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Public Trust v Hotchilly Limited HC Wellington CIV 2009-485-704 [2010] NZHC 596 (31 March 2010)

Last Updated: 20 May 2010

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

_{CIV-2009-485-704}

BETWEEN PUBLIC TRUST Plaintiff

AND HOTCHILLY LIMITED Defendant

Hearing: 31 March 2010

Judgment: 31 March 2010 at 2.00 pm

_{JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL}

This judgment was delivered by Associate Judge Gendall on 31 March 2010 at 2.00 pm pursuant to r 11.5 of the High Court Rules.

Solicitors: Minter Ellison Rudd Watts, Solicitors, PO Box 2793, Wellington

Young Hunter, Solicitors, PO Box 929, Christchurch

PUBLIC TRUST V HOTCHILLY LIMITED HC WN CIV-2009-485-704 31 March 2010

Introduction

[1] Both parties in this proceeding have applied for orders setting aside the other party’s claim to privilege in relation to a number of documents. The respective applications are opposed.

[2] By agreement between the parties, a number of the documents in question have now been placed before me for inspection pursuant to r 8.31(2) High Court Rules.

Factual Background

[3] On 1 December 2003, the Public Trust (“the plaintiff”) entered into an Asset Management Agreement with Telco Asset Management Limited. As part of the agreement Telco engaged Tracer Interiors and Construction Limited (“Tracer”) as main contractors to carry out design and refitting works of the plaintiff’s general office and computer room.

[4] In 2005 the plaintiff moved to new premises in Willis Street, Wellington, which involved transferring existing computer equipment to the new premises and installing new equipment in the computer room.

[5] Tracer engaged Hotchilly Limited (“the defendant”) as subcontractors to install process coolers in the plaintiff’s computer room. On 8 August 2005, the defendant’s employees undertook installation works to fit seismic restraints for the process coolers. The plaintiff alleges that, as a result of the defendant’s drilling holes into the concrete ceiling of the room and also into steel side panels, debris entered the cavities of the plaintiff’s computer equipment and caused contamination and other damage.

[6] The defendant denies these allegations and claims that the damage or contamination is the fault of the plaintiff. It argues, for example, that the plaintiff should not have installed the computer equipment before completion of the installation, and that the plaintiff failed to take steps to protect the equipment.

[7] Both the defendant and the plaintiff have filed verified lists of documents. Both lists include documents that are claimed to be privileged.

[8] On 27 October 2009, the defendant applied for orders setting aside the plaintiff’s claim to privilege in relation to a number of documents included in the plaintiff’s list namely documents 2.1-2.3, documents 2.4-2.33, documents 2.40-2.125 and documents 2.223- 2.270, and asked that the plaintiff provide inspection of these documents.

[9] Similarly, on 11 November 2009, the plaintiff applied for orders setting aside the defendant’s claim to privilege in relation to documents included in the defendant’s list numbered 129 and 150-154 and requested that these documents be produced for inspection.

[10] Following a joint memorandum dated 10 February 2010, the parties agreed that I should examine a representative selection of documents in respect of which the parties are still in dispute. If my determination is that privilege has been legitimately claimed in relation to some or all of the documents, the parties have said they will relinquish their opposition to the claim of privilege in relation to other documents in the same category. The parties reserve their right, however, to make a further application in relation to other documents if the result of my determination is that privilege has not been legitimately claimed in relation to any documents within a particular category.

[11] The relevant documents held by the defendant that the plaintiff seeks to have produced for inspection are documents 129 and documents 150-154. The grounds on which the orders are sought are that:

• document 129, which is dated 16 August 2005, does not appear to have been prepared for the dominant purpose of litigation or at a time when litigation privilege applied, having regard to the date and the multiplicity of purpose which would have pertained at that time; and

• documents 150-154, which are dated 12 August 2005 – 23 August 2005, appear to be insurance assessor’s reports or similar type documents which do not appear to have been prepared for the dominant purpose of litigation or at a time when litigation privilege applied, having regard to the dates and the multiplicity of purpose which would have pertained at that time.

[12] The relevant documents provided to me for consideration by counsel in respect of which the plaintiff claims privilege are documents 2.79, 2.86, 2.94, 2.101,

2.119, 2.223, 2.235, 2.236, 2.237, 2.258, 2.265 and 2.267. On these, the defendant claims that:

• the first four documents do not appear to be protected by legal professional privilege, either because they are not communications between the plaintiff or its agents and the plaintiff’s legal advisers, or because the provision of legal advice was not the purpose for which the documents were created; and

• the last six documents do not appear to be protected by litigation privilege either because there was not a reasonable anticipation of litigation when the documents came into existence or because the document was not created for the dominant purpose of preparing the litigation.

The Law

[13] Rule 8.31 of the High Court Rules provides that a party may apply to the

Court for an order setting aside another party’s claim to privilege or confidentiality.

[14] Claims of privilege can be based on non-litigious legal professional privilege or litigation privilege. Both types of privilege are provided for in Subpart 8 of Part 2 of the Evidence Act 2006. However, because the provisions do not apply retrospectively to communications or information that came into being before the Act came into force, it is the pre-existing law rather than the Act that is applicable in the present circumstances: Todd Pohokura Ltd v Shell Exploration NZ Ltd (2008) 18

PRNZ 1026 at [90]-[91].

[15] Legal professional privilege protects communications between solicitors and their clients made for the purpose of obtaining legal advice or assistance, and is based “on the necessity of freedom from apprehension in consulting a legal adviser”: R v Uljee [1982] 1 NZLR 561 (CA). Its rationale was expressed in A Ltd v Director of the Serious Fraud Office HC Auckland CIV-2005-404-6833, 28 March 2007 in the following way:

[80] ... [T]he right to the law’s protection of information prepared for the purpose of seeking and giving legal advice is a fundamental constitutional entitlement. The precept that ignorance of the law is no excuse contains the corollary that access to legal advice must be encouraged. To do so requires that it be protected. That simple principle has been endorsed repeatedly by the highest courts of New Zealand, Australia, Canada and England...

[16] Communications between solicitor and client are only protected if they concern legal advice and assistance, including advice as to what should prudently and sensibly be done in the relevant legal context: Three Rivers District Council v Bank of England [2004] UKHL 48 (HL). In that case, it was observed at [62] that:

[t]here will always be borderline cases in which it is difficult to decide whether there is or is not a ‘legal’ context. But much will depend upon whether it is one in which it is reasonable for the client to consult the special professional knowledge and skills of a lawyer, so that the lawyer will be able to give the client sound advice as to what he should do, and just as importantly what he should not do, and how to do it. We want people to obey the law, enter into valid and effective transactions, settle their affairs responsibly when they separate or divorce, make wills which will withstand the challenge of the disappointed, and present their best case before all kinds of court, tribunal and inquiry in an honest and responsible manner.

[17] However, the purpose of the communication is to be broadly construed, as noted by Fisher J in Commerce Commission v Caltex New Zealand Limited HC Auckland CL33/97, 10 December 1998 at 3:

For such privilege the communication need not be confined to advice regarding litigation. It is sufficient if the purpose is to enable legal advice to be sought and given in confidence. The purpose of the document is to be broadly construed. It is not limited to a specific request from the client for legal advice and the legal advice in reply. It includes a continuum of information passing between the two to keep each other informed so that advice may be sought and given as required ... The communications may include factual narratives which in themselves would not be protected, so long as they form part of a necessary exchange of information whose object is the communication of legal advice.

[18] Litigation privilege attaches in respect of communications or information that were made or compiled for the dominant purpose of preparing for a reasonably anticipated proceeding: Guardian Royal Exchange Assurance of NZ Ltd v Stuart [1985] 1 NZLR 596 (CA). As noted by Dobson J in Reid v Crown Law Office HC Wellington CIV-2008-485-1203, 21 April 20098 at [13], this allows

... full and frank exchanges of views, testing of positions and facilitation of better conditions for the preparation of a party’s case in litigation than would be the case if the product of all work designed to assist the party in the litigation was constrained by the prospect of disclosure to opposing parties.

[19] The privilege extends to communications between the party or the party’s legal adviser and any other person, and to information compiled or prepared by any other person at the request of the party or their legal adviser: see Reid v Crown Law Office at [19]. The rationale was expressed as follows by Bingham LJ in Ventouris v

Mountain [1991] 3 All ER 472 at 476 (noted in Dinsdale v Commissioner of Inland

Revenue (1997) 2 NZPC 755):

...the right of a litigant or potential litigant to seek and obtain legal advice on his prospects and the conduct of proceedings under the seal of confidence [and to] the right of such a litigant and his legal adviser to prepare for and conduct his case without, directly or indirectly, revealing the effect of that advice...

[20] The question of whether a proceeding was reasonably anticipated requires a determination as to whether a reasonable person placed in the position of the party in question, and possessed of the same information at that time, would have regarded the future commencement of litigation as probable: Guardian Royal Exchange Assurance of NZ Ltd v Stuart at 599 and 606. It is not necessary that there be a formal decision to litigate or to defend by – or on behalf of - the person or legal entity in question. In Commerce Commission v Caltex NZ Limited at 4, the Court held:

That no formal decision is necessary follows from the fact that the test is an objective one. Nor is it necessarily sufficient that a particular employee of, or investigator for, the party had a subjective intention, purpose, or apprehension if that individual had no power to make the significant decisions on behalf of the party in question ... On the other hand, if the decision to litigate had been made by the party itself, or there had been even a decision to recommend litigation by an individual where it could be supposed that the recommendation would be likely to be followed, that seems in itself to be a critical fact from which the objective observer would almost certainly infer that at that point litigation was probable.

[21] Nevertheless, the dominant purpose for the creation of the document must have been submission to legal advisers for use in connection with that litigation: Commerce Commission at 4.

The Defendant’s Claim to Privilege

[22] The plaintiff seeks production of documents 129 and documents 150-154.

• Document 129 is dated 16 August 2005, and is described as “Notes of Work carried out at PT [Public Trust]”. The notes appears to provide some detail of the extent and possible causes of the dust contamination and recommend a procedure for future projects to avoid similar claims.

• Document 150 is dated 23 August 2005 and is a letter from Mr Wayne Bryson of McLarens Young International as loss adjusters to QBE. The subject of this letter is the estimate of the loss arising from the

contamination and the subsequent clean-up. It sets out the circumstances of the contamination, the extent of the likely damage and addresses questions surrounding possible liability.

• Document 151 is dated 22 August 2005 and is a handwritten note by Mr Wayne Bryson. This note seems to contain information about the defendant and includes some brief points as to the alleged contamination.

• Document 152 is dated 16 August 2005 and is a communication from QBE to McLarens Young International. This letter asks that reports be sent to Minter Ellison Rudd Watts, “given the extent of the loss and liability may not be all that clear”.

• Document 153 dated 16 August 2005 is a letter from McLarens Young International to QBE. This letter includes “Preliminary Loss Advice” and specifies the nature of the damage.

• Document 154 as I understand it is dated 12 August 2005 and is described as a New Case Record by Mr Wayne Bryson. This document was not provided to me, however.

[23] The defendant opposes the plaintiff’s application on the basis that documents

129 and 150-153 were created on behalf of QBE (Insurance) International Ltd (“QBE”), the defendant’s insurer, after it became aware of a potential claim against the defendant on 12 August 2005. The defendant submits that, given the circumstances pertaining at that time, QBE contemplated that litigation was likely, and that the documents were created for the dominant purpose of preparing for and conducting the defence of that apprehended litigation.

[24] The defendant has provided to the Court an affidavit by Mr Andre Mataia, who was employed at QBE at the relevant time. Mr Mataia deposes that, on 12

August 2005, he investigated the circumstances of a potential claim by the defendant in relation to the contamination incident. He says that he was aware of the risk that the plaintiff would sue the defendant for the alleged damage and emailed Mr Wayne Bryson at MacLarens Young International to instruct him to undertake an assessment. On 16 August 2005, Mr Mataia concluded that litigation was likely to ensue and therefore instructed Mr Bryson to prepare a full report. He also instructed Minter Ellison Rudd Watts to act as solicitors for QBE and the defendant in defence of the anticipated claim. With regard to the written report and subsequent documents in respect of which privilege is claimed, Mr Mataia deposes that the purpose of these documents was to conduct the defence of the apprehended litigation.

[25] The plaintiff contends that these documents do not appear to have been prepared for the dominant purpose of litigation due to “the date and the multiplicity of purpose” at that time. No issue was raised with respect to the fact that, strictly speaking, most of the documents came into existence on behalf of QBE, which is not a party to the present proceeding. However, I am satisfied that nothing turns on this matter for present purposes, as I take the view that, where an insurer and its insured have a common interest in the anticipated litigation, common interest privilege applies to documents created on behalf of the insurer even if the insurer is not a named party to the proceeding: see Contractors Bonding Limited v The Whangarei District Council HC Auckland CIV-2004-488-756, 3 November 2006 at [46].

[26] The issue was recently addressed by Wylie J in Fresh Direct Limited v J M Batten and Associates HC Auckland CIV-2008-404-4757, 1 October 2009 at [58]- [74], where it was held that common interest privilege is not a stand-alone privilege and that having a common interest in a document not otherwise privileged cannot create an independent privilege. In that case, Wylie J referred to Guinness Peat Properties Ltd v Fitzroy Robinson Partnership [1987] 1 WLR 1027, where the defendants claimed privilege over a letter that they had written, as insureds, to their insurer about a claim threatened by the plaintiff. The Court considered that the letter had been brought into existence in order to obtain legal advice or assistance in the conduct of litigation and held that, although it was the insurer that had caused the letter to be written, the document was still privileged in the hands of the defendants. The communication in Fresh Direct was distinguished from this case on the basis that it was not in itself privileged. The case is currently under appeal: Fresh Direct Limited v J M Batten and Associates HC Auckland CIV-2008-404-4757, 3

December 2009.

[27] In order to successfully claim litigation privilege, the defendant must show that litigation was reasonably apprehended at the time the communication or document was made, and that the dominant purpose of the communication or document was in preparing for that litigation.

[28] In General Accident Fire and Life Assurance Corp Limited v Elite Apparel Limited [1987] 1 NZLR 129, the Court of Appeal concluded that reports made by fire investigators and assessors were privileged because the insurer had more than a mere suspicion that it would refuse to pay out the insured’s claim when ordering the reports, and that from an early stage the dominant purpose of preparing the documents was submission to legal advisers to conduct reasonably apprehended

litigation. This case was referred to in Commerce Commission v Caltex NZ Limited

at 9, where Fisher J held:

On that basis any step taken by a body which would facilitate the future success of the litigation would fall within the privilege because it would make the legal adviser’s task easier when it came to the conduct of the litigation. On the face of it that does seem to qualify given that in most of the leading decisions, insurance assessors’ reports, while obviously of great assistance in the conduct of litigation, are not prepared in the form of communications to legal advisers as such. In General Accident and Fire v Elite Apparel, supra, for example, litigation privilege was upheld where the report of insurance assessors was prepared before solicitors were even engaged. While the great majority of documents which have been the subject of litigation in this area have involved the reports of investigators, it seems to me that documents prepared for the purpose of promoting the successful conduct of litigation in other ways, such as the facilitation of other steps which would lead to evidence which might prove useful in the litigation, also qualify.

[29] In my view, documents 129 and 153 came into existence at a stage when it was not yet known whether legal proceedings would ensue. Before the incident was investigated by McLarens Young International, QBE did not know whether there was a reasonable doubt that the defendant was legally responsible for the contamination, and thus whether the claim was likely to be litigated: cf Carlton Cranes Ltd v Consolidated Hotels Ltd [1988] 2 NZLR 555 at 562-3; Harrison v Attorney-General (1989) 4 PRNZ 122. It follows that the dominant purpose of these documents was to establish the cause of the contamination and to determine whether to deny the claim.

[30] I have come to this conclusion on the basis of the material that is currently before me. Mr Mataia deposes that he considered litigation was likely to ensue after he had had a telephone conversation with Mr Bryson of McLarens Young International on 16 August 2005, in which he indicated the preliminary results of his investigation. Presumably these preliminary results were based partly on the letter from McLarens Young International dated 16 August 2005 (document 153). As a result of these “preliminary results”, Mr Mataia instructed Mr Bryson to prepare a full report and to send it to QBE’s solicitors.

[31] I am satisfied, however, that documents 150, 151 and 152 are documents that were prepared once QBE reasonably apprehended that the plaintiff would be likely to issue legal proceedings, given that the plaintiff had previously communicated its allegations to the defendant, and that it would likely decide to litigate the claim. I accept, therefore, that there was a reasonably held bona fide belief that litigation was a probable prospect when these documents came into existence. In addition, it would

appear that these documents were also prepared for the dominant purpose of preparing a defence to the plaintiff’s anticipated claim. At this stage, the primary purpose of the documents was not to determine whether or not to accept liability for the plaintiff’s claim, but to prepare a defence to the plaintiff’s claim by ascertaining the causes of the contamination, the extent of the defendant’s involvement and its legal responsibility, and the degree of any potential loss.

[32] For the reasons outlined above, the plaintiff’s application to set aside the defendant’s claim to privilege in relation to documents 129 and 153 succeeds, but in relation to documents 150-152 it fails. And I repeat my comment noted at [22] above that document 154 was not provided to me.

The Plaintiff’s Claim to Privilege

[33] The defendant seeks production of those documents held by the plaintiff and which were provided to me for inspection being documents 2.79, 2.86, 2.94, 2.101,

2.119, 2.223, 2.235, 2.236, 2.237, 2.258, 2.265 and 2.267.

• Document 2.79 is an email described as “Re insurance claim for computer equipment (from Mr Mark Godfrey to various recipients)” and is dated 13 September 2005. This email from Mr Godfrey, a loss adjuster instructed by IAG New Zealand (“IAG”) to assess the contamination incident, is to various recipients, including Mr Graeme Edwards, the plaintiff’s general counsel at the time. This email appears to address the cost of an “HP Engineer” to be engaged.

• Document 2.86 is an email described as “Re meeting tomorrow (from Ms Maryann Nesbit the plaintiff’s “Project Manager” to various recipients)” and is dated 12 September 2005. This email to Mr Mark Godfrey is also copied to Mr Graeme Edwards and relates to appointment of an HP expert for a report and discusses other remedial work.

• Document 2.94 is a 1 September 2005 email described as “Re Technical Reports (from Mr Graeme Edwards to various recipients)”. By email thread it includes as attachments two reports “BMS CAT report Public Trust” and “Hi Tech Draft Report Public Trust” dated 29 August 2005 –

43 pages”. In this email, Mr Edwards advises that he is happy for the reports to be released to the vendors. The email thread includes an email from Mr Godfrey to Mr Edwards attaching the reports. The first report is by BMS Catastrophe an Australian firm, and is addressed to Mr Godfrey. It sets out details of the incident, the cleaning protocol, the results of the

inspection of the equipment and other observations. The second report is by Mr Clive Neeson, a Specialist Investigator with Hitech Resources Ltd to Mr Godfrey, and concerns the cause of the contamination, remedial action that was taken and the extent of the damage.

• Document 2.101 is a short email described as “Re Insurance Claim (from Mr Mark Godfrey to various recipients)” and is dated 19 August 2005. One of the recipients of this email was Mr Graeme Edwards.

• Document 2.119 is an email described as “Re Meeting on Monday (from Maryanne Nesbit to various recipients) (email thread – 2 pages)” and is dated 19 September 2005. The email thread was forwarded to Mr Graeme Edwards and it appears concerned a meeting with the HP expert.

• Document 2.223 is a report described as “Report Godfreys (20 pages)” and is dated 17 August 2005. This report from Godfreys, the loss adjusters, is addressed to NZI and provides an estimate of the loss and recovery prospects, and an outline of the contractual position to suggest the responsibilities of the various parties. It also describes the circumstances of the contamination and the cleaning process.

• Document 2.235 is an email from Mr Kevin Millard described as “Large Claim Notification for Public Trust” and is dated 12 August 2005. This email sets out the “claim event summary” for notification of the claim to the insurer.

• Document 2.236 seems to be an NZI report described as “Claims Notes” and is dated 12 August 2005. It appears to be notes taken by NZI about the notified claim.

• Document 2.237 is an NZI “Inquiry” report and is dated 12 August 2005.

It appears to contain details concerning the plaintiff’s insurance with NZI.

• Document 2.258 is an email from Mr Kevin Millard also described as Large Claim Notification for Public Trust” and is dated 25 August 2005. It appears to be a revised “claim event summary”.

• Document 2.265 is a short email from Mr Jason Moore, a “Claims Negotiator” at NZI, to Ms Jane Peach” and is dated 11 August 2005. This email appears to be a notification by NZI that the claim has been registered and that Godfreys will assess the loss.

• Document 2.267 is a file note described as “NZI Insurance – Material Damage Inquiry” and is dated 11 August 2005. The note appears simply to contain insurance details.

[34] The plaintiff opposes the defendant’s application on the basis that documents

2.79, 2.86, 2.94, 2.101 and 2.119 are protected by legal professional privilege, and that the remaining documents (2.223, 2.235, 2.236, 2.237, 2.258, 2.265 and 2.267) are protected by litigation privilege. More particularly, it claims that documents 2.79,

2.86, 2.94, 2.101 and 2.119 are part of the file of the in house counsel for the plaintiff and consist of emails between the plaintiff and its legal adviser in his legal professional capacity for the purposes of obtaining or providing legal advice.

[35] According to Ms Nicole Macfarlane, who is the senior corporate solicitor of the plaintiff, these documents were contained in a file relating to the contamination of the plaintiff’s computer equipment. She says that the documents consist of letters, emails, memoranda and statements made between the plaintiff and its legal advisers and were intended to be confidential and made for the purpose of obtaining or giving professional legal advice.

[36] The essential issue with respect to these documents is whether they attract legal professional privilege, that is whether their purpose was to enable legal advice to be sought and given in confidence. As such, it is necessary that the documents form part of a necessary exchange of information whose object is the communication of legal advice: Commerce Commission v Caltex New Zealand Limited at 3. Drafts and working papers produced as part of the process of the giving or receiving of legal advice fall within the framework of legal professional privilege: Kupe Group Ltd v Seamar Holdings Ltd [1993] 3 NZLR 209 at 213.

[37] The defendant claims that the documents do not appear to be protected by legal professional privilege, either because they are not communications between the plaintiff or its agents and the plaintiff’s legal advisers, or because the provision of legal advice was not the purpose for which the documents were created.

[38] The documents 2.79, 2.86, 2.94, 2.101 and 2.119 contain emails that were addressed to various recipients, including Mr Graeme Edwards, who was employed by the plaintiff as general counsel from 2005 to 2007. Document 2.94 also includes an email from Mr Edwards and two attached investigation reports. So long as in- house counsel are acting in their capacity as legal advisers, no distinction is to be drawn between in-house counsel and independent legal practitioners for the purposes of legal professional privilege: Commerce Commission v Caltex NZ Limited at 5. The question becomes, therefore, whether Mr Edwards received or sent these communications in his capacity as legal adviser.

[39] An additional issue, however, is whether the documents concerned communications between Mr Edwards and the plaintiff or its agents. Document 2.79, an email contained in document 2.94, and document 2.101 were sent to Mr Edwards from Mr Mark Godfrey. Mr Godfrey is a loss adjuster who was instructed by IAG New Zealand (“IAG”) to assess the contamination incident. For these documents to be protected by legal professional privilege, it may be that Mr Godfrey would need to qualify as the agent of the plaintiff for the purposes of obtaining legal advice for it: C-C Bottlers Ltd v Lion Nathan Ltd [1993] 2 NZLR 445; see also Prime Commercial Ltd v New Zealand Wool Board HC Wellington CIV-2001-485-994, 4

December 2003 at [13]. In Mudgway v New Zealand Insurance Co Ltd [1988] 2

NZLR 283, Chilwell J was satisfied that communications between the insurer’s assessors and its solicitors were privileged because the assessors were the agents of the insurer. The agent was acting on the insurer’s behalf rather than as an independent contractor procured to perform a task for a client.

[40] In the present circumstances, it is my view that Mr Godfrey can be said to be acting here as the agent of the plaintiff’s insurer for the purpose of the plaintiff obtaining legal advice. The situation is similar to that which prevailed in Mudgway v New Zealand Insurance Co Ltd, where the agent had been appointed because the insurer did not have sufficient staff to carry out the investigations.

[41] Consequently, I find that Mr Godfrey’s communications were likely to have been made to enable the provision of consequential legal advice to the plaintiff, and as such, they were effectively communications between solicitor and client and are privileged. It follows from this that documents 2.79, 2.94 and 2.101 are protected by legal professional privilege.

[42] As to document 2.86, although it is an email from the plaintiff that was also addressed to Mr Edwards, I consider that it does not form part of a necessary exchange of information whose object is the communication of legal advice, and accordingly is not privileged. Similarly, document 2.119 consists primarily of communications with third parties, which do not become legally privileged simply by being forwarded to a legal adviser: see Crisford v Haszard [2000] 2 NZLR 729.

[43] Turning now to documents 2.223, 2.235, 2.236, 2.237, 2.258, 2.265 and

2.267 the plaintiff further submits that these consist of communications between the plaintiff’s solicitors and its insurer or third parties, which were made after litigation was reasonably apprehended or had commenced, for the dominant purpose of enabling the plaintiff’s legal advisers to conduct or advise on the litigation.

[44] Ms Charmaine Botha, who is the claims services team manager of IAG, the plaintiff’s insurer, says that documents 2.223, 2.236, 2.237 and 2.258 were compiled by IAG for the purpose of preparing for proceedings against the defendant. According to Ms Botha, the documents are part of the plaintiff’s solicitor’s master file and consist of communications, reports and file notes that relate to dates on or after 12 August 2005.

[45] It is unnecessary to repeat the legal principles pertaining to litigation privilege in these circumstances. Documents 2.235, 2.236, 2.237, 2.258, 2.265 and

2.267 consist of “Claim Event Summaries” and notifications of the contamination event to the plaintiff’s insurer, and of “Claims Notes” taken by the insurer. Apart from document 2.258, all the documents were created between 11 and 12 August, before litigation was a probable prospect. Document 2.258 is a revised “Claim Event Summary” and is dated 25 August. In my view it is reasonable to conclude here that litigation was reasonably anticipated at that time. I am satisfied however that this was not the dominant purpose of the document. Probably the revised “Claim Event Summary” came into existence as part of the plaintiff’s obligations as an insured to keep its insurer informed of any changes, rather than for the purpose of preparing for or conducting the plaintiff’s case.

[46] Document 2.223 is a letter from Mr Mark Godfrey, dated 17 August 2005, in which Mr Godfrey advised IAG that there appeared to be a prima facie basis for seeking recovery from the defendant for damages in negligence. As noted previously, Mr Godfrey was instructed by IAG as a loss adjuster to examine and report on the contamination incident. On 12 August 2005, he attended the plaintiff’s premises and discussed the contamination of the computer equipment with the plaintiff’s representatives. In his affidavit, he says that it was clear that his actions and those of the plaintiff’s representatives on 12 August 2005 were solely in consideration of bringing a recovery action against the defendant.

[47] In my view, the purpose of this document was to provide information so the insurer could determine whether the plaintiff’s claim fell within its policy and, if so, whether to recover the loss from the defendant or other parties. As I have noted above, litigation was then not reasonably apprehended, as the chances of recovery against the defendant were still being assessed to determine whether to issue proceedings, and it was still unclear whether the defendant would defend any potential claim. Indeed Mr Godfrey said in his letter: “We have met with McLarens who have, not unexpectedly, suggested that their client is not at fault. We suspect

this is posturing as McLarens did not ask to take any samples, details of equipment, spread of contaminants or the like.”

Result

[48] I have inspected the relevant documents pursuant to r 8.31(2) for the purpose of determining the plaintiff’s and the defendant’s respective claims of privilege.

[49] Turning first to the defendant’s application, for the reasons outlined above:

(a) That application is unsuccessful in so far as it relates to documents

2.79, 2.94 and 2.101 which I find are protected by legal professional privilege.

(b) The application succeeds in so far as it relates to documents 2.86,

2.119, 2.223, 2.235, 2.236, 2.237, 2.258, 2.265 and 2.267 which I find are not privileged.

(c) Orders are now made first, setting aside the plaintiff’s claim to privilege in relation to these documents 2.86, 2.119, 2.223, 2.235,

2.236, 2.237, 2.258, 2.265 and 2.267, and secondly, requiring the plaintiff to produce these documents for inspection by the defendant within ten working days of today.

[50] The plaintiff’s application to set aside the defendant’s privilege claim and accordingly for inspection is unsuccessful insofar as it relates to documents 150, 151 and 152. It succeeds however with respect to documents 129 and 153.

[51] Orders are now made first, setting aside the defendant’s claim to privilege in relation to these documents 129 and 153, and secondly, requiring the defendant to produce these documents for inspection by the plaintiff within ten working days of today.

[52] Document 154 has not been provided to me, so I can make no order with respect to this document.

[53] Costs on these applications are reserved. If counsel are unable to agree between themselves on questions of costs they may file memoranda sequentially and I will decide the issues based on the material before the Court.

‘Associate Judge D.I. Gendall’