When Discovery Becomes the Risk: Lessons from Otsuka v Generic Health (No 4)
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Published: 18 November 2025 | Reviewed: 18 November 2025
(3-minute read)
Case Summary
In Otsuka Pharmaceutical Co., Ltd v Generic Health Pty Ltd (No 4) [2021] FCA 416, the Court refused an application for additional discovery in long-running PBS and patent-related enforcement proceedings. The Commonwealth had already provided extensive discovery across 24 categories. Otsuka/BMS sought five more.
Justice Yates emphasised that discovery must remain proportionate and directed to genuine issues. He reiterated the Court’s obligation under r 20.11 of the Federal Court Rules and s 37M of the Federal Court Act:
“The Court must be vigilant to ensure that excessive and wasteful discovery does not occur”.
The evidence showed the Commonwealth had already undertaken over 1,300 hours of discovery work. Additional categories would require:
re-searching files already searched,
reviewing material across a six-year span,
involving multiple government agencies, and
months of solicitor review to determine relevance and privilege.
Several proposed categories also duplicated existing ones. Others sought documents of marginal relevance or relied on case theories that should have been raised earlier. The Court accepted Mr Korbel’s evidence that the further discovery would take at least seven months and impose “very significant” cost.
Justice Yates dismissed the application, noting the lack of justification for imposing a late, heavy discovery burden without new issues being raised.
Why It Still Matters
Discovery is one of the most common drivers of unexpected cost blow-outs in commercial litigation. This judgment shows how late or unfocused requests, especially when duplicative, can increase cost, delay, and uncertainty, even when ultimately unsuccessful.
Clients often assume discovery is simply a procedural step. In reality, it becomes a structural risk when teams preparing for trial also control the scope of earlier investigative work. The incentives can subtly tilt toward “just in case” document searches rather than disciplined relevance.
Here, the Court’s reasoning illustrates a core systemic tension: parties face pressure to over-collect to protect against hypothetical arguments, yet the legal system requires proportionality. That tension is frequently borne by the client in the form of spiralling legal costs.
How to Avoid the Same Trap
Safeguard Focus: Cost Alignment
This case is fundamentally about cost discipline and proportionality. The structural risk is clear: when the same litigation team prepares for both settlement and trial, clients can end up funding both pathways simultaneously, particularly through expanding discovery.
Clean Law’s cost-alignment design separates the settlement lawyer from the trial lawyer. Because each lawyer is funded for one path only, not both, the system is built to prevent the incentives that typically inflate discovery.
As explained in Clean Law’s public materials:
“Two lawyers often cost less than one - because you fund one path, not both.”
In the context of this case:
A settlement lawyer focuses on narrowing issues early.
A trial lawyer engages only when genuinely necessary, and only on the refined record.
Neither has an incentive to expand discovery for defensive reasons.
Clients avoid paying for duplicated work or “just in case” document review.
This structural separation mirrors the discipline the Court required in Otsuka: focus on what is genuinely relevant, avoid re-searching old ground, and prevent unnecessary cost.
To explore how this safeguard works in practice, the detailed explainer is here:
Reflection
When courts speak about proportionality, they are speaking directly to clients’ real-world experience: litigation becomes risky not only because of legal outcomes but because of uncontrolled process costs. Structural safeguards matter because they prevent these risks before they arise.
If you are facing a dispute where discovery, expert work, or strategic uncertainty could escalate, a confidential conversation often helps clarify the safest structural pathway.
Speak Confidentially with a Clean Law Lawyer
By Nicky Wang
Principal Solicitor
Legal Liaison Ltd (trading as Clean Law)
Prepared in accordance with public-interest governance,
annual Law Society trust-account audits, and ACNC-reported standards.
Disclaimer: This page is intended to provide general information only and is not legal advice. The contents may not reflect the most current legal developments and do not take into account your individual circumstances. You should not act or refrain from acting on the basis of this information without obtaining legal advice tailored to your situation.
