Health Services Union NSW v Mylan; Mylan v Health Services Union NSW

The proceedings before the Full Bench of the Federal Court were between Health Services Union NSW and Mylan Pty Limited, with a related case between Mylan Pty Limited and Health Services Union NSW. The central issue in dispute was whether there was an implied term in the settlement agreement between the parties that the plaintiff would cooperate with a third defendant, Sigma Pharmaceuticals, regarding the taxation implications of the settlement. The Federal Court was tasked with determining whether such an implied term existed.

The legal issues before the court revolved around the interpretation of the settlement agreement and whether an implied term could be discerned from the context in which the settlement was made. The plaintiff argued that there was no implied term requiring cooperation on tax matters, while the defendant contended that such a term was necessary to give business efficacy to the settlement. The court had to consider the principles of contract interpretation, including the need for a term to be necessary for the reasonable or effective operation of the contract and the circumstances surrounding the agreement.

The Full Bench of the Federal Court found that there was indeed an implied term in the settlement agreement that required the plaintiff to cooperate with Sigma Pharmaceuticals regarding the taxation implications of the settlement. The court held that such a term was necessary to give business efficacy to the agreement and was implied as a matter of necessity to ensure the effective operation of the settlement. The reasoning was grounded in the context and surrounding circumstances of the settlement, which indicated an intention that tax implications would be addressed cooperatively.

The final orders of the court confirmed the existence of the implied term and directed the parties to cooperate on the taxation matters as implied in the settlement agreement. The decision underscored the importance of clear communication and understanding between parties when settling disputes, ensuring that all relevant aspects, including tax implications, are addressed to give true effect to the settlement.