Payment Express Ltd v Paymark Ltd
[2019] NZHC 2027
•16 August 2019
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2016-404-2872
[2019] NZHC 2027
BETWEEN PAYMENT EXPRESS LIMITED
Plaintiff
AND
PAYMARK LIMITED
Defendant
Hearing: 5 July 2019 Appearances:
N Flanagan and J Carlyon for the Plaintiff
J Hodder QC and J Upson for the Defendant
Judgment:
16 August 2019
JUDGMENT OF GAULT J
This judgment was delivered by me on 16 August 2019 at 4:00 p.m. pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
……………………………………
Solicitors / Counsel:
Mr N Flanagan and Ms J Carlyon, Meredith Connell, Auckland Mr J Hodder QC, Barrister, Wellington
Mr J Upson, Chapman Tripp, Auckland
PAYMENT EXPRESS LTD v PAYMARK LTD [2019] NZHC 2027 [16 August 2019]
[1] In this proceeding Payment Express Ltd (PE) alleges that Paymark Ltd has taken advantage of its substantial power in the EFTPOS bank switching market for an anti-competitive purpose in breach of s 36 of the Commerce Act 1986. The proceeding is hard fought – reflecting that the parties are vigorous competitors. The immediate issue concerns PE’s access to documents discovered by Paymark as confidential with inspection restricted to counsel and independent experts. PE applies to set aside those restrictions so that its CEO, Mr Cullen, can review the documents.
[2] A preliminary procedural issue was resolved at the outset of the hearing with a supplementary affidavit filed by each party being admitted by consent.
The proceeding
[3] PE provides electronic payment hardware and services, including EFTPOS machines. Paymark owns and operates the central transaction processing system (switch) for EFTPOS transactions in New Zealand, which routes transactions between banks. This allows simultaneous electronic transfer of funds between New Zealand bank accounts, begun by an EFTPOS machine sending a request to Paymark, which is switched to the banks for the buyer and seller.1
[4] EFTPOS machines also process other electronic transactions, such as credit card and smartphone payments. PE requires access to Paymark’s services in order to provide EFTPOS but does not require access for processing other types of payments. PE alleges that Paymark is using its power in the EFTPOS bank switching market to stymie PE’s ability to compete, by requiring customers to buy Paymark services where competition exists if they also want EFTPOS services – essentially a bundling allegation. PE relies on Paymark’s dealings with two large retailers in particular.
[5] Paymark denies the allegations against it. It denies PE’s market definition, and that it has substantial market power, referring to the Commerce Commission’s recent decision clearing an acquisition of Paymark, where the Commission did not consider
1 There is further discussion of electronic payments and switches in the recent Commerce Commission decision concerning Paymark: Ingenico Group SA and Paymark Limited [2018] NZCC 18.
that cost was likely to be a significant barrier to building a network.2 Paymark denies it has taken advantage of its market power,3 and denies a proscribed anti-competitive purpose. The issues in dispute are broad but I draw no adverse inference either way. Mr Hodder QC for Paymark reminded me of the statement in Queensland Wire Pty Ltd v Broken Hill Proprietary Co Ltd regarding Australia’s then equivalent of s 36:4
… the object of s 46 is to protect the interests of consumers, the operation of the section being predicated on the assumption that competition is a means to that end. Competition by its very nature is deliberate and ruthless. Competitors jockey for sales, the more effective competitors injuring the less effective by taking sales away. Competitors almost always try to “injure” each other in this way.
The application
[6] PE applies to set aside the confidentiality restrictions placed on specific categories of documents – in summary, documents containing information available to the public, common knowledge of the industry, or information which PE has general knowledge of, including but not limited to Paymark’s understanding of PE’s business and some specified contracts or proposed arrangements, documents created by Paymark more than two years ago, and correspondence sent to or from PE (save that pricing and sales data may be redacted).
[7] Mr Flanagan for PE explained that the application sought determination in this way given the extent of Paymark’s confidentiality restrictions – 1,868 documents of 2,014 discovered (over 90%) – and recognising the impracticality of a document by document approach. He suggested that the Court rule on Paymark’s stated objections, leaving counsel to identify what that means for individual documents.
[8] I appreciate the attempt to deal with the application by reference to categories. However, several of the challenged categories are inapt in the sense that documents may be caught by the category, for example “documents containing information available to the public”, but also contain highly confidential information. Rather than
2 Ingenico Group SA and Paymark Limited [2018] NZCC 18 at [139]-[141].
3 Applying the counterfactual of a hypothetically competitive market: Commerce Commission v Telecom Corp of New Zealand [2010] NZSC 111, [2011] 1 NZLR 577 at [31]-[32].
4 Queensland Wire Pty Ltd v Broken Hill Proprietary Co Ltd (1989) 167 CLR 177 (HCA) at 191 per Mason CJ and Wilson J.
pursue a ruling in respect of the categories set out in the application, Mr Flanagan was content to seek a ruling on the approach and two higher-level issues proposed by Mr Hodder during the hearing:
(a)Is there a real risk of prejudice to Paymark?
(b)Is that prejudice overborne by prejudice to PE relating to Mr Cullen’s role as a witness and the need for PE to give instructions to counsel?
[9] Counsel agreed that the preferable course was for the Court to deal with these issues and adjourn the application given the difficulty with its terms in the expectation that counsel could resolve outstanding issues.
Confidentiality protocol
[10] One preliminary ground of opposition raised by Paymark relies on the detailed confidentiality protocol agreed between the parties to protect the confidentiality and commercial sensitivity of information provided by the parties pursuant to the agreed categories of tailored discovery. Paymark says that PE has filed its application without following the provisions of the agreed protocol as PE had only raised specific issues concerning disclosure of 17 individual documents. While PE’s solicitors had indicated that these 17 documents were a priority, they also said their comments applied more broadly. Their letter had referred to documents created five years before. They sought Paymark’s position as to what amounted to confidential material. The response addressed the 17 individual documents and the wider question. It agreed to provide an open version of one further document. There was no further correspondence before the application.
[11] As Mr Hodder submitted, the protocol requires a document by document approach to challenges to classification. Although the protocol refers to challenges to classification of documents or information, information in this context means information extracted from documents. Even so, I do not consider PE’s application should be dismissed on the basis it had not raised individual objection in relation to all 1,868 of the documents over which confidentiality is claimed. PE signalled its broader challenge, which was not accepted by Paymark, and having heard argument which
narrowed the issues to be addressed, I consider I should address those issues in the interests of just, speedy and inexpensive determination of the matter.
Approach to confidentiality claims
Submissions
[12] The parties disagreed as to the correct approach to confidentiality claims in discovery. Mr Flanagan relied on Port Nelson Ltd v Commerce Commission,5 submitting that an order for non-disclosure can only be made when the Court is satisfied it is necessary, and emphasising the need for prejudice to the party claiming confidentiality. He referred to a presumption in favour of provision of relevant documents and cited Business Distributors v SIA Abrasives Australia Pty Ltd,6 where the Court said it will not lightly allow an allegation of possible prejudice to the discovering party through disclosure to lead to a restriction precluding the other party’s access to the document. Mr Flanagan acknowledged it is common for the Court to balance the competing interest of the parties, which turns on the facts of the case,7 but submitted the onus is on Paymark to establish prejudice arising from disclosure. In particular, PE submitted that the onus rests upon Paymark to prove that any prejudice it would suffer by non-disclosure outweighs both the ordinary presumption of discovery, and the particular prejudice arising in this case by non-disclosure to Mr Cullen, in circumstances where the documents are highly relevant and can be expected to be treated properly upon disclosure. In other words, Paymark must identify particular prejudice that is not outweighed by the administration of justice. Mr Flanagan also sought to draw a distinction between confidentiality in the ordinary sense and a higher standard of confidentiality to justify non-disclosure to another litigant.
[13] Mr Hodder accepted that Paymark bears an initial onus to make out the requirements for its confidentiality claims, but submitted that having done so, the Court balances the interests of disclosure against the likely harm flowing from it – on a case by case basis in light of the parties’ relationship and the nature of the
5 Port Nelson Ltd v Commerce Commission (1994) 7 PRNZ 344 (CA) at 348.
6 Business Distributors v SIA Abrasives Australia Pty Ltd [2014] NZHC 3365 at [34].
7 Citing British Markitex Ltd v Johnston (1987) 2 PRNZ 535 (HC) at 543.
documents in issue. He submitted that PE must demonstrate that evident confidentiality should be relaxed with specific, document by document, reasons. Mr Hodder relied on cases since Port Nelson where the Court has restricted inspection to external lawyers and experts.8
Starting point
[14] Like Asher J in InterCity Group (NZ) Ltd v Naked Bus NZ Ltd,9 I consider the starting point in terms of the approach to challenges to confidentiality claims in discovery is r 8.15(f), which provides that in an affidavit of documents a party must state any restrictions proposed to protect the claimed confidentiality of any document. Rule 8.28(3) then provides that a party may limit inspection of confidential documents to the person specified in the affidavit of documents, subject to the restrictions proposed in the affidavit. Rule 8.25(1) provides that if a party challenges a claim to confidentiality made an affidavit of documents, the party may apply to the Court for an order setting aside or modifying the claim. Under r 8.25(3), the Judge has a discretion to set aside or modify the claim for confidentiality, or dismiss the application, or make any other order.
Section 69 of the Evidence Act 2006
[15] In InterCity, Asher J treated s 69 of the Evidence Act 2006 as having application to the discovery process, while recognising that the weighing of public interests in s 69 is not entirely apposite to the considerations that arise on discovery in civil proceedings.10 Section 69(2) provides that a Judge may make a direction regarding confidential information if the Judge considers that the public interest in disclosure is outweighed by the public interest in preventing other harm. Section 69(3) lists factors to which the Judge must have regard in making a direction. Asher J
8 For example, Todd Pohokura Ltd v Shell Exploration NZ Ltd HC Wellington CIV-2006-485-1600 12 August 2009; Pernod Ricard New Zealand Ltd v Lion-Beer Spirits & Wine Ltd HC Auckland CIV-2011-404-1664, 1 December 2011; and InterCity Group (NZ) Ltd v Naked Bus NZ Ltd [2013] NZHC 2261, (2013) 21 PRNZ 52.
9 InterCity Group (NZ) Ltd v Naked Bus NZ Ltd [2013] NZHC 2261, (2013) 21 PRNZ 520 at [12].
10 InterCity Group (NZ) Ltd v Naked Bus NZ Ltd [2013] NZHC 2261, (2013) 21 PRNZ 520 at [18]. See also NXZ Ltd v Ralec Commodities Pty Ltd [2015] NZHC 241 at [8]; and Vector Gas Contracts Ltd v Contact Energy Ltd [2015] 2 NZLR 670 (HC) at [31].
considered the common law approach to issues of confidentiality arising in discovery was not inconsistent with any of the considerations set out in s 69.
Port Nelson Ltd v Commerce Commission and its application
[16] The leading New Zealand authority on confidentiality arising on discovery and inspection is Port Nelson, 11 which was also a s 36 case. The Court of Appeal stated:12
The ability of each party to a proceeding to inspect the documents of the other, except for documents which are privileged, is important in enabling the proceeding to be brought to a just conclusion. It avoids parties being taken by surprise. It enables legal advisers to better assess the likely outcome of trial, and to concentrate on what will ultimately prove to be the real issues. In this way it can save cost. Sometimes, however, relevant documents which are not privileged may be commercially sensitive. Examples would be documents showing the detailed costings of products or services which are provided in a competitive market, the marketing plans for a proposed new product, or a patent specification during the period before the application has been accepted and made available for inspection. In some cases, it may be sufficient protection that “a party who seeks discovered documents gets them on condition that he will make use of them only for the purposes of that action and for no other purpose”. … In other cases, the courts have directed that particular documents are to be shown only to nominated persons, typically solicitors, counsel and expert witnesses.
…
Relevant documents should generally be made available for inspection. The fact that they are regarded as being confidential, and would not be made available were it not for the requirements of the litigation, is immaterial. An order for non-disclosure can only be made when the Court is satisfied in terms of r 312 that such an order is “necessary”. It must be either apparent from the document in question or shown by other evidence that disclosure would be likely to prejudice the party in some significant way. Even the possibility of prejudice may be sufficient, but that will depend on the seriousness of the possible prejudice and on the significance of the document to the issues in the proceeding, and the extent to which limited disclosure may enable the concerns of both parties to be accommodated.
It follows that the documents must be approached on a one by one basis. This is the responsibility of counsel. In the vast majority of cases counsel should be able to agree whether or not a document is such as to require special protection, bearing in mind the restrictions on the use of discovered documents which apply in any event. Where there is some genuine point of difference which warrants referral to the Court, then the Judge can decide. Such referrals should be rare where experienced counsel are involved.
11 Port Nelson Ltd v Commerce Commission (1994) 7 PRNZ 344 (CA).
12 At 347-349.
[17] In the circumstances of that case, the Court recognised the need for the Commission to have the input of Captain Tregidga, a director of a competitor of Port Nelson. The Court endorsed the High Court Judge’s deliberately robust approach. The Judge had considered that was necessary to make progress and some shared commercial pain must be endured. Captain Tregidga and Port Nelson’s CEO were each given access, with leave reserved in relation to whether particular documents did not need to be disclosed.
[18] Two related aspects of Port Nelson should be recognised. First, it was an appeal against a Judge’s order restricting access except in relation to the named individuals. At that time, and until the 2004 change to the High Court Rules, confidentiality was not positively recognised as a ground for resisting inspection of documents, but the Court had inherent jurisdiction to limit access. Secondly, at that time, r 312 provided that an order for non-disclosure could only be made when the Court was satisfied that such an order was “necessary”. There is no longer an equivalent rule.
[19] However, the balancing exercise indicated in Port Nelson remains relevant. That is, balancing on the one hand the interests of justice in ensuring that a party is able to prepare and present its case, and on the other hand the interests of another party in safeguarding its confidential information in a competitive market.13
[20] In carrying out that balancing exercise, as Wylie J said in British Markitex v Johnston, each case will necessarily depend on its own facts.14 In British Markitex and in Business Distributors,15 disclosure to an individual could occur without prejudicing the other party’s confidential information. On the other hand, in Todd Pohokura Ltd v Shell Exploration NZ Ltd the senior executives could not be expected to ring-fence the information in their minds.16 The prejudice of disclosure outweighed the impact on Todd’s preparation of its case. Body Corporate 344862 v E-Gas Ltd, Pernod Ricard New Zealand Ltd v Lion-Beer Spirits & Wine Ltd and InterCity are
13 Port Nelson Ltd v Commerce Commission (1994) 7 PRNZ 344 (CA) at 348.
14 British Markitex Ltd v Johnston (1987) 2 PRNZ 535 (HC) at 543.
15 Business Distributors v SIA Abrasives Australia Pty Ltd [2014] NZHC 3365.
16 Todd Pohokura Ltd v Shell Exploration NZ Ltd HC Wellington CIV-2006-485-1600 12 August 2009.
further examples where the balance was struck in favour of disclosure only to external lawyers and experts.17
Onus
[21] On a challenge to confidentiality claims in discovery, the Court must first decide whether the documents are confidential. As Mr Hodder accepted, the party claiming confidentiality bears an initial onus to make out the requirements for its confidentiality claims.18 Once that is done, there is a balancing exercise in relation to prejudice. At that balancing stage, to the extent there is an onus, it is on the applicant seeking to set aside the confidentiality claim.19 But that is not to downplay in the balancing exercise the importance of the interests of justice in ensuring that a party is able to prepare and present its case. As Buckley LJ said in Warner-Lambert Co v Glaxo Laboratories Ltd, advisers are agents in the matter and strong grounds must be required for excluding the principal from knowledge which its agents properly acquire on its behalf.20
Higher standard of confidentiality?
[22] The authorities do not support the proposition that there is a different threshold definition of confidentiality in the context of non-disclosure to litigants. I consider there is not. Of course, the nature and significance of the confidential information is relevant in the balancing of prejudice to each party. Protecting technical trade secrets may give rise to different safeguards from some other commercial information. But that is in the application of the balancing exercise, not the initial determination as to whether confidentiality is made out.
17 Body Corporate 344862 v E-Gas Ltd HC Wellington CIV-2007-485-2168, 31 August 2010; Pernod Ricard New Zealand Ltd v Lion-Beer Spirits & Wine Ltd HC Auckland CIV-2011-404- 1664, 1 December 2011; and InterCity Group (NZ) Ltd v Naked Bus NZ Ltd [2013] NZHC 2261, (2013) 21 PRNZ 520.
18 Port Nelson Ltd v Commerce Commission (1994) 7 PRNZ 344 (CA) at 348; Todd Pohokura Ltd v Shell Exploration NZ Ltd HC Wellington CIV-2006-485-1600 12 August 2009 at [16]; and Pernod Ricard New Zealand Ltd v Lion-Beer Spirits & Wine Ltd HC Auckland CIV-2011-404-1664, 1 December 2011 at [32].
19 Pernod Ricard New Zealand Ltd v Lion-Beer Spirits & Wine Ltd HC Auckland CIV-2011-404- 1664, 1 December 2011 at [33].
20 Warner-Lambert Co v Glaxo Laboratories Ltd [1975] RPC 354 (CA).
Is there a real risk of prejudice to Paymark?
[23] In the absence of a document by document determination, as counsel accept this question is necessarily to be answered as a matter of general impression. It incorporates the threshold question of whether the documents are confidential.
Confidentiality
[24] Having concluded that there is not a different threshold definition of confidentiality in the context of non-disclosure to litigants, I can deal briefly with what is confidential information in this context. As the majority of the Court of Appeal indicated in R v X,21 the common law has never restricted the subject-matter of confidentiality, nor would there seem to be any particular reason to do so under s 69. Trade secrets are but one example of confidential information in a commercial setting. As the Court of Appeal said in AB Consolidated Ltd v Europe Strength Food Co Pty Ltd,22 the kind of information which will be protected must have “the necessary quality of confidence about it” in the sense that it is not “something which is public property and public knowledge”.23
[25] I consider that Paymark has discharged its initial onus in relation to confidentiality. I reach this conclusion based on Ms White’s review and my own impression of the documents to which I was referred during the hearing, a selection of the 43 Paymark documents that PE put in evidence as examples of each of its challenged categories. Ms White’s affidavit confirmed the reason for confidentiality in respect of each of these documents (excluding the one it had already agreed to reclassify). Counsel referred me to a number of these documents to support their respective arguments. As counsel accepted, I have not made a determination in respect of these or all the other challenged documents on an individual basis. But I make the following observations on the confidentiality claims:
(a)A number of documents are said to be confidential because they referred to Paymark’s strategy or strategic analysis. As Mr Flanagan
21 R v X [2009] NZCA 531, [2010] 2 NZLR 181 at [37].
22 AB Consolidated Ltd v Europe Strength Food Co Pty Ltd [1978] 2 NZLR 514 (CA) at 521.
23 Citing Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203 (CA) at 215.
pointed out, parts of these documents are bland or in such general terms as not to be confidential. However, other parts of these documents do appear confidential (except I did not see anything obviously confidential in AM11). Information concerning corporate strategy, including assessment of strategic risks and opportunities, can have commercial value and the necessary quality of confidence. Mr Hodder referred to strategic and intellectual capital, which may amount to the same thing. I also accept Paymark’s proposition that such internal information does not lose its confidentiality merely because a competitor believes it has general knowledge of it.
(b)In relation to redacting these documents containing strategic information, Mr Hodder submitted that PE did not need to see the non- confidential parts. Those parts may be mundane and of limited utility, but I consider that Paymark should restrict its confidentiality claims to those parts that contain strategic information by redacting where feasible. I say where feasible as I accept Ms White’s evidence that the information may be so intertwined that preparation of a redacted version would be extremely challenging. I leave to responsible counsel to redact where feasible.
(c)Some of these documents said to be of strategic value are also challenged on the basis that they are dated – for example from 2012 to 2014 – and cannot still be confidential. The examples did not indicate to me that a brightline is possible in relation to document date. In particular, I do not consider that all documents created by Paymark more than two years ago can be said to be non-confidential as sought in the application. While I expect that some strategic information likely loses commercial sensitivity relatively quickly, I accept this is a small specialised industry and some confidential information may have more enduring sensitivity. Ms White refers to Paymark’s strategies, pricing and contracting decisions being essentially medium-term decisions, retaining relevance for a number of years. However, as part of its
review for feasible redacting, Paymark should review whether information in such dated documents remains commercially sensitive.
(d)Some documents are said to be confidential because they refer to Paymark’s pricing. PE does not seek prices, but Mr Flanagan challenged the confidentiality of dated documents and those relating to pricing structure rather than specific prices. Paymark claims that despite the age, the pricing information remains of commercial importance. I accept that pricing information that extends beyond actual prices may be confidential. Depending on context, pricing structure may be confidential and the structure may still be current. Little more can be said in the abstract.
(e)One document was a third party report commissioned by Paymark about likely developments in the industry, which Paymark submitted PE should not benefit from without incurring the cost. As Mr Flanagan pointed out, this is not a basis for withholding. But the document may still contain confidential strategic information. Paymark should review whether it is possible to redact.
(f)Documents sent to or from PE are not confidential in the sense that inspection should be restricted to counsel and experts. I understand that where an email with PE has been forwarded internally within Paymark with confidential comment, Paymark has separately discovered the email with PE.
Real risk of prejudice to Paymark?
[26] Having accepted that Paymark has discharged its initial onus in relation to confidentiality, and after considering the nature of the documents, I add that some of the documents indicate Paymark’s strategic analysis, which Paymark understandably considers to be highly confidential. While such information is not in the category of a vital formula or trade secret, it is sufficiently confidential to warrant Paymark’s concern for protection.
[27] It is common ground that Mr Cullen would seek to abide by his obligations if given access to the documents. Paymark’s concern is that it is impossible for him to separate information obtained through the proceeding from his mind in his other business dealings. That is an understandable concern, which Allan J recognised in Pernod Ricard.24 As the Court of Appeal has said, no matter how conscientious and honourable, executives could be placed in a most invidious position by being made privy to confidential material. That possibility ought to be avoided as much as it can be.25
[28] I consider there is a real risk of prejudice to Paymark if confidential documents were disclosed to PE. In s 69 terms, I consider there will be harm to Paymark if there is disclosure of confidential documents, that harm being disclosure of material helpful to a competitor. This is not a case like British Markitex and Business Distributors where disclosure to an individual can occur without prejudice to Paymark. Like Todd and Pernod Ricard, in this case Mr Cullen cannot be expected to ring-fence in his mind information helpful to PE as a competitor of Paymark – even though he is used to protecting PE’s customer confidential information.
Is Paymark’s prejudice overborne by prejudice to PE relating to Mr Cullen’s role as a witness and the need for PE to give instructions to counsel?
[29] Mr Flanagan submitted that, given the wide-ranging nature of Paymark’s defence and, moreover, the nature of the purpose requirement in s 36, Paymark’s discovery must be analysed by Mr Cullen rather than relying on counsel and independent experts. Mr Cullen founded PE, he is its CEO, sole director and ultimate owner, and is said to have unrivalled experience in electronic payments, technical and commercial. PE submits that his input is indispensable.
[30] Mr Flanagan submitted that prejudice to PE is readily identifiable in the abstract but acknowledges that it is by definition unknowable in relation to particular documents. PE cannot know what might be of significance to Mr Cullen, particularly where so few discovered documents have been provided to him so he cannot even get
24 Pernod Ricard New Zealand Ltd v Lion-Beer Spirits & Wine Ltd HC Auckland CIV-2011-404- 1664, 1 December 2011 at [26].
25 New Zealand Railways Corporation v Auckland Regional Council (1990) 3 PRNZ 332 (CA).
a flavour of the discovered materials. Mr Flanagan submitted that inherent difficulty has been resolved in the case law by analysing in general terms whether the type of documents are ones where the party in question is likely to require the input, and perhaps evidence, of the individual. He submitted that Mr Cullen’s input, and evidence, will be required.26 The prejudice to PE was submitted to be three-fold (but during the hearing the second and third concerns merged):
(a)Its key witness will give evidence on contested matters of fact without seeing the discovery documents relevant to those matters, despite the fact that Paymark’s opposing witnesses will have them.
(b)Identification and analysis of key issues from PE’s perspective, including the purpose of Paymark’s strategic decisions, cannot be done by the person far and away best placed to do it. That raises a real risk that important matters to the prosecution of PE’s case will be missed. Mr Flanagan relied on a worked example arising from some further documents disclosed by Paymark after the application was made.
(c)The principal of PE will be precluded from giving meaningful instructions in relation to litigation in which it is the plaintiff.
[31] As to the first concern, I accept that Mr Cullen will be a witness. He was directly involved in some dealings which will be the subject of evidence and he is in effect an expert in the area in his own right. However, I consider the concern that he will give evidence on contested matters of fact without seeing discovery documents relevant to those matters is overstated. Mr Cullen will be able to give evidence of relevant factual matters within his knowledge whether or not he sees Paymark’s internal documents. While it may be reassuring for witnesses of fact to be briefed by reference to all of the discovered documents relevant to their evidence, that increasingly leads to witnesses unhelpfully commenting on documents that they never saw before the proceeding. If Paymark wishes to challenge Mr Cullen’s evidence by
26 By analogy with Captain Tregidga in Port Nelson (1994) 7 PRNZ 344 (CA) at 349; and Mr Huston in Business Distributors [2014] NZHC 3365 at [44]. See also British Markitex Ltd v Johnston (1987) 2 PRNZ 535 (HC) at 543; and Oxygen Air Ltd v LG Electronics Australia Pty Ltd [2017] NZHC 1857 at [68].
reference to Paymark’s documents, it will need to do so whether or not it has classified the documents as confidential. Also, insofar as the concern is focused on the purpose element of s 36, purpose tends to be inferred, as Mr Hodder acknowledged. Any admissible opinion evidence from Mr Cullen as a non-independent expert is likely to be limited and not extend to opinion as to Paymark’s behaviour.
[32] As to the second concern, the starting point is that inherently all the documents are relevant and I accept some may be highly relevant. The interests of justice attach real importance to ensuring that a party is able to prepare and present its case. Even so, Mr Hodder submitted that PE’s concern understates the talents of counsel and overstates the role of Mr Cullen. Counsel can review the documents and cross- examine on them. As Mr Hodder submitted, counsel for PE can be sceptical and prepare cross-examination accordingly. Also, Mr Flanagan pointed to references in the example documents that he said were significant to PE’s case, which indicated that counsel are well qualified to identify such references without Mr Cullen’s input.
[33] On the other hand, I consider the worked example Mr Flanagan referred to relating to PCI standards does illustrate the need for technical knowledge that cannot be expected of counsel, and that Mr Cullen is likely the person best placed to identify and analyse such issues from PE’s perspective. But an independent expert may well have identified the point.
[34] The related third aspect, the need for meaningful instructions, is more acute in this case as Mr Cullen is the founder and principal of PE. He is said to be involved in every aspect of its business. I accept that counsel would look to him for instructions. But even if Mr Cullen is PE, Paymark submits that PE’s counsel can get instructions by questioning Mr Cullen in open terms without disclosing the content of Paymark’s confidential documents. Although acknowledging it was more cumbersome, Dobson J in Todd was not persuaded that Todd’s case was likely to be materially weakened taking that approach. I reach a similar view here. Stepping back and considering the need for issue identification, analysis and instructions together, I consider that the combination of experienced counsel and independent experts should ensure that PE is not materially prejudiced even though Mr Cullen cannot himself review Paymark’s confidential redactions.
[35] I consider the balance in this case is similar to that in Pernod Ricard.27 On the information currently available to the Court, there is a clear risk of commercial harm to Paymark on the one hand if all confidentiality claims are set aside, while on the other the Court has only the general contention on behalf of PE that disclosure is necessary to enable it to prepare adequately for trial. That contention is understandable and has some force in this case despite its general nature, but I consider PE’s preparation is manageable with appropriate input from Mr Cullen as envisaged. Unlike Warner-Lambert, this case does not really call for disclosure of technical information to an authorised officer of PE able to make major decisions on its behalf such as whether to continue or abandon a patent infringement action.28
[36] I do not consider that the fact that PE is plaintiff counts against its right to prepare and present its case but I also do not accept its submission that the nature of the proceeding under s 36 gives rise to a public interest in favour of disclosure. While s 36 reflects the public interest in competitive behaviour, the public interest does not extend to favouring disclosure in proceedings alleging breach of s 36. As Mr Hodder submitted, that begs the question whether PE’s claim has merit.
[37] I conclude that Paymark’s prejudice is not overborne by prejudice to PE relating to Mr Cullen’s role as a witness and the need for PE to give instructions to counsel. In s 69 terms, I consider that PE’s right to inspection of the confidential (parts of) documents to prepare and present its case does not outweigh the harm to Paymark of disclosure of material helpful to a competitor.
Next steps
[38] As indicated, counsel agreed the application should be adjourned in the expectation they could resolve outstanding issues. As a result of Ms White’s review of the 43 example documents, Paymark identified some further documents that could be reclassified as non-confidential. It remains open to PE’s counsel to challenge the classification of other particular documents under the protocol if they consider they need Mr Cullen’s input in relation to them. Mr Hodder indicated the position could
27 Pernod Ricard New Zealand Ltd v Lion-Beer Spirits & Wine Ltd HC Auckland CIV-2011-404- 1664, 1 December 2011 at [33].
28 Warner-Lambert Co v Glaxo Laboratories Ltd [1975] RPC 354 (CA) at 360-361.
be revisited. I reserve leave to PE to apply to modify a specific confidentiality claim if counsel are unable to reach agreement in a particular case. As in Port Nelson, this is intended only as an ultimate backstop.
Result
[39] The application is adjourned and leave reserved to PE to apply to modify a specific confidentiality claim if counsel are unable to reach agreement in a particular case.
Gault J
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