FEDERAL COURT OF AUSTRALIA

Merial, Inc. v Intervet International B.V. (No 2) [2016] FCA 1070

ORDERS

THE COURT ORDERS THAT:

1.    The appellant produce to the respondent the documents in the list of communications being annexure GF-41 to the affidavit of Grant William Fisher sworn 30 August 2016.

2.    Disclosure of the documents produced according to paragraph 1 be limited to external solicitors and counsel for the respondent and Mr Mark Pieloch.

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

REASONS FOR JUDGMENT

MOSHINSKY J:

Introduction

1    On the afternoon of 30 August 2016, during the course of the hearing of this matter, I heard an oral application by the respondent (Intervet) for an order that the appellant (Merial) produce certain documents on the basis that, although the documents were otherwise subject to legal professional privilege, Merial had waived privilege. As the documents were potentially relevant to the cross-examination of a witness who was to be called to give evidence the next morning, it was discussed in court that I would convey my ruling on the application by way of an email from my associate to the parties that evening. I ruled that there had been a waiver of privilege and therefore the relevant documents were to be produced by Merial to Intervet. These are my reasons for that ruling.

2    The background to the oral application is as follows. By correspondence between the parties, Intervet requested production by Merial of certain categories of documents. A call for the production of the documents was foreshadowed. In response, Merial provided an affidavit of Mr Grant Fisher (a partner of Merial’s Australian solicitors) sworn on 30 August 2016 dealing with each of the categories of documents and an additional, similar category of documents. The issue before me concerned the documents dealt with in paragraphs 13-15 of Mr Fisher’s 30 August 2016 affidavit, which were listed in annexure GF-41 to that affidavit. The documents, broadly speaking, comprise communications between a US law firm acting for Merial and a witness in this proceeding (Mr Mark Pieloch) in relation to the subject-matter of the proceeding.

3    Intervet contended, in summary, that Merial had, through its filing and reliance on an affidavit of Mr Fisher dated 20 November 2015 (Fisher November 2015 Affidavit) and in particular annexures GF-8 to GF-12 to that affidavit, waived privilege in respect of the relevant documents. Annexures GF-8 to GF-12 comprise communications between Merial’s Australian lawyers and Mr Pieloch about the subject-matter of the proceeding. Those communications were disclosed by Merial in support of an application for leave to amend its notice of appeal to add a ground of lack of entitlement. Intervet contended that there was an inconsistency between Merial’s conduct in disclosing and relying on the communications with Mr Pieloch, on the one hand, and the maintenance of confidentiality in respect of other communications between Merial’s lawyers (albeit at a different law firm) and Mr Pieloch about the subject-matter of the proceeding, on the other.

4    Neither side suggested that there was any difficulty in my hearing the application by reason of being the trial judge. Further, Merial handed up a folder comprising the documents listed in annexure GF-41 and requested that I read the documents before determining the application. I confirm that I read the documents before ruling on the application.

Background facts

5    The proceeding is an appeal by Merial from a decision of the Commissioner of Patents (by her delegate) in relation to a patent application by Intervet in respect of an invention described as “compositions and process for delivering an additive”.

6    In December 2015, Merial filed an interlocutory application seeking leave to amend its notice of appeal to add an additional ground of opposition, namely lack of entitlement. Merial relied on the Fisher November 2015 Affidavit in support of that application. Ultimately, that application was dealt with in February 2016 and an order was made granting Merial leave to amend its notice of appeal to add the ground of lack of entitlement.

7    The Fisher November 2015 Affidavit contained a section headed “Communications with Mark Pieloch” comprising paragraphs 10-36. As stated in paragraph 10 of the affidavit, this section of the affidavit referred to communications between Mr Fisher and Mr Pieloch “for the purpose of this proceeding”. Paragraph 10 of the affidavit also stated: “Save insofar as the contents of those communications are expressly set out below or in the annexures to this affidavit, Merial and I do not, and do not intend to, waive privilege or confidentiality in or consent to the disclosure of any confidential communications or documents relating to, or brought into existence in connection with, the conduct of this proceeding or the provision of any other legal services”.

8    The subsequent paragraphs of that section of the affidavit described communications between Mr Fisher and Mr Pieloch by which Merial sought Mr Pieloch’s assistance in connection with the proceeding. In paragraph 13 of the affidavit, Mr Fisher quoted a statement from an email from Mr Pieloch (annexed as annexure GF-9) in which Mr Pieloch stated: 

I stand by what I have previously written and what was written by Wendy Marsh in the October 20, 2003 letter.

I note at this point that the letter from Ms Marsh dated 20 October 2003 is a key document in the case, referred to by Merial in its opening submissions for the hearing.

9    In paragraphs 14-31 of the Fisher November 2015 Affidavit, Mr Fisher described a telephone conference call with Mr Pieloch. Annexed to the affidavit as annexure GF-11 is a detailed contemporaneous file note of the conference call prepared by an employee solicitor at the firm of solicitors. The file note is prepared in the form of a transcript, with each paragraph commencing with the initials of the person speaking. It is seven pages long. Key parts of the conversation, as recorded in the file note, are extracted in the body of the affidavit. The discussion addressed the question whether a contract transferring title to an invention had been entered into between Pharma Chemie (Mr Pieloch’s company) and Intervet, a key issue in the proceeding.

10    The file note records discussion with Mr Pieloch about attachment 19 to a letter from Mr Pieloch to Wendy Marsh dated 6 October 2003. That letter and attachment 19 to the letter are key documents in the proceeding, referred to by Merial in opening submissions.

11    The file note also records discussion with Mr Pieloch about attachments 1, 4, 5, 6, 12, 13, 14, 15, 16 and 18 to the 6 October 2003 letter. These attachments are also important documents in the case. Many of them were referred to in opening submissions.

12    On 8 February 2016, Merial was granted leave to file and serve a further amended notice of appeal. The further amended notice of appeal included, in paragraph 11(i), which related to lack of novelty and inventive step, a statement that Merial relied on the Fisher November 2015 Affidavit. In paragraph (a) of the particulars for the ground of lack of entitlement, Merial repeated paragraph 11(i). Although the notice of appeal has been amended since then, these paragraphs relying on the Fisher November 2015 Affidavit remain in the notice of appeal.

Applicable principles

13    Although the parties’ submissions were directed to s 122 of the Evidence Act 1995 (Cth), it may be that the application, which in substance seeks an order for the production of certain documents, should be considered at common law: see Heydon, JD, Cross on Evidence (10th Aust. ed, 2015), [25300]. I note that s 122(2) is expressed in terms of the adducing of evidence and that s 131A of the Evidence Act is in different terms from the counterpart provision in State legislation. In any event, there is no relevant distinction for present purposes between the applicable principles: Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303 at [32] per French CJ, Kiefel, Bell, Gageler and Keane JJ. The relevant test of waiver at common law is set out in Mann v Carnell (1999) 201 CLR 1. In particular, Gleeson CJ, Gaudron, Gummow and Callinan JJ said at [29]:

What brings about the waiver is the inconsistency, which the courts, where necessary informed by the consideration of fairness, perceive, between the conduct of the client and the maintenance of confidentiality; not some overriding principle of fairness operating at large.

14    Inconsistency may arise, for example, where one party deploys a partial disclosure for forensic advantage, while seeking unfairly to deny the other party the opportunity to see the full text from which the disclosure is made: Cross on Evidence, [25010], referring to Osland v Secretary, Department of Justice (2008) 234 CLR 275 at [35], and British American Tobacco Australia Ltd v Secretary, Department of Health and Ageing (2011) 195 FCR 123 at [47]. However, I do not think inconsistency of this nature is limited to situations where there is partial disclosure of a particular communication. I think it can also arise where there is partial disclosure of a body of communications of a particular kind and about a particular subject-matter (cf Attorney-General for the Northern Territory v Maurice (1986) 161 CLR 475 at 482-483 per Gibbs CJ).

Application of principles to the facts of the present case

15    In the present case, there was a disclosure of privileged communications by Merial when it filed and relied on the Fisher November 2015 Affidavit. Merial decided to deploy, in support of its application for leave to amend its notice of appeal, a body of communications between Merial’s lawyers and Mr Pieloch about the subject-matter of the proceeding. It is important to note that this was not merely a passing reference to such communications. The communications were described in detail in paragraphs 10-36 of the affidavit. And the file note which is annexure GF-11 to that affidavit contained a detailed account (in the form of a transcript) of a conference call with Mr Pieloch.

16    The question is whether, having waived privilege in respect of that material, there is inconsistency in the maintenance of the privilege in respect of other communications between Merial’s lawyers and Mr Pieloch about the subject-matter of the proceeding. In my view, for the reasons that follow, there is such inconsistency.

17    First, I think the communications comprising the documents in issue have essentially the same character as the communications in respect of which privilege was waived. In both cases, they are communications between the lawyers acting for Merial and the same prospective witness about the subject-matter of this proceeding. I do not think it is a relevant distinction that the communications are over different periods of time: the communications disclosed in the Fisher November 2015 Affidavit are from the period October to November 2015, while the communications in the documents in dispute are from the period January to February 2016. Although the periods are sequential rather than overlapping, the communications form part of a continuum of dealings with Mr Pieloch in relation to the possibility of his giving evidence in the proceeding. Further, I do not think it is a relevant distinction that the disclosed communications involved Merial’s Australian lawyers while the disputed documents involved Merial’s US lawyers. All of the communications relate to this proceeding.

18    Secondly, Merial has relied on the disclosed communications to further its case in this proceeding. The material was deployed to support an application for leave to amend to raise a contention that Intervet lacks entitlement to the alleged invention. While the leave to amend application has now been dealt with, the Fisher November 2015 Affidavit is referred to in the current version of the notice of appeal and thus still relied on by Merial, at least by way of particularising its case on lack of entitlement, in the proceeding. There would seem to be inconsistency in Merial disclosing some – but not all – communications between Merial’s lawyers and Mr Pieloch about the subject-matter of the proceeding. Further, without the disclosure of the other communications, Intervet is unable to ascertain whether or not Merial has been selective in the communications of this nature that it has disclosed and relied upon.

19    Thirdly, the communications between Merial’s lawyers and Mr Pieloch that have been disclosed relate to central issues in the case. This is not a situation where the disclosed communications are peripheral to the issues in the case. To the contrary, the discussion with Mr Pieloch during the conference call with Merial’s Australian lawyers, recorded in the file note, related to important issues. For example, in the course of the conversation, Mr Pieloch was asked, “Do you recall whether any contract was ever entered into which transferred title to the invention from Pharma Chemie to Intervet?” There was also detailed discussion about the attachments to Mr Pieloch’s letter to Wendy Marsh dated 6 October 2003. That letter and the attachments to it are important documents in the case relating to lack of entitlement. Without disclosure of the other communications between Merial’s lawyers and Mr Pieloch about the subject-matter of the proceeding, Intervet is unable to ascertain whether the comments recorded in the file note are a complete and accurate representation of Mr Pieloch’s views on these matters as discussed with Merial’s lawyers or, rather, a selective representation of such views.

20    The considerations discussed above lead me to the conclusion that in the particular circumstances of this case it would be inconsistent for Merial, having disclosed and relied on privileged communications between Merial’s lawyers and Mr Pieloch about the subject-matter of the proceeding, to maintain confidentiality over other communications between Merial’s lawyers and Mr Pieloch about the same subject-matter. I do not think it is necessary to have regard to the content of the disputed documents to reach this conclusion. However, as requested by Merial, I have reviewed the disputed documents. That review does not lead me to reach any different conclusion. The review confirms that the disputed documents are of the same character as the communications with Mr Pieloch that have been disclosed. I do not think it is appropriate for me to consider whether the disputed documents contain anything which is inconsistent in substance with the disclosed communications. That is a matter for the parties to consider. Even if it be the case that the disputed documents are relatively innocuous, unless the disputed documents are disclosed to Intervet, the inconsistency and unfairness referred to above would arise.

21    For these reasons, I concluded that Merial had waived legal professional privilege in relation to the documents listed in annexure GF-41.

Associate:

Dated:    2 September 2016