Wellington Combined Taxis Limited v Clyma

[2024] NZHC 2520

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2024-485-140

[2024] NZHC 2520

UNDER

the Companies Act 1993

BETWEEN

WELLINGTON COMBINED TAXIS LIMITED

Plaintiff

AND

DAVID CLYMA

First Defendant

DELFIN DE GUZMAN
Second Defendant

CHRISTOPHER DAVID FINLAYSON

Third Defendant

GARTH FRASER
Fourth Defendant

DEV KUMAR NARAYAN
Fifth Defendant

SAHA DEWAN MUDALIAR

Sixth Defendant

Hearing:

3 September 2024

Appearances:

A Olney and H Cameron for Plaintiff

M A Cavanaugh for First to Sixth Defendants

Judgment:

4 September 2024

JUDGMENT OF ASSOCIATE JUDGE LESTER

(In-person Issues Conference)

WELLINGTON COMBINED TAXIS LIMITED v CLYMA [2024] NZHC 2520 [4 September 2024]

[1]                  This proceeding is a derivative action in the name of Wellington Combined Taxis Limited (WCTL), commenced by some of its shareholders against its present directors and one former director. Pursuant to the judgment of Associate Judge Skelton1 granting leave for the derivative action, the shareholders who have brought the derivative action are “to control the conduct of the intended proceedings”.

[2]                  The directors, in a memorandum, raised with the Court concerns as to how the mechanics of discovery would operate. WCTL will have to provide discovery in this proceeding in the ordinary way. While a timetable for discovery and whether the discovery will be general or tailored is yet to be finalised, the directors seek directions as to how discovery would be completed. Their concern is that wider issues between the shareholders controlling this litigation and the directors could complicate the discovery process.

[3]The directors concerns were as follows:

(i)the directors understand the solicitors acting for WCTL also act for the shareholders controlling the derivative action;

(ii)that in the process of completing discovery, WCTL’s counsel may come into possession of information which, while irrelevant to the present proceeding, may be relevant to the wider interests of their shareholder clients; and

(iii)if such information comes to WCTL’s solicitors attention, they would be under an obligation pursuant to the Solicitor/Client Rules of Conduct to disclose that information to the shareholders.

[4]                  When the directors  concerns  came  before  the  Court  on  the  morning  of  3 September 2024, I sought to find a practical solution to those concerns.

[5]                  Mr Olney, counsel for WCTL, advised he is not instructed on other matters for the shareholders at this time. However, he confirmed that he had obtained from the

1      Row v Wellington Combined Taxis Ltd [2023] NZHC 2756 at [148(b)].

shareholders their consent that if there are documents received by WCTL’s solicitors in the course of the discovery process that are not discovered in this proceeding, then such documents need not be disclosed to the shareholders. In other words, the shareholders will only get to see (subject to the terms of this order), those documents which are actually included in WCTL’s List of Documents.

[6]                  To address a further concern of the directors that discovery may adopt an overly liberal approach to relevance or an approach to privilege that favours the shareholders, WCTL’s solicitors will produce a draft List of Documents to be sent to the solicitors for the directors. The solicitors for the directors will have 15 working days to review the draft List and within that 15 working days may provide to WCTL’s solicitors any challenges to relevance or privilege arising from the List with reasons (the challenged documents).

[7]                  Pending agreement of counsel or order of the Court, the challenged documents are not to be included in the List of Documents which may otherwise be finalised, that is, the List will exclude the challenged documents.

[8]                  In that way, the discovery process, once the form and type of discovery are finalised, can progress but with a mechanism in place to meet the concerns of the directors.

[9]                  Accordingly, there is an order that discovery in this proceeding is to take place on the following basis:

(i)Documents received or reviewed by WCTL’s solicitors in the course of completing discovery but which are not discovered in the derivative action are not to be disclosed by WCTL’s solicitors to any other person.

(ii)Upon WCTL’s solicitors producing a List of Documents, it will be sent in draft to the directors solicitors. The directors solicitors will have  15 working days to advise WCTL’s solicitors of any challenges to relevance or privilege with supporting reasons. In respect of the challenged documents, pending agreement of counsel or order of

the Court, the challenged documents are not to be included in the finalised List of Documents.

(iii)As to confidentiality, if WCTL through its general manager designates a document to be commercially sensitive then:

(a)the document can be designated as such in WCTL’s List of Documents;

(b)disclosure can be limited to the solicitors and experts acting for WCTL in the first instance; and

(c)if the shareholders conducting WCTL’s claim consider on the basis of the document as described in WCTL’s List of Documents that wider disclosure (for example, to them) is necessary, they can apply to the Court for directions.

(iv)Costs of the resolution of this issue are fixed on a 2B basis and are to be costs in the cause.

[10]              Mr Olney advised there is an application by WCTL to amend the statement of claim in this proceeding. Mr Cavanaugh, counsel for the directors, considered that Mr Chisnell, who has been counsel for WCTL, should be served with the application to amend the statement of claim.  There is a direction that Mr Cavanaugh is to send  a copy of the application to amend the statement of claim to Mr Chisnell. It will be for Mr Chisnell to consider whether the terms of his engagement mean it is appropriate for him to take an active role in that application.

Associate Judge Lester

Solicitors:

Cameron Lawyers, Wellington (for Plaintiff)

Wotton + Kearney, Auckland (for First to Fifth Defendants) Copy to counsel:

A Olney, Woodward Street Chambers, Wellington (for Plaintiff)