Crawford v Australia and New Zealand Banking Group Limited

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

GROUP PROCEEDINGS LIST

S ECI 2020 03365

STEELE LEE CRAWFORD

Plaintiff

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (ACN 005 357 522) & ORS

(according to the attached Schedule)

Defendants

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JUDICIAL REGISTRAR:	Steffensen JR
WHERE HELD:	Melbourne
DATE OF HEARING:	19 August 2021
DATE OF RULING:	14 September 2021
CASE MAY BE CITED AS:	Crawford v Australia and New Zealand Banking Group Limited & Ors
MEDIUM NEUTRAL CITATION:	[2021] VSC 578

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DISCOVERY– Group proceedings – Application for defendants to give discovery – Issues in dispute on the pleadings – ‘flex commissions’ - Relevance of proposed document categories – Discovery conference.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J Stoljar SC with Mr D Fahey	Maurice Blackburn Pty Ltd
For the First Defendant	Mr M Rush QC with Ms M Szydzik	Herbert Smith Freehills
For the Second and Third Defendants	Mr J Williams SC with Mr J Entwisle	Gilbert + Tobin

JUDICIAL REGISTRAR:

A. Introduction

This ruling concerns the discovery to be made by the first defendant (ANZ). By summons filed on 25 June 2021, the plaintiff seeks inter alia that the defendants make discovery by way of certain categories. The plaintiff relies upon the affidavit of Andrew John Watson filed on 25 June 2021 and its written submissions filed on 29 June 2021. ANZ opposes the orders sought by the plaintiff and filed its own summons on 26 July 2021. ANZ seeks that it make discovery of documents relevant to any issue in dispute in the proceeding which are located in certain repositories of documents, or alternatively, that it make general discovery in accordance with Rule 29.05.1 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic). ANZ relies upon the affidavit of Ruth Elizabeth Overington filed on 26 July 2021 and its written outline of submissions filed on the same day.
The plaintiff and ANZ take very different views on what are the issues in dispute in the proceeding, and thereby, what documents or categories of documents are relevant for the purposes of discovery. Accordingly, this ruling addresses the dispute between the parties as to relevance by reference to the document categories proposed by the plaintiff numbered 4 to 13.

B. The Plaintiff’s Claim & ANZ’s Defence

The plaintiff purchased a car from Cars of Melbourne. To finance the purchase, the plaintiff obtained a loan through the car dealer, who was the authorised representative of ANZ.
ANZ had agreements with car dealers whereby the dealer acted as ANZ’s authorised representative for the purpose of assisting customers to enter into loan agreements with ANZ to finance the purchase of cars sold by the dealers.
It is common ground that:
(i)the remuneration structure between ANZ and the dealers involved “flex commissions” whereby the dealer was paid a proportion of the interest charged to the customer over and above a base rate;
(ii)the dealers could propose to the customer, discuss and negotiate, and then inform ANZ of the proposed interest rate to apply to the finance contract (ANZ’s Defence at [10(a)(ii)]); and
(iii)ANZ did not require dealers to inform customers about the commissions that a dealer may be entitled to (ANZ’s Defence at [12(a)]).
The plaintiff brings this claim on his own behalf and on behalf of group members. Group members are defined to mean persons who entered into car loans with ANZ via dealers during the period from 1 January 2011 and 31 March 2016, where the dealers were paid a flex commission.
As I will refer to in more detail, the plaintiff claims loss and damage from ANZ arising from the entry into the car loan by reference to the flex commission remuneration structure and the information provided to the plaintiff and group members during the process of obtaining their car loans. The plaintiff pleads three causes of action. First, he says that the dealers have engaged in unfair conduct within the meaning of s 180A(1)(b) of the National Consumer Credit Protection Act 2009 (Cth) (NCCP Act), for which it says ANZ is responsible. Second, that ANZ has engaged in misleading and deceptive conduct contrary to the Corporations Act 2001 (Cth) (Corporations Act) and the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act). Thirdly, the plaintiff claims against the defendants for money had and received and for unjust enrichment.
At paragraph 10 of the Statement of Claim (SOC), the plaintiff pleads his definition of flex commission and the “Flex Commission Calculation Method”. The plaintiff alleges that the “Flex Commission Calculation Method” arises pursuant to the agreements between ANZ and dealers, whereby ANZ set a base interest rate for the loans initiated and authorised the dealer to set a rate of interest payable under a car loan in their discretion and on a case-by-case basis, higher than that base rate. ANZ then paid a proportion of the difference in the interest between the base rate and the contract rate, being the flex commission.
At paragraph 11 of the SOC, the plaintiff pleads that flex commissions and the Flex Commission Calculation Method have the following “Flex Commission Features” which form the basis of its three causes of action:
(i)it involved the dealers setting the contract rate in the absence of objective criteria, in a manner where the contract rate would be influenced or determined by the dealer’s self-interest, or alternatively, significantly higher than ANZ would have offered the group members or other consumers had they been approached otherwise than through a dealer (SOC, [11(a)]).
(ii)the dealers were involved in setting the term (length) of the car loan (SOC, [11(b)];
(iii)it provided an incentive for dealers to increase the price of a car loan or the term of a car loan, in a way that depended upon the negotiating skills or vulnerability of the consumer (SOC, [11(c)]);
(iv)it created unfairness or a risk of unfairness in relation to car loans (SOC, [11(d)];
(v)it was designed to encourage writing loans with interest rates above the base rate (SOC, [11(e)]); and
(vi)it created a conflict, or a potential conflict, between the interests of a dealer and the interests of a group member or customers of that dealer (SOC, [11(f)]).
Other than admitting that the flex commission structure encouraged writing of car loans above the base rate, ANZ denies these allegations and pleads other aspects of the car loan process, such as the customer’s role in negotiating and accepting the terms of a finance quote. ANZ denies that any legally relevant conflict of interest could or did arise in the circumstances where the transaction was arms-length and the customer expressly confirmed that the dealer was not acting on the customer’s behalf or owe the customer any duties (ANZ’s Defence, [11]).
At paragraph 12 of the SOC, the plaintiff pleads what is defined as the “Car Loan Circumstances” namely:
(i)that neither ANZ nor the dealers disclosed to group members the flex commissions, their calculation method, the Flex Commission Features, or the dealers’ role in setting the interest rate and the term of the loan. ANZ is alleged to have failed to ensure the dealers disclosed this information or have appropriate systems to ensure disclosure. The plaintiff alleges that a reasonable person in the position of the group members would have understood or assumed that the interest rate and car loan term were set solely by ANZ and that the dealers were disinterested in the contract rate (SOC, [12(a)-(c)]); and
(ii)that group members were in weaker positions as compared to ANZ and the dealers, and that group members were not treated equally, in that comparable group members were not afforded the same interest rates on their car loans (SOC, [12(c)-(e)]). Whilst ANZ’s Defence pleads that these allegations are vague and embarrassing, it has not sought to strike them out (ANZ’s Defence, [12(b)(xi))]).
In response to the allegations of non-disclosure, ANZ admits that it did not require dealers to inform customers of the base or cap interest rates or the terms of the dealers’ entitlement to flex commissions, but says that it did not prevent dealers from disclosing this information, and cannot know what was said by dealers to customers (ANZ’s Defence, [12(a),(b)]). ANZ pleads aspects of the car loan process, including the negotiating role of the customer, and the requirement that borrowers acknowledge the dealer will be entitled to a commission (ANZ’s Defence, [12 (b)]). ANZ otherwise denies the plaintiff’s allegations (ANZ’s Defence, [12(d)]).
In respect of the NCCP Act claim, the plaintiff alleges that the dealers were intermediaries between group members and ANZ that provided a credit service to group members within the meaning of the NCCP Act (SOC, [13] – [21]). In response, ANZ admits certain of these allegations. It is not relevant to these reasons to address the detail of the admissions and denials.
The plaintiff alleges that the dealers engaged in unfair conduct within the meaning of s 180A(1)(b) of the NCCP Act (SOC, [22]-[23]).
Pursuant to s 180A(3) of the NCCP Act, in determining whether conduct was unfair, the court must have regard to the extent (if any) of the circumstances described in subsection (4) existed, and must consider it more likely that the conduct was unfair the more any of them affected the plaintiff’s interests.
Paragraph 22 of the SOC pleads a series of alternative circumstances which mirror some of those provided for in s 180A(4). The plaintiff pleads that that by reason of the car loan process undertaken between the customer, dealers and ANZ, the Flex Commission Features and the Car Loan Circumstances:
(i)group members were at a special disadvantage in dealing with the dealers, or alternatively, were unable or considered themselves unable to make a car loan with a credit provider other than ANZ (SOC, [22(a)-(b)]);
(ii)the Car Loan Circumstances involved a technique that should not in good conscience have been used, or manipulated group members (SOC, [22(c)]);
(iii)ANZ had the ability to determine or significantly influence the terms of the car loans and that the terms of the car loans were less favourable to group members than the terms of a comparable transaction (SOC, [22 (d)-(e)]).
ANZ denies these allegations, and pleads inter alia that whether group members were at a special disadvantage or whether the Car Loan Circumstances involved a technique that should not in good conscience have been used, is a matter to be assessed having regard to the personal and financial circumstances of each customer (ANZ’s Defence, [22(b)(i)]). In a similar vein, ANZ pleads that determining whether a group member’s car loans was less favourable involves consideration of the particular vehicle being financed, and proof of the availability of alternative credit to the particular customer at the relevant time (ANZ’s Defence, [22(b)(iv)]).
The plaintiff alleges that but for the unfair conduct, the group members would not have entered into loans, or would have entered into loans on more favourable terms (SOC, [24]). ANZ is alleged to be liable for the dealers’ unfair conduct (SOC, [31]-[34]).
The misleading and deceptive conduct claim is based upon an allegation that the group members had a reasonable expectation that the matters concerning the flex commissions, and the dealers’ interest in the interest rate and term of the car loan would have been disclosed to them, and that the failure to disclose is misleading and deceptive or likely to mislead or deceive in contravention of s 104H of the Corporations Act and/ or s 12DA(1) of the ASIC Act (SOC, [35] – [39]). This claim is denied by ANZ.
In respect of the claim for money had and received and unjust enrichment, the plaintiff pleads that group members were not informed (sufficiently or at all) of certain matters. These matters mirror the allegations of non-disclosure in the NCCP Act claim set out at [12(a)] of the SOC (see SOC, [42(a)-(c)]). In addition, it is alleged that group members were not informed of the existence of the dealers’ unfair conduct and that group members would be entitled to remedies against the dealers and ANZ under the NCCP Act (SOC, [42](d)).
The matters of which it is alleged group members were not informed are alleged to be:
(i)material information that would have been relevant to the group members’ decision to proceed with the car loan (SOC, [43]); and
(ii)the foundation of causative mistaken beliefs on the part of group members which led to their entry into the car loans ( SOC, [44]). Each mistaken belief is alleged to be a unilateral mistake (SOC, [45]).
By reason of the mistaken beliefs and unilateral mistakes, the group members are alleged to have entered into the car loans when they would not have done so, or alternatively, entered into loans at higher interest rates and for longer terms than they otherwise would have, or became liable to pay the contract rate to ANZ (SOC, [46]).
The plaintiff pleads that by reason of the car loan process undertaken between the customer, dealers and ANZ, the features of flex commissions and the failure to disclose matters concerning the flex commission structure car loan process to customers, ANZ was aware of or induced the matters about which group members are alleged to have been mistaken, as pleaded at [42], [43], [44], [45] and/or [46] (SOC, [47]). Alternatively, the plaintiff pleads that ANZ concealed the matters pleaded in [42] of the SOC. ANZ denies paragraph 47, and thus denies that ANZ was aware of, induced or concealed the facts pleaded in paragraph [42] of the SOC about which group members are said to be mistaken.

C. The Relevance Dispute

Flex Commission Review Documents - Categories 4, 11, 12 and 13

The plaintiff seeks discovery of ANZ’s internal documents relating to flex commissions, including risk reviews and investigations (category 4), correspondence and records of meeting with regulators (category 11), and in particular connection with ASIC Consultation Paper 279, ‘Flex commission arrangements in the car finance industry’ (category 12),[1] and the Banking and Financial Services Royal Commission (insofar as it relates to flex commissions) (category 13)[2]. I will refer to these categories together as the Flex Commission Review Documents. ANZ objects to the Flex Commission Review Documents on the grounds of relevance.
[1]Category 12, including documents produced to ASIC.
[2]Category 13, including documents produced to the Royal Commission.
The plaintiff argues that the Flex Commission Review Documents are relevant to the following matters in issue in this proceeding:
(i)the flex commission features pleaded at [11] of the SOC. In particular, the pleading at [11(d)] that the flex commission features created unfairness or a risk of unfairness. As referred to at [10] above, these allegations are largely denied by ANZ. The plaintiff submits that in order to determine this allegation of unfairness, regard must be had to the circumstances as a whole, including ANZ’s knowledge at the relevant time, which will likely be recorded in the internal documents sought by the Flex Commission Review Documents;
(ii)the question of whether the flex commission structure involved a technique that should not have in good conscience have been used, as pleaded in paragraph at [22(c)] of the SOC. This allegation is denied. The plaintiff argues that to address whether the flex commission structure was a technique that should not have in good conscience been used, requires examination of what those who were employing and directing that the technique be used, namely ANZ and the dealers, knew about the structure and its potential for unfairness so as to address the issue of its employment in good conscience;
(iii)ANZ’s awareness of the dealers’ unfair conduct and that group members would be entitled to remedies against the dealers and ANZ under the NCCP Act pleaded at SOC, [42(d)], which, as referred to at [20] above, is denied by ANZ. The plaintiff anticipates that risk reports may identify ANZ’s assessment of litigation risk, regulatory risk, and reputational risk arising from the flex commission structure, which would be relevant to the question of ANZ’s awareness.
By way of contrast, ANZ argues that the relevant enquiry on the pleadings is largely limited to an enquiry into the dealers’ conduct, rather than that of ANZ, and submits that discovery should be directed to the plaintiff’s individual claim. Paragraph 10 of Ms Overington’s affidavit sets out ANZ’s view of the issues in dispute by reference to the plaintiff’s claim. By way of summary, these are said to be:
(i)the legal consequences of the plaintiff not being informed that a portion of the interest would be paid to the dealer and that the dealer had the ability to nominate the interest rate payable;
(ii)the legal consequences of ANZ not requiring the dealer to inform the plaintiff of those matters;
(iii)whether the dealer engaged in unfair conduct within the meaning of s 180A(1)(b) of the NCCP Act, and ANZ’s liability for that conduct;
(iv)whether ANZ engaged in misleading and deceptive conduct; and
(v)whether the plaintiff laboured under a unilateral mistake when he entered into the loan agreement.
By reference to the above issues, ANZ considers that discovery ought to be focussed upon the directions ANZ gave to dealers as to what information should be communicated to customers, and discovery relevant to the plaintiff’s application, the plaintiff’s individual circumstances, the commissions paid by ANZ to Cars of Melbourne in relation to the plaintiff’s loan, the dealer agreements between ANZ and Cars of Melbourne and fees payable by ANZ to Cars of Melbourne.
The above analysis has informed ANZ’s discovery proposal, which includes using the search terms “Crawford”, “Cars of Melbourne” and “dealer” within 10 words of “training” to repositories containing more than 5,000 documents.
ANZ’s submissions that s 180A(1)(b) of the NCCP Act is focussed upon the dealer’s conduct is founded upon the definition of “defendant” in that provision. “Defendant” is defined in subsection (1)(a) to be a person who ‘provided a credit service to a customer’. Consistent with the plaintiff’s allegation at [21] of the SOC, ANZ says that it is the dealer who provided the credit service, not ANZ. Simply put, ANZ’s argument is that as it was the dealers who provided the credit service, it is the dealers’ conduct which is the subject of enquiry under s 180A(1)(b), rather than that of ANZ. ANZ argues that any vicarious responsibility of ANZ for the dealers’ conduct is not to be determined by reference to what ANZ did or did not do, but rather by reference to the dealers’ conduct alone.
ANZ’s position is that the plaintiff’s claim with respect to whether the flex commission and flex commission calculation method created unfairness or the risk of unfairness is to be determined primarily by reference to the documents relevant to the dealer’s entitlement to a commission pursuant to its agreement with ANZ, and the extent of that commission, rather than any internal documents of ANZ’s which address or analyse flex commissions. In this regard, ANZ submits that its admission that it did not require the flex commission structure to be disclosed to customers is important to bear in mind when analysing the matters in issue on the pleadings. As such, it was argued, discovery in respect of documents revealing ANZ’s knowledge is at best of peripheral relevance, as it will not inform the question of what disclosure was made by a particular dealer to their customer. ANZ submits that the costs of making discovery of this material would be out of all proportion and not reflective of the real issues in dispute.

It was submitted that an assessment within the risk division of whether this was an appropriate structure does not ultimately bear upon whether in the particular circumstances of the individual, who was not informed of the matters the plaintiff says they ought to have been informed of, was unfair.[3]
[3]Transcript of Proceedings on 19 August 2021, page 62, lines 7-11 (Transcript).
In relation to the allegation that the flex commission involved a technique that in good conscience should not have been used, ANZ argued that as a matter of statutory interpretation, this is an objective question, and not one that asks as to the conscience of ANZ. To the extent that the issue requires consideration of the extent of any manipulation of group members, ANZ argues this is matter relevant to group members’ individual circumstances and claims, and accordingly should not form part of discovery at this stage in the proceeding.
In relation to the claim for misleading and deceptive conduct and unilateral mistake, ANZ submits that the key question is what is disclosed by a dealer to the plaintiff or a group member, such that ANZ’s conduct is not the subject of enquiry.
ANZ accepts that its awareness is in issue in respect of certain matters relating to purported non-disclosure, as pleaded in paragraphs [42] to [46] of the SOC. ANZ submits that its awareness of matters pertaining to flex commissions generally is not in issue.
I consider that ANZ’s construction of the matters in issue in this proceeding to be too narrow.
For the purposes of this discovery dispute, the focus must be upon the pleaded case. As referred to above, the plaintiff pleads a case that it is the nature of flex commissions as provided for in the dealer contracts and the Flex Commission Features which underpin the alleged unfair conduct by the dealers. As explained at paragraph [10] above, ANZ denies the Flex Commission Features.
By its denial of [11] of the SOC, ANZ has denied that the flex commissions structure set by its dealer agreements involved the dealers setting contract rates in the absence of objective criteria. ANZ has denied that the dealer contract rates were significantly higher than ANZ would have offered the group members outside of the dealer network, and ANZ has denied that flex commissions created unfairness (or risk of unfairness).
ANZ’s admissions as to the dealers’ role in proposing the interest rate to be applied to the car loan, and that it did not require the customers to be informed of the flex commissions, do not render irrelevant the balance of the plaintiff’s pleas which are denied by ANZ.
Whilst the plaintiff’s pleading is layered with defined terms, a close analysis makes clear that the technique pleaded at [22(c)] of the SOC is that set by ANZ in its dealer agreements which is said to have the features pleaded in paragraph [11] of the SOC. This is because [22(c)] pleads that “the Car Loan Circumstances” involved the technique that should not in good conscience have been used. “Car Loan Circumstances” are the circumstances of the car loans as pleaded at [12] of the SOC,[4] including the Flex Commission Features pleaded at [11] of the SOC. These are alleged to be a consequence of the terms of ANZ’s agreements with its dealers (see SOC, [10]–[11]). As such, on the plaintiff’s pleaded case, I consider the enquiry goes beyond the dealers’ conduct in connection with the plaintiff or group members’ loans.
[4]Summarised above at [11] to [11(ii)] above.
I do not consider that ANZ’s arguments as to the narrow focus of s 180A of the NCCP Act upon the dealers’ conduct assists ANZ on the question of scope of discovery. The manner in which the case has been pleaded calls for examination of whether the flex commission technique structure set by ANZ in its dealer agreements had the Flex Commission Features. If ANZ has documents which analyse or report upon the technique and whether it has the Flex Commission Features, they are relevant and discoverable. ANZ has not admitted the allegations, and neither has it sought to strike them out. Accordingly, it is not necessary for me to address this argument or otherwise determine whether ANZ’s interpretation of s 180A of the NCCP is to be preferred.
Further, ANZ has denied it was aware of the asserted non-disclosure and the dealers’ unfair conduct (SOC, [47]; ANZ’s Defence, [47]). Accordingly, any documents which relate to the ANZ’s knowledge of the dealer’s unfair conduct as alleged by the plaintiff are relevant.
Accordingly, ANZ’s denial of these facts pleaded in paragraphs [11] (in particular the allegations at [11(a),(c) and (d)] and excluding [11(e)]), [22(c)] and [47] of the SOC render documents of the nature sought by the Flex Commission Review Documents discoverable to the extent that they are relevant to these issues.
Whilst I consider that documents in the nature of the Flex Commission Review Documents are discoverable, I am not prepared to make orders for discovery of the categories as drafted by the plaintiff. The breadth of the categories require refinement, narrowing and re-drafting to ensure that discovery of the relevant documents going to the real issues in dispute can be made in the most efficient and effective manner.
For example, categories 4, 11, 12 and 13 each seek call for reports, correspondence, records of meetings and the like relating to flex commissions and/or dealer originated car loans. No further refinement is articulated as to matters in issue which might be addressed in these documents. The proposed time period for categories 4 and 11, is 10 years, whereas the relevant time period for group members are those that entered into dealer-originated loans during the period from 1 January 2011 to 31 March 2016. The issues in dispute do not call for discovery of all of these documents, regardless of their date or topic. For example, documents recording ANZ’s analysis of dealer conduct with respect to flex commissions will only be relevant if they show what ANZ knew at the time the plaintiff or group members entered into their car loans, and whether they tend to prove or disprove the allegations referred to at paragraphs [37], [39] and [41] above. It is not apparent why a ten year time period is reflective of the matters in issue in this proceeding.
There also appears to be significant overlap between the categories. I accept the evidence of Ms Overington that large numbers of categories can lead to unnecessary inefficiencies and cost.
Ms Overington deposes being no central storage within ANZ of correspondence and notes of meetings with regulators and industry bodies,[5] and the wide variety of sources that would need to be searched in order to address categories 4 and 11 as they have been formulated by the plaintiffs.[6] These factors increase the time that it will take to complete discovery and the cost of the process. Ms Overington’s affidavit does not address the use of search terms, technology assisted review or other mechanisms which may assist to reduce the scale and cost of the task. Consideration must also be given to limiting the repositories to those most likely to contain the documents going to the heart of the issues in dispute to ensure proportionality.
[5]Overington Affidavit, [45].
[6]Overington Affidavit, [42].
It may be that with the benefit of further information from ANZ as to the nature, type and repositories of documents falling broadly within these categories, or the best means of extracting documents of this nature, the discovery will be able to be refined to ensure it is focussed, efficient, and tailored to the issues in the proceeding. For example, Ms Overington deposes to there being a shared storage location for records relating to ASIC, but that this is likely to be incomplete.[7] Depending on the nature and content of that shared storage location, it may be appropriate to limit the ASIC documents to those retrieved from this location.
[7]Overington Affidavit, [46(c)].

Dealer Documents - Categories 5, 6 and 8

The plaintiff seeks discovery of training and quality assurance materials provided by ANZ to dealers (category 5), template contractual documents between ANZ and dealers that relate to flex commissions (category 6) and template correspondence between ANZ and the dealers in the relevant period that relate to flex commissions (category 8). I will refer to these as the ‘Dealer Documents’.
ANZ’s position is that the Dealer Documents are irrelevant, other than in respect of Cars of Melbourne, the plaintiff’s dealer.
In respect of training materials, ANZ agrees to provide discovery of a more limited scope, namely materials provided to Cars of Melbourne addressing “what information should be communicated to customers who wished to apply for consumer motor vehicle finance”.[8]
[8]Overington Affidavit, [11(a)].
Without further information about ANZ’s repositories and the size thereof, it is not apparent how the reasonable search proposed in ANZ’s summons will retrieve the training documents it has agreed to discover. In the document repositories identified by ANZ, it appears that the source of training document discovery is through the mailboxes of certain managers of the business who were involved in the training provided to accredited dealers, and a shared drive folder entitled “Business Manager Training”. However, if those mailboxes contain more than 5000 items, the relevant material will, on ANZ’s proposal, only be retrieved if they are hits for the search terms “Dealer” w/10 “training”. There is no evidence as to whether these search terms will successfully extract the relevant documents. ANZ may be able to provide further information which will enable this category to be crafted to ensure that discovery is as efficient and effective as possible.
I agree with the plaintiff’s submissions that training materials (category 5) which explain what dealers were instructed to do by ANZ in connection with the car loan process, and documents recording monitoring and quality assurance undertaken by ANZ with respect to the dealers’ conduct and compliance with its directives are relevant. These matters are relevant to the manner in which ANZ instructed its dealers to act, and thereby the question of whether the Flex Commission Features existed. For the same reason, I consider that template correspondence between ANZ and dealers that relate to flex commissions (category 8) is relevant and discoverable.
ANZ’s argues that template contracts with dealers other than Cars of Melbourne are only relevant to the individual claims of group members, and ought not to be discovered at this juncture.[9]
[9]Transcript, page 66, lines 23-30.
I infer from the use of the word “template” that the plaintiff seeks discovery of standard-form contracts that ANZ used to enter into agreements with dealers which address flex commissions, but without the specific parameters agreed as between ANZ and particular dealers. The plaintiff argues that these documents are relevant to the issues in dispute of the pricing models, setting of interest rates, base rates and commission structures, and the question of whether the terms of dealer initiated loans were on less favourable terms than the terms of comparable transactions.
To the extent that template contracts identify the broad parameters of the agreements between ANZ and its dealers with respect to flex commissions, I consider such documents to be relevant to the mattes in issue in this proceeding for the same reasons that I consider the balance of the Dealer Documents to be relevant. It may be that this category is able to be refined by reference to ANZ’s repositories so as to ensure that it is not unduly burdensome.
The evidence relied upon by the plaintiff suggests that the flex commissions payable by ANZ differed from dealer to dealer.[10] Accordingly, I would not expect template documents to disclose the specific commission payable to particular dealers. The arrangements between specific dealers and ANZ may be relevant to the interaction between that dealer and a group member in assessing their conduct, or relevant to quantification of that group member’s claim. I agree with ANZ’s submission that this information will be relevant to the individual claims of group members, and is thereby not discoverable at this stage of the proceeding.
[10]Exhibit AJW-15 to the Watson Affidavit, Extract of Transcript of Cross Examination of Guy Mendelson at the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, page 817, lines 34-5.

Materials relating to ANZ Car Loans Outside of the Dealer Network
Categories 7 and 10

The plaintiff seeks template contractual documents in relation to loans it offered during the relevant period outside of the dealer channel (category 7), and documents in the nature of reports or reviews relating to car loans offered by ANZ outside of its dealer network (category 10(1)), and the car loans offered by its competitors (category 10(2)).
ANZ objects to these categories on the grounds of relevance. ANZ argues that the comparable transactions available to the plaintiff or any group member is a question which may only be answered on an individual basis, having regard to the particular borrower’s circumstances and the car they sought to finance. Thus, ANZ submits that it is not necessary to discover these materials at this stage in the proceeding.
I disagree. The plaintiff’s case is pleaded at a systematic level, and pleads that a feature of flex commissions is that it involved dealers setting the contract rate significantly higher than ANZ would have offered to group members or other consumers had they been approached outside of the dealer network (SOC, [11(a)(iii)]). ANZ denies this allegation. The materials in category 7 should be discovered, subject to any necessary refinement of the category to ensure discovery is effective and efficient.
For the same reason, the documents sought in category 10(1) are relevant. To the extent that ANZ has reports which identify the broad parameters as to their lending criteria, interest rates, and loan terms for car loans made outside of the dealer network, these ought to be discovered by ANZ, and the category should be limited in this way.
Category 10(2) seeks reports in relation to car loans offered by ANZ’s competitors. This is said to be relevant to the allegations that group member’s car loans were less favourable than the terms of comparable transactions, pleaded at [22(e)] and [24(b)] of the SOC. I agree these are discoverable, with the same limitations noted above with respect to category 10(1).

Number and Rates of Flex Commissions paid - Category 9

The plaintiff seeks discovery of documents recording the number of dealer-originated loans in which flex commissions were paid on an annual basis and the interest rate charged in relation to any dealer-originated loans in which a flex commission was paid (category 9).
ANZ objects to this category on the grounds that it goes to the quantum of group members’ claims and is not relevant to issues to be determined by the Court in the first trial. I agree with ANZ’s submission.

D. Repository Information Provided by ANZ

The plaintiff makes various complaints regarding the asserted failure by ANZ to provide lucid descriptions of its repositories, in the manner contemplated by Justice Nichols.[11] I agree with the plaintiff that the information provided thus far by ANZ with respect to its repositories provides little clarity to the plaintiff or the Court as to whether these are the appropriate sources from which discovery ought to be drawn.
[11]Transcript of Proceedings on 24 February 2021, page 7, lines 17-31, and Order 9 of the Orders made on that day.
ANZ has provided a list of shared drive folders which it proposes to search from, but other than a generalised statement in Ms Overington’s affidavit that these are the folders which are likely to contain relevant documents,[12] no further justification is given. No information is given as to folder structure, number of documents in each folder, the purpose for which the business used the folder, or the nature of the documents contained in these folders. Further, ANZ has not disclosed the existence, name, or contents of any other sharedrive folders or other document storage facilities used by ANZ which it has determined not to be relevant.
[12]Overington Affidavit, [16(b)].
One of the repositories identified by ANZ is the “HSF Database”. The correspondence between the parties in evidence on this application provides little information as to the manner in which this database was created, and no information is provided as to the purpose for which it was created,[13] and the form in which it has the documents stored. During the course of oral submissions, it was revealed that the HSF Database relates to an ASIC investigation and subsequent Federal Court proceedings in 2018 regarding a complaint that certain dealers failed to verify income before the entry into credit contracts.[14] However, this appears to be at odds with the statement in Ms Overington’s affidavit at [39], that she would expect documents created in relation the consumer motor vehicle case study the subject of the Royal Commission to be contained in the HSF Database. Given that the HSF Database is a core repository from which ANZ proposes to make discovery, it would be helpful for the Court and the plaintiff to have further information as to its composition.
[13]Overington Affidavit at [56] states that it was “for a different purpose”, but does not disclose what that purpose was.
[14]Transcript, page 20, lines 18-27.
Surprisingly, other than the statement referred to in the preceding paragraph at [39] of Ms Overington’s affidavit, there has not been any disclosure of what repositories were used by ANZ to address the flex commissions component of the Royal Commission. One would expect that a database of documents was compiled for the purpose of the Royal Commission, which might provide a convenient source of potentially relevant documents.
ANZ seeks that the HSF Database should be excluded from the requirements of the electronic discovery protocol. Ms Overington deposes that in order for the documents in the HSF Database to meet the electronic discovery protocol, they would need to be re-collected from their original source and reprocessed, causing additional cost and effort for ANZ[15]. However, little information is given to the plaintiff or the Court as to manner in which these documents have been processed or how that differs from the exchange protocol. If, for example, the documents are in a workable form (e.g., contain unique page identifiers, are text–searchable, have metadata fields, are stored in acceptable file types), I would require some convincing to order that ANZ be put to the cost of reprocessing the documents.
[15]Overington Affidavit, [56].
To date, the information provided by ANZ regarding repositories and proposed search terms has largely been in accordance with ANZ’s view that these documents are irrelevant. Accordingly, it is appropriate that ANZ be given an opportunity, with the benefit of this ruling, to provide information to the plaintiff and the Court which will ensure that the orders are framed appropriately. Further, given the volume of documents, consideration ought to be given to the use of technology aided review to reduce costs, and the use of representative sample reviews to identify whether proposed search terms succeed in returning relevant documents. The parties’ evidence does not address the use of these tools.

E. Conclusion

The drafting of effective discovery orders, particularly where there are large volumes of electronic documents and multiple repositories, benefits from an open discussion as to the different options by which discovery may be made. Often, discovery proposals require testing and refinement to identify the volume of documents encompassed by the proposed parameters and whether the extraction methods are successful in retrieving relevant materials that go to the real issues in dispute.

Paragraph 9.1 of the Commercial Court Practice Note SC CC 1 of 2017 contemplates that where parties are unable to agree the scope of discovery, the Court may order a discovery conference. A discovery conference provides a more informal means for the parties or their legal representatives to confer, consider and attempt to reach agreement regarding the manner in which discovery is to be conducted, with the assistance of a judicial officer. A discovery conference enables the parties to discuss the use of repositories, search terms, technology assisted review and any other tools or methods which may be employed to ensure the discovery process is as time and cost efficient, and effective as possible. If necessary, the conference may be held over more than one session so as to allow the parties time to test the effectiveness of proposals before they are the subject of orders. Where agreement is not reached, the Court will make any necessary rulings.
I will list this proceeding for a discovery conference for the purpose of drafting the precise scope of discovery to be made by ANZ and addressing the remaining issues between the parties concerning the plaintiff’s discovery, discovery by the second and third defendants, and the form of the electronic discovery protocol. This conference will allow the precise scope of discovery to be the subject of conferral by the parties with the assistance of the Court so as to ensure that the exercise is efficient, effective, economical and proportionate to the nature and complexity of the proceeding. In advance of the conference, the parties will be directed to exchange information as to their respective proposals for refinement of the categories in a manner which reflects this ruling.

SCHEDULE OF PARTIES

S ECI 2020 03365
BETWEEN:
STEELE LEECRAWFORD	Plaintiff
- v -
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (ACN 005 357 522)	First Defendant
MACQUARIE BANK LIMITED (ACN 008 583 542)	Second Defendant
MACQUARIE LEASING PTY LTD (ACN 002 674 982)	Third Defendant

[2021] VSC 578

14 September 2021