Smoker awarded $700,000 after evidence was destroyed

Introduction

These stories first appeared in The Age on April 12-13, 2002. They are reposted here with permission.

Australia’s biggest tobacco company destroyed thousands of internal documents to deliberately subvert court processes and to deny Melbourne lung cancer patient Rolah McCabe a fair trial, the Victorian Supreme Court found yesterday.

Mrs. McCabe, 51, who has only months to live, was yesterday awarded $700,000 in damages. Justice Geoffrey Eames said British American Tobacco Australia Services and its lawyers, Clayton Utz, destroyed the documents so that they would not have to be produced in health-related court cases.

Justice Eames last month struck out the tobacco company’s defense and ordered a jury to assess the damages Mrs. McCabe would receive. It was the first time in Australia that a smoker has beaten a tobacco company but the decision was suppressed until the jury’s verdict yesterday.

The outcome in the landmark case could lead to a flood of similar lawsuits, according to Quit Victoria. “These documents weren’t destroyed to deny Mrs. McCabe a fair trial, but to deny any smoker who might one day sue the company a fair trial,” said executive director Todd Harper. “Now any smoker who sues British American Tobacco Australia may also have their case proceed to an assessment of damages without having to prove liability.”

Justice Eames yesterday lifted the suppression order, which was contested by The Age and other groups, after rejecting an application by British American Tobacco that it continue until an appeal against the strikeout ruling is heard. Slater & Gordon’s senior partner, Peter Gordon, said the result cleared the way for others to take action against tobacco companies. He said the case revealed an international conspiracy by company executives and lawyers in the United States, Britain and Australia to destroy evidence.

Justice Eames found the company also had obliterated CD-ROMS on which 30,000 documents were imaged, as well as lists of the documents. “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,” he said.

Documents were warehoused by Clayton Utz and held offshore on behalf of the firm. Evidence was given during the hearing that in Australia documents were destroyed in several waves: in 1985, 1990 and following a review in 1992 and 1998.

In his 133-page ruling, Justice Eames says the company’s instructing solicitor, Richard Travers, from Clayton Utz, and Robyn Chalmers, chairman of the board of Mallesons Stephen Jaques, were reluctant to make full and frank statements about the destruction of the documents.

Justice Eames found it was Mr. Travers’ intention to mislead Mrs. McCabe’s lawyers, Slater & Gordon, in order to gain an advantage for the company. Ms. Chalmers was retained by Clayton Utz to do the discovery of documents in Mrs. McCabe’s case. Under the court’s discovery rules, parties to litigation exchange relevant information before formal trial hearings begin. Justice Eames concluded that Ms. Chalmers had not consciously prepared what she believed to be misleading and evasive affidavits “but that was their effect” because she had been denied important information by Clayton Utz.

The court heard that in March 1990, Clayton Utz solicitor Brian Wilson proposed a new document retention policy. “The advice was, in effect, get rid of the documents but claim an innocent intention,” the judge said. On April 2, 1990, notes taken at a meeting of tobacco company executives with Clayton Utz record Mr. Wilson as saying: “keep all research docs which become 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.”

After the suppression order was lifted yesterday, Clayton Utz issued a statement denying it was the architect of the document policy and that it had not advised Wills on document management after 1992. “Our firm has never advised Wills or BATAS to dispose of prejudicial documents so that their production could be avoided in tobacco litigation,” said the company’s chief executive partner, David Fagan.

Justice Eames outlined how Clayton Utz solicitors and the tobacco company worked with “an army of litigation lawyers” in the United States and Britain from the mid-1980s to systematically destroy documents.

In 1985, the company’s lawyers were anticipating a “wave of litigation” related to smoking and health. “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,” the judge found.

Clayton Utz advised on and approved the tobacco company’s document retention policy, which Justice Eames earlier said could equally be described as a document destruction policy. “I am 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,” Justice Eames said.

Justice Eames also was critical of several company executives, including company secretary John Namey, and former chief counsel, Nick Cannar. BATAS was created in the 1999 merger of W. D. &H. O. Wills and Rothmans.

Read the McCabe v. British American Tobacco Australia Services Judgment