H INVESTMENTS (NZ) LIMITED AND ANOR V CARLIN ENTERPRISES LIMITED AND ANOR HC CHCH CIV 2006 409 002200 [2007] NZHC 1129 (24 October 2007)

IN THE HIGH COURT OF NEW ZEALAND
CHRISTCHURCH REGISTRY
                                                               CIV 2006 409
002200



               BETWEEN                    H INVESTMENTS (NZ) LIMITED
                                          First Plaintiff

               AND                        STYX MILL COUNTRY CLUB
                                          INCORPORATED
       
                                  Second Plaintiff

               AND                        CARLIN ENTERPRISES LIMITED
       
                                  First Defendant

               AND                        K D CARLIN
                        
                 Second Defendant

               AND                        MALLOCH MCCLEAN
                                   
      First Third Party

               AND                        L R MCCLEAN
                                          Second Third
Party

               AND                        J T HAYSON
                                          Third Third Party


Hearing:
      17 October 2007

Appearances: A J Forbes Q.C., for First Plaintiff
             R Smedley for Defendants

Judgment:      24
October 2007 at 2pm


            JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN



[1]    This judgment concerns the respective applications
of the first plaintiff and
the defendants for further and better discovery.




H INVESTMENTS (NZ) LIMITED AND ANOR V CARLIN ENTERPRISES
LIMITED AND ANOR HC
CHCH CIV 2006 409 002200 24 October 2007

[2]    Also extant are the defendants' applications to strike out
the defences of the
first plaintiff and the third parties to the defendants' defamation claim. I will return
to those applications
at the end of this judgment.


[3]    At the beginning of the hearing upon the further and better discovery claims,
Mr Forbes advised
the first plaintiff had provided nearly all of the documents
requested by the defendants upon their application.        Such as had
not yet been
provided were promised within 2 days. In the circumstances, I make the orders
sought by the defendants upon their application.


The first plaintiff's application


[4]    It requests the defendants discover:


               (a)    The printed copies of previously
archived emails held in
                     electronic form by the first third party, being emails held by it
                 
   when acting as the defendants' accountants, and which have been
                     the subject of a key word search as to relevance
by the first third
                     party's solicitors.


               (b) Communications with other interested purchasers
of the Styx Mill
                     development, and including the financial model for the Styx Mill
                     project.


[5]    Additionally, the plaintiffs have applied to set aside a claim of confidentiality
in respect to the updated cash flow already
discovered, but from which several
entries have been deleted.


Context


[6]    The dispute concerns the Styx Mill Country Club
development and
subdivision near Christchurch. The first plaintiff purchased the properties within the
development from the first
defendant. The second defendant was a principal of the
first defendant.

[7]    The claim alleges a series of misrepresentations
about what was and was not
being purchased. In particular, it alleges representations concerning time frames
within which the development
could be completed, and costs that would be incurred.
After the first plaintiff took possession of the development delays occurred.
A
reserve contribution was required to be paid, and the extent of subdivision available
was reduced because of the impact of a road
bunding requirement.


[8]    The first plaintiff believes the archived emails of the accountants (the first
third party) who acted
for it and for the first defendant over the period June ­
October 2005 may contain relevant material.


[9]    Further, it has copies
of written communications with other interested
purchasers at the time. It says these too are relevant.


[10]   In short, and concerning the emails,
the first plaintiff says the defendants
have documents in their possession or control which may be relevant even though
they do not
know if they are relevant, and have no knowledge of what they contain;
moreover documents which in their present form the defendants
have not seen
because they do not have copies of them, they having chosen not to take delivery of
them from the first third party.


[11]   Regarding their application to discover written communications between the
defendants and other interested purchasers, the
first plaintiff is claiming there is
relevance in these, although its claim against the defendants is restricted to
representations
made to it and not to others.


Opposition to applications for further and better discovery


[12]   In brief, the grounds are:


               (a) There is no evidence that the printed copies of the previously
                   archived emails held in electronic
form by the first third party,
                   when acting as the accountants for the first plaintiff and first

           
        defendant, and which have since been the subject of a key word
                    search, are relevant to any issues in
these proceedings.


                 (b) Communications to other interested purchasers are not relevant to
                    any
issues in these proceedings.


Printed emails


[13]   The various submissions of Mr Smedley for the defendants may be
summarised
as follows:


                 (a) The printed emails in question are copies of electronic records
                    contained
in computer hardware belonging to and in the control of
                    the first third party, and, therefore, are not in the
control of the
                    defendants.


                 (b) The discoverable document comprises the hardware and not the
                    data on it.


                 (c) The emails in question were not printed at its request but at the
       
            first third party's behest.


                 (d) The cost of copying the printed emails at 30 cents per page is
  
                 estimated to be $3,750.00.


                 (e) There is no evidence the printed emails are relevant, rather,
at
                    best, counsel for the first third party has only gone so far as to say
                    they "may be relevant"
as between the plaintiffs and defendants.


                 (f) It is not known what key words were used for the search of
    
               documents.

                 (g) The plaintiffs' application is not specific enough, and apart from
            
        deposing that certain emails exist, provides no evidence that any
                     of the emails relate to any question
in the proceeding.


Communications to interested purchasers


[14]   Mr Smedley relies on s 7(2) of the Evidence Act 2006 which
provides:

       7. Fundamental principle that relevant evidence admissible

       .....

       (2)     Evidence that is not relevant
is not admissible in a proceeding

[15]   He submits that what was communicated to other interested purchasers
cannot be relevant
to what was represented by the defendants to the first plaintiff.
Evidence that may merely establish propensity is not admissible,
for it must be
relevant in the sense of bringing additional proof to bear on some issue the case ­
The Laws of New Zealand Vol.12
(para.41).


[16]   Further (at para.41):

       When a practice to do or omit an act is an issue, evidence of similar acts or

      omissions by the same person on other occasions is admissible. But where
       the similar fact is not logically probative
of an issue, evidence of it will not
       be allowed.

[17]   Mr Smedley submits that in the present case the issue is not whether
the
defendants made a practice of representing the Styx Mill development in a particular
way, but whether the defendants represented the development to the first plaintiff in
the particular way claimed.


[18]   Mr Smedley submits that evidence of other actions are, at best, admissible to
prove a course of conduct rather than as proof
that a particular act was done.

Considerations


[19]   In my judgment the first plaintiff's application for the discovery of the
printed emails and for the communications of other interested purchasers must
succeed.


Printed emails


[20]   The third parties'
solicitor, an experienced litigation lawyer, has said "they
may be relevant". Not surprisingly, he gave no further opinion than that,
for the
assessment of relevance is ultimately for the Court.


[21]   The emails were sorted from a huge data base by a key word
search. The
Court can infer, as Mr Forbes submits, that the key word and search would have
included the names of persons and of companies,
and of associated names and titles
of entities connected to this proceeding. It was in connection with this proceeding
that the key
word search was carried out by the first third party.


[22]   In the result, the first third party has produced a collection of
emails the
defendants are entitled to possession and control of. They are, therefore discoverable
if they are relevant.


[23]  
It seems the first plaintiff could have obtained all of the printed emails from
the first third party, who expressed no objection
to providing same. However, the
first plaintiff has correctly adopted the approach that it is not interested in viewing
documents
which have no relevance because they are personal to the defendants, or
which are confidential.


[24]   The defendants claim that
there is no proof of relevance is on less sound
footing than the first plaintiff's claim that likely they do contain relevant documents.
The defendants have not seen them. On the other hand, their existence has been
generated as a consequence of the issue of these proceedings
and as result of a key
word search undertaken by the party that was the accountant for both plaintiffs and
defendants at the relevant
time.

[25]    Mr Forbes' inquiries reveal the relevant documents in question are many
fewer than the defendants claim, and would
cost in total about $600 only to print.
The first plaintiff offers to pay half that cost.


Communications with other interested
purchasers


[26]    Although in its application the first plaintiff did not limit "communications"
to written communications, it
is clear that is all that is sought. It could not have been
otherwise.


[27]    As I earlier noted, the case, for our purposes,
concerns representations
allegedly made at the relevant time. It is not only about what was written or told, but
about what was not
written and not told. It was about what was stated concerning
development costs, the payment of a reserve contribution, about when
a resource
consent would be available to allow construction to commence, about what was said
about the road boundary, the bund and
the fence along the top of the bund, and about
whether the use of the name "Styx Mill" was included in what was sold, and about
what
use the office building could be put to.


[28]    The first plaintiff claims there is evidence of 3 other interested persons at
the
time. There is before the Court detail of some emails with one of those interested
purchasers.


[29]    It appears from my view
of the authorities that civil cases will admit evidence
of similar facts where such is relevant to the determination of a matter
in issue ­
where there is a nexus between the similar fact and that matter, provided the
evidence is not oppressive or unfair, and
that the other side has had notice of it and is
able to deal with it ( Cook v Evatt  [1992] 1 NZLR 673).


[30]    In this case there may (or may not) be evidence of a consistent course of
conduct containing representations of matters
concerning costs, time frame, and
development of the kind relevant to the pleading in this proceeding. If it exists, then
it is important
an opportunity is available for a Court to consider it.

[31]   The request for details of communications with other interested
purchasers
involves a relatively confined area of investigation, and will likely impose little
concern, or effort, with compliance.


[32]   There is no reason why a person should be denied the opportunity to bring
similar fact evidence of representations made
to others which could be used to prove
the misrepresentation in appropriate cases, e.g., under the Fair Trading Act ­ as in
this
case. Obviously, a proper foundation needs to be made in any instance to prove
the existence, or likelihood of the existence, of
the material sought to be discovered.
That being done, then nowadays Courts are increasingly less concerned with formal
objections
to restrict access to evidence which may well be important in the
outcome.


Other matters


Confidential material in cash flow sheet


[33]   I earlier referred to the first plaintiff's application including an application to
set aside a claim of confidentiality
in respect to a cash flow sheet which had been
discovered in part to the plaintiffs.


[34]   For the purposes of dealing with this
application, Mr Smedley has provided a
copy of the cash flow sheet without deletions. This was perused by myself and Mr
Forbes, and
in the result a final agreement was reached, and I direct that that
document, without deletion, is to be made available to the first
plaintiff's counsel
and solicitor, and is not to be copied or made available to any other person without
order of the Court. Those
copies are to be returned to Mr Smedley within 2 weeks
unless issues concerning items referred to in the spread sheet are reasonably
raised
beforehand, in which case the return of the document is subject to further direction
of the Court. For that purpose, leave
is reserved to the parties on short notice to
make an urgent application for directions.

Strike out applications


[35]   I am
happy to arrange an urgent fixture to deal with these applications. I
await counsel's memorandum with suggestions for timetable orders.
In the first
instance the defendants are required to file an affidavit in support of their
application, or, alternatively, a repleaded
fully particularised application identifying
precisely why it has been filed.


[36]   If the application concerns the form and pleading
of the Defamation Act
claim, then I would expect the defendants, through counsel, to advise in writing
those aspects with which objection
is taken.


Judgment


[37]   The first and second defendants are to file and serve an affidavit of
documents which discovers:


               (a) The printed copies of previously archived emails held in
                   electronic form by the first third
party, being emails held by it
                   when acting as the first and second defendants' accountants, and
             
     which have seen been the subject of a key word search as to
                   relevance by the first third party's solicitors.


               (b) Communications with other interested purchasers of the Styx Mill
                   development, including,
but not limited to, Titan 1, Pollans, and
                   Robert Brown, and including the financial model for the Styx Mill
 
                 villa project referred to as document 2.23 of the first and second
                   defendants' list of documents.


               (c) The first plaintiff shall pay half of the cost of the supply by the
                   first third party of
the documents referred to in (a) above.

Costs


[38]          I indicated to counsel it was my intention to reserve costs upon
the
defendants' application, which was resolved without need for argument. In the
outcome of the plaintiffs' application it is my decision that costs upon the
applications of both
the first plaintiff and the defendants should lie where they fall.
Overall, and in the outcome, both parties have succeeded with
their applications.




______________________________________________________________________________




Solicitors
Cruickshank
Pryde, Invercargill for First Plaintiff
(Counsel ­ AJ Forbes, Christchurch)
Anthony Harper, Christchurch for Defendants