Lyon v AK 651441 Limited
[2013] NZHC 3208
•2 December 2013
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2012-404-406 [2013] NZHC 3208
BETWEEN MARK STUART LYON First Plaintiff
AK 3694975 LIMITED as corporate trustee of the LAZONA TRUST Second Plaintiff
ANDAK 651441 LIMITED First Defendant
RCM LIMITED Second Defendant
GEOFFREY LAWSON RIDLEY Third Defendant
QST LIMITED Fourth Defendant
Hearing: 2 December 2013
Appearances: S Barter and R S Phillips for Plaintiffs (Lyon interests) P J Dale for Defendants (Ridley interests)
Judgment: 2 December 2013
ORAL JUDGMENT OF ASSOCIATE JUDGE BELL
Solicitors:
Barter & Co Limited (S H Barter/R S Phillips) Albany Village, North Shore, for Mr Lyon’s interests
Ellis Law (B Ellis) Auckland, for Mr Ridley’s interests
Counsel:
P J Dale, Auckland, for Defendants for Mr Ridley’s interests
LYON v AK 651441 LIMITED and RIDLEY [2013] NZHC 3208 [2 December 2013]
[1] The plaintiffs have applied under r 8.25(3) to set aside claims as to confidentiality made in the defendants’ supplementary affidavit of documents sworn on 5 September 2013. Paragraph 5 of that affidavit says this:
In respect of the documents for which I have claimed confidentiality I propose that inspection of these documents be restricted to the court and the plaintiffs’ legal advisors, and that the following restrictions apply:
(a) The documents are not to be copied without leave of the defendants or by order of the court.
[2] I comment that where confidentiality is claimed it is common for the party making the disclosure to propose restrictions which allow documents to be copied upon undertakings being given as to confidentiality and to ensure that the documents are used only for the purpose of the proceeding and for no wider purpose. It is unusual, in my experience, to find a party stipulating that documents should not even be copied without either leave of that party or by order of the court.
[3] The affidavit lists three groups of documents for which the defendants claim confidentiality:
Documents 14-19 come under a heading in the schedule “Quay Street sub- lease agreements/documents”. These documents apparently relate to leases of the Quay Street premises to McDonalds, Restaurant Brands Ltd and Mobil. They run from 4 July 2011 to 27 October 2011.
Documents 24-28 are under the heading “Westpac documents”. They are bank statements of Mid-Point Investments (Quay Street) Ltd for different numbered bank accounts. They run from April 1997 up to April 2010.
Documents 82-86 are in a section of the schedule with the heading “Additional documents held by defendants”. They concern a deed of acknowledgment of lease, a notice of assignment of a benefit of a deed of lease, resolutions of the Quay Trust Trustees and related documents. They are dated from 2008 to 2010.
[4] The only evidence to support the claims of confidentiality is not in the affidavit of documents itself but in another affidavit sworn by Mr Ridley in April
2013. That affidavit was sworn in support of an application for separate determination of questions of liability and quantum. I note that ultimately the defendants did not pursue that application.
[5] Paragraph 17 of Mr Ridley’s April 2013 affidavit says:
In the foregoing exchange of correspondence my solicitors addressed the issue of confidentiality which is a major factor behind this application. The three remaining tenants, KFC, McDonalds and Mobil all have on-going rent reviews taking place at the moment, and which I assume the plaintiff would expect to be taking into account when calculating its claims. However, those rent reviews are highly confidential. I anticipate that each of the tenants will be concerned about disclosure of whatever rental is fixed, because it may have a bearing on their other properties and other commercial negotiations.
[6] Before addressing the question of confidentiality, I note that at the outset Mr Dale addressed me on questions of liability. He contended that the plaintiffs’ claim is misconceived and, if there were any claim, it is out of time. He endeavoured to generally persuade me as to the merits of his client’s position on liability.
[7] That submission was misdirected. In this application I am concerned with discovery of documents bearing on matters of quantum. Given that the defendants have accepted that quantum and liability ought to be determined together, then the defendants are under an obligation to make discovery of documents relating to quantum. Further, they have prepared a supplementary affidavit of documents in which they have listed the documents which they must have recognised were relevant to the matters in issue, especially as to quantum. Mounting arguments as to relevance to prevent disclosure is misdirected when the documents have been listed in the affidavit of documents and the matter in issue is one of confidentiality.
[8] For their written submissions, the plaintiffs referred to the decision of the
Court of Appeal in Port Nelson Ltd v Commerce Commission.1 Mr Dale accepted
that the principles stated by the Court of Appeal do apply. Relevant extracts from the
Court’s decision are:2
The ability of each party to a proceeding to inspect the documents of the other except for documents which are privileged, is important in enabling the proceeding to be brought to a just conclusion. It avoids parties being taken by surprise. It enables legal advisers to better assess the likely outcome of trial, and to concentrate on what will ultimately prove to be the real issues. In this way it can save cost. Sometimes, however, relevant documents which are not privileged may be commercially sensitive. Examples would be documents showing the detailed costings of products or services which are provided in a competitive market, the marketing plans for a proposed new product, or a patent specification during the period before the application has been accepted and made available for inspection. In some cases it may be sufficient protection that “a party who seeks discovery of documents gets it on condition that he will make use of them only for the purposes of that action and for no other purpose”: Riddick v Thames Board Mills Ltd (1977) QB 881, 896; [1977] 3 All ER 677, 688 per Lord Denning MR. Use for some collateral or ulterior purpose is a contempt of court: Church of Scientology of California v Department of Health and Social Security [1979]
3 All ER 97, 116 per Lord Templeman LJ. That sanction continues to apply to copies of documents obtained through discovery even after the document has been produced and read in open Court: Home Office v Harman [1983] 1
AC 280; [1872] 1 All ER 532. In other cases, the courts have directed that particular documents are to be shown only to nominated persons – typically
solicitors, counsel and expert witnesses. Power to limit access in this way
arises from the inherent jurisdiction of the Court to prevent abuse of the process: Church of Scientology of California v Department of Health and
Security [1979] 3 All ER 97 (CA). Orders limiting the persons to be allowed
access to discovered documents have been made in many cases in the High
Court...
And at 348:
Relevant documents should generally be made available for inspection. The fact that they are regarded as being confidential, and would not be made available were it not for the requirements of the litigation is immaterial. An order for non-disclosure can only be made when the Court is satisfied in terms of r 312 that such an order is “necessary”. It must be either apparent from the document in question or shown by other evidence that disclosure would be likely to prejudice the party in some significant way. Even the possibility of prejudice may be sufficient, and that will depend on the seriousness of possible prejudice and on the significance of the documents to the issues in the proceedings, and the extent to which limited disclosure may enable the concerns of both parties to be accommodated.
And at 349:
It follows that the documents must be approached on a one by one basis. This is the responsibility of counsel. In the vast majority of cases counsel should be able to agree whether or not a document is such as to require special protection, bearing in mind the restrictions on the use of discovered documents which apply in any event. Where there is some genuine point of difference which warrants referral to the Court, then the Judge can decide. Such referrals should be rare where experienced counsel are involved.
[9] It is relevant to note that that decision was given under an older version of the High Court Rules. Provisions for discovery have now changed in that there is now express recognition of claims for confidentiality. The rules expressly provide that claims of confidentiality must be recorded in the schedule to the affidavit of documents. Claims of confidentiality may be challenged by applications under r
8.25. Subject to any justified claim for confidentiality, a party can be required to allow the other side to inspect documents, and can also be required to allow the other side to make copies of documents available on inspection. Generally those matters should proceed smoothly without requiring the court’s supervision. That is recognised by the Court of Appeal’s statement at 349 that it expects experienced counsel to be able to resolve these matters themselves.
[10] By the time this matter came to a hearing the defendants were not insisting on the position they had maintained in their affidavit of documents. They had relaxed the matter to the extent that they were prepared to accept that the documents for which confidentiality was claimed could be disclosed to the lawyers for the plaintiffs and to any expert witnesses who might be instructed. I take that as meaning accountants who might be instructed to calculate quantum. But further disclosure was resisted. In particular the point was taken that Mr Lyon, the first plaintiff, should not receive the documents.
[11] Mr Lyon has sworn an affidavit in support of the application. He has deposed that he recognises the obligations of confidentiality that go with disclosure in litigation. He gives an undertaking that he will respect the confidentiality of documents.
[12] My assessment of the confidentiality claim is this. I recognise that the documents are the defendants’ business documents and that there is a sensitivity that goes with the disclosure of such documents. They are documents which any businessman would ordinarily want to keep confidential. However, evidence has not been adduced to show that they have the degree of confidentiality for which added protection should be required in the way recognised by the Court of Appeal in Port Nelson Ltd v Commerce Commission. In particular, Mr Ridley claimed in his April affidavit that there were ongoing rent reviews, but the only documents that bear on rent reviews seem to be historical, going back to 2011.
[13] The other matters seem to be documents private to Mr Ridley and to the defendants. But in litigation the disclosure of private documentation is required. Protection against misuse of documents can normally be assured by keeping the other party to their obligations, to use the documents only for the purpose of the litigation. Normally that goes without saying. Special undertakings are not normally required. Mr Dale, however, says that Mr Lyon is a risk factor. There is only slight evidence to suggest that. I take into account that Mr Lyon has deposed that he will keep documents confidential.
[14] In these circumstances – and this is really to set the defendants’ mind at rest – I require that Mr Lyon give a written undertaking to the defendants that he will respect the confidentiality of the defendants’ documents, will not disclose them to any third parties except his lawyers and any experts engaged for this proceeding, and will not make further disclosure of those documents. On his giving that undertaking, the documents may be disclosed to him.
[15] The plaintiffs seek costs. The defendants oppose. Mr Dale says that costs should be reserved because there have been difficulties in running both this case and the Chancery proceeding (CIV-2013-404-2549). In this case I follow the normal approach in interlocutory applications, that costs ought to be fixed and ought to be payable now. I make an order for costs in favour of the plaintiffs on a 2B basis. It should reflect the fact that the hearing today has required only an hour.
[16] I also comment that one reason for requiring costs is that I take into account the advice of the Court of Appeal in the Port Nelson case – that experienced counsel ought to be able to resolve these matters. I take into account the fact that the affidavit imposed an unusual restriction on the plaintiffs’ access to the defendants’ documents. By taking that stance the defendants, in effect, required that this application had to be made. I also note that there was some movement on the defendants’ part once the application had been made, but in my judgment that was not sufficient. It necessitated that this application had to be heard. I had allowed time for the parties to try and resolve this matter informally themselves. All these circumstances point towards a need for an order for costs.
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Associate Judge R M Bell
2 December 2013
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