Integria Healthcare (New Zealand) Limited v Antipodes New Zealand Limited

[2021] NZHC 1867

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2020-485-498

[2021] NZHC 1867

BETWEEN

INTEGRIA HEALTHCARE (NEW ZEALAND) LIMITED

First Plaintiff

INTEGRIA HEALTHCARE (AUSTRALIA) PTY LIMITED
Second Plaintiff

AND

ANTIPODES NEW ZEALAND LIMITED

Defendant

Hearing:

20 July 2021

Appearances:

C Martin for plaintiffs

S J Corlett for defendant

Judgment:

23 July 2021

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

[1]    Antipodes New Zealand Ltd is a supplier of organic skincare and cosmetic products. Integria Healthcare (New Zealand) Ltd is a distributor of such products that operates in this country and, through Integria Healthcare (Australia) Pty Ltd, in Australia.

[2]    Antipodes and Integria NZ entered into a distributorship agreement that they agreed would run from 1 January 2016. Under the agreement, Antipodes appointed Integria NZ as the exclusive distributor of its products in New Zealand and Australia (subject to some limited exceptions). The initial term of the agreement was three years concluding on 31 December 2018. Antipodes agreed that, provided Integria NZ met certain performance targets, the agreement would be renewed for a further year

INTEGRIA HEALTHCARE (NEW ZEALAND) LIMITED v ANTIPODES NEW ZEALAND LIMITED [2021] NZHC 1867 [23 July 2021]

concluding on 31 December 2019. Thereafter, the agreement was to roll over year- on-year, with both parties having a right to terminate on notice without cause provided that was done at least three months before the conclusion of any year.

[3]    Integria NZ and Integria Australia, the two operating companies, sue Antipodes alleging that Antipodes breached the terms of the agreement by entering into a distributorship agreement with the American conglomerate Johnson & Johnson that would apply from 1 December 2019. They say that as a result they lost revenue during December of that year and seek damages and other remedies.

[4]    The proceeding is at the stage where the parties are dealing with discovery. Both have agreed to provide tailored discovery of categories of documentation. They have agreed on all but one category. They have reached an impasse in relation to this last category. The Integria companies say this is relevant. Antipodes says otherwise.

[5]    The category of documents consists of Antipodes’ distribution agreement with Johnson & Johnson and documents evidencing the extent of sales of Antipodes’ products in New Zealand and Australia by Johnson & Johnson prior to 1 January 2020.

[6]    On the pleadings, Antipodes appears to deny that it entered into an agreement with Johnson & Johnson that was to apply from 1 December 2019. However, during the course of the hearing before me Mr Corlett said that Antipodes accepted that it had entered into an agreement with Johnson & Johnson which was to operate from that date, and that that agreement conferred distribution rights on Johnson & Johnson that were the same as those that it had conferred on the Integria companies under the earlier agreement. He said that Antipodes’ defence in this case was that the parties had agreed to a variation to the earlier agreement entitling Antipodes to enter into the agreement it did with Johnson & Johnson. It was that description of the defence that enabled  Mr Corlett logically to contend that the agreement between Antipodes and Johnson & Johnson was not relevant to any live issue in this case. However, this is not reflected in the current pleadings, and I did not quite understand Mr Corlett to accept that if the argument he outlined was not successful Antipodes would accept that it had breached its obligations to the Integria companies.

[7]    Although the High Court Rules 2016 do not specify the scope of tailored discovery — whether it is adverse documents or something narrower or broader — the relevance of the document or documents in question to an issue in the proceeding is the starting point.1 Beyond that tailored discovery must be ordered when the interests of justice require an order involving either more or less discovery than standard discovery would involve.2 The concept of proportionality is also central.3

[8]    In my view, on the pleadings as they stand, the agreement between Antipodes and Johnson & Johnson is relevant to issues between the parties.

[9]    Turning to any documentary evidence that Antipodes may have in relation to sales through Johnson & Johnson prior to 1 January 2020, the Integria companies say that that material is relevant to the question of their loss.

[10]   In their statement of claim they calculate their loss by reference to their historical performance. That assessment of loss can of course be carried out without reference to sales by Antipodes effected through Johnson & Johnson. But the Integria companies say that such information will provide additional evidence.

[11]   Antipodes says that having regard to the way in which the Integria companies have calculated their loss any documentation concerning sales effected by Antipodes through Johnson & Johnson is irrelevant.

[12]   The view I take is that if Antipodes was accepting the Integria companies’ analysis as to the quantum of their loss then arguably documentation relating to sales effected by Antipodes through Johnson & Johnson would be irrelevant. But given that Antipodes has put quantum in issue, the Integria companies are entitled to discovery of any documentation that is relevant to that issue.

1      See Robert Osborne and others McGechan on Procedure (online ed, Thompson Reuters) at [HR8.10.01] citing ASB Bank Ltd v Commissioner of Inland Revenue [2014] NZHC 2184, (2014) 26 NZTC 21-098 at [7].

2      High Court Rules 2016, r 8.8.

3      Goodman Fielder Consumer Foods Pty Ltd v Heinz Wattieʼs Ltd [2017] NZHC 177 at [12].

[13]   It seems clear to me that any records of sales effected by Antipodes through Johnson & Johnson prior to 1 January 2020 are relevant to the question of loss, even if they are only used as a reality check on the Integria companies’ historical analysis.

[14]   Accordingly, in my view, both categories of documentation in respect of which the Integria companies seek discovery are properly discoverable.

[15]   Antipodes says, and I accept, that this material is commercially sensitive, and confidential from the perspectives of both Antipodes and Johnson & Johnson.

[16]   However, confidentiality is not a ground for non-disclosure of relevant documents, and it has never been the law that because documentation is confidential it is not discoverable.4

[17]   Fortunately, in this case, because counsel have approached matters collaboratively and sensibly, the confidentiality issue has essentially been sorted out. The Integria companies have proposed a regime for discovery which is designed to protect the confidentiality of this documentation for Antipodes and Johnson & Johnson, and Mr Corlett for Antipodes said during the course of the hearing that he accepts that this proposal was appropriate.

[18]I agree.

[19]I make the following orders:

(a)The defendant is to provide discovery of documents falling within the following tailored discovery category (in addition to the tailored discovery categories already ordered by consent):

Category 19:

aA copy of Antipodes’ distribution agreement with Johnson & Johnson;

4      See Port Nelson limited v Commerce Commission (1994) 7 PRNZ 344 (CA) at 348.

bAll documents evidencing the extent of sales of Antipodes’ products made by Johnson & Johnson to customers in Australia and New Zealand prior to 1 January 2020;

(b)Inspection of the document(s) in Category 19a be limited to Integria’s external counsel and other advisors in this proceeding, and expert witnesses, subject to provision by each individual of an appropriate confidentiality undertaking (the form of which is to be agreed between the parties). Notwithstanding, the Commencement Date (or, in the absence of a Commencement Date, information about any commencement provisions) of that document may be shared with Integria;

(c)Inspection of the documents in Category 19b be limited to Integria’s external counsel and other advisers in this proceeding, expert witnesses, and Integria’s General Counsel (Anna Cuperman, subject to provision by each individual of an appropriate confidentiality undertaking (the form of which is to be agreed). Notwithstanding, the monetary value) only (of any sales made by Johnson & Johnston to customers before 31 December 2019 may be shared with Integria;

(d)The parties may agree modifications to the orders at (b) and (c) above at any time, or any party may apply to the Court under High Court Rule

8.25 to set aside or modify those orders at any time after discovery has been provided.

[20]   I have not heard from counsel in relation to costs. My preliminary view is that the plaintiffs as the successful parties are entitled to a costs order in accordance with scales 2B. However, I reserve costs. I expect counsel will be able to resolve these. If not they may file memoranda in the usual way.

Associate Judge Johnston

Solicitors:

Wilson Harle, Auckland for plaintiffs

Brookfields Lawyers, Auckland for defendant