Intech Inc v Baker
[2022] NZHC 2146
•26 August 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV 2021-404-002270
[2022] NZHC 2146
BETWEEN INTECH INC
First Plaintiff
AND
WAREHAM STEAMSHIP CORPORATION
Second Plaintiff
AND
ACRA-CUT INC
Third Plaintiff
AND
JOHN BAKER
Fourth Defendant
AND
ANURA LIMITED
(formerly named ORION MARINE LIMITED) First Defendant
continued overleaf…
Tele Conference: 22 August 2022 Counsel:
C Elliott QC and K Crossland for the Plaintiff
G Illingworth QC and A Hyde for the First, Second, Third & Fourth Defendants
G Arthur QC for Non-partyJudgment:
26 August 2022
JUDGMENT OF VAN BOHEMEN J
[on application by non-party for access to Court documents]
This judgment was delivered by me on 26 August 2022 at 2.00pm Pursuant to Rule 11.5 of the High Court Rules
…………………………
Registrar/Deputy Registrar
INTECH INC v WAREHAM STEAMSHIP CORPORATION [on application by non-party for access to Court documents] [2022] NZHC 2146 [26 August 2022]
continued from previous page… AND
ZHANG YUN
Second Defendant
AND
DARREN PAUL LEYBOURNE
Third Defendant
AND
VLADAN ZUBCIC
Fourth Defendant
AND
STRYDA MARINE LIMITED
Fifth Defendant
AND
WARREN FARR
Sixth Defendant
Solicitors/Counsel:
C Elliott QC, Auckland
G M Illingworth QC, Auckland Shieff Angland Lawyers, Auckland Heritage Law, Auckland
Keegan Alexander, Auckland Goodwin Turner, Auckland
Introduction
[1] Sealegs International Ltd (Sealegs) applies, pursuant to rr 8 and 11 of the Senior Courts (Access to Court Documents) Rules 2017 (“Access to Documents Rules”), for access to Court documents in this proceeding.
[2] The plaintiffs in the present proceeding (“the Intech proceeding”) are three United States companies controlled by the recently added fourth plaintiff, John (Jack) Baker. The defendants are Anura Ltd (formerly Orion Marine Ltd) (“Orion”), and Zhang Yun, Darryl Leybourne and Vladan Zubcic, who are principals and employees of Orion.1
[3] Sealegs, which is not a party to the Intech proceeding, seeks access to all documents other than documents classified as confidential by any of the parties.
[4]The plaintiffs support the Sealegs application. The defendants oppose.
Relevant background
[5] As set out in my judgment of 25 March 2022 declining the plaintiffs’ application for injunctive relief in the Intech proceeding, some of the plaintiffs’ claims against the defendants relate to a proceeding brought by Sealegs over the defendants’ manufacture and production of Orion’s S25 amphibious system. Sealegs alleged the S25 infringed its copyright in its own amphibious system.2
[6] On 19 December 2016, the High Court granted Sealegs an interim injunction restraining Orion and the others from acts that would infringe Sealegs’ claimed copyright.3
[7] On 12 July 2018, the High Court granted a permanent injunction preventing Orion and others from manufacturing the S25.4
1 The term “defendants” is used to refer only to the first to fourth defendants. The fifth and sixth defendants have taken no part in the proceeding to date.
2 Intech Inc v Anura Ltd [2022] NZHC 574, see especially at [56] – [65].
3 Sealegs International Ltd v Zhang [2016] NZHC 3143 at [47].
4 Sealegs International Ltd v Zhang [2018] NZHC 1724 at [472].
[8] In August 2018, Mr Zhang, Mr Leybourne and Mr Zubcic travelled to Massachusetts and met with Mr Baker. As a result of that meeting, Mr Baker advanced $200,000 to the defendants to meet the costs of instructing senior counsel in an appeal against the High Court’s decision.
[9]On 27 August 2019, the Court of Appeal set aside the High Court injunction.5
[10] In a proceeding filed in December 2020 (“the Sealegs proceeding”), Orion and others seek to enforce the undertaking as to damages given by Sealegs when bringing its injunction proceeding. They seek damages of $6.8 million against Sealegs for profits lost as a result of the injunctions.6 Sealegs counterclaims, seeking injunctions for the infringement of specified patents, orders for the delivery up of amphibious vehicles and leg assemblies that infringe the patents, and an inquiry as to damages.7
[11] In a judgment dated 26 November 2021, Associate Judge Sussock dismissed Orion’s application to strike out the Sealegs’ counterclaim and those parts of the Sealegs’ defence relying on patent infringement.8
[12] Orion has applied for leave to appeal Judge Sussock’s decision. The hearing of the application for leave to appeal was delayed for various reasons but is now set down for 5 October 2022. Whatever the result of that application, further steps may follow.
[13] Meanwhile, no timetable has been set to advance the substantive Sealegs proceeding.
Relevant steps in the Intech proceeding
[14] In the Intech proceeding, the plaintiffs allege, and the defendants deny, that the defendants agreed to transfer rights in the S25 as consideration for Mr Baker’s advance
5 Zhang v Sealegs International Ltd [2019] NZCA 389, [2020] 2 NZLR 308. In December 2019, the Supreme Court dismissed Sealegs’ application for leave to appeal the Court of Appeal’s judgment; see Sealegs International Ltd v Zhang [2019] NZSC 147.
6 Orion Ltd v Sealegs International Ltd HC Auckland CIV-2020-404-2488 (Statement of claim dated 16 December 2020).
7 Statement of defence and counterclaim dated 17 February 2021.
8 Orion Ltd v Sealegs International Ltd [2021] NZHC 3207.
of $200,000 made in August 2018 to meet the costs of instructing senior counsel in the appeal against the High Court injunction in the Sealegs proceeding. The plaintiffs make that allegation even though Mr Baker required the advance to be repaid, the advance was repaid and there has been no evidence to date of the plaintiffs asserting a proprietary interest in the S25 prior to Mr Baker falling out with the defendants in January 2021.
[15] The plaintiffs applied for interim orders restraining the defendants from using, manufacturing or distributing, selling or offering for sale the S25 system and Modified S25 system and vessels incorporating such systems, unless the defendants undertook to pay a notional royalty on the ex-factory wholesale price of all such systems and vessels. The plaintiffs also sought other interim orders relating to the S65 and S90 amphibious systems designed by the defendants for the plaintiffs.
[16] In my judgment of 25 March 2022, I dismissed the plaintiffs’ application for interim orders. 9 I accepted it was arguable, at that interlocutory stage, there was a serious issue to be tried as to whether Orion or any of the other defendants on its behalf agreed to assign the rights in the S25 to the Baker interests in consideration for the advance of $200,000.10 I held, however, that such an agreement was inherently unlikely, there were aspects of Mr Baker’s accounts of events that gave rise to doubts as to their accuracy and to whether, even on Mr Baker’s own account, there had been a discussion of or an agreement to transfer ownership of the S25.11
[17] Prior to the issue of the judgment, the plaintiffs asked for a case management conference to consider various issues, including setting a timetable for the plaintiffs to have this proceeding heard sequentially with the Sealegs proceeding and whether the plaintiffs could provide Sealegs with copies of the documents in this proceeding.
[18] By application dated 21 April 2022, the plaintiffs applied for an order directing that they could provide the solicitors for Sealegs with copies of documents relating to
9 Intech Inc v Anura Ltd, above n 2.
10 At [146].
11 At [136] – [143].
this proceeding, excluding confidential affidavits. That application was opposed by the defendants.
[19] By memorandum dated 13 May 2022, the plaintiffs withdrew the application for the solicitors of Sealegs to have access to the Court file. Counsel for the plaintiffs advised that the withdrawal of the application was made “with a view to proceeding expeditiously and efficiently.” The plaintiffs reserved their position with respect to “any application to be heard sequentially with, or to apply for any other intervention in, Orion’s damages claim against Sealegs.”
[20] By minute dated 30 May 2022, I varied by consent timetable orders to progress both the plaintiffs’ substantive proceeding and the plaintiffs’ application to restrain from acting the solicitors who acted for the defendants in their disputes with Sealegs and the plaintiffs. Under those orders:12
(a)dates were set out to 9 September 2022 for the filing and serving of revised pleadings in the substantive proceeding;
(b)dates were set out to 11 November 2022 for the filing of evidence and submissions in the restraint application; and
(c)a telephone conference was set down for 11 October 2022.
[21] By memorandum dated 2 August 2022, the plaintiffs withdrew their application to restrain the defendants’ solicitors from acting so that the application did not delay the proceeding.
[22] Most recently, counsel for the plaintiffs and the defendants have jointly proposed revised timetable orders for advancing the substantive proceeding. Those orders were made by consent at a telephone conference following the hearing of this application.13 There are now settled dates for the filing of revised pleadings. I
12 Orion Ltd v Sealegs International Ltd HC Auckland CIV-2021-404-2270 30 May 2022 (Minute of van Bohemen J).
13 Ibid, 22 August 2022 (Minute of van Bohemen J).
declined to make orders for discovery at that time, especially when the plaintiffs’ claim was not complete.
[23] Under the revised timetable, the pleadings will not be completed until 7 October 2022. Discovery, whenever ordered, will still have to be completed, evidence prepared and exchanged, and the substantive proceeding set down for hearing. Because of the pressures on the Court schedule, that hearing is unlikely before late 2024.
[24] In other words, the timing of substantive hearings in both the Sealegs proceeding and the Intech proceeding is uncertain, and neither is imminent.
Access to Documents Rules
[25] Rule 11(2) of the Access to Documents Rules provides that a person may ask to access any document by providing the Registrar of the relevant court registry with a letter, an email, or any other written form of request that meets the requirements of that subsection.
[26]Rule 12 relevantly provides:
In determining a request for access under rule 11, the Judge must consider the nature of, and the reasons given for, the request and take into account each of the following matters that is relevant to the request or any objection to the request:
(a)the orderly and fair administration of justice:
(b)…
(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)…
(e)the principle of open justice … :
(f)the freedom to seek, receive, and impart information:
(g)…
(h)any other matter that the Judge thinks appropriate.
[27]Rule 13 relevantly provides:
In applying rule 12, the Judge must have regard to the following:
(a)before the substantive hearing, the protection of confidentiality and privacy interests and the orderly and fair administration of justice may require that access to documents be limited:
The grounds for the Sealegs’ application
[28] Whether with the encouragement of the plaintiffs or otherwise, Sealegs has revived the question that had apparently been put aside by the plaintiffs “with a view to proceeding expeditiously and efficiently,” namely, whether Sealegs should have access to most of the documents filed in this proceeding.
[29]The reasons for access stated in the Sealegs’ application are:
(a)To allow Sealegs to properly consider and respond to the request for consent by the plaintiffs in the Intech proceeding to the Sealegs proceeding and the Intech proceeding being managed together and heard sequentially; and
(b)Documents in the Intech proceeding are likely to be relevant to Sealegs and its position in relation to the Sealegs proceeding and in relation to the Intech proceeding.
[30] At the telephone conference on 22 August 2022, Mr Arthur QC said Sealegs seeks access because it wants to see how Orion and the other defendants advance their defence to the plaintiffs’ claims to assess whether it is consistent with Orion’s stance in the Sealegs’ litigation. Sealegs also wants to see whether Orion complied with the injunctions and whether Orion mitigated its losses, for example by selling the S25 offshore, including through Mr Baker and his companies.
[31] Even if discovery in the Sealegs proceeding is likely to be some time away, Mr Arthur submitted there is no reason why Sealegs should not have access to the documents in the Intech proceeding, given their right to apply under the Access to Documents Rules and the matters set out in rr 12(a), (e) and f); namely, the orderly
and fair administration of justice, the principle of open justice and the freedom to seek, receive, and impart information.
[32] With regard to r 12(c), Mr Arthur said concern for the private lives of individuals does not arise in a dispute between two commercial parties. He also said the commercial significance of the dispute, in which Orion is seeking compensation in excess of $5 million, supports access being granted. Mr Arthur said Sealegs would use the documents only for the purposes of informing its position in the Sealegs proceeding and would not disclose the documents more widely.
Positions of the parties in the present proceeding
[33] The plaintiffs support the application. At the telephone conference, Mr Elliot said there is a direct relationship between Sealegs’ claim for breach of patent in relation to the S25 and the plaintiffs’ claims to profits from sales of the S25. Given that the outcome of each proceeding could affect the relief available in the other proceeding, it made sense for the two proceedings to be managed together and heard sequentially.
[34] The defendants oppose the application. They say the written application does not address the matters set out in r 12 and the reasons given for access are deficient and that access should be denied.
[35] In particular, the defendants say the orderly and fair administration of justice militates against granting access to the Court file which contains a significant amount of disputed and yet untested evidence. They also say it would be inconsistent with their right to defend the proceeding without having to disclose any more information on the private lives of individuals or on commercially sensitive matters than is necessary to satisfy the principles of open justice. They note that, as recognised in r 13, before the substantive hearing the protection of confidentiality and privacy interests and the orderly and fair administration of justice may require that access to documents be limited.
[36] The defendants observe that I have given a detailed judgment on the plaintiffs’ allegations against the defendants and the defendants’ responses and say that the principles of open justice are more than satisfied by that judgment, especially at this
early stage of the proceeding. If Sealegs wants more information, it should particularise what that information is.
[37] At the telephone conference on 22 August 2022, Mr Illingworth QC said there is no substantive connection between the two proceedings, which deal with separate issues and that it would be inefficient and impractical to try to manage the two proceedings together. To the extent there is any factual overlap between the two proceedings, Sealegs is attempting to gain early discovery in the Sealegs proceeding before any orders for discovery have been made in that proceeding. Mr Illingworth said that, unlike the discovery process, which takes places under Court supervision, documents provided under the Access to Documents Rules are not subject to controls.
Analysis
[38] As Mr Arthur acknowledges, there is no current application to have the Sealegs and Intech proceedings managed together and heard sequentially. For that reason, the first ground advanced for access has no procedural foundation. If Sealegs or the plaintiffs want to achieve those outcomes, either one or both will have to make that application.
[39] The second reason advanced by Sealegs in its written application is stated generally; that is, documents in the present proceeding are likely to be relevant to Sealegs. Mr Arthur’s oral explanation for the application, namely that Sealegs wants to see if Orion’s position in the Intech proceeding is consistent with the position taken in the Sealegs proceeding, does not significantly reduce the generality of that position.
[40] I do not consider those reasons provide any adequate basis on which the Court can decide, by reference to the matters in r 12 of the Access to Documents Rules, whether the application should be granted. That is particularly the case where, as here, there is a significant quantity of documents on the Court file because of the plaintiffs’ application for interim orders.
[41] While the original dispute between Sealegs and the defendants forms part of the factual background to the plaintiffs’ claims against the defendants in this proceeding, it is not obvious that there is so close a connection between the two sets
of proceeding that would warrant Sealegs being given complete access to the Court file in the Intech proceeding.
[42] The interim injunction restraining Orion ran from 19 December 2016. It was replaced by the permanent injunction made on 12 July 2018. The permanent injunction ran until 27 August 2019, when it was set aside by the Court of Appeal. Presumably, therefore, the bulk of the lost profits sought by Orion in the Sealegs proceeding relates to the period December 2016 to August 2019, assuming the defendants complied with the injunctions.
[43] As Mr Illingworth says, in my decision of 25 March 2022, I held it was not seriously arguable that there was any agreement between Mr Baker and the defendants in relation to the S25 prior to the meeting in Massachusetts in August 2018. On that basis, any claim by the plaintiffs in relation to the S25 can relate only to the period from 4 August 2018.
[44]The disputes between Orion and Sealegs relate to:
(a)Whether Sealegs must account to Orion for lost profits; and
(b)Whether Orion breached patents held by Sealegs.
[45] Neither of those questions would appear to be continent on any arrangements between the plaintiffs and the defendants. If Orion is successful in its claim against Sealegs, it may face a claim by the plaintiffs for some or all of those recovered profits for the period from 4 August 2018. But that possible liability of Orion to the plaintiffs would appear to be of no direct relevance to Sealegs, either in its defence to Orion’s claims or in its claims to compensation for patent infringement.
[46] In these circumstances, I do not consider it is consistent with the orderly and fair administration of justice to allow Sealegs access to the whole of the Court file in the Intech proceeding when it is not apparent that the outcomes of the Sealegs’ proceeding will be affected by the Intech proceeding.
[47] That conclusion is reinforced by the considerations identified in rr 12(c) and 13(a):
(a)Information about matters that are commercially sensitive should be disclosed only to the extent necessary to satisfy the principle of open justice; and
(b)The protection of confidentiality and privacy interests and the orderly and fair administration of justice may require that access to documents be limited before the substantive hearing.
[48] While Mr Arthur says Sealegs seeks only documents that have not been identified as confidential by either set of parties in this proceeding, given the unstructured way in which documents were produced in the interim relief phase of the Intech proceeding, there may well be documents that are of some commercial sensitivity that have not been formally identified as confidential.
[49] I also consider that it would not be consistent with the orderly administration of justice to order that Sealegs be given general access to the documents in the Intech proceeding separate from any discovery process that has yet to be ordered in the Sealegs proceeding. The principle of open justice and the freedom to seek, receive, and impart information do not alter that assessment. The Access to Justice Rules do not offer a way around the usual requirements for discovery.
[50] Given these considerations, I do not consider it appropriate to make the access orders sought.
Result
[51] The application by Sealegs for access to Court documents in this proceeding is dismissed.
G J van Bohemen J
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