FEDERAL COURT OF AUSTRALIA

Pharm-a-Care Laboratories Pty Ltd v Commonwealth of Australia (No 3)

[2010] FCA 361

THE COURT ORDERS THAT:

1.                  The parties are to bring in Short Minutes of Orders which give effect to these reasons within seven days.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

1                     On 23 December 2008 there was filed in this Court an Application expressed to be an “Application Under Part IVA of the Federal Court of Australia Act 1976”. A Statement of Claim was also filed on that date.

2                     All Respondents have from the outset contended that the Statement of Claim suffers from a number of deficiencies. Notices of Motion were filed in April 2009 seeking orders that the Statement of Claim be struck out pursuant to O 11 r 16 of the Federal Court Rules. Further or alternative orders were also sought by the Second to Sixth Respondents that the proceedings as against the Fifth and Sixth Respondents should be dismissed pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth) (“the 1976 Act”).

3                     On 23 July 2009 an Amended Statement of Claim was filed. Those amendments were filed pursuant to O 13 r 3(1) of the Federal Court Rules which permits an amendment “without leave [of] any pleading … once at any time before the pleadings are closed”. By reason of O 1 r 4 and the definition of a “pleading”, an “application” does not fall within O 13 r 3(1): Giraffe World Australia Pty Ltd v Australian Competition and Consumer Commission [1998] FCA 1560, (1999) ATPR 41-669. Rule 3(1) is, perhaps, but a recognition of the reality that a draftsman might wish to revise what was previously thought to be a satisfactory pleading. The rule also recognises the absence of any prejudice to a respondent by such amendment at the preliminary stage of a proceeding. Any further amendment, however, requires leave. In the present proceeding, the Respondents all contend that the amendments made to the Statement of Claim fail to address their concerns.

4                     The position of the First Respondent, the Commonwealth of Australia, changed over time. It has always questioned, and continues to question, whether the proceeding has properly been brought under Part IVA as a “representative proceeding”. It also has always questioned the potential liability of the Commonwealth for the torts of misfeasance in public office and negligence as pleaded. However, without abandoning its position previously expressed, it is now content to have questions as to liability for misfeasance and negligence resolved at a final hearing.

5                     The position advanced on behalf of the individual Respondents was always, to some extent, different from that of the Commonwealth – and even different one from the other. Those Respondents have also sought to have the proceeding or part of the proceeding dismissed or struck out.

6                     Although the Commonwealth was content to have its challenges to the pleadings stood over for resolution at the final hearing, the Second to Sixth Respondents (and in particular the Second, Fifth and Sixth Respondents) wished for their Motion to be resolved in advance of the final hearing.

7                     At the outset of the hearing of that Motion on 15 March 2010 the Applicant provided an Amended Notice of Motion annexing an Amended Application Under Part IVA of the Federal Court of Australia Act 1976 and a Further Amended Statement of Claim.

8                     With the concurrence of all parties, a number of issues have been left for resolution at the final hearing and are not in need of present resolution. These outstanding issues, in very summary form, include the following:

·                    whether or not one or other of the Second to Sixth Respondents are “public officers” for the purposes of the tort of misfeasance in a public office;

·                    to the extent that one or other of the misfeasances sought to be advanced does not involve any exercise of statutory power, whether ss 61 and 64 of the Commonwealth of Australia Constitution Actprovide a sufficient basis for maintaining a cause of action for misfeasance; and

·                    whether the Commonwealth can assume vicarious liability for the conduct of the individual Respondents.

An issue also arises as to the role that:

·                    the “independent discretion rule” may have to play in denying the liability of the Commonwealth.

All of the claims for negligence have also been left for resolution at the final hearing.

9                     Again in very summary form, the contentions that are to be presently resolved may be expressed as follows:

·                    do the existing Amended Application and Amended Statement of Claim as filed on 23 July 2009 comply with the mandatory requirements imposed by Part IVA of the 1976 Act?

·                    are the existing pleadings as to misfeasance as against the Second, Fifth and Sixth Respondents adequate to plead misfeasance?

·                    if there are deficiencies in the existing pleadings, should judgment now be entered in favour of the Second, Fifth or Sixth Respondents or should the Applicant be given further leave to amend? and

·                    if leave is to be given, do the further proposed amendments suggested at the outset of the hearing of the Motion on 15 March 2010 adequately address those deficiencies?

If any further amendment is to be permitted, the question as to whether the amendment should date back to the commencement of the proceeding (or from the date upon which the application to further amend was made) was a question agreed to be deferred for resolution at the final hearing.

10                  It is considered that the proceeding has been properly instituted under Part IVA and that no orders should be made pursuant to either O 11 r 16 of the Federal Court Rules or s 31A of the 1976 Act. Limited leave should be granted to the Applicant to further amend its Application and its Amended Statement of Claim substantially in accordance with the drafts proposed on 15 March 2010.

11                  It should also be noted at the outset that all Respondents have to date opposed an order being made that the proceeding be referred to a mediator or arbitrator pursuant to s 53A of the 1976 Act. That opposition, it is considered, has to date been well-founded. Until the fate of the Motions was resolved, the ambit of any mediation or arbitration would remain uncertain. But, given the orders to be now made, it is considered that the time for mediation will have arrived.

Strike Out or Dismissal?

12                  None of the principles relevant to either the discretion conferred by s 31A of the 1976 Act or that conferred by O 11 r 16 of the Federal Court Rules were in issue. Nor was there dispute as to the circumstances in which one discretionary power – as opposed to the other – should be exercised.

13                  Those principles should nevertheless be briefly mentioned.

14                  Section 31A provides as follows:

Summary judgment

(1)   The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:

(a)   the first party is prosecuting the proceeding or that part of the proceeding; and

(b)   the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding.

(2)   The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:

(a)   the first party is defending the proceeding or that part of the proceeding; and

(b)   the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.

(3)   For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:

(a)   hopeless; or

(b)   bound to fail;

for it to have no reasonable prospect of success.

(4)   This section does not limit any powers that the Court has apart from this section.

(5)   This section does not apply to criminal proceedings.

Perhaps curiously by reason of its general application, s 31A was introduced by the Migration Litigation Reform Act 2005 (Cth). It is nevertheless a general provision that is intended to strengthen the power of this Court to enter summary judgment where it is satisfied that there is “no reasonable prospect of success”. It is a section plainly intended to lower the bar for strike outs that was set in Dey v Victorian Railways Commissioners (1948) 78 CLR 62. The effect of s 31A is thus to “soften the test for a successful application for summary judgment”: Kowalski v MMAL Staff Superannuation Fund Pty Ltd [2009] FCAFC 117 at [25], 178 FCR 401 at 408 per Spender, Graham and Gilmour JJ.

15                  Order 11 r 16 provides as follows:

Embarrassment etc

Where a pleading:

(a)   discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading;

(b)   has a tendency to cause prejudice, embarrassment or delay in the proceeding; or is otherwise an abuse of the process of the Court,

the Court may at any stage of the proceeding order that the whole or any part of the pleading be struck out.

The power conferred by rules such as O 11 r 16 to strike out a pleading or part of a pleading, it has been said, will only be exercised in a plain and obvious case: Davis v Commonwealth (1986) 61 ALJR 32 at 35 per Gibbs CJ. It is a power to be exercised with “exceptional caution”: Morton v Vouris (1996) 21 ACSR 497 at 513 per Sackville J.

16                  It should finally be noted that the fundamental difference in the exercise of either power has usefully been summarised by Finkelstein J in Imobilari Pty Ltd v Opes Prime Stockbroking Ltd [2008] FCA 1920, 252 ALR 41 as follows:

[3] The banks seek to have the claims against them either struck out pursuant to O 11 r 16 of the Federal Court Rules or summarily dismissed pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth). Both provisions are procedural vehicles for the summary resolution of claims, in the former case without a trial. Moreover, under both procedures the court may be called upon to consider and resolve questions, even important ones, of law. Nonetheless, there are significant differences between motions for strike out and summary judgment that are sometimes overlooked. It is therefore appropriate to begin with a consideration of those differences and to decide whether, in light of them, O 11 strike out or s 31A summary judgment is the proper vehicle in which to run the arguments.

[4] The fundamental thing to understand about the strike-out rule, which the language of O 11 r 16 itself makes clear, is that the rule is concerned only with the adequacy of the pleading (or to be more precise, the allegations and the causes of action asserted therein) as a matter of law. The rule does not permit or allow consideration of facts or evidence outside the pleadings: … Indeed, as counsel for ANZ … correctly noted in his submissions, the court must, for purposes of deciding the strike-out motion and deciding whether a pleading discloses a reasonable cause of action, assume the truth of the allegations in the statement of claim and draw all inferences in favour of the non-moving party because the question is whether those allegations, even if proved, cannot succeed as a matter of law: …

[5] The United States Supreme Court recently reexamined the standard for a strike-out motion (called a motion to dismiss in the US) in Bell-Atlantic Corp v Twombly (2007) 550 US 544. The Supreme Court reaffirmed that on a strike-out motion the court is required to assume the truth of all allegations. Proceeding on that assumption, the Supreme Court held the only question is whether the allegations are enough to raise the applicant’s right to relief above the speculative level. That is, the allegations must be plausible enough to create a reasonable expectation that discovery will reveal evidence to support the claim. This plausibility test is consistent with the strike-out test expressed by the High Court in General Steel, where Barwick CJ said (112 CLR at 129):

“The test to be applied has been variously expressed; ‘so obviously untenable that it cannot possibly succeed’; ‘manifestly groundless’; ‘so manifestly faulty that it does not admit of argument’; ‘discloses a case which the Court is satisfied cannot succeed’; ‘under no possibility can there be a good cause of action’; ‘be manifest that to allow them’ (the pleadings) ‘to stand would involve useless expense’... . At times the test has been put as high as saying that the case must be so plain and obvious that the court can say at once that the statement of claim, even if proved, cannot succeed; or ‘so manifest on the view of the pleadings, merely reading through them, that it is a case that does not admit of reasonable argument’; ‘so to speak apparent at a glance’.”

[6] In contrast, a s 31A application not only permits, but requires, a consideration of matters outside the pleadings: … The application is, after all, a trial albeit a summary trial. In White Industries Aust Ltd v Federal Commissioner of Taxation (2007) 160 FCR 298 at [50], Lindgren J said that s 31A “is concerned with the bringing and defending of proceedings, not just with pleadings; with substance, not just with form”. That is to say, the “no reasonable prospect of success” standard is designed to test the adequacy of the evidence in support of the allegations, not just the allegations themselves. At the same time, it is important to understand that the court in deciding a motion for summary judgment does not, in testing that evidence, find any facts; rather, the court determines, as a matter of law, whether there are any facts that need to be found such that a trial is required: … To put the point another way (ie in language that perhaps had more resonance in the days when juries were still used in civil cases), the court determines whether there is a real or genuine dispute as to any material fact – whether any reasonable juror could find for the non-moving party on one or more of those material factual issues: … If the answer to this question of law is no, then the judge can and must take the case from the jury and enter judgment accordingly.

[7] Precisely what the summary judgment standard now is and how high (or low) the bar is in light of the reforms ushered in by s 31A was recently a matter of lengthy consideration, and no little dispute, in the Full Court, of which I was a member, in Jefferson Ford Pty Ltd v Ford Motor Company of Australia Limited (2008) 167 FCR 372. One point that clearly emerges from the earlier cases is that the "no reasonable prospect" standard needs no amplification: …The other point that emerges is that it is easier to obtain summary judgment than strike-out because the moving party on a summary judgment application need only show that there is no real dispute of material fact, not that the allegations are implausible or admit of no reasonable argument. Indeed, the summary judgment inquiry does not turn on the pleadings at all because the truth of the pleaded allegations is no longer assumed. Instead, the court must look at the evidence to see if it discloses a cause of action or defence, or whether there is any ambiguity, contradiction, or other divergence with respect to a material fact such as to require a full trial.

[8] Returning to Jefferson Ford, there is one last matter that requires mention in the present context. It has long been settled law that a judgment in respect of a strike-out motion, regardless of in whose favour made and regardless of whether it is on all or less than all claims, is an interlocutory order from which no appeal may be taken without leave: Re Luck (2003) 203 ALR 1, 4. With respect to summary judgment, in contrast, what emerges from the fractured reasons for decision in Jefferson Ford is a majority view that, in some cases, an order granting summary judgment is final and appellable as of right.

See also: Windsor v Sydney Medical Service Co-operative Ltd (No 2) [2009] FCA 704 at [12] per Edmonds J.

17                  It should perhaps be further noted that the discretionary power conferred by O 11 r 16 to strike out pleadings is also different to the power conferred by O 20 r 2 to stay or dismiss proceedings: White Industries Aust Ltd v Commissioner of Taxation [2007] FCA 511, 160 FCR 298. Lindgren J there observed:

[47] The central concern of both O 20, r 2(1)(a) and s 31A is different from that of O 11, r 16, which empowers the Court to strike out pleadings. For example, evidence may disclose that a person has or may have a “reasonable cause of action” or “reasonable prospects of success”, yet the person’s pleading does not disclose this. In such a case O 11, r 16 empowers the Court to strike out the pleading but O 20 r 2(1)(a) would not empower the Court to order a stay or dismissal, and s 31A(2) would not empower the Court to give judgment for the respondent against the applicant. A failure after ample opportunity to plead a reasonable cause of action may suggest that none exists and therefore that the applicant has no reasonable prospects of success, but the existence of a reasonable cause of action and the pleading of a reasonable cause of action remain distinct concepts.

[48] Finally, it should be noted that “pleading” is defined in O 1 r 4 of the Rules as not including an application, notice of motion or affidavit. Thus, O 11, r 16 does not permit the striking out of an application. Indeed, the striking out, as distinct from the dismissal, of an application, would be misconceived, as the continuation of a proceeding depends upon the existence of an application.

18                  Submissions as to the issues now to be resolved were confined in the present proceeding to the pleadings alone.

The Background Facts — As Presently Pleaded

19                  The Amended Statement of Claim as filed on 23 July 2009 is the latest in a series. It has been preceded by a number of earlier versions or drafts which have been circulated between the parties.

20                  As presently pleaded it is a document in excess of 130 pages.

21                  Notwithstanding its length, the central allegations are within a narrow compass.

22                  The Applicant, Pharm-A-Care Laboratories Pty Ltd, is a corporation engaged in the business of arranging for the manufacture and supply of therapeutic goods. It seeks to bring the present proceeding as a representative proceeding pursuant to Part IVA of the 1976 Act. Loss is claimed to have been suffered by both the Applicant and other “Group Members” that is said to have been occasioned by regulatory action taken as against Pan Pharmaceuticals Ltd (“Pan Pharmaceuticals”).

23                  Pan Pharmaceuticals is a manufacturer of therapeutic goods licensed in accordance with the Therapeutic Goods Act 1989 (Cth) (“Therapeutic Goods Act”). In the financial year ending 30 June 2002 it had approximately 3,000 products listed in the registerknown as the Australian Register of Therapeutic Products. That register is required to be maintained under s 9A(1) of the Therapeutic Goods Act.

24                  It is alleged that from at least 2000 to April 2003 the Therapeutic Goods Administration had established practices and standard operating procedures with respect to various matters including the conduct of audits and the exercise of power under the Therapeutic Goods Act. The Therapeutic Goods Administration is said to be “a division or unit within the Department of Health and Ageing”.

25                  On 30 April 2002 and 1 May 2002 the Therapeutic Goods Administration by its officers conducted an audit of the manufacturing processes and premises of Pan Pharmaceuticals. Further audits were undertaken in January and February 2003. A search warrant was executed on 13 February 2003.

26                  By 20 March 2003 a decision was made to suspend the licence of Pan Pharmaceuticals with 28 days’ notice. But the Therapeutic Goods Administration did not then inform Pan Pharmaceuticals of this decision.

27                  On or about 26-27 March 2003 a meeting was apparently held at which officers of the Therapeutic Goods Administration agreed on what is said to be a “New Strategy” for dealing with Pan Pharmaceuticals.

28                  Between 7 and 14 April 2003 a further audit of Pan Pharmaceuticals was undertaken.

29                  On 23 April 2003 a variety of decisions and other conduct is said to have taken place. Decisions said to have been taken include a decision to suspend the licence of Pan Pharmaceuticals and a decision to cancel the registration of all therapeutic goods manufactured by Pan Pharmaceuticals.Decisions are also said to have been made to impose a condition on the registration or listing of all products manufactured by Pan Pharmaceuticals. All of what are described as “Pan Sponsors” were said to have been “strongly encourage[d]” to immediately undertake a voluntary safety related recall of all batches of products manufactured since 1 May 2002.

30                  The next date which assumes importance is 28 April 2003. On that date a further meeting was held. The Applicant claimsthat notices were then issued giving effect to the decision to suspend the licence and to issue the cancellation and recall notice. Advertisements were placed in newspapers and on the website of the Therapeutic Goods Administration from 28 April 2003 advising consumers of various matters, including advice that none of the products manufactured by Pan Pharmaceuticals since 1 May 2002 were safe to be consumed. A warning was given to consumers that “consuming any such Pan products would create a risk of death, serious illness or serious injury”.

31                  The Applicant claims that the “New Strategy” involved withholding the findings or results of the February and April audits and sought to “go for the jugular” of Pan Pharmaceuticals.

32                  Various purposes are said to have motivated those involved in taking such action.

The Therapeutic Goods Act

33                  It is prudent to make some brief reference to the Therapeutic Goods Act. Many of the steps taken by one or other of the individual Respondents to the present proceeding find their source in this Act. Other steps cannot be as immediately sourced back to the Act.

34                  The objects of the Act are essentially set forth in s 4(1) as follows:

Objects of Act

(1)   The objects of this Act are to do the following, so far as the Constitution permits:

(a)   provide for the establishment and maintenance of a national system of controls relating to the quality, safety, efficacy and timely availability of therapeutic goods that are:

(i)    used in Australia, whether produced in Australia or elsewhere; or

(ii)   exported from Australia;

(b)   to provide a framework for the States and Territories to adopt a uniform approach to control the availability and accessibility, and ensure the safe handling, of poisons in Australia.

The Act, it may be noted, forms part of the means whereby therapeutic goods are regulated in Australiaand is complemented by State and Territory legislation: Roche Products Pty Ltd v National Drugs and Poisons Schedule Committee [2007] FCA 1352 at [8], 163 FCR 451 at 454. In Hui v Lane [2003] SASC 401, Gray J helpfully reviewed the scheme of the Act as follows:

[33] The Therapeutic Goods Act provides for the establishment and maintenance of a national system of controls relating to the quality, safety and efficacy of therapeutic goods. It covers therapeutic goods supplied in Australia whether those goods are produced in Australia or elsewhere or are exported from Australia. The legislation was intended to strengthen the then existing Commonwealth legislative scheme and provide added protection to consumers of therapeutic goods and to assist Australian industry both locally and internationally.

…

[35] Ensuring the quality, safety, efficacy and timely availability of therapeutic goods is the core purpose of the Act. A system of controls has been provided. …

[36] The Therapeutic Goods Act seeks to regulate the conduct of persons having control of therapeutic goods at any particular time. The Act regulates the conduct of manufacturers, importers, exporters and suppliers.

…

[38] …The national control of therapeutic goods is effected through the determination of standards, the establishment of an Australian Register of therapeutic goods which have been approved for import, export and supply and the licensing of Australian manufacturers of therapeutic goods. The central control mechanism is the register. The register consists of two parts, registered goods and listed goods. Registered goods are those which require an evaluation of their quality, safety and effectiveness before being approved. Listed goods are those of a less hazardous nature which require an assessment of their quality and compliance with any official standard or other specific requirement.

[39] The Therapeutic Goods Act includes three major elements each of which are considered by the World Health Organisation to be necessary for the effective regulation of therapeutic goods. They are a pre-market assessment of products for human use, an assurance that good practices are followed in the manufacture of therapeutic products for human use and a set of standards to be complied with for therapeutic goods for human and animal use. These requirements are mirrored in legislation in European countries, Britain, the United States, Japan and Canada. It is said that the Act provides a level of regulation recognised internationally as necessary to control therapeutic goods. The introduction of this legislation has brought Australia into line with the levels of product assurances exercised and required by major trading partners.

See also Debelle J at [10].

35                  The “Secretary” is defined in s 3 as being “the Secretary to the Department”. Section 57(1) permits the Secretary to delegate to “an officer of the Department … all or any of his or her powers and functions under this Act”.

36                  The sections of the Act which assume some degree of prominence in the proposed Amended Statement of Claim are ss 28, 30 and 41. Section 28 deals with the conditions of registration or listing and is one of the central means whereby the objects of the Act are sought to be achieved. Section 28 and related provisions regarding the Register have recently been reviewed by Jessup J in Peterson v Merck Sharpe & Dohme (Aust) Pty Ltd [2010] FCA 180 at [202] to [205].

A Representative Proceeding?

37                  Perhaps in recognition of deficiencies in the existing Application and the Amended Statement of Claim, leave was sought by the Applicant at the outset of the hearing on 15 March 2010 to file an Amended Application under Part IVA of the Federal Court of Australia Act 1976 (Cth) and to further amend its existing Amended Statement of Claim as filed in July 2009.

38                  Part IVAdeals with what are there defined as “Representative Proceedings”. In addition to the terms of Part IVA, reference should also be made to O 73 of the Federal Court Rules which also deals with representative proceedings.

39                  Section 33A of the 1976 Act defines a “representative proceeding” as a proceeding commenced under s 33C. Section 33C provides as follows:

Commencement of proceeding

(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 or omissions of the respondent done or omitted to be done in relation to individual group members.

The section is concerned with the commencement of litigation using the procedures provided for in Part IVA and is not concerned with the subsequent conduct of such a proceeding: Wong v Silkfield Pty Ltd [1999] HCA 48 at [26], 199 CLR 255 at 266 per Gleeson CJ, McHugh, Gummow, Kirby and Callinan JJ.

40                  When directing attention to Part IVA and s 33C in particular, Justice Sackville observed in Phillip Morris (Australia) Ltd v Nixon [2000] FCA 229, 170 ALR 487:

Procedural Requirements for Representative Proceedings

[123] It follows from Pt IVA of the Federal Court Act, when construed in context (including the LRC’s report on Grouped Proceedings), that representative proceedings must satisfy a number of procedural requirements.

[124] First, in order for representative proceedings to be properly constituted, the application (or a supporting document) must include the three categories of information specified in s 33H(1). If, for example, the application does not describe or otherwise identify the group members, as required by s 33H(1)(a), the application is liable to be struck out or the proceedings dismissed, pursuant to the court's powers under the FCR specifically preserved by s 33ZG(b).

[125] Secondly, a proceeding is not properly commenced unless it satisfies each of the three threshold requirements specified in s 33C(1). If the proceeding does not comply with these requirements, for example because seven or more persons do not have claims against the same person as required by s 33C(1)(a), the proceeding is liable to be dismissed or the applicants’ pleading struck out. …

[126] Thirdly, as the parties accepted, s 33C(1)(a) requires every applicant and represented party to have a claim against the one respondent or, if there is more than one, against all respondents. This conclusion follows from the language of s 33C(1)(a) itself and is consistent with the approach taken by the LRC in Grouped Proceedings. It is also consistent with the structure of the legislation. …

[127] It follows that s 33C(1)(a) is not satisfied if some applicants and group members have claims against one respondent (or group of respondents) while other applicants and group members have claims against another respondent (or group of respondents). The requirement in s 33C(1)(b), that the claims of all group members are in respect of or arise out of the same, similar or related circumstances, is a necessary but not sufficient condition for the commencement of representative proceedings. Of course, if there are two sets of claims against two sets of respondents, it may well be that each can be the subject of representative proceedings. It may even be that directions can be made for them to be heard together: Ryan v Great Lakes Council (1997) 149 ALR 45 at 48, per Wilcox J. But they cannot both be the subject of the same representative proceedings.

[128] Fourthly, in a representative proceeding commenced by application and statement of claim, the pleading must demonstrate that each of the conditions laid down in s 33C(1) has been satisfied. Since s 33C(1) is concerned with the commencement of proceedings, compliance with its terms can be assessed only by reference to the case pleaded by the applicants (or set out in affidavit form if pleadings are not used). …

 [129] Fifthly, Pt IVA of the Federal Court Act does not abrogate the general pleading requirements applicable to proceedings in the Federal Court by virtue of FCR O 11. An inadequately pleaded representative proceeding is liable to be struck out or dismissed in the exercise of the court's powers under FCR O 11, r 16 or O 20 r 2(1). So much follows from s 33ZG(b) of the Federal Court Act …

[130] Unlike the threshold requirements for a representative proceeding specified in s 33C(1) of the Federal Court Act, inadequacies in the pleadings do not necessarily mean that the proceeding cannot continue as a representative action. Whether that is the consequence of pleaded deficiencies will depend on the nature of the deficiencies and whether they are curable by amendment. The court has powers to manage representative proceedings which are no less extensive than its powers to manage other proceedings: FCR O 10, r 1; Federal Court Act s 33ZF(1) (empowering the court to make any order in a representative proceeding that the court thinks appropriate or necessary to ensure that justice is done).

Spender and Hill JJ agreed with the reasons of Sackville J. See also: Guglielmin v Trescowthick (No 2) [2005] FCA 138, 220 ALR 515.

41                  Section 33C(1) is thus concerned with the claims made by an applicant. As a consequence, any determination as to whether the requirements of s 33C(1) have been met is to be made by reference to the pleading or other document in which the claims are made: Bright v Femcare Ltd [2002] FCAFC 243 at [126], 195 ALR 574 at 600 per Kiefel J.

42                  When reference is made in s 33C(1)(c) to a “substantial common issue of law or fact”, the term “substantial” does not indicate that which is “large” or “of special significance” or would “have a major impact on the … litigation” but, rather, is directed to issues which are “real or of substance”: Wong v Silkfield Pty Ltd, supra, at [28]per Gleeson CJ, McHugh, Gummow, Kirby and Callinan JJ. See also: Wotton v Queensland [2009] FCA 758 at [35], 109 ALD 534 at 543 to 544. Even though there may be factual variations in claims advanced, it does not follow that s 33C(1)(c) is not satisfied: Green v Barzen Pty Ltd (formerly Dukes Financial Services Pty Ltd) [2008] FCA 920 at [13]. Finkelstein J there further observed that it “will be enough if there is at least a common nucleus of operative facts or legal issues. It will also suffice if what is alleged in substance amounts to a common course of conduct directed toward a particular group …”.

43                  Section 33H deals with the content of the “originating process” whereby a representative proceeding is commenced. That section provides as follows:

Originating process

(1)   An application commencing a representative proceeding, or a document filed in support of such an application, must, in addition to any other matters required to be included:

(a)   describe or otherwise identify the group members to whom the proceeding relates; and

(b)   specify the nature of the claims made on behalf of the group members and the relief claimed; and

(c)   specify the questions of law or fact common to the claims of the group members.

(2)   In describing or otherwise identifying group members for the purposes of subsection (1), it is not necessary to name, or specify the number of, the group members.

Order 73 r 3 further provides that a representative proceeding “must be commenced by filing an application in accordance with Form 129”. That form is framed by reference to s 33H(1)(a), (b) and (c): Bailey v Veda Advantage Information Services and Solutions Ltd [2007] FCA 1664 at [9]. Amongst the other requirements imposed by s 33H, s 33H(1)(a) requires the “group members” to be clearly identified: Auskay International Manufacturing and Trade Pty Ltd v Qantas Airways Ltd [2008] FCA 1458 at [27], 251 ALR 166 at 175 per Tracey J. In an attempt to give some greater clarification as to that which is required by s 33H(1)(a), Sackville J in Petrusevski v Bulldogs Rugby League Club Ltd [2003] FCA 61 observed:

[19] In determining what s 33H(1)(a) of the Federal Court Act requires, it is important to consider why it is necessary to describe or identify the group members in a representative proceeding. One reason, as the High Court observed in Wong v Silkfield, is to enable the Court to determine whether the requirements of s 33C have been satisfied. Unless the group member is adequately described or identified (although not necessarily named or counted: s 33H(2)), it may be difficult to ascertain, for example, whether the claims of all the group members give rise to a substantial common issue of law or fact.

[20] Another reason for describing or identifying group members is to enable group members to decide whether or not to opt out of the representative proceeding pursuant to s 33J(2) of the Federal Court Act. If a person who is a group member does not opt out of the proceedings he or she will be bound by the judgment. (Section 33ZB requires the judgment in a representative proceeding to “describe or otherwise identify the group members who will be affected by it” and provides that the judgment binds any such persons other than any person who has opted out.) The failure by a group member to opt out of representative proceedings may therefore be attended by serious consequences, although of course the litigation might also produce advantages for that group member.

[21] These factors suggest that it must be possible for persons who may be within the represented group to ascertain from the pleadings whether they are in fact group members. The point was made by Hedigan J in Cook v Pasminco Ltd [2000] VSC 534, at [59], in relation to similar State legislation:

“It is beyond doubt that in a group proceeding the description of a group membership must be such so that it is at least possible to determine who falls within the group as described. Persons contemplated as being within the group would themselves not understand whether they were within it, unless the definition of the group is intelligible, although not necessarily exact. Members of the group are entitled to know what constitutes the essentials of the group. A decision concerning opt-out cannot be sensibly made unless it is known what it is that is being opted out from.”

It follows from his Honour’s observations that a person must be able to ascertain from the description of the represented group whether he or she is a member of that group.

…

[23] Clearly enough, not every description or identification of the represented group will satisfy the requirements of s 33H(1)(a) of the Federal Court Act. A useful, although not necessarily exhaustive test, is whether the description is such as to enable a person, with the assistance of a legal adviser if necessary, to ascertain whether he or she is a group member. If the description incorporates a reference to conduct alleged in the pleadings, a person or his or her adviser ought to be able, by reading the description and the relevant portion of the pleadings, to determine whether he or she is a member of the represented group. If a person cannot reasonably be expected to do this, the definition is unlikely to satisfy the requirements of s 33H(1)(a).

In applying these principles in Wright Rubber Products Pty Ltd v Bayer AG [2008] FCA 1510 at [13] Tracey J referred to the “need for precision in the framing of group definitions in representative proceedings”. In Johnstone v HIH Ltd [2004] FCA 190 at [52] Tamberlin J likewise said that “it is necessary to know with some precision who the group members are”.

44                  For the purposes of resolving whether or not there has been compliance with s 33C and s 33H (and Order 73) in the present proceeding, submissions were directed to the form of a proposed Amended Application and to the further proposed amendments to the Amended Statement of Claim as filed on 23 July 2009. The differences between the Amended Statement of Claim and the proposed Further Amended Statement of Claim provided on 15 March 2010 are sufficiently discernible from a “marked up” version of the pleadings. Relevantly, the Applicant wants to delete the existing paragraph [3] of the Amended Statement of Claim and insert a new paragraph [3] in its place. The “marked up” copy, including a handwritten amendment, provides as follows:

The Group Members

3.             The proceeding is commenced by the Applicant on its own behalf and on behalf of persons who:

(a)           suffered less by reason of, as a consequence of, the conduct of the Therapeutic Goods Administration pleaded in relation to regulatory action purportedly taken against Pan Pharmaceuticals Ltd (Pan) on and from 28 April 2003; and

(b)           have, as at the date of the commencement of this proceeding, entered into a litigation funding agreement with IMF (Australia) Ltd in relation to this proceeding;

(the Group Members).

3.             The proceeding is commenced by the Applicant on its own behalf and on behalf of persons who:

(a)           are Injured Persons (as defined in para 26, together with paras 21, 24 and 25 below); and

(b)           have suffered loss by reason, or as a consequence, of some or all of the conduct of the respondents pleaded in paras 76-144, 146-174, 177-183, 185-191 below; and

(c)           have, as at the date of commencement of this proceeding, entered into a litigation funding agreement with IMF (Australia) Ltd in relation to this proceeding.

(the Group Members).

The amendments proposed at the outset of the hearing on 15 March 2010 to the form of the Application as filed in December 2008 duplicates the definition of “Group Members” proposed in the new paragraph [3].

45                  Considerable difficulty is experienced with respect to the existing paragraph [3(a)] of the Amended Statement of Claim as filed in July 2009. There is much to be said for the proposition that, as presently pleaded, the conjunctive definition may confine the “Group Members” to those who have suffered loss at the hands of the Therapeutic Goods Administration but not at the hands of the individual Respondents.

46                  But, it is considered that that difficulty is now addressed by both the proposed deletion of the reference to “the conduct of the Therapeutic Goods Administration …” and the proposed substituted terminology. It is not understood that Senior Counsel for the individual Respondents ultimately contended that, if amended, the definition of “Group Members” would fail to address that difficulty.

47                  A further potential difficulty arose, however, in respect to the time from which any such amendment should take effect.

48                  Initial concern was also expressed as to whether the necessary precision in the identification of “the Group Members” was denied by the use of the phrase “Injured Persons”. The proposed amendments to the existing Application – and the proposed insertion of the reference to “Injured Persons (as defined in para 26, together with paras 21, 24 and 25 below”) – implicitly accept that “the Group Members” can only be identified by reference to the pleading itself.

49                  No amendment is sought to be made to paragraph [26] of the existing Amended Statement of Claim as filed on 23 July 2009. That paragraph provides as follows:

[26] The Pan Sponsors, Pan Suppliers and Pan Distributors are collectively referred to as Injured Persons.

Each of these “Injured Persons” is further defined — or at least given some further content — as follows in those paragraphs of the Amended Statement of Claim identified above:

·                    “… Pan manufactured tablets and capsules for numerous other companies or businesses, including those known as sponsors under the TG Act and foreign companies and businesses (collectively Pan Sponsors), for supply in Australia and elsewhere” (at paragraph [21]);

·                    “… there were numerous suppliers of goods and services to Pan in connection with the manufacture and supply of Pan products, namely (Pan Suppliers): …” (at paragraph [24]); and

·                    “… numerous distributors and agents distributed products manufactured by Pan, through a supply distribution chain, ultimately to retailers for sale to consumers (Pan Distributors)” (at paragraph 25).

50                  If attention is confined to such definitions, it is considered that there has not beencompliance with s 33H of the 1976 Act.

51                  But any lack of precision, it is contended on behalf of the Applicant is addressed by paragraph [3(c)] of the definition of “the Group Members”, namely the requirement that “Group Members” are not only those persons who fall within sub-paragraphs (a) and (b) (as proposed to be amended) – but also sub-paragraph (c). That sub-paragraph confines the “Group Members” to those persons who have also “at the date of the commencement of this proceeding, entered into a litigation funding agreement with IMF (Australia) Ltd in relation to this proceeding”.

52                  Taken in its entirety, the definition of “Group Members” in the proposed amendments to both the Application and the Amended Statement of Claim is sufficient compliance with s 33H.

53                  Although it is considered that the existing definitions of “Group Members” may well not satisfy the requirements of Part IVA, the proposed amendments rectify those deficiencies and would satisfy those requirements.

54                  The source of power to amend the Application is s 33K of the 1976 Act; the source of power to further amend the Amended Statement of Claim is O 13 r 2 of the Federal Court Rules. The heading to s 33K and s 33K(1) provide as follows:

Causes of action accruing after commencement of representative proceeding

(1)  The Court may at any stage of a representative proceeding, on application made by the representative party, give leave to amend the application commencing the representative proceeding so as to alter the description of the group.

Notwithstanding the heading to s 33K, which may otherwise have suggested a narrowing of the power otherwise conferred by s 33K(1), it has been concluded that “it is clear that s 33K(1) empowers the Court to grant leave in respect of any amendment to the description of the group once a proceeding has been commenced”: Bray v F. Hoffman-La Roche Ltd [2003] FCA 1505at [25] per Merkel J. See also: Falfire Pty Ltd v Roger David Stores Pty Ltd (Unreported, Federal Court of Australia, Kiefel J, 25 September 1996).It has been suggested that the “specific power of amendment” conferred by s 33K(1) does not preclude the application of O 13 of the Federal Court Rules: Revian v Dasford Holdings Pty Ltd [2001] FCA 777 at [9] per Nicholson J. In the present proceeding, however, there is no need to further consider the interrelationship between these two potential sources of power. Section 33K, it is considered, unquestionably confers power to amend the Application as filed.

55                  It was not understood that the individual Respondents contended that there was no power to amend the Application; the sole question put on their behalf was rather whether the discretionary power should be exercised and (more specifically) the date from which any amendment should take effect.

56                  It is considered that the discretionary powers conferred by s 33K and O 13 r 2 should be exercised to permit the amendments substantially in the form proposed in the Applicant’s Amended Notice of Motion as provided on 15 March 2010. The amendments really do no more than add clarity to the existing definition of “Group Members”. With the concurrence of the parties, the question as to the time from which an amendment is to take effect has been deferred for resolution at the final hearing.

Misfeasance — General Principles

57                  In the event that an order was not made striking out or otherwise dismissing the Application for failure to comply with Part 1VA of the 1976 Act, the Respondents mounted a further and separate challenge to the reliance sought to be placed by the Applicant upon the tort of misfeasance. To resolve this challenge, attention must be directed to the general principles relevant to the tort, the manner in which it is required to be pleaded, and the manner in which it has been pleaded in the present proceedings.

58                  Although the reach of the tort of misfeasance may have been “undefined” until recently, there is no doubt that it is a “deliberate tort”. In Northern Territory of Australia v Mengel (1996) 185 CLR 307 (“Mengel”) Mason CJ, Dawson, Toohey, Gaudron and McHugh JJ held at 345:

It was recognised as recently as 1973 that the precise limits of the tort of misfeasance in public office were then undefined … In important respects, that is still true. However, the weight of authority here and in the United Kingdom is clearly to the effect that it is a deliberate tort in the sense that there is no liability unless either there is an intention to cause harm or the officer concerned knowingly acts in excess of his or her power. … (citations omitted)

In addition to it being a “deliberate tort”, the elements of the tort were there also helpfully summarised by Deane J as follows at 370 to 371:

… the tort of misfeasance in public office is “well-established”. Its elements are: (i) an invalid or unauthorised act; (ii) done maliciously; (iii) by a public officer; (iv) in the purported discharge of his or her public duties; (v) which causes loss or harm to the plaintiff. That summary statement of the elements of the tort inevitably fails to disclose some latent ambiguities and qualifications of which account must be taken in determining whether a particular element is present in the circumstances of a particular case. The critical element for present purposes is malice.

In the context of misfeasance in public office, the focus of the requisite element of malice is injury to the plaintiff or injury to some other person through an act which injuriously affects the plaintiff … Such malice will exist if the act was done with an actual intention to cause such injury. The requirement of malice will also be satisfied if the act was done with knowledge of invalidity or lack of power and with knowledge that it would cause or be likely to cause such injury. Finally, malice will exist if the act is done with reckless indifference or deliberate blindness … to that invalidity or lack of power and that likely injury. Absent such an intention, such knowledge and such reckless indifference or deliberate blindness, the requirement of malice will not be satisfied.

The elements of the tort have also been variously described by others who have been called upon to resolve claims for liability founded upon misfeasance. Thus, for instance, in Porter v OAMPS Ltd [2005] FCA 232, 215 ALR 327 Goldberg J has described the elements of the tort as follows:

[103]       The elements of the tort of misfeasance in public office are:

·      there is a public officer;

·      who owes a public duty (including to the plaintiff as a member of the public);

·      which the public officer has breached;

·      the breach of duty has caused loss or  damage to the plaintiff; and

·      the public officer breached the duty with the intention of causing harm to the plaintiff or with the knowledge that he or she was acting in excess of his or her powers.

59                  In Sanders v Snell (1998) 196 CLR 329 at 346 Gleeson CJ, Gaudron, Kirby and Hayne JJ again directed attention to the element of the tort that it be “intentional”. In Rush v Commissioner of Police [2006] FCA 12, 150 FCR 165 at 197 to 198Finn J likewise observed:

[121] … the tort can take two forms. In one form (that of “targeted malice”) it must be shown that the public officer in question has acted as such with an actual intent to cause injury to a person or persons. In its alternate form it must be shown either that the officer has actual knowledge both that his or her action was beyond power and would cause or be likely to cause injury or else that the officer has acted with reckless indifference both to the possibility his or her action was beyond power and to the possibility that that action would cause or be likely to cause injury: … ’

60                  As to the requirement that a respondent or defendant be a “public officer”, in Mengel, supra, Brennan J relevantly observed at 355:

The tort of misfeasance in public office is well established. … Less clearly established are the principles which define the liability imposed on a public officer who, by use of his position or power … causes loss to another. The starting point is to identify the class of public officers. Best CJ identified the class in these terms in Henly v Mayor of Lyme [(1828) 5 Bing 91 at 107-108]:

“Now I take it to be perfectly clear, that if a public officer abuses his office, either by an act of omission or commission, and the consequence of that, is an injury to an individual, an action may be maintained against such public officer. The instances of this are so numerous, that it would be a waste of time to refer to them.

Then, what constitutes a public officer? In my opinion, every one who is appointed to discharge a public duty, and receives a compensation in whatever shape, whether from the crown or otherwise, is constituted a public officer.

…

It seems to me that all these cases establish the principle, that if a man takes a reward, – whatever be the nature of that reward, whether it be in money from the crown, whether it be in land from the crown, whether it be in lands or money from any individual, – for the discharge of a public duty, that instant he becomes a public officer; and if by any act of negligence or any act of abuse in his office, any individual sustains an injury, that individual is entitled to redress in a civil action.”

The tort is not limited to an abuse of office by exercise of a statutory power … Any act or omission done or made by a public official in purported performance of the functions of the office can found an action for misfeasance in public office. Public officers perform a great variety of functions some of which have a judicial element in them. …

His Honour went on as follows to discuss the requirement that any exercise of power being impugned must be “wrongful”:

A number of elements must combine to make a purported exercise of administrative power wrongful. The first is that the purported exercise of power must be invalid, either because there is no power to be exercised or because a purported exercise of the power has miscarried by reason of some matter which warrants judicial review and a setting aside of the administrative action. There can be no tortious liability for an act or omission which is done or made in valid exercise of a power. A valid exercise of power by a public officer may inflict on another an unintended but foreseeable loss — or even an intended loss — but, if the exercise of the power is valid, the other’s loss is authorised by the law creating the power. In that case, the conduct of the public officer does not infringe an interest which the common law protects. However, a purported exercise of power is not necessarily wrongful because it is ultra vires. The history of the tort shows that a public officer whose action has caused loss and who has acted without power is not liable for the loss merely by reason of an error in appreciating the power available. Something further is required to render wrongful an act done in purported exercise of power when the act is ultra vires.

The further requirement relates to the state of mind of the public officer when the relevant act is done or the omission is made. …

61                  In Leerdam v Noori [2009] NSWCA 90, 227 FLR 210attention was focussed by the Court of Appeal upon whether or not the appellants occupied positions sufficient to bring them within the scope of the tort of misfeasance. The first appellant was the solicitor who had acted for the then Minister for Immigration and Multicultural and Indigenous Affairs in proceedings before the Administrative Appeals Tribunal. Review by the Tribunal had been sought of a decision to refuse Mr Noori a protection visa. The first appellant was employed by the second appellant, a firm of solicitors. Attention, accordingly, was directed to the scope of the term “public office” for the purpose of attracting liability. In concluding that the appellants did not have any power or authority or any duty sufficient to attract liability for misfeasance, Spigelman CJ said :

[26] In my opinion, a solicitor acting in proceedings, albeit proceedings concerned with the exercise of a public power or the discharge of a public duty, does not occupy a position within the scope of the tort of misfeasance in public office.

Allsop P also reviewed the authorities, including the decision of the Victorian Court of Appeal in Cannon v Tahche [2002] VSCA 84, 5 VR 317, a case concerning the potential liability of prosecutors for misfeasance in public office. The President stated:

[48] Some authorities place emphasis on there being an office, the holder of which owes duties to members of the public as to how the office shall be exercised: … What was essential, however, was the existence of a relevant power attached to the office. …

It was, however, perhaps Macfarlan JA who most clearly exposed the interrelationship between the “public office” occupied and the nature of the duty or power or authority necessary to attract liability. His Honour also referred to Cannon v Tahche, supra, and immediately thereafter continued:

[102] The Court took the view that “the position of prosecutor did not have, as an incident of it, any relevant power” (at [61]). In conducting the trial the prosecutor did not exercise any relevant power but rather performed a function of the office of Director of Public Prosecutions, “that being to represent the Crown at a criminal trial” (at [61]). Accordingly the Court concluded that the prosecutor could not “be regarded as having held a public office during the plaintiff’s trial” (at [72]). …

...

[104] Similarly in Sanders v Snell (1998) 196 CLR 329, the plurality judgment described the tort of misfeasance in public office as being “concerned with misuse of public power”. Further, in Three Rivers District Council v Bank of England (No 3) [2003] 2 AC 1 Lord Steyn described the second ingredient of the tort as being a requirement that there be an exercise of power as a public officer (at 191) and Lord Hobhouse spoke of the tort being concerned with “governmental authority and the exercise of executive powers”: at 229; see also Society of Lloyd’s v Henderson [2008] 1 WLR 2255 at [23].

[105] The fact that the Courts have at times referred in the context of this tort to “public duties” is not inconsistent with the proposition that the tort is concerned with the abuse of public powers or authorities. As was pointed out in Cannon v Tahche, persons entitled to exercise public powers or authorities will almost invariably have a duty to exercise them in order to fulfil the requirements of their office (at [52]). Thus there was no inconsistency in the plurality judgment in Sanders v Snell referring at one point to misfeasance in public office as being “concerned with misuse of public power” (at [37]) and at another to it being concerned with “performance of public duties” (at [345]). The latter is a natural concomitant of the former. The references to “public duties” do not require the conclusion that, for the tort to be applicable, it is enough to point to the existence of a public duty, unassociated with the exercise of a public power or authority.

62                  “Employment with the Crown”, it has thus been recognised, “is not necessarily a public office for this purpose”: Tampion v Anderson [1973] VR 715 at 720. The Full Court of the Supreme Court of Victoria there went on to state that “the office must be one the holder of which owes duties to members of the public as to how the office shall be exercised”.

63                  The tort, however, is not confined to acts done in purported exercise of statutory power but extends to an exercise of common law powers incidental to an office whose powers are knowingly exceeded: Tampion v Anderson, supra, at 720.

64                  Issues to be resolved at the final hearing in the present proceedings include whether one or other of the misfeasances said to have been committed is alleged against a “public officer” and whether or not there is relevantly a “public duty” or a “power or authority” which has been abused.

Misfeasance — The Need for Specific PleadingS

65                  One final aspect of the tort of misfeasance should be noted — but it is more a matter of pleading than substantive law. To so characterise it is not to diminish its importance.

66                  The allegation that a public officer has so abused his office that his conduct constitutes the tort of misfeasance is, self-evidently, a serious allegation. It is an allegation which should be pleaded with sufficient detail that the public officer knows the case being mounted against him.

67                  The requirements imposed by O 11 of the Federal Court Rules in respect to pleadings are no different when an applicant seeks to allege misfeasance than they are for any other cause of action. The function of pleadings remains the same. In Banque Commerciale S.A., en Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 286 Mason CJ and Gaudron J expressed the general principle as follows:

The function of pleadings is to state with sufficient clarity the case that must be met: … In this way, pleadings serve to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and, incidentally, to define the issues for decision. The rule that, in general, relief is confined to that available on the pleadings secures a party’s right to this basic requirement of procedural fairness. Accordingly, the circumstances in which a case may be decided on a basis different from that disclosed by the pleadings are limited to those in which the parties have deliberately chosen some different basis for the determination of their respective rights and liabilities. …

This general statement has been repeatedly cited and applied in this Court: e.g. Cummings v Lewis (1993) 41 FCR 559 at 577 to 578, 113 ALR 285 at 303 per Cooper J; Seven Network Limited v News Limited [2003] FCA 388 at [21] per Sackville J; Travel Compensation Fund v Internova Travel Pty Limited (in liquidation) [2003] FCA 664 at [29] per Bennett J. See also: Wride v Schulze [2004] FCAFC 216;Shelton v National Roads and Motorists Association Ltd [2004] FCA 1393 at [20] to [21] per Tamberlin J; Australian Competition and Consumer Commission v Singapore Airlines Cargo Pte Ltd [2009] FCA 510 at [95], 256 ALR 458 at 472 to 473 per Jacobson J.

68                  A pleading which alleges a particularly serious matter needs to be pleaded specifically. The example frequently given is that of fraud. Such an allegation must be pleaded precisely: Rajski v Bainton (1990) 22 NSWLR 125 (“Rajski”) at 135 per Mahoney JA. The reasons for this are obvious – if a person is to be charged with doing or writing something which will involve serious consequences, the person is not to be condemned casually or by “inexact proofs, indefinite testimony, or indirect inferences”: Rajski at 135 per Mahoney JA (citing Briginshaw v Briginshaw (1938) 60 CLR 336 at 362). And charges of this kind are not to be made unless the person who makes them, in a pleading or otherwise, is satisfied that there is expected to be available the evidence to prove them.

69                  The same approach in respect to the need for specificity in pleadings has been applied in the context of misfeasance: Three Rivers District Council v Bank of England (No 3) [2003] 2 AC 1. Pleading issues were there in issue when misfeasance had been alleged as against the Bank. Lord Hope of Craighead there expressed the principle generally as follows:

[51] On the other hand it is clear that as a general rule, the more serious the allegation of misconduct, the greater is the need for particulars to be given which explain the basis for the allegation. This is especially so where the allegation that is being made is of bad faith or dishonesty. The point is well established by authority in the case of fraud.

When addressing the question as to whether the claim had been properly particularised, His Lordship had earlier observed:

[48] The Bank makes much of the fact that the claimants have received numerous warnings of the need for particulars to be given of the facts relied on in support of their allegations and of the many opportunities that they have been given to amend their statement of claim. Your Lordships are invited to infer from the absence of particulars, and in the light of the available evidence, that the claimants are not able to make good their allegations and that on this ground alone Clarke J was right to order that the claim should be struck out. On the other hand the claimants say that the Bank is well aware of the case that they seek to bring and that the Bank's argument is calculated to place an insuperable obstacle in their path.

[49] In my judgment a balance must be struck between the need for fair notice to be given on the one hand and excessive demands for detail on the other. In British Airways Pension Trustees Ltd v Sir Robert McAlpine & Sons Ltd (1994) 72 BLR 26, 33-34 Saville LJ said:

“The basic purpose of pleadings is to enable the opposing party to know what case is being made in sufficient detail to enable that party properly to prepare to answer it. To my mind it seems that in recent years there has been a tendency to forget this basic purpose and to seek particularisation even when it is not really required. This is not only costly in itself, but is calculated to lead to delay and to interlocutory battles in which the parties and the court pore over endless pages of pleadings to see whether or not some particular point has or has not been raised or answered, when in truth each party knows perfectly well what case is made by the other and is able properly to prepare to deal with it.”

[50] These observations were made under the old rules. But the same general approach to pleadings under the CPR was indicated by Lord Woolf MR in McPhilemy v Times Newspapers Ltd [1999] 3 All ER 775, 792J-793A:

“The need for extensive pleadings including particulars should be reduced by the requirement that witness statements are now exchanged. In the majority of proceedings identification of the documents upon which a party relies, together with copies of that party’s witness statement, will make the detail of the nature of the case the other side has to meet obvious. This reduces the need for particulars in order to avoid being taken by surprise. This does not mean that pleadings are now superfluous. Pleadings are still required to mark out the parameters of the case that is being advanced by each party. In particular they are still critical to identify the issues and the extent of the dispute between the parties. What is important is that the pleadings should make clear the general nature of the case of the pleader. This is true both under the old rules and the new rules.”

Lord Millett expressed the principle as follows:

[185] It is important to appreciate that there are two principles in play. The first is a matter of pleading. The function of pleadings is to give the party opposite sufficient notice of the case which is being made against him. If the pleader means “dishonestly” or “fraudulently”, it may not be enough to say “wilfully” or “recklessly”. Such language is equivocal. A similar requirement applies, in my opinion, in a case like the present, but the requirement is satisfied by the present pleadings. It is perfectly clear that the depositors are alleging an intentional tort.

 [186] The second principle, which is quite distinct, is that an allegation of fraud or dishonesty must be sufficiently particularised, and that particulars of facts which are consistent with honesty are not sufficient. This is only partly a matter of pleading. It is also a matter of substance. As I have said, the defendant is entitled to know the case he has to meet. But since dishonesty is usually a matter of inference from primary facts, this involves knowing not only that he is alleged to have acted dishonestly, but also the primary facts which will be relied upon at trial to justify the inference. At trial the court will not normally allow proof of primary facts which have not been pleaded, and will not do so in a case of fraud. It is not open to the court to infer dishonesty from facts which have not been pleaded, or from facts which have been pleaded but are consistent with honesty. There must be some fact which tilts the balance and justifies an inference of dishonesty, and this fact must be both pleaded and proved.

70                  Such is the degree of specificity required in the present proceeding in respect to the various allegations as to misfeasance.

Misfeasance – The Pleadings: An Overview

71                  Misfeasance in public office is alleged against the individual Respondents in paragraphs [76] to [142] of the Amended Statement of Claim filed on 23 July 2009. The “vicarious liability” of the Commonwealth is addressed in paragraphs [143] to [144]. Loss and damage is alleged in paragraph [145]. Claims in negligence (it may be noted) are pleaded in paragraphs [146] to [192].

72                  In respect of misfeasance, liability is sought to be established by reference to eight separately pleaded factual events.

73                  These events and the individual Respondents who are alleged to have committed the tort are set forth in the Amended Statement of Claim as follows:

(i)                 the Pan Suspension Misfeasance alleged as against the Third Respondent (Ms MacLachlan) (at paragraphs [77] to [85] inclusive), involving the exercise of the power conferred by s 41 of the Therapeutic Goods Act on 23 April 2003 to suspend the licence of Pan Pharmaceuticals;

(ii)                the Pan Cancellation Misfeasance alleged as against the Fourth Respondent (Mr Cesarin) (at paragraphs [86] to [93] inclusive), involving the exercise of power conferred by s 30(1)(a) of the Therapeutic Goods Act on 23 April 2003 to cancel from the register of therapeutic goods all products manufactured by Pan Pharmaceuticals;

(iii)              the Pan Recall Misfeasance alleged as against the Fourth Respondent (at paragraphs [94] to [103] inclusive), involving the exercise of the power conferred by s 30(6) of the Therapeutic Goods Act on 23 April 2003 to require Pan Pharmaceutical to undertake a mandatory safety related consumer level recall of all products manufactured by Pan Pharmaceuticals “since 1 May 2002”;

(iv)              the Sponsor Prohibition on Supply Misfeasance alleged as against the Fourth Respondent (at paragraphs [104] to [111] inclusive), involving the exercise of the power conferred by s 28(3) and (4)(a) of the Therapeutic Goods Act on 23 April 2003 to impose a condition on the registration or listing of all products manufactured by Pan Pharmaceuticals that Pan Sponsors cease supply of all products manufactured since 1 May 2002;

(v)               the Sponsor Voluntary Recall Misfeasance alleged as against the Fourth Respondent (at paragraphs [112] to [118] inclusive) involving an allegation that on 23 April 2003 all Pan Sponsors were “strongly encourage[d]” to immediately undertake a voluntary safety related recall of all batches of products manufactured by Pan Pharmaceuticalssince 1 May 2002; and

(vi)              the Pan Warnings Direction Misfeasance alleged against the Second Respondent (Mr Slater) and the Third and Fourth Respondents (Ms MacLachlan and Mr Cesarin respectively) (at paragraphs [119] to [126] inclusive) involving an allegation that on 28 April 2003 advertisements and warnings were published in newspapers and on the Therapeutic Goods Administration website.

In addition:

(vii)            paragraph [127] alleges that each of the individual Respondents, including the Fifth and Sixth Respondents (Mr Tribe and Mr Fraser) “agreed on the New Strategy” and paragraph [131] alleges that “each of Slater, MacLachlan, Tribe, Fraser and Cesarin is, and is liable as, a joint tortfeasor in respect of each of the above misfeasances”.

In the alternative to each of those misfeasances alleged as against Mr Cesarin, a further misfeasance is alleged in paragraphs [132] to [142], namely:

(viii)           an allegation that the Second, Third, Fifth and Sixth Respondents “joined in formulating, recommending to, and/or instructing Cesarin, as delegate of the Secretary” the conduct thereafter identified in the Amended Statement of Claim.

74                  The positions of each of the individual Respondents are set forth as follows in paragraph [10] of the Amended Statement of Claim:

At all material times:

(a)           the Second Respondent (Slater) was the National Manager of the TGA and the senior officer within the TGA to whom TGA Members reported and pursuant to whose instructions TGA Members were required to act or customarily acted;

(b)           the Third Respondent (MacLachlan) was the Director of the Office of Devices, Blood & Tissues, a subunit within the TGA and was a Delegate of the Secretary for the purposes of s41 of the TG Act;

(c)           the Fourth Respondent (Cesarin) was the head of the Non-Prescriptions Medicines Branch of the TGA and was a Delegate of the Secretary for the purposes of ss28, 30 and 30(6) of the TG Act;

(d)           the Fifth Respondent (Tribe) was Chief GMP Auditor of the Auditing Section of the TGA; and

(e)           the Sixth Respondent (Fraser) was Lead Auditor in respect of Pan.

75                  Paragraph [11] also further relevantly defines the phrase “the TGA officers” as follows:

At all material times each of the Second to Sixth Respondents (the TGA Officers):

(a)           were TGA Members;

(b)           were senior officers of a Department of State;

(c)           were appointed to discharge a public duty, including to administer the TG Act;

(d)           were employed by the Commonwealth pursuant to the Public Service Act 1999;

(e)           received compensation in the form of a salary for the discharge of their duties as an employee or officer of the Commonwealth;

(f)            were officers of the Commonwealth within the meaning of s75(v) of the Constitution.

76                  The oral submissions advanced on 15 March 2010 focussed specific attention upon the sixth, seventh and eighth misfeasances. Attention was also specifically directed to the role played by the Fifth and Sixth Respondents, Messrs Tribe and Fraser.

The Sixth Misfeasance — The Pan Warnings Direction Misfeasance

77                  The sixth misfeasance, namely that pleaded at paragraphs [119] to [126] of the Amended Statement of Claim, is alleged as against the Second Respondent (Mr Slater), the Third Respondent (Ms MacLachlan) and/or the Fourth Respondent (Mr Cesarin) – the Fifth and Sixth Respondents (Messrs Tribe and Fraser) are not included.

78                  The issues presently to be resolved in respect to this allegation may be summarised as follows:

·                    is the allegation in paragraph [119] that “… Slater, MacLachlan and/or Cesarin directed, instructed, requested or otherwise caused TGA members … to make the Pan Consumer Warnings” an allegation of a conclusion or a fact such as to be susceptible to particulars being provided?

·                    does the allegation have any causal connection to loss or damage claimed to have been suffered?

Whatever may be the source of the power being exercised, this exercise of power does not derive expressly from any statutory provision to be found within the Therapeutic Goods Act. Whether that is an answer to a claim for misfeasance is a question left to be resolved at a final hearing.

79                  The principal submission advanced orally by Senior Counsel for the individual Respondents was that there is an inadequate pleading of the allegation that this conduct in fact caused loss or damage.

80                  Albeit differently expressed in different decisions, two elements of the tort of misfeasance assume present relevance – the element that the tort is a “deliberate” or an “intentional” tort and the element that any excess or abuse of office in fact causes loss or damage.

81                  There is, perhaps, uncertainty as to whether a public officer who intentionally or recklessly abuses his office is responsible for all loss or damage suffered or only that loss or damage that he intended to cause or the damage for which he showed reckless indifference. A more confined ambit of recovery was endorsed by Lord Steyn in Three Rivers, supra. His Lordship there said at 195 to 196:

Enough has been said to demonstrate the special nature of the tort, and the strict requirements governing it. This is a legally sound justification for adopting as a starting point that in both forms of the tort the intent required must be directed at the harm complained of, or at least to harm of the type suffered by the plaintiffs. This results in the rule that a plaintiff must establish not only that the defendant acted in the knowledge that the act was beyond his powers but also in the knowledge that his act would probably injure the plaintiff or person of a class of which the plaintiff was a member. In presenting a sustained argument for a rule allowing recovery of all foreseeable losses counsel for the plaintiffs argued that such a more liberal rule is necessary in a democracy as a constraint upon abuse of executive and administrative power. The force of this argument is, however, substantially reduced by the recognition that subjective recklessness on the part of a public officer in acting in excess of his powers is sufficient. Recklessness about the consequences of his act, in the sense of not caring, whether the consequences happen or not, is therefore sufficient in law. This justifies the conclusion that the test adopted by Clarke J represents a satisfactory balance between the two competing policy considerations, namely enlisting tort law to combat executive and administrative abuse of power and not allowing public officers, who must always act for the public good, to be assailed by unmeritorious actions.

The New Zealand Court of Appeal has reached a similar conclusion: Garrett v Attorney-General [1997] 2 NZLR 332. The Court there concluded at 350:

In our view this intentional tort should not be allowed to overflow its banks and cover the unintentional infliction of damage. In many cases the consequences of breaking the law will be obvious enough to officials, who can then be taken to have intended the damage they caused. But where at the time they do not realise the consequences they will probably not be deterred from exceeding their powers by any enlargement of the tort. As Clarke J observes, they may well think that they are acting in the best interests of those persons whom they actually have in mind. In any modern society administration of central or local government is complex. Overly punitive civil laws may oftentimes deter a commonsense approach by officials to the use or enforcement of rules and regulations. We prefer to err on the side of caution and not to extend the potential liability of officials for causing unforeseen damage. To do so may have a stultifying effect on governance without commensurate benefit to the public.

It is submitted on behalf of the individual Respondents that, in Mengel, supra, Mason CJ, Dawson, Toohey, Gaudron and McHugh JJ did not endorse a proposition that a public officer was liable for all foreseeable loss arising from the misfeasance. Their Honours there observed at 346:

One aspect of misfeasance in public office that lacks precise definition is whether, assuming damage, it is sufficient to establish that the public officer knows that he or she is acting without authority or whether there is some additional requirement. For example, it was suggested in Bourgoin SA v Ministry of Agriculture, Fisheries and Food … that there is an additional requirement that damage be foreseeable, and it was said in Tampion v Anderson … that the plaintiff must be “the member of the public, or one of the members of the public, to whom the holder of the office owed a duty not to commit the particular abuse complained of”.

…

The cases do not establish that misfeasance in public office is constituted simply by an act of a public officer which he or she knows is beyond power and which results in damage. Nor is that required by policy or by principle. Policy and principle both suggest that liability should be more closely confined. So far as policy is concerned, it is to be borne in mind that, although the tort is the tort of a public officer, he or she is liable personally and, unless there is de facto authority, there will ordinarily only be personal liability … And principle suggests that misfeasance in public office is a counterpart to, and should be confined in the same way as, those torts which impose liability on private individuals for the intentional infliction of harm. …

… However, it is sufficient for present purposes to proceed on the basis … that liability requires an act which the public officer knows is beyond power and which involves a foreseeable risk of harm.

Those comments, say the individual Respondents, simply record that their Honours simply proceeded upon that basis “for present purposes”.

82                  The circumstances in which damages are recoverable for an abuse of office and the rationale for imposing liability involve complex considerations as to the overlap between private and public law.

83                  But the extent of liability for recoverable loss or damage if the tort of misfeasance is otherwise made out need not presently be resolved. Nor would it be appropriate to resolve at the present stage of the proceeding the extent of any damage that may be recoverable. Whatever loss or damage may ultimately be recoverable (if any), must necessarily depend upon the evidence. For present purposes, it is sufficient to conclude that the individual Respondents are sufficiently put on notice as to the manner in which they are said to have abused their office and to further conclude that they know that the Applicant contends that their conduct has caused loss or damage. What that loss or damage is must await final determination, as must a determination of whether any such loss or damage falls within the reach of the “deliberate” or “intentional” tort of misfeasance.

84                  A separate and more specific submission was also advanced in oral submissions and focussed upon the issuing of “Pan Consumer Warnings”. These were the warnings placed in newspapers from 28 April 2003. The very purpose of placing those warnings in newspapers was (presumably) to advise people that all products manufactured since 1 May 2002 were withdrawn from sale and to convey advice as to the safety of those products.

85                  It is submitted on behalf of the individual Respondents that there is “no causal link between the Pan Consumer Warnings and any loss suffered and none is pleaded”. What is pleaded in paragraph [124] of the Amended Statement of Claim is that “each of Slater, MacLachlan, and Cesarin made the Pan Warnings Direction, not for a proper purpose, but for an ulterior purpose with the intent that harm be caused …”.

86                  Whether or not the warnings in fact caused loss or harm – and the extent of any damages recoverable – are again questions to be resolved on the evidence at the final hearing.

87                  As with paragraph [133] of the Amended Statement of Claim which details part of the alternative pleadings to the “Cesarin Misfeasances”, it is considered that paragraph [119] – taken in the context of the Amended Statement of Claim as a whole – adequately puts each of the individual Respondents against which the allegation is made sufficiently on notice of the case to be met.

88                  The attack upon paragraphs [119] to [126] fails. The fate of that attack, it may presently be noted, depends upon comparable submissions made in respect to the two outstanding claims of misfeasance – namely the seventh and eighth misfeasances. Paragraphs [119] to [126] attract no different conclusion.

The Seventh Misfeasance — The Liability of the TGA Officers

89                  The seventh misfeasance, namely that pleaded at paragraphs [127] to [131] of the Amended Statement of Claim, is alleged against “… each of Slater, MacLachlan, Cesarin, Tribe and Fraser …”.

90                  This allegation of misfeasance does not involve any exercise of statutory power. Questions will thus inevitably arise at the final hearing as to whether the tort of misfeasance in a public office can attach to the conduct alleged.

91                  The issues presently to be resolved in respect to this allegation may be very loosely summarised as follows:

·                    is the allegation which is made in paragraph [129] that each of the individual Respondents “agreed on a common action, being the New Strategy …” an allegation too general and lacking in the requisite degree of specificity required of a pleading of misfeasance?

·                    is the alternative allegation in paragraph [130] that each of the individual Respondents “aided, counselled, directed or joined in the Pan Warnings Direction Misfeasance” a pleading of a conclusion rather than a pleading of fact?

A question also arises as to the time from which any amendment to the pleadings should take effect.

92                  It is contended on behalf of Messrs Slater, Tribe and Fraser that this allegation of misfeasance is a blatant attempt to do no more than to retain those Respondents as parties to the existing proceeding where other claims against them have been abandoned. Compared to allegations previously mounted against them in earlier versions of the pleadings, the current allegation is said to be “an entirely new basis for relief …”. The Applicant, on the other hand, contends that this allegation has to be viewed against the factual background surrounding the “New Strategy”. As pleaded, prior to the “New Strategy” being implemented, the Therapeutic Goods Administration was pursuing a course which may have left open to meaningful challenge the conduct of the individual Respondents and their decisions taken. The “New Strategy” was the pursuit of a very different course of conduct to that previously envisaged.

93                  Paragraph [127] of the Amended Statement of Claim introduces this factual background by alleging as follows:

[127] As pleaded at paragraphs 48 and 70 to 74, each of Slater, MacLachlan, Cesarin, Tribe and Fraser agreed on the New Strategy.

Paragraph [48] refers to a meeting said to have taken place on or about 26-27 March 2003. It was at this meeting that it is alleged that “Slater, MacLachlan, Tribe and Fraser, or any two or more of them, agreed on a ‘New Strategy’…”. There is no reference there to Mr Cesarin having then “agreed” to this “New Strategy”. But he is said, in paragraph [72], to have “also agreed on the New Strategy” on or about 28 April 2003, if not at a time prior to then. Separate attention is then given to the “New Strategy” in paragraphs [70] to [75]. Whether paragraph [75] should also have been included in paragraph [127] is a matter which may for now at least be left to one side. Of present concern is the role in the “New Strategy” that Ms MacLachlan and Messrs Tribe and Fraser are alleged to have played.

94                  Paragraph [70] details the “constituent elements of the New Strategy”. Paragraph [74] details the “belief or opinion” which is alleged against each of the individual Respondents. Paragraph [75] then sets forth the “purposes, or motivating purposes, or substantial purposes, of each of Slater, MacLachlan, Tribe, Fraser and Cesarin …”. The purposes alleged to have been pursued were:

·                    “to injure the business interests of Pan and Selim …”;

·                    “to ensure that Pan did not have a proper opportunity to seek administrative and injunctive relief from the courts…”; and

·                    “to punish Pan and Selim…”.

These allegations, of course, are of a most serious kind. Subject to such submissions as may be made as to whether or not any one or more of the individual Respondents was indeed a “public officer” and the identification of the “office” which has been “abused”, these allegations may well go some considerable way towards making out the tort of misfeasance in public office.

95                  In addition to the allegations in paragraph [75], the draftsman of the Amended Statement of Claim makes further allegations as to what “[e]ach of Slater, MacLachlan, Tribe, Fraser and Cesarin knew, or were reckless as to” the consequences of their conduct detailed in paragraph [76].

96                  After seeking to incorporate these allegations, paragraphs [129] and [130] thereafter provide as follows (without alteration):

[129]       In the premises, each of MacLachlan, Slater, Tribe, Fraser and Cesarin agreed on a common action, being the New Strategy, in the course of, and to further which:

(a)           one of them, namely MacLachlan, committed the Pan Suspension Misfeasance;

(b)           one of them, namely Cesarin, committed the Pan Cancellation Misfeasance, the Pan Recall Misfeasance, the Sponsor Prohibition on Supply Misfeasance and the Sponsor Voluntary Recall Misfeasance; and

(c)           one or more of them, namely Slater, MacLachlan and/or Cesarin, committed the Pan Warnings Direction Misfeasance.

[130]       In the alternative, in the premises:

(a)           each of Slater, Tribe Fraser and Cesarin aided, counselled, directed or joined in the Suspension Misfeasance;

(b)                 each of Slater, Tribe, Fraser and MacLachlan aided, counselled, directed or joined in the Pan Cancellation Misfeasance, the Pan Recall Misfeasance, the Sponsor Prohibition on Supply Misfeasance and the Sponsor Voluntary Recall Misfeasance; and

(c)                 each of Slater, MacLachlan, Tribe, Fraser and Cesarin aided, counselled, directed or joined in the Pan Warnings Direction Misfeasance.

Particulars

A.      The matters and circumstances which constitute the relevant aiding, counselling, directing and joining are those pleaded at paragraphs 39 to 76 above.

97                  When viewed in the context of the Amended Statement of Claim as a whole, it is considered that the allegations in paragraph [129] are not so lacking in specificity as to deny to the individual Respondents an adequate opportunity to know the case sought to be mounted against them.

98                  Insofar as the submission is made on behalf of the individual Respondents that the Amended Statement of Claim impermissibly pleads conclusions rather than material facts, it may be accepted that a pleading which does no more than plead a conclusion and which does not put a respondent in a position where he knows the case he has to meet may be struck out: Charlie Carter Pty Ltd v The Shop, Distributive and Allied Employees’ Association of Western Australia (1987) 13 FCR 413 (“Charlie Carter”). French J (as His Honour then was) there referred to an earlier decision of Fisher J in Trade Practices Commission v David Jones (Australia) Pty Ltd (1985) 7 FCR 109. The paragraph of the pleading there in issue was drafted as follows:

“15. In or about mid March 1984 the corporate respondents and each of them or some two or more of them made an arrangement or arrived at an understanding the material provisions of which had the purpose, or had or were likely to have the effect, of fixing, controlling or maintaining or providing for the fixing, controlling or maintaining of, the prices at which the First, Second and Third Respondents, and certain other retails of manchester products in the Adelaide metropolitan area, would sell Sheridan manchester.

…”

Of that paragraph, Fisher J concluded at 114 that:

Paragraph 15 of the statement of claim does not state any material facts. It is merely a statement of a conclusion drawn from facts which are not in the statement of claim. Standing alone, par 15 does not disclose a reasonable cause of action against the respondents.

In Charlie Carter, paragraph [5] of the pleading in question alleged that the respondents were “acting in concert” with each other. French J concluded that such a pleading was defective. His Honour said at 417 to 418:

The sufficiency of the pleading may be judged first by reference to the necessary condition that it disclose a reasonable cause of action and secondly, by reference to the requirement for sufficient particularity that the respondents know in advance the case they have to meet.

…

In my opinion the pleading in par 5 that the respondents acted in concert involves the pleading of a conclusion.

It does not necessarily follow that a conclusion may not constitute a material fact.

Nevertheless the pleading is in this case unsatisfactory in relation to the fifth respondent. It is unsatisfactory if only because the allegation of concert is at too great a level of generality or, put another way, is insufficiently particular.

His Honour then went on to refer to particulars which had been provided and concluded at 419 that:

The particulars seem to offer an account of the evidence upon which the applicant would construct an inference that the fifth respondent was involved in the concerted conduct of all the respondents.

However whatever their content and nature, they cannot rectify a defective pleading.

Particulars cannot be used to fill gaps in the statement of claim which ought to have been filled by appropriate statements of the various material facts together constituting the cause of action – Bruce v Odhams Press Ltd (supra); H 1976 Nominees Pty Ltd v Galli (1979) 40 FLR 242 at 246; Trade Practices Commission v David Jones (Australia) Pty Ltd (1985) 7 FCR 109.

There is nothing about the particulars provided that leads me to change my view that par 5 as pleaded is embarrassing.

99                  Emphasis is placed by Senior Counsel on behalf of the Applicant on the statement by French J in Charlie Carter that it “does not necessarily follow that a conclusion may not constitute a material fact”. With reference to this statement, Hely J in Australian Wool Innovation Ltd v Newkirk [2005] FCA 290 observed:

[24] On the other hand, French J has expressed the view that a conclusion may constitute a material fact: Charlie Carter Pty Ltd v The Shop, Distributive & Allied Employees’ Assn of Western Australia (1987) 13 FCR 413; Kernel Holdings Pty Ltd v Rothmans of Pall Mall (Aust) Pty Ltd WAG 83 of 1991, 3 September 1991 (unreported). In his Honour’s view, the real issue in a case where an objection is raised that a conclusion only is pleaded is whether the facts are pleaded at too great a level of generality to allow the pleading to serve its intended purpose. Drummond J agreed with that approach in State of Queensland v Pioneer Concrete (Qld) Pty Ltd [1999] FCA 499. …

Reference may also be made to the like comment of Greenwood J in Australian Competition and Consumer Commission v Australia and New Zealand Banking Group Ltd [2008] FCA 1623 at [2] that “[n]ot all conclusionary pleadings will be struck out. Whether a pleading ought to be struck out will depend upon whether the facts have been pleaded at too great a level of generality or at too high a level of abstraction”.

100               The submission advanced on behalf of Mr Cesarin that paragraph [72] of the existing Amended Statement of Claim is “at least as defective” as that before the Court in Charlie Carter is rejected. Taken in isolation, there may be something to support such a submission. But, when paragraph [72] is read in the context of the entirety of the pleading – or at least so much of it as is specifically referred to or incorporated in paragraphs [127] to [131] – it is considered that Mr Cesarin is adequately put on notice as to the case being advanced against him. To so conclude is not to say anything about the need for further particulars to be provided.

101               Taken in the context of the Amended Statement of Claim, it is considered that material facts are set forth such that paragraph [72] cannot be said to be either a conclusion (as opposed to a statement of material facts) or a statement so general in nature as to fail to inform Mr Cesarin of the case he has to meet.

102               Nor is it considered that the challenge to paragraphs [129] and [130] should prevail.

103               There is considered to be no fatal deficiency in the pleading in paragraph [48] as against Slater, MacLachlan, Tribe and Fraser or the subsequent pleading as against Mr Cesarin in paragraph [72] or the incorporation of all of these Respondents in paragraphs [129] and [130].

104               Notwithstanding the deficiencies in the Amended Statement of Claim, it is considered that the present pleading stands in contrast to that in Tepperova v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 1147, 91 ALD 620. Finn J there dismissed a claim by reason of the “rolled up” nature of the pleading at [32] to [34]. The contrast lies in the degree of detail as to the involvement of each of the individual Respondents found elsewhere in the Amended Statement of Claim and the statement of the purposes each is said to have pursued at paragraph [75].

105               Again, taking the entirety of the allegations as to the seventh tort of misfeasance into account, it is considered that the involvement of each of the individual Respondents as joint tortfeasors is sufficiently set forth in the Amended Statement of Claim to enable each to defend the case sought to be made against them.

106               The requirements to be satisfied when pleading the involvement of a number of persons as joint tortfeasors – as is the case in the present proceeding – has been addressed in Thompson v Australian Capital Television Pty Limited (1996) 186 CLR 574. A television channel, Channel 7, had there broadcast an interview on one of its programmes said to be defamatory of the plaintiff. Channel 7 sought to defend the proceeding upon the bases that it and the producer of the programme, Channel 9, were joint tortfeasors and that a release given to Channel 9 also operated to release Channel 7. It was concluded that both television channels were joint tortfeasors. Brennan CJ, Dawson and Toohey JJ addressed the difference between joint and several tortfeasors and the need to establish a concurrence in the act causing damage if it is alleged that persons are joint tortfeasors as follows at 580 to 581:

Joint tortfeasors

We have no doubt that Channel 9 and Channel 7 were joint tortfeasors. The difference between joint tortfeasors and several tortfeasors is that the former are responsible for the same tort whereas the latter are responsible only for the same damage. As was said in The “Koursk”, for there to be joint tortfeasors “there must be a concurrence in the act or acts causing damage, not merely a coincidence of separate acts which by their conjoined effect cause damage”. Principal and agent may be joint tortfeasors where the agent commits a tort on behalf of the principal, as master and servant may be where the servant commits a tort in the course of employment. Persons who breach a joint duty may also be joint tortfeasors. Otherwise, to constitute joint tortfeasors two or more persons must act in concert in committing the tort. Torts of all kinds may be joint and defamation is no exception. (citations omitted)

Gummow J then identified the “criteria for the identification of joint tortfeasors” as follows at 599 to 600:

Joint or concurrent tortfeasors?

The distinction which must be considered is between, on the one hand, the one tortious injury in respect of which the plaintiff has one cause of action, albeit against two or more defendants, and, on the other, the one tortious injury in respect of which there are distinct liabilities of a plurality of concurrent tortfeasors. In the latter case a judgment against or release of one concurrent tortfeasor does not bar any action against other concurrent tortfeasors in respect of the same damage. The appellant submits that Channel 9 and Channel 7 were not joint tortfeasors in respect of the matter of which he complains and that, as a result, the Deed of Release had no legal effect upon his cause of action against Channel 7.

In England, Australia and New Zealand, criteria for the identification of joint tortfeasors are to be found in expressions used in The “Koursk”. Scrutton LJ there spoke of “two persons who agree on common action, in the course of, and to further which, one of them commits a tort”, saying that in such a case there is one tort committed by one of them “in concert with another”. Sargant LJ accepted the proposition that persons are joint tortfeasors when their “respective shares in the commission of the tort are done in furtherance of a common design” so that those who “aid or counsel, direct, or join” in commission of the tort are joint tortfeasors. (citations omitted.)

107               Such is the course pleaded as against “the TGA Officers” in paragraphs [127] to [131]. Whether the evidence at final hearing makes out the agreement of each of these officers to the “New Strategy” and whether the evidence establishes that they “agree[d] on a common action” remains a matter to be seen. But there is considered to be sufficient certainty in the existing pleading for each of the individual Respondents to know the case they are called upon to meet.

The Eighth Misfeasance

108               The eighth misfeasance, namely that pleaded at paragraphs [132] to [142] of the Amended Statement of Claim which seeks to plead an “Alternative to Cesarin Misfeasances”, is alleged against “Slater, MacLachlan, Triber and Fraser”.

109               The issues presently to be resolved in respect to this allegation may again be loosely summarised as follows:

·                    is the allegation which is presently made in paragraph [133] that Mr Slater, Ms MacLachlan, Messrs Tribe and Fraser each “joined in formulating, recommending to, and/or instructing Cesarin …” the matters thereafter specified an impermissible pleading of a conclusion or a material fact?

·                    is an allegation that a person made a “recommendation” susceptible of constituting misfeasance?

Again a time element arises.

110               The allegation set forth in paragraph [133] is that Mr Slater, Ms MacLachlan, MessrsTribe and Fraser “joined in formulating, recommending to, and/or instructing Cesarin …”.

111               In aid of a submission that this is but a bare allegation of a conclusion, it was submitted by the individual Respondents that there is no specification of such material facts as to when each of the individual Respondents are said to have “joined in”; no specification of where each is said to have “joined in”; and no specification of how and by what means each is said to have “joined in”. The individual Respondents submit that of further concern is the fact that Mr Tribe was on leave in April 2003 and Mr Cesarin was apparently on leave between 23 and 27 April 2003.

112               The allegation in paragraph [133] is little better than that set forth in paragraph [119].

113               The difficulty experienced by the draftsman in providing further detail of the allegations sought to be made is said on behalf of the individual Respondents to be an indication that there is indeed no cause of action: cf. Trau v University of Sydney (1989) 34 IR 466. The primary Judge had there dismissed the appellant’s motion seeking leave to file a fourth amended statement of claim. In dismissing the appeal, Gleeson CJ (sitting as the Chief Justice of the Supreme Court of New South Wales) observed at 475:

Even under the modern system of pleading, considerations of form and substance are often closely intertwined. If one sees that a plaintiff’s lawyers are experiencing extreme difficulty in formulating with clarity and particularity their client’s cause of action then that is often a very good indication that there is no cause of action. The history of the present matter creates the strong impression that such a problem exists, compounded by an additional difficulty created by a need to manoeuvre around problems concerning periods of limitation.

Mahoney and Priestley JJA agreed.

114               If paragraphs [132] to [142] stood alone, the criticisms advanced by Senior Counsel on behalf of the individual Respondents would have much greater force. An allegation, for instance, that Mr Tribe “joined in … recommending to … Cesarin … that there was an imminent risk of death … if the Pan Cancellation … [was] not made…” would say embarrassingly little as to how or when he joined in making such a recommendation – especially if he was on leave in April 2003. But those paragraphs do not stand alone – they are to be read and construed as part of both the pleading as a whole and the other allegations being advanced. The earlier paragraphs of the Amended Statement of Claim identify with sufficient detail the date on which (for instance) the decision was taken to suspend the licence of Pan Pharmaceuticals and the date (for instance) of the meeting on 23 April 2009 at which the so-called New Strategy was formulated. It is considered that the timing of decisions and the dates of meetings have been set forth in sufficient detail to enable the individual Respondents to be able to plead to whether or not they “joined in” the matters set forth in paragraph [133].

115               A discrete further submission made by Senior Counsel on behalf of the individual Respondents was that the conduct referred to in paragraph [133] – or perhaps the more confined conduct of making a “recommendation” – was insufficient to constitute the tort of misfeasance. Particular reliance was placed upon Emanuele v Hedley (1998) 179 FCR 290. An appeal from a decision of Higgins J against other respondents had there been abandoned. But the appeals as against Mr Hedley and the Commonwealth of Australia were maintained. It was alleged that Mr Emanuele had bribed Hedley, a public servant and First Assistant Secretary of the Department of Territories. Misfeasance in a public office was alleged against Mr Hedley. The facts arose out of a proposal in 1985 by the Commonwealth to sell the Belconnen Shopping Mall, a shopping centre in the Australian Capital Territory. It was alleged that Mr Hedley had intentionally inflicted economic harm by making statements and taking actions that caused a tender for the purchase of the Mall to fail. It was also alleged that Hedley made a false report to his superiors. The pleading was there described as “verbose, tortuous and confused”. In nevertheless concluding that the conduct of Mr Hedley was not causative of the disqualification of the tender, Wilcox, Miles and RD Nicholson JJ concluded in respect to the misfeasance allegation at 300:

It is claimed the plaintiffs suffered loss or damage as a result of that conduct. Although the Amended Statement of Claim fails to define the precise actions of Mr Hedley that are said to constitute misfeasance in public office, Higgins J dealt with the summary judgment application on the basis there were two items of relevant conduct: Mr Hedley’s disclosure of information concerning other tenderers at the dinner of 18 October 1985 (see 60 FCR at 271-272) and his alleged false report to his superiors of a conversation between himself and Mr Fabrizioni on 13 November (see 60 FCR at 272-273). Perhaps it is fair to add a third item: the intimations of corruptibility given in some of the conversations recorded by the listening devices: see 61 FCR 274-276.

The report of the Fabrizioni conversation clearly cannot found an action for misfeasance in public office. Whether the report was true or false, its compilation and delivery were not actions done in the exercise of powers attaching to a public office. They were simply the actions of an employee reporting an alleged event to superior officers. We agree with the following comment of Higgins J:

“However, the prosecution of Emanuele did not follow and was not the consequence of any power given to Hedley to act so as to report that conversation. He did not purport, for example, to declare Emanuele an ineligible tenderer by reference to some supposed head of executive or legislative power in reliance on that conversation. Nor is that alleged. He simply made an allegation to his superior which, if true, might have indicated a criminal intent on Emanuele’s part and led to the exclusion of him and his companies from the tender process. That might have been defamation or injurious falsehood. However, as it did not lead to the exercise by him of any legislative or executive power, it is not malfeasance in public office on his part.”

In any event, it was not Mr Hedley’s report that caused the disqualification of the Emanuele tender or the prosecution of Mr Emanuele for bribery. Those events occurred because of Mr Emanuele’s own criminal act in paying a bribe.

Their Honours, however, went on to further conclude at 301:

In conducting discussions with Mr Emanuele, Mr Hedley acted on behalf of the Commonwealth; he enjoyed express authority. But it is not the general conduct of discussions that founds the allegation of misfeasance in public office; it could not be, since there was nothing improper about mere discussion of the projected sale. The improper conduct, on Mr Emanuele’s case, was Mr Hedley’s disclosure of confidential information about other tenderers and his suggestions that he was willing to accept a bribe in order to ensure that Mr Emanuele’s company was the successful tenderer. In engaging in that conduct, if he did, Mr Hedley plainly was acting in derogation of his duty to his employer; he was acting without the authority of the Commonwealth. Accordingly, there is no basis upon which it can be argued that the Commonwealth would be vicariously liable for any misfeasance in public office that Mr Hedley may have committed. …

116               But Emanuele v Hedley, it is respectfully considered, is no authority for any broadly expressed proposition that a “recommendation” cannot in any circumstances constitute the tort of misfeasance or authority for the proposition that a “recommendation” may not causeloss or damage. A decision as to whether or not the facts as alleged in the present proceeding have been made out on the evidence, and whether those facts are sufficient to constitute misfeasance, must await another day. For present purposes, it is sufficient to conclude that Emanuele v Hedley provides no support for a submission that paragraph [133] (or part of it) should be struck out pursuant to Order 11 r 16, let alone dismissed by the making of an order pursuant to s 31A.

Tribe and Fraser — The Seventh and Eighth Misfeasances

117               Two aspects of the inclusion of Messrs Tribe and Fraser in the claims of misfeasance should perhaps be separately addressed.

118               First, a discrete attack was made on the inclusion of what was characterised as “an entirely fresh allegation” in paragraph [70] – as incorporated by paragraph [127] – in the Amended Statement of Claim. This attack is understood to be but a part of what was seen by these two individual Respondents (in particular) as an impermissible attempt to re-plead their involvement so as to continue their role as parties to the proceeding rather than “letting them out”.

119               Paragraph [70] provides as follows:

The constituent elements of the New Strategy, as defined at paragraph 48 above, were:

(a)           to not proceed with the With Notice Suspension and not send to Pan the February Notice;

(b)           to withhold, or continue to withhold, from Pan the purported findings or results of the February Audit and the April Audit Report and the existence or detail of any other concerns which any of them held with respect to Pan’s continuing suitability to hold a licence to manufacture therapeutic goods;

(c)           notwithstanding that Fraser and Tribe had finalised the February Audit Report and had been preparing to send the same to Pan, to treat the February Audit as incomplete and the February Audit Report as a “draft” to be continued in April 2003 so that it did not need to be sent to Pan;

(d)           to conduct the April Audit;

(e)           to “go for the jugular” of Pan;

Particulars of (e)

A.            Transcript of Evidence (FCA Proceedings NSD489/2004) 17 July 2008, T845, 17-27 (Tribe).

B.            The document behind tab 100 in Exhibit 2 of the affidavit of Tribe sworn 13 June 2008 in Proceedings NSD489/2004.

(f)            by reason of (a) to (e) above, to act with respect to Pan otherwise than in accordance with the TGA Practice and differently from the TGA’s Treatment of Others and the TGA’s Prior Treatment of Pan;

(g)           by inter alia the means pleaded at (a) to (f) above, to engender a situation where, without notice to Pan:

(i)            Pan’s Licence would be suspended or cancelled;

(ii)           Pan’s registration would be cancelled;

(iii)          Goods manufactured by Pan and in the public domain would be recalled;

(iv)          Pan and Selim would effectively be compelled to cease to manufacture and supply therapeutic goods in Australia.

Particulars

A.            Meeting of 26 or 27 March 2003 between at least MacLachlan and Fraser.

120               Paragraph [70] had its counterpart in paragraph [64] of the Statement of Claim as first filed on 23 December 2008. The former paragraph [64] thus referred to the meeting on 27 March 2003 at which it was alleged (inter alia) that “each of Slater, MacLachlan, and Tribe formulated authorised or agreed to (and in the case of Fraser, agreed to implement) a ‘New Strategy’ for dealing with Pan, the constituent parts of which were … to ‘go for the jugular’ of Pan”. But what was not included in the former paragraph [64] was the allegation now made in paragraph [70(g)], namely the allegation that each of the individual Respondents would “engender a situation” of the kind described.

121               Paragraph [70(g)], it is said, is a new allegation and that there had not until the filing of the Amended Statement of Claim in July 2009 been an allegation of “in effect, a conspiracy, to take regulatory action”. The manner in which the “constituent elements” of the “New Strategy” are now pleaded may be accepted as being different to the earlier pleading as filed in December 2008. Such is the consequence of the amendment.

122               The fact that the Amended Statement of Claim as filed in July 2009 has re-pleaded the allegations now made in this manner, it is considered, of itself provides no reason why the allegation should not be heard and resolved. Although the involvement of those who participated in the March 2003 meeting may now have been re-cast and re-characterised in the manner now pleaded in paragraph [70(g)], the involvement of these two Respondents in that meeting as an issue in the proceeding has been pleaded as from the outset. Whether the serious allegation as now made in paragraph [70(g)], in particular, will be established on the evidence must await determination.

123               The second aspect of the allegations now made as against Messrs Tribe and Fraser in respect to the seventh and eighth misfeasances arises by reason of a submission made on their behalf that “[n]o explanation has been proffered as to why the amendment was made to make these new claims”.

124               This submission was sought to be buttressed by reference to Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27, 239 CLR 175 (“Aon”). There in issue was the application of Rules 21(2), 501(a) and (c) and 502(1) of the Court Procedure Rules 2006 (ACT). Rule 21(2) provided that the rules were to be applied by the courts in civil proceedings “with the objective of achieving –  (a) the just resolution of the real issues in the proceedings; and (b) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable to by the respective parties”. Rule 501 provided that “[a]ll necessary amendments of a document must be made for the purpose of – (a) deciding the real issues in the proceedings; … or (c) avoiding multiple proceedings”. Rule 502(1) provided “[a]t any stage of a proceeding, the court may give leave for a party to amend … an originating process, … a pleading, an application or any other document filed in the court in a proceeding in the way it considers appropriate”. An application for an adjournment and for leave to amend its statement of claim was there made by the plaintiff on the third day of a four-week trial.

125               Of present relevance are the comments of Gummow, Hayne, Crennan, Kiefel and Bell JJ as to the need to explain the delay in making an application for leave to amend. Their Honours observed:

[102] The objectives stated in r 21 do not require that every application for amendment should be refused because it involves the waste of some costs and some degree of delay, as it inevitably will. Factors such as the nature and importance of the amendment to the party applying cannot be overlooked. Whilst r 21 assumes some ill-effects will flow from the fact of a delay, that will not prevent the parties dealing with its particular effects in their case in more detail. It is the extent of the delay and the costs associated with it, together with the prejudice which might reasonably be assumed to follow and that which is shown, which are to be weighed against the grant of permission to a party to alter its case. Much may depend upon the point the litigation has reached relative to a trial when the application to amend is made. There may be cases where it may properly be concluded that a party has had sufficient opportunity to plead their case and that it is too late for a further amendment, having regard to the other party and other litigants awaiting trial dates. Rule 21 makes it plain that the extent and the effect of delay and costs are to be regarded as important considerations in the exercise of the court’s discretion. Invariably the exercise of that discretion will require an explanation to be given where there is delay in applying for amendment.

[103] The fact that an explanation had been offered for the delay in raising the defence was regarded as a relevant consideration in JL Holdings. Generally speaking, where a discretion is sought to be exercised in favour of one party, and to the disadvantage of another, an explanation will be called for. The importance attached by r 21 to the factor of delay will require that, in most cases where it is present, a party should explain it. Not only will they need to show that their application is brought in good faith, but they will also need to bring the circumstances giving rise to the amendment to the court’s attention, so that they may be weighed against the effects of any delay and the objectives of the Rules. There can be no doubt that an explanation was required in this case. (citations omitted.)

The individual Respondents are correct in their submissions that no explanation has been provided as to the manner in which the claim is now advanced.

126               But it is not considered that the chequered history as to the attempts made by the draftsman to include Messrs Tribe and Fraser within the ambit of allegations of misfeasance should now be itself a reason why the seventh and eighth allegations of misfeasance, or the involvement of Messrs Tribe and Fraser, should be struck out. The amendment has been made and the involvement of Messrs Tribe and Fraser in the March 2003 meeting has been there from the outset. It was at that meeting that it is alleged that a decision was made to “go for the jugular” of Pan Pharmaceuticals. Subject to O 3 r 4 of the Federal Court Rules,O 3r 3(3) permitted the amendment in July 2009 of “a new claim for relief or foundation in law for a claim for relief”. That is what the Amended Statement of Claim sought to achieve. Aon, it is considered, provides no support for the relief now sought by Messrs Tribe or Fraser. The fate of any further application that may be made to amend in order to further refine the allegations made against these two Respondents may perhaps more clearly raise the principles espoused in Aon for consideration. But any such application – if and when made – will be resolved on the facts and circumstances then presented.

Conclusions

127               One submission advanced by Senior Counsel on behalf of the Applicant must unquestioningly be accepted. That submission was that the Amended Statement of Claim would not win any “Bullen & Leake prize [for pleading]”.

128               There is much to be said in support of the submissions advanced on behalf of the individual Respondents. The allegation in paragraph [119] of the Amended Statement of Claim that Mr Slater, Ms MacLachlan and/or Mr Cesarin “directed, instructed, requested or otherwise caused” the making of the Pan Consumer Warnings is no better than the allegation in paragraph [133] that the Second, Third, Fifth and Sixth Respondents “joined in formulating, recommending to, and/or instructing Cesarin”. Both allegations could well have been better pleaded.

129               But, if the function of pleadings is to put a party on notice as to the case that is to be advanced, it is ultimately considered that such criticisms as may be levelled against the existing pleadings do not deny to the individual Respondents an adequate identification of that case.

130               Those criticisms are certainly not such that judgment should be entered in favour of one or other of the individual Respondents in respect to any one of the three allegations of misfeasance which have presently been placed in issue. Nor is it considered that the criticisms are such that relief should be granted pursuant to O 11 r 16 of the Federal Court Rules.

131               The seriousness of the allegations of misfeasance made against each of the individual Respondents must constantly be borne in mind – it is the very seriousness of those allegations which dictates that the Respondents must be properly informed of the case they have to meet. But once a conclusion has been reached that the allegations sufficiently identify the claims being advanced, it is the very seriousness of the allegations which dictates that those allegations must be allowed to proceed to a final and public hearing.

132               Although the Respondents have been unsuccessful in obtaining the relief they sought, it is considered that the submissions advanced on their behalf nevertheless had considerable merit. It is thus considered that the costs of the present Application should be the Applicant’s costs in the proceeding. The consequence, accordingly, is that it is only if the Applicant obtains a favourable order for costs in the final hearing that it will be able to recover its costs of the present Application. Liberty is, however, reserved to the parties to file further short written submissions as to costs if that is considered appropriate.

133               The parties are to bring in Short Minutes of Orders which give effect to these reasons within seven days. Those Short Minutes of Orders should also address the time within which amendments to the Application and the Amended Statement of Claim are to be filed, the time within which defences are to be filed and also an order for mediation pursuant to s 53A of the 1976 Act.

ORDER

134               The Order of the Court is:

1.                  The parties are to bring in Short Minutes of Orders to give effect to these reasons within 7 days.

Associate:

Dated:         16 April 2010