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Yesterday a court awarded Melbourne grandmother Rolah Ann McCabe $700,000 in damages after she sued one of the world’s leading tobacco companies. The case revealed how the Firm was prepared to go to extraordinary lengths to win.

In 1996 when Phyllis Cremona sued tobacco companies for smoking-related illness, her lawyers were snowed under by thousands of documents.

The pile of internal papers had been supplied by W.D. & H.O. Wills, one of the companies involved in the lawsuit, because it was obliged to do so under legal process. With headings such as “Wills’ knowledge of risks of lung cancer” and “Presence, qualities and effects of nicotine”, the documents had the potential to seriously damage the company’s case.

The company’s legal team rated the papers on a scale of one to five – five being a knockout blow for the company, one a knockout blow for Phyllis Cremona.

Wills had spent $2 million and six months sifting through hundreds of thousands of documents dating back decades before identifying about 30,000 that might be relevant to the case. Of these, 11,600 were given to her lawyers and the rest were set aside. W.D. & H.O. Wills had unearthed the papers as part of the “discovery process”, an integral part of legal proceedings. It is governed by court rules and involves the parties exchanging information before formal hearings start.

Mrs. Cremona, who was seriously ill, discontinued her action for damages in 1998. Legal sources said she was overwhelmed by the financial muscle of the tobacco companies.

This year, another Melbourne resident, Rolah McCabe, 51 – dying from lung cancer and said to have only months to live – sued the same company, renamed after a merger as British American Tobacco Australia Services Ltd (BATAS), a subsidiary of the world’s second biggest tobacco manufacturer, British American Tobacco.

Mrs. McCabe’s lawyers, Slater & Gordon, were stunned when they were handed only 844 documents, of which 788 were advertisements for the Capstan and Escort brands that Mrs. McCabe smoked.

What had happened? How was it that Mrs. Cremona’s lawyers had 11,600 documents while Slater & Gordon were given only a handful that were of any use?

Slater & Gordon’s explanation was that after the Cremona case was settled, BATAS destroyed thousands of documents under its so-called document retention policy. But even more extraordinary was the charge that two of Melbourne’s blue-chip legal firms, Clayton Utz and Mallesons Stephen Jacques, had helped.

Such breaches of the rules – particularly suppression or destruction of documentation – is regarded seriously by the courts. In some cases it can result in the defense case being thrown out, something Slater & Gordon relentlessly pursued over 16 days in the Supreme Court in a closed-door hearing before the McCabe hearing began.

Their lawyers argued that Mrs. McCabe would not receive a fair trial because documents that would have assisted her case were destroyed and that BATAS had failed to comply with discovery obligations.

Mrs. McCabe’s robust counsel, Jack Rush, QC, declared: “The company has absolved itself of corporate memory. It is almost breathtaking in its audacity.”

BATAS, through its lawyers, Clayton Utz, argued that there was nothing sinister about the document policy and denied there was any evidence of selective culling of documents ahead of impending litigation.

Clayton Utz warned that striking out the defense would be an “extreme remedy” with serious consequences for future proceedings.

The Supreme Court judge who heard the strike-out application, Justice Geoffrey Eames, found that Clayton Utz had misled both Slater & Gordon and himself in correspondence on the discovery issue.

He concluded that the discovery process had been subverted by BATAS and Clayton Utz with the deliberate intention of denying Mrs. McCabe a fair trial and struck out the defense. Once the McCabe case began, Clayton Utz found themselves in the unenviable position of having to argue not over whether Mrs. McCabe should receive damages, but how much.

Between November 23, 1990, and March 6, 1998, W.D. & H.O. Wills had in place hold orders – “no shredding” directives while legal proceedings in the Cremona case and another were before the courts.

The hearing before Justice Eames heard that once those cases were resolved, the company began shredding in earnest. The McCabe case hadn’t been lodged and no other litigation had been signaled.

But Justice Eames found thousands of documents were destroyed even though Wills knew further proceedings were a “near certainty.”

Called as a witness, Wills’ former corporate counsel, Graham Maher, told the hearing that after the Cremona case there was a sense of urgency about implementing the company’s document policy.

He had concerns about his own position as a lawyer in the process and had sought legal advice from Robyn Chalmers, a partner with law firm Mallesons Stephen Jacques who had been responsible for reviewing and collecting the Cremona discovery documents.

Mr. Maher told her many of the Cremona documents required destruction as the retention policy was to keep documents for five years only. In her response on March 19, Ms. Chalmers said that there was “no specific obligation on you to retain documents for the purposes of legal proceedings where no such proceedings have been commenced.

“You are entitled to destroy any documents subject to the legislative requirements but, as you have been advised previously, the court may draw an adverse inference from the destruction of such documents, depending on the circumstances of the destruction.”

In other words, it was a calculated risk – destroy but possibly suffer in court as a result.

Mr. Maher could not say how many Cremona documents were destroyed, nor was there a permanent record of them. Justice Eames offered some clarity. He described what happened as “mass destruction.”

He said: “In my view, Maher was relying on legal advice from Chalmers to provide his defense if the destruction was later criticized, and Chalmers in turn was relying on not being told anything that would embarrass her in giving advice.” Last year, Clayton Utz asked Ms. Chalmers to run the legal discovery process in the McCabe case.

In an affidavit about the McCabe discovery on December 6, 2001, Chalmers said BATAS was unable to locate documents listed in a letter from Slater & Gordon, “but our review is continuing.”

Under questioning before Justice Eames she agreed she had not mentioned the destruction of the documents in her affidavit as it “wasn’t relevant to what that affidavit was for, which was to set out what was needed in the McCabe discovery and to ask for more time.”

The court heard that on November 28 last year, Clayton Utz advised Slater & Gordon that the general discovery involved in the Cremona case bore little relationship to the specific categories of discovery sought in McCabe.

“After the case (Cremona) was withdrawn, the documents of which discovery was given were not retained as a discrete group but were dealt with in accordance with the defendants’ internal document handling processes.” Asked whether this said anything about the documents being destroyed, Chalmers said: “No, it doesn’t.”

Evidence in documents before the court and in internal company records obtained by The Age show that in the mid-1980s tobacco companies and lawyers around the world were preparing for litigation.

British American Tobacco’s US arm was becoming concerned that documents from its affiliated companies might be produced in court cases under US product liability laws.

It sought advice on whether such documents held by BAT Industries or the UK group, BATCO, might be discoverable by plaintiffs in litigation against its local firm, Brown & Williamson.

“This is the most significant legal issue affecting BATUS,” David

Schechter, BATUS general counsel, told a closed meeting of the BATUS board in April, 1985.

In Australia, concern about legal action also intensified in 1985. A Kansas city law firm specializing in tobacco litigation, Shook, Hardy & Bacon — advisers to Brown & Williamson – briefed two senior Clayton Utz lawyers, Brian Wilson and Glenn Eggleton.

They had been retained by the Tobacco Institute of Australia and its member companies to prepare for possible litigation.

In 1985, Wills was anticipating what its lawyers, Clayton Utz, described as a “wave of litigation.”

In December that year, Wills introduced a document retention policy, following a review and advice from Clayton Utz.

Justice Eames said: “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.”

On May 15, 1986, a meeting took place at BATCO’s Millbank site in the UK between its then senior legal counsel, Nick Cannar – who later transferred to Australia – and the group’s legal advisers from Lovell, White and King.

Minutes of the meeting show that involvement in the document retention policy went right to the top of the company and that Sir Patrick Sheehy, the chairman of BAT Industries, was aware of the sensitivities.

The minutes quote Cannar as saying that “Mr. Sheehy did not wish it to be seen that BATCO had instituted a destruction policy only when the possibility of their being involved in litigation became real and after they had instructed solicitors.”

Rather than a destruction policy, it was decided that BAT’s research and development center, where the scientific work on smoking was held, would merely “tidy up the loose papers held by individuals.”

By 1989, Clayton Utz, according to partner Brian Wilson, was “fully prepared to defend a tobacco product liability claim anywhere in Australia and would be confident of successfully defending such a claim.”

The following year, Wills decided to review its 1985 document policy.

Andrew Foyle, a solicitor with BATCO’s UK lawyers, Lovell White Durrant, produced a detailed memorandum, citing a number of problems. with Wills’ policy including that the wording, coupled with the timing of its introduction, “might lead to the inference that the real purpose of the policy was to destroy sensitive smoking and health documents.”

In suggesting remedial action, Mr. Foyle posed a series of questions, including: Is there any reason why Wills should not now destroy its copies of most of the (research) reports and “would the termination or the restriction of Wills’ access to the reports database on the BATCO computer cause any problems?”

Responding to a request from Wills for advice on the Foyle memo, Brian Wilson from Clayton Utz reassured that Wills’ destruction of documents had not occurred during any litigation but “in a situation where litigation has been and still is contemplated.”

Wilson said the wording of the policy – about cost efficiency, litigation support and sabotage prevention – indicated a positive intent rather than interference in the course of justice.

“The advice was, in effect, get rid of the documents but claim an innocent intention,” Justice Eames noted.

Several days after this advice, on April 2, 1990, notes taken at a meeting of Wills executives, attribute Mr. Wilson as saying, “keep all research documents, 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.”

In January, 1992, BATCO informed Wills that its board had decided there was an urgent need to introduce a comprehensive and consistent records management program across all operating companies.

Wills’ former company secretary and newly appointed records manager, Michael Harrison, flew to Kuala Lumpur in March, 1992, for a meeting led by David Schechter.

“It was made clear to me at this conference that it would be my responsibility to return to Australia, devise, draft and then implement a records management program for the Wills Group of companies,” he said in an affidavit.

On his return, “large quantities of documents” were destroyed. By November, Harrison took long-service leave and retired. He denied the aim was to destroy documents that would be damaging in court.

In February, 1992, during a multi-party call that included BATUS’s Schechter, Shook, Hardy & Bacon partner, Northrip, and Andrew Foyle, Robyn Chalmers took notes on a Mallesons Stephen Jacques pad.

Northrip’s words were prophetic. Under the heading “Dispose of documents”, Chalmers quoted Northrip saying, “pro is you get rid of them. Con (plaintiff’s) firm may persuade court to more readily allow (discovery) from BATCO or order Wills to get the docs or a sanction will be imposed. Australian firms believe both of these will be very difficult. More likely court will say Wills acted improperly and sanction Wills. Greatest sanction would be deny a defense.”

The paper trail


1985 W.D. & H.O. Wills is told to expect a wave of litigation relating to smoking and health. Wills introduces a document policy after advice from Clayton Utz.

1989 Clayton Utz declares it is ready to fight claims. for smoking-related diseases anywhere in Australia.

1990 Wills reviews its documents policy, after advice the original policy could give the impression the policy’s real purpose was to destroy sensitive documents.

Senior Clayton Utz lawyer Brian Wilson is attributed as advising that Wills keep documents public and present them in court proceedings, adding “as to other documents, get rid of them …”

1992 After UK-based parent company BATCO orders a new policy, Wills destroys “large quantities of documents.”

1996 Emphysema patient Phyllis Cremona sues Wills.

Wills finds about 30,000 internal documents potentially relevant to the case.

1998 Cremona withdraws her legal action and Wills destroys thousands of documents.

2001 Rolah McCabe sues Wills, and her lawyers Slater & Gordon are handed only 844 documents, 788 of which are for cigarette advertisements.

2002 Slater & Gordon succeed in striking out Wills’ defense of the McCabe claim after a judge finds Wills and Clayton Utz had subverted justice.


A partner with law firm Mallesons Stephen Jacques. Justice Eames said Chalmers was “relying on not being told anything that would embarrass her in giving advice” when she was asked for advice on destruction of documents.


Senior lawyer with Clayton Utz. His advice on document destruction was “in effect, get rid of the documents but claim an innocent intention,” Justice Eames noted.

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