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Court in the Act
21 November, 2006  
Rolah McCabe rolls on

The Age and the Financial Review want to publish more from the secret Clutz investigation into the conduct of its lawyers in big tobacco litigation. The cancer stick boys are fighting with every ounce of their emphysema breath to stop any more unpleasant stories. Ginger Snatch reports

A fresh round of tobacco litigation is generating clouds of smoke and plenty of expectoration.

Justice Paul Brereton has ordered (Nov. 9) British American Tobacco’s Australian offshoots to produce documents called for by Fairfax newspapers that could reveal “an iniquity” perpetrated by the company and its former lawyers, Clayton Utz.

Brereton said it was “on the cards” that the documents – internal communications between Mallesons Stephen Jaques, the cigarette companies and Clayton Utz – could contain an admission of past “iniquitous” conduct.

This is a prelude to an important struggle by the Fairfax papers to publish further details of an internal investigation conducted by Clutz into the behaviour of its people in the Rolah McCabe litigation.

imageIn April 2002 McCabe (snap) was awarded damages of $700,000 by a jury after Justice Geoffrey Eames struck out the BAT defence because he found so many of the company’s documents had been destroyed pursuant to its “document retention policy”.

BAT appealed, arguing that the trial judge’s discretion had been wrongly exercised. The Court of Appeal, in an extraordinary decision, found it was lawful to destroy documents before the formal commencement of legal proceedings, even where there was an expectation that litigation might soon commence. The appeal judges thought that striking out a defence in this sort of situation could only be justified where the destruction amounted to contempt or an attempt to pervert the course of justice.

It was such bad law that the Victorian parliament overturned it with amendments to the Evidence Act that restored a judge’s discretion to deal with pre-commencement document destruction.

A criminal offence was also created to apply in circumstances where documents relevant to litigation were destroyed. There was also a new Victorian professional conduct regulation dealing with legal advice about “document retention”.

Another round in the NSW Supreme Court before Brereton is set-down for Thursday (Nov. 23).

On November 2 the judge granted the BAT companies an interim injunction against Fairfax papers publishing articles about the leaked internal Clutz report on the McCabe case.

The Australian Financial Review was seeking to follow-up the scoop by The Sunday Age’s Bill Birnbauer, who started the ball rolling on October 29 with the publication of articles about aspects of Clutz’ internal investigation.

Suffice it to say that The Sunday Age’s reports of the Clutz investigation did not cast some members of the firm, including former members, in an attractive light. The articles suggested serious ethical misconduct, including deliberate deception of the Victorian Supreme Court and Rolah McCabe’s lawyers.

The Age web site still carries some commentary by legal academics about those stories.

imageThe Victorian Attorney General, Rob “Fuckin” Hulls (snap) said that he would refer any improper conduct by the law firm to the government solicitor. McCabe’s lawyers, Slater & Gordon, also said that grounds to reopen the case were being explored.

Clutz’ chief executive partner David Fagan issued a statement, saying:

“The allegations made in The Sunday Age articles were thoroughly dealt with in the Court of Appeal in BATAS v Cowell and were also subject to a full regulatory investigation in both Victoria and NSW.

The Court of Appeal exonerated Clayton Utz of any wrong doing.

The draft internal partnership documents referred to in the newspaper articles were never finalised and were superseded by the investigations undertaken by the Victorian Legal Ombudsman and the NSW Legal Services Commissioner, who had full access to all files and statements by the individuals involved.

Clayton Utz partners, both current and former, were exonerated by those investigations.

Clayton Utz is disappointed and concerned draft confidential internal partnership material was disclosed in the manner it was by The Age newspaper.”

The Age subsequently quoted NSW Legal Services Commissioner, Steve Mark, as not entirely agreeing with Fagan’s line:

“It may be that I deem, as the DPP might deem, that there’s not sufficient evidence to prosecute. That’s far from being an exoneration.”

The Age said that it believed that the Victorian Legal Ombudsman had held a similar view.

Former Clutz tobacco partner Richard Travers also released to the Financial Review a letter to his solicitor from the Victorian Legal Ombudsman which he said cleared him of any misconduct. Travers had been sharply criticised by Justice Eames in his judgment. The letter from the VLO, Kate Hammond, said in part:

“I am satisfied there is no reasonable likelihood that the Legal Profession Tribunal would find your client guilty of misconduct or unsatisfactory conduct.”

The proposed next round of stories by The Age and the AFR are expected to concentrate on other aspects of the leaked Clutz report – including the litigation strategy with Mallesons in the earlier Cremona case.

Clutz is not part of the suppression application. The Batty boys are seeking to suppress documents that are not theirs.

The subpoenas and notices to produce from both Fairfax and The Age are part of a move to establish that the tobacco companies engaged in an “iniquity” with their lawyers.

The newspapers are seeking to argue that the tobacco companies should not be able to keep privileged any documents that disclose potentially unlawful behaviour.

Before argument commenced on November 9, Fairfax and The Age produced documents called for on November 7 by the BAT companies. This included material from Bill Birnbauer and some documents marked “confidential”.

The application by the Batties to set aside Fairfax’s notice to produce and its subpoena to Clayton Utz was conducted in a courtroom reeking of tobacco lawyers; some 30 in all.

Tony Meagher SC, for British American Tobacco Australian Services, opposed Fairfax’s notice to produce on grounds of legal professional privilege.

“It’s our privilege, not a privilege of Clayton Utz,” he told the court before adding that BATAS was satisfied Clayton Utz was not going to divulge the privileged documents.

Meagher claimed the subpoena was a “fishing expedition” and the notice to produce was “oppressive” in requiring BATAS to reveal the content of a particular document relating to a meeting on April 30, 1997.

Tom Blackburn SC, for Fairfax, argued that the claims of professional privilege were “very weak” and suggested that BATAS and British American Tobacco Australia Ltd were not genuinely concerned with the disclosure of some of the so-called “privileged” documents.

Stopping short of alleging an abuse of process, Blackburn argued that the tobacco companies’ lack of real concern was relevant to both the pursuance of an “iniquity” and the public interest.

Brereton noted that the plaintiffs were still entitled to bring a claim of privilege over documents they “couldn’t give a hoot about”.

“If covering up an iniquity is the purpose, then that’s an abuse of process,” Blackburn responded.

Michael Wheelahan SC, for BATAL, argued that a requirement to produce was only relevant to charges of an abuse of process and Fairfax wasn’t alleging that.

He objected to Fairfax’ call for documents relating to communications between Clayton Utz and BAT Australia “from 2002 and thereafter” on the basis of professional privilege.

Some documents called for by Fairfax were ruled out of contention by the judge. Brereton ruled that the tobacco companies would not have to produce material relating to discussions about the “document retention policy”.

He also set aside Fairfax’ notice to produce documents relating to the internal decision-making process and reasoning behind the injunction sought against Fairfax newspapers by the BAT companies, saying they lacked “apparent imagerelevance” to the main case.

Banki Haddock Fiora is acting for Fairfax because its usual solicitors, Freehills, are conflicted, having acted for Clayton Utz grand fromage Brian Wilson (snap) in the Victorian Court of Appeal in the McCabe case.

On Thursday (Nov 23) there’ll be a battle over a hefty notice to produce to the Batties from The Age, and thereafter it’s all on for the injunction hearing on November 29.

It is a fight between the nobility of journalism and the deceit and rottenness of cancer stick companies. Who on earth deserves to win?


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