FEDERAL COURT OF AUSTRALIA

 

Brookfield v Yevad Products Pty Ltd [2004] FCA 1164

PRACTICE AND PROCEDURE – setting aside judgment – discovery – obligation to make discovery – whether discovery of documents withheld fraudulently or deliberately – where respondent’s representatives became aware of undiscovered documents – whether documents had been discovered a train of inquiry would have opened up for applicants – probable effect of documents on trial judge’s decision – grounds for setting aside judgment – setting aside judgment where obligations of discovery not complied with.

Federal Court Rules, O 15

Hip Foong Hong v H Neotia and Company [1918] AC 888 cited

Cabassi v Vila (1940) 64 CLR 130 cited

Jonesco v Beard [1930] AC 298 cited

Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 cited

Brookfield v Davey Products Pty Ltd [1996] FCA 24; (1996) 14 ACLC 303 related

Brookfield v Davey Products Pty Ltd [1998] FCA 535; (1998) ATPR 41-635 related

Brookfield v Davey Products Pty Ltd [2001] FCA 104 related

Brookfield v Yevad Products Pty Ltd [2002] FCA 1376 related

Brookfield v Davey Products Pty Ltd [1996] FCA 971 related

Davies v Eli Lilly & Co [1987] 1 All ER 801 cited

Rockwell Machine Tool Co Ltd v E P Barrus (Concessionaires) Ltd [1968] 2 All ER 98 cited

Mulley v Manifold (1959) 103 CLR 341 cited

Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Company (1882) 11 QBD 55 cited

Orr v Holmes (1948) 76 CLR 632 cited

Council of the City of Greater Wollongong Corporation v Cowan (1955) 93 CLR 435 cited

Commonwealth Bank of Australia v Quade (1991) 178 CLR 134 applied

Londish v Gulf Pacific Pty Ltd (1993) 117 ALR 361 cited

Quade v Commonwealth Bank of Australia (1991) 27 FCR 569 cited

IAN WALTER BROOKFIELD AND SEPTIC PRODUCTS AUSTRALIA PTY LTD (IN LIQ) v YEVAD PRODUCTS PTY LTD (FORMERLY KNOWN AS DAVEY PRODUCTS PTY LTD) ACN 004 813 192

 

SG 112 of 1993

 

 

 

LANDER J

ADELAIDE

9 SEPTEMBER 2004

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	SG 112 OF 1993

 

BETWEEN:	IAN WALTER BROOKFIELD FIRST APPLICANT
AND:	SEPTIC PRODUCTS AUSTRALIA PTY LTD SECOND APPLICANT
AND:	YEVAD PRODUCTS PTY LTD RESPONDENT
JUDGE:	LANDER J
DATE OF ORDER:	9 SEPTEMBER 2004
WHERE MADE:	ADELAIDE

 

THE COURT ORDERS THAT:

 

1.         The applicants to bring into Court short minutes of order to reflect and give effect to these reasons.

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	SG 112 OF 1993

 

BETWEEN:	IAN WALTER BROOKFIELD FIRST APPLICANT
AND:	SEPTIC PRODUCTS AUSTRALIA PTY LTD SECOND APPLICANT
AND:	YEVAD PRODUCTS PTY LTD RESPONDENT

 

JUDGE:	LANDER J
DATE:	9 SEPTEMBER 2004
PLACE:	ADELAIDE

REASONS FOR JUDGMENT

General Introduction

1                     The issues to be decided arise from notices of motion filed by the two unrepresented applicants on 27 November 1998, 12 February 2003 and 1 May 2003 seeking several orders, including an order that the judgment and orders of the trial judge in this matter, given on 8 February 1996 and 19 December 1997, be set aside.  The applicants failed in the proceedings against the respondent before the trial judge.

2                     The orders sought and the grounds for those orders will be more precisely identified later in these reasons.  At this stage, it is enough to say that the applicants complain that the respondent failed to make proper discovery of the documents which the respondent was bound to discover before trial or at any time before judgment.

3                     This matter has a long and complicated history and some attempt should be made to introduce the matter as a whole.

4                     These proceedings centre around waste-water treatment systems in which Mr Brookfield (the first applicant) was involved or had an interest.

5                     Mr Brookfield held a 50% shareholding in the second applicant, Septic Products Australia Pty Ltd (SPA) which manufactured and installed waste-water systems designed to clarify waste-water for irrigation use.  Mr Brookfield was also the Chief Executive Officer and a director of SPA.  The other shareholder of SPA was his former partner.  That company’s history will be discussed in some detail later.

6                     There were three waste water treatment systems in which Mr Brookfield and SPA were involved or had an interest.  The first system was known as the Parco Beaver system.  The second system was a modification of the Parco Beaver system (modified Parco Beaver system); it incorporated a different filter medium which Mr Brookfield had designed.  The third system, the BPS Trickle Filter system (BPS system), was entirely Mr Brookfield’s own design.  The three systems are described in detail at par [48] of these reasons.  The relationship between Mr Brookfield and each of the systems is discussed at pars [26] to [34] of these reasons.

7                     In October 1990 Mr Brookfield approached the respondent, which was then called ‘Davey Products Pty Ltd’, to provide him with various pumps to use in his waste-water systems.  Each system required two pumps.  The two pumps which were supplied by the respondent were the Doc 3 and Doc 7 pumps.

8                     The pumps supplied by the respondent and installed in the waste-water systems failed prematurely due to wearing of the pump shaft and the failure of contact lip seals which were designed to prevent the water being pumped from coming into contact with the pump motor.

9                     Mr Brookfield brought proceedings in his own name, and caused SPA to bring proceedings against the respondent (and two other respondents) seeking relief pursuant to several causes of action under the Trade Practices Act 1974 (Cth) (the TPA), and the Misrepresentation Act 1972 (SA), and in contract and negligent misrepresentation (the principal proceedings).  The claims against the two other respondents were settled shortly before the trial of the principal proceedings and no further reference needs to be made to those respondents.

10                  Both applicants’ claims failed before the trial judge, who gave her decision on 8 February 1996 (many claims pleaded failed because they were misconceived or procedurally deficient):  Brookfield v Davey Products Pty Ltd [1996] FCA 24; (1996) 14 ACLC 303.

11                  Her Honour found that SPA had been the relevant purchaser of pumps and it was that company, not Mr Brookfield, that had suffered the pleaded loss.  ‘No attempt was made… to prove loss or damage suffered by Mr Brookfield directly.’

12                  SPA was in liquidation when the principal proceedings went to trial.  Mr Brookfield purported to sue in his own right pursuant to a deed of assignment by which the liquidator of SPA assigned to Mr Brookfield ‘the choses in action the subject matter’ of the trial.  Following an amendment to the pleadings, the deed was treated as constituting a purported equitable assignment (the assignment did not comply with the Law of Property Act 1936 (SA)).  SPA was named as a co-applicant to satisfy the procedural requirement  ‘as to joinder of an assignor of a chose in action’.

13                  The pleadings did not distinguish between claims for relief made by Mr Brookfield personally and those made pursuant to the deed of assignment.

14                  Consistent with the finding referred to in par [11], Mr Brookfield was held not to have any right to relief independently of the deed of assignment because the pleaded losses were those of SPA and SPA was the proper party.

15                  The trial judge held that Mr Brookfield was not entitled to relief pursuant to s 82 of the TPA because ‘on its proper construction, s 82 of the Trade Practices Act does not allow recovery by an assignee who has not himself or herself suffered the loss or damage sought to be recovered’.

16                  Her Honour held that the deed constituted a valid sale by the liquidator of property of SPA pursuant to s 477(2)(c) of the then Corporations Law.  Having already ruled against the applicants in relation to the Trade Practices causes, her Honour considered the claims in negligent misrepresentation and breach of contract.

17                  The claim for negligent misrepresentation failed because the trial judge held that the applicants had failed to establish a causal relationship between representations made by the respondent and any loss suffered by SPA.

18                  The claim for breach of contract also failed, the reasons for which need to be examined in more detail later.

19                  The applicants appealed against the whole of the trial judge’s decision to the Full Court of the Federal Court, but the appeal was dismissed: Brookfield v Davey Products Pty Ltd [1996] FCA 971.

20                  Special leave to appeal to the High Court was sought and refused.

21                  Subsequently, Mr Brookfield has made several attempts to set aside the orders of the trial judge and stay the execution of orders for costs made against him in the principal proceedings, but those attempts have been unsuccessful.  This is a further attempt to set aside the trial judge’s orders.  Before addressing the facts, I need to say something about these notices of motion seeking to set aside the trial judge’s judgment.

22                  The applications before me are to have the judgment in this matter SG112 of 1993 set aside.  It can be seen, therefore, that the notices of motion were filed in the proceedings in which judgment was entered for the respondents.  Earlier authorities suggest that an application to set aside a judgment on the ground that the judgment was procured by fraud is by separate action: Hip Foong Hong v H Neotia and Company [1918] AC 888; Cabassi v Vila (1940) 64 CLR 130 at 147.  However, the rule is not inflexible: Jonesco v Beard [1930] AC 298 at 301.  In some circumstances, the Court will entertain a claim to set aside a judgment said to be procured by fraud in the action in which the judgment was based.  The reason why courts had formerly insisted upon the bringing of a separate action was to ensure that the charge of fraud was properly particularised in that separate action.

23                  However, even if the application is permitted to be made in the original action that does not mean that an applicant’s obligation to fully particularise the claim is relaxed.  In Jonesco v Beard, Lord Buckmaster said at 301:

‘           If, however, for any special reason departure from the established practice is permitted, the necessity for stating the particulars of the fraud and the burden of proof are no whit abated and all the strict rules of evidence apply.  The affidavits used must, therefore, be examined as on final trial; every particle of hearsay evidence and reference to documents, not produced, must be excluded, and it must be kept constantly in mind that the rules which permit, on interlocutory proceedings, hearsay evidence, where the exact source of the information is afforded, have no more application than they would possess were the deponent a witness in the box speaking at the trial.’

24                  Order 35 rule 7 of the Federal Court Rules provides:

‘           7  (1)  The Court may vary or set aside a judgment or order before it has been entered.

            (2)  The Court, where it is not exercising its appellate or related jurisdiction under Division 2 of Part III of the Act, may if it thinks fit vary or set aside a judgment or order after the order has been entered where—

(a)   the order has been made in the absence of a party, whether or not the absent party is in default of appearance or otherwise in default and whether or not the absent party had notice of the motion for the order;

(b)   the order was obtained by fraud;

(c)    the order is interlocutory;

(d)   the order is an injunction or for the appointment of a receiver;

(e)    the order does not reflect the intention of the Court; or

(f)    the party in whose favour the order was made consents.

            (3)  A clerical mistake in a judgment or order, or an error arising in a judgment or order from an accidental slip or omission, may at any time be corrected by the Court.

            (4)  Subrule (2) shall not affect the power of the Court to vary or terminate the operation of an order by a supplementary order.’

25                  In my opinion, O 35 r 7(2)(b) contemplates that an application to set aside a judgment obtained by fraud may be made in the action in which the judgment was entered.  That rule gives power to a judge of the Court, not exercising the appellate or related jurisdiction of the Court, to vary or set aside a judgment.  Of course, the Court will be vigilant to ensure that the claim of fraud is properly particularised.  The rule should not be understood to mean that this Court is not concerned to ensure that litigation is brought to an end.

The Parties - Applicants

26                  Mr Brookfield is a qualified master plumber who, at the relevant time, carried on the business of a manufacturer and installer of septic tanks and waste-water systems using the registered business name ‘Brookfield Plumbing Services’.

27                  The first waste-water system with which Mr Brookfield became involved was the ‘Parco Beaver Aerobic Septic System’ (Parco Beaver system) in respect of which the company Parco Pty Ltd (Parco) had applied to register a patent in early 1989.  Allwater Treatment Pty Ltd (Allwater) was licensed by Parco to manufacture and sell the system.

28                  In early 1989, Mr Brookfield became a shareholder in a company, Waterite (SA) Pty Ltd, which became the supplier of the Parco Beaver system in South Australia.  Mr Brookfield installed the systems using the business name Brookfield Plumbing Services.

29                  A provisional liquidator was appointed to Allwater in September 1990.  Parco, which had assigned its rights with respect to the Parco Beaver system to Allwater, re-acquired those rights from the provisional liquidator.  On 6 December 1990, Mr Brookfield entered into a deed with Parco whereby Mr Brookfield was licensed to manufacture and sell the Parco Beaver system in Australia, and was authorised to incorporate a company to be called Parco Beaver Australia Pty Ltd (PBA).

30                  PBA was duly incorporated in July 1991 and the assets and liabilities of Mr Brookfield’s business, Brookfield Plumbing Services, were transferred to that company.

31                  In September 1991, Mr Brookfield received provisional patent approval for a waste water treatment system known as the BPS Trickle Filter System (BPS system).  From that time, PBA installed only BPS systems.

32                  In January 1992, Parco terminated the deed between it and Mr Brookfield.

33                  Parco’s application for the Parco Beaver system was accepted in November 1991 and the patent was sealed in May 1992.

34                  Parco brought proceedings against Mr Brookfield and PBA in the Supreme Court of New South Wales seeking interlocutory injunctive relief.  In June 1992, orders were made restraining Mr Brookfield and PBA from manufacturing or selling any product under the name of Parco Beaver.  It was shortly after this that the name of PBA was changed to Septic Products Australia Pty Ltd, the second applicant.

SPA’S STATUS

35                  As I have already said, SPA went into liquidation when, on 5 April 1993, an order was made for its winding up.  Mr Russell Heywood-Smith was appointed liquidator.  The winding up order gave rise to significant difficulties for the applicants in the principal proceedings.  SPA’s status in these applications also needs to be examined.

36                  During final addresses at the trial of the principal proceedings, an application was made ‘for Mr Brookfield to be granted authority to conduct this litigation’ using SPA’s name.  Her Honour made the order authorising Mr Brookfield to name SPA as a co-applicant in the principal proceedings.

37                  SPA’s status changed again after judgment and before these notices of motion were brought.  In February 1998 SPA was deregistered.  At the commencement of the hearing of these notices of motion SPA had ceased to exist because it had been deregistered: s 601AD(1) Corporations Act 2001 (Cth).

38                  SPA’s status was raised on the first day of the hearing by the respondent’s counsel, Mr Wells QC, who indicated that the respondent would not object to the matter proceeding provided Mr Brookfield gave certain undertakings as to the re-registration of SPA.

39                  For reasons which I could not understand, Mr Brookfield sought to resist effecting the re-registration of SPA.  However, I advised him that there was a significant risk that the notices of motion would ultimately be dismissed because SPA, which was a necessary applicant, had ceased to exist.

40                  After some argument, Mr Brookfield gave the following undertakings which had been requested of him by the respondent in a letter dated 3 September 2003:

‘(a) That [Mr Brookfield] will forthwith, and in any event, before the conclusion of this hearing, take all necessary steps to obtain re-registration of SPA, and the appointment of a liquidator of [sic] the re-registered company; and

 

(b) That upon that re-registration, and the fulfilment of any conditions imposed upon the re-registration or appointment, [Mr Brookfield] will forthwith seek the leave of the court at [his]  own expense and risk as to costs to use the name of SPA as a co-applicant to commence and prosecute this Notice of Motion.

(c) That [Mr Brookfield] will enter into a binding and enforceable agreement with the liquidator of SPA to indemnify the company against all costs and expenses incurred (including adverse costs orders) in relation to the present proceedings’

41                  The respondent sought the undertaking in terms of paragraph (b) above because it argued Mr Brookfield’s authority to name SPA as a co-applicant expired when the proceedings in SG112 of 1993 were finally determined.  It argued that the notice of motion presently before me was in substance a fresh proceeding, and the authority for Mr Brookfield to use SPA’s name did not survive the refusal of the special leave application to the High Court.

42                  On 3 December 2003, the District Registrar of this Court ordered that:

‘Pursuant to s601AH(2) of the Corporations Act 2001 the Australian Securities and Investment Commission reinstate the registration of Septic Products Australia Pty Ltd (in Liquidation) (ACN 050 294 972).’

43                  ASIC confirmed the re-registration of SPA by letter dated 12 December 2003 and a liquidator was appointed by order of the Registrar on 19 December 2003.  An indemnity was given to the liquidator in the following terms:

‘I, Ian Walter Brookfield, being a director of [SPA], hereby agree to indemnify you and keep you indemnified against all costs, actions, suits, claims, demands, adverse costs orders, expenses and liabilities that may be assessed which may be brought or made against or incurred by you in connection with your activities as liquidator of the company if you should be so appointed.’

44                  Paragraphs (a) and (c) of Mr Brookfield’s undertaking were thereby discharged.  On 22 December 2003 I relieved Mr Brookfield of the undertaking given in paragraph (b) above, given that it was contemplated that SPA be deemed to have existed during the course of the proceedings.

45                  I will proceed on the basis that Mr Brookfield has authority to use the name of SPA in the present proceedings and that SPA is properly a party to these applications.

The Parties – The Respondent

46                  The respondent was formerly known as Davey Products Pty Ltd (Davey) and, at the relevant time, carried on the ‘business of importer and supplier of pumps and other associated irrigation products’.  I shall identify the circumstances in which the respondent changed its name later.

The Waste Water Systems and Pumps

47                  The various waste water systems from time to time installed and/or manufactured by Mr Brookfield were described by the trial judge as follows:

‘WASTE WATER SYSTEMS

(a)       Parco Beaver System

…

The Parco Beaver system utilises two tanks each divided into two compartments.  The first tank serves as a settlement tank with primary settlement taking place in its larger compartment.  Waste water, with limited solids, flows from the smaller compartment of the first tank into the larger compartment of the second tank.  The larger compartment of the second tank is known as the holding tank.  It is situated beneath a bio-filter module.  The waste water is repeatedly pumped by a recirculation pump above the bio-filter module from where it trickles through the filter medium back to the holding tank.  By this process clarification of the waste water is achieved.  Clarified waste water flows into the smaller compartment of the second tank where it is treated with chlorine.  From this compartment it is pumped by the irrigation pump out of the system, usually through a garden irrigation system.

(b)       Modified Parco Beaver System

The Parco Beaver system utilises short lengths of cut plastic piping held within a concrete bowl as its filter medium.  It is this aspect of the system which Mr Brookfield modified.  The modification involved the replacement of the cut plastic piping with a series of plastic discs set one above the other on a horizontal plane ("the disc pack").  The discs had a regular pattern of small holes drilled through them so as to allow water discharged over the top disc to trickle through the series of discs and return to the holding tank.

(c)        BPS System

The BPS system is, in essence, a modification devised by Mr Brookfield of the Parco Beaver system.  The settlement tank is not materially different from that used in the Parco Beaver system.  The second tank as designed for the BPS system is illustrated in annexure 2 to these reasons [not reproduced].  The significant differences between the second tank of the Parco Beaver system and the second tank of the BPS system include the following:-

(a)        the BPS system used the disc pack as the filter medium rather than the cut pipe used in the Parco Beaver systems;

(b)        the BPS system did not use a concrete filter bowl but rather a free-standing PVC column which supported the disc pack;

(c)        in the BPS system the stilling chamber extended to the floor of the tank although it had a 100 millimetre diameter circular opening 50 millimetres above the floor of the tank.  In the Parco Beaver system the stilling chamber was open at the bottom and did not reach to the floor of the tank;

(d)        the BPS system returned water which had passed over the filter packs to the stilling chamber.  The Parco Beaver system returned such water to the outside of the stilling chamber.’

48                  I shall refer to the three systems in the same manner as the trial judge.

49                  On appeal, Mr Brookfield complained, inter alia, that the trial judge misunderstood the evidence concerning the operation of the waste water systems.  For example, Mr Brookfield claimed that, in fact, the Parco Beaver system also returned filtered water to the stilling chamber, and not to the outside of that chamber, as the trial judge found in para (d) above.

50                  The Full Court held that:

‘On the evidence the learned trial judge did not misunderstand the way in which waste water returned from the filter to the holding tank in the Parco Beaver System.’

51                  Although the trial judge’s finding was upheld by the Full Court, there is evidence, contrary to that finding, to support Mr Brookfield’s contention that the Parco Beaver system also returned water to the stilling chamber.  However, my function on these applications is not to decide whether the trial judge’s decision was correct on the evidence before her or, indeed, whether the Full Court’s decision was correct.  That would be quite inappropriate.

The Dispute and Relevant Findings of the Trial Judge: Lowara Doc 3 Pumps

52                  Mr Brookfield approached the respondent in early October 1990 before the incorporation of PBA (the second applicant, later called SPA) to inquire about purchasing pumps for his waste water systems.  He spoke to the State Manager, Mr Dallas Wilsdon.  He required two pumps, one to recirculate waste water over the filter medium (‘the recirculation pump’), and one to pump chlorinated water out of the system for irrigation use (‘the irrigation pump’).

53                  Mr Brookfield said that in early October 1990 he met with Mr Wilsdon at the offices of the respondent and advised Mr Wilsdon that he wanted to discuss the use of an alternative recirculation pump in his waste water system.  The pump then being used was the ‘Grundfos KP 100’.  Mr Brookfield said that he told Mr Wilsdon that the pump would be used to recirculate waste water over a filter medium and detailed the cycle times.  Mr Brookfield claimed that certain representations were made to him by Mr Wilsdon regarding the suitability of pumps sold by the respondent for the systems being manufactured by Mr Brookfield.  His case was that Mr Wilsdon indicated that the ‘Lowara Doc 3’ pump would be a suitable alternative to the Grundfos KP 100.

54                  On this occasion, Mr Wilsdon provided certain brochures to Mr Brookfield containing performance statistics and other information for Lowara pumps.

55                  Shortly after this meeting, Mr Wilsdon attended at the applicants’ premises and viewed a display unit of the Parco Beaver System pumping fresh water.  The Parco Beaver system used the cut pipe filter medium.  Mr Brookfield claimed that having seen the display unit, Mr Wilsdon confirmed the suitability of the Lowara Doc 3 pump for use as a recirculation pump in the system.  Mr Wilsdon did not recall any discussion on this occasion regarding Doc 3 pumps.  He said that discussions regarding the suitability of the Doc 3 pump as a recirculation pump took place at the meeting at Davey’s premises.  He agreed that he may have said that ‘Davey pumps were going to be more than suitable for the job at hand’.

56                  The trial judge preferred the evidence of Mr Wilsdon.

57                  Doc 3 pumps were subsequently supplied by the respondent to the applicants for inclusion in their waste water systems.  The trial judge held that the particular purpose made known to the respondent for which the Doc 3 pumps were required was for recirculation of waste water in a Parco Beaver system; not a system which incorporated the disc pack filter in place of the cut-pipe filter.

58                  The trial judge found that 50 per cent of the Doc 3 pumps supplied by Davey to SPA failed in use.  The failure rate of 50 per cent led to a finding by the trial judge that the Doc 3 pumps were not fit for the purpose for which they were in fact used.  However, she did not find that the pumps were not fit for the purpose for which they were made known to the respondent.

59                  Mr Brookfield commenced installing the original Parco Beaver system in 1989.  He commenced installing the modified Parco Beaver system which incorporated the disc-pack filter in South Australia during 1990 and in New South Wales during 1991.  From September 1991, Mr Brookfield installed only BPS Systems which also incorporated the disc-pack filter.  The trial judge’s conclusion was that ‘all, or nearly all, waste water systems installed by [SPA] utilised disk packs as the filter medium’.

60                  The Doc 3 pumps failed because working fluid came into contact with the pump motors as a result of the failure of contact lip seals.

61                  The applicants’ case at trial was that the Doc 3 pump shafts were manufactured from steel which was too soft or prone to wear for the use of contact lip seals.  An expert called by the applicants expressed the opinion that the pump shafts were too soft but explained that hardness of the shaft is only one factor relevant to wear.

62                  The trial judge noted that Doc 7 pumps, which had been installed as irrigation pumps and pumped filtered, chlorinated water, failed at a much lower rate than the Doc 3 pumps.  Her Honour indicated that if the wear resulting in lip seal failure was attributable only to the softness of the pump shaft, then one would expect similar rates of failure in both pumps.

63                  The evidence of an expert, Mr Mark Gobbie, who was called by the respondent, was that use of the disc-pack filter medium resulted in the development of uneven biomass growth resulting in ‘large pieces of biomass sloughing from the filter medium into the area of the holding tank in which the recirculation pump (for present purposes, the Doc 3 pump) operates’.

64                  Mr John Weir, another expert witness, also called by the respondent, gave evidence that the lip seals failed in the Doc 3 pumps because ‘the pumps were operated for an extended period in an environment containing an excessively high concentration of abrasive particles’.

65                  The trial judge concluded 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 [SPA] 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.’

66                  The case in negligent misrepresentation failed.

67                  The applicants’ case in contract was that it was an express or implied term of the contract for the sale and purchase of the pumps that ‘they were of merchantable quality and fit for the purpose made known to [the respondent].’  In support of this claim, the applicants relied on s 14 of the Sale of Goods Act 1895 (SA) which relevantly provided:

‘14.      Subject to the provisions of this Act, and of any Statute in that behalf, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale, except as follows:

I           Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller's skill or judgment, and the goods are of a description which it is in the course of the seller's business to supply … there is an implied condition that the goods shall be reasonably fit for such purpose:  Provided that in the case of a contract for the sale of a specified article under its patent or other trade name, there is no implied condition as to its fitness for any particular purpose;

II          Where goods are bought by description from a seller who deals in goods of that description ... there is an implied condition that the goods shall be of merchantable quality:  Provided that if the buyer has examined the goods, there shall be no implied condition as regards defects which such examination ought to have revealed ...’

68                  The trial judge held that the particular purpose which was made known to the respondent for which the Doc 3 pumps were required by Mr Brookfield was the use of the Doc 3 pump in the Parco Beaver system.  The Parco Beaver system used cut-pipe as the filter medium.

69                  There were some faults in certain pumps which were provided by the respondent which rendered the pumps not fit for purpose. However, those faults were unrelated to shaft wear and lip seal failure and need not be further addressed.

70                  Her Honour found that the particular purpose for which the Doc 3 pumps were actually required, that is, for use as a recirculation pump in a waste water system using the disk-pack filter (the BPS system), was never made known to the respondent.  Therefore, ‘[t]he claim for breach of an implied condition of the contracts of sale of Doc 3 pumps between [SPA] and the respondent based upon the first proviso of s 14 of the Sale of Goods Act failed’.

The Dispute and Relevant Findings of the Trial Judge: Lowara Doc 7 Pumps

71                  Mr Brookfield used the Doc 7 pump as the irrigation pump in his waste water systems from about July 1989.  Following the liquidation of Allwater, Mr Brookfield approached the respondent as an alternative supplier of Doc 7 pumps.

72                  The respondent supplied Doc 7 pumps to Mr Brookfield and SPA from October 1990.

73                  In dealing with the contracts for the sale and purchase of Doc 7 pumps, the trial judge said:

‘In my view the… contracts for the supply by the respondent to Mr Brookfield of Doc 7 pumps were contracts “for the sale of a specified article under its patent or other trade name” within the meaning of the proviso to paragraph I of s14 of the Sale of Goods Act.  The evidence does not suggest that the position was different with respect to the contracts between [SPA] and the respondent for the sale and purchase of Doc 7 pumps.

I conclude that the contracts between [SPA] and the respondent for the sale of Doc 7 pumps included no implied condition of fitness for any particular purpose.’

74                  Her Honour further noted:

‘At the time when he first approached the respondent with respect to purchasing pumps from it, he had been using Doc 7 pumps supplied by Allwater in Parco Beaver systems since 1989.  As is mentioned above, he had witnessed extensive testing of Doc 7 pumps by Allwater, apparently in conjunction with the respondent.  He had found that the Doc 7 pumps performed satisfactorily in the Parco Beaver system and he was happy to continue to use them.  I regard this as compelling evidence that the steel with which the Doc 7 pump shafts are manufactured is not in practice too soft for the satisfactory operation of such pumps in Parco Beaver systems.’

75                  The applicants’ claim in contract in respect of the Doc 7 pumps failed.

76                  In dismissing the claim for negligent misrepresentation, as it pertained to the Doc 7 pumps, the trial judge noted:

‘… the evidence as to the Doc 7 pumps falls short of establishing that in October 1990 Mr Brookfield himself placed reliance on the respondent in respect of the Doc 7 pump or that he acted in reliance on any representations made by the respondent in October 1990 as to the Doc 7 pump.’

77                  The negligent misrepresentation claim by SPA failed, however, because, as the trial judge found:

‘… it cannot sensibly be suggested on behalf of the applicants that any representations made by the respondent to Mr Brookfield in October 1990 concerning the Doc 3 and Doc 7 pumps were relied upon by [SPA], or were influential on [SPA] in any relevant way so far as its conduct of its waste water business was concerned.  In my view, the applicants have failed to establish the necessary relationship of proximity between [SPA] and the respondent to support the pleaded duty of care.  If I am wrong in this, I conclude that the applicants’ claim must in any event fail on the basis that no loss has been shown to have been suffered by [SPA] as a consequence of any representations made by the respondent.’

Sumprat Pumps

78                  During February and March 1991, due to a supply shortage, the respondent supplied Mr Brookfield with alternative pumps to the Lowara Doc 3 and 7 pumps.  The alternative pumps were known as ‘Sumprat’ pumps, and Mr Brookfield experienced the same problems with these pumps as he had with the Doc 3 pumps.  No Sumprat pumps were supplied to SPA, but 46 such pumps were invoiced to Brookfield Plumbing Services in February and March 1991.

79                  Claims made on behalf of SPA in negligent misrepresentation and contract also failed in relation to the Sumprat pumps.

THE TRIAL, THE APPEAL AND THE SUBSEQUENT COSTS ORDER

80                  On 8 February 1996 the trial judge dismissed the applicants’ proceedings and ordered the applicants to pay the respondent’s costs of the application to be taxed if not agreed.  The applicants seek to set aside those orders.

81                  On 12 September 1996 the Full Court of this Court (von Doussa, O’Loughlin and Lehane JJ) dismissed the applicants’ appeal and ordered the applicants to pay the respondent’s costs of the appeal.

82                  On 30 May 1997 the High Court of Australia (Dawson, Toohey and Kirby JJ) dismissed the applicants’ application for special leave to appeal to that Court with costs.

83                  On 19 December 1997 the trial judge varied the order for costs made on 8 February 1996 and ordered Mr Brookfield to pay the respondent’s costs specified in the sum of $380,493.82.  The applicants seek to set aside that order.

PROCEEDINGS SG 99 OF 1997

84                  On 16 December 1997, Mr Brookfield issued separate proceedings (SG99 of 1997) on his own behalf, and that of SPA, seeking a stay of execution of the costs order made against him by the trial judge in the principal proceedings ‘until perjury and fraud charges are laid against Mr Dallas Wilsdon (formerly of Davey Products Pty Ltd)’: Brookfield v Davey Products Pty Ltd [1998] FCA 535; (1998) ATPR 41-635.  The application claimed:

‘1.        The conduct of the respondents is questioned by the applicant and is outlined and will be pursued as follows.

2.         That the cost order be suspended until perjury and fraud charges are laid against Mr. Dallas Wilsdon (formerly of Davey Products Pty Ltd).

3.         Until fraud charges are laid against officers of Davey Products Pty Ltd.

4.         Until fraud charges are laid against the solicitors for the respondent, Piper Alderman.

5.         The suspension of cost orders to extend to the application to have judgment set aside is commenced.

6.         On the granting of such order, the applicant will keep this Honourable Court advised at all material times to all events with the perjury and fraud charges as and when they occur.

7.         The application to have judgment set aside will commence on the finality of the perjury and fraud charges being completed.

8.         Any such further orders this Honourable Court sees fit to impose.’

85                  A notice of motion was filed in those proceedings on 30 January 1998 seeking the following relief:

‘1.        For the suspension of the execution of the judgment of [the trial judge] dated 19 December 1997 [sic] until 2 August 1998 when the application to have judgment set aside will be served and filed.

2.         That the respondent make full and proper discovery of all correspondence in its possession or power located at or from its Melbourne office of Davey Products Pty Ltd with relation to its trading with Lowara Pumps in Italy and its trading with Gould Pumps in Singapore and Italy.’

86                  O’Loughlin J, who heard the notice of motion, treated the notice of motion of 30 January 1998 as having overtaken the relief sought in the application of 16 December 1997.  O’Loughlin J noted that, ‘[t]he date 19 December 1997 should, presumably, be 8 February 1996’.  The judgment was given on 8 February 1996.  The costs order was varied on 19 December 1997.

87                  The applicants relied for a stay on an affidavit sworn by Mr Dallas Wilsdon on 30 July 1995 in the principal proceedings.  It is not entirely clear whether that affidavit was tendered in the principal proceedings.  It was certainly marked [MFI R8].  The reason why I think it may also have been tendered is that the trial judge referred to the contents of the affidavit in her reasons.  She could not have done so unless the affidavit had been tendered.

88                  Mr Wilsdon was then, but is not now, the State Manager of the respondent.  In his affidavit, Mr Wilsdon had deposed to having inspected the records of the respondent and to having determined the number of pumps sold by the respondent throughout Australia and the number of pumps returned to, or replaced by the respondent for the five financial years commencing 1 July 1988 and concluding on 30 June 1993.   He also deposed to having determined from the respondent’s records, the number of pumps sold to manufacturers of waste water systems, and the number of such pumps returned to or replaced by the respondent during those years.  The affidavit exhibited schedules summarising the determinations, and exhibited the records upon which the determinations were said to have been based.

89                  He exhibited to his affidavit a summary of total pump sales and returns / replacements [Exhibit DW25] which indicated that there were ‘no records’ for the two financial years commencing on 1 July 1988 and concluding on 30 June 1990.

90                  Mr Brookfield complained that the documents contained in exhibit DW28 to Mr Wilsdon’s affidavit showed that there were records for pump returns during those two years, which were not discovered in the principal proceedings.  He complained that DW28 was inconsistent with DW25.

91                  Mr Wilsdon also exhibited a summary of sales to waste water system manufacturers and returns to or replacements by the respondent [Exhibit DW27] related to two waste water companies: ‘Envirocycle’ and ‘Biocycle’.  There is a notation at the end of the schedule stating: ‘These figures have been collated from Customer Sales Reports, Warranty Transaction Reports, and Return Job Cards over the above period’.

92                  Mr Brookfield complained that the documents referred to in this notation were also not discovered by the respondent.

93                  In the same affidavit, Mr Wilsdon deposed to there having been a fire in the offices of the respondent in 1993 which destroyed certain records.  He said:

‘69.      A fire in the office of Davey in Sydney in 1993 destroyed certain records of Davey.  Amongst those records were those which would allow me to determine why a pump was returned to or replaced by Davey.  Without those documents I have been unable to undertake that analysis …’

94                  The date which Mr Wilsdon said that the fire occurred was incorrect.  The fire had in fact occurred in 1991.  An affidavit of Robert Leopold Morrow, who was the credit manager for Davey since 1985 and the officer of the company responsible for co-ordinating its defence to the proceedings brought by Mr Brookfield and SPA up until 1995, sworn on 4 March 1998, deposing to the fact that the fire had occurred on 16 March 1991, was filed in the proceedings before O’Loughlin J.  Mr Morrow said that the only records which would have been housed in the offices where the fire occurred were those stored there in the six month period immediately preceding the fire, that is, records relating to the period between mid September 1990 and 16 March 1991.  Mr Morrow’s affidavit contradicted Mr Wilsdon’s affidavit in a number of material aspects.  First, the date of the fire.  Secondly, the documents which could have been destroyed.  Thirdly, the reason why Mr Wilsdon could not determine why a pump was returned or replaced before mid September 1990 and after 16 March 1991.

95                  Mr Brookfield complained that the failure to discover the documents referred to in the notation to Exhibit DW27 was deliberate.  O’Loughlin J found that those documents should have been discovered.

96                  Initially, Mr Brookfield alleged that Mr Wilsdon had perjured himself.  In the end result, however, Mr Brookfield did not pursue allegations of fraud and perjury, but maintained his complaint that the respondent had failed to make discovery of relevant documents, principally those referred to in the notation to Exhibit DW27 and to a lesser extent, those documents from which Exhibit DW25 were drawn.

97                  O’Loughlin J refused to grant a stay because ‘the complaints made by Mr Brookfield on behalf of the applicants on the subject of non-discovery of documents are not of sufficient substance to warrant the intervention of the Court’.  O’Loughlin J concluded that the applicants were on notice of the existence of such documents (at least in relation to the documents referred to in DW27) at trial by virtue of DW27 itself.  He said:

‘… Mr Brookfield acknowledged during the course of argument that he and his legal representatives were aware, prior to and during the course of the trial, of the information that is contained in Exhs DW25 and DW27.’

98                  O’Loughlin J concluded that, although there had been a failure to make discovery:

(1)        there was no fraud or deliberate failure to make discovery;

(2)        the documents were disclosed, and the deficiencies in discovery were self-evident, and quite capable of being pursued by Mr Brookfield and his solicitors before and at trial had they thought them important.  Indeed, ‘Mr Brookfield acknowledged that he did see reference to [the documents referred to in exhibit DW27] during the course of the trial’;

(3)        in any event, the issues raised by non-discovery did not go to the finding of a relationship between the established failure of a significant proportion of the Doc 3 pumps supplied to SPA by the respondent and the modifications effected by Mr Brookfield to the Parco Beaver system.

99                  O’Loughlin J’s reasons for judgment were published on 19 May 1998.  He made an order dismissing the applicants’ notice of motion filed on 30 January 1998 and he ordered the applicants to pay the respondent’s costs.

100               The proceedings before O’Loughlin J principally concerned the first respondent’s failure to make discovery, as evidenced by Mr Wilsdon’s own affidavit and the exhibits to that affidavit, but there was one further complaint made in the proceedings before O’Loughlin J which related to discovery.

101               In his affidavit, sworn on 4 March 1998 (which was tendered in the proceedings before me), Mr Morrow deposed that:

‘Although records postdating the fire would have existed in 1995 during the course of the trial they no longer exist because the respondent’s New South Wales Repairs Facility closed operations in March 1992 and at the time of a move of the New South Wales office to Moorebank in August 1996 all such records were destroyed.’

102               The records to which Mr Morrow was referring were ‘records including Job Cards and Goods Return Advice forms of the Sydney office’.

103               Mr Brookfield complained that the destruction of records in August 1996 took place after the Full Court appeal hearing in May 1996, but before the delivery of its judgment in September that year.  O’Loughlin J noted that ‘[n]one of the issues raised in the appeal to the Full Court addressed the need for the production or examination of the respondent’s records’.  His Honour was unable to draw any adverse inference against the respondent as a consequence of the destruction of documents.

104               Mr Brookfield’s complaint in relation to the non-discovery evidenced by Mr Wilsdon’s affidavit presumably encompassed the documents that Mr Morrow deposed were destroyed in August 1996.  That is, the documents said to have been destroyed in August 1996 were not a further category of documents not discovered, in addition to those to which reference was made in Mr Wilsdon’s affidavit.  The documents destroyed in 1996 were of the kind referred to in the notation to DW27.

105               An application by Mr Brookfield for an extension of time within which to file and serve a notice of appeal from the judgment of O’Loughlin J was refused by Mansfield J on 6 August 1998.  Those proceedings (SG99 of 1997) have been finally determined.

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.

THE HISTORY OF THESE PROCEEDINGS

107               On 27 November 1998, Mr Brookfield filed a notice of motion in these proceedings (SG112 of 1993).  These are the proceedings in which judgment was given by the trial judge dismissing the applicants’ claims against the respondent.  The following orders were sought:

‘1.        That the judgment of Branson J dated the 8^th day of February 1996 be set aside.

2.         That the judgment proceeded on a misapprehension as to the facts and the law.

 3.        The judgment was obtained by extrinsic fraud.

 4.        That this matter be transferred from Adelaide to Sydney.’

108               The notice of motion was in Mr Brookfield’s name only, but points of claim filed on 18 June 1999 purported to be on behalf of both the applicants.

109               In the points of claim filed on 18 June 1999, the applicants alleged that the respondent did not discover and had not discovered:

‘15….

(a)…

(i)         Customer Sales Reports;

(ii)        Warranty Transaction Reports;

(iii)       Return Job Cards;

(iv)       the source documents for the information contained in exhibit “DW25”;

(v)        notes, memoranda and other records of examination and testing of Lowara pumps returned as faulty;

(vi)       notes, memoranda, correspondence and other records of communications with Lowara as to the causes and extent of failure of the pumps.’

110               The points of claim contained the following allegations of fraud:

‘17.      The existence of the documents referred to in paragraph 15(a) was at all material times concealed from the Court and the applicants.

…

22.       [The respondent] by its servants and agents:

(a)        deliberately withheld from the applicant the documents relating to the extent of failures of the Davey Lowara pumps; or

(b)        alternatively, were recklessly indifferent to their obligation to make discovery and well knowing the documents would negate the basis of the defence to the applicants’ claim, turned a blind eye to its obligations to discover such documents and permitted its solicitors to defend the claim on grounds which it knew or ought to have known were false; or

(c)        alternatively, well knowing that the pumps were failing in large numbers instructed their solicitors to falsely assert that the pumps failed because of a modification in the applicants’ operating system when the respondent well knew that numbers of Lowara pumps were failing in exactly the same manner in other applications which did not involve such a modification;

(d)        destroyed documents which it well knew had been withheld from discovery when the appeal to the Full Federal Court was pending and which it knew:

(i)         would support the appeal; and

(ii)        would be relevant in any new trial ordered by that Court.’

111               Various procedural directions were made on the notice of motion and it was adjourned several times.  Several directions were not complied with by the applicants and the respondent filed a notice of motion on 23 September 1999 seeking the dismissal or a permanent stay of the applicants’ notice of motion.

112               The respondent argued that the applicants’ notice of motion of 27 November 1998 should be dismissed or stayed because the decision of O’Loughlin J refusing to stay execution of the trial judgment created an issue estoppel or was barred by reason of res judicata.  The respondent also contended that the notice of motion constituted an abuse of the Court’s processes because it sought to litigate afresh a case which had already been dealt with by O’Loughlin J in the stay proceedings.

113               In a judgment delivered on 12 April 2000, Mansfield J rejected those three grounds and refused to make the orders sought by the respondent.

114               In the alternative, the respondent argued that the applicants should be ordered to give particulars of the fraud alleged in the points of claim filed on 18 June 1999.  On 12 April 2000 Mansfield J ordered that those particulars be given.

115               No particulars of the fraud alleged in the points of claim were filed by the applicants in compliance with Mansfield J’s orders despite the time for them to do so having been extended.  Further procedural directions were made which were either not complied with in a timely fashion or at all.

116               On 6 December 2000 the respondent again filed a notice of motion seeking dismissal of the applicants’ notice of motion of 27 November 1998.

117               On 22 February 2001 Mansfield J stayed the applicants’ claims in the notice of motion of 27 November 1998: Brookfield v Davey Products Pty Ltd [2001] FCA 104.  His Honour said:

‘I propose to stay the claim made by motion of 27 November 1998 until further order, rather than to dismiss it.  Whether that is properly described as a permanent stay is a moot question.  Any stay order may be the subject of an application that it be lifted.  I intend, by that order, to avoid a claim that the order finally determines the rights of the parties on the question which the motion raises so as to give rise to any issue estoppel or res judicata:  Cooper v Williams [1963] 2 QB 567.  I adopt that course because, if it be the case that [the respondent’s] discovery in the proceeding leading to the primary judgment was deliberately and significantly inadequate, the public interest in the administration of justice would not be served by securing to [the respondent] the spoils of that default because of the way in which the present claim has been conducted.’

118               On 5 August 2002 Mr Brookfield filed a notice of motion on behalf of himself and SPA seeking orders that the stay imposed by Mansfield J on 22 February 2001 be lifted and that the judgment of the trial judge, and the order for costs made by the trial judge on 19 December 1997, be set aside.

119               The orders sought in the applicants’ notice of motion of 5 August 2002 were refused by Mansfield J on 6 November 2002: Brookfield v Yevad Products Pty Ltd [2002] FCA 1376.

120               On 12 February 2003, Mr Brookfield filed a notice of motion in these proceedings seeking the following orders:

‘1.        That the stay imposed by Mansfield J on 22 February 2001 in proceedings SG112 of 1993 be lifted in order to hear this fresh application / notice of motion.

2.         That the judgement’s [sic] of [the trial judge] of the 8^th of February 1996 and the 19^th of December 1997 be set aside.

3.         That McPherson’s Limited be joined by this court, as second respondent to the action.

4.         That summary judgement [sic] be handed down in favour of the applicant Brookfield on the following grounds …’

121               The notice of motion proceeded to set out the grounds upon which Mr Brookfield relied.

122               On 24 April 2003, Mansfield J refused to join McPherson’s Limited as sought in paragraph 3 of the applicants’ notice of motion of 12 February 2003.

123               On 1 May 2003, the applicants issued a further notice of motion in which they purported to amend paragraph 3 of the notice of motion of 12 February 2003 to read: ‘That the action against McPherson’s Limited be heard in parallel to the within action SG112 of 1993’.  The amended notice of motion also added further grounds in support of the order sought ‘that “summary judgment” be handed down in favour of the applicant Brookfield’.

124               On 29 May 2003, applications 1 and 2 in the notice of motion filed on 12 February 2003 were listed for hearing before Mansfield J on 4 September 2003.  Application 4 was stayed by Mansfield J pending the outcome of applications 1 and 2.  Paragraph 3 had been dealt with previously.  In due course, I heard the applications.

125               On the first day of the hearing the respondent’s counsel argued that I should decline to hear the present application because the applicants had continued to fail to comply with Mansfield J’s order of 12 April 2000 that particulars of the alleged fraud be provided.  The respondent had not indicated to Mansfield J that objection to the hearing of this notice of motion would be taken on that ground.  Presumably, Mansfield J would not have listed the notice of motion for hearing before me had he been given notice of that application.  In any event, I continued to hear the matter.

126               At the hearing, Mr Brookfield requested that I treat the further grounds supporting the application for summary judgment included in the notice of motion of 1 May 2003 as particulars in support of the orders sought in paragraphs 1 and 2 of the notice of motion of 12 February 2003.  There being no objection by the respondent’s counsel, I proceeded on that basis.  The particulars or grounds are:

‘a)       Despite the respondent’s continued denial of having discoverable documents in their possession, evidence has revealed, that Doc pump failure records were in fact available to the respondent at all material stages of the litigation and proceedings.

b)         The discoverable documents were available from a third party who purchased the documents and business records of the respondent, six months prior to trial.

c)         Evidence before the court has verified the existence of failure records for the states of New South Wales, Victoria, Tasmania and South Australia.

d)         The respondent has confirmed via affidavit, the recent destruction of the records pertaining to pump failures in New South Wales and Victoria.  (Note; the Victorian records have now been discovered by Thomson Playford).

e)         The respondent’s [sic] have not advanced an explanation as to the whereabouts of the records pertaining to the states of Western Australia, Queensland, and South Australia.

f)         The granting of a new trial would not assist in the administration of justice, due to the respondent’s failure to exercise due diligence throughout the proceedings and complete its obligations for full and proper discovery, resulting in the subsequent destruction by a third party of all relevant material.

g)         The applicant is now prevented from access to a fair new trial, as a direct result of the respondent’s continuing conduct with relation to its discovery obligations.

h)        Had the fresh evidence that is now before this Honourable Court been available at prior trial, there would have been a material difference to the outcome of the trial.

i)         That material difference would have been a judgement that favoured the applicant’s [sic] Brookfield and Septic.

j)          Had the fresh evidence that is now before this Honourable Court been available at trial, the respondent would have been prevented from proffering the defence they did.

k)         Had the fresh evidence that is now before this Honourable Court been available at trial, the respondent would not have had a defence in the original action.

l)         Had the fresh evidence that is now before this Honourable Court been available at trial, the court would have found that the failures of the applicant’s [sic] Brookfield and Septic were experienced in an identical fashion and time by other pump users around Australia.

m)        Had the fresh evidence that is now before this Honourable Court been available at trial, the court would have found summary judgement in favour of the applicant’s [sic] Brookfield and Septic at first instance.

n)        The respondent’s [sic] have no defence in delaying the discovery process for a period of “five years” after the trial date.

o)         The respondent’s explanation to date for not discovering the fresh evidence is untenable.

p)         The respondent’s delay and unwillingness in providing the fresh evidence, has caused the applicant Brookfield and The Federal Court of Australia unnecessary delay and duress.

q)         The respondent’s delay and unwillingness in providing the fresh evidence, has caused the applicant Brookfield to endure continuing and permanent medical conditions, which are well known to the court and the respondent.

r)         The respondent’s conduct has caused this Honourable Court to hand down a judgement, that does not reflect the true facts and evidence that now stands before it.

s)         The public interest in the administration of justice requires this Honourable Courts [sic] intervention.’

127               Before dealing with the substantive matters before me, I should note that a further notice of motion was filed by the applicants on 21 August 2003 seeking orders that certain documents, which I shall shortly identify, ‘be exempt from the protection of “solicitor third party privilege”’.  I dismissed this notice of motion on the first day of the hearing and indicated that I would give my reasons later.  It would be convenient to deal with that matter before dealing with the substantive matter.  In doing so, it is necessary to go back in time to recount the circumstances leading up to the hearing of these applications.

The notice of motion of 21 August 2003

128               By agreement dated 1 March 1995, the respondent, then ‘Davey Products Pty Ltd’, sold its business to a third party, Domali Pty Ltd.  Domali Pty Ltd subsequently changed its name to Davey Products Pty Ltd (Davey) and the respondent changed its name to Yevad Products Pty Ltd, but, of course, retained its ACN.

129               The documents the subject of this notice of motion were produced by Davey to the Court pursuant to a subpoena dated 23 May 2003, issued by the applicants and made returnable on 29 May.  On 29 May the return of the subpoena was adjourned to 16 June 2003 before the Registrar.  On 29 May 2003 Mansfield J made the following order:

’10.      Liberty to the parties to inspect any documents produced by Davey Products Pty Ltd (ACN 066 327 517) in answer to the subpoena issued at the request of the Applicants.  Direct that the Respondent do first inspect any documents produced by Davey Products Pty Ltd in response to the subpoena dated 23 May 2003 and the Applicants may then inspect them 48 hours after the production, save for any documents in respect of which the respondent claims privilege.  In respect of the documents the respondent claims privilege, direct the respondent to file and serve within 48 hours of the inspection, a list of those documents and the grounds upon which privilege is claimed.’

The documents were produced to the Court on the day of the adjourned return of the subpoena.

130               Apparently, there was some confusion about the meaning of the order.  The Court intended that the respondent would have 48 hours from the time the documents were produced to the registry within which to inspect the documents and to make any claim for privilege it might be advised.  The respondent’s solicitors had apparently understood that they would have 48 hours from the date set for the return of the subpoena to carry out that inspection.  The confusion, I think, arises out of the terms of the order where the respondent was entitled to inspect first and the applicants entitled to inspect in any event within 48 hours of production.  The respondent, however, was not obliged to claim privilege until 48 hours after the respondent’s inspection.

131               On 18 June 2003, the respondent filed an affidavit of Stephen John White, a partner in the firm of the respondent’s solicitors, which exhibited a list of documents for which the respondent claimed privilege.  However, by that time all of the documents had already been inspected by Mr Brookfield.

132               By notice of motion dated 18 June 2003, the respondent sought orders that the documents in respect of which the respondent claimed privilege be removed from the bundles of documents produced to the Court by Davey; that the documents so removed be delivered up to the respondent; and that Mr Brookfield deliver up for destruction all notes relating to his inspection of the documents and any copies thereof.

133               On 20 June 2003, Selway J made orders that the documents produced by Davey be sealed and not available for inspection until further order, and that Mr Brookfield be restrained from publishing or discussing any information gleaned from his inspection of the documents (except to or with his legal advisers).

134               The documents which had been produced were in two bundles.  The first bundle contained the documents in respect of which the respondent claimed privilege.  On 28 July 2003, Mansfield J marked this bundle ‘MFI TP1’.  The remainder of the documents produced by Davey were contained in the second bundle and were marked ‘MFI TP2’.

135               The respondent’s counsel sought leave to inspect the documents contained in ‘MFI TP1’ so that the claim for privilege could be properly identified. Leave was given and the respondent subsequently filed a further affidavit of Stephen John White, sworn on 30 July 2003, which supported claims for privilege made in respect of some of the documents within ‘MFI TP1’ which had been produced by Davey.  The affidavit exhibited an updated list of documents summarising the privilege claim.  Leave was given to all parties to inspect the documents marked ‘MFI TP2’.

136               The matter was adjourned until 4 August 2003 when the parties argued the question of privilege.  The applicants argued that any privilege was waived when the respondent provided the documents to the third party, Davey, following the sale to it of the respondent’s business.  The respondent’s counsel argued that the documents were released to Davey on a confidential basis which was not inconsistent with the maintenance of a claim to legal professional privilege if, of course, privilege attached to the relevant documents before their release.

137               After hearing the parties, Mansfield J varied the order in the nature of an injunction by lifting that order in respect of 18 of the documents contained within ‘MFI TP1’.  Those documents were identified in the annexure to Mr White’s affidavit as documents in respect of which the respondent no longer claimed privilege.  Mansfield J directed that those documents contained within ‘MFI TP1’ in respect of which the order was lifted be separated from the remainder of the documents in ‘MFI TP1’ and be re-marked ‘MFI TP1B’.  Leave to inspect those documents was extended to Mr Brookfield

138               The remainder of ‘MFI TP1’; which were the documents which continued to be subject to a claim for privilege, were remarked ‘MFI TP1A’.

139               On 8 August 2003, Mansfield J determined that 20 of the documents contained in ‘MFI TP1A’ attracted legal professional privilege.  The remainder did not and Mansfield J directed that those documents to which privilege did not attach be removed from ‘MFI TP1A’ and placed in ‘MFI TP1B’, and thereby made available for inspection by Mr Brookfield.

140               Mansfield J ordered that the remaining documents contained in ‘MFI TP1A’ be unavailable to any party other than the respondent until further order.

141               The applicants’ notice of motion filed on 21 August 2003 sought the release to the applicants of three documents contained within ‘MFI TP1A’.  The documents sought were:

(1)        a 20 page document complied by Mr John White of Thomson Playford in 1999, summarising the Lowara Doc 3 and Doc 7 pump failures of his client;

(2)        a letter from Mr John White of Thomson Playford to Mr Robert Morrow of Davey, requesting further documents relating to Doc 3 and Doc 7 pump failures; and

(3)        a letter of response from Mr Robert Morrow to Mr John White explaining that the reason why further discovery of documents could not be provided was because the initial requests for discovery by the former solicitors, Piper Alderman, were that Davey only provide the pump failure records of Envirocycle and Bio Cycle and that no request was made to Davey to provide documentation as to the cause of the pump failures, and all records have since been destroyed.

142               The applicants claimed that those three documents were included in the 20 documents which Mansfield J had determined on 8 August 2003 attracted legal professional privilege.

143               Mr Brookfield was unable to identify the three documents to which he was seeking access by reference to the exhibit to Mr White’s affidavit.  Rather, he tried to recall and identify them from his first inspection of the subpoenaed documents.

144               The first document was described by Mr Brookfield as a 20 page document prepared by the respondent’s current solicitors summarising 810 pages of documents discovered by the respondent to Mr Brookfield in December 2000.  The 810 pages of documents were in fact first identified to Mr Brookfield in a letter from the respondent’s solicitors to Mr Brookfield in October 2000.  In December 2000, however, Mr Brookfield sought a direction that the documents and their origin be identified by an affidavit on oath.  Mr Brookfield, therefore, asserts that discovery of the 810 pages of documents, for the purposes of this argument, did not occur until December 2000.  Nothing turns on whether that discovery was made in October or December 2000.

145               The 810 pages discovered consisted of handwritten records kept by the respondent which recorded requests made by pump purchasers for warranty repairs.  The records related to sales and returns mainly in Victoria, but also some sales and returns in Western Australia.

146               I should describe how and why these documents were created by the respondent in the course of its business.  Those documents are not only relevant to this application but are very relevant to the applicants’ principal application to set aside Branson J’s orders for the respondent’s failure to make discovery.

147               Mr Wilsdon’s affidavit of 20 July 1995, to which I have already referred, was tendered by the applicants.  Two further affidavits of Mr Wilsdon sworn on 3 March 1998 and 8 August 2003 were tendered by the respondent.  Mr Wilsdon was cross-examined by Mr Brookfield on the contents of all those affidavits.

148               His evidence disclosed that if a customer of the respondent returned a pump as defective, the respondent created a document recording the return of the product and any repairs undertaken.  These records were known as ‘job cards’.  Mr Wilsdon said that the information from the job cards was entered into a computer system which recorded the details in a database.  DW26 to the affidavit of 30 July 1995 is a printout of that database.

149               An affidavit of Robert John Mills, sworn on 3 March 1998, was tendered.  He said the purpose of paragraphs 65 and 66 of Mr Wilsdon’s affidavit of 30 July 1995 was to establish the number of pumps sold and returned, not the reasons for the return or the faults.  The database does not disclose the reasons or identify the faults.

150               Pump sales were recorded manually by way of delivery dockets, information from which was entered into the respondent’s computer system.  Mr Wilsdon said that if a faulty pump was returned and then replaced, rather than repaired, a ‘no charge’ delivery docket was issued.

151               Some job cards recording returns by the applicants were discovered pre-trial.  Other job cards were available during the trial, but were not discovered.  The existence of such job cards, however, was to be inferred from the notation to Exhibit DW27 to the affidavit of Mr Wilsdon sworn on 30 July 1995.

152               Job cards not discovered pre-trial were provided to Davey in March 1995 when it purchased the respondent’s business.  Some of the job cards were subsequently destroyed by Davey in 1996 in the ordinary course of business.

153               After O’Loughlin J’s decision refusing the applicants’ application for a stay, Mr Brookfield continued to assert that Piper Alderman, who previously acted for the respondent, had failed to make appropriate discovery on behalf of the respondent.  In early April 1999 Piper Alderman wrote to Mr Fahy, the then Chief Financial Officer of McPhersons Ltd, the parent company of the respondent:

‘With this in mind, please can you assist by ascertaining the following information (the relevant years are 1989-90, 1990-91, 1991-92 and 1992-93):

1.         Precisely what documents for the relevant years relating to the supply of Lowarra [sic] pumps to wastewater treatment system manufacturers in New South Wales, and the return of Lowarra [sic] pumps from such manufacturers, would have been available for discovery at the trial although such documents have now been destroyed.

2.         What documents relating to the supply of Lowarra [sic] pumps generally, Australia wide (and not limited to waste water treatment manufacturers), and returns generally of such pumps, does Davey have for the relevant years.

3.         If certain of the records referred to in 2 above have now been destroyed, please advise when they were destroyed and why.  Please also advise what documents would have been available at the time of the trial in 1995.’

154               Piper Alderman’s request was referred to Mr  Robert Morrow.

155               In early May 1999, following that correspondence, the 810 pages of job cards were provided to Piper Alderman by Mr Robert Morrow.  The documents were inspected by those solicitors who extracted documents relating to the relevant Lowara pumps.  A draft list of documents was then prepared.

156               In early July 1999, Piper Alderman ceased to act for the respondent and the respondent instructed Thomson Playford.

157               The respondent asserts that the job cards were inspected by Thomson Playford at the offices of Piper Alderman on 30 September and 1 October 1999.  The job cards were subsequently delivered to Thomson Playford in about mid November 1999.  On 17 November 1999, Thomson Playford obtained the respondent’s instructions to release the job cards, but Mr White, the partner in Thomson Playford with conduct of the matter, had reservations whether the documents were relevant or strictly discoverable.

158               The issue of discovery of the job cards was not resolved until late October 2000 at which time, as I have said, Thomson Playford wrote to Mr Brookfield and identified the job cards in their possession and offered to allow him to inspect the documents.

159               Mr Brookfield claimed that because the 20 page document summarising the job cards was prepared by Thomson Playford in July 1999, the document proves that the respondent’s solicitors were in possession of relevant material which they failed to discover over an extended period.

160               The respondent’s solicitors claim not to have come into possession of the documents until November 1999.  I accept the respondent’s solicitors’ evidence in that regard.  However, even so, the documents still remained undiscovered to Mr Brookfield after they had been provided to the respondent’s current solicitors for a period of about a year.

161               Mr Brookfield sought access to the 20 page document on what seem to me to be two grounds.

162               First, he argued that privilege did not attach to the document because it was a document generated from material which was not subject to any claim for privilege.  That is not the test to determine whether a document is or is not privileged.  Copies of non-privileged documents may become privileged if they were created for the obtaining of legal advice or for use in pending litigation: Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501.  This document was clearly created by the respondent’s solicitors for the dominant purpose of use in connection with legal proceedings.  This ground fails.

163               Secondly, Mr Brookfield argued that the delay in making discovery of the job cards by the respondent’s solicitors was evidence of a course of conduct whereby both the respondent’s former and current solicitors deliberately withheld discovery of relevant material.  Mr Brookfield resiled from the term ‘fraud’ but insisted that the delay in discovery between July 1999 and December 2000 was evidence of deliberate concealment of relevant documents and, as a result, the document to which he sought access should be stripped of any privilege attaching to it, presumably pursuant to what I will now call the ‘fraud’ exception to legal professional privilege.

164               Mr Brookfield complained that the solicitors deliberately failed to make discovery and claimed that legal professional privilege should not attach to the document in circumstances where a claim of privilege would interfere with the proper administration of justice.

165               The delay which Mr Brookfield complains of on this notice of motion is the delay between 1999 and 2000.  The period of delay which he relies upon to establish the claim that the privilege has been lost occurred well after the principal proceedings had been finally determined.  I cannot infer from that delay, for which the solicitors in the principal proceedings were not responsible, that the respondent or their former solicitors were guilty of misconduct in relation to their obligations in making discovery in the principal proceedings.

166               However, whilst the delay does not establish any course of deliberate concealment of relevant material from which it may be inferred that the respondent or its former solicitors deliberately failed to make proper discovery, the delay in the respondent making discovery between 1999 and 2000 calls for some explanation.

167               The respondent’s solicitors concede delay on their part of at least 12 months in making discovery.  The only explanation for the delay is contained in Mr White’s affidavit.  I say immediately that I do not believe that the respondent’s delay was for the purpose of deliberate concealment or for any sinister purpose.  However, I think that the respondent’s solicitors’ failure to discover the 810 pages of documents in a timely fashion is inexcusable.  It seems from Mr White’s affidavit that some time between July and September 1999 he was ‘persuaded’ by senior counsel that the respondent had an obligation ‘to make continuing discovery in the existing proceedings’.

168               On 30 September and 1 October, a solicitor in the employ of the respondent’s solicitors inspected the documents at Piper Alderman.  Those documents were delivered to Thomson Playford on or before 16 November 1999.  On 17 November 1999 Mr White was given instructions ‘to release the job cards in my discretion, despite my continuing reservation that they may not be relevant or strictly discoverable’.  His affidavit continues:

’17.      Thomson Playford’s file records that in 22 November I reported to the Respondent that I had disclosed the documents, and that I would make them available to Mr Brookfield.  I cannot now recall how I had disclosed them, but I suspect I told Mr Townsend or the Applicants’ counsel at court on 18 November 1999.

18.       On 24 November 1999 I raised with counsel what might be an appropriate method of making “de-facto” discovery.  I can find no record of counsel’s response, and suspect I was still waiting for it when I again went on leave on 23 December 1999.

19.       Thereafter, the question of disclosing the job cards seems to have fallen in abeyance.  In February and April 2000, tentative discussions about settlement occurred at the invitation of the Applicant’s [sic] advisers.  Mansfield J delivered judgement on 12 April 2000, refusing to strike out the Points of Claim, but ordering the delivery of particulars.  I am unable to locate transcript of hearing on that day, but do not believe that any order was made for discovery.  We prepared a request for particulars.  From May 2000 further discussions about mediation occurred at the invitation of the Applicant’s [sic] advisers.  The question of further discovery was included in certain discussions and a letters (sic) between me and Mr Townsend in the context of without prejudice discussions.  Now produced and shown to me and marked “SJW 7” and exhibited hereto are true copies of Townsends’ letter of 17 May, my response (not signed but sent by facsimile) on 19 May, Mr Brookfield’s letter and my responses of 16 June, and Mr Brookfield’s letter and my response of 20 June.  On 21 June the issue of discovery was mentioned at an unscheduled directions hearing, and was adjourned.  The Applicants did not attend the next hearing on 21 July which was adjourned to 4 September.

20.       On 18 August, Townsends informed me they no longer acted in the proceedings, but continued to act in the mediation.  In about September the attempts to mediate the matter collapsed, and Townsends ceased to represent the Applicants at all.  On 4 September 2000 the issues of discovery and the proper constitution of the proceedings were debated before Mansfield J who relevantly ordered:

“3.       Direct applicant to write to respondent’s solicitors by 18 September 2000 indicating precisely what order for discovery is sought in this proceeding and the facts upon which the applicants assert that such documents should now be ordered to be discovered; that is how the applicants claim that such documents exist”.

21.       Correspondence then ensued between this firm and Mr Brookfield, as is exhibited to an affidavit of Mr Hannaford sworn 25 October 2000.  In particular, by letter dated 12 October 2000 Thomson Playford specifically identified the job cards, and offered to allow Mr Brookfield to inspect and copy them.  Now produced and shown to me and marked “SJW 8” and exhibited hereto is a further true copy of that letter.

22.       Mr Brookfield inspected the job cards on 3 November 2000.  On 7 November 2000 Thomson Playford sent a facsimile to Mr Brookfield advising him of the cost of copying the documents and asking him to provide payment if he wished to obtain copies.  Now produced and shown to me and marked “SJW 9” is a copy of this facsimile.  Copies of them were provided to him by letter on 15 December 2000 after he paid Thomson Playford photocopying account dated 14 December 2000.  Now produced and shown to me and marked “SJW 10” is a copy of Thomson Playford photocopying account.’

169               I must say I regard the explanation for the delay as unsatisfactory.  The applicants’ case was that the respondent had failed to make proper discovery in the principal proceedings.

170               As soon as the respondent realised that its discovery was incomplete it should have responded to those complaints by making proper discovery.  The failure to make further discovery, in my opinion, was an important factor in Mr Brookfield believing that the respondent had deliberately concealed documents in the principal proceedings.

171               The respondent’s solicitor told his client in November 1999 that he would make the documents available to the applicants.  They were not disclosed for nearly a year.

172               The claim in paragraph 19 of Mr White’s affidavit that the question of disclosing job cards seems to have fallen in abeyance is not right.  The letters exhibited as SJW 7 to that affidavit show that the respondent’s solicitors resisted discovering the documents to the applicants.  On 17 May 2000 the applicants’ former solicitors wrote:

‘We refer to discussions at the without prejudice conference on Friday, 7 April 2000.

You indicated during the course of that meeting that you had seen numerous documents that had not previously been made available to our client.

We are instructed to request that you forthwith make discovery of all those documents.’

173               On 19 May 2000 Mr White relevantly replied:

‘Your second letter refers to matters discussed at an explicitly “without prejudice” meeting, called for the sole purpose of discussing possible ways to try to resolve this action.  Nothing said at that meeting can appropriately be the subject of a request for discovery.

The issue of discovery stands quite independently.  If there are documents which are relevant to the proceedings, they will be discovered as part of the ordinary obligations of a party in litigation.’

174               The documents which were sought by the applicants were the subject matter of the application.  They should have been discovered and produced.

175               On 16 June 2000, in response to Mr Brookfield’s request for copies of documents, Mr White wrote:

‘I note your request for copies of documents.  I will consider it.  However, I do not propose to have copies of anything available on Monday next.’

176               On 16 June 2000 he wrote to Mr Brookfield’s solicitors:

‘Mr Brookfield makes a demand for production of documents.  We intend that discovery, and production of documents, take place in the confines of the proceedings.  Mr Brookfields’ [sic] case is in an unsatisfactory state, and until it is clarified, we do not consider it is appropriate to respond further to discovery requests.’

177               On 20 June 2000 he wrote to Mr Brookfield:

‘The present position of the legal proceedings is also unsatisfactory.  You have attempted to revive the old legal proceedings when, in fact, you are making a new application.  You are misusing those proceedings to confuse issues of discovery of documents between the original proceedings and the present proceedings.

I do not understand you to be requesting discovery in the old proceedings.

The present proceedings are not properly constituted.  In addition, you have made various serious allegations which have been partly withdrawn by your counsel in argument, and which in any case have not been properly pleaded or substantiated.

The process of discovery in the present proceedings must await clarification of the issues, and a proper pleading and substantiation of them.  You correctly quote my refusal to provide documents in answer to your request of 16 June.  You omit the context, in which I told you that the discovery process must await getting the proceedings in order, and that I was not inclined to provide you with material to foster a claim which appears to have no basis.  I should have added, although I did not at the time, that your request for discovery is patently fishing and inappropriate.

There needs to be some consideration of the interaction between the proposed mediation and the litigation.  The present position is that the litigation is not proceeding pending the proposed mediation.  However, your attempts to revive the litigation suggest that you are not interested in mediation.

Both the litigation and the proposed mediation have this in common – the onus is on you to clearly and fully state your allegations and the material supporting them.  You have not done so, and I suspect that you cannot.

I have no intention of responding further to telephone calls from you.  You should put any further communications in writing.  Please address them to the attention of Simon Hannaford of this firm.

Nor will we submit to arbitrary demands or deadlines which you attempt to impose.  We will deal with your requests on their merits.

This prolonged and unnecessary litigation has cost our client a great deal of money.  On your own assertion, you cannot pay the various costs orders against you.  I intend to try to keep my client’s further costs to a minimum, and that means we will only respond further as we think necessary in accordance with out professional obligations.  We will not respond to requests that we think are irrelevant or misconcerned [sic].’

178               The correspondence speaks for itself.  It is difficult to understand why the respondent, which knew that it had failed to make proper discovery in the principal proceedings, would act in such a high-handed way when called upon to produce those documents.

179               However, the 20-page document compiled by Mr White to which Mr Brookfield seeks access is not required to prove the delay.  If the document was in fact prepared in July 1999, the delay in making discovery would have been approximately 15 months.  If the respondent’s current solicitors did not inspect or receive the documents until later in 1999, the delay in making discovery would have been in the order of 12 months.  The difference is negligible for the purposes of this aspect of the argument.  Proving an additional delay of three months does not materially assist the applicants’ cause or give their complaint any additional weight.

180               The document could not establish fraudulent concealment by the respondent or by its then solicitors in the principal proceedings.

181               In my opinion, the document was privileged because it was created for use in these proceedings and its privilege has not been lost.

182               Mr Brookfield ultimately abandoned his claim in respect of the other two documents to which he sought access.  He was unable to identify those documents.  During the course of the hearing, I gave leave to Mr Brookfield to read the documents contained within MFI TP1A for the purpose of identifying to the respondent’s solicitors the two documents to which he sought access and, for that purpose, I adjourned the Court to allow Mr Brookfield to conduct a search in the presence of a solicitor for the respondent and my associate.  Mr Brookfield was unable to identify the two documents in MFI TP1A.

183               The first document was a document to which legal professional privilege attached.  The second and third documents could not be found by Mr Brookfield.

184               For those reasons, I dismissed the applicants’ notice of motion of 21 August 2003 and ordered that the applicants pay the respondent’s costs of and incidental to that notice of motion.

The applications to set aside the judgments of the trial judge

185               The applicants’ notices of motion to have the decision in the principal proceedings set aside relies upon the respondent’s failure to make discovery of three categories of documents in those proceedings.  The applicants contended throughout the hearing that the documents not discovered were deliberately concealed by the respondent and/or its solicitors until after the application for special leave to appeal to the High Court had been disposed of.

186               During the hearing of the notice of motion, I was concerned to ascertain precisely the claim made by the applicants of deliberate concealment.  Mr Brookfield vacillated on this point.  The following extract from the transcript shows that Mr Brookfield could not clearly articulate his claim that documents had been deliberately concealed rather than mistakenly not discovered.  The extract is lengthy, but is important in highlighting the lack of precision in the applicant’s case for deliberate concealment.

‘HIS HONOUR:   You put whatever argument you want to put.  But before you do can I ask you to address the other matters I raised with you from the outset.  Firstly, do you allege that there has been a deliberate concealment of the documents?

MR BROOKFIELD:   Yes, I do.

HIS HONOUR:   By whom?

MR BROOKFIELD:   By the respondent.

HIS HONOUR:   Not by the respondent's solicitors; by the respondent?

MR BROOKFIELD:   No, by the respondent; not the solicitors.

HIS HONOUR:   In particular - who in the respondent?

MR BROOKFIELD:   That is impossible to identify because of the way that the discovery process was handled.

HIS HONOUR:   So you're saying that the respondent has been guilty of a deliberate concealment, and thereby fraud, in failure to make proper discovery?

MR BROOKFIELD:   I'll just clarify that point, your Honour.  The concealment is in two forms.  The concealment comes in the form of the involvement of the parent company, McPherson's Ltd, and the concealment also comes in the form of Davey Products, as in the company that was sold by McPherson's Ltd.

HIS HONOUR:   Yes.

MR BROOKFIELD:   The respondent in this action is Yevad Products, which we have clarified is a company entity retained by McPhersons.  So Yevad the company didn't participate in the defence of the action at all. 

HIS HONOUR:   But it did.

MR BROOKFIELD:   It didn't, your Honour, no.

HIS HONOUR:   Why?

MR BROOKFIELD:   Because the company that I sued was Davey Products and that was sold.

HIS HONOUR:   We've been through that before.

MR BROOKFIELD:   That's right.

HIS HONOUR:   The company has changed its name; that's all it's about.

MR BROOKFIELD:   Yes, but the discovery process was provided by Davey Products - the new Davey Products.

HIS HONOUR:   Yes, well, who has been guilty of the concealment?

MR BROOKFIELD:   Davey Products ‑ ‑ ‑

HIS HONOUR:   That's the third party.

MR BROOKFIELD:   That's right.

HIS HONOUR:   Not the one you're suing.

MR BROOKFIELD:   No.

HIS HONOUR:   Davey Products.

MR BROOKFIELD:   Davey Products.

HIS HONOUR:   And?

MR BROOKFIELD:   McPherson's Ltd.

HIS HONOUR:   And you're not able to particularise who in those two companies has been guilty of the concealment?

MR BROOKFIELD:   It's impossible to point to who it is.

HIS HONOUR:   Just "Yes" or "No".

MR BROOKFIELD:   No, I can't name an exact person.  There are a number of people involved and it's impossible to say specifically who was involved and to what extent.

HIS HONOUR:   Well, neither of those companies are parties to this action.

MR BROOKFIELD:   Well, that's right.

HIS HONOUR:   And you said Yevad had nothing to do with the concealment.

MR BROOKFIELD:   But both of those companies participated in running this action.  They were only companies involved in running the action.

HIS HONOUR:   Just a minute.  You're saying the deliberate concealment was by Davey Products and McPhersons and there was no concealment by Yevad, the respondent?

MR BROOKFIELD:   That's right.

HIS HONOUR:   Right.  Well, you're trying to set aside a judgment obtained by Yevad.

MR BROOKFIELD:   That's correct.

HIS HONOUR:   And if it wasn't guilty of concealment it's rather irrelevant, isn't it, that the others were?

MR BROOKFIELD:   Not at all because the directors of Yevad were fully aware of how the defence of this action was being run.  They allowed Davey Products' management to provide the discovery on their behalf.

HIS HONOUR:   Yes, but if they're not guilty of concealment it doesn't matter much, does it?

MR BROOKFIELD:   Pardon?

HIS HONOUR:   If the company is not guilty of concealment it doesn't matter much, does it?

MR BROOKFIELD:   Yevad Products itself, as a company entity is not guilty of concealment.  The directors of Yevad certainly knew and were certainly involved in the participation of the defence of this action.

HIS HONOUR:   But are you saying that they're guilty of concealment?

MR BROOKFIELD:   The directors are, most certainly.

HIS HONOUR:   Well, hold on.  I asked you before who was guilty of the concealment and you just gave me two entities:  McPhersons and Davey Products.  Now, do you say that there are people who were also involved in the concealment?

MR BROOKFIELD:   The same people at McPhersons are the same ‑ ‑ ‑

HIS HONOUR:   Do you say the word?  Just let's take it step by step because I've got to understand exactly what your case is.  Do you say that any persons were guilty of concealment?

MR BROOKFIELD:   Yes, I do.

HIS HONOUR:   Yes.  Were any of those employed - not directors - were any of those employed by Yevad?

MR BROOKFIELD:   No.

HIS HONOUR:   Were any of those employed by Davey Products?

MR BROOKFIELD:   No.

HIS HONOUR:   Were any of those employed by McPhersons?

MR BROOKFIELD:   Yes.

HIS HONOUR:   Were the directors of Yevad guilty of concealment?

MR BROOKFIELD:   Yes.

HIS HONOUR:   Right.  Were the directors of McPhersons guilty of concealment?

MR BROOKFIELD:   Yes.

HIS HONOUR:   And were the directors of Davey Products guilty of concealment?

MR BROOKFIELD:   No.

HIS HONOUR:   All right.  Well, how could Davey Products be guilty of concealment if its directors and its employees were not?

MR BROOKFIELD:   It was the management of Davey Products which was providing the discovery; not the directors.

HIS HONOUR:   You've said that no employees of Davey Products were guilty of concealment.

MR BROOKFIELD:   I'm sorry, your Honour.  I misunderstood that.  Employees of Davey Products were guilty of concealment.

HIS HONOUR:   Right.  And the directors of the other two companies?

MR BROOKFIELD:   Yes.

HIS HONOUR:   But you can't say whom?

MR BROOKFIELD:   Not exactly.  I can name a group of people, but I can't limit it to one person.  I can't say it was two people.  We know who was involved but we don't know to what extent each person was involved.

HIS HONOUR:   And do you say that there was a deliberate concealment so as to defeat your claim?

MR BROOKFIELD:   Yes, I do.

HIS HONOUR:   Now, do you say that the solicitors were guilty of any concealment?

MR BROOKFIELD:   No, I don't.

HIS HONOUR:   All right.  Were any of the persons who were called as witnesses those whom you say were involved in the concealment?

MR BROOKFIELD:   Yes, they were.

HIS HONOUR:   Who would they be?

MR BROOKFIELD:   Mr Fahy and Mr Bennett. [Mr Fahy, as previously mentioned was the Chief Financial Officer, and later the General Manager of McPhersons; Mr Bennett is a director and company secretary of the respondent]

HIS HONOUR:   Fahy and Bennett.  Now, you didn't suggest to them that they had been guilty of that?

MR BROOKFIELD:   Not as a question, no.  That was self‑evident because they were the people who had found documents in their own company's archive department, which had been there for five years.

HIS HONOUR:   But that doesn't mean they're guilty of concealment.  That just means they found the documents.  They may have been innocently not discovered.  The point I'm making is that you didn't suggest to them that they had been guilty of an act of concealment.

MR BROOKFIELD:   No.

HIS HONOUR:   Why didn't you?

MR BROOKFIELD:   Because there is no evidence to say that they were the particular people ‑ ‑ ‑

HIS HONOUR:   Well, you've just said that they were the people who ‑ ‑ ‑

MR BROOKFIELD:   That's right.  They were aware of it.  If I can just clarify the definition of "conceal", your Honour?  To conceal something is to hide from view.  McPhersons had documents hidden from view for five years.

HIS HONOUR:   Yes.

MR BROOKFIELD:   From 1998 to ‑ ‑ ‑

HIS HONOUR:   We're talking about deliberate concealment.

MR BROOKFIELD:   That's right.

HIS HONOUR:   That's where I started; that they deliberately hid from view these documents.  That's where we're going, you understand?  Not that it was an innocent mistake, but they deliberately concealed the documents.  You've understood all my questions on that basis?

MR BROOKFIELD:   If it's on that basis, your Honour, then I would be forced to come back to Piper Alderman, solicitors, because of the fact that they were the people who sent documents to McPhersons.

HIS HONOUR:   Mr Brookfield, you've got to understand these questions I'm asking you are precise and I want a precise answer because I have to understand what your case is.  Now, all of these questions in relation to concealment at the moment are predicated on the basis of a deliberate concealment; an intentional withholding of a document.  Do you understand that?

MR BROOKFIELD:   Yes.

HIS HONOUR:   Do you say the directors of McPhersons and Yevad were guilty of that?

MR BROOKFIELD:   Yes, I do.

HIS HONOUR:   And that the management of Davey Products was guilty of that?

MR BROOKFIELD:   Yes.

HIS HONOUR:   But not the directors?

MR BROOKFIELD:   No.

HIS HONOUR:   And you say now that the solicitors also were guilty of that.

MR BROOKFIELD:   The former solicitors, yes.

HIS HONOUR:   Yes.  Piper Alderman?

MR BROOKFIELD:   Yes.

HIS HONOUR:   So everyone that was mentioned deliberately withheld these documents from you?

MR BROOKFIELD:   Yes, they did.

HIS HONOUR:   You didn't put that to Mr Mills.  You didn't ask Mr Mills [formerly of Piper Alderman] whether he had deliberately done this?

MR BROOKFIELD:   No, I didn't put the question to Mr Mills did he deliberately conceal documents, because not only would that have been self‑incriminating to Mr Mills, it would have been a question he couldn't have answered.

HIS HONOUR:   Why?

MR BROOKFIELD:   Well, I believe that there are provisions in the law where a self‑incriminating question - a person can refuse to answer that question.

HIS HONOUR:   But the question is admissible.  You can ask the question.  Whether he answers it would depend upon whether he believes that his answer would expose him to a criminal prosecution.  If he did and there was some risk of that, he would be excused from answering it.  But that's no reason for not asking the question.

MR BROOKFIELD:   Well, again, Mr Mills, when asked the question about the discovery process, laid it back on Mr Davis; that was his role.

HIS HONOUR:   Well, you didn't ask Mr Davis either.

MR BROOKFIELD:   Well, when I asked Mr Davis about the discovery process he said Mr Mills took care of all of that.  So we had opposing answers to the same question from both Mr Mills and Mr Davis.  So again I think it would have been unfair of me, your Honour, to say to Mr Mills:  did you deliberately conceal documents?  Because it was Mr Mills's evidence that it was Mr Davis's responsibility for preparing the discovery process.

HIS HONOUR:   I'm not accusing Mr Mills or Mr Davis of anything; you are.

MR BROOKFIELD:   I'm just repeating what their answers were, your Honour.

HIS HONOUR:   You're accusing them of deliberate concealment.  Now, what I'm saying to you is:  you accuse them of that to me, but you weren't prepared to ask them about it.  Do you understand?

MR BROOKFIELD:   Yes, I do.

HIS HONOUR:   That's a point Mr Wells makes; that you're happy enough to make the claim of fraud, or deliberate concealment, but you're not prepared to ask anyone about it.  These men have never had an opportunity of saying, "I didn't do it."  Do you understand that?

MR BROOKFIELD:   Right.  Well, I suppose I'm placed in the position, your Honour, where we have the two different situations.  We have innocent concealment or we have deliberate concealment.

HIS HONOUR:   I'm only talking about deliberate concealment.  I've told you that.

MR BROOKFIELD:   Yes.

HIS HONOUR:   Forget innocent concealment; that's another point.  There are a number of admissions that documents which should have been discovered weren't discovered.  The respondent admits that.

MR BROOKFIELD:   Yes.

HIS HONOUR:   But they say that it was a mistake; an error.  You're saying they did it deliberately.  Now, I want you to understand the difference.  You understand that?

MR BROOKFIELD:   Yes, I do.

HIS HONOUR:   Right.  Now, what Mr Wells put yesterday, which is a point of some substance, is that whilst you're prepared to say that all of these people have been guilty of this conduct, you weren't prepared to accuse them of it when they gave their evidence.  So they've never had a chance to say that they didn't do it.  Do you understand?

MR BROOKFIELD:   Yes, I do.

HIS HONOUR:   How do you answer that?

MR BROOKFIELD:   Well, again, I'm placed in that situation, your Honour, where I can't lead your Honour to a specific piece of evidence where I've put forward:  here is an act of deliberate knowledge of the content of the documents and here is a deliberate act of concealment.  I can't do that so I'm placed in the position where I can't take ‑ ‑ ‑

HIS HONOUR:   Do you say you can't prove deliberate concealment?

MR BROOKFIELD:   I can't prove deliberate concealment.

HIS HONOUR:   Well, why do you allege it?

MR BROOKFIELD:   Because of the fact that I'm sitting on concealment as against deliberate concealment. 

HIS HONOUR:   If you admit that you can't prove it, why do you allege it?

MR BROOKFIELD:   I allege there's been concealment.  Was it deliberate?  I can't prove that.

HIS HONOUR:   No, Mr Brookfield.  Don't do that.  This is about deliberate concealment.  Why do you allege deliberate concealment if you say you can't prove it.

MR BROOKFIELD:   I'm alleging - there's a broad brush, your Honour - deliberate concealment in that we have solicitors that are qualified practitioners.  They've learnt about what the Rules of Discovery are and we've got evidence before the court where boxes of documents which have now come before the court were boxed up, sent to the parent company of the respondent and put into archives for a five-year period.  Then when the current solicitors come back on board, they identify boxes of documents that have been archived for a five‑year period and are brought into court, and the documents are clearly relevant to the proceedings.  The problem ‑ ‑ ‑

HIS HONOUR:   That doesn't answer my question.  I know all those facts.  I know of the boxes of documents and the failure to make discovery.  What I'm asking you is why do you allege these solicitors have been guilty of deliberate concealment when you accept you can't prove it?

MR BROOKFIELD:   Because I look at it on the basis that if we have solicitors here that are qualified, boxing documents up that are clearly relevant, and they're sent to the parent company and put into archives, why weren't they discovered?

HIS HONOUR:   Is that your best answer?

MR BROOKFIELD:   Unfortunately, your Honour, yes.

HIS HONOUR:   Well, you know it's a very serious charge you're making against the solicitors.  It's a charge which amounts to unprofessional conduct at the very least; but you can't prove it, you say.

MR BROOKFIELD:   Nor do I seek to press the allegation against the particular solicitors, because at no time in the trial or the appeal was I [sic] defending the respondent.

HIS HONOUR:   But your allegation is that either Mr Davis or Mr Mills or both, and perhaps even some other solicitors within Piper Alderman, were guilty of deliberate concealment in circumstances where you accept you can't prove it.  All I'm asking is why would you do that?

MR BROOKFIELD:   Again, all these documents that have been discovered since the trial have all been ‑ ‑ ‑

HIS HONOUR:   I know that.  There's no argument about that.

MR BROOKFIELD:   They've been in the respondent's custody and control up to three months ago.  Somebody had them.

HIS HONOUR:   Of course they did.

MR BROOKFIELD:   That's right.

HIS HONOUR:   They weren't discovered.  That's what this case is about.  But if you can't understand me when I say we're only talking about deliberate concealment, then there's not much point in me asking these questions.  I'm asking you why you would accuse solicitors of a very serious professional offence, and perhaps other offence, in circumstances where you say you can't prove it.

MR BROOKFIELD:   I've taken the position, your Honour, that if hundreds and hundreds of pages appear eight years after a trial has been completed, and we have a situation where the respondent has given more discovery since the judgment was entered into than they did prior to trial, and they are - all this new evidence that's come to the court, all these documents that have all come to the court, have all been provided by the respondent.  Some have come from the current solicitors.  Some have come from the former solicitors.  Some have come from the parent company.  They've had these since trial and it's only in the last few months that the last of them have actually come to the forefront.

Those documents have been in their possession the whole time.  They've been concealed.  Is it deliberate?  I'm going to have withdraw that allegation.  If I can say, yes, Mr Robert Mills knew what these documents were.  He deliberately boxed them up, deliberately sent them to McPhersons and said, "Put these in your archives and hide them" - can I do that?  No, I can't.  But can I say that the entirety of the fresh evidence that currently sits before this court has been provided by the respondent and the evidence shows that it has been in the respondent's control at all material times - goes to the concealment? 

But if I'm put in the position, your Honour, where I have to say name of person, show me the evidence that they deliberately did it, no, I can't do that, and I would respectfully withdraw that position.

HIS HONOUR:   I just want to understand what your claim is, because as one of the annexures show in Mr Wells's argument you've, with respect, vacillated about this.  Sometimes you claim there has been a deliberate concealment, sometimes you claim that there hasn't, sometimes you say they're frauds, sometimes you say there's not.  But now I understand you.  You're saying that the directors of McPhersons and Yevad, the management of Davey Products and the solicitors have been guilty of a deliberate concealment.

MR BROOKFIELD:   That's right, and I press that on the point that they are the ones that have provided these documents.

HIS HONOUR:   I can't put the point any better than I have.  Because a person hasn't made discovery doesn't mean that the documents were deliberately concealed.  They're two different things.  But anyhow, I put that point.

MR BROOKFIELD:   I appreciate that, your Honour.  That's the highest I can put it, your Honour.

HIS HONOUR:   The question might be whether you're trying to put it too high.’

187               It is necessary to first identify the documents Mr Brookfield claims were not discovered, and should have been, in the principal proceedings.  Then, whether those documents were deliberately concealed or deliberately withheld from discovery by any person.  Having made those determinations, it will be necessary to consider the law as it applies to setting aside judgments where a party to those proceedings has been guilty of failing to make proper discovery.

CATEGORIES OF DOCUMENTS

188               I have already referred to 810 pages of documents which were eventually, but lately, discovered by the respondent.  They were described by the respondent as ‘Job Cards and Associated Documents’.  These job cards mainly came from Victoria and Western Australia, but the cards from Victoria include some job cards from Tasmania, South Australia and New South Wales which seem to have been sent to Victoria (Head Office) for review.

189               Mr Brookfield complained about the respondent’s failure to make discovery of these documents in the principal proceedings.

190               Towards the end of the hearing Mr Brookfield handed up two documents [Marked ‘A’ and ‘B’] identifying the materials which he said the respondents failed to discover at trial.  The first document, ‘A’, refers to various ‘warranty returns and replacement records’ for Lowara submersible pumps Doc 3, sumprat and Doc 7 (ie: job cards) in the various States.  Document ‘B’ identifies particular customers of the respondent from within those States and was said to constitute particulars of document ‘A’.

191               Shortly put, the applicants complain that the respondent failed not only to discover the 810 pages of documents which identified 329 job cards, but all job cards from all States and the Northern Territory.

192               As previously mentioned, job cards relating to transactions between the applicants and the respondent were discovered at trial.  The job cards relating to the applicants were discovered in a list of documents filed in the principal proceedings on 25 March 1994.  Those documents were also exhibited to Mr Wilsdon’s affidavit of 30 July 1995 as DW11.

193               Mr Brookfield claims, however, that the remainder of the South Australian job cards were not, nor have they been discovered.  The respondent’s case is that the South Australian records other than those relating to the applicants were destroyed in August 1996.

194               In the case of each of the other States and Territory, the respondent claims that there was no evidence that the documents were not in the possession of the former solicitors either before or during the trial of the principal proceedings.  Whilst that is so and might be accepted, that is no answer to the first question whether there were job cards and whether they should have been discovered.

195               The respondent now claims that other job cards have been destroyed in the ordinary course of business by Davey in 1996.

196               The first category of documents is the ‘job cards’.  The only job cards discovered at trial were the job cards relating to the applicants.  The job cards for all other States were not discovered.  810 pages of job cards have now been produced.  Other job cards from other States have still not been discovered.  Some were said to be destroyed in 1996.

197               The next document that Mr Brookfield complained was not discovered was a memorandum prepared by the Lowara Products Manager, Mr Ashley White, and dated 29 October 1991.  It appears ultimately to have been produced to Mr Brookfield as an exhibit to the affidavit sworn by Mr Ashley White on 12 August 2003 and filed in these proceedings the following day.  I shall refer to that document as the second group of documents.

198               The third group of documents that Mr Brookfield complained were not discovered was not readily identifiable.  The respondent describes this category as ‘examples of correspondence dealing with the ‘thermal stator overload’ and ‘bottom bearing housing problems’.  These documents were also produced to Mr Brookfield as exhibits to the affidavit of Mr White sworn 12 August 2003.

199               The respondent filed four lists of documents in the principal proceedings before trial.  The original list was filed on 25 March 1994, and supplementary lists were filed on 20 April 1995, 3 August 1995 and 4 August 1995.  It is agreed that those lists do not include any documents included in the three groups of documents to which I have referred.

200               In the proceedings before O’Loughlin J (SG 99 of 1997) no further list was filed.

201               There is no doubt that the respondent now accepts that it failed to make full discovery in the principal proceedings.  It, of course, denies that that failure was fraudulent or deliberate.

202               For reasons which I will give, I accept that the respondent’s failure to make discovery in the principal proceedings was not fraudulent, nor was it deliberate.  It is difficult to know why the respondent failed to make discovery.  For reasons which I will also give, I am of the opinion that the respondent has been dilatory in producing documents from the three groups of documents to the applicants.  For reasons already given, the respondent’s explanation for that delay is unconvincing.

203               More importantly, however, the respondent has continued to fail to give discovery even after the applicants raised the inadequacy of the respondent’s discovery and even after the respondent recognised that it had failed to discover all of its documents in the principal proceedings.

204               The respondent filed a further list of documents on 10 May 1999.  The list was in the usual form.  In Part II of Schedule 1, the respondent discovered:

‘1.        Invoices relating to the sale of Lowara pumps by the respondent to Envirocycle and Biocycle subsequent to 1 January 1991.’

205               Schedule 2 relates to documents which were, but are no longer in the possession, custody or power of the party making discovery.  In that schedule the respondent discovered:

‘1.        Job cards, warranty claim forms and goods returned advices relating to Lowara pumps sold by the respondent from its New South Wales premises to Envirocycle and Biocycle for the financial years 1988/89, 1989/90, 1990/91, 1991/92 and 1992/93.

2.         Invoices relating to the sale of Lowara pumps by the respondent to Envirocycle and Biocycle, prior to January 1991.’

206               The documents in paragraph 1 of Schedule 2 were said to have been last in the respondent’s possession, custody or power; in the case of documents created prior to 15 March 1991, on 16 March 1991 when they were destroyed by fire at the respondent’s Sydney office; in the case of documents created after 16 March 1991, in August 1996 when all such documents were destroyed when Davey moved its New South Wales premises.  The documents in paragraph 2 of Schedule 2 were last in the respondent’s possession, custody or power in or about November 1997 when they were destroyed when Davey renovated its head office in Huntingdale, Victoria.

207               That list of documents recognises that the respondent’s fire occurred on 16 March 1991.  I will return to that.

208               It also recognises that the job cards, warranty claim forms and goods returned advices relating to Lowara pumps sold from the New South Wales premises to Envirocycle and Biocycle in those years should have been discovered.

209               It does not recognise that other job cards, warranty claim forms and goods returned advices relating to Lowara pumps sold from the respondent’s New South Wales premises or any other premises in any other State to any other customers, especially those in the waste water industry, were discoverable.

210               The list of documents does not include any of the documents in the three groups of documents which are the subject of these applications.

211               The respondent should have filed a further list of documents in these proceedings, which identified all documents which had not previously been discovered, including all the documents in the three groups of documents and any other relevant documents which are no longer in the possession, custody, or power of the respondent: O 15 r 6(2).

212               There can be no doubt that the respondent’s solicitors obtained advice from senior counsel that it had an obligation to make further discovery.  Mr Stephen White said in his affidavit sworn on 5 September 2003 that he had received advice some time between July and September 1999 that the respondent had an obligation ‘to make continuing discovery in the existing proceedings’.  The Federal Court Rules oblige a party to make continuing discovery: O 15 r 7A.  The continuing obligation is to make discovery of ‘any document not previously discovered’.  Usually, a judgment following a trial exhausts a party’s obligations to make further discovery even though documents created after judgment may in fact be relevant to issues decided in the trial.  For example, a court may have assessed damages against a party on particular assumptions as to the period over which a loss would be occasioned.  It may be that documents relevant to the ascertainment of that period may be created after judgment.  They could not have been discovered before trial because they did not exist.  The party who receives those documents into his/her possession, custody or power is under no obligation to discover those documents to any other party in the proceedings in which judgment has been entered.  The judgment brings an end to the litigation and discharges the parties to that litigation from any further obligations to each other in respect of discovery.  There may be exceptions where the judgment is under appeal and fresh evidence is sought to be adduced by a party, but those exceptions do not need to be addressed.

213               However, the documents in this matter were created before judgment and should have been discovered before trial.

214               In my opinion, the respondent had an obligation, as soon as it became aware of its failure to make full discovery in the principal proceedings, to acquaint the applicants with that fact.  As soon as the applicants complained of that failure by the filing of these applications, the respondent became obliged to make full discovery by filing a list of documents which discovered all documents in the possession, custody or power of the respondent and all documents which were, but were not then, in the respondent’s possession, custody or power and when and in what circumstances those documents were last in that party’s possession, custody or power.

215               The obligation to make discovery by filing such a list of documents arises because of the respondent’s previous failure to make full discovery before trial.

216               Discovery of a party’s written evidence is an important part of the litigation process.

217               The discovery process relies to a considerable extent upon the honesty and integrity of the parties to litigation and their legal advisers.  Where after judgment any party or that party’s legal advisers becomes aware that there has been an inadvertent failure to make full discovery, that party has a duty to disclose that fact to the other parties to the litigation.  There is also a public interest in ensuring parties make appropriate discovery by complying with any order of the Court and with its obligation under the Federal Court Rules.  There is a public interest in maintaining the integrity of the Court’s processes.

218               Thus, a party who has failed to make discovery in accordance with an order of the Court or the Federal Court Rules is obliged to bring that failure to the attention of the other parties to the litigation.  As part of that duty, the party in default must make all enquiries necessary to ensure that all documents which should have been previously discovered are discovered to the other parties and made available for inspection.  This is one further aspect of the continuing obligation to make discovery.

219               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.

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

The Job Cards

221               Mr Brookfield adduced no direct evidence or any evidence from which an inference could be drawn that the job cards were fraudulently or deliberately withheld from discovery.  A number of witnesses were cross-examined by Mr Brookfield – Mr Wilsdon, Mr Fahy, the Group Controller of McPherson Ltd between June 1989 and March 1995 and now General Manager Commercial, Mr Bennett, now Director and Company Secretary of the respondent, Mr Ashley White, Product Manager, Rural and Domestic, of the respondent, and now employed by Davey and Mr Mills and Mr Davis, both solicitors in Piper Alderman.  Mr Brookfield did not suggest to any of those witnesses that any of them or anyone else had been guilty of deliberately failing to make discovery of relevant documents in the principal proceedings.  Mr Brookfield made various allegations of improper conduct but these allegations were muddled together into a general sense of grievance on his part.  I find that none of the directors, employees or agents of the respondent, or their solicitors, were at any time guilty of fraudulently withholding relevant material from discovery.

222               The inquiry in respect of these documents is narrowed, therefore, to the questions whether the documents are relevant; whether or not the applicants exercised due diligence in seeking the discovery and production of these materials; and what impact, if any, the documents might have had on the reasoning of the trial judge at first instance.

223               The respondent concedes that, insofar as the job cards relate(d) to comparable failures experienced by other customers of the respondent, the job cards were discoverable.  The respondent, however, argued that the applicants had never defined the concept of ‘comparable users’.  It submitted that there was a ‘pronounced lack of clarity in the notion of comparable users’.  The respondent argued that other septic waste systems had different designs ‘and took different approaches to aeration and effluent’.

224               Ultimately, however, the respondent conceded that if there were job cards relating to manufacturers of waste water systems which put the pumps to uses which were comparable to those of Mr Brookfield, then those job cards were also discoverable, either as a matter of general principle or because DW27 to Mr Wilsdon’s affidavit made them relevant.

225               I can proceed, therefore, on the basis that any job cards, whether forming part of the 329 job cards contained in the 810 pages of documents or any other job cards which showed failure of the same kind experienced by the applicants whilst being used by comparable users were relevant and discoverable.

226               The originals of the 810 pages of documents were ultimately tendered by the respondents at the hearing of the notice of motion.  The job cards record service or warranty claims in respect of 457 pumps and motors, of which 216 can be positively identified as Doc 3 pumps and 65 as Doc 7 pumps.  Mr Brookfield took me to several job cards which identified seal failure or shaft grooving as the fault giving rise to the return of the pump to the respondent.  These job cards related to pump returns by customers other than the applicants.  Mr Brookfield identified 44 job cards which he asserted showed ‘identical failures’ to those experienced by SPA.

227               The faults identified by the handwritten comments on those 44 job cards are not always precisely described.  There are comments to the effect that there is ‘moisture in motor’, ‘leaking between shaft and lip seal’, ‘grooves in shaft from lip seals and sand’ and ‘grooves in shaft’.  Some job cards identify the cause of failure as the pumping of abrasive materials such as sand, cow manure, rubbish, stones and gravel.

228               However, those job cards do show that other users of Davey pumps experienced failures similar (if not identical) to those experienced by Mr Brookfield and SPA.

229               The respondent presented two written analyses of the job cards.

230               One analysis is an analysis of the 44 job cards identified by the applicants.  The respondent observes that two of the 44 job cards are duplicates of others, therefore there are 42 relevant job cards.  In its analysis, a fault code was ascribed to each of the faults identified by each of the job cards.  All faults identifiable as shaft grooving or lip seal failures were identified with the number ‘1’.  It should be noted that a fault was only ascribed the fault code ‘1’ if the description of the fault on the job card specifically mentioned shaft grooving.  Where the failure was something other than shaft grooving / lip seal, ‘2’, where the fault was unclear ‘3’ and where there was no fault, ‘4’.  In this analysis, the respondent identified 33 shaft groove / lip seal failures.  Twenty-three such failures occurred in Doc 3 pumps, four in Doc 7 pumps, and eight in other sorts of pumps (including four sumprat pumps) supplied by the respondent.  The individual failures total 35.

231               The other analysis identified each of the 329 job cards, the type of pump to which the job card related, and the category of fault recorded on the job card.  By cross-referencing this summary against the list of 44 job cards identified by Mr Brookfield, it was possible to identify further examples of pump failures which could be said to be similar to those experienced by Mr Brookfield and SPA.

232               For example, one job card, to which Mr Brookfield did not draw my attention, did not record any fault in the field provided for that purpose.  However, on the reverse of the original job card there is written ‘grooves in shaft’.  This particular job card is identified by Document No. 156135.  Whilst that particular job card is marked ‘Cancelled’, assuming the provenance of the comment on the reverse of the job card was established, the job card would presumably record a fault which Mr Brookfield would describe as being identical to the faults experienced by SPA.

233               Again, on the reverse of job card No. 156326, there is a comment handwritten in the following terms: ‘water in motor through grooves in shaft (slight grooves)’. 

234               Why some entries appear on the reverse of the original job cards (as opposed to the attached carbon copies) is not clear.  These particular entries were obviously not identified by Mr Brookfield during the course of the hearing, and were not dealt with during the hearing.  Mr Brookfield presented his arguments by reference to the 810 pages of documents which are copies of the originals contained in Exhibit R16 tendered by the respondent.  He may, therefore, have easily missed some of these entries.

235               The job cards appear to record failures in 216 Doc 3 pumps and 65 Doc 7 pumps (as well as a number of other pumps which are not presently relevant).  Mr Brookfield has identified 44 job cards which he says record pump failures identical to those experienced by SPA (ie: shaft groove / lip seal failures).  In respect of those job cards, the respondent concedes that the records disclose 23 Doc 3 pump shaft groove / lip seal failures, and 4 like failures in respect of Doc 7 pumps.  It appears that there are job cards apart from the 44 identified by Mr Brookfield which might record relevant failures.  From a cross-referencing of the respondent’s analyses and the list of 44 job cards identified by Mr Brookfield, I have identified a further 12 job cards (155647; 156135; 156326; 156497; 203; 2557; 1338; 1377; 495; 2352; 2341; 2654) which specifically record shaft groove / lip seal failures in 11 Doc 3 pumps and 4 Doc 7 pumps.  Some of these are marked ‘cancelled’.  That notation has not been explained.

236               Assuming these are the only recorded failures in respect of Doc 3 and Doc 7 pumps amongst the newly discovered job cards, I have working figures of 34 Doc 3 pump shaft groove failures out of 216 returns and 8 Doc 7 pump shaft groove failures out of 65 returns.  However, these figures can only be regarded as rough estimates; no safe extrapolation can be made that would enable me to draw any conclusions as to relevant failure rates experienced by the respondent’s other customers.

237               The trial judge found a causal relationship between the working fluid in Mr Brookfield’s systems, and the failures experienced by him in relation to the Doc 3 and Doc 7 pumps.  Mr Brookfield argued that her Honour’s reasons for judgment meant that the failures experienced by SPA were unique to the systems which incorporated the modified filter medium, ie: the disc-pack.  The disc-pack was incorporated in the modified Parco Beaver system and the BPS system.  He asserted at the hearing that this was the respondent’s case at trial.

238               However, the respondent denied that the trial judge’s finding was as Mr Brookfield contended.  The respondent pleaded in its defence in the principal proceedings that pumps were replaced by it due to problems caused by defects in the septic system designed by Brookfield and/or the incorrect installation of the pumps.  It also pleaded that any problems which arose with the pumps arose not because of faults and defects in the pump, but due to design faults in the septic system designed by Brookfield and/or the incorrect installation of the pumps.  No further particulars were given of the defects or the design faults.

239               The respondent relied upon the evidence of two experts in the trial in the principal proceedings.  Their reports were tendered.

240               Mr Weir, in a report dated 4 August 1995, offered the following executive summary in his report:

‘2.        EXECUTIVE SUMMARY OF CONCLUSIONS

The Davey pumps (Lowara DOC 3 and DOC 7, and the Sumprat) are well-designed and economical examples of mechanical engineering equipment.  They are capable of providing reliable long-term operation in a clean pumping environment.  They are also adequate for operating in moderately dirty conditions over a reasonable service life.  They are not designed for extended operation in an extremely arduous environment, particularly one involving highly abrasive working fluids.  Their useful service life could be expected to be reduced in such circumstances.  The greater the amount of grit and abrasive particles in the working fluid, the shorter the useful life of the pump.

These Davey pumps have failed prematurely, not because of any alleged inherent design flaws, but because they have been wrongly used in an environment for which they were never intended.

Evidence is presented in this report which shows that the conclusions of Professor Joubert and Mr Miller concerning the causes of failure of the pump seals are incorrect.  Evidence is presented instead which shows that any failures of the pump shaft seals were due to the action of a working fluid containing an excessively high concentration of abrasive particles.’

241               In his report he said:

‘5.6      Likely causes of failure

In the light of the above, the most likely cause of premature failure of the pumps (given that failure was precipitated by water getting into the motor) is that the pumps were exposed for prolonged periods to excessively harsh conditions of abrasion, that is, to a working fluid which carried an unusually high concentration of abrasive particles in suspension.’

242               It can be seen that Mr Weir’s opinion was that there were two factors operating which caused the failure; prolonged use; and use in fluids which carried an unusually high concentration of abrasive particles in suspension.

243               The respondent also tendered the report of Mr Mark Gobbie.  He had been retained to ‘review the design features, performance and operation of the Brookfield Plumbing Services Mark 9 wastewater treatment system’.

244               His report shows that he reviewed that system and the Parco Beaver Wastewater treatment plans.  He wrote:

‘2         TREATMENT PLANT DESCRIPTION

The two systems reviewed were the Brookfield Plumbing Services Mark 9 Wastewater Treatment Plant and the Parco-Beaver Wastewater Treatment Plant.  Both systems are trickling filter systems where settled wastewater from a septic tank is discharged to the secondary treatment plant (trickling filter system).

In the Brookfield Plumbing Services design the trickling filter reactor consists of two concentric chambers.  Settled wastewater is discharged to the primary settling chamber (which is the central chamber) and is then lifted by a recirculation pump to the top of the filter to be distributed over media which is positioned above the primary settling chamber.  Biomass which grows on the media, breaks down the organics contained in the wastewater as it trickles over the filter media.  The biomass which is exposed to a mix of air and organics continues to grow to the point where it can no longer sustain its own weight and it is then said to slough or break off.

The mix of wastewater and biomass particles flow back to the primary settling chamber where the solid biomass settles from the liquid stream.  Outside the primary settling chamber is the secondary settling chamber which is hydraulically linked to the primary chamber via a hole located at the bottom of the dividing wall.  Clarified liquid from the settling chambers passes to the irrigation chamber through a pipe where it is chlorinated.  The irrigation chamber is used for storage of treated effluent which is pumped to an irrigation system by high level activation of a submersible pump.

The Parco-Beaver system is similar in concept to the Brookfield system.  The major functional difference is that wastewater is discharged at a point between two concentric baffles.  This baffle arrangement enables the full area of the tank to be utilized as the primary settling chamber.  Consequently, the system has a larger area for sludge settling and storage.

The most significant process difference between the two systems is the filter media.  The Parco-Beaver system uses a randomly packed plastic media while the Brookfield Plumbing Services system uses series of parallel horizontal discs with 12 mm diameter drainage holes.  It is worthy to note that the plastic media would be likely to provide a higher media surface area to filter volume ratio than the disc system enabling effective operation at loading higher rates.’

245               He later concluded:

‘On the basis of the above discussion which summarizes key issues discussed by Harrison and Daigger it is valid to conclude that the horizontal media is likely to lead to uneven biomass growth.

The other difference in the two designs noted in reviewing the literature was that the recirculation pump was lower in the Brookfield system than in the Parco-Beaver plant.  As the primary settling chamber is intended to allow settlement of solids, a build-up of sludge would be expected at the bottom of this chamber.  This, combined with the previously mentioned fact that the primary settling chamber is smaller in the Brookfield system, results in the likelihood that the recirculation pump in the Brookfield system is exposed to the sludge build-up sooner than in the Parco-Beaver system.’

246               His final conclusions were:

‘6         CONCLUSION

On the basis of the discussion presented above, the following conclusions can be drawn:

●         The higher organic loading rate in relation to the hydraulic flushing capacity of the Brookfield system is likely to result in an increased biomass build-up within the filter.  This in turn is likely to result in an increase in the solids sloughed from the filter.

●         The baffle arrangement used in the Parco-Beaver system enables the full tank area to be used for settling and sludge accumulation.  Exposure of the recirculation pump to solids is likely to be more severe in the Brookfield system.

●         The baffle arrangement used in the Parco-Beaver system provides an effective means of allowing incoming solids to settle away from the recirculating pump.  This is not the case in the Brookfield system.

●         The use of horizontal media as opposed to plastic media is likely to increase the potential for uneven biomass development within the filter media.

●         The light weight construction materials in the Brookfield unit may increase the potential for uneven flow distribution and hence uneven biomass development within the filter.

●         The observations made by John Zio indicating thick anaerobic gelatinuous biomass build-up in the Brookfield system are consistent with the above.

●         The build-up of biomass on the filter is likely to expose the recirculation pump to a higher solids content liquid than would normally be expected if the system were operating correctly, and higher than that in the Parco-Beaver system.

In addition to the above, it is worthy to note that the modification made by John Zio to the Brookfield system (levelling of the filter media, increased pump discharge pipe diameter and increased venturi size) have established a stable relatively well distributed aerobic biomass.  The Davey pump is operating well in this environment.’

247               In my opinion, there is no ambiguity about Mr Gobbie’s opinion.  His opinion was that the Brookfield system was the reason for the pump failures.

248               It is necessary to understand the trial judge’s reasons for rejecting the applicants’ claim in breach of contract before considering the impact of the recently discovered documents on that decision.  The applicants had pleaded that it was an express or implied term of the contract for sale and purchase of the Doc 3 pumps that they were of merchantable quality and fit for the purpose made known to Davey.  A similar plea was made in respect of the Sumprat pumps.

249               A plea that it was an express or implied term of the sale and purchase agreement of the Doc 7 pumps that they were of merchantable quality and fit for the purpose of pumping septic waste water was also raised.

250               The applicants pleaded that at the time they made the agreement (for the sale and purchase of the Doc 3 pumps) Mr Brookfield expressly or by implication made known to Davey, its servants or agents the particular purpose for which the Doc 3 pumps were required.

251               The two terms pleaded in respect of the Doc 3 pumps and the single term pleaded in respect of the Doc 7 pump and the Sumprat pump were admitted by the respondent.

252               The trial judge found that the pleas to which I have referred could not be supported under the Trade Practices Act.  She proceeded on the basis that the applicants’ claims in contract and breach relied upon s 14 of the Sale of Goods Act to which I referred at [67].

253               She found that s 14 I did not apply so as to provide a statutory warranty in respect of Doc 7 pumps because the proviso to s 14 I applied as ‘the supply by the respondent to Mr Brookfield of Doc 7 pumps were contracts “for the sale of a specified article under its patent or other trade name”’.

254               She found that the contract/contracts for the sale and purchase of the pumps from the respondent included no implied condition of fitness for any particular purpose because the contract/contracts were ‘contracts for the sale of a specified article under its patent or other trade name’.

255               She then considered whether Mr Brookfield had made known to Mr Wilsdon and, therefore, the respondent, the particular purpose for which the Doc 3 pumps ‘were required so as to show that he relied on the respondent’s skill and judgment’.

256               Although her Honour preferred Mr Wilsdon’s evidence to Mr Brookfield’s, she made a positive finding that Mr Brookfield did make known to Mr Wilsdon and, thus, the respondent, the particular purpose for which the Doc 3 pumps were required so as to show that he relied on the respondent’s skill and judgment.

257               However, the applicants failed to establish that the exception in s 14 I should apply because the trial judge found that the particular purpose the applicants made known to the respondent was use in a Parco Beaver system not a modified Parco Beaver system which replaced ‘the cut plastic piping filter medium with a disc pack or in a BPS system’.

258               Her Honour said:

‘I am prepared to treat the particular purpose expressly made known to the respondent so far as the contracts for the sale of Doc 3 pumps by it to Mr Brookfield were concerned, as having been made known to the respondent, expressly or by implication, so far as the contracts for the sale of Doc 3 pumps by it to Septic Products were concerned.’

259               She next posed for herself the question whether the applicants had established that the Doc 3 pumps were not reasonably fit for that purpose.  After considering evidence relating to a specific batch of faulty pumps which failed due to bottom bearing housing problems, which she treated separately, she found that 50 per cent of the Doc 3 pumps failed in use.  She found that a failure rate of that kind over a relatively short period indicated that the Doc 3 pumps ‘were not fit for the purpose for which they were in fact used’.

260               She then posed the further question:  ‘Is the purpose for which the Doc 3 pumps were in fact used the particular purpose which I have found was made known to the respondent: that is, the particular purpose of acting as a recirculation pump in a Parco Beaver system?’

261               She referred to Mr Brookfield’s evidence of design modifications to the Parco Beaver system and, in particular, replacing the filter medium of cut plastic piping with a disc pack which he commenced to do in South Australia in 1990 and in New South Wales in 1991.  She found that, some time in 1991, he stopped using cut plastic piping altogether and, after September 1991, only installed the BPS system.

262               She found it was unlikely that any Doc 3 pumps were installed in any BPS system because Mr Brookfield stopped purchasing Doc 3 pumps in August 1991.

263               She concluded that nearly all Doc 3 pumps were installed in waste water systems which used disc packs.  Because of her earlier finding, she must have found that the Doc 3 pumps were nearly all installed in modified Parco Beaver systems.

264               The trial judge then referred to Mr Gobbie’s evidence.  She described Mr Gobbie as the ‘only academically qualified expert with experience in waste water process design’.  She said:

‘Mr Gobbie expressed the opinions, which I accept, that horizontal medium, such as the disc packs, are likely to lead to uneven biomass growth, and that uneven biomass growth will result in large pieces of biomass sloughing from the filter medium into the area of the holding tank in which the recirculation pump (for present purposes, the Doc 3 pump) operates.  Although Mr Gobbie assumed, contrary to the fact, that disc packs would not be serviced, I do not consider that this factor affects his above opinions.  A view of waste water systems, including a BPS system, was held early in the hearing of this matter.  The BPS system seen on the view was one which the evidence established to have been regularly serviced.  Uneven biomass distribution on the top disc of the disc pack was pointed out to me and observed by me.  Also pointed out to, and observed by me, were lumps of biomass on the surface of the holding tank below the disck pack.  What I saw on the view in this regard tends, in my view, to provide support for the opinion expressed by Mr Gobbie (s54 of the Evidence Act 1995 (Cth)).’

265               The trial judge found that the modified Parco Beaver system (which was unique to Mr Brookfield) would create large pieces of biomass which would come into contact with the Doc 3 pumps.  She referred to other evidence which she said reinforced that finding:

‘Mr Wilsdon gave evidence of Doc 3 and Doc 7 pumps returned by Mr Brookfield to the respondent having large quantities of thick waste material in and around the pumps’ external workings of the shaft and the impeller.  His evidence was that after the removal of such material the pumps operated satisfactorily.

There is other evidence that a number of failed pumps returned to the respondent showed on examination a build up of bacteria growth.  Mr Brookfield himself gave evidence of seeing approximately 9 dismantled Doc 3 pumps previously returned by him to the respondent: on each of them he saw a dried substance around the impeller and the pump shaft which, when he rubbed it between his finger and thumb, ground down to a fine gritty substance.  His evidence is that he recognised the dried substance immediately as bacteria culture, and that it was identical to the biomass growth which forms on top of filter packs.’

266               There was no dispute, so the trial judge found, that both the Doc 3 and Doc 7 pumps had failed because lips seals (of which each had three) located on the pump shafts had failed allowing fluid to come into contact with the motors.

267               She rejected the applicants’ experts’ hypothesis that the lip seals had failed because the steel shaft was too soft for use with lip seals.

268               She accepted Mr Wilsdon’s evidence:

 ‘Moreover, Mr Wilsdon gave unchallenged evidence of the sale of 22,017 Doc 3 pumps by the respondent between 1988 and 1993 and of the sale of 4,689 Doc 7 pumps over the same period.  He was only able to give evidence of warranty replacements of Doc 3 and Doc 7 pumps between 1990-1994.  His evidence was that during that period 740 Doc 3 pumps and 297 Doc 7 pumps were replaced under warranty.  Whilst there may be reason to doubt that such figures are precisely accurate, I accept that they reflect the order of the number of pumps so replaced.  I further accept Mr Wilsdon’s evidence that a number of the Doc 3 and Doc 7 pumps sold by the respondent over the periods referred to above were sold to customers other than the applicants for use in waste water systems and that the return rate of such pumps was not out of the ordinary.’

269               She then discussed the different functions performed by the Doc 3 and Doc 7 pumps in the modified Parco Beaver system.  The Doc 3 pump operates in the stilling chamber where they pump the fluid in its early stages of treatment.  The Doc 7 pump operates the treated fluid which is substantially cleaner than the fluid in the stilling chamber.  She then said:

‘Mr Brookfield acknowledged that the applicants’ records indicated that only “a handful” of 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.’

270               The trial judge thereby specifically relied upon the applicants’ failure to call evidence from others in the industry to establish failure in waste water systems which were not modified by using a disc pack filter.

271               The respondent’s pleadings, of course, do not specifically raise the question of other users of pumps supplied by the respondent, but the respondent relied on evidence at trial from which it could be inferred that the high rate of lip seal/shaft degradation failures experienced by Mr Brookfield was peculiar to him.  The trial judge accepted that evidence and found:

‘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.

Although Septic Products may be taken to have made known to the respondent that the Doc 3 pumps were required for use as recirculation pumps in Parco Beaver systems, the failure to inform the respondent of the modification effected to the system (which modification I have found affected the working environment of the Doc 3 pumps) has the consequence, in my view, that Septic Products did not make known to the respondent the particular purpose for which the Doc 3 pumps were required.

The claim for breach of an implied condition of the contracts of sale of Doc 3 pumps between Septic Products and the respondent based upon the first proviso of s14 of the Sale of Goods Act must fail.’

272               The applicants’ case under s 14 I did not succeed because the trial judge concluded that the Doc 3 pumps failed because of Mr Brookfield’s modifications to the Parco Beaver system which had not been made known to the respondent.  Thus, the applicants had not made known to the respondent the particular purpose for which the Doc 3 pumps were required.

273               It would have been relevant to her Honour’s decision, as her Honour herself observed, to have evidence from other manufacturers or installers in the industry using the Parco Beaver system, or any other system not employing the disc pack modification, of their experience with Doc 3 pumps.  The only evidence she had was that deposed to by Mr Wilsdon which was of sales of all Doc 3, Doc 7 and sumprat pumps, which were not peculiar to the industry.

274               Her Honour next dealt with the applicants’ claim under s 14 II.  She said:

‘It is not contested in this case that the Doc 3 pumps were bought by description and that the respondent dealt at the relevant time in goods of that description.  No party chose to hazard what that description might have been.  The description on the evidence must, I think, have been that of “Lowara Doc 3 sump pumps”, or perhaps, simply “sump pumps”.  It was not suggested that any examination made of the goods ought to have revealed defects.  The issue here raised is that of whether the Doc 3 pumps sold by the respondent to Septic Products were of merchantable quality.’

275               She referred to a number of authorities concluding:

‘This case has, in my view, many similarities with the case of Jillawarra Grazing Company v John Shearer Ltd (1984) ATPR 40-441.  In that case, which involved an airseeder purchased by the applicant from the respondent, at 45,089 Toohey J said:-

“I am not persuaded that the airseeder was of unmerchantable quality in the sense in which that term has been considered by the Courts; indeed I am satisfied that it was of merchantable quality.  As an airseeder or, if it is permissible to impose a gloss and say an airseeder capable of carrying out the work for which it was designed, the airseeder met the test.  The experience of John Shearer with similar airseeders sold throughout Australia would indicate that the machine is one that a reasonable purchase would accept …

 

As I have concluded, the difficulties encountered by Jillawarra stemmed in the main from Mr. Bunter’s decision to drive the airseeder with a hydrometer.  I should not be taken as holding that John Shearer should not have anticipated that the airseeder might be driven by a hydraulic motor as well as by a power take-off.  What I am saying is that a purchaser who decided to install a hydromotor was obliged to ensure that the hydraulic drive was appropriately designed and installed.  …  The applicant did not seek the respondent’s advice in this respect and the latter cannot be held responsible for any vice in the airseeder that was a consequence of an inadequate hydraulic system.”’

276               She found that the applicants had failed to establish that the pumps were not of merchantable quality.  Whilst her Honour did not say so it is implicit in her findings that she was not satisfied that the pumps were not of merchantable quality if used in appropriate conditions.

277               Like her findings in respect of the applicants’ case based on s 14 I, her Honour decided this aspect of the case on the basis that the pumps were not intended to be used in a waste water environment which was filtered by the disc pack modification.

278               It is implicit in her findings that the pumps were intended to be used in the unmodified system.

279               The job cards recorded service or warranty claims in relation to 457 pumps and motors.  The respondents identified 48 shaft groove failures amongst all pumps returned (including pumps that were not Doc 3 or Doc 7 pumps).  The respondent contended that one approach would be to consider the job cards as representative of a 10 per cent failure rate amongst other pump users, which could be compared with the 50 per cent failure rate experienced by Mr Brookfield.  This is wrong.  The trial judge found that 50 per cent of the Doc 3 pumps supplied to Mr Brookfield suffered shaft groove/lip seal failures.  The industry figure contended for by the respondent is in reality a percentage of pumps returned which were returned because of a particular failure.  The two figures are incomparable.

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.

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.

282               Mr Brookfield appeared to argue that had the job cards been discovered, other septic waste manufacturers supplied by the respondent would have been identified to him and a case could have been run that pumps were failing at high rates in systems which did not incorporate Mr Brookfield’s modification.

283               The respondent contended that this argument should be rejected for several reasons.

284               First,  the respondent says that the applicants had the ability to run a case of ‘comparable use’ or ‘comparable failure’ from the outset, and that pursuit of such a tact was not hindered by the non-discovery.  The respondent conceded that my inquiry is not limited to the impact the now discovered documents would have had as evidence at trial, but extends to the impact of potential evidence which was rendered unavailable by reason of the non-discovery.

285               I have referred several times to the affidavit of Mr Dallas Wilsdon sworn on 30 July 1995.   Mr Wilsdon deposed to having inspected the records of Davey and to having determined and summarised national sales and returns figures for the respondent in the relevant years.  This summary was exhibited to his affidavit and marked DW25 (refer to par [87] above).  He further deposed to having made an inspection to determine the statistics in relation to customers of the respondent who were waste water treatment system manufacturers.  A summary of his findings was exhibited to his affidavit and marked DW27.

286               DW27 related only to two waste water treatment systems manufacturers: ‘Envirocycle and Biocycle’.  Mr Brookfield argued that job cards relating to several other waste water system manufacturers existed and ought to have been discovered.  Had they been discovered, Mr Brookfield argued, he could have identified comparable users of Davey pumps and investigated failures experienced by them.  On the second day of the hearing of this notice of motion, Mr Brookfield said:

‘MR BROOKFIELD:   Right.  Apart from Envirocycle, Biocycle and myself in

the industry, there were other waste water treatment manufacturers that the

respondent used to supply the DOC3 and DOC7 pumps to.

HIS HONOUR:   Did you know that then?

MR BROOKFIELD:   I knew this because of the fact that from time to time we

would communicate with other waste water treatment companies over the time.

At the time I didn't know the - apart from Envirocycle, Biocycle and

Clearwater, I wasn't aware of the extent of which they supplied to some of the

eastern state companies because there was a reasonable amount of

confidentiality in there with supplies and manufacturers, et cetera.  In relation

to what the respondent claimed at trial and what the case actually was are two totally different things….’

287               The respondent’s answer to this contention was that the other waste water manufacturers were known to or could easily have been identified by Mr Brookfield without discovery of the job cards.

288               Certainly, Envirocycle and Biocycle were known to Mr Brookfield at trial.  So much is evident from the transcript of cross-examination of Mr Brookfield at trial.  These two companies manufactured activated sludge systems which aerated effluent by means of an air blower.  Their systems did not employ a recirculation pump, but rather used Davey pumps as irrigation pumps.  As could be expected, the pumps in these systems pumped cleaner water than that pumped by a recirculation pump in Mr Brookfield’s systems.  Evidence of similar rates of failure, experienced by these manufacturers may well have supported any ‘comparable user’ case Mr Brookfield may have pursued at trial.

289               Some material supporting the figures in DW27 was exhibited to Mr Wilsdon’s affidavit as DW28.  As previously mentioned, Mr Wilsdon incorrectly deposed that the records, which would have enabled him to give details as to pump failures and causes, were destroyed in a fire.  A notation to DW27 recorded that the summary was prepared using documents which Mr Wilsdon said had been destroyed.  DW27, however, could have been prepared solely by reference to the material contained in DW28.  The notation may have been incorrect.  I do not know.

290               The end result is that job cards relating to Envirocycle and Biocycle were not discovered, and nor were job cards relating to other  waste water system manufacturers supplied by the respondent.

291               The ‘other’ waste water treatment system manufacturers identified by Mr Brookfield during the hearing of the notice of motion were ‘Clearwater’, ‘Allwater’, ‘Dural’, ‘Earthsafe’ and ‘Biotreat’.

292               The respondent says that all of these manufacturers were known to Mr Brookfield at the trial, and that non-discovery of job cards relating to returns from these manufacturers did not prevent Mr Brookfield from investigating failures experienced by those manufacturers.

293               Even if that is so, that is no answer to the respondent’s failure to make discovery.

294               Certainly, Mr Brookfield must have been aware of Allwater Treatment Pty Ltd.  This was the company which held the licence to manufacture the Parco Beaver system, and which later went into provisional liquidation (see par [29] above).

295               Mr Brookfield was also aware of the existence of Clearwater Treatment Systems Pty Ltd (Clearwater) at the time of the trial.  Two affidavits of Mr Andrew Leishman sworn in June 1999 were tendered at the hearing of the notice of motion.

296               Mr Leishman was, at least in 1989, the managing director of Clearwater, a company that manufactured a trickle filter system similar to the Parco Beaver system (the Clearwater System).  Mr Brookfield claimed that the Clearwater System used a cut-pipe filter medium similar to that used in the original Parco Beaver system.  Some time in 1990, Mr Leishman began incorporating Doc 3 and Doc 7 pumps in the Clearwater System.  The pumps were supplied by the respondent.

297               Mr Leishman deposed that the Doc 3 pumps, used as recirculation pumps in the Clearwater System, failed consistently after eight months of usage.

298               That evidence may have assisted Mr Brookfield at trial.  However, the respondent says it was not evidence that was denied to Mr Brookfield by reason of the respondent’s failure to give adequate discovery.  There is some evidence to suggest that Mr Brookfield knew at trial that the respondent supplied Clearwater with pumps.  He claims that he was unable to achieve co-operation from other waste water system manufacturers until recently because of competition in the industry, and hostility between competitors.

299               On the respondent’s case, Mr Brookfield must be taken to have known since the filing of Mr Wilsdon’s affidavit of 30 July 1995 that Clearwater had been supplied by Davey with pumps (although not necessarily Doc 3 or Doc 7 pumps) and that Clearwater had experienced failures in such pumps.  Exhibit ‘DW28’ to Mr Wilsdon’s affidavit records two entries in respect of ‘Clearwater’ (although one of these is an entry in respect of ‘Clearwater Tanks’).

300               ‘Biotreat’, another activated sludge system manufacturer was also identified in ‘DW28’, as were, of course, ‘Envirocycle’ and ‘Biocycle’.  ‘Allwater’ and ‘Dural’ are also mentioned in that document.

301               Dural Irrigation Pty Ltd (Dural) distributed the respondent’s pumps.  Mr Michael Freame is the manager and ‘part-owner’ of that company, and an affidavit of his sworn 1 July 1999 was tendered at the hearing before me.  In his affidavit, Mr Freame deposed to Doc 3 and 7 pumps having been returned to Dural by customers, which ultimately resulted in Dural ceasing to stock such pumps.  The pump failures experienced by customers of Dural were related to seal failure and shaft grooving.

302               Dural supplied pumps for use in swimming pools, fish ponds, cellars and aquariums.  Mr Freame deposed that it was his ‘experience that the Davey Lowara Doc pumps could not perform in continuous use applications …’.

303               DW28 only records returns from Dural to the respondent of pumps other than Doc 3 and Doc 7 pumps.  Mr Freame claims that failed Doc 3 and Doc 7 pumps were in fact returned to the respondent by Dural, and that DW28 does not completely record returns from Dural.

304               Mr Brookfield asserted that requests were made to Dural Irrigation by his solicitors pre-trial for documents relating to returned Doc 3 and Doc 7 pumps.  He said that such requests were refused and that, therefore, evidence of the matters referred to in Mr Freame’s affidavit were not available to the applicants at trial.  There is no reference to any such requests in Mr Freame’s affidavit.  There is no evidence that the requests were made, or that Mr Freame’s evidence was unavailable to the applicants in 1995.

305               ‘Earthsafe’ was another company Mr Brookfield claimed was supplied with pumps by the respondent.

306               Mr Brookfield claims that Earthsafe used the Doc 3 pump as an irrigation pump in clean, chlorinated water.  He argued that that company experienced similar failures to the applicants.

307               Mr Brookfield simply did not prove his assertions as to the use by ‘Earthsafe’ of Doc 3 pumps, and as to the failure of those pumps.  Attempts were made to prove the assertions, but no material advanced was admitted into evidence.

308               In those circumstances, it is unnecessary for me to consider whether or not Mr Brookfield or his advisers exercised reasonable diligence (at trial) in trying to obtain the evidence which Mr Brookfield says was denied to him by the respondent’s failure to discover.

309               Finally, Mr Brookfield has asserted that various waste water treatment system manufacturers experienced similar failures (and rates of failures) in respect of Doc 3 and Doc 7 pumps supplied by the respondent.  Such failures were said to have been experienced in systems pumping cleaner water than that encountered by pumps in the modified Parco Beaver system.

310               Mr Brookfield claimed that had appropriate discovery of job cards been made, he would at least have been alerted to the identity of those manufacturers supplied by the respondent who experienced the relevant failures.  Such identification would have opened a line of inquiry enabling Mr Brookfield to seek out evidence in support of his case.

311               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.

312               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.

313               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.

314               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.

315               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.

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

MEMORANDUM OF ASHLEY WHITE

317               Mr Ashley White was employed by the respondent between 1989 and March 1995 as ‘Product Manager – Rural and Domestic’.  Between October 1990 and March 1993, he was the respondent’s product manager for Lowara pumps.

318               On or about 29 October 1991, Mr White drafted a memorandum (the memorandum) which was addressed to people who were identified as senior management for the respondent.

319               The memorandum is significant and I set it out in full:

‘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”.’

320               No satisfactory explanation has been advanced for the non-discovery of this document at trial.  Its importance is self-evident.  The author was the Product Manager for Lowara pumps within the respondent.  The addressees were the respondent’s senior management.  Mr Wilsdon, the SA State Manager, was one of the addressees.

321               The memorandum was part of a series of documents that were contained in two boxes of documents sent by McPhersons Ltd, the parent company of the respondent, to Piper Alderman (the respondent’s former solicitors) on or about 27 February 1998.

322              A Piper Alderman time costing record indicates that at the end of February and at the beginning of March 1998, a solicitor in the employ of Piper Alderman was preparing affidavits and submissions in relation to the stay proceedings that were at that time before O’Loughlin J.  The time costing record indicates that the solicitor, on 2 March 1998, considered materials received from McPhersons Ltd.

323               On 7 December 1998, Piper Alderman returned two boxes of documents to Mr Fahy of McPhersons Ltd.  The covering letter indicated that enclosed were ‘two boxes of documents, originally belonging to Mr Bob Morrow, forwarded to us some time ago in relation to Brookfield’s various applications in the Federal Court regarding allegations of the deficiency in discovery by [the respondent]’.

324               I think the documents returned to McPhersons Ltd were those that were provided to Piper Alderman on or about 27 February 1998.

325               Mr Fahy did not inspect the documents upon their return, but instructed a member of his staff to archive the boxes, which was done.  The two boxes were packed into one archive box and stored.

326               In May 2003, whilst preparing for the hearing before me, a solicitor from Thomson Playford inspected Piper Alderman’s files and located the letter of 7 December 1998 which enclosed the two boxes of documents.

327               That solicitor contacted McPhersons Ltd and inquired about the returned boxes.  The boxes were retrieved from archives under the instructions of Mr Bennett.  Mr Bennett inspected the documents and identified and extracted those he regarded as relevant to Mr Brookfield’s current motion.  Those documents extracted were then forwarded to Thomson Playford on or about 9 May 2003. The remainder of the box was sent to Thomson Playford on or about 19 May 2003.

328               The memorandum currently in dispute was contained within the documents provided to Thomson Playford by Mr Bennett.  The memorandum, together with other documents were ultimately produced to Mr Brookfield as exhibits to Mr Ashley White’s affidavit sworn on 12 August 2003.

329               The explanation for non-discovery is unhelpful.  There is no explanation as to why the document was not discovered in February / March 1998 when the documents contained within the two boxes were inspected by the respondent’s former solicitors.  There is no explanation as to why the document was not discovered at the trial.

330               There is nothing to suggest, however, that the document was deliberately concealed or withheld from discovery.  I cannot make any findings on the evidence before me that the documents were deliberately concealed or withheld from discovery.  The respondent has tendered several affidavits sworn by persons responsible for making discovery on behalf of the respondent.  They all depose to there having been no attempt to conceal this document. 

331               At the very least, the failure to discover the memorandum was careless, and from the applicants’ perspectives, frustrating.

332               It appears that the memorandum was prepared by Mr White after he became aware of Mr Brookfield’s complaints concerning the failures he was experiencing in the Doc 3 and Doc 7 pumps.  In a facsimile from Mr White to Mr Wilsdon dated 8 October 1991, Mr White identifies the failures in pumps returned by Mr Brookfield.  Mr White said in cross-examination that the memorandum was drafted after he had inspected pumps returned by Mr Brookfield.

333               Mr White was cross-examined in relation to the circumstances that caused him to draft the memorandum:

‘MR BROOKFIELD:   Mr White, if I can draw your attention to a memo that you issued that was marked for your eyes only.  I believe it's annexure 1 to your affidavit.  You say in there, "Following extensive examination of the use of Doc drainage pumps for the package Extended Aeration Plant Market, please be advised that the following applies".  Before you issued that memo, did you produce any notes or research to formulate that view?---Yes.  There was inspection of product that had been returned from our South Australian branch from Brookfield Plumbing and that was part of the reason for our examination.  There was a further note that I'm just trying to find, your Honour, which detailed where we had explained the nature of failure with product, on product 4, Brookfield.  On that basis I was concerned that I had seen, in similar slurry pumping applications, similar failures.  So I was drawing attention to that.  I can't find the other bulletin but that's where we have seen the nature of failure.

You just said then that you had seen similar failures in other slurry applications.  Can you advise the court what those other applications were?

---Yes.  Things like concrete batching plants; things like aquaculture applications where there was effluent in the water, fish effluent which is very aggressive; applications involving continuous running and the long-term operation of the product as well, like where there was a fine suspension in the water.  They became very aggressive and brazen.  That's the sort of things that we had seen.

What sort of failures did you identify from your examination?---Those that are detailed in this note here which is the failure of the lip seal and the grooving that occurs which, if I can move over, there's a copy of the ‑ ‑ ‑

HIS HONOUR:   That's a document you prepared, is it, Mr White?---Yes, a document I prepared.

What's the date of it?---This document here is 29 October 1991.

Was that document based upon other documents?---It would have been based on visual examination of returned product and verbal discussions.

Firstly, would it be based on visual examination of a number of pumps which had been returned?---Yes.

Only by Brookfield Plumbing?---Predominantly.  We had seen others back, as I say, from concrete batching plants and the like but predominantly they were in applications where abrasions were in suspension in the water and the pumps were required to run for long periods of time.

Apart from the visual examinations, what documents might have been considered for the purpose of writing that memorandum?---There was a bulletin or a file note that we had received from our New South Wales branch, David Gore, where he'd detailed the applications and usage that he had seen in similar effluent or aerated septic systems in New South Wales.  On that basis, we essentially wanted to take a conservative approach to the marketplace.  We were concerned, obviously, about selling product to customers that may create a problem, especially in consideration of the fact that the marketplace had really experienced problems with product quality which we had addressed but which we didn't want people to surmise were a result of other issues.  So if we sold product into applications they weren't suited to - - -

Sorry, what was [the] name of the gentleman you said in New South Wales?---David Gore.

Spelt?---G-O-R-E.

And he had written a report, had he?---He'd written a short report, a file note.  I certainly remember seeing that in here somewhere.  It's certainly in these notes.

And that was relied upon by you for the purpose of the ‑ ‑ ‑?---That was part of the reliance and most of - probably the only documented situation we would have had.  Most of the decisions were based upon visual examination and experience between ourselves, or myself and other members of our engineering department.

MR WELLS:   Your Honour, the Gore memorandum is AW3 to the affidavit and the other document that, I think, Mr White was referring to is AW4.

HIS HONOUR:   Can you find AW3 and AW4, Mr White?---I haven't familiarised myself with the numbering system in here.

My associate could probably help you.  I think you've been shown the two exhibits now, Mr White?---Yes.

Do you recognise Mr Gore's memorandum?---Yes.

Is that the document to which you're referring?---That's the one.  I'm assuming that mine follow that, and here it is here.  This was a note, a reply to Dallas Wilsdon from myself regarding failures of Doc units from Brookfield Plumbing in which we detail [memorandum from Mr White to Mr Wilsdon dated 8 October 1991] - and I remember this.  Dallas had sent over to me and explained that we had a problem with a product, or the customer, and I was to give them some attention in examining them.  I wouldn't normally have become involved in the examination of these, but under the circumstances specifically I examined these in conjunction with the other members of our employ.  We had three units that had no sign of failure and that was not an unusual event.  We had one unit where we had, in fact, a previous failure issue and we had - passed warranty without question and the other four units had shown signs of considerable wear and that was the nature of the failure.’

334               Mr White deposed in his affidavit sworn 12 August 2003 that the memorandum was drawn in response to Mr Brookfield’s complaints.  He said:

‘When I learned that Mr Brookfield was using the pumps to pump slurry, and that the pumps were failing, I decided to advise Davey/Yevad’s State Branches not to sell Doc 3 or Doc 7 pumps for this type of use.  I did not want to have people misusing the pumps and then complaining that they were not any good.’

335               Mr Wilsdon said in evidence that he cannot recall sighting the memorandum of 29 October 1991 at or about the time it was created.  Mr Wilsdon was one of the persons to whom the memorandum was addressed.  He was only prepared to concede there was a very slim chance that he ever saw the document at that time.

336               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.

337               Mr Brookfield’s complaint in respect of the non-discovery of the memorandum was not clearly articulated.  His primary complaint was that it was the respondent’s case at trial, and the finding of the trial judge, that the failures experienced by Mr Brookfield were unique to the applicant.  As mentioned, the finding was that the modified filter medium introduced by Mr Brookfield was responsible for the build-up of excess solids in the water being pumped, and it was the presence of these solids in the water that resulted in the premature failure of the Doc pumps.  However, implicit in the trial judge’s reasons is a finding that the rates of failure experienced by Brookfield were peculiar to him, when compared with other pump users in the waste water industry.

338               Mr Brookfield’s complaint in respect of Mr White’s memorandum was that the memorandum demonstrated that the respondent knew that the failures experienced by Mr Brookfield were not unique to him.

339               At the hearing, Mr Brookfield submitted:

‘… there was certainly, in Ashley White’s eyes, enough concerns with these pumps in the industry to put out a memo saying, “Don’t sell them for that type of application,” … they knew of other people’s problems, and yet they stood before the Court and said, “Excuse me, your Honour, this is unique to Brookfield.’

340               The trial judge’s finding was that the pumps were supplied for use in the original Parco Beaver system.  She further found that the pumps were used in a system which incorporated a modified filter medium, and that it was that filter medium that resulted in excess abrasive material being present in the working fluid.  It was continuous pumping of such abrasive material that resulted in pump failures.  She found that it was the filter medium modification that resulted in a working environment to which the pumps were not suited.  Mr Brookfield’s case is that if this document had been available to the trial judge she would have found that the same failures would have occurred with the same frequency in the original Parco Beaver system.  That is, the modification effected by Mr Brookfield was not the cause of pump failures.

341               The memorandum did not say that other pump users were experiencing similar failures, but that is implicit where the memorandum refers to ‘extensive examination of the use of Doc drainage pumps for the package extended aeration plant market.’

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.

343               During cross-examination, Mr Ashley White referred to a file note of Mr Gore, which was discovered to Mr Brookfield pre-trial.  He said that that file note formed part of the material upon which his memorandum of 29 October 1991 was based.  That file note records the opinion of Mr Gore that:

‘It is apparent that the successful use of Doc pumps in the aeration section of these systems is entirely determined by the type of aeration / biodegradation practice and the duration of pump operation.  Where the pumps are used for recirculation and biodegradation occurs in the tank proper, it is possible for a “soup” of suspended matter to develop which could be responsible for accelerated wear on pump components.’

344               This file note was discovered to Mr Brookfield pre-trial.  This file-note of itself, put Mr Brookfield on notice that the respondent was aware of the potential for failure of pump components in waste water system recirculation pumps.  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.

345               The respondent argued that the memorandum was a sales manager’s response to complaints made by Mr Brookfield.  It said the memorandum was inspired by an attitude that it was simply more trouble than it was worth to supply pumps to Mr Brookfield.  Given the breadth of the memorandum’s terms, and the lack of any specific reference to Mr Brookfield’s complaints, this contention must be rejected.  Further, Mr White said during cross-examination (despite his affidavit) that the memorandum was based on investigations of failures including, but not limited to, those reported by Mr Brookfield.

346               If this document had been discovered, Mr Brookfield would have been put on a train of inquiry that may have led him to evidence that similar failures (and rates of failures) were being experienced in systems which pumped water that contained no more abrasive material than that contained in the water pumped by the recirculation pump in the original Parco Beaver system.  If that evidence had been available at trial, the applicants could have contradicted the respondent’s case that the pumps failed because of excessive biomass present suspended in the working fluid because of the filter medium modification.  That is, Mr Brookfield could have contended that the pumps would have failed even in the original Parco Beaver system, the system that was made known to the respondent as the system into which the pumps were to be incorporated.

347               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.

348               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.

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

350               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.

351               Whilst he was prepared to concede there was some possibility he might have received the document, in my opinion, it is unlikely that he would not have.  It was written for the purpose of advising all State Managers not to sell pumps into certain applications in the industry.  It is unlikely that Mr Wilsdon did not receive it.

352               In any event, if this document had been available at trial it would have allowed the applicants to pursue discovery of the documents in the possession of the various State Managers.  It would have allowed the applicants to obtain further and better discovery of documents within the respondent to establish that each of the State Managers had received the document.

353               It would have led to a train of inquiry as to the reaction of the various State Managers in each of the States and whether the pumps ceased to be made available generally to the industry.

354               In my opinion, the document was particularly important to the applicants’ case and to the applicants’ response to the respondent’s case.

Other documents not discovered

355               In addition to the memorandum of 29 October 1991, various other documents were exhibited to Mr Ashley White’s affidavit sworn on 12 August 2003.  Some of the exhibited documents were located by the respondent’s current solicitors at the same time as the memorandum of 29 October 1991.  That is, some of those documents have the same ‘discovery’ history as Mr White’s memorandum.  They were not produced to Mr Brookfield until the affidavit of Mr Ashley White was filed in these proceedings (13 August 2003).

356               In its written submissions, the respondent identifies these documents as the final category of documents not discovered at trial and in respect of which Mr Brookfield raises complaint on the motion currently before me.

357               It was not clear from Mr Brookfield’s submissions whether he relied upon the non-discovery of those documents for the orders sought.  He certainly placed less reliance upon them.  I will deal with them in any event.

358               Like the memorandum, I cannot find on the evidence before me that these documents were withheld from discovery deliberately or fraudulently.  There is not a scintilla of evidence to support such a finding.  The only evidence relied upon by Mr Brookfield to support such a finding is evidence of the inexplicable delay in making discovery of the documents.  That is not enough.

359               The documents falling within this last category were contained in exhibit AW1 to Mr White’s affidavit.

360               The majority of the documents relate to pump failures experienced by users of the Doc range of pumps, which failures were unrelated to lip seal failures or pump shaft grooving.  The correspondence is identified by the respondents in their written submissions as relating to ‘thermal stator overload’ and ‘bottom bearing housing’ problems.

361               In his affidavit, Mr White refers to these problems:

‘7.        … in the second half of 1990 we received a batch of pumps which were rated at 220v, rather than 240v.  These pumps tended to stop in operation.  This became known to me as the “stator” or “thermal overload” problem.

8.         The “stator” or “thermal overload” problem was a minor problem.  Lowara eventually accepted it was their fault.  However, in an attempt to discover why this batch of pumps was stopping, we disassembled a number of pumps.  In the course of disassembly, we discovered that some of the pumps had cracked bottom bearing housings.’

362               The trial judge addressed the ‘bottom bearing housing problem’, and said:

‘The respondent did not contest that it had received from its supplier a batch of faulty Doc 3 and Doc 7 pumps.  The fault was related to the mounting of the steel retainer at the bottom of the pump to the plastic bottom bearing housing immediately above it.  The screws which fixed the retainer to the bottom bearing housing had split or cracked the plastic.  As a consequence the screws would not hold and the retainer could come loose if bumped or forced.  Pumps with this fault were plainly not fit for use in a waste water system.  The fault will hereafter be referred to as “the bottom bearing housing problem”.

 

The evidence of Mr Wilsdon was that the faulty batch arrived in Australia in January or February 1991, and one pallet of about 72 pumps, of which 40% had the bottom bearing housing problem, came to South Australia.  The first 6 pumps returned to the respondent by Mr Brookfield, according to Mr Wilsdon, came from this batch.  This evidence was not challenged and I accept it.  It may be, of course, that the first pumps returned by Mr Brookfield to the respondent were not the first with which problems were experienced.

It seems fair to assume that pumps from the faulty batch were not continuing to be supplied by the respondent to its customers as late as April 1991.  Other evidence tends to confirm this assumption.  Mr Brookfield's belief was that the Sumprat pumps were supplied because the Doc 3 and Doc 7 pumps (presumably the faulty batch) had been withdrawn from the market.  The Sumprat pumps were supplied to Mr Brookfield between 7 February and 8 March 1991.  Mr Wilsdon's evidence was of a shortage of Doc 3 and Doc 7 pumps in February and March 1991:  a shortage presumably caused, at least in part, by the need to withhold from customers pumps identified as being faulty.  The inability of the respondent to supply Doc 3 and Doc 7 pumps, for whatever reason, had clearly passed by mid-March 1991.  Internal memoranda of the applicant are consistent with pumps with the bottom bearing housing problem not being supplied by it after February 1991.  I conclude that pumps supplied by the applicant later than February 1991 did not suffer from the bottom bearing housing problem.  That is, I conclude that none of the Doc 3 pumps supplied to Septic Products pursuant to contracts of sale between it and the respondent suffered from the bottom bearing housing problem.’

363               I accept the respondent’s submission that non-discovery of this last category of documents could not have affected the decision at which the trial judge arrived.  I accept the respondent’s submission that although they ‘were discoverable pre-trial … they have no further relevance, both because they are consistent with the Trial Judge’s findings of fact and with her findings that SPA did not suffer from the bottom-bearing housing problem’.

THE LAW

364               Discovery, which originated in the Court of Chancery, was introduced into all courts in England following upon the enactment of the Judicature Acts.

365               The process was introduced as part of the simplification of the courts’ processes.  The Judicature Acts were passed in order to introduce a civil legal system which was understandable and which had procedures which would enable litigation to be conducted efficiently, expeditiously and reasonably inexpensively.  The purpose of including a regime which allowed for discovery was to ensure that the parties had full access to all relevant material whether in their hands or their opponents.

366               The process enables the parties to obtain documents from their opponents which support their own case, and which destroy their opponents’ case.  It enables the parties to assess their own prospects of success before trial and to ensure that they are not ambushed at trial.  Interrogatories also form part of this process and are designed to identify the opposing parties’ oral evidence.

367               Sir John Donaldson MR said in Davies v Eli Lilly & Co [1987] 1 All ER 801 at 804:

‘           Let me emphasise that the plaintiffs’ right to discovery of all relevant documents, saving all just exceptions, is not in issue.  The right is peculiar to the common law jurisdictions.  In plain language, litigation in this country is conducted “cards face up on the table”.  Some people from other lands regard this as incomprehensible.  “Why”, they ask, “should I be expected to provide my opponent with the means of defeating me?”  The answer, of course, is that litigation is not a war or even a game.  It is designed to do real justice between opposing parties and, if the court does not have all the relevant information, it cannot achieve this object.’

368               The integrity of the discovery process must be maintained.  The discovery process in many ways depends upon the honesty of the parties and their legal advisers.

369               It is essential for the administration of justice that the parties’ legal advisers properly instruct their clients as to their responsibilities in the discovery process.  The parties must be instructed on the issues in the litigation, including the issues raised by their opponents’ pleadings.  They must be instructed as to what documents are relevant for the purposes of discovery.  They must be encouraged to open up their documents for assessment by their own legal advisers.  If the parties are not mindful of the heavy responsibility that lies upon them, including the responsibility to discover and provide production of documents which might be destructive of their own case, then it is likely that the parties might fail to discover those documents.

370               In Rockwell Machine Tool Co Ltd v E P Barrus (Concessionaires) Ltd [1968] 2 All ER 98 at 99, Megarry J said:

‘In preparing for trial solicitors bear a great responsibility and a heavy burden.  Not the least of these burdens is that of discovery.  This is of especial weight in a complex case of passing off such as this was.  Many litigants (and not least corporate litigants) have little appreciation of the scope of discovery, and the duty of making full disclosure.  So often they neither know nor appreciate the requirement that they must search for and disclose to their adversary any documents which, in the classic phrase of Brett LJ, in the Peruvian Guano case, “may fairly lead him to a train of inquiry” which may either advance his own case or damage his opponent’s.

            Accordingly, it seems to me necessary for solicitors to take positive steps to ensure that their clients appreciate at an early stage of the litigation, promptly after writ issued, not only the duty of discovery and its width but also the importance of not destroying documents which might by possibility have to be disclosed.  This burden extends, in my judgment, to taking steps to ensure that in any corporate organisation knowledge of this burden is passed on to any who may be affected by it.’

371               The obligation to make discovery arises under the Federal Court Rules: O 15.  The obligations as they now stand are different to the obligations which existed at the time of the trial judge’s judgment.

372               Order 15 governs a party’s obligations to make discovery and provide inspection of documents.

373               At the relevant time, when judgment was delivered, O 15 provided that a party give discovery not less than 14 days after service of a notice of discovery upon that party: O 15 r 2.

374               Discovery was to be given by filing and serving on the party giving the notice of discovery a list of documents ‘relating to any matter in question between him and the party giving the notice of discovery’: O 15 r 2(2).

375               The list of documents had to comply with O 15 r 6 and, in particular, had to describe each document or, in the case of a group of documents of the same nature, describe the group sufficiently to enable the document or group to be identified: O 15 r 6(3).

376               The list of documents had to enumerate the documents ‘which are or have been in the possession, custody or power of the party making the list’: O 15 r 6(2).

377               The list of documents needed to appoint a time within seven days after service of the list and a place where the documents could be inspected: O 15 r 6(7).  It had to be certified by the party’s solicitor that, according to his instructions, the list and the statements in the list are correct: O 15 r 6(8).

378               Order 15 r 9 provided for an affidavit verifying a list of documents if ordered under O 15 r 8.

379               Order 15 r 16 provided for procedure on default and, in particular, provided that where a respondent did not file or serve a list of documents or produce any documents as required under O 15, an applicant could move for judgment against that respondent.

380               The extent of the obligation to give discovery is governed, of course, by the pleadings: Mulley v Manifold (1959) 103 CLR 341 at 345.  The pleadings determine what documents are relevant.

381               There is no doubt that in this case the respondent had a general obligation to make discovery.  The obligation was to make discovery of all documents which might lead to a train of inquiry: Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Company (1882) 11 QBD 55.

382               In that case, the Court of Appeal in England was concerned with the extent of the obligation to make discovery of documents which were in the possession or under the control of a party relating to any matter in question in the action.

383               Brett LJ said at 62-63:

‘We desire to make the rule as large as we can with due regard to propriety; and therefore I desire to give as large an interpretation as I can to the words of the rule, “a document relating to any matter in question in the action.”  I think it obvious from the use of these terms that the documents to be produced are not confined to those, which would be evidence either to prove or to disprove any matter in question in the action; and the practice with regard to insurance cases shews, that the Court never thought that the person making the affidavit would satisfy the duty imposed upon him by merely setting out such documents, as would be evidence to support or defeat any issue in the cause.

            The doctrine seems to me to go farther than that and to go as far as the principle which I am about to lay down.  It seems to me that every document relates to the matters in question in the action, which not only would be evidence upon any issue, but also which, it is reasonable to suppose, contains information which may—not which must—either directly or indirectly enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary.  I have put in the words “either directly or indirectly,” because, as it seems to me, a document can properly be said to contain information which may enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary, if it is a document which may fairly lead him to a train of inquiry, which may have either of these two consequences:  …’

384               In this case, there is no dispute that the respondent failed to make discovery of documents which were both directly and indirectly relevant to issues in the trial.  The failure to make discovery is, as I have found, not as a consequence of fraud on the part of the respondent.

385               However, I am still of the opinion that the respondent’s continuing and existing failure to make discovery in accordance with the rules by providing a list of documents setting out all of the documents which are or have been in the possession of the respondent is a matter for which it may be criticised.

386               In my opinion, the documents which should have been discovered would have led the applicants to a train of inquiry and, in particular, to investigate the causes of failure of Doc 3 and Doc 7 pumps in other working situations.  Moreover, if discovery had been made, the applicants would have been motivated to enquire as to the circumstances giving rise to Mr White’s memorandum.

387               The question is whether the applicants should be entitled to have their case reopened as a result of the failure to give discovery of documents which are and were relevant to issues in the trial.

388               Section 27 of the Federal Court Act 1976 (Cth) provides:

’27       In an appeal, the Court shall have regard to the evidence given in the proceedings out of which the appeal arose, and has power to draw inferences of fact and, in its discretion, to receive further evidence, which evidence may be taken:

            (a)        on affidavit; or

(b)        by video link, audio link or other appropriate means in accordance with another provision of this Act or another law of the Commonwealth; or

(c)        by oral examination before the Court or a Judge; or

(d)        otherwise in accordance with section 46.’

389               However, this is not an appeal.  Nor is this an application to tender further evidence.  It may or may not be that the applicants would tender some of the documents lately discovered.  It may be that those documents would put them on a train of inquiry such that they would present a different case.  For example, they may retain other experts and ask those experts to make other assumptions or consider different conclusions.

390               In Orr v Holmes (1948) 76 CLR 632, the High Court considered a case where an unsuccessful defendant sought to set aside a verdict in order to introduce fresh evidence which might, if accepted, have led to the dismissal of the action.  Dixon J said at 640:

‘           If a trial has been regularly conducted and the party against whom the verdict has passed cannot complain that evidence has been wrongly received or rejected or that there has been a misdirection or that he has not been fully heard or has been taken by surprise or that the result is not warranted by the evidence, the successful party is not to be deprived of the verdict he has obtained except to fulfil an imperative demand of justice.  The discovery of fresh evidence makes no such demand upon justice unless it is almost certain that, if the evidence had been available and had been adduced, an opposite result would have been reached and unless no reasonable diligence upon the part of the defeated party would have enabled him to procure the evidence.’

391               There are good reasons why there are limits upon the reception of fresh evidence after trial.  It is in the public interest that litigation be brought to an end.

392               However, Dixon J’s statement supposes that the trial will have been regularly conducted.  A trial has not been regularly conducted where a party to the litigation has not discovered documents which are relevant to the issues in the trial.  That party has not complied with its obligations in the interlocutory processes and by failing to make full discovery that party has withheld evidence from its opponent.

393               Moreover, another aspect of the administration of justice must be considered.  Because it serves the administration of justice, it is also in the public interest that the integrity of the courts’ processes are preserved.

394               For the reasons already given the discovery process is very important in ensuring that the parties are accorded a fair trial.  Litigants will lose confidence in the courts’ processes and decisions if they think that a party might avoid giving proper discovery and not be later held to account.

395               In Council of the City of Greater Wollongong Corporation v Cowan (1955) 93 CLR 435, Dixon CJ said at 444 (Williams, Webb, Kitto and Taylor JJ concurring):

‘If cases are put aside where a trial has miscarried through misdirection, misreception of evidence, wrongful rejection of evidence or other error and if cases of surprise, malpractice or fraud are put on one side, it is essential to give effect to the rule that the verdict, regularly obtained, must not be disturbed without some insistent demand of justice.  The discovery of fresh evidence in such circumstances could rarely, if ever, be a ground for a new trial unless certain well-known conditions are fulfilled.  It must be reasonably clear that if the evidence had been available at the first trial and had been adduced, an opposite result would have been produced or, if it is not reasonably clear that it would have been produced, it must have been so highly likely as to make it unreasonable to suppose the contrary.  Again, reasonable diligence must have been exercised to procure the evidence which the defeated party failed to adduce at the first trial.’

396               There, Dixon CJ continued to qualify the circumstances where the courts relax the rigours of the rule that a verdict cannot be set aside.  The trial should not have miscarried and the verdict must be regularly obtained.  Moreover, the rule does not apply in cases of surprise, malpractice or fraud.  The failure to make full discovery may amount to malpractice.

397               In Commonwealth Bank of Australia v Quade (1991) 178 CLR 134, the High Court was called upon to consider whether a new trial should be granted in circumstances where a successful party had failed to comply with an order for discovery of documents which had the result that relevant evidence in that party’s control had remained undisclosed until after judgment.  The Court referred to Orr v Holmes and the passage to which I have referred in Greater Wollongong Corporation v Cowan and said at 140-141:

 ‘The words “rarely, if ever” in the above passage leave open the possibility of exceptional circumstances justifying a departure from the general rule even in the class of case to which the general rule is directed.  It is not, however, necessary to pursue that aspect of the matter for the purposes of the present case.  Nor is it necessary to consider whether the somewhat obscure qualification expressed by Dixon C.J. in the words “or, if it is not reasonably clear that it would have been produced, it must have been so highly likely as to make it unreasonable to suppose the contrary” represents other than an illusory relaxation of the primary test (i.e. “reasonably clear that  …  an opposite result would have been produced”).

            As the above quotation makes plain, the general rule formulated by Dixon C.J. is directed to the ordinary case where all that is involved is that relevant fresh evidence has come to the notice of the unsuccessful party after the trial.  It is not directed to the case where the trial itself has miscarried “through misdirection, misreception of evidence, wrongful rejection of evidence or other error” or to a case of “surprise, malpractice or fraud”.  Such cases cannot properly be seen as mere cases of “fresh evidence”.  Nor can a case where the material constituting the fresh evidence as 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.’

398               The Court then discussed the policy that there be an end to litigation and referred to the ordinary class of case where it would be unfair to deprive a successful party of the fruits of victory where some relevant evidence had, without fault on that successful party’s part, been unavailable at the time of the trial to the unsuccessful party.

399               The Court then said 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.’  (Footnotes omitted.)

400               The Court then went on to say 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.’  (Footnotes omitted.)

401               In Londish v Gulf Pacific Pty Ltd (1993) 117 ALR 361, the Full Court of this Court was called upon to consider the principle expounded in Quade v Commonwealth Bank of Australia (1991) 27 FCR 569.

402               In that case, the appellants established that a party had not discovered documents relevant to a company’s change of name.  It was argued that the appellants ought to have had their suspicions aroused in relation to the matters contained in the undiscovered documents.

403               The Court said at 368:

‘           But to ask whether the solicitors or counsel representing the appellants ought to have had their suspicions aroused seems to us to be to ask altogether the wrong question.  From time to time, a defendant in a fraud case has attempted to rely on the defence that the plaintiff had the means of knowledge of the truth, and was unduly gullible in submitting to be deceived.  Such defences have always had from the courts a short shrift: see Poseidon Ltd v Adelaide Petroleum NL (1991) 105 ALR 25 at 37.  So here, in our opinion, if it was unsatisfactory that this point should have emerged when the pleadings raised no issue as to the identity of the company Gulf Pacific Pty Ltd, the responsibility ought to attach to the party that made the false assertion in the statement of claim.  Particularly is this so when the respondent has failed to make proper discovery.  In Quade v Commonwealth Bank of Australia (1991) 27 FCR 569; 99 ALR 567, this court held 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 at the hearing was the failure of the successful party to comply with that party’s own obligations in respect of discovery.  An appeal was dismissed by the High Court in Commonwealth Bank of Australia v Quade (1991) 192 ALR 487, where (at 489) the joint judgment of Mason CJ, Deane, Dawson, Toohey and Gaudron JJ referred, inter alia, to cases of surprise as being cases which could not properly be seen as mere cases of “fresh evidence”.  Their Honours continued:

        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.

 

Their Honours thought a case of failure to comply with a discovery order could, particularly if it remained unexplained, provide a stronger case for allowing an appeal than a case of surprise, which was expressly excluded from the general rule restricting appeals of this kind by Dixon CJ in Wollongong Corp v Cowan (1955) 93 CLR 435 at 444.’

404               The respondent defended its failure to make discovery by pointing to the material which was available which might have alerted the applicants to trains of inquiry or the existence of the non-discovered documents.

405               The applicants could not have known of Mr White’s very important memorandum.  They were dependent upon the respondent to discover that document.

406               They might have been aware of job cards but they were advised by Mr Wilsdon, on his oath, that the documents had been lost in a fire in 1993.  That was wrong and, whether innocent or not, seriously misleading.

407               I can find no want of diligence on the part of the applicants in respect to the failure of the respondent to make discovery.

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.

409               It has not, however, as I have already said, ever made discovery of all the documents which it was bound to discover under the Federal Court Rules.

410               Mr Ashley White’s memorandum, which I think is a critical document in the respondent’s possession and which was not discovered for reasons unexplained, was sent to a number of persons in the respondent’s organisation.  The copies of that document should be discovered so that the applicants can know who received it.  For example, if all the addressees received it then it might be more difficult to accept Mr Wilsdon’s evidence that he did not.  However, no attempt has been made to discover those documents.  As I have already explained, the job cards, apart from the 810 pages produced, have not been discovered in the sense that the respondent has not disclosed when they were last in its possession and what happened to them.

411               The third category of documents would probably have made little difference in the evidence produced at trial and made no difference to the result.  However, the first two categories, in my opinion, stand in a different position.

412               810 pages of job cards and Mr White’s memorandum of 29 October 1991 would, at the very least, have put the applicants on a train of inquiry.  So also would the destroyed job cards.  They would have, in my opinion, been relevant to put before the applicants’ expert to obtain an opinion as to the likely cause of the failure of the pumps.  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.

413               They might have led the trial judge to make findings of the causes of the failure of the Doc 3 and Doc 7 pumps different to those made.

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.

415               In my opinion, this Court should ensure that a party complies with their obligation to make discovery.

416               It is imperative that parties have access to all relevant documentary evidence before trial in order to advance a party’s case or in order to destroy their opponent’s case.  Often, especially in commercial causes, the best evidence of the events the subject of the inquiry in the trial is contained in the contemporaneous documents.  Usually, documents are created in circumstances where parties do not expect the documents to surface in a trial.  They often, therefore, contain the true account of the contemporaneous event.

417               In my opinion, the trial in this case miscarried.  It miscarried because the respondent failed in its obligations to make discovery of all relevant documents which were or had been in its possession or power at the time of trial.  It failed to discover vital documents which may have led the Court to a different conclusion to that at which it arrived.

418               In my opinion, the applicants did not fail to prosecute their case diligently.  The respondent, for all of the reasons I have given, failed and continues to fail in its obligations.

419               There is a real possibility that at trial the Court may conclude that the failure of these pumps was not due to any particular aspect of the applicants’ systems but were due, as Mr White said in his memorandum, to two matters:

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

2.         The Doc is intended 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.’

420               In my opinion, the interests of justice will be served by setting aside the order made by Branson J on 8 February 1996 dismissing the applicants’ application and ordering the applicants to pay the respondent’s costs.  There should also be an order setting aside the order made by Branson J varying the order for costs made on 8 February 1996 and providing that the first applicant pay the respondent’s costs specified in the sum of $380,493.82.

421               Although the applicants have not sought further orders, unless otherwise ordered the orders for costs made by the Full Court of this Court on 12 September 1996 and the order for costs made by the High Court of Australia on 30 May 1997 will continue to stand.  I could not set aside the order for costs made by the High Court.  Application would need to be made to that Court for that order.  It may be that I can make an order staying those orders for costs but I need to be addressed on that matter.

422               As presently advised, I think that there should also be a further order that the matter proceed to trial although the applicants’ notice of motion of 12 February 2003 sought summary judgment.  That aspect of the notice of motion was stayed by Mansfield J pending the hearing of these matters: [124].

423               I invite the applicants, who since I have reserved judgment have become represented, to bring in short minutes to reflect and to give effect to these reasons.

I certify that the preceding four hundred and twenty three (423) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander.

Associate:

Dated:              9 September 2004

Counsel for the First and Second Applicants:	The First Applicant appeared in person
Counsel for the Respondent:	Mr J Wells QC with Mr D Rydon
Solicitor for the Respondent:	Thomson Playford
Date of Hearing:	4, 5, 8, 9, 10, 12, 15 September; 3, 4, 5 November; and 8 & 22 December 2003
Date of Judgment:	9 September 2004