FEDERAL COURT OF AUSTRALIA

Novartis Pharmaceuticals Australia Pty Ltd v Bayer Australia Limited (No 3) [2013] FCA 1323

THE COURT ORDERS THAT:

1.    Leave be granted to the respondent to withdraw its admissions in accordance with the proposed Notice of withdrawal of pleading annexed to its interlocutory application filed on 31 October 2013.

2.    The respondent pay the costs thrown away by the withdrawal of the admissions.

3.    Each party bear its own costs of and incidental to the interlocutory application.

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

REASONS FOR JUDGMENT

1    The respondent, Bayer, by interlocutory application filed on 31 October 2013, seeks to withdraw certain admissions in accordance with a “Notice of withdrawal of pleading” dated 31 October 2013.

2    I shall grant that leave, for the reasons which follow. Bayer must pay the costs thrown away by the withdrawal of the admissions. Each party should bear its own costs of and incidental to the interlocutory application.

3    These reasons should be read with my earlier reasons in Novartis Pharmaceuticals Australia Pty Ltd v Bayer Australia Ltd (No 2) [2013] FCA 1201 and in Novartis Pharmaceuticals Australia Pty Ltd v Bayer Australia Ltd [2013] FCA 929. In the earlier of those judgments, on 13 September 2013, I granted leave to the applicant, Novartis, to amend its Further Amended Statement of Claim to allege further misleading and deceptive conduct with the consequence that the then hearing dates, fixed for December 2013, be vacated. The matter is listed for hearing for 10 days commencing on 7 April 2014.

4    The essence of the amendment which I granted leave to Novartis to make was:

During the course of 2012 and/or 2013 Bayer company representatives engaged in communications with ophthalmologists and/or optometrists (known as “detailing”) during which the ophthalmologists and/or optometrists were shown in detail aids which included word [sic] in terms substantially similar to those in paragraph 28A above (“Detailing Conduct”).

5    Consequent upon the leave granted, Novartis filed a Second Further Amended Statement of Claim dated 19 September 2013.

6    On 15 October 2013, Bayer served a draft defence. In the covering letter, the lawyers for Bayer sought Novartis’ consent to the proposed amendments to paragraphs 14B, 14C, 14E and 14F of the previous pleading.

7    Shortly stated, Bayer proposed to withdraw and replace its admissions in relation to the representations that had then been pleaded so that it no longer admitted that, if found to be conveyed (which was denied), each of the four representations in certain Advertisements and Posters was misleading or deceptive in contravention of s 18 of the Australian Consumer Law or was a false or misleading representation in contravention of certain subsections of s 29. The effect of the withdrawal and replacement would mean that Bayer would admit that the representations said to be conveyed in the Advertisements and the Posters were false but deny that they were misleading or deceptive in contravention of s 18 or s 29.

8    By letter dated 18 October 2013, Novartis did not consent to the proposed amendments. Detailed reasons were given in a letter dated 29 October 2013.

9    This background is significant because, without it, Bayer would have had difficulty in establishing a ground for leave to withdraw the admissions.

10    The discretion with which the present interlocutory application is concerned is found in r 26.11(2)(b) of the Federal Court Rules 2011 as follows:

26.11 Withdrawal of defence etc

(1)    A party may, at any time, withdraw a plea raised in the party’s pleading by filing a notice of withdrawal, in accordance with Form 47.

(2)    However, a party must not withdraw an admission or any other plea that benefits another party, in a defence or subsequent pleading unless:

(a)    the other party consents; or

(b)    the Court gives leave.

(3)    The notice of withdrawal must:

(a)    state the extent of the withdrawal; and

(b)    if the withdrawal is by consent — be signed by each consenting party.

11    In my opinion the relevant principles in this matter of practice and procedure are not confined or rigid and, contrary to the submissions of Novartis, there are no gateways which have to be passed before leave to withdraw an admission may be granted. In my opinion, good cause must be shown to withdraw an admission and even if good cause is shown, the prejudice to the other party may be such as to warrant the refusal of leave to withdraw an admission. I do not regard the statements of the Full Court in Celestino v Celestino [1990] FCA 299 as requiring a different approach. In my opinion the Full Court was not purporting to circumscribe the discretion. Further, the facts of that case were very different.

12    I note what was said by Yates J in Optical 88 Limited v Optical 88 Pty Limited [2010] FCA 310 at [31] citing Finn J in Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union [2007] FCA 1390 at [4]:

The overriding consideration is the interests of justice. The Court will not lightly permit a party to withdraw an admission where the other party has acted to its detriment on the admission or is otherwise prejudiced by the withdrawal. It is plainly necessary to have regard to all relevant factors including the nature and importance of the admission, the circumstances in which the admission was made, whether the admission was made deliberately or inadvertently, the reason given for the application to withdraw, the detriment or prejudice which might be caused to the other party and the stage which the proceedings have reached, and whether the admission is contrary to the facts. The list of relevant factors affecting the Court’s decision will plainly vary from case to case.

as read in the light of the considerations in s 37M of the Federal Court of Australia Act 1976 (Cth) and in light of Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175. It is also to be recalled that in a decision of a Full Court in Jeans v Commonwealth Bank of Australia Ltd (2003) 204 ALR 327 it was said that the Court had a broad discretion to weigh up all matters with the overall question being to ensure that there is a fair trial.

13    I take into account whether the admissions were made deliberately or in error, which they were not, but I also take into account whether the significance of the admission has changed since it was made by reason of other amendments: see White J in SLE Worldwide v WGB [2005] NSWSC 816 at [56], to which I was taken by senior counsel for Novartis, citing Silver v Dome Resources NL [2005] NSWSC 265 at [12]. In that case, Hamilton J said:

[12] The only countervailing consideration is that the plaintiffs seek to rely on new causes of action which were not in play when the admission was made. It is clear that para 20 is material to those new causes of action. In Demasi v Linfox Transport (Aust) Pty Ltd NSWSC unreported 14 June 1995, McLelland CJ in Eq would not have permitted admissions made in a defence to be withdrawn except that the statement of claim was amended “in a way which may arguably cause the admitted fact to have an added or different significance in relation to a claim first brought forward by the amendment to the statement of claim.” There the allegation sought to be put in issue (whether a lease expired on 29 or 30 September) had a totally different significance in respect of the added, as opposed to the existing, claim. Here the significance of the admitted fact is of the same nature in relation to the proposed new claims as to the old, but that does not alter the fact that the plaintiffs seek to rely on new claims that were not propounded at the time the admission was made. I do not propose to hold an inquiry into whether the defendants’ decision would have been the same had the new claims already been in play at that time. Like McLelland CJ in Eq in Demasi, I do not think that defendants should be held to their admission in respect of claims not under consideration at the time it was made. If they are not held to the admission in relation to some claims, they should not be held to it at all.

14    In the present case I accept the evidence of the solicitor for Bayer that at the time of making the relevant admissions the only publications pleaded by Novartis in respect of which Novartis alleged that the representations arose were contained in posters displayed in a trade display booth at three meetings and advertisements in three editions of the mivision magazine. I also accept the evidence, on information and belief, that the admissions were made in the context of the narrow scope of those publications; the then likelihood of an early hearing on all issues other than the quantification of damages; and in order to avoid a factual dispute as to the actual treatment frequency and efficacy of “Lucentis” and thereby avoid certain interlocutory disputes.

15    I also accept the evidence of the solicitor for Novartis that the admissions made by Bayer affected many aspects of the case and Novartis would need to reconsider its forensic position in relation to the publications at the conferences and in the mivision magazine and address in full detail the context in which the representations were made. It may also be necessary to revisit Novartis’ expert evidence and also the discovery given in relation to the representations. The solicitor has serious concerns that, if the admissions were permitted to be withdrawn, additional interlocutory steps would be required to be taken which could prejudice and potentially jeopardise the current hearing dates and impede the orderly preparation for trial.

16    In granting the application to withdraw the admissions I take into account that the admissions were important; the circumstances in which the admissions were made as referred to in the evidence of Bayer’s solicitor; that the admissions were not made inadvertently but were made deliberately; the reasons given for the application to withdraw, which centre upon Novartis’ amended pleading; the detriment or prejudice to Novartis as deposed to by its solicitor; and the stage which the proceedings have reached in light of Novartis’ amendments and the commencement of the trial in early April 2014. I do not accept that Bayer has established that the admissions are contrary to the facts. I do not accept that Novartis has established substantial detriment or prejudice since any such detriment or prejudice would only be the margin between dealing with Bayer’s proposed pleading in relation to the representations in Novartis’ amended pleading and the additional work which needs to be done if the admissions are withdrawn in relation to the representations originally pleaded.

17    One additional matter to which I have had regard is whether or not Bayer required leave to plead that the representations, if found to be conveyed by the Detailing Conduct the subject of Novartis’ amendments for which I granted leave, were not misleading or deceptive under s 18 or under s 29. While initially appearing to accept that Bayer did not require such leave, on the second day of the hearing of the interlocutory application on 25 November 2013 senior counsel for Novartis submitted that such leave was required by virtue of r 16.06 of the Federal Court Rules which provides that a party must not plead inconsistent allegations of fact or inconsistent grounds or claims except as alternatives.

18    This submission by Novartis bore the unattractive aspect that a consequence of the leave I granted to it to amend to expand its case to include allegations concerning the Detailing Conduct, being a consequence previously unannounced, was that Bayer was bound to admit that such conduct, at least if the pleaded representations were conveyed, was misleading and deceptive under s 18 or under s 29. To my mind, if there were such an inconsistency, as Novartis contended, it would be a factor in support of leave to withdraw the admissions since otherwise there would be an unintended and procedurally unfair consequence of the leave I granted to Novartis to amend. As it is, in my view there would be no such inconsistency because the representations were legally separate and distinct from those in relation to which Bayer made the admissions which it now seeks to withdraw. In that event, there would be an asymmetry between the pleading in respect of the recently added representations and the proposed pleading which includes the admissions sought to be withdrawn. Looked at either way, in my opinion, Bayer should have the leave which it seeks.

Associate:

Dated:    6 December 2013