Reeves v OneWorld Challenge LLC Ca87/04
[2005] NZCA 314
•8 December 2005
For a Court ready (fee required) version please follow this link
IN THE COURT OF APPEAL OF NEW ZEALAND
CA87/04
BETWEENSEAN ST LEGER REEVES
Appellant
ANDONE WORLD CHALLENGE LLC
Respondent
Hearing:21 April 2005
Court:Anderson P, William Young and O'Regan JJ
Counsel:P J K Spring and S O McAnally for Appellant
I J Thain and G F Weir for Respondent
Judgment:8 December 2005
JUDGMENT OF THE COURT
A The appeal is dismissed.
B The respondent is entitled to costs of $6,000 plus usual disbursements.
REASONS
Anderson P and O’Regan J [1]
William Young J (dissenting) [83]
ANDERSON P AND O’REGAN J
(Given by O’Regan J)
Table of Contents
Para No
Introduction [1]
Issue [3]
Parties [4]
Agreements [6]
US proceedings [7]
Expert evidence [23]
US judgments [26]
New Zealand High Court decision [35]
Public policy exception [46]
Tenable defence [68]
Result [81]
Costs [82]Introduction
[1] The appellant, Mr Reeves, appeals to this Court against a decision of Associate Judge Sargisson, One World Challenge LLC v Reeves HC AK CIV 2003-404-4216 23 April 2004. In that decision, Associate Judge Sargisson upheld an application by the respondent, One World Challenge LLC (One World) for summary judgment in an action for the amount owed by Mr Reeves to One World pursuant to certain judgments of the United States Federal Court for the Western District of Washington at Seattle (which totalled US$1,053,497.60), interest and costs. We will call these the US judgments.
[2] Mr Reeves had argued in the High Court that he had an arguable defence to the claim by One World because, although he accepted that judgments of a US Court would normally be enforced in New Zealand, it would in this case be contrary to New Zealand public policy to enforce the US judgments and, in any event, the US judgments had been obtained in breach of the rules of natural justice.
Issue
[3] In this Court the natural justice argument was not pursued. The sole issue before us is, therefore, whether summary judgment ought to have been declined in this case, because Mr Reeves had an arguable defence that the enforcement of the US judgments would be contrary to the public policy of New Zealand.
Parties
[4] One World, a company incorporated in the State of Washington, USA, was incorporated to manage a challenge against Team New Zealand for the America’s Cup in 2003 in Auckland on behalf of the Seattle Yacht Club.
[5] Mr Reeves is a New Zealander who had worked with Team New Zealand during two America’s Cup campaigns. He left Team New Zealand in early 2000, joining One World as Operations Manager. He was also sole director and shareholder in a New Zealand company, Victory 2000 Ltd.
Agreements
[6] Mr Reeves and Victory 2000 entered into a number of agreements with One World. All of the agreements were expressed to be governed by the laws of the State of Washington, USA: that is not in dispute. The details of the agreements are as follows:
(a)Consultancy Services Agreement (20 June 2000): This was an agreement for the provision of yacht racing consultancy services by Victory 2000 (through Mr Reeves) to One World for US$40,000 per month, plus bonuses if certain milestones were achieved.
(b)Consultancy Services Agreement (30 September 2000): This replaced the 20 June agreement but was in similar terms.
(c)Confidentiality and Noncompetition Agreement (30 September 2000): Clause 3 of this agreement provided that Mr Reeves would not disclose or disseminate (directly or indirectly) or otherwise use any confidential information without the prior written consent of One World. It also provided at clauses 4 and 5 that Mr Reeves was prohibited from making copies of confidential information unless there was a legitimate business need, and upon termination of the consultancy services agreement he was required to promptly return, without retaining copies, documents, data, or other information relating to confidential information. Any breach of the agreement by Mr Reeves entitled One World to injunctive relief and liquidated damages equal to an amount of 50% of Mr Reeves’ annual consulting fees at the time of breach. We will refer to this document as the confidentiality agreement.
(d)Separation and General Release Agreement (21 May 2001): This was entered into upon the termination of Victory 2000’s and Mr Reeves’ involvement with, and provision of services to, One World. It provided that Mr Reeves was required to return to One World all One World property under his control by 1 June 2001 and that the terms of the confidentiality agreement would remain in full force and effect after the termination. It also provided for the sum of US$600,000 to be paid to Mr Reeves/Victory 2000 as “separation pay”.
US proceedings
[7] One World’s lawsuit against Mr Reeves was originally commenced in August 2001 in the Superior Court of the State of Washington in and for King County. The proceedings resulted from information received from another America’s Cup syndicate, Oracle Racing, that a former member of One World’s America’s Cup team had offered to sell One World’s confidential yacht design information. Because Oracle would not voluntarily reveal the name of the former member of One World’s team, One World commenced proceedings against “John Doe” and obtained a temporary restraining order that could be served on the ex team member and anyone acting in concert with him. One World also posted a bond to support the temporary restraining order, obtained a commission to take the deposition of Oracle at California, commenced an ancillary proceeding in the California Courts to issue a deposition subpoena, and eventually obtained a declaration from Mr Chris Dickson of Oracle, in lieu of a deposition, which identified “John Doe” as Mr Reeves. A similar declaration from Mr David Barnes of Great Britain Racing was obtained corroborating the Oracle declaration, and indicating to One World that Mr Reeves had material belonging to other racing teams improperly in his possession.
[8] One World amended its complaint in the lawsuit to name Mr Reeves. One World alleged that Mr Reeves had, among other things, breached the confidentiality agreement. Mr Reeves was served with One World’s complaint and other papers. Mr Reeves then engaged lawyers at a Seattle law firm. Acting on Mr Reeves’ behalf, his lawyers removed the lawsuit to the US District Court for the Western District of Washington at Seattle.
[9] One World filed a third and final amended complaint seeking injunctive relief and liquidated damages. The complaint alleged that Mr Reeves had breached the confidentiality agreement by divulging and retaining confidential information after his contract with One World had been terminated. Mr Reeves filed a verified answer, affirmative defences, and counterclaims. In particular Mr Reeves denied offering to sell or disclose confidential information to either Oracle or Great Britain Racing.
[10] As a result of evidence given by Mr Reeves in a sworn deposition, One World decided to seek summary judgment against Mr Reeves. One World sought liquidated damages plus interest, a permanent injunction against further contractual violations, and reasonable attorney’s fees.
[11] Three items of allegedly confidential information were at issue in the US proceedings:
(a) A hull design package;
(b) Hydrostatic studies conducted by One World; and
(c)Various emails and documents belonging to One World.
[12] It was alleged in the US proceedings that Mr Reeves retained, copied and disclosed One World’s hull design package. Mr Reeves considered the hydrostatic studies to be one and the same with the design package as the studies related to testing done on the hull design in the package. He said those studies were affixed and annexed to the hull plans depicted in the package. In his Defendant’s brief filed in the US proceedings, he dealt with the design package and studies as though they were one and the same.
[13] In response to the allegations, Mr Reeves admitted to the US Court that he came into possession of one of two duplicate originals of the design package, but said this occurred when he was Operations Manager for One World. He said he removed the package from One World’s premises because of security concerns he held in One World’s interests. As Operations Manager he was responsible for maintaining overall security of One World’s office and its contents. He neither sought nor required permission to remove the design package. In terms of the retention claim, Mr Reeves submitted before the US Court that he did not deliberately retain the design package. He did not realise that it remained in his possession until One World sent him a written request alerting him that the package was in his possession. Mr Reeves submitted that he then took immediate steps to advise his attorney.
[14] Mr Reeves refused to return the design package and the hydrostatic studies upon demand. His refusal was based upon a contention that he maintains to be true in the proceeding before this Court: Mr Reeves says that the design package contained plans that were copied or derived from designs owned by Team New Zealand and as a consequence that they were not confidential information or trade secrets over which One World could assert exclusive rights of ownership. This point was originally made by Mr Reeves’ attorney at the time, in a letter to One World dated 30 November 2001.
[15] In his affidavit before the High Court, Mr Reeves articulated the allegation in the following terms:
…the design package in question was prepared by Mr Laurie Davidson who was employed by Team New Zealand, as a designer, from 1995 to 2000 but then moved to One World. The design package he produced was derived in whole or in part, from Mr Davidson’s work with Team New Zealand. One World’s standard design #3 was essentially NZL57-60 or Team New Zealand’s towing tank design TH28 and its standard designs numbered 1 and 2 were, in my view, in fact derived from NZL32 and 38. The design package also contained keel strut, ballast bulb trim tab and rudder drawings, which I also believe were the intellectual property and/or trade secrets of Team New Zealand.
I raised my concerns in this regard with Mr Wright [President of OneWorld] while still employed by [OneWorld] and at some time subsequent to 15 August 2000 Mr Davidson himself explained to me that he had told Mr Wright that the lines plan of #3 standard design was an exact replica of NZL57 and 60. Moreover Mr Davidson explained to me when he showed me the design package for the first time, that lines plan #3 standard was NZL-60. It is my understanding that Mr Davidson was paid USD1.5 million for the design package he prepared for the plaintiff.
[16] In regard to allegations of unauthorised copying of the originals, Mr Reeves submitted that such copying was not a breach because the copies made were for the purpose of preserving evidence of illegality by One World.
[17] Allegations were also made that Mr Reeves had delivered copies of the design package to Team New Zealand. In the US proceedings Mr Reeves submitted that delivery of copies to Team New Zealand was not a breach of the confidentiality obligations for the same reasons the retention and copying of the package was not a breach. Mr Reeves submitted that the purpose of the delivery was to enable Team New Zealand, once it had possession of the package, to take such steps as it considered necessary to assert rights of ownership over the design package or such part of it that had been copied from its plans and designs. He also asserted that the copies of the design package were forwarded in sealed containers under the seal of a Notary Public, with the intent and effect that the contents would not be accessed by Team New Zealand, which if it chose, could put in place a process for independent expert assessment. He said One World had previously accepted there was no actual disclosure to Team New Zealand.
[18] There were also other allegations in regard to the design package relating to steps taken by Mr Reeves to confirm and ascertain his contentions regarding the allegedly copied plans, a “discreet audit” undertaken by Mr Reeves in which he checked and ascertained the nature of design information held by One World, and the provision of information by Mr Reeves to the America’s Cup Arbitration Panel. All of these alleged breaches were denied by Mr Reeves, and are not of particular significance to this appeal.
[19] In regard to the emails it was alleged that, upon termination of Mr Reeves’ engagement with One World, Mr Reeves retained a CD containing copies of confidential email messages. Mr Reeves submitted that the CD was delivered to him by a One World employee approximately two weeks after termination of Mr Reeves’ relationship with One World. He said he had sought return of the personal files which had been on the laptop computer that he had previously returned to One World. He submitted that he did not request or expect to receive any other information from One World, and that upon receipt of the CD he did not appreciate that it contained such documents. He said it was only much later that he realised that the CD contained much more information than the personal files he had sought.
[20] One World sought the return of originals and copies of these emails. Mr Reeves did not comply with this demand, and submitted in the US proceedings that, insofar as such emails in his possession contained evidence of illegal conduct on the part of One World, they were evidence which went to his defence against the alleged confidentiality breaches that One World was not legally in possession of the design plans.
[21] Of particular significance was the “Vogel email”. This was an email from Scott Vogel, One World’s principal rig designer, to Gary Wright, President of One World, where Mr Vogel expressed concern that the design of some fittings were essentially copies of Team New Zealand designs, with input from ex-Team New Zealand members. Mr Reeves saw this not as merely a “smoking gun” document, but as a clear admission by One World that the secrets Mr Reeves was said to have misappropriated were taken wrongfully from other syndicates. He submitted that it was also evidence that One World intended to undertake continued concealment of such copying. He said this meant the Vogel email was of significant evidential value and that there could be no breach by copying and preserving evidence of such illegality so as to enable him to mount his defence.
[22] Other allegations were mounted to the effect that Mr Reeves retained copies of confidential hacked email messages upon termination of his contract with One World. Mr Reeves submitted in the US proceedings that these documents were among the documents provided to him by One World as being his own property following termination of the contract. Mr Reeves claimed that, at the time when he collected the boxes of materials and documents collected for him by One World’s employees, the “hacked” email documents had been included.
Expert evidence
[23] It is relevant to note the evidence before the US Court as to Mr Reeves’ allegations. Three experts were selected by Mr Reeves in the US proceedings to compare the allegedly copied designs with Team New Zealand’s designs. Mr Reeves disclosed the report of only one of these experts: that of Mr Perry. He said nothing about the other two experts and Mr Spring said he had no instructions on the point.
[24] In a letter he wrote in October 2002, Mr Reeves said that Mr Perry had concluded that the hull designs in the hull design package were not Team New Zealand’s. He said the report written by Mr Perry was only two pages long.
[25] Mr Reeves in his affidavit in the High Court said he was forced to find an expert in very limited time, and that Mr Perry’s report could not be relied upon for a number of reasons. However, Mr Reeves accepted Mr Perry as one of his experts in a declaration to the US Court, and in his motion to extend the deadline to disclose expert witnesses and reports. Mr Reeves’ complaints about Mr Perry were advanced in the High Court to support his allegation that the US judgments had been obtained in breach of natural justice, which was not pursued in this Court.
US judgments
Damages judgment (23 September 2002)
[26] The US District Court Judge, Judge Rothstein dealt with the case on motion for summary judgment.
[27] The Judge noted that Mr Reeves had admitted that he retained and disclosed duplicates of the hull design package sold to One World by Mr Davidson, and that Mr Reeves had alleged that the designs were copied from designs previously prepared for Team New Zealand which meant One World was in breach of the America’s Cup rules. The Judge held that Mr Reeves’ allegations were irrelevant to whether Mr Reeves violated the confidentiality agreement by disclosing those plans. She did, however, observe that the fact that Mr Reeves had waited almost two years after discovering the alleged violations of the America’s Cup rules by One World before disclosing them “casts doubt on this proffered justification”.
[28] The Judge reasoned that possession is good title against all the world but the true owner. She said that once One World purchased the plans from Mr Davidson, they became One World’s confidential information, and covered by the confidentiality agreement. The Judge said that the only way the design plans could not be One World’s confidential information would be if the plans were known publicly, which they were not.
[29] The Judge said that, regardless of the status of the hull designs, the hydrostatic studies were clearly One World’s confidential information, and the retention and disclosure of such information violated the terms of the confidentiality agreement.
[30] In regard to the emails and other documents, the Judge held that that information was undisputedly confidential. While Mr Reeves had contended that his possession of those emails was inadvertent, this was irrelevant because, once he became aware, he continued to retain such information and even disclose it. In regard to Mr Reeves’ claim that he was justified in retaining the emails as evidence of alleged yacht racing rules violations by One World, the Judge said Mr Reeves failed to cite any legal authority for the proposition that a violation of the rules of a yacht race entitled him to disclose confidential information in violation of a confidentiality agreement.
[31] Accordingly the Court found that Mr Reeves did in fact disclose information that was confidential thus breaching the terms of the confidentiality agreement without justification or excuse.
[32] In light of the above findings, Judge Rothstein granted injunctive relief ordering Mr Reeves to immediately return all of One World’s confidential information, and to cease and desist from disclosing any of One World’s confidential information without One World’s consent. This was in accordance with cl 8 of the confidentiality agreement. By judgment of 5 November 2002 the Judge calculated the liquidated damages against Mr Reeves to be US$300,000. Mr Reeves was ordered to pay that sum to One World.
Costs judgment
[33] On 23 December 2002 Judge Rothstein granted One World US$753,497.60 in costs plus interest pursuant to 28 USC § 1961. She gave her findings of fact and reasons for the costs judgment on 22 January 2003. Mr Reeves did not oppose the costs application. He said this was due to physical, emotional and financial exhaustion. The costs judgment was in the form of a draft submitted by One World’s lawyer, with minimal alterations made by the Judge.
Finality of the US judgments
[34] Mr Reeves did not take any steps to exercise his right of appeal against the US judgments, or to seek a stay, so they were final and conclusive against Mr Reeves in the US jurisdiction. His reasons for this were the same as his reasons for not opposing the costs judgment. The time for any reconsideration of, or appeal against the US judgments expired well before the High Court hearing
New Zealand High Court decision
Orders Sought
[35] In the High Court One World sought orders giving judgment for $US1,053,497.60 (being the amount of the damages judgment, together with the amount of the costs judgment), plus interest and costs. Mr Reeves opposed the application saying he had an arguable defence so that summary judgment should not be entered against him.
Legal Principles
[36] The Associate Judge considered the legal principles that applied to the enforcement of foreign judgments referring to case law and the leading text, Collins (ed) Dicey & Morris on the Conflict of Laws (13ed 2000). In general terms, an order for a foreign judgment will be enforceable in New Zealand subject to three basic requirements (“jurisdictional matters”):
(a) The foreign court must have had jurisdiction to give judgment;
(b) The foreign judgment must be for a definite sum of money; and
(c) The foreign judgment must be final and conclusive.
[37] There are limited exceptions. The two exceptions relied on in the High Court were, as mentioned above:
(a)That enforcement of the foreign judgment would be contrary to public policy; and
(b)The proceedings in which the judgment was obtained were opposed to natural justice.
[38] Mr Reeves accepted the US judgments were enforceable unless the Court found one or other exception applied.
[39] The Associate Judge also cited the principle that a foreign judgment is enforceable despite, and cannot be impeached for, an error of law or fact (citing Dicey & Morris), and the principle that a foreign judgment cannot be re-examined on its merits (Godard v Gray (1870) LR 6 QB 139).
[40] In regard to the public policy exception the Associate Judge referred to Amaltal Corporation Ltd v Maruha (NZ) Corporation Ltd CA11/03 11 March 2004 where the Court referred to the various case law on the meaning of “public policy” in the context of Art 34 of Schedule 1 to the Arbitration Act 1996. The theme in the case law was that the public policy exception is restricted to cases that affect the essential principles of justice or moral interests in the country in which enforcement is sought. The Associate Judge also cited Lloyd’s v Meinzer (2002) 210 DLR (4th) 519 (Ont CA) for the proposition that the defendant resisting enforcement of a foreign judgment must show that enforcement would be inherently repugnant to such principles or interests. She also noted the principle in Vervaeke v Smith [1983] 1 AC 145 that the public policy exception is a narrow one, and is rarely applied. The Associate Judge went on to note a number of cases where the exception had been upheld (at [21]).
Public Policy
[41] The Associate Judge considered “whether enforcement in New Zealand of the US judgments would offend public policy here”. Mr Reeves submitted that public policy would be offended because:
(a)Arguably One World knowingly paid one of Team New Zealand’s former designers to provide it with designs that were in essence, identical to those the designer had previously produced for Team New Zealand;
(b)The acquisition of the designs in such circumstances would be a breach of the rules of the America’s Cup;
(c)Enforcement of the judgment would arguably enable One World to enforce its own “ill gotten gains”. It was submitted that this approach to public policy in New Zealand is reinforced by the philosophy behind the Protected Disclosures Act 2000.
[42] For summary judgment purposes Mr Reeves did not have to prove that the information was obtained by One World in the circumstances alleged. Nevertheless the Associate Judge did not consider the above matters to be sufficient to find that it would be contrary to public policy in New Zealand to enforce the US judgments.
[43] The Associate Judge’s reasons were as follows:
(a)Even if the documents did belong to Team New Zealand, and were illegally obtained, the possibility that the US Court might have taken a different view from a New Zealand Court as to the legal consequence of the contract between One World and Mr Reeves was not in the Associate Judge’s view a matter of such moment that the Court should intervene by declining to enforce the US judgment. The Associate Judge did not consider that this would violate essential principles of justice or moral interests in New Zealand. Also the exception argued for here is not analogous with the case law as to what may constitute a valid exception. The Associate Judge opined: “It is certainly not contrary to public policy to enforce in New Zealand a contractual promise to keep documents confidential”;
(b)For the same reasons, even if the acquisition of designs was in breach of the America’s Cup Rules, this could not be a matter of such gravity to make enforcement of the US judgments contrary to public policy in New Zealand;
(c)The Associate Judge considered any possible illegality in One World’s obtaining of the documents to be a matter to be pursued by the owner of those documents with One World. It was not a matter in which Mr Reeves had a proper interest;
(d)One World would not need to rely on any possible illegality in obtaining the documents in order to enforce the confidentiality agreement itself, as distinct from its property rights in the documents. It was enough that One World acquired possession of the documents and that they became confidential under the agreement;
(e)Mr Reeves could not rely on the Protected Disclosures Act 2000: the Act had no application to this case. Counsel for Mr Reeves acknowledged this at the hearing;
(f)Finally, there was a countervailing public policy interest in the finality of litigation. Any possible argument that enforcement would be repugnant to public policy would be overridden by the facts that Mr Reeves willingly entered a contract and accepted it should be governed by US law; that the US Court found that Mr Reeves breached the contract and the contract could be enforced by One World irrespective of how the documents were obtained; that such findings are not impeachable in New Zealand; and that Mr Reeves could have appealed but chose not to.
Natural Justice
[44] Mr Reeves contended that there were a number of breaches of natural justice in the conduct of the hearing before the US Court. This was rejected by the Associate Judge and her finding is not challenged in this Court.
Orders
[45] The Associate Judge awarded:
(a) Judgment for respondent in the sum of $US1,053,497.60;
(b) Interest at rates between 1.38% and 1.51% p.a;
(c) Costs and disbursements.
Public policy exception
[46] Counsel for Mr Reeves, Mr Spring, said that the Associate Judge had, in the course of her discussion of the natural justice argument, stated that she did not think it was necessary to deal with Mr Reeves’ claims that breaches of natural justice had denied him the ability to put forward one of his defences because “Mr Reeves effectively had the benefit of the [finding] to which he says he would have been entitled had there not been these alleged breaches [of natural justice]”. Mr Spring said that this meant that consideration of Mr Reeves public policy argument had to proceed on the assumption that the relevant information had been wrongly obtained by One World from Team New Zealand in the circumstances alleged by Mr Reeves.
[47] In our view, that submission has no foundation. It takes a finding of the Associate Judge from one context and purports to apply it to another. The Associate Judge was right to say that Mr Reeves could not complain of breaches of natural justice denying him a defence when the US Court decided the case on the basis that the advancing of the defence would have made no difference to the outcome. That does not mean that the Associate Judge had to make an assumption that Mr Reeves had established something he had not established, and it certainly does not require this Court to do so. The Associate Judge made no finding of fact to the effect that the information had been wrongly obtained.
[48] What Judge Rothstein actually said in her judgment was that whether the plans were stolen from Team New Zealand or not was irrelevant because Mr Reeves had breached the confidentiality agreement by disclosing the plans: whatever their status, the plans were in the possession of One World, and possession was title against all the world but the true owner. She also noted that even if the hull designs were stolen property, the hydrostatic studies and emails were not, and these had also been retained and/or disclosed by Mr Reeves in breach of the confidentiality agreement.
[49] Mr Spring placed particular emphasis on the decision of this Court in Amaltal, and the statement that the enforcement of an arbitral award will be contrary to public policy where the integrity of the Courts’ processes and powers would thereby be abused. He suggested that this was a lower threshold than the test of repugnancy to essential justice or morality, which was the test applied in Society of Lloyd’s v Meinzer.
[50] The test recently applied by the majority of the Supreme Court of Canada in Beals v Saldanha [2003] SCC 72 was that enforcement would “shock the conscience of a reasonable Canadian” (at [77]) or would be “contrary to our view of basic morality” (at [71]). At [75], Major J, on behalf of the majority, made the following observation:
The use of the defence of public policy to challenge the enforcement of a foreign judgment involves impeachment of that judgment by condemning the foreign law on which the judgment is based. It is not a remedy to be used lightly. The expansion of this defence to include perceived injustices that do not offend our sense of morality is unwarranted. The defence of public policy should continue to have a narrow application.
[51] We agree with that observation, and respectfully adopt it. We do not think the judgment of this Court in Amaltal lowered the threshold in the manner contended for by Mr Spring.
[52] Mr Spring said that the Court should not rely on decisions made in cases involving the enforcement of judgments under the Reciprocal Enforcement of Judgments Act 1934, where reciprocity and comity are important factors. We reject that submission. In effect the argument suggests that a New Zealand Court would enforce a judgment under the Reciprocal Enforcement of Judgments Act where the judgment offended public policy for reciprocity reasons. We do not think that is a sustainable argument. In that regard, we accept the submission made by counsel for One World, Mr Thain, that the discussion of the concept of public policy in the leading cases does not support an argument based on any distinction between cases which involve reciprocity statutes and those which do not.
[53] Mr Spring asked us to adopt a test which would involve our determining whether a New Zealand Court would have reached the same conclusion as that reached by the US Court, and to refuse to enforce it if not. He put it this way:
The proper question is whether or not it is an abuse of process to obtain, “by the back door”, enforcement of the contract here by the imposition of a foreign judgment when the contract would not be enforced by our Courts in circumstances of illegality.
[54] The difficulty with that proposition is that it effectively asks us to determine the rights and obligations of the parties under the confidentiality agreement as if it were governed by New Zealand law, when One World and Mr Reeves have agreed that it will be governed by the law of the State of Washington.
[55] Mr Spring suggested that it was necessary to adopt this approach. He said it would be illegal under New Zealand law to enforce the confidentiality agreement in the present circumstances. That meant that to enforce a US judgment giving effect to the confidentiality agreement would necessarily amount to an abuse of process of the New Zealand Court.
[56] In our view, the test proposed by Mr Spring sets the bar too low. In our view, the public policy exception is a narrow one, that must be necessarily confined in line with the comity of nations principle. Simply because a case could have been decided differently under New Zealand law is not a weighty enough factor to invoke the exception. As Cardozo J said in Loucks v Standard Oil Co of New York 224 NY 99 (1918) at 111:
We are not so provincial as to say that every solution of a problem is wrong because we deal with it otherwise at home.
[57] The major texts on private international law frame the exception narrowly, and place the legal threshold at a high level. North and Fawcett Cheshire and North’s Private International Law (13ed 1999) frame the test as one of “repugnance” at 123:
Certain heads of the domestic doctrine of public policy command such respect, and certain foreign laws and institutions seem so repugnant to English notions and ideals, that the English view must prevail in proceedings in this country.
[58] North and Fawcett go on to say at 123:
[I]t is essential to resist the suggestion that an action concerning a transaction governed by a foreign law must necessarily fail because it would have failed had the governing law been English. Judges in the past have now and then expressed somewhat extravagant views on the matter. Thus, for instance, in a restraint of trade case, Fry J seemed to suggest that every limb of the domestic doctrine must apply in every action in England. This can scarcely be so. The conception of public policy is, and should be, narrower and more limited in private international law than in internal law. A transaction that is valid by its foreign governing law should not be nullified on this ground unless its enforcement would offend some moral, social or economic principle so sacrosanct in English eyes as to require the maintenance at all costs without exception.
[59] Dicey and Morris at para 14-142 notes that there are very few reported cases in which foreign judgments in personam have been denied enforcement or recognition for reasons of public policy at common law, thus illustrating the close confines of the exception.
[60] There is also a considerable body of case law that supports the test adopted in Saldanha, and which suggests that a narrow approach should be taken to the public policy exception. In Society of Lloyd’s v Meinzer, Feldman JA for the Court at [60] said:
[T]he review of the case law confirms that the public policy exception is narrow … and therefore, has rarely been applied.
[61] Feldman JA at [60] noted a trend expressed by two Canadian Supreme Court cases which is to:
[E]mphasize the concept of comity among nations and particularly among provinces of this country when addressing the issue of enforcement of judgments and choice of law. In both cases, the role of the public policy concept was left, in effect, as a safety valve to prevent anomalies.
[62] Other Canadian decisions, Burchell v Burchell [1926] 2 DLR 595 (Ont), Saldanha, and Boardwalk Regency Corp v Maalouf (1992) 88 DLR (4th) 612 (Ont CA), are authority for the proposition that, even though the case could or would have been decided a different way in the home jurisdiction, the foreign judgments will still be enforced.
[63] In the Australian decision, Stern v National Bank of Australia [1999] FCA 1421, Tamberlin J, after surveying the case law and commentaries on the public policy exception said at [143]:
The thread running through the authorities is that the extent to which the enforcement of the foreign judgment is contrary to public policy must be of a high order to establish a defence. A number of the cases involve questions of moral and ethical policy, fairness of procedure, and illegality, of a fundamental nature.
[64] The New Zealand courts have also emphasised that the public policy exception is a narrow one: see for example Banque Indosuez v Bourgogne HC AK M662/89 12 January 1990 at 9 and Bank of Kirabati Ltd v Harrison (1990) 3 PRNZ 111 at 115.
[65] For completeness, we note that there are some decisions that set the threshold for the exception much lower. For example in Jones v Poffenroth HC AK CP188/86 14 March 1986 Smellie J refused to enforce a judgment where the proceedings in the State of California had been tainted by maintenance and champerty. In our view, that set the bar too low, and the weight of judicial and academic authority would tell against such a low threshold.
[66] Even if the confidentiality agreement would not be enforceable under New Zealand law if the assertions made by Mr Reeves were correct, the submission made by Mr Spring would still have a number of difficulties. In particular:
(a)Of necessity, the Court would be re-examining the merits of the US judgments, something which is contrary to Godard v Gray and the observation of the majority of the Supreme Court of Canada in Beals v Saldanha at [75].
(b)As Judge Rothstein noted in her judgment, the argument applies only to the hull design package, but not to the hydrostatic studies conducted by One World on the hull designs or the emails. The liquidated damages were payable under the confidentiality agreement for any breach: the retention of the hydrostatic studies or the emails only would have yielded the same result. The argument also has no direct relevance to the costs judgment which, in monetary terms, is the more significant judgment against Mr Reeves. Mr Spring made no submission to the effect that the costs judgment was contrary to New Zealand public policy.
(c)The argument involves an attempt to contest the US decision in the Courts of New Zealand, when Mr Reeves did not take the opportunities available to him to contest the decisions in the US jurisdiction, because he failed to exercise his appeal rights and, in the case of the costs judgment, did not contest the first instance judgment either. This invokes what Associate Judge Sargisson referred to as the countervailing public policy in the finality of litigation: Vervaeke v Smith at 164. Also of relevance is the dictum of Wylie J in Banque Indosuez v Bourgogne (supra) at 9, endorsed by this Court in Bolton v Marine Services Ltd (1993) 9 PRNZ 300 at 303 per Thomas J for the Court, that considerations such as exercise and exhaustion of appeal rights in the foreign jurisdiction are relevant to the public policy exception.
(d)In New Zealand disclosures of confidential information evidencing wrongdoing are governed by the regime set out in the Protected Disclosures Act 2000, and that Act represents the public policy in New Zealand. The Protected Disclosures Act provides that if whistleblowers want to breach confidentiality agreements to expose wrongdoing they must do so via the regime provided for in the Act; only if the requirements of the Act are fulfilled will the whistleblower receive the immunity given by the Act from liability for breaching a confidentiality agreement.
[67] In our view the Associate Judge was correct in her assessment that the enforcement of the US judgments in the Courts of New Zealand does not invoke the public policy exception. Even if the outcome under United States law differed from that under New Zealand law (and we do not express a concluded view on that point), we do not accept that enforcement of the US judgments would amount to an abuse of process of the New Zealand Courts: such enforcement would not shock the conscience of a reasonable New Zealander, be contrary to New Zealand’s view of basic morality or a violation of essential principles of justice or moral interests in New Zealand.
Tenable defence
[68] We also observe that there was, in any event, insufficient evidence before the Court from Mr Reeves to lead the Court to conclude that One World has not satisfied the Court that Mr Reeves has no tenable defence in the present case.
[69] The contention that the confidentiality agreement would not be enforceable under New Zealand law is based on Mr Reeves’ assertions that:
(a)The hull designs were based on intellectual property belonging to Team New Zealand; and
(b)Enforcement of the confidentiality agreement would be designed to conceal One World’s wrongdoing in purchasing them from Mr Davidson when, according to Mr Reeves, One World knew they were derived from or replications of designs undertaken previously by Mr Davidson for Team New Zealand, or to punish Mr Reeves for his efforts to bring that alleged wrongdoing to light.
The onus on summary judgment
[70] Rule 136(1) of the High Court Rules provides:
The Court may give judgment against a defendant if the plaintiff satisfies the Court that the defendant has no defence to a claim in the statement of claim or to a particular part of any such claim.
[71] McGechan on Procedure at HR136.05 says “while ultimately the onus rests with the plaintiff to show that there is no defence, the circumstances may cause the evidentiary onus to shift to the defendant”. McGechan cites the following passage from Auckett v Falvey HC WN CP296/86 20 August 1986 per Eichelbaum J:
On a summary judgment application, the onus is on the plaintiff to show that there is no defence. On the present facts, the plaintiffs are able to pass an evidential onus to the defendants by exhibiting the contract which on its face, entitles them to the remedy they now seek. The defendants are then in a position of having to demonstrate a tenable defence. However, the overall position concerning onus on the application is that at the end of the day the question is whether the plaintiffs have satisfied the Court as to the absence of a defence.
The threshold of credibility
[72] Beck Summary Judgment Procedure (1988) says at 4.05:
Whether or not there is a defence may turn largely upon the credibility of the defendant’s evidence. In cases of substantial uncertainty, this may mean that the matter will have to go to trial. It has been said on a number of occasions, however, that the defendant must pass a “threshold of credibility” in order to achieve this benefit: the mere say so of the defendant is not enough if there appears to be a lack of bona fides or the whole defence appears to be a matter of afterthought.
[73] The need for the defendant’s affidavit evidence to pass a “threshold of credibility” has been emphasised in a number of New Zealand decisions. In the leading case of Pemberton v Chappell [1987] 1 NZLR 1 (CA) Somers J said at 4:
Where the defence raises questions of fact upon which the outcome of the case may turn it will not often be right to enter summary judgment. There may however be cases in which the Court can be confident – that is to say, satisfied – that the defendant’s statements as to matters of fact are baseless. The need to scrutinise affidavits, to see that they pass the threshold of credibility, is referred to in Eng Mee Yong v Letchumanan [1980] AC 331, 341 and in the judgment of Greig J in Attorney-General v Rakiura Holdings Ltd (Wellington, CP 23/86, 8 April 1986).
[74] In Eng Mee Yong v Letchumanan [1980] AC 331 (cited in Pemberton) Lord Diplock said at 341 that a Judge is not bound “to accept uncritically, as raising a dispute of fact which calls for further investigation, every statement on an affidavit however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself it may be”.
[75] In Pemberton both Somers J and Casey J saw the provision of independent support for the defendant’s affidavit evidence as a weighty consideration. Somers J at 4 said that the provision of independent support for the defendant’s evidence lent “a sufficient degree of credence” to the claim. And Casey J at 8 said that in light of independent supporting evidence:
It would be a bold step to reject what [the defendant] now says about these matters out of hand solely as a result of his dubious affidavit evidence. There is every reason to be suspicious of his good faith. But once the essential core of his complaint is shown to have some independent support, I cannot be satisfied that he has no defence.
This case
[76] Mr Spring accepted that Mr Reeves carried the onus of making out an arguable defence. We think he was right to do so. The US judgment is prima facie conclusive evidence of One World’s claim, and as such, the onus, as described in Auckett, shifts to Mr Reeves to demonstrate a tenable defence. Here, Mr Reeves needed to provide an evidential basis for his assertion that One World could not satisfy the Court that he had no defence.
[77] The only evidential basis was Mr Reeves’ allegations in his affidavit sworn in these proceedings, which exhibited material filed in the US proceedings. There was no evidence from other individuals corroborating his description of events. And the evidence that was before the US Court, such as the declarations from Mr Dickson and Mr Barnes, and the expert’s findings as to copying of Team NZ’s hull designs, go against Mr Reeves’ version of events. Further, Mr Reeves’ allegations against One World vary: he makes allegations of theft, receiving, copying in whole or part, and derivation of the designs. There is also no evidence as to the specific contractual relationship between Mr Davidson and Team NZ affecting ownership of copyright in designs undertaken by Mr Davidson for Team NZ, and nothing to indicate that Team NZ has issued proceedings against either Mr Davidson or One World. The Vogel email does not concern the confidential information at issue here, but rather the design of certain “fittings”.
[78] Mr Reeves’ evidence in the High Court as to alleged wrongdoing by One World refers only to the hull design package. He said his defence in the US litigation was that the technical information he held or disclosed did not belong to One World because it was stolen. He then makes the allegations reproduced at [15] above about the hull design package. But he does not deal with Judge Rothstein’s conclusion that the hydrostatic studies were One World’s confidential information, not subject to the allegation that they came from Team New Zealand and does not address the question of the emails either.
[79] We do not agree with the observation of William Young J at [92] that it is surprising that One World has not provided sworn evidence in the New Zealand proceeding denying Mr Reeves’ allegations. One World has an American judgment in its favour which prima facie establishes One World’s claim. One World should not be required to put forward evidence of factual matters relating to its claim to support a judgment it has already obtained through a litigation process in the United States courts. This is not the typical summary judgment scenario of one person’s word against another’s: it is a case of a final foreign judgment (appeal rights having been foregone) versus one person’s unsupported affidavit evidence.
[80] In our view, the production by One World of the US judgments and its affidavits outlining the process leading to the obtaining of those judgments is sufficient to meet the onus on it to satisfy the Court that there is no tenable defence based on public policy, notwithstanding Mr Reeves’ evidence in opposition.
Result
[81] We would dismiss the appeal.
Costs
[82] We would award costs to One World of $6,000 plus usual disbursements.
WILLIAM YOUNG J
General
[83] I disagree with the result proposed.
[84] I can express my reasons for this by reference to the following questions:
(a)Does New Zealand public policy preclude enforcement of a contract to maintain confidentiality in relation to iniquity?
(b)Has Mr Reeves provided an adequate evidential basis for his allegations against One World?
(c)On the facts alleged by Mr Reeves, is it reasonably arguable that enforcement of the agreement (via the judgment) is precluded as contrary to New Zealand public policy?
Does New Zealand public policy preclude enforcement of a contract to maintain confidentiality in relation to iniquity?
[85] The leading case is Gartside v Outram (1856) 26 LJ Ch (NS) 113. There is doubt as to the words used by the Judge (Wood V-C) as his judgment is reported in rather different terms in other reports, 5 WR 35, 3 Jur (NS) 39 and 28 LT(OS) 120, but the case undoubtedly stands for the principle that there is no confidence in iniquity.
[86] Most commonly, the iniquity of a plaintiff may be a ground for refusing an injunction intended to prevent disclosure of information about such iniquity. Cases of this nature might be (and often are) rationalised on the basis that the plaintiff lacks “clean hands”. However, the Gartside principle goes beyond providing merely a defence to a discretionary remedy and justifies either treating as void an express contractual obligation of confidentiality or denying a plaintiff all remedies, see for instance A v Hayden (1984) 156 CLR 532 and Fraser v Evans [1969] 1 QB 349 at 362. So the iniquity defence if made out is not just a basis for declining an injunction; it takes away any entitlement to any remedy.
[87] The English courts have gone further than the Australian courts in treating the governing principle as one of public interest in the round, see for instance Lion Laboratories Ltd v Evans [1985] QB 526. This difference of approach is discussed helpfully in Meagher, Gummow & Lehane, Equity Doctrines and Remedies (4th ed 2002) at 41 - 115. On my reading, the decision of this Court in the New Zealand Spycatcher case, Attorney General for the United Kingdom v Wellington Newspapers Ltd [1988] 1 NZLR 129 perhaps supports the broader English position (see the remarks of Cooke P at 176 and McMullin J at 178). But even on the narrower Australian approach, the cases support the stance taken by Mr Reeves. In this regard I note that Gummow J in Corrs Pavey Whiting & Byrne v Collecterof Customs (Vic) (1987) 74 ALR 428 at 450 regarded the iniquity principle as applying to publication of material revealing:
… the existence or real likelihood of the existence of an iniquity in the sense of a crime, civil wrong or serious misdeed of public importance. …
[88] Disclosure to a person with a legitimate interest in the alleged iniquity will necessarily be protected and, in certain circumstances, broader disclosure may also be permitted. This is discussed in the English Spycatcher case, Attorney General v Guardian Newspapers Ltd [1990] 1 AC 109 at 268 – 269 per Lord Griffiths and at 282 - 283 per Lord Goff. In the present context, the only disclosure held to have been established against Mr Reeves is to Team New Zealand. I make it clear that I am by no means persuaded that broader disclosures might not be permitted by reference to the iniquity principle.
[89] I note in passing that the law in American jurisdictions would appear to be broadly similar. It is trite that a contract for the concealment of a crime is contrary to public policy. Williston on Contract vol. 14 states at §1718:
Any bargain, express or implied, having for its purpose or consideration the concealment or compounding of a crime is unlawful. The cases so holding are myriad, and have arisen in virtually every common-law jurisdiction. They are expressive of the public policy which governs the administration of justice.
This principle applies not only to contracts which are addressed overtly or explicitly to the concealment of criminal behaviour but also to the use of generally expressed (and unexceptionable) confidentiality obligations which are utilised to suppress disclosures of offending which occurred after, and were not contemplated at the time of, the entering into of the relevant contract; see for instance the examples given by Garfield, “Promises of Silence: Contract Law and Freedom of Speech” (1998) 83 Cornell LR 261 at 307 et seq. Likewise public policy has been held to preclude resort to confidentiality obligations to prevent disclosure of tortious conduct, see Lachman v Sperry-Sun Well Surveying Co 457 F 2nd 859 (10th Cir 1972) and the discussion in Garfield at 324 et seq.
[90] Not argued in this case was the potential application of the New Zealand Bill of Rights Act 1990. This is presumably because One World (a private entity) is not subject to the Act. That, however, is not the position with the courts; see s 3(a). Direct or indirect interference by the New Zealand courts with Mr Reeves’ entitlement to freedom of expression (under s 14) may well engage the New Zealand Bill of Rights Act and it is far from clear to me that such interference could be justified under s 5 or otherwise. Related issues associated with American constitutional law are discussed by Garfield in the article to which I have referred. If the present case were more closely balanced than I think it is, this point would warrant serious consideration.
Has Mr Reeves provided an adequate evidential basis for his allegations against One World?
[91] In his affidavit in the High Court proceedings, Mr Reeves fully particularised his allegations (see [15] of the judgment prepared by O’Regan J). No doubt these allegations have been expressed by Mr Reeves in different ways at different times, but such differences seem to me to be no more than variations on a theme.
[92] Surprisingly, at least to my way of thinking, One World has not provided sworn evidence in the New Zealand proceedings to deny the allegations made by Mr Reeves. As well, there is the “Vogel email” which is truly a smoking gun as it provides direct evidence that One World copied Team New Zealand’s designs in respects other than those directly in issue in the litigation. One World has not condescended to provide an explanation for the contents of the “Vogel email”. If it is the case that One World was guilty of copying Team New Zealand’s designs in the respects acknowledged in the Vogel email, that seems to me to be relevant, perhaps on a similar fact basis, to an assessment of the overall credibility of the allegations made by Mr Reeves which are directly in issue in this appeal.
[93] In this general context, I see MacLean v Stewart (1997) 11 PRNZ 66 as relevant. In that case it was said (at 69):
… We acknowledge, of course, that a denial of liability in general terms is of itself unacceptable. The defendant cannot escape liability for summary judgment by raising a false, hypothetical or frivolous “defence” and then contend that the Court cannot be satisfied that he or she has no defence. But in this case the expert's affidavits disclose considerable disquiet about the quality of the respondents' workmanship, and his assessment of the cost of remedying the “current defects” was duly itemised. If his assessment is correct the appellants do not owe the respondents any money at all. This is not a case where the appellants are claiming a set-off only. They are alleging that, because of faulty workmanship, no money at all is owing. Thus, it cannot be said that there is an undisputed sum. Whether or not this is correct properly can be resolved only after a hearing. The appellants’ evidence will then be expanded and can be tested in cross-examination. In the meantime it is premature to seek to reach a firm conclusion as to its validity.
In the present case, the allegations made by Mr Reeves are not merely in “general terms” and do not raise merely “hypothetical or frivolous” claims. I refer also to what was said at 69:
There is no question but that on a summary judgment application the onus is on the plaintiff to satisfy the Court that the defendant has no defence. That onus does not shift. It may well be that the evidence adduced by the plaintiff in support of the application would, in the absence of any response by the defendant, satisfy the Court that the defendant had no defence. The Court may then enter judgment for the plaintiff. But the defendant may, of course, adduce evidence directed to showing that he or she does have a defence. The question which the Court must then answer having regard to the further evidence remains the same; is it satisfied the defendant has no defence.
(Emphasis added)
[94] In his reasons for judgment, O’Regan J refers to the report obtained from Mr Perry for the purposes of the American litigation, a report which plainly did not assist Mr Reeves. He also justifies the failure by One World to respond to the allegations advanced by Mr Reeves by saying that in the context of the American proceedings and the judgment in its favour, there was no reason why it should do so. I do not see either consideration as controlling.
[95] Mr Perry’s report is not in evidence in the New Zealand proceedings and, until it is deployed in evidence, it might be thought to be irrelevant. As well, the report was obtained under what seems to me to be very strictured circumstances which severely limited the ability of Mr Reeves to participate in the process. Further, Mr Perry has seen fit to discuss on the internet his role in the litigation, conduct which to my way of thinking is pretty surprising in an expert witness.
[96] One World’s success in the American proceedings is not relevant to whether it could fairly be expected to respond in the New Zealand proceedings to the allegations made by Mr Reeves. I say this because the American judgment did not turn on a finding that the designs had not been copied. So the factual question in issue here was not the subject of a determination in favour of One World.
[97] In this context, I see no reason why the Court should not accept the uncontradicted evidence of Mr Reeves as establishing that, arguably, his factual contentions are correct. In this context, I do not see the affidavit of Mr Reeves as being relevantly contradicted by evidence which was put to the American Court but which was adjudicated on by that Court. If the American Judge had made a finding that there had been no copying, this may have raised questions broadly similar to those addressed by this Court in Amaltal Corporation Ltd v Maruha (NZ) Corporation Ltd [2004] 2 NZLR 614 at [40] and [60]. But such questions do not arise because, given the basis upon which the American judgment proceeded, there is no inconsistency between the factual assertions of Mr Reeves and the findings made in that judgment.
[98] It does not matter, at least in the present summary judgment context, that the allegations of Mr Reeves are primarily addressed to the hull designs rather than the hydrostatic studies. On the limited material before the High Court, I believe that a defence of iniquity associated with the hull designs might permit retention and disclosure of associated material (for instance, as evidence which might tend to prove wrongdoing in relation to the hull designs).
[99] I am therefore of the view that it is distinctly arguable that One World illegitimately obtained from Team NZ confidential copyright material. It follows that it is arguable that in doing so One World acted in knowing breach of the confidentiality obligations of any Team NZ personnel from whom this information was obtained and that this conduct involved breach of equitable obligations (including being a party to breaches of fiduciary duty by the relevant Team New Zealand personnel), tortious conduct (for instance, wilful interference with contractual obligations) and copyright breach. Further, it is possible that the underlying conduct (as alleged by Mr Reeves) involved criminality under s 131 of the Copyright Act 1994 and, conceivably, the Crimes Act 1961. Consciously dishonest breaches of fiduciary duty (which might be thought to be implicit in what is alleged) can amount to fraud for the purposes of the Crimes Act, see R v Simcock CA322/03 19 May 2004 at [79] – [87].
On the facts alleged by Mr Reeves, is it reasonably arguable that enforcement of the agreement (via the judgment) precluded as contrary to New Zealand public policy?
[100] I would answer this question in the affirmative.
[101] The principles of law which underpin the iniquity defence are based on principles of public policy. So, if the facts are as Mr Reeves allege and if the contract were governed by New Zealand law, I am satisfied that it would be contrary to public policy to enforce the contract so as to:
(a)Prevent Mr Reeves from disclosing the information in question at least to appropriate parties, in particular Team New Zealand (the alleged victim of the copying) and officials associated with the America’s Cup and associated retention of the information in question; or
(b)Preclude imposing sanctions or obtaining compensation in respect of such disclosure or retention.
As is apparent from what I have said, I think it distinctly arguable as a matter of law that disclosure permitted by the iniquity principle would not necessarily be confined to disclosure to Team New Zealand and the America’s Cup officials. But on the findings of fact made against Mr Reeves in the American proceedings, there is no need to consider this aspect of the case.
[102] Ideas of public policy can be slippery. Many, and perhaps most, judge made rules of law depend ultimately on judicial perceptions of policy and when required to be explained or often justified as involving policy. But not all rules of law which might be justified on grounds of policy necessarily involve “public policy” in the sense which is relevant in this context, cf what was said in Amaltal Corporation Ltd at [56] and [59]. This means that our Courts should be prepared to enforce judgments based on contracts which, if entered into in New Zealand, would not be enforced; cf Boardwalk Regency Corp v Maalouf (1992) 88 DLR (4th) 612 where an Ontario Court upheld a New Jersey judgment based on a gaming contract entered into in New Jersey even though such a contract, if entered into in Ontario, would not have been enforced. That said, I think it obvious that the rules of law which deny confidentiality to iniquity are grounded in principles of public policy on any conceivable approach to that concept.
[103] Of moment in this context is the reality that the public policy which is engaged by the case is primarily that of New Zealand. The alleged victim of the copying was a New Zealand entity and this is said to have occurred in a context of a sporting event which was conducted in New Zealand.
[104] If it is assumed, that Mr Reeves’ allegations are correct (and this aspect of the case must be assessed on this basis) it follows that One World has acted with gross impropriety and in breach of the rules governing America’s Cup yachting and has incurred civil and possible criminal liability. Yet, on the approach proposed by the majority the New Zealand courts should enforce a crippling judgment against Mr Reeves for doing no more than what most New Zealanders would regard as being his moral duty. I regard that consequence as so outrageous as to justify involving the public policy defence. To paraphrase the language used by Supreme Court of Canada in Beals v Saldanha [2003] SCR 416 enforcement of such a judgment would “shock the conscience of a reasonable New Zealander” (at [77]) or would be “contrary to our view of basic morality” (at [71]).
[105] I accept that it has yet to be shown that One World acted in the way alleged by Mr Reeves. Further, assuming that what Mr Reeves alleges against One World is true, it may also be open to question whether Mr Reeves’ conduct has been as public spirited as postulated in the preceding paragraph. But, given that the findings by the American Court of breach of the confidentiality agreement do not go beyond what might arguably be seen as being appropriate to the proper disclosure of iniquity and allowing for the summary judgment context in which the case falls to be determined, these reservations are of no moment.
[106] In light of those considerations, I have no difficulty with treating New Zealand public policy as trumping the American judgment.
Conclusion
[107] As I have indicated, I am satisfied that the principles associated with the iniquity defence advanced by Mr Reeves are founded in public policy and warrant withholding, at this stage, enforcement of the American judgment.
Solicitors:
Keegan Alexander, Auckland for Appellant
Phillips Fox, Auckland for Respondent
0
3
0