Jackson v Heart Research Institute Ltd

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FEDERAL COURT OF AUSTRALIA

Jackson v Heart Research Institute Ltd [2025] FCA 301

File number: NSD 773 of 2024
Judgment of: RAPER J
Date of judgment: 2 April 2025
Catchwords: CORPORATIONS – whistleblower protections – claim for relief under ss 1317AD and 1317AE of the Corporations Act 2001 (Cth) – whether the respondent engaged in conduct that was a “detriment” within the meaning of s 1317ADA by not renewing the applicant’s employment contract – whether the respondent had the requisite suspicion or belief, under s 1317AD(1)(b), which was the reason, or part of the reason for the detrimental conduct – where the respondent is a company – whether the respondent’s state of mind comprised the voting directors or others with a material contribution to the decision-making process
CONSUMER LAW – misleading and deceptive conduct – where there were negotiations regarding a new employment contract and a collaboration agreement to commercialise a drug – whether the respondent’s conduct had a tendency to lead the applicant to believe that his employment contract would be extended for five years and the respondent would finalise and enter into a commercialisation agreement with the applicant’s entity
EVIDENCE – legal professional privilege – whether legal professional privilege is waived – where privileged documents comprise file notes of legal advisors, employees and directors of respondent from meetings in relation to non-renewal of applicant’s employment contract – whether the respondent has waived privileged over certain advice
Legislation:

Australian Securities and Investments Commission Act 2001 (Cth) s 12CC(1)

Corporations Act 2001 (Cth) ss 1317AA, 1317AA(4), 1317AA(5), 1317AADA, 1317AADA(1), 1317AADA(2), 1317AADA(2)(a), 1317AADA(2)(b)(i), 1317AC, 1317AC(1)(c) 1317AD, 1317AD(1), 1317AD(1)(a),1317AD(1)(b)–(c), 1317AD(1)(c), 1317AD(2B), 1317AD(2B)(a)(i), 1317AD(2B)(b), 1317ADA, 1317ADA(b), 1317ADA(j), 1317AE, 1317AH

Competition and Consumer Act 2010 (Cth) sch 2 ss 18, 236

Federal Court of Australia Act 1976 (Cth) s 37M

Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019 (Cth)
Cases cited:

Australian Olympic Committee, Inc v Telstra Corporation Ltd [2016] FCA 857

Australian Securities and Investments Commission v Mariner Corporation Ltd [2015] FCA 589; 241 FCR 502

AWB Ltd v Cole (No 5) [2006] FCA 1234; 155 FCR 30

Beach Petroleum NL v Abbott Tout Russell Kennedy [1999] NSWCA 408; 48 NSWLR 1

EssoAustralia Resources Ltd v Federal Commissioner of Taxation [1999] HCA 67; 201 CLR 49

Federal Commissioner of Taxation v Rio Tinto Ltd [2006] FCAFC 86; 151 FCR 341

Grant v Downs [1976] HCA 63; 135 CLR 674

Jones v Dunkel [1959] HCA 8; 101 CLR 298

Mann v Carnell [1999] HCA 66; 201 CLR 1

McKenzie v Cash Converters International Ltd [2017] FCA 1564

Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited [2010] HCA 31; 241 CLR 357

Mount v Dover Castle Metals Pty Ltd [2025] FCA 101

New South Wales v Betfair Pty Ltd [2009] FCAFC 160; 180 FCR 543

Reiche v Neometals Ltd (No 2) [2025] FCA 125

Thomas v New South Wales [2006] NSWSC 380

Watson v Greenwoods & Herbert Smith Freehills Pty…

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Details
Case
[2025] FCA 301
Decision Date

CaseChat Overview and Summary

The case of Jackson v Heart Research Institute Ltd involves a dispute between Professor Jackson, a researcher, and the Heart Research Institute Ltd (HRI), an organisation involved in cardiovascular research. Professor Jackson alleged that HRI contravened whistleblower protections under the Corporations Act 2001 (Cth) by not renewing his employment contract, and that HRI engaged in misleading and deceptive conduct under the Competition and Consumer Act 2010 (Cth). The central issue was whether HRI's decision not to renew Professor Jackson's employment was motivated by a prohibited belief or suspicion, and whether HRI had made misleading representations about extending his contract and finalising a collaboration agreement.

The court had to determine if HRI's decision constituted a "detriment" within the meaning of the Corporations Act, whether HRI had the requisite suspicion or belief that motivated the detrimental conduct, and if HRI's state of mind included voting directors or others who materially contributed to the decision-making process. The court found that the decision not to renew Professor Jackson’s employment did not constitute a detriment, and HRI had discharged its onus of proving it did not hold the alleged prohibited belief or suspicion. Additionally, even if HRI had such a belief, it was not the motivating factor in the decision. Regarding the misleading and deceptive conduct claim, the court found that Professor Jackson did not establish that the alleged representations were made, and even if they were, they were not misleading.

The court concluded that Professor Jackson's application must be dismissed. The court ordered that Professor Jackson's Further Amended Originating Application be dismissed and set timelines for any potential application for costs, with any responses to be filed and served by specific dates. The court also noted that if no application for costs was made within the stipulated timeframe, there would be no order as to costs.

Orders

Orders of the court

1. Professor Jackson’s Further Amended Originating application, filed on 29 July 2024, be dismissed.

2. Any application for costs, together with any evidence and submissions (of not more than four pages) be filed and served by 4:00pm on 16 April 2025.

3. Any affidavit(s) and submissions (of not more than four pages) in response be filed and served by 4:00pm on 30 April 2025.

4. If no application for costs is made within the time frame fixed by order 2 above, there be no order as to costs.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

There is an unfortunateness to his lack of candour though: It left a lacuna in which Professor Jackson was left in the dark, and from that darkness, (ultimately unfounded) suspicions grew. Background The evidence, in summary, revealed the following. In August 2022, negotiations were ongoing regarding Professor Jackson’s employment contract and a collaboration agreement. Professor Jackson was HRI’s Director of Cardiovascular Research and head of its TRG. During this year, Professor Jackson and TRG were embarking on clinical trials for TBO-309, referred to as the STARS trials. TRG’s research and work was funded largely by grants allocated and tied to Professor Jackson. At the same time, Professor Jackson was negotiating with HRI to enter this collaboration agreement whereby the parties would commercialise TBO-309, HRI would provide financial support to ThromBio (the entity registered in 2020 by Professor Jackson, with Mr Bush as its CEO, to commercialise TBO-309), as well as HRI employee time and premises, in exchange for equity in the company. These negotiations were being undertaken when there was a changing of the guard at HRI: Mr McGauran came on board as Director in June 2022, Professor Coats as Interim Scientific Director in August 2022. Dr Hollings, Mr Scott Martin and Ms Debbie Ormsby (who had been previously involved in the negotiations) had left. This meant that there was very limited prior corporate knowledge (as to how Professor Jackson’s lab, funds and employment had been previously managed) but it also is material when issues arose as to his lab funds later (Professor Jackson remains but those on the HRI side do not have the prior corporate knowledge). It is this disjunct (as to knowledge of past practices) which fuels (unfortunately, mistrust and confusion) on both sides, that is material in the demise of the relationship between the parties. Professor Jackson had a firm view about the past, past practices; how his lab funds were managed, what HRI was required to contribute, and his role in committing HRI to financial outlays. HRI had a different view, but one based not on direct corporate knowledge (by employees engaged at the time) of the past. However, there were certain voting directors who had a lengthy history on the Board and past experience of dealing with Professor Jackson in protracted contractual negotiations. However, it was clear that, with respect to the collaboration agreement, that Professor Coats and Mr McGauran understood, as at August/September 2022, that it was in its final stages of negotiation and had been largely agreed. However, despite the fact that it was understood that HRI was to provide a draft of the collaboration agreement in fulsome terms, as drafted by HRI’s (then lawyers) Corrs, the draft agreement was not in fact provided to Professor Jackson and Mr Bush until 27 October 2022. In the meantime, a Master Services Agreement had been entered between HRI and Ardena, (a company that provides drug development, manufacturing and analytical services to pharmaceutical companies), for the provision of services with respect to manufacturing the drugs for trials. There was no formal system for the creation of Statements of Work (SoWs). No policy nor instruction was given to Associate Professor Schoenwaelder nor Professor Jackson in this regard. There was a great deal of dispute between the parties regarding whether Professor Jackson was in fact “approving” the SoWs and in effect the commitments by HRI under HRI’s delegation policy. For the reasons already stated above, it appears this dispute arose from the fact that those within HRI who had worked with Professor Jackson in the past (on financial matters) had left, there was no clear demarcation in roles, nor communication regarding how the delegation policy was to be applied in practice.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Additionally, it may be noted, though not relevant to the determination of waiver, but which is otherwise relevant to the overall dispute, the fact of the advice, and where it fitted within the evidence, was peripheral to the overall determination of the issues required to be determined in the case. It was not the case that HRI was seeking to rely on the advice to justify the decision it had made – that is, that HRI had received legal advice that it should decide not renew Professor Jackson’s employment. Rather it was given an Options Paper that professed no view as to which outcome should be taken. Furthermore, the voting directors were not privy to the circumstances (save for Mr Halstead, to the extent that he, attended the meeting on 17 July) that had led to its generation and therefore, such that limited reliance could be placed on it per se. None of the voting directors were challenged as to their reasons by reference to any undisclosed legal advice nor the Options Paper (save for Mr Rassi). In that regard, the extent of the challenge, was by reference to an aspect of the Options Paper which appeared on the face of the document. Mr Halstead was not cross-examined at all regarding the meeting on 17 July 2023. Further, it is unclear how the 17 July meeting would have been relevant, when the Options Paper was circulated before then. Indeed, as is evident from the above reasons, each voting director had independent reasons for why they chose to vote in the way that each of them did. Their reasons were largely unchallenged. It is my view, that this was not a case where a party was seeking to deploy, with forensic advantage, a part of an advice. Rather, it appears that HRI’s lawyers have acted responsibly and disclosed this Options Paper, not because it had any great utility in the case, but because it was before the voting directors at the time they made their decision. Conclusion Given Professor Jackson has not succeeded with respect to each of his claims, there is no need for me to consider the one aspect of relief that was to be considered together with liability, reinstatement. For all of the above reasons, Professor Jackson’s application must be dismissed. It is not known whether there will be any application for costs, given the operation of s 1317AH of the Corporations Act. Orders will be made to deal with any such application if made.

Ratio Decidendi

Legal Principle Established

There are therefore two main issues to be determined: First, whether HRI contravened s 1317AD(1) of the Corporations Act 2001 (Cth) in determining not to renew Professor Jackson’s employment contract on 24 July 2023 (the whistleblowing claim). Secondly, whether HRI engaged in misleading and deceptive conduct, contravening s 18 of sch 2 to the Competition and Consumer Act 2010 (Cth) (Australian Consumer Law) by representing that Professor Jackson’s contract would be extended by five years, and that HRI would finalise and enter into a collaboration agreement with ThromBio (the ACL claim). Whilst, for the following reasons, Professor Jackson’s claim must fail, it very hard not to be sympathetic to the situation he found himself in. Professor Jackson is an extremely accomplished researcher undertaking critical health research. Whilst this decision finds that his allegations of being misled in contractual negotiations and subjected to detrimental treatment as a consequence of any alleged prohibited belief or suspicion are not established, the decision makes no findings as to any alleged misconduct on his part. The Court was not asked to make any such findings and could not have done so on the evidence. These conclusions concern the limited case before me. For the following reasons, my conclusions with respect to each of these claims are as follows: First, the whistleblowing claim fails for three reasons: (a) the decision not to renew Professor Jackson’s employment does not constitute a detriment within the meaning of ss 1317AD(1), 1317ADA(b) or (j) of the Corporations Act; (b) in any event, HRI has discharged its onus under s 1317AD(2B) and proved that it did not hold the alleged prohibited belief or suspicion; and (c) further, even if it did, HRI was not motivated by this prohibited belief or suspicion in the decision not to renew Professor Jackson’s employment. Secondly, the ACL claim fails because Professor Jackson did not establish that the alleged representations were made and alternatively, even if they were, they were not misleading. The witnesses in the proceedings Professor Jackson relied upon the evidence of 10 witnesses, including himself. HRI made no serious challenge to the credit of any of his witnesses. This is unsurprising, given HRI’s position with respect to the two claims was that even if one accepted Professor Jackson’s account, his claims would fail. Mr Bush, CEO of ThromBio, gave evidence concerning how ThromBio was funded, including funding from HRI, as well as discussions between him and HRI regarding Professor Jackson’s future employment with HRI and finalising the collaboration agreement for the commercialisation of TBO-309. In addition, Professor Jackson relied upon the evidence of members of the Steering Committee of the Safety and Tolerability of AZD6482 in Reperfusion for Stroke trial (STARS trial), the body responsible for oversight of the conduct of the clinical trials for TBO-309, being Professor Geoff Donnan, Dr Candice Delcourt, Professor Christopher Levi and Professor Craig Anderson. Their evidence was relied as to the question of relief (which for the reasons which follow, ultimately did not require determination). Associate Professor Schoenwaelder gave evidence on the impact upon her of HRI parting ways with ThromBio and Professor Jackson, as well as processes for approving Ardena Statements of Work (SoWs). Dr Yuping Yuan, Mr Benjamin Hoffma, Mr Ethan Italiano and Mr Imala Alwis gave evidence of working with Professor Jackson and the consequent effect upon of them of cessation of Professor Jackson’s relationship with HRI.