Luxon v SC

Background

1. On 27 July 2015 and on the application of Mr and Mrs Luxon, Schmidt J ordered the defendants to the proceedings to give discovery (see Luxon v SC (Melbourne) Pty Limited [2015] NSWSC 1012; "Luxon v SC"). In Luxon v SC at [1] to [3] her Honour succinctly described the background to and nature of the proceedings as follows: "1 These proceedings concern a claim brought by Mr and Mrs Luxon that in June 2008, a defective component in a Sony television set caused a fire at their home, resulting in extensive damage. In November 2011, they received a notice from Sony advising them of a potential problem with a component in the TV, which had been identified might contain a component affected by a quality issue, which 'in a rare number of cases may over-heat and ignite inside the television and may possibly result in the melting of the upper rear casing of the TV'. 2 Mr and Mrs Luxon seek damages for various breaches of the Trade Practices Act 1974 (Cth), alleging that the television was not of merchantable quality and was defective; for breach of contract, alleging that the television was not fit for purpose or of merchantable quality; and in negligence, alleging failure to inspect and test the television prior to sale, or to ensure its safety. 3 By their defences, the Sony companies plead a limitation defence, although they accept that the November 2011 notice amounted to a relevant admission, that is, a previous presentation adverse to their interest in the outcome of the proceedings (see the definition of 'admission' in the Dictionary to the Evidence Act 1995 (NSW)). The limitation defence is of little relevance, given that it was not suggested that it applied to the contractual claim."
2. The first defendant to the proceedings, SC (Melbourne) Pty Limited, was not a respondent to this Motion. It appears to have been a retail outlet in Melbourne that sold televisions. It need not be mentioned further.
3. The categories of documents that Schmidt J ordered be discovered were as follows: "In the period 1 February 2005 to the date of the commencement of these proceedings: (1) All documents recording or referring to any complaints, defects, claims, recalls, or notices to customers in relation to any component which the Second Defendant on 16 November 2011 said in a rare number of cases may over-heat and ignite inside the Sony Bravia KDL-40W3100 model. (2) All documents recording or referring to any complaints, defects, claims, recalls, or notices to customers arising from or in relation to the risk or alleged occurrence of fires within or caused by any Sony Bravia television models available for purchase in Australia as at February 2008."
4. After judgment in Luxon v SC, on 11 August 2015 the Court ordered Sony to serve its verified list of documents by 22 September 2015. Sony was not able to comply with that order by that date. Instead, it served a verified list of documents on 14 October 2015. The list of documents had a solicitor's certificate attached to it stating that the deponent of the verifying affidavit, Mr David Harris, had been advised of Sony's obligations. Mr Harris is Sony's Technical Manager. Mr Harris swore the affidavit verifying the list of documents on 8 October 2015. His affidavit contained the usual form of verification, namely a statement on oath that, "I have made reasonable inquiries as to the existence and location of the documents referred to in the order for discovery dated 27 July 2015".
5. There was a complaint made by the solicitors for Mr and Mrs Luxon to Sony concerning the scope of the discovery that had been provided. On 7 December 2015, Sony's solicitors sent an email advising that further documents had been located and that Sony would file and serve another list of documents in due course. Ultimately, on or about 11 February 2016, Sony filed a supplementary list of documents. The supplementary list again contained a solicitor's certificate and an affidavit from Mr Harris verifying the discovery in the form that I have stated.
6. There was further correspondence between the parties about the scope of the discovery. On or about 18 May 2016 Sony filed a further supplementary list of documents. Again, that document had attached to it an affidavit of verification sworn by Mr Harris in the terms that I have stated, as well as a certificate from Sony's solicitor.
7. However, Mr and Mrs Luxon were not content with the discovery that had been provided by Sony. On or about 14 July 2016, they filed the Notice of Motion that I referred to earlier. In support of that Notice of Motion their solicitor, Mr Michael Nguyen, swore an affidavit on 14 July 2016 setting out the history of discovery. Annexed to Mr Nguyen's affidavit were the three lists of discovery that had been provided up to that time. Further, Annexure W to Mr Nguyen's affidavit was a schedule which addressed various documents that had to that time been discovered by Sony. This annexure identified what Mr and Mrs Luxon contended were further documents which, on a reading of the documents that were discovered, were said to be, or likely to be, in Sony's possession.
8. The most prominent theme of that schedule was a contention that, while Sony had discovered various documents recording incidents where televisions had overheated, and on occasions exhumed smoke and that persons employed by Sony within Australia had referred those incidents for investigation overseas, there did not appear to be discovered any material concerning what the results of those overseas investigations were. This is a matter to which I will return.
9. Following the filing of the motion, on or about 5 August 2016 Sony provided a second further supplementary list of documents. The list again contained a certification from Sony's solicitor and an affidavit from Mr Harris verifying the discovery.
10. On this application an affidavit was read from Sony's solicitor, Ms Heidi Hopkins. Ms Hopkins' affidavit sets out the efforts she has made over the last 12 months or so to assist and advise Sony to comply with its discovery obligations. A couple of matters should be noted about that affidavit. First, it is clear from Ms Hopkins' affidavit that she has, on a number of occasions, discharged her responsibility to advise Sony of what its discovery obligations are. Subject to one possible matter concerning whether or not Sony might be in possession of documents that are located overseas, there is no reason to doubt that Sony has been made aware of its obligations.
11. Second, notwithstanding the fact that Ms Hopkins has advised Sony and in particular Mr Harris on a number of occasions as to what its discovery obligations are, her affidavit reveals that from time to time Mr Harris has identified within Sony further repositories of documents which answer the discovery order made by Schmidt J.
12. Third, in the course of his submissions on behalf of Sony, its counsel, Mr Dodson, referred to the difficulties that his client had experienced in providing discovery given that the relevant incident giving rise to the litigation occurred in June 2008 yet proceedings were not commenced until 2014.
13. Ms Hopkins does not give any evidence to support that submission. There is no other evidence to support the submission that, perhaps through passage of time or otherwise, records that one might expect to be retained by Sony have been lost. This is particularly significant when I come to deal with the examples relied on by Mr and Mrs Luxon as they all concern matters of safety which one would expect that a company of the apparent size of Sony would be vitally concerned in retaining.
14. Fourth, Ms Hopkins' affidavit reveals that following receipt of Mr Nguyen's affidavit she gave "particular attention" to the schedule attached to Mr Nguyen's affidavit. She states that she drew the schedule to the attention of the employees of Sony. Ms Hopkins states that, having discussed the matter with Sony's employees, including Mr Harris, the result was that Mr Harris identified two further potential repositories of documents, namely, various service centres operated by Sony and call centre records. It appears that it was spreadsheets obtained from those repositories that led to the provision of the second further supplementary list.
15. Although Ms Hopkins states that she identified that the annexure to Mr Nguyen's affidavit was "substantially directed at the question of whether or not a Malaysian company and a Japanese company had provided documents to the second defendant which have not been discovered", she does not address any matter concerning Sony's response to the suggestion that those documents were not discovered.

The Affidavit Verifying Discovery

1. The considered submissions of both counsel referred the Court to the relevant authorities governing whether or not leave would be granted to a party to cross-examine the deponent of an affidavit verifying discovery. Ultimately, the principles were not much in dispute, save for one which I will identify. What I might call the traditional principle was succinctly stated by Hunter J in Proctor and Gamble v Medical Research [2001] NSWSC 183 at [64]: "I think the true rule in resolving a question of sufficiency of discovery is as follows: The affidavit verifying discovery is conclusive of the question unless it can be shown (i) by recourse to the documents discovered; (ii) from the content of the affidavit verifying discovery; (iii) from the pleadings, or "from any other source that constituted an admission of the existence of a discoverable document" that the discovery has been insufficient. Further, where the discovering party has misconceived the nature of the obligation of discovery it is not necessary to infer the existence of relevant documents other than those discovered (see Mulley v Manifold(1959) 103 CLR 341 at 343 and Falk v Finlay, Supreme Court of New South Wales, Austin J, 24 December 1999, unreported)."
2. The area of possible dispute concerns whether the relative strictness with which the Courts have approached any application for leave to go behind an affidavit verifying discovery has been relaxed since the passage of the Civil Procedure Act 2005 (NSW), specifically s 56 (see for example Barescape Pty Limited (as trustee for the V's Family Trust), v Bacchus Holdings Pty Limited as trustee for the Bacchus Holding Trust [2011] NSWSC 437 at [7] to [8] per Bergin CJ in Eq; and Con Ange v Fairfax Media Publications [2010] NSWSC 1200 at [42] per Garling J).
3. Counsel for Sony, Mr Dodson, referred the Court to a passage from the Court of Appeal's judgment in Dai v Zhu [2013] NSWCA 412 [124ff], which albeit in a different context, appeared to endorse the continuing relevance of the stricter approach that I have identified. Ultimately, I will address the matter in accordance with that strict approach.
4. Specifically, Mr Dodson submitted that the relevant test is ultimately that stated, or at least endorsed, by Hoeben J as his Honour then was, in Preston v Star City Council Pty Limited [2007] NSWSC 293 at [21], namely whether the Court "has reasonable grounds for being fairly certain that there were other relevant documents which ought to have been disclosed".
5. In that context it is appropriate to identify the significance or otherwise of the history of discovery in relation to the matter. Mr Dodson submitted that not much can be drawn from the delays that his client experienced in complying with various timetables for the provision of discovery. I agree. However, I consider that the history of discovery means that the weight that the Court might attach to the verification of the various lists of documents given by Mr Harris is substantially diminished. Further, given the repeated attempts to comply with the discovery application and the repeated identification of further repositories of documents, I do not think that one can readily conclude from the fact that Sony may have had the complaints made in Annexure W to Mr Nguyen's affidavit drawn to its attention, that it has properly satisfied itself that any safety reports are not in its possession.

The Examples

1. Counsel for Mr and Mrs Luxon, Mr Lloyd, sought to make good the proposition that the Court would be satisfied to the relevant standard that there are documents not yet discovered, not only by reference to the history of the matter but by reference to five "examples" based on the documents that were discovered. These examples were based on the first five entries in Annexure W to Mr Nguyen's affidavit.
2. The first example arose from discovered document 146 in Sony's original list of documents. This is a document entitled "CSS Escalation System". It is a form of report concerning an incident involving the overheating of a Bravia television on or about 8 October 2007, that being approximately eight months before the incident that gave rise to these proceedings.
3. The document is of a standard form which one would expect in a significant organisation when a safety complaint is raised. It reveals some form of initial inspection had been undertaken of the relevant television set. It indicates that the television unit is currently at a service centre and "the original sets be held for TSG investigation". It is not clear what "TSG" stands for. Under the heading "Response History" the document indicates that "sent report O/S", which I would infer is a reference to sending the report overseas.
4. Discovery document 148 includes an email from Mr Harris to a Mr Takayuki, who appears to be an employee of at least a related entity overseas, attaching a report of the incident. The email was sent on 11 October 2007. Within this chain of emails is an email sent by Mr Takayuki to Mr Harris on 15 October 2007 advising him to send the "defective board to TVOPA and they will check once returned on 18 October".
5. The entity "TVOPA" appears to be, or to contain, a product safety department. It is located in Malaysia. Within the first list of documents provided by Sony there is no report or document that post-dates that email in relation to that incident. The ultimate contention is that the Court should be satisfied to the relevant standard that there is or is likely to be a report from TVOPA concerning that incident in the possession of Sony.
6. The second example arises out of document 136. Document 136 includes a document headed "Reliability Incident Report" ("RIR") which is a report on an incident involving a Bravia TV on 17 December 2007 when a TV was switched on for the first time and smoke emitted from the back of the television. The date of that incident was approximately six months before the incident that gave rise to this litigation.
7. A "CSS Escalation System" form was prepared in relation to that incident which indicates that the television set was sent to "TSS". TSS appears to be an electronics firm in West Burleigh, Queensland. On 19 October 2007, they forwarded a brief note saying they had inspected the unit and located a circuit which had "burnt all the way through the board".
8. On 21 December 2007, Mr Harris sent an email to a person overseas within Sony saying, "please find attached an RIR case for your information". He inquired whether the recipient needed the "board as otherwise it would be disposed of within one month". He received an email reply saying, "I will come back to you middle of next week whether TVOPA needs the board for investigation".
9. It was contended that was the last chronological document dealing with this incident. It was submitted that the Court should be satisfied to the relevant standard that it was likely that a report upon an investigation into the burnt circuit was sent back to Sony.
10. The third example arises out of discovered documents 123 and 124. Included within discovery document 123 is an RIR dated 13 June 2008 concerning an incident on 18 April 2008, where the customer turned on the television and smoke came out of the unit. The customer noticed a burnt wiring smell and heard a crackling sound when the unit was turned on.
11. A CSS Escalation System form was provided in relation to this incident. On 13 June 2008, Mr Harris sent the RIR form by email overseas. He received a response on 19 June 2008, requesting that he send the circuit board to "TVOPA for investigation". Again Mr Lloyd submitted that the Court should be satisfied to the relevant standard that a report on that investigation was sent back to Sony. No such report has been discovered.
12. The fourth example arises out of discovered document 111. It is a CSS Escalation System document concerning an incident on 14 April 2010. The form records an incident where the customer watching the television set noticed black smoke came from the television set and heard a sparking noise. Mr Lloyd submitted that this was the only document concerning that incident. He submitted that, in light of what is revealed by the other documents, the Court should be satisfied of the existence of further documents being by way of investigation and follow-up.
13. The fifth example arises out of discovery document 103 which is another document entitled "CSS Escalation System". It concerns an incident on 15 February 2012, where a customer detected an abnormal or "weird" smell coming from a television set. The report includes an entry where a Sony employee requested that the "ASC send me a report". It is not clear who the "ASC" is but one would expect it to be some form of technical follow-up. The CSS Escalation System document also records an entry that at some point the unit had been assessed and "Ian from IBIE will send you a report on it soon". Mr Lloyd submitted that, in light of those entries, the Court should be satisfied to the relevant standard that Sony received a report from "ASC" and received a report from "IBIE".
14. Mr Lloyd also contended that this material is capable of suggesting that a flaw in Sony's discovery is a misconception as to its obligations on discovery, specifically, a misunderstanding of the extent of its obligations to obtain documents that are within its possession and control. He contended that merely because a document was overseas and perhaps located at premises or on a computer server controlled or owned by on overseas entity, did not necessarily mean that it was not within the possession and control of Sony. That may or may not be correct. It is not necessary for me to determine that on this application. As Mr Harris will be required for cross-examination that matter can be asked of him.

Assessment

1. As stated, I have approached the matter on the basis that the relevant test is that indicated by Hoeben J in Preston v Star City Council, namely, whether the Court has reasonable grounds for being fairly certain that there are other relevant documents which ought to have been disclosed. The history of discovery does not give me much confidence that the existing lists represent a complete answer to Sony's discovery obligations. Further, that history does not give me much confidence that, even if the complaints made in Annexure W to Mr Nguyen's affidavit were brought to Sony's attention, it has made the relevant inquiries to ascertain whether it is in possession of the type of reports the documents suggest it received. Most importantly, a consideration of the discovered documents means the Court has reasonable grounds for being fairly certain that there are other relevant documents which ought to have been disclosed.
2. The fifth example specifically identifies two reports that were due to be provided to Sony and there is no explanation for why they have not been discovered. The first two examples reveal reasonably serious potential safety incidents which were the subject of specific referrals to the entity TVOPA in Malaysia, accompanied with a clear expectation that a response would be received. It is not a matter of simply saying that it seems likely that Sony would have received a response in these circumstances. Instead, in circumstances where a safety concern is raised and where officers within Sony have specifically sought an investigation by that overseas entity, I am more than satisfied that there are reasonable grounds for being fairly certain that Sony received documents from that overseas entity reporting on the outcome of its investigation into the relevant incidents. There is no basis in the material for believing that having received those reports somehow they have been lost and cannot on appropriate search be found.
3. Accordingly, I will grant the relief sought in the Notice of Motion. I think the appropriate course will be to make the orders but to list the matter for mention before a Registrar in the short-term to allow that date to be fixed. I can indicate that I consider that the cross-examination should occur before a Judge or an Associate Judge. The utility of this exercise requires that there be a judicial officer who, following the questioning of Mr Harris, will be able to make reasonably focused orders for supplementary discovery if that is required. Accordingly, the Court will make orders 1 and 2 in the Amended Notice of Motion filed 23 September 2016.
4. [Discussion re dates and submissions on costs]
5. Accordingly, the Court orders that: 1. David Harris, Technical Manager employed by the Second Defendant, is to attend the Supreme Court of NSW to give evidence on a day assigned by the Court. 2. Leave for the First and Second Plaintiffs to cross-examine David Harris in respect of his Affidavit sworn 20 July 2015 and Affidavits of Discovery sworn 8 October 2015, 10 February, 18 May and 5 August 2016. 3. Second defendant to pay costs of the plaintiff's motion up to today. 4. Reserve the costs of the cross-examination of Mr Harris. 5. Matter listed for directions before the Common Law Registrar on 6 October 2016.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 05 October 2016