Parsons v O'Connor - [2021] NZHC 1047

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-265

[2021] NZHC 1047

UNDER the Companies Act 1993 section 174

BETWEEN

MICHAEL KENNETH PARSONS

First Plaintiff

GREEN SHOOTS HOLDING LIMITED
as trustee of THE GREEN SHOOTS
LIFESTYLE AND EDUCATION TRUST
Second Plaintiff

AND

PAUL MICHAEL O’CONNOR and BHW TRUSTEE 2017 LIMITED

as trustees of the O’CONNOR FAMILY TRUST

First Defendants

SALLY JANE CAREY and
ANDY FOX as trustees of the FOX CUB TRUST
Second Defendants

DATAMINE LIMITED

Third Defendant

Hearing: 21 April 2021

Appearances:

T Nelson for the Plaintiffs J Cundy for the Defendants

Judgment:

12 May 2021

JUDGMENT OF ASSOCIATE JUDGE R M BELL

This judgment was delivered by me on 12 May 2021 at 11:00 am pursuant to Rule 11.5 of the High Court Rules

…………………………. Registrar/Deputy Registrar

PARSONS v O’CONNOR [2021] NZHC 1047 [12 May 2021]

[1] The main question in this application for further discovery is whether Mr Parsons can be required to disclose documents of his employer, when his employer has told him not to. The answer is that the documents are not in Mr Parsons’ control and he is not required to discover them. The defendants may have to use other means to obtain the documents, such as an application for non-party discovery.

[2] The case concerns Datamine Ltd which carries on business as a data analytics consultancy. The plaintiffs seek relief as prejudiced shareholders under s 174 of the Companies Act 1993. Mr Parsons, the first plaintiff, started as an employee but later became a director. Mr O’Connor and Ms Carey were the other directors. Mr Parsons and his company, Green Shoots Holdings Ltd became shareholders. Mr O’Connor’s family trust and Ms Carey’s family trust are the other shareholders. The parties have fallen out. The details of the plaintiffs’ oppressiveness claim are not relevant to this decision.

[3] The discovery question arises under the defendants’ counterclaim against Mr Parsons for breach of the shareholders’ agreement. In 2019, Mr Parsons stopped working for Datamine and took a job with Air New Zealand as General Manager, Data and Analytics. The defendants say that he breached a provision in the agreement not to be involved in a similar business to Datamine’s, including as an employee.

[4] Air New Zealand has a subsidiary, 11 Ants Analytics Group Ltd, which provides analytical services. Datamine also provides data and analytic services to Air New Zealand. It considers that its business with Air New Zealand has dropped since Mr Parsons left it. On the other hand, Mr Parsons says that Air New Zealand remains a significant client of Datamine and that the two companies are not in competition.

[5] The defendants’ application for further discovery under r 8.19 of the High Court Rules 2016 seeks these documents:1

(a)Correspondence between the first plaintiff and Air New Zealand (Air NZ), relating to his employment as General Manager, Data and Analytics, at Air New Zealand, including (but not limited to) any Linkedin…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Parsons v O'Connor

Details

AGLC: Parsons v O'Connor [2021] NZHC 1047
Case: [2021] NZHC 1047
Decision Date: 12 May 2021

CaseChat Overview and Summary

Parsons v O'Connor [2021] NZHC 1047 concerns a legal dispute where the plaintiffs, Michael Parsons and Green Shoots Holding Limited, seek relief as prejudiced shareholders under section 174 of the Companies Act 1993. The defendants, Paul O'Connor, Sally Carey, and Datamine Limited, counterclaim against Parsons for breach of the shareholders' agreement. The primary legal issue revolves around whether Parsons can be compelled to disclose documents of his employer, Air New Zealand, when his employer has expressly instructed him not to disclose them.

The court meticulously analysed the principles of discovery under the High Court Rules 2016. The key legal principle is that a party can only be required to disclose documents that are within their control. Control is defined as having a presently enforceable legal right to inspect or copy the document. The court concluded that documents in an employee's access but not in their control, due to an employer's instruction prohibiting disclosure, are not within the employee's control. Parsons correctly identified the documents in question as being in Air New Zealand's control and not his own.

The court dismissed the defendants' application for further discovery, ruling that Parsons could not be compelled to disclose documents from Air New Zealand. However, Parsons was required to disclose documents relating to his employment agreement with Air New Zealand, as he has an enforceable right to access his personal information under the Privacy Act 2020. The court ordered Parsons to disclose these documents within three weeks of receiving clarification from the defendants and made directions for costs and further case management.

Orders