Darby v Team Kiwi Racing Limited HC Auckland Civ-2010-404-4228

[2010] NZHC 2384

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2010-404-004228

BETWEEN  MATTHEW LEIGH DARBY Plaintiff

ANDTEAM KIWI RACING LIMITED Defendant Company

Judgment:      14 December 2010 15:00:00

JUDGMENT OF COURTNEY J

This judgment was delivered by Justice Courtney on 14 December 2010 at 3:00 pm

pursuant to R 11.5 of the High Court Rules.

Registrar / Deputy Registrar

Date……………………….

Solicitors:           Edmund Lawler & Associates Limited, P O Box 25931, St Heliers, Auckland

Fax: [phone] – G A Hikaka

McVeagh Fleming, P O Box 13723, Onehunga, Auckland 1643

Fax: [phone] – C A Anderson

DARBY V TEAM KIWI RACING LTD HC AK CIV-2010-404-004228 14 December 2010

[1]      The Herald on Sunday has applied for permission to inspect and copy the Court file in this proceeding.  The application is opposed by the plaintiff, Mr Darby. The defendant, Team Kiwi, has not given any response to the Herald on Sunday’s request.

[2]      In July 2010 the plaintiff, Matthew Darby, applied for an order placing the defendant, Team Kiwi Racing Limited, in liquidation.  Team Kiwi responded with an application for orders that Mr Darby’s proceeding be struck out or stayed and that advertising be restrained.  Mr Darby agreed not to advertise the proceedings until the application to strike out had been determined.   Before that application was heard however, the parties entered into a settlement agreement, a term of which requires them to keep the terms of the agreement confidential.  The steps required to be taken under the settlement agreement will not be completed until late December 2010 or early January 2011.  The proceeding has been adjourned for mention on 28 January

2011.

[3]      The Herald on Sunday’s application falls under R 3.13 which provides for permission to access documents, the Court file or the formal Court record other than at the hearing stage.   Rule 3.16 requires the Judge or Registrar considering an application under R 3.13 to consider the nature of and reasons for the application and to take into account each of the following matters relevant to the application:

(a)       The orderly and fair administration of justice;

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

(c)      The principle of open justice, namely encouraging fair and accurate reporting of and comment on all hearings and decisions;

(d)      The freedom to seek, receive and impart information;

(e)       Whether a document to which the application or request relates is subject to any restriction under R 3.12;

(f)      Any other matter that the Judge or Registrar thinks just.

[4]      The factors required to be considered in R 3.16 point to a balancing exercise between the principle of open justice and potential public interest in the proceedings against the privacy and expectations of confidentiality of the parties.

[5]      The current regime for access to court documents was introduced by the High Court (Access to Court Documents) Amendment Rules 2009 and brought significant changes to the test for allowing access to court documents.  In BNZ Investments v Commissioner of Inland Revenue Wild J described these changes:[1]

[1] (2010) 24 NZTC 23,997

[12]      The current rules shifted the emphasis from the nature of the persons interest   to   the   nature   of   the   information   requested,   with   almost   a presumption of disclosure, unless the content of the information provides a good reason for non-disclosure.  Further the two-step test described by the Court of Appeal in McCully is now a single balancing test; there is no preliminary question of eligibility.

[15]     I consider that the threshold for a non-party such as Maddocks to obtain access to Court documents is now considerably lower.  That lowering has been achieved in two ways.  First, the two-step test has been replaced by an  overall  balancing  test.    Secondly,  the  substance  of  the  test  has  now shifted.  It now focuses on open justice and freedom of information, almost to the point of creating a presumption of disclosure.

[6]      These  comments  reflect  the  general  statements  regarding  access  to  court records by the Supreme Court in Rogers v Television NZ Limited which are apt, even though made before the introduction of the current regime:[2]

[2] [2007] NZSC 91

[67]     …The rules relating to the search of court records envisaged the balancing of competing interests.  It is difficult to possit a case in which the principle of open justice will not, to a greater or lesser extent, be a factor in favour of relief.  It is therefore more generally appropriate to administer the rules on the basis that unless there is some good reason for withholding the material concerned, members of the public or at least those with a bona fide purpose in obtaining the information, should be entitled to it.  The freedom of information culture which exists in New Zealand and its counterpart, the right  to  freedom  of  expression,  both  justify  this  general  approach.    In

practical terms the effect of this approach is that if the balance of competing factors is even, the material in question should be released.

[7]      Although there have been several cases decided under R 3.13 the factual circumstances of those are different to the present in that they relate either to proceedings that had already concluded3  or were in the process of the substantive hearing stage.4

[8]      A helpful example however of the balancing of the kinds of factors present in this case appears in Target Pest Enterprises Ltd (in receivership and in liquidation) v Crichton & Anor.5   In that case the plaintiff liquidators sought a direction pursuant to s 284 Companies Act 1993 confirming their decision to enter into settlement arrangements and, in addition, a direction prohibiting the search of the Court file. Panckhurst J observed that:

[36]      …The order prohibiting any search of the file was sought on account of the without prejudice and confidentiality terms which are contained in each of the deeds.  These are intended to protect the parties to the intended proceeding during the period until the settlement is approved and implemented.  If the composite settlement does not proceed then it is only right  that  settlement  negotiations  and  the  proposed  terms  of  settlement should remain confidential.   Otherwise the intended defendants’ rights in resisting the liquidator’s claim (should it come to that) may be compromised.

[37]      However, assuming the settlement does proceed I am satisfied that it would be wrong for there to be a blanket prohibition upon the search of the court file.   It is a fundamental principle that court proceedings should be open to public scrutiny unless there are compelling reasons to the contrary; see Glaister v Amalgamated Dairies Ltd (2002) 16 PRNZ 756 (HC) and R & M v Commissioner of Inland Revenue (2003) 17 PRNZ 28 (HC).  Here, it is appropriate that this principle should bend to protect the position of the intended defendants, at least to the point where the settlement is finalised. But from that point I am satisfied that any application to search the court file should be considered on its merits.

[9]      There is also another factor to be considered in this case and one which was alluded to by Wild J in BNZ.  In his review of the position in other jurisdictions, Wild J referred to the corollary of open justice as the paramount consideration being

whether the documents had been adduced in evidence:6

3 ASB Bank Limited v Versalko HC Auckland CIV2009-404-005449, 4 May 2010

4 United Civil Construction Ltd v Matauri Bay Properties Ltd (2010) 19 PRNZ 610
5 CIV-2009-4-09-001669, 5 October 2009

6 Citing Sackville J in Seven Network Ltd & Anor v News Ltd & Ors (No 2) (2005) 148 FCR 1 at [27]

[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 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.

[10]     The current position is that because of the parties’ agreements in relation to the restraining of advertising and the subsequent of all matters between them, the Court has not been required to consider any of the documents filed by the parties. Further, there is a settlement agreement with confidentiality provisions in it which has, as yet, not been finalised.   These two factors clearly outweigh any basis on which access might be permitted on the principles of open justice.   Depending on whether the settlement is finalised, as expected, it may be that a further application could be made, although I do not express any view as to the outcome of such an application.

[11]     The application is refused.

P Courtney J