FEDERAL COURT OF AUSTRALIA Australian Competition & Consumer Commission v Advanced Medical Institute Pty Ltd [2005] FCA 366 PRACTICE AND PROCEDURE – discovery – order made for discovery by 'categories' of documents – the 'complete investigation file' of the Australian Competition and Consumer Commission held not be a 'category of documents' within the order – discussion of rules relating to discovery and of constraints on identification of 'categories' of documents. DISCOVERY – order made for discovery by 'categories' of documents – the 'complete investigation file' of the Australian Competition and Consumer Commission held not be a 'category of documents' within the order – discussion of rules relating to discovery and of constraints on identification of 'categories' of documents. Federal Court Rules O 15 rr 1, 2, 3 Wellcome Foundation Ltd v VR Laboratories (Australia) Pty Ltd (1980) 42 FLR 266 cited Commonwealth of Australia v Northern Land Council (1991) 30 FCR 1 cited The Compagnie Financičre et Commerciale du Pacifique v The Peruvian Guano Company (1882) 11 QBD 55 cited Mulley v Manifold (1959) 103 CLR 341 cited Spyer v Cuddles'N'Mum Franchise Pty Ltd (No 3) [2002] FCA 1563 cited AUSTRALIAN COMPETITION & CONSUMER COMMISSION v ADVANCED MEDICAL INSTITUTE PTY LTD (ACN 095 238 645) AND OTHERS NSD 1106 OF 2004 LINDGREN J 7 APRIL 2005 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 1106 OF 2004 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPLICANT AND: ADVANCED MEDICAL INSTITUTE PTY LTD (ACN 095 238 645) FIRST RESPONDENT PHILIP SOMERSET TRADING AS COLBYCO MEDIA SECOND RESPONDENT IAN BRUCE TURPIE THIRD RESPONDENT JUDGE: LINDGREN J DATE OF ORDER: 7 APRIL 2005 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The first respondent's motion brought by notice of motion filed on 7 March 2005 be dismissed. 2. The first respondent pay the applicant's costs of that motion. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 1106 OF 2004 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPLICANT AND: ADVANCED MEDICAL INSTITUTE PTY LTD (ACN 095 238 645) FIRST RESPONDENT PHILIP SOMERSET TRADING AS COLBYCO MEDIA SECOND RESPONDENT IAN BRUCE TURPIE THIRD RESPONDENT JUDGE: LINDGREN J DATE: 7 APRIL 2005 PLACE: SYDNEY REASONS FOR JUDGMENT (Discovery) INTRODUCTION 1 There is a motion before the Court which raises questions as to the relationship between the commonly made order for discovery of documents by 'categories' and the Court's rules governing discovery. 2 This proceeding concerns a newspaper advertisement, in respect of what it described as a 'nasal delivery system method' said to have the capacity to cure impotence or erectile dysfunction. 3 The applicant ('the ACCC') alleges, and the first respondent ('AMI') admits, that AMI carried on a business of providing products and services to members of the public in connection with the treatment of the condition known as impotence and/or erectile dysfunction, and caused the Advertisement to appear in print media in various parts of Australia. ACCC alleges, and AMI denies, that in causing the Advertisement to be published, AMI engaged in misleading or deceptive conduct or conduct likely to mislead or deceive, in contravention of s 52 of Trade Practices Act 1974 (Cth) ('the Act'). 4 The ACCC's allegation against the second respondent ('Mr Somerset') and the third respondent ('Mr Turpie') is one of ancillary liability on the basis that each was directly or indirectly knowingly concerned in or a party to AMI's conduct in contravention. The ACCC alleges that Mr Somerset carried on business as an advertising agent for and on behalf of AMI and was the person responsible for preparation and publication of the Advertisement. It alleges that, at all material times, Mr Turpie was a well-known entertainer on television and in clubs, and allowed himself to be held out by AMI as a person who had done and said the things described in the Advertisement. 5 By a notice of motion filed on 7 March 2005, AMI seeks an order that the ACCC file and serve a verified list of all documents in its possession, custody or power in relation to its investigation and information gathering activities concerning the Advertisement. In short, and as AMI puts it, it seeks discovery of ACCC's 'complete investigation file'. THE PRESENT DISPUTE OVER DISCOVERY 6 The proceeding commenced on 19 July 2004 when the ACCC filed its application accompanied by a statement of claim. 7 On 1 September 2004, by consent as between the ACCC and Mr Turpie, orders were made against Mr Turpie, including an order that the proceeding be dismissed against him unless AMI filed and served a cross-claim against him by 22 September 2004. In fact, on that date, AMI did file and serve a cross-claim against him. 8 On the same date, 1 September 2004, by consent as between the ACCC on the one hand and AMI and Somerset respectively on the other, I ordered: * that those parties exchange 'categories of documents' required in discovery on or before 29 September 2004; * that they provide lists of documents on or before 20 October 2004; and * that inspection to take place on or before 27 October 2004. 9 On 29 September 2004, Paul Bard, the solicitor for AMI, wrote to Ian McNeilly of the office of the Australian Government Solicitor ('AGS'), the solicitor for the ACCC, enclosing a notice which purported to set out three categories of documents which AMI required the ACCC to discover. Only the following one of them is now pressed by AMI: 'In relation to the complaint by [Mr Turpie] which is the subject of these proceedings: 1. The ACCC's complete investigation file including: (a) All documents; and (b) All records of all interviews and statements including signed, unsigned and drafts of the same.' 10 On 19 October 2004, Mr McNeilly of the AGS responded to AMI's notice of categories. His letter sought clarification of the meaning of the expression 'the complaint by [Mr Turpie] which is the subject of these proceedings', and contended that category 1, set out above, was vexatious and oppressive as it was too broad, and should be replaced by an amended category. The letter stated that in the AGS's view, AMI's request amounted to a request for general discovery, which was, according to the letter, 'what is to be avoided under the present rules regarding discovery'. 11 On 3 March 2005 Mr Bard wrote to Mr McNeilly of the AGS elaborating on AMI's position. The letter asserted that AMI was seeking 'discovery of documents ... relevant to facts in issue', and stated: 'the documents or categories of documents sought relate or may relate to a material allegation in issue in these proceedings' (my emphasis). The letter enclosed a list of what the letter described as 'the specific documents or categories of documents sought'. That list was headed 'Specific further documents and specific further categories of documents for production by the ACCC'. However, the text of the list commenced: 'The complete ACCC investigation file relating to the advertisements the subject of these proceedings including ...' (my emphasis) There followed five paragraphs, each being a more or less detailed description of the documents. Clearly, however, AMI was still insisting on discovery of the ACCC's complete investigation file. 12 On 4 March 2005, Mr McNeilly replied, agreeing to provide a list of the documents falling within the five categories, while noting that it was not conceded that AMI was entitled to require discovery of them. 13 On 7 March 2005, Mr Bard replied, pointing out that AMI had not indicated a willingness to accept discovery of only those documents, and making it plain that AMI was seeking discovery of the entire investigation file. AMI filed its notice of motion on the same day, 7 March 2005, and served it under cover of a letter of that date which stated: 'We have provided you with a list of the specific documents and categories of documents sought previously. Subject to the contents of the list your client is currently preparing, as previously indicated, we may be able to deal with the application by consent on terms to be agreed.' 14 On 21 March 2005 Mr Bard wrote to Mr McNeilly referring to the motion which, by then, had been fixed for hearing on Thursday 31 March 2005, and again said that he was instructed to proceed with the application for an order for discovery of the ACCC's investigation file in its entirety. The letter noted that the ACCC had not served on AMI even a list of documents falling within the five categories. The letter asserted that there would be other documents in the ACCC's investigation file, the nature of which AMI could not be expected to know, since it did not know the extent of the investigation and information gathering activities that had been undertaken by the ACCC. It stated that AMI expected that every inquiry which the ACCC had made before it decided to launch this proceeding would in fact be relevant to the issues in dispute and should be discovered. 15 The following day, 22 March 2005, Mr McNeilly replied, advising that his proposal of 4 March had been made on the basis that discovery of the documents falling within the five categories would be in full and final satisfaction of AMI's request for discovery, and that since AMI was insisting upon discovery of the ACCC's entire investigation file, no list would be provided until AMI's motion was heard and determined. Mr McNeilly's letter concluded by asserting that Mr Bard's letter had not explained how the ACCC's entire investigation file went to a matter in issue, and, further that Mr Bard's substantiation of the discovery request showed it to be a 'fishing expedition'. consideration 16 The motion should be dismissed with costs because, in seeking discovery of the ACCC's complete investigation file, AMI is not seeking discovery of a 'category' or 'categories' of documents as allowed for by the orders of 1 September 2004. The expression 'complete investigation file' is a description of the physical or administrative repository of all the documents of the ACCC, not of a 'category of documents' within the orders. The point can be made by asking rhetorically, 'What documents are omitted from discovery by the expression '[t]he ACCC's complete investigation file''? The answer must be 'None!'. 17 The present régime governing discovery in the Court results from the Federal Court Amendment Rules 1999 (No 6) (SR 1999 No 295), r 3, Schedule 1, items [2] and [3], which commenced to operate on 3 December 1999, and Practice Note No 14 (Discovery) issued on the same date. The rule amendments and the Practice Note mark one court's attempt to reduce the time-consuming and costly burden of the process of discovery, which has long troubled courts, litigants and legal practitioners. 18 One difficulty associated with the discovery process is that of appropriately (not too widely or too narrowly) identifying and describing the appropriate connection with, or relationship to, the issues in a proceeding which documents must have in order to be discoverable. Another relates to the degree of individuation, specificity and detail, with which those documents which are decided to be discoverable must be described in the list of documents. 19 Prior to the changes made in 1999, O 15 r 1 provided for discovery pursuant to a notice for discovery. sSince the notice was able to be given only after a directions hearing and within any period limited by the Court for the purpose, and the Court was given a general power to order otherwise, in practice a notice for discovery could be given only if the Court allowed it to be given.. Order 15 r 2(2) provided that, subject to O 15 r 3, a party giving discovery was to give discovery of all documents 'relating to any matter in question between [the party giving discovery] and the party giving the notice for discovery'. The expression 'relating to any matter in question' in this formulation was treated as invoking 'the Peruvian Guano test' (cf The Compagnie Financičre et Commerciale du Pacifique v The Peruvian Guano Company (1882) 11 QBD 55): see for example, the Full Court judgments in Wellcome Foundation Ltd v VR Laboratories (Australia) Pty Ltd (1980) 42 FLR 266 at 289; Commonwealth of Australia v Northern Land Council (1991) 30 FCR 1 at 23-24. In Peruvian Guano, Baggallay LJ referred (at 60) to documents of which 'it is not unreasonable to suppose that they … may contain information, directly or indirectly, enabling the defendants to advance their own case or to damage the case of their adversaries' (my emphasis), and Brett LJ referred (at 63) to any document 'which not only would be evidence upon any issue, but also which, it is reasonable to suppose, contains information which may – not which must – either directly or indirectly enable the party requiring [discovery] either to advance his own case or to damage the case of his adversary' (emphasis in original). The required relationship was described similarly by Menzies J in Mulley v Manifold (1959) 103 CLR 341 at 345: '[o]nly a document which relates in some way to a matter in issue is discoverable, but it is sufficient if it would, or would lead to a train on inquiry which would, either advance a party's own case or damage that of his adversary' (my emphasis). (Order 15 r 8 has continued since 3 December 1999 to use the expression 'relating to any matter in question', and, therefore, to invoke the Peruvian Guano test: see Spyer v Cuddles'N'Mum Franchise Pty Ltd (No 3) [2002] FCA 1563 at [6]). 20 Subrule 3(1) of O 15 was not amended in 1999. It provided, and still provides, that: 'The Court may, before or after the party has been required under rule 1 to give discovery, order that discovery under rule 2 by any party shall not be required or shall be limited to such documents or classes of documents or to such of the matters in question in the proceeding, as may be specified in the order.' 21 Under the current régime, against the background of which the orders of 1 September 2004 are to be understood: * it is expressly provided in O 15 r 1 that a notice for discovery may be given only with the leave of the Court; * ;lleave to give a notice requiring general discovery is not granted as a matter of course, even when a consent direction to that effect is submitted (Practice Note No 14, para 1(a)); * the Court moulds any order for discovery to suit the facts of a particular case (Practice Note No 14, para 1(b)); and · 'To prevent orders for discovery requiring production of more documents than are necessary for the fair conduct of the case, orders for discovery will ordinarily be limited to the documents required to be disclosed by Order 15 rule 2(3).' (Practice Note No 14, para 3) 22 Discovery may be given in response to a notice for discovery served with the leave of Court, or in direct obedience to an order of the Court without the necessity of a notice being given. The orders of 1 September 2004 reflected the latter course, and contemplated that there would be no dispute over the categories. Where there is no dispute, it is the Court's order of the kind made here, coupled with the undisputed descriptions of the categories, that define the discovery régime and obligations in the particular proceeding, rather than O 15 r 2(3). It is open to the parties, when describing categories, to incorporate reference to the criteria listed in that subrule, which provides: '(3) Without limiting rule 3 ..., the documents required to be disclosed are any of the following documents of which the party giving discovery is, after a reasonable search, aware at the time discovery is given: (a) documents on which the party relies; and (b) documents that adversely affect the party's own case; and (c) documents that adversely affect another party's case; and (d) documents that support another party's case.' 23 In the rare case in which the Court grants leave to a party to give a notice requiring general discovery, that subrule operates, rather than, as formerly, the Peruvian Guano test, to identify the discoverable documents. The Explanatory Memorandum which accompanied the Federal Court Amendment Rules 1999 (No 6) (SR 1999 No 295) stated of the new subrule 2(3) that '[t]he aim of the rule is to limit the documents that must be discovered to those which are directly relevant to the proceedings'. 24 The description, '[t]he ACCC's complete investigation file', did not incorporate any confining limitation. Rather than seek a category or categories, AMI has, in substance, sought general discovery without the confining effect of either the Peruvian Guano test or the criteria of discoverability now provided in O 15 r 2(3). The limitations expressed in O 15 r 2(3), in addition to operating of their own force where a party, with leave, gives a notice for discovery, are available to be invoked if the Court makes an order providing directly for the giving of discovery, whether or not the order is made by consent. 25 Where, as commonly happens (and happened here), orders are made which contemplate the parties' reaching agreement upon categories of documents, one might reasonably expect their starting point in formulating the categories to be some consideration of the issues to be determined in the proceeding, or, to adapt the language of the former O 15 r 2(2), the 'matters in question' in the proceeding. Under any criterion for discovery, there can be no justification for requiring discovery of documents that bear no relationship to those issues. Of course, the description '[t]he ACCC's complete investigation file' does not suggest that any attention was given to the issues, and may encompass documents having no connection with them. 26 It may be that the due outworking of the discovery process will in fact result in discovery of almost the entire investigation file of the ACCC, but speculation that this may happen is not to be substituted for an insistence on principle in the discovery process. 27 On the hearing of the motion, there was some discussion of formulas other than '[t]he ACCC's complete investigation file', according to which AMI would be entitled to discovery, but this matter is appropriately left to another occasion. conclusion 28 For the reasons above, the motion should be dismissed with costs. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. Associate: Dated: 6 April 2005 Counsel for the Applicant/ Mr R J Bromwich Respondent on the Motion: Solicitor for the Applicant/ Australian Government Solicitor Respondent on the Motion: Counsel for the First Respondent/ Mr K L Andronos Applicant on the Motion: Solicitor for the First Respondent/ Paul Bard Applicant on the Motion: Date of Hearing: 31 March 2005 Date of Judgment: 7 April 2005