NZX Limited v Ralec Commodities Pty Limited [2016] NZHC 799 (27 April 2016)

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BETWEEN

NZX LIMITED

Plaintiff/First Counterclaim Defendant

AND

RALEC COMMODITIES PTY LIMITED First Defendant/First Counterclaim Plaintiff

RALEC INTERACTIVE PTY LIMITED Second Defendant/Second Counterclaim Plaintiff

GRANT DAVIS THOMAS Third Defendant

GRANT THOMAS NOMINEES PTY LIMITED

Fourth Defendant

DOMINIC LUKE PYM Fifth Defendant

PYM FAMILY PTY LIMITED Sixth Defendant

NZX HOLDING NO 4 LIMITED Second Counterclaim Defendant

MARK RHYS WELDON Third Counterclaim Defendant

Hearing:	19 April 2016
Counsel:	D J Cooper and B M Cash for plaintiff/counterclaim defendants T J North QC, J K Scragg, C R Gubb and T W McKeown for defendants/counterclaim plaintiffs
_Judgment:	_{27 April 2016}

Evidence on behalf of Ralec from subpoenaed witnesses............................................................... [2] The test for granting leave ................................................................................................................ [5] Australian subpoenaed witnesses ................................................................................................... [24] James Pierce................................................................................................................................. [26] Justin French ................................................................................................................................ [32] Marcus Crafter ............................................................................................................................. [38] Patrick O’Shannassy .................................................................................................................... [41] Nigel Williams .............................................................................................................................. [47] French and Crafter – is subpoenaed evidence from them necessary? ........................................ [54] New Zealand subpoenaed witnesses .............................................................................................. [59] The warned witnesses ................................................................................................................... [59] Kim Peacock............................................................................................................................ [60] Leanne Walker ......................................................................................................................... [65]

Nikita Ranchhod ...................................................................................................................... [69] Stacey Campbell ...................................................................................................................... [73] Witnesses not warned ................................................................................................................... [76] Geoff Brown ............................................................................................................................ [79] Erich Livengood ...................................................................................................................... [84] Fiona Mackenzie...................................................................................................................... [87] Saki Hannah............................................................................................................................. [89]

Leave to adduce evidence by AVL.................................................................................................. [94] Leave to amend statement of claim................................................................................................ [98] Trial directions............................................................................................................................... [102] Costs on the applications dealt with in this judgment ................................................................. [111] Reference to the Rules Committee ................................................................................................[112]

[1] This judgment deals with further pre-trial issues on which the parties could not agree. During a full half day’s argument, counsel referred me to extensive materials claimed to be important to the decisions I had to make. That task took substantially longer than I anticipated, so on 22 April 2016 I issued a minute conveying my decisions. I now provide my reasons for those decisions.

[2] Ralec proposes to call oral evidence from a significant number of witnesses appearing pursuant to subpoena, and for whom no brief of evidence has been exchanged. NZX has opposed that occurring and I heard an initial exchange of views about this prospect in a telephone conference on 23 March 2016. Warnings have been conveyed on behalf of NZX to a number of these proposed witnesses that they should not risk making any disclosures that would breach on-going confidentiality obligations. (As previously, I refer to those communications as the Bell Gully warning letters.) Ralec has cited these warnings as the rationale for those witnesses not being prepared to volunteer a brief.

[3] To resolve these differences, I directed that Ralec was to disclose the attempts it had made to obtain a brief from each of the proposed subpoenaed witnesses, and an exhaustive list of the topics Ralec considered the proposed witnesses could address in their evidence, including the discovered documents that Ralec intended to put to them. The need to provide those details reflected NZX’s argument that Ralec would need to establish the necessity for the evidence obtained in this unconventional way, before the Court should grant leave for the evidence to be adduced.

[4] In my minute following the 23 March 2016 telephone conference, I distinguished the proposed witnesses who had been recipients of the Bell Gully warning letters from the remainder. I directed that where a proposed witness was confirmed as a recipient of a Bell Gully warning letter, then that amounted to a prima facie justification for Ralec’s resort to a subpoena. Where a proposed witness had not been a recipient of a Bell Gully warning letter, Ralec was to apply to adduce their evidence in the proposed mode. That application was to contain confirmation that the witness had declined to complete a brief of evidence, and had been served with a subpoena in circumstances where the witness was advised of the position that I had adopted.

[5] The parties adopted different views on the criteria that should be applied when the Court considers whether evidence should be permitted in this way. The current form of the High Court Rules for provision of evidence in civil proceedings does not explicitly address the procedure that should apply where a proposed witness refuses to complete a brief. Rule 9.1(3) provides that the evidence-in-chief of witnesses must be prepared, produced and led in accordance with that subpart of the Rules. The requirements in relation to briefs are set out in r 9.7. There is no explicit requirement in that rule that a brief must be served for every proposed witness, but from the structure of the Rules more generally, that is clearly implicit.

[6] The only exception is in r 9.10, which provides for the Court to direct that evidence on any particular topic is to be given orally. That provision follows on

from a requirement (not being adhered to in the present case) for parties to exchange a chronology of facts that is intended to bring to the attention of the Court significant facts that are disputed. The purpose of r 9.10 is to enable the Court to direct that evidence on specific topics (that will have been addressed in briefs that have been exchanged) is to be given orally. The purpose of it is to avoid the less satisfactory mode of assessing credibility on evidence-in-chief read from written briefs. There is nothing in the context of the Rules in which r 9.10 appears, or its terms, to suggest that it is intended to apply to the whole of the evidence from a proposed witness who has refused to complete a brief.

[7] NZX relied on cases under the prior form of the High Court Rules in rr 441B,

[8] Arguably, former r 441G came nearer to contemplating the provision of oral evidence pursuant to subpoena that has not been stated in a brief served before trial. That rule was in the following terms:

(1) Oral evidence in chief of any person (whether a person who has given a written statement served under rule 441B or rule 441C or rule 441E or a person who has not given such a statement) may be adduced at the trial only if that oral evidence–

(a) The evidence relates to matters contained in a written statement served under rule 441B or rule 441C and is required to explain, elaborate, or otherwise clarify those matters; or

(c) The evidence relates to new or further matters that could not reasonably have been included in the witness’s written statement or a supplementary written statement; or

[9] Among other contingencies, r 441G contemplated that evidence-in-chief may be adduced from a person who had not provided a written brief with the leave of the trial judge, which leave could be granted if the evidence relates to new or further matters that could not reasonably have been included in the witness’s written statement, or its admission is required in the interests of justice (applying subrule (1)(b) and (2)(c) and (d)).

[6] The purpose of the rules regarding the exchange of briefs is in part to avoid trial by ambush and to expedite the trial process. I thus indicated that the granting of any such application could include conditions to ensure that there is no such trial by ambush (eg an order that details of the evidence it is hoped the subpoenaed witness will give should be provided to the other party). It would also appear necessary that any such application or applications be accompanied by evidence to show that the situation is exceptional.

[7] While not wishing to appear to be giving a definitive list I indicated in the minute that such evidence would need at least to cover the inability (despite effort) of obtaining a signed brief from the proposed witness, and also why the evidence of that witness is necessary to the case. It would also need to cover any other evidence that could be adduced to show that the requirements of r441A(4) are met.

[11] That approach was also adopted in O’Connell v Muharemi, where Heath J found that inadequate attempts had been made to obtain statements from some of the proposed witnesses.²In that case, the Judge directed:

[16] If a witness declines to give a witness statement he or she should be advised that evidence can be compelled by subpoena. At the very least there should be evidence of requests made, preferably in writing, of the witness to ascertain whether a statement, or at least an indication of the nature of the evidence to be given, can be provided in anticipation of being called under

subpoena. If necessary, a subpoena can be extracted from the Court and served on the witness before that request is made so that the witness can clearly be seen to be acting in aid of the Court process.

[17] Where either a written statement is provided (however informally that may be) or where an oral outline of that evidence has been given, best practice requires that information to be made available to opposing counsel either at the same time that witness statements are exchanged or as soon as practicable thereafter.

[12] I am not satisfied that the redrafting of the Rules for the presentation of evidence was intended to alter the assessment the Court should undertake before permitting oral evidence to be led from subpoenaed witnesses where no brief has been exchanged. The structure of the Rules still implicitly treats such evidence as an exception. All components of the Rules on trial procedure depend on full disclosure well before trial, including of every witness’s evidence-in-chief in the form of written briefs. Trial by ambush has not been tolerated for some time. The pre-trial and trial process is to be supervised in a way that prevents material prejudice that would arise from lack of warning as to the content of a party’s proposed evidence-in- chief.

[13] Without the trial judge’s leave, evidence adduced in the absence of a previously served written brief would not comply with rr 9.1(3), 9.7 and 9.12. Therefore, despite the absence of a specific provision comparable to former r 441G that could be used by a trial judge to grant leave for subpoenaed evidence, the current Rules can only be applied sensibly by treating that requirement as continuing to apply.

[14] In this case, Mr North QC argued that the absence from the Rules of an express provision that required Ralec to obtain leave meant that there was no relevant constraint on Ralec’s entitlement to add to its evidence-in-chief at trial by unheralded evidence from subpoenaed witnesses. His submissions formally sought to reserve Ralec’s position on the necessity for an application, and he joined issue on the criteria I consider in relation to the proposed witnesses, subject to that caveat. That approach to the presentation of evidence is unrealistic. It resurrects the prospect of trial by ambush, which numerous iterations of the High Court Rules have endeavoured to protect litigants against. It is inconsistent with the overall effect of

subpart 1 of Part 9 of the current Rules, and more generally inconsistent with the overall objective in r 1.2 to secure just, speedy and inexpensive determination of proceedings.

[15] Adapting the criteria applied in the cases under the former r 441G to the circumstances of this litigation, I will consider whether leave should be granted to Ralec in respect of each of the proposed subpoenaed witnesses by considering the following questions.

[16] First, has Ralec exhausted the reasonable attempts to have the witness produce a brief? Those attempts should include advice to the proposed witness that Ralec could obtain a subpoena to force the provision of evidence and, in the generality cases, reinforcing that message by service of a subpoena.

[17] As to the timing for such attempts, in O’Connell, Heath J emphasised the need for all such reasonable endeavours to have been exhausted before the deadline for service of briefs.³The rationale for that is to maintain the orderly preparation for trial. When briefs are served for a party that is also applying for leave to adduce evidence from subpoenaed witnesses, the opposing parties should be put on notice that there is a prospect of additional evidence, its source and an outline of its content.

I support that approach, but recognise that exceptional circumstances may require the Court to also have regard to attempts to procure a brief after the deadline for serving them has passed.

[18] Secondly, is evidence from the proposed witness necessary? Glazebrook J’s inclusion of this requirement (from [6] of Commerce Commission v Giltrap cited in [10] above) was linked with the consideration as to whether the evidence sought from a subpoenaed witness could be adduced in another way. That formulation preceded the Evidence Act 2006, which now contains in ss 7 and 8 basic requirements that evidence has to be relevant to be admissible and that a judge must exclude evidence if its probative value is outweighed by a risk that the evidence will

_{have an unfairly prejudicial effect on the proceeding, or unnecessarily
prolong it.}

[19] On the one hand, this onus to establish that the evidence of a subpoenaed witness is necessary to the case might arguably be applied with greater rigour because the Court is dealing with an exceptional mode of adducing evidence. Where the evidence is called viva voce in an unbriefed form that substantially lessens the opportunity for opposing parties to make efficient challenges to its content. It also limits the opportunity to obtain rebuttal evidence, and consequently to put matters in cross-examination that might later be adduced in rebuttal.

[20] On the other hand, if the party proposing evidence from a subpoenaed witness has established that it has taken all reasonable steps to obtain a brief, then that party ought not to be penalised for circumstances that will presumably be beyond its control, by having to conform to higher than the usual standards for admissible evidence.

[21] The claims and counterclaims in this case are being fought on extremely wide factual fronts and protracted interlocutories thus far have revealed a tendency for the cases of the parties to steer past each other. That increases the prospect for NZX to treat as irrelevant a topic that Ralec considers important. I note also that the timetable required contemporaneous exchange of factual briefs on 10 February 2016, with provision for supplementary briefs from fact witnesses on 29 March 2016. That sequence lessens the expectation that NZX would respond in its initial briefs to evidence it was warned of as likely to come from witnesses subpoenaed by Ralec.

[22] With the limitations inherent in assessing whether evidence on topics identified for the proposed witnesses will be necessary for Ralec’s case, I intend applying the standards required under ss 7 and 8 of the Evidence Act.

[23] All of the witnesses are characterised as being former employees of NZX.⁴A number of them were also recipients of the Bell Gully warning letter. Although Mr North did not explicitly rely on the point, it is a fair inference that Ralec did not anticipate it would have to make out grounds for leave to adduce subpoenaed

_{evidence by applying the test that was used in cases under the former r
441G. In}

particular, Ralec appears not to have appreciated that all reasonable attempts to procure briefs ought to have been completed before the exchange of briefs.

[24] The list of proposed witnesses from Australia has thankfully shrunk somewhat. Of the 10 proposed witnesses who have been served with trans-Tasman subpoenas, two are no longer required,⁵and a further three have subsequently agreed to provide briefs.⁶

[26] Mr Pierce is described by Ralec as a critical member of the Clear development team. He held the position of chief technology officer prior to the acquisition of Clear by NZX, and following the acquisition was promoted to chief information officer. Hannah Elliott from Ralec’s Australian solicitors, Wisewould Mahony, emailed Mr Pierce on 16 June 2015 requesting a meeting to discuss the claim and offering to forward to him a draft outline of a statement for Mr Pierce to

10 February 2016, and no further contact is described between Ralec’s advisers and Mr Pierce before that time. The day after I issued my 23 March 2016 minute, Wellington solicitors for Ralec, Duncan Cotterill, emailed Mr Pierce a copy of a subpoena issued by the Court, together with a letter repeating the request for

_{Mr Pierce to provide evidence.}⁹_{Mr Pierce
responded to that by email on 29 March}

2016, acknowledging that his delayed response had been caused by having limited access to email whilst travelling. His response included the following:¹⁰

I am not sure if I will prepare a witness statement. Aside from media reports and gossip, I don’t know very much about the case of [sic] what sort of evidence of looking for from me. It would be helpful if you would provide me with a list of the questions to be covered before I take a position on this matter. ...

Many years ago, Dom Pym asked if I would give evidence in this case. I can’t remember if it had even started at that point or not. At the time, I told Dom that I didn’t really want to get involved, and that would only give evidence if I was subpoenaed. From then until your email, with the exception of one or two generic emails from Wisewould Mahoney, I haven’t had any dealings with Ralec or its legal advisors to express my reluctance or otherwise.

[28] In an affidavit affirmed on 5 April 2016, Ms Elliott has deposed to the contacts with each of the proposed witnesses. She characterises the last response from Mr Pierce, being an email dated 2 April 2016, as indicating that he is not willing to provide a written witness statement. That email included the following:¹¹

I also indicated in my last response that it would been [sic] helpful to understand the questions you are seeking me to answer. Regardless this is no small endeavour and would take considerable time away from my own enterprises in order to assist your clients in [sic] theirs for free.

The New Zealand High Court may subpoena me, but it can’t force me to prepare a witness statement. If I am compelled to attend court, then I will attend and answer any questions put to me. It seems it will be less inconvenient for me to do this than to spend hours working on a witness statement. I don’t really like the idea of having words put in my mouth by someone else anyway.

I note that I have still not been served with an original subpoena, or any conduct money.

[29] Assessing the adequacy of steps to procure a brief from Mr Pierce by the standard suggested in O’Connell, they are clearly inadequate. He told Ralec in June

2015 that he would not engage with them “in any way” and that rejection appears to have been accepted until after my 23 March 2016 minute issued. In the interim, the deadline for serving NZX with the content of its evidence-in-chief had passed. A subpoena had not issued for Mr Pierce by that time, and it is not clear whether

Ralec’s advisers would have been in a position to notify NZX of the detail of the oral evidence they intended to seek from Mr Pierce as a subpoenaed witness. Such an outline was only provided pursuant to directions I made on 23 March 2016.

[30] The outcome is that, until the position was clarified in the documents filed for the present argument, Ralec was preparing for trial holding an advantage over NZX. Ralec was aware of the evidence-in-chief of all NZX’s witnesses, but NZX was unaware of the evidence Ralec would endeavour to elicit from Mr Pierce.

[31] If indeed Mr Pierce’s evidence was material, then the single attempt between June 2015 and February 2016 to urge him to complete a witness brief was clearly inadequate. He was not among the recipients of a Bell Gully warning letter and, at least on his own version, had long maintained that he would only provide evidence if subpoenaed. His latest email on 29 March 2016 suggests a hint of equivocation in his reluctance to participate in a briefing process.¹²He was still questioning what topics Ralec wished him to address and expressing a preference to provide any evidence without others putting words in his mouth. He sought an assurance that he

would be paid his usual consultancy rate for attendances, including the preparation of any witness statement. I am not satisfied that all reasonable attempts have been made to procure a brief from him.

[32] Mr French was an IT developer with Clear and remained in that role for some period after NZX’s acquisition of the businesses. Ralec seeks evidence from him, both in support of its defence of the software claims NZX makes, and also in support of its counterclaims on NZX’s inadequate resourcing of the businesses.

[33] Counsel for Ralec had contact with Mr French in 2014 when he provided an affidavit in respect of an interlocutory matter. He told Ralec at the time that he was not comfortable speaking about any matters that post-dated NZX’s acquisition of the Clear businesses, but would speak about pre-acquisition matters. Ralec contacted Mr French in June 2015, at which point his position had not changed in that he

[34] No further contact with Mr Pierce has been disclosed until 24 March 2016, when he was served with a subpoena and a request that he confirm whether he was willing to provide a brief by 31 March 2016. Mr French responded to the 24 March

2016 letter to him by email on 31 March 2016. He indicated that he was unwilling to provide a brief on matters post-acquisition.

I have already provided a statement on matters prior to the acquisition of Clear, but I remain unwilling to provide a statement on matters post- acquisition.

My understanding from your email is that this subpoena does not require me to provide a further written statement covering post-acquisition matters. Based on a short conversation with you and Jonathan today, it’s also my understanding that this subpoena does not negate the ethical and legal concerns I have about providing such a statement (potentially breaching my obligations as a former employee of NZX).

[36] The position with a partial brief from Mr French addressing matters up to acquisition of the businesses is regrettably unclear. Ms Elliott alludes in her first affidavit to discussions with him in the course of preparing a brief, and that his brief includes an acknowledgement that he is not prepared to discuss matters post- acquisition. That is consistent with the first statement from Mr French’s email quoted in the preceding paragraph. However, both are inconsistent with the terms of Duncan Cotterill’s 24 March 2016 letter, which provided a copy of the subpoena and ignored the existence of any brief Mr French had already completed. One could understand a measure of annoyance on Mr French’s part in responding to a letter in those terms, given the extent of his co-operation.

[37] It is not clear to me whether the partial brief was served, and I have not been provided with a copy of it. However, on the assumption that I have correctly discerned the situation, this is a circumstance in which Ralec has exhausted all

reasonable attempts to have Mr French produce a brief in relation to relevant matters post-NZX’s acquisition of the businesses.

[38] Ralec describes Mr Crafter as the application engineering lead following NZX’s acquisition of Clear. Ralec characterises him as the most senior member of the development team.

[39] Ms Elliott’s first affidavit states that Mr Crafter told the Ralec parties in June

2015 that he was not interested in speaking to counsel for Ralec. However, that affidavit suggested he had qualified his stance more recently, indicating a preparedness to speak about matters up to the time of acquisition of Clear by NZX.

[40] Ms Elliott has filed two further affidavits in relation to these applications. In her second affidavit, affirmed on 18 April 2016, she confirmed that Mr Crafter had ultimately declined to provide any written brief, having discussed the possibility of providing a brief that related to matters up to the date of acquisition of Clear. The reference to recent contacts with Mr Crafter is vague – “over the last few months” – and there is no detail of the extent to which Mr Crafter committed to a draft brief for matters up to acquisition of the businesses by NZX. I am prepared to accept Ms Elliott’s analysis that the prospect of a brief was pushed as far as it could. Therefore, in relation to Mr Crafter, Ralec has also exhausted all reasonable attempts to have him produce a brief of evidence.

[41] Ralec treats Mr O’Shannassy as NZX’s manager of agricultural commodities from July 2010 until approximately 2012. He is treated as managing NZX’s operations in the commodities area in Australia, throughout that period.

[42] Ms Elliott deposes that first attempts to contact Mr O’Shannassy were by telephone on and after 15 March 2016. The explanation offered for not attempting to contact Mr O’Shannassy before then is because the Ralec parties understood that NZX would most likely be filing a brief from him. That understanding was based on

the inclusion of Mr O’Shannassy’s name in a list of potential witnesses cited on behalf of NZX in 2011, when opposing Ralec’s protest to New Zealand jurisdiction. Ralec’s belief that NZX would be calling Mr O’Shannassy was bolstered by the fact that NZX relied on his evidence in County Court proceedings in Australia.

[43] NZX rejects that as a genuine or sufficient reason for not making timely contact with Mr O’Shannassy to assess whether he would be prepared to provide a brief for Ralec. Ralec had certainly made attempts prior to the date for exchanging briefs to obtain briefs from five other proposed NZX witnesses on the 2011 list.¹⁴

[44] Ralec is to be taken as being well aware of the principle that there is no property in a witness, and in this exhaustively hard-fought contest there could certainly be no suggestion that Ralec would stay away from Mr O’Shannassy because they respected that he was “NZX’s witness”. That is particularly so when there is at least a partial chronological gap between NZX’s interest in matters pre- acquisition, and Ralec’s interest in NZX’s alleged deficiencies in operating the businesses, post-acquisition. If Mr O’Shannassy was an important witness to Ralec, and his omission from the briefs NZX served on 10 February 2016 came as a surprise, there is no explanation for the delay of more than a further month in their attempts to request a brief from him.

[45] There is no evidence of who on behalf of Ralec made the attempts to contact Mr O’Shannassy by telephone in mid March 2016. There is no detail as to whether the telephone numbers called were mobile, home or business numbers, any assurances that the numbers were current or any detail as to the terms of messages left for the calls to be returned, when they were not. In her updating affidavit affirmed 18 April 2016, Ms Elliott relays, as a matter of hearsay, that another solicitor in her firm spoke to Mr O’Shannassy on 24 March 2016, and it was at that time that Ralec obtained an email address for the purposes of forwarding correspondence to him. Email communications were sent on 24 March, 31 March,

_{and 1 April 2016. They all elicited only a one line statement on 2 April
2016:}¹⁵

¹⁴Those being Rachael Cross/Greer, Nigel Williams, Rachael Newsome, Heather Kirkham and

[46] In all these circumstances, I am not satisfied that all reasonable attempts to procure a timely brief from Mr O’Shannassy were undertaken.

[47] Mr Williams was on the board of NZX from 2004 to 2011. At least from the time of the acquisition onwards, it appears that he has been resident in Melbourne. Ms Elliott deposed that:

In or around 2014, counsel for the Ralec parties contacted Mr Williams by telephone. His position was that he was not prepared to give a brief of evidence.

[48] No documentary support for that statement was provided on behalf of Ralec. However, in an affidavit in opposition on behalf of NZX, James Danaher, a solicitor working on the matter for NZX, has annexed an email exchange between Mr Williams and Rob McGirr of Wisewould Mahony, in November 2014.¹⁶The content of Mr McGirr’s initiating email suggests that Mr North had left a message on Mr Williams’ mobile phone, for Mr Williams to contact Mr North. That hardly qualifies as being in contact with Mr Williams. The email confirmed that Ralec’s advisers wished to meet with Mr Williams to obtain his view on certain documents. Mr McGirr stated:¹⁷

We are interviewing witnesses for the purpose of the trial of the proceeding. We would expect that you may be subpoenaed to attend the trial and give evidence in due course.

[49] Mr Williams email response was that he was in China and suggested that Mr McGirr make his contact via NZX’s lawyers. Mr McGirr’s second email on the same day in response to Mr Williams was that he did not propose to contact NZX’s lawyers and that once a trial date is fixed, he would be in contact with Mr Williams

[50] Mr North objected to the circumstances in which some of the proposed subpoenaed witnesses had conferred with NZX’s solicitors, and the material from some of those witnesses that is placed before the Court, both as exhibits to the Danaher affidavit and in their own affidavits.

[51] As to Mr Williams, Ms Elliott’s second affidavit in response to that from Mr Danaher acknowledges the email exchange exhibited to the Danaher affidavit. She then suggests that the proposal that Mr McGirr should contact Mr Williams via NZX’s lawyers indicated that Mr Williams would not have been prepared to speak with the Ralec parties. She further suggests that Mr Williams’ dealings with NZX’s solicitors confirm that Mr Williams would not be prepared to speak with the Ralec parties.

[52] Those inferences might reasonably be drawn. However, one message left on a mobile phone and the November 2014 exchange of emails fall materially short of all reasonable attempts that could be made to have Mr Williams produce a brief. Mr McGirr’s November 2014 email warned of a subpoena, and that Ralec’s advisers would be back in touch when a fixture date was known. There is no evidence of further attempts to engage Mr Williams by email, and, for example, no provision to him of a list of the topics on which Ralec sought evidence. Mr Williams is employed in a senior position with an Australasian bank. Although based in Melbourne, it appears that his international responsibilities have him travelling, including internationally, for a substantial portion of his time. Reasonable attempts to engage a person in that situation should include some attempts to facilitate his focusing on it, and some reasonable explanation of the scope of what would be asked of him.

[53] There are grounds for the concern that, until I directed Ralec to provide an exhaustive list of the topics on which the proposed subpoenaed witnesses would be questioned, Ralec wished to test with an ex-NZX board member, views on the transactions in the hope of eliciting answers inconsistent with the evidence of other board members who are to be called as NZX witnesses. Any such initiative gives rise to concerns at the prospect of trial by ambush, the very reason for exchange of briefs and the need to monitor exceptions to it. In these circumstances, I am not

satisfied that Ralec has exhausted all reasonable attempts to obtain a brief from

[54] I have considered the content of the 18 topics on which Ralec wishes to lead additional evidence from Mr French. They appear to be relevant, and appear to raise matters on which it would be expected Mr French would have first-hand knowledge. I am therefore satisfied that (at least in respect of some of the topics) admissible evidence in terms of the ss 7 and 8 threshold under the Evidence Act may be obtained from Mr French in response to the subpoena.

[55] As to Mr Crafter, I have considered the 42 topics outlined in the schedule intended for this witness, as attached to Ms Elliott’s first affidavit.¹⁸My consideration of relevance is inevitably superficial and I acknowledge that the content of the list is likely to mislead me when I have yet to acquire a detailed understanding of the development of the businesses. I also cannot assess the extent of duplication involved in evidence from Mr Crafter on such topics.

[56] In support of NZX’s challenge to the necessity for evidence from Mr Crafter, Mr Danaher has analysed the documents cited in the outline of topics Ralec would wish to cover with him. Of 172 documents, NZX contends that eight are now “undiscovered”. Presumably, this is because they were included in the overly extensive discovery initially provided by Ralec that I directed to be confined. Only

[57] The analysis for NZX in opposition suggests that the topics proposed to be covered by Mr Crafter substantially duplicate those Ralec would wish to put to Mr French. Further, that Mr French, as a more senior member of the Clear technology team, would be the more appropriate witness to address such documents.

_{That overlap is not readily apparent from a comparison of the topics
that Ralec wish}

to question each of them on. The arguments in opposition do not deprive these topics of relevance.

[58] Accordingly, I grant leave for Ralec to call Mr Crafter in response to his subpoena. However, I direct that he is to be scheduled after Mr French, and I will, if appropriate, review at that time NZX’s concern that Mr Crafter’s evidence would be unnecessarily repetitive.

[59] My 23 March 2016 minute distinguished the proposed witnesses who had been recipients of a Bell Gully warning letter (the warned witnesses) from those who had not. This was on the basis that NZX’s initiative to warn off former staff members from discussing knowledge acquired in the course of their employment provided a basis for the assumption that the recipients would not voluntarily provide briefs on these matters for Ralec. Consistently with that, Mr North’s arguments in respect of the warned witnesses focused on Ralec’s perception of the relevance of the evidence it considers they can provide. Dealing in turn with each of the New Zealand based witnesses in that category:

[60] Ms Peacock worked at NZX from 2001 to 2011. From 2002 to 2011 she was personal assistant to Mr Weldon. She has affirmed in an affidavit her own view that she can add nothing to the topics that are likely to be relevant at the trial. To demonstrate that, she has commented on a sample of the documents that Ralec wishes to put to her. Both generally, and specifically by reference to those documents, she explains that her role did not go beyond that of a traditional PA. She managed Mr Weldon’s diary and provided secretarial and organisational support for him.

[61] In a second subpoena served on Ms Peacock, Ralec requires her to bring any relevant documents she has, in particular certain handwritten notebooks or diaries

maintained by Mr Weldon as contemporaneous notes of his meetings and other activities. There has previously been formal confirmation on behalf of NZX that those documents are lost in circumstances the detail of which has not been explained. In her affidavit, she acknowledges Mr Weldon’s practice of keeping notebooks but affirms she took no documents away from NZX with her and does not know what may have happened to any of his notebooks.

[62] On Mr Danaher’s analysis, Ralec’s indication of the matters they want to put to Ms Peacock extends to over 360 documents. He makes the point that that is more than any witnesses for whom briefs have been exchanged, except for the principals, Messrs Pym and Weldon. Mr North submitted that Mr Weldon’s leadership and management style would be a critical issue in the proceeding, and foreshadowed questioning Ms Peacock on her opinion of her former boss.

[63] I am satisfied that Ms Peacock’s involvement was entirely in a support or functionary role. There are no grounds for questioning her explanation that as PA to the chief executive, she would have no part in directing any part of NZX’s conduct that might be relevant to the issues in the proceeding. With respect to Ms Peacock, I struggle to see that there would be any relevance in assessing NZX’s conduct, by taking into account any opinions she might volunteer when being led by Mr North as to Mr Weldon’s management style or the culture of NZX under his leadership.

[64] The matter of the mislaid Weldon notebooks is one discrete topic that is an exception. NZX’s failure to discover them has been an on-going source of complaint on behalf of Ralec since early exchanges about the adequacy of discovery. Without necessarily agreeing with Ralec as to the potential significance of NZX’s failure to discover these documents (or to explain definitively the circumstances of their disappearance), I acknowledge the importance Ralec has consistently attributed to their disappearance. I accordingly grant leave for Ralec to require Ms Peacock to respond to her subpoena, including the provision of any documents she does hold, but will restrict questions that may be put to her strictly to the topic of Mr Weldon’s notebooks.

[65] Ms Walker was a senior accountant/finance manager working at NZX between November 2006 and April 2011. She has completed an affidavit in opposition to the requirement for her to respond to the subpoena and is a “warned witness”. Her affidavit confirms that after Clear was purchased, she was involved in integrating finance functions, and went to Australia for a week. She characterises her role as an accounting one and says that generally it is hard for her to remember anything about the topics raised in Ralec’s outline. She characterises hers as administrative exercises.

[66] Mr Danaher’s analysis suggests that all 21 of the documents that Ralec wants to put to Ms Walker are emails to or from witnesses who have already provided briefs of evidence.

[67] Mr North argued that the preparation of accounts for NZX4 is a significant topic on Ralec’s analysis of the NZX claim for loss and damage. Ms Walker was responsible for those accounts. The list of topics on which he seeks to question Ms Walker risks extending the evidence into matters of minutiae that would not pass muster under ss 7 and 8 of the Evidence Act. However, they cannot all be dismissed at this stage as failing those tests for admissibility.

[68] I grant leave for Ralec to call Ms Walker in response to the subpoena served on her.

[69] Ms Ranchhod worked for NZX between April 2008 and April 2013. Her role was that of an office manager. In her affidavit opposing the requirement for her to give evidence, she describes her work as “event and project management and administration type role”. She was the operations manager for Clear from February to July 2010. She was seconded to Clear’s Melbourne office for five months in early

[70] On Mr Danaher’s analysis, the 20 documents Ralec seeks to put to her all comprise emails or attachments that either have been sent or received by witnesses who have already provided briefs.

[71] Mr North submitted that Ms Ranchhod’s personal experience whilst in the Melbourne office is relevant, and he instances NZX’s decision to terminate senior staff during her visit.

[72] There is a real prospect of evidence of some relevance given the nature of Ms Ranchhod’s involvement. I accordingly grant leave for her to be called pursuant to the subpoena served on her.

[73] Ms Campbell has not completed an affidavit in opposition to giving evidence. Mr Danaher’s analysis of her position describes her as an account manager. He considers at least some of the 22 documents Ralec wishes to put to her are entirely irrelevant, such as an email exchange as to the time members of a team working together would meet for breakfast. Numerous others of the attendees at the conference at that time are already giving evidence and there seems no dispute that Ms Campbell was among the attendees.

[74] From Ralec’s perspective, Mr North argues that she was involved in the due diligence conducted by NZX and also in developing the Agri-portal part of the businesses after acquisition so that she can give relevant evidence about the resourcing and financing of the businesses. Arguably that makes her evidence relevant to Ralec’s counterclaim that NZX had failed to resource and finance the Clear businesses adequately.

[75] Mr Danaher’s analysis suggests Ralec may pursue with Ms Campbell matters that cannot constitute relevant evidence. However, that position is not made out on all of the topics and I accordingly grant leave.

[76] Somewhat different considerations apply to five further New Zealand based witnesses who are not warned witnesses, and who Ralec has subpoenaed or threatened to do so. Of the five, Ms Rachael Greer has now provided an extensive brief running to some 176 paragraphs.

[77] The remaining four, Geoff Brown, Erich Livengood, Fiona Mackenzie and Saki Hannah have each provided affidavits for NZX in opposition to Ralec’s application for leave to adduce evidence from them. It is clear from those affidavits that they each resist giving evidence at the hearing, primarily on grounds that they do not consider that they could contribute relevant evidence at the trial. None of them suggests that they would go so far as to disobey their subpoena. Mr North opposed my considering the content of these affidavits to the extent that they attempted to relegate the potential relevance of the evidence those deponents could provide. He characterised NZX’s contact with the witnesses in this context as improper. He argued that the Court should certainly not place any weight on the proposed witnesses’ own assessment of the relevance of the evidence they might provide, without his being afforded the opportunity to cross-examine them about it. He suggested they would have a natural inclination to exaggerate the lack of relevance given their disinclination to appear as witnesses.

2002 and May 2010. He suggests that between 2009 and 2010, when he was chief financial officer/head of finance of NZX, the job descriptions for those roles somewhat overstate the responsibilities he had. His analysis of the topics on which Ralec wishes to ask him questions suggests that he did not have sole responsibility in any relevant areas, and should not be seen as any more than a sounding board, and in some respects a functionary.

[80] Mr Brown was served with his subpoena in May 2015, but does not state when he drew it to NZX’s attention. Mr Brown deposes that he became wary of Ralec’s advisers including in a draft brief for him matters going beyond what he had indicated he was comfortable addressing. His affidavit undertakes an analysis of the topics that Ralec has now indicated it would seek evidence from him about.

[81] I am mindful of Mr North’s caution that Mr Brown’s own reconstruction of his role ought not to be determinative. Given his position I am also not prepared to find that evidence from him would not be necessary, merely because existing witnesses are likely to have first-hand knowledge of the topics on which he would be questioned.

[82] I consider the threshold for the necessity of evidence from Mr Brown to be met. I accordingly grant leave for evidence to be adduced from him orally pursuant to the subpoena.

[83] If Ralec proceeds to call Mr Brown, it is on notice as to his approach to the topics on which questions might be asked. If Ralec elicits no more than responses consistent with his affidavit, then discrete questions of the cost of dealing with that evidence are likely to arise. Certainly, I expect Ralec to reflect on the matters conveyed by Mr Brown to assess how many documents and topics they can realistically expect to get assistance on, and confine the questioning of him appropriately. Depending on how matters unfold at the trial, it may be necessary to address a more detailed protocol for handling the evidence of any witnesses providing oral evidence pursuant to subpoena. This point applies equally to each of the witnesses who have rejected the prospect of being able to give relevant evidence.

[84] Mr Livengood’s affidavit explains that he was employed by NZX between January 2011 and April 2014, his principal role being as head of energy. He did have additional roles. Prior to his employment, he consulted to a number of clients including NZX and in that capacity took an interest from December 2010 in the Clear grain exchange and the Melbourne tech team.

[85] There is a direct clash between Ralec’s expectations, and Mr Livengood’s own understanding of what he could add by way of evidence. For instance, Ralec wish to ask him about the termination of Mr Pym’s employment and Mr Livengood deposes to his firm view that he would not be able to offer any evidence on this issue that Messrs Weldon and Pym cannot provide.

[86] An assessment as to whether evidence from Mr Livengood is necessary raises similar issues to those I have reviewed in respect of Mr Brown. I come to the same conclusion, subject to the same cautions about the evidence once it is given that I have set out in [83] above. I accordingly grant leave.

[87] Ms Mackenzie was employed by NZX from May 2009 to August 2011, initially as head of traded products and then as head of markets and strategy. She has also completed an affidavit in opposition to the application for her to provide evidence under subpoena. She has analysed the extent of her involvement in matters likely to arise in the proceedings, contending that she could not assist and that other witnesses who have provided briefs of evidence are the ones who were directly and relevantly involved in the Clear businesses and development and execution of the IMI/Agri-Portal strategies.

[88] I apply the same reasoning to the application in respect of Ms Mackenzie as to Messrs Brown and Livengood. I accordingly grant leave.

2010 in various roles within its senior management team. At the time of the Clear transaction in 2009 until his departure in March 2010, Mr Hannah held the role of company secretary.

[90] Mr Hannah has responded to requests on behalf of Ralec to discuss what they believe to be the extent of his involvement in matters that might arise in the proceedings. From his perspective, those communications have become somewhat

testy. He has not declined to provide a brief of evidence. Rather, he has objected to the inclusion in draft briefs prepared on behalf of Ralec of matters that go beyond what Mr Hannah is prepared to say in evidence. From Mr Hannah’s perspective, as relayed in his affidavit in opposition to being called, he is clear that those limits on his involvement, and his recollections of that involvement, have been spelt out. Having analysed the topics likely to be raised, he maintains the view that he cannot provide any evidence of assistance to the Court.

[91] Mr North’s submissions in relation to Mr Hannah characterised him as having withdrawn from an agreement to meet with Mr Scragg, attributing to Mr Hannah a concern that the Ralec parties had been disingenuous in their approach to him. That is materially stronger than Mr Hannah’s view of his last dialogue on 1 April 2016, which he records as conveying a willingness still to consider a brief if it reflected his actual role and the comments he had made on the documents provided to him. That affidavit was sworn on 11 April 2016 and on this discrete point, I am comfortable accepting Mr Hannah’s characterisation of his dealings.

[92] As with others adopting the stance that their evidence is not necessary, Mr Hannah’s view on that cannot be determinative.

[93] However, in his case, Ralec cannot presently make out that they have exhausted all reasonable attempts to have him produce a brief. The reason for his not doing so is Ralec’s apparent insistence that they include content in the brief that Mr Hannah is not comfortable with. In his case, I will defer a determination on the requisite necessity for him to be required to give oral evidence pursuant to subpoena until the end of NZX’s evidence. I appreciate the lack of resolution on the point will create difficulties, not the least for Mr Hannah. However, I will deal with the consequences of it remaining unresolved until that point, if the application on behalf of Ralec is pursued, and needs determination at that time.

[94] Ralec has sought leave to adduce evidence via AVL from as many of the proposed subpoenaed witnesses resident in Australia as are going to give evidence at the trial. Although NZX has registered concerns at the unwieldy difficulties likely to

arise, given the number and detail in the documents apparently sought to be put to such witnesses, I am satisfied that those difficulties can adequately be managed. I accordingly grant leave, subject to the onus on Ralec to establish in advance that the technology is working, and its assured availability at the appropriate times. The parties ought to be prepared to be flexible in terms of sitting hours to accommodate timing differences.

[95] Ralec has separately applied for leave to have Ms Greer provide her evidence by AVL because of domestic responsibilities making it difficult for her to leave her home in Christchurch. NZX has sought to reserve its position on this, given the extent of matters traversed in the brief that has only been provided for Ms Greer in recent days.

[96] I am inclined to grant the application in relation to Ms Greer, given her personal situation, but acknowledge that the requirement for her to attend personally, perhaps at least for her cross-examination and any re-examination, may need to be revisited during trial when the significance of disputed content in her brief can better be assessed.

[97] Ralec has also applied to have evidence provided from another of its witnesses, Mr Maw, from London. I do not understand that was opposed by NZX and leave is granted on similar terms.

[98] NZX has made recent application to amend some details in its current (fourth amended) statement of claim. Mr Cooper submitted that the alterations, which affect only the calculations of loss pleaded, are needed to ensure the pleading conforms with the analysis of the expert, Mr Graham, who NZX proposes to call and whose analysis it relies on.

[99] Mr North opposed leave, arguing that it is significantly past the close of pleadings date, and that NZX should not be entitled to gain leave informally when he would expect the requirement for a formal application supported by affidavit evidence, which he anticipated should come from Mr Graham. His concern was that

the change in the amounts between the existing pleading, and the analysis provided by Mr Graham, revealed a change of heart by Mr Graham. He claimed to be prejudiced unless he had an opportunity of testing the circumstances in which that has occurred.

[100] I am not satisfied that the absence of evidence in support of the late application to amend the pleading materially prejudices Ralec’s position. The opportunity to cross-examine Mr Graham will, in any event, extend to the entire course of his analysis, in light of the terms of instructions given to him. That would not be confined by the pleading on which NZX goes to trial conforming with the final view of the expert, when the difference in the amounts between the penultimate and final form of the statement of claim will be a matter of record.

[101] Mr North did not identify other forms of prejudice from allowing the amendment. I do not understand that any amended pleading will be required from Ralec. I accordingly grant leave.

[102] The parties disagree on how opening statements should be presented. NZX has a preference to present one omnibus opening, both in support of its claim and outlining its defence to Ralec’s counterclaims. For Ralec, Mr North would prefer that NZX opens on its claims, Ralec opens on its defence of those claims, Ralec then opens on the counterclaims, with NZX and then Mr Weldon responding on their respective defences.

[103] Mr Cooper claimed greater efficiency in NZX’s preferred mode for openings, suggesting there would be substantial overlap if its openings were done in two separate presentations. As against that, Ralec as counterclaimant ought to be entitled to the first word on the rationale for those counterclaims. Given the prior exchange of openings, the extent of duplication in my hearing counsel for NZX twice ought to be minimal, given that one will follow relatively closely after the other.

[104] Mr Cooper asked, on behalf of Mr Galbraith QC, that Mr Weldon not be required to exchange the written form of opening on behalf of Mr Weldon to the

counterclaim against him at the same time as the other openings are to be exchanged. I gather this is largely to accommodate other commitments Mr Galbraith has.

[105] Mr North opposed any different requirement for Mr Galbraith, arguing that he should have the terms of the opening before he opens on Ralec’s counterclaims. Despite that concern, Mr North accepted that he did not anticipate Mr Weldon would be raising discrete matters in his opening, that will not be traversed in NZX’s opening on its defence. I accordingly direct that the opening of Mr Weldon’s defence need not be served on other parties until the opening morning of trial, 2 May

[106] Mr North also proposed the written form of openings be taken as read on the basis that I should read them all before the hearing begins, so that counsel would open by speaking to them. There are logistical difficulties with that, because my other commitments preclude my reliably having sufficient time to read and digest the openings before the trial begins. I anticipate having preliminary familiarity with the openings to the extent it will be unnecessary for counsel to read them exhaustively, but anticipate counsel may wish to take me to a number of the more important documents, in addition to traversing at least the substance of the written openings.

[107] Mr North also raised a concern that NZX has not indicated the sequence in which they propose calling their witnesses, beyond the first three. I direct that both sides are to advise the others before their respective cases begin of the sequence in which witnesses are intended to be called. Understandably, there may need to be variations in order, but except to meet unforeseen circumstances, I expect counsel to be confirming the sequence of witnesses at least three days in advance.

[108] One matter not addressed by counsel was any timetabling for provision of the additional briefs that Ralec is now preparing for witnesses previously threatened with subpoenas. This applies to the Australian based witnesses, Brooks, Shannon and Wood. Clearly, those briefs should be made available as soon as reasonably possible and if any delay in obtaining signed versions is encountered, Ralec should consider provision of drafts on the basis the witness could not be held to the detail of it if amendments are subsequently made.

[109] NZX has previously rejected my suggestion that non-contentious parts of some, at least, of the briefs could be taken as read. I urge counsel to prepare the leading of evidence from their witnesses with consideration for the National Transcription Service. Copies of briefs should be provided to the Court well in advance to enable them to be referred to the Transcription Service, and counsel should be mindful to keep interruptions to the reading of the evidence-in-chief to a minimum, as much as is reasonably possible.

[110] As to the length of trial, I confirmed with counsel that a ninth week is available. I expect the proceeding, including closing submissions, to be capable of completion within that time.

[111] I will treat costs on the applications determined in this judgment as costs in the cause.

[112] The process for obtaining leave for unbriefed evidence from subpoenaed witnesses is a subject I commend to the Rules Committee for consideration. I direct that the Registrar is to provide a copy of this judgment to Asher J, the Chair of the Rules Committee, inviting the Committee to reflect on the considerations raised by [5] to [22] of the judgment.

High Court of New Zealand Decisions

NZX Limited v Ralec Commodities Pty Limited [2016] NZHC 799 (27 April 2016)