Green Way Limited v Mutual Construction Limited
[2022] NZHC 1000
•12 May 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-001053
[2022] NZHC 1000
UNDER Copyright Act 1994 and Fair Trading Act 1986 IN THE MATTER OF
A dispute
BETWEEN
GREEN WAY LIMITED
Plaintiff
AND
MUTUAL CONSTRUCTION LIMITED
Defendant
Hearing: 28 March 2022 Appearances:
C L Elliott QC, B P Molloy and J E Palairet for Plaintiff J D McBride and R L White for Defendant
Judgment:
12 May 2022
JUDGMENT OF ASSOCIATE JUDGE P J ANDREW
This judgment was delivered by Associate Judge Andrew on 12 May 2022 at 3.00 pm
pursuant to r 11.5 of the High Court Rules Registrar / Deputy Registrar
Date ………………………….
GREEN WAY LTD v MUTUAL CONSTRUCTION LTD [2022] NZHC 1000 [12 May 2022]
Introduction
[1] The parties are trade competitors, and both carry on business as asbestos removal companies. Their services are regulated by the Health and Safety at Work (Asbestos) Regulations 2016, which require operators to hold a licence. Both companies have obtained certification from Telarc Ltd,1 an accredited auditor.
[2] The plaintiff, Green Way Ltd,2 says that in 2020 it discovered that three of its most senior employees were helping the defendant, Mutual Construction Ltd,3 start an asbestos removal and demolition branch of its business. The former employees allegedly took Green Way’s confidential information and shared it with Mutual. Green Way contends that its former employees worked with Mutual as a part of a “scheme”, while they were still employed at Green Way and subsequently, to facilitate and enable Mutual’s conduct and to harm Green Way’s business in the process.
[3] The confidential information is said to include Green Way’s master-pricing spreadsheet (which Green Way has honed over several years to allow it to accurately price potential projects), its management system manual 2021, its procedures manual and its asbestos removal standards procedures manual. Green Way says that these manuals are central to Green Way meeting the standards required to obtain and maintain its certifications.
[4] The second amended statement of claim,4 contains four causes of action: breach of confidence, conspiracy by unlawful means, breach of copyright, and misleading and deceptive conduct under the Fair Trading Act 1986. The latter involves alleged misrepresentations to Telarc and to the public. Green Way has also taken proceedings against its former employees in the Employment Relations Authority.
[5] In a judgment dated 8 July 2021,5 Campbell J rescinded a search order obtained without notice by Green Way against Mutual. The independent solicitor and Green
1 Telarc.
2 Green Way.
3 Mutual.
4 Dated 3 March 2022.
5 Green Way Ltd v Mutual Construction Ltd [2021] NZHC 1704.
Way’s IT expert,6 were required to return all documents and data obtained in the execution of the search order to Mutual, but on the basis that the solicitor and the expert would retain copies of the documents and data but not deal with them further pending further order of the Court. In a subsequent judgment of 10 November 2021,7 his Honour held that the Court retains control over the secure and preserved documents.
[6] The yield, i.e. the result, of the search order is some 2.5 million documents. The control of those documents and how to analyse them is at issue in one of the interlocutory discovery applications now before me.
[7]There are four interlocutory applications for determination:
(a)Application by Mutual to strike out the fourth cause of action, namely breach of the Fair Trading Act 1986 (s 9);
(b)Application by Green Way for the conferral of experts (i.e. to confer and analyse the yield to ensure that all relevant documents are identified) (r 9.44 of the High Court Rules 2016) and a direction that the experts prepare a joint report containing a full record of the analysis of the yield;
(c)Application by Green Way for particular discovery (r 8.19 of the High Court Rules 2016);
(d)Application by Green Way granting leave to use the documents, obtained through discovery in these proceedings, in the “closely related” Employment Relations Authority proceedings.
6 Mr McKenzie.
7 Green Way Ltd v Mutual Construction Ltd [2021] NZHC 3029, in which leave to appeal to the Court of Appeal was refused.
Factual background
[8] Green Way filed its first statement of claim on 16 June 2021, when it applied for without notice search orders against both Mutual and its former employees.
[9] In advance of the first case management conference in September 2021, the parties exchanged correspondence on discovery and how best to search and analyse the yield. This included correspondence on search terms. On 8 September 2021, counsel for Mutual advised that its expert, Mr Whale, had completed a search of the yield based on previous search terms suggested by Mutual. Mutual advised that Mr Whale had used “magnet axiom” forensic software to filter the data based on the search terms and then to generate reports. Mutual further advised that the associated digital files are then migrated to an e-discovery platform (EDT) for review for relevance, confidentiality and privilege. Mutual advised that the review process was then under way.
[10] In his case management conference directions of 29 September 2021, Bell AJ recorded:8
For the defendants, Mr McBride proposes to make a first cut of discovery by 15 October 2021. He explained that his instructing solicitors have already done considerable work on discovery. Documents have been retrieved using search terms, and those documents have now been manually reviewed. He accepts this may be no more than a “first cut”, and that the plaintiff may have questions afterwards. But it is at least likely to get discovery moving. For the plaintiff, Mr Elliott did not strongly resist that proposal. When the defendants make their discovery, their discovery affidavit should explain the process used to search for documents.
[11] Because of the Supreme Court decision FMV v TZB,9 which considered the jurisdiction of the Employment Relations Authority, Green Way removed the former employees from its statement of claim and on 20 October 2021 filed a first amended statement of claim.
[12] In his leave to appeal judgment of 10 November 2021,10 Campbell J concluded that the Court retained control over the yield, reasoned as follows:
8 Minute of Bell AJ dated 29 September 2021 at [7].
9 FMV v TZB [2021] NZSC 102.
10 Green Way Ltd v Mutual Construction Ltd, above n 7.
[23] Mr McBride submitted the proposed appeal would be pointless. Documents had already been preserved in the yield. The yield had been returned to MCL, but the independent solicitor (and IT expert) retained a control copy. MCL was undertaking the discovery process. It was doing so by searching the yield. MCL’s discovery was being overseen by solicitors. This was how discovery always worked, and there was no responsible basis on which Green Way could complain about it. If, after seeing MCL’s list of documents, Green Way applied for further and better discovery, the control copy of the yield retained by the independent solicitor could be used to assess whether MCL had complied with its discovery obligations.
[24] I accept Mr McBride’s submission. The point of the search order was to secure and preserve documents. That happened with the creation of the yield. Copies of the yield remain with the independent solicitor. A condition on which I rescinded the search order was that the independent solicitor would retain copies of the yield but have no further dealings with them until further order of the Court. That was the basis on which MCL applied to rescind the without notice orders.
[25] The Court therefore retains control over secured and preserved documents. MCL has now undertaken discovery from the yield. That discovery is being overseen by its solicitor. The solicitors have their own discovery obligations. When MCL provides an affidavit of documents, it will have to explain the process that it used to search the yield. If Green Way applies for further and better discovery, the Court might utilise the yield to determine whether MCL has complied with its discovery obligations.11
[26] If Green Way were to successfully appeal my decision to rescind the search order, this Court would then have to decide what to do with the yield. The Court would probably ask the independent solicitor to prepare a report, with the assistance of the IT expert, categorising the yield into relevant, irrelevant and privileged documents, with that report being provided to the parties’ respective solicitors.
[27] In that event, the yield would be no better secured or preserved than it is at present. Security and preservation of evidence are the point of a search order. Green Way (or at least its solicitors) might, in the event of a successful appeal, be more likely to obtain a report on the yield than they would if they had to apply for further and better discovery. I do not regard that difference as important, given the discovery obligations to which MCL’s solicitors (officers of this Court who are overseeing discovery from the yield) are subject.
[13] On 26 November 2021, Mutual filed and served an affidavit of documents in accordance with the “tailored discovery” order of Bell AJ of 29 September 2021. In an accompanying affidavit of 26 November 2021, Mr Jonathan Tien Tze Tu12 explains how the dataset resulting from Mr Whale’s searches of the yield was uploaded to an
11 In footnote 15, Campbell J noted: “I emphasise “might”. Whether a court would do so would depend, of course, on the material put forward in support of any application.”
12 Senior manager at McGrath Nicol (MGN). Mr Tu is based in MGN’s eDiscovery department in Auckland.
e-discovery platform in order for Mutual’s solicitors to review the documents as part of the process of providing discovery.
[14]On 3 March 2022, Green Way filed its second amended statement of claim.13
Application by Mutual to strike out fourth cause of action (breach of the Fair Trading Act 1986)
(a): Strike out principles
[15]Rule 15.1 of the High Court Rules reads:
Dismissing or staying all or part of proceeding
(1)The court may strike out all or part of a pleading if it –
(a)discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading; or
(b)is likely to cause prejudice or delay; or
(c)is frivolous or vexatious; or
(d)is otherwise an abuse of the process of the court.
(2) If the court strikes out a statement of claim or a counterclaim under subclause (1), it may by the same or a subsequent order dismiss the proceeding or the counterclaim.
(3) Instead of striking out all or part of a pleading under subclause (1), the court may stay all or part of the proceeding on such conditions as are considered just.
(4)This rule does not affect the court’s inherent jurisdiction.
[16]Strike principles under r 15.1 are well settled:14
(a)The Court is to assume that the facts pleaded are true (unless they are entirely speculative and without foundation);
(b)The cause of action must be clearly untenable in the sense that the Court can be certain that it cannot succeed;
13 2ASOC.
14 Attorney-General v Prince [1998] 1 NZLR 262 (CA) at 267; Couch v Attorney-General [2008] NZSC 45 at [33].
(c)The jurisdiction is to be exercised sparingly and only in clear cases; and
(d)The jurisdiction is not excluded by the need to decide difficult questions of law, even if requiring extensive argument.
(b): Analysis
[17] Green Way pleads that Mutual has made two misleading and deceptive representations contrary to s 9:
(a)First, to Telarc: misrepresenting the originality and authenticity of Mutual’s documentation, processes and/or systems;
(b)Second, to the public: misrepresenting that Mutual is a legitimate asbestos removal business, when in fact it is relying on Green Way’s confidential information and copyright works.
[18] Mr McBride, for Mutual, made a wide-ranging attack on the Fair Trading Act (FTA) pleadings. He contended that the case generally is a weak one and that the FTA cause of action adds nothing to the primary case based on breach of copyright and breach of confidence. He argued that this is all “much ado about nothing” and Green Way is now proceeding on a third iteration (i.e. the 2ASOC) as it struggles to explain its concerns to its competitors. Mutual had originally sought a strike out of all causes of action, but it is now confined to the fourth one only.
[19]Mr McBride further argued:
(a)No particulars are given by Green Way as to how or when Mutual represented to Telarc that its systems, policies and procedures are its own. Likewise, Green Way does not plead what was said and why it was untrue. The FTA claim is essentially the same as the claim for breach of copyright and adds nothing other than additional complexity;
(b)Green Way does not plead that the representations were made by Mutual “in trade”, an essential prerequisite of a s 9 claim. The
legislation is aimed at protecting consumers from improper trade practices, not representations to regulators who in this case would be indifferent to a private law dispute between the parties;
(c)As to the concerns about actions taken by Green Way employees (a matter directly before the ERA), there is no pleading as to what was done by Mutual, in trade, that was misleading and deceptive, or who was deceived and by what, other than Green Way’s own employees.
[20] In my view, the complaints Mr McBride makes about the pleading are trial issues. The test at this interim stage is not whether the fourth cause of action adds anything to the existing pleadings but rather, whether it discloses a reasonably arguable cause of action and/or is an abuse of process of the Court.
[21] I find that the threshold for a strike out has not been made out. There may be a degree of generality about the existing pleading, but that can be cured by the provision of further particulars. This is clearly not a case where the pleading is so deficient that a de novo start is required, rather than an amendment of the pleadings.15
[22] The fact that Green Way does not expressly plead that the representations were made by Mutual “in trade” is not fatal. It is not disputed that it is an essential prerequisite of a s 9 Fair Trading Act 1986 claim that the representation must have been made “in trade”. However, it is abundantly clear from the context of the pleading that the plaintiff is making the allegation that the representations at issue were made “in trade”. It is also clear that the pleading has been framed in a way that addresses the other essential requirements of a s 9 claim.16
[23] I also find that it is reasonably arguable that Mutual was acting “in trade” when applying for certification from Telarc for its asbestos removal and demolition business. That was arguably an “activity in commerce”.17
15 Marshall Futures Ltd (in liq) v Marshall [1992] 1 NZLR 316, (1991) 3 PRNZ 200 (HC) at 207.
16 See Red Eagle Corporation Ltd v Ellis [2010] NZSC 20 at [27].
17 See the definition of “trade” in s 2 of the Fair Trading Act 1986.
[24] Representations made to regulatory authorities in the course of obtaining regulatory approval may be misleading and deceptive misrepresentations and fall under the Fair Trading Act 1986. In Norbrook Laboratories Ltd v Bomac Laboratories Ltd,18 the Court held that a false representation made to the New Zealand Food Safety Authority was likely to mislead and deceive and fell under the ambit of the Fair Trading Act 1986 as it was likely to affect consumers.
[25] The critical issue is whether the misrepresentations alleged have a clear link and impact on “the consuming public”.19 It is reasonably arguable that the representations here did have that clear link and impact. The materials copied by Mutual arguably relate principally to health and safety systems and processes, designed to protect the consuming public and Mutual staff from dangerous, friable asbestos.
[26] I accept Mr Elliott’s submission that this case is arguably akin to an inverse passing off, namely representing another person’s confidential information or copyright works or goods as one’s own.20 The central issue, one for trial and not for determination at this stage, is whether by uplifting Green Way’s systems and documentation, which are key for meeting the requirements for accreditation with Telarc, and passing them off as their own, Mutual engaged in misleading and deceptive conduct contrary to s 9.
[27] As to the alleged misrepresentations to the public, it is again reasonably clear and apparent from the pleading as to the substance of the plaintiff’s complaint. This is not a case of a fundamentally defective pleading and the criticisms Mr McBride made about the use of language being more appropriate for submissions rather than pleadings is beside the point; that is not the test.
18 Norbrook Laboratories Ltd v Bomac Laboratories Ltd (No 3) HC Auckland, CP241-SW02, 2 December 2002; see also Brown v Riverstone Meat Co Pty Ltd (1985) 60 ALR 595 at 606–607.
19 That was the basis on which Norbrook Laboratories Ltd v Bomac Laboratories Ltd, above n 18, was distinguished in McVicker v Vodafone (NZ) HC Auckland, CIV-2005-404-0180, 3 April 2006 at [56].
20 See Bristol Conservatories Ltd v Conservatories Custom Built Ltd [1989] RPC 455 (CA); Dodson Motorsport Ltd v Logiical Performance Ltd [2019] NZHC 918 at [325].
[28] For all these reasons I conclude that the application to strike out the fourth cause of action should be dismissed.
Application by Green Way for a joint expert report and a conferral of experts (r 9.44)
[29] Green Way and its independent expert, Mr McKenzie, have concerns with the scope, methodology and completeness of Mr Whale’s search of the yield. That search by Mr Whale, Mutual’s independent expert, is the basis for Mutual’s discovery provided to date.
[30] Green Way seeks an order under r 9.44, directing a conference between Mr Whale and Mr McKenzie requiring them to confer and analyse the yield to ensure that all relevant documents are identified. Green Way seeks a direction that the experts prepare a joint report containing a full record and analysis of the yield, including an outline of matters on which they agree or disagree and including the reasons for their disagreement.
[31] This application is of course closely linked to Green Way’s application for further discovery under r 8.19. There is clear disagreement between the parties as to the search process used and the reliability of the result.
[32] Mutual says that the orders sought under r 9.44 are unnecessary and that in any event there is no jurisdiction to provide Mr McKenzie with access to the yield. Mutual contends that Green Way’s continual focus on access to the yield is a fundamental misapprehension as to how the discovery processes work. It says that the presumption should be that it will be for Mutual, as the defendant, to give discovery of documents in the usual way and there is no sufficient justification here to depart from that usual discovery process. Mutual says that it is open to carrying out further searches of the yield, including having Mr Whale carry out such searches, but it is inappropriate for Green Way’s expert, Mr McKenzie, to play any role in that process beyond proposing search methods.
[33]There are three critical issues for determination:
(a)Does the Court have jurisdiction to make the orders sought, namely a direction requiring the experts to confer and analyse the yield?
(b)If so, is there a sufficient evidential basis established by the plaintiff that the process to date has been inadequate and that the kind of orders sought should be made?
(c)The terms of any relevant orders.
(a)Jurisdiction
[34] I accept that the power to direct a conference of experts under r 9.44 is generally concerned with substantive, trial issues. However, that does not mean that the Court has no jurisdiction to make the kinds of orders sought here. In any event, r 9.44 is expressed in very general terms and there is no basis for concluding that it does not extend to practical discovery issues such as the ones before me.
[35] As I have noted, this application is closely linked to the application for further discovery. The Court clearly has the power to enforce the discovery obligations of the parties and to make orders for further and better discovery (r 8.19). The following provisions of the High Court Rules 2016 are also relevant and support a finding that the Court does have the power to direct an experts’ conference to address the issue of appropriate and relevant methodology for discovery searches. Firstly, under r 8.2, the parties are required to cooperate in the discovery process. This includes an obligation to ensure that technology is used efficiently and effectively (r 8.2(2)(c)). In accordance with r 8.14, a party must make a reasonable search for documents within the scope of any discovery order. Under r 8.17, a party may apply for an order varying the terms of a discovery order. Under r 7.48, if a party fails to comply with an interlocutory order (such as discovery) a Judge may make any order that he or she thinks just. That rule will of course extend to making any orders necessary to ensure compliance with other discovery rules such as r 8.14 and compliance with the listing and exchange protocol in Schedule 9 to Part 2 of the High Court Rules.21
21 See cl 3(2)(ii), which deals with methods and strategies for locating documents. This includes appropriate key word searches and other automated searches and techniques for culling documents.
[36] It is also important to recall that the yield comprising the documents at issue remains subject to the control of the Court. Campbell J expressly contemplated that the yield might be used in the event that a proper basis is established for concluding that the search was not adequate.22
[37]I conclude that the Court has jurisdiction to make the orders sought.
(b)Has Green Way established a sufficient evidential basis to conclude that the process to date has been inadequate and the orders sought are necessary?
[38] I accept that any exercise of jurisdiction should be exercised cautiously. There are of course conceptual and practical distinctions between Anton Piller orders, which have an evidence preservation function, and orders for the disclosure of information by defendants.23 Imaging orders of the kind obtained here are invasive; so too are orders for discovery.24
[39] The approach of the English Court of Appeal in TBD (Owen Holland) Ltd v Simons, is helpful and provides guidance on the application of some important principles. In that case, the Court held that imaging can only ever be a preservation step and must be followed by proper consideration of the issues of disclosure and inspection of the documents preserved by the imaging process.25 The case also supports my finding that where the appropriate threshold is made out, the Court does have the power to make the kinds of orders sought here. Arnold LJ held:26
[193] Returning to the point I raised in [181] above, the basic safeguard required in imaging orders is that, save in exceptional cases, the images should be kept in the safekeeping of the forensic computer expert, and not searched or inspected by anyone, until the return date. If there is to be any departure from this, it will require a very high degree of justification, and must be specifically and explicitly approved by the Court. On the return date, consideration must be given to the timing and methodology of disclosure and inspection of documents captured in the images. The presumption should be that it will be for the defendant to give disclosure of such documents in the normal way, but this presumption may be departed from where there is sufficient justification. Even if the presumption is departed from, there
22 Green Way Ltd v Mutual Construction Ltd, above n 7, at [26].
23 TBD (Owen Holland) Ltd v Simons [2020] EWCA Civ 1182, [2021] 1 WLR 992 at [143] per Arnold LJ.
24 Harman v Secretary of State for the Home Department [1983] 1 AC 280 (HL) at 308.
25 TBD Owen Holland Ltd v Simons, above n 23, at [178].
26 At [193].
should be no unilateral searching of the images by or on behalf of the claimant: the methodology of the search must be either agreed between the parties or approved by the Court.
[40] In this case, each party claims that the documents comprising the yield are theirs; Green Way says the documents were stolen and Mutual says that the documents comprised the whole of its business. I accept, as Mr Elliott submitted, that once the relevant threshold is established, there needs to be a balancing of interests with the application of relevant safeguards.
[41] It is clear from the minute of Bell AJ dated 29 September 2021, that Mutual’s discovery to date was a “first cut”.27 Mutual has expressly acknowledged that further searches might be required. It defended the application for leave to appeal on that basis.28
[42] The critical issue between the parties is the methodology used to analyse the yield so as to ensure that the search for relevant documents is robust and has integrity. There is clear disagreement as to how that is to be achieved.
[43] I find, on the basis of the evidence of Mr McKenzie, Green Way’s expert, that there is a proper evidential basis for concluding that the discovery by Mutual to date has been inadequate, in particular because of its principal reliance on key word searches. The approach that Green Way seeks, namely the conferral of experts, is a sensible way forward to resolve what appears to be a highly technical issue about search methodology.
[44]Mr McKenzie states in his affidavit, dated 4 February 2022, as follows:
[13] For forensic examinations of this nature, we would also typically review the Yield using processes that do not rely solely on keywords, such as “timeline analysis” and “automated document comparisons”. I consider that these processes would also have been useful in relation to the search of this Yield.
[14] Such processes are recommended for consideration under the “discovery checklist and listing and exchange protocol” of the High Court Rules 2016. As per paragraph 3 the parties must:
27 See [10] above.
28 Green Way Ltd v Mutual Construction Ltd, above n 7, at [3]–[25].
Endeavour to agree a proposal in relation to the discovery order that should be made with respect to the following: other automated searches and techniques for culling documents (including concept searching, clustering technology, document prioritisation technology, email threading, and any other new tool or technique).
[15] I find these processes tend to locate relevant documents more quickly and effectively than using generic key word searches.
[45]In relation to metadata, Mr McKenzie states:
[25] Mr Whale has not discussed the use of metadata in his searches. Document metadata is information attached to a text-based file that is not typically visible on the face of the document. It is unclear to me whether the metadata was searched, or whether the metadata contained within the resulting documents was reviewed.
[26] Metadata searches are essential in such matters because they typically contain remnants from any original documents. This is typically one of the first items of data I search for in such matters.
[46]In his affidavit in reply, sworn 18 February 2022, Mr McKenzie further states:
[20] In my earlier affidavit starting at [20], I pointed out that the omission of a key word GW or GWL, while using the key word MCL, was a matter of significant concern to me. In my view the failure to search GW or GWL is important, because in my experience, documents often use an acronym of a company name within the author or company metadata field. Mr Whale’s searches would not necessarily have picked those documents up, and if so, the lawyers would never have reviewed them. In my experience of working on these types of cases, I often locate documents that have been copied from another company, edited, but where the author of a company name (often expressed as an acronym) has not been changed from the original source company.
[47] Mr Whale has not filed any evidence in response to Mr McKenzie’s evidence on these issues. Mr McKenzie disputes Mr Tien Tze Tu’s assertion that his methodology would be disproportionately expensive.29 Mr McKenzie says that there would be no need to process all data in the way that Mr Tien Tze Tu claims.
[48] I conclude that an order should be made requiring the experts to confer on the issue of the appropriate methodology to adopt in analysing the yield. I understand that Mr McKenzie and Mr Whale know each other, and it is entirely reasonable to expect
29 Affidavit of Mr Campbell McKenzie in reply, sworn 18 February 2022.
that they will cooperate in accordance with their professional obligations as expert witnesses.
(c)The terms of the orders
[49] I direct that Mr Whale and Mr McKenzie, as the expert witnesses, are to confer with a view to trying to reach agreement on the appropriate scope and methodology for searching and analysing the yield to determine documents of relevance and whether the discovery to date has been incomplete or inadequate. They are then to file a joint report with the Court. Mr McKenzie may have access to the yield in consultation with Mr Whale, but only for the purpose of determining the appropriate scope and methodology. If the experts conclude that there should be a change to the scope and methodology and therefore a further analysis of the yield is required to address Mutual’s discovery obligations, then that discovery process (i.e. the generation of further documents of relevance and analysis of them for the purposes of privilege and the like, and the subsequent filing of an affidavit of documents) is for Mutual and its own solicitors and advisers to carry out. Leave is reserved to the parties to seek further orders which might provide a proper evidential basis for Mr McKenzie to have greater access to the yield than I have allowed thus far.
[50] It would be preferable if the experts were to confer and work together in the absence of the lawyers. However, if there is no agreement on that issue, then the lawyers may attend any relevant meeting. As I have noted, the issues involved appear to be highly technical. Mr McKenzie will need to sign a confidentiality agreement.
[51]Further relevant directions, including timing and the like, are set out below.
Application by Green Way for particular discovery (r 8.19)
[52] The principles to apply are not in dispute. The Court adopts a four-stage approach as set out in Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd.30
30 Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd [2015] NZHC 2760 at [14].
[53]I address each of the outstanding categories in turn.31
Payslips and bank data from 1 October 2020 to 30 June 2021
[54] I accept the submission of Mr Elliott that Green Way could reasonably have expected to see, as part of the discovery from Mutual, payslips for Mr Masutti, Mr Ainsworth and Mr Xiang from Mutual, and bank data showing payments made by Mutual to Green Way’s former employees.
[55] I accept that the four steps of Assa Abloy have been made out in relation to this category. The documents are relevant and important. There is evidence to suggest that the documents exist.
[56] I reject Mutual’s contention that it does not have any “payslip” documents in its control since they are created by its payroll system and emailed to employees by that system. Mutual is required to retain records of salary and/or wages paid to its employees.32
[57] I note that Green Way further contends that Mutual did not search the former employees’ names in its banking data.
[58] I find that an order should be made requiring further discovery from Mutual disclosing the payslips and bank data that Green Way seeks.
Scan data
[59] Green Way says that its own searches show that the former employees put screen shots and scans of documents on Green Way’s servers and emailed at least one of those documents to their personal email accounts.
[60] I find that Green Way has established a reasonable evidential basis for concluding that the discovery to date in this category is inadequate. The other
31 The scope of the orders sought has narrowed significantly since the application for particular discovery was filed on 2 February 2022.
32 See Employment Relations Act 2000, s 130. All employers must keep wage and payroll records for at least 6 years.
requirements of Assa Abloy are also made out. Accordingly, I direct that Mutual is required to provide further discovery by searching for emails in the yield connected to the former employees for “scanned data” and “GW” and must review all emails sent by Mr Ainsworth and Mr Masutti on 3 May 2021 in the yield.
Specific invoices and information about Mutual’s asbestos removal and demolition work from 1 October 2020 until 30 June 2021
[61] Green Way seeks all documents held by Mutual on its tenders and/or completed work for projects that were also tendered and/or completed by Green Way.
[62] I reject Mutual’s contention that documents in this category are not relevant. Green Way has pleaded that former employees have assisted Mutual in “siphoning off” work intended for Green Way as part of a conspiracy designed to harm Green Way’s business. Green Way has identified instances of siphoning off in its second amended statement of claim.
[63] I accept Green Way’s submission that it cannot properly identify which projects have been siphoned off without comparing Green Way’s tenders and invoices with Mutual’s work over the same period and then investigating whether and how the work was siphoned.
[64] Green Way also contends that it has evidence that Mutual is using its master pricing spreadsheet to consistently undercut Green Way’s pricing by roughly 7-10 per cent and to compare its prices to Green Way. Green Way says that without evidence of Mutual’s invoices and projects completed over the relevant period, it cannot ascertain the nature and extent of its losses and the manner and extent to which Mutual used Green Way’s master pricing spreadsheets in its tender process.
[65] Mutual says that this particular application is misguided and premised on the view that if Mutual had successfully tendered for a particular job against Green Way, then Green Way has suffered loss, which they say fails to take into account the range of factors relevant in the construction tender process. However, the test for particular
discovery is relevance, as well as the other factors in Assa Abloy.33 Relevance is assessed by reference to the issues. Whether Green Way has suffered loss is a trial issue and not to be pre-determined by denying disclosure of documents that might advance their case on the dispute about loss.
[66] I also find in favour of Green Way’s proposal that a practical way of giving effect to this order is for both Mutual and Green Way to submit a list of all tenders in asbestos removal work completed between 1 October 2020 and 30 June 2021 to an independent solicitor who can review and identify duplication. Both parties should review any duplications as part of the discovery process.
Application by Green Way for use of documents in Employment Relations Authority proceedings
[67] Green Way seeks an order allowing them to use documents obtained through discovery in these High Court proceedings, that relate to Green Way’s former employees, in the closely related Employment Relations Authority proceedings (file number 3159745/6/7).
[68] Mutual does not dispute that there is significant factual overlap between the two proceedings. However, it contends that the proceedings are in different jurisdictions and involve different causes of action. In particular, Mutual notes that in the ERA, Green Way is seeking penalties against its former employees. Where penalties are claimed in the proceeding in the employment jurisdiction, the party against whom a penalty is sought has a privilege against self-incrimination, being the same privilege that exists in pecuniary penalty proceedings under other regulatory statutory regimes.34
[69] Mutual further contends that the implied undertaking not to use documents discovered in one proceeding for a collateral purpose is an important obligation and one which should not be taken lightly. Mutual submits that Green Way has already
33 Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd, above n 30.
34 NZ Meat Workers Union v South Pacific Meats [2015] NZEmpC 138 at [78]; Radius Residential Care v New Zealand Nurses Organisation Inc [2016] NZEmpC 86 at [29].
breached this undertaking when it included a document obtained in discovery in these proceedings in its application to the ERA in December 2021.
[70] I find that there is no merit to Mutual’s opposition to this application. The solicitor for Green Way responsible for the inadvertent disclosure in the ERA of relevant discovery documents has apologised and accepted full responsibility for the inadvertent error. There is, of course, no contempt application before me and, whilst a regrettable omission, it provides no basis for me to decline to make the orders sought. There is undoubtedly clear overlap between the proceedings in this Court and those in the ERA and the circumstances of the error are understandable.
[71] As to the concern about privilege against self-incrimination, that is a matter which can be addressed as part of the ERA process. Proceedings in that jurisdiction are of course investigative in nature and it will be for the Authority member to determine how any issue of privilege against self-incrimination is to be managed.35
[72] Leave is reserved to seek further directions from this Court on these issues should that be necessary.
Result
[73]I make the following orders and directions:
(a)Mutual’s application to strike out the fourth cause of action, namely breach of the Fair Trading Act 1986, is dismissed;
(b)I grant Green Way’s application that the parties’ respective experts confer on the appropriate scope and methodology for searching and analysing the yield and on the terms set out in this judgment. The experts are to meet, and to file and serve a joint report recording matters on which they agree or disagree, including any reasons for disagreement, by 24 June 2022;
35 See Employment Relations Act 2000, s 160.
(c)If the experts agree that there should be a further search of the yield and on the basis of any agreed terms in methodology, then the defendant is to carry out that further search in accordance with the experts’ scope and methodology and to file and serve a further affidavit of documents based on such search by 22 July 2022;
(d)The experts involved are to maintain confidentiality and are not to use or disclose to any person any material from the yield which is not relevant to the proceedings;
(e)The experts may jointly seek directions/guidance from the parties’ legal advisers and those directions/guidance are to be provided jointly and in writing by the parties’ legal advisers. However, this does not preclude the individual expert from seeking confidential legal advice from the relevant party’s legal adviser;
(f)I grant the plaintiff’s application for particular discovery in relation to the payslips for the former employees and bank data from 1 October 2020 to 30 June 2021 (cl 1.1(a) and (b) of the plaintiff’s application of 2 February 2022);
(g)I also grant the plaintiff’s application for particular discovery in relation to the scanned data and specific invoices and information about Mutual’s asbestos removal and demolition work from 1 October 2020 until 30 June 2021 and on the terms set out in this judgment (paragraph 1.1(d) of the plaintiff’s application of 2 February 2022);
(h)The defendant is to file and serve a further affidavit of documents in accordance with r 8.19 by 24 June 2022;
(i)I grant the plaintiff’s application for leave to use documents obtained through discovery in these proceedings that relate to the plaintiff’s former employees in the Employment Relations Authority proceedings (file number 3159745/6/7) and on terms set out in this judgment.
[74] As to costs, I am of the preliminary view, that having succeeded on all applications, the plaintiff is entitled to costs and on a 2B basis. If the parties cannot agree on costs, then memoranda are to be filed and served (no more than three pages) by 3 June 2022.
Associate Judge P J Andrew
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