Buxton v Xero Limited [2022] NZCA 100 (31 March 2022)

Last Updated: 5 April 2022

IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA

CA140/2021 [2022] NZCA 100

	BETWEEN	KRISTINA LOUISE BUXTON First Appellant AFB TREASURY LIMITED Second Appellant SPINACH DESIGN LIMITED Third Appellant
	AND	XERO LIMITED Respondent

Hearing:	30 September 2021 (further materials received on 1 November 2021)
Court:	Goddard, Woolford and Mander JJ
Counsel:	J Moss and S L Austin for Appellants S J Leslie for Respondent
Judgment:	31 March 2022 at 11.00 am

JUDGMENT OF THE COURT

1. The appeal is allowed.
2. The cross-appeal is allowed.

100. The order made in the High Court striking out the appellants’ proceedings is set aside, and replaced with an order entering summary judgment for the defendant, Xero Ltd, in those proceedings.

4. The appellants must pay costs to the respondent for a standard appeal on a band A basis, with usual disbursements.

____________________________________________________________________

Table of Contents

Para No

REASONS OF THE COURT

(Given by Goddard J)

Introduction

• [1] Mr Henderson was a prominent property developer. His businesses encountered difficulties, and between November 2010 and January 2017 he was bankrupt. The Official Assignee undertook investigations into Mr Henderson’s affairs. She formed the view that while he was a bankrupt Mr Henderson was exercising control over, and conducting dealings through, a number of companies including AFB Treasury Limited (AFB), the second appellant, and Spinach Design Limited (Spinach), the third appellant. The sole director of both these companies at the relevant time was Ms Buxton, the first appellant, who is married to Mr Henderson.
• [2] Xero Ltd, the respondent, is a cloud-based accounting software company that provides online services to small business customers.
• [3] Section 171 of the Insolvency Act 2006 provides that the Official Assignee may, by notice in writing, require any person to deliver to her “any document relating to the bankrupt’s property, conduct, or dealings in that person’s possession or under that person’s control”. The Official Assignee issued three s 171 notices to Xero seeking access to financial information held on Xero’s system concerning AFB and Spinach, which the Official Assignee believed were Xero customers. AFB was a Xero customer. Spinach was not. In response to those notices, Xero provided electronic files to the Official Assignee which contained extensive information about transactions recorded by its customer AFB using Xero’s accounting software (the information).
• [4] The appellants accept that some of the information provided by Xero to the Official Assignee arguably related to Mr Henderson’s conduct or dealings. But they say that the information provided by Xero to the Assignee included records of transactions entered into by them which were their own private and personal information, and did not relate to the property, conduct and dealings of Mr Henderson. They brought proceedings against Xero claiming that Xero committed the tort of invasion of privacy by providing the information to the Assignee.
• [5] Xero applied to strike out the proceedings on the basis that they were an abuse of process. Xero also sought summary judgment on the basis that the claims against it could not succeed. Associate Judge Johnston struck out the proceedings as an abuse of process.^[1]
• [6] The appellants appeal to this Court against the decision striking out their claim. Xero says the High Court was right to strike out the claim as an abuse of process. Xero also argues that if the proceedings are not struck out, summary judgment should be entered in its favour.
• [7] We do not consider that the proceedings are an abuse of process. However it is clear that the appellants’ claim cannot succeed as Xero was required by law to provide the information to the Official Assignee. That is a complete defence to a claim based on the tort of invasion of privacy.

Background

Section 171 requests to Xero seeking access to records of AFB and Spinach

• [8] As already mentioned, Mr Henderson was bankrupt between November 2010 and January 2017. The Official Assignee undertook extensive investigations into Mr Henderson’s affairs. She formed the view that although Mr Henderson was bankrupt, he was exercising control over, and conducting dealings through, a number of companies including AFB and Spinach. She decided to require Xero to provide the information it held about AFB and Spinach, which she believed were Xero customers, under s 171 of the Insolvency Act:

171 Assignee may obtain documents

In addition to the power contained in section 165(1)(b)(i), the Assignee may, by notice in writing, require the bankrupt, the bankrupt’s spouse, or any other person to deliver to the Assignee any document relating to the bankrupt’s property, conduct, or dealings in that person’s possession or under that person’s control.

• [9] The first s 171 notice that the Official Assignee served on Xero in July 2014 required Xero to provide account login information for Xero subscriptions that the Official Assignee believed were held by AFB and Spinach. The Official Assignee sought:

... a user name and password for each of [AFB and Spinach] to permit the Official Assignee to review the financial transactions of both companies in which the bankrupt has control and direction.

• [10] Xero ascertained that Mr Henderson was neither a shareholder nor a director of AFB or Spinach. It had no other information indicating that he had any involvement with those companies. On that basis, Xero formed the view that s 171 of the Insolvency Act did not apply to the records of AFB, and declined to provide information to the Official Assignee. Xero suggested that the Official Assignee seek the information directly from the companies. Xero also advised the Official Assignee that its policy was to advise its customers when access was being provided to their information.
• [11] The Official Assignee replied to Xero noting that her request was made to Xero alone, and not to the companies. She advised Xero that the notice had been issued pursuant to s 171 of the Insolvency Act and directed Xero not to notify AFB and Spinach.
• [12] On 14 August 2014 the Official Assignee served a second s 171 notice stating that the Official Assignee would summons Xero’s managing director to produce the information under s 165 of the Insolvency Act if the s 171 notice was not complied with.
• [13] On 21 August 2014 Xero responded to this second notice. It explained its contractual arrangements with its clients, emphasising its obligations under those arrangements, and in particular its confidentiality obligations. However Xero advised that if the Official Assignee could demonstrate that Mr Henderson was connected with AFB or Spinach, or if a court order was obtained requiring Xero to provide the information, it would reconsider its position.
• [14] Between 2 September and 17 September 2014 the Official Assignee provided Xero with a detailed outline of the grounds on which she had concluded that Mr Henderson continued to have connections with AFB and Spinach, and was exercising control over their finances.
• [15] Xero was satisfied that the Official Assignee had established a connection between Mr Henderson and AFB, and had a basis for requiring Xero to provide information about transactions carried out by AFB.
• [16] As noted above, Spinach did not have a Xero subscription. But Spinach carried out transactions through AFB’s bank account, and AFB’s Xero system entries included details of credits and debits relating to Spinach.
• [17] Xero agreed to release information about the transactions recorded by AFB on Xero’s accounting platform on the condition that the information would be treated confidentially, only used for the purposes for which it was requested under the Insolvency Act, and only within the Official Assignee’s lawful powers. In October 2014 Xero sent the Official Assignee “... a password-protected report showing the credits and debits of each account connected with AFB”.
• [18] On 31 March 2015 the Official Assignee served a third s 171 notice on Xero, requesting information about AFB transactions for the period 30 August 2014 to 31 March 2015. Xero provided this additional information on 8 April 2015.

Examination of Mr Henderson and pre-examination ruling

• [19] In the normal course of events, Mr Henderson would have been automatically discharged from bankruptcy in January 2014. However in November 2013, the Official Assignee filed a notice of objection to Mr Henderson’s discharge under s 292 of the Insolvency Act. On 19 June 2015, the Official Assignee filed the report required by s 296 of the Insolvency Act in relation to, among other matters, the bankrupt’s conduct before and after adjudication. That report included information obtained through the s 171 notices issued to Xero.
• [20] Mr Henderson applied for orders striking out some of the evidence contained in the Official Assignee’s report, including the evidence obtained through the s 171 notices issued to Xero. He claimed those notices had been issued unlawfully. The application was opposed by the Official Assignee. Associate Judge Osborne, as he then was, held that the s 171 notices had been lawfully issued by the Official Assignee.^[2] The Associate Judge found that:

  (a) The Official Assignee was justified in viewing Xero as able to deliver documents relating to Mr Henderson’s property, conduct or dealings.^[3]
  (b) The documents which the Official Assignee was empowered to require under s 171 included the electronic records held by Xero.^[4]
  (c) Mr Henderson’s submission that the Official Assignee should have narrowed down Xero’s requirement to identify specific entities within the expected record and to redact remaining entities was rejected as “impracticable and unsound as a matter of logic. For the purpose of her investigation, the Assignee reasonably needed to see the full record of dealings”.^[5]
  (d) The “comprehensive records that Xero held in relation to AFB and Spinach were an obvious and justified subject-matter of a s 171 requirement when the Assignee issued her notice”.^[6]

• [21] The pre-examination ruling was issued on 29 July 2015, following a two-day hearing on 16 and 17 July 2015. Shortly beforehand, on 29 June 2015, the Associate Judge held a chambers hearing to determine a number of preliminary matters raised by the parties and certain “non-parties” including AFB and Spinach. AFB and Spinach were represented by counsel at that chambers hearing. They advised the Court that they might wish to pursue some form of relief in their own right in relation to various matters including the extent to which they may have been affected by the s 171 notices, on the basis that steps taken by the Official Assignee were unlawful.^[7]
• [22] The Associate Judge ruled that those were matters which the “non-parties” could pursue in their own right against the Official Assignee in a separate proceeding. That would not cut across Mr Henderson’s right to pursue a ruling in relation to matters of evidence in the bankruptcy proceeding.^[8]
• [23] The Associate Judge said:^[9]

I have left matters with [counsel for AFB, Spinach and others] upon the basis that if they wish to pursue matters upon the basis of unlawful summonses or notices, those are matters for separate proceedings whether by way of originating application or similar. [Counsel] has indicated that he expects to be in a position to make any application promptly. ... I confirm that in any event, such application or applications are to have their own proceeding number.

Ms Buxton complains to Xero about the disclosures

• [24] In August 2015 Ms Buxton made a complaint to Xero about its disclosure of the appellants’ financial information to the Official Assignee. She complained that the information had been provided to the Official Assignee in breach of the Privacy Act 1993, and Xero’s own privacy policy which (as relevant) read:

Xero will not otherwise disclose Your personal information to a third party unless You have provided Your express consent. However, You should be aware that Xero may be required to disclose Your personal information without Your consent in order to comply with any court orders, subpoenas, or other legal process or investigation including by tax authorities, if such disclosure is required by law. Where possible and appropriate, we will notify You if we are required by law to disclose Your personal information.

• [25] In September 2015 Xero responded to the complaint, saying Xero had been compelled to comply with the s 171 Insolvency Act request. Xero was compelled to keep the request and its compliance with the request confidential. Xero’s privacy policy did not require it to inform Ms Buxton of the request and its compliance with the request. The provision of the information was not a breach of the Privacy Act.

The appellants’ breach of privacy proceedings

The appellants file proceedings for breach of privacy

• [26] Some five years later on 3 August 2020 the appellants filed proceedings against Xero. They pleaded a single cause of action in the tort of invasion of privacy. They alleged that:

  (a) The AFB records disclosed by Xero to the Official Assignee included information relating to the appellants that was private and confidential. They had a reasonable expectation of privacy in relation to that information.
  (b) The s 171 notices were unlawful and invalid for various reasons, including that Mr Henderson did not have control or direction over AFB or Spinach, and AFB and Spinach did not hold any of Mr Henderson’s property, or information about his conduct or dealings.
  (c) Xero knew, or ought to have known, that the Official Assignee was not entitled to the information requested.
  (d) In these circumstances, Xero had (at a minimum) a duty to seek the directions of the Court or ask the Official Assignee to do so, in order to protect their privacy. Xero failed to do so.
  (e) The provision of the information to the Official Assignee was a breach of the appellants’ privacy, and was highly offensive.

• [27] Each of the three appellants sought a declaration that there had been a breach of their privacy, disclosure of particulars of the information provided to the Official Assignee, and damages of $50,000.

Xero applies for strike out/summary judgment

• [28] Xero filed a defence to the appellants’ claim, and applied to strike it out on the basis that it was an abuse of process. Xero alleged that the claim was predicated on the allegation that the s 171 notices were unlawful. But the High Court had already determined that the notices were lawful in the pre-examination ruling in July 2015.^[10] So that issue was res judicata (that is, a matter that has been finally decided) and it was an abuse of process for the appellants to attempt to relitigate it.
• [29] Alternatively, Xero sought summary judgment on the basis that it had a complete defence to the invasion of privacy claim. It had been required by law to provide the information to the Official Assignee. Providing the information was not “highly offensive”, an essential element of the tort.
• [30] Xero’s applications were supported by an affidavit from Mr Ward-Marshall, a solicitor employed by Xero as “Head of Regulatory”. That affidavit attached, among other things, the correspondence between the Official Assignee and Xero, and copies of the records that Xero had disclosed to the Official Assignee.

The appellants oppose Xero’s applications

• [31] Xero’s applications were opposed by the appellants. Ms Buxton affirmed an affidavit in opposition to the applications. She gave evidence that from early 2011 onwards she had been the sole director of AFB. Spinach is her interior design company. She incorporated the company in 2006 and has always been the sole director and shareholder. Spinach was one of a number of companies that used AFB’s bank account as a clearing or holding account. All Spinach’s transactions went through AFB’s account, and records of those transactions appear on AFB’s Xero records.
• [32] Ms Buxton said that she takes her privacy very seriously. The information provided captured a huge amount of private information that did not come within the description of Mr Henderson’s property, conduct or dealings. She accepted that a limited amount of material relating to Mr Henderson was contained in the records disclosed.
• [33] Ms Buxton estimated that a substantial proportion of the entries disclosed by Xero were personal to her or Spinach. She said there were pages where every single transaction related to her personally or Spinach, and had nothing to do with Mr Henderson’s property, conduct and dealings. She said the information includes payments for her personal doctors’ appointments, chemist and medicine payments, payments to charities, vet bills for her pets, restaurant bills and supermarket bills. The records included every transaction of Spinach: “its entire financial history is on display”.
• [34] Ms Buxton described these disclosures as “deeply distressing”.

High Court judgment

• [35] Xero’s applications were heard by Associate Judge Johnston. He noted that the principles governing applications to strike out a claim, and for summary judgment, were common ground.^[11]
• [36] The strike out application was made under r 15.1(1)(d) of the High Court Rules 2016 on the basis that the claim is an abuse of process. A properly grounded res judicata plea provides the foundation for a finding that a proceeding is an abuse of process, and is liable to be struck out.^[12]
• [37] The application for summary judgment was made under r 12.2 of the High Court Rules, which provides:

12.2 Judgment when there is no defence or when no cause of action can succeed

(1) The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.

(2) The court may give judgment against a plaintiff if the defendant satisfies the court that none of the causes of action in the plaintiff's statement of claim can succeed.

• [38] The Associate Judge set out the following passage from Krukziener v Hanover Finance Ltd in which this Court described the approach to be taken to summary judgment applications by plaintiffs:^[13]

[26] The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1986] NZCA 112; [1987] 1 NZLR 1 at 3 (CA). The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11 PRNZ 66 (CA). The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331 at 341 (PC). In the end the Court’s assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel [1987] NZCA 193; (1987) 1 PRNZ 84 (CA).

[27] Under r 141A the defendant need not file a statement of defence. The onus remains on the plaintiff, and summary judgment will be denied if on the hearing of the application it appears that there is an issue worthy of trial.

• [39] In this case, the application for summary judgment was made by the defendant. The same principles apply: in order to succeed the defendant must be able to establish that the plaintiff cannot succeed on any pleaded cause of action.^[14]
• [40] The Associate Judge set out the background to the claim, and to Xero’s application. He accepted the appellants’ submission that it is at least arguable that some of the information provided by Xero to the Official Assignee was of a confidential nature.^[15]
• [41] The Associate Judge set out the following passage from this Court’s recent decision in Craig v Stringer summarising the principle of res judicata:^[16]

Access to the courts will be denied where a litigant seeks to reopen a dispute that has already been determined. This is precluded by the doctrine of res judicata which serves the public interest in finality in litigation and upholds the principle that a party should not be vexed twice in the same matter. Res judicata applies where a cause of action has been determined in earlier proceedings between the same parties or their privies — cause of action estoppel. The doctrine prevents re-litigation of the same cause of action in any subsequent proceedings. Res judicata can also apply where there has been a determination in earlier proceedings between the same parties or their privies of an issue that was essential to the determination of the claim such that the judgment could not stand without it — issue estoppel. Issue estoppel is narrower, and less absolute in its application than cause of action estoppel.

(Footnotes omitted).

• [42] The Associate Judge then turned to consider whether the pre-examination ruling gave rise to a res judicata. He considered it was beyond serious doubt that the Judge had concluded that the s 171 notices were lawful.^[17] He considered that the appellants were privies of Mr Henderson, so were bound by that judgment.^[18]
• [43] In addition, although the case was not argued on that basis, the Associate Judge considered that it was open to Xero to contend that the pre-examination ruling was a judgment in rem as to the lawfulness or status of the Official Assignee’s notices. Those notices could be said to be binding on the world generally, unlike decisions in personam that determine the jural relation of persons to each other.^[19]
• [44] The Associate Judge concluded that in the pre-examination ruling the High Court had determined that the Official Assignee’s notices were lawful and had the effect of requiring Xero to do precisely what it did do, that is to say disclose to the Official Assignee all information within its possession or power relating to the affairs of AFB for the specified periods. The proceeding amounted to a collateral attack on the lawfulness of the s 171 notices so could not succeed.^[20] Even if the spreadsheets provided in response to those notices contained information capable of attracting confidentiality, the disclosure of that information to the Official Assignee by Xero in compliance with lawful notices issued by her in the exercise of her statutory powers could not give rise to a claim in tort by any of the plaintiffs against Xero.^[21]
• [45] The Associate Judge also considered that this meant that the defence advanced by Xero in its first affirmative defence — that it was compelled by lawful authority to make the disclosures to the Official Assignee — must succeed.^[22]
• [46] The Associate Judge made an order striking out the proceeding on the basis that it constituted an abuse of process. Because the proceeding had been struck out, he did not enter summary judgment.^[23]

The issues before this Court

• [47] The appellants appeal against the decision striking out their proceedings. They say the Associate Judge was wrong to find that it was an abuse of process.
• [48] Xero gave notice that it intended to support the judgment of the High Court on other grounds. Those “other grounds” include that summary judgment should have been entered for Xero, if the proceeding was not struck out.
• [49] Strictly speaking a notice of intention to support a judgment on other grounds must provide additional reasons to support the orders made by the court below. If a respondent considers that this Court should make an order that differs from the orders made in the court below, the respondent should file a notice of cross-appeal. That applies even if the different order is sought in the alternative to a primary argument that the orders in the court below should be upheld.
• [50] Xero did not file a cross-appeal seeking entry of summary judgment. But the parties’ agreed list of issues for this appeal squarely identified as an issue whether Xero was entitled to summary judgment. Both parties made detailed submissions on that issue. In these circumstances, we consider that it is appropriate to treat the notice of intention to support the judgment on other grounds as if it were a notice of cross-appeal. That is clearly how all the parties understood it. There is no unfair prejudice to the appellants in proceeding on that basis.

Appellants’ submissions on appeal

• [51] The appellants say that the Associate Judge was wrong to find that their claim was barred by res judicata principles because:

  (a) They are not challenging the lawfulness of the s 171 notices. Rather, the core issue is whether Xero’s responses to those notices were lawful having regard to the appellants’ right to privacy in the materials disclosed.
  (b) The pre-examination ruling did not determine the lawfulness of Xero’s response to the s 171 notices. It held that the notices were lawful, and that the Official Assignee was entitled to use the information provided by Xero in the public examination of Mr Henderson. The focus was on the conduct of the Official Assignee.
  (c) Thus the issues determined in the pre-examination ruling are not identical to the issues raised by this claim, as required for the principle of res judicata to apply.
  (d) In addition, the parties in the two decisions are not the same. None of the parties to the current proceeding was a party to the application determined in the pre-examination ruling.
  (e) The appellants are not privies of Mr Henderson because they do not have the same interest in the issues as he did. Their claims concern their own privacy interests in information relating to them personally.
  (f) The pre-examination ruling was an interlocutory decision. It was not intended to be final and determinative in relation to the rights of Ms Buxton, AFB and Spinach. Indeed in his Minute of 29 June 2015 Associate Judge Osborne specifically excluded them from being parties to that application, and specifically held that their rights were preserved.
  (g) There is no issue of a party being vexed twice or lack of finality of litigation. The overall justice is in favour of allowing the appellants to bring claims in tort against Xero for the release of material outside the parameters of the s 171 notices.

• [52] The appellants say that if the finding of res judicata is overturned, Xero should not be granted summary judgment. It is arguable that the requirements for a claim for breach of privacy are met in this case. In particular, it is arguable that the disclosures were highly offensive to a reasonable person in the shoes of the complainants. And this case would be a good vehicle for the Court to reconsider whether the “highly offensive” test should be retained as an element of the tort of breach of privacy in New Zealand.
• [53] In the course of argument Mr Moss, counsel for the appellants, emphasised the failure by Xero to inform the appellants that the information had been requested. He submitted there was no good reason not to do so. Xero knew or ought to have known that disclosure of all the records sought would extend to private information of one or more of the appellants. Xero could only ascertain whether some or all of the information was private, and whether the request properly extended to that private information, by making appropriate inquiries.
• [54] Mr Moss accepted that there was evidence that Mr Henderson had some dealings through the AFB bank account. But the intermingling of entries that were relevant to the Official Assignee’s inquiry and entries containing private information about the appellants that were not relevant to the affairs of Mr Henderson did not mean that the appellants’ privacy was lost. The appellants should have been advised of the request to enable them to assert their claims to privacy, and to enable Xero to draw the necessary distinction between these categories of information.
• [55] The appellants had provided a draft amended statement of claim prior to the hearing of the appeal. At the hearing of the appeal their position evolved in a number of respects, including the emphasis placed on the failure by Xero to make inquiries before providing the reports to the Official Assignee. We granted leave to the appellants to provide a further draft statement of claim setting out the claim in the form they now wish to pursue. They did so shortly after the hearing. We will focus on that draft pleading, as if their original pleading is capable of being amended to plead a claim that is arguable and is not an abuse of process, the proceedings should not be struck out.^[24]
• [56] Importantly, the further draft amended statement of claim no longer pleads that the s 171 notices were unlawful. Rather, it alleges that the reports provided by Xero in response to those notices included personal and private information of the appellants that was not related to the property, conduct and dealings of Mr Henderson. It is helpful to set out the relevant pleading in full:

18. Xero provided to the Assignee two reports covering the period from January 2011 until 31 March 2015 (the Reports). The Reports contained every transaction on the AFB bank account. The transactions included a mix of personal and private transactions relating to Ms Buxton, Spinach Design and AFB and transactions that the Assignee was alleging were related to entities associated with Mr Henderson and his “property, conduct and dealings”.

19. The Reports include the following personal and private information that was not related to the property, conduct and dealings of Mr Henderson:

19.1. Over 2000 transactions or entries that related to personal and private income and expense transactions of Ms Buxton; and

19.2. Over 100 transactions/ entries that related to personal and private income and expense transactions of Spinach Design.

(the private disclosures)

20. The private disclosures included:

20.1. extremely private expenses such as doctor and pharmacy visits, veterinary expenses, and charity contributions through to the more regular personal day to day purchases of supermarket, bottle store and petrol purchases;

20.2. the transaction name, date, reference and amount of every purchase during the period of almost four years; and

20.3. personal income transactions of Ms Buxton derived from rents on properties/ businesses owned by her and her entities.

21. The income and expenses in the private disclosures of Ms Buxton and Spinach Design were entirely related to Ms Buxton and her entities’ income sources and had nothing to do with, nor did they derive from, the property, conduct or dealings of Mr Henderson, or entities associated with him, and nor were they relevant to the bankruptcy of Mr Henderson.

• [57] The appellants go on to plead that:

  (a) The Official Assignee requested all documentation held by Xero relating to AFB under the s 171 notices. Pursuant to s 171, the Official Assignee is only entitled to information held by another person that related to the property, conduct or dealings of the bankrupt.
  (b) Xero knew or ought to have known that it was only entitled to provide information to the Official Assignee relating to the property, conduct or dealings of the bankrupt and not any private or personal information outside those strict parameters.
  (c) Xero breached its duty to Ms Buxton, AFB and Spinach by providing the reports because Xero knew or ought to have known that the reports did or likely contained private and personal information of Ms Buxton, AFB and Spinach that did not relate to the property, conduct and dealings of Mr Henderson. In circumstances where a s 171 notice was issued in relation to an account owned or held by a party other than the bankrupt and/or the prima facie position is that the information contains private and personal information, Xero had an obligation to either separate or redact all of the private disclosures or, if that was not possible, to notify the subscriber or owner of the account, or apply to the Court (under s 226 of the Insolvency Act), or require the Official Assignee to apply to the Court (under either s 182 or s 225 of the Insolvency Act).

• [58] The appellants plead that the disclosures were an invasion of their privacy which caused them loss, hurt and humiliation. They seek declarations. Ms Buxton also seeks damages in the sum of $50,000 and Spinach seeks damages in the sum of $20,000.
• [59] The parties were permitted to file brief submissions in relation to matters arising out of the amended draft pleading. The appellants’ further submissions emphasise that the strike out application should be determined on the basis that Xero had the knowledge pleaded by them. They say that a simple review of the information that Xero provided to the Official Assignee would have disclosed that it arguably contained the private information of Ms Buxton and others. Xero needed to tell AFB that the information had been requested, so the appellants could identify their private information. Xero could, and should, withhold that information.

Xero’s arguments on appeal

• [60] Xero’s submissions on appeal support the High Court judgment, and advance the alternative argument referred to above that summary judgment should have been entered for Xero if the claim was not struck out as an abuse of process.
• [61] Xero’s submissions emphasise the substantial evidence provided to it that Mr Henderson was exercising control over payments from the AFB bank account, was receiving payments through that bank account toward his credit cards, and was directing payment from that account of fines owed by him personally.
• [62] Xero submits that the requirements of res judicata are met in this case, and mean that the appellants’ claim cannot succeed. If the notices were lawful, and the Official Assignee was entitled to compel the provision of the information, Xero was obliged to provide it. Xero therefore has a complete defence to the privacy claim. Even if the strict requirements of res judicata are not met, the proceeding is an abuse of process because it is the same proceeding in “different garb”.^[25]
• [63] Alternatively, if the proceeding is not an abuse of process, the Associate Judge could and should have entered summary judgment for Xero on the grounds that:

  (a) the Official Assignee was entitled to and did compel Xero to provide the spreadsheets, so Xero has a complete defence to the claim; or
  (b) the disclosures of information in these circumstances were not highly offensive to a reasonable person.

Discussion

The elements of the tort of invasion of privacy

• [64] Before addressing the parties’ arguments in relation to abuse of process and summary judgment, it is helpful to summarise the essential elements of a claim in the tort of invasion of privacy.
• [65] The tort of giving publicity to private facts — one aspect of the tort of invasion of privacy — was recognised by a majority of a full court of this Court in Hosking v Runting.^[26] Gault and Blanchard JJ considered that in New Zealand there are two fundamental requirements for a successful tort claim for invasion of privacy:^[27]

  (a) the existence of facts in respect of which there is a reasonable expectation of privacy; and
  (b) publicity given to those private facts that would be considered highly offensive to an objective reasonable person.

• [66] They emphasised that the tort is concerned with “publicity that is truly humiliating and distressful or otherwise harmful to the individual concerned”.^[28] The right of action should only be in respect of publicity determined objectively, by reference to its extent in nature, to be offensive by causing real hurt or harm. The test of highly offensive to a reasonable person, which relates to the publicity rather than to whether the information is private, is intended to draw this line.^[29]
• [67] They considered that there should be a defence enabling publication to be justified by a legitimate public concern in the information.^[30]
• [68] The other Judge in the majority, Tipping J, was in general agreement with the judgment delivered by Gault and Blanchard JJ. He differed in relation to the precise formulation of the elements of the tort.^[31] But those differences are not material for present purposes.
• [69] Subsequent cases in New Zealand have consistently applied the formulation of the test adopted by Gault and Blanchard JJ. But as this Court noted in Peters v
  Attorney-General, there has been some development in the way in which the elements of the tort are expressed, and reservations have been expressed about the desirability of retaining a separate “highly offensive” limb of the test.^[32]
• [70] This Court has held that the tort may be committed by disclosure of private information to a single person. The disclosure need not be to the public generally.^[33]
• [71] But at the risk of stating the obvious, where person A is required by law to provide information to person B, the provision of that information cannot amount to a wrongful invasion of the privacy of person C even if the information includes material that is private and confidential information relating to C. C cannot have a reasonable expectation that A will not comply with their legal obligation. So that element of the tort will be absent. Another (and perhaps simpler) way to put this is to say that it is a complete defence to a claim for the tort of wrongful disclosure of private facts that the disclosure in question was required by statute, just as it is to a claim for breach of confidence.^[34] The provision of information in compliance with a statutory obligation cannot amount to breach of a common law obligation to refrain from disclosing private facts.

Are the proceedings an abuse of process?

• [72] The landscape in relation to the abuse of process argument has changed in two significant ways since the High Court dealt with that issue.
• [73] First, the appellants have abandoned the allegation that the s 171 notices were unlawful. Their amended pleading no longer includes that allegation. Instead, the claim focuses on whether the material could lawfully be provided by Xero in response to those notices. So the question of the lawfulness of the issue of the notices, which had previously been determined in the pre-examination ruling, is no longer an essential plank in their argument.
• [74] Second, the appellants have provided this Court with the 29 June 2015 Minute of Associate Judge Osborne in which he declined to hear them in relation to the lawfulness of the s 171 notices, and left matters on the basis that those were issues to be raised in separate proceedings. That Minute was not before the High Court.
• [75] In light of those two developments, we consider that the proceedings do not amount to an abuse of process.
• [76] The appellants are no longer seeking to relitigate the lawfulness of the issue of the s 171 notices by the Official Assignee. Rather, they say that in responding to those notices Xero provided information that it should have withheld, because that information related to the private affairs of the appellants and did not relate to the property, conduct and dealings of Mr Henderson. The appellants accept in their pleading that the notices on their face required Xero to provide “all documentation held by Xero relating to AFB”. But they say that Xero knew or ought to have known that some of this broad class of information was not in fact within the scope of information that could be requested by the Official Assignee, and was private information of the appellants. Xero should either have declined to provide that information, or sought directions from the Court.
• [77] In the pre-examination ruling the Associate Judge rejected the argument that the Official Assignee should have narrowed down her request. He held that for the purpose of her investigation, she needed to see the full record of dealings. The “comprehensive records that Xero held in relation to AFB and Spinach were an obvious and justified subject-matter of a s 171 requirement when the Assignee issued her notice”.^[35] But it is at least arguable that a recipient of a broadly worded s 171 notice who knows that it includes private information of a third party which is not relevant to the financial affairs of a bankrupt cannot simply provide all the requested information and rely on the notice to justify that action. Suppose for example that a s 171 request was made for specified papers held by a bankrupt’s lawyer on their behalf. So far as the Official Assignee is aware, those papers are relevant to the bankrupt’s property, conduct or dealings. But the lawyer knows that those papers include a folder of documents concerning the bankrupt’s partner and children that have no relevance to the bankrupt’s finances.^[36] It seems to us that the lawyer cannot uncritically provide all the papers that they hold. They should take appropriate steps to invite the Official Assignee to narrow the request, in light of the information the lawyer holds, and if necessary seek directions from the court.
• [78] As this example illustrates, there may be circumstances in which a notice is lawfully issued in general terms, but the recipient is not justified in providing all the information that comes within the scope of the request. We therefore accept that the issues raised in this proceeding are different from the issues determined in the pre-examination ruling, which were confined to the lawfulness of the issue of the s 171 notice by the Official Assignee. It was not necessary for the Associate Judge to determine whether any of the information included in Xero’s response did not in fact relate to the property, conduct and dealings of Mr Henderson, and he did not do so.
• [79] Nor do we consider that the appellants are privies of Mr Henderson in relation to the issue determined in the pre-examination ruling, which was concerned with whether certain passages in the Official Assignee’s report under s 296 of the Insolvency Act should be struck out. That was not an issue in which the appellants had the same interest as Mr Henderson. Indeed they had no interest in that issue at all, which is why the Associate Judge quite rightly declined to permit them to be heard on it. The possibility that they might have claims for breach of privacy against Xero — which was not a party to those proceedings — arising out of Xero’s response to the s 171 notices, and that the issue of the lawfulness of those notices might arise in those proceedings, did not mean they were entitled to be heard on that issue in the context of the bankruptcy proceedings. Still less did it mean that they were required to participate in those proceedings and advance their argument there, or risk being precluded from doing so in subsequent proceedings against Xero. The appellants cannot fairly be described as seeking to relitigate issues determined in the pre-examination ruling, in circumstances where:

  (a) they sought to participate in those proceedings, but were not permitted to do so; and
  (b) the issue they now seek to raise is not one that could have been advanced, and finally resolved, in the context of that application.

• [80] On the basis of the arguments before us, which were materially different from those presented in the High Court, we consider that the appellants’ claims are not res judicata and are not an abuse of the process of the Court. The appeal from that finding must therefore be allowed.

Should summary judgment be entered for Xero?

• [81] It is therefore necessary to go on and consider Xero’s application for summary judgment. Has Xero established that the claims against it cannot succeed?
• [82] The reports provided particulars of all transactions on the AFB bank account. The appellants do not allege that those reports, and the information they contained, were not within the scope of the requests in the s 171 notices. Rather, they claim that Xero should have withheld some of the requested information, or sought court directions, because Xero knew or ought to have known that some entries relating to some of the transactions that passed through AFB’s bank account were private information of Ms Buxton or AFB or Spinach, and were not relevant to Mr Henderson’s property, conduct or dealings. They emphasise the entries relating to personal transactions involving Ms Buxton, including payments for doctors’ appointments and other services.
• [83] We do not consider that it is arguable that Xero was required to act in this way.
• [84] We accept the appellants’ argument that Xero could have identified that some payments recorded in AFB’s accounting records related to personal transactions of Ms Buxton. But that does not cast any doubt on the appropriateness of Xero including the entries relating to those transactions in the records it provided to the Official Assignee. Xero made appropriate inquiries in response to the first s 171 notice, and was provided with information that established that there was a proper basis for the Official Assignee’s view that Mr Henderson was exercising a substantial measure of control over the funds passing through the AFB bank account, and using the funds held in that account for his own purposes. Once that threshold was crossed, it is irrelevant that some of the payments out of the account were identifiably made for the personal benefit of Ms Buxton, or for the benefit of Spinach. The appellants’ argument assumes there is a dichotomy between financial information relating to Mr Henderson, and information about payments for the benefit of Ms Buxton and Spinach. But there is no such dichotomy. Payments may have been made for the personal benefit of Ms Buxton through the AFB account out of funds owned or controlled by Mr Henderson. Funds may have been deployed for Mr Henderson’s personal benefit through Spinach or other intermediaries. Mr Henderson may have been exercising control over transactions that purported to be entered into by those companies. None of that could be known without a forensic examination of the transactions carried out through the AFB bank account. The purpose of the Official Assignee’s information requests was to enable such an investigation to be carried out. It would not have been possible, let alone realistic, for Xero to carry out such an investigation. Xero was not required to do so in order to respond to the s 171 notices.
• [85] The appellants emphasise the personal nature of some of the entries in the Xero accounting records which show payments being made for medical services received by Ms Buxton. If those payments were made out of funds controlled by Mr Henderson, they would be directly relevant to the Official Assignee’s investigation of Mr Henderson’s conduct during his bankruptcy. Xero could not know this. Xero could not be expected to investigate this. So far as Xero was concerned, even the most personal of the transactions recorded in AFB’s records was capable of being directly relevant to the Official Assignee’s inquiries.
• [86] It would not have served any useful purpose for Xero to make inquiries of AFB or Ms Buxton about these entries. Confirmation from them that the payments were — for example — made for Ms Buxton’s personal benefit would not take matters any further. Nor would claims that the payments had nothing to do with Mr Henderson: that is not a matter which Xero could be expected to investigate, or form a view on. Rather, that is precisely the inquiry that the Official Assignee could be expected to undertake following receipt of the information.
• [87] We need not consider whether it is arguable that Xero had an obligation to notify its customer about the requests made by the Official Assignee.^[37] For present purposes, it is sufficient that Xero was in our view plainly required to provide all of the entries recorded in AFB’s online ledgers, whether or not it was required to notify its customer about the requests. The appellants’ claim against Xero relates to the provision of the information to the Official Assignee. Even if Xero was required to notify its customer of the request as a matter of contract, or under the Privacy Act, that would not have affected Xero’s obligation to provide the information to the Official Assignee under the Insolvency Act. This was not a case where the person to whom the request was made held discrete information of a private nature that could be withheld without affecting the integrity of the other information properly requested.^[38] Xero was required to provide the full record it held of dealings through AFB’s bank account to enable the Official Assignee to conduct an investigation of the dealings through that account. It was for the Official Assignee, not Xero, to conduct that investigation. The appellants’ argument that AFB should have been notified about the requests does not, in this case, provide any support for their claim that the disclosure was unlawful.
• [88] Nor are these questions that should have been the subject of an application to the Court by Xero or by the Official Assignee, as the appellants claim in their draft amended statement of claim. Unless and until the necessary forensic examination was carried out, the Court would not be in a position to finally determine the relevance of transactions involving payments for the benefit of Ms Buxton or others. But that forensic investigation could not be carried out by the Official Assignee unless and until the information was provided. It would not be workable to require these questions to be referred to a court before the information was provided.
• [89] We emphasise that information obtained by the Official Assignee — like any information obtained by a public agency through compulsion — must be kept confidential, and used only for the purpose for which it has been requested.^[39] If the Official Assignee’s investigation revealed that transactions involving Ms Buxton had nothing to do with Mr Henderson, then there would be no further disclosure of those transactions. Any intrusion on her privacy would be minimal. If however it appeared to the Official Assignee, following proper investigation, that the payments were relevant to an investigation of Mr Henderson’s conduct during bankruptcy, there could be no reasonable expectation that those transactions would not be disclosed for purposes properly connected with the investigation, and any resulting steps taken by the Official Assignee.
• [90] It follows that Xero was required to provide the information to the Official Assignee in answer to the s 171 notices. The information was within the scope of the notices. Xero did not have any information that suggested that some entries in AFB’s records were not properly within the scope of a s 171 request. In particular, the mere fact that some of the entries appeared to relate to transactions involving Ms Buxton or Spinach or AFB did not indicate that the information should not be provided, or require Xero to make further inquiries, or require Xero to apply to the court for guidance. The appellants did not have a reasonable expectation that the information would not be provided by Xero to the Official Assignee. Xero has a complete defence to the claims, as it was required by law to provide the information. Summary judgment should be entered for Xero.

Result

• [91] The appeal is allowed.
• [92] The cross-appeal by Xero is allowed.
• [93] The order made in the High Court striking out the appellants’ proceedings is set aside, and replaced with an order entering summary judgment for the defendant, Xero, in those proceedings.
• [94] The appellants must pay costs to the respondent for a standard appeal on a band A basis, with usual disbursements.

Solicitors:
Canterbury Legal, Christchurch for Appellants
Bell Gully, Wellington for Respondent

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^[1] Buxton v Xero Ltd [2021] NZHC 206 [High Court judgment].

^[2] Havenleigh Global Services Ltd v Henderson [2015] NZHC 1761 [Pre-examination ruling] at [67]–[78].

^[3] At [76].

^[4] At [76].

^[5] At [77].

^[6] At [78].

^[7] Havenleigh Global Services Ltd v Henderson HC Christchurch CIV-2010-409-559, 29 June 2015 (Minute No 1) at [6].

^[8] At [7].

^[9] At [8].

^[10] Pre-examination ruling, above n 2, at [82].

^[11] High Court judgment, above n 1, at [3].

^[12] At [7].

^[13] Krukziener v Hanover Finance Ltd [2008] NZCA 187, (2008) 19 PRNZ 162.

^[14] High Court judgment, above n 1, at [10].

^[15] At [34].

^[16] At [41], quoting from Craig v Stringer [2020] NZCA 260, (2020) 25 PRNZ 367 at [16].

^[17] At [48].

^[18] At [49]–[50].

^[19] At [51], referring to KR Handley (ed) Spencer, Bower and Handley: Res Judicata (5th ed, LexisNexis, 2019) at [10.01].

^[20] At [57]–[58].

^[21] At [59].

^[22] At [60].

^[23] At [61]–[62].

^[24] Marshall Futures Ltd v Marshall [1992] 1 NZLR 316 (HC); and CED Distributors (1988) Ltd v Computer Logic Ltd (in rec) (1991) 4 PRNZ 35 (CA).

^[25] NZ Social Credit Political League Inc v O’Brien [1984] 1 NZLR 84 (CA) at 95.

^[26] Hosking v Runting [2004] NZCA 34; [2005] 1 NZLR 1 (CA).

^[27] At [117].

^[28] At [126].

^[29] At [126]–[127]. See also Peters v Attorney-General [2021] NZCA 355, [2021] 3 NZLR 191 at [100].

^[30] At [129].

^[31] At [223] and [248]–[259].

^[32] Peters v Attorney-General, above n 29, at [105].

^[33] See Hyndman v Walker [2021] NZCA 25, [2021] 2 NZLR 685 at [50]; and Peters v Attorney-General, above n 29, at [116]–[118].

^[34] B v Auckland District Law Society [2003] UKPC 38, [2004] 1 NZLR 326; and Henderson v Walker [2019] NZHC 2184, [2021] 2 NZLR 630 at [191]–[195].

^[35] Pre-examination ruling, above n 2, at [77]–[78].

^[36] For example, medical documents, private emails between a husband and wife and personal photographs as in Henderson v Walker, above n 34, at [192]–[193].

^[37] See Official Assignee v ASB Bank Ltd [2019] NZHC 1736, [2019] 3 NZLR 585 at [45], but contrast [17].

^[38] As was the case in Henderson v Walker, above n 34.

^[39] Marcel v Commissioner of Police [1992] Ch 225; R v Chief Constable of the North Wales Police, ex p AB [1998] EWCA Civ 486; [1999] QB 396 (HC and CA); Johns v Australian Securities Commission [1993] HCA 56, (1993) 178 CLR 408; The Stepping Stones Nursery Ltd v Attorney-General [2002] 3 NZLR 414 (HC); and Henderson v Walker, above n 34, at [175]–[178].