Radio Tarana (NZ) Limited v 5Tunz Communications Limited [2014] NZHC 199 (17 February 2014)

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Radio Tarana (NZ) Limited v 5Tunz Communications Limited [2014] NZHC 199 (17 February 2014)

Last Updated: 5 March 2014

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2013-404-001508 [2014] NZHC 199

BETWEEN RADIO TARANA (NZ) LIMITED Plaintiff

AND 5TUNZ COMMUNICATIONS LIMITED First Defendant

ROSHILA SINGH PRASAD Second Defendant

SATYANDRA PRASAD Third Defendant

Hearing: 17 February 2014

Appearances: M B Wigley for the Plaintiff

JEM Lethbridge and J Anderson for the Defendants

Judgment: 17 February 2014

_{[ORAL] JUDGMENT OF WYLIE J}

RADIO TARANA (NZ) LIMITED v 5TUNZ COMMUNICATIONS LIMITED & ORS [2014] NZHC 199 [17

February 2014]

Introduction

[1] These proceedings concern a dispute between two radio broadcasters, the plaintiff and the first defendant.

[2] The plaintiff holds a full commercial licence from the Crown. It broadcasts on the AM network. Its target audience is the Indian community in Auckland. I am told that that community makes up around nine percent of Auckland’s population.

[3] The first defendant holds a local commercial license permitting it to broadcast on the FM network. Such licenses are regionally focussed. 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 relating to the ownership and control of such licenses. Parties who have interests in full commercial licenses cannot be involved in the ownership of local commercial licenses or in the control of such licenses.

[4] The proceedings issued by the plaintiff make various allegations. Inter alia, it is alleged that a Mr Lodhia, and entities associated with him, have interests in the plaintiff, and further, that Mr Lodhia, or entities associated with him, have either funded or have some kind of relationship with the first defendant or with Mr and Mrs Prasad, who are the directors of, and shareholders in, the first defendant. The plaintiff alleges that Mr and Mrs Prasad and the first defendant have failed to disclose detail of Mr Lodhia’s interests to the Ministry of Business Information and Employment which is responsible for the issuing and administration of radio licenses. It also challenges various other aspects of the first defendant’s funding, and asserts that the second and third defendants have not made full disclosure to the Ministry as required. The plaintiff claims that the defendants have misrepresented the position to the Ministry, and that the first defendant should not be holding a license at all. It says that it has suffered losses as a result. The proceedings are based on the Fair Trading Act 1986. There is no civil claim alleging fraud. Nor is deceit pleaded.

Outstanding Applications

(i) The Plaintiff ’s Application against the Defendants

[5] The application by the plaintiff is multi-faceted. Relevantly, it seeks particular discovery of various documents which were listed in a schedule annexed to the application. Further, it sought:

(a) variation of an existing standard discovery order made between the parties,

(b) orders for subsequent and staged discovery and inspection,

(c) orders as to the swearing of affidavits by the second defendant, Mr Prasad,

(d) an order modifying confidentiality undertakings that have been given between counsel,

(e) leave to disclose documents discovered by the defendants to the

Ministry, and

(f) orders permitting the documents discovered by the defendants to be disclosed to regulatory agencies, such as the Inland Revenue Department and the Serious Fraud Office.

[6] In the event, and following lengthy discussions with counsel, the matters in dispute were substantially narrowed.

[7] First, and subject to certain qualifications which I mention shortly, the second and third defendants, and through them the first defendant, have agreed to further discover a number of documents which have not been discovered to date. The defendants accept that the plaintiff will require time to assess these documents. They also accept that if the plaintiff does not accept that the further documents to be discovered constitute full and complete discovery, it will remain open to the plaintiff to seek further and better discovery afresh. On that basis, the plaintiff has withdrawn

its applications to vary the existing discovery order, and to seek subsequent discovery and inspection on a staged basis.

[8] Accordingly, and by consent, I direct as follows:

(a) The defendants are to discover the following documents:

(i) 5TUNZ 00 account statements from 31/7/2013 to date; (ii) 5TUNZ 48 account statements from 2/11/2012 to date;

(iii) All bank statements in electronic form from 20 December

2013 list;

(iv) Documents as to deposits (other than trade receivables and tax refunds) into 5TUNZ bank accounts;

(v) Mr and Mrs Prasad’s IR3s and IRD assessments 2009/2010 to

date;

(vi) Deposit for purchase;

(vii) Payment into GD Trust Account on 8 December 2010; (viii) Deposit of $550,000 and withdrawal on 9 December 2010; (ix) Advance of $500,000 on March 2010;

(x) Advance of $215,277.22.

(b) The defendants are to depose whether or not any documents of Community and Financial Services Limited, Enterprise Motor Group Limited, or Vehicle Imports Limited, relevant to the matters in issue in these proceedings are or have been in their control. If such documents are in their control, then the same are to be discovered. If they are not

in their control, then the defendants are to state who controls the documents;

(c) The affidavit of documents is to be sworn by both the second and third defendants. It is to be filed and served within seven days from the date of this oral judgment;

(d) The documents to be discovered are to be inspected within a further period of seven days thereafter.

[9] I record that the defendants have consented this order, first, on a without prejudice basis as to their liability for costs, and secondly, without any concession that the documents are relevant, given the current state of the proceedings. The defendants are disclosing the documents simply as a matter of practicality and in an endeavour to avoid the need for ongoing disputes between them and the plaintiff.

[10] For the avoidance of doubt, I also record that it is open to the plaintiff to seek orders for further and better discovery at a later stage should it be necessary for it to do so.

[11] Again by consent, Mr Prasad is to swear an affidavit verifying the affidavits of documents already discovered by his wife.

[12] In relation to the application for confidentiality, as matters stand at present, confidentiality undertakings have been given as between counsel. The documents discovered by the second and third defendants, which cover not only their personal financial information, but also financial information of the first defendant, have not been disclosed to Mr Khan, who is the principal behind the plaintiff. The documents have been disclosed only to counsel and to experts retained by the plaintiff.

[13] Mr Khan for his part does not seek access to Mr and Mrs Prasad’s personal financial information. Nor does he seek access to recent financial information. He is prepared to limit the request that he should be allowed to see documents only to documents generated before 31 March 2013.

[14] Ms Lethbridge, appearing for the defendants, took issue with any request to lift confidentiality at this stage. She noted that there can be no prejudice asserted by Mr Khan, because detailed affidavits had been filed by two experts on the plaintiff’s behalf which clearly set out the plaintiff’s suspicions in relation to the documentation filed to date. She further noted that Mr Khan cannot give evidence in relation to either Mr and Mrs Prasad’s personal financial information, nor the financial information of the first defendant. She noted that he is not an expert, and that he was not a party to any of the financial transactions in issue. Nevertheless, she accepted that when and if the statement of claim is further particularised, that it may be appropriate for the confidentiality undertakings to be varied, so that Mr Khan can see and comment on at least some of the documentation.

[15] Mr Wigley, appearing for Mr Khan, requested that the confidentiality orders should be lifted so that his client can better understand what is in issue in the proceeding, and give the appropriate instructions to both counsel and the experts retained. He pointed out that Mr Khan has some expertise in the radio industry, and of cultural matters affecting the Indian community, which counsel and the experts will not necessarily have.

[16] In my view, it is premature to either open or close the door on Mr Khan’s application to waive the confidentiality undertakings. The documents to be discovered pursuant to the order I have made above, will have to be analysed by Mr Wigley and by the experts retained. The statement of claim should then be able to be particularised. Once this is done, it may well be that issues as to confidentiality can be agreed between counsel. At this stage, I propose adjourning the application to lift the undertakings on confidentiality, to give the parties the opportunity to consider the documents to be discovered and to try and reach agreement on the issue. If they are unable to do so, I will deal with the issue at a later date.

[17] Mr Wigley, on behalf of the plaintiff, also sought leave to disclose the documents already discovered by the defendants to the Ministry of Business Information and Employment. Initially, he sought leave to disclose the documents to the Inland Revenue Department and to the Serious Fraud Office as well. However, this latter application was withdrawn.

8.30 Use of documents

...

(4) A party who obtains a document by way of inspection or who makes a copy of a document under this rule—

(a) may use that document or copy only for the purposes of the proceeding; and

(b) except for the purposes of the proceeding, must not make it available to any other person (unless it has been read out in open court).

[19] The purpose of the protection afforded by the rule is to encourage openness between parties to litigation. It was, however, common ground between counsel that the rule can, in “special circumstances”, be departed from. This generally occurs where documents discovered in one proceeding, are sought to be used in another proceeding already on foot.

[20] Mr Wigley argued that it would be artificial for this case to continue, and for the Court to try and second guess what the Ministry might have done if it had been in possession of the information the plaintiff alleges should have been disclosed. He argued that disclosure to the Ministry is appropriate, because the Ministry is “closely connected” to this case, and because the matter is out of the ordinary course of most proceedings. He argued that it is in the interests of justice for disclosure to the Ministry to be permitted.

[21] Ms Lethbridge argued that disclosure to the Ministry would be an

inappropriate use of the Court’s powers. She noted as follows:

(a) The plaintiff and Mr Khan have already complained to the Ministry on a number of occasions about the defendants. The Ministry has made inquiry and has taken no action;

(b) The plaintiff, at an earlier stage in these proceedings, foreshadowed joining the Ministry to the proceeding. It has, however, elected not to do so;

(c) The parties are trade competitors;

(d) There is no other proceeding on foot;

(e) The Ministry has, to date, initiated no action itself, notwithstanding that one of the payments the plaintiff alleges breaches the relevant rules applying to local community licenses has been disclosed, albeit belatedly, to it.

[22] I am not satisfied that it is appropriate to depart from the provisions of r 8.30(4). In these proceedings, the plaintiff is seeking damages against the defendants based upon alleged misrepresentations to the Ministry. It will be for the plaintiff to make out its case, and the burden of proof, to the ordinary civil standard, will be on it. I am left with the distinct impression that the reason for seeking to disclose the documents to the Ministry, is to try and induce the Ministry to take steps to cancel the license held by the plaintiff. In my view, that is a collateral purpose. It is not sought in the present proceedings and the Ministry is not a party to the proceedings. It may be that the Court ultimately finds that there has been no misrepresentation. If that turns out to be the case, the defendants should not be exposed to further inquiry from the Ministry at this stage. If misrepresentation is established at trial, then the resulting judgment will be in the public domain and it will be open to the plaintiff at that stage to bring matters to the Ministry’s attention. I cannot see that the plaintiff has any right to expose the defendants to additional scrutiny at this stage, based only on its suspicions.

(ii) Non-Party Discovery

[23] The plaintiff is also seeking non-party discovery, although by consent, it was agreed that those orders would not be advanced today, unless the non-parties consented, or were prepared to abide the decision of the Court.

[24] The ANZ, in a letter dated 15 February 2014, consented in part to the application, indicated that it did not wish to be heard on it, and that it would abide the decision of the Court. The defendants did not object to orders being made against the bank.

(a) The ANZ Bank New Zealand Limited, within 21 days of the date of this judgment, is to disclose copies of its diary notes and loan application form from 1 January 2010 to date, relating to the following accounts in the names of the first defendant, or either or both the second and third defendants, or S & R 2005 Limited:

(i) 01-0183-0161092-83; (ii) 01-0183-0161092-46; (iii) 01-0183-0257000-48; (iv) 01-0183-0257000-00; (v) 01-0183-0257000-46; (vi) 01-0183-0221710-00;

(vii) The accounts for the four loans by the bank to Mr and Mrs Prasad made in around November 2010 and amended or replaced in or about October 2011.

(b) The documents to be disclosed are to have confidential information, which is not relevant to the proceedings, redacted.

[26] Directions regarding the outstanding non-party discovery application are made below.

(iii) Defendants’ Application Against the Plaintiff

[27] The parties have also confirmed and agreed on an approach concerning the defendants’ application for further particulars in the statement of claim. I direct as follows:

(a) Within seven days following inspection of the further documents to be made available, the plaintiff is to further particularise the pleadings set out in [74], [75], [77], [78] and [120] of its statement of claim. Further, the plaintiff is to otherwise amend its claim in such manner as it considers appropriate;

(b) At the same time, the plaintiff is to discover and serve any additional relevant documents referred to or arising from the amended pleading;

(c) Within seven days thereafter, the defendants are to file and serve any additional relevant documents arising from the amended pleading.

(iv) Additional Timetable

[28] I make the following additional timetable directions:

(a) Within seven days of inspection of the further documents to be discovered having been completed, the parties to the proceeding are to file and serve any further interlocutory applications they wish to file, together with supporting affidavits;

(b) Within a further seven days thereafter, any notices of opposition, together with any supporting affidavits, are to be filed and served;

(c) Within a further seven days thereafter, any affidavits in reply are to be filed and served;

(d) The Registrar is to allocate a telephone conference on the first available date thereafter;

[29] Mr Wigley, as counsel for the plaintiff, is to contact each of the third parties and advise them of this timetable. He is to advise those parties that they or their counsel are entitled to attend the telephone conference. Not less than seven days prior to the telephone conference, Mr Wigley is to advise the Registrar whether counsel for the third parties will be attending the telephone conference. I anticipate

that at that conference, either orders will be made by consent dealing with the third party applications, or alternatively, a timetable will be put in place and a date will be fixed so that they can be resolved.

(v) Costs

[30] By agreement between the parties, costs in relation to today’s application are

_reserved.

Wylie J