DWS (NSW) Pty Ltd (Australian Company Number 115 070 301) v Chief Executive of the Department of Internal Affairs

[2024] NZHC 222

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2024-485-57

[2024] NZHC 222

BETWEEN

DWS (NSW) PTY LTD (AUSTRALIAN COMPANY NUMBER 115 070 301)
Applicant

AND

THE CHIEF EXECUTIVE OF THE DEPARTMENT OF INTERNAL AFFAIRS

First Respondent

AND

CODEKEEPER BV

Second Respondent

Hearing:	9 February 2024
Counsel:	E B Moran and M Fitzpatrick-Cockram for Applicant S A Barker and P J Niven for First Respondent
Judgment:	19 February 2024

JUDGMENT OF ISAC J

[Application for interim injunction]

Introduction

[1]    On 8 February 2024, DWS filed a without notice application for an urgent interim injunction. The aim of the application was to suspend the effect of a contractual notice issued by the first respondent, the Department of Internal Affairs, on the second respondent, Codekeeper. The notice required Codekeeper to release certain information owned by DWS to the Department by 5pm the same day, 8 February 2024.

DWS (NSW) PTY LTD (AUSTRALIAN COMPANY NUMBER 115 070 301) v THE CHIEF EXECUTIVE OF THE DEPARTMENT OF INTERNAL AFFAIRS & ANOR [2024] NZHC 222 [19 February 2024]

[2]    Given the urgent timeframe, Cooke J granted an interim order on a Pickwick basis to preserve the position pending further hearing and resolution of the application. He set the matter down for an urgent hearing commencing before me at  2:15pm on  9 February 2024.

[3]    Following the hearing I continued the order pending the provision of undertakings by the Department to DWS. When those undertakings were provided, I discharged the interim injunction and reserved the question of costs. My reasons for doing so follow.

Background

[4]    In 2022 the Department entered into a Master ICT Agreement with DWS for the delivery of what is described as a “civil registration solution” relating to “life milestones” such as births, deaths and marriages. As part of the services arrangement the parties also entered into an escrow agreement, requiring certain material created by DWS—source code—to be held on escrow for the Department’s benefit by Codekeeper, as an escrow agent.

[5]    The evidence indicates the project has not been without difficulties. Differences arose between DWS and the Department that eventually led the Department to issue a notice of termination of the Master ICT Agreement in December 2023.

[6]    More recently the Department issued a notice to Codekeeper purporting to require Codekeeper to release to the Department source code said to belong to DWS and to contain valuable proprietary information. This led DWS to seek an urgent interim injunction suspending the operation of the Department’s release notice until the differences between the parties had been resolved through the dispute resolution process envisaged by the Master ICT Agreement. The application was urgent because under the terms of the notice and the escrow agreement, Codekeeper might otherwise have  been  obliged  to  release  the  source  code  to  the  Department  by  5pm,       8 February 2024.

[7]    Following a teleconference with counsel in the afternoon of 8 February 2024, Cooke J made the interim order requiring the Department to communicate with the escrow agent advising it that no material should be released to the Department pending further order of the Court. He did so to enable argument of the application before me at 2.15pm 9 February 2024, and to permit the parties an opportunity to reach an agreement that would avoid the need for an urgent hearing.

[8]    By the time of the 9 February 2024 hearing, the Department appeared to accept it would be appropriate for the Department to pursue a process of inspection of the escrow material by an approved person under art 3.1 of the escrow agreement, and to withdraw its release notice. However, the parties could not agree on additional conclusions that may have avoided the need for a determination of the application. The principal issue preventing a resolution was DWS’s desire for a continuing injunction even with undertakings from the Department. This was said to be necessary to avoid the risk it might again be vexed by another release notice in the future.

[9]    After hearing the parties on 9 February 2024, I issued a minute where I recorded that if the Department was prepared to provide appropriate undertakings to the respondent, continuation of the interim injunction made by Cooke J would be unnecessary.1 Those undertakings were:

(a)the Department would withdraw its notice to Codekeeper and the requirement for release of information pursuant to that notice; and

(b)the Department would not again seek release of the source code from Codekeeper without first providing DWS, by its solicitor, with at least ten working days’ notice of any intention to serve a release notice.

[10]   I directed counsel for the Department to advise by 9am on 12 February 2024 whether the respondent was prepared to provide the undertakings. Mr Barker duly filed a memorandum confirming the undertakings were provided to the Court and

1      DWS (NSW) Pty Ltd v Chief Executive of the Department of Internal Affairs HC Wellington CIV-2024-485-57, 9 February 2024 at [6].

DWS. I then issued a minute confirming the injunction was discharged. My reasons now follow.

Legal Test

[11]   The principles are well settled. On an application for an interim injunction, the Court will generally address itself to three issues:2

(a)Is there a serious issue to be tried?

(b)Where does the balance of convenience lie?

(c)What is the overall justice of the case?

[12]   The last two issues require the Court to consider the adequacy of damages, preservation of the status quo, disadvantages to either party and the relative strengths of their cases.3 At the interlocutory stage the Court is not required to resolve conflicts of evidence or resolve difficult questions of law requiring detailed argument and mature considerations.4

Consideration

[13]   Having considered the evidence and submissions from both sides, I concluded it was appropriate to dismiss the interim order made by Cooke J.

[14]   Once undertakings were provided to the applicant DWS no longer had a position requiring preservation. The underlying concern that led to the urgent application was the imminent release of DWS’s proprietary information to the Department. By the time I heard argument, the parties had agreed that the release notice could be withdrawn in favour of the alternative process under art 3.1 of the

2 Klissers Farmhouse Bakeries v Harvest Bakeries Ltd [1985] 2 NZLR 129 (HC); and NZ Tax Refunds Ltd v Brooks Homes Ltd [2013] NZCA 90 at [12].

3 Wellington International Airport Ltd v Air New Zealand Ltd HC Wellington CIV-2007-485-1476,  30 July 2008 at [6]-[14].

4 American Cyanamid Co v Ethicon Ltd [1975] AC 396 (HL) at 407; Villa Maria Wines Ltd v Montana Wines Ltd [1984] NZLR 4 22 (CA) at 425; and Health Club Brands Ltd v Colven [2013] NZHC 428

at [9].

escrow agreement. With that, there was no longer any risk to DWS’s proprietary information.

[15]   That left only DWS’s concern that a release notice could be issued again in the future. Ultimately, it is not the role of the Court to police the conduct of commercial parties by way of prospective enjoinder. But in any case, given the second undertaking provided by the Department, any future attempt to issue a release notice will require the Department to provide DWS’s solicitors with at least 10 working days’ notice. In my view, that provides the applicant with sufficient time to take action again, should it consider it necessary to do so. And with this, the balance of convenience and the overall justice of the case no longer favoured continuation of the interim order.

Result

[16]The interim injunction against the respondent is discharged. Costs are reserved.

Isac J

Solicitors:

DLA Piper New Zealand, Wellington for Applicant Buddle Findlay, Wellington for Respondents