Sudan v West
[2025] NZHC 422
•12 March 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2023-404-000953
[2025] NZHC 422
UNDER the Companies Act 1993 BETWEEN
SUNNY SUDAN
Plaintiff
AND
ANNETTE WEST
First Defendant
360FIXIT LIMITED
Second DefendantWEST FACILITY MANAGEMENT LIMITED
Third Defendant
Hearing: 6 March 2025 Appearances:
P Rice for the Plaintiff
T Ashley for the First Defendant
Judgment:
12 March 2025
JUDGMENT OF ASSOCIATE JUDGE COGSWELL
This judgment was delivered by me on 12 March 2025 at 3.30 p.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date.......................................
Solicitors:
Gaze Burt, Auckland
B Parshotam, Auckland
P Rice, Auckland S Wroe, Auckland
SUDAN v WEST [2025] NZHC 422 [12 March 2025]
Introduction and Background
[1] The plaintiff and the first defendant are the two directors and shareholders of the second defendant, 360Fixit Limited (360Fixit). This proceeding concerns cross- allegations of oppressive conduct under s 174 of the Companies Act 1993 relating to 360Fixit.
[2] The issues are whether the affairs of 360Fixit have been conducted by either party in a manner that is oppressive, unfairly discriminatory, or unfairly prejudicial to the other and, if so, what is the appropriate remedy.
[3] The parties are agreed that the first defendant acquire the shares of the plaintiff. The contest is whether the shares should be valued at the date of an alleged “lock-out” in late 2021, at the date of the hearing, or some other time.
[4] The background to the dispute is that the plaintiff says he was locked out of the company by the first defendant in late 2021. He says that he has been prevented from participating in 360Fixit’s business. He says he was denied access to company information that he was entitled to as a director.
[5] The first defendant says that the plaintiff abandoned his duties on behalf of the company, attempted to induce employees and a franchisee to join him in his own business and pursued interests in competition with the business of 360Fixit.
[6] One event that features in the applications before the Court is the operation of the bank accounts of 360Fixit and the first defendant. Following the alleged lock out, the plaintiff arranged for a brief freeze on the bank account operated by 360Fixit.
[7] That freeze was lifted, but the first defendant then started using her own bank account for the company’s operations. She named one of her own bank accounts “360Fixit trustee” account, but it is accepted that this is not a trust account. Disclosure of the transactions on that account to the plaintiff has already occurred.
[8] However, the first defendant’s use of her own bank account for the company’s business has led to the plaintiff seeking to set aside her claims to confidentiality attaching to her other personal bank accounts.
[9] Both parties seek to support their respective arguments that the Court should exercise its remedial discretion in their favour by seeking evidence from the other that shows poor conduct, which they argue is or may be relevant to the Court’s exercise of its remedial discretion.
Current applications
[10]There are two applications before the Court.
[11]In the first, the first defendant seeks further discovery from the plaintiff.
[12] In the second, the plaintiff challenges the first defendant’s claim to confidentiality of two categories of documents disclosed in her list of documents.
First defendant’s application for particular discovery
[13] The first defendant seeks three categories of documents from the plaintiff that she says have not been discovered.
[14] As an initial point, the application should have been brought in reliance on r 8.19 of the High Court Rules 2016, but it refers to rr 8.14 and 8.15. The parties have agreed to treat the application as one for particular discovery under r 8.19 and the Court approaches the application on that basis.
[15]The application seeks:
(a)particular discovery from the plaintiff of:
(i)correspondence between the plaintiff and staff and/or contractors and/or franchisees of 360Fixit, including five named individuals;
(ii)work done by the plaintiff for 360Fixit’s clients and/or work of the same or similar type to be done by the first defendant between 27 September 2021 and 31 March 2023, including any correspondence between the plaintiff and Downers and/or Kāinga Ora or other clients (actual or potential) of 360Fixit;
(iii)financial records of the plaintiff and any company the plaintiff controls between 21 September 2021 and 31 March 2023 in relation to the first defendant’s allegations that the plaintiff undertook work for clients of 360Fixit and/or work that ought to have been undertaken by 360Fixit; and
(b)an order that the plaintiff provide a second affidavit of documents that complies with r 8.15 and gives particulars of the steps taken to fulfil his discovery obligation in relation to his first discovery affidavit.
[16] As the hearing proceeded, the documents sought at [15](a)(i) above were treated as one category and the documents sought at [13](a)(ii) and (iii) above were treated as one category. They are referred to as Category A and Category B documents in this decision.
[17] Under r 8.19 a Court may make an order for particular discovery after the proceeding has commenced, where:
[It] appears to a Judge, from evidence or from the nature or circumstances of the case or from any document filed in the proceeding, that there are grounds for believing that a party has not discovered one or more documents or a group of documents that should have been discovered …
[18] The starting point is the presumption that the affidavit of documents of the respondent is conclusive unless the applicant establishes otherwise.1 The burden is on the applicant to make out grounds for a belief that the respondent has not discovered documents that “should have been discovered”.2
1 Dodson Motorsport Ltd v Logical Performance Ltd [2018] NZHC 2331; McCullagh v Robt Jones Holdings Ltd [2015] NZHC 1462.
2 Plumpton v Terry [2016] NZHC 988.
[19] In determining whether the documents should have been discovered, the Court applies a four-step approach:3
(a)Are the documents relevant, and if so, how important will they be?
(b)Are there grounds for belief that the documents sought exist?
(c)Is discovery proportionate?
(d)Weighing and balancing these factors, is an order appropriate?
[20] Relevance is assessed by reference to the pleadings. For the purpose of the application, the case of the party seeking discovery is assumed to be true.4
[21]Regarding relevance, s 7(3) of the Evidence Act 2006 states that:
Evidence is relevant in a proceeding if it has a tendency to prove or disprove anything that is of consequence to the determination of the proceeding.
[22] So, with that approach in mind, the question is whether the first defendant has established:
(a)that the Category A or B documents are relevant; and if so
(b)that there are grounds for a belief that the Category A or B documents exist; and if so
(c)that discovery of the Category A or B documents is proportionate; and if so
(d)it is appropriate to make an order.
[23] The pleadings collectively make wide-ranging allegations of wrongdoing, mismanagement and abandonment of 360Fixit’s business. There are allegations that the plaintiff was locked out of the business, the first defendant has wrongly taken money from the company, the plaintiff failed to perform his obligations owed to the
3 Assa Abloy NZ Ltd v Allegion (New Zealand) Ltd [2015] NZHC 2760 at [14].
4 Business Control (Schweiz) AG v Shibalova [2022] NZHC 484 at [10]; and Assa Abloy NZ Ltd v Allegion (New Zealand) Ltd, above n 3, at [9].
company and tried to or did carry out work for clients that were either clients of 360Fixit or prospective clients that should have been referred to it.
Category A documents – correspondence between the plaintiff and staff / contractors / franchisees of 360Fixit
Are the Category A documents relevant?
[24] The first defendant alleges breaches of duty by the plaintiff as a director of the company by, inter alia, attempting to entice staff, clients, and a franchisee away from the company to a new company that he intended to form.5
[25] If documents exist that engage with this pleading, they are relevant. The plaintiff remains a director of the company and owes it a duty to act in good faith and in the best interests of the company.6 Acting to induce staff away from the business, acting to divert the company’s clients away from the business and attempting to have franchisees terminate their relationship with the company could be a breach of that duty.
[26]The documents, if they exist, are relevant.
Are there grounds to believe that Category A documents exist?
[27] The plaintiff’s position is that the documents do not exist. He has sworn an affidavit stating that7. He says that he has undertaken a search of his computer and telephone for any relevant emails and text communications and there are none. He specifically denies the existence of any documents in Category A.
[28] The first defendant relies on telephone conversations with two staff members and an oral conversation with a franchisee in support of her allegation that the plaintiff was acting in breach of duties owed to the company 360Fixit and that, therefore, there
5 First defendant’s statement of defence and counterclaim, paras 8(a)(iii), 8(a)(iv), and 9(c).
6 Companies Act 1993, s 131.
7 Plaintiff’s affidavit sworn on 14 November 2024, paras [1.3] and [6.3].
must be documents on that issue. She has obtained statutory declarations from those people setting out their recollection of events.
[29] The plaintiff admits that if there were written communications between him, the two employees and the franchisee, they would be relevant and discoverable to the extent they support the allegations pleaded in paragraphs [8] and [25] of the statement of defence and counterclaim. But the plaintiff has sworn an affidavit that there are no such documents.8
[30] The plaintiff further submits that discovery should not be ordered because the first defendant may be able to obtain the Category A documents from 360Fixit’s staff, from one of the named individuals or the franchisee directly. That is not correct; the fact that the documents may be obtained from another source does not excuse the party from giving discovery if the obligation to do so exists.
[31] The particular discovery enquiry requires the Court to be satisfied, first, that the Category A documents are relevant. The documents sought would be relevant.
[32] The next step in the inquiry is to determine, by evidence which the applicant bears the onus of proving, that there are grounds to believe that the Category A documents exist.
[33] There is no evidence of any documents to support the proposition that there are grounds to believe that the Category A documents exist.
[34] The first defendant has provided no evidence beyond the statutory declarations of the two staff members and the franchisee to support her allegations that there are Category A documents in existence. At most, the first defendant seeks to have the Court infer that such documents must exist as a result of the conversations recorded in the statutory declarations.
[35] Counsel submits that the existence of the Category A documents could be inferred from the evidence and the circumstances in which the parties operated. It is
8 Plaintiff’s affidavit sworn on 14 November 2024, paras [1.3] and [6.3].
accepted that such an inference may be drawn, but some proper foundation for the inference is required and, on the evidence, the required foundation is not laid.
[36] I agree with the plaintiff that the statutory declarations do not take the matter any further on the question of whether such documents exist. There is not one document identified by the plaintiff or the deponents to the statutory declarations that could put the Court on a train of enquiry to identify the existence of the Category A documents. There is no text message, no email, no document pointing towards the existence of the Category A documents.
[37] The first defendant’s application for an order for particular discovery of Category A documents fails, for want of any evidence that there are grounds to believe that Category A documents exist.
[38]There is one exception.
[39] The first defendant discovered various “WhatsApp” exchanges with the plaintiff. She says that the plaintiff must have those communications, as he was the other party to them and that they should be discovered.
[40] There is also a possibility that the plaintiff has other WhatsApp exchanges with staff / contractors / franchisees of 360Fixit.
[41] I accept that the first defendant has proven that there are grounds for a belief that the plaintiff may have WhatsApp communications with staff / contractors / franchisees of 360Fixit on the grounds that the first defendant and the plaintiff communicated by that medium and so he may have done so with the staff / contractors
/ franchisees of 360Fixit.
Is discovery of the Category A documents proportionate?
[42] The inquiry the first defendant seeks from the plaintiff on this type of document is not disproportionate. It is confined to WhatsApp communications with the plaintiff and with staff / contractors / franchisees of 360Fixit. It is not disproportionate to require parties to discover such documents if they exist.
Decision on Category A documents
[43] I order that the plaintiff give particular discovery of any WhatsApp communications with the plaintiff or with staff / contractors / franchisees of 360Fixit.
Category B documents – documents relating to work done by the plaintiff for 360Fixit’s clients and financial records of that work
[44]The first defendant seeks discovery of documents:
(a)relating to work done by the plaintiff for 360Fixit’s clients between 27 September 2021 and 31 March 2023, and/or “work of the same type or similar type” to that done by the first defendant, including correspondence between the plaintiff and Downer and/or Kāinga Ora or other clients (actual or potential) of 360Fixit; and
(b)the financial records of the plaintiff and any company he controls between the dates set out above that would tend to support or adversely affect either party’s case in relation to an allegation the plaintiff undertook work for clients of the company, or “to have been undertaken by the company”.
Are the Category B documents relevant?
[45] If their existence is proven, documents establishing that the plaintiff directed work that should have been undertaken by 360Fixit away from it to either NewVision Software Limited (NewVision) or some other entity related to him, would be relevant.
[46] The first defendant alleges in paragraph [28] of her statement of defence and counterclaim that the plaintiff “undertook work” at 360Fixit’s sites and did not disclose the fact of the work or income received, to 360Fixit. While not specific, I take the allegation to be that the plaintiff wrongly deprived 360Fixit of revenue and/or
diverted corporate opportunities to himself or his company, in breach of duties owed to 360Fixit.
[47] Any documents supporting the allegation that the plaintiff diverted 360Fixit’s clients or work to him or his related entities would be relevant. It could be a breach of duty by him as a director. That is the first type of document in Category B.
[48] If the first defendant can establish that the plaintiff did divert 360Fixit’s clients or work to him or his related entities, then the financial records relating to that work would be relevant, to establish 360Fixit’s losses. That is the second type of document in Category B.
Are there grounds to believe that Category A documents exist?
[49] However, again, the first defendant has not established a ground to believe that such documents exist.
[50] The first defendant has provided five short video clips. They are said to support an allegation that the plaintiff is carrying out work that should be 360Fixit’s work.
[51]I have viewed the videos. They do not support that allegation.
[52] The plaintiff has given evidence that NewVision has two clients, Downer and Universal Communications Group (UCG). NewVision’s business is the provision of network connections to Chorus’ internet network.
[53] The plaintiff operated that business for two years before going into business with the first defendant. He operates it now. It does not compete with the business of 360Fixit. There is no diversion of corporate opportunity, even on a very broad interpretation of that term. The work that NewVision performs is not work that 360Fixit could take up. To hold that would mean that the plaintiff could not operate his business at all, a business that he operated before entry into the business relationship with the first defendant.
[54] While Downer is a client of both 360Fixit and NewVision, that does not make the separate business records of NewVision discoverable in this litigation. NewVision is not a competitor of 360Fixit; it does not do the same work as 360Fixit and so there is no credible evidence of the diversion of corporate opportunity away from 360Fixit to NewVision or the plaintiff.
[55] The fact that the plaintiff was at a site with Downer personnel or vehicles does not take matter any further. The plaintiff explains that Downer was doing its own work on that site and NewVision was doing its own work. NewVision was installing fibre optic cable. Downer was performing its own services. Kāinga Ora is not a client of NewVision.
[56] The plaintiff’s evidence on this point is persuasive and credible.9 NewVision’s business was the installation of fibre optic cable to private residences in the Chorus network, on behalf of Downer and UCG. There is no evidence to suggest that any other type of work was being carried out by NewVision, much less work being carried out that should have been done by 360Fixit.
[57] The plaintiff says that he went back to that work after being wrongly “locked out” of 360Fixit’s business. I do not need to make a determination on the lock out point, but do find that the plaintiff has demonstrated that the work done by NewVision is not work that would have or should have been done by 360Fixit.
[58] In relation to the financial records of NewVision, the plaintiff says that those records are irrelevant to the pleaded issues, as NewVision does not undertake work of a similar type carried out by 360Fixit and there is no evidence to suggest that it did.
[59] As there is no evidence at all to suggest that NewVision was carrying out work that properly should have been carried out by 360Fixit, there is no justification for requiring the disclosure of NewVision’s financial records to the first defendant.
9 Plaintiff’s affidavit sworn on 14 November 2024, paras [4.2] – [4.4], [5.5] and [5.6].
Decision on Category B documents
[60]The application for particular discovery of Category B documents is declined.
Application that plaintiff clarify the steps he took to comply with his discovery obligations
[61] Rule 8.15 obliges a party giving discovery to set out the particulars of the steps taken to fulfil the obligations imposed by this rule.
[62]The plaintiff’s affidavit of documents sworn on 22 March 2024 states:
In order to fulfil those obligations, I have arranged a diligent search for all documents required to be discovered under the discovery order.
[63] The first defendant says that statement is not in compliance with r 8.15(2)(c) as it fails to specify who undertook the search that the plaintiff arranged and fails to say what searches he undertook. The first defendant says that she cannot assess whether the plaintiff’s search for documents was adequate, based on this statement.
[64] She outlines in her affidavit of documents with more specificity the searches she carried out. However, it is not surprising that she was able to carry out more detailed searches, as she controls the company and has access to its computer systems, email and hard copy documents. The plaintiff does not.
[65] The plaintiff responded to the criticism about his compliance with r 8.15(2)(c) in his affidavit sworn on 14 November 2024. The plaintiff states:
I undertook the search myself. It involved searching my computer and telephone for any relevant emails and text communications.
[66] I consider that this clarifying statement is adequate compliance with r 8.15(2)(c). I do not order the plaintiff to file further affidavit of documents giving further particulars of the steps he took to comply with his discovery obligations.
[67]That part of the application is declined.
Application by plaintiff challenging claim to confidentiality
[68] The plaintiff seeks to have the first defendant’s claim to confidentiality in her discovery affidavit set aside.
[69]The documents are:
(a)job sheets for 360Fixit and the third defendant;
(b)the first defendant’s personal bank statements.
[70]The application is opposed by the first defendant on the basis that:
(a)The job sheets are the company’s “key operational records” containing details of company work sites, tasks undertaken, contact details for clients and subcontractors, amounts billed by subcontractors, and mark- ups taken by the companies, that disclosure of those job sheets to the plaintiff risks prejudice to the first defendant and that the financial information required to understand the company’s financial performance is obtainable from the financial statements already disclosed.
(b)Her personal bank accounts contain private personal information, but she is willing to disclose them to the plaintiff’s counsel and experts.
[71] Rule 8.25 provides a procedure to challenge a claim for confidentiality made in an affidavit of documents. The Court may set aside, modify, or dismiss the challenge to confidentiality or make any other order with respect to the document that the Court thinks just.
[72] Counsel refer to a two stage approach summarised by Gault J in Payment Express Ltd v Paymark Ltd.10
10 Payment Express Ltd v Paymark Ltd [2019] NZHC 2027 at [21].
[21] On a challenge to confidentiality claims in discovery, the Court must first decide whether the documents are confidential. As Mr Hodder accepted, the party claiming confidentiality bears an initial onus to make out the requirements of its confidentiality claims. Once that is done, there is a balancing exercise in relation to prejudice. At that balancing stage, to the extent there is an onus, it is on the applicant seeking to set aside the confidentiality claim. But that is not to downplay in the balancing exercise the importance of the interests of justice in ensuring that a party is able to prepare and present its case … advisers are agents in the matter and strong grounds must be required for excluding the principal from knowledge which its agents properly acquire on its behalf.
[73] The onus is on the party seeking a restriction on inspection because of confidentiality to show that the documents have the necessary confidential character. A proper evidential foundation for the claim must be laid.11 Once that is done, there is a balancing exercise in relation to prejudice. That balancing exercise includes the party’s ability to prepare and present its case.12
[74] Confidential information is information which has “the necessary quality of confidence about it, in the sense that it is not ‘something which is public property and public knowledge’”.13
[75]The Court can consider various factors:
(a)the importance of open justice.
(b)the ability of the party seeking to lift the restrictions to fully understand their case and the case against them, and the ability of their legal advisors to take full instructions.
(c)any prejudice that could arise from disclosure.
Job sheets
[76] The first defendant seeks to protect the job sheets from inspection because they contain commercially sensitive information about 360Fixit’s business and because the
11 Port Nelson Ltd v Commerce Commission [1994] 7 PRNZ 344 (CA) at [348].
12 Beverley v DC One H1 Ltd [2024] NZHC 3363.
13 AB Consolidated Ltd v Europe Strength Food Co Pty Ltd [1978] 2 NZLR 515 (CA) at [525]; Evidence Act 2006, s 69.
information is contained in the financial statements of 360Fixit that have already been disclosed. The first defendant expresses concern that the plaintiff will compete with 360Fixit. I have already found that there is no evidence to support that concern.
[77] The position regarding job sheets is relatively straightforward. Both parties remain directors and shareholders of 360Fixit. They are not confidential as between directors.
[78] The disclosure is relevant to the issues between the parties (broadly cast as they are currently) because the job sheets are primary evidence from which information is drawn to generate the financial statements of 360Fixit. They are source documents.
[79] The information contained in the job sheets serves as an important cross-check against the secondary financial information disclosed in the financial statements and will enable the plaintiff’s forensic expert to assess the reliability of the financial information disclosed for the purpose of valuing the shares of 360Fixit.
[80] As a director and as a litigant in proceedings he is entitled to that relevant information. Whether or not the job sheets contained information of a commercially sensitive nature does not restrict the plaintiff’s entitlement to view those documents in this litigation. They are relevant. They may be probative to the issues between the parties.
[81] The first defendant seeks to restrict access to the job sheets on the ground that the plaintiff may use that information to the detriment of her or 360Fixit. There is no evidence that the plaintiff is operating a competing business. There is no ground to protect the documents on that basis.
[82] The first defendant says that as a director the plaintiff is entitled to inspect “records of the company” in accordance with s 191 of the Companies Act 1993, but that “company records” are set out in s 189 of the Companies Act and do not include the job sheets. The first defendant says that financial statements are available under s 189(1)(h) and have been disclosed.
[83] The first defendant says further that the accounting records required by s 194 are available but that the job sheets do not fall within the definition of accounting records under s 194 and so are not available to the plaintiff.
[84] She adds that under s 191, access can be denied if the plaintiff’s purpose in seeking inspection is not for a purpose properly connected with the director’s duties.
[85] These arguments are not accepted. They conflate the plaintiff’s roles as director and as a litigant to this proceeding. The job sheets are available to the plaintiff as a party to this proceeding. They are available to the plaintiff as a director as well. The business of the company must be managed by the board.14 The board is both directors.15
[86] The definitions of “records of the company” or “accounting records” do not exclude the job sheets. The reference to “company records” in s 189 is not exhaustive or exclusive, it is inclusive.
[87] Under s 194, the board of a company must keep accounting records that, inter alia, correctly record the transactions of the company and enable the company to ensure that the financial statements comply with generally accepted accounting practice. That could include the job sheets.
[88] Job sheets are records of the company’s transactions, clients, mark up, profit margins and so on, all of which are used to generate the financial statements of the company. They fit within the definition of either “company records” or “accounting records”.
Decision on confidentiality attaching to job sheets
[89] I consider that the job sheets are company documents that the plaintiff, as a director and as a party to the proceedings, is entitled to inspect.
14 Companies Act 1993, s 128.
15 Companies Act, s 127.
[90]I set aside the first defendant’s claim to confidentiality over the job sheets.
[91] There will be an order that the first defendant discover the job records of 360Fixit and the third defendant.
Bank statements
[92] The first defendant objects to the release of her personal bank statements on the grounds that they contain private personal information and are her personal accounts which were not used by the company. She says she has a reasonable expectation of privacy and so they should be protected from disclosure.
[93] The first defendant concedes that following the dispute arising between the parties, she diverted the company’s business transactions from 360Fixit’s account to her own private bank account. She says that this was in response to the plaintiff arranging a stop on the company’s bank accounts. That stop only continued for a few days.
[94] She nonetheless persisted with using her own account with the BNZ Bank that is described as “360Fixit trustee” account but which is in fact just a subaccount of her own personal account. It is not a trust account.
[95] The first defendant filed a memorandum following the hearing clarifying the bank accounts that she operates. They are:
(a) ANZ 01-_ (also -52, -55, -56).
(b)BNZ 02-.
(c)BNZ 02-(“360Fixit trustee” account).
(d) BNZ 020-.
(e) BNZ 020-.
[96] She has already given the plaintiff disclosure of the bank statements for “360Fixit trustee” account, being BNZ 02-.
[97] But she resists disclosing any of her other bank statements to the plaintiff on the grounds that they contain personal, private, information.
[98] She says that she is also in litigation with her ex-husband and that the plaintiff has previously disclosed confidential information to him and is likely to do that same with her personal, private, bank information, to her detriment.
[99] The plaintiff accepts that he discussed the company’s business with the first defendant’s ex-husband and one of the company’s staff but says that no confidential information was disclosed, rather that he was discussing what had happened and that he was locked out of the company by the first defendant.
[100] Both these alleged disclosures occurred before the current litigation was commenced and so I draw no conclusion about the plaintiff’s likelihood of complying with r 8.30(4). The alleged previous disclosure is subject to different considerations of confidentiality and disclosure than that imposed on documents disclosed in litigation under r 8.30(4).
[101] The plaintiff says that he needs access to the first defendant’s personal bank accounts because he wishes to verify any other transactions that may be related to the business of 360Fixit and that he is entitled to undertake that exercise to prepare his case for trial. By reference to Beverley v DC One H1 Ltd, the prejudice to one party in not being able to prepare their case is a relevant consideration.16
[102] The plaintiff says that he needs to see all accounts to determine if 360Fixit funds were diverted to other accounts in the control of the first defendant and if the first defendant has used company funds for unauthorised purposes, for example, to buy or renovate property.
16 Beverley v DC One H1 Ltd [2024] NZHC 3363 at [135].
[103] Whilst I have some sympathy for the position the first defendant finds herself in regarding disclosure of potentially private personal information from her bank accounts, she has been the author of her own misfortune in that regard. Her decision to divert the company’s banking business from the company’s own bank account and instead use her own bank accounts exposes all of her accounts to scrutiny.
[104] The effect of her doing so was to deprive the plaintiff of visibility of the company’s financial affairs other than through the financial statements, which may or may not record all transactions. Viewing the first defendant’s bank records will enable that cross-check process to occur. It is the first defendant’s actions that have caused the need for her otherwise private personal bank records to become relevant.
[105] If confidentiality is to be set aside the first defendant has sought that inspection of her personal bank accounts be restricted to only the plaintiff’s counsel and his professional advisors.
[106] The plaintiff resists that restriction on the basis that he needs to inspect the entries in the bank statements to attempt to identify parties to whom funds may have been paid and whether they are being paid with company funds. He says that there is an allegation that the first defendant has been paying family members or associates with company funds and that an independent expert may not necessarily identify such payments unless they are able to understand who the various recipients are in relation to the first defendant.
[107] The first defendant says that, as a fall back, she could accept that an independent expert reviewing the bank statements could refer specific queried transactions to the plaintiff for him to comment on them. However, that approach would assume that the independent expert knew enough about the background and the relationships to even identify that a particular transaction was suspicious or needed further information.
[108] Rule 8.30(4) provides that a party who receives copies of discovery documents under this rule may only use them for the purposes of the proceeding and may not
make them available to any other person unless the document has been read out in open court.
[109] To act contrary to r 8.30 would be a contempt of Court and could justify a “claim on what might well be a strict liability basis for open-ended losses that could be proven to have flowed from unauthorised disclosure”.17
[110] An additional protection to preserve the confidentiality of documents was provided by the Court in Donovan Group NZ Ltd v Reid where the Court required an undertaking from the party seeking disclosure before the documents could be inspected.18
[111] The plaintiff has deposed that he is prepared to give an undertaking that he will not disclose to the first defendant’s ex-husband or any other person other than his professional advisors any information obtained from inspecting the first defendant’s bank accounts.
[112] I intend to grant the plaintiff’s application to set aside the first defendant’s claim to confidentiality over her personal bank statements, on the following terms:
(a)the first defendant’s claim to confidentiality over her personal bank statements is set aside; and
(b)before the first defendant’s personal bank statements are disclosed to the plaintiff, he must give an undertaking in the following form:
“I, Sunny Sudan, plaintiff in proceeding CIV 2023-404-953 (proceedings), irrevocably undertake, subject to any orders of the Court or further agreement of the parties, in relation to the first defendant’s personal bank statements (the bank statements) required to be disclosed in the proceedings:
I will inspect the bank statements disclosed under discovery solely for the purpose of the proceedings.
17 Biggs v Biggs [2018] NZHC 1592, citing Todd Petroleum Mining Co Ltd v Vector Gas Trading Ltd [2017] NZHC 1129 at [65].
18 Donovan Group NZ Ltd v Reid [2020] NZHC 3367 at [64].
Any copies I receive of the bank statements and any knowledge I gain of the contents of the bank statements, will be used solely for the purpose of the proceedings.
I will safeguard the bank statements and any copies thereof and will not at any time disclose the bank statements or copies or the contents thereof, in whole or in part, to any person without first obtaining the consent of the defendants in the proceedings, or an order of the Court allowing disclosure, or as is required by any law, rule, or regulation to do so.
I may disclose the content of the bank statements or any copies thereof and discuss the contents of the bank statements with the Court, with my counsel or any professional advisor engaged by me to advise on the proceedings and, in the case of any professional advisor engaged by me to advise on the proceedings, who has first provided a signed undertaking in this form to the solicitors for the plaintiff in the proceedings.
If any of the bank statements are scanned or imaged and converted to electronic form for the purpose of the proceedings, these will be held by me in a secure form, and will not be further copied or transmitted and will remain in my possession and subject to my control at all times.
Dated:
Sunny Sudan”
[113] The first defendant’s personal bank statements are to be released to the plaintiff on receipt by the first defendant of a written undertaking in this form and signed by the plaintiff. The bank statements are those relating to the following accounts:
(a) ANZ 01-_ (also -52, -55, -56).
(b)BNZ 02-.
(c)BNZ 02-(“360Fixit Trustee” account).
(d) BNZ 020-.
(e) BNZ 020-.
Costs
[114] The first defendant has had only partial success on her application for particular discovery.
[115] The plaintiff has had success on his application to challenge the confidentiality claimed by the first defendant.
[116] The parties are to liaise regarding costs, and if they are unable to agree on costs, they may file sequential memoranda seeking costs to the following schedule:
(a)Any party seeking costs against the other is to file a memorandum seeking costs, of no more than five pages in length.
(b)Any party resisting a costs application is to file a memorandum of no more than five pages in length 5 working days later.
[117]The Court will determine costs applications on the papers.
Associate Judge Cogswell
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10
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