ADM International SARL v Golden Shine NZ Ltd

[2024] NZHC 3668

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2023-404-001384

[2024] NZHC 3668

BETWEEN

ADM INTERNATIONAL SARL

Applicant

AND

GOLDEN SHINE NZ LIMITED

Respondent

Hearing:	11 November 2024
Appearances:	A J Sherlock & C D Hunter for the Applicant C R Langstone for the Respondent
Judgment:	4 December 2024

JUDGMENT OF TAHANA J

This judgment was delivered by me on 4 December 2024 at 3.00pm Pursuant to Rule 11.5 of the High Court Rules

…………………………

Registrar/Deputy Registrar

Solicitors:

Hesketh Henry, Auckland Fee Langstone, Auckland

ADM INTERNATIONAL SARL v GOLDEN SHINE NZ LIMITED [2024] NZHC 3668 [4 December 2024]

Introduction

[1]    ADM International SARL (ADM) applies for orders authorising it to use documents disclosed by Golden Shine NZ Ltd (GSNZ) in this proceeding, for a collateral purpose. ADM argues that the documents are necessary for it to bring a potential claim against Kiwi Forests Investment Ltd (KFIL). GSNZ opposes the application.

Procedural background

[2]    On 6 July 2023, ADM applied without notice for freezing orders and ancillary orders against GSNZ. In short, GSNZ provided performance guarantees to ADM in relation to charterparty agreements between ADM and Golden Shine Management Ltd (GSM). GSM defaulted under the charterparty agreement and ADM wishes to enforce the performance guarantees given by GSNZ. ADM has filed proceedings against GSM in London.

[3]    On 17 July 2023, Davison J granted the interim freezing order but declined to grant the ancillary order. ADM was directed to serve the application for the ancillary order on GSNZ. GSNZ applied to set aside the freezing order.

[4]    On 2 August 2023, Campbell J made the ancillary order and set down a hearing to consider whether the freezing order should continue.

[5]On 10 August 2023, GSNZ applied to set aside the ancillary order.

[6]On 18 August 2023, GSNZ applied to discharge the freezing order.

[7]    On 22 August 2023, Isac J declined to set aside the ancillary order and  on  27 September 2023, he provided reasons for that decision.1

1      ADM International SARL v Golden Shine NZ Ltd [2023] NZHC 2694.

[8]    On 30 October 2023, Brewer J held that GSNZ had not complied with the ancillary order and made orders for disclosure of further documents. He also directed that the substantive application regarding the freezing order be set down for hearing.2

[9]    On 12 March 2024, Moore J by consent ordered that the freezing order be made permanent and that the application for orders staying the ancillary order was withdrawn.3

[10]   In compliance with the ancillary order, GSNZ disclosed the following documents to ADM:

(a)a supplemental deed to the grant of forestry right dated 15 March 2018 (the Deed); and

(b)GSNZ’s New Zealand Emissions Trading Scheme (ETS) – account details – dated 21 November 2023 (the ETS Account);

(together, the Documents).

[11]   ADM now seeks to use the Documents to make a demand against KFIL for alleged contravention of s 9 of the Fair Trading Act 1986 (the FTA).

Forestry Right and Deed

[12]   On 11 December 2017, GSNZ entered into an agreement with KFIL (as proprietor of the land) under which KFIL purported to grant a forestry right to GSNZ (the Forestry Right).

[13]The Forestry Right provided that:

(a)KFIL granted rights to GSNZ to “establish, plant, manage, cultivate, maintain, protect and render to productive harvest” all trees, timber and

2      ADM International SARL v Golden Shine NZ Ltd [2023] NZHC 3021.

3      ADM International SARL v Golden Shine NZ Ltd HC Auckland CIV-2023-404-1384, 12 March 2024.

logs growing or to be grown on the forest block “subject to the restrictions on harvesting provisions as set out in this Deed”;4

(b)in consideration of the rights granted, GSNZ would pay to KFIL $1,000 per year and “allow [KFIL] to continue to maintain, harvest and retain the benefits of (excluding any carbon credits) the Forest Block, subject to [KFIL] being liable for all maintenance and Harvest Costs;5

(c)KFIL may, at its sole discretion, waive its rights in which case the right to harvest will belong to GSNZ;6 and

(d)GSNZ may, or KFIL may require GSNZ, to surrender the forestry right by providing a surrender notice.7

[14]The Forestry Right was registered on the title of the land.

[15]   On 15 March 2018, KFIL and GSNZ entered into the Deed, which had retrospective effect as from the commencement of the Forestry Right. The Deed provided that GSNZ would provide to KFIL professional advice and operational guidance with the objective to increase the number of the carbon credits of KFIL.8

[16]   The Deed records that the effect of the Forestry Right in relation to the carbon credits was that GSNZ was entitled to retain only the “Excess”.9 The “Excess” being the difference between the actual carbon credits and the performance target less the net government credits (excess = actual carbon credits – net government credits – performance targets).10

[17]The Forestry Right was surrendered on 19 September 2022.

4      Forestry Right, cl 2.1(a).

5      Forestry Right, cl 3.1.

6      Clause 3.1.

7      Clause 5.2.

8      Deed, cl 4.1.

9      Clause 1.2.

10     Clause 4.3.

Guarantees from GSNZ to ADM

[18]   On 22 June 2021, ADM obtained a report from Infospectrum (a provider of risk appraisal reports) regarding GSNZ. That report noted that GSNZ owns forests in Wellington, New Zealand.

[19]   GSNZ provided two guarantees to ADM guaranteeing the performance of GSM under charter party arrangements. One guarantee was dated 28 June 2021 (in respect of the MV “Eastern Hawk”) and the other was dated 6 May 2022 (in respect of the MV “YM Advance”).

[20]   On 29 November 2022, ADM issued a payment demand to GSNZ for outstanding hire instalments owing by GSM to ADM. Those demands have not been paid.

Relevant law

[21]   The High Court Rules 2016 (HCR) prescribe the limits on the use of documents disclosed to a party to a proceeding by way of discovery or evidence. In this regard, rr 8.30(4) and 9.14(e) state:

8.30     Use of documents

…

(4)A party who obtains a document by way of inspection or who makes a copy of a document under this rule—

(a)may use that document or copy only for the purposes of the proceeding; and

(b)except for the purposes of the proceeding, must not make it available to any other person (unless it has been read out in open court).

9.14     Privilege and admissibility not affected by briefs

Nothing in this subpart—

…

(e) allows a brief, served under these rules, to be made available, before it is given in evidence, for use for another purpose or proceeding.

[22]   The HCR are silent as to the form of application required if a party wishes to use documents other than as prescribed by rr 8.30 and 9.14. The Court has held that it has inherent jurisdiction to authorise a party to use documents obtained in this way for a collateral purpose.11

[23]GSNZ challenges both the form and substance of the application.

Does the Court have jurisdiction to determine the application?

[24]   Mr Langstone for GSNZ argued that the Court does not have jurisdiction to determine the application because it is functus officio as the freezing order is now permanent, and the Court has determined the issue of costs.

[25]   The Court retains jurisdiction to vary and/or discharge the freezing orders so to that extent it is not functus officio.

[26]   Mr Langstone then submitted that ADM should have applied for leave under r 19.5 of the HCR to bring an originating application to use the documents for a collateral purpose. The Courts have previously considered the appropriate form of an application of this type.

[27]   In Hally Labels Ltd v Powell this Court noted that the then High Court Rules did not identify any procedure to be adopted when seeking leave.12 The Court referred to Wilson v White where the Court of Appeal observed that the proper course is to put the issue to the Court in the context of an application for release from the undertaking.13 The Court observed that although the “New Zealand judgments in this area of law do not always identify precisely the manner of application, there appears to be a pattern of formal application being made”.14 There is a formal application currently before the Court.

11     Wilson v White [2005] 3 NZLR 619 (CA) at [47]; Hally Labels Ltd v Powell [2013] NZHC 900 at [27]–[29]; and Taylor v Attorney-General [2021] NZHC 1546 at [36].

12     Hally Labels Ltd v Powell [2013] NZHC 900 at [32].

13 At [33].

14 At [34].

[28]   In Holpitt Pty Ltd v Varimu Pty Ltd, the Federal Court of Australia noted that the application was by notice of motion and Burchett J observed that the correct procedure is that any notice of motion (or similar) should be filed in the proceeding in which the implied undertaking arose.15

[29]   Here, there is a formal application made in the proceedings within which the documents were disclosed. That is consistent with the authorities.

[30]   The Court clearly has inherent jurisdiction to determine an application for leave to use documents for a collateral purpose. The objective of the HCR is to secure the just, speedy, and inexpensive determination of any proceeding or interlocutory application.16 I do not consider that the form in which the application has been brought is a reason to decline it. It was wholly appropriate to bring the application in the proceeding within which the documents were disclosed. To require a separate originating application is not just, speedy nor inexpensive. It would simply add further costs to the parties.

[31]   I accept that I have inherent jurisdiction to determine the application and that it is wholly unnecessary for ADM to file a separate originating application.

Should permission be granted to use the Documents for a collateral purpose?

Applicable legal principles

[32]   The applicable legal principles when determining an application of this type are helpfully set out in Zurich Insurance Public Ltd Company v Liberty Mutual Insurance Europe Se:17

The Court may give permission for use of documents for a collateral purpose in its inherent jurisdiction. There is no exhaustive test or list of considerations relevant to when the Court will exercise its inherent power because each case is fact specific. However, for exposition purposes, I adopt the following list of guiding principles set out in the applicants’ submissions:

(a)An applicant should attempt to obtain consent of the other parties.

15     Holpitt Pty Ltd v Varimu Pty Ltd (1991) 103 ALR 684 (FCA) at 685.

16     High Court Rules 2016, r 1.2.

17     Zurich Insurance Public Ltd Company v Liberty Mutual Insurance Europe Se [2024] NZHC 888 at [9].

(b)A strong factual connection between the proceedings may tend in favour of granting permission. An application to use material for a purpose not related to the subject matter of the proceeding is unlikely to be successful.

(c)Whether there are other avenues for obtaining the documents that have not been exhausted may be relevant.

(d)The Court will not generally release or modify the obligation unless “special circumstances” exist and where it would not cause injustice to the other party. This reflects that the Court is wary of the exceptions overwhelming the rule.

(e)         The Court will need to ensure that fair trial rights are respected. (footnotes omitted)

[33]I consider each of the above principles in turn.

Consent of party

[34]   ADM has sought GSNZ’s consent to use the documents to claim against KFIL. GSNZ does not consent, so this application has become necessary. This counts in favour of granting the application.

Is there a strong factual connection between this proceeding and the collateral purpose?

[35]   ADM seeks to recover from KFIL the same losses it is seeking to recover from GSNZ, namely, non-payment of charter fees. ADM argues that the same losses arise by reason of ADM’s reliance on the Forestry Right that KFIL purported to grant to GSNZ.

[36]   Mr Langstone argued that the substantive litigation is in the United Kingdom (UK) and those courts should determine the issue. While the litigation in the UK involves a claim to recover the same losses, it is against another party for a different cause of action. The proposed claim concerns a New Zealand incorporated company (KFIL) and a cause of action arising under New Zealand legislation, the FTA. The New Zealand courts have jurisdiction to determine the proposed claim.

[37]   I accept that there is a factual connection between ADM’s application for freezing orders against GSNZ and ADM’s proposed claim against KFIL by reason of

the losses ADM is seeking to recover being the same. KFIL is the other party to the Forestry Right on which ADM is alleged to have relied.

[38]Mr Langstone also argued that ADM’s proposed claim is without merit.

[39]   In determining an application for collateral use of documents, the authorities do not indicate that the Court is required to consider the merits of any proposed claim. It is the existence of a factual connection that is relevant. I accept that if the proposed claim indicated a potential abuse of process or an obviously hopeless claim, that may be relevant, but I do not consider that is the case here for the reasons below.

[40]ADM argues that there are two claims it wishes to make against KFIL:

(a)first, that KFIL misled the Registrar of Land and the ETS Registrar by allowing GSNZ to appear to hold a forestry right and associated carbon credit account, causing ADM to suffer loss as a result; and

(b)second, that by entering into the Deed and allowing the grant of the Forestry Right to stand unaltered without informing the ETS Registrar that GSNZ was not actually the owner of its own account, KFIL engaged in misleading and deceptive conduct, causing ADM to suffer loss.

[41]ADM argues that the ETS Account is essential to its claim because it shows:

(a)that GSNZ did not in fact carry out any of the purported trading that was the object of that transaction; and

(b)that there was a transfer of significant forestry assets in and out of GSNZ’s ETS Account.

[42]   Whether ADM was entitled to rely on the Forestry Right in the circumstances cannot be determined in the context of this application. On the face of it, ADM has grounds for pursuing a claim under s 9 of the FTA in circumstances where it alleges that KFIL misled the Registrar and did not meet the requirements of the Forestry

Rights Registration Act 1983 in purporting to register the instrument as a forestry right. There is a real issue as to whether the instrument confers any right to maintain and harvest a crop of trees on land. Further, the Deed is relevant to the terms of the Forestry Right as it applies as from the commencement of the Forestry Right. The Deed was not registered, and it discloses the actual arrangements between GSNZ and KFIL. The ETS Account also discloses the nature of the arrangements between GSNZ and KFIL. That is relevant to a potential claim under s 9 of the FTA.

[43]   Whether ADM entered into its charterparty arrangements prior to, or after, the surrender of the Forestry Right and whether it should have taken steps to further interrogate the actual nature of GSNZ’s rights are issues that would need to be determined in the context of the FTA claim. It is not appropriate to make any findings, in the context of this discrete application, as to factual disputes and issues of credibility.

[44]   On the face of the Documents and without expressing a view on the potential merits, ADM has grounds to pursue a claim against KFIL as the other party to the Forestry Right and Deed.

[45]   I accept there is a factual connection between the application for freezing and ancillary orders and the collateral use to which ADM wishes to put the Documents.

Other avenues for obtaining the Documents

[46]   ADM argues that it cannot properly make a claim against KFIL without being able to rely on the Documents. While ADM acknowledges that KFIL will be required to discover documents in any claim against it, it says that KFIL cannot responsibly assert a position, with the knowledge that it has as to the Deed and ETS Account, without being able to rely on the Documents.

[47]   Further, ADM argues that use of the Documents may avoid the need for any proceedings, as the Documents will be relevant to any demand and subsequent discussions between ADM and KFIL.

[48]   If ADM does not have access to the Documents, any claim would be limited to allegations as to the Forestry Right as registered in circumstances where ADM is aware of the subsequent Deed and the actual dealings with the ETS Account.

[49]   While I accept there are other potential avenues for obtaining the Documents in any future proceeding, I accept that this would preclude ADM being able to put the proper basis for its claim in making demands on KFIL.

Exception rather than rule

[50]   I consider that there are “special circumstances” here that justify granting the application. KFIL is the other party to the Forestry Right with GSNZ. The Forestry Right is publicly available and there is a real issue as to whether the Deed should also have been registered. The Documents are directly relevant to the actual nature of the arrangements between KFIL and GSNZ. I accept ADM’s submission that it cannot properly advance its claim against KFIL if it has knowledge of the Deed and the ETS Account but cannot refer to, or rely on, that knowledge. It is in the interests of justice that ADM be able to use the documents for that collateral purpose.

Fair trial rights

[51]   There is no issue as to fair trial rights that would justify declining the application.

Conclusion

[52]   On balance, for the reasons above, I consider that permission should be granted for ADM to use the Documents to pursue a claim against KFIL.

Result

[53]   I grant leave to ADM to use the Documents for the purpose of pursuing a claim (including making a demand and, if reasonably necessary, issuing proceedings) against KFIL.

Costs

[54]   ADM has been successful in its application. My preliminary view is that ADM is entitled to 2B costs against GSNZ. If the parties are unable to agree costs, memoranda of no more than three pages are to be filed and served as follows:

(a)ADM to file and serve a memorandum within 15 working days of this judgment; and

(b)GSNZ to file and serve a memorandum within a further 10 working days.

Tahana J