Opes Partners New Zealand Limited v Sdogeneral Limited

[2021] NZHC 3147

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-001879

[2021] NZHC 3147

UNDER

Rule 8.20 of the High Court Rules 2016

BETWEEN

OPES PARTNERS NEW ZEALAND LIMITED

Applicant

AND

SDOGENERAL LIMITED

Respondent

Hearing:	18 November 2021
Appearances:	S D Campbell and JK Stringer for Applicant S Moore for Respondent
Judgment:	22 November 2021

JUDGMENT OF WOOLFORD J

This judgment was delivered by me on Monday, 22 November 2021 at 2:30 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:WynnWilliams (S D Campbell), Christchurch Jessica O’Dea, Auckland

Counsel:            S Moore, Auckland

OPES PARTNERS NEW ZEALAND LTD v SDOGENERAL LTD [2021] NZHC 3147 [22 November 2021]

[1]    The applicant, Opes Partners New Zealand Limited (Opes), applies for discovery orders against the respondent, SDOGeneral Limited t/a Unlocked Real Estate (Unlocked), before the commencement of a substantive proceeding. It says orders should be granted because discovery of the documents sought by Opes is required to establish what breaches of contract and/or fiduciary duties or misuse of confidential information have occurred (if any), when they occurred, and what loss it has suffered as a consequence. Opes says that it can gain insight into these matters only through discovery, which would permit it to draft a proper and compliant statement of claim against Unlocked.

[2]    The application is opposed by Unlocked. It says Opes’ claim is speculative. Furthermore, it is not impossible or impracticable for Opes to formulate its claim without pre-trial discovery and any further particulars can be added to the claim following post-commencement discovery undertaken in the usual manner.

[3]    Rule 8.20 of the High Court Rules allows the Court to make an order for particular discovery before commencement of a proceeding. It provides:

8.20 Order for particular discovery before proceeding commenced

(1)This rule applies if it appears to a Judge that—

(a)a person (the intending plaintiff) is or may be entitled to claim in the court relief against another person (the intended defendant) but that it is impossible or impracticable for the intending plaintiff to formulate the intending plaintiff’s claim without reference to 1 or more documents or a group of documents; and

(b)there are grounds to believe that the documents may be or may have been in the control of a person (the person) who may or may not be the intended defendant.

(2)The Judge may, on the application of the intending plaintiff made before any proceeding is brought, order the person—

(a)to file an affidavit stating—

(i)whether the documents are or have been in the person’s control; and

(ii)        if they have been but are no longer in the person’s control, the person’s best knowledge and belief as to when the documents ceased to be in the person’s control and who now has control of them; and

(b)to serve the affidavit on the intending plaintiff; and

(c)if the documents are in the person’s control, to make those documents available for inspection, in accordance with rule 8.27, to the intending plaintiff.

(3)An application under subclause (2) must be by interlocutory application made on notice—

(a)to the person; and

(b)to the intended defendant.

(4)The Judge may not make an order under this rule unless satisfied that the order is necessary at the time when the order is made.

[4]    First, Opes has to establish that there is at least “the real possibility of a claim”.1 The threshold is met if there is “some basis of fact which takes matters beyond mere fishing; mere trawling or speculation”.2

[5]    I am satisfied from the  two affidavits sworn by the sole director of Opes,   Mr Nichol, and the two affidavits sworn by the sole director of Unlocked, Mr Osner, that this threshold is met. There was a commercial arrangement between the parties to market and sell real estate. The arrangement involved splitting the commissions which were received, in various ways. The commercial arrangement evolved and was modified over time.

[6]    Opes alleges that in breach of the commercial arrangement, Unlocked failed to pay Opes any commission on sales involving (a) clients introduced by Unlocked to properties of developers with whom Opes had a relationship or (b) properties of developers introduced by Unlocked which were sold to clients of Opes. Unlocked disputes that Opes was entitled to any commission on transactions of this type.

[7]    In terms of the commercial arrangement, Unlocked also had access to lists of developers with whom Opes had a relationship, as well as lists of Opes’ property business clients. Unlocked says that some of the developers who had nationally recognised brands were already known to Unlocked and nothing in the commercial arrangement provided that Unlocked was not allowed to approach developers with whom Opes also had an arrangement in order to facilitate sales of properties belonging to vendors not known to Opes.

1      Exchange Commerce Corp Ltd v New Zealand News Ltd [1987] 2 NZLR 160 (CA).

2      Welgas Holdings Ltd v Petroleum Corp of New Zealand Ltd (1991) 3 PRNZ 33 (HC) at 43 per McGechan J.

[8]    Mr Nichol has also set out what he knows of transactions involving Unlocked and developers who were introduced by Opes to Unlocked such as Oaks Development, Williams Corporation and CBD Developments. He asserts that it was a breach of their commercial arrangement for Unlocked to seek to work exclusively with these developers. Unlocked acknowledges that CBD Developments for instance has worked with Opes in the past, but does not consider all the work that was done to complete four contracts with a fee revenue to Unlocked of $48,000 plus GST comes under any discussion of potential agreements with Opes.

[9]    Secondly, Opes has to establish that it is impracticable for Opes to formulate its claim without reference to documents under the control of Unlocked.

[10]   I am satisfied that access to such documents would enable Opes to properly draft the proceeding from the outset. A draft statement of claim has been prepared. However, it only pleads the limited breaches of which Opes is currently aware, based on the information currently available. It relies on inferences of breach drawn from the facts presently known. It also does not plead the loss suffered by Opes as that is presently unascertainable.

[11]   I am also satisfied that subsequent discovery cannot cure pleading issues because the scope of discovery obtained in the ordinary way under r  8.5  of the  High Court Rules is determined by the pleadings.

[12]   The orders sought in the application relate to the following documents said to be in Unlocked’s control:

(a)Documents relating to any active or former agency agreements entered into by Unlocked or the sole director of Unlocked, Mr Osner, between April 2017 – June 2021.

(b)Documents relating to any agreements for sale and purchase of real estate where Unlocked or Mr Osner provided real estate agency work in relation to that transaction between April 2017 – June 2021.

(c)Documents relating to commissions or income paid to Unlocked or Mr Osner for property transactions that Unlocked or Mr Osner provided real estate agency work in relation to between April 2017 – June 2021, including but not limited to bank statements and invoices.

(d)Documents relating  to  any  communications  between  Unlocked,  Mr Osner and any of the entities or persons (or their representatives) listed in Schedule One.

[13]   Opes seeks orders relating to documents between April 2017 – June 2021. Unlocked says that the relationship between the parties began on 2 August 2017 and Opes should not be entitled to inspect documents prior to the date of the relationship.

[14]   There is a one-page agreement between the parties dated 2 August 2017. It is, however, quite limited in scope and does not appear to cover all aspects of the parties’ relationship. The exact nature of the relationship is very much in dispute. Mr Nichol says in his affidavit that agreement was reached in or around April 2017. Mr Osner says in his affidavit that there was no “official relationship” prior to 2 August 2017. Although there may not have been a signed written agreement prior to 2 August 2017, I am prepared to accept for the purpose of this application that there may well be an “unofficial relationship” before then. The four-month time difference does not, in any event, appear to be all that material.

[15]   I therefore have no difficulty with the orders numbered 1 and 4, but I find that orders numbered 2 and 3 are too broad. Unlocked has business which is completely unrelated to that of Opes. There is no basis for Unlocked to provide discovery of that. Orders 2 and 3 should be narrowed to exclude any confidential documents relating to Unlocked’s own clients who are not listed in the Opes list of developers annexed as Schedule One to the application or in a list of clients to be provided by Opes to Unlocked. The list of clients to be provided by Opes is to be kept confidential and not to be disclosed to any other person other than Unlocked’s counsel and Mr Osner, the sole director of Unlocked.

[16]There will, accordingly, be the following orders:

(a)That Mr Osner file and serve an affidavit on behalf of Unlocked within 15 working days following the provision of a client list by Opes stating:

(i)whether the following categories of documents are, or have been, in Unlocked’s control:

1.   documents relating to any active or former agency agreements entered into by Unlocked or Mr Osner between April 2017 – June 2021;

2.   documents relating to any agreements for sale and purchase of real estate involving any person listed in the Opes list of developers or in the Opes list of clients where Unlocked or Mr Osner provided real estate agency work in relation to that transaction between April 2017 – June 2021;

3.   documents relating to commissions or income paid to Unlocked or Mr Osner for property transactions involving any person listed in the Opes list of developers or in the Opes list of clients where Unlocked or Mr Osner provided real estate agency work in relation to that transaction between April 2017 – June 2021, including, but not limited to bank statements and invoices;

4.   documents relating to any communications between Unlocked, Mr Osner and any of the persons listed in the Opes list of developers or in the Opes list of clients.

(ii)If any of the documents have been but are no longer in the control of Unlocked stating to Mr Osner’s best knowledge and belief as to when the documents ceased to be in Unlocked’s control and who now has control of them.

(b)That Unlocked make the documents within Unlocked’s control available to Opes for inspection at the time of filing and serving the affidavit in accordance with r 8.27 of the High Court Rules 2016 and the listing and exchange protocol.

(c)Confidentiality orders over the following information on the terms outlined in Schedule 2 to the interlocutory application on the basis it contains commercially sensitive information about Opes’ business.

(i)Information relating to the amount of commission Opes charges on the sale of a development;

(ii)Information relating to the terms of its commercial arrangements with Unlocked and Mr Osner;

(iii)Information relating to Opes’ business model;

(iv)Information relating to the identities of the developers it has relationships with and persons contained in the list of clients to be provided by Opes to Unlocked.

(d)The costs of and incidental to this application are reserved.

[17]   Leave is also granted to the parties to vary or amend the above orders if they are impracticable to comply with or in any other way are unduly onerous.

Woolford J