Roebuck v Liddle

[2023] NZHC 2350

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE

CIV-2021-441-74

[2023] NZHC 2350

BETWEEN

JASON GREGORY ROEBUCK and VICTORIA ANN ROEBUCK

Plaintiff

JASON GREGORY ROEBUCK, VICTORIA ANN ROEBUCK and PETER

ROEBUCK as trustees of the Tahi Trust Second Plaintiffs

AND

ROBERT JAMES LIDDLE

First Defendant

AMANDA ELIZABETH LIDDLE
Second Defendant

HASTINGS DISTRICT COUNCIL

Third Defendant  Cont over…

Hearing:

21 August 2023

Counsel:

J L Bates for Plaintiffs

J K Goodall KC and S P Farnell for Third Defendant

Date of Judgment:

28 August 2023

JUDGMENT OF ASSOCIATE JUDGE BRITTAIN

This judgment was delivered by me on 28 August 2023 at 11 am, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Solicitors:

Brown & Bates Ltd, Napier for the plaintiffs Rice Speir, Auckland for third defendant

ROEBUCK v LIDDLE [2023] NZHC 2350 [28 August 2023]

AND

SIGMA CONSULTING ENGINEERS

LIMITED
Fourth Defendant

REDHEAD ARCHITECTURE LIMITED

Fifth Defendant

FORMWORKS HB LIMITED

Sixth Defendant

HARDCORE CONCRETE LIMITED
Seventh Defendant

M J FOGARTY PAINTING & DECORATING LIMITED

Eighth Defendant

WYNANDS MASONRY LIMITED

Ninth Defendant

REALDEAL ROOFING LIMITED

Tenth Defendant

HAWKES BAY MEMBRANE SOLUTIONS LIMITED

Eleventh Defendant

MITCHELL LEITZ
Twelfth Defendant

WYNANDS MASONRY (2015) LIMITED

Thirteenth Defendant

ANTHONY JOHN MICHAEL WYNANDS

Fourteenth Defendant

GA SCARFE BUILDER LIMITED
Fifteenth defendant

GRAHAM ALAN SCARFE

Sixteenth Defendant

Introduction

[1]    The plaintiffs are the owners of a property in Havelock North (the property). In 2019, the plaintiffs arranged for a residential building to be constructed on the property pursuant to a building consent.

[2] The third defendant, Hastings District Council (the Council), is the territorial authority responsible for issuing the building consent and performing the relevant functions as a building consent authority under the Building Act 2004.

[3]    The property is in a flood risk area. The terms of the building consent prescribed a finished height for the floor slab, which incorporates the foundations, and required that the finished height be confirmed by a surveyor’s certificate before the Council’s first inspection.

[4]    In this proceeding, the plaintiffs allege that the building has been constructed with defects, the most significant being that the floor slab has not been constructed to the required height. The causes of action include a claim against the Council for negligence when performing its statutory functions.

[5]    The discovery process has become protracted. The Council has provided several affidavits of documents, the most recent being its third supplementary affidavit of documents dated 6 July 2023. The plaintiffs now challenge the Council’s claims for privilege in respect of eight documents included in the Council’s discovery.

[6]    On 19 May 2023, the plaintiffs filed an interlocutory application seeking, inter alia, an order that “the documents the [Council] maintains are subject to litigation privilege be produced to the Court to inspect for the purpose of deciding the validity of the claims for litigation privilege …” Read literally, the proposed order applied to all of the Council’s privileged documents, including hundreds of group-listed documents.

[7]    On 19 July 2023, the plaintiffs filed an amended application. The terms of the order sought challenging privilege was unamended, however, the application for some ancillary orders was abandoned.

[8]    The Council filed a notice of opposition dated 4 August 2023. After considering the points raised in the notice of opposition, the plaintiffs reduced the scope of their challenge to the Council’s claims of privilege. Thirty-nine documents remained in issue.

[9]    By the time that the plaintiffs were required to file their written submissions in support of their application, they had further refined their position. Of the thirty-nine documents in issue, one was provided by the Council and any claim for privilege waived, and the challenges to privilege in respect of thirty were abandoned by the plaintiffs. Eight documents now remain in issue. Those documents are the subject of this judgment.

[10]   The Council’s primary argument is that all eight documents are subject to litigation privilege under s 56 of the Evidence Act 2006 (the Act). In respect of three of the documents, which together comprise one communication, the Council also asserts privilege for communications with its legal advisers under s 54 of the Act.

Legal principles

[11]Section 54(1) of the Act provides:

54       Privilege for communications with legal advisers

(1)A person who requests or obtains professional legal services from a legal adviser has a privilege in respect of any communication between the person and the legal adviser if the communication was—

(a)intended to be confidential; and

(b)made in the course of and for the purpose of—

(i)the person requesting or obtaining professional legal services from the legal adviser; or

(ii)the legal adviser giving such services to the person.

[12]Section 56 of the Act relevantly provides:

56       Privilege for preparatory materials for proceedings

(1)Subsection (2) applies to a communication or information only if the communication or information is made, received, compiled, or

prepared for the dominant purpose of preparing for a proceeding or an apprehended proceeding (the proceeding).

(2)A person (the party) who is, or on reasonable grounds contemplates becoming, a party to the proceeding has a privilege in respect of—

(a)a communication between the party and any other person:

(b)a communication between the party’s legal adviser and any other person:

(c)information compiled or prepared by the party or the party’s legal adviser:

(d)information compiled or prepared at the request of the party, or the party’s legal adviser, by any other person.

…

[13]    Counsel largely agree on the applicable principles, but disagree as to their application in this case.

[14]   Litigation privilege under s 56 of the Act exists for documents prepared for the dominant purpose of litigation, which is reasonably anticipated1 and not a “mere possibility”.2

[15]   In terms of legal advice privilege under s 54 of the Act, an issue can arise regarding the purpose of draft documents prepared by a party and sent to the party’s legal adviser for advice. Draft documents may still attract the privilege,3 even though the ultimate purpose of the document is independent of the need for legal advice. For example, draft transaction documents are created for the ultimate purpose of documenting a transaction, yet when they are passed between client and solicitor for legal advice they are privileged.

[16]   However, the position may be different if a draft document prepared by a party is not prepared for the purpose of being laid before the legal advisor for advice. In that case, the draft may not arise out of the relationship of solicitor and client, and

1      Minister of Education v IT Architects Ltd [2014] NZHC 1541 at [21] citing Dinsdale v Commissioner of Inland Revenue (1997) 11 PRNZ 325 (CA) at 326.

2      Pernod Ricard New Zealand Ltd v Lion — Beer, Spirits & Wine (NZ) Ltd [2012] NZHC 2801 at [30].

3      Kupe Group Ltd v Seamar Holding Ltd [1993] 3 NZLR 209 (HC) at 213.

subsequent production of the draft document to the legal advisor may not therefore attract legal advice privilege for the draft.4

My approach to this application

[17]   The Council provided the Court with copies of the eight documents that are in issue, for my review. Any documents for which the claim of privilege is upheld will be returned to the Council, and no copy retained on the Court file.

[18]   I will consider the Council’s claims of privilege in respect of each of the challenged documents. Where appropriate, documents are considered in groups.

[19]   A common issue for the claims of litigation privilege is determination of the date by which the Council reasonably apprehended a proceeding.

[20]   I am satisfied that the Council reasonably apprehended a claim against it on the morning of Friday 3 July 2020. At 8.24 am that morning, the surveyor sent an email to the builder and the Council confirming that the finished level of the floor slab was non-compliant. On receipt of that email, Council staff were aware that the floor slab did not comply with the conditions of the building consent. Given the prevalence of defective building claims against Councils over the prior twenty years or so, it is reasonable to infer that Council staff would have been immediately alive to the risk of a claim against Council. That is confirmed by Council’s decision to notify its insurer on Monday 6 July 2020.

HDC.04.00046, HDC.04.00047 and HDC.04.00048

[21]   These three documents comprise one communication on 3 July 2020, which was an email from one Council staff member to two other staff members, attaching a draft notice to fix.

[22] The Council has a duty and power to issue a notice to fix under s 164 of the Building Act:

4      Simunovich Fisheries Ltd v Television New Zealand Ltd [2008] NZCA 350 at [159]–[160].

164     Issue of notice to fix

(1)This section applies if a responsible authority considers on reasonable grounds that—

(a)a specified person is contravening or failing to comply with this Act or the regulations (for example, the requirement to obtain a building consent); or

(b)a building warrant of fitness or dam warrant of fitness is not correct; or

(c)the inspection, maintenance, or reporting procedures stated in a compliance schedule are not being, or have not been, properly complied with.

(2)A responsible authority must issue to the specified person concerned a notice (a notice to fix) requiring the person—

(a)to remedy the contravention of, or to comply with, this Act or the regulations; or

(b)to correct the warrant of fitness; or

(c)to properly comply with the inspection, maintenance, or reporting procedures stated in the compliance schedule.

(3)However, if a responsible authority considers that it is more appropriate for another responsible authority to issue the notice to fix, it must—

(a)notify the other authority that it holds that view; and

(b)give the other authority the reasons for that view.

(4)The other responsible authority referred to in subsection (3) must issue the notice to fix if it considers that this section applies.

[23]   The content of the covering email on 3 July 2020 confirms that the draft notice to fix was sent to the receiving staff members for their review before it was to be sent to the Council’s legal advisors for advice.

[24]   The Council has produced a copy of an internal document, entitled “Notice to Fix Timeline Form”, which is not privileged. This standard form records the events leading up to the issue of the final version of the notice to fix on 8 July 2020:

(a)On 1 July 2020, the Council sent an email to the builder requesting that the builder stop work and provide a surveyor’s certificate.

(b)On 3 July 2020, there was a meeting at the Council’s offices, between Council staff, the building designer, the surveyor and the property owner. The form notes “discussed issue and informed an NTF will be issued”.

(c)On 3 July 2020, the draft notice to fix was “sent to Nathan Speirs lawyer”.

[25]   The Council argues that the draft notice to fix and the internal email on 3 July 2020 attract litigation privilege under s 56 of the Act.

[26] Counsel for the plaintiffs submitted that s 56 does not apply because the dominant purpose of preparing the draft notice to fix, and seeking legal advice on the draft, was to fulfil Council’s statutory duty to issue a notice under s 164 of the Building Act. However, even if that is correct, the draft notice to fix was prepared for the purpose of being laid before the Council’s legal advisor for advice. The draft arose out of the relationship of solicitor and client. The privilege in s 54 of the Act accordingly applies.

HDC.04.00049

[27]   This document is a spreadsheet prepared by a Council staff member on or around 13 July 2020. The spreadsheet lists various parties involved in the construction of the building, and includes comments speculating on liability, including apportionments that might be made among joint tortfeasors.

[28]   The author of the document provided an affidavit confirming that the spreadsheet is an unfinished piece of work, intended for internal use and for the Council’s legal advisors. There is no evidence that the spreadsheet was ever sent to any other party.

[29]   I am satisfied that the spreadsheet was prepared after litigation was reasonably apprehended, and for the dominant purpose of preparing for a potential claim against the Council. It is privileged under s 56 of the Act.

HDC.04.00050 and 51

[30]   This document is an internal email sent by a Council staff member to several other staff members on 10 September 2020. The email forwarded an exchange of internal Council emails from 2011, which relate to a different property and different issues. These emails from 2011 are irrelevant and need not be produced.

[31]   The email between Council staff on 10 September 2020 includes comments on another party to this litigation, including comments relevant to the construction issues that had arisen  with the  building on  the  plaintiffs’ property.  The email  sent  on  10 September 2020 was prepared after litigation was reasonably apprehended, and for the dominant purpose of preparing for a potential claim against the Council. It is privileged under s 56 of the Act.

HDC.05.0004 and HDC.04.00052

[32]   On 31 May 2021, the plaintiffs’ expert building surveyor sent a copy of his report on the building defects, the “QSPEC Report”, to a Council staff member. The report included a schedule of the defects with comments by the building surveyor on the parties he considered liable for each defect.

[33]   Later the same day, the recipient Council staff member forwarded the email to another staff member, including the QSPEC defects list annotated by the staff member with comments on the potential liability of various parties involved in the construction.

[34]   I am satisfied that the annotation of the QSPEC defects list with the Council staff members comments on liability, and the provision of that defects list to another staff member by email, was for the dominant purpose of preparing for a potential claim against the Council. The documents are privileged under s 56 of the Act.

Costs

[35]   The plaintiffs’ application has been unsuccessful with one exception, which is document HDC.05.00037. Council elected to waive its claim for privilege in respect of that document after being served with the plaintiffs’ application.

[36]   The Council is the successful party, and my preliminary view is that costs should follow the event. Counsel for the plaintiffs has filed submissions on costs dated 18 August 2023, running to six pages. Counsel for the plaintiffs wishes to make further submissions.

Result

[37]   The plaintiffs’ application for orders setting aside or modifying the third defendant’s claims of privilege is dismissed.

[38]If the parties are unable to agree on costs, then:

(a)the third defendant may file written submissions on costs, of no more than three pages, by 8 September 2023 ;

(b)the plaintiffs may file and serve written submissions on costs, of no more than three pages, by 15 September 2023;

(c)the third defendant shall have no right of reply;

(d)I will determine costs on the papers.

Associate Judge Brittain