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Federal Court of Australia - Full Court Decisions |
Last Updated: 21 August 2002
Bright v Femcare Limited [2002] FCAFC 243
PRACTICE AND PROCEDURE - application for leave to appeal from interlocutory order under s 24(1A) Federal Court of Australia Act 1976 (Cth) - whether decision attended with sufficient doubt and substantial injustice would result - whether order discontinuing proceeding as representative is one of practice and procedure only - relevance of effect of order - whether Court should interfere with exercise of a discretion
PRACTICE AND PROCEDURE - representative proceedings under Pt IVA Federal Court of Australia Act 1976 (Cth) - whether s 33C satisfied - whether substantial common issues of law or fact - importance of compliance with s 33H in specifying common questions - operation of s 33C to claims - whether common questions determined by reference to findings which might be made at trial --whether merger of questions under s 33C and s 33N - operation of s 33N in relation to disposition of issues - whether in interests of justice to order discontinuance under s 33N - whether inappropriate for claims to be pursued in representative proceedings - whether issues will be controversial - whether extent of findings possible relevant to order under s 33N - whether relevant to consider evidence in other claims rendered unnecessary by findings in representative proceeding - what findings on causation possible - whether application premature - relevance of procedure in determining common questions prior to discontinuing as representative proceeding - effect of determination of risk of injury - effect of determination whether conduct misleading and deceptive - whether costs of representative proceeding greater - whether substantial number of non-common issues sufficient for order of discontinuance - relevance of case management to assessment of representative proceedings - objects of representative proceedings - observations on excessive interlocutory proceedings in group proceedings
COSTS - whether costs of representative proceedings greater than costs of separate proceedings - evidence necessary to establish - relevance to order of discontinuance of representative proceeding under s 33N Federal Court of Australia Act 1976 (Cth)
Federal Court of Australia Act 1976 (Cth) Pt IVA, s 33C, s 33H, s 33N
Trade Practices Act 1974 (Cth) s 52
In re the Will of FB Gilbert (dec'd) (1946) 46 SR(NSW) 318 cited
Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170 cited
House v The King [1936] HCA 40; (1936) 55 CLR 499 followed
Décor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 655; (1991) 33 FCR 397 followed
Wong v Silkfield Pty Ltd [1999] HCA 48; (1999) 199 CLR 255 followed
Tropical Shine Holdings Pty Ltd (t/a KC Country) v Lake Gesture Pty Ltd (1993) 45 FCR 457 cited
Zhang v Minister for Immigration, Local Government & Ethnic Affairs [1993] FCA 489; (1993) 45 FCR 384 cited
Vasram v AMP Life Ltd [2000] FCA 1676 cited
Philip Morris (Australia) Ltd v Nixon [2000] FCA 229; (2000) 170 ALR 487 cited
NMFM Property Pty Ltd v Citibank Ltd [2000] FCA 1558; (2000) 107 FCR 270 cited
ACCC v Giraffe World Australia Pty Ltd [1998] FCA 819; (1998) 84 FCR 512 cited
Campomar Sociedad, Limitada & Anor v Nike International Limited & Anor [2000] HCA 12; (2000) 202 CLR 45 cited
Chappel v Hart [1998] HCA 55; (1998) 195 CLR 232 cited
Mercer v Commissioner for Road Transport and Tramways (NSW) [1936] HCA 71; (1936) 56 CLR 580 cited
Ryan v Great Lakes Council (1998) 155 ALR 447 cited
Australian National Industries Ltd v Spedley Securities Ltd (In Liq) (1992) 26 NSWLR 411 cited
KERRIE BRIGHT v FEMCARE LIMITED & ANOR
N 410 OF 1999
LINDGREN, KIEFEL AND FINKELSTEIN JJ
20 AUGUST 2002
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA |
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NEW SOUTH WALES DISTRICT REGISTRY |
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THE COURT ORDERS THAT:
1. The applicant be granted leave to appeal from the order made on 19 October 2001 in proceeding N 410 of 1999.
2. The appeal be allowed.
3. The order made on 19 October 2001 in proceeding N 410 of 1999 that that proceeding no longer continue under Part IVA of the Federal Court of Australia Act 1976 (Cth) be set aside, and in lieu thereof it be ordered that:
(a) the first respondent's motion brought by notice of motion filed on 12 October 2000 be dismissed;
(b) the first respondent pay the applicant's costs of that motion;
(c) the second respondent's motion brought by notice of motion filed on 11 October 2000 be dismissed; and
(d) the second respondent pay the applicant's costs of that motion.
4. The respondents pay the applicant's costs of the application for leave to appeal and of the appeal.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA |
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NEW SOUTH WALES DISTRICT REGISTRY |
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LINDGREN J
Introduction
1 I have had the benefit of reading a draft of the reasons for judgment of Kiefel J and agree that the orders proposed by her Honour should be made. I gratefully adopt her Honour's account of the background facts, legislative provisions and the parties' submissions. I will use the terms and forms of reference of the fourth amended statement of claim ("the Pleading"), a copy of which is conveniently annexed to the reasons for judgment of the primary Judge.
Appellate review of a discretionary decision on a matter of practice and procedure
2 In making an order under s 33N of the Federal Court of Australia Act 1976 (Cth) ("the Act") that the proceeding no longer continue under Pt IVA of the Act, the primary Judge exercised a discretion on a matter of practice and procedure. A "tight rein" must be kept upon appellate interference with an exercise of discretion of that kind: In re the Will of FB Gilbert (dec'd) (1946) 46 SR(NSW) 318 at 323 per Jordan CJ, cited with approval in, for example, Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170 at 177 per Gibbs CJ and Aickin, Wilson and Brennan JJ. Subsection 24(1A) of the Act is consistent with this stricture in that it provides that an appeal is not to be brought from an interlocutory judgment unless the Court or a Judge gives leave to appeal. In the present case, on 23 November 2001, Sackville J ordered that the application for leave, and, if leave should be granted, the substantive appeal, should be fixed for hearing on the same date by the Full Court.
3 In an oft-cited passage from House v The King [1936] HCA 40; (1936) 55 CLR 499 at 504-505, Dixon, Evatt and McTiernan JJ stated as follows:
"The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred."
(House v The King concerned an appeal against sentence - an exercise of discretion as to a matter not one of practice or procedure.)
4 An appellate court would be justified in disturbing her Honour's order of discontinuance if it was satisfied that the order was infected by one or more of the vitiating factors mentioned in the passage from House v The King set out above. We should grant leave to appeal only if we are satisfied that:
* there is sufficient doubt as to whether it was so infected to warrant its being reconsidered by a Full Court; and
* substantial injustice would result if, the decision being supposed to be wrong, leave to appeal were refused (Décor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 655; (1991) 33 FCR 397 at 399-400).
5 I can dispose of the "substantial injustice" question immediately. There was no evidence before her Honour that, absent a representative proceeding, the Group Members would be unlikely to seek to enforce their perceived rights in multiple ordinary proceedings, and her Honour made no finding to that effect. In my opinion the substantial injustice issue is to be resolved as an aspect of the issues raised by s 33N itself. That is to say, any additional burden thrown on the applicant and Group Members by being relegated to ordinary proceedings is an aspect of the "costs" question identified in par 33N(1)(a), the "efficiency and effectiveness" question identified in par 33N(1)(c) and the "inappropriateness" question identified in par 33N(1)(d).
6 The applicant did not submit that the Group Members would be barred by any limitation period, from now commencing individual proceedings; cf s 33ZE of the Act.
Summary
7 In their written submissions, counsel for the applicant summarised the "three errors of significance" the applicant asserts the learned primary Judge made. That summary was as follows:
"First, her Honour has wrongly identified as `not common' various questions which are in fact common.Second, her Honour failed to take account of the fact that various questions, whilst not common to every member of the group, are common to substantial sub-groups [s 33Q of the Act]. By ignoring these issues, her Honour failed to take into account the efficiencies involved in deciding those issues in a representative action.
Third, her Honour has in effect undertaken a task similar to a strike out application, and has attempted to assess, by speculation, whether certain paragraphs in the current pleading are capable of being established in the face of possible evidence. This involves several errors: it is no part of the question posed by section 33N; there is no evidence to enable the question to be answered; and the Respondents have not even committed themselves to their defences. The question before her Honour was not whether she could envisage facts that might make it difficult for the Applicant to prove its case. The question was rather whether the case pleaded by the Applicant gives rise to enough common issues to make a representative proceeding an efficient and effective means of dealing with the claims of group members."
8 As will appear below, in my respectful opinion, these grounds are established. It follows that leave to appeal should be granted, her Honour's orders should be set aside and this Court is justified in approaching the issues raised by the respondents' motions afresh.
Common issues - general
9 The evidence before her Honour was that the applicant's solicitors have sixty-one clients, that is to say, the applicant and sixty Group Members who are known to those solicitors and who have not opted out of the group proceeding. David Keith Roche, a solicitor employed by the applicant's solicitors, testified before his Honour that of the sixty-one clients, twelve were Group B Members and the remaining forty-nine were the applicant and forty-eight Group A Members. On 9 August 2000, Lehane J ordered that particulars be provided. The applicant's solicitors were able to provide particulars in relation to only the applicant and ten of the known sixty Group Members. Of those ten, eight were Group A Members and two were Group B Members. The Court has not yet, pursuant to s 33J of the Act, fixed a date by which any Group Member wishing to opt out of the proceeding must do so. The total number of Group A Members and the total number of Group B Members are not known
10 Subsection 33C(1) of the Act is directed to the "claims" of seven or more persons against the same person. Paragraph (c) of that subsection prescribes a condition that their claims give rise to a "substantial common issue of law or fact". In terms, the condition refers to claims which exist when a representative proceeding is commenced. The Pleading may be taken to state the claims which the applicant and the Group Members made against the respondents at that time. Therefore, as Kiefel J observes, the issue under s 33C is whether the claims made in the Pleading give rise to a common issue of law or fact which is "substantial" in the sense explained in Wong v Silkfield Pty Ltd [1999] HCA 48; (1999) 199 CLR 255 at 266-267.
11 Subsection 33H(1) of the Act supports subs 33C(1). Of particular present relevance is s 33H(1)(c) which provides that an application commencing a representative proceeding, or a document filed in support of it, must:
"specify the questions of law or fact common to the claims of the group members."
There is no relevant distinction between "questions" within s 33H(1)(c) and "issues" within s 33C(1)(c).
12 Order 73 r 3 of the Federal Court Rules ("the Rules") provides that a representative proceeding must be commenced by filing an application in accordance with Form 129. Form 129 contains provision for a statement of common questions of law or fact.
13 The application which commenced the proceeding below as long ago as 10 May 1999 purported to state common questions of law and fact. But by the time of the current fourth amended application and the Pleading which accompanied it, the comparable statement (now found in par 159 of the Pleading) was simply as follows:
"The claim gives rise to substantial common issues of law and fact including the issues raised by the allegations contained in each of paragraphs 9, 10, 15 to 39, 40, 42 to 45, 47 to 50, 52 to 55, 60 to 63, 64 to 67, 94 to 145, 146(a), 147, 148, 149, 151, 152, 154, 155, 157 and 158."
This paragraph did not "specify" "questions".
14 The failure of the Pleading to comply with s 33H(1)(c) made the primary Judge's task difficult. Careful compliance with this requirement is of the greatest importance. Its purpose is to elicit the identity of questions, the answering of which in the representative party's claim can be expected also to perform the useful purpose of answering them in the claims of the represented parties. In my opinion, the identification and formulation of the common issues calls for care and attention of the same kind as does the identification and formulation of a separate question for the purpose of O 29 r 2 of the Rules.
15 In the course of the hearing, we invited senior counsel for the applicant to submit a written statement of the text of the common issues to which he contended par 159 referred, relating them to the respective numbered paragraphs of the Pleading mentioned in that paragraph. He did so, by providing the following statement:
"1. a. Whether there was a risk that an applicator would go out of calibration in ordinary use and handling?b. Whether the First Respondent was aware of that risk?
c. Whether the Second Respondent was aware of that risk?
d. Whether it was essential that a Filshie applicator be checked by the First Respondent or its appointed agent so as to ensure that it was in calibration, and if so how often?
e. Whether it was essential that accurate records be kept of the usage and checking of a Filshie applicator?
(9-10, 15-38)
2. What information was provided to Relevant Hospitals and Doctors concerning the calibration and recalibration of the Filshie applicators? (40, 42-45, 47-50, 52-55, 60-67)
3. Did the Respondents give the Relevant Hospitals and Doctors a sufficient `Calibration Risk Warning' (as defined in paragraph 94 of the Statement of Claim)? (94-101)
4. Did the Respondents give the Relevant Hospitals and Doctors a sufficient `Regular Check Warning' (as defined in paragraph 102 of the Statement of Claim)? (102-110)
5. Did the Respondents give the Relevant Hospitals and Doctors a sufficient `No Servicing Warning' (as defined in paragraph 111 of the Statement of Claim)? (111-118)
6. Did the Respondents make the `Safety Representation' (as defined in paragraph 119 of the Statement of Claim)? (119-123)
7. Did the failure by the Respondents to give the Calibration Risk Warning, and/or the Regular Check Warning, and/or the No Servicing Warning constitute conduct that was misleading or deceptive or likely to mislead or deceive? (124-134)
8. Was the First Respondent involved in the contraventions by the Second Respondent in the preceding question? (135)
9. Whether the conduct of the Respondents was conduct in trade or commerce as defined in the Trade Practices Act? (136-141)
10. Did the Respondents owe a duty to the Applicant and Group Members to take steps to minimise the risk of a Filshie applicator being used which was out of calibration or could not be confirmed as being in calibration (including to provide an Onsite Gauge, as defined in paragraph 32 of the Statement of Claim)? (142, 144)
11. Did the Respondents breach that duty? (143, 145)
12. Did the Respondents' failure to design an Onsite Gauge, failure to give the Calibration Risk Warning, failure to give the Regular Check Warning and/or failure to give the No Servicing Warning cause the Applicant and Group Members to lose the chance of avoiding loss and damage or increase the risk of them suffering loss and damage? (146-158)"
If s 33H(1)(c) had been complied with, the learned primary Judge would have been favoured with some such specification of questions.
16 The first respondent provided an incomplete draft defence. Her Honour noted the applicant's submission that in the circumstances it was premature to consider the respondents' applications under s 33N. As will appear, I think it was premature to make an order under the section, but since the respondents apparently pressed their applications, her Honour had to deal with them.
17 Her Honour assayed the task of identifying the issues to which par 159 of the Pleading was intended to refer, grouping the paragraphs referred to in that paragraph for that purpose. She did so by reference to the following twenty-five headings in her reasons for judgment:
1. "Paragraphs 10, 17 and 30 (importance of calibration)"2. "Paragraphs 15, 20, 25, 33, 40, 43, 44, 48, 49, 53, 54 and 64 (manuals and promotional material supplied to hospitals and doctors)"
3. "Paragraphs 18, 19, 22, 23 and 24 (content of warning)"
4. "Paragraph 21 (use of Filshie applicators)"
5. "Paragraphs 26, 34, 37 and 38 (importance of checking calibration and keeping records of use)"
6. "Paragraphs 27, 28, 31 and 32 (availability of means of checking calibration of Filshie applicator)"
7. "Paragraphs 16, 35, 36, 66, 67, 97, 105 and 114 (knowledge of respondents)"
8. "Paragraph 39 (Filshie applicators not known to have been regularly checked should not be used)"
9. "Paragraphs 42, 47 and 52 (same Filshie applicators supplied over time)"
10. "Paragraphs 45, 50, 55, 94, 96, 102, 104, 111, 113, 143(b) and 145(b) (information given to hospitals and doctors)"
11. "Paragraphs 60 to 63 (publicity)"
12. "Paragraph 65 (relevant hospitals and doctors failed to have Filshie applicators serviced regularly)"
13. "Paragraphs 95, 103, 112, 143(b) and 145(b) (warnings not given to distributors)"
14. "Paragraphs 98, 100, 106, 108, 115 and 117 (reasonable and legitimate expectations of relevant hospitals, doctors and distributors)"
15. "Paragraphs 99, 101, 107, 109, 116, 118, 142 and 144 (existence of duty to give certain warnings to relevant hospitals, doctors and distributors and to take certain steps)"
16. "Paragraph 110 (certain statements did not constitute a required warning)"
17. "Paragraphs 119 and 120 (certain representations made to relevant hospitals, doctors and distributors)"
18. "Paragraphs 121 to 134 (certain conduct misleading or deceptive and certain statements inaccurate)"
19. "Paragraph 135 (aiding and abetting)"
20. "Paragraphs 136 to 141 (certain conduct is in trade and commerce)"
21. "Paragraph 29 (no means of checking Filshie applicator is in calibration available to hospitals and doctors)"
22. "Paragraph 146(a) (access to `onsite' gauge)"
23. "Paragraphs 143(a) and 145(a) (failure to design and make available an onsite gauge is breach of duty of care)"
24. "Paragraphs 147, 148, 151, 152, 154, 155, 157 and 158 (lost chance to avoid loss and damage, increased risk of loss and damage)"
25. "Paragraph 149 (if warnings had been given, an onsite gauge would have been developed)"
18 The applications under s 33N were made at a procedurally early stage. Defences have not yet been filed. In substance, the applicant commenced a representative proceeding which ex hypothesi, the legislature intended she be entitled to commence because of the presence of substantial common issues of law and fact, yet the Court was immediately asked to accept that the proceeding would not provide an efficient and effective means of dealing with the claim of the Group Members. I do not mean to suggest that an application under s 33N at such an early stage of a properly commenced representative proceeding would always be premature: if there were an incompatibility or conflict between the representative party's case and the cases of the represented parties (cf Tropical Shine Holdings Pty Ltd (t/a KC Country) v Lake Gesture Pty Ltd (1993) 45 FCR 457 at 464) or if the only substantial common issue were one of law on which a decision in the case of one group member would bind the others, it may be thought not efficient or effective for the representative proceeding to continue. But ordinarily one would expect that, in an attempt to give effect to the legislative intention, a means will be sought, by case management techniques, to enable a representative proceeding to continue to the stage of resolution of the substantial common issues on the basis that after that stage is completed, an order under s 33N or directions under s 33Q will be made (cf the order made by French J in Zhang v Minister for Immigration, Local Government & Ethnic Affairs [1993] FCA 489; (1993) 45 FCR 384 at 403, 404, and the course followed by Stone J in Vasram v AMP Life Ltd [2000] FCA 1676 at [18]).
19 The burden of much of the respondents' submissions is that they are being pressed with claims which will fail on their non-common issues, particularly, in the case of the applicant and the Group A Members, the issue of causation of the failed sterilisations. The respondents submit that it is "in the interests of justice" (to take words from subs 33N(1)) that the claimants be relegated to ordinary proceedings where they will be ordered, without further delay, to produce expert medical reports supporting their cases on causation.
20 But an application under s 33N is not an application for summary dismissal. Indeed s 33ZG provides that except as otherwise provided in Pt IVA of the Act, nothing in that Part affects, inter alia, the Court's powers in relation to:
"a proceeding in which no reasonable cause of action is disclosed or that is oppressive, vexatious, frivolous or an abuse of the process of the Court".
Accordingly, the possibility under the Rules of a striking out under O 11 r 16 or of a summary dismissal under O 20 r 2 is recognised. Although the second respondent referred to O 20 r 2 in its notice of motion, it is clear that its application was based on an alleged failure to meet the conditions specified in s 33C of the Act and the grounds for an order of discontinuance specified in s 33N. In the circumstances I put to one side suggestions that all the individual claims are deemed to fail on the non-common issues.
21 This is not to say that the respondents' submission is not important for case management purposes. It is unjust that a respondent be vexed with a representative proceeding over a long period during which the unmeritorious nature of the claims remains hidden because it resides in non-common issues. But in my opinion, the present representative proceeding can be managed in such a way that the common issues can be determined so that the determination binds the applicant and Group Members (cf ss 33Z and 33ZB of the Act), and contemporaneously a selected number of the individual claims can be finally determined, that is, on their non-common issues as well (see ss 33Q and 33ZF).
22 The primary Judge identified (at [63]) nine "substantial and very significant issues" which she characterised as "not common to Group A Members or Group B Members".
23 Her Honour thought that only the nine issues numbered (by me) 2, 3, 6, 7, 9, 11, 13, 18 and 20 in [15] above actually involved substantial common issues of law or fact and had "the potential to be determined separately" (at [66]). She thought that issue 26 relating to "damages for birth of a healthy child" raised a common question of law in relation to Group A Members, but that "a Pt IVA proceeding is not required to ensure that this question is only determined once" (at [59]). I agree with this observation in relation to issue 26.
24 I agree with the primary Judge and Kiefel J that in at least the respects they have identified, the requirements of s 33C(1)(c) were satisfied. Indeed, as will appear below, in my opinion there are more common issues than were allowed to be such by the primary Judge.
25 The second respondent submitted that s 33C(1)(a) was not satisfied. Paragraph (a) of subs 33C(1) prescribes the condition that:
"7 or more persons have claims against the same person".
This means that the applicant and all the Group Members in the present proceeding were required to have claims against both respondents: Philip Morris (Australia) Ltd v Nixon [2000] FCA 229; (2000) 170 ALR 487 at [126]. The submission was that this condition was not satisfied in relation to those Group Members who underwent the Filshie procedure prior to November 1993, when the second respondent was appointed Australian distributor for the first respondent. Senior counsel for the applicant undertook that the applicant would seek leave to amend the definition of the Group Members in the Pleading by limiting it by reference to persons who underwent the Filshie procedure in or after December 1993. This amendment would overcome the difficulty. None of the eleven claims that have been particularised (see [9] above) concerned surgical procedures earlier than December 1993.
26 The primary Judge was correct in concluding that the applicant was entitled to commence the proceeding under Pt IVA of the Act.
27 In relation to the applicant's submission that it was premature to consider the applications under s 33N, her Honour noted (at [26]) that it would not prejudice the applicant if she approached the matter on the basis that the respondents would put every allegation in issue, as it seemed from its draft defence that the second respondent in fact proposed to do. But in fact her Honour did speculate that certain issues, which she came to characterise as common, would ultimately prove to be uncontroversial or would occupy little hearing time, and for this reason did not count for much in favour of the representative proceeding being allowed to continue.
28 In the course of considering the twenty-five issues listed in [17] above, her Honour characterised them as either common or not common. In some instances, she characterised issues as not common because she speculated that the respondents would adduce evidence on the issue which would differ as between the respective individual claims. But an issue itself can be common even if the respondents establish that they will adduce different evidence from claim to claim in dealing with it. Perhaps more importantly for s 33N purposes, I think most of the common issues which her Honour thought would provoke responsive evidence differing as between claims, would in fact not do so. This can be seen to be so once one appreciates the limited and general nature of the common issue.
29 Generally speaking, I think her Honour allowed the undoubtedly large and important non-common issue of causation of an unwanted pregnancy which is inherent in every Group A Member's claim (this was not an issue in the Group B Members' claims) to intrude into her analysis and characterisation of what were truly antecedent common issues, such as the importance of calibration, the risks associated with an Out of Calibration applicator, and the steps available and proper to be taken to safeguard against those risks. All of these issues would be addressed by expert evidence or other evidence of general application based on facts which pre-dated the unwanted pregnancies of the Group A Members. They would be capable of arising and being dealt with and decided even if those unwanted pregnancies had never occurred, as the claims of the Group B Members show.
30 Error of the kind described caused her Honour to classify as non-common, some issues that were in fact common and to regard them as calling for non-common evidence.
31 In relation to the respondents' applications under s 33N, her Honour considered (at [67]-[73]) the advantages and disadvantages of determining issues numbered 2, 3, 6, 7, 9, 11, 13, 18 and 20 above in a representative proceeding rather than in individual proceedings brought by the representative party and the respective group members.
32 Her Honour then reached, in par [78], the conclusions set out in Kiefel J's reasons for judgment at [117].
33 I respectfully agree with Kiefel J (at [134]) that, in identifying common issues, her Honour seems to have "merged the two inquiries under s 33C(1)(c) and s 33N(1)(c)".
34 The learned primary Judge's headings set out in [17] above do not do justice to her identification of issues (or questions) in the text beneath them, but I think it suffices to say that in my opinion, her Honour's classification of at least the twelve issues numbered 1, 4, 5, 8, 10, 13, 15, 16, 17, 21, 22 and 24 was infected by the first error mentioned and that those issues were in fact common ones. That is to say, the questions indicated by those headings would have to be answered in order to decide the claims of all Group Members. I also think that in relation to most of those issues, her Honour erred in the second respect mentioned (thinking that they would be answered by evidence which differed as between the individual claims). The evidence in respect of issues 10, 13, 16 and 17 would not be identical as between the claims of all Group Members but would be identical within sub-groups of them.
35 It is unnecessary to deal with all of the twelve issues mentioned and it is sufficient to refer to seven of them as illustrations. I have chosen issues 1, 4, 5, 8, 10, 22 and 24.
Issue 1: "Paragraphs 10, 17 and 30 (importance of calibration)"
36 Paragraphs 10, 17 and 30 of the Pleading are as follows:
"10. The use in a Filshie Procedure of a Filshie Applicator which is Out of Calibration increases the risk of a failed sterilisation.""17. The maintenance of a Filshie Applicator In Calibration is and at all material times has been critical to its effective performance."
"30. "The potential consequences of the use in a sterilisation operation of a Filshie Applicator which was Out of Calibration were and are very serious for the patient."
These paragraphs lay the basis, or part of the basis, of the various duties which the Pleading later alleges were incumbent on both respondents.
37 The expressions "In Calibration" and "Out of Calibration" are defined in par 9 of the Pleading as follows:
"A Filshie Applicator is properly calibrated (`In Calibration') if it is adjusted so that it will sufficiently close the Filshie Clip so as to occlude the fallopian tube without cutting it and is not properly calibrated (`Out of Calibration') if it is not so adjusted."
38 According to par 10 of its draft defence, the first respondent will admit the allegations in par 10 of the Pleading:
"The use in a Filshie Procedure of a Filshie Applicator which is Out of Calibration increases the risk of a failed sterilisation."
39 According to par 14 of its draft defence, which responds to par 17 of the Pleading, the first respondent will also admit that it is "always critical to the effective performance of a Filshie applicator that it be In Calibration", but otherwise does not admit the allegations in par 17.
40 According to par 27 of its draft defence, the first respondent will admit the allegations in par 30 of the Pleading.
41 For its part, the second respondent will not admit any of the allegations in pars 10, 17 and 30 of the Pleading.
42 The first respondent emphasises the limited nature of its admissions, pointing out that the definition in par 9 implicitly refers to the fallopian tube of a particular woman undergoing the procedure and does not signify "not calibrated to the [high] standard specified [by the first respondent]". The first respondent will rely on expert evidence that even an applicator which is not calibrated to that "high" standard may nevertheless be "In Calibration" within the definition in the Pleading. The first respondent will also rely on evidence as to the variety of circumstances in which a Filshie sterilisation procedure might fail for reasons other than an Out of Calibration applicator, in particular, by reason of surgeon or hospital error.
43 Indeed, a major submission of the respondents is that surgeon or hospital error, rather than Out of Calibration applicators, will be found to be the cause of the failed sterilisations. But, as noted earlier, any likelihood that the claims will fail is irrelevant to an application under s 33N.
44 The first respondent also relied on affidavit evidence that there were communications between distributors and hospitals and doctors using the Filshie applicator and the Filshie clips. But the evidence (in par 10 of an affidavit of Kevin William Broadley sworn 11 October 2000) was no more than "that from time to time distributors had face to face meetings and discussions with relevant hospitals and doctors". These few words do not satisfy me that there will be evidence on a final hearing of any oral communication relevant to the existence or content of a duty of care, breach of that duty or causation of loss.
45 Her Honour said that the consequences of the use of an Out of Calibration applicator appeared to be relevant in assessing the likelihood that the pregnancy of a particular Group A Member arose from the use of such an applicator. Her Honour said (at [30]) that this matter was "best dealt with at the level of the individual group member".
46 Paragraphs 10, 17 and 30 raise questions of a general nature critical to the existence and scope of a duty of care incumbent upon a manufacturer and distributor and the steps which they might have to take to discharge that duty. Her Honour said (at [30]) it appeared that the respondents would seek to show that a failed sterilisation was more likely to be attributable to hospital or surgeon error than to the use of an applicator that was Out of Calibration and that resolution of this issue was likely to depend on evidence of what the surgeon observed and other circumstances touching the surgical procedure in a particular case.
47 But the issues raised by pars 10, 17 and 30 of the Pleading were common ones which would be resolved by the same expert evidence in relation to all claims. It would be unfortunate if that evidence had to be given sixty-one times. With respect, I think it was erroneous to say, as her Honour did (at [28]), that the assertions in pars 10, 17 and 30 were "unlikely to be controversial" and that acceptance of the allegations in par 30 in the applicant's case would be unlikely to be helpful in resolving other claims. The importance of calibration, the increased risk of an unwanted pregnancy if an applicator is Out of Calibration and the necessity of a check that an applicator is In Calibration at the time of any Filshie procedure and of the keeping of records of the checks, and the existence and content of any resultant duty on the respondents - all common issues - lie at the heart of the claims made. It is a different issue, whether a particular Group A Member's pregnancy arose from breach of the supposed duty on the one hand or from surgeon or hospital error on the other.
Issue 4: "Paragraph 21 (use of Filshie applicators)"
48 Paragraph 21 of the Pleading is as follows:
"The Filshie Applicators have been used, and at all material times were intended by the First Respondent to be used, in environments in Australia in which they were likely to be handled by more than one person over time whether in cleaning procedures or surgical procedures or otherwise."
49 The primary Judge stated (at [36]):
"In paragraph 21 of the statement of claim, it is alleged that Filshie applicators are likely to be handled by more than one person, whether in cleaning or in surgical procedures, and that this was intended by Femcare. The way in which a Filshie applicator is treated and used will almost certainly vary from hospital to hospital. For example, different hospitals may have different cleaning regimes and different numbers of people handling their applicators. One hospital's applicators may be subject to more intensive use than another's because of a greater caseload or because it has fewer applicators. Thus the use and handling of Filshie applicators is not a common issue and paragraph 21 does not raise any common issues of law or fact. The knowledge or `intention' of Femcare is discussed in [39] below."
50 Paragraph 21 is directed to a point of time prior to the circumstances giving rise to each claim. The paragraph is directed to likelihood, as at the times of the supply of the applicators; it is not directed to the subsequent historical facts of the claimants' cases. Proof of the allegations in par 21 would require evidence of environments and practices which formed the background to the supply of the allegedly problematical applicators which were allegedly Out of Calibration at the times of the respective surgical procedures. The paragraph gives rise to common questions which will be answered by virtually the same evidence in the cases of all claims.
Issue 5: "Paragraphs 26, 34, 37 and 38 (importance of checking calibration and keeping records of use)"
51 Paragraph 26 of the Pleading concludes:
"... the only reliable and safe method of using a Filshie Applicator was to check whether it was In Calibration immediately prior to each use in a sterilisation operation."
52 Paragraph 34 of the Pleading concludes:
"... it was essential or alternatively important that the Relevant Hospitals and Doctors have a reliable means of checking whether a Filshie Applicator was In Calibration immediately prior to its use in a sterilisation procedure."
53 Paragraph 37 of the Pleading concludes:
"... it was essential that a Filshie Applicator be checked by the First Respondent or its appointed agent so as to ensure that it was In Calibration:(a) every 100 usages; or, alternatively
(b) annually; or, alternatively
(c) otherwise on a regular basis."
54 Paragraph 38 of the Pleading was as follows:
"Further, it was essential that as accurate records as possible be kept as to the extent of usage of the Filshie Applicator and the dates on which it was last checked to ensure that it was In Calibration."
55 Her Honour stated (at [37]) in relation to these paragraphs:
"These paragraphs set out certain inferences that the applicant is asking the Court to draw from other paragraphs, some of which involve common issues and others of which do not. These inferences are not separate common issues. In addition, the pleadings are themselves vague (perhaps necessarily so) using relative terms such as `reliable', `safe', `essential' and `important'. The use of relative terms means that, if these allegations were established in relation to the applicant, it would be difficult to apply those findings when considering the cases of the other group members."
56 The Court will be asked to draw the inferences set out in these paragraphs in respect of all claims on the basis of the same evidence. They raise common issues of fact. It would be unfortunate if they had to be resolved upon the same evidence in at least sixty-one separate proceedings.
Issue 8: "Paragraph 39 (Filshie applicators not known to have been regularly checked should not be used)"
57 Paragraph 39 of the Pleading was as follows:
"Further, it was essential that a Filshie Applicator which:(a) had not been checked by the First Respondent or its appointed agent to ensure that it was In Calibration:
(i) less than 12 months previously; or, alternatively
(ii) less than 100 usages previously; or, alternatively
(iii) otherwise regularly; or
(b) had not had records maintained in respect of it such as to determine whether it had been checked after every 100 usages or annually or otherwise regularly by the First Respondent or its appointed agent to ensure that it was In Calibration
not be used in a sterilisation operation."
58 In relation to the paragraph, her Honour stated (at [40]) as follows:
"This paragraph suffers from the same defect as paragraph 38 (see [37] above) namely that it uses vague and relative language. Based on other allegations relating to the importance of calibration, the benefits of proper maintenance and the importance of records, I have assumed it means that failure by the respondents to ensure that Filshie applicators are checked regularly and maintenance records are kept would be negligent. If that is its meaning, paragraph 39 is really a legal conclusion drawn from facts pleaded elsewhere, some of which involve common issues and others of which do not. It does not itself raise a separate common issue."
59 I think it clear that the word "essential" in par 39 of the Pleading means "necessary if there is to be no risk of an unsuccessful sterilisation operation caused by the use of an Out of Calibration applicator". Whether the checking and record-keeping described in par 39 were essential in that sense was a common issue to be resolved by the same evidence in relation to all Group Members.
Issue 10: "Paragraphs 45, 50, 55, 94, 96, 102, 104, 111, 113, 143(b) and 145(b) (information given to hospitals and doctors)"
60 These paragraphs refer to information supplied and not supplied to hospitals and doctors. Her Honour said (at [42]):
"The pleadings relate to the failure of the respondents and others to give the warnings discussed in [14] to [18] above. Except to the extent that some information is provided to hospitals and doctors in manuals, promotional material and standard form letters (see [32] - [33] above), this is not a common issue. It is quite possible that distributors and subdistributors gave different information to different hospitals and doctors in face to face meetings. Further, the circumstances in which manuals and other material were provided to hospitals and doctors may be different so as to give rise to different representations; Murphy v Overton Investments Pty Ltd [1999] FCA 689 at [15]."
61 The Pleading does not allege that there was differentiation as between one hospital and another or as between one doctor and another; it alleges that the form of the first respondent's manual which accompanied the applicators, first included a servicing and recalibration warning in 1994 and that this standard form of warning underwent changes on two subsequent occasions. There was no evidence before her Honour inconsistent with these allegations.
62 Contrary to what her Honour said in [42] (set out above), there was a common issue which, according to the Pleading, would be resolved differently for groups of clients, depending on when they underwent the surgical procedure. At noted at [44] above, there was no evidence that the respondents will adduce evidence that the written information was in fact modified orally.
Issue 22: "Paragraph 146(a) (access to `onsite' gauge)"
63 Paragraph 146(a) of the Pleading was as follows:
"If prior to the Operation Dates the First Respondent had designed an Onsite Gauge, made it available for sale in Australia and given the Calibration Risk Warning as alleged above:(a) the relevant Hospitals and Doctors would have had access to the Onsite Gauge;"
64 The learned primary Judge said (at [55]):
"This cannot be a common issue. If an `onsite' gauge had been developed and made available for sale, it is not obvious that each of the relevant hospitals and doctors would have had access to it. Whether or not particular hospitals would have purchased or leased such a device might depend on that hospital's budget and purchasing policy as well as on whether or not they would have felt that it was necessary. In particular, certain hospitals may have concluded that the risk of a Filshie applicator being out of calibration was small or could be reduced by use of good surgical technique, such as checking to see whether the clip has been properly applied during the operation."
65 I think par 146(a) raises a common issue. Whether hospitals and doctors would have availed themselves of the access by buying the onsite gauge, like the issue whether, having bought it, they would have used it when carrying out any particular Filshie procedure, goes to causation. In any event, it is a matter of speculation, not evidence, whether the respondents will lead evidence that particular hospitals and doctors would not have bought the onsite gauge if it had been available.
Issue 24: "Paragraphs 147, 148, 151, 152, 154, 155, 157 and 158 (lost chance to avoid loss and damage, increased risk of loss and damage)"
66 Paragraphs 147 and 148 of the Pleading are relevantly as follows:
"147. ... by reason of the First Respondent's failure to design and make available the Onsite Gauge and give the Calibration Risk Warning the Applicant and the Group Members lost the chance of avoiding the loss and damage suffered which would have presented itself if the Onsite Gauge had been designed and made available and the Calibration Risk Warning had been given.""148. ... the failure of the First Respondent to design and make available the Onsite Gauge and give the Calibration Risk Warning increased the risk of the Applicant and the Group Members suffering the loss and damage which they did suffer and thereby materially contributed to such loss and damage."
67 Her Honour said (at [57]):
"This is not a common issue. Whether or not Femcare's failure to do certain things resulted in a group member losing a chance to avoid loss and damage will depend on the circumstances of that group member. For example, it might be the case that the Filshie clip was attached to the wrong anatomical structure, making it irrelevant whether or not the applicator was in calibration."
68 In my opinion pars 147 and 148 of the Pleading raise common issues which will be answered by the same evidence in respect of all claims. The matters raised by her Honour go to causation in the case of the individual women.
Group B Members
69 The learned primary Judge did not address a special aspect of the position of Group B Members. Paragraphs 85-93 of the Pleading relate to them. Relevantly, and in substance, they allege that the respondents had a duty to warn and advise hospitals and doctors to check that their applicators were In Calibration and to keep records of the checks made. Paragraph 70 of the first respondent's draft defence responds to those paragraphs as follows:
"As to paragraphs 85 to 93 inclusive, the First Respondent:(a) Says that as a matter of law it is not responsible for the failure of doctors and hospitals to keep records;
(b) Says it is not responsible for the failure of doctors and hospitals to maintain equipment;
(c) Says that it does not cause any of the loss or damage alleged;
(d) Otherwise cannot plead to those paragraphs as they are vague and embarrassing."
The second respondent's draft defence either denies or does not admit the allegations in pars 85-93.
70 Issues as to the importance of calibration and the need for warnings and for record-keeping, are common to all Group A Members and all Group B Members. The non-common issues as to the actual causes of failed sterilisations are not issues in the claims of the Group B Members. The only non-common issues in their claims relate to each woman having undergone the Filshie procedure; the calibration of the Filshie applicator not having been timeously checked and the result of the check not having been recorded; the seeking of reassurance by the woman or by someone on her behalf; a response which did not allay her anxiety; and the consequences for her, including distress and any remedial steps taken.
71 It was an important consideration relevant to the exercise of her Honour's discretion that, in the cases of the Group B Members, the common issues mentioned were, it seems, the only issues which would prove to be controversial, time-consuming and decisive. In sum, the key issues in their claims are whether they were owed a duty by the respondents, discharge of which necessitated the giving of warnings to check and keep records of checks, the doing of which would, in fact, have allayed their misgivings.
72 The Court might give appropriate directions under ss 33Q and 33R of the Act in respect of the claims of the Group B Members if the common issues mentioned above were resolved in their favour.
73 For the reasons set out at [27] to [72] above, I agree with Kiefel J (at [134]) that the order of discontinuance should be set aside and that the inquiry under subs 33N(1) must be considered afresh.
Should an order be made under subs 33N(1)?
74 Subsection 33N(1) of the Act empowers the Court to order a discontinuance only if it is satisfied that it is in the interests of justice to do so on one or more of the grounds specified in pars (a) to (d) of the subsection. Unless the Court is so satisfied, the representative proceeding is to continue. Those grounds raise practical questions which require that the Pt IVA proceeding be compared with other proceedings that are available to the applicant and group members as a means of resolving their claims. What are the comparator proceedings here? Other proceedings all in the one court might be more efficient and effective than other proceedings in several courts. If the applicant and group members were all to bring, through the same solicitors, proceedings in the same court, filing fees on all but one proceeding might be waived and the court might order, with necessary adjustments and to the extent appropriate, that interlocutory steps and orders in one proceeding be deemed to have been taken and made in each of the others, and that the proceedings be heard together, the evidence in one, to the extent relevant, being evidence in each of the others. But counsel for the respondents could hardly submit that the evidence shows that individual proceedings in the one court would probably be brought and are therefore the appropriate comparator. They have, in fact, referred to proceedings in State courts at various levels in Queensland, New South Wales and Victoria.
75 I am not "satisfied" (to use the word in subs 33N(1)) that the proceedings to be compared with the present representative one under Pt IVA are anything other than individual proceedings in several courts brought by all the Group Members (numbering at least sixty-one) not necessarily represented by the same solicitors.
76 In relation to the grounds referred to in subs 33N(1), I would have expected the parties to adduce evidence directed to establish in some detail the likely course and cost of the two kinds of proceeding required to be compared. They did not do so. One is left to speculate whether Dr Filshie will come from England to testify in all of the individual cases, and if so, why the respondents do not prefer the present representative proceeding to ordinary individual proceedings. Perhaps the parties' omission is attributable, at least in part, to the applicant's failure to "specify" common "questions" of law or fact as she was required to do by s 33H(1)(c), and to the early stage in the proceeding at which the respondents have applied under s 33N.
77 Senior counsel for the first respondent said that the substantial controversy will relate to the non-common issues. But let it be assumed that in respect of the resolution of each woman's claim, two thirds of the time to be spent will have to be devoted to issues unique to that claim and one third to issues which are common to all claims. Is it still not preferable that the common issues be heard and determined once so as to be binding as between each claimant and the respondents rather than many times?
78 As noted earlier, the respondents submit that once one descends to the non-common issues, one will appreciate that the claims will very probably fail. Senior counsel refer to the difficulty which the respondents have had over a long period in extracting particulars of the individual claims. They also refer to evidence of actions brought in various other courts against the respondents, all of which have come to an end without payment of any compensation by either respondent to a plaintiff.
79 But, as also noted earlier, it is possible for the present Pt IVA proceeding to be managed by the Docket Judge in ways which will permit the respondents' present submission, in relation to at least some of the individual claims, to be tested at an early time. The mechanism by which the non-common issues are to be accommodated within the present Pt IVA proceeding will be a matter for the Docket Judge. One possibility would be for the applicant and the respondents to nominate a small number of Group Members' claims, resolution of the non-common issues in which would provide guidance to the parties as to how the Judge would be likely to decide the non-common issues in the remainder (cf NMFM Property Pty Ltd v Citibank Ltd [2000] FCA 1558; (2000) 107 FCR 270 at [20]- [22] - not a proceeding under Pt IVA of the Act). The hearing and determination of the selected claims would also afford the occasion for the resolution of the common issues in the claims of all Group Members. Care would have to be taken in the formulation of directions under s 33Q of the Act and otherwise.
80 I am not satisfied that it is in the interests of justice that the proceeding at first instance should not continue under Pt IVA of the Act because of any of the matters referred to in pars (a), (c) or (d) of subs 33N(1) of the Act.
Conclusion
81 The appeal should be allowed and the orders proposed by Kiefel J should be made.
I certify that the preceding eighty-one (81) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. |
Associate:
Dated: 20 August 2002
IN THE FEDERAL COURT OF AUSTRALIA |
|
NEW SOUTH WALES DISTRICT REGISTRY |
N410 OF 1999 |
BETWEEN: |
KERRIE BRIGHT APPLICANT |
AND: |
FEMCARE LIMITED FIRST RESPONDENT ENDOVASIVE PTY LIMITED SECOND RESPONDENT |
JUDGES: |
LINDGREN, KIEFEL AND FINKELSTEIN JJ |
DATE: |
20 AUGUST 2002 |
PLACE: |
SYDNEY |
KIEFEL J:
82 The applicant commenced these proceedings in 1999 as a representative of two groups of women pursuant to Part IVA of the Federal Court Act 1976 (Cth) ("the Act"). Her Honour the primary Judge ordered, pursuant to s 33N of the Act, that the proceedings should no longer continue as a representative proceeding. Her Honour held that whilst there were some issues of substance common to the group members, their resolution in the applicant's proceedings would not facilitate the determination of the other members' claims to any significant extent. Further, in her Honour's view, the costs of continuing the proceeding as a representative one were likely to exceed the costs if each claim were dealt with individually.
THE STATEMENT OF CLAIM
83 The statement of claim (the fourth amended statement of claim) refers to "Group A" as women who became pregnant after undergoing a sterilisation procedure which involved the use of a Filshie clip and a Filshie applicator. The required result, occlusion of the fallopian tubes, is achieved by clamping a Filshie clip on each fallopian tube by means of the Filshie applicator. These products have been manufactured by the first respondent since 1982 and were distributed in Australia by the second respondent since November 1993. In each case it is alleged that the applicator was out of calibration and that caused the procedure to be ineffective. In this context "out of calibration" means that an applicator is not adjusted so that it will sufficiently close the Filshie clip and occlude the fallopian tube. "Group B" is made up of women who underwent the procedure at particular hospitals but who subsequently had further procedures to check the effectiveness of the first, or took other procedures or precautions to ensure that they would not conceive. The need to do so was said to have been brought about because of publicity concerning the effectiveness of the Filshie procedure. The publicity raised questions as to whether applicators could be confirmed as having been in calibration. In each case it could not, and the group member was left in a state of uncertainty as to whether her operation was effective.
84 The facts pleaded as personal to the plaintiff show that she falls within Group A. The applicant alleges that she became pregnant following an operation in January 1998 in which the Filshie equipment was employed. There may therefore be a question as to whether she can represent Group B members. It may fairly be observed that the motions determined by her Honour and this appeal have focused upon the proceedings so far as they relate to Group A members, although the second respondent had raised a question about Group B.
85 The applicant alleges that obligations, on the part of the respondents, arose because of the likelihood of an applicator going out of calibration for any number of reasons, and because of the effect that might have upon the success of the procedure for the woman. The obligations were said to include those to warn users, hospitals and surgeons, of the risk just mentioned and of the need to have the applicator checked and serviced on a regular basis. These are referred to respectively as the "Calibration Risk Warning", the "Regular Check Warning" and the "No Servicing Warning". No such warnings were provided, although manuals and promotional material were provided from time to time. There were some warnings given about the need for checking and servicing from about 1994, but it is to be inferred that it is the applicant's case that they were not sufficient. The respondents are alleged to have known that applicators were not regularly serviced because they were not presented to them for servicing.
86 The applicant alleges that if the Calibration Risk Warning had been given, the Filshie products may not have been sold. If the Regular Check and No Servicing Warnings were given, they would not have been used. It is alleged that the only safe and effective way to check calibration was immediately prior to use in surgery. There was however no "on site" gauge made available by the first respondent until 1999. What was needed was such a gauge and the warning to check calibration. The first respondent could have produced the gauge since 1982 but did not do so, it is alleged. The case therefore appears to describe the products as unsafe to use, absent the ability to check their calibration and a warning to do so. In this event the other warnings may be otiose. This approach is reinforced by the allegations of misrepresentation. It is alleged that the Filshie procedure was misrepresented as a safe and effective one, or that such misrepresentation is to be inferred, because it was promoted and sold without qualification. The provision of materials absent a warning is relied upon as conduct likely to mislead or deceive: s 52 Trade Practices Act 1974 (Cth) ("the TPA").
87 So far as concerns the Group B members, it is alleged that in 1997 a number of procedures at the John Hunter Hospital failed and two applicators were found to be out of calibration. A safety alert was given by the second respondent in October 1998 to the effect that if an applicator had not been calibrated in a given period it should not be used. This is the beginning of the publicity relevant to Group B.
88 The issues which are alleged to be common to all group members are described, rather unhelpfully, in the following way in the statement of claim:
"159. The claim gives rise to substantial common issues of law and fact including the issues raised by the allegations contained in each of paragraphs 9, 10, 15 to 39, 40, 42 to 45, 47 to 50, 52 to 55, 60 to 63, 64 to 67, 94 to 145, 146(a), 147, 148, 149, 151, 152, 154, 155, 157 and 158."
THE RESPONDENTS' MOTIONS
89 Before her Honour the respondents sought to have the proceedings no longer continue as representative of the two groups, but on different bases. Submissions on the first respondent's motion were based upon s 33N of the Act which provides:
"33N. (1) The Court may, on application by the respondent or of its own motion, order that a proceeding no longer continue under this Part where it is satisfied that it is in the interests of justice to do so because:(a) the costs that would be incurred if the proceeding were to continue as a representative proceeding are likely to exceed the costs that would be incurred if each group member conducted a separate proceeding; or
(b) all the relief sought can be obtained by means of a proceeding other than a representative proceeding under this Part; or
(c) the representative proceeding will not provide an efficient and effective means of dealing with the claims of group members; or
(d) it is otherwise inappropriate that the claims be pursued by means of a representative proceeding."
90 The second respondent's motion also relied upon the applicant's failure to satisfy the requirement of a representative proceeding that there be common issues and that they be specified. Section 33C provides:
"33C. (1) Subject to this Part, where:(a) 7 or more persons have claims against the same person; and
(b) the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances; and
(c) the claims of all those persons give rise to a substantial common issue of law or fact;
a proceeding may be commenced by one or more of those persons as representing some or all of them.
(2) A representative proceeding may be commenced:
(a) whether or not the relief sought:
(i) is, or includes, equitable relief; or
(ii) consists of, or includes, damages; or
(iii) includes claims for damages that would require individual assessment; or
(iv) is the same for each person represented; and
(b) whether or not the proceeding;
(i) is concerned with separate contracts or transactions between the respondent in the proceeding and individual group members; or
(ii) involves separate acts of omissions of the respondent done or omitted to be done in relation to individual group members."
91 Section 33H provides:
"33H (1) An application commencing a representative proceeding, or a document filed in support of such an application, must, in addition to any other matters required to be included:(a) describe or otherwise identify the group members to whom the proceeding relates; and
(b) specify the nature of the claims made on behalf of the group members and the relief claimed; and
(c) specify the questions of law or fact common to the claims of the group members."
92 The second respondent also sought orders, in the alternative, that the proceedings be stayed so far as they related to Group B members.
93 No defences, at least in final form, were filed at the time the motions were heard. Documents entitled "Draft Defences" were filed by each respondent but apparently for the purpose of showing what issues of fact were likely to arise and as an aid to argument. The first respondent's document was not complete. Both documents would put many of the applicant's allegations in issue.
94 The respondents also adduced evidence before her Honour. It included a number of manuals produced by the first respondent over the years in question which provided instructions for services and operation. It is not necessary to refer to them in detail. They contain some references to the need for checking and servicing but I do not understand the respondents to suggest that they departed in any substantial way from the description of them in the statement of claim. I take it they were put forward in support of the argument that, to the extent that the equipment needed to be maintained in calibration, users were advised of this. Some documents relating to servicing or maintenance carried out were also produced. Circulars and correspondence were produced. Some of it was addressed, generally, to users of the equipment, and there are some letters referring to events at the John Hunter Hospital.
95 Dr Filshie, one of the developers of the equipment, and the honorary medical director of the first respondent, provided his opinion as to the prospect that an applicator, which was not adjusted to the first respondent's specification, could have been responsible for the failure of a sterilisation procedure. Dr Filshie said that he was not aware of any case in which it had been held responsible. He accepted the theoretical possibility that an applicator might be so far out of adjustment, from wear and tear, that it would not properly occlude the tube. He explained that the top jaw of the clip is flattened by the pressure of the applicator. He considered that there was only a substantial possibility that the clip would not exert sufficient pressure if the clip had a closed height of 4.40 mm or more, but that this would be apparent to a surgeon. The procedure concluded with a visual inspection by the surgeon to ensure that the clip had occluded the tubes. If too much pressure was applied and the tube transected, this would also have been apparent to a surgeon.
96 Dr Filshie went on to say that there were a number of reasons why a procedure might fail and surgeon error was one of them. The prospect that the surgeon and the hospital involved in each case might be joined as parties to the proceedings if they continued was confirmed as real by the respondents' legal representatives. There was material put forward as to the discontinuance of similar cases against the respondents in other Courts.
97 Dr Renou, the medical expert who has provided the applicant with a report, did not accept that either tubal transection or an insufficient closure would necessarily be observable. There was a difficulty in identifying a closed clip height at which there might be a problem in achieving occlusion, because there were other variables personal to the patient. In his view where (a) an applicator does not sufficiently close a clip when the applicator finger bar is squeezed to its full limit of travel; and (b) it closes a clip too tightly when the applicator bar is squeezed to its full limit of travel, the use of an applicator could be said to increase the risk of a failed sterilisation.
98 Dr Renou also provided comment upon the applicant's own case. It would appear that two clips applied to the left tube were effective in occluding the tube, but that the clip to the right, although appearing satisfactory at the time of the operation, was not completely closed and became detached afterwards. The first respondent relies upon this evidence as showing that the applicant will not be able to establish that the applicator used was unable, effectively, to occlude the tubes. Dr Renou's comments on a similar assertion, in connexion with another patient, leave the matter unclear.
99 The motions were originally heard by Lehane J in November 2000, but his Honour became seriously ill shortly thereafter. During that hearing the applicant's solicitor was cross-examined about the extent of the Group A members, which he numbered at about sixty-one, and as to the state of the applicator used in each case so far as concerned its adjustment. The solicitor was not able to say that any applicator had been confirmed as being out of calibration. The further and better particulars provided to date, and in response to an order made on 9 August 2000, do not identify either the applicator in question or the extent of its incorrect adjustment. He agreed that proof on the issue as to there being a failure to warn would not be expensive and I take him to say that the relevant manuals and the material could be readily produced. His opinion as to the cost savings to be made by the proceeding remaining a representative one had regard to all of the issues arising from the paragraphs listed in par 159 of the statement of claim.
100 Her Honour the primary Judge dealt with the matter "on the papers", hearing only additional submissions.
THE DECISION APPEALED FROM
101 Her Honour identified the following topics as arising from the paragraphs listed in par 159 of the statement of claim:
* Paragraph 9 (meaning of calibration).
* Paragraphs 10, 17, & 30 (importance of calibration).
* Paragraphs 15, 20, 25, 33, 40, 43, 44, 48, 49, 53, 54 & 64 (manuals and promotional material supplied to hospitals and doctors).
* Paragraphs 18, 19, 22, 23 & 24 (content of warning).
* Paragraph 21 (care of Filshie applicators).
* Paragraphs 26, 34, 37 & 38 (importance of checking calibration and keeping records of use).
* Paragraphs 27, 28, 31 & 32 (availability of means of checking calibration of Filshie applicator).
* Paragraphs 16, 35, 36, 66, 67, 97, 105 & 114 (knowledge of respondents).
* Paragraph 39 (Filshie applicators not known to have been regularly checked should not be used).
* Paragraphs 42, 47 & 52 (same Filshie applicators supplied over time).
* Paragraphs 45, 50, 55, 94, 96, 102, 104, 111, 113, 143(b) and 145(b) (information given to hospitals and doctors).
* Paragraphs 60 to 63 (publicity).
* Paragraph 65 (relevant hospitals and doctors failed to have Filshie applicators serviced regularly).
* Paragraphs 95, 103, 112, 143(b) and 145(b) (warnings not given to distributors).
* Paragraphs 98, 100, 106, 108, 115 and 117 (reasonable and legitimate expectations of relevant hospitals, doctors and distributors).
* Paragraphs 99, 101, 107, 109, 116, 118, 142 and 144 (existence of duty to give certain warnings to relevant hospitals, doctors and distributors and to take certain steps).
* Paragraph 110 (certain statements did not constitute a required warning).
* Paragraphs 119 and 120 (certain representations made to relevant hospitals, doctors and distributors).
* Paragraphs 121 to 134 (certain misleading or deceptive and certain statements inaccurate).
* Paragraph 135 (aiding and abetting).
* Paragraphs 136 to 141 (certain conduct is in trade and commerce).
* Paragraph 29 (no means of checking Filshie applicator is in calibration available to hospitals and doctors).
* Paragraph 146(A) (access to "onsite" gauge).
* Paragraphs 143(A) and 145(A) (failure to design and make available an onsite gauge is breach of duty of care).
* Paragraphs 147, 148, 151, 152, 154, 155, 157 and 158 (lost chance to avoid loss and damage, increased risk of loss and damage).
* Paragraph 149 (if warnings had been given, an onsite gauge would have been developed).
* Common question of law in relation to group a members - damages for birth of healthy child.
102 Her Honour identified the following issue as arising from the statement of claim with respect to the importance of calibration (at [28]):
"The use in a Filshie Procedure of a Filshie applicator which is not adjusted so that it will sufficiently close the Filshie clip so as to occlude the fallopian tube without cutting it increases the risk of a failed sterilisation."
103 Her Honour accepted the first respondent's submission that this statement was unlikely to be controversial. Her Honour accepted that evidence as to what might occur if an applicator was out of calibration would require expert evidence and that the evidence might be relevant and significant in determining the claims of group members. Its relevance lay in connexion with determining the duty to warn, whether the respondents' conduct in that regard was such as that it might have been misleading and deceptive within the meaning of s 52 of the TPA and also in assessing the likelihood that the pregnancy of a Group A member arose from use of a Filshie applicator that was out of calibration. Her Honour considered that the question of causation was best dealt with at the level of the individual group member, and that it was "pointless to consider this question in the abstract"[30]. Her Honour accepted that the first respondent would seek to show that a failed sterilisation is more likely to be attributable to hospital or surgeon error than an applicator which is out of calibration and that:
"Resolution of this issue is likely to depend on evidence of what the surgeon observed during and after the procedures, what a competent surgeon might be expected to conclude from such observations, the position of the Filshie clip after the procedure (where this has been subsequently investigated) and the status of the relevant Filshie applicator at or about the time of the operation rather than on a general proposition that use of a Filshie applicator that is out of calibration may have negative consequences" (at [30]).
104 Her Honour also concluded that the question whether regular servicing would have ensured that Filshie applicators remained in calibration was a common one, albeit an uncontroversial one. So far as concerned the actual use of Filshie applicators, as to how they were handled and the likelihood that they would be handled by more than one person, to the first respondent's knowledge, her Honour considered that practices would almost certainly vary from hospital to hospital and concluded that the issue was not a common one. Her Honour dealt with the question of the first respondent's knowledge separately. Her Honour considered that the allegations concerning the importance of checking calibrations and keeping records gave rise to inferences, but not to common issues. Further, they were described too generally to be of application in the group members' cases. The allegation that the hospital and doctors failed to have the applicators serviced regularly was not a common issue, in her Honour's view. It would require separate evidence in each case. Her Honour considered the possibility of creating sub-groups, but considered that it was difficult to assess the benefit of a finding on this issue to the various sub-groups.
105 So far as concerned the knowledge of the respondents, as to matters such as the importance of maintaining the applicators in calibration and that they were not in fact checked regularly, that issue was held to be common in the negligence claim, but not common to the claim under s 52 of the TPA. Whether there was no means available to the hospitals and doctors to check whether an applicator was in calibration could not, in her Honour's view, be a common issue since they may have had different means at their disposal to check whether that was the case. As to the allegation that the first respondent could have made such a device available to users, some common issues were raised. Whether it would have been used, was not a common issue, but required evidence in each case.
106 Her Honour appears to have considered the possibility that different manuals and promotional materials were supplied from time to time. In any event her Honour did not consider that proof in any given case would be onerous and, implicitly, thought that not much was to be gained by it. Other information provided to users was not a common issue since it was quite possible that different information was provided by distributors and sub-distributors to different hospitals and doctors in face-to-face meetings. This possibility had been adverted to in the evidence.
107 The statement of claim had alleged that doctors and hospitals would have had an expectation that any necessary warnings would be given. Her Honour did not consider these allegations to raise common issues since much would depend upon the individual's circumstances and experience. Similarly her Honour held that the question whether a duty was owed to users and the content of that duty could not be said to be common because of the variation in circumstances. At another point her Honour held that whilst the applicant's pleading referred to other warnings, her case required only one to be given, namely that each applicator should be checked immediately before use. I infer that her Honour considered that this would require little by way of evidence. The allegation that warnings were not given gave rise to both common and uncommon issues. Evidence as to information passing between the first respondent and the Australian distributors was common; but evidence as to information passing between the distributors and sub-distributors was not. Whether certain statements made in the material provided to the hospitals constituted a required warning was a common issue. Her Honour however considered that this did not necessarily conclude the question, as different information might have been provided.
108 The representations said to have been made to distributors, hospitals and doctors were common and, her Honour observed, were based on evidence that was common to both the applicant and group members namely the material provided to them. However the respondents might seek to raise a case that no implication could be said to arise from the material because of the circumstances of the sale of the Filshie equipment and accordingly the issue was not common. So far as concerned conduct said to be misleading and deceptive, her Honour again considered that the conduct could be different with respect to each hospital or doctor. Therefore it was not a common issue. Her Honour also held that whether the first respondent was guilty of accessorial liability, with respect to the conduct of the second respondent, was not a common issue. That would not be known until after findings were made as to the second respondent's conduct.
109 Of the few remaining matters which her Honour had listed, only two were considered to be common: whether the first respondent was acting in trade and commerce in Australia, which it had said it would put in issue, and a legal issue about the measure of damages for Group A members.
110 Her Honour concluded that there were a number of issues that could be said to be common and substantial in the sense referred to in Wong v Silkfield Pty Ltd [1999] HCA 48; (1999) 199 CLR 255, 266-267. It was there held that for a common issue to be regarded as "substantial" for the purposes of s 33C(1), it was not necessary that its determination would have a major impact on the litigation, but only that the issue said to be common was "real or of substance" [27, 28]. As her Honour observed, the requirement in s 33C was easier to meet than had previously been thought.
111 Her Honour listed (at [63]) the issues which were not considered to be common:
* whether the woman is a group member (and whether she is in group A or B);* whether the Filshie applicator used in the woman's operation can be identified;
* whether the Filshie applicator used in the woman's operation was regularly serviced;
* whether the Filshie applicator used in the woman's operation was out of calibration at the time of the procedure and, if so, whether it was sufficiently out of calibration to cause the procedure to fail (taking into account the woman's biology and blood pressure);
* whether the surgeon who carried out the procedure was aware of the alleged propensity of Filshie applicators to lose calibration;
* whether the woman's pregnancy (in the case of Group A) arose as the result of an improperly calibrated applicator as opposed to, for example, surgeon error;
* whether the woman would be in a different situation had the warnings been given (for example, the doctor may already have known of these matters or may have ignored any warning given);
* whether the relevant hospital and doctor relied on any misrepresentations made; and
* what is the amount of any loss and damages.
112 It was submitted for the applicant before her Honour that, because the issues remained poorly defined, it was premature to consider the application of s 33N. Her Honour did not accept that submission. In her Honour's view the applicant could not be prejudiced if the matter was approached on the basis that the respondents would put each allegation in issue.
113 Her Honour then proceeded (at [66]) to consider those common issues which might be determined in the applicant's proceeding and to evaluate what assistance that might provide in the determination of the claims of the group members. Those identified were as follows:
"(a) the content of manuals and promotional material generally supplied to hospitals;(b) the content of any necessary warning;
(c) whether an onsite gauge had or should have been developed in 1982;
(d) the knowledge of the two respondents;
(e) the Filshie applicators that were supplied over a period of time were similar in appearance and functionality;
(f) the existence and content of the publicity following the "John Hunter incidents";
(g) information passing between Femcare and Endovasive (and previous exclusive Australian distributors);
(h) whether certain alleged conduct was misleading or deceptive ([51]); and
(i) whether Femcare was carrying on business in Australia"
114 Her Honour concluded that only issue (a) could be said to provide a benefit from a single determination. Even then it would be more efficiently dealt with by alternative case management procedures. In her Honour's view any findings made with respect to the content of the manuals and any necessary warning (issues (a) and (b)), could not be said to be of great importance, since the case was based upon omissions. Issues (c) and (d) were relevant to the scope of any duty of care owed by Femcare, but that question could not however be determined by reference solely to those issues. Issue (g) was to be viewed in a similar light. Issues (e) and (f) were, her Honour considered, unlikely to involve much, if any, controversial evidence. In relation to whether certain conduct was misleading or deceptive, the applicant had submitted that it was not necessary to consider, in each case, the knowledge of the particular people targeted. Her Honour considered, however, that the difficulty the applicant faced in relying upon this issue was that different conduct may have been directed towards different hospitals and doctors "(that is, they may have received different information)".
115 The applicant argued before her Honour that the respondents should not benefit from the fact that individual group members might not consider it worthwhile to commence proceedings of their own: Ryan v Great Lakes Council (1998) 155 ALR 447, 456; ACCC v Giraffe World Australia Pty Ltd [1998] FCA 819; (1998) 84 FCR 512, 534. In her Honour's view that was only one aspect of the policy of Part IVA of the Act. Section 33N provides for an order that a proceeding not continue unless the Court is satisfied "that it is in the interests of justice to do so" and recognises that there may be circumstances where, despite the existence of substantial common issues, the procedures under Part IVA are not appropriate. In that regard her Honour considered some other factors, pertaining to the proceedings, to be relevant.
116 The respondents argued that the surgeons and hospitals responsible for each of the procedures would not be joined by the applicant to the proceedings. This was said to disadvantage the respondents and also to lull women falling within Group A "into a false sense of security" about time limits for making such a claim, in addition to the claims here made. The applicant submitted, in response, that it was a matter for individual group members or their legal advisers to decide whether to join the doctors. Further it was submitted that if the common issues were determined in the applicant's favour, the respondents would retain a right of contribution against the doctor concerned. Her Honour said in this regard (at [76]):
"Despite the possibility of the respondents claiming contribution from surgeons in any case involving joint negligence, proceeding in this manner does not lend itself to efficient resolution of the claims of the group members. Further, the doctor would not be bound by findings of fact made in the main proceedings and it is possible that, following the doctor's evidence and submissions, inconsistent findings of fact would be made."
117 The first respondent also submitted before her Honour that the existence and content of any duty of care would depend upon the circumstances pertaining to the recipient of the warning. Her Honour accepted that it would be necessary, at the least, to assess the knowledge of the practitioner carrying out the procedure. In this regard it would be necessary to consider both information generally provided by the respondents, and information provided to the individual doctor. The respondents' promotional material would need to be considered having regard to the circumstances of each case. Her Honour concluded (at [78]):
"Having reviewed the evidence and the submissions made by both parties, I have concluded that the representative proceeding will not provide an efficient and effective means of dealing with the claims of the group members and that, in the interests of justice, it should not continue under Pt IVA of the Act. Although there are issues of substance common to the claims of group members, in the main, they are either issues that are stated at such a level of generality that their resolution will not materially advance the determination of the claims of individual group members and/or they would need to be revisited in the context of each group member's claim. In addition, the intertwining of the common and individual issues is such that I also believe that the costs of continuing the proceeding under Pt IVA are likely to exceed the costs that would be incurred by dealing with the claims of group members individually. There are established techniques of case management by which these costs can be minimised, for example by ensuring that all individual claims are dealt with by the same judge. It may be that, as the respondents suggested, those claims could dealt with more cost effectively in another jurisdiction."
118 Because of the view her Honour had reached, it was not necessary for her to consider the second respondent's contention, that the mandatory requirements of s 33H were not met. The second respondent has given notice of that contention as another basis for supporting the orders made by her Honour.
THE APPLICATION FOR LEAVE TO APPEAL AND THE APPEAL
119 The applicant requires leave to appeal: s 24(1A) of the Act. It will be granted only if it is considered that the decision is attended with sufficient doubt and substantial injustice would result, assuming for this purpose that the decision is wrong. Additionally, the order under s 33N(1) is one made in the exercise of a discretion and the basis upon which an Appeal Court may intervene is limited.
120 The second respondent relies upon the nature of the decision as tending against the grant of leave. It is pointed out that it is not determinative of substantial rights and is concerned only with the procedure to be utilised to determine the cases of the group members: see Décor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 655; (1991) 33 FCR 397, 400. The submission may be strictly correct but it would seem to me that there is a point of distinction in cases where it is determined that a representative proceeding be discontinued, not the least because of the number of claimants affected by an order. I do not however intend to convey by that observation that there will, in each such case, be a tendency to grant leave, but rather that the importance and effect of the decision might not necessarily be discounted.
121 The applicant pointed to three errors said to have been made by her Honour. The first two involve the commonality of the questions arising from the statement of claim. The third is said to be in the approach taken by her Honour which, it was argued, was similar to that applied in an application to strike out a pleading. It is submitted that her Honour attempted to assess, by speculation in some instances, whether some evidence which might be led by the respondents would affect the applicant's success on certain issues.
122 The applicant challenges many of the findings made by her Honour as to whether an issue was common to the claims. In that regard it was submitted that some topics, such as the importance of calibration, should not have been accepted as likely to be uncontroversial. So far as concerns her Honour's method, it was submitted that the draft defences and the evidence should not have been utilised to identify the common issues. I understand the applicant to argue that only the statement of claim should in that connexion, be referred to and that the allegations in it were conclusive of such questions. Once the "hurdle" presented by s 33C(1) was overcome, there was an entitlement to continue the proceedings as representative save in exceptional circumstances. Consistently, the applicant submitted that s 33N had no application in the present case. It was submitted that its intended operation was a narrow one, to enable the Court to prevent abuse of the new procedures provided by Part IVA. Reliance was placed in that regard on a statement made in the Explanatory Memorandum to the Federal Court of Australia Bill 1991 (29256/91). It follows, in the applicant's submission, that the process of evaluation undertaken by her Honour and the conclusion reached as to what would be achieved by conducting this proceeding as a representative one, having regard to the evidence which was likely to be led in the other cases, was not a course open under s 33N.
123 The submissions for the first respondent may be summarised for present purposes. It relies principally upon the fact that the cases are inherently individual and require assessment on that basis. The specificity of the evidence necessary in each case is shown by reference to other decided cases dealing with the Filshie procedure. The first respondent argues that here there is an issue and, inferentially, some doubt, as to whether an applicator which is out of calibration is likely to be a relevant cause. The first respondent submits, directly, that it is not likely to be an issue at all. The applicant is not able to point to one case where it could be said that the applicator was out of calibration. The respondents otherwise submit that her Honour's method of evaluating the evidence likely to be necessary in each case could not be said to be erroneous.
SECTIONS 33C AND 33N
124 Section 33C is, as Wong v Silkfield, (266 [26]) holds, a threshold requirement, one which will ordinarily be evaluated before it is known what issues remain as between the parties. As the Court there pointed out with respect to s 33C(1):
"...That provision is concerned with the commencement, not subsequent conduct, of litigation using the procedures provided in Part IVA. In terms, s 33C(1) looks to the claims made by seven or more persons against the same person, being claims which are in respect of, or arise out of, the same, similar or related circumstances, and asks whether claims so understood give rise to a substantial common issue of law or fact ...".
125 In their Honours' view an assessment, as to whether an issue was at the core of the dispute between the parties and therefore one which might have a major impact on the litigation, could not realistically be made at this stage in the litigation.
126 The focus of s 33C(1), particularly pars (b) and (c), are upon the applicant's claims. It follows, in my view, that a determination as to whether the requirements of s 33C(1) have been met is to be made by reference to the pleading or other document in which the claims of the applicant and the group members are made. Section 33H(1) is intended to facilitate that assessment. Whether those issues will remain at the close of pleadings, and whether the evidence which will be led in each case might differ in some respects, are not matters which are relevant to a determination as to whether there is a common question and whether s 33C(1) is satisfied.
127 In the present case, as the second respondent points out, s 33H was not complied with. There was no specification of the questions of law or fact common to the claims of group members. It was explained that they were identified in earlier versions of the application or statement of claim. That does not provide any assistance with respect to what has been described as a substantially different pleading. It would seem to me that any substantial change to a case as pleaded would require s 33H to be addressed again. Nevertheless, it does not in this case conclude the matter against the applicant. It does not mean that there are no common questions arising from the claims, but that her Honour was given the unnecessary task of attempting to identify them. Further, the matter has not been dealt with as a point of pleading, but as a determination of the questions of substance arising under s 33C(1) and the application of s 33N(1).
128 As her Honour the primary Judge observed, a proceeding might satisfy the requirements of s 33C(1) but an order for its discontinuance as a representative proceeding nevertheless be appropriate under s 33N(1). In general terms the matters listed for the Court's consideration under pars (a) to (c) of the latter subsection require consideration as to what would be achieved by a determination of the proceedings in their present form and the costs of doing so. If there is some real benefit to be gained, the requirement that the proceedings be seen as an inefficient means of dealing with the claims might not be met. A consideration as to whether the proceedings would, or would not, provide an efficient means of dealing with the claims of group members would almost certainly involve an assessment of the findings which might be made in an applicant's case and of the extent to which they would be likely to resolve the other claims. It does not seem to me that the subsection requires an audit to be conducted of the findings which might be useful, and those which might not be in the other claims. The enquiry required by the subsection is not whether the continuance of the representative proceeding can be seen to be efficient, but whether the Court is satisfied that it is in the interests of justice to order its discontinuance as a proceeding under Part IVA for the reasons listed in pars (a) to (c) of s 33N(1). A Court may also order a discontinuance if it thinks it otherwise inappropriate for the claims to be pursued in that way (par (d)).
129 Zhang v Minister for Immigration, Local Government and Ethnic Affairs [1993] FCA 489; (1993) 45 FCR 384 furnishes an example of a representative proceeding which had utility at the point of determination of a threshold question but which had no further purpose as a representative proceeding thereafter. French J in that case determined the question, whether there had been a failure to comply with certain requirements of natural justice and then made an order of discontinuance under s 33N(1). The decision was referred to with apparent approval in Wong v Silkfield (266 [25]).
130 Section 33N(1) is not intended to be applied unless the requisite level of satisfaction is reached. The applicant would go further, and deny the operation of the subsection unless there was an abuse of the procedures provided under Part IVA. Where the Court's processes were subject to abuse I would not have thought that statutory warrant to deal with the case was necessary. In any event it is clear from the terms of the subsection that it permits the Court a much wider consideration, as to what purpose the representative proceeding might serve.
131 The first respondent's submissions contain a challenge to the applicant's and the group members' cases at a factual level. I refer to the contention that the use of applicators which were out of adjustment will not be an issue in any of the cases. This is of course one of the questions said to be common to all claims. The determination of it will have application to them all.
132 It would not seem to follow from s 33C(1), or from Wong v Silkfield, that there is a prohibition upon a respondent challenging whether, in truth, the applicant's and the group members' cases had the necessary qualities referred to in s 33C(1). Such an application, to strike out or stay the proceedings, would not however be one based upon non-compliance with s 33C(1), which is to be assessed by reference to the claims, not the true facts. It would be based upon there being an abuse of process because there is no foundation in fact for the required matters. One would not think that such an application is likely to be often made. I do not understand the first respondent to put its argument in this way. It maintains reliance upon the provisions of s 33N(1) as making an order for discontinuance appropriate in such circumstances.
DETERMINATION OF THE APPEAL
133 As already observed, s 33C(1)(c) is concerned with questions arising from the applicant's pleading. Section 33N(1)(c) is concerned with the disposition of these questions and their effect. It must follow, in my respectful view, that a conclusion that the claims made do not give rise to a common question cannot be reached by reference to the evidence to be given on that point and a finding that it is likely to be different in each case. In that circumstance it may be concluded that a finding in the representative proceeding will not dispose of the question in the other proceedings, which is to say it will not have a common application. That is a matter to be considered under s 33N(1)(c).
134 The applicant's argument is therefore correct in part. In this case the evaluation of the differences in the evidence to be led in each case was irrelevant to the identification of the questions which would be said to arise from the claims and which would need to be resolved in each case. It is not necessary to review the summary of her Honour's findings set out above. It is clear that her Honour did have regard to the evidence which might be given to determine the nature of the question arising. That is not however to say that her Honour made findings on the evidence which the respondents said they would put forward, or evaluated the applicant's likelihood of success, even if the respondents' material might have been directed in some respects to this end. The applicant's contention that her Honour dealt with the matter as if it were a challenge to the pleading is also incorrect. Rather, it seems to me, the process undertaken merged the two enquiries under s 33C(1)(c) and s 33N(1)(c). In my respectful view her Honour was in error in that approach. Her Honour's discussion of the evidence which might be given on many topics remains to be considered with respect to the enquiry under s 33N(1). The identification of the common questions in the way discussed has however had the effect of narrowing the consideration of what might usefully be obtained from a determination of the applicant's case. It must necessarily also have affected her Honour's view as to costs. In these circumstances, in my respectful view, leave to appeal should be granted and the enquiry under s 33N(1) considered afresh.
135 Her Honour's conclusions, that there were some common questions of substance, and that s 33C(1)(c) were satisfied, was however plainly correct. It is necessary to mention only a few of those questions. A substantial question, or questions, could be seen to arise from the allegation that an applicator which was out of calibration might affect the risk of a procedure failing and be the cause of its failure, as is alleged to have occurred in each case. Whether warnings were given and whether they were sufficient, were questions which would arise in all the claims, as would the question whether the respondents' conduct, as particularised in the statement of claim, could amount to misleading and deceptive conduct.
136 It may therefore be concluded that the threshold requirements, for the commencement of a representative proceeding, have been met. Attention can then be directed to the enquiries under s 33N(1). A consideration as to how many common questions could be seen to arise from the applicant's pleading would not seem to me to be particularly influential in that consideration, as I have earlier observed. More telling is what their resolution in the representative proceeding might mean for the other claims and how much evidence might be thereby made unnecessary.
137 There were some aspects of the evidence identified by her Honour as likely to be necessary in each case, but proof of which could not be said to involve a great deal. The manuals and promotional material relevant to the period in question fall into this category. Whether warnings were given might be thereby established. Whether other information might have been given in face-to-face meetings would not seem to me to have been established as likely by the respondents. If it is in some cases, that may be an additional feature of the evidence on the issue of causation, which the applicant accepts will be likely to require assessment in each case.
138 The applicant submits that the fact that causation may need to be proved in each case does not necessarily mean that the representative proceeding is an inefficient means for determining the other claims. There are other matters which may nevertheless be determined and be useful in the resolution of the claims. An analogy was drawn with cases where reliance must be proved individually. Questions of utility and efficiency will depend upon the nature and circumstances of a representative proceeding. In a case of misrepresentation, it may be thought that the nature of the misrepresentation itself might have something to say on the question of reliance, or that a determination as to the quality of the conduct in question was nevertheless of real benefit to the other claims. In any event, even though proof of causation might involve a considerable part of the evidence and substantial argument in each case, the possibility of other findings being useful is not foreclosed. It will be necessary to assess what might be provided by them.
139 It is not necessary to outline what may be necessary to be proved in connexion with causation. The respondents will seek to establish other possible causes. The surgeon in question may be called to give evidence regarding what was observed during and at the conclusion of the operation, if they are not joined. It might be sought to be shown that the particular applicator was not likely to be out of calibration, because of servicing and checks undertaken on the use to which it was put. Much might depend upon how the applicant approaches proof of causation. The respondents submit that there is nothing to suggest that the cases will involve reference to the applicator in question. They have not been identified, and neither the applicant nor the group members appear to be able to show whether the particular instrument was out of adjustment. The respondents' argument however assumes a method of proof. Having regard to the applicant's expert report, the applicant's case might seek to draw an inference about the state of the applicator by reference to its failure to occlude a tube or to remain in position. It may be necessary for the applicant to negate other possibilities, but that is not to say that the question whether an applicator was out of calibration will not arise.
140 The importance of the point the first respondent sought to make about whether the applicator would be raised as an issue in the proceedings is not relevant only to the question of causation. If the first respondent were correct it could also be said that there was no likelihood of a finding that an applicator being out of calibration posed the risk alleged. The first respondent could be taken to say that the state of an applicator was a false issue. A contention such as this must however be established at a factual level. That would involve a determination as to how the applicant's case was to be established and such a finding was not sought. As I have said, the first respondent appears to have assumed the method by which the applicant's case is to be proved, and the applicant's expert's report appears to suggest that a different approach may be taken.
141 I have considered whether the applicant should be taken to have had a sufficient opportunity to put evidence forward, at least to clarify how it will approach proof on this issue. Whilst complaints were made by the respondents as to the lack of identification of the applicator in question, I do not think it could be suggested that the matter was approached on the basis that the Court might make a finding on this issue and, in effect, determine the applicant's prospects. I do not consider a Court would be likely to entertain such a request except in the clearest of cases. This is not such a case.
142 The issue which assumes importance in an assessment under s 33N(1)(c) is the threshold issue as to whether the claimed risk was present. The risk was that an applicator which was out of calibration, and therefore capable of affecting the failure of the operation, might be used. That risk is said to have eventuated in each case: (Chappel v Hart [1998] HCA 55; (1998) 195 CLR 232).
143 The prospect, that an applicator might go out of calibration to some unspecified extent, might not be controversial. I take this to be the concession made by the first respondent. Evidence may not therefore be necessary on this point. If it were, it would not seem likely to involve many witnesses. That would not however complete the assessment of the risk. What will certainly remain in issue is the possible consequences for a patient if an applicator is in that state. Whether an applicator could be so far out of calibration so as to be ineffective has only been accepted as a theoretical possibility by the first respondent. Its approach might be to postulate a critical point in the adjustment of the opening. This would not appear to be accepted by the applicant's expert.
144 To the prospect of a finding concerning the existence of some risk is to be added a finding concerning the nature and extent of that risk. Evidence is likely to be called in aid of the assessment of the danger presented: Mercer v Commissioner for Road Transport and Tramways (NSW) [1936] HCA 71; (1936) 56 CLR 580, 601. The extent of any duty and what obligations, on the part of the respondents, arose in connexion with it, would be thereby determined. The evidence relating to that risk should be the same in each case. A determination in the applicant's case might remove the need to establish the threshold issues in the other claims, or bring the claims to an end.
145 The question whether the respondents' conduct qualifies as having been misleading and deceptive might also be of general application in each case. Findings in connexion with the risk will go some way towards determination of this question. In my respectful view it will not however be necessary to have regard to the position of individuals affected by the conduct in question, at least so far as concerns whether it contravenes s 52 TPA. In that connexion reference may be necessary to a class of persons to whom the conduct can be seen to be addressed, and a determination made as to a representative member of that class: Campomar Sociedad, Limitada & Anor v Nike International Limited & Anor [2000] HCA 12; (2000) 202 CLR 45, 85 [103]. Evidence in each case would not be necessary. I add that a determination as to whether there was any accessorial liability, on the part of the first respondent, would not add much, dependent as it is on the resolution of the principal issue.
146 The applicant also submitted that the legal question, concerning the measure of any damages where the result is the birth of a healthy child, provides a further example of the utility of the representative proceedings. In my view that under-estimates the effect of rulings in other cases which, if not operating as precedent, operate as influential. For similar reasons I consider the applicant's contention that it is better to determine any issue once, rather than sixty-one times, to deny the practical effect upon litigants of a ruling in one case, or a few cases.
147 In my respectful view, the proceedings cannot at this point be considered to provide an inefficient method of determining the other claims, or at least that has not been shown to be the case. There is, I accept, considerable uncertainty as to how the applicant will go about proving risk and causation, but such an opinion is not sufficient for an order to be made under s 33N(1). At least for the present the prospect that the determination of questions concerning the existence and degree of any risk cannot be denied. Other aspects of the case will largely be determined by findings in those areas.
148 I have considered the difficulty posed by hospitals or surgeons, against whom the respondents might wish to cross-claim, not being bound by a determination on these issues. This involves an assessment of the likelihood that they would seek to re-litigate these issues as between them and the respondents concerning the equipment. It could not be assumed and, in my view, a clearer picture might emerge at the conclusion of the applicant's case. The risk that they may do so does not deny some utility to a determination as between the present parties.
149 In my view the motion brought by the first respondent was premature, in the sense that it required a view of the evidence which is likely only to be gained after a hearing, or at least a hearing on those issues. If the trial Judge considers that the findings to be made have application to the other claims, appropriate determinations and orders can be made. The question whether to make an order of discontinuance under s 33N(1)(c) could be revisited at that point. If the findings are not useful in that way, and the applicant fails to establish the relevant risk and cause, such an order could be made at an earlier point and before other orders in the proceedings.
150 So far as concerns the Group B members, there are fewer non-common issues and the determination of the representative action might conclude a significant part of the claims. An order under s 33N(1) is therefore not appropriate.
CONCLUSION AND ORDERS
151 I would grant leave to appeal, allow the appeal and set aside the order under s 33N(1) and the order for costs. I would order that the first and the second respondents' motions be dismissed The respondents should pay the applicant's costs of the appeal and of the hearing of the motion.
I certify that the preceding seventy (70) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kiefel. |
Associate:
Dated: 20 August 2002
IN THE FEDERAL COURT OF AUSTRALIA |
|
NEW SOUTH WALES DISTRICT REGISTRY |
N 410 OF 1999 |
BETWEEN: |
KERRIE BRIGHT APPLICANT |
AND: |
FEMCARE LIMITED FIRST RESPONDENT ENDOVASIVE PTY LIMITED (ACN 061 512 132) SECOND RESPONDENT |
JUDGES: |
LINDGREN, KIEFEL AND FINKELSTEIN JJ |
DATE: |
20 AUGUST 2002 |
PLACE: |
SYDNEY |
FINKELSTEIN J:
152 An action which has properly been commenced as a representative proceeding (or class action as it is commonly referred to) may be ordered no longer to continue as such a proceeding only "if it is in the interests of justice": s 33N Federal Court of Australia Act 1976 (Cth). Whether or not it is in the interests of justice to make such an order has to be weighed against the public interest in the administration of justice that favours class actions. That requires one to consider the principal objects of the class action procedure. They are: (1) To promote the efficient use of court time and the parties' resources by eliminating the need to separately try the same issue; (2) To provide a remedy in favour of persons who may not have the funds to bring a separate action, or who may not bring an action because the cost of litigation is disproportionate to the value of the claim; and (3) To protect defendants from multiple suits and the risk of inconsistent findings.
153 There will be cases where a representative proceeding will not resolve all issues in a dispute. Commonly, for example, a representative proceeding will be suitable to try issues of liability, while proof of damage and other remedies may be left to each individual member of the class to establish. Sometimes the benefit of a representative proceeding will be even less than that. There will be cases where a class action will do no more than resolve certain issues relating to liability, leaving others to be dealt with on an individual basis. Inducement in a fraud case, for example, could rarely be dealt with as a common issue.
154 There is no doubt that a representative proceeding is particularly useful in product liability cases. The reasons are obvious. These cases usually raise common issues relating to matters such as the manufacturing process, the knowledge of any health hazard presented by the use of the manufactured article, whether there has been a failure to test the article and whether the manufacturer has any duty to warn about the dangers associated with the use of the article. Because the damage that may be caused by the use of certain defective products is likely to be of a similar character, a class action can also be of benefit to the determination of the damages suffered by the members of the class.
155 There seem to be three principal factors which persuaded the judge to order that this action no longer proceed as a representative action: (1) That the resolution of the common questions of fact and law, of which a number were identified, would not materially advance the claims of group members; (2) That the costs of continuing the representative proceeding were likely to exceed the costs that would be incurred by dealing with the claims of all group members individually; and (3) That the established techniques of case management in individual actions could reduce the cost of individual claims. For example, the judge said that it might possible that all individual claims would be dealt with by the same judge.
156 It is convenient first to deal with the two points relating to costs. The only foundation for the finding that the costs of many individual actions are likely to be less than the cost of one representative proceeding is an unsubstantiated assertion by the solicitor acting for the first respondent. I say that the allegation is unsubstantiated because the solicitor provided no explanation how it might be that one action is likely to be less costly than many separate actions. For my own part, in the absence of a compelling explanation I would place no weight on such a statement because it is inherently unlikely to be true. Moreover, while the evidence shows that there are 61 group members known to the applicant's solicitors, the total number of group members is not yet known. That circumstance alone is sufficient to render irrelevant the solicitor's evidence: How could he say that one representative action would be more costly than many actions when he is unable to specify the number of actions with which the comparison is being made? In any event I simply do not accept that one action can cost more than what may amount to hundreds of actions.
157 There is a further problem. The judge has acted on the basis that it is likely that, as a cost minimization process, all individual claims could be dealt with by the same judge. It seems that the judge had in mind a situation where there would be orders to consolidate separate claims or have them heard either concurrently or sequentially before the same judge. One possible consequence of this approach is that the contemplated procedure will in substance bring into existence what is in effect, but not in name, a representative proceeding, which is what we already have. More importantly, however, the suggestion overlooks at least two relevant matters. It would only be possible for one judge to hear all the separate actions if they were all instituted in the same state. This is an unwarranted assumption. It is likely that if there are to be separate actions they will be litigated in a number of states. In any event, and this is the second point, the possibility of apprehended bias by prejudgment may be a legal barrier that would prevent one judge from hearing related claims: see eg Australian National Industries Ltd v Spedley Securities Ltd (In Liq) (1992) 26 NSWLR 411.
158 As regards the judge's first reason for making the order (that the resolution of the common questions of law and fact will not materially advance the position of the group), I think that she was in error for the reasons given by both Lindgren and Kiefel JJ. I only wish to add one or two short points to what they have said. I am of the firm view that this case is a good example of the benefits of a class action. Take the Group B members by way of example. First, on the question of liability, most of the elements of their respective causes of action, whether the elements be of law or fact, are common. Indeed it is difficult to see in what respects their cases will differ, apart from the different states of knowledge as to the risks, if any, associated with the sterilisation procedure they undertook. Second, if the Group B members were to succeed, the quantum of the damages to which the members would be entitled will not be great. It seems to me that if these women are not permitted to bring a group claim, it is likely that many of them will not pursue an individual claim because the potential gain would not justify incurring the risk of costs. In that sense it would be contrary to the interests of justice to make an order under s 33N.
159 It follows, in my opinion, that as the condition for the exercise of the power to make an order under s 33N was not satisfied on an objective assessment of the material, the judge could not have made the order she did. In that circumstance it is not necessary to consider whether there has been any error in the discretionary aspects of the decision under appeal.
160 That is all I wish to say about the appeal proper. There is, however, one other matter to which I wish to direct some comments. There is a disturbing trend that is emerging in representative proceedings which is best brought to an end. I refer to the numerous interlocutory applications, including interlocutory appeals, that occur in such proceedings. This case is a particularly good example. The respondents have not yet delivered their defences yet there have been approximately seven or eight contested interlocutory hearings before a single judge, one application to a Full Court and one appeal to the High Court. I would not be surprised if the applicants' legal costs are by now well in excess of $500,000. I say nothing about the respondents' costs. This is an intolerable situation, and one which the court is under a duty to prevent, if at all possible. One possible approach in these types of cases (that is, product liability or mass torts claims) is to bring the action on for speedy determination. By giving appropriate directions the court can ensure that the parties get on with the litigation and do not become bogged down in what are often academic or sterile arguments about pleadings, particulars, practices and procedures. What I say should not be taken as a particular criticism of the present respondents. But it is not unknown for respondents in class actions to do whatever is necessary to avoid a trial, usually by causing the applicants to incur prohibitive costs. The court should be astute to ensure that such tactics are not successful. I appreciate that there are times when the cause for interlocutory proceedings lies with the applicants, often because their pleadings are less than perfect. But even in that event, appropriate directions can remedy the position so that the litigation can be brought on quickly. It should not be forgotten that a product liability case, such as is being litigated here, will hold no surprises for the respondents and justice will still be done in a case which proceeds with pleadings that are less than perfect.
161 I agree in the orders proposed by Kiefel J.
I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein. |
Associate:
Dated: 20 August 2002
Counsel for the Appellant: Mr J W K Burnside QC and Mr J R Clarke
Solicitors for the Appellant: Maurice Blackburn Cashman
Counsel for the First Respondent: Mr B W Walker SC
Solicitors for the First Respondent: Freehills
Counsel for the Second Respondent: Mr P J Deakin QC and Mr I Butcher
Solicitors for the Second Respondent: Sparke Helmore
Date of Hearing: 20 & 21 May 2002
Date of Judgment: 20 August 2002
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