British American Tobacco (Investments) Ltd v Philip Morris Ltd

[1999] FCA 866

FEDERAL COURT OF AUSTRALIA

British American Tobacco (Investments) Ltd v Philip Morris Ltd
[1999] FCA 866

COSTS – whether respondent entitled to costs of motion and notice to produce relating to discovery issues

BRITISH AMERICAN TOBACCO (INVESTMENTS) LTD v PHILIP MORRIS LTD

NG 822 OF 1994

LEHANE J
28 JUNE 1999
SYDNEY

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

BETWEEN:

BRITISH AMERICAN TOBACCO (INVESTMENTS) LIMITED
Applicant

AND:

PHILIP MORRIS LIMITED
Respondent

PHILIP MORRIS LIMITED
Cross‑Applicant

BRITISH AMERICAN TOBACCO (INVESTMENTS) LIMITED
Cross‑Respondent

JUDGE:

LEHANE J

DATE OF ORDER:

28 JUNE 1999

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.The applicant pay one half of the costs of the respondent of its motions, notice of which was filed on 27 July 1998 and amended notice of which was filed on 8 October 1998, and its notice to produce, served on 15 July 1998.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

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

BETWEEN:

BRITISH AMERICAN TOBACCO (INVESTMENTS) LIMITED
Applicant

AND:

PHILIP MORRIS LIMITED
Respondent

PHILIP MORRIS LIMITED
Cross‑Applicant

BRITISH AMERICAN TOBACCO (INVESTMENTS) LIMITED
Cross‑Respondent

JUDGE:	LEHANE J
DATE:	28 JUNE 1999
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. This is the latest and, it is to be hoped, the last episode in a discovery saga which began early in 1995: in February of that year Gummow J made an order which contemplated the settling of categories of documents in which discovery was to be made.  The outstanding question relates to the costs of motions by which the respondent sought a series of orders.  The notice of motion was filed on 14 July 1998; an amended notice of motion was filed in Court on 8 October 1998.  The respondent sought orders for leave to add to its Grounds and Particulars of Invalidity, for particular discovery of certain documents listed in a schedule to a letter from the respondent’s to the applicant’s solicitors and an order for production and for inspection, of the originals of certain discovered documents (copies of which, earlier produced for inspection, were indistinct).  The applicant had indicated in correspondence that it did not consent to an amendment of the Grounds and Particulars of Invalidity and resisted (at least to a substantial extent) suggestions that further discovery or production was required.

2. On the return day of the notice of motion, the amendment sought proved not to be greatly controversial and I made an order giving leave to make it.  It emerged, however, that significant aspects of the application for particular discovery were controversial; particularly, the applicant claimed not to have understood that among the documents of which discovery was sought were documents which might be in the possession or power not of the applicant itself but of various subsidiaries of the applicant.  As a result, I stood the applications for orders for further discovery over to a later date and made directions that the applicant, before that date, file any further affidavits on which it wished to rely.

3. When the matter was next before me, on 17 December 1998, affidavits were read and I heard argument on a number of aspects of the motions.  I also had before me a somewhat refined and narrowed version of the orders sought by the respondent.  I concluded that an order for discovery of documents held by subsidiaries (the first order sought) was highly unlikely to uncover any significant discoverable documents; it was, on the other hand, likely to require lengthy, difficult and expensive activity to be undertaken.  Accordingly, I declined to make that order.  A number of the documents sought by a second proposed order were, I concluded – and there was no controversy about this – covered by the applicant’s existing discovery obligation; to the extent that that was so, I was not satisfied that the applicant had approached the task of discovery in a way which made a further order appropriate.  I did, however, make an order requiring the applicant to file and serve an affidavit as to what was described as its Central Brands Index: the purpose of the affidavit was to provide evidence of the nature and purpose of the Index, its history and the use made of it (or which might have been made of it, but was not) in the course of the applicant’s discovery.

4. The applicant filed certain further affidavits.  They were read, and I heard further argument, on 29 March 1999.  I concluded that the affidavits did not sufficiently satisfy the purpose for which they had been required; accordingly I made an order directing the applicant to file and serve an affidavit dealing with inspections which were made of the Central Brands Index for the purpose of discovery in related proceedings elsewhere, and any subsequent inspection of the Index, and explaining whether, and if so on what basis, it was said that there were no documents, contained in the Index, falling within the categories for discovery in this proceeding but not already discovered.  Such an affidavit in due course was filed.  Thus, when the matter was next before me, on 10 May 1999, nothing further was required to be done in relation to the motions other than to consider the question of costs.  I directed the filing of written submissions on that question.

5. One matter needs to be added to complete the factual picture.  On 15 July 1998 the respondent served on the applicant a notice to produce the documents the copies of which were indistinct or illegible.  That spawned, over an extended period, considerable further correspondence and led to the production of some documents and discs.

6. In brief, the respondent submits that the applicant’s discovery has been slow, grudging and inadequate and that it has been substantially completed only under the impetus of the motions and the orders made on them: looked at in that light, the respondent should be regarded as substantially successful.  On that footing the respondent seeks its costs of its motions and its notice to produce.  The applicant, on the other hand, says that the motions were premature and were substantially unsuccessful and that, accordingly, an order for costs should be made in favour of the applicant or, at least, there should be an order that the costs of the motions be costs in the cause.

7. In my view, the truth of the matter – which I am sure is by no means the most significant or expensive in this substantial and long‑running litigation – lies between those two positions.  I am surprised, looking back at the terms of the motion, the evidence and the correspondence, that the applicant did not expect, when the matter was first before me, that discovery would be sought of documents held by subsidiaries of the applicant.  That, I think, had been made clear.  On the other hand, I declined in the end to make an order in relation to documents in the possession or power of subsidiaries.  But there must have been some costs thrown away on that question.  The respondent did not obtain much – perhaps, strictly speaking, anything – by way of orders for further discovery.  However, some matters were conceded (in relation to so‑called “missing” documents) and a matter was investigated – the Central Brands Index – which on the evidence called for investigation, an investigation which, for reasons for which the respondent was not responsible, required more than one hearing and more than one attempt to get the evidence in order.  As for the notice to produce, I think it is sufficient to say that, in my view, the applicant has been rather more slowly forthcoming than it might have been.

8. I have mentioned the respondent’s general criticism of the applicant’s approach to discovery.  It is a criticism which has been made on earlier occasions and on those occasions I have, as a general criticism, rejected it.  There is no doubt, on evidence which has been led at a number of hearings in this matter, that the applicant’s discovery obligation has been extensive and onerous and has consumed much time and substantial resources.  A number of estimates of what was involved and of time likely to be taken proved overly optimistic.  In the context of an exercise of the size and complexity of this, the applicant is not in my view to be criticised if it appears – as it has – that a relatively small number of documents has been inadvertently missed.  Of course, where it turns out that that has happened, it is to be expected that the matter will be promptly remedied.  Equally, where it appears that there is a source, which may have been overlooked, from which additional discoverable documents may be found (such as, as it seemed might be the case, the Central Brands Index) it is to be expected that that will be pursued.  Likewise, if copies of discovered documents are produced which cannot be read, but better copies or legible originals exist, it is to be expected that steps will be taken promptly to remedy the situation so far as that can be done.  A reading of the correspondence does suggest, I think, a degree of reluctance on the part of the applicant to see that there were some outstanding matters in relation to discovery which needed to be attended to; and I think that there is justification for the respondent’s submission both that the filing of the notice of motion was necessary in order to bring matters to a head and that the need for several hearings and successive orders was due, in considerable part, to the fact that the applicant did not initially perceive fully what was sought and, later, what was required by orders which were made.

9. The question is, of course, a discretionary one.  In my view the respondent is entitled to have the applicant pay a portion, but not all, of the costs of its motions and notice to produce.  In my view the appropriate portion is one half of those costs and I so order.  Whether, at the end of this litigation, anyone will consider it worthwhile, whatever the ultimate result, to insist on the apportionment which would be required is a topic on which I need not speculate.

I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lehane.

Associate:

Dated:             28 June 1999

Solicitor for the Applicant:	Allen Allen & Hemsley
Counsel for the Respondent:	Mr J J Garnsey QC with Mr T J Hancock
Solicitor for the Respondent:	Arthur Robinson & Hedderwicks
Date of Hearing:	10 May 1999
Date of Judgment:	28 June 1999