FEDERAL COURT OF AUSTRALIA

Bright v Femcare Limited [2001] FCA 1477

PROCEDURE – representative proceedings under Pt IVA of the Federal Court of Australia Act 1976 (Cth) (“the Act”)– whether proceedings satisfy the criteria in s 33C of the Act - whether there are substantial common issues of fact or law – whether the Court ought to make an order pursuant to s 33N of the Act that the proceeding no longer continue under Pt IVA of the Act

Federal Court of Australia Act 1976 (Cth), s 33C, s 33N

Silkfield Pty Ltd v Wong (1998) 90 FCR 152 at 157 – 158  referred to

Murphy v Overton Investments Pty Ltd [1999] FCA 1123 at [67], [80]  referred to

Vasram v AMP Life Limited [2000] FCA 1676 at [14]  referred to

Murphy v Overton Investments Pty Ltd [1999] FCA 689 at [15]  referred to

Qantas Airways v Cameron (1996) 66 FCR 246 at 251 ­ 252, 293  referred to

Wong v Silkfield Pty Ltd (1999) 199 CLR 255  followed

Campomar Sociedad, Limitada v Nike International Ltd (2000) 169 ALR 677 at 704 [103]  referred to

Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 at 467  referred to

Ryan v Great Lakes Council (1998) 155 ALR 447 at 456  referred to

ACCC v Giraffe World Australia Pty Ltd (1998) 84 FCR 512 at 534  referred to

KERRIE BRIGHT v FEMCARE LIMITED & ANOR

N 410 of 1999

STONE J

19 OCTOBER 2001

SYDNEY

THE COURT ORDERS:

pursuant to s 33N of the Federal Court of Australia Act 1976 (Cth), that this proceeding no longer continue under Pt IVA of the Act.

THE COURT DIRECTS THAT:

1.                  the proceedings be stood over to a date to be advised; and

2.                  the parties file and serve any written submissions on the issue of costs by 2 November 2001.

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

REASONS FOR JUDGMENT

introduction

1                     On 10 May 1999, the applicant commenced representative proceedings under Pt IVA of the Federal Court of Australia Act 1976 (Cth) (“the Act”). The proceedings have already given rise to six judgments of this Court: (1999) 166 ALR 743 (constitutional validity of Pt IVA of the Act; affirmed on appeal, (2000) 100 FCR 331), (2000) 175 ALR 50 (third amended statement of claim struck out), [2000] FCA 1179 (issues relating to a subpoena addressed to the Therapeutic Goods Administration), [2000] FCA 1344 (issues relating to subpoenas addressed to public hospitals) and [2000] FCA 1394 (issues relating to a subpoena addressed to Toowoomba Base Hospital).

2                     There are currently two notices of motion before the Court. The first notice of motion, filed on behalf of the first respondent (“Femcare”) on 12 October 2000, seeks an order under s 33N of the Act that the proceeding no longer continue, or alternatively no longer continue against Femcare, as a representative proceeding under Pt IVA of the Act. The second notice of motion, filed for the second respondent (“Endovasive”) on 11 October 2000 seeks orders that the proceeding be dismissed or stayed pursuant to O 20 r 2 of the Federal Court Rules for failure to satisfy the criteria in s 33C of the Act, or alternatively that they be dismissed or stayed pursuant to O 20 r 2 in so far as they relate to group members described as “Group B Members”, and, in the further alternative, relief similar to that sought by Femcare.

3                     These notices of motion were originally heard by Lehane J on 6 and 7 November 2000. Unfortunately his Honour was overtaken by serious illness shortly thereafter. It was then agreed between the parties that another judge of this Court should decide the issues raised by the notices of motion “on the papers” with one hearing day for additional submissions. Prior to that hearing, I reviewed the evidence adduced before his Honour and the transcript of the proceeding before him.  At the hearing before me, the respondents, over the objection of the applicant, were given leave to present some “updating material” in the form of additional affidavits. Because that additional evidence has not been material to my decision, it is not necessary to discuss it further. In discussing the parties’ submissions in these reasons, I have not distinguished between submissions that were made before Lehane J and those made before me.

the legislation

4                     For ease of reference, I have set out the relevant provisions of Pt IVA of the Act:

33C.   

(1)       Subject to this Part, where:

(a)               7 or more persons have claims against the same person; and

(b)               the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances; and

(c)               the claims of all those persons give rise to a substantial common issue of law or fact;

a proceeding may be commenced by one or more of those persons as representing some or all of them.

(2)               A representative proceeding may be commenced:

(a)               whether or not the relief sought:

(i)                 is, or includes, equitable relief; or

(ii)               consists of, or includes, damages; or

(iii)             includes claims for damages that would require individual assessment; or

(iv)             is the same for each person represented; and

(b)               whether or not the proceeding;

(i)                 is concerned with separate contracts or transactions between the respondent in the proceeding and individual group members; or

(ii)               involves separate acts of omissions of the respondent done or omitted to be done in relation to individual group members.

33N.

(1)       The Court may, on application by the respondent or of its own motion, order that a proceeding no longer continue under this Part where it is satisfied that it is in the interests of justice to do so because:

(a)               the costs that would be incurred if the proceeding were to continue as a representative proceeding are likely to exceed the costs that would be incurred if each group member conducted a separate proceeding; or

(b)               all the relief sought can be obtained by means of a proceeding other than a representative proceeding under this Part; or

(c)               the representative proceeding will not provide an efficient and effective means of dealing with the claims of group members; or

(d)               it is otherwise inappropriate that the claims be pursued by means of a representative proceeding.

The proceeding

5                     The nature of this proceeding, the claims which (in previous versions of the statement of claim) the applicant made on behalf of herself and other group members and the circumstances in which those claims were made, have been described in an earlier judgment of Lehane J, Bright v Femcare Ltd (2000) 175 ALR 50.

6                     The current pleading, being the fourth amended statement of claim filed on 2 August 2000 (“statement of claim”), differs significantly from its predecessors.  For that reason the earlier judgments are not a reliable guide to the case that Ms Bright now seeks to make. A draft defence provided by Endovasive puts in issue every allegation against Endovasive in the statement of claim other than that Endovasive is incorporated and is liable to be sued and that, from November 1993, it was a distributor for Femcare in Australia of Filshie clips and applicators.  Femcare has provided an incomplete draft defence. It does not deal with any of the paragraphs of the statement of claim after paragraph114 (the statement of claim runs to 159 numbered paragraphs) but it is, so far as it goes, a document which has been drawn with some care and by no means proceeds on the basis that nothing is to be admitted. Neither respondent has, as yet, committed itself to a defence.

current claims

7                     The following outline of the applicant’s claims is derived from the statement of claim. It is intended only to provide a coherent account of the background to this proceeding and the claims currently made by the applicant on behalf of herself and group members. It should not be regarded as involving any determination of disputed facts.

8                     Femcare manufactures devices known as Filshie clips and applicators that are used in female sterilisation procedures. A Filshie clip is applied to the fallopian tube by means of a Filshie applicator with the aim of occluding that tube thus preventing conception. It is claimed that effective sterilisation depends, inter alia, on the applicator being correctly adjusted so that it applies sufficient pressure to cause the Filshie clip to occlude the fallopian tube without cutting it. When a Filshie applicator is correctly adjusted it is said to be “in calibration”. If not so adjusted it is said to be “out of calibration”.

9                     The applicant claims damages for herself and for group members in respect of losses allegedly resulting from sterilisation procedures in which Filshie equipment was used.  In the case of the applicant and the “Group A Members”, the loss or damage is said to have resulted from failed procedures, resulting in pregnancy, followed in some cases by termination (sometimes with complications) and in others by the birth of a child (involving the burden of raising the child). The failure of the procedure is said to result from the use of a Filshie applicator that is out of calibration. 

10                  “Group B Members” are women whose procedures have not been demonstrated to fail but who, as a result of publicity about failed sterilisations in which Filshie equipment had been used referring to lack of proper calibration as a possible cause, were concerned about the effectiveness of the procedures that they had undergone. Inquiries were made by (or on behalf of) Group B Members as to whether the hospitals in which their procedures were performed had records confirming that the applicators used were, or were likely to have been, in calibration. As a consequence of being unable to allay their concerns by reference to hospital records, the Group B Members underwent investigatory or sterilisation procedures, adopted additional contraceptive precautions or suffered distress. It is alleged that the absence of such records, resulting, it is claimed, from the respondents’ breaches of duty, led to these consequences.

11                  The allegations made in the statement of claim can be briefly summarised.  The precise calibration of a Filshie applicator is said to be critical to its effective performance.  An applicator may be out of calibration for a number of reasons, including repeated opening and closing in ordinary use and rough handling.  Because applicators are used in environments where they are likely to be handled by more than one person, it is unlikely that an accurate record could be kept of the number of times a particular applicator has been opened and closed.  Therefore the only reliable way to ensure that an applicator is in calibration for the purpose of a procedure would be to check the calibration immediately before use. 

12                  It is alleged that since 1982 Femcare or its agent has had a means of checking whether an applicator was in calibration but it was not until August 1999 that Femcare made available to hospitals and doctors a gauge that would enable them to check calibration reliably.  The gauge produced in August 1999 is said to be simple and inexpensive and able to have been developed no later than 1982.  It is said that Femcare was aware of these matters since 1982 and that Endovasive was aware of these matters since November 1993.  Alternatively, it is claimed that the calibration of Filshie applicators should have been checked regularly by Femcare or its agent. 

13                  It is said in the statement of claim to be essential that accurate records be kept of the extent of use of each applicator and the dates on which its calibration was checked.  Despite this, it is claimed, no statement of the need for regular servicing appeared in instruction manuals until after 1994. Apart from a circular issued by Endovasive in 1995 recommending annual service “to ensure smooth running and trouble free maintenance” and a statement in manuals supplied with the equipment, no statement was made of the need to service applicators or of the possible consequences of insufficient servicing until about May 1998.  Femcare and, since 1993, Endovasive, were allegedly aware that applicators were not sent to Femcare or its agent for regular servicing.

The warnings

14                  The statement of claim identifies three warnings that, it is alleged, both Femcare and Endovasive (after 1993) had a duty to give.  They are:

(a)        the “calibration risk” warning;

(b)        the “regular check” warning; and

(c)        the “no servicing” warning.

Calibration risk warning

15                  The calibration risk warning, is described as a clear and prominent warning to the effect that:

·        it is critical to the performance of an applicator that it be in calibration;

·        an applicator might become out of calibration as a result of ordinary use or as a result of mishandling or vigorous handling;

·        it cannot be predicted with precision how much use will cause an applicator to become out of calibration;

·        the use of an out of calibration applicator increases the risk of ineffective sterilisation and therefore a Filshie applicator should be checked immediately before use; and

·        it is therefore important that hospitals and doctors have had a reliable means of checking whether an applicator is in calibration before using it. 

16                  Femcare, it is alleged, did not give such a warning to its Australian distributors or instruct them to give such a warning to hospitals, doctors and subdistributors. Endovasive and other distributors did not give such a warning to hospitals or doctors.  Doctors and hospitals had a reasonable or legitimate expectation that Femcare and Endovasive would give such a warning, or alternatively, it was misleading or deceptive for them not to do so, or alternatively, Femcare and Endovasive owed a duty to hospitals and doctors to give the warning.

Regular check warning

17                  Similar allegations are made in relation to the regular check warning.  This is a warning that, because of the propensity of an applicator to fall out of calibration and the impossibility of predicting the precise circumstances in which this might occur, it is essential that an applicator be regularly checked by Femcare or its authorised agent, that accurate records of use be kept and that applicators which have not been regularly checked, or of which records of use have not been kept, not be used in procedures.

No servicing warning

18                  The no servicing warning is described as a clear and prominent warning incorporating the regular check warning and stating that Femcare or its agent has an available means of checking the calibration of an applicator and that hospitals and doctors are not providing applicators to Femcare or its agent for checking. The pleading makes allegations in relation to this warning which are substantially the same as those made in relation to the other two warnings.  There is, however, one difference the materiality of which is not immediately obvious.  The duty to give the no servicing warning, unlike the duty to give the other warnings, is pleaded as a duty owed to the applicant and group members as well as a duty owed to hospitals, doctors and (in the case of Femcare) Australian distributors and (in the case of Endovasive) Australian subdistributors.

Misrepresentation

19                  In addition to the allegations of misrepresentation stemming from the failure to give warnings, the applicant also alleges positive misrepresentation.  It is said that Femcare (since 1982) and Endovasive (since November 1993) have made what is described as the “safety representation”.  This is a representation that the Filshie procedure was and would be a safe and effective method of female sterilisation.  That representation is said to have been made both in the product literature accompanying the equipment and, by implication, from the fact of the sale and promotion of the Filshie equipment.  The safety representation is alleged to have been made to doctors, hospitals, distributors and subdistributors and is alleged to have been inaccurate because it was not qualified by either the calibration risk warning or the regular service warning.

Misleading and deceptive conduct

20                  The statement of claim pleads that Femcare’s conduct was misleading or deceptive in that it failed to give the calibration risk warning or the regular check warning to doctors, hospitals or distributors and also failed to give the no servicing warning to hospitals, doctors, distributors, the applicant and group members.  Corresponding allegations are made against Endovasive in relation to the period after November 1993.  Additionally, both Femcare and Endovasive are alleged to have engaged in conduct which was misleading or deceptive or likely to mislead or deceive by making the safety representation to hospitals, doctors, Australian distributors and Australian subdistributors.  In the alternative, Femcare is alleged to have been implicated in the conduct alleged against Endovasive.  There is then a series of allegations leading to the conclusory pleading that the conduct alleged against both Endovasive and Femcare was conduct in trade or commerce in Australia.

Negligence

21                  The statement of claim also alleges that Femcare and Endovasive owed a duty of care to Ms Bright and group members to take all reasonable steps to avoid or minimise the risk that a Filshie applicator that was:

·        out of calibration;

·        unable to be confirmed as being in calibration;

·        not regularly checked; or

·        because of the absence of servicing records, not able to be confirmed as having been regularly checked;

would be used in a sterilisation procedure. The duty is said to have been breached by failure to give any of the three warnings, by Femcare’s failure to design and make available a gauge for checking calibration and/or by Endovasive’s failure to require Femcare to design such a gauge and make it available.

Causation

22                  Causation is pleaded similarly in relation to the failure to give each of the three warnings and somewhat differently, in a way that relates only to Femcare, in relation to failure to supply a checking gauge coupled with failure to give the calibration risk warning.  It is sufficient to take, as an example, the alleged failure to give the calibration risk warning.  It is said that, if Femcare had given that warning to hospitals and doctors or distributors or if Endovasive had given a warning to hospitals and doctors or subdistributors, Filshie equipment would not have been used in any of the procedures performed on the applicant or group members, so that the loss and damage would not have been suffered; alternatively, by reason of the breach, the applicant and group members lost the chance of avoiding the loss and damage suffered; in the further alternative, the absence of a warning increased the risk of the applicant and group members suffering loss and damage.  In addition, it is pleaded that, had the calibration risk warning been given, it would have been so difficult to market Filshie equipment without an onsite checking gauge that such a gauge would have been produced.

issues claimed to be substantial common issues of law or fact

23                  The applicant has pleaded the existence of substantial common issues of law and fact by reference to various paragraphs in the statement of claim. It is necessary to deal with each claim in detail but, rather than repeating those paragraphs, the Fourth Amended Statement of Claim has been attached as an appendix to these reasons. The paragraphs identified as giving rise to common issues are 9, 10, 15 to 40, 42 to 45, 47 to 50, 52 to 55, 60 to 67, 94 to 145, 146(a), 147 to 149, 151, 152, 154, 155, 157 and 158.

24                  Each respondent has filed a document described as a “Draft Defence”. Femcare’s draft defence was described by its counsel, Mr Walker SC, as “not a pleading” but “an argumentative document designed to illustrate the way in which allegations can and will be met were the case to proceed in this Court”.  It provides a detailed response to the fourth amended statement of claim, admitting many of the allegations contained therein. Endovasive’s draft defence denies, or does not admit, all allegations in the fourth amended statement of claim with two exceptions, namely paragraphs 6 and 7. It is therefore less useful in assessing what the issues in this case are likely to be.

25                  Given the preliminary nature of the defences and the fact that the issues remain poorly defined, the applicant submits that it is premature to consider the s 33N application. In support of this submission, counsel referred to Foster J’s approach in Silkfield Pty Ltd v Wong (1998) 90 FCR 152 concerning the primary judge’s refusal to make orders under s 33N. In a comment that was approved by the High Court ((1999) 199 CLR 255 at 268 [35]), his Honour said (at 157 – 158):

“It is too early to make any of the decisions called for by that section. Even if I had some doubt in this regard, I would not be disposed to disturb [the primary judge’s] decision. It was a decision made in the exercise of a discretion and nothing has been shown to indicate that there was any miscarriage in its exercise.”

26                  Undoubtedly what is pleaded by way of defence may affect the identification of common issues. Potential common issues might be admitted by the defendant and thus cease to be at issue between the parties; Murphy v Overton Investments Pty Ltd [1999] FCA 1123 at [67]. However, it cannot prejudice the applicant if I approach my consideration of s 33N on the basis that the respondents will put every allegation in issue, as it seems Endovasive proposes to do.  In any event, as Endovasive has alleged that there are no substantial common issues of law or fact in the statement of claim, it is necessary to consider all relevant paragraphs of the statement of claim. I shall group similar issues wherever possible.

 Paragraph 9 (meaning of calibration)

27                  This paragraph does no more than define terms used throughout the statement of claim. It does not make any substantive statements of fact or law. It cannot, therefore, be a common issue of law or fact within the meaning of Pt IVA of the Act.

Paragraphs 10, 17 and 30 (importance of calibration)

28                  Using the definition of “out of calibration” set out in paragraph 9, paragraph 10 makes the following assertion: “The use in a Filshie Procedure of a Filshie Applicator which is not adjusted so that it will sufficiently close the Filshie Clip so as to occlude the fallopian tube without cutting it increases the risk of a failed sterilisation”. Paragraph 30 is similar, but vague in that it states that the potential consequences of using an applicator that is out of calibration are “very serious for the patient”. As Mr Walker SC pointed out in submissions, these statements, of themselves, are unlikely to be controversial. Moreover, it is unlikely that acceptance of this allegation in the applicant’s case would be helpful in resolving other claims.

29                  Nevertheless, the consequences of using an applicator that is out of calibration are likely to be the subject of expert evidence and would appear to be significant in determining the claims of group members. They could be relevant in the following ways:

·               in determining the existence and scope of the alleged “duty to warn” based on the respondents’ actual and imputed knowledge of these consequences;

·               in determining whether a failure to provide certain information to doctors and hospitals was misleading and deceptive or likely to mislead and deceive within the meaning of s 52 of the Trade Practices Act 1974 (Cth);

·               in assessing the likelihood that the pregnancy of a particular Group A Member arose from use of a Filshie applicator that was out of calibration.

The first of these points is discussed below in [39], which deals with paragraphs 16, 35, 36, 66, 67, 97, 105 and 114 of the statement of claim. The second point is discussed in [51] – [52] below, dealing with paragraphs 121 to 134 of the statement of claim.

30                  The third point is best dealt with at the level of the individual group member. It is pointless to consider this question in the abstract. It would appear that the respondents will seek to show that a failed sterilisation is more likely to be attributable to hospital or surgeon error than to the use of an applicator that is out of calibration; affidavit of Kevin William Broadley sworn 11 October 2000, pars 13 – 17, affidavit of Deborah Jackson sworn 23 October 2000, par 5. Resolution of this issue is likely to depend on evidence of what the surgeon observed during and after the procedures, what a competent surgeon might be expected to conclude from such observations, the position of the Filshie clip after the procedure (where this has been subsequently investigated) and the status of the relevant Filshie applicator at or about the time of the operation rather than on a general proposition that use of a Filshie applicator that is out of calibration may have negative consequences.

31                  Paragraph 17 alleges that “[t]he maintenance of a Filshie Applicator In Calibration is and at all material times has been critical to its effective performance”. This claim is similar to that in paragraph 10, except that it possibly alleges a relationship between the maintenance of a Filshie applicator and it being in calibration. Whether regular servicing would have ensured that Filshie applicators remained in calibration is a common issue, albeit a seemingly uncontroversial one.

Paragraphs 15, 20, 25, 33, 40, 43, 44, 48, 49, 53, 54 and 64 (manuals and promotional material supplied to hospitals and doctors)

32                  These paragraphs allege that certain material (manuals and promotional material) was supplied to hospitals and doctors by the Australian distributors of Filshie applicators and make allegations concerning information said to be contained in or omitted from this material. It seems that different manuals could have been supplied at different times; first respondent’s draft defence paragraph 13; affidavit of Kevin William Broadley sworn 11 October 2000, par 9. Ascertaining what material was supplied on different dates and the content of that material may raise an issue common to certain subgroups of group members. Although different manuals would be relevant to different group members, each version of the manual is likely to be relevant to the claims of a number of group members. As it should be relatively simple to ascertain the date of each operation, it would not be difficult to determine which material is relevant to the claims of each group member. It is important to note that this will not include all of the material that a particular hospital or doctor had at the date of each group member’s procedure as it will only include material that was provided to every hospital or doctor.

33                  Determining the content of some of the material relevant to the claims of particular subgroups is a comparatively small element of the case that needs to be made if a group member is to succeed in establishing her case as pleaded. As indicated above, the gravamen of the applicant’s complaint is that failure on the part of the respondents to give certain warnings (see [14] – [18] above) had certain consequences (see [19] – [22] above). Even if the allegations as to omission were made out in relation to the relevant written material, the applicant would not have established that no warnings were given or that the alleged positive representations were inaccurate (that allegation being based on a failure to give certain warnings). As senior counsel for Endovasive, Mr Deakin QC, pointed out, even material that was generally circulated may have been provided to different recipients in different circumstances. In his submission, it would not be useful to look at the documents in isolation, rather each applicant’s case would require separate analysis involving determination of what documents were supplied to the relevant doctor and hospital, what the doctor and hospital had been told, what the doctor and the hospital knew or should have known, and so on; see Vasram v AMP Life Limited [2000] FCA 1676 at [14], Murphy v Overton Investments Pty Ltd [1999] FCA 1123 at [80].

Paragraphs 18, 19, 22, 23 and 24 (content of warning)

34                  Paragraphs 18, 19, 23, and 24 make certain allegations about the propensity of a Filshie applicator to go out of calibration, a fact that would appear to be relevant to the content of any necessary warning. The propositions expressed in 18, 19 and 23 are so vague that it would be difficult, if not impossible, to determine what would be required to establish their truth. In any event, they are subsumed by paragraph 24. This paragraph alleges that it is not possible to predict the precise circumstances of use or misuse which will cause a particular applicator to go out of calibration.  If this statement is correct. there would be no difficulty in establishing the necessary warning, since only one warning would be possible, namely that each applicator should be checked immediately before use. The issue raised by paragraph 24 is both relevant and common.

35                  Paragraph 22 alleges that there was no practical likelihood that an accurate record of the number of uses of an applicator’s opening and closing mechanisms would be kept.  Given the claim that, had such records been kept, they would not have been useful (paragraphs 19 and 24), paragraph 22 does not raise any issue that ought to be addressed separately.

Paragraph 21 (use of Filshie applicators)

36                  In paragraph 21 of the statement of claim, it is alleged that Filshie applicators are likely to be handled by more than one person, whether in cleaning or in surgical procedures, and that this was intended by Femcare.  The way in which a Filshie applicator is treated and used will almost certainly vary from hospital to hospital. For example, different hospitals may have different cleaning regimes and different numbers of people handling their applicators. One hospital’s applicators may be subject to more intensive use than another’s because of a greater caseload or because it has fewer applicators. Thus the use and handling of Filshie applicators is not a common issue and paragraph 21 does not raise any common issues of law or fact. The knowledge or “intention” of Femcare is discussed in [39] below.

Paragraphs 26, 34, 37 and 38 (importance of checking calibration and keeping records of use)

37                  These paragraphs set out certain inferences that the applicant is asking the Court to draw from other paragraphs, some of which involve common issues and others of which do not. These inferences are not separate common issues. In addition, the pleadings are themselves vague (perhaps necessarily so) using relative terms such as “reliable”, “safe”, “essential” and “important”. The use of relative terms means that, if these allegations were established in relation to the applicant, it would be difficult to apply those findings when considering the cases of the other group members.

Paragraphs 27, 28, 31 and 32 (availability of means of checking calibration of Filshie applicator)

38                  The applicant has alleged that Femcare had a means of checking whether a Filshie applicator was out of calibration since 1982 but only supplied such a device to hospitals after August 1999. Paragraph 50 of the affidavit of Kevin William Broadley sworn 11 October 2000 indicates that Femcare will seek to prove that it first developed an “onsite” gauge for checking whether a Filshie applicator was in calibration in 1999. Paragraphs 27, 28, 31 and 32 may give rise to common issues, including whether Femcare had developed a similar product earlier and, if not, what product development would have been “reasonable” for it to undertake in the circumstances.

Paragraphs 16, 35, 36, 66, 67, 97, 105 and 114 (knowledge of respondents)

39                  These pleadings allege that Femcare and, in two cases, Endovasive, was aware of (or ought to have been aware of) certain facts, including the content of manuals and other information supplied to hospitals, the importance of a Filshie applicator being in calibration, the manner in which Filshie applicators would be handled and the fact that the calibration of Filshie applicators was not checked regularly. The knowledge of the two respondents is a common issue relevant to the reasonable foreseeability of damage in the negligence claim, and therefore also to the existence and scope of any duty of care. It cannot be relevant to the claim under s 52 of the Trade Practices Act 1974 (Cth) because whether conduct is misleading or deceptive is to be judged objectively.

Paragraph 39 (Filshie applicators not known to have been regularly checked should not be used)

40                  This paragraph suffers from the same defect as paragraph 38 (see [37] above) namely that it uses vague and relative language. Based on other allegations relating to the importance of calibration, the benefits of proper maintenance and the importance of records, I have assumed it means that failure by the respondents to ensure that Filshie applicators are checked regularly and maintenance records are kept would be negligent. If that is its meaning, paragraph 39 is really a legal conclusion drawn from facts pleaded elsewhere, some of which involve common issues and others of which do not. It does not itself raise a separate common issue.

Paragraphs 42, 47 and 52 (same Filshie applicators supplied over time)

41                  These paragraphs allege that, while different manuals were supplied at different times, the Filshie applicators supplied were similar in appearance and functionality. I accept that the issue is common, although it seems quite minor and relatively simple to determine.

Paragraphs 45, 50, 55, 94, 96, 102, 104, 111, 113, 143(b) and 145(b) (information given to hospitals and doctors)

42                  Paragraphs 45, 50 and 55 refer to “existing or prospective users” which, I assume, is a reference to the surgeons performing the sterilisation procedures or to the hospitals in which the equipment was used. The pleadings relate to the failure of the respondents and others to give the warnings discussed in [14] to [18] above. Except to the extent that some information is provided to hospitals and doctors in manuals, promotional material and standard form letters (see [32] – [33] above), this is not a common issue. It is quite possible that distributors and subdistributors gave different information to different hospitals and doctors in face to face meetings. Further, the circumstances in which manuals and other material were provided to hospitals and doctors may be different so as to give rise to different representations; Murphy v Overton Investments Pty Ltd [1999] FCA 689 at [15].

Paragraphs 60 to 63 (publicity)

43                  Paragraph 60 is vague, alleging that there was publicity surrounding certain failed sterilisation procedures performed at the John Hunter Hospital in Newcastle. More detail is provided in paragraphs 61, 62 and 63. Essentially, it is alleged that a safety alert was issued by Endovasive, the Royal Australian College of Obstetricians and Gynaecologists issued a statement to its members and the respondents commenced sending regular service reminders to hospitals and doctors. This publicity is relevant to the claims of Group B Members because it is alleged that the publicity surrounding the John Hunter incidents led to their undergoing further medical treatment, taking additional precautions to avoid pregnancy and/or suffering distress. Further, the existence and content of the publicity is a common issue.

Paragraph 65 (relevant hospitals and doctors failed to have Filshie applicators serviced regularly)

44                  This is not a common issue; the allegation would require separate evidence in relation to each relevant hospital. There may, however, be subgroups of Group A Members and Group B Members who had their operations performed at the same hospital or by the same doctor. In this case, it may be possible to consider the claims of certain subgroups of applicants together under s 33Q(2).The benefit of such a procedure would depend on the extent to which different group members were treated at the same hospital or by the same doctor (depending on whether the applicator used was owned by the hospital or the doctor). It seems to me that more work would be required to ascertain the identities of all group members, the identity of the relevant hospital and doctor and which of them owned the applicator used in the procedure than would be required to ascertain whether that owner (being a doctor or a hospital) had their applicators serviced regularly. It is therefore difficult to assess the benefit of determining this issue for subgroups established under s 33Q(2).

Paragraphs 95, 103, 112, 143(b) and 145(b) (warnings not given to distributors)

45                  These paragraphs allege that Femcare did not pass on the warnings outlined above at [14] – [18] to the Australian distributors (including Endovasive) or instruct distributors to communicate the warnings to subdistributors, hospitals and doctors. The issue is clearly relevant. If there is a duty of care obliging Femcare to ensure that certain warnings are communicated to hospitals and doctors, an issue might arise as to whether it fulfilled that duty by passing the information on to distributors. The information passing between Femcare and the Australian distributors is a common issue. The information passing between the Australian distributors and subdistributors is not a common issue. If, however, if Filshie applicators supplied by the same subdistributor were used in the procedures of a subgroup of group members, it might be possible to make directions pursuant to s 33Q(2). Again, it would be difficult to assess the benefits of such a procedure in the absence of evidence as to the number of subdistributors and the volume of evidence as to what information passed between distributors and subdistributors.

Paragraphs 98, 100, 106, 108, 115 and 117 (reasonable and legitimate expectations of relevant hospitals, doctors and distributors)

46                  The reasonable and legitimate expectations of a particular hospital, doctor or distributor may well depend on their individual experiences and circumstances. In my opinion, these paragraphs do not raise any common issues.

Paragraphs 99, 101, 107, 109, 116, 118, 142 and 144 (existence of duty to give certain warnings to relevant hospitals, doctors and distributors and to take certain steps)

47                  It is well established that a manufacturer or distributor of products may owe a duty of care to the ultimate consumers of those products. Argument, therefore, is more likely to focus on the scope of the duty of care and, in particular, whether it included an obligation to give the warnings referred to in the statement of claim rather than on its existence. The applicant submitted that the kind of warning that would be required would depend on circumstances common to all applicants. That may often be the case; Qantas Airways v Cameron (1996) 66 FCR 246 at 251 ­ 252, 293. However, in this case, the paragraphs that refer to the existence of a duty to warn refer to other paragraphs in the statement of claim that are said to give rise to that duty. Some of those paragraphs relate to “common issues” whereas others relate to circumstances that will vary according to the hospital and doctor used by the particular group member. For that reason, the existence and scope of the duty of care cannot itself be a common issue.

Paragraph 110 (certain statements did not constitute a required warning)

48                  The applicant has alleged that certain statements were made in material provided to every relevant hospital but that these statements did not constitute a regular check warning (see [17] above). Whether or not this is the case is a common issue. However, the absence of such a warning in the material referred to does not mean that the warning was not given.  As noted above, the each hospital and doctor may have received different information.  My comments at [33] above are apposite here.

Paragraphs 119 and 120 (certain representations made to relevant hospitals, doctors and distributors)

49                  It is useful to set out these pleadings in full:

“119.  Further and in the alternative, the First Respondent since 1982 represented to the Relevant Hospitals and Doctors and the Australian Distributors and the Australian Subdistributors that the Filshie Procedure was and would be a safe and effective method of female sterilisation (“the Safety Representation”).

Particulars

The representation was partly express and partly implied. To the extent that it was express it was in writing contained in various promotional material and product literature prepared and distributed by the First Respondent and Australian Distributors other than the Second Respondent from about 1982 until November 1993 and by the First and Second Respondents from about November 1993. To the extent that it was implied, the implication derives from the fact of sale and promotion of instruments and a procedure for use in a surgical operation and from the nature and context of the writing referred to above.

120.          Further and in the alternative, since November 1993 the Second Respondent has made the Safety Representation to the Relevant Doctors and Hospitals and to Australian Subdistributors.”

50                  It is clear that the allegations in these paragraphs are based on evidence that is common to all applicants, in that the representation is said to arise from materials provided to all distributors, hospitals and doctors and from the fact of sale, which is common to all relevant hospitals and doctors. However, the respondent’s case may not be so limited. For example, the respondents might seek to argue that, in relation to particular hospitals, the implication that might ordinarily arise from the promotional material and manuals cannot be made because of the circumstances of the sale of Filshie equipment to that hospital. Accordingly, this is not a common issue.

Paragraphs 121 to 134 (certain conduct misleading or deceptive and certain statements inaccurate)

51                  These pleadings refer to allegations made earlier in the statement of claim that certain warnings were not given and that certain representations were made. On the basis of these allegations, it was said that the respondents’ conduct was misleading or deceptive and that certain statements were not accurate. As noted above, however, the “conduct” in relation to each hospital or doctor could be different. Certain comments may have been made to one doctor and not to another or before some of the relevant procedures and after others. Whether or not such conduct is misleading or deceptive is not a common issue. However, determining whether specific conduct alleged to have occurred in all cases was misleading or deceptive would be a common issue.

Paragraph 135 (aiding and abetting)

52                  Whether or not Femcare “aided and abetted, counselled or procured, induced or was directly or indirectly knowingly concerned in” the alleged wrongful conduct of Endovasive is not a common issue. It is impossible to consider the issue prior to determining what conduct Endovasive engaged in and whether that conduct was unlawful, neither of which can be resolved as a common issue.

Paragraphs 136 to 141 (certain conduct is in trade and commerce)

53                  These paragraphs raise common issues. Mr Walker SC conceded that Femcare would dispute whether it carries on business in Australia.

Paragraph 29 (no means of checking Filshie applicator is in calibration available to hospitals and doctors)

54                  This cannot be a common issue; different doctors and hospitals may have had different means at their disposal to check whether a Filshie applicator was in calibration. Some hospitals may have employed technicians or had an arrangement with an external entity with a means of checking the calibration of a Filshie applicator. There is some suggestion in the affidavit of Kevin William Broadley sworn 11 October 2000 that Femcare may argue that the fact that a Filshie applicator was out of calibration would be apparent to the surgeon during the sterilisation operation. The extent to which this is possible might be a common issue but might also depend on the different surgical procedures employed and the experience of the relevant surgeon. In any event, paragraph 29 does not raise this issue.

Paragraph 146(a) (access to “onsite” gauge)

55                  This cannot be a common issue. If an “onsite” gauge had been developed and made available for sale, it is not obvious that each of the relevant hospitals and doctors would have had access to it. Whether or not particular hospitals would have purchased or leased such a device might depend on that hospital’s budget and purchasing policy as well as on whether or not they would have felt that it was necessary. In particular, certain hospitals may have concluded that the risk of a Filshie applicator being out of calibration was small or could be reduced by use of good surgical technique, such as checking to see whether the clip has been properly applied during the operation.

Paragraphs 143(a) and 145(a) (failure to design and make available an onsite gauge is breach of duty of care)

56                  This is not a common issue; whether the failure to design and make available an onsite gauge is a breach of the respondents’ duty of care to hospitals, doctors or patients will depend, inter alia, on whether the relevant hospitals and doctors otherwise had access to an onsite gauge or some other means of checking the calibration and effective operation of applicators.

Paragraphs 147, 148, 151, 152, 154, 155, 157 and 158 (lost chance to avoid loss and damage, increased risk of loss and damage

57                  This is not a common issue. Whether or not Femcare’s failure to do certain things resulted in a group member losing a chance to avoid loss and damage will depend on the circumstances of that group member. For example, it might be the case that the Filshie clip was attached to the wrong anatomical structure, making it irrelevant whether or not the applicator was in calibration.

Paragraph 149 (if warnings had been given, an onsite gauge would have been developed)

58                  It is alleged that if hospitals and doctors had been warned of the propensity of Filshie applicators to lose calibration and of the consequences of this occurring, the Filshie equipment could not have been marketed without the provision of an onsite gauge. Thus, the Court is invited to conclude that a gauge would have been developed, that the calibration of each applicator would have been checked immediately before use and the losses of the applicant and the group members would not have resulted. This argument is fundamentally flawed. It assumes that the losses claimed by the applicant and group members have been caused by the use of Filshie applicators that were out of calibration. Yet that is the very proposition that the applicant needs to establish in this proceeding.

Common question of law in relation to Group A Members – damages for birth of healthy child

59                  A common question of law on the material will be the measure of damages, in the case of Group A Members, for the unwanted birth of a healthy child. However, as Mr Walker SC submitted, a Pt IVA proceeding is not required to ensure that this question is only determined once. As soon as it is determined with respect to the claim of any Group A Member, that determination will create a precedent by which the claims of the other Group A Members can be assessed.

Section 33c

60                  As the above analysis makes clear, there are issues that are common to the claims of group members.  The question then is whether the requirement in s 33C that the common issues be “substantial” has been met. In Wong v Silkfield Pty Ltd (1999) 199 CLR 255, the High Court held that an issue is “substantial” if it is “real” or “of substance” or if the allegations involved are “serious and significant”.  The Court stated at [30] that:

“[i]t is not to the point that, in the final resolution of the litigation, this might not prove to be the ‘major’ or ‘core’ issue. It was not necessary to show that litigation of this common issue would be likely to resolve wholly, or to any significant degree, the claims of all group members.”

61                  As a result of the High Court’s interpretation, the requirement in s 33C is much easier to meet than had previously been thought. I have no doubt that many of the issues that I have found to be common to group members are substantial in this sense (for example, see [32] – [33], [34], [38], [39], [51] and [53]).

62                  As I have found that there are substantial common issues in the claims of group members, it follows that the proceeding was properly commenced under Pt IVA. I therefore reject Endovasive’s claim that the proceeding should be dismissed for failure to meet the criteria set out in s 33C of the Act

issues of law and fact that are not common

63                  In addition to the common issues discussed above, there are substantial and very significant issues that are not common to Group A Members or Group B Members. Some of these issues have already been identified in the course of rejecting the applicant’s assertion that they are common. Some other issues that will need to be separately considered in respect of each group member’s claim are:

·               whether the woman is a group member (and whether she is in group A or B);

·               whether the Filshie applicator used in the woman’s operation can be identified;

·               whether the Filshie applicator used in the woman’s operation was regularly serviced;

·               whether the Filshie applicator used in the woman’s operation was out of calibration at the time of the procedure and, if so, whether it was sufficiently out of calibration to cause the procedure to fail (taking into account the woman’s biology and blood pressure);

·               whether the surgeon who carried out the procedure was aware of the alleged propensity of Filshie applicators to lose calibration;

·               whether the woman’s pregnancy (in the case of Group A) arose as the result of an improperly calibrated applicator as opposed to, for example, surgeon error;

·               whether the woman would be in a different situation had the warnings been given (for example, the doctor may already have known of these matters or may have ignored any warning given);

·               whether the relevant hospital and doctor relied on any misrepresentations made; and

·               what is the amount of any loss and damages.

64                  As the applicant correctly submitted, the existence of non-common issues does not preclude the proceedings continuing under Pt IVA of the Act. The extent and significance of non-common issues is, however, a factor to consider when deciding whether to make an order under s 33N.

application for orders under s 33N of the act.

65                  The respondents moved the Court for orders, in exercise of its discretion under s 33N of the Act, that the proceeding not continue as a representative proceeding under Pt IVA. The respondents submitted that this is a case to which all four paragraphs of s 33N apply, although they relied particularly on s33N(1)(c), which applies where representative proceedings will not provide an efficient and effective means of dealing with the claims of group members.  They contended that there is no possibility of anything like the bulk of the important issues between group members and the respondents being determined in representative proceedings. 

Usefulness of separate consideration of common issues identified above

66                  In [27] – [59], I have identified which of the issues identified in the statement of claim as involving substantial common issues of law or fact actually do so. The issues that I have identified as having the potential to be determined separately are:

(a)                the content of manuals and promotional material generally supplied to hospitals ([32] – [33]);

(b)               the content of any necessary warning ([34]);

(c)                whether an onsite gauge had or should have been developed in 1982 ([38]);

(d)               the knowledge of the two respondents ([39]);

(e)                the Filshie applicators that were supplied over a period of time were similar in appearance and functionality ([41]);

(f)                 the existence and content of the publicity following the “John Hunter incidents” ([43]);

(g)                information passing between Femcare and Endovasive (and previous exclusive Australian distributors) ([45]);

(h)                whether certain alleged conduct was misleading or deceptive ([51]); and

(i)                  whether Femcare was carrying on business in Australia ([53]).

67                  The difficulty in assessing issue (a) in a representative proceeding is that the applicant’s case is primarily about omission rather than culpable action. This failure or omission is said to have a number of legal consequences:

(a)                it was misleading and deceptive conduct;

(b)               because of the omission, a representation made as to safety was inaccurate (and therefore misleading and deceptive);

(c)                it gave rise to breaches of the duty of care owed by the respondents to the group members;

(d)               it was causally connected to loss and damage suffered by group members.

68                  The difficulty with the argument that an omission in particular “common” documents has the above legal consequences is the absence of a legal obligation to do that which has been omitted by a specific time or in a specific manner. In this way, it is different from positive actions or representations that could have immediate legal consequences. The fact that the allegations are based on an omission severely limits the value of any finding made in respect of the manuals and promotional material generally supplied (see [32] – [33] above). 

69                  There would seem to be little to gain in having a separate representative proceeding to establish the content of any necessary warning (issue (b)) where the necessity of such a warning is not a common issue and where it is not clear that such a warning will ever be necessary. On the other hand, if a warning were required and the applicant is successful in establishing that no warning was given, the applicant may not need to advert to content.

70                  Issue (c) is relevant to the scope of any duty of care owed by the respondents. For example, if an onsite gauge had, or could easily have been, developed, failure to make that gauge available must be in breach of Femcare’s duty of care. This will not be the case if no such gauge could have been developed before 1999. Issue (d) is also relevant to the scope of any duty of care owed. The difficulty is that the scope of the duty of care cannot be determined by reference solely to issues (c) and (d) and other relevant issues. In this context, the resolution of issues (c) and (d) in a separate representative proceeding would not allow the Court to make any final conclusions. In the case of issue (c), a finding is likely to be in the form of a statement as to the difficulty of developing an onsite gauge in or about 1982. In the case of issue (d), a finding is likely to be a list of relevant things that the respondents knew, ought to have known or did not know. In moving from these findings to a conclusion on the scope of the duty of care, it is likely that the evidence itself would have to be reconsidered and that submissions would be made on the meaning of the findings already made. This is not an efficient means of assessing the scope of any duty of care. The situation in relation to issue (g) is similar. That is, it goes to the issue of whether or not any duty of care requiring that certain matters be communicated by Femcare to the Australian distributor (for the time being) was breached, but is not itself conclusive (for example, information may have been provided by Femcare directly to some hospitals or doctors).

71                  Issues (e) and (f) are unlikely to involve much, if any, controversial evidence.

72                  Determining issue (h) separately from the question of whether actual conduct (including conduct that was not common) was misleading or deceptive would not, in my opinion, be an efficient way to deal with the claims of group members. The applicant submits that, in considering whether or not certain conduct is misleading or deceptive, one need not consider the special knowledge of the people targeted; Campomar Sociedad, Limitada v Nike International Ltd (2000) 169 ALR 677 at 704 [103], Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 at 467. Nevertheless, in this case, the difficulty faced by the applicant is not the prior knowledge of the hospitals and doctors but the fact that different conduct may have been directed towards different hospitals and doctors (that is, they may have received different information).

73                  Thus issue (i) is the only issue where there may be some benefit in having a single determination made in a representative proceeding. However, given that this is the only such issue, it would be more efficiently dealt with by alternative case management procedures, such as that referred to in [78] below.

Other relevant factors

74                  The applicant submitted that it was part of the policy of Pt IVA of the Act that respondents should not benefit from the fact that individual group members might not consider it worth their while to commence proceedings on their own initiative; Ryan v Great Lakes Council (1998) 155 ALR 447 at 456, ACCC v Giraffe World Australia Pty Ltd (1998) 84 FCR 512 at 534. While undoubtedly true, this is just one aspect of a complex policy. The provision in s 33N for the Court to order that a proceeding not continue under Pt IVA “where it is satisfied that it is in the interests of justice to do so” recognises that there may be circumstances in which, despite the existence of substantial common issues, the representative proceeding process is not appropriate. 

75                  The respondents submitted that they might be disadvantaged by the fact that the surgeons who operated on each group member and hospitals where the operations took place would not be joined to the proceeding, either as a respondent or as a cross-respondent. They also submitted that people might “be lulled into a false sense of security” and lose their right to commence proceedings against the surgeon involved (or the hospital). Section 33ZE(1) of the Act may not be sufficient to preserve such claims, in particular in circumstances where a potential plaintiff is not truly a group member. The applicant submitted in response that it was a matter for individual group members and their legal advisers to decide whether to commence separate proceedings against their doctors. In any event it was submitted that if common issues are decided in the applicant’s favour, the respondents would retain a right of contribution against the doctor concerned if that doctor was also at fault.

76                  Despite the possibility of the respondents claiming contribution from surgeons in any case involving joint negligence, proceeding in this manner does not lend itself to efficient resolution of the claims of the group members. Further, the doctor would not be bound by findings of fact made in the main proceedings and it is possible that, following the doctor’s evidence and submissions, inconsistent findings of fact would be made.

77                  Mr Walker SC submitted that one cannot determine whether there was a duty to warn in any individual case because the existence and content of the duty to warn depends upon the putative recipient of the warning.  Whether or not that is strictly accurate, it is clear that no claim against the respondents based on their failure to warn could succeed without assessing the relevant knowledge of the medical practitioner who carried out the procedure at that time. As Mr Walker SC reminded the Court, the group members’ claims are ultimately directed to establishing responsibility for their alleged losses and compensation for those losses. They are not directed towards settling in the abstract propositions about failures to warn and the making of representations. In assessing the medical practitioner’s knowledge, it would be necessary to consider, not only information provided to the individual doctor, but also information provided by the respondents more generally. It may be that this involves both issues of causation as well as of duty but, in any event, the result is that the respondents’ promotional material would need to be considered in the context of in each individual case, even if it had already been considered in a representative proceeding.

Conclusion and orders

78                  Having reviewed the evidence and the submissions made by both parties, I have concluded that the representative proceeding will not provide an efficient and effective means of dealing with the claims of the group members and that, in the interests of justice, it should not continue under Pt IVA of the Act. Although there are issues of substance common to the claims of group members, in the main, they are either issues that are stated at such a level of generality that their resolution will not materially advance the determination of the claims of individual group members and/or they would need to be revisited in the context of each group member’s claim.  In addition, the intertwining of the common and individual issues is such that I also believe that the costs of continuing the proceeding under Pt IVA are likely to exceed the costs that would be incurred by dealing with the claims of group members individually. There are established techniques of case management by which these costs can be minimised, for example by ensuring that all individual claims are dealt with by the same judge. It may be that, as the respondents suggested, those claims could dealt with more cost effectively in another jurisdiction. 

79                  My conclusion that the proceeding should not continue under Pt IVA makes it unnecessary to consider Endovasive’s contention that the mandatory requirements of s 33H have not been met.

80                  I propose to order that this proceeding no longer continue under Pt IVA of the Act. I will stand the proceeding over for further directions on a date to be advised by my associate. Both respondents have claimed costs but, as there has been no argument on this issue, I do not propose to make any order as to costs at this time. I will allow all parties to make written submissions as to costs, such submissions to be filed no later than 2 November 2001. If any

party wishes to be heard on the matter of costs, that party should contact my associate to arrange a suitable date.

Associate:

Dated:              19 October 2001