Lisec Australia Pty Ltd v Saremach Pty Ltd; Saremach Pty Ltd v Lisec Australia Pty Ltd

[2017] NSWSC 1127

Supreme Court

New South Wales

Medium Neutral Citation:	Lisec Australia Pty Ltd v Saremach Pty Ltd;; Saremach Pty Ltd v Lisec Australia Pty Ltd [2017] NSWSC 1127
Hearing dates:	16/08/2017
Date of orders:	16 August 2017
Decision date:	16 August 2017
Jurisdiction:	Equity - Commercial List
Before:	McDougall J
Decision:	Application for discovery dismissed.
Catchwords:	PRACTICE AND PROCEDURE – discovery – whether there is a need for discovery – no question of principle
Cases Cited:	ASIC v Rich [2003] NSWSC 257 Sabre Corporation v Russ Kalvin's Hair Care (1993) 46 FCR 428
Category:	Procedural and other rulings
Parties:	Lisec Australia Ltd (Plaintiff) (2014/198057) Saremach Pty Ltd (First Defendant) Core Toughened Pty Ltd (Second Defendant) Fethers Glazing Systems Pty Ltd (Third Defendant) Saremach Pty Ltd (First Plaintiff) (2014/265604) Rental Trust and Core Toughened Pty Ltd (Second Plaintiff) Feathers Glazing Systems Pty Ltd (Third Plaintiff) Lisec Australia Pty Ltd (Defendant)
Representation:	Counsel: I Neil SC / J Knackstredt (Lisec) F Hicks / D Byrne (Saremach)   Solicitors: Schweizer Kobras (Lisec) Arnold Bloch Leibler (Saremach)
File Number(s):	2014/198057 and 2014/265604

Judgment   (ex tempore – revised 17 august 2017)

1. HIS HONOUR: There are two proceedings fixed for hearing to commence on 3 October 2017. In one, the plaintiff Lisec Australia sues to recover the cost of a reconditioned glass cutting machine that it sold to parties that may be sufficiently identified as the FGS parties. The FGS parties say that Lisec Australia made representations as to the performance and functionality of the machine, and that their experience of using it shows that those representations were misleading or deceptive. Thus, in the other proceeding, the FGS parties sue Lisec Australia for damages.

2. The parties have exchanged expert evidence. One of the issues raised in the FGS parties’ expert evidence concerns suggested design deficiencies. Lisec Australia's expert has replied. The FGS parties seek discovery of documents relating to the performance of similar machines (which have been referred to generically as BAZ machines) in Australia. The machine sold to the FGS parties is one of five such BAZ machines operating in Australia.

3. The first problem that the FGS parties need to surmount is to show that there is a need for the discovery, having regard to the ways in which the design issues have been debated between the experts.

4. I start by observing that the expert report on which the FGS parties rely (prepared by a company called AMOG Pty Ltd, and dated 15 December 2016) does not suggest that the consideration given by the experts who apparently were its author, checker and authoriser respectively, would be advanced in any way by having any of the documents, discovery of which is now sought. Nor is there any affidavit, on information and belief or otherwise, pointing to the need for the discovery now sought.

5. The next point to note is that when the discovery request was made originally, the context was that the expert for Lisec Australia, Mr Hörlendsberger, had put on a report which referred to his experience with similar machines around the world. That had been used as the basis for the justification for the requests (which then were of course much wider than they are now). Those portions of the report have been excluded, and in his latest report Mr Hörlendsberger does not seek to revive the issue of satisfactory performance as evidenced by other machines. It is a little difficult to understand why the originally asserted need should be taken, nonetheless, to be current.

6. Regardless, I am simply not satisfied that discovery of the documents in question is likely to increase the store of human knowledge in any way that will help in the resolution of the real issues that seem to me to arise on the expert reports. First of all, AMOG expresses its design opinions by reference to its inspection of the machine that was sold and delivered to, and used by, the FGS parties. That machine was disassembled, not because of anything that Lisec Australia did or omitted to do but because the FGS parties took a deliberate decision to disassemble it. Mr Hörlendsberger makes the point, repeatedly, that to some extent the opinions expressed by AMOG may result from its having inspected the machine only in its disassembled state.

7. As I have said already, AMOG does not suggest that its consideration of the design issues would have been improved were it to have access to the documents, discovery of which is now sought.

8. The second point to make is that although Mr Hörlendsberger refers from time to time in his reply report to "normal operation", and suggests that at least some of the problems of which the FGS parties complain may have resulted from abnormal operation, the documents in question could not really assist in illuminating either what is meant by "normal operation" or whether any operational or performance problems experienced with other BAZ machines in Australia did occur within the course of "normal" operations. It is correct to say, as Mr Hicks (who appeared with Mr Byrne for the FGS parties) contended, that the documents may, accidentally or incidentally, demonstrate either normal or abnormal usage. But the way the request is formulated, that cannot be said with any confidence. Thus, to the extent that the request was sought to be justified by reference to the need to test Mr Hörlendsberger's opinions based on normal usage, it is not at all clear to me that production of the documents would assist in clarifying matters.

9. The third point is that the opinions expressed by AMOG are opinions as to design: specifically, to the effect that various aspects of the machine that it observed in its inspection of the machine in its disassembled state suggested that there were design defects. AMOG has not suggested that its opinion relates to the performance of the machine. Of course, if design defects are demonstrated, it is understandable that there may be some link between those defects and the allegations of defective and insufficient performance. But as I have said, AMOG has not suggested, either directly or through someone else on information and belief, that its opinions on design defects would be strengthened in some way if it were given access to the documents in question.

10. Accordingly, it seems to me that documents in categories 2(b), (c), (e) and (g) (which are the only non-electronic documents that are now sought) need not be discovered. As I have said, I am far from satisfied that there is any real need for them, let alone a need that would require Lisec Australia to undertake the costly task, outlined in the affidavit of its solicitor Ms Henderson, of departing from preparation for hearing and identifying and isolating the relevant documents.

11. The other category of discovery sought is "all Electronic Data from the Machines". “Electronic Data” is defined by reference to "acronis" backup data and by reference to "production.txt" or identical files.

12. The acronis data as I understand it is information that the Lisec machines maintain as a result of their operation, and that is available to be inspected by someone who has both the access and the expertise to do so. The other category of electronic data, production.txt files or similar, is limited to cycle times and fault error messages. It has not been suggested that this information is not in principle available.

13. The difficulty that appears from the evidence is that the electronic data is usually saved and then stored on a server maintained not by Lisec Australia but by its parent company, which may be called Lisec Austria. Thus, as the application stands, it would appear to be the case that Lisec Australia has nothing to discover. Mr Hicks submitted that it would be open to Lisec Australia to make a request to Lisec Austria for production of the electronic records, so that it could give discovery of them. He referred to ASIC v Rich [1] . In effect, Mr Hicks submitted, a "Sabre" order should be made (see Sabre Corporation v Russ Kalvin's Hair Care [2] .

    1. [2003] NSWSC 257.

    2. (1993) 46 FCR 428).

14. It is open to infer, on the evidence, that Lisec Austria has given assistance to Lisec Australia in connection with this litigation. Indeed, it would be strange if this were not the case, given the potential for reputational damage that Lisec worldwide might suffer if court findings are made as to the alleged defects in the machines.

15. However, the fundamental point remains that in the absence of any demonstrated need for the data (and in particular, in the absence of any demonstrated link between the Electronic Data or what it is likely to show and the expert report as to design deficiencies) the basis upon which the court would order discovery has simply not been made good.

16. I order that the further amended notice of motion filed on 7 April 2017, as amended in court today, be dismissed.

[Counsel addressed on costs.]

17. I order that the costs of the motion be cost in the cause.

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Endnotes

Decision last updated: 24 August 2017