Strahl v McKinnon

[2014] NZHC 1411

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2013-485-6758 [2014] NZHC 1411

UNDER

the Declaratory Judgments Act 1908

IN THE MATTER

of an application under Part 18 of the High
Court Rules

BETWEEN

JOHN RUSSELL STRAHL Plaintiff

AND

ALEXANDER MALCOLM MCKINNON AND OTHERS

First Defendants

GOUGH HOLDINGS LIMITED Second Defendant

Hearing:

On the papers

Counsel:

R J B Fowler QC for Plaintiff
J W A Johnson and G J C Carter for First and Fifth named First
Defendants

J A Farmer QC and P A Robertson for Third, Fourth, and Ninth named First Defendants

T C Weston QC and A V Foote for Fourteenth, Fifteenth and
Sixteenth named First Defendants
L J Taylor QC for Second Defendant

Judgment:

20 June 2014

JUDGMENT OF MACKENZIE J

I direct that the delivery time of this judgment is

4.45 pm on the 20th day of June 2014.

Solicitors:           DLA Phillips Fox, Wellington, for Plaintiff.

Wynn Williams Lawyers, Christchurch, for First and Fifth name First Defendants
Mortlock McCormack, Christchurch, for Third, Fourth and Ninth named First

Defendants

Duncan Cotterill, Christchurch, for Fourteenth, Fifteenth and Sixteenth named First
Defendants

Clark Boyce, Christchurch, for Second Defendant

STRAHL v MCKINNON & ORS [2014] NZHC 1411 [20 June 2014]

[1]      The second defendant has applied for the following orders:

(a)      Suppressing all pleadings and submissions and the judgment in the proceedings CIV 2013-485-006758 until the final judgment (after all appeals have been exhausted) in CIV 2012-404-3798 (Auckland Registry) become publicly available.

(b)Suppressing all details including but not limited to the fact of this application and any affidavits and submissions and any judgment in respect of this application.

(c)       Providing  that  if  any  application  to  view  the  file  CIV 2013-485-

006758 is received by the Registry that the Second Defendant have an opportunity to be heard on such an application.

[2]      That application was filed on 5 June 2014.   In a minute issued on 6 June

2014, I gave certain directions as to the hearing of the application.  Counsel for the third, fourth and ninth named first defendants, and counsel for the first and fifth named first defendants, and two other named first defendants filed memoranda advising that those parties will abide the decision of the Court and do not wish to be heard.  I issued a further minute dated 13 June 2014 in which I directed that if there were no parties other than the second defendant who wished to be heard, counsel for the second defendant could file written submissions and I would deal with the matter on the papers.   Counsel for the plaintiff has subsequently filed a memorandum abiding the decision of the Court.  Mr Taylor QC, for the second defendant, has filed written submissions, and confirmed that there are no other parties who wish to be heard.  I therefore issue this judgment, having considered Mr Taylor’s submissions.

[3]      When the present application was received, I was on the point of delivering my judgment in the proceedings.  I delayed that pending the hearing of the present application.  I consider that it is now appropriate to deliver that judgment and it will be delivered at the same time as this judgment.   This judgment should be read against the background described in that judgment, which I do not repeat here.

[4]      The starting point, on any application for suppression of material relating to the conduct of Court proceedings, is the principle of open justice.

[5]      The importance of the open justice principle was reiterated by the Court of Appeal in Broadcasting Corporation of New Zealand v Attorney-General.1    In particular, the statements of Woodhouse P,2 and of Cooke J,3 reaffirm that principle. The principle was further reaffirmed by that Court in Clark v Attorney-General.4

[6]      The principle however is not absolute and orders which have the effect of restricting publication may be made in appropriate circumstances.  The making of such an order necessarily involves the exercise of discretion.5   The question here is whether the circumstances of this case are such that the discretion in favour of suppression should be exercised.

[7]      The ground on which the order is sought is that any publicity associated with this proceeding is likely to cause significant damage to the business of the second defendant.  The second defendant and its subsidiaries (the Gough Group) hold and operate a number of exclusive dealerships for heavy equipment and machinery.  The Gough  Group  is  the  exclusive  dealer  in  New  Zealand  for  products  made  by Caterpillar  Inc.  (Caterpillar),  and  has  held  that  dealership  since  1932.     The Caterpillar dealership and the business associated with it represents the largest business division of the Gough Group and is said to be critical to the group. Caterpillar representatives have expressed dissatisfaction with, among other things, disputes between members of the Gough family in connection with the business of the Gough Group.   The essence of the second defendant’s concern is that the Caterpillar dealership may be put at greater risk as a result of these proceedings and any attendant publicity.

[8]      As well as the present proceedings, there are separate proceedings in this

Court at Auckland over issues about the administration of the trust which hold the

1      Broadcasting Corporation of New Zealand v Attorney-General [1982] 1 NZLR 120 (CA).

2      At 122, line 45 to 123, line 11.

3      At 127, line 40, to 128, line 13.

4      Clark v Attorney-General 17 PRNZ 554 [name suppression].  Leave to appeal to the Supreme Court was refused:   see Clark v Attorney-General [2005] NZSC 4, 17 PRNZ 566 [leave to appeal].

5      Clark v Attorney-General [leave to appeal], above n 4, at [6].

majority of the shares in the second defendant.  These are described in the judgment of Associate  Judge  Smith  delivered  on  9 April  2014.6      The  second  defendant’s concern is that the outcome of the present proceedings before me may cause irreparable damage to the second defendant and its shareholders in circumstances where ultimately the point decided in these proceedings may be moot.  A temporary suppression is sought until the judgment in the Auckland proceedings is delivered.

[9]      The   present   proceeding   is   concerned   with   the   interpretation   of   the constitution of the second defendant.  That is not, of itself, a matter which has the potential to cause damage to the second defendant.  It is not the interpretation of the constitution per se, but rather the existence of the dispute as to the interpretation of the  constitution,  which  is  said  to  have  the  potential  to  cause  damage.    The constitution is a document of public record under the Companies Act 1993.  Any declaration by this Court about the interpretation of the constitution should similarly be a matter of public record.  That consideration weighs heavily against the making of the first order sought.  The fact that suppression is sought only for a limited period does not significantly diminish the weight of this point.  The declaration should in the absence of compelling reasons to the contrary become a matter of public record when it is made.

[10]     Reference  is  also  made  to  publicity  which  other  litigation  involving  the Gough family has received.  The fact that litigation may attract publicity which is unwelcome to the litigants is not of itself a ground for suppressing information about the litigation. As Lord Atkinson said in Scott v Scott:7

The hearing of a case in public may be, and often is, no doubt, painful, humiliating, or deterrent both to parties and witnesses, and in many cases, especially those of a criminal nature, the details may be so indecent as to tend to injure public morals, but all this is tolerated and endured, because it is felt that in public trial is to found, on the whole, the best security for the pure, impartial, and efficient administration of justice, the best means for winning for it public confidence and respect.

[11]     The publicity which the proceedings may attract is therefore not a factor which weighs in favour of the orders sought, even on an interim basis.

6      Strahl v McKinnon & Ors [2014] NZHC 730.

7      Scott v Scott [1913] AC 417 (HL) at 463.

[12]     Mr Taylor submits that, to the extent that Caterpillar is interested in the outcome of this proceeding, that interest can properly be protected when the final outcome of both proceedings is known, and the second defendant will be able to deal with Caterpillar on the basis of the two judgments.  I do not find that a persuasive consideration.  If the matter is of concern to Caterpillar, to the extent that it has an interest  in  knowing  of  the  proceedings  which  goes  beyond  the  general  public interest,  that  is  a  factor  which  weighs  against  making  an  order  which  would suppress, from a party with a genuine interest in knowing of the proceedings, the fact that the proceedings have been issued, and that a judgment has been delivered.  The Court should not lend its assistance to a process by which Caterpillar’s knowledge of the proceedings  is  managed  for the benefit  of  the second  defendant.    I do  not consider  that  any  concern  that  Caterpillar  may  become  aware  of  the  litigation provides a sufficient basis for a departure from the open justice principle.

[13]     It is also relevant that the Gough family have been aware, from at least 1986, that disputation within the family is of concern to Caterpillar.   The prospect that family disputes might put the dealership at risk must have been apparent to the family since then.   That consideration has not led the family to seek means of resolving their disputes without recourse to the Court.   Concern about Caterpillar’s reaction is not, in those circumstances, a factor which carries significant weight in favour of suppression.

[14]     Counsel  for  the  second  defendant  submits  that  it  is  a  party  to  these proceedings only because it is owned by the other parties and has a legitimate interest in the interpretation of its constitution.   It maintains that its role in these proceedings is closer to that of a disinterested third party than to a defendant with an interest opposed to that of the plaintiff.   I do not consider that is a factor which weighs in favour of the orders sought.  The Gough family hold all the shares in the second defendant.  The Gough family have engaged in this litigation, to which the open justice principle applies.  The interests of a wholly owned family company do not constitute a separate and independent interest which should be taken into account in applying that principle.  No family member has taken an active part in supporting the present application.

[15]     Mr Taylor also submits that the question being determined is unique to the parties and there is not a legitimate public interest in the outcome.   He further submits that the proceedings are analogous to a family or financial dispute where the Courts have been willing to depart from the principle of open justice.  I do not agree. As  I  have  noted,  the  proceeding  involves  the  interpretation  of  a  company constitution, which is a matter of public record, in which the public and all persons having dealings with the company have a potential interest.

[16]     The second order sought is suppression, on a permanent basis, of the fact of this present application, and of all the papers relating to it.  Mr Taylor submits that this is an interlocutory application which is of legitimate interest only to the parties. He further submits that there is commercially sensitive information in the affidavit filed in support.  I do not consider that the circumstances justify a departure from the open justice principle for this application.  While an interlocutory application may be heard in private, any judgment on that application will usually be made public.  This judgment must properly be delivered in public, so the fact of the application cannot be suppressed.   I am not satisfied that any of the information in the affidavit is commercially sensitive.  The information in paragraph 6 might potentially fall within that description, but that is not clear on the evidence before me.  The evidence about the nature of the second defendant’s concerns, and Caterpillar’s attitude, does not appear to be commercially sensitive information.  It is necessarily referred to in this judgment, which must be public.  I am not persuaded that a suppression to the extent sought by the second defendant is appropriate.  However, in case the information in the affidavit may be confidential in ways not apparent to me, I consider that it is appropriate to direct, under r 3.9(3) of the High Court Rules, that the affidavit not be accessed without the permission of a judge during the substantive hearing stage as defined in r 3.9(1).  Access after that stage will be subject to the grant of permission under r 3.13.

[17]     For these reasons, I am satisfied that it is not appropriate to make any of the orders sought.   The application is accordingly dismissed.   The interim direction which I gave on 6 June 2014 under r 3.9 is discharged.  In its place, I give a direction under r 3.9(3) that the affidavit of Mr Smith sworn on 3 June 2014 is not to be accessed in the period prescribed in r 3.9(1) without the permission of a judge.

[18]     So that the second defendant’s right to appeal against this judgment will not be rendered nugatory, neither this judgment nor the substantive judgment delivered at the same time will be distributed any further than to the parties until after 1 pm on

Friday, 27 June, 2014.

A D MacKenzie J