Bright v Femcare Limited

[2001] FCA 1477

Federal Court of Australia|2001-07-01|Before: Stone J

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Source facts

Court

Federal Court of Australia

Decision date

2001-07-01

Before

Stone J

Source

Original judgment source is linked above.

Judgment (56 paragraphs)

[1]

introduction 1 On 10 May 1999, the applicant commenced representative proceedings under Pt IVA of the Federal Court of Australia Act 1976 (Cth) ("the Act"). The proceedings have already given rise to six judgments of this Court: (1999) 166 ALR 743 (constitutional validity of Pt IVA of the Act; affirmed on appeal, (2000) 100 FCR 331), (2000) 175 ALR 50 (third amended statement of claim struck out), [2000] FCA 1179 (issues relating to a subpoena addressed to the Therapeutic Goods Administration), [2000] FCA 1344 (issues relating to subpoenas addressed to public hospitals) and [2000] FCA 1394 (issues relating to a subpoena addressed to Toowoomba Base Hospital). 2 There are currently two notices of motion before the Court. The first notice of motion, filed on behalf of the first respondent ("Femcare") on 12 October 2000, seeks an order under s 33N of the Act that the proceeding no longer continue, or alternatively no longer continue against Femcare, as a representative proceeding under Pt IVA of the Act. The second notice of motion, filed for the second respondent ("Endovasive") on 11 October 2000 seeks orders that the proceeding be dismissed or stayed pursuant to O 20 r 2 of the Federal Court Rules for failure to satisfy the criteria in s 33C of the Act, or alternatively that they be dismissed or stayed pursuant to O 20 r 2 in so far as they relate to group members described as "Group B Members", and, in the further alternative, relief similar to that sought by Femcare. 3 These notices of motion were originally heard by Lehane J on 6 and 7 November 2000. Unfortunately his Honour was overtaken by serious illness shortly thereafter. It was then agreed between the parties that another judge of this Court should decide the issues raised by the notices of motion "on the papers" with one hearing day for additional submissions. Prior to that hearing, I reviewed the evidence adduced before his Honour and the transcript of the proceeding before him. At the hearing before me, the respondents, over the objection of the applicant, were given leave to present some "updating material" in the form of additional affidavits. Because that additional evidence has not been material to my decision, it is not necessary to discuss it further. In discussing the parties' submissions in these reasons, I have not distinguished between submissions that were made before Lehane J and those made before me.

[5]

current claims 7 The following outline of the applicant's claims is derived from the statement of claim. It is intended only to provide a coherent account of the background to this proceeding and the claims currently made by the applicant on behalf of herself and group members. It should not be regarded as involving any determination of disputed facts. 8 Femcare manufactures devices known as Filshie clips and applicators that are used in female sterilisation procedures. A Filshie clip is applied to the fallopian tube by means of a Filshie applicator with the aim of occluding that tube thus preventing conception. It is claimed that effective sterilisation depends, inter alia, on the applicator being correctly adjusted so that it applies sufficient pressure to cause the Filshie clip to occlude the fallopian tube without cutting it. When a Filshie applicator is correctly adjusted it is said to be "in calibration". If not so adjusted it is said to be "out of calibration". 9 The applicant claims damages for herself and for group members in respect of losses allegedly resulting from sterilisation procedures in which Filshie equipment was used. In the case of the applicant and the "Group A Members", the loss or damage is said to have resulted from failed procedures, resulting in pregnancy, followed in some cases by termination (sometimes with complications) and in others by the birth of a child (involving the burden of raising the child). The failure of the procedure is said to result from the use of a Filshie applicator that is out of calibration. 10 "Group B Members" are women whose procedures have not been demonstrated to fail but who, as a result of publicity about failed sterilisations in which Filshie equipment had been used referring to lack of proper calibration as a possible cause, were concerned about the effectiveness of the procedures that they had undergone. Inquiries were made by (or on behalf of) Group B Members as to whether the hospitals in which their procedures were performed had records confirming that the applicators used were, or were likely to have been, in calibration. As a consequence of being unable to allay their concerns by reference to hospital records, the Group B Members underwent investigatory or sterilisation procedures, adopted additional contraceptive precautions or suffered distress. It is alleged that the absence of such records, resulting, it is claimed, from the respondents' breaches of duty, led to these consequences. 11 The allegations made in the statement of claim can be briefly summarised. The precise calibration of a Filshie applicator is said to be critical to its effective performance. An applicator may be out of calibration for a number of reasons, including repeated opening and closing in ordinary use and rough handling. Because applicators are used in environments where they are likely to be handled by more than one person, it is unlikely that an accurate record could be kept of the number of times a particular applicator has been opened and closed. Therefore the only reliable way to ensure that an applicator is in calibration for the purpose of a procedure would be to check the calibration immediately before use. 12 It is alleged that since 1982 Femcare or its agent has had a means of checking whether an applicator was in calibration but it was not until August 1999 that Femcare made available to hospitals and doctors a gauge that would enable them to check calibration reliably. The gauge produced in August 1999 is said to be simple and inexpensive and able to have been developed no later than 1982. It is said that Femcare was aware of these matters since 1982 and that Endovasive was aware of these matters since November 1993. Alternatively, it is claimed that the calibration of Filshie applicators should have been checked regularly by Femcare or its agent. 13 It is said in the statement of claim to be essential that accurate records be kept of the extent of use of each applicator and the dates on which its calibration was checked. Despite this, it is claimed, no statement of the need for regular servicing appeared in instruction manuals until after 1994. Apart from a circular issued by Endovasive in 1995 recommending annual service "to ensure smooth running and trouble free maintenance" and a statement in manuals supplied with the equipment, no statement was made of the need to service applicators or of the possible consequences of insufficient servicing until about May 1998. Femcare and, since 1993, Endovasive, were allegedly aware that applicators were not sent to Femcare or its agent for regular servicing.

[14]

issues claimed to be substantial common issues of law or fact 23 The applicant has pleaded the existence of substantial common issues of law and fact by reference to various paragraphs in the statement of claim. It is necessary to deal with each claim in detail but, rather than repeating those paragraphs, the Fourth Amended Statement of Claim has been attached as an appendix to these reasons. The paragraphs identified as giving rise to common issues are 9, 10, 15 to 40, 42 to 45, 47 to 50, 52 to 55, 60 to 67, 94 to 145, 146(a), 147 to 149, 151, 152, 154, 155, 157 and 158. 24 Each respondent has filed a document described as a "Draft Defence". Femcare's draft defence was described by its counsel, Mr Walker SC, as "not a pleading" but "an argumentative document designed to illustrate the way in which allegations can and will be met were the case to proceed in this Court". It provides a detailed response to the fourth amended statement of claim, admitting many of the allegations contained therein. Endovasive's draft defence denies, or does not admit, all allegations in the fourth amended statement of claim with two exceptions, namely paragraphs 6 and 7. It is therefore less useful in assessing what the issues in this case are likely to be. 25 Given the preliminary nature of the defences and the fact that the issues remain poorly defined, the applicant submits that it is premature to consider the s 33N application. In support of this submission, counsel referred to Foster J's approach in Silkfield Pty Ltd v Wong (1998) 90 FCR 152 concerning the primary judge's refusal to make orders under s 33N. In a comment that was approved by the High Court ((1999) 199 CLR 255 at 268 [35]), his Honour said (at 157 - 158): "It is too early to make any of the decisions called for by that section. Even if I had some doubt in this regard, I would not be disposed to disturb [the primary judge's] decision. It was a decision made in the exercise of a discretion and nothing has been shown to indicate that there was any miscarriage in its exercise." 26 Undoubtedly what is pleaded by way of defence may affect the identification of common issues. Potential common issues might be admitted by the defendant and thus cease to be at issue between the parties; Murphy v Overton Investments Pty Ltd [1999] FCA 1123 at [67]. However, it cannot prejudice the applicant if I approach my consideration of s 33N on the basis that the respondents will put every allegation in issue, as it seems Endovasive proposes to do. In any event, as Endovasive has alleged that there are no substantial common issues of law or fact in the statement of claim, it is necessary to consider all relevant paragraphs of the statement of claim. I shall group similar issues wherever possible.

[16]

Paragraphs 10, 17 and 30 (importance of calibration) 28 Using the definition of "out of calibration" set out in paragraph 9, paragraph 10 makes the following assertion: "The use in a Filshie Procedure of a Filshie Applicator which is not adjusted so that it will sufficiently close the Filshie Clip so as to occlude the fallopian tube without cutting it increases the risk of a failed sterilisation". Paragraph 30 is similar, but vague in that it states that the potential consequences of using an applicator that is out of calibration are "very serious for the patient". As Mr Walker SC pointed out in submissions, these statements, of themselves, are unlikely to be controversial. Moreover, it is unlikely that acceptance of this allegation in the applicant's case would be helpful in resolving other claims. 29 Nevertheless, the consequences of using an applicator that is out of calibration are likely to be the subject of expert evidence and would appear to be significant in determining the claims of group members. They could be relevant in the following ways: · in determining the existence and scope of the alleged "duty to warn" based on the respondents' actual and imputed knowledge of these consequences; · in determining whether a failure to provide certain information to doctors and hospitals was misleading and deceptive or likely to mislead and deceive within the meaning of s 52 of the Trade Practices Act 1974 (Cth); · in assessing the likelihood that the pregnancy of a particular Group A Member arose from use of a Filshie applicator that was out of calibration. The first of these points is discussed below in [39], which deals with paragraphs 16, 35, 36, 66, 67, 97, 105 and 114 of the statement of claim. The second point is discussed in [51] - [52] below, dealing with paragraphs 121 to 134 of the statement of claim. 30 The third point is best dealt with at the level of the individual group member. It is pointless to consider this question in the abstract. It would appear that the respondents will seek to show that a failed sterilisation is more likely to be attributable to hospital or surgeon error than to the use of an applicator that is out of calibration; affidavit of Kevin William Broadley sworn 11 October 2000, pars 13 - 17, affidavit of Deborah Jackson sworn 23 October 2000, par 5. Resolution of this issue is likely to depend on evidence of what the surgeon observed during and after the procedures, what a competent surgeon might be expected to conclude from such observations, the position of the Filshie clip after the procedure (where this has been subsequently investigated) and the status of the relevant Filshie applicator at or about the time of the operation rather than on a general proposition that use of a Filshie applicator that is out of calibration may have negative consequences. 31 Paragraph 17 alleges that "[t]he maintenance of a Filshie Applicator In Calibration is and at all material times has been critical to its effective performance". This claim is similar to that in paragraph 10, except that it possibly alleges a relationship between the maintenance of a Filshie applicator and it being in calibration. Whether regular servicing would have ensured that Filshie applicators remained in calibration is a common issue, albeit a seemingly uncontroversial one.

[17]

Paragraphs 15, 20, 25, 33, 40, 43, 44, 48, 49, 53, 54 and 64 (manuals and promotional material supplied to hospitals and doctors) 32 These paragraphs allege that certain material (manuals and promotional material) was supplied to hospitals and doctors by the Australian distributors of Filshie applicators and make allegations concerning information said to be contained in or omitted from this material. It seems that different manuals could have been supplied at different times; first respondent's draft defence paragraph 13; affidavit of Kevin William Broadley sworn 11 October 2000, par 9. Ascertaining what material was supplied on different dates and the content of that material may raise an issue common to certain subgroups of group members. Although different manuals would be relevant to different group members, each version of the manual is likely to be relevant to the claims of a number of group members. As it should be relatively simple to ascertain the date of each operation, it would not be difficult to determine which material is relevant to the claims of each group member. It is important to note that this will not include all of the material that a particular hospital or doctor had at the date of each group member's procedure as it will only include material that was provided to every hospital or doctor. 33 Determining the content of some of the material relevant to the claims of particular subgroups is a comparatively small element of the case that needs to be made if a group member is to succeed in establishing her case as pleaded. As indicated above, the gravamen of the applicant's complaint is that failure on the part of the respondents to give certain warnings (see [14] - [18] above) had certain consequences (see [19] - [22] above). Even if the allegations as to omission were made out in relation to the relevant written material, the applicant would not have established that no warnings were given or that the alleged positive representations were inaccurate (that allegation being based on a failure to give certain warnings). As senior counsel for Endovasive, Mr Deakin QC, pointed out, even material that was generally circulated may have been provided to different recipients in different circumstances. In his submission, it would not be useful to look at the documents in isolation, rather each applicant's case would require separate analysis involving determination of what documents were supplied to the relevant doctor and hospital, what the doctor and hospital had been told, what the doctor and the hospital knew or should have known, and so on; see Vasram v AMP Life Limited [2000] FCA 1676 at [14], Murphy v Overton Investments Pty Ltd [1999] FCA 1123 at [80].

[45]

Usefulness of separate consideration of common issues identified above 66 In [27] - [59], I have identified which of the issues identified in the statement of claim as involving substantial common issues of law or fact actually do so. The issues that I have identified as having the potential to be determined separately are: (a) the content of manuals and promotional material generally supplied to hospitals ([32] - [33]); (b) the content of any necessary warning ([34]); (c) whether an onsite gauge had or should have been developed in 1982 ([38]); (d) the knowledge of the two respondents ([39]); (e) the Filshie applicators that were supplied over a period of time were similar in appearance and functionality ([41]); (f) the existence and content of the publicity following the "John Hunter incidents" ([43]); (g) information passing between Femcare and Endovasive (and previous exclusive Australian distributors) ([45]); (h) whether certain alleged conduct was misleading or deceptive ([51]); and (i) whether Femcare was carrying on business in Australia ([53]). 67 The difficulty in assessing issue (a) in a representative proceeding is that the applicant's case is primarily about omission rather than culpable action. This failure or omission is said to have a number of legal consequences: (a) it was misleading and deceptive conduct; (b) because of the omission, a representation made as to safety was inaccurate (and therefore misleading and deceptive); (c) it gave rise to breaches of the duty of care owed by the respondents to the group members; (d) it was causally connected to loss and damage suffered by group members. 68 The difficulty with the argument that an omission in particular "common" documents has the above legal consequences is the absence of a legal obligation to do that which has been omitted by a specific time or in a specific manner. In this way, it is different from positive actions or representations that could have immediate legal consequences. The fact that the allegations are based on an omission severely limits the value of any finding made in respect of the manuals and promotional material generally supplied (see [32] - [33] above). 69 There would seem to be little to gain in having a separate representative proceeding to establish the content of any necessary warning (issue (b)) where the necessity of such a warning is not a common issue and where it is not clear that such a warning will ever be necessary. On the other hand, if a warning were required and the applicant is successful in establishing that no warning was given, the applicant may not need to advert to content. 70 Issue (c) is relevant to the scope of any duty of care owed by the respondents. For example, if an onsite gauge had, or could easily have been, developed, failure to make that gauge available must be in breach of Femcare's duty of care. This will not be the case if no such gauge could have been developed before 1999. Issue (d) is also relevant to the scope of any duty of care owed. The difficulty is that the scope of the duty of care cannot be determined by reference solely to issues (c) and (d) and other relevant issues. In this context, the resolution of issues (c) and (d) in a separate representative proceeding would not allow the Court to make any final conclusions. In the case of issue (c), a finding is likely to be in the form of a statement as to the difficulty of developing an onsite gauge in or about 1982. In the case of issue (d), a finding is likely to be a list of relevant things that the respondents knew, ought to have known or did not know. In moving from these findings to a conclusion on the scope of the duty of care, it is likely that the evidence itself would have to be reconsidered and that submissions would be made on the meaning of the findings already made. This is not an efficient means of assessing the scope of any duty of care. The situation in relation to issue (g) is similar. That is, it goes to the issue of whether or not any duty of care requiring that certain matters be communicated by Femcare to the Australian distributor (for the time being) was breached, but is not itself conclusive (for example, information may have been provided by Femcare directly to some hospitals or doctors). 71 Issues (e) and (f) are unlikely to involve much, if any, controversial evidence. 72 Determining issue (h) separately from the question of whether actual conduct (including conduct that was not common) was misleading or deceptive would not, in my opinion, be an efficient way to deal with the claims of group members. The applicant submits that, in considering whether or not certain conduct is misleading or deceptive, one need not consider the special knowledge of the people targeted; Campomar Sociedad, Limitada v Nike International Ltd (2000) 169 ALR 677 at 704 [103], Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 at 467. Nevertheless, in this case, the difficulty faced by the applicant is not the prior knowledge of the hospitals and doctors but the fact that different conduct may have been directed towards different hospitals and doctors (that is, they may have received different information). 73 Thus issue (i) is the only issue where there may be some benefit in having a single determination made in a representative proceeding. However, given that this is the only such issue, it would be more efficiently dealt with by alternative case management procedures, such as that referred to in [78] below.

[46]

Other relevant factors 74 The applicant submitted that it was part of the policy of Pt IVA of the Act that respondents should not benefit from the fact that individual group members might not consider it worth their while to commence proceedings on their own initiative; Ryan v Great Lakes Council (1998) 155 ALR 447 at 456, ACCC v Giraffe World Australia Pty Ltd (1998) 84 FCR 512 at 534. While undoubtedly true, this is just one aspect of a complex policy. The provision in s 33N for the Court to order that a proceeding not continue under Pt IVA "where it is satisfied that it is in the interests of justice to do so" recognises that there may be circumstances in which, despite the existence of substantial common issues, the representative proceeding process is not appropriate. 75 The respondents submitted that they might be disadvantaged by the fact that the surgeons who operated on each group member and hospitals where the operations took place would not be joined to the proceeding, either as a respondent or as a cross-respondent. They also submitted that people might "be lulled into a false sense of security" and lose their right to commence proceedings against the surgeon involved (or the hospital). Section 33ZE(1) of the Act may not be sufficient to preserve such claims, in particular in circumstances where a potential plaintiff is not truly a group member. The applicant submitted in response that it was a matter for individual group members and their legal advisers to decide whether to commence separate proceedings against their doctors. In any event it was submitted that if common issues are decided in the applicant's favour, the respondents would retain a right of contribution against the doctor concerned if that doctor was also at fault. 76 Despite the possibility of the respondents claiming contribution from surgeons in any case involving joint negligence, proceeding in this manner does not lend itself to efficient resolution of the claims of the group members. Further, the doctor would not be bound by findings of fact made in the main proceedings and it is possible that, following the doctor's evidence and submissions, inconsistent findings of fact would be made. 77 Mr Walker SC submitted that one cannot determine whether there was a duty to warn in any individual case because the existence and content of the duty to warn depends upon the putative recipient of the warning. Whether or not that is strictly accurate, it is clear that no claim against the respondents based on their failure to warn could succeed without assessing the relevant knowledge of the medical practitioner who carried out the procedure at that time. As Mr Walker SC reminded the Court, the group members' claims are ultimately directed to establishing responsibility for their alleged losses and compensation for those losses. They are not directed towards settling in the abstract propositions about failures to warn and the making of representations. In assessing the medical practitioner's knowledge, it would be necessary to consider, not only information provided to the individual doctor, but also information provided by the respondents more generally. It may be that this involves both issues of causation as well as of duty but, in any event, the result is that the respondents' promotional material would need to be considered in the context of in each individual case, even if it had already been considered in a representative proceeding.

Parties

Applicant/Plaintiff:

Bright

Respondent/Defendant:

Femcare Limited

Legislation Cited (2)

Federal Court of Australia Act 1976(Cth)

Trade Practices Act 1974(Cth)

Cases Cited (17)

FEDERAL COURT OF AUSTRALIA [2001] FCA 1477 Bright v Femcare Limited SUMMARY In accordance with the practice of the Federal Court in some cases of public interest, the following summary has been prepared to accompany the reasons for judgment delivered today. The summary is intended to assist understanding of the decision of the Court. It is not a complete statement of the conclusions reached by the Court or the reasons for those conclusions. The only authoritative statement of the Court's reasons is that contained in the published reasons for judgment. The published reasons for judgment and this summary will be available on the Internet at www.fedcourt.gov.au. This proceeding is a representative proceeding commenced by Ms Bright on her own behalf and, in a representative capacity, on behalf of an unknown number of other women. The substantive case centres on surgical sterilisation procedures undergone by the applicant and the other women (together "the group members"). For reasons that have not been established at this point in time, some sterilisation procedures failed and some of the group members ("Group A") became pregnant. For the remaining group members ("Group B") who have not become pregnant, awareness of failed sterilisations made them uncertain about the effectiveness of the procedures they have undergone. This is alleged to have caused them mental distress and, in some cases, led them to take additional precautions. The applicant has alleged that the sterilisation procedure failed because the Filshie applicators used in the procedures were not properly adjusted. It is alleged that, for various reasons, this was a result of the respondents' negligence or misleading or deceptive conduct. The respondents deny the claim. The decision handed down today does not deal with the disputed claims of the group members but only with the way in which the proceeding should be managed in the future. The respondents had asked the Court to order that the proceeding not continue as a representative action. In accordance with the provisions of the Federal Court of Australia Act 1976 (Cth), the Court has satisfied itself that a representative proceeding is not the most efficient and effective way of dealing with the claims of group members and that, in the interests of justice, this proceeding should not continue as a representative proceeding. The reasons for this conclusion are set out in detail in the Court's published reasons for judgment. In summary, the reasons are that, compared with the number and significance of issues that are not common, the common issues are few and relatively insignificant. Further, many of the issues that are common are so intertwined with issues that are not common that it would not be efficient or effective to deal with common and non-common issues in separate proceedings. It is also the case that, in relation to many of the common issues, findings could only be made at a most general level and the evidence and reasoning that led to those findings would have to be revisited when the claims of an individual woman were considered. This would be an inefficient and costly way of dealing with such claims and not in the interests of justice. The fact that the proceedings will no longer continue as representative proceedings means that any group member (other than the applicant) wishing to make a claim against either or both respondents will need to bring separate proceedings, either in this or some other court. No decision has yet been made on the merits of the claims made by any of the group members.

Silkfield Pty Ltd v Wong (1998) 90 FCR 152 at 157 - 158 referred to Murphy v Overton Investments Pty Ltd [1999] FCA 1123 at [67], [80] referred to Vasram v AMP Life Limited [2000] FCA 1676 at [14] referred to Murphy v Overton Investments Pty Ltd [1999] FCA 689 at [15] referred to Qantas Airways v Cameron (1996) 66 FCR 246 at 251 252, 293 referred to Wong v Silkfield Pty Ltd (1999) 199 CLR 255 followed Campomar Sociedad, Limitada v Nike International Ltd (2000) 169 ALR 677 at 704 [103] referred to Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 at 467 referred to Ryan v Great Lakes Council (1998) 155 ALR 447 at 456 referred to ACCC v Giraffe World Australia Pty Ltd (1998) 84 FCR 512 at 534 referred to

(1998) 90 FCR 152

(1996) 66 FCR 246

(1999) 199 CLR 255

(2000) 169 ALR 677

(1995) 55 FCR 452

(1998) 155 ALR 447

(1998) 84 FCR 512

(1999) 166 ALR 743

(2000) 100 FCR 331

(2000) 175 ALR 50