Taua v Tahi Enterprises Limited
[2020] NZHC 2899
•4 November 2020
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-001589
[2020] NZHC 2899
BETWEEN TE WARENA TAUA, GEORGE HORI WINIKEREI TAUA, NGARAMA
WALKER and MIRIAMA TAMAARIKI as
trustees of the Te Kawerau Iwi Tribal Authority
Plaintiffs
AND
TAHI ENTERPRISES LIMITED
First Defendant
DIANNE LEE
Second DefendantTAO (MARTIN) LI
Third Defendant
Hearing: 7 August 2020 Appearances:
J S Langston for the Plaintiffs C Upton for the Defendants
Judgment:
4 November 2020
JUDGMENT OF ASSOCIATE JUDGE GARDINER
This judgment was delivered by me on 4 November 2020 at 3.30 p.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date.......................................
Solicitors:
Shieff Angland, Auckland LeeSalmonLong, Auckland
TAUA v TAHI ENTERPRISES LTD [2020] NZHC 2899 [4 November 2020]
Introduction
[1] This is an application by the defendants, under r 10.12 of the High Court Rules 2016, that this proceeding (relating to breach of confidence) and proceeding CIV-2017-404-435 (“the earlier proceeding”) are consolidated and case managed together, and that the two proceedings be tried at the same time. The alternative application sought in the notice of application (that this proceeding be stayed until after determination of the earlier proceeding) was not pursued at the hearing.
[2] The plaintiffs oppose the defendants’ application and contend that consolidating the proceedings or having them case managed together will prejudice the plaintiffs and will delay progressing this proceeding.
[3] An interlocutory application in the earlier proceeding was heard with this application. That application, brought by the first and second defendants, sought particular discovery of any registers of the individual members of the Te Kawerau ā Maki iwi (“the Iwi”) in the control of the plaintiffs. They also sought discovery of other specific documents and objected to redactions made and confidentiality claimed. The outcome of that application is the subject of a separate judgment.
The earlier proceeding
[4] The first and second defendants in this proceeding, Tahi Enterprises Ltd (“Tahi”) and Dianne Lee (“Mrs Lee”), are the first and second plaintiffs in the earlier proceeding. The third defendant in this proceeding, Tao (Martin) Li (“Mr Li”), is Mrs Lee’s husband. Mr Li is not a party in the earlier proceeding.
[5] The plaintiffs in this proceeding, the trustees of the Te Kawerau Iwi Tribal Authority (“the Tribal Authority”), are the second defendants in the earlier proceeding.
[6] The earlier proceeding arises out of three alleged agreements involving Tahi, Mrs Lee, Te Warena Taua (“Mr Taua”) and the Iwi. The first of these was a joint venture agreement dated 27 June 2007 (“the 2007 Agreement”). The named parties to the 2007 Agreement were Tahi and “Te Kawerau ā Maki”. Mrs Lee signed the
document for Tahi, and Mr Taua and Piki Taylor for the Iwi. Under the 2007 Agreement, Tahi agreed to provide funding of up to $2 million “in support of Te Kawerau’s Treaty claims process”. In consideration for receiving the sums, the Iwi agreed that Tahi would be its exclusive partner in all commercial developments undertaken using the proceeds of the settlement of the Iwi’s Treaty of Waitangi claims. Profits would be shared 35 per cent to Tahi and 65 per cent to the Iwi.
[7] The second agreement was signed on 22 July 2008 and purported to vary the 2007 Agreement (“the Variation Agreement”). The signatories to the Variation Agreement were Mrs Lee on behalf of Tahi, and Mr Taua and Hariata Ewe on behalf of the Iwi. Under that agreement, Tahi agreed to pay further instalments on certain dates, and the Iwi agreed to repay the sums on a certain event.
[8] In the third agreement, Mr Taua agreed to assign to Mrs Lee his four per cent interest in the Iwi’s treaty settlement, in return for ownership of a property in Mangere where he had been living and financial assistance of $220,000 (“the Mangere Property Agreement”).
[9] The Iwi reached a settlement with the Crown in relation to its historical Treaty of Waitangi claims on 22 February 2014. This settlement came into effect through the Te Kawerau ā Maki Claims Settlement Act 2015.
[10] In September 2016, the Iwi, the Tribal Authority and Mr Taua purported to cancel the 2007 Agreement and the Variation Agreement. Tahi and Mrs Lee filed the earlier proceedings.
[11]Tahi and Mrs Lee’s causes of action in the earlier proceeding are:
(a)Damages for breach of the 2007 Agreement and the Variation Agreement (first cause of action).
(b)In the alternative, unjust enrichment and equitable compensation (second cause of action).
(c)Subrogation to the defendants’ indemnity rights and a charge (third cause of action).
(d)Specific performance of the Mangere Property Agreement or damages in lieu of specific performance (fourth cause of action).
(e)Judgment against Mr Taua for unpaid rent (fifth cause of action).
This proceeding
[12] This proceeding arose after the defendants’ solicitors informed the plaintiffs’ solicitors on 30 July 2019 that while complying with the discovery order in the earlier proceeding, the defendants had found in their possession a copy of the register of members of the Iwi as at 18 December 2013. In this judgment and my judgment on the interlocutory application for particular discovery in the earlier proceeding, I refer to this document as the “List of Members”, and the current database of members of the Iwi as the “Register of Members”.
[13] The defendants claimed that the List of Members was given to Mr Li by Mr Taua on 19 December 2013 at a hui held by the Iwi to ratify the deed of settlement with the Crown and the post-settlement governance entity. The List of Members identifies the names and addresses of 230 members of the Iwi.
[14] In the correspondence that followed, the solicitors for the plaintiffs advised that the List of Members was confidential, the release of the List to Tahi had not been authorised and that Mr Taua denied giving the document to Mr Li. The plaintiffs also came to believe that the defendants held other documents, which the plaintiffs considered confidential, relating to the Tribal Authority’s private and confidential negotiations with the Crown and the Iwi’s settlement with the Crown (“the Further Documents”). They say that further particulars of the documents are unknown to the plaintiffs at the time.1
1 Amended statement of claim dated 26 February 2020 at [20].
[15] Tahi denied any wrongdoing and indicated an intention to use the List of Members to identify individual iwi members for the purpose of joining them as defendants in the earlier proceeding.
[16] On 8 August 2019, the plaintiffs filed this proceeding and an application for an interim injunction restraining the defendants from using, communicating or disclosing any confidential information of the Tribal Authority that was obtained surreptitiously or during the course of the second and third defendants’ employment with the Tribal Authority relating to the Register of Members, including the List of Members and its business (including details of the Iwi’s settlement with the Crown).
[17] The plaintiffs’ application for an interlocutory injunction came before Jagose J on 29 August 2019.2 On 18 December 2018, in the earlier proceeding, the trustees of the Tribunal Authority had been ordered by Associate Judge Smith to provide Tahi with the Register of Members following an interlocutory application for pre-commencement discovery by Tahi and Mrs Lee.3 That decision had been appealed by the Tribunal Authority trustees and cross-appealed by Tahi and Mrs Lee. In view of Associate Judge Smith’s order, the parties reached an interim accommodation. The defendants undertook not to use the information at issue in this proceeding in any way until after the Court of Appeal’s decision was made.
[18] The defendants now apply to have this proceeding consolidated and case managed with the earlier proceeding. The defendants contend that:
(a)Common questions of law and fact arise in both proceedings;
(b)The rights to relief claimed in the proceedings are in respect of or arise out of the same series of events and same series of transactions;
(c)Consolidation will achieve savings in time and cost to the parties, and of judicial resources; and
2 Taua v Tahi Enterprises Ltd HC Auckland CIV-2019-404-1589, 29 August 2019 (Minute of Jagose J).
3 Tahi Enterprises Ltd v Taua [2018] NZHC 3372.
(d)A serious risk of inconsistent decisions will be removed if the proceedings are consolidated.
[19] The plaintiffs oppose consolidation, saying that the issues in question in the two proceedings are separate and distinct, the events out of which relief arises are different, and consolidation will delay this proceeding, not produce savings and will result in serious injustice to the plaintiffs.
Legal principles
[20]At the hearing, the parties agreed on the applicable legal principles.
[21] The Court may make orders that two or more proceedings be consolidated if the Court is satisfied:4
(a)that some common question of law or fact arises in both or all of them; or
(b)that the rights to relief claimed therein are in respect of or arise out of:
(i)the same event; or
(ii)the same transaction; or
(iii)the same event and the same transaction; or
(iv)the same series of events; or
(v)the same series of transactions; or
(vi)the same series of events and the same series of transactions; or
(vii)that for some other reason it is desirable to make an order under this rule.
4 High Court Rules 2016, r 10.12.
[22] The power to consolidate proceedings is a wide discretion, to be exercised broadly in the interests of justice.5 The Court may consolidate the proceedings on such terms as it thinks just; order them to be tried at the same time but without consolidation; order them to be tried sequentially; or order one to be stayed until the other has been determined.
[23] The Courts must “balance all the considerations of justice, convenience and expense” in determining whether to consolidate proceedings.6 Relevant considerations in the Court’s exercise of the discretion include:7
(a)whether time and cost for the parties (and the Court) will be saved;8
(b)whether judicial resources will be used more efficiently;9 and
(c)whether the risk of inconsistent findings (of fact and/or law) will be eliminated or reduced.10
[24] The existence of some degree of commonality between the proceedings and a potential for inconsistent findings does not necessarily lead to a conclusion that the proceedings should be consolidated.11
Discussion
Common questions of law or fact — submissions
[25] The parties did not have an agreed position on the issues before the Court in this proceeding or the earlier proceeding.
[26] Central to the defendants’ argument for consolidation is their contention that the List of Members and the Further Documents came into their possession and are
5 Regan v Gill [2011] NZCA 607 at [10].
6 Gair v Newnhan [1934] 1 NZLR 662 (CA) at 665.
7 See McGechan on Procedure (online looseleaf ed, Thomson Reuters) at [HR10.12 03(3)].
8 Medlab Hamilton Ltd v Waikato District Health Board (2007) 18 PRNZ 517 (HC) at [8].
9 At [8].
10 CallPlus Ltd v Telecom New Zealand Ltd (2015) PRNZ 14 (HC) at [51].
11 Fairway Holdings Ltd v McCullagh [2019] NZCA 353 at [17] and [21].
held pursuant to their rights under the agreements at issue in the earlier proceeding (that is, the 2007 Agreement, the Variation Agreement, and the Mangere Property Agreement (together, “the Agreements”)).
[27] Mr Li says that Mr Taua gave him the List of Members at the hui for him and Mrs Lee to keep, in recognition of their contribution to the Iwi in relation to the Agreements, to thank them for assisting the Iwi to achieve the milestone reached that day, and for “various other matters where we gave assistance to Mr Taua and the Iwi”.
[28] On that basis, the defendants maintain that an issue in this proceeding is their entitlement to use the List of Members and the Further Documents pursuant to their rights under the Agreements. As the nature and extent of their rights generally under the Agreements is at issue in the earlier proceeding, this key question of fact and law falls to be determined in both proceedings.
[29] Further, the defendants say that Mr Taua gave the List of Members to Mr Li in pursuance of the Agreements and acting as agent and/or trustee of the Tribal Authority and the Iwi members. Mr Taua’s capacity to act as agent and/or trustee of the Tribal Authority and the Iwi members is an issue in the earlier proceeding. So again, there is commonality.
[30] In addition, they contend that in the earlier proceeding they will rely on the provision of the List of Members and Further Documents to the defendants as evidence of the parties’ performance of the Agreements. If, as the plaintiffs contend, the documents were obtained surreptitiously, or during the second and third defendants’ employment with the Tribal Authority, that will be significant in both proceedings.
[31] Mr Taua, on the other hand, denies giving the List of Members to Mr Li or saying any of the things Mr Li asserts in his evidence. He says that he understood the personal and confidential nature of the information in the Register of Members and that he would not provide that information to anyone without the permission of the Iwi members concerned.
[32] Rewi Newton, an employee of the Tribal Authority, has been responsible for maintaining the Register of Members since 2010. The database is stored on his computer. His evidence is that the information contained in it concerning the Iwi members is treated as personal information under the Privacy Act 1993 and is not given to any third parties (including trustees of the Tribal Authority) unless there is good reason, for a specific purpose and it is done on a confidential basis. The application form says that the information supplied by registrants is confidential within the terms of Privacy Act 1993 and for the lawful use of the Tribal Authority.
[33] Mr Newton does not recall providing the List of Members to Mr Li or Mrs Lee. The List of Members as at December 2013 was created by Elections NZ for the Tribal Authority, to enable voting at the information hui. It was also used to confirm attendance at the hui and update contact details. Mr Newton recalls that Mr Li assisted in preparing an information booklet that was handed out at the hui. Mr Taua says that if Mr Li attended the hui, he did so as an employee of the Tribal Authority (Mr Li was employed by the Tribal Authority from October 2010 to 30 June 2016). Mr Newton says that it is possible, but unlikely, that Mr Li was provided the List of Members so he could assist in checking off the Iwi members who attended. If that was the case, he would have received the list as an employee.
[34] The plaintiffs contend that the issues in this proceeding are of a narrow compass, being:
(a)Is the List of Members a confidential document belonging to the Tribal Authority?
(b)Did Mr Taua give the document to Mr Li on 19 December 2013? If yes, was the List of Members supplied in circumstances that suggested a duty of confidence?
(c)If no, how did Mr Li obtain the List of Members?
(d)Do Tahi, Mrs Lee and Mr Li hold any other confidential documents belonging to the Tribal Authority?
(e)Are the defendants entitled to possess and use the List of Members and the Further Documents under the Agreements?
(f)Does the settlement between the Tribal Authority and Mr Li dated 20 October 2016 preclude the Tribal Authority trustees from bringing a breach of confidence claim against the defendants?
[35] The plaintiffs submit that the issues at (a) to (e) involve an analysis of each document and the circumstances of how each document came into the defendants’ possession.
[36] The plaintiffs contend that there are numerous issues in the earlier proceeding, the majority of which are unconnected to the issues in this proceeding. In support of that, they submitted a schedule of what they say are the 26 issues to be determined in the earlier proceeding. They say that Mr Taua’s authority to provide the List of Members to Mr Li on 13 December 2013 is not an issue in the earlier proceeding. In that proceeding the central issue is whether Mr Taua acted as a trustee for all Iwi members or acted as an agent (under express authority for all Iwi members and the Tribal Authority trustees) when he executed the Agreements in 2007 and 2008.
Common questions of law and fact — conclusion
[37] I accept as correct the statement of issues in this proceeding articulated by the plaintiffs. The focus of this proceeding is:
(a)The nature of the documents in question, including whether the List of Documents and the Further Documents were confidential to individual Iwi members and/or the Tribal Authority. This will involve considering the List of Documents in the context of the Privacy Act 1993, as the starting point must be that the information contained in the List is the personal information of the individuals concerned.
(b)How Mr Li and Mrs Lee came to possess the documents (surreptitiously, through their employment or in pursuance of the Agreements).
(c)If the documents were confidential, whether they have retained that character such that the defendants should be prevented from using them and should be required to deliver them up to the plaintiffs.
[38] None of these issues feature in the earlier proceeding. The focus of that proceeding is on whether Mr Taua and Mrs Taylor (in relation to the 2007 Agreement) and Mr Taua and Ms Ewe (in relation to the Variation Agreement) had authority to execute the Agreements on behalf of Iwi members, whether they were acting as agents and/or trustees, and whether Iwi members over the age of 18 acted as agents and/or trustees for all Iwi members, whenever born.
[39] It is not immediately obvious to me why the Tribal Authority would give Mr Li and/or Mrs Lee a List of Members “in furtherance of” the Agreements. The defendants did not explain specifically for what purpose the List was allegedly provided. In any case, it is not apparent to me how a determination on whether these documents came into their possession under the Agreements would advance the authority issue at the heart of the earlier proceeding one way or another. There is no dispute between the parties in the earlier proceeding that the Agreements were signed and were not purported to be cancelled until September 2016. If the List of Documents was provided to Mr Li by Mr Taua in 2013 “pursuant to the Agreements” as the defendants maintain, that does no more than prove that those individuals were acting consistently with there being agreements in place at that time. However, it has minimal if any relevance to the issue of the authority of Mr Taua, Mrs Taylor and/or Mrs Ewe to act as agents or trustees for individual Iwi members when signing the 2007 Agreement and the Variation Agreement.
[40] I conclude that there is insufficient commonality with the earlier proceeding in terms of the issues before the Court to justify consolidation.
[41] I note that the defendants have argued that this Court has already ruled that any confidentiality in the List of Members is subordinate to the defendants’ rights to use the List in its litigation, referring to the decision of Associate Judge Smith in the earlier proceeding.12 Associate Judge Smith was concerned with whether any rights of individual Iwi members to privacy in the information contained in the Register (by virtue of the principles of the Privacy Act 1993) are enforceable in the Court or prevent the making of a discovery order. This proceeding is concerned with a different question, namely whether the defendants have acquired and hold information that is confidential to the plaintiffs or individual Iwi members and should be returned to them. I do not take Associate Judge Smith to have concluded that the information in the List and/or Register is not inherently personal or confidential.
Same series of events and transactions
[42] The defendants say that the plaintiffs claim rights to relief in this proceeding in respect of actions taken by the Iwi members (in particular, Mr Taua) in pursuance of the Agreements. Similarly, the defendants claim rights to relief in the earlier pleading in respect of those (and other) actions taken in pursuance of the Agreements. They say, therefore, that the rights to relief claimed in both proceedings arise out of the same series of events and transactions, being the entering into the Agreements and the pursuit of the Agreements by the parties.
[43] The plaintiffs submit that the relief only arises in this proceeding if Mrs Lee and Mr Li obtained the documents through their employment, or surreptitiously.
[44] I do not accept that the rights to relief arise out of substantially the same events and/or transactions. The relief sought by the defendants in the earlier proceeding arises out of the Agreements; payments made by Mrs Lee/Tahi pursuant to those Agreements and received by Mr Taua/the Iwi; the purported cancellation of the 2007 Agreement and Variation Agreement by the Tribal Authority; and Mr Taua’s alleged non-performance of the Mangere Property Agreement.
12 Tahi Enterprises Ltd v Taua [2019] NZHC 630.
[45] While those events and transactions form the broader factual backdrop to this proceeding, the specific events giving rise to the claim to relief in this proceeding by the plaintiffs are the acquisition by Mr Li and Mrs Lee of the List of Members and the Further Documents. I find therefore that consolidation is not justified on this ground.
Savings in time and costs, inconsistent decisions, justice
[46] The defendants contend that if this proceeding were to proceed out of step with the earlier proceeding, they (the defendants in this proceeding) would be required to prove a range of legal and factual issues twice, including:
(a)whether the Iwi entered into joint venture agreements through the agency and/or trusteeship of the Iwi parties and variation Iwi parties;
(b)whether the Iwi parties and variation Iwi parties were bound by the joint venture agreements and acted accordingly until at least 27 September 2016;
(c)whether the joint venture agreements were performed by the parties at least up until their purported cancellation on 27 September 2016;
(d)whether the benefitting Iwi members, Tribal Authority trustees and settlement trustees were bound by the assignment of Mr Taua’s four per cent interest in the settlement assets to Mrs Lee, and acted accordingly until at least 27 September 2016; and
(e)whether the Mangere Property Agreement was performed by the parties at least up until 27 September 2016.
[47] The plaintiffs maintain that consolidating the proceedings will materially prejudice the Tribal Authority trustees by delaying this proceeding. The earlier proceeding is awaiting a Court of Appeal decision which will either block or allow the joinder of hundreds of other persons (the individual Iwi members). They maintain that this proceeding, if allowed to progress, is likely to be heard before the earlier proceeding and take a fraction of the time to hear.
[48] Further, they point to serious injustice which they say would arise as consolidation would mean that the documents in this proceeding (including the List of Members) would be discoverable in the earlier proceeding, enabling the defendants to make use of documents which they have no right to possess.
[49] I am not convinced that consolidation of the two proceedings would save time and cost or be more efficient with judicial resources.
[50] I accept that if the two proceedings proceed separately there will be some duplication in terms of proving the broad factual background to the Agreements, the Iwi’s settlement with the Crown and the events that followed. However, I do not accept that it will be necessary for the defendants (in this proceeding) to prove all the points they say to establish, as they contend, that Mr Li and Mrs Lee received the documents in pursuance of the Agreements. It is not necessary for the agency or trustee aspects at issue in the earlier proceeding to be proven in this proceeding to establish the facts around the acquisition of the documents by Mr Li and Mrs Lee. This factual issue will be determined with reference to the evidence of Mr Li and Mrs Lee on the one hand and Mr Taua and Mr Newton on the other. These individuals have already filed affidavits addressing this factual issue, and the point could conceivably be determined on those affidavits, with cross-examination if that was thought necessary.
[51] The defendants are overstating the degree of overlap of the two proceedings. This proceeding is a reasonably focused claim for breach of confidence through which the plaintiffs seek the recovery of allegedly confidential documents. The earlier proceeding is much more complex and wide-ranging, concerns events which form the backdrop to, but not the direct focus of, this proceeding, and involves different relief. The plaintiffs in this proceeding are defendants in the other. Rather than simplifying matters and creating efficiencies, there is a risk that consolidation could result in confusion and greater complexity.
[52] Further, the defendants (in this proceeding) have said that they intend to use the information in the List of Members to identify individual Iwi members, so they can be joined as defendants in the earlier proceeding. Logically, whether they are
entitled to do so needs to be determined ahead of the earlier proceeding, not at the same time.
[53] I also accept that consolidation could result in injustice to the plaintiffs as it would have the effect of bringing the documents into the discovery pool in the earlier proceeding in circumstances where they may have been wrongly obtained. It is preferable that this issue is determined separately and if the documents are found to have been wrongfully obtained, they are returned to the plaintiffs.
[54] While I do not consider that the two proceedings should be consolidated, there are interdependencies between the two. Logically, this proceeding should be resolved ahead of the earlier proceeding, as it affects the defendants’ ability to join additional parties to that proceeding. However, if the Court of Appeal upholds the decision of Associate Judge Smith in the earlier proceeding, and the plaintiffs are required to discover the current Register of Members to the defendants, the plaintiffs may well conclude that this proceeding is redundant (as it concerns the List of Members). Therefore, it is appropriate that this proceeding is reviewed following the Court of Appeal’s decision to determine if there remain any live issues.
Result
[55]The application for consolidation is dismissed.
[56] This proceeding will be listed for a case management conference once the Court of Appeal has delivered its judgment on the appeal of Associate Judge Smith’s decision on the application for discovery of the Register in the earlier proceeding. Counsel are to notify the case officer when that has happened.
[57] At that conference, it will be determined whether there are any live issues remaining in this proceeding, in light of the Court of Appeal’s judgment. If there are, timetable directions will be made to have this proceeding heard, at the earliest opportunity.
[58] The parties are to confer in advance of the case management conference and, if possible, file a joint memorandum updating the Court five days in advance and proposing suitable timetable orders. Failing agreement, the plaintiffs are to file a memorandum five days in advance, and the defendants three days in advance.
Costs
[59] The plaintiffs are entitled to the costs of defending this application on a 2B basis. The parties are to file an agreed memorandum within two weeks and I will determine costs on the papers. Failing agreement, the plaintiffs are to file a memorandum within two weeks, and the defendants one week later.
Associate Judge Gardiner
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