Yevad Products Pty Limited v Brookfield [2005] FCAFC 177 (31 August 2005)

Last Updated: 1 September 2005

FEDERAL COURT OF AUSTRALIA

Yevad Products Pty Limited v Brookfield [2005] FCAFC 177

PRACTICE AND PROCEDURE – setting aside judgment for failure to give full discovery – assessing possible impact of ‘fresh evidence’ - whether permissible to take into account possible lines of enquiry – likelihood of difference result - reasonable diligence - no explanation for failure to discover



Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 referred to
Council of the City of Greater Wollongong Corporation v Cowan [1955] HCA 16; (1955) 93 CLR 435 cited
Commonwealth Bank of Australia v Quade [1993] HCA 55; (1991) 178 CLR 134 applied
Grant v Australian Knitting Mills Limited [1933] HCA 35; (1933) 50 CLR 387 cited
House v The King [1936] HCA 40; (1936) 55 CLR 499 applied
Lexcray Pty Limited v Northern Territory [2003] NTCA 11 cited
Londish v Gulf Pacific (1993) 45 FCR 128 cited
McCann v Parsons [1954] HCA 70; (1954) 93 CLR 418 referred to
Orr v Holmes [1948] HCA 16; (1948) 76 CLR 632 cited
Ras Behari Lal v King-Emperor [1933] All ER Rep 723 cited















YEVAD PRODUCTS PTY LIMITED (FORMERLY KNOWN AS DAVEY PRODUCTS PTY LIMITED) ACN 004 813 192 v IAN WALTER BROOKFIELD AND SEPTIC PRODUCTS AUSTRALIA PTY LIMITED (IN LIQ)
SAD 24 of 2005


NICHOLSON, FINKELSTEIN & JACOBSON JJ
ADELAIDE
31 AUGUST 2005

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	SAD 24 of 2005

On appeal from a decision of a single Judge of the Federal Court of Australia

BETWEEN:	YEVAD PRODUCTS PTY LIMITED (formerly known as DAVEY PRODUCTS PTY LIMITED) ACN 004 813 912 APPELLANT
AND:	IAN WALTER BROOKFIELD FIRST RESPONDENT
AND:	SEPTIC PRODUCTS AUSTRALIA PTY LIMITED (IN LIQUIDATION) SECOND RESPONDENT
JUDGES:	NICHOLSON, FINKELSTEIN & JACOBSON JJ
DATE OF ORDER:	31 AUGUST 2005
WHERE MADE:	ADELAIDE

THE COURT ORDERS THAT:

1.	The appeal be allowed in part.
2.	The order made by Branson J on 8 February 1996, to the extent that it dismissed the claims for breach of contract under s 14 of the Sale of Goods Act 1895 (SA), be set aside.
3.	Otherwise, the appeal be dismissed.
4.	The appellant pay the respondents’ costs of the appeal.

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 24 of 2005

On appeal from a decision of a single Judge of the Federal Court of Australia

BETWEEN:	YEVAD PRODUCTS PTY LIMITED (formerly known as DAVEY PRODUCTS PTY LIMITED) ACN 004 813 912 APPELLANT
AND:	IAN WALTER BROOKFIELD FIRST RESPONDENT
AND:	SEPTIC PRODUCTS AUSTRALIA PTY LIMITED (IN LIQUIDATION) SECOND RESPONDENT
JUDGE:	NICHOLSON, FINKELSTEIN & JACOBSON JJ
DATE:	31 AUGUST 2005
PLACE:	ADELAIDE

REASONS FOR JUDGMENT

1 This is an appeal from a judgment of Lander J dated 9 September 2004, and consequential orders, setting aside orders made by Branson J in 1996 and 1997. On 8 February 1996, her Honour dismissed proceedings brought by the respondents against the appellant ("Yevad"). On 19 December 1997, her Honour ordered the first respondent ("Mr Brookfield") to pay Yevad’s costs specified in an amount slightly in excess of $380,000. Lander J ordered that Branson J’s orders be set aside because of Yevad’s failure to make full discovery in the proceedings.

2 Mr Brookfield is a qualified master plumber. In about 1987 he began to supply his customers with a household waste water treatment system known as the Parco Beaver system. Commencing in about 1990 Mr Brookfield, either on his own behalf or through the second respondent, Septic Products Australia Pty Limited ("SPA") supplied a modified version of the Parco Beaver system, the BPS Trickle Filter system, ("the BPS system") to his customers. The BPS system used pumps manufactured and supplied to the respondents by Yevad.

3 In the proceedings before Branson J, it was contended that the pumps supplied by Yevad were defective. A number of causes of action were alleged including breach of implied conditions of merchantability and fitness for the purpose said to have been made known to Yevad. These conditions were said to have been implied under s 14 of the Sale of Goods Act 1895 (SA) ("Sale of Goods Act").

4 Branson J found that approximately 50% of one type of pump supplied by Yevad were not fit for the purpose for which they were in fact used. However, her Honour found that the respondents did not make known to Yevad the particular purpose for which those pumps were required. Accordingly, her Honour found that the claim for breach of the implied condition of fitness for the purpose failed.

5 This issue of fitness for the purpose turned upon the modification to the Parco Beaver system made by Mr Brookfield and whether that had been made known to Yevad. Whether the fact of the modification had been communicated to Yevad turned substantially on evidence of conversations between Mr Brookfield and an employee of Yevad, Mr Wilsdon. Her Honour preferred the evidence of Mr Wilsdon.

6 Lander J found that two categories of discoverable documents were not discovered by Yevad. The first category was warranty returns and replacement records, known as job cards, for pumps supplied by Yevad to customers other than those for whom the respondent had installed the PBS system. The job cards for the respondents’ customers were discovered.

7 The second category of documents was a single memorandum prepared by the Products Manager of Yevad, Mr Ashley White, dated 29 October 1991 ("the Ashley White memorandum").

8 Lander J found at [281] that the undiscovered job cards could have been used by the respondents to prove that other users of Yevad’s pumps experienced failures that were the same or similar to those experienced by the respondents. His Honour found that had the job cards been available at the trial the respondents may have been able to establish that failures were occurring at high rates in systems that did not incorporate Mr Brookfield’s modification to the Parco Beaver system.

9 His Honour observed at [336] that the Ashley White memorandum identified that the type of pump in question was susceptible to premature wear. It would have put Mr Brookfield on notice that high rates of lip seal and shaft grooving failures were experienced by other system manufacturers; see at [342].

10 There was no dispute before Lander J that Yevad had failed to make discovery of both categories of documents, which his Honour said at [384] were "directly and indirectly relevant to issues at the trial". In his Honour’s view, the documents would have led the applicants to a train of inquiry, "in particular, to investigate the causes of failure of the pumps"; see at [386].

11 Lander J was of the view, at [414], that there was "a real possibility" that if the documents had been available at the trial, "a different result would have been obtained". His Honour followed the decision of the High Court in Commonwealth Bank of Australia v Quade [1993] HCA 55; (1991) 178 CLR 134 ("Quade") and concluded that the interests of justice would be served by setting aside the orders made by Branson J on 8 February 1996 and 19 December 1997.

12 Leave to appeal against Lander J’s orders was granted by Mansfield J on 24 February 2005.

13 The issues raised by Yevad on appeal turn upon whether his Honour correctly applied the principles stated in Quade. Five principal submissions were put by senior counsel for Yevad, Mr Wells QC. The submissions were as follows:-

(a)	that Lander J was required to confine himself to a consideration of the "fresh evidence" sought to be adduced and that his Honour should not have taken into account lines of inquiry which might have been available and which were said to involve speculation as to whether the result would have been different.
(b)	that his Honour failed to consider, or adequately consider, whether the respondents could have obtained the evidence at the trial by the exercise of reasonable diligence.
(c)	that his Honour found that the failure to give discovery was not deliberate and that this should have weighed against the setting aside of the trial judge’s reasons.
(d)	that his Honour failed to address what was called the "appropriate impact threshold" of the "fresh evidence". It was submitted that this was to be determined according to a sliding scale depending upon the degree of default.
(e)	that his Honour wrongly took into account Yevad’s continuing failure to give full discovery.

Branson J’s judgment

14 Her Honour referred (at p 4) to the contractual arrangements which were put in place between the parties in about October 1990 for the supply by Yevad (then known as Davey Products Pty Limited) of two models of pump. The first was the Davey Lowara Doc 3 ("the Doc 3 pump"). The second was the Davey Lowara Doc 7 ("the Doc 7 pump"). The arrangements were made following upon conversations between Mr Brookfield and Mr Wilsdon.

15 From about October 1990 to about October 1991, Yevad supplied SPA with the Doc 3 pump and the Doc 7 pump, both of which were used by SPA in the manufacture and installation of the BPS system.

16 The differences between the Parco Beaver system and the BPS system were described by her Honour at pp. 116-7. The principal difference was that the BPS system used a disc pack as the filtering medium in the filter system ("the disc pack modification") whereas the Parco Beaver system used short lengths of cut plastic piping held within the concrete bowl.

17 Six causes of action were alleged. The first was a claim for damages under s 82 of the Trade Practices Act 1974 (Cth) ("the TPA"), consequent upon a contravention of s 52 of the TPA. The second was for breach of the conditions of merchantability and fitness implied under s 71 of the TPA. The third was for negligent misrepresentation. The fourth was for damages under the Misrepresentation Act 1972 (SA). The fifth and sixth causes of action were for breach of the implied conditions of merchantability and fitness for the purpose under the Sale of Goods Act.

18 Her Honour found that the particular purpose which Mr Brookfield made known to Mr Wilsdon was the purpose of acting as a recirculation pump in a Parco Beaver system. She found (at p 60) that Mr Brookfield did not make known that the Doc 3 pump was required for the purpose of acting as a recirculation pump in the BPS system; that is to say, using the disc pack modification in lieu of the cut plastic piping.

19 There was a very high rate of failure in the Doc 3 pump. Her Honour found (at p 67) that the failure rate in the Doc 3 pump was 50% in a relatively short period and that the Doc 3 pumps were not fit for the purpose for which they were in fact used. There was a lower failure rate in the Doc 7 pump.

20 All of the experts who gave evidence agreed that the Doc 3 and Doc 7 pumps failed because lip seals on the pump shafts failed thereby causing fluid to enter the motors. The dispute between the experts was why the failures in the lip seals had occurred (see at p 71).

21 The case sought to be made through Mr Brookfield and SPA’s expert was that the seals failed because the pump shafts were manufactured from steel which was too soft for use in the lip seals. Yevad’s expert evidence was that the seals failed because the pumps were operated for extended periods in an environment containing excessively high concentration of abrasive particles.

22 Her Honour found (at p 73) that the steel with which at least the Doc 7 pump was manufactured was not too soft. Her Honour accepted Mr Wilsdon’s evidence that a number of the Doc 3 and Doc 7 pumps were sold by Yevad over the relevant periods to customers other than Mr Brookfield and SPA and "that the return rate for such pumps was not out of the ordinary" (p 73).

23 Her Honour recorded the following acknowledgment made by Mr Brookfield and the consequent evidentiary gap:-

"Mr Brookfield acknowledged that the applicants' records indicated that only ‘a handful’ of Doc 3 pumps supplied to the applicants had failed in systems which did not have the disc pack modification. There was no attempt made on behalf of the applicant to call admissible evidence of Doc 3 pumps failing in significant numbers in Parco Beaver systems which did not have the disc pack modification, or in any other waste water systems."

24 Her Honour went on to make the following critical finding:-

"I find that, on the balance of probabilities, there is a relationship between the established failure of a significant proportion of the Doc 3 pumps supplied to Septic Products by the respondent and the modification effected by Mr Brookfield to the Parco Beaver system. The evidence does not disclose that Mr Brookfield, or any other person on behalf of the applicants, advised the respondent of the modification made by Mr Brookfield to the Parco Beaver system." (p 74)

25 Accordingly, her Honour found that Yevad did not breach the implied condition of fitness for the purpose. She also found, applying the principles in cases such as Grant v Australian Knitting Mills Limited [1933] HCA 35; (1933) 50 CLR 387, that Mr Brookfield and SPA had failed to establish that the Doc 3 pumps were not of merchantable quality.

26 An appeal from her Honour’s judgment was dismissed by a Full Court (von Doussa, O’Loughlin and Lehane JJ) on 12 September 1996.

27 Special leave to appeal to the High Court was refused on 30 May 1997.

Proceedings for a stay of Branson J’s orders

28 As early as 16 December 1997, Mr Brookfield brought an application for a stay of execution of the costs orders made by Branson J on the ground, inter alia, of Yevad’s failure to give discovery. Lander J described the application, which was determined by O’Loughlin J on 19 May 1998, at [84] – [106].

29 The application before O’Loughlin J relied in large measure on a number of exhibits to an affidavit of Mr Wilsdon sworn 30 July 1995 which had been read in the proceedings before Branson J. Mr Wilsdon was, at the relevant time, the State Manager for Yevad.

30 Exhibit DW 25 to Mr Wilsdon’s affidavit contained a summary of sales, returns and replacements of Davey Lowara pumps from 1988 to 1994 indicating that there were no records for the two financial years commencing on 1 July 1988 and concluding on 30 June 1990.

31 Exhibit DW 27 contained a further schedule of sales and returns from 1988 to 1993. The schedule contained a note made by Mr Wilsdon as follows:-

"These figures have been collated from Customer Sales Reports, Warranty Transaction Reports, and Return Job Cards over the above period."

32 Exhibit DW 28 contained a number of customer sales reports.

33 Mr Brookfield complained that the documents referred to in the notation to Exhibit DW 27 were not discovered. These included the return job cards for other customers. He also complained that the documents in Exhibit DW 28 showed that there were records for pump returns for 1990 and 1991 which were not discovered in the principal proceedings.

34 In addition, Mr Brookfield pointed to false evidence given by Mr Wilsdon in the affidavit as to the date of a fire at Yevad’s premises which had destroyed some documents. Mr Morrow, the credit manager of Yevad who had co-ordinated the defence of the proceedings, swore an affidavit in the application before O’Loughlin J indicating that the fire had occurred at a later date than that deposed to by Mr Wilsdon.

35 The effect of this was that fewer documents were in fact destroyed by the fire than had been indicated in Mr Wilsdon’s evidence.

36 O’Loughlin J refused the stay for two reasons. First, he considered that the documents were not of sufficient substance to warrant the Court’s intervention. Second, he considered that Mr Brookfield and his legal advisers were on notice of the existence of the documents because they were referred to or appeared from the exhibits to Mr Wilsdon’s affidavit.

37 Nevertheless, O’Loughlin J held that the documents were discoverable and that they should have been discovered in the proceedings before Branson J. His Honour also referred to evidence filed in the application for a stay which indicated that documents of a kind referred to in Exhibit DW 27 had been destroyed in August 1996 when Yevad had moved offices in New South Wales. His Honour did not draw any adverse inference against Yevad as a consequence of the destruction of the documents in 1996.

38 Lander J summed up the effect of the application before O’Loughlin J as follows at [106]:-

"Although Mr Brookfield’s application to O’Loughlin J was unsuccessful, he did establish that:

1. Mr Wilsdon’s claim that records did not exist was false.
2. Records which were not discovered must have been available.

3. Those records were relevant because they were referred to in Mr Wilsdon’s own affidavit.

4. Those records were destroyed in August 1996."

39 A number of other applications were brought by Mr Brookfield seeking to set aside Branson J’s judgment on the ground of allegations of fraud and failure to give discovery. Lander J described the history of the applications at [107] to [127]. It is unnecessary to repeat the history.

Lander J’s judgment of 9 September 2004

40 There were three notices of motion before his Honour. Two of them sought to set aside the orders of Branson J. The third sought the release of documents produced to the Court under subpoena. No issue arises in relation to the third motion.

41 Mr Brookfield contended that three categories of documents were not produced in the proceedings. The first category was job cards for customers other than those supplied by Mr Brookfield and SPA. By the time of the hearing, 810 pages of documents had been produced which identified 329 job cards. Some from various states were not produced and some were said to have been destroyed in 1996; see at [196].

42 The second category was the Ashley White memorandum. His Honour set out the memorandum in full at [319]. For convenience, we will set it out:-

"TO: David Gore, Stewart Wilson, Trevor Bissett, Dallas Wilsdon, Patrick Keenan-Smith, Bryon Winn, Godfred Bonney, John Vincent, Don Brown, Herb Hellings, John Amsden

FROM: Ashley White

SUBJECT: DOC DRAINAGE PUMPS DATE: 29/10/1991

- FOR YOUR EYES ONLY -

Following extensive examination of the use of DOC Drainage pumps for the package extended aeration plant market, please be advised that the following applies :

1. The DOC range is designed for sump pump operation which usually involves intermittent use, not continuous operation.

2. The DOC is intended for use as a sullage or grey water pump capable of handling some solids in suspension. Continuous pumping of slurries will lead to premature wear, especially at the seal area.

With the above points in mind, be aware that the use of DOC pumps for continuous duty pumping, especially with dirty water or slurries, will lead to failure of the seal within a short time, between eight to twelve months. The nature of the failure is easily recognised since the lip seals are progressively lapped into the rotor shaft with the bottom being more heavily grooved than the top.

Failure of the DOC units due to this type of miss-use [sic] is not covered by warranty. Do not sell the product for this type of duty, since it will not last in this application without regular seal and rotor replacement.

All warranties claimed for this type of failure should be rejected as failure was due to both ‘fair wear and tear’, and ‘the use of the product for a duty it is not intended nor recommended for."

43 The third category of documents consisted of miscellaneous correspondence. His Honour found at [363] that this category of documents could not have affected the decision of the trial judge. Mr Brookfield did not challenge this finding.

44 Lander J referred at [204] to a supplementary list of documents filed by Yevad on 10 May 1999, nearly two years after the complaint was first made by Mr Brookfield of failure to give full discovery. His Honour said at [208] that the supplementary list recognised that job cards were discoverable but he observed at [210] that the list did not include any of the documents in the three categories which were the subject of the present application.

45 His Honour referred at [217] to the obligation of the legal advisers to file a supplementary list once they have become aware of an inadvertent failure to make appropriate discovery.

46 His Honour said at [219] – [220]:-

"I think it incredible that the respondent in this case has still not filed a list of documents identifying all of the documents not previously discovered. The respondent has been on notice since 16 December 1997 when the applicants brought the proceedings in action number SG99 of 1997 of the applicants’ complaints of its failure to make appropriate discovery. The respondent’s reaction to those complaints has been inappropriate. Instead of co-operating with the applicants to identify and produce the documents still in its possession, custody or power, it has taken objection after objection, point after point. It has delayed for a period of a year or more providing the applicants with some documents. The respondent’s solicitors’ letters in May and June of 2000 indicate the respondent’s attitude to its own failure to make proper discovery.

Instead of identifying the documents which are no longer in its possession, custody or power, it has disputed its obligations to make discovery."

47 Lander J found at [228] that the 329 job cards showed that other users of the Doc 3 and Doc 7 pumps experienced failures similar, if not identical, to those experienced by Mr Brookfield and SPA.

48 His Honour said at [273] that it would have been relevant to Branson J’s decision, as her Honour herself observed, to have evidence from other manufacturers or installers using the Parco Beaver system or any other system not employing the disc pack modification.

49 Lander J pointed out at [276] that although her Honour did not say so, it was implicit in her findings that she was not satisfied that the pumps were not of merchantable quality if used in appropriate conditions.

50 His Honour said at [280]:-

"I cannot, on the job cards before me, be satisfied of any particular rate of failure experienced by customers of the respondent at large. Nor can I be satisfied of the cause of any shaft groove/lip seal failures experienced by those customers. There is some indication from the job cards that shaft groove / lip seal failures were experienced by customers of the respondent who pumped abrasive material such as sand, cow manure, rubbish, stones, gravel, soft solids and mud. This is consistent with the trial judge’s finding that such failures were caused by extended pumping in an abrasive environment. It is consistent with the respondent’s case at trial."

51 However, Lander J found at [281] that if all the job cards had been produced, Mr Brookfield may have been able to establish that the failures experienced by other customers supported a claim of lack of merchantable quality. He said at [281]:-

"It may have been the case that, had all job cards (available as at the date of the trial) been discovered and produced, the applicants could have proved, by reference to the same or similar failures experienced by other users of Davey pumps, that the shaft grooving and lip seal failures were caused by something other than pumping in an abrasive environment and were occurring at high rates in systems which did not incorporate Mr Brookfield’s modification."

52 Yevad’s answer to Mr Brookfield’s contention was, as his Honour said at [287], that the other wastewater manufacturers were known and could easily have been identified by Mr Brookfield without discovery of the job cards. However, his Honour stated at [293] that even if that were so, it was not an answer to Yevad’s failure to make discovery.

53 His Honour went on to say at [308] that it was unnecessary for him to consider whether or not Mr Brookfield and his advisers exercised reasonable diligence at the trial in trying to obtain this evidence.

54 The critical findings made by Lander J with respect to the job cards were set out at [311] to [316] as follows:-

"Whilst I am satisfied that those other manufacturers of waste water systems were entities already known to Mr Brookfield at the trial, and that he may be taken to have been aware of the fact that those manufacturers were supplied with pumps by the respondent, it is not right, as the respondent has argued, that because Mr Brookfield was aware of those other manufacturers and that, in all probability, they used similar pumps, he should have been on inquiry to determine his competitors’ rates of failure.

That rather reverses the onus. The onus was on the respondent to discover these 810 pages of job cards and all other job cards which were or have been in the possession, custody or power of the respondent at the time that the proceedings were brought.

Those job cards would have alerted Mr Brookfield to the fact that his competitors were also experiencing failures of the kind which he and SPA were experiencing. That would have allowed him, if he could not have obtained the co-operation of his competitors, to obtain third party discovery from them so as to establish that pumps of this kind were simply unsuitable in the industry generally although, of course, I do not making that finding. They would have put the applicants on notice that other inquiries ought to be made of other competitors in the industry.

In my opinion, these job cards were not only relevant, they were vital to the applicants’ claims and they would have either by themselves or, in combination with other job cards now destroyed, had the effect of answering the respondent’s expert evidence.

Moreover, they would have allowed the applicants to place the material before their experts to obtain evidence in answer to the respondent’s expert evidence to which I have referred and to obtain other expert evidence.

These documents would have been very important in the applicants’ case."

55 As to the Ashley White memorandum, his Honour considered, at [320], that its importance was self-evident. He set out at [333] a portion of the cross-examination of Mr White in the present application which revealed the author’s concerns that he had seen similar slurry pumping applications and similar failures to those experienced by Mr Brookfield.

56 Lander J commented about the Ashley White memorandum at [336] as follows:-

"The memorandum identifies that the Doc range of pumps were susceptible to premature wear at the seal area when used to continuously pump ‘slurries’. It is not clear what Mr White regards as constituting a ‘slurry’. He did say during cross-examination that he had seen similar failures in pumps employed in ‘continuous use’ applications which pumped water containing some suspended solids."

57 His Honour went on to say at [342]:-

"In any event, discovery of the memorandum would have put Mr Brookfield on notice that high rates of lip seal and shaft grooving failures may have been experienced by other system manufacturers in the ‘extended aeration plant market’. Mr Brookfield could have made inquiries of the respondent to ascertain what was involved in the ‘extensive examination’ referred to in the memorandum. Such inquiry may have alerted Mr Brookfield or his advisers to the significance of the non-discovery of job cards in respect of which complaint is now made."

58 Yevad relied upon the existence of a file note made by Mr David Gore prior to the preparation of the Ashley White memorandum. Mr Gore’s file note was discovered to Mr Brookfield before the trial. As Lander J said at [344], the Gore file note put Mr Brookfield on notice that Yevad was aware of the potential for failures of pump components in waste water system recirculation pumps. He continued:-

"It did not, however, put Mr Brookfield on notice that the respondent was aware of relevant pump failures in the industry that were frequent enough for the respondent to issue an internal memorandum advising against distribution of the pumps for use in Parco Beaver type applications."

59 His Honour found at [346] that the Ashley White memorandum would have led to a train of inquiry that may have led to evidence of similar failures in other systems.

60 Lander J’s critical findings in relation to the Ashley White memorandum were set out at [347] – [350] as follows:-

"In my opinion, the document is self-evidently important. First, it is addressed to all of the State Managers including, relevantly, Mr Dallas Wilsdon. Secondly, it is dated 29 October 1991. Thirdly, contrary to the respondent’s experts’ evidence, it asserts that the pumps are unsuitable generally in the industry.

It could have been used in cross-examination of the respondent’s experts. This document could also have been put to the applicants’ experts for the purpose of obtaining expert evidence.

In my opinion, the document was clearly relevant to the decision arrived at by the trial judge.

Although Mr Wilsdon said that he had no recollection of receiving the document, that may not have been his evidence at trial many years before."

61 His Honour then turned to the Rules of Court and the authorities governing the obligation to make discovery. At the time of the trial, the Rules required discovery of documents leading to a train of inquiry. He found at [384] that Yevad had failed to make discovery of documents which were directly or indirectly relevant to issues in the trial, although not as a consequence of fraud.

62 His Honour then turned to the question of whether Mr Brookfield and SPA should be entitled to have their case re-opened. He referred to the well known authorities of Orr v Holmes [1948] HCA 16; (1948) 76 CLR 632 ("Orr v Holmes") and Council of the City of Greater Wollongong Corporation v Cowan [1955] HCA 16; (1955) 93 CLR 435 ("Cowan"), in which Dixon CJ referred to the high standard of certainty that an opposite result would be obtained before fresh evidence will be admitted. He also set out at some length the relevant parts of the decision in Quade which deal with the different position that applies where the unavailability of the evidence at the trial resulted from a significant failure by the unsuccessful party to comply with discovery obligations. The authorities to which his Honour referred also point to the need for diligence by the other party.

63 After considering these authorities, his Honour said at [407] that he could find no want of diligence on the part of Mr Brookfield and SPA in respect of Yevad’s failure to make proper discovery.

64 His Honour said at [408]:-

"This case is not the ordinary case. In this case, the successful party failed to make discovery of documents which were relevant to the case prosecuted by the unsuccessful party. The failure to make full discovery remains largely unexplained. The limited explanation offered is unsatisfactory. In this case, the successful party has continued to fail to give discovery of all documents which are or have been in its possession, custody or power. True it is, it has identified, through affidavit evidence, documents which it has found in the many years since the trial which it now accepts are relevant to issues in the trial."

65 He repeated at [412] his earlier findings that the job cards and the Ashley White memorandum would have put Mr Brookfield on a train of inquiry. He said that they would have been relevant to put to Mr Brookfield’s expert at the trial to obtain an opinion as to the likely cause of the failure of the pumps. He continued:-

"In my opinion, the applicants’ experts might have offered different opinions. They were relevant to the opinions offered by the respondent’s experts. In my opinion, they had, at the very least, the tendency to contradict the respondent’s experts’ opinions."

66 His Honour also said at [413] that the documents "might have led" Branson J to make findings of the causes of the pump failures different from those which she did make. He then said at [414]:-

"In those circumstances, in my opinion, it can be said that there is a real possibility that if these documents had been available to the applicants at the trial of their proceedings a different result would have been obtained."

67 His Honour made an express finding at [417] that the trial miscarried because of Yevad’s failure to make full discovery. He said at [419] that there is a real possibility that the Court may conclude that the failure of the pumps was not due to any aspect of the BPS system, that is, the disc pack modification, but was due to the reasons stated in the Ashley White memorandum.

68 Lander J concluded by stating at [420] that in his opinion the interests of justice will be served by setting aside the orders made by Branson J on 8 February 1996 and 19 December 1997. Orders incorporating the setting aside of the orders of Branson J were made on 23 December 2004.

The decision of the High Court in Quade

69 Although Lander J dealt comprehensively with the decision in Quade and related authorities, it is convenient to repeat some of the salient passages from the decision of the High Court.

70 After referring to the observations of Dixon CJ in Orr v Holmes and Cowan, Mason CJ, Deane, Dawson, Toohey and Gaudron JJ said at 140 that the general rule formulated by his Honour in those cases is directed at the ordinary case where all that is involved is that fresh evidence has come to the notice of the unsuccessful party.

71 Their Honours went on to say that the general rule is not applicable to cases where the trial has miscarried through, inter alia, "surprise, malpractice or fraud". Those cases, their Honours said at 140, cannot be seen as mere cases of "fresh evidence".

72 They continued at 140 – 141 as follows:-

"Nor can a case where the material constituting the fresh evidence was unknown to the unsuccessful party by reason of misconduct on the part of the successful party, such as an admitted failure to comply with the requirements of the trial court’s order for discovery of documents. True it is that a case of failure by a party to comply fully with such an order can be distinguished from one in which the trial has miscarried by reason of error or fault on the part of the tribunal itself or a case where the verdict can be seen to have been procured by fraud or perjury. On the other hand, a case of failure to comply with a discovery order could, particularly where the failure was deliberate or remains unexplained, come within the category of ‘cases of malpractice’, and be a stronger case than the category of ‘cases of surprise’, which were both expressly exempted from the above statement of what we have referred to as the ‘general’ rule."

73 The overriding consideration in determining whether to order a new trial in cases of fresh evidence is to reconcile the demands of justice with the policy in the public interest of the finality of litigation. Their Honours referred to this at 141. They said that this dictates the general rule stated by Dixon CJ that a successful party should only be deprived of the verdict if the unsuccessful party persuades a court that there was no lack of reasonable diligence and that it is reasonably clear that the fresh evidence would have produced the opposite result.

74 Their Honours distinguished the application of the general rule in the following passage at 142:-

" The position is, however, different in a case such as the present where the unavailability of the evidence at the trial resulted from a significant failure by the successful party to comply with an order for the discovery of relevant documents in his possession or under his control. The application to that category of case of the general rule that a new trial should only be ordered on the ground of fresh evidence if it is ‘almost certain’ or ‘reasonably clear’ that the opposite result would have been produced if the evidence had been available at the first trial would, particularly where the failure was deliberate or remains unexplained, serve neither the demands of justice in the individual case nor the public interest in the administration of justice generally. In so far as the demands of justice in the individual case are concerned, it would cast upon the innocent party an unfairly onerous burden of demonstrating to virtual certainty what would have happened in the hypothetical situation which would have existed but for the other party’s misconduct. In so far as the public interest in the administration of justice generally is concerned, it would be likely to ensure to the successful party the spoils of his own default and thereby encourage, rather than to penalize, failure to comply with pre-trial orders and procedural requirements." [citations omitted]

75 The principle which applies to such cases cannot be stated in a general rule capable of mechanical application. Their Honours recognised this in the following passage at 142 – 143:-

"It is neither practicable nor desirable to seek to enunciate a general rule which can be mechanically applied by an appellate court to determine whether a new trial should be ordered in a case where misconduct on the part of the successful party has had the result that relevant evidence in his possession has remained undisclosed until after the verdict. The most that can be said is that the answer to that question in such a case must depend upon the appellate court’s assessment of what will best serve the interests of justice, ‘either particularly in relation to the parties or generally in relation to the administration of justice’. In determining whether the matter should be tried afresh, it will be necessary for the appellate court to take account of a variety of possibly competing factors, including, in addition to general considerations relating to the administration of justice, the degree of culpability of the successful party, any lack of diligence on the part of the unsuccessful party and the extent of any likelihood that the result would have been different if the order had been complied with and the non-disclosed material had been made available. While it is not necessary that the appellate court be persuaded in such a case that it is ‘almost certain’ or ‘reasonably clear’ that an opposite result would have been produced, the question whether the verdict should be set aside will almost inevitably be answered in the negative if it does not appear that there is at least a real possibility that that would have been so." [citations omitted]

76 In endorsing the approach taken by Burchett J in the Full Federal Court in Quade, the High Court made it plain at 143 that the question of whether a verdict should be set aside in such cases is to be determined by "broad considerations of justice" including the public interest in the finality of litigation. Their Honours also referred to the "equally important principle that a party should not be permitted to mock the orders of the Court."

77 In Londish v Gulf Pacific Pty Limited (1993) 45 FCR 128, a Full Court (Neaves, Burchett and Ryan JJ) summed up the effect of Quade at 135. Their Honours said that the stringent rules, which ordinarily restrict the grant of a new trial to enable the calling of fresh evidence, must be relaxed where the reason why the evidence was not available was the failure of the successful party to comply with discovery obligations. The relevant passage from the judgment was set out in full by Lander J at [403].

Issue 1 – the scope of the inquiry: whether the primary judge was permitted to take into account lines of inquiry suggested by the documents

78 Mr Wells QC for Yevad submitted that Lander J addressed the wrong issue. His Honour, so it was submitted, was confined to identifying the "fresh evidence" contained in the job cards and the Ashley White memorandum and should merely have asked whether those documents, in combination with the evidence adduced at the trial could have led to a different result. According to the submission, the approach adopted by Lander J of taking into account lines of inquiry opened up by the documents amounted to impermissible speculation as to what may have been adduced if those lines of inquiry had been pursued.

79 In our view this submission is not supported by Quade and indeed is inconsistent with the broad considerations of the interests of justice which underlie the exercise of the discretion in such cases.

80 It is true, as their Honours said in Quade, that the Court must take account, inter alia, of the extent of any likelihood that the result would have been different if the non-disclosed material had been available. But that cannot be taken as a limitation on the type of material to which the Court may have regard.

81 The approach urged on us by Mr Wells fails to address the various purposes for which discovery is to be made. It is not simply to make available admissible evidence but also to suggest avenues of inquiry that are open to the party to whom the documents are disclosed.

82 Moreover, the submission fails to give weight to considerations of the administration of justice to which the High Court referred in Quade. It ignores the interest of public confidence in the administration of justice and the principle against "mocking" the orders of the Court.

83 By declining to state a general rule applicable to such cases, the High Court in Quade made it plain that a flexible approach is required. It is true that the Court, in considering whether to exercise the jurisdiction, must take into account the competing factors to which their Honours referred. However, there is nothing in what their Honours said, or in logic, to suggest that the Court cannot take into account lines of inquiry which may be presented by undiscovered documents.

84 It may be that in some cases the Court would not be minded to exercise the jurisdiction without evidence that the lines of inquiry have been pursued and without evidence as to what fresh evidence is to be put to the Court if the case is re-opened. However, that cannot be a rule of general application. It must be a matter for the Court in each case to form a judgment as to how the lines of inquiry would have assisted the unsuccessful party. This is not speculation.

85 It must be a matter for the Court in each case to make an informed judgment as to the position the innocent party would have been in if the defaulting party had made proper discovery. That was the approach taken by Angel ACJ (with whom Bailey J agreed) in Lexcray Pty Limited v Northern Territory [2003] NTCA 11 ("Lexcray") at [14] – [15].

86 Angel ACJ pointed to the requirement of full discovery as an incident of a party’s right to a fair trial. He considered that the innocent party’s case was not decided on it true footing or merits at the trial and that there was a miscarriage of justice.

87 This makes it clear that the question in each case is one of the exercise of discretion by the Court on a matter of practice and procedure. That was the approach taken by Lander J in the present case. It cannot be disturbed absent an error of principle in accordance with the well established rules under which appellate courts determine appeals from the exercise of a judicial discretion; see House v The King [1936] HCA 40; (1936) 55 CLR 499 at 504 – 505. No such error is revealed in the present case.

Issue 2 – exercise of reasonable diligence

88 One of the factors which the Court in Quade referred to was "any lack of diligence on the part of the unsuccessful party" (at 143).

89 The reasonable diligence which is required in the ordinary fresh evidence case is reasonable diligence to procure the evidence which the unsuccessful party failed to adduce at the trial; see Cowan at 444. It is not clear whether the diligence to which the Court referred in Quade in relation to discovery cases is lack of diligence in obtaining the evidence from other sources or lack of diligence in questioning errors in the successful party’s discovery.

90 It seems to us that in cases such as the present it is a matter for the Court to determine, in the exercise of its discretion, whether there has been any lack of diligence in either of those respects. But lack of diligence in pursuing the successful party about its discovery is unlikely, in most cases, to be a significant factor. This is because it is the obligation of a party who is the subject of a discovery order or a notice for discovery to give full and proper discovery of documents falling within the scope of the order or the notice.

91 In our view, the submissions of counsel for Mr Brookfield and SPA correctly observe that it is not the obligation of the opponent to monitor discovery by the other parties to the action.

92 In any event, Lander J found no want of diligence on the part of Mr Brookfield and SPA in respect of the failure of Yevad to make full discovery; see [407]. That was a finding of fact and no basis has been shown for disturbing it.

93 His Honour made a different finding about whether Mr Brookfield exercised reasonable diligence in trying to procure evidence. He said at [308] that it was unnecessary for him to consider whether Mr Brookfield or his advisers exercised reasonable diligence at the trial in trying to obtain the evidence said to have been denied as a result of Yevad’s failure to give discovery. His Honour, at [311], rejected a submission that Mr Brookfield should have been on inquiry to determine his competitors’ failure rates. That too was a finding of fact which is unassailable.

94 Moreover, as his Honour said at [312], Yevad’s submission that Mr Brookfield should have been on notice reverses the onus on it to provide discovery.

95 Mr Wells placed considerable store on the fact that the file note of Mr Gore was discovered and that it put Mr Brookfield on notice that Yevad was aware of the potential for pump failures. But, as his Honour found at [344], it did not put Mr Brookfield on notice that Yevad was aware that pump failures were frequent enough to issue the warning contained in the Ashley White memorandum.

Issue 3 – the degree of culpability

96 Mr Wells submitted that Yevad’s degree of culpability was low and that this was a factor which the primary judge ought to have taken into account in his assessment of what would best serve the ends of justice. He pointed to "the degree of culpability of the successful party" as one of the factors identified in Quade. He also emphasised the words "where the failure was deliberate or remains unexplained" in the passage from Quade which we have set out at [72] above. Mr Wells was at pains to remind us of his Honour’s finding that the failure was not deliberate.

97 The short answer to these submissions is that what underlies the exercise of the jurisdiction to order a new trial in cases of failure to give discovery is the interests of justice. The competing factors which it is necessary for the Court to address, as referred to in Quade, are not capable of mechanical application. They are factors to be weighed in the balance in the exercise of a broad judicial discretion. There is no error in the primary judge’s approach. In any event, we do not accept Mr Wells’ submission that the failure to give discovery was explained.

98 Mr Wells did not attack, directly, the findings made by the primary judge that the failure to make full discovery was "largely unexplained" or that the "limited explanation offered is unsatisfactory": see at [408]; see also at [202]. Nevertheless, he directed us to a large body of evidence, apparently to seek to make good a submission that there was an explanation for the default.

99 We have considered the material relied upon, in particular, but not limited to, the evidence referred to in a supplementary written submission for the appellants.

100 The evidence included affidavits from Mr Davis, who was the solicitor with overall responsibility for the defence of the proceedings and Mr Mills, the solicitor who assisted him. There were a large number of affidavits, including affidavits of Mr Wilsdon and Mr Ashley White. All of those witnesses were cross-examined in the application before the primary judge.

101 Mr Morrow, the credit manager of Yevad, was charged with the conduct of the defence of the proceedings on behalf of that company. He was responsible for the instructions given to the solicitors during the pre-trial stage and at the trial itself. However, he died in 2001, some two years before the primary judge heard this application. Nevertheless, an affidavit sworn by Mr Morrow in 1998 for the hearing of the application before O’Loughlin J was relied upon. The affidavit gives no explanation for the failure to discover the job cards. Nor does it address the Ashley White memorandum because that document did not come to light until 2003.

102 The existence of the job cards was apparent from Exhibits DW25 to DW28 to the affidavit of Mr Wilsdon sworn on 30 July 1995, in particular from Exhibit DW27 which referred to "Return Job Cards" for the relevant period. The appellants’ third list of documents in the proceedings was filed the following day. It included the exhibits to Mr Wilsdon’s affidavit but, of course, not the job cards.

103 In his affidavit sworn for the application before O’Loughlin J, Mr Mills referred to the exhibits to Mr Wilsdon’s affidavits but said that the "documents regarding the problems were not considered to be relevant". O’Loughlin J rejected this contention. His Honour considered that the job cards were discoverable and that they should have been discovered as part of the usual discovery process before the trial.

104 O’Loughlin J’s judgment was delivered on 19 May 1998 but it was not until Mr Brookfield re-agitated his complaint later in 1998 or early 1999 that the job cards were discovered. Mr Mills dealt with this in his affidavit of 13 August 2003.

105 In that affidavit Mr Mills said that in April or May 1999 he had conversations with Mr Morrow concerning the availability of documents. As a result, Mr Mills received two boxes of documents containing the job cards. He then prepared a draft of the list of documents to be filed but the matter was taken away from his firm on 7 July 1999.

106 There was no explanation in Mr Mills’ affidavit of 13 August 2003 for the failure to give discovery of the job cards before the trial. The only explanation offered in Mr Mills’ affidavits was that which was given in his 1998 affidavit, namely that the documents were considered to be irrelevant.

107 Nor was there any explanation in Mr Davis’ affidavits for the failure to discover the job cards.

108 The same may be said of Mr Wilsdon’s affidavit. Mr Ashley White’s affidavit dealt only with his own memorandum.

109 There was no explanation in any of the affidavits for the failure to discover the Ashley White memorandum. The evidence establishes that it was one of a number of documents contained in two boxes of Mr Morrow’s files sent by McPhersons Limited ("McPhersons"), the parent company of Yevad, to Piper Alderman, the firm acting for Yevad at the time, in February 1998, ie 2 years after the judgment of Branson J was delivered.

110 McPhersons had the role of archiving Yevad’s documents for the proceedings, apparently under the supervision of Mr Morrow. Piper Alderman returned the documents to McPhersons in December 1998. There appears to be no evidence as to whether anyone inspected the documents while they were in Piper Alderman’s custody for about ten months in 1998.

111 When the documents were returned to McPhersons, they remained in archives until May 2003. At that time Mr Bennett, the company secretary of McPhersons, opened one of the boxes and identified the documents as relevant to Mr Brookfield’s claim. He forwarded the documents to Yevad’s current solicitors and the Ashley White memorandum was produced in about July 2003.

112 Mr Ashley White says in his affidavit that he does not know why the memorandum was not discovered previously.

113 The explanations which were put to us seem to be fourfold. They were a mixture of submissions from the bar table and inferences said to be drawn from the evidence.

114 First, it was said that the solicitors focussed upon the "forensic issues" at the trial rather than the pleadings. There was no evidence to support this.

115 Second, it was suggested that the omission was due to oversight, either by the solicitors or by the appellant. There was evidence in cross-examination before the primary judge that each of Mr Davis and Mr Mills seemed to leave it to the other to explain to the appellant its discovery obligations. This might have provided an explanation, albeit one that was based upon the mistakes of the solicitors.

116 However, no clear explanation setting out the steps taken, or not taken, is to be found in the solicitors’ affidavits. Of course, genuine mistakes sometimes occur in the course of a large discovery, but where an issue such as this arises, the Court cannot make a finding that the error has been properly explained in the absence of a clear and coherent explanation in the solicitors’ affidavits. Regrettably, that was not done in the present case. That is not to say that the solicitors were guilty of anything approaching dishonesty.

117 The third explanation, which was given in evidence, was that the appellant relied upon its then solicitors. The unsatisfactory basis for this explanation was revealed in the following passage of transcript in which the learned primary judge questioned Mr Wilsdon:-

"His Honour: Can I just see one of the lists of documents, please? Yes, well, I’ll put this question to you first, Mr Wilsdon. Did you know of your own knowledge whether each of those documents contained all of the documents relating to questions between the applicant and the respondent at the time you swore the affidavit?---Yes, I believed that that was all that was available.

What did you base that belief upon?---The fact that I was dealing with reputable solicitors and that I’d been requested to sign an affidavit, and that I was sure that they wouldn’t have been asking me to sign an affidavit that they weren’t confident in getting me to sign.

Yes. Did it occur to you that the solicitors, of course, could only know what documents were in a client’s possession if the client disclosed those documents to the solicitors?---Correct, your Honour, yes.

So to that extent, in relying upon the solicitors, you were also relying upon a full disclosure by the company to the solicitors?---Correct, yes.

What steps did you take to ensure that there had been a full disclosure before you swore the affidavit?---None. There was no check, other than just basing it on the grounds that I believed they had been received.

Would it be fair to say that you assumed, because you were asked by the solicitors to swear the affidavit, that it would be appropriate to do so?---Correct.

Did you make any inquiries of any other officers within the company as to whether or not there were any other documents relating to any matter in question between Mr Brookfield and your company?---No, I can’t recall having made any comment.

On any of the occasions which you swore the affidavits?---No.

Do you know if the solicitors did?---They appeared to be a very thorough organisation, your Honour,, and I believed that they would have ---

Would it be fair to say you assumed they did?--- Correct."

118 The fourth explanation related to the job cards. It was said that the existence of the job cards was disclosed in the exhibits to Mr Wilsdon’s affidavit of 30 July 1995. It was then submitted that, having discovered the computerised records and disclosed the existence of the job cards, it was to be inferred from Mr Mills’ affidavit of 3 March 1998 that the solicitors did not consider it necessary to discover the job cards formally. That explanation is contrary to Mr Mills’ sworn evidence in [5] of his affidavit that the documents were considered to be irrelevant.

119 What this unproductive and unnecessary exercise reveals is that the learned primary judge was correct in finding that the failure to make full discovery remains unexplained and that the limited explanations are unsatisfactory. Indeed, these were the only findings that were open on the evidence.

Issue 4 - the "sliding scale" submission

120 Mr Wells submitted that the effect of Quade was that the "necessary potency" or impact threshold of the fresh evidence must be determined on a sliding scale according to considerations of justice. In some cases, so it was said, the required impact threshold might be virtual certainty as in the case of "pure" fresh evidence applications. In others, the threshold might be lower, such as the real possibility of an opposite result.

121 On this approach, it was submitted, if the failure to comply was innocent and there was a lack of diligence by the unsuccessful party, the threshold would be akin to the virtual certainty required under the general rule applicable to fresh evidence cases. If, on the other hand, the failure to discover involved deliberate concealment and no lack of diligence, the threshold would be low; that is, a real possibility of a different result.

122 In our view these submissions fail to take into account the distinction between the two categories of fresh evidence cases recognised by the High Court in Quade. What distinguishes the first category, as in Orr v Holmes and Cowan, from the second category, as in Quade, is that in the former there has been no fault by the successful party whereas in the latter the result has been procured by a form of misconduct on the part of the successful party.

123 Thus, in Quade, the Court explained that in the first category the over-riding consideration is the public interest in the finality of litigation. This dictates that in such cases the stringent rule applies so that the unsuccessful party must demonstrate something approaching virtual certainty.

124 But in the second category of cases, whilst the Court must balance the competing interests of finality and the administration of justice, it is the public interest of confidence in the administration of justice which must be given at least an equal weighting with the finality of litigation. As Angel ACJ said in Lexcray at [8], citing the dictum of Lord Atkin in Ras Behari Lal v King-Emperor [1933] All ER Rep 723 at 726: "Finality is a good thing, but justice is better".

125 The submissions of Yevad’s counsel assume that in cases where the successful party is "innocent" or the unsuccessful party is lacking in diligence, the stringent test stated in Orr v Holmes and Cowan applies so that the Court must be persuaded that an opposite result is "almost certain" or "reasonably clear". This approach was rejected by the Court in Quade at 143.

126 Moreover, the submissions also assume that a variable standard of proof is required depending upon the seriousness of the default or the lack of diligence of the unsuccessful party. This might be thought to be akin to the standard of proof discussed in Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 which varies according to the seriousness of the issue in question.

127 However, there is no mandate for this in Quade. It is a matter for the Court in the exercise of its discretion to balance the competing factors to which their Honours referred. What is required as a minimum is that there be a real possibility of an opposite result. To raise the standard of proof in the manner suggested by Yevad would be to give excessive weight to the public interest in the finality of litigation over considerations affecting the interests of justice.

128 What underlies the determination of whether a new trial is to be ordered is flexibility in weighing the competing factors with the overriding purpose being to reconcile the demands of justice with the interest in finality of litigation; see McCann v Parsons [1954] HCA 70; (1954) 93 CLR 418 at 430-1, cited in Quade at 141. The approach put forward by Yevad would be to remove some elements of this flexibility from the exercise of the Court’s discretion.

129 In any event, for reasons referred to above, the successful party in the present case cannot be said to be entirely innocent, albeit that the failure to give discovery was not deliberate. Nor, on the primary judge’s findings can it be said that the unsuccessful parties were lacking in diligence.

Issue 5 – the "impact threshold" of the fresh evidence

130 Yevad submitted that Lander J failed to assess the "impact threshold" of the evidence in the light of all relevant factors, including Yevad’s lack of culpability and the lack of diligence of Mr Brookfield and SPA.

131 We reject this submission for reasons set out above in dealing with Issue 4.

Issue 6 – the continuing failure to make discovery

132 Mr Wells submitted that Lander J was in error in wrongly taking into account Yevad’s delay and continuing failure to make full discovery after the delivery of Branson J’s judgment.

133 Lander J proceeded on the basis that ordinarily the delivery of judgment after a trial exhausts a party’s obligation to give discovery, but he observed the documents in this matter were created before judgment and should have been discovered before the trial; see at [212] – [213].

134 His Honour was critical of Yevad’s failure to make full discovery after it became aware of the deficiencies; see at [214]; see also the passage set out at [46] above. His Honour considered that Yevad had an obligation to make full discovery as soon as it became aware of its omissions and an obligation to acquaint Mr Brookfield with that fact.

135 We do not need to decide whether the obligation existed in the terms stated by his Honour. It is sufficient to state that Yevad’s failure to make full discovery in the context of the notices of motion was a relevant consideration to the exercise of the primary judge’s discretion. This is because the absence of full discovery at the time of hearing of the notices of motion was relevant to the question of the degree of likelihood that if proper discovery had been made the result would have been different. It permitted the primary judge to draw inferences adverse to Yevad on that question.

136 In any event, the reason why the primary judge set aside the trial judge’s orders was Yevad’s failure to discover "critical" and "vital" documents which may have led the trial judge to a different conclusion; see [324], [410] and [417].

Refusal to set aside part of the orders

137 Order 1 made by Lander J was that [1] of the orders made by Branson J on 8 February 1996 be set aside. Her Honour’s order was that the application be dismissed.

138 Yevad submitted that Branson J’s orders should be set aside only to the extent that the causes of action on which Mr Brookfield and SPA failed have been demonstrated to have been prejudiced by the unavailability of the documents referred to in the application before Lander J. In our view this submission is correct.

139 The causes of action which were prejudiced were the claims for damages for breach of the implied conditions of merchantability and fitness for the purpose under s 14 of the Sale of Goods Act. Lander J’s orders should be varied accordingly.

General

140 We are indebted to Mr McNamara QC and Mr Cox who were appointed as pro bono counsel for Mr Brookfield and SPA. We have been much assisted by their helpful written submissions.

I certify that the preceding one hundred and forty (140) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court.

Associate:

Dated: 31 August 2005

Counsel for the Appellant:	Mr Wells QC and Mr Abbott
Solicitor for the Appellant:	Thomson Playford
The First Respondent appeared in person.
Counsel for the Respondents post hearing:	Mr McNamara QC and Mr Cox (pro bono)
Date of Hearing:	9 May 2005
Date of Judgment:	31 August 2005