Unilever Australia Ltd v Revlon Australia Pty Ltd

Application for leave to amend particulars 5 The application is dated 23 February 2015. It was served on the respondent ("Revlon")'s solicitor on 19 February 2015, following a debate on 17 February 2015 about whether Unilever was seeking to induce a new case through a report prepared by Professor Easton, an independent expert retained on behalf of Unilever. Professor Easton is a professor at the Research School of Chemistry at the Australian National University. The report is entitled "Response to Confidential Report PP-9 to the 6 February 2014 affidavit of Professor Perlmutter" ("Purported response to PP-9"). Professor Perlmutter is a Professor of Chemistry at Monash University. 6 Senior counsel for Revlon, Mr Hall SC, contended that Professor Easton's Purported response to PP-9 raised an "entirely new case" based on scientific experiments done the previous day. 7 I did not understand Unilever to dispute that, while there was an issue between the parties about the rate of dissipation of hydrogen peroxide following application of the product, there had been no issue thus far as to whether the hydrogen peroxide in the product might decay between when it is added to the product and when it is applied by the consumer. Whether the proposed amended particulars amount to an "entirely new" case is contested.

Unilever's evidence 8 Unilever relied upon an affidavit of Andrew Salgo, Unilever's solicitor, sworn 19 February 2015 and a folder of materials, as well as a copy of a patent application. The patent application relates to the encapsulation of hydrogen peroxide. 9 In his affidavit, Mr Salgo deposed that the basis for the new contention, that hydrogen peroxide is not present in the Mitchum Clinical products at all, was not available to Unilever's legal advisers prior to the tests and reports contained in and referred to in affidavits sworn by Professor Easton. Mr Salgo referred in particular to the views expressed by Professor Easton in his affidavit of 3 February 2015 and the Purported response to PP-9. Those views were based on: (1) Professor Easton's consideration of the implications of tests reported in Dr Cai's affidavit sworn 26 November 2014; (2) tests reported in Professor Easton's affidavit of 3 February 2015, using encapsulated hydrogen peroxide; and (3) the tests and reasoning set out in the Purported response to PP-9.

Revlon's evidence 10 In opposition to the application, Revlon read an affidavit of Katrina Rathie sworn on 22 February 2015. Revlon also relied on a bundle of documents that included an affidavit of Professor Perlmutter made on 22 February 2015. Attached to that affidavit is a document which appears to respond to the Purported response to PP-9 and which refers to two further experiments conducted by Professor Perlmutter. The bundle also contains an unsworn affidavit of Dr Cai which sets out evidence that Dr Cai would give in answer to the Purported response to PP-9. 11 Ms Rathie gave evidence that Revlon has conducted its case on the basis that Unilever accepted that hydrogen peroxide was present in the Mitchum Clinical products. Her evidence was that, until the service of the Purported response to PP-9, and Unilever's interlocutory application for leave to amend its particulars, Revlon took the view that it was not necessary to prove that Mitchum Clinical contained hydrogen peroxide because the issue between the parties was whether the amount admitted to be present was adequate. 12 Revlon identified the following matters as prejudice that it would suffer if the amendment was allowed: (1) Revlon will have had no opportunity to call evidence to prove the presence of hydrogen peroxide in Mitchum Clinical, such as commissioning its own equivalent of the Intertek test from an independent analytical laboratory (see paragraph 13 below); (2) Revlon has been denied the opportunity to test the evidence of Professor Thornthwaite, including questioning him on the reliability of the Intertek test results which are exhibited to Professor Thornthwaite's own affidavit. When Professor Thornthwaite came and went, Intertek's detection of hydrogen peroxide (though not the quantity) was common ground; and (3) Professor Perlmutter has not been given adequate time and opportunity to consider the new allegation that there is no hydrogen peroxide in Mitchum Clinical, in particular to deal with the Purported response to PP-9.

Background to application 13 Unilever commenced the proceeding on 23 May 2014. In support of its application for interlocutory relief, Unilever relied on a report by a testing laboratory Intertek Pharmaceutical Services ("Intertek report") which had tested samples of the Mitchum Clinical soft solid antiperspirant deodorant to assess the level of hydrogen peroxide by weight in the product. The report indicated the presence of hydrogen peroxide at a level of 0.006%. According to Mr Salgo's evidence, at the time of commencing the proceeding, Unilever considered that the result of the Intertek report was accurate. 14 In an affidavit dated 28 May 2014, Dr Michael Traudt, Director of Sensory & Clinical Testing Center, Revlon Consumer Products Corporation, said: The form of hydrogen peroxide used in Mitchum Clinical is stabilised until it is activated by application to the axilla by a consumer. 15 He also said: The methods used to ensure the stability of hydrogen peroxide in Mitchum Clinical are the subject of a confidential unpublished Patent Application…The unpublished Patent Application has not yet been published and is therefore confidential. I am aware from my extensive experience and knowledge in this field that the new Oxygen Odor Control Technology used in Mitchum Clinical is a "first" in the clinical anti-perspirant deodorant industry and a considerable revolutionary advance for clinical deodorants. 16 Professor Thornthwaite, Unilever's lead scientist at Unilever's Research and Development Port Sunlight Laboratory in the United Kingdom swore his first affidavit on 27 June 2014. Professor Thornthwaite is an industrial chemist. His evidence addressed the potential efficacy of the hydrogen peroxide in the Mitchum Clinical products for delivery of benefits in malodour control. In that affidavit, he identified, as instructions or assumptions, a list of ingredients contained in the products including hydrogen peroxide. He also noted the results of the Intertek report. Professor Thornthwaite concluded, at paragraph 71 of his first affidavit, that any reaction between malodorous thiols with hydrogen peroxide present in Mitchum Clinical at around 0.006% or some multiples higher will not have any detectable impact on underarm malodour. 17 Professor Thornthwaite's opinion (paragraph 72 of his affidavit) was that the only way in which a hypothesis that such levels of hydrogen peroxide in Mitchum Clinical would have a detectable efficacy by smell could be tested to a level of certainty would be to conduct a reliable clinical test of Mitchum Clinical against a control, being Mitchum Clinical without hydrogen peroxide. 18 At the end of his affidavit, Professor Thornthwaite qualified his opinion by reference to the facts that he had not been informed of the precise level of hydrogen peroxide in the relevant products, or of the process used for stabilisation of hydrogen peroxide in the products. 19 Professor Thornthwaite gave evidence in his first affidavit concerning the claimed "stabilisation" of the hydrogen peroxide which included his understanding of the encapsulation technique (subsequently confirmed by Revlon's counsel to be accurate) but noted that he was unaware of the precise technique and raised as a possible issue whether the encapsulation technique would release all available hydrogen peroxide from its capsule to react under the arm. 20 Contrary to Revlon's submission that Unilever's expert, Professor Thornthwaite, gave his evidence upon the basis that Mitchum Clinical in fact contains hydrogen peroxide at all relevant times, as I read his report, it is based upon an assumption as to the presence of hydrogen peroxide in the quantity detected by Intertek. 21 On 1 July 2014, Unilever provided Revlon with particulars of its claim in which it effectively conceded that the Mitchum Clinical products contain hydrogen peroxide. 22 On 11 July 2014, Professor Perlmutter affirmed his first affidavit. Under the heading "Instructions and Assumptions", Professor Perlmutter said: I was instructed by [Revlon's solicitor] that the ingredients of Mitchum Clinical include hydrogen peroxide, and that the hydrogen peroxide is added to the formulation in encapsulated form. I was informed that the encapsulated hydrogen peroxide is hydrophobic. I have not been informed of the method or means of encapsulation of hydrogen peroxide, nor have I been informed of the quantity of hydrogen peroxide that is present in Mitchum Clinical. I understand from Professor Thornthwaite's affidavit at paragraph 18 that the concentration of hydrogen peroxide in Mitchum Clinical was determined to be 0.006% by a commercial analytical group. 23 Professor Perlmutter disagreed with Professor Thornthwaite's opinion as to the appropriate way to test the efficacy of the inclusion of hydrogen peroxide in the Mitchum Clinical products, saying: I do not consider that the experiment proposed by Professor Thornthwaite in para 72 of his affidavit is required. The Intertek assay of the Mitchum Clinical…found that the product contains hydrogen peroxide. I am also instructed to assume that Revlon has demonstrated that when the Mitchum Clinical product is mixed with artificial sweat and agitated, oxygen gas is evolved over time. I consider that those two facts establish that Mitchum contains hydrogen peroxide which is stable on the shelf and that Mitchum will release that hydrogen peroxide in the presence of sweat. I consider that it demonstrates that Mitchum, applied to an underarm and exposed to sweat, will release hydrogen peroxide. 24 On 14 July 2014, Dr Heng (Harry) Cai swore an affidavit. Dr Cai is the Vice President of Research and Development at Revlon Consumer Products Corporation and a co-author of the patent application. In his 14 July 2014 affidavit, Dr Cai questioned the reliability of the Intertek analysis, particularly for the purpose of determining the presence of encapsulated hydrogen peroxide. However, he also expresses the following opinion: The result of the Intertek Analysis also indicates to me that it is unarguable that the encapsulation process works and that a product made in the United States, shipped to Australia, then shipped to England and tested four months later (by a person who does not know how the encapsulation process works and may not even be aware that it is encapsulated at all) contains active hydrogen peroxide. 25 Dr Cai's 14 July 2014 affidavit has an exhibit, "HC-2", which contains some information about tests Dr Cai described as comments concerning the development of encapsulated hydrogen peroxide and a series of experiments related to the "stabilized form of hydrogen peroxide" (at paragraph 33). In particular, Dr Cai said: I tested the encapsulated product and found that it was stable when heated to 45˚C for a period of 12 weeks, by which I mean that it did not suffer any significant decomposition or degradation. I have also tested the final formulation of Mitchum Clinical, which is also stable in those conditions. 26 By affidavit sworn 26 November 2014, Dr Cai corrected this evidence, saying that the product was heated for eight, and not 12, weeks. 27 By letter dated 25 July 2014, Professor Christopher Easton was instructed, as an independent expert, to provide a report in these proceedings. The letter sought Professor Easton's responses to various propositions advanced by scientists who had given evidence for Revlon. In the letter, Professor Easton was asked to make the following assumption: The quantity of hydrogen peroxide in Mitchum Clinical is at least 0.006% and may be at that level or an amount several times higher, say up to 0.025%. Revlon maintains that the precise quantity is confidential. 28 Professor Easton's first affidavit is dated 28 August 2014. Attached to that affidavit is a report in which, among other things, Professor Easton expressed opinions about Revlon's experimental proof which is said to support the claim that hydrogen peroxide will react with odour causing thiols in the underarm. As appears from paragraph 22 above, the existence of this proof is one of the two matters relied upon by Professor Perlmutter to reach the view that the Mitchum Clinical products contain hydrogen peroxide which is stable on the shelf and that the products will release the hydrogen peroxide in the presence of sweat. 29 By affidavit sworn 8 September 2014 Dr Cai then presented videos (exhibits "HC-7" and "HC-8") and provided commentary in relation to those videos (exhibit "HC-9") concerning some of the tests described in exhibit "HC-2". 30 Professor Easton addressed Dr Cai's 8 September 2014 affidavit in an affidavit sworn on 22 September 2014. In the report exhibited to his affidavit, Professor Easton essentially rejected Dr Cai's experimental work as persuasive. In particular, Professor Easton expressed his opinion that it was: …not possible that hydrogen peroxide in the quantity stated to be present in Mitchum Clinical soft solid formulation of Mitchum stick formulation would produce the quantity of oxygen shown in the balloon tests seen in exhibits "HC-7" and "HC-8" (Exhibit CJE9, paragraph 2). 31 In his opening, senior counsel for Unilever, Mr Cobden SC accepted the presence of hydrogen peroxide in the Mitchum Clinical products, while disputing the efficacy of the assumed amount. He said, relevantly: … we accept our tests show that there's hydrogen peroxide in it. We accept, because it must be so, that it's encapsulated. If it weren't encapsulated, it would be reacting all over the place with all sorts of things. But the act of putting it on and rubbing it, there's moisture, there s (sic) heat and there's friction. Certainly, we accept, releases the encapsulated hydrogen peroxide…. 32 At some point, steps were taken by Unilever's lawyers to prepare a protocol by which Professor Easton could attempt to replicate Dr Cai's experiments. Professor Easton caused that exercise to be undertaken by a research officer, Dr Onagi, under Professor Easton's supervision and was unable to replicate Dr Cai's results. Tests described as the "New Tests" by Professor Easton in his affidavit of 12 November 2014 confirmed the view previously expressed by Professor Easton and set out at paragraph 30 above. 33 Dr Cai then conducted a number of further laboratory tests. These are described in his affidavit sworn 26 November 2014, and in particular exhibit "HC-13". In exhibit "HC-13" Professor Cai comments on the reasons for difference between the experiments described in exhibits "HC-2", "HC-7" and "HC-9" and the experiments described in Professor Easton's 12 November 2014 affidavit. 34 One of Dr Cai's tests referred to in exhibit "HC-13" was to combine 25 grams of Mitchum Clinical soft solid and an AZT gly solution and artificial sweat; and another was to combine 25 grams of Mitchum Clinical soft solid with artificial sweat; and another was to combine 25 grams of Mitchum Clinical soft solid with artificial sweat and bovine catalase in circumstances described in paragraphs 21-23 of exhibit "HC-13". Mr Salgo's evidence, which was not disputed, was that there is disagreement between Dr Cai and Professor Easton as to whether the tests recorded at paragraphs 21 to 45 of exhibit "HC-13" evidenced the presence or absence of hydrogen peroxide in Mitchum Clinical. 35 On 9 December 2014 (day six of the trial), I ruled that evidence given or proposed to be given by Dr Cai to the effect that hydrogen peroxide included in Revlon's Mitchum Clinical products is encapsulated and in a stabilised form not be admitted into evidence: Unilever v Revlon (No 6) [2014] FCA 1409. In that judgment, I recorded my view that the method by which the hydrogen peroxide was encapsulated was "fundamental to Revlon's claims that are in issue in these proceedings" (at paragraph 10) and that the claims of encapsulation and stability of the hydrogen peroxide were matters in issue (at paragraph 3). As I understand it, the fact of encapsulation (and stabilisation) provides the basis for the claim that hydrogen peroxide is present in Mitchum Clinical at the time of delivery to the armpit. By this stage of the proceeding, Revlon had served evidence of experimental proofs designed to permit the conclusion that the Mitchum clinical products contained hydrogen peroxide which was "stable on the shelf". Some of those proofs were challenged by Professor Easton and some of them were yet to be addressed by Professor Easton in evidence. 36 Also on 9 December 2014, Revlon's solicitors provided Unilever's solicitors with a copy of the patent application. 37 By affidavit sworn 3 February 2015, Professor Easton recorded his consideration of the experiments referred to in Dr Cai's 26 November 2014 affidavit and concluded: In summary, none of the experiments outlined in Dr Cai's November affidavit, provides any evidence that hydrogen peroxide is either encapsulated, stabilised through encapsulation, remains in antiperspirant formulations when they are either manufactured or stored, released from antiperspirant formulations, or after release is converted to oxygen. When preparing my first affidavit, at paragraphs 82-93 of exhibit CJE-2 I allowed for the possibility that all the hydrogen peroxide in the Revlon products was released and converted to oxygen, but the evidence that there is no hydrogen peroxide released and converted to oxygen, suggests that there is no possibility of any effect of released oxygen on either odour producing bacteria…, thiols through autoxidation…, or metabolism of potentially odorous compounds. 38 Putting aside the Intertek report, it was predictable that, if Dr Cai's 26 November 2014 experiments were not accepted by Professor Easton, Professor Easton might reach this conclusion because whether the encapsulation process works is critical to whether the product is able to deliver hydrogen peroxide to the armpit on application. 39 In other words, if Dr Cai's experiments do not demonstrate the claimed evolution of oxygen gas over time, then there is necessarily a significant doubt over whether the hydrogen peroxide in the products will be able to be released in the presence of sweat. 40 Professor Perlmutter's 6 February 2015 affidavit recognises the importance in the proceeding of whether the hydrogen peroxide in the Mitchum products is contained in a stable form. In that affidavit he stated that: It occurred to me that an important issue in this case appears to be the presence of hydrogen peroxide in the "encapsulated form" as well as the ability of the encapsulated form to release the hydrogen peroxide. As requested by [Revlon's solicitor] I prepared some of the encapsulated material and conducted such experiments as I thought necessary and appropriate to give my opinion about the resolution of those questions. 41 One test reported on by Professor Perlmutter was to prepare the putative encapsulated material (in a manner described by Professor Perlmutter) and observe its behaviour in various respects which then caused Professor Perlmutter to reach the conclusion that "[t]he method of encapsulation described in the patent is effective and has stabilised the hydrogen peroxide". 42 In the Purported Response to "PP-9", at paragraph 6, Professor Easton sets out three further tests performed by him. The tests led Professor Easton to conclude that: (1) the hydrogen peroxide in the material tested by him is not encapsulated or stabilised but is instead freely available to undergo reactions; and (2) it is likely that hydrogen peroxide would be released during the manufacture of the Mitchum Clinical products, because of the mechanical force that would be required for that process.

Relevant principles 43 By rule 16.53 of the Federal Court Rules 2011 (Cth), unless rule 16.51 applies, a party must apply for the leave of the Court to amend a pleading. The power to amend pleadings includes the power to amend particulars. 44 The powers of the Court to grant leave to amend are broad with the aim of ensuring that the real questions in the proceedings are properly agitated to avoid a multiplicity of proceedings: AON Risk Services Australia Limited v Australian National University [2009] HCA 27; 239 CLR 175 at [13] and [71]-[72]. 45 In Thomson v STX Pan Ocean Co Ltd [2012] FCAFC 15 a Full Court of this Court said: It is well-established that the main purposes of pleadings are to give notice to the other party of the case it has to meet, to avoid surprise to that party, to define the issues at trial, to thereby allow only relevant evidence to be admitted at trial and for the trial to be conducted efficiently within permissible bounds: see, eg Dare v Pulham [1982] HCA 70; (1982) 148 CLR 658 (at 664-665). However, it is also well-established that pleadings are not an end in themselves, instead they are a means to the ultimate attainment of justice between the parties to litigation: see Banque Commerciale S.A. (in liq) v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279 (at 293) per Dawson J who cites Isaacs and Rich JJ in Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (in liq) [1916] HCA 81; (1916) 22 CLR 490 (at 517). For these reasons, the courts do not, at least in the current era, take an unduly technical or restrictive approach to pleadings such that, among other things, a party is strictly bound to the literal meaning of the case it has pleaded. The introduction of case management has, in part, been responsible for this change in approach: see the observations of Martin CJ in Barclay Mowlem Construction Limited v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82 (at [4]-[8]). Even before the widespread use of case management, the High Court reflected this approach in decisions such as Leotta v Public Transport Commission (NSW) (1976) 50 ALJR 666 (at 668-669) per Stephen, Mason and Jacobs JJ and Water Board v Maustakas [1988] HCA 12; (1988) 180 CLR 491 (at 497) per Mason CJ and Wilson, Brennan and Dawson JJ. 46 In exercising its discretion, the Court should take into account the nature of the proposed amendment, whether it is proposed in good faith, the stage of the proceedings at which leave is sought, the nature of the prejudice that may be caused and the means by which such prejudice might be redressed. 47 The question of delay is a relevant factor to be taken into account: Caason Investments Pty Ltd v Cao [2014] FCA 1410 at [33]; Franklin v GHF Pty Ltd [2014] FCA 1414 at [21].

Consideration 48 The application was made at a late stage in the trial. Ten days of hearing had already been completed and the independent experts (Professor Perlmutter and Professor Easton) were expected to commence their concurrent evidence on the morning of Unilever's application for leave to amend its particulars. One of the agreed issues for concurrent evidence was what is revealed by Dr Cai's various experiments. 49 In my view, the following matters warranted the grant of leave: (1) The composition of the Mitchum Clinical products and the presence or otherwise of the hydrogen peroxide at the time of application to the armpit is a matter that is, or should be, within the knowledge of Revlon; (2) Revlon should not be taken by surprise by the introduction of the proposed amended particulars because it has served evidence of several experiments intended to demonstrate the presence of hydrogen peroxide in the Mitchum Clinical products over time. Putting aside the Intertek analysis, it is obvious that if those experiments are contested (as they are) and do not demonstrate the presence of hydrogen peroxide in the products over time, there is an issue as to whether any hydrogen peroxide will be present in the products at all when it is applied to the armpit; (3) There is no suggestion of any lack of good faith on the part of Unilever in seeking to amend at this stage; (4) I accept Mr Salgo's evidence recorded in paragraph 9 above and therefore am satisfied that there has been no material delay on the part of Unilever in seeking to amend. In particular, I do not accept that Professor Easton ought to have formed the opinion that he has now reached in September 2014: it was not unreasonable for him to have formed the more cautious conclusion that is set out in paragraph 28 above, in the absence of a consideration of Dr Cai's further experimental evidence served in November 2014 and the patent application received in December 2014. It follows that I also do not accept the contention that Professor Easton was armed from July 2014 with all the information he needed to reach the conclusions he has arrived at in February 2015; (5) There is no currently no evidence that the Intertek analysis is conclusive as to the presence of hydrogen peroxide in the products. To the contrary, Dr Cai's evidence raises a question about the reliability of the analysis (although he seems to suggest that it is reliable as to presence but not quantity); (6) Although the application is made late in the proceedings, in my view, the attainment of justice would not be served by refusing the application. If the amendment were refused, then the Court would determine the question whether Revlon has engaged in misleading conduct, or conduct likely to mislead, in its advertising to consumers on the basis of what would appear to be incomplete evidence about a matter that is, or should be, within Revlon's knowledge; (7) The issue has been raised as the result of efforts by an independent expert to test the experiments performed by both Dr Cai and Professor Perlmutter (each without inviting Professor Easton to attend) to test the stability of the hydrogen peroxide included in the Mitchum products. In my view, the attainment of justice would not be served by declining to hear from Professor Easton as to matters that he has identified as of importance for the purpose of giving independent expert evidence. That view is fortified by the fact that his evidence is given in response to experiments put forward by Revlon which go to establishing that Mitchum will release hydrogen peroxide in the presence of sweat. (8) In my view, the prejudice identified on behalf of Revlon, arising from the proposed amendments, can be sufficiently prevented or ameliorated by permitting Revlon a reasonable time to adduce further evidence of the presence of hydrogen peroxide in the Mitchum Clinical products at the time of application to the underarm. That permission addresses the first item of prejudice identified by Ms Rathie. As to the second item, I am not satisfied that it is important for Professor Thornthwaite to be questioned on the reliability of the Intertek results. There is no evidence that he participated in or observed the Intertek analysis. As to the third item, before the application was argued I said that I would require evidence from Professor Perlmutter himself about what extra time, if any, he needed to address the Purported response to PP-9. No such evidence was tendered and, in fact, I received evidence that appears to address the Purported response to PP-9 and which does not identify any further work that he wishes to do to address the Purported response. 50 Revlon contended that the disclosure of the patent application "does not go to the question of whether hydrogen peroxide is present in Mitchum Clinical; it goes only to the method of manufacture of that hydrogen peroxide". Revlon also contended that "the information contained in [the] patent application does not go to the very different question of whether hydrogen peroxide is in Mitchum Clinical at all". I do not accept that distinction because the importance of the method of manufacture is precisely that it is said to enable the delivery of hydrogen peroxide to the armpit. This is an issue that may be further ventilated during the expert evidence of Professor Perlmutter and Professor Easton, but my provisional view is that Revlon's decision not to disclose the patent application until December 2014 was a matter which delayed investigations relevant to the likely efficacy of including hydrogen peroxide in the Mitchum Clinical products because the information previously available to Unilever about the method of encapsulation of hydrogen peroxide did not permit it to understand the method, sufficiently to enable Professor Easton to do the experiments he has done since he received the patent application. (I do not address here whether the information in the patent application was sufficient for that purpose.) 51 I do not accept that the amendment requires a further adjournment of the hearing (a submission that was put in written but not oral submissions). Indeed, on the basis of Mr Hall SC's submissions, it seemed very likely that the reliability of the various experiments to test whether Mitchum Clinical contains hydrogen peroxide at the time of application could be agreed between the experts.

Costs 52 Senior counsel for Unilever, Mr Cobden SC accepted that Unilever should pay the costs thrown away by reason of the amendment. However, he argued that Revlon should pay the costs of the hearing of the application. I accept that submission. Revlon has failed in its opposition to the application and costs should follow the event. I certify that the preceding fifty-two numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson.