Shanghai Neuhof Trade Company Limited v Zespri International Limited
[2017] NZHC 1543
•5 July 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2014-404-001316 [2017] NZHC 1543
BETWEEN SHANGHAI NEUHOF TRADE
COMPANY LIMITED First Plaintiff
SHANGHAI HUI ZHAN LOGISTIC LIMITED
Second Plaintiff
AND
ZESPRI INTERNATIONAL LIMITED Defendant
Hearing: 23 June 2017 Appearances:
B D Gray QC and C Goode for Plaintiffs
S Barker and B R McKinnon for DefendantJudgment:
5 July 2017
INTERIM JUDGMENT OF WYLIE J
This judgment was delivered by Justice Wylie
On 5 July 2017 at 4.45pm Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar
Date:…………………………
Solicitors/counsel:
Winston Wang & Associates/B D Gray QC/C Goode, Auckland
Buddle Findlay, Wellington
SHANGHAI NEUHOF TRADE COMPANY LIMITED v ZESPRI INTERNATIONAL LIMITED [2017] NZHC
1543 [5 July 2017]
Introduction
[1] These proceedings have been outstanding for some time. They have been bedevilled by discovery.
[2] When matters relating to discovery reached an impasse, the defendant sought orders staying the proceedings unless the plaintiffs comply with the consent orders within a further three month period. In the alternative, it sought to strike out the plaintiffs’ proceedings for non-compliance. This application was opposed by the plaintiffs. They sought the allocation of a fixture.
[3] Various consent orders have been made in relation to discovery – by Heath J on 24 March 2016, by me on 14 June 2016 and by Muir J on 11 October 2016. Although a very large number of documents have been discovered, it is common ground that not all documents detailed in the consent orders have been discovered by the plaintiffs. The plaintiffs say that they have used their best endeavours to comply with the consent orders, but that they have been unable to obtain access to some of the documents sought by the defendant. The defendant has filed affidavits from various experts, which in essence assert that the plaintiffs have not tried hard enough to obtain the documents sought, and that if they do so, they should be able to obtain them.
[4] The defendant’s application was initially called before me on 22 May 2017.
There was insufficient time to complete the hearing, and I adjourned it to 23 June
2017, and permitted the parties to file further evidence.
[5] On 23 June 2017, I heard from Mr Barker on behalf of the defendant. He outlined the defendant’s complaints, and detailed the various steps the defendant says the plaintiffs should have taken to comply with their discovery obligations.
[6] I then heard from Mr Gray QC for the plaintiffs. He conceded that the plaintiffs have not fully discovered all documents detailed in the consent orders, but argued that they have discovered all documents detailed in the orders which are in their possession and control. He indicated that the plaintiffs were nevertheless
prepared to take the various steps recommended by the defendant, to see if they could obtain yet further documents which should be discovered.
[7] I invited counsel to confer to see if they could agree the appropriate orders necessary to give effect to the defendant’s proposals. They did so, and I have received a consent memorandum from counsel in this regard.
[8] I also received memoranda from both counsel, indicating their respective views as to the formal orders the Court should make.
[9] In my view, the following are appropriate and I so order:
(a) I enter interim judgment on the defendant’s application under r 11.2(a)
as set out hereunder;
(b) The defendant’s application for a stay or a strike out is adjourned;
(c) The plaintiffs are to take the various steps referred to in Annexure “A” within a period of three months from the date of this interim judgment;
(d)The defendant’s discovery obligations in relation to material on a laptop belonging to a Joseph Yu are stayed pending further order of the Court;
(e) The defendant’s application is to be called before me for mention in
the week of 2 October 2017. I will then:
(i) assess the plaintiffs’ progress with the consent orders;
(ii) make orders in respect of the defendant’s further discovery
obligations in relation to the material on Joseph Yu’s laptop;
(iii)if the plaintiffs have complied with the obligations contained in this interim judgment, determine whether or not the matter is ready for trial;
(iv)if the plaintiffs have not complied with the obligations contained in this interim judgment, hear from the parties as to the consequences of that non-compliance, and determine whether I should grant the relief sought by the defendant in its application;
(v) make any other orders I consider appropriate; and
(vi) deal with costs.
Wylie J
Annexure “A”
1.The plaintiffs are to take the following steps under the three consent orders the subject of Zespri's application dated 21 April 2017 ("Consent Orders"), as set out below.
Emails of Yingjie Liu
2.The plaintiffs will appoint an independent, and suitably qualified, forensic IT/data recovery expert in China ("China IT expert") and will serve a copy of this order on the China IT expert.
3.The plaintiffs will instruct the China IT expert to attempt to extract all emails from any of Mr Yingjie Liu's email accounts or devices (whether personal, web-based, or otherwise).
4.The plaintiffs will also instruct the China IT expert to attempt to recover any deleted data using the steps identified in paragraph [8], supplemented by any additional steps the China IT expert considers necessary.
5.The China IT expert is to process the data from [3] and [4] and then to undertake keyword searching (using English and Mandarin keywords) and filtering of Mr Yingjie Liu's emails, using parameters as agreed between counsel in accordance with their obligations under High Court Rule 8.2. If the parties are unable to agree on the keywords to apply, they may file separate memoranda for the Court to consider.
6.The plaintiffs' New Zealand lawyers will review and discover any responsive emails identified by the China IT expert.
Devices taken by the ASB and returned
7. The plaintiffs will deliver the two devices referred to in evidence by Mr
Zongyuan Li, being:
(a) Gigabyte laptop, model M1022; and
(b) Founder Zhuoyue desktop, model K100,
(together "Devices"), to their NZ counsel in Auckland. The plaintiffs will then appoint an independent, and suitably qualified forensic IT/data recovery expert in NZ ("NZ IT expert") and serve a copy of this order on the NZ IT expert.
8. The NZ IT expert will carry out the following steps:
(a) obtain two forensic copies (a master copy and a backup) of the storage media from each of the Devices;
(b) draft chain of custody forms and contemporaneous notes of the steps taken during the collection process;
(c) generate "MD5 hash" values of the forensic copies at the point that the forensic copies have been completed and ensure that they verify with the MD5 hash values of storage media copied;
(d) examine the forensic copies obtained to determine whether the data on the Devices is recoverable or not;
(e) recover all of the data on the Devices (deleted or not) to the extent possible; and
(f) produce a report on oath to be filed with the High Court (see [10] below) detailing all of the steps taken, what data were recoverable from the Devices, and if no data were recoverable, provide reasons to the extent
he or she is able as to why that is so.
9.The plaintiffs are to instruct the NZ IT expert to process any data that the NZ IT expert recovers, in order to conduct keyword searching (including English and Mandarin keywords) and filtering as agreed between counsel.
10.The NZ IT expert and China IT expert are each to provide an affidavit setting out in detail:
(a) the IT expert's qualifications and experience in forensic data recovery; (b) the IT expert's instructions from the plaintiffs;
(c) which steps were taken by him/her set out at [2]-[9] (inclusive) above; (d) the reasons, if known, why any step was not or could not be taken;
(e) any other steps deemed necessary or appropriate by him/her in order to complete the steps set out above; and
(f) that the IT expert understands what this order requires of him/her, and the IT expert has complied with it.
Bank statements
11.The plaintiffs will submit a written request to each bank at which either plaintiff held accounts during the period 2007-2011 requesting copies of all statements of account and any other documents pertaining to the conduct of the account(s), including but not limited to mandate/account operating authority. For the sake of clarity, this order extends to all bank accounts of either plaintiff wherever in the world such accounts are held.
12.If, and to the extent that, any bank is unable to provide all or any statements of account or other documents for any account of either plaintiff, then the relevant plaintiff is to request a written explanation from the bank in question as to why the documents are no longer available, and in relation to any bank located within the People's Republic of China ("PRC"), such explanation should be
provided with specific reference to the bank's obligation to its customer pursuant to The Administrative Measure for the Identification of Financial Institution Clients and the Preservation of Clients' Identities and Transaction Records.
13.The plaintiffs will file and serve evidence, verified on oath, of compliance with the steps identified at [11]-[12].
ASB documents
14.The plaintiffs are to apply forthwith in writing to the Anti-Smuggling Bureau ("ASB") for a List of Items and Documents seized in accordance with the Public Manual for Anti-Smuggling Police.
15.The plaintiffs are to apply forthwith in writing to the relevant PRC Courts, including the:
(a) Shanghai No. 1 Intermediate People's Court; (b) Shanghai Higher People's Court; and
(c) Supreme People's Court of the PRC,
(together, "PRC Courts") for a particularised list of any of the plaintiffs' documents held by the PRC Courts, as well as permission to access and make photocopies of these documents with reference to the Measures for Archives Management of the People’s Courts and the Reply from the General Office of the Supreme People’s Court on the Access to the Litigation Archives by a Litigant or Its Representative.
16.The plaintiffs are to apply forthwith in writing to the PRC Courts and the ASB for the release of any of their documents held by the PRC Courts or ASB, which have not been permanently detained under the Notice of the Supreme
People's Court, the Supreme People's Procuratorate and the Ministry of Public Security on Archive Filing and Storage Issues in Anti-revolution and Other Criminal Cases.
VAT returns
17. The first plaintiff will take the following steps to retrieve its VAT returns:
(a) identify and depose as to whom of the first plaintiff was responsible for filing its VAT returns for 2008, 2009, 2010, and 2011 ("VAT Returns"), and from when the first plaintiff began filing its VAT Returns electronically;
(b) access the first plaintiffs' electronic tax file with the State Administration of Taxation ("SAT"):
(i) identify what information is available on that electronic tax file;
(ii) list all such information;
(iii)verify such list on oath and then file and serve such on the defendant;
(iv) retrieve all VAT Returns; and
(v)if no such information is available, explain the reasons why that is so;
(c) file a formal written request to the SAT or Shanghai Tax Bureau ("STB"), being its local counterpart ("Initial Tax Authority"), for retrieval of its VAT Returns following the process in the Announcement of the State Administration of Taxation on Promulgating the Administrative Measures for Tax Related Information Inquiry; and
(d) file a Government Information Disclosure Request to the SAT/STB for retrieval of the VAT Returns pursuant to the Regulation of the Government of PRC for the Disclosure of Government Information.
18. The first plaintiff will also take the following steps:
(a) If [17(c)] is unsuccessful, file a request for verification with the Initial Tax Authority under the Announcement of the State Administration of Taxation on Promulgating the Administrative Measures for Tax Related Information Inquiry;
(b) if [17(c) & 18(a)] are not successful, apply for administrative reconsideration to a higher taxation authority under the Law of PRC on Administration Reconsideration, and the Implementing Regulations for the Law of PRC on Administrative Reconsideration; and
(c) if [17(d)] is not successful, apply for administrative reconsideration to the SAT under the Law of PRC on Administration Reconsideration, and the Implementing Regulations for the Law of PRC on Administrative Reconsideration.
General directions
19.As evidence of the plaintiffs' compliance with these orders, the plaintiffs will: (a) keep documentary evidence of the particulars of every step taken by
them in compliance with the above orders;
(b) annex all documentary evidence, and correspondence sent or received with third parties in relation to the steps taken in compliance with the above orders to their affidavit evidence; and
(c) provide evidence, verified on oath, by a deponent who has direct
personal knowledge of the steps taken in each case, and otherwise to satisfy the requirements of High Court Rule 8.15(2).
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