Dotcom v Twentieth Century Fox Film Corporation
[2017] NZHC 3262
•20 December 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2017-404-1837 [2017] NZHC 3262
UNDER Part 19 of the High Court Rules 2016 BETWEEN
KIM DOTCOM Applicant
AND
TWENTIETH CENTURY FOX FILM CORPORATION; DISNEY ENTERPRISES, INC; PARAMOUNT PICTURES CORPORATION; UNIVERSAL STUDIOS PRODUCTIONS LLP; COLUMBIA PICTURES INDUSTRIES, INC; WARNER PROCEEDINGS, PICTURES INTERNATIONAL
First Respondents
YIFTACH SWERY Second Respondent
Hearing: 13 December 2017 Counsel:
RM Mansfield, SL Cogan and GA Barkle for applicant
MC Sumpter and H Wham for first respondentsJudgment:
20 December 2017
JUDGMENT OF FITZGERALD J [As to access to Court documents]
This judgment was delivered by me on 20 December 2017 at 2 pm pursuant to Rule 11.5 of the High Court
Rules.
Registrar/Deputy Registrar ………………………………… Date……………………………………..
Dotcom v Twentieth Century Fox Film Corporation [2017] NZHC 3262 [20 December 2017]
Solicitors: Anderson Creagh Lai Ltd, Auckland (AM Glenie) Chapman Tripp, Auckland
Introduction and background
[1] The applicant (“Mr Dotcom”) is party to several court proceedings in this country. Two in particular are relevant for present purposes. The first is what I will refer to as the “Extradition Proceedings”, by which the United States of America (“USA”) seeks to extradite Mr Dotcom to the United States to face criminal charges in relation to alleged copyright infringement (“US Prosecution”). The first respondents (the “Studios”) were the complainants which triggered the US Prosecution.
[2] The second set of relevant New Zealand proceedings is what I will refer to as the “NZ Civil Proceedings”, in which the Studios sought and obtained freezing orders over some of Mr Dotcom’s assets in New Zealand. This was against the backdrop of the Studios having commenced civil proceedings against Mr Dotcom in the United States (the “US Civil Proceedings”), based on the same alleged copyright infringements giving rise to the US Prosecution.1
[3] Mr Dotcom now seeks access to this Court’s file in Twentieth Century Fox Film Corporation v Swery (CIV-2015-404-2351) (“Swery Proceedings”). Mr Dotcom says there is a reasonable prospect there is material on that file which will be relevant to matters arising in the Extradition Proceeding, the US Civil Proceeding and/or the NZ Civil Proceeding.
[4] The Studios, as well as being the first respondents to this application, were the plaintiffs in the Swery Proceedings. In those proceedings, the Studios alleged
Mr Swery directly infringed copyright on a significant scale. Mr Swery resides in Auckland. The Studios sought and obtained search orders on a without notice basis. The Swery Proceedings did not have a particularly long life. It seems that reasonably
soon after their commencement, there was a resolution and the proceedings were
1 The US Civil Proceedings are currently stayed pending the outcome of the Extradition
Proceedings and the US Prosecution.
discontinued. In that context, the parties jointly sought an order that the Court’s file be permanently sealed. Thomas J made such an order in November 2015.
[5] The Studios oppose Mr Dotcom’s request for access. They say it is highly unlikely there is any material in the Swery Proceedings which could be of any relevance to Mr Dotcom’s proceedings. Further, the Studios say there is a large amount of confidential and private information on Swery Proceedings file, including information about a vulnerable person. The Studios say these concerns were recognised by Thomas J’s order permanently sealing the Court file.
[6] Mr Swery is the second respondent to Mr Dotcom’s application. He has been served with the papers but has taken no steps.
[7] Mr Cogan, counsel for Mr Dotcom, informed me at the hearing of the application that if access is granted and relevant material located, an application for that material to be adduced by way fresh evidence in Mr Dotcom’s forthcoming appeal in the Extradition Proceedings may be made. That appeal is due to commence in the Court of Appeal on 7 February 2018.
Relevant applicable principles
[8] There is no dispute as to the applicable principles and they may be briefly stated.
[9] The application for access was filed in August 2017. Accordingly, it falls to be determined pursuant to Part 3, Subpart 2 of the High Court Rules 2016, which then governed such applications. Those Rules have since been replaced by the Senior Courts (Access to Court Documents) Rule 2017 (“2017 Rules”), which came into force on 1 September 2017. The Court of Appeal has clarified that a court considering an access request should apply the rules that were in force at the time the application was made, informed by the 2017 Rules.2 Neither counsel suggests any different approach would be reached were Mr Dotcom’s request considered under the 2016
High Court Rules or the 2017 Rules.
2 Greymouth Petroleum Holdings Ltd v Empresa Nacional del Petróleo [2017] NZCA 490 at [18].
[10] In determining whether to grant access to court documents, the Court must consider the nature of, and the reasons for, the application or request.3 In addition, the Court must take into account the following factors:
(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, court 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 rule 3.12:
(f) any other matter that the Judge or Registrar thinks just.
[11] As Asher J noted in E-Trans International Finance Ltd v Kiwibank Ltd, these factors are not in any particular hierarchy and the relevance and weight to be placed upon each will depend on the reasons for the application and the context of the proceeding in question.4 Asher J also noted there is no presumption of access, although access to documents is more readily granted during the substantive hearing stage.5
[12] It is not in dispute that a request for access which seeks information which may assist with other private litigation does not itself mean the purpose of the request is
illegitimate.6 However, that will only be a legitimate purpose if there is a “point to the
3 High Court Rules, r 3.16; Schenker AG v Commerce Commission [2013] NZCA 114, (2013) 22
PRNZ 286 at [2].
4 E-Trans International Finance Ltd v Kiwibank Ltd [2015] NZHC 2164 at [11].
5 At [11].
6 Carolan v NZ Real Estate Credit [2017] NZHC 156, (2017) 23 PRNZ 405 at [24]; Greymouth
Petroleum Holdings Ltd v Empresa Nacional del Petróleo [2017] NZCA 490 at [56].
exercise”.7 As the Court of Appeal observed in Greymouth Petroleum Holdings Ltd v
Empresa Nacional del Petróleo:8
When access is sought to the court file by a non-party, that party will often be unable to point to an exact document of relevance that is on a court file; there will often be an element of “fishing”. However, there must at least be a reasonable prospect that relevant material may be found.
[Emphasis added]
Submissions
Mr Dotcom’s reasons for seeking access - summary
[13] Mr Dotcom advances three reasons for access:
(a) First, information on Swery Proceedings file will be relevant to the Extradition Proceedings, in that it may shed light on the apparent inconsistent treatment of Mr Dotcom and Mr Swery.
(b)Second, information as to the approach to and calculation of damages in the Swery Proceedings will be relevant to the question of damages in the US Civil Proceedings.
(c) Third, the information referred to at (b) above may justify revisiting the scope of the freezing orders granted in the NZ Civil Proceedings, given they were made against the backdrop of the Studio’s damages claims in the US Civil Proceedings.
Material relevant to the Extradition Proceedings
[14] Mr Cogan points to the fact that in relation to what appears to be very similar conduct alleged against Mr Swery and Mr Dotcom, Mr Swery was the subject of civil proceedings only by the Studios, while Mr Dotcom is the subject of both civil
proceedings by the Studios and criminal prosecution by the USA. Mr Dotcom wishes
7 Greymouth Petroleum Holdings Ltd v Empresa Nacional del Petróleo [2017] NZCA 490 at [56].
8 At [57]. See also Carolan v NZ Real Estate Credit [2017] NZHC 156, (2017) 23 PRNZ 405 at [26]; E-Trans International Finance Ltd v Kiwibank Ltd [2015] NZHC 2164 at [13]; Kawarau Village Holdings Ltd v Chi [2015] NZHC 2387 at [14].
to understand the reason for this inconsistency and consider its impact on the
Extradition Proceedings.
[15] Mr Cogan notes that a matter of some relevance in the Extradition Proceedings is whether the conduct alleged against Mr Dotcom gives rise to an offence under s 131 of the Copyright Act 1994. That is because extradition orders can only be made in relation to criminal conduct, and on the basis that had the conduct occurred in New Zealand, it would have been an offence as a matter of New Zealand law. He submits if the Studios thought Mr Swery was potentially criminally liable for the conduct alleged against him, they would have pursued a criminal complaint, as they did in the case of Mr Dotcom. Mr Cogan submits that given there were no criminal proceedings against Mr Swery, the Studios may not have considered Mr Swery’s conduct gave rise to criminal offending. If that were the case, he submits the question is then whether the USA also understood this. If it did, it should have disclosed this uncertainty to the New Zealand extradition court (i.e. the District Court) pursuant to its duty of candour in the Extradition Proceedings. In this context, Mr Cogan highlights the timing of the Swery Proceedings, which were commenced while the Extradition Proceedings were being heard before the District Court.
[16] Mr Cogan quite properly acknowledges the Studios as plaintiffs in the Swery Proceedings are a different party to the USA in the Extradition Proceedings. However, he submits the Studios and the USA clearly work closely together and coordinate various proceedings. He also points to the fact that the Studios are the complainant and alleged victim in the US Prosecution, and certain employees of the Studios can be expected to be witnesses in the US Prosecution. In this way, there is a degree of “connection” or nexus between the Studios and the USA in relation to the US Prosecution and the Extradition Proceedings.
Material relevant to the US Civil Proceedings
[17] The second reason for Mr Dotcom’s request for access is that there is said to be a reasonable prospect material on the Swery Proceedings file will be relevant to the quantum of damages claimed by the Studios in the US Civil Proceedings. Mr Cogan notes that, based on an illustrative list of 30 movies alleged to have been subject to
copyright infringement, the Studios claim damages in the US Civil Proceedings of US$100 million. He submits the Studios may elect between compensatory damages or statutory damages of US$150,000 per infringement. The Studios have evidently not yet made an election and Mr Cogan submits “there is therefore a legitimate question as to how the Studios have calculated the US$100 million claimed”. It is accordingly said the amount claimed in the Swery Proceedings and the number of infringing works alleged will be relevant to the quantum of damages in the US Civil Proceedings.
Material relevant to the NZ Civil Proceedings
[18] Finally, Mr Cogan submits the amount claimed by way of damages in the Swery Proceedings, relative to the number of allegedly infringing works, may indicate a much lower scale of damages available in the US Civil Proceedings. As the scope of the freezing orders made in the NZ Civil Proceedings was based on the Studios’ damages claim in the US Civil Proceedings, this may justify revisiting the scope of the New Zealand freezing orders.
Confidentiality of the Swery Proceedings file
[19] Mr Cogan also responsibly acknowledges that as matters presently stand, the file in the Swery Proceedings is subject to a permanent confidentiality order. However, he submits there have been changes in circumstances which mean a blanket confidentiality order across the entire file is no longer necessary:
(a) There has been significantly more material published about the Swery
Proceeding since Thomas J’s order sealing the file;
(b)Mr Swery is now known in the public domain to have been the defendant in the Swery Proceedings; and
(c) The District Court and High Court decisions in the Extradition Proceeding had not been issued when Thomas J made the order sealing the Swery Proceedings file, such that the interest in the court file now advanced by Mr Dotcom was not before Thomas J at that time.
[20] Finally, Mr Cogan submits that, in addition to Mr Dotcom’s private interest in accessing the Swery Proceedings, there is also a legitimate public interest, namely to understand the apparent inconsistency in Mr Swery and Mr Dotcom’s treatment in relation to what appears to have been similar alleged conduct.
Submissions – the Studios
[21] Mr Sumpter appeared for the Studios in opposition to Mr Dotcom’s application. Mr Sumpter was counsel for the Studios in the Swery Proceedings. His submissions centred on the proposition that there is no reasonable prospect of any material relevant to Mr Dotcom’s proceedings being found on the Swery Proceedings file. Mr Sumpter accordingly submits that, rather than Mr Dotcom’s application having an element of “fishing”, the application is founded on a number of red herrings and is akin to “fishing for snapper in July with soft bait”.9 In short, Mr Sumpter submits:
(a) The Swery Proceedings, being civil proceedings by the Studios against Mr Swery, cannot shed any light on why the USA has brought criminal charges against Mr Dotcom;
(b)Nor will any materials on the Swery Proceedings file provide a window on legally privileged matters, in terms of the Studios’ consideration of their enforcement options and choices in that case;
(c) Nor is there any evidence of the Studios and the USA “working closely together” as Mr Cogan suggests. Mr Sumpter submits that submission simply needs to be made to try to join the dots between what are otherwise unconnected matters.
[22] In response to Mr Cogan’s suggestion that the Studios’ evidence in support of the freezing orders in the NZ Civil Proceedings (which included the USA’s record of
case in the US prosecution) illustrates the Studios and the USA work together,
9 As Mr Sumpter explained to the Court (it not being familiar with such fishing techniques) fishing in that manner and at that time of the year is almost guaranteed to produce a nil result.
Mr Sumpter notes that that evidence is a publicly available document which was simply downloaded from the internet.10
[23] Mr Sumpter further submits that whether the alleged conduct against
Mr Dotcom gives rise to a criminal offence if it occurred in New Zealand is ultimately a matter of law for the New Zealand courts to determine in any event. It will not be informed by the fact or content of civil proceedings against Mr Swery.
[24] Mr Sumpter also notes that two Judges in the Swery Proceedings considered sealing the Court file to be appropriate. Gilbert J made original interim orders to that effect and Thomas J made those orders final. Further, affidavit evidence filed on behalf of the Studios says it would be difficult to fully redact the confidential information on the file (which is extensive), if access were to be given to non- confidential material.
[25] In terms of Mr Dotcom’s suggestion there might be material on the Swery Proceedings file relevant to damages, Mr Sumpter confirmed the relief sought was simply an inquiry as to damages. He submits that in any event, the approach to quantifying damages (a legal issue) is very well settled in both jurisdictions, with the quantum of damages being a factual issue dependant on the evidence in any given case.
[26] For these reasons, the Studios say there is no understandable or legitimate reason for granting access, and particularly one which warrants revisiting Thomas J’s order permanently sealing the court file.
Analysis
[27] I accept a request for access to information on a court file which is relevant to a separate proceeding involving separate parties may be a legitimate reason for access.
However, as the courts have made clear on a number of occasions, including the Court
10 Twentieth Century Fox Film Corporation v Dotcom [2014] NZHC 1789 at [33], at which it is noted that the United States District Court for the Eastern District of Virginia ordered the US government to publicly notify victims of Megaupload (including the Studios) of the evidence held by it.
of Appeal in Greymouth Petroleum, there must ultimately be a point to the exercise. While an applicant need not show there is relevant material on the file to be accessed,
it must nevertheless satisfy the court there is at least a reasonable prospect of such material being found.
[28] I am far from persuaded there is any reasonable prospect of relevant material being found in this case.
[29] First, the Swery Proceedings were civil proceedings brought against Mr Swery by the Studios. Ultimately it is a matter for the Studios as to what enforcement action they pursued. They may or may not have made a complaint to the FBI in relation to
Mr Swery’s alleged conduct. There was no evidence before me on this issue. However, the fact the (civil) Swery Proceedings were brought by the Studios says nothing about the USA's decision-making process in relation to Mr Dotcom. Presumably the USA did consider Mr Dotcom’s alleged conduct to give rise to a criminal offence had it occurred in New Zealand, given it commenced the Extradition Proceedings in New Zealand.
[30] Further, I consider it speculative and somewhat fanciful that even if material on the Swery Proceedings file somehow indicates the Studios had doubts as to whether Mr Swery’s conduct gave rise to criminal offending, that is relevant to the USA's duty of candour in the Extradition Proceedings. In my view, and on the materials before the Court, it is drawing a long bow indeed to suggest any such view on the part of the Studios was either shared with or communicated to the USA (in the course of some close working relationship between the two, as submitted on behalf of Mr Dotcom), or any such view held by the Studios might suggest the USA held a similar view.
[31] Nor am I persuaded there is a reasonable prospect of relevant material being found on the Swery Proceedings file in relation to the quantum of damages in the US Civil Proceedings. Given the very early stage of the Swery Proceedings, the relief sought was an inquiry as to damages, i.e. rather than a more detailed exposition of the Studios’ alleged loss, which might (in theory at least) be relevant to similar issues in relation to Mr Dotcom’s conduct in the US Civil Proceedings. Further and in any event, the question of damages in the US Civil Proceedings will be a mixed question
of law (as to the proper approach to damages in such a case in that jurisdiction) and fact (in terms of the actual calculation of damages). It is difficult to see how the fact an inquiry as to damages was sought in civil proceedings in New Zealand against a different person will be relevant to a US’s court’s consideration of those issues.
[32] For similar reasons, I do not accept that there is a legitimate public interest in access being granted, based on the suggested inconsistent treatment of Mr Swery and Mr Dotcom. For the reasons already outlined above, the fact the Studios took civil proceedings against Mr Swery will not say anything about why the USA chose to prosecute Mr Dotcom.
[33] For these reasons, I consider the prospect of the Swery Proceedings file containing material relevant to Mr Dotcom’s proceedings as very weak indeed.
[34] Against that backdrop, I do not consider the factors set out in r 3.16 point to access being granted. In terms of the orderly and fair administration of justice, given there is already an order permanently sealing the court file, there would need to be clear grounds for revisiting that order and granting a non-party access. Further, it appears the parties to the Swery Proceedings sought the sealing of the court file in the context of a resolution of those proceedings. Were third parties later to be granted access to a sealed file, and at least without strong and clear grounds for such access, agreed resolution of proceedings in that way might be undermined.
[35] There is no dispute the file contains confidential and private information which requires protection. If there were otherwise good grounds for access, this factor alone would unlikely justify refusing access altogether. Access could be granted to non- confidential information, or on strict conditions to protect confidentiality. Similarly, the mere fact there might need to be extensive redactions
would also not justify refusing access if all other factors pointed to access. The relevant factors in this case do not, however, point to access being granted.
[36] In considering the principle of open justice, the courts have consistently stated this factor will have greater weight during the substantive hearing phase, a principle which is now reflected in the 2017 Rules.11 As noted, the Swery Proceedings were discontinued at a very early stage, without any hearings in open court. The material on the file is accordingly untested through a trial in the ordinary way.
[37] Finally, the freedom to seek, receive and impart information is largely driven by the legitimacy of the request for access. In this case, I do not consider this factor to carry significant weight. In this context, I do not accept Mr Cogan’s submission that there is a compelling public interest in Mr Dotcom having access to the file, in order to scrutinise what is said to be an inconsistency between his treatment and that of Mr Swery. Again, this comes back to the point that there is no demonstrable nexus between the Studios’ private litigation against Mr Swery and the USA's criminal prosecution of Mr Dotcom.
Result
[38] Mr Dotcom’s application is accordingly dismissed.
Costs
[39] The parties are encouraged to seek to agree costs. Given the application has been declined, my provisional but non-binding view is that costs ought to follow the event in the usual way, on a 2B basis.
[40] If the parties are unable to agree on costs, the Studios may file a memorandum within 15 working days of the date of this judgment, with Mr Dotcom to file any memorandum in response within a further 10 working days. Absent a request by either
party to be heard, I will then determine costs on the papers.
11 See for example, GFD I LLP v Melview (Kawarau Falls Station) Investments Ltd (in rec) [2012] NZHC 677, (2012) 21 PRNZ 125 at [16]; 2017 Rules, r 13(a) and (b).
Fitzgerald J
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