FEDERAL COURT OF AUSTRALIA

Peterson v Merck Sharpe & Dohme (Aust) Pty Ltd (No 5) [2010] FCA 605

THE COURT ORDERS THAT:

1.         On the applicant�s personal claim against the first respondent, there be judgment for the applicant on his causes of action pursuant to ss 74B and 74D of the Trade Practices Act 1974 (Cth) in the amount of $330,465.35.

2.         Execution of judgment in favour of the applicant be stayed for 28 days.

3.         Subject to any order of the court, if the first respondent, within 28 days �

            (a)        pays into court the sum referred to in the previous order;  and

            (b)        institutes an appeal, or files an application for leave to appeal, against the                                   making of that order;

            execution of judgment in favour of the applicant be stayed pending the hearing and         determination �

            (c)        of that appeal;  or

            (d)        of that application;  or

            (e)        if that application is successful, of any appeal which arises therefrom;

            as the case requires.

4.         The applicant�s personal claim against the first respondent in respect of his causes of action in negligence and under ss 75AD and 82 of the Trade Practices Act 1974 (Cth) be dismissed.

5.         The issues set out in the schedule to the orders made by the court on 30 March 2009 be determined as set out in the Schedule to these orders.

6.         The claims against the first respondent of persons who are group members only by reason of the circumstances referred to in any one or more of items (ii), (iii), (iv) and (v) of para 2(c) of the Further Amended Statement of Claim be dismissed.

7.         As against the second respondent, the Application be dismissed.

8.         Subject to any costs order previously made, the first respondent pay the applicant�s costs, including reserved costs and costs incurred in the Supreme Court of Victoria, other than:

            (a)        costs incurred only in relation to the applicant�s allegations with respect to                      cardiovascular conditions other than myocardial infarction;

            (b)        costs incurred only in relation to the applicant�s allegations in paras 19A and                  27A-27E of the Further Amended Statement of Claim, save to the extent that                 such costs related directly to proof of representations made to the applicant�s                         medical practitioner or practitioners;

            (c)        costs incurred only because of the claim of a particular group member, or of                  particular group members, other than the applicant;  and

            (d)        costs incurred only because of the joinder of the second respondent.

9.         Subject to any costs order previously made, the applicant pay the first respondent�s costs incurred only in defence to the applicant�s allegations with respect to cardiovascular conditions other than myocardial infarction.

10.       The following costs of the applicant and of the first respondent be reserved:

            (a)        costs incurred only in relation to the applicant�s allegations in paras 19A and                  27A-27E of the Further Amended Statement of Claim, save to the extent that                 such costs related directly to proof of representations made to the applicant�s                         medical practitioner or practitioners;  and

            (b)        costs incurred only because of the claim of a particular group member, or of                  particular group members, other than the applicant.

11.       Subject to any costs order previously made, the applicant pay the second respondent�s costs, including reserved costs, other than:

            (a)        costs incurred jointly with the first respondent which did not relate only to the                 second respondent�s defence to the applicant�s claims;  and

            (b)        costs incurred after 24 January 2008 in defence to the applicant�s allegations                 that the consumption of rofecoxib or Vioxx tablets increased, or materially                 increased, the risk of suffering a myocardial infarction.

12.       Subject to any costs order previously made, the second respondent be under no obligation pursuant to O 62 r 24 of the Federal Court Rules to pay any of the applicant�s costs incurred on or before 24 January 2008.

13.       Order 62 r 3(3) of the Federal Court Rules not apply with respect to any order as to costs made this day.

14.       Subject to any order of the court, the operation of the previous order be stayed for 28 days, and, if any party institutes an appeal, or applies for leave to appeal, against any order made this day, pending the hearing and determination �

            (a)        of that appeal;  or

            (b)        of that application;  or

            (c)        if that application is successful, of any appeal which arises therefrom;

            as the case requires.

15.       The applicant have leave, by notice of motion filed and served not later than 28 days before he takes any step for the taxation of any of the costs to which he is entitled under any order made this day, to apply for those costs to be taxed on an indemnity basis.

16.       Pursuant to O 52 r 15(1) of the Federal Court Rules, each party be allowed 28 days within which to institute an appeal from any order made this day.

17.       Pursuant to O 52 r 10(2A) of the Federal Court Rules, each party be allowed 28 days within which to file an application for leave to appeal from any order made this day.

18.       On or before 19 July 2010, each of the applicant and the first respondent serve upon the other, and file, a memorandum setting out his or its proposals for the directions that should be made for the future conduct of the proceeding.

19.       The proceeding be listed for directions at 9.30 am on 21 July 2010.

SCHEDULE

Commonality

Question 1.     Are any and which of the questions set out below common to the claims of the group members?

Answer:           Save to the extent indicated in the answers set out below, all the questions are common to the claims of the group members.

Materially increased risk

Question 2.     Is there a physiological mechanism by which the consumption of Vioxx is capable of causing any and which of the Vioxx cardiovascular conditions?

Answer:           As amended by replacing �causing� with �contributing to the onset of�:  In the case of myocardial infarction, yes;  otherwise, no.

Question 3.     If the answer to question 2 is in the affirmative, then for each such condition, what is the physiological mechanism?

Answer:           The aggregation of thrombotic material in the vasculature as the result of the blocking of the production of prostacyclin by the inhibition of COX-2 in the absence of any blocking of the production of platelet thromboxane.

Question 4.     Did the consumption of Vioxx increase the risk of suffering any and which of the Vioxx cardiovascular conditions?

Answer:           In the case of myocardial infarction, yes;  otherwise, no.

Question 5.     If the answer to question 4 is in the affirmative, was the increase in risk material?

Answer:           To the extent that question 4 was answered in the affirmative, yes.

Negligence

Question 6.     If the answer to question 5 is in the affirmative:

(a)        when, if ever, did the First Respondent (�Merck Australia�) first know that the consumption of Vioxx materially increased the risk of suffering the condition?

(b)        when, if ever, ought Merck Australia have first known that that consumption of Vioxx materially increased the risk of suffering the condition?

(c)        did Merck Australia owe the group members a duty to take reasonable care to avoid acts and omissions that may expose them to a material increase in the risk of suffering the condition as a consequence of consuming Vioxx tablets?

Answer:           (a) & (b):  Late September 2004.  However, Merck Australia was first presented with a worrisome and important signal of potential cardiovascular risk associated with the consumption of Vioxx in March 2000.

(c):  Yes.

Question 7.     Did Merck Australia:

(a)        not owe group members the duty of care alleged; or

(b)        satisfy the applicable standard of care

by virtue of compliance with the relevant legislative requirements referred to in paragraph 61 (a)-(t) of the Defence to Further Amended Statement of Claim and requirements imposed upon it in respect of Vioxx tablets by the Therapeutic Goods Administration (�TGA�) pursuant to the powers granted by the Therapeutic Goods Act 1989 (Cth)?

Answer:           (a) & (b):  No.

Question 8.     Did Merck Australia:

(a)        not owe group members the duty of care alleged; or

(b)        satisfy the applicable standard of care

by reason of the learned intermediary defence pleaded in paragraph 63 of the Defence to Further Amended Statement of Claim?

Answer:           (a) & (b):  No.

Question 9.     If the answer to question 5 is in the affirmative:

(a)        did Merck Australia fail to make adequate inquiries of the Second Respondent (�Merck Inc�) regarding the adverse side effects and health risks that may be associated with the consumption of Vioxx including a material increase in the risk of suffering the condition?  If so, was that failure less than reasonable in all of the circumstances?

(b)        Did Merck Australia fail to undertake or cause to be undertaken any or any adequate research, investigations, clinical trials or observational studies in order to ascertain the adverse side effects and health risks that may be associated with the consumption of Vioxx including a material increase in the risk of suffering the condition?  If so, was that failure less than reasonable in all of the circumstances?

(c)        Did Merck Australia fail to have adequate regard to the results of any research, investigations, clinical trials or observational studies undertaken or caused to be undertaken by Merck Australia, Merck Inc or others suggesting that the consumption of Vioxx materially increased the risk of suffering the condition? If so, was that failure less than reasonable in all of the circumstances?

(d)        Did Merck Australia fail to provide adequate information, advice or warning to the general public or to health care professionals to the effect that the consumption of Vioxx materially increased the risk of suffering the condition?  If so, was that failure less than reasonable in all of the circumstances?

(e)        Did Merck Australia develop and implement a marketing strategy or campaign by which it formulated and disseminated to health care professionals in Australia any and which of the following representations about Vioxx:

(i)         Vioxx has an excellent gastrointestinal safety profile compared with other non-steroidal anti-inflammatory drugs (�NSAIDs�);

(ii)        Vioxx has an excellent overall safety profile compared with other NSAIDs;

(iii)       Vioxx does not increase the incidence of adverse cardiovascular events;

(iv)       higher rates of myocardial infarction and other cardiovascular events among persons taking Vioxx relative to persons taking other traditional NSAIDs (in particular naproxen) did not indicate that Vioxx increased the risk of suffering adverse cardiovascular events but were attributable to the fact that the consumption of naproxen produced a lower incidence of cardiovascular events    because naproxen inhibits platelet aggregation in a manner similar to aspirin        while Vioxx does not;

(v)        the higher rates of myocardial infarction among persons taking Vioxx relative to persons taking naproxen observed in the Vioxx Gastrointestinal Outcomes Research Trial (�Vigor�) did not indicate that Vioxx increased the risk of suffering adverse cardiovascular events;

(vi)       any information to the effect that Vioxx was not as safe as other NSAIDs because the consumption of Vioxx materially increased the risk of suffering the condition was incorrect, misleading, exaggerated and/or unreliable.

If so, was that conduct less than reasonable in all of the circumstances?

Answer:           (a), (b) & (c):  No

(d):

(i)         Merck Australia failed to provide adequate information, advice or warning to healthcare professionals generally about the signal of risk referred to in the answer to question 6.  Whether that failure was less than reasonable in all of the circumstances is not a common question.

(ii)        Whether Merck Australia failed to provide adequate information, advice or warning to individual healthcare professionals about the signal of risk      referred to in the answer to question 6 is not a common question.

(iii)       Merck Australia did not fail to provide adequate information, advice or warning to the general public about the signal of risk referred to in the answer to question 6.

(e):       As to the dissemination of representations to health care professionals who treated or advised individual group members, not a common question.  Otherwise, not appropriate to answer.

Question 10.   Was it less than reasonable in all of the circumstances, at any time before 30 September 2004, for Merck Australia to distribute Vioxx in Australia?  If so, when?

Answer:           No.

Question 11.   Is the fact that the Product Information for Vioxx was approved by the TGA pursuant to the Therapeutic Goods Act, if proved, a complete answer to an allegation that Merck Australia was in breach of any common law duty by unreasonably failing to adequately disclose information in the Product Information?

Answer:           No.

Section 52 of the Trade Practices Act 1974 (Cth)

Question 12.   If the answer to question 5 is in the affirmative, did Merck Australia:

(a)        label Vioxx without providing adequate information, advice or warning to the general public or to health care professionals to the effect that the consumption of Vioxx materially increased the risk of suffering the condition?

(b)        market and distribute and/or supply Vioxx for sale in Australia without providing adequate information, advice or warning to the general public or to health care professionals to the effect that the consumption of Vioxx materially increased the risk of suffering the condition?

(c)        develop and implement a marketing strategy or campaign by which it formulated and disseminated to health care professionals in Australia, any and which of the following representations about Vioxx:

(i)         Vioxx has an excellent gastrointestinal safety profile compared with other NSAIDs;

(ii)        Vioxx has an excellent overall safety profile compared with other NSAIDs;

(iii)       Vioxx does not increase the incidence of adverse cardiovascular events;

(iv)       higher rates of myocardial infarction and other cardiovascular events among persons taking Vioxx relative to persons taking other traditional NSAIDs (in particular naproxen) did not indicate that Vioxx increased the risk of suffering adverse cardiovascular events but were attributable to the fact that the consumption of naproxen produced a lower incidence of cardiovascular events    because naproxen inhibits platelet aggregation in a manner similar to aspirin        while Vioxx does not;

(v)        the higher rates of myocardial infarction among persons taking Vioxx relative to persons taking naproxen observed in Vigor did not indicate that Vioxx increased the risk of suffering adverse cardiovascular events;

(vi)       information to the effect that Vioxx was not as safe as other NSAIDs because the consumption of Vioxx materially increased the risk of suffering the condition was incorrect, misleading, exaggerated and/or unreliable?

Answer:           (a):  Not a common question.

(b):

(i)         Merck Australia marketed, distributed and supplied Vioxx for sale in Australia without providing adequate information, advice or warning to health care professionals generally about the signal of risk referred to in the answer to question 6.

(ii)  Whether Merck Australia marketed, distributed and supplied Vioxx for sale in Australia without providing adequate information, advice or warning to individual healthcare professionals about the signal of risk referred to in the answer to question 6 is not a common question.

(iii)  Merck Australia did not market, distribute or supply Vioxx for sale in Australia without providing adequate information, advice or warning to the general public about the signal of risk referred to in the answer to question 6.

(c):       As to the dissemination of representations to health care professionals who treated or advised individual group members, not a common question.  Otherwise, not appropriate to answer.

Question 13.   If Merck engaged in any of the conduct referred to in question 12 was any of that conduct in trade or commerce within the meaning of the Trade Practices Act?  If so, which conduct?

Answer:           Merck Australia�s promotional interactions with prescribers were in trade and commerce within the meaning of the Trade Practices Act.

Question 14.   Was any of the conduct identified in question 12, in all of the circumstances and context in which it occurred, misleading or deceptive or likely to mislead or deceive in contravention of section 52 of the Trade Practices Act?

Answer:           As to the conduct identified in answer 12(b)(i):  Until 16 November 2001, yes;  otherwise, no.

Question 15.   Upon the proper construction of the Therapeutic Goods Act, does the fact that the Product Information for Vioxx was approved by the TGA pursuant to the Therapeutic Goods Act, if proved, exclude the operation of the Trade Practices Act in so far as an allegation is made that a failure to adequately disclose information in the Product Information contravenes:

(a)        section 52 of the Trade Practices Act?

(b)        section 75AD of the Trade Practices Act?

Answer:           (a) & (b):  No.

Question 16.   Is the fact that Vioxx was registered on the Australian Register of Therapeutic Goods pursuant to the Therapeutic Goods Act and available only by prescription of permitted prescribers, and that the Product Information for Vioxx was approved by the TGA pursuant to the Therapeutic Goods Act,  if proved, a complete answer to an allegation that the respondent contravened:

(a)        section 52 of the Trade Practices Act;

(b)        section 75AD of the Trade Practices Act;

by failing to adequately disclose information in the Product Information?

Answer:           (a) & (b):  No.

Sections 75AD, 74B and 74D of the Trade Practices Act 1974 (Cth)

Question 17.   Were Vioxx tablets manufactured by Merck Australia �goods� that were "ordinarily acquired" as defined in section 74A(2) of the Trade Practices Act?

Answer:           Yes.

Question 18.   Is the fact that Vioxx was registered on the Australian Register of Therapeutic Goods pursuant to the Therapeutic Goods Act and available in its approved form and packaging only by prescription of permitted prescribers, if proved, sufficient to establish as a matter of law that Vioxx was reasonably fit for purpose within the meaning of s74B of the Trade Practices Act?

Answer:           No.

Question 19.   Is the fact that Vioxx was registered on the Australian Register of Therapeutic Goods pursuant to the Therapeutic Goods Act and available in its approved form and packaging only by prescription of permitted prescribers, if proved, sufficient to establish as a matter of law that Vioxx was of merchantable quality within the meaning of s74D of the Trade Practices Act?

Answer:           No.

Question 20.   If the answer to question 5 is in the affirmative, were Vioxx tablets defective within the meaning of section 75AD of the Trade Practices Act in that the safety of Vioxx tablets was not such as persons are generally entitled to expect by reason of the fact that the consumption of Vioxx materially increased the risk of suffering the condition?

Answer:           In the absence of any information, advice or warning, addressed to a particular group member or to his or her medical practitioner, to the effect that the consumption of Vioxx materially increased the risk of myocardial infarction, yes.

Question 21.   If the answer to question 5 is in the affirmative, were Vioxx tablets defective within the meaning of section 75AD of the Trade Practices Act in that the safety of Vioxx was not such as persons are generally entitled to expect by reason of the fact that the packaging and labelling of Vioxx and the Vioxx product information did not contain adequate information, advice or warning to the effect that the consumption of Vioxx materially increased the risk of suffering the condition?

Answer:           With respect to packaging and labelling, not a common question.  With respect to the Product Information, the absence of any adequate information, advice or warning therefrom was a circumstance which, together with others, made the safety of Vioxx not such as persons generally were entitled to expect within the meaning of s 75AD.

Question 22.   If the answer to question 5 is in the affirmative, were Vioxx tablets not reasonably fit for the purpose of acquisition within the meaning of section 74B of the Trade Practices Act by reason of the fact that the consumption of Vioxx materially increased the risk of suffering the condition?

Answer:           Not a common question.

Question 23.   If the answer to question 5 is in the affirmative, were Vioxx tablets not of merchantable quality within the meaning of section 74D of the Trade Practices Act by reason of the fact that the consumption of Vioxx materially increased the risk of suffering the condition?

Answer:           Not a common question.

Question 24.   If the answer to question 5 is in the affirmative, at all times before 30 September 2004 was the state of scientific or technical knowledge such as to enable Merck Australia to discover that the consumption of Vioxx materially increased the risk of suffering the condition?

Answer:           No.

Question 25.   Were the defects pleaded in paragraphs 33, 34 and 37 of the Further Amended Statement of Claim (if found to exist) caused by Merck Australia�s compliance with a mandatory standard or standards?

Answer:           No.

Claim against Merck Inc

Question 26.   If the answer to question 5 is in the affirmative:

(a)        when did Merck Inc first know that the consumption of Vioxx materially increased the risk of suffering the condition?

(b)        when ought Merck Inc to have first known that the consumption of Vioxx materially increased the risk of suffering the condition?

(c)        did Merck Inc owe the group members a duty to take reasonable care to avoid acts and omissions that may expose them to a material increase in the risk of suffering the condition as a consequence of consuming Vioxx?

Answer:           (a) & (b):  Late September 2004.  However, Merck Inc was first presented with a worrisome and important signal of potential cardiovascular risk associated with the consumption of Vioxx in March 2000.

(c):  Yes.

Question 27.   Did Merck Inc:

(a)        not owe group members the duty of care alleged; or

(b)        satisfy the applicable standard of care

by virtue of Merck Australia�s compliance with the relevant legislative requirements referred to in paragraphs 23(a)-(1) of the Defence to Amended Statement of Claim and the requirements imposed upon Merck Australia by the TGA pursuant to the powers granted by the Therapeutic Goods Act?

Answer:           (a) & (b):  No.

Question 28.   Did Merck Inc:

(a)        not owe group members the duty of care alleged; or

(b)        satisfy the applicable standard of care

by reason of the learned intermediary defence pleaded in paragraph 24 of the Defence to the Further Amended Statement of Claim?

Answer:           (a) & (b): No.

Question 29.   If the answer to question 5 is in the affirmative:

(a)        did Merck Inc fail to undertake or cause to be undertaken any or any adequate research, investigations, clinical trials or observational studies in order to ascertain the adverse side effects and health risks that may be associated with the consumption of Vioxx including a material increase in the risk of suffering the condition? If so, was that failure less than reasonable in all of the circumstances?

(b)        did Merck Inc fail to have adequate regard to the results of any research, investigations, clinical trials or observational studies undertaken or caused to be undertaken by Merck Inc or others suggesting that the consumption of Vioxx materially increased the risk of suffering the condition? If so, was that failure less than reasonable in all of the circumstances?

(c)        Did Merck Inc withhold from and fail to publish in medical publications or otherwise reveal data and information of which it was aware concerning adverse cardiovascular risks associated with the consumption of Vioxx? If so, was that failure less than reasonable in all of the circumstances?

(d)        Did Merck Inc fail to provide to Merck Australia, and health care professionals in Australia or the Australian public any or any adequate information, advice or warning to the effect that the consumption of Vioxx materially increased the risk of suffering the condition?  If so, was that failure less than reasonable in all of the circumstances?

Answer:           (a), (b), (c) & (d): No.

Question 30.   Was it less than reasonable in all of the circumstances at any time before 30 September 2004 for Merck Inc to supply Vioxx to Merck Australia in Australia?  If so, when?

Answer:           No.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court�s website.

REASONS FOR JUDGMENT

1                          On 5 March 2010, I gave judgment in this proceeding: Peterson v Merck Sharpe & Dohme (Australia) Pty Ltd [2010] FCA 180.  The only orders which I then made were procedural ones, effectively requiring the parties to file, and to exchange, their proposals as to the orders which should be made to give effect to my reasons then published.  The parties have done so, and have made both oral and written submissions in support of their respective proposals.  Save to the extent referred to below, the orders which I make today are uncontroversial.  The matters upon which further determinations are now required relate to the answers to the questions set out in App A to my reasons of 5 March 2010, to the disposition of the proceeding with respect to group members other than those who suffered myocardial infarction, to the application of Merck Sharpe & Dohme Australia Pty Ltd (�MSDA�) for a stay of execution pending appeal (and/or application for leave to appeal), and to costs. 

Answers to questions

2                          Save to the extent dealt with in my reasons below, the parties were in agreement as to the answers to be given to the questions referred to in App A to my reasons of 5 March 2010.  In the circumstances, I shall deal only with the answers which were the subject of disagreement.

3                          Question 4: It is convenient to take this question out of order, as my answer to it, and my reasons for giving that answer, will inform my approach to question 2. 

4                          Subject to a fairly narrow point made by the respondents to which I shall come in para 11 below, the parties agreed that the question should be answered, in part: �In the case of myocardial infarction, yes.�  Beyond that, the parties were not in agreement.  The respondents proposed that the question should otherwise be answered in the negative.  The applicant proposed that so much of the question as relates to conditions other than myocardial infarction should be left open, and not answered at this stage.  He submitted that his own case related to myocardial infarction, and that it was neither necessary nor appropriate for him to undertake the obligation of proving that the question should be answered in the affirmative with respect to each of the other pleaded cardiovascular conditions.  He proposed that, henceforth, subgroups should be established under s 33Q(2) of the Federal Court of Australia Act 1976 (Cth), each having its own representative applicant who suffered from one of the other conditions. 

5                          The difficulty with the applicant�s proposal commences with the terms of his Application and Statement of Claim.  Consistently with s 33H(1)(c) of the Federal Court Act, in para 5 of his Application, the applicant stated that �[t]he questions of law or fact common to the claims of the group members are those set out in the Schedule to the Amended Statement of Claim�.  In that schedule, the applicant set out the following as a common question:

At all material times after 30 June 1999 did the consumption of rofecoxib or Vioxx tablets materially increase the risk of suffering the Vioxx cardiovascular conditions referred to in paragraph 2(c) of the Further Amended Statement of Claim?

What the applicant described as the �Vioxx cardiovascular conditions� were what I called, in my reasons of 5 March 2010, the �pleaded cardiovascular conditions�.  All those conditions were set out in para 2(c) of the Further Amended Statement of Claim.

6                          In para 1 of the Further Amended Statement of Claim, the applicant stated that he brought the representative proceeding on his own behalf and on behalf of the group members described in para 2.  The group members included all persons who suffered, and were diagnosed as having suffered, one or more of the pleaded cardiovascular conditions.  He alleged that each of the group members did suffer one or more of those conditions.  He alleged that each such condition, as suffered by a group member, was caused by that group member�s consumption of Vioxx tablets.  He alleged that the consumption of rofecoxib materially increased the risk of suffering every one of the pleaded cardiovascular conditions.  The relationship between the consumption of Vioxx and the onset of each of the pleaded cardiovascular conditions (ie not myocardial infarction alone) was unquestionably part of the applicant�s case as pleaded. 

7                          From there one goes to the orders made on 30 March 2009 under s 33ZF of the Federal Court Act.  It was there provided that the issues of fact and law set out in the schedule attached thereto that the court found to be common to the claims of the group members be determined at the same time as the applicant�s personal case, and in advance of all other issues in the proceeding.  The opening sentence of the applicant�s final written submissions read as follows: �We submit that it is clear on the evidence that Vioxx materially increases the risk of the [cardiovascular] events pleaded, including heart attacks.�  The applicant contended that question 4 was a common question, and should be answered: �Yes � all of the cardiovascular conditions�.  The respondents contended otherwise, but more in the way of proposing that the question was not common as between different group members who suffered any one of the pleaded cardiovascular conditions, in that issues of risk necessarily depended on individual circumstances.  Given the approach of the applicant in his pleading and by way of final submissions, it is, in my view, no longer open to him to contend that question 4 is not a common one with respect to each of the pleaded cardiovascular conditions.  That being the case, I am required by the orders made on 30 March 2009 to determine that question at this stage of the proceeding. 

8                          That question 4 be answered in relation to each of the pleaded cardiovascular conditions is consistent also with the way that the parties conducted their cases.  In terms which were relevantly a matter of consensus as between the parties, the four cardiologists who gave evidence in the case were given an �agenda� to guide them in the preparation of their joint report which was, after they had conferred, tendered in evidence.  That agenda defined �specified cardiovascular events�, as �any one or more of� the pleaded cardiovascular conditions.  The cardiologists were asked for their opinion whether Vioxx increased a person�s risk of the specified cardiovascular events, in comparison to situations in which the person was taking other identified medication, or taking no medication at all.  They were asked whether certain biological processes (including that proposed under the Fitzgerald hypothesis) were physiological mechanisms by which Vioxx increased �any� of those risks.  In response to the first of these questions, the cardiologists said that there were insufficient data to draw meaningful conclusions concerning the Vioxx-related risk for unstable angina, transient ischaemic attack and peripheral vascular disease.  Profs Harper and Zypes said that they had not examined in detail the data linking Vioxx with thrombotic stroke.  Profs Cellemajer and Vaughan said that there were no data linking Vioxx to thrombotic stroke, and that there were compelling data to show that Vioxx did not predispose to thrombotic stroke.  In the concurrent cardiology session of evidence in court, questions were addressed to the cardiologists which left little doubt but that the court was concerned to know, so far as it was possible to tell, what, if any, relationship existed between the consumption of Vioxx and each of the pleaded cardiovascular conditions.

9                          In my reasons for judgment published on 5 March 2010, I concluded that it had not been established that the consumption of Vioxx gave rise to an increased risk of thrombotic stroke, or of any of the pleaded cardiovascular conditions other than myocardial infarction (see paras 583-584).  That is to say, the applicant made allegations which were capable of being resolved during the course of the case which he conducted, and he failed to substantiate those allegations.  In relevant respects, the questions which arose on the applicant�s case must, therefore, be answered favourably to the respondents. 

10                        It was submitted on behalf of the applicant that it would be unfair for the court now to answer question 4 in the negative with respect to conditions other than myocardial infarction.  It would be unfair for the applicant, it was said, because it would implicitly require him to institute an appeal, with all the attendant costs and risks which that involved, when he had nothing to gain therefrom.  It would be unfair for the other group members, in the sense that those who suffered from conditions other than myocardial infarction would be forever cut out from prosecuting their claims against the respondents in circumstances in which the only individual to have had his case considered by the court was one who had not suffered from any of those conditions.  In my view, however, these submissions both beg the question and miss the point that this is a representative proceeding.  By instituting the proceeding in the form that he did, and by making the broad allegations referred to above, the applicant assumed the responsibility of proving that Vioxx increased the risk of suffering each of the pleaded cardiovascular conditions, not merely myocardial infarction.  It cannot be unfair, on him, to expect him to carry through with the undertaking upon which he embarked.  Likewise, given the structure and assumptions of Part IVA of the Federal Court Act, group members who have not opted out must be taken to be content to have their claims dealt with by the applicant himself, at least to the extent that common issues are involved.  Were it otherwise, the whole point of having a representative proceeding would, in my view, be undermined.  It would be intolerable, after a lengthy and complex proceeding such as the present, for the applicant, having fallen short of making good his case in some respects, to be able to leave it to other group members to have a second try, as it were. 

11                        There was one qualification to the respondents� proposal that question 4 should be answered in the affirmative in relation to myocardial infarction.  They submitted that the parenthetical qualifier �compared to placebo� should be added to the answer.  The basis of this submission was that the statistical data upon which I had relied to find the existence of an increase in risk all involved comparisons as between Vioxx and placebo.  I accept that so far as it goes, but it would, in my view, be inappropriate to add the qualifier proposed by the respondents.  The fact that placebo was the comparator was a matter of evidence which justified the general conclusion which I reached.  That conclusion having being reached, I consider that the answer to question 4 should reflect it in the simplest possible terms, rather than being set about with reminders of the evidentiary trail which I followed in my reasons. 

12                        For the above reasons, I propose to answer question 4 in the affirmative for myocardial infarction, and in the negative for other conditions.

13                        Question 2: The parties accepted that the question should be amended by replacing the word �causing� with the phrase �contributing to the onset of�  The parties also agreed that the question should be answered in the affirmative with respect to myocardial infarction.  The respondents proposed that it should be answered in the negative with respect to the other pleaded cardiovascular conditions, while the applicant proposed that this part of the answer should be held over pending the continuation of the proceeding with respect to group members who had suffered from those other conditions.  In relevant respects, the parties� positions were the same as those taken in relation to question 4.  Consistently with the way I have dealt with question 4, I propose to answer question 2 in the negative for conditions other than myocardial infarction. 

14                        Question 3: The parties agreed that the mechanism required to be identified, in relation to myocardial infarction, should be �the aggregation of [thrombotic or thromboembolic] material in the vasculature as the result of the blocking of the production of prostacyclin by the inhibition of COX-2 in the absence of any blocking of the production of platelet thromboxane�.  There was a minor dispute about the words in square brackets.  The applicant submitted that the word should be �thromboembolic�, while the respondents submitted that the word should be �thrombotic�.  With the consent of the parties, I have consulted Aaronson PI and Ward JPT, The Cardiovascular System at a Glance, 3^rd ed, 2007, at p 99.  In the sense in which the term is used in the proposed answer to question 3, I consider that �thrombotic� would more accurately convey the sense of the physiological mechanism identified in my reasons of 5 March 2010.  I should make it clear, however, that I do not base the answer to this question upon any technical distinction between thrombotic and thromboembolic, and I do not regard it as significant that the thrombus or embolism did its presumptively pathological work at, near, or distant from, the site of original formation.  So far as risk is concerned, what matters is that thrombotic material aggregated in the vasculature in the way proposed in the answer to the question. 

15                        Question 9(d): Part (d) of question 9 inquired whether MSDA failed to provide adequate information, advice or warning to the general public, or to health care professionals, to the effect that the consumption of Vioxx materially increased the risk of suffering the condition, a material increase in the risk of which was posited by an affirmative answer to question 5.  Strictly, because of the way the question was expressed, and because of the answers given to parts (a) and (b) of question 6, question 9(d) was irrelevant.  However, the parties accepted that, involved in question 9(d) was an inquiry whether MSDA failed to provide adequate information, advice or warning as to the signal of potential cardiovascular risk referred to.  From this point, however, the parties parted company with respect to the appropriate answer to question 9(d). 

16                        The respondents proposed that, at the level of health care professionals who treated or advised individual group members, this was not a common question.  They proposed that, at the level of the general public, and of health care professionals other than with respect to their treatment of or advice to individual group members, the question should be answered in the negative.  The applicant submitted, in effect, that the respondents� approach was more categorical than was fairly allowed by my reasons for judgment.  He drew attention to the fact that I had found that no general communication by way of information, advice or warning had been conveyed to health care professionals, and that this much at least must now be taken to have been finally established as against MSDA.  Allowing for the possibility that MSDA might, in the case of a particular group member other than the applicant, show that there was a particular communication which constituted adequate information, advice or warning, the applicant submitted that it should not be regarded as any longer open to MSDA to press for different conclusions at the general level, under the guise of dealing with questions which were not common. 

17                        The respondents submitted that, if I were disposed to make a distinction between communications to the generality of health care professionals, on the one hand, and communications to particular health care professionals, on the other hand, I should likewise recognise that, in my reasons of 5 March 2010, I held that the amended Product Information of November 2001 was, in point of content, an adequate warning to a professional audience.  The respondents submitted that MSDA had failed in relevant respects only because of my finding that this warning had not been appropriately drawn to the attention of health care professionals and that, once one reaches this level of communication, the question itself becomes a non-common one. 

18                        With respect to health care professionals, I accept the applicant�s submission that, in my reasons of 5 March 2010, I found that MSDA had not, at the general level, provided any adequate information, advice or warning as to the signal of potential cardiovascular risk.  I consider this to be a closed question, which it is no longer open to the respondents to re-agitate.  However, to the extent that there were more limited communications made to particular professionals who advised or treated group members, I consider that question 9(d) is not common.  Likewise, because of the potential for there to be such limited communications, I could not hold that the question whether MSDA�s failure to issue a general warning was �less than reasonable in all the circumstances� is a common one.  The circumstances do, of course, include such limited communications as may have been made to individual health care professionals.  I shall answer this question in a way that reflects these conclusions. 

19                        With respect to so much of question 9(d) as relates to the �general public� it is clear from para 853 of my reasons of 5 March 2010 that the question must be answered in the negative. 

20                        Question 9(e) was the source of some difficulty.  I must say that, in retrospect, it demonstrates the unwisdom of my uncritical acceptance of all of these questions as originally proposed by the parties.  The question uses imprecise terms which might be appropriate in a court�s reasons for judgment, but which, in my view, have no place in binding orders.  I refer here to such loose concepts as developing and implementing a marketing strategy or campaign and to the formulation and dissemination of representations.  The question rolls up into one compound grammatical structure several internal questions (even before one reaches the Roman numerals).  Instead of asking whether MSDA formulated certain representations, and, if so, whether it then disseminated those representations, the question asked whether MSDA developed and implemented a marketing strategy or campaign �by which� it formulated and disseminated etc.  To answer the question as posed, the court would be obliged to concern itself with the �development� of a �strategy�, and, if such an event had occurred, whether the strategy involved the �formulation� of each of the representations referred to.  All this, and no finding would yet have been made that any of those representations reached the ears of any relevant addressee. 

21                        In written submissions recently filed, the applicant proposed that question 9(e) should be answered in the following terms:

Merck Australia developed and implemented a marketing campaign by which it formulated and disseminated to medical practitioners in Australia representations concerning the safety of Vioxx, however it will be a matter for individual claimants to prove whether this campaign generally, or individual representations within it, were causally relevant. 

It will be noted that this proposal does not amount to an unqualified affirmative answer to question 9(e), and does not deal specifically with the numbered elements within the question.  The applicant submitted that my reasons �[supported] the answer that representations to this effect were elements of the campaign, and that [MSDA] made every attempt to ensure its messages were communicated in a consistent way�.  This is not the language of question 9(e).  Neither does the applicant�s proposed answer correspond with my reasons insofar as it proposes that MSDA �disseminated� representations concerning the safety of Vioxx. 

22                        For their part, the respondents originally submitted that question 9(e) should be answered as follows:

[MSDA] developed a marketing strategy or campaign by which it intended to disseminate certain messages about Vioxx.  The Applicant has not established that by reason of this marketing strategy or campaign any particular representation was made to any particular prescribing doctor. 

While this answer is broadly consistent with the flow of my reasons, it does not reflect any particular finding made therein.  I also consider that such an answer would be neither appropriate by way of judicial determination of particular facts in this litigation, nor satisfactory as a basis for the resolution of the claims of other group members. 

23                        To the extent that the evidence justifies general conclusions of the kind with which question 9(e) is apparently concerned, the matter was dealt with in paras 259-296 of my reasons of 5 March 2010.  The utility of the findings which I made about MSDA�s marketing and promotional activities will lie in the support they provide for such evidence as may subsequently be called about the dissemination of representations by MSDA to the other group members themselves, or to the health care professionals whose treatment or advice is relevant to their circumstances.  That utility would not, in my view, be advanced by attempting to close off, in very general terms which could not anticipate those circumstances, some but not all of the relevant issues for determination.  Although much of the evidence will, fairly obviously, be common to all group members, the context of its application will necessarily depend upon such evidence as there is on the matter of dissemination.  For reasons previously given, the latter aspect cannot be regarded as common to all group members. 

24                        I propose to answer question 9(e) by saying that the dissemination of representations to health care professionals is not a common question, and that, in other respects, it is inappropriate to answer the question. 

25                        Question 10: Consistently with paras 810-811 of my reasons of 5 March 2010, the respondents submitted that this question should be answered in the negative.  If the question is to be understood as confined to the issue whether reasonable behaviour required MSDA to withdraw Vioxx from the market before 30 September 2004, the applicant also accepted that it should be answered in the negative.  His only concern with such an answer was that it might convey, implicitly if not otherwise, that �all of the circumstances� included the absence of adequate information, advice or warning accompanying the distribution of Vioxx.  I do not regard question 10 as concerned with the presence or absence of warnings or the like.  The question is, in my view, confined to the bare fact of the distribution, or non-distribution, of Vioxx into the Australian market.  As so understood, the question should be answered in the negative. 

26                        Question 12: Again, the parties accepted that parts (a) and (c) of this question should be understood by reference to the signal of potential cardiovascular risk, rather than, as expressed, by reference to a materially increased risk.  As so understood, the respondents proposed that part (a) of question 12 should be answered in the negative, since I had not found, save in the applicant�s own case, that MSDA had failed to provide, on the label, any such adequate information, advice or warning as is inquired about (see para 835 of my reasons).  The applicant proposed that the question should be answered consistently with his own evidence and that, in effect, the respondents had not discharged the evidentiary onus thereby thrown upon them to show that other labels were not the same as those to which the applicant encountered.  I do not accept that any such onus was thrown upon the respondents.  The absence of a proper warning on the label was part of the applicant�s case.  He gave evidence only in the very limited terms referred to in para 835 of my reasons.  There was no evidence as to the labelling practices of MSDA � whether there was a single label for all supplies of Vioxx, whether the label was altered at some point along the way, or anything else.  In those circumstances, I am disposed to hold that question 12 (a) is not common to all group members.

27                        The parties agreed that parts (b) and (c) of question 12 should be answered consistently with the answers to parts (d) and (e), respectively, of question 9. 

28                        Question 13: After some debate, the applicant accepted the respondents� proposal that this question should be answered consistently with para 888 of my reasons, namely, by stating that MSDA�s promotional interactions with prescribers were in trade or commerce within the meaning of the Trade Practices Act 1974 (Cth). 

29                        Question 14: The parties agreed that I should answer this question consistently with my answer to question 12.

30                        Question 20: The parties were not agreed on the answer to this question.  The applicant proposed that it should be regarded as a common question, and, in the absence of �any other information, advice or warning that consumption of Vioxx tablets may materially increase the risk of myocardial infarction�, should be answered in the affirmative.  The respondents submitted that this was not a common question, save to the extent to which I made findings in paras 917-921 of my reasons.  I consider that the applicant�s proposal more closely captures the sense of what I decided on 5 March 2010.  The substance of that decision was that the safety of Vioxx tablets was not such as persons generally were entitled to expect by reason of the material increase in the risk of suffering a myocardial infarction, and the circumstances which I took into account included the absence of any sufficient information, advice or warning associated with the supply of the medication.  I take the view that, at the general level, the absence of any such information, advice or warning has been established on the evidence, and should not be re-litigated.  However, the applicant�s proposed answer to this question recognises that, in an individual case, there may have been some such information, advice or warning conveyed to a group member or to his or her practitioner which would, in that individual case, justify a different answer to this question.  Save to make it clear that the qualification applies only in an individual case, I shall adopt the applicant�s proposal by way of answer to question 20. 

31                        Question 21: With respect to packaging and labelling, consistently with my answer to question 12(a), I consider that question 21 is not common to all group members.  With respect to the Product Information, it follows from paras 918-921 of my reasons of 5 March 2010 that the question should be answered in the affirmative, but I would emphasise that the absence of adequate information, advice or warning in the Product Information was but one of the circumstances which led me to conclude that the safety of Vioxx was not such as persons generally were entitled to expect.  I shall answer question 21 consistently with these views. 

32                        Question 22: The respondents submitted that this was not a common question, referring in this respect to para 935 of my reasons of 5 March 2010.  The applicant submitted that the question should be answered thus: �If the purpose of acquisition of the Vioxx tablets was for use as an anti-inflammatory drug, yes�.  In this instance, I consider that the respondents� proposal accurately reflects my reasons of 5 March 2010.  In the light of those reasons, I should not attempt to anticipate the purpose of another group member by making the answer to the question a hypothetical one.  In my view, question 22 is not common. 

33                        Question 23: Although the answers they proposed differed, the parties were agreed that I should answer question 23 consistently with my answer to question 22.  I shall follow that course. 

34                        Question 26: The parties agreed that this question should be answered consistently with my answers to question 6.  I shall follow that course. 

Group members who did not suffer myocardial infarction

35                        The respondents submitted that, in accordance with my reasons of 5 March 2010, the claims of group members who suffered only cardiovascular conditions other than myocardial infarction should now be dismissed.  The applicant resisted that course, but accepted that it was a course which should be followed if my answers to questions 2 and 4 were, in relation to conditions other than myocardial infarction, in the negative.  In the circumstances, I shall adopt the course proposed by the respondents. 

Stay of execution

36                        MSDA seeks a stay of its obligation to pay the damages awarded in favour of the applicant, pending the hearing and determination of an appeal (or of an application for leave to appeal, or of any appeal arising from such an application, as the case requires) which, I was told, would definitely be lodged.  Neither an appeal nor an application have yet been lodged, but the parties approached the subject by reference to the assurance I was given by counsel for the respondents that my judgment in favour of the applicant under ss 74B and 74D of the Trade Practices Act would be challenged.  Both sides approached the debate by reference to the principles which govern the discretionary grant of a stay pending the determination of an appeal, and I shall do likewise. 

37                        An applicant for a stay pending the determination of an appeal is required to demonstrate �a reason or an appropriate case to warrant the exercise of discretion in his favour�: Powerflex Services Pty Ltd v Data Access Corporation (1996) 67 FCR 65, 66.  The starting point is that a successful party is entitled to the fruits of his or her judgment, and some good reason to hold that entitlement in abeyance must be shown.  Although the prospect that execution of the judgment at first instance would render any appeal nugatory would almost inevitably be regarded as a good reason, that is not a necessary condition of the exercise of the jurisdiction to grant a stay.  Where the judgment to be appealed from obliges one party to pay a sum of money � particularly a substantial sum � to the other party, the considerations to which the court should advert in the exercise of its discretion include the prospect of the intending appellant being restored to his or her original position, if the appeal succeeds, and the hardship or prejudice which would be visited upon the party who was successful at first instance if he or she were denied the fruits of the judgment, and yet the appeal fails. 

38                        MSDA, as the moving party, submitted that it was entitled to some protection against the prospect of not being returned to its original position, if its appeal were to succeed.  It pointed out that the sum payable in favour of the applicant was a substantial one, and that, if ultimately there were an order for restitution, its then presumptive entitlement would, by the accretion of interest, have become even greater.  It submitted that it would be most unfortunate, to say the least, if it were ultimately obliged to take enforcement proceedings against the applicant to recover that sum.  MSDA was prepared to consider any practical expedient to protect the applicant�s position against the prospect that the appeal would fail.  It was, for example, prepared to pay the judgment sum into court (where, as part of the Litigants� Fund under O 63 of the Federal Court Rules, it would earn some interest); it was prepared to cooperate in the establishment of an interest-bearing trust account in the names of the parties� solicitors jointly; and it was also prepared to pay the sum to the applicant absolutely, so long as he was prepared to provide security, acceptable to the court, for restitution of the sum, with interest, in the event that an appeal should succeed. 

39                        The applicant�s resistance to the respondents� application for a stay was based on the simple proposition that no sufficient ground had been established to displace his entitlement to the fruits of his judgment.  No attempt had been made by MSDA to demonstrate that the applicant would be unable to repay the judgment sum, together with any interest, if an appeal were to succeed.  It was not good enough, it was submitted, for MSDA to deal in generalities: it had to show that this particular applicant was likely to be unwilling and unable to restore MSDA to its original position, should that be required.  The applicant did not accept any of the practical expedients proposed by MSDA.  He was not prepared to have the money paid into court, nor to participate in the establishment of a joint trust account, nor to provide any security for repayment. 

40                        The court is, of course, not without some understanding of the applicant�s means.  Indeed, an important element of his claim for compensation under ss 74B and 74D was that he had suffered a diminution in earnings capacity as a result of his heart attack.  On the other hand, it is apparent from the facts to which I referred in my reasons of 5 March 2010 that the applicant is in no need of the judgment sum merely to meet the daily necessities of life.  Although it is correct that MSDA carries the onus of proof, if there were any respect � save for the deferral of the use of the money as an asset � in which the applicant would be prejudiced by being held out of the fruits of his judgment over the period during which MSDA prosecuted its presumptively unsuccessful appeal, I would have expected that counsel for the applicant would at least have adverted to it. 

41                        In my consideration of this matter, it is significant that the applicant has not agreed to participate in what I consider to be reasonable expedients proposed by MSDA to protect its position in the event that an appeal is successful.  It may be simple enough to point out, at this stage, that no reason has been shown to hold the applicant out of the fruits of his judgment, but, as counsel for MSDA pointed out, circumstances change.  The very fact that the applicant had received the judgment sum absolutely, without either qualification or undertaking, would leave MSDA exposed to the consequences of any presently unpredictable change in the applicant�s circumstances.  All things considered, I do not think that it is a satisfactory response, on the part of the applicant, to go no further than to say that MSDA has not led positive evidence as to the likelihood of his inability to repay this substantial sum. 

42                        I consider that each of the practical expedients proposed by MSDA was a reasonable one, and might well have been taken up by the applicant.  However, since none has, the step I propose to take is to stay execution of judgment in favour of the applicant, but to make that stay conditional upon MSDA paying the judgment sum into court (and, of course, upon the institution of an appeal or the filing of an application for leave to appeal).

Costs

43                        With respect to the costs of the proceeding to date, the questions which now require determination fall into the following categories:

·          Costs as between the applicant and MSDA;

·          Costs as between the applicant and Merck;

·          The consequence of the respondents having disputed facts the subject of Notices to Admit served on behalf of the applicant on 19 December 2007 and 17 March 2008;

·          To the extent that the applicant would otherwise be required to pay all or part of the costs of Merck, whether that obligation should be transferred to MSDA pursuant to the principles referred to in Sanderson v Blyth Theatre Company [1903] 2 KB 533;

·          If the applicant is entitled to costs, whether those costs should be taxed and paid forthwith, rather than awaiting the resolution of any appeal which may be lodged, or the conclusion of the proceeding as a whole; and

·          Whether the applicant should be reserved leave to have some or all of the costs to which he is found to be entitled taxed on an indemnity basis.

I shall deal with these question in the order set out above.

44                        The applicant sought his costs generally as against MSDA.  As the successful party, conventionally he would be entitled to those costs.  MSDA submitted, however, that the applicant had sued on a number of causes of action, and had succeeded on only two (those arising under ss 74B and 74D of the Trade Practices Act).  That is true, but there are three considerations which incline me to the view that the applicant�s entitlement to costs should not be qualified by reference to the causes of action on which he did not succeed.  The first is that the core of each of the applicant�s causes of action was his claim to be compensated for the damage which he suffered as a result of ingesting Vioxx.  Jurisprudentially, he framed his allegations so as to satisfy the requirements of the individual causes of action, but, realistically, each was in the nature of an alternative road to the same end.  He was entitled so to proceed:  indeed, for him to have sued sequentially on each cause of action would in all probability have been regarded as an abuse of process: see Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.  Generally speaking, and subject to what follows below, an applicant who relies on different legal rules in pursuit of a single outcome, and who achieves that outcome, should not have his or her entitlement to costs qualified by reference to the rules under which his or her case was not successful.  That is a principle which should, at least as a starting-point, inform the disposition of the applicant�s costs claim against MSDA in the present case.

45                        The second consideration concerns the relationship between the causes of action on which the applicant succeeded, and those on which he failed.  Had these various causes of action required the applicant to advance completely separate factual cases, there may have been a legitimate discretionary basis for excluding from the costs required to be paid by MSDA those that related only to causes of action on which the applicant failed.  However, the single most difficult factual issue in the case was whether the consumption of Vioxx increased the risk of cardiovascular disease.  To make good his case under ss 74B and 74D, the applicant had to establish that proposition, and he did so with respect to myocardial infarction.  It is true that success under these sections did not strictly require an examination of the scientific evidence available to the respondents at various times before the end of September 2004, nor of the reasonableness of the respondents� reactions to that evidence (probably the second most problematic aspect of the parties� factual cases), but there was a high degree of overlap between the parties� treatments of these two issues.  It would be artificial to attempt a separation between costs which related only to proof of the objective scientific facts and costs which related to the respondents� state of understanding at various times, and to the reasonableness of their responses to that understanding.

46                        The third consideration is based on the circumstance that this is a representative proceeding.  Although the applicant failed in his negligence action against MSDA, that was only because of facts specific to himself.  To the extent that he secured findings against MSDA, those findings, which were reflected, for example, in my answers to common questions 6, 7, 8, 9(d) and 11, may yet provide a basis for success for other group members under the applicant�s common law claims.  These circumstances set the present case apart from a non-representative proceeding in which an applicant has wholly failed with respect to a particular cause of action.

47                        There are four exceptions which I would make to the above conclusions.  The first relates to cardiovascular conditions other than myocardial infarction.  To make good his personal case, and the cases of the other group members whose circumstances were closely analogous to his own, the applicant had no need to introduce allegations about those other conditions.  Neither was it as though, properly and prudently advised, the applicant ought not to have perceived, from the publicly-available information, that, while the case for cardiovascular conditions generally was reasonably evident, that for myocardial infarction was clearly likely to be the strongest.  The applicant�s claims about the other conditions were in no sense alternatives to his case about myocardial infarction.  He chose to run the broader case, and I cannot see why he should expect to get his own costs, or to avoid paying those of the first respondent, to the extent that they related only to conditions other than myocardial infarction.  By this I do not mean that the parties� costs should somehow be divided proportionately between the five pleaded conditions.  I accept that, in making good his case about myocardial infarction, the applicant was obliged to lead, and to deal with, a great deal of evidence about cardiovascular events generally.  I mean only that costs which related only to conditions other than myocardial infarction should be excluded from those to be paid to the applicant, and included amongst those to be paid by the applicant.

48                        The second exception relates to the applicant�s marketing case against MSDA.  There was much in that case that, as things emerged, made no contribution to the applicant�s success in his personal case, or to the answers which I have given to the common questions.  It is apparent from my reasons of 5 March 2010, and from these reasons, that I consider that it is too early to provide an affirmative answer to the question whether the costs incurred by the applicant in connection with his marketing case (other than the costs of proving the making of representations to the practitioner or practitioners who treated the applicant himself) were necessarily incurred � or even reasonably incurred � in the pursuit of the outcomes which he achieved.  I do not exclude the prospect, for example, that I would ultimately form the view that it would be unjust to require MSDA to pay the applicant�s costs of preparing for, and leading, the evidence of Prof Donovan and/or of Prof Jelinek.  I do not think I will be in a position to make these kind of judgments until the claims of the other group members have been dealt with.  I propose to reserve these costs � both the applicant�s and MSDA�s.

49                        The third exception may be more theoretical than real, but I should not now make a costs order which requires MSDA to pay any part of the applicant�s costs incurred to date in connection only with the claims of group members other than himself.  I have no information about such matters, but I am bound to presume that the applicant�s solicitors may have incurred costs in preparation of the individual claims of other group members.  To decide whether it would be just to require MSDA to pay those costs must await the resolution of the claims concerned.

50                        The fourth exception relates to the applicant�s costs incurred only because of the joinder of Merck.  The applicant failed as against Merck, and it would be neither just nor appropriate for these costs to be borne by the first respondent. 

51                        The costs orders which I make as between the applicant and MSDA will reflect the reasoning set out above. 

52                        The applicant submitted that he should not have to pay any part of Merck�s costs, since Merck was jointly represented with MSDA, and it is a fair inference that, generally speaking, only one set of costs was incurred.  Here the applicant relied upon Krueger Transport Equipment Pty Ltd v Glen Cameron Storage and Distribution Pty Ltd (No 3) [2008] FCA 1592.  In that case, there were five respondents, four of whom were part of a single corporate group and had common representation.  The fifth respondent proposed that it should be obliged to pay only such fraction of the costs of the partly successful applicant as was calculated by reference to the number of respondents.  Gordon J rejected that approach.  Her Honour said (at para [9]):

Although there were four respondents on the Camerons side (two individuals and two corporations) that were alleged to have engaged (and were found to have engaged) in one course of conduct, they were represented jointly by one set of legal advisers and ran one defence.  Vawdrey makes no argument (and I can see none) that Krueger incurred appreciably more costs by virtue of the fact that there were four Camerons respondents rather than one Camerons respondent.  In the circumstances, I decline to apportion the costs relating to the copyright claim otherwise than equally among the Camerons parties and Vawdrey. 

Gordon J�s judgment in Krueger does not, however, assist the applicant in his present submission that he should be relieved of the obligation of paying any of the costs of Merck.  In Krueger, her Honour was concerned only with the question of the allocation of the costs of the successful applicant as between unsuccessful respondents.  The question before her had nothing to do with the costs of a successful, jointly represented, respondent. 

53                        There is, however, a respect in which I consider that the joint representation of the respondents is relevant to the obligation which would otherwise fall upon the applicant to pay the costs of Merck. Since the applicant has succeeded against MSDA, and will, subject to the qualifications to which I have referred above, get his costs, it would be wrong to require him to pay the costs of Merck which would in any event have been incurred by MSDA in the prosecution of its unsuccessful defence to his claims.  I shall, therefore, exclude from the costs payable by the applicant those incurred by Merck jointly with MSDA which did not relate only to Merck�s defence to the applicant�s claims. 

54                        On 19 December 2007, the applicant served upon both respondents a Notice to Admit ten facts.  The first fact was the following:

That at all material times after 30 June 1999 the consumption of rofecoxib or VIOXX tablets materially increased the risk of suffering a myocardial infarction.

The next four facts were in similar terms, save that they referred, sequentially, to each of the other pleaded cardiovascular conditions.  The sixth fact was in the same terms as the first, save for the omission of the word �materially�.  The remaining four facts corresponded with the sixth but dealt with the other pleaded cardiovascular conditions.  By Notice Disputing Facts dated 24 January 2008, the respondents disputed each of the facts set out in the applicant�s Notice to Admit.  In the proceeding leading to my judgment of 5 March 2010, the first and sixth facts specified by the applicant were proved. 

55                        On 17 March 2008, the applicant served upon the respondents a further Notice to Admit, one of the facts specified in which was as follows:

That at all material times after 30 June 1999 the consumption of rofecoxib or VIOXX tablets materially increased the risk of Graeme Peterson suffering a myocardial infarction.

The respondents disputed that fact.  It too was proved by the applicant. 

56                        The applicant sought an order that Merck pay its costs of proof of the first and sixth facts in his notice of 19 December 2007, and the fact to which I have referred in his notice of 17 March 2008.  He relied in this respect on O 62 r 24 of the Federal Court Rules, which provides as follows:

Where a party to any proceeding serves a notice disputing a fact under Order 18, rule 2 (which relates to notices to admit facts) and afterwards that fact is proved in the proceeding he shall, unless the Court otherwise orders, pay the costs of proof.

It is, however, neither necessary nor appropriate for the court to make an entitling order under this rule.  In the circumstances to which it refers, the rule operates according to its terms, without any order of the court: Meadow Gem Pty Ltd v ANZ Executors and Trustees(unreported, Supreme Court of Victoria, Byrne J, 11 June 1996). 

57                        The respondents (effectively Merck) resisted the proposition that they should pay for the applicant�s proof of the facts set out in its Notices to Admit, substantially on the ground that those notices had included a number of facts, broadly expressed, and closely in alignment with important allegations which the applicant had made in his pleading.  They submitted that it was proper for them to have contested what they described as �the bare allegations� referred to in the Notices to Admit.  They urged me to take the same approach as was taken by Goldberg J in Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602.  His Honour said (at [58]):

I do not consider that it was either reasonable or appropriate to require the respondents, under the pain of an order for costs pursuant to O 18 r 2 of the Federal Court Rules, to respond to a notice which substantially reproduced the allegations in the amended statement of claim in a rolled-up way and in a form which required the respondents to make admissions as to matters which were not clearly separated from other matters.  Further, in a number of respects it was not possible to sever components of matters, the subject of the notices to admit, without having any consequential effect on other paragraphs in the notices to admit.

However, the kind of situation with which Goldberg J was concerned is revealed by the following paragraph in the relevant Notice to Admit, which was in terms identical to those used in the corresponding paragraph of the Statement of Claim (at [57]):

Continuously since at least the late 1960�s the Footwear (including the Z Welt Footwear) has been advertised, promoted, marketed, offered for sale and sold in very substantial quantities in Australia under or by reference to one or more of the following scheduled marks:

�Dr Martens�, �DOC�s�, �Doc Martens�, �Docs� and the Dr Martens Logo.

It is easy to appreciate why his Honour would not allow this kind of formulation to stand as a basis for the operation of what was then O 18 r 2(4) (now O 62 r 24). 

58                        The facts specified by the applicant in his Notices to Admit in the present case stand by way of stark contrast to those with which Goldberg J was concerned in Dr Martens.  Although the applicant�s facts did correspond with central allegations made in his pleading, each was singular (in the sense of not involving overlapping or cascading alternatives) and were in no other sense embarrassing.  To the extent that the first fact in the applicant�s notice of 19 December 2007 might be regarded as problematic by reason of the inclusion of the qualifier �materially�, the sixth fact did not have that vice.  It was this fact which was the broadest of the three to which I have referred above, and it was proved by the applicant.  I am not disposed to render O 62 r 24 inoperative upon the broad grounds here adverted to by the respondents. 

59                        There is another dimension to the operation of O 62 r 24 to which the parties did not advert in their submissions, but which I consider to be important.  Here I refer to the observations of Byrne J in Meadow Gem: 

Under R.63.18, prima facie, the disputing party must pay the costs of proof of a fact where a Notice to Admit has been given. The question raised in the present application, then, is whether the party so entitled to the costs should be deprived of those costs. In general, the incidence of party and party costs in litigation does not depend upon reasonableness or upon matters such as whether it was part of a party�s cause of action or whether it was within a party�s knowledge; it depends upon success. Rule 35.03 is intended to encourage parties, especially those who expect to be ultimately successful, to consider realistically whether they will put the other party to the cost of proving each and every fact. As a general rule, the respondent to a Notice to Admit a fact should, in my view, be in no different position with respect to that fact from the position of a defendant who puts the allegations in the plaintiff�s Statement of Claim in issue. Absent some special factor, each of them thereby runs the risk that, if the plaintiff or the party giving the Notice to Admit succeeds, a costs burden must be accepted. It must be remembered, too, that this is not a once and for all decision for it is always open to a party at any later time to admit a fact alleged by an opposing party. The use of costs as an incentive to narrow the issues, to shorten trials and to save costs is found elsewhere in the rules, for example, R.26.18 (offer of compromise not accepted). In my opinion the primary question which a party in receipt of a Notice to Admit a fact or an offer of compromise must address is whether the notice giver will prove that fact or obtain a result not less favourable than that contained in the offer.

Byrne J likened Notices to Admit to Offers of Compromise, each being regarded as an example of an incentive, provided by way of modifying what would otherwise be the incidence of the obligation to pay costs, to narrow issues and to shorten trials.  With respect, I would associate myself with his Honour�s observations.  Upon receipt of a Notice to Admit, a party must seriously consider whether each fact referred to will be proved at trial.  A consequence of seeing the Notice to Admit procedure in this light, however, is that the recipient of such a notice should not be penalised for not having volunteered the admission before the expiration of the 14 days referred to in O 18 r 2(2).  That is to say, I cannot discern in the policy underlying O 62 r 24 any rationale for the imposition on the recipient of an obligation to pay costs incurred before he or she was required to make and to communicate his or her election as to whether the fact in question would be put in dispute.  In the circumstances, I propose to qualify the operation of O 62 r 24, such that it applies only to the applicant�s relevant costs incurred after the respondents put in dispute the broadest formulation of the relevant fact, namely, 24 January 2008. 

60                        There is another respect in which the assumed operation of O 62 r 24 bears upon the orders proper to be made in favour of Merck.  It would, in my view, be inappropriate, and inconsistent with the policy and operation of the rule, for Merck to receive its costs incurred resisting proof of the facts specified in the applicant�s Notices to Admit, and subsequently proved.  I shall, therefore, incorporate an appropriate qualification in the costs order which I would otherwise make in favour of Merck. 

61                        To the extent that he would otherwise fall under an obligation to pay all or some part of the costs of Merck, the applicant submitted that a Sanderson order should be made, namely, that the relevant obligation to pay those costs should be imposed upon MSDA (the unsuccessful respondent) rather than upon himself (the successful applicant).  In this respect, both parties relied upon the judgment of Asche CJ in Lackersteen v Jones (No 2) (1988) 93 FLR 442, 449:

From those cases therefore the following principles seem to be established before a judge can make a "Bullock" or "Sanderson" order.

1.         It must be seen to have been reasonable and proper for the plaintiff to have          sued the successful defendant.

2.         The causes of action against two or more defendants need not be the same          but they must be substantially connected or dependent the one on the other.

3.         While it is essential to find that the plaintiff has acted reasonably and        properly that alone is not sufficient. The court must find something in the   conduct of the unsuccessful defendant which makes it a proper exercise of         discretion.

4.         Finally, in considering whether to make such an order, the court should, in             the exercise of its discretion balance overall two considerations of policy: the           first, that an unnecessary multiplicity of actions should not be forced on litigants, so that a plaintiff who acts reasonably in joining two or more             defendants should not be penalised or lose the fruits of his victory in costs on        the basis that he should have either elected or taken separate actions;       secondly, that an unsuccessful defendant should not have to pay more than   one set of costs merely because he is unsuccessful.

62                        The respondents did not place the first two principles in issue.  Further, they implicitly accepted that the balancing exercise referred to in the fourth principle should inform my judgment in the present case.  The respect in which the applicant fell short of entitling himself to the benefit of a Sanderson order, in the submission of the respondents, lay in the third principle: there was, they submitted, nothing in the conduct of MSDA which would make it a proper exercise of the court�s discretion to require it, rather than the applicant, to pay the costs of Merck. 

63                        The applicant pointed to the circumstance that the respondents are both members of the same corporate group, and that MSDA is a wholly-owned subsidiary of Merck.  Appropriately, however, the applicant did not rely only upon those circumstances in support of his case for a Sanderson order.  He submitted that, under the third principle of Asche CJ, there was something in the conduct of MSDA which made it a proper exercise of the court�s discretion to make such an order.  Relevantly, his submission was as follows:

It was an important part of the applicant�s case that there had been a failure by one or other or both of the respondents to warn medical practitioners that Vioxx increased the risk of suffering cardiovascular conditions and that Merck had failed to provide adequate information or warnings of that risk to MSDA.  One of the possible bases for Merck being liable for the failure was that it had failed to provide adequate information to MSDA to enable it to do so.  Whether that was so or not was a matter peculiarly within the knowledge of the respondents.

MSDA did not plead to the allegation that Merck had failed to provide it with adequate information or warnings.  It did nothing at any stage to make it clear that it had been provided with adequate information by Merck at all relevant times. The respondents, including MSDA chose to conduct the trial on the silent proposition that MSDA was fixed with the relevant scientific knowledge of Merck at each point in time, rather than make it clear that that was so either by way of pleading, evidence or other admission. 

It is submitted that MSDA�s ambiguous position as to the responsibility for the failure to warn is conduct that, as between the applicant and MSDA, made it reasonable for the applicant to have joined Merck.  That is particularly so in circumstances where the close corporate and business relationship between the respondents made it otherwise impossible for the applicant to have identified which of the respondents was to blame.

The applicant�s reference to a �silent proposition� was, of course, an echo of the observation which I made in para 811 of my reasons of 5 March 2010. 

64                        In his Further Amended Statement of Claim, the applicant alleged that Merck knew or ought to have known that the consumption of rofecoxib materially increased the risk of suffering the pleaded cardiovascular conditions.  The same allegation was made against MSDA.  Both were effectively denied.  The applicant alleged that, in suppling rofecoxib to MSDA, Merck failed to provide to MSDA any or any adequate information, advice or warning to the effect that the consumption of rofecoxib materially increased the risk of suffering the pleaded cardiovascular conditions.  That allegation was denied by Merck.  The fact that MSDA conducted its defence to the applicant�s allegations without responding to that allegation (which was not made against it) does not, in my view, provide a basis for the discretionary transfer to it of what would otherwise be the applicant�s obligation to pay the costs of Merck.  Further, the respondents never engaged in anything approaching smart dealing or clever tactics with respect to the distinction between the state of knowledge of Merck and that of MSDA at various points in time.  There was never any attempt to conceal the state of MSDA�s knowledge, or the extent of the communications which it received from Merck. 

65                        Although I accept that it was reasonable for the applicant to have proceeded against Merck, the fact is that he failed in that undertaking.  The circumstance that the two respondents were jointly represented will, as noted above, be reflected by way of a qualification in the costs order which I would otherwise make in favour of Merck, and the applicant will derive the benefit of that.  To the extent that he will remain under an obligation to pay some part of the costs of Merck, I am not persuaded that the circumstances call for the discretionary transfer of that obligation to MSDA. 

66                        The applicant next sought an order varying the effect of O 62 r 3(3) of the Federal Court Rules.  That subrule provides as follows:

An order for costs of an interlocutory proceeding shall not, unless the Court otherwise orders, entitle a party to have a bill of costs taxed until the principal proceeding in which the interlocutory order was made is concluded or further order.

If the present case concerned the applicant alone, the judgment which I gave on 5 March 2010 would have been final, and O 62 r 3(3) would have had no work to do.  However, since this is a representative proceeding, those orders were interlocutory (at least as between the applicant and MSDA), and the operation of the subrule would produce the result that the applicant would not be entitled to have his costs taxed until the resolution of the claims of all the remaining group members.  In my view, that would be an unjust and inappropriate outcome.  I agree with what was said by Sackville J with respect to a corresponding point having been reached in the prosecution of the representative proceeding in Courtney v Medtel Pty Limited (No 3) [2004] FCA 347, at para [23]:

In my opinion, the circumstances of the present case clearly warrant a departure from the usual practice of the Court.  The parties have chosen, perfectly sensibly, to litigate in a separate hearing the applicant�s claim for compensation together with issues of considerable importance to the representative proceedings.  Although the proceedings have not yet concluded, the Judgment can fairly be regarded as dealing with largely discrete issues.  The applicant has incurred very substantial costs in conducting the proceedings.  It appears that the proceedings as a whole will not be concluded for some considerable time, in part because Medtel wishes to adduce further evidence on the yellow spool solder issue.  In my view, it would be unfair to deny the appellant the opportunity to tax his costs without delay.

67                        The respondents did not propose that the taxation of costs to date should await the conclusion of the proceeding as a whole.  Rather, they proposed only that there should be no taxation of costs while an appeal is in prospect (as, I was assured, is the case) and, if there is an appeal, pending the determination thereof.  I am persuaded by that submission, since the success, in whole or in part, of an appeal would not only have consequences as to the terms of the costs orders which I propose to make, but most likely render futile the cost and inconvenience of any intervening taxation.  I shall make the order sought by the applicant to exclude the operation of O 62 r 3(3), but I shall stay the operation of that order pending the hearing and determination of an appeal, if appeal there be. 

68                        Finally with respect to costs, the applicant sought an order to the effect that the orders otherwise made be �without prejudice� to his entitlement to seek that his costs be paid on an indemnity basis.  There were, the applicant submitted, communications which had passed between the parties, and he may wish to rely upon these in due course as a basis for contending that his costs, or some part of them, should be taxed on an indemnity basis.  The applicant�s proposal seems sound in point of principle, but I think it would be both unfair and wasteful for the respondents to be required to endure two taxations of the applicant�s costs.  I will reserve the applicant the leave which he seeks, but will require him to make an election in that regard not later than 28 days before he takes any step to have his costs taxed. 

Associate:

Dated:         18 June 2010