Berry v Crimson Consulting Ltd

[2017] NZHC 3026

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2016-404-2933 [2017] NZHC 3026

BETWEEN

SAMANTHA MARIE BERRY

Plaintiff

AND

CRIMSON CONSULTING LIMITED Defendant

Hearing:	On the papers
Appearances:	B OʼCallahan and D Yan for Plaintiff T J P Bowler for Defendant
Judgment:	7 December 2017

JUDGMENT OF PALMER J

This judgment is delivered by me on 7 December 2017 at 2.30 pm pursuant to r 11.5 of the High Court Rules.

..................................................... Registrar / Deputy Registrar

Solicitors

BERRY v CRIMSON CONSULTING LTD [2017] NZHC 3026 [7 December 2017]

K3 Legal Limited, Auckland

Neilsons Lawyers Limited, Auckland

Summary

[1]      The New Zealand Herald and the National Business Review (NBR) apply to access the court file of this proceeding which settled before reaching the close of pleadings date.  I consider the defendant’s arguments about commercial sensitivity of information on the file could be managed by redactions in the material accessed.  But the early stage at which the case settled means access to untested allegations, which are disputed, could give a misleading impression of the issues and facts involved in the proceeding.  To satisfy the principle of open justice I order that only redacted versions of the statements of claim and defence be made available to the Herald and the NBR.

The proceeding and application

[2]      The Statement of Claim initiating the proceeding was filed on 14 November

2016. The Statement of Defence was filed on 16 December 2016.

[3]      In a minute of 26 June 2017, Associate Judge Bell declined a request by the NBR to inspect the court file but left it open for a fresh application to be made after the close of pleadings date, on 11 December 2017. The Judge stated, as a general rule, during and before the substantive hearing stage there is a trend for preferring the orderly and fair administration of justice over the principle of open justice and the freedom to seek, receive and impart information. He stated “[d]uring the interlocutory stages the ordinary and fair administration of justice is enhanced by allowing the parties to conduct their litigation without scrutiny by third parties.”1    He noted the parties still had the opportunity to explore settlement before the close of pleadings date.  He cited the existence of qualified privilege for a report of pleadings only after the close of pleadings date under clause 5 of Part 1 of Schedule 1 of the Defamation

Act 1992.

1      Berry v Crimson Consulting Ltd HC Auckland CIV-2016-494-2933, 26 June 2017 (minute of

Associate Judge R M Bell).

[4]      On 17 October 2017, in Minute No 2, I denied an application by Crimson Consulting for orders that the Court record be permanently sealed and that no third party is granted access to the file or record.  I stated all I had from the defendant was a general assertion of commercial sensitivity without indication of what the sensitivity was or which documents it concerned.  I ordered that, if there are any requests to the Registry by third parties to access the file, the parties should be given the opportunity to state their positions in response to such requests.  I indicated they would be best to do that with reference to particular information or documents.

[5]      On 26 October 2017, the Herald and the NBR each applied to access the court file under r 11 of the Senior Courts (Access to Documents) Rules 2016 (the Rules).

Submissions

Submissions by the Herald and NBR

[6]      The Herald sought access to the court file, including statements, submissions, affidavits, and evidence. It stated the case is of public interest, the company is a public company worth $200 million, its founder is a well-known public figure and investors and clients have a right to know the information on the file.

[7]      The NBR stated its purpose was to inform its research into Crimson Consulting and Jamie Beaton as a public figure who courted publicity for Crimson Consulting. The NBR stated it did not wish to view documents the court deems genuinely commercially sensitive such as the sale and purchase agreement or sales reports.  But it wanted all other documents, including the Statements of Claim and Defence and supporting documents.  The NBR cited r 12(a), (e) and (f) and the Supreme Court’s endorsement of the principle of open justice in Erceg v Erceg.2

Submissions by the parties

[8]      The plaintiff took no position on the requests.   The defendant opposed the request.  Mr Bowler’s submissions for the defendant appear to fall into four general

areas.

2      Erceg v Erceg [2016] NZSC 135, [2017] 1 NZLR 310.

[9]      First, Mr Bowler submitted the defendant relied on Associate Judge Bell’s decision not to permit inspection and that NBR could not apply again until after the close of pleadings date.  The defendant says the driving force in its decision to settle was that, provided the proceeding was settled before the close of pleading date, no media organisation would be granted access to the court file. He said the defendant is a privately held, not a publicly listed, company.

[10]     Second, Mr Bowler submitted the pleadings and evidence contain untested, unfounded and unanswered allegations against the defendants, particularly in the plaintiff’s reply to the statement of defence. Access to the court file would not provide a proper understanding or balanced view of the case.

[11]     Third, Mr Bowler submitted the pleadings and evidence refer to commercially sensitive information, providing competitors and prospective targets an insight into the defendant’s intellectual property and modus operandi.   He gave examples.  He submitted the ordinary and fair administration of justice and the protection of privacy and matters that are commercially sensitive outweigh the principle of open justice.

[12]     Fourth, Mr Bowler submitted Rule 12(c) is a substantial limit on open justice. The principle does not extend to reporting proceedings generally but to enable accurate reporting of substantive hearings and decisions, which did not occur here.3     He submitted the commentary in McGechan on Procedure on Rule 13 indicates the general approach is that a greater level of access is appropriate between the start of a hearing and delivery of judgment. Greater weight should be given to privacy interests and the orderly administration of justice because this case did not come close to reaching the close of pleadings date.

[13]     Mr Bowler also submitted the rules are not applicable because the documents will be transferred to Archives. This is clearly incorrect so I do not consider it further.

3      Citing Rice v Heaney (2014) 22 PRN 159 and Hotchin v APN New Zealand Ltd [2011] NZAR 464 (HC).

Law of access to court documents

[14]     Section 173 of the Senior Courts Act 2016 provides that “any person may have access to court information of a senior court to the extent provided by,  and in accordance with, rules of court”. Schedule 2 provides that court information includes the formal court record, the court file, information relating to particular cases and electronic records of hearings. The information sought here is on the court file.

[15]     Rule 12 of the Rules sets out the matters that I must take into account in determining the applications here. As well as the nature of, and reasons given for, the request, I must take into account, relevantly:

(a)       the orderly and fair administration of justice:

…

(c)       the right to bring and defend civil proceedings without the disclosure of any more information about the private lives of individuals, or matters that are commercially sensitive, than is necessary to satisfy the principle of open justice:

(d)       the protection of other confidentiality and privacy interests (including those of children and other vulnerable members of the community) and any privilege held by, or available to, any person:

(e)       the principle of open justice (including the encouragement of fair and accurate reporting of, and comment on, court hearings and decisions):

(f)       the freedom to seek, receive, and impart information:

…

(h)      any other matter that the Judge thinks appropriate

[16]     Courts have been willing to except commercially sensitive information from access to court files.4

[17]     In applying r 12, r 13 provides I must have regard to the point that protection of confidentiality and privacy interests and the orderly and fair administration of justice may require access to documents be limited before the substantive hearing.

Associate Judge Bell’s point about qualified privilege under the Defamation Act 1992

4Zespri Group Ltd v Southlink Supply Ltd [2017] NZHC 1378. There, Associate Judge Bell was considering an application for a non-publication order, but he took the same approach as he would have to an application to access court documents.

is a good one and supports this approach.  The point was recently reinforced by the Court of Appeal in Greymouth Petroleum Holdings Ltd v Empresa Nacional Del Petróleo:5

[25] … during the substantive hearing open justice has greater weight, in particular in relation to documents admitted in evidence.  When a court is engaged in hearing a dispute its workings, including documents referred to or relied on, should be open to full scrutiny by all members of the public, unless there are particular and strong reasons to the contrary.  The public should be able to follow and understand the hearing process. However, prior to and after the substantive hearing, the importance of public scrutiny is less, as the court is not hearing and resolving the dispute.   Prior to the hearing there is no guarantee the case will go to hearing at all. Therefore, open justice has less weight. The parties are entitled to the protection of confidentiality and privacy within reasonable limits, given that they have not at that point aired the dispute in public.  After the substantive hearing the need for public scrutiny diminishes in importance as time moves on …

[18]     Where applications are made prior to substantive hearing, concerns about potential inaccuracies in pleadings can carry substantial weight.   In Hawkes Bay Regional Council v Herbert Construction Company Ltd,6 Simon France J held weight should  be given to  protecting defendants  from  the harm  that  could  ensue from disclosure of untested allegations where early resolution occurs. That outweighed the public interest engaged by the plaintiff’s public nature as a regional council, as he considered the proceeding was a commercial dispute that did not engage the Council’s public administration  role.    In  GFD  I LLP v  Melview  (Kawarau  Falls  Station) Investments Ltd (in Rec) Winkelmann J articulated the reasons for that as follows:7

Parties file applications at an interlocutory stage and typically make various allegations in memoranda and affidavits.   Some of those allegations are not responded to by parties in the full confidence that when a matter gets to a substantive hearing, issues which remain relevant can be fully addressed and an appropriate focus brought to bear upon the critical factual and legal issues.

[19]     In BNZ Investments v Commissioner of Inland Revenue Wild J stated:8

[33]     If the documents in question have not been adduced in evidence, or have not been read by the court at some other (i.e. non-evidentiary) stage, the

5Greymouth Petroleum Holdings Ltd v Empresa Nacional Del Petróle [2017] NZCA 490 at [25] (emphasis added).

6        Hawkes Bay Regional Council v Herbert Construction Company Ltd [2015] NZHC 1060.

7        GFD I LLP v Melview (Kawarau Falls Station) Investments Ltd (in Rec) [2012] NZHC 677,

(2012) 21 PRNZ 125 at [16].

8      BNZ Investments v Commissioner of Inland Revenue (2009) 20 PRNZ 311 (HC).

moral impetus behind “open justice” did not apply, because the material never entered the public domain …

[36]      … Rule 3.16 places the focus upon the nature of and reasons for the request and the factors outlined in the rule.  This mirrors the approach taken by Courts in the United Kingdom and Australia.  It is clear that the principle of open justice is paramount, effectively creating a presumption of disclosure. This presumption is easily displaced if the request is for documents that were not read in or read by the Court, because the principle of open justice rests on the premise that such documents have entered the public domain.

Decision

[20]     My starting point is the principle of open justice. As the Supreme Court stated in Erceg v Erceg:9

The principle of open justice is fundamental to the common law system of civil and criminal justice.  It is a principle of constitutional importance, and has been described as “an almost priceless inheritance”.   The principle’s underlying rationale is that transparency of court proceedings maintains public confidence in the administration of justice by guarding against arbitrariness or partiality, and suspicion of arbitrariness or partiality, on the part of courts. Open justice “imposes a certain self-discipline on all who are engaged in the adjudicatory process – parties, witnesses, counsel, Court officers and Judges”. The principle means not only that judicial proceedings should be held in open court, accessible by the public, but also that media representatives should be free to provide fair and accurate reports of what occurs in court. Given the reality that few members of the public will be able to attend particular hearings, the media carry an important responsibility in this respect. The courts have confirmed these propositions on many occasions, often in stirring language.

[21]     The Supreme Court also recognised that there are circumstances in which the interests of justice require departures from the principle of open justice, “but only to the extent necessary to serve the ends of justice” and not just because the material would be embarrassing or unwelcome, unless there are exceptional specific adverse consequences.10

[22]     As Wild J stated in BNZ Investments, the principle of open justice effectively creates a presumption of disclosure of information filed in court for the purpose of legal proceedings.   That is similar to the principle of availability in the Official

Information Act 1982 regarding official information held by the executive branch of

9      Erceg v Erceg, above n 2, at [2] (footnotes omitted).

10     At [3] and [13].

government.   It is reinforced by the right to freedom of expression, including the freedom to seek, receive and impart information, guaranteed by s 14 of the Bill of Rights, as reflected in r 12.  The decisions of the judiciary are subject to the Bill of Rights, under s 3.

[23]     The right to freedom of expression may be subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society, under s 5 of the Bill of Rights.  The law prescribes the availability of judicial discretion to determine requests for access, in the Rules.   As reflected there, commercial sensitivity can be a good reason to withhold information. I have reviewed the material on the file here and am in no doubt that there are substantial amounts of commercial information in the documents on the file.  However, access to the rest of the information on the file could be provided while redacting the commercially sensitive information.

[24]     The defendant’s submission about the stage of the proceeding is a more generic ground for restricting release of the information on the court file.  There are untested and unanswered allegations made against the defendants. Whether they are unfounded will not be determined because the proceedings have settled at an early stage.  It may well be that access to the partial evidential records on the file could give a misleading impression of the issues and facts involved in the proceeding.  That would not be consistent with encouraging fair and accurate reporting. And the importance of public scrutiny is less as the court has not heard or resolved the dispute and will not do so. As the Court of Appeal said in Greymouth Petroleum Holdings Ltd, the parties are entitled to the protection of confidentiality and privacy within reasonable limits given they have not aired their dispute in public.  The evidence was not read in or read by the Court.  I do not consider the defendant’s argument about “reliance” on Associate Judge Bell’s decision, which left open the possibility of further applications by the media, adds to this.

[25]     On the basis of r 13, and the legal authorities referred to above relating to the limits on access to information at early stages of the proceeding, I consider there is sufficiently good reason in this case to decline the request for access to the partial evidence and memoranda on the court file.

[26]     However, it is a matter of public record that the proceedings were brought. As the Supreme Court stated in Erceg, it is important to maintain transparency of court proceedings in order to maintain public confidence in the administration of justice.  I consider that value would be satisfied by release to the Herald and the NBR of the statements of claim and defence, only, redacted for commercially sensitive information. I attach copies of those documents with my draft redactions for comment (on the redactions only) by the parties within three working days.

..................................................................

Palmer J