Nzx Ltd v Ralec Commodities Pty Ltd

• Jurisdiction: New Zealand
• Judge: Dobson J
• Judgment Date: 23 February 2015
• Neutral Citation: [2015] NZHC 241
• Docket Number: CIV-2011-485-1299
• Court: High Court
• Date: 23 February 2015

BETWEEN

NZX Limited

Plaintiff/First Counterclaim Defendant

Ralec Commodities Pty Limited

First Defendant/First Counterclaim Plaintiff

Ralec Interactive Pty Limited

Second Defendant/Second Counterclaim Plaintiff

and

Grant Davis Thomas

Third Defendant

Grant Thomas Nominees Pty Limited

Fourth Defendant

Dominic Luke Pym

Fifth Defendant

Pym Family Pty Limited

Sixth Defendant

NZX Holding No 4 Limited

Second Counterclaim Defendant

Mark Rhys Weldon

Third Counterclaim Defendant

[2015] NZHC 241

CIV-2011-485-1299

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

Applications by both parties concerning the scope and manner of discovery, and inspection arrangements for documents — substantive dispute related to the purchase by the plaintiff of Australian based businesses from the defendants — there were also counterclaims by the defendants for alleged deficiencies in the post-acquisition operation of the businesses that were said to have compromised the prospects of the defendants earning additional consideration for their sale — whether documents relating to individual employees/contractors of the plaintiff could be disclosed — whether commercially sensitive documents in respect of the plaintiff's business could be disclosed — whether documents disclosed in error could be deemed confidential — whether confidential documents could be released to overseas expert witnesses — whether the plaintiff could restrict inspection to being carried out by the first defendant's New Zealand solicitors and not by its Australian legal advisers — whether the plaintiff's in-house counsel could claim solicitor/client privilege in respect of notes recorded at the time of the purchase — whether the first defendant could be held to its waiver of privilege in respect of material related to disclosed emails.

Counsel:

B R Latimour, B M Cash and J A Ruddell for plaintiff/counterclaim defendants

T J North SC, J K Scragg and B D A Collins for defendants/counterclaim plaintiffs

RESERVED JUDGMENT OF Dobson J

Contents

A RALEC APPLICATIONS
Application to remove confidentiality constraints imposed by NZX	[3]
The approach to inspection of confidential documents	[6]
Documents relating to individual employees/contractors	[11]
Commercially sensitive documents in respect of NZX's business	[23]
Pre-requisites for disclosure of NZX confidential documents to experts	[37]
Challenge to extent of redactions in NZX discovered documents	[41]
Challenge to NZX claim to privilege in parts of Ms Newsome's notes	[53]
NZX Holdings No 4 Limited — documents to be separately identified?	[59]
Non-disclosure of Mr Weldon's notebooks	[64]
Miscellaneous discovery concerns	[72]
NZX constraining Ralec's contact with potential witnesses	[76]
B NZX APPLICATIONS
Challenge to Ralec's claims to litigation privilege	[82]
Claim that Ralec has waived privilege on certain topics	[103]
Re Thundacats/no disputes representation	[108]
Negotiation of integration (alliance) agreement	[112]
Advice on negotiating content of documents with NZX	[114]
Legal advice on deteriorating relationship between Ralec and NZX, and the resignation of Mr Thomas	[119]
Application for order that Ralec provide discovery of hard copy documents	[121]
Application for particular discovery re “gaps” and “missing documents	[125]
Application for increased/further security for costs on the counterclaims	[130]
Summary	[138]
Costs	[140]

1 My last interlocutory judgment in these proceedings was delivered on 6 March 2014. 1 There, I sufficiently described the proceedings as involving claims by the plaintiff arising out of its purchase of businesses (based in Australia) from the defendants. There are also counterclaims by the defendants for alleged deficiencies by the counterclaim defendants in their post-acquisition operation of the businesses that are said to have compromised the prospects of the defendants earning additional consideration for their sale. As in my earlier judgment, I will refer to the plaintiff/counterclaim defendants as NZX, and to the defendants/counterclaim plaintiffs as Ralec.

2 Somewhat more than three and a half years after the proceedings were commenced, the parties are still some distance from completing inspection of each other's documents, and resolving residual issues in respect of the scope and terms for provision of discovery and inspection. This judgment deals for the most part with numerous applications affecting the scope and manner of discovery, and inspection arrangements. Their nature and the sequence in which they are addressed is sufficiently reflected in the list of contents of the judgment appearing above.

A RALEC APPLICATIONS

Application to remove confidentiality constraints imposed by NZX

3 NZX has imposed confidentiality constraints on inspection of a substantial number of its documents, which Ralec's counsel complain are frustrating their preparation of the case for Ralec. I addressed an earlier challenge by Ralec to the breadth of the confidentiality constraint in my 6 March 2014 judgment. 2

4 The submissions for Ralec identify 232 documents for which confidentiality constraints were still claimed on behalf of NZX. I was provided with copies of all of them for consideration, running to 1,328 pages.

5 Counsel were at odds on how the documents ought to be characterised for the purposes of considering the justification for restraints on inspection, and whether

certain of the documents or their effective equivalents had otherwise been discovered on an open basis (that is, with no constraint on inspection claimed on behalf of NZX). A further issue was whether claims to confidentiality of some of the documents could be disputed because Messrs Pym and Thomas, as the Ralec principals most involved in preparation of its case, were independently aware of, or had sighted, some of the documents for which NZX still claimed confidentiality

The approach to inspection of confidential documents

6 The balancing act between fulfilling the discovery and inspection stage of proceedings so as not to frustrate fully informed preparation, and protection of legitimate confidentiality concerns, was reflected in the Court of Appeal's observation in Port Nelson Ltd v Commerce Commission as follows: 3

Relevant documents should generally be made available for inspection. The fact that they are regarded as being confidential, and would not be made available were it not for the requirements of the litigation, is immaterial. An order for non-disclosure can only be made when the Court is satisfied in terms of rule 312 that such an order is “necessary”. It must be either apparent from the document in question or shown by other evidence that disclosure would be likely to prejudice the party in some significant way. Even the possibility of prejudice may be sufficient, but that will depend on the seriousness of the possible prejudice and on the significance of the document to the issues in the proceeding, and the extent to which limited disclosure may enable the concerns of both parties to be accommodated.

7 Although that decision pre-dates the current High Court Rules and also the Evidence Act 2006, it remains helpful guidance in assessing competing interests where disputes about claims to confidentiality cannot be resolved between the parties.

8 I agree with, and respectfully adopt, the approach adopted to this issue by Asher J in Intercity Group (NZ) Ltd v Nakedbus NZ Ltd. 4 That approach uses the considerations in s 69(3) of the Evidence Act as a touchstone, recognising that the section addresses the discretion the Court has to direct that confidential communications not be disclosed in a proceeding, and that some of the

considerations in subs (3) will not be relevant in the context of restricting inspection of documents by an opposing party

9 The list in s 69(3) is as follows:

69 Overriding discretion as to confidential information

…

• (3) When considering whether to give a direction under this section, the Judge must have regard to—

  • (a) the likely extent of harm that may result from the disclosure of the communication or information; and

  • (b) the nature of the communication or information and its likely importance in the proceeding; and

  • (c) the nature of the proceeding; and

  • (d) the availability or possible availability of other means of obtaining evidence of the communication or information; and

  • (e) the availability of means of preventing or restricting public disclosure of the evidence if the evidence is given; and

  • (f) the sensitivity of the evidence, having regard to—

    • (i) the time that has elapsed since the communication was made or the information was compiled or prepared; and

    • (ii) the extent to which the information has already been disclosed to other persons; and

  • (g) society's interest in protecting the privacy of victims of offences and, in particular, victims of sexual offences.

10 The balancing of interests in the present circumstances can be approached from what I can treat as being the orthodox perspective. For the most part, I resist dealing with the opposing positions on an individual document basis, being satisfied that it is unnecessary to do so.

Documents relating to individual employees/contractors

11 A significant portion of the documents for which NZX claims confidentiality contain details about or reflect dealings with individuals who were employees of the businesses as owned by NZX, or contractors to them (employee confidential documents).

12 Ralec's legal advisers complain that the confidentiality asserted by NZX purportedly to protect the privacy interests of the individuals is unjustified, particularly as Ralec's advisers have obtained affidavits from 11...