White v James Hardie New Zealand
[2020] NZHC 2202
•27 August 2020
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2015-404-2981 (WHITE)
[2020] NZHC 2202
BETWEEN KAREN LOUISE WHITE AND THE PERSONS LISTED IN SCHEDULE 1
Plaintiffs
AND
JAMES HARDIE NEW ZEALAND
First Defendant
STUDORP LIMITED
Second DefendantRCI HOLDINGS PTY LIMITED
Fourth Defendant(Continued next page)
Hearing: 6 and 7 August 2020 Counsel:
B Gray QC and R A Havelock for White Plaintiffs
C M Meechan QC, J Stewart and C Gordon for Waitakere Plaintiffs
J Hodder QC, L Fraser and H Graham for DefendantsJudgment:
27 August 2020
[REDACTED] JUDGMENT (NO 8) OF WHATA J
This judgment was delivered by me on 27 August 2020 at 4.00 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date: ………………………….
WHITE v JAMES HARDIE NEW ZEALAND [2020] NZHC 2202 [27 August 2020]
JAMES HARDIE AUSTRALIA PTY LIMITED
Fifth Defendant
JAMES HARDIE RESEARCH PTY LIMITED
Sixth Defendant
JAMIES HARDIE INDUSTRIES PLC
Seventh Defendant
CIV-2015-404-3080 (WAITAKERE GROUP LIMITED)
BETWEEN WAITAKERE GROUP LIMITED & ORS
Plaintiffs
AND JAMES HARDIE NEW ZEALAND
First Defendant
STUDORP LIMITED
Second DefendantJAMES HARDIE NZ HOLDINGS
Third DefendantRCI HOLDINGS PTY LIMITED
Fourth DefendantJAMES HARDIE AUSTRALIA PTY LIMITED
Fifth DefendantJAMES HARDIE RESEARCH PTY LIMITED
Six DefendantJAMES HARDIE INDUSTRICES PLC
Seventh Defendant
TABLE OF CONTENTS
Background [2]
The remaining applications [8]
The White plaintiffs’ second amended and supplementary applications [9]
Amended interlocutory application by Waitakere plaintiffs [15]
Caucusing and independent counsel process [16]
Second amended application by Waitakere plaintiffs [17]
The Discovery Process
Overview [19]
Specific evidence [37]
Discovery explained as at November 2019 [38]
A December update [40]
A request, more tranches of discovery and the April orders [48]
The White plaintiffs’ second amended application, another tranche of
discovery and a supplementary application [50]
A response to the April orders and the May applications [56]The Waitakere plaintiffs’ June application [78]
A further response [84]
The Waitakere plaintiffs’ July application [92]
More about insurance documents [93]
Mr Petrie and Ms Nola respond again – offers and answers [104]
Independent counsel report [114]
Sources [124]
Review [125]
Data gaps [126]
Irrelevance and redactions [127]
Privilege and irrelevance [129]
The relevant principles [130]
The Rules [132]
Litigation and solicitor-client privilege [140]
The remaining issues [146]
White plaintiffs [147]
Overarching submissions [151]
Issues 2 and 4 (custodians) [154]
Assessment [157]
Issue 6 (insurance documents) [161]
Issue 7 (additional types of insurance documents) [163]
Issue 8 (additional documents) [164]
“Teams” documents [165]
Deeds of Access, insurance and indemnity [168]
Board materials [174]
Specific document requests [175]
Insurance policy referred to in the 2019 accounts [177]
Issues 10, 11 and 12 (privilege and masking) [179]
Waitakere plaintiffs [184]
Class I and J [186
Assessment [197]
Leave application
Document retention/destruction policy and privilege [200]
Assessment [205]
Privilege and masking [209]
Assessment [213]
Outcome of review [215]
Timetable [219]
Outcome [220]
[1] The discovery process in this matter spans more than 15 months, a discovery universe of 1.7 million documents, seven discovery applications, four High Court judgments, one Court of Appeal judgment, and independent counsel review. At the commencement of the latest hearing, 13 priority issues remained to be resolved. This judgment deals with them. An application for security was also heard by me at the same time. The need for that judgment is not as pressing and will follow in due course.
Background
[2] The central claim in both the White and Waitakere proceedings is that the defendants (collectively, James Hardie), manufactured, supplied or promoted defective exterior cladding products, sold under the brand names “Harditex”, “Monotek” or “Titan” (the James Hardie products). Approximately 1,246 properties are claimed to be clad with defective James Hardie products. Of those properties, 1,236 are residential homes, five are commercial buildings and five are retirement villages. The five retirement villages are the plaintiffs in the Waitakere proceedings. The primary issues raised by the plaintiffs in their proceedings are set out in Schedule 1.
[3] The hearing of this matter has been split into two stages with the following issues to be addressed at stage one:1
(a)who is responsible for the design/manufacture/sale of the James Hardie products and related product information;
(b)whether the James Hardie products are defective;
(c)whether the defendants knew/ought to have known about any defects, and
(d)whether the defendants breached any common law or statutory duties in respect of the James Hardie products or James Hardie product information.
1 White v James Hardie New Zealand [2018] NZHC 1627.
[4] The trial date for stage one was set down to commence on 3 May 2021. Tailored discovery orders were subsequently made in two bites, with the result being that James Hardie was required to discover the following classes of document:2
A. Product Development
B. Testing
C. Promotional Material
D. Customer Complaints
E. Harditex Improvement Project
F. Decision to withdraw Old Product and Introduce New Product;
G. Industry Study Tour of USA and Canada
H. Technical Literature;
I. Documents Identifying Risks or Defects or liability relating to James Hardie Products;
J. Insurance documents
K. Training Documents
L. Site Visits
M. Customer advice
N. Correspondence with Industry and Regulatory Bodies
2 White v James Hardie New Zealand (No 2)[2018] NZHC 2812; and White v James Hardie New Zealand (No 4)[2019] NZHC 1543.
P. Licensing arrangements
Q. Sales Figures
U. Agency, representation, joint venture or similar arrangements
[5] A large set of search terms were also sought by the plaintiffs and later adopted by James Hardie. Directions were also made for tranches of discovery by specified defendants to be provided, with a final tranche of discovery to be provided by all defendants by 13 September 2019.3
[6] Discovery did not go smoothly. Deadlines for making discovery were not met and the plaintiffs’ demands for further and better discovery continued to evolve. Illustrative of this, the plaintiffs have – since my first discovery orders – filed a further six applications.4 Three of them are described, together with the supporting evidence, in my judgment issued on 3 April 2020 (Judgment No 7).5 Some of what the Waitakere plaintiffs called “priority discovery” issues were resolved by that judgment, with other issues deferred for later consideration.
[7] My Minutes 31 – 37 then followed, all dealing with discovery. In my Minute 31,6 I set down a timetable for the resolution of the remaining discovery issues. The White plaintiffs were to file a second amended interlocutory application in relation to discovery by 8 May 2020, and the Waitakere plaintiffs were to file an updating memorandum that same day. Any notice of opposition and memorandum in reply were to be filed by 22 May 2020. James Hardie were to provide an updated discovery list (in accordance with the amended schedule of document types agreed with the Waitakere plaintiffs) by 1 June 2020. A hearing was to be fixed after 5 June 2020, including in respect of James Hardie’s further application for security for costs. That timetable was optimistic.
3 Minute (No 19), dated 13 May 2019.
4 On 29 November 2019, 6 December 2019, 8 May 2020, 22 May 2020, 15 June 2020, 21 July 2020.
5 White v James Hardie New Zealand (No 7) [2020] NZHC 685.
6 Dated 1 May 2020.
The remaining applications
[8] In their memoranda of 8 May 2020, the Waitakere plaintiffs identified the remaining discovery issues and proposed timetabling orders. They also foreshadowed a problem with the generic listing of “James Hardie” in the “Author/Receipt Fields” and the lack of job titles for the custodian of documents.
The White plaintiffs’ second amended and supplementary applications
[9] The White plaintiffs, in their 8 May 2020 application, sought additional orders that:
(a)the defendants file further affidavits as to the methodology employed by the defendants, why and how custodians were identified, confirmation as to whether certain archives have been searched and relevant documents discovered and, if not, why not;
(b)the defendants shall treat an additional 50 persons as custodians;
(c)the defendants provide a further affidavit in relation to categories of documents listed in Schedule 3 to the application;
(d)the defendants search for and discover relevant non-privileged documents using additional search terms listed in Schedule 4 to the application;
(e)the defendants produce copies of the documents listed in Schedule 5 to the application (privileged documents) for inspection by the Court for the purpose of deciding the validity of the privilege claimed; and
(f)the defendants produce copies of the documents listed in Schedule 6 to the application (masked documents) for inspection by the Court.
[10] Further issues arose out of the defendants’ provision of further documents on 8 May 2020, culminating in the White plaintiffs’ supplementary application of 22 May 2020 in which they seek orders:
(a)for production of documents relating generally to management reports and related documents (as identified in Schedule 1 to the application);
(b)for the defendants to produce copies of documents in Schedule 2 to the application (specified documents identified by the defendants as privileged documents) for inspection by the Court;
(c)for the unmasking of specified documents; and
(d)specifying a final date for discovery.
[11] As a result of the various memoranda, a hearing date for one to two days to hear all remaining matters was set down for 6 July 2020.7 10 priority issues which remained to be resolved were identified. Given this, expert caucusing and the appointment of independent counsel to assist on reporting on the outstanding discovery issues was mooted. It was envisaged that members from each of the discovery teams should be able to caucus and reach agreement in relation to seven of the remaining issues and that independent counsel should be able to report on the balance of matters.
[12] Minute (No 34) recorded the agreement of the parties to the appointment of independent counsel and conferral between the discovery teams, and a timetable for conferral was fixed. The independent counsel process had to be deferred, given issues relating to identification and an appropriate person to assist.
[13] In Minute (No 35),8 the role of independent counsel was revisited. A direction was made that independent counsel should address all remaining issues and report to the Court on the proper management of those issues. The issue of independent counsel was revisited in Minutes (No 37) and (No 38).9 A fixture was also allocated and a timetable set down for that purpose.
7 Minute (No 33), dated 25 May 2020.
8 Dated 9 June 2020.
9 Dated 12 June 2020 and 16 June respectively.
[14] Minute (No 39) refers to and attaches a copy of instructions to independent counsel.10 The instructions noted the primary task was to assist the parties and the Court in the resolution of the remaining discovery issues.
Amended interlocutory application by Waitakere plaintiffs
[15] On 15 June 2020, the Waitakere plaintiffs filed an amended application. It has been overtaken by a second amended application of 21 July 2020. As that application requires leave, it remains necessary to describe the 15 June application. In summary that application seeks four orders. First, an order for compliant discovery in relation to Class J and Class I categories on the grounds that the defendants have discovered incomplete documents in both these categories. Second, an order that the defendants search for documents in the control of six persons (Messrs Gustafson, Gries, Salter, Baker, Fisher, Loduwick) on the grounds that James Hardie holds mailboxes for them and no proper basis for excluding searches of them has been provided. Third, that leave be reserved to the plaintiffs to apply for such further orders as may be necessary in relation to above. Fourth, that the costs of the application, and incidental costs, should be awarded to the plaintiffs.
Caucusing and independent counsel process
[16] The independent counsel process below is addressed below. Caucusing of the discovery teams took place on one occasion, on 15 June 2020. No report on that process was produced. That is regrettable because the Court has no clear understanding as to the outcomes of that process. Unhelpfully, correspondence between the parties concerning the matters discussed at the conferral is included in the bundles provided by the parties. It is not the function of this Court to wade through volumes of correspondence to ascertain material outcomes of the caucusing process or other discussions between the parties. I simply understand that it facilitated resolution of some issues but also triggered new issues and/or the refinement of issues. It seems that second amended application by the Waitakere plaintiffs refers to some of these new and/or refined issues.
10 Dated 23 June 2020. See [115] below.
Second amended application by Waitakere plaintiffs
[17] As mentioned above, on 21 July 2020 the Waitakere plaintiffs filed a second amended interlocutory application for orders that:
(a)In respect of Class J documents (insurance documents), the defendants:
(i) discover specified documents (e.g. proposal or renewal forms, notifications, insurance policies, or other specified documents referred to in discovered documents) or otherwise confirm that they do not exist;
(ii) confirm they have correctly applied the test for relevance in relation to specified documents; and
(iii) provide copies of their document retention/destruction policies for the period 1980 to 2006.
(b)In respect of Class I documents (documents identifying risks, defects or liability relating to James Hardie Products), the defendants:
(i) discover (or otherwise confirm that they do not exist), all relevant board materials, documents related to Team management, Group Business Results that discuss or identify risks, defects and/or liability, product development monthly reports, and product development meeting minutes;
(ii) produce documents incorrectly listed as privileged; and
(iii) confirm that they have searched all repositories/locations where the relevant materials are likely to be stored.
(c)The defendants provide their document retention/destruction policies and information as to why certain documents are not recoverable.
(d)The defendants treat six persons (Messrs Gustafson, Gries, Salter, Baker, Fisher, Loduwick) as custodians and discover all relevant documents obtained from them.
(e)The Court set aside or modifies the defendants’ claim to privilege over specified documents (which also appear to include insurance-related documents).
[18] Given the lateness of this amended application, leave to file the application was required. This aspect is dealt with below.
The Discovery Process
Overview
[19] Ms Nola, a Project Service Manager at Chapman Tripp, provides a useful overview of the discovery process and the collection of documents generally in her affidavit dated 27 May 2020. The following outline is based on it.
[20] The electronic discovery reference model (EDRM) is said to represent the industry view of a gold standard approach to electronic discovery. In accordance with the EDRM, the first step in the discovery process was the identification of sources of data and custodians who (or which) may hold potentially relevant sources of information. Identification required engagement with a client and IT personnel to understand the organisation’s document management policies and IT systems, in order to inform what steps could sensibly be taken to ensure the collection of relevant documents. It involved consideration of both people and systems that might hold potentially relevant information.
[21] Custodian searches are designed to identify information that is likely to be held by the individual in question specifically, as opposed to information held generally. The ordinary approach to identification of custodians is to have the producing party decide who the key players are and target them for specific collection. In all cases, it is essentially a judgement call as to who is the most likely to hold relevant documents. Several factors inform that judgement call, including who is or was most likely to hold
the relevant material, whether the producing party is likely to still hold or control that material, the nature of email traffic, and the extent of the producing party’s other searches for relevant material.
[22] A custodian may hold different kinds of documents specific to that custodian (such as hard copy documents like notebooks), but by far the most common form of documents specifically held by a custodian is his or her email mailbox. In some cases, the personal drives of a custodian may be collected.
[23] The plaintiffs did not request any particular custodian searches. This was not unusual as the producing party will usually have the best sense at the outset of who may have the relevant documents. It is not uncommon for additional custodians to be identified by the appearance of the names of those individuals in relevant documents unearthed in the discovery process but typically this would only entail a handful of additional custodians. The custodians should be a reasonable sampling, rather than every person who ever had their name on a document found relevant to the matter in dispute.
[24] Generally in any discovery process, a collection of all potentially relevant materials is compiled from two main sources:
(a)available hard copy data; and
(b)available ESI (electronically stored information), which may include: network servers, desktops, backups, custodian mailboxes, audio and video files, electronic document retention systems, laptop computers and personal devices, and information from databases.
[25] Once material has been identified, preserved and collected, it is collated into one central electronic database for processing. This creates the ultimate “discovery universe” across which searches are run.
[26] The discovery universe in the present proceeding consists of 1,710,428 documents (as at the date of Ms Nola’s affidavit – 27 May 2020). ESI and hard copy
material is not in a searchable condition until it has been processed and indexed using specialised software. The objective of the processing phase is to reduce the volume of ESI, render it text searchable (where not already searchable) and convert it into forms more suitable for review. The outcome of this process is a reasonable selection of ESI that search terms can be run across, in order to achieve a set of documents that will need to be manually reviewed by lawyers for relevance and privilege.
[27] During processing, it is best practice to preserve a document’s “family” relationship. A document family is a series of documents stemming from a single email or file, for example an email (the parent) and each attachment (the child), or word processing files (the parent) and each embedded spreadsheet (the child). This is known as the parent-child relationship. This allows the reviewer to review the entire family of documents at once, in order to fully understand the relevance and/or privilege of the family of documents. Scanned and image-based documents are also made searchable at this stage, through an OCR process. The OCR process means that the content of the document can be indexed, so when a hard copy document is loaded onto a discovery platform, search items are able to be run across it. This allows search terms to be run across the discovery universe, to further select what is required to be manually reviewed.
[28] Search terms are key terms that are most likely to be found in documents relevant to the dispute. The application of search terms allows for the elimination of documents that are plainly irrelevant to the proceeding. So, if the document universe contains a custodian’s entire mailbox, search terms will weed out plainly irrelevant material, such as emails relating to other aspects of the custodian’s role that are not relevant to the proceeding, personal emails and promotional material.
[29] A commonly utilised practice is to conduct sampling exercises on the responsive documents to test methods and search assumptions. This involves having someone familiar with the subject matter of the litigation review responsive items at the filtering stage.
[30] The set of documents for manual review by a lawyer – the review set – excludes all material that does not contain a relevant search term and will therefore be
significantly smaller than the discovery universe. The search terms do not need to be applied in a way which ascertains whether one specific word is in a document. Rather, there are a number of variations and different types of searches that can be run.
[31] The different search variations can be used in conjunction with one another. The running of the search terms is reliant on documents being OCR’d so that the words and phrases can be identified within the document. In this proceeding a comprehensive list of search terms was devised between the parties at the outset of the collection exercise in 2018. Devising search terms was an iterative process and terms were tested and sampled for effectiveness by running them across James Hardie’s existing database of previous leaky building litigation documents to ensure they were predominantly hitting on documents already known to be relevant through previous litigation experience.
[32] Once the discovery universe has been narrowed down to a more manageable review set, the remaining documents are batched out to reviewers (lawyers) to complete a linear review (that is, a document-by-document manual review) of the entire review set. This involves manually reviewing documents for relevance and privilege and coding these accordingly in electronic discovery software.
[33] In large discovery exercises it is considered proportionate to utilise technology assisted review (TAR) to assist with the review process.11 This process involves a manual review by lawyers which feeds into the TAR software and “trains” the machine on what documents are relevant or not to the proceeding. Multiple iterations of this occur, to the point where the lawyers have reviewed enough material for the TAR software to find that it has reached (in this proceeding) a 90 per cent confidence level that the TAR process has found all responsive documents in the discovery universe.
[34] Once this review was complete, both manual and TAR, a smaller set of relevant documents was produced for disclosure (excluding privileged relevant documents, which are listed but not produced). The diagram below was used to represent the disclosure set in these proceedings, which consists of 28,495 documents, shown
11 The TAR approach was initially challenged by the White plaintiffs, but this challenge was not pursued.
proportionately against the discovery universe and the review set as the green (smallest) circle.
[35] Before disclosure, each document must be coded in accordance with sch 9 to the High Court Rules 2016. The documents may be manually coded based on an objective assessment of the qualities on the face of it and/or parties can, where possible, agree to use metadata (being the data attached to an electronic file that provides data about that document, such as author, recipient and date).
[36] With that useful background in mind, I now turn to consider the specifics of this discovery exercise and discovery universe.
Specific evidence
[37] The discovery process was addressed in considerable detail in the evidence of Mr Petrie, Ms Nola and Ms Zohrab Coates, who also responded to concerns raised by the plaintiffs. The various alleged problems with the discovery are detailed in the affidavits/affirmations of Ms Gray for the White plaintiffs (in addition to the evidence filed in relation to the earlier applications) and Ms Armstrong, Ms Kim and Mr Peace for the Waitakere plaintiffs. From this evidence, I have extrapolated the following (broad) chronology of the discovery process and creation of the discovery universe.
Discovery explained as at November 2019
[38] Mr Petrie is employed as legal counsel for James Hardie Australia Pty Ltd. In his affidavit of documents dated 5 November 2019, Mr Petrie affirms the defendants, with the assistance of their lawyers have:
(a)indexed and reviewed thousands of hard copy files from various identified locations, including in New Zealand, Sydney, United States and Ireland;
(b)made enquiries of and collected emails for identified New Zealand James Hardie custodians and Australian James Hardie custodians;
(c)collected data held on James Hardie’s New Zealand and Australian servers and shared drives (several terabytes), including electronic, non- email files created or accessed by those custodians;
(d)applied agreed search terms and date parameters to the electronic sources collected above to isolate potentially relevant documents;
(e)linear reviewed the New Zealand server data response to the search parameters and then applied TAR using an Active Learning algorithm to prioritise potentially relevant documents within the remaining search term responsive electronic set;
(f)reviewed documents prioritised by the algorithm and applied widely accepted quality control and validation methods throughout the process;
(g)collected James Hardie Industries plc’s Board materials from a third party SaaS platform and reviewed search term responsive items;
(h)collected electronic records from James Hardie Industries plc and reviewed search term responsive items; and
(i)collected and reviewed CDs, DVDs and floppy disks.
[39] The defendants were at that time undertaking some additional searches of relevant documents within the “insurance documents” tailored discovery category (Class J) as it was proving very difficult to find relevant documents relating to the period 1990 to 31 March 1998. With respect to public liability (including multi-line) insurance documents relating to the period 1 April 2004 onwards, the defendants’ records confirm that insurance cover for New Zealand weathertightness matters occurring post 31 March 2004 was unavailable market-wide and was never provided by the captive insurer, James Hardie Insurance Limited.
A December update
[40] The plaintiffs subsequently made two further discovery applications, dated 29 November and 6 December 2019. On 16 December 2020, the defendants discovered a tranche of 46 documents12 and in an affidavit dated 17 December 2019, Mr Petrie provided further information regarding James Hardie’s “extensive” efforts to achieve full compliance with its discovery obligations.
[41] Mr Petrie notes that regarding insurance-related documents, in addition to the steps described above, James Hardie has also made specific inquiries of individuals involved with the negotiation and renewal of insurance arrangements, including past and present employees such as Guy Jarvi, Peter Shafron, Cece Tripi and Norm Gritsch.
[42] He notes that in terms of the overall insurance picture, prior to 1998 James Hardie’s public liability insurer never responded to New Zealand Weathertightness litigation claims and two “Multi-Year/Multi-Line” policies spanning the period 31 March 1998 to 31 March 2004 have been discovered. Mr Petrie also notes that James Hardie has an excellent claims history in the three year period commencing 2001 and after 2004 the global insurance market no longer provided cover for NZ weathertightness claims and it was not provided in any subsequent years. Insurance cover for NZ Weathertightness was also not provided by James Hardie's captive insurer James Hardie Insurance Limited (a Guernsey company which provided some
12 According to Ms Armstrong’s affidavit, dated 16 June 2020.
insurance and/or reinsurance for the James Hardie Group for the period 2004 to 2011). Supporting documents are attached to his affidavit.
[43]Mr Petrie confirmed that the discovery process had cost James Hardie around
$1.6m in costs since it began, including $595,000 spent on external consultants. Solicitors and project services staff from Chapman Tripp and relevant James Hardie staff members have inspected and identified potentially relevant material stored at various locations in New Zealand, Australia and the United States. Several thousand files were reviewed as part of the process. Once documents were digitised and uploaded to the document review platform, “fuzzy terms” (meaning search terms which would not be affected by typographical errors in documents searched) for the three products (Harditex, Monotek and Titan) were run across the digitised document.
[44] In terms of electronic records, James Hardie had searched a data pool of around 1,674,106 electronic documents (as at December 2019). In order to compile the data pool, entire copies of James Hardie Australian and New Zealand servers were collected, with the assistance of PWC Forensics and BlueStar (an e-discovery provider based in the United States). In addition, specific custodians’ mailboxes were obtained where possible and electronic Board documents were collected from a SaaS platform in Ireland.
[45] Search terms were then run across the data pool. The search terms consisted of James Hardie’s nominated search terms and all of the additional search terms requested by the plaintiffs in their discovery application of 4 September 2018. The electronic searches resulted in approximately 180,000 responsive documents (including family items). Of these, approximately 90,000 documents were reviewed by solicitors using the TAR workflow. As at 17 December 2019, James Hardie had discovered 28,032 documents, comprising of approximately 12,000 electronic documents and 16,000 hard copy documents.
[46] The hard copy exercise undertaken by James Hardie was not limited as regards custodians. In relation to electronic discovery, 40 individuals’ electronic records have been the subject of specific inquiries, collection and assessment of relevance.
[47] Mr Petrie also explains that as a result of an automated document retention policy which was implemented in early 2011, all emails (globally) in James Hardie’s possession and control were routinely deleted after five years unless subject to a litigation hold or government subpoena. As a result, all emails that were in James Hardie’s possession and control prior to April 2006 were deleted in or about April 2011. Similarly, all .pst folders or archived email folders for employees or directors who left the company prior to April 2006 no longer exist. However, shortly afterwards a hold was instigated (which remains in place) and all such deletions were suspended, so such records do exist from about mid 2006 onwards.
A request, more tranches of discovery and the April orders
[48] On 11 February 2020 MinterEllisonRuddWatts (MERW) requested that Chapman Tripp provide a custodian schedule outlining the defendant company employer and job title for each custodian listed in the defendants’ affidavit of documents dated 5 November 2019.13 MERW stated that this would enable the Waitakere plaintiffs to assess the defendants’ privilege claims. It is also noted that the Waitakere plaintiffs reserved rights to apply to the Court to challenge the defendants’ privilege claim.
[49] On 20 February 2020, the defendants discovered a tranche of 98 documents14 and James Hardie agreed to apply a number of additional search items in March 2020, being additional search terms requested by the Waitakere plaintiffs, including a primary search using terms such as “Board Meeting” and “Director / Board” and “meeting” and “agenda”, as well as secondary terms such as “weathertight*.15 On 31 March 2020, the defendants discovered a tranche of 187 documents, comprising mainly of insurance and testing documents.16 On 3 April 2020, further orders relating to discovery were made, including that the defendants must, where possible, identify
13 Affidavit of Ms Irene Aram Kim, law clerk at MERW, dated 20 July 2020.
14 Affidavit of Ms Armstrong, dated 16 June 2020.
15 The following is drawn from Mr Petrie’s affidavit dated 27 May 2020.
16 Affidavit of Ms Armstrong, dated 16 June 2020. Ms Armstrong also refers to another tranche of documents on “20 February 2020” of 36 documents. This presumably was meant to be a reference to 20 April 2020.
the individual author and/or recipient of a document and must identify the employee positions of the custodians.17
The White plaintiffs’ second amended application, another tranche of discovery and a supplementary application
[50] As mentioned above, the White plaintiffs then filed a second amended interlocutory application for orders relating to discovery on 8 May 2020. Ms Caroline Gina Gray provided an affidavit of support of this application and the White plaintiffs supplementary application of 22 May 2020. Ms Gray is a consultant engaged by Adina Thorn Lawyers. Her role involves litigation support, including in relation to the present proceedings. In her 8 May 2020 affidavit, Ms Gray refers to a table which contained examples of documents involving James Hardie personnel who have not been listed as custodians. One of the New Zealand custodians who is listed is Matthew Woodley. Based on her review of the documents, Mr Woodley appears to have been the “Market Segment Manager” for fibre cement products in New Zealand in the early 2000s. Ms Gray also identifies other references to Mr Woodley and the discovery database.
[51] Ms Gray also refers to a copy of the James Hardie New Zealand Holdings Limited Financial Statements for the year ended 31 March 2019, as well as a bundle of three spreadsheets provided by the defendants’ solicitors to the plaintiffs’ solicitors which list the insurance-related documents provided by the defendants. She searched these spreadsheets for a number of terms, each search using the additional term “insurance”. The results generated only three hits.
[52] In terms of the remaining issues between the parties, Ms Gray searched for board materials and financial documents. Only seven documents were found. She also refers to a bundle of three documents discovered by the defendants with redactions made for privilege and to a chain of correspondence between Adina Thorn and Chapman Tripp regarding documents masked as irrelevant. Examples of documents so masked are attached to her affidavit.
17 White v James Hardie New Zealand (No 7), above n 5, at [79(a) and (d)].
[53] The defendants’ solicitors had provided a further tranche of documents by way of discovery on 8 May 2020, comprising 198 documents. These documents included testing documents, standards, reports, media articles, insurance documents, emails, business plans, agendas and board reports. These documents were reviewed by the White plaintiffs’ solicitors and a letter was sent to Chapman Tripp (entitled “supplementary discovery”) on 11 May. Queries were raised in relation to certain privilege claims and documents that were noted as having been masked for both privilege and irrelevance. The letter also referred to the numerous board minutes and reports which had been discovered and suggested the late discovery highlighted the inadequacy of the defendants’ discovery. Confirmation was sought as to the steps taken by the defendants to ascertain whether the defendants’ discovery obligations have been fully complied with in respect of board minutes/reports and associated material.18
[54] In her 22 May affidavit in support of the White plaintiffs’ supplementary interlocutory application, Ms Gray also identifies other documents that have been masked for irrelevance and specifically references an update in relation to New Zealand weathertightness which appears to have not been discovered and a document which had been partly redacted for privilege.
[55] She also notes that a number of management reports and monthly CEO reports were provided as part of the 8 May 2020 discovery. These documents are said to include:
(a)Only 14 monthly management reports (and a one-page extract) over a nine-year period and the full document set.
(b)Only five monthly CEO reports over a five-year period and the full document set.
18 According to the affidavit of Ms Armstrong, dated 16 June 2020.
A response to the April orders and the May applications
[56] Mr Petrie swore an further affidavit dated 27 May 2020 in response to the April order and matters raised by the plaintiffs in their May applications.
(a)Custodians
[57] Mr Petrie provided a table that identifies the custodians and their roles within James Hardie. He also describes the custodian identification process. James Hardie’s external legal counsel, Chapman Tripp, have advised James Hardie on weathertightness matters since late 2002. Mr Petrie explained that as a result of that longstanding role and the historic nature of the claims, Chapman Tripp played a major role in the custodian selection process. The identification exercise produced an initial list of 31 custodians. Additional steps were then taken. These included checks of James Hardie servers to identify whether James Hardie held a mailbox for each individual. If it did, the mailbox was extracted/exported in full. Search items were then run across each mailbox and responsive documents reviewed and relevant documents disclosed.
[58] Emails were a key focus of the custodian-specific searches but James Hardie specifically ensured custodian-related material was checked for relevance. For example, steps were taken to review all servers containing all other types of electronic documents of the James Hardie defendants to attempt to locate folders of documents created by or assessed by each document custodian. The list of custodian names was used when indexing and reviewing James Hardie’s hard copy records to identify potentially relevant documents.
[59] Searches of emails could not extend to pre-April 2006 emails, as all emails prior to April 2006 were permanently deleted (in accordance with James Hardie’s document retention/destruction policies). James Hardie has, however, discovered some pre-2006 emails from two sources, namely, emails found on James Hardie’s hard copy records and emails that have been subject to record holds and sent to Chapman Tripp prior to 2011.
[60] Mr Petrie notes, however, that they did not apply April 2006 as a cut-off date to their searches. In some cases, it was revealed that James Hardie no longer held any emails from a document custodian and those persons are noted. Also, it did not necessarily find electronic or hard copy folders in relation to each custodian. It is noted that several of the document custodians had not worked for James Hardie for over 20 years.
[61] A further limitation was identified. It was not practically possible to isolate specific documents held by James Hardie on the basis they were created or edited by a particular James Hardie employee outside of that employee’s hard copy or electronic folders (created or accessed). It is also noted that James Hardie’s initial custodian list was not static; it evolved during the course of discovery. James Hardie relied on Chapman Tripp to identify individuals whose names may not have come up in initial investigations but who, nonetheless, appeared on historic documents identified as relevant and who might themselves have further relevant documents. Custodians in this category had their mailboxes extracted and searched, or were used to identify folders of potentially relevant electronic and hard copy documents.
[62] Mr Petrie notes that the James Hardie discovery custodians were selected on the basis that the individuals identified were most likely to hold or have generated relevant documents. James Hardie largely relied on Chapman Tripp and its consideration of information relevant to each of the discovery categories to determine which individuals were most likely to hold or to have generated relevant documents. Mr Petrie confirms that James Hardie did not identify custodians solely by reference to which company they worked for, nor on the basis of what specific role the individual in question may have held from time to time with any particular company in the wider organisation. A number of reasons for this were identified, including that: James Hardie does not have a centralised database of employees or officers or organisational roles over a lengthy period; it has only kept electronic employee human resources personal folders from 2012 onwards; and it does not have a reliable set of organisational charts or similar that could be used to pinpoint potentially relevant roles that may have been filled by different people over many years. It is also noted that a person’s role within the James Hardie Group might span more than one company.
[63] As noted above, Ms Nola also provided evidence support of the defendants’ opposition to the plaintiffs’ second amended application of 8 May 2020. In addition to addressing the discovery process and the collection of documents more generally (as discussed above), she too addresses specific issues raised by the White plaintiffs, including custodian issues, the process of searching additional custodians and the process of adding additional search terms in an ongoing discovery process.
[64] Ms Nola explains why emails were not the sole focus of the James Hardie custodian-specific searches. She considers that it was not possible for James Hardie to simply extract all documents that were created or edited by a single custodian and that email mailboxes were the easiest means of being certain that material related to a particular individual. That is not to say that James Hardie did not look for and collect relevant documents from other sources created or accessed by a document custodian. Those individuals’ names was one of the ways which relevant material was identified from servers and hard copy sources. She also notes that on servers, the more effective way to collect all relevant material created by custodians is to run key word searches across the discovery universe and review these documents for relevance. She says it is likely that any relevant material created by a custodian is captured by this search methodology.
[65] Ms Nola refers to the White plaintiffs’ 8 May 2020 application for additional custodians and enquiries of additional custodians. She notes that naming additional custodians requires the collection of the further custodians’ mailboxes. The consequence of this is that as the document universe is expanded beyond its original size and collection, processing and review exercises must be repeated. As a sampling exercise, she requested that James Hardie retrieve mailboxes of five of the proposed additional custodians - Messrs Fisher, Gries, Gustafson, Loduwick and Salters. They were selected because, among other things, they had the highest number of hits across the disclosure set. She notes that the number of hits on the existing disclosure set for these directors’ names ranged from 1 to 87 hits across 28,495 documents.
[66] In order to get some insight into the potential relevance counts, and in light of some search limitations, James Hardie applied some broad search strings to get sample results. The sampling exercise indicated that even when using broader search terms
than the current search terms, those directors whose names appear most often on the most documents in the current disclosure set mostly hold next to no potentially relevant documents. The results indicated to Ms Nola that three of the persons subject to the search exercise should be excluded as potential custodians, while two (Grant Gustafson and Don Salter) could not be excluded so that James Hardie would need to collect their entire mailboxes to enable search terms as currently formulated to be run across the mailboxes to accurately determine the volume of material that would need to be reviewed. James Hardie has confirmed that beyond the five directors just mentioned, it does not hold mailboxes for the remainder director/custodians sought by the White plaintiffs. This is said to be because of one or more of the following reasons:
(a)their directorships were completed prior to April 2006;
(b)they were independent/non-executive directors; and/or
(c)they did not have a James Hardie mailbox.
[67] One exception to this was identified (a director of James Hardie Australia Pty Ltd), but Ms Nola noted that James Hardie has already searched another director of the same company who was a director at the same time so presumably any materials sent to that director in his capacity, would have been sent to the other director as well.
[68] She also understands that for the three non-director proposed additional custodians sought by the White plaintiffs:
(a)Tom Nickels left James Hardie in 1997, so James Hardie would not hold a mailbox for him;
(b)Peter Edwards left James Hardie in 2002, so James Hardie would not hold a mailbox for him; and
(c)David Hood left James Hardie in 2001, so James Hardie would not hold a mailbox for him.
[69] Ms Nola notes that the cost of collecting and processing the additional emails of the five directors would be at least in excess of US$42,500. It is also noted that storage of this material by a third party, BlueStar, would incur a hosting cost of US$8,000 per month and that Chapman Tripp would then be required to manually review the responses set for relevance and privilege. That cost would be approximately NZ$521,000. That figure is based on a manual review, rather than using TAR. The set would then need to be objectively coded and on the assumption that five per cent of the search term responsive data set is in fact found to be relevant, Ms Nola would estimate a cost of approximately NZ$17,000 to objectively code. In summary, the total cost of the process would be approximately NZ$607,700 plus NZ$13,120 per month to store the material.
(b)Insurance documents
[70] Mr Petrie refers to the White plaintiffs’ requests concerning insurance documents, namely, a request that the defendants confirm that James Hardie does not have, and has never had in its control, certain types of insurance documents. Mr Petrie notes that he would not be able to provide an affidavit saying that James Hardie did not have any instances of the types of insurance documents identified by the plaintiffs in its control at any point in time over a 30-year period, particularly given the breadth of the documents that the plaintiffs are concerned with and the date range in issue. He says, however, that James Hardie has diligently searched for and discovered those relevant open documents in discovery Class J that it has been able to locate within its control. It has made specific enquiries of several persons involved in James Hardie’s insurance arrangements; undertaken specific searches of its records for insurance documents; built up a list of additional insurance-related search terms; made enquiries of Marsh (the entity which acquired James Hardie’s former insurance broker, Jardine Lloyd Thompson, in April 2019); and explained to the White plaintiffs in some detail what its enquiries related to insurance documents have revealed about the structure of James Hardie’s arrangements.
[71] Mr Petrie confirms that James Hardie has made attempts to locate potentially relevant documents of the kind sought by the White plaintiffs.19 As a result of extensive searches, James Hardie found a potential source of further documents – some boxes of material at its Australian archives that appear to date between 1983 and 1998. He says it is not clear whether the boxes contain the relevant insurance documents, but he intends to review those boxes to confirm the position.
(c)“GMT” and “RMT”
[72] Mr Petrie responds to concerns about the apparent lack of discovery in relation to GMT (global management team), RMT (regional management team) and Fibre Cement Teams documentation. He says that James Hardie has discovered a number of documents concerning these teams. James Hardie ran additional search terms across offshore custodian mailboxes and across the corporate affairs areas of the James Hardie servers that could be expected to identify any relevant documents now sought by the White plaintiffs, including searches for “GMT”, “Global Management Team” and “risk committee”.
[73] Ms Nola also referred to additional searches in relation to GMT and RMT (that is, Global Management Team or GMT and Regional Management Team or RMT). Ms Nola says that they have undertaken a search, including all the terms just mentioned and this search alone returns 19,665 documents that run across the current document universe. Having sampled the result, she confirmed a number of false positive hits for Greenwich Mean Time and therefore she recommended omitting GMT so the search does not return a multitude of false hits. Ultimately, Ms Nola recommended a modified search approach as follows:
(RMT OR FCGMT OR FCGTT OR FCTNT OR “Fibre Cement Global Management Team” OR “Fibre Cement Global Technology Team” OR “Global Management Team” OR “regional management team” OR “Global Fibre Cement Network” OR “Group Management Team”) AND (Harditex OR monotek OR titan OR “fibre cement” OR cladding OR sheet OR monolithic)
19 For example, all proposals, placing slips and documents provided to insurers relating to the defendants’ business and risks together with all claim forms, notifications and records; all insurance questionaires or surveys completed by the defendants, their directors, managers, employees and contractors; and all documents provided to insurers concerning business risks, including to reinsurers and brokers.
[74] To ensure that GMT is not missed in other non-email type documents, she recommended including a search for the search terms “GMT” across all non-email document types.
(d)Board materials
[75] In terms of board materials also sought by the White plaintiffs in their application, Mr Petrie notes:
(a)The defendants’ discovery categories did not include a management document or board document category. However, James Hardie looked to identify documents of this kind to the extent such documents may have contained relevant information that fell within one or other of the defendants’ discovery categories.
(b)As early as 5 November 2019, James Hardie specifically identified and reviewed hard copy and electronic board papers for the seventh defendant to confirm whether any of that material was relevant.
[76] He also notes that James Hardie, of its own initiative, applied broad search terms specifically to identify any further relevant board and management documents.
(e)Additional search terms
[77] Ms Nola’s affidavit addresses the request for more search terms. As I will note below, this aspect has been resolved between the parties. It remains relevant insofar as it indicates the scale of the review exercise that would have been needed. Ms Nola estimates that the review set size, including the additional search terms, would be approximately 356,901 documents. It is also noted that a number of the search items that were proposed by the White plaintiffs in their amended application were redundant because they were variations on existing terms and would accordingly not produce any new documents for review. It is also noted that some search items were unusually wide and that the management terms were too wide.
The Waitakere plaintiffs’ June application
[78] As discussed above, on 15 June 2020 the Waitakere plaintiffs filed an amended interlocutory application for orders that the defendants provide compliant discovery. Ms Armstrong, legal counsel employed by Metlifecare Ltd, provided an affidavit in support. Ms Armstrong says that the review of the defendants’ latest tranche of insurance documents on 8 May 2020 by MERW shows that:
(a)the defendants have discovered:
three insurance policies; and
13 placing or quotation slips;
(b)no proposal forms or renewal forms have been discovered;
(c)no actual/potential claim notifications to external insurers or the captive insurer; and
(d)incomplete insurance policies have been discovered.
[79] She also notes that the defendants have discovered the following insurance documents which refer to other documents that have not been discovered:
(a)a quotation slip, which refers to an “attached claims experience for the periods 31 March 1998 to 31 March 2004” which has not been discovered;
(b)a General and Products Liability Quotation Slip which refers to claims information and underwriting information that has not been discovered;
(c)a final renewal report, which refers to renewal declarations that have not been discovered; and
(d)a list of quotation or placing slips but no underlying proposal forms or policies have been discovered.
[80] Ms Armstrong also refers to board materials. She notes the defendants have only discovered the following board materials in the entire set for the seventh and second defendants:
(a)14 board reports for the seventh defendant. An example is included in the exhibit annexed.
(b)One board meeting agenda for the seventh defendant. An example is included in the exhibit annexed.
(c)One board meeting minute for the seventh defendant. An example is included in the exhibit annexed.
(d)68 Management Committee meeting minutes for James Hardie & Coy Pty Limited have been discovered. The current named second defendant, Studorp Limited, traded as James Hardie & Coy Pty Limited from 7 July 1937 to 12 July 1994.
(e)Five monthly CEO reports for the seventh defendant. An example is included in the exhibit annexed.
[81]According to Ms Armstrong, no board memoranda have been discovered.
[82] Ms Armstrong therefore says that the following gaps have been identified in the defendants’ discovery:
(a)No board materials for the first, third, fourth, fifth and sixth defendants have been discovered.
(b)The defendants have only discovered two Group Business Results dated 31 October 2015 and 31 October 2016.
(c)The defendants have only discovered three Product Development Monthly reports for 1 September 2001, 1 January 2002 and 1 September 2002.
(d)The defendants have discovered an internal memorandum that refers to a Product Development Meeting, however, MERW have not been able to identify any Product Development Meeting minutes in any of the documents discovered by the defendants.
[83] Following conferral between the solicitors on 15 June 2020, MERW wrote to Chapman Tripp advising that the Waitakere plaintiffs were still considering the privilege issues surrounding the defendants’ insurance documents. The Waitakere plaintiffs’ statement of position on issues with the defendants’ discovery, dated 22 June 2020, included the Waitakere plaintiffs’ position on the defendants’ privilege claim.
A further response
[84] Ms Zohrab Coates, a solicitor at Chapman Tripp, made an affidavit dated 1 July 2020 in support of the defendants’ opposition to the White and Waitakere plaintiffs’ applications of 8 May, 22 May and 15 June 2020.
[85] She notes that as a result of the sampling exercise undertaken by Ms Nola and referred to in her evidence (discussed above at [64]–[68]), the defendants offered to the plaintiffs to treat two individuals as document custodians – Mr Gustafson and Mr Salter. Ms Zohrab Coates has been involved in the defendants’ subsequent review of the mailboxes of Mr Gustafson and Mr Salter. 52,816 documents from those two custodians were ingested into the defendants’ discovery universe for the purposes of the review. That review is now complete.
[86] Only four open documents relevant to this proceeding were identified and only three of those documents are unique documents within the defendants’ discovery set. Those three documents, with redactions for irrelevance, are attached to her affidavit. The first of these documents describes group licensing arrangements. The next two documents are licensing agreements with respect to particular trademarks, including Harditex, involving entities within the group.
[87] She notes that the White and Waitakere plaintiffs made a number of specific document requests in their respective applications and James Hardie has responded to those requests in relevant schedules to its statement of position for caucusing, dated 22 June 2020.
[88] Ms Zohrab Coates also refers to a further request by the Waitakere plaintiffs relating to Category I documents to apply a number of search terms to identify potentially relevant documents. This search string is identical to a search string that the Waitakere plaintiffs requested the defendants’ apply to address the alleged document gaps concerning board and management documents in March 2020.
[89] The defendants record in open correspondence that they had agreed to run certain search items first proposed by the Waitakere plaintiffs and had run the search terms agreed. The Waitakere plaintiffs then requested additional terms to be added to the primary search filter, namely:
(a)Director/Board and paper; or
(b)Director/Board and memo*.
[90] By this stage, Ms Zohrab Coates says, James Hardie had already run the agreed searches using the following search filter requested by the Waitakere plaintiffs:
(a)Director/chair* and meeting;
(b)“Board Meeting”;
(c)Director/Board and meeting and agenda.
[91] As a result of that search, the defendants disclosed 111 open documents (of which a number were duplicates of documents already discovered from different document families). The additional terms which now form part of the Waitakere plaintiffs’ amended application are the only terms in the amended application that the defendants have not already run.
The Waitakere plaintiffs’ July application
[92] Ms Kim filed her July affidavit in support of the Waitakere plaintiffs’ 21 July 2020 application. She refers to a table produced by the High Court of the matters in which James Hardie has been involved since 2001. Ms Kim also says that MERW advised Chapman Tripp on 8 July 2020 that the Waitakere plaintiffs were minded to file an amended interlocutory application, given the outstanding discovery and privilege issues.
More about insurance documents
[93] Mr Peace, a consultant employed by Risk Management Ltd, provided an affirmation dated 21 July 2020 in support of the Waitakere plaintiffs’ application. Risk Management Limited provides risk, business and continuity management, insurance- related services and risk assessment services.
[94] In his affirmation, Mr Peace responds to instructions to provide an opinion on the insurance arrangements of the seven defendants in these proceedings and the documents that would typically be created to establish the record of those arrangements. He confirms that he has complied with the code of conduct for expert witnesses. He notes that from the discovery provided to date, no proposal or renewal or notifications of actual or potential claims have been discovered. He notes, from Mr Petrie’s December 2019 affidavit, that: two multi-year, multi-line policies have been discovered; the defendants assert that the global insurance markets no longer provided cover for New Zealand weathertightness claims after 31 March 2004; and that the defendants’ captive insurer, “James Hardie Insurance Limited” did not provide cover for New Zealand weathertightness claims.
[95] He notes that Mr Petrie focuses on public liability cover and that there are other types of insurance policies that may be relevant for the purposes of this current claim. For example, the Master Insurance Summary states that the multi-line/multi-year programme incorporates General and Products Liability (including Errors and Omissions) and Directors & Offices liability (including Employer Practices Liability). He also understands that some placing or quotation slips have been produced.
[96]Based on his experience, he would expect companies like James Hardie to:
(a)retain copies of proposal or renewal documents used to obtain cover; and
(b)notify either the groups’ broker or underwriters of actual or potential claims, nothing that in the period 1980 to 2006, there were claims in the High Court involving the same defendants.
[97] Mr Peace understands that documents have been disclosed via Marsh but that those documents did not include proposals, renewals and notifications of actual or potential claims. That such documents do not exist is inconsistent with his experience of large multi-nationals who have in place the comprehensive suite of policies that appear to have been established for the group. He also notes that, based on his experience, he would expect a multi-million global corporate such as James Hardie to have proposal and renewal documents and that a renewal would need to be prepared on an annual basis by a risk manager or other person responsible for making insurance arrangements. In his experience, the risk manager would ask the relevant managers and subsidiaries for information about any risks and typically this process would be underway about two months prior to the date of the renewal that was required to be provided to the broker. He says that proposal and renewal documents are the basis for insurers to be able to assess claims and form views about future claims or circumstances.
[98] He further understands from Mr Petrie’s December affidavit that he made enquiries of Marsh as to whether they had copies of insurance documents. In his experience, he would have expected that Marsh and JLT (the former insurance broker) would have retained copies of proposals and renewal forms for several years (even decades), particularly for a large insured such as the James Hardie group. He says that retention of these documents is necessary to help substantiate insurance cover should claims arise in the future.
[99] Mr Peace also notes that typically a risk manager communicates with all relevant line managers to the effect that all incidents or risks must be reported. He
refers to the master insurance summary that has been discovered and notes that, in terms of the requirements under that summary, circumstances giving rise to potential claims should have been notified to the claims contact for each of the defendant entities. He refers to the High Court proceeding. He says it seems very unlikely that there could be a case in the High Court or the Weathertight Homes Resolution Tribunal where the first and second defendant were named parties but yet did not notify their insurers. He says, in his experience, he would expect the risk manager to provide a report or memorandum to the board summarising the insurance renewal and relevant market conditions, and a regular litigation report.
[100] He says that a risk manager or employee responsible for the insurance would prepare a risk report and he notes that Mr Petrie attaches copies of internal memoranda, dated 25 January 2000 and 2 February 2001, entitled “Insurance and Risk Management Report” which cover insurance and risk management initiatives in the James Hardie group. However, copies of such memoranda have not been provided for each year in the relevant period from 1980 to 2006.
[101] Mr Peace also notes that when a corporation is looking into whether to establish a captive, the risk manager or risk consultant would prepare a detailed feasibility study, often in conjunction with their insurance broker. As part of the study, the group would gather all insurance records in order to understand its risks and liabilities and benefits of establishing a captive. He would therefore expect that insurance records, including proposals, renewals and copies of notifications along with supporting information, should have been gathered together and detailed in a feasibility study prior to James Hardie’s captive being established.
[102] He says that in addition to gathering information for the previous 10 to 20 years and preparing a feasibility study, he would expect that the board of the group considering the establishment of a captive would have been provided with a memorandum or a report as to the risks and benefits of establishing a captive as opposed to continuing with market insurance. He would expect that this would have included a summary of the risks and liabilities and details of any proceedings.
[103] In an affidavit dated 22 July 2020, Ms Gray provides an update to the Court in relation to correspondence between the parties. It is unclear to me what I was to make of this. As noted, it is not the function of the Court to review correspondence between the parties, the reference of which is not explained. More helpfully, she details the efforts made by the White plaintiffs to refine their request for additional custodians, that is, from 50 to 20 persons. Six individuals are highlighted as appearing to have had significant involvement in Harditex and Monotek: David Hood, Tom Nickels, Peter Edwards, Matthew Woodley, Peter Safron and David Worley.
Mr Petrie and Ms Nola respond again – offers and answers
[104] On 29 July 2020, in an affidavit, Mr Petrie outlines the proposals and offers made by the defendants as a consequence of caucusing and the independent counsel process. He refers to the following matters:
(a)employer-issued devices;
(b)document retention polices,
(c)cloud-based storage or services,
(d)custodian information;
(e)insurance documents; and
(f)other work done by the defendants to resolve matters.
[105] Issues in relation to employer-issued devices and cloud services have been resolved. In terms of document retention policies, Mr Petrie notes that the defendants have written to the plaintiffs rejecting requests in respect of production of document retention and/or destruction policies. He notes though, in a letter dated 3 July 2020, the defendants also offered to provide a further affidavit which would explain that certain assumptions that appear to have been made by the White plaintiffs in pursuit of these documents are incorrect. He understands there has been no response to that letter. He says, for completeness:
(a)James Hardie’s 2011 decision to apply a hold to its emails, which he describes in his December affidavit was, to the best of his knowledge, completely unrelated to any events in New Zealand, and unrelated to any weathertightness matters.
(b)Prior to that decision, James Hardie had been permanently deleting all of its emails after five years (unless subject to record holds at that time). That approach was driven purely by storage capacity concerns and related cost of that storage.
(c)However, in 2011, James Hardie undertook a system upgrade, at which time it decided it needed to improve its document management practices. Around the same time, it was subject to some significant litigation in the United States (unrelated to the subject matter of these proceedings). At that time, James Hardie decided that it was more practical to reverse its decision to delete emails more than five years old and then to work out how to apply litigation holds to some or other emails on an ad hoc basis as and when an entity may have required such a hold. In other words, in 2011, James Hardie decided it was just easier and simpler to store its emails going forward. Again, to the best of his knowledge, this had nothing to do with any matter in issue in this litigation.
[106] In terms of custodian information, he refers to the ongoing dispute between the parties about identification of custodians and the reason for their selection. He attaches as a schedule to his affidavit a table which includes the information requested, he thinks, by the White plaintiffs to the extent that that information is available, based on enquiries made by the defendants, as described in his May affidavit. He confirms that, to the best of his knowledge and belief, the information supplied in that schedule/table is correct.
[107] He notes that there are ongoing issues in relation to insurance documents and that the defendants continue to work to attempt to resolve matters, including by taking the following steps:
(a)The defendants have offered to treat two further individuals as “document custodians” in a letter dated 3 June 2020 and this has been referred to in Ms Zohrab Coates’ affidavit (discussed above at [85]).
(b)In their 3 June 2020 letter and again in their 15 June 2020 statement of position for caucusing, the defendants offered to provide their privileged and irrelevant documents to independent counsel to review, notwithstanding that they do not consider such a step to be necessary.
[108] Chapman Tripp also proposed to provide confidential submissions on those documents to independent counsel, but this was opposed by the plaintiffs. They also offered to re-review all privileged and irrelevant documents under challenge to ascertain whether there were any steps they thought they could take to try and resolve any of the challenges. As a consequence of that review, the defendants:
(a)offered to disclose certain documents in their entirety where irrelevance redactions had been made;
(b)for many of the challenged documents, offered to unredact headings to allay the plaintiffs’ concerns about the redactions in question; and
(c)prepared a 35-page table that explained to the plaintiffs the results of the defendants’ re-review.
[109] On 3 August 2020, Ms Nola provided evidence in relation to the defendants’ opposition to the White and Waitakere plaintiffs’ applications. In that affidavit, she also responds to a request for further information by independent counsel, Ms O’Gorman.
[110] Dealing with the last aspect first, independent counsel suggested it would be helpful to know the number of hits for the proposed additional search terms to the mailboxes of Messrs Gustafson and Salter. Ms Nola confirms that the defendants ran all agreed search terms across their mailboxes and manually reviewed any responsive
material for relevance. The result was four open documents, as Ms Zohrab Coates noted in her July affidavit (discussed above at [86]).
[111]Ms Nola refers to a modified search methodology proposed by the White
plaintiffs on 28 July 2020, with all terms run as “fuzzy”, namely:
(a)primary search filter: the names of 20 custodians identified by Ms Gray;
(b)secondary search filter: “fibre cement” or cladding or sheet or monolithic.
(c)Third search filter: leak* or watertight* or weathertight* or weatherproof.
[112] After corresponding with BlueStar, Ms Nola considers running the search as formulated by the White plaintiffs would require the defendants to manually review 9,034 documents. Ms Nola estimated the cost of this proposed search at $59,000 and instead recommended amending the search string as follows:
20.1Only the primary search filter should be run as a fuzzy search. This would allow for any documents with variations of custodian names to respond to the searches.
20.2The search term “fiber cement” (i.e. the American spelling of ‘fibre cement’) should be added to the secondary search filter. This resolves the plaintiffs’ apprehension that American spellings would not be responsive (which was their reason for suggesting fuzzy searches). I do not understand that the remaining search terms in either the secondary or third search filters have different American spellings, and I consider fuzzy searches of these terms will render the search less effective.
[113] Ms Nola also refers to a proposal to re-run searches in respect of the term GMT, noting that the defendants would be required to review a total of 3538 additional documents at a cost of $23,000. She also responds to a suggestion by Ms Gray that the defendants have mass reproduced discovery by explaining that that once a document is objectively coded in discovery soft-wear, the objective coding does not typically change.
Independent counsel report
[114] On 22 June 2020, I appointed Ms Laura O’Gorman as independent counsel. The background to her appointment was foreshadowed in my Judgment No 7 and discussed in my minutes 33–37.20 Ultimately, the parties agreed to the independent counsel process and identified Ms O’Gorman as suitably qualified to act as independent counsel for the purpose of assisting the parties and the Court to resolve the remaining discovery issues.
[115]My instructions to Ms O’Gorman in my letter of instruction were as follows:21
Your primary task is to assist the parties and, if necessary, the Court, in the resolution of the remaining discovery issues. I do not propose to prescribe the steps you should take in relation to this task. But I envisage it involves the following steps:
(a)compile a combined list of remaining discovery issues;
(b)identify the position of the parties in respect of those issues;
(c)review and comment on the outcomes of the conferral process;
(d)identify a potential solution to each of the issues, having regard to the outcome of the conferral process;
(e)state the reasons for the suggested solution; and
(f)collate the outcomes of your review in a report to me which addresses each of the aforementioned steps.
[116] I also indicated to Ms O’Gorman that she would need to develop protocols for engagement with counsel and provide undertakings as to confidentiality in respect of privileged and masked documents.
[117] It transpires that the envisaged conferral process did not extend past an initial meeting, with the result that Ms O’Gorman was not involved in that process. Nevertheless, as requested, Ms O’Gorman otherwise completed her review exercise and she produced her report on 17 July 2020.
20 White v James Hardie New Zealand (No 7), above n 5, at [77].
21 As attached to my Minute (No 39), dated 23 June 2020.
[118] Her substantive analysis is prefaced by a succinct statement of legal principles which is not disputed. Ms O’Gorman notes that the nature and complexity of the proceeding justifies a very extensive discovery. She also notes that a very large number of documents have already been discovered, with a discovery universe consisting of 1,710,428 de-duplicated documents, which has been narrowed to a review set of 233,811 of which 28,495 documents have been disclosed. The ease and cost of retrieving a document is also noted, though Ms Gorman identifies the problem as not so much with those issues but rather whether any more responsive documents are likely to exist.
[119] Ms Gorman refers to the significance of a document to be found, noting that if there are grounds to believe that a key evidence document exists, this could justify a very extensive search, while a search for discovery documents of only marginal relevance may be regarded as disproportionate. She says there is no bright line test for what constitutes a proportional amount to spend on discovery and that it involves a balancing of the time and cost of making discovery against the potential value of it.22
[120] Ms O’Gorman addresses each of the issues identified in a joint issues document provided by the parties. She also reviews the evidence filed in respect of the various applications and records the respective positions of the parties. She also helpfully provided a schedule summarising the position of the parties and her response to them. Where relevant, I will refer to independent counsel’s specific response on the issues that are still to be resolved below in my “Assessment” section below.
[121] By way of overview, Ms O’Gorman’s report was thorough, careful and balanced. She had undertaken the type of fine-grained review I had envisaged. It was of considerable assistance to me. Her substantive analysis was not seriously criticised by any counsel. The primary complaints of the plaintiffs were that Ms O’Gorman was said to have trespassed outside her brief into an adjudicative role, failed to take into account all the post-caucusing proposals and did not accurately record the White plaintiffs’ position. I do not accept these complaints. As noted, Ms O’Gorman was tasked with assisting the parties and then the Court with the resolution of the remaining
22 Citing NSK Ltd v General Equipment Co Ltd [2015] NZHC 1979 at [27].
issues and she has done exactly that. In short, she has assessed whether and to what extent, if at all, the issues raised by the plaintiffs require further action by the defendants. She has made recommendations that correspond to that assessment. Any purported failure to take into account post-caucusing proposals or the position of the parties does not materially derogate from the substance of her recommendations.
[122] I turn then to her assessment of the key issues. Ms O’Gorman groups the issues together in the following sections:
(a)Sources – whether the defendants have taken all appropriate searches to locate sources of documents that might be responsive to the tailored discovery orders (questions of identifying relevant custodians, servers, hard drives, devices, backups etc). This stage is depicted in the “Identification” and “Collection” steps of the EDRM Model.
(b)Review – in respect of any such located material, whether it has been properly searched to identify responsive documents (questions of e- discovery search methods including the use of key words, TAR 2.0 prioritisation and manual review). This is the “Review” step of the EDRM Model.
(c)Identified gaps and missing documents – related to both of the above, whether there are any genuine “gaps” in discovery (the parties have different perspectives on what might be indicated by a relatively low number of responsive documents), and if so, then the extent to which they either:
(i) indicate that the required standards of a “reasonable search” in (a) or (b) above have not been met; and/or
(ii) justify a more directed search for the identified missing material.
(d)Irrelevance and redactions – related to whether there are any genuine “gaps” in discovery (and also fundamental to the irrelevance issues
discussed in section 12), section 11 discussed the disputed issue of the scope of the tailored discovery orders in the context of the principles discussed in Judgment No 4.23
[123]I turn to summarise Ms O’Gorman’s response to each of these issues.
Sources
[124] Ms O’Gorman considered that the defendants had exhausted the search of employer-issued devices and that the plaintiffs also have no reason to disbelieve the defendants’ evidence that they have no other relevant cloud-based storage or services. In terms of custodians and further searches for source material, Ms O’Gorman considered that the plaintiffs do not sufficiently acknowledge that a “reasonable” search is required and that the defendants’ evidence and explanations properly support Mr Petrie’s assessment that the defendants have taken all reasonable steps to locate all relevant sources in this category. She did not see any grounds for the belief that more inquires or searches would locate further responsive documents. She considered that possibility to be speculative. She also noted that the plaintiffs’ concerns appear to focus on the extent of responsiveness rather than being targeted at any particular missing documents. She identified that the searches were custodian-specific, but that other documents were nevertheless comprehensively searched and gathered as sources. She was fortified in her view that further custodian specific searches were unnecessary given the sampling exercise undertaken, and the inclusion of two further custodians (Mr Gustafson and Mr Salter). She did not see any grounds for the plaintiffs’ belief that further searches would disclose a material number of documents that were not already reasonably searched for and included in the discovery universe.
[176] I agree with Mr Hodder. The defendants can only discover what they have in their possession. I have no reason to doubt Mr Hodder’s advice to the Court that attempts have been made to locate documentation of the kind now in issue. As noted already, given the scale of the discovery exercise undertaken (as explained by Mr Petrie, Ms Nola and Ms Zorab Coates), and the confidence expressed by Ms O’Gorman about the defendants’ discovery exercise, I am satisfied that the defendants’ response to this issue was reasonable.
Insurance policy referred to in the 2019 accounts
[177] Mr Gray submits that this document exists and must be discovered. Mr Hodder submits that this policy document cannot possibly be relevant to this proceeding, given that the document is a policy document some nine years after the last James Hardie product ceased sale and three years after the start of the claim.
[178] Assuming the policy referred to is contemporaneous with the 2019 account, it is highly unlikely it is relevant to the issues in the proceedings. Indeed, it is speculative
to suggest it would reveal anything of probative value to the matters in dispute. I therefore agree with Mr Hodder that the order sought is unnecessary.
Issues 10, 11 and 12 (privilege and masking)
[179] The White plaintiffs submit that the Court should review specified documents to verify the impressions of independent counsel. I address the merits of that request below when I review and comment on the confidential parts of Ms O’Gorman’s report. For present purposes, I address the central complaint made about Ms O’Gorman’s approach, namely that the defendants have not provided an adequate explanation for privilege, masking or relevance and the plaintiffs’ contention that Ms O’Gorman’s review of those documents must have been based on a flawed view of relevance. The White plaintiffs’ submissions did not explain how the defendants (or Ms O’Gorman’s) view of relevance is wrong. Nor did the Waitakere plaintiffs, who raise similar concerns in respect of discovery of board materials. Their collective concern, however, appears to drive from the scale of the masking.
[180] I have examined the approach taken to relevance by Ms O’Gorman. This issue is discussed at part 11 of her report. In summary, Ms O’Gorman reviewed the scope of the tailored discovery orders. She noted:
(a)The core issues at trial as defined in my Judgments No 2 and 4:62
(i) Who is responsible for the design/manufacture/sale of the James Hardie Products and related Product Information;
(ii) Whether the James Hardie Products are defective;
(iii) Whether the defendants knew/ought to have known about any defects, and
(iv) Whether the defendants breached any common law or statutory duties in respect of the James Hardie Products or James Hardie Product Information.
62 See White v James Hardie New Zealand (No 2), above n 2, at [5]; and White v James Hardie New Zealand (No 4), above n 2, at [5].
(b)The most contentious classes are I (Documents identifying risk or defects or liability relating to James Hardie Products) and J (Insurance Documents).
(c)In relation to Class J, that I had commented on what is relevant and what is relevant/irrelevant about insurance documentation in my Judgment No 4:63
(i) Relevant: who sought and obtained the policies and for what, is relevant because it is directly and cogently relevant to the third, fourth and seventh defendants denial of responsibility, their knowledge of the product defects, and the steps they took, or did not take, to mitigate the effects of those defects.
(ii) Irrelevant: subject to above, what policies have been issued and/or what claims have been made, or what their merits are, are irrelevant.
[181] Ms O’Gorman then, having reviewed the 106 documents sought to be reviewed by the White plaintiffs,64 considered that the defendants excluded documents as irrelevant because they fell outside the scope of the tailored order classes (including I and J), and were irrelevant to the trial issues, to the reasons for which the plaintiffs sought the documents and to the questions of the defendants responsibility, knowledge of the likely product defects and the steps they took, or did not take, to mitigate the effects of those defects.
[182] Mr Hodder contends that Ms O’Gorman was plainly correct to adopt the defendants’ approach to relevance. Subject to one point of clarification discussed in the redacted section below, I agree. On Ms O’Gorman’s account, the defendants framed their understanding of relevance by reference to the key issues at trial as recorded in my Judgments (No 2) and (No 4).65 In relation to Class J, the exclusion or masking of documents is also consistent with my reasoning in Judgment (No 4):
[16] In this regard, the primary relevance of the insurance documentation is not what policies have been issued and/or what claims have been made, or what their merits are, but who sought and obtained those policies and for what.
63 White v James Hardie New Zealand (No 4), above n 2, at [16]–[17].
64 As noted at [129], Ms O’Gorman considered 80 of the documents to be straight forward and irrelevant. She had a closer look at 26 of the documents which were not so straightforward.
65 See White v James Hardie New Zealand (No 2), above n 2; and White v James Hardie New Zealand (No 4), above n 2.
[17] This documentation, like the agency and licencing agreements, is therefore directly and cogently relevant to the third, fourth and seventh defendants’ denial of responsibility, their knowledge of likely product defects, and the steps they took, or did not take, to mitigate the effects of those defects. The usual prohibition against discovery of those types of documents on irrelevancy grounds does not apply.
[183]The generic complaint about irrelevance overreach is therefore rejected.
Waitakere plaintiffs
[184] The following issues were live insofar as concerns the Waitakere plaintiffs at the commencement of the hearing:
(a)Whether the defendants complied with the tailored discovery orders in respect of Categories I and J.
(b)Whether six managers/directors identified by the Waitakere plaintiffs should be treated as custodians.
Subject to leave
(c)Whether the defendants should be ordered to produce copies of their document retention/destruction policy.
(d)Whether the defendants should produce documents listed in Schedule B to the Waitakere plaintiffs’ second amended application.
[185] I understand that the Waitakere plaintiffs no longer seek orders in respect of the six additional custodians because the defendants had agreed to run a search in relation to one of them, a Mr Loduwick. If I am wrong about that, for the reasons expressed above at [157]–[160] in respect of the similar request made by the White plaintiffs, I would refuse to add the three additional custodians not already included.
Class I and J
[186] Ms Meechan submits that given the lack of documents discovered to date, further documents under Class I must exist. Accordingly, the Waitakere plaintiffs initially sought orders that the defendants must either:
(a)provide a further affidavit that complies with Class I – documents identifying risks, defects or liability related to James Hardie Products; or
(b)confirm they have undertaken reasonable searches of all repositories where documents in Class I exist, and
(c)provide their document retention/destruction policy.
[187] The almost complete absence of board meeting minutes, agendas and papers provided to the board (“Board Materials”) in relation to issues the “arc” of which spans more than 20 years is a key matter of particular concern in this context. Ms Meechan submits that it is remarkable that weathertightness issues have not made it onto the agenda of any New Zealand company, given that James Hardie was involved in such litigation as early as 2001, including leaky building proceedings commenced in 2003 where Harditex had been used for exterior cladding.
[188] It is also noted that relatively few board-level documents were discovered, and that James Hardie have not discovered the following:
(a)Board Materials for the first, third, fourth, fifth and sixth defendants;
(b)Group Business Results (except two dated 31 October 2015 and 31 October 2016);
(c)Product Development Monthly Reports (except three); and
(d)Product Development meeting minutes.
[189] Ms Meechan also says that conferral and subsequent exchanges failed to resolve the Waitakere plaintiffs’ concerns and the second amended application refines and defines the documents now sought to Board Materials, with the object to provide specificity and focus to the compliance exercise. It is noted that the defendants offered on 7 July to advise whether James Hardie has located minutes or board papers (where clearly marked as such) from relevant time periods for overseas defendant entities, but not in relation to New Zealand defendant entities. A request that this be expanded to all James Hardie entities was not responded to. As a consequence the Waitakere plaintiffs now seek confirmation as to whether relevant Board Materials exist and if they exist, whether they have been excluded as irrelevant.
[190] In terms of Class J (insurance documents), the Waitakere plaintiffs originally claimed that James Hardie had not undertaken a proper search of them. Their position now is that they accept that reasonable searches for this category of documents have been undertaken, but that the defendants appear to be claiming privilege or irrelevance in relation to them. They say that James Hardie must provide a further affidavit that complies with Class J or confirm they have applied the correct test for relevance as set out in Judgment (No 4),66 namely to the issue of responsibility for the James Hardie products.
[191] Ms Meechan also notes that the Waitakere plaintiffs only realised that the Class J documents had been located within the privileged section of the defendants’ discovery when the defendants provided further information about document types on 29 May 2020. The fundamental legal issue now is that the plaintiffs’ believe the basis upon which these documents have been disclosed is wrong: they are not privileged.
[192] While relevant to the matters raised in the leave application, Ms Meechan submits that I must assess the function of the documents as described by Mr Peace against the function asserted by the defendants, which, in order to attract solicitor- client privilege, needs to be the giving or getting of legal advice. His evidence is referred to above.67 He identifies how a multinational corporate might be expected to approach insurance. In short, he would expect annual renewals recording any risk,
66 White v James Hardie New Zealand (No 7), above n 5, at [14]–[17].
67 See above at [93]–[102].
actual and potential claims, a risk manager who would collate relevant information and insurer demands for renewal documents.
[193] Mr Hodder responds that James Hardie did in fact search for Board Materials of the defendants. For example:
(a)The defendants identified and reviewed hard copy and electronic board papers for the seventh defendant to confirm whether any of that material was relevant.
(b)James Hardie applied broad search terms across its servers relating to management and board material, of its own initiative to specifically identify any further relevant board and management documents from any other defendants.
(c)They have since run every targeted further search step requested by the Waitakere plaintiffs and agreed to run two further terms subsequently requested by the plaintiffs.
[194] He further submits that the real problem is not the scope of the searches, but that it has not disclosed many relevant documents. But there is no basis he says for an implicit assumption that there is more relevant material but it has not been located by the multiple searches to date. Furthermore, as the affidavit evidence shows, the defendants have searched for Class I material in James Hardie’s control and it is not obliged to disclose other Board Materials that it says are not relevant to that category.
[195] Mr Hodder also rejects any further requirement to confirm that the defendants have undertaken reasonable searches of all repositories where documents in Class I could exist. The defendants have already confirmed by affidavit that they have diligently searched for all documents required to be discovered under that order, including by running management and board search terms across the corporate affairs area of the James Hardie servers and that James Hardie has looked to identify board
materials to the extent that such documents may have contained relevant information.68
[196] As to Class J, Mr Hodder refers to the Waitakere plaintiffs’ shifting position from concerns about the nature of the searches for this category, to requiring disclosure of types of insurance documents, to a requirement now to provide a compliant affidavit of documents or for James Hardie to confirm that it has applied the correct test of relevance and to disclose their document retention policy. At the same time, there is also now a focus on the privilege and a request to review whether specified documents are properly subject to privilege. Mr Hodder submits that in other words, the plaintiffs now appear to accept all relevant documents have been identified and all appropriate locations searched.
Assessment
[197] Putting aside the matters subject to the leave application, for the reasons expressed by me above at [161]-[162] and by Mr Hodder and Ms O’Gorman (see [127]-[129] and above), I am satisfied that the defendants have discharged their obligations of discovery in respect of Classes I and J. The steps taken by James Hardie to meet their discovery obligations in respect of these classes of documents is addressed in the evidence of Mr Petrie, Ms Nola and Ms Zohrab Coates (referred to above at [41]-[42], [70]-[71], [75]-[76], [88]-[91] and [107]). It is unnecessary to repeat it here. A careful and comprehensive approach was adopted. Mr Petrie has explained that James Hardie has diligently searched for open documents in Classes I and J. I have no reason to assume he is untruthful or Chapman Tripp was neglectful about this. Exemplifying their confidence about the robustness of their approach, James Hardie offered to refer masked and privileged insurance documents to independent counsel to review.
[198] Moreover, it is not sufficient, in the context of a discovery exercise spanning some 15 months and a discovery universe of some 1.7 million documents, to identify an apparent absence of material as providing a proper foundation for further discovery. A theory based on “no smoke: there must be fire” is evidently illogical. I also dismiss
68 As mentioned in the evidence of Mr Petrie, discussed above at [71].
concerns about the relevance filter applied by the defendants for reasons explained above at [180]-[183]. The change in focus by Waitakere plaintiffs to whether privilege is properly claimed was appropriate. I will examine that issue in the context of the leave application below. In any event, I am confident that that the discovery in respect of Classes I and J has otherwise been compliant. Any insurance documents found in the boxes referred to at [71] should nevertheless be discovered, if they have not already.
[199] The final aspect requiring resolution under this heading is whether I should direct the defendants to confirm that “Board Materials” do not exist or if they exist, that they have been deemed not to be relevant. I am not persuaded I should do so. As Mr Hodder submits, a party cannot be expected to aver to the non-existence of documents in respect of a period of 30 years across seven defendants. Rather, save in one minor respect, as proposed by the defendants, it is sufficient to aver to the fact that board minutes and papers were not located or that they have been located but not discovered. However, I am not clear why the defendants seek to confine their confirmation to papers and minutes, as opposed to Board Materials which are defined as “minutes, agendas and papers”. They should be co-extensive. To avoid doubt, I will make an order in respect of Board Materials.
Leave application
Document retention/destruction policy and privilege
[200] The Waitakere plaintiffs apply for leave to make an application for orders directing the defendants to produce their document retention/destruction policy and for the production of specified documents the defendants claim are privileged. In support of this application for leave Ms Meechan, assisted by Ms Stewart, submits that they were only in a position to raise the present issues after the exchange of the May 2020 evidence and caucusing.
[201] Dealing first with the document retention/destruction policy, the full significance of the policy only became clear at the caucusing meeting on 15 June 2020. Ms Meechan also notes that the document retention/destruction policy was referred to by Mr Petrie in his May affidavit to explain why there no emails were discovered prior
to 2006 and conversely why, in 2011, the emails were discoverable. She submits that having put this document retention/destruction policy forward as the reason for the absence of a potentially vast amount of relevant material, the plaintiffs should be able to see it. She accepts, however, that it is only indirectly relevant to the key issues to be resolved at the stage one hearing.
[202] As to privilege, Ms Stewart argued that it was only after the defendants identified individual authors and recipients that the Waitakere plaintiffs were able to assess whether claims to privilege were contestable. She referred to a letter from MERW to Chapman Tripp dated 25 November 2019 wherein it is recorded:69
As above, please provide further details (including job titles and entities which employed the custodian) for the custodians that James Hardie has listed at paragraphs 4.2 and 4.3 of the affidavit, in order for us to properly understand and assess the documents which have been listed as privileged.
[203] She then notes that it was not until my Judgment (No 4) that the defendants were directed to identify individual authors and recipients of documents and that this information was not provided until 27 May 2020. The Waitakere plaintiffs then identified, for example, that Mike Going was listed as the author and Mr Stan Bloxham the recipient of a privileged document dated 14 May 2003 even though Mr Going is recorded as being the General Manager of Sales and Mr Bloxham a Technical Support Manager, both of James Hardie New Zealand in 2003. It is also noted that several of the documents appear to be insurance-related documents (which links back to their earlier application in relation to Category J documents) and/or communications between persons who would not necessarily attract privilege. It is therefore submitted that the delay in making the application is explicable. It is also submitted that the application raises proper issues to be ventilated, noting for example the outcome in NZ Iron Sands Holdings Ltd v Toward Industries Ltd & Ors wherein the Court directed inspection of Board papers by an Associate Judge.70 Ms Meechan would be content, however, for independent counsel to review the specified documents.
[204] Mr Hodder responds that the document retention/destruction policy was first disclosed in February 2020 and, in any event is not relevant to any issue to be resolved.
69 The letter is attached to Ms Kim’s affirmation, dated 20 July 2020.
70 NZ Iron Sands Holdings Ltd v Toward Industries Ltd & Ors, above n 40.
Rather, this part of the application is simply an attempt to go behind the affidavits. As to the issue of privilege, Mr Hodder contends that the Waitakere plaintiffs’ application proceeds on a flawed premise – that Chapman Tripp does not understand privilege and must have got it wrong. He also notes, for example, that contrary to an apparent assumption made by the Waitakere plaintiffs the defendants have disclosed numerous documents prepared by or sent to in-house counsel. Ms O’Gorman found the process adopted by the defendants to be robust in relation to the White application. Mr Hodder also distinguished Iron Sands, noting that there had been a basic error in the listing of privileged documents which meant that there was no proper basis for privilege. He also noted that subsequent review upheld privilege in relation to all of the documents.
Assessment
[205] I am satisfied that the lateness in bringing the second amended application in respect of the privileged documents is explained by the late identification of the roles played by the authors and/or recipients of the documents. It would therefore be unfair to the Waitakere plaintiffs to preclude the proper opportunity to challenge privilege claimed in respect of the documents they have identified as amenable to challenge. I also consider that there is a tenable basis for concerns raised by the Waitakere plaintiffs. A document authored by Mr Going and received by Mr Bloxham exemplifies this point. It involves a claim to solicitor-client privilege when, on the face of the available information, neither of them are solicitors. There appear to be several documents like this. Other documents are identified as subject to litigation privilege, but not readily referable to any such litigation. I accept there may be an explanations for all of them. But that is properly a matter for the substantive application.
[206] I am not, however, satisfied I should grant leave in relation to the document retention/destruction policy issue. To be relevant, those policies must bear on one of the issues in dispute – in short, responsibility, defects, knowledge and breach of duty. Mr Petrie explained that as a result of an automated document retention policy which was implemented in early 2011 all emails (globally) in James Hardie’s possession and control were routinely deleted after five years unless subject to a litigation hold or
government subpoena. That policy was reversed shortly thereafter, but not before all emails pre-2006 had been deleted.
[207] While I can readily understand the plaintiffs’ concern about the effect the policy has had on discovery, it is not obvious why that policy might be relevant to the issues in dispute. Ms Meechan was right to concede this point. Whereas reasonable counsel might have differing views on the claimed privilege just mentioned, whether a document retention/destruction policy is relevant to the issues in dispute should be evident on its face. I am told the policy is not. That is sufficient, given that it would be a remarkable breach of duty to the Court to not discover a policy of this kind if it was in fact relevant to an issue in dispute, for example, insofar as it was directed to the deletion of relevant materials rather than a prosaic administrative decision.
[208] Accordingly, I grant leave to bring the application in relation to the privileged documents, but I refuse leave in relation to the document retention/destruction policy because it has no evident merit. As indicated to counsel, James Hardie must be afforded an opportunity to respond to the application to have the Court review privileged documents. It may be helpful, however, if I make a tentative observation about it. Mr Hodder advocated for the independent counsel process when it became apparent that the discovery issues could benefit from fine grained assessment. He helpfully directed me to the decision of Fisher J in Clear Communications v Telecom Corporation of New Zealand Ltd and the decision of the Judge to use independent counsel to assist on the issue of privilege and masked documents.71 Mr Hodder rightly raises concerns about the lateness of the request. But given where I have got to on delay, it seems to me that the Waitakere plaintiffs’ request is amenable to that approach for the very reasons Mr Hodder was a strong advocate for it. I also note that this outcome would appear to be consistent with the offer already made by James Hardie (refer [108] above).
Parts to be Redacted Section
71 Clear Communications Ltd v Telecom Corporation of New Zealand Ltd HC Auckland CL51/96, 22 July 1998. The White plaintiffs also referred to this decision.
Privilege and masking
[209] In this part of the judgment I address the merits of the White plaintiffs’ application to have the 106 specified documents reviewed by a Judge. Mr Gray’s primary concerns relate to:
(a)Privilege being claimed over entire documents in circumstances where the reasons given for claiming privilege indicate that the documents may not be privileged in their entirety (for example documents incorporating legal advice – JH.NZ 7000.0859, 7003.0040 and 7000.0628).
(b)Minute redactions for privilege in documents (in some cases, just a few words or lines) where it is not obvious on the face of the documents how such redactions can be justified.
(c)Instances where insufficient detail is provided to enable the White plaintiffs to make an assessment as to the claim for privilege, including in respect of documents such as a business plan, various agendas, various reports, two insurance documents and an insurance broker’s memorandum.
(d)The extensive masking of certain documents for alleged irrelevance. By way of illustration Mr Gray refers to five documents where it is impossible to understand the purpose or context of the document:72
(i) JH.NZ 5013.0173 – “Risk Review Report” – this 22 page document is masked in its entirety except for selected parts of two pages.
(ii) JH.NZ 5013.0174 – “Additions to Risk Review Report” – this 23 page document is masked in its entirety except for selected parts of two pages.
72 I have abbreviated the document references.
(iii) JH.NZ 7000.00845 – “Report to the Audit Committee, Executive Directors, the Managing Board and the Supervisory Board” – this 67 page document is substantially masked throughout and includes tables at pages six to 23 which relate to (business) risks and exposures facing the company.
(iv) JH.NZ 7001.0008D – this 12 page document is masked in its entirety.
(v) JH.NZ 5023.0270 / 0272 – these are draft and final versions respectively of a six page document entitled “Corporate Affairs Plan FY04-06”. The documents are masked in their entirety apart from small parts of a section entitled “Current Situation – External Business Environment”, including a section referring to “New Zealand Weathertightness”.
(e)Documents masked for both privilege and irrelevance, including:
(i) JH.NZ 5023.0241 – “Australia/New Zealand – FY04 Business Plan” – includes reference to a sensitivity analysis table with the bottom row masked entirely and page 33 masked entirely.
(ii) JH.NZ 5023.0279 / 0281C – Audit committee papers – both contain sections headed “Ongoing Issues: New Zealand Weathertightness” which are masked in their entirety.
(iii) JH.NZ 5023.0309 – “JHI plc Monthly CEO Report – April 2014”
– contains a section headed “New Zealand Weathertightness Claims” which is masked in its entirety.
[210] As noted, the White plaintiffs invite the Court to inspect the documents in order to verify the impressions of independent counsel.
[211] Mr Gray also notes that in correspondence to independent counsel dated 30 June 2020 and in their Statement of Position (at [129.2] and [132]) the defendants
offered to disclose certain documents in their entirety and to provide the plaintiffs with revised copies of certain documents with headings disclosed to assist comprehension. Mr Gray submits that the defendants have not made such disclosure.
[212] Mr Hodder resists any further review of the defendants’ privileged or masked documents, noting that independent counsel has already undertaken that task. He observes that subject to three queries, independent counsel was comfortable the defendants had appropriately claimed privilege or redacted for irrelevance. The defendants have also reviewed the same documents multiple times to ensure that privilege was properly claimed. Mr Hodder further submits that before any disclosure to the Court is required, the defendants must be afforded an opportunity to make confidential submissions to a decision-maker explaining the privileged context of the documents. The Court should also adhere to the starting presumption that the affidavit of documents filed is complete.73 As to irrelevance, Mr Hodder noted (as I have) that the White plaintiffs offer no substantive criticism of the defendants’ approach to irrelevance.
Assessment
[213] I have addressed the relevant legal principles attaching to review of privileged documents above at [140]–[145]. I have the benefit of the independent counsel’s confidential summary of documents reviewed by her. It is not possible to provide a detailed account of Ms O’Gorman’s review without infringing privilege or masking for irrelevance. However, I make the following broad comments:
(a)The summary provides a detailed description of the 26 documents she considered required a more detailed review and analysis by her.
(b)I have been able to assess the scope and reliability of Ms O’Gorman’s review.
(c)Her commentary reveals attention to detail and a conventional appreciation of proper scope for exclusion based on privilege.
73 Citing Carter Holt Holdings Ltd v Fletcher Holdings Ltd [1981] 2 NZLR 613 (HC); and Chandris Lines Ltd v Wilson & Horton Ltd [1981] 2 NZLR 600 (HC).
(d)Save in one (potential) respect, her commentary reveals a proper appreciation of the scope for exclusion based on irrelevance.
(e)She identifies two documents as not attracting privilege but that may be excluded for irrelevance.
(f)Only two documents are identified as potentially requiring inspection by the Court (I address these below).
(g)The defendants have offered to disclose document JH.NZ 5023.0486.
[214]In terms of specific comments, I note the following:
(a)Document JH.NZ 7000.0859 – [Redacted]
Given that Ms O’Gorman has assessed responsiveness of this document to all classes of the tailored discovery orders, I am satisfied it is not necessary to view this document.
(b)Document JH NZ 7000.0890 - [Redacted]
[Redacted] The document does not appear to be privileged according to Ms O’Gorman but may contain references that may be relevant to issues in dispute, [Redacted]
(c)Document JH.NZ 5023.0387 - [Redacted]
[Redacted]
[Redacted]
I am unable to assess the full significance of the issue raised by Ms O’Gorman without viewing the document. I am satisfied that the issue raised by her justifies inspection by the Court [Redacted]
(d)Document JH.NZ 5023.0338 - [Redacted]
This document, as described by Ms O’Gorman is not relevant to any issue in the proceeding. However, she requests confirmation that the appendices to the document have been reviewed.
(e)In reference to documents JH.NZ 5024.0042, 43, 46; JH.NZ 5013.0050; JH.NZ 5023.0387; and JH.NZ 7003.0040, Ms O’Gorman observes that the content of these documents falls outside the scope of Classes I and J. However, by contrast, in reference to other documents Ms O’Gorman notes that the content of those documents is not responsive to Classes I and J and “any other class”.
While I apprehend that Ms O’Gorman (and the defendants) have assessed the responsiveness of the content of these (and the other) documents by reference to all classes of tailored discovery orders, I require confirmation that in reviewing all documents, Ms O’Gorman assessed (where applicable) whether the content of those documents is responsive to any class of the Tailored discovery orders. I also require confirmation that she is satisfied that the defendants when masking documents for irrelevance, similarly assessed whether the contents of the documents were responsive to any class of tailored discovery order.
Outcome of review
[215] Overall, I am satisfied that Ms O’Gorman has undertaken a thorough review of both privilege and relevance. Except as specifically noted, I see no basis for any further review by this Court of her “impressions”. They were much more than that. I would, however, like to see the defendants discharge two offers they made during the discovery process, namely:
(a)To discover the documents (if any) referred to by Mr Petrie in his 27 May affidavit (see [71] and [163] above); and
(b)To make the disclosure offered in their statement of position at [129.2] and [132].
[216] As to process from here, Mr Hodder insists that he be heard in relation to any proposal that the documents be inspected by the Court. He notes that, because of the plaintiffs’ objections, he has not conferred with independent counsel about these documents. But he is in no better position than he would have been without the independent counsel process. His position could have much worse (at least from his perspective). He has confirmed his view that the documents are properly privileged or masked and I have considered his submissions on this. However, for the very reasons that Mr Hodder supports the review undertaken by independent counsel, I am satisfied that the issues raised by Ms O’Gorman justify the very limited inspection now proposed. In this regard, the independent review counsel process has served the purpose for which it was triggered, that is to narrow the issues in dispute and the need or otherwise for further Court intervention.
[217]Accordingly, in relation to the matters I have identified I direct as follows:
(a)James Hardie are to confirm that the appendices to Document JH.NZ 5023.0338 have been reviewed.
(b)Ms O’Gorman is to confirm (or otherwise) that in reviewing the masked documents, she assessed whether content of those documents is responsive to any class of the Tailored discovery orders; and
(c)Ms O’Gorman is to confirm (or otherwise) she is satisfied that the defendants when masking documents for irrelevance, similarly assessed whether the content of those documents was responsive to any class of tailored discovery orders.
(d)If it has not already done so, James Hardie discover the documents (if any) referred to by Mr Petrie in his 27 May affidavit (see [71] and [163] above).
(e)If it has not already done so, James Hardie is to make the disclosure it offered to make in their Statement of Position at paragraphs [129.2] and [132].
(f)Documents JH.NZ 7000.0890 and JH.NZ 5023.0387 are to be produced for the Court (not the trial Judge) to review.
[218] I otherwise decline to make any further orders. Given the careful review undertaken already by Ms O’Gorman, and the presumption that the affidavits are conclusive, any further review by this Court is unnecessary.
Timetable
[219] Mr Hodder did not want to commit to a timetable, including final date for discovery, until this judgment has been released. Given where I have got to, a timetable to hearing including final discovery should now be made. I have already set down a telephone conference for 1.30 pm, Friday, 28 August 2020.
Outcome
[220] In relation to both the White and Waitakere proceedings, I decline to make the orders sought save in the following respects:
(a)If it has not done so already, James Hardie must run the additional search recommended by Ms Nola in relation to “Teams” as recorded at
[73] above.
(b)If it has not done so already, James Hardie must, in accordance with its 3 June 2020 offer, check and confirm that it has no deeds that relate to products or alleged defects or liability addressing the specific risks at issue in this proceeding. If it finds any such documents from the relevant time periods in its control, it will disclose them (see [171]–
[172] above).
(c)James Hardie will, for each of the first to sixth defendants, confirm that:
(i) they have not located any Board Materials (being Board minutes, agendas and papers); or
(ii) there are Board materials that have been located but not discovered.
(d)James Hardie are to confirm that the appendices to Document JH.NZ 5023.0338 have been reviewed.
(e)Ms O’Gorman is to confirm (or otherwise) that in reviewing the masked documents, she assessed whether the contents of those documents are responsive to any class of the tailored discovery orders; and
(f)Ms O’Gorman is to confirm (or otherwise) that she is satisfied that the defendants, when masking documents for irrelevance, similarly assessed whether the content of those documents was responsive to any class of tailored discovery orders.
(g)If it has not already done so, James Hardie discover the documents (if any) referred to by Mr Petrie in his 27 May affidavit (see [71] and [163] above).
(h)If it has not already done so, James Hardie is to make the disclosure it offered to make in their Statement of Position at paragraphs [129.2] and [132].
(i)Documents JH.NZ 7000.0890 and JH.NZ 5023.0387 are to be produced for the Court (not the trial Judge) to review.
(j)Leave is granted to bring the Waitakere application in relation to privileged documents. Submissions and evidence are to be filed by James Hardie within 10 working days. Reply evidence is to be filed within five working days thereafter. Unless required, the application will be determined on the papers.
[221] If in the event Ms O’Gorman has not reviewed the responsiveness of the contents of the documents to all or any of the classes of tailored discovery, or apprehends that the defendants have not done so when masking documents for irrelevance, she will need to advise the Court and the parties accordingly. I will convene a telephone conference for the purpose of any consequential timetable, including to a further hearing if necessary (as this was not matter that was live to me at the hearing or discussed with the parties or Ms O’Gorman).
[222] A telephone conference has already been organised for the purpose of making timetabling orders to the stage one trial. Save in respect of item (i), I do not expect the orders above will have a material impact on the timetable. Even as to (i), that process should be completed within a month.
Whata J
6
5
1