Australian Medic-Care Company Ltd v Hamilton Pharmaceutical Pty Limited [2008] FCA 976 | Case summary

REASONS FOR JUDGMENT 1 This is an application by notice of motion filed on 18 June 2008 seeking orders for further and better discovery and production. The applicant on the notice of motion is the respondent to the proceeding. I shall continue to refer to that party as the respondent. The proceeding was commenced early last year and is due to go to trial on Monday week. There has been recently a flurry of activity by the parties in relation to interlocutory proceedings as the parties attempt to ready themselves for the trial. This application was brought on short notice and has to be determined immediately and without having the benefit to reflect on either the pleadings, any facts upon which the parties have relied or the number of authorities which have been cited over the hearing this afternoon. 2 The principal proceeding concerns a claim by a distributor in Hong Kong against a pharmaceutical company in South Australia. The respondent, Hamilton Pharmaceutical Pty Limited, is a manufacturer of pharmaceuticals for distribution in Australia and outside Australia. It is asserted by the applicant that it entered into a distribution agreement with the respondent on 9 March 2000. The distribution agreement was backdated to 1 July 1999. The applicant claims that the distribution agreement was partly in writing and partly oral. The oral terms seem to be the matter of dispute between the parties. 3 The applicant claims that the respondent has breached the distribution agreement by engaging in part in parallel distribution in Hong Kong through another distributor. It is said that that conduct is in breach of the distribution agreement which provided the applicant with exclusivity. The applicant otherwise claims damages under s 52 of the Trade Practices Act 1974 (Cth). It also claims rectification of the distribution agreement to reflect the oral terms which it says bound the parties. The proceeding apparently was brought out of time and the applicant seeks an extension of time within which to bring the proceedings pursuant to the Limitations of Actions Act 1936 (SA). 4 The applicant also commenced proceedings in Hong Kong against a distributor of pharmaceuticals, Hong Kong Tung Tak Tong trading as Forward Company, which it says distributed pharmaceuticals supplied by the respondent through agents in Australia in breach of the distribution agreement. It has claimed damages and other relief against Forward Company in Hong Kong for Forward Company infringing the applicant's trade mark. 5 Extensive discovery seems to have been given by the parties to each other but, as this notice of motion shows, not to a satisfactory level, at least to the respondent. 6 The respondent has sought discovery of a number of categories of documents, notwithstanding that orders were made by the judge who is to be the trial judge, Finn J, on 8 April 2008 which purported to apparently address the matters which have been addressed today. 7 The first category of documents which is sought by the respondent relates to correspondence between the applicant and any third party, including any correspondence between the applicant and the second cross-respondent by any of their solicitors, in action number 3901 of 2002 in the High Court of Hong Kong. 8 There are two answers given by the applicant in response to this aspect of the application. First, it is contended the respondent has failed to identify any documents which it says the applicant has failed to discover. Secondly, the applicant contends it has not been shown that any of that correspondence would be relevant in relation to any of the issues raised on the pleadings in this proceeding. I want to make it clear that whilst many of the rules relating to discovery have changed over the recent past it is still a requirement of discovery that the document which is sought to be discovered is relevant to an issue raised on the pleadings in the sense described by the High Court in Mulley v Manifold (1959) 163 CLR 341. Attempts have been made today to show that there might be evidence which would indicate that some correspondence could be relevant to this proceeding. That, in my opinion, is not an appropriate way of addressing the question of discovery and, in particular, in addressing a question of discovery so late in the proceeding and so shortly before trial. 9 It seems to me, if the respondent wishes to identify documents which it says ought to have been discovered, it must be able to do so precisely by reference to the pleadings and by reference to the document which it says ought to be discovered. In other words, it ought to be able to discharge the obligation which lies upon a party seeking further and better discovery. In my opinion, the respondent has failed to do so in respect of this category of documents and for that reason alone I would decline to make the order sought. However, I am also not persuaded, at this stage, that any of the documents sought are relevant in the sense to which I have referred. 10 The second category of documents has three groups of documents within it. First, it contains a witness statement given by a director of the applicant; and secondly, it lists a witness statement given by a defendant in the Hong Kong proceedings. Both of those documents were filed in the proceedings in Hong Kong. The third group of documents, within this larger category, are documents which were discovered by the defendants in the Hong Kong proceedings. 11 The applicant has argued that it is not obliged to produce the witness statement of the applicant's director because it was a document filed in the Hong Kong proceedings and therefore unable to be used, and, in any event, has retained its privilege. In my opinion, that argument must be rejected. Order 38, rule 2A of the Rules of the High Court (HK) (Hong Kong Rules) provides for the exchange of witness statements. Subrule (11) of that rule provides that: Where a party serves a witness statement under this rule, no other person may make use of that statement for any purpose other than the purpose of the proceedings in which it was served - (a) ... (b) ... 12 In my opinion, O 38 r 2A(11) does not prevent the applicant using a witness statement which it has filed in the Hong Kong proceedings in any other proceedings and does not, by itself, prevent the applicant discovering and producing that document in accordance with the rules of this Court. The applicant argued, however, as I have already said, that the document, or the statement, was protected by legal professional privilege and that privilege had not been waived by the filing of the statement in the Hong Kong proceedings. There are conflicting authorities on whether the filing of a witness statement indicates an implied waiver of legal professional privilege. 13 The two most recent decisions in this Court, Cadbury Schweppes Pty Ltd v Amcor Limited [2008] FCA 88 and Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union [2008] FCA 678, indicate that any legal professional privilege in the statement is lost when the document is filed. 14 There are, as I have said, authorities contrary to those two decisions and I was taken to them by Mr Robertson, counsel for the applicant. In Nilsen Industrial Electronics Pty Ltd v National Semiconductor Corporation (1994) 48 FCR 337, Olney J held that statements filed in legal proceedings continue to attract legal professional privilege unless and until they are put into evidence. In Complete Technology Pty Limited v Toshiba (Australia) Pty Limited (1994) 53 FCR 125, Hill J, whilst disagreeing with the reasons given by Olney J, reached the same conclusion that legal professional privilege reposed in the document until it was read. He, however, relied upon the implied undertaking as to discovery for that decision. 15 I think I should follow the more recent authorities of the Federal Court which preferred the line of authority which is to the effect that filing and service of a witness statement, without more, operates as a full or limited waiver. Upon that basis, it seems to me that I should make the order in paragraph 3.1 of the notice of motion which seeks the witness statement of the director of the applicant, Keung Kin Wah. 16 The second witness statement which is sought is that of Cheng Chun Keung, who was a defendant in the Hong Kong proceedings. Since this application has been made, that witness statement has been provided to the respondent by the defendant in the Hong Kong proceedings. However, the respondent continues to seek production of the statement by the applicant in this proceeding, so as to ensure that the document which they have is a complete copy of the document which was filed in the court. I think they are entitled to press for the production of that document. Mr Robertson did not suggest any privilege attached to this document, insofar, at least, as his client was concerned. 17 However, he relied upon the implied undertaking as to discovery, which he said bound his client in the Hong Kong proceedings and therefore prevented his client making discovery in these proceedings. Exhibited to the affidavit of Timothy Rupert Magarey sworn on 24 June 2008 was O 24 r 14A of the Hong Kong Rules. That rule provides that: Any undertaking, whether express or implied, not to use a document for any purposes other than those of the proceedings in which it is disclosed shall cease to apply to such document after it has been read to or by the Court, or referred to, in open court, unless the Court, for special reasons has otherwise ordered on the application of a party or of the person to whom the document belongs. 18 That rule states the rule in Harman v Home Department State Secretary [1983] 1 AC 280. Mr Robertson said that his client was unable to produce the document, which it has discovered, by reason of that rule. It seems to me that there are two answers to that proposition. The first is that whilst, of course, the implied undertaking in relation to discovery binds a party, it does not prevent a party making discovery under obligations of other rules of court. 19 In Esso Australia Resources Limited v Plowman (1995) 183 CLR 10 at 33, Mason CJ said after referring to the implied undertaking as to discovery: It would be inequitable if a party were compelled by court process to produce private documents for the purposes of the litigation yet be exposed to publication of them for other purposes. No doubt the implied obligation must yield to inconsistent statutory provisions and to the requirements of curial process in other litigation, eg discovery and inspection, but that circumstance is not a reason for denying the existence of the implied obligation. 20 Chief Justice Mason's dicta was applied by Tamberlin J in Patrick v Capital Finance Pty Ltd (No 4) [2003] FCA 436 at [15] to [21]. The point which the Chief Justice made and which was applied in Patrick v Capital Finance Pty Ltd (No 4) [2003] FCA 436 is that, notwithstanding the implied undertaking, if rules of court of a jurisdiction apply to a party who has a document in that party's possession by reason of a process in another jurisdiction, that party is still obliged to comply with the processes in the second jurisdiction and make discovery of the document if it be an application for discovery and production if production follows upon discovery. For that reason, in my opinion, the document should be produced. 21 Secondly, there has been no suggestion made by the applicant that the applicant could not obtain a release from the implied undertaking in the High Court of Hong Kong. Indeed, the applicant has sought and obtained a release in relation to other documents. I infer from the fact that such a release has been obtained, that the applicant could obtain a release in relation to the implied undertaking in respect of the witness statement of Cheng Chun Keung. The same applies to the documents discovered by the defendants in the Hong Kong proceedings which are presently in the possession, custody or control of the applicant. The applicant has discovered those documents and the respondent seeks production of them. 22 Whilst those documents are subject to the implied undertaking referred to in O 24 r 14A of the Hong Kong Rules, in my opinion, consistent with the decisions in Esso Australia Resources Limited v Plowman 183 CLR 10 and Patrick v Capital Finance Pty Ltd (No 4) [2003] FCA 436, the applicant should make production of those documents in this jurisdiction. No doubt the applicant will, at or before making production, apply to the High Court of Hong Kong for a release from the implied undertaking in relation to those documents. I should say that the defendants in the Hong Kong proceedings have indicated they have no objection to the documents being produced. 23 The third category of documents sought by the respondent relates to legal advice given by the applicant's solicitors to the applicant before the applicant and the respondent entered into the distribution agreement and subsequently. The respondent seeks an order that the Court instruct the applicant's solicitors in Hong Kong on or before Wednesday, 25 June 2008 to send their respective files from 1999 to 2006 forthwith to Piper Alderman Lawyers, solicitors for the applicant and the second cross-respondent in these proceedings. I am not prepared to make that order. I have no reason to doubt that the solicitors in Hong Kong have an understanding of their obligations in relation to their client's obligations to make discovery. I have nothing before me which would suggest that I should require them, if I was able and if I had such power, to send their files to South Australia for the management of the local solicitors. 24 I think, however, that the respondent has shown that there are some aspects of the applicant's legal advice which ought to be discovered in this proceeding. The applicant claims that it entered into the distribution agreement which has oral terms apparently inconsistent with the written terms. It claims, insofar as those written terms do not reflect the terms which were agreed upon by the parties, the distribution agreement ought to be rectified. 25 It would be important to know when the applicant entered into the distribution agreement and if it had advice in relation to the written terms of the distribution agreement. The applicant's counsel did not argue otherwise. In those circumstances, it seems to me that the applicant ought to discover any legal advice given to it in writing in relation to its entry into the distribution agreement. The applicant also contends that representations were made to it by an officer of the respondent which induced it to enter into the distribution agreement. Those representations relate to the oral terms which the applicant says forms part of the distribution agreement. 26 Again, I think it would be important for the respondent to know whether the applicant received legal advice in relation to the representations which were made by the respondent to the applicant in that regard. It also would be important, in my opinion, for the respondent to know whether the applicant received advice generally in relation to the terms of the distribution agreement and insofar as that advice would impact upon the applicant's claim for rectification. The respondent also sought discovery of the applicant's continuing legal advice after the distribution agreement was entered into until 2006. 27 It said that the applicant claims that, acting upon the representations which are pleaded in paragraph 84A and following, the applicant did things which, if the respondent's contention as to the terms of the agreement is right, means that the applicant has suffered damage. I am not persuaded that the advice given to the applicant after the applicant entered into the distribution agreement has been raised by the applicant in the way that the applicant has framed its case. In those circumstances, I will not make an order in relation to any advice given by the applicant's solicitors in relation to steps taken in relation to the damage which the applicant claims it has suffered. 28 The applicant needed an extension of time within which to bring these proceedings and claims that it learnt of the material facts at a particular time. I accept, as Mr Cox has argued, that it would be appropriate for the applicant to disclose any legal advice that the applicant obtained in relation to the matters relevant to its application for an extension of time. 29 The last category of documents which has been sought by the respondent was the file of the applicant's trade mark attorneys. In paragraph 17.5.6(d)(v)(C) of the applicant's amended reply, the applicant said that it admitted that it ultimately became registered as entitled to a trade mark in Hong Kong, pursuant to an application which was filed on 11 August 1999, but says, relevantly, that its trade mark attorneys were instructed by it to prepare the application in June 1999 without having particular knowledge, which the respondent asserted it had, subsequent to that date. It is important to know the state of mind of the applicant as at June 1999 and as at 11 August 1999 in relation to its application for trade mark. I accept, as Mr Cox has contended, that the applicant should disclose so much of its trade mark attorneys' file as would indicate the instructions given to the trade mark attorneys prior to June 1999 in relation to an application for registration of a Hong Kong trade mark and in relation to the application which was made on 11 August 1999. Otherwise, I see no reason to order the rest of the trade mark attorneys' file to be discovered or produced. I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander.

Australian Medic-Care Company Ltd v Hamilton Pharmaceutical Pty Limited

At a glance

Court

Decision date

Before

Source

Judgment (8 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (7)

Cited By (5)