Five-year-old flood focus of Telecom legal action

Telecom has lost a court case against AMP's commercial property division

Telecom has lost a court case against AMP’s commercial property division, which involved the right of the latter to view documents relating to a flood at Telecom’s Wellington headquarters in 2001.

The flood, which happened in July that year, damaged property — mainly computer equipment — and is the subject of an unresolved insurance claim that subsequently developed into a litigation situation.

AMP NZ Property (Commercial), which owns the building that houses Telecom’s Wellington headquarters, applied to view a series of documents relating to the case but Telecom counter-claimed that AMP and two other defendants had no right to see the documents because the documents are covered by lawyer-client privilege between Telecom and its lawyers.

However, High Court Judge David Abbott didn’t buy Telecom’s arguments, ruling in a judgment earlier this month that AMP had the right to view the documents. First, because they weren’t covered by the alleged privilege and second, because of the seriousness of Telecom’s damages claims against AMP and the other parties.

Telecom relied on an established legal principle that documents primarily created for the purpose of preparing for litigation are covered by lawyer-client privilege and thus can’t be handed over to other parties.

However, Abbott ruled that the principle didn’t apply in this case, as the documents AMP seeks weren’t created solely for the purposes of preparing for litigation.

The judge inspected the documents as part of the judgment process before deciding that: “Although the documents may well have been created for mixed purposes (the insurance claim and recovery action), the dominant purpose was not to enable the plaintiff’s legal advisers to conduct or advise on recovery action.”

In 2001, Telecom indicated it was prepared to accept a settlement of $1,554,067 for the flood damage, but after negotiations culminating in a meeting in December 2003 failed to produce an outcome acceptable to both Telecom and AMP, Telecom filed proceedings in March 2004. Then, in September of that year, it filed an amended statement of claim increasing the damages claim to $3.3 million. In February 2005, it amended the statement of claim again, upping the claim to $5,295,550.

Judge Abbott noted: “The significant disparity between the sum accepted by the plaintiff and settlement of the insurance claim, and the amount now being sought from the defendants may give rise to a proper line of cross-examination of the plaintiff’s witnesses in relation to quantum [of damages]. Documents that assist this line of cross-examination are relevant.”

The ruling ends with instructions to the court registrar to “arrange a telephone conference at the first available opportunity for the purpose of making directions with a view to bringing this matter to trial.”

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