N-Tech Ltd v Abooth Ltd (in Rec.) Hc Ak
| Jurisdiction | New Zealand |
| Judge | White J |
| Judgment Date | 25 February 2011 |
| Court | High Court |
| Docket Number | CIV 2006-404-003362 |
| Date | 25 February 2011 |
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CIV 2006-404-003362
CIV 2007-404-000990
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
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.
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
JUDGMENT OF White J
On application for production of documents
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.
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].
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.
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.
This led to applications by the Denham Martin third parties for the following orders:
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(a) production for inspection of the full, complete and unredacted deeds; and
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(b) the setting aside of the claims for privilege and/or confidentiality in the unredacted deeds.
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.
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 before the Court now are:
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(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?
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(b) If the latter, is the rest of the agreement also relevant?
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(c) If the rest of the agreement is relevant, is it subject to litigation privilege and therefore not required to be produced for inspection?
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(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?
I propose to consider the first two issues together before considering the third and fourth issues separately.
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 Walker's argument the admissions do not of themselves prove anything in relation to the defendants' claim against the third parties, but the admissions do quantify an aspect of the loss claimed by the defendants and the agreement pursuant to which the admissions were filed may be relevant to the quantification of that loss.
[16] To establish their claim against the Denham Martin third parties the LSL defendants will have to prove a duty, breach and loss. The agreement leading to the admissions cannot have any relevance to the existence of a duty or its breach. However, it is relevant to the issue of loss, which is an essential element of the cause of action pleaded by the LSL defendants against the Denham Martin third parties. An obvious way to prove loss will be to establish the LSL defendants' liability to the plaintiffs under the share purchase agreements. The agreement — which preceded the admissions will-record the acceptance of such liability and is likely to provide the basis for its quantification.
[17] Put another way, to support their claim against the Denham Martin third parties the LSL defendants will inevitably rely on their liability to the plaintiffs under the share purchase agreements. The agreement concluded between the plaintiffs and the LSL defendants is the prime document that provides the basis for that admitted liability. At the very least, discovery of that document may lead the Denham Martin third parties on a train of inquiry which may enable them to advance their defence. It may provide a basis to challenge the defendants' claim, at least as to quantum. For that reason the settlement agreement leading to the admissions from the LSL defendants, is discoverable.
[18] I am not, however, able to accept Mrs Fee's submission that the discovery should extend to all documents relating to the negotiation of and giving effect to the agreement. It is accepted that there has been a concluded agreement reached between the LSL defendants and the plaintiffs. That agreement will record the terms upon which the parties settled the matters in issue between them. The negotiations that proceeded it have been effectively subsumed in the final agreement. It is not, in the circumstances, necessary to go behind that final agreement, particularly bearing in mind that the Court's discretion to order particular discovery should be exercised in a conservative way.
(emphasis added)
For the applicants, Mrs Fee submitted that Venning J's decision determined that the whole agreement was relevant and, in the absence of any appeal, was not open to further challenge. She also submitted that the whole of the agreement was relevant because the extent, if any, of loss the LSL defendants may have does not stop at the amount admitted by the relevant LSL defendant. It will necessarily include all other arrangements between the parties to the litigation which record the basis upon which liability has been admitted. Examples of relevancy include:
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(a) If...
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