FEDERAL COURT OF AUSTRALIA
Simpson v Thorn Australia Pty Ltd trading as Radio Rentals [2018] FCA 1219
ORDERS
Applicant | ||
AND: | THORN AUSTRALIA PTY LTD T/AS RADIO RENTALS (ACN 008 454 439) Respondent | |
DATE OF ORDER: |
THE COURT ORDERS THAT:
1. Annexure A to the orders made on 9 August 2018 be varied to add the following categories of documents:
(a) Any final report to the Board and/or the Board Audit, Risk and Compliance Committee in relation to:
(i) the marketing and/or sales of Radio Rentals Contracts.
(ii) the Unfair Contract Terms; and/or
(iii) customer service.
(b) All documents reporting to the Board and/or subcommittee of the Board on Damage Liability Reduction in relation to Radio Rentals Contract, addressing profitability during the Discovery Period in dollar and/or percentage terms.
(c) All documents recording the total number and/or value attributable to Radio Rentals Contracts provided to the Board and/or subcommittee of the Board and/or Key Personnel which were the subject of:
(i) a Radio Rentals Contract Consumer’s attempts, expressly or in effect, to exercise their entitlement to Damage Liability Reduction during the Discovery Period; and
(ii) approval or acceptance by Radio Rentals of the exercise of Damage Liability Reduction during the Discovery Period.
2. Pursuant to r 21.1 of the Federal Court Rules 2011, the respondent is to provide written answers to the following interrogatories, for each financial year in the Discovery Period, by 30 August 2018:
(a) What is the total number of Radio Rentals Contract Consumers?
(b) What is the total number of Radio Rentals Contracts?
3. Otherwise, the applicant’s interlocutory application dated 27 July 2018 be dismissed.
4. The costs of the interlocutory application be reserved.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
GLEESON J:
1 By interlocutory application dated 27 July 2018, the applicant sought orders for further discovery and leave to administer interrogatories and ancillary orders.
2 The parties reached agreement on orders which disposed of many of the issues raised by the interlocutory application, leaving only two issues for judicial determination. The first concerns three disputed categories of discovery; the second concerns the applicant’s proposed interrogatories.
3 The applicant’s case concerns contracts identified in the statement of claim as “Radio Rentals Contracts”. The case is relevantly based on the identification of “Unfair Contract Terms” in those contracts. They include terms which:
(1) did not entitle consumers to buy the “Goods” they were “renting” and “trying” for $1; and
(2) did not give consumers the right to buy “Similar Goods” of the same quality for $1.
4 The applicant alleges, relevantly, that these terms were not reasonably necessary to protect the legitimate interests of the respondent and, instead, were a means by which it avoided certain protections of consumer protection legislation. This allegation is relevant to whether the Unfair Contract Terms were “unfair” within the meaning of s 12BF of the Australian Securities and Investments Commission Act 2001 (Cth) (para 60 of the statement of claim) and whether the respondent engaged in unconscionable conduct by entering into the relevant contracts (para 66 of the statement of claim).
5 As to (1), the respondent admits that the relevant terms did not entitle consumers to buy the “Goods” they were “renting” and “trying” for $1. As to (2), the respondent says that consumers were given a right to buy “Similar Goods” in particular circumstances set out in its defence.
6 In answer to an allegation that the applicant was not reminded of her rights under one of the relevant contracts, the respondent alleges that “in accordance with the respondent’s usual practices”, the applicant was sent a letter stating that she would “soon” be able to (a) purchase a similar product to the goods the subject of the contract for $1, or (b) make an offer to purchase the goods the subject of the contract. This letter also allegedly informed the applicant that many consumers made an offer of $1 to purchase the goods the subject of their contracts and were approved.
7 The respondent also alleges that the applicant was sent two other letters “[i]n accordance with the respondent’s usual practices”. The first of these allegedly stated that the applicant could, in one month, make an offer to purchase a similar product to the goods the subject of the contract for $1. The second of these stated that, as she had now completed 36 months of continuous rental of the goods the subject of the contract, the applicant could make an offer to purchase a similar product to the goods the subject of the contract for $1.
8 The respondent further alleges that the applicant was subsequently sent two further letters, both stating that after 36 months from the date of the contract she could (a) purchase similar goods to the goods the subject of the contract for $1, or (b) offer to purchase the goods the subject of the contract.
Discovery
9 In determining whether to order discovery (or, in this case, further discovery), the Court has a broad discretion and will balance the costs, time and possible oppression to the producing party against the importance and likely benefits to the applying party: United Salvage Pty Ltd v Louis Dreyfus Armateurs SNC [2006] FCA 116 at [3].
“Refinement” of category 8
10 The respondent has given discovery of documents by category. Category 8 is:
Any final report of legal and/or compliance matters to the Board Audit, Risk and Compliance Committee and to the Key personnel in relation to the marketing of Radio Rentals contracts.
11 The respondent has discovered few or no documents in this category. The applicant now wishes to broaden the discovery to obtain documents following within the following category:
Any final report … to the Board and/or the Board Audit, Risk and Compliance Committee and/or to the Key Personnel in relation to:
(a) the marketing and/or sales of Radio Rentals Contracts.
(b) the Unfair Contract Terms; and/or
(c) customer service.
12 Approximately 35 individuals have been identified as the “Key Personnel”.
13 The “Unfair Contract Terms” are identified in para 8 of the statement of claim (see [3] above).
14 In support of the proposed further discovery, the applicant’s solicitor, Mr Slade, deposed:
I suspect that the respondent may have produced few or no documents … due to:
(a) the respondent’s narrow interpretation of the categories compared to that of the applicant; and/or
(b) terms in the categories which limit the scope of the category, such as… “final report”.
15 In oral submissions, senior counsel for the respondent, Mr Halley SC, submitted that the further discovery is oppressive where approximately 1.5 million documents have been identified in relation to the “Key Personnel”. Further he submitted that, while the term “final report” is reasonably clear in the case of documents provided to the Board or the Board Audit, Risk and Compliance Committee, it does not adequately identify or limit the documents that would be discoverable in connection with any of 35 “Key Personnel”.
16 If discovery of categories of documents are sought, they should be framed so as not to be too wide and need to be stated with sufficient specificity: Austal Ships Pty Ltd v Incat Australia Pty Ltd [2009] FCA 368 at [150]. It is also important when framing categories that they should be shown to be relevant to the dispute: KGL Health Pty Ltd v Mechtler [2008] FCA 273.
17 I will order discovery of the category limited to documents provided to the Board and/or the Board Audit, Risk and Compliance Committee. I am not persuaded that the respondent should be required to give discovery of the expanded category of documents, primarily because I accept Mr Halley SC’s submission that it is not expressed in a meaningful way in relation to “Key Personnel”. Further, the term “final report” does not elucidate the documents which might advance the applicant’s case or adversely affect the respondent’s case. It was not suggested that the applicant is seeking discovery of any particular “final report”.
Additional discovery concerning “Damage Liability Reduction”
18 The applicant also seeks discovery of the following two categories of documents:
13. All documents reporting to the Board and/or subcommittee of the Board and/or Key Personnel on Damage Liability Reduction in relation to Radio Rentals Contracts, addressing profitability during the Discovery Period in dollar and/or percentage terms.
14. All documents recording the total number and/or value attributable to Radio Rentals Contracts provided to the Board and/or subcommittee of the Board and/or Key Personnel which were the subject of:
(a) a Radio Rentals Contract Consumer’s attempts, expressly or in effect, to exercise their entitlement to Damage Liability Reduction during the Discovery Period; and
(b) approval or acceptance by Radio Rentals of the exercise of Damage Liability Reduction during the Discovery Period.
19 I have assumed that the discovery is sought in relation to a particular subcommittee of the Board, the identity of which is agreed between the parties.
20 Mr Halley SC’s submissions in relation to these categories essentially replicated his submissions concerning category 8. That is, the proposed discovery is oppressive and the term “reporting” in para 13 does not adequately identify or limit the documents that would be discoverable in connection with the “Key Personnel”.
21 As to para 13, and for similar reasons to those given above concerning the proposed extension of category 8, I am not persuaded that the respondent should be required to give further discovery in so far as it relates to reporting to Key Personnel.
22 Paragraph 14 does not use the language of “report” or “reporting”. In my view, para 14 is significantly limited by seeking only documents “recording the total number and/or value attributable” to contracts answering the descriptions in sub-paras (a) and (b). In my view, the burden of providing discovery in answer to para 14 is unlikely to require an extensive review of documents, particularly as a result of the further limitation that the sought documents are only those that were provided to “the Board and/or subcommittee of the Board and/or Key Personnel”.
23 Accordingly, I will order discovery of the category of documents in para 14.
Interrogatories
24 The applicant seeks to administer 14 interrogatories for each of six financial years.
25 The relevant legal framework is set out in Lynch v Cash Converters Personal Finance Pty Ltd (No 4) [2018] FCA 988 at [22] to [33].
26 In support of the respondent’s argument that the interrogatories are, on their face, oppressive, Mr Halley SC said that the total number of Radio Rentals Contract Consumers for the six year period is 186,063 and the total number of Radio Rentals Contracts is 465,488.
27 Proposed interrogatories 1 and 2 ask for the total number of Radio Rentals Consumers and Radio Rentals Contracts for each financial year in the Discovery Period. Mr Halley SC acknowledged the potential relevance of answers to the first two interrogatories, and I will grant leave for those to be administered.
28 The balance of the proposed interrogatories are concerned with offers received under Radio Rentals Contracts for the purchase of either goods which had been rented or “Similar Goods”. Ms Francois, counsel for the applicant, argued that these interrogatories are relevant to whether the “Unfair Contract Terms” were not reasonably necessary to protect the legitimate interests of Radio Rentals and were a means by which it avoided consumer protection legislation.
29 Ms Francois argued that answers to the interrogatories, which she submitted are likely to show that many consumers made a relevant offer which was accepted, would support a case that the inclusion of the Unfair Contract Terms had no practical impact for the respondent and, therefore, were a device to avoid compliance with consumer protection legislation.
30 Mr Halley SC argued that the answers to the interrogatories could not substantially advance the applicant’s case having regard to the admissions and allegations made by the respondent in its defence, referred to above. That is, on the respondent’s own case, it systematically encouraged consumers to make offers of the relevant kind, many customers made those offers and many were approved.
31 I accept Mr Halley SC’s argument. In the light of the respondent’s case, I am not persuaded that it will advance the applicant’s case to adduce more precise evidence about how many offers were approved.
32 Accordingly, I will grant leave to administer only interrogatories 1 and 2 for each financial year in the discovery period
I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson. |
