ICI Australia Operations Pty Ltd v Dr Neal Blewett

[1989] FCA 282

JCECMEPdT P b . 2 ?&!...a?-

IN THE FEDERAL COURT OF AUSTRALIA	)
AUSTRALIAN CAPITAL TERRITORY	)

No. ACT G 26 of 1989

DISTRICT REGISTRY	!
\

BETWEEN :  ICI AUS'I'W.LIA OPJERATIONS PTY
LIMITED

First Applicant

WELLCOME-AUSTRALIA LIMITED

Second Applicant

PFIZER PTY LIMITED

Third Appllcnt

HOECHST AUSTRALIA LIMITED

Fourth Applicant

GLAXO AUSTRALIA PTY LIMITED

Flf th Applicant

SMITH KLINE & FRENCH

LABORATORIES AUSTRALIA LIMITED

Sixth Applicant

AND:  DR NEAL BLEWFIT (who is sued in
his capacity as Minister of
State for Community Services
and Health)

WHERE MADE : Canberra PRINCIPAL

Flrst Respondent

IAN JAMES McNEIL

Second Respondent

MINUTE OF ORDER

J m E	MAKING ORDER : Neaves J.
DATE OF ORDER	: 6 June 1989

THE COURT ORDERS THAT:

1.      The motion, notlce of whlch was given on 22 May 1989, seeklng an order for discovery of documents be dismissed.

2.      The sppllcants pay the respondents' costs of the application.

Note: Settlement and entry of orders 1s dealt wlth in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA	)
I
AUSTRALIAN CAPITAL TERRITORJ	)
) No. ACT G 26 of 1989
DISTRICT REGISTRY	) )
GENERAL DIVISION

BETWEEN:	ICI AUSTRALIA OPERATIONS PTY
-.  LIMITED

First Applicant

WELLCOME AUSTRALIA LIMITED

Second Applicant

PFIZER PTY LIMITED

Thlrd Applicant

HOECHST AUSTRALIA LIMITED

Fourth Applicant

GLAXO AUSTRALIA PTY LIMITED

Fifth Applicant

SMITH KLINE & FRENCH

LABORATORIES AUSTRACIA LIMITED

Sixth Applicant

AND:  DR NEFL BLEWEIT (who is sued in
his capacity as Mlnlster of
State for Community Services

and Health)

First Respondent

IAN JAMES McNEIL

Second Respondent

CORAM: Neaves J.

m: 6 June 1989

REASONS FOR JULGMENT

The applicants, being the six companies named below,
have moved the Court for an order tor the discovery af certain
documents by the respondents to a proceedlng pendlng in the

Court at the suit of the applicants. In that proceedlng the applicants, ICI Australia Operations Pty Llmlted, Wellcome Australia Llmlted, Pflzer Pty Llmlted, Hoechst Australia Llmlted, Glaxo Australia Pty Llmlted and Smlth Kline G French Laboratories Pty Llmited, scck an order of review under 5.5 of the Administ_ratlve Dec_lslons (Judicial Revlew) Act 1977 (Cth) ("the Judlclal Revlew Act") in respect of a determination under

ss.85, 85A and 88 ot the Natlonal Health Act 1953 (Cth). That determlnation was made on 16 March 1989 by Ian James McNeil, the second respondent, as delegate of the Minister of State for Community Services and Health, the first respondent. It came into operation on 1 Aprll 1989.

The sectlons under which the determlnation was made are withln Part V11 of the Natlonal Health Act. That Part establishes what may conveniently be referred to as the Pharmaceutical Beneflts Scheme. Sub-sectlon 85(1) provldes that benefits are to be provided by the Commonwealth, in accordance with Part VII, in respect of the drugs and mediclnal

medicinal preparations to whlch Part V11 applies include drugs	preparations to which that Part applies. The drugs and
and mediclnal preparations that are declared by the Minister, In wrlting, to be drugs and medicinal preparations to which that Part applies (sub-s.85(2)). Sub-s.85(6) provides:

"(6) The Minister may determine, in respect of a drug or medicinal preparation in relation to which this Part applies, a brand or brands under which the drug or medicinal preparation may be supplied under this Part. i where such a determination is in force in rel~tion to a drug or medicinal preparation, thls Part does not apply in relation to the druy or medlclnal preparation as marketed under any other brand."

Each of the applicants is the manufacturer of various drugs or medicinal preparatlons which have been declared, in writlng, by a delegate of the Minlster to be drugs or medicinal preparatlons to whlch Part V11 of the National Health Act applies. The detcrmlnation in respect of which an order of revlew is sought determines, in respect of drugs or medicinal preparatlons to which Part V11 applies, including drugs or mediclnal preparations manufactured by one or other of the applicants, the brand or brands under which the drugs or medicinal preparations may

be supplied under Part VII. The determination, however,

excludes, In the case of certain of the drugs and mediclnal preparatlons manufactured by the appllcants, the brand of the drug or medicinal preparation under which the same is marketed by the relevant applicant. In consequence, Part

V11 of the National Health Act does not apply in relation to

that drug or medicinal preparation as marketed by that

April 1989 differs from that which obtained under the	applicant. The situation which has thus obtained since 1
determination which was in force immediately prlor to that date.
The substantive proceeding was commenced on 26 April 1989. The grounds on which the order of review is sought are as follows:

"1. The maklng of the decision was not authorised or empowered by sectlon R5(6) of the Act.

2.  The makzng of the decislon by the Second Respondent as delegate of the Flrst Respondent was an improper exercise of the power conferred by sub-sectzon 85(6) of the Act in that the Respondent took irrelevant considerations into account in the exerclse of that power.

3.  The making of the decision by the Second Respondent as delegate of the Flrst Respondent was an improper exerclse of the power conferred by sub-sectzon 85(6) of the Act in that the exercise of the power was for a purpose other than the purpose for which the power was conferred, namely:

(a)	the purpose of assisting the generic manufacturers enter Into the market or Increase their market share (as the case may be) for the supply of drugs or medicinal preparations in competition with the Applicants; or
(b)	coercing the Applicants to agree and/or punishing the Applicants for not agreeing to price reductions for their products.

4 .   The procedures that were required by law to be observed in connection with the making of the determlnatlon were not observed by the Second Respondent In making the determlnatlon as delegate of the First Respondent.

5.  The Second Respondent's determlnatlon involved an error of law in that he proceeded on the basls that:-

(a)	sub-section 85(6) conferred a general power to fix manufacturer's prices for drugs or medicinal preparations for the purposes of Part V11 of the Act; and
(b)	the power conferred by section 85B unilaterally to set the manufacturers' price for drugs or medicinal preparations for the purposes of Part V11 could not be

used ss it can only be used when the relevant drugs or medicinal preparations were withln the period of protection glven by the Patents Act 1952 (as amended).

6. The maklnq of the declsion by the Second Respondent as delegate of the Plrst Respondent was an lmproper exercise of the power conferred by sub-sectlon 8 5 ( 6 ) of the Act in that the Second Respondent failed to take Into account relevant conslderatlons in the exerclse of the power.

7.  The making of the declslon by the second Respondent as delegate of the flrst Respondent was an Improper exercise of the power conferred by sub-section 8 5 ( 6 ) In that the decision was made in accordance wlth a rule or policy adopted by the Respondents and wlthout regard to the merlts of the particular case."

It will be apparent that these grounds overlap to a considerable extent. Particulars are glven in the application in respect of a number of the grounds. To some of these it will be necessary to refer later in these reasons.

When the substantive application came before the

Court on a directions hearlng on 12 May 1989, counsel for

been requested to discover, and to allow inspection by the	the applicants informed the Court that the respondents had
applicants of, certain classes of documents and that, if that request were not acceded to, an application would be made to the Court for an appropriate order. On 26 April 1989, each of the applicants had requested the respondents to furnish, in respect of the determination made on 16 March 1989, a statement under 5.13 of the Judicial Revlew Act

settlng out the finding: on material questions of fact, referring to the evldcnce or otner material on which those findings were based and slvlnq the reasons for the declslon. Such statements, one in respect of each applicant, were furnished to the appllrants on or about 26 May 1989. Thc respondents had, however, previously informed the applicants that the request for discovery and inspection of documents would not be acceded to, whereupon the applicants, on 22 May 1989, gave notice that they would move the Court for an order that the respondents flle and serve an affidavit of documents in relatlon to the following classes of documents:

"(a) any agreement or understanding with, or commitment to, any generic mnufacturer, as referred to in the Application;

(b) any notice given to the generic manufacturers in accordance with the commitments of the desire of any of the Applicants to have its brand ( s ) re-listed or of the Respondents' intention to re-list any of the Applicants' brands;

(C) any file notes or memoranda recording the effect of any conversations between any of the Applicants, on the one hand, and the Respondents, Officers of the

Department of Health and Community Services or the Pharmaceutical Benefits	Pricing Authority on the other relating
to the issues in the Application."

Following receipt of the statements under s.13 of the Judicial Review Act, the applicants revised their request for discovery and, by letter dated 31 May 1989 to the respondents' solicitor, confined the request to the following documents:

"1. Any agreement or undertaking wlth or commitment to any generlc manufacturer, as referred to in the application. In particular, those letters referred to in paragraph 2.17 of thc Section 13 Statement in respect of the Flrst Applicant and the letters referred to in the slmllar passages in the Section 13 Statements relating to the remaining

Applicants;

2.  Notlce glven to the generic manufacturers in accordance with the commitments of the deslre of any of the Applicants to have its brand relisted or the Respondents' lntentlon to relist any of the Applicants' brands;

3.  The letter dated 29th July, 1988 from the Chairman of the PBPA to the Minister of State for Housing and Aged Care referred to in paragraphs 2.10 and 3.5 in each of the Sectlon 13 Statements;

4.  The memorandum of the Minister's decision dated 4th August, 1988 referred to in paragraphs 2.11 and 3.6 in each of the Section 13 Statements;

5.  The minutes of the meetings of the PBPA between 26th February, 1988 and 24th January, 1989 referred to in paragraph 3.8 of the Section 13 Statements; and

6. The memorandum of advice from the

departmental officers concerning the administrative tlme perlods involved in amending the schedule of benefits so as to delist and list drugs on the PBS

During the course of the hearing, the applicants stated that Sectlon 13 Statements." referred to in paragraph 3.9 of the

they dld not press for discovery of the documents referred
to in the paragraph numbered 2

Counsel for the respondents dld not question the power of the Court to order discovery in an application under the Judicial Review Act but submitted that, in a case such as this where comprehensive statements under s.13 of that Act had been furnished, the Court should be cautlous in exercising its discretion to order discovery of documents.

Counsel referred to Llovd v. Costiqan (1983) 62 A.L.R. 284

at p.293, Sixth Ravini Ptv Ltd v. Federal Commissioner of Taxation (1985) 6 F.C.R. 356 at p.366 and Federal Commissioner of Taxation v. Nestle Australia Ltd (1986) 12 F.C.R. 257 at p.265.

It is part of the case which the applicants seek to
make that the second respondent, in making the determination
in question, took into account an agreement, arrangement or

understanding with, or a commitment given to, each of the generic manufacturers to the effect that a determination under s.85(6) of the National Health Act would be made delisting as from 1 April 1989 the brands under which

certain drugs or medicinal preparations manufactured by the applicants were marketed and that a determination re-listing those brands would not be made without giving at least four months' notice to the generic manufacturers of the

applicants seek discovery of any documents relating to such	respondents' intention to make such a determination. The
agreement, arrangement, understanding or commitment.

An examination of the statement under s.13 of the

Judlcial Review Act furnished by the second respondent to the first applicant, ICI Australia Operations Pty Limited, which is in evidence, shows that the second respondent acknowledges and admits that a commitment to the effect of that alleged by the applicants was given to the relevant generlc manufacturers by letter dated 19 September 1988 and that, in maklng the determination dated 16 March 1989, he took that clrcumstance into account. It is common ground that a slmilar acknowledgment and admission is contalned in each of the other statements furnished by the second respondent under s.13 of the Judiclal Revlew Act though those statements are not in evidence. It is not disputed that the statements under s.13 of the Judicial Review Act may be used by the applicants as admlsslons in their favour: Mlnister for Irnmiqration and Ethnic Affairs v. Arslan (1984) 4 F.C.R. 73 at p.75.

As discovery is a procedure dlrected towards obtaining a proper examination and determination of the issues which are in dispute between the parties (see Mullev v. Manlfold (1959) 103 C.L.R. 341 at p.345), it follows that, as there is no issue between the parties that a commitment to the effect relied upon by the applicants was given, it is lnapproprlate to order discovery of documents

evidencing such commitment.

The applicants also seek discovery of a letter dated 29 July 1988 from the Chairman of the Pharmaceutical Beneflts Pricing Authority to the Minlster of State for Housing and Aged Care. The purpose of the applicants in seeking discovery of that letter is to support their contention that the power conferred by sub-s.85(6) of the National Health Act was not properly exercised in that the power was used for the purpose of flxing the prices at whlch drugs or medicinal preparatlonz might be sold by the

manufacturers thereof, a purpose other than that for which
the power was conferred.

The second respondent, in the statements furnished under s.13 of the Judlcial Revlew Act, acknowledges and admits that, by the letter dated 29 July 1988, it was recommended to the Minister that certain brands of drugs be delisted from supply under Part V11 of the National Health Act if the manufacturer of thc brand of the drug refused to lower the price to comply with the Generic Pricing Policy, that that recommendation was accepted by the Minister and that he, the second respondent, had taken those matters into account in making the determination under review. The second respondent also acknowledges in the s.13 statements that the Generic Priclng Policy is a policy adopted by the first respondent whereby the maximum differential to apply between brands of the same drug supplied under Part V11 of the National Health Act is to be 20 cents, subject to a

the maximum price is based is reasonably available to	"market availability" test to ensure that the brand on which
consumers.
It follows that there is no disputed issue of fact between the parties to which the letter dated 29 July 1988 may be relevant and it is inappropriate to order its discovery.
Discovery is also souqht of any document evldenclng the Minister's agreement on 4 August 1988 to the
recommendation of the Pharmaceutlcal Beneflts Prlclng Authority. Here, agaln, the second respondent acknowledges
and admlts that the Minlster did so agree and that he, the second respondent, took that circumstance lnto account in making his determlnatlon. There 15, therefore, no relevant Issue of fact between the partles in relatlon to that matter and no call for the exercise of the Court's discretion to requlre production of the document.
The llst of documents for which discovery is sought includes the mlnutes of the meetings of the Pharmaceutlcal
Beneflts Priclng Authority between 26 February 1988 and 24 January 1989 referred to in the statements furnished under s.13 of the Judiclal Review Act.
Having regard to the grounds upon which the applicants rely as disclosed in the application dated 26 April 1989 and the materlal which has been provided to the
Review Act, I am of opinion that the Court should not order applicants in the statements made under s.13 of the Judicial
discovery of the minutes sought.
The last of the documents for which discovery is sought is described as a memorandum of advice to the second respondent from departmental officers concerning the administrative time periods involved in amending the schedule of benefits so as to delist and llst drugs on the Pharmaceutic1 Benefits Scheme. Although the statements under 5.13 of the Judlcial Revlew Act acknowledge that the second respondent based his findings on, inter U, advice on the subject mentioned, they do not disclose the substance of the advice given. In those circumstances, it would, I think, have been appropriate to order discovery of any document recording such advice. However, the Court was
assured by counsel for the respondents that the advice provided to the second respondent was not set out in any document. Accepting that assurance, as I do, it would be futile to make an order for discovery in respect of the advice.
For the reasons set out above, the motion for discovery is dismissed. The applicants must pay the
respondents' costs of the application.

I certify that this and the preceding 11 pages

Reasons for Judgment are a true copy of the

herein of the Honourable

Mr Justice Neaves.

~sso~iate
Dated: 6 June 1989

Counsel for the applicants : Mr H. Jolson

Solicitors for the applicants : Macphillamy Cummins &

Glbson

Counsel for the respondents : Miss S.C. Kenny

Solicitor for the respondents : Australian Government

Solicltor

Date of hearing : 5 June 1989