Welcome to the third edition of our series, Case in Point, in which we highlight key case law and other developments in commercial litigation in New Zealand and abroad.
In this edition we cover:
Statutory limitation periods limit how long a claimant has to file a claim. Claims made after that time are "time-barred" and the defendant can raise a limitation defence to that effect. Sometimes, as one way of getting around limitation periods, claimants argue that their case is one of "continuing breach". By this they mean that the relevant breach is ongoing, so that the clock on the limitation period keeps restarting.
In Whangārei District Council v Daisley [2026] NZSC 72, this argument was raised by Mr Daisley in his claim of negligence against the Council for enforcement action over his quarry starting from 2005. The cause of action arose in 2006 and Mr Daisley sued in 2015, also making claims about subsequent enforcement steps taken in 2009.
The Council raised a limitation defence that Mr Daisley's claim was brought outside the six-year limitation period. Mr Daisley responded that the Council had continuously failed to check its records when taking active enforcement steps. If the Council had checked its records, he said, it would have correctly understood the position and not taken enforcement action. This meant it should be considered in "continuous breach" until 2009, meaning the claims about the abatement notices were in time.
In dealing with this issue the Supreme Court said it was necessary to distinguish between singular, episodic and continuing breaches.
Continuing breach principles allow a claimant to sue for loss accruing within a limitation period despite the original breach falling outside the limitation period. But they do not permit the plaintiff to recover loss falling outside the limitation period.
In this case, the continuing breach argument was not properly raised in the claim and was not available on the facts. The Supreme Court instead held that what occurred was better described as a sequence of discrete negligent acts, even though they each had the same "unifying element" of a failure by the Council to check its records.
The Supreme Court's judgment provides important guidance on the "continuing breach" principle and its limits.
Recent decisions across Australia and the United Kingdom reflect ongoing scrutiny of claims to legal professional privilege.
Across the Tasman in Medibank Private Limited v McClure [2026] FCAFC 38, the Full Federal Court of Australia confirmed that reports commissioned following a cyber incident were not legally privileged, despite being procured through lawyers in anticipation of litigation and to inform legal advice, because obtaining legal advice was not the dominant purpose of the reports.
Following a major data breach and expecting litigation, Medibank commissioned external reports (including a post-incident review) through its solicitors. However, the evidence showed that the reports formed part of a broader institutional response for multiple purposes and were publicly framed as an exercise in learning and improving customer safeguards.
In New Zealand, we apply a dominant purpose test when determining whether a document is protected by litigation privilege. This decision reminds that where there are multiple purposes for the commissioning and use of reports in the context of litigation, organisations face a real risk that the reports are not privileged and are required to be disclosed in proceedings unless the litigation purpose can be shown to prevail over all other purposes.
In Mastercard Asia / Pacific (Australia) Pty Ltd v Australian Competition and Consumer Commission [2026] FCAFC 37, the Full Federal Court of Australia found that making broad factual assertions in evidence can waive privilege in underlying communications.
In civil penalty proceedings, Mastercard filed affidavits from senior executives asserting that its strategic merchant agreements were not intended to be anti-competitive and that no such purpose had been communicated to them. Those assertions were based on internal discussions and communications with in-house lawyers. By asserting that no such purpose formed part of their thinking or was communicated to them, Mastercard acted inconsistently with maintaining the confidentiality of communications on that subject, waiving privilege in them.
Using a document consistently with a claim to privilege is a key to avoid waiving privilege. In a litigation context, privilege can be waived by putting a privileged document in issue in a proceeding. This often requires careful strategic thinking about the content and framing of evidence so as not to waive privilege.
In Aabar Holdings SARL v Glencore Plc [2026] EWHC 877 (Comm), the High Court confirmed that intra client communications can be privileged where created for the dominant purpose of seeking legal advice, including preparatory internal documents.
In this case Glencore claimed privilege over internal communications between employees that did not involve lawyers. The Court held that where intra client documents are created for the dominant purpose of seeking legal advice, they may attract legal advice privilege, including preparatory documents identifying issues for advice or recording information to be communicated to lawyers. The decision recognises the practical realities of modern organisations, where internal communications are a regular part of the process of obtaining legal advice.
In New Zealand, s 54 of the Evidence Act 2006 is worded in a way that appears to limit legal advice privilege to communications with a legal adviser. Despite this, the High Court has, accepted in some cases that documents prepared for the purposes of seeking legal advice are privileged. Whether or not the courts would extend this to communications between non-lawyer employees of the client is unclear (at least outside the context of litigation). Given the uncertainty, caution is always advised. The Law Commission has recommended reform of the legislation but it is not clear how or when the Government will respond to that recommendation.
The High Court decision in Kapa Kingi v Tamihere [2026] NZHC 517 is another in a line of decisions doubting a 'variable intensity' approach to judicial review. This is the idea, in broad terms, that the Court will apply different levels of scrutiny in judicial review depending on the context.
The case concerned the suspension and expulsion of Mariameno Kapa Kingi MP from Te Pāti Māori by members of the party’s National Council.
The Court was presented with competing arguments about the appropriate intensity of review of the decision to expel Ms Kapa-Kingi. The applicants favoured a more interventionist approach justified by the contractual nature of the party's constitution, while the respondents urged restraint given the political and private context. The High Court rejected both approaches and held that the intensity with which the court reviews whether a decision-maker has made their decision in accordance with the law should not vary. Rather, it is the nature and extent of the legal constraints on the decision-maker that may differ and these factors instead inform whether relief should be granted and what form it should take.
To date, the Supreme Court has declined to resolve the question of variable intensity of review. The Court of Appeal last year in New Zealand Independent Pharmacy Group Inc v Health New Zealand [2025] NZCS 443, [2025] NZAR 481 took a similar approach to the High Court in stating that even judicial review of commercial decisions (previously considered more exceptional and limited) would be based on the statutory and factual context of a decision. Given the building skepticism towards variable intensity of review detailed, it appears that the writing is on the wall. We will be watching this space closely.
The Court of Appeal in its 2025 judgment of New Health New Zealand Inc v Minister for Covid-19 Response [2025] NZCA 592, [2025] 3 NZLR 877 confirmed that a material mistake about an established fact can be a ground of judicial review.
The applicant challenged the face mask mandates during Covid-19 on the basis that the Minister for Covid-19 Response had made a mistake about their efficacy. The Court accepted the applicant's argument that a mistake of fact could be a ground for successful review but found that there had been no mistake in the Minister's decision.
The applicant presented a range of expert evidence that face masks were not effective at preventing Covid-19 transmission, but the Court found that the mistake of fact must be uncontentious and objectively verifiable as at the time of the decision. The Court found that evidence with the benefit of hindsight after key decisions were made was irrelevant, and that mistake of fact cannot be made out by simply establishing that different views on the facts are available.
This confirms a straightforward avenue for judicial review where it can be demonstrated that the decision-maker made a material mistake about an established fact.
In our last edition of Case in Point we observed that shareholder disputes have been steadily increasing in recent years, with Drylandcarbon GP One Ltd v Leckie [2025] NZHC 2915 exemplifying this. Continuing this trend, the Court of Appeal's recent judgment in PBL Solutions Ltd v AFT Pharmaceuticals Ltd [2026] NZCA 57 deals with a shareholder dispute again featuring claims of breach of fiduciary duty for diversion of a corporate opportunity – however this time with less success for the claimant.
In this case, the shareholders' agreement limited the scope of the operating company's business to the provision and distribution of market-ready pharmaceutical drugs to treat rare or "orphan" diseases. The business opportunity related to the use of a pharmaceutical drugs to treat orphan and non-orphan conditions. The Court in this case found that there was no breach of fiduciary duty in diverting the opportunity to treat non-orphan conditions, which was outside the scope of the business opportunity that was the subject of the shareholders' agreement. The fiduciary duty in this case only applied to the scope of that opportunity, rather than changing the scope of the parties' contract through the shareholders' agreement. The respondent only had to account for those profits attributable to the opportunity that was within the company's scope of business.
This is another example of the strictness but also malleability of fiduciary duties - and that taking steps to clearly define their scope at the outset can avoid significant difficulties in the future.
This content is intended only to provide a summary of the subject covered. It does not purport to be comprehensive or to provide legal advice. No person should act in reliance on any statement contained in this publication without first obtaining specific professional advice. If you require any advice or further information on the subject matter, please contact a Russell McVeagh partner/solicitor.
