FUJI XEROX FINANCE LIMITED V ABC PHOTOSIGNS NZ LTD HC AK CIV-2008-404-003868

FUJI XEROX FINANCE LIMITED V ABC PHOTOSIGNS NZ LTD HC AK CIV-2008-404-003868 2 September 2009IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV-2008-404-003868BETWEEN FUJI XEROX FINANCE LIMITED Plaintiff AND ABC PHOTOSIGNS NZ LTD Defendant Hearing: 20 August 2009 Appearances: Mr Bogiatto for Applicant/Plaintiff Mr R J Connell for Respondent/Defendant Judgment: 2 September 2009 at 5 p.m.JUDGMENT OF ASSOCIATE JUDGE DOOGUEThis judgment was delivered by me on02.09.09 at 5 pm, pursuant to Rule 11.5 of the High Court Rules. Registrar/Deputy Registrar DateCounsel:Mr G George Bogiatto, P O Box 106-120, Auckland R J Connell, P O Box 5275, AucklandBackground[1] This is a dispute over large volume commercial copying machines. The plaintiff provided the machines and has sued the defendant for money it says it is owed arising from the contract between them. The defendant has brought a counter- claim, essentially claiming that there were defects in the machines which related to poor quality product output, machine downtime, missed deadlines for supplying product and other problems which resulted in it suffering loss for which it now claims. [2] The defendant has made a very extensive application for further and better discovery.The applications[3] The defendant is interested in obtaining documents that may broadly be described as effectively establishing that the other customers of the plaintiff, who obtained similar machines from it, suffered similar problems. The first issue that arises is whether it is appropriate for the Court to make an order under Rule 8.24 of the High Court Rules in regard to such material. [4] The rule in question provides:8.24 Order for particular discovery against party after proceeding commenced If at any stage of the proceeding it appears to a Judge, from evidence or from the nature or circumstances of the case or from any document filed in the proceeding, that there are grounds for believing that a party has not discovered 1 or more documents or a group of documents that should have been discovered, the Judge may order that party— (a) to file an affidavit stating— (i) whether the documents are or have been in the party's control; and (ii) if they have been but are no longer in the party's control, the party's best knowledge and belief as to when the documents ceased to be in the party's control, and who now has control of them; and(b) to serve the affidavit on any other party.[5] That in turn leads to an enquiry as to whether the material is relevant within the parameters of the Peruvian Guano decision (Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882-83) LR 11 QBD 55 (CA)). In my view such material is potentially relevant. I say "potentially" because limits have to be set on the width of the categories of documents are that may be relevant. [6] The authorities were reviewed in the Queensland case of Officine Meccaniche Toschi Sp.A v Cosco Holdings Pty Limited [1992] 2 QDR 418. In that decision, Ryan J referred to the English Court of Appeal authority of Broad v Thomas Hedley and Co Limited [1951] 2 ALLER 431. In that case the plaintiff claimed damages for negligence from the defendant alleging that they had manufactured and sold a dangerous cleaning product which she had used and in consequence had contracted dermatitis on both hands. It was the held that on the issue as to whether the product was dangerous, evidence that subsequent users had suffered from dermatitis would be admissible, and therefore documents relating to such later complaints might lead to a train of enquiry enabling the plaintiff to advance her case, and so were relevant and ought to be disclosed. Dylan LJ for the Court of Appeal said (at page 830):Similarly, in an action for damages for negligence which had caused personal injury, evidence that the defendant's knowledge that there had been similar previous accident in the same premises to other persons would be relevant to show the defendant's knowledge of the risk, and discovery of complaints of those previous injuries would relevant. But in an action for damages for professional negligence against a solicitor evidence of other claims for negligence made or established against the defendant by other clients in respect of other matters would be irrelevant and inadmissible.[7] The Officine Meccaniche decision related to an application to obtain evidence of defects in a machine supplied to another company separate from the plaintiff. The Court allowed the discovery relating to the other company's machine which had been supplied by the defendant as well as the plaintiff's machine because:. Judging rationally upon common experience, that the defects alleged to be present in the machines supplied to Cosco are attributable to defects in design by Toschi and not defects in maintenance by Cosco. (p 423)[8] Exactly the same considerations apply here. If there have been problems with the copying machines of a similar kind to that which the plaintiff sold to the defendant, then such other occurrences help to establish a pattern which is suggestive of a problem with the design or construction of the copying machine – rather than just some other cause such as operating area. [9] In my view the plaintiff ought to provide discovery of such instances. That is to say, certainly in the case of 6060 series machines where there have been complaints of similar faults to those which the defendant claims, the defendant ought to discover any documents in its possession which have relevance to those other claims.Specific groups of documents[10] Against that background I turn to the specific numbered categories of documents set out in the defendant's schedule. [11] Clause 1.1 – all service records for the 6060 machines with complaints - is too wide. Documents such as those evidencing service calls, maintenance work and documents providing reports on the symptoms of the problems reported and anything relating to probable causes of the problems ought to be discovered by the defendant. The defendant in this case, I should add, has adduced evidence that there have been problems with other machines, namely those operated by the Otago Daily Times and also by Elizabeth Taylor Graphic. So this is not just a matter of the defendant launching a speculative application to obtain documents about when the existence of any such documents is entirely speculative. I agree that there is not specific proof identifying actual documents. But given that the defendant has produced adequate evidence for the purposes of an application of this kind and that there have been disputes between the plaintiff on the one part and Otago Daily Times and Elizabeth Taylor Graphics on the other, I am prepared to draw the inference that the plaintiff is, or has been in possession, of a document or class of document that relates to defects with the colour copying machines, the defects of which are substantiallysimilar to those about which the defendant complains. Such documents ought to be disclosed. [12] In my view 1.1 is drawn to widely and it would be quite wrong to order the plaintiff to produce the service records for all 6060 copying machines. [13] I am prepared as well to order that some of the documents listed in 1.2 should be produced. This relates to service records for each of the machines about which complaints are made. The service records must be relevant to the alleged defects. After all, the defendant required the plaintiff to come and carry out maintenance. The issues such as the frequency of the reported problems, the nature of the repair work carried out and spare parts supplied will all be relevant to what the cause of the problem was and these documents ought to be supplied. I am not prepared to order the disclosure of the service records before the period of lease. There are no grounds for belief that such documents are discoverable because it is not established that they are relevant to any matter in dispute. The defendant does not, for example, depose that those to whom the machines were previously leased experienced the same problem that it has experienced with the machines. [14] In 1.3 the defendant seeks all contracts relating to the machines referred to in 1.1 and 1.2. I am not prepared to order the plaintiff to do so, as no grounds for belief have been shown that such documents ought to have discovered in the first place. [15] I decline to order production of the documents in 1.4, all documentation used in calculating the "running record" of certain machines. It has not been made clear to me what the significance of these documents is and whether they come within the terms of Rule 8.24. [16] The documents in 1.5, the details of plaintiff's maintenance costs, are discoverable. It seems very likely from the nature of the case that documents of the kind sought do actually exist. It is not necessary to prove that they exist. Further, the documents are relevant because they are related to the question of what damages the plaintiff is entitled to arising from the relinquishing of the lease to machines. Knowing what expenditure the plaintiff was saved through the early return of themachine will be a factor that may arguably reduce the size of the damages that the plaintiff is able to claim. [17] Category 1.6, asking for all documents relating to Court proceedings or disputes for the 6060 machines, is drawn much too widely. The defendant has grounds for belief that Court proceedings and a dispute arose between Elizabeth Taylor Graphics and the plaintiff over a 6060 copying machine and as well that a dispute (although no litigation) arose from Otago Daily Times leasing or use of such a machine. In the case of Court documents involving Elizabeth Taylor Graphics the plaintiff is required to disclose all documents which are relevant in the Peruvian Guano sense. Because I am unclear about the scope of the documents so ordered, I reserve leave to the plaintiff to apply for further directions as to the extent of the documents to be discovered if it seems necessary. I would however urge both sides to use common sense and to limit their consideration to documents that are truly relevant. [18] I am not prepared to direct that the plaintiff provide documents of 'disputes with customers to whom it has supplied 6060 copying machines'. The formulation of documents so sought cannot be justified under Rule 8.24 and is far too wide. [19] Much the same considerations apply to category 1.7, requesting the names and addresses of customers to whom the machines were supplied. The connection between the categories of documents sought in 1.7 and the present dispute is far too tenuous to justify the making of an order. [20] I am not prepared to conclude that there are any documents in category 1.8 (equipment installation records) that are in existence that have not been discovered and I decline to make any order under that category.Result[21] I make orders for discovery for the following documents: a) Any documents evidencing service calls, maintenance work, reports on the symptoms of problems reported and anything relating toprobable causes of defects substantially similar those claimed by the defendant, particularly in respect of disputes between the plaintiff and Elizabeth Taylor Graphics; b) All service records for each of the machines referred to in Exhibit "D" of the affidavit of William John Matheson sworn 20th July 2009 for the period these machines were leased to the defendant; c) Records of the plaintiff's projected maintenance costs for servicing machines supplied to the defendant had the plaintiff continued to service those machines; d) Relevant Court documents involving Elizabeth Taylor Graphics with leave being reserved for the plaintiff to apply for further directions as to the extent of the documents to be discovered. [22] The parties should confer on and agree the issue of costs. If they cannot they are to advise the Registrar who is to allocate hearing time at 9 a.m. one morning on a suitable date. _____________ J.P. Doogue Associate Judge