Walker v Forbes
[2017] NZHC 1090
•24 May 2017
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2012-409-2486 [2017] NZHC 1090
UNDER the Companies Act 1993 IN THE MATTER
of the liquidation of Property Ventures Limited (in receivership and in liquidation)
BETWEEN
ROBERT BRUCE WALKER AND JOHN MARSHALL SCUTTER
First Plaintiffs
PROPERTY VENTURES LIMITED (in liquidation)
Second Plaintiff
FIVE MILE HOLDINGS LIMITED (in receivership and in liquidation) Third Plaintiff
CASHEL VENTURES LIMITED Fourth Plaintiff
TAY VENTURES LIMITED
(in receivership and in liquidation) Fifth Plaintiff
LIVINGSPACE PROPERTIES LIMITED (in receivership and in liquidation)
Sixth Plaintiff
BEECHNEST VENTURES LIMITED (in liquidation)
Seventh Plaintiff
TUAM VENTURES LIMITED
(in receivership and in liquidation) Eighth Plaintiff
CASTLE STREET VENTURES LIMITED
(in receivership and in liquidation) Ninth Plaintiff
WALKER v HENDERSON [2017] NZHC 1090 [24 May 2017]
LICHFIELD VENTURES LIMITED
(in receivership and in liquidation) Tenth Plaintiff
92 LICHFIELD LIMITED
(in receivership and in liquidation) Eleventh Plaintiff
ST ASAPH VENTURES LIMITED (in liquidation)
Twelfth Plaintiff
MONTECRISTO CONSTRUCTION COMPANY LIMITED
(in liquidation) Thirteenth Plaintiff
AND
AUSTIN JOHN FORBES First Defendant
ALISTER SPEDDING JOHNSTON Second Defendant
GORDON LEWIS HANSEN Third Defendant
DAVID IAN HENDERSON (a bankrupt) Fourth Defendant
ADOLF de ROOS Fifth Defendant
DANIEL JAMES GODDEN Sixth Defendant
PwC (sued as a firm) Seventh Defendant
VERO LIABILITY INSURANCE Third Party
Hearing 10 and 11 May 2017 Appearances:
N R Williams for Plaintiffs
D Lester and C Child for Fourth DefendantJudgment:
24 May 2017
[JUDGMENT OF LANG J
[on application by fourth defendant for an order that the
first plaintiff Robert Bruce Walker be held in contempt]
Thisjudgment was delivered by me on 24 May 2017 at 3.30 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
[1] This proceeding is brought by the liquidator of Property Ventures Limited (PVL) and companies associated with it (the PVL group) against the former directors and auditors of the PVL group. Mr David Henderson, the fourth defendant and formerly a director of companies in the PVL group, has applied for an order that the first plaintiff Robert Bruce Walker be held in contempt for breaching the terms of an undertaking he gave to this Court in another proceeding on 1 March 2013.
Background
[2] The present proceeding is but one of several between these parties in both the
District Court and this Court. For present purposes the narrative begins on 13 and
16 December 2010, when Mr Walker was appointed as liquidator of subsidiary companies in the PVL group by the High Court. Mr Walker then began the task of assembling records relating to the affairs of the companies in respect of which he had been appointed liquidator.
[3] When this task confronted difficulties, Mr Walker made a complaint to the police about the failure of the directors of one of the companies to produce documents to him in accordance with notices he had issued under s 261 of the Companies Act 1993. Acting on the complaint, the police obtained and executed a search warrant on an address at 110 Lichfield Street, Christchurch on 8 April 2011. They uplifted a number of files and folders from that address. In addition, they uplifted a laptop computer that they found in an office formerly used by Mr Henderson. Mr Walker subsequently entered into an arrangement with the police that enabled him to take possession of the laptop. He then copied the files held on the laptop to an external hard drive and to flash drives. Mr Walker then returned the laptop and copied material to the police, who subsequently returned the laptop to Mr Henderson. They retained the electronic data that had been copied onto the hard and flash drives.
[4] Mr Walker sought access to the data because he believed it related to the affairs of companies in respect of which he had been appointed as liquidator. The police were not prepared to hand the data over to Mr Walker in the absence of a court order authorising them to take that step. Mr Walker therefore applied to this Court
for an order under s 266 of the Companies Act 1993 requiring the police to deliver the material to him. Mr Henderson opposed the application on the basis that a large proportion of the material was personal information that had no relevance to the companies of which Mr Walker had been appointed as liquidator.
[5] In a judgment delivered on 11 June 2013, Associate Judge Osborne granted Mr Walker’s application.1 The Associate Judge made the order in the following terms:
[66] I direct:
(a) The New Zealand Police are to deliver to Robert Bruce Walker (“the liquidator”), as liquidator of Property Ventures Ltd (in receivership and in liquidation), and of companies associated with Property Ventures Ltd, the external hard drive and the flash drives on which is stored electronic data extracted from a laptop obtained by the police pursuant to a search warrant executed on 8 April 2011 at premises at 96 and 110 Lichfield Street, Christchurch, such delivery to take place forthwith upon receipt of this Order and, in any event, no later than five working days after the date of this Order;
…
[6] In making the order the Associate Judge relied on an undertaking given by Mr Walker in an affidavit filed in support of his application to gain access to the documents. The Associate Judge said:
[43] It is the liquidator's case that the external hard drives and flash drives (which contain electronic data extracted from the laptop obtained by the police through the search warrant), constitute the records of Property Ventures. Section 266(2) Companies Act empowers the Court to order a person holding the documents relating to the business, accounts or affairs of the company in liquidation to produce to the liquidator those documents. The liquidator has by his affidavit solemnly undertaken that his immediate need for the documents is in relation to civil proceedings currently before the High Court. Claims within those proceedings were potentially affected by statutory limitations under the Limitation Act 2010. The liquidator needs all documents of Property Ventures relevant to the High Court claims, both in order to be able to pursue the proceedings and in order to meet in a timely way his obligations of discovery. The liquidator undertakes that he will not be disclosing information which may be contained on the external hard drives which is not relevant or which is privileged.
[7] The Associate Judge made the observations about the undertaking in reliance on the following passage from an affidavit Mr Walker had filed in support of the application:
47 I am very familiar with the information on the copy of the laptop as I have had it in my possession for many months. I can say, with due solemnity, and undertake that I am only interested in information which is relevant to the allegations made in the claim I have filed or such other legal actions I may contemplate (for example, the investigation and collection of transactions subject to rules of unfair preference). I will not be disclosing information which is not relevant, or indeed any information which is privileged. Indeed I would be foolish to do otherwise for fear of invoking yet further litigation in the matter of privacy when I have more than sufficient matters legal to concern myself with.
[8] One of the reasons Mr Walker had sought access to the information was that he needed to ensure the plaintiffs complied with their discovery obligations in the present proceeding. He provided the hard drive and flash drives to his solicitors so that they could compile a list of documents for filing and service in this proceeding. The solicitors compiled, and Mr Walker affirmed, an affidavit of documents listing some 848,000 documents in the plaintiffs’ possession. This was served on the defendants, including Mr Henderson, on 29 February 2016. The solicitors then acting for the plaintiffs also provided the defendants with flash drives containing copies of the documents listed in the affidavit.
[9] Unknown to Mr Walker, some of the documents in the list were not relevant to the present proceeding and contained personal information that was the property of Mr Henderson. For that reason Mr Walker unwittingly breached the undertaking he had given the Court not to disclose material that was not relevant to the present proceeding. Mr Henderson advances his application for an order that Mr Walker be held in contempt on that basis.
Jurisdiction
[10] It is common ground that breach of an undertaking given to the Court can amount to contempt.2 Where, as here, the Court sanctions a course of action on the basis of an undertaking given by a party, it is entitled to expect that party to honour
the undertaking. Failure to do so may result in the offending party being held in contempt. On Mr Henderson’s behalf Mr Lester accepts that the breach of the undertaking by Mr Walker was not wilful or deliberate. He accepts that it can properly be described as inadvertent. For that reason Mr Lester acknowledges the Court should not punish Mr Walker by fining him or ordering him to be imprisoned. Instead, he asks the Court to find that Mr Walker is in contempt and to require him to pay costs to Mr Henderson on a category 2B basis in respect of the present application.
[11] Mr Henderson filed the present application without the benefit of advice from counsel. The application purports to rely on s 56C of the Judicature Act 1908, r 7.48 of the High Court Rules and the common law or inherent jurisdiction of the Court to make an order holding a litigant in contempt for breach of an undertaking.
Section 56C Judicature Act 1908
[12] Section 56C provides as follows:3
56C Contempt of Court
(1) If any person
(a) Assaults, threatens, intimidates, or wilfully insults a Judge, or any Registrar, or any officer of the Court, or any juror, or any witness, during his sitting or attendance in Court, or in going to or returning from the Court; or
(b) Wilfully interrupts or obstructs the proceedings of the Court or otherwise misbehaves in Court; or
(c) Wilfully and without lawful excuse disobeys any order or direction of the Court in the course of the hearing of any proceedings –
any constable or officer of the Court, with or without the assistance of any other person, may, by order of the Judge, take the offender into custody and detain him until the rising of the Court.
(2) In any such case as aforesaid, the Judge, if he thinks fit, may sentence the offender to imprisonment for any period not exceeding
3 Section 56C of the Judicature Act 1908 has now been repealed and replaced with s 165 of the Senior Courts Act 2016. However, s 56C would continue to apply to this proceeding because the proceeding commenced before the Senior Courts Act 2016 came into force on 1 March 2017: Senior Courts Act 2016, sch 5, cl 10.
3 months, or sentence him to pay a fine not exceeding $1,000 for every such offence; and in default of payment of any such fine may direct that the offender be imprisoned for any period not exceeding 3 months, unless the fine is sooner paid.
(3) Nothing in this section shall limit or affect any power or authority of the Court to punish any person for contempt of Court in any case to which this section does not apply.
[13] As is evident from the wording of the section, it applies only to conduct that occurs during or shortly after Court hearings. The conduct underpinning the present application did not occur in that context. For that reason s 56C does not apply in the present case.
Rule 7.48 of the High Court Rules
[14] Rule 7.48 provides as follows:
7.48 Enforcement of interlocutory order
(1) If a party (the party in default) fails to comply with an interlocutory order or any requirement imposed by or under subpart 1 of Part 7 (case management), a Judge may, subject to any express provision of these rules, make any order that the Judge thinks just.
(2) The Judge may, for example, order—
(a) that any pleading of the party in default be struck out in whole or in part:
(b) that judgment be sealed:
(c) that the proceeding be stayed in whole or in part: (d) that the party in default be committed:
(e) if any property in dispute is in the possession or control of the party in default, that the property be sequestered:
(f) that any fund in dispute be paid into court:
(g) the appointment of a receiver of any property or of any fund in dispute.
(3) An order must not be enforced by committal unless the order has been served personally on the party in default or that party had notice or knowledge of the order within sufficient time for compliance with the order.
[15] Rule 7.48 is obviously designed to enforce interlocutory orders made in the course of a proceeding. If Mr Henderson had wished to invoke r 7.48, he ought to have filed the present application in the proceeding in which Mr Walker gave the undertaking. Given the fact that Mr Walker did not give the undertaking as part of an interlocutory step in this proceeding, any breach of the undertaking cannot be enforced under r 7.48 in the present proceeding. Furthermore, none of the remedies under r 7.48 would be appropriate in any event given the fact that Mr Henderson acknowledges Mr Walker should not be committed for breach of the undertaking.
The inherent or common law jurisdiction
[16] For Mr Henderson, Mr Lester relies on the approach taken in Country Colours Ltd v Resene Paints Ltd4 and Douglas Pharmaceuticals Ltd v Nutripharm New Zealand Ltd (No 2).5 Those cases were decided by this Court in 1992 and 1998 respectively. In Country Colours, the plaintiff sought unsuccessfully to obtain a writ of sequestration against the defendant for persistent breaches of the terms of an injunction. It is therefore different factually to the circumstances of the present case.
[17] In Douglas Pharmaceuticals, the plaintiffs asked the Court to fine the defendant for breaching undertakings given so as to avoid the need for an interim injunction to be granted. The undertakings had been breached because the defendant’s overseas agents had taken inadequate steps to ensure compliance with them. Randerson J declined to fine the defendant because he did not consider the defendant had acted “wilfully, recklessly or contumaciously in breach of the
undertakings given”.6 Nevertheless, he observed that the Courts “must act firmly
where undertakings are breached, even where this occurs without wilful or reckless conduct by the party in breach”.7 For that reason Randerson J ordered the defendant to pay a substantial sum by way of costs to the plaintiff.
[18] For the liquidators, Mr Williams submits, correctly in my opinion, that the approach taken by the courts to the law of contempt has changed markedly since the
4 Country Colours Ltd v Resene Paints Ltd HC Auckland, CP 2153/91, 17 June 1992.
5 Douglas Pharmaceuticals Ltd v Nutripharm New Zealand Ltd (No 2) (1998) 12 PRNZ 176 (HC).
6 At 183.
7 At 184.
cases relied upon by Mr Lester were decided. As the Law Commission noted in its report Contempt in Modern New Zealand, the traditional distinction between civil and criminal contempt is now virtually gone.8 Furthermore, the Supreme Court confirmed in Siemer v Solicitor-General that proceedings for contempt in a civil context are now subject to the rights guaranteed by the New Zealand Bill of Rights Act 1990.9 A right to elect trial by jury exists in cases where the respondent is at risk of imprisonment for three months or more. In all other cases proceedings for contempt must be determined by means of a summary (Judge-alone) process.10
[19] Applying the principles confirmed in Siemer, I propose to deal with the application as if it was a criminal proceeding in which the prosecution bears the onus of proof. For that reason I consider first the evidence adduced by Mr Henderson in support of the application. The evidence given by Mr Walker in opposition to it will only become relevant in the event that I reject Mr Williams’ submission that Mr Walker does not have a case to answer.
The evidence adduced by Mr Henderson
[20] The evidence for Mr Henderson is contained in an affidavit sworn in support of the present application on 1 March 2017. This contains the information set out above by way of background and contains a large number of annexures. It is now necessary to examine the events that occurred after Mr Walker’s solicitors sent the list of documents to the defendants in this proceeding on 29 February 2016 along with a hard drive containing those documents.
[21] On 2 March 2017 Mr Henderson sent Mr Tim Smith, the solicitor then acting for Mr Walker, an email in which he said he could not access the documents on the hard drive he had been given. He also asked Mr Smith to provide an undertaking that none of the documents he had supplied to the other parties constituted information that was either personal to Mr Henderson and his family or related to
companies of which Mr Walker was not the liquidator. In an email sent to
8 Law Commission, Contempt in Modern New Zealand, (NZLC IP36, 2014) at 7.4.
9 Siemer v Solicitor-General [2010] NZSC 54, [2010] 3 NZLR 767 at [16].
10 At [66].
Mr Henderson on 11 March 2017 Mr Smith declined to provide the undertaking sought by Mr Henderson. That letter concluded:
…
3) Please let me know if there are any documents in the discovery which you feel are not appropriately included so that we can consider your concerns and, if appropriate, delete those documents as part of the further document cull that we are already carrying out – and request undertakings from the others who you have copied in that such documents be deleted from their hard drives.
…
[22] Mr Walker did not become aware of the fact that the list and hard drive contained material that was disclosed in breach of his undertaking until on or about
4 April 2016. On that date Mr Henderson amended a claim he had brought against Mr Walker in another proceeding in which Mr Henderson alleged that Mr Walker had breached his privacy rights (the privacy proceeding). The amendment to the privacy proceeding alleged that Mr Walker had further breached Mr Henderson’s privacy rights by disclosing documents that were irrelevant to the present proceeding and contained personal information about him.
[23] On the morning of 5 April 2016 Mr Smith sent the following email to counsel for all defendants:
All,
Further to the correspondence below, Mr Henderson, in pre-existing proceedings involving Mr Walker, last night filed a further pleading which identified a number of irrelevant documents which were included in the discovery.
In light of the nature of those documents, the appropriate course would be to disregard the documents previously provided on the hard drive (which we have inferred was the approach being essentially adopted by those corresponding with us [in] any event). Please confirm to both ourselves and Mr Henderson that you will adopt this approach.
We plan to file a further discovery list addressing the issues regarding relevance raised by Duncan Cotterill and Jones Fee as soon as possible and plan to update you further when we respond to the further Jones Fee letter of yesterday.
[24] With one exception, all counsel to whom the email was sent promptly confirmed that they had not opened the hard drive containing the documents listed in the plaintiffs’ affidavit of documents and would not do so. The solicitors acting for the seventh defendant, PricewaterhouseCoopers (PWC), had already sent an email to Mr Smith on 4 March 2016 raising concerns about the nature of the plaintiffs’ discovery. The email stated that PWC’s solicitors had “only undertaken a very high level (and preliminary) review” of the documents provided on 29 February 2016 but nevertheless considered that the plaintiffs had not adequately reviewed the documents from the standpoint of relevance. PWC’s solicitors referred by way of example to an email that clearly related to Mr Henderson’s personal affairs and was irrelevant to the present proceeding. This demonstrated that PWC’s solicitors had already accessed material that Mr Walker had disclosed to them in breach of the undertaking given to Associate Judge Osborne.
[25] The concerns expressed by PWC’s solicitors were endorsed by the solicitors acting for the first defendant, Mr Forbes, in an email dated 7 March 2016. There is no reference in this email, however, to Mr Forbes’ solicitors having viewed the documents in the hard drive.
[26] Mr Henderson sent a further email to Mr Smith on the afternoon of 6 April
2016. In this he raised his concerns regarding the fact that Mr Walker had disclosed to the other defendants a large amount of material that was both personal to Mr Henderson and irrelevant to the present proceeding. Mr Smith responded to this email later the same day as follows:
…
As to the nature of the material disclosed in the discovery process, that only became apparent to me when I read your revised statement of claim. As you acknowledge below, as soon as that became apparent to me I pulled the discovery immediately.
As indicated in my email of yesterday, my understanding then was that the other defendants to whom the hard drive had been sent were not reviewing the docs contained in it until we provided our further discovery. As you know, Aaron Sheriff has confirmed that is the position in relation to Mr Hansen [the third defendant].
Subsequent to your email, I have also spoken to [counsel for the other defendants] – all of whom have confirmed that they have not read any
documents that could be considered personal to you. [Counsel for PWC] noted that a high level review of a few of the hard drive documents had been done by someone else in the firm and that the hard drive had been copied by SLS. He was, therefore, not able to be absolutely clear that no document that could be seen as personal to you had not been seen by anyone.
As you will have noted, since you sent your email to me [counsel for the other defendants] have also responded positively to my email regarding disregarding the relevant part of the discovery. I trust the above answers the queries in your final paragraph.
[27] Counsel for all defendants but Mr Godden agreed to return the hard drives to the plaintiffs’ solicitors and to disregard the documents on them. It subsequently transpired, however, that the solicitors acting for the sixth defendant, Mr Godden, had passed the hard drive on to their client. They told Mr Smith they would approach Mr Godden to retrieve the hard drive. Mr Henderson’s affidavit does not say whether Mr Godden complied with the request by his solicitors that he should return the hard drive to them.
[28] Against that background it is necessary to determine whether Mr Walker has a case to answer.
Is there a case for Mr Walker to answer?
[29] Mr Williams submitted that, taken as a whole, the evidence adduced by Mr Walker falls short of providing a prima facie basis for a finding of contempt. He began his submission by pointing out that on 11 March 2015 Mr Smith had sent a letter by email to Mr Henderson and counsel for all other defendants in response to letters he had received from several defendants expressing concern at the anticipated scope of the plaintiffs’ discovery. In response to a specific query raised by the solicitors acting for PWC, Mr Smith stated:
9. As to PwC’s queries regarding the steps taken to cull the various
documents to date, this has been undertaken in two stages:
(a) Electronic Documents that have originated from the PVL server and the data uplifted the PVL laptop used by Mr Henderson, has been processed using proprietary software called Intella.
(b) Arising from the considerable intermingling of the affairs of the companies within the PVL Group there are company documents on the servers that related to entities the
liquidator may arguably not have been entitled to have access to. This is because some of the companies were / are not in liquidation and are still being operated by Mr Henderson’s associates. We note that this has changed slightly and there are several entities to which Mr Walker and Mr Scutter have subsequently been appointed liquidators.
(c) Following issues raised by Mr Henderson when Mr Walker first obtained the records of the PVL Group (in particular those documents obtained under the search warrant), and further to the terms of a Court order addressing these issues, a key word list naming the entities (and relevant parties) that the liquidator was entitled to hold information for was run over the electronic data.
(d) These results were then cross referenced (using the Intella software) with a list of the entities that the liquidator was arguably not entitled to (the details of which having been discovered on an initial inspection) and any files that appeared in both lists were visually inspected for relevance and entitlement. The key word lists are at Appendix 2.
(e) Further to the terms of the court order, a full excel spreadsheet listing of documents that arose from this search was then sent to Mr Henderson for him to make comment on or object to documents claimed by the liquidator. Mr Henderson did not respond to raise any objection to the categorisation.
(f) Any files which remain have been deemed by the plaintiff to be relevant and these will be further refined using the categories discussed below prior to exchange.
(Emphasis added)
[30] Mr Williams submits that Mr Henderson ought to have responded to Mr Walker’s request if he wished to avoid the possibility of personal or otherwise irrelevant documents being inadvertently disclosed to the other defendants in the discovery process.
[31] This submission needs to be balanced against the fact that Mr Walker provided Mr Henderson with more than 840,000 documents he had copied from Mr Henderson’s laptop. It would have been a mammoth task for Mr Henderson to go through each of those to ensure it was relevant to the present proceeding. Secondly, the solicitors acting for the liquidators had sent the documents to Mr Henderson for comment more than a year earlier. They had taken that step in order to comply with ancillary directions made by the Associate Judge at the time he made the order
requiring the police to hand the documents over to Mr Walker. Mr Walker therefore made the request to Mr Henderson in that context and not in the context of whether the documents should be discovered in the present proceeding.
[32] More importantly, Mr Henderson was not responsible for ensuring that personal and irrelevant documents were not disclosed to the other defendants. It was Mr Walker who had given the undertaking to the Court. He therefore assumed the responsibility of ensuring he complied with it. For that reason alone the fact that Mr Henderson did not respond to Mr Walker’s earlier letter is not sufficient to prevent Mr Henderson from establishing a prima facie case.
[33] Mr Williams also relied on the fact that Mr Smith had taken steps to retrieve the offending material from the remaining defendants as soon as he became aware Mr Henderson had amended his claim in the privacy proceeding. Those efforts were successful in the case of all defendants other than Mr Godden. Furthermore, other than PWC and Mr Godden, none of the defendants has accessed the material. Mr Williams therefore submitted that Mr Smith had done everything within his power to rectify the situation once he became aware of what happened.
[34] I accept this argument as far as it goes, but I also accept Mr Lester’s submission that Mr Smith’s actions after he became aware of the situation were those that could be expected of any responsible solicitor in his position. Furthermore, although Mr Smith’s actions helped to mitigate the consequences of the breach, they could not overcome the fact that it had occurred.
[35] I consider there is a case to answer because there can be no dispute that Mr Walker disclosed the offending material to the other defendants in this proceeding in breach of the undertaking he had given to the Court. Furthermore, on Mr Henderson’s evidence Mr Godden remains in possession of personal and irrelevant material as a result of the breach.
[36] It is now necessary to consider the evidence given by Mr Walker in opposition to the present application.
Mr Walker’s evidence
[37] In his affidavit filed in opposition to the application Mr Walker deposes that he left it to his solicitors to undertake the discovery process because of Mr Henderson’s hostility to the possibility that Mr Walker might view his personal documents. He says he believed that his solicitors would take the necessary steps to ensure they only provided the other defendants with documents that were relevant to the present proceeding. He also confirms the steps Mr Smith took to retrieve the offending material once he became aware of the situation.
[38] Mr Walker’s affidavit also reveals that Mr Godden passed the material on to a Mr Hyndman, who apparently intends to use them in other proceedings Mr Hyndman has brought against Mr Walker. Mr Walker believes that Mr Godden and Mr Hyndman “have long been and still remain close associates of Mr Henderson”. A barrister acting on Mr Walker’s behalf is currently endeavouring to persuade Mr Hyndman’s solicitors not to use the material, and to return it to Mr Walker.
Should the Court make a finding that Mr Walker is in contempt by virtue of the breach of his undertaking to the Court?
The arguments
[39] Mr Lester contends that the breach of the undertaking warrants a finding of contempt, and that it also justifies a modest award of costs being made against Mr Walker. He points out that Mr Walker could not delegate his responsibility to honour the undertaking by placing the discovery process in the hands of his solicitors.11
Furthermore, the breach occurred in circumstances where Mr Walker must have been well aware from the numerous court proceedings in which he and Mr Henderson have been involved that Mr Henderson has always held serious concerns about the fact that the laptop contained personal and other information that was irrelevant to the present proceeding. That issue was also canvassed at some length both during
the hearing before the Associate Judge and in his decision.
11 Douglas Pharmaceuticals Ltd v Nutripharm NZ Ltd (No 2), above n 5, at 181.
[40] For Mr Walker, Mr Williams relies again on the factors he raised in support of his submission that Mr Walker had no case to answer. In addition, he points out that Mr Henderson has been guilty of significant delay in bringing the present application. Mr Henderson became aware of the situation on or shortly after 29
February 2016. He did not respond by immediately seeking to bring the matter back before the Associate Judge to whom Mr Walker had given the undertaking. Nor did Mr Henderson alert Mr Walker or Mr Smith to what had occurred. Instead, and nearly two months later, he responded to the breach by amending his claim in the privacy proceeding. He did not file the present application until 7 March 2017, more than a year after the breach occurred.
[41] Mr Walker also submits that the present proceeding comes perilously close to infringing the principle that it is an abuse of process for a litigant to file a second proceeding in respect of an issue that is yet to be determined in an existing proceeding.12 That purpose of the principle is that it is “primarily to protect a party from having to litigate the same matter in separate proceedings”.13 Mr Williams points out that Mr Walker is effectively being required to defend the present
application whilst Mr Henderson’s privacy proceeding is yet to be determined. That proceeding includes claims in respect of alleged breaches of his privacy arising out of the documents discovered by the plaintiffs in the present proceeding.
[42] Finally, Mr Williams submits that there is no point in making a finding of contempt. The breach occurred more than a year ago and the effect of it has largely been cured. He contends it would be wrong in principle and out of all proportion to make such a finding when the breach was inadvertent and there has been significant delay by Mr Henderson in bringing the present application.
Decision
[43] I do not consider the present application is an abuse of process on the basis that Mr Henderson has issued two different proceedings dealing with the same issue.
The privacy proceeding raises the issue of whether Mr Walker breached
12 Stevenson v Office of Police Commissioner [2015] NZHC 1408 at [11] citing Buckland v Palmer [1984] 1 WLR 1109 (CA) and Otis Elevator Co Ltd v Linnell Builders Ltd (1991) 5 PRNZ 72 (HC) at [26].
13 Edwards v Edwards [2012] NZHC 1630 at [26].
Mr Henderson’s privacy rights by disclosing the information. The present application relates to whether the disclosure amounts to contempt of court. I see those two issues as being sufficiently different that the principle is not engaged.
[44] I accept, however, all of the remaining points made by Mr Williams in his submissions. In particular, I accept that Mr Walker never intended to breach his undertaking and that, if fault lies anywhere, it lies in the apparent lack of care taken by his solicitors when they prepared and served Mr Walker’s affidavit of documents. I also accept that Mr Smith did what he could to rectify the situation once he became aware of what had happened. The fact that some of the documents remain in circulation is largely due to factors beyond the control of Mr Walker and his solicitors.
[45] I consider, however, that those factors are largely relevant to the issue of remedy. In determining the question of liability I place significance on the fact that Mr Walker has known from the outset, and certainly well before he gave his undertaking to the Court, that Mr Henderson was insisting that the material downloaded from the laptop included a large quantity of personal and irrelevant material. In giving his undertaking Mr Walker knew that Mr Henderson would expect the Court to hold Mr Walker to it. Mr Walker should therefore have been especially vigilant to ensure that his solicitors did not allow any personal or irrelevant information to be provided to the other defendants. Mr Walker has not pointed to any precautions that he took to ensure this would not occur.
[46] These factors persuade me that it is appropriate to make a finding that the breach of the undertaking amounted to an act of contempt. However, given the circumstances in which the breach occurred, the steps taken to remedy it and Mr Henderson’s delay in bringing the present application I make no further order.
[47] It follows that there will be no order as to costs.
Lang J
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