Croser v Focus Genetics Ltd Partnership (2548500)

[2019] NZHC 2995

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2019-485-625

[2019] NZHC 2995

BETWEEN

DAMIEN LEIGH CROSER and KIRSTEN LOUISE CROSER

Plaintiffs

AND

FOCUS GENETICS LIMITED PARTNERSHIP (2548500)

Defendant

Hearing:

6 November 2019

Further submissions and evidence 7, 12, 14 and 15 November
2019

Counsel:

C M Stephens and T Mijatov for Plaintiffs S M Bisley and P J Niven for Defendant

Judgment:

18 November 2019

JUDGMENT OF CHURCHMAN J

Background

[1]    The plaintiffs are sheep farmers at Kiranda in South Australia. The defendant is a limited partnership based in Napier, New Zealand. It specialises in livestock genetics. It is controlled by Landcorp Farming Limited, a very substantial Government-owned farming enterprise.

[2]    The defendant undertakes, or has undertaken, business relating to sheep genetics in three Australian states: New South Wales, Victoria and South Australia. In 2013, the parties commenced discussions with the intent that they would enter into an agreement whereby the plaintiffs would breed sheep utilising genetic material provided by the defendant.

CROSER & ANOR v FOCUS GENETICS LIMITED PARTNERSHIP (2548500) [2019] NZHC 2995

[18 November 2019]

[3]On 18 December 2013, the parties signed a written agreement.

[4]    Evidence filed by the plaintiffs in parallel proceedings contains a claim that the terms of the written agreement were varied.1 The defendant denies that, and says that the total extent of the contractual terms between the parties is to be found in the December 2013 agreement. The Court has yet to resolve that issue.

[5]    For the purposes of an interim injunction, the plaintiffs satisfied the Court that it was arguable that the December 2013 agreement does not accurately and comprehensively document the contractual arrangements which evolved between the parties.2

[6]    As a result of that application, the Court ordered an interim injunction directing the defendant to provide the plaintiffs’ breeding plan consultant with certain genetic data held by the defendant on the plaintiffs’ sheep. That data was to be used for the purpose of creating a mating plan.

[7]    The provision of that data allowed for the preparation of such a plan which ensured that the plaintiffs’ sheep were not inbred by mating with close relatives, and also ensured that the genetic value of the flock would be maintained.

[8]    The original  proceedings  were  set  down  for  hearing  to  commence  on  14 October 2019.

Developments

[9]    By email of 2 October 2019, the Court was advised by counsel for the plaintiffs that the proceedings set down to commence on 14 October 2019 had been settled, and that the hearing could be vacated.

[10]   For reasons that I need not go into, the matter did not settle as anticipated. This led to the plaintiffs issuing these proceedings on 25 October 2019 to enforce what the plaintiffs said was the settlement agreement.

1      Croser v Focus Genetics Limited Partnership (2548500) CIV-2019-485-164.

2      Croser v Focus Genetics Limited Partnership [2019] NZHC 627 at [57].

[11]In a separate application, the plaintiffs sought orders:

(a)for an urgent substantive fixture on or from 2 December 2019; and

(b)permitting the plaintiffs to rely on the evidence and discovery documents previously exchanged in the original proceedings (CIV- 2019-485-164).

[12]   By memorandum of counsel for the defendant dated 30 October 2019, the defendant opposed the application for urgency and reserved its position in respect of the plaintiffs’ application to rely on the evidence and discovered documents.

[13]This matter came before me as Duty Judge on 6 November 2019.

[14]   During the course of the hearing that day, the plaintiffs made an oral application for an interim injunction. That oral application was followed up with a memorandum of counsel dated 7 November 2019 setting out the precise terms of the injunction sought. Those terms were:

(a)Within 24 hours of the Court so ordering, the Defendant will cause SGA [Sheep Genetics Australia] to make publicly available on LambPlan all ASBVs relating to: (1) all Kiranda sheep, (2) the parents of all Kiranda sheep, and (3) the grandparents of all Kiranda sheep; and

(b)Within the same period, the Defendant will cause SGA to provide, to experts nominated by the Plaintiffs, confidentially to those experts, full access to all information on LambPlan relating to: (1) all Kiranda sheep, (2) the parents of all Kiranda sheep, (3) the grandparents of all Kiranda sheep; and

(c)Within the same period, the Defendant will cause SGA to allow experts nominated by the Plaintiffs to submit to SGA updated data on Kiranda sheep and to cause SGA to update the data on the Kiranda sheep accordingly; and

(d)The Defendant’s obligation to cause SGA to do the things listed above is to remain in force until resolution of the proceeding; and

(e)With leave for either party with three working days’ notice.

The urgency application

[15]   The ground advanced by the plaintiffs for the allocation of an urgent fixture related to the plaintiffs needing certain genetic data about their sheep before the October-December sales were concluded. It was also submitted that the data was needed prior to the mating of the plaintiffs’ sheep in the new year which occurred in February and March 2020.

[16]   The memorandum of counsel for the plaintiffs proposed a set of timetable directions that would have had the matter  able to be set down  for hearing  as from  2 December 2019.

[17]   The defendant opposed the application for urgency on a number of grounds including:

(a)the proposal provided no opportunity for the defendant to be heard in opposition;

(b)the urgency of the proceeding was considerably overstated;

(c)the proposal was incomplete and unworkable, and did not allow for the usual steps necessary for a substantive hearing;

(d)the proposal assumed that evidence would be given by way of affidavit when oral evidence was required;

(e)the proposal did not allow enough hearing time for the six witnesses that the defendant expected to call;

(f)the defendant intended to file an application for a defendant’s summary judgment and/or strike-out;

(g)the defendant intended to file a counterclaim seeking enforcement of the terms of a sales agreement concerning arrangements for the

October-November 2019 sales entered into as an interim measure by the parties on 6 August 2019 (the Sales Agreement);

(h)the plaintiffs had alleged that an employee of the defendant had lied to them about the identity of who it sold 21 of the plaintiffs’ best rams to in 2018, telling the plaintiffs that the rams were sold to a customer when in fact they were sold to two Global Breeding Partners (Murnong and Karrawarra) who were the plaintiffs’ direct competitors. The defendant accepted that the plaintiffs had been misinformed but asserted that the need to call evidence explaining the apparent dishonesty would significantly lengthen the time required for a hearing.

[18]   The memorandum of counsel for the defendant dated 30 October 2019, proposed an alternative to the grant of urgency. It:

(a)confirmed the defendant was willing to reach arrangements with the plaintiffs to avoid or minimise prejudice to them pending determination of the substantive issues;

(b)indicated the defendant’s willingness to abide by the Sales Agreement;

(c)agreed to the same data being made available for any rams to be sold in February 2020, on the same terms as in the Sales Agreement (save that the plaintiffs would not be required to pay any share of the sales proceeds to the defendant); and

(d)advised the defendant was prepared to agree to allow an independent expert to have access to the data on the plaintiffs’ flock in LambPlan to prepare a mating plan for 2020 on the terms of the injunction of 29 March 2019 in the original proceeding.

Urgency – the legal tests

[19]   In accordance with the High Court Rules 2016’s objective of ensuring that litigants receive a just, speedy and inexpensive determination of their proceedings,

cases in the High Court are generally dealt with in the order in which they are filed.3 There are exceptions to that, the principal one being applications for interim injunctions, or other forms of interim relief, in circumstances where the tests for the granting of interim relief are met.

[20]   A much less common way of dealing with urgent matters is for a granting of urgency and the allocation of a priority fixture.

[21]   The allocation of a priority fixture has consequences for other litigants. As Gilbert J noted in Alison Trust Holdings Ltd v NZVIF Investments Ltd:4

The problem with granting a priority fixture is that it inevitably disadvantages other litigants by delaying the disposition of their proceedings which were filed earlier and are ahead in the queue. Most litigants want to have their cases disposed of promptly and the Court strives to facilitate this but it has a responsibility to allocate precious hearing time in a manner that is fair and just for all litigants.

[22]His Honour went on to note:5

Exceptional circumstances must be demonstrated before it could be appropriate to allow one litigant to gain preference over others in having their case heard.

[23]   Gilbert J referred to examples given by Barker J in the case of Shattock v Devlin of the circumstances that might justify a priority fixture as including “compassionate grounds; impending financial disaster; the public interest; or the interest of children.”6

[24]   The state of readiness of a proceeding for trial is also a matter that will influence the Court as to whether a priority fixture should be granted. In the case of Deep v Auckland Gold Line Co-Operative Taxi Society Ltd, the lack of preparedness of the matter for trial was held to be a significant factor in the Court declining an application for a priority fixture.7   This was so even though the Court acknowledged

3      High Court Rules 2016, r 1.2.

4      Alison Trust Holdings Ltd v NZVIF Investments Ltd [2016] NZHC 2715 at [7].

5 At [8].

6      Shattock v Devlin (1988) 1 PRNZ 271 (HC) at 278.

7      Deep v Auckland Gold Line Co-Operative Taxi Society Ltd [2018] NZHC 1189 at [4].

that the financial hardship that would be sustained by the plaintiffs, prior to hearing, was a matter of significant concern.8

[25]   Lack of readiness for trial was also a significant factor in the Court declining an application for priority in Alison Trust Holdings Ltd v NZVIF Investments Ltd.9

[26]   The defendant seems to accept that if the plaintiffs cannot get any genetic data about their sheep, they will suffer financial loss. That financial loss will arise from the inability of the plaintiffs to sell their stock for the premium values that they will realise if full genetic data is available at the time of sale, and also the need for the genetic data for the purposes of mating.

[27]   The Court accepted similar arguments when it granted the interim injunction in the original proceedings.10

[28]   However, given that the sales in respect of which the genetic data is relevant are currently ongoing between October and December, the relief sought by the plaintiffs, by way of priority fixture, is not capable of achieving the result they seek. It might also not produce a remedy in time for the mating in February and March 2020.

[29] It was as a result of this concern that during the course of the hearing on 6 November I enquired whether the plaintiffs had considered an application for an interim injunction. That lead to the plaintiffs’ oral application referred to at [14] above.

[30]   Given that the stated position of the defendant, as set out in their synopsis of submissions dated 6 November 2019, was to work with the plaintiffs “to reduce, or avoid, prejudice to them while this proceeding was on foot”, I anticipated that the application for an interim injunction might have been able to be resolved by the giving of undertakings or the making of a consent order. That did not come to pass.

8 At [8].

9 Above n 4, at [12].

10     Croser v Focus Genetics Limited Partnership, above n 2.

1. On 12 November 2019, the defendant filed the following documents:

(a)memorandum opposing the application for interim injunction;

(b)a statement of defence;

(c)defendant’s interlocutory application for summary judgment;

(d)affidavits of Alistair Donald McMechan, Anthony Edward Cresswell, and  Marius  Maris  van  Niekerk,   all   of  which   were  sworn   on 12 November 2019 and were substantial.

[32]   A briefer affidavit from Natalie Kathleen Pickering dated 5 November 2019 had been filed earlier as had another affidavit of Alistair McMechan.

[33]   There were fundamental differences between the contents of these affidavits and those of Damien Leigh Croser, Gerald Leslie Martin and Despina Nicoletta Anagnostou filed for the plaintiffs. Those differences are impossible to reconcile in the context of this interim hearing.

Law on interim injunctions

[34]   The two-step approach of considering whether there is an arguable case (serious question to be tried), and where the balance of convenience lies articulated in Klisser Farmhouse Bakeries Ltd v Harvest Bakeries Ltd remains the test.11 The defendant here accepts that there is a serious question to be tried.

[35]   I find that the plaintiffs have an arguable case that they reached a binding settlement agreement with the defendant. In terms of balance of convenience, the defendant appears to accept that the plaintiffs will suffer significant harm if they do not have access to at least some of the genetic data held by the defendant. I am satisfied that data is critical in relation to the imminent sale of the plaintiffs’ sheep and the preparation of a mating plan prior to mating in February/March 2020.

11     Klisser Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129 at 142.

[36]   For the same reasons articulated in Croser v Focus Genetics Limited Partnership, I am satisfied that damages would not be an adequate remedy for the plaintiffs but would be adequate for the defendant if an interim injunction were to be granted.12

[37]   Counsel for the defendant has urged upon me that one of the factors relevant to the terms of any interim injunction should be what arrangements the parties have made themselves in respect of the interim resolution of the problems leading to the injunction application.13

[38]   The defendant says that one such relevant document is the Sales Agreement. The parties had agreed that the Sales Agreement would cover the October 2019 sales. The defendant has proposed that it should also cover the February 2020 sales, and that the defendant should not be entitled to a share of the profit from those sales.

[39]   The plaintiffs do not accept the defendant’s assertion that the Sales Agreement should form the basis of any interim injunction. In a memorandum of submissions filed on 14 November 2019, counsel submits that the Sales Agreement was a compromise which reflected a number of matters including that, at the time it was entered into, the anticipated October hearing of the original proceedings was imminent, and they were prepared to compromise their claim for data on the basis that the cost and expense of another interim injunction was thereby avoided.

[40]   They submit that, in any event, the Sales Agreement does not resolve “the very issue before the Court” as it related only to the October-December 2019 sales, not the 2020 sales, or the mating decisions that need to be made in early 2020.

[41]   The memorandum also refers to what is said to be a change of position on the part of Mr McMechan. They refer to a comment at [5.37] of his affidavit sworn on 12 November 2019 where he acknowledges telling the plaintiffs’ solicitor that “without the NZ pedigree information, the Croser’s sheep would have lesser breeding value than Focus’ breeding partners”, but he now says that is not correct.

12     Above n 2, at [59]-[66].

13     Relying on Arrow International (NZ) Ltd v NZ Project 29 Ltd [2019] NZHC 1326 at [21].

[42]   The memorandum of 14 November 2019 asserts that the plaintiffs are making a concession by seeking only limited ASBVs for their flock by way of public visibility for two generations rather than five generations.

[43]   The memorandum says the defendant mis-states what the plaintiffs are seeking in stating that the plaintiffs do not seek “the full data set” or “full information” or “all data or all information” as asserted by Mr Cresswell at [9.13], [9.14], [9.16] and [9.20] of his affidavit, but simply the data for two previous generations. They refer to the evidence of Mr Martin as to the absence of pedigree data rendering the Croser’s flock values effectively nugatory.

[44]   As to the defendant’s arguments that the plaintiffs should only be entitled to data on the rams that are proposed to be sold, the plaintiffs say that they need flock data to inform potential purchasers of the rams and also to assist in selecting the rams to be sold, and rams to be culled.

[45]   In a further memorandum dated 15 November 2019 in reply to the plaintiffs’ reply memorandum, counsel for the defendant said that it was:

Common ground that the Crosers should be given access to Focus’ data to carry out three things:

(a)the October 2019 sales;

(b)the mating of their sheep in February 2020;

(c)further sales in February 2020.

[46]   The reference to “access to Focus’ data” is unhelpful given the fundamental disagreement between the parties as to exactly what data this means. The whole reason for these proceedings is the plaintiffs thought they had settled the original proceedings on the basis of receiving one set of data but the defendant thought they had agreed to provide a different set of data.

[47]   The memorandum said that the defendant sought reasonable protection for its data on terms mirroring “the Court’s own orders” (presumably a reference to the interim injunction issued in the original proceedings on 29 March 2019) and an

agreement reached between the parties to resolve the issue of interim relief (presumably the Sales Agreement).

[48]   It is said that the plaintiffs seek orders that the great majority of Focus’ data is made public without any protections whatsoever, and that the plaintiffs have not explained why public access to the entire flock is necessary to sell some of the rams from the flock or why public access to any sheep data is required to prepare a mating plan.

[49]   In relation to the breeding plan, the defendant rejects any suggestion that what the defendant is offering is a restriction on what the plaintiffs received through the injunction, and says:

Focus has offered full access to the complete LambPlan data set for an independent expert to prepare the breeding plan on precisely the same basis as the 2019 injunction.

[50]   The memorandum also suggests that, in seeking data in relation to the current Kiranda sheep, their parents and grandparents, the plaintiffs are seeking something other than two generations of data.

Analysis

[51]   I accept the arguments of the plaintiffs that the Sales Agreement should not conclusively determine the terms of the interim injunction. It was obviously a compromise document entered into shortly before what was anticipated to be the hearing which would fully resolve all outstanding issues as between the parties. Sensibly, the parties made concessions to avoid the cost and effort involved in another interim injunction application.

[52]   I accept the plaintiffs’ submission that delay favours the defendant. Aspects of the conduct of the defendant in these proceedings is inconsistent with their claim not to wish to unnecessarily inconvenience the plaintiffs. An obvious example of this is the pedantic approach taken to the plaintiffs’ application, to be able to use the evidence and discovery in the original proceedings in these proceedings.

[53]   To the extent that I can understand the differences in position between the plaintiffs and defendant in relation to the availability of data, the plaintiffs say that for the purpose of ram sales, they need data going back two generations. I understand this refers to data on the parents and grandparents of the sheep to be sold. It is arguable that, in light of the  information  in  [5.37]  of the  affidavit  of  Mr  McMechan  of 12 November 2019, that in the absence of this information, the plaintiffs’ sheep would have a lesser breeding value than the sheep of the defendant’s other breeding partners.

[54]   In terms of the need for this information to be publicly available, I understand that this is necessary to allow potential purchasers to review it as part of their decision whether or not to purchase.

[55]   Another issue is whether the only data required is that relating to the rams to be sold or the data relating to all of the rest of the flock.

[56]   To the extent that I can understand the volume of evidence contained in all of the affidavits, it seems that the data relating to the rams is the most critical data. There is an assertion that the ewes will not be able to be sold as elite sheep without data, but it is not clear whether, or if, there is to be a sale of the ewes.

[57]   Making the best sense of the information that I can, it would be appropriate for the injunction to require the defendant to provide data on the rams proposed to be sold going back two generations, i.e. including the parents and grandparents of the rams to be sold, and for that data to be publicly available so that potential purchasers of the rams can access it to inform their purchase decisions.

[58]   In relation to the mating of the plaintiffs’ sheep in February 2020, there is no reason why the data used for that purpose should be publicly available.

[59]   In terms of the provision of this data to a breeding plan consultant, the difference between the parties seem to be that the defendant takes exception to the provision of this data to an expert or experts nominated by the plaintiffs as opposed to one agreed by the parties.

[60]   As the expert who receives such data is given it for the sole purpose of preparing a mating plan and will be obliged to destroy or return it once the mating plan is prepared, it is difficult to understand what risk there is to the defendant if the expert is chosen by the plaintiffs rather than jointly agreed.

[61]   Given the inability of the parties to agree on things such as what the terms of the alleged settlement agreement actually are, it would be wholly unrealistic to require them to agree on the identity of the breeding plan consultant to whom the data for mating should be disclosed. It is also possible to see the insistence by the defendant on such a provision as being an attempt to delay matters. Delaying the provision of data would seem to increase the relative bargaining position of the defendant at the expense of the plaintiffs.

[62]   I accept that the defendant is entitled to protection of its data but believe that its interests can be adequately protected by requiring that the plaintiffs identify the breeding plan consultant that they wish the data to be provided to, that the data is provided for the sole purpose of preparation of a mating plan, and following the implementation of the mating plan, the data will be destroyed or returned.

[63]   As far as further sales in February 2020 are concerned, or indeed any further sales that may occur prior to the ultimate resolution of this matter, it is appropriate that pedigree data on the rams being offered for sale is publicly available. As proposed by the defendant for the February 2020 (and any subsequent) sales, the defendant is not entitled to receive a share of the sale proceeds.

Use of evidence and discovery from original proceedings

[64]   Under r 8.30 of the HCR, documents obtained for one proceeding are not available for use in other proceedings unless they have been read out in open Court. However, the High Court has an inherent jurisdiction to permit the use of such documents in other proceedings.14

14     See Hally Labels Ltd v Powell [2013] NZHC 900; Hunter Grain Ltd v Price HC Tauranga CIV- 2008-470-192, 3 August 2010.

[65]   Given the codification of the common law in r 8.30 HCR, the old concept of the parties to proceedings giving an implied undertaking to the Court not to use such documentation in other cases no longer applies in New Zealand.15

[66]   One of the factors that the Court will consider when a party applies to use documentation from one proceeding in another proceeding, is the strength of the factual connection between the two proceedings.16

[67]   It would be impossible to get a stronger factual connection between two sets of proceedings than the present one. The parties are identical, and these proceedings relate to enforcement of an agreement set to have settled the original proceedings.

[68]There is no basis to decline the application and it is granted.

Outcome

[69]   The plaintiffs’ application to use in these proceedings affidavit evidence and discovery material from CIV-2019-485-164 is granted.

[70]   An injunction will issue in the following terms pending further order of the Court:

(a)within 24 hours of this order, the defendant will cause Sheep Genetics Australia (SGA) to make publicly available on LambPlan all Australian Sheep Breeder Values (ASBVs) relating to:

(i)the rams that the plaintiffs propose selling now or at any future ram sale until these proceedings and the original proceedings to which they relate are resolved, such data to include pedigree data on the rams, their parents and grandparents. The data will include the ASBVs linkage and parenting data and index values held for the rams;

15     Hally Labels Ltd v Powell, above n 14, at [18].

16     See Hunter Grain Ltd v Price, above n 14, at [39]; Telstra  New Zealand Limited  v Telecom  New Zealand Limited (2000) 14 PRNZ 541; Hally Labels Ltd v Powell, above n 14, at [44]-[46].

(b)the plaintiffs will pay the costs of the manual data changes necessary to effect public access to the data for the February 2020 sales and any subsequent sale but the defendant will not be entitled to 25 per cent of the proceeds of sale as will be the case in relation to the 2019 sales;

(c)the defendant will offer full access to the complete LambPlan data set to the breeding plan consultant, such data to be used by the plaintiffs’ breeding plan consultant for the sole purpose of creating a mating plan and once the mating plan has been implemented, the breeding plan consultant will destroy or return the data provided;

(d)the defendant will forthwith cause SGA to allow an expert or experts nominated by the plaintiffs to submit to SGA updated data on the plaintiffs’ sheep, and to cause SGA to update the data on the sheep accordingly; and

(e)leave is reserved to either party to apply urgently to the Court for any further directions that might be required to implement this interim injunction.

[71]   As to timetabling of these proceedings, the parties are directed to file within seven working days of this order, a joint memorandum setting out a proposed timetable order, or failing agreement, separate memoranda.

[72]The Court will then deal with the issue of a timetable order on the papers.

Churchman J

Solicitors:

Succeed Legal Limited, Wellington for Plaintiffs Buddle Findlay, Wellington for Defendant

cc:        C M Stephens and T Mijatov