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High Court of New Zealand Decisions |
IN THE HIGH COURT OF NEW ZEALAND
WELLINGTON REGISTRY
CIV 2006 485 1600
BETWEEN
TODD POHOKURA LIMITED
Plaintiff
AND SHELL EXPLORATION NZ
LIMITED
First Defendant
AND OMV NEW ZEALAND LIMITED
Second Defendant
Hearing: 22, 23 and 24 July 2009
Counsel:
A S Olney & I M G Clarke for plaintiff
L J Taylor & O J Meech for first defendant
T C Stephens & K R Hodgson for second defendant
Judgment: 12 August 2009
RESERVED JUDGMENT OF DOBSON J
(On interlocutory applications by Todd, and appointment of Lay Member)
First application: To set aside Shell's claims to confidentiality for certain discovered documents ....................... [5]
Ongoing sensitivity .................................................................................................................................................
[13]
Comparison with documents for which Todd claims confidentiality.......................................................................
[14]
No substantial prejudice to Todd ............................................................................................................................
[25]
Second application: For particular discovery from Shell of further details on supply/demand model ............... [28]
Third
application: For further and better discovery from Shell ............................................................................
[37]
GSA1 and GSA2 contracts ......................................................................................................................................
[38]
"Missing attachments" ...........................................................................................................................................
[45]
STOS documents .....................................................................................................................................................
[58]
Common interest privilege ......................................................................................................................................
[71]
Pre-contractual negotiations for the PJVA .............................................................................................................
[85]
Fourth application: To administer interrogatories and require further particulars from Shell and OMV........ [90]
Interrogatories,
as against Shell .............................................................................................................................
[93]
Interrogatories, as against OMV ..........................................................................................................................
[110]
Further particulars, as against Shell ....................................................................................................................
[117]
Further particulars, as against OMV....................................................................................................................
[132]
Fifth application: Costs on application not argued.................................................................................................[143]
Costs on the present contested applications ............................................................................................................[154]
Lay Member...............................................................................................................................................................[156]
Summary ....................................................................................................................................................................[164]
TODD POHOKURA LIMITED V SHELL EXPLORATION NZ LIMITED AND ANOR HC WN CIV 2006 485
1600 12 August 2009
[1] This hearing was
convened to hear argument on four further interlocutory
applications brought by Todd in these proceedings, as well as a matter of
disputed
costs in respect of a fifth application that does not have to be argued. In addition, I
determine Todd's request for the
appointment of a Lay Member to sit with me at the
substantive hearing which is set down for a six-week fixture due to commence on
15 February 2010.
[2] In a judgment delivered on 25 July 2008, I determined an earlier series of
interlocutory applications.
In the proceedings, Todd pursues some 10 causes of
action challenging the conduct of its co-joint venturers in the Pohokura Joint
Venture. Their relationship is governed by the Pohokura Joint Venture Operating
Agreement (PJVA) concluded in 1999. In approximate
terms, Shell has a 48%
interest and OMV and Todd 26% each. For some years, the parties evolved
proposals as to the terms
on which the Pohokura Field might be exploited, including
a proposal that the three joint venturers would jointly market the output
from the
field. They sought and were granted consent from the Commerce Commission on
certain terms to do that. The financial commitment
to develop the field was made by
all of them in 2004.
[3] Todd's causes of action seek:
· declarations as to the
interpretation of relevant provisions in the PJVA;
· allegations of breach of that agreement; and
· various
causes of action alleging that the conduct of Shell and OMV in
relation to exploitation of the field is contrary to numerous
provisions of
the Commerce Act 1986.
[4] It is in this context that the following applications have been argued.
First application: To set aside Shell's claims to confidentiality for certain
discovered documents
[5] Counsel advised that
the volume of Shell's discovery in the proceedings
extends to some 75 Eastlight files, of which it has claimed confidentiality for
some
15 Eastlight files. Thus far, inspection of those documents has been restricted to
Todd's external legal advisers and appropriate
experts retained by them in relation to
the case, with all such personnel only getting access to Shell's confidential
documents after
completing appropriate confidentiality acknowledgements. Todd's
solicitors wish to disclose Shell's confidential documents to Todd
executives who
are providing them with instructions on the case.
[6] Mr Murray Jackson, Manager, Contract Support, for Shell
has analysed its
confidential documents as falling within the following categories:
(a) Shell's gas sales contracts;
(b) internal commercial and strategic planning for gas marketing;
(c) terms and conditions for the sale of gas
(including price and
volumes, Shell's commercial aspirations for such terms, and current
terms and commitments
under existing contracts);
(d) internal documents prepared for the purposes of engagement with
the PJV parties
(or either of them);
(e) internal documents prepared for the purposes of entering into
negotiations with
the PJV parties (or either of them) on commercial
issues such as:
(i) joint sales and marketing;
(ii) the terms of a JV uplift agreement;
(iii) gas balancing;
(f) Shell Group Budget Proposals, Group Investment Proposals and
similar Shell Group internal documents containing budgeting
and
strategic information prepared at various stages of the project for the
procurement of capital expenditure
or other investment in the
Pohokura project;
(g) confidential submissions made to the Commerce Commission
as
part of its processes.
[7] There was no dispute as to the accuracy of this summary.
[8] Illustrative of
the concerns created for Todd's legal advisers is the inability to
take instructions directly from Todd executives on references
in the Shell
confidential documents to the evolving status of 70 petajoules (PJ) of gas per annum
as the capacity of, or rate of
output from, the Pohokura Field. At the core of the
proceedings is Todd's challenge to the use by Shell and OMV of their majority
votes
to effectively settle 70 PJ as the rate of extraction of gas in the off-take regime
governing management of the venture. Todd's
claims raise various challenges to
this, given Todd's aspiration to have the capacity to take its proportionate share of
more than
that volume of gas per annum.
[9] It appears that Shell's case will be that, in various forms, 70 PJ per annum
was the level
of extraction recognised by all three joint venturers from the early days
of proposed development of the field.
[10] For its
part, Todd wishes to analyse the minutiae of how the figure of 70 PJ
per annum got whatever status it does have and, as importantly,
the purposes
motivating Shell in opting for that volume. Todd seeks to establish that Shell's view
on the rate of extraction from
Pohokura was for purposes other than the optimum
extraction of this field. For these and other reasons, Mr Olney complains that the
preparation of Todd's case is prejudiced if senior Todd executives who were
involved at the time are not able to consider the various
Shell papers, and provide a
"first hand" reaction to what Todd perceived the position to be at the relevant times.
Mr Olney suggests
that the presently available alternative procedure of inviting the
relevant Todd executives to respond to open questions as to the
state of affairs
discerned by an analysis of Shell's papers undertaken by Todd's counsel and
independent experts is unduly cumbersome
and risks missing points that may be of
importance.
[11] Mr Olney contends that that form of prejudice substantially outweighs
any
residual risk to Shell's commercial interests, by disclosure of papers that he to
characterises as now all being historic and
having no, or an insignificant extent of,
current commercial sensitivity. For instance, Shell proposals as to the terms on
which
it would offer a first tranche of gas from the Pohokura Field, and strategic
considerations for Shell arising from the inter-relationship
between the extent of the
Pohokura resource and Shell's interest in other fields such as Maui, was now spent
because all such contracts
have been concluded. Todd argued that the state of the
market has moved on so that those considerations could not be treated by Todd
as
necessarily applying to Shell's commercial tactics, for example in respect of
subsequent contracting for sales of later tranches
of Pohokura gas.
[12] For Shell, Mr Taylor's response focused on three aspects. First, the
substantial extent of ongoing
commercial sensitivity surrounding the documents for
which confidentiality is maintained, notwithstanding their age. His second point
in
support of the first was to invite comparison with the character of documents for
which Todd has claimed confidentiality, and
which claim Shell continues to respect
as appropriate. The third point was that Todd cannot demonstrate any substantial
extent of
prejudice arising from its having to prepare its case by the somewhat more
cumbersome method of testing the circumstances in which
the position of the
respective parties evolved over the relevant period by questioning of the executives
on open terms. This is necessarily without disclosing any
detail of what Shell was
doing by explicit reference to the content of its confidential documents.
Ongoing sensitivity
[13]
In terms of the ongoing sensitivity, Mr Taylor was insistent that documents
from the very beginning of the period in issue retain
current and ongoing sensitivity
of vital importance to Shell. One feature of the intensely competitive relationship
between Shell
and Todd relates to opportunities that could arise for one, when
appraised of the detail of a weakness in the market position of
the other. A pre-
occupation for Shell reflected in many of the confidential documents is the steps it
might take to minimise exposure
or provide complete cover for a deficiency in
supply relative to commitments to deliver over a particular period, when viewing its
total gas supply business. Mr Taylor acknowledged that Todd would know in
general terms about the parameters of such a potential
problem for Shell, but that
disclosure of the content of the confidential documents would give Todd a
sufficiently precise indication
of Shell's perception of the prospective problem for it
to be "gold" in competitive marketing terms. Although details on this particular
matter were perhaps the most intense concern, Mr Taylor instanced a number of
other matters of Shell's ongoing tactics and strategic
thinking that may well have
been reflected in the documents. For instance, those dealing with the terms on which
gas would be offered
to potential buyers from the first tranche retain considerable
value to a competitor because of the safe assumption that they would
also influence
Shell's conduct in later rounds of negotiations.
Comparison with documents for which Todd claims confidentiality
[14] As to the second of the points taken for Shell, Mr Taylor handed up a small
volume of Todd's documents that have been inspected
on the same restricted basis as
the terms imposed by Shell for its confidential documents. Mr Taylor drew
substantial support
for his primary argument by inviting me to consider the other
side of the coin represented by these documents. These examples
of Todd's
documents reflected the quite acute dynamic as between Shell and Todd in their
respective options for flexibility in the
volume of supply of gas from Taranaki
hydrocarbon resources. The evolution of Todd's strategy as instanced in these
documents suggested
a priority of sequence of exploitation that best suited Todd's
long-term optimisation of value from its investments. Whilst Shell
might make well-
educated guesses about those strategic priorities, Mr Taylor pointed out that it would
be invaluable for Shell to
know the nature of Todd's thinking with the level of
certainty that would ensue from Shell executives having access to these confidential
Todd documents.
[15] Counsel accepted that I can only evaluate the terms on which confidentiality
is preserved as a matter of
impression, rather than a finite finding of the extent of
harm that would flow from disclosure. At that impressionistic level, I
am well
satisfied that, notwithstanding the volume of them and the age of some of them,
Shell is entitled to be concerned to preserve
confidentiality of the documents for
which it has been claimed.
[16] Part of Mr Olney's criticism of Shell's defence of its position
is that Shell
bears an onus, on a document by document basis, to make out the extent of prejudice
that would flow. He submitted that
Shell's evidence did not discharge that onus. As
a matter of first principles, discovered documents are to be available for inspection
by the opposing parties and constraints on the usual process constitute an exception,
the extent of which has to be justified by
the party seeking that exception. Such has
been the consistent approach since at least Commerce Commission v Port Nelson Ltd
HC NEL
CP12/92 2 June 1995 McGechan J and Professor Lattimore; Port Nelson
Ltd v Commerce Commission [1996] 3 NZLR 554 (CA). I accordingly accept
Mr Olney's proposition that there is an onus on Shell to make out the requirements
for confidentiality.
[17] Shell has addressed that point in the affidavit from Mr Jackson. Mr Jackson
deposes to having reconsidered all of the documents
for which Shell has claimed
confidentiality in its list of documents. In addition to being able to categorise the
documents as cited
in paragraph [6] above, this analysis has enabled him to identify
some documents that, on reconsideration, Shell is prepared to transfer
into the
"open" section with the consequence that there can be full inspection of them on the
usual basis. Mr Jackson also identified
some documents which contained relatively
confined passages of confidential information and which he has recommended to
Shell's solicitors
be made available for inspection on an open basis, subject to those
passages being redacted. He has also reconsidered the documents
in terms of
relevance and found some documents that he now considers were included as
potentially relevant when they should not have
been, and were therefore included in
the list by error.
[18] I consider that Mr Jackson's analysis of the documents, demonstrated
by his
re-classification of a number of them and the division of the rest into the seven
categories quoted in [6] above, demonstrates
a sufficiently individualised analysis,
relative to the substantial volume of documents being dealt with here to discharge
the onus
of establishing a very real concern to protect their confidentiality.
[19] I took it to be common ground between counsel that
there is a pattern,
reflective of the nature of the organisations involved, of Shell writing down a great
deal more of these sorts
of strategic analyses, than has occurred at Todd. That
provides one explanation for the disparity in volume of documents (i.e. some
15 Eastlight files of confidential information sought to be protected for Shell, in
comparison with one Eastlight file for Todd).
[20] I am also satisfied that this is not the sort of confidential information that
could be "mentally ring-fenced" and not misused
in contexts outside of the present
litigation. The value to each party in retaining confidentiality of their respective
documents
is because of the strategic value it has. Its value is pervasive in the
ongoing dealings and in their competition in the market.
[21] Mr Taylor was not prepared to contemplate that Todd executives could
compartmentalise the use they made of such information
once in possession of it.
He went further and submitted that Shell should not be expected to trust Todd at all,
given an instance
of Todd abusing the implied undertaking to constrain the use of
inspected documents solely to the proceedings in which they have
been discovered.
A material document discovered in these proceedings, the Alignment Agreement
between Shell and OMV, has been referred
to in an affidavit from Todd's Managing
Director, Mr Tweedie, in entirely unrelated proceedings. Mr Jackson's affidavit
described
correspondence between solicitors for OMV and those acting for Todd on
misuse of that document. Mr Jackson believed that OMV's solicitors
had not had
any satisfactory explanation. I called for the correspondence relating to this apparent
unauthorised use of a document
obtained on discovery, and have considered it. I
have also considered Memoranda on this criticism, respectively from Mr Olney
dated
31 July 2009, from Mr Taylor dated 5 August 2009, and in reply from
Mr Olney dated 11 August 2009.
[22] Mr Olney's 31 July 2009
Memorandum explains that another principal of
Russell McVeagh was acting for Todd in the unrelated litigation, and had the
Alignment
Agreement drawn to his attention by Mr Tweedie. Mr Olney advises that
his firm provided advice to Todd that it was permissible to
refer to the existence of
the Alignment Agreement in Mr Tweedie's affidavit in those unrelated proceedings,
but that it was not permissible to produce that document as an exhibit. On the basis
that Mr Tweedie made reference to the agreement on the basis of legal advice,
Mr Olney now invites the Court to exonerate Todd from any responsibility for
breach of the implied undertaking.
[23] His firm's
advice was plainly wrong, on the basis of well-settled authority. I
am not satisfied there is any adequate explanation for the breach
of the implied
undertaking. Nor would I be prepared to exonerate Todd on the ground that it
breached the implied undertaking on the
basis of legal advice. Todd's mining
interests, and Mr Tweedie in particular, are seasoned litigants. I do not accept that
Mr Tweedie
is not cognisant of the extent of the implied undertaking, and the reason
for it. As frequent litigants, Todd's mining interests
no doubt have to rely on
compliance by opposing parties with the implied undertaking when they give
discovery of documents in the
course of their various involvements in commercial
litigation. The expectation of compliance has to be reciprocal.
[24] Respect
for the letter and spirit of rules governing access to a competitor's
documents in the course of litigation is absolutely critical
to the orderly working of
the High Court Rules and to the conduct of all civil litigation in the Courts. A
breach of this important
undertaking is to be taken seriously, and deserves strong
censure. However, punishment for such breach of the Rules should not arise
in a
tangential or unconnected context. Were relaxation or removal of the confidentiality
constraint Shell seeks to maintain otherwise
appropriate, I would not have been
prepared to "punish" Todd by denying it wider access to the confidential documents
on account
of this breach of the implied undertaking. It does, however, afford ample
grounds for Shell's submission that it ought not to be
required to trust Todd
executives to implicitly respect the letter and spirit of the High Court Rules
governing access to, and use
of, discovered documents.
No substantial prejudice to Todd
[25] The last aspect of Mr Taylor's argument for Shell was that
Todd had not
established any sufficient degree of prejudice in the preparation of its case. I agree
with that submission. I tested
Mr Olney as to the processes for taking instructions
from Todd executives without making Shell's confidential documents available
to
them. Although I accept that it involves more work and is more cumbersome, I am
not persuaded that Todd's case is likely to be
materially weakened by Todd's
advisers missing a point that might otherwise have been elucidated from a first-hand
analysis of
Shell's confidential documents by Todd executives.
[26] In the end, there has to be a balance struck. Here, vigorously contested
litigation has arisen in the course of an ongoing significant joint venture for
exploitation of gas and condensate. The litigation
has to be kept in perspective and
should not be managed in a way that jeopardises the future of that significant
venture. In short,
the price for Todd is that it must run its case with whatever modest
impediment eventually follows from Todd executives being kept
away from the
content of Shell's confidential documents.
[27] Accordingly, Todd's present application is dismissed. I raised
with counsel
the need for a protocol in respect of any documents for which confidentiality is
claimed by any of the parties, and
which may need to be adduced in evidence and
referred to in briefs of evidence. I anticipate counsel will be able to agree a protocol
for redacted versions of briefs of evidence making reference to confidential
documents being provided for the respective executives
who are to be excluded from
access to such documents. Cross-examination on such documents will probably
require the Court to be cleared
of those who have not completed confidentiality
undertakings.
Second application: For particular discovery from Shell of further
details on
supply/demand model
[28] Shell has previously provided hard copy documents reflecting the computer
analysis produced by a supply/demand model used in April 2005 as an
aid to
assessing the effects of different levels of production from Pohokura. More recently,
an electronic copy of that model has
also been provided. This application by Todd
sought from Shell any further hard copy representations, or comments on, or
electronic
records reflecting, further use of that model. In particular, Todd seeks
hard copy or electronic records reflecting the input into
the model of any levels of
production other than 70 PJ per annum.
[29] The request relied upon two 12 April 2005 emails between
Shell personnel.
The first email set out 84 PJ per annum as Pohokura's processing facility, 70 PJ as
its "planned sales gas plateau"
and 60 PJ as the minimum rate as at 30 June 2006
stipulated in a Commerce Commission condition of its approval for joint marketing
by the three joint venturers of the gas from Pohokura. In commenting on those
statistics, Mr Mulvena of Shell had commented to others
in a separate email:
See Pohokura rates below from STOS. This was always going to be an
interesting issue! Assuming
a sales plateau below the plant capacity makes
it essential we have a balancing arrangement in place as someone will
always want to push sales up to plant capacity!!
We have only assumed 70 Pj/a offtake so far in supply/demand study
83
Pj/a will take even more production/sales off Maui.
[30] Todd retained a Wellington economist, Mr Kieran Murray,
to provide expert
evidence in these proceedings. Mr Murray has expressed the view in an affidavit in
support of this application,
having analysed the documents thus far inspected, that he
would expect Shell to have modelled one or more scenarios with Pohokura
producing more than 70 PJ of gas per annum using the model it had available for that
purpose.
[31] For Shell, Mr Mulvena has
completed an affidavit which denies that, in light
of the discrete purposes for which Shell was using the electronic model in its
wider
business, there could be any relevance to the use of the model for testing the
consequences of any other level of production
from Pohokura. In submissions,
Mr Taylor advanced the arguments on lack of relevance by pointing out that the
model, having been
used in April 2005, would then be available for the year until
April 2006 by which time the joint venturers had (by the majority
votes of Shell and
OMV) resolved the off-take regime for Pohokura at 70 PJ per annum. However, on
Mr Taylor's analysis, in that year
Shell had already committed itself to sales on the
basis of production at 70 PJ and the focus was on completing the arrangements
for
Shell's dealings in its portion of production at that level. There was therefore no
purpose relevant to the Pohokura joint venture
for Shell to be exploring the wider
consequences of promoting production from Pohokura at any different level from
70 PJ.
[32]
Mr Taylor also argued that if there were any other hard copy documents that
made any form of reference to levels of production
at Pohokura, they would already
have been identified and discovered. Accordingly, Todd's current request for
particular discovery
could only relate to electronic workings, of which no hard copy
record had been made. A number of Shell personnel are no longer with
the company
and a number are now outside New Zealand. A substantial extent of work would be
involved in attempting to ascertain whether
any of these Shell personnel had used the
model to test the effects of a level of production other than 70 PJ. This was being
requested
on the basis of a speculative assumption made by Todd that Shell had a
reason to undertake modelling on alternative levels of production
and therefore
would have done so. Mr Taylor protested that requiring this exercise to be
undertaken was unjustifiably oppressive
because the outcome would, in any event,
be irrelevant.
[33] I took Mr Olney to accept that Todd did not have grounds for contesting
Shell's response that there
were no more hard copy documents within the category
contemplated, so that the request was confined to any electronic record of the
model
having been used for levels of production other than 70 PJ per annum.
[34] Todd did not advance any conventional grounds
for a belief that other records
of the type sought are in existence. Rather, the application was based on the
theoretical assumption
that an organisation of Shell's type, having access to an
electronic model of the type already discovered, would have used it to
test the
consequences of other levels of production. I am not satisfied that that theoretical
construct is sufficient to warrant
an order for further discovery. Todd has not
established the existence of such electronic records, which is the initial premise
that
an applicant for such an order must make out, before the Court will exercise the
jurisdiction to order further discovery.
[35] Mr Olney acknowledged the cross-over between this request for production
of further documents, and an interrogatory addressing
the question of whether such
other scenarios were tested by Shell. I need to return to the issue of relevance of any
electronic workings,
and whether the enquiries required to answer an interrogatory
are oppressive in that context.
[36] However, at this stage, Todd
has not made out the case for an order for
further discovery and this second application accordingly is dismissed.
Third application:
For further and better discovery from Shell
[37] In its third application, Todd sought discovery of:
· certain GSA1
and GSA2 contracts in relation to sale of Maui gas, plus
documents in connection with those contracts;
· five
attachments referred to in discovered documents but not themselves
discovered;
· unredacted versions of certain
STOS documents for which Shell has
claimed privilege; and
· a group of documents in which Shell has claimed
common interest
privilege.
GSA1 and GSA2 contracts
[38] My recollection is that Shell and Contact Energy have inherited
the
contractual positions under those contracts of Fletcher Challenge Energy and ECNZ
respectively. The contracts provide for sale
and purchase of Maui gas. Todd
attributes relevance to those, because it seeks to argue that Shell's part in imposing
70 PJ
per annum as the level of production at Pohokura has been influenced by
Shell's own commercial considerations, irrelevant to the
pursuit of optimum return
for the Pohokura Joint Venture. Those other commercial interests of Shell include
the profile of its sales
of gas from its entitlement at the Maui Field.
[39] I understand from counsel that the term of GSA1 has expired, but there are
inter-relationships between that and GSA2, which is still current.
[40] Although Mr Taylor did not have explicit instructions,
in the course of
argument he conceded the case for Todd to have access to the terms of both
contracts, in their current and any superseded
forms, subject to inspection being
constrained by the confidentiality obligations thus far imposed for other confidential
Shell documents.
Mr Taylor has volunteered the documents on behalf of Shell,
(subject to his instructions confirming this indication),
without any
acknowledgement of their relevance, but to avoid further argument. Accordingly, no
order is needed on that aspect
of this Todd application.
[41] Todd also sought documents in Shell's possession that bore on the terms and
operation of GSA1
and GSA2. Mr Olney argued that such documents might reflect
Shell's strategic thinking in the overall management of its gas reserves,
thereby
throwing further light on the motives that Todd seeks to attribute to Shell, in
stipulating 70 PJ as the level of production
from Pohokura.
[42] Mr Olney sought these surrounding documents within the period from 2002
from 2005 and claimed they were relevant because
Shell's ongoing considerations in
that period as to its Maui commitments obviously impacted on the view Shell took in
respect of
Pohokura. He invited the inference, from certain of the Shell internal
documents annexed to the affidavits filed on these applications,
that in the 2002-
2005 period Shell's analysis demonstrated an inter-play between its core supply from
Maui, its possible additional
quantities from Maui by virtue of "right of first
refusal"(ROFR) gas, and the extent of production possible from Pohokura.
[43]
Mr Taylor resisted discovery of any additional documents within these types,
on the basis that they could not possibly be relevant
to any of the issues in the
present proceedings, and that the obligation imposed on Shell to search for and list
such documents would
be oppressive.
[44] On the impressionistic basis that is inevitable when dealing with an
interlocutory raising matters of such
detail in a case on such a scale, I am not
persuaded that the peripheral documents commenting on GSA1 and GSA2 can claim
sufficient
relevance to warrant an order for their discovery. This is, of course, to the
extent that they have not already been identified because
of content that touches
upon Pohokura. I am influenced in this by the additional burden that would now
impose on Shell in searching
for and listing such documents. The inter-relationship
between how much gas Shell could procure from Pohokura, relative to the
management
of its sale contracts that depended on gas from other sources, seems
likely to be made out. How that impacts on Shell's rights and
obligations as alleged
by Todd is another matter. Commentary on the terms of contract that Shell inherited
appears to be beyond the
reasonable circumference of relevance, given the scale of
this dispute.
"Missing attachments"
[45] Todd sought discovery of
five attachments referred to in email chains
between Shell and STOS personnel. The attachments are detailed in paragraph 3(a)
to
(e) of Todd's application dated 8 July 2009. For the most part, Shell objected to
discovering these documents on the ground that
they are irrelevant to the issues in
the proceedings. Shell relied on the decision in ANZ National Bank Ltd v
Commissioner of
Inland Revenue (2008) 18 PRNZ 916 (HC) for the proposition that
reference to a document in a discovered document does not render the undiscovered
document presumptively
relevant.
[46] Paragraph 3(a): The first attachment was a Word document attached to a
23 June 2003 email which itself was given
the discovery number Shell_OCM_15.3.
Without conceding relevance, Shell has agreed to produce that attachment on a
confidential basis.
[47] Paragraphs 3(b) and (c): The next two attachments sought were Excel
spreadsheets attached to emails dated 8 March 2004 and
22 June 2004. From the
context of the intra-Shell personnel emails to which they were attached (Shell
discovered documents Conf_OCM_15.22.2
and 15.28.4), both spreadsheets
addressed the extent of Maui ROFR gas. There is no direct reference to Pohokura in
the relevant emails,
and the earlier of them suggests that the spreadsheet was not
particularly thoroughly prepared because it referred to asking STOS
to "come up
with something more robust...".
[48] On Todd's theory of its case, Shell was evaluating optimum production from
Pohokura
for its own purposes, as an aspect of larger planning that involved all of
Shell's other hydrocarbon resources. Todd contends that
Shell's ability to expand
and contract the total volume of gas it dealt with at any time by use of Maui ROFR
gas is likely to give
insight into the non-Pohokura considerations influencing Shell's
decisions on the volume of production it sought from Pohokura.
[49] Mr Taylor responds that this hypothesis is simply too remote, and that there
is no reason for Todd to believe that the undiscovered
attachments would have any
relevance to such an analysis.
[50] Again, deciding between these competing positions can only be
impressionistic in the absence of considering the attachments themselves, which I do
not propose to do in relation to these particular
documents.
[51] For the purposes of the present discovery application, I am prepared to accept
that Todd brings the attachments
within the outer boundaries of the test for relevance
and is accordingly entitled to discovery of them. I anticipate that Shell will
require
inspection of them to be on the terms as to confidentiality that have been enforced in
relation to other documents.
[52]
Paragraph 3(d): The next attachments sought are those referred to in a Shell
internal email of 13 May 2004 (Shell Conf_AB_18.A.53.4).
The text of the emails
suggests that the attachments contain suggested changes to GSA1 and GSA2.
Consistently with my determination
on the documents commenting on the content of
those contracts, I rule that they are not relevant and therefore do not need to be
discovered.
[53] Paragraph 3(e): The last of the attached documents are a Contact Energy
press release and a Commerce Commission
letter, referred to in an email of
25 March 2003 (Shell Conf OCM 23.1). The reference to the press release is
immediately followed
by the comment:
The spotlight again turns on Pohokura development, the gas industry
structure and by implication
the Shell/Todd/STOS relationship and its
competition impacts.
[54] The email also refers to a Commerce Commission inquiry
on Shell's change
of stance in relation to an application to the Commission for approval to jointly
market Pohokura gas.
[55]
I do not consider that Shell's discovery obligations should extend to
producing an electronic copy of a Contact Energy press release.
Todd's resources
should be sufficient to identify and obtain that, should they consider it of any
relevance.
[56] Because of
the connection between the subject of the Commerce Commission
communication and the marketing of Pohokura gas, I am persuaded that
the letter
from the Commerce Commission may be relevant and is accordingly discoverable.
Again, I anticipate that Shell would wish
to afford inspection of it only on a
confidential basis.
[57] In summary, as to the attachments, that sought in paragraph 3(a)
of Todd's
application dated 8 July 2009 has been volunteered on behalf of Shell, subject to
confidentiality. Todd has made out relevance, and is accordingly
entitled to
discovery, of the attachments sought in paragraph 3(b), (c) and the second of the
attachments in 3(e). I am not satisfied
as to the relevance of the attachments sought
in paragraph 3(d), and the first of the attachments in paragraph 3(e) of the
application.
STOS documents
[58] Shell has claimed privilege for certain communications between Shell in-
house counsel and certain personnel
at STOS. At the relevant time, STOS was
resourced by personnel on secondment from Shell. Mr Taylor suggests that the Shell
personnel
were seconded on terms retaining certain Shell responsibilities as part of
their on-going work.
[59] However, Todd challenges
the entitlement for Shell to claim legal
professional privilege when an in-house counsel at Shell (whose only client can be
Shell
itself) communicates with somebody at STOS who is, by definition, not within
his client's organisation.
[60] During the hearing,
it was resolved that I should see the three documents
which have been partly redacted on the basis of privilege claimed in these
circumstances. I issued a Minute on 24 July 2009 to record the arrangements that
would pertain to these documents. Since, without
objection from Todd, solicitors for
Shell invited me to expand the range of identities of personnel involved in these
communications,
I set out the Minute in the amended form after hearing counsel
further on it:
[1] In the course of argument on Todd's
application for access to inspect
certain STOS documents, an issue arose as to the entitlement of Shell to
claim
solicitor/client privilege for such documents on the basis that they
were communications between Shell in-house counsel,
Shell employees and
a person or persons having a STOS email address, being Shell personnel on
secondment to STOS
and/or persons engaged or employed by STOS
believed at the relevant time to be providing services to a member of the
Shell group of companies.
[2] Counsel are agreed that in respect of this aspect of Todd's
application,
I should inspect the documents in an unredacted form to assess
the entitlement of Shell to claim privilege for them on the
basis it has
advanced. I have directed that that aspect of Todd's application will be
treated as standing adjourned,
against the contingency that, having inspected
the documents, I consider it is appropriate to call for further argument on
the
matter.
[61] I have now considered the three documents in unredacted form. As to the
first of them (Shell VO_4.2),
this is an email from Alan Bewley, in-house counsel at
Shell, to various recipients involved in a preceding chain of emails. The
recipients
include a Mr Phil Moore whose email address is a STOS one. The redacted content
of Mr Bewley's email does not provide
the legal opinion that preceding emails in the
chain contemplate, but rather predicts what such an opinion is likely to advise. Legal
professional privilege is inarguably appropriate to the extent that it was a
communication between Mr Bewley and other Shell employees.
I accept that those
involved in the series of emails at the time were entitled to treat personnel on
secondment at STOS as within
the Shell umbrella, for the purposes of sharing with
them strategic and, in this case, legal communications. From the
content of
Mr Bewley's contribution and the context in which it appears at the end of the email
chain, I can readily infer that if
Mr Bewley thought he would be waiving legal
professional privilege by including Mr Moore within the recipients, then Mr Moore
simply
would not have got it. In that sense, any waiver of privilege would be
entirely inadvertent.
[62] More positively, I am satisfied
as a matter of clear inference that Mr Moore is
included because, notwithstanding his position at STOS, he retained responsibilities
for Shell, to the extent that any distinction
might be required between work he was
doing for STOS, and his residual contribution to progressing Shell's interests.
[63] I
accordingly uphold the claim to privilege in that document.
[64] In relation both to that first document, and to the next one
I am about to
consider, Mr Whalley's affidavit in support of Shell's claim to uphold the privilege
contends that the redacted aspects
are in any event irrelevant. Given the scale of
discovery and the breadth of relevance claimed by Todd, I would prefer not to make
a fine judgment approving the exclusion of the document on relevance and am
satisfied that is unnecessary, given the entitlement
of Shell to maintain privilege in it.
[65] The second group of emails where challenged redactions have been made
(Shell_ABE_17.589,
23, 24 June 2004) starts with a concern raised by
Mr Selvadurai on behalf of Todd about a proposed procedure for the operator
(STOS)
to obtain approval to certain categories of expenditure for the project. In
addition to addressees I assume to be other Todd personnel,
it was addressed to
Dennis Washer at Shell, and Phil Moore at STOS. The first redacted email is
Mr Washer forwarding Mr Selvadurai's
email to the in-house counsel, Mr Bewley,
seeking advice on the contractual point that had been raised. Some four minutes
after doing
that, Mr Washer has copied both the original email and his request to
Mr Bewley on to Mr Moore and a further recipient, Warwick Smith,
with a STOS
email address. The intent of the somewhat cryptic comment in forwarding on the
two earlier emails, namely "Whoops...my
apologies...all JV communications into
the project to yourself" appears to be acknowledging that communications, implicitly
within
Shell, about its work on the joint venture ought, in any event, to have been
copied to Messrs Moore and Smith, notwithstanding their
email addresses at STOS.
[66] Shell has then redacted the whole of two emails thereafter. The first is from
Mr Moore to Mr Bewley,
and the second is a reply from Mr Bewley to Mr Moore.
The terms of the former communication make it abundantly clear that Mr Moore
considered he was entitled to ask Mr Bewley for legal advice that reflected Shell's
position within the venture on terms that Mr
Moore would use to protect and
advance Shell's position, and which he did not need to disclose to other joint venture
interests.
Mr Bewley's response implicitly shares that understanding as to the nature
of the communication between them.
[67] Accordingly,
by application of the reasoning used in relation to the first
redacted document, I am also satisfied that Shell is entitled to claim
privilege for this
second series of emails.
[68] The third document partly redacted on this basis is a chain of emails sent on
4
and 5 July 2006 (Shell RMA.40.240). It begins with a request on behalf of Todd in
relation to "Pohokura communications".
It is addressed to Mr Moore at what
appears at the time to be a Shell email address. Mr Moore's reaction is to forward
the Todd
email to three Shell addressees and a Mr Schmitz at a STOS email address.
The Shell recipients included in-house counsel, Chris Street,
and the senior
executive, Murray Jackson. The next contributor to the chain is Mr Jackson, and it is
his email that has been redacted
by Shell in its totality. Mr Jackson comments on his
perception of Todd's conduct, and then recommends that two separate actions
be
considered. His email concludes with the direction that those steps would need to be
reviewed by Lawrie Hinton, whom I infer at
the time was a Shell in-house counsel.
He is among the recipients of Mr Jackson's email.
[69] All of what follows has been disclosed.
It appears to end with the whole
chain of emails being referred to Robert McDonald, whom again I infer was a Shell
in-house counsel
at the time.
[70] The respective roles of Mr Schmitz and a Mr Coomber, who were the
recipients of the Jackson email with STOS email addresses, are not specified.
However, from the content of the whole string of emails and their inclusion in it, it is
apparent that they are being included because
they have some responsibility to
advance Shell's interests within the operator. I consider that the details of
Mr Jackson's
two proposed actions are entitled to legal professional privilege
because he is initiating steps that he contemplates will be the
subject of legal advice,
and intending that Shell's response to Todd would be taken with the benefit of such
advice. However, the
particular addressee, and the opening comments, do not bear
on the subsequent proposals on which he contemplates legal advice will
be taken.
Accordingly, I order that the redaction in this chain of emails is to be reduced so as
to make available for inspection
by Todd the header of Mr Jackson's email
despatched on 4 July 2006 at 7.08pm, and the content of that email down to and
including
the line "I see two separate actions", together with the salutation at the end
and Mr Jackson's name.
Common interest privilege
[71] Shell has claimed legal professional privilege, on the basis that a common
interest privilege arises, in respect of the
following four categories of documents:
a) Confidential legal advice provided jointly to both Shell and OMV, the
privilege in which belongs to Shell and OMV jointly, and over which
Shell also claims legal advice privilege;
b) Confidential legal advice provided to OMV, the privilege in which
belongs to OMV and which is not
Shell's to waive, which has been
shared with Shell in circumstances where that privilege has not been
waived;
c) Confidential legal advice provided to Shell, the privilege in which
belongs to Shell (and
over which Shell claims legal advice privilege),
which has been shared with OMV in circumstances where that
privilege has not been waived; or
d) Confidential communications between Shell and OMV's in-house
counsel in relation to the legal advice obtained by either of them
individually or both of them jointly.
[72] In submissions for Shell, it proposed that this list ought to be expanded by a
further category in the following terms:
e) Communications with persons, including persons having a STOS
email address, for confidential communications
between Shell group
in-house counsel, Shell employees and/or employees of the Shell
group made available
to STOS on secondment and/or persons
engaged or employed by STOS believed at the relevant time to be
providing services to a member of the Shell group pursuant to a
Technical Services Agreement, in circumstances
where the disclosure
to STOS personnel is not considered inconsistent with a claim of
confidentiality.
[73] Todd conceded that categories (a) to (c) are properly the subject of a claim to
privilege. However, it remains concerned
that there ought to be a re-listing of
documents claimed to come within those categories by Shell, to enable Todd to
better assess
the entitlement to claim privilege on these grounds.
[74] Shell opposes any obligation to re-list as oppressive given the stage
that the
proceedings have reached, the extent to which the issues have been aired already,
and the need for Shell's advisers to commit
resources to other aspects of preparation
for trial.
[75] Having heard all the arguments I have, and gained some appreciation
of the
detailed analysis each set of advisers has been able to bring to bear on the case of the
other side and its documents, I have
decided that Todd's residual requirement for a
more exhaustive listing of categories (a) to (c) is not warranted.
[76] As to category (d), a first consideration
is whether the entitlement to claim
privilege is to be regulated by the provisions of the Evidence Act 2006, or the pre-
existing
common law position. The documents were all created before the Evidence
Act came into force, and accordingly in an environment where
those involved in
them reasonably contemplated that the entitlement to withhold them from inspection
in any litigation was regulated
by the common law rules.
[77] A different form of this issue arose in my earlier interlocutory judgment in
these proceedings
delivered on 25 July 2008 (see paragraphs [83] to [91]).
Consistently with my conclusion on that occasion, I consider the present
issue is to
be resolved on the pre-Evidence Act state of the common law.
[78] Todd's challenge to reliance on common interest
privilege in respect of
category (d) is that it seeks to assert privilege for original communications between
personnel who are not
in a solicitor/client relationship. Rather, the communications
are between lawyers acting for different clients.
[79] The rationale
for the so-called "common interest privilege" is not in fact to
recognise that privilege from disclosure should extend to a category
of
communication beyond that applying to solicitor/client communications. Rather,
where the terms of an original (privileged) communication
between a solicitor and
client are then shared with a third party, be it another lawyer or another party, the
privilege attaching
to the original solicitor/client communication is not lost where it
is passed on in the context of a relationship that the law recognises
as giving rise to a
common interest between the person forwarding the solicitor/client communication,
and the person receiving it.
[80] Original communications between lawyers for two different clients are not
within this common interest privilege as it is
customarily defined. Nor do they fall
within the rationale recognised for what is in fact an extension of solicitor/client
privilege.
[81] In the course of argument, Mr Taylor was inclined to accept that, where the
communication between, say, Shell's in-house
counsel and OMV's in-house counsel
was not to convey the effect of advice given to Shell, then it was not a
communication covered
by the scope of common interest privilege as recognised at
common law. To the extent that the in-house counsel with each company
were
exchanging views with each other as to the advice each of them was likely to give to
their respective employer/client, Mr Taylor
invited me to treat it as reflecting advice
that was "being given", and therefore covered by a common interest privilege. I do
not
accept that characterisation. The advice is to be conveyed to the client. Once it
has that status, then its subsequent re-publication
to a third party with the necessary
common interest may be covered by that original privilege.
[82] For Shell, Mr Taylor sought
to invoke as an alternative that litigation
privilege could, in any event, apply to the communications in question. Once
litigation is seriously in contemplation, and the dominant purpose for creation of a
document is to further the interests of a client
in relation to that litigation, then far
broader categories of communication are entitled to privilege on this different basis.
If
Shell were to make out that, at the relevant times, litigation privilege could be
invoked, then it would apply to communications
such as those between its own in-
house counsel and those acting for OMV. It was agreed that I should consider the
content of documents
for which privilege is claimed on grounds (d) and (e). During
the hearing, I was provided with an envelope containing some 13 such
documents.
[83] This matter was raised late and had not been traversed in the evidence filed in
support of, and in opposition
to, these interlocutory applications. Accordingly, I
directed that Shell be given seven days to provide affidavit evidence as to when Shell
could reasonably
have apprehended that litigation was in contemplation. I have now
received and considered an affidavit dated 31 July 2009 from Mr
Robert Macdonald,
an in-house solicitor with Shell. Mr Macdonald's view was that litigation was
reasonably apprehended by Shell from
November 2005. Alternatively, matters had
developed to a point where litigation was very likely from March 2006. For Todd,
Mr Olney
informally conveyed a message to the Registry on 10 August 2009 that his
client had nothing to add on the date from which Shell claimed
litigation privilege.
[84] I have assessed the 13 documents, relative to the potential grounds for Shell
to now claim privilege
for them. I determine as follows:
a) Shell PC LLA 13.1. 10 March 2005 email from OMV in-house
counsel to Shell in-house
counsel. This reflects comments on the
potential content of a Pohokura joint venturers' indemnity, reflecting
the respective
interests of OMV and Shell. It does not pass on to
Shell the terms of internal legal advice provided by OMV's in-house
counsel to OMV, and accordingly privilege cannot be maintained for
it.
b) PC_CS_41.12. 21 April 2006 emails among
in-house counsel at
OMV and Shell, proposing meetings on contractual terms and
prospect for exchange of advice previously
received by each
company. It does not reflect a sharing of legal advice and accordingly
is not entitled to privilege.
c) PC_CS_41.5, 41.6, 41.7 and 41.8. This series of emails, all dated
3 July 2006, are to be assessed together. They reflect
consideration of
the terms of communications between Shell and OMV on the one
hand, and Todd on the other, and in particular
the implication for
Court proceedings of the terms used. I am satisfied they are entitled
to litigation privilege.
d)
Shell PC_CS_41.9 (enclosing 41.10). This 7 July 2006 email from
Shell in-house counsel to OMV merely copies correspondence
sent
that day to Todd. It is not entitled to privilege.
e) Shell PC_CS_41.11 10 July 2006 email. This is merely OMV's
acknowledgement of the email at 41.9 and is similarly not entitled to
privilege.
f) Shell PC_CS_41.13. Notionally dated
31 July 2006, the exchanges
between in-house counsel at OMV and Shell on that date relate to a
request by OMV to reconstruct
the terms of advice about contractual
terms previously provided by in-house counsel at Shell to Shell in
December 2005.
This communication represents the subsequent
sharing of a communication which in its original form was privileged.
I am satisfied that in this particular context, by the end of July 2006
there was the requisite common
interest established between Shell and
OMV, and accordingly this document is entitled to common interest
privilege.
g) PC_CS_41.15 1 August 2006. Email from in-house counsel at
OMV to in-house counsel
at Shell, providing a copy of Shell's own
earlier correspondence with Todd. No privilege can be claimed for
this communication.
h) PC_CS_41.18 15 August 2006. Email from in-house counsel at
Shell to in-house
counsel at OMV as to terms of a Memorandum for
the Court in these proceedings. It is entitled to litigation privilege.
i) Shell PC_RMA_40.11, .12, .13, .14. These February 2006 email
exchanges between OMV and Shell relate
to negotiation of
agreements to which their entities were to be parties. There is no
basis on which privilege
can be claimed for them.
j) PC_RMA_40.15, .16 - 9 March 2006. Email from Robert Macdonald
at Shell to
numerous addressees (including two at OMV) about work
to be done on the drafting of numerous agreements subsequent to a
meeting that day. Although
the potential relevance of much of what is
said is difficult to identify, as the document has been listed, it is
discoverable and as OMV and Shell were distinct parties to those
agreements, there is no basis for claiming
privilege for the
communication.
Pre-contractual negotiations for the PJVA
[85] Todd seeks discovery of any documents
in the possession of Shell that it has
inherited from the Fletcher Challenge entity that was an original party to the PJVA.
[86]
In respect of the equivalent position for OMV which inherited the position
under the PJVA of the other original party to it, Preussag
Energie GmbH, OMV
responded to Todd's request by conducting a diligent search and confirming that
there are no such documents. Todd
accepts that position.
[87] However, Shell has refused to undertake such a search on the basis that any
documents, if they existed,
could not be relevant and that it is oppressive to require it
to undertake the search. I was advised that the form of agreement adapts
a standard
United States form for such joint ventures. There would be considerable risk in
attributing anything to what the original
parties thought about using that precedent.
[88] Mr Olney relies on the approach to contractual interpretation as reflected in
the Court of Appeal's decision in Boat Park Ltd v Hutchinson [1999] 2 NZLR 74,
which recognises that all surrounding circumstances and the commercial context
may be relevant in construing a contract. He also
argues that lack of admissibility of
a document does not exclude it from the scope of discovery: Comalco NZ Ltd v
Broadcasting Standards
Authority [1995] 3 NZLR 469 (HC), a point confirmed on
appeal (1995) 9 PRNZ 153 (CA).
[89] Inherent or potential unreliability of such further documents is probably to be
seen in the same light as inadmissibility:
it cannot deprive a particular category of
documents of their potential relevance. However, the pre-contractual stance adopted
by
the parties to the agreement, neither of whom are now parties to the litigation or
to the ongoing operation of the agreement, must
be at or beyond the boundaries of
any potential relevance to arguments about the interpretation of the agreement. The
relative extent
of oppression in requiring Shell to trawl through any records it
inherited at the time of acquisition of Fletcher Challenge's energy
interests should
take into account the potential utility to the opposing party of requiring Shell
personnel to undertake that task.
The combined impact of very marginal prospect of
any relevance, plus the latent, or at least potential, unreliability of such documents
when measured against the scope of the task imposed on Shell, persuades me that it
would be oppressive to require such further discovery
to be undertaken by them.
This aspect of Todd's application is declined.
Fourth application: To administer interrogatories and
require further
particulars from Shell and OMV
[90] Todd has sought answers to interrogatories served on both Shell and OMV,
on the basis that the answers are necessary to enable it to adequately prepare its case.
Mr Olney argued that the interrogatories
go to questions of fact, and do not seek
evidence. Todd relied upon the approach to interrogatories as reviewed in the
decision in
Bank of New Zealand v Gardner (1990) 2 PRNZ 278, a decision of then
Master Hansen. That decision treats the rules on interrogatories to be applied in a
way that brings to an end
the "cards close to the chest" form of advocacy. Rather,
interrogatories are to be used to assist the parties in coming to a recognition
of the
proper issues through which settlement of disputes is to be achieved. The decision in
Bank of New Zealand adopted the observation
from Shore v Thomas [1949] NZLR
690:
It is not necessary that the answer should be conclusive on the questions at
issue; it is enough that they should
have some bearing on the question, and
that they might have a tendency to establish, or form a step in establishing,
the allegations made. (695)
[91] The Bank of New Zealand decision also recognised that what may constitute
oppressive interrogatories
is a question of proportion in each case. Interrogatories
will normally be disallowed where answering them would require a search
or inquiry
out of all proportion to the value of the question or, generally, where to answer
would be burdensome.
[92] Mr Olney
complains that Todd is unsure as to what Shell and OMV's answer
is to the allegations of breach of various provisions of the Commerce
Act, and also
more generally as to Todd's allegation of the purpose or effect of the off-take rules
and nomination protocols that
have been procured by Shell and OMV's use of their
majority voting power.
Interrogatories, as against Shell
[93] Mr Taylor
argues that there is no necessity for the interrogatories to be
answered because Shell's evidence will address in detail how the
optimal production
level of 70 PJ per annum was initially developed, and how it has come to be relied
upon. Mr Taylor drew an analogy
with the decision in Ancare NZ Ltd v Novartis NZ
Ltd (1997) 11 PRNZ 393 (HC) for the proposition that interrogatories will not
qualify as "necessary" if the questions traverse matters that the Court can
be satisfied
will be provided in evidence. However, Mr Olney argued that Todd has no way of
knowing whether in fact the questions
raised by its interrogatories will indeed be
answered in Shell's evidence.
[94] Perhaps more relevant as a point of distinction
between Todd's position and
that in Ancare is that in that case, involving an application for revocation of patents,
it was the defendants
who were pursuing interrogatories of the plaintiff. Before the
defendants had to settle the terms of their evidence, therefore, they
would have the
plaintiff's case by way of the briefs of its evidence. In contrast here, the
interrogatories are pursued
by the plaintiff, seeking to know further factual matters
from the defendants before the plaintiff has to commit to the terms of
its own
evidence. I therefore consider that the situation in Ancare is distinguishable, when
assessing whether Todd can make out
necessity in respect of the questions posed in
its interrogatories.
[95] For Shell, Mr Taylor also relied on the decision in
Shore for the further
proposition:
It is not incumbent upon the Court to sift and sort the mass, and where called
for, to reshape the form of particular interrogatories. (695)
[96] Mr Taylor's point was that if some aspects of the interrogatories
could be
rendered reasonable by amendment, then it was not for the Court to "save" such
parts, because the onus was on the party
wishing to interrogate to present necessary
and reasonable questions.
[97] On Mr Taylor's calculation, the potential application
of eight variables to a
series of questions divided into sub-parts would require consideration and, if
ordered, answer to some 464
enquiries. He contended this was clearly oppressive.
[98] On the third day of the hearing, Mr Olney produced an amended form
of
notice to answer interrogatories, following criticisms by Mr Taylor of the capacity in
which the original form of interrogatories
purported to require responses from Shell.
The original interrogatories sought answers in respect of conduct by Shell "in its
capacity
as operator". Mr Taylor criticised this because the pleading against Shell
criticised its conduct as a joint venturer, not as the
operator of the venture. The
amended form deleted references to "in its capacity as operator" and consistently
with that also deleted
references questioning the creation by Shell of documents
where that occurred in Shell's capacity as operator.
[99] Once that
change had been made, perhaps predictably Mr Taylor then
criticised the inappropriate nature of questions addressed to Shell as a
joint venturer,
because of the questions related to steps that had been taken by Shell as operator.
[100] Considering first the
necessity for the questions. I disallow questions 6 and 7
and 14 and 15 of the amended form because they seek documents that have
been
referred to or relied upon (questions 6 and 7) or correspondence between Shell and
OMV (questions 14 and 15). There has been
an apparently thorough process of
discovery and inspection so that such questions could not be justified if it was
anticipated that
they would reveal documents not already discovered. To the extent
that the questions seek to commit Shell to a characterisation of
relatively how
important certain documents are, that have already been discovered, I am not
persuaded that that is a necessary topic
that Shell should be required to answer.
[101] It is difficult to attribute "necessity" to any particular factual enquiry in
absolute
terms. However, I am, for present purposes, prepared to accept that there is
a measure of necessity in Todd knowing certain of the
facts that would be addressed
in answers to the remaining interrogatories. As against that, I am concerned about
the oppressive extent
of work which would be required to answer them anywhere
near completely. One pervasive multiplier of the extent of work required is the
stipulation in interrogatory 1 that
answers should separately be provided for the
"total production available" and "total production available (contingent)" separately
for each of the 2007 to 2010 years, as well as the "total production available" for the
2006 year. From a preliminary consideration
of Todd's Second Amended Statement
of Claim (the Statement of Claim), and in particular the seventh to ninth causes of
action which
allege breaches of the Commerce Act, it does appear that any behaviour
on behalf of Shell that might go to an anti-competitive purpose
or effect will most
likely have been manifested at or near the outset of the relevant period to which the
broader scope of questions
is directed.
[102] Accordingly, I propose to disallow any interrogatories other than in respect of
question 1(a) to (c), covering
the 2006 and 2007 projections. I appreciate that this
creates a risk of limiting the answers in an way that avoids Shell having to
acknowledge some aspect of conduct subsequent to the period that I would allow
questions to be asked about. I further acknowledge
that the superficial level of my
understanding of the nature of the competing cases and the commercial context in
which the conduct
has occurred do create a risk that I am drawing a distinction on an
inadequately informed basis. However, I am well satisfied
that to allow the
questions over the longer, more recent periods would inevitably be oppressive. I am
also satisfied that conduct
on behalf of Shell that is likely to harm its own defence or
assist Todd in it making out its causes of action is relatively more
likely to have
occurred when the pattern of their commercial conduct was being developed.
[103] As to question 5 of the amended
interrogatories, (d) and (e) could require
Shell to make further enquiries of any relevant independent contractor or agent. In
terms
of marginal relevance weighed against the potentially oppressive extent of
work required to answer, I do not consider such questions
justified and accordingly
disallow question 5, in respect of paragraphs (d) and (e).
[104] As to question 16, I appreciate its
potential importance for Todd in relation to
the allegations of breach of the Commerce Act. However, in its present, relatively
open-ended
form, it is undoubtedly oppressive. Any communications between Shell
and OMV that were likely to have commercial significance in
the decisions
subsequently made are unlikely not to have been recorded. I accept that if parties
appreciate they may be conducting
themselves contrary to the Commerce Act, then
they may deliberately not create a record that would subsequently be discoverable.
However, given the apparent nature of Shell and OMV's organisations in
New Zealand, and the formality attributed to their April 2004
Alignment Agreement,
I am not satisfied that Todd can lay a foundation for there being any realistic
prospect of such unrecorded
communications. Obviously, recorded conversations
would be discoverable. Further, the question is open-ended as to time, and as to
the
personnel who may have been party to such conversations. I accept Mr Taylor's
concern that there would be a real risk of inadequate
answers, however
conscientiously Shell made enquiries of existing and former personnel. This is not a
question which I am prepared
to confine on Todd's behalf so as to render it
acceptable. Accordingly, questions 16 (and 17, 18 and 19, which are consequent
either
upon 16 or 14 and 16) are disallowed.
[105] Questions 20 and 21 address the same factual enquiry in relation to the
supply and
demand model as was sought by way of further discovery in Todd's
second application (see paragraphs [28] to [36] above).
[106]
In the context of this interrogatory, Mr Taylor still objected on the basis that
it was oppressive, and that however conscientiously
Shell might address the
question, it could still not be sure of the complete accuracy of its answers. The
question contemplates an entirely electronic process without any paper
results having
been produced (such documents would have been discovered, and there are none).
Nor should there be any uncertainty
as to the extent of electronic interrogation that
Shell should be required to commission, in order to answer the interrogatories.
[107] It appears that the interrogatory, as with the request for further discovery, is
premised on the view of Mr Murray, the independent
expert retained by Todd, that
an organisation like Shell once having access to the model, would have used it to test
the outcome
at rates of production other than 70 PJ per annum. I would not be
prepared to allow question 20 on the terms proposed in the amended
notice. To
prevent the imposition on Shell of oppressive obligations, I would permit an
interrogatory in the more confined terms
as follows:
In the period up to the end of April 2006, did SENZL ever run any
version of any electronic supply and
demand model ("Model") with a
production rate for the plateau period set at a rate other than 70 Pj/a?
The answer
to this question is to be confined to the electronic records
currently available to SENZL, to the extent that such electronic
records
can be interrogated without incurring any substantial expense by way
of information technology consultants,
in deconstructing any
overwriting of versions of the model that has previously occurred.
[108] Question 21 is to be posed
in respect of the confined terms of question 20.
[109] Accordingly, I order that Shell is to answer Todd's amended notice to answer
interrogatories dated 24 July 2009, except to the following extent:
a) None of the answers need address question 1(d)
to (h).
b) Any answers needed to question 5 are not to address paragraphs (d)
and (e).
c)
Questions 6 and 7 do not require to be answered.
d) Questions 14 to 19 do not require to be answered.
e) Question 20 is only to be answered in respect of the more confined
version of it specified in paragraph [107]
above.
f) The scope of any response to question 21 is confined to those terms of
question 20.
Interrogatories,
as against OMV
[110] Todd seeks answers to a further series of interrogatories posed of OMV,
some of which more or less parallel
the topics raised in the interrogatories posed of
Shell. Again, Mr Olney produced an amended form of questions on the second day
of the hearing. The topics are, however, more confined.
[111] For OMV, Mr Stephens spoke to his written submissions, helpfully
adopting
those aspects of OMV's opposition that mirrored the points already argued by
Mr Taylor for Shell. In addition, he emphasised
the lateness of Todd's request to
answer the interrogatories, relative to the first pleading of allegations of breach of the
Commerce
Act in October 2006, the relatively small number of OMV personnel in
New Zealand and the high level of turnover of such personnel
since the events to
which the majority of the questions posed for OMV related.
[112] Question 1 of the interrogatories mirrors
question 1 in the Shell
interrogatories, and to the extent that any subsequent questions would be permitted,
they would be confined
in the same way as specified in paragraph [102] above.
[113] Questions 2 to 5 in the interrogatories served on OMV are in comparable
terms to questions 16 to 19 of those posed of Shell. They are disallowed for the
same reasoning.
[114] Questions 6 and 7 pose open-ended
questions about a supply and demand
model used by OMV, intended to elicit responses on the same matters as questions
20 and 21 in
the interrogatories posed of Shell.
[115] OMV's opposition to answering these questions is supported by an affidavit
from Mr John
Burt, the commercial executive of OMV based in Wellington. That
describes the previous disclosure to Todd's advisers of various versions of an
electronic model developed
in August 2003 by Mr Burt's predecessor, Mr Michael
Wright. This means that the model dates from the period when there was an
assumption
of joint marketing by all three venturers. Initially, OMV discovered
version 10, and then versions 6, 7 and 9 of that model. It has
also supplied electronic
versions of all five versions of the model still in existence, namely 6 to 10. Mr Burt
denies that there
are any electronic or documented versions projecting a production
rate higher than 70 PJ per annum, or indeed other than in the versions
as already
discovered. Apparently the versions that were near to being able to make a complete
analysis (8 and 10) could not be run
with a production variable higher than 70 PJ.
The only version where that was possible was an incomplete draft. In OMV's case,
these
questions have effectively been answered in the negative, and I consider it
would be oppressive to require the scope of enquiries
necessary to formally respond.
[116] Accordingly, I find that there are valid grounds for opposing each of the
operative questions,
and OMV is not required to answer any of Todd's proposed
interrogatories.
Further particulars, as against Shell
[117] Relatively
recently before the argument of these applications, Todd served
notices on each of the defendants requiring them to provide further
particulars of a
small number of the paragraphs in their respective Statements of Defence. In
pleading terms, this
is a relatively complex case. There are 10 causes of action in the
Statement of Claim, which runs to a little more than 25 closely
typed pages. In
general terms, neither Statement of Defence to it could be criticised as being evasive.
The tactical consideration
on this application reflects a fine balancing act. On the
one hand, Todd has an interest in knowing adequately the matters of justification
that
will be raised in the arguments for Shell and OMV so as to avoid prejudice to Todd's
case at trial by being taken by surprise.
On the other hand, there is a wish to confine
the defendants as specifically as possible by way of pleading so as to deny them the
opportunity of raising additional matters that might otherwise advance their defences
at trial. The authorities considering contested
requests for particulars recognise the
validity of the first concern, and are wary of intervening to an extent that might do
no more
than is justified on the second. See generally McGechan on Procedure
HR5.21.01.
[118] The first particular sought of Shell relates
to a part of its response to Todd's
allegation as to the effect of Article 10.1 of the PJVA. Shell has pleaded, in part:
...It says production from time to time is not determined by Article 10 but as
a matter for determination in accordance with
other terms of the PJVA,
including Articles 5.2 and 6.3.
[119] Todd seeks particulars of the provisions of the PJVA other
than Articles 5.2
and 6.3 in accordance with which Shell alleges that production from time to time is
to be determined.
[120] The
extent of particularity required in respect of contractual provisions and
their interpretation is now guided by rr 5.19(3) and 5.20
of the High Court Rules.
The former provision provides that a party asserting that the interpretation of a
contract advanced by another
is wrong must assert its own interpretation. That is
balanced by the latter provision which provides that if a party relies upon
any
document in whole or in part, it is sufficient to state its effect as briefly as possible,
without setting it out, unless the
precise words are material. The combined effect of
these two provisions will render inadequate in most situations the classic formulation
for a defendant in a contract claim, simply denying the plaintiff's pleaded effect of
the contract and signalling reliance on the
whole document in terms such as "...and
will rely on the contract as if exhaustively pleaded herein". What r 5.19(3) requires
is for the defendant
in such a situation to do more than simply deny the effect of the
contract as pleaded by the plaintiff. The defendant's alternative
interpretation of the
contract must be pleaded, in its essence.
[121] Shell resists the provision of an explicit list of additional
contractual
provisions which might bear on how the level of production is to be determined from
time to time. Mr Taylor argues that
if, in analysing all the provisions having any
impact on this issue, one provision is left out, is Shell thereby prevented from
presenting
the full argument that would otherwise be available to it?
[122] The effect of Shell's existing pleading gives primacy to the effect
of Articles
5.2 and 6.3, but implicitly contemplates that their application will be influenced by
other parts of the PJVA. I consider
that specifying that relative level of importance
is adequate. It is unnecessary, in understanding how Shell asserts the contract
is to
be interpreted, to specify all the other provisions that may have any influence on the
interpretation of these (implicitly)
primary provisions. Shell is not required to
provide the further particulars sought of paragraph 6 of its Statement of Defence.
[123] Todd seeks two particulars of paragraph 7 of Shell's Amended Statement of
Defence, namely the identity of any off-take agreement
and other agreements entered
into by the joint venturers that incorporated arrangements for the disposal of gas.
Mr Taylor did not
resist provision of those particulars, and I accordingly direct that
they are to be provided.
[124] In paragraph 77 of the Statement
of Claim, Todd alleges that certain
documents in relation to off-take and resolutions passed by Shell and OMV adopting
them constitute
contracts, arrangements or understandings for the purposes of certain
sections in the Commerce Act. Paragraph 77 of Shell's Statement
of Defence pleads
that such documents were approved "...for the purposes of the joint venture...". A
response in those terms is likely
to be relevant to the invocation of s 31 of the
Commerce Act, which recognises an exemption from s 30 for activities undertaken
by
a joint venture. Todd now wishes Shell to state the relevant purposes of the joint
venture referred to.
[125] Such purposes are
a matter for evidence and argument. I do not consider that
Todd needs to know as a matter of pleading from Shell how it will couch
those
"purposes of the joint venture" in argument at trial. To require greater particularity
would extend this beyond the proper
scope of pleading. Shell accordingly does not
have to respond to this particular.
[126] Paragraph 80 of Todd's Statement of Claim
pleads that the provisions of the
off-take documents have the purpose, effect or likely effect of substantially lessening
competition.
Subsequent to denying that allegation, paragraph 80 of Shell's
Statement of Defence pleads in the alternative that if the off-take
documents are
contracts, arrangements or understandings to which s 27 applies, then they were
"authorised" for the purposes of facilitating
production from Pohokura.
[127] Todd now seeks particulars as to how and by whom the off-take documents
were "authorised". Todd
submits that it is entitled to have the pleading commit Shell
to saying how and by whom such authorisation occurred.
[128] In resisting
a response on this, Mr Taylor submits that the authorisation can
only derive from the terms of the agreement, and whether that is
correct is a matter
of interpretation and therefore a question of law. A distinction could be drawn
between the joint venture agreement
providing for a process by which such
documents might be authorised, and the factual circumstances in which particular
documents
were alleged to be authorised pursuant to that process. Todd's request
relates to the latter, whereas Shell's resistance contemplated the former. Shell is not
required to provide that particulars of the contractual provisions for such a process.
Nor do I consider
it necessary for Shell to spell out the factual circumstances it
alleges occurred in the case of these particular documents. Their
history is a part of
Todd's own pleading. Accordingly, this particular does not need to be provided.
[129] In the same paragraph
of the Statement of Claim, Todd alleges that the
relevant market for competition law terms is the "national natural gas production
(and first point of sale) market", which encompasses transactions between the
producers of gas and the first point of sale customers
(Gas Market)". Shell's
response says that the Gas Market is not limited in the way defined by Todd. Todd
has requested
that Shell state what the limits of the Gas Market are if it is not limited
in the way Todd's pleading defines it. The scope of the
relevant market can be
critical in a competition law analysis. The choice between competing economic
analyses as to what constitutes
the scope of a relevant market can be a vexed
question, and the parties should disclose, in advance of the preparation of briefs
of
evidence, the alternatives contended for.
[130] Here, Mr Taylor appeared to be wanting to keep Shell's options open to
argue
that the relevant market was to be more broadly defined than as Todd
contends. This is too important to be left until Todd is served
with Shell's briefs of
evidence. Accordingly, Todd is entitled to have Shell respond to the second
particular arising under paragraph
80 (as posed in question 6 of the notice dated
3 July 2009).
[131] In summary, Shell is not required to provide the particulars
sought in
questions 1, 4 and 5, but will answer the particulars required in questions 2, 3 and
must provide the answer to question
6.
Further particulars, as against OMV
[132] The first particular sought by Todd in respect of OMV's Statement of
Defence relates
to paragraph 6 of the respective pleadings and is substantially similar
to the issue arising on the first particular sought by Todd
of Shell. In OMV's case,
its response to paragraph 6 of the Statement of Claim, in addition to a denial of
Todd's alleged right
and obligation to take its share of the total production capable of
delivery, is:
...That "total production available to
it under this agreement" in
Article 10.1 does not mean petroleum which is physically capable of
delivery at any given
time, but means the total production of petroleum
available in accordance with the production decisions made by the operating
committee under the PJVA, including pursuant to Articles 5.2 and 6.3 of the
PJVA.
[133] As with Shell, Todd has
asked OMV to state pursuant to which terms of the
PJVA, in addition to Articles 5.2 and 6.3, it is alleged that the Operating Committee
production decisions are made.
[134] For the reasons identified in finding that Shell did not have to provide such
further detail
of the contractual provisions, the same outcome avails OMV. The
specific identification of Articles 5.2 and 6.3 gives them a degree
of primacy, but
their interpretation and application in the context of the whole of the PJVA is a
matter of argument. Such argument
ought not to be artificially constrained by some
exhaustive list of the other provisions that have any degree of influence on the
interpretation and application of those primary provisions as relied on by OMV.
[135] The second particular sought by Todd relates
to paragraph 16 of OMV's
Statement of Defence. That responds on the effect of matters agreed at a meeting on
30 June 2004 in the
following terms:
...The Pohokura Joint Venturers unanimously approved the development of
the Pohokura field according
to the development plan providing for
production of 70 Pj of natural gas per annum and the wells and facilities
required
to deliver that level of production.
[136] The first particular sought by Todd in respect of this is whether OMV alleges
that the effect of the 30 June 2004 approvals
operate as an agreement to limit
production from the field to a maximum of 70 PJ per annum.
[137] This request raises an issue
additional to that pleaded by Todd, and by
OMV's response. There is a material difference between joint venturers agreeing to
produce
70 PJ per annum, and the joint venturers agreeing that they would limit
production to a maximum of 70 PJ per annum. The former does
not necessarily
encompass the latter proposition. In that sense, it is not within the conventional
scope of a request for particulars
that should be intended to render more precise what
is inadequately particularised. Rather, it seeks to build on OMV's existing pleading
by requiring OMV to commit to a subtly different point not addressed in the
requisite paragraph of the Statement of Claim.
[138]
Whilst Mr Olney was concerned that this paragraph reflected an "evolving"
case on OMV's part, Mr Stephens emphatically denied that,
pointing out that this
pleading is in the same terms as OMV's earlier pleading in its Statement of Defence
served in April 2007.
[139] The practical point, as expressed in OMV's written submissions, is as
follows:
In any event, OMV does not intend
to argue that the 30 June 2004 resolution
was a binding agreement among the Pohokura joint venturers to limit annual
production to a maximum of 70 Pj per annum.
[140] It is sufficient that that answer, which I understand to be consistent with
the
way OMV's case is presented in other respects, is conveyed in that way and OMV is
not formally required to respond to the request
for further particulars of its
paragraph 16.
[141] This approach also resolves the absence of need for a response by OMV to
the
second of the particulars sought by Todd in respect of OMV's paragraph 16.
[142] Accordingly, OMV is not required to respond to
any aspects of Todd's
request for particulars of its Statement of Defence.
Fifth application: Costs on application not argued
[143] Todd separately sought further discovery against OMV, to gain access to
additional "documents" reflecting OMV's work on a
2003 supply and demand
model. There were no further documents of a conventional type, but OMV has
subsequently volunteered further
electronic models, without prejudice to its view
that they are irrelevant. OMV supplied them because it considered it was pointless
to withhold them and take up time arguing the matter before the Court
[144] Todd and OMV now seek costs from each other on the
preliminary steps in
relation to the further discovery application. For OMV, Mr Stephens criticised
Todd's application as having
been filed prematurely. The urgency in pursuing the
matter was, from his perspective, entirely of Todd's making because Todd had
had
the documents giving rise to the present request for further discovery since last
August. Mr Stephens acknowledged that OMV did
not respond within the initial
period in which it indicated it would, but that there had been an explanation for this
as the relevant
OMV employee was unwell at the time. Mr Stephens said OMV was
not warned that a slight delay in responding would cause the filing
of a formal
application, and that the matter was still being dealt with via correspondence at that
time.
[145] Further, Mr Stephens
emphasised the lack of relevance of the further draft
versions of the Excel spreadsheet which he characterised as just the work of
one
person working on an Excel spreadsheet, and producing incomplete working drafts.
OMV is satisfied that these workings had no
bearing at all on its decision-making.
[146] OMV sought $1,760 for the work in responding to what it characterised as
the unnecessary
further discovery application.
[147] From Todd's perspective, Ms Clarke argued that Todd was entitled to pursue
the application
when it did, and that it is vindicated in doing so because the initiative
resulted in the disclosure of further documents which it claims may be directly
relevant to the competition
law aspects of the case.
[148] As to timing, the lack of response from OMV is said to have left Todd with
no alternative but to
make a formal application so that the matter could be included
for hearing at the fixture that had then been allocated for 22 and
23 July 2009. For
its part, Todd seeks a total of $1,560 (including a filing fee of $600).
[149] I have a measure of sympathy for
OMV on this particular part of the
interlocutory process. The urgency attributed to the matter by Todd was not clear at
the outset,
even if understandably driven by Todd's requirement to have any
contested application ready for argument at the fixture that had
already been
allocated. OMV makes the point that once its solicitors wrote on 17 June 2009
answering the queries about OMV's model,
the Todd application should have been
withdrawn. Instead, OMV had to proceed with a notice of opposition and
preparation for hearing.
[150] However, it would be inappropriate to determine the merits of this discrete
costs argument on terms accepting OMV's assertion
as to the complete lack of
relevance of the further versions of the model.
[151] Further, the work on the matter must be kept in
perspective. Both parties are
involved in a major piece of litigation, in which there are bound to be contested
interchanges progressing
from informal correspondence to the perceived need for
formal interlocutory applications. Resolution by the Court of costs' consequences
where such differences are not argued is not to be encouraged.
[152] It is not for the Court to question the economics of both
sides preparing for
and pursuing arguments for amounts of costs less than $2,000. There is, however, a
concern that these parties
have argued this costs issue for symbolic, rather than
economic, reasons.
[153] I am not prepared to make any order as to costs
on the discovery application
not argued. Costs are to lie where they fall.
Costs on the present contested applications
[154]
That leaves the issue of costs on Todd's interlocutory applications that I have
determined in this judgment. From Shell's perspective,
it has successfully defended
the separate application challenging confidentiality in its commercially sensitive
documents, and the
application for further discovery in respect of electronic records
of its modelling. It has largely been successful in resisting
Todd's application for
further discovery of various types of documents. It has also successfully resisted the
major part of Todd's
application to administer interrogatories, and to require further
particulars of its Statement of Defence. In these circumstances,
I consider it ought to
have an order in its favour on a 2B scale for the first two applications where it was
successful in its defence,
and as to two thirds of what would have been the
entitlement to costs had it been entirely successful on the further discovery,
interrogatories
and request for further particulars application.
[155] So far as OMV is concerned, it has been successful in resisting the
application
for interrogatories and particulars, and is entitled to costs on a 2B scale.
Lay Member
[156] On 8 July 2009, a joint Memorandum
of Counsel requested the appointment
of a Lay Member to sit with the Court in respect of the Commerce Act causes of
action. That
request was promoted by the plaintiff, and the defendants were not
opposed, provided such an appointment did not jeopardise the allocated
fixture. I
issued a Minute on 14 July 2009 seeking clarification of the relative extent to which
the evidence at trial would traverse
matters not relevant to the Commerce Act causes
of action. Although I invited a further joint Memorandum within 14 days, I took the
opportunity to discuss the views of the parties with counsel at the conclusion of the
hearing on 24 July 2009.
[157] I raised with
counsel first a concern that the Court may not have jurisdiction
to convene with a Lay Member for the hearing of non-Commerce Act causes of
action,
and secondly to invite a response to the concern in my Minute about the
extent to which the evidence would traverse non-Commerce
Act issues.
[158] As to jurisdiction, all counsel were agreed that the Court has jurisdiction to
convene with a Lay Member in proceedings
involving non-Commerce Act causes of
action, provided that the Lay Member does not participate in any way in the non-
Commerce Act
aspects of the case. An appropriate precedent was the decision in
Shell (Petroleum Mining) Co Ltd v Kapuni Gas Contracts Ltd (1997)
7 TCLR 463.
In that case, Barker J sat with Mr R G Blunt in comparable proceedings utilising the
expertise of the Lay Member to
contribute to the analysis of the Commerce Act
causes of action, with the Judge alone addressing the remainder of the issues.
[159]
I am accordingly satisfied that the jurisdiction does exist to appoint a Lay
Member in the present proceedings.
[160] As to the
extent of non-Commerce Act evidence and argument, counsel were
agreed that the majority of the evidence is likely to go to Commerce
Act issues, and
that it would be extremely difficult to divide either the evidence or argument, so as to
allow for a Lay Member to
not be present during the non-Commerce Act aspects of
the case.
[161] In the end, I accept that that is realistic, and that the
advantages of having a
Lay Member for the Commerce Act aspects of the proceedings outweighs the
disadvantage for the Lay Member,
and the Court, in having the Lay Member sit
through the non-Commerce Act aspects of the case.
[162] Accordingly, I order the appointment
of a Lay Member and direct the
Registry to make the appropriate arrangements.
[163] As I emphasised to counsel, the taking of this
step makes it even more
important than is usually the case for the parties to be accurate in their estimate as to
the time required
for the hearing. Counsel were confident that the present estimate
of six weeks is realistic and an accurate one.
Summary
[164]
The outcome of the five interlocutory applications is as follows:
a) Shell is entitled to uphold the confidentiality
sought for its
commercially sensitive documents. There is to be no variation to the
existing regime
for inspection.
b) Todd's application for further discovery against Shell in relation to
electronic records of its modelling
for projected production levels at
Pohokura, other than 70 PJ per annum, is dismissed.
c) As to Todd's application for further
and better discovery of other
types of documents sought from Shell:
i) GSA1 and GSA2 contracts have
been volunteered.
Documents commenting on GSA1 and GSA2, to the extent not
already discovered, are
irrelevant and there is no order for their
discovery.
ii) As to the five missing attachments, some are to
be discovered
in terms of the summary at paragraph [57].
iii) As to STOS documents, Shell is entitled to maintain
a claim
for solicitor/client privilege in all of these documents, subject
to a minor exception specified
in paragraph [70] above.
iv) Common interest privilege/litigation privilege categories (a)
to (c) for which
Shell sought to invoke this form of privilege
are excepted. There is no obligation on Shell to re-list those
categories. As to (d) and (e), a small number are to be
discovered in terms of paragraph [84] above.
v) As to pre-contractual documents no order as to discovery is
warranted.
d) Todd application requiring
answers to interrogatories and further and
better particulars:
i) As against Shell, a small number of the interrogatories
are
allowed and a small number of further particulars are to be
provided (see paragraphs [109] and [131] respectively).
ii) As against OMV, none of the interrogatories are justified and
nor is the request for further
particulars.
e) No costs order is made on Todd's resolved application for particular
discovery from
OMV.
f) Shell and OMV are entitled to costs on these applications in
accordance with paragraphs
[154] and [155] above.
g) I have ordered that a Lay Member will sit with the Court to participate
in the determination of the Commerce Act causes of action.
Dobson J
Solicitors:
Russell McVeagh, Wellington for the plaintiff
Minter Ellison Rudd Watts, Wellington for the first defendant
Simpson Grierson, Wellington for the second defendant
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