Thomson v Earthquake Commission [2015] NZHC 1090 (21 May 2015)

Last Updated: 27 May 2015

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2013-409-001740 [2015] NZHC 1090

BETWEEN	KATHERINE ROSE THOMSON Plaintiff
AND	THE EARTHQUAKE COMMISSION First Defendant
AND	IAG NEW ZEALAND LIMITED Second Defendant

Hearing:	19 May 2015 (by telephone)
Appearances:	GDR Shand for Plaintiff R S Hargreaves for Defendants
Judgment:	21 May 2015

_{JUDGMENT OF ASSOCIATE JUDGE MATTHEWS}

[1] This is a claim by Ms Thomson in relation to damage to her home caused by the Canterbury earthquakes. The case is ready to be heard as a fixture and is likely to be heard in June. At a late stage an issue has arisen in relation to privilege of a document.

[2] The document concerned is a draft witness statement of Mr John Scarry. Mr Scarry is a structural engineer, advising Ms Thomson.

[3] Mr Scarry produced a draft witness statement (the draft statement) on or about 19 December 2014. It contained 76 paragraphs. It was prepared for the purpose of this proceeding. In the draft Mr Scarry set out a scope of works required

_{on Ms Thomson’s home.}

THOMSON v THE EARTHQUAKE COMMISSION and IAG [2015] NZHC 1090 [21 May 2015]

[4] The second defendant, IAG New Zealand Limited (IAG) accepts that at the inception this was a privileged document, but it says that privilege has been waived by virtue of the following steps:

(a) On 10 February 2015 Ms Thomson’s solicitor served IAG with a witness statement of Mr P E Bishop, a quantity surveyor. Attached to that statement is his repair cost estimate in the form of a report dated

6 February 2015. In that report he states that his estimate is based on the repair scope identified in the witness statement of Mr Scarry received by email on 19 December.

(b) On 25 March 2015 Ms Thomson’s solicitor advised by email that an amended statement of claim would be filed for reasons which he set out. Attached to his email were Mr Bishop’s revised costings, which contained the same statement.

(c) On 26 March 2015 Ms Thomson, through her solicitor, filed an amended statement of claim to which is attached Mr Bishop’s repair cost estimate containing the same statement.

(d) On 2 April 2015 Ms Thomson’s solicitor served IAG’s solicitor with a reply witness statement from Mr Bishop. Again his repair cost estimates were attached, containing reference to the witness statement of Mr Scarry received on 19 December.

[5] Correspondence between the solicitors for Ms Thomson and IAG have resulted in an email being sent from a Mr Ferguson of Ms Thomson’s solicitor’s firm in which he says he is setting out the paragraphs from the draft witness statement of Mr Scarry of December 2014 which constitute the repair scope.

[6] Rule 8.25 of the High Court Rules, under which this application is brought, provides that when considering this application I may require the document under review to be produced to me, and I may inspect it for the purposes of deciding the validity of the claim.

[7] Having received and considered written submissions from Mr Hargreaves and Mr Shand, and heard oral argument from them, I decided that I would inspect the document. I requested Mr Shand to forward the document to the Case Officer at the Christchurch High Court Registry, and he did so promptly. Prior to preparing this judgment, I have read the entire document.

[8] Section 65 of the Evidence Act 2006 provides:

65 Waiver

(1) A person who has a privilege conferred by any of sections 54 to 60 and 64 may waive that privilege either expressly or impliedly.

(2) A person has a privilege waives the privilege if that person, or anyone with the authority of that person, voluntarily produces or discloses, or consents to the production or disclosure of, any significant part of the privileged communication, information, opinion, or document in circumstances that are inconsistent with a claim of confidentiality.

(3) A person who has a privilege waives the privilege if the person –

(a) acts so as to put the privileged communication, information, opinion, or document in issue in a proceeding; or

(b) institutes a civil proceeding against a person who is in possession of the privileged communication, information, opinion, or document the effect of which is to put the privileged matter in issue in the proceeding.

(4) A person who has a privilege in respect of a communication, information, opinion, or document that has been disclosed to another person does not waive the privilege if the disclosure occurred involuntarily or mistakenly or otherwise without the consent of the person who has the privilege.

(5) A privilege conferred by section 57 (which relates to settlement negotiations or mediation) may be waived only by all the persons who have that privilege.

[9] Mr Hargreaves, for IAG, says that Ms Thomson has disclosed or consented to the disclosure of a significant part of the draft statement because in taking the steps set out in paragraph [4] she has disclosed a significant part of the draft statement, in circumstances that are inconsistent with a claim of confidentiality. Although Mr Scarry has now prepared and provided a full witness statement for use at trial, Mr Hargreaves says he has no way of knowing whether that document differs from the draft statement, and therefore whether the evidence of Mr Bishop is based on

Mr Scarry’s draft statement, or on the material in his latest (and final) statement of evidence.

[10] On this application Mr Bishop swore an affidavit giving details of the information he has received from Mr Scarry and advising that the witness statement he prepared on 24 March 2015 (which was the statement, I understand, served on IAG on 2 April, and referred to in paragraph [4] (d) above) was wrong where it stated that his estimates were based on the draft statement. In fact, Mr Bishop says, his statement of evidence should have stated that his calculations were based on the final signed witness statement and reply witness statement prepared by Mr Scarry.

[11] It follows that IAG is now fully informed that the evidence to be presented at trial by Mr Bishop is based on the latest assessment of scope of works by Mr Scarry, not on the assessment of scope of works in his draft statement.

[12] Having reviewed the draft statement, I also confirm that the paragraphs from the draft statement which are reproduced in the email sent by Mr Ferguson, referred to in paragraph [5] above, are accurately reproduced.

[13] It follows, from this, that not only does IAG know exactly what Mr Scarry is to say at trial, and that Mr Bishop’s evidence is based on Mr Scarry’s latest assessment, but also it has accurate knowledge of certain paragraphs, all of which do relate to the scope of works Mr Scarry considers necessary, from the draft statement.

[14] This has the effect of reducing the issue between the parties to whether IAG can succeed in demonstrating a waiver of privilege in relation to the balance of the draft statement and, if so, whether an order should be made under r 8.25(3)(a) setting aside the claim to privilege.

[15] In my view, IAG has not established a waiver of privilege under s 65(2) of the Evidence Act 2006. Ms Thomson has not disclosed or consented to the disclosure of any significant part of the draft statement in circumstances that are inconsistent with a claim of confidentiality. The communications and documents I have referred to in paragraph [4] certainly disclose the existence of the witness

statement, but they do not disclose any significant part of it. The only disclosure of significant parts of it have been in the email sent by Mr Ferguson, but IAG did not argue, and I think correctly, that that email was in itself a waiver of privilege on the balance of the draft statement. The circumstances of that disclosure are that it was made in an attempt to resolve the differences between Ms Thomson and IAG in relation to the claim to privilege of the draft statement, by making available to IAG the parts Ms Thomson and her advisors think relevant to the disclosures made in the documents listed in paragraph [4].

[16] IAG also relies on s 65(3).

[17] In Astrazeneca Ltd v Commerce Commission, Panckhurst J said:¹

To my mind the judgments in Opthalmological Society of New Zealand Inc v Commerce Commission [2003] NZCA 26; [2003] 2 NZLR 145 (CA) and Shannon v Shannon [2005] NZCA 91; [2005] 3 NZLR 757 (CA) indicate where the boundaries of s 65(3)(a) lie. While the former espouses a test based on the Court’s objective judgment as to the consistency of the claimant’s conduct with maintaining the privilege, the discussion in Shannon elucidates the principles which underpin that test. The mere relevance of a privileged communication to an issue in the case provides no basis for waiver. Even a party’s asserted reliance upon a privileged communication is generally insufficient. Waiver occurs where a party both asserts reliance upon the privileged communication and also seeks to inject the substance of the communication in evidence. At that point an abuse of the privilege exists. The claimant cannot have the benefit of reliance upon the substance of the advice and still seek to shield that advice from disclosure to the other side. To permit this would give rise to unfairness in the required sense, in that the party’s conduct would be offensive to the trial process.

[18] Applying this approach, the issue to be decided is whether Ms Thomson, through her advisors, has both asserted reliance on the draft statement, and sought to inject the substance of it in evidence, thereby abusing the privilege which otherwise existed.

[19] Mr Bishop asserts that his estimate of loss in his witness statement served on

10 February is based on the repair scope identified in Mr Scarry’s draft statement. Mr Scarry maintains in his affidavit in opposition to this application that the repair scope was referred to only in certain paragraphs, those being the paragraphs

reproduced by and sent to IAG by Mr Ferguson. There are in my view other statements contained in the draft statement which also relate to the work which will be required on Ms Thomson’s property. Paragraph 36 to 45 and 73 and 74 also contain information directly relevant to the scope of works, as I read them.

[20] Mr Bishop’s repair costings which were provided in February, and the amended pleading based on them, are both necessarily directly derived from the substance of the draft statement, thereby injecting the substance of the statement into evidence.

[21] I therefore find the privilege has been waived under s 65(3).

[22] Whilst I am conscious of the sound reasons for upholding litigation privilege,² I consider it fair to IAG that it should have access to the full draft statement. Although it has received an accurate reproduction of parts of it, there are other parts of it which in my view appear to be descriptive of the scope of works required, as I have said. I have not checked these on a line by line basis with Mr Scarry’s final statement of evidence. If they are not the same, all the more reason for IAG to have access to them. If they are, it is not unfair to Ms Thomson to release them.

[23] I have also checked the paragraphs in the draft statement which Mr Scarry says are the repair scope of works, and are the same in both the draft statement and his final witness statement, but they are not precisely the same. All the subparagraphs of paragraph 32 of the draft statement differ in the final version, paragraphs 73 and 74 in the final version do not appear in the draft statement, and paragraphs 70, 71 and 72 of the draft statement are not in the final statement.

[24] In my judgment the balance of the draft statement contains matters which are not contentious including evidence to qualify Mr Scarry as an expert witness, and a detailed description of the property. Again, I have not checked these on a line by line basis. I do not see it as being unfair to Ms Thomson in any way for this material on these issues in the draft statement to be made available.

[25] For these reasons I set aside the claim to privilege in relation to the draft statement. I direct Ms Thomson to send a complete copy to IAG through its solicitors, within one working day.

[26] As discussed with counsel, costs should follow the event and now be awarded. Ms Thomson will pay to IAG costs on a 2B basis plus any reasonably

_{recoverable disbursement associated only with this application.}

_{J G Matthews}

Associate Judge

Solicitors:

Grant Shand, Barrister & Solicitor, Christchurch. Fortune Manning, Auckland.