consider whether the disputed issue could be proved more simply, cheaply and expeditiously by other means.21 In this case, Phillimore has given discovery of what materials are available in terms of final “as-built” drawings, or the closest approximation to them, pursuant to category 7.
20 See [28] above.
21 Reeder v Reeder [2013] NZHC 646 at [44].
[53] Taking these matters into account, I am satisfied the Associate Judge did not consider the extent to which these particular classes of documents might be relevant to the issues arising on the pleadings, versus the proportionality of ordering the full discovery sought.
[54] The Associate Judge’s orders in relation to these categories of documents are accordingly set aside. I record that this does not preclude St John’s seeking further discovery from these categories of documents in a more limited and targeted form, which would not give rise to the disproportionate discovery required in response to the categories as currently framed. I would also encourage the parties to consider and discuss the most efficient way to respond to any more targeted discovery requests; for example, St John’s has confirmed it would be content to receive or inspect the documents in an informal way, rather than them needing to be subject to a formal list.
Item 9(ii): details of any separate contractors used on project, including the scope of works and costs paid to those contractors
[55] Again, this turns on the scope of the issues arising on the pleadings. Phillimore says that a document category referring to contractors used on “the project” is overly broad, when the “the project” is not a term used or defined in the pleadings. Further, Phillimore says that to the extent “the project” is intended to relate to the scope of works defined by Phillimore in its statement of claim (being the base build works), then the relevant details of contractors and costs have already been provided.22 Phillimore says that to the extent this discovery category seeks details of contractors’ works and costs outside the base build works, then such matters are irrelevant on the current state of the pleadings.
[56] Similar to its earlier arguments, St John’s argues that documents concerning contractors for the subsequent fit-out of the bare shell of the building for occupation for tenants ought to be disclosed, being a part of the overall development that should be considered when assessing whether a major redevelopment has occurred. It says that the scope and cost of these works is not known to St John’s, but statements made by Phillimore’s directors suggest that they are significant.
22 Invoices and payments schedules relating to the base build works have already been discovered and Phillimore has confirmed that it did not engage separate contractors for those works.
[57] In response to Phillimore’s arguments relating to the scope of the works being confined to the base build works, St John’s says that Phillimore is entitled to argue that only the base build works are relevant to whether there has been a major redevelopment, but as noted earlier, “the defendant is entitled to the information necessary to contest this argument, should it choose to do so”.
[58] In my view, the above extract from the submissions for St John’s highlights the pleadings point that has been addressed earlier. As matters presently stand, and as they stood at the time of Associate Judge Christiansen’s decision, the only works relevant on the pleadings are the base build works. St John’s is of course entitled to advance its case that a broader scope of works is relevant to whether a major redevelopment has been carried out. However, it has not yet done so, by pleading its own case based on that proposition. Discovery is not to be given in response to matters which a party might choose to argue at hearing, but which do not arise on the pleadings.
[59] Accordingly, I consider the Associate Judge was wrong to order discovery of this category of documents. It is not relevant to issues presently arising on the pleadings. The discovery order is accordingly set aside.
Item 11: documents evidencing total costs of the redevelopment works
[60] As noted earlier, the respondent’s bare denial of Phillimore’s statement of the total costs of the works does not give rise to an issue on the pleadings for the purposes of discovery. Rather, Phillimore is put to proof and will need to give discovery of those documents on which it relies to demonstrate the total costs of the works pleaded in its statement of claim. St John’s has not advanced a contrary “case” as to what those costs were.
[61] Further, this category seeks discovery of documents evidencing the costs of contractors engaged on the tenancy fit-out, after conclusion of the base build works.
[62] Phillimore has given discovery of documents evidencing the costs of the base build works — final invoices and payment schedules for any consultants paid from 2010 to 2012, as well as the same information for any separate contractors paid by Phillimore over the same period.
[63] I accept Phillimore’s submission that this category of documents is overly broad, to the extent it seeks discovery of documents relating to works carried out after completion of the base build works, such as costs of the tenancy fit-out works. As Phillimore notes, there is nothing in the pleadings concerning tenancy fit-outs or other similar works.
[64] I therefore uphold the application for review in relation to this category of documents.
Item 14: documents recording change in leasable areas
[65] St John’s submits that this category of documents is relevant to the issue set out at [37](d) above. For the reasons explained above, however, the pleadings do not presently give rise to that issue. Further, Phillimore has given discovery of some further material (under category 16, being valuations of the buildings) which are said to show valuations before and after the pleaded works. Phillimore submits these documents contain details of leased areas and tenancy schedules both before and after the restoration project.
[66] I accept that, as a matter of principle, and on the current state of the pleadings, documents demonstrating changes in leasable areas before and after the works pleaded by Phillimore are relevant to whether there has been a major redevelopment: changes in those areas go to the scope of the works rather than, for example, the costs or resulting value of those works to Phillimore.
[67] However, the documents disclosed in response to item 16 would appear to evidence the “before and after” scope of leasable areas and tenancy details. I consider that discovery of “any” document which records such a change would be overly broad and therefore disproportionate. I accordingly accept Phillimore’s submission that the Associate Judge was wrong to order discovery of this category of documents, without limitation, and thus the order for further documents in response to item 14 ought to be set aside.
Item 15: documents recording vacancy rates and rents achieved in redeveloped buildings
[68] The same comments made under item 14 apply to item 15. Moreover, rather than relating to changes to the scope in leasable areas, this category relates only to the resulting economic value of leasable areas to Phillimore. It is not clear how vacancy rates and rents achieved will be relevant to whether a major redevelopment has been carried out, at least on the current pleadings. For example, vacancy rates and rents achieved will depend, at least in part, on a lessor’s skills and efforts in marketing the property, and external factors such as the prevailing economic climate.
[69] Again, on the pleadings as they currently stand, these documents are not relevant to the issues. The Associate Judge’s order that they ought to be discovered is therefore set aside.
Conclusion and orders
[70] For the reasons set out above, I consider that a number of the discovery orders made by Associate Judge Christiansen ought to be set aside, given the limited scope of the issues arising on the current pleadings.
[71] As will be evident from the above, much turns on the content of the pleadings and, in particular, the effect of the bare denial by St John’s of a number of the key aspects of Phillimore’s statement of claim. The outcome on at least some of the disputed discovery categories may be different in the event St John’s were to amend its statement of defence to advance its case in relation to those matters it says ought to be taken into account when considering whether a major redevelopment has been carried out for the purposes of clause 20 of the lease.
[72]For present purposes, however, I make the following orders:
(a)Phillimore’s application for review of Associate Judge Christiansen’s discovery order in relation to item 5 is dismissed. Phillimore is to give discovery of that item.
(b)Phillimore’s application for review of Associate Judge Christiansen’s discovery orders in relation to items 8, 9(i), 9(ii), 11, 14 and 15 is granted, and those discovery orders set aside, subject to this being without prejudice to:
(i)St John’s seeking discovery in terms of categories 8 and 9(i), in a more limited and targeted form, as discussed at [54] above; and
(ii)any further application for particular discovery that may be necessary, in the event the issues arising on the pleadings were to change.
Costs
[73] The parties are encouraged to agree costs. If they cannot, memoranda may be filed.
[74] Any party seeking costs is to file a memorandum within 15 working days of this judgment, with any memorandum in response to follow within a further five working days. Memoranda are not to exceed five pages in length.
[75]Absent a request for a hearing, I will thereafter determine costs on the papers.
Fitzgerald J
Schedule: Categories of Discovery
Item Application by St John’s
1
Disclosure of the architect’s response to a design brief provided by Phillimore in 2009 (the design brief being PIL.01.0038 of the plaintiff’s discovered documents), including design and initial pricing for a tower/new building on the site.
2
Phillimore shall disclose whether a feasibility study was undertaken for the project, and provide that study if it exists to the defendant (Item 2).
4
Disclosure of Fearon Hay’s submission for the NZIA design awards (part of which is contained in PIL.01.0039 of the plaintiff’s discovered documents) and any other award submissions.
5
Disclosure of the book of photographs prepared by Canam illustrating the works undertaken.
6
Phillimore shall disclose whether any reports were provided by its contractors or consultants regarding the condition of the buildings & the scope of works required and provide those reports if they exist to St John’s (Item 6).
7
Phillimore shall disclose whether Fearon Hay (or any other person) prepared plans, elevations or other architectural drawings of the completed works and provide those drawings if they exist to St John’s (Item 7).
8
Phillimore shall disclose to St John’s the supporting documentation referred to in the contract instructions issued by Phillimore’s Engineer/project manager.
9(i)
The documents referenced in ATC 243 and schedule D to the amended 2011 construction contract;
9(ii)
Details of any separate contractors used on the project, including the scope of works and costs paid to those contractors;
9(iii)
Item 9 – being the building contract between Phillimore and Canam, and any separate contractors engaged by Phillimore.
10
Disclosure of a complete copy of the 31 October 2011 waiver application (the first page of which is at PIL.03.0173 of the plaintiff’s discovered documents).
11
Documents evidencing the total costs for the redevelopment works (including design works, and works undertaken by other consultants or contractors after conclusion of the base build works), including:
(a) Consultants’ fees.
(b) Contractors engaged on the tenancy fit out and basement works (to the extent that Phillimore paid for or contributed to those works).
(c) Fees and development contributions (if any) paid to Council.
12
Any reports submitted to the financier identifying total costs that had been accrued.
13
Documents evidencing the price paid on the sale of the buildings from AMP to Phillimore.
14
Documents recording any change in the leasable areas of the original and redeveloped buildings.
15
Documents recording vacancy rates and rents achieved in the redeveloped buildings.
16
Valuations of the buildings following [their] redevelopment.
2
11
0