Federal Court of Australia

Eaton v DePuy International Ltd [2026] FCAFC 33

ORDERS

THE COURT ORDERS THAT:

1.    The application for an extension of time and leave to appeal be granted.

2.    The appeal be allowed.

3.    The orders made by the primary judge on 5 July 2024 be set aside.

4.    It be declared that:

(a)    Independent Counsel made an error of law by not giving the appellant the opportunity to tender further evidence or make submissions as to whether (contrary to the agreement reached between the appellant and the respondents) the appellant had experienced extraordinary and significant complications or injury in excess of that to which Eligible Group Members in Category A, B or C would experience as a result of failure of an Affected Implant within the meaning of cl 3.1(d)(iii) of the Compensation Protocol; and

(b)    Independent Counsel made an error of law in determining a dispute as to the Category applicable to the appellant (within the meaning of cl 3.1 of the Compensation Protocol) in the absence of giving the appellant the opportunity in (a).

5.    The determination of Independent Counsel, Mr Richard Sergi, dated 5 October 2023 be set aside.

6.    Determination of the appellant’s claim for non-economic loss and gratuitous care under the Compensation Protocol be referred to a different Independent Counsel for determination according to law.

7.    The first and second respondents pay the appellant’s costs of the appeal and the proceedings before the primary judge as agreed or taxed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

MURPHY AND SHARIFF JJ:

INTRODUCTION

1    These reasons relate to an application for leave to appeal, and appeal, from the orders and decision of the primary judge in Casey v DePuy International Ltd (No 4) [2024] FCA 724 (PJ or primary judgment).

2    The present application arises from the settlement of representative proceedings commenced in 2010 in this Court pursuant to Pt IVA of the Federal Court of Australia Act 1976 (Cth) (FCA Act) by Ms Pamela Casey, as lead applicant, against DePuy International Ltd (DePuy) and Johnson & Johnson Medical Pty Ltd (JJM) (collectively the respondents). The representative proceedings related to a prosthesis which was marketed as the LCS® DuofixTM Femoral Component (the Affected Implant). It was claimed that the Affected Implant was not fit for purpose or of merchantable quality.

3    The representative proceedings were settled in 2012 on terms of settlement approved by the Court pursuant to s 33V(1) of the FCA Act as recorded in an amended deed of settlement dated 19 November 2012 between Ms Casey, DePuy and JJM (Settlement Deed). Ms Casey entered into the Settlement Deed on her own behalf and as the representative of group members. The Settlement Deed did not provide for the payment of a global sum to group members but provided for a regime for eligible group members to receive compensation, subject to the satisfaction of various criteria. The regime was recorded in the terms of the Liability Protocol and the Compensation Protocol. The regime contemplates that the parties may be unable to agree as to which group members should be eligible to receive compensation and the extent of such compensation.

4    The Liability Protocol provides a process for the parties to agree upon the eligibility of group members to receive compensation and, in the absence of such agreement, a process for the determination of that issue, with such group members then being regarded as “Eligible Group Members”.

5    The Compensation Protocol provides a process for the parties to agree upon the “category” of an Eligible Group Member’s claim for compensation (Category) and the quantification of their claim for compensation. The Compensation Protocol contemplates that an Eligible Group Member may seek a nominated amount of compensation and provide supporting documentation to the respondents (being the manufacturer of the prosthesis and its supplier and distributor). If there is a dispute about the amount of compensation, the dispute is to be referred to an “independent counsel” for determination. The independent counsel’s decision binds the respondents and the Eligible Group Member, subject to a right of appeal in respect of an error of law.

6    The applicant (Mr Eaton) was a person who claimed to be an Eligible Group Member. He had undergone a total knee replacement surgery of his right knee (TKR Surgery) in July 2007 which used the Affected Implant. The Affected Implant was then subject to a voluntary recall in 2009. Thereafter, Mr Eaton had two revision surgeries, with the first occurring on 1 December 2010 (the First Revision Surgery) and the second occurring on 7 December 2011 (the Second Revision Surgery).

7    Five weeks and five days after the Second Revision Surgery, on 16 January 2012, Mr Eaton fell at home injuring his right knee and his left shoulder (the Fall). Following the Fall, Mr Eaton received medical care and treatment over a period of time but there were various complications that arose. Unfortunately, during the latter parts of 2016, an above the knee amputation was required to be carried out on Mr Eaton’s right leg (AKA).

8    Mr Eaton sought compensation including for both economic and non-economic loss, and gratuitous care. The respondents accepted that Mr Eaton was an “Eligible Group Member” for the purposes of the Liability and Compensation Protocols. However, the respondents disputed the amount of compensation that was payable to Mr Eaton. The primary dispute between the parties related to whether a rupture in Mr Eaton’s right patellar tendon was caused by the Affected Implant (which was said to have caused the Fall) as Mr Eaton contended, or whether the rupture was caused by the Fall as the respondents contended.

9    As the parties were in dispute, Mr Eaton invoked the dispute resolution procedure contained in the Compensation Protocol which provided for an independent counsel to be appointed to resolve the dispute by making a determination (Independent Counsel). An Independent Counsel (Mr Sergi, a barrister) was appointed to that role in respect of the assessment of Mr Eaton’s claims for compensation. Relevantly, in a written determination dated 5 October 2023 (IC Determination), Independent Counsel determined to allow a part of Mr Eaton’s claim as to non-economic loss, gratuitous care and disbursements but rejected other parts of his claims and, specifically, rejected Mr Eaton’s claim that the ruptured right patellar tendon was caused by the Affected Implant.

10    Mr Eaton then exercised his right to appeal to this Court and sought a declaration or, in the alternative, an order under s 33ZF of the FCA Act, that the IC Determination contained errors of law. Mr Eaton contended that Independent Counsel had (a) denied him procedural fairness by concluding that his claim for compensation was to be assessed on the basis that he fell within the criteria of subclause 3.1(d)(ii) of the Compensation Protocol instead of subclause 3.1(d)(iii) as had been agreed between the parties, (b) erred by finding that there was a dispute about the Category of Mr Eaton’s claim when that dispute had not been referred to Independent Counsel, (c) applied incorrect tests and approaches to the question of causation and novus actus interveniens, and (d) engaged in other errors including as to the assessment of the expert evidence that the parties had provided to Independent Counsel.

11    The primary judge rejected Mr Eaton’s arguments and dismissed his application. Mr Eaton now contends that the primary judge erred, essentially on the basis that her Honour should have upheld his primary contentions.

12    For the reasons that follow, leave to appeal should be granted and the appeal should be upheld.

LEAVE TO APPEAL AND GROUNDS OF APPEAL

13    It was common ground that Mr Eaton requires leave to appeal. That is because his application before the primary judge was an interlocutory application seeking declaratory relief.

14    It is settled that leave is generally refused unless the applicant establishes that: (a) the decision giving rise to the orders is attended with sufficient doubt to warrant it being considered by a Full Court; and (b) substantial injustice would result if leave were refused: Decor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 844; (1991) 33 FCR 397 at 398 (Sheppard, Burchett and Heerey JJ). These considerations are cumulative and will not be satisfied “unless each limb of the test is made out”: Rawson Finances Pty Ltd v Deputy Commissioner of Taxation [2010] FCAFC 139; (2010) 81 ATR 36 at [5] (Ryan, Stone and Jagot JJ); see also Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd [2017] FCAFC 98; (2017) 252 FCR 1 at [3] (Jagot, Yates and Murphy JJ).

15    Mr Eaton’s draft notice of appeal is not a model of clarity. It raised seven grounds of appeal, with multiple sub-grounds. Not all of these grounds were pressed and some were only faintly advanced. By the central grounds that Mr Eaton pressed, it was contended that the primary judge erred by finding that Independent Counsel:

(a)    was not bound by the rules of procedural fairness, and that Mr Eaton “cannot now complain” about any denial of procedural fairness: Grounds 1 and 3 (the Procedural Fairness Ground);

(b)    was permitted to determine the Category of claim into which Mr Eaton fell under cl 3.1 of the Compensation Protocol, and that Mr Eaton’s challenge to the finding that the Independent Counsel’s determination of Category “go[es] nowhere” in any event: Grounds 2 and 4 (the Category Dispute Ground);

(c)    did not misdirect himself or apply the wrong test as to causation: Ground 5 (Causation Ground); and

(d)    had not engaged in any error of law in respect of his conclusion as to novus actus interveniens: Ground 6 (the Novus Actus Interveniens Ground).

16    As addressed below, there was considerable overlap between the Procedural Fairness and Category Dispute Grounds, such that the determination of the former largely (but not wholly) addresses the latter.

17    We are satisfied that leave to appeal should be granted because we consider the decision giving rise to the orders is attended with sufficient doubt to warrant it being considered by the Full Court; indeed, for the reasons we explain, we consider the Procedural Fairness and Category Dispute Grounds should be upheld. Further, for the reasons we explain, in upholding the Procedural Fairness Ground we find that the deprivation of procedural fairness to Mr Eaton may have occasioned substantial injustice.

18    Before turning to address the grounds of appeal, it is necessary to set out the salient provisions of the Compensation Protocol.

THE SALIENT PROVISIONS OF THE COMPENSATION PROTOCOL

19    Clause 1 is entitled “Introduction and overview”. It sets out the purpose of the Compensation Protocol and its interaction with the Liability Protocol, and provides:

1.1    The Liability Protocol provides a regime for assessing whether Group Members in the Proceeding are eligible to receive compensation. This Compensation Protocol:

(a)    only applies to Eligible Group Members;

(b)    provides a regime for assessing and processing the compensation entitlements of Eligible Group Members pursuant to the settlement of the proceeding.

1.2    The Compensation Protocol provides for four different categories of claims as set out in clause 3.1.

1.3    The Compensation Protocol provides for:

(a)    compensation for non-economic loss and Gratuitous Care to be determined in accordance with clause 4 below;

(b)    compensation for financial losses to be determined in accordance with clause 5 below.

1.4    Section 6 sets out the procedure for assessing a claim. If there is a dispute between the parties in relation to an Eligible Group Member’s entitlements or assessment, the dispute is to be resolved by Independent Counsel in accordance with clause 10.

…

20    As addressed further below, it is important that these clauses identify that there are to be “four different categories of claims” and that the Compensation Protocol provides for a regime for the assessment of compensation for non-economic loss and financial losses, with any disputes between the parties to be resolved by Independent Counsel.

21    Clause 2 of the Compensation Protocol contains the following relevant definitions:

…

Maurice Blackburn means Maurice Blackburn Pty Ltd (ACN 105 657 949), the solicitor for the applicant and some Eligible Group Members.

NRA means Norton Rose Australia, the solicitors for the Respondents.

…

Revision means the surgical removal of an Affected Implant and/or the tibial component and/or the patellar component of the prosthesis of which the Affected Implant constituted a part and it also includes the primary implantation of a patella resurfacing prosthesis.

Surgical Procedure means an invasive surgical procedure involving one or more of the following:

(a)    arthroscopy;

(b)    arthroscopic wash-out;

(c)    arthroscopic aspiration;

(d)    arthroscopic instillation;

(e)    arthroscopic biopsy;

(f)    arthroscopic synovectomy;

(g)    manipulation under general anaesthetic;

(h)    removal of ectopic bone;

(i)    revision of the ultrahigh molecular polyethylene component of the prosthesis of which the Affected Implant constituted a part;

(j)    biopsy;

(k)    staged removal of internal fixation;

(l)    synovectomy; or

(m)    scar excision.

TPA means the Trade Practices Act 1974 (Cth) as in force immediately before 1 January 2011.

(Original emphasis.)

22    The parties had agreed that it would be the Trade Practices Act 1974 (Cth) as in force immediately before 1 January 2011 (TPA) that would apply to the determination of their respective rights and liabilities. In these reasons, our references to the TPA are a reference to that statute as in force immediately before 1 January 2011, unless otherwise stated. We also refer to “Revision” and “Surgical Procedure” in these reasons, adopting the meanings outlined in the Compensation Protocol.

23    Clause 3 concerns the process for the determination of the “Category” of an Eligible Group Member’s claim for compensation. It provides that:

3.1    An Eligible Group Member will be assessed in accordance with this clause 3 as falling into one of the following categories (Categories):

(a)    Category A: Any Eligible Group Member who does not meet the criteria for Categories B, C or D of the Compensation Protocol;

(b)    Category B: Any Eligible Group Member who has undergone one Revision plus one other Surgical Procedure consequent on the Affected Implant;

(c)    Category C: Any Eligible Group Member who has undergone one Revision plus two or three other Surgical Procedures consequent on the Affected Implant;

(d)    Category D: Any Eligible Group Member who meets one or more of the following criteria:

(i)    has undergone one Revision plus four or more other Surgical Procedures consequent on the Affected Implant; and/or

(ii)    has undergone more than one Revision consequent on the Affected Implant; and/or

(iii)    has experienced extraordinary and significant complications or injury in excess of that to which Eligible Group Members in Category A, B or C would experience as a result of failure of an Affected Implant.

(Original emphasis.)

24    The balance of cl 3 of the Compensation Protocol sets out a process for the nomination of a Category by an Eligible Group Member and the resolution of any disputes relating to Category. It relevantly provides:

3.3    Within three months of either of the following dates (whichever is later):

(a)    the determination that an Eligible Group Member is eligible in accordance with the Liability Protocol to receive compensation; or

(b)    the Eligible Group Member’s injuries stabilising,

the Group Member’s lawyer will provide to NRA (insofar as they have not previously been provided to NRA) medical records confirming the Surgical Procedures and/or Revisions the Eligible Group Member underwent consequent on the Affected Implant.

3.4    Within one month of the Group Member’s lawyer either providing medical records to NRA in accordance with clause 3.3 or notifying NRA that there are no additional medical records to be provided:

(a)    the Group Member’s lawyer will notify NRA if the Eligible Group Member considers that they fall within Category D(iii); or

(b)    in the absence of a notification pursuant to clause 3.4(a), the Category that is applicable to the Eligible Group Member will be determined according to the following procedure:

(i)    in the first instance, the Group Member’s lawyer and NRA will seek to agree on whether the Eligible Group Member falls into Category A, Category B, Category C, Category D(i) or Category D(ii);

(ii)    if the Group Member’s lawyer and NRA are unable agree, the Group Member’s lawyer will within a further seven days request a report from the Eligible Group Member’s treating surgeon concerning the number of Surgical Procedures and/or Revisions which the treating surgeon considers the Group Member has undergone; and

(iii)    if the Eligible Group Member’s treating surgeon is unwilling or unable to provide a report pursuant to clause 3.4(b)(ii) or if on receipt of the treating surgeon’s report the Group Member’s lawyer and NRA are still unable to agree, the Group Member’s lawyer will within a further fourteen days issue a request in the form of Schedule A for a report from an Assessor who will be:

A.    if an Assessor was engaged to assess the Eligible Group Member pursuant to the Liability Protocol, the same Assessor; or

B.    if an Assessor was not engaged to assess the Eligible Group Member pursuant to the Liability Protocol, an Assessor allocated by NRA using the procedure set out in the Liability Protocol for the appointment of Assessors; and

(iv)    in the unlikely event that the applicable Category remains in dispute after receipt of the report from the Assessor, Independent Counsel will be requested to determine the dispute in accordance with clause 10;

(v)    the onus is on the Eligible Group Member to establish, on the balance of probabilities, that the Revision and/or Surgical Procedures are consequent on the Affected Implant.

(Original emphasis.)

25    Clause 4 addresses the assessment of compensation for non-economic loss and gratuitous care, and relevantly provides:

4.1    Eligible Group Members are entitled to compensation for non-economic loss and Gratuitous Care in accordance with the following table:

4.2    If an Eligible Group Member notified NRA in accordance with clause 3.4(a) that they consider that they fall within Category D(iii):

(a)    the Eligible Group Member bears the burden of establishing their entitlement to more compensation than they would have received under this protocol if they had not elected to be assessed under Category D(iii); and

(b)    if the Eligible Group Member fails to discharge this burden, they will be entitled to receive the compensation that they would have otherwise received if they had not elected to be assessed under Category D(iii).

…

4.4    If compensation for non-economic loss and Gratuitous Care is to be individually assessed pursuant to clause 4, the compensation will be determined or assessed in accordance with the provisions and principles for the assessment of non-economic loss and Gratuitous Care in Part VIB of the TPA.

(Original emphasis.)

26    Clause 5 addresses the assessment of compensation for financial losses. It relevantly provides:

5.1    The compensation payable to an Eligible Group Member for financial losses will be calculated, determined or assessed pursuant to the provisions and principles for the assessment of damages or compensation for personal injury in Part VIB of the TPA.

5.2    The losses recoverable will be limited to losses which, on the balance of probabilities, were caused by the Eligible Group Member having been the recipient of an Affected Implant, after taking into account the effect of any unrelated contributing causes.

27    Clause 6 sets out a procedure for determining compensation entitlements and requires, in the event of a dispute in relation to quantum, that the parties attempt to resolve their dispute by good faith negotiation (at cl 6.7). If the parties are unable to resolve their dispute, it is to be referred to “Independent Counsel” for resolution in accordance with cl 10.

28    Clause 10 is entitled “Independent Counsel”. It provides as follows:

10.1    A barrister may at any time be appointed by agreement between the parties to perform the role of Independent Counsel. If the parties are unable to agree, the parties agree to accept a barrister nominated by the President of the NSW Bar Association.

10.2    Subject to clause 15.3 below, the following may be referred to Independent Counsel for determination:

(a)    a dispute as to the Category that is applicable to an Eligible Group Member;

(b)    a dispute concerning the amount of compensation for financial losses; and

(c)    a dispute concerning the amount of compensation for non-economic loss and/or Gratuitous Care where it is to be individually assessed.

10.3    If either party wishes to refer a matter to Independent Counsel for determination, the party intending to make the referral (Referring Party) shall notify the other party (Other Party) of its intention and shall include in the notification:

(a)    its final offer or position in respect of the matter in dispute; and

(b)    the name of the proposed Independent Counsel.

10.4    Within 7 days of the notification pursuant to clause 10.3, the Other Party shall notify the Referring Party of:

(a)    its final offer or position in respect of the matter in dispute; and

(b)    whether it accepts the Referring Party’s proposal for Independent Counsel and, if not, its alternative proposal.

10.5    The final offers made in accordance with clause 10.3 and 10.4 are the offers that are to be taken into account for the purpose of determining which party is liable to pay the costs of the determination in accordance with clause 13.2.

10.6    If a dispute is referred to Independent Counsel for determination:

(a)    the Referring Party will provide Independent Counsel with a copy of this Compensation Protocol together with the Eligible Group Member’s Claim Documents (including any additional documents or particulars provided or obtained in accordance with clauses 6.2, 6.3, 6.4 and/or 6.5 above);

(b)    the parties may make written submissions to Independent Counsel and:

(i)    submissions on behalf of the Referring Party are to be provided to Independent Counsel and the Other Party within seven days of the provision of the Claim Documents to Independent Counsel;

(ii)    submissions on behalf of the Other Party are to be provided to Independent Counsel and the Referring Party within 14 days of the provision of the Claim Documents to Independent Counsel;

(c)    the determination by Independent Counsel will be in accordance with the principles and provisions for the assessment of compensation and damages for personal injury under Part VIB of the TPA, except insofar as those principles and provisions are inconsistent with this Compensation Protocol in which case this Compensation Protocol will prevail;

(d)    Independent Counsel will make a determination concerning any items in dispute and will provide a written assessment to the Eligible Group Member's lawyer and NRA within one month of receiving the Eligible Group Member’s Claim Documents;

(e)    the assessment of a dispute by Independent Counsel is (subject to Court approval where required in accordance with clause 11) binding on the Eligible Group Member and the Respondents with no right of appeal except in relation to an error of law.

(Original emphasis.)

29    Clause 15, titled “General”, includes:

15.1    For the avoidance of doubt, the extent to which loss or injury arising out of any act or omission of any doctor or hospital in connection with the failure and/or revision of the Affected Implant or the components of the prosthesis of which the Affected Implant constituted a part will be compensable under this Compensation Protocol, will be determined according to the TPA and, to the extent that the application of the TPA draws on the common law, by reference to the common law in force as at 16 August 2012.

…

15.7    An Eligible Group Member or the Respondents may apply to the Federal Court of Australia in respect of any point of law arising from the implementation of this Compensation Protocol in relation to the Eligible Group Member.

THE PROCEDURAL FAIRNESS GROUND

1.1    The salient facts

30    It was common ground that prior to the referral of the dispute to Independent Counsel, the parties had agreed that Mr Eaton fell into Category D because he satisfied the criteria specified in subclause 3.1(d)(iii) of the Compensation Protocol.

31    The following briefly summarises the facts relating to the agreement that the parties had reached.

32    By letter dated 28 January 2015, Norton Rose informed Maurice Blackburn that the respondents had assessed Mr Eaton’s claim to fall within the criteria contained in subclause 3.1(d)(iii) of the Compensation Protocol.

33    By email dated 12 February 2015, Maurice Blackburn responded as follows:

We refer to your letter dated 28 January 2015 regarding our client Bradley Eaton and in particular your assessment that our client falls within Category D(iii) of the Compensation Protocol.

Our client agrees that he falls within Category D(iii).

(Original emphasis.)

34    Although the parties had (at this time) agreed upon the appropriate Category for Mr Eaton’s claim, they had not agreed the amount of compensation payable to him. The primary issue in dispute between the parties was whether the rupture to Mr Eaton’s right patella tendon and its sequelae (including the AKA) were causally related to the Affected Implant.

35    In early 2022, Maurice Blackburn referred that dispute to Independent Counsel. By a letter dated 6 May 2022, Maurice Blackburn informed Independent Counsel that:

The parties are unable to agree about the amount of compensation Mr Eaton is entitled to receive. As the parties have been unable to reach an agreement, Mr Eaton has elected to refer the dispute to you for determination pursuant to clause 10 of the Compensation Protocol.

36    In written submissions provided to Independent Counsel on 30 May 2022, Maurice Blackburn confirmed the nature of the dispute to be determined. These submissions stated that “the parties agree that Mr Eaton is eligible for compensation. The dispute is about the quantum of his entitlement”. Later in the submissions, it was submitted at [2.3] that:

The parties agree that Mr Eaton falls into Category D(iii). Therefore, it is agreed he has experienced extraordinary and significant complications or injury in excess Eligible Group Members in Categories A – C as a result of the failure of the Affected Implant.

(Emphasis added.)

37    The respondents provided their written submissions to Independent Counsel on 1 July 2022. The introductory parts of the respondents’ submissions characterised the dispute between the parties in the same way as Mr Eaton. It was there stated at [1.15] that:

The disputes for determination under clause 10.2 in this matter are as follow:

(1)    a dispute concerning the amount of compensation for financial losses (10.2(b)); and

(2)    a dispute concerning the amount of compensation for non-economic loss and/or Gratuitous Care (10.2(c)).

38    In this part of the submissions, the respondents made no mention of a dispute as to the applicable Category for Mr Eaton.

39    However, in later of part of their submissions, under the heading “Categorisation”, the respondents submitted as follows (at [6.3]-[6.4]):

6.3    In 2015 the parties agreed that the Group Member is Category D(iii) on the basis that he “has experienced extraordinary and significant complications or injury in excess of that to which Eligible Group Members in Category A, B or C would experience as a result of the failure of an Affected Implant.” The Group Member is therefore is [sic] subject to individual assessment of non-economic loss.

6.4    With respect to the categorisation of the Group Member, the Respondents note the following:

(1)    This agreement was six years before the Respondents became aware of the Group Member’s slip and fall incident in January 2012. The Respondents submit this event was a novus actus interveniens by which the causal chain was broken so that any injury, loss and damage from the Affected Implant ceased on 16 January 2012.

(2)    It follows that the Respondents do not accept the Group Member’s complications which culminated in the above knee amputation were caused by the Affected Implant.

(3)    Furthermore, no attempt has been made in the Group Member’s submissions to explain how the Group Member satisfies the second limb of category D(iii) being “in excess of that to which Eligible Group Members in Category A, B or C would experience as a result of failure of an Affected Implant”.

(4)    Nor could such an explanation be proffered – there is no evidence in the Claim Documents concerning the usual injuries and complications of Group Members in those categories, or how the Group Member’s complications and injuries are extraordinarily and significantly in excess of those.

(5)    To illustrate, it cannot be determined from the Claim Documents that, for example, a Group Member in Category C who has undergone a revision surgery and three other invasive surgical procedures would not experience similar injuries and complications to the Group Member. The Group Member has provided no necessary comparators and, thereby is unable to discharge his onus pursuant to clause 4.2.

(6)    Regardless of this categorisation, D(iii) still requires individual assessment per clause 4.1 of the Compensation Protocol.

(Original emphasis.)

40    It will be apparent from the above that, notwithstanding that an agreement had been reached that Mr Eaton satisfied the criteria specified in subclause 3.1(d)(iii), the respondents were advancing a submission to Independent Counsel that Mr Eaton had not established that he had suffered extraordinary and significant complications “in excess of that to which Eligible Group Members in Category A, B or C” would experience.

41    The primary judge described the respondents’ submissions to Independent Counsel on this issue as being “ambiguous, somewhat disingenuous and less than clear”: PJ [52]. We agree, for the reasons explained by her Honour. Notwithstanding that view, her Honour concluded that the respondents’ submissions were sufficient to raise the question of the applicable Category as an issue for determination by Independent Counsel: PJ [55].

42    As explained below, it is apparent from the decision of Independent Counsel that he too found the respondents’ submissions ambiguous (expressing the tentative view that it “appears” or it “seems” that there was a Category dispute). As addressed below, Independent Counsel took the respondents’ submissions to mean that there was a “Category dispute” between the parties and resolved that dispute by finding that Mr Eaton prima facie satisfied the criteria specified in subclause 3.1(d)(ii). However, Independent Counsel considered it to be a “moot point” as to whether Mr Eaton fell within Category 3.1(d)(iii) because on meeting either Category 3.1(d)(ii) or (iii), an individual assessment was required. This reasoning became central to the parties’ contentions before the primary judge and on appeal.

43    It is next necessary to identify the relevant parts of the IC Determination where Independent Counsel dealt with these matters.

1.2    Independent Counsel’s Determination

44    Under the heading “Dispute”, Independent Counsel noted (IC Determination at [7]):

In accordance with cl 10.2 of the Compensation Protocol, there are two primary aspects of the dispute between the Parties in relation to the assessment of Mr Eaton’s compensation. Firstly, there is a dispute concerning the amount of compensation for financial losses. Secondly, there is a dispute concerning the amount of compensation for non-economic loss and gratuitous care. There is one further issue which appears to be in dispute. Although there was initial agreement about the Category in the Compensation Protocol that is applicable to Mr Eaton, it would now seem that this too is the subject of dispute.

(Emphasis added.)

45    By his statements “one further issue which appears” to be in dispute and “it would now seem” that there was a dispute about the applicable Category, it is evident that Independent Counsel was not entirely sure as to whether or not a Category dispute had been raised. Notwithstanding the expression of such doubt, Independent Counsel proceeded to determine the “Category dispute” and found that Mr Eaton met the criteria of Category D(ii), rather than Category D(iii).

46    Independent Counsel made that determination without seeking the views of Mr Eaton.

47    Before seeking to resolve the dispute about Category, Independent Counsel set out his determination of the relevant facts. In this regard, it is relevant that Independent Counsel found that:

(a)    the First Revision Surgery was performed on 1 December 2010: IC Determination at [26];

(b)    the Second Revision Surgery was performed on 7 December 2011: IC Determination at [28];

(c)    the Fall happened on 16 January 2012: IC Determination at [34];

(d)    there were 14 procedures following the Fall which Independent Counsel outlined in the IC Determination at [88], which included the following:

(i)    a patella tendon reconstruction with insertion of “synthetic LARS ligament” (referred to as the “First Patella Repair”);

(ii)    Neurolysis of the anterolateral nerve right thigh (Neurolysis);

(iii)    arthroscopy of the knee (First Arthroscopy);

(iv)    a second patella tendon surgery with removal of “synthetic LARS ligament” (referred to as the “Second Patella Repair”);

(v)    debridement and synovectomy;

(vi)    further debridement and synovectomy;

(vii)    the first stage of a revision knee replacement surgery;

(viii)    the second stage of a revision knee replacement surgery;

(ix)    a genicular nerve block (Nerve Block);

(x)    manipulation under anaesthetic and aspiration;

(xi)    further debridement and synovectomy;

(xii)    yet further debridement and synovectomy;

(xiii)    the first stage of the AKA; and

(xiv)    the second stage of the AKA.

48    Independent Counsel also found that there was evidence that Mr Eaton’s clinical history disclosed that he had a history of an infection and was identified as a “S.aureus carrier”: i.e., a staphylococcus aureus carrier: IC Determination at [242]. This infection had been identified as early as 10 July 2007 before the First and Second Revision Surgeries: IC Determination at [242].

49    Ultimately, Independent Counsel determined that Mr Eaton had not established the facts causally connecting the Affected Implant to the Fall: IC Determination at [337]. Specifically, Independent Counsel accepted that the Affected Implant was the cause of Mr Eaton’s injury, loss and damage up to the time of the Fall, but not thereafter: IC Determination at [338]-[340].

50    Independent Counsel then turned to address the Category of Mr Eaton’s claim: IC Determination at [342]-[353]. Independent Counsel noted that the respondents did not dispute that there was agreement between the parties that “Mr Eaton was an Eligible Group Member within Category D(iii)” but that the respondents were contending that he did not in fact fall within that Category: IC Determination at [345]. Independent Counsel recorded that the respondents were now contending that “Mr Eaton’s compensation is to be determined other than in accordance with Category D(iii)” and that Mr Eaton had not established any extraordinary and significant complications or injury in excess of Categories A, B or C: IC Determination at [346]-[347]. Independent Counsel observed that the respondents had not made any express submission as to which Category Mr Eaton’s claim fell into, and proceeded to make an assumption that the respondents were contending that Mr Eaton’s claim for compensation should be determined in accordance with Category C: IC Determination at [348].

51    Independent Counsel made a further assumption that cl 3.4(b)(iv) applied such that the parties were in dispute about the Category of Mr Eaton’s claims and that part of Independent Counsel’s role was to determine the correct Category for Mr Eaton in accordance with cl 10 of the Compensation Protocol: IC Determination at [349].

52    Independent Counsel then reasoned as follows at [352]-[353]:

There is no controversy about three relevant matters affecting the determination of whether Mr Eaton satisfies the criteria for Category D. First, there is no issue that Mr Eaton has undergone the First Revision Surgery and the Second Revision Surgery. Secondly, there is no issue that the First Revision Surgery and the Second Revision Surgery were both “Revision” surgeries within the definition of that term. Thirdly, there is no issue between the Parties that each of the First Revision Surgery and the Second Revision Surgery was required as a result of the failure of the Affected Implant. Additionally, I note that there is no submission made by DePuy that cl 3.2 of the Compensation Protocol has any relevant application to each of the three uncontroversial matters referred to in the preceding paragraph. In those circumstances, I find that the criteria set out in cl 3.1(d)(ii) of the Compensation Protocol are prima facie satisfied.

In the circumstances, it is a moot point as to whether Mr Eaton satisfies the criteria set out in cl 3.1(d)(iii) or not as Mr Eaton otherwise satisfies the criteria for assessment in accordance with Category D. It follows that Mr Eaton’s entitlement to non-economic loss is to be individually assessed in accordance with the principles and provisions for the assessment of non-economic loss in Part VIB of the TPA.

(Original emphasis retained in italics and emphasis added in bold.)

53    Three matters are evident from these paragraphs. First, Independent Counsel appears to have been satisfied that the criteria in subclause 3.1(d)(ii) was satisfied at a prima facie level but does not appear to have made a positive finding that Mr Eaton’s claims fell within that subclause. Second, Independent Counsel did not positively determine whether Mr Eaton’s claims fell within subclause 3.1(d)(iii). Rather, Independent Counsel appears to have taken to the view that the “Category dispute” was a moot point because Mr Eaton satisfied the criteria for an individual assessment irrespective of the specific criteria that applied to his claims. Third, Independent Counsel appears not to have given consideration to the factual basis underlying the parties’ (earlier) agreement that Mr Eaton’s claims met the criteria in subclause 3.1(d)(iii). As we later explain, the underlying factual basis of the agreement is important in assessing whether the alleged denial of procedural fairness was of any moment.

54    Independent Counsel then turned to determine Mr Eaton’s claim for non-economic loss: IC Determination at [355]-[439]. Independent Counsel approached the determination of that claim on the basis that Division 3 of Part VIB of the TPA set out the limits on personal injury damages for non-economic loss including that the maximum amount of damages that could be awarded where an injured person had suffered non-economic loss of the “gravest conceivable kind” was to be calculated by the applicable percentage of a most extreme case (MEC): IC Determination at [355]. There was no dispute that, at the relevant time, $359,090 was the maximum amount that could be awarded for non-economic loss: IC Determination at [355].

55    After setting out the parties’ rival submissions at [356]-[367], Independent Counsel determined (again) that the respondents were not “legally responsible for the surgeries and procedures that were required as a consequence of the rupture of the right patella tendon” or other claims made by him in relation to phantom limb pain, psychiatric injury, or co-morbidities: IC Determination at [368], [372], [404] (though accepting that there was some psychological symptomology existing prior to the Fall at [405]), and [422].

56    However, Independent Counsel determined that, in addition to the First and Second Revision Surgeries, there were other Surgical Procedures or conditions that were unrelated to the Fall and were required as a consequence of the Affected Implant. Independent Counsel found as follows (IC Determination at [369]):

…the evidence does not support a finding that either of the Neurolysis (to address meralgia paraesthetica), nor the exploratory First Arthroscopy (to investigate his ongoing knee pain) were attributable to the patella tendon rupture or patella tendon reconstruction surgery. I find that both of the Neurolysis and the First Arthroscopy were a consequence of the Affected Implant/Second Revision Surgery. Further, I find that the Nerve Block was required as a consequence of the Affected Implant.

(Emphasis added.)

57    Independent Counsel accepted that Mr Eaton had suffered some loss of amenity of life from 2008 to when the Fall occurred, but beyond that date, his loss of amenity resulting from the Affected Implant was “limited to the consequences arising from the Neurotomy and the First Arthroscopy”: IC Determination at [427].

58    Independent Counsel observed that Mr Eaton had claimed the appropriate assessment of non-economic loss was 80% of the MEC, whereas the respondents submitted the appropriate assessment was 30%: IC Determination at [428]-[432]. Independent Counsel determined that the appropriate assessment was 35%, which amounted to $138,880. In reasoning to that conclusion, Independent Counsel stated as follows (at [433]-[439]):

Consideration As discussed previously, I have found that DePuy is liable for the failure of the Affected Implant and Mr Eaton’s First and Second Revision Surgeries, the Neurotomy and First Arthroscopy. I have determined on the balance of probabilities that DePuy is not legally responsible for Mr Eaton’s patella tendon rupture, the patella tendon reconstructions, infection and AKA.

In assessing Mr Eaton’s non-economic loss, I have taken into account the respective submissions of the Parties directed to the issue of assessment, as summarised and considered above. Of particular significance, the greater part of the submissions made on Mr Eaton’s behalf concerning non-economic loss relate to Mr Eaton’s clinical course following the Fall that culminated in the AKA for which I have determined there is no liability for DePuy. Accordingly, the comparative verdicts referenced by Mr Eaton are of less assistance than they might otherwise be in determining an award for non-economic loss. In all the circumstances, I do not accept the Eaton Submissions that there be an assessment in [sic] of Mr Eaton’s non-economic loss at 80% of a MEC and award accordingly.

On the other hand, I do not accept submissions made on behalf of DePuy that an assessment of 30% of a MEC is appropriate. In my view, such an assessment unduly diminishes the impact of the failure of the Affected Implant on Mr Eaton. Mr Eaton suffered significant symptomology including unremitting pain that led him to the path of two significant revision surgeries and the subsequent development of meralgia paraesthetica as a direct consequence of the Affected Implant. Those events for which DePuy is responsible had a significant impact on Mr Eaton’s life materially affecting many aspects of his personal and professional life.

In assessing Mr Eaton’s non-economic loss on the basis of the matters referred to, I am conscious of the fact that compensable loss relates to a closed period. Nevertheless, in relation to the future, I do not accept DePuy’s submission that it is likely that but for the novus actus, Mr Eaton would have likely enjoyed a return to a normal level of comfort and functioning expect [sic] of a person who had undergone a knee replacement procedure. That submission may be valid had Mr Eaton not undergone two revision surgeries as a direct and undisputed consequence of the Affected Implant. I find that the revisional surgeries in 2010 and 2011 militate in favour of a finding that Mr Eaton’s likely prognosis but for the novus actus was not as positive as it would have been had he undergone a TKR Surgery which was not negatively impacted by the Affected Implant.

Finally, I do not agree with DePuy’s submission that the existence of the statutory scheme of assessing non-economic loss in accordance with the TPA means that it is impermissible to assess non-economic loss by looking to earlier decisions. In the context of the present determination, it is my understanding of the effect of the decision in Planet Fisheries Pty Ltd v La Rosa is [sic] that no norm or standard should be discerned from earlier decisions. Rather, an assessment of the injury and its consequences should be proportionate. In the instant matter, Mr Eaton’s non-economic loss must be assessed as a percentage of a Most Extreme Case (MEC) in accordance with s 87P of the TPA.

In all the circumstances, and in accordance with Division 3 of the TPA, I have assessed Mr Eaton’s non-economic loss at 35% of a MEC. In accordance with s 87M of the TPA, the maximum amount that may be awarded for non-economic loss damages has now been indexed to $396,800. In accordance with s 87Q of the TPA, an assessment of 35% of a MEC is $138,880.

Accordingly, I assess Mr Eaton’s non-economic loss in the amount of $138,880.

(Original emphasis retained in italics and emphasis added in bold.)

59    It will be evident from the parts emphasised above that, although Independent Counsel assessed Mr Eaton’s claim for non-economic loss on the basis of the impact of the failure of the Affected Implant and its material impact on his life, Independent Counsel considered that the “greater part” of the submissions focused on events after the Fall. Independent Counsel did not in these paragraphs (where he assessed non-economic loss) refer to or have regard to the factual basis of the parties’ agreement that Mr Eaton satisfied the criteria in subclause 3.1(d)(iii).

1.3    The primary judge’s reasons as to the Procedural Fairness Ground

60    The primary judge reasoned that the types of error that could be the subject of review were of the type identified in Australian Vintage Ltd v Belvino Investments No 2 Pty Ltd [2015] NSWCA 275; (2015) 90 NSWLR 367 at [75] (Bathurst CJ with whom Beazley P and McColl JA agreed), specifically, where it could be said that Independent Counsel had not performed the task that was contractually conferred on him or her, but rather performed some different task, or carried out his or her task in a way that was not within the contractual contemplation of the parties, objectively ascertained.

61    The primary judge was not satisfied that Independent Counsel made an error of law by determining the Category of the claim: PJ [51]. That was so despite (as mentioned earlier) her Honour finding that the respondents’ submissions to Independent Counsel were “ambiguous, somewhat disingenuous and less than clear”: PJ [52]. Despite these reservations, the primary judge found that the respondents’ submissions had sufficiently raised the question of the applicable Category as an issue for determination by Independent Counsel: PJ [55]. In coming to that conclusion, the primary judge considered that Independent Counsel was correct in his understanding that the Category of Mr Eaton’s claim was in dispute and the Compensation Protocol contemplated that Independent Counsel was able to determine that dispute: PJ [58]-[59].

62    As to whether the determination of the Category dispute amounted to a denial of procedural fairness, the primary judge commenced her analysis by observing that the Compensation Protocol “does not provide that an Independent Counsel appointed pursuant to its terms must afford the parties natural justice”: PJ [62]. Her Honour reasoned that, whether such a requirement is to be implied into the terms of the Compensation Protocol, “will depend upon the role undertaken by Independent Counsel, namely whether once appointed their role is more akin to that of an expert or arbitrator”: PJ [62].

63    The primary judge referred to a number of authorities that identified a distinction between the appointment of an expert or arbitrator: see Zeke Services Pty Ltd v Traffic Technologies Ltd [2005] QSC 135; [2005] 2 Qd R 563 at [23] (Chesterman J); Shoalhaven City Council v Firedam Civil Engineering Pty Limited [2011] HCA 38; (2011) 244 CLR 305 at [25] (French CJ, Crennan and Kiefel JJ); Lahoud v Lahoud [2010] NSWSC 1297 at [70]-[71] (Ward J, as her Honour then was). The primary judge observed that the Compensation Protocol did not describe Independent Counsel’s role as either arbitrator or expert, but found that the role was more akin to that of an expert than an arbitrator: PJ [66]. Her Honour reasoned this was so because Independent Counsel was required to be a barrister and inferred this likely meant that he or she was to have expertise in the relevant field, which was more consistent with the function of Independent Counsel being to make an expert determination: PJ [66]. The primary judge observed that the principles to be applied in making that determination were specified in the Compensation Protocol, which again indicated that the process was one of expert determination: PJ [66]. Her Honour further reasoned that this conclusion was supported by the fact that the parties were entitled to provide written submissions, but there was no mechanism for the parties to test evidence through cross-examination or otherwise: PJ [66].

64    The primary judge regarded Independent Counsel’s role as an expert to be significant to the conclusion that the Compensation Protocol did not require Independent Counsel to be bound by the rules of procedural fairness: PJ [66], [71]. The primary judge reasoned that Independent Counsel was “of course required to consider the submissions which the parties chose to put before him”, which he had done: PJ [71].

65    The primary judge further reasoned that even though the Compensation Protocol made no provision for submissions in reply, it was open for Mr Eaton to have provided such submissions, and he could not now complain that it was incumbent on Independent Counsel to raise the issue with him given his role: PJ [72]. As to the respondents’ contention that the alleged error was in any event not material, the primary judge observed that it was not clear “why the principles that apply when reviewing a decision of an administrative decision maker are applicable to the role of Independent Counsel undertaking a determination pursuant to the terms of the Compensation Protocol”: PJ [73].

66    The primary judge then reasoned that in the event that her conclusion as to error was incorrect, and Independent Counsel was required to invite comment from Mr Eaton as to the Category dispute, the respondents’ contention that Mr Eaton’s complaints “go nowhere” should be accepted: PJ [74]. Her Honour reasoned that (consistently with Independent Counsel’s understanding) the point was “moot” because irrespective of whether an Eligible Group Member falls within Category D(ii) or (iii), the assessment of compensation for non-economic loss required to be carried out was the same in that it was to be an individual assessment: PJ [74]. That was so even if clause 3.1(d) envisaged that Eligible Group Members may meet more than one criterion (PJ [75]) because a different form of assessment of non-economic loss was not required and such an assessment was not “likely to lead to a higher quantification”: PJ [75]. In coming to that conclusion, her Honour observed that cl 4.2 of the Compensation Protocol does not suggest any different form of assessment despite the fact that the criteria in cl 3.1(d)(i) and (ii) were “objective and concern identifiable surgical procedures” whereas the criteria in cl 3.1(d)(iii) were not of that nature: PJ [77].

1.4    The parties’ submissions

67    Mr Eaton submitted that the primary judge erred by finding that the role undertaken by Independent Counsel was “more akin to that of an expert than an arbitrator” such that, in the absence of any requirement imposed on him by the Compensation Protocol, he was not bound by the rules of procedural fairness: PJ [66], [71]. Mr Eaton also challenged the primary judge’s finding that he could not now complain that Independent Counsel denied him procedural fairness because it was open to him to approach Independent Counsel and to seek to respond to the Category issue raised by the respondents, but did not do so: PJ [72]. Finally, Mr Eaton challenged the finding that the asserted breach of procedural fairness by Independent Counsel ultimately went “nowhere” because the assessment of non-economic loss and gratuitous care was “carried out on the same basis”, being an individual assessment under the Compensation Protocol: PJ [74].

68    In submitting that he had lost an opportunity by reason of the denial of procedural fairness, Mr Eaton filed an interlocutory application seeking leave to file evidence from a radiologist, which he claimed was the type of evidence he could have called had he been notified of the dispute about Category.

69    Mr Eaton submitted that the primary judge should have found that Independent Counsel was bound to afford him procedural fairness. It was submitted that the obligation to afford procedural fairness necessarily flowed from the fact that Independent Counsel’s role formed a component of a dispute resolution mechanism approved by the Court under s 33V of the FCA Act. It was said that Independent Counsel’s role was akin to that of an arbitrator or at least involved a quasi-judicial process such that, on a proper construction of the Compensation Protocol, it required Independent Counsel to afford procedural fairness to the parties.

70    The respondents’ submissions in relation to the alleged breach of procedural fairness commenced with an overarching contention that the proposed appeal is inutile because the alleged denial of procedural fairness rests on the premise that a different result could and would have occurred had procedural fairness been accorded to Mr Eaton. The respondents argued that the allegation of a breach of procedural fairness was obviously wrong as Categories D(ii) and D(iii) under the Compensation Protocol resulted in the same process of individual assessment, which is what occurred in Mr Eaton’s case, and that the nature and quality of that individual assessment did not turn on the Category under the Compensation Protocol pursuant to which Independent Counsel assessed Mr Eaton’s claim.

71    The respondents submitted that the primary judge was correct to find that there was no requirement to afford procedural fairness at PJ [62] and [71]. It was submitted that, although the distinction between an expert and arbitrator may be a fine line, the primary judge was correct to find that Independent Counsel was acting as an expert. That is said to be so because textually, there is nothing in the Compensation Protocol that required Independent Counsel to act as an arbitrator. Instead, the text suggests that Independent Counsel is to apply his or her expertise in relation to the assessment of compensation and damages for personal injury, rather than be limited to the particular matters raised in the parties’ submissions. It was submitted that these features were consistent with the role of Independent Counsel being an expert, rather than an arbitrator.

72    Further, the respondents contended that the primary judge’s characterisation of the role of Independent Counsel as an expert was consistent with the context of the Compensation Protocol as the “scheme was designed to accelerate the determinations of claims so that there would not be something akin to a Court hearing for each claim”. It was submitted that the number of group members meant that “expediency required the rapid assessment of claims”. This was said to be reinforced by the fact that there is no mechanism for an oral “hearing” or for the parties to test evidence through cross-examination or otherwise within the Compensation Protocol.

73    The respondents further submitted that the Compensation Protocol does not distinguish between Categories D(ii) and D(iii) either on the basis that one is worse than the other, or on the basis that they lead to a different result or assessment. The respondents submitted that Category D(iii) is intended to be a catch-all for persons that do not fall within Category D(i) or D(ii) but nevertheless have complications that are such that individual assessment is necessary to properly determine their claim. The respondents said that this is inconsistent with Mr Eaton’s proposition that a person who falls within Category D because they satisfy the criterion for Category D(iii) has inherently worse or more serious injuries than a person who has satisfied the criterion for Category D(ii). The respondents submitted that, in circumstances where there is no material distinction between an assessment under Category D(ii) and D(iii), it is unclear how the alleged denial of procedural fairness meant that there could have been a different result in Mr Eaton’s case.

74    The respondents said that it is speculative to accept (as Mr Eaton contends) that the quantum of a claim under Category D(iii) is “very likely to be higher” than a Category D(i) or (ii) claim (because the former involves greater injury or disability, namely “extraordinary and significant complications or injury”). It was submitted that such speculation is based on the false premise that Category D(iii) necessarily involves “greater injury or disability” than Categories D(i) or D(ii).

75    Relatedly, the respondents contended that there was, in fact, no denial of procedural fairness. It was submitted that Mr Eaton was represented by a sophisticated law firm, Maurice Blackburn. The respondents noted that Maurice Blackburn made submissions to Independent Counsel on 30 May 2022, and the respondents’ lawyers, Norton Rose Australia, made submissions on 1 July 2022. Between those two dates, Maurice Blackburn provided additional materials to Independent Counsel, which demonstrated that Mr Eaton had the opportunity and the ability to provide additional material should new information come to light, as well as the knowledge of how to do so. It was submitted that it was open to Maurice Blackburn to have sought agreement from the respondents or, failing that, permission from Independent Counsel for a further opportunity to make submissions or indeed to obtain further evidence, to respond. Instead, contrary to the course Maurice Blackburn took in the assessment of another Eligible Group Member’s claim (see Casey v DePuy International Ltd [2023] FCA 254 at [83] (Perram J) (Casey Appeal (No 1))), no action was taken in relation to Mr Eaton between the date of the respondents’ submissions and the decision of Independent Counsel on 5 October 2023.

76    Finally, the respondents submitted that even if the Independent Counsel was bound to provide procedural fairness, the content of that obligation was necessarily fact dependent, as the requirement for natural justice “is flexible and adaptable to the circumstances of the particular case”, citing Saeed v Minister for Immigration and Citizenship [2010] HCA 23; 241 CLR 252 at [18] (French CJ, Gummow, Hayne, Crennan and Kiefel JJ), citing Kioa v West [1985] HCA 81; 159 CLR 550 at 612 (Brennan J). The respondents contended that if Independent Counsel was subject to the requirements of procedural fairness, it cannot sensibly be suggested that the Independent Counsel was obliged to notify Mr Eaton of his intention to determine that Mr Eaton’s claim fell within a different criteria for Category D than the one the parties had agreed on, when the pathway of individual assessment was the same and the outcome was no different.

1.5    Consideration

77    The Procedural Fairness Ground raises several issues for determination.

78    The first is whether the Compensation Protocol contains an implied term requiring Independent Counsel to afford procedural fairness in the terms alleged by Mr Eaton.

79    The second is whether, if such a term is implied, the failure by Independent Counsel to afford procedural fairness to Mr Eaton would have made any difference in circumstances where he nevertheless obtained the benefit of an “individual assessment”.

80    The third is whether the principle of “materiality” applies to a breach of an implied contractual term of procedural fairness.

81    The final issue is whether Mr Eaton should be given leave to file evidence demonstrating the type of evidence he would have provided to Independent Counsel had he been notified of the dispute about Category.

82    Each of these issues is addressed in turn.

1.5.1    Implication of a term requiring Independent Counsel to afford procedural fairness in the terms alleged

83    Mr Eaton’s case before the primary judge did not make it abundantly clear whether it was his contention that it was an implied term of the Compensation Protocol that Independent Counsel was bound to comply with the rules of procedural fairness at large, or whether the implied term was of narrower compass relating only to the provision of an opportunity to provide submissions and evidence where Independent Counsel sought to depart from a position agreed between the parties.

84    Even so, it is sufficiently clear that Mr Eaton’s case concerned an implied term of narrow compass. That can be seen in his Amended Interlocutory Application filed on 5 April 2024, in which he sought a declaration in the following terms:

The Independent Counsel made an error of law when determining that the Appellant fell within Category of Claim D(ii) pursuant to the Compensation Protocol, in circumstances where the parties had agreed the Appellant fell within Category of Claim D(iii) and Independent Counsel did not give the Appellant the opportunity to tender further evidence or make submissions on that issue after the Respondents had made submissions contrary to the agreement. This constituted a denial of procedural fairness to the Appellant.

(Emphasis added.)

85    That is the way the primary judge understood Mr Eaton’s contentions. The primary judge recorded at PJ [49] that Mr Eaton contended that “Independent Counsel also failed to give effect to the agreement between the parties and denied him procedural fairness in that he took those steps despite the clear position in his submissions and without giving him the opportunity to make further submissions or to obtain further evidence”. Thus, it appears that the question before the primary judge was whether this term of narrower compass was an implied term of the Compensation Protocol.

86    It follows that the primary judge was not being asked to determine whether Independent Counsel had a general obligation to afford procedural fairness to Mr Eaton.

87    The parties and the primary judge proceeded on the basis of the uncontroversial proposition that the Compensation Protocol was a contract made between the parties.

88    It was common ground that the Compensation Protocol does not contain any express term that requires Independent Counsel to be bound by the rules of procedural fairness. As a result, the resolution of that question turned on whether such a requirement is to be implied. That question fell to be determined by reference to ordinary contractual principles of construction and implication. As to principles of construction, see, generally, Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104; Electricity Generation Corporation (t/as Verve Energy) v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640; Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165. As to principles relating to the implication of terms, see, generally, Realestate.com.au Pty Ltd v Hardingham [2022] HCA 39; (2022) 277 CLR 115; Commonwealth Bank of Australia v Barker [2014] HCA 32; (2014) 253 CLR 169; BP Refinery (Westernport) Pty Ltd v President, Councillors and Ratepayers of the Shire of Hastings (1977) 180 CLR 266 at 283 (Lord Simon of Glaisdale); Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596; Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337 at 347 (Mason J).

89    Somewhat surprisingly, the parties’ submissions before the primary judge did not address the question of implication by reference to whether the term was to be implied as a matter of business efficacy, as a matter of law or on some other basis known to law. Rather, the parties approached the resolution of the question by reference to whether the role or function of Independent Counsel was akin to that of an expert or an arbitrator. The primary judge was accordingly led to determine that question on that basis: see PJ [62]. Before us, the parties took the same approach. Other than by reference to the nature of Independent Counsel’s role, and whether that role is appropriately characterised as being arbitral or involving an expert determination, we were not taken to the basis for the implication of the asserted narrow procedural fairness obligation by reference to standard principles applicable to the implication of terms in fact or in law.

90    Then in oral argument, the respondents abandoned the contention that the distinction between expert and arbitrator had any real significance to whether or not Independent Counsel owed the parties the obligation of procedural fairness for which Mr Eaton contended: T85.30-86.47. Rather, Counsel for the respondents accepted that the task of implication required regard to be had to the contractual terms in light of the statutory context. Counsel for the respondents also accepted that there was no clause contained in the Compensation Protocol that ousted the operation of the principles of procedural fairness.

91    In circumstances where, both below and before us, the parties did not refer or even allude to the standard principles of construction and implication referred to above, we will not embark upon a discussion of the application of those principles in this case. For the reasons we explain, and on the approach put to us by the respondents in oral argument, we are satisfied that on its proper construction, the Compensation Protocol contained an implied term of the type sought by Mr Eaton. And, in any event, if it were necessary to decide, we would conclude that such a term meets the five well-established criteria in BP Refinery.

92    The question of whether Independent Counsel’s role was akin to that of an expert or arbitrator took on significance because it is a distinction that has, in other cases, been determinative as to the obligations imposed on an independent person appointed by parties to a contract to resolve a dispute between them. It is correct, as the primary judge reasoned, and the parties emphasised, that the authorities have drawn a distinction between the obligations that have in other cases been implied or imposed depending on whether the role of a person appointed to resolve a dispute between parties is properly characterised as being that of an expert or an arbitrator. Her Honour considered the characterisation of Independent Counsel’s role as one of expert or arbitrator to be critical to the determination of whether any obligations of procedural fairness applied. As the plurality observed in Firedam Civil Engineering at [25] (by reference to Dennys N, Raeside M and Clay R, Hudson’s Building and Engineering Contracts (12th ed, Sweet & Maxwell, London, 2008) p 706, at [4–102]), there is an increasing diversity of dispute avoidance and resolution mechanisms in modern contracts and it is necessary to have regard to the “specific role described in the contract, because the consequences of the different nature of the roles can be radical”.

93    In Re an Arbitration between Dawdy and Hartcup (1885) 15 QBD 426 at 430, Lord Esher MR explained that an expert determination is ordinarily one where:

…a man is, on account of his skill…appointed to make a valuation, in such a manner that in making it he may, in accordance with the appointment, decide solely by the use of his eyes, his knowledge, and his skill, he is not acting judicially; he is using the skill of a valuer, not of a judge … (He has) to determine the matter by using solely (his) own eyes, and knowledge, and skill.

94    By contrast, an arbitration is a process that ordinarily involves quasi-judicial or inquisitorial approach. A commonly cited definition of an arbitration (see Chief Executive Officer of the Australian Sports Anti-Doping Authority v 34 Players and One Support Person [2014] VSC 635 at [13] (Croft J)) was that stated by Lord Esher MR in Re Carus-Wilson and Greene (1886) 18 QBD 7 at 9:

If it appears from the terms of the agreement by which a matter is submitted to a person’s decision, that the intention of the parties was that he should hold an inquiry in the nature of a judicial inquiry, and hear the respective cases of the parties, and decide upon evidence laid before him, then the case is one of an arbitration. The intention in such cases is that there shall be a judicial inquiry worked out in a judicial manner. On the other hand, there are cases in which a person is appointed to ascertain some matter for the purpose of preventing differences from arising, not of settling them when they have arisen, and where the case is not one of arbitration but of a mere valuation. There may be cases of an intermediate kind, where, though a person is appointed to settle disputes that have arisen, still it is not intended that he shall be bound to hear evidence or arguments. In such cases it may be often difficult to say whether he is intended to be an arbitrator or to exercise some function other than that of an arbitrator. Such cases must be determined each according to its particular circumstances.

95    In Zeke Services, Chesterman J stated at [23]:

There is a clear distinction between arbitration and expert determination. The former involves a more or less formal adjudication of the respective cases put before the arbitrator. The court exercises a degree of supervision over the conduct of arbitrations and arbitrators, and minimum standards of procedural fairness are required. There are no such safeguards with respect to expert determination. Lord Esher MR explained the ordinary case of an expert determination In Re An Arbitration Between Dawdy and Hartcup (1885) 15 QBD 426 at 430:

…

Einstein J (at [16]) in Heart Research Institute noted that “Expert Determination provides an informal, speedy and effective way of resolving disputes, particularly disputes which are of a specific technical character or specialised kind.” The most common examples are where a valuer is appointed to fix the rent of demised premises or a man experienced in a particular line of business is called on to fix the price of stock in trade, or say whether it is saleable.

96    The distinction between an expert or arbitrator was also considered by the Queensland Court of Appeal in Capricorn Inks Pty Ltd v Lawter International (Australasia) Pty Ltd [1989] 1 Qd R 8.

97    It may be accepted that there are several aspects of the Compensation Protocol that suggest that the role and function of Independent Counsel is that of an expert and not an arbitrator. As the primary judge pointed out, Independent Counsel must be a barrister. The principles to be applied by Independent Counsel are specified in the Compensation Protocol, and are ones which it may be expected are within the specialist skill and expertise of a barrister experienced in personal injury litigation. The Compensation Protocol essentially requires Independent Counsel to make a determination as to an Eligible Group Member’s damages entitlements under the TPA, and to do so on the papers by reference to the terms of the Compensation Protocol, the submissions of the parties, and the documents that are provided by the parties. There is no mechanism for an oral hearing or for the parties to test evidence through cross-examination or otherwise. The characterisation of Independent Counsel’s role as involving an expert determination would also be consistent with at least one purpose of the Compensation Protocol (viewed within the context of the Settlement Deed), being to promote the efficient resolution of group members’ claims through such determinations as an alternative to each group member having to litigate their respective claims before the Court.

98    The distinction between an arbitrator and an expert may not always be an easy one to draw, and there may be cases where the relevant person is to engage in a process that bears the hallmarks of both processes or some hybrid or other process. And the authorities show that the distinction between expert or arbitrator can be important to whether it is appropriate to imply a general requirement of procedural fairness.

99    In Lahoud, Ward J observed at [71]-[73] that in Australia, the question as to whether an expert is required to afford natural justice “turns on what role the expert is retained to play in the particular events in question”. Her Honour was not there stating a principle of general application but emphasising that the question is to be resolved by reference to the role of the expert in the context of the contract in question.

100    In Enron Australia Finance Pty Ltd (in liq) v Integral Energy Australia [2002] NSWSC 753, Einstein J considered whether an obligation to act independently or impartially could be implied in the context of an expert determination. His Honour stated at [111]-[113]:

It is plain that when one is examining the conduct of a judicial or quasi-judicial hearing there is an expectation of impartiality and adherence to procedural fairness (or what was formerly referred to as natural justice). In Kioa v West (1985) 159 CLR 550, Mason J stated the rule as follows:

"The law has now developed to a point where it may be accepted that there is a common law duty to act fairly, in the sense of according procedural fairness, in the making of administrative decisions which affect rights, interests and legitimate expectations, subject only to the clear manifestation of a contrary statutory intention...What is appropriate in terms of natural justice depends on the circumstances of the case and they will include, inter alia, the nature of the inquiry, the subject-matter, and the rules under which the decision-maker is acting...In this respect the expression 'procedural fairness' more aptly conveys the notion of a flexible obligation to adopt fair procedures which are appropriate and adapted to the circumstances of the particular case." [at 584-85]

However, where what is involved falls outside the realm of judicial or quasi-judicial determination, the issue is whether the principle of procedural fairness can be or should be maintained.  Framed in terms of this case, the question is whether the Reference Market-maker, called upon to give a market quotation, must do so independently and impartially.

It is of assistance to address this issue by first asking whether the … task is to be seen as that of an arbitrator, ie. a quasi-judicial determination which will automatically invoke the principles of impartiality, or whether the task is merely that of an expert, valuer or appraiser.

(Original emphasis.)

101    After referring to Capricorn Inks, Einstein J stated at [117]-[118]:

With this in mind, it is now convenient to treat with the more complex issue, namely whether an expert is to be regarded as being required to act independently and without partiality to either party. While the judgments in Capricorn are useful in addressing the distinction between arbitration and other inquiries such as expert appraisals or valuations, it is important to note that the Full Court decision was that the accountants, as auditors, acted outside the terms of their engagement established by the parties. In this regard, a subtle distinction may well exist between on the one hand, an expert acting outside the terms of their prescribed duties and, on the other hand, an expert failing to act impartially. It is no doubt conceivable that an expert asked by the parties to value certain goods may engage in conduct that lies outside the terms of their engagement, without ever acting partially to either party involved. Conversely, experts may act entirely within the general terms of their engagement in making a valuation, but do so while acting partially to a particular party. The decision in Capricorn, though useful, does not entirely address the issue arising in this case as pleaded.

Absent an expert code of conduct or contractual provision requiring adherence to procedural fairness, “the issue will be whether it was an implied term of the contract that the expert would follow fair procedures, which would be difficult to oppose in general terms, but the exact extent of the duty would always be controversial.”: Kendall J, Dispute Resolution; Expert Determination (London: Longman Group UK Ltd, 1992) at 119-20. It has been suggested that "[e]ven if the parties accept that the expert is not bound to decide on the basis of their submissions there is no reason why they should not expect fair procedures to be followed, for example in any conference that might take place.": Astor H and Chinkin CM, Dispute Resolution in Australia (Sydney: Butterworths, 1992) at 136.

(Original emphasis retained in italics and emphasis added in bold.)

102    And there is another line of authority arising from judicial review of decision makers, including domestic tribunals, committees of inquiry, steward’s inquiries and a financial services ombudsman, where the decision maker owed its decision-making power to the contractual or consensual arrangements between the parties: see Dickason v Edwards [1910] HCA 7; 10 CLR 243 at 255 (O’Connor J), 262 (Isaacs J); Australian Workers’ Union v Bowen (No 2) [1948] HCA 35; (1948) 77 CLR 601 at 617 (Latham CJ), 630-631 (Dixon J); R v Brewer; Ex parte Renzella [1973] VR 375 at 380 (Adam J); Australian Football League v Carlton Football Club [1998] 2 VR 546 at 550-552 (Tadgell JA), 568 (Hayne JA); Mitchell v Royal NSW Canine Council [2001] NSWCA 162; (2001) 52 NSWLR 242 (Ipp AJA with whom Mason P and Stein JA agreed) at [36]-[37]; Mickovski v Financial Ombudsman Service Ltd [2012] VSCA 185; (2012) 36 VR 456 (Buchanan and Nettle JJA, and Beach AJA) at [38]; Queensland Racing Integrity Commission v Endresz [2024] QCA 76 (Fraser AJA with whom Morrison JA and Williams J agreed) at [55], [69].

103    In those cases, the courts found that when construing a contract or consensual arrangements between parties pursuant to which a third party is empowered to make binding determinations relating to the parties’ rights and entitlements, there is a rebuttable presumption in aid of construing the contract so that if the construction be reasonably open, the third party decision maker will be understood to have an obligation not to depart from the requirements of natural justice further than necessary. In Dickason, O’Connor J said at [255] that it is ordinarily to be implied into the contract or rules that the proceedings shall be carried on in accordance with the fundamental principles of “common justice”, and it is upon the party who wishes to shut out the implication to show that the contract expressly or by necessary implication negatives the existence of that implication.

104    However, the implied contractual term that Mr Eaton advanced was not one to the effect that Independent Counsel had a general obligation to afford procedural fairness. The appeal concerns whether the primary judge erred in failing to find that the Compensation Protocol carried a term of narrower compass to the effect that Independent Counsel was required to give a party an opportunity to make submissions or provide further evidence as to the applicable Category, where Independent Counsel intended not to accept or to give effect to an agreement as to Category reached between the parties. We note too that even if the appeal concerned an application to imply a general obligation of procedural fairness, ultimately the question would fall to be resolved by reference to the relevant contract, as made clear in Enron and in the Dickason line of authority.

105    The distinction between an arbitrator and an expert is not always an easy one to draw, and there may be cases where the relevant person is to engage in a process that bears the hallmarks of both processes, or some hybrid or other process. For the reasons earlier explained, we can accept that the role of Independent Counsel under the Compensation Protocol is closer to that of an expert than to that of an arbitrator. But the characterisation of the role of a decision maker under a contract will not necessarily supply an answer as to whether an obligation of procedural fairness at large or on some narrower basis is to be implied. These questions are to be answered by resort to the ordinary processes of construction.

106    In our view, in circumstances where Mr Eaton sought the implication of a narrow obligation of procedural fairness, the parties’ characterisation of Independent Counsel’s role as either expert or arbitrator distracted the primary judge from whether the particular term contended for by Mr Eaton was an implied term of the Compensation Protocol. The critical question is not whether the Independent Counsel was acting as an expert or an arbitrator, but whether, on the proper construction of the Compensation Protocol, Independent Counsel acted outside the contract.

107    For example, in Capricorn Inks, the parties had agreed to appoint an accounting firm, as “assessors to investigate and advise the parties as to the extent of the loss suffered” by one party in circumstances where the other party had agreed to pay such compensation as was determined by the independent accountants (see eg 27, 19). The claiming party’s personal accountant had prepared a set of accounts that inflated the quantification of the claims and presented it to the independent accountants. The other party did not know this had occurred. The independent accountants accepted those inflated accounts and they formed the basis of a quantification of compensation that was greater than it should have been. One of the questions was whether, by accepting and having regard to the inflated accounts, the independent accountants had exceeded the power conferred by the parties under their agreement. At first instance, McPherson J carefully examined the differences between an arbitrator, valuer, and expert and concluded that the independent accountants’ role was that of an expert and not an arbitrator. On appeal, the Court of Appeal agreed with that conclusion but held that the independent accountants had acted in excess of their power by receiving and acting upon a further claim from the claiming parties’ accountants which was beyond the scope of what the accountants had been appointed to do and outside the terms of the agreement between the parties: Capricorn Inks at 28 (Andrews CJ), 33 (Connolly J), 40 (Thomas J).

108    The outcome in Capricorn Inks demonstrates that notwithstanding the characterisation of the role or function of the person engaged in the dispute resolution process, separate questions may arise as to whether that person exceeds the bounds of the terms of the contract in respect of the dispute that has been referred to them.

109    It is well settled that the obligation to accord procedural fairness is flexible, context dependent, and adaptable to the circumstances of a particular case. Procedural fairness does not prescribe any fixed body of rules: Mobil Oil Australia Pty Ltd v Federal Commissioner of Taxation [1963] HCA 41; (1963) 113 CLR 475 at 504 (Kitto J); National Companies and Securities Commission v News Corp Ltd [1984] HCA 29; (1984) 156 CLR 296 at 312 (Gibbs CJ). Procedural fairness is not abstract and is essentially practical, with the concern of the law being to avoid practical injustice: Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam [2003] HCA 6; (2003) 214 CLR 1 at [37] (Gleeson CJ).

110    Relevantly to the present case, the requirement of procedural fairness has traditionally encompassed two interrelated requirements. First, adverse information which is credible, relevant and significant to the decision ought to be disclosed to the parties and an opportunity given to respond to it: Kioa at 629 (Brennan J). Second, a decision maker ought to afford parties a reasonable opportunity to present their case to the decision maker: Re Media, Entertainment & Arts Alliance and Theatre Managers’ Association; Ex Parte Hoyts Corporation Pty Ltd [1994] HCA 66; (1994) 68 ALJR 179 at 185 (Mason CJ, Brennan, Deane, Dawson and Gaudron JJ). A constituent obligation of these requirements is that the decision maker usually has an obligation to disclose, and to give parties the opportunity to make submissions, where the decision maker proposes to decide a case on a different basis from that submitted or agreed by the parties.

111    In judicial proceedings this obligation is clear. In Seltsam Pty Ltd v Ghaleb [2005] NSWCA 208 at [78]-[79], Ipp AJA (with whom Mason P agreed) identified:

… the general principle that although the basis on which the parties conduct a trial does not bind the judge, if the judge contemplates determining the case on a different basis he or she must inform the parties of this prospect so that they have an opportunity to address any new or changed issues that may arise.

A failure so to inform the parties will ordinarily result in a denial of procedural fairness.

(Emphasis added.)

112    In Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353 at [4], Giles JA said in a similar context:

Many considerations may come into whether there has been a denial of procedural fairness, as it is a question of practical fairness and justice … [I]f the judge is minded to decide the case on a completely different basis from that on which the case is being conducted, that should be raised…

113    That approach was followed by the Western Australian Supreme Court of Appeal in Ugle v The State of Western Australia [2018] WASCA 97 at [36] (Mazza, Mitchell and Beech JJA) where the Court said:

A judge who contemplates determining the case in a manner which departs from the basis on which both parties have conducted the proceedings must ordinarily inform the parties of this prospect so that they have an opportunity to address any new or changed issues that may arise.

114    The position is less clear in other contexts, but the same reasoning has found application in the content of procedural fairness for non-judicial decision makers. For example, Fairfield City Council v Brear [2010] NSWSC 480 concerned a decision made by a medical appeal panel (in a workers compensation context) which departed from the common ground of both parties in respect of which edition of the relevant WorkCover Guidelines should be applied. Barr AJ said (at [32]):

Because the Plaintiff had no way of knowing that the Appeal Panel was to depart from the basis of the applicability of the second edition of the Guidelines, according to the common ground of both sides, it seems to me that the Plaintiff was denied procedural fairness. It seems to me that the Appeal Panel, as soon as it contemplated the possibility that the third and not the second edition of the Guidelines was that which applied, ought to have informed the parties and afforded them an opportunity to make submissions. The failure to do so amounted, I think, to a denial of procedural fairness.

(Emphasis added.)

See also Australian Associated Motor Insurers Ltd v Motor Accidents Authority of NSW [2010] NSWSC 833 at [23], [25] (Barr AJ).

115    Here, the primary judge concluded that there was no obligation to afford procedural fairness because the role of Independent Counsel was more akin to that of an expert than an arbitrator. However, in so reasoning the primary judge appears to have concluded that because Independent Counsel’s role was more akin to that of an expert, it followed that he had no obligation to give Mr Eaton an opportunity to make submissions or provide further evidence as to an issue where Independent Counsel did not give effect to an agreement that had been reached between the parties. The primary judge erred in so concluding.

116    It does not necessarily follow from the characterisation of Independent Counsel’s role as being more akin to that of an expert rather than an arbitrator that there was no implied obligation to afford procedural fairness as advanced by Mr Eaton. For example, the Compensation Protocol did not contain an express obligation requiring Independent Counsel to consider a party’s submissions, but the primary judge recognised that Independent Counsel was “required to consider the submissions which the parties chose to put before him”: PJ [71]. The primary judge’s reasons in this respect reflect that her Honour regarded the Compensation Protocol as including an implied term that Independent Counsel consider a party’s submission.

117    The delineation of Independent Counsel’s role as one more akin to that of an expert as opposed to an arbitrator did not ipso facto answer the question posed to the primary judge, and in the appeal. It was a starting point. It was necessary to consider the relevant question by reference to Independent Counsel’s role within the text, context and purpose of the Compensation Protocol. While not addressed in the parties’ written submissions, this approach was accepted by the respondents in oral argument, as we have noted above. Rather, as Counsel for the respondents accepted, the question is whether having regard to the contractual terms in light of the statutory context, do they import an obligation of procedural fairness and, if so, to what extent? We now turn to apply that approach.

118    First, the context and purpose of the Compensation Protocol is important.

119    Clause 1.1 of the Compensation Protocol makes it immediately clear that it is to be read together with the Liability Protocol. The Compensation Protocol “only applies to Eligible Group Members”: cl 1.1(a). Its purpose is stated to be to provide “a regime for assessing and processing the compensation entitlements of Eligible Group Members pursuant to the settlement of the proceeding”. The term “Eligible Group Member” is defined to mean a “Group Member who has been assessed pursuant to the Liability Protocol as being eligible to receive compensation”, and in turn a Group Member is defined to mean a “group member in the proceeding”, which had been settled, and as defined in the “further amended originating application”: cl 2.

120    Each of these definitional terms emphasise the importance of the context, being that both the Liability Protocol and the Compensation Protocol are elements of the settlement that came into effect through a Court-approved settlement of a class action pursuant to s 33V of the FCA Act. Mr Eaton became bound by the Compensation Protocol not because he was a signatory, but because the effect of a settlement approved pursuant to s 33V is that it binds not only the representative party, but also all Eligible Group Members who had not opted out of the representative proceedings. Mr Eaton was such an Eligible Group Member. Although not a signatory to the contract (being the Compensation Protocol), his rights were by this statutory artefact subject to that contract.

121    The respondents emphasised that as a matter of purpose the implication of a term of procedural fairness stood at odds with the evident purpose of the settlement which was to encourage quick and efficient resolution of disputed claims. Whilst such a purpose may be accepted in so far as it goes, the purpose must still be read subject to its terms. Both the Liability Protocol and the Compensation Protocol have dispute resolution procedures, though they are different. Whereas the Liability Protocol contains a dispute resolution procedure involving referral to a medical panel with no right of appeal on errors of law (see cll 4, 5.2(c)(iii), 5.3(b)(iii), 5.4(c)), the Compensation Protocol contains a dispute resolution procedure that involves referral to an Independent Counsel and contains a right of appeal on errors of law. Putting to one side the precise jurisdictional basis upon which this Court was to exercise a power to correct errors of law in the context of a settlement agreement (which Perram J addressed in Casey Appeal (No 1)), the fact is that the parties agreed that there should be such a right. The significance of this is addressed further below.

122    Second, the parties had agreed to specific terms for the referral of a dispute to Independent Counsel.

123    Clause 10.3 of the Compensation Protocol provides that if either party wishes to “refer a matter to Independent Counsel for determination”, the party “intending to make the referral (Referring Party)” is to “notify” the “Other Party” (original emphasis) of its intention and is also to include in that notification its final offer or position and the name of the proposed Independent Counsel. Clause 10.4 then provides for the “Other Party” to notify the “Referring Party” of its final position.

124    During oral submissions, Mr Eaton emphasised the significance to the issue of costs of each party knowing the other’s “final offer” as specified in their respective final positions. However, an even more germane aspect of cl 10.3 for present purposes is that it requires the “Referring Party” to notify the “Other Party” of the dispute and its intention to refer that dispute to an Independent Counsel.

125    As a matter of text, context and purpose, cll 10.3 and 10.4 contemplate a process of notification of the relevant dispute by the “Referring Party” to the “Other Party” anterior to the referral to Independent Counsel. That conclusion is fortified by the fact that (a) the notification is to be provided when the “Referring Party” intends to refer the matter, (b) the notification is to specify the identity of the Independent Counsel proposed by the “Referring Party”, and (c) there is requirement to put a final position in “respect of the matter in dispute” (emphasis added).

126    In the present case, none of these steps had occurred in relation to the “Category Dispute” (as we will return to below). That is because the parties were agreed that Mr Eaton satisfied the criteria contained in subclause 3.1(d)(iii).

127    Third, once a dispute is referred, the structure of the referral process involves the provision of documents and submissions as set out in cll 10.6(a) and (b). Clause 10.6(a) requires the “Referring Party” to provide Independent Counsel with a copy of the Compensation Protocol together with the Eligible Group Member’s “Claim Documents” including any additional documents that had been obtained in accordance with cll 6.2, 6.3, 6.4 and/or 6.5.

128    Clause 10.6(b) provided that the parties “may” make written submissions to Independent Counsel, first, by the “Referring Party” and then, by the “Other Party”. The word “may” here suggests that the parties are not compelled to provide written submissions, but could do so.

129    Fourth, it is important that Independent Counsel is not required to hold a hearing, and is not required to apply the rules of evidence or any other procedural rules. Rather, the obligations imposed on Independent Counsel required that the determination:

(a)    be in accordance with the principles and provisions for the assessment of compensation and damages for personal injury under Part VIB of the TPA except to the extent that they were inconsistent with the provisions of the Compensation Protocol in which case the latter is to prevail: cl 10.6(c);

(b)    be in writing: cl 10.6(d); and

(c)    concerning “any items in dispute” (emphasis added): cl 10.6(d).

130    These provisions are important in that unlike an arbitral or other similar adjudicative process, there is no obligation imposed on Independent Counsel to hold a hearing and there is otherwise no obligation as to the content of the determination to be made.

131    Fifth, however, it is critical that the parties have no right of appeal except in relation to an error of law: cl 10.6(e). The parties clearly intended that Independent Counsel’s determination could be subject to correction where an error of law is established, and the parties intended that there be such a right of appeal. The expression “error of law” is a broad one which extends to all such errors, including errors of principle. It includes:

(a)    that Independent Counsel had carried out his or her task in a way that was not within the contractual contemplation of the parties, objectively ascertained: Belvino at [75] (Bathurst CJ with whom Beazley P and McColl JA agreed);

(b)    a failure to afford procedural fairness, where such an obligation is implied, whether narrow or broad. There is little doubt that a denial of procedural fairness is an error of law: e.g., see International Fashion Group Pty Ltd v Jonco Imports Pty Ltd [2014] NSWSC 60 at [79] (Garling J) citing Hutchinson v Roads and Traffic Authority [2000] NSWCA 332 at [29] (Giles JA, Meagher JA agreeing).

132    In response to these matters, the respondents submitted that as Independent Counsel “could determine” a dispute about Category, and as Mr Eaton’s real complaint was a formalistic one, the referral was not strictly in accordance with the Compensation Protocol. It is correct that cl 10.2(a) of the Compensation Protocol identifies that “a dispute as to the Category that is applicable to an Eligible Group Member” may be referred to Independent Counsel for determination. A dispute about whether an Eligible Group Member falls within Category A, B, C, D(i) and (ii) may also be referred to Independent Counsel in accordance with the process specified in cl 3.4(b). Contrary to Mr Eaton’s submissions, we do not accept that the process in cl 3.4(b) is applicable to a dispute about “Category D(iii)” as that that Category is dealt with in cl 3.4(a). A dispute about “Category D(iii)” may nevertheless be referred to Independent Counsel as provided for in cl 10.2(a).

133    However, the fact that a dispute about categories may be referred to Independent Counsel for determination does not mean that, pursuant to the Compensation Protocol, Independent Counsel has a broad and roving authority granted by the parties to determine any matter that could be referred to him or her, irrespective of whether it was in fact so referred. Further, if (contrary to our view) Independent Counsel was empowered to do so, that would further weigh in favour of the implication of a term that Independent Counsel is obliged to give a party notice if this was to occur.

134    During the course of oral argument, the respondents drew attention to cl 10.6(d) of the Compensation Protocol which (as noted above) provides that “Independent Counsel will make a determination concerning any items in dispute and will provide a written assessment to the Eligible Group Member’s lawyer and NRA within one month of receiving the Eligible Group Member’s Claim Documents” (emphasis added). Although the primary judge did not specifically refer to this clause at PJ [59], her Honour there observed that Independent Counsel was correct “in his understanding that the category of Mr Eaton’s claim was in dispute” and “that he was, as contemplated by the Compensation Protocol, able to determine that dispute”. The primary judge appeared to reason that (a) so long as the parties had raised a dispute through their respective submissions (even if only one of them had raised it), and (b) the dispute related to a matter that Independent Counsel was able to determine under cl 10.2, then it was open for Independent Counsel to determine that dispute without notice to the other party. The primary judge erred in so concluding.

135    In Casey Appeal (No 1), Perram J had occasion to consider the terms of the Compensation Protocol. A question there arose as to whether Independent Counsel ought to have dealt with a particular issue when it was not relied upon in the “initial claim”. His Honour stated at [99]-[100]:

I do not accept, and it was not put, that the provisions of the Compensation Protocol delimited the jurisdiction of the Independent Counsel only to arguments which were made in the initial claim. Rather, under cl 10.6(d) his jurisdiction was put in these terms:

“Independent Counsel will make a determination concerning any items in dispute and will provide a written assessment to the Eligible Group Member’s lawyer and NRA within one month of receiving the Eligible Group Member’s Claim Documents.”

This demonstrates that as long as an item of the claim was in dispute, the jurisdiction of the Independent Counsel with respect to the claim was at large.

(Emphasis added.)

136    Putting to one side whether Perram J’s reasoning here was strictly obiter (in circumstances where the argument was not put), his Honour’s reasons identify that so long as a claim has been put in dispute, the so-called jurisdiction of Independent Counsel is at large to determine that claim. The context is important. There, a claim had been made for out-of-pocket expenses, being an amount that had been paid to the applicant by way of worker’s compensation for which reimbursement was sought by the worker’s compensation insurer: [88], [91]–[92]. The particular issue that was not the subject of the “initial claim” was whether the applicant’s liability to repay these out-of-pockets expenses arose from the operation of s 85(6) of the Accident Compensation Act 1985 (Vic), this being a legislative provision that the applicant did not raise or rely upon until the delivery of supplementary submissions: [83]. Perram J reasoned that the particular point was within the scope of the initial claim. That is a factually different situation to where the “matter” is as to an entirely different subject.

137    In this regard, it is notable that cll 10.3 and 10.4 refer to a “matter in dispute” (emphasis added) whereas cl 10.6(d) refers to a determination concerning “any items in dispute” (emphasis added), which suggests that the items in dispute are a subset of the matter that is in dispute, as opposed to the scope of the matter of the dispute being enlarged by one party as occurred here. It is unnecessary to decide these points. That is because here, Mr Eaton’s claim as to the applicable Category was not in dispute in the referral made to Independent Counsel. In fact, not only was it not the subject of the equivalent of the “initial claim”, the parties had informed Independent Counsel that they had reached agreement on that issue in 2015. But after noting that agreement in their submissions, the respondents recanted their agreement.

138    We are fortified in our conclusion that it is appropriate to imply the limited obligation to accord procedural fairness for which Mr Eaton contended, by the context in which the Compensation Protocol came into effect. It came into effect through a Court-approved settlement of a class action pursuant to s 33V of the FCA Act. In approving the settlement, the Court had a protective role in relation to the interests of group members and it was required to be satisfied that the terms of the settlement were fair and reasonable in the interests of group members: Australian Securities and Investments Commission v Richards [2013] FCAFC 89 at [7]-[8] (Jacobson, Middleton and Gordon JJ); Kelly v Willmott Forests Ltd (in liquidation) (No 4) [2016] FCA 323; (2016) 335 ALR 439 at [62] (Murphy J). It may be doubted that a settlement scheme which provided for the binding determination of the appropriate compensation for sometimes substantial losses from substantial injuries, and which allowed no appeal except for error of law, would have been found to be fair and reasonable in the interests of group members if they were not to be accorded at least the limited measure of procedural fairness for which Mr Eaton contended.

139    The question here is whether, having regard to the terms of the Compensation Protocol, its statutory context and its purpose, as well as the role to be discharged by Independent Counsel, it carried an implied term that Independent Counsel is obliged to raise with a party, and give them an opportunity to be heard and provide evidence, if Independent Counsel intended to or would determine the applicable Category in a way that was contrary to an agreement reached between the parties, and on the assumption that the parties had referred to him a dispute that they had not in fact referred. In view of the text, context and purpose of the Compensation Protocol, the answer is that Independent Counsel was so required. The primary judge erred in not so finding.

140    We again note that the approach we have taken is consistent with the respondents’ approach in oral argument. The parties did not address us on the standard constructional principles regarding implication of terms. But in our view, taking that approach would produce the same result.

141    The proposition as to whether the Compensation Protocol contains an implied term in the form advanced by Mr Eaton may be tested this way. Suppose that the parties had agreed that, as a matter of fact, Mr Eaton had undergone three Revisions and 15 Surgical Procedures. If contrary to that agreed fact, the respondents wished to resile from it and/or Independent Counsel intended to (or did) disregard it, it would manifest obvious error, either because there would have been a denial of procedural fairness to Mr Eaton or because Independent Counsel had acted beyond the terms of his remit (as was the case in Capricorn Inks).

142    There was no dispute that an error of law would be established if Independent Counsel was required to afford procedural fairness to Mr Eaton but did not do so. However, there was a dispute between the parties as to whether such an error could be established if the denial of procedural fairness would have made no difference. It is next necessary to address that question.

1.5.2    Did the denial of procedural fairness as alleged by Mr Eaton make any difference to the individual assessment?

143    The primary judge reasoned that, even if Independent Counsel was required to afford Mr Eaton procedural fairness, the denial would have made no difference to the outcome because categorisation of Mr Eaton’s claim as satisfying the criteria under either subclauses 3.1(d)(ii) or (iii) led to the same result: an individual assessment of his claims for non-economic loss and gratuitous care.

144    The premise of the primary judge’s reasons was that so long as Independent Counsel determined Mr Eaton’s claim for compensation for non-economic loss on the basis of an individual assessment – which had occurred – Mr Eaton had lost nothing. However, this reasoning overlooked important aspects of the deprivation of the opportunity Mr Eaton had suffered and what he had lost as a result.

145    In order to explain the nature of the deprivation of that opportunity, it is necessary to have regard to the effect of the agreement reached between the parties and situate that within the context of the terms of the Compensation Protocol and the way in which Independent Counsel determined Mr Eaton’s claim for non-economic loss.

146    The starting point here is that (as noted above at [30]) the parties had reached agreement that Mr Eaton satisfied the criteria in subclause 3.1(d)(iii). This was made plain from the exchange of letters between the parties, but also in Mr Eaton’s written submissions to Independent Counsel.

147    Further, to characterise the agreement between the parties as merely one about Category overlooks the agreed factual basis for that agreement. As addressed further below, an agreement that an Eligible Group Member satisfies the criteria in subclause 3.1(d)(i) subsumes or carries within it an agreement between the parties as to a matter of fact - that the relevant Group Member had “undergone one Revision plus four or more other Surgical Procedures consequent on the Affected Implant”. An agreement that an Eligible Group Member satisfies the criteria in subclause 3.1(d)(ii) subsumes or carries within it an agreement between the parties as to a matter of fact - that the relevant Group Member has “undergone more than one Revision consequent on the Affected Implant”. An agreement that an Eligible Group Member satisfied the criteria in subclause 3.1(d)(iii) subsumes or carries within it an agreement between the parties as to a matter of fact - that the relevant Group Member “has experienced extraordinary and significant complications or injury in excess of that to which Eligible Group Members in Category A, B or C would experience as a result of failure of an Affected Implant”.

148    Both the primary judge’s reasons and the respondents’ submissions overlook the effect of the factual agreement that underlies the agreement as to Category. This was significant because in their written submissions in reply provided to Independent Counsel, the respondents were not merely resiling from the agreement as to Category but also from the agreed fact that Mr Eaton had “experienced extraordinary and significant complications or injury in excess of that to which Eligible Group Members in Category A, B or C would experience as a result of failure of an Affected Implant”.

149    During the course of argument, an issue arose as to whether the respondents were, in fact, resiling from any agreement that had been reached, or were merely embarking upon a forensic and tactical course to emphasise that Mr Eaton had not discharged his onus in respect of his claims for non-economic loss. It would appear that Independent Counsel was also uncertain as to the precise point being made by the respondents. Nevertheless, Independent Counsel did proceed on the footing that the matter as to Category was in dispute and, as explained below, did not return to address the question as to whether Mr Eaton had “experienced extraordinary and significant complications or injury in excess of that to which Eligible Group Members in Category A, B or C would experience as a result of failure of an Affected Implant”.

150    In resolving the question as to whether the denial of procedural fairness “went nowhere” or “went somewhere”, it is necessary to situate the effect of Independent Counsel’s reasoning in the context of the terms of the Compensation Protocol.

151    Clause 3.1 provides an Eligible Group Member’s entitlement to compensation will be assessed in accordance with the Categories specified in that clause: Category A, B, C and D.

152    As has been noted, it is important that cl 4.1 provides that Eligible Group Members falling into Categories A, B and C are entitled to compensation for non-economic loss and Gratuitous Care of fixed amounts (being, respectively, $30,000, $40,000 and $65,000), whereas Categories D(i), (ii) and (iii) are given an entitlement to compensation on the basis of an “Individual assessment”. It is for this reason that the primary judge concluded that it did not matter whether Independent Counsel had found that Mr Eaton fell within Category D(ii) as opposed to Category D(iii), as both categories required an individual assessment.

153    Whilst the primary judge correctly found that both Categories D(ii) and (iii) require an individual assessment, it is important to consider the differences between the respective Categories:

(a)    Category A is applicable where any Eligible Group Member does not meet the criteria for Categories B, C or D. In other words, Category A applies when the Eligible Group Member has required no Revisions or has required one Revision but no other “Surgical Procedure[s] consequent on the Affected Implant” and has not experienced or suffered any extraordinary and significant complications or injury (which would be covered by cl 3.1(d)(iii)).

(b)    Category B is applicable where any Eligible Group Member has undergone “one Revision” plus “one other Surgical Procedure” that are “consequent on the Affected Implant” (emphasis added).

(c)    Category C is applicable where any Eligible Group Member has undergone “one Revision” plus “two or three other Surgical Procedures” that are “consequent on the Affected Implant” (emphasis added).

154    It is evident that both Categories B and C apply where the Eligible Group Member has undergone only one Revision but has had either one or up to three other Surgical Procedures.

155    Category D is stated to apply where any Eligible Group Member “meets one or more of the following criteria”, which expressly indicates that the criteria may operate cumulatively. The criteria in subclause 3.1(d)(i) applies where the Eligible Group Member has undergone “one Revision” but has had “four or more other Surgical Procedures” consequent on the Affected Implant (emphasis added). It is clear that that subclause is next in sequence to Categories B (one Revision but only one other Surgical Procedures) and C (one Revision but more than one or up to three other Surgical Procedures).

156    Subclause 3.1(d)(ii) applies where the Eligible Group Member has undergone “more than one Revision consequent on the Affected Implant” (emphasis added). This criteria is different to Categories B and C and subclause 3.1(d)(i) in that it is applicable where there has been more than one Revision (irrespective of whether there has been one or more other Surgical Procedures). There was no doubt that Mr Eaton fell within subclause 3.1(d)(ii) as he had undergone two Revisions.

157    Subclause 3.1(d)(iii) applies where the Eligible Group Member has “experienced extraordinary and significant complications or injury in excess of that to which Eligible Group Members in Category A, B or C would experience as a result of failure of an Affected Implant”. A number of features of this subclause are important. The criteria may apply where the Eligible Group Member has:

(a)    not had any Revisions (as in Category A) but nevertheless satisfies the criteria in subclause 3.1(d)(iii);

(b)    had at least one Revision (Categories B and C and subclause 3.1(d)(i)) and also satisfies the criteria in subclause 3.1(d)(iii); or

(c)    had more than one Revision (subclause 3.1(d)(ii)) and also satisfies the criteria in subclause 3.1(d)(iii).

158    It follows that subclause 3.1(d)(iii) is applicable irrespective of the number of Revisions or the number of other Surgical Procedures that the Eligible Group Member has had. The criteria is not dependent on the number of Revisions or Surgical Procedures but the quality of the complications or injury that the Eligible Group Member has experienced (ie extraordinary and significant).

159    The primary judge’s reasons assume that the difference between the criteria specified in subclauses 3.1(d)(i), (ii) and (iii) are irrelevant to the determination of the compensation for non-economic loss and gratuitous care as each of these Categories required an individual assessment. The respondents embraced this point by contending that it should not be assumed that the criteria in subclause 3.1(d)(iii) involved “greater” or “more severe” injury or disability.

160    It may be accepted that the fact that an Eligible Group Member satisfies subclause 3.1(d)(iii) does not mean that that Eligible Group Member’s injury is greater or more severe than another Eligible Group Member who satisfies the criteria for other categories in cl 3.1. It may also be accepted that there will be circumstances where the assessment of non-economic loss may be greater or less across the different categories. However, the fact is that the parties had agreed that Mr Eaton had “experienced extraordinary and significant complications or injury in excess of that to which Eligible Group Members in Category A, B or C would experience as a result of failure of an Affected Implant”. Independent Counsel did not account for this agreed fact in the assessment he made as to Mr Eaton’s claim for non-economic loss and, more importantly, did not give Mr Eaton an opportunity to address this matter in light of the respondents’ submissions.

161    In undertaking the individual assessment, Independent Counsel found that Mr Eaton prima facie satisfied the criteria in cl 3.1(d)(ii): IC Determination at [352]. As noted above, that criteria was applicable where the Eligible Group Member had more than one Revision. Despite this, Independent Counsel proceeded to determine Mr Eaton’s claim on the basis that the Neurolysis, the First Arthroscopy and Nerve Block were required as a consequence of the Affected Implant. Independent Counsel also found that Mr Eaton had suffered some loss of amenity of life from 2008 to when the Fall occurred.

162    When assessing Mr Eaton’s claim for compensation, Independent Counsel did so on the basis that the respondents were “liable for the failure of the Affected Implant and Mr Eaton’s First and Second Revision Surgeries, the Neurotomy and First Arthroscopy”: IC Determination at [433]. In undertaking that assessment, Independent Counsel did assess the impact of the Affected Implant on Mr Eaton’s life and the material impact it had on him. However, Independent Counsel did not consider whether, in addition to these Revisions and Surgical Procedures that were consequent upon the Affected Implant, Mr Eaton had “experienced extraordinary and significant complications or injury in excess of that to which Eligible Group Members in Category A, B or C would experience as a result of failure of an Affected Implant”. Mr Eaton was not given an opportunity to address whether the factual agreement as to this matter was relevant to the assessment of non-economic loss irrespective of whether the respondents were liable for the other Surgical Procedures consequent upon the Fall.

163    The Compensation Protocol does not expressly specify that the individual assessment is to be tied to the factual basis upon which an Eligible Group Member satisfies the criteria within subclauses 3.1(d)(i), (ii) or (iii). Mr Eaton submitted that in essence, the Categories in cl 3 of the Compensation Protocol were the “injury” or “disability” in respect of which the assessment of loss was to be undertaken. We do not agree. As the respondents contended, the criteria open a gateway for the different forms of assessment (fixed in the case of Categories A, B and C, and individual assessments in the case of Category D). However, that is not to say that the Categories (or the criteria applicable to the Categories) are merely gateways alone. That is because the criteria contain embedded matters of fact that are likely to be relevant to an individual assessment, where that is required for the purpose of Category D.

164    For example, where the criteria for the Categories involve a factual agreement that the relevant Eligible Group Member has had a particular number of Revisions or Surgical Procedures or “has experienced extraordinary and significant complications or injury in excess of that to which Eligible Group Members in Category A, B or C would experience as a result of failure of an Affected Implant”, it is difficult to see how these factual matters would not bear upon the individual assessment that is required. Irrespective of the statutory basis for the claim for recovery being the TPA, the general purpose of non-economic loss is to compensate an injured person for the non-financial components of suffering an injury. Although the purpose of such damages is restorative, there are nuances involved. As the authors of Fleming’s The Law of Torts state:

The avowed aim of special damages is to put victims in the same financial position they would have been in had the accident not happened. This is often expressed by saying that they are entitled to restitutio in integrum but many aspects of general damages provide the plaintiff with compensation, not restitution. If any eye or an arm is lost, money can never restore what has been lost: the most it can do is to help the victim bear the loss with least discomfort, indignity and expense and perhaps console him or her a little, so far as public policy will permit money to be a salve.

(Sappideen C, Vines P, Eldridge J, Giliker P, Handford P, McDonald B, Fleming’s The Law of Torts (11th ed, Thomson Reuters, 2024) p 328)

165    Consistent with this, s 87D of the TPA defines non-economic loss as follows:

non-economic loss means any one or more of the following:

(a)     pain and suffering;

(b)     loss of amenities of life;

(c)     loss of expectation of life;

(d)     disfigurement.

(Original emphasis.)

166    Given that Independent Counsel regarded the question of whether Mr Eaton satisfied the criteria in cl 3.1(d)(iii) of the Compensation Protocol to be “moot”, he gave no consideration in the assessment of non-economic loss to the impact of the parties’ agreement that Mr Eaton had “experienced extraordinary and significant complications or injury in excess of that to which Eligible Group Members in Category A, B or C would experience” on the assessment of heads of damage such as pain and suffering, loss of amenities, etc. And having noted that the respondents’ submissions indicated that they appeared to no longer subscribe to the agreement that Mr Eaton had “experienced extraordinary and significant complications or injury”, Independent Counsel made a determination of the applicable Category, and assessed the applicable damages for non-economic loss, without regard to the prior agreement and without informing Mr Eaton of that, or giving him an opportunity to make submissions.

167    The difficulty with the primary judge’s reasons, and the respondents’ submissions, to the effect that Mr Eaton lost nothing because he received the benefit of an individual assessment is not only do they overlook these important matters of assessment, they assume the answer to the question as to the effect of the deprivation of the opportunity was to be determined by reference to whether Mr Eaton obtained an individual assessment. The answer should not be so assumed. It should especially not be assumed when the very thing Mr Eaton was deprived of was the opportunity to address why satisfaction of the criteria in subclause 3.1(d)(iii) was important beyond the fact of an individual assessment.

168    It may be that as the primary judge reasoned that the categorisation would make no difference to the individual assessment. It may also be, as the respondents submitted, that Mr Eaton’s injuries were not more serious or not more grave, but that misses the point of Mr Eaton having been deprived of the opportunity to address the points that the respondents had raised in their submissions.

169    Had Mr Eaton been informed that he was to be categorised under subclause 3.1(d)(ii), he may have adduced evidence as to the “extraordinary and significant complications or injury” he had suffered in excess of not only Eligible Group Members in Category A, B and C, but also in excess of those who met the criteria of subclause 3.1(d)(ii). The fact is that Mr Eaton’s submissions proceeded on the basis that it was an agreed fact that he had “experienced extraordinary and significant complications or injury” and focussed their attention on establishing whether the 14 additional procedures referable to the period after the Fall were caused by the Affected Implant. It may be that ultimately, Independent Counsel would have come to the same conclusion as to the individual assessment, but that misses the point that Mr Eaton was deprived of the opportunity.

170    The primary judge also reasoned that Mr Eaton could not now complain that he was not given the opportunity to provide further submissions given that he could have approached Independent Counsel to seek such an opportunity: PJ [72]. The respondents embraced this aspect of the primary judge’s reasons and also contended that it was relevant that Mr Eaton was represented by Maurice Blackburn who were familiar with the outcome in Casey Appeal (No 1). However, the primary judge’s reasons and the respondents’ submissions proceed on the premise that Mr Eaton should have known or would expect Independent Counsel to seek to determine a dispute about Category or to ignore the agreement that the parties had reached. Whilst there may have been a risk of that occurring, these arguments invert the obligation such that it would be left to the parties to the dispute resolution procedure contained in the Compensation Protocol to speculate as to the course that Independent Counsel may take.

171    It follows that the primary judge erred in concluding that a denial of procedural fairness went nowhere.

1.5.3    The relevance of materiality

172    The parties were in dispute as to whether a test of materiality applies. Mr Eaton contended that in cases involving a breach of a contractual obligation to afford procedural fairness, no test of materiality applies. The respondents did not expressly submit that a test of materiality applies but nevertheless submitted that a denial of procedural fairness without more would not result in the Court granting relief.

173    As a result of the conclusion reached above, it is unnecessary to resolve these questions. That is because there was here a denial of procedural fairness which deprived Mr Eaton of an opportunity to be notified that Independent Counsel would be departing from an agreement reached between the parties such that he was denied the opportunity to make submissions or provide further evidence to Independent Counsel. That denial was not one that went nowhere. Declaratory relief in this context would not be inutile or merely theoretical.

1.5.4    Mr Eaton’s application to adduce further evidence

174    In light of the conclusions we have reached, Mr Eaton’s application to adduce further evidence should be dismissed. In any event, we would not have allowed that application in circumstances where the material was not before the primary judge and no attempt was made to address the Court as to the principles applicable to the receipt of such evidence in those circumstances.

THE CATEGORY DISPUTE GROUND

175    As referred to above, there is a significant overlap between the Category Dispute Ground and the Procedural Fairness Ground, as a result of which, the Category Dispute Ground can be dealt with in brief.

176    Mr Eaton’s central contention in support of the Category Dispute Ground was that Independent Counsel’s “jurisdiction” to make a determination is limited by the “terms of the referral” made under cl 10 of the Compensation Protocol. It was submitted that, as the parties did not refer a “category dispute” to Independent Counsel, he had acted in excess of his jurisdiction by determining a dispute that had not been referred to him.

177    The primary judge rejected Mr Eaton’s contentions by finding that the parties were, in fact, in dispute about the Category applicable to Mr Eaton: PJ [55]-[58]. The primary judge reasoned that, as an issue had been raised by the respondents’ submissions (despite the earlier agreement between the parties), Independent Counsel was permitted by the terms of the Compensation Protocol to consider it. Her Honour referred to cl 10.2(a) in coming to this conclusion.

178    The primary judge erred in so concluding.

179    As noted above, cll 10.3 and 10.4 provide that if either party wishes to “refer a matter to Independent Counsel for determination”, the “Referring Party” is to “notify” the “Other Party” of its intention and is also to include in that notification its final offer or position and the name of the proposed Independent Counsel. It may be readily inferred that the purpose of these provisions is not only to ensure that the parties are on notice as to the matters in dispute, but also so that they have an opportunity to put their final positions to each other in relation to the “matter in dispute”.

180    Clause 10.2(a) of the Compensation Protocol did not provide an answer to the fact that a Category dispute had not been referred to Independent Counsel. As noted above, the fact that a Category dispute could be referred to Independent Counsel did not mean that such a dispute had been referred in accordance with the terms of the Compensation Protocol. It had not.

181    The primary judge’s reasons assume that a dispute about Category may be referred to Independent Counsel unilaterally by one party, without the consent of the other and without notice being given as to the fact of the dispute. If that were correct, it would deprive the parties of the rights conferred by cll 10.3 and 10.4 to have notice of the dispute and to put their final positions in relation to the subject matter of the dispute. In the present case, Mr Eaton was denied the opportunity to put his final position to the respondents on the Category dispute.

182    It is important to bear in mind the context within which cll 10.3 and 10.4 are to be construed. They provide for the referral of disputes to Independent Counsel for the purpose of the determination of claims for compensation and other related disputes in a way that is, in relative terms, more quick and cost effective than curial determination. However, the fact that, subject to errors of law, the determinations of Independent Counsel are binding is a matter that calls for certainty in notification of the dispute and for the ability of each party to exchange their respective final positions. We do not regard these matters as mere formalism as contended for by the respondents, but ones which serve important purposes in the context of the settlement of complicated representative proceedings.

183    The primary judge’s reasons further assume that an entirely new dispute (beyond the subject matter of an existing dispute) can be raised and, thereby, referred in a responding party’s submissions to Independent Counsel. As noted above by reference to Casey Appeal (No 1), whether the new dispute is connected with the subject matter of the referred dispute will be a question of fact and degree in any given case. In the present case, the dispute as to Category was not only new (in the sense that it was not the referred dispute), but it was also contrary to the agreement reached between the parties which was a fact disclosed to Independent Counsel. That makes this case different to Casey Appeal (No 1).

184    One way of viewing the error here was that by seeking to determine a dispute that was not referred to him, Independent Counsel had acted outside the scope of the contractual basis upon which the dispute was referred (or outside the remit of that scope) as was found in Capricorn Inks.

185    For these reasons, the Category Dispute Ground should be upheld.

THE CAUSATION GROUND

186    By this ground, Mr Eaton challenges the primary judge’s finding that Independent Counsel did not misdirect himself or apply the wrong test as to causation: PJ [107].

187    Mr Eaton’s submissions in support of the Causation Ground were difficult to discern and appeared to be inconsistent. The essential points appeared to be that (a) the Compensation Protocol did not require Independent Counsel to determine issues as to causation and only required a quantification of Mr Eaton’s claims, and (b) Independent Counsel erroneously applied the common law “but for” test for causation and/or the test for causation drawn from the Civil Liability Act 2002 (NSW) (Civil Liability Act) which were more onerous than the tests required under the Compensation Protocol.

188    In support of his contention that the Compensation Protocol did not require Independent Counsel to determine questions of causation, Mr Eaton submitted that cl 10.6(c) of the Compensation Protocol provided that the Independent Counsel’s determination must accord with the principles and provisions for the assessment of compensation and damages for personal injury under Part VIB of the TPA, except insofar as they are inconsistent with the Protocol itself (in which case, the Protocol prevails). Relevantly, Mr Eaton submitted that cl 4.4 addresses compensation for non-economic loss and gratuitous care, and provides that it is to be assessed in accordance with the corresponding provisions and principles in Part VIB of the TPA. Mr Eaton submitted that Part VIB of the TPA deals with the quantification of damages, rather than causation principles.

189    However, somewhat inconsistently with this point, Mr Eaton submitted that the Compensation Protocol established its own less onerous test(s) for causation. Mr Eaton submitted that cl 4.4 had to be read together with cll 3.1(b), 3.1(c), 3.1(d)(i), 3.1(d)(ii) and 3.4(v) which all referred to whether, respectively, the Revision(s), Surgical Procedure(s) or complications or injury were “consequent” upon the Affected Implant. In addition, Mr Eaton pointed out that subclause 3.1(d)(iii) referred to whether the relevant complications or injury were in excess of those referrable to Categories A, B and C arising “as a result of” the failure of an Affected Implant. It was submitted that the words “consequent on” and “as a result of” imposed a different and less onerous standard than the common law “but for” test for causation that Independent Counsel had applied.

190    However, somewhat inconsistently again, Mr Eaton submitted that because Part VIB of the TPA dealt only with quantification of damages:

…the common law test of causation applies with respect to non-economic loss and gratuitous care, being the common law in force as at 16 August 2012: see cl 15.1. The relevant question is whether, as a matter of common sense, the Affected Implant was a cause of the Applicant’s harm, which is again a different and less onerous standard than the “but for” test adopted by the IC. In particular, negligent conduct that materially contributed to the Applicant’s harm but which cannot be shown to have been a necessary condition of its occurrence, may establish factual causation at common law. Yet the IC failed to address that question.

191    Mr Eaton next pointed out that cl 5.2 of the Compensation Protocol deals with compensation for financial losses and provides that losses recoverable are limited to those “which, on the balance of probabilities, were caused by the Eligible Group Member having been the recipient of an Affected Implant, after taking into account the effect of any unrelated contributing causes” (emphasis added). It was submitted that this clause too posits a different, and materially less onerous, test of causation with respect to financial loss than that which Independent Counsel applied, excluding only “unrelated contributing causes” of the loss.

192    Mr Eaton submitted that the primary judge erred by finding that Independent Counsel applied “the test mandated by the common law and by the Compensation Protocol”: PJ [107]. It was submitted that the primary judge should have found that Independent Counsel’s adoption of the wrong test of causation constituted a manifest error of law.

193    Mr Eaton’s contention that the Compensation Protocol did not require Independent Counsel to determine questions of causation as opposed to quantification is contrary to the dispute that was referred to Independent Counsel and the terms of the Compensation Protocol.

194    In his written submissions to Independent Counsel, Mr Eaton clearly stated:

On 16 January 2012, Mr Eaton ruptured his patella tendon. The key issue for determination is the cause of his ruptured patella tendon, about which there is competing evidence from orthopaedic surgeons.

(Emphasis added.)

195    Thus, the key issue referred to Independent Counsel for determination was that relating to causation.

196    In relation to compensation for financial losses, cl 5.1 clearly provides that they are to be “calculated, determined or assessed” pursuant to the provisions and principles for the assessment of damages or compensation for personal injury in Part VIB of the TPA. Further, cl 15.2 clearly provides that the losses recoverable “will be limited to losses which, on the balance of probabilities, were caused by the Eligible Group Member having been the recipient of an Affected Implant”. It is plain that the dispute that was referred to Independent Counsel required him to determine and assess whether the loss and damage claimed by Mr Eaton was causally connected to the Affected Implant.

197    In relation to the assessment of non-economic loss and gratuitous care, cl 4.4 clearly provides that in the event of an “[i]ndividual assessment” compensation is to be determined or assessed in accordance with Part VIB of the TPA. Again, the dispute that was referred to Independent Counsel required him to determine whether the compensation claimed for non-economic loss and gratuitous care was causally connected to the Affected Implant.

198    Mr Eaton’s contention that Part VIB of the TPA deals with the quantification of damages as opposed to causation principles is at odds with the text of the relevant sections within Part VIB and the abovementioned terms of the Compensation Protocol. In relation to these matters, the primary judge reasoned at PJ [111]-[112]:

For non-economic loss and gratuitous care the Compensation Protocol required that compensation be individually assessed in accordance with the provisions and principles for the assessment of those heads of damage in Pt VIB of the TPA. Part VIB in its terms does not preclude questions of causation. As set out above Pt VIB applies to a proceeding in which, among other things, the plaintiff seeks an award of “personal injury damages”. The definition of that term imports the notion of causation as the compensable loss or damage for which damages or compensation are sought must result from the death of or personal injury to the claimant. Further, s 87W which concerns gratuitous care (see [96] above) requires among other things that the court is satisfied that the need for services arose “solely because of personal injury to which the personal injury damages relate” and the services would not be provided “but for the injury”: see s 87W(2). Again, the section requires an inquiry into causation.

For financial losses the Compensation Protocol, in its terms, requires inquiry into causation as it limits recoverable losses to those which were caused by the Affected Implant after taking into account “the effect of any unrelated contributing causes”: see cl 5.2 (at [14] above).

(Emphasis added.)

199    The primary judge’s reasons and conclusions are plainly correct. As her Honour observed, Part VIB of the TPA (as in force at the relevant time) defined “personal injury damages” at s 87D to mean “damages or compensation for loss or damage that is, or results from, the death of or personal injury to a person” (emphasis added). It is plain from this definition that under Part VIB of the TPA, damages or compensation is payable for the loss or damage resulting from the relevant personal injury.

200    The text of s 87W of the TPA also reinforces that questions of causation are raised in the determination of personal injury damages for gratuitous care, as it provides as follows:

(1)     A court must not, in a proceeding to which this Part applies, award personal injury damages for gratuitous attendant care services for the plaintiff, except in accordance with this section.

(2)     The court must be satisfied that:

(a)     there is (or was) a reasonable need for the services to be provided; and

(b)     the need has arisen (or arose) solely because of personal injury to which the personal injury damages relate; and

(c)     the services would not be (or would not have been) provided to the plaintiff but for the injury; and

(d)     the services are provided (or are to be provided) for at least 6 hours per week; and

(e)     the services are provided (or are to be provided) over a period of at least 6 months.

(Emphasis added.)

201    The emphasised parts of s 87W(2) make it plain that questions of causation are raised in the assessment of compensation for gratuitous care under Part VIB of the TPA. The primary judge did not err in so concluding.

202    Mr Eaton’s next contention that the Compensation Protocol applied less onerous tests for causation than the common law test of causation does not accord with the case that Mr Eaton put to Independent Counsel or that which was put to the primary judge. As noted above, Mr Eaton submitted that the words “consequent on” and “as a result of” imposed a different and less onerous standard than the common law test for causation that Independent Counsel had applied. However, Mr Eaton was unable to identify the test for causation that was said to be applicable by reason of the use of these words. A similar position prevailed before in the proceedings below, where the primary judge sought an answer as to how causation was to be assessed and was told by Mr Eaton’s Counsel that “it depends” (which the primary judge did not regard as a “great answer”): T51.18-20.

203    There is nothing in the written submissions that Mr Eaton provided to Independent Counsel that identified that the words “consequent on” and “as a result of” imposed a different and less onerous standard than the common law test for causation. Instead, Mr Eaton’s submissions to Independent Counsel in part embraced the common law “but for” test of causation. For example, at [118] of the IC Determination, Independent Counsel stated:

In concluding his submissions in relation to the cause of the patellar tendon rupture, Mr Eaton submits that there are four matters which militate in favour of a finding that the Fall would not have occurred but for the Second Revision Surgery:

a.     The Fall occurred less than 6 weeks after the Second Revision Surgery and less than 4 weeks following discharge from hospital;

b.     As a consequence of the Second Revision Surgery, the musculature of Mr Eaton’s right lower limb was acutely weakened;

c.     Mr Eaton was still reliant on crutches when the Fall occurred; and

d.     At the time of the Fall, Mr Eaton was prescribed opioid medication.

(Emphasis added.)

204    No submission was made in the appeal that the test for causation for personal injury damages for non-economic loss and gratuitous care and for economic loss under Part VIB of TPA was any different to the common law test for compensation. Rather, as the primary judge recorded at PJ [84], Mr Eaton submitted that, “if the Compensation Protocol itself does not govern the test of causation, then it is the common law common-sense test of factual causation that applies”. Then, during oral submissions before the primary judge, Mr Eaton made submissions that the primary judge recorded at PJ [85] as follows:

Mr Eaton contended that Independent Counsel erred in strictly applying concepts of common law causation rather than using the common law as an aid to statutory construction of Pt VIB of the TPA. He relied on several authorities, including Henville v Walker (2001) 206 CLR 459 and Allianz Australia Insurance Ltd v GSF Australia Pty Ltd (2005) 221 CLR 568, in support of that proposition. He submits that statutory tests for causation, the test for common law causation and the test for causation under a contract are each distinct, and Independent Counsel erred in eliding those tests.

205    It does not appear that the primary judge addressed this submission in the primary judgment. That is unsurprising given the many varied and inconsistent submissions that were advanced on Mr Eaton’s behalf. As noted above, on the one hand, Mr Eaton submitted that the common law test for compensation applied for the purpose of Part VIB of the TPA (PJ [84]), and, on the other hand, Mr Eaton submitted that Independent Counsel erred by “strictly” applying the common law test of causation to the determination of compensation under Part VIB of the TPA, as opposed to using it as an aid. These submissions were to be viewed in the context that aspects of Mr Eaton’s submissions to Independent Counsel embraced the “but for” test of causation.

206    These inconsistent positions became even less coherent in the appeal. No assistance was provided as to the relevant distinctions between the test for causation at common law and that which is applicable for the purpose of Part VIB of the TPA. In Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514, the Court stated at 525 (Mason CJ, Dawson, Gaudron and McHugh JJ):

The statutory cause of action arises when the plaintiff suffers loss or damage "by" contravening conduct of another person. "By" is a curious word to use. One might have expected "by means of”, "by reason of”, "in consequence of” or "as a result of”. But the word clearly expresses the notion of causation without defining or elucidating it. In this situation, s 82(1) should be understood as taking up the common law practical or common-sense concept of causation recently discussed by this court in March v. Stramare (E. & M. H.) Pty. Ltd. [(1991) 171 CLR 506], except in so far as that concept is modified or supplemented expressly or impliedly by the provisions of the Act. Had Parliament intended to say something else, it would have been natural and easy to have said so.

207    Subsequent decisions have elucidated the extent of the assistance that may be drawn from common law principles of causation to the assessment of compensation under s 82(1) of the TPA: see Henville v Walker [2001] HCA 52; (2001) 206 CLR 459; Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494; Murphy v Overton Investments Pty Ltd [2004] HCA 3; (2004) 216 CLR 388. However, these points were not addressed in Mr Eaton’s written and oral submissions, and it would not be appropriate in those circumstances to address them further here. It is sufficient to note that no error has been established in the primary judge’s reasons in circumstances where the points advanced on Mr Eaton’s behalf lacked coherence.

208    As to Mr Eaton’s contention that Independent Counsel had applied the wrong test for causation drawn from the Civil Liability Act, we discern no error in the primary judge’s methodical reasoning on this point. The primary judge accepted that, notwithstanding the Civil Liability Act did not apply to the assessment of compensation under the Compensation Protocol, it was curious that Independent Counsel had referred to that Act in his reasons: PJ [88], [101] and [107]. Despite this curiosity, the primary judge reasoned that the parts of the Civil Liability Act that Independent Counsel had relied upon as to “factual causation” were in substance the same as the common law test for causation and that ultimately Independent Counsel had not misdirected himself as to the relevant test: PJ [106]-[107].

209    The primary judge observed at PJ [97] that Independent Counsel commenced his consideration by setting out what he considered to be the relevant test to be applied as follows (IC Determination at [209]):

In order to establish factual causation Mr Eaton must demonstrate that the Affected Implant was a necessary condition of the occurrence of harm. It may be that there is more than a single sufficient condition for Mr Eaton’s harm. Only if one of those things is proven is it necessary to consider whether liability should be extended to DePuy for the Fall and the events that followed. Mr Eaton bears the onus of establishing, on the balance of probabilities, that but for the Affected Implant, he would not have fallen on 16 January 2012, or the consequences of the Fall would have been less severe. The standard of proof required to establish the requisite facts is on the balance of probabilities.

(Emphasis added.)

210    It is evident from this passage that Independent Counsel was identifying the relevant test for causation in two ways: first, that it was necessary to establish that the Affected Implant was a necessary condition of the occurrence of harm, and, second, that Mr Eaton had to establish on the balance of probabilities that but for the Affected Implant he would not have fallen. The primary judge correctly pointed out (by reference to footnote 272 of the IC Determination) that these matters were drawn from s 5D(1) of the Civil Liability Act: PJ [98]. That section provides as follows:

A determination that negligence caused particular harm comprises the following elements—

(a)     that the negligence was a necessary condition of the occurrence of the harm (factual causation), and

(b)     that it is appropriate for the scope of the negligent person’s liability to extend to the harm so caused (scope of liability).

(Original emphasis.)

211    The primary judge pointed out at PJ [99] that Independent Counsel commenced his analysis of causation as follows (at IC Determination [236]-[237]):

The question of factual causation under s 5D(1)(a) of the CLA involves a determination of a probable course of events had the Affected Implant not been defective. The onus of establishing factual causation rests upon Mr Eaton. It is necessary for Mr Eaton to establish, on the assumption that the Affected Implant had not been defective, that the likely outcome would have been different.

The CLA imposes the “but for” test as the first gateway to proof of causation. The High Court has articulated that statutory test in terms. The suggestion of a possible outcome should some alternate been taken does not satisfy the “but for” test. The “but for” test is a necessary test, save for exceptional cases to which s 5D(2) applies. In short terms, it is necessary for Mr Eaton to establish that he would not have suffered the harm complained of “but for” the Affected Implant. So long as the Affected Implant is a necessary element of a sufficient set of conditions to bring about the harm suffered, factual causation will be established.

(Emphasis added.)

212    Putting to one side that Independent Counsel was here referring to the Civil Liability Act, the primary judge proceeded to explain at PJ [104]-[106] by reference to the decision of the High Court in Wallace v Kam [2013] HCA 19; (2013) 250 CLR 375 that the test for factual causation specified in s 5D(1)(a) of the Civil Liability Act involved, in essence, the application of the “but for” test. In this regard, it is instructive that in Wallace v Kam, the Court stated at [14] and [16]:

The distinction now drawn by s 5D(1) between factual causation and scope of liability should not be obscured by judicial glosses. A determination in accordance with s 5D(1)(a) that negligence was a necessary condition of the occurrence of harm is entirely factual, turning on proof by the plaintiff of relevant facts on the balance of probabilities in accordance with s 5E. A determination in accordance with s 5D(1)(b) that it is appropriate for the scope of the negligent person’s liability to extend to the harm so caused is entirely normative, turning in accordance with s 5D(4) on consideration by a court of (amongst other relevant things) whether or not, and if so why, responsibility for the harm should be imposed on the negligent party.

…

The determination of factual causation in accordance with s 5D(1)(a) involves nothing more or less than the application of a “but for” test of causation. That is to say, a determination in accordance with s 5D(1)(a) that negligence was a necessary condition of the occurrence of harm is nothing more or less than a determination on the balance of probabilities that the harm that in fact occurred would not have occurred absent the negligence.

(Emphasis added.)

213    The primary judge further observed that in Strong v Woolworths Ltd [2012] HCA 5; (2012) 246 CLR 182 at [18] a majority of the High Court (French CJ, Gummow, Crennan and Bell JJ) observed that “the determination of factual causation under s 5D(1)(a) of the [Civil Liability Act] is a statutory statement of the ‘but for’ test of causation, albeit noting that it has two kinds of limitations”: PJ [106].

214    Thus, as the primary judge cogently and correctly reasoned, Independent Counsel had not misdirected himself as to the correct test to be applied at common law (despite his references to and reliance upon the Civil Liability Act): PJ [107]. As her Honour further stated at PJ [107], the common law test was the one that Mr Eaton had argued should have been applied and it was the one that Independent Counsel applied “despite his misplaced references” to the Civil Liability Act. We discern no error in the primary judge’s methodical determination of this issue.

215    For these reasons, the Causation Ground is not established.

THE NOVUS ACTUS INTERVENIENS GROUND

216    By the Novus Actus Interveniens Ground, Mr Eaton contends that Independent Counsel erred by failing to apply the correct principle as to novus actus interveniens and that the primary judge erred by failing to so find.

217    Mr Eaton submitted that the applicable principle at common law is that the chain of causation will be broken by a novus actus interveniens where that act “comprises either a voluntary human action, or a coincidence”: citing Haber v Walker [1963] VR 339 at 358 (Smith J) and cited with approval Pabai v Commonwealth of Australia (No 2) [2025] FCA 796 at [162] (Wigney J). Mr Eaton submitted that, although Independent Counsel found that the Fall was neither a voluntary act nor a matter of coincidence at IC Determination [331], he proceeded to find that Mr Eaton’s loss and damage resulted “in large measure” from a novus actus interveniens because it was “directly traceable to an unrelated and intervening event”: IC Determination at [340]. It was submitted that Independent Counsel’s findings were inconsistent and amounted to a misapplication of the applicable common law principle.

218    This Ground is not made out.

219    As the primary judge pointed out at PJ [117], Independent Counsel commenced his analysis of novus actus interveniens at IC Determination [328]. Independent Counsel observed that the respondents’ contention was that the Fall was a voluntary act and an unfortunate coincidence: IC Determination at [331]. At IC Determination [170], Independent Counsel had already set out the relevant passage of Smith J’s judgment in Haber v Walker at 358, which was as follows:

Confining attention to what is relevant to the present case the main principles, I consider, are these. In the first place a wrongful act or omission cannot ordinarily be held to have been a cause of subsequent harm unless that harm would not have occurred without the act or omission having previously occurred with such of its incidents as rendered it wrongful. Exceptions to this first principle are narrowly confined. Secondly, where the requirements of this first principle are satisfied, the act or omission is to be regarded as a cause of the harm unless there intervenes between the act or omission and the harm an occurrence which is necessary for the production of the harm and is sufficient in law to sever the causal connexion. And, finally, the intervening occurrence, if it is to be sufficient to sever the connexion, must ordinarily be either-

(a)     human action that is properly to be regarded as voluntary, or

(b)     a causally independent event the conjunction of which with the wrongful act or omission is by ordinary standards so extremely unlikely as to be termed a coincidence: see Hart and Honore, op. cit., especially at pp. 103-117, 123-134, 151-152 and 157-9.

220    At IC Determination [329], Independent Counsel set out the judgment of Mayo J in Fishlock v Plummer [1950] SASR 176 at 180, which was as follows:

When a plaintiff suffers further injuries that result afterwards from some independent intervening cause, the further disability will not be treated as the result of the wrongful act. If the injury or loss be not directly traceable to the negligence of the defendant, but is due to the operation of a new and independent cause, that damage will not be recoverable from the defendant; it is within the principle novus actus interveniens (e.g. Adelaide Chemical and Fertilizer Co. Ltd. v. Carlyle [(1940) 64 CLR 514 at pp 520, 528, 534].

(Original emphasis.)

221    Independent Counsel then rejected the respondents’ contention that the Fall was a “voluntary act and an unfortunate coincidence”: IC Determination at [331]. Independent Counsel reasoned as follows:

In my view, it is not reasonably arguable that the Fall was voluntary in the sense that it occurred as a consequence of a deliberate and intended act of Mr Eaton. Further, I disagree that the Fall was a coincidence. In my view, the Fall was not a coincidence in the sense that it was an unrelated coincident event occurring without apparent causal connection to the Affected Implant.

222    Independent Counsel next turned to summarise his conclusions as to causation at IC Determination [337]-[341] as follows:

For the reasons referred to above, it is my view that Mr Eaton has not met the standard of proof required to establish to the requisite standard the facts causally connecting the Affected Implant to the Fall. I make the following findings.

First, the Affected Implant was the cause of Mr Eaton’s injury, loss and damage up to the time of the Fall.

Secondly, the Affected Implant did not cause the Fall. The available evidence does not establish that the Affected Implant was a necessary condition of the Fall. Mr Eaton has not proved on the balance of probabilities, that the Fall was caused by the Affected Implant, nor that the consequences of the Fall were more severe due to the Affected Implant.

Thirdly, I find that in large measure, Mr Eaton’s injury, loss and damage has resulted from a novus actus interveniens. Save for some relatively minor aspects of Mr Eaton’s clinical course following the Fall, the injury, loss and damage complained of is directly traceable to an unrelated and intervening event: viz. the Fall.

In arriving at my findings, I have determined the issues in accordance with common law principles outlined above.

(Original emphasis.)

223    As is apparent from this reasoning, Independent Counsel was not satisfied that Mr Eaton had established on the available evidence that the Affected Implant caused the Fall (or, more specifically, the rupture in the right patellar tendon). Independent Counsel proceeded to find (though it may have been unnecessary to do so) that in large measure, Mr Eaton’s injury, loss and damage was due to a novus actus interveniens in that they were “directly traceable to an unrelated and intervening event”.

224    There was, and is, no inconsistency between Independent Counsel’s rejection of the respondents’ contention that the Fall was a voluntary act or unrelated coincidence, and his finding that in large measure Mr Eaton’s loss was directly traceable to an unrelated intervening event (which applied the test from Fishlock v Plummer). Reading Independent Counsel’s reasons fairly and as a whole, Independent Counsel was rejecting the idea that the Fall could be characterised as a voluntary act or a mere coincidence. The rejection of those propositions was not inconsistent with the conclusion that the Fall was nevertheless an intervening event in the chain of causation. As to these matters, the primary judge reasoned as follows at PJ [119]-[120]:

There is no inconsistency between IA [331] and IA [340] when read in context. At IA [331] Independent Counsel did not form a view or state his conclusion on whether there was a novus actus interveniens. He did no more than reject the respondents’ submission that the Fall was voluntary, in the sense that it was a deliberate action on Mr Eaton’s part, or that it was a coincidence. Independent Counsel’s conclusions are set out at IA [332]-[340], including that the Affected Implant did not cause the Fall and ultimately (at IA [340]) that in large measure Mr Eaton’s injury and loss resulted from an intervening act, namely the Fall.

It follows that the contentions in grounds (l) and (m) of the amended interlocutory application, both of which have as their foundation the establishment of the alleged inconsistency between IA [331] and IA [340], are not made out.

225    The primary judge did not err in so concluding.

CONCLUSION

226    An order should be made setting aside the orders made by the primary judge on 5 July 2024. In their place, a declaration should be made that:

(a)    Independent Counsel made an error of law by not giving the appellant the opportunity to tender further evidence or make submissions as to whether (contrary to the agreement reached between the applicant and the respondents) the appellant had experienced extraordinary and significant complications or injury in excess of that to which Eligible Group Members in Category A, B or C would experience as a result of failure of an Affected Implant within the meaning of cl 3.1(d)(iii) of the Compensation Protocol; and

(b)    Independent Counsel made an error of law in determining a dispute as to the Category applicable to the appellant (within the meaning of cl 3.1 of the Compensation Protocol) in the absence of giving the appellant the opportunity in (a).

227    It follows from these declarations that the IC Determination should be set aside. In all the circumstances, it is appropriate that the determination of Mr Eaton’s claim for non-economic loss and gratuitous care under the Compensation Protocol be referred to a different Independent Counsel for determination according to law.

228    The respondents should pay the appellant’s costs of the appeal and the proceedings before the primary judge as agreed or taxed.

Associate:

Dated:    27 March 2026

REASONS FOR JUDGMENT

CHEESEMAN J:

1.    INTRODUCTION

229    This appeal concerns the dismissal of an interlocutory application seeking to set aside, for alleged error of law, an assessment of compensation made pursuant to a contractually agreed protocol governing the assessment of quantum (the Compensation Protocol): Casey v DePuy International Ltd (No 4) [2024] FCA 724 (the primary judgment or PJ). That protocol formed part of a court‑approved settlement of representative proceedings. The application was brought pursuant to cl 10.6(e) of the Compensation Protocol, which confines challenges to appeals on an error of law. Jurisdiction arises under s 33V of the Federal Court of Australia Act 1976 (Cth) (the FCA Act). Leave to appeal under s 24 of the FCA Act was required and was not ultimately opposed. Likewise, the application for an extension of time within which to appeal.

230    In their joint reasons, Murphy and Shariff JJ explain that they would grant leave to appeal and allow the appeal on grounds 1 to 4 (which their Honours describe as the Procedural Fairness Ground and the Category Dispute Ground). Their Honours would otherwise dismiss the remaining grounds, being grounds 5 and 6 (the Causation Ground and the Novus Actus Interveniens Ground) and would dismiss the application to adduce further evidence.

231    I would dismiss the appeal.

232    I do not disagree as to the grant of leave, the dismissal of the application to adduce further evidence, or the disposition of the Causation Ground and the Novus Actus Interveniens Ground.

233    I will refer to Mr Bradley Eaton, who is the applicant for leave to appeal, as the appellant. The respondents are Ms Pamela Casey, DePuy International Ltd and Johnson & Johnson Medical Pty Ltd. Ms Casey was the lead applicant in the representative proceeding. She filed a submitting appearance in this proceeding. DePuy and Johnson & Johnson were the respondents in the representative proceeding. In the Compensation Protocol, they are defined as the Respondents. I will refer to them collectively as the respondents to this proceeding. When using the contractual definition, I will say the “Respondents”.

234    The key difference concerns the Procedural Fairness Ground (grounds 1 and 2) and the Category Dispute Ground (grounds 3 and 4). I would dismiss those grounds. On the proper construction of the amended settlement agreement dated 19 November 2012 between Ms Casey, DePuy and Johnson & Johnson (the Settlement Agreement), and in particular the Compensation Protocol, neither the assessment undertaken by the Independent Counsel nor the reasoning of the primary judge discloses error of law. The scope of the appeal is confined under cl 10.6(e) of the Compensation Protocol. The determination of Independent Counsel is final and binding except for an appeal to the Federal Court on an error of law.

235    The Court’s jurisdiction to determine the interlocutory application was not in issue before the primary judge: PJ [7]. As the primary judge noted, similar applications have previously arisen under the present Compensation Protocol, including in Casey v DePuy International Ltd (Appeal from Independent Counsel) [2023] FCA 254 (Casey Appeal No 1). In that decision, Perram J concluded that jurisdiction was supplied by s 33V(1) of the FCA Act, but recognising that the question was contestable, subsequently made an order under s 33V(2) requiring the respondents to pay “Eligible Group Members” in accordance with the Compensation Protocol to take effect nunc pro tunc from the date of settlement approval.

236    The appeal turns on the proper construction of the Settlement Agreement. That agreement embodied both a protocol for determining eligibility for compensation (the Liability Protocol) and the Compensation Protocol. The focus of the appeal is the Compensation Protocol. It is to that question of construction that I turn.

PROPER CONSTRUCTION OF THE COMPENSATION PROTOCOL

1.6    Applicable principles

1.6.1    Construction of commercial contracts

237    The Compensation Protocol forms part of the settlement approved by the Court under ss 33V(1) and 33ZF of the FCA Act along with the Settlement Agreement and the Liability Protocol. Notwithstanding the Court’s approval, the Settlement Agreement (including the Compensation Protocol) remains a private contractual instrument, the construction of which is governed by orthodox principles of contractual interpretation.

238    The rights and obligations of the parties are to be ascertained objectively by reference to the text of the instrument, read as a whole, in its contractual context, and having regard to its purpose. The inquiry is directed to the meaning that the text would convey to a reasonable person in the position of the parties, not to the subjective intentions, expectations or understandings of any individual party or group member: Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; 149 CLR 337 at 347-348 (Mason J); Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; 256 CLR 104 at [46]-[52] (French CJ, Nettle and Gordon JJ); Electricity Generation Corporation (t/as Verve Energy) v Woodside Energy Ltd [2014] HCA 7; 251 CLR 640 at [35] (French CJ, Hayne, Crennan and Kiefel JJ).

239    Each provision is to be construed in a manner that enables it to operate coherently with the instrument as a whole. Clauses are not read in isolation. Apparent tensions are resolved, where possible, by reference to the overall structure, object and allocation of functions effected by the agreement: Fitzgerald v Masters [1956] HCA 53; 95 CLR 420 at 426-427 (Dixon CJ, Fullagar J); Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12; 261 CLR 544 at [16]-[17] (Kiefel, Bell and Gordon JJ), [73], [85]-[88] (Nettle J).

240    Commercial contracts are construed on the assumption that the parties intended the instrument to produce a commercial result and to avoid commercial nonsense or incoherence. That principle operates as a tool of construction where competing meanings are available on the text. It does not authorise a court to re‑write the parties’ bargain or to improve it by reference to hindsight. See Mount Bruce at [47], [51]; Ecosse at [88].

1.6.2    Effect of approval under s 33V of the FCA Act

241    Section 33V requires the Court to be satisfied that a proposed settlement of representative proceedings is fair and reasonable as between group members. The Court’s role at the approval stage is protective. It is directed to the interests of absent class members and to the fairness of the settlement as a whole: Williams v FAI Home Security Pty Ltd (No 4) [2000] FCA 1925; 180 ALR 459 at [19]-[21] (Goldberg J); Modtech Engineering Pty Ltd v GPT Management Holdings Ltd [2013] FCA 626 at [23]-[27] (Gordon J). The protective function of the Court is exercised ex ante.

242    Approval under s 33V does not transform the contract effecting the settlement into a statutory instrument. Once approved, the Court is not given a continuing supervisory jurisdiction under s 33V to remodel the parties’ contractual arrangements post-approval. The proposition that a contract approved under s 33V is not by the fact of that approval transformed into something other than a private contract is the premise which informs the debate in the authorities as to whether the Court, on approval, has power to interfere with the contractual terms. This has arisen in the context of the Court’s consideration of approval of funding agreements under ss 33V and 33ZF. See Elliott-Carde v McDonald’s Australia Limited [2023] FCAFC 162; 301 FCR 1 at [396] (Lee J), [476] (Colvin J), cf Beach J [165]; Liverpool City Council v McGraw-Hill Financial, Inc (now known as S&P Global Inc) [2018] FCA 1289 at [47]-[52] (Lee J); Mitic v Oz Minerals Ltd (No 2) [2017] FCA 409 at [28] (Middleton J); Botsman v Bolitho [2018] VSCA 278; 57 VR 68 at [375]-[380] (Tate, Whelan and Niall JJA); cf Blairgowrie Trading Ltd v Allco Finance Group Ltd (recs & mgrs apptd) (in liq) (No 3) [2017] FCA 330; 343 ALR 476 at [101] (Beach J); Earglow Pty Ltd v Newcrest Mining Limited [2016] FCA 1433 at [133]-[158] (Murphy J). That issue does not arise in this appeal. What is clear is that once approved, the contractual arrangements giving effect to the settlement take effect according to their terms.

243    Approval under s 33V does not displace the application of the ordinary principles governing the construction of the contract effecting a settlement. The fact of approval under s 33V may inform the context in which the settlement operates, but it does not displace the objective theory of contract, nor justify the implication of additional substantive or procedural obligations not found in, or required by, the contract as properly construed. That is particularly so where, as here, the Compensation Protocol itself makes detailed provision for the procedure by which determinations are to be made.

244    In construing a contract that takes effect upon Court approval, part of the relevant context is that the parties entered the contract to achieve finality and administrative efficiency to resolve the claims of all Group Members. Once approved, the contract embodying the settlement takes effect according to its terms.

1.6.3    Dispute‑resolution mechanisms within approved settlements

245    Where a settlement establishes a private mechanism for the determination of individual entitlements, the scope of the decision‑maker’s authority, and the nature of the function conferred, are questions of construction. The critical inquiry is what the parties have agreed the decision‑maker is to do, and on what basis.

246    The mere fact that a mechanism for the determination of individual compensation affects substantive interests does not by that fact alone convert the mechanism into an arbitral or quasi‑judicial process. Whether the decision‑maker is required to act judicially, or to observe procedural fairness according to administrative law concepts, depends on the proper construction of the contract which must be assessed objectively. Absent clear textual indication, courts do not supplement such schemes by implying additional layers of process merely because, with hindsight, a different procedure might have been preferable where to do so would alter the efficiency, finality or structure of the agreed scheme: Codelfa at 346-347; Pipeline Services WA Pty Ltd v Atco Gas Australia Pty Ltd [2014] WASC 10 at [56] (Martin CJ); Jireh International Pty Ltd t/as Gloria Jean's Coffee v Western Exports Services Inc [2011] NSWCA 137 at [55] (Macfarlan JA).

1.6.4    Implication of terms

247    The implication of a term as a matter of fact is directed to the particular contract, assessed by reference to the objective intentions of the parties. In this appeal, the Compensation Protocol is therefore governed by the stringent criteria applicable to implication in fact.

248    The relevant criteria are summarised in BP Refinery (Westernport) Pty Ltd v President, Councillors and Ratepayers of the Shire of Hastings (1977) 180 CLR 266 at 283. A term will not be implied unless it is reasonable and equitable, necessary to give the contract business efficacy, so obvious that it goes without saying, capable of clear expression, and consistent with the express terms of the contract. The High Court adopted those criteria in Codelfa at 346-347 (Mason J). Implication in fact is exceptional. The threshold is exacting, and a term will not be implied merely because it would be reasonable, desirable or fair. They are distinct from implication in law, which operates at the level of classes of contracts and is not concerned with the intentions of the parties to the particular agreement.

1.7    Procedural context attending entry into the Settlement Agreement

249    The procedural context in which the Settlement Agreement was entered into was summarised by the primary judge at PJ [1]-[6]. In 2010, Ms Casey commenced representative proceedings pursuant to Part IVA of the FCA Act against DePuy and Johnson & Johnson. Ms Casey alleged that a prosthesis designed to be fitted during total knee replacement surgery (the Affected Implant) was not fit for purpose and not of merchantable quality.

250    In 2012, the representative proceeding was settled. The terms of settlement were recorded in the Settlement Agreement. Ms Casey entered into the Settlement Agreement on her own behalf and as the representative of group members. The Court approved the settlement pursuant to ss 33V(1) and 33ZF of the FCA Act on the terms set out in the Settlement Agreement, the Liability Protocol, and the Compensation Protocol. Nothing in the settlement approval reasons suggests that the Court understood the Compensation Protocol to operate otherwise than according to its expressed procedures, or to require the observance of additional procedural steps beyond those for which the parties expressly provided: Casey v DePuy International Ltd (No 2) [2012] FCA 1370 (Buchanan J). As mentioned, Perram J subsequently made an order requiring the respondents to pay Eligible Group Members in accordance with the Compensation Protocol to take effect nunc pro tunc from the date of settlement approval.

251    The Settlement Agreement did not provide for the payment of a global sum to group members. Instead, it established a mechanism for assessment of whether group members were eligible to receive compensation and, if so, a further mechanism for the determination of the amount of compensation payable by the respondents. Those mechanisms were identified in cl 5 of the Settlement Agreement and were set out in two further documents, namely the Liability Protocol and the Compensation Protocol.

252    The appellant is an Eligible Group Member for the purposes of the Compensation Protocol, being a group member assessed pursuant to the Liability Protocol as eligible to receive compensation.

253    As the appellant did not reach agreement with the respondents as to his compensation entitlement, the determination of that entitlement fell to be determined by an Independent Counsel appointed pursuant to cl 6.7 of the Compensation Protocol. Mr Richard Sergi was appointed to that role. He provided an Independent Assessment dated 5 October 2023.

1.8    The issue of construction that informs the Procedural Fairness Ground and Category Dispute Ground

254    The Compensation Protocol defines the function conferred on the Independent Counsel and the limits of the evaluative judgment thereby conferred. The question is whether Independent Counsel misconceived the function or exceeded the authority conferred by the Compensation Protocol so as to constitute an error of law.

1.8.1    Clause 1 - scope and function of the Compensation Protocol

255    Clause 1.1 identifies the function of the Compensation Protocol. It applies only to Eligible Group Members and provides a regime for assessing and processing their compensation entitlements pursuant to the settlement. Clause 1.2 confirms that the Compensation Protocol provides for four different categories of claims. Clause 1.3 identifies the heads of compensation governed by the Compensation Protocol, distinguishing between non‑economic loss and Gratuitous Care (cl 4) and financial losses (cl 5). Clause 1.4 identifies dispute resolution by Independent Counsel under cl 10 as an integral part of the contractual scheme.

256    Clause 1 makes clear that the Compensation Protocol is not aspirational or discretionary. It is the machinery directed to the final determination of the compensation entitlements of the individual claims of Eligible Group Members within defined parameters.

1.8.2    Clause 2 - definitions

257    In these reasons I will capitalise terms in accordance with the definitions provided, in particular, in cl 2 of the Compensation Protocol.

1.8.3    Clause 3 - categorisation of claims

258    Clause 3.1 requires that each Eligible Group Member be assessed as falling within one of four categories – Category A (no Revision or Surgical Procedures); Category B (one Revision plus one other Surgical Procedure); Category C (one Revision plus two or three other Surgical Procedures); or Category D.

259    Category D is defined disjunctively in cl 3.1(d) by reference to three alternative criteria: (i) one Revision plus four or more Surgical Procedures; “and/or” (ii) more than one Revision; “and/or” (iii) extraordinary and significant complications or injury in excess of that to which Eligible Group Members in Categories A, B, or C would experience, in each case consequent on the Affected Implant. Satisfaction of any one criterion is sufficient to place a claimant within Category D. An Eligible Group Member may satisfy more than one of the sub criteria in Category D.

260    Nothing in cl 3.1 suggests that sub‑categories within Category D operate hierarchically or attract different contractual consequences. All Category D claims are subject to individual assessment. The particular limb of cl 3.1(d) by which Category D is engaged does not alter the applicable assessment regime.

261    Clause 3.2 performs an important but confined function in the operation of cl 3. It does not introduce additional criteria for categorisation. Clause 3.2 prescribes counting rules for Revisions and Surgical Procedures for the purpose of applying cl 3.1. Those rules are directed to ensuring that categorisation proceeds by reference to defined surgical events and is not distorted by double‑counting or the fragmentation of a single surgical episode.

262    The effect of those provisions is to render categorisation under cl 3 a mechanical and rule‑based exercise, directed to identifying whether the thresholds in cl 3.1 are met, rather than an evaluative inquiry informed by discretionary judgment. That rule‑based character is inconsistent with the importation of procedural requirements directed to persuasion, advocacy or iterative engagement, and reinforces that categorisation under cl 3 is to be resolved by application of the Compensation Protocol’s criteria rather than by an adjudicative process. Save for the sub criterion in cl 3.1(d)(iii), the categorisation criteria are quantitative – they set rules for counting the defined events that inform the identification of the applicable category which in turn results in identification of the applicable method of determination to be applied – be that by defined lump sum or individual assessment.

263    Category D(iii) is different in that it requires demonstration of a qualitative element, namely, “extraordinary and significant complications or injury in excess of that to which Eligible Group Members in Category A, B or C would experience as a result of failure of an Affected Implant”. If that qualitative element is established, then the Eligible Group Member’s entitlement to non-economic loss and Gratuitous Care is subject to individual assessment in the same way as if the Eligible Group Member’s claim was accepted to fall within Category D(i) or (ii).

264    Read with cll 3.1 and 3.4 (detailed below), cl 3.2 confirms that disputes about category are to be resolved by applying the Compensation Protocol’s counting rules to the surgical history, and, if necessary, by the dispute‑resolution mechanism expressly provided. It does not contemplate the introduction of additional procedural requirements or the re‑characterisation of the categorisation exercise by reference to external notions of fairness or merits.

265    Clause 3.3 operates as the evidentiary gateway to the category‑determination process prescribed by cl 3.4. It requires the Group Member’s lawyer, within a defined timeframe, to provide medical records confirming the Surgical Procedures and/or Revisions undergone consequent on the Affected Implant. The purpose of that requirement is to ensure that the subsequent steps in cl 3.4 proceed on an agreed and properly documented factual foundation as to the Group Member’s surgical history.

266    Clause 3.4 then prescribes what follows once the Group Member’s lawyer provides that material (or confirms it as complete). If the Group Member’s lawyer notifies under cl 3.4(a) that the Eligible Group Member considers they fall within Category D(iii), the default category‑determination process in cl 3.4(b) is displaced. In the absence of such a notification, cl 3.4(b) establishes a sequential mechanism—agreement between the parties, recourse to a treating surgeon or Assessor, and, if necessary, determination by Independent Counsel—for resolving any dispute as to category. Within the cl 3.4(b) sequential mechanism, cl 3.4(b)(v) places the onus on the Eligible Group Member to establish, on the balance of probabilities, that the Revision and/or Surgical Procedures were consequent on the Affected Implant.

267    The reference in cl 3.4(b)(iv) to a category dispute being determined by Independent Counsel “in accordance with clause 10” operates as a specific instance of the general referral power in cl 10.2(a), confirming that unresolved disputes as to category are within the ambit of the function conferred on Independent Counsel under the Compensation Protocol.

268    Read together, cll 3.3 and 3.4 reflect a deliberate structure. Clause 3.3 ensures that category determination is informed by objective medical material. Clause 3.4 then channels disputes about categorisation into two separate and defined pathways, depending on whether the Eligible Group Member considers that they fall into Category D(iii). Where an Eligible Group Member is not within Category D(iii), the second pathway is engaged. The clauses do not contemplate any additional or free‑standing procedural steps beyond those expressly specified.

269    Clauses 3.3 and 3.4 demonstrate that the parties addressed procedural content expressly by requiring the provision of objective medical material as the evidentiary foundation for categorisation and by prescribing defined pathways for resolving any dispute as to category. That structure tells against the implication of any additional obligation of procedural fairness beyond that for which the Compensation Protocol expressly provides.

270    The function of cl 3 is classificatory. Its purpose is to determine whether a claim proceeds by reference to fixed amounts (Categories A-C) or by individual assessment (Category D). It is not in its terms concerned with the qualitative assessment of the relevant loss, other than by nominating whether it is to be by reference to fixed amounts or alternatively by individual assessment.

1.8.4    Clause 4 - non‑economic loss and gratuitous care

271    Clause 4.1 provides that Eligible Group Members in Categories A-C receive fixed amounts of money for non‑economic loss and Gratuitous Care. Claims within Category D are to be individually assessed. Non-economic loss and Gratuitous Care are to be individually assessed regardless of which of the Category D subcategories an Eligible Group Member’s claim falls into. Category D is structured in such a way that it is possible that an Eligible Group Member’s claim may fall into more than one of the Category D subcategories.

272    Clause 4.2 applies where an Eligible Group Member has provided notification in accordance with cl 3.4(a) that they consider that they fall within Category D(iii). Clause 4.2(a) imposes an evidentiary burden on such an Eligible Group Member to establish entitlement to more compensation than would otherwise be available if they had not elected to be assessed under Category D(iii). The clause does not create a separate assessment regime within Category D. It regulates proof, not outcome. The contractual outcome for all Category D claimants is individual assessment.

273    If an Eligible Group Member who has notified that they consider that they fall within Category D(iii) fails to discharge that evidentiary burden, cl 4.2(b) provides that they are entitled to receive the compensation they would otherwise have received had they not elected to be assessed under Category D(iii).

274    Clause 4.4 provides that where compensation for non‑economic loss and Gratuitous Care is to be individually assessed, that assessment is to be carried out in accordance with the provisions and principles in Part VIB of the Trade Practices Act 1974 (Cth), subject to inconsistency with the Compensation Protocol.

1.8.5    Clause 5 - financial losses

275    Clause 5.1 provides that compensation for financial losses is to be assessed pursuant to the provisions and principles in Part VIB of the Trade Practices Act. Clause 5.2 limits recoverable losses to those which, on the balance of probabilities, were caused by the Eligible Group Member having received an Affected Implant, after taking into account the effect of any unrelated contributing causes.

276    Clause 5.2 reflects a contractual allocation of causative responsibility. It directs attention to causation as defined by the Compensation Protocol itself, rather than by external legal doctrines, except to the extent that Part VIB draws upon common law principles.

1.8.6    Clause 6 - assessment process

277    Clause 6 sets out the procedural steps by which compensation claims are assessed, including the exchange of material, attempts at agreement, and negotiation in good faith. Where agreement cannot be reached, disputes as to quantum be referred to Independent Counsel under cl 10: cl 6.7.

278    Clause 6 confirms that referral to Independent Counsel is not automatic. It is contingent upon the existence of a dispute and the exhaustion of the processes prescribed by the Compensation Protocol. The Compensation Protocol makes express provision for the management of informational sufficiency and the evolution of the claim prior to any referral to Independent Counsel. Clauses 6.4 and 6.5 confer powers on the “Respondents” to request clarification, further particulars, third‑party material and medical examinations, coupled with corresponding obligations to provide reports obtained, thereby addressing questions of completeness and responsiveness of the evidentiary material at the assessment stage. Significantly, cl 6.5(b) expressly permits an Eligible Group Member to notify under cl 3.4(a) that they consider themselves to fall within Category D(iii) notwithstanding any earlier determination of category.

279    The presence of express machinery in cll 6.4 and 6.5 underscores that the parties addressed procedural sufficiency expressly. Those provisions demonstrate that the parties contemplated, and made express allowance for, refinement and adjustment of both the evidentiary foundation and the asserted category within the Compensation Protocol’s own machinery. Read as a whole, they tell against the implication of additional procedural fairness obligations and confirm that issues of category and sufficiency are to be addressed, and re‑addressed if necessary, through the mechanisms the Compensation Protocol itself provides. That is inconsistent with implying a further obligation on Independent Counsel to invite additional submissions beyond those stipulated.

1.8.7    Clause 10 - Independent Counsel

280    Clause 10.1 provides for the appointment of Independent Counsel. Clause 10.2 identifies the matters that may be referred, including disputes as to category (cl 10.2(a)) and disputes as to amounts of compensation (cl 10.2(b)-(c)).

281    Clause 10.6 prescribes, in deliberate and detailed terms, the procedure to be followed once a dispute is referred to Independent Counsel and the scope of the determination to be made. It is the central provision that governs how disputes are resolved under the Compensation Protocol and, as such, is critical to its proper construction.

282    Clause 10.6(a) requires that Independent Counsel be provided with the Compensation Protocol and the Eligible Group Member’s “Claim Documents”, including any additional documents or particulars provided or obtained pursuant to cll 6.2, 6.3, 6.4 and 6.5. That requirement situates the determination firmly within the documentary and procedural framework established earlier in the Compensation Protocol. The determination made by Independent Counsel under the Compensation Protocol is not undertaken in a factual vacuum, nor on material selected ad hoc, but on the defined body of material generated through the Compensation Protocol’s assessment machinery.

283    Clause 10.6(b) then addresses submissions. It provides that the parties may make written submissions to Independent Counsel and prescribes a two-stage timetable: submissions by the “Referring Party” within seven days of provision of the Claim Documents, and submissions by the “Other Party” within fourteen days. The clause makes no provision for submissions in reply. The absence of any right to reply is not accidental. Read in context, it reflects a deliberate procedural choice to confine the exchange to a single round of written submissions from each side. Notably, the Compensation Protocol is agnostic as to which party may provide submissions first. The party who goes first is the party that refers the matter to the Independent Counsel for determination. The procedure is not structured as an adjudicative process where the party bearing the onus would ordinarily be required to go first. The Compensation Protocol makes the order of submissions a happenstance of the way in which the referral was initiated. That reflects a focus on efficiency. The referring party is expected to make submissions within seven days of supplying Independent Counsel with the documents required under cl 10.6(a). The confined structure for the making of submissions is consistent with the Compensation Protocol’s emphasis on efficiency, finality and cost control, and is inconsistent with the implication of an obligation on Independent Counsel to invite further submissions, to disclose provisional views, or to permit iterative engagement beyond that for which the Compensation Protocol expressly provides.

284    Clause 10.6(c) directs Independent Counsel to determine disputes in accordance with the principles and provisions for the assessment of compensation and damages for personal injury under Part VIB of the Trade Practices Act, except insofar as those principles and provisions are inconsistent with the Compensation Protocol, in which case the Compensation Protocol is to prevail. That provision underscores the contractual primacy of the Compensation Protocol. It confirms that the legal framework to be applied is both defined and limited, and that Independent Counsel’s role is to apply those principles within the boundaries fixed by the contract.

285    The construction I have arrived at is consistent with the treatment of the Independent Counsel’s role in the earlier appeal arising from the same settlement. Perram J construed Independent Counsel’s determination to be directed at resolving disputes arising on the application of the Compensation Protocol to the claim materials, subject only to review for error of law: Casey Appeal (No 1) at [99]-[100].

286    Clause 10.6(d) provides that Independent Counsel “will make a determination concerning any items in dispute and will provide a written assessment” within one month of receiving the Claim Documents (emphasis added). The phrase “any items in dispute” is expressed broadly and without qualification. It is not confined to issues expressly articulated in a party’s submissions, nor to issues that have been the subject of prior agreement between the parties. Properly construed, it authorises Independent Counsel to determine all matters that are in dispute on the material before them, within the scope of the referral permitted by cl 10.2, including matters that arise from the application of the Compensation Protocol’s criteria to the facts disclosed by the Claim Documents. The breadth of that formulation tells against a construction that would confine Independent Counsel to a narrow, party-defined question or that would require Independent Counsel to refrain from addressing a matter because one party contends that it was not squarely raised. That authority remains bounded by the kinds of disputes made referable by cl 10.2 and by the requirement that the determination be made by applying the Compensation Protocol to the Claim Documents.

287    Clause 10.6(e) then provides that the assessment of a dispute by Independent Counsel is, subject to Court approval where required in accordance with cl 11 for persons under a legal incapacity, binding on the Eligible Group Member and the “Respondents”, with no right of appeal except in relation to an error of law. That provision defines both the finality of the determination and the limited scope of judicial supervision. Read in the full context of cl 10.6 as a whole, cl 10.6(e) confirms that the parties agreed to accept Independent Counsel’s evaluative determination of disputed matters, save only where an error of law is demonstrated.

288    Taken as a whole, cl 10.6 establishes a confined, document-based, non-iterative procedure. It authorises Independent Counsel to determine all items in dispute arising within the scope of the referral and it limits recourse to the Court to an error of law. That structure provides no basis to imply additional procedural fairness obligations (such as a right of reply or a duty to give notice), and answers the contention that Independent Counsel exceeded authority by determining an issue that fell within “any items in dispute”.

1.8.8    Clause 15 - general provisions

289    Clause 15.1 provides that, to the extent that loss or injury is compensable under the Compensation Protocol, it is to be determined according to the Trade Practices Act and, insofar as the Trade Practices Act draws upon the common law, by reference to the common law as at 16 August 2012.

290    Clause 15.6 reinforces the self‑contained nature of the Compensation Protocol by prescribing a sequential mechanism for resolving disagreements as to its implementation, interpretation or application. Clause 15.6 requires the parties to first seek resolution between themselves, then obtain advice from Independent Counsel, and only if the dispute remains unresolved to apply to the Federal Court for orders. That graduated machinery demonstrates that the parties made express provision for when and how recourse beyond the Compensation Protocol was to occur and is inconsistent with implying additional procedural fairness obligations or supervisory steps outside the structure for which the Compensation Protocol expressly provides.

291    Clause 15.7 permits an application to the Federal Court in respect of any point of law arising from the implementation of the Compensation Protocol.

1.8.9    Synthesis

292    Read as a whole, the Compensation Protocol establishes an integrated contractual scheme for the identification, assessment and resolution of compensation claims by Eligible Group Members. It allocates distinct but interlocking functions to the parties, assessors and Independent Counsel; prescribes the evidentiary foundation and procedural steps by which categorisation and assessment are to occur; expressly channels unresolved category disputes to Independent Counsel; permits refinement of category positions notwithstanding earlier determinations; confines the determination process to a defined, document-based procedure without iterative or reply submissions; and provides a graduated pathway for recourse to the Federal Court limited to errors of law or disputes as to implementation, interpretation or application of the Compensation Protocol. Independent Counsel is thereby given a determinative evaluative function within contractual limits, and the Court’s role is confined to determining whether those limits have been exceeded or an error of law disclosed.

293    It is against that constructional framework that the grounds of appeal must be assessed.

GROUNDS OF APPEAL

1.9    Procedural Fairness Ground - grounds 1 and 2

294    The appellant contends that Independent Counsel was required, as a matter of procedural fairness, to afford an opportunity to make further submissions before determining the category applicable to the appellant’s claim. That contention cannot be accepted. On the proper construction of the Compensation Protocol, no such obligation arises: no term requiring the observance of procedural fairness in that sense can be implied.

295    The source of any procedural obligation in this context must be the contract itself. Public law notions of procedural fairness do not supply a default rule for private settlement schemes and cannot be used to dilute the stringent requirements for the implication of contractual terms in fact.

296    Several features of the Compensation Protocol point against characterising the role of Independent Counsel as arbitral or quasi-judicial in nature. The process is paper‑based. There is no hearing, no testing of evidence, and no application of the rules of evidence. The parties are permitted a single round of written submissions on a defined timetable, with no provision for reply. Determinations are made on the material provided and are binding, subject only to appeal for error of law. Those features reflect a deliberate choice to adopt a confined, efficient and final assessment mechanism. The Compensation Protocol establishes a streamlined contractual mechanism for the assessment of compensation, not an iterative common law adjudicative process.

297    The parties’ choice of a confined, paper‑based, and final determination mechanism is properly understood as an expert or evaluative process, rather than adjudication. The role of Independent Counsel is properly characterised as analogous to expert determination. An expert determination does not ordinarily attract an obligation to afford procedural fairness unless the contract so provides. The critical inquiry is whether the decision-maker performed the function conferred by the Compensation Protocol, not whether the process accords with judicial standards of fairness.

298    The issue is best approached by reference to two related considerations. The first concerns the proper construction of the Compensation Protocol and the scope of the authority it confers upon Independent Counsel. That inquiry requires attention to the structure of the regime adopted by the parties, including the effect of any agreement reached as to eligibility or category and whether such agreement fixes the factual basis upon which the assessment is to proceed. If, contrary to the conclusion I have reached, on its proper construction the Protocol does not permit departure from an agreed factual premise without further engagement with the Eligible Group Member, that conclusion follows from the contract itself. The second consideration arises only if the matter is addressed by implication. On that approach, some difficulty attends the identification of the obligation said to arise, as its content is not readily expressed with precision. In the absence of a clearly articulated term, it is not easy to assess whether the orthodox requirements for implication in fact are satisfied, or whether the constraint is properly traced to construction rather than implication.

299    Nothing in the text or structure of the Compensation Protocol supports the implication of a term requiring Independent Counsel to notify a party of a provisional view or to invite further submissions whenever an issue within the scope of the referral is addressed adversely to that party.

300    Nor is such an implication necessary to give the Compensation Protocol business efficacy. The Compensation Protocol provides a detailed procedure to be followed. When assessed against the criteria in BP Refinery, the asserted obligation is not necessary to give the Compensation Protocol business efficacy and is inconsistent with the procedure the parties specified. Any additional procedural step must be justified by contractual necessity and coherence, not by analogy with judicial practice. And where relief is sought for an asserted procedural breach, the question is whether the asserted breach was material to the performance of the contractual function, not whether a party lost an opportunity to say more.

301    The appellant’s submission that procedural fairness must be implied because the determination affects substantive rights elides the distinction between the consequences of a determination and the nature of the function performed by Independent Counsel. Many expert determinations affect rights and obligations. That fact alone does not transform an expert function into an adjudicative one.

302    Accordingly, the question is not whether the appellant would have wished to make further submissions, but whether Independent Counsel acted beyond the authority conferred by the Compensation Protocol. That is the touchstone fixed by cl 10.6(e). The appellant has not demonstrated that Independent Counsel misunderstood the nature of the task or applied a wrong legal standard.

303    Even if such an obligation were assumed, the absence of any further opportunity to make submissions did not affect the determination made under cl 10.6.

304    The breadth of the authority conferred by cl 10.6(d) to determine “any items in dispute” is inconsistent with an obligation to forewarn a party before addressing an issue that arises on the application of the Compensation Protocol to the Claim Documents.

305    The primary judge reached the same conclusion: PJ [71]-[72].

306    The implication of a term requiring notice or further submissions whenever Independent Counsel departs from a position previously agreed between the parties is inconsistent with the structure of the Compensation Protocol. The Compensation Protocol contemplates that agreement may be provisional, that disputes may emerge through the assessment process, and that Independent Counsel is to determine “any items in dispute” on the material provided within a confined, non-iterative procedure. To imply such an obligation would alter the operation of the procedure for which the parties provided.

307    The Procedural Fairness Ground fails.

1.10    Category Dispute Ground - grounds 3 and 4

308    The appellant separately contends that Independent Counsel committed an error of law by determining the category applicable to the appellant’s claim when, it is said, the parties had previously agreed that the claim fell within Category D(iii). That contention should be rejected.

309    The starting point is the proper construction of the Compensation Protocol. Clause 1.2 confirms that the Compensation Protocol provides for four different categories of claims. Clause 3 requires that each Eligible Group Member be assessed as falling within one of the categories identified in cl 3.1. Category D is defined disjunctively. Its singular contractual consequence is fixed by cll 4.1 and 4.4. Satisfaction of any one of the criteria in cll 3.1(d)(i), (ii) or (iii) is sufficient. The Compensation Protocol does not create a hierarchy within Category D, nor does it prescribe different assessment regimes depending upon which limb of cl 3.1(d) is satisfied.

310    Clause 3 performs a classificatory function. Its purpose is to determine whether a claim proceeds by reference to fixed amounts (Categories A-C) or by individual assessment (Category D). Once Category D is engaged, the assessment of non‑economic loss and Gratuitous Care proceeds by individual assessment under cl 4, informed by Part VIB of the Trade Practices Act.

311    The distinction drawn in cl 10 between a “matter” referred and “any items in dispute” does not confine Independent Counsel to the parties’ characterisation of the dispute at the point of referral. Rather, once a dispute is properly before Independent Counsel under cl 10.2, cl 10.6(d) authorises the determination of all issues that arise on the application of the Compensation Protocol to the Claim Documents. The provision does not condition that authority on prior notification of each such issue, nor does it freeze the scope of determination by reference to earlier consensus between the parties.

312    The Compensation Protocol expressly contemplates that disputes as to category may be referred to Independent Counsel: cl 10.2(a). Whether such a dispute exists, and whether it has been engaged by the material placed before Independent Counsel, is a matter within the scope of the function conferred by the Compensation Protocol. The Compensation Protocol does not require Independent Counsel to decline to determine a category issue merely because one party asserts that it had previously been agreed.

313    Nor does the Compensation Protocol elevate an earlier consensus between the parties into a contractual estoppel binding the Independent Counsel. The function conferred is to determine disputes by reference to the criteria fixed by the Compensation Protocol. Independent Counsel’s authority is not conditioned upon the persistence of agreement between the parties at an earlier point in time.

314    In any event, on the proper construction of the Compensation Protocol, the practical consequence of categorisation within Category D does not depend upon which limb of cl 3.1(d) is engaged. All Category D claims are subject to individual assessment. Clause 4.2 regulates evidentiary burden where an Eligible Group Member elects to proceed under cl 3.1(d)(iii). It does not create a different form of assessment, nor does it mandate a different outcome.

315    It may be accepted that the parties’ earlier agreement that the appellant fell within Category D(iii) reflected their understanding of his circumstances at that time. But the Compensation Protocol does not convert that understanding into a contractual premise that governs, or is required to govern, the individual assessment. The operative consequence of Category D is fixed by cll 4.1 and 4.4: an individual assessment in accordance with the provisions and principles in Part VIB of the Trade Practices Act. The only distinct consequence of a Category D(iii) notification is the proof-allocating mechanism in cl 4.2; it does not alter the assessment regime or the contractual outcome. The fact that a matter might have been argued differently, or that further submissions might have been made, does not of itself identify a contractual consequence or establish materiality. Absent such a contractual consequence, the asserted “lost opportunity” remains forensic rather than relevant to the contractual consequence. In that sense, the category issue was capable of being treated as moot, consistently with the approach taken by the primary judge.

316    The loss of an opportunity to make submissions does not justify relief in a contractual setting where the asserted breach was not material to the performance of the contractual function conferred on Independent Counsel. A different conclusion would require identification of a contractual consequence that turns on the distinction between Category D(ii) and Category D(iii); the Compensation Protocol provides none. In the absence of such a contractual consequence, the asserted denial of an opportunity to make further submissions is not material to the determination made under the Compensation Protocol. In the category context, a failure to invite submissions is immaterial where the categorisation adopted does not alter the assessment regime or the Eligible Group Member’s contractual entitlement, and thus could not have affected the outcome. Clause 4.2 does not impose a distinct or outcome-relevant burden by reason of the distinction between Category D(ii) and Category D(iii); it regulates proof within Category D without altering the assessment regime or the Eligible Group Member’s contractual entitlement. Procedural fairness would only be engaged if Independent Counsel were minded to adopt a categorisation capable of altering the Eligible Group Member’s contractual entitlement, for example, by displacing the right to an individual assessment in favour of a fixed lump‑sum outcome. No such consequence arose here. Independent Counsel was therefore correct to treat the category issue as moot. That conclusion accords with the primary judge’s analysis at PJ [74]-[77].

317    Against that background, the appellant’s submission that the determination of category occasioned an alteration of the contractual outcome fails. Any dissatisfaction with the manner in which the evaluative judgment was exercised does not amount to an outcome-relevant detriment of the kind required to establish error of law. The categorisation adopted by Independent Counsel did not alter the applicable assessment regime. It did not deprive the appellant of an entitlement to individual assessment. It did not, of itself, foreclose the consideration of the nature and extent of the appellant’s injuries in the quantification process. Accordingly, even if an error of law were assumed in the determination of category, it would not have been material, because it could not have affected either the applicable assessment regime or the outcome of the appellant’s claim.

318    The appellant’s argument also proceeds on the premise that Independent Counsel was not authorised to address category at all. That premise is inconsistent with the text of cl 10.2(a) and with the nature of the function conferred. Independent Counsel was required to resolve disputes arising in the course of assessment. The determination of the applicable category fell within that function.

319    Once the role of Independent Counsel is correctly characterised as an expert determination within contractual limits, rather than an arbitral or adjudicative function, the complaint reduces to disagreement with the exercise of evaluative judgment within authority. Such disagreement does not disclose an error of law.

320    Accordingly, the Category Dispute Ground fails.

CONCLUSION AND DISPOSITION OF THE APPEAL

321    Properly construed, the Compensation Protocol establishes a contractual mechanism for the determination of individual compensation claims. It confers on Independent Counsel a determinative evaluative function within defined limits. It does not impose a judicial or quasi‑judicial role, nor attract an obligation to afford procedural fairness of the kind for which the appellant contends.

322    No term requiring Independent Counsel to notify a provisional view or invite further submissions can be implied as a matter of fact. The Protocol sets out a detailed contractual procedure. Review is confined to error of law. None is shown. Grounds 1 and 2 therefore fail.

323    The Category Dispute Ground (grounds 3 and 4) also fails. Clause 3 performs a threshold classificatory function only. Category D is defined disjunctively and carries a single contractual consequence. Satisfaction of any one criterion in cl 3.1(d) is sufficient. Once engaged, assessment proceeds under cl 4. No distinct assessment regimes are created within Category D.

324    Independent Counsel’s determination of category was within the authority conferred by cl 10.2(a). A prior shared assumption as to category did not deprive Independent Counsel of authority to address the issue when it arose. The determination did not alter the applicable assessment regime or result in any relevant detriment. In substance, the complaint is a disagreement with an evaluative judgment made within authority. It discloses no error of law.

325    I would dismiss the appeal with costs.

Associate:

Dated:    27 March 2026