Ecostore Company Limited v Worth
[2017] NZHC 2943
•29 November 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2017-404-672 [2017] NZHC 2943
BETWEEN ECOSTORE COMPANY LIMITED
Plaintiff
AND
GILLIAN HELEN WORTH Defendant
Hearing: 13 November 2017 Appearances:
J McBride for the Plaintiff
A Toohey for the DefendantJudgment:
29 November 2017
JUDGMENT OF GORDON J
This judgment was delivered by me
on 29 November 2017 at 3.30 pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date:
Solicitors: Powle & Hodson Ltd, Auckland
Shauna McClelland, Christchurch
Counsel: J McBride, Auckland
A Toohey, Christchurch
ECOSTORE CO LTD v WORTH [2017] NZHC 2943 [29 November 2017]
Introduction
[1] The plaintiff (Ecostore) has applied under r 9.34 of the High Court Rules 2016 for an order for inspection of the defendant’s (Ms Worth) laptop computer.
[2] Ms Worth opposes the application in its present form but consents to an appropriate inspection order on reasonable terms.
[3] Ecostore also seeks an order for costs in relation to its application challenging Ms Worth’s claim of confidentiality in certain documents. That application was also to have been heard on 13 November 2017 but has been resolved without the need for a hearing.
[4] Ms Worth opposes the application for costs on the withdrawn application and claims costs herself against Ecostore on the basis that costs should follow the event.
Background
[5] The relationship between the parties and the background giving rise to the dispute are conveniently summarised in a judgment of Gilbert J.1 Ms Worth had applied for an order striking out all causes of action in the proceeding contending that the Employment Relations Authority had exclusive jurisdiction to determine all three claims. The application to strike out the proceeding was dismissed. The judgment records the following:
[1] Ecostore Company Ltd is an Auckland-based manufacturer and distributor of household cleaners and body-care products. It seeks to produce products that exclude toxic and unnecessary chemicals, making them safer for people and the environment. Gillian Worth, who lives in Christchurch, was employed by Ecostore as a development chemist under two short-term contracts, each lasting a little over three months, spanning the period from
9 May 2016 to 25 November 2016.
[2] There is no dispute that throughout the period of her employment, Ms Worth transferred confidential information belonging to Ecostore to her personal email account and that she retains this information. The information includes sales data, product formulations, development ingredient databases, product test results, consumer testing information and a surfactant study plan. Ms Worth is now employed in a similar capacity by Earthwise Group Ltd, a direct competitor of Ecostore based in Christchurch.
1 Ecostore Company Ltd v Worth [2017] NZHC 1480.
[3] Ecostore seeks an injunction restraining Ms Worth from using its confidential information, requiring the return or destruction of all documents containing confidential information, and damages or an account of profits for any misuse of this information. Ecostore advances three causes of action as justifying this relief, breach of confidence, conversion, and breach of copyright. These causes of action are all founded on the retention and misuse of the same confidential information.
[4] The background allegations pleaded for all three causes of action refer to the terms restricting the use of confidential information in the employment agreements. These include terms: prohibiting Ms Worth, other than in the reasonable performance of her duties to Ecostore, from removing, disclosing or using any of its intellectual property without its written consent; prohibiting
Ms Worth from removing, copying or transmitting any confidential information from Ecostore’s premises without its consent unless this is in the normal course of her duties; and requiring Ms Worth to respect the confidentiality of Ecostore’s confidential information at all times during and after her employment and not to divulge it to anyone or use it for any purpose other than in connection with her employment without Ecostore’s consent.
Procedural history
[6] I set out briefly parts of the procedural history that are relevant to this decision.
[7] Ecostore filed its statement of claim on 11 April 2017. On 12 April 2017
Fitzgerald J heard an urgent application by Ecostore on a without notice basis for search orders in respect of information located on electronic devices at Ms Worth’s premises. The application for search orders was refused as Fitzgerald J was not satisfied that Ecostore had demonstrated that there was a real possibility that, but for the orders, Ms Worth would take steps to destroy evidence.2
[8] Despite that conclusion, Fitzgerald J considered that the evidence before her gave rise to some concern. The Court therefore made orders granting the interim injunctive relief sought by Ecostore which, in essence, prohibited Ms Worth from disclosing, using, copying or divulging various categories of documents derived from Ecostore pending further order of the Court.
[9] Notwithstanding the grant of interim relief, Ecostore remained concerned that
Ms Worth continued to retain its highly confidential material, given her new role with
Ecostore’s main competitor. Accordingly, following the delivery of the judgment of
2 Ecostore Company Ltd v Worth HC Auckland CIV-2017-404-672, 12 April 2017 (Minute of
Fitzgerald J).
Gilbert J on 29 June 2017 Ecostore was anxious to proceed with discovery as soon as possible to enable it to determine what had happened to its confidential information.
[10] On 9 August 2017, prior to any affidavit of documents being filed, Ecostore filed the present application seeking to inspect a clone of Ms Worth’s laptop, which had been imaged by a forensic IT specialist engaged by Ms Worth. In its memorandum in support of the application, Ecostore stated that the purpose of the inspection was to determine whether its confidential information had been misused or transmitted in any way. The memorandum further stated that the information at issue was effectively a blueprint of its business and was highly sensitive.
[11] On 5 September 2017, the parties filed a detailed joint memorandum as to the manner in which Ms Worth would provide tailored discovery. The memorandum set out a process by which a forensic computer expert engaged by Ms Worth, Ms Tina Payne, would search the clone of Ms Worth’s laptop. A schedule to the memorandum listed 78 keywords for Ms Payne’s search.
[12] On 6 September 2017, van Bohemen J issued orders by consent in terms of the joint memorandum with a sworn list of documents required to be filed and served by
3 October 2017. Ms Worth complied, at least insofar as the date was concerned, by filing an affidavit of documents on 3 October 2017 (the first affidavit of documents).
[13] In response Ecostore filed a memorandum on 4 October 2017 setting out why, in its view, the affidavit did not comply either with the orders made by consent or, more generally, the High Court Rules. Ecostore therefore sought inspection orders in accordance with its 9 August 2017 application.
[14] On 9 October 2017, the matter came before me as Duty Judge and I ordered that Ms Worth file and serve an affidavit of documents which complied with the listing and exchange protocol of Part 2 of Schedule 9 of the High Court Rules by 24 October
2017. A second affidavit of documents variously records that it was sworn on 24 and
25 October 2017. It was filed on 25 October 2017 (the second affidavit of documents).
Application for inspection order
[15] Ecostore now pursues, in a modified form, its application for inspection of Ms
Worth’s laptop computer.
Ecostore’s position
[16] Mr McBride, who appears for Ecostore, submits that the documents that have been discovered to date demonstrate that a full forensic examination of Ms Worth’s laptop is now necessary to establish the extent to which Ms Worth has been using Ecostore-sourced confidential information in her new role at Earthwise.
[17] Mr McBride says that Ecostore wishes to examine the laptop to determine: (a) How Ecostore-generated emails were migrated to Ms Worth’s laptop; (b) The email addresses of the senders and recipients of those emails;
(c) The folder structure of the “files for Ecostore” and “Gills new enterprise\Ecostore\” folders, including any content stored in those folders;
(d)Whether Ms Worth has been storing emails and spreadsheets from her Earthwise address on her laptop, in the same way she did with Ecostore emails; and
(e) Whether Ms Worth has been populating and cross-pollinating any other spreadsheets with information sourced from Ecostore, and whether those spreadsheets have assisted her with her work at Earthwise.
[18] Mr McBride proposes a full inspection of the laptop clone by counsel for Ecostore, assisted by an independent IT expert, Mr Budge, who has been retained by Ecostore since the early stages of this proceeding. The necessary undertakings regarding confidentiality would be given.
Ms Worth’s opposition
[19] Ms Toohey, appearing for Ms Worth, opposes the application on the following grounds:
(a) Ms Worth’s discovery was comprehensive, fully compliant with Schedule 9 to the High Court Rules, and was completed by an appropriately qualified forensic expert in terms of an agreed process and did not omit relevant documents. Ms Payne has deposed in an affidavit filed in support of Ms Worth’s opposition to Ecostore’s application that any Earthwise documents containing confidential information of Ecostore would have been discovered by the keyword searches. There is no basis for the contention that there are undiscovered relevant documents on Ms Worth’s laptop. Ecostore’s application amounts to a fishing expedition.
(b)Ms Worth is not required to list email addresses pursuant to Schedule 9 of the Rules, but as stated by Ms Payne in her affidavit, the native documents can be provided to Ecostore.
(c) The laptop is Ms Worth’s personal laptop, and contains highly personal, sensitive and confidential material (both pre-dating and post-dating, and completely unrelated to, Ms Worth’s employment with Ecostore).
(d)Ms Worth has always accepted that she retained Ecostore’s confidential information, in the form of her work emails from when she was employed by Ecostore.
(e) While Ms Worth has admitted retaining her work emails, and forwarding several of them to her work email account of her current employer, she has denied using any confidential information of the plaintiff in her current work and there is no evidence from Ecostore to support any contention of “cross-pollination” of its confidential information to the product formulations of the Earthwise skincare
range, said to be now publicly available. There is no evidence of any misuse by Ms Worth of Ecostore’s confidential information.
(f) The proposed deletion of key word searches from Ecostore’s 9 August
2017 application and the proposal that any files located by Ecostore’s computer expert be provided to Ecostore’s solicitor and counsel for review to determine relevance, removes any safeguards conventionally required by the Court.
(g)The inclusion of irrelevant documents in the first affidavit was not for the purpose, as alleged on behalf of Ecostore, of obscuring incriminating material amongst many thousands of perfectly anodyne emails in order to obscure what was actually happening. Rather, given the successive renewal of Ecostore’s application for inspection of her laptop, Ms Worth understandably erred on the side of caution in listing documents.
[20] Ms Toohey further submits the matters raised by Mr McBride, as set out in
[17](a) to (e) can be addressed by way of answers to interrogatories.
[21] Finally, and notwithstanding Ms Worth’s opposition, she is prepared to agree to an inspection of the clone of her laptop by an independent expert acceptable to both parties. Ms Toohey submits that Mr Budge would not be suitable for this purpose as he has been already retained by Ecostore. The search would be conducted on the same terms and in the same manner as conducted by Ms Payne in accordance with the 6
September 2017 order of van Bohemen J.
The law relating to inspections
[22] Rule 9.34 reads:
9.34 Order for inspection, etc
(1) The court may, for the purpose of enabling the proper determination of any matter in question in a proceeding, make orders, on terms, for—
(a) the inspection of any property:
(b) the taking of samples of any property: (c) the observation of any property:
(d) the measuring, weighing, or photographing of any property: (e) the conduct of an experiment on or with any property:
(f) the observation of a process.
(2) An order may authorise a person to enter any land or do anything else for the purpose of getting access to the property.
(3) In this rule, property includes any land and any document or other chattel, whether in the control of a party or not.
[23] It is clear from the plain words of r 9.34 that orders for inspection are only to be made where they are for the purpose of enabling the proper determination of any matter in question in the proceeding. In other words, the inspection must be relevant to an issue in dispute in the proceeding.
[24] Once the threshold jurisdiction has been established, exercise of the discretion in favour of an order is likely.3 Any orders are to be made on appropriate terms.
[25] The application of r 9.34 in relation to the search of a computer system was summarised by Associate Judge Bell in Gillespie v Guest (No 1):4
[65] More recently the courts have made orders under this rule to allow the inspection of computer systems to search for documents. Examples are Tyco Flow Pacific Pty Ltd v Grant, PAE (New Zealand) Ltd v Brosnahan and Transpacific All Brite Ltd v MPC Traders Ltd. These orders go beyond inspection of the computer systems to ascertain their inherent states or properties, to enable the party seeking inspection to obtain discovery of documents. They are really extended discovery orders. As discovery of documents ought to be achieved by the rules under Part 8 of the High Court Rules, the party seeking inspection of another party’s computer systems to obtain documents needs to satisfy the court that there is good reason for this additional form of discovery. In each of the three cases above the court did
3 Tyco Flow Pacific Pty Ltd v Grant HC Auckland CIV 2003-404-4121, 18 March 2005 at [42].
inquire and was satisfied that there was good reason. Generally the party seeking the inspection order persuaded the court that the other side’s discovery was arguably inadequate and there was reason to believe that further documents would be found on a computer system. Accordingly for this application inspection should only be required if there is good reason to believe that other discovery by Mr Guest has been inadequate and that documents may be found on his computer systems.
[26] More recently in AFI Management Pty Ltd v Lepionka & Company Investments Ltd, this Court granted inspection of a computer system by an independent expert to determine, in the first instance, whether access was available to historic emails and documents.5
[27] The courts have not allowed discovery or inspection where the purpose of the inspection is an impermissible fishing expedition. As stated by Asher J in Intercity Group (NZ) Ltd v Nakedbus NZ Ltd:6
[34] The whole purpose of discovery is to fish for documents, in the sense that a party does not know exactly what documents discovery will reveal, or their contents. Fishing is permissible if the categories of documents sought can be assumed to relate to a matter at issue. Such fishing becomes impermissible where what is sought is not relevant to any pleaded cause of action, but might reveal material that could be the basis of a new head of claim. As Chilwell J observed in AMP Society v Architectural Windows Ltd:
An applicant is fishing when he seeks to obtain information or documents by interrogatories or discovery in order to discover a cause of action different from that pleaded or in order to discover circumstances which may or may not support a baseless or speculative cause of action.
[28] In this case the parties are agreed that the central issue in the proceeding is whether Ms Worth has converted Ecostore’s confidential information to her own use and/or the use of Earthwise.
Should an inspection order be made in this case?
[29] I am satisfied that the information sought by Ecostore, as outlined at [17] above, is relevant to the central issue in these proceedings. I am additionally satisfied that the application to inspect the clone of Ms Worth’s laptop is not a fishing expedition
in the sense set out by Asher J in [27] above. Ecostore does not seek to discover a
5 AFI Management Pty Ltd v Lepionka & Company Investments Ltd [2017] NZHC 1176.
cause of action which is different from that already pleaded or to discover circumstances which may support a baseless or speculative cause of action.
[30] The question then arises whether an order for inspection is justified in the circumstances of this case.
[31] Mr McBride submits that there is reason to doubt the veracity of statements made by Ms Worth in other documents filed in these proceedings. Specifically, he says, the Court cannot rely on what has been said by Ms Worth in her 18 May 2017 affidavit (that she has not misused any of Ecostore’s confidential information) and the submissions made based on that affidavit:
(a) Ms Worth’s affidavit of 18 May 2017 annexed a letter from Clendons (the solicitors acting for Earthwise), dated 9 May 2017. That letter was addressed to Earthwise Group Limited. It advised that Earthwise took immediate steps to preserve electronic information, and that only four emails were said to have been located of potential relevance. Submissions for Ms Worth dated 24 May 2017 stated:
It is apparent from the report of Clendons solicitors, that no confidential information has been provided to Earthwise, and furthermore that they have no interest in it.
(b)Further comments to this effect were made in submission for Ms Worth dated 6 August 2017, where it was submitted that:
The evidence does not therefore support the proposition that she transmitted confidential information for her own benefit or the benefit of a new employer.
(c) And:
The Court can have comfort from the full report by Clendons, which demonstrated that only four emails have been transmitted from her Ecostore email to Earthwise, and none of these in Clendons’ view contained confidential information.
(d) Then:
There is therefore no evidence to support the contention that there is a risk that Ms Worth’s laptop has been or is being misused by her by transmitting it to third parties or using product formulations to assist her in her new role as the plaintiff has set out in its memorandum.
[32] Mr McBride says those claims are not accurate. He refers to a report annexed to Ms Worth’s first affidavit of documents which listed a number of documents that responded to a search for the key word “claims by ingredient for substantiation”. The keyword was the name of an Excel spreadsheet that Ms Worth had routinely copied to her personal ihug address while she was employed by Ecostore. Mr McBride says the spreadsheet is highly confidential as it lists the ingredients that Ecostore was proposing to use in its new skincare range, and itemised the claims that could be made in respect of those products.
[33] Additionally, Mr McBride says that on 24 March 2017, by which time
Ms Worth was working for Earthwise, she emailed that spreadsheet to herself at [email protected]. This contradicts the evidence referred to in [31] above.
[34] Mr McBride further draws the Court’s attention to one of the reports in the first affidavit of documents which lists various documents located in a folder in Ms Worth’s computer with the file path “\Docs\Gillsnewenterprise\ecostore\”. Mr McBride says that folder contained what he described as “swathes of confidential Ecostore information”. It is apparent that Excel spreadsheets included within that material were accessed by Ms Worth in February, March and April 2017 while Ms Worth was working for Earthwise.
[35] The folder called “Files for Ecostore” contains further confidential information including a spreadsheet listing the individual product recipes for all of Ecostore’s products, together with the cost of the ingredients, the formulation objectives, and comments on the performance of the ingredients. Mr McBride submitted that this was a blueprint for the entire Ecostore range. The document was last accessed on 17 March
2017.
[36] I do not, in this interlocutory application, make any finding as to credibility. However, I accept that there is apparent contradiction between what Ms Worth says in
her 18 May 2017 affidavit (that she has not misused any of Ecostore’s confidential information) and the evidence from Ms Payne that Ecostore files were accessed on Ms Worth’s laptop in February, March and April 2017 at a time when Ms Worth was working for Earthwise.
[37] However, I do not consider that the existence of this contradiction necessarily supports Mr McBride’s submission that a full forensic inspection of the cloned laptop is required at this stage, for two reasons.
[38] First, I am unable to identify any logical connection between potential credibility issues in respect of Ms Worth and the necessity for a full inspection of the cloned laptop. The documents that have been discovered to this point were identified following a comprehensive keyword search of the laptop clone, carried out by a competent IT expert. Ms Worth played no part in that process.
[39] Second, I consider that with one exception, the documents and/or information sought by Ecostore can be provided without a full inspection of the cloned laptop:
(a) The migration of emails to Ms Worth’s laptop: At the time of commencing proceedings, Ecostore had discovered 193 instances of emails that had been CC’d or BCC’d by Ms Worth from her work computer to her laptop. Following discovery, it has become clear that there are in fact several thousand Ecostore-generated emails stored on Ms Worth’s laptop. I agree that raises real questions about the way in which emails and other information came to be migrated to Ms Worth’s laptop and that an inspection of the laptop clone is justified to investigate this issue.
(b)Email addresses of senders and recipients of emails and folder structure of the “files for Ecostore” and “Gills new enterprise\Ecostore\” folders: Ms Toohey has indicated that Ms Payne is able to provide the email addresses of the senders and recipients of emails and a full account of the folder structure, including the contents
of those folders. There is no need to order an inspection for these purposes.
(c) Whether Ms Worth has been storing emails and spreadsheets from her Earthwise address on her laptop: The answer to this issue is only tangentially relevant to the present proceeding. Ms Worth’s storage of Earthwise emails and/or spreadsheets does not demonstrate whether Ms Worth has misused confidential information belonging to Ecostore. If Ms Worth has indeed been storing emails and spreadsheets from her Earthwise address on her laptop, that is a fact that tends to support her account of events and therefore it will be in Ms Worth’s interest to disclose the relevant information.
(d)Whether Ms Worth has been populating spreadsheets with information sourced from Ecostore and whether those spreadsheets have assisted her with her Earthwise work: I do not consider a full inspection of the cloned laptop is necessary to achieve this purpose. There does not appear to be any reason why the documents in question could not be provided by way of ordinary discovery procedures. In any case, Ecostore will have access to a full account of the file structure of the “files for Ecostore” and “Gills new enterprise\Ecostore\” folders and their contents. It will be able to determine whether there are other potentially relevant documents in those folders that have not been discovered.
[40] For the reasons given, there will be a limited order for inspection of the clone of Ms Worth’s laptop computer for the purpose of determining how Ecostore- generated emails have been migrated to Ms Worth’s laptop. The inspection will be conducted by a computer forensic expert of Ecostore’s choosing and the clone of
Ms Worth’s laptop should be provided to the expert for this purpose.
[41] At this stage I will not make formal orders. They will issue once I have heard further from the parties in relation to the terms of the orders.
Costs of application for inspection order
[42] Ecostore has succeeded on its application for an inspection order but on a significantly more limited basis than was sought. For Ms Worth’s part, the order is more extensive than the order which she was prepared to agree to. Each party has therefore had a measure of success. My preliminary view is that costs should lie where they fall. If, however, the parties have a different view, they may address that in separate memoranda, to be filed within 10 working days of the date of this judgment.
Costs on withdrawal of application challenging confidentiality
[43] Ecostore made an application challenging confidentiality claimed by
Ms Worth over certain documents listed in her first affidavit of documents.
[44] That application is now withdrawn as it is no longer necessary.
[45] Ecostore seeks costs on a 2B basis on the ground that there was “over- discovery” by Ms Worth.
[46] Ms Worth opposes that application and seeks costs herself on the ground that there is no basis to depart from the usual principle that costs should follow the event.
First affidavit of documents
[47] It had been agreed between counsel that only relevant information would be listed in the affidavit of documents. However, in her first affidavit of documents dated
3 October 2017, Ms Worth deposed:
9.In Part 2 of the Schedule, I list the documents that are in my control and for which I claim confidentiality on the basis that each of the documents is both irrelevant and confidential pursuant to s 69 of the Evidence Act 2006, in that each of the documents is listed due to the inclusion of a keyword, but in fact is confidential to me or a third party. Documents listed in Part 3A of the Schedule will not be disclosed in the proceeding and a confidentiality order will be sought pursuant to s 69 of the Evidence Act 2006 on the basis that they are irrelevant and contain commercially sensitive confidential information pertaining to third parties. These include the following lists:
9.1 irrelevant and confidential email search results:
9.1.1 “Ecotech” and “Eco-tech”
9.1.2 “cruelty free”
9.1.3 “Ecostore”
9.1.4 Various search terms
9.1.5 Encase results (excludes emails searched in Intella)
9.1.6 Encase results part 2.
10.In Part 3 of the Schedule, I list the documents listed by Tina Payne which are irrelevant. These include the following lists:
10.1 Irrelevant email search results:
10.1.1 “Ecotech” and “Eco-tech”
10.1.2 “cruelty free”
10.1.3 “Ecostore”
10.1.4 Various search terms
10.1.5 Encase results (excludes emails searched in Intella)
10.1.6 Encase results part 2.
[48] Mr McBride then filed a memorandum dated 4 October 2017 recording, first, that if the documents were irrelevant they should not have been listed. However, in relation to the claim of confidentiality, it was submitted that the claim must be treated with considerable scepticism. The memorandum records:
17.… [Ms Worth] cannot resist disclosure altogether; all that can occur under the Rules is a restriction on who sees the documents, once they are discovered. The usual rule is that, if material is genuinely confidential, then it will be disclosed on the basis that it can only be reviewed by the other party’s solicitors, counsel, and experts, who must first sign confidentiality agreements. But the defendant has not proposed that sort of regime in the present case, indeed no inspection regime has been proposed at all.
[49] At a conference before me as Duty Judge on 9 October 2017 I made orders by consent which included the following:
[13] It is pleasing that counsel were able to make progress between them and the orders I now make were generally agreed. I order as follows:
(a) By 5 pm on Wednesday 11 October 2017 counsel for the defendant is to provide to counsel for the plaintiff copies of
the confidential documents listed in 9.1.1 to 9.1.6 of the defendant’s affidavit of 3 October 2017 on a counsel to counsel basis on the proviso that the documents are not shown or given to the plaintiff or the plaintiff’s witnesses;
(b) Counsel for the defendant will similarly provide copies of the irrelevant documents listed in 10.1.1 to 10.1.16 of the defendant’s affidavit of 3 October 2017 to counsel for the plaintiff on the same basis and with the same proviso as in [13](a), also by 5 pm on Wednesday 11 October 2017;
(c) If the plaintiff wishes to challenge the defendant’s claim for confidentiality in any or all of the documents for which confidentiality is claimed, an application under r 8.25(1) is to be filed and served by 5 pm on Friday 13 October 2017 together with any affidavit in support.
[50] On 11 October 2017, Mr McBride filed a memorandum in relation to the documents listed in paras 9.1.1 to 9.1.6 of Ms Worth’s first affidavit of documents. The memorandum recorded that the documents had been provided to counsel that day. However, Mr McBride complained, saying:
(i) a number of the documents have been redacted, including some email exchanges between the defendant and the managing director of Earthwise, apparently on the basis that they contain confidential information (an example is attached);
(ii) relevant documents have been missed up with irrelevant documents in the same electronic folder, which has meant I have had to review every one of these documents to determine whether it might be confidential and/or relevant; and
(iii) the PDFs provided to me have been numbered in a way which does not enable me to cross-reference them against the schedules annexed to the affidavit of documents.
Counsel for Ecostore sought an urgent telephone conference with the Court.
[51] An application by Ecostore challenging the claims for confidentiality was filed on 13 October 2017 in accordance with the timetable orders made on 9 October 2017.
[52] The issues regarding redactions and the challenge to the claim for confidentiality were mostly resolved at a telephone conference before Downs J on
16 October 2017. That conference was also attended by counsel on behalf of
Earthwise. The minute records:
[1] The background to this telephone conference is contained in the recent Minute of Gordon J. Mr McBride for Ecostore is concerned at the provision of a number of seemingly irrelevant documents – which contained redactions. Mr McBride observes if the material is irrelevant, it should not have been identified as discoverable.
[2] On behalf of Ms Worth, Ms Toohey explains irrelevant material has been identified out of an abundance of caution. However, Earthwise – Ms Worth’s current employer – insists on redactions on the bases of confidentiality (or possible confidentiality) and irrelevance. Mr Burgess on behalf of Earthwise has confirmed that position.
[3] The number of redacted documents is small – in substance there are
10. Ms Toohey and Mr Burgess consider at least nine are irrelevant.
Mr McBride is content with that assurance, provided it is confirmed by 5 pm today. Ms Toohey and Mr Burgess will each review the redacted documents and provide that assurance by that deadline.
[4] That leaves, as is likely, one redacted document. Mr Burgess observes aspects of this have already been provided to Mr McBride. He offered to discuss the position with Mr McBride. I welcome that development.
[53] The issue of the remaining document was resolved.
[54] Accordingly, there was no longer any need for the challenge to the claim for confidentiality to proceed.
Submissions for Ecostore
[55] Mr McBride submits that the defendant’s decision to list irrelevant documents and then refuse to produce them for inspection on the grounds of confidentiality was a waste of everyone’s time. Mr McBride relies on NZX Ltd v Ralec Commodities Pty Ltd in support of his submission that there has been “over-discovery” and that Ecostore is entitled to costs on a 2B basis.7
Submissions for Ms Worth
[56] Ms Toohey notes that Ecostore withdrew its application challenging the claim for confidentiality on the basis that it accepted her assessment of relevance.
Ms Toohey submits that Ms Worth clearly listed those documents as irrelevant in the first affidavit of documents. She says there was, therefore, no basis for the application
challenging the claim of confidentiality. She says the application should never have
7 NZX Ltd v Ralec Commodities Pty Ltd [2014] NZHC 376.
been brought and seeks costs in relation to the withdrawn application on a 2B basis against Ecostore.
Decision
[57] I consider that there was fault on both sides. It was agreed that the affidavit of documents would not list any irrelevant documents. Contrary to that agreement, the first affidavit of documents did list irrelevant documents in both paras 9 and 10. Ms Toohey is recorded as submitting to Downs J on 16 October 2017 that this was out of an abundance of caution. While I acknowledge that counsel was endeavouring to be transparent, had the irrelevant documents not been listed this issue may well not have arisen.
[58] For his part, Mr McBride was on notice that while confidentiality was claimed in the documents, they were nevertheless listed as irrelevant. It is perhaps understandable that the challenge to confidentiality was made as Ecostore is sensitive to the fact that Ms Worth continues to retain its highly confidential material on her laptop. Nevertheless, repeating what I said above, those documents were also flagged as irrelevant.
[59] Given that there was fault on both sides that contributed to an unnecessary application, I consider costs should lie where they fall.
Gordon J
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