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Lyttelton Port Company Limited v Aon New Zealand Limited [2017] NZHC 2215 (14 September 2017)

Last Updated: 24 October 2018

JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN [REDACTED VERSION]

This judgment was delivered by me on

14.09.17 at 3:30pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date...............

LYTTELTON PORT COMPANY LIMITED v AON NEW ZEALAND LIMITED [2017] NZHC 2215 [14

September 2017]

Introduction

[1] The defendant, (Aon), has filed for consideration:

1. An application for orders as to privilege.

2. An application for leave to issue a third party notice.

100. An application for further discovery.

[2] The plaintiff (LPC) opposes those applications.

[3] When these matters were called on 22 August 2017 there was only time to consider the applications as to privilege and for leave to issue a third party notice. The third application, for further discovery, was adjourned for hearing before Associate Judge Osborne, on a date to be arranged. Therefore this judgment only concerns the first two applications referred to.

Background

[4] LPC has sued Aon which arranged insurance cover for LPC for the period 1 July 2010 to 30 June 2011 (the period), when the Canterbury earthquake occurred. Vero Specialist Risks Limited (Vero) was the lead insurer for LPC at that time. LPC sued Vero. An outcome was mediated and Vero paid LPC $445,969,000,300 (plus GST) in respect of claims for earthquake damage and business interruption losses. Also a sum of $3,291,984 (plus GST) was paid in respect of LPC’s claim in relation to contract works.

[5] LPC’s claim against Aon is that it failed to exercise reasonable care and skill to obtain cover for the period under a material damage (excluding fire) insurance policy (MD policy) which clearly met LPC’s need for full reinstatement cover over its assets, and to meet business interruption costs.

[6] LPC alleges it suffered losses totalling $184,810,615.00 as a consequence of Aon’s negligence.
[7] LPC alleges Aon was negligent in numerous ways, including that leading up to the placement of insurance on 1 July 2010, Aon failed to pass on to insurers the reinstatement cost estimates for various assets, and negligently advised LPC that certain matters were uninsurable (and consequently failed to insure them), and failed to obtain cover that clearly and unambiguously had no asset-specific sub-limits, and consequently obtained inadequate indemnity periods and sums insured.

[8] LPC sues Aon for breach of contract and negligence in the placement of LPC’s insurance program for the period commencing 1 July 2010. Aon placed that insurance by obtaining signed placing slips from insurers on 1 July 2010. The cover that Aon arranged was effective from that date.

[9] The first of the Canterbury earthquakes was on 4 September 2010. Widespread damage was caused to LPC’s assets. Aon had by that time not finalised the policy wording with insurers in breach, LPC says, of Aon’s promise that it would do so within 60 days of cover.

The applications

[10] The present applications for consideration are in part about the role if any carried out by Mr Tony Paterson of the law firm Markit Law. Mr Paterson was engaged by LPC after the September 2010 earthquake. It is in that connection Aon’s application to set aside privilege concerns two emails, one of which was sent to Mr Paterson, and the other which reports comment by Mr Paterson regarding the extent of insurance cover.

[11] The other matter for consideration concerns Aon’s application for leave to issue third party proceedings against Mr Paterson. Aon’s draft third party claim is based on two allegations of breach of duty by Mr Paterson and these are that he failed to advise LPC that the draft MD policy wording did not clearly and indisputably establish sufficient insurance cover.

[12] In the Court’s view the setting aside privilege application should be dealt with first, because in that outcome, as will become apparent by this judgment those issues around joinder become refined somewhat.

Application to modify LPC’s claims of privilege

[13] This application was filed on 16 June 2017. It sought orders setting aside or modifying LPC’s claims to privilege over two documents identified in LPC’s discovery as LPC.00040 and LPC.01596.

[14] Both documents in question were, by LPC’s first discovery affidavit of documents, filed and served on 24 March 2016, and listed in Part 1 of the Schedule of that affidavit as discoverable documents in LPC’s control and for which neither privilege nor confidentiality was claimed.

[15] Subsequently and following disclosure LPC asserted claims of privilege over those documents.

LPC.00040

[16] LPC.00040 is an email which attached seven documents; each of which was individually listed and given a unique document number. It reads:

[REDACTED]

The information in this email and any attachments is confidential, may be legally privileged and is intended for the addressee only. Reading, Copying, disclosure or use by any other person is not authorised. If you are not the intended recipient, please advise the sender by return email and delete this message and any attachments. Emails are not secure and cannot be guaranteed to be error free as they can be intercepted, amended, lost or destroyed and may contain electronic contamination. Anyone who communicates with Fawcett Faire Limited by email is taken to accept these risks.

[17] Aon says LPC’s claims of privilege over that document should be set aside or modified, but says privilege claims are anyway unsustainable because the author of the document, Peter Faire of Fawcett Faire Limited, was not given authority by LPC to obtain legal advice on LPC’s behalf and it did not seek and receive that advice and that Mr Faire simply passed on information to LPC’s solicitor for the purpose of enabling legal advice to be given directly to LPC. Aon says therefore that LPC.00040 is not privileged (because privilege does not attach unless the document has been provided by an agent), but if privileged then LPC has waived that privilege because
its disclosure of that document was not involuntary or mistaken or without LPC’s consent, and therefore was inconsistent with a continued claim to confidentiality.

[18] LPC.00040 was an email from Mr Faire that was sent to Mr Paterson and it was copied to Ms Meads, then LPC’s Chief Finance Officer (CFO). It was marked ‘private, confidential and privileged’. [REDACTED]

LPC.01596

[19] Likewise and with respect to that document, Aon claims LPC waived privilege because its disclosure to Aon was not involuntary, mistaken, or without consent, but also because LPC failed to take steps to obtain privilege until about three months after disclosure of that document was brought to its attention by Aon.

[20] LPC.01596 was an email from Ms Meads as CFO to Mr Rodger Fisher (then Chairman of LPC’s Board) dated 26 October 2010 confirming receipt of a letter from the Chief Executive of Aon which recorded that [REDACTED].

Issues regarding claims of privilege

[21] Mr Taylor for Aon submits that if LPC.00040 is to attract privilege then LPC must establish that its author, Mr Faire:

1. Was LPC’s authorised representative or agent;

2. Was acting under an agency agreement that authorised him to request or obtain professional legal services on LPC’s behalf; and

100. Actually requested or retained such legal services.

[22] Mr Taylor submits no sufficient evidence has been provided to prove Mr Faire was its “claims consultant” and its “agent”. LPC’s failure to do so, submits Mr Taylor, gives rise to the inference Mr Faire was merely an independently contracted claims consultant, i.e. he was just a conduit – who just passed information on without comment or input.
[23] There is, Mr Taylor submits, no evidence that Ms Meads sought advice or confirmation from Mr Faire on what instructions ought to be given to Mr Paterson – that she was not deferential to his views. It was she, Mr Taylor says, and not Mr Faire who directly instructed Mr Paterson; that Mr Faire was not authorised to request or obtain legal services on LPC’s behalf. If Mr Faire was LPC’s agent then it was as an independent contractor and not for the purpose of requesting or obtaining legal services; and that it is apparent from the wording of LPC.00040 that [REDACTED] It is for these reasons, Mr Taylor submits, that LPC’s claimed privilege in LPC.00040 ought to be set aside.

[24] Furthermore, it is submitted LPC has in any event waived privilege in relation to that document because their disclosure of that document by the Courts processes was not involuntary or mistaken or without LPC’s consent, and therefore is inconsistent with continued claims as to confidentiality.

[25] Mr Paterson records, Mr Taylor notes, having reviewed each of LPC’s 13,500 relevant documents before being listed in the first discovery affidavit and he personally conducted the second review of approximately 6000 documents that he and his firm, Markit Law, had identified as relevant and open and he relisted any privileged documents that were mistakenly listed previously in Part 1.

[26] Mr Taylor submits claims by Mr Paterson of a mistake and by Ms Meads claiming disclosure was inadvertent cannot be accepted, because such a claim is inadmissible. She, it is submitted, was authorised to make the first discovery affidavit and cannot now resile from her consent to disclosure of LPC.00040.

[27] The matter has importance submits Mr Taylor, for LPC’s case is that Aon did not provide full insurance cover. It is Aon’s case that the two documents in question demonstrate that [REDACTED].

[28] Mr Paterson deposed that he noted that had LPC.01596 included a reference to legal advice obtained by LPC, he would immediately have raised an objection regarding its disclosure. Claims of inadvertence are rejected on behalf of Aon. They say Mr Paterson was clearly giving advice about insurance policy cover details and Ms Meads, the CFO at the time, was responsible for instructing Mr Paterson in that
regard. Therefore they were persons directly involved in requesting advice regarding the construction and effect of the draft policy submitted for consideration.

[29] Mr Taylor submits that if LPC’s claim of privilege in LPC.00040 is upheld then the unredacted portions that are in evidence remain nonetheless non-privileged and those include the attachments to that document including the insurance policy documents that were provided to Mr Faire by Aon.

[30] Regarding document LPC.01596 Aon accepts it contains some privileged material as emphasised in the sentence [REDACTED].

Legal principles

[31] Relevant provisions of the Evidence Act 2005 (the Act) include the following sections:

1. Section 54 - relating to communications with legal advisors;

2. Section 51 - which deals with interpretation considerations;

100. Section 53 - relating to the effect and protection of privilege;

4. Section 65 - which deals with considerations of waiver.

[32] Section 54 states that communications between a lawyer and a client are privileged from production if they are confidential and were made for the purpose of seeking or giving legal advice for the client. It is clear that claims of confidentiality are no different if the communications between lawyer and client were effected by a third party acting as an agent for the purpose of communicating with the other party to give or obtain legal advice.¹

[33] In issue is whether Mr Faire of Fawcett Faire Limited, claim consultants, was or was not acting as an agent for LPC when he sent his LPC.00040 email on 1 October 2010. The proper enquiry is whether Mr Faire can be said to have assumed the role

¹ Wheeler v Le Marchant (1881) 17 Ch D 675.

on behalf of LPC in forwarding information to LPC’s solicitor (i.e. whether in doing so he was acting on behalf of LPC) and was undertaking that which LPC itself would have by collecting information for the purpose of communicating that to the solicitor.

[34] Mr Taylor submits privilege was waived because disclosure was not involuntary, mistaken or without consent and indeed was not identified or corrected until Aon applied to join Mr Paterson to the proceeding; and that claims by Ms Meads that it was inadvertent and by Mr Paterson that it was a mistake, are unacceptable.

[35] Mr Taylor says the clear inference to be taken from that document is that [REDACTED]. Moreover it was only upon the application to join Mr Paterson to the proceeding that LPC took steps to challenge the disclosure of LPC’s .01596.

[36] Mr Taylor refers to the comment of Allen J in Pernod Ricard². In that case His Honour referred to the importance of the speed with which a party moves to correct the erroneous disclosure of privileged material³. Mr Taylor comments that LPC had for three months been fixed with the knowledge of disclosure of the document and therefore could not now avoid the responsibility for a failure to take steps in relation to its disclosure.

[37] It is Aon’s backup position that even if Mr Faire acted as an agent, that privilege was in any event waived.

[38] Waiver of privilege is governed by s 65 of the Evidence Act. Section 65(1) provides that waiver may be express or implied. Subsections (2) and (3) deal with the circumstances in which waiver will be effective. Section 65(2) provides:

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

Considerations

² Pernod Ricard [2012] NZHC 2801 at [49].

³ Pernod Ricard at [55]

[39] There appears little doubt that in this case inadvertence was the dominant cause of disclosure. Usually such disclosure is unlikely to be found to be voluntary.⁴ Waiver of privilege does not usually occur when a document is inadvertently listed in the “open” part of an affidavit of documents. In the present case the document in question was subsequently provided for inspection. Usually when that occurs privilege is generally lost unless the inspecting party had been given notice of the mistake before inspection – although that outcome is by no means certain. For s 65(2) purposes the Court’s enquiry ought to be about whether that disclosure was instead inconsistent with the claimed confidentiality.

[40] The Court agrees with Mr Campbell’s submission that the test involved concerns an assessment of all of the circumstances of the case, and it is about where the documents have been listed in Part 1 and what was provided for inspection. Relevant factors ought to include whether there was anything to suggest to the inspecting party that the production of the documents was consistent with a continuing claim to confidentiality. For example, whether there was anything on the face of the document putting the inspecting party on notice that it attracted privilege. Further, as Mr Campbell notes, s 65(4) separately provides that, despite issues relating to whether or not disclosure was voluntary or inconsistent with a claim of confidentiality, waiver is not to be found where disclosure involuntarily or mistakenly, “or otherwise occurred without the consent” of the privilege holder.

[41] In Pernod Ricard, Allan J held that s 65(4) was directed at the “not uncommon situation” of administrative error or procedural mishap, where the party handing over or disclosing a document never intends to do so.⁵ Allan J confirmed in the circumstances there described that it could not have been said the disclosure was a result of an obvious mistake, and therefore held that privilege could not be maintained.

[42] The issue has an important affect in this proceeding. If privilege is maintained then LPC has the right to refuse the disclosure of the particular communications, and evidence must not be given of it.⁶ It may also affect Aon’s claims of wanting to join Mr Paterson as a party.

⁴ McGechan on Procedure at [HR8.25.13(1)], citing Kos J in Rolex Group (2010) Ltd v Chaffers Group Ltd [2012] NZHC 1332.

⁵ Pernod Ricard at [45] – [46].

⁶ ss 52 and 53.

Conclusions

[43] In this Court’s view an entitlement to a claim of privilege is clear. As can clearly be inferred from the email, Mr Faire was LPC’s insurance claims consultant and agent. The evidence of Ms Meads and Mr Paterson confirms Mr Faire was asked to send the email to Mr Paterson for the purpose of obtaining legal advice from Mr Paterson. The email is headed “Private, confidential and privileged”. The opening words note, “As instructed...”.

[44] The Court agrees with Mr Campbell’s submission that were it not for Mr Faire’s engagement as a claims consultant, he would not have received the policy documents from Aon, and the email that he sent to Mr Paterson would have been sent by someone within LPC; that Mr Faire had collected information in the course of performing a task that LPC would have undertaken otherwise – because he was instructed by LPC to send that information to Mr Paterson.

[45] The Court does not accept there was waiver. The more acceptable view is that Mr Paterson’s evidence of an inadvertent mistake in the nature of an oversight is understandable, given the number of documents that were reviewed in the discovery process. Further, the Court accepts that it must have been obvious that LPC.00040 was a privileged communication because it was sent to its solicitor and clearly marked “Private, confidential and privileged”, and that ‘label’ applied equally to the attachments.

[46] The Court accepts that as soon as Mr Paterson became aware that privilege had not been claimed for LPC.00040, he on 5 July 2016 emailed Aon’s solicitors advising them of the mistaken disclosures, and identified the documents in question by reference to their discovery number. On 3 August Mr Paterson emailed Aon’s solicitors and confirmed that privilege was claimed over the entirety of LPC.00040, and he asked that it be returned or destroyed.

[47] Aon’s solicitors by a letter dated 15 September 2016 disputed LPC’s claim to privilege over LPC.00040. That letter carefully addressed claims of privilege over some eight documents that had been listed and had then been disclosed. The letter did not suggest LPC had waived any privilege in any of those documents. Only when
LPC later claimed privilege did the solicitors respond, noting that it may be necessary for the matter to be formally challenged.

[48] The Court does not accept that LPC has acted inconsistently with its claim of confidentiality, either as to LPC.00040 or to the attachments referred to in that document.

[49] For similar reasons the Court dismisses claims of waiver affecting LPC.01596. The Court accepts Mr Paterson’s account of the listing of that document as an inadvertent mistake. The document had been inadvertently listed, and disclosure of it inadvertently provided. As Mr Campbell submits, it ought to have been clear to Aon’s solicitors that the material was privileged and that no general waiver had been provided.

[50] The Court agrees that LPC acted consistently with continued claims for confidentiality in relation to both documents, including attachments, and that fairness dictates that privilege has not been waived under s 65(2). Alternatively, the disclosure of those documents was mistaken in terms of s 65(4), and privilege has not been waived.

Application for leave to issue a third party notice

[51] On 16 May 2017 Aon applied for leave to issue a third party notice against Mr Paterson, the solicitor who was, Aon says, retained by LPC to provide legal advice in relation to material damage insurance cover required to meet LPC’s need for full reinstatement cover of its assets.

[52] Leave of the Court is required because the time to issue a notice of joinder as of right expired more than two years ago.

[53] Mr Paterson was retained by LPC to provide legal advice in relation to the MD policy prior to the wording being, Aon claims, finalised on or about 28 October 2010. Aon alleges that Mr Paterson as the solicitor advising LPC, owed a duty of care to LPC to exercise all reasonable skill and care when advising LPC on the interpretation and effect of the MD policy; that on the basis of documents discovered by LPC, Aon
will allege that if it is found liable in respect of claims that it did not meet LPC’s need for full reinstatement cover, then Mr Paterson similarly failed to advise LPC that the draft MD policy wording provided to him did not clearly and indisputably establish insurance cover without asset-specific sub-limits and without estimated reinstatement cost values.

[54] Aon’s position is that if it is negligent then so too was Mr Paterson negligent and Aon is entitled to a contribution from Mr Paterson. If LPC is successful in its claim against Aon then, Aon says, there is a question in this proceeding that ought to be determined not only between LPC and Aon but, also between LPC and Mr Paterson.

[55] Again, and upon this separate issue LPC.00040 together with its attachments and LPC.01596, do have significance.

[56] Mr Taylor submits it is clear that Ms Meads had engaged Mr Paterson to provide LPC with legal advice by no later than 4 October 2010. Ms Meads deposed that when she reviewed the draft MD Policy that had been sent to her by Mr MacDonald, LPC’s account manager, she was worried the policy was less than clear, particularly as to the basis on which LPC’s assets were insured. She relayed her concerns to Mr MacDonald, and also to Mr Mullin a director of Aon. She reports receiving a reply from Mr Mullin which stated the draft policy was “just that” and that some more work was still to be done on the wording and that Aon had:

A few changes to make to match the intended policy responses agreed with insurers at the time of placing cover for renewal.

[57] It is Aon’s position Ms Meads by her email of 26 October 2010 had referred explicitly to legal advice provided by Mr Paterson [REDACTED].

[58] Aon says that this email confirms that Mr Paterson provided legal advice on or before 26 October 2010.

[59] Mr Taylor submits an obvious inference from available evidence is that Mr Paterson gave advice on the proper interpretation of the draft MD Policy wording prior to its finalisation; and as a solicitor advising LPC he owed a duty of care to exercise
reasonable skill and care, including in particular when advising on the interpretation and the effect the MD Policy.

[60] Mr Taylor’s submissions also address LPC’s claims that Mr Paterson’s joinder may cause delay for the hearing of a 14 week trial set down for 25 June 2018 and for which pre-trial directions are yet to be made. Mr Taylor responds that Mr Paterson’s involvement while significant was not substantial and there is no reason why all issues raised by his joinder cannot be readied meanwhile. It is Aon’s position that if its application for joinder is denied Aon would be able in any event to issue separate proceedings against Mr Paterson and apply for consolidation of those with this proceeding. Mr Taylor submits that joinder now would avoid any risk of a multiplicity of proceedings. Aon submits the interests of justice favour the grant of leave.

Principles

[61] These applications are governed by the provisions of rr 4.4 and 4.8 of the High Court Rules.

[62] Counsel agree that the general principles in relation to leave are summarised in Westwood Group Holdings Limited v Rilean Construction (South Island) Limited [Westwood]:⁷

In exercising its discretion the Court must have regard to all relevant circumstances, including the delay in making the application. For present purposes considerations of risks of delay being caused, the avoidance of duplicity of proceedings, and an assessment of the relative strengths and weaknesses of the parties’ cases require consideration.

Considerations

[63] Previously herein the Court has addressed the details of LPC’s claim against Aon. In brief it is claimed Aon negligently failed to provide sufficient insurance of its assets to ensure sufficient cover to ensure full reinstatement costs would be available.

7. Westwood Group Holdings Limited v Rilean Construction (South Island) Limited [2013] NZHC 739 at [15].

Aon denies allegations of negligence in that regard. It is Aon’s claim of a case against Mr Paterson that:

a) [REDACTED];

2. [REDACTED];

100. LPC became concerned that the basis on which its assets were insured under the draft MD policy wording were not sufficiently clear (i.e. reinstatement or indemnity) and during the period commencing 11 October 2010, LPC then corresponded with Aon regarding LPC’s concerns;

4. On 12 October 2010, Mr Faire emailed Ms Meads as follows:

I have been reflecting on Tony’s draft letter from you to Aon and the possibility of ‘spooking’ them with potential Policy Problems, or disclosing at this stage that LPC has retained legal advice. Brokers are very sensitive to the Potential threats.

e) [REDACTED].

6. [REDACTED].

7. On 28 October 2010 LPC’s policy wordings were finalised, and these

were provided to Ms Meads on 29 October 2010; and

8. On that same date LPC recorded in open correspondence that

Mr Faire’s email of 1 October 2010 “... was provided in the course of
... for the purpose of providing legal advice in relation to the insurance contract”.

[64] It is Aon’s case that Mr Paterson gave advice on the proper interpretation of the draft MD policy wording prior to its finalisation and, as the solicitor advising LPC, Mr Paterson owed a duty of care to exercise reasonable skill and care in particular when advising on the interpretation and the effect of that policy. Further, it is Aon’s position that the nature of that advice given is relevant to whether Aon is liable to LPC,
for if it is, it will contend that Mr Paterson similarly failed to advise LPC that the draft MD policy wording provided to him prior to finalisation did not clearly and unambiguously establish the insurance cover claimed to have been required.

[65] In that result, Aon says it is entitled to claim a contribution because of Mr Paterson’s breach of duty; and that is an issue it says needs to be determined not only between LPC and Aon but also between LPC and Mr Paterson.

[66] Addressing those relevant Westward principles, it is submitted by Mr Taylor:

1. No unreasonable delay occurs because the 14 week trial date set for 25 June 2018 was over 13 months away when the third party notice leave application was filed.

2. Regarding claims on behalf of LPC that Mr Paterson would, if joined, no longer be able to act for LPC, and therefore new solicitors would have to be instructed, resulting in delays occurring, counsel says Mr Paterson should never have acted in the proceeding anyway because the open documents demonstrated he directly advised LPC on the insurance policy terms, and there would always be a likelihood he would be required to give evidence and anyway, LPC’s current solicitors have been engaged since 25 May 2017, and its counsel have been involved in the proceeding since at least 2012;

100. That the events giving rise to the claims occurred at latest when Mr Paterson was engaged to advise LPC in early October 2010, and because the LPC policy wordings were finalised on 28 October 2010; and therefore Mr Paterson’s discovery obligations should be limited in particular because LPC has already discovered most of its relevant documents;

4. Aon would have been able to join Mr Paterson as of right had it served a third party notice within time, and Aon has not been guilty of unreasonable delay in bringing its leave application;
5. The granting of leave will avoid a duplicity of proceedings and prevent the same proceeding being tried twice with different results; because if Aon is unsuccessful by its leave application it will nonetheless defend LPC’s claim by reference to Mr Paterson’s involvement, and also it would be able to issue separate proceedings against Mr Paterson and apply for a consolidation of those with this, and would seek to use the documents discovered in this proceeding to the extent necessary;

6. That a proper balance between the parties’ interests would be achieved by the grant of leave, because this is not a case where LPC was not involved in the issues between Aon and Mr Paterson;

7. That Aon believes it has a strong prima facie case against Mr Paterson;

8. And therefore the overall interests of justice would be favoured by the grant of leave, because there is a question in issue that ought to be determined as well between Aon and Mr Paterson.

Conclusions

[67] The clear evidence is that Aon placed LPC’s insurance program for the period commencing 1 July 2010 by obtaining signed placing slips from insurers on that date; and that by the time of the Canterbury earthquakes on 4 September 2010 Aon had not by then finalised the policy wording with insurers as it said it would.

[68] Mr Paterson’s services were engaged after the September 2010 earthquake. It is Aon’s case Mr Paterson failed to advise LPC that the draft MD policy wording did not clearly and indisputably establish insurance cover without sub-limits, and for estimated reinstatement cost. Aon says if Mr Paterson had given that advice LPC would have instructed Aon to obtain cover without sub-limits.

[69] It is far from clear how Mr Paterson caused or contributed to Aon’s claims of loss when by the time Mr Paterson was engaged LPC’s insurance contracts had already been entered into and the September 2010 earthquake had damaged LPC’s assets. It is clear by the time of Mr Paterson’s engagement that the insurance contracts were
formed under the slip system when, once signed by insurers, it constituted a legally binding contract providing for insurance cover in its own right.

[70] LPC’s own claim focuses upon what was done or not done prior to the placement of cover on 1 July 2010. This gives cause to question Aon’s claim that Mr Paterson’s breach of duty caused or contributed to the losses.

[71] Aon’s case against Mr Paterson focuses on events post-earthquake.

[72] It is LPC’s case that it did give those instructions to Aon. Therefore and if Aon is correct that Mr Paterson failed to give advice, that failure did not have the consequence pleaded by Aon because LPC says it had in any event instructed Aon to make it clear that there were no sub-limits.

[73] It is now two years since Aon filed its statement of defence. The documents it identified in support of its joinder application have, subject to those affected by privilege, been available by discovery since 31 March 2016. Then it took almost a year for Aon to advise of its intention to pursue a claim against Mr Paterson.

[74] Of course Mr Paterson has had to be removed as a solicitor assisting with LPC’s proceeding preparations, notwithstanding LPC’s engagement of senior counsel meanwhile. As Ms Meads deposes, Mr Paterson has been LPC’s advisor in relation to this matter since 2010, has a detailed understanding of its business and assets, and of the extensive losses that LPC has suffered in the earthquakes. Ms Meads says Mr Paterson and his team at Markit Law had responsibility for trial preparation tasks such as managing LPC’s discovery, locating expert witnesses and the briefing of those.

[75] Mr Campbell submits that because it is not possible to foresee all eventualities that might follow joinder there is a significant risk that joinder will result in an application for adjournment of the June 2018 fixture. The Court agrees that if that occurs then likely there will be a lengthy delay if the fixture is vacated.

[76] Mr Campbell submits LPC’s allegations of breach by Aon focus almost exclusively on what Aon did or failed to do leading up to the placement of cover on 1 July 2010 and concerning a period of time with which Mr Paterson had no
involvement; and that he had no involvement with LPC’s claims that Aon failed to provide proper claims assistance to it. Mr Campbell’s concerns are that if Mr Paterson is joined then there will be an extensive review of issues between Aon and Mr Paterson with which LPC will have no involvement – and that this will add unnecessarily to an already complex trial.

Result

[77] Aon is at liberty to issue a separate proceeding against Mr Paterson and then to apply to consolidate the two proceedings because Aon says there is an overlap between the two. However an application for consolidation will give rise to the same discretionary considerations as those on a current application and it should not be assumed that any application for consolidation would succeed.

[78] It is clear Aon’s application and proposed third party claim against Mr Paterson are founded on Aon’s use of privileged communications. As earlier noted, LPC’s claims to privilege over those documents are upheld. Therefore those documents are not available for Aon’s present joinder application.

[79] In the Court’s view a weighing up of Westward principles favours the decline of the grant of leave to issue a third party notice to join Mr Paterson to this proceeding.

[80] Aon’s application for leave to join Mr Paterson to the proceeding is dismissed.

Costs

[81] These will be fixed upon application.

Associate Judge Christiansen