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Tahi Enterprises Limited v Taua [2019] NZHC 630 (29 March 2019)

Last Updated: 10 April 2019

JUDGMENT OF ASSOCIATE JUDGE SMITH

This judgment was delivered by me on 29 March 2019 at 11.00am, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors / Counsel:

LeeSalmonLong, Auckland Shieff Angland, Auckland

TAHI ENTERPRISES LTD v TAUA [2019] NZHC 630 [29 March 2019]

TE WARENA TAUA, GEORGE HORI WINIKEREI TAUA, NGARAMA WALKER, HAMUERA TAUA and
MIRIAMA TAMAARIKI as trustees of the TE KAWERAU IWI TRIBAL
AUTHORITY
Second Defendants

TE WARENA TAUA, GEORGE HORI WINIKEREI TAUA, NGARAMA WALKER, HAMUERA TAUA and
MIRIAMA TAMAARIKI as trustees of the TE KAWERAU SETTLEMENT TRUST
Third Defendants





[1] On 18 December 2018 I gave a reserved judgment (the judgment) on an application by the plaintiffs for discovery before action.¹ The application, which was primarily based on r 8.20 of the High Court Rules, sought discovery of the register of members of Te Kawerau Ā Maki Iwi (the Iwi). The plaintiffs' purpose in making the application was to ascertain the names of all Iwi members, so that they could be joined as additional defendants in the proceeding.

[2] In the judgment, I ordered the second and third defendants (the Trustees) to discover the register of members, but I directed that the register when produced for inspection was to have the names of all Iwi members who were either unborn or under the age of 18 as at 27 June 2007 (the Under 18's) redacted.

[3] The Trustees now apply for leave under s 56(3) of the Senior Courts Act 2016 (the Act) for leave to appeal against the judgment. The plaintiffs have responded with an application for leave to cross-appeal, contending that I erred in deciding that the names and addresses of the Under 18's should be redacted from the register of members the Trustees were ordered to disclose.

¹ Tahi Enterprises Ltd v Taua [2018] NZHC 3372.

Applications for leave to apply against interlocutory decisions in the High Court

[4] Section 56 of the Act materially provides:

56 Jurisdiction

...

(3) No appeal, except an appeal under subsection (4), lies from any order or decision of the High Court made on an interlocutory application in respect of any civil proceeding unless leave to appeal to the Court of Appeal is given by the High Court on application made within 20 working days after the date of that order or decision or within any further time that the High Court may allow.

...

(5) If the High Court refuses leave to appeal under subsection (3), the Court of Appeal may grant that leave on application made to the Court of Appeal within 20 working days after the date of the refusal of leave by the High Court.

(6) If leave to appeal under subsection (3) or (5) is refused in respect of an order or a decision of the High Court made on an interlocutory application, nothing in this section prevents any point raised in the application for leave to appeal from being raised in an appeal against the substantive High Court decision.

[5] The principles to be applied on applications under ss 56(3) and (5) of the Act have recently been discussed in two decisions of the Court of Appeal. In Ngai Te Hapu Inc v Bay of Plenty Regional Council the Court of Appeal observed that s 56(3) was intended to reduce the volume of appeals to the Court of Appeal from interlocutory decisions in the High Court.² The Court of Appeal referred in its judgment to s 24G of the Judicature Act 2008, concerning appeals in commercial list cases. While the Court did not consider the case before it to be an appropriate one to provide definitive guidance on the principles to be applied on applications under s 56(3) or (5) of the Act, it stated:³

We agree that leave to appeal should only be granted where the significance or implications of an arguable error of fact or law, either for the particular case or for the applicant or as a matter of precedent, warrants the further delay which the appeal process would involve.

² Ngai Te Hapu Inc v Bay of Plenty Regional Council [2018] NZCA 291 at [15].

³ At [17].

[6] The second Court of Appeal case was Fairway Holdings Ltd v McCullagh.⁴ The Court of Appeal referred to its earlier judgment in Ngai Te Hapu Inc, and noted "the understandable objective" of s 56 of "regulating the volume of non-substantive appeals". The Court noted that s 56 does not preclude the grant of leave where it appears that the interests of justice warrant further consideration by the Court of Appeal. The Court referred, with apparent approval, to the judgment of Associate Judge Bell in Western Joinery Ltd v Commissioner of Inland Revenue, where the Associate Judge referred to decisions on leave to appeal under the former s 71A of the District Courts Act 1947.⁵ Associate Judge Bell referred to the following dictum of Somers J in Sandle v Stewart:⁶

The purpose of [leave] is to limit the cases which may go on appeal in the interests of finality of litigation and workload of the High Court, while preserving the integrity of the law and the interests of justice.

[7] The Court of Appeal in Fairway Holdings Ltd also referred to the judgment of Fitzgerald J in Finewood Upholstery Ltd v Vaughan, in which the learned Judge described the leave requirement as a "filtering mechanism" to ensure that unmeritorious appeals of interlocutory orders, or appeals of interlocutory orders of no great significance to either of the parties or more generally, do not unnecessarily delay the proceedings in which the orders were made.⁷

The application for leave, the opposition, and the cross-application

[8] The Trustees' application for leave contends that the proposed appeal raises important points of law that have yet to be considered in New Zealand. These are said to include the privacy rights of Iwi members who disclose personal information to their tribal authorities for genealogy purposes, and their expectations of privacy under the Privacy Act 1993. The application also identified various parts of the judgment in which the Court is said to have misapplied the principles of Norwich Pharmacal Co Ltd v Customs & Excise Commissioners,⁸ including by finding that the plaintiffs had led sufficient evidence to establish a prima facie case that Mr Taua, Ms Taylor, and

⁴ Fairway Holdings Ltd v McCullagh [2018] NZCA 605.

⁵ Western Joinery Ltd v Commissioner of Inland Revenue [2017] NZHC 3297 at [9].

⁶ Sandle v Stewart [1982] 1 NZLR 708 (CA) at 715.

⁷ Finewood Upholstery Ltd v Vaughan [2017] NZHC 1679 at [13].

8. Norwich Pharmacal Co Ltd v Customs & Excise Commissioners [1974] AC 133 (HL); [1993] UK HL 6.

Mrs Ewe, or the second defendants, acted as agents for the intended fourth and fifth defendants. Generally, they contend that the judgment did not contain a sufficient evaluation of whether the plaintiffs had shown that they had a good case against the proposed fourth and fifth defendants.

[9] The plaintiffs oppose the granting of leave on various grounds. They deny that the Trustees have raised any arguable error of law or fact in the judgment, and they deny that the information sought from the register of members is highly private or confidential. They refer to the delays since the proceeding was filed in 2017, attributing those delays largely to procedural objections by the Trustees. They contend that further delays would not be warranted, and say that the plaintiffs will be unreasonably prejudiced by further delay.

[10] The plaintiffs say that the alleged errors in the judgment are not of importance, either generally, to the public, or to the Trustees. They also refer to the fact that Lang J determined (in his judgment of 26 March 2018, in which he refused the plaintiffs' application to have a representative appointed for the individual Iwi members⁹) that the representation order sought should not be granted, in part because it would be open to the plaintiffs to sue the Iwi members (some of whom might have different interests from others) individually.

[11] The plaintiffs' application for leave to cross-appeal is only pursued if leave is granted to appeal. They say also that if leave is given to the Trustees they will support the judgment on a ground additional to those on which the judgment was based, namely that the jurisdiction under r 8.20 of the High Court Rules was available, and could have been exercised by the Court.

[12] The Trustees did not oppose leave being granted for the cross-appeal (assuming leave is granted for their own appeal).

⁹ Tahi Enterprises Ltd v Taua [2018] NZHC 516.

Counsel's submissions

Mr Crossland

[13] Mr Crossland submitted that the present leave application differs substantially from applications to appeal from decisions on run-of-the-mill interlocutory applications, concerned with matters such as security for costs, document privilege, interrogatories, or evidence admissibility. First, the judgment has the effect of allowing the joinder of approximately 300 new defendants. The joinder will greatly increase the aggregate cost and the length of time it will take to resolve the issues in the proceeding. However, if leave is granted and the judgment is overturned, the trial will be shorter and costs will be saved.

[14] Mr Crossland did not suggest that the Norwich Pharmacal jurisdiction is not available in New Zealand: rather, he submitted that it was wrongly applied in the judgment. In his submission the Court had to determine whether the plaintiffs had shown they had a "good case",¹⁰ and in that sense the application for discovery of the register had parallels with a strike-out application "in advance". Appeals against a decision striking out a pleading do not require leave, and, functionally, the present leave application is closer to a substantive ruling that affects the proposed fourth and/or fifth defendants.

[15] Mr Crossland submitted that the law is complex, and the Court had weighty issues to consider. But for the 1987 decision in Exchange Commerce Corp Ltd v NZ News Ltd, ¹¹ the Norwich Pharmacal principles have not been discussed or applied by the senior courts in this country. By contrast, the House of Lords and the United Kingdom Supreme Court have fairly recently considered the equitable jurisdiction as it applies in the United Kingdom. How a New Zealand appellate court might invoke and shape the Norwich Pharmacal principles as they have developed in the United Kingdom is an open question.

¹⁰ The test referred to by Neuberger J in The Coca Cola Company v British Telecommunications Plc

[1999] FSR 518 at 522.

¹¹ Exchange Commerce Corp Ltd v NZ News Ltd [1987] NZCA 94; [1987] 2 NZLR 160.

[16] Mr Crossland emphasised the Iwi members' right to privacy and confidentiality in personal information supplied by them to the Trustees. He submitted this is an important factor, with potential to affect other Iwi who collect private information for genealogical research and similar purposes. Some of the English cases have regarded confidentiality and privacy as significant concerns in the exercise of the Norwich Pharmacal jurisdiction, and New Zealand appellate courts have generally put a high value on an individual's privacy.¹²

[17] A further issue identified as important by Mr Crossland was the ability of a chief (rangatira) to represent members of an Iwi. He submitted that there is a significant difference, not given sufficient weight in the judgment, between a chief representing an Iwi by bringing an action to vindicate a collectively held right on the one hand, and a chief purporting to bind Iwi members to personal liability that could sound in damages on the other.

[18] Mr Crossland then submitted that the [lack of] efficacy of the Agreements should have weighed more heavily against the making of a discovery order, referring to them as "non-endorsed funding agreement[s] entered into by an indigent chief used to pursue a Waitangi Tribunal claim".

[19] Generally, Mr Crossland referred to the high stakes in this proceeding, where the plaintiffs seek 35 per cent of the net future profits to be earned by the Iwi, for an indefinite period. The plaintiffs are also seeking 4 per cent of the assets held by the third defendants. He also submitted that it is hard to argue that the issues raised by the judgment do not have parameters beyond the present case.

Mr Upton

[20] Mr Upton referred to the serious delays in the proceeding to date, submitting that they have been contributed to by the "recalcitrant" approach of the Trustees. He noted that it is now over two years since the proceeding was filed, but no substantive progress has been made. No case management conference has yet been convened, and

12. Referring to Finnigan & Anor v Ellis [2017] NZCA 488 at [44]- [46], and Hosking v Runting [2004] NZCA 34; [2005] 1 NZLR 1 (CA).

the parties have not undertaken discovery. He submitted that an appeal would likely delay matters by at least a further six months.

[21] On the significance or implications of the judgment, Mr Upton submitted that the Trustees are unaffected by the discovery order (beyond the negligible administration burden of providing the discovery ordered). The Trustees have led no direct evidence to support their submission that particular privacy and confidentiality considerations should apply to a register of Iwi members, and in opposing the discovery application they have already discharged any duty they might have had to protect the identities of the proposed fourth and fifth defendants. Further, the Trustees' privacy argument cannot be correct, as to uphold it would be to effectively endorse the concealment of the identities of alleged wrongdoers. Any issues of privacy or confidentiality are to be managed by appropriate specific orders, not by discovery being declined.

[22] Mr Upton submitted that the principles of Norwich Pharmacal have already been recognised widely in New Zealand Courts. The application of those principles in this case was uncontroversial, and the judgment is not of interest from a precedent point of view.

[23] Mr Upton submitted that the Trustees have failed to raise any arguable error of fact or law. But even if they had, their grounds for attacking the merits of the plaintiffs' claims would only go to the proper exercise of the Court's discretion to order discovery, and they must be measured against the strength of the plaintiffs' claim. As to that, the Court applied the correct test on the merits of the plaintiffs' case, namely whether they have a bona fide and non-speculative claim. The Trustees are incorrect in submitting that the threshold for the making of the Norwich Pharmacal order is the establishment by the applicant of a "good case".¹³

[24] No injustice can arise in this case: the orders made in the judgment merely facilitate the plaintiffs' ability to have their claims properly heard.

¹³ Referring to The Coca-Cola Company v British Telecommunications Plc, above n 10.

[25] On the cross-application, Mr Upton submitted that the relevant trusteeships alleged by the plaintiffs in respect of the proposed fifth defendants are still denied by all relevant parties. The judgment proceeded on the basis that the availability to the third defendants of an indemnity out of settlement trust assets meant that the Under 18's need not be joined as parties. But those parties ought to be joined in circumstances where the plaintiffs make claims against them in respect of their beneficial entitlements under the alleged trusts. Mr Upton submitted that I erred in the judgment in accepting the assurance of counsel for the Trustees that only the third defendants hold relevant assets. That is a matter to be tested. Further, the need or otherwise for joinder of the trust beneficiaries on a claim by a plaintiff to be subrogated to a trustee's right to indemnity out of trust assets, involves significant issues of law, which (if leave is given to the Trustees) justify the granting of leave for the cross-appeal.

Mr Crossland in reply

[26] In reply, Mr Crossland pointed out that the proposed appeal is not being advanced because of some negligible administrative burden imposed by the discovery
— he emphasised the Trustees' concern to protect the identities of Iwi members, and in particular their concern to avoid breaching obligations they believe they owe to those members. He noted that privacy and confidentiality have both been considered relevant concerns on Norwich Pharmacal applications.

[27] Mr Crossland submitted that the delay factor should be considered neutral. Joining an additional 300 or 400 Iwi members will also result in substantial delay.

[28] Mr Crossland acknowledged that Norwich Pharmacal has been recognised and applied in New Zealand, but not in circumstances such as the present where the purpose of the discovery is to identify potential defendants based on an incomplete/speculative claim. It was for the plaintiffs, not the Trustees, to identify the alleged "wrongdoing". They failed to do that. Further, it was for the plaintiffs to lead sufficient evidence to show that they had a good case. If an applicant cannot identify what the alleged wrongdoing is, the claim should be considered speculative.

[29] Finally, Mr Crossland confirmed that the second defendants do not hold any assets, and nor do the proposed fourth and fifth defendants. The third defendants hold
the assets received on the Treaty claim, and those assets could meet the judgment if a judgment were awarded against the third defendants.

Discussion and conclusions

[30] In my view, this is a proper case for the granting of leave on both appeal and cross-appeal.

[31] I accept Mr Crossland's submission that there were some difficult issues in the case, including in particular the threshold question of whether the plaintiffs had to demonstrate that they had a "good case", or whether something less than that (a bona fide belief in the merit of a claim which is not speculative, or "fishing") was sufficient. If the plaintiffs were required to show that they had a "good case", there are then subsidiary questions as to (i) whether they carried the burden of proving (to that same standard) that the tikanga of the Iwi permitted the Iwi's rangatira to not merely represent the Iwi, but take on financial obligations on behalf of individual Iwi members, and (ii) if it did, whether the plaintiffs discharged that burden.

[32] In my view those issues are reasonably arguable for the Trustees, and they have reached the threshold of showing at least an arguable error of law in the judgment.

[33] I also accept Mr Crossland's submission that this case is very different from many interlocutory applications. In this case, the judgment has the practical effect of allowing the plaintiffs to join some 300 to 400 additional defendants whose joinder would not have been possible without the discovery order. That joinder by itself seems likely to create significant management issues and further delay, and that delay will occur anyway, whatever decision I make on this application.

[34] I think the reality of the matter is that, if all issues are run by the parties (including those who may now be joined following the making of the discovery order) this case might not get to trial in Auckland until late 2020 or even into 2021. Discovery has not been attended to by the present parties, let alone the hundreds who are now likely to be added. There is a strike-out application by the third defendants still to be dealt with. Time will have to be taken assessing the position of the added defendants, and the extent to which representation orders may be made where added defendants
have identical interests. All of this will require the existing parties to incur substantial costs.

[35] The first and immediate point arising from those considerations is that the consequences of the judgment for the parties (and for another 300-400 people who are likely to become parties) and for the conduct of the litigation seems likely to be very substantial, far more so than would be the case with most interlocutory judgments. The second point is that, if a trial may not be possible until sometime in late 2020 or 2021 anyway, adding an appeal against the judgment as an additional interlocutory step may have no effect on the eventual trial date (although if the Trustees were to succeed with their appeal there would be a prospect of a far earlier trial than would otherwise have been the case).

[36] Having regard to all of those factors, I consider that (if I fell into error as contended by the Trustees) the significance and implications of the errors do warrant such risk of further delay as might exist if leave to appeal is granted.

[37] I have not overlooked Mr Upton's concern over the delay to date. However, a significant cause of that delay was the plaintiffs' pursuit of an unsuccessful application for a representation order; in any event, I think I am now concerned with additional delay that would be occasioned by an appeal.

[38] Nor have I overlooked the fact that the proposed appeal is against an exercise of a discretionary power. If a particular decision given by the first instance Judge appears to be reasonably available to the Judge in the exercise of his or her discretion, I do not think the Court of Appeal can be expected to substitute a different exercise of the discretion. But I think this case is sufficiently unusual, involving as it does the exercise of a discretion in a relatively novel legal context in this country, where the effect of the decision will add significantly to the size and complexity of the litigation. I consider too that the test for the strength of an applicant's case ("good case" or "bona fide and not speculative") is worthy of further consideration by the Court of Appeal, particularly where the issue appears to be more concerned with the strength of a particular assertion by the respondent to the application (that those entering into a
contract purportedly on behalf of third parties the plaintiff now wishes to sue had no authority to bind those third parties).

[39] I accept that the strength of the applicant's case may not be the only consideration to be assessed in deciding whether to make a Norwich Pharmacal order, but in a case like this I think that identifying the correct test was important.

[40] That is sufficient for me to determine the Trustees' application in their favour. However, I will briefly address other submissions made by counsel.

[41] Mr Crossland submitted that there was a failure in the judgment to identify any "wrongdoing" by the proposed fourth and fifth defendants, but I do not think there is anything meriting appeal in that submission. The plaintiffs' first cause of action, which I found provided a sufficient basis for the discovery order in respect of the members of the Iwi who were adults as at 27 June 2007, alleged breach of contract by those members (as undisclosed or unidentified principals in the Agreements).

[42] At the hearing of the leave application, I asked Mr Crossland what the Trustees, and/or the proposed fourth and fifth defendants, will irrevocably lose if the judgment is not overturned. Mr Crossland gave me the obvious answer, namely the loss of any right the individual Iwi members (other than the "Under 18's") might have to anonymity — to not have their identities disclosed to third parties wanting to sue them. He told me that this is a matter of importance not just to the Iwi, but to other iwis who gather such information for particular purposes in the expectation that they will not be forced to disclose it to third parties.

[43] That factor would have supported the granting of leave, but I do not rely on it. The plaintiffs' ability to prosecute their case against all necessary parties is a substantial policy consideration, and one that I would have thought should trump the privacy factor in the majority of cases.

[44] Dealing with Mr Upton's submissions, I do not think that the Trustees can properly be regarded as largely unaffected by the discovery order because they will only be required to take the simple step of discovering the register. The reality is that
the Trustees have wider concerns about the management of the Iwi, and in my view those concerns cannot be dismissed as unreasonable. Nor do I think it possible to avoid the conclusion that the real issue here is more than the simple discovery of a single document: the judgment's (far) wider implication is that it facilitates the joinder of several hundred additional parties.

[45] Nor do I accept Mr Upton's submission that the application of the Norwich Pharmacal principles in this case was necessarily clear or uncontroversial. The parameters of the Norwich Pharmacal jurisdiction in this country have not been addressed at appellate level for some years, and the issue of whether I got the threshold test correct in the particular circumstances of this case is in my view an important one, both to the parties in this case and potentially for other situations where the Norwich Pharmacal jurisdiction is sought to be used to identify the names of numerous members of an unincorporated body whose leader has purported to bind the members to potentially onerous legal obligations.

[46] In summary, the principal factors on the issue of leave or no leave are the relatively high significance or implication of any arguable error of law (300 to 400 additional defendants are likely to be added, and the cost and complexity of the proceeding is likely to be increased accordingly), and the fact that there is in my view a genuinely arguable legal issue as to whether, in a case of this nature, the "bona fide belief in a case which is not speculative" test was the right test to apply.

[47] I am conscious of the fact that the leave procedure is intended to act as a "filter" to reduce the number of unnecessary appeals from interlocutory decisions to the Court of Appeal. However, it will be clear from what I have said that I do not consider the proposed appeal to be either unnecessary or so clearly without merit that any additional delay brought about by an appeal would not be warranted.

[48] I conclude that the Trustees' application for leave to appeal should be granted, and there will be an order accordingly.
[49] I direct that the Trustees are to file and serve their appeal within 10 working days. Thereafter, they are also to take such steps as may be available to them in the Court of Appeal to ensure that the hearing of the appeal is not delayed.

[50] Turning to the cross-appeal, the granting of the Trustees' application means that I need not be concerned about the delay factor — the judgment will be considered by the Court of Appeal anyway.

[51] As to arguable error of law, Mr Upton submitted that the Under 18's ought to be joined in circumstances where the plaintiffs make claims against them in respect of their beneficial entitlements under trusts that are denied. If the Under 18's are not joined, they will arguably not be bound by any ultimate decision upholding the trusts for which the plaintiffs contend.

[52] Although the third defendants have recently amended their statement of defence to admit that as trustees of the Settlement Trust they are entitled to indemnity for debts incurred in the course of their trusteeship from the assets they held on trust under the terms of the Settlement Trust, I accept Mr Upton's submission that that might not be sufficient for the plaintiffs' purposes. The particular trusts pleaded by the plaintiffs are denied, and even if a right of indemnity enjoyed by a trustee of one of those trusts existed against the settlement assets now held by the third defendants, it may be contended in the future by an interested party that Mr Taua and the others involved in signing the Agreements were not acting in the course of their duties as trustees of those trusts, and consequently have no right to indemnity. The authors of Lewin on Trusts note that one of the cases where there might be good reason to issue proceedings direct against the beneficiaries is where the trustee's right of indemnity is disputed by the beneficiaries,¹⁴ and I accept that that may well be the position in this case.

[53] In all of those circumstances I accept that the need to join the proposed fifth defendants was not beyond reasonable argument, and there was arguably an error of law in effectively refusing that joinder by refusing the discovery order sought in respect of the Under 18's. I accept also Mr Upton's submission that there seems to be

¹⁴ Lynton Tucker et al Lewin on Trusts (Thomson Reuters, 19^th Ed) at 21-053.

little recent authority on the need or otherwise for a plaintiff suing the trustees of a trust (who might not have the resources to meet a judgment from their own funds) to add the trust beneficiaries as defendants.

[54] For those reasons, leave will be granted to the plaintiffs to cross-appeal. The cross-appeal is to be commenced within 10 working days of service on the plaintiffs of the Trustees' appeal.

[55] The costs on the respective leave applications are reserved.

Associate Judge Smith