Hally Labels Ltd v Powell - [2013] NZHC 900

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2011-409-000867 [2013] NZHC 900

BETWEEN HALLY LABELS LIMITED Plaintiff

ANDKEVIN POWELL First Defendant

ANDGEON GROUP LIMITED Second Defendant

ANDKIWI LABELS LIMITED Third Defendant

Hearing: Determined on the papers
(Heard at Christchurch) Counsel: C T Patterson for Plaintiff Judgment: 29 April 2013
RULING OF ASSOCIATE JUDGE OSBORNE

[on request for permission to use discovered documents in another proceeding]

Introduction

[1] The second and third defendants gave discovery in this proceeding (which has been discontinued). The plaintiff now wishes to use those documents in a separate proceeding against the first defendant in the Employment Court. By memorandum it seeks leave to do so.

[2] To dispose of the request requires me to identify:

1) the nature of the prohibition on the collateral use of discovered documents;

HALLY LABELS LIMITED V KEVIN POWELL HC CHCH CIV-2011-409-000867 [29 April 2013]

2) the circumstances in which discovered documents may be used collaterally; and

3) the acceptable procedure for any application for leave.

The prohibition of the collateral use of discovered documents

[3] The plaintiff’s request for leave arises because of the prohibition of collateral use of discovered documents outside the proceeding in which they were discovered.

[4] The prohibition is contained in r 8.30(4) High Court Rules (previously r 312(4) and before that r 309(4)) which provides:

8.30 Use of documents

…

(4) A party who obtains a document by way of inspection or who makes a copy of a document under this rule—

(a) may use that document or copy only for the purposes of the proceeding; and

(b) except for the purposes of the proceeding, must not make it available to any other person (unless it has been read out in open court).

[5] The common law had recognised an implied obligation on a party obtaining discovery not to use documents discovered for collateral or ulterior purposes.1

[6] The courts’ approach to discovery and to the collateral use prohibition can be traced to a balancing of two competing public interests. First, the public interest in full disclosure so that the Court can get at the truth of a dispute. Secondly, the public interest in preserving and protecting confidential information. As Lord Denning MR explained in Riddick v Thames Board Mills Ltd:2

Compulsion is an invasion of a private right to keep one’s documents to
oneself. The public interest in privacy and confidence demands that this

1 Alterskye v Scott [1948] 1 All ER 469 (Ch) at 470 per Jenkins J; Crest Homes PLC v Marks
[1987] 1 AC 829 (HL); Soft-Tech International Pty Ltd v Ball (1990) 2 PRNZ 254 (HC) At 261 per Chilwell J.
2 Riddick v Thames Board Mills Ltd [1977] 1 QB 881 (CA) at 896 per Lord Denning.

compulsion should not be pressed further than the course of justice requires. The courts should, therefore, not allow the other party – or anyone else – to use the documents for any ulterior or alien purpose. Otherwise the courts themselves…

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.

Continue reading Hally Labels Ltd v Powell

Details

AGLC: Hally Labels Ltd v Powell [2013] NZHC 900
Case: [2013] NZHC 900
Decision Date: 29 April 2013

CaseChat Overview and Summary

Hally Labels Limited (the plaintiff) sought permission to use documents discovered in a proceeding between it and the second and third defendants in a separate proceeding against the first defendant in the Employment Court. The second and third defendants did not oppose the request. The plaintiff argued that the documents were relevant to whether the first defendant had breached an implied undertaking he gave to the Employment Court not to compete with the plaintiff. The court was required to consider the prohibition of the collateral use of discovered documents, the circumstances in which discovered documents may be used collaterally, and the procedure for obtaining permission or leave. The court identified that the prohibition on the collateral use of discovered documents is contained in r 8.30(4) High Court Rules and is based on balancing the public interest in full disclosure and the protection of confidential information. The court also identified that the circumstances in which discovered documents may be used collaterally are when the document has been read out in open court or when there are special circumstances not occasioning injustice to the person giving discovery. The court further identified that the procedure for obtaining permission or leave is to make a formal application on notice and served on the relevant parties. The court found that the plaintiff should first seek the consent of the second and third defendants, which if given would be the only prerequisite to use of the documents in the Employment Court. If consent is not available, then the plaintiff should proceed on the basis of an interlocutory application filed in the normal way and supported by the appropriate evidence. The court did not grant the plaintiff's request in terms of the memorandum filed for leave to use in the Employment Court email documentation provided by the second and third defendants in the discovery process in this proceeding.

Orders