R McDonald Co New Zealand Limited v Mavericks Group Limited
[2018] NZHC 2439
•17 September 2018
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2017-404-000514
[2018] NZHC 2439
BETWEEN R McDONALD CO NEW ZEALAND LIMITED
PlaintiffAND
MAVERICKS GROUP LIMITED
First Defendant
MICHAEL PAUL BISHARA
Second Defendant
Hearing: 15 June 2018 Appearances:
G Williams for the Plaintiff
G Collecutt for the Defendants
Judgment:
17 September 2018
JUDGMENT OF ASSOCIATE JUDGE SARGISSON
This judgment was delivered by me on 17 September 2018 at 4.00 p.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date.......................................
Solicitors:
Potter IP, Auckland
G Williams, Auckland
R McDONALD CO NEW ZEALAND LTD v MAVERICKS GROUP LTD [2018] NZHC 2439
[17 September 2018]
Introduction
[1] The plaintiff, R McDonald Co New Zealand Limited, is the exclusive authorised head-distributor in New Zealand of Weber® branded barbeques and related products.
[2] From at least January 2016 onwards the plaintiff became aware the first defendant, Mavericks Group Limited, had begun importing Weber barbeques of a design not intended to be made available in New Zealand. The first defendant readily accepts it undertook parallel importation; and further, that it then engaged in marketing, advertising, distributing, offering to sell, and selling such products to the New Zealand market via its online website.
[3] In the substantive proceeding the plaintiff accuses the first defendant — along with its director, Mr Bishara, as second defendant — of various breaches under the Fair Trading Act 1986.
[4] This decision addresses various interlocutory matters arising out of pre-trial discovery. The scope of the outstanding issues was substantially narrowed at the hearing. The remaining issues concern:
(a)the defendants’ claimed confidentiality over discovered documents, and also over its answers to the plaintiff’s sought interrogatories; and
(b)the appropriate mechanisms for protecting its legitimate confidentiality interests.
[5]I turn to those issues now, after outlining the substantive dispute in more detail.
The substantive proceeding
[6] The plaintiff’s statement of claim identifies three causes of action under the Fair Trading Act. In the broadest terms, it is alleged the first and/or second defendants:
(a)in breach of ss 9, 10 and 13, made misleading and deceptive representations on its website causing the plaintiff loss (including the loss of good-will);
(b)in breach of s 16, effaced Weber trade marks and identifying indicia by removing them from the parallel imported products sold to the New Zealand markets, leading to safety concerns given the difficulty of tracking the products;
(c)in breach of ss 9 and 10, engaged in misleading and deceptive conduct by (expressly or impliedly) falsely representing to WorkSafe, and by extension to the New Zealand public, its product and operations complied with the relevant statutory safety regulations.
[7] On the basis of these pleadings, the plaintiff seeks declarations and injunctions preventing the defendants from continuing its operation in New Zealand.
[8] The defendants challenge the plaintiff’s standing to bring the claim, pointing out the plaintiff is not the owner of the Weber branding. Beyond that, the defendants otherwise deny the business model is in any way misleading or deceptive, or non-compliant with relevant statutory obligations. (There is one exception: the defendants admit the temporary use of the domain name was misleading, but it pleads the domain name has ceased and has had no impact on the plaintiff).
The claimed confidentiality
[9] The documents the defendants have discovered are voluminous, numbering approximately 39,000 documents, identified from searches based on agreed key words. Confidentiality is claimed over all these documents. Counsel for the defendants candidly acknowledges he has not reviewed the documents to determine their relevance with respect to the parties’ pleadings. However surprising, the plaintiff advises it takes no issue with the sheer volume of documents, and does not require any “refined” affidavit as to documents.
[10] So the issue before me is not one of relevance, which is presumed by the disclosure to which the plaintiff does not object; rather, the issue is confidentiality. The Court of Appeal explains the governing principles in Port Nelson v Commerce Commission as follows:1
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.
[11] As the relevant rules indicate, there is a need to strike a balance between legitimate but competing considerations: a plaintiff’s need to have access to documents relevant to the proceeding, against a defendant’s need to protect against improper use of the documents following discovery.
[12] The bone of contention is the defendants’ refusal to tolerate disclosure to the plaintiff’s director, Mr McDonald, or any of his employees or agents. The defendants contend the documents should only be accessed by the plaintiff’s counsel, instructing solicitors, and experts. Without such safeguards in place the defendants fear the plaintiff might discover the first defendant’s:
(a)supplier(s), and so take steps (likely through altering Weber international) preventing those supplier(s) from continuing to sell product to the first defendant;
(b)customers, and so in some way interfere with the first defendant’s sales to those customers, compiling a customer list for the object of approaching them directly and undercutting the first defendant’s market.
1 Port Nelson Ltd v Commerce Commission (1994) 7 PRNZ 344 (CA) at 347.
[13] It is apparent from their written and oral submissions the defendants are chiefly preoccupied by the risk of the plaintiff uncovering the identity of their supplier(s). That, to my understanding, is also the more realistic and persuasive concern.
[14] The plaintiff objects to the sought restriction. It says the restrictions materially impedes its ability to bring its claim, by circumscribing the scope of communication between the company and its solicitors. Its complaint has merit to my mind, and I am unwilling in these circumstances to grant the defendants’ sought restriction over the entirety of the discovered documents. A practical middle-road is necessary.
[15] I consider the defendants’ confidentiality interests are adequately managed by the following three layers of protection.
[16] First, Mr McDonald (and his employees or agents) ought to be restricted from accessing some, but not all, of the discovered documents. On my examination of the pleadings, the documents appear to fall into two broad categories. There are, in the first instance, documents dealing with the interface between the first defendant and its supplier(s). Those documents legitimately attract confidentiality interests in my view. Moreover, to my understanding of the plaintiff’s case, they are at most only marginally relevant to its claim. I am prepared to restrict the plaintiff’s access to such documents.
[17] But I cannot say the same for the second category of documents, namely those describing the first defendant’s dealings with its New Zealand based customers. These customer-facing documents are potentially highly germane to the present litigation. And the defendants’ (lesser) fear for the identification of its customer base is sufficiently safeguarded, in my view, by the two protection mechanisms that follow. For the avoidance of doubt, I include within the category of documents to which I would grant Mr McDonald and his agents full access the first defendant’s accounting records (to the extent those records exist and have been finalised).
[18] Second – noting counsel for the plaintiff’s advice that is has no present objection to this approach – I allow the defendants to redact text in those documents as follows:
(a)with respect to all the documents, the defendants can redact references to the names and other identifying indicia (addresses, telephone numbers, and so on) of both the first defendant’s New Zealand customers and its overseas supplier(s);
(b)with respect only to the first category of documents (see at [16] above), the defendants can redact references to specific dates, as long as the documents are then grouped according to their year.
(This latter concession responds to the defendants’ expressed concern that the plaintiff would be able to narrow down the geographical location of its suppliers from dates alone, based on seasonal trends in the barbecue industry).
[19] Finally, again noting the plaintiff’s concurrence, I would require Mr McDonald (and any expert witness engaged in the litigation to advise the plaintiff, who will inspect the documents) to sign an undertaking not to abuse that right of access to inspect the documents. After considering the undertakings proposed by the parties, I opt instead to set out my own in the following terms:
I, [name], undertake that:
(i)I shall keep confidential the contents of the documents listed as confidential in the list of documents filed in this proceeding (“the confidential documents”) subject to any ruling of the Court as to the confidential status or otherwise of the documents.
(ii)pending such ruling of the Court I shall not disclose the contents of the confidential documents to any persons other than persons:
1. authorised to access those documents, who have also themselves signed this undertaking; or
2. such other persons as directed by the Court.
(iii)I shall not use the confidential documents for any purposes other than the conduct of the present proceeding..
(iv)I shall use my best endeavours to safeguard the confidentiality of the confidential documents I am provided with and ensure that they are stored in a secure environment at all times.
(v)I shall keep confidential any notes or other records I make while inspecting the confidential documents, and I will destroy the notes, sketches or other records once proceedings have concluded.
[20] I note, finally, this undertaking overlays the existing protection in r 8.30(4), which states:
(4)A party who obtains a document by way of inspection or who makes a copy of a document under this rule—
(a)may use that document or copy only for the purposes of the proceeding; and
(b)except for the purposes of the proceeding, must not make it available to any other person (unless it has been read out in open court).
Interrogatories
[21] The plaintiff has filed a notice to answer interrogatories dated 14 February 2018 over five pages of questions it seeks to put to the defendants. I agree with the defendants’ counsel there are real issues of relevance, and the potentially oppressive scope of the answers sought.
[22] I address the question of interrogatories consistently with the framework articulated above. I do not require the defendants to provide the particulars mentioned at [18](a)-(b) above. Nor do I require answers to interrogatories that patently irrelevant to the present litigation. I consider these principles are already adequately mirrored in the discussion on each of the interrogatories in Mr Bishara’s affidavit.
[23] The best route forward is for the parties to proceed on that basis, with leave reserved for the plaintiff to notify the Court if it objects the discussion of the particulars in Mr Bishara’s affidavit does not coincide with my statement of the applicable principles.
[24] Given these protections, I see no reason to restrict Mr McDonald’s (or the plaintiff’s expert’s) access to the answers provided by in response. But I restrict access to only those who have signed the undertaking mentioned above. He is to be treated
in the same way as the plaintiff’s experts, but their access is subject to their signing the memorandum mentioned above.
Orders
[25]I make orders as follows:
(a)The defendants are to categorise the discovered documents into the two broad categories referred to in paras [13] and [14] above, and they may redact text in those documents in accordance with para [15](a) and (b).
(b)Mr McDonald and the plaintiff’s experts may inspect the documents (with the allowed redactions) upon completing the undertaking set out at para [16].
(c)The defendants are to provide sworn answers to interrogatories, but those answers need not provide the particulars mentioned at para [15](a)-(b) above.
(d)Answers to interrogatories that are patently irrelevant to the present litigation need not be answered.
[26] This judgment is issued as an interim judgment in order to reserve leave to the plaintiff to seek to bring any objection of the kind referred to at para [20] back to the Court. For that purpose a memorandum may be filed and served on 5 working days’ notice – in which case the matter is to be listed in the next available Chambers list – and the defendants are to file a memorandum in response 3 working days prior.
[27]As this judgment is issued on an interim basis, costs are reserved.
[28]I have issued a separate minute dealing with pre-trial directions.
Associate Judge Sargisson
0
0
0