HONEY NEW ZEALAND (INTERNATIONAL) LTD V D V WHITEHEAD, Y M WHITEHEAD AND E I WHITEHEARD AS TRUSTEES OF THE GOLDENFLOW TRUST AND ANOR HC AK CIV-2008-488-000519

HONEY NEW ZEALAND (INTERNATIONAL) LTD V D V WHITEHEAD, Y M WHITEHEAD AND E I WHITEHEARD AS TRUSTEES OF THE GOLDENFLOW TRUST AND ANOR HC AK CIV-2008-488- 000519 1 November 2010IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV-2008-488-000519BETWEEN HONEY NEW ZEALAND (INTERNATIONAL) LTD Plaintiff AND DAVID VERNON WHITEHEAD, YVETTE MARIE WHITEHEAD AND EDWARD IVAN WHITEHEARD AS TRUSTEES OF THE GOLDENFLOW TRUST First Defendants AND DAVID VERNON WHITEHEAD Second Defendant Hearing: 1 November 2010 Appearances: M D Pascariu for Plaintiffs M C Black for Defendant Judgment: 1 November 2010ORAL JUDGMENT OF ASSOCIATE JUDGE BELLSolicitors: Minter Ellison Rudd Watts, PO Box 3798, Auckland Hammonds, PO Box 16, Dargaville M C Black, PO Box 1984, Auckland[1] The matter before the Court today is an application for further discovery brought by the defendants against the plaintiff. As the matter developed, there were discussions about the forthcoming fixture which is to take place on 2 March 2011. The parties asked for directions to be given for exchange of evidence as well. I deal with that matter at the outset and deal with discovery later. [2] The plaintiff is to serve its statements of evidence by 8 December 2010. The defendants are to serve their statements of evidence by 9 February 2011 and any statements of evidence in reply by the plaintiff are to be served by 23 February 2011. The plaintiff is also to prepare an agreed bundle of documents by 23 February 2011. [3] The plaintiff also indicates that it will amend its quantum and wishes to file another statement of claim. It is to file and serve its statement of claim by15 November 2010. It appears likely that the changes made in that new pleading will involve matters of substance as well as matters of quantum and it is therefore appropriate that the defendants plead to it. A statement of defence to that new statement of claim should be filed and served before the Court closes in 2010. While indicating that an amended statement of claim is to be filed by 15 November 2010, the plaintiff may wish to amend its quantum further. If it wishes to amend its claim in respect only of quantum, it has liberty to do so after 15 November 2010, but should endeavour to have its quantum finalized by 8 December 2010 and no later. [4] I will be giving directions as to discovery. Quite simply, the directions I give will require the plaintiff to make further discovery. It is to file another affidavit of documents by 29 November 2010 and there is to be a telephone conference during the latter part of that week, probably at 9:00 am, when I can discuss with counsel any outstanding matters arising out of discovery. [5] The defendants have sought discovery of eight classes of documents. I have heard submissions about those. The differences between the parties are relatively minor. [6] The first two classes of documents say:1. Further particulars of the basis for the calculation of its claim for losses and estimated net profits totalling $1,840,224. 2. Discovery by the plaintiff of all documents and other financial information held of and incidental to its claim for losses (including its claim for loss of profits) totalling $1,840,224.[7] For these items, it will be necessary for the plaintiff to disclose source documents said to give rise to its calculation for losses and estimated profits. That may involve going beyond simply the spreadsheet which the plaintiff has discovered so far. It is to include documents which the plaintiff will rely on at trial to show a foundation for its spreadsheet. [8] In addition, as this case progresses, a consultant accountant retained for the defendants may wish to requisition for further documentation which may not be disclosed and which may not be apparently necessary to lawyers but may seem necessary to accountants. If the defendants' accountant, in looking at the documentation, finds that there are further source documents he believes are necessary, then the plaintiff is to comply with those requests promptly. If there are any issues about that, they can be raised in the conference in the week of 29 November 2010. It is also possible that the consultant accountant might require production of financial statements. They are included within my reference to source documentation. [9] Classes 3 and 4 say:3. Correspondence surrounding the plaintiff's EU export order documents for the consignment of the honey in question and its export order which resulted in the claim for losses totalling $1,840,224. 4. All Asure Quality information concerning the eligibility of the honey purchased and including relating to the eligibility of the export order.[10] The plaintiff says that it has already disclosed all documentation within its possession, power and control and it holds no further documents that require any further answer. In discussion it emerged that Asure Quality, an organisation that checks products for quality compliance for export and has carried out such testing for the plaintiff, may potentially hold further documents. So far, no one has sought non-party discovery from Asure Quality Ltd.[11] Given the relatively short time to the hearing, a convenient way of dealing with this is to direct the plaintiff to request from Asure Quality Ltd copies of documents held by Asure Quality Ltd relating to the plaintiff's honey and the defendants' honey in issue in this case. If there are any difficulties in Asure Quality complying with those requests, they can be raised at the conference on 29 November 2010. It is contemplated that if Asure Quality Ltd does make further documentation available, they will be incorporated in the plaintiff's further affidavit of documents. In its new affidavit of documents, the plaintiff is also to confirm whether it holds any further documents within these two classes. [12] Class 5 says:5. Email and correspondence replies from Robert and/or Matthew Pringle and other correspondence relating to the eligibility of the honey including the export order. Email and other correspondence relating to defendants' requests for payment of the noney.[13] The plaintiff's response to this is that it has already made full disclosure. If that is the case, it is to confirm that in its updating affidavit. [14] Classes 6 and 7 say:6. Manufacturing Certificates for the honey including in respect of it being exported. 7. E-Cert documentation relating to the honey.[15] The plaintiff says that for those documents as well it has already made full disclosure. If that is the case, then the further affidavit is to confirm that to be the position. [16] The final class says this:8. Information concerning other honey held or contracted for by the plaintiff at the relevant time in late 2007 between July 2007 to October 2007, in or about June 2008 and in or about January to March 2008 (when some of the honey was returned and the claim settled.[17] Mr Black explains that, at relevant times when the plaintiff had rejected the defendants' honey as not being EU compliant, the plaintiff held honey supplied byothers and that honey would have been available to meet export orders. In other words, the defendant is saying that the honey supplied by others was a means the plaintiff could have taken to mitigate its losses. To that end, it wishes to find out what other honey the plaintiff had at the relevant times between July 2007 and October 2007 and in about June 2008 and January to March 2008. [18] The plaintiff is directed to make disclosure of other EU compliant stocks of honey it held during those periods. I am conscious that this is expressed somewhat loosely and if the plaintiff has difficulty in complying with that direction, it can be resolved later on, if need be, during the conference on 29 November 2010. [19] There remains the question of confidentiality. I expect that almost all the documents that are the subject of this order will be confidential to both Assured Quality and to the plaintiff. The defendants do not take strong issue with the plaintiff's claim for protection of confidentiality. The matter can be dealt with in the normal way, that is, by requiring all persons who receive these documents to, first of all, give a written confidentiality undertaking. The plaintiff has provided a draft undertaking. It is an undertaking in conventional form and is appropriate for this case. The undertaking is to be signed by counsel and solicitors for the plaintiff and also any consultants, including accounting experts whom the defendants propose to use. [20] The question arose during discussion whether the defendants themselves should have access to this information. My provisional view is that there would be a risk if the defendants themselves were to receive this information. It is not that I cast any doubt on their integrity, but it is simply cleaner in terms of the running of the case if they themselves do not have the information so that if there were any suggestion of leakage, then they will be clear of any such suggestions. The matter is also cleaner if it is restricted to experts and consultants because they, of all people, are not likely to use the information wrongly. We should be confident that they will use it only for the purpose of this proceeding. [21] At the conference, there will also be an opportunity to review the directions I have given and also address any issues that might come up regarding exchange ofinformation. It may also be appropriate to consider whether directions should be given for experts to confer on questions of accounting issues. [22] I reserve costs on this matter. This matter has been conducted very much in the way of a case management conference. I am loath to declare any winners or losers at the moment. Whether there are any winners or losers will become clearer after the case has been decided and the costs today can be allocated then. __________________________ R M Bell Associate Judge