The decision of Minister of Education v Reidy McKenzie Ltd [2016] NZCA 326 by the Court of Appeal has affirmed principles relating to the waiver of privilege in the context of settlement negotiation privilege.

Reidy McKenzie Limited (McKenzie), a builder, constructed schools for the Minister of Education (Minister). The Minister considered work on some of the schools to be deficient and issued proceedings against McKenzie (School Proceedings).

During these proceedings, McKenzie entered into settlement negotiations with the Minister, in the course of which, financial accounts were disclosed by McKenzie - in circumstances that attracted settlement negotiation privilege. Memoranda were provided to the Court by McKenzie and the Minister, which referenced the provision of these financial accounts to the Minister.  This occurred in the context of matters more procedural in nature, such as the potential vacation of a trial date.  Settlement was not reached between the parties.

Later, the Minister brought liquidation proceedings against McKenzie and sought to rely on the financial accounts. The Minister argued, among others, that privilege over thee accounts had been waived by McKenzie because McKenzie had relied upon those financial accounts in the School Proceedings.

The Court of Appeal dismissed this argument, holding that the financial accounts had not been relied upon by McKenzie in the School Proceedings. The financial accounts were provided to assist the Minister in determining whether it was financially worth continuing her proceedings against McKenzie.  The Court held that this determination was unrelated to the merits or substance of the Minister's claims in the School Proceedings.

As an aside, the Court noted that where a document is used only for procedural purposes, it is highly probable that a claim of waiver will fail; however, this is not an absolute proposition. The appeal was ultimately dismissed.

See the Court's decision here.