Ingenu CRO Pty Ltd v Psycheceutical AU Pty Ltd (in liquidation)
[2025] VSC 581
•15 September 2025
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S ECI 2024 03280
| INGENU CRO PTY LTD (ACN 656 400 056) | Plaintiff/Defendant by Counterclaim |
| v | |
| PSYCHECEUTICAL AU PTY LTD (ACN 662 937 706) (in liquidation) | Defendant/Plaintiff by Counterclaim |
---
JUDGE: | Waller J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 1 September 2025 |
DATE OF JUDGMENT: | 15 September 2025 |
CASE MAY BE CITED AS: | INGENU CRO Pty Ltd v Psycheceutical AU Pty Ltd (in liquidation) |
MEDIUM NEUTRAL CITATION: | [2025] VSC 581 |
---
CONTRACTS – Provision of clinical research services – Performance of services pursuant to contract – Payment not received – Action in debt.
CORPORATIONS – Application for leave to continue proceedings against a company in liquidation – Whether leave should be granted – Leave granted – Corporations Act 2001 (Cth), s 500(2).
PRACTICE AND PROCEDURE – Security for costs – Counterclaim stayed due to failure to provide security for costs – Discretion to dismiss – Counterclaim dismissed – Supreme Court (General Civil Procedure) Rules 2015 (Vic), r 62.04.
PRACTICE AND PROCEDURE – Judgment in foreign currency – Conversion to Australian currency as at the date of judgment – Election.
PRACTICE AND PROCEDURE – Pre-judgment interest – Whether pre-judgment interest to be applied at the rate fixed under the Penalty Interest Rates Act 1983 (Vic) – Supreme Court Act 1986 (Vic), s 58.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | M Thomas | Septimus Jones & Lee |
| For the Defendant | No appearance |
HIS HONOUR:
A. INTRODUCTION
The plaintiff, INGENU CRO Pty Ltd, and the defendant, Psycheceutical AU Pty Ltd, entered into a Master Services Agreement (MSA) on 6 November 2022, pursuant to which the plaintiff was to undertake clinical trials for the defendant.
On 6 November 2022, the parties executed various documents pursuant to the MSA, including a study order pursuant to which the plaintiff agreed to undertake clinical services in relation to the use of ketamine for the treatment of post-traumatic stress disorder (Study Order).
Between 11 October 2022 and 8 March 2023, the defendant paid the plaintiff US$550,000, by way of deposit, pursuant to the parties’ contractual arrangement.
Between 6 November 2022 and 25 July 2023, the plaintiff performed the relevant clinical services for the defendant, including the provision of project delivery documents to the defendant.
On 12 July 2023, the plaintiff issued six invoices to the defendant totalling US$2.03 million. Other than the deposit amount of US$550,000, the defendant failed to pay these invoices.
The plaintiff commenced this proceeding on 27 June 2024.
On 17 October 2024, the defendant filed its defence and counterclaim.
On 14 March 2025, due to concerns about the defendant’s financial standing, the plaintiff sought an order for security for the costs of defending the counterclaim.
On 5 May 2025, Efthim AsJ ordered that the defendant provide security for the plaintiff’s costs of defending the counterclaim in the amount of $100,000 by 26 May 2025, failing which the counterclaim would be stayed.
The defendant failed to provide security as ordered and its counterclaim was stayed.
On 15 August 2025, the defendant entered into a creditor’s voluntary liquidation, which automatically stayed the proceeding pursuant to s 500(2) of the Corporations Act 2001 (Cth) (Corporations Act).
At the hearing, the plaintiff sought leave pursuant to s 500(2) of the Corporations Act to continue its proceeding against the defendant.
The plaintiff also sought an order dismissing the defendant’s counterclaim on the basis that the defendant had failed to comply with the order in respect of the provision of security.
Before dealing with the plaintiff’s substantive claim, I will address the defendant’s non-appearance at the hearing and the plaintiff’s preliminary applications.
B. ABSENCE OF THE DEFENDANT AT THE HEARING
On 6 February 2025, I made consent orders including that the directions hearing listed on 7 February 2025 be adjourned to 10:30am on 30 May 2025.
On 24 April 2025, the defendant’s solicitors, Harwood Andrews, filed a notice of solicitor ceasing to act.
On 30 May 2025 at 7:12am, Mr Michael Hlavsa, one of the three directors of the defendant, emailed my chambers stating that the defendant did not have counsel and requesting an adjournment of the directions hearing.
At the directions hearing on 30 May 2025 I refused the adjournment as the defendant had received considerable notice of the hearing. I also made orders fixing the proceeding for trial on 1 September 2025 and requiring the plaintiff to serve a copy of the orders and a copy of the transcript of the directions hearing on the defendant.
The defendant’s pattern of non-engagement is well established. It failed to appear before Efthim AsJ on 5 May 2025 for the security for costs application, has been non-responsive to correspondence from the plaintiff’s solicitors, and despite multiple communications from my chambers to the defendant’s directors since 30 May 2025, no response has been received.
Following the defendant’s entry into voluntary liquidation on 15 August 2025, the proceeding was automatically stayed under s 500(2) of the Corporations Act.
At the directions hearing on 22 August 2025, the solicitor appearing for the liquidators stated that the liquidators neither consented to nor opposed the orders sought by the plaintiff and that they did not intend to take any steps with respect to the proceeding.
In these circumstances, where the defendant has effectively abandoned the proceeding both before and after entering liquidation, I determined that the trial should proceed in its absence.[1] The defendant was afforded reasonable notice and opportunity to participate but chose not to do so.
[1]See Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 49.02(1)(b).
However, the defendant’s absence does not relieve the plaintiff of its obligation to prove its case. Where a defendant is not present at trial, the plaintiff must still establish its case by evidence to obtain judgment. The plaintiff is then entitled to the relief sought in the statement of claim.[2]
[2]See Stone v Smith (1887) 35 Ch D 188, 189 (Kekewich J); Macquarie Bank Ltd v Seagle (2005) 146 FCR 400, 406–7 [24] (Conti J); Electrolux Home Products Pty Ltd v Delap Impex KFT (2015) 110 IPR 164, 169–70 [24] (Farrell J).
While the plaintiff relies primarily on its own evidence, it may also rely on admissions made by the defendant in its filed defence.
Lawyers have implied authority to make admissions on their clients’ behalf during litigation, either for the purposes of dispensing with proof at trial or in certain respects.[3]
[3]Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (2008) 167 FCR 314, 318–19 [18]–[19], [34] (Rares J), cited in Slea Pty Ltd v Connective Services Pty Ltd (No 9) [2022] VSC 136, [429] (Robson J), undisturbed on appeal in Millsave Holdings Pty Ltd v Connective Group Pty Ltd [2023] VSCA 326, [105] (McLeish and Macaulay JJA, Lyons JA agreeing at [1053]–[1054]).
Whether an admission in documents filed by a defendant constitutes an admission pursuant to s 87 of the Evidence Act 2008 (Vic) is a question of fact in the circumstances.[4]
[4]Australian Competition and Consumer Commission v J Hutchinson Pty Ltd (2022) 404 ALR 553, 569–70 [98] (Downes J), quoting Australian Competition and Consumer Commission v Pratt (No 3) (2009) 175 FCR 558, 593–5, [70], [72]–[73]; Capic v Ford Motor Company of Australia (2021) 154 ACSR 235, 419–20 [815]–[817] (Perram J), reversed (2023) 300 FCR 1 but not on the question of admissions, special leave granted by the High Court in Capic v Ford Motor Company of Australia Pty Ltd [2024] HCASL 27.
The defendant’s failure to adduce evidence at trial is a relevant consideration when weighing its pleaded defences. In Australian Securities and Investments Commission v Hellicar, the High Court of Australia recognised that:
[d]isputed questions of fact must be decided by a court according to the evidence that the parties adduce, not according to some speculation about what other evidence might possibly have been led. Principles governing the onus and standard of proof must faithfully be applied. And there are cases where demonstration that other evidence could have been, but was not, called may properly be taken to account in determining whether a party has proved its case to the requisite standard.[5]
[5](2012) 247 CLR 345, 412 [165] (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ) (Hellicar).
In determining whether a party has discharged the burden of proof on the balance of probabilities, regard must be had to that party’s ability to adduce evidence and any failure by the other party to adduce available evidence in response.[6]
[6]G v H (1994) 181 CLR 387, 391–2 (Brennan and McHugh JJ), quoted in Hellicar, 441 [250] (Heydon J).
Accordingly, I consider it appropriate to treat representations made in the defendant’s defence as admissions for the purpose of establishing the defendant’s business operations and the contractual arrangements between the parties, while requiring the plaintiff to prove by evidence its performance of contractual obligations and the defendant’s breaches.
C.APPLICATION FOR LEAVE TO PROCEED AGAINST COMPANY IN LIQUIDATION
C.1 Applicable law
Section 500(2) of the Corporations Act provides:
After the passing of the resolution for voluntary winding up, no action or other civil proceeding is to be proceeded with or commenced against the company except by leave of the Court and subject to such terms as the Court imposes.
In Viscariello v Bernsteen Pty Ltd (in liquidation), Besanko J stated that the effect of s 500(2) is to require a claimant to adopt the course of lodging a proof of debt unless the claimant can demonstrate that there is a good reason why a departure from that procedure is justified in the case of that particular claim in dispute.[7]
[7][2004] SASC 266, [21] (Besanko J) (Viscariello).
The following principles have been identified as relevant to the exercise of the Court’s discretion under s 500(2):
(a) one purpose of the requirement of leave is to avoid a company in liquidation being subject to multiplicity of time-consuming and expensive actions[8] and to prevent the assets of the company from being dissipated by unnecessary litigation;[9]
[8]Latimer v Cutwood Panels Pty Ltd (in liquidation) [2012] WASC 408, [8] (Beech J), citing Re Gordon Grant and Grant Pty Ltd [1983] 2 Qd R 314, 315–317; Vagrand Pty Ltd (in liquidation) v Fielding (1993) 41 FCR 550, 555; Viscariello, [21] (Besanko J).
[9]Re DSHE Holdings Limited (recs and mgrs apptd) (in liq) [2018] NSWSC 82, [18] (Black J) (DSHE Holdings).
(b) the power to grant leave is discretionary;[10]
[10]DSHE Holdings, [18] (Black J).
(c) the claimant has to establish that the claim has a solid foundation and gives rise to a serious question to be tried;[11]
[11]DSHE Holdings, [18] (Black J).
(d) the claimant must show why it should not be left to prove its debt in the winding up;[12]
[12]DSHE Holdings, [18] (Black J).
(e) the considerations relevant to the exercise of the Court’s discretion under s 500(2) include:
(i) the amount and seriousness of the claim;[13]
[13]Viscariello, [21] (Besanko J).
(ii) the degree of complexity of the relevant legal and factual issues,[14] which may include whether there are complex procedural matters such as discovery or interrogatories involved;[15]
[14]Viscariello, [21] (Besanko J).
[15]Zamattia v Jainti Pty Ltd (in liq) in its capacity as Trustee of the Zambito Trust [2022] NSWCA 3, [8] (Leeming JA) (Zamattia).
(iii) if proceedings have already commenced, the stage to which those proceedings have progressed;[16] and
[16]Viscariello, [21] (Besanko J).
(iv) the effects that the proceedings may have on creditors of the company in liquidation;[17]
[17]Zamattia, [8] (Leeming JA).
(f) the fact that the company is insolvent and will be unable to satisfy a judgment is a factor against leave being granted;[18]
[18]Viscariello, [21] (Besanko J).
(g) where a claim is likely to be, or is arguably, covered by insurance, leave will be more readily granted;[19]
(h) the fact that the claimant has an arguable claim for proprietary relief against the company’s assets is a factor in favour of leave being granted;[20] and
(i) the Court will normally grant leave as of right if the claimant seeks to recover their own property from the company because such claims cannot be accommodated within the proof of debt regime.[21]
[19]DSHE Holdings, [18] (Black J).
[20]Viscariello, [21] (Besanko J).
[21]Commonwealth of Australia v Davis Samuel Pty Ltd (No 5) (2008) 68 ACSR 336, 344 [34]–[35] (Refshauge J).
C.2 The plaintiff’s submissions
The plaintiff submitted that the discretion to grant leave pursuant to s 500(2) should be exercised for the following reasons:
(a) there is a solid foundation for the substantive proceeding and a serious question to be tried, as set out in the plaintiff’s outline of opening submissions for the substantive proceeding dated 18 August 2025 and the affidavit of Mr Anthony Northam sworn 28 August 2025;
(b) the legal and factual issues are not complex, and the defendant will not appear to test or otherwise challenge the plaintiff’s evidence;
(c) the defendant has allowed the plaintiff to continue expending its time and resources to prepare its case even when liquidation had been contemplated by the defendant as evidenced by the communication between the liquidator and the defendant’s solicitors in May 2025;
(d) there is no prejudice to creditors, as the defendant’s liquidators do not intend to defend or otherwise participate in the proceeding;
(e) given the steps taken, the time, expense and resources expended, and the relatively limited time and expense required to complete the proceeding, it would be inimical to the overarching purpose set out in the Civil Procedure Act 2010 (Vic) if leave were not granted to continue the proceeding;
(f) it is likely that the defendant will reject any proof of debt submitted by the plaintiff without a judgment in this proceeding;
(g) the proof of debt procedure will not enable the plaintiff to recover interest and costs, which the defendant has allowed the plaintiff to accrue over many months; and
(h) if the plaintiff is successful at trial, it may be able to obtain some or all of the judgement debt out of insurance proceeds. The plaintiff has identified the following insurance policies held by the defendant:
(v) Chubb Insurance Australia Limited, Life Science Liability Certificate of Insurance from 10 January 2023 to 15 January 2024;[22]
[22]Exhibit AHN-6 to the affidavit of Mr Anthony Northam sworn 29 August 2025, 18 (Exhibit AHN-6).
(vi) Chubb Insurance Australia Limited, Life Science Liability Certificate of Insurance from 15 January 2024 to 15 January 2025;[23]
[23]Exhibit AHN-6, 17.
(vii) Chubb Insurance Australia Limited, Life Science Liability Policy Wording;[24] and
(viii) Berkeley Insurance Australia, Management Liability Insurance Policy Wording).[25]
[24]Exhibit AHN-6, 19–77.
[25]Exhibit AHN-7 to the affidavit of Mr Anthony Northam sworn 1 September 2025, 68–117 (Exhibit AHN-7).
C.3 Consideration
At the hearing I made an order that the plaintiff had leave to continue the proceeding pursuant to s 500(2) of the Corporations Act. My reasons are as follows.
First, the plaintiff has established that its claim has a solid foundation and gives rise to a serious question to be tried. The claim is based on unpaid invoices totalling US$1.48 million for clinical research services that were performed under clear contractual arrangements. The defendant has admitted in its defence the existence of the MSA and Study Order, and while it disputes the manner of performance, it has filed no evidence to support its allegations.
Secondly, the legal and factual issues are not complex. This is fundamentally a debt claim based on unpaid invoices for services rendered under written agreements.
Thirdly, the proceeding has progressed to the point where it was ready for trial on 1 September 2025. All pre-trial steps have been completed and the plaintiff has expended considerable time and resources in preparation. It would be wasteful and prejudicial to require the plaintiff to abandon this proceeding and start afresh with a proof of debt.
Fourthly, there will be no prejudice to other creditors. The liquidators have confirmed they do not intend to defend the proceeding or take any steps in relation to it. No additional costs will be incurred by the liquidation as a result of granting leave, and the liquidators have already secured over $1 million in funds.[26]
[26]Exhibit AHN-7, 18.
Fifthly, there is some prospect that any judgment may be satisfied from insurance proceeds. The plaintiff has identified insurance policies held by the defendant, including a Life Sciences policy that may arguably cover a judgment against the defendant.
Sixthly, requiring the plaintiff to prove its debt in the winding up would be inappropriate in these circumstances. The defendant is likely to reject any proof of debt without a court judgment, and the proof of debt procedure would not enable recovery of interest and costs that have accrued over many months due to the defendant’s failure to pay.
The fact that the defendant is insolvent and may be unable to satisfy a judgment is a factor against granting leave, but this is outweighed by the other considerations I have referred to.
D. APPLICATION TO DISMISS THE DEFENDANT’S COUNTERCLAIM
D.1 Applicable law
Rule 62.04 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (Supreme Court Rules)[27] provides:
Where a plaintiff fails to give the security required by an order, the Court may dismiss the plaintiff’s claim.
[27]I note that the Supreme Court (General Civil Procedure) Rules 2025 (Vic) commenced on 8 September 2025. However, the application was heard and determined on 1 September 2025 while the Supreme Court (General Civil Procedure) Rules 2015 (Vic) were still in force. In any event, in respect of rr 62.01 and 62.04, there are no differences between the two sets of the Rules.
Rule 62.01 provides that ‘plaintiff includes any person who makes a claim in a proceeding’ so would include a defendant who brings a counterclaim.
The principles to be applied regarding r 62.04 were set out by Delany J in Osten & Chrome Pty Ltd v Hale Corp Pty Ltd & Anor:
Rule 62.04 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘Rules’) provides that, where a plaintiff fails to give the security required by an order, the Court may dismiss a plaintiff’s claim. Rule 62.04 confers a discretionary power which is to be exercised judicially: that is, according to the requirements of reason and justice, and having regard to the subject matter, scope and purpose of the power.
Dismissal of a claim without adjudication on the merits is a ‘severe order’, given it terminates the litigation. Accordingly, the Court ought exercise its power conferred by r 62.04 with caution. Factors relevant to the exercise of that discretion may include: whether the proceeding has been pursued with due diligence; whether there is a reasonable prospect that the security will be paid; and whether there has been a failure to comply with a Court prescribed time limit for payment. Those factors are illustrative, not exhaustive. It may also be accepted that the period of any delay and any associated prejudice will be relevant; as well as whether the plaintiff was put on notice of the dismissal at the time security was ordered.
More generally, it has been said that the Court must ‘take into account the nature of the proceedings and every aspect of or related to the circumstances in which the security for costs orders have not been complied with’ and will strain ‘wherever practicable consistently with the interest of justice to avoid taking the radical step of denying the plaintiff its day in court’.[28]
[28][2025] VSC 320, [26] (Delany J) (citations omitted).
D.2 The plaintiff’s submissions
The plaintiff submitted that an order dismissing the counterclaim should be granted because:
(a) after the defendant filed its counterclaim and obtained a lengthy timetable to prepare for trial, it did not take any further steps in the proceeding and elected not to prosecute its counterclaim;
(b) the defendant ceased to have representation in this proceeding;
(c) the defendant failed to comply with the Court’s orders to give security by a stipulated due date; and
(d) the defendant had reasonable notice that the plaintiff would make an application to dismiss the defendant’s counterclaim if security was not provided.
D.3 Consideration
At the hearing I said that I would make an order dismissing the defendant’s counterclaim pursuant to r 62.04 of the Supreme Court Rules. My reasons are as follows.
First, there has been a clear failure to comply with a court-prescribed time limit for payment of security. The defendant had 21 days from 5 May 2025 to provide security but failed to do so.
Secondly, there is no reasonable prospect that security will be paid. The defendant entered voluntary liquidation on 15 August 2025, and the liquidators have confirmed they do not intend to defend or take any steps in this proceeding.
Thirdly, the defendant was given reasonable notice that this application would be made. The plaintiff foreshadowed the application at the directions hearing on 30 May 2025, and written submissions dated 18 August 2025 were served on the defendant indicating this application would be made.
Fourthly, the defendant has not pursued its counterclaim with due diligence. After filing the counterclaim and obtaining a lengthy timetable, it took no further steps, ceased to have legal representation, and failed to appear at hearings.
Fifthly, the defendant was put on notice of potential dismissal at the time security was ordered, as Efthim AsJ’s order specifically provided for this possibility.
Sixthly, the period of delay has been approximately three and a half months since the security was required to be provided, during which time the plaintiff has continued to incur costs in defending the counterclaim.
In all the circumstances, the interests of justice require that the defendant’s failure to comply with the court’s order should result in dismissal of the counterclaim. The defendant has effectively abandoned its counterclaim by failing to provide security and entering liquidation without seeking to defend the proceeding.
E. THE SUBSTANTIVE PROCEEDING
E.1 The relevant facts
The plaintiff carries on a clinical research business and performs clinical trials on behalf of pharmaceutical or biotechnology companies.[29] The defendant has been in the business of developing pharmaceutical products.[30]
[29]Statement of Claim filed on 27 June 2024, [1] (Statement of Claim); Defence and Counterclaim filed on 17 October 2024, [1] (Defence); Transcript of Proceedings (1 September 2025) 33 (Transcript).
[30]Statement of Claim filed on 27 June 2024, [2] (Statement of Claim); Defence and Counterclaim filed on 17 October 2024, [2] (Defence); Transcript, 33.
On 6 November 2022, the plaintiff and defendant entered into the MSA, executed by the respective directors on behalf of both parties, and the parties further executed the Study Order and a Transfer of Responsibilities document pursuant to the MSA.[31]
[31]Court Book filed on 1 August 2025, 86–104, 109–115 (CB); Transcript, 33–34.
Dr Sudhanshu Agarwal, the plaintiff’s director, gave evidence for the plaintiff. He explained that the MSA describes the overarching terms and conditions of engagement between the plaintiff and defendant, while the Study Order dictates the exact work order to be performed under the auspices of the MSA.[32]
[32]Transcript, 34.
Dr Agarwal explained that the Transfer of Responsibilities outlines in a legal manner who carries the responsibility over the course of the clinical trials and shows that the defendant, as the sponsor, transferred many of those responsibilities to the plaintiff, as the clinical research organisation (CRO), in exchange for money.[33]
[33]Transcript, 40–41.
Under these agreements, the plaintiff was required to prepare for and undertake clinical research services in relation to the use of ketamine for the treatment of post-traumatic stress disorder (Services).[34] The cost of the Services was US$5 million.[35]
[34]CB, 96.
[35]CB, 98.
Between October 2022 and March 2023, the defendant paid a deposit totalling US$550,000 to the plaintiff.[36]
[36]Defence, [15]; Plaintiff’s Outline of Opening Submissions filed on 18 August 2025, [3(a)] (Plaintiff’s Submissions); Transcript, 26.
On 18 January 2023, the parties executed an addendum to the Study Order titled ‘Addendum to Study Order Executed on 6th November 2022’ (First Addendum), pursuant to which the overall cost of the clinical trial would increase to US$6.8 million to account for the growth in the number of participants from 65 to 115.[37]
[37]CB, 105–108.
On 14 July 2023, the parties executed a second addendum to the Study Order titled ‘Addendum to Study Order 18th May 2023’ (Second Addendum), pursuant to which:
(a) the overall design of the clinical trial was changed into two separate studies (that is, Phase I and Phase II);
(b) the number of participants decreased to 78;
(c) the total cost for services under Phase I and Phase II was US$5.2 million; and
(d) the First Addendum became null and void.[38]
[38]CB, 116–119. In respect of the First Addendum becoming null and void, the Second Addendum refers to itself as ‘this addendum dated 11th May 2023’ when it is titled ‘Addendum to Study Order 18th May 2023’. Dr Agarwal gave evidence that the discrepancy in the dates appears to be a typographical error.
In its statement of claim the plaintiff alleged that between 6 November 2022 and 25 July 2023, it performed the Services for the defendant and provided to the defendant various project delivery documents in the course of providing the Services.[39]
[39]Statement of Claim, [10]–[11].
In its defence the defendant alleged that the Services were not performed in accordance with the Study Order or the MSA,[40] but no evidence was filed in support of its allegations.[41]
[40]See, eg, Defence, [7], [10].
[41]Transcript, 70–71.
To establish that the plaintiff performed the Services in accordance with the Study Order and the MSA, it relied on the evidence given by Dr Agarwal and various project delivery documents that were referred to as ‘Clinical Trial Documents’.
Dr Agarwal gave the following evidence:
(a) the plaintiff performed work for the defendant from late 2022 until October 2023;[42]
[42]Transcript, 42–43.
(b) the plaintiff provided the Clinical Trial Documents to the defendant and Dr Agarwal was involved in the final oversight of those documents at the time they were published;[43]
[43]Transcript, 43; CB, 2.
(c) the document titled ‘Project Management Plan’ was signed by two employees of the plaintiff, Veronika Simic and Dom Bailey, and by the chief executive officer of the defendant, Chad Harman.[44] The Project Management Plan dictates prospectively what the course of the trial management will be throughout the clinical trial;[45]
[44]Transcript, 43–44; CB, 177.
[45]Transcript, 44.
(d) the document titled ‘Trial Monitoring Plan’ was also signed by the same three people who signed the Project Management Plan.[46] The Trial Monitoring Plan details the conditions agreed on by both the plaintiff and defendant to monitor data accuracy and patient safety, or in this case, healthy volunteer safety;[47]
(e) the document titled ‘Safety Management Plan’ was signed by the same three people who signed the Project Management Plan and by a fourth person, Dr Howard Wraight, a medical monitor responsible for monitoring patients and healthy volunteers throughout the conduct of the study to ensure that no one is harmed by the clinical trial;[48] and
(f) each of the Clinical Trial Documents is highly customised and specific for the drug being tested, the clinical trial venue and the style of data needed for the particular client to achieve Food and Drug Administration (FDA) or Therapeutic Goods Administration (TGA) registration.[49]
[46]Transcript, 44; CB, 208.
[47]Transcript, 44–45.
[48]Transcript, 45; CB, 282.
[49]Transcript, 45.
In response to the defendant’s allegation in its defence that there were certain guidelines that the plaintiff was required to comply with in providing the Services, Dr Agarwal confirmed that to the extent that the guidelines and standards for the performance of clinical research were applicable, the Services conformed ‘100 per cent’ to those guidelines and standards.[50]
[50]Transcript, 46–47.
Dr Agarwal gave further evidence that:
(a) the Services were under the observation of Australia’s largest phase 1 clinical trial unit, Nucleus Network, run at the Alfred Hospital under a ‘fairly well-renowned physician by the name of Dr Jason Lickliter’;
(b) the Alfred Hospital Human Research Ethics Committee oversaw the entire conduct of the study; and
(c) all data had to be submitted to both the Alfred Hospital Human Research Ethics Committee and the TGA and none of the laws, guidelines or regulations identified by the defendant had been breached.[51]
[51]Transcript, 47.
On 12 July 2023, the plaintiff issued six invoices totalling US$2.03 million (exclusive of GST):
(a) Invoice No. 1082 for Commencement (Phase 1): US$550,000, due 17 July 2023;
(b) Invoice No. 1083 for Site Selection (Phase 1): US$220,000, due 17 July 2023;
(c) Invoice No. 1084 for Ethics Submission (Phase 1): US$220,000, due 17 July 2023;
(d) Invoice No. 1085 for First Patient First Dose (Phase 1): US$440,000, due 12 September 2023;
(e) Invoice No. 1086 for Phase 2 Trial Commencement: US$300,000, due 17 July 2023; and
(f) Invoice No. 1087 for Phase 2 Trial Site Selection: US$300,000, due 12 September 2023.[52]
[52]Statement of Claim, [12]; Defence, [12(a)]; CB, 162–167.
These six invoices were referable to the tables set out under the heading, ‘Services Charges — Phase I & Phase II’ in the Second Addendum, where the invoices represent the trial milestones throughout the progress of the clinical trial.[53]
[53]CB, 117; Transcript, 48–49.
All six invoices were issued on 12 July 2023. Dr Agarwal explained that the invoices were likely issued under the original Study Order, but at the defendant’s request the dates were subsequently updated to reflect when the Second Addendum was executed.[54]
[54]Transcript, 51.
Dr Agarwal confirmed that by the time these invoices were issued, the work described in each invoice had already been completed.[55]
[55]Transcript, 51–52.
Under the MSA, the defendant was obliged to pay each invoice (including GST of 10%) issued by the plaintiff in accordance with the payment terms noted on the invoice.[56]
[56]CB, 89.
In addition to stating a ‘due date’, each of the invoices contained the following payment terms: ‘Accounts due when rendered. Interest at the rate of 2.0% per annum will be charged on accounts overdue 30 days or more’.[57]
[57]CB, 162–167.
In respect of Invoice No. 1082, Dr Agarwal gave evidence that while the invoice was not paid at the time it was issued, the defendant’s US$550,000 deposit was subsequently applied against this invoice.[58] However, the GST component was never paid.[59]
[58]Transcript, 48.
[59]Transcript, 50.
In respect of the remaining five invoices, Dr Agarwal confirmed that those invoices were not paid.[60]
[60]Transcript, 48.
By around September or October 2023, no further work on the clinical trials was being performed and the plaintiff was in ‘weekly negotiations’ with the defendant about payment arrangements.[61]
[61]Transcript, 52–53.
On 28 March 2024, LegalVision, then acting for the plaintiff, issued a letter of demand to the defendant. Dr Agarwal explained that this followed numerous months of unsuccessful negotiations and discussions, after which payment appeared highly improbable.[62]
[62]CB, 168; Transcript, 52.
E.2 Applicable contractual provisions
The relevant contractual provisions of the MSA are set out below. The MSA specifies that ‘CRO, we, us, or our’ refers to the plaintiff and ‘Sponsor, you or your’ refers to the defendant.[63]
[63]CB, 86.
…
2.1This Agreement constitutes a ‘master’ agreement under which, during the Term, you may engage us to conduct Services under separate Study Orders.[64]
[64]CB, 87.
2.2The details of each Study under this Agreement (each ‘Study’) shall be agreed in a form acceptable to the parties (each such writing, a ‘Study Order’). A form of Study Order is provided at Attachment 1 to this Agreement.[65]
[65]CB, 87.
…
3.1In consideration of your payment of the Fee, on and from the Commencement Date, the Sponsor appoints the CRO to provide the Services.[66]
[66]CB, 87.
…
5.1 The Parties must comply with the following, as applicable:
(a)any requirements of relevant Commonwealth, State or Territory Laws or of Regulatory Authorities;
(b)the requirements of the TGA in Access to Unapproved Therapeutic Goods - Clinical Trials in Australia (October 2004) or its replacement and any other TGA publication or guideline that relates to clinical investigations, or other such regulations or guidance governing the conduct of clinical research in the Jurisdiction of the Study;
(c)the principles that have their origins in the Declaration of Helsinki adopted by the World Medical Association in October 1996 (as accepted by the Australian Government);
(d)the Guideline for Good Clinical Practice developed by the International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (ICH), being the version in force from time to time or its replacement;
(e)the procedures and practices described in ISO 14155:2011, being the version in force from time to time, or its replacement, of the International Standard ISO14155:2011 ‘Clinical investigation of medical devices for human subjects — Good clinical practice’ developed by the International Organisation for Standardisation; and
(f)the NHMRC Statement and any other relevant NHMRC publication or guideline that relates to clinical trials.[67]
[67]CB, 87.
…
13.1In consideration for us providing the Services, you agree to pay us the Fees in accordance with this Agreement.[68]
[68]CB, 89.
…
13.3The Sponsor must pay each invoice issued by the CRO as per the payment terms noted on the invoice.[69]
[69]CB, 89.
13.4If any payment has not been made in accordance with the Payment Terms, we may (at our absolute discretion), after a period of 10 Business Days, cease providing Services, and recover, as a debt due and immediately payable from you, our additional costs of doing so.[70]
[70]CB, 89.
…
22.2Amendment: This Agreement may only be amended by written instrument executed by the Parties.[71]
[71]CB, 92.
…
23. Definitions (relevantly):
…
Agreement means these terms and conditions and any agreed Study Order issued under it and any documents attached to, or referred to in, each of them.[72]
[72]CB, 93.
…
Fees means the fees and charges payable to the CRO for the Services and specified in the Study Order.[73]
[73]CB, 93.
…
NHMRC means the National Health and Medical Research Council.[74]
…
NHMRC Statement means the NHMRC National Statement on Ethical Conduct in Human Research (2007) or its replacement.[75]
…
Services means the conduct of the Australian clinical trial (Study) in accordance with the Services set out in the Study Order and as indicated on the relevant TORO Document.[76]
…
Study Order means an order for the supply of the Services, issued by us in accordance with clause 2, a form of which is provided at Annexure 1 to this Agreement.[77]
…
TORO Document means the transfer of regulatory obligations document at Attachment 2.[78]
…
[74]CB, 94.
[75]CB, 94.
[76]CB, 94.
[77]CB, 95.
[78]CB, 95.
E.3 The plaintiff’s submissions
The plaintiff submitted that the relevant terms of the MSA, Study Order and the Second Addendum are clear and unambiguous and there are no issues of construction with respect to these contractual provisions.[79]
[79]Plaintiff’s Submission, [21]; Transcript, 68.
The plaintiff submitted that the undisputed evidence was that it had undertaken the Services for the defendant as agreed and, with the exception of the deposit of US$550,000, had not been paid the amounts it was owed.
The plaintiff seeks to recover unpaid fees from the defendant as a debt or, alternatively, as damages.[80] In its statement of claim the plaintiff sought payment of US$2.03 million, calculated into Australian dollars, plus 10% GST.[81]
[80]Transcript, 24.
[81]Statement of Claim, [18].
In its submissions, the plaintiff revised its claim to US$1.48 million, acknowledging that the defendant paid a US$550,000 deposit. The plaintiff no longer presses its claim for GST.[82]
[82]Plaintiff’s Submissions, [3]; Transcript, 26.
E.4 Consideration
The plaintiff has established its case for recovery of the unpaid invoices on the evidence before the Court.
The contractual arrangements between the parties are clear and unambiguous. The MSA established the overarching framework for the provision of clinical research services, with specific work to be detailed in the Study Order. The Study Order (as amended by the Second Addendum) required the plaintiff to provide clinical research services relating to ketamine treatment for post-traumatic stress disorder at a total cost of US$5.2 million.
The evidence of Dr Agarwal, which I accept, establishes that the plaintiff performed the required services between November 2022 and July 2023. The clinical trial documents demonstrate the sophisticated and comprehensive nature of the work performed, including project management plans, trial monitoring plans, and safety management plans, all properly executed by representatives of both parties.
Dr Agarwal’s evidence that the Services conformed ‘100 per cent’ to applicable guidelines and standards is unchallenged. The Services were conducted under the oversight of the Alfred Hospital Human Research Ethics Committee and Nucleus Network, with all data submitted to both the Ethics Committee and the TGA for confirmation. No breaches of applicable laws, guidelines or regulations have been identified.
The defendant’s allegations in its defence that the Services were not performed in accordance with the Study Order or MSA are unsupported by any evidence. In accordance with the principles in Australian Securities and Investments Commission v Hellicar and G v H, the Court must decide disputed questions of fact according to the evidence adduced, and the defendant’s failure to adduce any evidence in support of its allegations is a matter properly taken into account.[83]
[83]Hellicar, 412 [165] (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ); G v H (1994) 181 CLR 387, 391–2 (Brennan and McHugh JJ), quoted in Hellicar, 441 [250] (Heydon J).
The invoicing arrangements are clearly established. Six invoices totalling US$2.03 million were issued on 12 July 2023, representing different trial milestones under the Second Addendum. Dr Agarwal’s evidence, which I accept, is that the work the subject of each invoice had already been completed by the time the invoices were issued.
The defendant paid a deposit of US$550,000 which was applied against Invoice No. 1082, though the GST component was never paid. The remaining five invoices totalling US$1.48 million were never paid, despite the clear contractual obligation under cl 13.3 of the MSA to pay each invoice as per the payment terms noted on the invoice.
The plaintiff’s revised claim for US$1.48 million (being US$2.03 million less the US$550,000 deposit paid) is appropriate and supported by the evidence.
Accordingly, I find in favour of the plaintiff on its claim for debt in the amount of US$1.48 million.
E.5 Foreign currency conversion
The plaintiff submitted that there should be judgment for the plaintiff in the amount of US$1.48 million (converted into Australian dollars) plus interest and costs.
The Court can give judgment in a foreign currency.[84] In Weatherbeeta Limited v Hammersmith Nominees Pty Ltd (No 2) (Weatherbeeta), Connock J held that it is open to the Court to give judgment in a foreign currency, converted to the Australian dollar equivalent amount as at the date of judgment, if the party in whose favour judgment is to be given elects to do so.[85]
[84]Weatherbeeta Limited v Hammersmith Nominees Pty Ltd (No 2) [2019] VSC 713, [10] (Connock J) (Weatherbeeta); Vlasons Shipping Inc v Neuchatel Swiss General Insurance Co Ltd [1998] VSC 91 (Byrne J) [7], [15] (Vlasons); Mineralogy Pty Ltd v BGP Geoexplorer Pte Ltd [2017] QSC 219 [185] (Jackson J); BHPB v Cosco (2009) 263 ALR 63) [8] (Finkelstein J); Miliangos v George Frank (Textiles) Ltd (No 2) [1977] QB 489 [497] (Bristow J); Maschinenfabrik Augsburg-Nurenburg AG v Altikar Pty Ltd (1984) 3 NSWLR 152 (Rogers J); Swiss Bank Corporation v State Bank of New South Wales (1993) 33 NSWLR 63 (Giles J); New South Wales v Swiss Bank Corporation (1995) 39 NSWLR 350 (Priestley, Handley and Sheller JJA).
[85]Weatherbeeta, [10] (Connock J). See also Vlasons, [7], [15] (Byrne J).
The plaintiff has so elected as is clear from its statement of claim.
E.6 Interest
The plaintiff also sought interest in respect of the debt.
The plaintiff relied on s 58(1) of the Supreme Court Act 1986 (Vic) (Supreme Court Act) to claim interest from the relevant dates that the debts were due (that is, the due dates of the invoices).
Section 58(1) of the Supreme Court Act provides:
If in a proceeding a debt or sum certain is recovered, the Court must on application, unless good cause is shown to the contrary, allow interest to the creditor on the debt or sum at a rate not exceeding the rate for the time being fixed under section 2 of the Penalty Interest Rates Act 1983 or, in respect of any bill of exchange or promissory note, at 2% per annum more than that rate from the time when the debt or sum was payable (if payable by virtue of some written instrument and at a date or time certain) or, if payable otherwise, then from the time when demand of payment was made.
Section 2(1) of the Penalty Interest Rates Act 1983 (Vic) (Rates Act) provides:
The penalty interest rate is the interest rate expressed as a percentage fixed by the Attorney-General from time to time by notice published in the Government Gazette.
The current penalty interest rate is 10 per cent.[86]
[86]Attorney-General (Vic), ‘Penalty Interest Rates Act 1983’ in Victoria, Victoria Government Gazette, No G 1, 5 January 2017, 9.
In Weatherbeeta, the parties were in dispute as to whether the penalty interest rate of 10 per cent should be applied.[87]
[87]Weatherbeeta, [14]–[15] (Connock J).
Connock J observed that s 58(1) of the Supreme Court Act does not require good cause to be shown to the contrary to enliven the Court’s power to fix an interest rate lower than that fixed by the Rates Act.[88]
[88]Weatherbeeta, [19], [25] (Connock J).
After considering relevant authorities, Connock J stated:
It is correct that there is no rigid or fixed ‘rule’ or principle of law that mandates that interest rates must be referable to the particular country of the foreign currency in question. The power under s 58(1) of the Act is discretionary, with such discretion to be exercised judicially having regard to the particular facts and circumstances under consideration…
Each case depends on its own facts, and limited assistance is to be obtained from other cases involving different facts and circumstances at different times in varying jurisdictions. All of the cases referred to by the parties involved differing circumstances and do not materially assist, except perhaps to the extent that they underscore that circumstances of previous cases are of limited assistance.[89]
[89]Weatherbeeta, [27]–[28] (Connock J).
In Australia Kunqian International Energy Co Pty Ltd v Flash Lighting Company Ltd, the Court of Appeal summarised the relevant principles relating to the rate of interest to be applied under s 58 of the Supreme Court Act in the following terms:[90]
The purposes of s 58(1) of the [Supreme Court Act] include compensating a plaintiff for being kept out of his or her money[91] and encouraging a defendant to settle early.[92] The [Rates Act] rates may contain a ‘penalty element’.[93] Although it is not one of the purposes of s 58(1) to punish a defendant, by authorising awards of interest at the [Rates Act] rates, s 58(1) recognises that such awards may have a punitive effect.[94]
Section 58(1) of the [Supreme Court Act] does not mandate application of the [Rates Act] rates unless good cause to the contrary is shown.[95] Rather, it designates those rates as the maximum rates that may be applied, leaving the Court with a discretion to apply lower rates. Nevertheless, the practice in Victoria is to treat the maximum rate as the starting point for the exercise of the discretion.[96] Where a defendant contends that the facts and circumstances of the case warrant adopting a lower rate, evidence is required as to an appropriate lower rate.[97] Mere reliance by a defendant in broad terms on the fact that the [Rates Act] rates are higher than market rates is not in itself a sufficient reason to apply a lower rate.[98]
[90][2020] VSCA 259, [41]-[42] (Kyrou, Niall and Hargrave JJA).
[91]MBP (SA) Pty Ltd v Gogic (1991) 171 CLR 657, 663.
[92]Grincelis v House (2000) 201 CLR 321, 328–9 [16] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ).
[93]Penalty Interest Rates Act 1983 (Vic) s 2(2)(b); Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [No 3] [2003] VSC 244, [46], [60], [67]–[70] (Gillard J) (Johnson Tiles).
[94]Clarke v Foodland Stores Pty Ltd [1993] 2 VR 382, 396–7 (Fullagar, Marks and JD Phillips JJ) (Clarke).
[95]Clarke, 389 (Fullagar, Marks and JD Phillips JJ).
[96]Johnson Tiles, [64] (Gillard J); Hartley Poynton Ltd v Ali (2005) 11 VR 568, 618 [107] (Ormiston, Buchanan and Eames JJA) (Hartley Poynton); Amcor Ltd v Barnes (No 2) [2019] VSC 849, [73]–[84] (Sloss J).
[97]See, eg, Johnson Tiles, [75] (Gillard J).
[98]Hartley Poynton, 617–18 [106] (Ormiston, Buchanan and Eames JJA).
In the present proceeding, the defendant has not made any submissions against the rate of 10 per cent being applied. Nonetheless, I have considered whether the penalty interest rate of 10 per cent should be applied in this case.
Although the invoices contained payment terms stating that interest at 2% per annum would be charged on accounts overdue 30 days or more, the defendant’s conduct in failing to pay the invoices, failing to engage constructively in negotiations and ultimately, entering liquidation without defending the proceeding supports the application of the full penalty interest rate.
The interest should run from the due dates of the respective invoices: 17 July 2023 for invoices totalling US$740,000 and 12 September 2023 for invoices totalling US$740,000, being the dates when the debts became payable under the written instruments.
Accordingly, I award interest at the rate of 10 per cent per annum from the respective due dates of the invoices to the date of judgment.
F. CONCLUSION AND ORDERS
For the reasons set out above, there will be judgment for the plaintiff in the sum of US$1,480,000 to be converted into Australian dollars as at the date of judgment in accordance with the exchange rate published by the Reserve Bank of Australia.
There will be an order that the defendant pay the plaintiff interest:
(a) on the sum of US$740,000 at the rate for the time being fixed under s 2 of the Penalty Interest Rates Act 1983 (Vic) from 17 July 2023 to the date of judgment; and
(b) on the sum of US$740,000 at the rate for the time being fixed under s 2 of the Penalty Interest Rates Act 1983 (Vic) from 12 September 2023 to the date of judgment
such amounts to be converted into Australian dollars as at the date of judgment in accordance with the exchange rate published by the Reserve Bank of Australia.
There will be an order that the defendant’s counterclaim be dismissed pursuant to r 62.04 of the Supreme Court Rules.
Finally, there will be an order that the defendant pay the plaintiff’s costs of the proceeding on a standard basis to be taxed in default of agreement.
The plaintiff should, within seven days, provide the Court with a form of order to give effect to the conclusions expressed in these reasons.
---
22
0