Australian Communications Corporation Pty Ltd v Coles Myer Ltd

[2002] VSC 443

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

PRACTICE COURT

No. 5434 of 2000

AUSTRALIAN COMMUNICATIONS CORPORATION PTY LTD (ACN 058 100 271) & OVID PROSILIS	Plaintiff
V
COLES MYER LTD (ACN 004 089 936)	Defendant

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JUDGE:	Bongiorno J
WHERE HELD:	Melbourne
DATE OF HEARING:	4 October 2002
DATE OF JUDGMENT:	7 October 2002
CASE MAY BE CITED AS:	Australian Communications Corporation Pty Ltd & Anor v Coles Myer Ltd
MEDIUM NEUTRAL CITATION:	[2002] VSC 443

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Practice and procedure – application for separate trial of issues – specific discovery

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M. D. G. Heaton Q.C.	Ryan Carlisle Thomas
For the Defendant	Mr C. C. Macaulay	Mallesons Stephen Jaques

HIS HONOUR:

1. This matter, which concluded late on Friday, such that it was too late to deliver a ruling, involves a claim by Australian Communications Corporation Pty Ltd and Ovid Prosilis against Coles Myer Ltd, which was instituted by a writ issued out of this Court on 18 May 2000.

1. The plaintiffs' claim is based upon two alleged agreements which they claim the defendant wrongfully repudiated.  The first is an agreement made between October 1993 and April 1994, referred to in the pleadings as the "audit and implementation agreement".  It related to the production and distribution of Coles Myer Ltd subsidiaries' catalogues, and in particular related to services to be provided by the plaintiff with respect to effecting savings in the production and distribution of those catalogues by Coles Myer.  It entitled the plaintiff to remuneration based upon a percentage of the savings from the suggestions made by it to Coles Myer.  A document which was said to embody some of the terms of the contract set out the rates at which that remuneration would be earned depending upon certain events occurring.  The plaintiff claims that on 20 May 1994 there was a wrongful repudiation of that agreement by the defendant giving rise to a right in it to damages and other consequential relief. 

1. The second agreement is said to have been made in September or October of 1994 and related to the exclusive right to distribute 50% of the catalogues of Coles Myer and its subsidiaries for a period of five years.  The plaintiff claims that that contract was wrongfully repudiated in about February 1996. 

1. The matter has progressed until, on 8 August of this year, a summons was issued by the defendant returnable before the Master for an order which would separate the issues of liability and quantum in this case for separate trial pursuant to Rule 47.04.  On 8 August 2002 the plaintiff issued a summons seeking particular discovery of the defendant pursuant to Rule 29.08.  That particular discovery related to documents both from the defendant and its subsidiaries going to all issues in the case. 

1. The matter was heard by Master Evans who partially granted the application for further discovery by the plaintiff and adjourned the defendant's application for separate trials of the issues of liability and damages.  The plaintiffs appealed the Master's orders so that both summonses were effectively before this Court.

1. Mr Macaulay, who appeared for the defendant on this appeal to support the application for separate trials of the issues of liability and quantum, made two essential points.  Firstly, he said that the issues of liability and quantum in this case are very clearly delineated, that there was no overlap between them when they were properly analysed, and that there was no document or documents which would come from any subsidiaries by way of discovery which could ever be relevant to the issue of the defendant's liability;  that is to say, they could never be relevant either on the issue of whether either contract existed and, if so, whether either of them were wrongfully repudiated.  He said that, accordingly, that gave rise to the potential for the exercise of the Court's discretion under Rule 47.04 to separate the issues of liability and quantum, thereby shortening proceedings considerably, if, of course, the defendant was successful on the first issue.

1. The second point Mr Macaulay made was that the basis for making such an order lay in the fact that discovery issues going to the question of quantum would in this case be extensive and oppressive and could be avoided by such a division of issues.  He said that, so far as damages were concerned, questions of documents relating to the remuneration claim, lost opportunity and consequential loss, damages claims and similar issues in relation to the second agreement would all be relevant to the issue of discovery.  He relied upon extensive affidavits filed on behalf of the defendant by John Haydon Whiteoak, the defendant's solicitor, which went into considerable detail as to the magnitude of the discovery task which would be associated with the issue of quantum.  In Mr Whiteoak's second and third affidavits great detail was set out as to the difficulties associated with discovery, including discovery ordered by Master Evans as a result of the plaintiff's summons.

1. In the course of argument, no specific reference was made to the affidavit of discovery of the defendant's, that is to say, its affidavit of general discovery sworn on 10 July 2002, which enumerates some 150 documents as being relevant to the issues then between the parties.  However, that now seems to have been overtaken by a mutual acceptance that if there is not any separation of the issues of liability and quantum, then the plaintiffs' application for specific discovery as set out in its summons which is now before me on appeal needs to be considered and acted upon if thought appropriate.

1. The summons before Master Evans for discovery by the defendant resulted in an order relating to documents concerning only Myer Grace Bros., that is to say, one of the entities with which the plaintiff was concerned.  The basis of that order was that it was only in respect of that entity that the plaintiff ever implemented any audit procedure in purported execution of the alleged first agreement, and that therefore they were arguably the only documents which could possibly go to the issue of the existence of that agreement and its implementation, that is to say, the issue generally referred to as the issue of liability. 

1. Mr Macaulay relied upon two Victorian cases in support of his argument:  George Wimpey & Co. Ltd. v. Territory Enterprises Pty Ltd[1], a decision of Hudson, J., and, more particularly, Dunstan v. Simmie & Co. Pty Ltd[2], where an extensive examination of the power of the Court to separate issues is undertaken by Young, C.J. and Jenkinson, J. in a joint judgment.

   [1][1966] V.R. 312.

   [2][1978] V.R. at 669.

1. Mr Heaton of Queen's Counsel, who appeared for the plaintiffs, drew the Court's attention to a number of authorities.  It is necessary to refer only to two of them.  The first is a recent High Court authority of Tepko Pty Ltd & Ors. v. Water Board[3].  In that case, Kirby and Callinan, JJ., dealing with the question of separate trials of separate issues, made four comments.  At para. [168] their Honours said:

"The appeal should be allowed.  However, we should not leave this case without making four comments.  Both Mason, P. and Fitzgerald, J.A. were critical of the course of limiting the issues to be tried that the primary judge adopted.  In Perre v. Apand Pty Ltd, attention was drawn to difficulties that can be caused when that course is adopted.  In light of the experience in this case, what was there said should be restated with emphasis.  The attractions of trials of issues rather than of cases in their totality, are often more chimerical than real.  Common experience demonstrates that savings in time and expense are often illusory, particularly when the parties have, as here, had the necessity of making full preparation and the factual matters relevant to one issue are relevant to others, and they all overlap. 

The second and related comment is this.  A party whose whole case is knocked out on a trial of a preliminary or single issue may suspect, however unjustifiably, that an abbreviated course was adopted and a decision reached in the court's rather than the parties' interests.

Thirdly, there is an additional potential for further appeals to which the course of the trial on separate issues may give rise.  Indeed, that could occur here were this appeal to be allowed and a re-trial had in which the remaining issues of causation and damages were decided.  Single-issue trials should, in our opinion, only be embarked upon when their utility, economy, and fairness to the parties are beyond question."

Their Honours went on to deal with a fourth point which is not of any significance in this case.

[3](2001) 206 CLR 1.

1. In this Court, Byrne, J., in Hyder Consulting (Vic) Pty Ltd v. CGE Insurance Ltd[4], had reason to look at Rule 47.04 recently.  At para. [25], his Honour dealt with a large number of issues which go to the exercise of the discretion to try separate issues in a trial one before the other.  He said:

"It is said in the cases dealing with Rule 47.04 that a question should not be ordered to be tried before other questions unless it can be formulated with sufficient particularity.  A further consideration is whether the question can, in justice to the interests of all parties, be determined without the determination of the other questions in the proceedings.  In a conventional trial of all issues, each of the parties has the opportunity of bolstering its case from the evidence of any witness called by any party, including those who may be called on issues which, in chief, do not bear upon that case.  A party may in this way be unfairly disadvantaged if it is denied the opportunity to elicit this evidence.  Furthermore, the credit of a witness called on one issue may be affected by the evidence of that witness or of other witnesses on other issues.  The advantage, in terms of saving court time and expense, of trying certain questions or parts of a case before others may be eroded, if not destroyed, where a party at the first trial cross-examines a witness on the deferred questions on the basis that this ordinarily goes to the credit of that witness.  Where this course is adopted the cross-examiner is bound by the rule that answers given cannot be contradicted.  The position is otherwise if the cross-examination can be justified as going to an issue.  These considerations lead to the conclusion that the advantages of the severance of questions for trial before other questions or the division of a trial into parts, as a technique of efficient trial management, may lead to unfair advantage or disadvantage to a party or may prove to be illusory.  There is a further difficulty recently adverted to by Kirby and Callinan, JJ. in Tepko Pty Ltd v. Water Board that the procedure has the indirect disadvantage of prolonging the litigation where the determination of the preliminary issue is subject to appeal, so that the remainder of the trial may await the conclusion of a lengthy appeal process.  This, together with other considerations, caused their Honours to observe that 'the attractions of trials of issues rather than of cases in their totality are often more chimerical than real' and to counsel the profession that the trial of issues 'should only be embarked upon when their utility, economy and fairness to the parties are beyond question'.  From the perspective of a trial judge, it must be acknowledged, too, that the full implications of severance cannot be appreciated without a detailed familiarity with the evidence which might be led on the question or part of the proceeding to be tried first and on those which are to await the subsequent trial.  The trial judge, even a judge who has had dealings with the case as the judge managing the litigation, will not normally have such a familiarity.  It will be therefore necessary for that judge to rely upon counsel who are more likely to have this familiarity.  This is but another aspect of the particular relationship and confidence which must exist between the bench and bar in the efficient management and disposition of litigation.  But it also demonstrates the perils of adopting the course against the opposition of any party."

[4][2001] VSC 449.

1. I might add to what Byrne, J. said, the fact that modern litigation is generally referred for alternative dispute resolution at some point prior to trial, either by an order of the court or by the cooperation of the parties or both, is a further consideration to be taken into account in deciding whether to separate issues.  To separate one issue from another necessarily means that alternative dispute resolution is somewhat less effective;  the parties having concentrated their efforts, perhaps, on one issue to the neglect in the first instance of the others.

1. Mr Macaulay's argument that here the issues are so clearly defined that there was no overlap between the questions of liability and quantum had some initial attraction.  However, I am not able to say that I could confidently predict that all of the evidence on quantum would necessarily be irrelevant on the issue of liability if all issues were tried together.  It would only be if I could be so confident that one would consider the question of severance further.  Such a degree of confidence cannot be reached in this case.

1. So far as the issue of discovery is concerned, there is no doubt that the burden of discovery will be extremely heavy so far as the defendant is concerned, but that is one of the facts of litigation.  It cannot be avoided in a case where claims are made as widely as they are here, and, in theory at least, the defendant, if successful ultimately, will be compensated by an appropriate order for costs.  Should that be regarded by the defendant as being unlikely to produce an indemnity (or indeed on a party-party basis any real contribution towards the defendant's costs) of course, there are procedures in the Court available where, if appropriate, security for costs can be ordered. 

1. Accordingly, having considered the matter, I am of the opinion that Master Evans' orders should be set aside and that in lieu of each of his orders on the two summonses he was dealing with, the orders in effect dismissing the application for a separate trial should be made as well as orders for discovery. 

1. The Court will accordingly make the following orders:

1.The appeal from Master Evans by the plaintiffs on the orders made on each of the summonses dated 8 August 2002 will be upheld.

2.The orders of Master Evans on those summonses made 6 September 2002 will be set aside in each case.

3.On the defendant's summons seeking an order pursuant to Rule 47.04, that summons will be dismissed.

4.On the plaintiffs' summons seeking specific discovery pursuant to Rule 29.08, the orders will be made in terms of the summons itself, and in particular there will be orders in terms of paragraph 1 of the plaintiffs' summons of 8 August 2002, save for paragraph (d) of that order.

(Discussion ensued re costs.)

HIS HONOUR:  On both appeals the defendant will pay the plaintiffs' costs to be taxed.  I will grant a certificate to the defendant in respect of the appeal from Master Evans' order adjourning the application for separate trials under Rule 47.04.

I will finally order that this order be drawn up by the solicitors for the plaintiffs and signed by a judge pursuant to Rule 60.04 of the Rules.

(Discussion ensued.)

I will grant liberty to apply.

I will not fix any time for that discovery process, but what I would recommend is that that discovery process be done in tranches rather than in one go.  I will simply add these comments:  that the defendants ought to begin producing discovery and continue to produce it.  Under the liberty to apply, if the plaintiffs are concerned that it is taking too long, they can come back.  If the defendants have other concerns about it - in other words, the discovery process will be supervised by the Court, so far as is necessary, whilst remaining in the hands of the parties.  They are the only comments I would make.  I will not put any time on it.  If it is progressing in a sensible and expeditious way, it will be in the hands of the plaintiffs to come back to court to seek hurry up orders if they are not getting discovery, but by cooperation it should be able to be done without the necessity for it.

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