FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd [2018] FCA 1981

ORDERS

THE COURT ORDERS THAT:

1.    The Respondent provide discovery of the documents described in categories (a) to (d) in the draft orders which are Annexure “ATD3” to the affidavit of Ashleigh Tayla Davis dated 12 November 2018, doing so by 4 pm on 14 January 2019.

2.    The parties have liberty to apply, within seven days, in relation to the date by which the documents must be produced.

3.    The Respondent pay the Applicant’s costs of the application.

4.    The parties have liberty to file short submissions (no more than 1.5 pages) on costs if they seek a different costs order, doing so within seven days.

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

REASONS FOR JUDGMENT

MURPHY J:

1    In this proceeding the applicant, the Australian Competition and Consumer Commission (ACCC) claims that the respondent, Jayco Corporation Pty Ltd (Jayco) breached ss 21, 18, 29(1)(m) of the Australian Consumer Law (ACL) in Schedule 2 of the Competition and Consumer Act 2010 (Cth). It alleges that Jayco made false or misleading representations, engaged in misleading or deceptive conduct and acted unconscionably towards four consumers in connection with the supply to each of them of a Jayco recreation vehicle (RV) by a Jayco dealer, and the supply to each of them of a 12 month express warranty (the Jayco Warranty) and its associated after-sales service. It seeks relief including declarations, injunctions and orders for pecuniary penalties together with a non-party consumer redress order under s 239(1) of the ACL.

2    By an interlocutory application dated 21 September 2018 the ACCC seeks an order pursuant to r 20.13 of the Federal Court Rules 2011 (Cth) (the Rules) that the Respondent make discovery of documents in four identified categories. Jayco has consented to categories (a) and (d) of the discovery sought, and the ACCC has narrowed the scope of categories (b) and (c) to address issues raised by Jayco. The parties have been unable to reach agreement regarding categories (b) and (c) and have consented to the Court deciding the application on the papers.

The categories of discovery

3    The two disputed categories, as narrowed, are as follows:

(b)    All documents dated, created or received during the period from 1 January 2013 to 30 June 2016 (the Period) comprising:

       (i)    emails, including attachments, sent or received by Peter Manning, Phillip Rigby, Malcolm Austin, Peter Murphy, Shane Holloway and/ or Carl Bizon; and/or

 (ii)    management reviews or reports

 referring to, recording or reporting defects concerning the alignment, closure and/or leakage of the roof of the following models of caravans:

 (iii)    2013 Jayco Swan Outback Camper Trailer;

 (iv)    2013 Jayco Expanda Pop Top Caravan;

 (v)    2014 Jayco Journey Outback Pop Top Caravan; and/or

 (vi)    2015 Jayco Expanda Outback Pop Top Caravan.

(c)    All documents dated, created or received during the Period comprising:

(i)    emails, including attachments, sent or received by Peter Manning, Phillip Rigby, Malcolm Austin, Peter Murphy, Shane Holloway and Carl Bizon; and/or

(ii)    any policies, general directions or general instructions to employees or dealers

concerning or referring to the provision (or refusal) of refunds or replacement vehicles.

Jayco’s contentions

4    Jayco relies on the Central Practice Note: National Court Framework and Case Management (CPN-1) of the Court which, amongst other things, provides that the Court expects the parties and their representatives to take all steps to minimise the burden of discovery; the Court will not approve expansive or unjustified requests; the applicant for discovery must adequately justify the request, including demonstrating the utility and appropriateness of discovery, the relevance and importance of the documents or information, the limited and targeted nature of the request, and that the documents sought are or are very likely to be significantly probative in nature, or materially support or be materially adverse to any party’s case. A discovery request must be proportionate to the nature, size and complexity of the case.

5    Jayco argues that the case pleaded in the Concise Statement is only in relation to four identified consumers, and it does not include an allegation of systemic or systematic conduct by Jayco. Further it submits this is not a case where similar fact or tendency evidence of any sort could conceivably be relevant. Jayco contends therefore that the whole of category (b) is irrelevant and, in reliance on an affidavit of its solicitor Ms Danielle Khalaf made 13 November 2018, it argues that such discovery would be extremely burdensome and expensive for Jayco to undertake. It says that allowing such discovery would be contrary to the Central Practice Note and wasteful of the parties’ resources.

6    It also argues that category (c) is irrelevant because the Concise Statement does not allege that any “policies, general directions or general instructions to employees or dealers” have ever existed within Jayco, or had anything to do with the four consumers’ alleged experiences. It says that this category of discovery is merely fishing and directed towards an irrelevant matter not raised in the Concise Statement.

7    Finally, Jayco says that discovery of this nature should not be permitted when the ACCC has utilised its powers under s 155 of the Competition and Consumer Act 2010 (Cth) to seek and obtain extensive documents from Jayco prior to the institution of the proceeding. On the basis of an affidavit of Ms Khalaf made 14 November 2018 Jayco says that, in response to a s 155 notice, it has already produced documents in response to categories which appear to cover some of the same ground as that now sought by discovery.

Analysis

8    In my view orders should be made for Jayco to provide discovery in both of the disputed categories.

9    First, contrary to Jayco’s contention I consider both discovery categories fall within the pleaded case.

10    Category (b) seeks documents which evidence manufacturing defects of the type alleged to affect RVs of the same model and year as those purchased by the four consumers. Paragraph 2 of the Concise Statement alleges that the RVs purchased by each of the four identified consumers had serious manufacturing defects in the roofs. In its Concise Response Jayco admits that the consumers’ RVs had some non-major defects, but denies that they had serious manufacturing defects. I accept the ACCC’s contention that documents in category (b) are directly relevant to and may be rationally probative of an issue in the proceeding – whether there are serious manufacturing defects affecting the RV models purchased by the four consumers.

11    Category (c) seeks documents which establish the existence of a practice of dealing with consumer complaints in the way Jayco is alleged to have dealt with the four consumers’ complaints.

12    Although it is not as clearly articulated in the Concise Statement as it could be, paragraphs 4, 5 and 6 allege that, at least in the case of the four consumers, Jayco had a practice of dealing with consumer complaints as part of the Jayco Warranty process and therefore as a matter for its own discretion. It is alleged that each of the consumers made multiple requests for a replacement RV or a refund directly to Jayco and to the Jayco dealers, who denied the requests and instead offered only further attempts at repair. It is said that, at least in the four identified cases, Jayco exercised effective control over the refund, replacement and repair processes for the defective RVs.

13    Although not as clearly articulated as it could be, paragraphs 6, 7, 8 and 9 allege that, in relation to the four consumers’ RVs, Jayco’s practice was to continually attempt to repair the RVs and to unfairly refuse to provide a refund or a replacement RV, even when numerous repairs had been unsuccessful, and to make false or misleading representations to the consumers as to their entitlement to a refund or replacement.

14    For its part, Jayco denies the matters upon which the ACCC relies to prove the alleged “practice” in relation to the four consumers’ RVs. In effect, it denies any such practice existed. Jayco admits that each of the consumers made several complaints but denies that the repairs were ultimately unsuccessful. It admits that the consumers requested refunds or replacement RVs and that it refused those requests but says it was not obliged to provide refunds or replacements. It denies that it pressed the position that the only remedy available to consumers who were unhappy about the alleged defects was another attempt at repair. It says that the relevant Jayco dealers were separate businesses and not Jayco’s agents, and it denies that it unfairly obstructed the consumers from obtaining a refund or replacement RV from the relevant Jayco dealer.

15    Jayco also argues that there is no allegation that any “policies, general directions or general instructions to employees or dealers” concerning or referring to the provision (or refusal) of refunds or replacement RVs exist. That is true but it does not take the issue very far. The ACCC does not know what documents exist within Jayco and I accept the ACCC’s contention that if they do exist, such documents may be directly relevant to and may be rationally probative of an issue in the proceeding – whether Jayco had such a practice in relation to the four consumers. One way for the ACCC to show that the consumers’ complaints about the alleged defects were dealt with by Jayco as the ACCC alleges would be to show that Jayco had a general practice of acting in that way: TS & B Retail Systems v 3Fold Resources Pty Ltd (No 3) (2007) 158 FCR 444; [2007] FCA 151 at [100] (Finkelstein J).

16    Second, I do not accept that the categories of documents sought to be discovered will be oppressive for Jayco to produce. Subcategories (b)(i) and (c)(i) comprise emails and attachments. Ms Khalaf said, on the basis of information and belief, that there are just over 60,000 documents under category (b)(i) and just over 38,000 documents under category (c)(i) that will require review for relevance.

17    Ms Khalaf did not specify how Jayco manages, stores or destroys emails and attachments or explain the basis for that estimate. I doubt that the relevant documents are voluminous when the categories are relatively confined and relate to the mailboxes of only six senior managers in relation to four RV models and years. There is no indication of whether narrowing by keyword search had been considered or rejected for some reason, nor whether any other forms of good faith proportionate search might enable Jayco to locate the documents sought without it being unduly burdensome.

18    I do not consider that it will be oppressive for Jayco to conduct targeted electronic searches of six mailboxes for emails and attachments which: (a) refer to, record or report defects in the roofs of four specific RV models and years, for a specified period; and (b) concern or refer to the provision or refusal of refunds or replacement RVs.

19    Indeed, as the ACCC submits, if there are voluminous documents which respond to either of these categories, that seems likely to assist the ACCC in proving that the four consumers’ RVs had serious manufacturing defects or in proving the alleged “practice” of not offering refunds or replacements.

20    Category (b)(ii) cannot be oppressive, since Ms Khalaf states that there are no documents that respond to that category.

21    The position is different with category (c)(ii), being “policies, general directions or general instructions to employees or dealers concerning or referring to the provision (or refusal) of refunds or replacement vehicles”. Ms Khalaf says that such documents are held as hard copies and there are over 100,000 hard copy documents that will require review for relevance. Ms Khalaf did not explain how Jayco arrived at that estimate. The documents sought are management documents setting out policies and general directions in regard to refunds or replacements, and if such documents exist it is quite unlikely that they are so numerous. In a large and apparently well-run company like Jayco I would expect such documents to be readily locatable. Jayco is only required to undertake a good faith and proportionate search to locate such documents and it did not explain why its relevant manager or managers would be unable to say whether such policies and general directions exist and if so where they are held.

22    Finally, the s 155 notice is not a reason not to order reasonable and proportionate discovery. Section 155 empowers the ACCC to collect information and documents under compulsion for the purposes of its investigative function. That is a different purpose than the purpose for which the current discovery is sought. Further, there is no material before me about the number of documents produced pursuant to that notice, or how many may respond to the categories presently sought. In those circumstances it is not a reason not to order the discovery sought.

23    I will order the documents be produced by 14 January 2019 but grant leave to the parties to apply in relation to that date, doing so within seven days.

What is in issue in the case?

24    It appears from the submissions that there may be some difference between the parties as to what is in issue in the proceeding, and given the impending trial any uncertainty must be speedily addressed. The Concise Statement makes allegations of unconscionability, misleading or deceptive conduct and false or misleading representations only in relation to Jayco’s conduct towards the four specified consumers and not more broadly. In its submissions the ACCC expressly disavows that the claim of unconscionable conduct relies on s 21(4) of the ACL. It says that it does not need to rely on that provision because it will establish that Jayco engaged in unconscionable conduct though its dealings with the four identified consumers. As I have said, if the ACCC can establish that Jayco had a broad practice of unfairly refusing to provide refunds or replacements that may assist it in proving the alleged conduct towards the four specified consumers.

25    There is, however, one indication that the ACCC seeks to extend the case beyond the four specified consumers. The Originating Application seeks non-party consumer redress orders under s 239(1) of the ACL. If the ACCC is successful in establishing contraventions of ss 18, 21 and 29 of the ACL in respect to the four identified consumers, it appears that it intends to argue that relief is appropriate in respect to a class of non-party consumers. Pursuant to ss 239 and 240(3), while the ACCC must identify the relevant class of non-party consumers caused or likely to be caused to suffer loss or damage by the contravening conduct, the Court would not be required to make a finding which specifically identifies which persons are the affected non-party consumers or the nature of the loss or damage suffered or likely to be suffered. Without pre-empting any such argument, if the ACCC does intend to argue for such relief it should say so expressly, so as to ensure that Jayco is on notice.

26    I direct the ACCC to consider the case to be put and the relief being sought and to prepare any amendments to the Concise Statement it considers appropriate within 14 days. Thereafter it must consult with Jayco’s legal representatives and the parties should jointly approach chambers seeking a date for a case management hearing in early February 2019.

Costs

27    The ACCC has been successful in its application and I am not aware of any reason why costs should not follow the event. I will order Jayco to pay the ACCC’s costs of the application. If either party wishes to contend for a different costs order they must file and serve short submissions in that regard, doing so within seven days.

Associate:

Dated:    7 December 2018