Railway Street Trustees Limited v Railway Investments Limited HC Auckland Civ-2010-404-2545

[2010] NZHC 2439

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2010-404-2545

BETWEEN  RAILWAY STREET TRUSTEES LIMITED

Plaintiff

ANDRAILWAY INVESTMENTS LIMITED First Defendant

ANDDAVID RAYMOND GRANT CAMPBELL

Second Defendant

Hearing:         17 December 2010

Counsel:         AHJ Commons for plaintiff

DA Wood for defendants

Judgment:      17 December 2010 16:30:00

JUDGMENT OF ASSOCIATE JUDGE FAIRE [on application to strike out or for unless order]

Solicitors:           Hornabrook MacDonald Lawyers, PO Box 91 845, Auckland 1142

Therese Slade, PO Box 75 504, Auckland 2243

RAILWAY STREET TRUSTEES LIMITED V RAILWAY INVESTMENTS LIMITED HC AK CIV-2010-404-

2545 17 December 2010

Background

[1]      On 30 August 2010 the plaintiff filed an application for further and better discovery by the defendants.

[2]      The  application  was  considered  at  a  case  management  conference  on

7 September 2010.

[3]      In my minute of 7 September 2010 I recorded the following in relation to the application:

Plaintiff’s application for further and better discovery – court document

15

I  have  endeavoured  to  see  if  there  is  a  way  through  this  matter.    Mr Commons indicates that a further affidavit in support can be made available promptly.   Accordingly, I order that such affidavit be filed and served by

5pm tomorrow, 8 September 2010.

Simply to preserve the position I adjourn the application for a ½-day fixture for 10am on 24 January 2011.   On the understanding that a fixture at that time is required, the plaintiff shall file and serve by 15 December 2010 submissions in support plus copies of all authorities referred to and a casebook of the relevant pleadings, application, notice of opposition and affidavits, which is indexed and paginated.   The defendants shall file and serve submissions in opposition together with all authorities referred to, by

17 January 2011.

Because there is the possibility of this application being resolved I scheduled a telephone conference call with counsel and me for 9am on 6 October 2010. It s purpose shall be to see if, in fact, the fixture is required and, if so, to summarise precisely the areas of difference between the parties.

[4]      At  the  conference  on  6 October  2010  the  matter  of  further  and  better discovery was further considered.  I recorded in my minute issued as a result of that conference the position which had been reached in respect of the application as follows:

The plaintiff’s application for further discovery – court document 15

Counsel are discussing the issues that have been raised in Mr Commons’ memorandum for this conference.  There is a matter which is identified as Item 4 in Mr Commons’ memorandum that may require interrogatories as an alternative way of ascertaining the places from which finance was being sought.    I  can  understand  Mr Commons’ diffidence  at  this  stage  about preparing his client’s interrogatories where the discovery process has not

been completed.  Mr Wood is to take instructions to confirm that there would be no objection to a second set of interrogatories being issued in this case if this discovery issue cannot be resolved.  What is envisaged may be a first set of interrogatories dealing with the point just mentioned which is issued prior to the resolution of the discovery application.  This matter will be discussed at  the  next  conference  for  this  file  which  will  be  held  at  12:20pm  on

9 November 2010.

[5]      The 6 October 2010 minute scheduled a further case management conference for 9 November 2010 to consider the further and better discovery application.

[6]      The conference on 9 November 2010 did not proceed because counsel filed a consent memorandum which provided as follows:

1.        Further  to  the  memoranda  filed  yesterday  in  advance  of  the conference at 12:20pm today to attend to outstanding issues relating to the plaintiff’s 30 August 2010 application for further, better discovery, counsel have consulted further and are pleased to advise that the application has been resolved subject to:

1.1In relation to item 2, the defendants have agreed to provide the extracts of the bank account statement(s) of Howick Investments Limited identifying the drawdowns said to have been used to pay the deposit amount(s) due under the agreement the subject of this proceeding.

1.2Overall, the  defendants  will,  within 10  working days,  confirm  I affidavit form that all relevant documents that have been in their control have been disclosed, and, if there are others that have been, but are no longer in the defendants’ control, the defendants’ best knowledge and belief as to when the documents ceased to be in the defendant’s control and the person who now has control of them.

1.3On  the  above  bases,  the  parties  respectfully  request  that  the conference scheduled at 12:20pm today be vacated with costs on the plaintiff’s application for further, better discovery being reserved.

[7]      As a result I issued a minute on 9 November 2010 as follows:

1.         I thank counsel for their consent memorandum.

2.In view of the fact that counsel have agreed on matters which now resolve the plaintiff’s application for further and better discovery – court document 15 – the plaintiff’s application is accordingly withdrawn with costs reserved.

3.The  fixture  allocated  for  10am  on  24 January  2011  is  now  not necessary and is accordingly vacated as are all directions in relation to that matter which were given in my minute on 7 September 2010.

4.        Counsel’s appearances at the conference on 9 November 2010 are

accordingly excused.

[8]      This proceeding has been allocated a trial of four days’ duration commencing on 18 July 2011.  A direction has been given for the holding of a judicial settlement conference but as yet the Case Officer and counsel have not been able to settle on an appropriate date.   In my minute of 7 September 2010 it was contemplated that a conference after 31 March 2011 but before the end of April 2011 would be the most convenient time for it to be held.

[9]      The  plaintiff  complains  that  the  agreement  reached  in  respect  of  the application for further and better discovery and contained in the consent memorandum to which I have made reference in [6] has not been complied with.

The application

[10]     The plaintiff applies  for orders in  the alternative.    In  the  first  place  the plaintiff seeks an order that the defendants’ defences be struck out.  In the second, or alternative place, the plaintiff seeks an order that unless the defendants comply with the terms of the 9 November 2010 consent memorandum by a date to be fixed by the court that the defences be struck out.

[11]     The application is made principally in reliance on hcr 15.1 which provides for the dismissal or stay of all or part of the proceeding.

The opposition

[12]     Mr Wood submitted that there had been a compliance even though it was not within the precise terms of the consent memorandum.

The position analysed

[13]   Counsel referred to Vanda Investments Ltd v Logan.[1]     That judgment comprehensively reviews the obligations which parties undertake in relation to discovery.

[1] Vanda Investments Ltd v Logan HC Dunedin CIV 2009-412-219, 27 November 2009.

[14] Whilst I take a party’s obligations into account in relation to discovery generally, the principal inquiry that is required on this application is whether there has been a formal compliance with an agreement which the parties reached in relation to their discovery obligations. That agreement is recorded in the memorandum that I have referred to in [6].

[15]     The agreement of counsel required two specific matters specifically to be attended to.

[16]     The first matter required the production of an extract from a bank account statement of Howick Investments Ltd.  What was disclosed to me does not satisfy that that was what was produced.  What is required for compliance with 1.1 of the consent memorandum is production of a document which:

(a)       identifies the name of the bank concerned;

(b)      is a bank account statement with the bank concerned for Howick

Investments Ltd; and

(c)      contains specific entries which are the drawdowns said to have been used to pay the deposit moneys due under the agreement the subject of this proceeding.

[17]     What  is  required  is  plain  and  without  ambiguity.    The  obligation  was undertaken.  No good reason for not complying precisely with it has been given to

me.   Mr Wood confirmed to me that there would be no reason why compliance

formally with what was required could not be achieved by 11 February 2011.  I am satisfied that an order should be made which requires compliance.

[18]     The  second  aspect  is  that  which  is  contained  in  1.2  of  the  consent memorandum.

[19]     The purported compliance with this requirement were two affidavits.   The first was sworn by LA Campbell on 15 November 2010 and the second was sworn by DRG Campbell on 15 November 2010.  I also take into account the content of an affidavit sworn by TM Slade on 26 October 2010.

[20]     The answer is equivocal as to whether there had at any time been additional relevant documents within the control of the defendants which have not been disclosed.   That, specifically, the problem with the answers that have been given. Mr Wood advised me that further affidavits on behalf of the defendants could be sworn.  He said it was most likely that those affidavits would confirm that, in fact, there are no other relevant documents that had been in the control of the defendants which had not been disclosed.   That is a matter which the defendants must be satisfied as to themselves.  If that is the case it is a simple matter for the defendants to swear affidavits to that effect.  If that is the case, then that would be a compliance with 1.2 of the consent memorandum.

[21]     If, however, the defendants believe there to have been other documents which are no longer in their control, they must swear an affidavit which complies with the second  part  of  1.2.    That  requires  that  if  the  defendants  have  knowledge  of documents which are no longer in their control, they must swear an affidavit which:

(a)       Identifies the documents concerned;

(b)gives to the best knowledge and belief they have as to when those documents ceased to be in their control;

(c)       and  names  the  person  or  persons  who  now  have  control  of  the documents.

[22]     Unless the aspects that I have just recorded are met, there is plainly no compliance with this aspect of the agreement as to the discovery.

[23]     The plaintiff seeks either an immediate striking out of the defence or the making of an unless order.   I conclude there has been non-compliance with the agreement which was intended to resolve discovery matters.  In Ko v Ko[2]  the court reviewed the approach to the making of unless orders and endorsed the principals which were set out in Hytec Information Systems Ltd v Coventry CC.[3]

[2] Ko v Ko 14 PRNZ 362.

[3] Hytec Information Systems Ltd v Coventry CC [1977] 1 WLR 1666 (CA) at 1674.

[24]     Mr Wood has confirmed to me that if I were to make an order requiring formal  compliance  with  the  agreed  position  on  discovery  that  could  easily  be attended to on or before 11 February 2011.

[25]     I am satisfied that an unless order should be made in this case.  I take account particularly of the following matters:

(a)       The parties reached an agreement to resolve a discovery application.

Its terms are clear and unambiguous;

(b)The  defendants  have  failed  to  comply  with  the  terms  of  that agreement regarding discovery;

(c)      The  agreement  had  the  effect  of  bringing  to  the  end  an  existing discovery application;

(d)This case has a trial scheduled for 18 July 2011 and, as a result of discussions   I  have   had   with   a   counsel,   a   Judicial   settlement conference scheduled for 30 May 2011;

(e)      Any further delays in the resolution of the discovery may well affect the interlocutory steps available to the plaintiff, in particular the possibility of obtaining non-party discovery.  It is therefore essential

that the defendants’ discovery be in order; and

(f)      What was required was plainly settled by the parties.   There is no ambiguity.   In these circumstances, whilst I conclude that the defendants should have one further opportunity to comply, that should be granted on the basis that it is an indulgence and to be backed up by a sanction if there is non-compliance.  In this way, this litigation can proceed expeditiously and on the express understanding that there has been compliance by the parties with their specific obligations.

Trial directions and judicial settlement conference

[26]     I took the opportunity of discussing a revision of the trial directions and also the fixing of a date for a judicial settlement conference.   Counsel confirmed availability for a one-day judicial settlement conference set for 10am on 30 May

2011.  Their position is confirmed in the orders that I make at the conclusion of this judgment.

[27]     Because the settlement conference has had to be scheduled for May 2011 counsel were agreed that an alteration to the trial directions contained in my minute of 7 September 2010 were appropriate.   The agreed change is that the plaintiff’s briefs of evidence shall now be served on or before 10 June 2011 and the defendants’ briefs of evidence shall be served on or before 1 July 2011.  That will give a little extra time following the conclusion  of the judicial  settlement  conference if  the matter does not resolve at that conference for the briefs to be completed.

Costs

[28]     I reserve costs at this stage.  Costs necessarily need to be reviewed when the time for compliance expires.  If there is no compliance then costs will be entered in respect of the whole proceeding against the defendants.  On the other hand, if there is compliance, costs in relation to this application need to be considered.  In this later event counsel may file memoranda in support, opposition and reply at seven-day intervals on the question of costs.

Orders

[29]     I order:

(a)       The defendants defence shall be struck out unless, by 11 February

2011, they:

(i)       Produce a document or documents which:

(1)       Identifies the name of the bank concerned;

(2)Is a bank account statement with the bank concerned for Howick Investments Ltd; and

(3)Contains  specific  entries  which  are  the  drawdowns said to have been used to pay the deposit moneys due under the agreement the subject of this proceeding;

(ii)      File and serve affidavits which either:

(1)Confirm  that  there have been  at  no  time additional relevant   documents   within   the   control   of   the defendants which have not been disclosed; or

(2)If there are such documents, the affidavits must: (a)    Identify the documents concerned;

(b)Give to the best knowledge and belief of the deponent as to when those documents ceased to be in the party’s control; and

(c)      Name  the  person  or  persons  who  now  have control of the documents;

(b)      A judicial settlement conference shall be held at 10am on 30 May

2011.     The  orders  made  with  respect  to  a  judicial  settlement conference contained in the minute of 7 September 2010 shall apply;

(c)      The  trial  directions  made  in  the  minute  of  7 September  2010  are varied so that the plaintiff’s briefs of evidence shall be served by

10 June 2011.  The defendants’ briefs of evidence shall be served by

1 July 2011.  In all other respects the directions of 7 September 2010 pertaining to the trial shall apply;

(d)Costs  in  relation  to  this  application  are  reserved.    Memoranda  in relation to costs may be filed and served in support, opposition and reply at seven-day intervals having regard to the matters specifically

referred to in [28] of this judgment.

JA Faire

Associate Judge