OMNI MARKETING GROUP ASIA PTE LTD V TRANSACTOR TECHNOLOGIES LIMITED HC AK CIV 2007-404-430

OMNI MARKETING GROUP ASIA PTE LTD V TRANSACTOR TECHNOLOGIES LIMITED HC AK CIV 2007-404-430 29 February 2008IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2007-404-430BETWEEN OMNI MARKETING GROUP ASIA PTE LTD Plaintiff AND TRANSACTOR TECHNOLOGIES LIMITED Defendant Hearing: 28 February 2008 Appearances: Mr McEntegart for plaintiff Mr Tingey for defendant Judgment: 29 February 2008ORAL JUDGMENT OF ASSOCIATE JUDGE DOOGUECOUNSEL:Mr L McEntegart, Park Chambers, 23 Victoria Street East, Auckland Bell Gully, P O Box 4199, Auckland[1] The approach I shall adopt in this judgment is to work through the plaintiff's application followed by defendant's application and identify the categories of documents by their numbering in the application.Category 1 A[2] The reason why these documents are relevant is that there is a contested issue brought to the surface by the pleadings. Payments were made to the defendant by the plaintiff. The plaintiff says this was pursuant to an agreement to provide advances to Transactor Technologies Limited ("TTL") pending the conclusion of a joint venture agreement between the two groups. The plaintiff claims the defendant said this was necessary because it, the defendant, needed financial assistance. There is a specific pleading in paragraph 19 of the statement of claim that an employee or officer of the defendant told the CEO of the plaintiff about the defendant's cashflow problems and that he specifically stated that the defendant required funds to continue its operations. The defendant's version of events is that, in fact, TTL made charges to the plaintiff as a service provider and received payment for those services. [3] The plaintiff says a wide category of documents ought to be disclosed which showed the state of the defendant's accounts at the relevant period. The plaintiff says that all it has received so far are some copies of ledgers. It says there must be other documents and that it is necessary that such other documents be discovered. [4] Mr Tingey for the defendant says that the ledgers, in fact, give a full account of how payments received into the company were treated in the accounts. He said that there would not be other documents that descend to the necessary level of particularity to show just how each payment was treated. [5] In my view, the documents which bear upon the question of how any payments made by the defendant to the plaintiff were dealt with in the accounts must be relevant to the issue. The documents, which are instanced in the applicant's application, according to Mr McEntegart, self-evidently will provide relevant information. I am not going to make any order. I am not persuaded there are additional documents. If there are documents though, which would advance theplaintiff's case in a way that I have suggested, I simply note that they would be discoverable. [6] But there is a second basis upon which the plaintiff now says the further financial documents are discoverable. That concerns the question of the company's ability to pay its own way. Mr Tingey says he has not looked into that matter yet but there may be documents which, for example, show the cash flows of the company and which might be suggestive either of if the company was able to pay its own way or was not. Mr Tingey agrees, in principle, that financial documents that fall into this group are in principle discoverable. There is no basis upon which I can make an order directing further and better discovery relating to these documents, but again I simply note that if there are such documents they would be discoverable and that the defendant has an obligation to disclose them. Beyond that I cannot directly order that any particular category of documents ought to be discovered.Group two of the documents[7] This group is identified in the application as 1(b), which the plaintiff has filed. A practical way of dealing with this issue, which the parties agree with, is that the defendant will provide the documents in a form which does not disclose the names and any material identifying the defendant's customers or clients it deleted from the copies provided for inspection. This means, of course, that there is no obligation on the defendant to prepare a supplementary affidavit identifying the documents. The defendant does, however, have an unconditional obligation to produce in redacted form all of the documents which are identified in this category.Group three of the documents[8] This group is identified by para 1(a) of the defendant's Notice of Application for further and better discovery. There is continuing reference made by the defendant, in its submissions in support of this part of the application, as to the basis on which certain work was done. Was it done on the basis that Mr Norrie and parties associated with him and the defendant contracted with the plaintiff, or was there a different explanation that Mr Norrie did work for the plaintiff or one of its wholly owned subsidiaries? There is a further issue concerning certain payments theplaintiff made to the defendant. On the plaintiff's telling these were instalments of advances. On the defendant's side it is said they were payments for services. [9] The defendant says there is a live issue between the plaintiff and the defendant which justifies further and better discovery. The defendant says that, on the present state of the pleadings, it is correct that aspects of its counter-claim are denied. The various claims made in the counter-claim are that there was a contract to provide services, that the contract was cancelled and that the defendant is entitled to relief under s 9 of the Contractual Remedies Act 1979 for the work done. The defendant pleads that a reasonable fee for the work is in excess of $1,000,000. The defendant also says that pursuant to the contract, in addition to providing services, it made available the use of a computer application called THOR. It says that, again pursuant to the Contractual Remedies Act 1979, it is entitled to relief which is reflected in a sum which is the equivalent of the standard licence fee that it would receive for licensing THOR to the plaintiff. [10] The second counter-claim concerns essentially the same subject matter except that the legal formulation of the claim is that, having performed its contract with the plaintiff, the defendant is entitled to claim for the amount owed to it as a result. The third counter-claim goes into the same matters but puts the claim on an alternative footing of quantum valebat or quantum meruit.[11] Under this claim the defendant says the value of the work 'claimed and freely accepted by the plaintiff' is slightly in excess of $1,500,000 for the work and for the use of THOR US$300,000 plus 5% of the revenue generated. [12] The fourth counter-claim is based on breach of copyright that relates to infringement of the defendant's copyright in the THOR computer application, with an account of profits being sought. [13] The fifth counter-claim involves use of confidential information about a business programme, which I understand is essentially a customer loyalty type incentive programme which the defendant says the plaintiff misappropriated.[14] The plaintiff, as I understand it, says that given that there is a denial of the core allegation that there was a contract for services and services provided, that is an end to any live issue which would justify discovery. But Mr Tingey said there are subsidiary issues arising on the counter-claim which are not extinguished by admissions or concessions on the part of the plaintiff. Those issues include matters which go to the value of the work but also extends to quality of the work which was done. Both of those matters are relevant to the contractual claims and also to thequantum meruit/valebat claim. [15] Of course, if the plaintiff possessed documents which had the tendency to assist the defendant's claim that the nature of the working relationship was one of a retainer then those documents would be discoverable as well. [16] I consider that the defendant is entitled to further and better discovery. I do not accept that the fact that the defendant already has some relevant documents relating to this aspect of the dispute excuses the plaintiff from giving discovery. I do not accept either that the time left until the date of trial will make it so difficult for the plaintiff to complete discovery that I ought, in my discretion, to decline to make an order. [17] I was also referred to the broad extent of the documents included in the categories of types of documents in the sense of the medium in which the documents were created which Mr McEntegart referred me to. It is true that is quite a wide definition, including, as it does, all documents including:All minutes, file notes, drawings, diagrams, plans, electronic records, invoices and programme specifications created and used in relation to (certain) projects and programmes.[18] On the other hand, the various types of documents, by which I mean the media in which they were created, are typical business documents so far as I can see, which are routinely ordered to be discovered. [19] In the end, the plaintiff will have to make the same judgment that clients in conjunction with their legal advisers always make as to what documents are arguably discoverable. The fact that I am going to make an order for further and betterdiscovery does not compel the plaintiff to produce irrelevant documents. It will use its informed judgment to confine discovery to those matters which are truly relevant to the proceeding. The only clarification that this judgment gives is subject areas in which the discovery is required. That in turn is informed by what the issues are and I have tried to set those out at the beginning, when I summarised the causes of action in the counter-claim. As often happens on an application for discovery there is emerging clarity about what the exact issues are that are thrown up by the pleadings and as a consequence closer definition of what categories of documents the respondent party is going to be required to produce. Of course, if there can be further refinement to the pleadings to reduce the number of issues then that will reduce the scale and scope of discovery that is required.Group four of the documents[20] The fourth group of documents that need to be considered are those which are the subject of the defendant's application for further and better discovery of documents that broadly relate to its fourth alternative counter-claim for breach of copyright. [21] At para 66 of the counter-claim the defendant makes the following allegation:66. The plaintiff has infringed the defendant's copyright in the artistic and literary works by using them and continuing to use them when the defendant has not authorised their use including: (a) In relation to the Park 'N 'Shop contract in Hong Kong (the Park 'N 'Shop contract). (b) In relation to the TP4 contract for TOPS the artistic and literary works that are said to be protected by copyright seem to fall into two categories. The first relates to the THOR computer application, which I mentioned earlier, and the second part to business models.[22] Briefly, my understanding of the factual basis of the claim is that the defendant generated a scheme for collecting information about consumers and using that to the advantage of retailers. The scheme requires for its implementation a computer programme and THOR supplies that need.[23] The defendant's case is apparently that, during a period of time when it was operating with the plaintiff, it made available the necessary computer software as well as the business model. This was done in anticipation of a joint venture that has never happened. The plaintiff, the defendant alleges, is still in possession of its intellectual property and it is not compensating the defendant for that. Hence the claim for breach of copyright of the continued use of the intellectual property is brought. The defendant alleges the plaintiff is not licensed and is not permitted to use the defendant's intellectual property. [24] There was much discussion in the submissions before me about the way in which the defendant had formulated the claim with discussions centring on the use of the word 'including' in para 66 of the counter-claim. Mr McEntegart submitted that the defendant had given two concrete instances of circumstances in which breaches were occurring. Those two circumstances were in relation to the Park 'N' Shop contract and to the TP4 contract for TOPS. He said that by tagging on the word 'including' the defendant was trying to mount an unspecified claim which asserted further breaches and resulting damage, but which was not particularised as to how, in addition to the Park 'N' Shop and TOPS instances, the defendant was further wrongly exploiting the defendant's software. [25] Mr Tingey made several points in response, including that there had been no challenge to the form of the pleading and that the defendant simply could not be expected to specify all of the proposed breaches in detail. It was enough that the defendant was trying to vindicate the continued retention and exploitation of its software by the plaintiff. [26] As I understand it there is agreement on the part of the plaintiff to provide the relevant documents that are sought in this category so far as they are restricted to Park 'N' Shop and TOPS. Beyond that the plaintiff is unwilling to go. [27] This is not of course an application to strike out or otherwise seek to remedy perceived defects in the defendant's pleading. However, precision in pleadings is required to give shape and structure to the obligation to discover. The defendants pleadings cannot justify, in my view, any requirement for discovery beyond thepleaded breaches in relation to Park 'N' Shop and TOPS. I therefore decline to make any further order extending the plaintiff's obligation to discover beyond the pleaded circumstances relating to Park 'N' Shop and TOPS.Fifth group of documents[28] This group of documents concerns diary records of Mr Mebreuer and Lim Keng Teck. Mr Teck has deposed he does not maintain a diary. Mr Mebreuer is, as I have said, the CEO/ Principal of the plaintiff. The obvious principal functions of diaries are to note meetings and engagements. Mr McEntegart says that the plaintiff pleads (at paragraphs 18 and 19 of the statement of claim) that meetings took place between 16 June 2004 and 19 June 2004. The pages relating to those meetings in Mr Mebreuer's diaries have been disclosed. Beyond that, he said, he would ensure that the diaries were combed to see that there were not other meetings referred to. [29] The defendant's position is, first of all, set out in Mr Norrie's affidavit where he states that the defendant seeks to see all of the diary. Mr Tingey, in his submissions, said that the diaries were discoverable, not just for meeting dates, but for any other matter that had relevance to the proceedings. [30] I am not prepared to make any further order. There is no basis for determining that the discovery given thus far is defective. No proper inference can be drawn that there are properly discoverable pages in the diaries that have not been disclosed.Other matters[31] Mr Tingey told me that he would not be proceeding with the orders in respect of the categories of documents set out at para's 1(c) and 1(d) of the defendant's notice of application. [32] There are still outstanding issues including staging of exchange of statements of evidence and filing of a proposed amended statement of claim. Counsel have already filed memoranda on the question of the order of exchange of statements of evidence. Mr Tingey would like to file a memorandum in reply.[33] The other issue is timetable orders for trial which have not been set at this point. I will have this matter re-called in my Chambers List at 11.45 a.m. on 7 March 2008 to hear from counsel concerning those issues. I note that Mr Tingey has another Chambers matter that morning at that time. If it is in another list we may need to be flexible at to the start time for this matter and I will accommodate him as required.Costs[34] The Court has an over-riding discretion when awarding costs to do justice as between the parties. The principle stated in r 47 says that the party that fails with respect to the proceeding on interlocutory applications should pay costs to the party who succeeds. This is a case where as so often there was not a complete success or complete failure on each side. It is more helpful to look at whether the applications were brought bona fide and with the objective of clearing away procedural difficulties ahead of the trial. Judged from that perspective both applications were necessary. I therefore take the view that justice would be done by making no orders at all or by ordering costs each way to each applicant on its application. On balance I think the latter course is preferable and that is the order I make. There will be no order relating to the oral application that was brought to recall my judgment. It was a matter that arose without being heralded in any written application. It did not involve preparation of papers by the other side. It may have contributed slightly to the entire time that the hearings before me have taken but not so significantly as to merit an adverse award of costs against the plaintiff, which brought the application. There were proper grounds for bringing the application. For all of those reasons I decline to make an order on that oral application. _____________ J.P. Doogue Associate Judge