FEDERAL COURT OF AUSTRALIA

 

Bright v Femcare Ltd [2000] FCA 742

PLEADINGS – representative proceedings under Pt IVA of the Federal Court of Australia Act 1976 (Cth) – respondents sought an order that the third amended statement of claim be struck out on the grounds that it does not sufficiently plead, for the applicant or the group members, any reasonable cause of action and that it is embarrassing in certain respects – adequacy of the pleading of causes of action under ss 52, 53(c), 74B, 74D and 75AD of the Trade Practices Act 1974 (Cth) and in negligence, having regard to the rules concerning pleading in O 11 of the Federal Court Rules – permissible level of generality of initial pleading of material facts in representative proceedings

Federal Court of Australia Act 1976 (Cth), Pt IVA

Trade Practices Act 1974 (Cth), ss 4(1), 5(1), 52, 53(c), 74A, 74B, 74D, 75AB, 75AC and 75AD

Federal Court Rules, O 11

Philip Morris (Australia) Ltd v Nixon (2000) 170 ALR 487, followed

Bartlett v Swan Television & Radio Broadcasters Pty Ltd (1995) ATPR 41-434, referred to

Tycoon Holdings Ltd v Trencor Jetco Inc (1992) 34 FCR 31, referred to

Pyrenees Shire Council v Day (1998) 192 CLR 330, referred to

Stegenga v J Corp Pty Ltd (1999) ATPR 41-695, referred to

KERRIE BRIGHT v FEMCARE LIMITED AND ENDOVASIVE PTY LIMITED

 

N 410 OF 1999

 

 

 

 

 

 

 

 

LEHANE J

5 JUNE 2000

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 410 OF 1999

 

BETWEEN:	KERRIE BRIGHT APPLICANT
AND:	FEMCARE LIMITED FIRST RESPONDENT   ENDOVASIVE PTY LIMITED (ACN 061 512 132) SECOND RESPONDENT
JUDGE:	LEHANE J
DATE OF ORDER:	5 JUNE 2000
WHERE MADE:	SYDNEY

 

THE COURT ORDERS THAT:

 

1.         The third amended statement of claim filed on 1 November 1999 be struck out.

2.         The applicant have liberty to replead.

3.         The first and second respondents file and serve, not later than 13 June 2000, short draft minutes of the orders for which they contend, consistently with these reasons, to dispose of the remaining aspects of their notices of motion filed on 17 November 1999 and 19 November 1999 respectively and the outstanding costs issues.

4.         The matter be listed for further directions at 9.00am on 16 June 2000.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 410 OF 1999

 

BETWEEN:	KERRIE BRIGHT APPLICANT
AND:	FEMCARE LIMITED FIRST RESPONDENT   ENDOVASIVE PTY LIMITED (ACN 061 512 132) SECOND RESPONDENT

 

JUDGE:	LEHANE J
DATE:	5 JUNE 2000
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1                     By an amended notice of motion filed on 17 November 1999 the first respondent (Femcare) seeks a number of orders: first, and principally, that the third amended statement of claim filed on 1 November 1999 be struck out (the third amended statement of claim is the applicant’s current pleading: when I use the expression “the statement of claim”, that is the document to which I refer, incorporating certain amendments foreshadowed during argument and confirmed in subsequent written submissions of counsel for the applicant); secondly, a direction that the applicant (I shall refer to Ms Bright in that way, though she is the respondent to the motion) file and serve an affidavit of facts and circumstances to be relied on in support of particular allegations in the statement of claim; thirdly, a direction that the applicant’s solicitors notify Femcare’s solicitors of certain matters (Femcare would say, material facts) relating to the applicant’s claims against Femcare and the second respondent (Endovasive) and of certain other matters which undoubtedly fall within the category of particulars – in each case, in so far as the applicant’s solicitors have the information; fourthly, a direction that the applicant and her solicitors supply authorities in favour of Femcare’s solicitors permitting the inspection of medical records and the conduct of interviews with medical practitioners; fifthly, a direction as to the filing and service by the applicant of expert evidence in support of particular paragraphs of the statement of claim; and sixthly, an order that certain persons who have commenced proceedings in the Supreme Court of Queensland against, among others, Femcare and Endovasive be excluded from the class of persons on whose behalf the applicant brings this proceeding under Pt IVA of the Federal Court of Australia Act 1976 (Cth) (I shall refer to that Act as the Federal Court Act).  Endovasive, by a notice of motion dated 19 November 1999, seeks identical relief.

Background

2                     Perhaps somewhat unusually on a strike‑out motion, I admitted affidavit evidence, on some of which there was limited cross‑examination, concerning the circumstances giving rise to the claims which the applicant makes for herself and for the group members defined in the statement of claim.  The evidence was referred to extensively in submissions.  To the extent that I admitted any of it subject to relevance, that condition is, in my view, satisfied.  What follows is based on that evidence.  It is, I think, largely uncontroversial, at least for the purposes of the motions.

(a)       The Filshie System

3                     Femcare is an English company, based in Nottingham.  It manufactures what are known as Filshie clips.  It also manufactures devices, known as applicators, by means of which the clips are applied to women’s fallopian tubes, occluding them so as to prevent conception.  The Filshie system involves laparoscopic surgery using the applicator and the clips.  It has been used in that way since 1982 in many countries, including Australia.  Both the system and the clips are named after Dr G M Filshie, who was described in evidence as the co‑developer of the Filshie system and is the honorary Medical Director of Femcare.

4                     Filshie clips and applicators are sold to hospitals and doctors in Australia by a distributor (and, in certain cases, sub‑distributors of the distributor).  Since November 1993, Endovasive has been Femcare’s distributor in Australia and, according to evidence read on behalf of Femcare, has been the sole purchaser of clips and applicators from Femcare for sale to hospitals and doctors in Australia.

(b)       Instruction manuals

5                     Since 1982, Femcare has supplied manuals with the applicators and clips (and it may be inferred that, since its appointment as distributor, Endovasive has supplied the manuals to the doctors and hospitals to whom it has sold those products).  Until some time during 1994, there were two separate manuals, one relating to the cleaning, sterilising and maintenance of the applicators and the other providing what were described as operating room instructions.  Since 1994, the two manuals have been combined into one.  Some aspects of the instructions in the manuals may be mentioned.  The cleaning instructions dealt with the extent to which the applicators might be dismantled for cleaning and said that no further dismantling should be attempted.  Cleaning might involve some fairly vigorous operations: a bottle brush was provided to clean the “mouth” of the applicator; “special cleaning” required a “strong jet of water” to be directed through the equipment; and fluid should be removed after cleaning by vigorous shaking.  From at least 1988, the instructions carried a “caution” in the following terms:

“Each applicator is individually calibrated by the manufacturer.  Because of this it is essential that all serial numbers on the shaft of the applicator are identical.  Failure to observe will lead to incorrect operation and possible procedure failures.  No adjustments may be made by unauthorised persons to any applicator.  Calibration is critical and must be done by the manufacturer or his appointed agent.”

Elements of that caution had appeared at various places in earlier versions of the manual.

6                     “Calibration”, or lack of it, is an important element of the case pleaded in the statement of claim.  For the purposes of the procedure for which the equipment is designed, an open clip is placed within the mouth, or jaws, of the applicator.  In the course of the procedure, the surgeon manoeuvres the clip, in the jaws of the applicator, towards the end of the fallopian tube which is closer to the uterus.  When the clip is in position, the surgeon operates the applicator, so as to close the jaws, closing the clip over the tube.  The applicator is then removed, leaving the clip in place.  The meaning to be attributed to phrases used in the statement of claim such as “out of calibration” is the subject of controversy.  But, in general terms, to say that an applicator is properly calibrated, or in calibration, means that it is adjusted so that it will completely close the clip, fully occluding the tube but not cutting it.  The operating room instructions suggest inspecting the clip once applied to ensure both that the tube is fully enclosed in the clip and that the top of the closed clip is flat.

7                     Until 1994, the manuals did not suggest periodic servicing or recalibration of the applicators.  During 1994, however, the following paragraph was included in a section of the combined manual headed “other customer maintenance”:

“NO OTHER MAINTENANCE OR ADJUSTMENT should be performed other than by the manufacturer or their appointed agent.

The applicator is a finely calibrated instrument and no liability will be accepted by the manufacturer for problems or failures arising as a result of any unauthorised repair or adjustment.  Like all mechanical equipment the Filshie equipment will deteriorate with use and age.  It is strongly recommended that the equipment is serviced and recalibrated by the manufacturer or their appointed agents at yearly intervals.” 

A later version substituted for the last sentence:

“It is strongly recommended that the equipment is serviced and recalibrated by the manufacturer or their appointed agents at least once a year depending on your usage rate.”

A still later (apparently the current) version has the last paragraph in bold capital letters partially surrounded by a black line.  The recommendation reads:

“IT IS STRONGLY RECOMMENDED THAT THE EQUIPMENT IS SERVICED AND RECALIBRATED BY THE MANUFACTURER OR THEIR APPOINTED AGENT AT LEAST ONCE A YEAR OR EVERY ONE HUNDRED USAGES.”

8                     There is evidence that Endovasive from time to time wrote to doctors and hospitals using the Filshie equipment and had meetings with some of them.  A circular sent by Endovasive in December 1993 said this:

“Over the course of recent months Endovasive Pty Ltd has been made aware on several occasions of repairs being carried out on Filshie Clip applicators by unauthorised persons.

The Filshie Clip applicator is carefully calibrated by the manufacturer before being released for sale, and repairs, adjustments, maintenance etc by unauthorised persons may affect the calibration adversely.  This could easily result in failed sterilisations or surgical injury to the patient.”

Endovasive’s first suggestion, disclosed by the evidence, that regular servicing was desirable appears in a circular dated January 1995:

“It is both the manufacturer’s and Endovasive’s advice that Filshie Clip equipment is serviced annually to ensure smooth running and trouble free maintenance.”

9                     During 1998 (apparently), Femcare (and presumably its distributors, including Endovasive) instituted a system of sending out regular service reminders.  A copy of such a document taken from the Femcare website says:

“It is important to note that POORLY SERVICED APPLICATORS CAN RESULT IN A LOSS OF CALIBRATION.  This could lead to incorrect closure of the Filshie Clip and possibly failed sterilisations.”

Femcare has recently – during 1999, the evidence suggests – introduced a gauge which a hospital or doctor may purchase for the purpose of checking the calibration of applicators.  No such equipment – on the evidence before me at present – was available previously.  It should also be said, however, that there is evidence given by Femcare’s solicitor of a conversation which he had with Dr Filshie in which Dr Filshie said, in substance, that the suggested check by the surgeon on completing the procedure (by inspecting the clip in situ) ought to reveal whether clips have been properly applied and whether, the top of the clip being flat, the tube was occluded.  Matters of that sort, no doubt, will give rise to significant controversy to be dealt with at the trial.

10                  There is evidence that the failure rate quoted by Femcare, based on the medical literature, and by Endovasive is 2.7 per 1000 cases.  Femcare’s solicitor gave evidence that he had been told by Dr Filshie that the Filshie system has a failure rate as low as, if not lower than, other leading methods of female sterilisation.

(c)       The John Hunter “cluster”

11                  In 1997 there occurred a “cluster” of failures of sterilisation procedures performed using Filshie clips and applicators at the John Hunter Hospital in Newcastle: the evidence before me indicates that, for a period from 1 January 1997, slightly less than 10 per cent of such procedures performed at that hospital failed – that is, the failure rate significantly exceeding 2.7 per 1000.  The applicators in use at the hospital were sent to Endovasive, and by Endovasive to Femcare, for checking.  The result appears in a fax from Femcare to Endovasive of 22 January 1998, the relevant part of which reads:

“2.       Applicators 687‑7 and 822‑7 have BDH ducks which should be replaced but are otherwise OK.

 3.        Applicator 7‑146 is seriously out of calibration.

 4.        Applicator 7‑145 has a misaligned duck tube assembly.  This has caused it to be seriously out of calibration.  We have records which indicate that the alignment was correct when the applicator was originally shipped from Femcare.  We are not able to ascertain how the misalignment occurred.

 5.        Applicator 7‑315 is OK.

 6.        Use of either applicator 7‑146 or 7‑145 in the condition in which we received them would result in sterilisations which must be considered to be at higher than normal risk of failure.”

12                  During 1998, a “safety alert” was sent to hospitals and other customers of Endovasive.  This apparently happened at the direction of, or by arrangement with, the Therapeutic Goods Administration.  The safety alert read:

“If your Filshie clip applicator has not been serviced and calibrated by an approved Femcare Repairer within the last 12 months then the equipment must not be used until it has been serviced and calibrated as it may cause a failed sterilisation.

Please contact Endovasive immediately to make arrangements for your applicator to be serviced and calibrated by an approved Femcare Repairer.

Procedures that have been performed using applicators that have not been serviced for over 12 months have a potentially high failure rate.  Doctors and patients should be notified of the potential risk of failure.  Patients should consider using alternate forms of contraception until they can discuss this issue with their doctor or hospital.”

13                  The Royal Australian College of Obstetricians and Gynaecologists, again apparently at the request of the Therapeutic Goods Administration, notified its members of the safety alert in October 1998 and gave Fellows of the College the following advice:

“i      Individual practitioners should contact institutions where procedures were performed to check whether the instruments used by them have been serviced and calibrated at regular intervals.  Femcare have indicated that data are available to demonstrate that a calibrated applicator remains in calibration for a minimum of one hundred (100) uses.

 i       The institution should be requested to supply the date of servicing in writing and to undertake notification of affected patients in line with the contents of the Safety Alert.  Individual practitioners may choose to personally notify their own patients.

 i       As it would be difficult if not impossible to determine the number of times an individual applicator has been used, it is recommended that if the Filshie clip applicator has not been serviced at 12 monthly intervals then affected patients should be notified that their procedure may have a higher failure rate than previously thought.  Femcare, over the signature of their Medical Director, Mr G M Filshie have advised that the risks of a repeat procedure outweigh the risks of failure.  They can give no advice in regards [to] the performance of hysterosalpingograms to confirm tubal occlusion.

 i       Practitioners who become aware of patients who have had failed procedures should provide relevant information including patient details to their Medical Defence Organisation.”

United Medical Protection (which provides professional indemnity insurance to medical practitioners) also sent a notification to its members and published an article about the “cluster” at John Hunter Hospital and its sequel.  The events received some publicity in the Hunter District press.  The hospital sent letters to all patients who had, during 1997, undergone a sterilisation procedure in which Filshie clips had been used; they were advised to consult their gynaecologist or, if that proved impracticable, the hospital.

14                  One result of the publicity concerning the events at John Hunter Hospital was that about 600 applicators were sent from Australia to Femcare for checking and servicing.  The evidence now before me, however, does not disclose the results of that process.

(d)       The applicant’s operation

15                  The applicant underwent a sterilisation procedure, in which Filshie clips and an applicator were used, at Westmead Hospital on 15 January 1998.  In the statement of claim, she makes the following allegations about that procedure and events following it:

“23.     The applicator used in this sterilisation procedure performed upon the Applicant was out of calibration.

23A.    By reason of the applicator being out of calibration at the time of the procedure, the clip(s) became defective in that if [sic] the clip(s) did not properly close and/or remain properly closed across the fallopian tube(s) of the Applicant thereby occluding it by reason of which the procedure failed.

23B.     In June 1998, the Applicant discovered she was pregnant.  In August 1998, the Applicant’s pregnancy was terminated as a consequence of which the Applicant suffered medical complications including severe infections.

24.       In January 1999, the Applicant underwent a second, corrective surgical procedure to achieve sterilisation.”

16                  There is in evidence a letter dated 31 May 1999 from Dr F R Bellingham to the applicant’s solicitors.  That letter indicates that the operation on 15 January 1998 was performed by a registrar under Dr Bellingham’s supervision.  The letter continues:

“The laparoscopy was performed under video control, so that it could be seen by all the theatre staff.

The application on the right tube appeared satisfactory.

I can [confirm] that the clip was never applied to the wrong structure and appeared to be secure, but, as I [have] not seen the patient since, it is difficult for me to give a firm opinion as to how the clip came off.”

(e)       Queensland proceeding

17                  Ms Bright is not alone in having commenced proceedings against Femcare and Endovasive.  A number of women have commenced individual proceedings in the Supreme Court of Queensland, in which they claim damages not only against Femcare and Endovasive but also against doctors and hospitals.  Each (according to the evidence before me) claims to have undergone a procedure involving the application of Filshie clips and later to have become pregnant.  The claims are based on alleged negligence, breach of contract and infringements of the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1989 (Qld).  The plaintiffs in those proceedings are the persons whom Femcare and Endovasive seek to have excluded from the class of persons on whose behalf the applicant sues in this proceeding.

The pleaded case

(a)       The represented group

18                  The description of the group of persons whom the applicant claims to represent is of considerable importance.  Despite its length and complexity, I shall set it out in full:

“2.       The Applicant brings this action as representative of a group of women each of whom underwent a sterilisation procedure(s) in Australia in which ‘the goods’ (referred to hereunder) were used:

(a)       the Filshie clip(s) (being part of the goods) failed to properly close across and thereby occlude the fallopian tube(s) of the woman by reason of the applicator (being another part of the goods) being ‘out of calibration’ and thereby causing the sterilisation procedure(s) to fail whereby the woman suffers loss and damage as pleaded in paragraph 19 hereof; or

(b)       where the sterilisation procedure(s) was performed in a hospital in Australia, there is no actual or known failure in the sterilisation(s) performed upon her but she suffers loss and damage as pleaded in paragraphs 19(c) and (d) hereof by reason of her not knowing whether the sterilisation procedure(s) is successful but has knowledge of:–

(i)        other sterilisation procedures failing and/or reputedly failing in which the goods were used at the same hospital attended by her for her procedure(s) by reason of the Filshie clip(s) failing to properly close across and thereby occlude a fallopian tube(s) as a result of the applicator being out of calibration; and/or

(ii)       the hospital attended by her for her procedure(s) either having failed to check the applicator used in her procedure(s) or not knowing whether the applicator used in her sterilisation procedure(s) had been checked for its calibration and, if necessary, re‑calibrated prior to the sterilisation procedure(s) and/or at least every 100 usages and/or at least every year and/or upon there being any reason to suspect the applicator had been damaged or misused; and

(c)        the woman suffers loss and damage and:–

(i)        the loss and damage suffered has occurred on or since 10 May 1996; and/or

(ii)       not earlier than 10 May 1996 the woman became aware, or ought reasonably to have become aware, of her loss and damage, the identity of the person(s) who manufactured the goods, and the goods having a defect as provided for in Section 75AD of the Trade Practices Act (‘the Act’) and as pleaded in paragraphs 49 to 50 hereof; and/or

(iii)      not earlier than 10 May 1996 the woman first became aware, or ought reasonably to have become aware, that the goods were not reasonably fit for the particular purpose the goods were acquired [sic] and where that purpose was, expressly or by implication, made known to the Respondents and/or each of them as provided for in Section 74B of the Act and as pleaded in paragraphs 57 to 62 hereof; and/or to be

(iv)      not earlier than 10 May 1996 the woman became aware, or ought reasonably to have become aware, that the goods were not of merchantable quality as provided for in Section 74D of the Act and as pleaded in paragraphs 63 to 67 hereof;

(herein referred to as ‘the Group Members’).”

19                  Paragraph 2(c) of that definition is, plainly enough, drawn with a view to limitation periods.  It received little attention in argument and I shall not discuss it, beyond noting the confusing use (which, as will be seen, appears in other contexts) of the expression “and/or” and, among other lapses of grammar or expression, the appearance at the end of subpar (iii) of the presumably superfluous words “to be”.  The loss and damage specified in par 19(a) and (b) of the statement of claim – to which par 2(a) apparently refers - comprises pregnancy, followed either by termination or by childbirth and rearing the child, and “physical and/or psychiatric/psychological injury” consequent upon the termination or upon bearing the child, childbirth and rearing the child, regarded as separate heads of loss or damage.  The group members who are claimed to have suffered loss and damage falling under those heads are, of course, those whose operations have, and are known to have, been unsuccessful.  Paragraph 19(c) of the statement of claim specifies the loss and damage suffered by those group members who knew of the matters described in par 2(b): the claimed heads of loss and damage are injury, physical or “psychological/psychiatric”, arising from that knowledge, including injury arising from undergoing invasive surgical procedures to determine whether sterilisation has been achieved and from choosing other forms of contraception.  In all cases, out‑of‑pocket expenses and other consequential damages are claimed.

20                  Paragraph 2(a) of the description of the group requires little explanatory comment.  The expression “the goods” is defined in par 6 of the statement of claim as meaning “the Filshie applicators and Filshie clips and … operating manuals.”  The expression “out of calibration” is not defined though, as will be seen, it is given some content later in the statement of claim.  Paragraph 2(a) includes women who have undergone sterilisation procedures involving the use of Filshie clips and applicators but who have not been successfully sterilised because, in each case, the applicator used was out of calibration.  For the purposes of the paragraph, the circumstances in which the applicator was out of calibration, and the cause of its being so, are immaterial.

21                  Paragraph 2(b) of the description of the group is, on analysis, very broad.  The women concerned underwent a sterilisation procedure in Australia in which “the goods” were used.  Either the procedure did not actually fail (that is, it was successful) or it is not known to have failed (it may or may not have been successful: we do not know).  It may fairly be commented that the language used is, in this respect, at least confusing.  If (at the date of the statement of claim) there “is no actual or known failure”, it might be said that the group does not include those who, having been at first uncertain, have had investigations undertaken and now know that their procedure has been successful: a result which I do not think the drafter intended.  Where “there is no actual or known failure in the sterilisation(s) performed”, a woman falls within par 2(b) of the definition of the group if she “has” (when?) knowledge, presumably, of either or both (“and/or”) of two things.  One is that other similar procedures at the same hospital failed or reputedly failed because a Filshie clip failed to occlude a fallopian tube, in turn because the applicator used was (for whatever reason and in whatever circumstances) out of calibration.  The other is more complex, involving internal alternatives and the use three times of the expression “and/or”.  It is not clear, as a matter of language, whether the words “prior to the sterilisation procedure(s) … damaged or misused” modify the first alternative (“having failed to check”) as well as the second (“not knowing whether …”).  And the complexity of the language conceals other ambiguities: does “prior to” mean at any time prior to or (as presumably was intended) “immediately prior to”?  And what exactly is the relationship between “not knowing …” and the four occasions separated by the expression “and/or”?  For example, if the hospital attended by a woman in fact knew that the applicator used in her procedure had been checked at least every one hundred usages but did not know whether it had been checked on any of the other three occasions mentioned, has the woman knowledge sufficient for her inclusion within the group?  If the woman does not know whether or not the hospital knows that the applicator was checked before her operation, is she nevertheless within the group if she knows that the hospital does not know whether it was checked every one hundred usages or every year or when there was reason to suspect that it had been damaged or misused?

22                  It is not easy to discuss matters of this kind without resorting to what sounds like pedantry.  But in my view it is not mere pedantry.  There are real uncertainties and ambiguities.  If ever there was a case requiring the drafter to consider carefully and precisely what he or she wished to say, this is that case.  It is important, after all, that an intelligible notice can be given under s 33X(1) of the Federal Court Act so that, among other things, women may determine whether or not they are group members and may consider the exercise of their rights under Pt IVA of the Act, including their rights under s 33J.  And, if a judgment is given in the proceeding, it must describe or otherwise identify the group members who will be affected by it, and those group members will be bound by the judgment (s 33ZB).

23                  An exchange of correspondence between Endovasive’s solicitors and the applicant’s solicitors is revealing both as to the apparent width of the definition of the group and as to the difficulty of construing it.  On 15 November 1999, Endovasive’s solicitors sought confirmation of the following propositions:

“1.2     According to paragraph 2 of the pleading, Group members include:

1.2.1    Not only those where there has been an actual known failure, but women who have had a completely successful sterilisation;

1.2.[2]Those whose procedure was performed with an applicator which was out of calibration, and those involving a perfectly calibrated applicator;

1.2.3    Those whose procedure was performed in a hospital where procedures were known to have failed because of an applicator being out of calibration, and those where procedures were ‘reputed’ to have failed for this reason;

1.2.4    Not only those who know that the hospital at which they were treated had failed to check calibration, but those who have no idea one way or the other.”

24                  The applicant’s solicitors confirmed, in a facsimile transmission dated 22 November 1999, that each of those propositions was correct.  It may be noted that the last of them assumes the correctness of an interpretation which ignores the grammatical construction of par 2(b)(ii) of the statement of claim: it proceeds on the basis that the intended alternatives are that the putative group member either knows that the hospital did not check the applicator or does not know whether it had been checked or not.  That may well be what is intended by the pleading, but it is hardly the natural meaning of the words “but [the woman] has knowledge of … the hospital attended by her for her procedure(s) either having failed to check the applicator used in her procedure(s) or not knowing whether the applicator used in her sterilisation procedure(s) had been checked …”.  There could scarcely be a better illustration of the need for the careful thought to which I have already referred.

25                  The letter from Endovasive’s solicitors continued:

“It seems to us that as patients [are] not involved in the maintenance of the goods at all, it is hard to imagine that there would be any patients who would know the state of calibration of the applicator used on them.  As such, the only conclusion we can draw is that every single patient who has undergone the procedure in Australia during the relevant period is a group member.”

The solicitors for the applicant responded:

“Potentially, this is correct.  However, in practice we are of the view that once the hospitals are identified, this will be a finite group of women for whom it may be appropriate to send out individual notices under Pt IVA.”

26                  In my view, par 2 of the statement of claim is embarrassing, at least because it is “susceptible to various meanings”: Bartlett v Swan Television & Radio Broadcasters Pty Ltd (1995) ATPR 41‑434 at 40,889.

(b)       The parties, the goods and the procedures undergone by the applicant and group members

27                  The statement of claim pleads the incorporation of Femcare “pursuant to the laws of the United Kingdom” (par 4) and that Femcare was “the designer, manufacturer and repairer of therapeutic goods and in particular the Filshie applicators and Filshie clips and published in relation to, inter alia, the applicators and clips, operating manuals” (par 6).  It pleads the incorporation, in Australia, of Endovasive (par 5) and that from about November 1993 Endovasive, among other things, distributed, sold and promoted the goods (defined in par 6 to include applicators, clips and manuals) in Australia in accordance with agreements entered into between Endovasive and Femcare (par 7).  Paragraph 7 pleads in some detail activities alleged to have been undertaken by Endovasive in relation to the goods.  I shall return to this aspect of the pleading, but it may be said for the present that the point of those detailed allegations is by no means obvious, except to the extent pleaded in par 8:

“8.       By reason of the matters pleaded in paragraph 7, at all material times the Second Respondent within the meaning of Section 4(1) of the [Trade Practices Act 1974 (Cth)] was engaged in “trade or commerce”:–

(a)       within Australia; and/or

(b)       between Australia and places outside Australia.”

28                  Paragraph 9 pleads that, at some time between 1982 and about November 1993, Femcare entered a distribution agreement with a company originally known as Biospectrum (Australia) Pty Ltd, and subsequently entered the agreements with Endovasive.  It proceeds to make a series of allegations about Femcare’s dealings with the goods resulting in their purchase and use in Australia.  Again, I shall return to the detail of those allegations.  They are alleged to lead to the following conclusions:

“10.     At all material times by reason of the matters pleaded in paragraph 9 hereof, the First Respondent engaged in trade or commerce within the meaning of section 4(1) of the Act: –

(a)       within Australia; and/or

(b)       between Australia and place(s) outside Australia

 11.      Further, by reason of those matters pleaded in paragraph 9 hereof, from time to time and at all material times, the First Respondent:–

(a)       carried on business within Australia; and

(b)       has engaged in conduct outside Australia

within the meaning of Section 5 of the Act.”

29                  Then, in terms which did not excite any particular controversy, the statement of claim pleads, in par 12, that since about November 1993 Endovasive imported the goods into Australia, that it was not the manufacturer of the goods but that the manufacturer, Femcare, did not have a place of business in Australia, with the result (so it is pleaded) that Endovasive “was/is deemed, for the purposes [of] Part V Division 2A of the Act to have manufactured the goods as provided for in section 74A(4) of the Act.”

30                  The pleader then turns to the goods.  Their purpose is stated in par 13; allegations are made in par 14 about the way in which they were “intended by the Respondents and each of them to be designed and used”.  Again, there is no particular controversy about par 14 and I have already sufficiently described the purpose of the goods and the way in which they are used.

31                  Paragraphs 15 to 18 are important, and I shall set them out in full:

“15.     Applicators:–

(a)        do not remain in calibration indefinitely; and/or

(b)        could be out of calibration;

(i)         at the time of manufacture; and/or

(ii)        with the effluxion of time; and/or

(iii)       if damaged; and/or

(iv)       if misused; and/or

(v)        at any time unbeknownst to the user; and/or

(c)        are intended by the Respondents and each of them to be finely calibrated in accordance with the Respondents’ specifications at the time of manufacture; and/or

(d)        following manufacture have to remain properly calibrated so as to provide the best opportunity for the clips to properly close across the fallopian tube(s) during the course of sterilisation procedure(s) in such a way as to occlude the fallopian tube(s) and thereby provide an effective method of female sterilisation.

 16.      At all material times a user of the goods could not know whether the applicator was out of calibration unless the First Respondent alone and/or its approved agent provided the user with a testing device or some other adequate means for determining whether the applicator was in calibration and that device was used to test each applicator prior to any sterilisation procedure(s).

 17.      When a sterilisation procedure is performed using an applicator which is out of calibration there is an increased risk of failed sterilisation due to the clip(s) becoming defective when applied by the applicator by reason of the clip(s) not closing across the fallopian tube(s) in such a way as to achieve sufficient occlusion.

 18.      At all material times, so as to avoid an unnecessary increased risk of failed sterilisation, prior to each sterilisation procedure, applicators needed to be:–

(a)       tested as pleaded in paragraph 16 hereof; and/or

(b)       serviced, checked and, if necessary, calibrated/re‑calibrated on a regular basis by the First Respondent only and/or its approved agents.”

In short, the pleader does not say, in so many words, what is meant by “out of calibration”.  The claims are, however, that there is an increased risk of failure if an applicator which is out of calibration is used; applicators are intended to be calibrated and must remain properly calibrated if they are to do what is expected of them; they may be out of calibration in various circumstances and for various reasons; thus, they needed to be tested “and/or” serviced and re‑calibrated; and there were no means provided by which the user of an applicator could know whether or not the applicator was properly calibrated.

32                  The pleading then sets out what are said to be the material facts in relation to the applicant and group members.  Paragraph 19 pleads the damage which the applicant claims she and the group members suffered.  I have sufficiently summarised that claim already.  Paragraphs 20 to 24 plead facts relating to the applicant.  In brief, the applicant in January 1998 underwent a sterilisation procedure at Westmead Hospital using a Filshie applicator and clips.  It is pleaded that the clips were intended to remain permanently in her body, so that it could be said that the hospital “and/or” the medical practitioners had supplied them to her and she had acquired the clips from them.  It is then said that the applicator was out of calibration, by reason of which the clips did not close completely, or did not remain properly closed, so that the procedure failed.  In June 1998, the pleading continues, the applicant discovered she was pregnant; the pregnancy was terminated and in consequence the applicant suffered complications including severe infections.  In January 1999, she underwent a second surgical procedure to achieve sterilisation.

33                  It may be noted, in passing, that the precise date of the procedure is not pleaded; the applicant does not plead the identity of the medical practitioner who performed the operation or that of any practitioner who was in attendance.  Nor does she plead the circumstances in which the applicator was out of calibration.

34                  The pleaded facts relating to the group members are very brief.  Each group member underwent a sterilisation procedure in Australia in which the goods were used (par 25); in relation to group members referred to in par 2(a), applicators were used which were out of calibration and the procedures failed (par 26); in relation to the group members referred to in par 2(b), applicators were used and the procedures were performed in hospitals in Australia (par 27); each group member is alleged, in the same way as Ms Bright, to have acquired Filshie clips supplied to her by the hospital or medical practitioner concerned (par 28).

(c)       The causes of action

(i)         Trade Practices Act s 52

35                  A variety of facts and circumstances is pleaded which are said to constitute misleading or deceptive conduct on the part of Femcare and Endovasive, by reason of which, it is said, the applicant and the group members suffered the loss or damage pleaded in par 19, in respect of which they claim damages under s 82 of the Trade Practices Act.  It is pleaded that both Femcare and Endovasive were corporations engaged in trade or commerce within Australia “and/or” between Australia and places outside Australia (par 29).  It is pleaded also that Femcare carried on business within Australia “and/or engaged in conduct outside Australia … ”.  Curiously, it is not specifically pleaded that the particular conduct relied on was conduct engaged in by Femcare and Endovasive in trade or commerce.

36                  Paragraph 31 of the statement of claim pleads a series of representations by both Femcare and Endovasive which, according to the particulars, were made both in writing in promotional material and orally (no further particulars are given of the oral representations).  The representations alleged are that:

“(a)     the Filshie clip system was simple and reliable;

 (b)      the Filshie clip system was easy to use, clean and maintain;

 (c)       the failure rate using the Filshie clip system was under 3 per 1000 and less when used by experienced practitioners; and

 (d)      full cleaning and maintenance instructions were included with each applicator, including instructions for assembling and disassembling for cleaning and maintenance purposes.”

It is then alleged (par 32) that each of those representations was false, misleading or deceptive or likely to mislead or deceive.  The particulars of falsity in relation to representations (a), (b) and (d) are that no appliance or method was advised or provided (or adequately advised or provided) by which operators could ensure that an applicator was properly calibrated before using it, that no adequate instructions were provided concerning the need to service and recalibrate applicators so as to avoid them being out of calibration, and that no adequate information was provided as to the consequences of not servicing “and/or” recalibrating the goods with sufficient regularity.  No particulars are given in relation to representation (c) concerning failure rates.

37                  Paragraph 33 then pleads that, acting on the faith of those representations and some others set out in par 34, to which I shall turn, the doctors and hospitals concerned bought the goods and used them to perform the procedures on, among others, the applicant and each group member.

38                  Paragraph 34 pleads a series of representations said to have been made to the doctors and hospitals who purchased or used the goods in Australia.  The representations are said to have been made both orally and in promotional material, but in fact all of them are taken from the manuals provided with the goods between 1982 and (apparently) 1994.  It is unnecessary to set them out or describe them in detail.  There is a good deal of overlapping, because statements made in manuals issued before and after 1985, dealing with substantially the same subject matter, are separately pleaded.  A few examples will give a sufficient indication of the nature of the representations pleaded:

“(a)     The alignment of the applicator could be checked by opening and closing it and checking that the mouth opened roughly in line with the finger bar.  If not, it was necessary to check that a screw joint was not loose.  If it got too far out of line the First Respondent should be consulted.

 (b)      The applicator could be dismantled and cleaned by unscrewing four rings so the applicator should be left in two parts and after cleaning both parts should be shaken vigorously to remove fluid from inside.

…

 (f)       The applicator should not be adjusted or repaired, such work only to be done by the distributor or maker.  The applicator had been carefully adjusted at the factory and dismantling of the instrument should go no further than described in the instructions.

…

 (h)      Each applicator had been individually calibrated by the manufacturer and, because of this, it was essential that all serial numbers on the shaft of the applicator were identical.  Failure to observe this requirement would lead to incorrect operation and possible procedure failures.  No adjustment might be made by unauthorised persons to any applicator and must be done only by the manufacturer or its appointed agent.

…

 (l)       The applicator should be tested by checking that it operated smoothly by squeezing the finger‑bar a few times.”

Notably omitted from the list are the recommendations incorporated in the manuals about servicing and calibration (the history of which is traced in par 7 of these reasons).  Notably also, it is not pleaded that any of the listed representations was false or, of itself, misleading or deceptive.  As will be seen, the apparent intention of the pleader is to allege that the representations listed in par 34 of the statement of claim are an element of conduct of Femcare and Endovasive which, regarded as a whole, was misleading or deceptive.

39                  Thus, par 35 repeats the allegation that, until after the middle of 1999, Femcare and Endovasive did not provide users of the goods with any testing device or means for determining whether an applicator was in calibration.  Paragraph 36 pleads that hospitals and medical practitioners did not have testing devices “and/or” did not have the applicators serviced and, if necessary, calibrated or re‑calibrated on a regular basis by Femcare, its appointed agents or at all “and/or” did not at the very least have the applicator serviced and re‑calibrated “every 100 usages and/or every year and/or upon there being any reason to suspect the applicator had been damaged or misused.”  Paragraph 37 alleges a failure to provide “follow‑up” or to engage in communication in order to ensure that applicators were serviced regularly and that users of the goods were aware of the increased risk of sterilisation failure if the goods were not serviced and calibrated on a regular basis (it is also pleaded that, from about the middle of 1998, Femcare and Endovasive forwarded “reminder cards” to users: I confess I do not entirely understand the purpose of that allegation).  Then it is said, in substance, that Femcare, Biospectrum (until November 1993) and Endovasive (since November 1993) were the only bodies approved by Femcare for servicing and calibrating applicators.  It is claimed (par 39) that both Femcare and Endovasive knew or ought to have known of the matters pleaded in par 36 and (par 40) ought to have known that, in the event of a failed sterilisation due to inadequate clip closure or defective clips arising from a procedure in which an applicator which was out of calibration was used, the patient could suffer injury, loss or damage.  Paragraph 41 then pleads that by reason of the matters pleaded in paragraphs 34 (that is, the list of representations culled from the manuals) and 40 (perhaps it was intended to refer to the intervening paragraphs as well), Femcare and Endovasive ought to have provided “clear instructions, warnings, representations and/or advice” to doctors and hospitals that:

“(a)     the applicators were unlikely to remain in calibration indefinitely;

 (b)      when a sterilisation procedure is performed using an applicator which is out of calibration there is an increased risk of failed sterilisation due to inadequate clip closure;

 (c)       the applicators required regular and proper servicing including re‑calibration to reduce the risk of failed sterilisation;

 (d)      applicators could be out of calibration at the time of manufacture and/or with the effluxion of time and/or if damaged and/or misused;

 (e)       it was necessary to service and, if necessary re‑calibrate, applicators on a regular basis;

 (f)       it was necessary to service and, if necessary, recalibrate applicators:–

(i)        at least every 100 usages; and/or

(ii)       at least every year;

(iii)      at least on every occasion when there was a suspicion of the applicator being damaged and/or misused

in order to reduce the risk of failed sterilisation; and

 (g)      applicators could be out of calibration prior to the commencement of any sterilisation procedure even with regular and proper servicing;

 (h)      not [sic] until after about the middle of 1999, the Respondents and each of them had not provided any or any adequate means for determining, prior to any sterilisation procedure being done, whether or not the applicator was in calibration;

 (i)       it was necessary to check the calibration of the applicator prior to the commencement of every sterilisation procedure because even with regular and proper servicing and re-calibration the applicator could be out of calibration;

 (j)       the Respondents and each of them did not provide any form of ‘follow‑up’ of the purchasers and/or users/operators of the goods in an attempt to ensure applicators were serviced and re-calibrated regularly or at all; and/or to ensure that operators of the goods were aware of the increased risk of sterilisation failure if goods were not properly serviced and re‑calibrated.”

40                  Obviously enough, (h) and (j) do not fit very comfortably and appear, in substance, to repeat matters already pleaded.  The statement of claim then says (par 42) that Femcare and Endovasive failed to provide the instructions etc listed in par 41 and the following two paragraphs plead what is alleged to have been misleading or deceptive conduct on the part of Femcare and Endovasive:

“43.     By reason of the matters pleaded in paragraphs 31 to 42 hereof, the Respondents and each of them engage[d] in conduct that was misleading and deceptive and/or likely to mislead or deceive within the meaning of Section 52 of the Act.

 44.      Further, and in the alternative, the failure, refusal, omission and/or silence of the Respondents as pleaded in paragraph 42 hereof, constituted conduct that was misleading and deceptive and/or likely to mislead [or] deceive within the meaning of Section 52 of the Act.”

41                  Paragraph 45 alleges a form of general reliance: the applicant and each group member are alleged to have relied on Femcare and Endovasive to provide instructions and warnings to hospitals and doctors.  The statement of claim proceeds to allege (par 46) that, by reason of the allegedly misleading or deceptive conduct, the sterilisation procedures which the applicant and each group member underwent involved the use of “an applicator(s) which was out of calibration whereby or, alternatively, which may have been out of calibration with the risk that, the clip(s) became defective by reason of it/them not closing across the fallopian [tube(s)] of the Applicant and each Group Member in such a way as to achieve sufficient occlusion.”  That is said (par 47) in each case to have caused loss and damage.

(ii)        Trade Practices Act s 53(c)

42                  The pleader relies (par 48) on the same facts to support a claim that Femcare and Endovasive, in trade and commerce, in connection with the supply or possible supply of goods, represented the goods to have performance characteristics or benefits that they did not have, causing the applicant and each group member to suffer loss and damage.

(iii)       Trade Practices Act s 75AD

43                  Though not expressed precisely in the terms of s 75AC and s 75AD of the Trade Practices Act, par 49 of the statement of claim is to the effect that the goods had a defect “in that their safety was not such as doctors, hospitals or patients were generally entitled to expect.”  The particulars of the allegation refer to the failure rate said to have been claimed by Femcare compared with what is described as an actual “much higher failure rate”; the circumstance that the goods were marketed as an effective means of female sterilisation whereas “frequently” they were not; the circumstance that the applicators would not retain calibration despite normal use and when out of calibration caused an increase in the failure rate; that no means were provided of checking calibration; and the circumstance that the goods were accompanied by insufficient instructions or warnings.  The applicant and each of the group members are said (par 50) to have suffered loss and damage as a result, which “would have been avoided in the event of the goods, and in particular the applicator, being properly calibrated or, alternatively, the applicator not being exposed to the risk of being out of calibration.”

(iv)       Negligence

44                  This cause of action is quite briefly pleaded: hospitals “and/or” medical practitioners purchased the goods “and/or” used the goods in sterilisation procedures performed on the applicant and each group member (par 51); in the circumstances previously pleaded, both Femcare and Endovasive owed the applicant and the group members a duty of care “not to expose them to a foreseeable increased risk of injury due to failed sterilisation caused by defective clips and/or inadequate clip closure through the use of an applicator that was out of calibration” (par 52); additionally, Femcare and Endovasive owed a duty of care to Ms Bright “and/or” each Group Member to take reasonable steps to avoid the goods becoming defective, particularly by reason of the applicator being out of calibration, to advise and warn operators of the goods “as would best ensure the likelihood of the applicator remaining in calibration” and to “provide follow‑up to operators of the goods” so as to ensure servicing and recalibration with adequate regularity “in order to best ensure the applicator did not become out of calibration”.

45                  It is then alleged (par 54) that Femcare and Endovasive breached their duty of care.  Appended to that allegation is a series of allegations of failure, described as particulars of the allegation of breach.  It includes failure to instruct and warn; failure to provide the means of checking calibration; failure to provide “service reminder cards”; and several other alleged failures, including:

“(f)      failed to conduct surveys to ascertain whether the clips were being properly applied;

(g)       failed to conduct surveys to ascertain whether sterilisation using the clips was successful within 0.3%  of operations, as represented;

(h)       failed to conduct surveys to ascertain whether the applicators were being properly inspected, maintained, serviced and re‑calibrated;

(i)        failed to act on the surveys that identified areas of poor performance of the applicators and clips or failure rates in excess of 0.3%; …”

46                  Paragraph 55 then pleads that, by reason of the breaches of duty, hospitals and doctors performed procedures on the applicant and each Group Member using “applicators which were out of calibration or which may have been out of calibration”; it is alleged (par 56) that, by reason of the breaches, the applicant and each group member has suffered loss.

(v)        Unsuitable or unmerchantable goods: Trade Practices Act s 74B and s 74D

47                  These allegations relate, in terms, only to the clips and only to the applicant and those group members who underwent a procedure which failed because the applicator used was out of calibration.  There are differences between the ways in which the two causes of action, one relying on s 74B and the other s 74D, are pleaded which are not attributable to differences between the elements of the statutory causes of action.  If the allegations survive in some form, there would be merit in some redrafting, and, possibly, amalgamation.  The pleading of the s 74D cause of action, which does not repeat some of the elements common to the s 74B cause of action, is, I think, plainly incomplete as it stands.  The gist of the allegations as they apply to the applicant and the particular group members may, however, be summarised as follows.  The clips are goods to which the provisions apply: that is, they are goods of a kind ordinarily acquired for personal use.  Femcare is the manufacturer of the clips.  It supplied them to Endovasive who acquired them for re‑supply.  A doctor or hospital, having acquired the clips from Endovasive, supplied them to the applicant or a group member, who acquired the goods as a consumer.  She expressly or by implication made known the particular purpose for which she required the clips.  Being applied inadequately by an applicator which was out of calibration, they were both not reasonably fit for the purpose made known and not of merchantable quality.  As a result the applicant, or the group member, suffered the loss or damage pleaded in par 19(a) or (b).

48                  There are obvious questions, to which I shall come, as to the character of the goods and whether the applicant or a group member “acquired” them, and there is an issue as to whether those questions are properly dealt with at this stage of the proceeding or should be deferred until the trial.

(d)       Similar or related circumstances; common issues

49                  These are pleaded in par 68 and par 69.  No particular submissions were directed to those paragraphs.  To a large extent, no doubt, the fate, and final form, of par 69, stating the “substantial common issues of law and/or fact”, will depend on the final form in which the various causes of action are pleaded.

What the motions are about; some relevant principles

50                  It is important to recall the area of discourse with which the motions are concerned and certain areas of discourse with which they are not concerned.

51                  The motions seek, simply, an order that the statement of claim be struck out.  It was made clear in argument, however, that that order is sought not on the basis that the filing of the statement of claim amounts to an abuse of process (because, for example, the applicant is not in a position to support, by evidence, critical allegations) but rather because, it is submitted, the statement of claim does not sufficiently plead, for the applicant or the group members, any reasonable cause of action and because it is, in particular ways, embarrassing.  Nor is there any claim for relief under s 33N of the Federal Court Act (though such an attack was, at least tentatively, foreshadowed during argument).  The attack on the statement of claim, and the applicant’s defence of it, concentrated on its adequacy, or otherwise, as a pleading, having regard to the rules concerning pleadings in O 11 of the Federal Court Rules (FCR) as elaborated in a series of well‑known authorities.

52                  It is fair to say, I think, that although the adequacy of pleadings in particular representative proceedings had been considered in a number of decisions, reported and unreported, and the respondents were able to collect a number of brief and general statements of the principles to be applied, the first extended discussion of those principles, in the context of a representative proceeding, is to be found in a decision published since the motions were argued: Philip Morris (Australia) Ltd v Nixon (2000) 170 ALR 487.  The discussion is to be found principally in the judgment of Sackville J at pars 117 to 120 and pars 129 to 137 (a discussion with which Spender and Hill JJ agreed).  His Honour said, at par 132 and par 133:

“The requirement imposed by FCR O 11, r 2, that a pleading contain a statement in summary form of the material facts on which the party relies, is to be understood by reference to the functions of pleadings.  Thus it is a well‑established rule that the permitted level of generality of a pleading must depend on the general subject matter and on what is required to convey to the opposite party the case that is to be met: Ratcliffe v Evans [1982] 2 QB 524 (CA).  For example, in some circumstances, it may be permissible to plead a conclusion rather than the material facts underlying the conclusion: Kernel Holdings Pty Ltd v Rothmans of Pall Mall Australia Pty Ltd (Fed C of A, French J, 3 September 1991, unreported); Queensland v Pioneer Concrete (Qld) Pty Ltd (1999) ATPR 41‑691 (Drummond J) at 42,829.

In the context of representative proceedings, it may be sufficient for the applicant to plead the case of each member of the represented class at a reasonably high level of generality.  (I use ‘sufficient’ in the sense of adequate to enable the applicant to resist an application to strike out the pleading or dismiss the proceedings.)  This is illustrated by the sample statement of claim appended to the LRC’s report on Grouped Proceedings.  As has been explained, the sample statement of claim alleges material facts, such as the purchase of a defective product by group members and their reliance on misleading representations, only in the most general terms.”

After referring to the particular objects of the introduction of the representative procedure in Pt IVA of the Federal Court Act, Sackville J continued, at par 136:

“Whether proceedings [sic: pleadings] at a relatively high level of generality are permissible will depend on the circumstances of the particular case and the stage it has reached.  The facts material to the claims of each member of the represented group might not be necessary to ensure that the respondent adequately understands the case made on behalf of the represented class and has a fair opportunity to meet that case.  This may be the position, for example, where representative proceedings are brought in order to provide a mechanism to enable one or more common issues of law or fact to be resolved in a manner that binds the respondent and all class members, rather than to determine finally the claims of each class member: see Federal Court Act ss 33Q, 33R.”

53                  It seems to me that the Full Court clearly contemplated that allegations made on behalf of group members may initially be pleaded (in an appropriate case) at a high level of generality, and that amendment of the pleading (or, possibly, successive amendments) made during the course of the proceeding will introduce greater particularity.  That will almost certainly be the case where, common issues having been decided, it is necessary to determine aspects of the claims of individual group members, or particular classes of group members, peculiar to them.  But there may well be other stages in the interlocutory progress of a proceeding where it is appropriate that a statement of claim, pleaded initially and properly at a relatively high level of generality, be amended to introduce greater particularity.

54                  The Full Court did not disapprove a number of general statements in earlier cases to the effect that nothing in Pt IV abrogates the need, in group proceedings, to comply with the rules of pleadings, particularly by pleading the material facts.  What the Full Court’s judgment does demonstrate, it seems to me, is that such general statements (including my own attempt in Bright v Femcare Ltd (1999) 166 ALR 743 at par 18, with which I was belaboured in argument on the motions) do not provide much by way of particular guidance in individual cases; nor is an attempt at rigid classification of “conclusions” (or “bald assertions”) and “material facts” likely to help much.  The point is not that the distinction between those categories is no longer important; it is.  It is that it must be applied with a degree of flexibility having regard to the nature of the particular case pleaded, a general proposition which has particular importance in the relatively new form of group proceedings under Pt IVA.

55                  The passage I have quoted from Philip Morris at par 136 demonstrates why, subject to the overriding requirement that the pleading enable the respondent adequately to understand the case made on behalf of the represented class and to meet that case, that may be so.  Where common issues are properly identified and can conveniently be determined in advance of matters peculiar to the claims of individual group members, a pleading at a relatively high level of generality may be sufficient.  Of course, if matters peculiar to the claims of individual group members must subsequently be determined, then some further, more detailed, pleading is likely to be required.  Thus it is not necessarily true, at this stage of the proceeding, that the fact that the applicant does not identify, in relation to group members, particular hospitals, particular dates, particular doctors or particular applicators bearing particular serial numbers means that the statement of claim, so far as it pleads the case brought on their behalf, must be struck out.  Indeed, as will be seen, it is not easy – perhaps it is impossible – to reach a firm conclusion as to whether that should be the result without considering in some detail the common issues identified and whether, in the light of those common issues, it is appropriate (having regard to s 33N) that the proceeding continue as a group proceeding.

Adequacy of the pleading

56                  I have already mentioned two respects in which, in my view, the statement of claim is plainly inadequate.  The description of the represented class is unduly complex, ambiguous and embarrassing.  Less importantly, the pleading of the claim based on s 74D of the Trade Practices Act is, at least, incomplete.  It is necessary to consider a number of other particular matters canvassed in argument.

(a)       Pleading at too high a level of generality?

57                  In relation to the applicant, the statement of claim pleads (pars 20 to 24) that in January 1998 she underwent a procedure at Westmead Hospital; a Filshie applicator and clips were used; the applicator was out of calibration; by reason of the applicator being out of calibration, one (or possibly both) of the clips did not properly close so that one or both of the fallopian tubes was not occluded; the applicant became pregnant; the pregnancy was terminated in 1998; and in January 1999 the applicant underwent a second procedure to achieve sterilisation.  The applicant does not plead the identity of the medical practitioner who performed the procedure in January 1998 (Dr Bellingham’s letter states that he observed a registrar (unnamed) performing it); nor does the statement of claim identify the particular applicator used, for example, by serial number.  If the applicant does not know who the registrar was who performed the procedure, presumably she is able to find out.  No claim is made against the registrar (or any medical practitioner) in this proceeding and it is said on behalf of the applicant that the identity of the registrar is not a material fact which she is obliged to plead.  The respondents submit that the identity of the doctor who performed the procedure is a material fact which must be pleaded.

58                  The pleading as to the applicator raises similar questions.  It is evident from correspondence tendered that the applicant is not at present in a position to identify the applicator by reference to its serial number.  Nor, evidently, has the applicant positive evidence that the applicator, when used in her procedure, was out of calibration or, if it was, how that came about.  It may be that the respondents would be able to identify, among the six hundred applicators which were checked and serviced following the events at John Hunter Hospital, one or more belonging to Westmead Hospital and would be able to ascertain whether at least one of those applicators was then out of calibration.  But the evidence before me is that the checking of the six hundred occurred in late 1998.  If that is right, the records would reveal nothing about the state of calibration of a particular applicator in January 1998; still less would they reveal why a particular applicator might have been out of calibration in January 1998.  As I have mentioned, the evidence is that there are various reasons why an applicator may be out of calibration, of which lack of regular servicing after periods of ordinary use is only one.  No doubt it is possible that the records would show that many applicators belonging to several hospitals were out of calibration in late 1998, indicating perhaps a widespread and longstanding problem; but at present we do not know.

59                  Senior counsel for the applicant made it plain, in argument, that the material on which the allegation about the applicator is based is the introduction and repeated strengthening of the caution in the manuals; the “cluster” of failures at John Hunter Hospital and the discovery that two of that hospital’s applicators were not properly calibrated; the actions and correspondence which followed including the reiteration of the need to service applicators regularly and the suggestions that a lack of regular servicing may result in applicators being out of calibration, leading in turn to failures; the resulting flood of applicators sent to the respondents  for service; and, ultimately, the manufacture and distribution, by Femcare, of the testing gauge.  In short, the John Hunter episode and its sequel provided evidence that lack of regular servicing resulted in applicators being out of calibration which in turn resulted in failed sterilisations; and the sending of the six hundred strongly suggested that John Hunter was by no means the only Australian hospital which had not had its applicators serviced regularly.  (But, as the respondents pointed out, in circumstances where the John Hunter episode received wide publicity, the applicants produced no evidence of any actual problem other than that at John Hunter.)

60                  The matters to which I have just referred are relevant to other relief sought in the notices of motion.  It is possible that they would also be relevant to other applications which have been foreshadowed.  In relation to the adequacy of the statement of claim as a pleading of material facts, they are, I think, to some extent a diversion.  That can be demonstrated by reference to the claims based on s 52 of the Trade Practices Act.  In essence, what is pleaded is that the respondents engaged in conduct which induced a hospital to purchase the Filshie system and also induced a doctor to adopt (having perhaps first recommended) a procedure in circumstances where the applicator to be used might well have been out of calibration (and, as it turned out, was out of calibration) so that there was a significant risk of failure (and failure in fact occurred).  At trial, of course, the allegations concerning the doctor cannot be proved by reference to a hypothetical or unnamed medical practitioner; the doctor actually involved will need to have emerged from the shadows.  It does not follow, I think, that for pleading purposes the identity of the doctor is a material fact in the sense that for those purposes it is to be regarded as a fact which must be proved in order to make good the cause of action or even as one which must be alleged in order that the respondents may know what is the case which is made against them.  It is, however, at least in my view a proper subject for particulars, and I shall return to that.  What is true of the doctor is, I think, true equally of the identification of the applicator.

61                  It is, after all, not only the pleading which informs a respondent of the case to be met.  A pleading will ordinarily do that only at a relatively high level of generality or abstraction; and a good deal of the subsequent interlocutory process (particularly, of course, the filing and service of statements or affidavits) is intended to inform each party of the case made by the other and to ensure the parties are not ambushed at trial.  Particulars – a topic to which I shall return – have an obvious part to play in that process.

62                  In relation to group members, in my view it is a proper application of the principles discussed in Philip Morris to hold that the attack on the pleading, so far as it was based on failure to plead with greater particularity the facts peculiar to individuals among them, should fail.  That is, I do not think that the pleading is objectionable because it fails, in relation to group members, to specify dates, hospitals, doctors or the serial numbers of applicators.  I say that on the assumption that there will be common issues which may conveniently be decided in advance of any trial of issues peculiar to individual group members.  Thus, for example, it may well be that matters relevant to the existence of a duty of care owed to women seeking sterilisation may be capable of determination in this way.  So, at least, may some matters relevant to the question whether the respondents engaged in conduct which was misleading or deceptive.  There may be questions such as those which may be determined on the basis of a very general pleading of the case made on behalf of group members without thereby causing prejudice to the respondents.

63                  The reference, however, to questions concerning misleading or deceptive conduct demonstrates, I think, the caution that must be exercised in “hiving off” issues of that kind.  This is not, after all, a case in which it is said that the respondents made representations to the whole world, for example, in a newspaper advertisement or on television.  It is said that they made representations, both orally and in writing, to doctors and hospitals.  No particulars are given of oral representations, and it was made plain that the applicant is not at present in a position to give any such particulars (because she lacks the information which would enable her to do so).  It is improbable, however, that Femcare or, more likely, Endovasive made precisely the same representations to each hospital with which, and each doctor with whom, it dealt.  In relation to each group member, the conduct which is relevant is, I should think, likely to be the particular conduct on which the hospital in which the group member was operated on relied or on which the doctor who recommended or performed the operation relied (or both).  Thus, the search for common issues of fact in relation to the claim that the respondents engaged in conduct which was misleading or deceptive may prove illusory.  Such issues of fact will be decided on evidence, and the evidence must relate to the conduct on which particular doctors and hospitals relied.

64                  The applicant accepts, as she must, that questions of reliance, causation and damages will require, at least at some later time, the pleading of more detailed material facts in relation to group members.  But the considerations which I have mentioned suggest that the difficulties may arise at an earlier stage.  All that that demonstrates for present purposes, however, is that I am unable, on the present state of the pleading, to form any clear view as to the extent to which it will be practically possible to isolate common issues for separate determination.  I am not prepared to hold, now, that it is impermissible to plead at a high level of generality the material facts relating to the group members.  Nor do I think – contrary to a submission made on behalf of Femcare – that a pleading, in relation to the claims of group members, is necessarily inadequate if it merely repeats the substance of the description of the group.  To hold otherwise, I think, would be to conclude – wrongly, in my view – that it is never permissible to plead group members’ claims, initially, at the high level of generality which Philip Morris contemplates.

(b)       Insufficient definition? “out of calibration”; failure rates

65                  The expression “out of calibration” is of very considerable importance in the case.  The applicant and one class of group members is alleged to have suffered loss because operations performed on them failed because the applicators used in the operations were out of calibration.  Those within the other class of group members are alleged to have suffered loss, although operations performed on them may in fact have been successful, because of circumstances arising from their knowledge of other events resulting from applicators at the hospital at which they were treated being out of calibration or of the hospital’s failure (or perhaps possible failure) to have their applicators checked for calibration and serviced.  To a large extent, the case pleaded depends on the proposition that an applicator can be relied upon to work properly and effectively only if it is not out of calibration.

66                  The essence of the respondents’ complaint, as I understood it, was that the applicant does not provide a definition of “out of calibration” or plead (or give particulars of) the extent to which, it is said, the applicator used in the procedure performed on the applicant was out of calibration: that is, the number of millimetres by which its adjustment departed from a state of “calibration”.  The applicant’s reply was that Femcare’s own manuals warned against particular practices on the basis that the applicators were “finely calibrated” and the practices would disturb that calibration; she relied also on the circulars and correspondence generated by the John Hunter episode (and the cautions in the more recent versions of Femcare’s manuals) as indicating that calibration was essential to efficacy, that the maintenance of calibration required regular servicing and that mishandling of various kinds might result in an applicator being out of calibration.  The essence of the applicant’s retort is, thus, that the respondents know, better than anyone (certainly, better than the applicant), what it means to say that an applicator is “finely calibrated” or, on the other hand, out of calibration.  I have already expressed the view – it might perhaps have done no harm had the pleader expressly said so – that phrases such as “out of calibration” are used in the statement of claim to indicate that an applicator is not adjusted, or calibrated, so that it will close a clip sufficiently to occlude a fallopian tube but not so as to cut it.  I do not think, as a matter of pleading, that the expression “out of calibration” need be further defined or that the extent to which a particular applicator was out of calibration is a material fact which must be pleaded.  It is, no doubt, a proper matter for particulars; and there may be a question of what should be done if (as seems almost certain) the applicant is unable, now, to provide those particulars.

67                  The question of failure rates gives rise to similar, but perhaps not identical, considerations.  It was accepted by all parties, during argument, that a failure rate might be expressed as a fraction, the denominator of which was the total number of procedures performed using Filshie equipment during a particular period, and the numerator of which was the number of those procedures which, for any reason, had not resulted in sterilisation.  It seems likely, on the material before me, that what prompted the allegation (of which no particulars are given) that the actual failure rate exceeded that claimed was the much higher failure rate recorded at John Hunter Hospital during 1997 in circumstances where, it appears, applicators were (for some reason) out of calibration.  But the evidence strongly suggests that the number of procedures performed using Filshie equipment at John Hunter Hospital would have represented a very small fraction of the total number of such procedures performed worldwide.  It may be, therefore, that the John Hunter episode provides an uncertain basis for a general allegation of falsity of a general representation about failure rates.  In those circumstances, I think that the pleading of the allegations concerning failure rates may properly be regarded as embarrassing to the extent that it does not spell out precisely what it means when it alleges that the actual failure rate was greater than that represented.  It may be that the extent of the excess can be regarded as a matter for particulars rather than pleading; but how the alleged actual failure rate is ascertained is, I think, undoubtedly a matter for pleading.  In those circumstances, I think the allegations as to failure rates, as they stand, should be struck out.  I shall return to the topic of particulars and to more general issues, including issues of case management, which arise.

(c)       Trade Practices Act Pt V Div 2A

(i)         Section 74B

68                  The criteria of liability are set out in s 74B(1), as follows:

“74B   (1)        Where –

(a)        a corporation, in trade or commerce, supplies goods manufactured by the corporation to another person who acquires the goods for re‑supply;

(b)        a person (whether or not the person who acquired the goods from the corporation) supplies the goods (otherwise than by way of sale by auction) to a consumer;

(c)        the goods are acquired by the consumer for a particular purpose that was, expressly or by implication, made known to the corporation, either directly, or through the person from whom the consumer acquired the goods or a person by whom any antecedent negotiations in connexion with the acquisition of the goods were conducted;

(d)        the goods are not reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied; and

(e)        the consumer or a person who acquires the goods from, or derives title to the goods through or under, the consumer suffers loss or damage by reason that the goods are not reasonably fit for that purpose.

the corporation is liable to compensate the consumer or that other person for the loss or damage and the consumer or that other person may recover the amount of the compensation by action against the corporation in a court of competent jurisdiction.”

Subsection (2) provides what may be described as two defences: one depends on circumstances, arising after the goods left the control of the manufacturer, outside the manufacturer’s control; the other on circumstances showing that the consumer did not rely, or that it was unreasonable for the consumer to rely, on the skill or judgment of the manufacturer.

69                  Paragraph 57 of the statement of claim repeats the first paragraph of the description of the represented group, the paragraphs describing the respondents, their activities and their relationship, those describing the goods and the alleged need to recalibrate the applicators and consequences of not doing so, the paragraphs alleging the facts relating to the procedures undergone by the applicant and women in the first category in the represented group and, finally, the paragraphs pleading facts said to be material to the claim based on s 52 of the Trade Practices Act.  It is, perhaps, useful to pause at that point, and to ask what is the apparent relevance of this compendious restatement?  Presumably, the intention is to state the facts on the basis of which s 74B(1)(a), (b) and (c) (and possibly also s 74B(1)(d)) are said to be satisfied.  But the position is complicated somewhat by the following paragraph, which pleads:

“58.     At all material times the clips comprised in the goods:‑

(a)        were used during sterilisation procedure(s) performed upon the Applicant and each Group Member referred to in paragraph 2(a);

(b)        the First Respondent, in trade or commerce, within Australia or between Australia and places outside Australia, supplied clips comprised in the goods manufactured by it to the Second Respondent who acquired the clips comprised in the goods for resupply;

(c)        the Second Respondent supplied the clips comprised in the goods (otherwise than by way of sale by auction) to the Applicant and each group member referred to in paragraph 2(a);

(d)        the goods were acquired by the hospitals and/or doctors for a particular purpose that was, expressly or by implication, made known to the First Respondent, either directly or through the doctors and/or hospitals from whom the consumer acquired the clips comprised in the goods or a person by whom any antecedent negotiations in connection with the acquisition of the goods were conducted;

(e)        the clips comprised in the goods were not reasonably fit for that purpose; and

(f)        the consumer or a person who acquired the clips comprised in the goods from, or derived title to the [clips comprised in the] goods through or under, the consumer suffered loss or damage by reason that the clips comprised in the goods were not reasonably fit for that purpose.”

For good measure, though I think irrelevantly, par 59 proceeds to plead that, in the circumstances, the clips comprised in the goods were not reasonably fit for the purpose for which they were commonly supplied – an apparent (but unnecessary and inapt) reference to s 74B(1)(d).

70                  Argument concentrated largely on the questions whether the clips were supplied to, or acquired by, the applicant and group members and whether the clips were “goods” of a kind to which s 74B applies: goods of a kind ordinarily acquired for personal, domestic or household use or consumption (s 74A(2)(a)).  An inclusive definition of the concepts of supply and acquisition appears in s 4(1) of the Trade Practices Act but it is not, I think, determinative of the former of the two questions.  The argument on behalf of Femcare was that a clip is not an item of property which a patient acquires, in the sense of obtains a proprietary (or perhaps possessory) interest in, during the course of an operation.  Rather – and unlike, for example, spectacles or a hearing aid – a clip should be regarded, it was submitted, in the same way as a suture or infused plasma and thus not a subject of supply to, or acquisition by, a patient.  That argument, on each side, did not proceed far beyond assertion and example and I would not be inclined, on a strike out motion, to hold that the applicant could not establish that, in the course of an operation of the kind pleaded, she or a group member did not acquire the clips used and that a hospital or doctor did not supply them to her.  Though with rather greater hesitation, I come to the same conclusion in relation to the other matter argued, that is whether the goods are properly to be described as goods ordinarily acquired for personal use.  Plainly, of course, hospitals and doctors do not acquire them for personal use; but once the step is taken of saying that a patient acquires clips, it would follow that patients are among those who ordinarily acquire them and it may be that they acquire them for a “use” which is properly described as “personal”.  I was referred to some authorities in which s 74A(2)(a) has been discussed (such as Minchillo v Ford Motor Company of Australia [1995] 2 VR 594 and Crago v Multiquip Pty Ltd & Dunogan Farm Tech Pty Ltd (1998) ATPR 41‑620), but none offers any particular assistance on the present question.

71                  It does not follow, however, that the paragraphs pleading the case under s 74B should stand.  They are, with every respect to the pleader, thoroughly confused and confusing.  Presumably what is intended to be said, in outline, is that Femcare supplied clips to Endovasive; Endovasive acquired them for resupply (but what of the period before Endovasive’s appointment as distributor?); a hospital or doctor supplied the goods to a consumer (the applicant and group members being presumably, within the statutory definition, consumers); the applicant and group members acquired the clips for a particular purpose which was, expressly or by implication, made known to Femcare either directly or through persons who had conducted “antecedent negotiations”; and, because the goods (clips) were applied by an applicator which was out of calibration, they were not, when they were acquired, reasonably fit for that purpose.  Additionally, the applicant pleads that Endovasive is liable as well as Femcare.  That presumably depends on a proposition that Femcare does not have a place of business in Australia and that Endovasive imported the clips (s 74A(4)).  Thus – though it hardly jumps at the reader from the pleading – a case is sought to be made against Endovasive on the footing that Femcare does not have a place of business in Australia and that Endovasive, having imported the goods, is liable as if it were their manufacturer.

72                  I shall consider later, in more detail, the necessary territorial connection between conduct (said to give rise to a liability under Pt V of the Trade Practices Act) and the jurisdiction.  As that discussion will indicate, there are, in my view, difficulties with par 58(b); in any event, that paragraph presumably is intended, in substance, as a conclusion to be drawn from some of the paragraphs repeated in par 57: but what are the particular allegations which enable the applicant to locate the relevant conduct which constitutes the supply?  That, so far as I can see, is by no means clear.  Then, par 58(c) is, I think, simply wrong: the allegation which is presumably intended to be made is not that Endovasive supplied clips to the applicant and group members but that it supplied them to hospitals (or doctors), who in turn supplied them to the applicant and group members.  Equally par 58(d) is, at best, embarrassing: it says that the doctors and/or hospitals acquired the clips for a particular purpose, not that the applicant and group members did (though, on one possible reading, the latter part of the paragraph suggests that the doctors and hospitals were mere intermediaries through whom the applicant and the group members acquired the clips); and the paragraph introduces the term “the consumer”, presumably referring to the applicant and group members, but the applicant should plead facts (a matter of no great difficulty, it might be supposed) justifying the conclusion that that applicant and group members were consumers.  Then, what ever is meant by par 58(f)?  The only relevant consumer, presumably, is the applicant or group member concerned – or is it the intention to plead also that hospitals or doctors were consumers and that the applicant or group member, as a person deriving title through or under the hospital or doctor, suffered loss?

73                  In short, paragraphs 57, 58, 59 and the dependent paragraphs need to be rethought.  The matters to which I have referred amply demonstrate that; I have not attempted exhaustively to list every deficiency.  Those paragraphs should be struck out and, if the allegation of breach of s 74B is to be persisted in, repleaded.

(ii)        Section 74D

74                  I have already referred to the differences between the ways in which the cases under s 74B and s 74D are pleaded.  It is unnecessary to say more about the paragraphs pleading the case relying on s 74D than that those paragraphs, which incorporate par 58, suffer from at least the same deficiencies as the s 74B pleading and must suffer the same fate.

(d)       Trade Practices Act claims: territorial connection

75                  Paragraph 7 of the statement of claim pleads a number of things which Endovasive is alleged to have done, mostly in Australia, including (in general terms) engaging in the conduct of which the applicant complains.  Little argument was directed to the paragraph.  It may be that (apart from any question of particulars) the allegations could be somewhat compressed and more precisely directed; and, if they were, it may be more likely that a defence will more clearly indicate where the parties are actually at issue.  Nevertheless, there is, I think, no doubt that it is sufficiently pleaded that the alleged conduct of Endovasive, pleaded in the statement of claim, is pleaded to have been engaged in in Australia.  Presumably it is unlikely that that will be seriously in dispute.

76                  The conduct alleged against Femcare is quite another matter.  Paragraph 10 of the statement of claim pleads that:

“At all material times by reason of the matters pleaded in paragraph 9 hereof, the First Respondent engaged in trade or commerce within the meaning of section 4(1) of the Act:‑

(a)       within Australia; and/or

(b)       between Australia and place(s) outside Australia.”

77                  Trade or commerce (that is, the activity conduct in which, or a supply of goods in which, may give rise to liability under the Trade Practices Act) is defined (s 4(1)) as meaning trade or commerce within Australia or between Australia and places outside Australia.  The general presumption that the Trade Practices Act applies only to conduct within Australia or of Australian nationals (J D Heydon, Trade Practices Law par 2.650) is reinforced by s 5, which provides a limited extension of the territorial operation of the Act.  Section 5(1) provides:

“(1)     Part IV, Part IVA, Part V (other than Division 1AA) and Part VB extend to the engaging in conduct outside Australia by bodies corporate incorporated or carrying on business within Australia or by Australian citizens or persons ordinarily resident within Australia.”

78                  Conduct, then, gives rise to a liability under, for example, s 52 if two conditions are met: first, it is engaged in within Australia (by a corporation) or outside Australia (by a body referred to in s 5(1)); secondly, it is conduct in trade or commerce (including trade or commerce between Australia and a place outside Australia).

79                  Paragraphs 29 and 30 of the statement of claim allege:

“29.     At all material times the Respondents were corporations engaged in trade or commerce within Australia and/or between Australia and places outside Australia by reason of those matters pleaded in:‑

(a)       paragraph 8 hereof with respect to the Second Respondent; and

(b)       paragraph 10 hereof with respect to the First respondent [sic].

 30.      Further, and in the alternative, to paragraph 29(b) hereof, at all material times from time to time the First Respondent carried on business within Australia and/or engaged in conduct outside Australia by reason of those matters pleaded in paragraph 11 hereof.”

Paragraph 10 simply alleges, relevantly, that Femcare (which, of course, is not incorporated in Australia), by reason of the matters pleaded in paragraph 9, engaged in trade or commerce within Australia and/or between Australia and place(s) outside Australia. Paragraph 9, particularly, includes a number of sub-paragraphs which assert that Femcare did certain things “either within Australia or at some place(s) outside Australia”.  It may be that par 9 pleads material facts on the basis of which it is said that Femcare engaged in trade or commerce either within Australia or between Australia and places outside Australia, but it does not plead material facts on the basis of which it is said that the (or any) actual conduct complained of, on the part of Femcare, took place in Australia.

80                  Paragraph 11 of the statement of claim makes it clear that the matters pleaded in par 9 are the sole support for the allegation, in par 11, that Femcare carried on business in Australia.  It is, I think, literally true that it would be possible to make good every allegation in par 9 without establishing that Femcare, at material times, carried on business in Australia.  That is partly because most of the paragraphs either do not allege that the activity which they describe took place within Australia or allege that it took place “either within Australia and/or from some place(s) outside Australia.”  Tycoon Holdings Ltd v Trencor Jetco Inc (1992) 34 FCR 31 helpfully illustrates the considerations which are relevant in deciding, in a case such as the present, whether a corporation carries on business in Australia.  It supports my view that par 9 is an insufficient basis for the pleading in par 11 and hence for a case against Femcare based on conduct engaged in outside Australia.

(e)       Section 52 Trade Practices Act

81                  A cause of action under s 52 and s 82 of the Trade Practices Act is pleaded between par 28 and par 47 of the statement of claim.  In my view, the difficulty with this aspect of the pleading can be summarised by saying that it is by no means clear what precisely is the conduct, on the part of each respondent, relied upon and how precisely that conduct is said to have caused the loss which the applicant claims that she and the group members have suffered.  The first difficulty is that s 33C(1)(a) of the Federal Court Act requires that the applicant and each group member have claims against each respondent, and the statement of claim must demonstrate that that requirement is met: Philip Morris at 514.  The statement of claim makes it quite clear that conduct is relied on which occurred well before Endovasive played any part in the distribution of the Filshie system.  There may, for example, be a group member whose doctor performed a procedure on her in reliance on conduct of Femcare engaged in before Endovasive’s appointment and not at all on conduct of Endovasive.  If as a result that group member suffered loss on or after 10 May 1996, or became aware of her loss or damage not earlier than 10 May 1996, the loss or damage being of a kind pleaded, her claim against Femcare would be within the statement of claim but she may not have a pleaded cause of action against Endovasive.

82                  Secondly, while it may be permissible to plead conduct directed generally at doctors and hospitals in Australia (as, for example, par 31 does), the only doctors and hospitals whose reliance on the conduct is relevant are those by whom, and at which, procedures were performed on the applicant and group members: thus, for example, par 33, to the extent that it refers to “the said doctors and hospitals” and refers to “sterilisation procedures on, inter alia [sic] the Applicant and each Group Member” is too wide.

83                  Thirdly, when one reads the paragraphs in sequence, one is left, at the end, in a state of considerable uncertainty as to what exactly is being alleged.  Paragraph 31 pleads the four particular representations that the system was simple and reliable; that it was easy to use, clean and maintain; that the failure rate using it was under three per 1000 and less when used by experienced practitioners; and that full cleaning and maintenance instructions were included.  Paragraph 32 then pleads that each of those representations was false, misleading or deceptive; and the particulars of falsity in relation to the first two representations and the last (I have mentioned that no such particulars are given in relation to the third) are that there was no appliance or method “advised or adequately advised or provided and/or adequately provided” to enable operators to ensure that applicators were properly calibrated before use, and that the respondents failed to provide adequate instructions about the need to service applicators and recalibrate them or about the consequences of failing to do so.  But then it is said, in par 37, that a follow up system by way of “reminder cards” was instituted by the respondents in about the middle of 1998, those reminder cards being forwarded “on a regular basis”; it is nevertheless pleaded, by a combination of par 41(j) and par 42, that at all material times the respondents failed to provide clear instructions or warnings to doctors and hospitals.  Similarly, the brochures in evidence make it clear that, from 1994, statements or recommendations were included about the desirability of regular servicing and recalibration.  I have mentioned that the extracts from the various manuals listed in par 34 as representations made to doctors and hospitals do not include any of those statements or recommendations and senior counsel for the applicant submitted that there was nothing objectionable about that: the respondents could, in their defences, refer to the manuals in their entirety.  That is true so far as it goes.  But par 41 pleads, among other things, that, by reason of the matters pleaded in par 34, the respondents at all material times ought to have “represented … clear instructions, warnings, representations and/or advice” that:

“(e)     it was necessary to service and, if necessary re‑calibrate, applicators on a regular basis;

 (f)       it was necessary to service and, if necessary, recalibrate applicators:

(i)        at least every 100 usages; and/or

(ii)       at least every year;

(iii)      at least on every occasion when there was a suspicion of the applicator being damaged and/or misused

in order to reduce the risk of failed sterilisation; …”

Paragraph 42 pleads that “at all material times” the respondents failed, among other things, to do that.

84                  The pleading makes it clear, and the evidence more so, that what the respondents told doctors and hospitals changed in material ways during the relevant period.  In those circumstances it is not, I think, by any means clear what precisely are the material facts relied on to support the allegation of misleading and deceptive conduct.  Is it said, for example, that the warnings which were given were insufficiently clear, prominent or specific?  Is it said that, because (as par 38 pleads) the respondents were the only authorised servicers of the equipment and therefore knew (par 39) that applicators were not being serviced or recalibrated regularly, their conduct was misleading or deceptive because they came under a duty to say more than (at various times during the relevant period) they had said?  How precisely do the “reminder cards” pleaded in par 37 fit into that picture?

85                  The confusing picture is compounded by a great deal of repetition (sometimes in slightly different terms) and apparent mistakes.  For example, what is one to make of a pleading (par 41(h)) that the respondents ought to have represented to doctors and hospitals that:

“Not until after about the middle of 1999, the Respondents and each of them had not provided any or any adequate means for determining, prior to any sterilisation procedure being done, whether or not the applicator was in calibration; …”?

Or that the respondents should have told doctors and hospitals (par 41(j)) that:

“The Respondents and each of them did not provide any form of ‘follow‑up’ of the purchasers and/or users/operators of the goods in an attempt to ensure applicators were serviced and re‑calibrated regularly or at all; and/or to ensure that operators of the goods were aware of the increased risk of sterilisation failure if goods were not properly serviced and re‑calibrated …”?

86                  Similarly, I have already mentioned the general reliance pleaded in par 45.  It is in these terms:

“The Applicant and each Group Member relied upon the Respondents and each of them to provide to the hospitals and/or medical practitioners which/who performed the sterilisation procedure(s) upon the Applicant and each Group Member with clear instructions, warnings or advice of all matters relevant to the safe and effective use of the goods so as to avoid and/or diminish the risk of failed sterilisation.”

87                  Senior counsel for Femcare submitted that “general reliance” no longer forms part of Australian law.  Certainly it is true, I think, that that concept or doctrine was disapproved by a majority of the High Court in Pyrenees Shire Council v Day (1998) 192 CLR 330 at 344 per Brennan CJ, 385 per Gummow J and 411 per Kirby J.  In any case, the concept has no place here in the pleading of a case based on infringement of s 52.  Senior counsel for the applicant accepted that the applicant’s case is that doctors and hospitals actually relied on the respondents’ conduct and that no claim is based on any reliance, whether specific, actual or “general”, on the part of the applicant or any group member.  Paragraph 45 has no role in the context in which it is pleaded, other than to confuse, and it should be struck out.

88                  Overall, I am by no means satisfied that the applicant is not in a position to plead, on her own behalf, a case against each respondent relying on s 52.  Nor am I satisfied that she is unable to do so on behalf of the group members (assuming an appropriate redefinition).  But the present pleading is, to my mind, at least confusing, and thus embarrassing, and should be struck out, but with liberty to replead.

(f)        Section 53(c) Trade Practices Act

89                  Paragraph 48 of the statement of claim pleads:

“Further, and alternatively, the Respondents and each of them in trade and commerce in connection with the supply or possible supply of the goods and/or in connection with the promotion or the supply and/or use of the goods, represented the goods to have performance characteristics and/or benefits they did not have by reason of the conduct pleaded in paragraphs 29 to 47 hereof within the meaning of the provisions of Section 53(c) of the Trade Practices Act by reason of which the Applicant and each of the Group Members suffers and will continue to suffer loss and damage.”

90                  It may be that in the end (and depending on the way in which the s 52 case is pleaded) the respondents will suffer little detriment by reason of the very “rolled‑up” nature of par 48.  But it is by no means self‑evident – in fact, it is not the case – that every element of the conduct pleaded in pars 29 to 47 can properly be described as a representation that the goods had particular performance characteristics and/or benefits.  If the applicant seeks to rely on representations to that effect – whether they go only to failure rate or to matters extending beyond that – she ought to specify what the representations were; and the alleged causal link between the representations and the loss should be pleaded.

(g)       Section 75AD of the Trade Practices Act

91                  It is as well to set out in full the relevant paragraphs of the statement of claim.  They read:

“49.     Further, and in the alternative, in the circumstances pleaded in paragraphs 29 to 47 [that is, the paragraphs in which the case under s 52 is pleaded], the goods were defective in that their safety was not such as doctors, hospitals or patients were generally entitled to expect as provided for in Section 75AC of the Trade Practices Act.

Particulars of Defects

(a)        the goods were marketed as having a failure rate of 0.3% but had a much higher failure rate;

(b)        the goods were marketed as an effective means of female sterilisation but were frequently not effective for that purpose;

(c)        the applicators would not retain calibration despite normal use and when used out of calibration resulted in an increased risk of failed sterilisation due to inadequate clip closure;

(d)        the goods did not include the means whereby the operator of the applicator could ascertain whether the applicator was properly calibrated before use; and

(e)        the goods did not have adequate instructions or warnings as to inspection, maintenance, service and re‑calibration of the applicator or of the increased risk of failed sterilisation due to inadequate clip closure if an applicator which was out of calibration was used.

 50.      The Applicant and each of the Group Members suffers loss and damage, as a result of the defects in circumstances where such injury and loss would have been avoided in the event of the goods, and in particular the applicator, being properly calibrated or, alternatively, the applicator not being exposed to the risk of being out of calibration.”

92                  Having regard to the terms of ss 75AB, 75AC and 75AD of the Trade Practices Act, those paragraphs, once again, are in my opinion deficient.  Though it may not matter greatly in practical terms, goods have a defect, for the purpose of the provisions, “if their safety is not such as persons generally are entitled to expect” (s 75AC(1)), not as “doctors, hospitals or patients are generally entitled to expect” (and what are the material facts relied on for this allegation?).  Secondly, once again, the pleading needs to address the bases on which Femcare, as an overseas manufacturer, and Endovasive, as an Australian importer, might be liable.  Thirdly, liability arises where a corporation supplies goods manufactured by it, those goods have a defect and, because of the defect, an individual suffers injury.  What appears to be necessary is that there be a clear link between particular defective goods and “injury” (not loss or damage) suffered by an individual (see Stegenga v J Corp Pty Ltd (1999) ATPR 41‑695).  That may create obvious difficulties in the case of those group members, at least, who did not undergo a procedure which was unsuccessful because an applicator was out of calibration.  It cannot be sufficient to plead that a group member suffered “loss and damage” as a result of defects where “such injury and loss would have been avoided in the event of the … applicator not being exposed to the risk of being out of calibration.”

93                  Yet again, in my view, the pleading needs to be revised in the light of a careful consideration of the provisions under which the applicant claims that the respondents are liable to herself and to group members.

(h)       Negligence

94                  I have already dealt with most matters relevant to the pleading of this cause of action.  To the extent that par 52 relies on facts alleged in earlier paragraphs as the pleading of material facts said to give rise to a duty of care, no doubt that paragraph will need reconsideration in the light of any repleading.  Two other difficulties may be mentioned briefly.  First, par 52 and par 53 both plead duties of care owed to the applicant and group members, but in significantly different terms.  In par 52 the duty is expressed as one “not to expose [the applicant and group members] to a foreseeable increased risk of injury due to failed sterilisation caused by defective clips and/or inadequate clip closure through the use of an applicator that was out of calibration”; par 53 pleads a duty to:

“(a)     take all reasonable steps so as to avoid the goods becoming defective and, in particular, the applicator becoming out of calibration;

 (b)      take all reasonable steps to advise and warn operators of the goods as would best ensure the likelihood of the applicator remaining in calibration;

 (c)       provide follow‑up to operators of the goods so as to best ensure that applicators were serviced and re‑calibrated with adequate regularity in order to best ensure the applicator did not become out of calibration.”

Some rationalisation would be desirable; and the pleading of the duty to warn lacks precision.

95                  Secondly, breach is pleaded in par 54.  That paragraph simply pleads that “the Respondents and/or each of them breached their duty of care to the Applicant and/or the Group Members.”  There follows a series of paragraphs described as “particulars” which allege various things which the respondents failed to do.  Senior counsel for Femcare was right, in my view, in submitting that those “particulars” are allegations of a kind to which the respondents ought to be required to plead in their defences and therefore should appear as allegations of material facts, not particulars.  Additionally, it is not entirely easy to see how some of the “particulars” of breach would amount to breaches of the particular duties alleged, particularly the allegations of failure to conduct various surveys.

Conclusion on the pleading

96                  I have not discussed every aspect of the pleading, particularly the common issues alleged: as I have mentioned, they were not the subject of detailed argument and they would at least need reconsideration, in the light of these reasons, in any repleading.  The deficiencies in the document are, in my view, so extensive as to require the conclusion that the statement of claim be struck out in whole.  The applicant should, however, have liberty to replead.

Other relief sought

97                  Given that the statement of claim is to be stuck out, it is inappropriate at this stage to order the filing and service of an affidavit of facts and circumstances or the provision of further particulars.  The evidence on the motions does, however, strongly suggest that the applicant has little information as to the precise circumstances of the procedures performed upon her and upon group members and relies substantially on what is reported to have occurred at John Hunter Hospital.  To some extent, no doubt, the applicant is in a position to fill gaps by inquiries which it is open to her to make.  To some extent, it may be that she will seek to rely on interlocutory processes to fill in gaps.

98                  As a general proposition, no doubt the respondents are right to submit that it is not legitimate to commence a proceeding not knowing whether one has a case but with the intention of using the processes of the Court to ascertain, after the proceeding is commenced, whether allegations made are capable of being supported.  To state that general proposition is easy; it is rather more difficult to draw a precise line so as to identify how much information is required in order to justify the commencement of a particular proceeding.  But so that issues of the kinds foreshadowed by the respondents can be identified and, for example, appropriate orders for discovery made, it is appropriate, I think, that the applicant be required to provide in large measure, when the case is repleaded, the materials sought by Femcare in par 2 and par 2A of its amended notice of motion and by Endovasive in the corresponding paragraphs of its notice of motion.

99                  Precision is impossible until any further amended statement of claim is presented.  But if the allegations referred to in par 2 of Femcare’s amended notice of motion are repeated, then in my view a statement (though not, at this stage, an affidavit) of the facts and circumstances, known to the applicant, on which she intends to rely should be required.  Similarly, but depending upon the precise form of the further amended statement of claim, particulars of the kind contemplated by par 2A of Femcare’s amended notice of motion should be provided.  I can see no reason why the applicant should not be required to furnish a statement and particulars at the time of delivery of the further amended statement of claim: if, in the light of the amendments, the respondents contend that something different, or further, is required, then they can seek it.

100               Paragraph 2B of Femcare’s amended notice of motion seeks (and Endovasive also seeks) a direction that the applicant provide authorities permitting inspection of medical records concerning sterilisation procedures performed upon the applicant and on group members and the consequences thereof, and permitting interviews to be conducted with medical practitioners.  There may be room for argument as to extent to which the direction should extend to procedures performed on group members, but in general terms that, no doubt, would be a first step in the discovery process.  Another, reciprocal, early step might well be (subject, of course, to argument) an order for discovery of the records concerning the servicing of the six hundred applicators sent to Femcare after the John Hunter episode.

101               Given that the statement of claim is to be stuck out I would not, pending repleading, make a direction for the filing or service of expert evidence (par 2C of Femcare’s amended notice of motion).  Nor would I order that the plaintiffs in the Queensland proceedings (par 3 of Femcare’s amended notice of motion) be excluded from the definition of group members: the evidence given by Ms Culkoff, the solicitor for the applicant, made it clear, I think, that there is a degree of cooperation between her firm and the firm of solicitors acting for the plaintiffs in the Queensland proceedings, and I see no reason why (given also that process in the Queensland proceedings has not, apparently, yet been served on any defendant)  this aspect of the matter should not be left until “opt‑out” notices have been given.  It is highly likely, of course, that at that stage these proceedings would not be allowed to continue on behalf of group members who had not opted out but nevertheless sought to continue to pursue those Queensland proceedings.  That, however, is not a decision which need be made now.

Costs

102               I see no reasons why the respondents, who have been substantially successful on their motions, should not have their costs of them.

103               There remain outstanding some questions about costs in relation to earlier interlocutory proceedings.  They concern earlier versions of the statement of claim, some of which were filed and a greater number of which were served, at least in draft.  The history can be described relatively briefly.

104               Both respondents filed notices of motion seeking to strike out an amended statement of claim filed by the applicant on 24 August 1999.  Femcare raised a constitutional point which was argued on 24 September, when the motions were initially set down for hearing.  Both respondents also, however, contended that the amended statement of claim was seriously defective in a number of respects and did not plead a reasonable cause of action.  In the event, only the constitutional point was argued on 24 September, other aspects of the motion being stood over to 13 October 1999.  On 6 October 1999, I delivered judgment on the constitutional questions, declining to make declarations, sought by Femcare, that Pt IVA of the Federal Court Act was invalid and, in the alternative, that s 33J and s 33ZB of the Federal Court Act were invalid (Bright v Femcare Ltd (1999) 166 ALR 743; affirmed Femcare Ltd v Bright [2000] FCA 512).

105               By 13 October 1999, the applicant no longer sought to support the amended statement of claim, and when the respondents’ motions came on for hearing on that day I ordered that it be struck out.  I indicated also that I would order that the applicant pay to the respondents their costs of, occasioned by and thrown away in consequence of, the amendment of the statement of claim and successive proposed further amended drafts of the statement of claim, including correspondence between the parties as to the deficiencies claimed by the respondents to exist in relation to both documents.  Both respondents submitted that those costs should be paid on an indemnity basis; should be taxed and paid forthwith; and should be paid by the applicant’s legal advisers.  I directed that written submissions be filed and served in relation to those matters.  Each party filed and served submissions and I prepared reasons for judgment which I proposed to deliver on 16 November 1999.  I was asked, however, and I agreed, not to deliver those reasons at that time or to make orders in consequence of them.  The applicant filed further submissions, relying to a considerable extent on matters said to have been discussed between counsel.  There matters rested, overtaken somewhat by more recent events.  The applicant now submits that I should not make any orders in relation to costs (including the costs of those earlier motions) until I have heard further argument.

106               In the circumstances, it is appropriate that I give the parties an opportunity to make further submissions on costs.  In a case where there have already been lengthy interlocutory proceedings, but nevertheless not a great deal of progress has been made, I think little purpose would be served by a reagitation at length of matters already fully canvassed.  The further submissions made on behalf of the applicant after 16 November do not, of themselves, alter the views which I had already formed.  In the rather unusual circumstances, I think it would be helpful if I were to set out, as representing my present tentative views, a substantial portion of the reasons which I had proposed to deliver on 16 November 1999:

“History

The applicant initially filed an application and statement of claim on 10 May 1999.  It is unnecessary to say much of the first directions hearing which took place on 18 June 1999.  There was some vigorous discussion, in the course of which the applicant’s solicitor expressed what, in my view, were clearly unrealistic suggestions or expectations.  Femcare, though not properly served with the applications and statement of claim, was represented by its solicitor.  The matter was set down for further directions; I directed, among other things, that each party serve short minutes of the orders for which that party would contend.

On 8 July 1999, Femcare’s solicitors wrote to the applicant’s solicitors pointing out in some detail what they contended were deficiencies in the statement of claim.  Endovasive informed the applicant that it supported Femcare’s approach; its solicitors also sought detailed particulars of the statement of claim.  The second directions hearing occurred on 13 July.  The applicant’s solicitor informed me that the applicant did not propose to file an amended application and statement of claim: she took the position that the statement of claim “sufficiently and adequately pleads the material facts” and that, in any event, the respondents were “well aware of the issues in the case”.  The respondents, particularly Femcare (then represented by senior counsel), made it clear that they maintained that the statement of claim was seriously defective and would, if it were not amended, seek to have it struck out.  I directed, among other things, that not later than 3 August the applicant respond to the letter from Femcare’s solicitors of 8 July and file such amended application and statement of claim as she may be advised.

The third directions hearing took place on 13 August.  For the first time, the applicant was represented by senior counsel.  The directions made on 13 July had not been complied with.  Senior counsel for the applicant sought an extension of time to file an amended statement of claim.  I directed that an amended statement of claim be filed and served not later than Monday, 23 August and that the applicant at the same time respond to the letter from Femcare’s solicitors.

Copies of a proposed amended statement of claim were served on 24 August; the document, together with an amended application, was filed on 25 August.  The response to the letter from Femcare’s solicitors was brief:

‘To the extent relevant and necessary, we are of the view that the issues raised in your letter dated 8 July 1999 have been addressed by the enclosed Amended Statement of Claim and Application.’

It is sufficient to say that they had not.  So much the applicant has, at least implicitly, accepted, as the later history demonstrates.  The next directions hearing was on 3 September.  The respondents made it clear that they were by no means satisfied that the amended statement of claim was significantly less deficient than its predecessor.  Directions were given for the filing of notices of motion together with evidence in support.  The motions were to be returnable on 24 September.  The respondents filed substantial submissions in support of their contentions that the amended statement of claim should be struck out.  On 23 September, the applicant served on the respondents a proposed further amended statement of claim.  Its form was significantly different from that of its predecessor which, on 24 September, senior counsel for the applicant made it clear he would no longer seek to support.  Thus, substantial work had been done on a document which plainly would be superseded and (apart from the constitutional argument) the strike out motions could not have been dealt with on the day on which they were set down.  In the event, the day was wholly occupied with argument on the constitutional question.  The strike out motions were listed for further hearing on 13 October.

On 24 September, senior counsel for the applicant stated that the version of the statement of claim which he would seek to support was that which had been served the previous evening.

On 1 October, Femcare’s solicitors spoke to the applicant’s solicitors describing what they contended to be a number of deficiencies in that draft pleading.  On 6 October, the applicant sought an adjournment of the hearing set down for 13 October; I refused the application but gave liberty to apply; no further application was made.  On 11 October, a further proposed amended statement of claim was served; on 12 October, a further proposed amended application was served; on 13 October (in the hours before the hearing), a further proposed amended application and two successive further proposed amended statements of claim were served.  When the matter came on for hearing, senior counsel for the applicant did not seek to file the then current proposed further amended statement of claim.  Senior counsel for Femcare made a series of criticisms of it.

In view of that history I do not need to describe any of the successive pleadings, or proposed pleadings.  There is no doubt that the first two versions were seriously deficient.  The third version – that of 23 September – was a very significant improvement and, no doubt, successive versions have offered further improvements; but on 13 October, the applicant still had not arrived at a form of statement of claim to which her senior counsel was then prepared to commit.

Costs payable by legal advisers?

It was submitted that the preparation of pleadings is a matter clearly “within the purview of duties of the legal representatives”, not a matter in which the lay client might be expected to play a part.  Thus the applicant’s lawyers should be regarded as responsible for what has happened and they, not she, should pay the costs.  There can be no doubt about the jurisdiction of the Court to make an order of the kind sought: De Sousa v Minister for Immigration, Local Government and Ethnic Affairs (1993) 41 FCR 544; White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169 at 229‑231 (affirmed (1999) 163 ALR 744).  But such an order is made only where the lawyers have committed a serious dereliction of duty (gross negligence may amount to such a dereliction): White at 230.  I do not think it is established that what has happened here amounts to such a dereliction.  There was a separate argument, on which both of the respondents relied.  It was based on statements in Knight v FP Special Assets Ltd (1992) 174 CLR 178 at 192, to the effect that costs might be awarded against a non‑party who played an active part in the conduct of litigation or had an interest in its subject matter where the party was insolvent or a “man of straw”.  Here, it was said, evidence relied on in another aspect of the proceeding indicated that the applicant was a person of small means and it might be inferred that her lawyers were acting on a contingency basis.  That circumstance, together with the likelihood that the applicant would not be able to pay any costs awarded against her (at least, unless ultimately she was successful in the proceedings) made it just that the lawyers should pay the costs.  I am not convinced, however, that the material before me is sufficient to enable me to draw the inference proposed, or even to establish that the applicant is a “person of straw”, much less insolvent.  In any event, I am by no means convinced that solicitors who act for persons of limited means should be made liable for costs in circumstances where no liability would attach to those whose clients are wealthy.  In short, I do not think that this is an appropriate case in which to make an order for costs against legal advisers.

Indemnity costs?

The tests which the Court applies are well established: Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397 at 401; Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 232‑234.

A particular application of the principles, in a case somewhat analogous to the present, was made by Goldberg J in Sammy Russo Supplies Pty Ltd v Australian Safeway Stores Pty Ltd (1998) ATPR 41‑641 at 41,098:

‘In my opinion, an application of these principles to the circumstances of this case warrants an order for indemnity costs.  Right from the start the applicants were put on notice of the deficiencies in the statement of claim.  Each succeeding statement of claim did not cure the deficiencies and on each occasion the further statements of claim were propounded substantial reasons were advanced by the respondents as to why the pleading was deficient.  The applicants could not help but have known of the problems they faced yet they persisted in propounding inadequate and deficient statements of claim.’

It is necessary, of course, to recognise that there are differences both of kind and of degree between cases and that it may be a mistake simply to apply a statement made with reference to particular pleadings and a particular history to another case which may appear to fit its literal terms.  In my view the deficiencies identified in the original statement of claim were clear and serious; they were clearly brought to the applicant’s attention; the applicant’s first reaction was that nothing needed to be done.  The applicant’s second reaction was to file an amended statement of claim, after some delay, which plainly did not deal with the identified deficiencies.  Nor did the applicant make any serious attempt to come to grips with the particular problems which the respondents had identified in some detail.  The matter was allowed to reach the point where the respondents had prepared detailed submissions as to the defects in the amended statement of claim; and then, on the eve of the first hearing of the motions, a substantial proposed amendment was proffered.  The failure to come to grips with what had been clearly pointed out and to do anything significant about it until the eve of the hearing necessarily had the result that substantial costs were incurred in circumstances where a significant portion of them need not have been incurred.  That, I think, justifies an order at least that those costs incurred up to and including 23 September 1999 be paid on an indemnity basis.

I am inclined to think, however, though with some hesitation, that the test is not met in relation to costs incurred subsequently and that those costs should be payable on the ordinary party and party basis.  The process by which the applicant has come to grips with the problems, particularly the issuing of a series of amendments and further amendments, is, at least, less than ideal: but it does not justify, I think, at this stage an order for indemnity costs.

Costs to be taxed and paid forthwith?

Goldberg J made such an order in Sammy Russo.  There, as in this case up to 23 September, there had despite the clearest warnings been nothing approaching an adequate pleading.  In effect, there, the real case would begin upon the filing of a new pleading as, in my view, here it may (depending on the fate of any further motions) be taken to have begun with the document of 23 September.  There is, I think, no reason why, in circumstances such as those which have arisen in this case, the respondents should remain out‑of‑pocket, until the conclusion of the hearing, for substantial costs which they have incurred in the course of bringing the case to a position which, it may be hoped, is close to its proper starting point: see also Vasyli v AOL International Pty Ltd (Lehane J, 2 September 1996, unreported), where a similar course was taken in comparable circumstances.

Offset

Femcare failed in its constitutional argument and I have ordered that it pay the applicant’s costs of that aspect of Femcare’s motion.  Senior counsel for Femcare accepted, in the course of argument, that those costs ought, if I should order immediate taxation and payment of its costs of other aspects of the motion, be offset against those costs.  That would require that the applicant’s costs of the constitutional question be taxed forthwith also.  The position is, however, complicated by the pendency of an appeal, pursuant to leave, from my decision on the constitutional challenge.  I shall hear counsel on the question of what orders, if any, can and should be made on that aspect of the matter.”

107               Since those reasons were written, additional costs have been incurred in connection with the appeal to the Full Court (on the constitutional question) which was heard over three days in November 1999 and February 2000.  The appeal was dismissed with costs.  The position is further complicated by the circumstance that Femcare has applied to the High Court for special leave to appeal from the Full Court’s decision.  It was conceded on behalf of Femcare that the applicant was entitled to an offset, against any costs ordered to be taxed and paid forthwith, of costs payable to the applicant in relation to the constitutional question.  But plainly, I think, it would not be appropriate to order the applicant’s costs of the constitutional challenge be taxed and paid forthwith.  Although Endovasive took no active part in the constitutional challenge, and therefore no question of offset arises as against it, my clear impression is that its costs in relation to the pleading issues are likely to be substantially less than those incurred by Femcare – even allowing for my tentative view that some of them should be paid on the indemnity basis.  Overall, an appropriate course might be to make orders as contemplated in the draft reasons which I have quoted, except any order for the taxation and payment forthwith of any of the costs ordered to be paid by the applicant.

108               My view – again a tentative view, subject to further argument – is that the costs of the present motions should not be required to be paid other than on the usual party/party basis and at the conclusion of the proceedings.  Although I have held the statement of claim to have been seriously deficient, the applicant succeeded, in the light of Philip Morris, on some points of principle which were argued, particularly on the degree of particularity with which, at the outset, it may be permissible to plead claims on behalf of represented parties.  Those questions, on which the submissions in large part concentrated, were of some difficulty and had not, until the decision in Philip Morris, been the subject of any extended consideration, particularly by the Full Court.

Orders

109               I have, I think, sufficiently indicated in general terms the way in which, in my view, the motions should be decided.  The statement of claim will be struck out but with liberty to replead.  Otherwise, the appropriate course, I think, is to order simply that the respondents file and serve short minutes of the orders for which they contend, consistently with these reasons, to dispose of the motions and also of the outstanding costs issues.  If there is dispute as to the appropriate orders, or if further argument as to costs is necessary, the matter will be set down for argument on those issues.  The respondents’ draft short minutes should be filed and served not later than 13 June 2000 and the matter will be set down for further directions at 9.00 am on 16 June 2000.

I certify that the preceding one hundred and nine (109) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lehane.

Associate:

Dated:              5 June 2000

 

Counsel for the Applicant:	Mr D J Higgs SC with Mr J R Clarke
Solicitor for the Applicant:	Maurice Blackburn Cashman
Counsel for the First Respondent:	Mr B W Walker SC
Solicitor for the First Respondent:	Freehill Hollingdale & Page
Counsel for the Second Respondent:	Mr I F Butcher
Solicitor for the Second Respondent:	Sparke Helmore
Date of Hearing:	13 October 1999
Date of Judgment:	5 June 2000