Apotex Pty Ltd v Les Laboratoires Servier

Federal Court of Australia|2011-11-10|Before: Bennett J, Flick J

Counsel for the Applicant/Cross-Respondents: Mr D K Catterns QC

Solicitor for the Applicant/Cross-Respondents: Freehills

Counsel for the Respondents/Cross-Claimants: Ms C L Cochrane

Solicitor for the Respondents/Cross-Claimants: Allens Arthur Robinson

IN THE FEDERAL COURT OF AUSTRALIA NSW DISTRICT REGISTRY GENERAL DIVISION NSD 657 of 2008

AND: LES LABORATOIRES SERVIER AND ANOTHER (ACCORDING TO THE SCHEDULE)

BETWEEN: LES LABORATOIRES SERVIER AND ANOTHER (ACCORDING TO THE SCHEDULE)

AND: APOTEX PTY LTD (ACN 096 916 148) AND OTHERS (ACCORDING TO THE SCHEDULE)

JUDGE: FLICK J DATE OF ORDER: 10 NOVEMBER 2011 WHERE MADE: SYDNEY

At the interlocutory hearing to be heard by Bennett J on 11 November 2011, the Applicant may not adduce evidence of the: (a) letter from Allens Arthur Robinson to Freehills dated 5 August 2011; (b) letter from Freehills to Allens Arthur Robinson dated 25 August 2011; (c) letter from Allens Arthur Robinson to Freehills dated 23 September 2011; (d) two letters from Freehills to Allens Arthur Robinson dated 3 October 2011; and (e) letter from Allens Arthur Robinson to Freehills dated 4 October 2011. 2. Costs of the Interlocutory Application as filed on 4 November 2011 are reserved. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA NSW DISTRICT REGISTRY GENERAL DIVISION NSD 657 of 2008

AND: LES LABORATOIRES SERVIER AND ANOTHER (ACCORDING TO THE SCHEDULE)

BETWEEN: LES LABORATOIRES SERVIER AND ANOTHER (ACCORDING TO THE SCHEDULE)

AND: APOTEX PTY LTD (ACN 096 916 148) AND OTHERS (ACCORDING TO THE SCHEDULE)

JUDGE: FLICK J DATE: 10 NOVEMBER 2011 PLACE: SYDNEY

REASONS FOR JUDGMENT 1 On 9 May 2008 Apotex Pty Ltd ("Apotex") commenced a proceeding in this Court seeking the revocation of Australian Patent No. 2001276418 entitled "A crystalline form of perindopril tert-butylamine salt". Fortunately for present purposes it is unnecessary to know anything further about this product. The Respondents are Les Laboratoires Servier and Servier Laboratories (Aust) Pty Ltd (the "Servier Parties"). The Servier Parties have in turn filed a Cross-Claim against Apotex and others. 2 The proceeding has been allocated to the docket of Bennett J. 3 The Servier Parties apparently wish to join as further Respondents to their Cross-Claim two further entities which can conveniently be described as the "proposed additional Cross-Respondents". When consideration is given to the application for joinder, the Servier Parties contend that neither the following correspondence nor the substance of the following correspondence should be adduced, namely: a letter from Allens Arthur Robinson to Freehills dated 5 August 2011; a letter from Freehills to Allens Arthur Robinson dated 25 August 2011; a letter from Allens Arthur Robinson to Freehills dated 23 September 2011; two letters from Freehills to Allens Arthur Robinson dated 3 October 2011; and a letter from Allens Arthur Robinson to Freehills dated 4 October 2011. Freehills acts for Apotex and the other Cross-Respondents; Allens Arthur Robinson acts for the Servier parties. 4 The Servier Parties claim that this correspondence forms part of "without prejudice" negotiations for the purposes of s 131(1) of the Evidence Act 1995 (Cth). 5 The resolution of those claims for privilege has been referred to the Court as presently constituted. The claims need to be resolved prior to Friday 11 November 2011 when the interlocutory hearing as to whether the proposed additional Cross-Respondents should be joined is set down before Bennett J. 6 When consideration is given to that application for joinder, the Servier Parties wish to contend that any expiration of time (or so-called "delay") on their part in making the application for joinder is answered by the time taken to engage in genuine attempts to avoid the necessity to make that application. Apotex wishes to rely upon the correspondence in the hearing before Bennett J to contend (inter alia) that the correspondence does not evidence an attempt to compromise or settle the need for that application. It contends that none of the correspondence falls within s 131(1); alternatively, it contends that the 23 September 2011 letter falls within the exceptions provided for in s 131(2)(b) and/or (g). 7 Time does not permit a more detailed consideration of the issues raised for resolution. But the principles to be applied are within a narrow compass, as are the facts. All six letters, it is concluded, fall within s 131(1). It is further concluded that the letter dated 23 September 2011 does not fall within s 131(2)(b) or (g). No submission was advanced by Senior Counsel on behalf of Apotex that any of the remaining correspondence also fell within s 131(2)(b) or (g). Accordingly, Apotex may not rely upon any of the correspondence in the forthcoming interlocutory hearing before Bennett J.

Section 131 8 Section 131 of the Evidence Act provides in relevant part as follows: Exclusion of evidence of settlement negotiations (1) Evidence is not to be adduced of: (a) a communication that is made between persons in dispute, or between one or more persons in dispute and a third party, in connection with an attempt to negotiate a settlement of the dispute; or (b) a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute. (2) Subsection (1) does not apply if: … (b) the substance of the evidence has been disclosed with the express or implied consent of all the persons in dispute; or … (g) evidence that has been adduced in the proceeding, or an inference from evidence that has been adduced in the proceeding, is likely to mislead the court unless evidence of the communication or document is adduced to contradict or to qualify that evidence; or … 9 The course of "without prejudice" negotiations, it may be noted at the outset, may be relevant in explaining what may otherwise be sought to be characterised as "delay": Hoefler v Tomlinson (1995) 60 FCR 452 at 453 to 454. Spender J there relevantly observed : The rationale of the rule excluding evidence of settlement negotiations is the public policy of encouraging out-of-court settlements and the principle promoting the individual's right to enter into such negotiations openly and without interference. I acknowledge that the common law admits of a possible exception where delay is an issue, as in proceedings involving want of prosecution or laches. In such proceedings it is clear enough that the fact of without prejudice communication between the parties may be a relevant matter. It may explain delay, for instance. Another reason for the exception may be that in such cases the communication is not genuinely intended to be an attempt at settlement and therefore does not come within the general rule. Or it may be that the reason for its disclosure, namely to assess whether there has been unreasonable delay, does not offend the policy behind the general rule. Sackville and Kiefel JJ agreed.

The Six Letters 10 The six letters for which privilege is now claimed cannot be considered completely in isolation. They must be considered in a wider context. 11 Relevantly, the events date back to at least 23 March 2011 when Apotex informed the Servier Parties that the proposed additional Cross-Respondents had roles in the manufacture and supply of the products the subject of the proceeding. 12 The Servier Parties formed the view that the proposed additional Cross-Respondents were "proper parties to the proceeding". They so advised Apotex by way of an "open" letter dated 4 May 2011. That letter stated that the Servier Parties would be willing not to join the proposed additional Cross-Respondents if certain admissions and undertakings were given. The letter identified those admissions and undertakings as follows: 2. Admissions sought Our clients would require admissions from each of your clients that finished perindopril product and API manufactured or supplied after 1 October 2008 is for all material purposes the same as the finished perindopril product manufactured and supplied by Apotex Inc and Apotex Pharmachem Inc prior to 1 October 2008. In order for this to work, it would also be necessary to finalise the issues relating to admissions and discovery, so that it is unambiguous as to what finished products and API are referred to in the admissions. These issues had been previously discussed but not concluded. The time is apposite to finalise these issues, in any event, given that the parties are now moving to the second tranche of discovery, the scope of which will be impacted by the form of any admissions. Our clients propose admissions from the Apotex parties in the following terms: (i) the API Sample is for all material purposes the same as the API in the finished perindopril products (whether manufactured or supplied before or after 1 October 2008); and (ii) the UK Experiment 3 XRPD Data is for all material purposes representative of the API in the finished perindopril products (whether manufactured or supplied before or after 1 October 2008) (where API, API Sample and UK Experiment 3 XRPD Data have the same meaning as set out in our Notice to Admit Facts dated 9 November 2009). 3. Further Undertakings sought In addition to the admissions required above, our clients would require undertakings from [the proposed additional Cross-Respondents] that they will comply with a decision of the Court against Apotex Inc or Apotex Pharmachem Inc in the Alpha Crystalline Patent Proceeding as if it were made in relation to [the proposed additional Cross-Respondents]. Our clients would also require undertakings from [the proposed additional Cross-Respondents] that if any document required to be discovered by Apotex, Apotex Inc and/or Apotex Pharmachem Inc in this proceeding is not in possession, power or control of Apotex, Apotex Inc or Apotex Pharmachem Inc, but is in the possession, power or control of [the proposed additional Cross-Respondents], then [the proposed additional Cross-Respondents], as the case may be, will provide access to that document to Apotex, Apotex Inc and/or Apotex Pharmachem Inc, so as to enable Apotex, Apotex Inc and/or Apotex Pharmachem Inc to discover and produce it in these proceedings. Further correspondence was exchanged, including correspondence in response to the 4 May 2011 letter. On 10 June 2011 Freehills wrote that "our clients will not provide the admissions sought under heading 2 of your letter". 13 A further letter was sent to Freehills from Allens Arthur Robinson on 7 July 2011 again seeking admissions and undertakings. The admissions as framed were directed to the former of the two admissions as sought on 4 May 2011. The undertakings were the same as previously sought. 14 On 29 July 2011 Freehills responded to the 7 July 2011 letter and stated that the proposed additional Cross-Respondents do "not agree to be joined to the proceedings and will not provide the admissions or undertakings in the form sought by your clients". Freehills stated that they had instructions "to oppose any application for … joinder" but did propose "a solution which will not only simplify the issues in dispute but also avoid unnecessary time and expense involved for all parties in another contested joinder motion and, if your clients are successful, further rounds of expensive discovery". On that same day each of the proposed additional Cross-Respondents sent an "open" letter to Allens Arthur Robinson in which they separately and unconditionally provided an undertaking that: If Les Laboratoires Servier and Servier Laboratories (Aust) Pty Ltd obtain final injunctive relief against Apotex Pty Ltd in respect of the Canadian Product [each of the proposed additional Cross-Respondents] will not supply the … Product to Australia for so long as that injunctive relief is in force. But agreement could not be reached and the Servier Parties now seek to join the proposed additional Cross-Respondents. The Servier Parties wish to contend that the following exchange in correspondence forms part of the ongoing attempt to settle at least this part of the "dispute" as to whether or not the proposed additional Cross-Respondents should be joined as parties. 15 The first letter now in issue, the one dated 5 August 2011, is headed "WITHOUT PREJUDICE SAVE AS TO COSTS". That letter refers to earlier correspondence and, in particular, to a letter from Allens Arthur Robinson dated 19 July 2011 and a Freehills reply letter dated 2 August 2011. The 5 August 2011 letter makes reference to the undertakings which had been sought and to correspondence going to admissions which had been sought. 16 In the second letter now in issue, the one dated 25 August 2011, Freehills again directs attention to the undertakings. 17 The third letter, the one dated 23 September 2011, is again headed "Without Prejudice". It deals with a number of issues concerning notices to admit facts and then refers to the desire of the proposed additional Cross-Respondents not to become involved in the Australian proceedings. Additional admissions are sought and an additional undertaking. A response is invited by 3 October 2011. 18 The fourth and fifth letters, both dated 3 October 2011, are from Freehills to Allens Arthur Robinson. Both are headed "Confidential". No reference is made to their being "without prejudice". The first of those two letters addresses a number of matters, including a summary account of the history of the correspondence as to the joinder of the proposed additional Cross-Respondents, including a reference to the content of the 29 July 2011 letters and the undertakings then proffered on a "without admissions" basis. The second of the two letters dated 3 October 2011 again addresses (inter alia) the "without prejudice" correspondence. 19 The final letter, the one dated 4 October 2011, is again headed "Without Prejudice". After referring to matters that occurred before Bennett J, that letter sought confirmation as to various matters. 20 The contents of each of the six letters now in issue have only been cryptically referred to so as to preserve the confidentiality of the communications asserted on behalf of the Servier Parties.

Attempts To Negotiate a Settlement - Section 131(1) 21 In Silver Fox Company Pty Ltd v Lenard's Pty Ltd (No 3) [2004] FCA 1570 at [36], 214 ALR 621 at 624, Mansfield J expressed the purposes of s 131(1) as follows: [36] … Section 131(1), subject to its exceptions, gives effect to the policy of ensuring the course of negotiations - whether private or by mediation - are not adduced into evidence for the purpose of influencing the outcome on the primary matters in issue. Clearly, it is in the public interest that negotiations to explore resolution of proceedings should not be inhibited by the risk of such negotiations influencing the outcome on those primary issues. It is equally in the public interest that negotiations should be conducted genuinely and realistically … This decision was reversed on appeal but not in any manner that affects these observations of the primary Judge: Poulet Frais Pty Ltd v Silver Fox Company Pty Ltd [2005] FCAFC 131, 220 ALR 211. See also: Field v Commissioner for Railways for New South Wales (1957) 99 CLR 285 at 291 per Dixon CJ, Webb, Kitto and Taylor JJ. 22 For the purposes of s 131(1) it may be also noted that the likelihood of litigation as against the proposed additional Cross-Respondents is sufficient to constitute a "dispute": cf. Korean Airlines Co Ltd v Australian Competition and Consumer Commission (No 3) [2008] FCA 701 at [70], 247 ALR 781 at 789 per Jacobson J. It may also be that the phrase "in connection with an attempt to negotiate the settlement of a dispute" may extend the boundaries of the otherwise comparable common law privilege: Brown v Commissioner of Taxation [2002] FCA 318 at [99], 119 FCR 269 at 294 per Sackville and Finn JJ. But whether that is so need not now be resolved. There exists an attempt to "negotiate" a settlement where parties are attempting to arrange for or to bring about a settlement: Barrett Property Group Pty Ltd v Dennis Family Homes Pty Ltd (No 2) [2011] FCA 276 at [34], 193 FCR 479 at 485. Bromberg J there said of the term "negotiate": [34] Section 131(1) speaks of an attempt to negotiate a settlement. It does not require an attempt to negotiate a compromise in which some middle ground is found. The applicants emphasise the word "negotiate", as though it necessarily connotes a willingness by every party to the dispute to compromise. In the context of the phrase "in connection with an attempt to negotiate the settlement of the dispute", the word "negotiate" simply means to arrange for or bring about a settlement: see Macquarie Dictionary (5th ed, 2009). 23 Such matters of principle were not put in issue. 24 One matter which was the focus of limited attention in the written submissions was whether or not the exchange of correspondence was properly to be characterised as "an attempt to negotiate a settlement" of a "dispute". In seeking to reject the Servier Parties' claim to privilege, Apotex contended that the correspondence was not a genuine "attempt to negotiate a settlement" as it did nothing more than repeat that which had previously been disclosed. Apotex further contended that it would in any event mislead the Court if the correspondence could not be adduced. 25 It may readily be accepted that the mere insertion of the words "without prejudice" does not of itself necessarily clothe correspondence with the character asserted (Bhagat v Global Custodians Ltd [2002] NSWCA 160 at [28] per Spigelman CJ (Ipp AJA and Brownie AJA agreeing)) any more than the absence of those words would deny a privilege attaching to correspondence which is truly engaged in for the purpose of effecting a settlement or compromise (Rodgers v Rodgers (1964) 114 CLR 608 at 614 per McTiernan, Taylor and Owen JJ; In the Marriage of Bradford (1995) 120 FLR 75 at 78 to 79 per Mushin J). 26 Although it may thus be accepted that the mere insertion or omission in correspondence of the words "without prejudice" does not of itself determine the character of correspondence, it is concluded that the correspondence presently in issue does evince a genuine attempt to negotiate a settlement by reason of: the claim in fact made by Allens Arthur Robinson that the exchange of correspondence is to be "without prejudice"; the fact that the exchange of correspondence that did take place evidences an exchange of proposals with a view to reaching consensus; and the fact that there is no reason to question that that exchange of correspondence was engaged in for the genuine purpose of trying to avoid the necessity to join the proposed additional Cross-Respondents as parties to the Cross-Claim. The fact that subsequent correspondence may have been repeating the substance of what had previously been disclosed does not deny that subsequent correspondence the character of being a continuing attempt to reach compromise or settlement. In respect to the letter dated 25 August 2011 and the two letters dated 3 October 2011, from Freehills to Allens Arthur Robinson, it is further concluded that such correspondence: forms part of the same genuine attempt to negotiate a settlement, notwithstanding the absence of a claim that the correspondence was to be "without prejudice". 27 An "attempt to negotiate a settlement" may in an appropriate case extend to correspondence which simply repeats offers that have previously been made and which foreshadows either concurrence or rejection of those offers, or correspondence which may seek clarification of the precise ambit of any offer being made. Subsequent correspondence which may (for example) be but an inappropriate and unwarranted attempt to delay or prolong a course of dealings - and which is thereby not a genuine attempt to reach a compromise or settlement - would not fall within s 131(1). But such is not the present case. 28 The present exchange of correspondence falls within s 131(1). 29 Given that all of the six letters thus fall within s 131, it remains necessary to resolve the alternative submissions of Apotex as to whether the 23 September 2011 letter falls within s 131(2)(b) or (g).

Prior Disclosure - Section 131(2)(b) 30 Senior Counsel on behalf of Apotex contends that the "demands in the 23 September 'without prejudice' letter are effectively the same as the letter from the Servier Parties dated 4 May 2011 … [T]he substance of the 'without prejudice' letter has been disclosed and subsection 131(2)(b) is enlivened". 31 Reliance is thus placed by Apotex upon the submission that the contents of the 23 September 2011 letter have been disclosed by the earlier letter dated 4 May 2011. 32 Some initial difficulty may be expressed as to how any such submission can be resolved without a more detailed understanding of the facts and issues involved in the principal litigation listed for hearing before Bennett J. Differences in language in which admissions (for example) may be sought do not necessarily lead to a conclusion that the admissions are different one from the other. A more detailed understanding of the issues to be litigated, however, may expose a greater difference than any form of words may otherwise convey. 33 Counsel for the Servier Parties confronted such a practical difficulty by contending that the mere repetition of an earlier offer or proposal - even if expressed in exactly the same terms as an earlier offer or proposal - is nevertheless privileged from production if made under cover of a letter genuinely expressed to be "without prejudice". In support of that contention Counsel relied upon the observations of Brereton J in Owners of Strata Plan 64622 v Australand Corporation Pty Ltd [2009] NSWSC 614. Alternatively, Counsel contended that there was in "substance" a difference between that which had been conveyed in the "open" 4 May 2011 letter to that addressed in the letter dated 23 September 2011. Any residual concern that the Court may have as to whether or not the later letter should be disclosed, on her approach, was to be resolved by reference to s 131(2)(g) - not s 131(2)(b). 34 Limited support for the former of the two contentions advanced on behalf of the Servier Parties is provided by the decision of Brereton J. In Owners of Strata Plan 64622 an order was sought that particular documents could not be adduced as evidence before a referee in a building dispute. In an ex tempore judgment Brereton J concluded in relevant part as follows: [21] Next, it was submitted that the substance of the evidence was disclosed with the express or implied consent of the persons in dispute, within s 131(2)(b). In this connection, it was pointed out that some of the offers in question had been referred to in the Referee's report, and therefore disclosed to the Referee at an earlier stage. However, no instance in which any of the "without prejudice" offers - as distinct from the "open" offers - had been so disclosed was identified. It was argued that the open offers disclosed the substance of the without prejudice offers because, and I shall assume it to be the case without deciding - that the without prejudice offers were on substantially similar terms to the open offers. However, when s 131(2)(b) speaks of the "substance of the evidence", one must look back at s 131(1) to see that the relevant evidence is evidence of a communication or of a document. The question is whether evidence of the without prejudice communication or the document has been, in substance, disclosed. There is nothing before me to indicate that evidence of the without prejudice communications or documents has been disclosed or without consent. … His Honour concluded that evidence of the "without prejudice" communications was not admissible. 35 No question obviously arises as to the disclosure of the terms of the 4 May 2011 letter. That was an "open" letter. The present situation, as contemplated by Brereton J, is thus different to those situations where there has been a prior "without prejudice" communication and questions arise as to whether or not that which is subsequently disclosed effects a disclosure of the "substance" of that for which privilege had previously been claimed: cf. Adlam v Noack [1999] FCA 1606 at [9] per Mansfield J. 36 If the privilege in respect to the letter dated 23 September 2011 is maintained, what is set forth in that letter will remain confidential between the parties and not be disclosed to the Court. The Court will not know whether the contents of that letter are the same or different to earlier correspondence. There has to date been no disclosure of the contents of that letter after it was sent. 37 Consistent with this approach, situations may well be envisaged where (for example) an "open offer" to settle proceedings has lapsed by reason of the expiration of a stipulated time limit. There may well be good reason for the party making an offer to again renew the offer, this time on a "without prejudice" basis, and again with a view to bringing a proceeding to an end. The mere fact that the two offers are in "substance" the same - with the exception of the date by which each may be accepted - would not strip the later "without prejudice" communication of the privilege otherwise attaching to it. 38 Although the submissions advanced on behalf of Apotex proceeded on an assumption that the substance of a "without prejudice" communication could be "disclosed" by that which precedes the communication, such an assumption without qualification may well be doubted. There may be circumstances in which an offeror orally communicates an "open offer" and says that the offer will be confirmed in writing. In that case the content of any subsequent written confirmation, even if subsequently expressed to be "without prejudice", has already been "disclosed". But the making of an "open offer" that is followed by a later "without prejudice" offer - even if in the same terms - does not necessarily say anything as to the subsequent "without prejudice" offer. Unless the contents of the subsequent offer are disclosed, the terms it contains may be the same, totally different or more or less generous than any prior "open offer". The fact that an "offer" is "open" says nothing as to whether it may be repeated at some time in the future, either in the same terms or in different terms. The same "policy" of excluding from evidence steps which may be taken to settle litigation continues to apply even after an "open offer" has been made. 39 Such is the present case. There has been no disclosure of the contents of the 23 September 2011 letter after it has been sent. It is unnecessary to resolve whether there is any difference as between this letter and the earlier 4 May 2011 letter or whether the two letters in substance address different concerns. The primary submission advanced on behalf of the Servier Parties as to the 4 May 2011 letter not constituting a "disclosure" of the subsequent 23 September 2011 letter for the purposes of s 131(2)(b) is accepted. 40 Section 131(2)(b), it may be noted, has its counterpart in s 122(3)(b). In the context of the latter provision, it has been held that "one cannot 'disclose' to a person something that the person already knows": Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2008] NSWSC 1070 at [11] to [20] per Barrett J. See also: Leasing Centre (Aust) Pty Ltd v Rollpress Proplate Group Pty Ltd [2010] NSWSC 877 at [28] per Barrett J. No submissions were directed to these decisions. Whether the two subsections operate differently by reason of one protecting ongoing attempts to resolve a dispute, whereas the other seeks to protect legal advice, was also not the subject of any submissions. It may be that once the substance of legal advice has been "disclosed" there is no continuing utility in maintaining confidentiality; there may, however, be utility in maintaining confidentiality in respect to repeated offers to settle a dispute even where earlier "open" offers in the same terms have been made and rejected. One difference may be that that which is "disclosed" by a later "without prejudice" offer to settle a claim, even in exactly the same terms as an earlier offer which has been rejected, is the fact that the same offer to settle is again being made. In the absence of any submissions being directed to such issues, however, the more prudent course is to not express any view going beyond the conclusions necessary to resolve the present Interlocutory Application. 41 That left for resolution the submission on behalf of Apotex that the Court would be "misled" if the 23 September 2011 letter was not adduced.

Misleading the Court - Section 131(2)(g) 42 It was common ground that the maintenance of a claim for privilege founded upon "without prejudice" communications cannot be the occasion for the Court being misled. 43 The common law recognises that the privilege cannot be relied upon if to do so would mislead the Court: Pitts v Adney [1961] NSWR 535 at 539. Walsh J there concluded: It is of importance that the rule protecting from disclosure, discussions taking place in an endeavour to put an end to pending litigation should, in general, be applied. But it is, after all, a rule based upon public policy. It cannot be permitted to put a party into the position of being able to cause a court to be deceived as to the facts, by shutting out evidence which would rebut inferences upon which that party seeks to rely. In McFadden v. Snow (1951), 69 W.N. (N.S.W.) 8, evidence was given on behalf of one party that no reply had been received to a letter. Thus it was sought to establish an admission by silence as to a relevant fact. Kinsella, J., admitted a letter headed "without prejudice'" tendered in disproof of that evidence. He said: "The privilege that may arise from the cloak of 'without prejudice' must not be abused for the purpose of misleading the court". With respect, I state my emphatic agreement with that observation. These observations have been said to be "the likely origin" of s 131(2)(g): Barrett Property Group Pty Ltd v Dennis Family Homes Pty Ltd (No 2) [2011] FCA 276 at [48], 193 FCR 479 at 487 per Bromberg J. 44 For the purposes of s 131(2)(g) it has been said that "two requirements" must be satisfied: Korean Airlines Co Ltd v Australian Competition and Consumer Commission (No 3) [2008] FCA 701 at [76] to [77], 247 ALR 781 at 789. Jacobson J there observed: Section 131(2)(g) of the Evidence Act [76] Two requirements must be satisfied for an otherwise privileged communication to fall within the exception stated in s 131(2)(g). First, other evidence must have already been adduced which would be likely to mislead the court unless evidence of the without prejudice communication is adduced. [77] The second requirement is that the evidence of the without prejudice communication must contradict or qualify the evidence that has been adduced. These "two requirements" in effect dissect the terms actually employed in s 131(2)(g). 45 In Brown v Commissioner of Taxation [2001] FCA 596 at [184] to [185], 187 ALR 714 at 754 Emmett J focussed specific attention upon the former of these "two requirements". His Honour there said: [184] I consider that s 131(2)(g) is designed to deal with the sort of circumstances that arose in Pitts v Adney (1961) 78 WN (NSW) 886. Evidence of a "without prejudice" communication was admitted in that case in order to prove the fact of and the nature of the communication. It was not tendered in order to contradict evidence as to the matters in issue, or as an admission. [185] It is not appropriate to attempt an exhaustive exposition of the effect of s 131(2)(g). However, I consider that it will not be attracted simply because evidence to which s 131(1) applies contradicts or qualifies evidence that has already been adduced. Section 131(2)(g) will apply where the court would be likely to be misled as to the existence or contents of an excluded communication or document, where those matters are in issue in the proceeding … In Mulkearns v Chandos Developments Pty Ltd (No 4) [2005] NSWSC 511 at [67] Young CJ in Eq (as His Honour then was) held that an earlier without prejudice offer was admissible under 131(2)(g) and said that "unless this additional fact is permitted into evidence, the plaintiffs may mislead the Court into thinking their case is one against a greedy defendant who would not give an inch and this would be a factor to go to the Court's discretion" whether to order the return of the deposit. Unless "there is a risk that the Court would be likely to be misled as to the existence or contents of an excluded communication or document, where those matters are in issue in the proceeding" s 131(2)(g) does not apply: Bloss Holdings Pty Ltd v Brackley Industries Pty Ltd [2005] NSWSC 756 at [7] per Hamilton J. See also: Simply Irresistible Pty Ltd v Couper [2010] VSC 505 at [15] to [20] per Kyrou J. 46 On Friday, Bennett J will apparently be taken to the "open" 4 May 2011 letter. That letter set forth the admissions and undertakings which were then under discussion. They were admissions and undertakings of some significance as related questions as to joinder and further discovery depended upon the Freehills response. 47 If privilege in the six letters is maintained, all that Her Honour will know is that there were negotiations taking place over the period from 5 August 2011 to 4 October 2011. For s 131(2)(g) to apply it must be concluded that Her Honour would be misled by the non-disclosure of the 23 September 2011 letter. Even if it be assumed that the substance of the May and September letters is the same, as is the contention of Apotex, it is not readily apparent why Her Honour would be misled. The repetition of the terms of an earlier "open" communication in a subsequent "without prejudice" communication, assuming that to be the fact, may continue to form part of a course of attempted negotiations. The terms may be the same or they may be varied. The non-disclosure of any privileged material, perhaps, occasions some speculation as to the content of that which is withheld from consideration. Even if there be some speculation as to the contents of the 23 September 2011 letter, any speculation would not "mislead the court". 48 For the purposes of s 131(2)(g), the evidence that has already been adduced is the 4 May 2011 letter; the 23 September 2011 letter, whether it is in the same terms or not, does not "contradict or … qualify the evidence" that has been adduced. Even if the assertion as to the comparability of the two letters is accepted, it is difficult to see why a party should be precluded from continuing to attempt a settlement even upon the same terms which have previously been rejected. Short of a conclusion that such continuing attempts do not constitute a genuine attempt to reach agreement to resolve a dispute, there is no reason why the policy of protecting "without prejudice" negotiations should not continue to preserve the confidentiality of such on-going negotiations. 49 Section 131(2)(g) does not apply. The non-disclosure of the 23 September 2011 letter does not satisfy either of the "two requirements" set forth in that provision.

Conclusions 50 It is concluded that each of the six letters the subject of present dispute form part of an "attempt to negotiate a settlement of the dispute" within the meaning of and for the purposes of s 131(1) of the Evidence Act. The submission advanced on behalf of Apotex to the contrary is thus rejected. 51 Notwithstanding the expression of a tentative view at the outset of the hearing on 8 November 2011 that the letter dated 23 September 2011 may fall within s 131(2)(b), it has ultimately been concluded that the letter does not fall within either s 131(2)(b) or (g) of the Evidence Act. . 52 It is understood that Bennett J has made orders pursuant to s 50 of the Federal Court of Australia Act 1976 (Cth) in respect to preserving the confidentiality (in particular) of previous transcripts in this proceeding and thereby the identities of the proposed additional Cross-Respondents. Although any individual Judge has an independent discretion to be exercised as to whether any like order should be made, the preferable course in the present case was to make orders of the kind previously made by Bennett J. That order was made on 9 November 2011. Her Honour would unquestionably be free to vary or revoke that order in such manner as she sees fit.

ORDERS The Orders of the Court are: 1. At the interlocutory hearing to be heard by Bennett J on 11 November 2011, the Applicant may not adduce evidence of the: (a) letter from Allens Arthur Robinson to Freehills dated 5 August 2011; (b) letter from Freehills to Allens Arthur Robinson dated 25 August 2011; (c) letter from Allens Arthur Robinson to Freehills dated 23 September 2011; (d) two letters from Freehills to Allens Arthur Robinson dated 3 October 2011; and (e) letter from Allens Arthur Robinson to Freehills dated 4 October 2011. 2. Costs of the Interlocutory Application as filed on 4 November 2011 are reserved. I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick.

Associate: Dated: 10 November 2011 SCHEDULE NSD 657 of 2008 BETWEEN: APOTEX PTY LTD (ACN 096 916 148) Applicant AND: LES LABORATOIRES SERVIER First Respondent SERVIER LABORATORIES (AUST.) PTY LTD (ACN 004 838 500) Second Respondent BETWEEN: LES LABORATOIRES SERVIER First Cross-Claimant SERVIER LABORATORIES (AUST.) PTY LTD (ACN 004 838 500) Second Cross-Claimant AND: APOTEX PTY LTD (ACN 096 916 148) First Cross-Respondent SYMBION PHARMACY SERVICES PTY LTD (ACN 000 875 034) Second Cross-Respondent CHEM MART PTY LIMITED (ACN 001 235 374) Third Cross-Respondent PHARMACOR LIMITED (ACN 121 020 835) Fourth Cross-Respondent ASCENT PHARMACEUTICALS LIMITED (ACN 003 854 626) Fifth Cross-Respondent SIGMA PHARMACEUTICALS (AUSTRALIA) PTY LTD (ACN 004 118 594) Sixth Cross-Respondent APOTEX INC Seventh Cross-Respondent APOTEX PHARMACHEM INC Eighth Cross-Respondent

Evidence Act 1995(Cth)ss 122, 131

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