British American Tobacco Co v Philip Morris Ltd

[1997] FCA 1330

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 822 of 1994

BETWEEN:	BRITISH AMERICAN TOBACCO COMPANY Applicant
AND:	PHILIP MORRIS LIMITED Respondent

JUDGE(S):	LEHANE J
DATE:	10 NOVEMBER 1997
PLACE:	SYDNEY

EX TEMPORE REASONS FOR JUDGMENT

HIS HONOUR:   The motion before me is one by which the applicant seeks an order limiting the categories in which, on 21 October 1996, the Court ordered that discovery be given.

There were three categories of documents required to be discovered.  The first comprised documents relating to the alleged invention, that is to say principally the inventive process, both in relation to the particular kind of cigarette with which these proceedings are concerned and any other cigarettes with a similarly small circumference.  The second category comprised documents relating to the manufacture, distribution and sale of, as well as measurements or tests of or carried out on, cigarettes of that kind.  The third category related to cigarette manufacturing techniques and machinery available for the manufacture of cigarettes in Australia as at the priority date.  The second category also contains a temporal limitation by reference to the priority date: it refers to documents relating to manufacture, distribution and sale, and to measurements or tests carried out, before the priority date.  The first category does not incorporate such a limitation.  It specifically refers to documents coming into existence both before and after the priority date; but the category comprises documents relating to the alleged invention and apparently - the drafting is not perhaps as precise as one might have hoped - the invention of other cigarettes of the same general sort.

In any event, what the applicant now seeks, under O 15 r 3 of the Federal Court Rules, is an order imposing a proviso that the applicant is not to be obliged to give discovery of any documents dated or created after 1 January 1990.  As the notice of motion is drawn, the qualification is stated to apply only to the first category for discovery; but during the course of argument it was accepted that the motion should apply equally to categories two and three.

The motion is supported by an affidavit of Andrew James Wiseman, a partner of the firm of solicitors acting for the applicant.  The affidavit refers to a number of previous affidavits in which a slightly confusing range of estimates had been given as to the process of discovery and as to the time that would be required to complete it.  Mr Wiseman proceeds to describe some sampling, which he and others acting under his direction have carried out, of documents falling within the three categories for discovery created after 1 January 1990.  The sample comprised somewhat less than 10 per cent of the documents which would be required to be reviewed if discovery within the categories were to be given, with no limitation, as to time.  The documents in the sample all came into existence during 1990.

The result, as Mr Wiseman describes it, is that 19,365 pages of documents were reviewed.  Of those 747 were discoverable within the categories.  Of the 747 pages, 716 are said to have come into being entirely as a consequence of patent opposition or infringement proceedings in connection with the patent the subject of these proceedings or corresponding patents elsewhere in the world and comprise documents filed in those proceedings: they include notices of opposition, declarations, affidavits, written submissions and so forth.

Mr Wiseman then says that of those 716 pages, 163 appear to be privileged and the balance not.  That leaves, of the initial 19,365 pages, a balance of 31.  The 31 pages, Mr Wiseman says, appear to be in the nature of ongoing tests by the applicant, or its associated companies, of commercially available samples of Capri, the cigarette manufactured in accordance with the subject invention.

Finally, Mr Wiseman refers to an analysis which he caused to be carried out of certain documents, within the categories for discovery, which came into existence during 1989.  The purpose of that was to provide a check as to whether the sample of the later (1990) documents might err or be unrepresentative: whether, for example, a greater number of discoverable documents might be found in a later sample than in an earlier one.

On the footing of Mr Wiseman's affidavit, the applicant says simply that the evidence demonstrates that, while one can never be certain (and Mr Wiseman in evidence readily conceded that), it is highly unlikely that important documents would be found upon review of the remaining files of documents which came into existence after 1989 and that the possibility that documents material for discovery and significant to these proceedings might be found upon review was outweighed by the time and expense involved in finding them.  As to that, an estimate that 10 weeks would be required to complete the review, with an additional two weeks for completion of a list, was made on the basis that 10 paralegals would work on the task and would work “overtime”.  The applicant pointed to the English rule in O 104 r 11 of the Rules of the Supreme Court, which prima facie limits discovery to documents coming into existence within the period commencing two years before and ending two years after the earliest claimed priority date.

The priority date of the application in question here is 24 May 1985.  The publication date in Australia is a date in November 1986.  Accordingly, as Mr Kerr for the applicant pointed out, the cut-off time proposed by the applicant's motion is slightly more than four and a half years after the priority date.

Mr Garnsey's response on behalf of the respondent had a number of aspects.  He referred to delay on the part of the applicant in suggesting that an order should be made imposing an outside time limit on documents required to be discovered.  He pointed out that no such suggestion was made in the argument before me which resulted in the orders which I made in October 1996.  The motion which is before me now was in fact filed in Court only on
7 March 1997.

Mr Garnsey referred to what he characterised as the delay on the part of the applicant in meeting its discovery obligations and to the series of varying estimates provided by the applicant of the time likely to be involved in completing discovery.  He submitted also that in the context of a discovery which has already occupied more than a year and involved the inspection of a great number of documents, and clearly considerable expense, the remaining 10 or 12 weeks involved in discovery in accordance with the orders already made should not be regarded as of such significance that the proposed limitation should be accepted.

Mr Garnsey referred also to what I may no doubt accept as the notorious fact that the parties to this proceeding are of very considerable substance, well able to support the expenditure of complex, drawn out and costly proceedings.

Any limitation of discovery which permits discovery to be made in a form less than general discovery carries with it the risk that material documents will not be discovered.  It is now commonplace, however, in this Court and in other Courts, that orders for general discovery are made considerably less frequently than they were in the past and that the view is taken that discovery should be kept within manageable bounds, both for the benefit of parties, on whom discovery can impose an immense burden and considerable expense, and also from the point of view of the public interest in the efficient and prompt administration of justice.

The balance is not always an easy one to strike.  In this case it proved particularly difficult: that is illustrated by the course of negotiation between the parties which led to the motions before me in August 1996 on which I made the orders of 21 October of that year.  It is perhaps fair to say also that it is illustrated equally by the difficulties and disputes that have arisen since October 1996.

It is certainly true that 12 weeks seems a relatively short time by comparison with the time which has already elapsed.  Clearly the bulk of the work required to complete discovery in accordance with the 1996 orders has been done.  That remaining to be done is a relatively small proportion of the whole though by no means insignificant.  It is true also that the applicant's estimates have varied from time to time in a way which I, at least, have found somewhat confusing though it has been to an extent explained in evidence given this morning.

Bearing all those matters in mind, however, and subject to one matter to which I will return, the process of discovery and the process of review for the purpose of discovery have now proceeded to a point where the Court is in a position confidently to say that they ought to be regarded as complete.  That is so particularly having regard to Mr Wiseman's evidence in his affidavit of 3 November 1997 and orally this morning.  It seems to me highly improbable, bearing in mind the issues in these proceedings, that discovery during periods surrounding and following the sample reviewed will produce documents which will be both material for discovery and significant in the context of these proceedings.  It is in my view in the highest degree difficult to see that any of the documents found in the sample would - as they have been classified by Mr Wiseman - meet that description.

That impression is verified by what Mr Wiseman says as to the sample of the 1989 documents.  The time involved, ten weeks, and the expense likely to be involved are not insignificant, even in the context of a case of this kind.  I think the time has come when it is appropriate for the matter to proceed on the footing that discovery, subject to the matter to which I propose to return, is complete, so that directions can be given for inspection if necessary and in any event for the filing of affidavits.

The matter to which I must return is this: Mr Garnsey, as what he described as a fallback and nothing more than that, suggested that liberty ought to be reserved to the respondent to seek discovery as to particular documents or perhaps particular kinds of documents brought into existence on or after 1 January 1990.  No doubt he contemplates that inspection of documents up to that date might suggest a real possibility that particular documents which ought to be discovered were brought into existence in later years.  It seems to me that that liberty ought to be given.  As I have said, any limitation on discovery is to some extent a matter of speculation and of judging probabilities and can be shown to be mistaken, however unlikely a judge may initially think that to be.

The principal orders to be made, therefore, are first, that the orders of the Court made on 21 October 1996 are varied so that the applicant is not to be obliged to give discovery of any documents dated or created on or after 1 January 1990; and secondly, that the respondent has liberty on seven days notice, on motion supported by affidavit, to seek orders for discovery of documents dated or created on or after that day.

[Argument ensued as to the costs of the present motion and a motion by which the respondent sought summary dismissal of the proceeding]

The respondent moved for summary dismissal and, in the light of later events, withdrew its motion; the applicant has successfully sought relief from its discovery obligation in part but has, I accept, not until it filed Mr Wiseman’s affidavit on 3 November put before the Court material which would enable it confidently to deal finally with the applicant’s motion.  That material, however, has been with the respondent presumably since about 3 November and did, in my view, undoubtedly provide a substantial basis upon which the applicant could proceed to seek, as it did, limitation of its discovery obligation.

I think justice is adequately served, bearing in mind the course of proceedings today and when the matter was last before the Court, by ordering the applicant to pay the costs of the respondent of the proceedings before me on 18 September 1997, by otherwise making no order as to the costs of the respondent's notice of motion of 2 September 1997 and by ordering that the costs of the hearing of the applicant's motion today be costs in the cause.

I certify that this and the preceding five (5) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Lehane

Associate:       

Dated:            10 November 1997

Solicitor for the Applicant:	Allen Allen & Hemsley
Counsel for the Respondent:	Mr J J Garnsey QC and Mr T J Hancock
Solicitor for the Respondent:	Arthur Robinson & Hedderwicks
Date of Hearing:	10 November 1997
Date of Judgment:	10 November 1997