Rollex Group (2010) Ltd v Chaffers Group Ltd

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2011-485-166 [2012] NZHC 1332

BETWEEN  ROLLEX GROUP (2010) LIMITED AND ROBERT JOHN LAURIE

Plaintiffs

ANDCHAFFERS GROUP LIMITED First Defendant

ANDJARED WILLIAM THOMPSON Second Defendant

ANDGAVIN RONALD SNOWSILL Third Defendant

ANDGLENN CHARLES TULLOCH Fourth Defendant

ANDCHAFFERS FINANCE LIMITED Fifth Defendant

Hearing:         23 April 2012

Counsel:         I R Millard QC for Plaintiffs

N I Burley for First and Fourth Defendants

Judgment:      13 June 2012

JUDGMENT OF THE HON JUSTICE KÓS

Introduction

[1]      Emails between some of the defendants and their solicitor have somehow come into the possession of the plaintiffs.  May the plaintiffs produce these emails in evidence at trial?

[2]      In  the  ordinary  course  such  communications  would  be  protected  from

production by legal adviser privilege.  That was formerly known as “solicitor-client

ROLLEX GROUP (2010) LIMITED & ANOR v CHAFFERS GROUP LIMITED HC WN CIV 2011-485-166 [13 June 2012]

privilege”.  The plaintiffs accept that the emails are, on the face of things, privileged. But they say that privilege in three emails has been lost, for two reasons.   First, because there is a prima facie case that they were prepared for a dishonest purpose. Secondly, because any privilege has been waived by the defendants.

Background

[3]      In October 2009 the New Zealand business of Chaffers Group Ltd, the first defendant, was put up for sale.   It was formerly called Rollex Group Ltd, and in this judgment I will call it “Rollex/Chaffers”.   It sold supermarket and industrial packaging equipment and materials.  It had sole New Zealand distribution rights for certain lines of butchery and delicatessen equipment, including film wrapping machines.  It also supplied film.  It had also started to sell an electronic shelf price labelling system to supermarkets.

[4]      Mr  Tulloch,  the  fourth  defendant,  was  sole  director  of,  and  majority shareholder in, Rollex/Chaffers. Mr Thompson, the second defendant, was its managing director.   Mr Snowsill, the third defendant, was the technical director. Messrs Thompson and Snowsill were minority shareholders in Rollex/Chaffers.

[5]       Prospective purchasers were given an information memorandum.   It was prepared by Rollex/Chaffers’ broker in October 2009.   The memorandum sets out Rollex/Chaffers’ 2009 EBITDA (earnings before interest, tax, depreciation and abnormal items) as $937,502.  The asking price of the business was said to be three times that figure, $2.81 million, plus stock. EBITDA for the first five months of the current financial year was said to be $430,047.  Projected EBITDA for the 2010 year was given as $956,967.

[6]      The memorandum also said that Rollex/Chaffers had sold five Atmopacks. This was a new poultry packaging method.  Foodstuffs Wellington was said to want to phase in packaging of all fresh chicken using Atmopacks.  The memorandum said this would hugely increase the amount of film supplied by Rollex/Chaffers’ business. It could add $400,000 to the bottom line annually.  If Foodstuffs Auckland and South

Island came aboard too, that could add another $1,000,000 per annum.   However, this was “by no means a certainty”.

[7]      On 24 November 2009 a conditional agreement for sale and purchase of the…