FEDERAL COURT OF AUSTRALIA Unilever Australia Limited v Revlon Australia Pty Ltd (No 4) [2014] FCA 1074 Citation: Unilever Australia Limited v Revlon Australia Pty Ltd (No 4) [2014] FCA 1074 Parties: UNILEVER AUSTRALIA LIMITED (ACN 004 050 828) v REVLON AUSTRALIA PTY LTD (ACN 095 360 731) File number(s): NSD 508 of 2014 Judge(s): GLEESON J Date of judgment: 3 October 2014 Catchwords: PRACTICE AND PROCEDURE – expert witnesses – application for evidence to be given by video-link – where application opposed – application refused Legislation: Federal Court of Australia Act 1976 (Cth) ss 47(6), 47A Cases cited: ACCC v Pirovic Enterprises Pty Ltd [2014] FCA 544 Blackrock Asset Management Australia Services Ltd v Waked (No 2) [2011] FCA 479 Campaign Master (UK) Ltd v Forty Two International Pty Ltd (No 3) (2009) 181 FCR 152 Commissioner of Taxation v Arnold [2014] FCA 959 Kirby v Centro Properties Ltd [2012] FCA 60 Rossiter v Core Mining Limited [2014] NSWSC 969 Stuke v ROST Capital Group Pty Ltd [2012] FCA 1097 Walker Charlotte Street v Rio Tinto Services [2014] NSWSC 535 Date of hearing: 2 October 2014 Date of last submissions: 3 October 2014 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 27 Counsel for the Applicant: Mr N Furlan Solicitor for the Applicant: Mr A Salgo (Baker & McKenzie) Counsel for the Respondent: Dr B Kremer Solicitor for the Respondent: King + Wood Mallesons IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 508 of 2014 BETWEEN: UNILEVER AUSTRALIA LIMITED (ACN 004 050 828) Applicant AND: REVLON AUSTRALIA PTY LTD (ACN 095 360 731) Respondent JUDGE: GLEESON J DATE OF ORDER: 3 OCTOBER 2014 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Pursuant to s 47A of the Federal Court of Australia Act 1976, the testimony of Ann-Marie Carvell be given from the United Kingdom by video link. 2. The application for the Court to allow the testimony of Professor Thornthwaite to be given from the United Kingdom by video link be refused. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 508 of 2014 BETWEEN: UNILEVER AUSTRALIA LIMITED (ACN 004 050 828) Applicant AND: REVLON AUSTRALIA PTY LTD (ACN 095 360 731) Respondent JUDGE: GLEESON J DATE: 3 OCTOBER 2014 PLACE: SYDNEY REASONS FOR JUDGMENT 1 The applicant/cross-respondent ("Unilever") has applied for the testimony of two of its witnesses, Professor David William Thornthwaite and Ms Ann-Marie Carvell, to be given from the United Kingdom by video link in accordance with s 47A of the Federal Court of Australia Act 1976 (Cth) ("Federal Court Act"). 2 The respondent/cross-claimant ("Revlon") does not oppose the application in relation to the testimony of Ms Carvell. However, it opposes the application in relation to the testimony of Professor Thornthwaite. 3 In support of its application, Unilever relied on an affidavit of Mr Andrew Salgo, Unilever's solicitor, made on 2 October 2014. The affidavit refers to communications between the parties, and with the Court. Exhibited to the affidavit is a confidential exhibit which sets out Professor Thornthwaite's personal circumstances that have caused the application to be made. 4 Unilever's application is made in the following context: (1) On 30 June 2014, Unilever filed an affidavit made by Professor Thornthwaite on 27 June 2014. The affidavit states that Professor Thornthwaite is employed as a Lead Scientist for Unilever UK Central Resources Ltd at the Research and Development Port Sunlight Laboratory. It states that Professor Thornthwaite is in charge of scientific leadership at the facility, providing coaching, monitoring and scientific input to all of the Unilever business on matters of organic chemistry. Professor Thornthwaite deposes that he has read, understood and complied with the Federal Court of Australia Practice Note CM7 on "Expert Witnesses in Proceedings in the Federal Court of Australia". The affidavit is arranged under the following hearings: (a) How antiperspirants work – my opinions (b) Reaction between hydrogen peroxide and thiols – my opinions (c) Hydrogen peroxide and catalase – my opinions (d) The redox reaction is pH dependent – my opinions (e) Competition with other substances, including cysteine – my opinions (f) Different locations of hydrogen peroxide and malodour thiols – my opinions (g) Conclusions – efficacy of hydrogen peroxide in Mitchum Clinical (h) Stabilisation of hydrogen peroxide in Mitchum Roll-on – my opinions (i) The oxygen impact on underarm odour – my opinions; (2) By letter dated 3 July 2014, Mr Salgo wrote to my associate to draw to the Court's attention the prospect that each party would seek to have some witnesses cross-examined by video-link. These witnesses included Professor Thornthwaite; (3) At a directions hearing on 8 July 2014, the prospect of video link examination was discussed. The Court was informed that the parties agreed amongst themselves that the use of video link was appropriate for each side. Senior counsel for Unilever, Mr Cobden SC said (without contradiction or qualification by counsel for Revlon) that no substantial factual dispute was anticipated, and no credit issue had been identified. On that basis, I told the parties that I would make an order in chambers under s 47A of the Federal Court Act permitting the evidence to be given by video-link. Orders were made, including that Unilevers' evidence in reply be filed and served by 15 July 2014 (although this order was vacated on 8 September 2014); (4) No draft consent order of the kind foreshadowed on 8 July 2014 was sent to my chambers; (5) At the time when the final hearing of the proceedings was fixed to commence on 17 July 2014, the parties agreed to orders including an order that Professor Thornthwaite's evidence be given by video link. However, the fixture for 17 July 2014 was vacated and the consent orders were not sought from the Court; (6) On 5 August 2014, Professor Thornthwaite's cross-examination and the commencement of the hearing was listed for 4:30 pm on 9 September 2014. The intention was that Professor Thornthwaite give his testimony by video-link that afternoon; (7) On 27 August 2014, Professor Thornthwaite's second affidavit, being an affidavit in reply, was served. Professor Thornthwaite's second affidavit responds to three affidavits served on behalf of Revlon, being affidavits of: (a) Professor Patrick Perlmutter sworn on 11 July 2014 (b) Dr Michael Traudt sworn on 12 July 2014; and (c) Dr Heng (Harry) Cai sworn on 13 July 2014. (8) On 4 September 2014, Revlon's solicitor, Ms Katrina Rathie, sent an email to Mr Salgo attaching a proposed timetable for the hearing, and said, relevantly: We cannot guarantee that Prof Thornthwaite will be finished in 4 hours, even assuming that the video facility works perfectly and that we are permitted to cross-examine for 4 hours continuously – from 4.30pm – 8.30pm with no dinner break (assuming that Her Honour has a full day sitting on 9 and 10 September). Given that the judge will have been sitting all day, she is unlikely to want to hear cross-examination late for 4 hours. Therefore we recommend that the time to continue Prof Thornthwaite's cross examination should be scheduled for the next available date if he cannot be completed in one late session. (9) Later on 4 September 2014, Mr Salgo received an email from Ms Rathie, stating that it was unlikely that Revlon would be in a position to deal with Professor Thornthwaite's cross-examination on 9 September 2014, and seeking to make alternate arrangements for Professor Thornthwaite's cross-examination. Consequently, the proceedings were relisted before the Court for directions on 5 September 2014. On 5 September 2014, Mr Cobden SC mentioned the possibility that Professor Thornthwaite's cross-examination might take more than one session; (10) On 8 September 2014, the 9 September 2014 hearing was vacated and the proceedings were fixed to commence on 24 and 25 September 2014, and then to resume on 10 October 2014, in the expectation that Professor Thornthwaite's cross-examination would be conducted after ordinary court hours on 10 October 2014; (11) The final hearing commenced on 24 September 2014. On 25 September 2014, Unilever called two witnesses. Professor Diamandis gave his testimony by video-link from Toronto. The evidence took approximately 1.5 hours. Ms Tanon- Gonzales gave her testimony by audio-link from the Philippines after the video screen froze. Her evidence took less than one hour. At the end of the day, I said: One of the things that I have been thinking about as a result of the experience this morning is about the viability of video link for the more contentious expert witnesses. If the parties agree on video link, then that probably goes a long way to resolving my concerns, but I am concerned about my ability to evaluate evidence when it's contentious, seriously contentious, on video link. (12) On 28 September 2014, Ms Rathie sent an email to Mr Salgo, asking whether Professor Thornthwaite would be able to travel to Sydney for the hearing and saying: In light of the detailed evidence including his most recent affidavit, counsel have advised me that the cross examination is likely to be lengthy (at least a day) and require many document exchanges. There is now a very strong preference that he be cross examined in person if possible. The alternative of three evening video conference sessions commencing outside of court hours seems undesirable. 5 The particular reasons why Unilever seeks to have Professor Thornwaite's testimony given by video link concern his personal circumstances. It is unnecessary for them to be disclosed in these reasons except to say that Professor Thornthwaite is not unable to travel to Australia for any legal or physical reason affecting him, although he has not made any enquiries or plans to travel to Australia for the purpose of giving his testimony in these proceedings. He has not made travel plans because, since around early July 2014, Mr Salgo has told Professor Thornthwaite that he would give his testimony via video link. 6 Unilever's evidence does not include independent evidence to support or otherwise explain Professor Thornthwaite's personal circumstances. For example, the matters identified in paragraph 4 of confidential exhibit AMS1 are expressed in the most general terms and, without more, I accord them little weight. 7 I also accord little weight to the second sentence of paragraph 6 of confidential exhibit AMS1 in the absence of evidence as to why obvious solutions are not available or appropriate. 8 In the absence of direct evidence to support paragraph 8 of confidential exhibit AMS1, I also accord little weight to the assertion made in that paragraph. 9 Although I am prepared to accept at face value the strength of Professor Thornthwaite's apparent felt need not to travel to Australia at this time, particularly as expressed in paragraphs 9 and 10 of confidential exhibit AMS1, it is far from clear that his circumstances could not be readily accommodated. 10 There is no reason to believe that Unilever is unwilling to arrange for Professor Thornthwaite to give his testimony orally in court, except that it apparently seeks to accommodate Professor Thornthwaite's personal circumstances. Legal principles 11 Section 47(6) of the Federal Court Act provides: Subject to this section and section 47A and without prejudice to any other law that would, if this subsection had not been enacted, expressly permit any testimony to be otherwise given, testimony at the trial of causes shall be given orally in court. 12 Section 47A of the Federal Court Act provides: (1) The Court or a Judge may, for the purposes of any proceeding, direct or allow testimony to be given by video link, audio link or other appropriate means. Note: See also section 47C. (2) The testimony must be given on oath or affirmation unless: (a) the person giving the testimony is in a foreign country; and (b) either: (i) the law in force in that country does not permit the person to give testimony on oath or affirmation for the purposes of the proceeding; or (ii) the law in force in that country would make it inconvenient for the person to give testimony on oath or affirmation for the purposes of the proceeding; and (c) the Court or the Judge is satisfied that it is appropriate for the testimony to be given otherwise than on oath or affirmation. (3) If the testimony is given: (a) otherwise than on oath or affirmation; and (b) in proceedings where there is not a jury; the Court or the Judge is to give the testimony such weight as the Court or the Judge thinks fit in the circumstances. Note: In proceedings where there is a jury, the Judge may warn the jury about the testimony (see section 165 of the Evidence Act 1995). (4) The power conferred on the Court or a Judge by subsection (1) may be exercised: (a) on the application of a party to the proceedings; or (b) on the Court's or Judge's own initiative. (5) This section applies whether the person giving testimony is in or outside Australia, but does not apply if the person giving testimony is in New Zealand. Note: See Part 6 of the Trans-Tasman Proceedings Act 2010. 13 Section 47C of the Federal Court Act precludes the exercise of the power conferred by s 47A unless certain conditions are met in relation to the video link. The conditions specified in s 47C are about ensuring the effectiveness of the video link. 14 It is fair to say that recent decisions have tended to take a conservative approach to the use of video link for the testimony of witnesses. In Campaign Master (UK) Ltd v Forty Two International Pty Ltd (No 3) (2009) 181 FCR 152 ("Campaign Master") at [77], Buchanan J said that "the trend of authority seems to me to emphasise the need for a persuasive case to be made out to use a video link to take evidence, particularly to impose it on an unwilling cross-examining party". At [78], Buchanan J said: I share the concerns expressed by Spender J in [Australian Competition and Consumer Commission v World Netsafe Pty Ltd (2002) 119 FCR 303] and by Stone J in [Dorajay Pty Ltd v Aristocrat Leisure Ltd [2007] FCA 1502] about the limitation on the effectiveness of video link arrangements as a means of taking oral evidence. I am particularly troubled by the prospect (or possibility) that the cross-examination of an important witness might be rendered less effective by the limitations of video link technology or the absence of the witness from the courtroom. Although the days are gone when witnesses are expected to feel any sense of intimidation as an aid to telling the truth, there is no doubt in my mind that the requirement to give evidence on oath or affirmation in the (generally) solemn atmosphere of a courtroom in the presence of a judge, and to answer questions in cross-examination in the presence also of cross-examining counsel, has at least three potential benefits. It enhances the prospect that the witness will remain conscious of the nature and solemnity of the occasion and of his or her obligations. It affords the cross-examiner some reassurance that the gravity and immediacy of the moment, and of the supervising presence of the judge, are not lost on the witness and the cross-examination is not thereby rendered any less effective, to the possible prejudice of the cross-examining party. It provides the Court with a more satisfactory environment in which to assess the nature, quality and reliability of responses by a witness, both to questions and to the overall situation presented by the necessity to give evidence in court. To my mind there remains, even in the modern context, a certain "chemistry" in oral interchanges in a courtroom, whether between a judge and counsel (or other representative) or between cross-examiner and witness. I would not wish too lightly to deprive a cross-examiner of that traditional forensic element in the exchange although, as the cases universally make clear, the Court must now, if asked to do so, balance the interests of a cross-examining party against claimed inconvenience both in individual cases and with respect to individual witnesses. Notwithstanding the increased availability and use of video link technology, in my view, a case must be made out for the use of video link evidence if it is opposed by an affected party. I do not share the view expressed by Katz J. My own view and, I think, the weight of authority, is to the contrary. 15 This passage from Campaign Master has been cited with approval on several occasions including, most recently, in ACCC v Pirovic Enterprises Pty Ltd [2014] FCA 544 and Commissioner of Taxation v Arnold [2014] FCA 959. See also Blackrock Asset Management Australia Services Ltd v Waked (No 2) [2011] FCA 479 and Stuke v ROST Capital Group Pty Ltd [2012] FCA 1097. 16 However, it is undoubtedly correct that "each case will turn on its own facts and circumstances and the balance of discretion as to what is appropriate in a particular case will involve a balancing exercise as to what will best serve the administration of justice consistently with maintaining justice between the parties": Kirby v Centro Properties Ltd [2012] FCA 60 at [11]. 17 Unilever submitted that the cases relied upon by Revlon, which included the cases referred to above and two decisions of the New South Wales Supreme Court (Rossiter v Core Mining Limited [2014] NSWSC 969 ("Rossiter") and Walker Charlotte Street v Rio Tinto Services [2014] NSWSC 535) dealt with circumstances that were materially different from this case. In particular, Unilever noted that all but one involved a witness or witnesses of fact. Further in all but one, the credibility of the witness or witnesses was shown to be squarely in issue. It was also submitted that the reasons given for the inability or unwillingness of each witness to travel to Australia were very different to (and, it was submitted, far less grave and compelling than) the reasons given for Professor Thornthwaite's inability to come to Sydney to give evidence. Competing contentions 18 Unilever relies on the following matters: (1) It has proceeded on an assumption that Professor Thornthwaite would be permitted to give evidence by video-link. That assumption was reflected in the Court's listing of the hearing in the late afternoon of 10 October 2014. The assumption was not questioned until 25 September 2014, following the video-link testimony of Dr Diamandis and Ms Tanon-Gonzales. If the issue had been raised earlier, it could have been accommodated and Professor Thornthwaite may have been able to travel to Sydney; (2) Professor Thornthwaite's personal circumstances provide grave and compelling reasons why he is unable to come to Sydney to give his evidence orally and in Court (at least at this time – there is a suggestion that, with more notice, he might be able to come to Sydney); (3) Revlon's claim, made for the first time at the hearing yesterday, that Professor Thornthwaite's credit is or is likely to be in issue is not explained and is not apparent. In opening, Revlon's counsel described Professor Thornthwaite's approach as "entirely theoretical"; (4) Revlon's estimates about the likely duration of Professor Thornthwaite's testimony are not explained and are not obviously reasonable; (5) It is not clear why the issues proposed to be the subject of cross-examination of Professor Thornthwaite could not be addressed through cross-examination of Professor Easton. 19 Revlon gives the following reasons for opposing the application: (1) Professor Thornthwaite will be giving highly contested opinions as well as direct but contested evidence of some facts; (2) It is not agreed that his evidence can be fairly tested by video-link. In particular, appearance by video-link would frustrate or delay the management of documents needed in cross-examination. Those documents presently comprise a little more than one lever arch file of documents; (3) His evidence is central to the case and is the foundation of the scientific claims made by Unilever; (4) Revlon's ability to cross-examine Professor Thornthwaite will be significantly inhibited by not having him present in Court; (5) The cross-examination will be extensive and detailed, and will take longer than one normal sitting day in Court. Due to time differences between the United Kingdom and Australia, the cross-examination would have to be done at the end of the usual sitting day, in three to four blocks, with a 24 hour delay between each block; (6) The reasons proffered for Professor Thornthwaite's absence are not sufficient to ground the order sought by Unilever; (7) The evidence does not demonstrate any real practical impediment to Unilever in requiring Professor Thornthwaite to travel to Sydney to be cross-examined; (8) Unilever has had since January 2014 (when the Mitchum Clinical products were launched in the Australian market) to locate suitable witnesses. The reasons advanced for Professor Thornthwaite's absence were in existence before he swore his first affidavit. If Unilever was aware that Professor Thornthwaite could not travel to Australia, he should not have been called as a witness; (9) Professor Thornthwaite's credit is "likely" to be in issue. In oral submissions, counsel for Revlon, Dr Kremer, said that there was a "strong likelihood" of a submission reflecting adversely on Professor Thornthwaite's professed independence; (10) Performing Professor Thornthwaite's cross-examination by video-link would result in his evidence still being taken during and after a number of Revlon's witnesses are due to give and complete their evidence. Consideration 20 In my assessment, as the issues in the case have emerged, Professor Thornthwaite's evidence is likely to be of central importance. 21 Further, I consider that Revlon would be significantly disadvantaged by being required to cross-examine Professor Thornthwaite by video-link. This disadvantage will arise from the complexity of the subject matter of Professor Thornthwaite's evidence, the logistical difficulties of cross-examining him on a large volume of documentary material and the expected length of the cross-examination. It may be exacerbated by the possibility that issues of credit will arise, although I do not consider that to be a decisive factor. Even if the cross-examination was still estimated to take four hours, I would consider Revlon to be significantly disadvantaged in attempting to cross-examinate Professor Thornthwaite for that duration by video-link: cf Rossiter at [21] and [22]). Generally speaking, in the absence of a very compelling case, I would have only been willing to allow Professor Thornthwaite to give testimony by video-link for that length of time on subject matter of the complexity of Professor Thornthwaite's evidence if Revlon agreed to that course. 22 In the absence of Revlon's consent, subject to one consideration, I am not satisfied that a sufficient case has been made for allowing Professor Thornthwaite to give his undoubtedly complex, substantial and probably lengthy testimony by video-link. Although I accept the sincerity of Professor Thornthwaite's concerns, the evidence is insufficient to persuade me that they are well-founded. 23 The matter which requires particular consideration is the history of the proceedings and the fact that both the parties and the Court were operating, until after the commencement of the final hearing, on a shared assumption that Professor Thornthwaite would be permitted to give his testimony by video-link. In hindsight, this assumption should have been tested earlier and probably at least at the time that the evidence was estimated to require four hours. 24 However, as it happened, the limitations of the use of video-link were only brought home to the Court and the parties on 25 September 2014. In saying this, I am not referring to the attempted use of video-link to the Philippines. I am prepared to assume that the quality of any video-link to the United Kingdom will match the quality of the video-link to Toronto, Canada. My impression was that Professor Diamandis' cross-examination took significantly longer than would have been the case if he had been present in Court. In particular, there were difficulties in presenting documents to him. These problems were not large because the cross-examination was reasonably short and he was only required to address a few documents. However, my impression was that a cross-examination of the complexity, materiality and length of Professor Diamandis' cross-examination was towards the outer limit of what might be a reasonable use of video-link testimony. 25 For these reasons, I am not satisfied that the discretion to allow Professor Thornthwaite to give his evidence by video link should be exercised in Unilever's favour. 26 It may be that I could reach a different conclusion if I were satisfied that there is no other alternative, and that Professor Thornthwaite's concerns about travelling to Australia are reasonable and are unable to be accommodated. Possible alternatives might be adjourning the proceedings until arrangements can be made for Professor Thornthwaite to come to Australia, the identification of another witness who is able to adopt the evidence given by Professor Thornthwaite and taking Professor Thornthwaite's evidence in England. 27 I will hear the parties as to how the hearing should proceed in the light of this decision. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson. Associate: Dated: 3 October 2014