Federal Court of Australia

Schofield v TFS Manufacturing [2020] FCA 1526

ORDERS

THE COURT ORDERS THAT:

1.    The application be dismissed with costs.

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

REASONS FOR JUDGMENT

(Revised from Transcript)

LEE J:

A    INTRODUCTION AND BACKGROUND

1    This is an application for security for costs in an unfunded “open class” representative proceeding commenced pursuant to Pt IVA of the Federal Court of Australia Act 1976 (Cth) (Act).

2    The current proceeding arises out of circumstances similar to those that I considered in West v Rane [2019] FCA 2195 and West v Rane (No 2) [2020] FCA 616. The current iteration of the claim is best seen by a proposed further amended statement of claim (FASOC), which the parties agreed articulated the allegations made by the second applicant, Mrs Weedon, against the third respondent (Covidien) (although it is of no moment, for clarity, I note that the applicants styled this pleading as a “second amended statement of claim”).

3    There are other applicants and respondents in the proceeding. Relevantly, the group members in the open class fall into two categories. The first are those group members who had surgery performed on them to implant what are described as TFS Implants (who, unsurprisingly, are called the TFS Sub-Group Members); and the second are those women who were implanted with an IVS Tunneller (IVS Implant), who are called the IVS Sub-Group Members.

4    Both the IVS Implants and the TFS Implants were, it is alleged, invented, designed and promoted by the fourth respondent, Dr Peter Petros. The group members are alleged to have been implanted with the devices by either: Dr Petros; a doctor under the supervision of, or with the assistance of, Dr Petros; a surgeon who had been trained by Dr Petros; or someone who had been advised by Dr Petros about the suitability, safety, and efficiency of the implants. Obviously enough, I do not propose to make findings about the accuracy of these allegations, but for the purpose of this security for costs application, it is important to understand the structure of the proceeding as reflected in the allegations pleaded.

5    It is alleged that Covidien, from May 2016, carried on the business of supplying IVS Implants. It is further asserted that both the TFS Implants and the IVS Implants gave rise to a number of complications, the details of which are unnecessary to set out. As against Covidien, Mrs Weedon alleges, in Part D of the FASOC, that in August 2004 she consulted an obstetrician and gynaecologist while suffering from urinary incontinence, and on the advice of her obstetrician, underwent the implantation of an IVS Implant. This procedure was said to have occurred in circumstances where Covidien did not give any or any sufficient information or warning to her (or the other IVS Sub-Group Members), the relevant treating hospitals, and/or their treating doctors of various matters, and the further circumstance that the obstetrician had been advised and educated by Dr Petros and had been told that the IVS Implants were suitable, safe and effective methods of treating the conditions suffered by Mrs Weedon. More particularly, Mrs Weedon makes the following claims:

Claims under the Trade Practices Act and the Competition and Consumer Act

66.    The IVS Implants were goods within the meaning of sections 4 and 74A(2)(a) of the [Trade Practices Act 1974 (Cth) (TPA)], and sections 2 and 271 of Schedule 2 of the [Competition and Consumer Act 2010 (Cth) (CCA)].

67.     The IVS Implants were supplied to each of the IVS Sub-Group Members as consumers within the meaning of section 4B of the TPA and section 3 of Schedule 2 of the CCA.

68.    By reason of:

(a)    the matters pleaded in paragraphs 9, 10, 11, 13, 52, 53 and, or alternatively, 54 above; and, or alternatively

(b)    the fact that neither the packaging of the IVS Implants, their Instructions For Use, nor any other document or any other source of information disseminated by Covidien gave sufficient warning, advice or information as to some or all of the POP Warning Matters and/or the SUI Warning Matters; and, or alternatively

(c)    The IVS Implants not being fit for the purpose for which implants of that kind were commonly acquired

the safety of the IVS Implants was not such as persons generally were entitled to expect and the IVS Implants had a defect for the purposes of sections 75AC(1) and 75AD(1) of the TPA and, or alternatively, a safety defect for the purposes of sections 9 and 138 of Schedule 2 of the CCA.

69.    By reason of the matters pleaded at paragraph 68 (a) to (c) above, the IVS Implants acquired by each of the IVS Sub-Group Members were not of merchantable quaIity within the meaning of section 740(3) of the TPA, or acceptable quality within the meaning of section 54 of Schedule 2 of the CCA.

70.    In the premises, each of the IVS Sub-Group Members has suffered loss and damage, by reason of the fact that:

(a)    the safety of any of the IVS Implants was not such as persons generally were entitled to expect as pleaded at paragraph 68 above; and in addition, or alternatively

(b)    the IVS Implants were not of merchantable or acceptable quality as pleaded in paragraph 69 above.

PARTICULARS

(A)    In respect of Ms Weedon the particulars to paragraph 65 above are repeated.

(B)    Particulars of each of the other Sling Sub-Group Members' loss and damage may be provided after the trial of common issues but is expected to include:

(i)    personal injury    including one or more of the Sling Complications or Removal Complications;

(ii)    health care expenses;

(iii)    other out of pocket expenses;

(iv)    economic loss;

(v)    the need for gratuitous and in addition, or alternatively, commercial care; and

(vi)    non-economic loss.

71.    In the premises, … Covidien is liable to compensate each of the IVS Sub-Group Members for their loss and damage pursuant to:

(a)    section 75AD of the TPA, or section 138 of Schedule 2 of the CCA, as the case may be; and, or alternatively,

(b)    section 740(1) of the TPA, or sections 54,271 and 272 of Schedule 2 of the CCA, as the case may be.

Claims in Negligence

72.    … Covidien owed the IVS Sub-Group Members a duty to exercise reasonable care and skill in the design, evaluation, manufacture, marketing and supply of the IVS Implants.

73.    … Covidien:

(a)    designed and manufactured the IVS Implants for the POP Purpose and/or the SUI Purpose;

(b)     did not undertake adequate clinical or other evaluation of the IVS Implants prior to the release in Australia and/or the supply, distribution, marketing or promotion in Australia of the IVS Implants, as pleaded at paragraphs 51 to 54 above.

74.    In the circumstances pleaded at paragraph 73 above, … Covidien designed, evaluated, manufactured, marketed and in addition, or alternatively, supplied the IVS Implants containing:

(a)    the characteristics pleaded at paragraph 10 above; and in addition, or alternatively;

(b)    a risk of, and in addition, or alternatively, a susceptibility to causing the Implant Complications and, or alternatively, the Implant Removal Complications.

75.    In addition to paragraph 73 above, … Covidien continued to design, manufacture, market and in addition, or alternatively, supply the IVS Implants notwithstanding the matters pleaded at 73 and 74 above.

76.    In addition, or alternatively, to paragraph 75 above, … Covidien failed to conduct adequate evaluation of the safety and effectiveness of the IVS Implants in treating POP and/or SUI after releasing them in Australia.

77.    Further, or alternatively, … Covidien failed to conduct adequate evaluation of the long-term safety and effectiveness of the IVS Implants in treating POP and/or SUI after releasing them in Australia.

78.    … Covidien failed to inform any of the IVS Sub-Group Members, treating hospitals; and in addition, or alternatively treating doctors of the IVS Warning Matters.

79.    By reason of the matters pleaded at paragraphs 73 to 77 above, … Covidien breached [its] duty of care to the IVS Sub-Group Members.

80.    By reason of the matters pleaded at paragraphs 73 to 77 above, the IVS Sub-Group Members have suffered loss or damage.

6    Both parties accepted that the claims of Mrs Weedon and the IVS Sub-Group Members are claims which could properly be characterised as both personal injury and product liability claims.

B    RELEVANT PRINCIPLES

7    Recently in both Abbott v Zoetis Australia Pty Limited (No 2) [2019] FCA 462; (2019) 369 ALR 512 and Turner v Tesa Mining (NSW) Pty Limited [2019] FCA 1644; (2019) 290 IR 388 I had cause to discuss, in some detail, the principles relating to the award of security for costs in the context of Pt IVA proceedings. In Abbott (at 522–4 [33]–[40]) a series of considerations which assume importance in applications for security for costs in class actions were described. They are equally relevant here. Although lengthy, it is appropriate that passage be set out in full:

First, like in Madgwick, the nature of the claim advanced in this class action is highly relevant. This proceeding is precisely the sort of case contemplated by the Australia Law Reform Commission when it produced its landmark report, Grouped Proceedings in the Federal Court, Report 46 (Australian Government Publishing Service, 1998) at 165. This report, published prior to the development of the modern market of litigation funding, contemplated that the proposed legislative scheme would provide an effective mechanism for persons with small or relatively modest claims to obtain access to justice. The class action procedure was seen as a mechanism to allow small or modest claims to be “bundled together” (at 45 [94], 49 [106]). An obvious example of the type of case which could employ such a procedure was mass torts or product liability cases where there were likely to be a small number of complex common issues, the determination of which, was critical for a large number of small or modest claims. The current proceeding, if properly advanced, is an exemplar of such a case.

Secondly, the applicant and almost all the group members are likely to be individuals normally resident in Australia, are suing for their own benefit and, given the nature of the claims made by the individuals, the respondent could not realistically expect to obtain an order for security in an individual case brought by such claimants. Although power to award security exists, it strikes me as intuitively odd that the applicant should somehow be in a worse position with regard to security because the applicant has taken the step of adopting a procedure which, at least in theory, makes the prosecution of claims feasible and should cause them to be advanced in a way that best promotes the overarching purpose, being the just resolution of the disputes (being all claims against the respondent) according to law and as quickly, inexpensively and efficiently as possible.

Thirdly, a further relevant contextual matter is the role of group members in Part IVA proceedings generally and in a case such as this in particular. Subject to presently irrelevant exceptions, group proceedings can be commenced without the group members’ consent (or without them even knowing a proceeding has been commenced): see s 33E of the Act. Moreover, a particular feature of the statutory scheme is that group members (even where group members have taken a conscious step to be involved in the proceeding by registration or retaining a solicitor), are generally entitled to play a passive role while the claims of the applicant and common issues are determined. This is why, as a general proposition, group member discovery or procuring information from group members prior to an initial trial (except in the context of a Court ordered mediation of all claims) is not allowed. As the Victorian Court of Appeal (Bongiorno and Harper JJA and Bell AJA) noted in National Australia Bank Ltd v Pathway Investments Pty Ltd [2012] VSCA 168; (2012) 265 FLR 247 at 257-258 [49]-[50], 275 [125]:

…group members are entitled to expect that, in the usual course, the plaintiffs will be responsible for the carriage of the proceeding and group members will not be required to participate as a party or be subject to orders for discovery.

Fourthly, the stage at which the provision of security is proposed is relevant, being close to the commencement of the proceeding and prior to the group members being given an informed choice to opt-out which I would order, in the ordinary course, after a close of pleadings and evidence being served. The final group membership will not be known until after opt-out, a statutory right enjoyed by all persons who have been described by the group definition. The persons from whom the respondent would seek to procure contribution to security may not even be group members following opt-out pursuant to s 33J of the Act. The flippant answer to this concern might be to say that the group member can always opt-out rather than provide security, but they should not be required to make a choice to opt-out by a date earlier than one I would have otherwise fixed if I was guided only by usual case management imperatives.

Fifthly, in this case, an award of security will cause complications (and not only to group members). Given that I think it highly likely that a very large proportion of group members being individuals with modest claims are likely to decline to provide any security to advance a case, the conduct of which they will not control, and on the further assumption (favourable to the respondent) adequate security is provided by others, it will be necessary to deal with “free riders”. On this premise, the most obvious solution seems to be the exclusion of those non-contributing group members from participation. Not only would this have deleterious consequences for access to justice for these persons with claims (a barrier Part IVA was designed to overcome), but it would also undermine the respondent having the benefit of s 33ZB orders which would allow it, if it was successful on the common issues, to have a statutory estoppel running against those excluded group members. The only apparent alternative would be a complicated assessment requiring some form of contribution by those group members who declined to provide security to the costs of those that did. That would be an uncertain exercise and indeed it could create real complications in negotiating a non-curial resolution of the matter.

Sixthly, although I do not consider that the applicant has discharged its burden of proving, in accordance with s 140(1) of the Evidence Act 1995 (Cth) stultification will necessarily occur (as that concept has been understood in the authorities), it would be a mistake, in the context of a class action such as the present, to consider that this is determinative. I accept the Full Court explained in Bell Wholesale Co Ltd v Gates Export Corporation (1984) 2 FCR 1 at 4 that:

… a court is not justified in declining to order security on the ground that to do so will frustrate the litigation unless a company in the position of the appellant here establishes that those who stand behind it and who will benefit from the litigation if it is successful (whether they be shareholder or creditors or, as in this case, beneficiaries under a trust) are also without means. It is not for the party seeking security to raise the matter; it is an essential part of the case of a company seeking to resist an order for security on the ground that the granting of security will frustrate the litigation to raise the issue of the impecuniosity of those whom the litigation will benefit and to prove the necessary facts.

But if one was to apply this principle indiscriminately to Part IVA proceedings, then strictly speaking, the only true way of proving stultification with certitude in an open class proceeding would be to prove that no group member had assets sufficient to proffer security or that no group member, with such assets, would pledge them. Whatever be the case in the different context of unfunded closed classes or unfunded commercial class actions, to place that burden on an applicant in an unfunded mass tort or product liability open class action such as the present, would necessarily require a costly and time consuming interrogation of the financial position of a very large number of group members – most of whom, no doubt, have no other connexion with the applicant other than the happenstance of being named as group members (and hence being someone who may benefit from a positive determination in relation to the common questions). To contend that current authority developed in the context of ordinary, inter partes litigation requires such an approach, ignores, or at least diminishes: the breadth of the discretion exercised in security applications; the unusual nature of open class Part IVA proceedings; and the concern of the Court expressed in Madgwick (at 19 [77]) that the Court’s approach in that case should not be taken as advocating that litigation funding should be put in place to avoid an order for security.

Seventhly, and connected to the last point, there is the broader desirable policy outcome of not putting in place obstacles to the ability of applicants to run Part IVA proceedings in a cost effective way by “self-funding”. This is not to downplay the relevance of possible injustice to respondent, but reflects the reality that providing protection against adverse costs and the provision of security has driven the funding market for litigation. Safeguarding against adverse costs and the provision of security can be addressed by litigation funding in a form that has now become common; it could also be addressed by solicitors for class action applicants as part of the basis upon which they would be allowed to charge contingency fees (as recently recommended, as Recommendations 17 and 18, by the Australian Law Reform Commission in its report, Integrity, Fairness and Efficiency—An Inquiry into Class Action Proceedings and Third-Party Litigation Funders (ALRC Report 134) at 205). Experience points to the fact that both forms of “funding” may be accompanied by “After-the-Event” (ATE) insurance, but irrespective of such insurance, the derivation of the benefit from funding litigation in this way, will be accompanied by the concomitant burden of providing protection against adverse costs and provision of security. What is evident is that each of these models involves substantial costs visited, in whole or part, on group members, directly or indirectly, and involves third parties making a profit by the use of public processes of the Court. There is no a priori difficulty with these models properly employed, but the unthinking application of principles developed in a different type of litigation which have the effect of requiring group members to, in effect, put up security, could inadvertently serve to undermine the ability of self-funding of open class actions to develop as an option. The Full Court (Jacobson, Middleton and Gordon JJ) in Australian Securities and Investments Commission v Richards [2013] FCAFC 89 at [53] has explicitly recognised that self-funding of class actions should be perceived as “an important alternative to commercial litigation funders and should, to the extent possible, be encouraged”.

C    THE PRESENT APPLICATION

8    The present application for security is made at a relatively early stage of the proceeding and seeks an order under s 56 of the Act and r 19.01 of the Federal Court Rules 2011 (Cth) (FCR) related to the costs and disbursements that are said to be likely to be incurred until the close of pleadings in accordance FCR schedule 3 and the National Guide to Counsel Fees. Those costs were estimated to be in the amount of $300,000, inclusive of GST. The solicitor giving that estimate, Mr O’Brien, was not the subject of challenge and it seems to me to be a figure which has a rational basis.

9    It is important to note, however, that Senior Counsel for Covidien accepted that this is a “first tranche” of security, and that if security was to be ordered, then further tranches would be sought up to and including the further stages of the litigation leading to the hearing of the initial trial of common issues and the determination of Mrs Weedon’s claim. Given the amount sought up until the close of pleadings, it is safe to assume, based on the way in which class action litigation of this type is conducted, that the amount of security sought could easily exceed $1 million (particularly, if roughly a third of that amount has been spent prior to the close of pleadings). Again, there is no specificity about this figure, but it is reasonable to proceed on the basis that further substantial security would be sought, if it was appropriate for security to be ordered. In consequence of a failure to provide security, Covidien seeks an order that the proceeding be stayed against it.

10    As noted above, this is an unfunded open class class action. In Turner v Tesa, I dealt with the different question as to whether or not the Court has power to order security against a funder and, if so, whether such security should be ordered. I determined that notwithstanding that industrial litigation is said to be a “no costs” jurisdiction, that this was not a sufficient reason to decline an award of security against a funder conducting a common enterprise, and that there was no reason why an order for costs ought not be made directly against a funder of unsuccessful funded litigation.

11    In that case, there had been a bargain struck between the funder and the group members by which the funder had agreed to provide any security ordered by the Court. No order was pressed (nor made) that if security was not provided, there would be a stay of the proceeding, because the appropriate remedial response in the event that security were not provided would have been a “declassing” of the proceeding. That case stands in stark contrast to the present circumstances. As was noted (at 408 [71]):

[I]t is worth noting that if this had been an unfunded class action where group members were bearing the costs, or if the solicitors were working on a speculative basis, I do not consider that any proper exercise of discretion could have led to award security for costs against the applicant (even though non-parties, in the form of group members, were attempting to obtain a financial benefit out of the class action). For the reasons I discussed at length in Abbott, such a course would undermine the central purpose of Pt IVA proceedings of facilitating access to justice.

12    The critical difference between Turner and this case, is that Turner could be characterised as a class action bought for financial reward tied to the fruits of the litigation. Although there are differences, the present case is far closer to that considered in Abbott (an application for leave to appeal was refused in Zoetis Australia Pty Ltd v Abbott [2019] FCAFC 153 Allsop CJ, Perram and Beach JJ). That case principally dealt with the proper approach to take in respect of security for costs applications in the light of the decisions of the Full Court of this Court in Bray v F Hoffman-La Roche Ltd [2003] FCAFC 153; (2003) 130 FCR 317 and Madgwick v Kelly [2013] FCAFC 61; (2013) 212 FCR 1. In Abbot, in a passage expressly approved by the Full Court, I noted (at 517 [15]) that in an application such as the present “context is everything”, and a discretion toward security is:

to be exercised judicially, having regard to a consideration of the particular facts of the case. If they are relevant, the factors that may be taken into account are unrestricted, and any weight to be given to them depends upon the fact’s own intrinsic persuasiveness and its impact on other circumstances which have to be weighed.

13    The written submissions exchanged by the parties identified that the “primary question” to be determined on this application was whether Mrs Weedon had discharged the onus of proving that an order for security would stultify the proceeding.

14    Following the service of the outline of submissions made by Covidien, there was some attempt by those acting for Mrs Weedon to rectify the evidence concerning stultification by filing additional affidavit evidence. Senior Counsel for Covidien noted that in the light of that evidence there would be a “likelihood of stultification.” That comment, I think, was made in the context of the fact that it is safe to assume that neither Mrs Weedon nor any IVS Sub-Group Members contacted by the solicitors for the applicants would be prepared to be a lead applicant in the proceeding against Covidien if they were required to put up security for $300,000 as a first tranche, and that each IVS Sub-Group Member had informed the solicitors that they would be unable to pay or get access to $300,000 for that purpose.

15    To my mind, this does not establish stultification as it is understood in the authorities, in particular as the Full Court explained it in Bell Wholesale Co Ltd v Gates Export Corporation (1984) 2 FCR 1 (at 4 per Sheppard, Morling and Neaves JJ). Stultification does not only look at the position by reference to the applicant, but it is also necessary to have regard to those persons who stand behind and will benefit from the litigation, if it is successful.

16    In the context of a class action, this, obviously, includes the group members. Indeed, in Abbott, I expressly found that the applicant had not discharged its burden (in accordance with s 140 of the Evidence Act 1995 (Cth)) to prove that stultification will occur. But I went on to note that it would be a mistake, in the context of a class action, to consider that this was determinative of an application for security. To place such a burden on an applicant in an unfunded mass tort or product liability open class action would require a costly and time consuming interrogation of the financial position of a very large number of group members, which would be unwarranted, particularly when it was likely that it would lead to no conclusion other than that the group members, collectively, would have sufficient unencumbered assets of a combined value in excess of the amount of security: see at 524 [38]–[39].

17    Although there are 19 identified IVS Sub-Group Members, neither Mrs Weedon nor Covidien can give an accurate estimate of precisely how many group members are likely to exist. Despite the reluctance of Mrs Weedon to concede the point, I do think it is safe to assume, given the likely number of group members, there would be sufficient unencumbered assets for group members, collectively, to put up an amount of $300,000, and I would not think it unsafe to infer that further amounts of security could be provided by group members. But, as I explained in Abbott, that is not the point.

18    During the course of oral submissions, the argument as to why security should be ordered placed primary focus on two quite different matters.

19    First was said to be the unusual nature of the claim made against Covidien and that it had, in effect, been “dragged into” a class action in circumstances where if claims had been made against it individually, the costs associated with the resolution of those controversies would have been far less than the costs likely to be incurred should this class action proceed.

20    Secondly, emphasis was put on the fact that it would not be accurate to describe this proceeding as one where there were relatively modest claims made by a large number of individuals. There are only around a score of group members who have already been identified, and if a similar case which has proceeded to judgment is any guide, it might be thought that the damages able to be recovered could be in a similar range, that is, between $550,000 and $1.2 million per claimant. It is unnecessary to form a view about the likely value of the claim made by Mrs Weedon, except, in the most general of terms, her Senior Counsel describes it as “very significant”, and likely to be at the top of this scale. That characterisation is resisted by Covidien. But the point remains that these are not “modest” claims made by group members.

21    Dealing with the first of these matters, the fact is that Mrs Weedon has brought both a claim under the Trade Practices Act 1974 (Cth) and in negligence against Covidien. Although it would have been possible for her to commence an individual proceeding against Covidien, Mrs Weedon has decided to bring her claim in both an individual and representative capacity using the class action mechanism. The spectre of individual claims being made in the circumstances was one which had been initially adopted by the solicitors for Mrs Weedon, and which was the subject of what might be described as trenchant criticism in West v Rane, being redolent of bygone days.

22    There is a reason why we have a class action regime; it provides an efficient and effective mechanism for the resolution of cases such as the present notwithstanding that there may be a number of respondents joined to those proceedings. The long debated controversy of whether it was necessary for each group member to have a claim against each respondent to a class action is now also a thing of the past. It is a flexible procedural mechanism which gives effect to the overarching purpose in resolving matters such as the present.

23    It is very difficult to speculate on what the costs would be associated with 19, 30, 50 or 100 claims against Covidien (the number is not known). It was suggested that the costs associated with advancing such claims (on the frankly unrealistic assumption that the claim was made against Covidien directly and did not involve other respondents) would be less than those brought in this class action proceeding. For my part, I think this is likely wrong but, in any event, speculation of this sort is unhelpful. I suppose it is fair to say that most respondents would say that they are dragged in to class actions. No one willingly wishes to be a respondent in complex proceedings, but the complexity of the resolution of all these controversies would be made far worse if it was necessary for a large number of individual proceedings to be commenced.

24    It may be that, if there was one case brought by Mrs Weedon against Covidien and it was resolved, this would provide a mechanism to allow other claims to be resolved non-curially, thus saving significant costs for Covidien. But all this is in the realm of speculation and it must be remembered that there would be nothing stopping Covidien from entering into an attempt to resolve its involvement in this class action in an extra-curial way. It is always open for a claim of an applicant to be resolved pursuant to an approval under s 33V of the Act without the whole of the claims against other respondents being resolved.

25    Although, as I have explained, this class action heavily focusses on the activities of Dr Petros and the consequences of those activities, there was no suggestion the proceeding is not properly constituted as a class action; no application has been made under s 33N of the Act, and, at least on the material I have thus far seen, it appears to be the most efficient way of resolving these claims.

26    As to the second matter, although Covidien is correct to note that the claims may not be as modest as some brought in other mass tort claims, the spectre of an individual group member making a claim of this type against these respondents on an individualised basis would no doubt be a daunting prospect. Even if such a group member was to find solicitors and counsel willing to act on a “no-win no-fee” basis, the potential of adverse costs would no doubt cause pause in considering whether such litigation should be commenced. One of the benefits of the class action regime is, of course, the ability of group members to obtain a determination in relation to common issues by remaining in the proceeding while not being exposed to any adverse cost consequences. I do not think that the policy issues I referred to in Abbott or in Turner are misplaced in the current circumstances.

27    Finally, in their written submissions, Covidien contended as follows:

while there is evidence that the solicitors for [Mrs Weedon] are “not in a position” to provide the security, there is no detail as to what that means in terms of the solicitors nor evidence as to whether consideration has been given to whether another firm would conduct the proceedings and provide necessary security, or provide … an indemnity.

28    Although those submissions do not say it in terms, if it is suggested that in order to prove stultification, a solicitor acting on a no-win no-fee basis is required to establish that they are not in a position to provide security, then this is a submission that ought be expressly rejected. As Perram J observed in Capic v Ford Motor Company (No 2) [2016] FCA 1178 (at [21]):

[I]f I were to order security to be provided in this case it would for all intents and purposes stifle the action. Even if some part of the case spluttered on after such a body blow so that it could not be said that the case was wholly stultified, this would not change my mind. In this area I am not per se required to order security if the applicant fails to prove stultification: Madgwick v Kelly [2013] FCAFC 61; (2013) 212 FCR 1 at [81]. It is true, I accept, that the lawyers for Ms Capic are acting on a no-win no-fee basis at this point, and that the costs recoverable by them if the class action succeeds may well exceed the fees which might be payable by Ford under an adverse costs order. To that extent, it is possible that some of the damages awarded may ultimately find their way into the lawyers’ hands. However, I do not think for the purposes of the issue of stultification that attorneys in that position are to be seen as standing behind the action. A similar conclusion was reached in Madgwick and in Bray.

See also Kelly v Willmott Forests Ltd (In Liq) [2012] FCA 1446 (at 697 [101]–[103] per Murphy J).

29    It follows that, notwithstanding the onus of proving stultification has not been made out (as I understand the concept of stultification), and the further matters raised by Covidien during the course of oral submissions, the application for security for costs ought not be made in this unfunded class action brought on a speculative basis for personal injury. This is an unsurprising result because if these claims were pursued by group members on an individual basis, it would be a risible suggestion to assert that those claimants would have been required to put up security.

D    CONCLUSION

30    Accordingly, the application will be dismissed. There is no reason why costs should not follow the event.

Associate:

Dated:    21 October 2020

SCHEDULE OF PARTIES