Carey-Hazell v Getz Bros & Co

Federal Court of Australia (Full Court)|2007-09-21|Before: French J, Kiefel J, Siopis JJ

The Court: 1 The Court is presently concerned with a Notice of Motion by the first respondent filed on 10 May 2007 seeking the following orders: 1 Pursuant to section 56(4) of the Federal Court of Australia Act 1976 (Cth), the appeal in so far as it relates to the first respondent be dismissed on the ground that the appellant has failed to provide the security for the first respondent's costs of the appeal, as ordered to be provided by French J on 15 October 2004. 2 The appellant pay the first respondent's costs of this motion and the appeal. 3 Such further or other orders or directions as the Court thinks fit. 2 On 8 May 2007, the second and third respondents filed a Notice of Motion seeking similar orders. 3 It is necessary to set out in some detail the history of the litigation, and the submissions by Ms Carey-Hazell (the appellant) in opposition to the motion to dismiss the appeal and award costs against her. 4 The trial of the proceedings brought by the appellant against the respondents was heard by Kiefel J in February 2004. The trial occupied some 13 days. 5 On 6 July 2004, Kiefel J gave judgment in the matter, dismissing the applicant's application with costs ([2004] FCA 853). The appellant had sought relief against the respondents following the implant of a mechanical valve in her heart. The appellant claimed that the implant of the valve led to her experiencing symptoms attributable to thromboembolisms and their aftermath. Her claim against the first respondent was in its capacity as supplier of the valve in Australia, against the second respondent as her cardiologist, and against the third respondent as her surgeon. 6 On 27 July 2004, the appellant instituted an appeal against the judgment pronounced by Kiefel J on 6 July 2004. 7 On 6 August 2004, the first respondent filed an application for security for costs of the appeal, and on 26 August 2004, the second and third respondents filed a similar application for security for costs. 8 French J heard the applications on 28 September 2004. On 15 October 2004, French J ordered that the appellant provide some security for the costs of the appeal, and indicated that in the event that the grounds of appeal were narrowed, and the likely cost and duration of the appeal reduced, the appellant had liberty to apply to vary the orders. 9 The orders made by French J on 15 October 2004 were: 1. The appellant is to provide security for the first respondent's costs of the appeal in the amount of $75,000 and for the second and third respondents' costs of the appeal in the further amount of $75,000 by way of bank guarantees on the terms set out in the attached schedule or such other terms as may be agreed to respectively by the first respondent and by the second and third respondents.

The appeal be stayed until such security has been provided or until further order. 3. The respondents have liberty to apply for further security for their costs of the appeal on 7 days' notice. 4. The appellant have liberty to apply to reduce the security for costs of the appeal on 7 days' notice. 5. The appellant is to pay: (a) the first respondent's costs of its motion; and (b) the second and third respondents' costs of their motion. 10 Subsequent to those orders by French J, the appellant failed to provide anything by way of security for costs. 11 On 27 April 2005, the first respondent moved by a Notice of Motion that the appeal be dismissed. A similar Notice of Motion by the second and third respondents was filed on 12 May 2005. 12 On 2 June 2005, the appellant filed a Notice of Motion seeking leave to file a subsequent Notice of Appeal, that the order for security for costs made by French J on 15 October 2004 be set aside, or alternatively, that the orders be varied by providing a reduced amount of security for costs. 13 The parties' three Notices of Motion were heard by a Full Court constituted by Spender, Branson and Siopis JJ. 14 On 31 March 2006, the Full Court ([2006] FCAFC 48) declined to dismiss the appellant's appeal on the ground that she had not provided the security required by the order made by French J. The Court also declined to set aside the order made by French J, or reduce the amount of security which she was required to provide. The Court ordered: 1. The security for costs ordered by French J on 15 October 2004 to be provided by the appellant for the first respondent's costs of the appeal, and for the second and third respondents' costs of the appeal, be provided by 4 pm on Friday 5 May 2006. 2. If the appellant fails to comply with the order to provide security for the first respondent's costs by 4pm on Friday 5 May 2006, the proceeding be dismissed as against the first respondent; if the appellant fails to comply with the order to provide security for the second and third respondents' costs by 4pm on Friday 5 May 2006, the proceeding be dismissed as against the second and third respondents. 3. The costs of the parties on the Notices of Motion be costs in the appeal. 15 On 20 April 2006, the appellant sought special leave to appeal to the High Court of Australia against the decision of the Full Court. 16 On 4 May 2006, Siopis J stayed the orders of the Full Court of 31 March 2006 until the determination by the High Court of the appellant's application for special leave to appeal from the judgment of the Full Court. 17 Particularly because of the material which the appellant urged on this Court in opposition to the making of the orders sought by the respondents' Notices of Motion, it is helpful to set out in full the reasons of the High Court for dismissing the application for special leave to appeal from the judgment and orders of the Full Court ([2006] HCA Trans 553): GUMMOW J: The Federal Court of Australia (Kiefel J) dismissed proceedings brought by the applicant seeking damages in relation to an allegedly faulty prosthetic heart valve. The applicant appealed to the Full Court of the Federal Court of Australia. French J ordered her to provide security for the costs of the respondents in the sum of $150,000. He noted among other factors the size of the appeal and its dependence on wide-ranging factual challenges. A Full Court (Spender, Branson and Siopis JJ) then fixed times by which the security was to be provided, and ordered that in default of compliance the appeal be dismissed. The Full Court considered a notice of appeal (the fifth) which was more focused than its predecessors, and which had been settled by senior counsel. The appeal was estimated to take five days. It remained largely fact-centred. In part the notice of appeal turned on a case not put to the trial judge and evidence not tendered before the trial judge. For those reasons, among others, the Full Court declined to vacate French J's orders to provide security. Whether the new case will be allowed and the new evidence received has not yet been decided.

The application for special leave to appeal to this Court against these discretionary decisions on matters of practice and procedure does not disclose any error in principle by either French J or the Full Court. The application stresses the applicant's impecuniosity and the disastrous financial effects which the trial judge's costs orders will have if they are not set aside. It is submitted that before security could be ordered, some factor additional to impecuniosity must be present. There are factors of this kind present in the novel case, based on new evidence, which the applicant wishes to advance. The application also contends that there is a significant public interest in allowing the appeal to proceed because the appeal will examine the meaningfulness of warnings about the communication of risk; but that is a fact-specific issue, and a context specific issue. There are insufficient prospects of success in an appeal against the security orders to justify a grant of special leave. 18 On 8 November 2006, the appellant filed a Notice of Motion seeking, in essence, an order that the orders of the Full Court made on 31 March 2006 be varied to the extent necessary to allow her to maintain her appeal from the judgment of Kiefel J, on condition that she provide the security for costs ordered by French J, within seven days of the order sought by her. 19 The Full Court (Branson J, with whom Spender and Siopis JJ agreed) in its judgment of 13 December 2006 ([2006] FCAFC 186), after observing that the application for special leave had been dismissed on 5 October 2006 by the High Court, said: 5 Consequently, as Ms Carey-Hazell had not provide[d] security for costs as ordered by French J, her appeal from the judgment of Kiefel J was dismissed by operation of order 2 of the orders made by the Full Court on 31 March 2006. 20 Branson J, on 13 December 2006, said at [7]: 7 As Ms Carey-Hazell's appeal stands dismissed, this Court may only set aside or vary the orders made by it on 31 March 2006 "in special circumstances" (see O 28 r 5(3) of the Federal Court Rules). … 8 There will be "special circumstances" within the meaning of O 28 r 5(3) if the circumstances of this case distinguish it from the usual or ordinary case in such a way that it is appropriate to depart from the general rule that finality should attend the dismissal of a proceeding (Jess v Scott (1986) 12 FCR 187 at 195).

21 Branson J said at [9]: 9 The circumstances upon which Ms Carey-Hazell relies are: (a) that she was effectively insolvent, and thus unable to provide security for the respondent's costs, until she learnt on 6 November 2006 that a substantial tax bill which she had received would be forgiven; (b) she is now able, as she claims, to borrow $150,000 from a close friend for the purpose of providing security for the respondents' costs; (c) She has applied to the Court promptly after learning of the change to her circumstances; (d) unless she obtains an order on appeal setting aside the costs order made by Kiefel J she will become bankrupt; and (e) there is a public interest element in her appeal from the judgment pronounced by Kiefel J. 22 Branson J said at [11]: 11 …Even were I satisfied that special circumstances have been demonstrated in this case I would not consider it an appropriate exercise of the Court's discretion to vary the orders made by the Full Court on 31 March 2006 so as to allow Ms Carey‑Hazell now to maintain her appeal from the judgment pronounced by Keifel J. 23 Branson J gave three reasons for that view: 12 First, I consider delay to be a significant factor suggesting against a variation of the orders. It is now more than ten years since the events occurred which gave rise to the proceeding before Kiefel J. If Ms Carey‑Hazell's appeal is re-instated it is unlikely to be heard until, at the earliest, mid 2007; that will be at least three years from the date of the judgment pronounced by Kiefel J. It is over two years since the order for the provision of security for costs was made. Additionally, Ms Carey-Hazell's application to the Tax Relief Board to have her tax bill forgiven was received on 28 August 2006. She provided no explanation in her affidavit evidence for not making her application to the Board earlier nor did she explain why, having applied to the Board, she did not seek to have the stay order made by Siopis J extended but rather allowed her appeal to be dismissed. Ms Carey-Hazell has today submitted that her delay in applying to the Board was necessitated by the need to have the relevant assessment issue first. However, she has provided no explanation for not seeking to have the stay order made by Siopis J extended. 13 Secondly, the respondents have incurred significant additional costs since the date of the orders made by French J. Payment of these costs is not secured by his Honour's orders. Ms Carey‑Hazell has indicated today that she is not able to provide any security for the respondents' costs in addition to that required by his Honour's orders. 14 Finally, I am not satisfied that Ms Carey-Hazell's grounds of appeal from the judgment of Kiefel J are strong. 24 In relation to the second of those reasons, it is relevant to note the observation of Branson J at [16]. 16 It is appropriate to record that were I satisfied that it was appropriate to vary the orders earlier made, I would accept the submissions of the respondents that (a) the amount of security to be provided by Ms Carey-Hazell should be increased and (b) the security should be provided in a form that provides protection to the respondents should Ms Carey-Hazell become bankrupt. 25 Mr Enore Panetta, a solicitor with Clayton Utz, deposes in his affidavit filed 25 July 2007 that in about January 2007, he was informed by another solicitor at Clayton Utz of a telephone call from a Deputy Registrar of the Federal Court advising that a Notice of Motion was required seeking formal orders that the appeal be dismissed (given that the appeal stood dismissed by operation of a springing order) and that the appellant pay the costs of the respondents, to be taxed if not agreed. 26 Mr Anthony O'Reilly, a solicitor from Kennedys for the first respondent, deposes in his affidavit filed 30 July 2007 that he was informed by Clayton Utz of that communication by a Deputy Registrar of the Federal Court. 27 Mr O'Reilly deposes that on 31 May 2007, Siopis J made the following orders: 1. The respondents file and serve on the appellant a minute of the proposed orders by 4:00 pm on 6 June 2007; 2. The appellant to file and serve on the respondents any affidavit and submissions in response to the minute of proposed orders by 4:00 pm on 13 June 2007; 3. The motion of the second and third respondent filed on 8 May 2007 and the motion of the first respondent filed on 10 May 2007 are adjourned to a date to be fixed; and 4. Costs of today are reserved. 28 On 31 May 2007, the first respondent prepared and served draft consent orders (jointly with solicitors for the second and third respondents) on the appellant in the following form: CONSENT ORDERS (Order 35, rule 10) The Court orders by consent that: 1 The appeal stands dismissed by operation of the orders of the Full Court dated 31 March 2006. 2 The appellant pay the costs of the first respondent of the appeal, to be taxed if not agreed. 29 On 13 June 2007, the appellant filed an affidavit opposing the proposed consent orders. 30 The appellant's submissions commence: 1. The applicant opposes the motion of the First and Second and Third Respondents to dismiss the appeal and order costs against the appellant and seeks an Order setting aside the springing order and allowing the appellant to pay into the Court the security for costs, within 14 days of the handling down of the decision of this Court. 31 It appears that the appellant relies, for the power of the Court to set aside that order, on O 35 r 7(2)(e) of the Federal Court Rules (the Rules), which provides that an order may be set aside if it does not reflect the intention of the Court. 32 The appellant submits that there are several important issues of law. The appellant identified these as: (a) Whether informed consent can be obtained where the quantum of the risk, if known, is not communicated. (b) Whether there is an obligation on the manufacturer to provide accurate product information to doctors about the risks, and in terms that can be understood. (c) Whether there is an obligation on the manufacturer for patient product information to represent the true facts. Keifel [sic] found that the patient information "Living with your new heart valve ‑ An instructional booklet for heart have [sic] patients", failed to provide adequate warnings. S75AC states "…Instructional defects are those caused by incorrect or inadequate warnings and instructions. All these categories of 'defect' fall within the definition of defect in section 75AC". Further the fact that the First Second and Third Respondents are arguing that the meaning of "per patient year" is unclear demonstrates that the instructional information provided to the doctors was also defective. (d) Given that the first respondent identified a chip on the valve, whether the first respondent fulfilled the obligations to demonstrate that there was no chip at the time of the supply. 33 In elaboration of the fourth of those points, the appellant made comments critical of the findings of the trial judge and her Honour's treatment of the evidence touching that point. 34 The appellant vigorously submits that: 17. There were many other issues of merit that support my grounds for appeal… 35 The appellant focuses strongly on what she asserts as the merit of her proposed appeal that she was not adequately informed as to the risks associated with the implantation of the mechanical valve. 36 The appellant now asserts that one of the grounds of appeal going to the merits of her challenge is: 18. (a) That regardless of the meaning and effect of "per patient year" or "per year" the rate of 2‑5% of suffering thromboembolism was sufficiently high that it required the proper communication of the risk to the patient. 37 What the appellant claims she should have been told is not clear, even now. 38 Even if it be assumed that, in the circumstances of this case, the Court has power to entertain a second application for an order setting aside or varying the orders made by the Court on 31 March 2006, two considerations render it inappropriate for the power to be exercised. 39 First, the appellant sought special leave to appeal to the High Court from the judgment of the Full Court delivered on 31 March 2006. The appellant's application for special leave was refused for the reasons set out at [17] above. In refusing special leave, Gummow J took into account the case which the appellant wished to advance if the orders for security for costs were set aside, and also, the public interest aspects of her case. These included the meaningfulness of warnings and the communication of risk. Gummow J dismissed the special leave application on the grounds that there were insufficient prospects of success. 40 Secondly, the appellant's contention that the orders of the Full Court should be set aside under O 35 r 7(2)(e) of the Rules on the basis that they do not reflect the intention of the Court was the subject of a specific finding by Branson J in the Reasons for Judgment of 13 December 2006. Her Honour said at [7]: 7 …I would reject the contention that the orders may be set aside pursuant to O 35 r 7(2)(e) on the basis that they do not reflect the intention of the Court. Assuming that O 35 r 7 has any application in the present circumstances, the terms of the orders do reflect the intention of the Full Court. 41 The consequence of the refusal of special leave by the High Court was that the stay ordered by Siopis J on 4 May 2006 lapsed. The consequence was that the appeal stood dismissed by operation of the orders of the Full Court dated 31 March 2006. It was not necessary for there to be a Notice of Motion seeking that order, contrary to the apparent view of a Deputy Registrar. There was, however, the need to seek an order for costs. 42 In those circumstances, it is appropriate to make the following orders.

43 The Court declares that the appeal WAD 176 of 2004 stands dismissed by operation of the orders of the Full Court dated 31 March 2006. 44 The Court orders that the appellant pay the costs of the first respondent of the appeal, and the costs of the second and third respondents of the appeal, in each case to be taxed if not agreed. 45 Having regard to the circumstance of the advice by the Deputy Registrar, it is appropriate to make an order that there be no order for costs of the present two Notices of Motion. I certify that the preceding forty‑five (45) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Spender, Branson and Siopis.

Associate: Dated: 21 September 2007 The Appellant appeared in Person.

Counsel for the First Respondent: PF Villa

Solicitor for the First Respondent: Kennedys

Counsel for the Second and Third Respondents: EA Panetta

Solicitor for the Second and Third Respondents: Clayton Utz Lawyers

Date of Hearing: 30 July 2007

Date of Judgment: 21 September 2007

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