Servier Laboratories (Aust.) Pty Ltd v Commonwealth of Australia [2009] FCA 31 (28 January 2009)

Last Updated: 28 January 2009

FEDERAL COURT OF AUSTRALIA

Servier Laboratories (Aust.) Pty Ltd v Commonwealth of Australia

[2009] FCA 31

Constitution, s 51(xxxi)
Acts Interpretation Act 1901 (Cth), s 8
Administrative Decisions (Judicial Review) Act 1977 (Cth)
Health Legislation Amendment Act 2007 (Cth), s 2(1), Sch 2
Judiciary Act 1903 (Cth), s 39B
National Health Act 1953 (Cth), ss 84(1), 84AB, 85, 85(1), 85(2), 85(3), 85(5), 85(6), 103, 103(2), 103(2)(a), 103(2A), 103(2A)(b), 103(2A)(c), Pt VII
National Health Amendment (Pharmaceutical Benefits Scheme) Act 2007 (Cth)

Health Legislation Amendment Bill 2007 (Cth), Explanatory Memorandum

SERVIER LABORATORIES (AUST.) PTY LTD (ACN 004 838 500) v THE COMMONWEALTH OF AUSTRALIA and THE MINISTER FOR HEALTH AND AGEING
VID 696 of 2007

GRAY J
28 JANUARY 2009
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 696 of 2007

BETWEEN:

SERVIER LABORATORIES (AUST.) PTY LTD (ACN 004 838 500) Applicant

AND:	THE COMMONWEALTH OF AUSTRALIA First Respondent THE MINISTER FOR HEALTH AND AGEING Second Respondent

JUDGE:	GRAY J
DATE OF ORDER:	28 JANUARY 2009
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. The amended application be dismissed.
2. The applicant pay the respondents’ costs of the proceeding incurred after 29 April 2008.
3. Otherwise, there be no order as to costs.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 696 of 2007

BETWEEN:

SERVIER LABORATORIES (AUST.) PTY LTD (ACN 004 838 500) Applicant

AND:	THE COMMONWEALTH OF AUSTRALIA First Respondent THE MINISTER FOR HEALTH AND AGEING Second Respondent

JUDGE:	GRAY J
DATE:	28 JANUARY 2009
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

The nature and history of the proceeding

1. When this proceeding was commenced on 16 August 2007, it was relatively simple. The applicant, a manufacturer of pharmaceutical drugs, sought judicial review of two decisions or two episodes of conduct, pursuant to the Administrative Decisions (Judicial Review) Act 1977 (Cth) (“the ADJR Act”) and s 39B of the Judiciary Act 1903 (Cth). The decisions were said to have been made or the conduct to have occurred within the Department of Health and Ageing (“the Department”). The Department issued a schedule of pharmaceutical benefits, operating from 1 August 2007, in which it was stated that two drugs manufactured by the applicant had equivalents for the purposes of s 103(2A) of the National Health Act 1953 (Cth) (“the NH Act”). The applicant’s drugs are perindopril arginine and perindopril arginine with indapamide hemihydrate. The stated equivalents are perindopril erbumine and perindopril erbumine with indapamide hemihydrate respectively. The effect of these decisions or this conduct, if valid, was to permit pharmacists who would otherwise have been required to dispense one of the applicant’s drugs in accordance with a prescription to dispense the equivalent instead. The applicant contended that each decision or episode of conduct exceeded the power given by s 103(2A) of the NH Act and was invalid. That contention involved a question as to the meaning of “pharmaceutical item”, a term used in s 103(2A) of the NH Act and defined in ss 84 and 84AB.
2. Two subsequent events made the proceeding much more complex. The first was that, on 19 September 2007, the applicant also filed in this Court an application that became proceeding no. VID 859 of 2007. In that proceeding, the applicant sought against the Commonwealth of Australia and the Secretary to the Department damages for negligence and injurious falsehood, arising out of the same two decisions or episodes of conduct, and injunctive relief in relation to those decisions or episodes of conduct.
3. The second event was the passage through Parliament of the Health Legislation Amendment Act 2007 (Cth) (“the HLA Act”). The HLA Act contained provisions amending s 103(2A) of the NH Act. The HLA Act received the assent of the Governor-General on 28 September 2007, but the provision amending s 103(2A) of the NH Act was expressed to come into operation retrospectively, on 1 August 2007.
4. The applicant then wished to argue that the amending provisions were invalid, because they exceeded the legislative power of the Commonwealth Parliament. It wished to contend that the retrospective operation of the amending provisions amounted to an acquisition of property of the applicant (the choses in action on which its two proceedings were founded) other than by affording just terms, as required by s 51(xxxi) of the Constitution. On 9 October 2007, pursuant to leave granted by North J on 8 October 2007, the applicant filed in this proceeding an amended application, raising this ground. The particulars of the choses in action relied on included both the cause of action in this proceeding and the causes of action in proceeding no. VID 859 of 2007.
5. Both proceedings were then transferred into my docket. This proceeding came on for hearing on 4 December 2007. In the course of that hearing, I revoked the leave given by North J on 8 October 2007 to the extent that it permitted the applicant to include in its amended application the paragraph of the particulars raising the issue of the alleged acquisition of the choses in action involved in proceeding no. VID 859 of 2007. Counsel for the applicant then sought to adjourn the further hearing of the proceeding. I granted that adjournment. The two proceedings were listed for directions on 18 December 2007. On that date, I ordered that the two proceedings be heard together and referred both of them to mediation.
6. As a consequence of the mediation, proceeding no. VID 859 of 2007 was settled. The terms of settlement are confidential, save as to the terms of orders that were made by consent to dispose of the proceeding. This proceeding was not settled, and was the subject of further directions as to the filing of written submissions.
7. On 1 August 2008, the hearing of this proceeding resumed. Counsel for the applicant informed the Court that the applicant no longer wished to pursue the proposition that the HLA Act effected an acquisition of property in terms of the chose in action the subject of this proceeding. He conceded that it followed that the retrospective operation of the amending provisions made it impossible for orders to be made setting aside the decisions, or for a declaration to be made that s 103(2A) of the NH Act prohibits a pharmacist from substituting the supposed equivalents for the applicant’s drugs. Counsel for the applicant also informed the Court that the applicant did not press for the injunctive relief sought in the amended application, and could not maintain its case for a declaration that the amending provisions of the HLA Act were invalid. This left the applicant in the position of seeking no relief in this proceeding. Counsel for the applicant conceded that the proceeding must be dismissed. The only request the applicant made was that I should give reasons for judgment, including reasons for the order made on 4 December 2007, revoking in part the leave to amend the application, previously granted by North J. With the exception of an argument about issues of costs of the proceeding, the proceeding was effectively at an end.

The legislation

8. Section 103 is found in Pt VII of the NH Act, which establishes a scheme under which the Commonwealth Government subsidises the provision of pharmaceutical drugs to the public. Immediately before 1 August 2007, s 103(2) provided:

Except as prescribed, a pharmacist to whom a prescription is presented shall not:

(a) supply, in purported pursuance of this Part, anything other than the
pharmaceutical benefit as specified in the prescription; or

(b) in exchange for the prescription make a payment in money or give any
other consideration to the person presenting the prescription.

Penalty: $2,000 or imprisonment for 12 months, or both.

9. At that time, s 103(2A) provided:

Paragraph (2)(a) does not prohibit a pharmacist from supplying, in lieu of the pharmaceutical benefit specified in a prescription (the specified benefit), another pharmaceutical benefit (the substitute benefit) that is marketed under a different brand from the specified benefit if:

(a) the person who prescribed the specified benefit did not indicate on the prescription that only that benefit was to be supplied; and

(b) the Schedule of Pharmaceutical Benefits issued by the Department states that the specified benefit and the substitute benefit are equivalent; and

(c) a determination is in force under subsection 85(6) in respect of the brand of the substitute benefit; and

(d) the supply of the substitute benefit under that brand is not prohibited by a law of the State or Territory in which the substitute benefit is supplied.

10. The term “pharmaceutical benefit” was defined in s 84(1) as meaning “a drug or medicinal preparation in relation to which, by virtue of section 85, this Part applies.” By s 85(1), benefits were to be provided by the Commonwealth in accordance with Pt VII, in respect of the drugs and medicinal preparations in relation to which Pt VII applied. By s 85(2), those drugs and medicinal preparations were those declared by the Minister in writing, or those in a class declared by the Minister in writing, to be drugs and medicinal preparations, or a class of drugs and medicinal preparations, as to which s 85 then empowered the Minister to make various forms of determinations or declarations. The forms of determinations or declarations included the following:

(3) The Minister may determine, by reference to strength, type of unit, size of
unit or otherwise, the form or forms of a drug or medicinal preparation
referred to in subsection (2) that is or are allowable for the purposes of
this Part and, where such a determination is in force in relation to a drug
or medicinal preparation:

(a) the drug or medicinal preparation in the form, or in each of the
forms, so determined is a drug or medicinal preparation in relation
to which this Part applies; and

(b) this Part does not apply in relation to the drug or medicinal
preparation in any other form.

...

(6) The Minister may determine, in respect of a drug or medicinal preparation
in relation to which this Part applies, a brand or brands under which the
drug or medicinal preparation may be supplied under this Part, and where
such a determination is in force in relation to a drug or medicinal
preparation, this Part does not apply in relation to the drug or medicinal
preparation as marketed under any other brand.

11. The National Health Amendment (Pharmaceutical Benefits Scheme) Act 2007 (Cth) introduced a number of amendments to Pt VII of the NH Act. This Act did not amend s 103(2) of the NH Act, but did amend s 103(2A) in significant ways. The amendments came into operation on 1 August 2007. Immediately after that date, s 103(2A) was in the following form:

Paragraph (2)(a) does not prohibit a pharmacist from supplying, in lieu of a listed brand of a pharmaceutical item specified in a prescription (the specified benefit), another listed brand of the pharmaceutical item (the substitute benefit) if:

(a) the person who prescribed the specified benefit did not indicate on the
prescription that only that benefit was to be supplied; and

(b) the Schedule of Pharmaceutical Benefits issued by the Department states
that the specified benefit and the substitute benefit are equivalent; and

(d) the supply of the substitute benefit is not prohibited by a law of the State
or Territory in which the substitute benefit is supplied.

12. At the same time, the definition of “pharmaceutical benefit” in s 84(1) was amended to read:

pharmaceutical benefit means the following:

(a) if a declaration under subsection 85(2) is in force in relation to a drug or
medicinal preparation (the drug) and paragraph (b), (c) and (d) do not
apply—the drug;

(b) if a determination under subsection 85(3) is in force in relation to a form of
the drug and paragraph (c) and (d) do not apply—the drug in that form;

(c) if a determination under subsection 85(5) is in force in relation to a manner
of administration of that form of the drug and paragraph (d) does not
apply—the drug in that form with that manner of administration;

(d) if a determination under subsection 85(6) is in force in relation to a brand
of a pharmaceutical item that is the drug in that form with that manner of
administration—that brand of the drug in that form with that manner of
administration.

13. A new definition of “pharmaceutical item” was also introduced. That term was assigned the meaning given by s 84AB. The new s 84AB provided as follows:

If:

(a) a declaration under subsection 85(2) is in force in relation to a drug or
medicinal preparation (the drug); and

(b) a determination under subsection 85(3) is in force in relation to a form of
the drug; and

(c) a determination under subsection 85(5) is in force in relation to a manner
of administration of that form of the drug;

then the drug in that form with that manner of administration is a pharmaceutical item.

14. Also inserted into s 84(1) were the following definitions of the terms “listed brand” and “listed drug”:

listed brand of a pharmaceutical item means a brand of the pharmaceutical item in relation to which a determination under subsection 85(6) is in force.

listed drug means a drug or medicinal preparation in relation to which a declaration under subsection 85(2) is in force.

15. At the same time, s 85 of the NH Act was amended. As from 1 August 2007, that section empowered the Minister to determine the form or forms of a listed drug (subs (3)), the manner of administration of a form of a listed drug (subs (5)) and a brand of a pharmaceutical item (subs (6)).
16. As a result of the HLA Act, a minor amendment was made to s 103(2)(a) of the NH Act, the effect of which was to delete the words “as specified”, following the phrase “pharmaceutical benefit”, and to substitute for the deleted words the words “that is directed to be supplied”. That amendment was effected by item 9 in Sch 2 to the HLA Act. Items 10 and 11 in the same schedule amended s 103(2A). The effect of item 10 was to delete the words “in lieu of a listed brand of a pharmaceutical item specified in a prescription (the specified benefit), another listed brand of the pharmaceutical item” and to substitute for them the words “instead of the pharmaceutical benefit that is directed to be supplied in a prescription (the specified benefit), another pharmaceutical benefit”. Item 11 inserted after s 103(2A)(b) a new paragraph (c), consisting of the words “the substitute benefit is a listed brand of a pharmaceutical item”.
17. By virtue of s 2(1) of the HLA Act, items 8 to 11 of Sch 2 commenced on 1 August 2007. Thus, by retrospective amendment, from 1 August 2007, s 103(2A) of the NH Act provided:

Paragraph (2)(a) does not prohibit a pharmacist from supplying, instead of the pharmaceutical benefit that is directed to be supplied in a prescription (the specified benefit), another pharmaceutical benefit (the substitute benefit) if:

(a) the person who prescribed the specified benefit did not indicate on the
prescription that only that benefit was to be supplied; and

(b) the Schedule of Pharmaceutical Benefits issued by the Department states
that the specified benefit and the substitute benefit are equivalent; and

(c) the substitute benefit is a listed brand of a pharmaceutical item; and

(d) the supply of the substitute benefit is not prohibited by a law of the State
or Territory in which the substitute benefit is supplied.

18. The effect of these successive amendments may be summarised for present purposes as follows. Prior to 1 August 2007, substitution of an equivalent was permitted if the equivalent was another pharmaceutical benefit, as defined. Immediately after 1 August 2007, the only substitution permitted was of one listed brand of a pharmaceutical item for another listed brand of the pharmaceutical item. Following the passage of the HLA Act, a pharmacist was again permitted to substitute for one pharmaceutical benefit another pharmaceutical benefit.

The facts

19. On 24 July 2007, the then Minister for Health and Ageing made two instruments, designated as No. PB48 of 2007 and No. PB49 of 2007 respectively. Each provided that it was to commence on 1 August 2007. Instrument No. PB48 of 2007 included a declaration, pursuant to s 85(2) of the NH Act, that various drugs and medicinal preparations were drugs and medicinal preparations to which Pt VII of the NH Act applied. Among those drugs and medicinal preparations were perindopril and perindopril with indapamide. Instrument No. PB49 of 2007 included determinations pursuant to the powers conferred by s 85(3), (5) and (6) of the NH Act, once those powers came into effect on 1 August 2007. The determinations were expressed in columns in schedules to Instrument No. PB49 of 2007. Relevantly, they were as follows:

Listed Drug	Form (strength, type, size, etc.)	Manner of administration	Maximum quantity	Maximum number of repeats	Brand
Perindopril	Tablet containing perindopril erbumine 2 mg	Oral	30	5	Chem mart Perindopril
					GenRx Perindopril
					Perindo
					Perindopril 2
					Perindopril-DP
					Terry White Chemists Perindopril
	Tablet containing perindopril arginine 2.5 mg	Oral	30	5	Coversyl 2.5mg
	Tablet containing perindopril erbumine 4 mg	Oral	30	5	Chem mart Perindopril
					GenRx Perindopril
					Perindo
					Perindopril 4
					Perindopril-DP
					Terry White Chemists Perindopril
	Tablet containing perindopril arginine 5 mg	Oral	30	5	Coversyl 5mg
	Tablet containing perindopril erbumine 8 mg	Oral	30	5	Chem mart Perindopril
					GenRx Perindopril
					Perindo
					Perindopril 8
					Perindopril-DP
					Terry White Chemists Perindopril
	Tablet containing perindopril arginine 10 mg	Oral	30	5	Coversyl 10mg

Perindopril with Indapamide	Tablet containing perindopril arginine 2.5 mg with indapamide hemihydrate 0.625 mg	Oral	30	5	Coversyl Plus LD 2.5mg/0.625mg
Listed Drug	Form (strength, type, size, etc.)	Manner of administration	Maximum quantity	Maximum number of repeats	Brand
	Tablet containing perindopril erbumine 4 mg with indapamide hemihydrate 1.25 mg	Oral	30	5	Chem mart Perindopril/ Indapamide 4/1.25 GenRx Perindopril/ Indapamide 4/1.25 Terry White Chemists Perindopril/ Indapamide 4/1.25
	Tablet containing Perindopril arginine 5 mg with indapamide hemihydrate 1.25 mg	Oral	30	5	Coversyl Plus 5mg/1.25mg

Coversyl was the brand name by which the applicant sold its perindopril and Coversyl Plus was the brand name by which the applicant sold its perindopril with indapamide.

20. Each month, the Department publishes a book entitled Schedule of Pharmaceutical Benefits for Approved Pharmacists and Medical Practitioners. It duly published such a schedule, described as “effective 1 August 2007 - 31 August 2007”. On the page following its title page, this schedule bears the following words in a printed rectangle:

This Schedule provides information on the arrangements for the prescribing of pharmaceutical benefits by medical practitioners and participating dental practitioners, and the supply of pharmaceutical benefits by approved pharmacists, approved medical practitioners and approved hospital authorities. These arrangements operate under the National Health Act 1953. However, at the time of printing, the relevant legislation giving authority for the changes included in this issue of the Schedule may still be subject to the usual Parliamentary scrutiny. This book is not a legal document, and, in cases of discrepancy, the legislation will be the source document for payment for the supply of pharmaceutical benefits. The legislation is available from the Federal Register of Legislative Instruments website at http://www.frli.gov.au.

21. At p 66 of the schedule appears the following:

BRAND EQUIVALENCE
‘a’ located immediately before brand names of a particular strength of an item indicates that the sponsors of these brands have submitted evidence that they have been demonstrated to be bioequivalent or therapeutically equivalent, or that justification for not needing bioequivalence or therapeutic equivalence data has been provided to and accepted by the Therapeutic Goods Administration. It would thus be expected that these brands may be interchanged without differences in clinical effect.

22. The schedule contained the following relevant entries:

23. The Department issued another monthly schedule effective from 1 September to 30 September 2007. In all relevant respects, this schedule was in the same terms as the schedule for the month of August. The two schedules containing the entries relating to the bioequivalence of the applicant’s products and other products constitute the two decisions, or episodes of conduct, the subject of challenge in this proceeding.

The applicant’s case on invalidity of the decisions

24. The applicant contended that the Department had exceeded its powers under s 103(2A) of the NH Act in the August 2007 schedule (and, necessarily, in the September 2007 schedule), when it represented that the applicant’s products and the products of other manufacturers or suppliers were equivalent. The underlying proposition was that, as s 103(2A) stood after the coming into operation of the amendments that first took effect on 1 August 2007, such a representation could only be made with respect to a listed brand of one pharmaceutical item, specified in a prescription, and another listed brand of the same pharmaceutical item.
25. On the face of it, the definition of “pharmaceutical item” in s 84AB of the NH Act appears to dictate the conclusion that s 103(2A) as it stood at 1 August 2007 and 1 September 2007 only permitted substitution of a drug with respect to which there was in force a declaration that it was a listed drug, and a determination in relation to the form of the drug, and a determination in relation to the manner of administration of that form of the drug. Having regard to the forms of the determinations made in Instrument No. PB49 of 2007, particularly the descriptions listed in the column headed “Form”, it would seem that each determined dosage of perindopril was to be regarded as a separate pharmaceutical item, and that perindopril erbumine was a different pharmaceutical item from perindopril arginine. The argument derives support from the amendments effected by the HLA Act, which reinstated the term “pharmaceutical benefit” in s 103(2A), so that different pharmaceutical benefits could be regarded as equivalents. The argument is also supported by the Explanatory Memorandum to the Bill that became the HLA Act, which explained the purpose of Item 10 in Sch 2 in the following terms:

This item, together with item 11, amends subsection 103(2A), which was unintentionally narrowed in meaning by amendments to the NH Act which commenced on 1 August 2007. The current provision enables the substitution of other listed brands of the same pharmaceutical item. The amendment proposed by this item will enable the substitution of different pharmaceutical benefits, as was the case prior to the 1 August 2007 amendments. In each case substitution is only permitted if each of the other requirements of subsection 103(2A) are satisfied, including that the Schedule of Pharmaceutical Benefits states that the two benefits are equivalent.

26. It is unnecessary to determine whether the applicant would have succeeded in relation to this argument. Counsel for the applicant were not able to point to any statutory authority for the production of the monthly schedules, other than the reference to “Schedule of Pharmaceutical Benefits issued by the Department” appearing in para (b) of each of the successive forms of s 103(2A) of the NH Act. In other words, there is some difficulty determining exactly what power the Department was exercising when making the representations about equivalence, and consequent difficulty about determining whether it exceeded that power in doing so. The applicant has abandoned its claims for any of the relief that might have flowed from its success in establishing invalidity of the decisions. There is therefore no longer any controversy between the parties capable of judicial determination. It is enough to say, for the purposes of these reasons for judgment, that I assume that the applicant would have been entitled to succeed in establishing that the representations as to equivalence of its products and the products of other manufacturers or suppliers were invalid. In addition, as appears below, the respondents appear to have taken substantially the same position as the applicant about the application of s 8 of the Acts Interpretation Act 1901 (Cth) (“the Acts Interpretation Act”). In the absence of a contradictor on that point, it is undesirable that I should attempt a final determination of the point.

The effect of the retrospective amendment

27. When the hearing of this proceeding began, the parties appeared to be of one view, that the retrospective operation of the relevant provisions of the HLA Act deprived the applicant of any entitlement to succeed in this proceeding. The parties remained at odds as to whether, as a consequence of this deprivation, there was an acquisition of the applicant’s property other than on just terms. In the course of argument, I raised the question of the operation of s 8 of the Acts Interpretation Act, which provides relevantly:

Where an Act repeals in the whole or in part a former Act, then unless the contrary intention appears the repeal shall not...

(b) affect the previous operation of any Act so repealed, or anything duly done
or suffered under any Act so repealed; or

(c) affect any right privilege obligation or liability acquired accrued or incurred
under any Act so repealed; or

...

(e) affect any investigation legal proceeding or remedy in respect of any such
right privilege obligation liability penalty forfeiture or punishment as aforesaid;

and any such investigation legal proceeding or remedy may be instituted continued or enforced...as if the repealing Act had not been passed.

28. There appeared to me to be a real question whether the mere provision that an amending act should operate retrospectively was sufficient to demonstrate a contrary intention, for the purposes of s 8, in relation to an existing proceeding in a court. A conclusion that such a contrary intention is not demonstrated, without some more explicit words, is all the more likely when there exists an obvious purpose for the choice of retrospective operation. In this case, such an obvious purpose existed. As things stood before the HLA Act was passed, pharmacists who had dispensed substitute drugs to those presenting prescriptions for the applicant’s products, on the faith of the Department’s statements that the substitute drugs were equivalents of the applicant’s products, were potentially liable to criminal conviction for contravention of s 103(2) of the NH Act. Retrospective operation of the HLA Act served to remove this potential criminal liability. It was altogether a different thing to say that retrospective operation was sufficient to put an end to the right that the applicant claimed to have (and is assumed to have had) to seek judicial review of invalid decisions or conduct, which the applicant had exercised in the form of this proceeding. It seemed to me that there was a strong case for saying that the right to pursue its claim for judicial review remained alive and that, subject to discretionary considerations, the applicant would have been entitled to declaratory relief as to the invalidity of the decisions at the time they were made. Whether injunctive relief would have been appropriate is another question, which may have been affected by the subsequent passage of the HLA Act. If this argument were accepted, at the most there would have been a diminution in value of the applicant’s chose in action, rather than an acquisition of any property.
29. This argument did not commend itself to the respondents. When the hearing of the proceeding resumed, they did not propose to rely on it if the applicant had continued to press for the relief sought in the amended application. Despite the respondents’ lack of enthusiasm for the argument, I am by no means convinced that it is entirely without merit. Because of the applicant’s abandonment of the claims for relief that might have been available to it, no occasion arises to determine whether the argument is correct or not.

The reasons for revoking leave to amend

30. The question of the acquisition of property, being the choses in action constituting or underlying proceeding no. VID 859 of 2007, raised issues different from those concerning the acquisition of property, being the chose in action constituting or underlying this proceeding. Those issues would have arisen inevitably if proceeding no. VID 859 of 2007 were to be prosecuted to its conclusion. The causes of action on which the applicant chose to rely in that other proceeding by no means assured it of success. To succeed in its cause of action for negligence, the applicant would first have had to establish that the Commonwealth of Australia, or the Secretary to the Department, owed to it a duty of care. There is a considerable line of authority concerning the co-existence of a common law duty of care and the performance of a public function, particularly a statutory function. Collateral challenge to an administrative decision by way of action for damages in negligence is possible, but not in the case of every administrative decision. It is necessary to look at the terms of the statute concerned, the nature of the public function being exercised, and the availability of remedies which can be pursued to challenge the correctness of the administrative decision. In addition, where the negligent act alleged is a negligent misstatement (as in the present case), there are inevitably more difficult questions as to the reasonable foreseeability of reliance on the misstatement. In that respect, it is necessary to consider the effect of any disclaimer, such as the one appearing at the commencement of each of the schedules, which I have set out in [20] above. Next, it would be necessary for the applicant to establish breach of the duty. Although I am assuming that the applicant would have been able to establish that the decisions exceeded any relevant legislative power, that would not necessarily conclude the question whether there had been want of reasonable care. Thirdly, it would be necessary to establish that damage flowed from any breach. If the applicant failed at any of these stages, although it might be said that it had a chose in action by way of a cause of action for negligence, it might fail altogether so that its cause of action, and consequently its chose in action, was worthless.
31. Similarly, the applicant would not be able to succeed on its cause of action for injurious falsehood without establishing the necessary falsity. The invalidity of each of the administrative decisions, on the basis that the decision-maker exceeded the limits of any relevant statutory power, would not establish such falsity. It would be necessary to examine the meaning and effect of the representations that were actually made from the point of view of those who made use of the schedule. The applicant would have needed to establish that the use of the letter ‘a’ in relation to its products and the products of others did not in fact indicate that the sponsors of any of those products had submitted evidence that they had been demonstrated to be bioequivalent or therapeutically equivalent, or that justification for not needing bioequivalence or therapeutic equivalence data had been provided to and accepted by the Therapeutic Goods Administration. Alternatively, the applicant would need to establish that it was incorrect for users of the schedule to expect that the brands with ‘a’ before their names could be interchanged without differences in clinical effect. Otherwise, the applicant would have been forced to rely on establishing the falsity of the representations that bioequivalence had been demonstrated between particular preparations. Again, a failure to establish the falsity of these representations would have meant that the applicant’s cause of action in injurious falsehood was of no value.
32. The respondents were prepared to concede that the applicant possessed a chose or choses in action in the form of its causes of action in proceeding no. VID 859 of 2007. They were not prepared to concede that the retrospective removal of those causes of action (if such occurred) involved an acquisition of property other than on just terms. If it were to turn out that each of the causes of action, and therefore each of the choses in action, was valueless, a question might have arisen as to the content of any possible just terms, if it were found that there had been an acquisition of property. It is difficult to see what just terms might be required by s 51(xxxi) of the Constitution, to make valid the acquisition of property that was of no value.
33. At the time when I revoked the leave previously given that would have enabled the applicant to argue its case about acquisition of property in the form of the chose or choses in action constituting or underlying proceeding no. VID 859 of 2007, that proceeding had not yet had its first directions hearing. It was then some distance away from readiness for trial, whereas this proceeding was in the course of its final hearing. It was obvious that the issues to which I have referred, and which I saw as bearing upon the acquisition of property point, would have to be litigated in proceeding no. VID 859 of 2007 in any event, if it were to be pursued to its conclusion. It was not practicable to litigate those issues in the present proceeding as things then stood. It was always open to the applicant to raise the question of the acquisition of property, being the chose or choses in action constituting or underlying proceeding no. VID 859 of 2007 in that proceeding.
34. For those reasons, which were essentially practical reasons at the time, I revoked in part the leave previously given by North J to the applicants to amend their application in the present case.

Conclusion

35. It follows from what I have said previously that the applicant must fail in this proceeding. The revocation of leave to which I have referred deprived the applicant of any opportunity to argue in this proceeding that its property, being the chose or choses in action constituting or underlying proceeding no. VID 859 of 2007, had been acquired other than on just terms through the retrospective operation of the relevant provisions of the HLA Act. The applicant did in fact raise that issue in its pleading in proceeding no. VID 859 of 2007, but settled that proceeding and therefore did not seek to have that question, along with the issues on which its outcome may have depended, determined in that proceeding. Otherwise, the applicant abandoned its quest for all of the relief it sought in this proceeding, on which it might have been entitled to succeed. An order must be made that the application be dismissed.

Costs

36. The normal presumption is that costs follow the event. The proceeding having been dismissed, it would be expected that the applicant would be ordered to pay the respondents’ costs of the proceeding. For a number of reasons, this is not an ordinary proceeding. It is one in relation to which I have assumed that the applicant had a good cause of action, at least up to and perhaps beyond 28 September 2007, when the HLA Act received the Governor-General’s assent. The respondents appear to have assumed that the cause of action was good until that date, but that the effect of the relevant provisions of the HLA Act was to destroy the cause of action validly, and retrospectively.
37. Counsel for the applicant sought an order that the respondent should pay the applicant’s costs up to 28 September 2007, and that thereafter there should be no order as to costs. I am disinclined to give the applicant its costs even up to that point. The schedule for the month of August 2007 operated from the first day of that month. This proceeding was commenced on 6 August 2007. Prior to its commencement, there was no letter or other form of demand, or warning, sent by the applicant or its solicitors to the Department. The first step that the applicant took was to begin litigation. That is a step likely to place the respondents on an adversarial footing, rather than to produce a negotiated resolution of the problem that had occurred. Once a legal proceeding had been commenced, and process had been served on the respondents, legal costs became an issue. If, instead of acting as precipitately as it did, the applicant had approached the Department to notify it of the error, and had sought to have the problem resolved by negotiation, it may well have succeeded in achieving that end, and litigation would have been unnecessary. Counsel for the respondents sought an order that the applicant pay the respondents’ costs of the proceeding. In the alternative, counsel for the respondents sought an order that the applicant pay the respondents’ costs of the proceeding after 28 September 2007, or a reasonable time after that date, to enable the applicant to assess the effect of the HLA Act.
38. The applicant has lost this proceeding by its own decision not to pursue such relief as might have been available to it. It has abandoned its claims for relief to the extent that there has been nothing left for me to decide. In those circumstances, it ought to pay the respondents’ costs after a time at which it should reasonably have concluded that it could not continue the proceeding with any hope of success, or that it did not wish to continue the proceeding. In determining that date, the order of North J giving the applicant leave to amend, and my partial revocation of that leave must be borne in mind. The proceeding, along with proceeding no. VID 859 of 2007, was sent for mediation. The applicant apparently chose to settle proceeding no. VID 859 of 2007. Subsequently, the applicant chose to abandon this proceeding. In my view, at the time when it decided to abandon its opportunity to pursue its acquisition of property point in proceeding no. VID 859 of 2007, by settling that proceeding, it would have been reasonable for the applicant to have discontinued this proceeding as well. According to the records of the Court, the registrar who conducted the mediation of the two proceedings recorded this one as having been finalised without being resolved on 28 February 2008. Proceeding no. VID 859 of 2007 was recorded as having been settled on 29 April 2008. The applicant should be ordered to pay the respondents’ costs of the proceeding after this latter date. For the reasons I have given, as to the circumstances in which the applicant commenced the proceeding without prior warning, there should be no order as to costs prior to that date.
    

I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gray.

Associate:
Dated: 28 January 2009

Counsel for the Applicant:	Mr P Hanks QC with Dr S Donaghue on 4 December 2007 Mr R Niall on 1 August 2008
Solicitor for the Applicant:	Allens Arthur Robinson
Counsel for the Respondents:	Mr C Caleo SC with Mr P Gray
Solicitor for the Respondents:	Australian Government Solicitor

Date of Hearing:	4 December 2007, 1 August 2008
Date of Judgment:	28 January 2009