Portofino Wellington Waterfront Limited v Stride Property Limited

[2024] NZHC 212

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-2292

[2024] NZHC 212

BETWEEN

PORTOFINO WELLINGTON WATERFRONT LIMITED
Plaintiff/Respondent

AND

STRIDE PROPERTY LIMITED

Defendant/Applicant

Hearing:	2 February 2024
Appearances:	G Jones for the Plaintiff/Respondent David Friar for the Defendant/Applicant
Judgment:	19 February 2024

JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR

Application for an order for Discovery

This judgment was delivered by me on 19 February 2024 at 3:00pm

pursuant to Rule 11.5 of the High Court Rules

…………………………. Registrar/Deputy Registrar

Solicitors:

Wynn Williams (R B Hern), Auckland, for the Plaintiff/Respondent Bell Gully (D J Friar/J F Hall), Auckland, for the Defendant/Applicant

PORTOFINO WELLINGTON WATERFRONT LIMITED v STRIDE PROPERTY LIMITED [2024] NZHC 212

[19 February 2024]

Introduction

[1]                  This matter was called before the Court in the Chambers List a 2:15pm on     2 February 2024. Counsel for each of the parties filed memoranda prior to the callover on 2 February 2024. Counsel made submissions to the Court at the callover hearing.

Background

[2]                  This proceeding concerns the lease between the defendant landlord (Stride) and the plaintiff tenant (Portofino) which expired on 27 September 2022 with no right of renewal. Portofino claims that it is entitled to a new lease for 12 years from December 2020 (including rights of renewal) or alternatively claims losses of

$8.9 million for Stride’s alleged failure to grant the new lease.

[3]                  Portofino seeks relief on the basis of terms it says were offered by Stride by email on 5 October 2020, and says that Stride misled or misrepresented the position to Portofino (or is otherwise estopped) by sending this email but not granting the lease. Stride rejects that allegations and for a number of reasons says that Portofino is not entitled to a new lease.

[4]                  Stride has brought an application for summary judgment and/or strike-out on the basis that none of the causes of action pleaded by Portofino can succeed, and the claim fails to disclose a reasonably arguable cause of action. Stride has also applied for security for costs. Stride’s application for summary judgment and/or strike-out is set down for be heard in a one-day fixture on 2 May 2024.

[5]                  On 22 December 2023 Portofino applied by interlocutory application for an order for discovery of particular documents from Stride (discovery application). The documents sought in the application were documents in the possession of Stride relating to Portofino’s cause of action, in particular:

(a)board minutes of Stride;

(b)communications from and to the board of Stride;

(c)communications between members of the staff of Stride;

(d)communications between Strike and other third parties in relation to the negotiation of the rent abatement referred to in the plaintiff’s statement of claim;

(e)communications and negotiations that occurred in relation to the offering up of a renewal of lease to Portofino.

[6]                  On 30 January 2024 Stride filed a notice of opposition to the discovery application.

Portofino’s position

[7]                  Portofino proposed that the discovery application be set down for a two-hour hearing at the Court’s earliest availability, or the issue be dealt with on the papers, in either case seeking that the discovery application be determined before the hearing of Stride’s summary judgment and/or strike-out application. Stride has opposed the application on the basis that the issue of security for costs should be heard before the discovery application, and generally that the discovery application should not be determined ahead of the hearing.

[8]                  Mr Jones for Portofino submits that the question of security for costs does not need to be dealt with prior to the hearing, on the basis that:

(a)the costs involved in determining the discovery application would, on Portofino’s proposal, be minimal and on the evidence before the Court could clearly be covered by Portofino in the event of an adverse decision;

(b)Stride’s contention that it is not appropriate or is premature requires determination by the Court at this stage rather than having the determination postponed so as to render the discovery application redundant.

[9]                  Mr Jones submits that Stride’s summary judgment and/or strike-out application should not act as a stay of the proceeding and, in the alternative, seeks directions that both parties provide standard discovery pursuant to r 8.12 of the High Court Rules 2016.

Stride’s position

[10]              Mr Friar for Stride submits that Stride should not be required to take any further steps in relation to the discovery application until its own application for security for costs has been determined and that security, if awarded, has been paid. He submits Portofino should not be permitted to leapfrog Stride’s application for security and to require Stride to incur costs and associated steps in the proceeding at least and until the application has been determined and security is paid.

[11]              Mr Friar submits that Stride’s application for summary judgment security was filed first, and should be determined first. If Stride is successful, then the costs of dealing with the discovery application will not be necessary. If Stride is not successful, then discovery can be dealt with in the ordinary way.

Analysis

[12]              Portofino relies on the leading case on discovery for summary judgment applications, NZI Bank v Philpott.1 In that case, McGechan J was dealing with an application by the defendant for discovery. It is clear from his judgment that he considered that there was only a very narrow range of cases where the Court will consider that discovery is necessary in relation to summary judgment applications. This point was observed by Associate Judge Bell in Westbury Thoroughbreds Limited v Webster (aka Watson) where he said:2

[13]                … As I understand the decision of McGechan J in the Philpott case, there is only a very narrow range of cases where the court will consider that discovery is necessary. Discovery will only be required once a necessity test has been satisfied.

1      NZI Bank v Philpott (1988) 1 PRNZ 560.

2      Westbury Thoroughbreds Limited v Webster (aka Watson) [2012] NZHC 333 at [13].

[13]              Mr Friar submits that discovery should not be ordered in this instance as Portofino’s application seeks to access Stride’s internal documents. Mr Friar submits all of Portofino’s pleaded causes of action rely on representations alleged to have been made by Stride to Portofino, and Stride’s application for summary judgment is brought on the basis that there was no such misrepresentations.

[14]              In addition, Mr Friar submits that courts have repeatedly refused discovery of internal documents in circumstances where a claim is premised on representations made to the plaintiff, citing the decision of the Court of Appeal in Juken New Zealand Limited v Red Stag Timber Limited3 which was followed by the High Court in Remediation (NZ) Limited v Enviro (NZ) Limited.4 Mr Friar submits that in both cases the Court accepted that in assessing whether representations are misleading or deceptive, it is an objective test, that internal communications are irrelevant and that the internal communications are therefore not discoverable.

Result

[15]              I am of the view that Portofino’s application for discovery should be adjourned until after Stride’s application for summary judgment, and/or strike-out and security for costs has been determined. In my view, Portofino’s application does not pass the “necessity” test as outlined by McGechan J in the Philpott case and applied by Associate Judge Bell in the Westbury case. Given Portofino’s claim relies on representations allegedly made by Stride to Portofino, it is difficult to see the necessity for Portofino to have discovery of Stride’s internal communications in order to establish a reasonably arguable case to defeat Stride’s application for summary judgment and/or strike-out.

[16]              I do not make any decision or express any view on whether the discovery application should be granted or not. I only express the view that it is not necessary for the discovery application to be determined before the hearing of the summary judgment/strike-out and security for costs application.

3      Juken New Zealand Limited v Red Stag Timber Limited [2022] NZCA 184.

4      Remediation (NZ) Limited v Enviro (NZ) Limited [2022] NZHC 2155.

Orders

[17]I make the following orders:

(a)Portofino’s discovery application is adjourned pending further order of the Court following determination of Stride’s application for summary judgment and/or strike-out and security for costs.

(b)Costs are reserved and are best dealt with as part of Stride’s application for summary judgment and/or strikeout and security for costs.

…………………………….. Associate Judge Taylor