The Deficiencies of the GMP Report
100 The Liquidators assert that the GMP Report goes to a counterfactual scenario based on Mr Selim's being a person who should have been aware of the matters pleaded in the Statement of Claim and who accordingly should have called in a person such as Mr Williams to conduct a full GMP audit and prepare a corrective action plan. The Liquidators refer specifically to paragraph 72 of the Statement of Claim.
101 Mr Selim complains that the GMP Report, however, is not premised on paragraph 72. Rather, it is premised on the 49 pages of the Statement of Assumptions and 9 volumes of documents, which go well beyond paragraph 72 and have taken the Liquidators four years to compile.
102 The GMP Report and the further affidavits affirmed by Mr Williams furnish no evidence of what a full GMP audit or corrective action plan customarily looked like in May 2002. While Mr Williams asserted in cross-examination that he had conducted 72 audits in his career, many with multiple repeats, he did not produce in answer to a subpoena any audit reports that looked anything like the GMP Report.
103 Mr Williams and SeerPharma failed to produce, in answer to subpoenas, any documents that would demonstrate whether Mr Williams had relevant expertise in providing the sort of report he was asked to assume that he had been retained to provide in May 2002. If Mr Williams had provided a full GMP audit and corrective action plan for a company in Australia in an industry similar to Pan in the years prior to May 2002, there should have been no difficulty in identifying the client and the approximate date upon which the plan or audit was provided. The inference is clearly open that Mr Williams never did such work and that the conclusionary statements in Mr Williams' curriculum vitáe, mask Mr Williams' lack of relevant expertise to express the opinions contained in the GMP Report.
104 None of the documents produced in answer to subpoenas is similar to what a GMP compliance audit at May 2002 or any other relevant time would have looked like. Even if it be accepted that the purpose of the GMP Report was not to produce a counterfactual audit report, but to indicate the deficiencies that would have been identified if an audit had been conducted and the corrective action that would have been recommended, the Court could not conclude with any safety or specificity what Mr Williams would have found or recommended, particularly in circumstances where he was comprehensively assisted by the written work and consultative assistance of solicitors and counsel for the Liquidators. Mr Williams had never previously produced anything similar in size or scope to the GMP Report for a company that resembles Pan. He had never produced anything during the relevant period that took the extraordinary amount of time that the GMP Report took to produce and that required the background assistance of four years of legal work and subsequent consultation with lawyers.
105 Mr Williams accepted in cross-examination that a usual GMP audit report would:
· Involve spending between one to three days at the premises of the client;
· Be conducted on a sampling basis, as opposed to looking at every single document and process;
· Be turned around, back to the client, within a week or, at most, two weeks;
· Not be settled in consultation with lawyers;
· Would not be based on carefully compiled assumptions about the history of the company; and
· Would not be assisted by the provision of voluminous documents on the company.
In contrast, the GMP Report took about 15 or 16 days of full time work over a period of four to five months, involved at least five lengthy meetings with lawyers at which the content of the report was discussed and was assisted by the provision of ten volumes of documents concerning Pan.
106 Mr Williams indicated that a particular report that he furnished to Morgan Grenfell, which was produced in answer to a subpoena, had similarities with the way he normally conducted audit reports. The substance and length of the Morgan Grenfell report is entirely different from the GMP Report. The Morgan Grenfell report related to a company called MediHerb. In the Morgan Grenfell report, the TGA view of MediHerb at the relevant time was considered central to the audit.
107 The GMP Report does not purport to be a full GMP audit or corrective action plan. Rather it is a series of answers to the highly specific and leading questions posed by the solicitors for the Liquidators. Mr Williams was led to provide answers to highly specific questions as to the actions that the Liquidators assert should have been taken. The questions go into such detail as, for example, employing "key ratio" mechanisms, making recommendations about internal audits, what a written training program should address and what reporting procedures for the QA manager should be established.
108 Nowhere in the GMP Report, which Mr Williams took months to prepare and which was based on assumptions that took the Liquidators' legal team years to generate, does Mr Williams identify an actual example of an industry company, similar to Pan or otherwise, that followed or did not follow what Mr Williams identified as norms or practices. His opinions therefore are virtually incapable of being tested.
109 The Liquidators also seek to rely on the GMP Report for identification of the following:
· The GMP standards applicable to a business such as Pan's in May 2002,
· Standards of practice for the conduct of the operations of pharmaceutical manufacturing companies such as Pan as at May 2002, and
· Deficiencies in Pan's systems and operations, by reference to those standards.
110 However, Mr Williams does not identify any independent body of GMP standards generally observed by businesses like Pan's, other than the Code. Rather, much of the GMP Report represents Mr Williams' conclusions as to whether standards in the Code were breached. Of necessity, that involves either the construction of the Code or the application of the Code to the facts that Mr Williams was asked to assume. They are roles for the Court and not for opinion evidence. Even if opinion evidence as to those matters might strictly, so long as s 79 were satisfied, be admissible under s 80 of the Evidence Act, the evidence would have little, if any, weight.
111 Even if the construction of the Code were something on which expert evidence were required, because of technical or scientific ambiguity or some particular technical or scientific usage, Mr Williams does not address such matters in the GMP Report. In particular, the GMP Report contains no statement of Mr Williams' view of the interpretation of the Code, in so far as that might be different from its meaning in ordinary English. There is no reference to any particular experience on the part of Mr Williams where the Code has been interpreted in a particular way different from its meaning in ordinary English and there is no reference to any general body of opinion on the interpretation of the Code. There are merely assertions that Pan has breached the Code. At its highest, the GMP Report represents a statement by Mr Williams of what he now says he would have concluded, had he been furnished, in or before May 2002, with the Statement of Assumptions and the nine volumes of documents.
112 For opinion evidence of Mr Williams to be afforded any weight, it would be necessary to demonstrate that he has had broad experience in the types of matters under consideration and has been called upon to perform the tasks about which he expresses opinions or that he has scientifically researched such tasks. It would be necessary to show how his experience and specialised knowledge in the particular field forms a basis for his opinion.
113 An example is Mr Williams' treatment of key ratios. Mr Williams outlines what he considers to be relevant key ratio indicators. He refers to the Code, implying that the Code requires a key ratio system. The Code does not mention such a concept. The GMP Report makes no suggestion that "key ratios" were matters considered by the industry at any time prior to May 2002. Those observations appear to be prompted by the specific question posed to Mr Williams by the Liquidators' solicitors.
114 There is no suggestion in the GMP Report or in Mr Williams' affidavits that there is any single company in Australia that uses a key ratio system. There is no evidence of levels of staff in QA Departments or QC Laboratories at any other companies like Pan at the relevant time. There is no evidence about the effect, in terms of quality, of the testing done by different levels of staff.
115 The most that can be gleaned from the GMP Report is that Mr Williams is of the opinion that key ratios are something to which a company should aspire. However, in the absence of some specific indication that key ratios were employed in the industry prior to May 2002 and the way in which they were employed by comparable businesses, that opinion has no weight. Neither the GMP Report nor Mr Williams' affidavits afford any means of testing his opinions as to how many people Pan should have employed and what impact any deficiency would actually have had on the products manufactured by Pan.
116 Mr Williams on several occasions uses phrases such as "industry norm" and asserts matters based on his "experience". However, neither the GMP Report nor Mr Williams' affidavits contain evidence of practices generally observed in the industry. No examples are given to demonstrate that there is any norm and Mr Williams does not at any time specifically identify any practice observed by any other company. After months of work, Mr Williams does not identify any specific company where the industry norms and practices to which he purports to refer were either observed or not observed. Mr Williams accepted that he did not spell out the actual basis of any of the claimed industry norms by reference to actual examples; nor did he identify a single occasion in his career where he had been confronted with any of the situations of which he wrote in the GMP Report.
117 In cross-examination, Mr Williams accepted that the so called industry norm as to staffing levels was no more than the notion that the more work there is, the more people are needed in the laboratory, although automation can reduce the number of analysts needed. Nevertheless, Mr Williams purports to express opinions about the specific number of extra staff required, based on an alleged industry norm. Mr Williams gave examples, in the course of cross-examination, of the numbers of staff employed in the quality assurance departments of a number of companies engaged in the industry as follows:
· Herron: "probably four, maybe five",
· Parke-Davis: "approximately half a dozen",
· PharmAction: "about four", and
· Sigma: "probably half a dozen".
118 Mr Williams was asked to assume, for the purposes of the GMP Report, that the Pan QA Department had two or three staff. Mr Williams was then asked what was the industry norm that he derived from his knowledge of the number of people at the four other companies. His response was that he would expect to see somebody controlling documentation, somebody controlling internal audit, somebody controlling invalidation, somebody looking at registration of the product and somebody sometimes looking after specification and looking after deviations and batch release. He acknowledged that no such industry norm was spelt out in the GMP Report.
119 Mr Williams was then asked where in the GMP Report he identified the respects in which Pan did not meet that so called industry norm. Mr Williams then drew a distinction between quality assurance and quality control, suggesting that companies would have substantially more people in the QC Laboratory, which involved laboratory testing. Mr Williams then gave evidence as to his understanding of the numbers of staff in the quality control departments of other companies as follows:
· Herron: "in excess of ten",
· Parke-Davis: "probably twenty", and
· PharmAction: "ranging between six and fifteen".
Mr Williams accepted that none of those figures were included in the GMP Report. His explanation was that he was not sure it was necessary to do so.
120 Mr Williams was then directed to one of the Assumptions that he had been asked to make, namely that Pan had 18 people in the laboratory in addition to the quality assurance manager and the quality control manager. The assumption was that approximately 5 staff members undertook raw materials testing, 9 staff members undertook in-process controls, 1 or 2 staff members undertook finished product testing and 2 staff members undertook stability testing. The assumption also went on to state that the number of staff employed in the laboratory was never assessed or determined by reference to any form of key ratio system or any other system based on how many products Pan produced.
121 Mr Williams was asked, in the light of that assumption, what was the industry norm from which he derived the number of people needed in the QC Laboratory as of May 2002. His response was that it would depend on the level of activity in the business, in relation to the number of batches they were testing or releasing. He said that it in a QC Laboratory the number of analysts is dependant upon the volume of work, so it would vary from company to company. That led to his acceptance of the proposition that the industry norm was no more than that the more work there was the more people were needed in the laboratory, subject to the level of automation.
122 The Liquidators say that the gist of Mr Williams' opinion was that, although he refers to "the industry norm", Pan simply did not have sufficient staff to meet its workload. Nevertheless, for the reasons already indicated, the GMP Report does not demonstrate how the allegedly specialised knowledge on which that opinion is said to be based is based on any specific or particular training, study or experience of Mr Williams. There is no indication in the GMP Report of any quantifiable technical or scientific analysis that would assist the Court in identifying the industry norms referred to by Mr Williams. The various bases for the industry norms or practices to which Mr Williams refers are no more than a most general rule of thumb, unconstrained by any specific actual or practical experience on the part of Mr Williams.
123 The Liquidators respond to the criticism of Section 2 of the GMP Report by suggesting that the GMP Report provides cogent reasons for the adoption of a key ratio system. They rely on the proposition that s 79 of the Evidence Act does not preclude an expert from generalising from experience in forming an opinion, so long as the expert possesses specialised knowledge and the opinion is wholly or substantially based on that knowledge. The expert does not need to identify individual examples in support of an opinion for that to be so. Be that as it may, the absence of specific examples in support of an opinion will go to the weight that should be afforded to the opinion.
124 The evidence of the GMP Report is not based on the fields of expertise described above, such as hard science, applied science or one of the social sciences. Nor is it the result of particular education or learning. Rather, it is based only on the experience of the witness.
125 There may be admissible opinion evidence within the GMP Report. However, substantial parts of the GMP Report consist of impermissible interpretation of the Code, and reproduction of the detailed assumptions that Mr Williams was asked to make and the voluminous supporting documents with which he was provided, which are prejudicial and of little weight. Neither Mr Selim nor the Court should be required to spend time extracting admissible evidence in the GMP Report in circumstances where it was produced four months after the date fixed by the Court, without any approach on behalf of the Liquidators to the Court for an extension of time or explanation for the blatant failure to comply with the Court's direction. In fact, the GMP Report was produced some 15 months after the Court first gave directions about its filing. On the earlier occasions when it was apparent that the Liquidators were unable to comply with the Court's directions, the time for compliance was extended. It is now apparent that Mr Williams had not even been instructed until well after the expiry of the time originally fixed.
126 Having regard to the argumentative nature of the GMP Report and the leading nature of the questions posed for Mr Williams' opinion, it should be given little weight of its own. It would be unfair for Mr Selim to have to cross-examine on the GMP Report in its current form, thereby running the risk of eliciting answers that may have greater weight than the GMP Report itself.
127 The GMP Report is cast in highly prejudicial terms from Mr Selim's point of view, apart from the prejudice arising from its late provision. Any admissible opinion evidence in the GMP Report is of such equivocal weight and would generate such further hearing time that I do not consider that any inconvenience or detriment from its rejection outweighs the inconvenience and unfairness involved for Mr Selim in preparing to answer the GMP Report at this stage. In the circumstances, to the extent that there is admissible evidence in the GMP Report, I would reject it under s 135 of the Evidence Act.
128 Nevertheless, the GMP Report appears to represent a substantial part of the case that the Liquidators seek to mount against Mr Selim, albeit not in an admissible form as evidence. Accordingly, while I would reject the GMP Report as evidence, it could possibly constitute a substantial submission on behalf of the Liquidators. If the material in the Statement of Assumptions is established by admissible evidence, a great deal of the work of counsel for the Liquidators will have been done by the GMP Report. That observation itself emphasises the defects of so called opinion evidence in a form such as the GMP Report.