Du Val Group NZ Limited v Servsync Limited - [2024] NZHC 1728

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2022-419-000232 CIV 2022-419-000296

[2024] NZHC 1728

IN THE MATTER of Parts 19 and 32 of the High Court Rules 2016 and Senior Courts Act 2016

AND IN THE MATTER

of a without notice originating application for freezing orders and ancillary orders under rr 32.2 and 32.3 of the High Court Rules 2016

BETWEEN

DU VAL GROUP NZ LIMITED and DU VAL MANAGEMENT LIMITED

Plaintiffs

AND

SERVSYNC LIMITED

First Defendant

STUART GOODFELLOW
Second Defendant

RED CELL CYBER LIMITED

Third Defendant

Hearing: 24 June 2024 (heard at Rotorua via VMR)

Appearances:

K A Lomas & LHH Hunt for the Plaintiffs (via VMR) E J Grove for the Defendants (via VMR)

Judgment:

27 June 2024

JUDGMENT OF TAHANA J

Solicitors / Counsel:

This judgment was delivered by me on 27 June 2024 at 11.00am.

Pursuant to Rule 11.5 of the High Court Rules.

…………………………

Registrar/Deputy Registrar

Braun Bond & Lomas Ltd, Hamilton Lateral Lawyers Ltd, Auckland
Chris Patterson Barrister Ltd, Auckland

DU VAL GROUP NZ LTD v SERVSYNC LTD [2024] NZHC 1728 [27 June 2024]

Introduction

[1] On 29 May 2023 the parties agreed tailored discovery for specified categories of documents, and I made orders accordingly.1

[2] The plaintiffs subsequently discovered documents within those categories using keywords that they had proposed to the defendants. The plaintiffs did not use the further keywords proposed by the defendants nor did the discovery include documents from software platforms that the defendants had identified to the plaintiffs.

[3] The defendants now apply for further discovery from the plaintiffs. The application seeks 13 types of records. After further engagement between the parties, the defendants now only seek orders in relation to four types of records. This judgment is therefore limited to whether discovery is required of those further records as follows (adopting the defendants’ numbering):2

1.1.1A full copy of Mr Goodfellow’s Outlook emails and calendar appointments during the period of his engagement by the plaintiffs.

1.1.5A copy of all electronic records from the plaintiffs’ Microsoft Azure platform relating to the plaintiffs’ development, during the plaintiffs’ engagement of Mr Goodfellow, of the PropTech Platform (the Platform) and, in particular, all such documentation recording the progressive coding and testing activities conducted during the development of the Platform.

1.1.10Electronic copies of all signed Docusign contracts executed during the plaintiffs’ engagement of Mr Goodfellow and relating to the development of the Platform.

1 Du Val v Servsync Ltd HC Hamilton CIV-2022-419-000232, CIV-2022-419-000296, 30 May 2023
(Minute of Tahana J) at [3].
2 In relation to category 1.1.2, at the hearing, Mr Grove confirmed that this category is captured by category 1.1.1 so is no longer necessary.

1.1.12All documentation relating to the sourcing of sales and rental data for use by the Platform.

[4] The plaintiffs are willing to conduct appropriate further keyword searches but say that the further discovery of the documents as requested would result in disproportionate expense and/or delay.

[5] Before considering the…

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: [2024] NZHC 1728
Decision Date: 27 June 2024

CaseChat Overview and Summary

In the High Court of New Zealand, the case of Du Val Group NZ Limited and Du Val Management Limited v Servsync Limited, Stuart Goodfellow, and Red Cell Cyber Limited concerns a dispute over discovery of specific documents and the associated obligations under the High Court Rules 2016. The plaintiffs, Du Val Group NZ Limited and Du Val Management Limited, brought claims against Servsync Limited, Stuart Goodfellow, and Red Cell Cyber Limited for various alleged breaches of contract and fiduciary duties. The defendants counterclaimed against the plaintiffs for unpaid invoices and an equity stake in a PropTech Platform. The defendants sought additional discovery of specific records, arguing that the plaintiffs had not met their obligations under the agreed tailored discovery process. The plaintiffs opposed the application, asserting that the discovery process was disproportionate and costly.

The court was required to determine whether the plaintiffs were obligated to provide the records sought by the defendants under the tailored discovery process. Key issues included the adequacy of the discovery conducted to date, the proportionality of the discovery sought, and the obligations of the parties under the High Court Rules 2016. The court also needed to assess whether the defendants' request for further discovery was reasonable and proportionate to the issues in the proceeding.

The court found that the defendants' application was premature, as the plaintiffs had indicated a willingness to conduct further keyword searches and had proposed methods for locating relevant documents. The court emphasised the importance of cooperation between the parties in identifying and locating relevant documents. The court concluded that the defendants had not sufficiently engaged with the plaintiffs to narrow the scope of the discovery and had not provided adequate justification for their requests. The court rejected the defendants' argument that the plaintiffs should provide all electronic records for review, noting that such an order would require the disclosure of irrelevant documents and was not supported by law. The court also directed the parties to provide further information to facilitate more targeted searches and to address any potential affirmative defences or need for further particulars.

The court dismissed the defendants' application for further discovery but directed the parties to exchange information to facilitate more targeted searches. The court ordered the defendants to provide a list of key individuals and relevant search terms for specific categories of documents, and required both parties to collaborate in identifying relevant suppliers and contracting parties. The court also granted leave for either party to apply to the Court for resolution of any disputes in relation to the directions. The issue of costs was reserved until further discovery was completed.

Orders