DOWNEY v QUIRK [2023] NZHC 1181

DOWNEY v QUIRK [2023] NZHC 1181 [16 May 2023]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYI TE KŌTI MATUA O AOTEAROAŌTAUTAHI ROHECIV-2018-409-000737[2023] NZHC 1181IN THE MATTER of the estate of PETER EDWARDCULMER READBETWEEN RICHARD WILLIAM DOWNEY andTRUST GROUP LIMITED as the trustees ofST JOHN'S TRUSTPlaintiffsAND TREVOR KINRED QUIRK as trustee andexecutor of the estate of PETER EDWARDCULMER READDefendantHearing: 12 May 2023Appearances: R J Lynn for PlaintiffsH D P van Schreven and J D Kaye for DefendantJudgment: 16 May 2023JUDGMENT OF ASSOCIATE JUDGE PAULSENThis judgment was delivered by me on 16 May 2023 at 4.00 pmpursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:[1] This judgment concerns the latest skirmish between these parties overdiscovery issues.[2] By way of background, I need only go back as far as my judgment of15 October 2021 concerning an application by the plaintiffs that the defendant remedydefects in his discovery affidavit, for particular discovery and for inspection ofdocuments.1 As recorded in the judgment, most of the issues on that application wereresolved by the making of consent orders. In response to the orders made, thedefendant filed two further discovery affidavits dated 29 October 2021 and15 December 2021.[3] The plaintiffs consider the defendant continues to fail to comply with hisdiscovery obligations. On 2 September 2022, the plaintiffs filed a further applicationseeking, amongst other things, compliance with the consent orders in several respects.That application came on for hearing before me on 27 September 2022 but I wasadvised that it had been resolved and further consent orders would be sought bymemorandum. That did not occur and the plaintiffs' application has been referred backto me for hearing.[4] When the application was heard on 12 May 2023 it appeared that, again, mostmatters could be resolved on a cooperative basis. Following the hearing, counsel fileda memorandum seeking further consent orders. However, some issues remainoutstanding.The consent orders[5] The application identifies the orders from my judgment of 15 October 2021that are in issue, which are at [19]–[21] of the judgment as follows:[19] By 16 December 2021, the defendant shall file and serve an amendedaffidavit of documents in substitution for its affidavit of 17 March 2021 thatcomplies with r 8.15 and the Protocol. As requested by counsel, I also orderthe affidavit shall list (to the extent that they have not already been listed inaccordance with the High Court Rules) the documents that are the subject ofthe agreements recorded below as well as all relevant documents that thedefendant has identified from Mr Read's computer hard drive, and includeeditable Excel spreadsheets as provided for in counsels' agreement.1 Downey v Quirk [2021] NZHC 2778.[20] By consent, orders are made that within 10 working days:(b) The defendant is to provide by way of discovery a copy of theemail dated 16 April 2018 that is referred to in paragraph22(a) of Mr Quirk's affidavit of 9 September 2021;(c) The defendant is to inquire of Samantha Read whether sheholds copies of any correspondence between 7 February 2017and 30 April 2017 between her and the defendant that relateto the NZI Document discussed in paragraph 24(c) ofMr Downey's first affidavit exhibited as BOD 0439–0466;and if so to request Ms Read to provide copies of any suchdocuments to the defendant and through the defendant to theplaintiffs by way of discovery;(e) That the undisputed orders sought at 1(b)i–vi. of the plaintiffs'application are made, being provision by the defendant ofcopies of the following documents:(i) All attachments to the document discovered asTQ.1464;(ii) All attachments to the document discovered asTQ.1637;(iii) Any responses to the document discovered asTQ.1640;(iv) All attachments to the document discovered asTQ.1662 (other than TQ.1663);(v) All attachments to the document discovered asTQ.1937;(vi) All attachments to the document discovered asTQ.1939.[21] The parties further agree and I order by consent:(b) Within five working days the defendant will confirm whetherit has complete files (including all electronic and pre-existinghardcopy documents) of Wynn Williams; Rodney HarrisonQC; and White Fox & Jones, and, should it not, it will requestcopies of these. The defendant consents to providing thesefiles to the plaintiffs. Plaintiffs' counsel consents to collectingall such files from the defendant's office.(c) Within five working days the defendant will make (or if itcannot make, to take all steps available to it to get relevantentities to make) a request or requests under the Privacy Act2020 to EQC and to IAG for copies of all documents held ontheir files in respect of the Insurance Proceedings andunderlying claims. The defendant is to provide copies of alldocuments provided by EQC and IAG in response to suchrequests to the plaintiffs immediately on receiving the same.The parties are agreed that these documents do not need to bereviewed for the purposes of being incorporated within anyfurther discovery affidavit that is sworn.The application[6] The plaintiffs' application is a complex document that is not easy tounderstand, not least because of the impenetrable numbering system adopted.However, Mr Lynn prepared for the hearing a roadmap of the plaintiffs' position thatis both commendably thorough and to the point. I intend to use that as the basis forthe structure of this judgment.Orders sought at 1.a.1.1-4[7] The plaintiffs take objection to the defendant's affidavits of documents whichthey say do not comply with the High Court Rules and the listing protocol in pt 2 sch9 of the Rules. The defendant accepts that an amended list of documents should befiled and counsel have agreed on the terms of an appropriate consent order requiringthis. It is set out at the end of this judgment.[8] There are, however, several outstanding issues concerning the scope of thedefendant's disclosure. One issue concerns the hard drive from Mr Read's computer,which is referred to several times in my 15 October 2021 judgment.2 Mr Downeyconsiders that not all relevant documents from the hard drive may have been disclosedand he requests an evidential image of the hard drive be provided to his computerexpert, which he considers was the intent of the order made at [21(a)] of my judgmentof 15 October 2021.[9] The defendant's position is that he has disclosed all relevant documents fromthe hard drive and provided that information to Mr Downey's IT expert. The defendantis prepared to provide direct access to the preserved data of the hard drive toMr Downey's IT expert but Mr van Schreven was not clear about what that might2 See for instance at [13], [15] and [21(a)].involve. Following the hearing, counsel have agreed on the terms of a consent orderwhich will allow the parties to explore the manner in which full access to the harddrive can be provided to Mr Downey's expert.[10] Mr Lynn, however, says that Mr Downey's concerns about the scope of thedefendant's disclosure extend beyond the hard drive. Several of the issues that heraises (para 3 of the roadmap document) are dealt with elsewhere in this judgment.However, I must deal with two categories of documents at this juncture.[11] First, Mr Lynn refers to bank and trust account statements concerningtransactions that are in issue in the proceeding (such as the settlement of insuranceclaims) that he says have not been disclosed. These are not specifically identified, butI understand Mr van Schreven to accept that trust account records held by thedefendant showing the receipt of money to or for the credit of Mr Read's estate wouldbe disclosed. I will require counsel to confer further in respect of this matter, andreserve leave to come back to the Court in the event agreement is not reached as towhat trust or bank account statements are to be disclosed.[12] Next, Mr Lynn refers to further categories of documents which are set out atpara 26 of schedule 2 to a letter from Mr Downey's lawyers to the defendant's lawyersdated 19 August 2022. Mr Lynn advises that Mr Downey seeks particular discoveryin respect of these categories of documents.[13] A party may seek particular discovery against another party after theproceeding has commenced under r 8.19 of the High Court Rules. The key issue inapplications under r 8.19 tends to be whether there are grounds for believing a partyhas not discovered documents that should have been discovered. The courts generallyadopt a four-stage approach to such applications, as outlined in Assa Abloy NewZealand Ltd v Allegion (New Zealand) Ltd.3 That requires the Court to consider notonly whether there are grounds for belief that the documents sought exist but also thedegree to which they are relevant and whether ordering further discovery isproportionate.3 Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd [2015] NZHC 2760, [2018] NZAR600 at [14].[14] While Mr Downey's concern that documents in these categories have not beendisclosed was raised between solicitors in correspondence, I do not accept that theyhave been fairly put in issue in the application before me. They appear to have beenraised as something of an afterthought in the preparation of submissions. Further,several of the categories concern documents that Mr Downey expected to see on thefiles of White Fox & Jones, which I am advised by counsel the defendant uplifted(both the hardcopy and electronic files) and disclosed. Mr Downey's speculations asto what he would expect to find on the files are not adequate grounds for a belief thatsuch documents exist. Furthermore, the documents are in most cases, at best, ofperipheral relevance and in several instances irrelevant to any matter in issue. I makeno orders in respect of them.Orders sought at 1.a.ii[15] This relates to [21](c) of the judgment of 15 October 2021 and to the makingof Privacy Act requests to insuers. Those requests have been made but Mr Downey isnot satisfied with them. Counsel have agreed on a way forward and a consent orderwill be made that Mr Downey draft further Privacy Act requests to be submitted on ajoint basis.Orders sought at 1.a.iii[16] This relates to [20(b)] of the judgment of 15 October 2021. The defendant wasordered to disclose an email of 16 April 2018 from the defendant to Karen Welsford.In an affidavit of 29 October 2021, the defendant disclosed an email from him toMr Downey dated 26 April 2018 acknowledging an email from Mr Downey dated16 April 2018 (but in fact referring to a letter of that date). The defendant deposedthat he holds no other emails dated 16 April 2018 relating to this matter. In his lateraffidavit of 15 December 2021, the defendant deposed:I have complied with paragraph [20(b)] of the Discovery Order by searchingmy emails and I confirm I do not hold the requisite email.[17] The order I have previously made was premised on the belief that an email of16 April 2018 existed, but I am satisfied by the defendant's affidavits that it does not.While Mr Downey's position is that the Court ordered the defendant to disclose theemail and not simply make a search for it, the defendant cannot disclose that whichdoes not exist. There will be no orders made in respect of this aspect of the application.Orders sought at 1.a.iv[18] This relates to [20(c)] of my judgment of 15 October 2021, where I ordered thedefendant to make an enquiry of Samantha Read whether she had certaincorrespondence. The defendant made a request of Ms Read who advised that she hadno such documents. Mr Downey is not satisfied with the request which he says didnot reflect the spirit of what the Court ordered. Counsel have agreed that a furtherrequest will be made of Ms Read on the terms set out below.Orders sought at 1.a.v[19] This relates to [21(b)] of my judgment of 15 October 2021, where I directedthe defendant to confirm whether he had the complete files from certain third parties,including Rodney Harrison KC, and to request copies of further documents if he didnot, which were to be provided to Mr Downey. Such a request was made ofDr Harrison and it appears that he has electronic communications which have not beendisclosed, and, perhaps, some correspondence with Mr Read that has not survived thedestruction of Mr Read's hard drive.[20] Once again, counsel have agreed on a way forward which will be set out in theorders made below. In the event that Dr Harrison does not provide further documents,there is the potential for further applications to be made, and the parties may refer backto the Court by memoranda for further directions should that occur.Orders sought at 1.a.vi[21] This relates in part only to [20(e)] of my judgment of 15 October 2021, butalso to attachments said to be missing from other documents disclosed by thedefendant. Counsel agree that the way forward is for the documents concerned to beprovided to Mr Downey in their native format, and a consent order will be made tothat effect.Orders sought at 1.e[22] This paragraph of the application is a catchall provision where Mr Downeyseeks further orders as the Court thinks just. Mr Lynn raised three matters under thisheading.[23] First, he submitted that because of the defaults by the defendant with hisdiscovery obligations, the plaintiff may have difficulty preparing for trial in the timeavailable and the hearing may have to be adjourned. There is no application presentlybefore me to adjourn the hearing. If one was made I would expect that it would bereferred to the trial Judge. I need say no more about that.[24] The next matter concerns what are described as anticipatory non-party orders.It is said that if the Court considers Mr Downey should apply for non-party discoveryorders against third parties to obtain disclosure of documents that are the subject ofthis application, then directions ought to be made that the defendant meet the costs ofthe plaintiffs and the non-parties with respect to those applications. I cannot anticipatewhat non-party discovery applications may be made or what the result of them mightbe. It would be wrong for me to give any indication as to where costs will lie on suchapplications in the event that they are made.[25] Finally, it is submitted that, given the history of the defendant's failure tocomply with his discovery obligations, I should make an unless order underr 7.48(2)(a) to the effect that the defendant's defence shall be struck out in the eventof further non-compliance with the Court's directions. It is submitted that it would bedifficult to see a clearer example of ongoing non-compliance by a party than hasoccurred in this case.[26] In SM v LFDB the Court of Appeal set out the principles that should guide themaking of an unless order.4 It was recognised the Court may respond to a breach of aprocedural order by making any order a Judge thinks just, including the making of anunless order. But it was also held that an unless order is "an order of last resort".4 SM v LFDB [2014] NZCA 326, [2014] 3 NZLR 494 at [29].Generally, unless orders will not be made for breach of procedural orders, exceptwhere a party has repeatedly and flagrantly chosen not to obey the Court's orders.[27] I do not consider that there is any basis to make an unless order in thecircumstances of this case. This application proceeded substantially on the basis thatthe defendant had failed to comply with the directions made in the 15 December 2021judgment. Whilst I accept that in certain respects that was the case, I do not believethat there was any intention to breach the orders and, in the main, there weredifferences of view as to whether there had been compliance or not. I also take littlefrom the fact that counsel have agreed to certain consent orders being made, which isnot, in my view, an acknowledgement by the defendant that he failed to comply withmy earlier orders. Rather, the defendant has demonstrated a willingness to attempt toaccommodate Mr Downey's requirements, notwithstanding he does not accept thatthey are reasonable or necessary. An unless order will not be made.Result[28] The directions I make are as follows: –(a) The defendant shall file an amended affidavit of documents whichcomplies in all respects with the High Court Rules and listing protocolsand counsels' agreement dated 31 August 2020 relating to discoveryand such affidavit shall:(i) list documents in chronological order;(ii) ensure that the naming and identification of documents isconsistent with prior affidavits of documents and to the intentthat such documents would be searchable on a consistent basis;and(iii) ensure the same consistency will apply in respect to the listingand identification of any parent document.(b) The defendant shall contact its IT expert, Paul Black, to ascertainwhether he can, and if so on what basis, provide full access to thepreserved data of the hard drive from Mr Read's computer to theplaintiffs' IT expert.(c) Counsel shall confer in respect of any trust account or bank accountstatements that the defendant may hold relating to transactions that arein issue in this proceeding and attempt to agree on the disclosure ofsuch statements.(d) The defendant shall contact Dr Harrison KC to endeavour to have himprovide his copies of any further hard copy and/or electronicfiles/documents that he holds relating to his acting as counsel forMr Read and related parties.(e) The plaintiff shall draft any further Privacy Act requests to EQC and/orIAG which the defendant shall submit on a joint basis to those entitiesand with the request to direct responses to both the plaintiffs and thedefendant.(f) The defendant shall make enquiries of Samantha Read as to whethershe holds copies of any correspondence between 7 February 2017 and30 April 2017 between her and the defendant that relates to the NZIdocument referred to in paragraph 24(c) of Mr Downey's first affidavitexhibited as BOD0439-0466; and if so, to request Ms Read to providecopies of any such documents to the defendant and through thedefendant to the plaintiffs by way of discovery from her email address .(g) The defendant shall provide to the plaintiffs in native format the emailsand attachments identified by reference to documents identified withthe prefix "TQ" and the following numbers:(i) 1464;(ii) 1637;(iii) 1640;(iv) 1662;(v) 1664;(vi) 1668;(vii) 1673;(viii) 1939.(h) In the event of any disagreement as to the implementation of thesedirections, or the need for further directions as may be required relatingto discovery issues, leave is reserved to the parties to refer back to theCourt by way of memoranda on three days' notice.[29] The parties agree that costs ought to be reserved, albeit that Mr Downey alsoseeks a direction from the Court that he was the successful party. It appears to me thatthe merits of this application did not point in one direction and it is obvious from thisjudgment and the consent orders that were agreed that this application should neverhave been necessary. I am in no position to decide where the responsibility for thatlies. Costs will be reserved._______________________O G PaulsenAssociate JudgeSolicitors:GCA Lawyers, ChristchurchClark Boyce, Christchurch