FEDERAL COURT OF AUSTRALIA

AFT Pharmaceuticals (AU) Pty Ltd v Reckitt Benckiser (Australia) Pty Ltd (No 2) [2020] FCA 1092

ORDERS

THE COURT ORDERS THAT:

1.    The applicant’s application for leave to re-open is refused with costs.

2.    The time for compliance with order 2 of the orders made on 21 May 2020 be extended to 18 August 2020.

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

REASONS FOR JUDGMENT

GLEESON J:

1    On 21 May 2020, I published my reasons for judgment (May 2020 judgment) to the parties (AFT and Reckitt) only and made orders requiring them to file and serve submissions in support of any application for non-publication of information contained in the reasons for judgment, and short minutes of orders to give effect to the reasons for judgment.

2    In brief, the judgment addressed the claim made by AFT that six “statements” contained in a print advertisement (new AFT advertisement) had an adequate scientific foundation being, principally, a published study referred to as the Daniels 2018 study. The judgment also addressed Reckitt’s cross-claim that the advertisement conveyed representations that contravened the Australian Consumer Law (being Sch 2 to the Competition and Consumer Act 2010 (Cth) (Australian Consumer Law), principally because the representations were misleading or deceptive or likely to mislead or deceive. By paras 23 and 24 of the notice of cross-claim, Reckitt alleged that the new AFT advertisement conveyed seven representations, as well as further representations that there was a current adequate foundation in scientific knowledge for each representation and that each representation was supported by the Daniels 2018 study. By para 25, Reckitt alleged that there was no current adequate foundation in scientific knowledge for the representations pleaded in para 23; and/or that the Daniels 2018 study did not support those representations made by AFT.

3    The judgment was intended to be final, subject only to any redactions or alterations that might have been necessary or appropriate to avoid or minimise publication of confidential information. Neither party requested any such redaction or alteration. However, on 26 May 2020, AFT informed the Court that it sought to re-open the hearing.

4    On 3 June 2020, orders were made for the filing and service of submissions addressing AFT’s application, and the application to re-open was listed for hearing on 22 July 2020.

5    The application is opposed by the respondent/cross-claimant (Reckitt).

Legal framework

6    AFT’s application for leave to re-open is made pursuant to r 39.04 of the Federal Court Rules 2011. Rule 39.04 provides that the Court may vary or set aside a judgment or order before it has been entered.

7    In Inspector-General in Bankruptcy v Bradshaw [2006] FCA 22 at [24], Kenny J relevantly identified inadvertent error and mistaken apprehension of the facts as classes of case in which a court may grant leave to re-open. Her Honour observed that “[i]n every case the overriding principle to be applied is whether the interests of justice are better served by allowing or rejecting the application for leave to re-open: citing Urban Transport Authority of NSW v Nweiser (1992) 28 NSWLR 471 at 478; see also The Silver Fox Co Pty Ltd as Trustee for the Baker Family Trust v Lenard’s Pty Ltd (No 2) [2004] FCA 1310 at [22] and [25]”.

8    In Venus Adult Shops v Fraserside Holdings Ltd (No. 2) [2007] FCAFC 41 at [6], French and Kiefel JJ (as their Honours then were) emphasised the need to exercise the relevant discretion sparingly, saying:

The public interest in the finality of litigation requires no less. A liberal approach would open the way to disappointed litigants to seek to re-argue cases generally on the basis that the Court failed to properly consider their submissions on the law or the facts. On the other hand, where a court has adopted a proposition of fact or law which the unsuccessful party has not had a reasonable opportunity to argue there may be a denial of procedural fairness if that party is not allowed to reopen argument for the purpose of meeting the adverse proposition: Autodesk Inc v Dyason (No 2) [1993] HCA 6; (1993) 176 CLR 300 at 309 (Brennan J)

9    In Autodesk Inc v Dyason (No. 2) [1993] HCA 6; (1993) 176 CLR 300 at 303, Mason CJ stated, relevantly

… [T]he public interest in the finality of litigation will not preclude the exceptional step of reviewing or rehearing an issue when a court has good reason to consider that, in its earlier judgment, it has proceeded on a misapprehension as to the facts or the law. As this Court is a final court of appeal, there is no reason for it to confine the exercise of its jurisdiction in a way that would inhibit its capacity to rectify what it perceives to be an apparent error arising from some miscarriage in its judgment. However, it must be emphasized that the jurisdiction is not to be exercised for the purpose of re-agitating arguments already considered by the Court; nor is it to be exercised simply because the party seeking a rehearing has failed to present the argument in all its aspects or as well as it might have been put. What must emerge, in order to enliven the exercise of the jurisdiction, is that the Court has apparently proceeded according to some misapprehension of the facts or the relevant law and that this misapprehension cannot be attributed solely to the neglect or default of the party seeking the rehearing. The purpose of the jurisdiction is not to provide a backdoor method by which unsuccessful litigants can seek to re-argue their cases.

10    Mason CJ referred to Pittalis v Sherefettin [1986] QB 868, where a judge recalled orders the day after they were made, upon determining that he had “erred in a material matter in his approach to the case”.

11    In Smith v Australia New Zealand Banking Group Limited & Ors [1996] NSWCA 483, the Court of Appeal withdrew reasons after concluding that the Court had made a mistake in setting out the facts, before final orders were entered. In Li Shi Ping v Minister of Immigration, Local Government and Ethnic Affairs [1995] FCA 1201, a Full Court of the Federal Court also withdrew reasons before making final orders, after concluding that leave to re-open should be granted and that the judgment had proceeding on the basis of a misapprehension of the facts in a critical respect.

Did the Court misapprehend the facts?

12    As stated in AFT’s written submissions, the basis of the application was that the Court misapprehended “that AFT accepted during the running of the trial that the impugned statements could be assessed on the basis that they had been made in an unqualified manner and without appropriate reference to the Daniels 2018 study”.

13    At the hearing of the application, senior counsel for AFT, Mr Crutchfield QC, accepted that the application related to Reckitt’s cross-claim rather than AFT’s claim.

14    Mr Crutchfield QC also acknowledged that AFT admitted the substance of para 23 of the cross-claim but said that AFT did not do so “in an unqualified way”. Ultimately, Mr Crutchfield QC submitted that AFT “never made that concession”, that the representations agreed to have been made were “unqualified”.

15    To address AFT’s submission, it is necessary to look at two documents provided to the Court by AFT concerning the representations, and the submissions made in relation to the documents.

16    The first document is in the following terms:

Representations which the Applicant accepts arise

 1.    Maxigesic is more efficacious than paracetamol or ibuprofen alone.

 2.    Maxigesic provides better and faster pain relief than both paracetamol or ibuprofen alone.

 3.    Maxigesic provides better and faster pain relief than both paracetamol or ibuprofen alone at maximum dosage.

 4.    Maxigesic provides 36% more effective pain relief than ibuprofen and 78% more effective pain relief than paracetamol.

5.    Maxigesic provides better pain relief than paracetamol and ibuprofen alone.

17    The first document was handed to the Court after the lunch adjournment on the first day of the trial. At the beginning of the trial, I had noted that the statement of claim alleged that certain statements were made in the new AFT advertisement that were not self-contained. There was the following exchange:

Court: … [T]the relief you’re seeking is a declaration that there’s an adequate scientific basis for particular statements, as opposed to particular representations. Some of the six statements don’t actually make syntactical sense, read alone, and, so, I was wondering, do I not need to find what an ordinary … reasonable reader would mean? And is it not possible for you to identify, within the representations that have been identified by Reckitt, the ones for which you contend?

Senior counsel for AFT: We will certainly do that. We will prepare a note of what we say is conveyed by the advertisement, yes.

18    When counsel for AFT handed up the page, there was the following exchange:

Counsel for AFT: … And, of course, we say that all of these representations, while we can record them on a piece of paper in this manner, they can’t be divorced from the context of the ad and the Daniels study for the trial.

Court: Yes.

19    At the commencement of AFT’s oral closing submissions, AFT handed up another document containing the following table (set out at [39] of the May 2020 judgment):

20    The training aid and the POS materials were the subject of Reckitt’s cross-claim, but not AFT’s claim. Reckitt contended that those other advertising materials also contravened the Australian Consumer Law.

21    When this document was handed up, there was the following exchange:

Senior counsel for AFT: … Your Honour, could I start by handing up a table which, captures, we think, the representations that we say arise, which pick up the four representations that your Honour identified on day one. They’re the first four. Plus number 5, which is the one that arises from the POS material.

Court: Yes.

Senior counsel for AFT: So they're the representations that we say arise. Now, in relation to the first of those: Maxigesic is more efficacious than paracetamol or ibuprofen alone. Our friends’ pleading doesn’t say this but we accept what your Honour said on day 1. I won’t go to it. It was page 8, line 20 where your Honour said that that representation has to be based on the Daniels study. And that’s how we think the representation should be read. That is to say, by the new AFT advertisement, the representation is being made that Maxigesic is more efficacious than paracetamol or ibuprofen alone. Why? What’s the basis for that? The Daniels study. …

22    Page 8, line 20 of the transcript is italicised in the following passage:

Court: … [M]y initial reaction was that the advertisement might convey representations 1, 2, 4 and 7, and I mention that because I think what you’re directing yourself to now is representation 6. So - - -

Senior counsel for AFT: (a), (b) and (g).

Court: Yes. Maxigesic is more efficacious than paracetamol or ibuprofen alone based on the Daniels study.

Senior counsel for AFT: Yes.

Court: Yes to the second [representation]. No to the representation, which includes for all pain, because the advertisement needs to be read in the context of the first bullet point.

…

Court: Obviously, that’s subject to whatever [senior counsel for Reckitt] also wants to say, but I just wanted to let you know my initial reading of the advertisement.

23    On the application for leave to re-open, Mr Crutchfield QC initially submitted that Reckitt did not intend by para 23 of its cross-claim to bring a case that the pleaded representations were to be understood “unyoked from the question whether or not there was an adequate scientific foundation” or “divorced from the context of the ad”.

24    Mr Crutchfield QC also submitted that the question whether identified representations were misleading “depends on whether or not they’re appropriately qualified”. AFT’s position was further articulated in the following exchange:

COURT: … So, you’re saying there are two issues on whether conduct is misleading: one is whether there’s an adequate scientific foundation and one is whether the representation is adequately qualified:

MR CRUTCHFIELD QC: They’re two sides – they’re two sides of the same coin. So the issue is, what are the representations that are conveyed. And are those representations misleading, is the second question. And in answering the second question one asks, are the representations sufficiently qualified? And they will be sufficiently qualified if there’s an adequate scientific foundation for it. That’s what this case was about – both of those things?

25    In reply, Mr Crutchfield QC said that AFT was content for the Court to deal with the case on the basis that Reckitt “ran a case that you should read the advertisement in an unqualified way”.

Consideration

26    The Court was tasked with deciding the proceeding on the facts and issues raised and addressed at trial: Betfair Pty Ltd v Racing New South Wales and Anor [2010] FCAFC 133; (2010) 189 FCR 356 at [51]; Gould v Mount Oxide Mines Ltd (in liq) [1916] HCA 81; (1916) 22 CLR 490 at 517; Banque Commerciale SA en Liquidation v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279 at 296-297.

27    In closing submissions, Reckitt noted that AFT had “conceded” that five representations were conveyed by the advertising material, and AFT did not cavil with that description.

28    As Gordon J put it in Australian Competition and Consumer Commission v Dukemaster [2009] FCA 682 at [61], in relation to the predecessor legislation to the Australian Consumer Law:

Two questions arise in the context of s 52 of the TPA. (1) Was each representation conveyed and (2) if yes to (1), was it misleading or deceptive or likely to mislead or deceive?

29    See also Australian Competition and Consumer Commission v Telstra Corporation Ltd [2007] FCA 1904at [14]–[15] and Novartis Pharmaceuticals Australia Pty Ltd v Bayer Australia Ltd [2015] FCA 35 at [200], which refer to a “two-step analysis”.

30    Gordon J’s questions emphasise that it is orthodox to “divorce” the identification of the relevant representations from whether or not there is an adequate scientific foundation for those representations.

31    The proposition that AFT admitted the substance of para 23 of the cross-claim, but not “in an unqualified way” does not clarify the nature of the case that AFT now wishes to say that it brought. AFT does not say that the Court should have decided the case on the basis that AFT denied para 23. Rather, the contention seems to be that the Court should have understood Reckitt’s cross-claim to have been narrower in scope. In effect, the submission was that Reckitt’s case as to the truth or falsity of the representations was to be examined only by reference to the Daniels 2018 study. Thus, Mr Crutchfield QC said:

… [T]he debate was: was the study – was the study an adequate scientific study? If the answer’s yes, we win. If the answer’s no, Reckitt won.

32    However, the case that was heard at trial was not so narrow, as appears from the following matters:

(1)    AFT itself sought to rely on a wider body of scientific evidence to support the representations, including evidence that was directed to studies and reviews of studies that were distinguishable from the Daniels study.

(2)    Reckitt’s closing submissions included the contention that “the single Daniels Study does not constitute ‘convincing evidence’ of the superiority of Maxigesic over the monotherapies so as to support the representations”.

(3)    The expert evidence included, presumably relevantly, agreement that the Daniels 2018 study is not directly informative concerning the degree of pain relief in contexts other than the acute pain dental impaction setting; and that one cannot extrapolate effectiveness in pain control from acute pain models, such as was used in the Daniels 2018 study, to chronic pain settings.

(4)    That expert evidence is relevant to the following particular to para 25 of the cross-claim concerned the limited scope of the Daniels study provides support:

(iv)    The Daniels Study 2018 exclusively tested dental patients who underwent molar extraction surgery only. In fact, the authors of the study themselves acknowledge the existence of several pain studies in emergency department patients that do not show superiority of analgesic combination therapy over monotherapy.

33    It is the responsibility of each party to articulate its case with clarity: cf. Bellevarde Constructions Pty Ltd v CPC Energy Pty Ltd [2008] NSWCA 228 at [55] (Spigelman CJ and Allsop P, Campbell JA agreeing).

34    In this case, AFT made a forensic decision to accept that specified representations were made, with the result that the main issue at trial was whether those representations were misleading or deceptive. As a matter of principle, the identification of the representations was separate from and not “yoked” to the question of whether there was an adequate scientific foundation. If AFT’s position was that the five representations which it accepted to arise, did not arise in “the context of the ad”, then its acceptance was meaningless because Reckitt only alleged that the representations were made in that context.

35    Accordingly, I do not accept that the Court has misapprehended AFT’s case as it was articulated.

Conclusion

36    The application to re-open will be refused with costs. The May 2020 judgment will be published.

Associate:

Dated:    4 August 2020