N-Tech Ltd v Abooth Ltd (in Rec.) Hc Ak

JurisdictionNew Zealand
CourtHigh Court
JudgeWhite J
Judgment Date25 February 2011
Docket NumberCIV 2006-404-003362

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2006-404-003362

CIV 2007-404-000990

BETWEEN
N-Tech Limited
First Plaintiff

and

St Lucia Investments Limited
Second Plaintiff
and
Abooth Limited (in Rec.)
First Defendant

and

Other Defendants as set out in Schedule one Attached to the Statement of Claim
Second to one Hundred and Twenty First Defendants

and

R J Chapman, GDC Walker, T F Mcgrath
First Third Parties

and

M V Richardson and T J Goldfinch
Second Third Parties

and

Russell Mcveagh
Third Third Party (struck out)

and

Denham Martin & Associates
Fourth Third Party

and

GSCK Sidnam
Fifth Third Party

and

H C Vincent
First Fourth Party (discontinued)

and

J M K Brown and P H Castle
Second Fourth Parties (discontinued)

and

KA Schwass
Third Fourth Party (discontinued)

and

JA Reid
First Counterclaim Defendant

and

H Millroy
Second Counterclaim Defendant

and

J Wong
Third Counterclaim Defendant

and

CMW & Company Limited
Fourth Counterclaim Defendant

and

J D Currie
Fifth Counterclaim Defendant

and

P M Connolly
Sixth Counterclaim Defendant

and

Asian Growth Fund Limited
Seventh Counterclaim Defendant

and

Armour Fidelity Limited
Eighth Counterclaim Defendant

and

Kensington Swan
Ninth Counterclaim Defendant
Appearances:

P Fee and R Stewart for Applicants/Fourth and Fifth Third Parties

C T Walker for Plaintiffs and First, Second, Third, Fourth and Sixth Counterclaim Defendants (Gilbert Walker Counterclaim Defendants)

T P Mullins for Lee Salmon Long Defendants

Application by third parties for order compelling production of an unredacted deed of admission of liability/related agreements and the setting aside of all claims of privilege thereunder — whether a previous judgment required complete deed to be produced — whether the whole or parts of redacted deed protected by litigation privilege under s56 Evidence Act 2006 (materials prepared for the dominant purpose of preparing for a proceeding or apprehended proceeding privileged) — whether cooperating parties in a proceeding entitled to claim joint privilege in material detailing their litigation strategy.

The issues were: (i) whether the first order required the complete deed to be reproduced; (ii) whether the whole or parts of the unredacted deed were protected by litigation privilege under s56 Evidence Act; and (iii) whether the objectors were entitled to claim joint litigation privilege in respect of provisions within the unredacted deed detailing their litigation strategy, if privilege subsisted within them.

Held: (i) The redacted parts of the deed did not relate to the issue of the LSL defendants' loss (i.e. its admitted liability to the plaintiffs) and its quantification (those being the only matters covered by the first order) and thus were not required to be disclosed, because:

  • • Notwithstanding the LSL defendants' admission of liability to the plaintiffs, the former's claim against DM third parties still had to be established independently; the LSL defendants' motivations for their admissions had no relevance to their claims.

  • • The redacted matters in the deeds were not relevant to the issues in the LSL defendants' claims against the DM third parties or to the existence or quantification of the LSL defendants' liability.

  • • Any provisions in the unredacted deed relating to the payment of costs had no relevance to the LSL defendants' third party claim. The defendants were not obliged to discover their litigation funding arrangements: Jupiter Air Ltd v Australian Aviation Underwriting Pool Pty Ltd.

  • • The inconsistency between LSL defendants' previous denial of liability and its subsequent change of tack was well established by the deed in redacted form and other admissions of liability filed with the court. If there was a valid line of cross-examination to be pursued by DM third parties in relation to the inconsistency, it could be pursued without the production of the redacted parts of the deeds.

For these reasons alone, the Court would have refused DM third parties' application.

  • (ii) If that were wrong, the Court was not satisfied that of the redacted parts of the deed were protected by litigation privilege. Jeffries v Privacy Commissioner established that the s56 Evidence Act inquiry turned on whether the character in which the information was made, received, and compiled etc was for a proceeding or an apprehended proceeding. The objectors could not establish this since the unredacted deed was described as a “Covenant Not To Sue” and plainly recorded the terms on which the plaintiffs agreed they would not pursue their claims against the LSL defendants. However, this did not mean that those provisions relating to the objectors' litigation strategy were not subject to litigation privilege, since s56 plainly applied to those and if one party was entitled to litigation privilege in respect of its litigation strategy, there was no good reason in principle why two parties should not be similarly entitled, when they agreed to co-operate and record their agreed strategy in a document.

DM third parties' application was refused.

JUDGMENT OF White J

On application for production of documents

1

In this proceeding by the plaintiffs against 121 defendants for breach of certain share purchase agreements, the defendants have made third party claims for indemnity against various professional persons, including Denham Martin and Associates and a solicitor employed by that firm (the Denham Martin third parties). After one group of defendants, represented by Lee Salmon Long (the LSL defendants) filed admissions of the plaintiffs' claims, the Denham Martin third parties sought discovery of all documents relating to the negotiation and effecting of any agreement concerning the LSL defendants' liability to the plaintiffs and/or any admission of liability by the LSL defendants to the plaintiffs.

2

In an interloctury judgment delivered on 10 November 2010 Venning J made the following order for further and better discovery:

The first and second plaintiffs and the LSL defendants are to discover the document or documents which record any agreement concerning the liability of the LSL defendants to the first and second plaintiffs or any admission of liability by the LSL defendants to the first and second plaintiffs (apart from the formal admissions filed with the Court).

Venning J declined to order discovery of documents relating to the negotiation or giving effect to the agreement: [18].

3

Venning J recorded in his judgment at [21] that Mr Walker, counsel for the plaintiffs, had indicated that common interest privilege would be claimed in relation to the agreement if discovery was ordered. The Judge noted that if, on reflection, the claim was maintained, the Denham Martin defendants, represented by Mrs Fee, would no doubt wish to challenge the claim to privilege. The Judge anticipated that any such application would be referred to him and that a minute would be issued with directions to convene a one hour hearing prior to the end of last year. In fact the application was not able to be dealt with last year: minute of Venning J dated 17 December 2010 at [2]. I have heard the application on the basis that I will not be the trial judge in this case.

4

Instead of claiming common interest privilege for the agreement in full, the plaintiffs included the relevant documents, which are deeds, in further lists of documents and produced for inspection redacted versions of the deeds disclosing only the paragraphs of the deeds relating to the admissions of liability by the LSL defendants. The remaining parts of the deeds, which were substantial, were redacted on grounds of litigation privilege and/confidentiality.

5

This led to applications by the Denham Martin third parties for the following orders:

  • (a) production for inspection of the full, complete and unredacted deeds; and

  • (b) the setting aside of the claims for privilege and/or confidentiality in the unredacted deeds.

6

The plaintiffs and the LSL defendants oppose the application on the grounds that the redacted portions of the deeds are irrelevant, privileged and confidential. The LSL defendants support the position adopted by the plaintiffs.

7

In support of their position the plaintiffs filed an affidavit from Mr J A Reid, a director of the first and second plaintiffs, who deposed that, as well as containing admissions of liability, the deeds recorded confidential arrangements between the relevant parties concerning the conduct of the litigation, in particular co-operation, control, legal representation, the sharing of documents and other information, responsibility for legal and other costs, and the application of claim proceeds.

The issues
8

The issues before the Court now are:

  • (a) Did Venning J decide that the whole of the documents recording the agreement concerning the liability of the LSL defendants to the plaintiffs or any admission of liability by the LSL defendants to the plaintiffs were relevant and therefore required to be produced or just those parts of the documents relating to the liability of the LSL defendants?

  • (b) If the latter, is the rest of the agreement also relevant?

  • (c) If the rest of the agreement is relevant, is it subject to litigation privilege and therefore not required to be produced for inspection?

  • (d) If the rest of the agreement is not subject to litigation privilege and is required to be produced, should its production be subject to confidentiality orders?

9

I propose to consider the first two issues together before considering the third and fourth issues separately.

Relevance
10

After referring to the relevant principles relating to discovery of particular documents and the submissions for the parties, Venning J said:

  • [15] I accept Mr...

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