Tourplan Pacific Limited v Australian Tours Management Pty Limited
[2017] NZHC 2210
•13 September 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2016-404-000650 [2017] NZHC 2210
BETWEEN TOURPLAN PACIFIC LIMITED
First Plaintiff
TOURPLAN CENTRAL SERVICES LIMITED
Second Plaintiff
AND
AUSTRALIAN TOURS MANAGEMENT PTY LIMITED Defendant
Hearing: 23 June 2017 (last submissions 17 August 2017) Appearances:
C Elliott QC and S C Laing for Plaintiffs
I M Gault and C M Cattin for DefendantJudgment:
13 September 2017
JUDGMENT OF COURTNEY J
This judgment was delivered by Justice Courtney on 13 September 2017 at 11.30 am
pursuant to R 11.5 of the High Court Rules
Registrar / Deputy Registrar
Date……………………….
TOURPLAN PACIFIC LTD & OR v AUSTRALIAN TOURS MANAGEMENT PTY LTD [2017] NZHC 2210 [13 September 2017]
Introduction
[1] The plaintiffs, Tourplan Pacific Ltd and Tourplan Central Services Ltd (together Tourplan), have applied for orders requiring the defendant, Australian Tours Management Pty Ltd (ATM), to give further and better discovery and requiring it to answer interrogatories.
[2] Tourplan also sought an order setting aside ATM’s claim to confidentiality in respect of documents disclosed by it. The parties agreed at the hearing that this could be resolved by consent and I made an order by consent that ATM’s solicitors are to provide to Tourplan a list of documents that are confidential and not to be disclosed beyond lawyers, patent attorneys and experts.
Application for leave to file further documents
[3] Nearly two months after the hearing of the applications Tourplan applied for leave to file a memorandum annexing several further documents that they submit ATM should have disclosed on the ground that these documents reaffirm Tourplan’s belief that ATM has failed to fulfil its discovery obligations to the Court.
[4] The Court has a broad discretion to allow further evidence in a civil proceeding under s 98(2) of the Evidence Act 20061 but I do not consider that leave is appropriate in this instance. ATM would need an opportunity to respond to the application, which would delay release of this judgment further. More importantly, Tourplan has already provided several documents that they say ATM ought to have disclosed; the new documents would not alter Tourplan’s position in any material way, but merely reaffirm the argument submitted at the hearing. Also, there was no explanation given as to why this evidence was not available prior to the hearing.
Nature of substantive proceedings
[5] Tourplan Central Services Ltd is a small Christchurch-based software company that produces a destination management software product for the global tourism industry (the Tourplan software). Tourplan Pacific Ltd is the sub-licensor
for Tourplan software in the Pacific region.
1 See the discussion of Osborne AJ in Lindsay v Noble Investments Ltd [2014] NZHC 799 at
[115]–[130].
[6] The Tourplan software is sub-licensed to around 60 clients in New Zealand, Australia, and the Pacific Islands. Until recently ATM was a user of the Tourplan software under a licensing agreement entered into in 2001 between ATM’s predecessor company (known by the same name) and Tourplan Pacific Ltd.
[7] In 2008, ATM’s predecessor company was purchased by Kuoni Travel Holding Ltd (Kuoni), a Swiss-based global tourism group. ATM was formed, and the licenses to use the Tourplan software assigned to it. ATM continued to use the Tourplan software until around 2015. In the meantime, Kuoni designed and produced its own software product for the tourism industry, called Passion. Passion performs a substantially similar function as the Tourplan software. The product was distributed through its related businesses, including to ATM.
[8] Tourplan alleges that Kuoni substantially copied the Tourplan software in developing Passion and that ATM assisted in the development using confidential information relating to the Tourplan software. Specifically, Tourplan alleges that ATM provided detailed and targeted feedback during the development of Passion to make it substantially similar to Tourplan. In doing so, ATM breached its licensing agreement with Tourplan Pacific Ltd.
[9] In these proceedings, Tourplan alleges breach of contract, repudiation, breach of trust and confidence, passing off and breach of copyright. Tourplan has also applied for joinder of further defendants, including Kuoni. That application is set down for hearing on 22 September 2017.
Application for orders for further and better discovery
[10] Tourplan served the proceedings in April 2016. Since then, consent orders have been made to allow for changes to timetabling six times. A large part of the delay can be attributed to issues with discovery. Between them, the parties have filed seven affidavits as to discovery; four by ATM, three by Tourplan.
[11] Initial disclosure by ATM on 2 June 2016 included only two documents. Tourplan say that ATM has been “drip-feeding” documents. Mr Gault, for ATM, rejects this characterisation and says that discovery from both parties has been on a rolling basis. Either way, discovery has been protracted.
[12] Tourplan seeks a verified list of all documents relating to the matters set out in Schedule 1 to their application, which are:
1.Documents relating to discussions between ATM and Kuoni regarding the Passion project, on or about September 2013 or prior to September 2013, referred to at Sch 2(a) below.
2. Documents relating to introducing Passion to ATM staff in
September 2013 – February 2014, referred to at Sch 2(b) below.
3. Documents relating to the visits referred to at Sch 2(g)(i) below.
4. Documents relating to the calls and meetings referred to at Sch
2(h)(i) below.
5. The agreement dated 20 January 2014 referred to in TP1.182.
6.Manuals, including testing guides, training guides, and training videos for each of the Passion modules.
7.The functional specification for Passion and any other documents produced during the ‘Requirement Analysis/Validation’ and ‘Design’ phases specified under D.3 in the Statement of Work for Development and Implementation of Inbound Travel Management System dated 30 July 2012 between Kuoni Travel Holding Ltd and NIIT Technologies FZ LLC.
8. The Passion database schema.
9. The Passion survey issued by Kuoni (Roman Stoll) and answered by
ATM staff in February 2015.
10.Emails where attachments referred to at a top or lower level have not been supplied, including [list provided].
[13] Tourplan also seeks an affidavit from the defendants stating:
(a) whether any of the documents identified in Schedule 1 and the correspondence referred to therein are not in the possession of the defendant;
(b) if so, what steps have been taken to properly verify whether they are not in the possession of the defendant;
(c) if they did exist but are no longer in its possession, custody or power, when it parted with them, how they did so and what has become of them; and
(d) whether the defendant has made all reasonable inquiries and efforts to obtain from its parent company, Kuoni Travel Holding Ltd, all relevant documentation that the defendant does not have in its possession.
[14] Orders for further discovery are provided for under r 8.19 of the High Court
Rules 2016:
If at any stage of the proceeding 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 1 or more documents or a group of documents that should have been discovered, the Judge may order that party —
(a) to file an affidavit stating—
(i) whether the documents are or have been in the party’s
control; and
(ii) if they have been but are no longer in the party’s control, the party’s best knowledge and belief as to when the documents ceased to be in the party’s control and who now has control of them; and
(b) to serve the affidavit on the other party or parties; and
(c) if the documents are in the person’s control, to make those documents available for inspection, in accordance with r 8.27, to the other party or parties.
[15] In Assay Abloy New Zealand Ltd v Allegion (New Zealand) Ltd Asher J suggested the following four-stage approach in considering an application under r 8.19:2
(a) Are the documents sought relevant, and if so how important will they be?
(b) Are there grounds for belief that the documents sought exist? This will often be a matter of inference. How strong is that evidence?
(c) Is discovery proportionate, assessing proportionality in accordance with Part 1 of the Discovery Checklist in the High Court Rules?
(d) Weighing and balancing these matters, in the Court’s discretion
applying r 8.19, is an order appropriate?
[16] The starting point for dealing with applications for further discovery is the presumption that the affidavits of documents already filed are conclusive.3 It is, however, common ground that ATM has not disclosed a number of documents it might otherwise have been expected to disclose in this proceeding on grounds that it
does not now have those documents in its control. Tourplan has provided documents
2 Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd [2015] NZHC 2760 at [14].
3 Jones v the Monte Video Gas Co (1880) 5 QBD 556 (CA).
authored by ATM that must, at least at one time, have been in ATM’s control but which have not been discovered by it. ATM says that these documents are no longer in its control because of its protocols around deletion of electronic documents.
[17] According to affidavits from ATM’s financial controller, Mr Cheong, there is an ATM protocol whereby documents deleted from ATM computers are retained on an external server for fourteen days and then permanently deleted. In Mr Cheong’s first supplementary affidavit of documents of 19 September 2016, he affirms:
6.In the course of completing this discovery affidavit I was advised that documents which were deleted in the ordinary course of business from ATM’s servers are retained for fourteen days on an external server and then automatically deleted. At the time of affirming this affidavit, I am still waiting to hear finally whether it is possible to recover ATM’s documents following deletion from that external server.
7.If deleted items referred to in paragraph 6 above are recoverable, they will be searched and reviewed for relevance and a further supplementary affidavit provided.
[18] Part 4 of the attached Schedule adds:
Emails between ATM and IT support personnel (who operate out of India as part of the Kuoni Destination Management group) relating to technical issues with the Passion Software which were deleted in the ordinary course of business and stored on an external server which I have been advised was decommissioned in or around October 2015.
[19] In his second supplementary affidavit of 28 October 2016, Mr Cheong adds:
5.In paragraph 7 of my first supplementary affidavit, I noted that if items deleted from ATM’s servers were recoverable I would provide a further supplementary affidavit. Subsequent to affirming that affidavit, I was advised that some deleted items were able to be recovered which I then provided to the solicitors to review.
[20] Tourplan expresses concerns about this explanation. It seems an unusually severe protocol; why were so many documents deleted, including so soon after their creation? Why was the server decommissioned, on what date, and on whose order? How is it that some documents were able to be recovered, while others were not?
[21] There are, clearly, inadequacies in ATM’s explanation. Mr Cheong’s explanation amounts to a paragraph simply saying that the documents have been deleted and there is no way to recover them. There is no detail as to where he
obtained this information or the steps taken to try and recover documents. The affidavit is provided by ATM’s finance controller, rather than by anyone involved in IT. There is no information as to whether independent IT experts have been engaged. There is no confirmation of any discussion between ATM and its server provider nor correspondence documenting ATM’s server protocol, as might be expected. There is no explanation as to why some documents have been able to be recovered while others have not.
[22] Mr Gault accepted that the affidavit was inadequate in its current form and that a more comprehensive explanation in a further affidavit is required. He submitted that ATM would provide such an affidavit, thus obviating the need for further discovery orders. But ATM has had considerable time to provide this explanation.
[23] Mr Elliot QC, for Tourplan, says that the inadequacy of the explanation given thus far gives reason to doubt that ATM has discovered all relevant documents. He says that Tourplan has reasonable grounds for believing that a more robust discovery process might lead to discovery of further relevant documents. On this basis another affidavit without further discovery orders would be insufficient.
[24] As a starting point, I consider that Tourplan have displaced the presumption that the affidavits of documents already filed are conclusive. Against that background I consider the steps listed by Asher J in Assa Abloy.
[25] The first issue is relevance, which is to be determined by reference to the matters in issue between the parties.4 There is no dispute that the documents sought by Tourplan would be relevant and likely of significant importance to their case if they exist.
[26] Secondly, there are grounds for belief that the documents sought do exist. Such grounds are established from the nature or circumstances of the case or from any document filed. There is no requirement that this has to be established on the
balance of probabilities or on a more likely than not basis; the threshold of “grounds
4 Simunovich Fisheries Ltd v Television New Zealand Ltd (No 6) HC Auckland CIV-2004-404-
3903, 3 August 2007 at [16].
for belief” is not that high.5 What is, first, required is “that there is some credible evidence which assessed objectively indicates that the documents that are sought exist”.6 The threshold does not require Tourplan to establish existence of the documents on the balance of probabilities. They are merely required to show that there is some credible evidence that documents sought exist.7
[27] The next question, of control, is also established against the threshold of “grounds for belief”. Any higher test would render the “grounds for belief” test for existence nugatory. Rule 8.19, itself, makes this clear. A judge can make the order if “there are grounds for believing that a party has not discovered … documents that should have been discovered”. Parties are required to disclose documents that are or have been in that party’s control.8 A judge may therefore make the order if there are grounds for believing that a party has not discovered documents in a category indicated and in that party’s control.
[28] I am satisfied that there are grounds for the belief that the documents sought by Tourplan exist. The documents fall into two categories. Some particular documents explicitly listed, such as the Passion database schema, the Passion survey, and the attachments to emails discovered, undoubtedly exist, as acknowledged by ATM.
[29] Tourplan also seeks categories of documents that it infers exist, but that do not refer to particular known documents, for example documents relating to the introduction of Passion to ATM staff or documents relating to ATM’s offices or international visits. I am of the view that there is a reasonable inference that documents that fall within the categories listed exist. It is difficult to believe, for example, that there would be no electronic or written communication about meetings in or visits to the ATM offices, particularly where the visitor was coming from a
different city or country.
5 Assa Abloy New Zealand Ltd v Allegion, above n 2, at [12].
6 Assa Abloy New Zealand Ltd v Allegion, above n 2, at [12].
7 Assa Abloy New Zealand Ltd v Allegion, above n 2, at [12].
8 High Court Rules 2016, r 8.10.
[30] The more contested question is whether the documents are or have been in ATM’s control. The threshold should be the same as previously discussed.9 The concept of control is defined under r 1.3(1) of the High Court Rules:
(a) possession of the document; or
(b) a right to possess the document; or
(c) a right, otherwise than under these rules, to inspect or copy the document.
[31] Mr Gault accepted that a large number of the documents sought have previously been in ATM’s control. He maintains, however, that those documents are not in ATM’s control currently.
[32] The relevant rule for tailored discovery, r 8.10, requires parties to disclose documents “that are or have been in that party’s control”. It would appear that all that is required, therefore, is grounds for belief that the documents have been in the party’s control, as Osborne AJ stated in Southland Building Society v Barlow Justice Ltd.10 That is clearly established.
[33] Even if the question is whether there are grounds for belief that the documents are currently in ATM’s control, I am of the view that there are grounds for that belief given the inadequacy of the explanation given for why or how they have been removed from ATM’s control, as well as the inadequacy of that given for why ATM has been able to recover some documents and not others.
[34] The third consideration is whether the discovery sought is proportionate. I accept that there will be a burden on ATM in checking whether the documents exist in their control. But there are limited documents available to the plaintiff because of the discovery issues canvassed. Any documents found may be highly significant in the case. Given these circumstances, it is proportionate to require ATM to attempt to locate the documents.11
[35] Finally, balancing these factors, I conclude that the discovery sought should
be ordered. The documents, if they are in ATM’s control, could be highly relevant to
9 Lyttelton Port Co Ltd v Aon New Zealand [2016] NZHC 2996 at [13]; Southland Building
Society v Barlow Justice Ltd [2013] NZHC 1125 at [13].
10 Southland Building Society v Barlow Justice Ltd, above n 9, at [13].
11 Having regard to High Court Rules 2016, r 8.10 and Schedule 9.
Tourplan’s case. Given the high degree of relevance, and the limited scope of documents currently provided, the costs and delay involved in carrying out the discovery exercise are appropriate. If the documents are not in ATM’s control, “its agents” will be required to provide an affidavit per r 8.19(a) stating further details about those particular documents.
Interrogatories
[36] On 10 November 2016 Tourplan served a notice to ATM to answer interrogatories. ATM answered the interrogatories by way of an affidavit from its financial controller, Mr Cheong, dated 16 December 2016.
[37] Tourplan seeks answers to a second set of interrogatories listed in Schedule 2 to the application. This includes eleven “categories” of interrogatories. By my count, there are well over 100 individual questions contained in the list, including a category that lists 11 visits and then requests five pieces of information about each visit.
[38] Interrogatories are provided for in the High Court Rules at rr 8.34 – 8.46. As Tourplan has already asked for one set of interrogatories, it now seeks an order requiring ATM to answer a second set.12 The Court has a discretion as to whether to make the order or not, and the Judge must not make an order unless satisfied that the order is necessary at the time when it is made.
[39] The Court of Appeal summarised the relevant principles in Todd Pohokura
Ltd v Shell Exploration NZ Ltd:13
[14] … An interrogatory is a question asked before trial for the purpose of eliciting an answer on oath or affirmation which is admissible in evidence at trial. Like all questions, it must be directed towards advancing one side’s case or damaging the other’s case. It must accordingly be relevant to an issue raised on the pleadings or a fact in dispute for determination.
[15] An interrogatory must also, like a question in cross-examination, be precise and unequivocal, and amenable to a direct and meaningful answer from information within the knowledge of or reasonably available to the person required to answer. It must not place unnecessary or burdensome obligations on the interrogated party, or be prolix. And its purpose must not be to search or probe on the speculative basis that an answer may prove
12 High Court Rules 2016, r 8.38.
13 Todd Pohokura Ltd v Shell Exploration NZ Ltd [2009] NZCA 561.
relevant (colloquially known as fishing). A question which offends these elements will fall within the general category of oppressiveness.
[16] An interrogatory is an exception to the settled manner of adducing evidence and in particular to a defendant’s right not to call evidence at trial. Accordingly the Court must be satisfied that the interrogatory is necessary where an application to issue interrogatories is opposed: r 8.5 High Court Rules. A material consideration is whether briefs of evidence will be given by the party to be interrogated. Moreover, an interrogatory is not to be confused with a request for further particulars.
Some questions already answered
[40] ATM submits that a number of interrogatories are not permissible as they have already been fully answered by ATM in response to the first set of interrogatories. I agree that some of the interrogatories are not permissible on this ground, although not all that ATM has identified. For this reason I would disallow questions (e)(iii)–(iv), (f)(i) and (i)(v).
[41] For example, questions (e)(iii) and (iv) ask:
(e)(iii) Did ATM contribute in any way to the development, design or improvement of Passion?
(e)(iv) If the answer to (e)(iii) is “yes”, what was ATM’s role in contributing
to the development, design, or improvement of Passion?
[42] ATM had already responded to the same questions in the first set of interrogatories by referring to its answer to another interrogatory, which asked “Were design changes made to Passion (either directly or indirectly) as a result of incorporating features, principles, ideas or expressions thereof found in Tourplan?”. The answer to that question said:
ATM’s involvement with the Passion software is limited to being an end- user. Each authorised ATM staff member has a username or password. As ATM continues to use the Passion software, these staff members may identify issues with the software and consequently provide feedback to the IT team to help them perform their daily tasks in servicing travel agents. These tasks include sending booking requests to suppliers, sending booking confirmation to agents, and generating itineraries and vouchers. The features ATM requires in its software are common to any operating system in the travel industry.
[43] That may not have answered fully the question to which it directly responded. But in my view it did answer what is now re-asked as questions (e)(iii) and (e)(iv).
Fact not evidence
[44] ATM submits that some of the interrogatories should be disallowed as they are directed to evidence, not facts. It is correct that it is not permissible to ask for what amounts to evidence of facts in dispute.14 But the two concepts are closely related.
[45] In BNZ v Gardner, on which ATM, Master Hansen observed:15
In my view, merely because interrogatories seek to obtain an admission of fact which could be proved by a witness at trial, one can no longer say, in the context of the New Zealand rule, that the interrogatory is unnecessary. Depending on the circumstances it may well be that an interrogatory will limit the scope of a witness’s evidence, thus saving time and expense. It may go even further and make it unnecessary for certain witnesses to be called. It seems to me that within the context of the New Zealand rules there must be added to the four objects of interrogatories, listed by Lockhart J in W A Pines Ltd v Bannerman … the aim and object of the rules generally and especially relating to interrogatories mentioned by Barker J at p 4 of Sunde, ie:
(1) The aim of the rules is to arrive at the truth.
(2) The rules are designed to assist the parties in coming to a recognition of the proper issues.
(3) Through that recognition to a settlement of disputes.
[46] Quite clearly, some answers that might ordinarily be referred to as evidence at trial will fall within the appropriate scope of an interrogatory. The question is one of degree. Evidence is that which tends to prove a fact, or that which may demonstrate a fact’s existence. In Westpac Banking Corp v Hart, Tipping J held that interrogatories should not require answers on the basis of a disputed assumption of fact.16 Such answers would amount to evidence of disputed facts rather than primary facts.
[47] In my view, the questions posed by Tourplan are directed to establishing primary facts. In part this is due to the paucity of information available to Tourplan given ATM’s inability thus far to discover documents. I do not consider that any of
the interrogatories listed are inappropriate on this ground.
14 Fay v Chirnside (2002) 16 PRNZ 87 (HC) at [15].
15 BNZ v Gardner (1990) 2 PRNZ 278 (HC) at 281.
16 Westpac Banking Corp v Hart (1987) 1 PRNZ 719 (HC) at 726–728.
Challenge to discovery
[48] Nor do I agree that the interrogatories should be disallowed on the ground that they are being used to challenge the affidavit of documents. Interrogatories are not admissible if they amount to cross-examination of a party on its former affidavit as to documents.17 But the unique circumstances of this proceeding mean that ATM has affirmed that it has limited documents in its possession. Interrogatories directed to whether documents were created do not challenge whether the documents are in
ATM’s possession, but ask whether they ever existed. Further, questions as to whether records were created may hypothetically serve another purpose because failure to record certain activities may itself be a relevant fact.
[49] One exception to this is (j)(i)(3), which asks about an agreement referred to in a document created by ATM but discovered by Tourplan. As currently phrased, the question asks “Did ATM at any material time have a copy of this agreement, and/or does ATM still have a copy of this agreement?”. This question requires amendment because the second clause is a challenge to discovery.
Burdensome
[50] I have some sympathy for ATM’s claim that the scope of the interrogatories places a considerable burden on them. But I consider this is warranted in the circumstances with one exception. Question b(i) asks “When and how were ATM staff (including Hong Wah Cheong and Ann Lai) told of the introduction of Passion?”, and the subsequent questions ask for further details. Without specificity as to which staff members it is directed, it is unreasonably broad. If the questions were limited to Hong Wah Cheong and Ann Lai only, however, it would be permissible.
Result
[51] I make an order as sought for further discovery by ATM.
[52] I make an order that ATM answers the set of interrogatories provided by
Tourplan, subject to the following exceptions:
17 Hall v Truman, Hanbury & Co (1884) 29 Ch D 307 (HC).
(a) ATM is not required to answer questions (e)(iii) and (iv), (f)(i) and
(i)(v);
(b) Question (b)(i) is to be amended to:
When and how were Hong Wah Cheong and Ann Lai told of the introduction of Passion?
(c) Question (b)(iii) is to be amended to:
What training documents or materials in relation to Passion were given to ATM staff between September 2013 and February 2014?
(d) Question (j)(i)(3) is to be amended to:
Did ATM at any material time have a copy of this agreement?
[53] The parties may address the issue of costs by memoranda filed on behalf of
Tourplan within 7 days, on behalf of ATM within 14 days and any reply by Tourplan within 21 days.
P Courtney J
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