Eurekly Limited v Crimson Consulting Limited

[2019] NZHC 972

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-2696

[2019] NZHC 972

IN THE MATTER

of breaches of contract, confidence and fiduciary duty

BETWEEN

EUREKLY LIMITED

Plaintiff

AND

CRIMSON CONSULTING LIMITED

First Defendant

NATALIA ROZOVA

Second Defendant

Hearing:	On the papers
Counsel:	N F Flanagan and S M Lowery for the Plaintiff T J P Bowler for the Defendants
Judgment:	7 May 2019

JUDGMENT OF PALMER J

This judgment was delivered by me on 7 May 2019 at 11.00 am, pursuant to

r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Solicitors:

Meredith Connell, Auckland Neilsons Lawyers Limited, Auckland

EUREKLY LTD v CRIMSON CONSULTING LTD [2019] NZHC 972 [7 May 2019]

The proceeding and application

[1]                  In this proceeding, filed in December 2018, Eurekly Ltd (Eurekly) sues Crimson Consulting Ltd (Crimson Consulting) for breach of contract, and Ms Rozova, a project manager employed by Eurekly and then Crimson Consulting, for breach of confidence, breach of fiduciary duty and inducing breach of contract. The defendants have filed a notice of appearance under protest to the jurisdiction of the Court and applications for security for costs, strike out and/or summary judgment and for a stay. Eurekly has applied to set aside the protest. There will be a one-day hearing of the applications on 20 May 2019.

[2]                  The National Business Review (NBR) requests access to Eurekly’s statement of claim and application and any “defence or other notifications” filed by Crimson Consulting. It submits the case involves a well-known education provider and believes it is in the public’s best interests to know the circumstances relating to the alleged “theft of staff” and intellectual property. Crimson Consulting opposes the application and Eurekly does not. The documents requested appear to be:

(a)A 48-paragraph statement of claim containing allegations by Eurekly that: Crimson Consulting declined to enter a joint venture with Eurekly but then took steps to acquire the core of Eurekly’s business via an alternate route; and, during or after her engagement with  Eurekly,  Ms Rozova engaged in a side venture potentially in competition with it and disclosed confidential information to Crimson Consulting. These allegations are likely to be denied by the defendants.

(b)The defendants’ notice of appearance under protest to jurisdiction and Eurekly’s application to set it aside.

(c)The defendants’ applications for security for costs, strike out and/or summary judgment and for a stay, two supporting affidavits as well as the plaintiff’s notice of opposition.

(d)Two joint memoranda of counsel regarding the case management of the proceeding.

(e)The memoranda of counsel concerning the NBR’s application.

Law of access to documents

[3]                  Section 173(1) of the Senior Courts Act 2016 provides “[a]ny person may have access to court information of a senior court to the extent provided by, and in accordance with, rules of court”.

[4]                  Rules 8(1) and 4 of the Senior Courts (Access to Court Documents) Rules 2017 (the Rules) provide every person has a right to access judgments, orders and minutes in a civil proceeding. Under r 12, the judge must consider the nature of, and the reasons for a request for other information, and must take into account:

(a)the orderly and fair administration of justice:

…

(c)the right to bring and defend civil proceedings without the disclosure of any more information about the private lives of individuals, or matters that are commercially sensitive, than is necessary to satisfy the principle of open justice:

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

(e)the principle of open justice (including the encouragement of fair and accurate reporting of, and comment on, court hearings and decisions):

(f)the freedom to seek, receive, and impart information:

…

(h)       any other matter that the Judge thinks appropriate.

[5]                  The freedom to seek, receive and impart information, a mandatory relevant consideration under r 12(f), is also guaranteed by s 14 of the New Zealand Bill of Rights Act 1990. Freedom of expression is subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society, under s 5. The Bill of Rights guarantee means freedom of expression is not only a mandatory relevant consideration but a requirement with which the judge’s decision must be consistent, under s 3.

[6]                  Rule 13(a) requires that, in applying r 12 before the substantive hearing, I must have regard to the point that protection of confidentiality and privacy interests, and the orderly and fair administration of justice, may require that access to documents be limited.

[7]                  In Crimson Consulting Ltd v Berry, the Court of Appeal clarified the legal principles relevant to these rules.1 It considered “the principle of open justice is fundamental to the common law system of civil and criminal justice” and it was engaged in the application by a media organisation there.2 That was a case which settled at an early stage. The Court considered the deterrence of parties from issuing proceedings because of fear of immediate and damaging publicity relating to recently formed and untested allegations endangered the orderly and fair administration of justice.3 It was concerned there was an element of unfairness on parties in the publication of one side of the story. But it was clear that the principle of open justice, and the freedom to seek information, are important factors “which do not cease to work in the pre-trial stage”.4 The Court upheld my release of redacted statements of claim and defence and refusal of access to evidence and memoranda.

Submissions

[8]                  Mr Flanagan, for Eurekly, relies on Crimson Consulting Ltd v Berry. He submits the relevant considerations are:

(a)This proceeding does not relate to the details of personal lives but a straightforward breach of contract.

(b)The proceeding is in its pre-trial stage. Releasing Mr Beaton’s affidavit, for Crimson Consulting, would reduce the risk of only one side of the story being published.

1      Crimson Consulting Ltd v Berry [2018] NZCA 460, [2019] NZAR 30.

2 At [33].

3 At [39].

4      At [40]

(c)There is no commercial sensitivity because the possible joint venture between the parties did not proceed.

(d)Crimson Consulting is a well-known education provider and its founder has a public profile.

(e)There is no “particular pejorative flavour” to the statement of claim. While Mr Beaton’s affidavit contains irrelevant and uncomplimentary assertions about Eurekly’s business, releasing it would reduce the risk of only one side of the story being published. Eurekly accepts the principles of open justice outweigh any interest in suppressing such allegations.

[9]Mr Bowler, for Crimson Consulting, submits:

(a)The proceeding is at the very earliest of stages and, if its application is successful may be transferred, in whole or part, to the Employment Court where different rules will apply to disclosure of information.

(b)There are significant privacy interests at stake for Ms Rozova. The allegations in the statement of claim remain untested and any reporting of the proceeding, in the absence of a statement of defence, would be completely one-sided.

(c)There has been a tendency for the media to portray Crimson Consulting and its chief executive in a negative light. Allowing access to the requested information at such an early stage would be unfairly detrimental to the defendants as the plaintiff may think the defendants are inclined to settle on non-commercial terms with the threat of media attention hanging over them.

(d)A number of matters referred to in the statement of claim are subject to a mutual confidentiality agreement which cannot be waived

unilaterally. Any publication by the media would breach the terms of the agreement.

(e)Given the unresolved issues with the statement of claim, it would be entirely inappropriate for any publication relating to it to take place because it would be factually incorrect and misleading.

Should the requested documents be released?

[10]              As the Court of Appeal stated in Crimson Consulting Ltd v Berry, the principle of open justice is fundamental to the common law system of civil and criminal justice. It is engaged here. Crimson Consulting’s concerns about how the media portrays it cannot be a concern of the Court if there are no good reasons to deny access to the documents requested.

[11]              But the proceeding is at an early stage. There is no statement of defence. So there would be an element of potential one-sidedness to reporting of Eurekly’s considered position on its allegations in the absence of that of the defendants. The two affidavits respond in part to, but do not adequately balance, the other side because they concern matters of fact relevant to the applications the defendants now make, rather than their responses to the allegations in the statement of claim.

[12]              I am also concerned that the jurisdiction of this Court is currently at issue between the parties in relation to the allegations against the second defendant. It is appropriate that the court with proper jurisdiction should make the decisions about access to the file. And the status and effect of the mutual confidentiality agreement also appears to be at issue between the parties. Whether or not that is relevant to the appropriate extent of media access to the requested information is not clear to me on the basis of the documents and submissions before me.

[13]              Jurisdiction will be resolved on the basis of the 20 May 2019 hearing, which is to occur in less than two weeks. Whether there are any confidentiality concerns emanating from the mutual confidentiality agreement could also be explored by the parties at that hearing, if they consider that is a significant issue. The hearing will be

of interlocutory applications. The High Court Rules 2016 govern the accessibility of the hearing to the media:

(a)Rule 7.34 requires the hearing be in chambers unless the judge otherwise directs.

(b)Rule 7.35 provides that particulars of the hearing or the decision, or both, may be published unless the judge otherwise directs.

(c)Rule 7.36 provides the application for summary judgment must be heard in open court.

[14]              I consider the early stage of the proceedings, the potential risk of one-sided reporting and the issues about jurisdiction and the mutual confidentiality agreement mean it is reasonable to limit the freedom to seek, receive and impart information under the Senior Courts (Access to Court Documents) Rules 2017 by not ordering release of the requested documents to the NBR before the 20 May 2019 hearing. The Judge at that hearing will be able to consider whether to make directions regarding the publication of the hearing or decision.

[15]              Subject to any directions to the contrary made by the Judge at or following the 20 May 2019 hearing, I order the statement of claim and statement of defence be released to the NBR when the statement of defence has been filed. The NBR will then also be able to request any other documents and that request will be considered afresh, in the circumstances at that time.

Palmer J