Alphapharm Pty Ltd v Eli Lilly Australia Pty Ltd (No 3)
[1996] FCA 645
•30 Jul 1996
NOT FOR DISTRIBUTION
CATCHWORDS
PRACTICE AND PROCEDURE - discovery - whether further discovery should be ordered - no question of principle.
Federal Court Rules O 15 r 8
Mulley v Manifold (1959) 103 CLR 341
ALPHAPHARM PTY LIMITED v ELI LILLY AUSTRALIA PTY LTD (NO 3)
No NG 432 of 1996
Lindgren J
Sydney
30 July 1996
IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY ) No NG 432 of 1996
GENERAL DIVISION )
BETWEEN:
ALPHAPHARM PTY LIMITED (ACN 002 359 739)
Applicant
AND:
ELI LILLY AUSTRALIA PTY LTD (ACN 000 233 882)
Respondent
CORAM:Lindgren J
PLACE:Sydney
DATE:30 July 1996
MINUTE OF ORDERS
THE COURT ORDERS:
THAT the proceeding be listed on 2 August 1996 at 9.30 am for the making of orders in conformity with the Reasons for Judgment of Lindgren J published on 30 July 1996.
THAT by 5.00 pm on 31 July 1996 the parties supply to the Associate to Lindgren J an agreed form of short minutes of the orders to be made pursuant to order 1, and failing agreement by that time and date, the forms of short minutes of the orders to be made pursuant to order 1 for which they will respectively contend.
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 LIMITED (ACN 002 359 739)
Applicant
AND:
ELI LILLY AUSTRALIA PTY LTD (ACN 000 233 882)
Respondent
CORAM:Lindgren J
PLACE:Sydney
DATE:30 July 1996
REASONS FOR JUDGMENT (No 3)
INTRODUCTION
By notice of motion filed on 12 July 1996 the applicant ("Alphapharm") seeks, relevantly, an order pursuant to O 15 r 8 of the Federal Court Rules that the respondent ("Eli Lilly") give discovery of documents identified in a schedule to the notice of motion ("the Schedule") by filing and serving a verified supplementary list of documents. The schedule comprises 14 paragraphs in each of which a class of documents was described. For various reasons, the hearing concerned only paras 9, 10, 11 and 13 (a) which were as follows:
Documents recording or relating to reports or claims by pharmacists, hospitals, medical practitioners, psychologists or patients of adverse reactions to Prozac, Prozac Liquid or Lovan, whether reported to the relevant regulatory authorities or not;
10Documents, including minutes of meetings, instructions, sales manuals and training manuals, issued to, and correspondence with, the respondent's:
(a)employees or representatives;
(b)agents;
(c)wholesalers; or
(d)distributors;
since 1 January 1996 in relation to either Prozac or Prozac Liquid and either Lovan or Zactin;
11Other documents created since 1 January 1996 recording or relating to promotional or educational material referring to either Prozac or Prozac Liquid and either Lovan or Zactin;
12........ ........ ........ ........ ........ ......
13All internal documents and correspondence between the respondent and its parent company since 30 June 1995 regarding marketing strategies for dealing with competition from:
(a) Zactin; ..."
BACKGROUND FACTS
The factual background to the present proceeding can be found in my Reasons for Judgment delivered on 24 May 1996 in an earlier proceeding No NG 351 of 1996 brought by Alphapharm against Eli Lilly in which Alphapharm sought, pursuant to O 15 r 6, pre-action discovery by Eli Lilly, and in my Reasons for Judgment (No 2) dated 25 July 1996 in the present proceeding disposing of a motion by Eli Lilly for an order pursuant to O 15 r 11 that Alphapharm produce certain documents discovered by it for inspection.
It does not seem necessary to give an account of the factual background for a third time. It is, however, necessary to refer to the issues as revealed by the pleadings, since questions of relevance for discovery purposes must be decided by reference to a "matter in question" in the proceeding as between the party seeking and the party giving discovery: O 15 rr 2 (2), 8. The particular paragraphs of the statement of claim to which Alphapharm refers are para 12 which pleads representations allegedly made in a letter which Eli Lilly forwarded to pharmacists in Australia on or about 27 February 1996 ("the February 1996 representations"); para 16 which pleads representations allegedly made in a letter dated 16 April 1996 which Eli Lilly forwarded to pharmacists in Australia ("the April 1996 representations"); para 16 which pleads the making of oral representations on or about 16 May 1996 ("the oral representations"); and para 21 which pleads certain background to all three classes of representation. It seems that the central issues in the proceeding are whether the particular representations pleaded were made and, if so, whether they were false.
Alphapharm read an affidavit sworn 16 July 1996 of Stewart Chun Lai Cheng, Technical Director of Alphapharm, directed to showing that it is naturally to be expected that Eli Lilly would have in its possession, custody or power documents of the kind referred to in para 9 of the Schedule and an affidavit sworn 15 July 1996 of Ronald Van der Pluijm, Alphapharm's Manager, Business Planning, directed to showing that it is to be expected that Eli Lilly would have in its possession custody or power documents of the kinds referred to in paras 10, 11 and 13 of the Schedule.
Eli Lilly read, relevantly, an affidavit sworn 25 July 1996 of Philip Leslie Whyatt, Associate Director of Regulatory and Scientific Affairs for Eli Lilly. In relation to para 9 of the Schedule, Mr Whyatt said that for Prozac, Prozac Liquid and Lovan (all drugs manufactured by Eli Lilly or its United States parent), Eli Lilly has received various reports concerning suggested reactions in patients. Eli Lilly submits that such reports do not satisfy even the "discovery test of relevance".
In relation to para 10 of the Schedule, Mr Whyatt says that Eli Lilly does have a sales training manual for Prozac marketed both in its capsule and liquid forms and that the sales training manual does not mention Zactin. Similarly, he says that brochures were prepared for the introduction of Lovan by Eli Lilly in May 1996 but that these do not refer to Zactin. He says that there are, according to his inquiries, no documents such as records of sales or marketing meetings which mention Zactin. He says that there are certain documents which are instructions to Eli Lilly's sales force concerning the marketing of Eli Lilly's products. Finally, in relation to para 10, he says that all correspondence from Eli Lilly to pharmacists referring to Zactin has been discovered. Eli Lilly has tendered the documents referred to in para 10 of the Schedule which it says are all those within its possession, custody or power. By consent, these became confidential exhibits and I have read them. Of course, Alphapharm has the disadvantage of making submissions without having seen the documents.
In relation to para 11 of the Schedule, Mr Whyatt has sworn that there are no documents of the kind in question in existence. Senior counsel for Alphapharm sought to cross examine Mr Whyatt on that paragraph. Alphapharm submits that it is inherently likely that Eli Lilly would have in its possession, custody or power documents satisfying the description in para 11 which, it will be recalled, is as follows:
"Other documents created since 1 January 1996 recording or relating to promotional or educational material referring to either Prozac or Prozac Liquid and either Lovan or Zactin."
Senior counsel for Alphapharm submitted that it may be that Mr Whyatt swore that there were no documents satisfying this description in existence because he took the view that the reference in para 11 is to "[either Prozac or Prozac Liquid] and [either Lovan or Zactin]" (brackets and emphasis supplied). Implicitly, it was submitted that such a construction would be incorrect. I deferred ruling on the request to cross examine.
In relation to para 13 (a) of the Schedule, Mr Whyatt swore that there was one document which answered the description. Eli Lilly tendered that document which was also, by consent, admitted as a confidential exhibit and I have read it. Again, Alphapharm's submissions have been made without the benefit of knowledge of the contents of the confidential exhibit.
REASONING
Paragraph 9 of the Schedule
Alphapharm relies, in particular, on para 15 (f) of the statement of claim in which it is pleaded that by the letter dated 16 April 1996, Eli Lilly represented to pharmacists that "Zactin is not as safe as Prozac". The letter dated 16 April is in evidence. It includes this paragraph:
"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."
Part of the "safety ... record of Prozac" comprises, in my view, the documents referred to in para 9 of the Schedule. (It was not suggested that the relevant record of Lovan is not, for this purpose, part of the record of Prozac, and there is evidence that in the Australian Register of Therapeutic Goods, Lovan is recorded as bioequivalent to Prozac 20.) Part of the import of Eli Lilly's letter to pharmacists dated 16 April 1996 seems to be that Prozac has a commendable and reliable safety record and that because Zactin uses lactose as filler with the active ingredient fluoxetine hydrochloride, while Prozac uses starch as filler, it cannot be assumed that the safety record of Prozac would characterise the new generic drug, Zactin.
I think that the documents referred to in para 9 satisfy the test of relevance for discovery purposes. In this respect, the following passage from the judgment of Menzies J in Mulley v Manifold (1959) 103 CLR 341 at 345, still provides guidance:
"I now turn to the pleadings to determine what are the matters at issue between the parties, because discovery is a procedure directed towards obtaining a proper examination and determination of these issues - not towards assisting a party upon a fishing expedition. Only a document which relates in some way to a matter in issue is discoverable, but it is sufficient if it would, or would lead to a train of enquiry which would, either advance a party's own case or damage that of his adversary."
"[T]he safety and efficacy record of Prozac" is, at least in the sense referred to, relevant to the representation pleaded in para 15 (f) of the statement of claim noted above.
Paragraph 10 of the Schedule
Alphapharm relies on paras 12 (a), (e), 16 (a) and (b), and 21 (a)-(e) of the statement of claim. I do not find it necessary to set them out. Having read the 9 documents which Eli Lilly tendered as being the documents in its possession, custody or power satisfying the description in para 10, I have concluded that only one of them is relevant, for discovery purposes, to matters in question between the parties, and that is a single-page document entitled "ZACTIN STRATEGY". It should be discovered. It seems fair to indicate that the remainder of the documents are directed to promotion of the sale of Prozac and Lovan, and to giving general advice to representatives of Eli Lilly.
Paragraph 11 of the Schedule
It will be recalled that Mr Whyatt swore that there are no documents satisfying para 11 in existence. It seems to me that Alphapharm's request to cross examine Mr Whyatt is directed to satisfying the conditions of the existence of the power referred to in O 15 r 8. At present, Alphapharm has not made it appear to me that there are grounds for a belief that documents of the kind referred to in para 11 exist. Although this rule and its counterparts in other jurisdictions overcame to some extent the general conclusiveness of a party's affidavit of documents, this does not signify that an order should be made under the rule wherever a question or suspicion is raised as to the adequacy of the discovery which has been given. The condition of the existence of the discretion to make an order under O 15 r 8 is that:
" ... it appears to the Court from evidence or from the nature or circumstances of the case or from any document filed in the proceeding that there are grounds for a belief that some document or class of document relating to any matter in question in the proceeding may be or may have been in the possession, custody or power of a party, ..."
I construe the words "either Prozac or Prozac Liquid and either Lovan or Zactin" in para 11 as requiring that there must be a reference to at least two drugs. The construction to which I refer can be indicated by the form "[either Prozac or Prozac Liquid] and [either Lovan or Zactin]".
There is no evidence and there is nothing in the nature or circumstances of the case or from any document filed in the proceeding or otherwise giving grounds for a belief that some document or class of documents relating to any matter in question in the proceeding and satisfying this description may be or may have been in the possession, custody or power of Eli Lilly. There is no evidence contrary to the denial of Mr Whyatt. To cross examine him would be to "fish" for such evidence. Alphapharm should not, in my view, be permitted to do this. There should not be an order in relation to para 11.
Sub-paragraph 13 (a)
I have read the internal memorandum tendered by Eli Lilly as representing the only document in its possession, custody or power satisfying the description of sub-para 13 (a). In my view, the document is relevant according to the discovery test, to matters in question between the parties.
The document is a memo dated 19 April 1996 on Eli Lilly's stationery from "Steve Fairall" to "Leslea Hsu" and "John Kaiser". It purports to enclose a copy of "the pharmacy letter mailed this week". No doubt this is a reference to the letter of 16 April. As well, it contains these sentences:
"For example, actual HPLC traces for Prozac and Zactin on the one page to show the difference would be extremely powerful."
"We need to have hard data to help convince pharmacists that it may not be worth the risk to substitute, even when Prozac will cost them and their patient more."
In my view, the memo is one which is apt to lead Alphapharm to a train of inquiry which would or might either advance its own case or damage that of Eli Lilly. The document should be discovered.
COSTS
The issue of costs was contentious. Of course, in making their submissions, the parties did not know the result at which I would arrive. Both parties have had some success on the issues which were contested. But there were 14 paragraphs in the schedule to the notice of motion. Apparently, after the filling of Alphapharm's notice of motion, Eli Lilly agreed to produce the documents referred to in paras 1 to 8, Alphapharm decided not to press para 12 or sub-para 13 (b), and on the hearing Alphapharm announced that para 14 was "not presently in issue". It was explained that this statement signified that whether para 14 would remain in issue would depend upon what inspection revealed.
The sequence of events which led to the filing of the notice of motion were not straightforward. Briefly, they were as follows:
On Wednesday 10 July 1996, Alphapharm's solicitors, Mallesons Stephen Jaques ("MSJ") wrote to Eli Lilly's solicitors, Dunhill Madden Butler ("DMB") seeking further discovery of categories of documents.
On Thursday 11 July 1996, when the proceeding was before me, I granted leave to Alphapharm to file any notice of motion relating to any outstanding interlocutory dispute by 4.00 pm on Friday 12 July 1996 returnable on Thursday 18 July 1996 at 9.00 am. Counsel for Eli Lilly stated that the questions relating to further discovery raised by MSJ were being considered.
On Friday 12 July 1996 before 1.00 pm, Mr Bennett of MSJ gave instructions for the sending of a fax to DMB reminding that firm that Alphapharm was awaiting a response on the question of further discovery. Unfortunately, due to a technical problem with the facsimile machine, the fax was not sent until 3.44 pm.
On the same day (Friday 12 July) at 2.35 pm, Mr Bennett of MSJ telephoned Mr Rubenstein of DMB in relation to another aspect of the litigation. In the course of conversation, Mr Rubenstein said that he was expecting to receive instructions relating to further discovery on the following Monday and suggested that the time for the filing of a notice of motion by Alphapharm be extended until then. Apparently Mr Bennett said that he would obtain instructions on this request. Mr Bennett was under the erroneous impression that his fax had been received by Mr Rubenstein by the time of the conversation. In fact, as noted above, Mr Rubenstein did not receive it until 3.44 pm.
Later on the same day (Friday 12 July) at about 4.00 pm Alphapharm's notice of motion was filed and it was served at DMB 4.52 pm.
On Wednesday 17 July 1996, at about 5.10 pm, DMB faxed MSJ responding to the numbered paragraphs in the Schedule.
On Thursday 18 July 1996, Alphapharm's notice of motion was returnable before the Court.
It is important to appreciate that the trial of this proceeding has been fixed for 21 October next with an estimated hearing time of three weeks. There is a tight timetable. Any question as to Alphapharm's entitlement to have further discovery has had to be resolved quickly so that the affidavits on which it intends to rely in chief will be filed by 2 August 1996 as required by the timetable. In ordinary circumstances, I would have thought that Mr Rubenstein's request on 12 July that Eli Lilly be allowed until the following Monday, 15 July to respond to MSJ's letter, was an eminently reasonable one. On the other hand, as Alphapharm points out, I had directed on 11 July that any motion of the kind in question be brought by notice of motion to be filed on 12 July and made returnable on 18 July. More generally, Alphapharm also points to the "fast-track" nature of the interlocutory steps in this proceeding.
In terms of the number of paragraphs in the Schedule to the notice of motion, the measure of success enjoyed by Alphapharm might be said to exceed that enjoyed by Eli Lilly. On the other hand, in relation to the paragraphs in issue on the hearing, Alphapharm succeeded on para 9, failed in respect of eight of the nine documents produced in response to para 10, failed on para 11, and succeeded in relation to sub-para 13 (a).
Taking all the foregoing matters into consideration I think that the appropriate order is that Eli Lilly pay one third of Alphapharm's costs of the motion.
CONCLUSION
There will be orders under O 15 r 8 in relation to the documents described in para 9 of the Schedule, in relation to the one page document headed "ZACTIN STRATEGY" comprised in para 10 of the Schedule, and in relation to the one page memo dated 19 April 1996 comprised in sub-para 13 (b) of the Schedule. There will be an order that Eli Lilly pay one third of Alphapharm's costs of the motion brought by notice of motion filed 12 July 1996. However, I think it desirable to allow the parties to formulate the orders to be made, and accordingly the proceeding will be listed for a date for the making of orders.
I certify that this and the preceding 13 pages are a true copy of the Reasons for Judgment of the Honourable Justice Lindgren.
Associate:
Dated:30 July 1996
Heard:
Place: Sydney
Decision: 25 July 1996
Reasons: 30 July 1996
Appearances: Mr D E Grieve QC with Ms A H Bowne of counsel instructed by Mallesons Stephen Jacques appeared for the applicant.
Mr J M Ireland QC with Mr P Dwyer of counsel instructed by Dunhill Madden Butler appeared for the respondent.
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