Murex Diagnostics Australia Pty Ltd v Chiron Corporation

[1995] FCA 961

CATCHWORDS

PRACTICE AND PROCEDURE - discovery - whether an order for particular discovery can be made in respect of a document or class of document "relating to any matter in question in the proceeding" where the document or class of document does not relate to "any matter in question between [the party requiring discovery] and the party giving the notice of discovery" - discussion of relevant authority in England and New South Wales.

Rules of Federal Court of Australia, Order 15 rules 1, 5 and 8

Murex Diagnostics Australia Pty Limited v Chiron Corporation
(1995) 55 FCR 194
Cory v Cory [1923] 1 Ch 90
Spokes v The Grosvenor and West End Railway Terminus Hotel
  Company, Limited [1897] 2 QB 124
Cojuanco v Routley [1983] 1 NSWLR 723
Mulley v Manifold (1959) 103 CLR 341
Unilever Plc v Chefaro Proprietaries Ltd [1994] FSR 135

MUREX DIAGNOSTICS AUSTRALIA PTY LIMITED v CHIRON CORPORATION & ANOR
NG 106 of 1994

Burchett J.
Sydney
28 November 1995

IN THE FEDERAL COURT OF AUSTRALIA  )
  )
NEW SOUTH WALES DISTRICT REGISTRY  )    NG 106 of 1994
  )
GENERAL DIVISION                 )

BETWEEN:MUREX DIAGNOSTICS AUSTRALIA PTY LIMITED

Applicant

AND:     CHIRON CORPORATION

First Respondent

AND:     ORTHO DIAGNOSTIC SYSTEMS, INC

Second Respondent

AND BETWEEN:     CHIRON CORPORATION

Cross-Claimant

AND:MUREX DIAGNOSTICS AUSTRALIA PTY LIMITED

First Cross-Respondent

AND:MUREX DIAGNOSTICS LIMITED

Second Cross-Respondent

CORAM: Burchett J.
PLACE: Sydney
DATE : 28 November 1995

ORDER OF THE COURT

THE COURT ORDERS THAT the applicant for discovery bring in, on a date to be fixed, short minutes of an order appropriate to be made in the light of the reasons of the Court.

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 106 of 1994
  )
GENERAL DIVISION                 )

BETWEEN:MUREX DIAGNOSTICS AUSTRALIA PTY LIMITED

Applicant

AND:     CHIRON CORPORATION

First Respondent

AND:     ORTHO DIAGNOSTIC SYSTEMS, INC

Second Respondent

AND BETWEEN:     CHIRON CORPORATION

Cross-Claimant

AND:MUREX DIAGNOSTICS AUSTRALIA PTY LIMITED

First Cross-Respondent

AND:MUREX DIAGNOSTICS LIMITED

Second Cross-Respondent

CORAM: Burchett J.
PLACE: Sydney
DATE : 28 November 1995

REASONS FOR JUDGMENT

BURCHETT J.:

This is a motion brought by the cross-claimant Chiron Corporation for a particular order in respect of discovery against the second cross-respondent Murex Diagnostics Limited.

I explained the general nature of the principal proceeding in my judgment, in respect of earlier motions, reported as Murex Diagnostics Australia Pty Limited v Chiron Corporation (1995) 55 FCR 194. One of the questions then involved was whether the cross-claim against the second cross-respondent should be set aside upon the principles discussed in Trade Practices Commission v The Gillette Company (No 1) (1993) 45 FCR 366. I held that it should not. Since then, a statement of defence has been filed on behalf of the second cross-respondent, which supplied diagnostic kits to the first cross-respondent that are alleged by the cross-claimant to have infringed its patent. Initially, the second cross-respondent pleaded invalidity of the patent upon a number of grounds, including novelty, obviousness and utility. But by an amendment made, so the cross-claimant contends, only after it had sought discovery of the documents now the subject of dispute, the three grounds mentioned have been withdrawn. They remain, however, grounds pleaded by the other cross-respondent, which is the applicant, and they are raised in the application. If they are so raised successfully, the patent will be revoked so as to defeat the cross-claim against both cross-respondents. The documents the subject of the present motion are relevant to the issue of obviousness. They are not, and have never been, in the possession of the applicant.

In this situation, the single question which, if decided in favour of the second cross-respondent, would determine this motion, is whether the order for particular discovery sought can be made, there being no issue of obviousness raised upon the pleadings between the applicant for discovery and the second cross-respondent.  However close the relationship between the company which has raised this issue and the second cross-respondent, if the principles upon which the Court orders discovery do not extend to such a case, the order cannot be made.  In Unilever Plc v Chefaro Proprietaries Ltd [1994] FSR 135 at 142 Hoffmann L.J. said:

"When validity is challenged on the ground of obviousness, it is standard practice to ask for discovery of the research and development which went into the defendant's product.  The object is to demonstrate, by reference to the work of the defendant's own researchers, that the subject-matter of the patent could not have been obvious to them.

This works perfectly well when research, manufacture and sale are undertaken by the same company.  In the case of a multi-national, however, the alleged infringer may be a marketing company operating entirely in the United Kingdom, and the research and development may have been done by another group company in this or a different country.  Whether one can obtain discovery against the latter company, in an Order 11 or Brussels Convention case depends, as this court decided in Unilever v. Gillette, upon whether an arguable case can be shown for joining the company as a substantive defendant.  This will involve demonstrating that it was arguably party to a common design to commit the acts which are alleged to constitute infringement.

Unilever v. Gillette and the later case of Mölnlycke AB v. Procter & Gamble Ltd. [1992] R.P.C. 21, show that it will often be possible to do so. In practice, however, the plaintiff has no interest in obtaining a final judgment against the additional defendant. The remedy against the primary infringer would usually be adequate. The plaintiff will have achieved the whole of its objective by keeping the additional defendant in the action for the purposes of discovery. It therefore seems to me strange that its right to do so should depend upon whether the court thinks there is a serious issue to be tried on a question which thereafter no-one will seriously want to have tried at all."

In the present case, I have already held (in one of the motions dealt with in the judgment reported as noted above) that it was open to Chiron Corporation to proceed against the second cross-respondent, which is a United Kingdom company.  But that company seeks to distinguish the proposition stated by Hoffmann L.J. on the basis that discovery is still unobtainable against it unless it chooses to raise the issue to which the discovery would relate, even though in a practical sense it has the benefit of the issue through the pleading of it by the first cross-respondent.  Of course, if Chiron Corporation can overcome the hurdle of the availability of discovery, there will remain a question how I should exercise my discretion.  But on this question, what Hoffmann L.J. said would be persuasive.  He stated (at 143) that

"discovery of research and development documents should be available against a multi-national on a group basis.  It should not depend upon the particular corporate structure of the group and how it has chosen to divide its activities." 

With that statement, the other members of the Court of Appeal, Glidewell and McCowan L.JJ., agreed.

In Murex Diagnostics Australia Pty Limited v Chiron Corporation (supra), I considered a similar argument raised by a party which had filed a submitting appearance, and then contended (see 197) that there were "no matters in issue in the proceeding between it and the applicant", which was seeking discovery.  I discussed the problem in some detail, examining the rules of court and citing the decision of the Court of Appeal in Cory v Cory [1923] 1 Ch 90. The conclusion I then reached was that the court had power, under Order 15 rule 8, to make the order sought, but I held it should not do so in the particular circumstances, as a matter of discretion. Counsel for the second cross-respondent contend that I there stated the power too widely, and that Cory v Cory should be confined to its own facts, and to the particular rule upon which it was decided.  They say it is a decision which stands alone, and had not been followed in a reported case prior to Murex Diagnostics Australia Pty Limited v Chiron Corporation (supra), although the law is stated in accordance with it in Halsbury, 4th ed., para. 16, footnote 13.

An argument of this sort is always somewhat two-edged.  A decision may not be discussed in subsequent reported cases, simply because no one questions its correctness, and as a consequence the point does not again arise for discussion.  In fact, Cory v Cory does not stand alone.  It followed an earlier decision of the Court of Appeal in Spokes v The Grosvenor and West End Railway Terminus Hotel Company, Limited [1897] 2 QB 124; and although Cory v Cory was not cited, Yeldham J. in Cojuanco v Routley [1983] 1 NSWLR 723 took precisely the same view, of a relevantly similar rule in the Rules of the Supreme Court of New South Wales, as the Court of Appeal had taken of the rule with which it was concerned in Cory v Cory.  In Spokes, the Court of Appeal had to interpret, as appears from the judgment of A.L. Smith L.J. (at 127), Order XXXI rule 12 of the Rules of the Supreme Court, which provided: "Any party may ... apply to the Court or a judge for an order directing any other party to any cause or matter to make discovery on oath of the documents in his possession and power."  It was argued that the old chancery practice required a defendant to have some interest in the subject before he could be compelled to answer a bill for discovery and that, as no relief was asked against the defendant company from which discovery was sought, an order could not be made.  But A.L. Smith L.J. said (ubi supra):

"Why is not the company an `other party' within this rule?  The company are defendants in the action in order that the action may be maintained, and to my mind are clearly a necessary party, which a mere witness certainly is not."

Chitty L.J. (at 129) dealt with the point even more directly.  He said:

"The order complained of was made under rule 12 of Order XXXI.  That rule speaks of `other party': an order for discovery may be made against `any other party to any cause.'  ...  I am of opinion that this case falls within the express provisions of the rule in question, and that there was jurisdiction to make the order."

In Cory v Cory (supra, at 95), Sargant J. (as he then was) commented that Spokes was a case where "there was no question really between the plaintiff and the defendant company.  The plaintiff really was in substance a co-plaintiff with the defendant company."  Yet discovery had been ordered. He referred to the width of the language of the rule, and to the fact that Russell J. (in an earlier unreported application in the same matter) had held it was wide enough to give jurisdiction in such a case.  He said:

"There is no doubt whatever that the company [against which discovery was sought] is `any other party' within the meaning of that rule, and I see no words at all in the rule which prescribe that the discovery to be granted is to be limited to such documents in the possession of the other party as relate solely to such part of the matters in question in the action as are matters between the plaintiff and that other party.  To read the words so seems to me to be introducing words into the rule, and words which it seems to me quite unnecessary to introduce, having regard to the very wide discretion given to the Courts under the rule.  If there was no discretion at all, that would be a reason for reading the words in a limited way.  If the discretion is one of the broadest kind, it seems to me to be one reason, and a cogent reason, for refusing to limit the generality of the language."

Sargant J. also pointed out (at 96) that the old practice in the Court of Chancery had at one time permitted parties to be joined "for the purpose of discovery only".  That implied that it was not thought to be inconsistent with the nature of discovery to order it against a party who had no interest in the particular issue.  On appeal, it was argued (as appears at 97) that "(t)he Court can only order discovery relevant to issues between the plaintiff and the defendant company".  The Court (Lord Sterndale M.R., Warrington and Younger L.JJ.) did not call upon counsel for the respondent, affirming the decision for the reasons given by Sargant J.

Cojuanco v Routley, as Yeldham J. said (at 724), raised

"the question whether a person joined by a defendant as cross-defendant, and who is not also sued as defendant by the plaintiff, is entitled in appropriate circumstances to administer interrogatories to the plaintiff".

Part 24 rule 1 of the Supreme Court Rules provided a procedure for the administration of interrogatories pursuant to a notice served by one party on another.  It confined this procedure to a case where the interrogatories related "to any matter in question between the interrogating party and the party served".  But there was also a rule 5, sub-rule (1) of which provided:

"The Court may, at any stage of any proceedings, order any party to file and serve on any other party (whether the interrogating party or not)

(a)a statement in accordance with rule 6 in answer to interrogatories specified or referred to in the order relating to any matter in question in the proceedings; or

(b)a statement as mentioned in paragraph (a) verified by affidavit."

Sub-rule (2) then provided that the Court should not make such an order "unless satisfied that the order is necessary at the time when the order is made".  Of the problem posed by these rules, Yeldham J. said (at 727-728):

"Mr Menzies, counsel for the plaintiff (ie the respondent to the application), submitted that Pt 24, r 5 should be construed in the light of the terms of Pt 24, r 1 and, apart from any extension to claims for damages for personal injuries, should not be given any wider operation.  But in my opinion the very contrast between the terms of the two rules is of significance.  I do not think that rules governing procedure should be given any narrow or artificial construction, notwithstanding that in some cases, as Holland J observed, there may not be any justification for ordering a person who is in no way interested with a cross-claim to submit to interrogation by a party to that cross-claim.  The court has ample discretionary powers in such a case and indeed the provisions of Pt 24, r 5(2), would normally afford ample protection in such a case.  I have come to the conclusion that the plaintiff is `any party' and the applicant is `any other party' within the meaning of r 5(1), and I am firmly of the opinion that the existence and terms of the contract between the plaintiff and the applicant is a `matter in question in the proceedings'.  It is not, of course, in question in any proceedings brought by the plaintiff against the applicant, because there are none.  But it is very much in question in the proceedings generally to which the applicant is a party."

In my opinion, the reasoning in these cases is fully applicable to the relevant rules in Order 15 of the Rules of this Court.  Those rules are set out in Murex Diagnostics Australia Pty Limited v Chiron Corporation (supra, at 198-199).  Although by rules 1 and 5 a party may be required to give discovery of documents "relating to any matter in question between him and the party giving [a] notice of discovery", rule 8 empowers the Court to order particular discovery in respect of a document "relating to any matter in question in the proceeding".  This is as unqualified as the rules dealt with in the cases I have been discussing, and the contrast between the terms of rule 1 and rule 8 has the same significance as that to which Yeldham J. drew attention in relation to the Rules of the Supreme Court of New South Wales.

Nevertheless, counsel resisting discovery argued that rule 8 should not be construed as going beyond the scope of
rules 1 and 5.  Its purpose, according to the argument, is simply to facilitate the making of an application for the better securing of the discovery the earlier rules contemplate.  It is true that in Richardson Pacific Ltd v Fielding (unreported, 24 July 1990), I held that rule 8 "was, beyond question, designed to ameliorate [the old situation limiting the discretion to make orders for particular discovery in order to rectify failures in the discovery process] and permit the discretion to be exercised where much less [than was formerly required to be shown] was able to be shown by the applicant for further discovery."  I referred to this passage in Murex Diagnostics Australia Pty Limited v Chiron Corporation (supra, at 199).  The same view, counsel reminded me in argument, had been taken by Menzies J., in Mulley v Manifold (1959) 103 CLR 341, of rule 18 of Order 32 of the Rules of the High Court of Australia, a rule which contemplated the making of an application, "whether or not an affidavit of documents has already been made or ordered", for particular discovery of documents or of a class of documents, an application made upon the basis of an affidavit showing, inter alia, "that they relate to a matter in question in the proceeding". Menzies J. said (at 343):

"So far as O. 32, r. 13 is concerned, it cannot be shown by a contentious affidavit that the discovery made is insufficient.  Before 1912, it was thought that the insufficiency had to appear from the pleadings, the affidavit of documents itself or the documents therein referred to.  However, in British Association of Glass Bottle Manufacturers Ltd. v. Nettlefold (1912) 1 K.B. 369; (1912) A.C. 709, it was established that the insufficiency might appear not only from the documents but also from any other source that constituted an admission of the existence of a discoverable document. Furthermore, it is not necessary to infer the existence of a particular document; it is sufficient if it appears that a party has excluded documents under a misconception of the case. Beyond this, the affidavit of discovery is conclusive.

It was in order to relax this rule to some extent that O. 32, r. 18 was introduced; this rule does permit an application for further discovery based upon the filing of an affidavit that there have been particular undiscovered documents in the possession of the other party which relate to a matter in question in the proceeding."

Counsel relied on the statement that the rule for particular discovery was introduced "in order to relax ... to some extent" the stringent requirements with which the law had hedged any right to redress against an insufficient discovery.  If that were the sole purpose of the rule, it would of course follow that it would not contemplate an enhanced right of discovery, but only enforcement of the right which, in the case of our Rules, is conferred by rules 1 and 5.  However, any statement in an authority must be read in context, or as the well known Latin phrase more precisely states it, secundum subjectam materiam: Miller-Mead v Minister of Housing and Local Government [1963] 2 QB 196 at 236, per Diplock L.J.; Ogden Industries Pty Ltd v Lucas [1970] 113 at 127, per Lord Upjohn.  Menzies J. was dealing with a case where discovery had been given, but it was claimed the discovery had been inadequate.  It was natural that he should concentrate on that aspect of rule 18 which met such a case.  But he could not have thought the rule was only designed for this case, since in terms it expressly stated that it applied "whether or not an affidavit of documents has already been made or ordered".  My own decision in Richardson Pacific Limited related to the same type of case as Mulley v Manifold.  But, like the rule 18 with which Menzies J. was concerned, rule 8 of Order 15 of the Rules of this Court should not be limited to a case of defective compliance with an earlier order.  Its rationale is not merely to plug a gap in the general discovery to which a party is entitled.  It does do that, and in that aspect its function is described in Mulley v Manifold and Richardson Pacific Limited.  But the rule also provides a right different in kind from the right to general discovery: a right to particular discovery of a document or class of document.  It is appropriate that a narrower right of this kind should not necessarily be restricted to the case where the document or class of document is relevant to an issue arising between the party seeking discovery and the party against whom discovery is sought.  It is appropriate that this narrower right should involve a discretion in the Court to require discovery where the document or class of document relates, as rule 8 expresses it, "to any matter in question in the proceeding".  Like Yeldham J., I think the contrast between that expression in rule 8 and the expression used in rule 2, limiting general discovery to documents "relating to any matter in question between him [i.e. the person giving discovery] and the party giving the notice of discovery" evinces a deliberate policy differentiating the scope of the one rule from that of the other.  Consistently with this differentiation, rule 8, although it does not contain an express statement in the terms of the High Court rule that it applies whether or not an earlier order has been made or applied for, commences without reference to the preceding rules, using language appropriate to an independent right. 

Accordingly, I hold that I am empowered to make an order of the kind sought by Chiron Corporation.  As I have already indicated, I think the discretionary factors plainly favour the exercise of the power.

During the argument, I suggested that, if I came to this conclusion, it would be appropriate that discovery of the class of documents in question be given, at least in the first instance, by reference to those documents already identified for the purposes of discovery in an earlier proceeding in the United Kingdom.  This may result in a considerable saving of time and money.  In the circumstances, the only order I make now is to direct the applicant for particular discovery to bring in, on a date to be fixed, short minutes of an appropriate order in the light of these reasons.  Chiron Corporation is, of course, entitled to its costs of the motion.

I certify that this and the preceding twelve (12) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Burchett.

Associate:

Date: 28 November 1995

Counsel for the Applicant:        Mr D.K. Catterns Q.C. with Miss K.J. Howard

Solicitors for the Applicant:     Banki Palombi Haddock & Fiora

Solicitor for the Respondents:     Mr P. Kerr of Allen Allen & Hemsley

Date of hearing:                 31 July 1995