McCabe v. British American Tobacco Australia Services LimitedNOTE: This text is derived from the PDF file at: http://www.ash.org.uk/html/conduct/pdfs/mccabejudgement.pdf.
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IN THE SUPREME COURT OF VICTORIA
COMMON LAW DIVISION
MAJOR TORTS LIST
No. 8121 of 2001
ROLAH ANN McCABE
BRITISH AMERICAN TOBACCO AUSTRALIA SERVICES LIMITED
JUDGE: Eames J
WHERE HELD: Melbourne
DATES OF HEARING: 24, 30-31 January, 1, 4-8, 11-13, 25-27 February, 1 March 2002
DATE OF JUDGMENT: 22 March 2002
CASE MAY BE CITED AS: McCabe v British American Tobacco.
MEDIUM NEUTRAL CITATION:  VSC 73
DISCOVERY - application to strike out defence - destruction of documents by defendant before proceedings issued and at a time when no other proceedings on foot - whether documents destroyed at a time when litigation was anticipated - purpose for the destruction of documents - whether failure to comply with orders for discovery - abuse of process - obligation of candour in discovery process - whether plaintiff denied a fair trial - defence struck out - R.S.C Orders 24.02, 24.05.
APPEARANCES: Counsel / Solicitors
For the Plaintiff
Mr J. Rush QC,
Mr J. Forrest QC,
Mr J. Gordon
Slater and Gordon
For the Defendant Mr J. Ruskin QC,
Mr J. Middleton QC,
Mr D. Beach SC,
Mr S. O'Meara
VICTORIAN GOVERNMENT REPORTING SERVICE
1st Floor, 167 Queen Street, Melbourne SC:HB
9603 2404 !Undefined Book mark, I
Table of Contents
The 1985 Document Retention Policy.... 6
The 1990-1992 review of the Document Retention Policy....8
The Clayton Utz Strategy of 1990.... .. 13
The Advice of Allen Allen & Hemsley, 1990 .... 20
The Australian proceedings ....25
A Multitude of Lawyers.... 26
The Post-1992 Document Retention Policy.... 29
(A) The Record Managers' Training and Education Workbook ....30
(B) The Staff Handbook.... 32
The Scope of a Hold Order .... 34
A Strategy to Confine Plaintiffs to documents in the public Domain .... .. 35
Destroyed Documents Pre-1998.... 36
Creation of a Cremona Data Base.... .. 39
The Scope of the Cremona Data Base....41
1998: The Cancellation of the Hold Order and Implementation of the Document
Retention Policy.... 44
What Documents were Destroyed in March/April 1998? .... 55
Inadequate Discovery: The deficiencies of the Affidavit of Documents .... 57
(A) The categories identified for discovery .... 57
(B) The Affidavit of Documents .... 59
A Matter of Interpretation.... 63
Misleading conduct? - The pre-trial directions hearings .... 65
(A) The grounds of complaint .... 65
(B) The correspondence between the solicitors....66
(C) Was the destruction of documents properly disclosed in affidavits? ....67
(D) The Chalmers' affidavit of 6 December 2001 .... 68
(E) The Namey Affidavits of 10, 17 and 21 December 2001 .... 71
(F) The Namey Affidavit of Documents of 14 January 2002 .... 71
(G) The submissions of counsel .... . 79
Intention .... 87
Anticipated proceedings .... 90
Findings .... 93
Prejudice - Denial of a fair Trial....98
The Warehousing of documents.... ..109
The Law.... 114
What outcome for this application? .... 127
Conclusion and Orders ....132
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1 Counsel for the plaintiff have made application by summons dated 25 January 2002 for an order that the defendant's defence be struck out and for supplementary or alternative orders. The grounds on which the relief is sought were set out in writing and were supported by affidavit evidence of the same date from Mr Peter Gordon, of Slater & Gordon, solicitors for the plaintiff. Although the affidavit was initially objected to, on the basis that it contained opinion evidence, it has been accepted during argument as a rea sonable summary of the contentions advanced on behalf of the plaintiff as to the significance of the many exhibits which were attached to it.
2 The grounds for the application may be summarised as follows:
(i) The destruction of potentially relevant documents by the defendant, at a time when litigation was apprehended, has rendered it impossible for the plaintiff to have a fair trial;
(ii) The defendant, through counsel, solicitors and deponents to affidavits, has misled the court and the plaintiff as to the true situation concerning documents discoverable in the trial;
(iii) Failure, contrary to Rule 20.02 of the Rules of the Supreme Court to comply with an order of discovery made 6 December 2001;
(iv) Failure to agree to further discovery sought by the plaintiff by letter dated 4 January 2002;
(v) The conduct in items (i) to (iv) caused severe prejudice to the plaintiff;
(vi) The plaintiff relies on the material advanced in the affidavit of Mr Gordon.
3 The application raises novel points which are of significant public importance, and serious allegations of impropriety have been advanced in submissions before me.
4 The plaintiff commenced her claim by writ issued on 26 October 2001. The plaintiff claims compensatory, general and exemplary damages for personal injuries. The defendant has sought trial by jury. The plaintiff, who was born on 23 September, 1950 is seriously ill with lung cancer and has a life expectancy of, at best, months,
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possibly only weeks. On 9 November 2001, by consent, an order for a speedy trial was granted, and the case was allocated to me for pre-trial management. There have been numerous hearings of applications relating to interlocutory matters. In late December 2001 I fixed the date of trial as 18 February 2002. A range of pre-trial issues remained unresolved, in particular with respect to discovery and the admissibility of documents. I set down five days for hearing, commencing 30 January 2002, to resolve those issues. I made it clear to the parties that, so far as possible, I wanted to resolve issues concerning the admissibility of documents prior to the jury being empanelled.
5 On 24 January 2002 counsel for the plaintiff advised that they wished to make a new application in lieu of the applications which had been listed to be heard on 30 January 2002. I permitted the plaintiff to substitute the present strike-out application. Mr Gordon's affidavit annexed a number of documents which have apparently been located in depositories of documents in the USA. The defendant, responding by way of a number of affidavits, has exhibited and filed a range of documents in answer to the application, and I have heard the evidence of witnesses on the issues. The application extended over sixteen days and a substantial number of documents were exhibited. Having regard to the tendering by the defendant of two letters of advice from firms of solicitors I ruled that the defendant had waived privilege as to legal advice received by it from 1998 concerning the handling and destruction of documents. Pursuant to that Order many letters and memoranda of advice from several firms of solicitors became exhibits on the application.
6 The hearing of this application has been conducted in the unfortunate and urgent context of the plaintiff's terminal illness. That consideration caused me to raise with counsel the possibility that the trial should proceed to verdict, with resolution of the present application being considered, if it remained relevant to do so, after verdict was delivered. Counsel for the defendant supported that suggestion, but counsel for the plaintiff urged that I not adopt that course, contending that the plaintiff's prospects of a fair trial had been irretrievably damaged. Having heard submissions,
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I concluded that I should deal fully and immediately with this application.
However, as anticipated, it has become necessary to vacate the trial date. In the event that the plaintiff were to die before verdict then a successful verdict for damages for the benefit of the estate would not include general or exemplary damages and pecuniary loss damages would be significantly restricted.1 7 The plaintiff's statement of claim alleges that from her early teens (having commenced smoking at age 12) she became addicted to cigarettes manufactured by the defendant, and that as a result of that addiction and the properties of the cigarettes, she contracted lung cancer. The plaintiff alleges that the defendant, itself or through its predecessor and affiliated companies, knew that cigarettes were addictive and dangerous to health, and by its advertising targeted children to become consumers. The plaintiff alleges that the defendant, knowing the dangers of addiction and to health of consumers, took no reasonable steps to reduce or eliminate the risk of addicti on or the health risks, and ignored or publicly disparaged research results which indicated the dangers to health of smoking.
8 The defendant is the successor to W.D. & H.O. Wills (Australia) Limited (hereafter referred to as "Wills"), which was in existenc e between September 1958 and March 2000. Wills, in turn, was the successor to The British -Australasian Tobacco Company Limited which was in existence between 1950 and August 1958. In the course of these reasons I will refer to the "defendant" as encompassing the relevant manifestations of the defendant as at the time of events under discussion. Unless appropriate to do so, I will not differentiate as between those companies. The defendant company came into existence in September 1999 when Wills merged with Rothmans of Pall Mall (Australia) Limited.
9 From 1959 Wills had been a subsidiary of British Tobacco Company (Australia) Limited, which underwent several name changes, including AMATIL Limited and Coca-Cola Amatil Limited. In 1989 Wills and some other subsidiaries were
1 See s. 29(2) Administration and Probate Act 1958. An exception to these limitations, but only with respect to dust-related conditions, was introduced by the insertion of sub section (2A) in 2000.
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separated from Coca Cola Amatil Limited, and were purchased by British-American Tobacco Company Limited (hereafter referred to as BATCO'), which is based in England and remains the parent of the present defendant company.
10 In broad terms, the defence denies that the plaintiff's illness is causally related to cigarettes, asserting that the majority of smokers do not contract lung cancer. As to the plaintiff's allegation that the defendants' cigarettes were addictive, the defendant, whilst acknowledging that some persons may find it difficult to quit smoking, denies the allegation, and asserts that smoking is a behaviour of choice, and does not impair the ability of a smoker to assess the risks of smoking and to make an informed decision. As to the plaintiff's allegation that the defendant between 23 September 1950 and 1992 knew or ought to have known about the risk of lung cancer and the addictive effect of nicotine, the defendant joins issue and expressly pleads, by par 5(d) that:
"the defendant did not have any knowledge about the risk of lung cancer or any difficulty associated with quitting smoking which was not in the public domain."
11 The defendant pleads that from a time prior to 1962 the Australian community was informed that smoking could cause lung cancer, and other diseases, and that it could be difficult to quit smoking, and that there was extensive legislative regulation of tobacco advertising and health warnings - among other matters - and there was legislation prohibiting the sale of tobacco to minors. The defendant pleads that it had entered into agreements with governments relating to such matters, including tar and nicotine levels. The defence asserts that the plaintiff voluntarily assumed the known risks of contracting cancer, those risks having been the subject of warnings over many years.
12 It is clear that the plaintiff's case against the defendant will direct attention to the question of what was known to the defendant as to the risks of smoking, the addictive properties of cigarettes, the considerations and knowledge which bore upon the defendant's decisions as to the manufacturing process, and advertising
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campaigns concerning its products, and, in particular, its knowledge as to the consumption of cigarettes by children. It is also clear that contemporaneous and historical documents held by the defendant relating to scientific research, not only that held in the public domain but also research conducted by scientists acting on its behalf, on behalf of other tobacco producers, and also research conducted by outside agencies on behalf of the defendant or the tobacco industry, would be of very great importance to the plaintiff's case. Equally important might be any internal memoranda reflecting the defendant's response to such research and its knowledge and actions as to relevant issues.
13 It is the contention of the plaintiff, in this application, that the defendant and its predecessor, Wills, since 1985, have followed a strategy designed to deny to any litigant access to doc uments to which the litigant would have been entitled and which would be of importance to the outcome of such proceedings. It is contended that the strategy employed in Australia was devised and overseen by Australian, British and American lawyers employed by or engaged by the respective BAT companies in each country. The strategy was designed to confine any plaintiff's case to documents in the public domain and to destroy or hide the existence of documents of which the defendant had knowledge which were damaging to the defendant's interests but which were not in the public domain. The plaintiff contends that the strategy involved the destruction of thousands of documents and, so it was submitted, required that the fact of such destruction, and its extent, not be disclosed. In the event that the process and extent of destruction became public knowledge, the strategy envisaged that an innocent motive for its occurrence would be advanced, and be plausible, but the true and primary motive for the destruction would be denied. The strategy, so it was submitted, contemplated the inappropriate application of privilege to many documents which had not been destroyed and the establishment and location of data bases of documents, controlled by lawyers, for the purpose of litigation but contrived to not be in the possession, custody or power of the defendant for the purpose of discovery.
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14 It is submitted on behalf of the plaintiff that implementation of the strategy was accompanied by the misleading of the Court, and of the plaintiff's advisers, by correspondence tendered in court, by affidavits filed at court, and in submissions made to the Court. Counsel for the plaintiff submit that the plaintiff has suffered irremediable prejudice by the defendant's actions, for which the only remedy is that the defence should be struck out and the trial proceed as an assessment of damages.
15 The defendant denies each of these accusations, and, whilst admitting that many documents have been destroyed which may have been relevant to the plaintiff's case, contends that documents were destroyed at a time when no litigation was before the court or was anticipated. The defendant contends that it was perfectly lawful and proper for it to have destroyed those documents in those circumstances, and it did so in accordance with legal advice and pursuant to an appropriate document management policy, the purposes of which were both innocent and appropriate, and which had not been implemented for some eight years while proceedings were on foot. The defendant contends that the destruction of documents was by series only, no attempt being made to identify and preserve individual documents which might have been helpful to the company in the defence of any proceedings. The defendant contends that far from implementing the policy for purposes of harming the case of later litigants it retained a large volume of research and scientific reports which were more likely to be harmful to the cause of the defendant than to be favourable.
16 It is necessary to set out the history, development and influences on the defendant's Document Retention Policy in some detail.
THE 1985 DOCUMENT RETENTION POLICY
17 The litigation in this case is not the first of its kind in Australia. The evidence I have heard on this application shows that as early as 1985 the defendant anticipated what its Australian solicitors, Clayton Utz, said would be "a wave of litigation". In response to that threat vast resources were allocated to readying the defence of any such claims. Clayton Utz, as the defendant's solicitors, took steps to devise a legal strategy, and did so with very close assistance of lawyers from the United Kingdom
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and USA who had performed a similar advisory role for tobacco companies in those countries. From the outset, the vital importance of documents in any litigation, and the danger which discovery of documents posed for the defendant, were fully appreciated by senior employees and officers of the defendant, and by its lawyers.
18 In an affidavit sworn 29 January 2002, Malcolm Nicholson, Area Audit Services manager of the defendant and a member of the Records Review Team since 1993, deposed that since the early 1970s the defendant had some form of Document Retention Policy governing the disposal and storage of the multitude of documents generated within the organisation. In the 1970s, however, the only written document which set out the policy was, he believed, of about one or two pages in length. Mr Michael Harrison, a retired executive of the company, gave evidence before me and produced a one page set of instructions concerning documentation, which he said was consistent with the policy document which had been in existence from at least 1954. To that page were attached a number of pages dealing with the timetable for destruction of specific categories of documents. It is a very modest document in comparison to versions produced in 1985 and later.
19 I have no doubt that the Document Retention Policy which was put in place did have some quite legitimate management and administrative purposes and benefits, and the documents contained much material relevant to such functions. I am, however, entirely satisfied that the primary purpose of the development of the new policy in 1985 and subsequently was to provide a means of destroying damaging documents under the cover of an apparently innocent house-keeping arrangement. When regard is had to the background material relating to the origins of the new policy, and the critical role played by litigation lawyers in its development and implementation, it is clear that the post-1985 policy documents reflect the acute consciousness of their authors (and explain their attempts to disguise the fact) that the Document Retention Policy was primarily directed towards the risks of litigation.
20 In 1985 the defendant turned attention to the prospects of litigation in Australia, and to the potential for the defence of any such litigation to be prejudiced by the
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disclosure of embarrassing documents. The firm of Clayton Utz was engaged to advise the company as to that issue and on 30 December 1985 a written Document Retention Policy came into effect. Mr Eggleton of Clayton Utz, who gave evidence before me, denied that his firm had drafted that policy, and it seems that a draft was first written by one Mr R. N. Paton, the in -house solicitor for Amatil Limited, but there is no doubt that the draft was considered and approved by Clayton Utz prior to its implementation. The firm also gave advice as to other strategies, including the enhancement and expansion of claims of legal professional privilege, with the same objective of minimising the prospect of any plaintiff gaining the benefit of damaging documents. As I will shortly discuss, a solicitor, Andrew Foyle, from the English firm Lovell White Durrant, was engaged by BATCO for purposes of addressing policy on document handling. He produced a memorandum setting out the development of the Document Retention Policy, which expressed the clear understanding that it was Clayton Utz that was responsible for the critical terms of the policy formulation.
21 I have not been shown a document which is agreed to comprise the 1985 written policy, but in legal advice written by Brian Wilson, a partner of Clayton Utz, dated 29 March 1990 (to which I will shortly refer), he noted that at page one there were a series of statements inserted into the document which asserted innocent purposes for the destruction of documents, under broad headings of cost efficiency, litigation support and sabotage prevention.
THE 1990-1992 REVIEW OF THE DOCUMENT RETENTION POLICY
22 By 1990 the adequacy of the Document Retention Policy was being questioned by Wills. In a letter dated 23 March 1990 sent from F.T. Gulson, legal counsel and secretary of Wills, to Brian Wilson of Clayton Utz, Gulson said that it was opportune to review and amend the policy. He said that BATCO (i.e. the UK parent corporation) was conducting a similar review as to its own Document Retention Policy. Stating that he did so "in recognition of our close and direct association with BATCO", Gulson enclosed a memorandum written by Andrew Foyle, a solicitor
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with Lovell White Durrant, U.K. solicitors, acting for BATCO, whom Gulson said had been retained to advise generally on product liability litigation "and, in particular, in relation to the current Document Retention Policy". Gulson noted that Nick Cannar, legal counsel of BATCO, would soon be visiting Australia with respect to the policy review, and Gulson sought Wilson's advice as to specific questions which Foyle had raised in his memorandum.
23 Counsel for the plaintiff place great emphasis on the terms of the Foyle memorandum, and it requires careful consideration. I will highlight some passages from it. In the first place, Foyle was not in doubt as to the origins of the new policy.
"Wills' current document retention policy was introduced on the 30th December 1985 at a time when the tobacco companies in Australia anticipated the possibility of product liability litigation, although no case had actually been brought against any company. Clayton Utz had previously been instructed to take steps to prepare the Industry, and Wills in particular, for litigation. One of their first actions was to review the document retention policy of the Company, hence the new policy."
24 Foyle said that what was required from Clayton Utz was "a strategy for handling the documents issue in litigation", and he also posed a series of questions on which specific advice was required.
25 Foyle noted the American and Australian experience of the "enormous man hours" which discovery obligations caused any company involved in litigation. As I will later discuss, he made it clear that destruction of sensitive documents had already been taking place. Foyle wrote:
"Details of how the policy was implemented by the Research Department are given in the note of AWF's meeting (ie Foyle's) with Graham McGregor and Tas Wilson on 17 November 1989. The note also describes the type of research undertaken by Wills, the documents which they have received from BATCO and the information which their employees have about the BATCO research. A copy of that note is attached".
26 Foyle expressed the concern of BATCO that because Wills had had access to sensitive
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BATCO research documents, through a computer link to England, that might lead to the discovery of the BATCO documents in any Australian proceedings, and also documents of other Group companies. He expressed particular concern about "summaries of the Janus reports". No documents meeting that description have been produced in discovery in these proceedings. I do not know what they were or whether they would fall into any of the categories of discovery which I ordered.
27 Foyle identified a range of problems which he said the current policy posed. Among the problems were the following (the reference to "SRG" is to Wills' Scientific Research Group):
"(a) The wording of policy (coupled with timing of its introduction) might lead to the inference that the real purpose of the policy was to destroy sensitive smoking and health documents.
(b) Aspects of the implementation of the policy might support that inference, for example the immediate destruction of the unpublished enclosures to the SRG letters.
(c) The retention of a set of the BATCO research reports means that a plaintiff will have access to much sensitive BATCO research.
The information in the reports is enough to prompt searching questions about the underlying research policy and also questions about what follow up action was taken by BATCO in the light of the research results.
(d) The retention of the BATCO reports might encourage a plaintiff to seek discovery of BATCO's documents, either by asserting that Wills has control over documents in the possession of BATCO, or by using the Hague Convention. The research reports might enable a plaintiff to frame a Hague Convention request for documents with the requisite degree of specificity and/or to identify the BATCO employee from whom oral testimony is required.
(e) Wills access to the BATCO computer gives them the de facto right to details of results of BATCO's research. The summaries of the reports which are on the database are sufficiently informative to be of real interest to a plaintiff's lawyer.
(f) The knowledge that Wills' senior scientists have of BATCO research could rule them out as a witness at any trial in Australia."
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28 Before setting out the detailed questions on which Clayton Utz' advice was required, Foyle made the following observations:
"1. It is understood that the destruction of documents n ow or in the past by Wills contravenes no law or rule in Australia and that, in that sense, Wills can do what it likes with its documents.
Presumably, if a court disapproved strongly of the destruction of the documents, then it might draw adverse inferences from that fact.
2. It should be assumed that Wills' documents (what is in them and what has happened to them) will be a matter of great interest to a plaintiff's lawyer in a product liability action. How Wills responds to questions about its documents will require careful thought, especially because of the implications which the answers may have for the BAT group as a whole. It would be sensible, therefore, to assess the nature and extent of any problems which the current document retention policy may pose and to take appropriate remedial action now, rather than wait for the litigation to begin. Generally, what is needed is a strategy for handling the documents issue in litigation."
29 He asked:
"1. To what extent is there a risk that the destruction of documents in accordance with the 1985 retention policy will cause the Court to apply the adverse inference principle, taking into account:
(a) the wording of the policy,
(b) the circumstances prevailing at the time it was introduced (e.g. whether product liability actions had been threatened against Wills or the industry generally),
(c) the extent to which Wills will need to claim privilege for documents produced in 1985 and later, on the grounds that the documents were produced in contemplation of anticipated proceedings."
30 Foyle sought advice about the adverse inferences or other consequences or sanctions which might flow from Wills destroying documents under the 1985 policy. He expressed particular anxiety that the Document Retention Policy itself, and Clayton Utz' advice as to "whether certain types of documents should be retained or destroyed", might also be discovered. I will address that anxiety in a later section of these reasons.
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31 As to the special concern about BATCO research, Foyle wrote:
"(d) Might BATCO's documents be more at risk? For example might the Court order Wills to retrieve from BATCO copies of the BATCO documents destroyed by Wills."
32 Foyle then asked:
"3. Should changes be made to the way in which the policy is currently being applied, for example, in relation to the SRG documents?
4. What should be done about the copies of the BATCO research reports held by Wills? In this connection:
(a) Would the continued retention of these reports compromise Wills' position via a vis the destruction of its other documents?
This question should be answered on the basis of the information given in this memorandum on the content of the reports. If more information is needed it can be supplied by LWD. It would be undesirable for Clayton Utz to seek information from Wills about the reports.
(b) Is there any reason why Wills should not now destroy its copies of most of the reports, if the motive for doing so were that the information in the reports is not relevant to Wills' Current "research mission"?
(c) Would the termination, or the restriction, of Wills's access to the reports database on the BATCO computer cause any problems?
(d) Does the Caudwell threat affect the position?
5. Would implementation of the proposed new retention policy hinder or help Wills' position on the documents issue?"
33 The reference to "LWD" no doubt meant the firm Lovell White Durrant. I will discuss "the Caudwell threat" later.
34 Although he did not respond to every specific question posed by Foyle, Mr Wilson of Clayton Utz did suggest a strategy. The evidence before me demonstrates that the strategy then devised has been followed, with modifications and additions, since 1990, and was being followed at the time of the hearings before me.
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35 As may be seen, Foyle identified problems with the existing Document Retention Policy and sought advice as to a strategy which might be put in place with respect to sensitive documents. As Eggleton acknowledged in his evidence, sensitive documents were those which might assist a plaintiff's case or harm the defendants' case.
36 The "note" referred to in Foyle's memorandum (see par  above), has not been produced. It is obviously a document which would be of particular interest to the plaintiff, and would bear on the question whether the Affidavit of Documents adequately dealt with the question of documents which had been destroyed.
THE CLAYTON UTZ STRATEGY OF 1990
37 By letter dated 29 March 1990, under the signature of Brian Wilson, a partner of Clayton Utz, a response was given to the questions raised in the Foyle Memorandum. The advice had been primarily the product of legal research conducted by John Oxland, another partner of Clayton Utz, but it was Wilson who proposed the strategy.
38 Wilson wrote to Gulson, Legal Counsel and secretary for Wills, as follows:
DOCUMENT RETENTION POLICY
We refer to your letter dated 23 March, 1990 attaching a memorandum on the above topic by Andrew W. Foyle of Lovell White Durrant. In it you asked us to answer the specific questions raised in the memorandum and make any comments we deem appropriate. We now do so.
1. To what extent is there a risk that the destruction of documents in accordance with the 1985 retention policy will cause a Court to apply the adverse inference principle taking into account:
(a) the wording of the policy,
(b) the circumstances prevailing at the time it was introduced, and
(c) the extent to which Wills will need to claim privilege for documents produced in 1985 and later?
A risk as to the application of the adverse inference principle may be more shortly described as a risk of contempt of court. That risk was dealt with by the High Court of Australia in Lane v. Registrar of Supreme Court of New South Wales (1981) 35 ALR 322 as follows (at 332):
"It was submitted on behalf of the respondent that conduct otherwise lawful can amount to contempt of court if done with a particular intention.
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That is correct, but the intention must be to do something likely to interfere with the course of justice.
Thus it may be lawful for one man to advise another to take a holiday in Brazil, but the giving of the advice may constitute a contempt of court if the advice is given for the purpose of keeping the witness out of the way to avoid service of a subpoena.
An intention to interfere with the administration of justice is not necessary to constitute a contempt; the critical question is whether the act is likely to have that effect, but the intention with which the act was done is relevant and sometimes important" (emphasis added)2 .
Destr uction of documents is prima facie lawful, as Andrew Foyle himself indicated when he wrote at p 5 of his memorandum:
"It is understood that the destruction of documents now or in the past by Wills contravenes no law or rule in Australia and that, in that sense, Wills can do what it likes with its documents."
Destruction must, however, not conflict with statutory requirements as to the retention of certain documents for certain periods. Those statutory requirements were set out in our letter dated 13 December, 1985 to Mr R.N. Paton, the in- house solicitor for Amatil Limited. The letter itself was referred to in the 1985 retention policy statement: see page 2, criterion 6.
Destruction must also not fall foul of the law laid down in Lane's case above: Registrar of Supreme Court of New South Wales v. McPherson  1 NSWLR 688. Applying that law, there is no doubt that destruction per se is likely to have the effect of interfering with the administration of justice. This is subject, however, to the test of intention, and also to the fact that the High Court in Lane's case was dealing with a situation where litigation was in esse and not merely contemplated.
Wills' destruction of documents has not occurred during litigation in relation to which those document s might be relevant. If it had, that would be extremely strong evidence of an intention "to do something likely to interfere with the course of justice": Lane's case above.
The destruction has occurred, instead, in a situation where litigation has been, and still is, contemplated. But it can be said that it has not occurred only because of that fact and in order adversely to affect the litigation. This is where the wording of the 1985 retention policy statement becomes important. The following quotes from page 1 serve to explain the motivation for destruction:
--"to ensure that our previous good management practices are maintained"
--"to ensure that our document retention policy is maintained at the most efficient level"
--"indiscriminate and unnecessary retention of documents involves ever increasing and costly space requirements"
--"enormous man-hours and other overheads involved in sifting through superfluous documents in order to locate records actually required in ... litigation"
--"under our legal system documents may be required ... on short notice
2 The emphasis was given by Wilson.
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under order for discovery or subpoena. Therefore the objective is to retain only necessary material"
--"the more unnecessary documents are retained the less control there is over secure storage of nece ssary records and hence the greater the potential risk of industrial sabotage."
The above quotes show the motivation for destruction to be threefold: cost efficiency, litigation support, and sabotage prevention. In our view, they are clear evidence of an intention which is the complete opposite of an intention "to do something likely to interfere with the course of justice". This positive intention cancels out the negative impression created by destruction per se.
We feel, therefore, that there is little, if any, risk of contempt of Court. We would be of the same opinion if we were asked to advise on the proposed BAT Industries' retention policy statement for research documents. That statement also clearly displays a positive intention to do something likely to support the course of justice, saying inter alia (at page 1):
"In all cases ... the policy [of destruction] should not be applied to research documents in respect of which and for so long as local lawyers advise that destruction of these documents is precluded".
2. What consequences or sanctions might result if the Court applied the adverse inference principle? For example:
(a) What unfavourable inferences of fact might the Court make against Wills?
The obvious unfavourable inference of fact would be that Wills had something to hide which could very well be detrimental to its chances of success in litigation brought against it. What that something was might then be inferred from the mere fact of destruction of documents.
Suppose, for example, that a Wills' research report showed a very strong association between passive smoking and lung cancer and the report was destroyed by Wills when sued by a person with lung cancer who claimed his/her disease was caused by passive smoking. It might be inferred from the fact that Wills had destroyed research reports that at least one of them tended to support the Plaintiff's case.
(b) Is there a risk that the Court could order the disclosure of documents which might otherwise be privileged (eg Clayton Utz's documents)?
There is. In dealing with the possible loss of legal professional privilege in his book Law of Evidence in Australia (Legal Books, 1987), Peter Gillies considered three leading cases and then wrote:
"Together these cases recognise that legal professional privilege will be lost where the public interest in the preservation of the fundamental processes of justice demands that the privilege give way. Such situations where the more general public interest outweighs the public interest in privileged communications between lawyer and client are potentially numerous, and cannot be specified in advance."
(c) Even if Clayton Utz's documents and work product are not at risk, is there a risk that they might be required to disclose information about the document retention policy in affidavit (such as an affidavit verifying Wills' discovery) or other evidence?
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Yes - except that an affidavit verifying discovery is sworn by a client and not the client's solicitor, who merely certifies that an explanation of the law's requirements for disclosure has been given to the client.
(d) Might BATCO's documents be more at risk? For example, might the Court order Wills to retrieve from BATCO copies of the BATCO documents destroyed by Wills?
3. Should changes be made to the way in which the policy is currently being applied, for example in relation to the SRG documents?
We cannot answer this question definitively, as we do not know how the policy is currently being applied . We have not been provided with the details of implementation "given in the note of AWF's meeting with Graham McGregor and Tas Wilson on the 17th November, 1989": see Andrew Foyle's memorandum at page 1, paragraph 3.
However, if the policy is being applied in accordance with the "Suggested Criteria" on page 2 of the 1985 retention policy statement, then we would guess that no changes need be made.
4. What should be done about the copies of the BATCO research reports held by Wills?
We feel that they should be dealt with in the same way that the originals are to be dealt with under the proposed BAT Industries' retention policy statement for research documents.
(a) Would the continued retention of these reports compromise Wills' position vis-a-vis the destruction of its other documents?
If the continued retention of research reports tended to show that the destruction of Wills' other documents was carried out with the intention "to do something likely to interfere with the course of justice", then obviously the retention would compromise Wills' position. However, we find it difficult to imagine such a tendency arising.
(b) Is there any reason why Wills should not now destroy its copies of most of the reports, if the motive for doing so were that the information in the reports is not relevant to Wills' current "research mission"?
On balance, no - although it would be better if the motivation included litigation support in the sense discussed earlier.
(c) Would the termination, or restriction, of Wills' access to the reports database on the BATCO computer cause any problems?
We cannot see that any legal problems would be created. In fact, legal benefits would probably accrue. In this regard, we refer you to the Advice on Discovery and Privilege given by Mr John M. Stowe QC on 20 June, 1986, and especially to the following statement about material obtained from the computer database established by the Tobacco Institute of America (at page 21):
"Whatever the situation may be in the United States, it is my view that, if the suggested precautions are taken, the electronic material will not be subject to discovery by the Australian companies in relevant proceedings and that privilege will
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attach to all printouts obtained by the Australian Companies for the requisite purpose by the exercise of skill or selection."
(d) Does the Cauldwell threat affect the position?
We note Andrew Foyle's statement that, while a letter "threatening legal proceedings against Wills was received from a Mr Cauldwell in November, 1989", it is "not yet clear whether Cauldwell intends to take legal action against the company." We should say that, until litigation is actually instituted, there is little, if any, risk of contempt of court through destruction of documents. In this regard, we refer you back to our consideration of the first question posed in Andrew Foyle's memorandum.
5. Would implementation of the proposed new retention policy hinder or help Wills' position on the documents issue?
We are not sure what proposed new retention policy is being referred to. If it is that in the proposed BAT Industries' retention policy statement for research documents, then we can only think its implementation would help Wills' position on the documents issue.
6. What strategy should Wills adopt for handling such problems as there may be in relation to the documents issue?
We think that the strategy is sufficiently apparent from what we have said so far, especially in answer to the first question posed in Andrew Foyle's memorandum.
7. If the issue of research is important in a product liability action, how will Wills defend its record without its documents?
It will obviously have to rely on the testimony of witnesses.
Is it anticipated that a witness might be called to give evidence on the subject?
If so, who would that witness be?
A witness with knowledge of Wills' research, and an expert witness capable of critically analysing what is said about that research.
Is there a satisfactory alternative to calling an employee who does not have extensive knowledge of group research?
The only alternative would be to call a number of employees whose testimony in the aggregate would show extensive knowledge of group research.
We shall be pleased to participate in any discussion about our answers and comments while Nick Cannar is in Australia, particularly because those answers and comments involve some degree of guess-work which could probably be cleared up in such a discussion.
Yours faithfully, CLAYTON UTZ Brian T. Wilson.
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39 Counsel for the defendant submitted to me that the advice contained in the letter was not only legally correct but was entirely appropriate. It was, I agree, carefully written. In my view, it reflects Wilson' understanding that sensitive documents had, indeed, already been destroyed, and that had occurred at a time when litigation was anticipated. The letter of advice is couched in terms which suggest that Wilson was very conscious of the fact that he could not guarantee that the Clayton Utz letter might not subsequently be disclosed. Whilst exercising caution for that reason, Wilson was telling Wills that the dire consequences could be avoided if they asserted innocent intention and employed statements of such innocent intention that he was now feeding to them, or had previously, by the terms employed in the policy documents. As the advice makes clear, Wills was given express warning that a programme for the destruction of documents relevant to anticipated litigation, even if no litigation was on foot, could be held to be an interference with the administration of justice, and thus be in contempt of court.
40 In my view, the reality of what was being advised is reflected by the enigmatic response given to Foyle's request for a strategy. Wilson answered: "We think that the strategy is sufficiently apparent from what we have said so far, especially in answer to the first question posed in Andrew Foyle's memorandum". Indeed, it was clear. The answer to the first question was contained in the passage from Lane's case which indicated that intention was of great importance. The advice was, in effect, get rid of the documents but claim an innocent intention. Foyle had suggested that the motive might be said to be that the documents were no longer required for the current "research mission". He highlighted those words, but Wilson suggested a better answer. Eggleton, the only Clayton Utz partner who gave evidence to me, said he did not understand what Foyle could have meant by "research mission", and I do not think it was a phrase which had any genuine meaning, in this context.
41 Any doubts as to what was the real message which Wilson was imparting to his client, on behalf of Clayton Utz, is dispelled by notes of a meeting which he attended soon after he wrote his letter and which notes he might have thought were never
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likely to see the light of day.
42 On 2 April 1990 a conference was held between Gulson of Wills, Cannar of BATCO, and both Wilson and Oxland of Clayton Utz. Oxland's notes of the meeting record that the discussion concerned the contents of the written advice dated 29 March 1990. Wilson is recorded as having proffered the following advice:
"Keep all research docs which became part of public domain and discover them.
As to other documents, get rid of them, and let other side rely on verbal evidence of people who used to handle such documents."
43 Another handwritten note made by Oxland - also apparently written at the 2 April 1990 meeting - noted the relationship between BATCO, Wills Holdings ("subsidiary") and WD & HO Wills (Aust) ("Wholly owned") and records an apparent decision, as follows:
"To shred all docs in Aust more than 5 yrs old (docs will still be available off-shore, though)".
44 Wilson did not give evidence before me. His absence was unexplained. Eggleton, who had been privy to the advice of 29 March 1990 but was not present for the conference of 2 April 1990, said that in preparation for giving evidence he had not spoken to Wilson about this advice. He agreed that if the note accurately reflected the oral advice which Wilson had given, then it was not proper advice for a solicitor to give a client. In their submissions counsel for the defendant have contended otherwise, it being submitted that a company is not acting unlawfully if it shreds documents, even if it did so to damage anticipated litigation, so long as no litigation was actually on foot. Mr Middleton, whilst not conceding any qualification to that absolute right, accepted that if the identity of a proposed litigant was known, and proceedings were about to commence, there might, arguably, be some impediment to the destruction of potentially relevant documents. As to that, I note that Wilson's oral advice was given at a time when a letter threatening action had been received.
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THE ADVICE OF ALLEN ALLEN & HEMSLEY, 1990
45 On 16 May 1990 Gulson, as legal counsel and secretary of Wills, wrote to Mr S.J. Walker of the solicitors Allen Allen & Hemsley seeking advice from that firm, also, as to the Document Retention Policy. He referred to "our meeting with Mr N.
B. Cannar, Senior Solicitor for BATCO , whilst he was in Australia". Gulson noted that at the meeting with Cannar a review of the retention policy was discussed and he observed that the Document Retention Policy "was developed by Clayton Utz for use by W.D. & H.O. Wills (Australia) Limited", when the company was a subsidiary of AMATIL. Gulson provided various documents to Walker, including a copy of the 1985 policy, a memo from Lovell White & Durrant as to the international and local implications of the policy, and also a copy of the proposed policy to be adopted by BATCO. Additionally, Gulson provided a copy of the advice on the same topic given by Clayton Utz on 29 March 1990.
46 Gulson then raised a number of issues relevant to advice. Counsel for the plaintiff submit that the issues raised by Gulson demonstrate the true purpose of the new policy, and also demonstrate the fact that the defendant had already destroyed BATCO documents and was anxious to cover up that fact. The passages to which counsel for the plaintiff referred sought advice on the following matters:
"1. The retention by Wills of BATCo's scientific reports could lead to a plaintiff seeking discovery of other BATCo reports which are not physically in Australia. The plaintiff could allege Wills has effective control over these other documents by virtue of the fact that Wills contributed to the funding of the research or alternatively by citing the Hague Convention. In the event of discovery being permitted, the documents could assist in identifying overseas persons able to give testimony in an Australian action. This risk will increase significantly if an Australian court were to order Wills to retrieve from BATCo copies of the BATCo documents previously destroyed by Wills pursuant to its own Document Retention Policy.
2 The potential and substantial problem that would face our major shareholder in the event that any discovery made in Australia of BATCo's research could be used by future plaintiffs in other jurisdictions especially the USA.
3 The retention by Wills on a selective basis of certain reports may
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highlight the fact that other documents have been destroyed and could well compromise the position of Wills with respect to the practice and operation of the Document Retention Policy.
4 Comments or observations that you may have in relation to the writer's letter and Clayton Utz's response of 29 March 1990.
5. Any other comments or observations that you may care to make on the Document Retention Policy or discovery."
47 Other notes reflect the fact that there was also concern about the computer link between Wills and the BATCO library in the UK. Both the UK and Australian companies (and also its USA affiliate) were anxious that discovery processes in Australia did not lead to the disclosure of research papers held by or received from the UK library. As a result of the concern the computer link with the UK was severed.
48 In its reply dated 9 July 1990, Allen Allen & Hemsley generally confirmed the advice given two months earlier by Wilson of Clayton Utz. The author, who appears to have been either Stephen Walker or Michael Rose, addressed Gulson's queries as to the position of Wills if "in any future litigation" an order for discovery was made.
The author of the advice first warned that any future litigation would require that Wills identified in a list of discovered documents any BATCO reports of which it previously had custody, and noted that documents were discoverable if they had been in the power of Wills. The letter of advice then proceeded (I omit some sections which do not have any bearing on issues before me):
1.2 Whether an Australian Court could order Wills to retrieve from BATCo copies of BATCo documents previously destroyed by Wills pursuant to its Document Retention Policy.
As noted above, Wills could be required to include, in its list of discovered documents, any relevant documents belonging to BATCo which had, at some previous time, been in its possession, but had subsequently been destroyed.
Part 23, Rule 10 of the Supreme Court Rules provides that the Court may order a party to produce for inspection documents that appear, from the list of discovered documents, to be in its possession, custody or power.' Accordingly, an order for production will not require the production of documents no longer in the possessi on, custody or power of Wills at the time the order is made.
Although BATCo documents in England may not be the subject of an order for production for inspection, the fact that they have been identified in a list
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of documents may encourage plaintiffs in Australia to seek access to the documents through the use of Letters of Request.
49 After discussing whether discovery of BATCO reports in Australian proceedings could be used in proceedings elsewhere (and advising that it would be a misuse of discovery to do so, but could not be ruled out with respect to foreign proceedings) the writer advised:
3. Whether retention by Wills on a selective basis of certain reports would highlight the fact that other documents have been destroyed and compromise the position of Wills with respect to the practice and operation of its Document Retention Policy.
It is, in our view, important that any Document Retention Policy adopted by Wills should be applied consistently. Selective destruction of documents, in a manner inconsistent with the Document Retention Policy, might well lead to an inference that those documents contained material that was somehow damaging to Wills.
In addition, such destruction of documents might be considered a contempt of Court if the Court considered that it was likely to interfere with the course of justice. (Lane v Registrar of Supreme Court of New South Wales (1981) 35 ALR 322).
In our view, no such inference could reasonably be drawn from the routine and non- selective destruction of documents in a ma nner consistent with the Document Retention Policy.
This question is dealt with extensively by Clayton Utz in their letter of 29 March 1990 at paragraph 1, with which we agree.
4. Letter of Clayton Utz dated 29 March 1990
Clayton Utz have quoted from the Document Retention Policy and have concluded that the policy shows a three-fold motivation for the destruction of documents. Clayton Utz says that this motivation evinces a positive intention which cancels out any negative impression which may be created by the destruction of documents. On this basis, Clayton Utz says that there is little, if any, risk of contempt of Court'.
Although we agree with Clayton Utz's comments relating to the interpretation of the policy, it does not necessarily follow that there is no risk of an adverse impression being created or of contempt being found. It should be remembered that an aggressive plaintiff, in an application for further discovery or in a hearing itself, could cross-examine Wills' witnesses about aspects of the policy. In such circumstances, the demeanour of witnesses and frankness of their answers will be most important. Any attempt by Wills' witnesses to deny an awareness of the fact that document destruction makes things difficult for plaintiffs may lead to those witnesses being disbelieved and adverse inferences being drawn.
50 In the next section (portion of which I omit), the writer discussed the law of privilege:
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4.2 Part 2(b) of Clayton Utz's letter
We agree with the comments made by Clayton Utz in Part 2(b) of their letter.
It is possible that a court could order the disclosure of Clayton Utz's documents and other documents which are assumed to be privileged, in circumstances other than those described by Clayton Utz. If a plaintiff were to be particularly aggressive in its attempts to gain access to documents in relation to which privilege has been claimed, it is possible that a court, after examining the documents concerned, could hold that documents which are assumed to be privileged, are not privileged.
51 The writer then discussed the risk of the Document Retention Policy, itself, being disclosed, a concern which had been reflected in the earlier advice of Clayton Utz, and which, in my opinion, continued to be a significant consideration in the conduct of the defence in the present litigation, including the discovery process:
4.3 Part 2(c) of Clayton Utz's letter
Clayton Utz's comments in Part 2(c) of their letter seems to assume that an Affidavit Verifying Discovery is the only affidavit relating to documents which would need to be sworn on behalf of Wills. This is not the case.
If a plaintiff were particularly aggressive in pursing access to Wills' documents, he or she could, by Notice of Motion, seek orders for further and better discovery. In some circumstances, Wills might choose to resist such an application, relying on evidence of the adequacy of its discovery. If such a course were adopted by Wills, it is possible that Wills' executives and/or Wills' legal advisers could be required to give evidence. Such evidence may involve disclosure of information about the Document Retention Policy.
Obviously, whether or not Wills would risk such disclosure will depend upon the circumstances of the case in which the issue arises.
52 The author added further com ments on the Clayton Utz advice, and warned that in cutting the computer link to the BATCO research library it should be made to appear that it had been the unilateral decision of BATCO, and did not arise because of the very concerns which actually motivated Wills to so act:
4.4 Part 3 of Clayton Utz's letter
We do not agree with Clayton Utz's assessment that no changes need to be made to the way in which the Document Retention Policy is applied. In our opinion, the policy could be improved by the incorporation of the suggestions contained in Part 5 of our letter.
4.5 Part 4 of Clayton Utz's letter
We agree with Clayton Utz's comments in Part 4 of their letter. We note that whatever policy is adopted in relation to BATCo research reports, it is essential that that policy be applied consistently.
In relation to Part 4(c) of the letter, we consider it important that the
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termination, or restriction, of Wills' access to the BATCo computer data base be built into the BATCo Document Retention Policy and not be referred to in the Wills Document Retention Policy.
It is possible that an adverse inference could be drawn if Wills decided to terminate or restrict its access to the BATCo computer data base. Although there are sound management reasons for introducing a Document Retention Policy in relation to hard-copy documents stored in Australia, it may be more difficult for Wills to establish sound reasons for the modification of access arrangements in circumstances where Wills does not have the responsibility for storage of the data base. Accordingly, termination or restriction of access must be the result of a unilateral decision by BATCo made solely by reference to its own management requirements.
53 The author then addressed some tactical disadvantages which might arise in a later trial if documents were destroyed. The author did not suggest that some of the difficulties might be overcome by adopting a process of "warehousing" documents, nor did the author address the much greater disadvantage which a plaintiff would experience in the conduct of a trial, if denied relevant research documents. The author wrote:
4.6 Part 7 of Clayton Utz's letter
If the issue of research becomes important in future legal proceedings, Wills may have to choose between:
-- settling the proceedings;
-- relying on BATCo reports brought to Australia and produced with the consent of BATCo;
-- relying on the oral evidence of Wills' and/or BATCo witnesses;
-- relying on the oral evidence of industry experts who may be able to comment on industry- wide research issues.
Obviously, each of the above courses of action has serious drawbacks for Wills and BATCo. Any action taken would depend entirely upon the nature of the proceedings concerned.
54 Finally, the author offered general advice as to the Document Retention Policy, making it clear that Allen Allen & Hemsley did not have the same knowledge of the policy, and of the documents held by Wills, as was held by Clayton Utz:
5. The Document Retention Policy
In our opinion, it is difficult to comment upon a Document Retention Policy without detailed knowledge of the corporate structure involved and the types of documents which exist or are likely to be produced. Whatever Document Retention Policy is adopted by Wills, it is important that:
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-- the policy is clear cut and requires as little subjective judgment as possible;
-- the policy is applied consistently;
-- compliance with the policy be audited to ensure consistent application;
-- the policy regulates the distribution, retention and destruction of documents which are prima facie privileged;
-- the policy applies to electronically-stored information;
-- care be taken to ensure that sensitive documents, which belong to a class of documents which would be destroyed, do not survive' because they are attached to, or contained in, documents belonging to another class of documents. For example, policy documents and correspondence (which under the BAT industries policy would be destroyed in one or two years) could survive' if they were attached to visit reports or minutes of specialist meetings which may be preserved for five years or more.
Should you wish to discuss any of the matters referred to above in greater detail, please contact either Jim Dwyer or Michael Rose of this office."
55 Neither Ms Chalmers of Mallesons nor Mr Eggleton of Clayton Utz, who gave evidence before me, were aware of the letter sent by Gulson, or of the reply from Allen Allen & Hemsley. Eggleton ventured that the references by Gulson to destroyed documents was merely hypothetical, but, in my opinion, it is clear that Gulson is addressing a real, not hypothetical, situation. Gulson was not called to give evidence before me.
56 The advice of Allen Allen & Hemsley was not produced until after all witnesses had completed their evidence in this case. It was not suggested, however, by any witness who was called, that the advice of Allen Allen & Hemsley played any significant role in decisions taken by Wills concerning document destruction.
THE AUSTRALIAN PROCEEDINGS
57 In November 1990 W.D. & H.O. Wills (hereafter referred to as Wills') which is the predecessor of the defendant was joined as third party in Supreme Court proceedings brought against CSR Limited by one Gallagher in Western Australia.
Gallagher claimed to have suffered chest disease as a result of inhaling asbestos. The third party proceedings raised the question whether cigarettes had caused or contributed to the plaintiff's condition.
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58 In 1991 proceedings against Wills were brought in the Supreme Court in New South Wales. The plaintiff was David Harrison, and the case was discontinued in March 1998.
59 In February 1996 proceedings were commenced in the Supreme Court in Victoria by Phyllis Cremona. Those proceedings were discontinued in March 1998.
60 Class action proceedings were brought in the Federal Court by Michael Nixon and others in 1999. Those proceedings were dismissed before trial, on procedural grounds, in about November 2000. As I have said, the present proceedings were commenced on 26 October 2001.
61 The Document Retention Policy pursuant to whic h documents were to be destroyed was suspended by virtue of a "Hold Order" which was imposed from time to time in recognition of the fact that proceedings had been issued against the defendant and either had or would lead to an order for discovery. Such a Hold Order was imposed on 23 November 1990 in response to the Gallagher litigation. Hold Orders were renewed thereafter, in response to each of the court proceedings to which I have referred. Hold Orders continued in place until March 1998.
A MULTITUDE OF LAWYERS
62 One outstanding feature of this case is the extent to which, after 1985, the terms of the Document Retention Policy, and the implementation of a program of destruction of documents, were the product of advice, decision and supervision by an army of litigation lawyers, from several countries, and being both retained private practitioners and in-house lawyers. The relationship between the defendant and its retained solicitors was so close that solicitors employed by private firms sometimes became employees of Wills and then continued to work alongside members of their former firm, and employees of one of the legal firms sometimes spent months working on the premises of Wills. Private practitioners and in-house lawyers travelled together to conferences of litigation lawyers, organised by companies in the BAT Group, to discuss litigation tactics.
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63 David Schechter, in-house counsel for BATUS, the USA affiliate, played a very significant role with respect to the Document Retention Policy. In 1990, after the Gallagher litigation commenced, Schechter visited Australia for the purpose of assisting Wills in its defence of the action. He conducted interviews with firms of solicitors to determine who should represent Wills, and selected Robinson Cox in Perth. David Eggleton, a partner in Clayton Utz, met Schechter at that time and deposed that Schechter also interviewed partners from Mallesons Stephens Jacques and played a part in the decision to appoint that firm in Sydney "to represent Wills in future product liability cases". Schechter returned to Australia from time to time, for such purposes as preparing a submission to legal aid authorities designed to prevent potential litigants obtaining legal aid.
64 Robyn Chalmers, a partner at Mallesons Stephen Jaques, was engaged by the defendant, Wills, to perform discovery for the Harrison case. She was told by Mary Weir, the in -house counsel for Wills (who was succeeded, later, by Cannar), that she should copy correspondence to Schechter and to Bob Northrip. Northrip was an American Attorney from the Kansas City firm Shook Hardy & Bacon, which specialised in tobacco litigation, and had represented Phillip Morris.
65 On 4 June 1991 Chalmers had a conference call with David Schechter and Bob Northrip. Her notes record that one or other of those two discussed the prospect of both the Gallagher and Harrison cases being dismissed, or going away, "so that documents can be gotten rid of". They sought Ms Chalmers' advice whether they could implement the document retention program if the Gallagher case was over and if Harrison had either gone away or else they concluded that it had no prospects.
66 Ms Chalmers noted, at the time, that it was said:
"If another case arises and those solicitors become aware that the documents have been destroyed while the Harrison case was on, but before the new case, can they complain about the destruction."
67 Ms Chalmers caused a lawyer in her office to conduct research on this question and in her instructions to the researcher queried whether such conduct would be in
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breach of director's duties, or would be grounds for exemplary damages. She queried too "ways of getting at head company's documents" and queried "conspiracy".
68 On 21 February 1992 Ms Chalmers was to discover that the question of document destruction had not gone away. In a multi-party phone hook up with Northrip, Andrew Foyle (the UK solicitor), Schechter and Stuart Charfon (a solicitor with BATCO), she recorded discussion under the heading "Dispose of Documents". She noted Northrip opening by saying that "Pro is you get rid of them", but the "con" was "plaintiff's firm may persuade courts to more readily allow discovery from BATCO or order Wills to get other documents or a sanction will be imposed". Her notes record that he added:
"Aust firms believe both of those will be very difficult. More likely course will say Wills acted improperly and sanction Wills. Greatest sanction would be deny a defence. Also sanctions against the solicitors involved."
69 Foyle responded that if the action was not settled or struck out "the solicitors would be in contempt of court if the docs were destroyed. Solicitors under an obligation to ensure clients preserve documents". Northrip saw the problem as being that the Harrison issues were so broad that a very wide range of documents were covered by its discovery and "can't destroy enough if it around" (sic). Schechter concluded that option one would be taken , namely to "try to strike out quickly but do not destroy the documents". Charfon concluded, too, that "On the advice we have we cannot destroy the documents. Very clear advice that documents cannot be destroyed".
70 Ms Chalmers told me that she had no doubt that the desire to get rid of documents expressed in those discussions had nothing to do with considerations of space and efficiency, but was related to the danger which the documents posed to the defence of future litigation. She considered, however, that the advice which she had tendered was proper, and had been followed by the client. I agr ee that she gave proper advice at that time. It is somewhat surprising that British and American lawyers might have been in any doubt as to what was proper in those circumstances.
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71 Eggleton, who said that he played no part in the document retention program, deposed that he saw Schechter four or five times in the next five years and on one occasion, between 1991 and 1995, when he saw Schechter in Australia, upon asking why he was in the country was told that he was here to assist in document issues. I am satisfied that Schechter played an important role in the modification of the policy after 1990.
72 Although Schechter accepted advice that documents could not be destroyed if proceedings were on foot, the clear inference from the notes as to his attitude at that time, was that once existing proceedings had been concluded the document destruction should proceed. No consideration as to whether further proceedings were anticipated had been considered, let alone been regarded as being a further impediment to such action. In my opinion, the record of those meetings is consistent with the conclusion that it was the actuality of proceedings being on foot that was accepted to be an impediment; anticipated proceedings were never seriously addressed. That reflects, in my opinion, the reality that at all times those who took the decisions about the implementation of the policy regarded future proceedings to be not merely likely, but to be a near certainty. It was that certainty which meant that any opportunity to destr oy documents which arose by virtue of the elimination of current proceedings was to be seized upon. Overwhelmingly, it was a policy designed by and implemented by lawyers, being driven by considerations relevant to future litigation.
THE POST-1992 DOCUMENT RETENTION POLICY
73 The Document Retention Policy was overseen by a group called the Records Review Team. Since 1993 the Records Review Team comprised the defendant's audit manager (Malcolm Nicholson), the tax manager, and a representative from the defendant's legal department. In 1998 Graham Maher was the solicitor who represented the defendant's in-house legal department on the Records Review Team.
74 After 1992 the Document Retention Policy was to be found in two documents, one being titled the "Records Managers Training and Education Workbook", and the
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other being titled "Staff Handbook". There is some uncertainty as to which documents were operative from 1992 to 1998, and I have seen several versions of the Staff Handbook. The terms used in the different versions are not always identical.
(A) The Record Managers' Training and Education Workbook
75 I will deal with the first of the two relevant documents which comprised the policy.
Mr Michael Harrison, the former, and now retired, company secretary, was appointed "Records Manager" in late 1991 or early 1992. He identified a lengthy document titled "Records Management Programme - Records Managers' Training and Education Workbook" which was dated March 1992 3 . In his affidavit Harrison said that this document was produced at a conference held in Kuala Lumpur in 1992 and was intended thereafter to be the statement of the Wills document management programme. Nicholson agreed that this document was the applicable Managers' training document as from that date.
76 The document noted the benefits which would flow from "getting people to think before they write or file records" and it was noted that among the benefits which would flow from having a disposal policy was that it would "reduce potential for legal and PR problems and costs". The document noted that fewer records being kept for shorter periods would reduce the potential for problems which would arise, or could arise, if poorly written company documents were made public in court or in the media. It was noted also that "it would also mean a significant reduction in the legal costs associated with a discovery exercise".
77 In a section titled "legal aspects" it was noted that records may have to be disclosed in a wide variety of cases, in several countries, and the expenditure of time in responding to discovery was said to be considerable, and the costs of such a process would be extremely high. Under a heading titled "Effect on a Law Suit" it was noted that -
"Documents which contain ambiguous or inflammatory remarks or statements which go beyond the expertise of the author can be taken
3 This document is Exhibit "MH1" to the affidavit of Harrison sworn 29 January 2002
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out of context and used to the advantage of the company's opponent in a law suit. The effects of losing a case may include not only the monetary cost of any award against the com pany but also, potentially, the cost in terms of damage to the company's reputation." 78 There then appeared a paragraph, paragraph G, page 8, which read as follows:
" Purpose of the records retention program . It should be emphasised that the retention of the records management program is aimed at ensuring that the company retains those records needed for business, legal, tax and audit reasons for the correct time period. That Program is not a way of ensuring destruction of 'damaging' records or retention of 'helpful' records. Records will be treated as series, in large blocks.
It is not the intention to 'spring clean' the files to remove or retain records on a selective basis. Any such action would prevent the Program from passing judicial scrutiny."
79 The Record Managers' Training and Education Workbook also addressed the question of the creation of new documents, and listed matters which managers should emphasise to staff. One topic appeared under the heading " How sensitive is the information that is to be communicated?" It read as follows (with emphases as shown):
"Whenever they are writing something people should always apply the mental copy rule . That is, they should imagine that the document will be copied to the local news media, to a competitor, to the Government or a potential plaintiff in a court case. They should then ask themselves whether they would still write the letter or memo and, if so, whether they would write it in the same way. Does the wording convey the message intended? Is it vague or ambiguous in any way?
It will soon become apparent that verbal communication is often the best way for sensitive information ".
80 There is nothing improper in advising a client against creating new documents which would be embarrassing to disclose in proceedings. 4
81 The March 1992 copy of the Managers' Training Workbook which Nicholson produced before me contained no appendices, but two appendices appear in the copy produced by Harrison. However, in the copy of the 1992 document which Harrison produced to the court, Appendix 1, which related to "Control of Stored
4 See Matthews & Malek "Discovery", 1992, at par. 11.06.
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Records", was a 1999 version, which has a noticeably different typeface and layout to the rest of the document. Harrison said there had been an earlier version. That was called for by counsel for the plaintiff but the defendant did not produce it.
82 Appendix 2 contained a paragraph warning that electronic records constituted a "blind spot" for many people, but that it must be understood that the destruction policy applied to electronic copies, too. The paragraph stated:
"There is no point in disposing of a paper record only to find that the same record is still being kept on a computer file or word processing disc, especially if you have a discovery order served on your Company by a court."
(B) The Staff Handbook
83 As to the second document comprising the policy, Harrison said that when he returned to Australia in June 1992 he created a Staff Handbook which was to complement the first document and which was thereafter modified from time to time 5 . He said that the Staff Handbook which was used after June 1992 (but later modified) was that exhibited behind Tab 31 to the affidavit of Mr Gordon of 25 January 2002, and Nicholson agreed that that Staff Handbook was in effect from 1993 to 1999. He also identified an earlier version dated May 1993 6 as being the document that had applied at that date.
84 Another version of the Staff Handbook was exhibited by Mr Gordon, of Slater & Gordon, behind tab 30 of Exhibit "PG5" of his affidavit. It bears no date. In that document, in a section titled " What benefits will be derived from the programme?", a number of identified benefits were identified, both for the records creation phase and the records destruction phase. For the records creation and filing phase, one of the benefits read as follows:
"Reduced potential for legal and PR problems
Reductions in the quantity of long term records and improvement in the quality of those produced will mean there is a lower risk that
5 A copy of the 1992 Staff Handbook appears at Tab 31 of Exhibit PG5 to the affidavit of Peter Gordon of 25 January 2002
6 Exhibit "MNN1" to affidavit of Nicholson dated 29 January 2002
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records, which may have to be produced during a court case or which may fall into the hands of the press, will cause problems for the company."
85 For the records destruction phase the following appears:
" Reduced potential for legal and PR problems and costs
As in the creation phase of the Programme, few er records means less likelihood that problems could arise if documents have to be produced in a court case. It also means much reduced legal review costs if the Company becomes involved in a law suit." 86 The handbook which Harrison and Nicholson said was the operative one did not distinguish as between phases of the programme, and identified the following as one of the benefits:
" Reduction of legal and PR costs
Reductions in the quantity of long-term records and improvement in the quality of those produced will mean that less costs will be incurred to maintain and locate records for legal, corporate and media use."
87 Harrison deposed that the document produced by Gordon ("PG 5", at tab 30), which had different typeface to the other version, may have been an earlier draft, but he said it was not a version distributed to staff. Nicholson noted the absence of a date and footer and said he did not confirm that it was a statement of the defendant's policy.
88 Both versions of the Staff Handbook identified other benefits which would derive from the programme. Among the other listed benefits were improved communications, improved productivity, lower costs, better teamwork, floor space savings, equipment savings, office moves, storage costs savings, records elimination savings, personal time savings and benefits as to quality in the work place.
89 Counsel for the defendant noted that, at page 17, of Tab 30, under a heading "How to Dispose of Your Records" the direction was given that all records were to be disposed of by series, and no individual files were to be kept back from destruction when they formed part of a series due for destruction. That demonstrated, they
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submitted, that a culling was not taking place.
THE SCOPE OF A HOLD ORDER
90 A Hold Order was first put in place in 1990 and was renewed thereafter until 1998.
On 1 April 1996 the Hold Order was reissued in recognition of the fact that the Harrison and Cremona cases were proceeding. The Hold Order noted that all documents created prior to and following the issue of the Cremona proceedings on 14 February 1996 had to be retained. The Hold Order expressly identified the categories of documents which would be subject to such retention, and were not to be destroyed. The categories included the following:
--Documents relating to the smoking and health issue or the continuing public debate, including any information relating to allegations that smoking was connected with ill health or disease, allegations that smoking is addictive or habit forming, components of tobacco or cigarette products including flavouring and additives, smoking testing and analysis of the combustion process, smoking behaviour including information as to why people smoke or choose to quit.
--Marketing, including documents relating to packaging, advertising and product launches, information relating to government health warnings, published cigarette advertisements and promotional material from 1955 to November 1987, documents directly concerned with the intention of effectiveness of any advertising or promotions.
--Documents relating to public and government attitudes to smoking and health issues and action aimed at influencing those attitudes and documents relating to the relationship between Wills and the Australian Tobacco Research Foundation and the Tobacco Institute of Australia.
--The records in connection with smoking and health and marketing that had to be retained were to include correspondence, internal memoranda and meeting minutes, discussion papers, reports, surveys and statistical data, scientific or pharmaceutical materials, both published and unpublished, and documents
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including references to such material, books magazines and journals obtained from all sources, audio and video tapes, films and photographs, electronic data and computer print-outs, including floppy discs, computer backup discs and tapes. "No electronically stored information relating to Will's activities concerning the areas of smoking and health and marketing whether on floppy disc or otherwise is to be erased or dumped, regardless of age".
A STRATEGY TO CONFINE PLAINTIFFS TO DOCUMENTS IN THE PUBLIC DOMAIN
91 In a letter to Slater & Gordon on 6 November 2001 Mr Travers of Clayton Utz advanced what counsel for the plaintiff contend is the strategy which was to be adopted by the defendant in the trial, and which has been the reason for the destruction of documents. Mr Travers asserted that the information as to the harmful effects of smoking had only evolved gradually; he referred to research on the public record, making no mention of any internal research by Wills or its agents.
The same approach was adopted in the letter sent to legal aid authorities, whereby discussion of the case was confined to documents in the public domain.
92 In 1993 or early 1994 the defendant, after consultations with lawyers representing the American and English companies in the Group (including Schechter, who came to Australia for the purpose) wrote to Legal Aid authorities in Australia urging that legal aid not be granted to any applicant seeking to bring proceedings against the defendant. The letter noted that the plaintiffs would be unable to prove a case against the defendant and great cost would be needlessly incurred.
93 The letter asserted:
"It is usually alleged that the defendant was negligent in not supplying sufficient information at the particular time as to the risks allegedly involved in the use of the product, a negligence claim based on breach of duty through failure to warn. In each individual tobacco case this issue will involve extensive enquiry and discovery relating to the factual basis of the allegations extending over a period of several decades, the general state of scientific and technical knowledge at the relevant times and an assessment whether any warning was needed at a particular da te."
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94 Maher, Wills in-house counsel, who had a part in the letter's production, said that the defendant and its advisers were well aware of the importance of discovery in relation to issues going to a defendant's state of knowledge.
95 In the present case counsel for the defendant responded to the plaintiff's complaint that relevant documents have been destroyed, by submitting that many of the documents may be found in the public domain. That, of course, denies to the plaintiff the opportunity to see any ann otations or notations which might appear on the original documents which were held by the defendant. No notes, memoranda or other records of debate and discussion concerning public comment or scientific reports on health issues relevant to such proceedings have been discovered, either.
96 The opportunity to obtain copies of documents which the defendant once held but had destroyed is severely impeded by the fact that there is now no list of such documents. Not even the less than 200 documents which had been provided to the solicitors for Mrs Cremona seem to now be held by the defendant. By an agreement entered between the solicitors for the defendant and for Mrs Cremona, none of the discovered documents were able to be copied by counsel, and the one copy of them which had been supplied was required to be returned to the defendant's solicitors, and that copy of the documents was subject to the destruction process, as I shall later discuss.
DESTROYED DOCUMENTS PRE-1998
97 As noted earlier, the Foyle memorandum of March 1990 contained the following observations:
"3. Details of how the policy was implemented by the Research Department are given in the note of AWF's meeting with Graham McGregor and Tas Wilson an the 17th November 1989.
The note also describes the type of research undertaken by Wills, the documents which they have received from BATCO and the information which their employees have about the BATCO research. A copy of the note is attached."
98 The note was not produced before me by the defendant and was apparently not sent
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to Wilson. It would have been an important document for this application, as research conducted before 1990 would have been of particular significance to the plaintiff. Later in his memorandum Foyle added:
"5. For the purpose of this exercise it can be assumed that, over the years, Wills has received copies of most of the sensitive documents generated by BATCO but that most of these (with the exception of the research reports) will have been destroyed as a result of the new retention policy. It should also be assumed that a number of Wills employees have a detailed knowledge of the subjects to which many of the sensitive documents referred."
99 Later, again, Foyle noted that: "The terms of the retention policy and the manner in which it has been implemented might cause problems for Wills in a product liability action".
100 I do not accept that Foyle was discussing a merely hypothetical destruction of documents. Given Foyle's opening statement that the current policy was introduced at a time when litigation was anticipated, it is clear that relevant documents had been destroyed upon that anticipation. What those documents were is now not known or not disclosed.
101 Graham Maher, in -house solicitor with Wills, gave evidence of a range of relevant internal material which he said was destroyed under the policy. He said that what was kept from destruction in 1998 was BATCO research and development material and material generated both internally and externally of scientific significance.
102 In his evidence Maher agreed:
"Do you agree with this proposition: that a plaintiff will not be able to show as a consequence of the policy adopted by this defendant when such documents were destroyed? --- I cannot agree as a consequence of the policy, counsel, because documents may have gone years and years and years ago - but since the policy was implemented, I can agree with that.
When do you say the policy was implemented? --- I thought it was implemented in or about 1993/94.
By Mr Harrison? --- Yes. Or by the company to be more accurate but Mr Harrison was responsible for it."
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103 Michael Harrison, having been trained under Schechter in Kuala Lumpur in 1992, as to the Document Retention Policy, took the role of Records Manager that year. He ceased employment with the company in November 1993. Schechter had visited Australia on one or more occasions to oversee the implementation of the policy.
Implementation of the policy had to be reported to BATCO in the UK.
104 Harrison deposed that he worked extremely long hours in implem enting the policy, which he said did involve destruction of large quantities of documents. Destruction was by series, he said, and there was no selective culling. He considered that the terms of the current Hold Order were complied with, and that "all documents involving scientific research and R & D were retained, as well as marketing and advertising material and documents relating to tobacco formulations.
105 Notwithstanding the apparent certainty of that statement I am not persuaded that all documents now relevant would have avoided destruction. Mr Harrison, himself, did not perform the task of locating and destroying documents. There were teams of workers for that. He read few of the documents which were to be destroyed and the documents were not identified individually before destruction was done by series.
His own interest was to separate out documents of historical interest. He was not looking for documents of relevance to potential litigation, as he considered that the Hold Order should have addressed those. In a period of frantic activity I consider it very likely that some relevant documents were destroyed. In any event, no record was kept of what was destroyed.
106 Many known relevant documents are now missing. If those relevant scientific and research documents and relevant memos and correspondence which are now missing were not destroyed at the time of Mr Harrison's activity then they were destroyed previously or subsequently.
107 Further evidence of past destruction of relevant documents is to be found in Gulson's letter dated 16 May 1990 to Walker of Allen Allen & Hemsley. As earlier noted, he referred to "BATCO documents previously destroyed by Wills" and "the
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fact that other documents have been destroyed". It is plain that he was there refer ring to documents which would have been relevant to litigation.
108 My Order for Discovery dated 6 December 2001 required, by par 9, that the defendant make discovery of any document within the categories identified by my Order and which had been previously held by the defendant, but which had been destroyed or removed from the possession, custody or control of the defendant. The Order required that it be disclosed by affidavit what had become of any documents which were missing or destroyed. As I shall discuss, that was not done.
CREATION OF A CREMONA DATA BASE
109 As a junior solicitor employed by Robinson Cox in Perth, Graham Maher had been involved in the discovery process in the Gallagher litigation. He commenced employment with Mallesons in Sydney in February 1996, working under Ms Chalmers, to review documents which might become relevant in any future litigation. He said that litigation was then a "distinct possibility", but no proceedings were on foot. Together with others, he summarised documents and had them scanned.
110 The review was conducted, he said, "because at that time there had been a lot of publicity about - and particularly publicity about documents, which had been made public in the United States." The American documents to which he referred were research papers which had a bearing on questions of the state of knowledge held within the industry and the state of their own research. Over a period of some six months, when he conducted the review, he examined not just research papers but also minutes of meetings, notes, letters and general documents over a period which might have been earlier than 1960, but was certainly dating from the mid sixties.
111 In July 1996 Maher left Mallesons and commenced employment by Wills, in their legal section, working under Mr Cannar. From March 1997 he worked on the Cremona discovery process, alongside Mallesons employees.
112 For the Cremona litigation, where general discovery was required, the defendant
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identified some 30,000 documents as being possibly relevant in the proceeding. Of the 30,000 documents some 11,600 were found to be relevant or arguably relevant and were included in the Affidavit of Documents on discovery. Save for a very small minority of documents, all 30,000 documents were imaged on computer discs.
Not only were they stored on compact discs, all documents were indexed, and in most instances summarised, for the very purpose that they could be readily retrieved and searched if required. The process of discovery cost in the order of two million dollars.
113 Notwithstanding the huge volume of material provided in discovery, and the time-consuming nature of the task, only some 200 documents were requested by Mrs Cremona's solicitors. Given the disruption and cost of the exercise the defendant resolved to avoid needlessly repeating the exercise in future, according to Maher. However, the very limited call for documents also surprised the defendants' lawyers, and was, I have no doubt, cause for relief. There was considerable anxiety to limit the potential damage which documents could do, as evidenced by the demand that the plaintiff's lawyers in Cremona return all copies to the defendant.
114 Chalmers said that the 1996-97 review also entailed the lawyers rating each document on a scale of 1 to 5, according to how damaging each was likely to be to the company in any litigation, or how beneficial. A rating of 5 meant the document was a "knockout" blow against the company, and a rating of 1 meant it was a knockout in favour of the company. It seems to me that the process of reviewing so many documents must have given many employees or consultants with the defendant a very clear appreciation of the potential for damage which the documents created.
115 All record of the summaries and rating of the Cremona documents has now been destroyed, but as I will next discuss, a hard copy of a search of the data base in 1997 indicates just how effective the search program was and how extensive was the data base before its destruction. It makes for one basis of comparison between the discovery which the plaintiff has achieved in this case and that which might have
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been attained had the data base not been destroyed.
THE SCOPE OF THE CREMONA DATA BASE
116 Some indication of the scope of the data base may be gleaned from Exhibits P10 and P 14. In August 1995 Alex Kinross, a solicitor with Mallesons, who took charge of the review process, provided Cannar and Mary Weir (Exhibit P10), with a detailed protocol for the collation and analysis of documents for the purpose of discovery, in the face of what was said to then be the "very real" threat of class action proceedings, which had been threatened in media comments by a barrister. The categories of smoking and health topics to which documents were to be allocated were discussed, and very clear, and accurate, instructions were given as to the legal obligations of discovery. In particular, Kinross stressed the necessity to obtain and provide accurate information as to all steps taken to locate missing documents and as to the circumstances when they were last seen and had been lost or destroyed.
117 The issue of juvenile smoking was identified by Kinross as one topic on which any relevant document had to be discovered, and so too documents relating to possible suppression of research, termination of research, misleading advertising and so forth. Ms Chalmers was identified by Kinross in her memo as being one of the persons who could be approached with any queries by staff. The various locations of relevant Wills documents were identified, including the Library and Wills Technical Centre which, under Mr Tas Wilson, was said to have conducted scientific research over 35 years. The WTC was said to hold a library of BATCO reports and also reports from other affiliates. The starting point for what was to become the Cremona data base was said to be 23,000 documents on smoking and health held at the WTC.
118 The Kinross document, Exhibit 10, contains a brief description of the nature of smoking and health documents held by each department of Wills at August 1995.
Ms Chalmers suggested in her evidence that it might not have been a list of what was known to be present so much as what Kinross expected to be present, but it is not written with such a qualification. It notes, for example, that the marketing
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department held market research reports, market surveys, correspondence, smoking statistics, research reports and documents relating to "warnings". Documents in those categories, and in others that Kinross mentioned, would be arguably relevant to the cat egories of discovery in this case, in particular, as to par 6.3 of my Order. In this case the defence is taken that the plaintiff voluntarily incurred the risk of suffering lung cancer by smoking. It would be relevant to the plaintiff's case to establish, for example, that the defendant had conducted market research as to the effectiveness of advertising in inducing young people to smoke. No market research or advertising studies were discovered.
119 Kinross was not called as a witness before me. Her absence was unexplained, save for the suggestion that it was unnecessary to call more witnesses, having regard to the number of witnesses who were produced by the defendant. In my opinion, she would have been a person with a very good knowledge, much better than Maher and Chalmers, of what had in fact been held on the Cremona data base prior to the implementation of the destruction programme in 1998.
120 It is obvious that the Cremona data base was a very useful tool. Given that it also contained a rating of importance of the documents, and of their "knockout" capacity, a person in the position of Maher or Cannar could very quickly have identified the documents of most danger to the defendant in any litigation. This data base was destroyed in 1998, after Cremona concluded.
121 The end product of all this effort to collate and review documents may be seen in Exhibit P14, a document which Chalmers sent to Maher on 17 April 1997. The Cremona data base, as the data base had expanded to become and be known, was searched under a number of headings.7 The topic "Wills knowledge of risks of lung cancer" for the period 1962 to 1988 produced 949 documents. There is no question that that is a relevant issue in this trial, it was also an issue on which the plaintiff interrogated. It was not, however, one of the categories of documents for which
7 It is not clear who performed the search, but it appears to have been a Mallesons employee, possibly Kinross.
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discovery was ordered.
122 However, on topics "Presence, qualities and effects of nicotine", and "Wills' knowledge of presence, qualities and effects of nicotine", for the period 1962 to 1987, a pool of 4654 documents were located in the data base and identified as relevant. A sub-category was the issue "Did Wills know that tobacco contained nicotine, and that the nicotine contained in the smoke from the cigarettes acted as an addictive, dependence-creating or strong habit forming substance between 1962 and 1987?"
The topic "Nicotine manipulation/content, 1962 to 1987 produced" a pool of 2430 documents.
123 Contrast that with the situation in the present case. One of the categories for discovery in this case was that stated in par 6.6: "All correspondence and other documents of or between the Defendant, Brown & Williamson and/or British American Tobacco between 1958 and 1968 relating to (a) Project Hippo, (b) research conducted by the Batelle Laboratories, (c) the pharmacological effect of nicotine on the human body, (d) the US Surgeon General." Not one document was discovered under any of those categories.
124 By way of explanation for the total failure to produce any documents under par 6.6, the defendant's counsel makes the following responses. First, they deny that par 6.6 refers to documents other than those actually authored by the defendant. I will discuss that later; it turns on the interpretation of the word "of", which the defendant interpreted in the most beneficial, albeit improbable, way. Secondly, it is contended that the time frame for discovery was more limited than the time frame in the 1997 search. The next explanation is that there may be documents under these categories in existence but they are held not under the possession, custody or power of the defendant, but of other persons. Finally, some of the documents may have been destroyed due to implementation of the Document Retention Policy in 1998.
Ms Chalmers said that while she believed that many of the documents in the Cremona pools, as listed in Exhibit P 14, would still exist, she could not say how many still existed, nor how many had been destroyed in 1998. She suggested that
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very few of the 4654 documents listed in 1997 relating to the qualities and effects of nicotine would have been discoverable under the "pharmacological effect of nicotine" category. I do not understand how Ms Chalmers could possibly know that to be so, and given the fact that not a single document was in fact discovered in that category the implication seems overwhelming that discovery has been fundamentally thwarted under this category by virtue of the 1998 destruction program.
125 The 1997 search under the category of "purpose and effect of Wills' advertising", for 1974 to 1988, produced 2387 documents. One category of discovery, under par 6.3, was "all documents relating to the advertising of the defendant's cigarettes of the brands "Capstan" and "Escort" between 1958 and 1992, whether or not such advertising also refers to other of the defendants' brands". No documents were produced under discovery in this category.
126 In my view, the interpretation adopted by the defendant by reference to the phrase "of the defendant" in par 6.6 of my Order, and its failure to seek clarification as to the correctness of that interpretation, demonstrates that the defendant is willing to adopt an exceptionally pedantic approach to its obligations of discovery, when that suits it interests - yet, as I shall show, when providing information to its opponent it has often chosen general words or vague phrases which mask its true meanings.
1998: THE CANCELLATION OF THE HOLD ORDER AND IMPLEMENTATION OF THE DOCUMENT RETENTION POLICY
127 On 8 April 1998 the Harrison proceedings were discontinued, upon the defendant's application. The notice of discontinuance had actually been signed on 5 March 1998.
The Cremona proceedings were discontinued, on the defendant's application, in March 1998.
128 Mal Nicholson reported to Nick Cannar, former in -house counsel for BATCO and at this time chief counsel for the defendant. Cannar said to Nicholson "now is a good opportunity to dispose of documents if we no longer need to keep them. That should be done outside the legal department". Cannar asked Nicholson to take the
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position of Records Manager and to be responsible for implementation of the policy.
On 9 March 1998 Nicholson, as Records Manager, gave a memo to all department managers and work group managers advising that with effect from 6 March 1998, and by the authority of the Chief Executive, Mr Stewart Watterton, the Hold Order of 1 April 1996 was revoked.
129 For the next three months Nicholson was engaged in the implentation process. The process did, in fact, involve lawyers, but they were lawyers from Mallesons, who reviewed all documents which had been collected for Cremona and Harrison, and once they confirmed that documents had passed the retention dates then they were destroyed. The actual task of destruction was performed by an external service provider. Nicholson said that Cannar did not supervise the destruction exercise.
Nicholson said that Mallesons reviewed a number of boxes of documents which had been returned to the company (from whence he did not know) after Cremona had concluded, and some of those documents were sent to the Technical Centre, and some to archives, but the balance was destroyed.
130 Nicholson had been with the company since 1967. He did not question the policy, and did not know that the Staff Handbook identified one of its functions as being to reduce the potential for legal and PR problems. Nicholson never met Chalmers, Eggleton or Schechter. Despite his title and role as Records Manager, (for three months), he was, I am quite satisfied, a minor player in the implementation of the policy.
131 In my opinion, it is perfectly plain that a window of opportunity was perceived by Cannar, and probably others, upon the completion of the Cremona and Harrison proceedings, there then being no proceedings on foot.
132 On 9 March 1998, before the destruction of the Cremona data base commenced, Maher, as corporate in -house counsel, wrote to Ms Chalmers, of Mallesons Stephen Jaques, seeking advice as to the entitlement of the defendant to revoke the Hold Order with respect to documents that had been collected pursuant to discovery in
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the Cremona litigation. Mallesons had been engaged for the purpose of undertaking the discovery exercise on behalf of Clayton Utz, who were the solicitors on the record.
133 Maher advised Chalmers that a Hold Order had been in place since November 1990 but had been revoked as from 6 March 1998. Revocation of the Hold Order, he said, "may not apply to 'external reports', being reports from other BATCO companies on research, development and related issues". He added that:
"Previous legal advice received some time ago was to the effect that there was no legal obligation on the company or its officers to retain documentation which may be related to issues arising in legal proceedings where no such proceedings were on foot, although a Court may draw adverse inferences from the destruction of such documents depending on the circumstances.
Whatever the strict legal position, in light of publicity given to document issues in other jurisdictions and the risk of adverse inferences being drawn by a court in the event of any future proceedings, I have recommended to the Committee, and the Committee has agreed, that, subject to your advice, we retain all 'external reports' irrespective of their date and all like reports created by the Company. The Committee has also agreed to recommend a change in the retention period applying to documents to the effect that both internal and external reports of 'fundamental and ongoing scientific significance' will be retained permanently, subject to annual review".
134 Maher annexed to his letter to Mallesons an earlier advice which had been obtained from Clayton Utz, dated 7 July 1992, and which had been directed to Mike Harrison, Company Secretary. That advice had dealt solely with statutory requirements as to document retention.
135 Maher, in his letter to Chalmers, then sought advice as to whether there was any legal obligation on the company to retain documents which "might possibly be relevant in legal proceedings where no such proceedings are in existence".
136 On 19 March 1998 Robyn Chalmers, a partner with Mallesons, responded to Maher's request for advice, and agreed that it was prudent that the Company's Records Management Review Committee had decided that all external reports and like
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reports were to be retained and also that both internal and external reports of "fundamental and ongoing scientific significance" were to be retained. She advised that original documents should be retained when they were of a legal nature.
137 Ms Chalmers advised:
"I confirm that there is no specific obligation of you to retain documents for the purposes of legal proceedings where no such proceedings have been commenced. You are entitled to destroy any documents subject to the legislative requirements but as you have been advised previously, the court may draw an adverse inference from the destruction of such documents, depending on the circumstances of the destruction. Moreover, you may be required to produce any copies retained where originals are destroyed or to give oral evidence regarding the nature and content of the original documents. Arguments in your defence where records have been destroyed would include compliance with the legislative retention periods and a necessity to maintain your archives within responsible limits, given the administrative and storage costs of keeping a large quantity of data".
138 Ms Chalmers advised that she would provide a member of the staff at Mallesons to identify and separate all documents which should be retained.
139 Even before receipt of the Chalmers advice, destruction of documents had commenced, but the destruction of the Cremona discovered documents commenced only after Maher had received the advice from Chalmers.
140 Maher was concerned about the proposal to rei nstate the Document Retention Policy and he discussed the proposal with his superior, Cannar. He warned Cannar that adverse inferences could be drawn and that the propriety of the company engaging in this process of destruction of documents, which would or might prejudice the case of any future plaintiff, could be a subject of comment by a court. He was concerned, too, about his own position as an officer of the Court, in participating in such a process. He proposed, and Cannar apparently agreed, the retention of the Research and Development reports, but otherwise agreed with Cannar's conclusion that the program should proceed. Maher assumed that Cannar would have reported to the CEO, Watterton.
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141 Maher also discussed Chalmers' legal advice with the members of the Records Management Review Committee, and gave them copies of Chalmers' advice. The Chalmers' written advice made no reference to any question of "anticipated" proceedings. She told me that she had in fact conferred with Cannar and Maher on 11 March 1998 and had expressly queried the purpose for the destruction and also whether there were any further proceedings anticipated. By oversight, she said, she omitted to include any advice about anticipated proceedings in her written advice.
142 Maher gave evidence before me prior to Ms Chalmers, and then returned to Dubai, where he is now employed by one of the companies in the BAT Group. In giving evidence in chief he was not asked about a meeting with Chalmers nor did he suggest that any meeting had occurred. He did not mention receiving any advice about anticipated proceedings or discussing that notion with Cannar or the committee.
143 Counsel for the plaintiff submitted that I should conclude that no such meeting took place and that I should reject Ms Chalmers' evidence concerning the meeting.
144 I do not consider that Ms Chalmers invented the meeting, but having regard to the fact that she had no note relating to it (apart from a diary entry) I do consider that her recollection of what was said between her self and Cannar and Maher may be incomplete, or unreliable to some degree.
145 The fact that Ms Chalmers now says that she made a point of inquiring as to the bona fides of the purpose of the proposed destruction and that she also raised, expressly, the question of anticipated proceedings suggests that she both then and now had some anxiety about what was proposed. I am not surprised if that was so.
What is clear is that whatever she said to Cannar and Maher, apparently neither the fact of the meeting nor any additional oral advice that she may have given made an impact on Maher. His recollection is that what was discussed with Cannar and his committee was merely the written advice: that advice was limited to discussion about proceedings that had commenced, and did not mention anticipated
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146 Ms Chalmers said that she was reassured as to the genuineness of the reasons for implementation of the policy by virtue of Maher's statement that all research material would be held back from destruction. That, she considered, meant that documents that may have been more harmful than helpful to the interests of the defendant were being preserved. Ms Chalmers, however, given her long involvement with the defendant and the discovery process, could have sought more evidence of the benevolence of that decision. It is now quite apparent that a great number of research documents held at the time of Cremona, of which the plaintiff sought discovery in this case, were destroyed in 1998, after she had delivered her written advice. As Maher appreciated, what would be destroyed (and was) included, at least, all internal documents reflecting discussion within the company about research, advertising, addiction and other critical issues. He knew at the time how important such material would have been to the case of a future plaintiff.
147 Ms Chalmers said it was not her function to cross examine employees of her client as to their motives for destruction and the scope of destruction. In my view, she was content to accept their answers without scrutiny. A solicitor advising a client about discovery is obliged only to take reasonable steps to ascertain the truth as to the client's instructions concerning documents, but must investigate further if he/she has reasonable grounds for suspecting that there are other documents which the client has not disclosed. A solicitor is entitled, on reasonable grounds, to believe his/ her client 8 . I do not consider that Ms Chalmers had reasonable grounds to be so satisfied, but I accept that she considered that she had, and in any event, she had been denied some important information by Clayton Utz (and by her client) about past destruction of documents, which would have made her more suspicious of her client's instructions.
148 Ms Chalmers said that at the time she did not consider that it was likely that further proceedings would be commenced, given that those to date had been unsuccessful,
8 As to these propositions see Matthews & Malek, "Discovery", (1992), at pp 248- 249.
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and no proceedings had been commenced in the UK. Cannar and Maher asked her whether the fact that the defendant was a tobacco company meant that they should retain their records, and she told them that, while there was no case law on the point, it would be "commercially unrealistic" for the law to require that, since it would mean that a company could never destroy its documents. In her discussion as to "anticipated litigation" Ms Chalmers said that it was her understanding, as she told them, that for litigation to be anticipated there would have to be some identifiable piece of litigation that they had knowledge of, perhaps by means of a letter of demand. They said they had no such information.
149 In my view, even a modest degree of scepticism would have suggested that if it was appropriate that scientific documents be preserved, having regard to the possible prejudice to a future plaintiff, then it was important to know what would be lost.
The urgency with which the program was to be implemented reflected the expectation of further litigation, as did the maintenance of substantial teams of litigation lawyers.
150 Although Maher's decision to retain certain documents was to a significant degree predicated on the possibility of later criticism if proceedings were brought by a plaintiff, Ms Chalmers said that she did not turn her mind to the question of whether a pla intiff would suffer prejudice by implementation of the policy. In any event, she did not believe that a plaintiff would have been prejudiced, because all of the scientific research was being retained, unculled. That material she understood to be both internal and external research and development material of BATCO companies.
She said: "I had no reason to believe that they were doing this in any way to seek to harm a future plaintiff". She doubted that she owed a duty to "unidentified people making unidentified claims", and suggested that it would have been negligent to have given her clients advice other than that she did. She considered that what they told her they proposed to do was both legally correct and eminently fair, but doubted whether fairness was a relevant consideration which they or she had to address. Ms Chalmers did not enquire whether there had been culling of the
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scientific documents in the past. She was unaware, for example, of the letter sent to Allen Allen & Hemsley on 16 May 1990 by Mr Gulson, legal counsel and company secretary of Wills, which strongly suggested that such culling had occurred in the past, pursuant to the Document Retention Policy.
151 Maher, and certainly Cannar, would have known perfectly well (having regard to earli er advice) that innocent motives had to be asserted by the company. Cannar knew that Chalmers would be placed in an embarrassing position if dishonourable motives (and recognition of the high probability of further proceedings) were admitted. Having regard to her discussions with Schechter and Northrip in 1991 and 1992 Ms Chalmers might have had good reason not to probe too deeply the question of motivation for the proposed destruction. She had no doubt that the intentions that Schechter and Northrip had expressed in 1991 and 1992 were related to impeding the prospects of any plaintiff by destroying damaging documents. Ms Chalmers told me, however, that they had accepted her advice not to so act.
Furthermore, she considered that the change in approach fr om about 1995 - when efforts were commenced to identify, analyse and place all documents on a data base - demonstrated a reversal of that earlier contemplated approach.
152 As to his own position as an officer of the Court, Maher told me that had there been a problem then Chalmers would have raised it in her advice. In my view, Maher was relying on the legal advice from Chalmers to provide his defence if the destruction was later criticised, and Chalmers, in turn, was relying on not being told anything that would embarrass her in giving advice. Although there was a sense of urgency in disposing of documents upon the lifting of the Hold Order, the documents in Cremona were not destroyed until Maher received the advice from Chalmers, then discussed it with his committee and got his direction from Cannar.
153 Maher told me that at the time of this destruction of documents no dispute had arisen with any person likely to become a litigant, but he agreed that "the possibility of litigation was certainly there". It was a difficult decision for him to take to destroy the documents. At first blush, he thought that the purpose of the proposed
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implementation of the policy might have been the deliberate destruction of harmful evidence but, he said, having regard to the decision to retain the research papers, and the involvement of Harrison, whom he respected, he decided that he should accept that there were justifiable commercial reasons for the implementation of the policy.
154 Maher said that he did not cull the research doc uments which were preserved, although he could not say whether they had already been culled before they reached this point. There was a sense of urgency. Maher said that the department managers were told they had to confirm compliance with the policy by 15 April 1998.
155 Maher said that he discussed with Cannar the fact that in addition to research documents the internal responses to research would also be highly relevant to any plaintiff's action. They agreed that if the policy was to be implemented, however, it would not be appropriate to extract such documents from the material, because they were destroying by series, and there was not a series which identified such documents.
156 The decision was really that of Cannar, rather than Maher. Maher said that Cannar accepted that people might look askance at the company, and that had to be weighed against the fact that the policy had not been implemented for eight years. Maher said he assumed that Cannar had weighed those considerations. He was instructed by Cannar that the policy was to be implemented.
157 I am satisfied that Maher appreciated that the implementation of the policy was primarily to ensure that incriminating documents would be kept out of litigation.
When the destruction occurred the prospect of further litigation was so real to Maher and Cannar that they decided it was wise to hold back the technical reports which they preserved, and which Maher judged to be the most contentious material to destroy. Maher based his assessment of importance by his knowledge of what disputes had arisen overseas about research records.
158 One additional factor which caused Maher to hold back the research documents was
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that the company at that time was saying that it had conducted a good faith research effort over the la st 40 or 50 years, and it seemed to him to be entirely inconsistent with any such public statement to then destroy that research record.
159 In my view, the application of a "series" approach was little more than an attempt to disguise the reality (whilst achieving the objective) that the predominant purpose was to destroy as many damaging documents as possible that were not in the public domain.
160 The process of destruction of documents in which the defendant engaged included destruction of CD Roms on which they were all imaged. There was no factor of storage space which caused that. As Maher conceded, the effect of the policy was to obliterate knowledge of the fact of the existence of documents. For all the talk of documents having to be destroyed in series, and individual documents not being held back, Maher said there had been an index and a list, or catalogue, of all the reviewed documents, and summaries were made of their contents. It would have been very easy to retain a record of what had been held so that by comparison with what is left we could know what had been destroyed. Retention of the CD ROMS would have achieved the same result. This defendant knew that if there was later litigation then it would be obliged in discovery to state what had happened to destroyed documents and to identify them as best it could. The decision to destroy all such lists and records can only have been a deliberate tactic designed to hide information as to what was destroyed.
161 Upon completion of the Cremona case, Mallesons returned to the defendant the original discovered documents together with the compact discs. Employees who had provided documents to the defendant during the course of the discovery exercise were invited to apply to have them returned, but only a limited number of such requests were made. In any event, the advice as to the lifting of the Hold Order was directed to all employees and, thus, any documents which had been returned to staff would then have been required to be passed back for destruction.
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162 Maher believed that with the exception of the filing cabinets containing the research and development reports, which Maher believed had been set aside, the balance of documents which had been obtained in discovery were then destroyed by the defendant, including all compact discs. If that was so then most of the documents which had been identified as relevant for the purpose of discovery in Cremona were destroyed, plus all records of what those documents were, and all compact disc record of those documents.
163 Ms Chalmers confirmed that the only copies of the Cremona data base (one held at Wills and one at Mallesons) were destroyed. Wills had held all of the hard copy documents, save for those delivered by Mallesons to the solicitors for Cremona, and subsequently returned to Wills. The fact that CD Rom copies of all of the Cremona documents had been held at those locations, and had been destroyed in 1998, was not disclosed in the Affidavit of Documents in this case.
164 A data base relating to the internal scientific reports was retained. Ms Chalmers said it was the entire body of such scientific reports which was retained, but I am not persuaded that that was so, or that Ms Chalmers could have known it to be so, whatever she may have believed, having regard to the very limited personal involvement she had in the actual process of the creation of the data base and the analysing of documents in it.
165 The role of Cannar is of considerable importance, and his absence from the witness box is glaring. He was involved in the development of the Document Retention Policy from at least 1990, when as Senior Solicitor for BATCO he visited Australia for talks with Gulson and Australian solicitors from Clayton Utz and Allen Allen & Hemsley. His name emerges constantly. He was present when Wilson advised in conference on 2 April 1990, "as to the rest, get rid of them".
166 Cannar did not give evidence. It was not suggested that he was unavailable to be called. He resides in New South Wales and is CEO of Imperial Tobacco Australia.
He left the employment of the defendant in September 1999.
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WHAT DOCUMENTS WERE DESTROYED IN MARCH/APRIL 1998?
167 No record was kept by the defendant as to the documents which were destroyed after the Hold Order was lifted in 1998. In assessing the extent of document destruction and the nature of the documents destroyed it is first necessary to assess the volume of potentially relevant material which was held by the defendant at the time when the Hold Order was lifted in 1998 and the ease with which it was capable of being reviewed.
168 Maher said he had seen internal memos, and commentaries on smoking and health issues, among the Cremona documents. He said it was necessary to destroy all such memos and similar documents which reflected how the company's officers responded to research and health issues, because, notwithstanding that he well appreciated how useful they would be a plaintiff, it was necessary, if the policy was to be implemented, he said, that there be no exceptions, and that all documents within the broad categories be destroyed. To have differentiated between documents would have constituted non -compliance with the policy. He said that documents which went to the questions of the defendant's state of scientific and technical knowledge would certainly have been destroyed in 1998. Any documents which recorded what had been destroyed were themselves destroyed. It was most likely that some of the documents returned by Holding Redlich, Mrs Cremona's solicitors, had also been destroyed. Maher thought, too, that some of the documents which had been in the Wills library may have been destroyed. The computer connection to BATCO library had been cut some years earlier.
169 Counsel for the defendant contend that Maher overestimated the volume of material that was destroyed after the discontinuance of Cremona. Maher suggested that apart from the research documents, and some advertising material and historical material, the bulk of the 30,000 documents in the Cremona data base were destroyed.
170 Ms Chalmers now contends that only a few thousand documents may have been destroyed. By reference to searches of the Nixon and BAT data bases conducted as
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at 6 December 2001 9 and by reference to a letter from herself as co-signatory to Nicholson, dated 1 April 1998, which reported on the implementation of the policy, she claimed that the following Cremona data base documents were retained. In the first place, there were 4214 research and technical reports which were preserved 10 .
In addition, Ms Chalmers claimed that as at the end of the Cremona proceedings there remained 11,483 company minutes, 3,700 books, journals and copy articles in the library, unknown numbers of documents about corporate and regulatory affairs, patents, and specifications. There were also 7500 advertisements and boxes of files of documents held by employees, which include some copies of documents which were in the Cremona discovery, and 700 audio tapes, videos and films. Thus, a conservative count suggests that if there had been 30,000 Cremona documents of which those formed part then perhaps two or three thousand documents were destroyed.
171 In fact, Ms Chalmers said that Maher would have been in a better position than she was to say what had transpired with the Cremona documents pursuant to the policy, since she did not attend Wills and had no hands-on role.11 However, even assuming her figures are correct (and I do not accept that they provide a reliable means for assessing the destruction), it remains the fact that documents which were in Cremona discovery, and were likely to be very important to the plaintiff's case, and were sought in this trial, have not been produced and must have been destroyed at this time. On the other hand, documents such as voluntary advertising code documents, which might reflect well on the defendant, survived implementation of the policy. No company memos or internal commentaries survived the destruction.
I find it difficult to imagine that in a company of this size, and operating over such a long period, such documents would not of themselves number at least hundreds, if
9 Exhibit P 18.
10 In Ex P18 Mallesons report "We retrieved from the Cremona discovery documents original reports not held by the WTC library so as to maintain a complete library of all research and technical report series issued by Wills and received by Wills from BAT Southampton, ITL Montreal, Brown & Williamson and Souza Cruz in the Wills Technical Centre library".
11 In his evidence, Maher was not prepared to say that the research documents which were held back from destruction represented the entirety of Wills' research output.
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not thousands, however narrowly the categories of discovery might be interpreted, and even allowing for the warning to staff, contained in the policy documents after 1992, about not creating newly embarrassing documents.
172 Mr Rush submitted that many more reports than those that were kept from destruction in 1998 had been in the possession of the defendant and had been destroyed by the defendant since the new policy was implemented in 1985. It was likely, he submitted, that all of the scientific reports which emanated from BATCO research, and which had been the subject of the Notice to Admit in this case, had been destroyed well before 1998. The fact of such destruction of documents was not disclosed to Chalmers by Clayton Utz and Wills; thus when she prepared the Affidavit of Documents for Namey to swear it made no reference to the destruction of relevant documents, as it should have. The Affidavit of Documents was seriously deficient in that respect.
INADEQUATE DISCOVERY: THE DEFICIENCIES OF T HE AFFIDAVIT OF DOCUMENTS
(A) The categories identified for discovery
173 By operation of the Rules and by its express terms, the Order made by me on 6 December 2001 required an affidavit to be sworn as to a range of documents, stating whether each had been in the possession, custody or power of the defendant, the date or dates it had been in possession, when it was last in possession, and what had become of it if it was no longer in possession. The categories of documents in my Order made on 6 December 2001 were those which had been agreed between the lawyers on either side. The categories of document which were identified in my Order may be summarised as follows:
(a) Fifteen Child smoking studies which were individually identified and for which dates were given (all of which had been in Cremona discovery);
(b) Annual reports 1957-1966;
(b) Thirty-four Documents listed in a Notice to Admit dated 20 November 2001;
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(e) Under par 6 of the Order the following categories were then identified (the inaccurate numbering is as it appeared):
"1. All documents upon which the Defendant will rely at the trial and which the Defendant will seek to tender at the trial;
2. All documents of the Defendant or of other tobacco companies sent to or received by the Defendant, dealing with health advertising, and/or any agreement or course of conduct entered into by the Defendant to refrain from advertising or promoting its cigarettes by reference to the comparative health risk of its cigarettes compared to other manufacturers' cigarettes;
3 All documents and records relating to the advertising of the Defendant's cigarettes of the brands Capstan' and Escort' between 1958 and 1992, whether or not such documents also relate to the advertising of other brands of cigarettes produced or sold by the Defendant;
4. All advertisements for Capstan and Escort cigarettes displayed, published and/or aired in Victoria between 1958 and 1992;
5. All correspondence between the Defendant and the NHMRC between 1957 and 1965;
6. All correspondence and other documents of or between the Defendant, Brown and Williamson, and/or British American tobacco, between 1958 and 1968, relating to;
(a) Project Hippo;
(b) research conducted by the Batelle Laboratories;
(c) the pharmacological effect of nicotine on the human body;
(d) the US Surgeon-General;
8. All correspondence between the Defendant and the Tobacco Journal of Victoria and/or the Australian Retail Tobacconist between 1955 and 1965.
9. Any document previously held by the Defendant in categories 2, 3, 5, 6, and 7 above which has been destroyed or otherwise removed from the possession, custody or control of the Defendant."
174 In addition, the solicitors agreed on three further categories set out in a letter of Gordon dated 14 December 2001, being copies of the in-house magazine "Smoke
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Signals" from 1958 to 1966, copies of sale agreements with distributors and retailers over that period, and documents and correspondence related to a particular survey of schoolboy smoking habits conducted in 1958.
(B) The Affidavit of Documents
175 On 14 January 2002 John Namey, company secretary of the defendant, swore an Affidavit of Documents.
176 The complaints of counsel for the plaintiff about the Namey affidavit are many fold and, in my opinion, in the main, are quite justified. In the first place, it was quite inadequate in its dealing with documents which were no longer in the possession of the defendant. Both he and Ms Chalmers said that they were unaware of the document destruction which had occurred prior to March/April 1998. Clayton Utz, which assigned the discovery responsibilities to Ms Chalmers, did know.
177 Additionally, the Namey affidavit presented an incomplete and misleading picture of what had occurred after Cremona. The affidavit was drafted by Chalmers but was settled by Clayton Utz and by counsel, Mr Beach. Ms Chalmers said that she sent a copy to Mr Ruskin, for information, but he did not comment on it. In my view, the order in which topics are addressed and emphasised, and the use of words, reflects a very careful attempt to disguise or understate what had occurred to documents after Cremona but without using words which were blatantly untrue. It was, as I described it, a "coy" document, conveying different meanings to different readers, according to their inside knowledge of what had really transpired after Cremona.
178 There are a number of instances of the failure of the Affidavit of Documents to disclose the fact of the destruction of documents and the circumstances of destruction. The Foyle Memorandum of 1990 refers to the operation of the 1985 policy of document retention and states that details "of how the policy was implemented by the Research Department" were contained in an enclosed note of the meeting Foyle held with two scientists, Graham McGregor and Tas Wilson on 17 November 1989. That memo was said to describe the type of research undertaken by
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Wills, the documents they had received from BATCO and the information which Wills employees held about BATCO research. This, obviously, was a document of potentially great significance to this application. Counsel for the plaintiff called for its production and no copy of the memo was produced. No adequate explanation was proffered for the apparent loss of that document.
179 As to the implementation of the policy up to 1990, Foyle stated that for the purpose of the exercise (presumably, the advising on a new strategy) "it can be assumed that, over the years, Wills has received copies of most of the sensitive documents generated by BATCO but that most of these (with the exception of the research reports) will have been destroyed as a result of the new retention policy". Whether the "new" retention policy to which Foyle was referring was the one which had been in place since 1985, or was the one being developed as part of the 1990 review is not clear. If it was the former then the clear inference that relevant documents had been destroyed before 1990 was not addressed in the Affidavit of Documents; neither the deponent nor Chalmers, the drafting solicitor, made inquiries as to those matters.
180 My Order, in par 9, expressly required the Affidavit of Documents to make discovery as to lost or destroyed documents, that is, to explain when last in the possession and what had become of them. This the affidavit failed to do except in the most vague and general of terms. Although the Document Retention Policy is said to have been referred to by Namey (who called it "the then current records management policy") under which the Cremona documents were "dealt with", no adequate explanation of the fate of the missing documents was proffered. As I later discuss, all of the 15 child smoking studies and many of the 34 documents in the Notice to Admit were known to have been destroyed in 1998 and Namey should have been able to state a belief that that was so.
181 Namey, who swore the affidavit, did not himself know what had happened to documents in 1998 and made no inquiry of Maher, nor anyone else. It was submitted by counsel for the defendant that the only obligation cast on Namey and Chalmers was to make reasonable and proper enquiries and that they had
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discharged that obligation. They submitted that there is no obligation in the rules relating to discovery equivalent to Ru le 30.05(1)(f) which required the persons swearing answers to interrogatories to make enquiries of former servants or agents.
Namey had deposed to having made enquiries of present employees or agents, and that was sufficient, it was submitted. Furthermore, it was submitted that it was sufficient for Namey to have described destroyed documents in general terms, and not to have attempted to list them individually.
182 In my view, Namey was not only capable of giving more precise and accurate information about missing documents, he was obliged to do so in the circumstances of this case. The obligation is to "search for and disclose 12 " any missing documents.
As counsel for the defendant concede in their submission, that obligation is to give the "description, date of departing with and belief as to what has become of the document"13 . It is an obligation "to identify precisely" 14 the documents which are no longer in its possession. As counsel noted, in circumstances where the burden of discovery is substantial, courts have sometimes ruled that the requirement of discovery may be regarded as satisfied by a general description of documents and of what became of them 15 . But this was not a situation where the task of giving precise information was at all "enormously burdensome" (to use the phrase of the defendant's counsel). Because discovery by category was adopted, and specific documents were identified in my Order, the task of the defendant was quite simple.
It had access to a computer which would tell whether the identified document was on the data base. If it was not, then at the very least Namey had sufficient information to form a belief that it had been destroyed, and, in the case of Cremona documents, to say when it had been destroyed. Indeed, he could probably have been even more precise if he had made enquiries of the appropriate servants or agents (including Clayton Utz). Reasonable enquiries would have extended to speaking to Maher and Cannar. Maher may have become an employee of an affiliated BATCO
12 Rockwell Machine Tool Co v E.P. Barrus (Commissionaires) Ltd.  2 All E.R. 98, at 99.
13 Submission, par 93.
14 Palmdale Insurance Ltd v Grollo & Co Pty Ltd  VR 113, at 115, per Marks J.
15 See Cassidy v MBF  FCA 700.
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company but he was on hand for the purpose of the defence, being brought to Australia in November 2001 for a conference with counsel and solicitors.
183 On behalf of Ms Chalmers, whom I permitted to be separately represented before me, it is conceded by Mr Judd QC that the affidavit which she drew "omits a level of detail in relation to the identification of documents no longer in existence", and counsel concedes that "it would have been possible, and, on reflection, desirable, to have said of each particular document sought by the plaintiff and which could not be located that, in all likelihood, they had been destroyed following Cremona". Those concessions are not made by the defendant.
184 The overlooking of such detail must be considered in the context of it being an affidavit which was vetted by counsel, by Clayton Utz and also Ms Chalmers. Ms Chalmers suggested that she had used a precedent in drafting at least one of the affidavits of Namey (although she was not then discussing the Affidavit of Documents itself). If the Affidavit of Documents had followed a precedent used in Cremona discovery (and I do not know if that was so) then an approach to keep to generalities, and not to make any further elucidation which would expose the Document Retention Policy or the scope of destruction of documents which had occurred, would be consistent with the approach adopted in Cremona.
185 In a letter dated 6 May 1997 (Exhibit P36) Ms Chalmers forwarded to Cannar a copy of notes made by Mark Hemery a solicitor of Mallesons (although she described them as being the notes of Tony Border another Mallesons solicitor, present at the meeting) of a meeting of legal representatives of all defendants in Cremona.
186 Present at that meeting were solicitors and an articled clerk from Arthur Robinson & Hedderwicks, solicitors from Mallesons Stephens Jacques and Mr Richard Travers from Clayton Utz. Ms Chalmers, although receiving the notes of the meeting, was not herself present.
187 Under the heading "Document Retention Policies", Hemery recorded:
"(b) Document retention policies
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AR&H noted that Philip Morris were considering discovering their document retention policy, but not documents evidencing how that policy was implemented. MSJ and Clayton Utz expressed the view that it was difficult to see the relevance of the document retention policy. It was agreed by all defendants that in relation to documents which were once in the possession of the parties but no longer were that they would be discovered by general description in Schedule 2 in the first instance. In the event of a challenge to that approach and request for substantiation of the claim, the document retention policy and any related documents could be relied upon. Philip Morris indicated they may reconsider their approach to this question in view of the discussion."
188 Given the approach adopted by Clayton Utz in the present proceedings - of acting on a narrow and improbable interpretation of the terms of the order for discovery yet not advising the plaintiff's solicitors that such an interpretation has been adopted - it is interesting to note the approach discussed at the meeting with respect to Cremona.
The note-taker recorded this discussion:
"MSJ (Mallesons) and AR&H (Arthur Robinson Hedderwicks) each expressed the view that where the statement of claim is unclear, and a decision is taken to exclude classes of documents which might reasonably be disputed by the plaintiff (eg to exclude lung cancer' documents) it is incumbent on the defendants to put the plaintiff on notice of the approach adopted. Peter Hobday expressed the view that the plaintiff might be put on notice either by a reference in the affidavit or by a letter. His present inclination was to adopt the latter approach. MSJ indicated that Wills was considering a similar approach, although at this stage favoured putting the plaintiff on notice by a comment in affidavit itself. Rothmans indicated that it did not propose putting the plaintiff on notice of any decisions taken by it to limit discovery based upon a particular (and reasonably contestable) reading of the statement of claim. It was agreed that differences of approach were not undesirable, and again had the desirable side benefit of negativing any appearance of collusion." (my emphasis)
A MATTER OF INTERPRETATION
189 In his affidavit sworn 25 January 2002, Mr Peter Gordon, solicitor for the plaintiff, complained that the defendant had failed to discover documents which it had held at the time of Cremona, and which had been discovered in that case. Many such documents, he contended, were relevant to the categories of discovery for this action.
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190 In exhibit "PG 2" to his affidavit Gordon listed the documents from the Cremona discovery which were also relevant to each category in this case and should have been discovered. Thus, by way of illustration, he listed 17 reports all of which appeared by their titles to be relevant to the category at par 6.6 of my order, being documents of the defendant relating to the pharmacological effect of nicotine on the human body. Mr Middleton submitted that none of those documents were discoverable because they were not documents "of the defendant". They were documents authored by people who were not employees or agents of the defendant.
Had the phrase in the order read "held by the defendant" then the defendant would have been obliged to discover them, had they been once in the possession of the defendant. If they had been destroyed after Cremona then the defendant would have been obliged to state what had happened to them. Mr Middleton submitted that a reading and comparison of the terms of all of the sub-paragraphs of par 6 of the Order indicates that the interpretation of par 6.6 which the defendant applied is the one which was intended by the parties, as agreed between the lawyers. In my opinion, the intended meaning of par 6.6 was, and remains, quite clear.
191 Given that the pleadings demonstrate that the knowledge of the defendant of health risks, the time at which it acquired such knowledge, and its responses to such knowledge were all issues in the trial it would have been highly improbable that the plaintiff would have sought only those documents, including research documents, that were created by the defendant itself on the relevant topic. That would have denied to the plaintiff the op portunity to demonstrate that the defendant had received external research reports as well as internal ones, and to have examined the copies held by the defendant or documents, such as memos, or analyses which had been authorised by others but had found their way into the defendants' files.
192 The defendant's position is quite simple: the plaintiff's advisers agreed to terms of an order which could be interpreted narrowly, and that was their misfortune; this is adversarial litigation and the defendant is entitled to take advantage of the ill chosen phrase.
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193 Additionally, the defendant contends that three documents were identified by Gordon on youth smoking, in his affidavit, which he claimed were discoverable, but counsel for the defendant pointed out that was not one of the topics covered by my order. That point is conceded. A general request was made by letter dated 20 November 2001 for documents on this topic, but the defendant did not agree to that request. Thus, putting to one side the question whether the plaintiff is entitled to expand her request for discovery, the failure to produce the three Cremona documents on youth smoking does not constitute a breach of my Order.
194 The potential for many more documents to have been discovered is evident from my earlier discussion of the 1997 search of the data base, as illustrated by reference to Exhibits P10 and P 14.
MISLEADING CONDUCT? - THE PRE-TRIAL DIRECTIONS HEARINGS
(A) The grounds of complaint
195 The second of six written grounds on which the plaintiff relied for striking out the defence was in the following terms:
"The defendant by the conduct of its servants and agents in the course of this proceeding -
(i) by statements of counsel to the court;
(ii) by correspondence from the defendant's solicitors to the plaintiff's solicitors;
(iii) by affidavits filed on its behalf in Court - has misled the Plaintiff and the Court as to the true position concerning the existence of documents relevant to this claim."
196 Over several months a number of affidavits have been filed by the parties which make assertions relevant to discovery and respond to matters raised by other deponents. In addition, there were a number of directions hearings before me throughout November and December 2001 at which questions of discovery (including interrogatories) were debated. At those hearings correspondence between the solicitors for the parties was presented to the court.
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197 The Affidavit of Documents sworn by Namey on 14 January 2002 must be read against the background of the correspondence between the solicitors, the discussion about the difficulties in answering interrogatories raised during the directions hearing on 12 December 2001 (and my invitation for those difficulties to be confirmed by affidavit), the discussion at the directions hearing on 21 December, the affidavit of Ms Chalmers of 6 December, and Namey's affidavit of 10 December. On 21 December 2001 I had expressly indicated that I wanted to know in some detail, just what had happened to the Cremona Documents. Set against that background the Affidavit of Documents was an inadequate and misleading document.
(B) The correspondence between the solicitors
198 Discovery was very important to the plaintiff in this case and the pre-trial directions hearings which I conducted were, from the outset, dominated by debate as to the adequacy and timeliness of discovery provided by the defendant and as to the reasonableness of the demands for discovery being made by the plaintiff's advisers.
Debate on these issues led to substantial correspondence, at times acrimonious, and discussion before me. The solicitors for the plaintiff advised the defendant's solicitors that they did not seek general discovery, but limited the request to identified categories of documents (which categories, they said, were not closed).
The plaintiff also served Notice to Admit facts, as to the possession and provenance of documents. The defendant has refused to make the admissions sought.
199 At a hearing on 21 December 2001 I admonished the solicitors for what seemed to me to be a tone of personal antipathy, suspicion and disbelief as to the bona fides on either side, which emerged in their correspondence. Having heard the evidence and examined the documents presented on this application it is now very clear that the suspicion and disbelief that the plaintiff's solicitor, Mr Gordon, expressed in his correspondence as to the frankness of the information being given to him concerning discovery was largely justified. I have concluded that not only was he misled as to material matters by the correspondence from the defendant's solicitor so too was I.
It must have been intended that Mr Gordon be misled in that manner. Having
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regard to the fact that almost all of the correspondence was being presented to me in the course of directions hearings, it should have been anticipated that I, too, might be misled.
200 I will refer to some of particular terms of correspondence in the course of these reasons.
(C) Was the destruction of documents properly disclosed in affidavits?
201 In his memorandum of 1990 to Clayton Utz, the English solicitor, Foyle, acting on behalf of Wills wrote:
(b) Is there a risk that the Court could order the disclosure of documents which might otherwise be privileged, such as:
- Clayton Utz's advice on the retention policy, such as whether and why it should be introduced and advice on whether certain types of documents should be retained or destroyed;
- Any notes which Clayton Utz's may have on the contents of documents subsequently destroyed;
- Clayton Utz's other work product relating generally to preparations for product liability litigation?
202 In answer to those questions, Wilson said there was such a risk, and cited authority for the view that privilege might give way to more fundamental principles of justice.
Foyle then asked:
(c) Even if Clayton Utz's documents and work product are not at risk, is there a risk that they might be required to disclose information about the document retention policy in affidavit (such as an affidavit verifying Wills' discovery) or other evidence?
203 In his reply to those queries Wilson said:
"Yes - except that an affidavit verifying discovery is sworn by a client and not the client's solicitor, who merely certifies that an explanation of the law's requirements for disclosure has been given to the client."
204 That response reflects what happened before me. Namey, who swore the Affidavit
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of Documents, had no personal knowledge of the implementation of the Document Retention Policy and his affidavit failed to clearly specify what had transpired.
(D) The Chalmers' affidavit of 6 December 2001
205 On 6 December 2001 Ms Chalmers swore her own affidavit as to the situation concerning documents after the conclusion of Cremona. That affidavit was part of a process of the provision of information to the solicitors and counsel for the plaintiff and to the Court. The affidavit was relevant to my task of assessing what time limit should be imposed on the defendant for its delivery of an Affidavit of Documents.
My reading of Ms Chalmers' affidavit was that the defendant was engaged in a huge, manual, task of trying to locate hard copy documents which had been dispersed throughout the organisation after Cremona.
206 Ms Chalmers said she was not intending to convey an impression in her own or other affidavits that the defendant was conducting a paper search without the benefit of computer data bases. In fact, prior to swearing her affidavit she had caused a search to be made for documents which fell within the categories held on either the 65,000 document Nixon da ta base or the 185,000 document BAT data base.
It was as a result of that exercise that Ms Chalmers deposed in her affidavit that:
"We have identified approximately 2000 documents which were partially reviewed for discovery in the Nixon proceedings and which may be discoverable in these proceedings." She added that her firm had commenced a further review of those documents for relevance. That paragraph in her affidavit made no reference to the data bases, and immediately followed a paragraph which spoke of her being retained by Clayton Utz to conduct the discovery process because of her knowledge of documents in Cremona and Nixon. Her task was, she deposed "to manage the collection and review of the defendant's documents for discovery in these proceedin gs".
207 In deposing that the defendant was unable to locate the 15 child smoking documents which were requested, Ms Chalmers said that:
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"The documents discovered in the Cremona proceedings were not retained as a discrete library after the conclusion of that case".
208 No hint was given by that phrase of the destruction of documents which had followed Cremona, nor that the remaining data bases had been searched and that failure to locate those documents meant that they had almost certainly been destroyed, as it is clear was the case, and as Ms Chalmers believed to be so at that time. Ms Chalmers said it was inappropriate to say that the documents had been destroyed, since she still had to be satisfied that copies of the documents might not turn up in archive boxes or as a result of the questionnaire sent to staff. She could, however, have expressed her belief as to the probable fate of those documents and the improbability that any copies of the documents had survived the destruction process.
209 The Chalmers affidavit of 6 December was interpreted by Mr Gordon (and his interpretation was stated in his affidavit of 18 December, thus before the discussion on 21 December). Gordon deposed that: "the defendant explained its failure to discover these documents by stating in effect that the Cremona documents were not kept in one location at the conclusion of the proceeding, and that the defendant is still trying to locate them. The defendant has not deposed as to whether it has copies of the subject documents".
210 Ms Chalmers told me that upon reading her affidavit the reader should have understood that documents had been destroyed. It is clear that Mr Gordon did not read the affidavit of Ms Chalmers in that way. I read the affidavit the same way as Mr Gordon, and so, possibly, did Mr Ruskin (as his words during the later directions hearing, on 21 December 2001 suggest).
211 Ms Chalmers said that the purpose of her affidavit was to explain why additional time was required to provide discovery beyond that which was contended by the plaintiffs' lawyers. The fact that there had been destruction of the Cremona documents was not expressly mentioned in her affidavit, she said, because it was not relevant to the purpose of the affidavit. She contended that the fact of destruction
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was not a secret, because Slater & Gordon had been informed of the fact by the letter from Mr Travers, of Clayton Utz, on 28 November 2001.
212 Mr Travers' letter to Gordon of 28 November 2001 spoke of the "huge task to collate the documents and to gather the necessary information to enable the affidavit to be sworn and the certificate to be given to you". Travers spoke of the size of the task, to train people, to review documents, to make enquiries and so forth. He said that "it takes time to get the system (i.e. of discovery) up and running". In response to Mr Gordon's complaints that Clayton Utz must have ready access to the Cremona documents, Travers wrote:
"You insinuate that, as a result of that case we should have some special knowledge of the defendant's documents, and that the documents discovered in that litigation are automatically discoverable in this litigation and that they are immediately available to be discovered."
213 I will omit Mr Travers several hostile responses to what he said were insinuations of impropriety made by Gordon. He added:
"After the case was withdrawn, the documents of which discovery was given were not retained as a discrete group, but were dealt with in accordance with the defendant's internal document handling processes". (My emphasis.)
214 The highlighted phrase is the one which Ms Chalmers said advised Gordon that many of the Cremona documents had been destroyed. Mr Gordon did not read it that way, and nor did I. A very similar phrase was employed in Ms Chalmers own affidavit, sworn on 6 December 2001, nine days after Travers letter (which was copied to her). She said the use of a similar expression was a co-incidence.
215 I accept that Ms Chalmers did not consciously adopt a phrase similar to that employed by Travers but I can not accept that the phrases used were not attempts to skirt around, and to avoid highlighting, the truth, known to both Chalmers and Travers of the fact and extent of the destruction of documents and, in particular, of the Cremona data base.
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(E) The Namey Affidavits of 10, 17 and 21 December 2001
216 The Affidavit of Documents sworn by Namey of 14 January 2002 was both misleading and less than comprehensive. In an earlier affidavit, on 10 December 2001, he had sworn that the defendant had found what appeared to be documents "similar" to nine of the 34 Notice to Admit documents, and after discussing some other possibilities Namey deposed that, after Cremona, documents which were not returned to staff members "should" have been "dealt with" in accordance with "the then current document retention policy". Those words failed to admit that he was in a position to have sworn that the 15 Child smoking studies, at least, were probably destroyed. The suggestion that they were still being searched for did not mean that he could not make that statement, and it would have represented his best knowledge, information and belief. Namey's next affidavit, on 17 December 2001, stated, again, that Mallesons had been unable to find any of the 15 Children's smoking studies, but that a search was continuing. He repeated the statement from his previous affidavit that the documents which were not returned to staff after Cremona should have been "dealt with" according to the policy. This time he added:
"If the documents are no longer in the possession of BATAS I cannot say when they were last in its possession and I cannot say when the documents were in its possession other than to the extent deposed to in par 6 of this affidavit"
217 Paragraph 6, to which Namey referred, added nothing of consequence. It was simply wrong to suggest that he could not say when the documents were last in the possession of the defendant. Chalmers knew the correct position, and with modest enquiries Namey would have also known.
218 A further affidavit, dated 21 December 2001, identified, once more, 9 of the 34 Notice to Produce documents (as being similar to those held by the defendant) and gave some information as to them, and identified one other document as having once been in its possession.
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(F) The Namey Affidavit of Documents of 14 January 2002
219 Mr Namey, joined the defendant only in September 1999, as its company secretary, and prior to that had worked for Rothmans. He had never worked for Wills.
Despite that limited association it was he who was chosen to swear the Affidavit of Documents which had been prepared for him by Ms Chalmers. He had virtually no personal knowledge, and, as emerged when he was called to give evidence, was unable to assist in any meaningful way as to what occurred with respect to the policy. He made no inquiries himself, was not told, and said he had no idea, that he had any responsibility to make inquiries to ascertain whether any documents had been destroyed, what had become of them, and when. He considered it was Mallesons' task to ensure proper discovery.
220 The Namey affidavit was delivered only weeks after the directions hearing on 21 December in which I expressed the desirability of it being clearly stated what had happened to the Cremona documents (as I later discuss). Mr Middleton relied on the fact that in his affidavit of 18 December 2001 Mr Gordon showed that he had obtained a draft of the retention policy, and thus knew it involved destruction, so nothing in Namey's Affidavit of Documents could have misled him. But the retention policy produced by Gordon on 21 December was not then conceded to be a document of the defendant, and in his affidavit Gordon, whilst raising his suspicion that there had been a deliberate policy of destruction which had taken place, said that he had read the affidavit of Ms Chalmers of 6 December 2001 to be suggesting merely that documents were difficult to locate, having not been kept together after Cremona. As I have said, that is how I also read that affidavit, and my understanding (now said to have been a misunderstanding) was reflected during the directions hearing on 21 December 2001 and was not corrected by counsel, despite my direct questioning as to the whereabouts of the Cremona documents.
221 Namey seemed to me to be a very reluctant witness, who approached his task with an air of petulance. He had little knowledge to draw upon concerning the matters in his affidavits, and was obviously unhappy to be required to explain their contents,
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any deficiencies of which he regarded as being attributable to Ms Chalmers and not himself. His responses to questions were minimalist, his answers being delivered in a monotone. As to the 15 missing documents on children's smoking, which the plaintiff's solicitors had sought, he said tha t he was told that they could not be found, but that Mallesons was still looking for them. He had no belief as to whether they had in fact been destroyed. He had no recollection of being told of the destruction of documents which had followed the lifting of the Hold Order in 1998.
He had almost no knowledge of the Document Retention Policy, and played no part in its implementation during his short time with the company. (Ms Chalmers, herself, had not sighted the Document Retention Policy documents befor e this application was brought by the plaintiff.)
222 It seems to me that the true situation was that whilst Namey was probably told generally of his obligations to refer to lost and destroyed documents it was a general discussion in the context of what was drafted for him on that topic in the Affidavit of Documents. Namey had been given no information about the destruction of documents under the 1985 policy, which Clayton Utz knew had occurred. Indeed, Ms Chalmers said she did not know about that, either, and the documents produced to me which demonstrated that such a process had taken place had never been conveyed to her by Clayton Utz, the solicitors on the record and for whom Mallesons was performing the discovery role.
223 I am satisfied that Namey was not told he should attempt to obtain details of destroyed documents and/or should make inquiries of staff who would have had such knowledge. His briefing as to his obligations was deficient in those respects, but I accept that Ms Chalmers made some attempt to explain Nameys' obligations to him.
224 In par 2 of the Second Schedule of the Affidavit of Documents a category of missing documents was addressed, being those discovered in Cremona other than any documents listed in Schedule 1. Paragraph 3 then stated that after Cremona:
"documents which had been discovered were dealt with in accordance with the instructions of the person from whom the documents had been obtained", and said
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that where the employee did not want them back they were "dealt with" in accordance with the current "records management policy". This, in itself, gave a false emphasis to documents having been obtained from individuals. The bulk of the Cremona discovery was the 23,000 documents drawn together for Gallagher. I am satisfied that very few documents were returned to staff after Cremona, and those that were would have been liable to destruction under the policy, also. The real activity after Cremona which affected the situation of documents was the mass destruction of documents, not the return of a limited number of documents to individuals. The emphasis conveyed by that paragraph, as to the significance of individual retention of documents, gave a misleading impression of how the Cremona data base and documents had been dealt with.
225 Paragraphs 4 of the Namey Affidavit of Documents read as follows:
"4. I am informed and verily believe that the defendant cannot identify which of the documents, which were discovered in the Cremona Proceedings, were returned to the person from whom the documents were obtained and which were dealt with in accordance with the then current records management policy at the conclusion of the Cremona proceedings."
226 Paragraph 5 identified another category of documents which had been lost or destroyed:
"5. Documents which may fall within the Document categories and be relevant to the issues in the proceedings brought by Mrs McCabe and which cannot now be identified but which are believed by the defendant to have been destroyed by the defendant, its employees or agents in the ordinary course of its business."
227 In my opinion, the contrast in drafting of paragraphs four and five of the Affidavit of Documents presents a quite misleading picture. Paragraph 4 is concerned with Cremona documents which had once been in possession and no longer were.
Paragraph 5 is referring to documents other than Cremona documents. The failure to expressly state that documents from Cremona had been "destroyed" was deliberate. Ms Chalmers said that was so. She explained that, as drafted, it had said
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that Cremona documents had, indeed, been destroyed, but that was removed because Namey refused to swear to that, as he did not know whether the Cremona documents had been destroyed in accordance with the then current records management policy or destroyed not in accordance with that policy. In later evidence Ms Chalmers gave a significantly different account of what Namey's concern was. Namey said nothing on this topic, at all. He said, in effect, that he simply signed what Chalmers had produced. He did not suggest that he had raised queries of any description with Ms Chalmers, at all, but then he was not asked about this topic expressly. He gave evidence prior to Ms Chalmers, and was not recalled.
228 Ms Chalmers denied that she had drafted the two paragraphs of Namey's affidavit with any devious purpose. She had not intended to mislead, she said, and she thought that the reference to a document management policy would be understood by any lawyer reading it (including, presumably, any judge) as mea ning that documents had been destroyed.
229 I do not think Ms Chalmers was being dishonest in her evidence on this question.
She believes that she was not drafting the document in a tricky manner, or to be a "coy" document (as I described it during her evidence). The Affidavit of Documents was partly her product and partly that of Clayton Utz and counsel, whereas other affidavits seem to have been solely her own work (although she said all affidavits were referred to Clayton Utz and counsel). In my view, how ever, even if the approach adopted was regarded as merely being to produce affidavits which were carefully structured and strategically worded, and as being an approach which was quite proper to adopt in hard-fought adversarial litigation, each of the affidavits, objectively, are misleading and less than frank.
230 The very fact that so much emphasis was given to the issue of documents having been returned to employees, and the need to question those employees to see if they were holding the documents, masks the reality that even if documents had escaped the shredder and been returned to employees the Document Retention Policy required that they then be returned for destruction, in any event. There may have
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been a possibility that copies of documents destroye d had survived that process, but it was a remote possibility. The probability was that any document which had been returned to employees would have subsequently been destroyed, and that if any such document had not been located by a search of the post-Cremona data bases then all of the defendant's copies of it had been permanently lost.
231 The Affidavit of Documents was settled by counsel, and in my view, consistent with the manner in which the word "of" in my order was interpreted, demonstrates a very precise and particular concentration on, and interpretation of, words, and of particular care, but not forthrightness, in what was being stated. That is consistent with the approach generally adopted by the defendant and its advisers to the discovery obligation. They were ready to seize advantage on any looseness of words, and to rely on ambiguous words when it was open to do so. Thus, the fact that CD Roms were never mentioned must have been a conscious decision, but it was said that "documents" in the Rules was defined to include electronic records 16 , hence it was unnecessary to mention the CD Roms, and the fact of their destruction.
The fact that CD Roms were not mentioned made it likely that a reader would have no idea that so much of the effort of searching for documents had been caused by the defendant's own decision to destroy the data base, and to keep no record of what documents had been destroyed. Furthermore, the defendant had an existing data base which allowed them to search the remaining document s to see if particular Cremona documents were now missing. None of these matters were mentioned in any of the affidavits, and given that so many of them were addressing the questions of the difficulties of searching for documents and the need for additional time to do so (quite apart from addressing what had become of missing documents) these matters should have been stated.
232 The tactical approach which was adopted may not be contrary to any specific Rules, or unknown in adversarial litigation, but such an approach suggests that rather than so many affidavits being drawn with apparent lack of attention to the matters
16 That is so, see s.38 of Interpretation of Legislation Act 1984.
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emphasised and the words employed or appreciation of their potential for ambiguity and misunderstanding, as Ms Chalmers suggests, the words used must have been chosen with care.
233 The pre-trial directions hearings and the discovery process which I was managing all required accurate information of the difficulty of the task facing the defendant in giving discovery, and required accurate information as to the prospects of documents being located. The directions hearings were set against a background of urgency, and of the plaintiff's solicitor contending that the defendant was deliberately stalling in efforts to locate documents, or else had delibe rately destroyed Cremona documents, neither proposition being admitted.
234 There was a failure to state, outright, in any of Namey's affidavits, what was known, namely, that many of the Cremona documents had not appeared on the available data bases and therefore it could be said, with confidence, probably had been destroyed. Both Mallesons and Clayton Utz solicitors had in the past discussed the very question of withholding information from affidavits about the Document Retention Policy (unless compelled by a request for specificity to disclose that fact).17 In my opinion, just such an approach had infected the affidavit of Namey.
235 It seems to me that a tactic of being less than forthright had permeated the approach to the defence of such proceedings many years before the case of Mrs McCabe, and reflected an approach to litigation that no quarter was to be given to the other side in defence of such litigation, even if that meant that there was a serious risk of misleading the opponent and the Court. It is like ly (assuming it was thought about at all) that what appears to me to be an evasive and less than frank approach was thought to be perfectly reasonable by those adopting it, and to be merely a case of gaining tactical advantage by employing words with a nicety that might not be appreciated by a reader who was not already aware of the fact that a large scale process of destruction of some of the very documents which the plaintiff was
17 Exhibit p. 36: Memorandum of meeting of Cremona solicitors for all defendants held 30 April 1997, as conveyed by letter Chalmers to Cannar 6 May 1997.
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seeking, had taken place after Cremona. Although Ms Chalmers, in drafting the affidavits, may not have regarded what she was doing as constituting the misleading of the plaintiff's advisers and the Court, the objective purpose and effect of the approach was to mislead. I have no doubt that it was intentional on the part of Mr Travers to mislead Slater and Gordon, by his correspondence, and to gain an advantage for the defendant, but I do not conclude that Ms Chalmers also acted with such conscious design.
236 Once a solicitor becomes aware that his or her client has in the past destroyed documents, or intends to do so, the solicitor cannot conduct the case in a manner which suggests that full discovery has been made. The solicitor must include full details of any documents destroyed in Schedule 2 of the Affidavit of Documents 18 .
In this case, it was quite possible for Schedule 2 to have expressly stated that the fifteen child smoking studies were believed to have been destroyed, in March/April 1998, and to have provided quite precise details of that destruction. It is quite clear that other documents in the discovery categories had suffered a similar fate and could have been identified, and details been provided, without any difficulty by the defendant had its solicitors chosen to do so. The decision to only give the most general, vague and ambiguous statements as to past documents was a deliberate one, taken by those solicitors advising the defendant, and the fact that there were two firms of solicitors involved, not holding co-extensive knowledge and information, contributed substantially to the inadequacy of the information which was ultimately conveyed in the affidavits.
237 If a solicitor becomes aware that an Affidavit of Documents or other affidavits are inadequate, omit relevant documents or are misleading then the solicitor is u nder an obligation to put the matter right, without waiting for a court order 19 . Once again, the fact that Clayton Utz did not provide all relevant information to Mallesons, meant that Ms Chalmers did not have the knowledge which she ought to have had, and that contributed to her drafting of inadequate affidavits for Namey.
18 Matthews & Malek, "Discovery" (1992), pp.246- 7.
19 Ibid, at p.249
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238 In submissions made by senior counsel for Ms Chalmers he conceded on her behalf that, with hindsight, the Affidavit of Documents was inadequate, and could mislead a reader. In final submissions Mr Judd QC, for Ms Chalmers, devised a document which he suggested, and I agree, might have been a more appropriate and comprehensive Affidavit of Documents for Namey to have sworn, having regard to what I now know would have been his state of mind had he made reasonable inquiries of employees servants and agents of the defendant. As Mr Judd said, it would have taken more time to produce, but in my view a document of such depth could have been produced, and should have been, without great delay.
(G) The submissions of counsel
239 Mr Middleton, who appeared as senior counsel for the defendant on this application after 2 February 2002 20 , submitted that nothing had been said by counsel on any occasion which was misleading. He submitted that I had been told about the Document Retention Policy as early as 6 December 2001.
240 I again stress that the inadequacy and misleading nature of the information contained in the affidavits and in submissions has to be considered against the background of the information which was being conveyed in correspondence by the defendant's solicitor. Between 5 November 2001 and 23 January 2002 some fifty nine letters or faxes were exchanged between the solicitors. From the outset Mr Travers of Clayton Utz complained as to the enormity of the task which his client faced in providing discovery, and the unreasonableness of the timetable which was being proposed by the plaintiff's solicitors, and of the multiplicity of demands for documents which were being made. In response, Mr Gordon of Slater & Gordon expressed disbelief that documents, in particular those which had been discovered in Cremona, could not be quickly produced, and accused Travers of adopting deliberate delaying tactics. The correspondence was characterised by increasingly hostile exchanges and reflected a profound distrust between the solicitors.
20 I was advised that Mr Ruskin was concentrating on preparation for trial, which was to commence after this application concluded.
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Throughout the correspondence Travers asserted that he was taking all steps necessary, and doing so expeditiously, to locate and deliver relevant documents.
241 On 6 December 2001 I convened a directions hearing to consider a summons for contempt of court issued by the plaintiff's solicitors against the defendant alleging that under the pretence of conducting a market survey a firm of consultants engaged by the defendant's solicitors had interviewed the plaintiff seeking material to discredit her case. I adjourned that proceeding, adopting the view that whatever the merits of the application it was an unnecessary distraction from matters which required priority in preparation of the case for trial. Mr Ruskin QC described the matters being raised by the plaintiff's solicitors in correspondence as amounting to "an interlocutory intifada". Mr Ruskin foreshadowed that there may be objections taken to the breadth of interrogatories that had recently been delivered. Mr Rush noted that he had just received Ms Chalmers' affidavit of 6 December 2001 and complained about delays in delivering documents. I expressed concern about "stalling on either side".
242 Later that morning the parties announced substantial agreement as to most terms of the proposed Order for discovery but sought my ruling as to some terms. The issue concerned the timetable for delivery of documents in tranches, and whether adequate time was being allowed to the defen dant. Mr Beach SC, who addressed me at that time, referred to Ms Chalmers' affidavit, and as to the plaintiff's contention that the 15 child smoking documents they sought were discovered in Cremona said:
"Our response to that, Your Honour is, "well, we're still looking for them because the Cremona discovery was never kept in one place."
After Cremona finished the documents were returned to various places , or in any event, they were not kept together. We still haven't found those documents. When we find them we will discover those of them which are relevant on the pleadings and particulars in this case".
243 I queried whether they had been catalogued and their location been identified after Cremona. Mr Beach said it was not so simple as that because when Cremona finished there was then no litigation on foot and the documents had been gathered
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from many sources, and as Ms Chalmers affidavit showed, he said, some 400 employees were being questioned as to "where the documents are". He added:
"The documents that were gathered from the various sources for Cremona were then offered back to their sources. Some said they wanted them; some said they didn't. There's a document retention policy that any major company has, and it remains possible that some of these documents that were discovered in Cremona, which our learned friends obviously have copies of, have been destroyed as a result of the application of a usual document retention policy".
244 Mr Beach said that if they "searched everything" and could not find a document then the defendant would have to swear an affidavit as to what became of it but that "at the moment all we're saying is we haven't found those documents yet, we don't know whether they're relevant because we haven't been able to examine them.
When we do find them, those that we find and are relevant will be discovered."
Further debate followed, during which Mr Beach referred to the "herculean task to identify documents".
245 The discussion during that hearing did not alert the plaintiff's advisers, or me, to the fact that searches of databases had already been done by Ms Chalmers and had failed to locate any of the fifteen documents, thus leading to the high probability that they had all been destroyed. That assessment had been made by Ms Chalmers at that time. I have not been told whether Mr Beach had been informed of that assessment, nor whether he knew what had been involved in the "usual document retention policy" after Cremona concluded. Certainly his instructing solicitor must have known. Furthermore, Mr Maher told me that he had returned to Australia for a conference with counsel and Mr Travers and also with American and English lawyers in November 2001 (Slater and Gordons' request of the 15 child smoking studies was first made on 7 Novembe r 2001). Whilst that might allow me to infer that the destruction of documents was discussed then, the question was not specifically put to Maher in his evidence, and I will not so conclude.
246 On 12 December 2001 the parties were before me with respect to the defendant's objection to all of the interrogatories of the plaintiff, contending that they were so
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voluminous and so oppressive as to be totally unreasonable. Mr Ruskin submitted that it would be usual for interrogatories to be delivered after discovery, and that the interrogatories sought answers about the state of knowledge, and sources of knowledge, over a period of forty years, which required investigation of all servants and agents, and required searching through a vast number of documents.
247 I said that for all I knew it might be that the defendant, as an experienced litigant, had access to computer records and had previously prepared answers to just such interrogatories, so that what appeared an unreasonable demand might well not be unreasonable for this defendant, as it might already know the answers to the questions that were being asked. I said that I would like to see an affidavit from the defendant deposing on oath to the difficulties it would experience and whether it was saying that it di d not have available to it records which were accessible. I said that asking a deponent to address fifty documents in order to answer an interrogatory might not be so difficult "if you're asking someone who's already produced the documents, already is aware of the documents and knows the contents of the documents".
248 Having indicated that I would not strike out the interrogatories without first considering an affidavit from the defendant, the matter was adjourned, but on the next directions day I was advised that no affidavit was to be filed and the application was no longer being pursued. Instead, the interrogatories were being answered, with objection taken to some, on an individual basis. That change in approach fueled suspicion in the plaintiff's camp that a deliberate stalling approach was being adopted, and that they and the court were being misled as to the difficulties which the defendant truly faced in giving discovery.
249 At the next directions hearing, on 21 December 2001, after discussing a timetable for preliminary arguments to be heard as to admissibility of documents, Mr Peter Gordon, who then appeared, as solicitor, for the plaintiff, complained about the inadequacy of discovery, and suggested that the defendant's conduct was an abuse of process. Mr Gordon had filed an affidavit dated 18 December 2001 which
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exhibited what is now said to be a draft of the 1992 Document Retention Policy, one which spoke of the "problems" which documents might cause in any court case. In his affidavit he referred to Ms Chalmers' affidavit of 6 December 2001, which explained the failure to produce Cremona documents as being due to the fact, Gordon summarised, that they "were not kept in one location at the conclusion of the proceeding and that the defendant was still trying to find them".
250 Mr Gordon submitted to me that it was difficult to accept that a party with the resources of the defendant could not find the Cremona documents and queried whether the true position was that documents had been deliberately destroyed under the retention policy. He handed to me a list of documents which had been discovered in Cremona, on topics such as "pharmacological effects of nicotine", which had not been discovered.
251 I said to counsel that it was hard to understand how documents, after general discovery had been given in a court case like Cremona, would not at least be copied and retained, unless there had been a deliberate policy of removing them. I said:
"I find it extraordinary, that they wouldn't be easily found or - what I was going to say was, it would seem to me that an affidavit should be able to be quite precise as to what happened to them because it does strike me as a bit surprising that documents which have been in a previous court case would not be easily located or referred to".
252 Mr Gordon foreshadowed that an application might be made to strike out the defence.
253 In response to what he called a "diatribe", Mr Ruskin said that he had no notice of what was to be alleged that day, had not been served with the affidavit and thought that the question of the Cremona documents had been dealt with by Ms Chalmers in her affidavit, which, (he said, he was not certain) he believed "swore to the procedure in respect of which the documents were returned to various locations, and if that is right then Mr Gordon can rage as he likes about his suspicions but the fact is that this was explained last time and accepted and now its rehearsed in a way that I can't factually respond to since I was given no notice about it". (It was subsequently
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admitted that the affidavit of Mr Gordon had been served on the defendant, but I was informed that neither Mr Ruskin nor Mr Travers had been informed of it, prior to the hearing, by the person who received the document at Clayton Utz).
254 I said to Mr Ruskin that I was bothered by the Document Retention Policy which had been exhibited. Mr Ruskin said that he had not seen the affidavit and did not know what was being talked about. I said that I was not presuming the validity of the document but that it was troubling that documents which had been available only a few years before were now not located. Mr Ruskin referred again to the affidavit of Chalmers which had been filed prior to agreement being reached on 6 December 2001 as to the Order for discovery. He said that he thought it "described how the Cremona documents were sent back, and when discovery was settled, as it were, we took that to be an acceptance of that proposition".
255 I said that were it to be established that there was a deliberate tactic being adopted of getting rid of documents, then that would be "pretty alarming", and that I would not be impressed by contentions that a party so acting was giving full and frank discovery. I said that I understood the pressures on both sides but I would be alarmed if material which was capable of being produced earlier was being delayed.
I expressed my concern about the tone of correspondence between the parties' solicitors and said that due to the plaintiff's ill-health there was a need for co-operati on and frankness so that a realistic timetable could be set.
256 I concluded with these comments:
"I think the parties have got to do their best here to be frank with each other and frank with the court and get to disclosing these documents which are required as quickly as possible or satisfactorily explaining why they are not available. If that means that we have to have parties cross-examined to deal with it, well I will deal with it next year, but it is plain that we haven't got time that can be lost here"
257 On 21 December 2001 Namey swore an affidavit identifying nine of the 34 Notice to Admit documents as "similar" to documents held by the defendant. He said that it was accepted (by reference to stamps on them) that six of those had been received by
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AMATIL on or about the dates they bore. Namey also admitted past possession by the defendant of some other documents in the Notice to Admit, but gave no information as to what had become of those documents.
258 On 14 January 2002 Namey swore his Affidavit of Documents. The contents of that affidavit are to be assessed against my remarks to counsel about my expectation that a detailed explanation would be given for any Cremona documents which could not be produced, and my request for full and frank explanations as to the whereabouts of documents.
259 An examination of the transcript of those discussions, having regard to what I now know, leads to the conclusion that I was not given adequate or accurate responses to my specific or general queries, and that I should have been given a full account of the post-Cremona document destruction process. I have not been offered any explanation for the apparently incomplete and less than frank statements that were made to me during those hearings.
260 I should also have been given better information as to the defendant's capacity to provide discovery and the extent to which any difficulties in locating documents was a product of deliberate decisions taken in 1998 and earlier by the defendant to destroy its data bases and not to keep any record of what documents had been destroyed.
261 Passages to which I have referred, above, on their face, suggest that Mr Ruskin QC may well have been unaware of the extent of document destruction which had taken place, at the time when he addressed me, but I do not understand how Mr Travers, the instructing solicitor, whom I was told was in court at the time (as was Mr Beach), could not have known that the information conveyed to me was incomplete and misleading.
262 I do not conclude that counsel were deliberately seeking to mislead me. I do not know what knowledge either Mr Ruskin or Mr Beach had about the Document Retention Policy and the scope of its implementation in 1998. I would have expected
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to be offered an explanation for the inadequacy of the information conveyed to me, but none has been proffered. I do not, however, conclude that silence as to that must reflect adversely on the ethics of counsel, both of whom have appeared before me many times, over the years, with untarnished integrity. It may be that they lacked relevant information, or it may be that they simply made what amount to errors of judgement (albeit, serious in my view). Having regard to the conclusion I have reached it is unnecessary for me to pursue further what explanation there may be for the failure of counsel to fully inform me and their opponents.
263 There can be no doubt, however, that within the defence camp the truth must have been known, that all 15 of the Cremona documents which the plaintiff sought, and many more, had been destroyed in 1998, and that while the defendant did have access to computer data bases which allowed quick assessment of what documents remained, the Cremona data base had been deliberately destroyed, along with all record of what documents had been destroyed. A frank acknowledgment of those facts, at the earliest opportunity, may have reduced or eliminated the considerable loss of time expended on this application. It is quite apparent that had this application not been pursued and had I had not made an Order requiring production of legal advice given to the defendant, the truth as to the scope of the destruction of documents would not have emerged.
264 The fact that a frank acknowledgment of the true position was not made earlier (and, indeed, has still not been) does not, of itself, demonstrate that there has been a failure to comply with the obligations of discovery. In a case where there had been a demonstrated failure to comply with such obligations, the additional fact that the court was given misleading or false explanations or denials might be relevant to the decision as to what consequence should flow from the failure, but it could only be indirectly relevant, in itself, to proof of the failure to meet the discovery obligation.
The indirect significance of the reluctance within the defence camp to volunteer, or at least frankly acknowledge, the fact of and scope of the Document Retention Policy and the impact it had on the Cremona documents is that it tends to confirm that the
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Clayton Utz strategy for defence of such proceedings continues to be applied.
Furthermore, this approach tends to confirm that the protests of innocent intention for the destruction of Cremona documents were known to be hollow, and to be unlikely to withstand close scrutiny.
265 The fact that a frank acknowledgment was not made is also entirely consistent with the approach adopted by Mr Travers in his correspondence. Throughout that correspondence he maintained the fiction that the Cremona documents were still in existence but were just difficult to locate, having not been kept as a discrete library after Cremona.
266 Despite express notice being given by Mr Rush QC that that his conduct would be the subject of adverse comment, Mr Richard Travers did not give evidence and has never sworn an affidavit in this case. No satisfactory explanation has been given for his failure to give evidence and I more readily draw the inference of his knowledge that the court and his opponent had been misled, by virtue of his absence from the witness box. As I will later discuss, there were other issues on which Mr Travers might also have been expected to give evidence.
267 The defendant maintains that the application of the Document Retention Policy in 1998 and earlier was not, at all, for the purpo se of destroying evidence which would be harmful to the interests of the defendant, should later proceedings be commenced. In support of that assertion counsel pointed to a statement in the policy document itself.
268 The paragraph read as follows:
" Purpose of the records retention program.It should be emphasised that the retention of the records management program is aimed at ensuring that the company retains those records needed for business, legal, tax and audit reasons for the correct time period. The Program is not a way of ensuring destruction of 'damaging' records or retention of 'helpful' records. Records will be treated as series, in large blocks.
It is not the intention to 'spring clean' the files to remove or retain records on a selective basis. Any such action would prevent the
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Program from passing judicial scrutiny".
269 In my view, that paragraph is a lawyer's attempt to disguise the reality, which is that the primary purpose for the reduction of documents was to impede the prospects of success of any plaintiff who brought proceedings against the defendant. The paragraph quoted above demonstrates a recognition that the programme might be viewed adversely by courts, and in my view the paragraph really demonstrates that the view was taken that it was better to destroy a whole body of documents (apart from those which had to be retained for tax audit or other purposes not concerned with legal proceedings) so as to ensure that all documents which had the potential to be damaging would be removed. The paragraph constitutes a clumsy and self-serving attempt to declare innocence but at the same time, in my opinion, demonstrates the clear purpose behind the program.
270 In his letter of 29 March 1990 Wilson acknowledged that destruction of documents pursuant to the 1985 policy had occurred "while litigation was contemplated". He added: "But it must be said that it has not occurred only because of that fact and in order adversely to affect the litigation". He pointed out the importance of words in the policy which asserted innocent motives. As I have concluded, it was he who caused those words to be inserted into the policy, whether first drafted by himself or another lawyer.
271 One factor which supports the contention that the application of the policy was for innocent purposes is the very fact that notwithstanding the existence of a Document Retention Policy a Hold Order was in place for the whole time that court proceedings were on foot. Had the intention been to simply remove damaging documents, then the defendant would have destroyed them, it was submitted.
Furthermore, the fact that a Document Retention Policy was in existence, in writing, was freely available within the organisation, and expressly acknowledged that it would be to the benefit of the company that some documents were destroyed, demonstrated, it was submitted, that the defendant had not sought to hide the Document Retention Policy or had applied it for an ulterior purpose.
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272 As against those arguments, it seems to me that little weight should be attached to self-serving statements contained in the policy documents, at the suggestion of lawyers concerned to provide evidence of innocent intention. Furthermore, I do not accept that no documents covered by the Hold Orders were destroyed between 1990 and 1998. In my view, the probability is otherwise.
273 Mr Middleton, in response to a question from me, said that, on his instructions, interference with the prospects of success of any future litigation formed no part, at all, of any intention by the company for the disposal of documents. That is impossible to accept, and would be even more so if I accepted that it had always been the company's belief that it was entitled to destroy any documents so long as proceedings were not on foot (and that none were anticipated).
274 The predominant purpose of the document destruction was the denial to plaintiffs of information which was likely to be of importance in proving their case, in particular, proving the state of knowledge of the defendant of the health risks of smoking, the addictive qualities of cigarettes and the response of the defendant to such knowledge. It is clear from the terms of the Document Retention Policy that there was concern to stop employees from committing to paper, or recording, opinions or advice which might prove damaging in the defence of litigation. It is a reasonable inference that such material must have existed in the records of the company from 1985 until 1998, and it is a reasonable inference that the policy of destroying all damaging documents which were not in the public domain ensured that, over time, most if not all such material was removed, and all record of such documents was eliminated (unless they happened to be found in the public domain).
275 The determination to destroy all possible damaging material was so great that notwithstanding legal advice that an adverse inference could be drawn from the process of destruction, the programme proceeded anyway. It is remarkable that the defendant contends that the destruction of Cremona documents was necessitated by considerations of efficiency, space and other, innocent, administrative factors, and yet, at the risk of attracting adverse inferences it claims that as few as a couple of
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thousand documents were destroyed in the process, out of the 11,600 discovered documents.
276 Counsel for the defendant submit that the defendant was entitled to adopt the course which it did because there were in fact no proceedings at the time when the documents were destroyed.
277 In 1985 Clayton Utz wrote of an anticipated "wave of litigation". Foyle, in his 1990 memorandum, which Wills provided to Clayton Utz, said a letter threatening legal proceedings had been received from a Mr Cauldwell, in November 1989, but said that it was not yet clear whether he intended to take legal action against Wills. But as earlier noted, he also recorded, in 1990, that the 1985 policy had been introduced "at a time when the tobacco companies in Australia anticipated the possibility of product liability litigation, although no case had actually been brought against any company".
278 In the letter of advice from Clayton Utz, dated 29 March 1990, Wilson stated that Wills' destruction of documents pursuant to the 1985 policy has not occurred during litigation but "has occurred instead where litigation has been and still is, contemplated".
279 In 1993 a submission on behalf of the three tobacco producers in Australia was made to legal aid authorities throughout Australia urging that they decline to grant legal aid to any applicant seeking to sue a tobacco company. The context of the letter was an advertisement which had appeared in the media from Holding Redlich, inviting members of the public interested in suing tobacco companies to engage that firm.
The submission reported that anti-tobacco lobbyists were seeking names of potential litigants who contended that they had been "seduced" into smoking. The submission argued that having regard to documents in the public domain, and to the difficulty of proof of such matters as causation, no litigant would be able to prove its case against the companies. The submission dismissed suggestions that the
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companies held "secret files" relevant to the issues. The submission noted that none of the previous actions in Australia and overseas (the last Australian case then being Gallagher) had succeeded, and contended that none could.
280 The Harrison proceedings were on foot at the time the submission was written (having been commenced in New South Wales on 21 December 1990 and being settled on 5 March 1998, and the proceedings then discontinued). The Gallagher proceeding had been dismissed as against Wills on 29 November 1991. For all the confidence exhibited in the letter to legal aid authorities as to the outcome of any litigation, the premise of the letter was that further litigation would be brought, as indeed proved to be the case, the Cremona action being commenced on 14 February 1996 and the Nixon class action being commenced on 8 March 1999.
281 Notwithstanding the fact that prior proceedings had been discontinued without trial it could have been reasonably anticipated at the conclusion of the Cremona proceedings that other proceedings would be brought in Australia against the defendant. Ms Chalmers contended that such further litigation was not then anticipated. I doubt that was her state of belief at the time when she gave advice to the defendant in 1998, but if it was then it was wishful thinking which I am quite satisfied was not shared by those to whom she gave the advice.
282 In any event, Ms Chalmers said that she understood that there was no clear legal authority on the issue, but her understanding of the law was that "anticipated litigation" required that you have knowledge "of some identifiable piece of litigation" such as "something like a letter of demand". She said that she discussed that with Cannar and Maher and they agreed that they had no such notice. One of them asked whether the mere fact that they were a tobacco company meant that they should retain the documents and she said no, because that would be commercially unrealistic. If that was the requirement, she told them, a company would have to keep its documents forever. (None of these considerations were included in her letter of advice).
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283 The defendant was a major corporation with international affiliated companies having a world wide experience in litigation. The evidence discloses that from the time of the reformulation of its Document Retention Policy in 1985 until today, there has never been a period when it did not have legal advisers engaged on legal work connected with the defence of actual or potential litigation. In September 1998 (or possibly 1999, Maher was not certain) a conference was held at the headquarters of BATCO in London, attended by litigation lawyers, barristers and solicitors from Australia, America and the U.K. Chalmers, Travers and Maher all attended and were briefed on litigation tactics.
284 The legal advisers to the defendant have included firms of solicitors and barristers in private practice and lawyers employed by the company as in -house counsel. From time to time lawyers employed by the firm in work for the defendant have become employees of the company, and then continued to work alongside members of the legal firm. Solicitors and para-legals have been located for months at the premises of the defendant. The principle firm, Clayton Utz, engaged Mallesons Stephen Jacques to perform the discovery role in Harrison and thereafter that firm worked both directly to the defendant and also to Clayton Utz.
285 In addition to Australian firms and lawyers, from the outset both in-house counsel and private lawyers engaged by the parent company BATCO and by the USA affiliate, BATUS, had also been engaged in conferences in Australia and by telephone and in advising the Australian lawyers as to questions concerning discovery.
286 Not only does that continuous activity emphasise the absurdity of claims that the company, in a corporate sense, did not anticipate further litigation when the Cremona documents were destroyed, it also reflects the very substantial extent to which it was lawyers who drove the company's strategy with respect to discovery of documents and document destruction. The long standing and very close association between in-house lawyers and private practitioners had the potential for blurring the roles and responsibilities of the lawyers.
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287 The conduct of senior employees of the defendant and its in -house and retained solicitors, and the lawyers employed and engaged by international subsidiaries, reflect the fact that it was assumed by the defendant's servants and agents that further proceedings were to be expected. I am satisfied that the imminent commencement of further proceedings was the assumption of Mr Maher, the corporate solicitor for the defendant, when he sought advice from Ms Chalmers in 1998.
288 Far from it being the case that the program of destruction of documents was undertaken from 6 March 1998 in anticipation that all litigation had concluded, in my opinion, it was conducted in anticipation that further litigation would soon arise.
There was an urgency in the task. In the Cremona litigation the defendant had been requested to supply only 200 of the 11,600 documents which its lawyers had identified and listed in discovery as being relevant to the action. The defendant would have well appreciated that such a limited exploration of their documents was unlikely to be repeated in later litigation. In my opinion, the belief held by the defendant in 1998 (as it was for the whole period from 1985) was that future proceedings were not merely likely, but were virtually certain, as indeed, proved to be the case.
289 Having regard to the voluminous material presented to me (only some of which I have addressed above), and to the oral evidence and submissions, I make the following findings of fact, on the balance of probabilities. These are not all of the findings made to date or later in these reasons, just some of the more significant ones, which I gather together, now, as a matter of convenience. In being satisfied on the balance of probabilities I have applied the gloss to that standard which was discussed by Dixon J (as he then was) in Briginshaw v Briginshaw 21 :
-- The 1985 Document Retention Policy was created under the auspices of AMATIL
21 (1938) 60 CLR 336 at 362-363.
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in the anticipation that there would be litigation brought against WD & HO Wills with respect to smoking and health issues.
-- The primary purpose of the policy, as then formulated, was to ensure the destruction of material which would be harmful to the defence of any such litigation.
-- Clayton Utz advised Wills on the wording of the policy, and ensured that words were inserted into the written policy document to which reference could be made in order to assert innocent intention and to disguise the true purpose of the policy.
-- After Wills was taken over by the present defendant concern arose in 1990 within the parent BAT Group as to the dangers of litigation in Australia causing the exposure of research reports which would be harmful to BAT companies worldwide. It was resolved to review the Document Retention Policy for fear that the 1985 wording, and the timing of its introduction, and of the destruction of sensitive documents which had already taken place, might lead to adverse inferences being drawn against the company, or more serious consequences, in future litigation, and might facilitate the release worldwide of BATCO research.
-- In March 1990 Wills, through its in house counsel, Gulson, sought updated advice from Clayton Utz as to how the Document Retention Policy could be handled with least risk of adverse consequences in litigation. Accompanying that request for advice was a memorandum written by an English lawyer, Mr Andrew Foyle of Lovell, White Durrant, which was unambiguous as to the tr ue purpose of the policy.
-- Clayton Utz, through one of its partners, Mr Brian Wilson, devised a strategy in 1990 in which the defendant was advised that - provided it asserted that its intention was not the destruction of material for the purpose of suppres sing evidence which would be relevant in anticipated litigation - the defendant should destroy documents and the only likely consequence would be the drawing of
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adverse inferences in later proceedings.
-- In supplementary oral advice in 1990, Wilson proposed a strategy whereby the defendant should destroy any damaging documents which were not in the public domain and retain and discover only those documents which were in the public domain. That strategy has been pursued since that advice was given.
-- In a further private conversation in April 1990 Wilson proposed, and it was agreed on behalf of the company, that all documents over five years old (meaning all sensitive documents) should be destroyed but that copies should be held "off shore" for access as required in support of the defence of any action.
-- In pursuit of the defence strategy, the wording of the Document Retention Policy was amended so that it more firmly asserted innocent intention and denied the true intention, which was to prejudice the prospects of success of any plaintiff in later proceedings.
-- In years following, and pursuant to, the Document Retention Policy of 1985 documents were destroyed which were considered damaging to the interests of the defendant in any future litigation. No record was kept, and deliberately so, as to what documents had been destroyed. A note from the Wills' Technical Research Centre which set out what had been destroyed as at 1990 has not been produced by the defendant, and has itself probably been destroyed.
-- A broader strategy was developed to ensure that where possible relevant documents would not be held under the possession, custody or power of the defendant but would be held by Clayton Utz or by other bodies or organisations, so that such documents would not be discovered in any proceedings. The contention by Clayton Utz that documents would not have to be discovered in those circumstances was disputed by Mallesons, which contended that such documents were discoverable, but Clayton Utz has maintained its position.
-- As later discussed, documents held on the Clayton Utz data base which would be
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relevant to issues in this action have not been discovered. The defendant contends they are not discoverable. Whether any documents on that data base fell within the categori es ordered for discovery on 6 December 2001 is not certain, but is likely. At least two documents which would meet those criteria have been shown to be in the possession of the solicitors but are claimed not to have been in their client's possession, custody or control.
-- Documents are held off shore on behalf of Clayton Utz by an American legal firm to which the defendant's solicitors have access and which are directly relevant to categories of discovery. They have not been discovered but will be called upon when, and if, required to rebut matters raised by witnesses called for the plaintiff.
-- At all times since 1985 when the modified Document Retention Policy was implemented, under the guidance of Clayton Utz, litigation was either on foot or the defendant considered that future litigation was inevitable.
-- In March 1998, at the conclusion of the Cremona litigation, thousands of documents which had been discovered as relevant in Cremona were destroyed by the defendant. The destruction was performed as a matter of urgency. When this destruction of documents occurred the defendant considered that further proceedings were not merely likely, but a near certainty, although it did not know the identity of any proposed litigant. The Nixon class action (in which the present plaintiff was later involved) was commenced in March 1999. The present proceedings were commenced in October 2001.
-- The destruction of Cremona documents was commenced after advice had been received from Mallesons that it was lawful to do so. Ms Robyn Chalmers of Mallesons accepted at face value the assertions of Maher and Cannar of Wills that the intention of destruction was not to prejudice the prospects of success of any future plaintiff and that there was no anticipation of any further proceedings being commenced against the company. In fact, the true intention for destruction and the true belief of the defendant was to the contrary of that which was
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asserted in each instance. Ms Chalmers believed she had reasonable grounds for accepting what Cannar and Maher told her, but she deliberately did not probe her client's employees as to these issues. In forming her opinion, however, Ms Chalmers was denied relevant information both by her client and by Clayton Utz as to the true intention and past destruction of documents which should, of itself, have caused her to doubt the truth of what she had been told.
-- The destruction of documents in 1998 included CD Roms on which some 30,000 documents had been imaged. Almost all documents had been summarised and analysed and ratings of all documents had been given according to their potential to damage or help the defence of any action. All such records were destroyed.
No record was kept, and deliberately so, of the documents which were destroyed in 1998.
-- Held back from destruction were many thousands of documents, including what Ms Chalmers believed to be, but was not, all reports of internal and external research held by the defendant. Many of the reports which the plaintiff has sought by way of discovery and which had been discovered during Cremona were destroyed by the defendant in 1998. Copies of some of these documents can be found in the public domain
-- The defendant had been advised as early as 1990 that in the event that documents were destroyed at a time when litigation was anticipated there was a risk that a court might strike out its defence to such proceedings or take other action against the defendant.
-- It was a deliberate tactic adopted by the defendant not to disclose the existence or adoption of its Document Retention Policy unless compelled to do so, and then not to volunteer details of its implementation unless compelled to do so. The reluctance to make full and frank statements as to the destruction of the Cremona documents was maintained in correspondence from the defendant's solicitor, Mr Richard Travers, of Clayton Utz, after the commencement of this proceeding, and
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the approach was maintained in affidavits sworn by herself and prepared for other deponents by Ms Chalmers of Mallesons, and in directions hearings before me. I do not conclude that Ms Chalmers consciously prepared what she believed to be misleading and evasive affidavits, but that was their effect. She was denied important information by Clayton Utz when drafting the affidavits.
-- The defendant intended that by the destruction of documents any plaintiff in the position of the present plaintiff would be prejudiced in the conduct of their action, both generally and, in particular, in the ability to lead relevant evidence or to cross examine witnesses. It was intended by the defendant that any such plaintiff would be denied a fair trial.
PREJUDICE - DENIAL OF A FAIR TRIAL
290 It is impossible to precisely assess what documents may have been destroyed in 1998, and earlier, and to what extent there has been a failure to give full and complete discovery as to documents in the categories for which I ordered discovery.
It may be that some of the documents which the plaintiff's counsel identified as destroyed might eventually be located, either held by the defendant or in supposedly independent data bases, or else in the public domain. The tactics adopted by the defendant, including its deliberate obliteration of any records of what documents it had destroyed over the years, prevents there being certainty as to the current position. It is, however, very clear that significant numbers of important documents have been denied to the plaintiff by the strategy adopted by the defendant.
291 The fifteen child smoking studies which were the subject of my order were destroyed by the defendant in 1998. The defendant admits that to be so. However, all of those studies are available in the public domain and the defendant has now admitted that it had the documents in its possession at or about the dates they were published. The prejudice to the plaintiff caused by the destruction of those documents by the defendant must now be confined to the fact that if there were any notations made by servants or agents of the defendant on the copies of the
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documents such records have been lost. There is no reason to assume that the copies of the documents would have had such notations. There is no evidence before me of such a practice occurring with respect to any documents which have been discovered by the defendant. The prejudice of the loss of these 15 child smoking studies has been substantially eliminated. It is, however, clear that any internal documents recording comments or responses to the reports by the defendant have been destroyed, but that is a separate issue.
292 In Exhibits "PG 2" and "PG 3" to his affidavit dated 25 January 2002 Mr Gordon identified a number of other documents which he said fell within the categories for which I ordered discovery, and which had been disclosed in the Cremona discovery but were not discovered in this case. The defendant has established that many of those are also available in the public domain. To deal with the categories addressed by Mr Gordon, the situation is as follows:
(a) Par 6.6(a)-(c) of Order: (Project Hippo, Ba telle Laboratories, pharmacological effects of nicotine) - of 17 documents listed by Mr Gordon as having been discovered in Cremona, but which had not been discovered in this case by the defendant, twelve are to be found in the public domain (and the defendant identified another three reports with similar, but not identical titles to three of the missing reports but the dates were not the same),
(b) US Surgeon General (par 6.6 (d)): of five documents discovered in Cremona but not discovered here, two are in the public domain;
(c) Health Advertising (par 6.2): two documents were discovered in Cremona and neither is said to be in the public domain (the defendant identified two reports of similar but not identical titles, and not of the same years as the two missing reports);
(d) Youth Smoking (Specific discovery category advanced by Mr Gordon in letters of 7 November and 20 November 2001). Mr Gordon identified three reports from Cremona discovery. All three reports are in the public domain.
293 The defendant submits that quite apart from the fact that many of the documents which Mr Gordon identified are in the public domain these identified documents
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are, in any event, not within the categories ordered, because they have not been shown to be documents "of" the defendant within the terms of par 6.6, or to fall within the precise terms of the order. There was no category of "Youth Smoking", the defendant submits, so there was no obligation to discover the three reports to which reference has been made. Furthermore, as to "health advertising", it is submitted that the category for which I ordered discovery was more confined than that description, and it is submitted that it has not been demonstrated that the two documents fall within the category which was ordered.
294 It is correct that a category of documents on "youth smoking" was not identified in my Order, apart from the specific identification of the 15 child smoking studies. In his letter of 20 November 2001 Mr Gordon proposed as a category:
"The documents referred to in our letter to you of 7 November which were discovered in Cremona, relating to surveys of the smoking habits of children and/or teenagers; together with all letters, memoranda, and other documents which discuss, respond to, or otherwise analyze or deal with these documents and all other documents between 1955 and 1968 which deal in whole or in part with the smoking habits, present and future, of persons under 18".
295 That broader category of youth smoking documents was not included in my order of 6 December 2001 (which reflected what had been agreed between the solicitors on each side), and was not otherwise agreed to by the defendant.
296 An additional document discovered in Cremona and which Mr Gordon identifies as not having been discovered in this case is titled "Interpretation of Leaf Analysis".
That was said to have been a report produced by the defendant. A document obtained by the plaintiff's advisers, dated 1959, reflects that the then Chairman of the defendant said that it was a product of many years of research by a large team of people employed by the defendant. No document relating to any of that research work has been discovered. Mr Gordon contends that this document is of critical importance because it reflects a knowledge by the defendant of the pharmacological and addictive effects of nicotine in years before the plaintiff commenced smoking. In his affidavit, though, Mr Gordon indicates that he has obtained a 1959 copy of that
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document. The defendant concedes that this document has been destroyed, as have two documents referred to in par 7 of Namey's affidavit of 10 December 2001. (One being an original report on the chemistry and biology of tobacco smoke and the other being the minutes and agenda of a research meeting held in London in March 1985 at which the plaintiff alleges a representative of the defendant attended.)
297 As to the thirty four documents listed in the plaintiff's Notice to Admit dated 20 November 2001, and made subject to my order for discovery by par 4 of the Order, the defendant produced nine documents which it now held and which it said were "similar" to those listed in the order. No other documents were discovered from the list but the defendant admitted that it had once held one of the documents, but no longer did. Three of the documents had been discovered in Cremona. The defendant admitted that it had discovered two documents in Cremona which were similar to two of the missing three documents. The third document, of which no admission was made, was a letter from the director of the defendant which referred to an attachment, being the "Interpretation of Leaf Analysis" report.
298 There were probably other documents from Cremona discovery not now discovered which fell into categories which I ordered, and I refer to my ear lier discussion of the 1997 search of the then extant Cremona data base.
299 In a letter dated 10 January 2002, at a time before this application was filed and in context of then proposed hearings as to admissibility of documents, Mr Gordon identified a range of documents the admissibility of which the plaintiff wanted resolved. He listed eleven under a heading of "Health Advertising Group" (and all said to bear upon the second document in the Notice to Admit) and five documents under a heading of "Interpretation of Leaf Analysis" (related to document 3 in the Notice to Admit). I have not been asked to consider those documents and it may be that they do not arguably fall within any of the categories which I ordered. It may equally be that they were not in the Cremona discovery, but I merely observe that they appear to be documents which one might have expected to be. I refer to these documents only to illustrate the point that the possible identification of destroyed
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documents is likely to be a continuing matter of debate and reconsideration.
300 The fact that the plaintiff has or could obtain copies of some missing documents does not eliminate all prejudice which flows from destruction of the defendant's copies.
The defendant has been served with a Notice to Admit as to each of the 34 documents listed in that Notice. The defendant has refused to make any admissions as to its possession of those documents, their provenance or authenticity. Even if the plaintiff can produce documents from other sources, unless admissions are made by the defendant the plaintiff faces serious difficulty in first proving the documents and then of making use of the documents in order prove the state of knowledge of the defendant. Counsel for the defendant contend that the plaintiff always faced such evidentiary problems, and the inadequacies of discovery, even if proved, do not affect that situation.
301 The problems are not insurmountable for the plaintiff. If the plaintiff can prove that the documents were discovered by the defendant in Cremona then there is some evidence of the state of knowledge of the defendant of the information contained within them. Of the nine out of thirty four Notice to Admit documents which the defendant concedes to be "similar' to those it once held, it is to be observed that the copies served upon the defendant by the Notice to Admit all bore "Wills" or "Amatil" stamps, thus making the admission of past possession by the defendant of "similar" documents almost redundant (subject to proof of the authenticit y of the stamps).
302 It needs also to be said that the plaintiff derives some benefit in the destruction of the defendant's documents when she can access copies from other sources. She would still be entitled to ask the jury to draw an adverse inference from the fact of destruction of the defendant's copy of the document, which inference can be made more significant by knowledge of what the document contained (although the adverse inference may not be so readily drawn against the defendant when a document was already known to be on the public record at the time of destruction).
However, that assumes that the plaintiff can prove that the copy document which
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she holds is a copy of a document which the defendant held, and at what time it was held.
303 Thus, some of the documents destroyed as a result of implementation of the policy after Cremona can be identified, as I have done, above. Many of those are available on the public domain. What else was destroyed? Mr Maher said that there were internal documents, memos, and commentaries on research which would have been destroyed. None has been produced in this case. I have not been shown the Affidavit of Documents from Cremona so I do not know whether any such documents were then listed.
304 By a letter dated 4 January 2002 to the defendant's solicitors Mr Gordon sought to add three further categories of documents to the categories for discovery which had been ordered by me on 6 December 2001. Mr Travers opposed that proposal. The failure of the defendant to agree to give discovery of the three additional categories has been made a separate ground advanced in support of the strike out application, and it was contended that the failure to agree to further discovery suggests that documents as to these categories have also been destroyed. I summarise Mr Gordon's proposed three new categories as follows:
(a) All reports memos file notes letters and other documents dealing with or relating in any way to the question of smoking and health and/or the physiological effects of nicotine and/or the smoking habits of and/or the marketing of cigarettes to children and/or of teenagers; to or from T.J.N. Foley, A Faul, W.W. Reid and A. Fraser between 1955 and 1968;
(b) All documents relating to any cost sharing agreements between the defendant and/or the British Tobacco Company (Australia) Limited and any associated company including but not limited to the British American Tobacco Company Limited and the Brown & Williamson Tobacco Corporation;
(c) The further documents discovered in Cremona, contained in the list of documents provided to you in court on 21/12/01; and the documents discovered in Cremona listed in the Schedule attached hereto.
305 The first category of documents listed under (c) were those I identified above and
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which Gordon set out in Exhibit PG 2 of his affidavit of 25 January 2002. As to those documents their non production was said to be justified by virtue of the interpretation of the word "of" in par 6.6 of my Order.
306 The second limb of category (c) was a list of 20 documents which had been discovered in Cremona, and which included the original 1958 report on the Interpretation of Leaf Analysis and a series of reports which by their title would also have been directly relevant to the categories set out in par 6.6 of my order. I note that some of those documents seem to meet the description of internal memos of Wills' officers, which confirms Maher's evidence that not all such documents had been destroyed before the Cremona data base was destroyed. I was not told whether any of those documents are also in the public domain. Nor was I told why they were not discovered, but I presume the defendant would give two answers. In the first place, the interpretation of the word "of" in my Order would, no doubt, be applied.
Secondly, it would be said that some or all of the documents were not in fact relevant to the categories listed. Neither would be a good answer. Perhaps a third answer would be that some had been destroyed since Cremona.
307 The defendant would no doubt contend that these documents were not included in the categories of my Order and should not now be added. At face value, however, all of the documents under (c) should have been within the categories for which I ordered discovery. It may be said, however, that if the items under (a) and (b) were not part of my Order then, given the generally unsatisfactory manner in which discovery has been responded to by the defendant, and in order to ensure a fair trial, I could make an order for further discovery of the docum ents in those categories (replacing the word "of" with a word that removes any doubt what must be discovered). No doubt that would produce a further interlocutory debate as to whether those documents were discoverable, but it might also produce a specific statement as to whether any of them have been destroyed and the circumstances of destruction.
308 As I earlier noted, Chalmers (and to a less confident degree, Maher) asserted that all
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internal and external research and scientific documents were held back fr om destruction after Cremona. I do not accept that all such relevant documents did survive the destruction process, some such documents undoubtedly being destroyed between 1985 and 1998. Nor do I accept that no such documents were destroyed in 1998. Som e probably were, even if Maher and Chalmers thought otherwise. So far as I can judge, no internal research papers produced by or for the defendant or by any of its related companies (in particular, BATCO) which the defendant had held at any time, and which is not in the public domain, was discovered in the Affidavit of Documents.22 If there are any that have been then the numbers are remarkably few.
Counsel for the defendant argue that they may be available but have not been produced simply because the discovery categories and the wording used for them were too narrow. That, in my opinion, can not be the complete answer. The programme of destruction since 1985 is the much more likely explanation.
309 It is, of course, to be kept in mind that whilst I am satisfied that thousands of documents were destroyed in 1998, an untold number was destroyed before that date, and for the same purpose. I have no doubt that many BATCO documents which the defendant held were destroyed after 1985, and there seems little doubt (as Foyle's "note" would have confirmed) that many research documents of Wills' own Research Unit were destroyed, too. Furthermore, the prejudice to the plaintiff might be immense by virtue of the deliberate destruction of just one document, which might have been decisive in her case. It would be interesting to know, for example, how many of the Cremona documents had been rated 5 (a "knockout" blow for the plaintiff) and how many of those had been discovered in this case. The dilemma, stressed by counsel for the plaintiff, is that they can not now know, at least not by virtue of cross examination of any of the witnesses who were called on this application, whether they have been denied such documents. The people who would be likely to know whether such documents were destroyed might be thought to be people such as Wilson, Cannar, Schechter, Northrip, Travers and Kinross.
22 It seems to be the case that no BATCO documents, at all, were discovered, whether or not copies are available in the public domain.
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Whilst their unexplained absence 23 leads to the inference that their evidence would not have been helpful to the defendant, that does not relieve the plaintiff's anxiety that she may have been denied at least one "knockout" document, if not many.
310 For the plaintiff the real difficulty is that she can not now know if internal research was conducted and reported on to Wills but has been destroyed without any record of its existence. If that was the case then by virtue of that fact, and compounded by the fact that the defendant will not now make the admissions sought by the Notice to Admit (i.e. that relevant documents have been in its possession), the plaintiff is confronted at trial with difficulties of proof which may well not have arisen had the destruction not occurred.
311 The plaintiff interrogated as to the 34 Notice to Admit documents (and two others) and the defendant answered that as to 9 of the Notice to Admit documents it has discovered similar documents in its possession, custody or control, but denied knowing when those documents came into its possession, custody or control. As to one other Notice to Admit document (actually two documents under heading of document 2), it admitted that it had similar documents in its possession on or about the dates borne by them. Similar information was conveyed in the affidavits of Mr Namey, to which I will refer later.
312 The plaintiff complains that the prejudice which she faces is compounded by the inadequate answers to other interrogatories, which inadequate response is possible only because documents have been destroyed. Counsel for the plaintiff submit that because records of what the defendant had held have been destroyed the defendant is now able to answer that it does not know, or is unaware, or is unable to say whether documents of the kind about which interrogatories inquired had been in its possession, or whether information on the topic had been known to it. Whilst it may be said that the plaintiff could have applied for further and better answers, it seems unlikely that the plaintiff would have achieved more, since she could not go behind
23 The fact that some of them reside out of Australia has not been advanced as a reason why their evidence could not have been taken.
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the answers when lack of knowledge as to document s was asserted.
313 Thus, it is clear that the destruction of records and the failure to keep a record of what documents were held, and when and when they were destroyed, will cause significant difficulties to the plaintiff's counsel in proof of those documents during the trial.
314 The mere fact that many scientific reports were retained does not diminish the fact that of those retained few if any of the research documents which the plaintiff's advisers identified and specifically sought in this case as being of critical importance are now to be found in the defendant's possession, and yet many of those were documents which it unquestionably had in its possession (and, for the purpose of the application, admits to be so) at the conclusion of the Cremona case. Furthermore, not a single internal note, memorandum or letter has been discovered in which any company representative discusses its responses to any research paper or any other relevant matter. It seems likely that what was retained as scientific research was no more than material which was already on the public record or material which had already been vetted as to its capacity to harm the defendant's cause. As it happens, that vetting would have been very easy to achieve because there was a computer data base which would have allowed very easy analysis for that purpose.
315 The destruction of documents has other disadvantages for the plaintiff, also, and these were contemplated by the defendant's legal advisers as an advantage which it would gain by destruction of documents.
316 Documents proved to have been held by the defendant could have been the subject of interrogatories designed to facilitate the tender of those documents. In order to prove documents which have not been discovered or admitted the plaintiff's counsel may be obliged to call witnesses who are in the defendant's camp. In calling such witnesses counsel will be bound by their answers. In cross examination of witnesses for the defendant, especially those with a scientific or research background, the plaintiff's counsel will be potentially handicapped by a lack of knowledge of
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research with which those witnesses are familiar but where documents relating to which have been destroyed. Even if the witness acknowledged the past existence of such documents, counsel would be severely handicapped in cross-examining without the documents. Some of those problems may be reduced or be overcome by pre-trial directions or directions during the course of the trial as to the depth of information required to be contained in statements of proposed witnesses, or in other ways, but it is likely to delay the trial and to cause inconvenient interruptions, especially if the defendant seeks to then rely on "warehoused" documents in order to rebut matters raised in cross-examination of its witnesses.
317 Advantages such as these, which would flow from the destruction of damaging documents, were fully understood within the camp of the defendant. I am satisfied that such motives were part of the explanation for document destruction.
318 There would have been some disadvantage to the defendant too, but the defendant would more easily overcome the problems and retain advantages. In his 1990 memorandum Foyle warned that "the knowledge that Wills' senior scientists have of BATCO research could rule them out as a witness at any trial in Australia". In his advice of 29 March 1990 Wilson, of Clayton Utz, answered Foyle's questions as follows:
If the issue of research is important in a product liability action, how will Wills defend its record without its documents?
It will obviously have to rely on the testimony of witnesses.
Is it anticipated that a witness might be called to give evidence on the subject?
If so, who would that witness be?
A witness with knowledge of Wills' research, and an expert witness capable of critically analysing what is said about that research.
319 On 2 April 1990 a conference was held between Gulson of Wills, Cannar of BATCO, and both Wilson and Oxland of Clayton Utz. Oxland's notes of the meeting rec ord that the discussion concerned the contents of the written advice dated 29 March
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1990. Wilson is recorded as having proffered the following advice:
"Keep all research docs which became part of public domain and discover them.
As to other documents, get rid of them, and let other side rely on verbal evidence of people who used to handle such documents" (my emphasis).
320 Another handwritten note of Oxland - also apparently written at the 2 April meeting - noted the relationship between BATCO, Wills Holdings ("subsidiary") and WD & HO Wills (Aust) ("Wholly owned") and records an apparent decision, as follows:
"To shred all docs in Aust more than 5 yrs old (docs will still be available off-shore, though)" (my emphasis).
321 In assessing the prejudice which the plaintiff has suffered I have to keep in mind that it is very much in the interests of the plaintiff to emphasise prejudice and to understate the extent to which it might be overcome. Counsel for the defendant submit, too, that even if documents were discovered it did not follow that they would have been admissible at trial. That, of course, may be so, but by their destruction the plaintiff has been denied the opportunity to attempt to have them tendered. The mere fact that documents were held by the defendant might make them admissible for limited purposes, at least, even if the truth of the contents of the documents could only be established by other means.
322 In my opinion, the prejudice to the plaintiff by the destruction of documents is considerable.
THE WAREHOUSING OF DOCUMENTS
323 Paragraph 6.1 of the Order made on 6 December 2001 required the defendant, as to documents "which it has then identified", to disclose all documents on which it will rely at trial and will seek to tender. That order would allow the defendant to introduce documents which it claimed it had not previously intended to rely on.
Insofar as any such document was relevant to one of the categories on which discovery was ordered a plaintiff would ordinarily have had notice by virtue of the
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document being discovered in the Affidavit of Documents. Thus, the plaintiff could not claim to be taken completely by surprise and any time lost for the plaintiff's counsel to obtain and consider the document would be likely to be minimal. In this case, however, it is apparent that I could not assume that in the event of new documents being sought to be relied on by the defendant, in that way, the plaintiff would have some knowledge of the documents.
324 It seems clear that the defendant has adopted the tactic of having third parties hold documents relevant to issues in the trial so that they were available to be called on to rebut the plaintiff's witnesses or to be used by the defendant's witnesses, whilst not being required to be discovered by the plaintiff because they were supposedly not under the possession, custody or power of the defendant. That emerged by events that occurred on 1 March 2002.
325 Just before the hearing of this application ended plaintiff's counsel complained that they had been served with an Order 44 witness statement which annexed to it important research documents, dated 1963, concerning "Project Hippo", one of which, as asserted on its face, had been commissioned by BATCO, and neither of which had been discovered. I required the defendant to file an affidavit to explain the circumstances of those documents being produced, and an affidavit of Mr Namey of 1 March 2002 duly disclosed that in 1997 one of the documents had been received by Mallesons from Holding Redlich, solicitors for Mrs Cremona.24 The second document was obtained by Mallesons, at an unstated time, "for the purposes of preparing for trial, from Chadbourne & Parke lawyers". Namey deposed that there was no record of either document having been given to the defendant or being in its possession, custody or control. Neither document was found on the Nixon data base created by Mallesons. Clayton Utz received copies of both documents, one from Mallesons (in January 2002) and one from Chadbourne & Parke (in February 2002), for purposes of preparing the defence, and obtained further copies when the expert witness supplied them to the solicitors with his statement.
24 Although many of the approximately 200 documents which Holding Redlich had been required to deliver up after Cremona had most likely been destroyed, this document was retained.
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326 I asked why the documents held by Mallesons and Clayton Utz were not discovered as part of the continuing obligation of discovery. Mr Middleton accepted that documents held by the defendant's solicitors would be in the possession, custody and power of the defendant but submitted that they were not obliged to be discovered because par 6.1 of my Order referred only to documents within the categories for discovery. That was not what the terms of the Order said or meant.
The Order required the disclosure of all documents to be relied on in the trial on any relevant topic. It was not inconsistent with there also being specific categories for discovery, or with the requirements under Order 44, for the Order of discovery to have had broader application than contended for by the defendant. But even if that is arguable, it is another instance of adopting an interpretation of the Order without disclosing or seeking to test that interpretation.
327 Chadbourne & Parke is an American firm of lawyers who acted for the BATUS company. That firm had participated in a conference in London in September 1999, after Cremona, at which Maher, Chalmers, Travers of Clayton Utz, and others, attended to discuss tactics of litigation defence. The firm was again represented in a conference with counsel in Melbourne in November 2001 which Travers and solicitors representing BATCO also attended.
328 I invited Mr Middleton to call his solicitor, Mr Travers, to rebut the inference which was open that a process was occurring of warehousing of documents so as to put them beyond reach for discovery but available if called upon by the defence. I indicated that documents of which Mr Travers was author suggested that he had contemplated such a strategy at an earlier time. I said that this information suggested to me that the whole process of discovery in this case had been subverted by tactics adopted by the defence.
329 After counsel took time to consider the matter and obtain instructions neither Mr Travers nor any other witness was called to rebut those inferences. I conclude that such a strategy has been adopted, and such a strategy is consistent with earlier proposals by Mr Travers.
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330 In a letter to the Tobacco Institute of Australia dated 30 January 1995 25 Travers proposed a means whereby the Institute (which was funded by Wills and two other tobacco companies) could go on-line to gain access to "a number of tobacco data bases" under an arrangement where it would have no power over the data bases and therefore could avoid discovering the data bases if it became involved in litigation.
He said that the approach was a lawful one which would be in accordance with authority 26 .
331 From as early as 11 December 1985 Clayton Utz had proposed to Wills that it would establish its own data base of scientific and other relevant material. Such a data base was created, and was later the subject of disagreement between Mall esons and Clayton Utz, in May 1997 27 , as to whether it was discoverable. Mr Eggleton of Clayton Utz asserted at that time that the data base was the sole property of Clayton Utz and was not within the power of either the Tobacco Institute or any of its members, and therefore was not discoverable. As Mr Angus, of Mallesons, pointed out in his letter of 22 May 1997 to Cannar and Maher, Clayton Utz had been engaged by Wills to defend what it described, as at 11 December 1985, as a threatened "wave of litigation" and Clayton Utz had proposed at that date the creation of a computerised data base of scientific and other relevant material for which it was funded by the Tobacco Institute of Australia.
332 Angus set out the advice which, according to the TIA minutes, an unnamed member of Clayton Utz had given to the TIA, namely, that "It would be in the industry's best interests if the information maintained by the TIA was kept in a disorganised fashion". The TIA, according to Angus, understood Clayton Utz to have advised that it should "have the reference service and access to it outside the TIA, i.e at Clayton Utz".
333 Mr Eggleton, a partner of Clayton Utz, who was referred to in the letter of Mr Angus as arguing the Clayton Utz position as to discovery of the data ba se, said in his
25 Exhibit P 35.
26 He cited Lonhro Limited v Shell Petroleum Co Limited (1980) 1 WLR 627, at 635 -636.
27 See Exhibit P 33, letter Mr. I Angus (Mallesons) to N Cannar and G Maher (Wills), 22 May 1997.
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evidence to me that if the TIA minutes accurately recorded the advice they had been given, then that appeared to be an attempt to get around the rules relating to discovery. I agree.
334 Mr Angus, of Mallesons, advised Wills that in his opinion "the data base was set up on behalf of the TIA and the three defendant companies who paid substantial sums of money to Clayton Utz for the establishment and maintenance of the data base. It seems likely the data base was set up on behalf of the three companies in preparation for anticipated product liability litigation against them". Mr Angus took the view that the data base was discoverable, and he was right to so conclude, but it has not been discovered in this case.
335 Mr Eggleton said that the Clayton Utz data base was established in about 1986 or 1987 and has developed since. I am satisfied that in setting it up Clayton Utz had advice from Mr Northrip, a partner of Shook Hardy and Bacon, the American firm acting for tobacco interests. He visited Australia to advise on the data base and Eggleton visited the American office to examine their own data base. Eggleton agreed that Clayton Utz have an arrangement with that firm to source documents from them for the purpose of litigation.
336 The relevance to the present application of the existence of these arrangements to warehouse documents is manyfold. In the first place, it demonstrates, if further evidence was needed, that the defendant fully appreciates that documents are central to the case. It reflects, too, the defendant's stance that the plaintiff should be denied full access to documents relevant to the categories of discovery in this case if an arguable legal construction can be placed on its discovery obligations which would reduce or deny such access, even if the application of such a legal construction is not brought to the attention of the opponent. The warehousing arrangements demonstrate, too, that the strategy devised and modified from time to time by Clayton Utz continues to be applied. That strengthens my conclusion that the purpose behind the destruction of documents under the post -1985 Document Retention Policy was to deny a fair trial to any plaintiff who later brought
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proceedings, and that the innocent purposes advanced by the company are merely employed in an attempt to hide that reality.
337 It is to be kept in mind that it is not just documents which relate to the defendant's knowledge as to topics identified in the categories of discovery which must be discovered, but documents relevant generally to those categories.
338 The application to strike out the defence is advanced on the basis that there has been a failure to give proper discovery, to such a degree and in circumstances so serious as to gravely prejudice the plaintiff. It is submitted that the Court, in its discretion, should conclude that striking out the defence is the only appropriate sanction which might be applied. The case for the plaintiff is not advanced on principles relating to contempt of court or interference with the course of justice. Although it was not expressed to be based on principles of abuse of process, in effect that principle is drawn upon because the Court is said to be exercising its inherent jurisdiction to control the conduct of parties before it and to ensure full and frank compliance with its rules. It is submitted the Court should strike out a defence where, by its conduct, the defendant has denied the plaintiff a fair trial, and particularly so where that result was deliberate on the part of the defendant.
339 Counsel for the defendant contend that abuse of process principles have no application to the present case, and apply only where proceedings are on foot:
Williams v Spautz 28 . Whilst that decision is concerned with a proceeding issued for an ulterior purpose the broader principle it addresses is the inherent power of the court to stay proceedings which are an abuse of process, and, as later discussed, in that case the principle was held to be available where a party had been denied a fair trial by the conduct of the opponent. It is in that sense that I say that abuse of process principles have application.
340 The starting point of the defendant's submissions is that there is no authority for the
28 Williams v Spautz (1992) 174 CLR 509, at 517- 519.
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proposition that a company is not entitled to destroy documents when there are no proceedings on foot against it. Counsel refer to the Practice Note in Rockwell Machine Tool Co Ltd v E. P. Barrus Concessionaires Ltd as authority to the contrary.
In the Practice Note Megarry J held (I apply the emphasis that counsel gave to the passage):
"It seems to me necessary for the solicitors to take positive steps to ensure that their clients appreciate at an early stage of litigation, promptly after writ issued , not only the duty of discovery and its width, but also the importance of not destroying documents which might by possibility have to be disclosed. This burden extends, in my judgment, to taking steps to ensure that any corporate organisation knowledge of this burden is passed onto anyone who may be affected by it".29
341 That decision was cited as authority by Matthew and Malek 30 and in Williams, Civil Procedure - Victoria 31 . That case was concerned with a factual situation where documents were destroyed pursuant to a routine destruction process implemented after proceedings had commenced. There was no question of deliberate destruction of documents in order to prejudice anticipated proceedings. The question with which I am concerned did not arise, and the remarks of Megarry J can not be regarded as limiting the scope of the obligation to the situation which his Honour addressed.
342 Counsel for the defendant submit that even if I held that documents were destroyed when there was an anticipation of proceedings it was still lawful for the defendant to destroy its own documents. The plaintiff, it submits, must be content with seeking to have adverse inferences drawn against it by reference to the destruction of documents.
343 The position adopted by the defendant is clearly and succinctly stated in the following passage of the written submission:
"The whole premise upon which the Plaintiff's submission derives is flawed,
29  2 All E.R. 98, at 99.
30 Mathews & Malek, "Discovery", supra, at pp.245- 246.
31 "Civil Procedure - Victoria", Williams, p.3773.
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namely, the underlying principle asserted that "parties are obliged to conduct themselves in such a way that an opponent will get a fair trial" (see paragraph 416 of the Plaintiff's submission). There is no such principle of law, and certainly no principle applicable that prior to proceedings being instituted a potential opponent needs to assist the other side in potential litigation. Even in the course o f the trial, this being an adversarial system, one conducts the trial in accordance with the rules of the Court, and the obligations to the Court, but otherwise on the basis that the Court determines the issues as presented to it by the parties. There is no general obligation to "help" an opponent."
344 Counsel for the defendant contend that it is only once proceedings have commenced that "the more vigorous aspects of the adversarial system are modified" by the operation of the Rules of Court and by such princ iples as contempt of court. Of the applicable rules those concerning discovery are of immediate concern, but insofar as those rules and principles deal with the destruction of documents, they submit that the obligations as to documents destroyed prior to trial require only that there be disclosure as to what happened to them. The other party must be content with seeking to have adverse inferences drawn by virtue of the destruction. Counsel for the defendant contend that it is only the destruction of documents after proceedings have commenced which could bring the sanctions which the plaintiff now seeks.
345 The defendant's position as to pre-trial destruction of documents is that:
"There can be no perverting the course of justice, because none of the powers of the Court have been impeded: see Queen v. Rogerson (1992) 174 CLR 268. Discovery can still take place, and the Rules specifically provide for discovery in relation to "destroyed" documents. The Plaintiff's task of proving its case may be made more difficult, but no principle of law dictates that a defendant need assist a plaintiff otherwise than through the Rules of Court or pursuant to Court orders" (emphasis in submission).
346 Counsel for the plaintiff concede that there is no authority for the proposition that the court may strike out the defence where proceedings were merely anticipated but had not commenced, but submit that that is probably due to the fact that the situation which has been disclosed in this application is unprecedented. It is submitted that where the requirements of discovery are so significantly disregarded as to prevent a fair trial the court has inherent power to strike out the defence.
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Counsel cited Coleman v Dunlop Limited (No 2) 32 and Landauer Ltd v Comins & Co (A Firm)33 , two decisions of the Court of Appeal in England.
347 Coleman v Dunlop Limited (No 2) had been a trial before judge alone. It was a re-trial, the defendant having succeeded at first instance, but the re-trial being ordered after an appeal. In preparation for re-trial it first emerged, and then during the re-trial it became clear, that the defendant had failed to discover all documents relevant to the case. The trial judge heard evidence in purported explanation of that circumstance and concluded that relevant docum ents had not been discovered, some of which had later been destroyed in a fire (which it seems was accepted to have been accidental). The trial judge struck out the defence on two bases, first, for non compliance with discovery obligations and, secondly, as constituting an abuse of process which made a fair trial impossible. The Court of Appeal upheld the decision on both bases. Judge LJ (with whom Lloyd LJ agreed) noted that striking out of the defence could not have been justified merely by way of punishment, but that the trial judge had concluded that denial of the documents meant that the plaintiff could not receive a fair trial. His Lordship noted that in making that assessment the trial judge had the advantage of the trial having been in progress and the issues having emerged on which the documents would have been relevant. Thus, "this was not a judge trying to foresee how the case might eventually work out in court". The trial judge had concluded that the documents "went to the core of the plaint iff's case and that the deficiencies in discovery could not now be made good".
348 In Landauer the Court was concerned with what it held was the first instance where a plaintiff's claim had been struck out for breach of a discovery obligation. In this case the plaintiff's destruction of documents was held to have been inadvertent but the Court of Appeal held that where the destruction of documents caused "a real or substantial or serious risk that a fair trial is no longer possible" that would justify striking out. Lloyd LJ, speaking for the Court, observed that the trial judge was "fully entitled to find that there was a serious risk that essential documents may
32 Coleman v Dunlop Limited (No 2) unreported 20 October 1999, Court of Appeal.
33 Landauer Ltd v Comins & Co (A Firm) , Times Law Reports 7 August 1991, 382.
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have been destroyed in this case, as a result of which a fair trial is no longer possible", and added:
"While it was accepted that the normal prerequisite for the striking out of an action under Order 24 Rule 16 of the Rules of the Supreme Court for failure to comply with the requirement of discovery of documents was the existence of a real or substantial or serious risk that a fair trial was no longer possible, it might be that cases of contumacious conduct such as the deliberate suppression of a document, would justify striking out even if a fair trial were still possible."34 334. Counsel for the plaintiff also relied on a more recent decision of the Court of Appeal in the case of Arrow Nominees Inc v Blackledge 35 . That case concerned a petition for relief under the Companies Act. The respondent prior to trial had sought to have the petition struck out on the basis that its opponent had discovered documents which it knew to be false, thus rendering a fair trial impossible. The trial judge had rejected the application at that stage, but stated that he would consider a further application, if one was made, after he had heard evidence in the trial. The application was renewed at trial, but failed. On appeal, Chadwick, LJ (with whom Ward and Roch LJJ agreed) held:
"I take the view that it was wrong for the judge to allow the petition to proceed once he had reached the conclusion there was a substantial risk that the allegations in relation to the disputed terms of the 1994 agreement were incapable of a fair trial."
349 His Lordship added:
" . . .It would be open to this court to allow the appeal against the judge's refusal to strike out the petition on that ground alone. But, for my part, I would allow the appeal on a second, and additional, ground. I adopt as a general principle the observations of Mr Justice Millett in Logicrosce Ltd v Southend United Football Club (The Times, 5 March 1988) that the object of the rules as to discovery is to secure the fair trial of the action in accordance with due process of the court; and that, accordingly, a party is not to be deprived of his right to a proper trial as a penalty for disobedience of those rules - even if such a disobedience amounts to contempt or defiance of the court - if that object is ultimately secured, by for example' the late production of a document which has been withheld. But where a litigant's
34 Landauer Ltd v. Comins & Co., supra, at 382.
35 Arrow Nominees Inc v Blackledge  All ER (D) 854, at pars 53-54..
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conduct puts the fairness of the trial in jeopardy, where it is such that any judgment in favour of the litigant would have to be regarded as unsafe, or where it amounts to such an abuse of the process of the court as to render the further proceeding unsatisfactory and to prevent the court from doing justice, the court is entitled - indeed, I would hold bound - to refuse to allow that litigant to take further part in the proceeding and (where appropriate) to determine the proceedings against him. The reason, as it seems to me, is that it is no part of the court's function to proceed to trial if to do so would give rise to a substantial risk of injustice. The function of the court is to do justice between the parties; not to allow its process to be used as means of achieving injustice. A litigant who has demonstrated that he is determined to pursue proceedings with the object of preventing a fair trial has forfeited his right to take part in a trial. His object is inimical to the process which he purports to invoke.
Further, in this context, a fair trial is a trial which is conducted without an undue expenditure of time and money; and with a proper regard to the demands of other litigants upon the finite resources of the court. The court does not do justice to the other parties to the proceedings in question if it allows processes to be abused so that the real point in issue becomes subordinated to an investigation into the effect which the admittedly fraudulent conduct of one party in connection with the process of litigation has had on the fairness of the trial itself. That, as it seems to me, is what happened in the present case. The trial was hijacked' by the need to investigate what documents were false and what documents had been destroyed."
350 In my opinion, the remarks of Chadwick LJ have particular application to the present case.
351 The plaintiff relied on the power under Rule 24.02 (which gives power to strike out a defence if a party "fails to comply" with an order for discovery) and on Rule 24.05, which is titled "Inherent Jurisdiction", and reads:
"Nothing in this Order shall affect the inherent power of the Court to dismiss any proceeding for want of prosecution or to order that upon the failure of a party to do any act or take any step which un der these Rules he is required to do or take or to comply with an order that he do any such act or take any such step the proceeding shall be dismissed or the defence struck out and that judgment may be entered or that there be judgment accordingly."
352 The Court of Appeal decisions cited above were concerned with the equivalent English provisions. Counsel for the defendant contended that neither rule was
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applicable here. There has not been a failure to comply with any order, it was submitted, merely, at its highest, a defective discovery. In Logicrose Ltd v Southend United Football Club, which was cited with approval in Arrow Nominees, Millet J held, when applying O24 that: "The serious and successful suppression of a material document is a serious abuse of the process of the court and may well merit the exclusion of the offender from all other participation in the trial" 36 .
353 In my view, those rules do provide power to strike out the defence in the circumstances of this case. In the first place, there has been a failure to comply with the requirement of the order to depose to what had become of documents which had been destroyed. Whilst striking out of the defence might be a severe remedy for such default, the rule would undoubtedly give power to do so for that purpose alone. In this case, the failure to frankly explain what had happened to documents was more than an oversight. It was a very deliberate strategy designed to avoid exposure of the significant level of destruction of documents, and to avoid, in turn, exposure of the broader strategy which had been put in place to deny a fair trial to the plaintiff. The Affidavit of Documents was deceptive or misleading in a number of ways. Documents had been omitted from discovery by virtue of what was an unreasonable interpretation of the terms of the order, which interpretation was intended not to be disclosed voluntarily, so as to enable its correctness to be tested.
The failure to disclose what had become of documents was a specific requirement of my order and was important in a case in which documents were central to the plaintiff's action. I consider that in all of these respects there has been a failure to comply with the order for discovery such as to empower me to make an order under the Rules. That would be so even if the destruction of documents, of itself, was not open to be regarded as constituting a breach of rules relating to discovery by virtue of the fact that it occurred before proceedings were issued.
354 The question remains whether the undoubted power to strike out a defence by reference to principles governing the obligations of discovery, as discussed above (in
36 Logicrose Ltd v Southend United Football Club, The Times, 5 March 1988, at p.10.
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particular, the obligation to give full explanation as to destroyed documents), might also apply if the only complaint was that documents had been destroyed at a time when no proceedings were on foot, but where the result was that the plaintiff's prospects of a fair trial had been diminished or denied.
355 There are possibly analogous situations where the law does impose obligations on people before proceedings are issued. The destruction of a document four days before proceedings commenced and in anticipation of receiving a subpoena to produce the documents has been held capable of constituting contempt of court 37 . In Lane v Registrar of the Supreme Court of New South Wales (Equity Division)38 , a decision of the High Court which was discussed in the Clayton Utz advice to Wills, the court recognised that where a person acted with an intention to interfere with the course of justice that could turn conduct which was lawful into conduct constituting contempt of court. McHugh JA in The Prothonotary v Collins 39 observed that their Honours in Lane clearly intended their remarks to apply to acts "likely to interfere with the course of justice as a continuing process", a concept not far removed from the conduct of a defendant expecting (as this defendant was) to be engaged in continuing litigation by many, but presently unknown, plaintiffs, in various jurisdictions, over many years.
356 The notion of an ticipated proceedings is also well recognised in the laws of privilege Documents relevant to obtaining advice brought into existence "in anticipation or contemplation of litigation" are privileged: See Cataldi v Commissioner for Government Transport 40 . The question in that regard is whether, viewed objectively, litigation can be said to have been reasonably anticipated at the time when the document came into existence: see Grant v Downs 41 . Privilege may be claimed for documents brought into existence when litigation was "reasonably apprehended" 42 .
37 Registrar of Supreme Court v McPherson  1 NSWLR 688, at 700, 711.
38 (1981) 148 CLR 245, at 258.
39 (1985) 2 NSWLR 573, at 568.
40 Cataldi v Commissioner for Government Transport  1 NSWR 65, at 67
41 Grant v Downs (1976) 135 CLR 674, at 682, 689, per Stephen, Mason, Murphy JJ,.
42 Collins v London General Omnibus Co [1891-1894] All ER 213.
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357 In my view, it is apt that similar principles with respect to privilege might be applied with respect to discovery. The rationale for legal professional privilege has been said to be that it promotes the public in terest in that it facilitates the administration of justice by ensuring that a client will make full and frank disclosure to his solicitor as to all relevant issues 43 . If the client is to gain that protection when proceedings are merely apprehended then a decision not to make full and frank acknowledgment to the court as to relevant issues (such as what became of documents) which occurred when proceedings were contemplated (and to do so for purposes of denying a fair trial to a litigant), and at a time when the client was in receipt of legal advice, might be thought to also reasonably attract sanctions by reference to public policy considerations. As was held in Grant v Downs: "The existence of the privilege reflects, to the extent to which it is accorded, the paramountcy of this public interest over a more general public interest, that which requires that in the interests of a fair trial litigation should be conducted on the footing that all relevant documentary evidence is available" 44 .
358 Where, as here, no question of privilege attaches to the destroyed documents the paramount principle that the courts should seek to ensure a fair trial, conducted with reference to all relevant documents, must be the guiding consideration when confronted by a party which ha s destroyed documents with the purpose of denying a fair trial. If other available steps can be taken so as to ensure a fair trial then the drastic step of striking out a defence would not need to be taken.
359 The courts have an overriding concern to protect the administration of justice, that concern being reflected in both the Rules and in the common law principles concerning such matters as the criminal offence of perverting the course of justice, and the laws of contempt. An attempt to pervert the course of justice can be committed even though there is no particular case in contemplation by the person committing the offence: see The Queen v Rogerson 45 . Whilst it is recognised that it
43 Grant v Downs, supra, at 685.
44 Grant v Downs, at 685.
45 The Queen v Rogerson (1992) 174 CLR 268, at 280, 293
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is a power which should be exercised sparingly, and only when no other available means are available to remedy the situation, the superior courts have an inherent power to stay both criminal and civil proceedings which constitute an abuse of process, where not to do so will result in a trial which is unfair 46 .
360 The obligation of a solicitor to advise a client as to the client's duties concerning destruction of documents has been said to arise once litigation is "contemplated" 47 , although the learned authors Matthews and Malek assume that "the extreme case" whereupon proceedings might be struck out would arise where documents had been destroyed after proceedings had commenced and where the fair trial of the issues had been rendered impossible by the opposite party 48 . In Andrews' Principles of Civil Procedure the learned author says that there is some authority for the proposition that the law of contempt of court applies to proceedings which are neither pending nor imminent; it is sufficient that they are merely contemplated 49 .
361 The extension of the court's regulatory power to contemplated litigation is well recognised in the United States of America, and pre-dates the tort of spoliation which has applied in many States since 1984 50 . That tort is said to impose a duty of care not to intentionally and in bad faith thwart a person's rig ht of access to the court, and to enforce a valuable interest in just compensation 51 . Although that tort does not exist in this country the underlying rationale for the principle applied by the American courts could as readily be applied with respect to the rules relating to discovery in this country, in my opinion. Counsel for the defendant reject that suggestion and submit that if there is to be such a remedy then it must be brought about by legislative reform.
362 The learned authors Richard Sommers and Andreas Seibert suggest that the tort of
46 Williams v Spautz (1992) 174 CLR 509, at 518- 519.
47 "Discovery", Matthews & Malek, (1992), at 246;
48 Ibid, at 246.
49 "Principles of Civil Procedure", Neil Andrews, (1994), at pp.290- 291.
50 Smith v Superior Court 198 Cal.Rptr.829, at 837.
51 I am indebted to the learned authors Sommers and Seibert for their examination of the American cases, in their article "Intentional Destruction of evidence: Why Procedural remedies are Insufficient" in Vol 78 (1999) Canadian Bar Review, 38ff.
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spoliation as a means to defeat "pending or potential" lawsuits should be regarded as a form of obstruction of justice entitling a party to summary judgment, particularly in circumstances of mass consumer product liability litigation where the shredding of documents going to the question of the knowledge of product dangers might eliminate internal research and force the plaintiff to debate the question on the basis of public domain documents.
363 I was referred to Bowmar Instrument Corp v Texas Instruments Inc. a decision of the U.S. District Court for Indiana, which was also cited in the article by Sommers and Seibert. This was not a case concerning the tort of spoliation but was concerned with failure to produce documents under subpoena. The Court was not satisfied that documents had been wilfully destroyed before the lawsuit commenced. In the course of his judgment District Judge Eschbach referred to Societe Internationale v Rogers which was a case concerning an alleged failure to comply with a pre-trial discovery order. The U.S Court of Appeals in that case recognised that proven deliberate conduct of placing documents under the control of another so that there would be legal impediments to their production might justify dismissal of an action. Judge Eschbach held in Bowmar:
"The most extreme legal position taken by the defendant is that the court is powerless to punish the wholesale, wilful destruction of relevant evidence where the destruction takes place prior to the specific court order for their production. Surely this proposition must be rejected . The plaintiffs are correct that such a rule would mean the demise of the real meaning and intent of the discovery process provided by the federal Rules of Civil Procedure.
It has long been recognised that sanctions may be proper where a party, before a lawsuit is instituted, wilfully places himself in such a position that he is unable to comply with a subsequent discovery order. Cf., e.g. Societe Internationale v Rogers 357 U.S. 197, 208-09 (1958). Although a potential litigant is under no obligation to preserve every document in its possession, whatever its degree of relevance, prior to the commencement of a lawsuit, see United States v International Business Machines Corp., 66 F.R.D. 189, 194, some duty must be imposed in circumstances such as these lest the fact finding process in our courts be reduced to a mockery.
The proper inquiry here is whether the defendant, with knowledge
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that this lawsuit would be filed, wilfully destroyed documents which it knew or should have known would constitute evidence relevant to this case."
364 Counsel for the defendant submitted that the American courts are by no means unanimous in their opinion as to the application of the tort of spoliation. The varied opinions are summarised by the Court of Appeal in California in Willard v. Caterpillar Inc. 52 (which cited the decision in Bowmar Instrument Corp with approval):
"Federal courts consider the conduct of a party prior to the commencement of the litigation in determining whether a party's failure to comply with a production order is willful or in bad faith. If, prior to litigation, a party "deliberately courted legal impediments to production,' "it cannot then be heard to assert its good faith after the expectation is realized. For conduct to constitute courting legal impediments,' it was not necessary that the actual litigation in which the documents are ordered produced be pending or specifically contemplated. "'Although a potential litigant is under no obligation to preserve every document in its possession, whatever its degree of relevance, prior to the commencement of a lawsuit, some duty must be imposed in circumstances such as these lest the fact-finding process in our courts be reduced to a mockery.'" (General Atomic Co. v. Exxon Nuclear Co., Inc. (S.D. Cal. 1981) 90 F.R.D. 290, 295-296, 299, 304 [party housed its cartel documents in Canada, whose law precluded their release, in anticipation of antitrust litigation in the United States].) The proper inquiry is whether the defendant, with knowledge that the lawsuit would be filed, willfully destroyed documents which it knew or should have known would constitute evidence relevant to the case. (Wm. T. Thompson Co. v. General Nutrition Corp., supra, 593 F. Supp. at p.1445.)
Finally, at the other end of the spoliation liability continuum, some courts have held there is no liability for failing to preserve documents before a party has notice of their relevance to litigation likely to be commenced. One court noted that the potential for litigation arises at the moment of injury, but the injured party may not contemplate filing a lawsuit. Therefore, discovery sanctions for spoliation of evidence are warranted only if evidence was destroyed when the products liability action was contemplated rather than merely possible. (Iowa Ham Canning, Inc. v. Handtmann, Inc. (N.D. Ill. 1994) 870 F. Supp. 238, 244; and see Akiona v. U.S. (9 th Cir. 1991) 938 F.2d 158, 160-161 [sanctions not warranted unless party had some notice the documents were potentially relevant]; PBA Local No. 38 v.
52 48 Cal. Rpts 2d 607 (Cal. App. 5 Dist. 1995) at pages 21-22 (Thaxter, Acting P.J. Harris and Buckley, JJ. concurring).
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Woodbridge Police Dep. (D.N.J. 1993) 832 F. Supp. 808, 833-834 [no spoliation of evidence where tape recordings at issue were routinely taped over four or five years before litigation commenced].)
These cases demonstrate the common understanding of society' regarding the wrongfulness of evidence destruction is tied to the temporal proximity between the destruction and the litigation interference and the foreseeability of the harm to the nonspoliating litigant resulting from the destruction. There is a tendency to impose greater responsibility on the defendant when its spoliation will clearly interfere with the plaintiff's prospective lawsuit and to impose less responsibility when the interference is less predictable."
365 The concept of litigation as warfare, so that the adversarial system requires little or no commitment by the combatants to notions of a fair trial, was considered by the learned author of Wigmore, in contending for full force to be given to the inference that can be drawn from the fact of document destruction. The learned author stated:
"The existence of a contrary view seems to be due chiefly to two distinct influences. One of these is the general tendency at common law to regard litigation as a sport of high quality, and to concede to the parties the right to hamper and obstruct their opponents, so far as may be, by the retention of such casual advantages (including the possession of documents) as chance has placed in their hands at the outset. This spirit has been totally discountenanced at the present day by the statutes which almost universally have given the power of forcing an opponent to disclose beforehand his documentary evidence, and have thus radically condemned the gaming theory of the British common law"53 .
366 As I have said, counsel for the defendant contend, in effect, that only legislative reform will deny a company in the position of the defendant the right to engage in what Wigmore might have deprecated as being "the sport of high quality" of the destruction of documents in anticipation of litigation. In my opinion, the rules relating to discovery which I have cited, above, are not so inadequate, and the inherent powers of the Court are not so deficient, that, in the event that no alternative course is reasonably open to remove the unfairness, the court must require a plaintiff to participate in an unfair trial and seek to obtain a verdict, in those circumstances, against a defendant whose actions rendered the trial unfair.
53 "Evidence in Trials at Common Law", J.H Wigmore, (1979), Vol 2, p.228.
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WHAT OUTCOME FOR THIS APPLICATION?
367 In The Ophelia 54 the Judicial Committee of the Privy Council held:
"If anyone by a deliberate act destroys a document which, according to what its contents may have been, would have told strongly either for him or against him, the strongest possible presumption arises that if it had been produced it would have told against him; and even if the document is destroyed by his own act, but under circumstances in which the intention to destroy evidence may fairly be considered rebutted, still he has to suffer. He is in the position that he is without the corroboration which might have been expected in his case." 368 Wigmore identifies two distinct inferences which may be drawn from the destruction of a document. In the first place, the destruction of a document may be regarded as demonstrating a consciousness of the weakness of the party's cause, in general, and from that consciousness may be inferred the fact itself of the cause's lack of truth and merit 55 . The second inference which may arise is that the specific document is unfavourable to the cause of the party who has destroyed it. For the latter inference to be raised there must be some evidence of the contents of the destroyed document 56 .
369 Counsel for the plaintiff submit that the benefit of such presumptions is severely diminished if the title and contents of the destroyed documents are not known, and while a general presumption still applies, its force is likely to be insufficient to compensate for the destruction of the documents.
370 Counsel for the plaintiff have strongly submitted that the plaintiff's case has been so prejudiced by the deliberate program of document destruction that she has been denied a fair trial, and that, in the absence of knowledge of the documents which have been destroyed, to merely rely on the drawing of adverse inferences is insufficient remedy to right the wrong of the deliberate conduct engaged in by the defendant. The defendant, they submit, has taken a course of action knowing full well the risks it ran, including the risks of being held in contempt of court and of
54 The Ophelia  2 AC 207 at 229
55 "Evidence in Trials at Common Law", J.H. Wigmore (1979) vol 2, par 277.
56 Ibid, par 291.
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having the defence struck out. The defendant proceeded nonetheless, and sought to hide its conduct by misleading the plaintiff's advisers and the court.
371 I have concluded that the defendant's actions have caused prejudice to the plaintiff and denied her a fair trial. Is that a matter which can be corrected by other means, short of striking out the defence?
372 Should I refuse this application the plaintiff may well succeed in her action and obtain a verdict from the jury. I have no doubt that the plaintiff is not bereft of all weapons with which to prosecute her claim. The plaintiff can no doubt lead a substantial body of evidence, both documentary and oral, through both expert and lay witnesses. The plaintiff has available to her what I believe must be a considerable body of documentary evidence held in the public domain. All of that evidence might be sufficient to satisfy a jury as to the plaintiff's claims, and to reject the defences raised in the pleadings.
373 I have considered whether the appropriate course might be not to strike out the defence but to permit the trial to proceed, after appropriate orders had been made for further discovery and interrogatories, and such other directions as may be appropriate. That might enable me to assess during the running of the trial whether the prejudice to the plaintiff by the destruction of documents had been reduced or exacerbated. I considered, too, whether I could make orders restricting or denying the defendant the right to contest certain issues on which it was shown that documents had been destroyed. Quite apart from the fact that I doubt that I have power to make such orders for issues-based sanctions in the face of objection by the defendant (and the defendant has given no indication that it would make any evidentiary concessions in this case), it would be impossible, in my view, to differentiate between the issues in this trial so as to determin e which issues should be subject to such an issues-based order and which would not. Indeed, the plaintiff's contentions as to all of the liability issues in the case are likely to have been prejudiced by the destruction of documents.
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374 There are other steps which might be taken which could ameliorate some of the prejudice which the plaintiff now faces if her trial were to proceed. A new order for discovery could be made, and, by removing any possibility of the words of the order being misconstrued, might produce further documents. Upon production of new documents an order permitting further interrogatories might be made. These steps would all take time, and no doubt there would be debate as to the terms and appropriateness of any such orders. Whilst the se steps might improve the plaintiff's position at trial, they would not cure the prejudice.
375 In order to remove the unfairness of the trial the plaintiff would place reliance on the inferences discussed above, and having regard to the material which is available to the plaintiff by virtue of this application, the inferences would be likely to have a powerful attraction to a jury. But they may not. The defendant would seek to persuade the jury that other explanations are open and that they should not draw any adverse inference. The defendant in choosing to destroy documents did so in the face of advice that these inferences might be drawn against it. It must be assumed that the defendant regarded the damage which the defence would suffer if the inferences were drawn against it, as being outweighed by the extent of the damage which it would suffer if the plaintiff had access to the documents.
Permitting the trial to proceed in those circumstances could not remove the prejudice suffered by the plaintiff.
376 Once it is concluded, as I have concluded, that the plaintiff has been denied a fair trial, in circumstances which cannot be adequately redressed, then in my opinion there is no point in attempting to quantify the extent of the unfairness. A trial is either fair or it is not. Unless all unfairness which the defendant has created can now be removed then a verdict by the jury in favour of the plaintiff would not demonstrate that the unfairness in the trial had been eliminated, but merely that the plaintiff had succeeded despite the unfairness of her trial. If it is necessary for me to be satisfied that there would remain a substantial risk of injustice to the plaintiff if
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the trial proceeds 57 , even after further orders are made in an attempt to alleviate her disadvantage, then I am so satisfied.
377 I do not consider that prejudice could have been removed entirely were the trial to proceed and were I make attempts, as discussed above, to ameliorate the prejudice suffered by the plaintiff. That being so, I have concluded that it would be an inappropriate course to adopt, to permit the trial to proceed, whether or not such a trial was by jury or by judge alone.
378 The fact that the plaintiff might well overcome the prejudice to a fair trial which the defendant has created is no answer, in my opinion, to this application. Success under those circumstances would merely demonstrate that the plaintiff's claim had merit. The defendant's decision to destroy documents was predicated on the fact that a claim brought by a plaintiff at a later time might well have merit and could succeed unless steps were taken to deny a fair trial to the plaintiff. Failure of a claim where a plaintiff had been denied a fair trial, could never be shown to be a just result.
379 The delay in frankly acknowledging the destruction of documents in this case has meant that the trial date has been vacated and a month has been lost on that account alone. Furthermore, none of the pre-trial evidentiary issues which had originally been listed for hearing have yet been addressed. If steps are taken by way of new orders for discovery and interrogatories the trial will be even further delayed. It is now accepted on both sides that having regard to the issues and evidence that emerged in this application the estimated duration of the trial must be revised. What at one time was expected to be a trial of about five weeks duration would now, I estimate, take twice as long, if not longer. On the medical evidence placed before me, which I have no reason not to accept, there is a serious risk that the plaintiff would not survive a trial of that duration. A trial confined to an assessment of
57 See the passage of the judgement of Chadwick LJ, cited above, from Arrow Nominees Inc v Blackledge . In Logicrose Ltd v Southend United Football Club Ltd (cited with approval in Arrow Nominees) Millet J allowed the trial to proceed only when he was satisfied that there was "no risk of injustice".
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damages would be considerably shorter 58 .
380 Delay is something which can only benefit the defendant, and severely prejudice the plaintiff. I recognise that it was plaintiff's solicitors who decided to bring this action at the time they did, and, as was pointed out by counsel for the defendant, the delay between the time when the plaintiff must first have instructed her solicitors and the commencement of proceedings is unexplained.
381 The plaintiff's solicitors were first engaged by her at a time when she had been one of those registered as a participant in the Nixon class action. That action was withdrawn in early 2000, when the Federal Court ruled adversely as to jurisdiction.
From at least that time the plaintiff's solicitors had access to depositories of documents produced by tobacco companies and held in Minnesota and Guilford.
The list of 34 documents in the Notice to Produce primarily was drawn from those depositories. The proceedings were commenced on 26 October 2001, and the plaintiff's advisers sought an early trial, a trial being listed for 18 February 2002.
Whilst Mr Gordon has deposed that it was his expectation that the Cremona discovery documents would have been able to be readily produced and admitted by the defendant, the plaintiff's advisers must have been prepared for the possibility that the defendant would not make any concessions towards the proof of the plaintiff's case. I have regard to those considerations.
382 The plaintiff's ill health, unfortunate as her situation is, could not justify an order being made which denied justice to the defendant. Her ill-health, however, is a relevant consideration. It is appropriate that this consideration should not be disregarded, having regard to the fact that the defendant, when contemplating further litigation at the time of the decision to destroy documents, must have known that any such litigant was likely to be a person with a serious, probably life-threatening, illness.
58 In response to my suggestion that a trial confined to damages might itself be very lengthy, counsel for the plaintiff undertook that if the defence was struck out the plaintiff would not seek to lead or rely on evidence as to the destruction of documents, for purposes of the assessment of damages.
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CONCLUSION AND ORDERS
383 The civil litigation system is an adversarial process, but it is a process governed by rules which the judges must administer. The formal rules of procedure complement and acknowledge the inherent powers of the Court which apply with the overriding objective of ensuring that parties to litigation receive a fair trial. Central to the conduct of a fair trial in civil litigation is the process of discovery of documents. That process is particularly important where documentary evidence is likely to be both voluminous and critical to the outcome of the case, and where access to documents is very much dependent on the approach adopted by one party and its advisers. For a fair trial to be assured in such circumstances the approach which that party must adopt may well conflict with its self -interest. The party which controls access to the documents must ensure that its opponent is not denied the opportunity to inspect and use relevant documents, and it must disclose fully and frankly what has become of documents which have been in its possession, custody or control.
384 In my opinion, the process of discovery in this case was subverted by the defendant and its solicitor Clayton Utz, with the deliberate intention of denying a fair trial to the plaintiff, and the strategy to achieve that outcome was successful. It is not a strategy which the court should countenance, and it is not an outcome which, in the circumstances of this case, can now be cured so as to permit the trial to proceed on the question of liability. In my opinion, the only appropriate order is that the defence should be struck out and judgment be entered for the plaintiff, with damages to be assessed.
385 I will hear the parties as to costs, and consequential orders. I will also require submissions as to the appropriate forum for the assessment of damages. Rules 24.02, and 24.05, read together with Rule 21.02, Rule 51.01 and Rule 47.02, suggest that the assessment of damages should be conducted by a Master, unless otherwise ordered.
386 On 6 March 2002 I made an order pursuant to s.18(1)(c) of the Supreme Court Act 1986 prohibiting, until further order, publication of a report of the proceedings on this application. My reasons for decision on that application indicate that the
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primary reason for my Order was the fact that the strike-out application was a pre-trial interlocutory proceeding in a case where trial was to be by jury. My concern was that publication, at that time, might inhibit empanelment of an unbiased jury.
That order was opposed by counsel representing media interests. Subject to any submissions of counsel, the assessment of damages will not now, it seems, be conducted by a jury. Thus, the basis for the suppression Order would appear to have been removed. I will, however, hear the parties and other persons interested in the maintenance or cessation of that order.
CERTIFICATE I certify that the previous 132 pages are a true copy of the reasons for judgment of Eames, J. of the Supreme Court of Victoria delivered on 22 March 2002.
DATED this twenty-second day of March 2002.
Neil Gill Associate
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