FEDERAL COURT OF AUSTRALIA

Cantor v Audi Australia Pty Limited (No 3) [2017] FCA 1079

ORDERS

THE COURT ORDERS THAT:

1.    The applicant have leave to administer the following interrogatories to the respondent:

(a)    Was the software installed in the engine control unit (ECU) of vehicles equipped with the EA189 diesel engine which effected two different modes of operation, one of which was optimised for NOx and other pollutant emissions and the other of which was optimised for comfort, different as between the Australian affected vehicles and their European equivalents, on the one hand, and vehicles equipped with the EA189 engine sold in the United States, on the other hand? If so, specify the differences.

(b)    State the reasons why the respondent installed in the engine control unit (ECU) of the affected vehicles and their European equivalents, software which effected two different modes of operation, one of which was optimised for NOx and other pollutant emissions, and the other of which was optimised for comfort

such interrogatories to be administered by 15 September 2017 with verified answers to the said interrogatories to be filed and served by 16 October 2017.

2.    Further consideration of categories 14 and 20 of the proposed categories for further discovery propounded by the applicant be deferred to the same time as the Court hears the Interlocutory Application filed by the Australian Competition and Consumer Commission on 13 July 2017 in proceedings NSD 1462 of 2016 and NSD 322 of 2017.

3.    Further consideration of the question whether the applicant should have leave to administer proposed interrogatory 3 be deferred until after production of documents in category 29 of the categories for discovery ordered by Foster J on 4 September 2017 has been completed.

4.    The respondent provide discovery of documents in the category more particularly described in the Schedule to these Orders, such discovery to be completed by 29 September 2017 and to be verified, in accordance with Order 2 of the Orders made by Foster J on 14 March 2017, by 29 September 2017.

5.    All other extant applications in respect of discovery not determined or deferred by these Orders or the Orders made by Foster J on 4 September 2017 be dismissed.

6.    The costs of and incidental to the discovery applications heard by the Court on 18, 19 and 24 July 2017 be the applicant’s costs in the proceeding.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ORDERS

THE COURT ORDERS THAT:

1.    The applicant have leave to administer the following interrogatories to the respondent:

(a)    Was the software installed in the engine control unit (ECU) of vehicles equipped with the EA189 diesel engine which effected two different modes of operation, one of which was optimised for NOx and other pollutant emissions and the other of which was optimised for comfort, different as between the Australian affected vehicles and their European equivalents, on the one hand, and vehicles equipped with the EA189 engine sold in the United States, on the other hand? If so, specify the differences.

(b)    State the reasons why the respondent installed in the engine control unit (ECU) of the affected vehicles and their European equivalents, software which effected two different modes of operation, one of which was optimised for NOx and other pollutant emissions, and the other of which was optimised for comfort

such interrogatories to be administered by 15 September 2017 with verified answers to the said interrogatories to be filed and served by 16 October 2017.

2.    Further consideration of categories 14 and 20 of the proposed categories for further discovery propounded by the applicant be deferred to the same time as the Court hears the Interlocutory Application filed by the Australian Competition and Consumer Commission on 13 July 2017 in proceedings NSD 1462 of 2016 and NSD 322 of 2017.

3.    Further consideration of the question whether the applicant should have leave to administer proposed interrogatory 3 be deferred until after production of documents in category 29 of the categories for discovery ordered by Foster J on 4 September 2017 has been completed.

4.    The respondent provide discovery of documents in the category more particularly described in the Schedule to these Orders, such discovery to be completed by 29 September 2017 and to be verified, in accordance with Order 2 of the Orders made by Foster J on 14 March 2017, by 29 September 2017.

5.    All other extant applications in respect of discovery not determined or deferred by these Orders or the Orders made by Foster J on 4 September 2017 be dismissed.

6.    The costs of and incidental to the discovery applications heard by the Court on 18, 19 and 24 July 2017 be the applicant’s costs in the proceeding.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ORDERS

THE COURT ORDERS THAT:

1.    The applicants have leave to administer the following interrogatories to the respondents:

(a)    Was the software installed in the engine control unit (ECU) of vehicles equipped with the EA189 diesel engine which effected two different modes of operation, one of which was optimised for NOx and other pollutant emissions and the other of which was optimised for comfort, different as between the Australian affected vehicles and their European equivalents, on the one hand, and vehicles equipped with the EA189 engine sold in the United States, on the other hand? If so, specify the differences.

(b)    State the reasons why the respondents installed in the engine control unit (ECU) of the affected vehicles and their European equivalents, software which effected two different modes of operation, one of which was optimised for NOx and other pollutant emissions, and the other of which was optimised for comfort

such interrogatories to be administered by 15 September 2017 with verified answers to the said interrogatories to be filed and served by 16 October 2017.

2.    Further consideration of categories 14 and 20 of the proposed categories for further discovery propounded by the applicants be deferred to the same time as the Court hears the Interlocutory Application filed by the Australian Competition and Consumer Commission on 13 July 2017 in proceedings NSD 1462 of 2016 and NSD 322 of 2017.

3.    Further consideration of the question whether the applicants should have leave to administer proposed interrogatory 3 be deferred until after production of documents in category 29 of the categories for discovery ordered by Foster J on 4 September 2017 has been completed.

4.    The respondents provide discovery of documents in the category more particularly described in the Schedule to these Orders, such discovery to be completed by 29 September 2017 and to be verified, in accordance with Order 2 of the Orders made by Foster J on 14 March 2017, by 29 September 2017.

5.    All other extant applications in respect of discovery not determined or deferred by these Orders or the Orders made by Foster J on 4 September 2017 be dismissed.

6.    The costs of and incidental to the discovery applications heard by the Court on 18, 19 and 24 July 2017 be the applicants’ costs in the proceeding.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ORDERS

THE COURT ORDERS THAT:

1.    The applicant have leave to administer the following interrogatories to the respondents:

(a)    Was the software installed in the engine control unit (ECU) of vehicles equipped with the EA189 diesel engine which effected two different modes of operation, one of which was optimised for NOx and other pollutant emissions and the other of which was optimised for comfort, different as between the Australian affected vehicles and their European equivalents, on the one hand, and vehicles equipped with the EA189 engine sold in the United States, on the other hand? If so, specify the differences.

(b)    State the reasons why the respondents installed in the engine control unit (ECU) of the affected vehicles and their European equivalents, software which effected two different modes of operation, one of which was optimised for NOx and other pollutant emissions, and the other of which was optimised for comfort

such interrogatories to be administered by 15 September 2017 with verified answers to the said interrogatories to be filed and served by 16 October 2017.

2.    Further consideration of categories 14 and 20 of the proposed categories for further discovery propounded by the applicant be deferred to the same time as the Court hears the Interlocutory Application filed by the Australian Competition and Consumer Commission on 13 July 2017 in proceedings NSD 1462 of 2016 and NSD 322 of 2017.

3.    Further consideration of the question whether the applicant should have leave to administer proposed interrogatory 3 be deferred until after production of documents in category 29 of the categories for discovery ordered by Foster J on 4 September 2017 has been completed.

4.    The respondents provide discovery of documents in the category more particularly described in the Schedule to these Orders, such discovery to be completed by 29 September 2017 and to be verified, in accordance with Order 2 of the Orders made by Foster J on 14 March 2017, by 29 September 2017.

5.    All other extant applications in respect of discovery not determined or deferred by these Orders or the Orders made by Foster J on 4 September 2017 be dismissed.

6.    The costs of and incidental to the discovery applications heard by the Court on 18, 19 and 24 July 2017 be the applicant’s costs in the proceeding.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ORDERS

THE COURT ORDERS THAT:

1.    The applicant have leave to administer the following interrogatories to the respondents:

(a)    Was the software installed in the engine control unit (ECU) of vehicles equipped with the EA189 diesel engine which effected two different modes of operation, one of which was optimised for NOx and other pollutant emissions and the other of which was optimised for comfort, different as between the Australian affected vehicles and their European equivalents, on the one hand, and vehicles equipped with the EA189 engine sold in the United States, on the other hand? If so, specify the differences.

(b)    State the reasons why the respondents installed in the engine control unit (ECU) of the affected vehicles and their European equivalents, software which effected two different modes of operation, one of which was optimised for NOx and other pollutant emissions, and the other of which was optimised for comfort

such interrogatories to be administered by 15 September 2017 with verified answers to the said interrogatories to be filed and served by 16 October 2017.

2.    Further consideration of categories 14 and 20 of the proposed categories for further discovery propounded by the applicant be deferred to the same time as the Court hears the Interlocutory Application filed by the Australian Competition and Consumer Commission on 13 July 2017 in proceedings NSD 1462 of 2016 and NSD 322 of 2017.

3.    Further consideration of the question whether the applicant should have leave to administer proposed interrogatory 3 be deferred until after production of documents in category 29 of the categories for discovery ordered by Foster J on 4 September 2017 has been completed.

4.    The respondents provide discovery of documents in the category more particularly described in the Schedule to these Orders, such discovery to be completed by 29 September 2017 and to be verified, in accordance with Order 2 of the Orders made by Foster J on 14 March 2017, by 29 September 2017.

5.    All other extant applications in respect of discovery not determined or deferred by these Orders or the Orders made by Foster J on 4 September 2017 be dismissed.

6.    The costs of and incidental to the discovery applications heard by the Court on 18, 19 and 24 July 2017 be the applicant’s costs in the proceeding.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ORDERS

THE COURT ORDERS THAT:

1.    The applicant have leave to administer the following interrogatories to the respondents:

(a)    Was the software installed in the engine control unit (ECU) of vehicles equipped with the EA189 diesel engine which effected two different modes of operation, one of which was optimised for NOx and other pollutant emissions and the other of which was optimised for comfort, different as between the Australian affected vehicles and their European equivalents, on the one hand, and vehicles equipped with the EA189 engine sold in the United States, on the other hand? If so, specify the differences.

(b)    State the reasons why the respondents installed in the engine control unit (ECU) of the affected vehicles and their European equivalents, software which effected two different modes of operation, one of which was optimised for NOx and other pollutant emissions, and the other of which was optimised for comfort

such interrogatories to be administered by 15 September 2017 with verified answers to the said interrogatories to be filed and served by 16 October 2017.

2.    Further consideration of categories 14 and 20 of the proposed categories for further discovery propounded by the applicant be deferred to the same time as the Court hears the Interlocutory Application filed on 13 July 2017 by the applicant in this proceeding (NSD 1462 of 2016) and in proceeding NSD 322 of 2017.

3.    Further consideration of the question whether the applicant should have leave to administer proposed interrogatory 3 be deferred until after production of documents in category 29 of the categories for discovery ordered by Foster J on 4 September 2017 has been completed.

4.    The respondents provide discovery of documents in the category more particularly described in the Schedule to these Orders, such discovery to be completed by 29 September 2017 and to be verified, in accordance with Order 2 of the Orders made by Foster J on 14 March 2017, by 29 September 2017.

5.    All other extant applications in respect of discovery not determined or deferred by these Orders or the Orders made by Foster J on 4 September 2017 be dismissed.

6.    The costs of and incidental to the discovery applications heard by the Court on 18, 19 and 24 July 2017 be the applicant’s costs in the proceeding.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ORDERS

THE COURT ORDERS THAT:

1.    The applicant have leave to administer the following interrogatories to the respondents:

(a)    Was the software installed in the engine control unit (ECU) of vehicles equipped with the EA189 diesel engine which effected two different modes of operation, one of which was optimised for NOx and other pollutant emissions and the other of which was optimised for comfort, different as between the Australian affected vehicles and their European equivalents, on the one hand, and vehicles equipped with the EA189 engine sold in the United States, on the other hand? If so, specify the differences.

(b)    State the reasons why the respondents installed in the engine control unit (ECU) of the affected vehicles and their European equivalents, software which effected two different modes of operation, one of which was optimised for NOx and other pollutant emissions, and the other of which was optimised for comfort

such interrogatories to be administered by 15 September 2017 with verified answers to the said interrogatories to be filed and served by 16 October 2017.

2.    Further consideration of categories 14 and 20 of the proposed categories for further discovery propounded by the applicant be deferred to the same time as the Court hears the Interlocutory Application filed on 13 July 2017 by the applicant in this proceeding (NSD 322 of 2017) and in proceeding NSD 1462 of 2016.

3.    Further consideration of the question whether the applicant should have leave to administer proposed interrogatory 3 be deferred until after production of documents in category 29 of the categories for discovery ordered by Foster J on 4 September 2017 has been completed.

4.    The respondents provide discovery of documents in the category more particularly described in the Schedule to these Orders, such discovery to be completed by 29 September 2017 and to be verified, in accordance with Order 11 of the Orders made by Foster J on 13 April 2017, by 29 September 2017.

5.    All other extant applications in respect of discovery not determined or deferred by these Orders or the Orders made by Foster J on 4 September 2017 be dismissed.

6.    The costs of and incidental to the discovery applications heard by the Court on 18, 19 and 24 July 2017 be the applicant’s costs in the proceeding.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

NSD 1307 of 2015

NSD 1308 of 2015

NSD 1459 of 2015

NSD 1472 of 2015

NSD 1473 of 2015

NSD 1462 of 2016

NSD 322 of 2017

SCHEDULE TO THE ORDERS MADE BY FOSTER J ON 13 SEPTEMBER 2017

1.    Documents constituting or recording communications between any of the respondents and Robert Bosch GmbH (Bosch), Continental AG (Continental) or IAV GmbH (IAV):

(a)    In which Bosch, Continental or IAV referred to the possibility that software in vehicles with the EA189 engine (and/or the engine diesel control unit EDC17) may be a defeat device; and/or

(b)    Which refer to an indemnity from any of the respondents in favour of Bosch, Continental or IAV in respect of software in vehicles with the EA189 engine (or the engine diesel control unit EDC17).

REASONS FOR JUDGMENT

FOSTER J:

1    On 1 September 2017, I delivered judgment (Cantor v Audi Australia Pty Limited (No 2) [2017] FCA 1042) (VW No 2) in relation to the form and manner of distribution of two opt out notices for the purposes of the five class actions commenced in this Court in respect of the “global emissions issue” which arose in late 2015 concerning Volkswagen, Audi and Skoda vehicles equipped with certain diesel engines. One notice was a long-form Opt Out Notice (long Opt Out Notice) and the other was a short-form Opt Out Notice (abridged Opt Out Notice). The applicants had moved the Court for orders approving the opt out notices propounded by them, for orders directing the manner of distribution and publication of the opt out notices and for orders determining who should pay for the cost of such dissemination in the first instance.

2    In VW No 2, I also addressed a submission made by the respondents to the effect that I should not accede to the applicants’ claim that opt out notices should be disseminated at the present time and should delay the distribution of such notices pending the hearing and determination of claims for relief made by the respondents in respect of alleged difficulties said to have resulted from the overlap between the two groups of class actions presently being case managed together. The respondents’ claims for relief in respect of overlap were made in Interlocutory Applications filed in each class action on 26 June 2017.

3    In VW No 2, I authorised the distribution and publication of the long Opt Out Notice and the publication of the abridged Opt Out Notice and rejected the respondents’ argument that I should not authorise the dissemination of opt out notices at this point in time.

4    At the same time as I heard the applicants’ applications in respect of opt out, I also heard applications by the applicants for orders requiring the respondents to provide additional discovery. These discovery applications were joined in by the Australian Competition and Consumer Commission (ACCC) in connection with the two sets of proceedings brought by it against certain VW entities (NSD 1462 of 2016 and NSD 322 of 2017).

5    On 13 July 2017, that is, five days prior to the listings on 18 July 2017, the ACCC filed in each of the matters in which it is the applicant an Interlocutory Application (the TAR application) in which it sought the following relief:

1.    Pursuant to s 54A of the Federal Court of Australia Act 1976 (Cth), matter numbers NSD1307/2015, NSD1308/2015, NSD1459/2015, NSD1472/2015, NSD1473/2015, NSD1462/2016 and NSD322/2017 (the Proceedings) be referred to a Referee for inquiry and report into the following questions:

a.    should the Court order discovery by technology assisted review (TAR) in the Proceedings at the Stage 1 trial and/or any subsequent trial(s); and

b.    if discovery by TAR is viewed as being appropriate:

i.    what TAR protocol should apply in the Proceedings, and

ii.    what timetable should apply for giving discovery?

2.    Pursuant to rule 28.62 of the Federal Court Rules 2011, the Court appoint a Referee for the purposes of the inquiry and report referred to in the preceding paragraph.

3.    Such further or other orders as the Court considers appropriate having regard to the Referee’s report.

4.    The costs of the interlocutory application and the special referee be costs in the cause.

6    The ACCC also served the TAR application on all of the parties in the class action proceedings involving the diesel emissions issue (proceedings NSD 1307 of 2015, NSD 1308 of 2015, NSD 1459 of 2015, NSD 1472 of 2015 and NSD 1473 of 2015).

7    The TAR application was listed for case management on 18 July 2017.

8    At the commencement of the hearing of the discovery applications, the applicants and the respondents were in dispute about a large number of matters. They had not agreed on the appropriate form of orders to be made in respect of the applicants’ claims for further discovery nor had they agreed upon the categories for further discovery. As the argument about discovery progressed, the matters in dispute were refined and reduced in number, largely as a result of the respondents bringing to bear incrementally a greater focus upon the discovery claims being advanced on behalf of the applicants. By the time the discovery arguments had concluded, relatively few matters remained in dispute.

9    On 1 September 2017, my Associate received an email from the solicitors for the respondents (Clayton Utz) in which the partner from that firm who has the carriage of the class action proceedings on behalf of the respondents informed the Court that the parties had agreed that the Court should make a number of orders in respect of 29 further categories of documents. Accordingly, and by consent, on 4 September 2017, I made orders in each of the proceedings giving effect to the parties’ agreement concerning discovery which had been notified to the Court on 1 September 2017.

10    In light of that agreement and the orders which I made on 4 September 2017, the following issues concerning discovery remained in dispute and now fall to be determined by me, namely:

(a)    Whether, when providing discovery of documents, the respondents should be required to provide a list in accordance with the requirements of r 20.17(2) of the Federal Court Rules 2011 (FCR) which contains, in respect of each document listed, by reference to its document identifier, the discovery category pursuant to which the document is being discovered in accordance with r 20.17(3)(c) FCR (Issue 1).

(b)    Whether the respondents should be required to prepare and serve upon Bannister Law and Maurice Blackburn (the two firms of solicitors acting for the applicants in the class actions) and also upon the Australian Government Solicitor, who represents the ACCC, a document in which the respondents describe the sequence of events leading up to and including the installation of software which enables the affected engines (the EA189 diesel engine) to operate in two modes (Issue 2).

(c)    Whether the Court should order an interrogatory addressing details of vehicles covered by certain test results produced by the respondents on discovery (Issue 3).

(d)    Whether, in the event that the Court declines to order the respondents to prepare and serve upon the solicitors for the applicants a document as specified in subpar (b) above, the Court should grant leave to the applicants in all matters to serve two interrogatories upon the respondents designed to secure admissions as to the differences (if any) between the software installed in the EA189 diesel engine in vehicles sold in the United States of America and the software installed in the EA189 engine in vehicles sold in Australia and also to secure an admission as to the reasons why the software was installed in the first place (Issue 4).

(e)    Whether the respondents should be required to give discovery of certain agreements, protocols or guidelines in effect in the period from 1 January 2007 to 3 October 2015 created in respect of the technical and product specification of Volkswagen vehicles, including Audi and Skoda vehicles (Issue 5). This is category 14 of the applicants’ proposed categories for further discovery. These categories are found in the document at Tab 2 of MFI-6, as updated from time to time during the course of the hearing.

(f)    Whether the Volkswagen entities should be required to provide discovery of communications between them concerning the decision-making process with respect to offering new versions, variants or models of the relevant vehicles and other matters concerning those models (Issue 6). This is category 20 of the applicants’ proposed categories for further discovery.

(g)    Whether the respondents should be required to give discovery of documents recording communications between any one or more of them and Robert Bosch GmbH (Bosch), Continental AG (Continental) or IAV GmbH (IAV) which refer to the possibility that the software installed in the EA189 engine may be a defeat device and/or which refer to an indemnity sought by Bosch, Continental, IAV, or any of them, from the respondents in relation to any loss that might be suffered by any of Bosch, Continental and IAV as a result of the software being found to be a defeat device (Issue 7). This is category 30 of the applicants’ proposed categories for further discovery. This category is agreed in respect of Bosch and Continental but resisted insofar as IAV is concerned.

(h)    Whether the respondents should be required to give discovery of documents which are detrimental to the respondents’ case of which the respondents or their legal representatives have become aware in the course of undertaking the searches or inquiries which have been undertaken or will be undertaken in the course of complying with their discovery obligations in all of the relevant proceedings (Issue 8). This is category 31 of the applicants’ proposed categories for further discovery.

11    By these Reasons for Judgment, I determine all remaining issues in dispute between the applicants and the respondents concerning discovery. I will also make some brief remarks concerning the TAR application, which has not yet been heard.

Background

12    At [1]–[16] of VW No 2, I said:

1    On 3 September 2015, Volkswagen AG (VW Germany) disclosed at a meeting with representatives of the California Air Resources Board and the US Environmental Protection Agency that emissions software in certain four cylinder diesel engines manufactured by VW Germany and its affiliates in the years 2009–2015 contained a “defeat device” in the form of hidden software which could recognise whether a vehicle was being operated in a test laboratory or on the road. The deployment of this software resulted in the affected diesel engines emitting higher levels of nitrogen oxides (NOx) when the affected vehicles were driven on the road than when tested in the laboratory.

2    On or about 7 October 2015, Volkswagen Group Australia Pty Ltd (VW Australia) announced an online tool so that VW and Skoda customers who had purchased vehicles in Australia could check if their vehicles had the affected diesel engines as part of VW Germany’s action plan to respond to “the global emissions issue”. I infer that the “global emissions issue” referred to in that announcement was the capacity of the software in the affected diesel engines to cause those engines to emit lower levels of NOx when being tested in the laboratory than are emitted when the vehicles are driven on the road.

3    On 30 October 2015, Bannister Law, as solicitors on the record, commenced two class actions in this Court—Cantor v Audi Australia Pty Ltd (Audi Australia) (NSD 1307 of 2015) and Tolentino v VW Australia (NSD 1308 of 2015)—in which the applicant in each of those proceedings claimed relief in respect of the emissions issue. I shall refer to these two class actions collectively as “the BL class actions”.

4    On 20 November 2015, Maurice Blackburn commenced a class action in this Court—Dalton v VW Germany and VW Australia (NSD 1459 of 2015). On 22 November 2015, Maurice Blackburn commenced two further class actions in this Court—Richardson v Audi AG (Audi Germany), Audi Australia and VW Germany (NSD 1472 of 2015) and Roe v Skoda Auto a.s. (Skoda), VW Australia and VW Germany (NSD 1473 of 2015). I shall refer to these three class actions collectively as “the MB class actions”.

5    On 1 September 2016, the Australian Competition and Consumer Commission (ACCC) commenced a proceeding against VW Germany and VW Australia (NSD 1462 of 2016) in which it sought declaratory relief, pecuniary penalties, corrective advertising and other relief in respect of allegedly false and misleading conduct and representations concerning VW vehicles sold in Australia in the period from 1 January 2011 to 3 October 2015.

6    On 8 March 2017, the ACCC commenced a similar proceeding against VW Germany, Audi Germany and Audi Australia in respect of certain Audi vehicles sold in Australia in the period from 1 January 2011 to 3 October 2015 (NSD 322 of 2017).

7    A further proceeding brought by Complete Taxi Management Pty Limited and others against VW Australia involving some of the same issues as have been raised in the other proceedings was transferred to this Court by the Supreme Court of Queensland on 7 March 2017. This proceeding is NSD 510 of 2017.

8    All of the above proceedings are being case managed together.

9    The Court has fixed certain issues for a four week hearing commencing on 30 October 2017 (stage 1 trial).

10    In all of the class actions, the applicants allege that:

(a)    The software fitted in the diesel engines installed in the affected vehicles is a “defeat device” within the meaning of that expression under the Australian Design Rules applicable to those vehicles and within the meaning of that expression under the Australian Vehicle Emissions Standards; and

(b)    The affected vehicles failed to comply with the requirements of the Australian Vehicle Emissions Standards, which prohibit the use of “defeat devices” to cause vehicles to operate an emission control system differently in the test environment from the way in which that system functions when operating in normal use on the road.

11    The applicants in all of the class actions allege that the respondents engaged in misleading and deceptive conduct and made false and misleading representations in respect of the affected vehicles by representing that those vehicles complied with the applicable Australian Vehicle Emissions Standards when, in truth, they did not comply with those Standards. They also allege that the vehicles were not of acceptable quality and did not comply with applicable safety standards.

12    The applicants in the MB class actions (MB applicants) also allege that the European and Australian companies named as respondents in those actions engaged in unconscionable conduct, deceit and general law misrepresentation and also failed to comply with an express warranty provided to their customers.

13    The applicants seek, among other things, compensation on behalf of the owners and interest holders in the affected vehicles for the alleged diminution in value of those vehicles which they contend has been caused by the respondents’ conduct.

14    The respondents in the class actions deny all of the above allegations on various grounds.

15    The issues in dispute and questions for the stage 1 trial are set out in Annexure A to Orders of the Court made in each proceeding on 19 July 2017. Those issues and questions are (omitting notes thereto and related sub-issues):

1.    Do the tests in Annex 11 and Annex 13 to the Standard apply in the present case as part of the full range of applicable requirements under the Standard?

2.    Which Volkswagen, Audi and Skoda vehicles supplied in Australia contained a device, comprising software in the engine control unit (ECU), and sensors from which the ECU receives signals, which operated in mode 1 and mode 2?

3.    Did the Vehicles contain a “defeat device” within the meaning of paragraph 2.16 of UNECE Reg 83 (applied by the Australian Design Rules), and (for NSD 1462 of 2016 only) paragraph 2.16 of Euro 4 and (for NSD 1462 of 2016 and NSD 322 of 2017 only) article 3(10) of Euro 5?

4.    What is the extent of the difference between the Vehicles operating in mode 1 as opposed to mode 2 in relation to:

a.    exhaust gas recirculation (EGR) rate/target fresh air mass;

b.    Injection characteristic;

c.    Injection pressure;

d.    Injection timing;

e.    the emission of oxides of nitrogen (NOx) from the vehicles;

f.    particulate emissions;

g.    CO2/fuel economy;

h.    power and torque;

i.    vehicle performance; and

j    the operation of the SCR system.

5.    Would the Vehicles have passed the NEDC Type I test, in respect of applicable NOx emissions, without the use of mode 1?

6.    Did the Vehicles comply with the following provisions of UNECE Reg 83 (sub-paras (a) to (d) (and for NSD 1462 of 2016 only) the following provisions of Euro 4 and (for NSD 1462 of 2016 and NSD 322 of 2017 only) Euro 5 (sub-paras (e) to (k)):

a.    5.1.2.1 of UNECE Reg 83 (prohibition on use of a defeat device);

b.    5.3.1.4 of UNECE Reg 83 (whether the Vehicles did not comply with the applicable NOx emissions limits set by ADR 79, except by reason of the use of a defeat device);

c.    5.1.1 of UNECE Reg 83 (whether the components liable to affect the emissions of pollutants were so designed, constructed and assembled as to enable the Vehicles, in normal use, to comply with the provisions of UNECE Reg 83);

d.    5.1.2 of UNECE Reg 83 (whether the technical measures taken by the manufacturer were such as to ensure that in conformity with the provisions of UNECE Reg 83, exhaust gas emissions are effectively limited throughout the normal life of the vehicle and under normal conditions of use);

e.    5.3.1.4 of Annex 1 of Euro 4 (whether the vehicles did not comply with the applicable NOx emissions limits set by Euro 4, except by reason of the use of a defeat device);

f.    section 5.1.1 of Annex 1 of Euro 4 (prohibition on use of a defeat device and whether the technical measures taken by the manufacturer were such as to ensure that pursuant to the provisions of Euro 4, the tailpipe and evaporative emissions are effectively limited throughout the normal life of the vehicle and under normal conditions of use);

g.    article 5(2) of Euro 5 (prohibition on use of a defeat device);

h.    article 1 and Annex 1, table 1 of Euro 5 (whether the Vehicles did not comply with the applicable NOx emissions limits set by Euro 5, except by reason of the use of a defeat device);

i.    article 4(1) of Euro 5 (whether the manufacturer has demonstrated that all new vehicles sold, registered or put into service in the European Community are type approved in accordance with Euro 5 including having met the emissions limits set out in table 1 of Annex 1 of Euro 5 and the implementing measures referred to in article 4 of Euro 5);

j.    article 4(2) of Euro 5 (whether the technical measures taken by the manufacturer were such as to ensure that pursuant to the provisions of Euro 5, tailpipe and evaporative emissions are effectively limited through the normal like of the Vehicles under normal conditions of use); and

k.    article 5(1) of Euro 5 (whether the manufacturer equipped the Vehicles such that that the components likely to affect emissions are designed, constructed and assembled so as to enable the vehicle in normal use to comply with Euro 5 and its implementing measures)?

7.    Did the vehicles contain a “defeat device equivalent”?

In determining the claims of members of the SCR Sub-Group (established by orders of Justice Foster on 19 July 2017 questions 2–7 set out above will involve consideration of the operation of the selective catalytic reduction (SCR) catalytic converter as referred to in particular (iiC)(iv) to paragraph 28 of the Further Amended Statement of Claim.

Definitions

In this statement of questions for the Stage 1 Trial:

a.    “Australian design Rules” means:

–    Vehicle Standard (Australian Design Rule 79/01 – Emissions Control for Light Vehicles) 2005 (ADR 79/01);

–    Vehicle Standard (Australian Design Rule 79/02 – Emissions Control for Light Vehicles) 2005 (ADR 79/02);

–    Vehicle Standard (Australian Design Rule 79/03 – Emissions Control for Light Vehicles) 2011 (ADR 79/03); and

–    (for NSD 1462 of 2016 only) Vehicle Standard (Australian Design Rule 79/04 – Emissions Control for Light Vehicles) 2011 (ADR 79/04)

(collectively, ADR 79);

b.    “UNECE Reg 83” means Regulation No 83 of the UN Economic Commission for Europe;

c.    “Euro 4” means Annex 1 of the Council Directive 70/200EC as amended by EU Directive 98/69/EC;

d.    “Euro 5” means EU Regulation 715/2007.

e.    “the Standard” means: Australian Design Rules or the alternative standard UNECE Reg 83 as it then applied to the approval of the Vehicles.

f.    “Vehicles” means Audi, Skoda and Volkswagen diesel vehicles fitted with a four cylinder “EA 189” 1.6L or 2.0 engine which are the subject of one or more of Federal Court proceedings Nos. NSD 1307 of 2015, NSD 1308 of 2015, NSD 1459 of 2015, NSD 1472 of 2015, NSD 1473 of 2015, NSD 1462 of 2016 and NSD 322 of 2017;

g.    “mode 1” means the mode in which the Vehicles operate in the conditions of the NEDC test;

h.    “mode 2” means the mode in which Vehicles operate when outside certain conditions of the NEDC test.

16.    The questions to be determined at the stage 1 trial concern technical engineering matters and the correct interpretation of the various relevant Vehicle Emissions Standards.

Alleged Obfuscation by the Respondents

13    All of the applicants attacked the way in which the respondents had hitherto complied with the discovery orders made by the Court. Senior Counsel for the Maurice Blackburn class action applicants (the MB applicants) made oral submissions in support of this attack. The other applicants adopted his submissions.

14    Senior Counsel for the MB applicants submitted that the respondents had failed entirely to engage with their discovery obligations in these proceedings. He said that the respondents were guilty of obfuscation and of frustrating the discovery process. He argued that, in relation to category 1 of the categories for discovery ordered by the Court on 14 February 2017, the respondents had set about creating a pool of documents which were guaranteed not to produce a single document that recorded or evidenced a management decision by Volkswagen AG and its related corporations to design software to be installed in the EA189 diesel engine which would enable that engine to recognise at any given point in time whether the vehicle in which it had been installed was being tested in laboratory-type conditions or was travelling on the open road in normal driving conditions with a view to altering the level of NOx emissions depending upon which mode the vehicle was operating in.

15    In support of these contentions, the applicants read and relied upon the affidavit of Angus James Francis affirmed on 5 July 2017 and tendered the exhibit to that affidavit (Exhibit AF-3). Counsel also referred to two affidavits read and relied upon by the respondents, namely, the affidavit of Gregory John Williams sworn on 22 February 2017 and the affidavit of Mr Williams sworn on 13 July 2017.

16    Senior Counsel for the MB applicants endeavoured to make good his ultimate proposition by making submissions in relation to the respondents’ compliance with production of documents in category 1 of the categories for discovery ordered by the Court on 14 February 2017. He submitted that the documents produced in answer to existing category 1 had been unduly confined and that production in respect of that category had been “woefully incomplete”. He said that there had been certain limitations put into place by the respondents within the agreed categories by the imposition of a relevance filter and by restricting the searches undertaken. He said that the respondents had produced to the applicants “unindexed swathes of documents” on USB sticks with no indexation or categorisation. Senior Counsel pointed to various paragraphs in Mr Williams’ two affidavits and to correspondence between the solicitors in order to endeavour to make good his ultimate proposition.

17    At pars 7–11 of his affidavit of 13 July 2017, Mr Williams said:

7.    Data and documents of the German Respondents has been, and continues to be, collected by Deloitte GmbH Wirtschaftsprṻfungsgesellschaft (Deloitte Germany) and stored within Relativity databases located in Wolfsburg, Germany (together, the German Relativity Databases).

8.    I am informed by Alicia Rause, Associate Director, Deloitte Advisory (Hong Kong) Limited (Deloitte), who operates the role of managing the review and production of documents contained in the German Relativity Databases, and believe that:

(a)    in total, the German Relativity Databases contain over 110 million documents, which comprise documents from 123 non-individual and 591 individual custodians who occupied, and/or continue to occupy, a range of roles within the German Respondents (714 custodians in total);

(b)    collation and retrieval of material that is currently being stored in the German Relativity Databases is on-going; and

(c)    the documents contained in the German Relativity Databases are made up of approximately 75% German documents and 23% English documents (with 2% of the documents in other languages) among the documents identified for language.

9.    In February 2017, in response to orders made by the Court on 14 February 2017, I made enquiries as to whether it would be possible to identify a list of custodians from the 714 custodians outlined above at sub-paragraph 8(a) that were most likely to be custodians of documents relevant to the issues to be heard and determined at the Stage 1 Trial (Technical Issues).

10.    As a result those enquiries, a list of 30 Volkswagen AG custodians was identified (Key Engineer Custodians). Those were the key engineers in software development who would most likely hold documents relevant to the Technical Issues. To the best of my knowledge, the Key Engineer Custodians continue to remain the most likely sources of relevant documents. Volkswagen AG is conducting ongoing investigations in relation to the circumstances of the development of the software in EA189 Diesel engines. Those investigations are being conducted for the purposes of diesel emissions litigation and so are subject to a claim for privilege. If further document custodians who may be relevant to the development of software are identified by those investigations, and searches of their documents are to be conducted for the purposes of Stage 1 trial discovery, that is likely to affect the Respondents' ability to complete discovery by 8 September 2017.

11.    The total number of documents currently collated from the Key Engineer Custodians is approximately 7.2 million. I note for completeness that this is the same pool of documents referred to at paragraph 16(b) of my 22 February 2017 Affidavit, and that, since 22 February 2017, additional documents have been collated from these custodians and included in the searches.

18    At pars 35–38 of the same affidavit, Mr Williams went on to say:

35.    On 6 April 2017, the Court directed the Respondents to produce documents in respect of a further category of discovery, being the Management Decision Category. In order to identify the most likely sources of documents containing information relevant to management decisions, enquiries were made of Jones Day and targeted searches were conducted for documents which may be responsive to the category.

36.    On 22 May 2017, Clayton Utz wrote to the Applicants in the Maurice Blackburn Proceedings and informed them that the Respondents had identified some documents that met the description of the Management Decision Category and also fell within Category 1. A copy of that letter is at pages 77 to 78 of exhibit AF-3 to the Affidavit of Angus James Francis.

37.    On 31 May and 1 June 2017, the documents referred to at paragraph 36 above were produced to the Class Action Applicants and the Applicants in the ACCC Proceedings respectively. Copies of letters to the Applicants enclosing those documents are at pages 25-26 and 27-28 of exhibit GJW­C respectively.

38.    The European Respondents are continuing their review in respect of documents responsive to the Management Decision Category and I estimate that production of documents responsive to that category cannot be completed before the end of August.

19    At par 17 of his affidavit of 13 July 2017, Mr Williams defined the expression Management Decision Category as requiring the production of documents in relation to the management decisions made by the respondents in respect of the two modes of software operation in the EA189 diesel engine.

20    Counsel drew my attention to a number of exchanges between Senior Counsel for the respondents and me at various Case Management Hearings conducted in late 2016 and in the first half of 2017 where the question of discovery of management decision documents was canvassed. Those exchanges demonstrate that while, for a time, the respondents may have interpreted the scope of category 1 of the discovery categories ordered on 14 February 2017 as being confined to technical documents, as time progressed, they came to accept that that category also encompassed management decision documents which were not necessarily of a technical nature. It was submitted on behalf of the applicants that, notwithstanding that the respondents accepted that they were required to discover management decision documents, they had nonetheless carefully constructed their search criteria in respect of category 1 in a way which would exclude such documents and which would confine the searches to engineering documents of a technical nature.

21    Whatever may have been the position prior to late May 2017, the matter was clarified to a large extent by Clayton Utz in their letter to Maurice Blackburn dated 22 May 2017. In that letter, Clayton Utz stated that Volkswagen AG had identified some documents which met what was then described as “Proposed New Category 1 (documents evidencing the decision by management to develop two modes of software operation in the EA189 engine)” and which also fell within existing category 1. Clayton Utz went on to say that those documents would be produced in the next tranche of category 1 documents.

22    As I understand the facts, the next tranche of category 1 documents was produced on 31 May 2017. Also, as I understand matters, as at late July 2017, further production of documents responsive to category 1 was intended.

23    It was then submitted on behalf of the applicants that, in light of the respondents’ alleged non-compliance with the Court’s orders in relation to existing category 1, the Court needed to impose a radical remedy. Senior Counsel for the MB applicants submitted that the radical remedy which he had in mind was the making of an order requiring the narrative historical document described at [10(b)] above to be produced and provided to the applicants or, in the alternative, for proposed interrogatories 1 and 2 to be administered by the applicants to the respondents. He also pressed for an order requiring the respondents to provide discovery of documents in proposed category 31 (as to which, see Issue 8 described at [10(h)] above).

24    When the hearing of the discovery applications resumed on 24 July 2017, the respondents read and relied upon a further affidavit of Mr Williams sworn on that day.

25    In that affidavit, Mr Williams said that none of the collections of documents stored in the German Relativity Database (which he defined in that affidavit) has been identified as sufficiently close to any category proposed to date by the applicants for discovery with the result that, in his view, he did not consider that the German Relativity Database could be used as a single source from which to identify documents responsive to the management decision category.

26    He then went on to explain in more detail a number of facts and circumstances which he contended answered the allegations made by the applicants against the respondents in respect of their approach to discovery, including the serious allegations that they had deliberately determined to frustrate the discovery process and to obfuscate at every turn in relation to that process.

27    Mr Williams’ affidavit of 24 July 2017 is an important affidavit. In my view, it provides a satisfactory answer to the most serious allegations made by the applicants against the respondents in respect of discovery and also provides a sound basis for dealing with most of the discovery issues remaining in dispute after 1 September 2017.

28    Mr Williams was not cross-examined in relation to the contents of his affidavit of 24 July 2017 or in relation to the contents of his earlier affidavits. All of his evidence was left unchallenged. Further, each group of applicants was given an opportunity to respond to Mr Williams’ affidavit of 24 July 2017 (it having been served very late). The ACCC chose not to offer any evidence in response to that affidavit. The Bannister Law class action applicants (BL applicants) took the same position. The MB applicants filed and served a further affidavit from Mr Francis (his affidavit of 28 July 2017). However, that affidavit did not provide any basis for challenging the evidence of Mr Williams. To a large extent, particularly in relation to the production made by the respondents on 31 May 2017, Mr Francis’ affidavit confirmed the evidence of Mr Williams.

29    In his 28 July 2017 affidavit, Mr Francis informed the Court that, notwithstanding that, as at early July 2017, he had been of the opinion that no management decision documents had been produced to Maurice Blackburn by Clayton Utz in the additional production effected on 31 May 2017, he now accepted that, after further consideration of those additional documents, some were appropriately classified as management decision documents.

30    In the circumstances, for the reasons explained at [21]–[29] above and having regard to Mr Williams’ evidence, I am not satisfied that the respondents have been deliberately obfuscating in relation to discovery nor am I satisfied that they have put in place a process designed specifically to avoid the production of damaging documents. The allegations made by the applicants against the respondents and their lawyers in respect of the respondents’ approach to discovery were serious and would require proof to a standard which left the Court in no doubt that they had been made good. I am not satisfied that the applicants have established their allegations to such a standard of proof. I now turn to consider Mr Williams’ 24 July 2017 affidavit in a little more detail.

31    I interpolate here to note that production of documents was, as at mid July 2017, ongoing and, as far as I am presently aware, continues. On more than one occasion in the correspondence to which I was taken in oral address, Clayton Utz had indicated that there would be further production of documents and that some of the tranches to be produced in the future would include management decision documents. To a large extent, the applicants’ submissions in relation to Issues 2, 3, 4 and 8 as described in [10] above were founded upon the proposition that the respondents and their solicitors were deliberately managing the discovery process in such a way as to exclude as far as possible damaging documents in relation to the provenance of the software concept which permitted the EA189 diesel engine to run in two modes and the execution of that concept in the real world by manufacturing motor vehicles with engines into which that software had been installed. I will approach my consideration of Issues 2, 3, 4 and 8 with these observations in mind.

32    At pars 10–13 of his 24 July 2017 affidavit, Mr Williams said:

10.    The Key Engineer Custodian set of documents have been used for keyword searches in relation to the following categories (including those categories not yet agreed):

(a)    category 1 of the 14 February 2017 categories; and

(b)    categories 1, 3, 4, 5, 7, 8 and 19 of the further proposed categories for the Stage 1 Trial.

11.    Mr Dawson several times characterised the documents of the Key Engineer Custodians as “technical engineering documents only” or similar (see, for example, T133.33-34) and submitted that, as a result, they were not a suitable set of documents in which to conduct searches for the purposes of giving discovery. Further, Mr Dawson submitted that the documents of the Key Engineer Custodians were not broad enough to capture documents relevant to category 7 “particularly because one would expect the engineering database to refer to a different point in time, albeit – in addition to the fact that it refers to different subject matter” (see T160.8-10). Mr Dawson submitted that the reliance on this group of documents as the primary source of material for the purposes of giving discovery was “obfuscation and frustration of the discovery process” (T130.20-21). For the following reasons, that characterisation is incorrect:

(a)    this group of documents represents all of the documents collected from the Key Engineer Custodians for the purposes of assembling the German Relativity Database, including but not limited to their emails. As at 21 July 2017, they:

(i)    include:

A.    2,167 million emails; and

B.    240,806 Powerpoints; and

(ii)    are dated between 29 November 1979 and 15 June 2017.

(b)    They are not only technical engineering documents. Some of the Key Engineer Custodians are or were in management positions within Volkswagen's Engine Development Department (and in particular within the Diesel Engine Development Department). Annexed to this affidavit and marked “GJW-59” is a confidential list of the Key Engineer Custodians and their positions as at 2007. I have picked 2007 because this year falls roughly in the middle of the period during which the EA189 engine was developed;

(c)    I am aware, as a result of my review and review by my team members of the Key Engineer Custodians and my own investigations into facts relevant to this matter, that decisions in relation to the development of the EA189 engine and its software were made within the Engine Development Department and, in particular, the Diesel Engine Development Department; and

(d)    in the course of discussions about categories for Stage 2, the applicants have identified a list of 23 individuals from whom they sought “to the extent not produced by category 1, documents created from 2006 to date sent or received by any of the following referring to the implementation of the dual mode operation software installed in vehicles with the EA189 engine”. Of that list, 16 individuals are Key Engineer Custodians.

12.    At T159.46 - 160.3 Mr Dawson said, “let’s take category 4 as an example - not much chance that the technical documents numbering 7.2 million about the function of the software across engineering software databases, are going to include communications between the respondent and Bosch and Continental, who are the software development firms that came up with the feature”. I understand the reference to “technical documents numbering 7.2 million” to be a reference to the documents of the Key Engineer Custodians. In fact, the documents of the Key Engineer Custodians include communications between Volkswagen or Audi and Bosch and Volkswagen or Audi and Continental. For example, in respect of the documents responsive to Category 4 of the Applicants' Further Technical Categories for the Stage 1 Trial, 91,600 documents (including family documents) comprise such communications. The review by my team of the documents of the Key Engineer Custodians to date suggests that communicating with Bosch in relation to various aspects of the development of EA189 engines was a significant part of the work undertaken by some of these engineers in the course of developing the EA189 engine.

13.    I reject the allegation that the process by which the Respondents are giving discovery involves “obfuscation and frustration of the discovery process” or otherwise of misleading this honourable Court.

33    In those paragraphs, Mr Williams said that some of the Key Engineer Custodians who were identified in the manner he described at par 11 of his affidavit were in management positions within Volkswagen’s Engine Development Department (EDD) and, in particular, within the Diesel EDD (DEDD). He then informed the Court that the relevant decisions were made within the EDD and, in particular, within the DEDD. He had mentioned the Key Engineer Custodians in his earlier affidavit of 13 July 2017.

34    During his oral address to the Court, Senior Counsel for the respondents informed the Court that all of the top level management personnel likely to have been involved in the development of the EA189 diesel engine had been identified by the respondents and were on the Key Engineer Custodians list of 30 names which was exhibited to Mr Williams’ affidavit and marked GJW-59. That list came into evidence on a confidential basis. Some of those persons were in key management positions within the EDD.

35    Mr Williams then testified that appropriate searches had been conducted of the Minutes of the Volkswagen Brand Management Board and of the Volkswagen Group Management Board and that there were no documents in those groups of documents which could be appropriately classified as management decision documents of the kind sought by the applicants.

36    At par 16 of his affidavit, Mr Williams said that the respondents had not applied any relevance filter above and beyond the words of the category.

37    At pars 17–21, Mr Williams said:

17.    On or about 11 January 2017 Volkswagen AG entered into a Plea Agreement with the United States Department of Justice. That plea agreement is publicly available and can be found at: https://www.justice.gov/opa/press-release/file/924436/download

18.    Exhibit 2 to that plea agreement is a Statement of Facts which Volkswagen AG agrees and stipulates is true and accurate. That Statement of Fact discloses that the development and implementation of the switching software in US vehicles occurred under the supervision of employees of Volkswagen AG in its engine development department who were below the level of the management board.

19.    On the basis of my own review of documents, the review of documents by members of my team, my discussions with employees or agents and the Respondents and with lawyers acting for the Respondents and other members of the Volkswagen Group in relation to diesel emissions:

(a)    I believe that it is also true that the development and implementation of the switching software in vehicles sold in Australia occurred under the supervision of employees in its engine development department; and.

(b)    I am not aware of any document which is a formal record of the decisions made in respect of such software.

20.    There are documents which record statements made by, or discussions with, persons in management positions within the Volkswagen AG engineering department about developing and implementing the software for EA189 engines. Some documents of this nature have been produced to the Applicants already and some are proposed to be produced in the next tranche of discovery, intended for 31 July 2017. It is often difficult to tell whether such documents are recording a decision of a manager. However, in my view such documents are generally speaking not “management decision documents” in the sense described in paragraph 14 above. For document production purposes, the question of whether such documents are “management decision documents” is largely academic because such documents in any event fall within category 1 ordered on 14 February 2007.

21.    In seeking to identify documents evidencing decisions or consideration by managers or management of the development, approval, installation or use of switching software in EA189 vehicles (and not limited to those that fall strictly within the words set out in paragraph 14 above) regard is being had to work carried out by lawyers acting for Volkswagen, including but not limited to lawyers in the United States. Such searches are not limited to the documents of the Key Engineer Custodians.

38    At par 26 and par 27 of his affidavit, Mr Williams said:

26.    In addition to the provision of a Source List, each production of documents to the Applicants by way of a USB or CD is accompanied by a list provided electronically in accordance with the eDiscovery Protocol (MDB Data). The MDB Data includes the following types of information about each document (as applicable):

(a)    document ID;

(b)    document date;

(c)    document type (eg. email, spreadsheet, presentation);

(d)    document title (eg. by way of file name or email subject);

(e)    correspondence type (eg. “to”, “from”, “between”, “CC”);

(f)    persons (eg. for emails, the name or email address of the sender, recipient, persons carbon copied or blind copied);

(g)    organisation; and

(h)    file path (eg. where available, the custodian / directory from where the document was collected).

27.    I understand that the information in the electronic list, along with the documents themselves, can be loaded into most commercially available document management platforms including, for example, Relativity and Ringtail. If the Applicants choose to do so, they can then search and sort the documents by reference to any of the information in the electronic list, as well as, in most cases the content of the document itself.

39    In addition to Mr Williams’ evidence, the respondents produced a table which was provided to the Court as Tab 3 in MFI-6, in which they set out in considerable detail their responses to the particular criticisms of their compliance with the orders of the Court in relation to discovery. I do not need to refer to that table in detail. However, to the extent that it remains relevant, I found it to be a most helpful document to which I have had regard in addressing the remaining discovery issues.

Particular Issues

Issue 1—Discovery Category Specification

40    The applicants submitted that, when providing discovery of documents, the respondents should be required to provide a list which met the requirements of r 20.17(2) FCR, which list should contain, in respect of each document listed, by reference to its document identifier, the discovery category pursuant to which the document is being discovered. The applicants submitted that the discovery orders which I have made in each set of proceedings contemplated this level of specification. Alternatively, they submitted that, if the orders do not already require this, I should now order that this be done.

41    The applicants relied upon r 20.17 FCR. That rule is in the following terms:

20.17    List of documents

(1)    A list of documents must be in accordance with Form 38.

(2)    The list must describe:

(a)    each category of documents in the party’s control sufficiently to identify the category but not necessarily the particular document; and

(b)    each document that has been, but is no longer in the party’s control, a statement of when the document was last in the party’s control and what became of it; and

(c)    each document in the party’s control for which privilege from production is claimed and the grounds of the privilege.

(3)    A party may apply to the Court, before or after the list of documents has been served, for an order:

(a)    about the use of categories in the list; or

(b)    that a more detailed list of documents be provided; or

(c)    that each document in a category be separately described.

(4)    The list of documents must be verified by an affidavit sworn in accordance with rule 20.22.

Note:    Control is defined in the Dictionary.

42    Senior Counsel for the respondents accepted that the respondents have not, to date, done that which is now sought by the applicants. He submitted that none of the Court’s orders made to date require the respondents to do this. In particular, he submitted that the requirement imposed upon the respondents to identify the person or entity which has given discovery of the document and, to the extent that such information is available, the database, custodian and/or source from whom the document was obtained, did not amount to imposing upon the respondents the obligation to allocate each document produced on discovery to a specific category of documents within the categories for discovery ordered by the Court.

43    I agree that the Court has not yet ordered the respondents to do that which the applicants now require.

44    Further, the respondents submitted that there was no good reason now for the Court to require the respondents to specify the category or categories to which each document when produced is a response.

45    First, they submitted that r 20.17 FCR did not impose such a requirement. They argued that, given r 20.17 is intended to apply both to standard discovery and discovery by categories, it would make no sense at all to read the rule in the fashion submitted by the applicants. They contended that, rather than interpreting the rule in the manner submitted by the applicants, the Court should construe the rule as a rule which permits a party, at its unilateral election initially, to group into “categories” or “groups” certain types of documents in that party’s List of Documents which would otherwise have to be listed individually, one by one. The respondents submitted that an example of the way in which r 20.17(2) should be used is to group together documents of a similar character which can easily be identified as being appropriately organised as a group, eg Annual Reports of a particular corporation for the years 2001 to 2015. It was submitted on behalf of the respondents that the rule was designed to permit groupings such as the example given by me above provided that the groupings are sensible and easily comprehensible. The respondents then argued that r 20.17(3) provides an avenue for the contra party to the listing party to challenge the category approach chosen by the listing party by allowing that contra party the opportunity to make an application to the Court.

46    Second, it was submitted on behalf of the respondents that, given the very substantial number of documents already produced by the respondents to the applicants on discovery, it would be wholly impractical and an unnecessary burden both in terms of time and cost now to require the respondents to revisit the production so far and to allocate each document already produced to a specific category or categories.

47    Third, according to Mr Williams (as to which, see pars 26 and 27 of his 24 July 2017 affidavit), the information which the respondents have provided with each tranche of documents produced in accordance with the Court’s orders enables the applicants and their lawyers to organise the material in any way they see fit. That process will continue. This is a considerable benefit to the applicants which goes far beyond the minimum required of the respondents.

48    I agree with the respondents’ submissions which I have summarised above. For the reasons submitted by the respondents, I reject the applicants’ application for an order requiring the respondents to specify, both in respect of past production and future production, the categories to which each document produced is a response.

Issue 2—The Narrative Document

49    Soon after the Bannister Law class actions (BL class actions) and the Maurice Blackburn class actions (MB class actions) were commenced, the respondents filed a narrative statement which addressed the claims made against them. In particular, it engaged with the allegations made in the applicants’ Concise Statements and Pleadings and also provided additional narrative material.

50    All of the matters are now proceeding on formal pleadings.

51    The applicants have not complained about the adequacy of the respondents’ initial Concise Statement nor have they complained about the adequacy of the respondents’ Defences filed in each of the matters.

52    Rather, they seem to say that the respondents have not assisted them to understand the documents which have been produced on discovery and, as submitted to me as part of the present applications, the respondents have obfuscated and frustrated the discovery process. The question of whether I should make the orders sought as described in Issue 2 above ([10(b)]) depends in large part on whether I accept the applicants’ assertions that the respondents have not engaged properly with the discovery process. For reasons which I have already explained, I am not convinced that this has occurred.

53    The respondents are not obliged to assist the applicants in proving their case nor are they obliged to set out in a narrative document the entire history of the development of the EA189 diesel engine with the mode 1 and mode 2 software in a single document in order to assist the applicants to understand what happened. Of course, the respondents may choose to tender evidence in their own cases which proves the design process and the reason for it. Whether they adopt such a course is a decision for them to make.

54    I see no reason to order a document of the kind sought by the applicants and decline to do so.

Issues 3 and 4—Whether the Court should order Further Interrogatories

55    Proposed interrogatories 1 and 2 are only sought if I decline to order the respondents to produce the document described at [10(b)] above. I have declined to make such an order. Accordingly, I need to consider the applicants’ application for two further interrogatories. The applicants have propounded the terms of interrogatories 1 and 2. Those interrogatories are substantially in the following terms (I have altered the language slightly):

(a)    Was the software installed in the engine control unit (ECU) of vehicles equipped with the EA189 diesel engine which effected two different modes of operation, one of which was optimised for NOx and other pollutant emissions and the other of which was optimised for comfort, different as between the Australian affected vehicles and their European equivalents, on the one hand, and vehicles equipped with the EA189 engine sold in the United States, on the other hand? If so, specify the differences.

(b)    State the reasons why the respondents installed in the engine control unit (ECU) of the affected vehicles and their European equivalents, software which effected two different modes of operation, one of which was optimised for NOx and other pollutant emissions, and the other of which was optimised for comfort.

56    Volkswagen AG and perhaps other related corporate entities entered into a plea agreement and other settlement arrangements in respect of alleged breaches of statutory clean air provisions in the United States of America.

57    The respondents have agreed to produce documents which relate to those arrangements (as to which see categories 21 to 26 of the further categories for discovery ordered on 4 September 2017).

58    In the present proceedings, the respondents contend that the regulatory requirements in the United States of America are different from those which obtain in Europe and in Australia. In due course, that contention will need to be investigated in order to determine whether or not it is correct.

59    The respondents submitted that the subject matter of proposed interrogatory 1 was not a matter appropriate for an interrogatory. They said that it strayed into matters for which expert evidence would be required. They went on to submit that it was not a simple or mechanical task to identify the differences in software as between the Australian affected vehicles and the relevant United States vehicles but rather required a person skilled in the art of software to review the relevant source code for the software, to identify the differences and, to the extent that there are differences, explain how those differences arise. In this way, so it was submitted, the interrogatory would require the respondents to form opinions, exercise judgment or draw conclusions, all of which matters tended against the grant of leave to administer it.

60    The points which I have summarised at [59] above may or may not obtain to some extent in the present case. However, I consider that it is well within the capability of the respondents to answer interrogatory 1.

61    Next, the respondents submitted that the interrogatory is oppressive. In this regard, the respondents relied upon pars 73 to 75 of Mr Williams’ affidavit of 13 July 2017. However, those paragraphs are expressed in very general terms and do not establish relevant oppression.

62    The third submission made on the part of the respondents in support of their contention that interrogatory 1 should not be the subject of leave was that the interrogatory did not make clear whether a reference to “software” in the interrogatory is referable to the whole of the software installed in the affected vehicles or whether it is intended to be narrower and only refer to the “switching” aspect of the software. I do not think that this is a valid criticism. The relevant aspects of the software are made clear in the interrogatory.

63    It seems to me that, for present purposes (including for the purposes of the stage 1 trial), it would be relevant for the Court to know whether the emissions software in the EA189 diesel engine installed in motor vehicles sold in the United States of America is substantially the same or even identical to the emissions software in the EA189 diesel engine sold in Australia and, for that matter, in Europe. Accordingly, I propose to grant leave to the applicants to administer interrogatory 1.

64    The respondents resisted leave being granted to administer interrogatory 2 because, so they submitted, it called for an answer which was properly a matter for evidence and legal submission. They said that, by its terms, the interrogatory is not capable of being answered with specificity and requires the respondents to form opinions, to exercise judgment or draw conclusions. I do not agree with this submission. The interrogatory calls for a succinct and plain answer to a question which goes to the heart of the present proceedings. I do not think that it calls for the complex analyses which were the subject of the respondents’ submissions.

65    The respondents next submitted that the interrogatory was oppressive because it would likely necessitate identifying and reviewing a large number of documents. I very much doubt that this is so. What is required is for the respondents to identify and specify with precision and brevity the reason or reasons why they developed the impugned emissions software. By now, I suspect that that is a simple matter for the respondents to put into words.

66    In each of the matters, there is an allegation that the impugned emissions software installed in the EA189 diesel engine is a defeat device or a defeat device equivalent within the meaning of the relevant regulatory provisions in Australia. It seems to me that it would be a relevant matter for the Court to know why it was that the software was developed and installed in the EA189 diesel engine found in vehicles sold in Australia. For this reason, I propose to grant leave to the applicants to administer interrogatory 2.

67    Proposed interrogatory 3 is pressed, come what may. That is, the grant of leave to administer that interrogatory is not said to be dependent upon my refusal to order the narrative document described at [10(b)] above. That proposed interrogatory is in the following terms:

For any test results produced to the applicants pursuant to category 29 of the discovery categories ordered on 4 September 2017, please indicate to the extent possible:

(a)    The vehicle make, model, year of manufacture, model year, engine code and UNEC/EC approval number for the vehicle on which the test results were obtained and the equivalent type of vehicle sold in Australia; and

(b)    The nature or type of test undertaken.

68    The respondents submitted that it is premature for the Court to grant leave to the applicants to administer interrogatory 3. They went on to submit that the question of whether that interrogatory should be the subject of leave should be further considered when the respondents have produced documents pursuant to discovery category 29 ordered on 4 September 2017. The respondents submitted that not only did this make sense but also the rules of Court (r 21.02 FCR) require that leave to administer interrogatories not be granted until discovery lists of documents have been filed and served. They also submitted that, even if the Court were to dispense with r 21.02 FCR, it was burdensome and oppressive to impose a requirement on the respondents to answer interrogatory 3. In particular, the respondents submitted that the burden of answering the interrogatory would outweigh the probative value of any answers. They also pointed to the way in which the Court had resolved a similar application for leave to administer interrogatories at an earlier point in time.

69    In my view, it is premature to consider whether leave to administer interrogatory 3 should be granted. I also consider that it may well turn out to be oppressive with little prospect of the probative value of the answers justifying the time and cost of the task. At the moment, I decline to grant leave to administer interrogatory 3 but defer for further consideration whether, after production in accordance with category 29 of the categories for discovery ordered on 4 September 2017, leave should then be granted.

Issues 5 and 6—Categories 14 and 20 of the Proposed Further Discovery Categories

70    These categories were proposed at the instigation of the ACCC. They are requested in order particularly for the ACCC to seek to secure the production of documents from the respondents which establish that the European companies carry on business in Australia, an allegation which is disputed by the European companies in the ACCC proceedings. This issue was previously part of the stage 1 trial (question 8) but was recently deferred to stage 2 at the request of the ACCC and with the consent of the other parties.

71    The ACCC has filed its TAR application. That application is designed to streamline future discovery, in particular, by using a process of predictive coding.

72    The respondents have declined to agree to proposed categories 14 and 20 essentially because, according to them, any requirement to produce documents in those categories would be oppressive. It seems to me that I should defer consideration of whether I should order proposed categories 14 and 20 until such time as I address the TAR application made by the ACCC. Deferring those categories in this way will not prejudice any party in respect of the stage 1 trial and will enable me better to assess whether discovery in accordance with those categories should be refused because it is oppressive.

73    The ACCC submitted that I should order discovery in accordance with proposed categories 14 and 20 now but defer production until later. I see little point in doing this.

74    Accordingly, for the reasons which I have explained, I propose to defer further consideration of proposed categories 14 and 20 until I hear the ACCC’s TAR application.

Issue 7—the IAV Issue

75    As I understand the facts, IAV is part owned by Volkswagen AG. According to the evidence, it was involved in the design of the impugned emissions software installed in the EA189 diesel engine. No compelling reason has been advanced on behalf of the respondents as to why I should exclude IAV from category 30 of the applicants’ proposed categories for further discovery.

76    Accordingly, IAV will be included in that category which will now be ordered.

Issue 8—The Damaging Documents Category

77    Proposed category 31 is in the following terms:

Documents which are detrimental to the respondents’ case of which the respondents or their legal representatives have become aware in the course of undertaking the searches or inquiries which have been undertaken or will be undertaken in the course of complying with their discovery obligations in these proceedings.

78    The applicants submitted that I should order a category in the terms of proposed category 31 essentially because the respondents have been guilty of frustrating the discovery process to date. I have not accepted this basal contention.

79    In any event, proposed category 31 raises other difficulties. One of those difficulties is that it would require the respondents’ lawyers to infringe their clients’ privilege in the advice given to the respondents from time to time in relation to discovery and the respondents’ obligations to comply with the law in respect of discovery. This difficulty alone would be sufficient for me to decline to order discovery in the terms of category 31, were I otherwise inclined to do so. I decline to order discovery in accordance with proposed category 31.

The ACCC’s TAR Application

80    The ACCC’s TAR application is yet to be heard. It was filed only a few days before the listings of 18 July 2017.

81    When the applications that were listed before the Court on 18 July 2017 were being dealt with, Counsel for the ACCC urged me to proceed to deal with the ACCC’s TAR application at the same time as the other applications. Because the other parties had had very little time to consider it and were otherwise heavily occupied in dealing with the applications that were listed for hearing on 18 July 2017, I declined to force the other parties to address the ACCC’s TAR application at that time. I considered that the other parties should have time to reflect upon the relief sought by the ACCC in that application and perhaps to confer with the ACCC’s representatives in order to see whether any consensus in relation to the relief claimed in that application could be reached. That remains the position.

82    When the matter is next before the Court (on 15 September 2017), I propose to address the ACCC’s TAR application and, if necessary, fix it for hearing.

Conclusions

83    The applicants have had considerable success in relation to the discovery applications that they brought before the Court on 18 July 2017. They secured orders by consent for discovery to be undertaken by the respondents within an additional 29 categories and obtained leave to administer two further interrogatories at this point in time.

84    While it is true that, in large part, the issues remaining after 4 September 2017 which have been the subject of consideration in this judgment were largely decided in favour of the respondents, I think that it would be a wrong approach to determine the question of costs only by taking into account the state of play on and after 1 September 2017.

85    The applicants have failed to make good the serious allegations which they made against the respondents and their lawyers in respect of discovery. Their contentions directed to establishing those allegations occupied some hours of the hearing time. The failure on the part of the applicants to make good these allegations should not be ignored when the question of costs is determined.

86    Taking into account all of the factors to which I have just referred, I have decided that the appropriate order for costs is that the costs of the discovery applications heard by the Court on 18, 19 and 24 July 2017 should be the applicants’ costs in each proceeding.

87    There will otherwise be orders giving effect to these Reasons for Judgment.

Associate:    

Dated:    13 September 2017