Sim v Grant
[2023] NZHC 2411
•31 August 2023
IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE
CIV-2022-412-116
[2023] NZHC 2411
BETWEEN ALEXANDER TURFUS SIM
Plaintiff
AND
DAVID JAMES GRANT
First Defendant
AND
ALEXANDRA STONE QUARRIES LIMITED
Second Defendant
Hearing: 30 August 2023 Appearances:
K J Logan for Plaintiff
A J More for First and Second Defendants
Judgment:
31 August 2023
JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 31 August 2023 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
SIM v GRANT [2023] NZHC 2411 [31 August 2023]
Introduction
[1] This is an application by the plaintiff seeking particular discovery and setting aside claims of confidentiality.
[2] There are 12 categories of documents that the plaintiff says the defendants have not discovered set out in the notice of application.
[3] The defendants have not opposed the application. They have, however, just a few days prior to the hearing, disclosed over 400 further documents not contained in their previous sworn and unsworn affidavits of documents. Notwithstanding the further disclosure, the plaintiff’s position remains that the defendants have failed to comply with their discovery obligations and will, in effect, need to begin the discovery exercise afresh.
Background
[4] The plaintiff says that he and the first defendant agreed to go into business together to own and operate a schist stone quarry business, but the first defendant and the second defendant, being a company in which the first defendant is a director and shareholder, has excluded him entirely from the business.
[5] The statement of claim contains three causes of action alleging breach of fiduciary duties, breach of a joint venture arrangement, and breach of contract. The remedies sought include an account of profits and damages.
[6] The defendants deny the existence of a partnership or joint venture arrangement or that there was ever any contract as pleaded.
[7] The proceeding was commenced in October 2022. On 3 February 2023, I made an order for standard discovery to be completed by 14 April 2023. I also required the defendants to provide their initial disclosure by 7 February 2023.
[8] The defendants served their initial disclosure on 7 February 2023, and on 1 May 2023 they filed an affidavit of documents which listed very few documents. It
plainly did not comply with the requirements of r 18.15 or cls 6 and 7 of sch 9 of the High Court Rules. By way of example, r 8.14 requires a party to make a reasonable search for documents within the scope of a discovery order, and r 18.15 requires an affidavit of documents to give particulars of steps taken to fulfil the party’s discovery obligations. The defendants’ affidavit of documents contains the bald assertion the first defendant had diligently searched for documents required by the discovery order. Not only is that inadequate, but subsequent events also suggest it to be incorrect.
[9] Counsel for the plaintiff raised non-compliance with the requirements of the High Court Rules and the paucity of discovered documents with counsel for the defendants. In an email of 3 May 2023, counsel for the defendants accepted there was some merit in the matters raised and said he would take instructions from his clients.
[10] On 12 May 2023, I made directions by consent amending the timetable and requiring the defendants to complete discovery by 26 May 2023.
[11] On 26 May 2023, the defendants filed an unsworn supplementary affidavit of documents. Again, it was not compliant with the Rules and was incomplete. On 29 May 2023, counsel for the plaintiff again wrote to the defendants’ counsel and, on 31 May 2023, the defendants filed a further unsworn affidavit of documents. It appears that affidavit was never sworn, or if it has been sworn, it has never made its way to the Court file.
[12] On 7 June 2023, a case management conference was convened. In my minute of that conference I noted that discovery issues needed to be resolved. I directed the plaintiff to file an application for further discovery by 21 June 2023, for any notice of opposition to be filed by 5 July 2023, and set the application down to be heard before me on 30 August 2023.
[13] This application was filed on 21 June 2023, but the defendants did not file any opposition to it by 5 July 2023 or at all. However, on 23 May 2023, Mr More filed a memorandum with the Court in respect to the application saying that his instructions were as follows:
(a)that everything in the possession of the defendants had been discovered;
(b)not all discovery had been provided to the plaintiff in affidavit form, which was being remedied;
(c)as counsel’s instructions were that all documents had been discovered, no notice of opposition to this application had been filed; and
(d)in respect to the plaintiff’s application disputing claims to confidentiality, it was a matter for the Court to determine whether sensitive commercial information should be disclosed.
[14] Consistent with that memorandum, also on 23 August 2023, the defendants’ counsel provided the plaintiff’s counsel with a link to access more than 400 previously undisclosed documents.
The High Court Rules
[15] Standard discovery requires disclosure of documents of actual and direct relevance. Relevance is determined by the pleadings and, in this context, the case of the party who seeks discovery must be assumed to be true and not that of the party from whom discovery is sought.
[16] The present application for particular discovery is made under r 8.19 of the High Court Rules. On such applications, the key issue tends to be whether there are grounds for believing a party has not discovered documents that should have been discovered. The Court generally adopts the following four-stage approach to such applications as outlined in Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd:1
1 Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd [2015] NZHC 2760; [2018] NZAR 600 at [12]
(a)Are the documents sought relevant, and if so how important will they be?
(b)Are there grounds for belief that the documents sought exist? This will often be a matter of inference. How strong is that evidence?
(c)Is discovery proportionate, assessing proportionality in accordance with Part 1 of the Discovery Checklist in the High Court Rules?
(d)Weighing and balancing these matters, in the Court’s discretion applying r 8.19, is an order appropriate?
[17] The Court’s power to set aside or modify a claim to confidentiality made in an affidavit of documents is contained in r 8.25 of the High Court Rules. For reasons I shall come to, it is not necessary to set out the principles that apply on such an application at this time.
My approach
[18] The plaintiff’s application is supported by two affidavits identifying the further documents sought and their relevance to the subject matter of the proceeding. There is good reason to believe that such documents exist and are in the possession and control of the defendants, and Mr More did not suggest otherwise. There is also no suggestion that it would not be proportionate to order further discovery of documents in those categories or that there are matters that might weigh against making the order sought in the exercise of the Court’s discretion.
[19] The only sworn affidavit of documents of the defendants is dated 1 May 2023, which is plainly deficient. The later unsworn affidavits are also deficient and if sworn and filed now would not satisfy the defendants’ discovery obligations.
[20] In those circumstances, I understand it is accepted there is a need for the defendants to effectively begin the discovery exercise afresh, but this time having
regard to the requirements of the Rules and the plaintiff’s entitlement to discovery of the additional documents set out in its application.
[21] In relation to the challenge to the defendants’ claim for confidentiality, Ms Logan asked me to make an order setting those claims aside, but as I pointed out to her the claims have not yet been made in a sworn affidavit of documents. It appears sensible that no decision be made in respect of that matter until the defendants file an affidavit of documents compliant with the Rules.
Result
[22] The defendants shall, by 21 September 2023, file a further affidavit of documents providing standard discovery, which affidavit shall be compliant in all respects with r 8.15 of the High Court Rules.
[23] In addition, the defendants’ affidavit of documents must state whether the documents set out in para 1(a)(i)-(xii) (inclusive) in the plaintiff’s application of 21 June 2023 are or have been in their control, their best knowledge and belief as to when any such documents ceased to be in their control, and who now has control of them. Any such documents in the defendants’ possession or control must be disclosed.
[24] The plaintiff’s application to set aside the defendants’ claim to confidentiality shall be adjourned to be brought back on for hearing if necessary on the application of the plaintiff at any time following the filing of the defendants’ further affidavit of documents.
[25] In respect to costs, the plaintiff seeks indemnity or increased costs. As I indicated to Mr More, it appears to me that there should be no issue as to the plaintiff’s entitlement to costs. The issue is whether there are grounds for an award of above scale costs. Counsel are agreed that costs shall be reserved at the present time. The plaintiff shall file and serve within seven days any submissions on costs as well as calculation of its costs claims. If costs cannot be agreed, the defendants shall file any submissions at the same time as their further affidavit of documents. Any submissions
from either party shall be no longer than five pages. I expect that costs can then be determined on the papers.
O G Paulsen Associate Judge
Solicitors:
Ross Dowling Marquet Griffin, Dunedin Gallaway Cook Allan Lawyers, Dunedin
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