Cardiorentis AG v Iqvia Ltd & Anor

IntroductionA1 The applications

The parties appear before me today on the case management conference in two consolidated proceedings. In its first claim, Cardiorentis AG ("Cardiorentis") seeks damages for alleged breaches of duty committed in relation to a Phase III clinical trial of a pharmaceutical product ("Ularitide") which was developed with the intention of treating acute decompensated heart failure (“the Clinical Trial”).

As to the second claim, IQVIA UK ltd, (i.e. the first defendant, referred to as “IQVIA UK”), seeks payments totalling about €16.5 million inclusive of interest in respect of unpaid invoices for work carried out as part of the Clinical Trial. The second defendant,

There are a number of applications before me on the case management conference. This judgment concerns the first application that is before me, namely Cardiorentis’ application to amend its Particulars of Claim (“the Amendment Application”).

The IQVIA group specialises in coordinating pharmaceutical research: it is a contract research organisation or CRO. Cardiorentis AG is a company with rights in relation to Ularitide, and was conducting trials into its safety and efficacy by undertaking the Clinical Trial between 2011 and 2016 in 156 centres in 23 countries. A Phase III trial involves treating patients with either the investigative drug or placebo in a doubleblind randomised study. "Doubleblind" means that none of the patients, the investigators, the CRO or the sponsor of the trial knew which participants were getting the trial drug and which were getting the placebo.

The principal agreement which governed the conduct of the trial was a General Services Agreement ("the GS Agreement) dated 30th August 2012 between IQVIA UK and Cardiorentis. The GS Agreement was a kind of "master contract" supplemented from time to time by "Change Orders", i.e. specifications of particular tasks to be carried out by IQVIA and the associated commercial terms.

IQVIA US (and, Cardiorentis alleges IQVIA UK) also entered into a Clinical Quality Agreement (“the CQ”) with Cardiorentis in April 2013. This agreement was, it is said, supplemental to the GS Agreement. It did not contain a choice of law clause. Cardiorentis alleges, but the defendants deny, that it was governed by North Carolina law.

Between August 2012 and May 2014, patients were identified, randomised (i.e., assigned to either the Ularitide group or the placebo group), and treated and then monitored until January 2016.

During the Clinical Trial, IQVIA made reports to Cardiorentis about the progress of the Clinical Trial, including the incidence of protocol deviations, of which eligibility deviations are a subset. The means by which this information was provided included, amongst other documents, what had been referred to as PD Logs, which were discussed at regular meetings.

Between around mid-February and mid-March 2016, the parties conducted the Blind Data Review process

The data for the Clinical Trial was duly unblinded. IQVIA contends that on 22nd March 2016, Cardiorentis signed off on the PD Spreadsheet in more or less the same form as it had been sent by IQVIA on 16th March. The results of the Clinical Trial were the subject of a publication in the New England Journal of Medicine on 12th April 2017. The authors included Dr. Holzmeister (Cardiorentis' CEO).

It is common ground that the results of the Clinical Trial mean that the drug is unlikely to win regulatory approval for treatment of acute decompensated heart failure on the back of that trial. I say that because Cardiorentis, in this action, says that the reason for that is because that trial was polluted by there being too many ineligible patients within that trial. More than that, although some positive effect appears statistically to have occurred as a result of the application of the drug to those who should have been within the Clinical Trial, the same was not true for those who should not have been in the Clinical Trial.

Cardiorentis claims damages for breach of the GS Agreement and damages for breach of the CQ Agreement. Those are claims in contract. It contends that the conduct of the Clinical Trial was flawed, in particular in two ways:

I will have to return to the pleaded issues in relation to that and what Cardiorentis says are the consequences of that. The reason for that is because one of the issues raised Mr. Laurence Emmett, who appears on behalf of the defendants, is, it is said, that the pleading does not sufficiently plead what he characterises as “reliance”.

Cardiorentis claims that the Clinical Trial cost approximately €69.5 million in payments to IQVIA UK, and approximately €28 million in other costs. Cardiorentis claims that this loss was incurred consequent upon the trial: it claims this loss as damages which it says flows from the breaches of contract on the part of the Defendants. For their part, IQVIA claims €16.5 million for unpaid invoices in respect of work carried out on the Clinical Trial. For its part, Cardiorentis says that it is not liable to pay that figure because it is entitled to set off its claim against that.

Further, Cardiorentis also contends that the CQ Agreement is governed by the law of North Carolina (as I foreshadowed) and so is subject to the Unfair and Deceptive Trade

There was pre-action correspondence in England between the parties in early 2017.

On 23rd March 2018, Cardiorentis issued proceedings against IQVIA in Durham County, North Carolina. These proceedings have been stayed until further order by a judgment of the North Carolina Business Court, dated 31st December 2018. In that judgment, it was stated that Cardiorentis did not dispute that the CQ Agreement was governed by English law. Cardiorentis has since appealed that decision and a hearing (I am told) before the North Carolina Supreme Court took place on 6th January 2020 with a decision expected by July 2020.

On 31st December 2018 IQVIA UK issued proceedings against Cardiorentis. On 1st February 2019, Cardiorentis issued its claim in damages in England against both of the IQVIA defendants. In the original Particulars of Claim, dated 4th July 2019,

IQVIA served their defence on 17th September 2019. In correspondence dated 26th September 2019, IQVIA expressed concerns relating to the factual case advanced in the original Particulars of Claim. Specifically, IQVIA allege that Cardiorentis' pleading contained the false allegation that Cardiorentis was only made aware of the eligibility protocols via the PD Logs, and that Cardiorentis had not properly dealt with other documents provided by IQVIA, namely the PD spreadsheets and the PD Listings. On 29th November 2019, Cardiorentis served a draft Amended Particulars of Claim (henceforth, “the draft APOC”) and a Reply on IQVIA. I should say that the defendant consents to all parts of that draft, apart from Paragraphs 26A and 29. In the draft APOC, Cardiorentis set out various PD Listings and versions of the PD spreadsheet provided by IQVIA. In particular, Paragraph 26A and the other disputed parts of that draft, involved amongst other things, Cardiorentis contending that:

IQVIA issued their Part 18 Request (“the RFIs”) on 31st January 2020, seeking a response by 7th February 2020: that is seven days thereafter. Cardiorentis replied, stating that it would be unable to respond in full until 21 days.In those circumstances, one of the issues that arises for determination before me today is what of those requests for further information should be answered and within what timescale. I will need to deal with that in due course during the course of this hearing.

A party may amend his statement of case, which has been served, either with the written consent of all other parties or with the permission of the court, (see CPR rule 17.1(2)). The principles on applications to amend are well-known and were ultimately common ground. I set them out myself in Slater & Gordon v Watchstone [2019] EWHC 2371, at [35]-[37], to which I have been referred, In summary:

Thus, the commentary in the White Book (cited at [37] of Slater & Gordon), supported as it is by the various authorities referred to, is also apposite on an application for permission for amend:

“The hearing of an application for summary judgment is not a summary trial. The court at the summary judgment application will consider the merits of the respondent’s case only to the extent necessary to determine whether it has sufficient merit to proceed to trial. The proper disposal of an issue under Part 24 does not involve a court conducting a mini-trial (per Lord Woolf MR in Swain v Hillman [2001] 1 All ER 91). How the court decides whether a defence is real without conducting a mini-trial has led to a series of unsatisfactory cases now hopefully concluded by the clear statements of authority in Three Rivers DC v Bank of England (No.3) [2001] 2 All ER 513, HL (a summary judgment application; see especially, the speech of Lord Hope of Craighead at paras 94 and 95) and ED&F Man Liquid Products Ltd v Patel [2003] EWCA Civ 472 (a set aside application; see especially paras, 9, 10, 11, 52 and 53 in the judgment of Potter LJ). At a trial, the criterion to be applied by the court is probability: victory goes to the party whose case is the more probable (taking into account the burden of proof). This is not true of a summary judgment application. ‘The criterion which the judge has to apply under CPR Part 24 is not one of probability; it is absence of reality.’ (Lord Hobhouse of Woodborough in Three Rivers DC v Bank of England (No.3), supra.”

Certain of the amendments are accepted. The disputed amendments, as I have foreshadowed, are Paragraphs 26A and 29. Cardiorentis contend that it wishes to amend those paragraphs in its pleading in order to address IQVIA's reliance on additional documents (the PD Spreadsheets and the PD Lists) and specify more clearly the documents on which Cardiorentis relies. IQVIA contends that permission to amend should not be granted for three reasons, which I will deal with in turn.

IQVIA contends that the case previously advanced by Cardiorentis, was "materially wrong", and that Cardiorentis has not explained why it did not previously advance the case that it now seeks to advance in the draft amended Particulars of Claim.

Whether or not Cardiorentis' previous case was "materially wrong" and the explanation for how that case came to be pleaded are not relevant matters to the question of whether an amendment should be allowed. At most, these matters go to the overall merits of the previous pleading. If it was or remains liable to be struck out, then the appropriate remedy is such an application. If it or the proposed amendments raised questions as to why the case was originally pleaded as it was or why it is now pleaded differently, then that is a matter in due course for cross-examination of witnesses appearing on behalf of Cardiorentis.

Further, I do not consider that IQVIA are entitled to an explanation as to why the original case was advanced in the way it was. They have an explanation as to the circumstances in which it has now been pleaded as it is - namely a review of the material that has been drawn to Cardiorentis’ attention by IQVIA. I should say in that regard that these amendments do not amount, in fact, to any new cause of action and are, essentially, further particulars of what remains the existing plea. There are very few deletions to the pleading, apart from one incorrect reference to an e-mail.. In other words, the gravamen of the allegations made previously and made now are the same, supplemented by the additional material in the amendments.

IQVIA says that the case which Cardiorentis wishes to run is inherently implausible.

On an application for permission to amend, the Court will not descend into a consideration of the merits going beyond that which is necessary to consider the application, applying the relevant legal principles that I have identified I do not consider that those principles to be apt in the present case, because the paragraphs that are objected to(26A and 29) in effect are further particulars of the existing plea.

However, to the extent that this is relevant, I am satisfied to the requisite level, for the purpose of this application, that the pleaded case (as advanced by the amendments), is not inherently implausible and it cannot be said that the claimant has no real prospect of success. In this regard:

I am satisfied that the pleas which are advanced in Paragraph 26A and 29 are both coherent and reasonably arguable.

The reality is that by the time of the hearing before me today, the first two points relied upon on behalf of the defendants (i.e. requiring an explanation as to why the original pleading was as it was, and also to suggest that the amendment was inherently plausible) were not at the forefront of Mr. Emmett's submission, wisely in my view. Instead, Mr. Emmett concentrated upon the third of the objections to the amendment, which was, it is said, that Cardiorentis' case is defective in that it does not provide proper particulars of what he referred to as “reliance”.

If one looks at Paragraph 26A and Paragraph 29, and indeed later paragraphs including Paragraph 38 and 39, to which I was taken, it is clear that Paragraph 26A itself has nothing to do with the question of reliance. What it is doing is providing further particulars of alleged breach, of the applicable alleged contracts. It is, therefore, by its very nature, simply supplementing the existing pleaded claim that exists.

It is important to recognise that this is not, contrary to the impression given by the submissions on behalf of the defendants, a claim where reliance is an essential element of the cause of action, (e.g. a claim in deceit or a claim for various forms of misrepresentation). On the contrary, the current claim is essentially a claim for breach of contract based on express and alleged implied terms. It is right that there are references to Cardiorentis and the question of knowledge in Paragraph 26A and inparticular in Paragraph 26A(xi) and, also, in subparagraph (d),. So, for example, in (ix), it is said that the total number of patients who were ineligible by reason of violation of Exclusion Criteria 2 or 6, or Exclusion Criteria 3, or all of them, was not apparent from the PD Listings 1, 2 and 9, and even in their final form IQVIA did not provide that figure. Nor did they alert Cardiorentis to the fact that, or the risk that, the number of ineligible patients was materially different from those identified in the PD Logs.

Equally, subparagraph (d) provided as follows:

It will be seen that Paragraph 26A, therefore, is both providing particulars of other documents (the Spreadsheets and the Listings) and also saying that the matters in those particulars impacted upon the knowledge that Cardiorentis had. It is correct that in those paragraphs the natural persons representing Cardiorentis are not specifically identified. Mr. Paul Stanley QC, who appears on behalf of Cardiorentis in this matter, acknowledges that it would be a proper subject matter of a request for further information to identify who it was being alleged had that knowledge. I agree, and as I will come on to, any permission I give in relation to this application will involve the provision of further information in relation to that knowledge. I should say, however, that I do not consider that the mere absence of identification of the individuals concerned renders the pleading defective.

As can be seen, Paragraph 26A is essentially concerned with knowledge. Paragraph 32 then deals with breach and at Paragraph 39, the damages claimed are set out.

In response to Cardiorentis’ pleading, in the IQVIA’s defence, at Paragraph 43(5) IQVIA pleaded as follows:

That plea was responded to by Cardiorentis in the reply, at Paragraph 30, and I quote:

It will be seen, as I have already foreshadowed, that Paragraph 26A in fact is concerned with knowledge and is not, in fact, concerned with reliance, certainly in the legal sense. I do not consider the fact that Paragraph 26A does not particularise matters of reliance to be an objection to the granting of permission in respect of Paragraph 26A. Indeed, it would be surprising if Paragraph 26A contained any particulars of reliance, because it is not a paragraph which purports to deal with reliance. It is a paragraph that deals with breach.

I understand Cardiorentis’ case to be, firstly, that there are various express and implied contractual obligations. Those obligations were then allegedly breached, both in relation to monitoring and reporting, including in relation to deviation in relation to ineligible patients, and Paragraph 26A is identifying aspects of those breaches, and the circumstances in which Cardiorentis did not have knowledge which implicitly it says it should have had, and would have had, had IQVIA complied with their contractual obligations in that regard. There are other paragraphs in the pleading which I have identified, including Paragraph 39, which look towards the consequences of that. I accept that in a wider and more general sense, reliance is relevant to Cardiorentis’ case, in the sense of a decision to act based on knowledge (or lack thereof) and reliance may be relevant when one comes to questions of causation and the plea of contributory negligence. However none of those matters relate to Paragraph 26A. Nor, indeed, do they relate to the other paragraph in relation to which objection was taken, which is Paragraph 29.

Paragraph 29, in its amended form, provides as follows:

Again, I see nothing inappropriate or incoherent about paragraph 29. It is providing further particulars of the matters there set out, and also correcting errors in initial pleadings. The consequence of that, of course, in the normal way, is that IQVIA will get their costs of and occasioned by the amendments in responding to that corrected pleading. That pleading, again, is not concerned with reliance. I am satisfied, so far as it is the sort of paragraph that can carry with it particular prospects of success, that it is a proper plea and that there are reasonable prospects of success of the allegations there pleaded out. Those allegations are supported by the factual matters there stated, and are reasonably capable of being demonstrated at a trial. Therefore, again, I cannot see any valid objection to that.

Mr. Emmett’s final fallback position is a wider objection, that taking the whole of the pleading, it is not clear to IQVIA whether or not it is being said that Cardiorentis, and particular individuals within Cardiorentis, relied upon information and would have acted in a particular way depending on what information they had. I do not accept that this is a fair reflection of the state of the pleadings. As I have highlighted, Cardiorentis identifies the permutations of what could have been open to it in so far as it can based on what is a hypothetical question, (given that this is not what was done by IQVIA) and sets out its positive case as to what would have happened.

Therefore, the objection based on a failure properly to particularise a case based on reliance is, I am satisfied, not a valid reason to object to the amendments which are sought to paragraphs 26A and 29, or, indeed, to the pleading as a whole. It did, however, become quite clear to me during the course of hearing the debate between Mr. Emmett

Accordingly, and for the reasons that I have given, I consider that it is appropriate that permission be granted for the amendments which are sought. That is subject only to the provision of further information in relation to who is being referred to in relation to the reference to Cardiorentis. I have a confirmation from Mr. Stanley that there are, indeed, individuals that fall within that rubric and, therefore, the concern of IQVIA (that in fact there was no one who so relied or at least no one who is going to say they so relied) is unfounded. Having been given that reassurance, I am satisfied that it is appropriate to grant the permission sought.

The question of what is appropriate further information is not a condition of the amendment application, and I will deal with that in the context of the request for further information together with the other matters that arise on the CMC.