R McDONALD CO NEW ZEALAND LTD v MAVERICKS GROUP LTD [2018] NZHC 2439 _x000b_

R McDONALD CO NEW ZEALAND LTD v MAVERICKS GROUP LTD [2018] NZHC 2439[17 September 2018]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2017-404-000514[2018] NZHC 2439BETWEEN R McDONALD CO NEW ZEALANDLIMITEDPlaintiffAND MAVERICKS GROUP LIMITEDFirst DefendantMICHAEL PAUL BISHARASecond DefendantHearing: 15 June 2018Appearances: G Williams for the PlaintiffG Collecutt for the DefendantsJudgment: 17 September 2018JUDGMENT OF ASSOCIATE JUDGE SARGISSONThis judgment was delivered by me on 17 September 2018 at 4.00 p.m.pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDate.......................................Solicitors:Potter IP, AucklandG Williams, AucklandIntroduction[1] The plaintiff, R McDonald Co New Zealand Limited, is the exclusiveauthorised head-distributor in New Zealand of Weber® branded barbeques and relatedproducts.[2] From at least January 2016 onwards the plaintiff became aware the firstdefendant, Mavericks Group Limited, had begun importing Weber barbeques of adesign not intended to be made available in New Zealand. The first defendant readilyaccepts it undertook parallel importation; and further, that it then engaged inmarketing, advertising, distributing, offering to sell, and selling such products to theNew Zealand market via its online website.[3] In the substantive proceeding the plaintiff accuses the first defendant — alongwith its director, Mr Bishara, as second defendant — of various breaches under theFair Trading Act 1986.[4] This decision addresses various interlocutory matters arising out of pre-trialdiscovery. The scope of the outstanding issues was substantially narrowed at thehearing. The remaining issues concern:(a) the defendants' claimed confidentiality over discovered documents,and also over its answers to the plaintiff's sought interrogatories; and(b) the appropriate mechanisms for protecting its legitimate confidentialityinterests.[5] I turn to those issues now, after outlining the substantive dispute in more detail.The substantive proceeding[6] The plaintiff's statement of claim identifies three causes of action under theFair Trading Act. In the broadest terms, it is alleged the first and/or second defendants:(a) in breach of ss 9, 10 and 13, made misleading and deceptiverepresentations on its website causing the plaintiff loss (including theloss of good-will);(b) in breach of s 16, effaced Weber trade marks and identifying indicia byremoving them from the parallel imported products sold to the NewZealand markets, leading to safety concerns given the difficulty oftracking the products;(c) in breach of ss 9 and 10, engaged in misleading and deceptive conductby (expressly or impliedly) falsely representing to WorkSafe, and byextension to the New Zealand public, its product and operationscomplied with the relevant statutory safety regulations.[7] On the basis of these pleadings, the plaintiff seeks declarations and injunctionspreventing the defendants from continuing its operation in New Zealand.[8] The defendants challenge the plaintiff's standing to bring the claim, pointingout the plaintiff is not the owner of the Weber branding. Beyond that, the defendantsotherwise deny the business model is in any way misleading or deceptive, ornon-compliant with relevant statutory obligations. (There is one exception: thedefendants admit the temporary use of the www.weberonline.nz domain name wasmisleading, but it pleads the domain name has ceased and has had no impact on theplaintiff).The claimed confidentiality[9] The documents the defendants have discovered are voluminous, numberingapproximately 39,000 documents, identified from searches based on agreed keywords. Confidentiality is claimed over all these documents. Counsel for thedefendants candidly acknowledges he has not reviewed the documents to determinetheir relevance with respect to the parties' pleadings. However surprising, the plaintiffadvises it takes no issue with the sheer volume of documents, and does not require any"refined" affidavit as to documents.[10] So the issue before me is not one of relevance, which is presumed by thedisclosure to which the plaintiff does not object; rather, the issue is confidentiality. TheCourt of Appeal explains the governing principles in Port Nelson v CommerceCommission as follows:1The ability of each party to a proceeding to inspect the documents of the other,except for documents which are privileged, is important in enabling theproceeding to be brought to a just conclusion. It avoids parties being taken bysurprise. It enables legal advisers to better assess the likely outcome of trial,and to concentrate on what will ultimately prove to be the real issues. In thisway it can save cost. Sometimes, however, relevant documents which are notprivileged may be commercially sensitive. Examples would be documentsshowing the detailed costings of products or services which are provided in acompetitive market, the marketing plans for a proposed new product, or apatent specification during the period before the application has been acceptedand made available for inspection.[11] As the relevant rules indicate, there is a need to strike a balance betweenlegitimate but competing considerations: a plaintiff's need to have access todocuments relevant to the proceeding, against a defendant's need to protect againstimproper use of the documents following discovery.[12] The bone of contention is the defendants' refusal to tolerate disclosure to theplaintiff's director, Mr McDonald, or any of his employees or agents. The defendantscontend the documents should only be accessed by the plaintiff's counsel, instructingsolicitors, and experts. Without such safeguards in place the defendants fear theplaintiff might discover the first defendant's:(a) supplier(s), and so take steps (likely through altering Weberinternational) preventing those supplier(s) from continuing to sellproduct to the first defendant;(b) customers, and so in some way interfere with the first defendant's salesto those customers, compiling a customer list for the object ofapproaching them directly and undercutting the first defendant'smarket.1 Port Nelson Ltd v Commerce Commission (1994) 7 PRNZ 344 (CA) at 347.[13] It is apparent from their written and oral submissions the defendants are chieflypreoccupied by the risk of the plaintiff uncovering the identity of their supplier(s).That, to my understanding, is also the more realistic and persuasive concern.[14] The plaintiff objects to the sought restriction. It says the restrictions materiallyimpedes its ability to bring its claim, by circumscribing the scope of communicationbetween the company and its solicitors. Its complaint has merit to my mind, and I amunwilling in these circumstances to grant the defendants' sought restriction over theentirety of the discovered documents. A practical middle-road is necessary.[15] I consider the defendants' confidentiality interests are adequately managed bythe following three layers of protection.[16] First, Mr McDonald (and his employees or agents) ought to be restricted fromaccessing some, but not all, of the discovered documents. On my examination of thepleadings, the documents appear to fall into two broad categories. There are, in thefirst instance, documents dealing with the interface between the first defendant and itssupplier(s). Those documents legitimately attract confidentiality interests in my view.Moreover, to my understanding of the plaintiff's case, they are at most only marginallyrelevant to its claim. I am prepared to restrict the plaintiff's access to such documents.[17] But I cannot say the same for the second category of documents, namely thosedescribing the first defendant's dealings with its New Zealand based customers. Thesecustomer-facing documents are potentially highly germane to the present litigation.And the defendants' (lesser) fear for the identification of its customer base issufficiently safeguarded, in my view, by the two protection mechanisms that follow.For the avoidance of doubt, I include within the category of documents to whichI would grant Mr McDonald and his agents full access the first defendant's accountingrecords (to the extent those records exist and have been finalised).[18] Second – noting counsel for the plaintiff's advice that is has no presentobjection to this approach – I allow the defendants to redact text in those documentsas follows:(a) with respect to all the documents, the defendants can redact referencesto the names and other identifying indicia (addresses, telephonenumbers, and so on) of both the first defendant's New Zealandcustomers and its overseas supplier(s);(b) with respect only to the first category of documents (see at [16] above),the defendants can redact references to specific dates, as long as thedocuments are then grouped according to their year.(This latter concession responds to the defendants' expressed concernthat the plaintiff would be able to narrow down the geographicallocation of its suppliers from dates alone, based on seasonal trends inthe barbecue industry).[19] Finally, again noting the plaintiff's concurrence, I would requireMr McDonald (and any expert witness engaged in the litigation to advise the plaintiff,who will inspect the documents) to sign an undertaking not to abuse that right of accessto inspect the documents. After considering the undertakings proposed by the parties,I opt instead to set out my own in the following terms:I, [name], undertake that:(i) I shall keep confidential the contents of the documents listedas confidential in the list of documents filed in this proceeding("the confidential documents") subject to any ruling of theCourt as to the confidential status or otherwise of thedocuments.(ii) pending such ruling of the Court I shall not disclose thecontents of the confidential documents to any persons otherthan persons:1. authorised to access those documents, who have alsothemselves signed this undertaking; or2. such other persons as directed by the Court.(iii) I shall not use the confidential documents for any purposesother than the conduct of the present proceeding..(iv) I shall use my best endeavours to safeguard the confidentialityof the confidential documents I am provided with and ensurethat they are stored in a secure environment at all times.(v) I shall keep confidential any notes or other records I makewhile inspecting the confidential documents, and I willdestroy the notes, sketches or other records once proceedingshave concluded.[20] I note, finally, this undertaking overlays the existing protection in r 8.30(4),which states:(4) A party who obtains a document by way of inspection or who makesa copy of a document under this rule—(a) may use that document or copy only for the purposes of theproceeding; and(b) except for the purposes of the proceeding, must not make itavailable to any other person (unless it has been read out inopen court).Interrogatories[21] The plaintiff has filed a notice to answer interrogatories dated14 February 2018 over five pages of questions it seeks to put to the defendants. I agreewith the defendants' counsel there are real issues of relevance, and the potentiallyoppressive scope of the answers sought.[22] I address the question of interrogatories consistently with the frameworkarticulated above. I do not require the defendants to provide the particulars mentionedat [18](a)-(b) above. Nor do I require answers to interrogatories that patentlyirrelevant to the present litigation. I consider these principles are already adequatelymirrored in the discussion on each of the interrogatories in Mr Bishara's affidavit.[23] The best route forward is for the parties to proceed on that basis, with leavereserved for the plaintiff to notify the Court if it objects the discussion of the particularsin Mr Bishara's affidavit does not coincide with my statement of the applicableprinciples.[24] Given these protections, I see no reason to restrict Mr McDonald's (or theplaintiff's expert's) access to the answers provided by in response. But I restrict accessto only those who have signed the undertaking mentioned above. He is to be treatedin the same way as the plaintiff's experts, but their access is subject to their signingthe memorandum mentioned above.Orders[25] I make orders as follows:(a) The defendants are to categorise the discovered documents into the twobroad categories referred to in paras [13] and [14] above, and they mayredact text in those documents in accordance with para [15](a) and (b).(b) Mr McDonald and the plaintiff's experts may inspect the documents(with the allowed redactions) upon completing the undertaking set outat para [16].(c) The defendants are to provide sworn answers to interrogatories, butthose answers need not provide the particulars mentioned atpara [15](a)-(b) above.(d) Answers to interrogatories that are patently irrelevant to the presentlitigation need not be answered.[26] This judgment is issued as an interim judgment in order to reserve leave to theplaintiff to seek to bring any objection of the kind referred to at para [20] back to theCourt. For that purpose a memorandum may be filed and served on 5 working days'notice – in which case the matter is to be listed in the next available Chambers list –and the defendants are to file a memorandum in response 3 working days prior.[27] As this judgment is issued on an interim basis, costs are reserved.[28] I have issued a separate minute dealing with pre-trial directions._____________________Associate Judge Sargisson