MB Technology Ltd v Orbis Blockchain Technologies Ltd

[2024] NZHC 3773

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

COMMERCIAL PANEL

CIV-2020-404-1541

[2024] NZHC 3773

BETWEEN

MB TECHNOLOGY LTD

Plaintiff

AND

ORBIS BLOCKCHAIN TECHNOLOGIES LTD

First defendant

DAVID SHU-HAN YU
Second defendant

DANIEL JOHN CROTHERS
Third defendant

Continued overleaf

Hearing:

9 December 2024

Appearances:

J S Cooper KC, M A Corlett KC, B E Marriner and AJA Cameron for plaintiff

M Heard and I K Rollinson for first, fifth and sixth defendants AJB Holmes for second and third defendants

C P Browne for fourth defendant

Date of judgment:

11 December 2024

REASONS FOR JUDGMENT OF JAGOSE J

[Evidence Act 2006, s 67(1)]

This judgment was delivered by me on 11 December 2024 at 3.30pm.

Pursuant to Rule 11.5 of the High Court Rules.

………………………… Registrar/Deputy Registrar

MB TECHNOLOGY LTD v ORBIS BLOCKCHAIN TECHNOLOGIES LTD [2024] NZHC 3773 [11 December 2024]

ECOMI TECHNOLOGY PTE LTD

Fourth defendant

DENISE MULLINGS
Fifth defendant

JAHANZAIB KHAN
Sixth defendant

[1]                  Among other things, my judgment of 2 December 2024 upheld Orbis’ claim to privilege in a communication comprising an email exchange between the parties in December 2020.1 I later granted MB Technology’s 9 December 2024 oral application to disallow privilege in the communication, with reasons to follow. These are those.

Background

[2]                  For settlement purposes, the email exchange sought and provided particular corporate constitutive documents.2 Section 57 of the Evidence Act 2006 affords privilege to intended confidential communications made in connection with an attempt to settle a dispute. I had emphasised “while the information contained in the communication also thus is privileged, its independent existence (if any) is not”.3

[3]                  The relevant communication annexed documents which the evidence now suggests were created on dates after MB Technology purported to cancel its agreement to acquire a shareholding in Orbis, but are dated prior and relied on by Orbis in the communication to contend any attempted cancellation came too late.

[4]Section 67(1) of the Evidence Act provides:

A Judge must disallow a claim of privilege conferred by any of sections 54 to 59 and 64 in respect of a communication or information if satisfied there is a prima facie case that the communication was made or received, or the information was compiled or prepared, for a dishonest purpose or to enable or

1      MB Technology Ltd v Orbis Blockchain Technologies Ltd [2024] NZHC 3631 at [2(d)] and [25]-[29].

2      The communication is a discovered document identified in this proceeding as MB.01.00732, being MB Technology’s  initiated  email  of  18  December  2020  and  Orbis’  responsive  email  of  23 December 2020 (the latter including a variety of attachments).

3      MB Technology Ltd v Orbis Blockchain Technologies Ltd, above n 1, at [29].

aid anyone to commit or plan to commit what the person claiming the privilege knew, or reasonably should have known, to be an offence.

Argument

[5]For MB Technology, Jenny Cooper KC contended “there is a prima facie case

… the communication was made for a dishonest purpose” (at least).

[6]                  For Orbis, Michael Heard disputed the parties’ settlement communication in December 2020 could have relevance to their dispute about the efficacy of any cancellation in August and September 2020. He justifiably complained to be “hamstrung” in obtaining meaningful instructions while Mr Yu remained under cross-examination, given his professional obligation not to communicate with a witness during the course of cross-examination.4 Distinctly from its opening on only Orbis’ alleged administrative corporate shortfalls, MB Technology now had raised serious criminal offences against at least Mr Yu, which gave rise to more substantial rights and privileges. But, given Mr Yu’s reliance on his privilege against self-incrimination, the evidence only established a threshold possibility of dishonesty.

[7]                  For Mr Yu, Antony Holmes endorsed Mr Heard’s submissions and added the communication honestly illustrated Orbis’ inability to repay MB Technology.

Discussion

[8]                  On any categorisation of the necessary civil quality — of fraud in some more or less grave sense,5 intentionally to deceive or to take advantage of misapprehension,6 acting other than as would an honest person7 — the documents appear to have dishonest purpose. They therefore cross s 67’s “prima facie” threshold.

4      Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, r 13.10.7.

5      Smallbone v London [2015] NZCA 391 at [57], citing Icepak Group Ltd v QBE Insurance (International) Ltd [2013] NZHC 3511 at [44]–[47] (citing Morgan & Banks Ltd v Gemini Personnel Ltd [2001] 1 NZLR 672 (CA) and Rollex Group (2010) Ltd v Chaffers Group Ltd [2012] NZHC 1332, [2012] NZAR 746 (HC)).

6      Gemini Personnel Ltd v Morgan & Banks Ltd [2001] 1 NZLR 14 (HC) at [60]–[69], citing

Crescent Farm (Sidcup) Sports Ltd v Sterling Offices Ltd [1972] 2 WLR 91 (Ch).

7      Royal Brunei Airlines Sdn Bhd v Tan [1995] 3 WLR 64 (PC).

[9]                  That alone would not disallow privilege in the documents’ communication but for Orbis’ reliance on the documents in connection with settlement as illustrative of MB Technology’s contended “shareholding in Orbis”. Thus the communication on its face itself has the necessary dishonest purpose, distinctly from any as may be the object of the annexed documents. This established the otherwise privileged communication as “part of the instrumentation” of the dishonest purpose.8

[10]              Such also is relevant in the proceeding, as having “a tendency to prove or disprove anything that is of consequence to the determination of the proceeding”,9 being the materiality of the contended corporate constitutive documents. Orbis relied on them for the truth of their substance.

[11]              As privilege is to be disallowed on a prima facie basis, counsel’s inability to obtain instructions is not meaningful. The documents appear to qualify for disallowance, and that will do. No different test is required because of the seriousness of the allegations.

Result

[12]I therefore disallowed Orbis’ claim of privilege to the communication.

—Jagose J

Counsel/Solicitors:

J S Cooper KC, Auckland M A Corlett KC, Auckland

AJB Holmes, Barrister, Auckland JAR Barrow, Barrister, Auckland Buddle Findlay, Wellington

Lee Salmon Long, Auckland Wilson Harle, Auckland

Koo Telle Lawyers, Auckland

8      Rollex Group (2010) Ltd v Chaffers Group Ltd, above n 5, at [45].

9      Evidence Act 2006, s 7(3).