FEDERAL COURT OF AUSTRALIA

Commonwealth of Australia v Sanofi (formerly Sanofi-Aventis) [2017] FCA 382

ORDERS

THE COURT DECLARES THAT:

1.    Clause 6 of the settlement deed dated 4 November 2014 made between Sanofi SA (formerly Sanofi-Aventis), Sanofi-Aventis US LLC, Bristol-Myers Squib InvestCo LLC, Apotex Pty Ltd, Apotex Inc and Apotex Research Private Limited (collectively “Apotex”) is unenforceable in so far as it:

(a)    relates to the Commonwealth of Australia’s claim for compensation filed 11 April 2013; and

(b)    prevents Apotex from releasing any witness or prospective witness from any obligation of confidence in respect of information relevant to such claim.

THE COURT ORDERS THAT:

2.    Subject to any further order the reasons for judgment are not to be published except to the parties and their legal representatives before 12.00 noon, 21 April 2017.

3.    Any party seeking an extension or variation of order 2 is to file and serve any interlocutory application seeking such relief together with any affidavit evidence to be relied upon by 12 noon, 20 April 2017.

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

REASONS FOR JUDGMENT

NICHOLAS J:

Introduction

1    Before me is an application by the Commonwealth of Australia (“the Commonwealth”) in which it contends that certain provisions of a settlement deed dated 4 November 2014 (“the settlement deed”) are unenforceable. The parties to the settlement deed are Apotex Pty Ltd, Apotex Inc and Apotex Research Private Limited (collectively “Apotex”) and Sanofi SA (formerly Sanofi-Aventis), Sanofi-Aventis US LLC and Bristol-Myers Squib InvestCo LLC (collectively “Sanofi”). The Commonwealth is not a party to the settlement deed.

2    For convenience I will refer to Apotex and Sanofi in the singular. I will distinguish between each of the relevant corporate entities only where it is essential to do so.

FACTUAL Background

3    In August 2007, Apotex commenced a proceeding (“the Apotex proceeding”) in the Federal Court of Australia against Sanofi to revoke Australian Patent No. 597784 (“the Patent”). In September 2007, Sanofi filed a cross-claim against Apotex alleging infringement of the Patent and also applied for interlocutory relief. Sanofi was granted interlocutory injunctive relief by Gyles J restraining infringement of various claims. His Honour also accepted an undertaking given by Apotex to the Court that, until the determination of the proceeding or further order, it would not take any steps to obtain a listing under the Pharmaceutical Benefit Scheme (“PBS”) established under the National Health Act 1953 (Cth) (“PBS listing”) in respect of any of its generic clopidogrel products. In support of its application for such interlocutory relief Sanofi gave to the Court the usual undertakings as to damages.

4    In August 2008, Gyles J upheld the validity of a number of claims and granted a final injunction based upon one of them. In September 2009, a Full Court allowed Apotex’s appeal against Gyles J’s judgment and ordered that the Patent be revoked. In March 2010, an application by Sanofi for special leave to appeal was refused by the High Court. A second application for special leave to appeal by Sanofi was refused by the High Court in November 2015.

5    In the period of time between Gyles J’s judgment in August 2008 and the first refusal of special leave to appeal in March 2010, Apotex gave a number of additional undertakings aimed at preserving the status quo. In return, Sanofi provided further undertakings as to damages in the usual form, once in September 2008, and again in October 2009.

6    After the High Court refused Sanofi’s first special leave application, Apotex and the Commonwealth each filed applications seeking orders against Sanofi for payment of compensation pursuant to the usual undertakings as to damages provided by Sanofi. These applications were made by interlocutory applications filed in the Apotex proceeding by Apotex on 4 May 2010 and the Commonwealth on 11 April 2013. The Commonwealth’s application against Sanofi for payment of compensation is fixed for hearing commencing on 28 August 2017.

7    In April 2013 the Commonwealth was given leave to inspect and copy (inter alia) the affidavit evidence filed by Apotex in support of its claim. An electronic copy of much of this material was provided to the Commonwealth in June 2013. There were approximately 12 prospective witnesses who had made affidavits for Apotex including Apotex’s managing director, Mr Roger Millichamp. Most of these witnesses are or were employees of Apotex or another related entity. It has been apparent since 2013 that the Commonwealth would seek to rely on evidence that would be called by Apotex in support of Apotex’s claim to support the Commonwealth’s claim.

8    In its defence of the claims made against it, Sanofi contended (inter alia) that, irrespective of the existence of the interlocutory relief, Apotex would not have sought a PBS listing of its products, or commenced supplying them at all, until after the final determination of the proceeding before Gyles J including, presumably, any appeal. Sanofi contends that the reason why Apotex gave the undertaking was not that it considered that the Court would make an interlocutory order to the same general effect, but because it wished to:

… avoid the significant adverse risk which would arise if it had listed on the PBS, had commenced supply and had been subsequently unsuccessful in its challenge of the Patent, namely that it might be obliged to pay significant damages to [Sanofi].

(See para 63(c)(iii) of the Further Amended Points of Defence to Claim by the Commonwealth filed by Sanofi on 15 May 2015 and para 4(b)(v) of the Amended Points of Defence to the claim by Apotex filed by Sanofi on 22 May 2014.)

9    This suggests that Apotex’s opposition to the interlocutory application heard by Gyles J was a charade and that Apotex had no intention of applying for a PBS listing for its products or offering them for sale until after the final determination of the proceeding. If Apotex had no intention of applying for a PBS listing of its generic clopidogrel products before the proceeding before Gyles J had been determined in its favour, then it is difficult to see how the Commonwealth could have suffered any loss as a result of Sanofi obtaining the interlocutory relief. In any event, it is quite obvious that the state of mind of those controlling Apotex, in particular, that of Mr Millichamp, at the time of the hearing before Gyles J is directly relevant to Sanofi’s defence to the Commonwealth’s claim. So too, it seems to me, is the legal advice obtained by Apotex relevant to the decision to give the undertaking to the Court not to apply for a PBS listing until the final determination of the proceeding.

10    On 7 November 2014 Apotex discontinued its compensation claim leaving the Commonwealth as the sole claimant. Apotex’s discontinuance occurred with Sanofi’s consent pursuant to the terms of the settlement deed. The Commonwealth appears to have known nothing of the terms of the settlement between Sanofi and Apotex until some weeks after the notice of discontinuance was filed. The Commonwealth did not obtain access (on a highly restricted basis) to the settlement deed until on or shortly after 18 December 2015 pursuant to an order made on that date.

Relief sought by the Commonwealth

11    By its amended interlocutory application, the Commonwealth seeks a declaration that clauses 6, 7, 9, 12 and 26 of the settlement deed are unenforceable by Sanofi against Apotex in so far as they relate to the Commonwealth’s compensation claim. The Commonwealth also seeks an injunction restraining Sanofi from enforcing clauses 6, 7, 9, 12 and 26 in respect of the Commonwealth’s compensation claim.

12    The Commonwealth contends that Sanofi’s conduct in making and enforcing the settlement deed constitutes a failure by them to do equity by the Commonwealth (as a third party claimant upon the relevant undertakings as to damages). The Commonwealth further contends that the terms of the settlement deed, Sanofi’s conduct in making and enforcing it, and/or its effect on the conduct of this proceeding, constitute an abuse of the process of this Court or, alternatively, an interference with the administration of justice.

13    It is fair to say that the focus of the Commonwealth’s submissions at the hearing was on cl 6 of the settlement deed. The Commonwealth submitted that if cl 6 were enforced it would hinder the Commonwealth’s preparations for the final hearing by effectively preventing the Commonwealth’s legal representatives from interviewing witnesses or potential witnesses who it may wish to call.

14    The Commonwealth’s original interlocutory application filed on 10 October 2016 nominated the Apotex parties as the fourth, fifth and sixth respondents. I was informed by Senior Counsel for the Commonwealth that Apotex’s solicitors were served with the interlocutory application. Further, counsel for Apotex appeared before the Court on 28 November 2016 to resist the discharge of a confidentiality order previously made by me in relation to the settlement deed. At that time counsel for Apotex indicated that there were no other matters about which her clients wished to be heard. I then made orders for the filing of the respondents’ evidence in relation to the interlocutory application which was also fixed for hearing. Apotex did not file any evidence nor did it otherwise take any part in the hearing of the Commonwealth’s application.

15    The interlocutory application filed on 10 October 2016 sought a wide range of orders and declarations none of which were ultimately included in the amended interlocutory application. However, the orders and declarations that were sought plainly indicated that the Commonwealth was challenging the enforceability of various provisions of the settlement deed including all those that are referred to in the amended interlocutory application.

Relevant provisions of the settlement deed

16    In the settlement deed the Apotex parties are collectively referred to as the Applicants and the Sanofi parties are collectively referred to as the Respondents. Recital H states:

As the parties are aware, on 11 April 2013, the Commonwealth made an application to the Federal Court of Australia in proceeding No. NSD 1639 of 2007 for compensation from the Respondents pursuant to the Undertakings as to Damages on the grounds set out in its Points of Claim dated 17 May 2013 (at Schedule A to this Deed) – including for adverse effects and losses referred to in paragraph 66 and following of that document associated with the impact of an alleged delay in the listing of generic clopidogrel brands of Apotex Pty Ltd on the PBS and the RPBS.

17    The settlement deed also includes a definition of the “Commonwealth Compensation Claim” and the “Apotex Compensation Claim” which refers to the Commonwealth’s and Apotex’s claims for compensation pursuant to the various undertakings as to damages to which I have referred. Clauses 6 provides:

6.    ASSISTANCE TO OTHERS

Otherwise than by compulsion of law, the Applicants agree not to voluntarily assist in any way or encourage:

(a)    the Commonwealth in relation to the Commonwealth Compensation Claim by way of waiving any claim for legal professional privilege that any or all of the Applicants may have, or releasing any third person from any obligation of confidence in respect of information relevant to the Commonwealth Compensation Claim or the Apotex Compensation Claim, or by the provision of documents;

(b)    any third person in a claim against any of the Respondent Parties in connection with the Undertakings as to Damages by way of waiving any claim for legal professional privilege that any or all of the Applicants may have, or releasing any third person from any obligation of confidence in respect of information relevant to the Apotex Compensation Claim, or by the provision of documents.

18    Clause 7 provides for an exchange of correspondence to occur between the Sanofi parties and the Apotex parties reflecting what appears in Schedules D and E. Schedules D and E incorporate two letters the first being a form of letter to be sent by Sanofi’s solicitors to Apotex requesting that Apotex make certain admissions in relation to matters of relevance to both Apotex’s and the Commonwealth’s claim against Sanofi, and the second being a letter in reply from Apotex making the admissions. These included an admission by Apotex to the effect that, had it engaged in certain manufacturing activities in Canada, it would have infringed Canadian Patent No 1,336,777 (“the Canadian patent”). Clause 7 also includes a warranty by Apotex that the content of the letter to be sent by it pursuant to cl 7 is correct and provided in good faith and that it will not seek to dispute or withdraw the admissions contained in it.

19    Clause 8 requires Apotex to provide reasonable assistance, at its own cost, to Sanofi in defence of the Commonwealth’s claim and to provide access to Apotex personnel who have made affidavits filed and served in the Apotex proceeding.

20    Clauses 12 and 26 relevantly provide:

12.    CONFIDENTIALITY

12.1    Confidential matters

    The following are confidential matters and must not be disclosed to any other person other than by compulsion of law:

(a)    the existence and terms of this Deed, except that the parties may make a public disclosure substantially in the form of “Apotex, Sanofi and Bristol-Myers Squibb Company have settled their disputes regarding clopidogrel in Australia”;

(b)    any oral or written communication passing between the parties that is connected in any way with the negotiations, formation or existence, or terms, of this Deed.

[…]

26.    NON INTERFERENCE

    No party to this Deed shall take, or cause any Affiliate to take any action to (i) interfere with the performance of any party to this Deed or (ii) undermine the purpose or intent of this Deed.

21    Clause 23 provides that the settlement deed is governed by the laws of New South Wales, that each party irrevocably submits to the non-exclusive jurisdiction of the courts exercising jurisdiction there, and that each party waives any right to object to the venue on any grounds.

Commonwealth’s attempts to interview witnesses

22    On 24 November 2014 the solicitors for the Commonwealth wrote to the solicitors for Apotex in relation to Apotex’s discontinuance. Their letter asked whether there was anything in or related to the terms of settlement that affected either the ability or the willingness of Apotex or any of its witnesses to co-operate with the Commonwealth in respect of the Commonwealth’s claims. The Commonwealth’s solicitors followed this request up by a letter of 28 November 2014 referring to the earlier letter and stating:

As you are aware, in light of the resolution of the proceedings as between the Sanofi and Apotex parties, the Commonwealth is considering the steps required to be taken by it in relation to evidentiary issues. Against this background, we would like to meet with you, during the week commencing 1 December 2014, for the purpose of gaining an understanding from you with respect to the extent to which the Apotex parties (and their witnesses) will cooperate with the Commonwealth in relation to evidentiary issues which the Commonwealth is now required to address.

23    Apotex’s solicitors were of the view that Apotex could not answer the Commonwealth’s letters given the terms of the settlement deed and that, in an effort to head off further correspondence on the issue, they would, if Sanofi agreed, inform the Commonwealth that Apotex was not in a position to respond to the Commonwealth’s requests. Apotex’s solicitors wrote to Sanofi’s solicitors seeking permission to reply to the Commonwealth’s letters in those terms. Sanofi’s solicitors then suggested a telephone conference take place on 4 December 2014. There is no evidence as to what transpired during that telephone conference except that Apotex’s solicitors responded to the Commonwealth’s letters on the same day stating that Apotex declined to respond to the Commonwealth’s requests.

24    On 23 April 2015, the Commonwealth’s solicitors wrote to Apotex’s solicitors again identifying particular witnesses who had made affidavits for Apotex (including Mr Millichamp) and expressing a desire to meet with them at a convenient time and place to discuss the contents of their affidavits and any other evidence they may give at a hearing of the Commonwealth’s claim.

25    Apotex’s solicitors responded to this letter on 27 April 2015 referring to the fact that the Commonwealth’s solicitors had already attempted to communicate directly with a number of the Apotex witnesses and stated that:

All contact with any Apotex witnesses employed by Apotex Pty Ltd should be made through us. We confirm those witnesses named in your correspondence who are employed by Apotex Pty Ltd are Roger Millichamp, Michael Healy, Michael Rose, and Michelle Wong. It would be inappropriate for you to continue to communicate with any such Apotex witness directly.

Please confirm that you will no longer attempt to communicate with the Apotex witnesses employed by Apotex Pty Ltd except through us.

We confirm that we have instructions to accept service of any subpoenas or other documents addressed to any Apotex witnesses (or other employees) employed by Apotex Pty Ltd.

The Apotex witnesses employed by Apotex Pty Ltd are not available to discuss their affidavits with you, unless required to do so by law.

26    On 1 May 2015 Apotex’s solicitors wrote to the Commonwealth’s solicitors advising that they did not have instructions to accept service of subpoenas addressed to any of the witnesses employed by Apotex Inc or Apotex Research Private Limited. In the same letter Apotex’s solicitors sought “confirmation that you will no longer attempt to communicate with the Apotex witnesses employed by Apotex Pty Ltd except through us.”

27    In August 2016 there was further correspondence between the solicitors for the Commonwealth and the solicitors for Sanofi. In a letter of 5 August 2016 the Commonwealth’s solicitors, referring to amendments that Sanofi wished to make to its points of defence, stated:

4.    In support of your clients' contention that the Commonwealth would not suffer any prejudice if the proposed amendments were allowed, you say that:

    ‘the Commonwealth is yet to interview any of the witnesses named in the Commonwealth's notification of witnesses filed on 2 October 2015’.

5.    That statement gives the impression that the Commonwealth will have an opportunity to interview those witnesses. Our experience, however, is that ever since your clients settled Apotex’s compensation claim, Apotex's witnesses have been unwilling to engage with the Commonwealth. Moreover, we now know that clause 6 of the Settlement Deed between your clients and the Apotex Parties obliges the Apotex Parties not to agree to voluntarily assist the Commonwealth in any way.

6.    We would appreciate it if you could clarify this issue for us. Are you now saying that the Sanofi Parties do not require the Apotex Parties to comply with the obligations imposed by clause 6 of the Settlement Deed?

28    Sanofi’s solicitors replied to this letter on 5 August 2016. In relation to witness interviews the letter stated:

The statement quoted in paragraph 4 of your letter was intended only to convey that, as far as we are aware, the Commonwealth has not previously interviewed any of the Apotex witnesses (including at any time before the Settlement Deed was executed). We did not intend to convey the statement set out in paragraph 6 of your letter. We trust this clarifies our clients' position.

Because the Commonwealth has not interviewed any of the Apotex witnesses, the Commonwealth will not suffer any prejudice by the proposed amendments raising allegations concerning what Apotex would have done if there had not been any Restraints. The matters raised by those amendments can be addressed when the Commonwealth leads, as it has foreshadowed, evidence in chief from the Apotex witnesses.

29    During September 2015 the Commonwealth wrote to various employees of Apotex based in India and Canada with a view to making arrangements for them to be interviewed by the Commonwealth’s legal representatives in anticipation of them giving evidence on the Commonwealth’s behalf at the final hearing.

30    Sanofi did not finish filing its affidavit evidence in answer to the Commonwealth’s claim until early August 2016. A directions hearing took place on 11 August 2016 at which the difficulties confronting the Commonwealth in relation to the preparation of evidence were discussed. That discussion led me to make various orders aimed at identifying which witnesses the Commonwealth wished to interview and whether Sanofi would raise any objection to the Commonwealth doing so.

31    In accordance with the orders made on 11 August 2016, the Commonwealth wrote to Sanofi advising that it wished to interview 13 witnesses (each of whom had made an affidavit or expert report that was filed by Apotex) prior to the final hearing (the “Apotex witnesses”). Sanofi’s solicitors wrote to the Commonwealth’s solicitors on 18 August 2016 stating Sanofi’s positon as follows:

Employees of the Apotex parties

2.    The Respondents do not object to the Commonwealth’s legal representatives interviewing any of the persons named in subparagraphs 5(a)-(g) of your letter in connection with the preparation of the Commonwealth’s case.

3.    However, the Respondents maintain that in respect of any such interview, Apotex Pty Ltd, Apotex Inc and Apotex Research Private Limited (together, the Apotex parties) must comply with their obligations under clause 6(a) of the settlement deed between them and the Respondents dated 4 November 2014 (the Settlement Deed). By that clause, the Apotex parties have agreed, relevantly, not to assist the Commonwealth in relation to its claim against the Respondents (otherwise than by compulsion of law) by taking any of the following steps:

(a)    waiving any claim of legal professional privilege;

(b)    releasing any third person from any obligation of confidence in respect of information relevant to the Commonwealth’s compensation claim or Apotex’s compensation claim; or

(c)    providing documents to the Commonwealth.

4.    The persons named in subparagraphs 5(a)-(g) are employees of the Apotex parties. The Respondents do not contend that by agreeing to, authorising or permitting any of the persons named in subparagraphs 5(a)-(g) to be interviewed by the Commonwealth’s legal representatives, the Apotex parties would be acting in breach of the Settlement Deed.

5.    Further, the Respondents do not consider that the Apotex parties require the Respondents’ consent to any of the persons named in subparagraphs 5(a)-(g) being interviewed by the Commonwealth’s legal representatives.

6.    It is a matter for the Apotex parties and the individual employees whether they consent to such interviews taking place. However, in respect of any such interview, the Apotex parties are obliged to comply with clause 6 of the Settlement Deed and in particular are required:

(a)    not to waive any claim of legal professional privilege that the Apotex parties might have;

(b)    not to release any of those employees from any obligation of confidence that that employee might owe to the Apotex parties in respect of information that is relevant to the Commonwealth claim or the Apotex claim; and

(c)    not to provide any documents to the Commonwealth or its legal representatives.

32    The letter went on to state an identical position in relation to other witnesses who were not employees of Apotex. These witnesses included various experts who were to have been called by Apotex to give expert evidence relating to accounting and industry matters.

33    On 18 October 2016 the solicitors for the Commonwealth wrote to Apotex’s solicitors again seeking access to Apotex’s witnesses. The letter went into some detail as to what matters the Commonwealth’s solicitors wished to discuss with the witnesses, made reference to various paragraphs in Sanofi’s defence, and enclosed a copy of the letter from Sanofi’s solicitors to the Commonwealth’s solicitors dated 10 August 2016. At para 7 of the letter, the Commonwealth’s solicitors stated:

As explained in my letter to Jones Day of 10 August 2016, the Commonwealth wishes to speak with the Apotex witnesses identified in paragraph 5 of that letter about matters related to subject-matter traversed in witness statements or expert reports which were filed for the Apotex parties before they discontinued their compensation claim against the Sanofi parties, as well as matters otherwise relevant or potentially relevant to allegations made by the Sanofi parties in their defence to the Commonwealth’s claim which were not addressed in evidence filed by the Apotex parties prior to the discontinuation of their own claims upon the Sanofi parties’ undertakings as to damages. Such further matters include the following:

(a)    the Sanofi parties’ copyright contentions (see paragraphs 62(ba), 62(da));

(b)    the Sanofi parties’ contentions concerning the Canadian Patent (see paragraph 85); and

(c)    the Sanofi parties’ contention that, by reason of the 2008 Declarations and Certification and irrespective of whether any of the Restraints were in place, Apotex would not have applied for the listing of the Apotex Clopidogrel Products on the PBS at any time from 19 August 2008 until 12 March 2010 (see paragraph 62(db)).

34    Apotex’s solicitors replied to this letter on 21 October 2016. Relevantly, Apotex’s solicitors stated that any contact with witnesses employed by Apotex Pty Ltd had to be made through them and that those witnesses:

    will make themselves available for a meeting for the purposes of answering questions regarding their respective affidavits;

    were not able to discuss the further matters outlined in para 7 of the letter of 18 October 2016 because these matters were confidential and/or subject to legal professional privilege.

35    On 28 October 2016 Sanofi’s solicitors wrote to the Commonwealth’s solicitors. The letter re-stated Sanofi’s position in relation to the matters addressed in their letter of 18 August 2016. At the hearing of the Commonwealth’s interlocutory application, Sanofi placed considerable reliance upon its position as re-stated in this letter and for that reason I must refer to it in some detail. Relevantly, the letter of 28 October 2016 stated:

1.    We refer to the directions hearing before Nicholas J on 14 October 2016, our letter to you dated 18 August 2016, your letter dated 18 October 2016, your proposed interlocutory application, the affidavit of Chris Pagent sworn 27 October 2016 and the settlement deed between Apotex Pty Ltd, Apotex Inc and Apotex Research Private Limited (together, the Apotex parties) and our clients dated 4 November 2014 (the Settlement Deed).

2.    In our letter dated 18 August 2016, we stated that the Respondents maintained that in respect of any interview by the Commonwealth’s legal representatives, the Apotex parties must comply with their obligations under clause 6(a) of the Settlement Deed. By that clause, the Apotex parties have agreed, relevantly, not to assist the Commonwealth in relation to its claim against the Respondents (otherwise than by compulsion of law) by taking any of the following steps:

(a)    waiving any claim of legal professional privilege;

(b)    releasing any third person from any obligation of confidence in respect of information relevant to the Commonwealth’s compensation claim or the Apotex parties’ compensation claim; or

(c)    providing documents to the Commonwealth.

3.    The Respondents do not agree that clause 6(a) is or has been shown to be an impediment to the Commonwealth in its conduct of these proceedings. To clarify, the Respondents’ view is that clause 6(a) of the Settlement Deed does not prevent the Apotex parties’ witnesses from discussing with the Commonwealth’s legal representatives matters that are relevant to the issues in the proceeding (including the matters the subject of the Respondents’ application to amend its points of defence dated 15 August 2016, the proposed amendments), subject to the Apotex parties’ obligation in clause 6(a) of the Settlement Deed (otherwise than by compulsion of law) not to:

(a)    waive any claim of legal professional privilege; or

(b)    provide documents to the Commonwealth.

4.    We do not see either of these two limitations as having any material impact on the Commonwealth’s ability fairly to advance its case or answer the respondents’ case. If you have a different view, please explain it.

5.    As regards the confidentiality limb of clause 6(a) of the Settlement Deed (namely, that which obliges the Apotex parties (otherwise than by compulsion of law) not to release any third person from any obligation of confidence in respect of information relevant to the Commonwealth’s compensation claim or the Apotex parties’ compensation claim), our clients do not object to the Commonwealth interviewing Apotex witnesses (including employees, past employees and consultants) as to matters in issue in the proceedings. The Apotex parties’ witnesses have, after all, already provided evidence as to matters arising under the pleadings as they stood prior to the Settlement Deed entering into force.

6.    In addition and to avoid doubt, our clients do not object to the Commonwealth’s legal representatives interviewing the Apotex parties’ witnesses (or potential witnesses) on matters that were not addressed in the evidence previously filed by the Apotex parties but which are now issues in the proceeding (including the matters the subject of the Respondents’ proposed amendments).

7.    Again, to avoid doubt, the Respondents do not and will not assert that the Apotex parties will breach the confidentiality limb of clause 6 of the Settlement Deed if they permit third parties (including their employees, former employees or consultants) to discuss with the Commonwealth’s lawyers any matters that are in issue in the proceedings.

8.    Whether any such persons are willing to participate in any such interviews is, as it has always been, a matter for them and those to whom they are responsible.

36    It is apparent from this letter that Sanofi’s position shifted considerably after it wrote its letter of 18 August 2016. The letter of 18 August 2016 did no more than quote back at the Commonwealth the language of cl 6(a) of the settlement deed and did not refer at all to what appears in paras 5, 6 and 7 of the letter dated 28 October 2016. I will say more about this apparent change in Sanofi’s stated position later in these reasons.

General Principles

37    There is no property in a witness. Lord Denning explained why in Harmony Shipping Co. S.A. v Saudi Europe Line Ltd [1979] 1 WLR 1380 (CA) (“Harmony Shipping”) at 1384 to 1385:

The reason is because the court has a right to every man’s evidence. Its primary duty is to ascertain the truth. Neither one side nor the other can debar the court from ascertaining the truth either by seeing a witness beforehand or by purchasing his evidence or by making communication to him. In no way can one side prohibit the other side from seeing a witness of fact, from getting the facts from him and from calling him to give evidence or from issuing him with a subpoena. That was laid down by the Law Society in 1944 and published in the “‘Short Guide to Professional Conduct and Etiquette.” It was affirmed and approved in 1963 by the then Lord Chief Justice and the judges and republished in The Law Society’s Gazette for February 1963. It says:

... the Council have always held the view that ·there is no property in a witness and that so long as there is no question of tampering with the evidence of witnesses it is open to a solicitor for either party to civil or criminal proceedings to interview and take a statement from any witness or prospective witness at any stage of the proceedings, whether or not that witness has been interviewed or called as a witness by the other party.

That principle is established in the case of a witness of fact: for the plain, simple reason that the primary duty of the court is to ascertain the truth by the best evidence available. Any witness who has seen the facts or who knows the facts can be compelled to assist the court and should assist the court by giving that evidence.

38    Further, the interference with witnesses, actual or potential, by threat, promise or punishment is a contempt of court: Regina v Kellett [1976] QB 372, Attorney General v Butterworth [1963] 1 QB 696. This principle was extended in Connolly v Dale [1996] QB 120 in which it was held that interference in this context extends to preventing or hindering proper and reasonable attempts by a party’s legal advisers to identify and interview potential witnesses.

39    The general principle with respect to contact with witnesses was explained by Williams  J in Commonwealth Bank of Australia v Cooke [2000] 1 Qd R 7 at [27]-[28] as follows:

[27]    There is no property in a witness. Either side to litigation can approach a person thought to be able to give relevant evidence as to the matters in dispute, and it is for that person to determine the extent to which he will co-operate in providing information prior to trial. There is no obligation on a person possessing information relevant to litigation to disclose it otherwise than in accordance with a direction of the court. No potential witness is obliged to give a statement prior to trial to the solicitor for any party to the litigation. If no statement is given the only course open to the parties to the litigation is to have that person called to the witness box, pursuant to a subpoena if necessary.

[28]    A potential witness may, of course, provide a statement to each side in the litigation. There is no obligation on the witness to do so; it is a matter of free choice. The potential witness may even inform, for example, the defendant’s solicitor what he in fact told the plaintiff’s solicitor; the mere fact that a potential witness has given a statement to one side does not mean that he is prevented from telling either the world at large or the other side what information he so provided. (See, for example, per French J. in J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (WA Branch) (No. 1) (1992) 38 FCR 452 at 457). Those propositions flow from the general principle that there is no property or confidentiality in the knowledge of an independent witness of matters relevant to an issue between the parties.

40    Of course, the witness may be bound by an obligation of confidence that prevents him or her from disclosing certain information and there are reports of cases in which actual or potential witnesses have been restrained from breaching such an obligation in their discussions with the solicitor for the party who is proposing to call them: see, for example, AG Australia Holdings Ltd v Burton (2002) 58 NSWLR 464.

41    These principles are also reflected in the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (“the Conduct Rules”) which provide in Rule 23:

23    Opposition access to witnesses

23.1    A solicitor must not take any step to prevent or discourage a prospective witness or a witness from conferring with an opponent or being interviewed by or on behalf of any other person involved in the proceedings.

23.2    A solicitor will not have breached Rule 23.1 simply by telling a prospective witness or a witness that the witness need not agree to confer or to be interviewed or by advising about relevant obligations of confidentiality.

42    There is a broader principle that may be invoked in cases involving contracts the enforcement of which may affect the administration of justice. Often these cases involve situations in which a party seeks to either enforce, or resist the enforcement of, a contractual or equitable obligation of confidence that may prevent the disclosure of information relevant to the identity or evidence of witnesses or potential witnesses. In these situations it may be open to the Court to refuse relief that would otherwise be available on the basis that the enforcement of the relevant obligation will affect the administration of justice.

43    In A v Hayden & Ors (1984) 156 CLR 532 the High Court was required to determine whether an injunction should be granted in favour of eleven plaintiffs restraining the Commonwealth from disclosing their identities to the Chief Commissioner of Police. Each of the plaintiffs had worked for a Commonwealth security organisation that arranged a training exercise during which some of the plaintiffs were alleged to have committed criminal offences. The terms of the contracts of employment for all but one of the plaintiffs provided that their identities would be kept confidential. The Commonwealth and the other defendants to the plaintiffs’ action contended that the relevant clauses in the contracts of employment were void or unenforceable.

44    Gibbs CJ (who dissented) said at 544-545:

The mere possibility that the contract in the present case might, if performed, obstruct the course of justice was not enough to render it invalid. There is no proof that the parties intended the contract to have any effect on the administration of justice. The contractual term was a valid one.

…

The fact that the contractual term is not in itself invalid is not however the end of the matter. The court will refuse to exercise its discretion in favour of granting equitable relief, such as an injunction, to enforce an obligation of confidentiality when the consequence would be to prevent the disclosure of criminality which in all the circumstances it would be in the public interest to reveal.

45    Mason J said at 553:

… if the promise is void or unenforceable, it is not because it is inconsistent with the duty imposed on the Commonwealth by law but because the promise seeks to impose an obligation which is at variance with a fundamental head of public policy – the public interest in the enforcement of the criminal law and in the administration of justice. That there is a powerful public interest in the enforcement of the criminal law as an important element in the administration of justice does not admit of debate. Indeed, its importance has been such that the common law has regarded as illegal “any contract or engagement having a tendency, however slight, to affect the administration of justice” to use the words of Lord Lyndhurst in Egerton v. Brownlow (Earl) [(1853) 4 HLC 1, at p 163].

His Honour continued at 556-557:

The foregoing discussion indicates that, subject to minor qualification only, Lord Lyndhurst was correct in Egerton v. Brownlow [(1853) 4 HLC at p 163] when he said that any contract having a tendency, however slight, to affect the administration of justice is illegal. He was of course speaking of a contract or engagement which has a tendency to affect the administration of justice adversely. It has been said that it is the effect of the contract rather than its purpose or the motives of the parties to it that is important: Howard v. Odhams Press Ltd [(1938] 1 KB at p 40]. In truth, it is the effect of the enforcement of the contract that is all important. In some cases it may not be easy to assess what impact the contract, if enforced, will have on the administration of justice, as, for example, where in one respect the impact is adverse, but in other respects, beneficial: see, e.g., the discussion in Weld-Blundell v. Stephens [(1919] 1 KB 520] and Howard v. Odhams Press Ltd.

Sometimes it is said that a contract to which the principle applies is void; at other times it is said that the contract is unenforceable or, as Lord Tenterden C.J. expressed it in Wetherell v. Jones [(1832) 3 B & Ad 221 at pp 225-226], that the court will not lend its aid to the enforcement of the contract. The true position, as I see it, is that some contracts are void whereas others are valid, though the court will decline to enforce the particular provision in a valid contract in particular circumstances when enforcement of that provision would have an adverse effect on the administration of justice. Thus, a simple agreement not to disclose the existence of a serious criminal offence, which has been, or is about to be, committed in consideration of the payment of a sum of money may well be void because it is illegal. However, it will be otherwise with a contract which is in all respects lawful but nevertheless contains a provision which, if enforced according to its terms, will result in an interference with the administration of justice.

46    Mason J also said at 559:

The refusal of the courts to enforce contracts on grounds of public policy is a striking illustration of the subordination of private right to public interest. The problem is one of formulating with any degree of precision the criteria or the circumstances which will justify a court in refusing to enforce a contract on the ground that there is a countervailing public interest amounting to public policy. The difficulties in ascertaining the existence and strength of an identifiable public interest to which the courts should give effect by refusing to enforce a contract are so formidable as to require that they “should use extreme reserve in holding such a contract to be void as against public policy, and only do so when the contract is incontestably and on any view inimical to the public interest”, to use the words of Asquith L.J. in Monkland v. Jack Barclay Ltd [[1951] 2 KB 252 at p 265]. Here, however, the head of public policy invoked is well recognized and it relates to the enforcement of the criminal law – a field in which the courts have a special interest and experience.

47    Wilson and Dawson JJ observed (at 571) that “[i]nterference with the administration of justice has long been recognised as a head of public policy when asked to enforce a contract” and that (at 573) the question in the case was whether the public interest in the administration of justice precluded the Court from restraining the relevant disclosures. Wilson and Dawson JJ accepted (at 573) that “… there is a public interest in the enforcement of contractual rights which must be overborne by a greater public interest before injunctive relief should be denied” and that (at 574) there may be circumstances in which the triviality of the breaches of the criminal law might lead the Court to not refuse relief for breach of confidence. However, their Honours did not accept that the case was within that category.

48    A v Hayden was considered by the New South Wales Court of Appeal in Richards v Kadian (2005) 64 NSWLR 204. Unlike A v Hayden, the case was concerned with what was alleged to be an interference with the administration of justice in a civil proceeding. The plaintiff’s treating doctors refused to be interviewed by the defendant’s legal representatives without the plaintiff’s consent. The defendant sought orders requiring that the plaintiff consent to such interviews failing which the plaintiff’s proceeding be stayed. Beazley JA (with whom Stein A-JA agreed) said at [46]:

The principle that an obligation of confidentiality will not be enforced by a court, or will be treated as void if it interferes with the administration of justice, is not confined to criminal cases, but extended also to civil cases. That does not mean, however, that any interference will suffice to render an obligation of confidentiality unenforceable or void. Rather, in order for the protection of a confidence to be lost, there needs to be some public element relevant to the administration of justice that is affected. … The mere fact that a confidentiality provision may have the effect of protecting the disclosure of a crime or some other wrong does not necessarily render the provision contrary to public policy. It will depend upon all the circumstances, including what information is sought to be protected, the extent of the protection said to be afforded by any confidential agreement, whether the rights of third parties are necessarily affected and whether there are any wider public policy questions involved. In particular circumstances, the court may be required to weigh up or balance competing interests in determining whether the confidentiality clause should be enforced …

(citations omitted)

49    Hodgson JA substantially agreed with her Honour, but added at [160]:

On the confidentiality issue, the analysis of the authorities undertaken by Beazley JA shows that the principle that an obligation of confidentiality will not be enforced when to do so would impede “ever so slightly” the administration of justice, is not unlimited and unqualified. If it were, it would seem that a party having confidential information would be free to voluntarily give that information to anyone who could be assisted in legal proceedings by the information being given in evidence or even used to obtain evidence. I agree with Beazley JA that there needs to be some matter of public interest beyond the resolution of a civil dispute, and that even then there may be a balancing exercise required in order to determine whether that public interest displaces the obligation of confidentiality.

50    The authorities provide support for a number of propositions relevant to the present case.

51    First, there are some contracts that are void because their purpose and effect is to interfere adversely with the administration of justice. Examples are where a witness is promised money in exchange for giving false testimony or where a contract has the purpose and effect of concealing the existence of a serious criminal offence or the identity of the perpetrator. These contracts are void at common law on the basis that they have a tendency to interfere with the proper working of the machinery of justice.

52    Secondly, there are other contracts that are not void but which may be unenforceable to the extent that they have a tendency to interfere adversely with the proper administration of justice. In these cases it is the effect of the enforcement of the contract which is most important. An employment contract in which the employee agrees not to disclose to third parties his or her employer’s private affairs is not enforceable by the employer to prevent the employee from disclosing to the authorities the commission of a serious criminal offence. In that case the contract must give way to the strong public interest in the enforcement of the criminal law.

53    Thirdly, it may be necessary for the Court to weigh competing public policy considerations when determining whether or not to decline to enforce a contract on the ground that it has a tendency to interfere adversely with the administration of justice. This is because the contract may be beneficial to the administration of justice in some respects but adverse to it in others. There is a public interest in upholding contractual bargains and in encouraging the settlement of legal proceedings. But these considerations may need to be weighed against other considerations relevant to the proper administration of justice.

54    Fourthly, a court is required to exercise extreme caution and reserve before finding a contract void as against public policy and may only do so when the contract in question is “incontestably and on any view inimical to the public interest” per Asquith LJ in Monkland v Jack Barclay [1951] 2 KB 252 at 265. The “public interest” in this context refers to some definite and recognizable public interest that transcends the private interests of the parties to a particular dispute.

55    Fifthly, a party cannot prevent a witness giving evidence in legal proceedings. Subject to any valid objection to evidence, the opposite party is entitled to call the witness and adduce evidence from him or her. The opposite party is also entitled to interview the witness if he or she agrees to such an interview. However, as Beazley JA observed in Richards v Kardin at [85]:

That does not mean ... that the right of a party to call evidence in court operates so as to permit or require a potential witness to breach an obligation of confidence other than in the giving of evidence. Put simply, it does not mean that in the pre-trial phase, a party wishing to call a witness bound by an obligation of confidence, can require the witness to provide information that will breach the obligation of confidence.

Consideration

The purpose, scope and operation of clause 6

56    Clause 6 of the settlement deed does not prevent Apotex from granting the Commonwealth access to Apotex witnesses. Properly construed, it would, if enforceable, prevent Apotex from voluntarily assisting or encouraging the Commonwealth in relation to the Commonwealth’s claim by engaging in any of the following categories of conduct:

(a)    releasing any “third party” from any obligation of confidence in respect of information relevant to the Commonwealth’s compensation claim or Apotex’s compensation claim (Category (a));

(b)    waiving any claim for legal professional privilege relevant to the Commonwealth’s compensation claim or Apotex’s compensation claim (Category (b)); or

(c)    providing documents (Category (c)).

57    The term “third party” is not defined but it would include any other person not party to the settlement deed. It therefore applies to releases that might be given by Apotex to any person who owes it an obligation of confidence including, for example, Mr Millichamp.

Category (a)

58    Sanofi does not dispute that the Commonwealth may wish to rely on Mr Millichamp’s written evidence either in chief or reply in support of its own claim and that it may wish to interview Mr Millichamp prior to him giving evidence. As previously mentioned, Sanofi contends that Apotex would never have sought a PBS listing for its products until such time as it had been determined that its products did not infringe a valid patent. I was told by Mr Sheahan QC, who appeared for Sanofi, that Mr Millichamp’s written evidence directly addresses this contention.

59    Mr Sheahan QC submitted that it would be open to the solicitors for the Commonwealth to discuss with Mr Millichamp in the course of such an interview the contents of his written evidence because, by filing and serving Mr Millichamp’s written evidence, Apotex has impliedly released Mr Millichamp from any obligation of confidence attaching to that material.

60    Mr Sheahan QC further submitted that when Apotex voluntarily disclosed material relevant to the issues in its case against Sanofi in its written evidence it released Mr Millichamp and the other Apotex witnesses from any obligation of confidence attaching to any other material relevant to those issues. It followed, according to this submission, that the Commonwealth was entitled to discuss with the Apotex witnesses all matters relevant to the issues to which their written evidence related because Apotex has impliedly released the witnesses from any obligation of confidence that might have prevented them from engaging in any such discussions.

61    In support of his submission Mr Sheahan QC referred to the authorities concerned with waiver of legal professional privilege including Australian Competition and Consumer Commission v Prysmian Cavi E Sistemi Energia SRL (No 10) (2015) 235 FCR 593 in which Besanko J reviewed some of the authorities concerning the test for determining the scope of any waiver of legal professional privilege in associated materials. His Honour referred to the decision of Young J in AWB Ltd v Cole (No 5) (2006) 155 FCR 30 who said at [164] that the test to be applied “… is whether the material that the party has chosen to release from privilege represents the whole of the material relevant to the same issue or subject matter …”. Mr Sheahan QC submitted that, while this test was propounded in the context of legal professional privilege, it was also applicable to confidential information more generally.

62    There are a number of reasons why I do not accept these submissions.

63    I do not consider the principles developed with respect to waiver of legal professional privilege are relevant to the operation of cl 6 in so far as it relates to non-privileged confidential information. The question here is whether as a result of having filed the written evidence of the Apotex witnesses containing information in relation to certain issues, Apotex has impliedly released those witnesses from any obligation of confidence that might otherwise prevent them from disclosing to the Commonwealth all other information relevant to those issues.

64    I do not see why the disclosure of some confidential information in the written evidence filed by Apotex gives rise to any implied release or implied waiver of the kind that is said to have arisen. The correctness of Sanofi’s submission can be tested in this way. Assume that Mr Millichamp annexed to his affidavit an extract from a confidential business plan that was the property of his employer. Any waiver of confidentiality with respect to that extract does not destroy the confidentiality of other parts of the business plan even if they were necessary to the proper understanding of the extract. Further, the deployment of that affidavit by Apotex in its proceeding against Sanofi would not give rise to any implied release in favour of Mr Millichamp from any obligation of confidence that would prevent him from disclosing other parts of the business plan to the Commonwealth’s solicitors during the course of an interview. Nor do I think that Apotex could be taken to have consented to such a disclosure merely because it filed and served an affidavit from Mr Millichamp that included an extract from the business plan.

65    While cl 6 is expressed to apply only to information that is the subject of an obligation of confidence, it is important to recognise that the case between the Commonwealth and Sanofi is largely concerned with Apotex’s business plans and intentions. These are matters that were most likely confidential to Apotex and most likely remain so.

66    It is the very fact that cl 6 of the settlement deed does not have the effect attributed to it by Mr Sheahan QC that is the source of the difficulty that led to the filing of the Commonwealth’s interlocutory application.

67    In my opinion cl 6 of the settlement deed, if enforceable, would prevent the legal representatives of the Commonwealth discussing with any of the Apotex witnesses many matters relevant to their written evidence. It would prevent the Commonwealth’s legal representatives from obtaining information from the Apotex witnesses relevant to the Commonwealth’s proceeding against Sanofi on the basis that there exist obligations of confidence owed to Apotex (but not to Sanofi) that Apotex may have no genuine interest in enforcing.

68    Mr Sheahan QC also submitted that the purpose of cl 6 was to prevent Apotex from providing information to the Commonwealth that might assist the Commonwealth to make new claims or to develop new theories of liability against Sanofi.

69    In my view cl 6 travels well beyond protecting Sanofi from new claims or new theories of liability. I am satisfied that up until 28 October 2016, Sanofi was using cl 6 of the settlement deed to prevent the Commonwealth communicating with the Apotex witnesses in relation to matters relevant to the Commonwealth’s existing claim. I am also satisfied that this is the primary purpose of cl 6 in so far as it prohibits Apotex from engaging in any Category (a) conduct.

Category (b)

70    The position in relation to the waiver of legal professional privilege is slightly different.

71    It is necessary to recall why the common law protects the confidentiality of communications between lawyers and their clients. In Carter v Managing Partner, Northmore Hale Davy & Leake (1995) 183 CLR 121 Brennan J said at 127 “… the basic justification for allowing the privilege is the public interest in facilitating the application of the rule of law.” His Honour also referred at 127 to his earlier judgment in Attorney-General (N.T.) v. Maurice (1986) 161 CLR 475 at 487 in which Mason and Brennan JJ described the raison d'etre of the privilege as:

the furtherance of the administration of justice through the fostering of trust and candour in the relationship between lawyer and client. The privilege is based on:

…the need of laymen for professional assistance in the protection, enforcement or creation of their legal rights. They should have the benefit of that assistance, free of any restraint which fear of the disclosure of their communications with those advisers would impose …

72    Mr Sheahan QC once again submitted that in so far as cl 6 prohibited Apotex from waiving legal professional privilege, it was aimed at preventing the Commonwealth from obtaining access to information that might assist the Commonwealth to make new claims or develop new theories of liability. I do not accept that submission. I do not accept that the purpose of cl 6 was so limited.

73    Mr Sheahan QC also submitted that there will have been an implied waiver of legal professional privilege by Apotex in relation to all communications relevant to Apotex’s intentions at the time it gave the relevant undertaking.

74    In Mann v Carnell (1999) 201 CLR 1 the plurality (Gleeson CJ, Gaudron, Gummow and Callinan JJ) considered the circumstances in which legal privilege may be waived at common law. Their Honours said at [29]:

Waiver may be express or implied. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is “imputed by operation of law”. This means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege … What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large.

75    The decision in Osland v Secretary, Department of Justice (2008) 234 CLR 275 makes clear that the question whether a limited disclosure of the existence and effect of legal advice is inconsistent with the maintenance of the confidentiality of the advice involves matters of fact and degree.

76    Whether or not there will have been any implied waiver by Apotex of legal professional privilege will depend upon whether Apotex has made disclosures in the written evidence that are inconsistent with the maintenance of the privilege. There is no evidence before me to indicate that it has.

77    The mere fact that Apotex may have filed written evidence from Mr Millichamp stating that it was always his intention that Apotex would file an application for a PBS listing in the event that it was not prevented from doing so would not necessarily result in an implied waiver of Apotex’s legal professional privilege in Mr Millichamp’s communications with Apotex’s lawyers.

Category (c)

78    If cl 6 prevented only Apotex Pty Ltd from providing documents to the Commonwealth then I do not think it would cause any real difficulty because it would be open to the Commonwealth to issue a subpoena to Apotex Pty Ltd for the purpose of obtaining access to relevant documents. However, the position is more complicated than this because it may not be open to the Commonwealth to serve a subpoena on either Apotex Inc or Apotex Research Private Limited unless the solicitors for those corporations agreed to accept service on their behalf. Both are foreign corporations which have no presence in Australia. Given the terms of cl 6, I can well understand why Apotex Inc and Apotex Research Private Limited may be reluctant to authorise solicitors in Australia to accept service of a subpoena on their behalf. Assuming the Court has power to issue a subpoena to a foreign corporation that has no presence in Australia, it would at the very least be necessary for the Commonwealth to satisfy the Court that it was appropriate to issue such a subpoena and that this course of action was not inconsistent with international law and comity.

79    But for the existence of cl 6, it would not be necessary for the Commonwealth to rely upon the power of the Court to issue a subpoena to Apotex Inc or Apotex Research Private Limited (or letters of request to a foreign court) if Apotex otherwise agreed to provide relevant documents to the Commonwealth. However, cl 6, if enforceable, prevents Apotex from voluntarily producing any relevant documents to the Commonwealth.

Public Interest

80    The authorities recognize that there is a public interest in allowing the legal representatives of parties to both criminal and civil litigation to meet with and interview witnesses of fact before they are required to give evidence at a trial. It is for this reason that a party may be held to be in contempt if he or she prevents or hinders the opposite party’s attempts to identify and interview potential witnesses for the purpose of “getting the facts”. Against this public interest must be weighed the public interest in the protection and enforcement of confidences and contractual bargains including, in particular, contracts to settle legal disputes and proceedings.

81    The public interest in protecting confidences may be put aside in this case because none of the Apotex witnesses owe any obligation of confidence to Sanofi. With respect to the public interest in upholding contractual bargains, in my view it is important to have close regard to the purpose and effect of the relevant contractual provisions and the circumstances in which they were brought into existence. In the present case the following matters are particularly relevant:

    The settlement deed was entered into when the litigation between Sanofi and the Commonwealth was well advanced and in circumstances where it was clear to Sanofi and Apotex that the Commonwealth would seek to rely on the evidence of the witnesses of fact who were to be called by Apotex.

    The Apotex witnesses’ evidence was likely to relate to Apotex’s confidential business plans that are directly relevant to the Commonwealth’s case against Sanofi which the Apotex witnesses would most likely be unable or unwilling to discuss with the Commonwealth’s legal representatives without Apotex’s consent.

    Clause 11.2 of the settlement deed states that cl 6 is of “fundamental importance”. Clause 6 is neither a minor nor an incidental element of the contractual bargain.

    The primary purpose of cl 6, in so far as it relates to Category (a) conduct, is to prevent or hinder any attempt by the Commonwealth’s legal representatives to interview the Apotex witnesses and discuss with them matters relevant to their written evidence.

82    I am satisfied that cl 6 is contrary to the public interest because of its strong propensity to prevent or hinder the Commonwealth’s legal representatives’ efforts to interview the Apotex witnesses and discuss with them matters relevant to the issues in this proceeding prior to them giving their evidence.

83    I am not persuaded that cl 6 is otherwise contrary to the public interest in so far as it relates to the Commonwealth’s claim. There was no attempt by the Commonwealth in its submissions to explain why cl 6 was contrary to public policy in so far as it prevents Apotex from waiving legal professional privilege or providing documents. It may be accepted that in these two respects cl 6 may cause the Commonwealth some difficulties if it is assumed that Apotex would agree to waive privilege or provide documents were it not for cl 6. But that does not provide a sufficient basis for holding that cl 6 is contrary to public policy in so far as it prevents Apotex from taking either of those steps. Litigation is usually conducted on the assumption that one party will not assist an opposing party by voluntarily waiving legal professional privilege or voluntarily providing documents unless the first party is of the view that it is in its interests to take either of those steps. The difficulties facing the Commonwealth are not out of the ordinary.

Declaratory Relief

84    In my opinion cl 6 of the settlement deed has a tendency to interfere adversely with the administration of justice and is unenforceable in so far as it relates to the Commonwealth’s claim and prevents Apotex from releasing any witness or prospective witness from any obligation of confidence in respect of information relevant to such claim. There will be a declaration to that effect.

85    I am not persuaded that any of the other clauses of the settlement deed referred to by the Commonwealth in its amended interlocutory application have a tendency to interfere adversely with the administration of justice. Nor is it necessary to express any view in relation to the enforceability of cl 6 in relation to claims by third parties.

Injunctive relief

86    The letter of 18 August 2016 from Sanofi’s solicitors to the Commonwealth’s solicitors gave a clear indication that Sanofi expected Apotex to fully comply with cl 6 and that any interviewing of the Apotex witnesses by the Commonwealth’s legal representatives would have to take place on that basis. The letter of 28 October 2016 from Sanofi’s solicitors to the Commonwealth’s solicitors sent after the Commonwealth filed its interlocutory application marked a significant retreat from the much less accommodating attitude reflected in the earlier letter.

87    Mr Sheahan QC submitted that, given the letter of 28 October 2016, there is no longer any threat that would justify the grant of any injunctive relief preventing Sanofi from seeking to enforce cl 6. The letter of 28 October 2016 is said by Mr Sheahan QC to reflect Sanofi’s present position. I accept this. I do not think there is any reason to grant an injunction.

88    It is a matter for each of the Apotex witnesses to decide whether he or she wishes to participate in any interview with the Commonwealth’s solicitors. Needless to say, I expect all the parties’ legal representatives to comply with Rule 23.1 of the Conduct Rules and I am confident they will do so.

INDEMNITY

89    The Commonwealth sought an order requiring Sanofi to indemnify the Commonwealth in respect of all of the Commonwealth’s legal costs:

(a)    thrown away as a consequence of Sanofi’s entry into clauses 6, 7, 9, 12 and 26 of the settlement deed and/or enforcement of those terms in connection with the Commonwealth’s claims upon the undertaking as to damages; and

(b)    of and incidental to the Commonwealth’s application for relief in respect of the settlement deed.

90    I do not propose to make any order for indemnity costs in favour of the Commonwealth. I do not regard the fact that Sanofi entered into the settlement deed or the fact that Sanofi sought to take advantage of its terms as providing a sufficient basis for the making of such an order.

91    I will otherwise hear the parties in relation to costs. In my view, the only question is whether the Commonwealth’s costs should be reduced to take account of any issue in relation to which it has been unsuccessful.

Associate:        

Dated:    19 April 2017