HUNTER GRAIN LIMITED V RW PRICE AND ANOR HC TAU CIV 2008-470-192

HUNTER GRAIN LIMITED V RW PRICE AND ANOR HC TAU CIV 2008-470-192 25 July 2008IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY CIV 2008-470-192BETWEEN HUNTER GRAIN LIMITED Plaintiff AND RICHARD WILLIAM PRICE First Defendant AND PRICE COMMODITIES LIMITED Second Defendant Hearing: 10, 14-15 July 2008 Appearances: I Thorpe for plaintiff H Fulton for defendants Judgment: 25 July 2008JUDGMENT OF ALLAN JIn accordance with r 540(4) I direct that the Registrar endorse this judgment with the delivery time of 11.45 am on Friday 25 July 2008Solicitors/counsel : Izard Weston, john.burton@izardweston.co.nz PO Box 5348, Wellington Iain Thorpe, PO Box 10048, Wellington iain@thorpe.co.nz Simpson Aspen Law, PO Box 13537, Tauranga H Fulton, PO Box 5577, Wellesley St, Auckland fulton.barrister@xtra.co.nzIndex Paragraph Introduction 001 Factual background 007 Execution of Anton Piller order 038 Interim injunction 042 Discharge of Anton Piller order 082 Identification and inspection of seized documents 093 Privilege 096 Interrogatories 099 Contempt 107 Summary 124 Costs 125 Case management 128Introduction[1] The plaintiff (Hunter Grain) is a trader in grains and stock food products. It is associated with Hunter Grain Pty Ltd, an Australian company which is a significant participant in the Australian market for those products. There are common directors. [2] The first defendant (Mr Price) was formerly the managing director of the plaintiff. The second defendant is a company which was intended to serve as the vehicle for a business set up by Mr Price, broadly in competition with Hunter Grain. [3] Hunter Grain believes that certain steps taken by Mr Price during the latter stages of his directorship, and at the time of his departure, constitute breaches of duty owed by him to Hunter Grain. There are two particular complaints: a) that Mr Price engaged in negotiations while still a director of Hunter Grain with Toepfer International-Asia Pte Ltd (Toepfer), a major international trader in grain and stock food commodities, in order to secure for himself the New Zealand agency for that company; the plaintiffs say that in doing so Mr Price appropriated to himself a corporate opportunity which he ought to have disclosed to Hunter Grain. b) that at the time of his departure from Hunter Grain, he took with him two computers upon which were stored a significant number of confidential documents belonging to Hunter Grain. Some of those documents are not otherwise available to Hunter Grain. To date the confidential information has not been returned to the company; indeed, Mr Price accepts that he caused a hard drive containing much of the material in dispute to be destroyed. [4] Hunter Grain's initial concerns about Mr Price related to the removal of confidential information. That was the basis upon which it sought Anton Piller andrelated orders from this Court. Such orders were made on 17 March 2008 and executed the following day. Hunter Grain only subsequently became aware in the course of execution of the Anton Piller orders and their aftermath, of Mr Price's allegedly improper negotiations with Toepfer. [5] The defendants apply to discharge the orders made on 17 March 2008. Mr Fulton says that as matters have developed there has proved to be no basis for their continuance. [6] For its part, Hunter Grain further applies (by notices of application dated 4 and 23 April 2008 respectively) for the following orders (as summarised in Mr Thorpe's synopsis of argument):7.1 To vary the Anton Piller and related orders (4 April 2008) requiring the defendants to: 1.1 make affidavits of documents (4 April 2008); and 1.2 answer interrogatories; and 7.2 for an injunction (23 April 2008) from dealing with or soliciting business from certain entities; 7.3 for sanctions (debarred from defending proceedings and indemnity costs) to be imposed on the first and second defendants for contempt arising from breach of the Anton Piller and related orders: 7.4 for the release to it by the independent solicitors of certain information belonging to the plaintiff; and 7.5 for orders relating to the inspection of certain computer records and allegedly privileged information.Factual background[7] Hunter Grain's predecessor, Hunter Grain (NZ) Ltd, was established in 1997 by Messrs David and Michael Dossor, the principals in Hunter Grain Australia. It was intended that the New Zealand company would service the New Zealand operation of the Australian company, and in particular in the early stages, the relationship with Inghams Enterprises Ltd (Australasia's largest chicken meat producer) for the provision of large quantities of soya bean meal. Hunter Grain (NZ)Ltd also engaged in the importation of other stock food products, principally for the dairy industry. [8] Not long after the establishment of Hunter Grain (NZ) Ltd, Mr David Dossor entered into arrangements with Mr David Swap of J Swap Contractors Ltd (Swaps) of Matamata, a long established family firm of contractors specialising in road haulage, civil contracting, bulk storage and other activities. Swaps was able to offer both warehousing and distribution services in New Zealand. [9] Initially the parties dealt in soya bean meal only, but later their arrangements extended to other products. Hunter Grain (NZ) Ltd was a trader rather than a retailer to farmers. Swaps had the infrastructure to sell to, and invoice, large numbers of New Zealand farmers. As the relationship developed the product range expanded to include copra and, importantly for present purposes, palm kernel meal (PKM). The latter is an important stock food. [10] Mr Price was employed as Chief Executive of Hunter Grain (NZ) Ltd in about 1998. He was a close personal friend of Mr Stephen Swap and had some experience in the industry. [11] The business conducted by Hunter Grain (NZ) Ltd grew rapidly and proved to be very successful. During the period 1997-2007 the quantity of stock foods imported increased from approximately 40,000 to 400,000 tonnes per annum. The staff of Hunter Grain and its predecessor have always been few in number. In 1998 Mr Price had with him only a receptionist and an accountant. [12] In recent times Mr Price's on-going contribution was recognised by the Dossors, who agreed to set up Hunter Grain and to allocate to Mr Price a 20% shareholding in the new company. It was intended that over time Mr Price's shareholding would increase. Mr Price was appointed Managing Director of Hunter Grain at a salary of $200,000 per annum, and an entitlement to dividends in his capacity as a shareholder.[13] Hunter Grain commenced trading in early 2006 and effectively took over the existing operations of Hunter Grain (NZ) Ltd. In 2006 the staff of Hunter Grain comprised Mr Price, an office administrator and an accountant. In May 2007 the accountant left and the accounting functions of Hunter Grain were out-sourced. Mr Price had day to day control of all aspects of Hunter Grain's operations, and necessarily enjoyed a high degree of trust on the part of other directors and shareholders. Messrs David and Michael Dossor remained active in their roles as non-executive directors. Directors' meetings were held regularly. [14] During 2007 problems arose. Mr Price sent an e-mail to Hunter Grain Australia with a copy to the Australian Barley Board. That e-mail was taken by Hunter Grain Australia to suggest support by Mr Price for price fixing. That was a concern to the Dossors. At about the same time Mr Price took exception to a transaction entered into by Hunter Grain Australia which he thought amounted to competition with Hunter Grain in breach of that company's shareholder agreement. The Dossors were concerned that a personality clash between Mr Price and the Chief Executive of Hunter Grain Australia was inhibiting the orderly conduct of Hunter Grain's business. [15] In September 2007, Mr Price went to Singapore. There he visited representatives of Wilmar International Ltd (Wilmar), and Singapore Touton Far East Pte Ltd (Touton). Wilmar is Asia's leading agri-business group, the largest global processor and merchandiser of a range of vegetable oil products, and the largest palm bio-diesel manufacturer in the world. It operates over 160 processing plants and employs 60,000 people in more than 20 countries. Hunter Grain's connection with Wilmar went back to 2002-03, and first arose through the operations of the Australian company. Purchases of PKM from Wilmar were negotiated by Hunter Grain through Touton, which is a commodity broker and merchant. The Manager of Touton, a Mr Delcourt, was personally friendly with a director of Wilmar. [16] Upon his return from Singapore, Mr Price reported to the Board of Hunter Grain that Wilmar had displayed an interest in entering the New Zealand market directly, and that they needed to be watched. That is recorded in the minutes of thedirectors' meeting of Hunter Grain of 18 September 2007. It is evident that during that meeting Mr Price also expressed his dissatisfaction over the way in which the disputes with Hunter Grain Australia had been handled, the minutes recording that Mr Price was to put his concerns in writing in order that the full Board might consider them. [17] However, that did not occur. Instead, Hunter Grain received a letter dated 26 September 2007 from Mr Fulton, counsel for Mr Price, advising the company that Mr Price intended to resign. The letter included proposals for a financial disengagement. Negotiations followed. Ultimately, in mid-January 2008 it was agreed that Mr David Dossor's holding company would purchase Mr Price's 20% shareholding in Hunter Grain for approximately $710,000. [18] It is not disputed that at about the time of giving notice through Mr Fulton, Mr Price told the Dossors that he intended to stay in the industry in some form or another, and that he indicated he might well be in competition with them. But at that time the Dossors were of course unaware of Mr Price's negotiations with Toepfer during October 2007 for an exclusive agency to represent Toepfer in New Zealand. The documents (in e-mail form) evidencing those negotiations became available to the plaintiffs following execution of the Anton Piller order. The relationship has now been confirmed on oath by Mr Price and by Mr Simon Murphy of Toepfer. Toepfer is a leading participant in the international industry and in past months has significantly increased its involvement in the New Zealand market. Neither Mr Price nor Mr Murphy has disclosed whether Toepfer and Mr Price have actually entered into an agency agreement, but the tenor of their affidavits suggests that there is an on-going business connection between them. [19] It is a fair inference, in my view, that Mr Price and Mr Murphy must have engaged in detailed discussions in Singapore when Mr Price was there in September, given the level of detail appearing in the October documents now made available to Hunter Grain. [20] On 10 December 2007 Mr Price gave written notice of resignation from his employment as managing director. The letter expressly advised the company that hewas not resigning as a director of the company. The timing of that letter seems to have been governed to some extent by Mr Price's growing dissatisfaction at what he saw as a degree of disempowerment. Mr Michael Dossor had taken a greater interest in the daily business of the company in the light of Mr Price's earlier notification of his intention to withdraw, but says that he did not significantly trespass upon Mr Price's activities. Be that as it may, it was subsequently agreed that Mr Price's last day at work as managing director would be 23 December 2007. He left the office that day and did not return to work. However, he was paid out until 10 January 2008. As it happened, there was a meeting on that day between David Dosser and Mr Price, for the purpose of negotiating a sale price for Mr Price's shares. A figure of $710,814 was agreed. There had been an earlier overpayment to Mr Price. The amount involved was $110,000 so the settlement figure was $600,814. [21] Hunter Grain's office administrator is Ms Jennifer White. She has worked for the company since 2007. She is responsible for all aspects of office administration as well as current contracts, movements, warehousing arrangements and banking facilities including international payments and foreign currency. Mr Price was out of the office more often than not, so responsibility for the general running of the office routinely fell upon her. She attended meetings of the board of directors and took the minutes. Ms White was directly responsible to the company for the recovery from Mr Price of two laptop computers and a Blackberry mobile phone, which he was to return to the company when he departed. One of the Hewlett Packard laptop computers had been used by the company accountant who left in 2007. His accounting functions were taken over by an outside firm, but the remainder of his duties became Ms White's responsibility. [22] Mr Price did not return the equipment when he left the office on 23 December. Ms White says that Michael Dossor asked her to ensure that everything was returned to the company before Mr Price was paid out. She says that the two laptop computers and the Blackberry mobile phone (without its sim card) were delivered by Mr Price to the office on 10 January.[23] Upon Michael Dossor's instructions, probably on 14 January, Ms White sent one of the computers to Price Waterhouse Coopers in Auckland, Then, on about 16 January, Michael Dossor asked her to forward the second computer to Price Waterhouse Coopers. At that point she noticed the second laptop was missing. She says she knew Mr Price had not returned his key to the company, and therefore assumed he had removed the computer. She was unable to contact Mr Price about the matter for some days, but eventually on 23 January 2008 he telephoned her. He advised her that he had indeed returned to Hunter Grain's office using his own key and had removed the computer. He said there was material on the computer that he had not had an opportunity to remove prior to returning it on 10 January. Ms White said Mr Price used words to the effect:Michael Dossor doesn't need to know about this.[24] Ms White says that Mr Price returned the laptop computer to the company on 23 January 2008 at about 3 pm. She then sent it on to Price Waterhouse Coopers as instructed by Michael Dossor. [25] Mr Price signed a notice of resignation of his directorship on 23 January 2008. The notice purports to take effect as from 10 January 2008, but it is common ground that by virtue of s 157(2) of the Companies Act 1993, the resignation took effect from the date upon which it was delivered to the address for service of Hunter Grain. Mr Price signed share transfer forms and was paid out by Rossod Holdings Ltd, David Dossor's company, on that same day. [26] On 1 February 2008 Hunter Grain received by courier, a copy of a sales contract made between Toepfer and Swaps dated 15 January 2008, in respect of the purchase by Swaps of 25,000 metric tonnes of PKM. The sales contract appears to have been sent to Hunter Grain in error. [27] It is appropriate at this point to say something about the relationship between Hunter Grain and the Swap organisation. For some years there had existed a relationship of mutual benefit to the parties. Hunter Grain procured stock that was subsequently stored in Swaps' various facilities. Hunter Grain and Swaps would routinely discuss arrangements for on-sales to Swaps' customers. They would agreeon a price at which Hunter Grain would sell to Swaps by reference to Swaps' eventual sale price to its own customers. So there was agreement between the parties as to the margins each would enjoy, the intention being that there would be parity in the calculation of those margins. [28] Because Hunter Grain did not maintain a large office staff, Swaps granted Hunter Grain access for a considerable period to Swaps' database, so that Hunter Grain could observe and manage stock movements in order to obtain accurate position reports. [29] Mr Thorpe argues that the relationship between Hunter Grain and Swaps was a joint venture, and that each owed fiduciary duties to the other. Swaps denies that. Mr Fulton argues that, properly analysed, the relationship is no more than contractual, although no doubt there are good faith obligations governing database access arrangements, and the sharing of information relevant to the calculation of margins. Swaps is not a party to this proceeding, and Mr Thorpe accepts that no finding as to the legal status of the relationship is necessary for present purposes. [30] On 8 January 2008 Hunter Grain appointed Mr James Wynn-Williams to be managing director in substitution for Mr Price. A few days later, Swaps restricted access to certain areas of its database, so limiting Hunter Grain's ability to monitor day to day stock movements and positions. Thereby Hunter Grain lost an element of control over its own stock. [31] On 26 February 2008, Michael Dossor met with Stephen Swap to discuss future arrangements between the parties. At that time it appeared from Stephen Swap's assurances that their relationship was on-going. But Michael Dossor says in evidence that he now believes that Mr Price and Swaps had joined in a strategy, devised no later than August 2007, to harm the business activities of Hunter Grain, and in particular to deprive Hunter Grain of the benefit of its joint venture arrangements with Swaps. Hunter Grain draws that inference from matters such as a change in former joint Hunter Grain/Swaps advertising initiatives, unilaterally engineered by Swaps. On the evidence available, the Court could not safely make a finding of improper conduct on Swaps' part, and it is unnecessary to do so.[32] In a recent affidavit, David Dossor has provided evidence of the scale of Hunter Grain's business and the impact of the altered supply arrangements, following Mr Price's departure. He says that the PKM business transacted between Hunter Grain and Swaps over the five years ending 31 March 2008, exceeded $300m and that although Swaps may have purchased stock foods from suppliers other than Hunter Grain over that five year period, the vast majority of such product was sourced from Hunter Grain. As at 22 April 2008, Swaps owed Hunter Grain about $20m, much of it on lengthy credit terms. [33] Mr Dossor says that the entry of Toepfer, assisted by Mr Price, into the New Zealand market has been catastrophic for Hunter Grain. More than 100,000 tonnes has been diverted away from Hunter Grain over the past few months. The lost profit from those sales is in the $1-2 million range he says. Instead of PKM passing down a Wilmar>Touton>Hunter Grain>J Swap> customer supply chain, it now moves through a Wilmar>Toepfer/Price Commodities>J Swap>customer chain. Mr Dossor says that if the remaining directors of Hunter Grain had been aware that Toepfer planned to engage in long term expansion into New Zealand, they would have done whatever was possible to take up any opportunity to act as Toepfer's agent in New Zealand. [34] In October 2007 Hunter Grain had signed a sales contract for the purchaser of 14,500 tonnes of tapioca and 12,000 tonnes of PKM from Toepfer for December shipment. Toepfer had not previously ventured into the New Zealand market in relation to PKM. Mr Dossor says that had Mr Price properly disclosed to the directors Toepfer's interest in the New Zealand market as he should have done when reporting to the Board on 18 September 2007, Hunter Grain would have endeavoured to take up the opportunity to act as Toepfer's agent. [35] This proceeding was commenced on 14 March 2008. Since then there have been two further market developments of significance. First, Wilmar has announced its direct entry into the New Zealand market. It has entered into a joint venture agreement with RD1, which is itself a joint venture company owned by Landmark Holdings Ltd and Fonterra Co-operative Group. Through the joint venture Wilmar intends to engage directly in the supply of PKM in New Zealand.[36] Second, the relationship between Hunter Grain and Swaps has significantly deteriorated. In a letter written to David Swap by the plaintiff's solicitors on 13 June 2008, Mr Swap was advised of Hunter Grain's position in the following terms:We refer to your letter dated 9 June addressed to Hunter Grain. Our client has asked us to reply on its behalf. Your letter is disingenuous. As you are well aware, the reason that Hunter Grain has been unable to supply palm kernel to your company is because your company, assisted Richard Price and Price Commodities Ltd, to take over our client's supply base, and did so for your own commercial benefit. We have provided you with a copy of David Dossor's affidavit sworn on 23 April 2008 which set out the deceitful conduct that enabled that situation to arise. Further, in an affidavit sworn by Stephen Swap on 7 April 2008, Stephen deposed 'I have read affidavits filed by the plaintiff in this proceeding'. But, in case you are uncertain of precisely what is alleged, we will summarise it again. In October 2007 with your knowledge, and at a time when he was still managing director of Hunter Grain Ltd, Richard Price secretly negotiated an agency agreement with Toepfer. That agreement was to facilitate the following future supply chain of palm kernel sourced from Hunter Grain's long-standing supplier Wilmar. Wilmar>R Price/Price Commodities/Toepfer>]Swap>customer. In January 2008, at a time when Richard Price was still a director of Hunter Grain Ltd, he and Stephen Swap travelled to Singapore to transact the purchase of cargoes sourced from Wilmar which would pass along the supply chain described in the preceding paragraph. That visit to Singapore was made behind our client's back. Hunter Grain's Singapore agent, Touton Far East, reported in an e-mail dated 31 January as follows: 'Richard's action and the fact that he showed up here with Stephen is really creating some misunderstanding at Wilmar, [especially] from the operation people. We need to show Wilmar that Hunter Grain NZ is the one taking the market risk and that Swap is only the logistic/servicing company. It would help us if you could send us a fax clarifying that; or even better a fax from Swap, stating that they would keep working with HGNZ. Richard's talk is cheap but we must convince Wilmar once and for all that we are still the main path to the NZ market'. In accordance with that suggestion, a letter was drafted which Stephen Swap was asked to sign. As James Wynn-Williams deposed in his affidavit sworn on 11 March 2008:'I made numerous requests for Stephen Swap to sign the letter. Stephen informed me on or about 4 February that he wanted to talk to Wilmar before signing. From that date, initially I followed up every day and then after that every few days, but was told by Stephen that Wilmar was unavailable leading up to and during the Chinese New Year holiday. The letter remains unsigned at the date of this affidavit'. Against that background, it is objectionable that your company should now feign surprise that Hunter Grain has been unable to supply palm kernel since late January this year. In relation to future supplies, as a consequence of your company's conduct, Hunter Grain no longer has the necessary trust and confidence to support any future supply arrangement with J Swap Contractors Ltd. Our client has already expressly reserved its rights against your company in respect of the breach of fiduciary obligations owed to Hunter Grain Ltd and the actions of your company amounting to wrongful assistance by you to Richard Price in breach of the fiduciary duties Richard Price then owed to Hunter Grain as its managing director. We note that your letter does not directly address the issue of the lease for the warehouse in New Plymouth. We assume from that you are not prepared to give vacant possession on 30 June 2008. Accordingly, our instructions from Hunter Grain (NZ) Ltd are to commence an application to the High Court for relief against forfeiture pursuant to provisions of the Property Law Act 1952. Those proceedings are currently being prepared and will be served on your company in the near future.[37] The market might accurately be described as being in a state of flux.Execution of the Anton Piller order[38] The order was executed on 18 March 2008 at Mr Price's residence and at his office, both in Mt Maunganui. As is common, the Anton Piller order directed that an independent executing solicitor supervise the execution process; in this case Mr P J K Spring of Auckland was appointed. He was assisted by Ms Jennifer Bradley- Young. They attended along with two licensed private investigators. The process occupied some 10 hours. Certain hard copy documents were identified and uplifted by the executing solicitors at each venue, but for present purposes the primary interest lies in Mr Price's laptop computer. It was found at the business premises. There is an issue as to whether it was at the time of the commencement of theexecution process at Mr Price's residence. I discuss that aspect of the matter when dealing with the plaintiff's contempt application. [39] When Mr Spring attended at Mr Price's home and office he was accompanied by Mr Campbell McKenzie, a forensic computer specialist. At the office Mr Price pointed out his laptop computer, and arrangements were made for Mr McKenzie to take a clone of what was on the laptop, upon the footing that the clone would be retained by Mr McKenzie in the first instance and not given to the plaintiffs. [40] Later in the afternoon Mr Spring asked Mr Price a series of questions about the computer and its contents, acting in reliance on the terms of the Anton Piller order itself. It is appropriate to set out the detail of Mr Spring's questions and the answers he obtained:I asked Mr Price to describe to me the precise specifications and details of the hard drive to the extent that he was able. Mr Price said that the laptop was about two years old. On the hard drive were his personal and business details for the last two years, his family photos and holiday photos as well as his daily business dealings on behalf of his employer, Hunter Grain. Mr Price wanted to add that all the business data on the hard drive was duplicated on other computer systems of Hunter Grain in that it was common for all e-mails to him to be cc'd to other individuals within the company. By way of further explanation, Mr Price elaborated that when it was decided he was going to leave Hunter Grain, the laptop was requested back from him. He told them that he had no intention of giving it back until a settlement was reached. Once that settlement was reached, he returned the laptop. I asked Mr Price when he returned the laptop what hard drive was on it. Mr Price replied that a new hard drive was on it. I then asked Mr Price where was the old hard drive. Mr Price explained that, prior to returning the laptop to his employers, he was concerned to remove all personal information from it because he felt that that information was of no concern of his previous employers. He therefore consulted a computer expert by the name of Peter from Total Computers of Mt Maunganui. Mr Price asked Peter how he could best remove personal data from the laptop before he gave it back to his employer. Peter told Mr Price that the only sure means of doing this was to remove the hard drive. Peter said thatif he put a new hard drive in it, it would not compromise the computer at all and it would be as good as new. Mr Price decided to follow Peter's advice. Accordingly, Peter picked up the laptop, including the hard drive, from Mr Price in or about January 2008 as best Mr Price can recall. Mr Price picked the computer up from Peter a few days later. He took it home, had lunch, turned it on and checked that all his personal information had been deleted. He found the computer to be in good working order, shut it down and then delivered it to Jenny White at Hunter Grain. As to what became of the old hard drive, Peter asked Mr Price what he should do with it. Mr Price said he had no need of it because he was buying a new laptop for himself and the hard drive was old technology. He authorised Peter to dispose of it as he wished. I asked Mr Price whether he, or anyone under his direction, made any copies of the hard drive. Mr Price said that he purchased a new laptop from Peter at around the same time. When he gave Peter the laptop he was returning to Hunter Grain with the old hard drive on it, he told Peter that there was certain personal and other information on the old hard drive which he wanted copied over to his new laptop. Mr Price told Peter to copy over onto his new laptop all of his photo files, My Documents and e-mails. Mr Price told Peter that he would then go through and work out from that what he wanted to save, and delete what he didn't want to keep. Accordingly, when Peter got his new laptop back at the same time as the old Hunter Grain laptop, he checked both to ensure that not only had his personal information been deleted from the old laptop but that it had been copied over to his new laptop. To clarify the above position, I asked Mr Price whether any of the information copied over by Peter from the hard drive onto the new laptop was business information or, more particularly relevant information as defined in the order. Mr Price said that there would have been Hunter Grain e-mails, ie e-mails written by and received by him in the course of his employment which would have been mixed in with his personal details. He did not tell Peter to sift through these because Peter would not have had sufficient knowledge to do that. Mr Price made the point that in his view, his address book was 90% personal and only 10% related to Hunter Grain's business. I then asked Mr Price what he did with the Hunter Grain/relevant information copied over onto his new laptop. He replied that he would have deleted some of it that first day because it was simply no longer of any use to him. He believes he would have progressively deleted much of the remainder in the coming weeks. I then asked Mr Price if he was able to recall what information was present on the old hard drive but not copied by Peter onto the new hard drive?In the course of discussing Mr Price's response to this question, it became apparent that the hard drive might in fact still be in the possession of Peter at Total Computers. Accordingly, with the consent of Mr Simpson, Mr Price telephoned Total Computers at 5.02 pm only to be greeted by an answer phone advising that the business hours were 8.30 am-5 pm. Mr Price left a message for Peter to ring him on his office number or mobile. We then returned to the question of what information might have been lost during the transfer from the old hard drive to the new hard drive conducted by Peter. Mr Price replied that in his view, no data would have been lost permanently because such Hunter Grain relevant information as Peter did not copy onto the new laptop would have been duplicated in any event on other computers belonging to Hunter Grain. In other words, there would have been Hunter Grain relevant information not copied by Peter onto the new laptop but that information would have been duplicated on other computer systems of Hunter Grain employees. We agreed then to conclude the questioning in relation to the hard drive. I then asked Mr Price the whereabouts of any relevant information as defined in the order if it were not in his or his company's possession. Mr Price replied that to the best of his knowledge, there was no relevant information either in his possession or in the possession of any others, save for boxes of old historical Hunter Grain material which he believed were in his garage at home. I then sought to clarify Mr Price's response to the above question. I reminded him that relevant information not only included confidential material belonging to Hunter Grain but also communications between or concerning him and his company on the one hand and Toepfer, Swap, Wilmar and Touton on the other. Mr Price responded that the majority of his communications with those entities were on the telephone and e-mails as well. I then asked Mr Price where those e-mails would be. His response was that those e-mails would be on his laptop. He added that he does the best he can to run an electronic office, ie he avoids letters, faxes and other paper based forms of communication. Following a point made by Mr Simpson, I sought to clarify the previous question by making the point that we were talking about communications prior and up to 23 January 2008. Mr Price said that his answer was the same – virtually all of his written communications with those persons would have been by e-mail.[41] Mr Price retained his computer and all the information on it. Mr McKenzie has possession of the cloned material. Sensibly, the parties have reached agreementas to the protocol to apply to that material. I will refer to these arrangements later in this judgment.Interim injunction[42] The proper approach to interim injunctive relief is now well settled. The principles were conveniently summarised by Fisher J in Peters v Collinge [1993] 2 NZLR 554 at 556-7.On such applications the Courts do not attempt finally to determine the parties' rights. Instead the Courts customarily traverse a series of questions in turn. The first is whether the plaintiff has established a serious question to be tried. If so, the second is where the balance of convenience lies with particular reference to the adequacy of damages to either party if ultimately successful at trial. The third is whether the result is affected by a series of discretionary considerations including the relative strengths of the parties' cases, any undue delay by the plaintiff, tentative preference for status quo and the conduct of the parties. At the end of the exercise the Court must stand back from those details and ask where the justice of the case lies:Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129, 142[43] Hunter Grain seeks an order that until trial of this proceeding, the defendants be restrained from dealing with, trading with, or directly or indirectly soliciting business from three named entities: Swaps, Toepfer and Wilmar, together with their related entities. [44] The plaintiffs claim that there is a serious issue to be tried: a) as between the plaintiff and the first defendant on causes of action for conversion, detinue, and misuse of confidential information, and for breach of the first defendant's duty as a director to act in good faith and in the best interests of the plaintiff; b) as between the plaintiff and the second defendant on a cause of action for misuse of confidential information. [45] They say that damages would be an inadequate remedy and that the overall justice of the case favours the grant of the relief sought.[46] Hunter Grain's case for an interim injunction is based upon two separate allegations, relating respectively to Mr Price's failure to disclose the Toepfer opportunity to his co-directors, and to his actions in taking away with him a computer containing confidential information belonging to Hunter Grain. [47] I deal first with the fiduciary duty ground. The law is accurately and comprehensively stated in the unreported decision of McGechan J in Holden v Architectural Finishes Ltd HC WN M659/92 1 November 1995. There, at p 84 he said:(a) A director may not take, or indeed make use of, his company's property. That, of course, is subject to particular provisions in the company's articles of association; and is widely breached in a New Zealand context in relation to one man companies. However, the point is obvious. Gower Principles of Modern Company Law 5th ed 565 cites Guinness plc v Saunders [1990] 2 AC 663 as an example. On a somewhat lesser scale, a director cannot seize and hold tangible company property, such as a car, or make private use of it. (b) A director may not take over ("usurp") less tangible property such as an existing company distribution agency. A director cannot, whilst still a director, negotiate with his company's supplier to switch an existing and ongoing supply contract over to himself, resign, and then take up the supply contract personally following resignation. Resignation does not necessarily sanitise. The point, in its strictness, is illustrated in relation to an existing agency by the "senior employee" case,Schilling v Kidd Garrett supra . A senior employee owed duties of good faith, comparable to those of a director. The employee, while in the last few days of employment after having given notice, negotiated (ironically in Sweden) with his employer company's supplier for removal of the company's agency and its grant to himself. Agreement was not reached before expiration of his employment. but was achieved subsequently, and the change-over effected. The company still sought to retain its agency. The employee was in breach of fiduciary duty and accountable. (c) Likewise, a director cannot take for himself a specific "business opportunity", eg a chance to obtain an agency, which the company is pursuing, or would or might pursue. A director, or indeed a senior company officer, who comes to know of such an opportunity in the course of office, and particularly a director who is involved in preparation or negotiation on behalf of the company, cannot resign with a view to taking up the opportunity himself, and subsequently proceed to do so.[48] An opportunity in which a company has no present interest or expectancy, but in which it might reasonably be expected to be interested, given its present line of business, will give rise to an obligation upon a director as a fiduciary to present it to the company for its consideration before there can be any entitlement on the fiduciary to exploit it himself: Pacifica Shipping Co Ltd v Andersen [1986] 2 NZLR 328 at 334, approving the observations of Professor S M Beck in his article "The Quickening of Fiduciary Obligation" (1975) 53 Canadian Bar Review 771.[49] The strictness of the obligation resting on a director is illustrated by the widely cited decision of the Canadian Supreme Court in Canadian Aero Service Ltd v O'Malley (1973) 40 DLR(3d) 371 at 382.An examination of the case law in this Court and in the Courts of other like jurisdictions on the fiduciary duties of directors and senior officers shows the pervasiveness of a strict ethic in this area of the law. In my opinion, this ethic disqualifies a director or senior officer from usurping for himself or diverting to another person or company with whom or with which he is associated a maturing business opportunity which his company is actively pursuing; he is also precluded from so acting even after his resignation where the resignation may fairly be said to have been prompted or influenced by a wish to acquire for himself the opportunity sought by the company, or where it was his position with the company rather than a fresh initiative that led him to the opportunity which he later acquired.[50] Moreover, as is observed by McGechan J in Holden at p 87, a breach of fiduciary duty may arise even in situations where the prospects of the company itself succeeding in obtaining a particular benefit are remote, or indeed nil: Industrial Development Consultants Ltd v Cooley [1972] 1 WLR 443. Of course there must be limits. A global business opportunity where a defendant merely wishes to take advantage generally of the course of business being pursued by a company of which he was formerly a director, as distinct from a particular business or market opportunity, may well lie outside the duty: CBA Finance Holdings Ltd v Hawkins(1984) 1 BCR 599. [51] Mr Fulton submits that the Toepfer agency cannot properly be regarded as a business opportunity in the sense contemplated by the relevant authorities because Toepfer's place in the relevant market is known to all. There is nothing confidential about what it does, and everybody with knowledge of the market would be able to make their own assessments of what on-going opportunities might be available in conjunction with Toepfer. So there was nothing to disclose, Mr Fulton argues. That submission overlooks the vital point that the disclosure by Toepfer to Mr Price of its intention to enter the New Zealand market itself, and to appoint an agent for that purpose, was market intelligence that would not be freely available to all market participants. It was imparted to Mr Price, and to him alone. An inference might be drawn that Toepfer became interested in Mr Price, solely by reason of his role as managing director of Hunter Grain – his experience and market knowledge was undoubtedly acquired, at least in large part, while he was an employee of thecompany and its predecessor. So this was indeed, a specific opportunity not known to the world at large. [52] I am satisfied that Hunter Grain has established a serious question to be tried in respect of Mr Price's failure to disclose to it the Toepfer opportunity. The material before the Court establishes that Mr Price was engaged in the detail of a proposed exclusive agency arrangement with Toepfer in New Zealand by early October 2007, long before there was any question of his resignation as a director. It is a proper inference that he must have been in discussions with Toepfer at the time of his visit to Singapore in September, and probably well before that. [53] Mr Price is dismissive of Hunter Grain's ability to secure such an agency for itself. He says that Toepfer has no interest in adding a further player to the supply chain. His evidence is corroborated by Mr Murphy of Toepfer. [54] I do not think that matters. The principle does not depend for its application on whether a company might itself take up the opportunity if it had the chance; it is policy driven. A director allowed to take up an opportunity personally, if his company is not able to do so, would be tempted to reduce or play down his company's ability: Holden at 88. [55] Mr Fulton argues that the fiduciary duty to which Mr Price is subject ought to be assessed in the light of what is argued to have been a "freezing out" of Mr Price in the latter stages. That was a consideration in Inplus Group Ltd v Pyke [2002] 2 BCLC 201, but the way in which Mr Price was treated by the company over the last few weeks of his directorship falls far short, in my view, of conduct that might have an impact on the scope of his fiduciary duties to Hunter Grain. The defendant inInplus Group Ltd v Pyke had effectively been frozen out of the company completely for a lengthy period. [56] Moreover, the breach here consisted of a continuing failure to disclose. There is a serious question as to whether Mr Price was in breach from as early as September 2007. There was no suggestion at that time of anything seriously amiss between him and the other directors. Although there were the August issues towhich I have earlier referred, they were not sufficient to prevent Mr Price travelling to Singapore in the ordinary course of his duties in September. I am satisfied that there is a serious question to be tried on the cause of action that rests upon Mr Price's failure to disclose the Toepfer opportunity. [57] Mr Fulton does not argue that there is no serious question to be tried in respect of the confidential information contained on Mr Price's computer. He accepts that Mr Price holds such information. That being so, in the circumstances of this case there must exist a seriously arguable case of breach of fiduciary duty, conversion and misuse of confidential information. [58] I turn to the balance of convenience. [59] As framed by the plaintiff, the interim injunction sought would, if granted, prevent Mr Price from dealing with Swaps, Toepfer and Touton until the trial of the proceeding, which, it is agreed, is many months away. [60] Mr Thorpe readily accepts that an injunction of such wide scope would have the effect of putting Mr Price out of business for a lengthy period. In a sense, it would finally determine this aspect of the case in Hunter Grain's favour; in a market that is evolving rapidly, the long term exclusion of Mr Price from participation would have the potential in my view to place him at an irremediable disadvantage. [61] In such circumstances great care is needed. It will not always be sufficient simply to apply the ordinary American Cyanamid test: NWL Ltd v Woods [1979] 1 WLR 1294, and Cayne v Global Natural Resources Plc [1984] 1 All ER 225. [62] Mr Thorpe says that an injunction is warranted on two separate but cumulative grounds. First there is the appropriation of the Toepfer opportunity, and second, there is the retention on Mr Price's computer of Hunter Grain's confidential information, not otherwise available to the plaintiff. Mr Thorpe argues that this is a springboard case and Mr Price ought to be restrained from competing with Hunter Grain for a significant period. He relies upon the approach adopted in Pacifica Shipping and more recently in BDM Grange Ltd v Parker HC AK CIV 2005-404-993 31 March 2005, by Priestley J, and in Bradford Trust Ltd v Roebeck HC AK CIV 2006-404-7111 7 December 2006 by Venning J. In the latter case the defendant was not a director but a senior manager to whom similar fiduciary duties attached. [63] Mr Price concedes that he negotiated with Toepfers to take up an exclusive agency for them in New Zealand several months before he resigned as a director of Hunter Grain. He says that he was entitled to do that:My negotiations with Toepfer were not Hunter Grain's business but exploring and negotiating my future for when I left Hunter Grain.[64] It is strongly arguable that Mr Price's view is not legally defensible. There is authority to the effect that the mere taking of preliminary steps to investigate or forward an intention to compete after a directorship terminates, will not necessarily amount to a breach of duty where there is no actual competitive activity during the currency of the directorship: Coleman Taymar Ltd v Oaks [2001] 2 BCLC 749, but there only very limited activity was held to breach the duty. Here it is seriously arguable that detailed negotiations had been undertaken that ought not to have been undertaken; where the opportunity, however remote, existed for Hunter Grain itself to endeavour to obtain an agency from Toepfer, Mr Price ought not to have engaged in any agency discussions with Toepfer until his connection with Hunter Grain had ceased. [65] The timing advantage Mr Price gained is likely to have had a significant adverse effect upon Hunter Grain as is demonstrated by Mr David Dossor's evidence about the PKM trade in New Zealand in the early part of 2008. Hunter Grain was left without the managing director who had principal control of the detail of Hunter Grain's dealings with Toepfer, Touton and Swaps. Mr Price well knew that Hunter Grain would be left at a significant disadvantage. [66] In an affidavit sworn on 23 June 2008, he says:13. Mr Dossor is wrong at para 25 to state, without proof to support him, that before I left Hunter Grain I set up a new supply line between Toepfer, myself and Swaps. When I left Hunter Grain no such supply line had been established. Neither had I then made arrangements for that supply line. There were no commitments. As Toepfer's agent in New Zealand I would hope to trade successfullywith Swaps and any other customer with which I could establish a competitive margin. I knew I would have to compete with Hunter Grain whose loose management and variable knowledge of the local market would not assist it. In the result I know that Swaps have continued to approach Hunter Grain for supplies. Hunter Grain has supplied some of the orders but has turned down a good many. Apparently Hunter Grain does not have the product, is not competitive, or is not really interested in competition. It has raised disputes with the Swap Group with threats of litigation. This is hardly conducive to continuing a supply business.[67] Had Mr Price deferred the commencement of his negotiations with Toepfer until he resigned as a director in January 2008, Hunter Grain would have been better placed to deal in the short term with the disadvantageous position in which it found itself. [68] Hunter Grain's problems were compounded by Mr Price's removal and retention of its confidential information. It is difficult to make an accurate assessment of the impact upon Hunter Grain of the partial loss of its information, because relatively sparse evidence only is available as to what precisely is missing. [69] Ms White has explained Hunter Grain's problems in this way:1. I make this affidavit to explain the extent to which the operation of Hunter Grain Ltd has been hindered by the lack of access to business records, e-mail correspondence and information. That information has either been destroyed by Richard Price prior to his departure from the company or, alternatively exists on the clone that is currently in the custody of the executing solicitors and to which Hunter Grain has been denied access. 2. As a direct result of Richard Price's actions, there have been, and remain, substantial and important gaps in the company's information and records. These include: 2.1 A record of the vast majority of e-mails written by Richard Price during his time as a Managing Director; 2.2 Names and addresses of company customers and suppliers; 2.3 Evidence of sales contracts negotiated, purchases made, freight rates agreed. 3. In paragraph 19 of his affidavit sworn on 23 June, Mr Price claims that all business information was on a shared drive 'the P drive'. This is not correct.4. I have checked the shared drive. I confirm that none of Richard Price's e-mails was saved on the shared drive. 5. Very rarely would Richard Price copy me in on e-mails. 6. The shared drive has only ever been used for Excel or Word correspondence of which Richard Price did very little. I would estimate that over 95% of Richard Price's business correspondence would have been conducted either by phone or e-mail. 7. The computer shared drive does not hold any details of business contacts. 8. The lack of hard copy files in our office, for a company that has been in business for over five years, demonstrates that Richard Price very rarely printed out hard copies of his e-mail correspondence. Once the electronic copies are destroyed or stolen, they can never be recovered. 9. Our business depends on contacts. Richard Price worked on the telephone and by e-mail. I would have expected that Richard Price would have sent at least 30 e-mails per day on average, if he was doing his job properly. Only a very small percentage of his e-mails were copied directly to me from Richard. In an average week I would receive only about 10 copied e-mails from Richard. In comparison now with CEO James Wynn-Williams I would receive approx 10 per day – detailing contract negotiations, customer quotes, confirmations of business conducted. Also, even if Richard Price's claim that he often copied me into a large number of the company's e-mails was correct (and it is not) e-mails received by Hunter Grain which were not addressed to me were only stored on Richard's hard drive. Hunter Grain no longer has access to them.[70] Hunter Grain's problems have been compounded by Mr Price's retention of its confidential information (there being no real dispute that the company's business records are confidential). [71] I turn to the terms of the interim injunction sought by Mr Thorpe. In my view, an injunction that extends to both Swaps and Touton cannot be justified. There is insufficient evidence to suggest that Mr Price has been engaged in unlawful commercial behaviour with Swaps. [72] In December 2007, Hunter Grain brought a half ship load of product from Toepfer. That shipment was supplied by Hunter Grain to Swaps. In January 2008, Swaps negotiated a further shipment direct with Toepfer. Mr Price said he was not involved in that supply. There is no evidence to the contrary.[73] Mr Thorpe advised the Court that Hunter Grain will be pursuing litigation against Swaps in respect of the breach of the alleged joint venture agreement between Swaps and Hunter Grain, but he also indicated that for the purposes of the present application, Hunter Grain places no reliance on what it says are Swaps' shortcomings. There is no doubt that Mr Price and Mr Stephen Swap are close friends, and it is likely that there will be an on-going commercial relationship between Mr Price and Swaps, but that is not sufficient of itself to found interim injunctive relief. [74] Neither do I consider that it is appropriate to grant an injunction in respect of Wilmar, which on the evidence appears to be the major supplier of the product with which the parties are primarily concerned in this litigation. There is no suggestion that Mr Price has improperly dealt with Wilmar during the period of his directorship. [75] The retention by Mr Price of Hunter Grain's confidential information does not, of itself, justify the grant of a blanket interim injunction which would completely shut him out of the market. Hunter Grain has had some months now to remedy its position. Mr Thorpe invited me to grant an injunction which would prevent Mr Price from competing in the market at all, for a period of some months on a "tit for tat" basis. That would be an excessive response in all the circumstances of the case. [76] It is proper however to grant Hunter Grain interim injunctive relief in respect of Mr Price's relationship with Toepfer. By negotiating with Toepfer some months before he was free to do so, Mr Price obtained a significant timing advantage over Hunter Grain. It is strongly arguable that that advantage was improperly obtained. Toepfer is, on the evidence, a strong international trader having a direct relationship with Wilmar. On the face of it, Mr Price has gained an illegitimate timing advantage which ought to be remedied by the grant of an interim injunction for a period broadly equivalent to the period for which the advantage has been so gained. On the evidence that seems to be about four months. [77] Of course no injunction is appropriate where damages would provide a sufficient remedy for a plaintiff. However, in springboard cases, damages will rarelybe adequate: BDM Grange Ltd v Parker at [35]. Here there is no evidence from Mr Price as to his ability to pay an award of damages which might ultimately be made by the Court at the trial of the proceeding. The Court does of course, have evidence of Mr Price's receipt of $600,000 for the sale of his shares in Hunter Grain, but the purchaser of those shares has now issued proceedings against him for recovery of at least some of the purchase price. There is no evidence of what has become of the sum received by Mr Price. [78] On the other hand there is evidence that Hunter Grain is in a sound financial position and that it is soundly backed by parties with considerable resources. Should it ultimately appear that an injunction now granted ought not to have been obtained, I am satisfied that the plaintiff will be able to pay the amount of any damages award. [79] In my view the appropriate term of an interim injunction is about four months, the assessment of the appropriate period being a necessarily arbitrary exercise to some extent: Bradford Trust Ltd at [74]. [80] Standing back and considering the matter overall in the interests of justice, as is mandated by the judgment of the Court of Appeal in Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129 at 142, I am satisfied that injunctive relief is justified. [81] There will accordingly be an interim injunction restraining the first and second defendants from dealing with, trading with, or directly or indirectly soliciting business from Toepfer International GMBH or related entities (including Toepfer International-Asia Pty Ltd) until 1 December 2008.Discharge of Anton Piller order[82] The defendants apply to discharge the Anton Piller and related orders made by the Court on 18 March 2008. They complain that some of the evidence upon which the application depended has proved to be incorrect, that Hunter Grain has failed to make full and fair disclosure and that certain of the evidence adduced amounts to hearsay or opinion which ought not to have been proffered to the Court.The defendants say also that Hunter Grain does not have a strong arguable case, and that there are defects in the plaintiff's pleadings. [83] The grounds for discharging an executed Anton Piller order prior to trial are relatively limited. The principles governing discharge applications were considered by Henry J in DB Baverstock Ltd v Haycock [1986] 1 NZLR 342. At the hearing of an application for discharge it is for the plaintiff to re-establish its entitlement to an order. That was explained in Baverstock at p 344:It is common ground that the purpose of an application under R 264 to rescind an ex parte order is to establish a hearing de novo in the presence of the defendant (Carter Holt Holdings Ltd v Fletcher Holdings Ltd [1980] 2 NZLR 80, 84; WEA Records Ltd v Visions Channel 4 Ltd [1983] 2 All ER 589, 593). The purpose of that is to enable a Judge to consider whether, on the basis of all the evidence and the arguments advanced, the interlocutory orders should stand. Ex parte orders are provisional by nature, being made on the basis of evidence and submissions from only one side, and for that reason are subject to review without inhibition.[84] That was the procedure adopted for the present application. [85] Henry J considered two then recent English authorities WEA Records Ltd v Visions Channel 4 Ltd [1983] 2 All ER 589(CA) and Booker McConnell PCL v Plascow [1985] RPC 425(CA). From those authorities Henry J derived the following principle:In my view the principle to be applied in respect of an application to discharge an executed Anton Piller order is that it should only be entertained prior to trial if the order has been obtained mala fide, or on material non- disclosure, or if there are other special circumstances which clearly demonstrate the need for immediate relief. A defendant will of course always have the right to apply urgently when appropriate to discharge such an order before it has been executed, and if necessary to refuse immediate compliance with it, but the risks of so doing would need carefully to be weighed.[86] The correctness of this approach was affirmed by our Court of Appeal inFujitsu General NZ Ltd v Melco NZ Ltd CA295/00 8 May 2002 [7]. [87] Evidence obtained upon the execution of an Anton Piller order may be considered by the Court at the time of a hearing for a discharge or variation: LockInternational PLC v Beswick [1989] 1 WLR 1268 at 1284 and Twentieth Century Fox Film Corp v Colonial Arms Tavern (1985) 1 NZIPR 602 at 607. [88] I accept Mr Thorpe's submission that none of the Baverstock tests for discharge are met in this case. Mr Price concedes that he took away from the plaintiff a hard drive which contains much information confidential to Hunter Grain, and now copied onto his own computer, in circumstances where he accepts that he intends to compete with Hunter Grain. That of itself is sufficient to justify the continuation of the orders made on 18 March 2002. Indeed, as appears below, the parties are agreed on appropriate protocols for the identification and disposal of such of the plaintiff's documents as are held on Mr Price's computer. The Anton Piller orders provide the proper framework for forthcoming discovery and inspection issues. It is not in dispute that the defendants must render up to Hunter Grain such of the plaintiff's documents as are confidential to it, and which the defendants have no proper claim to retain. The discharge of the order will accordingly carry no practical consequence: see Columbia Picture Industries Inc v Robinson [1986] 3 WLR 542. [89] Mr Fulton made comprehensive submissions in support of the application for discharge. As I understood it he accepted that it was appropriate for proper arrangements to be made for discovery and inspection of such of the documents seized by the executing solicitor as proved to be the plaintiff's documents, but that there was nevertheless no justification for the retention of an Anton Piller order as such. I infer that Mr Price's concern is reputational. [90] Mr Fulton reviewed the authorities to which I have referred above, and suggested that the case made for an Anton Piller order was thin, because there was no sufficient evidence upon which the Court could come to the conclusion that the defendants were likely, without an order, to destroy the information or otherwise put it out of the reach of the plaintiff. He suggested that there was an obligation on the plaintiff to check with Mr Price first before resorting to the extreme step of applying for an Anton Piller order. He was inclined also to argue that information on a computer might not fall within the purview of an action for conversion or detinue.[91] Mr Fulton further submits that Hunter Grain had not established in its March affidavits, either that the plaintiff's documents held by Mr Price were confidential, or that there was a risk that he may misuse them. [92] Mr Fulton's submissions, although pressed with skill and determination, do not persuade me that it is appropriate to discharge the order. The executing solicitor, Mr Spring, said that Mr Price acknowledged to him that he was holding business related e-mails that were the property of Hunter Grain. As such they were plainly confidential and Mr Price ought not have retained them. The risk of misuse is self- evident. There is no basis upon which it would be proper to discharge the Anton Piller order. The defendants' application is therefore refused.Identification and inspection of seized documents[93] In its application of 23 April 2008, Hunter Grain applied for orders directing the executing solicitors to release to the plaintiff for copying, two optical storage disks found during the execution of the search orders, and further directing that Mr Campbell McKenzie be permitted to undertake an inspection of the computer and of other records recovered on the execution of the search orders (orders D and E of the notice of application). [94] Sensibly counsel have been able to agree upon the terms upon which discovery and inspection arrangements, falling within these applications, ought to be advanced. Counsel provided to the Court at the hearing a joint memorandum setting out the proposed arrangements. It is convenient to set out the memorandum in full:MEMORANDUM OF COUNSEL FOR PLAINTIFF AND DEFENDANTS IN RELATION TO DRAFT ORDERS FOR THE SEARCH AND INSPECTION OF DOCUMENTS SEIZED DURING EXECUTION OF ANTON PILLER ORDER May it please the court counsel for the plaintiff and the defendant agree that: In respect to the plaintiff's business records1. The first defendant has confirmed that the optical disks comprise copies of all information taken from the plaintiff's hard drive by the first defendant.2. Mr Campbell McKenzie will make a search of the optical disks 'PC RP- 02' and 'PC-RP-03' as defined in his affidavit sworn on 15 July 2008 presently in the possession of the executing solicitors, Keegan Alexander. 3. Mr McKenzie's search will produce a catalogue of the folder and file contents of each of those disks providing a description of each document sufficient to identify it. 4. Mr McKenzie's search will produce a catalogue of all e-mails on each of the disks providing a description of the sender, recipient, the date of the e-mail and the subject heading. 5. Mr McKenzie will complete this task by 18 July 2008. 6. The defendants' counsel will inspect Mr McKenzie's catalogues and advise the plaintiff's solicitors in writing which of the documents that the defendants claim do not comprise the plaintiff's business records. 7. The defendant will complete this task by 25 July 2008. 8. Copies of all of the plaintiff's business records as identified by the defendant will immediately be released by the executing solicitors to the plaintiff. 9. Mr McKenzie will review and categorise each document identified by the defendant as not being a plaintiff's business record as – plaintiff's business, personal or unsure. 10. Mr McKenzie will complete this task as quickly as possible but in any case no later than 2 August 2008, with leave to request more time if required. 11. The plaintiff will advise the defendant of any documents where the plaintiff disputes the claim that they are not business records. The plaintiff's counsel, Mr I Thorpe, will be entitled to inspect any such documents on his undertaking to keep their contents confidential from his clients pending further order of the Court. 12. In respect of documents relevant to issues in dispute the parties have leave to apply to the court in these proceedings to determine whether any document can properly be characterised as a business record of the plaintiff and therefore must be released to the plaintiff.In respect of production of relevant documents for inspection13. Mr McKenzie will undertake a search of the entire forensic copy of the defendant's electronic records (including deleted records) using the search terms set out in the plaintiff's solicitors' letter to the defendant's counsel of 22 April 2008 which is pp 499-501 of the plaintiff's bundle of relevant documents for the hearing in these proceedings commencing on 10 July 2008. Mr McKenzie will produce his results in the form of catalogued lists as described earlier in this order (without attempting to categorise them as relevant or not).14. Mr McKenzie will complete this task by 2 August 2008. 15. Within 10 working days of Mr McKenzie advising the parties of the results of his search the defendant will advise the plaintiff of which documents it objects to produce for inspection, and why in each case. 16. The parties shall then have leave to apply to the Court for orders as to inspection of any such documents.[95] To the extent that it is necessary to do so the Court directs that the parties co- operate with Mr McKenzie in respect of the work contemplated by the memorandum, and directs that the parties comply with the timetable set out therein. Leave is reserved in terms of paragraph 16 of the memorandum.Privilege[96] In Hunter Grain's notice of application of 23 April 2008, an order was sought (order F), directing that certain documents listed in the executing solicitor's letter to the parties dated 2 April 2008, be released to Hunter Grain for inspection. The issue here is whether the documents concerned are privileged or not. I heard argument from counsel on the question. The thrust of Mr Thorpe's submission is that any document that appeared in electronic form on Mr Price's computer, during the period of his employment or directorship, could not be privileged because Mr Price must be taken to have waived privilege by placing the document concerned among the business records of the plaintiff, to which the plaintiff and its Board must have had access as of right. [97] I am not prepared to rule on this aspect of the application at the present time. The documents referred to in Mr Spring's letter of 2 April 2008 are not before the Court. There is limited evidence only of the protocols governing Mr Price's use of his business computer. Little argument was directed to the law on waiver, and to the provisions of the Evidence Act 2006 which might be thought to bear upon the matter. Further, there is the significant likelihood that documents identified by Mr McKenzie in pursuance of the protocols contained in counsels' joint memorandum might well also be the subject of the disputed claim to privilege.[98] Arguments as to privilege in this case ought, in my view, to be determined once and for all in the light of more detailed information than is available now. As Mr Fulton submits, the issue is quintessentially for consideration as part of the case management of the proceeding. This aspect of the plaintiff's application is accordingly adjourned.Interrogatories[99] Order 3.1 of the Anton Piller search orders made by Venning J on 17 March 2008, provided:Within three days of the service of a sealed copy of these Orders, each of the defendants so served shall, if required by the plaintiff, make, file and serve an affidavit which discloses [information relating to Relevant Information in the Hard Drive].[100] On 28 March 2008 the plaintiff's solicitors wrote to the defendants' solicitors requiring, pursuant to order 3.1, that the defendants file and serve an affidavit in compliance with order 3.1. The letter went on to discuss in detail two issues related to the events of the day upon which the Anton Piller orders were executed. The particular incidents so were identified were: a) The circumstances in which Mr Price's computer appeared to have been taken from his residence to his office during the currency of the execution of the order; b) The truthfulness of information given by Mr Price to Mr Spring about the identity and contact details of the computer consultant retained by Mr Price to carry out work on his computer. [101] These matters are relevant also to the plaintiff's application to hold the defendants in contempt. They are accordingly discussed in greater detail below. [102] For present purposes it is sufficient to record the requirement appearing in Izard Weston's letter of 28 March 2008 to Simpson Aspen Law, to the following effect:21. Order 3.1 requires your clients' affidavit to explain: 1. why the first defendant gave two different explanations given (sic) for the current whereabouts of the hard drive and the reasons for that (hard drive disposed of because it was no longer working compared with hard drive removed in circumstances outlined in paragraphs 44-45 of the Spring affidavit); and 2. why your client lied about the identity or workplace of the person who removed the Hard Drive from the laptop; 3. whether any Relevant Information or the Hard Drive were in Peter Roberts' possession on the morning of 18 March 2008; and 4. where any such Relevant Information and/or the Hard Drive is now, or was last known to be by any of your clients or their agent Peter Roberts.[103] Hunter Grain's solicitors followed up that request a few days later by filing on 4 April 2008 an application for orders in the following terms:A. Order 3.1 of the order granted on 17 March 2008 be varied to the following effect: 3.1 Within three days of the date of this varying order each of the defendants shall, make, file and serve an affidavit which discloses: 3.1.1 The whereabouts and a detailed and precise description of any Relevant Information or the Hard Drive in its possession or control, including whether any Relevant Information or the Hard Drive were in Peter John Roberts' possession on the morning of 18 March 2008; and 3.1.2 The identity and place of business of any person or company, other than the plaintiff or its directors, servants and agents (including Peter John Roberts) who has or had possession or control of any Relevant Information or the Hard Drive; 3.1.3 If any Relevant Information or the Hard Drive has been in the defendants' possession or control, but is no longer in his or its possession or control, the whereabouts and a description of the Relevant Information, including what may have become of it, and the whereabouts of the Hard Drive including what may have become of it.[104] Shortly thereafter Mr Price swore an affidavit, on 8 April 2008. It was expressed to refer to the letter from Hunter Grain's solicitors of 28 March 2008, andused the paragraph references appearing in that letter. It seems that when the affidavit was sworn, Mr Price was unaware of the 4 April application; the affidavit plainly does not respond to the application. Neither on the face of it does it deal completely with the issues raised in the letter of 28 March 2008. [105] Mr Fulton accepts that Hunter Grain is entitled to the answers sought in the 4 April application, and to an order in the varied terms set out therein. [106] Accordingly, there will be an order in terms of paragraph A of the plaintiff's application of 4 April 2008, save that the period of three days specified in the application is amended to read "five working days". The element of extreme urgency which attended the original application has now dissipated somewhat.Contempt[107] In its notice of application of 23 April 2008, Hunter Grain seeks the following orders:B The first defendant be held in contempt of Court for wilfully refusing to comply with the search and other orders of this Court dated 17 March 2008 made in these proceedings (the search orders); C The first defendant and the second defendant be debarred from taking any steps to defend these proceedings until they have paid the plaintiff's costs of these proceedings to date on an indemnity basis; or be subject to such other sanction as the Court may consider appropriate for contempt.[108] Earlier I referred to the grounds upon which these applications are made; namely the claimed unlawful removal of a computer from Mr Price's house to his office, and the subsequent giving of allegedly misleading answers by Mr Price to Mr Spring in respect of the identity and whereabouts of Mr Roberts, Mr Price's computer consultant. [109] Mr Thorpe submits that each of these incidents constitutes a contempt of the Anton Piller order, aggravated he says, by the unsatisfactory and incomplete character of the answers provided in Mr Price's affidavit of 8 April 2008.[110] Counsel are agreed that an accurate summary of the principles applying to applications for contempt for breach of an Anton Piller order appears in Neuronz Ltd v Tran HC AK CP623-SW01 23 May 2002. There Williams J said:[97] It is well-settled that the this Court has power, pursuant to its inherent jurisdiction, to prevent abuse of its process and to punish for contempt those who breach its processes (Taylor v Attorney-General [1975] 2 NZLR 675, 678-679). "The contempt jurisdiction exists in the public interest as a sanction to ensure that orders of the Court are complied with" (Taylor Bros Ltd v Taylors Group Ltd [1991] 1 NLZR 91, 93). [101] Before punishing a person for contempt the Court must be satisfied that the orders giving rise to the claimed contempt are clear and unambiguous with the person in breach having proper notice of them and with the breach being proved beyond reasonable doubt (Television New Zealand Ltd v Newsmonitor Services Ltd (1997) 12 PRNZ 168, 170) with liability being strict (Heatons (Transport) St Helens Ltd v Transport and General Workers Union [1973] AC 15, 109) and motive being irrelevant (R v Poplar Borough Council (No.2) [1922] 1 KB 95, 103; Laws NZ Contempt of Court para 70 p 65).[111] I turn to the first of the incidents claimed to constitute contempt. When the executing party arrived at Mr Price's house, the computer in question was at the house; so was Mr Roberts, the computer consultant. He has sworn an affidavit deposing to have been at the house in order to service the computer. [112] At the outset of the execution of the orders, Mr Spring briefly explained to Mr Price the purpose of his visit, and the obligations to which Mr Price was subject. Mr Price then spoke to Mr Fulton by telephone for some time. Mr Spring watched him from a distance throughout the relevant period. [113] While Mr Price was on the telephone, Mrs Price arrived at the house. She was observed by Mr Bourgeois, a licensed private investigator who formed part of the executing party. She was seen by him to enter the house in company with a male person, to take no notice of Mr Price, but within a few moments to leave the house with a package similar in appearance to a computer case. [114] The computer was found a little later in the day by the executing party at Mr Price's office. There is no first-hand evidence as to how it came to be movedfrom the house to the office. Mr Thorpe says I should draw the inference that Mr Price must have warned Mrs Price by telephone of what had transpired and had instructed her to take the computer away from the house and to place it in the office where Mr Price might have thought it would be safe from the executing party. [115] I am not prepared to draw that inference. Any breach must proved beyond reasonable doubt in order to constitute a contempt. There are certainly grounds for suspicion. If indeed it was Mrs Price who took the computer away, then presumably she would have done so on instructions from Mr Price. But on the evidence there was very little opportunity for Mr Price to convey his instructions to her. At the most, a few minutes only elapsed between the commencement of Mr Price's call (apparently to Mr Fulton) following Mr Spring's indication of his purpose in visiting the house, and Mrs Price's arrival at the house. The evidence tends to suggest that there was no opportunity for Mr Price to talk to her at the house without being overheard. Mr Spring's evidence is that Mr Price was talking to Mr Fulton about the implications of the order of which he had just been advised. [116] As I have observed, while the circumstances are suspicious, I am unable to conclude beyond reasonable doubt either that Mrs Price took away the computer, or that if she did she was doing so on the instructions of Mr Price. [117] The second incident concerns information given by Mr Price to Mr Spring about the identity and contact details of Mr Roberts. Earlier I reproduced at length that portion of Mr Spring's affidavit that explains in detail the exchanges that occurred between Mr Price and him in respect of the computer. At paragraph 49 Mr Spring says he was told by Mr Price that his computer consultant was "Peter from Total Computers of Mt Maunganui". Later, at paragraph 61 Mr Spring says:In the course of discussing Mr Price's response to this question, it became apparent that the hard drive might in fact still be in the possession of Peter at Total Computers. Accordingly, with the consent of Mr Simpson, Mr Price telephoned Total Computers at 5.02 pm only to be greeted by an answer phone advising that the business hours were 8.30 am-5 pm. Mr Price left a message for Peter to ring him on his office number or mobile.[118] There is evidence that:a) Mr Peter Roberts, although formerly employed by Total Computers was no longer so employed; that he had set up his own business and that he dealt with Total Computers only in order to purchase stock; b) Mr Roberts' new trade name and his cell phone number were well known to Mr Price who had used that number regularly in the preceding months; c) After Mr Spring left, Mr Price contacted Mr Roberts on the latter's cell phone in order to ascertain from him whether or not he had destroyed the plaintiff's hard drive as earlier instructed by Mr Price. [119] With some justification, Mr Thorpe argues that Mr Price must have known how to contact Mr Roberts on his cell phone at the time of his discussion with Mr Spring. Mr Price's call to Total Computers was therefore a hollow gesture, because Mr Price knew he would not find Mr Roberts there. [120] But in my view, Mr Price's actions, futile as they were, fell short of constituting a contempt of the order. Mr Spring does not say he asked Mr Price to contact Mr Roberts, nor did he ask him for Mr Roberts' contact details. Mr Price appears to have telephoned Total Computers on a voluntary basis. [121] Mr Thorpe submits that by making the call to Total Computers Mr Price was obstructing the execution of the orders. In my opinion, that might well have been so if Mr Spring had asked Mr Price to put him in contact with Mr Roberts, but there is no evidence that that request was made. The evidence falls short of constituting a contempt because it does not establish obstruction, bearing in mind the need for proof beyond reasonable doubt. [122] Given my findings on the two primary grounds relied upon by Hunter Grain, the somewhat fragmentary contents of Mr Price's affidavit of 8 April 2008 cannot properly be regarded, of themselves, as constituting a contempt either.[123] Accordingly, I am not prepared to make the order sought in paragraph B of the plaintiff's application of 23 April 2008.Summary[124] In summary, the result of the application before the Court is: a) There is an interim injunction restraining the first and second defendants from dealing with, trading with, or directly or indirectly soliciting business from Toepfer International GMBH or related entities (including Toepfer International-Asia Pty Ltd) until 1 December 2008. [81] b) The defendants' application to discharge the Anton Piller and related orders is refused. [92] c) Directions are given in terms of counsels' memorandum of 15 July 2008. [95] d) The application raising issues as to privilege is adjourned. [98] e) The first defendant is ordered to file an affidavit as sought in paragraph A of the plaintiff's application of 4 April 2008 within five working days of the date of this judgment. [106] f) The plaintiff's application for an order holding the first defendant in contempt is refused. [123]Costs[125] Mr Thorpe seeks costs in respect of all steps taken by the plaintiff in this proceeding, up to but not including preparation for, and the hearing of, these present applications. He submits that Mr Price's conduct has been such as to warrant an award of indemnity costs whether or not a finding of contempt is made: Hoole vDarby HC AK CIV 2006-404-5235 30 March 2007. Alternatively he relies upon r 48C(4)(a). [126] Mr Fulton did not address the question of costs in his oral submissions. [127] Because in any event it will be necessary for counsel to file memoranda in respect of the costs of the present applications, the better course is to permit counsel to lodge memoranda in respect of the whole of the costs of the proceeding to date, in the light of the contents of this judgment. Accordingly, Mr Thorpe is asked to file and serve a memorandum by 8 August 2008. Mr Fulton is to respond on or before 22 August 2008. Mr Thorpe may reply on or before 29 August 2008. I will therefore deal with costs on the papers, unless either counsel seeks a further oral hearing in respect of costs.Case management[128] Counsel are agreed that, although this is a proceeding filed in the Tauranga Registry, it would be appropriate, given the nature of the causes of action alleged, that it be case managed in the Auckland Registry, at least for the time being. The Registrar is asked to refer the file to an Associate Judge accordingly.C J Allan J