Alphapharm Pty Ltd v Eli Lilly Australia Pty Ltd
[1996] FCA 723
•14 AUGUST 1996
CATCHWORDS
PRACTICE AND PROCEDURE - discovery - whether documents subject to legal professional privilege - status of copies prepared for submission to expert for preparation of report - whether contents of documents had been disclosed and privilege waived.
Evidence Act 1995 (Cth) ss118 and 119
Trade Practices Commission v Sterling (1979) 36 FLR 244
Propend Finance Pty Ltd v Commissioner of Australian Federal Police (1995) 58 FCR 224
Nickmar Pty Ltd v Preservatrice Skandia Insurance Ltd (1985) 3 NSWLR 44
Grant v Downs (1976) 135 CLR 674
Wheeler v Le Marchant (1881) 17 ChD 675
Corporation of Bristol v Cox (1884) 26 ChD 678
Trade Practices Commission v Port Adelaide Wool Co Pty Ltd (1995) 132 ALR 645
Buttes Oil Co v Hammer (No. 3) 1981 QB 223
Attorney General for the Northern Territory v Maurice (1986) 161 CLR 475
No. NG 432 of 1996
ALPHAPHARM PTY LTD -v- ELI LILLY AUSTRALIA PTY LIMITED
MOORE J
SYDNEY
14 AUGUST 1996
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 432 of 1996
)
GENERAL DIVISION )
BETWEEN: ALPHAPHARM PTY LTD
Applicant
AND: ELI LILLY AUSTRALIA PTY LIMITED
Respondent
JUDGE: Moore J
PLACE: Sydney
DATE: 14 August 1996
ORDER OF THE COURT
THE COURT ORDERS AND DECLARES THAT:
The documents identified in paragraphs 4, 19, 23, 24, 25, 28 and 53 of Part 2 of Schedule I of the respondent's List of Documents dated 11 July 1996 ("Part 2") are subject to legal professional privilege.
The documents identified in paragraphs 49 and 62 of Part 2 are subject to legal professional privilege save for the copies of the affidavits of Dr John Bartley dated 9 May 1996 and Mrs Jane Maree Plomley of 9 May 1996 and the draft affidavit of Dr Gerald Holden which are not.
The documents identified in paragraphs 2 and 5 of Part 2 are not subject to legal professional privilege.
The respondent file and serve all affidavits on which it intends to rely which relate to
(a)the documents identified in paragraph 4 of Part 2;
(b)pages 2173 and 2175 of the bundle of documents identified in paragraph 49 of Part 2;
(c)pages 2817 to 2823, 2826, 2827, 2850, 2869 to 2872 and 2887 to 2889 of the bundle of documents identified in paragraph 53 of Part 2;
(d)pages 4548 to 4551, 4568 and 4574 of the bundle of documents identified in paragraph 62 of Part 2; and
(e)any issues or matters arising out of the documents identified in (a) to (d) above
by 3 September 1996, or in accordance with any further directions of the Court or consented to by the applicant, and not otherwise without the leave of the Court.
The respondent not be permitted, unless with the leave of the Court, to tender at the trial of the proceedings
(a)the documents identified in paragraph 4 above; and
(b)any documents relating to the issues or matters raised in the documents identified in paragraph 4 above.
The costs of the notice of motion be the costs in the principal proceedings.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 432 of 1996
)
GENERAL DIVISION )
BETWEEN: ALPHAPHARM PTY LTD
Applicant
AND: ELI LILLY AUSTRALIA PTY LIMITED
Respondent
JUDGE: Moore J
PLACE: Sydney
DATE: 14 August 1996
REASONS FOR JUDGMENT
INTRODUCTION
These are interlocutory proceedings concerning two related issues arising in litigation between Alphapharm Pty Ltd ("Alphapharm") and Eli Lilly Australia Pty Limited ("Eli Lilly") under the Trade Practices Act 1974 ("the principal proceedings"). The principal proceedings were commenced by application filed on 28 May 1995. They followed earlier proceedings in which Alphapharm sought an order under O15Ar6(b) for pre-action discovery of documents. That application was dismissed by Lindgren J on 24 May 1996.
Alphapharm is a manufacturer and supplier of general pharmaceutical products in Australia. It manufactures,
markets, distributes and supplies an anti-depressant drug which is marketed under the name "Zactin". Eli Lilly is a wholly-owned subsidiary of Eli Lilly and Company which is a corporation incorporated under the laws of the United States. Eli Lilly supplies pharmaceutical products to the Australian market which include an anti-depressant drug marketed under the name "Prozac". The sequence of events giving rise to the principal proceedings and the nature of the relief sought have been described in detail in judgments of Lindgren J of 24 May and 30 July 1996. His Honour has had the general pre-trial conduct of the principal proceedings which are listed for trial on 30 October 1996. I will repeat only so much of the history as is necessary to deal with the issues raised in these interlocutory proceedings.
THE BACKGROUND
Both Prozac and Zactin contain the same active ingredient, fluoxetine hydrochloride, though the drugs differ in their overall chemical composition. That difference results from the use of different non-active ingredients which in Prozac is starch and in Zactin is lactose. Until December 1994 Eli Lilly enjoyed the protection of the Patents Act 1952 in its use of fluoxetine hydrochloride. However on 24 December 1994 Eli Lilly's patent expired with a consequence that other drugs containing the same active ingredient might be sold on the Australian market. Sale of such drugs did not depend solely on the expiration of the patent and a regime of legislative approval needed to be met. Approval for the sale of Zactin was given by the Therapeutic Goods Administration and was included in the Australian Register of Therapeutic Goods as provided for in the Therapeutic Goods Act 1989. In February 1996 Zactin was listed in the schedule of pharmaceutical benefits under the National Health Act 1953 as a bioequivalent of Prozac.
The inclusion of Zactin in the schedule in these terms is the subject of proceedings brought under both the Administrative Decisions (Judicial Review) Act 1977 and Section 39B of the Judiciary Act 1903 ("the ADJR Proceedings"). The terms in which the application was framed in the ADJR proceedings ("the ADJR application") are relied upon by Alphapharm in resisting Eli Lilly's claim of privilege in these proceedings. The ADJR proceedings were commenced on 25 March 1996. Several of the grounds in the ADJR application refer to data that was said to be relevant to the decision to include Zactin in the schedule. The relevant grounds are:
In breach of the rules of natural justice in connection with the making of this decision, the Delegate failed to provide the Applicant with an opportunity to submit data concerning the lack of equivalence including the differing formulation and clinical effect between its product and Zactin, and thereby, implications for safety and efficacy should the products be listed as equivalent, when in all circumstances the Applicant had a legitimate expectation that such would be sought either from it and/or from other sources.
The Delegate failed to take into account, or alternatively failed to sufficiently consider any, data demonstrating adverse implications for safety and efficacy in Zactin's formulation using lactose as excipient and lack of equivalence between the products including different clinical effect.
...
The decision was so unreasonable that no reasonable person considering the application for listing of Zactin as equivalent to Prozac and the implications thereof would have made the decision when data to the contrary was available and relevant to consideration of the application especially given the implications arising from known formulation difference between them.
The decision involved an error of law in that (the) Delegate failed to consider or to consider sufficiently, data concerning the nature and effect of the formulation of Zactin using lactose as an excipient with fluoxetine hydrochloride and the known implications thereof for safety and efficacy, during consideration of the application for listing and the question of equivalence." (emphasis added)
The principal proceedings arose from a letter sent by Eli Lilly in the month following the commencement of the ADJR proceedings. The letter, dated 16 April 1996, was sent to pharmacists and concerned whether Zactin and Prozac were equivalent. The letter is foundational to the claims of Alphapharm in the principal proceedings. It read:
"16 April 1996
Dear Pharmacist
RE:Prozac® (fluoxetine, HCl, Lilly) and Zactin (Alphapharm)
As we previously advised in a letter to you on 27 February 1996 a non Eli Lilly generic version of Prozac® called Zactin has been available on the PBS since February 1st 1996.
Eli Lilly is of the view that Prozac® and Zactin are not identical products.
Prozac®, available in Australia since 1990 with a safety and efficacy profile known to you and your patients, is formulated with starch as the filler, Zactin, on the other hand, is formulated with lactose as the filler. Fluoxetine, the active ingredient of Prozac® and Zactin reacts with lactose to some extent.
Eli Lilly is concerned enough about this reaction to have decided to challenge the decision by the PBAC to list Prozac® and Zactin as bioequivalent on the PBS. Eli Lilly's concern is in part based upon its findings that the reaction of fluoxetine with lactose can lead to reduced quantities of fluoxetine being available and the creation of various degradation products, some of which have yet to be precisely identified.
It is the view of Eli Lilly that the safety and efficacy record of Prozac® should not be used to support the safety and efficacy of Zactin because that product has a different formulation.
We will keep you informed of developments. If you have any queries or require further information simply call the Eli Lilly Medical Information Services department on 02 325-4622.
Yours faithfully,
ELI LILLY AUSTRALIA PTY LIMITED" (emphasis added)
THE ISSUES
The issues in these interlocutory proceedings are related. The first is whether certain documents which Eli Lilly resists discovering are privileged as it claims. The claim is founded on legal professional privilege. The determination of that issue arises from a direction given by Lindgren J on 22 July 1996 though it would appear his Honour contemplated that any residual issues about the inspection of documents would be dealt with by him. The related issue concerns orders sought by Alphapharm in a notice of motion filed 12 July 1996 which, inter alia, limit the use that might be made by Eli Lilly of information contained in documents which are privileged.
In the principal proceedings Lindgren J gave a direction on 31 May 1996 that the parties file and serve verified lists of documents by 21 June 1996. The list of Eli Lilly was filed on 18 July 1996 and Part 2 of Schedule 1 of the list identified documents or bundles of documents for which legal professional privilege was claimed. A supplementary list was filed on 24 July 1996. After the initial list was filed correspondence passed between Alphapharm's solicitors, Mallesons Stephen Jacques, and Eli Lilly's solicitors, Dunhill
Madden Butler. The correspondence led to a letter of 17 July 1996 from Dunhill Madden Butler to Mallesons Stephen Jacques waiving privilege in relation to all but a limited number of the documents in the original list.
A claim of privilege is maintained by Eli Lilly in relation to the residual documents, which Alphapharm seeks to impugn on three bases:
(i)Eli Lilly has waived its privilege and did so having regard to the terms in which the ADJR application were framed and the terms of the letter of 16 April 1996.
(ii)The principal purpose for which some or all of the documents were brought into existence was to further a campaign being conducted by Eli Lilly in the marketplace to discredit other products, including Zactin, marketed in competition with Prozac. That being so then the documents were not privileged whether the legal professional privilege depends upon the sole purpose or the dominant purpose of their creation.
(iii)Some documents were not original documents but copies.
Alphapharm contends that a document which is a copy made for the purposes of litigation is not privileged if the original document is not a privileged document.
PRIVILEGE - STATUS OF COPIES
The documents for which privilege is presently claimed contain documents which are plainly copies of original documents or copies of copies. It is convenient to describe the documents by adopting, for present purposes, the description used by Mr Simon Rubenstein, who is a solicitor employed by Dunhill Madden Butler, in an affidavit sworn 26 July 1996. His description is:
Documents numbered 2 and 5 of Part 2 of Schedule 1 of the list of documents are memoranda dated 14 February, 1996 and 12 March, 1996 respectively from sales agents received as part of the response to the respondent's enquiries and investigations regarding the threatened proceedings, referred to in the above paragraph.
Document No 4 of Part 2 of Schedule 1 of the list of documents is an internal e-mail message dated 8 March, 1996 from Philip Wyatt to Dr Fred Perry ("Perry") of Eli Lilly & Company, requesting the provision of information for the purpose of Federal Court proceedings No VG 144 of 1996 ("the ADJR Act Proceedings").
Document No. 19 of Part 2 of Schedule 1 of the list of documents is a facsimile dated 6 May, 1996 from Perry to Philip Wyatt enclosing information to enable the engagement of an independent laboratory to prepare a report for the purpose of these proceedings.
Document No. 23 of Part 2 of Schedule 1 of the list of documents is a facsimile from Perry to Philip Wyatt dated 21 May, 1996 enclosing further information for the same purpose as document 19 referred to in paragraph 10 above.
Documents No. 24 and 25 of Part 2 of Schedule 1 of the list of documents are two facsimiles from Perry to Philip Wyatt each dated 30 May, 1996 in which Perry provided his comments on affidavit material, which was filed by the applicant and respondent in Federal Court proceeding No. G351/1996 ("The Pre-Trial Discovery Proceedings"), sent to him for comment. Those comments were provided to our firm for the purpose of those proceedings.
Document No. 28 of Part 2 of Schedule 1 of the list of documents is an e-mail note dated 12 June, 1996 between Eli Lilly and Company's internal legal counsel in the United States following a request from Steven Amendola and myself that Eli Lilly and Company provide documents in its possession relating to the testing of generic fluoxetine by Lilly Laboratories in the United States of America ("the US Documents").
Documents No. 49 (pages 2173, 2175-2196), 53 (pages 2817-2823, 2826-2827, 2850-2855, 2869-2872 and 2887-2889) and 62 (pages 4548-4574) of Part 2 of Schedule 1 of the list of documents, are some of the US Documents supplied by Eli Lilly and Company during the week commencing 17 June, 1996.
Document No. 49 (pages 2173, 2175-2196) of Part 2 of Schedule 1 of the list of documents, are a letter dated 22 May, 1996 enclosing the documents sent to Perry by Philip Wyatt for comment.
Document No. 53 (pages 2817-2823) is the material in response to Philip Wyatt's request referred to in paragraph 12 above.
Document No. 53 (pages 2826-2827, 2850-2855, 2869-2872 and 2887-2889) is further material relating to the instructions for engagement of an independent laboratory as referred to in paragraph 10 above.
Document No. 62 (pages 4548-4574) is material relating to the request for comments on the affidavit material filed in the Pre-Trial Discovery Proceedings, as referred to in paragraph 11 above."
I have inspected the contentious documents. They may, relatively accurately, be grouped into three groups identified by counsel for Eli Lilly, namely essentially independent laboratory engagement, comments on affidavits and matters concerning Eli Lilly's representatives. However the description by Mr Rubenstein of the documents is, in one respect, deficient in that a number of the documents actually produced to the Court appear to be either documents on plain paper printed by a receiving facsimile machine or a photocopy of a document printed by a receiving facsimile machine. They do not appear to be original documents though, in the main, nothing appears to turn on whether they are, in this respect, original documents or copies. The document numbers referred to by Mr Rubenstein are a reference to paragraphs in the list of documents and I will, for convenience, adopt his reference to document numbers.
Legal professional privilege exists if the documents constitute a communication between Eli Lilly and its solicitors or third parties for the purpose of preparing for litigation. I leave for later consideration whether this has to be the sole purpose or the dominant purpose and the applicability of the Evidence Act 1995 (Cth). At common law legal professional privilege extends to communications between a client and third parties if the communication is for the purpose of gathering material for litigation and placing it before a solicitor acting in the litigation: see Trade Practices Commission v Sterling (1979) 36 FLR 244 at 246.5 and Optus Communications Pty Ltd v Telstra Corporation Ltd, unreported 27 April 1995 Lockhart J, Federal Court of Australia and Hardie Finance Corporation Pty Ltd v CCD Australia Pty Ltd, unreported 14 July 195 Nicholson J, Federal Court of Australia. While a distinction can be drawn between an agent and a third party it is not a distinction I need discuss for the moment.
The extent to which that privilege may arise in these proceedings may be illustrated by reference to document No. 19. It is a facsimile transmission dated 6 May 1996 to an employee of Eli Lilly, Dr P.W. Wyatt from Dr F. Perry who is a research adviser employed by Eli Lilly and Company. The facsimile is described by Mr Rubenstein as enclosing information to enable the engagement of an independent laboratory to prepare a report for the purpose of the principal proceedings. I deal later with whether it was for the purpose of the principal proceedings or other proceedings. This specific description was not challenged in cross-examination other than as part of a general challenge concerning the purpose of Eli Lilly's conduct which is a matter I consider later in this judgment. The facsimile commences with a memorandum dated 6 May 1996 from Dr Perry to Dr Wyatt. Its contents are not inconsistent with the description of Mr Rubenstein, that is, a facsimile enclosing information to enable the engagement of an independent laboratory to prepare a report for the purpose of these or related proceedings. If viewed in conjunction with part of document 53, it is reasonably clear that was its purpose. However the facsimile from Dr Perry to Dr Wyatt contains not only the memorandum. It also contains a number of other documents which are copies of original documents which were not, having regard to the date of their creation and their terms, created for the purpose of use in or preparation for the principal or other related proceedings. The original documents are articles extracted from scientific journals or scientific papers or notes prepared by employees of Eli Lilly and Company. It is necessary to determine whether the copies are privileged if, as appears to be the case, the original documents are not.
The status of copy documents has recently been considered by a Full Court of this Court in Propend Finance Pty Ltd v Commissioner of Australian Federal Police (1995) 58 FCR 224. I was informed that an appeal in that matter has been argued before the High Court which has reserved judgment. In Propend, search warrants had issued under s10 of the Crimes Act 1914 (Cth). The police officers executing the warrants seized documents which were copy documents provided to a solicitor. The copies were provided by the clients for the sole purpose of obtaining advice. The copies were of documents concerning the financial affairs of the clients. The approach adopted by the trial judge, Davies J, see Propend Finance Pty Ltd v Commissioner, Australian Federal Police (No. 2) (1994) 35 ALD 25 reflected that taken by Wood J in Nickmar Pty Ltd v Preservatrice Skandia Insurance Ltd (1985) 3 NSWLR 44 namely, that the copies of unprivileged documents provided to a solicitor would not themselves be privileged unless the copy was made or obtained in circumstances involving a selective copying or results from research, or the exercise of skill and knowledge on the part of a solicitor.
On appeal the approach adopted by Beaumont J was summarised at 238:
"In my opinion, the fact that a document is a copy does not mean that it cannot be privileged, even if the original is not; but, on the other hand, in such a case, the circumstance that the copy was brought into existence solely for the requisite purpose should not always mean that the copy is privileged. Rather, in both situations, a broader inquiry is, in my opinion, called for; that is, in the particular circumstances in which the copy document came into existence, should it be treated as, in truth, part of the substantive process of the seeking or the obtaining of legal advice or of preparing for litigation?"
Hill J approached the matter, as concerns copies provided to obtain advice from a solicitor, on the basis that a copy document would be privileged if its production, in the context
in which it appeared when produced, would tend to reveal something of the matters upon which advice had been sought. As to documents copied for the purpose of litigation rather than obtaining advice, his Honour said at 259:
"It is unnecessary in the present case to consider whether a different principle would apply to documents copied for the purpose of litigation. Clearly, in my view, copies of documents made for inclusion in counsel's brief for the purpose of litigation should attract the subject of privilege. Those who favour privilege extending to copies usually refer to such an example. While these documents are in context, that is to say, while they are in or with counsel's brief so as effectively to form part of it, that privilege exists. If the copies were later extracted from the brief so that the contextual significance of them was no longer apparent, there seems no reason why privilege should continue to attach to the copy."
The approach of Lindgren J was somewhat different. His Honour firstly established at 263 a meaning for expressions later used in his reasons for judgment:
"This ground (concerning legal professional privilege) raises the question whether the privilege attaches to a copy of a document where the copy was made for the sole purpose of the obtaining or giving of legal advice or of use in anticipated or current litigation (I will refer to these as "privileged purposes"), but the original was not made solely for a privileged purpose, that is to say, is "non-privileged".
He later refers at 264 to what might be meant by the expression privileged documents:
"Although it is convenient to speak of "privileged documents", this involves an ellipsis which is apt to mislead. What are privileged from disclosure are communications, whether between lawyer and client or between one of them and a third party, and information which happens to be in documentary form; cf the passages in Grant v Downs referred to by Hill J in his judgment; O'Reilly v Commissioners of State Bank of Victoria (1983) 153 CLR 1 at 22 (Mason J); Roux v Australian Broadcasting Commission (1992) 2 VR 577 at 598 (Byrne J); D Byrne and J D Heydon (eds), Cross on Evidence (4th Aust ed, 1991), at 25,108."
The approach in principle adopted by his Honour is found in the following passage at 265:
"In terms of the rationale identified in the joint judgment in Grant v Downs referred to earlier, it must be asked whether the privilege must be accorded to copies of non-privileged documents made solely for a privileged purpose in order that clients may be effectively legally advised and effectively represented in litigation? In my opinion, the answer is "no". In my view the public policy which supports the existence of legal professional privilege is satisfied if copy documents stand in the same position in relation to privilege as the original. If the original is privileged, so is a copy of it even though the copy was not made solely for a privileged purpose (although this aspect of privilege relating to copy documents is not of immediate concern, the position as stated is supported by authority: Komacha v Orange City Council (unreported, Supreme Court, NSW, Rath J, 30 August 1979); Brambles Holdings Ltd v Trade Practices Commission (No 3) (1981) 58 FLR 452; Vardas v South British Insurance Co Ltd (1984) 2 NSWLR 652; Eager v Australian Government Solicitor (unreported, Federal Court, Wilcox J, 28 September 1992). If the original is non-privileged, so is a copy of it even though the copy was made for a privileged purpose. (I put to one side questions of waiver which may, for example, arise when a copy is made of a privileged document for a non-privileged purpose.)
Lindgren J then identifies circumstances in which the operation of this broadly stated test might be qualified. One relevant in the present proceedings is formulated in the following way at 266:
"First, inspection may reveal a line of thinking, whether of lawyer or of client, which led to the selection of the material which has been copied or the collocation of it in its assembled form. In such exceptional cases, the privilege attaches in order to prevent intrusion upon the confidentiality of processes involved in the client-lawyer relationship rather than the content of the document itself."
It is to be remembered that the judgments in Propend directly concerned copy documents provided for the purpose of obtaining advice. In so far as the members of the Full Court discussed the question of copy documents created for the purpose of anticipated or existing litigation, I would respectfully adopt the approach of Lindgren J. It provides a rational and balanced approach to the competing interests of preserving the privilege attaching to actual or likely communications between or involving a solicitor and a client when preparing for litigation and of ensuring that parties to litigation are able to obtain and utilise relevant material in the proceedings.
However the approach of Lindgren J, as it might be applied in these proceedings, was expressed in general terms. As to the reach of the first qualification, his Honour does not detail the character of the line of thinking of a client that might result in privilege attaching to a copy of a non-privileged document. It is to be borne in mind that the approach of Lindgren J is founded on the rationale of the privilege stated in the following passage from the joint judgment of Stephen, Mason and Murphy JJ in Grant v Downs (1976) 135 CLR 674 at 685:
"The rationale of this head of privilege, according to traditional doctrine, is that it promotes the public interest because it assists and enhances the administration of justice by facilitating the representation of clients by legal advisers, the law being a complex and complicated discipline. This it does by keeping secret their communications, thereby inducing the client to retain the solicitor and seek his advice, and encouraging the client to make a full and frank disclosure of the relevant circumstances to the solicitor. The existence of the privilege reflects, to the extent to which it is accorded, the paramountcy of this public interest over a more general public interest, that which requires that in the interests of a fair trial litigation should be conducted on the footing that all relevant documentary evidence is available. As a head of privilege legal professional privilege is so firmly entrenched in the law that it is not to be exercised by judicial decision. None the less there are powerful considerations which suggest that the privilege should be confined within strict limits."
As I apprehend the approach adopted by Lindgren J, it proceeds on the basis that the privilege is intended to protect communication. In so far as it relates to litigation, it protects communication concerning the manner in which litigation is to be or might be conducted, including communication concerning the facts as known by the client or as they might be discovered by the client. Thus the production of a copy of a non-privileged document which has been copied by or on behalf of the client might disclose a line of thinking of the client, or the solicitor acting for the client, concerning the manner in which the litigation might be conducted or concerning inquiries that might be made to gather material to be used in the litigation that either has been or might be discussed with the solicitor. The revelation of those matters might inhibit communication with a solicitor acting for the client in the litigation. However a copy document which does not, on its face or in the context in which it appears, reveal these matters, it is not privileged if the original is not privileged.
I am presently discussing the relevant principles in the context of how they might be applied to document 19. Document 19 is a response from Dr Perry to a memorandum of 3 May 1996 sent by Dr Wyatt requesting Dr Perry's comments on another document which accompanied Dr Wyatt's memorandum. Document 53 contains the memorandum from Dr Wyatt. I was informed that the document sent for comment and accompanying Dr Wyatt's memorandum was prepared by a solicitor employed by Dunhill Madden Butler. That is, in any event, apparent from a document code at the foot of each page which refers to the solicitor who is elsewhere identified in the contentious documents, Ms Vasantha Stesin. The document prepared by the solicitor discusses, in detail, methods of analysis of Prozac and Zactin and invites comment. The memorandum of 6 May 1996 from Dr Perry, which forms part of document 19, provides the response and includes comment. The other documents which accompany Dr Perry's memorandum are an integral part of Dr Perry's response. They concern methods of analysis or steps in the process of analysis. As I indicated earlier they are copies of articles in scientific journals or of scientific papers or notes prepared by employees of Eli Lilly and Company.
Neither the contents of the copy documents accompanying the memorandum nor the evidence of Eli Lilly in these interlocutory proceedings establish that the originals of the accompanying documents are privileged. However the copies would, in my opinion, be likely to disclose the line of thought of Dr Perry when advising Dr Wyatt, which was adopted by Dr Wyatt. The line of thought concerned methods of analysis and analysis that might be undertaken to advance Eli Lilly's interests in litigation with Alphapharm. Dr Perry was acting on behalf of Eli Lilly and Company which, in turn, was acting as agent for Eli Lilly in gathering material to prepare for proceedings involving Eli Lilly. An agent of the client, unlike a third party, may be treated as the client: see Wheeler v Le Marchant (1881) 17 ChD 675 at 684 per Cotton LJ and Nickmar at 53. I should add that no reliance was placed on common interest privilege though it may have relevance notwithstanding that, apparently, Eli Lilly and Company has not retained Dunhill Madden Butler: see Abrook and Ors v Patrick and Ors unreported 30 August 1995 Branson J, Federal Court of Australia.
Dr Wyatt received that advice for the purpose of engaging an expert to undertake scientific analysis for the principal or related proceedings. This was being done in response to detailed comments and requests by a solicitor employed by the firm acting for Eli Lilly. In my opinion not only is Dr Perry's memorandum, forming part of document 19, privileged but so too are the copy documents which accompanied it notwithstanding that the originals are not. The copy documents would disclose a line of thought relating to the gathering of evidence by Eli Lilly and fall within the first qualification described by Lindgren J.
The memorandum from Dr Perry to Dr Wyatt of 6 May 1996 predated the application that commenced the principal proceedings as obviously did the earlier memorandum of 3 May 1996 from Dr Wyatt to Dr Perry. Alphapharm filed its application for an order under O15Ar6(b) on 30 April 1996. In my opinion having regard to the chronology of events and the contents of the document prepared by the solicitor which accompanied the memorandum of 3 May 1996, Alphapharm was preparing in early May 1996 for the principal proceedings in contemplation of their commencement. Moreover on 31 May 1996, Lindgren J ordered that Alphapharm be given leave to read in the principal proceedings affidavits filed in the application for pre-action discovery. Thus, even if the memoranda of 3 May and 6 May 1996 and their attachments should be viewed as arising in preparation for the earlier proceedings, that preparation should, in my opinion having regard to the order of Lindgren J, be treated as preparation for the principal proceedings in any event. Even if, contrary to what I have just said, the memoranda are to be treated as having been created for the purposes of the application for pre-action discovery only, privilege arising from the circumstances in which they were created, continues to exist after the proceedings for which the documents or copy documents were created has concluded: see Complete Technology v Toshiba (Australia) Pty Ltd (1994) 124 ALR 493.
Among the contentious documents are other communications which are privileged but accompanied by other documents which are copies. They are copies of documents which, on their face, do not appear to be privileged. In this class are documents 23, 49, 53 and 62. In so far as these documents contain correspondence or copies of correspondence between Dr Perry and Dr Wyatt or Dunhill Madden Butler and Dr Wyatt, they are, for the reasons given in relation to document 19, privileged documents. Some of the accompanying documents are copies of scientific papers either internal to Eli Lilly and Company or extracted from scientific journals. They are of the same character as the copies within document 19 and are privileged for the same reasons. Other of the accompanying documents found in documents 49 and 62 are copies of affidavits of Dr Bartley of 2 May, 1996 and Ms Plomley of 9 May, 1996. The disclosure of those copies would not reveal a relevant line of thought of either Dunhill Madden Butler, Dr Wyatt or Dr Perry. The originals, which were filed and read in the pre-action discovery proceedings are not now privileged documents nor, in my opinion, are the copies. Accordingly that part of document 49 which are copies of the affidavits of Dr Bartley and Ms Plomley are not privileged. A copy of a draft affidavit of Dr Holden, which is also part of documents 49 and 62, is in a different position. However the contents of the draft affidavit were published when the affidavit of Dr Holden, which was in the same terms as the draft, was read in the proceedings brought by Alphapharm under O15Ar6(b). Either Alphapharm waived the privilege attaching to the draft: see McNichol, Law of Privilege 1992 Law Book Company at 25 or the affidavit ceased to be confidential: see Attorney General for the Northern Territory v Maurice (1986) 161 CLR 475 at 496 per Dawson J. Those parts of documents 49 and 62 which are not privileged may be severed from those parts which are: see Grofam Pty Ltd v Australian and New Zealand Banking Group Ltd (1993) 43 FCR 408.
Document 4 is privileged as it is communication between Dr Perry and Dr Wyatt concerning the gathering of material for preparation in the ADJR proceedings. Documents 2 and 5 are copies of memoranda dated 14 February and 12 March 1996 respectively which, I infer from their contents and what was said by Mr Rubenstein, are from sales or marketing representatives of Eli Lilly to a more senior employee of Eli Lilly. Their relationship with the principal proceedings is quite unclear. They were created after a letter dated 8 February 1996 was sent by Mallesons Stephen Jacques to Eli Lilly demanding that Eli Lilly give certain undertakings about what was said concerning Prozac and its status and the legal rights of Eli Lilly. The letter adverted to possible litigation. The memoranda deals with two conversations, one with a doctor and another with a pharmacist. They recount what was said by the representative of Eli Lilly responding to what a representative of Alphapharm had earlier said to the doctor and pharmacist. The terms in which each document is expressed suggest that they were written at the initiative of the Eli Lilly employee to relay to a more senior employee what had been said by a representative of Alphapharm and not to record what had been said on behalf of Eli Lilly. Mr Rubenstein stated they were:
"received as part of the response to the respondent's enquiries and investigations regarding the threatened proceedings."
If he is referring to the original memoranda, it is quite unclear what the nature of the "respondent's enquiries and investigations" were. The terms in which the memoranda are written and the principal focus of their contents do not indicate a material relationship with the principal proceedings which, at that stage, were threatened proceedings only. I am not satisfied the originals are privileged. Accordingly, neither are the copies.
Documents 24 and 25 are memoranda from Dr Perry to Dr Wyatt created for the purpose of preparing for the pre-action discovery application and are privileged.
Document 28 is described by Mr Rubenstein as an e-mail note between Eli Lilly and Company's internal legal counsel in the United States following a request from Dunhill Madden Butler to provide documents. Markings on the document indicate it is, in truth, a facsimile received by Dunhill Madden Butler from Eli Lilly. What was sent by facsimile was a copy of the e-mail note. Eli Lilly and Company has been acting as agent for Eli Lilly in preparing for litigation. The document in question may be described as a copy of an original document provided by a client to its solicitor where the original document is a communication internal to an agent of the client and relates to the assistance it was giving the client in preparing for the litigation. Thus, applying the approach of Lindgren J in Propend, the copy is privileged only if the original is unless it falls within one of the exceptions identified by his Honour. Its status is by no means obvious.
In Sterling (supra) Lockhart J identified in one of the classes of privileged documents, notes and memoranda made by a client which relate to information sought by the client's legal adviser. One the authorities referred to by his Honour to support that proposition was Corporation of Bristol v Cox (1884) 26 ChD 678. In Cox Pearson J had to consider the scope of the privilege as it might affect communications internal to corporation. His Honour said:
"I conceive that any notes made by a man with reference to his own conduct in the litigation - simply notes made of his own opinions - are just as much privileged as the thoughts which pass through his mind, and I conceive, inasmuch as this corporation cannot in its corporate capacity either think or write or act except by certain machinery, which is, so to speak, extraneous of itself, the corporation is perfectly justified in referring all these matters to a committee and asking the committee to deal with them as it would deal with them itself, and they are simply the agents of the corporation for the purpose of considering what ought to be done, and their reports are confidential matters; and under those circumstances those matters are to my mind protected."
The reference to "these matters" was a reference to past, contemplated or actual litigation. While this passage may be thought to describe one extreme of the reach of legal professional privilege, it nonetheless supports the approach that a memorandum constituting an internal written deliberation by a committee or employee of a corporation directly relating to litigation would be privileged if that was the sole purpose of its creation. If as I earlier indicated, Eli Lilly and Company is to be treated as an agent of Eli Lilly then an internal deliberation of the agent would be privileged in the same way.
Having regard to its terms and subject matter, the e-mail dated 12 June 1996 was plainly produced for the sole purpose of internal discussion about the preparation for litigation. In the main it dealt with the means of providing material to the partner of Dunhill Madden Butler acting for Eli Lilly and, in a subsidiary respect, touches upon a scientific matter. It is, in my opinion, a privileged document.
PRIVILEGE - PURPOSE OF CREATION OF DOCUMENTS
To this point no reference has been made to the Evidence Act 1995 (Cth). Whether issues concerning legal professional privilege arising prior to trial should be determined by reference to the common law "sole purpose" test or the statutory "dominant purpose" test reflected in ss 118 and 119 of that Act is a vexed question referred to but not decided in TPC v Port Adelaide Wool Co Pty Ltd (1995) 132 ALR 645. It is unnecessary to decide in these proceedings.
Senior counsel for Aphapharm submitted that documents would have been brought into existence by Eli Lilly for the purpose of pursuing a campaign in the marketplace to challenge the effectiveness of generic drugs such as Zactin. In support of the submission a number of documents were tendered which appear to include memoranda created within Eli Lilly and Company. It may be inferred from this material that Eli Lilly and Company was seeking to promote Prozac in the market place by means of critical comment about other drugs with the same active ingredient but a different chemical composition. However the contentious documents I have inspected (save for the originals of copy documents which I dealt with earlier and documents 2 and 5) are, in terms, plainly directed to the litigation between Alphapharm and Eli Lilly. Having regard to their terms and the time of their creation I am satisfied that they were created for the sole purpose of prosecuting litigation between Alphapharm and Eli Lilly and were not created for the collateral purpose of the marketing campaign discussed in the documents relied upon by Alphapharm. Necessarily it was their dominant purpose as well. Thus, applying either the common law test or that reflected in the Evidence Act 1995 (Cth), they are privileged.
WAIVER
Senior counsel for Alphapharm submitted that Eli Lilly had waived privilege having regard to the grounds pleaded in the application commencing the ADJR proceedings filed on 25 March 1996 and the contents of the letter of 16 April 1996. The former makes several references to "data" concerning the bioequivalence of Zactin and Prozac and the latter reference to "findings" of Eli Lilly on generally the same matter. Any waiver could only relate to privileged documents in existence at the time the waiver is said to have occurred.
I deal firstly with the submission based on waiver arising from the reference to "data" in the ADJR application. In Buttes Oil Co v Hammer (No. 3) 1981 QB 223 Donaldson LJ stated that a bare reference to a document in a pleading did not waive privilege attaching to it though if reproduced in full it would no longer be privileged. His Lordship adverted to, but did not resolve, the extent to which the contents would need to be disclosed before privilege was lost if it was something more than a mere reference and something short of reproduction in full. Buttes Oil was considered by the members of the High Court in Attorney General for the Northern Territory v Maurice (1986) 161 CLR 475 where, unlike the present case, there had been use of contentious material in the proceedings in which the claim of privilege was maintained. The High Court was able to resolve the question of whether the privilege had been waived by assessing whether the partial revelation of material in a claim book in proceedings, without the production of the source documents from which the material was derived, resulted in unfairness to the party seeking production.
This matter does not involve the revelation of material in the same proceedings in which production is sought of the source material. Nonetheless similar considerations may arise: see Goldberg v Ng (1995) 132 ALR 57. In Ng the majority comprising Deane, Dawson and Gaudron JJ at 66 proceeded on the basis that when there was related litigation with general correspondence between the parties arising out of the same dispute or closely connected disputes, notions of fairness should determine whether there had been a waiver of legal professional privilege for the purposes of one proceeding by the use of documents in another proceeding.
However in this matter no question of fairness falls to be considered. There has been no waiver of legal professional privilege by the filing of the ADJR application as there are no documents within the contentious documents that constitute or contain "data" of the type adverted to in the ADJR application that existed at the time the ADJR application was filed. As to the extent to which disclosure might bring about waiver, see Somerville v Australian Securities Commission (1993) 118 ALR 149 especially at 158 - 163. While some of the relevant contentious documents are detailed technical documents none, as I read them, involve a consideration of Zactin or a drug of the same composition or the effect of the various constituent elements in Zactin generally or on each other.
Different considerations arise in relation to the letter of 16 April 1996. However it is unnecessary to consider what might be the appropriate approach in determining whether there had been waiver of legal professional privilege by the publication of a letter that adverted to the contents of privileged documents. There are no documents in the contentious documents that existed at 16 April 1996 which contain material that could be said to be, or contain, a
"finding" of the type referred to in the letter, that is, a finding concerning the reaction between lactose and fluoxetine.
ORDERS RESTRAINING USE
Alphapharm sought an order restricting the use that might be made of any documents for which the claim of privilege was made out. The order in the notice of motion encompassed all documents for which privilege was originally claimed. However following waiver of the privilege in relation to many documents, the class of documents to which the order would apply was narrowed. The order finally sought was:
An order that the respondent file and serve all affidavits on which it intends to rely which relate to
(a)the documents identified in paragraphs 2, 4, 5, 19, 23, 24, 25 and 28 of Part 2 of Schedule 1 of the respondent's List of Documents dated 11 July 1996 ("Part 2");
(b)pages 2173 and 2175 to 2196 of the bundle of documents identified in paragraph 49 of Part 2;
(c)pages 2817 to 2823, 2826, 2827, 2850, 2869 to 2872 and 2887 to 2889 of the bundle of documents identified in paragraph 53 of Part 2;
(d)pages 4548 to 4574 of the bundle of documents identified in paragraph 62 of Part 2; and
(e)any issues or matters arising out of the documents identified in (a) to (d) above
by 3 September 1996, or in accordance with any further directions of the Court or consented to by the applicant, and not otherwise without the leave of the Court.
An order that the respondent not be permitted, unless with the leave of the Court, to tender at the trial of the proceedings
(a)the documents identified in paragraph 3 above; and
(b)any documents relating to the issues or matters raised in the documents identified in paragraph 3 above."
It can be seen that proposed order 4 limits the use that might be made, at the trial, of the privileged documents and documents relating to the "issues or matters raised in the (privileged) documents". While this last element of the order is in general and potentially far reaching terms, it is subject to the qualification in the prefatory words, namely it is subject to the grant of leave by the Court. Proposed order 3 is likewise qualified. In my opinion, basic fairness suggests that if a party claims privilege and thereby precludes the other party from seeing the documents the subject of the claim, limits may be placed on the use that can be made of those documents at the trial itself. Notwithstanding the width of order 4 it is, in the circumstances, an appropriate one. The potentially oppressive effect of the width of the order is met, in my opinion, by the recognition that the trial judge may permit use of the documents or other material relating to their contents if it appears appropriate.
CONCLUSION
As to the costs of the application, both Alphapharm and Eli Lilly have succeeded in part and failed in part. In my opinion the costs of the application should be part of the costs in the principal proceedings.
I certify that this and the preceding twenty-eight (28) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Moore.
Associate: ........ ........ ......
Date: 14 August 1996
APPEARANCES
Counsel for the Applicant: Mr D Grieve QC and
Ms A Bowne
Solicitor for the Applicant: Mallesons Stephen Jacques
Counsel for the Respondent: Mr P Dwyer
Solicitor for the Respondent: Dunhill Madden Butler
Dates of Hearing: 31 July and 1 August 1996
Date of Judgment: 14 August 1996
0
0