JUKEN NEW ZEALAND LIMITED v RED STAG TIMBER LIMITED [2022] NZCA 184

JUKEN NEW ZEALAND LIMITED v RED STAG TIMBER LIMITED [2022] NZCA 184 [13 May 2022]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA65/2022[2022] NZCA 184BETWEEN JUKEN NEW ZEALAND LIMITEDAppellantAND RED STAG TIMBER LIMITEDRespondentCourt: Gilbert and Courtney JJCounsel: A R Galbraith QC and C L Bryant for AppellantN F Flanagan and C M Fleming for RespondentJudgment:(On the papers)13 May 2022 at 9 amJUDGMENT OF THE COURTA The respondent's application for leave to bring a cross-appeal againstthe High Court judgment ([2021] NZHC 2662) declining (in part) itsapplication for particular discovery is declined.B The respondent must pay costs to the appellant for a standard application ona band A basis and any usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Gilbert J)[1] Juken New Zealand Ltd (Juken) and Red Stag Timber Ltd (Red Stag) arecompetitors in the market for the supply of timber products. Red Stag has issuedproceedings in the High Court at Auckland alleging Juken made false and misleadingrepresentations in breach of ss 9, 10 and 13 of the Fair Trading Act 1986 (FTA)concerning one of its products — a laminated veneer framing product called"J-Frame" typically used for wall frames and roof trusses in residential homes.Red Stag claims that J-Frame did not comply with relevant treatment standards,contrary to Juken's representations. The representations are said to have allowedJuken to obtain a greater share of New Zealand's timber framing market and depressedthe price of timber framing products generally. Red Stag seeks damages for the lossesit claims to have suffered.[2] Juken disputes Red Stag's interpretation of the requirements of the relevantstandards and denies that its representations were false or misleading.[3] The proceeding, which was originally filed in 2017, has had a complex andlengthy procedural background, but now has a trial date scheduled for February 2024.[4] In a judgment delivered on 6 October 2021, Gault J determined variousinterlocutory applications brought by the parties.1 The Judge:2(a) granted leave to Juken to apply for summary judgment;(b) dismissed Juken's application for strike out and summary judgment;(c) dismissed Red Stag's application for an order requiring Juken to file amore explicit pleading;(d) declined (in part) Red Stag's application for particular discovery;(e) dismissed Red Stag's application to set aside Juken's confidentialityclaims; and(f) dismissed Red Stag's application to set aside Juken's privilege claim.[5] Juken applied for leave to appeal to this Court against the refusal to strike outRed Stag's claim for the period prior to December 2012. Red Stag opposed leave.1 Red Stag Timber Ltd v Juken New Zealand Ltd [2021] NZHC 2662 [High Court judgment].2 At [124].However, if leave was granted, it sought leave to cross-appeal against one aspect ofthe judgment on its application for particular discovery, namely the Judge's refusal torequire Juken to discover internal correspondence regarding its interpretation ofthe applicable standards. The Judge reasoned:3 in the context of this FTA misrepresentation case where the relevance ofthe proper interpretation of the pleaded building standards and requirementsis whether the representation was false, I do not consider that internalcorrespondence regarding [Juken's] view of the proper interpretation is ofactual and direct relevance.[6] The Judge did, however, direct Juken to discover internal correspondencecontaining consumer or industry views of the proper interpretation of the pleadedstandards. This was because the Judge considered the understanding held byconsumers and the industry of what the standards required, irrespective of strictcompliance, could be relevant.4[7] In a judgment delivered on 4 February 2022, the Judge granted leave to appealas sought by Juken but declined Red Stag's application for leave to cross-appeal.5The Judge did not consider there was an arguable error as contended by Red Stag.In any event, the Judge said he would decline leave on the basis that the issue was notof general or public importance, and he considered it was not of sufficient importanceto Red Stag to justify the proposed appeal.6[8] Juken's appeal is scheduled to be heard on 14 June 2022.[9] Red Stag now seeks leave from this Court to pursue its proposed cross-appealon the narrow discovery issue. Juken opposes leave.[10] The principles to be applied in determining whether leave should be grantedfor an appeal against an interlocutory order are well-settled. Leave should only begranted where the significance or implications of an arguable error of fact or law, eitherfor the particular case or as a matter of precedent, warrant the further delay and3 At [95].4 At [96].5 Red Stag Timber Ltd v Juken New Zealand Ltd [2022] NZHC 103 [Leave judgment].6 At [25].expense of the proposed appeal.7 The threshold for leave is a high one. The ultimatequestion is whether the interests of justice are best served by granting or decliningleave.8 Also relevant in this case is the general principle that appeal courts willexercise particular restraint in respect of appeals from case management decisions,including those relating to discovery.9 This is because the judge assigned to managea complex proceeding such as this gains a familiarity with the case and is best placedto make case management decisions to enable its efficient and just disposition.An appeal court does not share this advantage.[11] Red Stag submits that the Judge overlooked the purpose of discovery whendetermining its application. It claims the Judge treated the question of relevance as amerely technical or procedural question, rather than one that may determine whetherjustice is done between the parties. Red Stag asserts the Judge made two specificerrors. First, he failed properly to assess relevance by identifying the issues arising onthe pleadings. Red Stag says the case turns on the industry's and the public'sunderstanding of the representation. It says that because Juken is itself part of theindustry, its understanding is as relevant to the overall assessment as that of any othermarket participant. For that reason, Red Stag argues that the Judge's distinction,between consumer or industry views on the one hand and Juken's views on the other,was artificial. Red Stag also argues that a defendant's intention to mislead or deceivecan be a factor supporting a conclusion that its conduct was likely to mislead ordeceive. Further, a defendant's degree of blameworthiness can be relevant tothe damages assessment under the FTA. Secondly, Red Stag argues that the Judgefailed to apply the adverse document test, instead using a test akin to the relevance testfor admissibility under s 7 of the Evidence Act 2006.[12] Red Stag argues that its proposed appeal is not only significant in the contextof the present proceeding, it raises a question of law concerning the scope of discoverygenerally that will impact on future civil proceedings. Red Stag claims that differing7 Ngai Te Hapū Inc v Bay of Plenty Regional Council [2018] NZCA 291 at [16]; citing Meates vTaylor (1992) 5 PRNZ 524 (CA) at 526.8 Greendrake v District Court of New Zealand [2020] NZCA 122 at [6].9 Houghton v Saunders [2019] NZCA 506 at [50]; and James Hardie New Zealand Ltd v White[2020] NZCA 142, (2020) 25 PRNZ 691 at [55].approaches have been adopted in the High Court and it is desirable that anyinconsistency be resolved by this Court.10[13] For the brief reasons that follow, we are not persuaded that Red Stag's proposedappeal meets the high threshold to justify the grant of leave.[14] First, we do not consider the proposed appeal has sufficient prospects ofsuccess to justify the additional costs that would be consumed in its pursuit.In particular, we do not consider it to be seriously arguable that the Judge overlookedthe purpose of discovery in determining the application or that he failed to identifythe issues disclosed by the pleadings to which the documents are said to be relevant.As the Judge observed, there does not appear to be any issue on the pleadings as towhether the representations were made. The critical issue on liability is whetherthe representations were misleading or deceptive or likely to mislead or deceive.The question of whether Juken's conduct was misleading or deceptive in breach ofthe FTA must be determined objectively. The subjective views held from time to time(one way or the other) by Juken personnel are not relevant to this assessment. We donot accept Mr Flanagan's submission for Red Stag that such documents go to the issuesat the heart of the case. If Red Stag's interpretation of the standards is correct, Juken'smisrepresentations as to compliance are likely to have been misleading or deceptivewhether it knew this or not. We agree with the Judge there is a logical distinctionbetween documents showing the market's understanding of the representations andthose that merely reveal the internal views held by Juken from time to time (or, forthat matter, Red Stag). In any event, we see no seriously arguable error of fact or lawin the Judge's decision declining to order discovery of these documents.[15] Secondly, the proposed appeal does not, in our assessment, raise any issue ofgeneral or public importance. The Judge recorded it was common ground that the testfor relevance for standard discovery is the adverse documents test which includesdocuments that adversely affect that party's case or support another party's case.1110 Referring to Attorney-General v Institution of Professional Engineers New Zealand Inc [2018]NZHC 74, [2018] NZAR 275; Westgate Town Centre Ltd v Auckland Council [2021] NZHC 858;Todd Petroleum Mining Company Ltd v Vector Gas Trading Ltd [2017] NZHC1129; CommerceCommission v Viagogo AG [2021] NZHC 1398; and Minister of Education v James Hardie NewZealand [2019] NZHC 245.11 High Court judgment, above n 1, at [84].The Judge considered actual and direct relevance on the pleadings was required.12In this respect, he adopted the same formulation used in other decisions,13 correctlynoting that the test is narrower than the former Peruvian Guano test which extendedto documents that might be relevant to issues in the proceeding or may lead to a trainof inquiry.14 There is no dispute that the adverse documents test was the applicabletest for relevance or that this test is considerably narrower than the former PeruvianGuano test. Whether there are inconsistencies in the shorthand labels used to describethis test is somewhat beside the point. The issue on any appeal will be whetherthe correct test was applied in the particular circumstances. We see no question ofgeneral or public importance arising in the proposed appeal.[16] It follows that leave for the proposed cross-appeal must be declined despitethe fact that it would not further delay the proceeding given Juken's appeal.Result[17] The respondent's application for leave to bring a cross-appeal against the HighCourt judgment declining (in part) its application for particular discovery is declined.[18] The respondent must pay costs to the appellant for a standard application on aband A basis and any usual disbursements.Solicitors:Hesketh Henry, Auckland for AppellantMeredith Connell, Auckland for Respondent____________________________________________________________________12 At [85].13 Pyne Gould Corporation Ltd v Bath Street Capital Ltd [2020] NZHC 1247 at [13]; nd Sellman vSlater (No 6) [2018] NZHC 3057 at [46], citing Chatfield & Co Ltd v Commissioner of InlandRevenue [2016] NZCA 614, (2016) 27 NZTC 22-084 at [21].14 The Compagnie Financiere et Commerciale Du Pacifique v The Peruvian Guano Co (1882) 11QBD 55 (CA) at 63.