MARRIOTT V THE ATTORNEY-GENERAL IN RESPECT OF LAND INFORMATION NEW ZEALAND AND THE REGISTRAR-GENERAL OF LAND HC AK CIV 2008-404-001437

MARRIOTT V THE ATTORNEY-GENERAL IN RESPECT OF LAND INFORMATION NEW ZEALAND AND THE REGISTRAR-GENERAL OF LAND HC AK CIV 2008-404-001437 15 February 2010IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2008-404-001437BETWEEN PETER JOHN MARRIOTT, MICHELLE SANDRA TAYLOR AND COLIN JAMES BISHOP BEING TRUSTEES OF THE MARTAY FAMILY TRUST Plaintiffs AND THE ATTORNEY-GENERAL IN RESPECT OF LAND INFORMATION NEW ZEALAND AND THE REGISTRAR-GENERAL OF LAND Defendant Hearing: by memoranda Counsel: D K Wilson for plaintiffs J R Burns for defendant Judgment: 15 February 2010 at 3:00pmREASONS FOR JUDGMENT OF ASSOCIATE JUDGE ABBOTTThis judgment was delivered by me on 15 February 2010 at 3:00pm, pursuant to Rule 11.5 of the High Court Rules. Registrar/Deputy RegistrarSolicitors: Turner Hopkins, PO Box 33237, North Shore City 0740 for plaintiffs Crown Law, PO Box 2858, Wellington 6140 for defendant[1] On 2 February 2010, I declined an application by the defendant to set aside claims made by the plaintiffs for legal privilege in two documents said to have been created in the course of obtaining legal advice. The defendant maintained that the plaintiffs had waived their right to privilege. The decision was given without full reasons, as trial was to commence the following day. These are those reasons.The context[2] This proceeding involves a claim for compensation pursuant to s 172 of the Land Transfer Act 1952. It has its genesis in events in 2005 whereby the plaintiffs sold a valuable residential property to a third party, BRCB Limited (now in liquidation). The plaintiffs say that the sale was part of a financing and marketing arrangement entered into with the individual who was director and shareholder of BRCB Limited, which was incorporated specifically to hold the land for the purpose of the transaction. The plaintiffs say that the price at which the property was transferred to BRCB Limited represented bridging finance (it was substantially lower than real estate agents' estimates of market value) and that the property was to be sold within a six month period, with the plaintiffs receiving any excess over an agreed minimum sale price after deduction of a commission and financing costs. [3] The plaintiffs contend that the financing and marketing arrangement included a buy back arrangement under which the property was to be transferred back to them at the same value as the sale to BRCB Limited if it did not sell for the agreed price. The plaintiffs say that after the property had been transferred to BRCB Limited the individuals, with whom they had been dealing, advised them of different terms for returning the property to them. [4] The plaintiffs registered a caveat against the title to protect their interest in the property pursuant to the underlying finance/marketing/buy back agreement. The caveat was removed from the title about a month later. The plaintiffs did not learn of this until about three months later, by which time BRCB Limited had onsold the property. The plaintiffs contend that an application for lapse of the caveat waswrongly treated as an application for its withdrawal by Land Information New Zealand. They seek compensation accordingly. [5] The defendant denies liability, but also raises an affirmative defence of contributory negligence.The application[6] The defendant seeks orders setting aside the plaintiffs' claim to privilege in two documents listed in an amended affidavit of documents sworn on 24 July 2009. The documents are listed and described in that amended affidavit of documents as follows:303. Undated Summary of events by P Marriott P4 304. 11/10/05 Affidavit of R C Candy P4 ... 4. The documents described as P4 are documents written for the purposes of providing information to the plaintiff's legal advisors (Turner Hopkins, D K Wilson, and Bell Gully), for consulting on legal issues including those at issue in these proceedings and obtaining legal advice.[7] The application is made under r 8.31 of the High Court Rules and s 65 of the Evidence Act 2006, the relevant parts of which provide that a person waives privilege if the person voluntarily discloses a significant part of the privileged communication, information, opinion, or document in circumstances that are inconsistent with a claim for confidentiality, or acts so as to put the privileged item in issue in a proceeding. [8] The summary of events prepared by Mr Marriott (one of the plaintiffs) is undated, but I understand that it is not contested that the plaintiffs' solicitor and/or counsel had received it by the time they received the second document, the affidavit of R C Candy (a friend of Mr Marriott through whom the plaintiffs met the persons with whom they made the financing and marketing arrangements). It is reasonable to infer that the affidavit was received by the plaintiffs' solicitor and counsel close to the date that it bears, 11 October 2005. Again, I did not understand there to be any challenge to the plaintiffs' position that there was no relevant proceeding inexistence at that time, and at that the time of its preparation it was not intended to be used (at least in that form) as part of any proceeding.The legal principles[9] Since the introduction of the Evidence Act 2006, waiver of privilege is covered by s 65 of that Act. The relevant parts read:65 Waiver(1) A person who has a privilege conferred by any of sections 54 to 60 and 64 may waive that privilege either expressly or impliedly. (2) A person who has a privilege waives the privilege if that person, or anyone with the authority of that person, voluntarily produces or discloses, or consents to the production or disclosure of, any significant part of the privileged communication, information, opinion, or document in circumstances that are inconsistent with a claim of confidentiality. (3) A person who has a privilege waives the privilege if the person— (a) acts so as to put the privileged communication, information, opinion, or document in issue in a proceeding; or (b) institutes a civil proceeding against a person who is in possession of the privileged communication, information, opinion, or document the effect of which is to put the privileged matter in issue in the proceeding.[10] The principles applicable to waiver of privilege by disclosure (s 65(2)) have recently been summarised in Houghton v Saunders HC Christchurch CIV 2008-409- 000348, 24 July 2009, French J:[54] The issue of waiver of privilege by disclosure has been considered in a number of New Zealand decisions. [55] It is possible to distil the following principles from the case law: (i) where a party's use of privileged material destroys its confidentiality, the privilege will be treated as impliedly waived, even if that was not the party's actual intention:Equiticorp Industries Group Ltd v Hawkins [1990] 2 NZLR 175 at 180. (ii) waiver can occur pre trial: Equiticorp; Chandris Lines Ltd v Wilson & Horton Ltd [1981] 2 NZLR 600.(iii) whether a "significant part" of privileged material has been disclosed as required by s65(2) will depend on the substance rather than the quantity of privileged material that is disclosed: Bete Fogg Nozzle Inc v Delavan Ltd & Ors HC Auckland CIV-2008-404-000169, 18 June 2008 Rodney Hansen J at [23]. (iv) deliberate disclosure of the existence of a privilege document as distinct from its contents will not normally amount to implied waiver: Equiticorp at 180; Chandris Lines at 611; Shannon v Shannon [2005] 3 NZLR 757 (CA). In so far as Tau v Durie [1996] 2 NZLR 190 may be authority to the contrary, it should not be followed. (v) deliberate disclosure of a complete copy of the privileged document will amount to waiver: Equiticorp at 180;Chandris Lines at 611. (vi) deliberate disclosure of some of the content of the privileged document will not necessarily amount to an implied waiver but may do so: Opthalmological Society of New Zealand Inc v Commerce Commission [2003] 2 NZLR 145 (CA) at 154;Astrazeneca Ltd v Commerce Commission & Anor (2008) 12 TCLR 116 at [39]. (vii) the test to be applied is whether in all the circumstances the conduct is inconsistent with maintaining the confidentiality of the privileged material in a way that could lead to injustice if the privilege is upheld: Opthalmological Societyat 154. This test although enunciated in a pre-Evidence Act decision, is still applicable to a consideration of both s65(2) and s65(3)(a): Astrazeneca at [31] – [39].[11] The principles applicable to putting the privileged documents in issue s 65(3)(a) were reviewed in Astrazeneca Ltd v Commerce Commission (2008) 12 TCLR 116 where Pankhurst J, after reviewing pre-Evidence Act 2006 authorities on a "putting in issue" exception at common law stated (at para [39]):To my mind the judgments in Opthalmological Soc and Shannon indicate where the boundaries of s 65(3)(a) lie. While the former espouses a test based on the Court's objectives judgment as to the consistency of the claimant's conduct with maintaining the privilege, the discussion in Shannonelucidates the principles which underpin that test. The mere relevance of a privileged communication to an issue in the case provides no basis for waiver. Even a party's asserted reliance upon a privileged communication is generally insufficient. Waiver occurs whether a party both asserts reliance upon the privileged communication and also seeks to inject the substance of the communication in evidence. At that point an abuse of the privilege exists. The claimant cannot have the benefit of reliance upon the substance of the advice and still seek to shield that advice from disclosure to the other side. To permit this would give unfairness in the required sense, in that the party's conduct would be offense to the trial process.This passage was adopted by French J in Houghton.The alleged waiver[12] The defendant contends that the plaintiffs waived privilege in these two documents in verified answers to interrogatories given by Mr Marriott on 8 July 2009. In the interrogatories the defendant sought, amongst other matters, to elicit information from the plaintiffs about their pleading that following BRCB Limited's transfer of the property to the subsequent purchaser (a Mr Murray Smith) they were "unable to enforce a transfer of the property back to [themselves]". The defendant sought that information as relevant to a plea of contributory negligence. [13] The interrogatories upon which the defendant relies were the plaintiffs' answers to the following questions (these are my summaries of the questions): a) What action did the plaintiffs take, after learning of the transfer, to obtain information or advice as to their ability to enforce a transfer back and what advice did they obtain? b) What were the details of the legal advice that Mr Marriott referred to in an affidavit sworn on 3 June 2008: who provided it and what was it? c) What are the full details of the "independent legal review...from Bell Gully" referred to in a brief of evidence of Mr Marriott provided as document 65 in the plaintiffs' discovery: what did the plaintiffs do to obtain that review, what instructions and information were provided to Bell Gully, and how did Mr Marriott receive that review? [14] The plaintiffs' answers to these questions, respectively, were:(a) Peter Marriott, on behalf of the plaintiffs, requested advice from D K Wilson, Barrister and Turner Hopkins, Solicitors, as to whether they were able to enforce a transfer from Smith back to the plaintiffs. The advice they received was that there was insufficient evidence and grounds to commence legal proceedings to enforce such a transfer. Such advice was sought by the plaintiffs on severaloccasions between approximately December 2005 and August 2006, the precise dates of which occasions are no longer recalled. (b) Between February and May 2006, Peter Marriott on behalf of the plaintiffs sought advice from D K Wilson as to whether the plaintiffs had rights or entitlements against Murray Linton Smith, to the effect that he had been a party to a fraud against the plaintiffs. Mr Wilson's advice was that there was no apparent specific evidence available to establish fraud or wrongful conduct on the party of Murray Smith, such as to form the basis of a legal claim by the plaintiffs against him. (c) Peter Marriott, on behalf of the plaintiffs, requested a review of the trusts [sic] position concerning the Beach Road property from Bell Gully in November 2005. He did this by email, and the emails were produced on discovery. The information provided via email to Bell Gully are [sic] produced on discovery. Peter Marriott did not in fact receive specific legal review [sic] which was requested, and it is acknowledged that paragraph 70 of his Brief of Evidence is incorrect in this respect. Only initial findings were conducted by Bell Gully to enable them to provide Peter Marriott with a more specific letter of engagement to undertake further detailed review. In principal what was received was that the caveat had lapsed. The advice was so unexpected that on receipt of it, the matter was immediately referred back to Turner Hopkins, Solicitors, and no further steps were taken by Peter Marriott or the plaintiffs with Bell Gully.The arguments[15] The defendant contends that by responding as they have, including choosing to give the substance of the legal advice, the plaintiffs have waived privilege both in that legal advice and also in any documents provided in obtaining that advice. He maintains that documents 303 and 304 formed at least part of the basis on which the advice was provided. Counsel for the defendant argued that by stating that they had advice that there was insufficient evidence and grounds on which to commence legal proceedings, and that there was no apparent specific evidence to establish fraud or wrongful conduct on the part of Mr Smith to form the basis of a claim against him, the plaintiffs were seeking to inject as evidence in this proceeding what they say is the substance of documents 303 and 304. Counsel submitted that by answering the interrogatories in this way, the plaintiffs voluntarily disclosed or consented to disclosure of the substance of the documents in circumstances that were inconsistent with a claim of confidentiality (s 65(2) of the Evidence Act). Further, by choosing toanswer in this way and claiming reliance on advice that is based at least in part on the information in documents 303 and 304, the plaintiffs have put those documents in issue (s 65(3)(a)). He argued that the defendant should have the opportunity to assess and challenge the substance of the documents, and thereby the substance of the legal advice received. [16] Counsel for the defendant also argued that the plaintiffs had also waived any privilege in document 303 by referring to it as part of the information provided to Bell Gully for the independent legal review in November 2005. [17] Counsel for the plaintiffs made three main points in support of the plaintiffs' claim to privilege. The first was that documents 303 and 304 were plainly statements of factual information supplied to the plaintiffs' lawyers for the purpose of consultation and obtaining legal advice, and plainly attract privilege. He submitted that it would be unusual for such privilege to be waived impliedly. Secondly, there is no clear and necessary connection between the documents and the advice mentioned in the interrogatories. The documents were in existence in October 2005. The advice referred to in the interrogatories was given the following year. Thirdly, the answers to interrogatories were not inconsistent with a continuing claim of confidentiality or did not put the substance of the documents in issue. The plaintiffs were endeavouring to respond appropriately to the interrogatories (in accordance with their legal obligations) and documents 303 and 304 were not mentioned in the answers. There is no particular connection between the documents and the answers. The plaintiffs were having to assess their rights and obligations in relation to several different parties or entities, and in the absence of any reference to documents 303 and 304 forming the basis for the advice mentioned in the interrogatories, it could not be said that they were injecting the substance of those documents into evidence.Has there been waiver by disclosure?[18] Apart from a last minute suggestion which I will address next, it cannot be said that the contents of documents 303 and 304 have been disclosed. There is no reference to them in the answers to interrogatories, let alone any apparent referenceto their content. I will come back the defendant's argument that disclosure can be implied from alleged reliance on the advice when addressing whether the substance of the documents have been put in issue. [19] At the last minute, (a memorandum in reply) counsel for the defendant advanced an argument that "it was likely" that the contents of documents 303 and 304 have been disclosed in draft briefs of evidence prepared for a possible claim against BRCB Limited. The draft briefs were disclosed as documents 64 and 65 in the plaintiffs' discovery. This ground was not advanced in the application, and there is no evidential basis for it. As I have said it was only raised after counsel for the plaintiffs had made his submissions. Although the discovered documents may refer to matters addressed in documents 303 and 304 the same could be said for any open communication by a lawyer based on a party's instructions to his lawyer. It does not, of itself, amount to a voluntary disclosure of some part of the instructions. Something more is needed. I do not accept that a brief prepared later, with a proceeding then in mind, necessarily discloses earlier instructions seeking advice generally. [20] Further, I reject the defendant's argument that the plaintiffs waived privilege in documents 303 and 304 by their answers to the interrogatories. The test under s 65(2) is whether a party voluntarily discloses a significant part of the privileged material in circumstances that are inconsistent with a claim of confidentiality. There would have been enough merit in the defendant's argument that the underlying documents form part of the disclosure to warrant inspection of the documents if there had been express reference to the advice having been drawn from them (or even if that was necessarily the case). That would be consistent with the view of Rodney Hansen J in Bete Fog Nozzle Inc v Delavan Ltd HC Auckland CIV 2008-404-169, 18 June 2008 where he took the view (para [23]) that the bare conclusion reached in a legal opinion could be a significant part for the purposes of s 65(2) even in nothing is said about the reasoning. However, in this case there is no such reference or necessary connection (particularly as the advice in question was in respect of the transfer to Mr Smith, which was not known at the time of preparation of the documents).[21] I find that the plaintiffs have not disclosed a significant part of documents 303 and 304 in circumstances that are inconsistent with a claim of confidentiality. This applies both to the alleged implied disclosure in the interrogatories and to the reference to these documents in the instructions to Bell Gully.Have the plaintiffs put these documents in issue?[22] I turn now to the defendant's argument that the plaintiffs have "injected the substance of the documents" into evidence by their answers to the interrogatories. I have set out the test for waiver under s 65(3)(a) in paragraph [11]. The plaintiffs have not expressly placed reliance on these documents as distinct from evidence available to them generally. Moreover, I do not accept that there can be any implied disclosure. The evidence would have to be reasonably compelling to persuade me to that view. As already mentioned, the interrogatories referred to advice as to a possible case against Mr Smith. The advice was that there was insufficient evidence to implicate him. Documents 303 and 304 were prepared before the plaintiffs knew of the sale to Mr Smith. Looking objectively at these facts I cannot reach the view that the plaintiffs were asserting reliance on documents 303 and 304, and seeking to insert the substance of those documents into evidence.Decision[23] The defendant's application has been dismissed for the above reasons. [24] The plaintiffs are entitled to costs on a 2B basis together with disbursements as fixed by the Registrar. ____________________Associate Judge Abbott