Renner v Renner
[2014] NZHC 1743
•23 July 2014
IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY
CIV-2013-470-569 [2014] NZHC 1743
BETWEEN IAN RODNEY RENNER
Plaintiff
AND
CATHERINE MAY RENNER Defendant
Hearing: 23 July 2014 Appearances:
C F Murphy for Plaintiff
D P Weaver for DefendantJudgment:
23 July 2014
ORAL JUDGMENT OF ASSOCIATE JUDGE BELL
Solicitors:
Mackenzie Elvin, Tauranga, for Plaintiff
Lyon O’Neale Arnold Lawyers Ltd, Tauranga, for Defendant
Counsel:
D P Weaver, Barrister, Tauranga, for Defendant
RENNER v RENNER [2014] NZHC 1743 [23 July 2014]
[1] The matter for decision is the plaintiff’s claim to privilege in two documents, AAA.248 and AAA.249 in Mr Renner’s second discovery affidavit. These are a letter from Mr Renner’s lawyers to counsel of 20 September 2011, and a response of
21 September 2011.
[2] The plaintiff has claimed litigation privilege under s 56 of the Evidence Act
2006. There were proceedings on foot at the time. FM Custodians Ltd had sued Mr and Mrs Renner under guarantees. The advice of counsel was relevant to matters in issue in that proceeding. Although it was not expressly claimed in the affidavit, I also find that the letters were subject to privilege under s 54 of the Evidence Act. Advice given by one lawyer to another on a matter in which the lawyer receiving the advice is acting for a client can be subject to the privilege for communicating legal advice.
[3] Mrs Renner says that while the documents would ordinarily be subject to privilege, the privilege has been waived under s 65 of the Evidence Act:
65 Waiver
(1) A person who has a privilege conferred by any of sections 54 to 60 and 64 may waive that privilege either expressly or impliedly.
(2) A person who has a privilege waives the privilege if that person, or anyone with the authority of that person, voluntarily produces or discloses, or consents to the production or disclosure of, any significant part of the privileged communication, information, opinion, or document in circumstances that are inconsistent with a claim of confidentiality.
(3) A person who has a privilege waives the privilege if the person—
(a) acts so as to put the privileged communication, information, opinion, or document in issue in a proceeding; or
(b) institutes a civil proceeding against a person who is in possession of the privileged communication, information, opinion, or document the effect of which is to put the privileged matter in issue in the proceeding.
(4) A person who has a privilege in respect of a communication, information, opinion, or document that has been disclosed to another person does not waive the privilege if the disclosure occurred involuntarily or mistakenly or otherwise without the consent of the person who has the privilege.
(5) A privilege conferred by section 57 (which relates to settlement negotiations or mediation) may be waived only by all the persons who have that privilege.
[4] To support the claim of waiver, Mrs Renner relies on an email which Mr Renner’s lawyers sent to FM Custodians Ltd on 22 September 2011. That is the email I referred to in my decision of 5 March 2014:1
... I thought it appropriate to update you as to progress in this matter.
There have been 2 meetings with Kathy Renner and Sharps in an effort to try and tidy things up in totality. While there has been some progress we are not there.
I suspected that would be the case but it was important to try.
The offer from Ian is still in totality acceptable, but we have a major problem. It is our understanding that NZMHT require the offer for the land to be the settlement figure whereas we required the land purchase to be at
$1.6 with Ian personally meeting the balance.
It was our concern that if the purchase price for the land is the settlement amount Ian would lose his right of contribution from co-guarantors, he cannot afford to do that. We have since secured an opinion from ... and he confirms that view.2
My understanding it may be a security issue from your clients perspective.
It would be unfortunate if this couldn’t be sorted out because in all other
respects there is not a problem in the balance of the arrangement. ...
[5] Mrs Renner submits that there has been waiver on two grounds: (a) that there has been disclosure under s 65(2); and
(b) that the communication has been put in issue under s 65(3)(a).
[6] In Houghton v Saunders, French J distilled certain principles from the case law:3
(i) where a party’s use of privileged material destroys its confidentiality, the privilege will be treated as impliedly waived, even if that was not the party’s actual intention: Equiticorp Industries Group Ltd v Hawkins [1990] 2 NZLR 175 at 180;
1 Renner v Renner [2014] NZHC 352.
2 It is unnecessary to identify counsel.
3 Houghton v Saunders (2009) 19 PRNZ 476 (HC) at [55].
(ii) waiver can occur pre trial: Equiticorp; Chandris Lines Ltd v Wilson
& Horton Ltd [1981] 2 NZLR 600;
(iii) whether “a significant part” of privileged material has been disclosed as required by s 65(2) will depend on the substance rather than the quantity of privileged material that is disclosed: Bete Fog Nozzle Inc v Delavan Ltd & Ors HC Auckland CIV-2008-404-000169, 18 June
2008 Rodney Hansen J at [23];
(iv) disclosure of the existence of a privileged document as distinct from its contents will not normally amount to implied waiver: Equiticorp at 180; Chandris Lines at 611; Shannon v Shannon [2005] 3 NZLR
757 (CA). Insofar as Tau v Durie [1996] 2 NZLR 190 may be authority to the contrary, it should not be followed;
(v) deliberate disclosure of a complete copy of the privileged document will amount to waiver: Equiticorp at 180; Chandris Lines at 611;
(vi) deliberate disclosure of some of the content of the privileged document will not necessarily amount to an implied waiver but may do so: Ophthalmological Society of New Zealand Inc v Commerce Commission [2003] 2 NZLR 145 (CA) at 154; Astrazeneca Ltd v Commerce Commission & Anor (2008) 12 TCLR 116 at [39];
(vii) the test to be applied is whether in all the circumstances the conduct is inconsistent with maintaining the confidentiality of the privileged material in a way that could lead to injustice if the privilege is upheld: Ophthalmological Society at 154. This test although enunciated in a pre-Evidence Act decision, is still applicable to a consideration of both s 65(2) and s 65(3)(a): Astrazeneca at [31]- [39].
[7] Also helpful are certain dicta from the Court of Appeal in Ophthalmological
Society of New Zealand Inc v Commerce Commission:4
[29] …While it might be said that it is unfair in the abstract for a party to blow hot by making such a claim, while blowing cold on disclosure, the reference to the advice was arguably not inconsistent with the maintenance of confidentiality in its contents…
[30] The fairness factor has, however, rightly been treated as of particular importance in cases where partial disclosure of legal advice raises questions over whether natural justice requires disclosure of the whole advice. In the end, however, as Mann v Carnell makes plain, it is the Court’s objective judgment as to the consistency of the conduct with maintaining the privilege which must be assessed in all the circumstances. That requires close analysis of the particular context: what is the issue in relation to the privilege; how does the evidence relate to that issue; and is there inconsistency that could lead to injustice if the privilege is upheld. The weight to be given to
4 Ophthalmological Society of New Zealand Inc v Commerce Commission [2003] 2 NZLR 145 (CA).
fairness in the Court’s exercise of judgment will differ according to the circumstances including the character of the privilege it is said has been waived …
[38] In this judgment we have concluded that whether legal professional privilege has been waived by the conduct of the holder in the course of litigation turns on whether, in all the circumstances, that conduct is inconsistent with maintaining the confidentiality of the privileged material in a way that could lead to injustice if the privilege is upheld. Considerations of natural justice and fairness will often be of great importance to that question but in some circumstances they will be of less importance. In applying the test, the judicial decision required as to whether privilege has been waived is not appropriately characterised as exercising a discretion. It is rather reaching a finding on the evidence, involving a judgment as to important competing values, in which generally only one view will be legally correct.
[8] In this proceeding Mr Renner is claiming contribution from Mrs Renner as co-guarantor. The settlement which Mr Renner entered into with FM Custodians Ltd in October 2011 is central to the case. That is the agreement I referred to in paragraph [7] of my decision of 5 March 2014. An important feature of that settlement is that FM Custodians Ltd sold the Lochhead Road property to the trustees of Mr Renner’s family trust for $1,600,000 in the exercise of its power as mortgagee. Mr Renner wants to adopt that figure of $1,600,000 as representing the fair market value of the Lochhead Road property.
[9] Mrs Renner wants to attack that sale price. Her case will be that that figure is too low, and that the true value of the property was higher. If it is found that the property is worth more than $1,600,000, that will reduce her liability under Mr Renner’s contribution claim.
[10] For Mrs Renner, it will be relevant that the sale by FM Custodians was not an
arm’s length sale on the open market, for the reasons I gave in my decision of
5 March 2014. The email of Mr Renner’s lawyers of 22 September 2011 gives support for that position. It tends to suggest that whereas FM Custodians Ltd would have been willing to sell the Lochhead Road property for about $2.9m, Mr Renner’s lawyers pressed for a sale at a lower figure so as to improve Mr Renner’s ability to make a contribution claim against his former wife. The email shows that Mr Renner’s lawyers had advised him that selling the land at the price proposed by
FM Custodians Ltd would reduce what he could recover from Mrs Renner in a contribution claim.
[11] That email is in the open section of Mr Renner’s second affidavit of documents. He has not claimed privilege for it. It discloses Mr Renner’s lawyers’ concern at the purchase price proposed by FM Custodians Ltd. Insofar as Mr Renner's lawyers may have passed on that concern to Mr Renner, that has already been disclosed. There has been an effective waiver of privilege under s 65(2) for any such advice given by Mr Renner’s lawyers to him.
[12] The question here is whether there has also been disclosure of the communications between Mr Renner’s lawyers and counsel, so that any privilege in those communications has been lost as well.
[13] In submissions, Mr Weaver for Mrs Renner pressed that he was not seeking disclosure of the advice as such. He wanted to look at the documents to ascertain what facts Mr Renner’s lawyers had given to counsel, so as to obtain the advice. He explained that the views of Mr Renner’s lawyers as to the value of the property would be relevant to ascertaining the matters in issue in this case – that is, whether Mrs Renner would be bound by the purchase price of $1.6m.
[14] I do not accept that for this decision it is possible to draw a neat distinction between the facts supplied to counsel and the advice given by counsel in response. The two matters are inextricably connected. Any privilege must apply both to supply of the facts and to the advice. In my view, if there has not been waiver of the advice, there cannot be waiver of the provision of the facts on which the advice was based. It is important to maintain that consistency between giving facts and responding with advice so as to ensure that privilege is fully maintained for communications between lawyer and client.
[15] Under the principles set out by French J in Houghton v Saunders, the disclosure of the existence of a document containing advice is not by itself normally waiver of the contents of the document. Here, the fact that counsel gave advice has been recorded. There is a brief indication as to the content of the advice in the words
“and he confirms that view”. We are at (vi) and (vii) in French J’s principles in Houghton v Saunders. Disclosure of some of the content of the privileged document does not necessarily amount to implied waiver but whether it may do so tends to turn on questions of fairness.
[16] Unfairness arises when one party claims to justify a course of action by saying that he or she obtained legal advice, but then refuses to disclose that advice. It is that inconsistency in position that is held to give rise to unfairness. That unfairness does not arise in this case. Mr Renner is not relying on the fact that his lawyers obtained advice from counsel to justify the settlement of 11 October 2011. The fact that his lawyers may have had some views as to the value of the land in late September 2011 is really neither here nor there. It may be a matter of curiosity to find out what views his lawyers held at that time, but this case is going to turn on the value of the land as determined by expert evidence, not on what views Mr Renner and his lawyers may have held. The fact that the lawyers may have passed on to counsel their views as to the value of the land is not going to result in any inconsistency of position on Mr Renner’s part. Keeping those views confidential does not in my view create any unfairness to Mrs Renner that requires the content of the emails to be disclosed to her. In short, I do not find that there is any unfairness which would give rise to waiver under s 65(2) of the Evidence Act.
[17] The other aspect is the claim under s 65(3)(a) of the Evidence Act. On this aspect, Mr Weaver acknowledged that the decision of Panckhurst J in Astrazeneca Ltd v Commerce Commission was against him. Panckhurst J said:5
The mere relevance of a privileged communication to an issue in the case provides no basis for waiver. Even a party’s asserted reliance upon a privileged communication is generally insufficient. Waiver occurs where a party both asserts reliance upon the privileged communication and also seeks to inject the substance of the communication in evidence. At that point an abuse of the privilege exists. The claimant cannot have the benefit of reliance upon the substance of the advice and still seek to shield that advice from disclosure to the other side. To permit this would give rise to unfairness in the required sense, in that the party’s conduct would be offensive to the trial process.
5 Astrazeneca Ltd v Commerce Commission (2008) 12 TCLR 116 (HC) at [39]. Panckhurst J
relied on the Court of Appeal’s decision in Shannon v Shannon [2005] 3 NZLR 757 (CA).
[18] Mr Weaver accepts that Mr Renner has not relied on the advice to the extent of injecting the substance of it into evidence in this case.
[19] In submissions, Mr Weaver also referred to a decision of Simon France J in Accountants First Ltd v Commissioner of Inland Revenue6 in which I note that Mr Weaver was counsel. In that case the plaintiff sought disclosure of documents and challenged claims to privilege. Simon France J considered the question of waiver of privilege, and in the circumstances of that case held that there had not been any waiver. While it was correct for Mr Weaver to refer me to this decision, there is
nothing in it that bears directly on the issues in this case.
[20] I accordingly find that there has not been any waiver under s 65 in the case so far. In saying that, I have gone by the way that the case has been run up until now. This decision does not, of course, rule out possible waiver in the future.
Costs
[21] Ms Murphy has asked for costs. Mr Renner is entitled to costs. This has been a hearing of an interlocutory application, even though I short-cut some of the procedures by not requiring a formal notice of application and a notice of opposition. Nevertheless both sides have prepared thoroughly for the hearing as on a full-blown interlocutory application. I follow the normal approach. Costs should be fixed and paid when an interlocutory application is decided.
[22] I fix costs in favour of Mr Renner on a 2B basis. He is entitled to recover costs under steps 24 and 26. Under step 26 he should have .25 of a day. There are no disbursements.
……………………………………
Associate Judge R M Bell
6 Accountants First Ltd v Commissioner of Inland Revenue [2014] NZHC 1723.
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