Gill v Ethicon Sàrl

1. The parties provide to the Associate to Lee J a minute of order reflecting these reasons.
2. The time for bringing any application for leave to appeal from orders made reflecting these reasons be extended to a date 7 days after the delivery of revised reasons. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

LEE J: 1 This matter has once again come before me, this time by way of an application for leave to expand the current group definition. 2 The application was listed before me at 9.30am this morning, having previously been listed and adjourned part-heard on 1 April 2019. The application seeks an order that the group definition be amended by replacing the existing cut-off date (being the current date by which claimants need to have met the criteria for group membership) with what is identified as being a "date to be fixed". This would have the consequence of expanding the class. The order is opposed, but for reasons that follow, leave should be granted. 3 The legislative policy underlying Pt IVA of the Federal Court of Australia Act 1976 (Cth) (Act) is plain. It provides a mechanism to avoid multiplicity of actions, and provides a means by which multiple claims may be dealt with together, consistently with the requirements of fairness and individual justice: see Mobil Oil Australia Pty Limited v Victoria [2002] HCA 27; (2002) 211 CLR 1 at 24 [12] (Gleeson CJ). 4 Foundational to the operation of a class action regime is the binding of class members to a determination of the court or a settlement approved by the court. A Federal Court in the United States is required, by Rule 23 of the Federal Rules of Civil Procedure (US), to designate those persons whom the court finds to be members of the class, so as to identify the claimants potentially bound by the outcome of the court's determination or any settlement: see r 23(c)(3). In a proceeding governed by Pt IVA of the Act, the same result effectively is arrived at by reason of the operation of the most important provision within Pt IVA, being s 33ZB. This provision provides that a judgment given in a representative proceeding must describe or otherwise identify the group members affected by it and binds all such persons other than any person who has opted-out of the proceeding under s 33J. This provision was described by the Full Court in Femcare Ltd v Bright [2000] FCA 512; (2000) 100 FCR 331 at 338 [25] (Black CJ, Sackville and Emmett JJ) as, in one sense, the "pivotal provision" in Pt IVA. 5 In Timbercorp Finance Pty Ltd (in liquidation) v Collins [2016] HCA 44; (2016) 259 CLR 212, the High Court held that so long as it was reasonable for group members not to have raised individual defences in a group proceeding, group members were not precluded by way of Anshun estoppel or an abuse of process from subsequently raising individual claims. The reasoning of the Court was based on an analysis of both the structure and specific provisions of Pt 4A of the Supreme Court Act 1986 (Vic) (the structure and provisions being relevantly identical to those in Pt IVA). In particular, the High Court focussed on the notion that the representative applicant acts on behalf of group members, but only acts on their behalf in a limited way. French CJ, Kiefel, Keane and Nettle JJ explained at 235-236 [52]-[53] as follows: Part 4A creates its own kind of statutory estoppel. Section 33ZB requires that a judgment in a group proceeding identify the group members affected by it and, subject to a provision not presently relevant, provides that that judgment "binds all persons who are such group members at the time the judgment is given". In order to understand that to which the group members are bound, it is necessary to read s 33ZB in the context of Pt 4A as a whole and ss 33C(1) and 33H in particular. By that process it will be seen that group members are bound by the determination of the claims giving rise to the common questions. The provisions of Pt 4A therefore confirm that a plaintiff in group proceedings represents group members only with respect to the claim the subject of that proceeding, but not with respect to their individual claims... 6 In this way, it can be seen that Pt IVA expressly contemplates and provides for the individuality of claims within a group proceeding. The focus of the proceeding is on answering either one or more common questions of fact or law for persons whose claims involve the same, similar or related circumstances. Section 33C recognises that each group member may, as an individual, have different claims against a respondent, but for a representative proceeding to be validly commenced it is necessary that any such claims (being claims which have an existence anterior to, and separately from, the proceeding) have the relevant commonality contemplated by the statutory provisions. 7 The other "gateway" provision, s 33H, requires three things: first, identification of group members to whom the proceeding relates; secondly, specification of the nature of the claims brought on behalf of group members and the relief sought; and thirdly, specification of the questions of law or fact common to the claims of group members. The importance of s 33H in the statutory scheme is that it provides the basis upon which the court can determine, immediately upon commencement of the representative proceeding, whether or not it has been properly constituted as a class action. Put another way, s 33H allows the court to identify whether s 33C (and hence Pt IVA) has been properly engaged. 8 A common misconception is that the s 33H common question or questions specified in the originating application or supporting documentation (for the "gateway" purpose explained in the preceding paragraph) define the common question or questions for the balance of the proceeding. A moment's reflection will lead to the conclusion that this cannot be the case. For one thing, issues which are common may narrow considerably upon a joinder of issue by way of pleadings. Similarly, issues which are common to the claims may arise by way of a positive averment made in a subsequent pleading, whether it be a defence, a reply, a rejoinder or so on. Further common issues of fact may arise upon the filing of lay or expert affidavit evidence. 9 By whatever means common questions arise, what is critical for the orderly conduct of a Pt IVA proceeding, is that prior to an initial trial there is specificity in what common questions are being determined at the trial. In Merck Sharp & Dohme (Australia) Pty Ltd v Peterson [2009] FCAFC 26; (2009) 355 ALR 20, the Full Court explained that at the conclusion of an initial trial, the court should pronounce formal orders regarding the common questions, perhaps by way of formal declarations or answers to questions. 10 In the early stages of Pt IVA litigation, the discipline of identifying the issues to be determined at an initial trial had not developed. Significant controversy often arose following the delivery of a judgment whereby the parties parsed the judgment of the trial judge like it was a haiku trying to divine which of the findings amounted to the determination of a common issue of law or fact. The accumulated experience of this Court in having to deal with the needless controversy that such a course involved, was the impetus for ensuring that prior to an initial trial there was no confusion between the parties as to what precise issues the trial judge was required to address. 11 Nowadays a "Merck order" is made, almost always wholly or largely by consent, which identifies that at an initial trial the whole of the claim of the applicant or some other group representatives are determined, together with a list of questions identified in a schedule to the order. These questions reflect common issues or issues of commonality the answers to which, following judgment, can be the subject of s 33ZB orders (thus identifying the metes and bounds of the statutory estoppel). 12 Unfortunately, in this proceeding, the trial judge was not provided with such an agreed order. Precisely why this was the case is a little difficult to fathom but it ought not to be a course repeated in complex Pt IVA proceedings. To fail to assist the Court in this way is inimical to the overarching purpose and the result has been an unfortunate one which has arisen in stark relief in the context of this application being made to amend the group definition. 13 The applicants say that this class action has proceeded in what it submits is the "usual way". The claims of three applicants are being determined together with common issues which arise in relation to the determination of those claims. Depending upon the answers to the common issues, the answers may be determinative of the liability claims of group members, but this is not necessarily the case. If the answers are not adverse in all respects to the applicant and group members, the matter will proceed to secondary or tertiary stages, whereby further aspects of the claims of all or some group members on liability will be determined, followed by any individual quantification of statutory compensation or common law damages. 14 The position adopted by the respondents is quite different. The respondents submit: (t)here was no agreement (and there continues to be no agreement) between the parties on the common questions for these proceedings. This is, in part, because there was and remains a dispute as to the framework from which these proceedings are to be determined. Part of the Applicants' case is that the Court may find that all of the implants were defective because they all used mesh partly made of polypropylene. The Respondents, however, say that each product must be approached individually, and the Applicants must adduce evidence to establish their case for each of the Implants. The parties' respective positions have been put throughout these proceedings. 15 There is no need for me to set out the history of this proceeding, which is detailed at some length by the Full Court (Allsop CJ, Murphy and Lee JJ) in Ethicon Sàrl v Gill [2018] FCAFC 137. The proceeding was ultimately maintained by three representative applicants (Ms Gill, Ms Dawson and Ms Sanders) for and on behalf of women who were implanted with, and suffered damage from, one or more of five "Tape Implants" and four "Mesh Implants". The respondents say that each of these implants is distinct including as to size, shape, treatment objectives, and implantation approach. They were developed in different time periods and were supplied in Australia at different times. Each implant was accompanied by instructions for use, which included sections on warnings, precautions, and adverse reactions. The instructions for use differed across the Implants, and changed over time. 16 Although the three representative applicants were implanted with a subset of the implants, the respondents contend that the allegations of defects do not exhibit a singular character, but rather amount to a series of multiple allegations that were and are put in the alternative (relating to the constituent materials of the implants, the design of the implants and the anatomical location associated with the implant surgery). 17 The respondents further contend that the applicants have always indicated that they intended to address the issue of defects across all implants in evidence at the initial trial and point to the fact that a significant part of the applicants' case at trial was that the respondents did not warn of the risks associated with all the implants. Accordingly, the knowledge of the surgeons discussing risks with patients (that is, the reader of the instructions for use and any other documents relevant to knowledge) and the knowledge of the patients themselves, will be relevant and critical to determining the claims of group members. Importantly, the degree and quality of such knowledge necessarily developed over time. It follows, it is asserted, that if the evidence at the initial trial does not establish that there was, for example, a failure to warn for certain time periods, the claims of group members which relate to those time periods must fail and be dismissed. 18 The following example was used in the respondents' submissions: if the trial judge was satisfied that there was sufficient evidence to establish: (a) that Prolift (one of the mesh implants) was associated with incidence of chronic pain; and (b) that as at 2005 treating surgeons did not know of this; then findings could be made relevant to claims of group members who were implanted with a Prolift implant in 2005. It would not mean, however, that potential claims of group members who received another implant would be successful, unless there was evidence adduced to establish these matters in relation to those other implants. 19 This leads to a contention as to futility in expanding the definition of the class. This is because as there is no evidence before the trial judge in relation to the position after 2017, it would necessarily follow that the proceeding must be dismissed in respect of new group members whose claim related to that period. 20 For reasons that I will explain, it is unnecessary for me to express a concluded view as to the correctness or otherwise of this argument of the respondents. For present purposes, I note that two authorities are relied upon. 21 The first is Schanka v Employment National (Administration) Pty Limited (No 2) [2001] FCA 1623; (2001) 114 FCR 379. This was a case where the representative applicants brought proceedings under the then Workplace Relations Act 1996 (Cth) alleging duress by the respondent. During the initial trial, the applicants had asserted, and indeed ran a case, that the existence of duress was a common issue which could be determined without individual evidence from group members. Contrary to this contention, the court held that upon the evidence adduced, it was satisfied that three representative applicants and one group member made out a case for duress, but due to a want of individualised evidence, the cases of the other group members were not made out. 22 The applicants then sought orders under s 33X that a notice be given to group members inviting them to lead the individualised evidence necessary to establish the group member claims, or in the alternative, that an order be made under s 33N that the proceeding no longer continue as a representative proceeding. The s 33X application was opposed by the respondent on the grounds that it amounted to a "reopening" of the case of the group members. Justice Moore declined to make the orders sought by the applicant and instead dismissed the proceeding leaving group members bound but with no relief. 23 The other case relied upon by the respondents is, somewhat ironically, a judgment of Jessup J in Peterson v Merck Sharpe & Dohme (Aust) Pty Ltd (No 5) [2010] FCA 605; (2010) 87 IPR 234. The irony is that despite the Full Court identifying the need for there to be precision about what was to be determined, controversy arose following delivery of the principal judgment in the proceeding (Peterson v Merck Sharpe & Dohme (Aust) Pty Ltd [2010] FCA 180; (2010) 184 FCR 1). Jessup J referred to the relevant "Merck orders" at [7] in Merck (No 5). He noted that the issues of fact and law set out in the schedule to those orders were to be determined at the same time as the applicant's personal case. In Merck (No 5), the applicant contended that an allegation that Vioxx materially increased the risk of particular cardiovascular conditions was a common question. His Honour determined it was necessary that that question be determined and said as follows at [8]-[10]: That [the question] be answered in relation to each of the pleaded cardiovascular conditions is consistent also with the way that the parties conducted their cases. In terms which were relevantly a matter of consensus as between the parties, the four cardiologists who gave evidence in the case were given an "agenda" to guide them in the preparation of their joint report which was, after they had conferred, tendered in evidence. That agenda defined "specified cardiovascular events", as "any one or more of" the pleaded cardiovascular conditions. The cardiologists were asked for their opinion whether Vioxx increased a person's risk of the specified cardiovascular events, in comparison to situations in which the person was taking other identified medication, or taking no medication at all. They were asked whether certain biological processes (including that proposed under the Fitzgerald hypothesis) were physiological mechanisms by which Vioxx increased "any" of those risks. In response to the first of these questions, the cardiologists said that there were insufficient data to draw meaningful conclusions concerning the Vioxx-related risk for unstable angina, transient ischaemic attack and peripheral vascular disease. Profs Harper and Zypes said that they had not examined in detail the data linking Vioxx with thrombotic stroke. Profs Cellemajer and Vaughan said that there were no data linking Vioxx to thrombotic stroke, and that there were compelling data to show that Vioxx did not predispose to thrombotic stroke. In the concurrent cardiology session of evidence in court, questions were addressed to the cardiologists which left little doubt but that the court was concerned to know, so far as it was possible to tell, what, if any, relationship existed between the consumption of Vioxx and each of the pleaded cardiovascular conditions. In my reasons for judgment published on 5 March 2010, I concluded that it had not been established that the consumption of Vioxx gave rise to an increased risk of thrombotic stroke, or of any of the pleaded cardiovascular conditions other than myocardial infarction (see paras 583-584). That is to say, the applicant made allegations which were capable of being resolved during the course of the case which he conducted, and he failed to substantiate those allegations. In relevant respects, the questions which arose on the applicant's case must, therefore, be answered favourably to the respondents. It was submitted on behalf of the applicant that it would be unfair for the court now to answer question 4 in the negative with respect to conditions other than myocardial infarction. It would be unfair for the applicant, it was said, because it would implicitly require him to institute an appeal, with all the attendant costs and risks which that involved, when he had nothing to gain therefrom. It would be unfair for the other group members, in the sense that those who suffered from conditions other than myocardial infarction would be forever cut out from prosecuting their claims against the respondents in circumstances in which the only individual to have had his case considered by the court was one who had not suffered from any of those conditions. In my view, however, these submissions both beg the question and miss the point that this is a representative proceeding. By instituting the proceeding in the form that he did, and by making the broad allegations referred to above, the applicant assumed the responsibility of proving that Vioxx increased the risk of suffering each of the pleaded cardiovascular conditions, not merely myocardial infarction. It cannot be unfair, on him, to expect him to carry through with the undertaking upon which he embarked. Likewise, given the structure and assumptions of Part IVA of the Federal Court Act, group members who have not opted out must be taken to be content to have their claims dealt with by the applicant himself, at least to the extent that common issues are involved. Were it otherwise, the whole point of having a representative proceeding would, in my view, be undermined. It would be intolerable, after a lengthy and complex proceeding such as the present, for the applicant, having fallen short of making good his case in some respects, to be able to leave it to other group members to have a second try, as it were. 24 These cases seem to me to deal with separate issues, although they have a common thread. Moore J in Schanka did not have the benefit, obviously enough, of Merck orders. There was said to be a common issue spanning the claims of all group members. Although his Honour did not put it in these terms, he implicitly accepted that the group members were privies in interest of the applicant insofar as the claims of group members which gave rise to the common questions of law or fact in the class action were advanced. Because the issue of duress was specifically identified by the applicant as a common question (and the group members did not opt-out) they were bound by the outcome of that common question. Although the circumstances were different in Merck, in that there were Merck orders, the ultimate result was the same. What his Honour found was that by reason of the way the applicants had conducted the case, the relevant issue was identified as a common issue and, given that it was adversely answered in respect of some group members, their claims failed. 25 It does not seem to me that these cases are directly on point. The real issue here is what precisely has been identified by the applicant as the common questions to be determined at the initial trial. This is a debate which would be unsafe for me to enter upon and will need to be determined by the trial judge in the lamentable circumstance where the parties, inconsistently with the overarching purpose, failed to deal with it prior to the initial trial. 26 Against this backdrop of fundamental although avoidable disputation, there does appear to be one matter of common ground. That is that part of the case advanced is that all of the implants are defective because they all use mesh partly made of polypropylene. Mr Finch SC, who appeared on behalf of the respondents, confirmed that if (contrary to the submissions of the respondents) her Honour was to find that the implants were "unsafe at any speed" by reason of the use of polypropylene (to use his expression), then this determination of this common issue would be one that would mean that none of the group members' claims would be dismissed. 27 Once this is appreciated, it seems to me that there is no substance in the contention of the respondents that the expansion of the group membership must be futile in all circumstances. If this is accepted, there does not seem to me any reason whatsoever why the group membership ought not to be amended to include claims of group members who fall into the group definition up until the date of an order of amendment. 28 There are discretionary arguments advanced by the respondents as to why I should decline to make such an order. None have any substance. 29 The first was that an amendment application had been made and rejected by the docket judge at an earlier time, which was the subject of an application for leave to appeal to the Full Court. Although the Full Court did not interfere with her Honour's order, this was explained by the Full Court in Ethicon Sàrl v Gill at [35]-[43] in the following terms: Order 1(b) was made as constituting the response to the question posed by the primary judge: What should be the cut-off date for the purposes of s 33K(2)? Strictly speaking, and with respect to her Honour, the way the question was framed was inapposite because this latest amendment was not to the originating application and s 33K was not engaged. Nothing, however, turns on this issue. The applicants submitted that the cut-off date should be the date of judgment or approval of the settlement to ensure that the largest possible number of group members would be bound by the judgment or settlement (subject to opt out). The primary judge was correct to reject this submission on the basis that it was inappropriate to fix a cut-off date by reference to a future and uncertain date. In the same way as at the time of commencement of the proceeding, and at the time of the subsequent Amendment Orders, if leave to amend was allowed, it was necessary to have certainty as to class composition. For the same reason as to why an "opt in" group definition is not allowed, it is foreign to the statutory scheme for group definitions to operate in an ambulatory fashion which allows the composition of the class to change automatically by the happening of an event post commencement: see Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd [2007] FCAFC 200; 164 FCR 275 at 280 [16]-[18] (per Lindgren J); 295 [142], 297 [168]-[171] (per Jacobson J with whom French J agreed). If there is to be a change to the persons constituting the class, an order is needed. Although s 33K(3) provides that the Court may set a date after leave has been granted, this is directed to circumstances where there is a gap between leave being granted and the amendment later becoming effective by the filing of the document effecting the amendment (as occurred here by the Amendment Orders). The circumstances when it would be necessary or desirable to pick a date further into the future are difficult to envision but if such circumstances did exist, a future date would need to be set so as to ensure that the requirement for class certainty during the currency of a Part IVA proceeding was not undermined and to allow opt out. This notion of certainty is fundamental. Certainty of composition allows the Court to deal with the class when necessary for the purposes of the Part. For example, s 33J (affording the right to opt out); s 33L (identifying where there are less than seven group members); s 33Q (making orders as to the determination of issues where not all issues are common); s 33R (making orders as to individual issues); s 33S (making directions relating to the commencement of further proceedings by group members); s 33T (considering applications by group members as to adequacy of representation); s 33X (giving notice to group members of certain matters); and s 33ZB (making orders binding group members). Obviously enough, this vice of inconclusiveness as to class composition is not present when a point of time is fixed by reference to an event that has already occurred. This is what happened here. The primary judge fixed a cut-off date of 3 July 2017, being the day before the initial trial started. A factor that influenced her Honour in doing so was the general prohibition on the hearing of a representative proceeding beginning before the date by which a group member may opt out of the proceeding (see s 33J(4)). The primary judge was alive to the benefit of incorporating as many women as possible in the class but considered that there was some tension between this outcome and the notion that opt out, for existing group members, should occur prior to commencement of the initial trial. Her Honour also recognised that having determined to grant leave to amend the group definition (and hence expand the class), it was necessary to provide a right to opt out to new group members exercisable after the initial trial had commenced. As it was necessary for those new group members who were included in the class to have the opportunity to opt out, it is not self-evident as to why it would not have been appropriate for others, whose claim arose after 4 July 2017 but before the leave application, to also be included (subject to opt out). Having noted this, the group definition "cut-off" chosen by her Honour was one that was open and provided a licit group definition. Her Honour considered the risk of multiplicity and took it into account. There is no reason why we should interfere, simply because a different date could have been chosen. This conclusion is dispositive of the cross appeal. This conclusion is fortified by the fact that an opt out notice has now been provided to group members pursuant to orders made on 12 April 2018. That notice, prepared by the parties, reflected the misconceptions explained above as to class composition, but was accurate in noting that persons were group members if they had suffered pleaded complications up until 4 July 2017. All current group members have now had the opportunity to opt out. It would cause unnecessary expense and possible confusion if yet another opt out notice was sent. 30 This reasoning does not provide a basis upon which it could be said that the present application is, in essence, the re-litigation of an application that had failed. Things have changed. In particular, I have been persuaded that it is appropriate to make "soft" closure orders. In Gill v Ethicon Sàrl (No 2) [2019] FCA 177, I explained my reasons for reaching that conclusion and the desirability of this Court facilitating the possibility that this dispute may resolve by a court-approved paction following a mediation. That mediation can only resolve the whole of the controversy in the event that the claims of all affected persons are better understood: both as to the number of persons affected, and as to the overall potential exposure of the respondents in the event that the applicants are correct in their liability contentions. 31 An elaborate regime has been put in place whereby a range of novel orders are being made to bring home to persons who may be group members the need to register in the event that they wish to participate in any settlement. There is no reason in logic as to why the group definition should not be expanded to include all persons up to today's date, or a date in the near future, who meet all other aspects of the group definition other than the temporal element. Not only will this better facilitate an overall settlement (at least in theory) but will also avoid the near inevitability of a further class action being commenced on behalf of persons whose alleged injuries have manifested themselves following the current cut-off date if an amendment is refused. 32 A potential problem with the course I propose was also raised by Mr Finch SC which has some superficial force: that is the fact that if an amendment was made today, another inevitability will be that a further amendment to expand the group will occur, followed by further applications. On examination, however, this is an Aunt Sally argument. The discretion presently being exercised is in the context of attempting to provide certainty as to the group membership which, following registration, is to participate in a mediation I propose to order at the next case management hearing and any overall settlement (if an agreement is struck and then approved). There is no reason why the group should be confined to a past date in the specific circumstance of a pending mediation ordered to take place following the delivery of judgment at the initial trial. The discretionary considerations arising upon any future application in another context, may well be quite different. 33 It suffices to note that I am not convinced that it would be consistent with the overarching purpose for there to be serial applications for an amendment to the group definition made by the applicants. 34 I recognise that by expanding the group the respondents contend that, by reason of a want of evidence before the trial judge, the claims of those new group members who do not opt-out are doomed to fail. But this argument presupposes that the trial judge will reject what is agreed between the parties to be a common issue run by the applicants, being the contention that all implants are defective because they all use mesh partly made of polypropylene. Time will no doubt tell. 35 For these reasons, I propose to allow the group definition to be amended and will invite the parties to provide a minute of order which will facilitate the amendment. As was explained by the Full Court, it is critical that at all times during the course of the proceeding there be certainty as to group membership and it is heterodox to contemplate a group definition by reference to a date in the future. Accordingly, the amendment should take effect as of today. 36 Finally, for reasons explained by the Full Court, the order will be made under s 33ZF of the Act, given that the group definition is no longer contained in the originating application. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lee.