ORDER OF ST. JOHN V GEMINI 10 LTD AND ORS HC AK CIV-2002-404-001559

ORDER OF ST. JOHN V GEMINI 10 LTD AND ORS HC AK CIV-2002-404-001559 25 August 2009IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV-2002-404-001559BETWEEN ORDER OF ST. JOHN NORTHERN REGIONAL TRUST Plaintiff AND GEMINI 10 LIMITED First Defendant AND TWINS 10 LIMITED Second Defendant AND JUNE 10 LIMITED Third Defendant AND QIN RUI KENNETH JOHN LU Fourth Defendant Hearing: 19 December 2008 2 April 2009 Counsel: Michael S Cole and Jurrian W Kiewik for plaintiff Evgeny Orlov for Fourth Defendant Judgment: 25 August 2009 at 3:00pmRESERVED JUDGMENT OF WILLIAMS JThis judgment was delivered by The Hon. Justice Williams on25 August 2009 at 3:00pmpursuant to R 11.5 of the High Court Rules .. Registrar/Deputy Registrar____________________________________________________________________A The fourth defendant's application for leave to apply to rescind the counterclaim is dismissed. B. The fourth defendant's application for leave to apply for further and better discovery is allowed to the very limited extent set out in this judgment. C. There is no need for an order in relation to the fourth defendant's application to engage a chartered accountant as an expert witness. _________________________________________________________________ Introduction[1] This judgment deals with applications by the Fourth Defendant, Mr Lu, for leave to apply for – a) Rescission of a stay entered on 2 September 2005 of a counterclaim filed by the defendants. b) Further and better discovery. c) To engage a chartered accountant, a Mr Tong, as an expert witness to scrutinize the plaintiff's claimed loss of profit. Leave was required as the proceeding was formally set down on 1 September 2006 – but has been unable to be allocated a fixture because of a plethora of interlocutory applications. [2] This judgment therefore deals with the latest round of interlocutory applications in a case the substantive hearing of which has been delayed now for over six years by its thoroughly unsatisfactory interlocutory history. Whilst the plaintiff has filed a number of interlocutory applications over the course of the case, in recent years the delays have been very largely as a result of the need to deal with a significant number of interlocutory applications filed by the defendants, Mr Lu in particular.[3] It is unnecessary to detail that history further, save to note that the defendants' actions concerning the plaintiff's discovery have played a significant role in delaying the hearing of the case. Indeed, the Court had to devise a régime unique to this case to try to deal with the problems the parties experienced over discovery and inspection (see the judgment of 31 July 2007), revisited it on several occasions over the ensuing period, and even then it took the parties over a year to make much progress on that issue (see the judgment of 6 August 2008). Significant aspects of it still remain in contention. Although it has only the broad truth of any generalization, it is not unfair to say that many of the difficulties which have dogged this case for several years and continue to dog it stem from the defendants' refusal to accept the adjudication on issues of discovery appearing in many of the judgments over that time: the defendants have adopted the stance that their views on the plaintiff's discovery obligations are correct and nothing the Court or the plaintiff has been able to do for a lengthy period has shaken their belief in the correctness of their views, notwithstanding, amongst other things, the Court's views in that regard. [4] Counsel estimated that no more than one day would be required for the hearing of the interlocutory applications with which this judgment deals. The 19thDecember 2008 was allocated but the submissions of Mr Orlov, counsel for Mr Lu, were so lengthy they left insufficient time for the answering submissions by Mr Cole, leading counsel for St John, to be presented. A further day's hearing was required. Due to other commitments, that could not be allocated until 2 April 2009 and, even then, the hearing was only just able to be completed within the allocated time.Application to rescind stay of counterclaim(1) Submissions[5] On 16 August 2005 all four defendants were ordered to meet orders for costs totalling $21,375 made against them on various interlocutory matters. Enforcement of those orders against Mr Lu personally was stayed until 2 September 2005 because of uncertainty whether he was legally-aided in relation to this claim and, if so, for what period.[6] On 2 September 2005 the defendants' set-off and counterclaims were stayed and costs of $2900 were ordered to be paid by them with, again, enforcement of that additional order for costs against Mr Lu personally stayed until further order. [7] After a number of other hearings on interlocutory matters, Potter J, in a reserved judgment delivered on 2 May 2007, rescinded the order for stay of the costs orders against Mr Lu after considering his legal aid position. [8] Mr Lu's application for leave to appeal was dismissed on 23 August 2007. He did not seek to appeal that refusal. [9] Accordingly, $24,275 has been owing by Mr Lu to St John over at least the past two years for costs. He has paid nothing. He claims to be so impecunious he is incapable of paying. The corporate defendants have also paid nothing off the orders for costs against them. Mr Orlov said they have all been struck off the Register. No enforcement action has been taken by St John against any of the defendants for non- payment of the costs orders. No bankruptcy petition has been issued against Mr Lu. [10] Despite that, in his submissions on this application, Mr Orlov submitted that the only issue was that the corporate defendants had not met their obligations and there is "nothing further outstanding that the Fourth Defendant should have done but has not". [11] He drew attention to the defendant's successful application to rescind the stay as it related to the defendants' defence, and to the fact that this Court has, on several occasions, said it was up to the defendants, if they considered they could persuade this Court that rescission would be appropriate, to apply for such an order. [12] Mr Orlov submitted the stay of the counterclaim should be rescinded because both it and the claim are so interwoven that, if Mr Lu were to be successful "in his counterclaim but not his defence, it is possible his claim will outweigh the plaintiff's and hence he will end up being owed monies. However, staying his counterclaim deprives him of the right of set-off also", a submission he supported by analysis of the pleadings.[13] Mr Orlov made the point that the same facts, witnesses and documents were relevant to the claim, defence and counterclaim. Leaving the counterclaim stay in place might necessitate separate hearings. [14] Mr Orlov relied on r 1.2 stating the objective of the Rules as being to secure a "just speedy and inexpensive" determination of any proceeding and submitted: a) because of the interweaving of the matters underpinning both the defence and counterclaim maintaining the stay prevented Mr Lu putting all relevant facts before the Court; b) St John had not come to Court with "clean hands", a submission he supported by reference to the various submissions he had made over the years – particularly on this hearing – concerning discovery and other interlocutory issues. He submitted the claim against Mr Lu was "rather incredible and certainly 'weak'." c) The plaintiff had wasted the Court's time with interlocutory matters while simultaneously not proceeding with the substantive hearing. Mr Orlov, on Mr Lu's behalf, has repeatedly asserted his or their belief that St John is only proceeding with this matter in order to harass Mr Lu. He submitted St John had waged a "concerted campaign of interlocutory warfare that simply was not able to be resisted by the defendants due to impecuniosity". In fact, all interlocutory applications brought by the plaintiff have been extensively resisted and the defendants – or Mr Lu – have lodged many of their own. [15] For St John, Mr Cole submitted rescinding the counterclaim stay would be contrary to the interests of justice, particularly having regard to the history of the case, including the defendant's numerous unsuccessful interlocutory applications or opposition to them. He submitted the defendants had been granted a number of indulgences over the years for such matters as repeated breaches of timetable orders and suggested failings in respect of the discovery process.[16] He made the point that Mr Harrison QC, arguing the stay/rescission application for the defendants in late 2005, made clear the defendants' then rescission application would be reduced to the defence – as was granted – and would not be pursued in relation to the counterclaim, something this Court relied on in granting rescission of the stay on the defence. [17] Mr Cole submitted rescinding the stay of the counterclaim was likely to both complicate and lengthen the substantive hearing, thus result in further costs, and then there must, having regard to the history, be the prospect of further interlocutory applications should that course be followed. He submitted the counterclaim was poorly pleaded, was extremely weak, prolix, oppressive and failed to comply with the Rules. [18] He submitted that the defendants' actions since 5 December 2005 did not justify rescinding the stay of the counterclaim. Further, the defendants' actions since that time had cost the plaintiff significant further funds and caused it injustice in delaying the substantive hearing. He relied on the following passage from Hytec Information Systems Limited v Coventry City Council [1997] 1 WLR 1666, 1675:The interests of justice require that justice be shown to the injured party for the procedural inefficiencies caused by the twin scourges of delay and wasted costs. The public interest in the administration of justice to contain those blights upon it weighs very heavily. Any injustice to the defaulting party, though never to be ignored, comes a long way behind the other two.(See also Anderson v Mainland Beverages Ltd (2005) 17 PRNZ 757 (CA)).(2) Discussion and Decision[19] This Court summarized the counterclaim issues in its judgment of 5 December 2005 rescinding the stay as far as it related to the defence by quoting from an earlier judgment of 19 July 2005:[6] The current position between these parties as appearing in the pleadings on the Court file was summarised in the judgment of 19 July 2005 in the following terms: [3] The claim revolves around gaming machines. St John pleads that it installed eighteen machines at a Hunter'sCorner site pursuant to an agreement with the first defendant, Gemini 10, dated 29 October 2001. It said the agreement debarred Gemini 10 from selling its business unless the buyer entered into a site agreement with St John for four years on the same terms as the Gemini 10 agreement. St John pleads that Gemini 10 breached the agreement on 16 October 2002 by entering into a contract for sale which was not conditional on the purchaser entering into a Gemini 10-like agreement with it when it sold its business to Zenith HK Ltd. It claims losses of $163,788.26 saying that it was required to remove its gaming machines from the Hunter's Corner site, lost the business for a period until it entered into an agreement with Zenith HK and thereafter suffered from loss of business. Up to 28 February 2003 its losses, principally loss of profit, amounted to the $163,788 with further losses claimed later. [4] There are further causes of action asserting breaches of the "blue book", the Department of Internal Affairs Gaming Machines manual, arising out of an alleged failure by Gemini 10 to bank $27,934 of machine profit during the period 29 October 2002-13 November 2002. [5] There is a similar breach of contract claim against the second defendant, Twins 10 in relation to a contract for eighteen machines installed at Mangere East which are said, in breach of contract, to have been sold to a company called Fortune HK Ltd on 16 October 2002 without that company entering into a similar site agreement. The claim for loss of profits for the same date in that case is $199,180.70. Against Twins 10 also there is a claim for unbanked profits of $28,737. [6] A third breach of contract claim is brought against the third defendant, June 10 Ltd, relating to eighteen machines installed in Manurewa which were said to have been sold in October 2002 to Titan HK Ltd without that company entering into a similar site contract. The losses in that case to the same date are said to amount to $177,033.71. [7] The claims against Mr Lu are brought against him as a director of Gemini 10, Twins 10 and June 10 and are based in inducing breach of contract, unlawful interference with contractual relations and breach of fiduciary duty with the sums claimed being the aggregate of those claimed against the individual companies. [8] The defendants raise a number of issues including breach of the site agreements by St John, claimed unenforceability, unreasonable restraint of trade, illegal restrictive trade practice and lack of proof of quantum of the claimed losses. Mr Lu denies personal liability and relies on the defences pleaded by the companies. A counterclaim raises issues of failing to perform the site agreements by St John, breaches of the Gaming and Lotteries Act 1977 and the "blue book"in a number of pleaded ways, they plead that Mr Lu entered into management consultancy agreements with the companies who have purchased the other defendants' businesses on 16 October 2002 under which he was to receive $100,000 p.a. plus GST from each. They plead that St John has induced breach of the consultancy management agreements. They claim $900,000 plus GST, being the amount payable for the first year of each of the contracts, together with continuing damages. [9] In a further cause of action the defendants assert the companies contracted with St John on the basis that all defendants would be treated in the same manner as all other site operators. They assert breach by St John in a number of ways including it was "reluctant to approve the contract for the first to third defendants inclusive because the director was of Chinese ethnicity." They assert the breaches amounted to anticipatory repudiation or rescission of the contract and sales to the other companies were a consequence but were at under-value. Loss of profits totalling over $1m are sought by each of the corporate defendants. Mr Lu asserts that St John induced the termination of his consultancy contracts thus causing him loss of $900,000. He also seeks exemplary damages of $300,000. He sues St John for defamation and seeks general damages and exemplary damages of $300,000. [10] St John denies all the allegations in the counterclaim and asserts that if remarks made by or on its behalf were defamatory, they were subject to qualified privilege. [7] That summary demonstrates that there is significant weight in Mr Harrison's submissions that the nub of the dispute revolves around which party first breached the three site agreements: the first-third defendants by selling their businesses to purchasers without including the required term in the contract, or the plaintiff by removing the gaming machines.[20] After noting Mr Harrison's concession that the latest statements of defence and counterclaim required "significant re-pleading" (p 5 para 9) the Court relied on the fact that at that stage the defendants did not seek rescission of the counterclaim stay (p 10 para 29). [21] The Court discussed the fact the defendants had made no payment on account of the costs order against them, claiming lack of financial capacity, and noted that in its latest claim St John had deducted $25,000 from the amount claimed, being a sum paid by the defendants to St John following mediation. The judgment then proceeded:[32] Another factor of significance – though not argued by counsel – was that, subject, of course, to limitation questions, it may yet be open to the defendants to issue separate proceedings against St John raising the issues on which they rely in their defence and counterclaim and seek, by interlocutory means, to postpone execution of any default judgment St John might obtain against them until completion of such litigation. The unsatisfactory nature of such a means of proceeding are factors in favour of granting rescission to enable all significant features of the claim to be adjudicated on at the one time. [33] However, overall, there must be weight in Mr Harrison's submission that, despite the defendants repeatedly exposing themselves to justifiable criticism, notwithstanding their failures and however unsatisfactorily their side of this litigation has been managed over the past two years or so, what must be kept securely in mind is that the defendants' failures, other perhaps than in non-payment of the costs orders, are interlocutory not substantive and it would be unfortunate if whatever may be the merits of their substantive defences is unable to be put before a trial Judge to enable a measured and comprehensive assessment to be undertaken of the parties' respective legal positions.[22] A determination on the present application is reasonably finely balanced. On the one hand, dismissing the application for leave to bring the counterclaim rescission application would be consonant with the Court's attitude to those who do not comply with its orders and with the defendants' withdrawal of the stay rescission application in 2005 as far as it related to the counterclaim. [23] On the other hand, given the way in which this case has been run by the parties – especially the defendants – to date, it is highly likely that even if the counterclaim stay remains in place, some documents and facts in evidence more relevant to the counterclaim than to the claim and defence will form part of the evidence. In practical terms, it would be difficult to prevent Mr Lu and his counsel bringing those issues into the hearing. Trying to confine the evidence at the substantive hearing strictly to issues raised by the claim and the defence and excluding issues solely related to the counterclaim would itself be an exercise likely to disrupt and lengthen the hearing. [24] But the difficulty in so doing should not lead to the counterclaim stay being rescinded. Accordingly the conclusion should be that the application for leave to bring that application should be dismissed. [25] The principal reasons for arriving at that conclusion are:a) Mr Lu has not merely owed $24,275 to St John since mid-2007 but that debt results from orders for costs made by Judges of this Court between April-September 2005. Those orders have never been challenged by review or appeal. Yet, now, Mr Lu is essentially asking this Court both to entirely disregard the fact he has paid nothing whatever on account of a substantial debt arising from orders of Judges of this Court and, secondly, to allow him to continue with his counterclaim as if those orders did not exist. b) Even if Mr Lu has been impecunious for the past several years, if he wished to ask the Court to grant him the indulgence of permitting him to proceed with his counterclaim as part of the substantive hearing in this matter, he should have been able to make some payments or arrangements for payment to St John over that lengthy period. c) Mr Lu and the other defendants applied to rescind the stay but abandoned that application as far as it related to the counterclaim at the November 2005 hearing. Having voluntarily undertaken that step at that stage, there seems little reason to allow Mr Lu to reverse his stance on the same matter at this stage when the issues in the case have been unaltered since well before the November 2005 hearing. d) Mr Lu has done nothing over the years to take any other action to protect his position as pleaded in the counterclaim. Notwithstanding the Court's hint (p 11 para [32]) in its 5 December 2005 judgment, that it might be open to Mr Lu or all the defendants to issue separate proceedings and seek to have them run in tandem with the current claim, Mr Lu has done nothing whatever in that regard. Since a procedural means of bringing the issues pleaded in the counterclaim to hearing was so obvious, that may reflect on the genuineness of Mr Lu's counterclaims as opposed to a possible wish on his part to embarrass St John. It provides another reason for declining the present application.e) Mr Lu has been very active in advancing or defending his position in interlocutory applications since the counterclaim was stayed about four years ago, yet he has seemed largely uninterested in dealing with the counterclaim until now. f) It was admitted during the November 2005 hearing that the counterclaim was in need of substantial re-pleading. To grant Mr Lu's application at this stage would therefore mean further delays while that re-pleading occurred and a defence was filed. In addition, Mr Orlov gave no hint of what might be contained in any re-pleaded counterclaim. Having regard to the way the parties conducted this litigation there must therefore be a chance that granting Mr Lu leave to apply to rescind the stay of the counterclaim issued nearly four years ago could take the hearing in a new or additional direction and result in a further round of interlocutory applications. [26] For all those reasons, the Court's conclusion is that no basis has been made out to grant Mr Lu leave to bring his application to rescind the counterclaim stay entered on 2 September 2005 and his application to that end is accordingly dismissed.Further and better discovery(1) Application[27] The documents of which Mr Lu sought further and better discovery in his application for leave in that regard were extensive, inconsistently formulated and thus difficult to deal with. As will be seen, they also varied during the hearing. The problems in approaching the issue were exacerbated by counsel presenting submissions on the issue which were not always clearly anchored in the application itself. It follows that the Court needs to deal with the issues globally in endeavouring to deal with the matter. [28] His interlocutory application included the following:a) "Specific professionally and independently verified financial information for the period during which the claim applies" which was extensively particularised. b) "Correspondence between the plaintiff and private investigators ... hired by the plaintiff to investigate the fourth defendant and his wife, [and] correspondence between the plaintiff and the NZ Police" which was again particularised. c) "Correspondence between ... employees of the plaintiff and ... St John Northern Region Trust on matters concerning the plaintiff's site contract with the defendant" with particulars. d) "Documental proof of the plaintiff's policy and procedure when the issue of withdrawal from or transfer of gaming machine leases occurs and documental proof of the plaintiff's practice to litigate against all machine lessees found to be in similar circumstances" with particulars. e) "Documented minutes and memoranda of meetings held between representatives of the Water Safety Education Foundation and [a named] trustee ... of St John Northern Region Trust" with particulars. [29] That was elaborated upon in a schedule filed as part of a memorandum next day as including: a) Some pages of the accounts for the Northern Region of St John copies of which had been offered but only if confidentiality undertakings were given by Messrs Lu and Orlov, plus "all Northern Region accounts applicable to all operations of the Grace's Place sites" for the years ended 31 March 2002 and 2003. b) "[C]omparative venue data ... to identify overall trends in gaming machines in the Auckland region particularly during the period inwhich the plaintiff claims financial losses ... sourced from the plaintiff's venue licensing records for the period ended 31 December 2005." c) Financial and performance data for some five gaming venues involving 65 machines for the period 1 January 2002–31 December 2005. d) The setting aside of privilege claimed by St John for 27 sets of board reports, agendas, and minutes between 24 June 2003-15 August 2006 plus, from the list of contentious documents provided to the Court in accordance with a previous discovery judgment, another 14 sets of board reports, agendas and minutes between 19 November 2002-24 August 2004. e) "All documents containing records of or references to meetings and negotiations" between St John and "prospective societies in relation to the transfer of venue licences" plus correspondence touching on that topic between those parties and between St John and the Department of Internal Affairs. f) "[D]ocuments containing the plaintiff's policy and procedure to be actioned when a change of contracted venue operator is anticipated or is actually occurring" plus documents recording the implementation of the policy in instances other than those involving the defendants plus documents recording litigation by St John against other venue operators. g) Documents held by St John in relation to the transfer of a contract to a Ms Lu as to the "procedure adopted by the plaintiff during the introduction of a new operator to the existing Grace's Place menus" plus the plaintiff's file relating to Ms Lu for the period ending 31 July 2003.(2) Submissions[30] Mr Orlov commenced his general submissions by suggesting that the claim displays a "history of a failure by the plaintiffs to properly plead their case", a case which Mr Lu asserts is "unsustainable in fact and in law and that the plaintiffs' true motivation is harassment of the fourth defendant". Extraordinarily, he submitted that the plaintiffs has "virtually allowed this claim to go to sleep and has unnecessarily complicated the claim by voluminous procedural complexities" including amending the claim four times - he being disparaging of the breach of fiduciary duty claim against Mr Lu - and the numerous applications relating to discovery. He submitted St John was guilty of abuse of process, not least because the "proceedings have been initiated for the predominant purpose of collateral advantage", principally the suggested harassment of Mr Lu. [31] Mr Orlov submitted St John had not discovered relevant documents for six years, made "nebulous" statements that documents were confidential and had omitted to discover documents later obtained by Mr Lu from third parties under the Official Information Act 1982. [32] He submitted the plaintiff had failed to discover documents relating to its loss of profits claim which was an "extremely serious dereliction of the duty to discover". He inferred the plaintiff had not been properly advised by its solicitors of its discovery obligations. He asked rhetorically "how can a board minute possibly be privileged?" as it did not come within solicitor/client privilege. [33] Mr Orlov then detailed a large number of instances in which, he suggested, St John was in breach of its discovery obligations. The examples began with the plaintiff's first list of documents filed on 20 December 2002 and involved many matters discussed at earlier hearings on discovery from that time on, matters he illustrated by reference to a bundle of documents he filed. [34] In particular, Mr Orlov pointed to the judgment of 31 July 2007 which, he said, ordered discovery and production of certain documents and which led him "by deductive logic" to infer that relevant documents that should have been discoveredhad not been. That summary, however, inadequately summarized the judgment of 31 July 2007 which, while it ordered discovery and inspection of certain documents, also set out the régime earlier mentioned designed to assist the parties to resolve all outstanding questions of discovery and inspection. It ultimately turned out to be unsuccessful, largely for the reasons in the Court's minutes of 23 August 2007, 8 November 2007 and the judgment of 10 June 2008. [35] Mr Orlov submitted that, the plaintiff having refused to supply "information which it implicitly admits is discoverable", it still refused to provide the documents sought. [36] Mr Orlov then referred to a bundle of documents which he said Mr Lu had obtained under the Official Information Act and from the Police, which had not been discovered by St John. He supported that submission with extended reference to a number of documents. [37] He was also critical of an affidavit filed by St John exhibiting some correspondence between the parties' legal advisers. He contended it was argumentative and amounted to submission, not evidence, but failed to recognise he, too, had put a number of letters of his own before the Court, thus risking the Court taking the view that, he being a witness, he was no longer able to continue in this case as counsel. [38] Mr Cole drew attention to numerous occasions when the defendants have been unsuccessful in interlocutory applications over the years coupled with what he submitted had been numerous indulgences granted to the defendant in relation to their breaches of timetable orders and the like. [39] In addition, he submitted the defence had been conducted unreasonably by failing to inspect and request copies of documents when they were available, objecting without valid reasons to the confidentiality undertakings required, evasively answering the plaintiff's interrogatories and, in particular, repeatedly pressing for copies of Board papers when Mr Bogiatto (who had participated in the discovery and inspection régime) accepted they were privileged.[40] He also asserted the defendants had continually sought discovery of documents accepted by Mr Bogiatto as being not relevant or non-existent, and failed to take advantage of offers years back in the past relating to the discovery of relevant financial performance information. He particularly relied on what he submitted were omissions in previous discovery applications of reference to material actually already discovered, or seeking discovery of documents ruled not discoverable. He drew attention to a number of letters from the plaintiff's solicitors during 2007 and 2008 which had not been replied to or to which the replies were belated. [41] Mr Cole's submissions concerning St John's board minutes were interrupted by Mr Orlov saying that Mr Lu was not now seeking that information and had not sought it for a "long time". [42] Mr Cole particularly relied on an offer on 27 August 2003 to the defendants' then counsel of detailed statements of financial performance relating to each of the sites which are the subject of these proceedings (subject to confidentiality) and of what was effectively a repeat, on 19 July 2007, when Mr Orlov was offered a CD- ROM containing that information and Mr Orlov declined to accept it. [43] When Mr Cole submitted that all the gaming site agreements were identical, that led to a further intervention by Mr Orlov that he no longer sought all the gaming site agreements once St John agreed all were identical. [44] Mr Cole refined his December submissions at the April resumption and added four Appendices enlarging on the plaintiff's opposition to the submissions made on Mr Lu's behalf, setting out what he submitted were inaccuracies or misconceptions in Mr Orlov's submissions, and detailing issues of inspection. [45] With respect to counsel's diligence, it is not considered necessary to review that material in detail save to note Mr Cole's reliance on Watson v Dolmark Industries Limited [1992] 3 NZLR 311 in answer to Mr Orlov's submission that no claim for breach of fiduciary duty lay against Mr Lu personally and dealing with damages claimable in such a situation. Mr Cole also relied on AWB Limited v Cole[2006] 232 ALR 743, 772ff as justifying St John's claim of privilege for its boardminutes. Discovery and production was not ordered in that case as might have tended to reveal the plaintiff's legal advice. [46] Mr Orlov's submissions in reply suggested evidence as to the defendants' historical breaches were of "little or no relevance" and were disputed. He put in evidence an affidavit of a barrister who accompanied him when he endeavoured to inspect St John's documents as supporting his submission that St John had failed to provide copies without reason – something which led to a further course of correspondence. [47] He said his failure to accept the CD-ROM arose because it was not a formal offer; was made with what he called a "level of aggression"; and the CD-ROM was "useless" to him. He asserted there was "still no concrete evidence of what was in the CD" and said there was still no "formal document or letter offering discovery". He suggested a "CD containing information on which no one is clear does not conform to discovery obligations"; there was "no verification that the documents on the disc are all in correspondence to the originals"; and they may not be "documents" under the Evidence Act 2006. That last submission does not appear to be in accord with the definition of "document" in s 4(1) of that Act. [48] He continued that "confidentiality cannot be a ground for refusing discovery when the very purpose of the undertaking is to preserve confidentiality", an observation that insufficiently recognises the fundamental test of relevance to issues in the case, not relevance as asserted by one party. [49] Apart from that, Mr Orlov repeated his earlier submissions with some elaboration by reference to the plaintiff's submissions. [50] As to the interlocutory history, he submitted it was unprincipled to suggest parties should be punished for making an unsuccessful interlocutory application and that "no matter how many a Judge may feel are unnecessary, the clients may not". In any event, that matter was res judicata as the applications had been completed. That reflects the defendants' attitude to discovery summarized earlier in this judgment: the determining issue is relevance, not what a party considers is relevant.[51] Although he admitted that "no doubt this litigation could have been conducted better by the Fourth Defendant", it was the plaintiff which had received indulgences from the Court. That description could not be applied to the fourth defendant's current applications.(3) Discussion and Decision[52] The submissions, at least in part, were broad in approach, focused on issues outside the specific documents of which further discovery was sought, and were extensive in detail. As a result of that, it was by no means clear at the end of the hearing of which documents or categories of documents the defendants – or Mr Lu – were seeking additional discovery. This was in part the result of differences between Mr Lu's original interlocutory application dated 29 October 2008, the schedule which Mr Orlov filed as part of a memorandum the following day, and the fact that on 7 November 2008 Mr Orlov filed a further application by Mr Lu alone for further and better discovery, suggesting the 30 October schedule attached to his memorandum listed documents which were "necessary and relevant" to Mr Lu's case. [53] The Court assumes that, in the circumstances of this case, what is principally or wholly sought by Mr Lu is, in the end, further and better discovery of the documents in the 30 October schedule to Mr Orlov's memorandum. This part of the judgment proceeds on that basis. It is to be noted that the ambit of any further discovery to be ordered will be confined by the fact that the issues between these parties remain those relevant to the claim and defence, with issues relevant to the counterclaim now being out of the picture. [54] As to the account information sought, as Mr Orlov was advised during the hearing, the confidentiality undertaking filed by him on 11 November 2008 was in conventional form and should have resulted in inspection proceeding on the basis of it. In light of that no further order is presently necessary. [55] As far as the financial information is concerned, there was no basis, at least in the first instance, for Mr Orlov not to accept the proffered CD-ROM. If, afterinspection of its contents, he considers there is relevant financial information which is not disclosed, leave will be reserved for him to make a further application in that regard but with the caveat that any such further application must be clearly within the ambit of the High Court Rules on discovery (including the Court's judgments) and must specify what material is on the CD-ROM, what Mr Orlov and Mr Lu considers is missing and discoverable, and why. [56] It may also be necessary to say that any discovery – including any further discovery – must only relate to issues covered by the claim and defence. To that, however, there are to be some additions. In the first place, discovery should extend to December 2002 when the Department of Internal Affairs authorized others to operate the defendants' gaming machines on what were then the plaintiff's sites. Secondly, in the 6 August 2008 judgment the Court extended the period for which discovery should be made as it related to Mrs Lu. That judgment remains in place since there has been no appeal and governs discovery on that aspect of the claim and defence. [57] Figures for comparative analysis can be sought if not supplied, but that must be strictly within the further discovery ordered in the judgment of 6 August 2008. [58] As earlier mentioned, it appears Mr Lu is no longer seeking discovery of the board minutes even though they were attached as a schedule to Mr Orlov's 30 October 2008 memorandum but if the Court's understanding of the ambit of Mr Orlov's concession is inaccurate, only the entries in St John's board minutes which specifically refer to the defendants' gaming machine sites would be discoverable – not the balance of the board minutes – and even those which are discoverable would be privileged if they contain material which might reveal the legal advice given to St John concerning this litigation over those sites. Those directions apply both to the St John's board minutes and to its agenda and any supporting documents. [59] Even for comparative purposes, the relevance of documents dealing with negotiations between St John and other societies concerning the transfer of or surrender of venue licences does not seem relevant to the matters in issue in thiscase. Similar comment applies to documents concerning St John's policies and procedures and the implementation of the policy "in instances in which the defendant was not involved" or to documents relating to litigation with other site operators. The application is dismissed in those respects. [60] Mr Orlov has regularly complained at the lack of discovery of financial data for other sites so that material can be utilized for comparative purposes. It may be necessary to say the Court is unpersuaded of the relevance of that material and to add that discovery in relation to the claim for loss of profits, is to be limited to the loss of profits for the sites operated by the defendants, comparing profits generated during the periods when the defendants operated those sites and when others operated them (within the limitation as to detail elsewhere ordered). Data relating to other sites under operation by other operators and differing numbers of machines does not seem relevant to data relating to the sites in question over the whole of the period covered by the claim. The Court observes that if the plaintiff's discovery of its financial data as limited by this judgment proves to be inadequate, then the plaintiff will not succeed in its claim for loss of profits. The defendants can hardly complain if that proves to be the outcome. [61] That would appear to cover all aspects of the further and better discovery sought but it is noted that what is sought at this hearing appears to have been repetitiously sought on earlier occasions and, to some degree at least, is seeking to re-visit issues earlier determined. [62] Discovery has bedevilled this claim for far too long. The very broad ranging ambit of the discovery sought on this and previous occasions justifies Mr Cole's description of it as a "fishing expedition". It is to be hoped that by implementation of this judgment and the very limited leave reserved, all issues of discovery between these parties will now be at an end.Engagement of Chartered Accountant as expert witness[63] This matter was barely mentioned in submissions.[64] It is always a matter for any party to decide which witnesses to engage and call. If in this instance the defendants wish to engage a chartered accountant to review the financial data discovered, it would be a matter for the accountant to give the required confidentiality undertaking and then embark on that exercise. [65] Beyond that, it is difficult to go although it must be said that if it proves to be impossible for the chartered accountant to report to the defendants on the loss of profits or other financial claims within the ambit of the claim and defence from the material discovered, the consent of the plaintiff or its counsel can be sought to the discovery of additional material. If the plaintiff declines to make such material available, the defendants can revert to the Court, but it must be emphasised that any further discovery will only be authorized if the chartered accountant is unable to report on the claim as presently pleaded: this is not an invitation to the defendants to circumvent the limitations of this and other judgments concerning discovery just because they feel they want more information.Result[66] In the result: a) The fourth defendant's application for leave to apply to rescind the counterclaim is dismissed. b) The fourth defendant's application for leave to apply for further and better discovery is allowed to the very limited extent set out in this judgment. c) At this stage there appears to be no need for an order in relation to the fourth defendant's application to engage a chartered accountant as an expert witness. [67] Mr Lu being legally-aided, no order for costs can be made against him. [68] There will be a telephone conference with counsel on Thursday 10 September 2009 at 9:00am to confirm that all interlocutory matters relating to thislitigation are now at an end. The two week fixture earlier indicated is still a reasonable estimate. The conference will make plans towards allocation of that fixture. .................................................................HUGH WILLIAMS J.Solicitors:Simpson Grierson (Jurrian R Kiewik), Private Bag 92518, Auckland 1141 Equity Law (E Orlov) P O Box 8333 Symonds Street, Auckland 1150 George Bogiatto, P O Box 106120, Auckland 1143 Dennis J Gates, P O Box 222, Whangaparaoa 0943Copy for:Michael S Cole, PO Box 651 Shortland Street, Auckland 1140Case Officer: David.Slight@justice.govt.nzScheduler: Corrina.MacDonald@justice.govt.nz