White v James Hardie New Zealand Limited

[2020] NZHC 2374

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 2374

UNDER

the Consumer Guarantees Act 1993 and the Fair Trading Act 19986

BETWEEN

KAREN LOUISE WHITE and the PERSONS LISTED IN SCHEDULE 1

Plaintiffs

AND

JAMES HARDIE NEW ZEALAND LIMITED

First Defendant

STUDORP LIMITED
Second Defendant

JAMES HARDIE NZ HOLDINGS LIMITED

Third Defendant

RCI HOLDINGS PTY LIMITED
Fourth Defendant

JAMES HARDIE AUSTRALIA PTY LIMITED
Fifth Defendant

JAMES HARDIE RESEARCH PTY LIMITED

Sixth Defendant

JAMES HARDIE INDUSTRIES plc

Seventh Defendant

CIV-2015-404-3080 (Waitakere)

BETWEEN

WAITAKERE GROUP LIMITED
First Plaintiff

METLIFE CARE PINESONG LIMITED

Second Plaintiff

WHITE and the PERSONS LISTED IN SCHEDULE 1 v JAMES HARDIE NEW ZEALAND LIMITED [2020] NZHC 2374

FOREST LAKE GARDENS LIMITED

Third Plaintiff

VISION (DANNEMORA) LIMITED
Fourth Plaintiff

METLIFECARE COASTAL VILLAS LIMITED
Fifth Plaintiff

AND

JAMES HARDIE NEW ZEALAND LIMITED
First Defendant

STUDORP LIMITED
Second Defendant

JAMES HARDIE NZ HOLDINGS LIMITED

Third Defendant

RCI HOLDINGS LIMITED
Fourth Defendant

JAMES HARDIE RSEARCH PTY LIMITED

Sixth Defendant

JAMES HARDIE INDUSTRIES plc

Seventh Defendant

F

On the papers:

11 September 2020

Appearances:

Bruce D Gray QC and Rowan A Havelock for the White Plaintiffs Christine Meechan QC, J Stewart and C Gordon for the

Waitakere plaintiffs

Jack Hodder QC, John A McKay, Laura L Fraser and H Graham for the Defendants

Judgment:

11 September 2020

RULING OF ASSOCIATE JUDGE R M BELL

This judgment was delivered by me on 11 September 2020 at 4:00pm

pursuant to Rule 11.5 of the High Court Rules

………………………… Registrar/Deputy Registrar

[1]                  In his judgment of 27 August 2020,1 Whata J directed that the defendants’ documents JH.NZ7000.0890 and JH.NZ 5023.0387 be produced to the court to review whether the defendants are entitled to maintain their claims of irrelevance and privilege.

[2]I have received:

[a]Whata J’s judgment of 31 October 2018,2

[b]his judgment of 4 July 2019,3

[c]his judgment of 27 August 2020,4

[d]Ms O’Gorman’s report of 17 July 2020,

[e]her memorandum of 31 August 2020, and

[f]the     documents     JH.NZ.5023.0386,     JH.NZ.5023.0387,     and JH.NZ.7000.0890.

[3]                  The documents supplied by the defendants were not redacted. The copy of Ms O’Gorman’s report of 17 July 2020 has a schedule 3, which is noted as “Confidential to the Court”.

[4]                  The documents produced by the defendants require decisions on relevance and privilege.

[5]                  As context for the relevance issue, there is a live issue whether the holding companies in this case, especially the seventh defendant, James Hardie Industries plc, may be liable to the plaintiffs. In James Hardie plc v White, the Court of

1      White v James Hardie New Zealand [2020] NZHC 2202.

2      White v James Hardie New Zealand [2018] NZHC 2812.

3      White v James Hardie New Zealand [2019] NZHC 1543.

4      White v James Hardie New Zealand [2020] NZHC 2202.

Appeal discussed the principles on which holding companies might incur liability and said:5

[65]      Our analysis of the authorities suggests the following three categories of potential liability:

(a)where the parent takes over the running of the relevant part of the business of the subsidiary;

(b)where the parent has superior knowledge of the relevant aspect of the business of the subsidiary, the subsidiary relied upon that knowledge, and the parent knew or ought to have foreseen the alleged deficiency in process or product; and

(c)more generally, where the parent takes responsibility (irrespective of superior knowledge or skill) for the policy or advice which is limited to the wrongful act or omission.

[66]      It is clear that the mere fact of co-ordination within a group is not enough. Evidence will need to show that co-ordination results from control by or reliance upon the parent, and that control is in some way relevant to the alleged wrong. …

[6]                  In light of this issue, in his judgment of 4 July 2019, Whata J directed discovery of insurance documents, while recognising that ordinarily documents of that sort are irrelevant. He said:6

[15]      … In my view, the insurance, agency and licence agreements will likely reveal the defendants who were associated with the James Hardie products and the nature, scale and degree of that association.

[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.

[17]      This documentation … 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. …

[7]                  Document JH.NZ.5023.0387 is an internal paper dated 19 May 2013 by the chief financial officer of James Hardie Industries plc, sent to the remuneration committee of the board. The paper deals with whether two matters are to be taken into account in assessing senior executives’ bonuses. One of those matters has

5      James Hardie plc v White [2018] NZCA 580, [2019] 2 NZLR 49.

6      White v James Hardie New Zealand [2019] NZHC 1543 at [15].

nothing at all to do with this case.7 The other part deals with New Zealand weathertightness costs. The document refers to costs incurred by James Hardie Industries plc’s New Zealand subsidiaries. Whether claims against James Hardie Industries plc’s New Zealand subsidiaries should be considered when calculating executives’ bonuses is not relevant to deciding that company’s liability under the approaches suggested by the Court of Appeal. Subject to one matter, there is nothing in the document that could be used to prove or disprove any of the three categories of potential liability.

[8]                  The report does, however, contain a self-serving, exculpatory statement: the first sentence in the fourth paragraph on page 5. It will not help the plaintiffs. The defendants resist producing the document at all, and accordingly I take it that they do not want to rely on the self-serving statement. Accordingly, the document is irrelevant.

[9]                  I do not uphold the privilege claim. The author of the report is a chief financial officer. The report does not contain any legal advice.

[10]              The defendants provided document JH.NZ.5023.0386 to support their privilege claim. That document is an email chain dated 13 and 14 May 2013 in which JHI executives make comments on the chief financial officer’s report. One of them is general counsel. Being an overseas practitioner, he is a legal adviser under the definition of “legal  adviser” in s 51(1) of the Evidence Act 2006.     His email does not, however, contain any legal advice or convey any professional legal services under s 54 of the Evidence Act 2006. Nor was his email sent in contemplation of litigation and for that purpose. Accordingly, there is no privilege in the document.

[11]The document does not need to be produced for inspection.

[12]              Document JH.NZ.7000.0890, dated 29 January 2004, by Peter Shafron, “SVP finance and legal” and Folkert Zwikels, “treasurer” is an insurance update paper for the audit committee of JHI NV. JHI NV was a Dutch company which

7      From page 1, paragraph A2, to page 4, paragraph A4.

was re-domiciled in Ireland and reconstituted as James Hardie Industries plc. The paper is marked “confidential” and is said to contain legally privileged material. The paper deals with James Hardie Industries group insurance cover. James Hardie Industries arranged global cover for all the subsidiaries in its group. The document has a reference to possible New Zealand weathertightness claims, but there is nothing in the document that would tend to prove any of the potential categories of liability identified by the Court of Appeal. The document shows no more than co- ordination of insurance arrangements, but does not show anything that could be used to prove product liability on the part of JHI NV or any of the holding company defendants.

[13]              The copy of the paper provided has some handwritten notes. They are comments on the content of the paper and do not raise anything relevant to the issues in this case. The entire document, including the handwriting, is accordingly irrelevant.

[14]              Notwithstanding the privilege claimed at the start of the document, I do not uphold any privilege claim. One of the authors of the report was an in-house lawyer, again an overseas practitioner, but the document is for a commercial purpose (insurance arrangements), not the provision of legal services.

[15]              In summary, I reject the claims for privilege for the documents, but they do not need to be produced, because they are irrelevant.

…………………………………

Associate Judge R M Bell

Solicitors:

Adina Thorn Limited (Rohan Havelock), Auckland, for the White Plaintiffs MinterEllisonRuddWatts (C J Gordon/Janine Stewart), Wellington, for the Waitakere Plaintiffs ChapmanTripp (J A McKay), Auckland, for the Defendants

Copy for:
B D Gray QC, Auckland, for the White Plaintiffs

Christine M Meechan QC, Bankside Chambers, Auckland, for the Waitakere Plaintiffs J E Hodder QC, Wellington, for the Defendants