Radio Tarana (NZ) Limited v 5TUNZ Communications Limited [2014] NZHC 1870 (8 August 2014)

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BETWEEN	RADIO TARANA (NZ) LIMITED Plaintiff
AND	5TUNZ COMMUNICATIONS LIMITED First Defendant ROSHILA SINGH PRASAD Second Defendant SATYANDRA PRASAD Third Defendant _Contd.../...

Hearing:	4 August 2014
Appearances:	M B Wigley for the Plaintiff JEM Lethbridge and J F Anderson for the Defendants and for the Non Parties other than Mr and Mrs Lodhia and Nair & Chen Chartered Accountants Limited L Ponniah for H and J Lodhia and Nair & Chen Chartered Accountants Limited
_Judgment:	_{8 August 2014}

RADIO TARANA (NZ) LIMITED v 5TUNZ COMMUNICATIONS LIMITED & ORS [2014] NZHC 1870 [8

AND COMMUNITY FINANCIAL SERVICES LIMITED, ENTERPRISE MOTOR GROUP LIMITED, TEAM CFS HOLDINGS LIMITED, VEHICLE IMPORTS LIMITED, KEVIN ALGIE, HARISH LODHIA, JYOTI LODHIA, NAIR & CHEN CHARTERED ACCOUNTANTS LIMITED and KIM YONG

[1] The plaintiff, Radio Tarana (NZ) Limited (“Radio Tarana”), has filed an application seeking various discovery orders against the first, second and third defendants, and against non parties – namely Community Financial Services Limited, Enterprise Motor Group Limited, Team CFS Holdings Limited, Vehicle Imports Limited, Kevin Algie, Harish and Jyoti Lodhia, Nair & Chen Chartered Accountants Limited and Kim Yong.

[2] The application is opposed by the defendants and the non parties. Some of the non parties, Mr and Mrs Lodhia and Nair & Chen Chartered Accountants Limited, have already discovered. They have done so voluntarily. Nevertheless, Radio Tarana maintains its application against them.

[3] These proceedings concern a dispute between two radio broadcasters, Radio Tarana, and the first defendant, 5TUNZ Communications Limited (“5TUNZ”).

[4] Radio Tarana holds a full commercial license from the Crown. It broadcasts on 1386 AM in Auckland, and its target audience is the Indian community in that city. I am told by Mr Wigley, appearing for Radio Tarana, that the Indian community comprises approximately nine percent of the Auckland population.

[6] 5TUNZ holds a local commercial license, which permits it to broadcast on the FM network. Such licenses are regionally focussed, and they are subject to restrictions and requirements which are not applicable to full commercial licenses. Inter alia, there are requirements as to content and restrictions on the ownership and control of such licenses.

[7] The second and third defendants, Mr and Mrs Prasad, are named as the shareholders of 5TUNZ in the Companies Office register.

[8] The most recent pleading by the Radio Tarana is its third amended statement of claim, filed on 5 March 2014. The allegations made by Radio Tarana can be broken down into two main areas:

(a) First, it asserts that 5TUNZ, as the holder of a local commercial license, is only allowed to offer a local commercial broadcasting service, with local and regional content, and within specified hours.

(b) Secondly, it asserts that 5TUNZ’s license restrains any change of control or transfer, or the assignment or creation, of any registered or controlling interest in the license. It says that parties who have interests in full commercial licenses cannot be involved in the ownership of local commercial licenses, or in controlling such licenses.

[9] It is asserted that 5TUNZ did not comply with its license. It is alleged that it did not offer purely a local commercial broadcasting service. Further, and relevantly for present purposes, it is alleged that the ownership and control restrictions applicable to the license have been breached. In this regard, it is said that a Mr and Mrs Lodhia, and/or persons or entities associated with them, hold or held a controlling interest in the 5TUNZ licence, and that they also hold or held an interest in the full commercial license granted for 1386 AM through a company called Jyoti Communications Limited. It is alleged that details of the ownership in and control of the 5TUNZ’s license by Mr and Mrs Lodhia, and/or persons or entities associated with them, have not been disclosed by 5TUNZ or by Mr and Mrs Prasad in various statutory declarations and compliance reports filed with the relevant Ministry – the Ministry of Business Innovation and Enterprise.

(a) As against 5TUNZ, Radio Tarana alleges that 5TUNZ has engaged in misleading and deceptive conduct pursuant to s 9 of the Fair Trading Act, and that it – Radio Tarana – has suffered loss or damage as a result. It seeks an injunction restraining 5TUNZ from engaging in misleading or deceptive conduct, and an order pursuant to s 43 of the Act that 5TUNZ pay to it the damages which it says it has suffered.

(b) As against Mr and Mrs Prasad, Radio Tarana also alleges that their conduct was misleading and deceptive, and that it has suffered damage as a consequence. Again, it seeks injunctions against both of them requiring them to refrain from misleading or deceptive conduct, and requiring them to pay damages pursuant to s 43 of the Act.

(c) There is then an omnibus cause of action, alleging that each of the defendants was a conscious or intentional participant in the misleading and deceptive conduct asserted, and that each has aided, abetted, counselled or procured the contravention of the Act’s provisions by the other or others. Again, injunctions are sought, along with damages.

[12] On 26 June 2013, by consent, I directed that the parties were to attend to discovery on the standard basis outlined in r 8.7 of the High Court Rules, and that the listing and exchange protocols detailed in Schedule 9, Part 2, were to apply. I put in place a timetable. It was subsequently extended by me, and in the event, all parties attended to discovery.

[13] There was a further conference scheduled before me on 13 November 2013. I received a consent memorandum from counsel dated 30 October 2013, requesting that the conference be vacated and rescheduled. I was told that this was necessary “given the current state of the proceedings, particularly as to finalising mutual discovery”.

2013, I received a further joint memorandum. I was then told that the defendants were about to file and serve a supplementary list of documents. I was also told that Radio Tarana would be seeking further and better discovery from the defendants and discovery by non parties. I directed that any application by Radio Tarana in this regard was to be filed and served by 11 December 2013, and that any notice of opposition was to be filed by 19 December 2013.

[15] Radio Tarana failed to comply with the timetable put in place by me. I received a request to amend the timetable. I did so, and ordered that any application by Radio Tarana in relation to discovery was to be filed by 17 January 2014 and that any notice of opposition was to be filed by 31 January 2014. I indicated that any application for further discovery would be heard, together with any application for further particulars (which had also been signalled by Radio Tarana) on 17 February

[16] Radio Tarana then sought further particular discovery and discovery by the non parties.

[17] At the request of the parties, I directed that the first call of the application for discovery which had been filed against the non parties was to take place on

17 February 2014, but that no orders requiring non parties to discover would be made on that date, unless they or any of them indicated they would abide the decision of the Court. An application by counsel to adjourn or delay the hearing of the discovery application and other outstanding applications was declined.

2014. In the event, many matters relating to the particular discovery then sought had been resolved, and the scope of the dispute between the parties had been substantially narrowed. I made the following orders:

(a) By consent, I directed that the defendants were to discover various additional documents.

(b) I noted that confidentiality undertakings had been given as between counsel, and that, as a consequence, documents discovered by Mr and Mrs Prasad detailing their personal financial information, and the financial affairs of 5TUNZ, had not been disclosed to Mr Khan. Mr Khan was seeking to lift the confidentiality undertaking. I declined to do so, and adjourned the application to give the parties the opportunity to consider the further documents to be discovered, and to try and reach agreement on the issue. I indicated that if they were unable to do so, I would deal with the issue at a later date.

(c) I declined leave to Radio Tarana to disclose documents already discovered to the Ministry, the Inland Revenue Department, or to the Serious Fraud Office.

(d) In relation to non-party discovery, I made various directions against the ANZ Bank New Zealand Limited by consent.

(e) I also made directions directing the parties to file and serve any further interlocutory applications they wished to pursue within a defined timeframe.

[19] In compliance with the orders made by me, the Prasads filed a supplementary affidavit of documents.

17 March 2014, it filed an amended notice of application for orders as to discovery by the defendants and non parties. The application was supported by affidavits from Mr Khan, a Ms Karen Greenwood, a Mr Simon McArley and a Ms Elizabeth Slobbe.

[21] The parties then requested that I should amend the timetable put in place by me on 17 February 2014, and I did so by consent. An amended statement of claim was to be filed and I recorded that, thereafter, Radio Tarana could, if it wished to do so, file a second amended further discovery application.

[22] Radio Tarana took advantage of that opportunity, and it filed the application which is currently before the Court. This second application was supported by a further affidavit from a Ms Nadine Haines.

[23] Also on 13 May 2014, the plaintiff gave notice to the defendants, requiring them to answer interrogatories. That notice was responded to by Mr Prasad on

[24] Notices of opposition were filed by the defendants and the non parties. Two affidavits were filed by Mr Prasad and some of the non parties have also filed affidavits. In particular:

(a) A Mr Curtis has filed an affidavit. He is the Chief Executive Officer of three of the non parties – Enterprise Motor Group Limited, Community Financial Services Limited and Vehicle Imports Limited. His predecessor in each of these roles was another of the non parties, Mr Algie. He denies that any of the companies with which he is involved, or any other related company, has any interest in 5TUNZ. He states that the only potentially relevant documents held by the companies are as follows:

(i) The current account ledger for Community Financial Services Limited and a company owned by Mr and Mrs Prasad known as S & R (2005) Limited which indirectly holds a 7.5 percent interest in Community Financial Services Limited;

(ii) Sundry bank statement entries and other source documents relating to a sum of $500,000 lent by Mr Prasad to Vehicle Imports Limited in March 2010, and the repayment of that sum, plus some interest;

Mr Curtis stated that he will produce the documents if ordered to do so, but he sought confidentiality in relation to them, on the basis that they are all business records.

(b) Mr Lodhia has filed an affidavit listing all documents he said are held by him. He stated that he has also made inquiries with his accountants, Nair & Chen Chartered Accountants Limited, his solicitors, and his wife.

(d) Mr Orton, who is the solicitor for Mr and Mrs Lodhia, filed an affidavit advising that, on 13 June 2014, Mr and Mrs Lodhia and Mr Nair offered to attend to discovery of relevant documents without the need for a court order.

[25] An affidavit in reply has been filed by Mr Khan for Radio Tarana. It deals with the affidavits filed by Mr Lodhia and Mr Nair.

(a) particular discovery pursuant to r 8.19. The documents sought are listed a schedule – schedule A – to the application;

2013, by requiring discovery and inspection of the documents listed in schedule A. This part of the application relies on r 8.17;

that there be discovery and inspection on terms to be ordered by the Court based upon all documents relevant to the ownership and control allegations in the third amended statement of claim, as refined by order, to include, if so determined by the Court...

(iv) orders that the defendants’ computer systems are supplied to the plaintiff, upon confidentiality and other undertakings to enable adequate inspection;

(v) further orders pursuant to cl 3(2) of Schedule 9 of the High Court Rules, including as to independent expert input and control on discovery and searching computer data by fields.

The rule relied on in this regard is not succinctly identified. Rather, the application purports to rely on rr 8.8, 8.10, 8.12, 8.15–8.19 (inclusive), 8.23, Schedule 9 and s 191 of the Companies Act 1991.

[27] Although Mr Wigley focussed his submissions on (c) above, he did not abandon (a) or (b). Radio Tarana did not pursue (c)(iii), (iv) and (v) noted above. When Ms Lethbridge, appearing for the defendants and some of the non parties, began to address these matters, Mr Wigley advised, for the first time, that his client was not pursuing these orders.

[28] With the exception of (c)(iii), (iv) and (v), I deal with each of the orders sought.

[29] The defendants have, on the face of it, complied with the orders made in relation to discovery to date. However, Radio Tarana asserts that documents evidencing arrangements that it says the defendants must have had with Mr and Mrs Lodhia, and interests associated with them, as to ownership and control of the

8.19 Order for particular discovery against party after proceeding commenced

If at any stage of the proceeding it appears to a Judge, from evidence or from the nature or circumstances of the case or from any document filed in the proceeding, that there are grounds for believing that a party has not

discovered 1 or more documents or a group of documents that should have been discovered, the Judge may order that party—

(ii) if they have been but are no longer in the party's control, the party's best knowledge and belief as to when the documents ceased to be in the party's control and who now has control of them; and

(c) if the documents are in the person's control, to make those documents available for inspection, in accordance with rule 8.27, to the other party or parties.

[31] Before a court can make an order under the rule, it must be satisfied that there are grounds for belief that the party from whom further particular discovery is sought, is in, or has been in control of, a document or group of documents that should have been discovered.¹There should be at least a prima facie indication that the documents concerned are or have been in the party’s control, albeit that an applicant does not need to prove that the documents actually exist.²The grounds for belief may be established from evidence, or from the nature or circumstances of the case, or from any document filed. They should be specified in an affidavit by a person who has knowledge of them so that the court can form the appropriate belief.³

[33] 5TUNZ has already supplied its final financial accounts for the 2013 financial year. It has not discovered its draft accounts, although it was not disputed that drafts do exist.

[34] Ms Lethbridge, for 5TUNZ, asserted that, in terms of the pleadings, the only relevant period is 2010 to 2011, and that draft accounts for 2013 are therefore

_{irrelevant to anything that is pleaded. Initially, she also asserted
that the draft}

¹_{Southland Building Society v Barlow Justice Ltd
[2013] NZHC 1125 at [18]–[30].}

²Beecham Group Ltd v Bristol-Myers Co [1979] VicRp 27; (1979) VR 273 (SC) at 279; Simunovich Fisheries Ltd v

_{Television New Zealand Ltd (No 6) HC Auckland
CIV-2004-404-3903, 3 August 2007 at [11].}

³Australian Mutual Providence Society v Architectural Windows Ltd [1986] NZHC 275; [1986] 2 NZLR 190 (HC) at

accounts were privileged, although when questioned by me in this regard, she accepted that privilege was not available.

[35] The scope of discovery is dictated by the allegations made in the pleadings.⁴

[36] Here, the pleadings are not specific as to time. While Radio Tarana has largely focussed on monies advanced by Mr and Mrs Lodhia, and alleged to have been advanced by Mr Lodhia’s associated interests to Mr and Mrs Prasad in 2010 and 2011, there is nothing in the pleadings which ties the allegations made to those years. It is alleged that 5TUNZ has been financed by Mr and Mrs Prasad from monies they have received from the Lodhias and/or persons or entities associated with them. Where monies which have financed 5TUNZ’s operations have come from is in issue. In my judgment, 5TUNZ should have discovered its draft accounts for the 2013 financial year. The drafts are likely to be commercially sensitive. If counsel cannot agree, confidentiality orders can be sought.

those included in the totals that are dealt with in detail in other affidavits, including without limitation, financial and banking records and emails,

[38] The defendants’ reply is that all documents that can be supplied in respect of each transaction, including source documents, have already been discovered. Mr Prasad has deposed to this and he has annexed to his affidavit a letter from the ANZ confirming that it has “interrogated” its systems, and that it does not hold any additional source documents.

[39] There is nothing concrete in Radio Tarana’s affidavits to contradict these

assertions. Rather, Mr Wigley in his submissions focussed on the inferences which he submitted can be drawn from documents already discovered. He acknowledged

that the proceedings were initially commenced by Radio Tarana “with strong suspicion but little evidence.” He argued that it had been difficult to obtain discovery from the defendants, and that it was only in the course of discovery that it was revealed that Mr Lodhia had advanced $70,000 to Mr and Mrs Prasad. He said that this revelation forced further disclosure by the defendants, and that it then became apparent that the payments had been made via what he termed as “intermediaries”. He said that as matters evolved, the defendants were “forced to attend” to yet further discovery, and that it subsequently emerged that there were a number of other cash payments into the Prasad’s personal account totalling approximately $215,000. He argued that Mr and Mrs Prasad had given implausible explanations by way of affidavit for these payments, which he described as “unusual transactions”. He referred to an affidavit filed by Mr McArley dated 18 March 2014. In that affidavit, Mr McArley ventured the opinion that various narrations in the Prasad’s accounts were “intentionally framed” so as to disguise the source of funds, and that it is highly likely, where there is no primary evidence from the defendants, that additional documentation or other evidence will exist which would enable further investigation to take place.

(a) First, r 8.19 requires that where particular discovery is sought, the documents demanded should be described with some specificity. A description such as “accounting and other records”, for example, has been held to be insufficient.⁵Here, the description given by Radio Tarana in its application – noted at [38] above – is not specific. Indeed, it is so wide as to be meaningless.

(b) Secondly, the documents sought are said to be identified in an affidavit filed by Mr McArley. Mr McArley has filed three affidavits.

(c) Thirdly, the application seeks documents, “including to avoid doubt... those included in the totals that are dealt with in detail in other affidavits”. It is unclear whether this is a reference to Mr McArley’s affidavits or other affidavits.

(d) Finally, Mr McArley’s affidavits are all out of date. The most recent affidavit filed by him was sworn on 18 March 2014. Since that date, a number of additional affidavits have been filed, including Mr Prasad. In addition, Mr Prasad has answered the interrogatories posed by Radio Tarana. There has been no challenge to the answers given, nor any assertion that Mr Prasad has not answered the interrogatories fully. The opinions expressed by Mr McArley do not take into account any of this later material.

[41] In my judgment, Radio Tarana has failed to get over the jurisdictional threshold necessary to permit the Court to make an order for particular discovery in the terms sought. The documents sought are not identified. There are no proper grounds established for believing that the defendants have not discovered one or more documents, or a group of documents, that should have been discovered. The application is declined in this regard.

1 April 2013 to 31 April 2014. Again, there was no dispute that these documents exist and that they have not been discovered to date.

[43] Ms Lethbridge submitted that these management accounts fall outside the relevant period for the purposes of the proceeding and she argued that 5TUNZ should not be required to supply them. In this regard, she referred to a letter sent by Grove Darlow, solicitors acting on behalf of the defendants, to the Ministry of Business Innovation and Employment dated 15 October 2013.

[44] I do not accept Ms Lethbridge’s submission. It is correct that the payments the subject of Radio Tarana’s focus to date were made in May, June and July 2011. It is also correct that these payments were canvassed in Grove Darlow’s letter to the

Ministry of 15 October 2013. The defendants cannot, however, rely on their own solicitor’s letter to try and limit the scope of the pleadings. I repeat that there is nothing in the pleadings limiting the allegations made to 2010/2011. 5TUNZ should have disclosed its management accounts for the period 1 April 2013 to 31 April

2014. As I understand it, it has already discovered its management accounts for earlier years. It was obliged to discover its 2013 management accounts as well, pursuant to its ongoing discovery obligations under r 8.18. If there is anything confidential in those accounts, and if agreement cannot be reached between counsel, then 5TUNZ can make application to the Court in that regard.

[45] Radio Tarana seeks all documents relating to a general security agreement granted by 5TUNZ to Community Financial Services Limited.

[46] The defendants’ response is that all relevant documents have been discovered. It says that some of the documents discovered are privileged, because they were communications between it and its solicitors.

[47] Mr Wigley noted an assertion made by Mr McArley in one of his affidavits that the general security agreement was consistent with the provision of funding to complete the purchase of the radio license being advanced by Community Financial Services Limited, either on its own behalf, or on behalf of some other party, to the Prasads. He submitted that an explanation given by Mr Prasad for the grant of the general security agreement was implausible.

[48] In this regard, I repeat my observation above – Mr McArley’s affidavit relied on is now dated. It does not address the documentation which has been filed since March 2014 both by Mr Prasad and by Mr Curtis. There is nothing in reply to gainsay the assertions made that there are no further documents that should have been discovered in regard to this matter. While there are some documents in respect of which privilege has been claimed, there has been no application by Radio Tarana challenging that claim to privilege. Once again, in my judgment, Radio Tarana has failed to establish a proper basis on which the Court could conclude that the defendants have not discovered all documents they should have discovered relating

[49] Radio Tarana seeks all documents, including emails and financial records relating to a sum totalling $215,277.22 which it says was advanced to Mr and Mrs Prasad by various persons and entities, all of which it alleges are connected to the Lodhias. Mr Prasad’s response was that all relevant financial records have been supplied, and that no emails exist that have not already been discovered.

[50] Again, Radio Tarana has put nothing before the Court on which it can properly find that there are grounds for believing that the defendants have not discovered all documents in this regard which should have been discovered. The application is declined in this regard.

[51] Finally, Radio Tarana seeks all bank statements not yet provided, up to the date of the court order.

[52] Ms Haines, in her affidavit, asserted that various specific bank statements have not been provided. Mr Prasad responded by saying that all relevant bank statements have been provided. He also objected to being asked to discover bank statements relating to accounts he and his wife hold with Westpac, and said that they are not relevant to the matters raised in the statement of claim. Mr Prasad does not, however, respond to the specific allegations made by Ms Haines.

[53] From Ms Haines’ affidavit, it seems that bank statements for 5TUNZ for the period 2 May 2012 to 26 October 2012, and 4 March 2014 to 31 March 2014 have not been discovered. Statements of various accounts held by the Prasads with the ANZ and Westpac have also not been discovered.

[54] For the reasons I have already set out, the proceedings are not limited to the timeframe asserted by the defendants and 5TUNZ’s bank statements could be relevant to matters raised in the pleadings. In my view, it is appropriate to order the various specific bank statements of 5TUNZ identified by Ms Haines be discovered. Again, confidentiality orders can be sought if required.

[55] In relation to the Prasad’s personal accounts, Mr and Mrs Prasad can only be required by an order under r 8.19 to discover documents which should have been discovered. Standard discovery has been ordered to date. The applicable test in considering which documents should have been discovered is that set out in r 8.7. The Prasad’s were required and are under a continuing obligation to disclose any documents on which they rely, which adversely affect their case, which adversely affect another party’s case or which support another party’s case. What is alleged is that Mr and Mrs Lodhia and/or persons or entities associated with them, have advanced monies to the Prasads to enable them to acquire the 5TUNZ license and run the radio station and that the Lodhias, and/or persons or entities associated with them, have an interest in, or control over, 5TUNZ’s license. Any bank statements relevant to that allegation must be discovered. If monies have come into the Prasad’s accounts from the Lodhias, or from any entity or person associated with them, and if they have subsequently advanced that money either in whole or in part, or other money freed up as a consequence of the advance(s), to 5TUNZ, then the relevant bank statements must be discovered. However, the proceeding does not necessitate an inquiry into all of the Prasad’s personal affairs and financial records. Other bank statements dealing purely with the Prasad’s personal financial affairs do not need to be discovered. The difficulty from Radio Tarana’s perspective is that there is nothing before me which supports its suspicion that the Prasads have not discovered all relevant bank statements. I decline to order particular discovery in this regard.

[56] Finally, Radio Tarana sought all documents relevant to the matters and documents listed in schedule B, including a list of all such relevant documents held by other parties including non parties.

[57] Schedule B is a schedule applicable to the non parties. It is annexed. As can be seen, it is lengthy. The application made in this regard by Radio Tarana is, in effect, meaningless. It is impossible to identify with any specificity what documents it is seeking, and there is no basis on which the Court can properly conclude that the defendants have failed to discover documents they are obliged to discover in relation to the myriad of matters covered in schedule B. I decline to order particular discovery in the terms sought.

[58] The application for variation of the discovery orders is in the following terms:

Varying the discovery order made on 26 June 2013 by requiring discovery and inspection of the requested documents on the terms at [1](a) above.

[59] The reference to [1](a) is a reference to the particular discovery orders sought. The words “requested documents” are not defined. However, the words “the first phase requested documents” are defined in the application as being the documents detailed in schedule A. I can only assume that this is what was sought by way of variation.

[60] I cannot see that the application for variation of the discovery order adds anything to the request for particular discovery. I make no further orders in this regard.

[61] I have set out above at [26] the terms of the general discovery order sought. As can be seen, Radio Tarana seeks tailored discovery, and then discovery on a “Peruvian Guano” basis.

[62] There was nothing in the application, nor in the submissions made, to clarify what was sought by way of “tailored discovery”. There was nothing to suggest that the parties had sought to co-operate in this regard as required by r 8.2. I can only assume that the tailored discovery sought was, in fact, the particular discovery which I have already dealt with above.

[63] The reference to “Peruvian Guano”⁶discovery is a reference to the test which was commonly adopted in relation to discovery prior to the amendments to the discovery regime in the High Court Rules which came into effect as from 1 February

_{documents that were, or might be, relevant to issues in a proceeding, or
which could}

⁶Compagnie Financiere Commerciale Du Pacifique v Peruvian Guano Co, above n 1.

lead to a chain of inquiry. One of the major changes introduced by the amended rules was the adoption of a narrower test. It is set out in r 8.7. It requires parties, by way of a standard discovery order, to disclose documents that are or have been in a party’s control on which that party relies, that adversely affect that party’s case, or that support or adversely affect another party’s case. Standard discovery is narrower in scope than that which applied under the former “Peruvian Guano” test. The new

test is based on similar tests that have been adopted in other jurisdictions.⁷

[64] The rules require that a judge must make a discovery order in a proceeding, unless he or she considers that the proceeding can be justly disposed of without any discovery, at the first case management conference that is held for the proceeding, unless there is good reason for making the order at a later point in time.⁸They go on to provide that the court may direct either standard discovery, or tailored discovery – r 8.6. The rule gives the court a discretion. It does not restrict the types of discovery order that can be made, and it is still possible that a court could order “Peruvian Guano”-type discovery.⁹

[65] Notwithstanding this residual discretion, the “Peruvian Guano”-type discovery now belatedly sought by Radio Tarana is at odds with the new rules, the purpose of which is to streamline discovery. Such orders will be rare, but they may be appropriate in, for example, cases alleging fraud, where the court has reason to doubt that standard discovery will suffice to flush out all relevant documents.

[66] The approach taken by Radio Tarana is also at odds with the approach to discovery taken to date in this case. As I have noted, the Court has ordered standard discovery at the request of the parties and by consent.

[67] I accept Mr Wigley’s submission that there are grounds for suspicion in the

present case, and that it is difficult for Radio Tarana to identify the documents it seeks, given the allegations it makes. However, I do note that there is no allegation

⁷Federal Court of Australia – Federal Court Rules 2011, r 20.14(1) & (2); United Kingdom Civil Procedure Rules, r 31.6; Canadian Federal Court Rules SOR/98–106; and see McGechan on Procedure at [HR8.7.01].

of fraud. The non parties have not been joined to the proceeding and there is no allegation in tort of an unlawful means conspiracy. As against Radio Tarana’s suspicions, there is a host of material from Mr and Mrs Prasad, from Mr Curtis, from the Lodhias, from the Lodhia’s accountant Mr Nair, and from the ANZ Bank, indicating that discovery has been attended to properly. There is also a concern that Mr Khan and Radio Tarana are endeavouring to exploit these proceedings to gain a commercial advantage – see below at [93]–[94].

[68] As I have already noted, Radio Tarana is alleging that the Lodhias, or entities or persons associated with them, have an interest in, or exercise control over,

(c) 5TUNZ accepts that the $70,000 was advanced to it by the Prasads, and that the money was used by it to further its operations.

(d) Various payments totalling some $215,000, were made to Mr and Mrs Prasad between September 2010 and November 2011. Those monies were subsequently advanced, directly or indirectly by the Prasads, to

(b) The $70,000 paid by Mr Lodhia to Mr and Mrs Prasad in mid-2011 was a loan, and that Mr Lodhia, and interests associated with him, did not thereby acquire any ownership of 5TUNZ, or any control over its operations;

(c) The additional monies which Mr and Mrs Prasad advanced to 5TUNZ were made from their own resources which they accumulated over time. The payments did not result in Mr Lodhia, or anyone else associated with him, acquiring an interest in, or control, over 5TUNZ.

[70] Beyond this, the affidavits filed by Radio Tarana, and the submissions made,

are long on speculation, but short on facts. For example, Mr McArley’s affidavit of

20 January 2014 suggested little more than that the various scenarios advanced by Radio Tarana were “possible”, or that they could be “consistent” with its theory of the case. In his affidavit of 5 February 2014, Mr McArley said that explanations advanced by the defendants were “indicative that further inquiry is justified”. As Mr Wigley fairly acknowledged, Radio Tarana’s case started with strong suspicion, but little evidence, and he accepted that its case still depends on inferences being drawn.

[71] Whether Radio Tarana’s assertions have any force, or whether the explanations advanced by Mr and Mrs Prasad and Mr Lodhia are plausible, can only be determined at trial, after all relevant witnesses have given evidence and been cross-examined. In my judgment, the disputed assertions involved in this case and the resulting suspicions, do not, without more, justify “Peruvian Guano”-type discovery. Indeed, it is my clear impression that “Peruvian Guano” discovery is being sought to fish for any further evidence which might support the rather speculative allegations made in the statement of claim. To adopt the language of Chilwell J in the Australian Mutual Providence Society case, Radio Tarana “is

[72] Further, in my judgment, at this late stage it would be unduly oppressive to require the defendants to now attend to “Peruvian Guano” discovery. Radio Tarana, by consent, initially sought standard discovery. The evidence establishes that the defendants have carried out an extensive search to comply with this order. They have discovered some 4,900 documents, and provided three sworn affidavits that comply with the High Court Rules as to form, and, on the face of it, as to content.

_{Further, the affidavits suggest that the defendants have, by and large,
complied with}

¹⁰Australian Mutual Providence Society v Architectural Windows Ltd, above n 3, at 515–516.

their continuing obligation to discover pursuant to r 8.18. There has been no obvious breach of the rules by the defendants. Rather, it appears that Radio Tarana has shifted its approach to discovery, and is now seeking putative documents it suspects may exist. Some limit must be put on the breadth of discovery, and while there is no evidence before me quantifying the likely time or costs involved, I have no doubt that ordering “Peruvian Guano”-type discovery now would involve the defendants in substantial additional cost. To belatedly require Peruvian Guano discovery would, in my view, be oppressive and disproportionate to the matters in issue in this proceeding.

[74] As against the non parties, Radio Tarana seeks “Peruvian Guano”-type discovery (including, without limitation, as to the items in schedule B).¹¹Mr Wigley submitted that this is appropriate, given the suspicion of concealment, and the alleged close relationship between the defendants and the non parties.

[75] Ms Lethbridge also acted for the non parties, with the exception of Mr and Mrs Lodhia and Nair & Chen Chartered Accountants Limited. She noted that there is no cause of action alleging fraud, or implicating any of the non parties in any underlying conspiracy. She referred to Mr Curtis’ affidavit, and to his offer to supply the few documents held by Enterprise Motor Group Limited, and the associated companies, on court order. She asserted that Mr Yong and Mr Algie have already provided such documents as they had to the defendants who have discovered them, and advised that affidavits can be filed in this regard if required. She argued that there is simply no basis on which the Court can make any further orders against the non parties.

_{Chartered Accountants Limited, argued that his clients have voluntarily
disclosed all}

that they can be required to discover and that it would be appropriate to require them to go further.

[77] Pursuant to r 8.21, the court can order a person who is not a party to a proceeding, and who may be, or may have been, in control of one or more documents, or group of documents, to discover those documents, if that person would have had to discover the documents if he or she were a party to the proceeding. To obtain non-party discovery, there must be grounds for belief that the non party has, or had, documents that would be discoverable if that person was a party. All considerations applying in the usual discovery context, including relevance and proportionality, apply, as well as the tests for standard, and, where

[78] Here, nothing has been filed by Radio Tarana to deny the assertions made by Mr Curtis in his affidavit. There are no grounds for belief that Enterprise Motor Group Limited, Community Financial Services Limited, or Vehicle Imports Limited, have any documents other than those identified by Mr Curtis, which he has offered to discover.

[79] There is nothing to suggest any involvement in these proceedings at all by Team CFS Holdings Limited, let alone that it is, or has been, in possession of any documents it would have been obliged to discover if it was a party.

[80] In relation to Mr Algie, he previously held the position now held by Mr Curtis. Again, there is nothing filed by Radio Tarana on which the Court could properly conclude that he either has, or may have been, in control of documents that he would have been obliged to discover if he were a party to the proceeding.

[81] In relation to Ms Yong, it seems that she advanced $20,000 to Mr Prasad. Mr Prasad, in his answers to the interrogatories, advised that the advance was not documented, and that no interest was payable. The defendants have provided a copy

_{of Ms Yong’s bank statement, but the page has been folded over to
disclose only the}

¹²Westpac New Zealand Ltd v Adams [2013] NZHC 3113 at [26]–[27]; and see McGechan on

payment out, and not any payment(s) in. While there is nothing in the affidavits filed, Mr Wigley submits that this of itself is a basis for suspicion, and that that suspicion justifies requiring Ms Yong to discover.

[82] I disagree. There is nothing to suggest Ms Yong is in possession of any other documents which she would have been obliged to discover if she were a party to the proceedings. To the extent that the bank statement has only been partially discovered, that may well be appropriate, because Ms Yong’s personal financial position is irrelevant to any matter raised in the proceeding. Where only part of a document is discoverable, and the party concerned does not wish to disclose the

whole document, it is permissible to cover up the irrelevant parts of the document.¹³

If the extent of the covering up is disputed, the court can inspect the whole of the document to determine discoverability. The same practice is adopted as applies in respect of privileged or confidential material.¹⁴I note that there has been no application in this regard by Radio Tarana. Requiring Ms Yong to attend to “Peruvian Guano”-type discovery in the terms sought by Radio Tarana, simply because she advanced $20,000 interest free to Mr Prasad, would, in my view, be inappropriate.

[83] I now turn to the Lodhias, and Nair & Chen Chartered Accountants Limited. They have already discovered voluntarily and without the necessity for a court order.

[84] Mr Khan has filed an affidavit criticising this discovery. His affidavit does little more than speculate that there must be further documents which have been held by the Lodhias. This assertion seems to be based on Mr Khan’s belief that the Lodhias have financed 5TUNZ, that they have an interest in it, and that they control it. That belief, of itself, does not establish that the Lodhias have any additional documents that they should have disclosed had they been parties to the proceeding. Mr Khan’s affidavit, in effect, goes no further than to say that, in his experience,

¹³_{GE Capital Corporate Finance Group Ltd v Bankers Trust
Code (1995) 2 All ER 993 (CA).}

[85] Mr Khan does dispute various claims to privilege made by the Lodhias, but once again, there has been no challenge to that privilege.

[87] Again, in my judgment, there is no proper basis on which the Court can conclude that the Lodhias, or Nair & Chen Chartered Accountants Limited, may be, or may have been, in control of additional documents that they would have been required to discover if they were parties to the proceeding. The application against them is declined as well.

[88] As I noted above, undertakings have been exchanged between the solicitors for the parties, and Mr Khan has not seen the Prasad’s personal financial information nor the financial information of 5TUNZ.

[89] Mr Khan now seeks access to those documents, and seeks an order that his solicitor be released from the confidentiality undertaking given to counsel for the defendants.

[90] It is not appropriate to release Mr Wigley from the undertaking that he has given.

[91] First, I note that the undertaking was offered to the defendants, without the involvement of the Court. Presumably, the giving of the undertaking was discussed with Mr Khan before it was given, and the documents were made available to Mr Wigley for inspection, on the basis of the undertaking offered. In circumstances where the parties have reached agreement of this kind, the Court would not normally interfere, unless there was very good reason for doing so.

[92] Secondly, the undertakings which have been given are, in my view, appropriate. The documents covered by the undertakings are personal banking and business banking records. The information in them will necessarily be confidential.

[93] In this regard, concern is heightened because there appear to have been a number of steps taken by Mr Khan which suggest that he is trying to obtain a commercial advantage from this litigation. For example, a staff member employed by Radio Tarana posted an article about this case on his Facebook page. That Facebook page attracted a number of comments from persons who listen to both stations. The staff member expressed views about the case. He was trying to persuade people viewing his Facebook page that Radio Tarana’s view of the case is correct. More alarmingly, it seems that Mr Khan has been cooperating with a well- known blogger, who has posted on the internet an article which contains various details about the case. That article quotes from the letter sent by Grove Darlow to the Ministry. Material before the Court suggests that the Ministry did not release that letter to any third party. The defendants did not do so. It can only have come from Radio Tarana/Mr Khan. The material published on the internet also contained a flowchart that was virtually identical to a flowchart contained in Mr Khan’s first affidavit filed in these proceedings in support of the initial discovery application. When these matters were raised by the defendants’ solicitor with Mr Wigley, a complaint was made against the defendants’ solicitor to the New Zealand Law Society, alleging that it was a breach of the rules for the defendants’ solicitor to have raised the issue. That complaint was dismissed by the Society.

[94] These matters suggest that Radio Tarana, or its agents, have been using the fact of the proceedings to try and gain a commercial advantage over 5TUNZ. In these circumstances, any order relaxing the confidentiality undertakings would carry significant risk to the defendants.

[95] The application to release the confidentiality undertakings given is declined.

(iv) Enterprise Motor Group Limited, Community Financial Services Limited, and Vehicle Imports Limited are to file an affidavit of documents, discovering the current account ledger for Community Financial Services Limited and S & R (2005) Limited, the bank statement entries and other source documents relating to a sum of $500,000 lent by Mr Prasad to Vehicle Imports Limited in March 2010, the repayment of that sum, and interest, and records showing payment of monies due to Enterprise Motor Group Limited to Mr Prasad, totalling

(v) Ms Yong and Mr Algie are to file and serve affidavits confirming that there are no additional documents held by them in relation to matters in issue in this proceeding;

(b) The reasonable costs in preparing the affidavits incurred by Enterprise Motor Group Limited, Community Financial Services Limited, Vehicle Imports Limited, Mr Algie and Ms Yong are to be met by Radio Tarana;

(c) Leave is reserved to 5TUNZ, Community Financial Services Limited, Enterprise Motor Group Limited and Vehicle Imports Limited to seek

(d) Inspection of the additional documents to be discovered pursuant to this order is to be completed within a further period of 15 working days thereafter;

(e) The Registrar is to arrange a teleconference with counsel, for the purpose of putting in place a fixture. In that regard, I expect counsel to liaise in advance, with a view to agreeing a timetable for the various steps that will be necessary to ensure that the matter is ready

[97] The defendants and the non parties have largely succeeded in regard to this matter, and in my view, they are entitled to costs. Any costs orders will take into account the various breaches of the timetables put in place by me, not only by Radio Tarana, but also the defendants, and by some of the non parties.

(a) Any applications for costs by the defendants/non parties are to be filed and served within 10 working days of the date of release of this judgment.

(b) Any opposition to the application(s) for costs is to be filed and served within a further 10 working days.

[99] I will then deal with the issue of costs on the papers, unless I require the assistance of counsel.

“Defendants’ Related Parties” (which includes the defendants) and “Associated Parties” (which includes Mr and Mrs H Lodhia) are defined in the 3^rdamended statement of claim.

5. Documents relating to advances to and from (i) Group companies and (ii) Prasad’s Related Parties since 1 January 2010 (to date) including relating to:

5.6. Accounting treatment of the advances in the Group companies’ accounts (such as by provision of relevant group Annual Reports or redacted extracts).

277.22 transaction between EMG and Mr Prasad, from when the sums comprised in that figure first arose (that is before the loan document was signed, and all relevant events from and including 2010), to date.

10.1. Any payments upstream or downstream of payments to the parties in Para 9 above.

10.2. Funds held, and the source of those funds, that were used to pay any of the defendants, directly or indirectly;

10.4. Documents relating to payments into CFS by any person or entity associated with Kevin Algie and related entities including Murphy Road Trust, Gent Holdings Ltd and Murphy Road Ltd, including

10.5. Documents such as emails and financial records relating to the payment for which $30,000 deposited with CFS on 2 June 2011 is said to have been a repayment

10.6. Bank statements, deposit and withdrawal forms, and similar, relating to all above payments and funds including documents that identify who personally did the transaction (such documents to be obtained from the bank if necessary);

10.7. Emails relating to such payments and funds and relating to any agreement in relation to payment and funds (such as in relation to payments to any of the defendants;

whether or not funds were advanced). Additionally, documents relating to any advance, repayment and interest are sought (if there was no advance, the above documents are still relevant).

10.10.Documents relating to dividends since 1 April 2011 to date, paid by CFS to Team CFS Holdings Ltd (not limited to dividends ultimately ending up with S&R(2005) Ltd) and, in turn, paid by Team CFS Holdings Ltd to S&R (2005) Ltd, including dates and amounts of payments and withholding tax certificates provided, IRD-sourced payment/disclosure records and Team CFS Holdings Ltd annual reports, IR4s and IRD assessments for the 2012 and 2013 years (or other verification if the 2013 return has not yet been completed).

10.11.Documents relating to all transactions in the CFS general ledger as to any Prasad parties including, without limitation, bank and financial records, emails, and copy deposit and withdrawal documents.

First phase non-party discovery by Kevin Algie and related parties including trusts, and companies (where he has control and/or rights to obtain and inspect documents) (“the Algie Group”)

2. In relation to any deposits, the entries for where those sums were paid to (and if transferred to accounts under the control of the Algie Group, to include all such transfers together with the final payment to an account outside the Algie Group)

3. Documents relating to advances to and from any of (i) Algie Group and (ii) Prasads’ Related Parties and Associated Parties since 1 January 2010 (to date) including:

3.5. Accounting treatment of the advances in the Group companies’ accounts (such as by provision of relevant group Annual Reports or redacted extracts).

5.1. Any payments upstream or downstream of payments to the parties in Para 4 above (for example, payments to any of the Algie Group to enable payment of $20,000 to 5TUNZ).

5.2. Funds held, and the source of those funds, that were used to pay any of the defendants, directly or indirectly;

5.4. Documents relating to payment into CFS by Murphy Road Trust, or any other person or entity in the Algie Group, including documents relating to the payment for which $30,000 deposited with CFS on 2

5.5. Bank statements, deposit and withdrawal forms, and similar, relating to all above payments and funds including documents that identify who personally did the transaction (such documents to be obtained from the bank if necessary);

5.6. Emails relating to such payments and funds and relating to any agreement in relation to payment and funds (such as in relation to payments to any of the defendants;

5.7. Any agreement between (a) any of the parties at Para 4.1 and (b) any of the parties at Para 4.2;

5.8. The deed of trust or similar document for any relevant trust including the Murphy Road Trust.

5TUNZ, from 1 June 2010 to date, to include emails to and from IdeaHQ. Note: some emails are on Mr Algie’s Xtra account and some on the CFS email account.

ultimately were received by the Defendants’ Related Parties. For example, payments via intermediaries as happened with the $70,000 are included. To be included also are payments to Prasad and/or 5TUNZ creditors such as the ANZ Bank

5TUNZ and/or the Prasads, in whatever capacity (for example, but without limitation, as to set up decisions, employment decisions, funding and financial decisions, etc whether or not, for example, Mr Lodhia was providing advice as a friend, and advice given as to ownership interests in relation to 5TUNZ).

12. All emails relating to the documents and matters in this Schedule, as between (a) the Associated Parties and (b) CFS, EMG, their related entities and staff including Kevin Algie (as to such staff, whether or not in their roles as staff members).

13. All emails relevant to the issues in the proceeding including content as well as ownership and control.

14. Daran & Nair’s working papers, and also documents received from Mr and/or Mrs Lodhia and other parties associated with Mr and/or Mrs Lodhia, including lawyers, which relate in any way to the Defendants’ Related Parties.

15. Where any payments have been made in cash, documents including emails, bank and financial records as to the source of the cash, including the ultimate source, and the reasons why cash has been paid instead of payment by bank transaction.

16. In relation to cash provided by or via any of the Associated Parties, discovered documents to include all documents relating to the source of the cash and date received, and why it was received in cash.

17. This discovery to extend to all relevant documents within the Lodhias’ and

18. All documents, including emails and file notes, relevant to the draft share trust document and any other shareholding and ownership arrangement (proposed or actual) including covering emails, drafts of that document, subsequent variations of that draft, details of their provenance including who drafted them, and details of the reason why they were drafted and what their purpose is.

19. Documents dealing with why relevant transactions have been handled in the way they were (eg in relation to the $70,000 documents dealing with reasons for payment in cash, to two intermediaries and then payment to

20. In relation to all payments referred to above, documents as to the tax treatment of each step in the trail from ultimate source of to ultimate payment (eg as to the $70K, the source of the cash, the payment to the two entities and the on-payment to 5TUNZ).

21. Tax and accounting treatment of the shareholding in 5TUNZ including without limitation, treatment by the Prasads’ Related Parties and Associated Parties.

23. Relevant Documents held by professional advisers in power or control of the Lodhia parties including solicitors and accountants.

25.1. Any payments upstream or downstream of payments to the parties in Para 11 above.

25.2. Funds held, and the source of those funds, that were used to pay any of the defendants, directly or indirectly;

25.4. Documents relating to payments into CFS by any person or entity associated with the Associated Parties, Kevin Algie and related entities including Murphy Road Trust, Gent Holdings Ltd and Murphy Road Ltd.

25.5. Documents such as emails and financial records relating to the payment for which $30,000 deposited with CFS on 2 June 2011 is said to have been a repayment

25.6. Bank statements, deposit and withdrawal forms, and similar, relating to all above payments and funds including hard copy documents that identify who personally did the transaction (such documents to be obtained from the bank if necessary);

25.7. Emails relating to such payments and funds and relating to any agreement in relation to payment and funds (such as in relation to payments to any of the defendants;

25.9. Documents relating to all transactions in the CFS general ledger as to any Prasad parties including, without limitation, bank and financial records, emails, and copy deposit and withdrawal documents.

1.1. Kim Yong and related parties including any trust such as the M A Y Trust; and

1.2. Any of the defendants, Mr and Mrs H Lodhia, Associated Parties and/or Defendants’ Related Parties (the latter two as defined in the third amended statement of claim).

in Para 1.2 above (for example, payments to Kim Yong and/or related parties to enable payment of $20,000 to 5TUNZ).

2.2. Funds held, and the source of those funds, that were used to pay any of the defendants, directly or indirectly;

2.5. Bank statements, deposit and withdrawal forms, and similar, relating to such payments and funds including documents that identify who personally did the transaction, whether in handwritten form or not (such documents to be obtained from the bank if necessary);

2.6. Emails relating to such payments and funds and relating to any agreement in relation to payment and funds (such as in relation to the $20,000 paid to 5TUNZ);

2.7. Any agreement between (a) any of the parties at Para 1.1 and (b) any of the parties at Para 1.2;

2.8. The deed of trust or similar document for any relevant trust including the M A Y Family Trust.

High Court of New Zealand Decisions

Radio Tarana (NZ) Limited v 5TUNZ Communications Limited [2014] NZHC 1870 (8 August 2014)