EUROPEAN FOODS LTD v CANEGALLO [2019] NZHC 503

EUROPEAN FOODS LTD v CANEGALLO [2019] NZHC 503 [20 March 2019]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2017-404-2769[2019] NZHC 503BETWEEN EUROPEAN FOODS LIMITEDPlaintiffAND MARCO CANEGALLODefendantHearing: 29 October 2018 and 15 February 2019Appearances: K M McMullen for the PlaintiffS L Cogan and J G Donkin for the DefendantJudgment: 20 March 2019JUDGMENT OF ASSOCIATE JUDGE SMITHThis judgment was delivered by me on 20 March 2019 at 3.00pm,pursuant to r 11.5 of the High Court RulesRegistrar/Deputy RegistrarSolicitors / Counsel:Cavell Leitch, ChristchurchAnderson Creagh Lai Ltd, AucklandTABLE OF CONTENTSBackground [2]EFL's statement of claim [9]Mr Canegallo's statement of defence [12]Defendant's amended defence and counterclaim [21]EFL'S APPLICATION FOR PARTICULAR DISCOVERY [25]Further documents sought [25]Evidence in support [28]Mr Canegallo's opposition [43]Evidence in opposition [45]Applications for particular discovery – legal principles [74]Discussion and conclusions [76]Request for documents in category 1 – communications betweenMr Canegallo and Prodotti [76]Request for documents in category 2 – documents concerning orders anddeliveries involving Mr Canegallo and Prodotti [93]Request for documents in category 3 – communications with Westpac inconnection with business proposals [98]Request for documents in category 4 – communications with Bayleys (or itsagents) relating to the sale of Prodotti (or ownership interests in Prodotti) [105]Request for documents in category 6 – documents relating to paragraph15(m)(ii) of Mr Canegallo's statement of defence, including correspondencebetween 0+81 Ltd and Europomella and Salumificio [113]EFL's request for order relating to the extent of Mr Canegallo's searches fordiscoverable documents [120]Summary of orders made on EFL's application for particular discovery [122]APPLICATION BY MR CANEGALLO FOR PARTICULARDISCOVERY [123]The categories of documents sought [123]Evidence in support of the application [130]Affidavit of Mr Canegallo [130]EFL's notice of opposition and affidavit in opposition [133]Discussion and conclusions [139]Document categories 1–3 — staff departures [139]Document categories 4(h), 5(g) and 6 — mislabelling [166]Documents in the introductory paragraph in category 7 — reduction orcessation of supplies from suppliers [180]Document category 9 — sales of mozzarella products [183]Document category 11 — EFL's financial performance [192]Document category 13 — alleged approaches by Mr Canegallo to EFLsuppliers, customers or employees [205]Document category 14 — alleged unlawful access to EFL's computer system [208]Summary of orders on Mr Canegallo's particular discovery application [211]APPLICATION BY EFL FOR NON-PARTY DISCOVERY BY BAYLEYS [212]Legal principles [213]Disposition [215][1] There are three applications before the Court. First, there are applications byeach party for orders for particular discovery under r 8.19 of the High Court Rules2016. The third is an unopposed application by the plaintiff (EFL) for an order fornon-party discovery from Bayleys Real Estate Ltd (Bayleys).Background[2] The background to the claim was set out in some detail in my judgment givenon 11 July 2018, in an application by the defendant (Mr Canegallo) for furtherparticulars of the EFL's statement of claim.1 The summary of the background, andEFL's statement of claim and Mr Canegallo's statement of defence, which is set outbelow is substantially taken from that judgment.[3] EFL is an importer and wholesaler of Italian food. Mr Canegallo is a formerdirector and shareholder of EFL.[4] On or about 12 June 2015, Mr Canegallo entered into a shareholders'agreement (the shareholders' agreement) with the founding shareholders of EFL, beinghimself, Sandro Del Moro, Stefano La Cava, Michele Fantino, and Francesca Fantino(together, "the founding shareholders"). The shareholders' agreement includedrestraint of trade provisions, which provided that the founding shareholders would not,during the restraint period, and in the restraint area:(1) be directly or indirectly engaged, concerned or interested in orotherwise associate with any business in competition with [EFL's]business including (for the avoidance of doubt) any developments in[EFL's] business or extensions to the product range after thecommencement date (with the exception of fresh pizza dough)(clause 14.1(a));(2) directly or indirectly induce or solicit or endeavour to induce or solicitany customer or client of [EFL] to cease doing business with [EFL]or reduce the amount of business which the customer or client wouldnormally do with [EFL] (clause 14.1(b));1 European Foods Ltd v Canegallo [2018] NZHC 1714.(3) employ or otherwise engage the services of any person who was anemployee of, or contractor to, [EFL] in the 12 months prior to the dateof termination (clause 14.1(c));[5] The restraint area was anywhere within New Zealand, and the restraint periodwas during the term of the shareholders' agreement and for a period of 24 months afterthe founding shareholders ceased to hold shares in EFL.[6] On 19 December 2015, the founding shareholders sold a total of 65,898 EFLshares to an Italian company, Granarolo International Srl (Granarolo). On or about4 or 5 October 2016, the founding shareholders sold their remaining shares toGranarolo. At that point, the 24 month restraint period in the shareholders' agreementcommenced.[7] The second sale agreement, under which the founding shareholders sold theirremaining shares to Granarolo, included provision for the restraint of trade clauses inthe shareholders' agreement to continue, provided that the restraint would only relateto the business of importing and distributing Italian or other European foods, andwould not relate to any other business, including the production of frozen pizza doughor pizza flour. Subject to those provisions, the shareholders' agreement wasterminated.[8] There is a minor dispute between the parties over the precise date on which the24 month restraint period commenced. EFL says the period commenced on 7 October2016; Mr Canegallo says the period commenced on 4 October 2016.EFL's statement of claim[9] EFL alleges that Mr Canegallo is in breach of the restraint provisions of theshareholders' agreement in that he:(a) Is engaged, concerned or interested in or otherwise associated with abusiness involved in importing and distributing Italian or otherEuropean foods in New Zealand.(b) Has directly or indirectly induced or solicited or endeavoured to induceor solicit customers or clients of EFL to cease doing business with EFLor reduce the amount of business which the customers or clients wouldnormally do with EFL.(c) Has, in connection with his interest in a competing business, employedor otherwise engaged the services of any person who was an employeeof, or contractor to, EFL in the 12 months prior to the date oftermination of the shareholders' agreement.[10] EFL pleads the following particulars of the alleged breaches:Particulars15.3.1. Prodotti D'Italia Limited (Prodotti) is a duly incorporated company,having its registered office at Level 1, 109 Carlton Gore Road,Newmarket, Auckland and was incorporated on 13 October 2016.15.3.3. Prodotti is involved in importing and distributing Italian or otherEuropean foods in New Zealand;15.3.6. The defendant is engaged, concerned or interested in or otherwiseassociated with Prodotti:15.3.6.1 Prodotti's directors are Guiseppe Carrozzino, FerruccioPiantini and Tomaso Piantini.15.3.6.2. Guiseppe Carrozzino and the defendant are the directorsof Pizza in a Box Limited ["Pizza In A Box"].15.3.6.3. Ferruccio Piantini and the defendant are the directors ofRound Pizza Limited ["Roundpizza"].15.3.6.4. Roundpizza and Prodotti share the same registered officeof GVW Accountants, 109 Carlton Gore Road, NewMarket, Auckland.15.3.6.5. Roundpizza and Prodotti have a common shareholdingof Cidi International SA ["CIDI"], a company registeredin Switzerland.15.3.6.6. Ferruccio Piantini is a director of CIDI.15.3.6.7. Ferruccio Piantini was a director of EFL from 23 August2016 to 30 September 2016.15.3.7 The defendant is through Prodotti engaged and associated withbusinesses in competition with EFL.15.3.8. The defendant has through Prodotti directly or indirectly induced orsolicited or endeavoured to induce or solicit the following suppliersof EFL to cease doing business with EFL or reduce the amount ofbusiness which would normally be done with EFL:15.3.8.1. Europomella S.p.A ["Europomella"];15.3.8.2. Latteria Sociale Mantova S.c.a ["LSM"];15.3.8.3. Cirillo Group S.r.l ["Cirillo"];15.3.8.4. Salumificio Vitali S.p.a ["Salumificio"];15.3.8.5. Pastificio Lucio Garofalo S.p.a ["Pastificio"].15.3.9. The defendant has through Prodotti directly or indirectly solicitedand employed the following employees who were employees of EFLin the 12 months prior to the date of termination of the shareholders'agreement:15.3.9.1. Leonardo Fontana;15.3.9.2. Rossana Guardamagna; and15.3.9.3. Edgar Soro Martin.15.3.10. Further the defendant has through Prodotti, directly or indirectly,solicited for employment:15.3.10.1 Brendon Ruthledge;15.3.10.2. Wi Hei Paora; and15.3.10.3. Daria Garizio.[11] EFL seeks a declaration that the restraint provisions are valid and enforceable,and it sought an injunction restraining Mr Canegallo from being engaged, concernedor interested in, or otherwise associated with, a business involved in importing anddistributing Italian or other European foods in New Zealand, until 18 October 2018 orsuch other period as the Court may determine. EFL also asks for an enquiry as todamages, and judgment for costs and interest.Mr Canegallo's statement of defence[12] Mr Canegallo admits that Prodotti is involved in importing and distributingItalian and other European foods into New Zealand. He also admits that Prodotti is incompetition with EFL. However, he denies that he has ever been a director,shareholder (legal or beneficial), employee, or contractor of Prodotti, or an investor inProdotti, or otherwise directly or indirectly engaged, concerned or interested in, orotherwise associated with or retained in any capacity by, or on behalf of, Prodotti.[13] Mr Canegallo admits EFL's allegations relating to the identity of the directorsof Prodotti, Pizza In A Box and Roundpizza, and he admits that Roundpizza andProdotti have a common shareholding (CIDI) and that both have their registered officeat the offices of GVW Accountants in Newmarket, Auckland. He also admits thatMr Piantini is a director of CIDI, and was between 23 August 2016 and 30 September2016 a director of EFL.[14] Mr Canegallo pleads that the businesses of Roundpizza and Pizza In A Boxboth fall outside the restraint provisions of the shareholders' agreement, and hegenerally denies that the various matters pleaded by EFL would be sufficient, ifproved, to show that he has been engaged, concerned, interested in or otherwiseassociated with a business in breach of the restraint provisions.[15] Mr Canegallo specifically denies that he has, through Prodotti or otherwise,and whether directly or indirectly, induced or solicited suppliers of EFL to cease doingbusiness with EFL, or attempted to do so. He also denies that he has, through Prodottior otherwise, solicited or employed the employees referred to in EFL's statement ofclaim.[16] Mr Canegallo pleads affirmatively that three of the suppliers referred to insubparagraphs 15.3.8 of EFL's statement of claim (LSM, Cirillo, and Salumificio)have continued to supply EFL, with 2017 turnover levels either approximately thesame as or greater than 2016 levels. He pleads that Pastificio terminated itsdistributorship with EFL independently and without any consultation with him,because of a lack of contact and orders from EFL for over a year. Europomella is saidto have terminated its distributorship with EFL due to a loss of trust and confidence inEFL for a number of reasons, including a significant decrease in orders of someproducts by EFL, and EFL registering in New Zealand two trademarks owned byEuropomella, without Europomella's knowledge or consent. Mr Canegallo says thata further factor was that EFL's owner, Granarolo, is one of Europomella's maincompetitors globally, and that Europomella was uncomfortable having a Granarolosubsidiary as its New Zealand distributor.[17] Mr Canegallo accepts that Europomella decided to commence supplyingProdotti, but he says that occurred independently of him and without consultation withhim.[18] Mr Canegallo pleads affirmatively that he has had no contact with Cirillo orLSM since he left EFL and before he was served with EFL's claim, and that the onlycontact he has had with the other suppliers has been either personal and not businessrelated (Pastificio), or concerned with selling the suppliers' products outsideNew Zealand (Europomella).[19] In respect of the former EFL employees referred to at subparagraph 15.3.9 ofEFL's statement of claim, Mr Canegallo says that each of them terminated theiremployment with EFL independently of and without consultation with him.Mr Fontana had resigned from EFL before Mr Piantini offered him employment withProdotti, and Mr Martin responded to an advertisement placed by Prodotti inDecember 2016.[20] In respect of the EFL employees referred to in subparagraph 15.3.10,Mr Canegallo says that he has run into Mr Paora only once since he left EFL. He saysthat the same is true of Mr Garizio. He has run into Mr Ruthledge on three occasions,but says he did not discuss EFL's business with him, or Mr Ruthledge leaving EFL towork for Prodotti.Defendant's amended defence and counterclaim[21] Subsequent to the delivery of my judgment on Mr Canegallo's particularsapplication, Mr Canegallo filed an amended defence and counterclaim. In thispleading, Mr Canegallo added certain particulars of his defence, and added threecounterclaims under the Fair Trading Act 1986 (the FTA), each alleging mislabellingof food products by EFL.[22] In his amended defence, Mr Canegallo adds a pleading that approximately 30employees, representing approximately 60 per cent of EFL's workforce, haveterminated their employment with EFL after Mr Canegallo left EFL, for reasonsentirely unrelated to Mr Canegallo. Mr Canegallo alleges they left because ofdissatisfaction with EFL's performance as an employer, in certain stated respects.Mr Canegallo says that, with the exception of Messrs Ruthledge, Martin, Fontana andPollara, and Ms Guardamagna, none of the employees who have left EFL sinceMr Canegallo's resignation have been employed by Prodotti.[23] I will refer to Mr Canegallo's counterclaims and EFL's defence to them, asnecessary, later in this judgment.Mr Canegallo becomes a Prodotti consultant[24] By letter dated 26 October 2018, Mr Canegallo's solicitors advised EFL thatMr Canegallo had entered into a consultancy agreement with Prodotti, with effect from16 October 2018. They noted that the restraint period affecting Mr Canegallo hadexpired earlier that month.EFL'S APPLICATION FOR PARTICULAR DISCOVERYFurther documents sought[25] In its application, EFL asked for an order that Mr Canegallo file an affidavitstating whether he has any of the following documents or classes of documents in hiscontrol:(1) Any communications with [Prodotti] and/or Prodottirepresentatives/staff (including but not limited to Brendon Ruthledgeby [Mr Canegallo], including any correspondence from[Mr Canegallo] in his personal capacity and his companies [Pizza InA Box] and/or [Roundpizza]; and(2) Documents concerning orders and deliveries (including but notlimited to DHL consignments) involving [Mr Canegallo] and Prodottiduring October 2016 to present;(3) Any communications with Westpac New Zealand Limited/WestpacBank, or relating to Westpac in connection with business proposals;(4) Any communications with Bayleys and/or any agent or contractor ofBayleys or associated persons regarding the sale of Prodotti orownership interests during October 2016 to the present;(5) All documents and communications with PTG Food and/or ViscoFoods associated with [Mr Canegallo's] pleaded counterclaim;(6) All documents concerning paragraph 15(m)(ii) of [Mr Canegallo's][amended] statement of defence and counterclaim, including anycorrespondence between 0+81 Limited and EFL competitorsincluding Europomella and Salumificio.[26] In her submissions, Ms McMullen abandoned the application for particulardiscovery in respect of the category 5 documents referred to above.[27] In addition, EFL asks for an order that Mr Canegallo confirm by affidavitwhether the searches referred to in his affidavit of documents included a search ofapplications, including WhatsApp and social media accounts, for discoverablerecords. If such searches were not carried out, EFL asks for an order directingMr Canegallo to carry out the searches and provide the results in a further affidavit.Evidence in support[28] EFL's application is supported by an affidavit sworn by a New Zealand-baseddirector of EFL, Mr Barry O'Neill. Mr O'Neill had reviewed the 14 open documentsprovided by Mr Canegallo in his affidavit of documents, together with a further 11documents supplied by Mr Canegallo on 6 June 2018.[29] Mr O'Neill noted that the directors of Prodotti are Mr Carrozzino, Mr TomasoPiantini, and Ferruccio Piantini, and that these directors have common directorshipswith Mr Canegallo as co-directors of Pizza In A Box and Roundpizza.[30] Mr O'Neill said that after Mr Canegallo's departure from EFL, a number ofemails were received into EFL's email system at the addressmarco@europeanfood.co.nz. In Mr O'Neill's view, some of these emails suggestedlinks between Mr Canegallo and Prodotti.[31] Mr O'Neill said that EFL tried to secure copies of the emails in Mr Canegallo'sinbox, and in so doing became aware of an unauthorised intrusion into its securecomputer system on or about 22 February 2017 in the course of which the content ofthe inbox was deleted.[32] The identity of the person or persons responsible for the intrusion into EFL'scomputer system has not been confirmed. EFL has retained a computer forensic firm,Computer Forensic Solutions (CFS), to investigate. Mr O'Neill produced with hisaffidavit two reports EFL has received relating to the unauthorised access to EFL'scomputer system. The CFS report dated 25 April 2017 referred to an email messagedated 21 April 2017 from DHL, addressed to Emiliano Parini of EFL and copied toMr Canegallo at his old EFL email address. The email message containedpre-shipment advice for consignments of cheese and general foodstuffs from twoItalian companies, LSM and Salumificio. In each case the named consignee wasProdotti.[33] Mr O'Neill also produced with his affidavit copies of a number of othermessages sent to Mr Canegallo's old mailbox at EFL, apparently inadvertently. Therewere two emails from Mr Carrozzino, dated 11 January and 14 January 2017. Thefirst of these emails, translated from the Italian by Mr O'Neill's Italian co-directors,enquired about a new business plan which had not been received. The second emailfrom Mr Carrozzino, which was not supplied with any English translation, was saidby Mr O'Neill to include an explanation that there had been an email error in sendingthe 11 January email to Mr Canegallo's EFL email inbox.[34] On 25 March 2017, Mr Gerardo Cinque of Europomella, a former supplier toEFL, sent a message to Mr Canegallo forwarding him a letter that EFL's lawyersreceived on the same date, and an email sent to a New Zealand lawyer who hadpreviously assisted Mr Canegallo in the October 2016 negotiations with EFL. Thisemail and letter are said to show that Mr Canegallo had an on-going relationship withEFL's suppliers, in breach of the restraint of trade agreement.[35] Referring to the consignment note relating to the consignment of cheese andother foodstuffs from LSM and Salumificio, Mr O'Neill said that it was concerning toEFL that Mr Canegallo appears to have been a contact for deliveries to Prodotti. EFLseeks full disclosure of records to understand this transaction and any others like it.[36] On 15 February 2017, Mr Giuseppe D'Amore of Profumi e Sapori del Sud(Profumi), an Italian exporting company, sent a message to Mr Canegallo referring toa "phone call earlier to the office". Mr D'Amore introduced Profumi. Mr O'Neill saidthat EFL was concerned by this phone call, as it is not clear what productsMr D'Amore's company was hoping to supply to Mr Canegallo which may breach therestraint of trade.[37] Mr O'Neill invited the Court to infer from the emails received intoMr Canegallo's EFL's email inbox concerning business planning, and from the variouscommon ownership interests, that Mr Canegallo has been involved with Prodotti incontravention of the restraint of trade agreement.[38] Mr O'Neill said that EFL believes that Mr Canegallo has communicated witha former EFL employee, Mr Edgar Martin, to encourage EFL employees to leave andwork for Prodotti. He said he understood that there "may be further communicationswith these parties which have not been discovered" (specifically, communicationsbetween Mr Canegallo and Prodotti (or its representatives or staff), includingcorrespondence from Mr Canegallo in his personal capacity and Pizza In A Box and/orRoundpizza). Mr O'Neill also considered that there should be documents concerningorders and deliveries (including, but not limited to, DHL consignment notes) involvingMr Canegallo and Prodotti, from October 2016 down to the present time. InMr O'Neill's view, there should also be communications with Westpac Bank, orrelating to Westpac, in connection with business proposals, and communications withBayleys Real Estate (and/or its agents or contractors) relating to the sale of Prodotti,or ownership interests in Prodotti.[39] Finally, Mr O'Neill referred to statements in Mr Canegallo's statement ofdefence, in which Mr Canegallo acknowledged that he had had contact withEuropomella and Salumificio through 0+81 Ltd, a company of which Mr Canegallo isthe sole director and shareholder, and which is trying to sell its products to customersin markets outside the restraint area (including Japan and the Philippines). Mr O'Neillreferred to the absence of any correspondence between 0+81 Ltd and EFL'scompetitors, including Europomella and Salumificio.[40] The second affidavit relied upon by EFL in support of its application was anaffidavit of Michael Campbell, a licensed private investigator. Mr Campbell'saffidavit was primarily concerned with Mr Canegallo's alleged involvement as aprospective purchaser, when Prodotti's business was being sold through Bayleys in2016. Bayleys' website showed its selling agent as Mr Tony van Camp, andMr Campbell said that he telephoned Mr van Camp to enquire about the listing andthe sale. He asked Mr van Camp if he had met Mr Canegallo, and Mr van Campconfirmed that he had dealt with Mr Canegallo in the course of marketing the businessfor sale.[41] Mr Campbell said that Bayleys prepared an information sheet for the sale, toassist prospective purchasers to carry out due diligence on the business. Theinformation sheet was only given to a prospective purchaser after he or she signed aconfidentiality agreement.[42] Mr van Camp told Mr Campbell that he recalled approaching Mr Canegallo tosee if he was interested in purchasing Prodotti. Mr Canegallo did undertake duediligence enquiries on the business, but he was not the ultimate purchaser. Mr vanCamp said that he was not at liberty to disclose the precise identity of the new owners.Mr Canegallo's opposition[43] Mr Canegallo opposes the application. He says that, to the extent they havenot already been listed, the documents sought by EFL are either not relevant or are notin his possession or control.[44] Mr Canegallo says that all of his communications with Prodotti relating tobusiness activities in New Zealand were in connection with Pizza In A Box,Roundpizza, and/or another of his companies, Zero Impact Ltd (Zero). None of thosebusinesses are involved in importing and distributing Italian or other European foodswithin the defined restraint area. Roundpizza produces frozen pizza dough or pizzaflour; Pizza In A Box was set up to run a pizza restaurant franchise system; and Zerocarries on business importing and distributing cleaning products.Evidence in opposition[45] In his affidavit, Mr Canegallo said that he was a founding shareholder anddirector of EFL, and the managing director of EFL from February 2015 until October2016. He described the acquisition of EFL's shares by Granarolo, and Granarolo'seventual acquisition of all the EFL shares. He said that the final stages in the processby which Granarolo acquired ownership of EFL were preceded by strains between thefounding shareholders and Granarolo over matters such as strategy, products andpricing. There were also difficulties over conflicts or potential conflicts betweenGranarolo's position as a shareholder of EFL, and its position as a supplier to EFL.[46] Mr Canegallo referred to a meeting at Granarolo's offices in Bologna inSeptember 2016 which became quite heated. He said that he invited Granarolo tomake an offer to buy out the other shareholders, and that offer led to the final sharesale agreement in October 2016. Up until the meeting in Bologna, Mr Canegallo saidthat he had no intention of leaving EFL in the foreseeable future.[47] After he left EFL, Mr Canegallo took approximately six months off from hisbusinesses and focused on his family life. He remained a director of his variousbusinesses, but essentially withdrew from their day-to-day management (even thoughthey were excluded from the restraint of trade agreement). He said that he returned towork in about May 2017.[48] Mr Canegallo said that he has no interest or involvement in Prodotti in anycapacity. He described the six separate businesses in which he has an interest,including Roundpizza, Pizza In A Box, 0+81 Ltd, and Zero. Of the six businesses,only Roundpizza, 0+81 Ltd, and Zero are currently trading.[49] Pizza In A Box has never traded. A business model was developed under whichpizza shops would be set up in containers, but the company was never able to getcouncil consent. Eventually, Pizza In A Box gave up on the idea.[50] Mr Canegallo confirmed that 0+81 Ltd distributes European foods exclusivelyoutside the restraint area, particularly in Asia, and that Zero imports and distributescleaning products.[51] Roundpizza, Zero, and 0+81 Ltd do have some commercial dealings withProdotti, but all of them fall outside the restraint of trade provision. Roundpizza'sbusiness involves selling its flour and dough products through agents, and one of thoseagents is Prodotti.[52] In the past, Roundpizza has from time to time also used Prodotti to import someingredients that go into Roundpizza products (it was cheaper for Roundpizza totransport small quantities of ingredients using one of Prodotti's containers than itwould have been to import those products via an alternative route). None of theingredients transported were in competition with EFL.[53] 0+81 Ltd has imported pizza ovens in one of Prodotti's containers, and Zeromay also have imported some products in one of Prodotti's containers. None of thoseproducts would have fallen within the range of products covered by the restraint oftrade.[54] Mr Canegallo acknowledged the various common shareholdings anddirectorships between some of his companies and Prodotti, but said that thatinformation was publicly available at the Companies Office, and was known to EFLand Granarolo not later than 12 June 2015 when the shareholders' agreement wasentered into.[55] Mr Canegallo confirmed that he has no legal or beneficial interest in CIDI,which is the investment vehicle of Mr Ferruccio Piantini, a professional investor.Mr Piantini has been a board member of Granarolo for five years, and he was alsoinvolved with Mr Canegallo in setting up Roundpizza in 2014. Granarolo and EFLwere aware throughout of Mr Canegallo's other business associations with FerruccioPiantini.[56] Mr Canegallo specifically denied that he had approached any of EFL'ssuppliers or employees, in breach of the restraint of trade, saying he has nodiscoverable documents relevant to those allegations. That said, Mr Canegalloacknowledged that he has longstanding business and personal relationships with thedirectors of Prodotti, Mr Carrozzino, Ferruccio Piantini and Tomaso Piantini. He hasregular contact by email and telephone with each of these gentlemen in relation to theirshared business and personal interests, which do not include Prodotti. He also hasrelationships with some employees of Prodotti, many of whom are part of therelatively small Italian community in Auckland. He sees them at food shows andsimilar events.[57] Mr Canegallo also denied communicating with Mr Edgar Martin, the formerEFL employee, to encourage EFL employees to work for Prodotti. Mr Canegalloobserved that EFL's concern appears to have been based on an email chain betweenMr Canegallo and Mr Martin, in which Mr Martin confirmed to Mr Canegallo that hisdecision to leave EFL and join Prodotti had nothing to do with Mr Canegallo.(Mr Canegallo had sought that confirmation because Mr Martin was one of theemployees Mr Canegallo was alleged to have solicited.)[58] With regard to the second category of documents sought by EFL (documentsconcerning orders and deliveries involving Mr Canegallo and Prodotti), Mr Canegallosaid that, before reading Mr O'Neill's affidavit, he had never seen the DHLconsignment note referred to in that affidavit. He repeated that he had had noinvolvement in Prodotti and was not the contact person for Prodotti in relation to anyaspect of its business, saying that the email was sent to him in error. He suggested thatthe email may have been copied to him because a principal recipient, Ms RossanaGuardamagna, had previously worked as Mr Canegallo's assistant at EFL. AfterMr Canegallo left EFL, Ms Guardamagna resigned and briefly went to work forProdotti. The order in question appears to have been placed during the periodMs Guardamagna was employed by Prodotti.[59] Also, the email in question was addressed to Emiliano Parini, the currentmanaging director of EFL.[60] Mr Canegallo did contact Georgia Vitali of Salumificio about the consignmentnote referred to in Mr O'Neill's affidavit. Mr Vitali confirmed that he had neverreceived any instruction from Mr Canegallo regarding the New Zealand market sinceMr Canegallo left EFL. Similarly, Mr Canegallo has obtained confirmation that LSMhas not spoken with Mr Canegallo about Prodotti: any orders supplied to Prodotti byLSM came from someone else and did not refer to Mr Canegallo.[61] The third category of documents sought relates to communications betweenMr Canegallo and Westpac in connection with business proposals. Mr Canegallonoted that the request appears to be based on the email dated 11 January 2017 fromMr Carrozzino, in which Mr Carrozzino was enquiring about a business plan forWestpac. Mr Carrozzino is a director of Pizza In A Box, and the reference to thebusiness plan was a reference to a plan for Pizza In A Box (or a related projectMr Carrozzino and Mr Canegallo had been working on for a number of years).Mr Canegallo confirmed that he has no documents related to Prodotti's businessplanning or banking.[62] The fourth category of documents requested related to communications withBayleys, or their contractors or agents, relating to the proposed sale of Prodotti.Mr Canegallo acknowledged signing a non-disclosure agreement required by Bayleys.It is dated 26 August 2016, which was before Mr Canegallo's meeting in Italy withGranarolo that precipitated his decision to leave EFL. Mr Canegallo says that hesigned the document in his capacity as a director of EFL, giving an EFL address.[63] In response to Mr Campbell's evidence about his discussion with Mr van Campof Bayleys, Mr Canegallo noted that Mr Campbell does not appear to have askedMr van Camp in what capacity Mr Canegallo dealt with him, and whetherMr Canegallo had anything to do with the successful purchase of Prodotti.[64] Mr Canegallo said that his interest in the sale of Prodotti's business was in hiscapacity as an EFL director. He said that he quickly concluded from his examinationof the due diligence materials provided by Bayleys that Prodotti was not anopportunity worth pursuing for EFL. For that reason he never prepared any writtenreport to EFL or Granarolo on the potential acquisition. He probably did discussProdotti informally with one or more of the New Zealand-based directors of EFL atthe time, but only to note that it was not worth pursuing further.[65] Mr Canegallo said that he did not meet with Mr van Camp. Also, Mr Campbellomitted from his affidavit any reference to an approach Mr Campbell made toMs Liesje Kurghan, the daughter of the then-owner of Prodotti – Ms Kurghan hasconfirmed to Mr Canegallo, and would have advised Mr Campbell, that Mr Canegallowas not involved with the eventual purchase of Prodotti.[66] The next category of documents relates to communications between 0+81 Ltdand EFL's competitors, including Europomella and Salumificio. Mr Canegallo saidthat any documents in this category could not be relevant as 0+81 does not trade withinthe restraint area. In addition, EFL's parent Granarolo is a competitor of 0+81 Ltd inthe markets in which 0+81 Ltd does trade, namely Japan, Korea and the Philippines.[67] Mr Canegallo confirmed that he is neither engaged, concerned, or otherwiseassociated with Europomella, Salumificio (both companies are suppliers to EFL), orany other competitor of EFL, within the restraint area.[68] Mr Canegallo acknowledged that he has in his control a number of documentsrelating to communications between 0+81 Ltd and its suppliers, some of whom maybe current or former suppliers to EFL in New Zealand. But such communicationscould not affect the issues over the alleged breach of the restraint clause.[69] Mr Canegallo dealt separately with the emails sent to his inbox at EFL after hehad left the company. The email from Mr Carrozzino dated 11 January 2017 wouldhave related to the Pizza In A Box business, in which Mr Carrozzino and Mr Canegalloare directors. Mr Canegallo produced a reply he sent to Mr Carrozzino's email of11 January 2017, on 13 January 2017. The reply (written in Italian, with a translationprovided by Mr Canegallo) appears to relate generally to the Roundpizza business, butdoes refer to a project that would have involved Pizza In A Box.[70] Turning to the email from Gerardo Cinque dated 25 March 2017, Mr Canegalloexplained that Mr Cinque is a longstanding friend. EFL had issued legal proceedingsagainst Europomella in Italy, and Mr Cinque contacted Mr Canegallo when he learnedof that legal proceeding. In response to Mr O'Neill's belief that this correspondenceshows that Mr Canegallo has an ongoing relationship with EFL's suppliers, allegedlyin breach of the restraint clause, Mr Canegallo pointed out that Europomella is not acustomer of EFL: it sells its products to EFL in New Zealand, and EFL then on-sellsthe products to New Zealand customers such as restaurants. But even if the restraintdid apply to suppliers (which Mr Canegallo did not accept), Mr Canegallo consideredthat he would not be precluded from having any contact whatsoever. Some of theemployees of EFL's suppliers have become good friends over the years, andMr Canegallo has remained in touch with them either socially or in connection withhis businesses, outside the restraint.[71] Mr Canegallo next referred to the email from Giusepe D'Amore of Profumi.He said that he has nothing to do with Profumi, and it was not clear to him why theemail has been referred to by EFL. Profumi is not identified as a supplier to EFL inEFL's statement of claim, and the statement of claim does not include any allegationsagainst Mr Canegallo relating to Profumi.[72] The next communication concerned an order relating to Salumificio.Mr Canegallo said that he had not had any dealings with Salumificio since leavingEFL. He produced an email from Mr Vitali of Salumificio confirming that statement.[73] Mr Canegallo emphatically denied the apparent suggestion by EFL that he (orsomeone on his behalf) hacked into EFL's computer system. He specifically deniedaccessing EFL's server after he left EFL.Applications for particular discovery – legal principles[74] Rule 8.19 of the High Court Rules provides:8.19 Order for particular discovery against party after proceedingcommencedIf at any stage of the proceeding it appears to a Judge, from evidence or fromthe nature or circumstances of the case or from any document filed in theproceeding, that there are grounds for believing that a party has not discovered1 or more documents or a group of documents that should have beendiscovered, 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, theparty's best knowledge and belief as to when the documentsceased to be in the party's control and who now has control ofthem; 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 documentsavailable for inspection, in accordance with rule 8.27, to the otherparty or parties.[75] The principles applied by the Courts under r 8.19 were summarised by Asher Jin Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd.2 In that case, the Judgefollowed a four-stage approach, as follows:3(i) Are the documents sought relevant, and if so how important will theybe?(ii) Are there grounds for belief that the documents sought exist? This willoften be a matter of inference. How strong is that evidence?(iii) Is the discovery sought proportionate?(iv) Weighing and balancing those matters, in the Court's discretionapplying r 8.19, is an order appropriate?Discussion and conclusionsRequest for documents in category 1 – communications between Mr Canegallo andProdotti[76] Ms McMullen noted that Mr Canegallo does not deny that he has had abusiness association with Prodotti, and that he has documents in his possessionrelating to his business with Prodotti. Mr Canegallo contends that his businessrelationship with Prodotti is irrelevant, because it falls outside the terms of the restraintof trade, but Ms McMullen submitted the effect of that stance was to invite the Courtand EFL to take Mr Canegallo's word for the fact that all of his communications with2 Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd [2015] NZHC 2760.3 At [14].EFL's competitor (Prodotti) in no way breached the restraint of trade, and on that basisare irrelevant. She referred to Kawerau Village Holdings Ltd v Yuen in support of theproposition that the Court will assume the case of the party seeking discovery is true,and not that of the party from whom discovery is sought.4 Ms McMullen alsosubmitted that the hearing of this application is not the time to try the case to decidethe ultimate relevance alleged by the party seeking discovery.5 There is norequirement on an applicant to absolutely prove each and every element of its claimsimply to obtain discovery orders.[77] Ms McMullen then referred to advice received from Mr Canegallo's solicitorson 26 October 2018 that Mr Canegallo has now entered into a consultancy agreementwith Prodotti, effective from 16 October 2018.[78] Generally, Ms McMullen submitted that it is only when the documents havebeen discovered and inspected that Mr Canegallo's claims as to their relevance can betested. She submitted that there are clear grounds for EFL to believe that thedocuments exist, having regard to Mr Canegallo's admitted contacts with Prodottiduring the restraint period, and that some of his businesses have had commercialdealings with Prodotti. She referred in particular to the DHL pre-advice email sent toMr Emiliano Parini and copied to Mr Canegallo on or about 21 April 2017: theconsignee was Prodotti, and the consignment (for cheese and other foodstuffs) wasclearly caught by the restraint. On the face of it, the email appears to suggest thatMr Canegallo has been associated with Prodotti in breach of the restraint clause.[79] Ms McMullen did acknowledge at the hearing that there was nothing in therestraint that would have precluded Mr Canegallo from dealing with the directors ofProdotti for the purposes of the Roundpizza business (or the Pizza In A Box business),as long as the dealings did not relate to European food items beyond those necessaryfor the making of the pizza dough and pizza flour. That led to some discussion overthe wide nature of the request for the category 1 documents, and I stood the case downfor a short period to enable counsel to confer on possible refinements to the request.4 Kawerau Village Holdings Ltd v Yuen [2015] NZHC 1379 at [38].5 Rapid Metal Developments NZ Ltd v Access One Scaffolding Ltd [2017] NZHC 204 at [5] and[14].When the case was recalled, Ms McMullen advised that the request under this headingcould be amended to read:Communications/documents between Prodotti/directors and [Mr Canegallo]in respect of any European food types not associated with pizza dough or pizzaflour, including but not limited to cheese and cured meats and Europomellaproducts during the restraint of trade period.Communications/documents between Prodotti/directors and [Mr Canegallo]in respect of any strategic matters, business proposals, dealings, consultingnot associated with Pizza In A Box and Roundpizza during the restraint oftrade period.[80] Mr Cogan submitted that the request in this category, even in its refined form,is a fishing expedition by EFL. It is the pleadings that determine relevance, and it isthen for the parties to depose whether they have, or have had, documents which arerelevant to the pleadings.[81] He submitted that the documents sought could only be relevant to the extentthey engage the restraint of trade. The revised form of request would still captureactivities which were not in competition with EFL's business. The request has beencontracted, but not enough. The second paragraph of the revised request in particularwould capture any activities. The touchstone for relevance has to be competition withEFL.[82] In response to Ms McMullen's submission based on the Kawerau VillageHoldings case, Mr Cogan submitted that the case does not really advance mattersbeyond the proposition that it is the pleadings that define questions of relevance, andaccordingly define the scope of discovery. He submitted that Mr Canegallo hassufficiently explained in his affidavit why there exist no further relevant documents inthis category.[83] In my view EFL's request in this category is, in effect, a fishing expedition. Itwas for EFL to demonstrate that there is reason to believe that Mr Canegallo has (orhas had) relevant documents that have not been disclosed, and it has not done that.[84] First, Ms McMullen acknowledged that there was nothing in the restraint thatwould have precluded Mr Canegallo from dealing with the directors of Prodotti forthe purposes of the Roundpizza business. That would have included seeking Prodotti'sassistance to import ingredients for the pizza dough or pizza flour, and it would haveincluded the distribution of Roundpizza's products using Prodotti as one of its agents.[85] I do not consider any of the documents produced by Mr O'Neill in support ofthe application assist the request for documents in this category. Westpac's request fora business plan appears to have been directed to the affairs of Roundpizza or Pizza InA Box, and on its face does not provide evidence of any activity caught by the restraintprovision. Nor does the communication from Profumi rise to the level of providingreasonable grounds to believe that further relevant documents might exist. TheProfumi letter did no more than introduce Profumi to Mr Canegallo, and in the face ofhis denials there is nothing to suggest that he, whether alone or in conjunction withProdotti or any other party, breached the restraint by importing Italian or otherEuropean foods into New Zealand in competition with EFL. And the communicationfrom Mr Cinque of Europomella does nothing to suggest that any business relationshipexisted between that company and Mr Canegallo which might have breached therestraint.[86] The closest EFL came to providing sufficient proof on this part of itsapplication was the DHL email of 21 April 2017. It was clearly concerned with theimportation by Prodotti of European foodstuffs that were covered by the restraint, itwas during the restraint period, and the email was copied to Mr Canegallo. However,Mr Canegallo denies ever seeing the email, and denies ever placing any orders for thecheese and other foodstuffs referred to in it. He speculates that the order may havebeen placed by a secretary who formerly worked with him at EFL but subsequentlywent to Prodotti.[87] The main difficulty for EFL with this document is that the primary addresseewas Mr Parini, who is the managing director of EFL. If Mr Canegallo had beeninvolved in assisting Prodotti to import European foods in breach of his restraintobligations, it seems improbable that the DHL email would have been addressed toMr Parini. The more probable explanation is that put forward by Mr Canegallo,namely that the email was sent to EFL in error on the assumption that the former EFLsecretary (now at Prodotti) was still at EFL.[88] I accept Mr Cogan's submission that communications between Mr Canegalloand Prodotti or its directors could only be relevant if and to the extent they wereconcerned with activities that would or might breach Mr Canegallo's restraintobligations. Anything else could neither assist nor damage either side's case. It is forthe party providing discovery, assisted by his or her solicitor, to properly apply thelegal test for relevance, and disclose all documents considered to be relevant on thebasis of the pleadings. The party's decision on what documents are relevant and mustbe disclosed is final, unless the other party can point to reasonable grounds forbelieving that further relevant documents exist. It is not enough for a party applyingfor particular discovery to complain that the party making discovery has determinedwhich documents are relevant and which are not — that is what always happens withdiscovery. I do not consider that the Kawerau Village Holdings case affects thatposition.[89] Considering the first paragraph of Ms McMullen's revised form of request at[86] above, the first point is that the request would pick up any communications theremay have been with regard to business activities carried on by Mr Canegallo or hiscompanies exclusively in markets outside New Zealand. Such documents could notadvance EFL's case or damage Mr Canegallo's case, and would therefore not berelevant. But more fundamentally, there is insufficient evidence of grounds to believethat documents of the kind described in the first paragraph of the revised request exist.The passage from Kawerau Village Holdings to which Ms McMullen referred was notdirected to that question — all it essentially said was that if one party contends for aparticular fact scenario, any documents tending to support that scenario, as well asthose adverse to it, will be relevant, regardless of the merits of the contention. Subjectto the point about communications for the purpose of supplies by Mr Canegallo or hiscompany exclusively outside New Zealand, which is concerned with the issue ofrelevance, the issue on this request is over the existence of grounds to believe thatMr Canegallo has not discovered some relevant document.[90] The request for the documents described in the second paragraph ofMs McMullen's revised form of request is again insufficiently supported by evidenceshowing that there are grounds for believing that Mr Canegallo has not discovereddocuments falling within the paragraph that have not been discovered. Mr Canegallohas provided an affidavit stating that he had never seen the DHL email of 21 April2017, and the business plan referred to in the Westpac email correspondence appearsto relate to Roundpizza and/or Pizza In a Box. The restraint applied only in respect ofimporting and distributing Italian and other European foods, and I do not think itreasonably arguable that documents recording any communications there may havebeen between Mr Canegallo and Prodotti's directors in respect of any strategic matters,business proposals, dealings or consulting that were not connected with theimportation and distribution of European foods in New Zealand would be documentsthat "should have been discovered" (noting that the terms of the final sale agreementprovided that the restraint would only relate to the business of importing anddistributing Italian or other European foods: it would not relate to other businesses).[91] I accept Mr Cogan's submissions on the consultancy agreement entered intobetween Prodotti and Mr Canegallo on 16 October 2018. That agreement, entered intoafter the expiry of the restraint period, does not (whether considered alone or togetherwith the other evidence) provide grounds for believing that there exist relevantdocuments relating to Mr Canegallo's activities during the restraint period that havenot been discovered.[92] Having regard to all of the considerations discussed, I am not satisfied that EFLhas met the threshold test for particular discovery under this head. The request fordiscovery of the category 1 documents is accordingly refused.Request for documents in category 2 – documents concerning orders and deliveriesinvolving Mr Canegallo and Prodotti[93] Ms McMullen relied primarily on the April 2017 email from DHL, copied toMr Canegallo at his old EFL email address. She submitted that the document (and anyothers like it) provides evidence of Mr Canegallo "being otherwise associated withany business in competition with EFL". She noted that Mr Canegallo hasacknowledged that he has used Prodotti to import ingredients for his businesses (onthe basis that doing so would not breach his obligations under the restraint clause).[94] Ms McMullen again referred to Kawerau Village Holdings Ltd, submitting thatMr Canegallo is "purporting to impose [his] own determination of relevance beforethe evidence can be inspected and tested".[95] Ms McMullen submitted in her written submissions that Mr Canegallo did notstate in his notice of opposition that he has never had documents in this category inhis possession.[96] In response, Mr Cogan referred to Mr Canegallo's affidavit, in which heprovided his "best guess" as to how the April 2017 DHL email may have been copiedto him. He said Mr Canegallo was long gone from EFL when that email was sent, andhe had no dealings with Prodotti — the email appears to have resulted from a mistakeby DHL.[97] I am not satisfied that EFL has provided sufficient evidence to justify an orderfor particular discovery of documents in this category, substantially for the samereasons EFL was unable to persuade me that particular discovery should be orderedfor the category 1 documents. Mr Canegallo has stated on oath that he was notinvolved with the consignment which was the subject of the April 2017 DHL email,and he has suggested an explanation for that email that seems plausible. In all thecircumstances, there is insufficient evidence that Mr Canegallo has not discovereddocuments in this category that should have been discovered. The application forparticular discovery of the category 2 documents is accordingly refused.Request for documents in category 3 – communications with Westpac in connectionwith business proposals[98] At the hearing, Ms McMullen amended this discovery request to read"Communications with Westpac bank in connection with business proposals between[Mr Canegallo] and the Prodotti directors" (emphasis added).[99] Ms McMullen referred to EFL's belief that "business plans were in motionbetween Mr Canegallo and Prodotti's director [Mr] Carrozzino during the restraint oftrade period". She relied primarily on the email dated 11 January 2017 fromMr Carrozzino to Mr Canegallo, in which Mr Carrozzino advised that "Mike" fromWestpac had called "to receive news on business plans do you know where we areso I report?"[100] Mr O'Neill produced further emails which appear to follow on from the emailreferring to "Mike from Westpac", being emails from Sandro Del Moro of EFL toMr Carrozzino (13 January 2017), from Mr Carrozzino to Mr Parini of EFL(14 January 2017), and from Mr Parini to Mr Carrozzino (15 January 2017).Unfortunately these emails are written in Italian, and I have not been provided withtranslations. Doing the best I can with them, however, it appears that on 13 January2017 Sandro Del Moro advised Mr Carrozzino that EFL had received the "Mike fromWestpac" email the day before. He invited Mr Carrozzino to contact EFL's managingdirector, Mr Parini, to discuss (or possibly explain) the email.[101] Mr Carrozzino emailed Mr Parini on 14 January. I cannot make much of thisemail without an English translation, but I do note that Mr Carrozzino referred,apparently with reference to EFL's receipt of the "Mike from Westpac" email, to "unerrore tecnico", and that he referred (in a postscript) to the Pizza In A Box "progetto",and to "Marco" (which I take to be a reference to Mr Canegallo).[102] Mr Canegallo produced a copy of an email to Mr Carrozzino that appears to bea response to Mr Carrozzino's "Mike from Westpac" email. The email included thestatement: "Anyway, I had a call from Mike about Roundpizza and he asked me thesame thing". The email went on to refer to a business proposal between Mr Canegalloand Mr Carrozzino relating to the sale of pizzas from containers — ie the proposedPizza In A Box business.[103] Mr Cogan submitted that there is nothing to suggest that the "Mike fromWestpac" email had anything to do with Prodotti, and no basis for believing thatrelevant documents exist in this category that have not been discovered.[104] I accept Mr Cogan's submissions on this category. The "business plan" referredto in the "Mike from Westpac" email appears to have been a business plan sought inrespect of either Roundpizza or Pizza In A Box, and it appears not to have involvedProdotti. In my view, the email correspondence relied on by EFL does not providesufficient grounds for believing that Mr Canegallo has failed to discover documentsin this category that should have been discovered. The application for particulardiscovery of the category 3 documents will be refused accordingly.Request for documents in category 4 – communications with Bayleys (or its agents)relating to the sale of Prodotti (or ownership interests in Prodotti)[105] The basis for the discovery sought is that EFL discovered that Mr Canegallowas registered with Bayleys listing agent as an "interested party" when Prodotti wason the market for sale in 2016. Prodotti was ultimately purchased by a company inwhich Mr Carrozzino and Mr Ferrucio Piantini were interested.[106] Mr Canegallo's explanation is that he was considering the potential acquisitionof Prodotti by EFL. He says that, at the time, he had no intention of leaving EFL, andremained committed to its strategy, which included looking for businesses to acquire.Bayleys provided Mr Canegallo with a preliminary information memorandum onProdotti, but Mr Canegallo says that, on reviewing the document, he concluded thatProdotti had no value for EFL. He says that he then withdrew from discussionsrelating to a possible purchase of Prodotti.[107] Mr Canegallo produced a copy of an email from Mr van Camp confirming thathe had never met Mr Canegallo in person.[108] Mr Cogan submitted that EFL has not pleaded anywhere in its statement ofclaim that Mr Canegallo was personally involved in the acquisition of Prodotti. Thefirst reference to his alleged involvement in doing due diligence on Prodotti came withEFL's application for particular discovery. All that has happened is that Mr Canegallohas located the documents relating to the Prodotti due diligence, and made themavailable.[109] In my view there is no basis for further discovery of documents under thisheading. Mr Canegallo's evidence is clear that he did not acquire Prodotti's businessor any part of it, and that evidence has not been contradicted by any evidence fromEFL. In particular, there was no reply evidence from EFL denying Mr Canegallo'sevidence that he was acting on behalf of EFL when he dealt with Bayleys.[110] Mr Campbell's affidavit confirms that Mr Canegallo was not the ultimatepurchaser of Prodotti, and I understand that is not in dispute. Further, whenMr Canegallo conducted the due diligence on Prodotti, he signed the Bayleysconfidentiality deed on behalf of EFL as a director of EFL, adding his EFL emailaddress to the document. So as far as the evidence shows, then, Mr Canegallo madean approach with a view to the possibility of EFL acquiring Prodotti, but the matterwent no further.[111] Quite apart from the absence of any express pleading relating toMr Canegallo's alleged attempt to acquire Prodotti, EFL has not clearly stated how, ifMr Canegallo was acting in his personal capacity when the approach occurred, hisapproach could be said to reach the level of Mr Canegallo being "engaged, concerned,or interested in, or otherwise associated with", a business in competition with EFL.[112] In all those circumstances, there is insufficient evidence to demonstratereasonable grounds for believing that further documents exist in this category thatwould either assist one of the party's cases, or be adverse to that party's case. Therequest for particular discovery of documents in this category is accordingly refused.Request for documents in category 6 – documents relating to paragraph 15(m)(ii) ofMr Canegallo's statement of defence, including correspondence between 0+81 Ltdand Europomella and Salumificio[113] Paragraph 15 of the statement of claim alleged numerous respects in whichMr Canegallo is said to have breached the shareholders' agreement. Paragraph 15 ofMr Canegallo's statement of defence and counterclaim contains at subparagraph(m)(ii) particulars of a broad denial by Mr Canegallo that he has, through Prodotti orotherwise, directly or indirectly endeavoured to induce or solicit certain of EFL'ssuppliers to cease doing business with EFL (or to reduce the amount of business theywould normally do with EFL). The suppliers in question include Europomella andSalumificio. At paragraph 15(m)(ii), Mr Canegallo pleads that he has had contact withEuropomella and Salumificio through 0+81 Ltd, which has been trying to sell itsproducts to customers in markets outside the restraint area as defined in theshareholders' agreement, including Japan and the Philippines.[114] Ms McMullen again submitted that the Court should not simply acceptMr Canegallo's explanation that such business as he may have been conducting orendeavouring to conduct with Europomella and Salumificio was permissible under therestraint of trade. She submitted that that cannot be properly tested until discovery hasbeen provided. She again relied on Kawerau Village Holdings Ltd in support of hersubmission, contending that documents showing that Mr Canegallo has been inbusiness with Europomella and Salumificio will be relevant to the question of whetherthe restraint of trade has been breached. Further, Mr Canegallo has confirmed thatsuch documents do exist.[115] Mr Cogan submitted that this request provides another example of how thediscovery sought by EFL is "creeping" outside the pleadings. He submitted thatdocuments relating to Mr Canegallo's or 0+81 Ltd's activities outside of New Zealand(and therefore outside the restraint zone) cannot be relevant. He submitted that thereis no proper factual basis showing that relevant documents exist in this category.[116] More generally, Mr Cogan submitted that EFL is on a fishing expedition withthis and other discovery requests it has made. EFL's case as it appears from thepleadings is limited to alleging:(i) "association" with a competitor of EFL (Prodotti), alleged to besufficiently established by the common shareholdings and directoratesbetween Prodotti and/or its owners and Mr Canegallo and some of hiscompanies;(ii) alleged solicitation of EFL's suppliers; and(iii) alleged solicitation of EFL's employees.[117] Mr Cogan submitted that EFL is seeking to make a case beyond this pleading.[118] Again, I accept Mr Cogan's submissions on this issue. In my view there wasnothing to prevent 0+81 Ltd from communicating with Europomella and/orSalumificio with a view to securing supplies for its business in the Japanese andPhilippines markets. Communications of that sort could not advance either party'scase on the issue of whether Mr Canegallo was directly or indirectly engaged,concerned, or interested in or otherwise associated with, a business in competitionwith EFL's business of importing Italian or other European foods into New Zealandand distributing them in this country. Nor are there sufficient grounds for believingthat documents are or have been held by Mr Canegallo which are relevant to the issueof whether (directly or indirectly) he has been soliciting Europomella or Salumificioto stop doing business with EFL (or reduce the amount of business they wouldnormally have done with EFL).[119] In those circumstances, there is no sufficient basis for particular discovery inrespect of the category 6 documents. The application in respect of category 6documents is refused accordingly.EFL's request for order relating to the extent of Mr Canegallo's searches fordiscoverable documents[120] I do not think there is a sufficient evidential basis for an order under this head.Mr Canegallo's discovery obligations relating to the extent of the search he wasrequired to make for relevant documents is clear,6 and no doubt his solicitors haveexplained those obligations to him in the particular context of this case (including thefact that his discovery obligations are ongoing – if further relevant documents cometo light, they must be promptly discovered).[121] In this case, some WhatsApp messages have been discovered by Mr Canegallo,so it is clear that that particular mode of communication has not been overlooked byhim. There is no specific evidence that he has failed to look for further WhatsAppmessages (or relevant communications on other messaging services), and absentevidence of that sort I do not see a need for the proposed order. The request for thisorder is also refused.6 Under r 8.14 of the High Court Rules 2016, a party must make "a reasonable search for documentswithin the scope of the discovery order". In his or her affidavit of documents, a party must giveparticulars of the steps taken to fulfil the discovery obligation, and state any categories or classesof documents that have not been searched (and the reasons for not searching them) – r 8.15(2)(c)and (d).Summary of orders made on EFL's application for particular discovery[122] EFL's application for particular discovery is dismissed. I make an order forcosts in favour of Mr Canegallo on a 2B basis, with disbursements to be fixed by theRegistrar.APPLICATION BY MR CANEGALLO FOR PARTICULAR DISCOVERYThe categories of documents sought[123] Mr Canegallo denies EFL's allegations that its employees have been solicitedby Prodotti, and that Mr Canegallo was responsible for the solicitation. He seeksdocuments relevant to the real reason EFL's employees have been leaving, and thecauses and quantum of EFL's losses (if any). He contends that EFL's employees havebeen leaving in large numbers for reasons that are unconnected with him but internalto EFL.[124] Mr Canegallo also seeks discovery relating to alleged breaches by him of thealleged duty that he should not solicit EFL's suppliers to either stop supplying EFL orreduce the business they would otherwise have done with EFL.[125] Mr Canegallo alleges in his amended statement of defence and counterclaimvarious breaches of the FTA by EFL, arising from mislabelling practices said to havebeen adopted by it. He asks in his discovery application (under the heading"Mislabelling") for documents relating to the sale by EFL of products that had passedtheir "use by", or "best before", dates (or otherwise been rejected as unfit for sale), andfor documents relating to sales by EFL of products that did not correspond to thedescription of the product as ordered by a customer (and the alleged mislabelling ofsuch products to falsely show that they were the products ordered).[126] Certain documents are sought concerning EFL's current management andfinancial performance. Documents were also sought relating to the allegation thatMr Canegallo allegedly obtained unlawful access to EFL's computer system.[127] In his application Mr Canegallo asked for an order for particular discovery of14 categories of documents. However, in a schedule presented at the hearing,Ms McMullen filed amended grounds of opposition, which indicated that discoveryof some of the documents sought would no longer be opposed.[128] The following categories are now no longer opposed: category 1(a), all ofcategory 4 with the exception of 4(h), all of category 5 with the exception of 5(g),7(a)-(d), 8, 10, and 12.[129] In many of those cases Ms McMullen advised that she considered there wouldneed to be restrictions on inspection, having regard to the commercially sensitivenature of the documents (particularly as Mr Canegallo is now working as a consultantfor Prodotti). In most cases I think it is likely to be fairly obvious whether a particulardiscoverable document is commercially sensitive or otherwise confidential, so that,for example, access to the sensitive or confidential document should be restricted to,say, counsel and one expert witness for Mr Canegallo, pending further order of theCourt. In those cases where particular discovery is ordered against EFL in the ordersmade below, I invite counsel to confer and, if they cannot agree, let me have a jointmemorandum within 20 working days after EFL has served its supplementarydiscovery list, setting out their respective proposals for inspection of the sensitive orconfidential documents (including the number and identities of the individuals whoshould be allowed to view the documents, and the nature of any undertakings thoseindividuals should be required to provide before the documents are made available forinspection). I will then deal with the issue on the papers, or if necessary convene aconference at which directions will be given.Evidence in support of the applicationAffidavit of Mr Canegallo[130] Mr Canegallo provided no fewer than six affidavits in support, one by himselfand the others by a number of former employees of or consultants to, EFL.Ms McMullen objected to some of this evidence, much of which appears to have beendirected to proving substantive allegations made by Mr Canegallo in his amendedstatement of defence or counterclaim.[131] In my view there is no need to refer to evidence of that kind. On the basis ofthe Kawerau Village Holdings Ltd case, I am required to assume for the purposes ofEFL's discharge of its discovery obligations that the various matters alleged byMr Canegallo may be proved at trial. If EFL documents would clearly be relevant todisputed allegations in the pleadings, the only necessary evidence would be evidencedirected to the issues of whether there is reason to believe EFL has (or has had) suchdocuments in its power that it has not discovered, and the proportionality of thediscovery sought.[132] In those circumstances I do not propose to refer to the evidence filed in support,except to such extent as may be necessary for those purposes.EFL's notice of opposition and affidavit in opposition[133] In its original notice of opposition, EFL opposed all of Mr Canegallo'sparticular discovery application, principally on the basis that the documents were saidto be irrelevant. EFL also contended in respect of some of the documents sought thatthe discovery would be disproportionate (particularly over the time period covered bysome of the document requests). Also, in a number of cases, EFL said that thedocuments sought were commercially sensitive.[134] There was one affidavit filed in opposition to Mr Canegallo's discoveryapplication. It was sworn by Mr O'Neill.[135] Mr O'Neill said that the range of allegations in the affidavits filed forMr Canegallo were generally denied. He limited his evidence to responding to therequest for the particular document categories, electing not to engage with the specificevidence of mislabelling, use of expired product, and so on.[136] Mr O'Neill said that EFL notified Mr Canegallo's solicitors on 31 August 2018that it does not hold any documents relating to Mr Canegallo's discovery requests 1(b),6, 7(a), 7(b) and 13 that have not already been discovered. On the other discoverycategories requested, he said that EFL does not consider that it should have to disclosethe documents sought because the documents are either irrelevant or constituteconfidential business records.[137] Mr O'Neill acknowledged that there are further confidential documents thatexist that were not listed in EFL's original affidavit of documents. At that time thesedocuments were considered not to be relevant, as Mr Canegallo's amended statementof defence and counterclaim had not been filed.[138] Mr O'Neill said that EFL has two further sales spreadsheets which aresignificant in size. It has agreed to provide these to Mr Canegallo for the purposes ofthis litigation, with confidential customer names redacted.Discussion and conclusionsDocument categories 1–3 — staff departures[139] Mr Canegallo applied for particular discovery of the following documents:1. Documents relating to the number of employees that have left EFLsince the defendant's resignation and their reasons for doing so,including, but not limited to:(a) Notices of resignation;(b) Any written record of their reasons for resignation, including,but not limited to, notes of any exit interview; and(c) Internal EFL communications regarding the rate and reasonsfor employee departures, including, but not limited to, reportsto the board of EFL, minutes of board meetings, and writtencommunications (or written records of communications)between EFL management regarding the actual or speculatedreasons for employees leaving EFL.2. Documents relating to EFL's decision on whether or not to recruitreplacement personnel for the positions vacated.3. Documents relating to EFL discussing, investigating or consideringthe reasons for the alleged loss of (as applicable) suppliers, customersand/or employees.[140] Mr Cogan submitted that the documents in these categories are relevant tobreach, causation, and quantum of any loss.[141] He noted that it is not in dispute that the pleaded employees have left EFL, butMr Canegallo alleges they left for reasons unconnected with him. He also contendsthat the departure of the employees referred to in the statement of claim is merely thetip of the iceberg, and that the departure is systematic of a general exodus ofdissatisfied employees.[142] Mr Cogan submitted that, if employees left EFL for reasons unconnected withMr Canegallo, there will be no breach of the restraint insofar as it related to solicitingEFL employees, and EFL's claim in that regard will fail.[143] Mr Cogan also identified a causation issue. Did any alleged solicitation byMr Canegallo in fact induce the named employees to leave? If so, what loss (if any)flowed from it? There will also be issues over what steps (if any) EFL has taken tomitigate the alleged loss. Were steps taken to recruit new employees immediately?What steps were taken to identify and address the underlying reasons for theemployees' departure?[144] In his oral submissions, Mr Cogan emphasised that EFL will need to prove attrial that the employees who have left the company have been induced byMr Canegallo to leave. While EFL's statement of claim refers only to six named EFLemployees, Mr Cogan submitted that it is artificial for EFL to say that discovery of thereasons for employee departures should be limited to those named employees.[145] In respect of request number 2, the question of what steps EFL has taken toreplace personnel who have left is said to be relevant to the likely reasons for staffdepartures, including staff allegedly being overworked and having to do the work ofothers who have left. Mr Cogan submitted that the staff departures from EFL were sosignificant that it beggars belief that the issue would not have been discussed at boardor management level.[146] Mr Cogan also noted that EFL has still not provided particulars of the allegedinducements by Mr Canegallo. That is another reason why it should now providediscovery of documents suggesting that there may have been other reasons foremployees leaving.[147] In response to these requests, EFL has now agreed to produce the resignationletters (subcategory 1(a)).[148] In response to request 1(b), relating to written records of employees' reasonsfor resignation (including notes of any exit interviews), EFL says that no documentsare held.[149] In response to request 1(c), EFL opposes the discovery sought on the basis thatthe documents are not relevant. It says that documents concerning "internalspeculation" about why an employee may have left does not prove the matter in issue,which is whether Mr Canegallo's alleged breaches of the restraint caused employeedepartures.[150] In response to request 2, being documents relating to EFL's decision onwhether or not to recruit replacement personnel for positions vacated, EFL again saysthat any such documents would not be relevant.[151] In response to request 3 (documents relating to EFL discussing, investigatingor considering the reasons for the alleged loss of suppliers, customers and/oremployees), EFL again says that the documents sought are not relevant.[152] On the request for discovery of the category 1(c), 2 and 3 documents,Ms McMullen noted that the question is whether Mr Canegallo caused the departures.She submitted that there are two possible answers:(1) Mr Canegallo did have something to do with the departures, in whichcase the employees' reasons would be irrelevant; or(2) Mr Canegallo did not have anything to do with the employees leaving,in which case there would be nothing further to consider as no casewould have been made out.[153] She submitted that speculative reasons EFL might have assumed foremployees' departures will not determine the true reason a given employee left.[154] EFL having agreed to provide discovery of the category 1(a) documents, Idirect that (if it has not already made this supplementary discovery) it is to file andserve a sworn supplementary discovery list disclosing the category 1(a) documents, inaccordance with the rules, within 20 working days.[155] Mr O'Neill has provided sworn evidence that no documents in category 1(b)exist. In my view there is insufficient evidence for the Court to reject that evidence.For example, not every employer conducts exit interviews, and there is no evidencethat EFL had a practice of doing so. The request for the category 1(b) documents willbe refused.[156] In respect of the request for the category 1(c) documents, Mr Canegallo haspleaded affirmatively that approximately 30 employees, representing approximately60 per cent of EFL's employees, have left EFL for reasons having nothing to do withMr Canegallo. He has expressly pleaded that these former employees (including thesix identified in EFL's statement of claim) have left because they were dissatisfiedwith EFL as an employer, in various pleaded respects. EFL does not appear to havefiled a reply denying these affirmative allegations, but I will assume that it either doeswish to deny them or that it considers them irrelevant to its pleaded claim thatMr Canegallo (through Prodotti) directly or indirectly, solicited and/or employed onlythe six named EFL employees.[157] Relevance is to be judged by the pleadings, but it seems to me that the variousalleged reasons for departure of the 30 EFL employees are advanced primarily asevidence in support of Mr Canegallo's denial of the allegation that he solicited orattempted to solicit the six named EFL employees for employment at Prodotti. Inthose circumstances I am not satisfied that some wide-ranging enquiry as to why theother 24 EFL employees who are said to have resigned from EFL did so, would beeither necessary or proportionate. What is ultimately relevant on the pleadings iswhether or not the six EFL employees were in fact solicited for employment byMr Canegallo, acting through Prodotti.[158] Of the six employees, only three are alleged to have been successfully solicitedfor employment by Mr Canegallo, in the sense that the alleged solicitation resulted inactual employment.[159] It is difficult to see how any unsuccessful solicitation by Mr Canegallo couldhave caused EFL any loss. As for the three EFL employees who are alleged to havebeen employed by Mr Canegallo and Prodotti (Mr Fontana, Ms Guardamagna andMr Martin), I accept that the category 1(c) documents, limited to the reasons for theirindividual departures, would be relevant and that an order for their discovery wouldbe proportionate. But the reasons for the departures of individual employees,including Messrs Fontana and Martin and Ms Guardamagna, has already beenaddressed in Mr O'Neill's response to the category 1(b) request: EFL does not holdany such documents. I am not satisfied that wide-ranging discovery of documentsshowing EFL employee departure trends, or reasons for departure in the cases ofemployees other than the six identified by EFL in its statement of claim, will advanceor detract from either party's case — the critical issue will be the reasons for thedeparture of the EFL employees whose departure is said to have involved solicitationby Mr Canegallo, and Mr O'Neill says there are no such documents. In thosecircumstances I am not satisfied there is a basis for further discovery of documents incategory 1(c).[160] Category 2 comprises documents relating to EFL's decisions whether or not torecruit replacement personnel for the positions vacated. Clearly discovery on thisissue could not be relevant to Mr Canegallo's alleged liability for soliciting orattempting to solicit the six employees, so if the documents are relevant they wouldhave to be relevant on the issues of causation or damages. I think they are relevant,but only in respect of those three individuals who are alleged to have been solicited byMr Canegallo and who did go to work for Prodotti (Mr Fontana, Ms Guardamagnaand Mr Martin). It is loss flowing from the alleged solicitation of those individualsthat would be relevant. I order that EFL is to include in its supplementary affidavit tobe filed and served within 20 working days, any documents in its control relating toEFL's decisions on whether or not to replace Mr Fontana, Ms Guardamagna andMr Martin when they left EFL.[161] Category 3 relates to EFL's internal discussions or investigations relating to thereasons for the alleged losses of suppliers, customers, or employees. Ms McMullensubmits that the documents sought in this category are not relevant.[162] I do not think an order for particular discovery relating to the reasons for thealleged loss of EFL employees is appropriate, for the reasons set out above. Nor do Iconsider any particular discovery order is appropriate in the case of alleged losses of"customers". At this stage, the statement of claim does not identify a loss of any"customer" (being a person purchasing goods or services from EFL) — the pleadingappears to be limited to allegations of wrongful soliciting or inducements directed tosuppliers and employees.[163] However, I think internal investigations or discussions relating to reasons forthe alleged loss of the suppliers pleaded at paragraph 15.3.8 of the statement of claimis in a different category. EFL's pleading is that it lost the five identified suppliers (orthey reduced their business with EFL) because of wrongful solicitation or inducementby Mr Canegallo. If and to the extent investigations may have identified other possiblereasons for the claimed loss of those suppliers or their business, I think documentsrecording such discussions or investigations must be relevant and discoverable,whether they record facts, conclusions or "speculation" on the part of EFL'smanagement or staff. Ms McMullen did not suggest that such documents do not exist,and the fact that the allegations relating to the loss of suppliers have been pursuedpresupposes that there must have been some discussions, investigations, andconsideration on the issue within EFL.7[164] I accordingly order that EFL is to discover in its supplementary affidavit to befiled and served within 20 working days, documents in its control (or which have beenin its control) recording internal EFL discussions, consideration or investigationsrelating to the reasons for the alleged losses of the suppliers Europomella, LSM,Cirillo, Salumificio and Pastificio (or the reduction of the volume of business thosecompanies would normally have done with EFL). Otherwise, the request for discoveryof the category 3 documents is refused.[165] Where particular discovery of documents in categories 1–3 has been ordered,the documents are to be made available for inspection within 20 working days, unless7 Whether documents recording any such discussions, consideration or investigations would beprivileged is not something with which I am presently concerned. Relevant documents which areprivileged must still be referred to in the discovery list, with an appropriate statement that thedocuments will not be made available for inspection because of the (identified) privilege.any issues of commercial sensitivity or confidentiality of the documents has beenraised. Any such issues are to be addressed in the manner set out at paragraph [129] ofthis judgment, and production of the subject documents will be deferred pendingfurther order of the Court.Document categories 4(h), 5(g) and 6 — mislabelling[166] The following documents are sought in category 4(h):4. Documents relating to the sale by EFL of products that have passedtheir "use by" and/or "best before" date, or otherwise been rejected asbeing unfit for sale, including, but not limited to:(h) Sales data for the relevant products and/or customers for theperiod from two years prior to the defendant's resignation upto the present; and[167] Mr Cogan submitted that the sales data is relevant to the loss claimed by EFL.He noted that in his affidavit Mr O'Neill referred to further spreadsheets showing salesdata which EFL was prepared to provide by the end of September 2018 — if EFL wasprepared to provide that information, why not provide the sales data referred to atrequest 4(h)?[168] In response to the category 4(h) request, Ms McMullen acknowledged thatEFL has further spreadsheets to be discovered, but said that they would havesubstantial redactions to protect commercially sensitive or private information.[169] Ms McMullen also advised that she was instructed to file an application forsplit trials as between liability and quantum. If an order is made for separate trials,any discovery of category 4(h) documents could be left to the second phase of theproceeding, once EFL had established liability.[170] Mr Cogan submitted in reply that it is now too late to resist discovery of plainlyrelevant documents on the basis of a prospective application for split trials which hasnot even been filed.[171] I am not prepared to deal with the application for category 4(h) documents onthe basis that EFL might apply for split trials on liability and quantum, and that thatapplication might be successful. I accept Mr Cogan's submission on that point.[172] I order that EFL is to include within its supplementary verified list to be filedwithin 20 working days, discovery of the category 4(h) documents, including anyspreadsheets applying to this category. Subject to any issues of commercial sensitivityor confidentiality of the documents in category 4(h), which are to be addressed in themanner set out in paragraph [129] of this judgment, the documents are to be providedfor inspection within 20 working days. If commercial sensitivity or confidentialityissues are raised, production of the subject documents will be deferred pending furtherorder of the Court.[173] The documents sought in category 5(g) are as follows:5. Documents relating to the sale by EFL of products that do notcorrespond to the description of the product ordered by a givencustomer and the mislabelling of the product supplied as the productin fact ordered, including, but not limited to:(g) Sales data for the relevant products and/or customers for theperiod from two years prior to the defendant's resignation upto the present; and[174] Ms McMullen submitted that EFL has previously provided sales data whichincluded redactions of commercially sensitive information. She submitted that it isunclear whether redacted information is now sought by Mr Canegallo. EFL sees noreason why the redacted information should now be disclosed.[175] Mr Cogan noted that the point made for EFL seems to be the same as the pointmade in respect of the category 4(h) documents, where EFL acknowledges that it hasspreadsheets which contain substantial redactions.[176] There appears to be no substantial dispute over this category. If EFL acceptsthat the redacted information is relevant, as I apprehend is the case, the redactedportions will be discoverable. Any issues of commercially sensitive or confidentialityare to be addressed in the manner set out in paragraph [129] of this judgment. If nosuch issues are raised, the documents in category 5(g) are to be produced for inspectionwithin 20 working days.[177] To the extent there is an issue over what documents are to be considered aswithin the expression "sales data" (and in particular, whether spreadsheetssummarising the sales will suffice, or whether all underlying delivery orders, invoicesetc are to be discovered), I invite counsel to confer further. The particular discoverysought might well be disproportionate if every underlying document has to beproduced, and counsel may consider that spreadsheets summarising the requiredinformation, supplemented by (say) copies of invoices for one or two customersnominated by Mr Canegallo's counsel, would provide sufficient by way of "audit" ofthe spreadsheet that discovery of any further underlying documents would not benecessary. I leave counsel to confer on that, with leave reserved to them to apply bymemorandum for further directions if necessary, within 20 working days after EFL'ssupplementary discovery list is served.[178] Mr Canegallo seeks the following documents in category 6:6. Documents relating to customer satisfaction levels, including surveyresults and complaints received.[179] Mr O'Neill's affidavit sworn on 14 September 2018 states that EFL does nothold any documents in category 6. In the absence of evidence to the contrary I thinkMr O'Neill's affidavit on this issue should be treated as final. Accordingly, I refuse tomake any order for particular discovery in respect of the category 6 documents.Documents in the introductory paragraph in category 7 — reduction or cessation ofsupplies from suppliers[180] Mr Canegallo requested the following documents in category 7:7. Documents relating to the actual, threatened or apprehended reductionor cessation of supply by any of EFL's suppliers, including, but notlimited to, those suppliers pleaded in the statement of claim,including:(a) Any agreements or other applicable terms andconditions between EFL and those suppliers;(b) Written communications, or records of communications,between EFL and any of its suppliers (including, but notlimited to, those pleaded) in relation to actual, threatened orapprehended reduction or cessation of supply and the reasonsfor it;(c) Data (including invoices and receipts) relating to ordersplaced by EFL (including orders placed but not fulfilled) withany of the pleaded suppliers for the period from two yearsprior to the defendant's resignation until the present; and(d) Written communications, or records of communications,between EFL and suppliers regarding the reasons for anyorders not fulfilled by suppliers.[181] Ms McMullen submitted that EFL has previously provided such documents asit has coming within the introductory part of category 7. It does not now opposediscovery of the documents in subcategories 7(a) to (d), although protections will benecessary in respect of commercially sensitive customer orders.[182] I order that EFL is to include within its supplementary discovery list to be filedand served within 20 working days, the documents within its control insubcategories 7(a) to (d). If any issues of commercial sensitivity or confidentiality areraised, such issues are to be addressed in the manner set out in paragraph [129] of thisjudgment. If no such issues are raised, the documents in category 7(a)–(d) are to beproduced for inspection within 20 working days.Document category 9 — sales of mozzarella products[183] Mr Canegallo seeks discovery of the following documents in this category:9. Documents relating to the introduction of EFL's Ghiotti brand ofmozzarella products, including documents relating to thedevelopment, marketing (including strategy and budget), and pricingof Ghiotti mozzarella products relative to any other mozzarellaproducts distributed by EFL.[184] The request is said to be directed to para 39(g) of Mr Canegallo's counterclaim,which provides:39. The deliberate mislabelling of food products by the Plaintiff included,but is not limited to:(g) Marketing Ghiotti-branded mozzarella as "fresh" when:(i) The mozzarella had in fact been refrigerated for anunknown period between leaving Italy and arriving inNew Zealand, and for a period of approximately fourdays after arrival in New Zealand, before beingfrozen;(ii) The frozen mozzarella was later defrosted to fulfilcustomer orders when its residual shelf life wasinsufficient for the product to be accepted by buyers(Progressive and Foodstuffs); and(iii) EFL had in fact amended the packaging to include anew, later expiry date without having undertaken any,or any adequate, investigation of the accuracy of thenew expiry date, in terms of food safety and/or qualityassurance;[185] Ms McMullen submitted that these documents are not relevant, and would inany event be commercially sensitive.[186] Beyond the prices at which EFL sold its Ghiotti-branded mozzarella productsin New Zealand after 1 November 2017, I am not persuaded that the documents incategory 9 are relevant to any allegations in the statement of claim or Mr Canegallo'samended statement of defence and counterclaim.[187] The issue identified at paragraph 39(g) of the amended statement of defenceand counterclaim forms part of the second cause of action pleaded in Mr Canegallo'scounterclaim, alleging breach of the FTA by deliberately mislabelling food products.The relief sought on this counterclaim is a declaration that the pleaded conduct was incontravention of s 9 of the FTA, and orders under s 43(e) and/or 43(f) of the FTArequiring EFL to pay to all purchasers of mislabelled products sold by EFL in breachof the FTA:(i) a refund of the purchase price paid;(ii) an amount equivalent to any loss or damage suffered by the purchaseras a result of having purchased the products.[188] Against that background, I cannot see that documents relating to theintroduction of EFL's Ghiotti brand of mozzarella products, including documentsrelating to the development and marketing (including strategy and budget) of theproduct, could be relevant.[189] I doubt that any document in EFL's possession could be expected to show anyamount equivalent to loss or damage suffered by the purchasers of mozzarella productsallegedly sold as fresh when they were not. However, I accept that any documentsshowing the prices at which the Ghiotti-branded mozzarella products were sold byEFL from and after 1 November 2017 will be relevant to the para 39(g) allegationsand the claim for relief on the second cause of action in Mr Canegallo's counterclaim.[190] Accordingly, I make an order that EFL include in its supplementary affidavitof documents to be filed within 20 working days, documents showing the pricing ofGhiotti mozzarella products sold by EFL in New Zealand from and after 1 November2017. If any issues of commercial sensitivity or confidentiality are raised, such issuesare to be addressed in the manner set out in paragraph [129] of this judgment. If nosuch issues are raised, Ghiotti mozzarella pricing documents are to be produced forinspection within 20 working days.[191] Beyond that, I decline to make any order for particular discovery in respect ofthe category 9 documents.Document category 11 — EFL's financial performance[192] The following documents were sought in this category:11. Documents relating to EFL's financial performance for the currentfinancial year and preceding five financial years, including:(a) Financial statements;(b) Draft financial statements for the current year;(c) Sales data for all products broken down by supplier;(d) Forecast and actual sales figures;(e) Written communications, or records of communications,relating to the potential reasons identified by EFL for anydecrease in its financial performance and any steps beingtaken by EFL to mitigate, including (but not limited to)internal EFL communications and communications betweenEFL and third parties, such as accountants, bankers, andconsultants;(f) The amount and value of stock written off by EFL in 2017 and2018;(g) Product being sold by EFL below cost or at a margin less than40 per cent;(h) Customer complaints and EFL's response (if any);(i) The data underlying the EFL sales spreadsheets that have beendiscovered to date; and(j) The volume of products ordered relative to actual sales ofthose products.[193] At the hearing, Ms McMullen advised that EFL now accepts that thedocuments in categories 11(a)-(j) are relevant, although it says it has no documents insubcategory 11(h) (customer complaints and EFL's responses).[194] However, Ms McMullen submitted that there are proportionality issues arisingwith a number of the category 11 documents. For example, EFL should be allowed toproduce the spreadsheets referred to in subcategory 11(c) without the need to producethe underlying documents. Nor does EFL have sales data broken down by supplier.Similar considerations apply to the documents requested in subcategories 11(i) and (j)— EFL should not be required to disclose underlying invoices evidencing individualsales.[195] Ms McMullen accepted that there needs to be discovery for some periodleading up to the end of the restraint period, but she submitted that the five year periodnominated by Mr Canegallo is too long. She proposed a period of four years,comprising the two year restraint period and the two year period immediatelypreceding it (that submission encompassed each of subcategories 11(d), (e), (f) and(g), in addition to subcategory 11(c)).[196] In respect of subcategory 11(b) (draft financial statements for the current year),Ms McMullen noted that the financial statements for the current year (to 31 August2018) had not yet been finished.[197] On the issue of inspection, EFL says that the category 11 documents it holdsare commercially sensitive. Agreement or orders will be needed defining and limitingthe people permitted to inspect the documents once disclosed.[198] In respect of subcategory 11(a), I accept Ms McMullen's submissions: theperiod for which EFL's financial statements are to be discovered is to be the financialyears that included the two year period of the restraint and the period of two yearsimmediately prior to the restraint period.[199] As for subcategory 11(b) (draft financial statements for the current year), theyare to be included in EFL's supplementary discovery if they are now available. If theyare not now available they are to be disclosed by EFL when they become available.[200] In respect of subcategories 11(c), (i) and (j), EFL may disclose availablespreadsheets only in the first instance. I am not persuaded that EFL should be requiredto discover "sales data for all products broken down by supplier" (subcategory (c)) ifit does not have that information in readily retrievable form. It would appear to bedisproportionate to require EFL to spend what might be a significant period of timecreating a report of this nature if reports in this format do not already exist. I declineto order particular discovery of the subcategory 11(c) documents. Nor am I presentlypersuaded that requiring EFL to produce all underlying documents (invoices, deliveryorders, purchase orders etc) where spreadsheets or other "summary" documents areavailable would be proportionate. I invite counsel to confer on the issue of whetherspreadsheets or similar "summary" documents, supplemented by one or two "samples"of underlying documents selected by Mr Canegallo's counsel (sufficient to providehim with the equivalent of an "audit" of the spreadsheet or summary document), willmeet the circumstances of the case. Leave is reserved to apply by memorandum forany further directions that might be required in that respect, within 20 working daysafter EFL provides its verified supplementary discovery list.[201] In respect of subcategories 11(d), (e) and (g), the relevant period to be coveredby the discovery will be the period covered by EFL's financial statements whichinclude the two year restraint period and the two year period immediately prior to it.[202] Subject to those directions, EFL is ordered to include in the supplementaryaffidavit of documents it is to file and serve within 20 working days, the documentslisted in subcategories 11(a)–(b), 11(d)–(g), and 11(i)–(j).[203] Where issues of commercial sensitivity or confidentiality are raised in respectof the documents in subcategories 11(a)–(b), 11(d)–(g), and 11(i)–(j), those issues areto be addressed in accordance with paragraph [129] of this judgment. If no such issuesare raised, the documents are to be produced for inspection within 20 working days.[204] It is not established that there are grounds for believing EFL has in its powerdocuments in subcategory 11(h). The request in respect of that subparagraph isaccordingly refused.Document category 13 — alleged approaches by Mr Canegallo to EFL suppliers,customers or employees[205] Mr Canegallo sought the following documents in category 13:13. Documents relating to EFL's allegation that the defendant hasapproached and induced, or attempted to induce, the pleadedsuppliers, customers and/or employees.[206] EFL opposes discovery of these documents, on the basis that it has alreadydiscovered such documents as it has in this category. Mr O'Neill confirmed in hisaffidavit that that is the case.[207] Mr Canegallo has not pointed to any grounds for believing that furtherdocuments exist in this category that have not been discovered (or dealt with elsewherein his discovery application). Accordingly, there is no basis for a particular discoveryorder in respect of the category 13 documents. The application in respect of them isrefused.Document category 14 — alleged unlawful access to EFL's computer system[208] At the hearing Ms McMullen noted that nothing has been pleaded by EFLabout the alleged hacking of its computer system. EFL does not intend to pursue thisissue against Mr Canegallo, and it will not be questioning him on it incross-examination at trial.[209] Mr Cogan noted that EFL has disclosed a police report in respect of the incident(in respect of which it has claimed privilege), and Mr Canegallo wishes to challengethe privilege claim. The document was mentioned by Mr O'Neill in one of hisaffidavits. Mr Cogan submitted that if the police report was considered relevant byEFL for discovery purposes, so must be the documents in Mr Canegallo's requests24(d) and (e).[210] In view of Ms McMullen's advice at the hearing, and the fact that the allegedhacking has not been referred to in the pleadings, I am satisfied that there is no basisfor an order for particular discovery in respect of the category 14 documents. Thedocuments are not relevant to issues disclosed by the pleadings, and the fact that EFLmight have considered the police report relevant at an earlier stage in the proceedingdoes not make it (or documents relating to it) relevant in circumstances where it isnow acknowledged that no allegations will be pursued against Mr Canegallo in respectof the alleged hacking. The police report (and any related documents) can neither behelpful nor adverse to either party's case. On that basis, they are not documents thatshould have been disclosed by EFL. The application for particular discovery of thecategory 14 documents is therefore refused.Summary of orders on Mr Canegallo's particular discovery application[211] I make the following orders:(1) The application for particular discovery in respect of the followingcategories of documents is refused: 1(b), 1(c), 2 (except as set out inparagraph [160] of this judgment), 3 (except as set out inparagraph [164] of this judgment), 6, the introductory paragraph ofcategory 7, 9 (except as set out in paragraph [190] of this judgment),11(c), 11(h), 13 and 14.(2) EFL is ordered to file and serve, within 20 working days of the date ofthis judgment, an affidavit stating whether it has (or has had) in itscontrol documents in the following categories: 1(a), 2 (limited to thedocuments described at paragraph [160] of this judgment), 3 (limitedto the documents described at paragraph [164] of this judgment), 4, 5,7 (subcategories 7(a)–(d)), 8, 9 (limited to the documents described atparagraph [190] of this judgment, 10, 11 (subcategories 11(a)–(b),11(d)–(g), and 11(i)–(j)), and 12.If those documents, or any of them, have been but are no longer inEFL's control, EFL's affidavit is to state its best knowledge and beliefas to when the documents ceased to be in its control and who now hascontrol of them.(3) If and to the extent EFL claims that any documents it has been orderedto discover are commercially sensitive or otherwise confidential,counsel are directed to confer to see if agreement can be reached onhow the commercially sensitive or confidential documents are to bemade available for inspection (including the number and names ofindividuals permitted to inspect the documents, and the nature of anyundertakings those individuals should be required to provide before thedocuments are made available for inspection). To the extent the partiesmay be unable to agree on those matters, counsel are to file a jointmemorandum, within 20 working days after EFL has served itssupplementary affidavit, setting out their respective proposals for theinspection of the commercially sensitive or confidential documents.The Court will then deal with the issues in the memorandum on thepapers, or if necessary convene a conference for the purpose of givingfurther directions.(4) If and to the extent EFL does not make any claim for commercialsensitivity or confidentiality for the documents it has been ordered todiscover, the documents are to be produced for inspection within20 working days of the date of this judgment.(5) Leave is reserved to the parties to apply by memorandum for suchfurther orders or directions as may be necessary in respect of thediscovery of source documents underlying spreadsheets or othersummary documents, where the spreadsheet or other summarydocument comes within a category or subcategory of documents EFLhas been ordered to discover. Any such memorandum is to be filedwithin 20 working days after EFL has served the affidavit referred to inparagraph (2) of these orders.(6) Other orders or directions made in the body of this judgment (forexample, as to the period to be covered by the discovery of documentsin subcategory 11(a)), are to have effect as stated.(7) Mr Canegallo has been substantially successful with this application.Costs are awarded to him on a 2B basis, reduced by 25 per cent toreflect those parts of the application where he has not been successful.In addition, he is to have disbursements as fixed by the Registrar.APPLICATION BY EFL FOR NON-PARTY DISCOVERY BY BAYLEYS[212] EFL seeks the following documents:1.1.1 Any documents and/or communications with [Mr Canegallo] in hispersonal capacity and/or through his companies Pizza In A BoxLimited and/or Roundpizza Limited regarding:1.1.1.1 Enquiries and due diligence in respect of the Bayleys'advertised sale of the business of [Prodotti];1.1.1.2 Direct or indirect engagement, or association with, or interestin, [Prodotti].Legal principles[213] Rule 8.21 of the High Court Rules provides:8.21 Order for particular discovery against non-party after proceedingcommenced(1) This rule applies if it appears to a Judge that a person who is not aparty to a proceeding may be or may have been in the control of 1 ormore documents or a group of documents that the person would havehad to discover if the person were a party to the proceeding.(2) The Judge may, on application, order the person—(a) to file an affidavit stating—(i) whether the documents are or have been in theperson's control; and(ii) if the documents have been but are no longer in theperson's control, the person's best knowledge andbelief as to when the documents ceased to be in theperson's control and who now has control of them;and(b) to serve the affidavit on a party or parties specified in theorder; and(c) if the documents are in the control of the person, to makethose documents available for inspection, in accordance withrule 8.27, to the party or parties specified in the order.(3) An application for an order under subclause (2) must be made onnotice to the person and to every other party who has filed an addressfor service.[214] In Vector Gas Contracts Ltd v Contact Energy Ltd, Koś J considered that thedocuments sought on a non-party discovery application must be relevant.8 His Honouralso considered that a discovery order sought under the rule must be necessary.9 Themaking of an order under the rule is discretionary.10Disposition[215] The application was properly served on both Mr Canegallo and Bayleys, andneither has taken any step to oppose it. Nevertheless, the Court needs to be satisfiedthat the non-party discovery is necessary for the just and expeditious resolution of thisproceeding, and I am not so satisfied.[216] Substantially for the same reasons that I refused EFL's application forparticular discovery against Mr Canegallo in respect of the Bayleys/Mr Canegallointeraction, and the Prodotti sale/due diligence, I am not satisfied that it has been8 Vector Gas Contracts Ltd v Contact Energy [2014] NZHC 3171, [2015] 2 NZLR 670, at [29] and[61].9 At [30].10 At [28].sufficiently shown that Bayleys does or might hold relevant documents. Theapplication appears to be no more than a fishing expedition, designed to endeavour toestablish that Mr Canegallo has some ownership interest in Prodotti when that has notbeen alleged. The application for non-party discovery from Bayleys is refusedaccordingly. In view of the fact that the application was unopposed, I make no orderfor costs on it.Associate Judge Smith