Oxygen Air Limited v LG Electronics Australia Pty Limited

[2019] NZHC 904

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2015-404-2184

[2019] NZHC 904

BETWEEN

OXYGEN AIR LIMITED

Plaintiff

AND

LG ELECTRONICS AUSTRALIA PTY LIMITED

Defendant

Hearing:

16 April 2019

Appearances:

M C Black for Plaintiff

R J Hollyman QC and T D Mahood for Defendant

Judgment:

26 April 2019

JUDGMENT OF PETERS J

This judgment was delivered by Justice Peters on 26 April 2019 at 4.00 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date: ...................................

Solicitors:           Craig Griffin & Lord, Auckland

Hudson Gavin Martin, Auckland

Counsel:            R J Hollyman QC, Auckland

M C Black, Auckland

OXYGEN AIR LTD v LG ELECTRONICS AUSTRALIA PTY LIMITED [2019] NZHC 904 [26 April 2019]

[1]    This judgment determines the plaintiff’s (“Oxygen”) application for further discovery dated 21 January 2019 (“application”).

Background

[2]    The defendant, LG Electronics Australia Pty Ltd (“LG), supplies heating and air-conditioning products (“products”). In February 2010, LG appointed Oxygen as LG’s exclusive supplier of the products in New Zealand and to the Pacific Islands (“territory”). Oxygen alleges that LG breached this obligation. LG denies this.

[3]    The defendant, LG Electronics Australia Pty Ltd (“LG), supplies heating and air-conditioning products (“products”). In February 2010, LG appointed Oxygen as LG’s exclusive supplier of the products in New Zealand and to the Pacific Islands (“territory”). Oxygen alleges that LG breached this obligation. LG denies this.

Orders sought

[4]Oxygen seeks:

(a)discovery of documents listed in schedule A to the application;

(b)inspection of what are referred to as “source” documents;

(c)a ruling on whether particular documents are privileged; and

(d)such other orders as the Court thinks fit.

[5]    I shall not reproduce Schedule A because much of it is unintelligible. As explained to me, however, categories (a) and (b) of the application relate to what is referred to as the CDR spreadsheet (“spreadsheet”).

[6]    The spreadsheet is LG’s best effort to compile a list of all the products it supplied within the territory in the relevant period. It comprises at least 5,500 rows and its columns include salient details for each supply, such as Actual Sales Order Timestamp, Order Booking Timestamp, Shipment Timestamp, Sales yyyymmdd, Sub

inventory Code, Item Name, Customer Header Name, Shipping address, Sales Order Amount and so on.

[7]    Counsel for LG gave me a page of the spreadsheet in font so small it was barely legible. I am advised that, even in that font, the spreadsheet comprises 30 to 40 pages.

[8]    LG compiled the spreadsheet by searches of its electronic databases. This method was envisaged by the order for discovery. LG has not gone back to the underlying purchase and sales order or courier slips etc. To do so would be an oppressive, if not impossible, task, and an expensive one.

[9]    In support of its application, Oxygen has filed affidavits from Mr Rotteveel, one of Oxygen’s directors, and Mr Beylefeld, chartered accountant of Auckland and Oxygen’s accounting expert. Mr Beylefeld’s evidence is that the spreadsheet does not include some information relevant to  Oxygen’s  claim.  As  I  understand  it  from Mr Black, counsel for Oxygen, the purpose of the application is to remedy the omissions that Mr Beylefeld has identified. These are that:

(a)the spreadsheet does not  list  the  names  of  all  recipients  of products supplied.   For  instance,  some   customers  are  described   in the spreadsheet as “ONE-TIME-CUSTOMER-NZ”. Some 232 transactions are noted in this way.

(b)the spreadsheet identifies approximately 508 air conditioning components or units as defective but it does not explain or identify what happened to those components or units.

(c)rows 2012, 2101 and 2103 in the spreadsheet are either blank or have been omitted.

(d)the spreadsheet does not reconcile with records that LG has produced as to the inventory it has had on hand from time to time. Moreover, the spreadsheet does not record some movements in LG’s inventory.

[10]   Mr Hollyman QC, counsel for LG, does not dispute that the spreadsheet may have these deficiencies. However, he submits that I should not make the order sought for the following reasons. LG has done the best it can in the circumstances; it has complied with the order for discovery; in May 2018, Oxygen made an application for discovery of at least some of the documents it now seeks and that application was vacated on the basis the parties agreed how they would deal with it and LG has complied with that agreement; and LG cannot comply with the orders Oxygen seeks before trial and it would be oppressive to require it to do so.

Discussion

[11]   On a fair reading, [31] of the order for discovery envisaged that Oxygen might seek the underlying documents for some transactions. The relevant parts of the order provided:

Transactional records

30Discovery of each relevant Transactional Document would be disproportionate.

31Transactional Documents will be provided in summary form by way of database extract where available. If summary reports cannot be produced, individual documents will be listed.

32If particular Transactional Documents are themselves at issue, those records will be individually listed and exchanged, i.e parties have the right to requisition Transactional Documents that are individually listed.

33Relevant Transactional Documents are:

33.1All records relating to LG Products ordered by or shipped to Oxygen from 1 February 2010 to the date of this discovery order.

33.2All records relating to sale or supply by LG of LG Air Con Products into the Territory to any entity other than Oxygen between 1 February 2010 and the date of this discovery order.

33.3All records of sale or supply by Oxygen of LG Solar Products.

...

34Definitions:

...

34.11Transactional Document means any purchase order, invoice, statement, remittance or shipping document relating to an LG Product.

[12]   Accordingly, I am not persuaded that LG is not bound by the terms of the order for discovery to supply the documents that Oxygen seeks.

[13]   Nor am I persuaded that the application duplicates Oxygen’s application of May 2018. That application related to the “Fliway documents”.

[14]   However, there is force in LG’s objections about the sheer lateness of the application. Oxygen has had the spreadsheet since May 2018, that is eight months before it made the application. In addition, the trial is now to start in two weeks. I accept that the application was filed three months ago but even that was very late in the piece.

[15]Taking these matters into account, I order as follows.

[16]   LG is to use its best endeavours to locate and provide to Oxygen the documents in its control that give the, or as many as possible of the, particulars or information referred to in [9](a) to (c) above. LG’s legal advisers are to keep Oxygen’s advisers informed of progress.

[17]   At the outset of trial, Mr Hollyman is to be in a position to advise the trial Judge of what LG has or has not been able to achieve as regards [16] above. It will be for the trial Judge to address matters thereafter.

[18]   I decline to make any order in respect of [9](d). I accept Mr Hollyman’s submission that any discrepancy between records of LG’s inventory on the one hand and the spreadsheet on the other is a matter for evidence. LG is to have a witness available at trial to respond to any questions Oxygen may have on the subject.

Privilege

[19]   After the hearing, counsel for LG provided me with copies of the documents for which LG’s claim to privilege is in dispute. Having inspected the documents, I am satisfied that LG was entitled to claim privilege as it did.

Costs

[20]Costs are to lie where they fall as each side has had a measure of success.

Peters J