Adam Peter Rowe Plaintiff v Toyota Motor Corporation Australia Limited Defendant
[2024] VSC 269
•22 May 2024
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S ECI 2022 00313
BETWEEN:
| ADAM PETER ROWE | Plaintiff |
| v | |
| TOYOTA MOTOR CORPORATION AUSTRALIA LIMITED | Defendant |
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JUDGE: | Gobbo AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 2 February 2024 |
DATE OF RULING: | 22 May 2024 |
CASE MAY BE CITED AS: | Rowe v Toyota Motor Corporation Australia Limited (discovery) |
MEDIUM NEUTRAL CITATION: | [2024] VSC 269 |
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PRACTICE AND PROCEDURE – Group proceeding – Discovery of documents – Discovery categories – Discovery of documents directly relevant to the issues in the pleadings – Discovery to assist expert evidence – Discovery when not specifically required by expert.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr G Dalton SC with Mr J Waters of counsel | Maddens Lawyers |
| For the Defendant | Mr P Liondas SC with Ms X Teo of counsel | Clayton Utz |
HER HONOUR:
This ruling concerns the discovery to be made by the defendant, Toyota Motor Corporation Australia Limited (ACN 009 686 097).
On 17 November 2023, Nichols J made orders (’17 November Orders’) for the defendant to make discovery and give inspection of five classes of documents in respect of each of the Affected Vehicles.[1] Paragraph 4 of the 17 November Orders referred to me the question of whether the defendant ought to make discovery and give inspection of a further three classes of documents in respect of each of the Affected Vehicles, being:
[1]The proceeding concerns nine models of affected vehicles that were imported by the defendant at various points from 2010 onwards. The Affected Vehicles are those identified in the plaintiff’s further amended statement of claim filed on 20 November 2023 (‘FASOC’), [53].
(a) documents that describe the design, operation and effect of the emissions control system relevant to each of the Affected Vehicles (insofar as such documents are not covered by paragraphs 2(a) to 2(e) of the 17 November Orders);
(b) the source code by which the Engine Control Unit (‘ECU’) controls the emissions control system, including documents explaining the operation of such code and any necessary software or hardware to review such code and documents; and
(c) documents that record consideration as to whether the Affected Vehicles comply with the emissions limits in UN EC Regulation 83 (Australian Design Rule 79 (‘ADR 79’) Appendix A) and/or contain a defeat device.
At the hearing before me, the plaintiff pressed for only one of the above classes of documents being:
…the source code by which the ECU controls the emissions control system, including documents explaining the operation of such code and any necessary software or hardware to review such code and documents, including all revisions of such software and documentation,[2]
(‘Source Code and Documents’).
[2]This class of documents reflects that sought by the plaintiff in its submissions filed on 19 January 2024 (‘Plaintiff’s Submissions’), with the underlined text added to the class defined in paragraph 4(b) of the Order of Nichols J made on 17 November 2023.
The plaintiff otherwise reserves his right to pursue the remaining two classes of documents following his review of the documents produced by the defendant pursuant to paragraph 2 of the 17 November Orders.
The plaintiff relies upon the following material:
(a) affidavit of Kathryn Amy Emeny sworn on 19 January 2024; and
(b) outline of submissions filed on 19 January 2024.
The application for further discovery is opposed by the defendant. The defendant relies upon the following material:
(a) affidavit of Deborah Anne Polites sworn on 25 January 2024; and
(b) outline of submissions filed on 25 January 2024.
Background
The threshold issue in this case is whether the Affected Vehicles contain a defeat device within the meaning of ADR 79.
Broadly, the plaintiff’s case is that the Affected Vehicles, manufactured by the defendant and supplied to group members, contain a defeat device such that they do not comply with ADR 79. The plaintiff alleges that this gives rise to four causes of action, namely, that the defendant:
(a) supplied goods that did not comply with an applicable safety standard in breach of s 65C of the Trade Practices Act 1974 (Cth) (prior to 1 January 2011) and s 106 of the Australian Consumer Law (‘ACL’) (from 1 January 2011);
(b) failed to comply with the statutory guarantee of acceptable quality in s 54 of the ACL;
(c) failed to comply with the statutory guarantee in s 59 of the ACL; and
(d) engaged in misleading and deceptive conduct by making certain representations in contravention of s 18 of the ACL.[3]
[3]Plaintiff’s Submissions, [3].
ADR 79 is a national standard for the purpose of the Motor Vehicle Standards Act1989 (Cth). If vehicles of a particular make and model do not contain a defeat device, the premise of the plaintiff’s claims in connection with the Affected Vehicles of that make and model will fall away. Conversely, if a defeat device within the meaning of ADR 79 does exist, then it will be necessary to consider whether the ACL has been contravened and, if so, the consequences which follow from that contravention.
The foundational premise of the plaintiff’s case regarding the existence of a defeat device is that set out at paragraphs 42 and 49 of his further amended statement of claim dated 20 November 2023 (‘FASOC’).
The meaning of defeat device is set out at paragraph 26 of the FASOC in the following terms:
At all material times, ADR 79 defined a defeat device to mean “any element of design which senses temperature, vehicle speed, engine rotational speed, transmission gear, manifold 9 vacuum or any other parameter for the purpose of activating, modulating, delaying or deactivating the operation of any part of the emission control system, that reduces the effectiveness of the emission control system under conditions which may reasonably be expected to be encountered in normal vehicle operation and use. Such an element may not be considered a defeat device if:
(a)the need for the device is justified in terms of protecting the engine against damage or accident and for safe operation of the vehicle; and
(b)the device does not function beyond the requirements of an engine starting; or
(c)conditions are substantially included in the Type I or Type VI test procedures.”
Particulars
i. ADR 79/02, 79/03 and 79/04, Appendix A, rule 2.16.
ii. The Type I and Type VI test procedures are the test procedures described in Annexure 4 and Annexure 8 of ADR 79/02;
iii. The Type I and Type VI test procedures are the test procedures described in Annexure 4A and Annexure 8 of ADR 79/03 and 79/04.
Paragraph 42 of the FASOC is in the following terms:
In each Affected Vehicle, the ECU controls the position of the EGR valve such that:
(a)the EGR valve is at its maximum open position when the throttle is idle;
(b) the EGR valve is fully closed when the throttle position is at or above approximately 42% of its maximum.
Paragraph 49 of the FASOC is in the following terms:
In each Affected Vehicle, the ECU controls the fuel injection timing such that:
(a) when the throttle position is less than approximately 42%, the fuel injecting timing is between approximately 1 and 7 degrees crank angle after “top dead centre” (being the point at which the piston is at the top of the cylinder, positioned farthest from the crankshaft); and
(b) when the throttle position is at or greater than approximately 42%, then during the period that it remains so, the fuel injection timing is advanced to be between about 1.5 degrees and 8 degrees crank angle before “top dead centre”.
It is these two specific matters that are each alleged to constitute an element of design, which is the device constituting a ‘defeat device’ within the meaning of ADR 79.
Critically, in respect of this application, it is only these elements of design that are alleged to be a defeat device and which are to be the subject of the discovery sought.
The plaintiff seeks discovery and inspection of software code used by the defendant’s parent company, Toyota Motor Corporation (‘TMC’), and related entities including Toyota Industries Corporation (‘TICO’), to program each of the Affected Vehicles’ ECUs. More particularly, the plaintiff seeks discovery and inspection of the software that controls the Affected Vehicles’ emissions control systems. The plaintiff seeks a Sabre order requiring that the defendant take all reasonable steps to obtain access to documents held by TMC and TICO.
The plaintiff acknowledges that the Source Code and Documents may have been designed, created and implemented by third party-suppliers to TMC and TICO, such as the Denso Corporation, and there are likely to be different versions of each set of Source Code and Documents for each of the Affected Vehicles. For this reason, all versions are sought in respect of each of the years of each of the Affected Vehicles.[4]
[4]Plaintiff’s Submissions, [7].
As to the document component of the Source Code and Documents, the plaintiff seeks discovery of the documents that describe the operation of the source code and calibration files. The plaintiff says that such documents may include ‘function sheets’ or ‘strategy books’ and descriptions of the parameters that can be changed in the calibration file and descriptions of control strategies of the ECU and how the software works. The plaintiff seeks discovery of such documents in so far as they relate to the emissions control system.[5]
[5]Prior to the hearing, the plaintiff also sought that if these documents existed and were in Japanese, that the defendant arrange for the documents to be translated into English. At the hearing, the plaintiff no longer pressed for an order that the documents be provided by the defendant translated into English.
Conversely, the defendant says that the question of whether the ECU controls the Exhaust Gas Recirculation valve (‘EGR Valve’) and Fuel Injection Timing in the way alleged by the plaintiff is a matter that ought to be able to be demonstrated by testing the functioning of those features. The defendant says that the Source Code is not relevant to, and has never been suggested as being relevant to, establishing whether as a matter of objective fact the Affected Vehicles function in the manner alleged.[6]
[6]Defendant’s Submissions, [7].
The defendant further says that it is not suggested that an assessment of the other positive element of the allegation of the existence of a defeat device (namely that the identified elements of design reduce the effectiveness of the Engine Control System under conditions which may reasonably be expected to be encountered in normal vehicle operation use) require the Source Code. The defendant contends this is unsurprising as the allegation by the plaintiff requires an assessment of the effect of the alleged element of design.[7]
[7]Ibid, [8].
The defendant otherwise maintains that the Source Code and Documents are amongst the most valuable intellectual property held by manufacturers.[8] The defendant contends that the disclosure of the Source Code and Documents ought only occur if it is imperative for an opponent in litigation to utilise such information in the conduct of the litigation, and then only on appropriate terms as to protection of confidentiality. The defendant says there is presently no such imperative and that no suitable arrangements for confidentiality have been put in place.
[8]Affidavit of Deborah Anne Polites sworn on 25 January 2024, [6] (‘Polites Affidavit’).
Prior case management
There have been two case management conferences (‘CMC’) in this proceeding: the first on 3 March 2023 (‘First CMC’) and the second on 7 July 2023 (‘Second CMC’). A third CMC was scheduled for 17 November 2023 but was vacated by Nichols J as the parties consented to procedural orders.
Prior to each of the three CMCs, the parties exchanged correspondence which informed the issues to be addressed at each CMC. The parties also exchanged correspondence following each CMC.[9] It is not necessary to recite the substance of that correspondence or the matters that were raised at the First CMC or Second CMC, which information was in evidence before me,[10] save to note that:
[9]Ibid, [10].
[10]Ibid, [10]-[13], [18]-[21], [27], and [29].
(a) on 15 November 2023, the plaintiff agreed that any order relating to testing to be undertaken by his expert, Mr Juston Smithers (‘Mr Smithers’), was expressly limited to the pleadings;[11]
[11]Ibid, [29].
(b) there have been discussions between the parties, and with the Court, as to the appropriate way to progress the question of whether there is a defeat device. The materials evidencing these discussions and consideration of this issue show that:
(i) from the outset of the proceeding, the defendant has identified the lack of adequate particulars or explanation of the plaintiff’s case, and has maintained that it does not understand the basis of the foundational premise on which the plaintiff’s case is based because it says that it is not aware of the Affected Vehicles functioning in the way alleged;
(ii) the defendant has pressed for further and better particulars and the production of documents underpinning the plaintiff’s technical allegations;
(iii) in the absence of the plaintiff providing a sufficient technical explanation or the documents underpinning his technical allegations, the defendant proposed that the next step in the proceeding should be for the plaintiff to file his expert evidence;
(iv) in response, the plaintiff agreed to provide further details in relation to technical aspects of his allegations as to the existence of a defeat device, so that the defendant could properly understand the basis for the allegations and the next steps in the proceeding could properly be considered. The defendant accepted this proposal, on the express basis that substantive explanations would be provided by the plaintiff in response to the issues raised by the defendant. The plaintiff was granted 10 weeks in which to provide those further details following the Second CMC on the basis that comprehensive explanations would be provided;
(v) when the plaintiff provided the required explanations, 10 weeks after the Second CMC, the defendant contended that the letters produced were in substance refusals to provide the required details. It was in this context that the parties then agreed that the next step in the proceeding should be the preparation of an expert report by the plaintiff’s expert, Mr Smithers, in relation to the plaintiff’s pleaded technical allegations;[12] and
[12]Defendant’s Submissions filed on 25 January 2024, [9] (‘Defendant’s Submissions’). See also Polites Affidavit, Exhibit DP-01, 46-47 [3], 51 [4], 76 [2], 93-94, 123 [4], 126 [15], 127 [17], 136 (lines 26-33), 142 (lines 8 -21), 147 (lines 16-18), 151 (lines 20-27), 164 (lines 20-23), 171-172, 175-178, 179-180 [3(c) and 3(e)], 188 [4].
(vi) subsequently, the plaintiff proposed and the defendant agreed (as a practical way of it being properly informed as to the plaintiff’s case) that the next appropriate step is for the plaintiff to file an expert report in relation to the testing of two Affected Vehicles;[13]
(c) the 17 November Orders record the parties’ consent to orders that:
By 29 March 2024, the plaintiff file and serve any expert report from Juston Smithers in relation to the testing of two Affected Vehicles, with such testing and report to be in respect of the plaintiff's allegations that the Affected Vehicles contain a ‘defeat device’ within the meaning of ADR 79 as alleged in paragraphs 35 to 52 of the Amended Statement of Claim.[14]
[13]Polites Affidavit, Exhibit DP-01, 188.
[14]Ibid, [10].
The plaintiff’s arguments
Before me, the plaintiff’s evidence is that, informed by Mr Smithers and based on his experience and study, the plaintiff considers that:[15]
[15]Affidavit of Kathryn Amy Emeny sworn on 19 January 2024, [8] (‘Emeny Affidavit’).
(a) the Source Code and Documents are likely held by TMC and TICO;
(b) the Source Code and Documents may have been designed, created, and implemented by third party-suppliers to TMC and TICO, such as the Denso Corporation;
(c) in respect of the software component of the Source Code and Documents:
(vii) the source code (once compiled) runs the emissions control system, among other things, on the Affected Vehicles’ ECU. Once compiled and loaded on to the ECU, the source code becomes a binary file (typically with file type ‘.bin’ or ‘.hex’);
(viii) the source code or binary file requires specialised software to view, operate and adjust calibration parameters. An ‘.A2L’ file, specific to the source code, enables interpretation and analysis of the source code on an appropriate viewer. One such ECU source code viewer is called ‘INCA’ (an acronym for ‘Integrated Calibration and Application Tool’) developed by ETAS Group, although there are others, including ‘Meister’ developed by the Denso Corporation; and
(ix)a calibration file, or files, consists of a set of calibration parameters that can be changed by the manufacturer or third-parties;
(d) in respect of the documents component of the Source Code and Documents, manufacturers such as the defendant, TMC and/or TICO, typically have a suite of documents that describe the operation of the source code and calibration files, and such documents may include ‘function sheets’ or ‘strategy books’ and descriptions of the parameters that can be changed in the calibration file and descriptions of control strategies of the ECU and how the software works. Such documents may be in Japanese;
(e) the Source Code and Documents are likely to be different for each of the Affected Vehicles, and there may be different versions of the Source Code and Documents for different years of production or by way of revisions by the defendant, TMC and/or TICO;
(f) reviewing the Source Code and Documents will assist in understanding the operation of the emissions control system and the identification of any system or device that may be a potential defeat device;
(g) the understanding gained from the Source Code and Documents can then be compared against information obtained during the testing of the Affected Vehicle to determine the output of the emissions control system and the effect of any identified defeat device;
(h) it is likely that testing of two Affected Vehicles (as defined in paragraph 53 of the FASOC) for potential defeat devices will reveal results that are not explicable by testing alone, and may be explicable with knowledge of the design and operation of the complex and multi-parameter emissions control system (which is controlled by the vehicles’ ECU software). The Source Code and Documents may be required to explain why the Affected Vehicles are producing certain results;
(i) the Affected Vehicles in this proceeding include at least some vehicles that were the subject of Williams v Toyota Motor Vehicle Corporation Australia [2022] FCA 344 (initial trial) and (2023) 408 ALR 582 (appeal) (‘Williams Proceeding’). The plaintiff contends that the Source Code and Documents are relevant to demonstrating whether, and if so how, the emissions control systems were changed by the 2018 Production Change, the 2020 Field Fix and the 2020 Production Change as referred to in the Williams Proceeding; and
(j) following the testing of the Affected Vehicles, and detection of any defeat device, the analysis of the Source Code and Documents will assist in providing further detail as to the potential rectification options for any defeat devices detected (emphasis added).[16]
[16]Ibid, [8].
The plaintiff further contends that the Source Code and Documents are relevant to the operation of the emissions control system for the following five reasons:
(a) first, the source code, and or documentation, itself may reveal the existence of a defeat device in the Affected Vehicles. From discussions with Mr Smithers, the plaintiff says that this is likely to be the case based on his experience with other vehicle emissions cases;
(b) second, even if the Source Code and Documents do not by themselves directly reveal the existence of a defeat device, necessarily they must explain how the ECU controls the emissions control system (including in relation to the EGR Valve and Fuel Injection Timing). The plaintiff points to the defendant’s defence where he says that the defendant admits that the ECU controls the EGR Valve, which it admits affects the Affected Vehicles’ emissions of Nitrogen Oxides (‘NOx’) and that the EGR Valve is controlled by seven parameters. From this, the plaintiff says that the Source Code and Documents are necessary to explain how the seven parameters influence the control of the EGR Valve by the ECU, the interrelationship between the parameters, and to thereby explain the defendant’s allegations as to the operation of the emissions control system. Similarly, with respect to the Fuel Injection Timing, the plaintiff points to the defendant’s apparent admission that it is controlled by the ECU on the basis of seven parameters (not all of which are common to the EGR Valve control). Again, the plaintiff submits that discovery of the Source Code and Documents is necessary to explain how the seven parameters influence the control of the Fuel Injection Timing by the ECU. While the plaintiff concedes that some diagrams produced by the defendant for inspection describe aspects of the operation of the EGR Valve and Fuel Injection Timing in broad terms, the plaintiff says that they do not do so in the detail necessary to understand how these systems work;
(c) third, the Source Code and Documents are necessary to explain test results that would otherwise be inexplicable. The plaintiff’s testing of the Affected Vehicles includes attempting to isolate the operation of each of the parameters pleaded by the defendant to determine its effect on the emissions control system and NOx emissions. The vehicles tested are treated as ‘black boxes’ for which the relevant consequences of known inputs are recorded. The plaintiff submits that based on discussions with Mr Smithers, there are likely to be results and behaviours of the Affected Vehicles’ emissions control system and NOx emissions that cannot be fully explained from the testing data alone. The plaintiff maintains that the Source Code and Documents are required to explain why the Affected Vehicles are producing certain results;[17]
(d) fourth, it is possible that there may be an interaction between vehicles that were changed as part of the Williams Proceeding affecting Toyota’s 1GD engine in relation to Diesel Particulate Filter issues, with the issues in the present case, as the Affected Vehicles include at least some of the vehicles in the Williams Proceeding. The plaintiff says that the Source Code and Documents are likely to explain how the ECUs of some Toyota Hilux, Toyota Landcruiser Prado, and Toyota Fortuner vehicles (all of which are Affected Vehicles in this proceeding) were changed in attempting to remedy the defect that was the subject of the Williams Proceeding. Again, based on discussions with Mr Smithers, the plaintiff says that it is likely that the effect of the various ECU changes, known as the 2018 Production Change, the 2020 Field Fix and the 2020 Production Change, will be noted in the Source Code and Documents and their effect, if any of the issues in this proceeding can be identified; and
(e) fifth, the Source Code and Documents are necessary to understand potential rectification of the Affected Vehicles that may be available, which may affect assessment of loss and damage.[18]
[17]Plaintiff’s Submissions, [11].
[18]Ibid, [12].
The defendant’s arguments
The defendant’s primary position is that plaintiff has acknowledged that Mr Smithers does not require the Source Code and Documents to undertake his testing,[19] and consistently with the 17 November Orders, Mr Smithers is required to provide his expert report prior to any further discovery being given, and without the provision of the Source Code and Documents.[20]
[19]Emeny Affidavit, Exhibit KAE-4, 73.
[20]Defendant’s Submissions, [12].
The defendant contends that until Mr Smithers reports on the results of his testing, the appropriate next steps in the proceeding cannot be determined. The defendant submits that one possibility is that after Mr Smithers’ testing and report the parties may be in a position to agree a course (e.g. a preliminary question) that might result (depending on the answer) in finalisation of the proceeding without the need for any further discovery or evidence.[21]
[21]Ibid, [13].
The defendant contends that its position is consistent with the history of the proceeding and the 17 November Orders requiring the plaintiff to provide Mr Smithers’ report.[22] Moreover, the defendant says that the position is consistent with that advanced in the CMCs and correspondence which led to the 17 November Orders being made by consent.
[22]Ibid, [14]
The defendant maintains that it is difficult to know the real issues in dispute until the plaintiff has provided further explanation of his case which the plaintiff has agreed should be provided. For example, the defendant says that once it understands the basis on which the plaintiff alleges that the relevant element of design existed (i.e. the basis for the matters pleaded at paragraphs 42 to 45 and 48 to 49 of the amended statement of claim filed on 8 March 2023) it is possible that the issues between the parties can be narrowed.[23]
[23]Defendant’s responsive memorandum for the second case management conference, [15(a)].
The defendant says that it is common ground that the plaintiff does not require discovery in order to provide the further explanation of technical issues which he has agreed to. Further still, the defendant says that the plaintiff has not explained why discovery would be properly required for the purpose of the preparation of expert evidence on technical issues.[24]
[24]Ibid, [17].
In the context of Mr Smithers’ testing and report, the plaintiff contends that the Source Code and Documents should be discovered because it is ‘necessary to explain test results that would otherwise be inexplicable.’[25] Against that proposition, the defendant raises two practical matters in opposition. First, Mr Smithers’ report was due to be served by 29 March 2024. The defendant says that on any view, the Source Code and Documents would not be available nor able to be considered in the context of that report.[26] Second, the defendant says that it is expected that Mr Smithers has completed or is close to completing his testing of the two Affected Vehicles. He was due to undertake testing in December 2023, but that was delayed to January 2024.[27]
[25]Plaintiff’s Submissions, [11(c)].
[26]Defendant’s Submissions, [16].
[27]Ibid, [17].
Additionally, the defendant contends that the plaintiff’s submissions overstate the effect of the vague and general evidence filed on this application. In this regard, the defendant submits that as at 25 January 2024, Mr Smithers is said to hold the view that the Source Code and Documents ‘may be required to explain why the Affected Vehicles are producing certain results’.[28] Notwithstanding the time that has passed, and progress Mr Smithers has made with respect to testing of the two Affected Vehicles, the defendant submits that there is no evidence that Mr Smithers actually requires these documents to enable him to explain any results.
[28]Ibid, [18]; Emeny Affidavit, [8(h)].
The defendant contends that the plaintiff has not filed any evidence to the effect that the Source Code and Documents are presently required for the purpose of enabling Mr Smithers to prepare his report. The defendant says that this has never been the case and that the plaintiff’s evidence amounts to no more than speculation that at some stage in the future – after Mr Smithers’ report has been provided – the Source Code and Documents may be required. Whether this is the case, the defendant says further discovery should await Mr Smithers’ report, and proper evidence (if discovery is pressed) as to why the Source Code and Documents are necessary in light of the testing and report prepared.[29]
[29]Defendant’s Submissions, [18].
To this end, the plaintiff’s submissions at paragraph 11(c) that ‘the Source Code and Documents are necessary to explain test results that would otherwise be inexplicable’ together with the remaining matters that appear under paragraph 11(c) of the plaintiff’s submissions are not supported by any evidence.[30]
[30]Ibid, [19].
The defendants contend that it is unclear how the Source Code and Documents are required to prove the specific allegations made by the plaintiff in the FASOC. Further, if such documents were to be discovered, the plaintiff has adduced no evidence as to Mr Smithers (or any other individual) that would enable an assessment to be made as to whether he (or they) should be permitted to inspect such documents. For example, while Mr Smithers has (apparently) been retained as an independent expert in this case, it is apparent that:
(a) his company, 44 Energy, provides consulting, testing and engineering services to entities in the automotive industry. Mr Smithers is the Managing Director of 44 Energy. The defendant says that it can therefore be inferred that Mr Smithers oversees and undertakes such work for his commercial clients. His ‘bio’ on the 44 Energy website discloses that he works in ‘product development’ including ‘through R&D, field demonstrations, regulatory approval, and commerciali[s]ation’, and that he ‘leads 44 Energy’s consulting practice where he works directly with clients on a variety of projects’. In this regard, he is properly considered to be a trade rival of an entity such as the defendant. For example, the 44 Energy website discloses that it ‘serves’ industry, government agencies, private equity and research institutions, and that it advises its clients in relation to a range of commercial matters;
(b) there has been no communication as to what security arrangements would be put in place to ensure that no other persons at 44 Energy (aside from those working with Mr Smithers) would be able to access any source code;
(c) Mr Smithers is not based in Australia and hence may not readily be amenable to sanction by the Court if any information was misused or not properly protected;
(d) Mr Smithers has previously acted as a consulting technical expert in cases against Toyota; and
(e) Mr Smithers has been retained to assist applicants in other group proceedings to obtain funding and also to investigate various technical matters.[31]
[31]Ibid, [20].
In these circumstances, the defendant submits that sufficient information ought to be provided to enable the Court to assess whether inspection of the Source Code and Documents should be granted to Mr Smithers if discovery is ordered. This is especially so when the plaintiff has been less than forthcoming about Mr Smithers’ existing involvement to date in this proceeding.[32]
[32]Ibid, [21].
Analysis and consideration
The power to order discovery and inspection of documents is not part of the inherent jurisdiction of the Court.[33]
[33]State of Victoria v Intralot Australia Pty Ltd [2015] VSCA 358, [49]–[52] (Beach, Kyrou JJA and Cavanough AJA).
Part 4.3 of the Civil Procedure Act 2010 (Vic) (‘CPA’) deals with disclosure and discovery. Section 54 of the CPA links the discovery of documents to the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘Rules’):
Discovery of documents to be in accordance with rules of court
Unless a court otherwise orders, discovery of documents in a civil proceeding is to be in accordance with the rules of court.
Unlike the Rules, the CPA does not define discovery. Section 55 of the CPA concerns Court orders for discovery:
Court orders for discovery
(1)A court may make any order or give any directions in relation to discovery that it considers necessary or appropriate.
(2)Without limiting subsection (1), a court may make any order or give any directions—
(a)requiring a party to make discovery to another party of—
(i)any documents within a class or classes specified in the order; or
(ii)one or more samples of documents within a class or classes, selected in any manner which the court specifies in the order;
(b)relieving a party from the obligation to provide discovery;
(c)limiting the obligation of discovery to—
(i)a class or classes of documents specified in the order; or
(ii)documents relating to one or more specified facts or issues in dispute; or
(iii)some or all of the issues set out in a statement of issues filed in the proceeding;
(d)that discovery occur in separate stages;
(e)requiring discovery of specified classes of documents prior to the close of pleadings;
(f)expanding a party’s obligation to provide discovery;
(g)requiring a list of documents be indexed or arranged in a particular way;
(h)requiring discovery or inspection of documents to be provided by a specific time;
(i)as to which parties are to be provided with inspection of documents by another party;
(j)relieving a party of the obligation to provide an affidavit of documents;
(k)modifying or regulating discovery of documents in any other way the court thinks fit.
The powers in s 55 of the CPA are limited by the requirement in the overarching purpose that discovery relate to the real issues in dispute between the parties. The broad discretion conferred by s 55 of the CPA must be interpreted and exercised to give effect to the overarching purpose in s 7 of the CPA:[34]
[34]Civil Procedure Act 2010 (Vic) s 8.
Overarching purpose
(1)The overarching purpose of this Act and the rules of court in relation to civil proceedings is to facilitate the just, efficient, timely and cost‑effective resolution of the real issues in dispute.
(2)Without limiting how the overarching purpose is achieved, it may be achieved by—
(a)the determination of the proceeding by the court;
(b)agreement between the parties;
(c)any appropriate dispute resolution process—
(i)agreed to by the parties; or
(ii)ordered by the court.
Relevantly, s 9(1) of the CPA provides:
In making any order or giving any direction in a civil proceeding, a court shall further the overarching purpose by having regard to the following objects—
(a) the just determination of the civil proceeding;
(b)the public interest in the early settlement of disputes by agreement between parties;
(c) the efficient conduct of the business of the court;
(d) the efficient use of judicial and administrative resources;
(e) minimising any delay between the commencement of a civil proceeding and its listing for trial beyond that reasonably required for any interlocutory steps that are necessary for—
(i) the fair and just determination of the real issues in dispute; and
(ii) the preparation of the case for trial;
(f) the timely determination of the civil proceeding;
(g) dealing with a civil proceeding in a manner proportionate to—
(i) the complexity or importance of the issues in dispute; and
(ii) the amount in dispute.
Rule 29.01 of the Rules also dictates the scope and limits of discovery to be provided by a party, subject to a Court order to the contrary.
Rule 29 of the Rules governs discovery of documents in proceedings. The scope of discovery is as set out in r 29.01.1 of the Rules:
Scope of discovery
(1)Unless the Court otherwise orders, discovery of documents pursuant to this Order is limited to the documents referred to in paragraph (3).
(2)Paragraph (1) applies despite any other rule of law to the contrary.
(3)Without limiting Rules 29.05 and 29.07, for the purposes of this Order, the documents required to be discovered are any of the following documents of which the party giving discovery is, after a reasonable search, aware at the time discovery is given—
(a)documents on which the party relies;
(b)documents that adversely affect the party’s own case;
(c)documents that adversely affect another party’s case;
(d)documents that support another party’s case.
Rules 29.05 and 29.05.2 of the Rules empower the Court to limit discovery that would otherwise be required, and to expand the obligation to give discovery beyond that required by r 29.01.1 of the Rules. Rule 29.07 of the Rules provides for discovery before the close of pleadings.
Rule 29.08 of the Rules governs orders for particular discovery:
Order for particular discovery
(1)This Rule applies to any proceeding in the Court.
(2)Where, at any stage of a proceeding, it appears to the Court from evidence or from the nature or circumstances of the case or from any document filed in the proceeding that there are grounds for a belief that some document or class of document relating to any question in the proceeding may be or may have been in the possession of a party, the Court may order that party to make and serve on any other party an affidavit stating—
(a)whether that document or any, and if so what, document or documents of that class is or has been in that party’s possession; and
(b)if it has been but is no longer in that party’s possession, when the party parted with it and that party's belief as to what has become of it.
Discovery is defined in the Rules to mean:
“discovery” includes discovery and inspection of documents and discovery by written interrogatories or oral examination, and make discovery of documents means make an affidavit of documents complying with the requirements of these Rules, file the affidavit and serve a copy on the party or person entitled to the discovery.
In Liesfield v SPI Electricity Pty Ltd(Ruling No 1),[35] the Court considered the scope of both s 55(1) of the CPA and O 29 of the Rules:
These provisions make clear that the Court’s powers in relation to discovery are broad. In sum, both the Act and Rules mandate that any order concerning discovery should be directed to finding the most efficient, effective and economical management of the discovery exercise, bearing in mind the nature and complexity of the trial.[36]
[35](2013) 43 VR 493.
[36]Ibid, 500 [25].
In Volunteer Fire Brigades Victoria v CFA (Discovery Ruling),[37] J Forrest J recognised the broad scope of the Court’s powers in relation to discovery provided by ss 7 and 55 of the Act and r 29 of the Rules. His Honour referred, in relation to the overarching purpose of the Act and the limits to the broad discretion it provides, to Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited,[38] where the High Court said in relation to the corresponding New South Wales legislation:
That purpose may require a more robust and proactive approach on the part of the courts. Unduly technical and costly disputes about non-essential issues are clearly to be avoided. However, the powers of the court are not at large and are not to be exercised according to a judge’s individualistic idea of what is fair in a given circumstance. Rather, the dictates of justice referred to in s 58 require that in determining what directions or orders to make in the conduct of the proceedings, regard is to be had in the first place to how the overriding purpose of the CPA can be furthered, together with other relevant matters, including those referred to in s 58(2). The focus is upon facilitating a just, quick and cheap resolution of the real issues in the proceedings, although not at all costs. The terms of the CPA assume that its purpose, to a large extent, will coincide with the dictates of justice.[39]
Applying that reasoning to the case before him, J Forrest J said (citations omitted):
The overriding consideration of the CPA is to ensure that the parties receive a fair trial i.e. ‘a just resolution’ to use the words of the CPA. However, a fair trial is not a perfect trial. It is, rather, the best trial that a court can provide to the parties within reason and in proportion to the issues in dispute and the court’s resources. Accordingly, demands for discovery of documents which are peripheral to the central issues cannot be entertained. The Court is obliged to focus on the central issues as best it can be determined at this point in the litigation.[40]
[37][2016] VSC 573 (‘Volunteer Fire Brigades’).
[38](2013) 250 CLR 303.
[39]Ibid, 323 [57] (French CJ, Kiefel, Bell, Gageler and Keane JJ).
[40]Volunteer Fire Brigades (n 37), [34].
J Forrest J went on to state that:
The approach to discovery has changed markedly in the past half-decade or so. The Peruvian Guano test has been consigned to the dustbin. The CPA now requires a court to cut through the layers of interminable argument and nit picking which had traditionally accompanied discovery contests.[41]
[41]Ibid, [46].
In Cargill Australia Ltd v Viterra Malt Pty Ltd (No 9),[42] Elliott J said, to like effect:
The relevance of documents to the proceeding is a threshold factor to be considered. If documents sought to be discovered are not relevant to the proceeding then there is no basis for ordering their production.[43]
[42][2018] VSC 433.
[43]Ibid, [40].
In in Bogan & Anor v The Estate of Peter John Smedley (deceased) & Ors,[44] Steffensen AsJ said (citations omitted):
[44][2022] VSC 645.
6.The principles with respect to discovery are clear. Discovery is to be made of documents which are directly relevant to matters in issue in the proceedings, and that is determined by reference to the pleadings.
7.Section 55(1) of the Civil Procedure Act 2010 (Vic) gives the court an overriding discretion to ‘make any order or give any directions in relation to discovery that it considers necessary or appropriate.’ As set out in Volunteer Fire Brigades Victoria Inc v Country Fire Authority:
... demands for discovery of documents which are peripheral to the central issues cannot be entertained. The Court is obliged to focus on the central issues as best it can be determined at this point in the litigation.
8.Discovery orders should be directed to finding the most efficient, effective and economical management of the discovery exercise, bearing in mind the nature and complexity of the trial.[45]
[45]Ibid, [6]-[8].
The authorities support the principle that discovery is of documents that relate to a question or fact in issue on pleadings between parties. The CPA obliges the Court to focus on the central issues as best it can be determined at this point in the litigation. Demands for discovery of documents which are peripheral to the central issues will not be entertained. Provided the document in the possession of a party goes to a real (and not peripheral) issue to be determined at the trial then, absent any proportionality consideration, it is relevant and ought to be discovered.
Further, and relevant to the application before me, discovery involves compulsory disclosure of often confidential information and documents. ‘The public interest in privacy and confidence demands that the compulsion should not be pressed further than the course of justice requires.’[46]
[46]Riddick v Thames Board Mills Ltd [1977] QB 881, 896 (Lord Denning MR) (‘Riddick’); Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] 2 VR 34, [37]-[38] (Hayne JA).
The plaintiff concedes that it is obliged to provide further and better particulars of its technical allegations as to the existence of a defeat device, so that the defendant can properly understand the foundational premise of the plaintiff’s case and the allegations against it. A course of action was proposed and agreed between the parties where the next step was for the plaintiff to file his expert report in relation to the testing of the two Affected Vehicles. Despite that agreement, the plaintiff now presses for discovery of the Source Code and Documents.
Applying the principes referable to discovery to the matter before me, first, I am not persuaded that the Source Code and Documents are currently relevant to the determination of any fact presently in issue in this proceeding. Consistently, the plaintiff’s own evidence does not suggest so.
At its highest, the plaintiff’s evidence contends that the Source Code and Documents:
(a) may reveal the existence of a defeat device.[47] The defendant urged upon me that how this was so was entirely unexplained. I accept that submission;
[47]Plaintiff’s Submissions, [11(a)].
(b) may be required to explain why the Affected Vehicles are producing certain results.[48] Again, how this might be so is unexplained by the plaintiff;
[48]Emeny Affidavit, [8(h)].
(c) must, even if they don’t reveal a defeat device, explain how the ECU controls the emissions control system. Against this contention, the defendants urged me to consider the absence of a proper articulation by the plaintiff of his case and submitted that, at this stage, the plaintiff’s general contention does not justify discovery of the Source Code and Documents. I accept that submission;
(d) are necessary to explain test results which would otherwise be inexplicable. I pause here to note that, at present, there are no such test results in existence and there were none put into evidence in support of this application;
(e) identify the effect, if any, of the various ECU changes which occurred after the Williams Proceeding on the issues in this proceeding. Against this contention, the defendant says that the plaintiff has not explained why any such changes are relevant to the allegations made in this proceeding. The defendant’s submission, which I accept, has considerable force when the pleadings are considered. To this end, I note that the plaintiff’s senior counsel conceded that the production changes were not the subject of the FASOC;[49] and
(f) are necessary to understand potential rectification of the Affected Vehicles that may be available which, in turn, might affect the assessment of loss and damage. The defendant urged that any assessment of loss and damage would be premature given the testing which was yet to occur to the Affected Vehicles. Again, the defendant’s submission has a degree of commonsense force.
[49]Transcript of Proceedings (2 February 2024), 18.7-18.9.
Given:
(a) the nature and complexity of the dispute;
(b) the current status of the proceeding, including:
(x) the ongoing complaints made by the defendants as to the absence of further and better particulars and their lack of understanding of the foundational aspects of the plaintiff’s claim; and
(xi) the absence of any report by the plaintiff’s expert Mr Smithers which directly addresses the need for and proposed use of the Source Code and Documents;
(c) the agreement that led to the 17 November Orders;
(d) the nature of the evidence before me on this application;
(e) the legitimate concerns raised by the defendant as to the highly confidential nature of the Source Code and Documents; and
(f) the conclusions I have expressed in paragraph 55 above,
I am not satisfied that making orders of the type sought by the plaintiff, is, at this point in time efficient, effective, economical or necessary for the progress of the litigation. The period for which the Source Code and Documents are sought spans more than a decade. Further the documents said to comprise the Source Code and Documents include documents explaining the operation of such code and any necessary software or hardware to review such code and documents, including all revisions of such software and documentation. The very description of the Source Code and Documents makes it clear that extensive documentation is involved, a great deal of which will be highly technical and some of which may be in Japanese requiring translation. In my view, the determination of whether to require discovery of the Source Code and Documents should, consistently with the objects of the CPA, await a time when an informed assessment can be made as to their actual relevance, particularly to those foundational matters alleged in paragraphs 42 and 49 of the FASOC.
At the hearing, I asked the plaintiff’s senior counsel whether the application was premature in light of Mr Smithers not yet completing his report. In response, whilst conceding inspection might need to be deferred, I was told that the Source Code and Documents were ‘critically relevant’ and ‘plainly directly relevant’ and that there was ‘no basis to make discovery conditional on other steps being taken in the proceeding’.[50] I reject that submission. Not only has Mr Smithers not sworn an affidavit deposing to the necessity for the Source Code and Documents to be provided in order for him to complete his report, the affidavit on which the plaintiff relies does not state that the Source Code and Documents are indeed necessary at this point in time.
[50]Transcript of Proceedings (2 February 2024), 2.2-2.19.
Additionally, having regard to the pleadings, and the defendant’s repeated insistence that is it unable to properly understand the foundational premise of the plaintiff’s case and the allegations against it in the absence of further and better particulars which the plaintiff has agreed to, but not yet provided, I am unable to conclude, at this juncture, that the Source Code and Documents are ‘critically relevant’ or ‘plainly directly relevant’ such that they should be ordered to be discovered at this point in time. In reaching this conclusion, I accept that it may be the case that the Source Code and Documents become relevant and that it may be necessary that they be discovered for the attainment of justice in this case. However, based on the pleadings as they stand and the evidence before me, and having regard to the objects of the CPA, I am unable to reach the conclusion now that discovery of the Source Code and Documents should be ordered.
Finally, there is no dispute that the Source Code and Documents are highly confidential. Embarking upon an elaborate discovery exercise, where documents are proposed to be compelled to be provided from an overseas organisation via a Sabre order, in those circumstances, is not a step that this Court ought to take unless it is satisfied that it is necessary to do in the interests of justice. I am not satisfied. The Source Code and Documents are plainly confidential to the defendant and its related entities. They should not be obliged to disclose private information unless ‘the course of justice requires’[51] that be done. In the absence of Mr Smithers’ report and based on the present evidence, I cannot be satisfied that the course of justice requires such disclosure.
[51]Riddick (n 46), 896 (Lord Denning MR).
Accordingly, the plaintiff’s application for discovery of the Source Code and Documents will be dismissed. I direct the parties to file a minute of order to give effect to these reasons. If, having obtained Mr Smithers’ report, the plaintiff wishes to renew its application on further evidence, there is no prohibition on him doing so.
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