Donovan Group NZ Limited v Reid - [2020] NZHC 3367

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

I TE KŌTI MATUA O AOTEAROA WHANGĀREI-TERENGA-PARĀOA ROHE

CIV-2018-488-113

[2020] NZHC 3367

BETWEEN
DONOVAN GROUP NZ LIMITED

Plaintiff

AND

HAEMISH LEE REID

First Defendant

SMARTSTEEL BUILDINGS LIMITED
Second Defendant

BRETT STEVEN WALDRON
Third Defendant

WALDRON CONSTRUCTIO AND ROOFING LIMITED

Fourth Defendant

Hearing: 1 December 2020

Appearances:

S J Davies-Colley for the Defendants Anthony Jackson as independent counsel

Chris Baird and Peter Magee for the Plaintiff (appearing later)

Judgment:

16 December 2020

JUDGMENT OF ASSOCIATE JUDGE R M BELL

This judgment was delivered by me on 16 December 2020 at 4:00pm
pursuant to Rule 11.5 of the High Court Rules

Solicitors:

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

Thomson Wilson (P J Magee), Whangarei, for the Plaintiff
WRMK Lawyers (S J Davies-Colley), Whangarei, for the Defendants
Copy for:
Anthony Jackson (appointed as independent counsel), Whangarei, for both parties Chris Baird, Southern Cross Chambers, Auckland.

DONOVAN GROUP NZ LIMITED v REID [2020] NZHC 3367

[1] In this breach of confidence proceeding, the plaintiff obtained an interim injunction and search and seizure order in October 2018. The defendants objected to the plaintiff seeing some of the documents that had been seized, saying that they were not relevant and information in the documents was confidential to them. Since then, while some documents have been disclosed to the plaintiff, others remain in issue. I decide which of them the plaintiff may see.

[2] The hearing also dealt with case management matters. The parties agreed that there should be standard discovery which is to be completed by the end of February 2021. They also agreed that the case should go to trial on liability only, with quantum to be decided in a later hearing.

[3] I uphold most of the defendants’ objections. Some documents need to be disclosed but not as many as the plaintiff seeks. That is because the real issues in the case are not as extensive as the plaintiff claims. I also give a ruling on a privilege question and direct how confidentiality is to be protected when documents are inspected.

[4] The plaintiff, Donovan Group NZ Ltd, designs, manufactures and constructs steel-framed buildings. While it was incorporated in the 1990s, the business has been going much longer. Its products range from sheds and garages to barns and large-scale commercial steel buildings. While it is based in Whangārei, it has 25 franchise regions with 22 franchise-holders. Donovan Group uses the trade-name “Coresteel”.

[5] Mr Reid, the first defendant, was employed from 3 February 2012 to 25 May 2018. Before that, he worked for a supplier of electrical equipment. He had not had earlier experience designing and building steel buildings. To start with, he was manager of the Barn Company, a Donovan subsidiary, but later became part of the management team of Donovan Group. He is said to have been privy to the company’s confidential and sensitive commercial information, including designs, specifications, manufacturing processes, pricing schedules, costings, margins, client details and

knowledge of current jobs and potential future…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2020] NZHC 3367
Decision Date: 16 December 2020

CaseChat Overview and Summary

Donovan Group NZ Limited brought proceedings against Haemish Lee Reid, Smartsteel Buildings Limited, Brett Steven Waldron, and Waldron Construction and Roofing Limited for breach of confidence, alleging that Reid had used confidential information he obtained while employed by Donovan Group to compete against it. The defendants objected to Donovan Group seeing some of the documents that had been seized, saying that they were not relevant and that information in the documents was confidential to them. Donovan Group sought to see the documents, but the defendants resisted. The court had to decide which of them Donovan Group may see.

The court considered the defendants' objections and found that most of them should be upheld. Some documents need to be disclosed but not as many as Donovan Group seeks. This is because the real issues in the case are not as extensive as Donovan Group claims. The court also gave a ruling on a privilege question and directed how confidentiality is to be protected when documents are inspected.

The court held that Donovan Group's confidentiality claims are restricted to information about its maturing business opportunities as at 25 May 2018. If it wants to claim confidentiality for other information, it will need to amend its pleading to specify exactly what it is and why it is confidential. For the documents on which the court was required to rule on relevance, only documents within the category Projects in contemplation before Reid left need to be disclosed. Some may be omitted according to what the court set out in the judgment. Documents relevant only to quantum are not to be disclosed yet. Documents which the court directed need not be disclosed are to be returned to the defendants.

The court also ruled that documents attached to or enclosed with communications between lawyers and clients are not privileged if they already existed and privilege did not attach before they were used in the communications. Relevant attachments and enclosures are to be disclosed unless the defendants can satisfy the independent counsel that they have already been disclosed.

The court also gave directions for safeguarding confidentiality when documents are inspected. The parties, their directors, lawyers, and professional advisers must give undertakings to the other side and to the court to inspect documents themselves so that their professionals can give them full advice and they can give informed instructions. The undertakings will require the parties to inspect documents disclosed under discovery solely for the purpose of the proceeding, to safeguard the confidential documents, and not to disclose the documents or copies or the contents thereof, in whole or in part, to any person without first obtaining the consent of the other party or an order of the court allowing disclosure.

Finally, the court gave directions for standard discovery and ordered a case management conference no earlier than the end of February 2021. The parties will be expected to have completed inspection of documents before the conference.

Orders