NZME Limited v Nine Entertainment Co. Holdings Limited
[2020] NZHC 1565
•3 July 2020
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-657
[2020] NZHC 1565
BETWEEN NZME LIMITED
Plaintiff
AND
NINE ENTERTAINMENT CO. HOLDINGS LIMITED
Defendant
Hearing: 12 June 2020 Counsel:
J E Hodder QC and J W J Graham for plaintiff
J Dixon QC, K Massey and C Butters for defendant M O’Brien QC for Stuff Limited (interested party)
Judgment:
3 July 2020
JUDGMENT OF KATZ J
[Redactions to judgment]
This judgment was delivered by me on 3 July 2020 at 3:00 pm Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
Solicitors: Chapman Tripp, Auckland
Russell McVeagh, Auckland
Counsel: J E Hodder QC, Barrister, Auckland
J Dixon QC, Shortland Chambers, Auckland M O’Brien QC, Barrister, Auckland
NZME LIMITED v NINE ENTERTAINMENT CO. HOLDINGS LIMITED [2020] NZHC 1565 [3 July 2020]
Introduction
[1] On 18 May 2020, I declined an application by NZME Limited for an injunction against Nine Entertainment Co. Holdings Limited. NZME had been in negotiations with Nine to acquire Nine’s shareholding in the Stuff group of companies. NZME alleged that Nine had breached an exclusivity agreement between the parties by terminating negotiations and entering into discussions with a competing bidder.
[2] The version of my judgment that was publicly released was redacted for reasons of commercial sensitivity. The issue currently before me is whether those redactions are still necessary and appropriate, in light of developments since the judgment was delivered. In particular, Stuff has now been sold to the competing bidder, Sinead Boucher (Stuff’s Chief Executive Officer).
[3] Stuff (under its new ownership) was represented at that hearing as an interested party. It submitted that the relevant information should remain confidential for a further six to twelve months. Stuff’s position was supported by its former owner, Nine. NZME, on the other hand, argued that there is no longer any justification for the redactions, and that the full judgment should now be released.1
Further background
[4] From September 2019 until May 2020, NZME and Nine were in discussions regarding a possible sale of Nine’s shares in Stuff to NZME. Nine terminated those discussions in May 2020 when it received an indicative offer from Ms Boucher. Negotiations between Nine and Ms Boucher progressed following release of the judgment on 18 May 2020, and the transaction settled on 31 May 2020.
[5] The publicly released version of the judgment was redacted for reasons of commercial sensitivity, given that negotiations with Ms Boucher were then at a critical stage. Two categories of information were redacted. The first related to a decision by the Nine board not to continue to support Stuff after 31 May 2020, if a sale could not be concluded by then. The second related to NZME and Nine’s characterisation
1 NZME’s formal position was that it abided the decision of the Court. In its written and oral submissions, however, it advocated for the removal of the redactions.
of Stuff as a “failing firm” for the purposes of seeking Commerce Commission clearance for the acquisition.2 This occurred against the backdrop of the Commission having declined an earlier clearance application in 2016.
Should the redactions to the judgment be removed?
Legal principles
[6] The leading case on suppression in a civil context is the Supreme Court’s decision in Erceg v Erceg.3 In that case the Court held that:4
(a)The “fundamental principle [is] that justice should be administered in open court, subject to the full scrutiny of the media”.
(b)It is nevertheless “well established that there are circumstances in which the interests of justice require that the general rule of open justice be departed from, but only to the extent necessary to serve the ends of justice”.
(c)Confidential information can only be suppressed if the party seeking the redactions can show specific adverse consequences that are sufficient to justify an exception to the fundamental rule.
(d)The threshold or standard is a high one. However, the circumstances do not have to be exceptional or extraordinary.
[7]As Dobson J observed in NZME Limited v Commerce Commission:5
The Courts recognise that in commercial litigation the interests of open justice often have to be balanced against the Court’s preparedness to minimise the risk of ongoing harm to litigants caused by public disclosure of the detail of commercially sensitive information. In commercial litigation, including appeals such as the present one, the Court routinely makes confidentiality orders to suppress commercially sensitive information, and facilitates the presentation of evidence and submissions, and for judgments to issue on terms that avoid unwarranted disclosure.
2 Even if a transaction might otherwise have anti-competitive features, an application can be made to the Commerce Commission for clearance on the basis that a firm is failing and the firm or its assets would leave the market altogether if the acquisition is not cleared.
3 Erceg v Erceg [2016] NZSC 135, [2017] 1 NZLR 310.
4 Erceg v Erceg [2016] NZSC 135, [2017] 1 NZLR 310at [2], [3], [12], and [13].
5 NZME Limited v Commerce Commission [2017] NZHC 1788 at [8].
Ms Boucher’s evidence
[8] Ms Boucher has filed an affidavit setting out her views as to the adverse consequences for Stuff of publication of the redacted material. Amongst other things, she states that:
(a)Although the trajectory of Stuff’s business has been declining in recent years it had remained generally profitable (although, along with other media organisations, it has been detrimentally impacted by the COVID-19 lockdown, which has severely impacted advertising revenues).
(b)The two New Zealand directors of Stuff (of which Ms Boucher is one) have never subscribed to the “failing firm” argument advanced by Nine to the Commerce Commission.
(c)The executive team have a lot planned for Stuff going forwards. They are currently developing a new strategy for the business, which they envisage will bring a positive financial impact to the business and its people. (Stuff currently employs approximately 849 full-time employees). However, they need some “clear air” to finalise and start delivering on this new strategy:
We need to be able to do so without more concern or noise in the market or amongst staff that Stuff is in difficulty or, worse, is a “failing firm” or might imminently fail.
(d)The announcement of Ms Boucher’s purchase of Stuff has been well received by staff, customers, potential investors and venture partners. As a result, the business has a real chance to return to pre-COVID-19 profitability.
(e)The redacted information is confidential, commercially sensitive, and was never intended for public release. It would never have been released publicly had NZME not issued this proceeding.
(f)The redacted information does not reflect the views of Stuff’s management and wrongly suggests that Stuff is not a viable business. The release of such information at this time would undermine confidence in the company and its future. This could cause a loss of confidence on the part of advertisers, suppliers, staff, investors, bankers and other key stakeholders.
(g)In summary:
Real livelihoods are at stake if confidential and sensitive information about Stuff’s position gets into the public arena before Stuff has a real chance to start to reverse the negative financial impact of Covid-19, deliver on its new strategy and put the recent difficulties behind it. While advertising revenue is now increasing weekly, Stuff can ill-afford another setback.
It is not only the company and its staff who could be adversely affected. Customers could also be adversely affected by the loss of the plurality the Commerce Commission and Court saw as important when the merger application was declined.
Are the adverse consequences of lifting suppression sufficient to justify an exception to the principle of open justice?
[9] Stuff initially sought permanent suppression of the redacted material. At the hearing, however, Mr O’Brien QC advised that Stuff now only seeks suppression for a period of six to twelve months. He acknowledged that the commercial sensitivity of the redacted information will decrease over time.
[10] Mr Hodder QC, for NZME, submitted that the potential adverse consequences identified by Ms Boucher are not sufficient to displace the fundamental principle of open justice. He submitted that the present situation is analogous to that in Peters v Birnie.6 In that case the applicants sought leave to bring derivative proceedings against Mr Birnie under the Companies Act 1993. Mr Birnie opposed the application. One of his key submissions was that his financial position was such that proceedings against him would be pointless, as he would not be able to meet any damages award in the amount sought. Mr Birnie filed evidence of his financial position in support of that submission. Asher J held that the relevant material did not
6 Peters v Birnie [2010] NZAR 494 (HC).
have any “exceptional commercial sensitivity”. He acknowledged that “it is generally embarrassing and unwelcome for any person to have their financial circumstances disclosed to the public, particularly when they are under severe financial pressure”. This, however, is not sufficient to justify a confidentiality order, as “more than mere embarrassment or detriment to reputation must be shown before a court will intervene”.
[11] The present case is not analogous to Peters v Birnie. Mr Birnie opposed leave being granted to the applicants to sue him on the basis that he was impecunious, but then sought to suppress publication of that fact (and evidence supporting it). No adverse consequences of publication were identified, other than generalised embarrassment or damage to reputation.
[12] This case is quite different. Stuff is a third party. It did not put the relevant confidential information before the Court. Ms Boucher’s concern is not general “embarrassment”, but specific adverse consequences which she believes would result from the release of the redacted information. The adverse consequences identified by Ms Boucher are significant ones. This weighs heavily in favour of continued suppression, for a limited period. Obviously, it is not possible to predict with certainty how key stakeholders might react to confirmation (as opposed to speculation) that Nine perceived Stuff as a failing firm and was apparently on the verge of withdrawing its support. However, Ms Boucher, as the longstanding Chief Executive Officer and now the sole owner of Stuff, is the person best placed to make that assessment. Her evidence was not challenged.
[13] As a third party to the litigation, Stuff has a greater claim to confidentiality than either NZME or Nine. Mr O’Brien referred, by analogy, to case law to the effect that witnesses have a significantly stronger claim to suppression than parties, if their interests will be prejudiced by publicity.7 In a similar vein, in Peters v Birnie, Asher J distinguished the position of a third party and ordered suppression of an affidavit
7 Y v Attorney-General [2016] NZCA 474, [2016] NZFLR 911; R v Legal Aid Board, Ex parte Kaim Todner [1999] QB 966, [1998] 3 WLR 925 at 978 per Lord Woolf.
reference that was critical to them, on the basis that that party “has not been at court and accordingly was not able to provide any response”.8
[14] Through no choice (or fault) of Stuff, confidential and commercially sensitive information regarding it has been put before the Court in proceedings to which it is not a party. In the normal course of events that information would likely have never seen the light of day. The relevant information has been treated as confidential by the Commerce Commission, due to its commercially sensitive nature. Further, Stuff disputes the accuracy of the information.
[15] Stuff is not seeking permanent suppression, but rather suppression for a limited period to give it some “clear air” to put its recent difficulties behind it and move forward with its new strategy. Hence, while the interests of open justice will be curtailed for a period, they will not ultimately be denied. I also note that the redacted material comprises a very small portion of the judgment.
[16] Ultimately the Court must strike a balance between open justice considerations and the interests of Stuff, its employees, and associated third parties. In my view, the specific adverse consequences identified by Ms Boucher are sufficient to justify an exception to the fundamental rule of open justice, for a limited period.
[17] Mr O’Brien submitted that a period of six to twelve months would be appropriate. In my view six months will likely be sufficient. Nine’s historical views of Stuff’s prospects will inevitably carry less weight with the passage of time. In six months’ time the redacted information will likely be of limited relevance or interest to Stuff’s key stakeholders. Their focus, presumably, will be on the current performance of Stuff under its new owner, who will have been at the helm by then for seven months. Stuff’s directors will therefore have had a reasonable period of “clear air” to start delivering their new strategy.
8 Peters v Birnie [2010] NZAR 494 (HC) at [35].
[18] Finally, this judgment refers in some detail to the information redacted from the injunction judgment, as well as Ms Boucher’s evidence regarding the adverse consequences of releasing the judgment at this time (from which the nature of the redacted information can be inferred). It is therefore necessary to also suppress this decision until the injunction judgment is released.
Result
[19] The redactions on the injunction judgment are to remain in place until 3 December 2020, at which time an unredacted copy of the judgment will be released publicly.
[20] This judgment is also suppressed until 3 December 2020. I propose, however, to release a Minute to the media advising of the outcome of this decision. That Minute will be released at approximately 12 noon next Tuesday, 7 July 2020.
[21] If costs cannot be agreed between counsel, leave is reserved to file memoranda. Any memoranda from Stuff or Nine are to be filed by 17 July 2020. Any memorandum in response from NZME is to be filed by 24 July 2020,
Katz J
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