Gill v Ethicon Sàrl

LEE J: 1 Earlier this week, this Pt IVA representative proceeding came before me, yet again, for the purpose of making orders facilitating the despatch to current group members of a court approved notice apprising them of the necessity to register in order to participate in any settlement which might arise following a Court-ordered mediation. My reasons for recently expanding the class and also for providing for a "soft" closure of the class are set out, in some detail, in Gill v Ethicon Sàrl (No 2) [2019] FCA 177; (2019) 134 ACSR 649 and Gill v Ethicon Sàrl (No 3) [2019] FCA 587; (2019) 369 ALR 175. These reasons assume a familiarity with both those judgments. 2 A day or so prior to the matter coming before me earlier this week, the chambers of the docket judge informed the parties that her Honour is to deliver judgment in relation to the substantive issues for determination at the initial trial at 11am on 21 November 2019. During the course of the case management hearing, I noted that the pending delivery of judgment gave rise to an issue which had not hitherto been appreciated. This issue related to the recent expansion of the class to include women who otherwise met the description of group members in the fifth further amended statement of claim, but whose entitlement to become a group member arose after 4 July 2017 and before 10 April 2019 (new group members). During the course of my reasons for expanding the class I indicated (in Gill v Ethicon Sàrl (No 3) at 183 [32]) that orders allowing for new group members to opt-out (and also facilitating notification and registration more generally) would be made at the next case management hearing, which at that stage I considered likely to be in June this year. 3 Regrettably, the process of obtaining contact details for group members and fastening upon an appropriate regime for notification has proved quite cumbrous. It has necessitated scores of subpoenas to be issued to third parties to ensure that information is conveyed in an effective way. It was only this week that the applicants settled upon a final course for notification to group members and the Court agreed to issue a further 100 or so subpoenas in order to procure information as to their contact details. In broad summary, these subpoenas are directed to procuring the production of records held by private health insurers and records held by public hospitals relating to women who obtained the relevant implants. In circumstances where the rights of these women would be adversely affected if they could not participate in any potential settlement, it is of signal importance the Court take particular care to ensure notification is given in an effective way. 4 In short, it is nobody's fault, but settling upon an effective notification regime has taken a good deal of time and has not, at the date of these reasons, been fully resolved. 5 Another issue with which I have had to deal was the applicants' desire to expand the class. In the Australian Law Reform Commission (ALRC) Report No 46, Grouped Proceedings in the Federal Court (which was the precursor to the enactment of Pt IVA of the Federal Court of Australia Act 1976 (Cth) (Act) in 1992), specific attention was given to the desirability of ensuring that group membership in large scale class actions could be expanded if it was thought appropriate. As the ALRC said at 66 [152]: … it will be in the interests of both the respondent and group members that the group be defined to include all relevant persons. If the principal applicant does not include all potential group members in the description of the group, the respondent will be deprived of the benefit of a common binding judgment in respect of all potential claimants. Similarly, potential group members who are not included will be denied a remedy or will be forced to institute either individual proceedings or another grouped proceeding. 6 Moreover, the ALRC gave specific attention to the circumstance where, in the case of mass torts with a latency period, the Act should provide for inclusion in a group proceeding of persons whose cause of action arose after the institution of the proceeding. At 67 [153] the following appears: Inclusion in grouped proceedings. Unless special provision is made, causes of action arising after the date when group proceedings are instituted which could otherwise have been included in those proceedings will not be included, even though they arise out of common circumstances. The policy objectives of the grouping procedure suggest that consideration be given to bringing in such causes of action if it is just for all parties to do so. An example which illustrates the merits of doing this is the mesothelioma claims in Western Australia. This disease has a latency period of at least 11 years. Half the victims die within 12 months of diagnosis and few survive for more than two years. Where a claimant is diagnosed after the filing of the initial claim, the Court may find that it is proper to enable his or her claim to be dealt with in the grouped proceedings... (emphasis added, citations omitted) 7 These considerations highlighted by the ALRC led to the enactment of s 33K of the Act, which provides that the Court may, at any stage of a representative proceeding, give leave to amend so as to alter the description of the group even where the cause of action accrued after the commencement of the representative proceeding. As is evident from Gill v Ethicon Sàrl (No 3), these same considerations referred to by the ALRC played a large part in the exercise of my discretion to allow the expansion of the group to include the new group members. 8 But inclusion of new group members gives rise to a further issue - that of notification. One further matter referred to by the ALRC in Report No 46, at 67 [153], was that upon group members being included post commencement, the: … [c]ourt would have to give appropriate directions about notice and other matters to bring those proceedings up to the same stage as the original proceedings. 9 The reason for this is obvious. Consistent with Pt IVA being an "opt-out" regime, a statutory estoppel will arise upon the making of s 33ZB orders in relation to the common issues identified in those orders. It would operate a manifest unfairness for either the whole or part of a group member's claim to be determined without them having an opportunity of opting-out of the proceeding; indeed this protection is reflected in s 33J which, among other things, provides that it is only with the leave of the Court that a hearing of a class action is to commence on a date before which a group member may opt-out of the proceeding. As noted above, the difficulty unforeseen at the time the group definition was expanded in the present case is that there has been a delay in settling upon a mode of notification, and judgment is now to be delivered in 20 days. Although I have explored the possibility of some expedited notification process directed to new group members, I have no confidence that sufficient opportunity will be given to the new group members to opt-out prior to the delivery of the reasons for judgment of her Honour. 10 A proposal floated by the applicants was to allow group members to opt-out following the delivery of reasons by her Honour, but prior to the finalisation of s 33ZB orders. It might be thought, given the complexity of this matter, that there might be some period of time between the delivery of reasons and the making of s 33ZB orders; the task of working out the metes and bounds of any statutory estoppel has been made unnecessarily difficult post-judgment because of the failure of the parties to assist her Honour in earlier agreeing upon Merck orders - this lack of assistance is a matter I have deprecated in a previous judgment of the Court. Although a course of deferred opt-out might be thought to be the pragmatic solution to the current difficulty, it creates its own unfairness - but this time to the respondent. To use an entirely hypothetical example I referred to during the course of argument, imagine a judgment was delivered by her Honour largely favourable to the applicants, but that a finding on a pleaded common issue was made, adverse to the applicants, by reason of a want of evidence. 11 To allow a group member to opt-out, commence another proceeding, and then run a case on that common issue in an entirely different way to make up the forensic deficiency identified, is contrary to basic notions of fairness. I stress I am using an abstract example to illustrate how, a least as a matter of theory, allowing a group member to opt-out following the delivery of reasons could operate unfairly. It is, of course, partly for this reason that s 33J of the Act generally only allows a hearing to commence after opt-out. 12 For the above reasons, I am satisfied that it is too late for the new group members to be involved in the resolution of common issues at the initial trial and that is appropriate to make an order that orders 1 to 4 made on 3 May 2019 be vacated, with the effect that the originating application and pleadings extant immediately prior to the making of those orders constitute the current originating application and pleadings in the proceeding. 13 Having said that, in making such an order, consideration must be given to the position of the new group members who, upon an unqualified order being made, would immediately cease to become group members. 14 Section 33ZE of the Act provides for the suspension of the running of "any limitation period" that applies to the claim of a group member to which the proceeding relates, upon the commencement of a representative proceeding. The plain objective of s 33ZE is that group members who are not parties but who have claims should be protected from the need to commence individual proceedings while they are group members. The Explanatory Memorandum to the Federal Court of Australia Amendment Bill 1991 (Cth) described the intended purpose of s 33ZE as follows at [49]: New section 33ZE: Suspension of limitation periods This section provides for the suspension of the limitation period that applies to the claim of a group member on the commencement of a representative proceeding. The suspension is lifted if the member opts out or [scil. "of"] the proceeding, and any appeals arising from the proceeding, are determined without finally disposing of the group member's claim. The provision is designed to remove any need for a group member to commence an individual proceeding to protect himself or herself from expiry of the relevant limitation period in the event that the representative action is dismissed on a procedural basis without judgment being given on the merits. 15 There are two matters to observe immediately about s 33ZE: the first is that it makes reference to "any limitation period". This is, obviously, a broad phrase which relates not only to limitation periods provided for by laws of the Commonwealth, but also any applicable state limitation periods which are "picked up" and applied to the justiciable controversy between the group member and the relevant respondent. It is trite that there is no concurrent state and federal jurisdiction. The "matter", to use that word in the constitutional sense, is wholly federal and will remain wholly federal. 16 It is also basic that a State Parliament is incapable of enacting a valid law which governs the exercise of federal jurisdiction by this Court or any state court exercising federal jurisdiction: see Rizeq v Western Australia [2017] HCA 23; (2017) 262 CLR 1. As the majority in that case observed at 26 [63]: The incapacity of a State Parliament to enact a law which governs the exercise of federal jurisdiction by a court, whether it be a federal court or a State court, explains the necessity for s 79 of the Judiciary Act and is key to understanding the nature and extent of its operation. 17 As is well known, s 79 of the Judiciary Act 1903 (Cth) fills the gap by picking up the text of a state law, including a law relating to limitations, and applying it as "surrogate" federal law in the exercise of federal jurisdiction by this Court. In their operation as surrogate federal law, those laws are applied but only to the extent that such laws are not inconsistent with either the Constitution or the laws of the Commonwealth. Although it has been said by some writers that there are unresolved questions regarding the power to regulate state limitation periods insofar as the Commonwealth Parliament is concerned, when the principled operation of s 79 is understood in the exercise of federal jurisdiction, those issues fall away. 18 The second matter to observe about s 33ZE is that after the limitation period is suspended, it does not begin to run again until the happening of certain events. In Ethicon Sàrl v Gill [2018] FCAFC 137; (2018) 264 FCR 394, the Full Court (Allsop CJ, Murphy and Lee JJ) went through the evolving group definition in relation to this case, including the very broad definition in the initial originating application and statement of claim. As was noted at 398 [12]: From an initial broad definition, as time went on, more specificity was given to the identification of the various implants and particulars were included in the definition as to the complications alleged. By April 2016, the group definition was changed to accommodate sub-groups being introduced (being the Mesh Sub-Group Members and the Tape Sub-Group Members), and two new applicants were added. 19 The Full Court went on to note at 401 [27] that: The effect of this valid commencement [of the proceeding], was that the running of any limitation period applying to "the claim of any group member to which the proceeding relates" was suspended (s 33ZE (1)) and the limitation period did not begin to run again unless either: (a) the member opted out of the proceeding under s 33J; or (b) the proceeding and any appeals are determined without finally disposing of the group member's claim (s 33ZE(2)). Notably, no reference is made in the Act to the limitation proceeding beginning to run when, as later occurred, some group members were excluded from the class by Court order upon amendments to the group definition. The legal consequences for individual claims (including the operation of s 33ZE) caused by the later exclusion of some group members, raise potentially complex issues which do not require further exploration in the present case. 20 I am required, however, to give consideration to this issue in order to satisfy myself as to whether or not there is any prejudice occasioned to the new group members attendant upon their exclusion. Put in simple terms, the question arises, that upon my making of the order vacating earlier orders providing for their inclusion as group members, does the limitation period for the new group members begin to run? 21 This is a matter in which there is a difference between Pt IVA and the cognate provision in the Victorian regime, being Pt 4A of the Supreme Court Act 1986 (Vic). In Pt IVA, the suspension limitation period operates as identified above, but this is subject to an exception with respect to group proceedings under Pt 4A. Section 33J(5) of the Supreme Court Act 1986 (Vic) provides that, unless the Court otherwise orders, a person who has opted-out of a group proceeding: "must be taken never to have been a group member". 22 There have not been, as far as my researches go, many cases concerning what constitutes a "determination" for the purposes of s 33ZE, although Kenny J in Lowe v Mack Trucks Australia Pty Ltd [2001] FCA 388 observed that a dismissal pursuant to a self-executing order constitutes a determination. Both textually and contextually, it seems to me that s 33ZE(2) is directed to the suspension continuing unless and until a decision has been made by the group member (opting-out) or there has been some judicial resolution of the claim of the group member. Obviously enough, neither of these eventualities is the same as an order, of which the group member is likely to have no notice, including and then later excluding them from a class. 23 Having said that, there does appear to be a difficulty if, as occurred in this case, a very broad initial group membership is defined and then the group is very significantly narrowed by amendment. The conclusion that the limitation period remains suspended for the group members excluded by the amendment might be thought to be an intuitively surprising one, but it seems to me to be the better view given the express words of the section. It suffices for present purposes to note that the construction point may be arguable and that some might argue that the Act should be amended to provide that a limitation suspension ends and time begins to run when the relevant group member is no longer a group member for any reason, if my view as to the preferable construction is correct. 24 Accordingly, if I was to make a simple order that the new group members are no longer group members, my view is that this order will have no effect on the existing suspension of the limitation period in relation to the individual claims of the new group members. However, if I am wrong (and the construction point is not beyond argument), then unintended consequences could follow and I consider I should do something to safeguard the position of the new group members. 25 When the matter was before me earlier in the week, given my protective and supervisory role, I raised with the parties a proposal that I make the following order: Pursuant to ss 33ZF and 33K of the Federal Court of Australia Act 1976 (Cth) the group members be as defined in the 5FASOC, save that [the new group members] remain as group members until 4 July 2020, but for the purpose only of the suspension of any limitation period pursuant to s 33ZE(1) of the Act and otherwise [the new group members] are not bound by any judgment or order or otherwise entitled or required to participate as a group member in the proceeding. 26 The reason why the proposed order was framed in this way is that the applicants have already indicated that in respect of women who are not currently the subject of the class action but have now suffered complications since the last amendment, the intention is to commence another class action to protect their position. This would need to occur by 4 July 2020 because of the expiration of the three-year limitation period from 4 July 2017 (the "cut-off" date prior to the most recent amendment bringing in the new group members). I originally indicated I was prepared to delay the entry or the operation of the order removing the new group members for a short period in order to allow for another class action to be commenced to protect their position if I was wrong about the limitation suspension not being lifted. Senior counsel for the applicants indicated a range of practical difficulties as to why that would not be feasible, including the necessity to find another lead applicant or applicants. 27 In any event, it is desirable to avoid duplicative class actions, and if another proceeding is to be commenced by 4 July 2020, then any order removing any doubt as to the continuing efficacy of the suspension should extend to that date, if it was otherwise within power and appropriate. When this issue was raised, the respondents sought an adjournment in order to obtain instructions and, if so advised, make submissions to the Court. Helpfully, yesterday I was provided with a short note which advanced the contention of the respondents that neither ss 33ZF nor 33K can be the source of power for the proposed order. 28 It is said that s 33ZF is predicated on justice being "in the proceeding". It was submitted that what the Court is proposing, relating to the new group members, will be for them to remain group members for the sole purpose of preserving their potential ability to bring a claim in a separate and wholly unconnected proceeding. Whatever may be said about the breadth of s 33ZF, such an order cannot be said to be appropriate or necessary to ensure justice is done in the proceeding. The putative orders are best considered to be orders made in aid of another proceeding. 29 The second point made by the respondents concerned s 33K which, as the respondents correctly point out, is a provision which is engaged upon application made an applicant and no such application has been made. Hence, if there is power to make the proposed order, it is to be found in s 33ZF. I accept that submission. 30 Turning to s 33ZF, as I recently noted in Turner v Tesa Mining (NSW) Pty Limited [2019] FCA 1644 at [65]: … the whole point of s 33ZF was to vest the Court with broad powers, even with no objective criteria other than that the order be "just" or "appropriate". The reason is obvious: Pt IVA introduced a form of litigation that was new; s 33ZF allows the Court to adapt orders and procedures to take account of, and respond to, unforeseen or developing circumstances (such as the procedural consequences and demands attendant upon the development of large scale funded litigation over the last generation). Consistently with its intended scope, "[t]he only express limitation or requirement in s 33ZF is that the Court thinks the order is appropriate or necessary to ensure that justice is done in the proceeding", and "[n]o other limitation should be read into the section": Blairgowrie Trading Ltd at 558 [98]. This is not to say that despite its breadth, s 33ZF should not, consistent with the principle explained in The Owners of the Ship "Shin Kobe Maru" v Empire Shipping Company Inc (1994) 181 CLR 404 at 421, be construed only as far as its text and context permit. But there is nothing about the text and context of s 33ZF which demands a conclusion that the Court cannot order security against a non-party when thought to be appropriate or necessary to ensure that justice is done in a class action. Indeed to proceed otherwise is to pay insufficient heed to the reality that Parliament intended to arm the Court with a wide and flexible armoury of power, capable of being adapted to the particular needs of representative proceedings. To attempt to confine the grant of such a statutory power (as is implicit in the Funder's argument) is incompatible with the oft-repeated statements in the High Court concerning the construction of grants of such powers to superior courts: see Re JJT; Ex parte Victoria Legal Aid [1998] HCA 44; (1998) 195 CLR 184 at 201 [41] (Kirby J); Knight v FP Special Assets Limited at 205 (Gaudron J); Gerlach v Clifton Bricks Pty Limited [2002] HCA 22; (2002) 209 CLR 478 at 505-506 [75]-[76]. Or as the Full Court (Allsop CJ, Middleton and Robertson JJ) recently put it in Westpac Banking Corporation v Lenthall [2019] FCAFC 34; (2019) 366 ALR 136 at 158 [86], s 33ZF: … is the widest possible power that extends to all procedures appropriate or necessary to deal with the matter on a just basis … Having that wide character from its words, context and purpose, the injunction against reading down statutory powers given to courts, absent clear indication in terms or context … is of particular force. (citations omitted) 31 This seems to me to be quintessentially the sort of reason why a provision such as s 33ZF was contemplated and then enacted. It is a gap-filling provision designed to prevent injustice in circumstances where, in this new and novel form of proceeding, issues may arise which demand some remedial response. It seems to me that it is artificial, given the authorities I referred to in Turner, to suggest that s 33ZF should be confined as the respondents contend. This is an order made in the proceeding to deal with a problem that has arisen because of the inclusion of the new group members in the proceeding and the perceived need to remove them as group members in the proceeding. Moreover, it clarifies their continued limited role in the proceeding. The current order is no different in effect from orders that were made by Goldberg J in Williams v FAI Home Security Pty Ltd (No 5) [2001] FCA 399 where his Honour, in the context of the potential exclusion of some group members from a settlement, extended the limitation period provided for in s 33ZE for a period of one month after publication of the notice that the proceeding had settled. 32 Similarly, there have been orders made in a number of cases (none of which, as far as I am aware, were the subject of any detailed argument), where the Court has made an order under s 33ZF following a "de-classing", which has allowed a period to elapse to ensure that any group member who ceases to have the benefit of the suspension has an opportunity to commence an individual proceeding. If the respondents' argument was correct, then such a course would not be possible, because it would, to use the words of the submission, be an order made in aid of another proceeding rather than the class action. This distinction is an artificial one and could, particularly in circumstances of de-classing, operate a potential injustice. 33 This is well illustrated by a not uncommon example. It is far from unusual for group proceedings to be commenced immediately prior to the expiry of limitation periods. If there was no ability for a person who has opted-out or, alternatively, was a class member in a de-classed proceeding, to commence another proceeding, then the practical reality would mean opting-out or de-classing would effectively mean that their individual claim would become statute barred and would be lost. If one was forced by intractable words to adopt such a construction of s 33ZF that is one thing, but the only express limitation or requirement in s 33ZF is that the Court thinks the order is appropriate or necessary to ensure that justice is done in the proceeding, and no other limitation should be read into the section. 34 The one issue that would make me hesitate in my making an order under s 33ZF would be if I was firmly of the view that it was unnecessary because of the view I take as to when the suspension of limitation period ceases. As I have noted, however, the point is novel and the history of this litigation means that if it becomes relevant there is likely to be ongoing disputation. Assurance should be made doubly sure. It is appropriate to make the order to ensure that justice is done within the proceeding (notwithstanding it may not be necessary). I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lee.

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