Waihopai Valley Vineyard Limited v Savvy Vineyards 3550 Limited
[2015] NZHC 814
•23 April 2015
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV2014-404-001177 [2015] NZHC 814
BETWEEN WAIHOPAI VALLEY VINEYARD
LIMITED Plaintiff
AND
SAVVY VINEYARDS 3550 LIMITED First Defendant
CONSTELLATION BRANDS NEW ZEALAND LIMITED
Second Defendant
GIESEN WINES LIMITED Third Defendant
TREASURY WINE ESTATES (MATUA) LIMITED
Fourth Defendant
Hearing: 13 April 2015 Appearances:
G Illingworth QC and I C Bassett for Plaintiff
K W Fulton for First DefendantJudgment:
23 April 2015
(RESERVED) JUDGMENT (NO. 3) OF ANDREWS J [Further interlocutory applications by plaintiff and first defendant ]
This judgment is delivered by me on 23 April 2015 at 3.30 pm pursuant to r 11.5 of the High Court Rules.
..................................................... Registrar / Deputy Registrar
WAIHOPAI VALLEY VINEYARD LTD v SAVVY VINEYARDS 3550 LTD [2015] NZHC 814 [23 April 2015]
Introduction
[1] This judgment concerns:
(a) An application by the first defendant (“Savvy”) for orders that:
(i)litigation privilege claimed by Waihopai in respect of certain documents be set aside and the documents produced (unredacted) for inspection; and
(ii)confidentiality asserted in respect of a document be varied so that it may be disclosed to Savvy and witnesses;
(b)An application by the plaintiff (Waihopai) for an order that Savvy give further discovery; and
(c) An application by Waihopai to adjourn the trial fixture scheduled to commence on 29 June 2015, and make new timetable orders.
[2] Applications by Waihopai (relating to Savvy’s representation) and by Savvy (relating to redaction of parts of an earlier judgment) were resolved and do not need to be considered further.
Background
[3] The background to this dispute between Waihopai (owner of a vineyard in Marlborough) and Savvy (with whom Waihopai contracted as manager of the vineyard and purchaser of the grape harvest) has been set out in previous judgments, and was most recently summarised in my judgment (No. 2) delivered on 27 March
2015.1 It is not necessary to repeat it. The dispute focuses on the vineyard
management agreements (“the management agreements”) and grape supply
agreements (“the supply agreements”) between the parties, and the vineyard’s
2103/2014 harvest.
Savvy’s application for orders concerning Waihopai’s claim to privilege and
confidentiality
Litigation privilege
[4] The essence of this dispute is whether communications between Waihopai and two consultant viticulturalists (Dr D Jordan and Mr T Hoksbergen) are protected by litigation privilege pursuant to s 56 of the Evidence Act 2006. Waihopai has claimed litigation privilege on the grounds that the communications were made after
6 December 2013 (from which time Waihopai claims to have reasonably apprehended legal proceedings) and were for the dominant purpose of preparing for such proceedings. Savvy contends that legal proceedings were not reasonably apprehended at the time, and that in any event the dominant purpose of the communications was not preparation for such a proceeding.
[5] Section 56(1) of the Evidence Act provides that “privilege for preparatory materials for proceedings”:
… 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. …
[6] As under the common law rule which applied before the Evidence Act came into force, the test for litigation privilege has two parts:2
(a) proceedings must be either under way or apprehended; and
(b)the dominant purpose for the communication or information in respect of which litigation privilege is asserted must have been to prepare for the proceeding.
[7] The party asserting litigation privilege must establish both parts of the test.
[8] The first question is whether, and when, the dispute between Waihopai and
Savvy reached the stage at which proceedings were apprehended. In Commerce
2 See Dinsdale v Commissioner of Inland Revenue (1997) 11 PRNZ 325 (CA) at 326; this was confirmed under the Evidence Act 2006 in Official Assignee v Menzies HC Auckland CIV 2009-
404-3391, 4 May 2011 at [27].
Commission v Caltex New Zealand Ltd, Fisher J expressed the test for determining whether proceedings are apprehended as follows:3
The question is whether a reasonable person placed in the position of the party in question, and possessed of the same information at that time, would have regarded the future commencement of litigation as probable.
For litigation privilege to attach to a document, a vague apprehension of litigation at the time is insufficient but it is not necessary that there be a formal decision to litigate, or to defend, by or on behalf of the person or entity in question. That no formal decision is necessary follows from the fact that the test is an objective one. Nor is it necessarily sufficient that a particular employee of, or investigator for, the party had a subjective intention, purpose, or apprehension if that individual had no power to make significant decisions on behalf of the party in question. On the other hand, if the decision to litigate had been made by the party itself, or there had been even a decision to recommend litigation by an individual where it could be supposed that the recommendation would likely be followed, that seems in itself to be a critical fact from which the objective observer would almost certainly infer that at that point litigation was probable.
[9] On behalf of Waihopai its solicitor, Mr Botting stated in an affidavit sworn on
10 April 2015 that Waihopai apprehended proceedings from around late November
2013, when it realised that Savvy had laid canes in preparation for a large harvest. He identified a telephone conversation which occurred on 29 November 2013 as a definitive moment that shifted the matter towards legal proceedings. He exhibited to his affidavit a copy of the relevant portions of his file note of that conversation. The critical section reads:
Canes – Savvy has laid down 4 canes to maximise crop. More canes = more buds, more buds = more shoots, more shoots = more crops.
Four canes costs more to prune and you over crop the vines. On that vine spacing (2.2m), can’t handle it. It’s the same as running sheep in a paddock. Can only have some[sic] many sheep before there’s too much demand on the grass and soil. And have to prune bunches = extra cost for WVVL. Paul does 3 canes gives 12-15 tpa. Question for David Jordan. If only growing
9 TPA, only need 2 canes. That would save $.20-$.30 per vine in pruning.
Higher tonnages put vines under more stress. They’d produce less crop or
canes next season. More sheep in paddock.
Seasons shorter in this area. That area can handle 15 tpa. If above 15 tpa later harvesting, disease issues, frost issues, 8 tpa Pinot Noir.
They can’t do fertigation this season to the extent they wanted to. Should slash the fertigation budget by half. They laid too many canes last year. Every decreasing circles.
[10] For Waihopai, Mr Illingworth submitted that the Court should accept Mr Botting’s evidence that, from at least November 2013, Waihopai apprehended that litigation against Savvy was likely. He submitted that Mr Botting is an officer of the Court, and his sworn evidence on this point should be accepted as determinative.
[11] Having reviewed Mr Botting’s file note, which he says was the moment when litigation was first apprehended, I am not satisfied that it establishes that litigation was apprehended at that time. While it appears at this point that Waihopai had concerns with the way the vineyard was being managed, and while it intended to make inquiries of Dr Jordan about this, there is no indication of legal proceedings being apprehended. Mr Botting’s suggestion that litigation was an obvious outcome (on the basis that Savvy had laid extra canes) is far from obvious from the file note. Indeed, the file not also discloses that Savvy had laid extra canes the previous year, and while this appears to have been a point of concern to Waihopai, it did not lead to litigation.
[12] Ultimately, the larger than expected harvest in 2014 proved to be a trigger point which brought the dispute between Waihopai and Savvy to a head. However, it was not clear at this early stage that proceedings were apprehended. Waihopai’s decision to seek advice from Dr Jordan is equally consistent with a party seeking information from a consultant viticulturalist; information that it intended to use in discussions with Savvy. Accordingly, I do not accept that litigation was apprehended as from the date of this conversation. For that reason, litigation privilege cannot attach to the communications in question.
[13] Even if Waihopai had established that it reasonably apprehended proceedings at the time of the telephone discussion on 29 November 2013, it would still have to establish that the dominant purpose of the communications in question was to prepare for such proceedings. This test requires that litigation was the predominant
purpose, not merely one of two equal purposes.4
4 See Dinsdale v Commissioner of Inland Revenue, above n 2, at 326.
[14] In order to assess this question, regard must be had to the content of the documents in respect of which privilege is claimed. It is often the case that where privilege is disputed, the Court will be assisted by being provided the relevant documents to review.5 In the present case, Waihopai has not provided the Court with copies of the documents in respect of which privilege is disputed. As a result, the Court is not able to assess their content, except to the extent that can be carried out
on the basis of the information provided by Mr Botting. All Mr Botting says is that all of the documents in respect of which litigation privilege has been claimed are communications “which were made for the dominant purpose of preparing for a proceeding or an apprehended proceeding and to advise Waihopai”.
[15] I am not satisfied that the documents are not at least equally consistent with Waihopai making general inquiries before discussing an issue with Savvy. In the circumstances, I am not satisfied that the predominant purpose of the documents was preparation for proceedings. Rather, the documents appear to fall into a similar class to preliminary reports in insurance cases, where proceedings are a possibility, but
only one of several possible outcomes.6
[16] I therefore conclude that litigation privilege does not attach to the documents in question. Accordingly, Waihopai is ordered to produce the unredacted documents (being communications with Dr Jordan and Mr Hoksbergen) in respect of which litigation privilege has been claimed.
Confidentiality
(a) ASB document
[17] Waihopai has disclosed a document as W91-W94. In the disclosed document, the whole of pages W91 and W92, and three-quarters of page W93, are redacted (blacked out). Savvy seeks an order that the complete document be
disclosed.
5 See, for example, General Accident Fire & Life Assurance Corp Ltd v Elite Apparel Ltd [1987]
1 NZLR 129 (CA) at 133; Guardian Royal Assurance v Stuart [1985] 1 NZLR 596 (CA).
6 See, General Accident Fire & Life Assurance Corp Ltd v Elite Apparel Ltd and Guardian Royal
[18] As Savvy had not seen any of the redacted portions of this document, Mr Fulton was unable to make detailed submissions. However, at the hearing, he was provided with a copy of page W91, on which the heading is unredacted. It is apparent that the document is a finance proposal for ASB Bank, dated 4 April 2014.
[19] Mr Illingworth submitted that the redacted portions of the document are not relevant to the matters at issue in the proceeding, and that the relevant portions were not redacted.
[20] A complete unredacted copy of the document was provided to the Court. As indicated to Mr Illingworth it is, in the circumstances, difficult for the Court to assess relevance or to assess whether the document advances or adversely effects either Savvy’s or Waihopai’s case. I have concluded that the full document should be disclosed, but subject to the commercial confidentiality protocol agreed between the parties: that is, printed on yellow paper, and to be made available in the first instance to Savvy’s solicitors and counsel, and any independent expert witness.
[21] I so order. I record that the unredacted document provided to the Court has not been copied, and I direct the Registry to return it to Waihopai’s solicitors, McLeod & Associates.
(b) Communications with ASB Bank
[22] Savvy seeks disclosure of documents being communications between
Waihopai (Mr Botting, Mr Chen, and any other person) and ASB Bank between
1 September 2013 and 20 May 2014, relating to the 2013/2014 harvest, including whether a sale agreement (conditional or otherwise) was in place, the revenue expected, the basis and source of such revenue, the strategy to terminate the contracts, and harvest information.
[23] Mr Fulton submitted that it is clear from disclosed documents and affidavit evidence that the ASB was monitoring Waihopai and receiving reports (which included reference to terminating the contract with Savvy). Mr Fulton submitted that ASB’s wish to know what Waihopai expected to receive, and on what basis, goes to the heart of the issue of whether there was in fact a sale agreement with Savvy for
the 2013/2014 harvest. Mr Illingworth submitted that any such documents are commercially sensitive and Waihopai should not be ordered to produce them.
[24] I accept Mr Fulton’s submission that the communications that are sought are limited in scope and date range. I am satisfied that the communications are relevant to issues in the proceeding, and satisfy the “adverse effect/support” test in r 8.7. I order that the documents sought are to be disclosed to Savvy.
(c) Agreement between Waihopai and Matakana Wines Ltd
[25] Waihopai has disclosed (on yellow paper, in accordance with the “commercial confidentiality” protocol) an agreement with Matakana Wines Ltd for the sale of the 2014/2015 grape harvest. Savvy seeks an order that the agreement may be disclosed to Savvy and witnesses, to be used at trial.
[26] Mr Fulton submitted for Savvy that the agreement does not contain any confidentiality clause. It has been listed by Waihopai, and is relevant to Savvy’s claim against Waihopai for damages for loss suffered as a result of Savvy being shut out of the 2014/2015 harvest. Mr Fulton accepted that the document could be treated as confidential in a judgment, but submitted that there is no reason why it should be treated as confidential at trial. Savvy wishes to cross-examine Waihopai’s witnesses on the terms and conditions of the agreement.
[27] Mr Illingworth submitted that the agreement wish Matakana Wines Ltd is clearly a confidential document. It is part of the ongoing operation of the vineyard, and has nothing to do with the issues before the Court. He submitted that there is no need for the agreement to be seen by anyone beyond those agreed in the protocol. Mr Illingworth further submitted that the agreement could not either damage Waihopai’s case or assist Savvy’s case. He submitted that, if Savvy succeeds in its claim for unlawful termination, damages will be set by expert evidence as to the value of the harvest in the market place. He submitted that there will be ample market-place evidence of values which do not involve the parties to the agreement.
[28] I do not accept that the agreement has no relevance to Savvy’s claim. I
accept that, if Savvy succeeds in its claim for unlawful termination, independent
evidence as to the value of the crop in the market-place would be given. However, the terms of the agreement actually entered into by Waihopai, following termination of the contract with Savvy, can properly be considered.
[29] Accordingly, I order that the agreement with Matakana Wines Ltd may be disclosed to Savvy and used at trial. Any further order as to confidentiality will be a matter for the trial Judge.
Application by Waihopai for discovery
[30] Waihopai has applied for an order that Savvy provide further and better discovery of documents in the following classes:
(a) communications between Savvy and Dr Jordan since 1 June 2013;
(b)documents recording bunch weights and bunch counts for the period from 1 June 2013 until the 2014 harvest;
(c) documents relating to the money received by Savvy relating to Savvy’s use and distribution of the proceeds of on-sale of the 2014 harvest, received by Savvy;
(d)communications between Savvy and contractors relating to invoices which it alleges Waihopai failed to pay; and
(e) communications between Savvy’s directors, employees or agents
relating to crop levels, crop targets and laying canes.
[31] While opposing the order, Savvy has provided Waihopai with documents in categories (a), (b), (d), and (e). Waihopai has acknowledged that it received four Eastlight files of documents on Friday 10 April 2015. Mr Illingworth submitted at the hearing on Monday 13 April 2015 that Waihopai’s solicitors and counsel had not had time to look at them. Accordingly, Waihopai’s position is reserved in respect of those classes of documents. The issue covered in submissions at the hearing was,
therefore, in relation to category (c) relating to Savvy’s use of approximately
$843,000 received in respect of the 2013/2014 harvest.
[32] The documents at issue within this category are described in paragraph 3(b)
to (f) of Schedule A to Waihopai’s application (“the documents”) as follows:
(b) Payments or distributions (whether to third parties or otherwise) by
Savvy of the proceeds of Savvy’s on-sale of the 2014 harvest.
(c) Use by Savvy of the proceeds of Savvy’s on-sale of the 2014 harvest.
(d) Identity of any other parties, persons or entities who received from Savvy any of the proceeds of Savvy’s on-sale of the 2014 harvest, including (but not limited to):
i) Any payments to Mr Peter Vegar or any relative of his or company with whom he was associated.
ii) Any payments to any creditor of Mr Peter Vegar or of Savvy. iii) Any payments to any other party, person or entity.
(e) Identity of any bank accounts into which any of the proceeds of Savvy’s on-sale of the 2014 harvest were paid, whether initially upon receipt by Savvy or subsequently upon distribution by Savvy.
(f) Identity of any other parties, persons or entities (other than Savvy) who received any of the proceeds of Savvy’s on-sale of the 2014 harvest.
[33] Mr Illingworth submitted Waihopai seeks all documents relating to the disbursement of the $843,000 received by Savvy on or before 19 May 2014. He submitted that the documents go to the heart of crucial issues in the proceeding, being Savvy’s intention to repudiate, its breach of fiduciary duties, and whether Savvy acted consistently with its obligations under the management and supply agreements.
[34] Mr Illingworth further submitted that it is now clear that a substantial amount (if not all) of the $843,000 has been spent. He submitted that it is crucial to Waihopai to know what it was spent on: was the expenditure bona fide in the ordinary course of business? Was the expenditure to bona fide purchasers for value? Was the expenditure to knowing recipients of trust funds? He submitted that if Waihopai does not have this detail, it cannot cross-examine witnesses at trial, it
cannot make submissions, and cannot ask the Judge to draw inferences. He submitted that this is a crucial issue for Waihopai.
[35] For Savvy, Mr Fulton submitted that the material sought by Waihopai is not relevant to the present proceeding. He submitted that it may become relevant at a later stage, if the Court concludes that Savvy holds the $843,000 on constructive trust. He submitted that the relief sought by Waihopai is a declaration of a constructive trust and an account of profits and as such, no recourse is needed to the documents sought. He submitted that how the $843,000 was dealt with by Savvy has no bearing on whether it holds the money on trust, and no bearing on whether Savvy has to account to Waihopai.
[36] Mr Fulton further submitted that, as far back as mid-October 2014, Waihopai expressed its belief that the funds were being spent, yet an amended statement of claim filed in late November 2014 does not contain any allegation as to misuse or unlawful disbursement of funds. Nor has any submission previously been made suggesting accessory liability of any kind.
[37] The starting point for considering Waihopai’s claim is the allegations in its
current statement of claim (its fourth amended statement of claim, dated 28
November 2014), which alleges six causes of action. These may be summarised as follows:
(a) Breach of contract: Waihopai alleges that the management and supply agreements both contain an implied term that Savvy will provide Waihopai with weigh-bridge records for the harvest to Waihopai and that Savvy has breached this term. Under this cause of action Waihopai sought a mandatory injunction that Savvy provide the weigh-bridge records.
(b)Breach of fiduciary duty: Waihopai alleges that Savvy owed it fiduciary duties in relation to the management of the vineyard and alleges that Savvy breached those duties by failing to provide the
weigh-bridge records. Again, it sought a mandatory injunction that
Savvy provide the weigh-bridge records.
(c) Breach of fiduciary duty and breach of contract: Waihopai alleges that Savvy owed it fiduciary duties in relation to the management of the vineyard and that Savvy breached those duties by asserting that the cropping levels were within 40 per cent of the target or adjusting crop targets without consulting Waihopai. Waihopai alleges that it was entitled to offer the grapes to Savvy for purchase at a price negotiated in good faith. However, Savvy on-sold the grapes without disclosing terms to Waihopai. On this cause of action Waihopai seeks a declaration that the proceeds of the sale of the grapes are held by Savvy on constructive trust for Waihopai.
(d)Breach of fiduciary duty: Waihopai alleges that Savvy breached fiduciary duties owed by it in relation to the management of the vineyard by refusing to disclose weigh-bridge records, failing to disclose that the harvest had exceeded the targets by more than 40 per cent, and on-selling the harvest without an agreement with Waihopai. Waihopai then alleges that it validly cancelled the management and supply agreements. On this cause of action Waihopai seeks an inquiry as to damages and/or an account of profits, a declaration that Waihopai validly cancelled the agreements, and a declaration that the proceeds of sale are held by Savvy on constructive trust for Waihopai.
(e) Breach of contract: Waihopai alleges that Savvy breached its duties under the management and supply agreements by refusing to disclose the weigh-bridge records, failing to disclose that the harvest had exceeded the targets by more than 40 per cent, and on-selling the harvest without first purchasing the grapes from Waihopai. As a result, Waihopai claims that it validly cancelled the agreements. On this cause of action Waihopai again seeks an inquiry as to damages and/or an account of profits, a declaration that Waihopai validly
cancelled the agreements, and a declaration that the proceeds of sale are held by Savvy on constructive trust for Waihopai.
(f) Breach of the Fair Trading Act: Waihopai alleges that Savvy engaged in misleading and deceptive conduct in breach of the Fair Trading Act 1986 by refusing to disclose the weigh-bridge records, failing to disclose that the harvest had exceeded targets by more than
40 per cent, and on-selling the harvest without first purchasing the grapes from Waihopai. As a result, Waihopai claims that it validly cancelled the management and supply agreements. Waihopai again seeks an inquiry as to damages and/or an account of profits, a declaration that Waihopai validly cancelled the agreements, and a declaration that the proceeds of sale are held by Savvy on constructive trust for Waihopai.
[38] In summary, Waihopai’s prayers for relief seek a mandatory injunction that Savvy disclose the weigh-bridge records, a declaration that Waihopai validly cancelled the management and supply agreements, an inquiry as to damages and/or an account of profits, and a declaration that the proceeds of sale are held by Savvy on constructive trust for Waihopai. (I note that the application for a mandatory injunction requiring Savvy to disclose weigh-bridge records was resolved by way of interim orders made by consent on 25 June 2014.)
[39] Part 8 of the High Court Rules sets out the rules relating to discovery, which supersede the earlier rule that documents are discoverable if they are or may be relevant to the issues in the proceeding or may lead to a train of inquiry.7 The new rules provide for a standard approach to discovery pursuant to r 8.7, under which each party must disclose documents that are or have been in its control and on which it relies, or which adversely affect its own case, or adversely affect another party’s case, or support another party’s case. Alternatively, under r 8.8, tailored discovery must be ordered when the interests of justice require it.
[40] The purpose of discovery is to facilitate the resolution of the dispute between the parties. Accordingly, discovery of documents will only be ordered where those documents are likely to assist the Court in determining the matters before it. It is not an opportunity for a party to obtain unrestricted access to another party’s information. Conversely, discovery should be ordered whenever the documents in question will assist the Court in deciding the mattes before it. A party should not be able to avoid discovery merely because documents are inconvenient for it.
[41] Waihopai’s application was made under r 8.19, which relates to applications for particular discovery against another party, after the proceeding is commenced. The applicant must establish that there are grounds for believing that a party has not discovered documents, or a group of documents that should have been discovered.
[42] Waihopai submitted that the documents sought would reveal further details of the breach of fiduciary duty pleaded against Savvy as manager, and conduct in its own self interest, such as would damage Savvy’s defence and advance Waihopai’s claim, and would disclose a further breach of an essential term by Savvy as buyer of the harvest, justifying cancellation by Waihopai as showing that it intended to exceed the harvest targets by 40 per cent or more and that it must have known that it therefore had no title to the proceeds of sale. It was submitted that the application for discovery falls squarely within r 8.7.
[43] The difficulty with Waihopai’s submissions on this point is that some of the disbursements which will be revealed in the documents it seeks are likely to have been made after Waihopai’s purported cancellation on 3 June 2014. While there is authority to suggest that a cancelling party can rely on breaches of which it was
unaware when it cancelled,8 it does not go so far as to suggest that the cancelling
party can rely on conduct which occurred after cancellation. As a result, to the extent that they occurred after 3 June 2014, Waihopai’s argument that the disbursements could justify its cancellation is of limited value.
[44] The question then becomes whether the documents will be relevant to the remedies which Waihopai seeks. Savvy argues that the Court does not need to know
what has happened to the $843,000 to make an order that it is held on constructive trust. While the documents may then be relevant to the question of tracing, Savvy argues that this is a question which does not yet arise.
[45] While this may be the case, Waihopai has also made a claim for an account of profits. As such, it claims not only the money which Savvy has already received, but also any profits Savvy has been able to make. The documents Waihopai seeks would clearly be relevant to evaluating the amount, if any, to be awarded pursuant to such a remedy. That is a pleading that Waihopai has made and which it is entitled to pursue. As such, the documents are relevant to its claim.
[46] Mr Fulton submitted that if the Court were to order disclosure of the documents, an order should be made limiting disclosure to senior counsel, Mr Illingworth, only, on the basis that the names of parties receiving funds (but not the amounts) could be disclosed on a confidential basis to his instructing solicitors (McLeod & Associates) but not to Waihopai or Mr Botting (who is no longer solicitor on the record for this proceeding). He submitted that Savvy is very concerned about the information from the documents finding its way to other parties who are also in litigation with other Savvy companies on similar contracts, and with
whom Waihopai is in contact.9 In his affidavit evidence relating to this application,
Mr Vegar expressed his concern that confidential information will be used to support the litigation strategies of other parties.
[47] Mr Illingworth did not respond to this submission, either in written or oral submissions.
[48] I accept that the documents should be protected by the confidentiality protocol agreed between the parties, limited to counsel and instructing solicitors, but I am not persuaded that further limitations are necessary. I therefore conclude that Savvy must disclose documents as described in [32], above. Disclosure of the documents is to be on yellow paper, and is limited to counsel and Mr McLeod only. No further disclosure is permitted.
Waihopai’s application to adjourn the trial
[49] A two-week fixture beginning on 29 June 2015 was confirmed in my judgment of 27 March 2015.10
[50] Waihopai has applied for adjournment of the trial fixture. I record that the
29 June fixture was confirmed after Mr Bassett had made an oral application on behalf of Waihopai to adjourn the fixture, at the hearing before me on 3 and 4
February 2015. Waihopai had also sought a later trial fixture in a telephone conference in November 2014, when the June fixture was reserved.
[51] Waihopai’s application is founded on alleged timetable breaches by Savvy, and ongoing issues as to discovery (including issues as to privilege and confidentiality). It claims that if it is forced to go to trial in June, its fair trial rights will be irreparably harmed. Waihopai also states its intention to amend its statement of claim to include fresh particulars of alleged breaches of duty by Savvy. Waihopai also argues that delays in the proceeding and uncertainty (in relation to its applications for leave to apply for summary judgment and for an interim payment, which were declined in my judgment of 27 March 2015) have compromised its funding of preparation and trial costs.
[52] In short, Mr Illingworth submitted, the proceeding is not ready for trial, and cannot be ready by 29 June. He submitted that there are too many issues to be settled, the appeal period on my judgment of 27 March 2015 is still running,11 and it is impossible to formulate a timetable that gives both parties fair time to take the steps which must be completed before trial.
[53] Mr Illingworth also submitted that this is a “high-stakes proceeding”, in which both parties claim to be victims. He submitted that the proceeding involves major issues, on which the parties are in head-to-head conflict, and which are of significant commercial value to both sides. He submitted that a fair process is essential, and the risk of the proceeding going off the rails is too great. In all the
circumstances, the trial should be deferred until both sides can prepare properly.
10 Waihopai Valley Vineyard Ltd v Savvy Vineyards 3550 Ltd, above n 1 at [61].
11 As far as the Court is aware, no notice of appeal had been filed as at the date of this judgment.
[54] Mr Fulton submitted that the 29 June fixture should be maintained and not adjourned. He submitted that Waihopai has not put forward anything that was not addressed and rejected when the fixture was reserved in November 2014, and confirmed on 27 March 2015.
[55] Regarding the specific issues raised by Waihopai, Mr Fulton submitted that the discovery issues have been overstated by Waihopai and that all outstanding issues, including any amendment to the pleadings, can be accommodated before the
29 June fixture. Mr Fulton submitted that there is urgency in having the proceeding determined. Savvy is a “one-contract” company, so is dependent on the management and supply contracts to remain profitable. Ongoing delays will cause it significant prejudice.
[56] Mr Fulton further submitted that Waihopai’s submission that it will not receive a fair hearing if the trial proceeds on 29 June is unjustified. He submitted that Waihopai’s case has been fully stated in the course of hearings to date (in particular in its application for leave to apply for summary judgment), and its evidence has been set out in numerous affidavits, in particular, Mr Chen’s affidavit of 24 October 2014.
[57] Finally, Mr Fulton submitted that if Waihopai had proceeded on the basis that it would succeed in its application for leave to apply for summary judgment, and would succeed in its application for an interim payment (as he submitted it had), when a trial fixture had been reserved, and subsequently confirmed, then it was the author of its present difficulties. It cannot now claim it needs time to secure funding and to prepare for trial.
[58] It is clear that Waihopai and Savvy each accuse the other of delaying, or seeking to delay, the proceeding. I do not accept in either case that the position is as “black and white” as it was put in submissions. I accept that Savvy was late in providing discovery and I accept that Waihopai’s reluctance to give confidentiality undertakings sought by Savvy contributed to the delay. On the other hand, I do not accept Savvy’s assertion that Waihopai has, in effect, bet on winning its applications, and done nothing to prepare for trial. However, pursuing applications that were not
sustained in Court has clearly diverted Waihopai’s attention away from preparing for
trial.
[59] Those points having been made, the Court must deal with the present situation. I accept (and as I have made clear since November 2014) that this proceeding should be determined as soon as possible. Savvy has at all times expressed the need for a decision as soon as practicable, and the importance of that in relation to its financial position.
[60] In November 2014, a priority fixture was not allocated, as the fixture for
29 June 2015 was, in any event, the earliest fixture that could have been given. That fixture was reserved, and subsequently confirmed, because I accepted that the proceeding needs to be determined as soon as practicable.
[61] I am not persuaded that the proceeding is not ready for trial, and cannot be made ready by 29 June 2015. This is for the following reasons:
(a) I accept Mr Fulton’s submission that the discovery applications addressed in this judgment (including issues as to privilege and confidentiality) do not involve a substantial number of documents.
(b)It is evident from the Court file that Waihopai has already presented a great deal of evidence, both in support of its own case and in its endeavour to establish that Savvy did not have an arguable defence, such that preparing briefs of evidence will be matter of consolidation and condensation, rather than starting from scratch.
(c) Waihopai’s arguments on its causes of action, and in relation to Savvy’s defence and counterclaim, have already been set out, in detail.
(d)Any necessary amendment to the pleadings can be accommodated before the trial begins.
(e) Despite Waihopai’s submissions to the contrary, I am sceptical as to its commitment to this proceeding being determined at an early trial.
[62] I have, again, carefully considered Waihopai’s application for adjournment. I have made further inquiries of the Registry, but have again been advised that another trial fixture could not be given before April 2016. A delay until then would be too long. I accept that it would cause serious prejudice to Savvy.
Application by Waihopai to adduce further evidence in support of application for adjournment
[63] On 21 April 2015 Waihopai filed an application for leave to file a further affidavit in support of its application for an adjournment, together with an affidavit sworn by Mr Botting. In his memorandum, Mr Bassett says that Waihopai’s legal advisers received the weigh-bridge records for the 2011 harvest from Savvy’s solicitors on 10 April 2015, and that those weigh-bridge records disclose that the
2011 harvest exceeded the crop level targets by more than 40 per cent.
[64] Mr Bassett submitted that the 2011 weigh-bridge records are evidence of a breach by Savvy in 2011 of clause 4.6 of the Supply Agreement, of further repudiatory conduct by Savvy, and of a further claim in respect of which Waihopai will wish to amend its statement of claim. He also submitted that further discovery will be sought (concerning on-sale proceeds). These matters were, he submitted, additional grounds for the application for adjournment.
[65] A memorandum was filed by Mr Fulton on behalf of Savvy on 22 April 2015. Mr Fulton noted that there was no leave reserved to file any further affidavits, and that the application for leave is opposed. He submitted that the 2011 weigh-bridge records are “minimal” and that the calculation as to the crop targets could have been made “within an hour”. Further, he submitted that this could have been referred to at the hearing on 13 April 2015, yet it had taken more than a week for Waihopai to raise the matter with the Court.
[66] Mr Fulton submitted that should Waihopai wish to amend its claim, it can still do so. Mr Fulton also summarised his instructions regarding the 2011 weigh-bridge
records. Finally, Mr Fulton submitted that the matter of the 2011 harvest does not require adjournment of the trial fixture.
[67] I have concluded that Mr Botting’s affidavit may be received, but I am not persuaded that it provides grounds for adjournment of the 29 June 2015 trial fixture. Clearly the matter has now been raised, and Savvy is in a position to deal with it.
[68] In the circumstances, I decline Waihopai’s application for adjournment of the
trial fixture.
[69] Timetable directions have earlier been given leading up to the fixture on
29 April. An amended timetable is set out below, proceeding from the date of this judgment. Self-evidently, the timetable is compressed. However, it is assumed that the parties will not have postponed preparation for trial pending the outcome of the application to adjourn.
(a) The parties are to comply with the orders made in this judgment by
29 April 2015.
(b) Waihopai is to file and serve any amended statement of claim by
8 May 2015.
(c) Savvy is to file and serve any amended statement of defence/counterclaim by 15 May 2015.
(d) Waihopai is to file and serve any reply to Savvy’s amended statement
of defence/counterclaim by 20 May 2015.
(e) Waihopai’s evidence, draft index of documents to be included in the common bundle and draft chronology are to be served by
5 June 2015.
(f) Savvy’s evidence and responses in relation to the common bundle and
chronology are to be provided to Waihopai by 12 June 2015.
(g) Any reply evidence by Waihopai is to be provided to Savvy by
12 June 2015.
(h) The bundle of documents and chronology is to be filed and served by
24 June 2015.
(i) Both parties are to file and serve opening synopses by 24 June 2015.
Andrews
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