YASHILI NEW ZEALAND DAIRY CO LIMITED v ASUREQUALITY LIMITED [2022] NZHC 332 [1 March 2022]

YASHILI NEW ZEALAND DAIRY CO LIMITED v ASUREQUALITY LIMITED [2022] NZHC 332[1 March 2022]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2021-404-294[2022] NZHC 332BETWEEN YASHILI NEW ZEALAND DAIRYCO LIMITEDPlaintiffAND ASUREQUALITY LIMITEDDefendantHearing: 24 February 2022(by AVL)Appearances: A E Murray for PlaintiffA R Durrant for DefendantJudgment: 1 March 2022JUDGMENT OF ASSOCIATE JUDGE LESTER[1] This judgment concerns an application for further and better discovery.[2] The one issue remaining between the parties in respect of discovery is the rumpof an application by AsureQuality Limited (AQL) for a number of discovery ordersand for further particulars.[3] Since that application was filed, counsel have worked through AQL's requeststo the extent that the day before the hearing on 25 February 2022, AQL's counseladvised that only one issue remained.Background to underlying dispute[4] I adopt Mr Durrant's summary from para [2] of his submissions as follows.[5] The underlying dispute in this proceeding relates to whether or not AQLbreached any alleged duty owed to Yashili New Zealand Dairy Co Limited (Yashili)in relation to testing carried out on samples submitted by Yashili from three batches ofits base powder. The claim relates to AQL's certificates of analysis dated22 November 2019 (batch 201732), 5 April 2020 (batch 201778), and 7 April 2020(batch 201780).[6] The issues between the parties include whether AQL failed to carry out thecontracted testing services accurately and/or to a reasonable standard, whether AQLincorrectly reported the results of its testing or incorrectly certified to Yashili that theresults of the testing carried out by AQL showed that the samples of base powder werewithin specification.[7] There are a number of other issues but for present purposes it is sufficient tosay that AQL disputes incorrectly testing or reporting its results to Yashili in respectof the above batches.Legal principles – particular discovery[8] These were not in dispute and, again, I adopt Mr Durrant's summary of theprinciples from para [8] of his submissions.[9] Pursuant to High Court Rule 8.19, the Court may order Yashili to file anaffidavit and disclose documents in its control if there are grounds for believing thatYashili has not discovered documents that should have been discovered.1 The beliefmay arise from evidence, the nature or circumstances of the case, or from anydocument filed in the proceeding.The documents sought[10] The remaining category of documents sought is discovery of "all raw data forall testing done on the base powder batches and finished products at issue in thisproceeding, including associated standard operating procedures (SOPs) / laboratoryspecific methods for testing undertaken by the laboratories.[11] AQL says this information is relevant as Yashili's claim alleges AQLincorrectly reported test results and breached its obligations in relation to the testingof the batches. Yashili's pleading refers to testing carried out by the "ChaozhouFactory" and Eurofins on the base powder and finished products manufactured withthe base powder which showed the product was not to specification.[12] Accordingly, AQL asserts the test results from the pleaded laboratories are atthe heart of Yashili's claim. AQL submits it follows that the requested raw data andSOP relating to that testing are relevant by reference to the pleadings. AQL notes thatYashili has discovered test certificates which appear to be only brief reportingdocuments but it has not discovered the full raw data sitting behind each certificate.Plaintiff's position[13] Yashili does not dispute that the material sought would be relevant but says thedocuments sought are not within its power and control. It also notes that asa preliminary point, AQL's application for discovery in respect of the remainingdisputed category is limited to "all raw data for all testing done on the batches of basepowder and finished products". The application did not seek SOPs or laboratory1 Andrew Beck and others McGechan on Procedure: (online ed, Thomson Reuters) at [HR8.19].specific methods for testing undertaken by the laboratories referred to in the pleading.Nor are these categories referred to in the affidavit in support.[14] There is validity in the above point. However, as the request has now beenmade and given Yashili does not suggest its opposition in relation to these mattersdiffers from its opposition to the application for the raw data, the present applicationshould not turn on what is essentially a pleading matter. Had Yashili been in theposition to provide the SOPs and laboratory method documents when requested,the fact such were not included in the application would be a matter for costs.[15] Yashili's short answer to the application is that it does not hold the requestedinformation and it does not have the ability to require it to be provided. Theinformation is held by Eurofins as an independent third party. Yashili also deniesEurofins is its expert in order to counter the applicant's submission that Yashili's expertought to disclose the requested information to the plaintiff who would then discover itin the ordinary way. Information from the "Chaozhou Factory" has been requested byYashili.Control[16] Rule 1.3 of the High Court Rules 2016 (the Rules) provides that control inrelation to a document, means:(a) possession of the document; or(b) a right to possess the document; or(c) a right, otherwise under these rules, to inspect or copy the document.[17] McGechan on Procedure says:2A document is in the control of the party, even in the possession of another, ifthe party has an enforceable right to access the document: Biggs v Biggs[[2018] NZHC 1592], [2018] NZFLR 580] at [228] citingDotcom v Attorney-General [2014] NZHC 1343.2 Andrew Beck and others McGechan on Procedure: High Court Rules 2016 (online ed, ThomsonReuters) at [HR8.7.02].[18] In Dotcom v Attorney-General, Winkelmann J concluded, in relation to onecategory of documents subject to the application, Mr Dotcom was entitled to thatinformation as he had an entitlement pursuant to the principles of the Privacy Act.While that entitlement was not one that could be enforced through the Court, it was anentitlement "for which procedural pathways existed for enforcement."3[19] Here, the applicant does not assert that Yashili has a "procedural pathway forenforcement" that would give it access to the requested documents. Other thansubmitting Eurofins, as Yashili's expert, ought to disclose the requested informationto Yashili pursuant to the Code of Conduct for Expert Witnesses, AQL does not sayYashili can require production of the documents. Again, Yashili says Eurofins is notits expert.[20] At the heart of AQL's application is that Yashili has not done nearly enough torequest the information. The applicant relies on Potter J's decision in InvernessMedical Switzerland GMBH v MDS Diagnostics Ltd, where her Honour said:4In a commercial cause where there is a relationship pursuant to which thedefendant may reasonably be expected to gain access to relevant documents,then the defendant should take all reasonable steps to obtain thatdocumentation and to make discovery. Fairness and openness in the discoveryprocess demands as much.[21] I agree with her Honour's comment as to what the Court expects parties to doin the interests of securing the "just speedy and inexpensive determination of anyproceeding or interlocutory application".5 It is also consistent with r 8.2 of the HighCourt Rules, which provides:8.2 Co-operation(1) The parties must co-operate to ensure that the processes of discoveryand inspection are—(a) proportionate to the subject matter of the proceeding; and(b) facilitated by agreement on practical arrangements.(2) The parties must, when appropriate,—3 Dotcom v Attorney-General [2014] NZHC 1343 at [76].4 Inverness Medical Switzerland GMBH v MDS Diagnostics Ltd HC Auckland CIV-2007-404-748,21 December 2007 at [37].5 High Court Rules 2016, r 1.2.(a) consider options to reduce the scope and burden of discovery;and(b) achieve reciprocity in the electronic format and processes ofdiscovery and inspection; and(c) ensure technology is used efficiently and effectively; and(d) employ a format compatible with the subsequent preparationof an electronic bundle of documents for use at trial.[22] Yashili seeking to obtain relevant documents pursuant to its obligations toco-operate, is different from Yashili having an enforceable right to require a third partyto produce documents. AQL's point, however, is that Yashili has not, since thisproceeding was issued, made a concerted effort to request the documents.[23] The applicant recognising that, says at para 31 of its submissions:If Yashili requests (or already has requested) the raw data and standardoperating procedures from its experts and related entity, and those entitiesgenuinely refuse to provide the requested documents, it would resolve thisaspect of the discovery application. However, if the experts refuse to providethe data, it will give rise to future admissibility issues.[24] As McGechan notes at [HR8.2.01]:6There is a strong emphasis on co-operation in the rules relating to discoveryand inspection.[25] For that co-operation extends to taking practical steps to see that discovery iscompleted efficiently. I am satisfied that Yashili here should, through its solicitors,make a formal request to Eurofins for the documents sought by AQL. The alternativeto requiring that practical step is AQL will have to apply for non-party discovery. Toread down Yashili's obligation of co-operation so that it did not have to make a formalcall for the documents would be inconsistent with the approach adopted by Potter J inInverness Medical7 and with r 1.2. I note her Honour's comments pre-date r 8.2 beingpart of the Rules.[26] I advised counsel during the hearing that I intended to direct that Yashili,through its counsel, make a formal request to Eurofins for the requested information6 Andrew Beck and others, above n 1.7 Inverness Medical Switzerland GMBH v MDS Diagnostics Ltd, above n 4.on the basis that Yashili was involved in High Court proceedings with AQL, thedocuments sought were important to the litigation and it was in the interests ofefficiency that the documents be provided voluntarily if that was possible. I now makethat direction.[27] I emphasise that Ms Murray, counsel for Yashili, was not in a position toconsent to that direction but given para [31] of AQL's submissions set out at [23]above, Ms Murray recognised that it would meet the applicant's concerns. Yashili isto make that request through its solicitors within 10 working days of the date of thisJudgment and provide a copy of that request to counsel for AQL.[28] If the request is successful then the documents received by Yashili will bediscoverable under its ongoing obligation to provide discovery. If Eurofins declinesto make the information available, Yashili's counsel is to advise AQL's counselaccordingly.[29] For the avoidance of doubt, this direction does not create any enforceableobligation on Eurofins. It has not been heard. The direction I make is to requireYashili to meet its obligation to co-operate in relation to discovery and to call for whatwill be important documents in the proceeding.Costs[30] I heard counsel briefly in respect of costs. I consider the applicant has beensuccessful. Ms Murray accepted she understood that AQL was calling for it to makethe request referred to at [23] above. Her instructions did not permit that to occur.[31] Accordingly, the hearing (which lasted only half an hour), was brought aboutthrough those instructions.[32] There is an award of costs in favour of the applicant on a 2B basis.____________________________________Associate Judge LesterSolicitors:Fee Langstone, AucklandDLA Piper, Auckland