Darcy v Medtel Pty Limited

Current Statement of Claim 6 The applicant brings the proceedings on his own behalf and on behalf of persons (including the legal personal representatives of deceased persons) who have had a 'Hazard Alert Pacemaker' surgically implanted in Australia. The expression 'Hazard Alert Pacemaker' is defined in the current pleadings (par 5A) as follows: 'A specific group of Meta Pacemakers [which] was the subject of one or both of two hazard alerts issued by [the] Therapeutic Goods Administration in Australia in June and July 2000 (the "Hazard Alerts"), or would have been the subject of one or both of the Hazard Alerts had the pacemaker not already been explanted.' 7 The pleadings describe the Meta Pacemaker as follows (par 15): 'Each Meta Pacemaker is a cardiac device manufactured and used for the particular purpose of being surgically implanted on the advice of doctors inside the human body and attached to the heart so as to restore and maintain a normal heart beat by providing an electrical impulse or energy or beat that is carried through leads to the heart. The Meta Pacemaker is triggered by an irregular pulse in the user. On being activated, the Meta Pacemaker sends a series of light electric pulses that activates a regular heart beat. The particular purpose of the implantation is to restore and maintain a regular heart beat, and so to provide comfort and reassurance to the user in respect of the user's health. Once fitted, the Meta [P]acemaker can only be used for the personal use of the user. The Meta Pacemaker was placed on the Australian Register of Therapeutic Goods on or about 21 November 1996.' 8 The applicant pleads that he and each Group Member (estimated to comprise 258 persons) have had a Meta Pacemaker implanted on medical advice. In his case, the device was implanted in February 1998. The applicant claims that after the Hazard Alerts he was advised to have his Pacemaker explanted and that it was removed surgically on 11 July 2002. 9 The current pleading (par 17) alleges that each Hazard Alert Pacemaker: '(a) was designed or manufactured in such a way or with such inputs or under such conditions that it was subject to an increased risk of failure of the pacer processing integrated circuit that controls the pulse generator, resulting or likely to result in sensing and output anomalies, including failure of the device, whereby the pacemaker may cease to function without any prior warning or indication; or (b) was part of a group of pacemakers about which it was not possible, without explanation and destructive examination of the pacemaker, to ascertain whether or not any individual pacemaker was designed or manufactured in such a way or with such inputs or under such conditions that it was subject to the characteristics identified in paragraph (a), (each of the circumstances being hereafter referred to as the "Fault").' It is further alleged that each Meta Pacemaker acquired by the applicant and the Group Members was one of the Hazard Alert Pacemakers and was subject to the Fault (par 40). Accordingly, the applicant pleads that each Hazard Alert Pacemaker was not reasonably fit for the particular purpose for which it was required and implanted within the meaning of s 74B of the Trade Practices Act 1974 (Cth) ('TP Act'), and was not of merchantable quality within the meaning of s 74D of the TP Act. 10 The current pleadings also seek to make out a case of breach of duty. Paragraph 65 repeats allegations relating to the manufacture and supply of Meta Pacemakers by the second respondent and the acquisition and resupply of the Meta Pacemakers by the first respondent. Paragraph 66 is as follows: 'When regard is had to the purpose for which the Meta Pacemakers are manufactured, implanted and used as pleaded in paragraph 15 above, and particularly that they require implantation through surgical procedure on the advice of doctors, and the manner in which they have been marketed as pleaded in paragraph 16 above, at all material times the Respondents and each of them owed a duty of care to the Applicant and Group Members to make each Meta Pacemaker as safe, dependable and reliable for its purpose as reasonable care and skill on the part of the Respondents could make it.' Paragraph 67 repeats par 40. Paragraph 68 then pleads a breach of the duty of care as follows: 'By reason of the matters pleaded in the preceding paragraph, each of the Hazard Alert Pacemakers was not as safe, dependable and reliable for its purpose as reasonable care and skill on the part of the Respondents could make them, and so the Respondents and each of them breached their duty of care to the Applicant and Group Members.' 11 The relief sought in the current statement of claim includes compensation pursuant to ss 74B and 74D of the TP Act (par 74(b) and (c)) and '[d]amages from each of the Respondents at common law' (par 74(f)).

Proposed Amendments 12 The proposed amendments add a further duty of care to that pleaded in par 66, namely a duty of care to the applicant and Group Members: '(b) to keep, in respect of each Meta Pacemaker, adequate records of the nature, source, date(s) of manufacture and date of inclusion of all critical components (including the SLIC IC [Super Low Current Consumption Integrated Circuit]) incorporated into each device.' 13 The proposed new pars 68A to 68C are as follows: '68A Further, and in the alternative, the Second Respondent failed to keep, and the First Respondent failed to ensure that the Second Respondent kept, adequate records in respect of the components incorporated into each of the Hazard Alert Pacemakers such that the Respondents breached their duty of care to the Applicant and Group Members. Particulars The Second Respondent was unable, because of the nature of its record keeping, to identify the date code for the SLIC IC that was incorporated into each of the Hazard Alert Pacemakers. 68B By reason of the matters pleaded in the preceding paragraph, the Respondents were unable to determine whether each of the Hazard Alert Pacemakers had incorporated within it a SLIC IC that was one of a batch that was subject to an increased risk of failure by virtue of exposure to electro-static discharge, and accordingly each of the Hazard Alert Pacemakers were included in the Hazard Alert. 68C In the premises, as a result of the Respondents' breach of their duty of care set out in paragraph 68A, each of the Applicant and Group Members has suffered and may continue to suffer injury, loss and damage by reason of the matters set out in paragraph 68B.' 14 The particulars to par 68C refer to par 72, which is to remain unamended. It pleads that the injury, loss and damage include loss of amenity of life; stress anxiety and grave concern at the risk of imminent failure of the Hazard Alert Pacemaker; and, in some cases, economic loss arising out of the need for further hospitalisation. The proposed amendments do not change the relief sought by the applicant with the current pleadings.

the limitations question 15 The current and proposed pleadings do not identify the place of manufacture of the Meta Pacemakers, but they imply that the product was manufactured outside Australia, presumably in the United States. The evidence suggests that the place of manufacture was in fact Florida, although part of the manufacturing or assembly process may have taken place in California. 16 Putting the position of deceased persons to one side, a person cannot be a Group Member unless he or she has had a Hazard Alert Pacemaker surgically implanted in Australia. The pleadings do not expressly allege that any loss or damage sustained by Group Members occurred in Australia. But the loss or damage allegedly sustained by the applicant occurred in Australia and it is likely that most if not all Group Members are in the same position. 17 In John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503, the High Court held that the substantive law for the determination of rights and liabilities in respect of intra-Australian torts is the lex loci delicti. The Court also held that limitation statutes, however expressed, should be regarded as part of the substantive law for this purpose: at 544 [100], per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ. Their Honours noted (at 538-539 [81]) that the place of the tort may be 'ambiguous or diverse', particularly in a product liability case: cf Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538, at 566-568, per Mason CJ, Deane, Dawson and Gaudron JJ. 18 In Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491, the High Court held that the substantive law for the determination of rights and liabilities in respect of foreign torts should also be the lex loci delicti: at 520 [75], per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ. It follows that where an applicant sues in Australia for damages in respect of a tort committed in a foreign jurisdiction, the relevant limitation period will ordinarily be determined by the lex loci delicti. 19 No evidence was adduced in the motion as to the law of California or Florida. If a respondent is to rely on a foreign limitations statute, evidence of the foreign law must be adduced: Zhang, at 518 [70]. (As to the pleading obligations of an applicant who wishes to rely on the provisions of a foreign law, see Zhang, at 518-519 [69]-[71]; Dyno Wesfarmers Ltd v Knuckey [2003] NSWCA 375.) Reference was made in argument to s 18A of the Limitation Act 1969 (NSW), which fixes a limitation period for three years for actions founded on negligence or breach of duty for damages for personal injury', but neither party suggested that s 18A necessarily fixes the relevant limitation period: cf Judiciary Act 1903 (Cth), ss 79, 80. 20 As both parties accepted, it is impossible on the evidence before me to ascertain the lex loci delicti for the purposes of the claims of the applicant and the Group Members. That can only be done when the evidence relating to the manufacture of the devices and, perhaps, evidence of the loss or damage sustained by the applicant and Group Members is complete. I therefore cannot as yet ascertain whether any limitation period relevant to the proposed amendments has expired. All that can be said is that if the amendments are allowed, and if no specific order is made providing that they are to take effect from the date of the application to amend, the respondents will be deprived of the opportunity of pleading and contending that the new claims are statute barred.

reasoning 21 FCR, O 13 took its present form in 1994. Prior to the amendments to O 13, doubts had been expressed as to whether the general words of O 13 r 2 (now O 13 r 2(a)) were sufficiently wide to abrogate the so-called rule in Weldon v Neal (1887) 19 QBD 394. While the 'rule' has been the subject of much analysis, its broad effect is to formulate a rule of practice that amendments will not be permitted if the effect of those amendments, by virtue of the doctrine of 'relation back' of amendments to the date of the initiating process, is to deprive a respondent of a limitations defence otherwise available: see Rodgers v Commissioner of Taxation (1998) 88 FCR 61, at 64, per curiam; Agtrack (NT) Pty Ltd v Hatfield (2003) 7 VR 63, at 79-81, per Ormiston JA (Chernov JA and O'Bryan AJA agreeing). 22 The authorities cast doubt on whether FCR O 13 r 2, in its original form, removed the rule of practice formulated in Weldon v Neal: see Bradshaw v Hair Transplant Pty Ltd (1986) 13 FCR 1, at 3-4, per Toohey J; Wardley Australia Ltd v Western Australia (1992) 175 CLR 514, at 559-562, per Toohey J. To overcome these doubts, the Federal Court Act was amended in 1994 by the Law and Justice Legislation Amendment Act 1994 (Cth), s 44, which inserted s 59(2B) into the Federal Court Act. The new s 59(2B) authorised the Rules of Court to make provision for the amendment of a document in a proceeding 'even if the effect of the amendment would be to allow a person to seek a remedy in respect of a legal or equitable claim that would have been barred because of the expiry of a period of limitation if the remedy had originally been sought at the time of the amendment'. (For the legislative history of s 59(2B), see Rodgers v Commissioner of Taxation, at 64-65.) The amendments to FCR, O 13 r 2 were made pursuant to the power conferred by s 59(2B) of the Federal Court Act. 23 It is perhaps not entirely clear that the proposed amendments in this case plead a fresh cause of action such as to attract the rule in Weldon v Neal. The current pleadings include a claim for damages for breach of duty in the manufacture of the Hazard Alert Pacemakers. There may be some doubt as to whether the addition of a different allegation of breach of duty in the course of the manufacturing process necessarily involves pleading a fresh cause of action: see Agtrack, at 81-83. It is not, however, necessary to resolve the issue in order to deal with the motion. 24 I am prepared to assume for the purposes of the present motion, without deciding the point, that s 33ZE of the Federal Court Act does not suspend the running of any limitation period that otherwise would apply to the claims made in the proposed amendments. On this assumption, the issues identified by the partes were whether: (i) the applicant had shown that the effect of the proposed amendments is to add a new claim for relief, or another legal foundation for a claim for relief, that 'arises out of the same facts or substantially the same facts as those already pleaded' (O 13 r 2(7)); and (ii) if so, whether it is just to grant leave to make the amendments notwithstanding the expiration of any relevant limitation period (O 13 r 2(3)). 25 I am content to proceed on the basis of the issues identified by the parties. Nonetheless, I note that, for the reasons I have already given, it is not yet possible to determine whether 'any relevant limitation period has expired' within the meaning of O 13 r 2(3). Since it cannot yet be determined whether the application for leave to amend was made after the expiration of any relevant limitation period, it is arguable that the applicant took on a greater burden than O 13 r 2 in truth requires. But if the applicant succeeds in obtaining leave to amend having regard to the requirements of O 13 r 2(3) and (7), his position cannot be made weaker by any uncertainty as to whether a relevant limitation period has in fact expired. 26 So far as the first issue is concerned, the only Full Court decision to address the expression 'arising out of the same or substantially the same facts' is Rodgers v Commission of Taxation. The Court referred to the discussion of the phrase 'substantially the same' in In re Burford; Burford v Clifford [1932] 2 Ch 122, at 138, per Lord Hanworth MR, as follows: 'the words "substantially the same"…relate to the facts which have to be examined for the purpose of ascertaining what is the relief or remedy to which the parties are entitled. "Substantially" must have been put in in order to embrace within the rule something which was not exactly a repetition of the relief or remedy asked for…where the same facts have to be conned over in order to ascertain the liability and to give some relief to one or other of the parties, in such a case the rule now provides that it is unnecessary to have separate actions and separate proceedings, but that a third party notice may be served.' 27 Although I bear in mind what the Full Court said, in my respectful opinion the observations of Lord Hanworth MR are of limited assistance in construing O 13 r 2(7). This is because In re Burford and the later case of Chatsworth Investments Ltd v Amoco (UK) Ltd [1968] 1 Ch 665, also cited in Rodgers v Commissioner of Taxation, were concerned with a quite different rule, namely Order XVIA, r 12 (later Order 16, r 1). The expression 'substantially the same' in Order XVIA, r 12, was used in relation to any relief or remedy claimed by the plaintiff, or any question or issue arising between the parties. The language of Order XVIA, r 12 and indeed the concepts to which the rule refers are not the same as those incorporated in O 13 r 2(7). 28 Perhaps of more direct relevance to the present case is the conclusion reached by the Court in Rodgers v Commissioner of Taxation. In thatcase, the liquidator of a company applied for leave to amend an application seeking to set aside payments of group tax made by a corporation that subsequently went into liquidation. The amendment added two payments to the eight that had already been pleaded. The Court reasoned as follows (at 70): 'No doubt it is correct to say each payment amounted to a separate transaction; nonetheless we consider these additional claims arise out of substantially the same facts as those pleaded to support the original claims. The additional claims are said to be part of a pattern of conduct extending over a period of approximately eight months and involve allegations identical in form to those of the earlier claims. The additional payments were both made within five weeks of the date of the last payment specified in the original application. The requirements of O 13, r 2(7) are satisfied in respect of these two payments.' The Full Court's analysis suggests that the scope of O 13 r 2(7) is not to be limited by any narrow approach to the language of the sub-rule. 29 It is important to appreciate that FCR, O 13 r 2(7) recognises that, subject to limited exceptions, the function of a party's pleading is to contain, and contain only, a statement in summary form of the material facts on which the party relies: O 11 r 2. By its terms, O 13 r 2(7) distinguishes between a claim for relief and the facts on which the claim for relief is founded. It is plainly no barrier to satisfying O 13 r 2(7) that the proposed amendment adds a new claim for relief if the claim arises out of the same or substantially the same facts as those already pleaded. 30 The respondents submitted that the proposed amendments introduce a claim based on the inadequacy of the respondents' record keeping as well as challenging the manner in which the respondents determined the scope of the Hazard Alert. The new claims are said to contrast with the 'existing claims', which are founded on the alleged quality of the Hazard Alert Pacemakers as measured by their risk profile. The language of O 13 r 2(7), however, requires the Court to focus on the facts currently pleaded and to determine whether the new claim for relief (or new legal foundation for a claim) arises out of the same, or substantially the same facts. 31 The proposed amendment to par 66 of the statement of claim adds a plea that the respondents owed a duty of care to the applicant and the Group Members to keep adequate records of the critical components incorporated into each Meta Pacemaker. The material facts relied on to support this duty of care are precisely the same as in the current pleading. That is, the duty is said to arise because of the purposes for which the Pacemakers were manufactured, implanted and used, and the manner in which they were marketed. The facts pleaded may or may not sustain the duty of care on which the applicant wishes to rely. But the proposed amendment to par 66 does not alter or add to the material facts on which the applicant relies. 32 Proposed par 68A pleads that the respondents breached their duty to keep adequate records relating to the critical components incorporated into each device. The facts relied on to support this allegation, as particularised, are that the respondents failed to keep adequate records and thus were unable to identify the date code for the SLIC IC incorporated into each of the Hazard Alert Pacemakers. It is true that an allegation in these terms is not made in the current pleadings. However, par 17(b) of the current statement of claim alleges that each Hazard Alert Pacemaker was part of a group about which it was not possible, without destroying the device, to ascertain whether any particular Meta Pacemaker was manufactured in such a way as to be subject to an increased risk of failure of the processing integrated circuit. Proposed par 68B pleads that by reason of the matters in par 68A the respondents were unable to determine whether each of the Hazard Alert Pacemakers incorporated an item that rendered it subject to a particular risk of failure. 33 In my view, the applicant correctly submitted that the proposed pars 68A and 68B elaborate the allegations already made in par 17(b) of the current statement of claim. In substance, they identify the reason why (on the applicant's case) it was not possible to ascertain which of the Hazard Alert Pacemakers was subject to the manufacturing defect that created a 'superadded' risk of failure of the device. 34 Proposed par 68C pleads that in consequence of the respondents' breach of duty of care, the applicant and Group Members have suffered injury, loss and damage. The injury, loss or damage is the same as that already pleaded in par 72. 35 In my opinion, the proposed amendments add a new foundation in law for a claim for relief that arises out of substantially the same facts as those already pleaded. The claim for relief is the claim for damages for breach of duty already pleaded in the current statement of claim. The new foundation in law for that claim is the allegation that the respondents breached their duty to keep adequate records of the components incorporated into each Hazard Alert Pacemaker, thereby preventing the respondents from identifying which of the Pacemakers was subject to an increased risk of failure by reason of a manufacturing or assembly fault. The new foundation in law for the relief claimed arises out of substantially the same facts as those already pleaded, particularly in pars 15, 17(b), 40, 66, 67 and 72 of the current pleadings. Accordingly, the applicant has satisfied the requirements of O 13 r 2(7). 36 The second question is whether it is 'just' to permit the amendments sought by the applicant for the purposes of O 13 r 2(3). 37 Mr Loveday, who appeared with Ms Harris on behalf of the respondents, submitted, by analogy with the approach taken in Brisbane South Regional Health Authority v Taylor (1997) 186 CLR 541, at 551, per McHugh J, that the onus lies on the applicant to show that the justice of the case requires the exercise of the Court's discretion in his favour. Mr Bannon SC, who appeared with Mr Clarke and Dr Cashman for the applicant, accepted that the applicant does bear that onus. 38 The respondents contended that they would be prejudiced if the amendments were allowed, at least if the amendments took effect from the date the proceedings commenced, by their inability to rely on a potential limitations defence. They also pointed to the 'potential' unavailability of relevant documents and witnesses, although they adduced no evidence to support that claim. Mr Loveday urged that even if the amendments were to be allowed, they should take effect only from the date of the motion, thus preserving to the respondents the right to rely on any relevant limitation period that may have expired since the commencement of the proceedings. 39 The evidence adduced by the applicant to explain the delay in seeking to raise the matters identified in the proposed amendments was somewhat sparse. However, I infer from the evidence of Ms Gilsenan, a solicitor in the firm representing the applicant, that it was not until the respondents filed an affidavit by Dr Morris, on 24 February 2004, that the applicant's advisers became aware of the reasons for the respondents' inability to identify particular Hazard Alert Pacemakers affected by an increased risk of failure of the processing integrated circuit. The applicant acted reasonably promptly to amend the pleadings to take account of this new information which, until the filing of Dr Morris' affidavit, was wholly within the knowledge of the respondents. 40 It is also relevant to the exercise of the discretion conferred by O 13 r 2(1) and (3) that (as I infer from Ms Gilsenen's evidence) it was not until Dr Morris' affidavit was filed that it became apparent to the applicant's advisers that the respondents would claim that a substantial proportion of the Hazard Alert Pacemakers were not affected by the particular fault that created the superadded risk of failure of the processing integrated circuit. This foreshadowed contention, which also depends on information available in the first instance only to the respondents, made the need to pursue the reasons for the situation pleaded in par 17(b) of the current statement of claim, to use the phrase in the applicant's written submissions 'starkly apparent'. 41 In my opinion, the interests of justice will be served by permitting the applicant to amend his pleadings without any direction that the amendments should take effect only from the date the motion was filed. I have taken account of the prejudice to the respondents in not being able to plead a limitations defence that might otherwise be available. However, had the information within the respondents' knowledge been made available to the applicant before February 2004, it is likely that the applicant's pleadings would have reflected that information within a short time of it becoming available. Moreover, there is no evidence of any forensic prejudice to the respondents (other than their inability to plead a limitation defence), such as a loss of records or the unavailability of witnesses. Indeed, given the nature of the proposed amendments, which concern the respondents' own manufacturing and record-keeping processes, it is unlikely that there would be any such prejudice of this kind. 42 I should add two points. First, both parties assumed that if leave to amend were granted without a direction that the amendment operate from a particular date, the effect of filing the third amended application and the third amended statement of claim would be that the amendment would relate back to the filing of the original pleadings. This assumption is correct although, as Ormiston JA suggested in Agtrack, at 86 [41], it may be that the question of relation back is not so much a principle or rule, but 'merely commonsense characterisation of what is in fact sought and done'; cf Air Link Pty Ltd v Paterson (No 2) [2003] NSWCA 251, at [46]-[51], [106], per Mason P (with whom Beazley JA agreed) expressing doubt about these observations. 43 Secondly, the expression 'relevant period of limitation' in O 13 r 2(3) is a wide one. As Mason P observed in Dyno Wesfarmers, at [36], the expression is not confined to 'procedural' limitation statutes of the forum, but extends to a foreign limitation statute that is applicable in the forum as part of the lex causae under the Zhang choice of law principles.

conclusion 44 I consider it appropriate to grant leave to the applicant to amend the pleadings by filing a third amended application and a third amended statement of claim in the form annexed to the amended motion filed on 5 May 2004. The costs of the motion should be costs in the cause. I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville.

Counsel for the Applicant: AJL Bannon SC with J Clarke P Cashman

Solicitor for the Applicant: Maurice Blackburn Cashman

Counsel for the Respondents: C Loveday with C Harris