Skelton v Z487 Limited [2015] NZHC 1338 (12 June 2015)

Last Updated: 26 June 2015

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV-2014-419-77 [2015] NZHC 1338

BETWEEN	DONALD ALFRED SKELTON Plaintiff
AND	Z487 LIMITED First Defendant JOHN DAVID BLACKLER Second Defendant

Hearing:	On the papers
Appearances:	S Hood for plaintiff J B Sweeney, C M Tam and S Bisley for first defendant No appearance for second defendant
Judgment:	12 June 2015

JUDGMENT OF LANG J

_{[as to discovery and filing of amended statement of defence]}

This judgment was delivered by me on 12 June 2015 at 3 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

_{Date...............}

SKELTON v Z487 LIMITED [2015] NZHC 1338 [12 June 2015]

[1] The trial of this proceeding was due to commence on 30 March 2015. It was adjourned on that date when the plaintiff obtained leave to amend its statement of claim so as to rely on breaches occurring after the date upon which the plaintiff had originally purported to terminate the two agreements with which the case is concerned. The trial is now due to commence on 3 August 2015.

[2] The plaintiff has filed a third amended statement of claim, and the first defendant seeks leave to file a fourth amended statement of defence responding to allegations in that document. In addition, the parties have not been able to reach agreement regarding discovery. The purpose of this judgment is to deal with both issues.

Discovery

[3] I learned of the outstanding discovery issues at a telephone conference that I held on 28 May 2014. I was also advised by the Registry that it was not possible for a fixture to be allocated in Hamilton to deal with these issues prior to the commencement of the trial. For that reason I did not require the plaintiff to file an application for further and better discovery. Instead, I made directions requiring counsel to file memoranda outlining their respective positions relating to the plaintiff’s request for further discovery. This was designed to enable me to give a decision quickly and without the need for an oral hearing.

[4] My current commitments and the short period of time leading up to trial mean that I am unable to deal with the issues raised by counsel in any great detail. I consider it is more important to provide a decision quickly so that counsel and the parties they know where they stand, and can focus on preparing for the forthcoming trial.

[5] The plaintiff seeks discovery of 12 separate categories of documents.

Categories 1-6 and 8-11

[6] These categories are as follows:

i. CAT 1 – All executed contracts between the first and/or second defendant and third parties that relate in whole or in part to any of the Cultivars.

ii. CAT 2- All documents created after 26 July 2014 relating to the negotiation of or entering into contractual arrangements for or the sale of any of the Cultivars.

iii. CAT 3 – All documents created up to and including the date of trial that relate to making PVR or other similar applications for the Cultivars.

iv. CAT 4 – All correspondence created after 26 July 2014 between the first defendant and Sub-Licencees relating to the plaintiff and/or the Cultivars.

v. CAT 5 – All documents created after 26 July 2014 relating to the import or export of the Cultivars.

vi. CAT 6 – All documents created after 26 July 2014 relating to the storage, propagation and movement of the Cultivars.

...

viii. CAT 8 – All documents created up to and including the date of trial that evidence payments received or receivable by the first defendant for any of the Cultivars.

ix. CAT 9 – All documents created up to and including the date of trial relating to market access fees being set off, discounted, or otherwise incurred or adjusted, against future royalty payments or fees.

x. CAT 10 – All documents created up to and including the date of trial between the first defendant and Kingsburg Orchards, Mike or Brent Jackson, or J Diepersloot in relation to granting or proposing to grant rights in the Cultivars.

xi. CAT 11- All documents created up to and including the date of trial showing incoming monies and outgoing costs incurred in respect of the Cultivars.

[7] The forthcoming trial relates to liability only. The plaintiff alleges in relation to this issue that it was entitled to terminate the two agreements on the basis either of unremedied breaches committed prior to 11 December 2013 or, alternatively, breaches occurring after that giving rise to an entitlement to cancel the agreements under s 7(4) of the Contractual Remedies Act 1979.

[8] The first defendant does not accept that the plaintiff was entitled to cancel the agreements on either of the bases advanced. It regards the purported termination of the agreements as constituting an un-retracted repudiation that rendered it futile for the first defendant to continue to perform its obligations under them.

[9] The first defendant maintains that it has complied with its discovery obligations in relation to the events and transactions that occurred up until

11 December 2013. The first defendant has also expressly admitted that after that date it continued to deal with the cultivars and PVR’s that were the subject of the two agreements. In doing so it has continued to deal with existing and new sub- licensees. It has also admitted continuing to receive monies from such parties, and not paying any further royalties to the plaintiff. The first defendant denies, however, that its actions produce the legal consequence for which the plaintiff contends.

[10] I have concluded that, with one exception, the documentation the plaintiff now seeks under these categories will be relevant to the issue of quantum in the event that the plaintiff succeeds in establishing that it was entitled to terminate the agreements under either of the two heads pleaded. For present purposes, however, I do not consider that it will impact on the issue of liability to the extent that the first defendant should be required to provide discovery in respect of those matters.

[11] The exception is category 9, which comprises documents relating to market access fees being offset, adjusted, or discounted against future royalty payments or fees. I consider that these documents could be directly relevant to the plaintiff’s claim that the first defendant acted in a manner that breached the agreement after

11 December 2013. I therefore consider that the first defendant should provide discovery of documents falling within this category within 21 days of the date of this judgment.

Categories 7 and 12

[12] Categories 7 and 12 are couched in very general terms. They comprise requests for discovery of “all documents created up to and including the date of trial that the first defendant relies upon or adversely affects the first defendant’s case” and

“all documents created up to and including the date of trial between the first and second defendants relating to the plaintiff or the cultivars”.

[13] These requests are couched in such general terms that it is impossible to know precisely what documents would come within their ambit. I consider they are too general to be given meaningful effect, and decline to make any order in relation to them.

[14] It follows that, with the exception of any documents falling within Category

9, the parties must proceed on the basis of the discovery that the first defendant has provided to date. The first defendant will be well aware, however, that it will not be permitted to rely on documents at trial unless they have been disclosed to the plaintiff through the discovery process undertaken to date.

Leave to file fourth amended statement of defence

[15] The first defendant seeks leave to file a further amended statement of defence. I do not consider the plaintiff will be prejudiced by this provided it has a reasonable period of time within which to file a defence or reply to affirmative allegations to which it needs to respond.

[16] I therefore grant the first defendant leave to file the amended statement of defence. The plaintiff will have until 5 pm on 25 June 2015 to file a defence or

_reply.

Lang J

Solicitors:

Holland Beckett, Tauranga

Counsel:

C Elliott QC, Auckland