Century v THLD

[2000] NSWSC 327

CITATION:	Century v THLD [2000] NSWSC 327
CURRENT JURISDICTION:	Equity Division Commercial List
FILE NUMBER(S):	SC 50042/98
HEARING DATE(S):	14/04/00
JUDGMENT DATE:	19 April 2000
PARTIES :	Century Medical Inc - Plaintiff THLD Limited - First Defendant Medical TPLC Pty Limited - Second Defendant TPLC Pty Limited - Third Defendant Telectronics Pacing Systems Inc - Fourth Defendant TPLC Incorporated - Fifth Defendant Nucleus Limited - Sixth Defendant Pacific Dunlop Limited - Seventh Defendant
JUDGMENT OF:	Rolfe J

COUNSEL :	Mr L.G. Foster SC - Plaintiff Mr T.J. Walker - Defendants
SOLICITORS:	Blake Dawson Waldron - Plaintiff Freehill Hollingdale & Page, Melbourne - Defendants
CATCHWORDS:	Discovery
CASES CITED:	Mulley v Manifold & Ors (1959) 103 CLR 341
DECISION:	1. In dealing with the contentious issues before me I have set forth my views as to the extent of discovery. As I understood it, the parties propose to act conformably with these opinions whilst I am away. If necessary formal orders can be made on my return; 2. I propose that the balance of the plaintiff's Notice of Motion and the defendants' Notices of Motion stand over to Friday, 19 May 2000. I shall then consider the question of costs of the matter thus far argued.

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

ROLFE J

WEDNESDAY, 19 APRIL 2000

50042/1998 - CENTURY MEDICAL INC v THLD LIMITED & ORS (NO 2)

JUDGMENT

HIS HONOUR:

Introduction

1    There are presently before the Court three Notices of Motion, one filed by the plaintiff on 7 April 2000 and two filed by the defendants on 7 and 12 April 2000. The parties agreed that it was appropriate for me to hear portion of the plaintiff’s Motion for discovery only at this stage.

2    By that Notice of Motion, which was supported by the affidavit of the solicitor for the plaintiff, Mr Graydon Francis Dowd, sworn 13 April 2000, the defendants sought the following substantive orders:-

“1. The defendants provide discovery of documents falling within categories 8, 9, 10, 12, 13, 15 and 19 of the document entitled ‘Categories of Documents to be Discovered by the Defendants’ served on the defendants on 16 September 1999, annexed hereto and marked ‘A’.
2. The defendants provide discovery of documents more particularly described in letter from Blake Dawson Waldron to Freehill Hollingdale and Page dated 28 March 2000 annexed hereto and marked ‘B’.
3. The defendants provide discovery of the documents described in attachment to facsimile from Blake Dawson Waldron to Freehill Hollingdale and Page dated 6 April 2000 annexed hereto and marked ‘C’.”

3    It is convenient to dispose immediately of the documents referred to in the letter, which is Annexure “C” to the Notice of Motion. Mr T.J. Walker of Counsel, who appeared for the defendants, stated that he required further time to consider the revised category of documents and, in those circumstances, was not in a position to argue that part of the Notice of Motion. Mr L.G. Foster of Senior Counsel, who appeared for the plaintiff, accepted that this was the position and, accordingly, that paragraph 3 of the Notice of Motion will have to stand over to another date.

4    Annexure “A” sets out categories of documents to be discovered by the defendants by reference to three headings, “Category Number”, “Category Description” and “Summons Paragraph Reference”. It is possible to dispose of two paragraphs, which were not the subject of controversy, immediately. Mr Walker agreed that the documents referred to in category 15 should be discovered. So far as category 19 is concerned Mr Walker stated that the defendants would give discovery in accordance with sub-paragraphs (a) to (k), Mr Foster having advised me that it was not proposed to press for discovery of the documents referred to in sub-paragraphs (l) and (m). Mr Walker said that the discovery was to be limited to documents in the sub-paragraphs which met the opening words and, ultimately, this was agreed.

5    The relationship between the various parties is in issue and, for that reason, the documents in category 19 are discoverable. So also are those in category 1 and Mr Walker stated that the defendant was prepared to give discovery conformably with that category.

6    At this stage I think it best to allow the matter to proceed on the basis that discovery of the documents to which I have referred will be granted and, of course, the parties have the right to seek further and better discovery if that is thought necessary.

Contentious Matters

(a) Categories 8, 9 And 10

7    The defendants accept that some of the documents referred to in categories 8, 9 and 10 are discoverable and, on 10 March 2000, various orders were made for discovery in relation to a number of categories. So far as categories 8, 9 and 10 are concerned the orders are contained in paragraph 10(c)(i) and (iii). The whole of paragraph 10 is prefaced by the words:-

“The defendants or any one or more of them file and serve lists of the documents described in the letter dated 9 March 2000 from the defendants’ solicitors to the plaintiff’s solicitors.”

Clauses 10(c)(i) and (iii) state:-

“(i) Categories 8, 9 and 10 to include documents referred to in or attached to the letter and notices respectively referred to in paragraphs 129, 130 and the particulars to paragraph 140 of the plaintiff’s Further Amended Summons;
…
(iii) Subject to any further request by the plaintiff for discovery of documents referred to in paragraphs 8, 9 and 10 of ‘Categories of Documents to be Discovered by the Defendants’ annexed to the plaintiff’s solicitors’ letter dated 16 September 1999.”

8    It was submitted on behalf of the plaintiff that whilst some of the paragraphs of the Further Amended Summons focused attention particularly upon the defendants’ alleged failure to inform it of the defects alleged in the products supplied and of the FDA investigations, the relevance of the documents called for was not limited to the facts and matters pertinent to the alleged failure to inform, and that the existence of defects in the products supplied is a crucial matter relevant to most, if not all, causes of action relied upon in the Further Amended Summons. In particular, those based on negligent misrepresentation and negligence are founded upon extensive allegations in respect of the design, manufacture and packaging of the products. It was submitted that the FDA documents contained information and, in so far as they included documents emanating from the defendants, statements made by or on behalf of them, which on any reasonable view would almost certainly lead to a train of inquiry tending to support the plaintiff’s or damage the defendants’ case in relation to the alleged defects, should be discovered.

9 Reliance was placed on the statement in Malley v Manifold (1959) 103 CLR 341 at p.345 that whilst a document must relate to a matter in issue to be discoverable, “it is sufficient if it would, or would lead to a chain of enquiry which would, either advance a party’s own case or damage that of his adversary”.

10    On behalf of the defendants it was submitted that the orders made provided for discovery of categories of documents pursuant to the class descriptions set out in categories 8, 9 and 10 of the defendants’ solicitors’ letter dated 9 March 2000, and not the class descriptions contained in the plaintiff’s solicitors’ letter dated 16 September 1999. This submission flowed from the general opening words of the paragraph, which I have quoted.

11    In the letter of 9 March 2000 the defendants’ solicitors set out their clients’ suggestions as to the categories of documents that should be discoverable and, in relation to paragraphs 8, 9 and 10 and by reference to paragraphs 97 to 100, 129, 130 and 132 of the Further Amended Summons, said that the first to fifth defendants proposed to discover the letters of 24 January 1994 and 15 October 1994, together with the responses to those letters submitted to the FDA. The letter continued that allegations were made that prior to May 1995, or alternatively November 1994, the first to fifth defendants failed to inform either the MHW or CMI of the letters, and that they proposed to discover any documents relevant to whether this information was so provided.

12    It continued that allegations were made of failure to inform of eight specific FDA notices and a response document dated 9 August 1994, and that:-

“The first to fifth defendants propose to discover copies of each of the documents in responses submitted to the FDA. Further, they propose to provide any documents relevant to whether the above was communicated to either or both of CMI and MHW.”

13    The defendants submitted that the plaintiff accepted their class descriptions relevant to the allegations made in the paragraphs I have identified, but that the plaintiff now wishes to resile from that and seek discovery according to the generalised categories in its solicitors’ letter of 16 September 1999 “knowing that the defendants had rejected such class descriptions for unacceptable width and irrelevance”. It was submitted that the allegations to which categories 8, 9 and 10 relate are advanced to make out a case of non-disclosure in breach of contract, but that the plaintiff now seeks to relate those categories to other causes of action, notwithstanding that the letter of 16 September 1999 made no such connection. It continued that the subject matter of the alleged non-disclosure is set forth precisely in the Further Amended Summons and is no wider “than the documents identified in categories 8, 9 and 10 of” the letter of 9 March 2000. It was submitted that the plaintiff should not be allowed to resile from the class descriptions to which it agreed on 10 March 2000, although the defendants have agreed to wider discovery in so far as it relates to pleaded allegations.

14    It was further submitted that Part 23 confined the role of discovery more narrowly than the common law: rule 1(d). In my respectful opinion this is not so and the basic common law rules of discovery, as stated in Mulley v Manifold, apply. Thus, in my opinion, where a document would tend to advance either party’s case, or would lead to a chain of inquiry that might have that effect, it is discoverable.

15    Nor do I consider that the order made by consent on 10 March 2000 has the effect for which Mr Walker contended. Sub-paragraph (iii) makes it clear, in my opinion, that the discovery to be given was subject to any further request. On one reading that may have the confined the effect of any further request in relation to the more circumscribed ambit set out in the letter of 9 March 2000, but when it is appreciated that it is put in the context of categories 8, 9 and 10 as appearing originally it seems to me that the better approach is that the plaintiff was not giving up its right to these documents. In this litigation I would require far more definite words before coming to that conclusion.

16    In the result I do not consider that the plaintiff’s request should be restricted in the way for which the defendants now contend. Subject to any particular objection to documents falling within categories 8, 9 and 10, with which the Court will have to deal if it is taken, I consider that the plaintiff is entitled to discovery of the documents it seeks.

17    I think that I have dealt with the substantial issue, which divided the parties in relation to this aspect of the matter. That was the effect of the order of 10 March 2000. I have stated my conclusion in that regard and, I think, I have made it clear that subject to what I have said the defendants retain the right to object to any particular documents falling within those categories on specified grounds.

Category 12

18    Under this category all documents (including but not limited to correspondence) passing between one or more of the defendants or any of the defendants and any of FDA, CMI and MHW evidencing, recording, referring to or relating to the USA Consent Decree are sought.

19    In paragraph 103 of the Further Amended Summons the plaintiff pleads the existence of the Consent Decree.

20    It was submitted by the plaintiff that the circumstances in which that Consent Decree was made may lead to a train of inquiry relevant in the discovery process from which it should not be shut out.

21    The defendants oppose the request as irrelevant to matters in issue on the basis that the Consent Decree speaks for itself and was entered into solely for the purpose of settlement of the proceedings in which it was made. It was pointed out that it was made without any admissions in relation to the allegations in the Complaint and on the express basis that the relevant defendants disclaimed any liability in connection with such allegations. The submission continued that from a reading of the Consent Decree it is clear that it was concerned with manufacturing procedural issues associated with Good Manufacturing Practice Regulations, and not with the product liability issues raised in this proceeding. The further submission was made that paragraph 105 of the Further Amended Summons seeks to rely upon the fact that the Consent Decree caused Japanese authorities to persuade the plaintiff to voluntarily suspend all importations and sales of Telectronics brand heart pacemaker products in Japan for the reason pleaded.

22    I was provided, by consent, with a copy of the Consent Decree. I do not, with respect, agree that it is limited in the way for which the defendants contend, the opening paragraph making it clear that the defendants were alleged to have violated various laws of the United States:-

“.. by introducing and delivering for introduction into interstate commerce, and by manufacturing, processing, packing, labelling, and holding for sale after shipment of one or more of their components in interstate commerce, articles of device that are adulterated within the meaning of”

the identified United States law.

23    The Consent Decree prohibited the introduction and delivery for introduction into interstate commerce of any article of device within the meaning of the stated law that “has been manufactured, processed, packed, labelled, or held at the defendants’ facilities located at … or any other United States manufacturing facility …”, and from carrying on a range of activities relating to manufacturing, processing, packing and labelling. The Consent Decree made provision for articles to be inspected by the FDA representatives, who were given wide powers of access. The Consent Decree, which runs for some sixteen pages, set out a number of sanctions and restrictions to which the defendants were subjected.

24    It seems to me that the plaintiff alleges far more than the defendants accept in paragraphs 103 to 105, and in the balance of the Further Amended Summons, and that consistently with the view I take of the requirements for discovery they should make discovery of the documents set out in category 12. The plaintiff is obviously seeking documents which may provide it with a chain of inquiry as to the circumstances in which the defendants in the United States proceedings dealt with the claim made against it and what admissions or concessions may have been made in those proceedings. This, in my opinion, is an appropriate area for discovery.

Category 13

25    Category 13 seeks a number of documents by reference to paragraph 87 of the Further Amended Summons, which alleges that from about mid-1991 to May 1995, certain individual units of Telectronics brand heart pacemaker products acquired by the plaintiff were defective. This allegation was particularised by asserting that individual units of Telectronics brand heart pacemaker products acquired by CMI and explanted from patients were forwarded by hospitals and/or CMI to the Telectronics Group of Companies for assessment and analysis. The particulars continued that an “Explant Return Sheet” was also forwarded to the Telectronics Group of Companies with the brand product and certain other information so that the defective units and the nature of the defects were identified in the test reports.

26    The request for discovery relates to all documents that passed between any of the defendants or any of the defendants and any of FDA, CMI, hospitals, medical practitioners, MIC or other sub-agents of any of the defendants, which evidenced, recorded, referred to or related to particular individual units of Telectronics brand heart pacemaker products supplied to CMI or any previous distributor of Telectronics brand heart pacemaker products in Japan that were explanted from patients, including but not limited to, Explant Return Sheets and correspondence and/or documents entitled “Telectronics Test Report” or “Pulse Generator Analysis Date Sheets”.

27    In the defendants’ solicitors’ letter of 9 March 2000 it was asserted that it is oppressive to request that discovery, as the Further Amended Summons makes clear that such documents are already within the possession of the plaintiff, and that further, to the extent that such documents are not in the possession of the plaintiff, the request is onerous and oppressive and travels beyond paragraph 87. There is no suggestion that the volume of the documents concerned makes the request oppressive.

28    The plaintiff has submitted that these are not proper grounds for resisting discovery, and that it is entitled to have all such documents, including those passing between the defendants and essential transactional documents between the parties. The submission stated that the relationships between the defendants is in issue, such that they should discover documents “which tend to throw light upon” it. Further, any documents passing between the defendants within this category, it is submitted, may be expected to cast light upon defects in the products and the defendants’ knowledge thereof.

29    The defendants submitted that the documents described “travel well beyond the documents referred to in paragraph 87” and relate not only to products supplied to the plaintiff but to others in Japan without any limitation as to the relevant time period, which is contrasted with paragraph 87.

30    It seems to me that there should be a temporal limitation on the documents required, but I do not agree that there needs to be a limitation in respect of products supplied to others, provided that the products are of the same type.

31    The defendants further submitted that the documents described lack any probative value in relation to the plaintiff’s pleaded case, paragraph 87 making no specific complaint in relation to individual units supplied to the plaintiff. The submission continued that it is inconceivable that the plaintiff proposes to conduct a mini-investigation at trial in relation to each individual unit of product explanted from patients in Japan. Such, so it was said, would turn this commercial cause into a Royal Commission.

32    It was further submitted that it is apparent from the nature of the heads of loss claimed by the plaintiff that no such claim is made for loss connected with the explantation of individual units and, accordingly, the discovery sought in category 13 can be of little or no assistance to the Court in determining the broader allegations made by the plaintiff.

33    If I may say so, with respect, it is not a question as to the assistance to the Court, but rather the ability of the plaintiff to ascertain the existence of and follow the chain of inquiry.

34    In these circumstances I do not consider that in the light of an allegation that the products were defective, discovery can be limited in the way for which the defendants contend.

The Letter Of 28 March 2000

35    By their letter of 28 March 2000, the solicitors for the plaintiff referred to certain class proceedings in the United States. Judgment was given in which it was alleged that the trial Judge made a number of factual findings in respect of the relationship between the “Telectronic Companies”, Nucleus Limited and Pacific Dunlop Limited. The plaintiff’s solicitors obtained access to the index of the documents filed, which contained various depositions, including one of Mr Thomas, who is likely to be a witness in these proceedings. Also it appears that certain submissions were obtained.

36    The defendants have objected to the discovery of these documents. It is submitted, and so much was not in dispute, that the factual findings in the judgment could not be used in these proceedings, the judgment doing no more than proving that a judgment was given and certain findings were made. However, the plaintiff submitted that it was entitled to discovery of the depositions to provide a possible permissible chain of inquiry. Mr Walker responded that the only use to which the depositions could be put was to assist in cross-examination and that this was not a proper use of discovery.

37    In my opinion the depositions are discoverable. The information may provide matters the plaintiff can legitimately follow up. I am of the view that the submissions do not fall into this class. They are not, in themselves, evidentiary of any matters in issue, but rather set forth the various positions for which the party contends. In my opinion, they are not properly the subject of discovery.

Conclusions

38    In dealing with the contentious issues before me I have set forth my views as to the extent of discovery. As I understood it, the parties propose to act conformably with these opinions. If necessary formal orders can be made.

39    I propose that the balance of the plaintiff’s Notice of Motion and the defendants’ Notices of Motion stand over to Friday, 19 May 2000. I shall then consider the question of costs of the matters thus far argued.

Last Modified: 09/25/2000