Brivis Australia Pty Ltd v Seeley International Pty Ltd [2008] FCA 87 (19 February 2008)

Last Updated: 19 February 2008

FEDERAL COURT OF AUSTRALIA

Brivis Australia Pty Ltd v Seeley International Pty Ltd [2008] FCA 87

PRACTICE AND PROCEDURE – application for discovery by the cross-respondent – where material sought by the cross-respondent predated the period over which the cross-claimant’s claim for damages related – whether the cross-respondent’s defence raising a bare denial was sufficient for discovery – application allowed.



Federal Court of Australia Rules 1979 (Cth) O 11 r 10

I&L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109 cited






















BRIVIS AUSTRALIA PTY LTD ACN 004 783 493 v SEELEY INTERNATIONAL PTY LTD ACN 054 687 035

SAD 9 OF 2000



LANDER J
19 FEBRUARY 2008
ADELAIDE

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	SAD 9 OF 2000

BETWEEN:	BRIVIS AUSTRALIA PTY LTD ACN 004 783 493 Applicant/Cross-Respondent
AND:	SEELEY INTERNATIONAL PTY LTD ACN 054 687 035 Respondent/Cross-Claimant

JUDGE:	LANDER J
DATE OF ORDER:	20 DECEMBER 2007
WHERE MADE:	ADELAIDE

THE COURT ORDERS THAT:

1. The cross-claimant discover the customer complaint files and the service repair records of the cross-claimant for the period between 1992 and April 2004.

2. The costs of both the cross-claimant’s application for further and better discovery and the cross-respondent’s application for further and better discovery be costs in the cause.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	SAD 9 OF 2000

BETWEEN:	BRIVIS AUSTRALIA PTY LTD ACN 004 783 493 Applicant/Cross-Respondent
AND:	SEELEY INTERNATIONAL PTY LTD ACN 054 687 035 Respondent-Cross-Claimant

JUDGE:	LANDER J
DATE:	19 FEBRUARY 2008
PLACE:	ADELAIDE

REASONS FOR JUDGMENT

1 On 20 December 2007 on the application of the cross-respondent, Brivis Australia Pty Ltd (Brivis), I made an order that the cross-claimant, Seeley International Pty Ltd (Seeley), make further and better discovery of customer complaint files and service repair records of Seeley for the period between 1992 and April 2004. At that time I said that I would provide brief reasons for that order. These are my reasons.

2 The cross-respondent’s application for further and better discovery was particularised in a letter from its solicitors to the cross-claimant’s solicitors dated 19 October 2007. Relevantly, the cross-respondent sought:

Complaint files and service repair records discovered by the cross-claimant and referred to at page 295 of the Judgment of O’Loughlin J in the proceedings between the cross-claimant and Newtronics in this Court.

3 The cross-respondent was in fact referring to [295] of the reasons for judgment of O’Loughlin J in Seeley International Pty Ltd v Newtronics Pty Ltd [2001] FCA 1862. I will return to that judgment.

4 The cross-claim in this proceeding was brought after the cross-claimant was successful on the claim. The cross-claimant asserts that the cross-respondent, by claiming that it had valid patents, had engaged in misleading or deceptive conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth) or made false or misleading representations in contravention of s 53 of that Act. The cross-claimant claims, as a result of those contraventions, that it has suffered loss and damage. In particular, it claims that, by reason of the cross-respondent’s false claims that it had a valid patent, the cross-respondent’s share of the Australian market for domestic fixed evaporative airconditioners increased and the cross-claimant’s market share decreased. Further, it claims that the cross-claimant has suffered loss and damage by reason of the diversion of sales from the cross-claimant to the cross-respondent and a consequential loss.

5 In paragraph 8 of the cross-claim it is pleaded:

The cross-claimant has since 1994 manufactured and offered for sale a range of rooftop evaporative air conditioners incorporating a sloping base.

Particulars

(a) Between 1994 and December 1998, the Breezair EM and ES series;

(b) Since December 1998, the Breezair Mirage range.

6 The cross-claim asserts that the false and misleading conduct occurred between September 1997 and April 2004.

7 At the hearing of this application, counsel for the cross-respondent, Mr Caine SC, stated that the cross-claimant’s claim for damages was confined to the period December 1998 and April 2004. That, of course, is consistent with paragraph 8 of the cross-claim, although paragraph 8 recognises that the cross-claimant has manufactured units since 1994.

8 The proceeding before O’Loughlin J was brought by the cross-claimant against a third party for damages arising out of the supply of defective parts was the cross-claimant’s claim in that proceeding that a number of units caught fire as a result of the supply of defective parts which gave rise to the necessity to recall the units. It was said that the recall gave rise to adverse publicity, as a result of which it was said the cross-claimant suffered damage.

9 In that proceeding, the Court was called upon to consider the quality of the product manufactured by the cross-claimant. O’Loughlin J said at [295]:

Seeley maintained records of the complaints that they received about their units ("the complaint files"). They also maintained details of all warranty services that their dealers and distributors carried out to their units. It is not a pretty picture. Seeley’s Service Repair Records ("SRRs") were the company’s computerised internal records of the occasions when the company was required to organise repairs to their products during a warranty period. A CD-ROM containing the particulars of the SRRs from 1992 to 1998 was discovered by Seeley and its contents were analysed by Newtronics’ advisers. Mr Seeley, who was cross-examined about the resulting analyses, admitted that he was not familiar with the detail of the SRRs. However, he did accept certain propositions that were put to him by the cross-examiner which, in my assessment, were quite significant, as the following passage from his evidence reveals:

"If I was to put to you that in 1993-1994, though you sold 11,000 units there were only 466 warranty claims, would you know whether that sounds right? ... It wouldn’t sound right to me. It’s the sort of thing I would hope for but not what I would expect.

What about 1994-1995 where there was 15,859 units sold, according to the disk, and 4668 warranty calls. Does that sound right? ... Yes, that could be.

So it’s about one in three. Would that be right? ... It could be.

So would you expect then one in every three units sold would require a warranty call within 12 months or two years, depending on the length of the warranty? ... Would I expect ...

Would you expect that to happen? ... I expect that could happen, yes.

So something goes wrong with one out of every three units within the warranty period? ... Yes, that could happen.

Is that what happens? ... I’m saying it could. I’m not that close to the business, I’ve stepped back from it, but it would not surprise me that that was the case.

If it was, however, 16,542 units and 9252 warranty calls, would that surprise you? ... That would be high but I think it has to be looked at with respect to two considerations, and one is that we did increase warranty periods. Originally they were one year and subsequently it was increased to two. It has subsequently been increased to three. That extends your warranty rate substantially.

When do you say it was increased to three years? ... When did I say it?

When was it increased to three years? ...I don’t know. I can’t give you a precise date but I’m saying that that’s my understanding of where it is at the moment.

So that if in 1996-97 there were 16,000 units sold and 15,000 warranty calls that could be because some of the warranties were for previous years, or even two years. Is that what you’re saying? Yes."

10 It is clear from his Honour’s reasons that service repair records existed at least between 1992 and 1998 because they were discovered in that proceeding.

11 In this proceeding the cross-claimant has discovered in paper form, customer complaints records for a period between December 1998 and April 2004 which is said to be the period over which the cross-claimant has suffered damage.

12 The cross-respondent argued, however, that notwithstanding the cross-claimant had limited its claim for damages for the period December 1998 to April 2004, the quality of the cross-claimant’s product prior to that time was relevant in determining whether the cross-claimant’s share of the market was already in decline prior to the impugned conduct. It was contended that, having regarding to O’Loughlin J’s remarks and findings, it could not be assumed that the cross-claimant’s product was reliable during the period with which O’Loughlin J was concerned.

13 The cross-claimant contended that the defence to the cross-claim did not raise the issue for which further and better discovery was sought. It was put that there was simply a bare denial that the cross-claimant had suffered damage which was not sufficient to raise any other issues: O 11 r 10 of the Federal Court of Australia Rules 1979 (Cth).

14 The cross-respondent indicated that it would be applying for leave to amend the defence to include a positive plea which would assert that any loss of market share suffered by the cross-claimant was not caused by any representations made by the cross-respondent. However, the cross-respondent asserted that, on the pleadings as they presently stand, even where the cross-respondent has raised only a bare denial, the documents sought were discoverable.

15 I was of the opinion that the documents were discoverable because, where there is a bare denial that the cross-claimant has suffered the loss of market share for the reasons complained of, these documents were likely to be documents which might adversely affect the cross-claimant’s case.

16 It was put by the cross-claimant that the cross-claimant will need only to establish that the cross-respondent’s conduct was "a cause" of the cross-claimant’s damages: I&L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109. The cross-claimant, of course, will not have to establish that the cross-respondent’s conduct was the only cause. The question will be whether the contravention was a cause of the cross-claimant’s loss. However, the plea as it presently stands allows the cross-respondent to say that the issue whether the cross-respondent’s conduct was "a cause" has been raised and, in those circumstances, documents which might be adverse to the cross-claimant’s case should be discovered.

17 For those reasons, I made the order to which I have already referred.

I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander.

Associate:
Dated: 19 February 2008

Counsel for the Applicant/Cross-Respondent:	Mr B Caine SC with Mr G Tye
Solicitor for the Applicant/Cross-Respondent:	Johnson Winter & Slattery
Counsel for the Respondent/Cross-Claimant:	Mr R Whitington QC with Mr M Evans and Mr C Beames
Solicitor for the Respondent/Cross-Claimant:	Norman Waterhouse
Date of Hearing:	20 December 2007
Date of Judgment:	19 February 2008