"'corporation' means a body corporate that

(a) is a foreign corporation;

(b) is a trading corporation formed within the limits

of Australia or is a financial corporation so formed;

(c) is incorporated in a Territory; or

(d) is the holding company of a body corporate of a kind

referred to in paragraph (a), (b) or (c);"

116. None of the respondents fell within para.(a), para.(c) or para.(d) of this definition. None was a "financial corporation". In the case of each of them, the question is whether it was a "trading corporation formed within the limits of Australia." Each was formed in Australia. Each traded. But was any of them a "trading corporation"?

117. In The Queen v Trade Practices Tribunal; ex parte St George County Council [1974] HCA 7; (1974) 130 CLR 533, the High Court of Australia held, by majority, that a county council established under a statute "for local government purposes" and empowered within its district to supply electricity and electrical appliances was not a "trading corporation", so as to be a "corporation" for the purposes of s.5 of the Restrictive Trade Practices Act 1971. All members of the Court agreed that the mere fact that a corporation engaged in trade was not enough to constitute it a "trading corporation". McTiernan J held that the county council was not a "trading corporation" because the statutory context showed that the term was not intended to embrace publicly-owned corporations: see pp 546- 547. Menzies and Gibbs JJ, the other members of the majority, enquired as to the essential character of the corporation: see Menzies J at pp 553-554 and Gibbs J at p 562. In contrast, the test adopted by the minority related to the nature of the council's activities: see Barwick C.J. at pp 542- 543 and Stephen J at p 568. In a passage at pp 569-570 which has some relevance to the present case, Stephen J said:

"As to s.419(1) it can no doubt be said that there is a

strong element of profit-making present in the concept

of trading and that this element will usually be

possessed by a trading corporation. This is, perhaps,

only because, traditionally, in societies organized

upon capitalist lines, the undertaking of trading

activities has been left substantially to private

enterprise rather than to government intervention; in

these circumstances the common incentive for entry into

those activities has necessarily been the profit

motive. Hence the conduct of a trading activity has

commonly come to be associated with the gaining of

profits, that being the motive leading to the

undertaking of those trading activities.

However if some other motive actuates a corporation or

individual to engage in trading activities those

activities will not themselves be altered in character

and, if they consist of what is properly described as

trading, a corporation which undertakes them as its

sole or principal business will, in my view, be a

trading corporation. Since it is the activity carried

on or intended to be carried on that is described by

the participle 'trading' it would not matter, if such

were the case, that the County Council so arranged the

margin between the price it paid for electricity in

bulk and the price at which it supplied it to consumers

as to ensure that it derived no surplus after making

the provisions referred to in s.419(1). It might be

otherwise if it distributed electricity free of charge

but so long as its activity is that of buying and

reselling rather than distributing by way of gift it

is, in my view, engaged in trading and since this is

its only activity it is properly described as a trading

corporation. In In re Duty on Estate of Incorporated

Council of Law Reporting for England and Wales (1888)

22 QBD, at p 293, Lord Coleridge C.J. said of the

phrase 'established for any trade or business' that 'it

is not essential to the carrying on of a trade that the

person engaged in it should make, or desire to make, a

profit by it' - see also British Institute of

Preventive Medicine v Styles (1895) 11 TLR 432.

It is the acts of buying and selling that are at the

very heart of trade; as Lush J. said in Higgins v

Beauchamp (1914) 3 KB 1192, at p 1195, 'a trading

business is one which depends on the buying and selling

of goods'. The word 'trade' was said by their Lordships

in Commissioners of Taxation v Kirk (1900) AC 588, at

p 592, to mean primarily 'traffic by way of sale or

exchange or commercial dealing'. The Shorter Oxford

English Dictionary gives, as meanings of 'trading', the

'carrying on of trade; buying and selling; commerce,

trade, traffic.'"

118. Upon the next occasion that the High Court had to consider the meaning of "trading corporation", a different result ensued. That was in The Queen v Judges of the Federal Court of Australia; ex parte The Western Australian National Football League ("Adamson") [1979] HCA 6; (1979) 143 CLR 190. That case arose under the 1974 Act, the question being whether certain corporations concerned with Australian League football were "trading corporations". By majority, the Court held that they were. The test favoured by Barwick C.J and Stephen J in St George County Council, the activities of the corporation, was adopted by all except Gibbs J; although Stephen J, with whom Aickin J. agreed, differed with the majority as to the application of that test to the facts of the case.

119. For the majority, Barwick C.J. at p 208 pointed out that, under modern conditions, "the nature of a company may not be discernible from a perusal of its memorandum". He went on:

"The only sure guide to the nature of the company is a

purview of its current activities, a judgment as to its

nature being made after an overview of all those activities.

I remain of the firm conviction that for constitutional

purposes a corporation formed within the limits of

Australia will satisfy the description 'trading

corporation ' if trading is a substantial corporate

activity. Its activities rather than the purpose of

its incorporation will designate its relevant

character. But so to say assumes that such trading

activities are within its corporate powers, actual or

imputed. It is the corporation which satisfies the

description which is the subject matter of the power.

Thus its corporate capacity or incapacity cannot be

ignored. But once it is found that trading is a

substantial and not a merely peripheral activity not

forbidden by the organic rules of the corporation, the

conclusion that the corporation is a trading

corporation is open."

120. Mason J, with whom Jacobs J agreed, expressed agreement, at p 233, with the minority approach in St George County Council. He said that "trading corporation" is "a description or label given to a corporation when its trading activities form a sufficiently significant proportion of its overall activities as to merit its description as a trading corporation". Murphy J went a little further, saying at p 239:

"A trading corporation may also be a sporting,

religious, or governmental body. As long as the

trading is not insubstantial, the fact that trading is

incidental to other activities does not prevent it

being a trading corporation. For example, a very large

corporation may engage in trading which though

incidental to its non-trading activities, and small in

relation to those, is nevertheless substantial and

perhaps exceeds or is of the same order in amount as

the trading of a person who clearly is a trader."

121. Adamson was referred to in two cases decided in 1982. In the first, Actors and Announcers Equity Association of Australia v Fontana Films Proprietary Limited [1982] HCA 23; (1982) 150 CLR 169, Brennan J at p 221 referred with approval to the test adopted by Mason J in Adamson. In the other, State Superannuation Board V Trade Practices Commission [1982] HCA 72; (1982) 150 CLR 282 at pp 303-304, Mason, Murphy and Deane JJ applied the Adamson approach to the determination of what constituted a "financial corporation". After quoting the tests adopted by each of Barwick CJ, Mason and Murphy JJ in Adamson, their Honours added:

"The point is that the corporation engages in trading

activities and these activities do not cease to be

trading activities because they are entered into in the

course of, or for the purpose of, carrying on a primary

or dominant undertaking not described by reference to

trade. As the carrying on of that undertaking requires

or involves engagement in trading activities, there is

no difficulty in categorizing the corporation as a

trading corporation when it engages in the activities."

122. At p 305, in the course of a discussion about the meaning of "financial corporation", they said:

"However, just as a corporation may be a trading

corporation , notwithstanding that its trading

activities are entered into in the course of carrying

on some primary or dominant undertaking, so also with a

corporation which engages in financial activities in

the course of carrying on its primary or dominant undertaking."

123. It is convenient to deal immediately with a submission made on behalf of the applicant that, in applying these principles to the first and second respondents, account should be taken of their blood supply activities. The applicant accepts that neither respondent makes any charge for the blood which it supplies. Neither "trades" in blood, in the usual sense of that term. But, say counsel, the reality is that the blood transfusion activities of the respondents constitute substantial businesses by which they supply valuable commodities, blood and blood products, in return for large payments. In the year 1984-1985, the Society (including its Divisions) received from Governments a total of $44,965,328 in respect of its blood transfusion services. Of this, the NSW Division directly received more than $10,000,000. (The exact figure is not ascertainable from the Division's annual report). These were, of course, substantial sums. They were earned only because the respondents are prepared to carry on blood transfusion services at a scale, in terms of labour and resources, greater than that of many organisations which are undoubtedly "trading corporations". But I do not think that it is appropriate to describe the gratuitous provision of a public welfare service, substantially at government expense, as the conduct of a "trade". It is pertinent to recall the words of Stephen J. in St George County Council: "It is the acts of buying and selling that are at the very heart of trade", and also to remember the distinction he made in respect of the distribution of electricity free of charge. In relation to the supply of blood, it seems to me that the first and second respondents do not engage in trading activities. They engage in a major public welfare activity pursuant to agreements with the Commonwealth and the various State governments under which they will be reimbursed most of their costs.

124. But, leaving out of account the blood transfusion income, the first and second respondents each earn considerable sums of money from the sale of goods. It is not easy to ascertain the precise figures from the annual reports. But, as I have said, in 1984-1985 the Society earned over $2,000,000 in this way.

125. According to the evidence of Mr John Smith, the Executive Director of the NSW Division, in 1984-1985 the Division received $1,193,024 from "donations from Branches which operate opportunity shops, street stalls and other fund raising activities", $65,121 for charges made for attendance at its first aid courses and a further $307,082 from its Clarence Street gift shop. Perhaps not all the money received from Branches emanated from trading activities but trading was plainly a major contributant to the Division's income. The scale of the Division's trading activities amply meets any of the tests enunciated in Adamson. It is true that the trading activities were not motivated by the hope of private gain but purely to earn the revenue which the Division needed for its charitable activities. But, as Mason, Murphy and Deane JJ made clear in State Superannuation Board, motive does not matter.

126. In my opinion, it should be held that each of the first and second respondents is a "trading corporation" within the meaning of s.4 of the Trade Practices Act.

127. I turn to the position of The Royal Prince Alfred Hospital. It does not matter that the corporation was incorporated by statute and publicly-owned: cf. The Commonwealth of Australia v Tasmania ("Tasmanian Dam") [1983] HCA 21; (1983) 158 CLR 1 at pp 155-157, 179-180, 240, 269-270. Counsel for the third respondent do not suggest otherwise. But they say that - despite the High Court's more recent preference for the "activities", rather than the "essential nature", test - it is still necessary to take into account the purpose for which the corporation was created. When this matter is considered, say counsel, it is found that the Prince Alfred Hospital Act created a corporation under the name of a hospital which was to have a close association with the University of Sydney, and especially the Faculty of Medicine of that university: see ss.4, 6 and 22 of that Act. They say that the hospital was not created as a trading corporation.

128. No objectives were stated in the Prince Alfred Hospital Act. But the 1985 annual report of the hospital contains a statement of its objectives, as follows:

"1. To provide medical and surgical care to

patients.

2. To undertake teaching.

3. To provide an appropriate environment for medical

research."

129. Counsel argue that, as the annual report shows, the predominant activity of the hospital in 1984-1985 was the provision of medical and surgical care. This activity was not profitable. On the contrary, it required what counsel describe as an "enormous subsidy from the public purse". Counsel also refer to the facts that the hospital was not free to fix either its own charges or the amount which it pays to its staff and that donations to it were deductible for the purposes of the Income Tax Assessment Act 1936; but I do not think that either of these last two matters has much bearing upon the matter.

130. I accept counsel's submission that, despite the adoption of the "activities" test, the purpose for which the corporation was formed retains some relevance. Barwick C.J. said as much in the passage in Adamson which I set out above. But, in the light of Tasmanian Dam, it is difficult to see that the matters mentioned by counsel stand in the way of a finding that The Prince Alfred Hospital was a trading corporation if, in fact, it traded on a substantial scale at the relevant date. The Tasmanian Hydro-Electric Commission was a statutory corporation established to undertake important public functions at public expense. It was subjected to a high degree of Ministerial control, although it had previously been held not to be a servant or agent of the Crown. Yet it was held to be a trading corporation because of the extent of its trading activities. In this connection, and as an indication of how far the pendulum has swung, it is interesting to compare the result in Tasmanian Dam with the almost derisory comment of Menzies J in St George County Council at p 553: "A body such as the Snowy Mountains Authority sells electricity but I hardly think that it would be natural to call it a 'trading corporation'. That body and many other corporations which do trade are in essence public authorities".

131. It seems to me that the critical question is the nature of The Prince Alfred Hospital's activities at the relevant time. Accepting that its predominant activity was the provision of medical and surgical care to patients, they were not objectives antithetical to the notion of trade. Many trading corporations supply services rather than goods. Many privately owned hospitals provide medical and surgical care for reward with the purpose of thereby trading profitably. There was nothing in the intrinsic nature of The Prince Alfred Hospital's activities to disqualify it as a trading corporation.

132. If the question be asked whether the scale of the corporation's trading activities was "substantial", "a sufficiently significant proportion of its overall activities" or "not insubstantial" - to apply the tests adopted in Adamson - it is relevant to note that, in the financial year ended 30 June 1985 it received $14,584,456 in patients' fees in return for services rendered by it. It also received $3,736,662 from "business activities". It is true that these amounts were dwarfed by its State government subsidy of $112,127,706. But that does not matter. Trading activities yielding some $18 million per year can only be described as substantial. It seems to me that the scale of the hospital's trading activities in 1984-1985 was such that it should be regarded as then being a trading corporation.

133. I should add that the evidence of Mr K R Barker, the Executive Director - Finance and Administration of the New South Wales Department of Health disclosed that charges made to non-public patients at public hospitals are fixed by the Minister by reference to the allowable health insurance rebate under Commonwealth legislation. Mr Barker said that "at no time has the daily accommodation fee exceeded or approximated the actual cost of delivery of those services for each day". Basing himself upon this evidence, counsel for the New South Wales Attorney General submits that it follows that the hospital is not engaged in trading activities in servicing private patients, so that the corporation conducting the hospital cannot be regarded as a trading corporation. But, of course, this does not follow; the corporation might qualify as a trading corporation because of its other activities. In any event, as Stephen J made clear in St George County Council, it is not necessary that trading activities be profitable, or even intended to be profitable, to constitute the trader a "trading corporation".

The application of the Trade Practices Act: emanation of the Crown

134. The next question, relevant only to the position of the third respondent, was whether The Prince Alfred Hospital was an emanation of the Crown in right of the State of New South Wales. If it was, it is clear that it was not bound by the Trade Practices Act; see Bradken Consolidated Limited v Broken Hill Proprietary Company Limited [1979] HCA 15; (1979) 145 CLR 107, Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 76 ALR 173, Bourke v State Bank of New South Wales (1989) ATPR 40-924 at p 49,995.

135. Despite the lengthy period of time over which The Prince Alfred Hospital managed The Royal Prince Alfred Hospital, it seems never to have been judicially determined whether the corporation was an emanation of the Crown. Moreover, so far as counsel have been able to ascertain, the question has never arisen in respect of any of the other major public hospitals.

136. The issue whether a particular entity is "the Crown", for the purposes of the relevant rule of construction normally raises questions of degree upon which minds may differ: see Superannuation Fund Investment Trust v Commissioner of Stamps (SA) [1979] HCA 34; (1979) 145 CLR 330, State Superannuation Board at pp 306-308. A number of matters have to be considered. Perhaps the three most important are: the function of the corporation, the extent to which it is subject to Ministerial control and whether or not its property and funds are held independently of government.

137. Although they were evenly divided as to the result of that consideration, the consideration of function was the major question for each of the four Justices in Superannuation Fund who considered Crown immunity. Aickin J thought that the function of the appellant Trust was not one "which could be regarded as an ordinary or usual function of government, or of a means by which such functions may conveniently be performed". On the other hand, Mason J, with whom Barwick C.J. agreed, was influenced by the fact that the Trust was concerned with the provision of superannuation benefits to Crown employees, a function linked to the obligations of the Crown as an employer.

138. In the present case, counsel for the third respondent argue that the provision of medical and surgical services was, in Australia in 1984, widely regarded as an ordinary and usual function of State governments; the conduct of The Royal Prince Alfred Hospital through the corporation was simply a means by which the New South Wales government discharged this responsibility.

139. I see the force of this submission but I do not think that it should be regarded as conclusive. I accept that, during the 1980's, most Australians would have regarded the provision of health care, including medical and surgical services, as a usual function of government; at least insofar as that care was furnished to people who could not afford to provide it for themselves. But successive governments, both at federal and State level, have chosen to provide health care by a variety of means. A major portion of that care - including hospital services - has been furnished by the private sector, although much of it ultimately at public expense. Another portion has been furnished by government agencies acting directly as elements of the executive. Health care providers in the latter category would indisputably be "the Crown". Those in the former category would not. So little is gained by application of general notions about the usual role of government.

140. In 1984 The Royal Prince Alfred Hospital fell between the extremes of the two cases I have mentioned. On the one hand, it was not privately owned. It was a public institution, established by a special Act of Parliament for public purposes and subjected to a deal of Ministerial control. On the other hand, it was not a mere component of a government department. It was a statutory corporation with its own objectives and a degree of autonomy in the manner of their attainment. It held property in its own name and managed its own funds, although subject to some control by government. I think that the critical factor, in determining whether the corporation was, at that time, "the Crown" is the extent of Ministerial and State bureaucratic control. Contrary to the submission of counsel, I put little weight upon the circumstance that the ultimate source of most of its income was the government; the same might be said of numerous private hospitals, medical practitioners, drug manufacturers and, perhaps, even pharmacists.

141. Section 6(1) of the Prince Alfred Hospital Act put the hospital and its property in the governance and management of the Board of Directors, subject to the hospital's By-laws, rules and regulations. The power to make By-laws, rules and regulations was vested in the Board of Directors - see s.10 - except that, in relation to its teaching functions, the Senate of the University had a role: see ss.21 and 22. Section 6(2) provided that the Board of Directors shall consist of 15 directors. Ten of them were to be elected by "members" of the Hospital; that is subscribers under s.4. The Chancellor of the University of Sydney and the Dean of the Faculty of Medicine within that university were to be ex officio directors. The remaining three directors were to be appointed by the Governor. By s.20 the body corporate constituted by the Act was to hold the land, described in the Second Schedule to the Act, on which the hospital stood subject to certain conditions, including the hospital being open "for the reception of all persons without any distinction whatsoever". The Governor was empowered to resume the land upon breach of any condition.

142. In 1915 s.6(2) was amended. The total number of directors was increased to 22. All of the additional seven directors were to be appointed by the Governor; giving to the Executive the power of appointment of ten out of the total 22 directors.

143. Section 6(2) is the only provision of this Act which confers any rights on the State government. Although the power to appoint ten directors might give the relevant Minister some influence in the affairs of the hospital, it seems to me to be indisputable that, if the Prince Alfred Hospital Act stood alone, the corporation could not be regarded as an emanation of the Crown.

144. But, by 1984, the Prince Alfred Hospital Act did not stand alone. It had become subject to some of the provisions of the Public Hospitals Act. I do not see any conceptual difficulty in a conclusion that a corporation which was initially not "the Crown" has become so subject to Crown control that, at a later stage of its life, it should be regarded as "the Crown" for the purposes of the rule of construction. Counsel argue that this is what happened in the present case.

145. In October 1984 The Royal Prince Alfred Hospital was a "Third Schedule hospital"; that is, it was named in the Third Schedule to the Public Hospitals Act. The consequence was that Parts II, III, VC, VD, VI, VIB, VII and VIII of that Act applied to it. But, in reading those Parts, it is necessary to note that the hospital was a "separate institution", within the meaning of s.3; because it was mentioned in the Third Schedule. Similarly, although the hospital was incorporated, it was not an "incorporated hospital" within the definition in s.3. So not all of the provisions even of those Parts applied to it.

146. Picking my way through Part II, entitled "Administration", with those matters in mind, I find that s.11 confers upon the Secretary of the Department of Health a duty to facilitate the achievement and maintenance of adequate standards of patient care and services, to facilitate the efficient and economic operation of hospitals consistent with those standards, to make enquiries into the standards of administration and management of hospitals and their services, to arrange inspections of hospitals from time to time and to make reports and recommendations to the Minister concerning subsidies. All of these duties would seem to apply to The Royal Prince Alfred Hospital. Although a "separate institution", the hospital apparently received a subsidy from the Hospital Fund: see s.11(1A). Section 13(1)(c) and (d) allow the Governor, by Gazette notification, to authorise or require the Board of any hospital to establish and maintain institutions for the treatment of particular types of patients or district nursing services. Section 13(3) authorises the Minister by Gazette order to authorise and direct the adoption of systems of preventative medicine and to promote research and investigation. For that purpose, the Minister may utilise the staff and facilities of any hospital. The Minister may also "authorise and direct arrangements between hospitals for the transfer of patients and nurses". Section 13(4) provides that the Minister "may, from time to time, determine the role, functions and activities of any hospital" and notify the hospital accordingly.

147. Part III of the Act deals with the Hospital Fund. That fund is to be opened within the Treasurer's accounts, to be fed mainly from moneys appropriated by Parliament. The Minister is empowered to grant subsidies to hospitals out of that fund, criteria being specified: see s.17(5) and (7). Conditions may be attached: see s.17(8).

148. Part VC deals with visiting medical officers and Part VD with visiting practitioners. Their effect is to subject those officers to the conditions and remuneration determined by the Minister. Part VIB permits an appeal to the Minister against a decision of a hospital Board in respect of the appointment of a visiting practitioner.

149. Part VI of the Act is headed "Liability of Patients". Section 30 limits the liability of patients to the fees determined by the Minister from time to time. By s.30(6) it is provided that: "No destitute person shall be refused relief at any hospital by reason only of his inability to pay therefor". Section 40B, which is in Part VII, requires the Secretary's approval of the appointment by any hospital of a chief executive officer or matron or to any such other position as may be specified in a Gazette notification from time to time.

150. Section 42 of the Act, which is contained within Part VIII, confers upon the Governor power to make regulations upon a miscellany of subjects. They include finance and visiting practitioners and some minor aspects of administration: the establishment of laboratories and the disposal of unclaimed property of patients. However, in contrast to the position in relation to Second Schedule hospitals - see s.42(1)(i) and (j) - the regulations may not extend, in the case of Third Schedule hospitals, to such matters as the admission and discharge of patients, the payment and collection of fees, "the construction, use, and management ... of buildings, and the carrying out of additions, alterations, and repairs thereto, the regulation of accommodation, and the provision and use of plant, appliances, and equipment".

151. As the above summary demonstrates, at the relevant time the Public Hospitals Act imposed significant fetters upon the freedom of action of The Royal Prince Alfred Hospital's Board of Directors. It appears that, by 1984, the hospital was substantially funded from the Hospital Fund. So it is not surprising that there were statutory provisions giving the Minister some control over financial matters. Necessarily, this extended to visiting medical officers and visiting practitioners. The 1985 annual report shows that 66.48% of all expenditure went on salaries and wages. The legislation also gave to the Secretary powers of inquiry and inspection to enable him or her to be satisfied as to the manner in which these public funds were expended and as to the standards achieved by the hospital. But it seems to me that, at least in relation to Third Schedule hospitals, the legislation stopped short of such a degree of control as would make the hospital an emanation of the Crown. The Public Hospitals Act did not affect the legal structure of the hospital. It left intact the Board of Directors, and their method of appointment. The Governor retained the right to nominate ten directors, but an equal number continued to be elected by the members of the hospital and the remaining two directors held ex officio positions not in the gift of the Crown. No legislation gave power to the Governor or the Minister to remove the Board or generally to interfere in their management of the hospital. It is true, as counsel point out, that s.4(4) of the Public Hospitals Act conferred on the Governor a power to amend the Third Schedule, inter alia, by omitting the name of an institution. If that had been done in relation to The Royal Prince Alfred Hospital, it could then have been listed on the Second Schedule: see s.4(3). If this step had been taken, the Minister would have acquired a greater degree of control over the management of the hospital. Whether that degree of control would have been sufficient to constitute the hospital "the Crown", it is not necessary to determine. That step had not been taken by 12 October 1984, when the blood plasma was administered to the applicant. It seems to me that, on that day, the hospital was not subject to such a degree of Executive control that it might properly be described as an emanation of the Crown. I think that the corporation governing the hospital at that time was not excluded from the operation of the Trade Practices Act.

The representations claims: ss.52 and s.55A and negligent misrepresentation

152. As I have mentioned, the applicant alleges the making to him by the respondents of various representations. The claimed representations are specified in para.11 of the Statement of Claim as follows:

"(a) that the blood or blood product was the most

efficacious mode of treatment available;

(b) that the treatment offered was safe and effective;

(c) that all reasonable precautions had been taken to

ensure the safety and well-being of the Applicant;

(d) that the mode of treatment was free of blood borne

viruses;

(e) that the Applicant was not exposed through the mode

of treatment offered to injury by a blood borne virus."

153. The applicant does not claim that any of these representations were made to him in express terms. He says that they were implied from the circumstances of his blood transfusion. But it seems to me that there is no basis for holding that any representations were made.

154. I accept that there may exist circumstances from which a representation may be implied: see Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1985) 10 FCR 567 at pp 587-588; (1986) 12 FCR 477 at pp 489-490, 504 and 508 and Collins Marrickville Pty Ltd v Henjo Investments Pty Limited (1987) 72 ALR 601 at p 609-610; [1988] FCA 40; (1988) 79 ALR 83 at p 95. Examples of those circumstances were given by Bowen C.J. in Rhone-Poulenc in this way:

"Dealing with the question of misrepresentation

constituted by silence, there are cases which show, for

example, that an omission to mention a qualification,

in the absence of which some absolute statement made is

rendered misleading, is conduct which should be

regarded as misleading. So too is the omission to

mention a subsequent change which has occurred after

some statement which is correct at the time has been

made where the result of the change is to render the

statement incorrect so that thereafter it becomes

misleading. This also may be regarded as constituting

misleading conduct. However, the general position

between contracting parties has been expressed in the

following way:

'The general rule, both of law and equity, in respect

to concealment, is that mere silence with regard to a

material fact, which there is no legal obligation to

divulge, will not avoid a contract, although it

operates as an injury to the party from whom it is

concealed.' (Smith v Hughes (1871) LR6 QB 597 at 604)."

155. In the present case there was no omission to qualify an absolute statement. There was no subsequent change. No relevant representation had ever been made. There was no contact whatever between the applicant and either of the first two respondents in connection with the blood transfusion. The only contact between him and the hospital concerning the blood transfusion related to matters of detail; taking a blood sample in advance of the operation and procuring his consent to the transfusion of blood, if this should become necessary. There was certainly no representation concerning the characteristics of any blood which might be required. Nor was there any representation when the plasma was transfused. The applicant was apparently unconscious at that time. It seems to me that the case is precisely covered by the general rule quoted by Bowen C.J.

156. Counsel for the applicant contend that, if a person lulls another into a false understanding by failing to give all the material facts, this is misleading conduct. They say that, if the respondents had informed the applicant that the blood which might be administered to him had not been tested, but that tested blood would soon be available, he could have considered whether to arrange a postponement of the operation until tested blood was available. No doubt that is so, but the failure of the respondents to so advise the applicant does not necessarily make their conduct misleading. It may merely mean that they failed to disclose information which, in retrospect, it would have been useful for the applicant to have. The issue of misleading conduct cannot be resolved by language such as "lulls ... into a false understanding". If the lulling is effected by a half-truth, the luller's conduct may be misleading; if it occurs simply because it does not occur to either party to advert to the subject, it is unlikely to amount to misleading conduct.

157. Even if it were possible to spell out from the circumstances a representation which amounted to misleading conduct, the applicant would face two further difficulties in respect of the claims under ss.52 and 55A of the Trade Practices Act. In the first place, ss.52 and 55A only apply to conduct "in trade or commerce". Whether or not the first and second respondents are "trading corporations", by reason of other activities, it is clear that, in supplying blood to hospitals for administration to patients, they act gratuitously. Although they are reimbursed most of the cost of the operations which enable them to provide the blood, they are not paid for the blood. They do not "trade" in blood. Their supply of blood is not an act "in trade and commerce".

158. This objection may not be open to the third respondent. Although the hospital did not charge for the blood itself, it did charge the applicant hospital fees. The hospital fees were paid in consideration of the supply to the applicant of nursing services; and the blood was supplied in the course of post-operative nursing. It is therefore strongly arguable that, if any representation had been made on behalf of the hospital, it would have been conduct "in trade or commerce": see the discussion of these terms in Re Ku-ring-gai Co-operative Building Society (No.2) Ltd (1978) 35 FLR 134 at pp 139,159. But the question is academic.

159. The second difficulty facing the applicant extends to all three respondents. Section 82(1) of the Trade Practices Act confers a right of action upon a person who suffers loss or damage "by conduct of another person that was done in contravention of a provision" of, inter alia, Part V of that Act. Sections 52 and 55A are, of course, included in Part V. But s.82(2) requires any such action to be commenced within three years after the date on which the cause of action accrued. In Jobbins v Capel Court Corporation Ltd [1989] FCA 538; (1989) 91 ALR 314 the Full Court assimilated the function of that subsection to "familiar concepts of the law in respect of the limitation of actions". The Court went on, at p 317:

"There is every reason to understand this language in

the sense in which it has come to be understood in

statutes of limitations. For the purposes of those

statutes, a number of principles have been worked out.

In the first place, where the incurring of damage is an

essential element of a cause of action, the suffering

of some damage (the other elements of the cause of

action having already occurred) will, in general, start

time running even although the damage continues to

grow. The running of time is not suspended until all

the damage which will be suffered has ceased to flow,

nor does further damage constitute a fresh cause ofaction."

160. In Do Carmo v Ford Excavations Proprietary Limited [1984] HCA 17; (1984) 154 CLR 234 at p 245 Wilson J explained the concept of "cause of action" as "simply the fact or combination of facts which gives rise to a right to sue. In an action for negligence, it consists of the wrongful act or omission and the consequent damage". The same statement may be made about causes of action arising under s.82 in respect of a contravention of s.52 or s.55A. The only person who may obtain damages in respect of a contravention of either of those sections is a person who has suffered loss or damage by reason of the contravention. Damage is a necessary element in the cause of action. Once it is suffered, the cause of action is complete.

161. The evidence shows that the infected blood was part of a number of units which was administered to the applicant immediately after the operation; on 12 October 1984 and early the following day. As the process of sero-conversion was then inevitable, it is strongly arguable that the relevant loss or damage was sustained at that time. But it is not necessary to decide that point. The applicant had an illness consistent with sero-conversion between 13 October and his discharge from hospital on 1 November. He reacted positively to two HIV tests in October 1985. On any view, damage had been sustained by then. So the cause of action was complete. Yet the proceeding was not commenced until 8 November 1989, over four years later. It is clear that the claims under ss.52 and 55A are out of time.

162. Before dealing with the detail of ss.71 and 74 of the Trade Practices Act, it is important to note a fundamental difference between the scheme of Division 1 of Part V of the Act, which includes ss.52 and 55A, and that of Division 2, which includes ss.71 and 74. This is relevant to the submission of counsel for the third respondent that s.82(2) also bars the claims under ss.71 and 74.

163. Division 1 is entitled "Unfair Practices". In relation to its subject matter, the course taken by Parliament was to proscribe the various practices which were thought to be unacceptable. Almost every section commences with the words "A corporation shall not ...", followed by a description of particular conduct. But the mere proscription of particular conduct would not confer any right of action for damages upon a person damaged by such conduct. It was the purpose of s.82(1) to confer that right of action.

164. By contrast, Division 2 - which is entitled "Conditions and Warranties in Consumer Transactions" - does its work, not by proscribing unacceptable practices but by imposing, by force of statute and regardless of the wishes of the parties, additional contractual terms. These terms each improve the position of the weaker party; typically, but not necessarily, a consumer. But they do so by force of contract law; not by conferring a right of action for breach of a statutory prohibition. The circumstances which attract the operation of each section include the prior existence of a contract. Consequently, a person who sues in reliance upon a section in Division 2 does not do so in reliance upon s.82(1). That subsection is inapplicable. There is no "contravention of a provision of ... Part V"; but rather a breach of a contractual term imposed by a provision of Part V.

165. At least until recent times, the distinction I have made was critical to the jurisdiction of this Court. Until it was recast in 1987, s.86 of the Act conferred upon the Court jurisdiction "to hear and determine actions, prosecutions and other proceedings under this Part". Those proceedings included claims under s.82(1) in respect of "conduct ... in contravention of a provision of Part IV and V." But occasionally cases were brought to the Court in which an applicant sought to enforce a term implied into a contract by a provision contained in Division 2. The Court repeatedly held that s.86 did not confer any jurisdiction to hear such a claim, unless it was appended to some other claim which was within jurisdiction: see Arturi v Zupps Motors Pty Ltd [1980] FCA 164; (1980) 49 FLR 283, Zaravinos v Dairy Farmers Co-operative Ltd [1985] FCA 77; (1985) 7 FCR 195 and Hjertum v Ahern (1987) ATPR 40-823. See also the decision of Rogers J in Zalai v Col Crawford (Retail) Pty Ltd (1980) 2 NSWLR 438. The reason was that such a claim was not a claim "in respect of conduct in contravention of a provision" of Part IV.

166. By parity of reasoning s.82(2), which imposes the three year time limit, does not apply to an action for breach of a statutory contractual term. Subsection (2) applies only to "An action under subsection (1)".

167. The Trade Practices Act provides no limitation period in respect of claims based on a statutory contractual term. Accordingly, the usual limitation period, relevant to claims in contract, applies. That period is six years. As this proceeding was commenced within six years of the applicant's transfusion, his claims under ss.71 and 74 are within time.

71.(1) Where a corporation supplies (otherwise than by

way of sale by auction) goods to a consumer in the

course of a business, there is an implied condition

that the goods supplied under the contract for the

supply of the goods are of merchantable quality, except

that there is no such condition by virtue only of this

section -

(a) as regards defects specifically drawn

to the consumer's attention before the contract is

made; or

(b) if the consumer examines the goods

before the contract is made, as regards defects which

that examination ought to reveal.

(2) Where a corporation supplies (otherwise

than by way of sale by auction) goods to a consumer in

the course of a business and the consumer, expressly or

by implication, makes known to the corporation or to

the person by whom any antecedent negotiations are

conducted any particular purpose for which the goods

are being acquired, there is an implied condition that

the goods supplied under the contract for the supply of

the goods are reasonably fit for that purpose, whether

or not that is a purpose for which such goods are

commonly supplied, except where the circumstances show

that the consumer does not rely, or that it is

unreasonable for him to rely, on the skill or judgment

of the corporation or of that person.

(3) ..."

169. I do not think that this section is applicable to the cases against any of the respondents. Even if it is appropriate to regard the blood plasma as "goods", a proposition which the respondents dispute, the assumption underlying each subsection is that there is a contract, onto which the implied condition is to be grafted, for the supply of those goods. But there was never a contract for the supply of the blood plasma to the applicant. He had no contract with either the first or second respondent. He did have a contract with the third respondent. But it was for the provision of nursing services; perhaps also medical attention. There was no contract for the supply of the blood plasma, which was intended - if necessary - to be supplied, and was supplied, free of charge.

170. The respondents raise other points concerning the applicant's reliance on s.71. It is not necessary to deal with them. The claim under that section must fail.

171. Section 19 of the Sale of Goods Act (NSW), upon which the applicant alternatively relies, is couched in terms very similar to those of s.71. That section also presupposes a contract for the supply of goods. For the same reason the claims under that section must also fail.

172. Section 74 of the Trade Practices Act was amended in 1986; in a way which is important to its application to this case. As it stood in 1984 the section read:

"74.(1) In every contract for the supply by a

corporation in the course of a business of services to

a consumer there is an implied warranty that the

services will be rendered with due care and skill and

that any materials supplied in connexion with those

services will be reasonably fit for the purpose for

which they are supplied.

(2) Where a corporation supplies services to a

consumer in the course of a business and the consumer,

expressly or by implication, makes known to the

corporation any particular purpose for which the

services are required or the result that he desires the

services to achieve, there is an implied warranty that

the services supplied under the contract for the supply

of the services and any materials supplied in connexion

with those services will be reasonably fit for that

purpose or are of such a nature and quality that they

might reasonably be expected to achieve that result,

except where the circumstances show that the consumer

does not rely, or that it is unreasonable for him to

rely, on the corporation's skill or judgment.

(3) In this section, 'services' means services

by way of -

(a) the construction, maintenance, repair,

treatment, processing, cleaning or alteration of goods

or of fixtures on land;

(b) the alteration of the physical state

of land; or

(c) the transportation of goods otherwise

than for the purposes of a business, trade, profession

or occupation carried on or engaged in by the person

for whom the goods are transported."

173. Although the contrary was suggested, I do not think that subs(2) could have any application to this case. However, but for one matter, there would be much to be said in favour of the view that subs(1) applied as against the third respondent. The subsection could have no application against either of the first two respondents; once again, this subsection assumes a contract between the consumer and the person who is to supply services to the consumer. The applicant never had a contract with either the first or second respondent. However, the position is different in relation to the third respondent. There was a contract between the applicant and The Prince Alfred Hospital. The applicant entered the hospital as a private, free-paying patient. Under that contract there was, at least, an implied term that the corporation, The Prince Alfred Hospital, would provide to him nursing services; perhaps other services as well. Those services were to be supplied to him by the corporation in the course of its business.

174. The third respondent disputes that the applicant was a "consumer". There is now no direct definition of that term; cf. s.4(3) of the original Act. But reference should be made to s.4B of the Act which sets out the circumstances under which "a person shall be taken to have acquired particular" goods or services "as a consumer". In the case of services, the condition is that the price of the services did not exceed the prescribed amount or, where it did, "the services were of a kind ordinarily acquired for personal, domestic or household use or consumption": see s.4B(2). In 1984 the "prescribed amount" was $15,000. Although there is no evidence on the matter, it may safely be assumed that the charges made to the applicant for his 20 odd days hospitalisation did not exceed $15,000. In any event the services were acquired for the applicant's personal use.

175. Counsel for the third respondent submit, in relation to s.71, that the notion of "consumer" evident in s.4B is "of being able to fix a purchase price of the goods or alternatively a money value". They say, rightly, that in Australia it is not possible to put a price on blood plasma. Blood products are not sold in Australia. At least in New South Wales, a sale of blood plasma would probably be unlawful: see s.32 of the Human Tissue Act 1983 (NSW). When they turn to s.74, they simply repeat their s.71 submission. But, under s.74, the relevant contract is for the supply of services. It is possible to put a monetary value on nursing services. Moreover, the gratuitous supply of a blood product in the course of providing nursing care does not involve the entering into of "a contract or arrangement under which any person agrees, for valuable consideration ... to the sale or supply of (human body) tissue"; the action proscribed by s.32 of the Human Tissue Act.

176. The notion of a "consumer" of services may be unfamiliar to some. But once that notion is accepted, I do not see why a hospital patient who receives nursing services in return for payment of fees should not be regarded as a "consumer" of those services within the ordinary meaning of that term. There is nothing in s.4B to make that meaning inapplicable.

177. Then it is said that the nursing services were not supplied "in the course of a business". The argument is that these words, like "in trade or commerce", do not extend to all activities in which a trading corporation may be engaged. Reference is made to Concrete Constructions (NSW) Pty Ltd v Nelson [1990] HCA 17; (1990) 64 ALJR 293. However, this authority is of little relevance. Nelson concerned an "internal" dealing, between a corporation and its employee. The present issue concerns an "external" dealing, between a corporation and its customer. In Nelson, Mason C.J., Deane, Dawson and Gaudron JJ said at p 295 that s.52 of the Trade Practices Act is concerned with "the conduct of a corporation towards persons, be they consumers or not, with whom it ... has or may have dealings in the course of those activities or transactions which, of their nature, bear a trading or commercial character". The "trade" of a hospital is the provision of services to patients. That is its business. I see no reason to doubt that its contract with the applicant was made "in the course of a business".

178. The applicant does not suggest that there was any breach by the hospital of the implied warranty that its services will be rendered with due care and skill. His case is that "materials" supplied in connection with those services were not reasonably fit for the purposes for which they were supplied.

179. Counsel for the third respondent dispute two aspects of this formulation. Firstly, they say that fresh frozen plasma cannot properly be described as "materials". They cite two definitions of the word "materials" contained in the Macquarie Dictionary viz:

"anything serving as crude or raw matter for working

upon or developing" and "articles of any kind requisite

for making or doing something."

180. I do not read the words "crude or raw matter" as suggesting that only unprocessed goods may constitute "materials". To so suggest would be to overlook the fact that many items which are habitually called "materials" are processed goods; for example, building materials such as bricks and concrete pipes or cooking materials such as flour and butter. So it does not matter that fresh frozen plasma is a processed item, separated from the whole blood by a centrifugal process and snap-frozen. The second half of the quoted definition refers to "articles of any kind requisite for ... doing something". Fresh frozen plasma is an article designed to do something; to achieve coagulation of the blood of the recipient.

181. No doubt there was a time when most people would have rejected the notion that human tissue might constitute "materials". But that was because medical science had not yet developed techniques for making available to one person the tissue of another. Once that can be done, there is no more reason to deny to reusable human tissue the description "materials" than there would be to deny that description to leather, intended to be made into shoes, or cat gut, intended for sutures.

182. Finally, it is said that the blood plasma supplied to the applicant was, in fact, "reasonably fit for the purpose for which (it was) supplied". The purpose, say counsel, was to achieve coagulation, to stop the applicant's life-threatening bleed. It did succeed in achieving coagulation. The bleeding stopped. They add that the requirement is only that the materials be "reasonably" fit for their purpose. The quality of fresh frozen plasma cannot be guaranteed; its use in medical science is to deal with problems of an immediate and more serious kind. The word "reasonably" imports a balancing process, setting the immediate benefits of the material against a possible adverse long-term effect.

183. I think that most people would be surprised at the suggestion that HIV infected blood was "reasonably fit" to be used as a coagulant. So far as I am aware, there is no authority upon the meaning of the description "reasonably fit", where used in s.74. But the expression has a substantial history, having been used in sale of goods legislation since the law on that subject was first codified in 1893: see Sale of Goods Act 1893 (UK) s.141. In Kendall v William Lillico and Sons Ltd (also called "Hardwick Game Farm v SA PPA")(1969) AC 31, the House of Lords considered that subsection in connection with a claim arising out of the supply of compounded meal. Unknown to both the buyer and seller, the meal contained traces of a substance which rendered it toxic to poultry, although not to cattle. The House held that the meal was not "reasonably fit" for use as poultry food. There was much discussion about the particularity of purpose at the time of the purchase, but it does not seem to have occurred to anyone that the meal should be regarded as "reasonably fit" to be supplied to poultry since it was suitable for the immediate purpose of providing nourishment, although it would ultimately kill them.

184. However, as I have said, there is one fatal defect in the applicant's s.74 case. As it stood in 1984, subs.(3) of s.74 provided a special definition of "services", for use only in that section. It commenced with the words "'services' means services by way of"; so the general definition of "services", contained in s.4, remained relevant. That definition included "any rights ... benefits, privileges or facilities that are ... granted or conferred in trade or commerce" and, in particular, "a contract for or in relation to the performance of work (including work of a professional nature), whether with or without the supply of goods". The s.4 definition clearly covered nursing services rendered in the course of running the business of a hospital.

185. However, the effect of s.74(3) was to limit the application of the section to only some kinds of s.4 "services". It did so by providing that the relevant "services" had to fall within one of the three categories described in paras.(a), (b) and (c). None of those paragraphs refers to services such as those supplied to this applicant at The Royal Prince Alfred Hospital. Accordingly, the s.74 claim must also fail.

186. In my judgment, the applicant is unable to make out a case against any of the respondents in relation to any of the provisions of the Trade Practices Act upon which he relies. The case comes back to a common law negligence action.

187. The respondents do not dispute that they each owed a duty of care to the applicant in connection with the transfused plasma. The question is whether any of them breached that duty. In that connection it is helpful to recall the words of Mason J (with whom Stephen and Aickin JJ agreed) in Wyong Shire Council v Shirt [1980] HCA 12; (1980) 146 CLR 40 at pp 47-48:

"In deciding whether there has been a breach of the

duty of care the tribunal of fact must first ask itself

whether a reasonable man in the defendant's position

would have foreseen that his conduct involved a risk of

injury to the plaintiff or to a class of persons

including the plaintiff. If the answer be in the

affirmative, it is then for the tribunal of fact to

determine what a reasonable man would do by way of

response to the risk. The perception of the reasonable

man's response calls for a consideration of the

magnitude of the risk and the degree of the probability

of its occurrence, along with the expense, difficulty

and inconvenience of taking alleviating action and any

other conflicting responsibilities which the defendant

may have. It is only when these matters are balanced

out that the tribunal of fact can confidently assert

what is the standard of response to be ascribed to the

reasonable man placed in the defendant's position.

The considerations to which I have referred indicate

that a risk of injury which is remote in the sense that

it is extremely unlikely to occur may nevertheless

constitute a foreseeable risk. A risk which is not

far-fetched or fanciful is real and therefore

foreseeable. But, as we have seen, the existence of a

foreseeable risk of injury does not in itself dispose

of the question of breach of duty. The magnitude of

the risk and its degree of probability remain to be

considered with other relevant factors."

188. There is no doubt that, in October 1984, a reasonable person in the position of the respondents would have foreseen the possibility of HIV infection from the transfusion supplied to the applicant. Even before it was established that AIDS was caused by a virus, it was believed that the agent responsible for the disease was transmissible by blood transfusion. Professor Penington had expressed this opinion at the meeting held in Perth on 23 July 1983. His opinion was amply supported by the evidence of AIDS amongst American haemophiliacs and transfusees, being persons not otherwise at high risk of contracting the disease. The whole debate about surrogate testing arose because of the participants' awareness of the risk of transfusion-infection, although they regarded the chance of infection in any particular case as extremely small. And, of course, by October 1984 the causative agent had been identified as a virus and described. Consequently, in the present case, the first question posed by Mason J must be answered in the affirmative. The next task is the difficult one: to determine what a reasonable person would do by way of response to that risk. In that connection, it is salutary to recall the warning of Barwick C.J. in Maloney v Commissioner for Railways (1978) 52 ALJR 292 at 292-293:

"It is easy to overlook the all important emphasis upon

the word 'reasonable' in the statement of the duty.

Perfection or the use of increased knowledge or

experience embraced in hindsight after the event should

form no part of the components of what is reasonable in

all the circumstances. That matter must be judged in

prospect and not in retrospect. The likelihood of the

incapacitating occurrence, the likely extent of the

injuries which the occurrence may cause, the nature and

extent of the burden of providing a safeguard against

the occurrence and the practicability of the specific

safeguard which would do so are all indispensable

considerations in determining what ought reasonably to

be done."

189. Coming closer to the facts of this case, and because of the respondents' reliance on American practice as an answer to the negligence claims, it is necessary to refer to the controversy as to whether, in determining the question of breach of duty by a medical practitioner, the practitioner is entitled to exoneration if it appears that he or she has acted in accordance with ordinary professional practice. McNair J said so in Bolam v Friern Hospital Management Committee (1957) 1 WLR 582 at p 587:

"I myself would prefer to put it this way, that he is

not guilty of negligence if he has acted in accordance

with a practice accepted as proper by a responsible

body of medical men skilled in that particular art."

190. The Bolam test, as it has been called, has often been applied. But it has also been criticised. At least without significant qualification, it is at odds with the principle applied in master and servant negligence cases. Dealing with an accident on a ship which was said to have occurred despite adherence to accepted practice, in Morris v West Hartlepool Steam Navigation Co Ltd (1958) AC 552 at p 574, Lord Reid said:

"I would agree that, if a practice has been generally

followed for a long time in similar circumstances and

there has been no mishap, a reasonable and prudent man

might well be influenced by that, and it might be

difficult to say that the practice was so obviously

wrong that to rely on it was folly. But an employer

seeking to rely on a practice which is admittedly a bad

one must at least prove that it has been followed

without mishap sufficiently widely in circumstances

similar to those in his own case in all material

respects."

191. In Sidaway v Board of Governors of the Bethlem Royal Hospital and the Maudsley Hospital [1985] UKHL 1; (1985) AC 871, the House of Lords divided upon the adequacy of Bolam. The major question in the case was the extent of a patient's right to be informed of the possible consequences of treatment; in United States' parlance, "informed consent". But that issue was discussed in terms of Bolam. The majority took the view that, in fixing the extent of that right, the courts should be guided by expert medical evidence as to usual practice. Lord Scarman thought that the law should impose its own test, requiring the court to answer the question "what would a reasonably prudent patient think significant if in the situation of this patient": see p 888. As his Lordship made clear, the "prudent patient" was not a real patient, certainly not the particular patient, but a norm like the man on the Clapham omnibus.

192. Lord Scarman's reasons for regarding Bolam as inadequate were given at p 882:

"Responsible medical judgment may, indeed, provide the

law with an acceptable standard in determining whether

a doctor in diagnosis or treatment has complied with

his duty. But is it right that medical judgment should

determine whether there exists a duty to warn of risk

and its scope? It would be a strange conclusion if the

courts should be led to conclude that our law, which

undoubtedly recognises a right in the patient to decide

whether he will accept or reject the treatment

proposed, should permit the doctors to determine

whether and in what circumstances a duty arises

requiring the doctor to warn his patient of the risks

inherent in the treatment which he proposes."

193. Similar sentiments have been expressed in Australia. In Albrighton v Royal Prince Alfred Hospital (1980) 2 NSWLR 542 one question was the admissibility of the evidence of an English medical practitioner concerning the procedures undertaken in an operation in Sydney. In the course of discussion of that matter, at pp 562-563, Reynolds JA, with whom Hope JA agreed, said:

"It also, in my view, is based on a wrong assumption

that a jury should be directed that, if what is charged

as negligence is shown to have been done in accordance

with the usual and customary practice and procedure

then prevailing in what was called a particular

'medical community', they cannot find negligence."

194. Three years later, in F v R (1983) SASR 189, also an "informed consent" case, King C.J. rejected the conclusiveness of evidence of accepted practice. In language which anticipated the view expressed by Lord Scarman in Sidaway, he said at p 194:

"In many cases an approved professional practice as to

disclosure will be decisive. But professions may adopt

unreasonable practices. Practices may develop in

professions, particularly as to disclosure, not because

they serve the interests of the clients, but because

they protect the interests or convenience of members of

the profession. The court has an obligation to

scrutinize professional practices to ensure that they

accord with the standard of reasonableness imposed by

the law. A practice as to disclosure approved and

adopted by a profession or a section of it may be in

many cases the determining consideration as to what is

reasonable. On the facts of a particular case the

answer to the question whether the defendant's conduct

conformed to approved professional practice may decide

the issue of negligence, and the test has been posed in

such terms in a number of cases. The ultimate

question, however, is not whether the defendant's

conduct accords with the practices of his profession or

some part of it, but whether it conforms to the

standard of reasonable care demanded by the law. That

is a question for the court and the duty of deciding it

cannot be delegated to any profession or group in the

community."

195. F v R has been followed by Australian first instance judges on at least three occasions: see Battersby v Tottman (1985) 37 SASR 524, Ellis v Wallsend District Hospital (Cole J, New South Wales Supreme Court, 16 September 1988, not reported) and Whitaker v Rogers (Campbell J, New South Wales Supreme Court, 3 August 1990). It is one of the authorities cited by Fleming, in the following comment upon evidence of common practice in medical negligence cases in "Law of Torts" (7th ed) at p 110:

"Common practice plays its most conspicuous role in

medical negligence actions. Conscious at once of the

layman's ignorance of medical science and apprehensive

of the impact of jury bias on a peculiarly vulnerable

profession, courts have resorted to the safeguard of

insisting that negligence in diagnosis and treatment

(including disclosure of risks) cannot ordinarily be

established without the aid of expert testimony or in

the teeth of conformity with accepted medical practice.

However there is no categorical rule. Thus an accepted

practice is open to censure by a jury (nor expert

testimony required) at any rate in matters not

involving diagnostic or clinical skills, on which an

ordinary person may presume to pass judgment sensibly,

like omission to inform the patient of risks, failure

to remove a sponge, an explosion set-off by an

admixture of ether vapour and oxygen or injury to a

patient's body outside the area of treatment."

196. It seems to me that, for the reasons they give, the view expressed by Reynolds J.A. in Albrighton, by King C.J. in F v R and by Lord Scarman in Sidaway is to be preferred to a rigid reliance upon common practice. Whilst evidence of the practice usually adopted by persons in the position of a defendant will generally be of great assistance, and often decisive, the way must be left open to a plaintiff to persuade the court that the practice does not ensure an adequate standard of care. Adopting that philosophy, I turn to the heads of negligence which are pressed in the present case.

197. As I have recounted, at the date of D9's donation, 3 October 1984, the practice of the New South Wales BTS was to give to each donor the document entitled "An Important Notice to All Blood Donors regarding AIDS (Acquired Immune Deficiency Syndrome)" which I quoted earlier. Each donor was asked to sign the statement "I have read this notice and am not one of the people described in paragraphs 1, 2 and 3 above". D9 did so and gave blood.

198. According to his subsequent statement to Dr Lien, D9 was the sexual partner of an intravenous drug user. If this was correct, he fell within para.3 of the notice. Yet he gave blood. Under those circumstances, the applicant understandably questions the sufficiency of the screening process.

199. The major element in this aspect of the applicant's case was a criticism of the wording of the statement. For that purpose the applicant sought to adduce evidence from Professor Philip Ley, who recently retired as Professor of Psychology within the University of Sydney. But objection was taken to Professor Ley's evidence upon two grounds: that the matters addressed by him in his affidavit were matters for determination by the Court and that the matters in respect of which he offered opinions were not matters which partook of a science. Reference was made to Clark v Ryan [1960] HCA 42; (1960) 103 CLR 486.

200. I indicated to counsel that I did not think that the first objection was valid. This question was discussed in a recent Full Court judgment to which I was a party, Arnotts Limited v Trade Practices Commission (29 November 1990, not yet reported). I need not elaborate on what was there said. As to the second matter, I permitted counsel for the respondents to question Professor Ley on the voir dire, after which I admitted his evidence. At the time I gave short reasons, indicating that I would elaborate the matter in my reasons for judgment in the proceeding.

201. In Clark v Ryan at pp 491-492 Dixon C.J. quoted several formulations of the circumstances under which expert opinion is admissible: "the opinion of witnesses possessing peculiar skill is admissible whenever the subject-matter of inquiry is such that inexperienced persons are unlikely to prove capable of forming a correct judgment upon it without such assistance, in other words, when it so far partakes of the nature of a science as to require a course of previous habit, or study, in order to the attainment of a knowledge of it"; "expert witnesses may give in evidence statements based on their own experience or study"; "no one should be allowed to give evidence as an expert unless his profession or course of study gives him more opportunity of judging than other people".

202. The evidence showed that Professor Ley graduated as a Bachelor of Arts at the University of Manchester in 1955. He attained an Academic Postgraduate Diploma in Psychology (Abnormal) at the University of London in 1956. He became a Doctor of Philosophy, University of Liverpool, in 1969. He worked as a clinical psychologist at various hospitals and institutions from January 1957 until November 1962 when he became Senior Research Psychologist at the Nuffield Research Unit within the Department of Psychiatry at the University of Liverpool. In 1965 he became Lecturer in Clinical Psychology within that Department. He remained at the University of Liverpool until 1977, progressively holding positions as Senior Lecturer and Acting Head of the Sub-Department of Clinical Psychology. In March 1977 Professor Ley came to Australia, taking an appointment as Reader in Psychology at the University of Queensland. He was appointed Professor of Psychology at the University of Sydney in August 1980 and retained that appointment until the end of 1989. During his academic career Professor Ley accepted a number of temporary appointments, as a Visitor or Consultant, at other institutions.

203. Of particular relevance to the witness' qualifications to give evidence in this case was the fact that, since about 1970, his major research interest has been, in his words, "how best to transmit information to patients, both orally and in writing". He has published extensively on that subject and has been retained from time to time to advise persons active in the health field, including both government instrumentalities and research organisations. He gave examples: the most useful form of written information to be given to people who wish to lose weight, written information for psychiatric patients about their medication, the most effective form of label for dangerous substances etc. Professor Ley said that it is "only recently that the field has coalesced as it were and now there are courses, and I think some Departments even, in America ... called Information Design and textbooks have come out on that subject".

204. To a degree, everyone has expertise in communication. Accordingly, it may not readily be apparent that communication may constitute a skilled science. Moreover, as Professor Ley said, his speciality is one of relatively recent origin, with few practitioners. No doubt both of those matters contributed to counsels' strong objection to the admission of Professor Ley's opinion evidence.

205. However, I do not think that the fact that others in the community have some insight into a particular matter means that a person who has made a special study of the subject should be denied the status of an expert in the field. Professor Ley's evidence showed that he had made a much more extensive study of communication with individuals, especially on medical and health matters, than would be made by ordinary people. He had acquired special expertise in the most effective way of making people aware of important information, especially in that area. Although inexperienced persons might make some sort of judgment about the matters addressed by Professor Ley, such as the effectiveness of the warning notice, it seems to me that this judgment would at least be assisted by the views of an expert in health communication. It is easy for people, who comfortably communicate with colleagues in their field, to overlook the comprehension difficulties of strangers to their area, especially people with a different linguistic, cultural or social background. Even a stranger to the field, such as a judge, might not readily appreciate the extent to which such factors reduce the effectiveness of a communication to people coming from a different background. And there was no doubt that, over a period of almost 20 years, Professor Ley had devoted considerable time and study to the very area of knowledge about which he was asked to depose. Accordingly, it seems to me that his evidence would meet any of the tests enunciated in Clark v Ryan.

206. Professor Ley annexed to his affidavit a document which he called a "critique" of the donor information form signed by D9. I need not set this out in full. He made the point that there were a number of reasons why "at risk" people might choose not to identify themselves as falling within one of the specified classes. In substance, his comments were similar to those made by Dr Whisson in the July 1983 symposium to which I have already referred. He also referred to studies which established that "written materials presented to patients in health care contexts are often too difficult for many of them to understand". Percentages were quoted.

207. Professor Ley thought that interviews would have been likely to be more effective than a notice or questionnaire. He also criticised the form of the reference to homosexuality; making the point that - unlike the reference to intravenous drug using - it did not include the words "present or past". He said that, as the first group (homosexuals) was confined to males, some people might assume that the second group (intravenous drug users) was also confined to males. He thought that the words "of the above" might be understood by some donors as referring only to the second group, rather than both the first and second group, as intended. Professor Ley went so far as to question the document's reliance upon the word "homosexual", suggesting that the message might have been better understood if a question had been asked which included a description, in explicit terms, of the homosexual act; although he conceded that this course might have affronted many blood donors and deterred them from returning.

208. I have no doubt that there is substance in some of Professor Ley's criticisms. No doubt the form could have been improved. In fact, it was later revised and, eventually, superseded by a questionnaire to be completed at interview. But I do not think that the imperfections of the form, such as they were, amounted to actionable negligence. The form was relatively short and explicit. Although it used a number of polysyllabic words, the critical words were well known in the community at that time. In particular, I remain unconvinced that, in 1984, there were many Sydney adults who did not understand the meaning of the word "homosexual", especially males who were in fact practising homosexuals. It must be remembered that, over the preceding couple of years, there had been intense publicity about the possible decriminalisation of male homosexual acts and the relationship between homosexuality and AIDS. This publicity penetrated all forms of the media.

209. A more substantial criticism, as it seems to me, is that, for some people, there might be an element of ambiguity in the description "homosexual males". Cases were postulated in argument of men who had followed a homosexual lifestyle but who, more recently, had been heterosexual. Counsel suggested that they might not have continued to regard themselves as homosexuals. Counsel might be correct; I cannot judge the likelihood of that situation. But it must also be remembered that the form invited donors to seek advice from a medical officer. A person who was in doubt about the application of the words "homosexual or bisexual males" to himself or to her sexual partner could easily have clarified the position.

210. (As an aside, such an enquirer would probably have been told that, if the homosexual acts had ceased more than a couple of years ago, there was no difficulty about donating blood. At that time, it was generally accepted that anyone who had been infected for more than about two years would have already developed full AIDS. This is now known to be incorrect.) As it seems to me, the most significant criticism made by Professor Ley concerned the lack of a "discard box", a receptacle into which a donor might secretly place a card identifying his or her donation and asking that it not be used. The argument is that a donor in a high risk category might be embarrassed about declining to give blood, especially if he or she had been accompanied to the blood bank by someone else. Even a request to see a medical officer might attract the curiosity of a companion. If there were a discard box, the donor could give blood - and be seen to give blood - in the usual way, but quietly indicate that it was not to be used.

211. In evidence, Dr Archer said that at one stage, I gather in 1983, he considered the use of a discard box. He contacted the Director of a New York blood bank which he knew to have introduced such a system. In the New York blood bank, apparently, donors were given the opportunity to nominate their blood for "laboratory" use, thus ensuring that it would not be transfused. Dr Archer was told that a large number of people had taken this course. In the belief of the New York Director, many people who were not in high risk AIDS categories regarded the use of their blood for research purposes as a badge of honour and nominated it notwithstanding that there was no reason to doubt its suitability for transfusion. Accordingly, the idea was regarded as a failure.

212. I would have thought that the solution to the New York problem was to change the form of the notice so as to invite use of the discard box only where a donor was in a high risk category and to indicate that the blood would be discarded. But Dr Archer was so discouraged by this report that he abandoned the notion of a discard box altogether. He said in evidence that he reorganised the exits of the blood bank in such a manner as to enable people discreetly to withdraw. Whether this really solved the problem I do not know; the matter was not followed up by counsel.

213. Professor Ley did not claim that his suggestions would necessarily have eliminated the problems which he identified. In the summary of his critique he said:

"Overall, it is my opinion that the document could have

been better worded and constructed. I think that if it

had been improved along the lines suggested above, it

would probably have led to fewer people who were in

at-risk groups giving blood. However, I do not know how

effective the document as it stands actually was. Nor

can I estimate how many fewer at-risk donors would have

given blood.

It is clearly my opinion that the balance of

probabilities makes it likely that a better constructed

document would have been a better screening device.

However, it has to be admitted that only an empirical

comparison of the effectiveness of the document in

question with an 'improved' document could conclusively

decide the issue."

214. In cross-examination, Professor Ley emphasised the importance of empirical testing. He said that, on some occasions, he had found that the application of his ideas about the framing of documents had led to a marked increase in comprehension; on other occasions there was no improvement. By the time that Professor Ley was consulted, in 1990, it was impossible to carry out an empirical testing exercise which would provide results indicative of the position in 1984. Too much had happened in the meantime. In this situation, the most that can be said is that, if in 1984 the advice of someone like Professor Ley had been taken and followed, there may have been an increase in the number of people who understood, and responded responsibly to, the notice.

215. Even if the adoption of such advice had led to an increase in the number of people who understood the document, it is not clear that this would have affected this case. There is nothing to suggest that D9 suffered any problem of comprehension when he gave blood on 3 October 1984. He claimed to be the sexual partner of an intravenous drug user, and there was no ambiguity in the notice about this category. Furthermore, he gave blood on two subsequent occasions, 21 March and 5 June 1985, when the notice had been replaced by a questionnaire. The form of questionnaire completed at his interview on 21 March referred to "Males who have engaged in homosexual activity within the past five (5) years"; "Intravenous drug users, now or within the past five (5) years"; and "sexual partners of the above". By 5 June the form had become even more explicit. The donor was required to sign, and D9 did sign, a "Declaration relating to A.I.D.S" which was in the following terms:

"I hereby certify that to the best of my knowledge all

of the following statements are true:

1. I have not engaged in male to male sexual activity

during the past five years:

2. I have not injected myself, or been injected with,

any drug not prescribed by a qualified medical

practitioner within the past five years:

3. I am not suffering from night sweats, weight loss,

persistent fever, diarrhoea or swollen glands:

4. I have no reason to believe that I am suffering

from AIDS (Acquired Immune Deficiency Syndrome) or any

disease related to it:

5. My spouse or any sexual partner does not come

within the categories described above.

I am signing this statement in the presence of a member

of the staff of the Blood Transfusion Service."

216. It is difficult to see how the descriptions in this declaration of the unacceptable donor classes could have been made more clear. Yet D9 signed the form and donated HIV infected blood. It seems to me that either he did not fall within any of those classes, contrary to his statement at a subsequent interview, or he was determined, for his own unexplained reasons, to give blood despite the requests. If he was prepared to take that course in 1985, there is no reason to ascribe his donation on 3 October 1984 to ignorance of the request then made.

217. Accordingly, even if it were possible to say that the form of the notice signed on 3 October 1984 fell short of what was necessary to discharge the first and second respondents' obligation to take reasonable care not to injure the applicant, it would not be possible to find that there was any causal connection between that omission and the infection of the applicant. This ground of negligence must fail.

Negligence: failure to make an earlier decision regarding surrogate testing

218. I turn now to the final ground of liability argued on behalf of the applicant: the failure of the first and second respondents to introduce, and the failure of the third respondent to insist upon, timely anti-HBc surrogate testing. Much of the evidence relating to this ground has already been recounted. The argument in favour of anti-HBc surrogate testing depends upon the circumstance that hepatitis B infection is relatively common amongst male homosexuals, the most prominent sub-group of AIDS sufferers. From their earliest days, AIDS statistics consistently showed over 70% of all patients to be homosexual or bisexual males. The pre-October 1984 literature was clear as to the relationship between male homosexuality and hepatitis B infection. In February 1982, "Annals of Internal Medicine" published a short paper by Reiner and others in which the authors set out to explain "Why active and passive oral-anal and genital-anal intercourse correlate strongly with hepatitis B virus (HBV) infection in homosexual men". In an article published in "The Journal of Infectious Diseases" in July 1982, a group of CDC researchers led by Dr MT Schreeder reported a study of 3,816 homosexual men who were examined in five sexually transmitted disease clinics. The rate of HBV seropositivity was 61.5%. In Australia, the link between homosexuality and HBV infection was also known. On 12 November 1983 the "Medical Journal of Australia" published an article by Dr Christopher Burrell and others - including Dr Beal, the Director of the South Australian BTS - entitled "Hepatitis B reservoirs and attack rates in an Australian community". That article reported the results of HBV testing amongst four sub-groups of the South Australian community. It showed that, of 163 homosexual men recruited at an Adelaide "gay" club, 37% proved positive to a hepatitis B surface antibody test. (Interestingly, and this is relevant to the argument on the other side, 45% of 709 tested Asians and 66% of 327 tested Aboriginals also tested positive.) 4.85% of a sample of 453 routine South Australian blood donors were positive to this same test.

219. The same issue of the "Medical Journal of Australia" carried a letter from three researchers at the Fairfield Hospital, including Professor Gust. This letter reported hepatitis B markers in 46.8% of a group of 496 homosexual men who had attended a particular general practice between September 1981 and April 1982. The practice was described as "known to be sympathetic to the homosexual community", so perhaps the sample was biased towards those who were more integrated into, and perhaps sexually active amongst, the homosexual community.

220. Although it came rather late in the day, so far as this case is concerned, the Adelaide and Melbourne findings were confirmed for Sydney in a paper published in the August 1984 issue of the "Australia and New Zealand Journal of Medicine". This paper, written by Dr P J Christopher and others, dealt with the incidence of HBV infection among patients of a sexually transmitted disease clinic in Sydney. It revealed that of 210 male homosexuals 64.3% had an HBV marker; 60% were positive to the anti-HBc test. A sample of 34 male bisexuals showed 47.1% anti-HBc positivity compared with 10.9% for male heterosexuals and 9.5% for female heterosexuals. Of course, all those figures may be higher than the average for their groups, given that the sample population was taken from people who perceived themselves to have a sexually transmitted disease problem.

221. Those who were concerned with the operation of blood banks, both in America and in Australia, were well aware of the link between male homosexuality and HBV infection. They were also well aware of the massive over-representation of homosexual males amongst AIDS patients. Yet, overwhelmingly, they did not favour surrogate anti-HBc testing at blood banks. There appear to have been three main reasons for this attitude: the non-specific nature of the test, the "magnet" problem and the effect on the blood supply.

222. There is no medical correlation between HBV and HIV. The two viruses are quite distinct. They induce different diseases. A particular individual may become infected with either virus without becoming infected with the other. Accordingly, there is no "scientific" basis for using an HBV test as an indication of HIV. A positive result to an anti-HBc test does not establish that the person has contracted HIV. A negative result does not negative HIV. There is no doubt that the "unscientific" nature of the test repelled many scientists. This repulsion is discernible in the transcripts of both the Bethesda meeting of 15-16 December 1983 and the Perth symposium of 23 July 1984. It was a reaction expressed in evidence by Dr Archer, Professor Paul Holland of Sacramento and Professor Gust. The reaction is understandable. Any scientist is likely to be more comfortable with a test which has a scientifically-demonstrated connection with the condition under search. The use of anti-HBc as a test for AIDS had no such connection. It depended upon the social, rather than the scientific, fact that a particular sub-group of the population suffered disproportionately highly from both conditions.

223. The "magnet" problem was eloquently expounded in this case by Professor Holland. Professor Holland was Director of the Blood Bank Department of the Clinical Center of the National Institutes of Health ("NIH"), in Maryland, between 1974 and August 1983. Since then he has been the Medical Director and Chief Executive Officer of the Sacramento Medical Foundation Blood Center in California and, since 1984, Clinical Professor in the Division of Hematology and Oncology at the University of California, Davis Medical School. Professor Holland has published extensively on immunological and haemological matters. He has served on numerous committees dealing with those topics and blood banking generally, including the NIH Hepatitis Coordinating Committee, from 1973 to 1983, the Scientific Council of the American Red Cross Blood Program, from 1980 to 1984, the Transfusion Transmitted Diseases Committee of the American Association of Blood Banks, from 1982 to the present time, the Ad Hoc Committee on AIDS Related Issues and Scientific Program of the Council of Community Blood Centers and the transfusion committees of several hospitals and commercial fractionators. Professor Holland has been Chairman, from its establishment in June 1984 until the present time, of the Transfusion Safety Study Committee of the National Heart, Blood and Lung Institute. That committee was charged with reviewing the results of a $22 million government financed study at several blood centres and hospitals which provided data relevant to surrogate tests. As his achievements might suggest, Professor Holland is a highly intelligent and articulate person. I have no doubt that, during at least the last decade, he has been an influential figure in American blood banking. During 1983-1984 he was resolutely opposed to anti-HBc surrogate testing, despite the fact that his Sacramento blood bank immediately adjoined the areas served by the five Californian blood banks which did introduce that test. He made his views known at the time and I think it probable that they significantly influenced the American debate.

224. Professor Holland held the view that there was no evidence that anti-HBc testing was effective or even potentially effective. In his affidavit he expressed the matter in this way:

"The suggestion that the hepatitis B core antibody test

or any other test for hepatitis B should have been used

as a surrogate test depends, in my view, on the

assumption that there was (and is) a correlation

between those groups at 'high risk' of carrying the

AIDS condition and those who had hepatitis B or

contracted hepatitis B in the past but were not

presently infective. Persons testing positive for

hepatitis B do not necessarily have the AIDS condition.

In fact, according to my own experience in 1984 and

1985, most individuals with a reactive test for anti-HBc

are not infected with the AIDS virus and most

individuals with anti-HIV are not also anti-HBc

reactive. Moreover, I did not regard the AIDS

condition as being qualitatively similar to the

hepatitis B virus and did not advise the exclusion or

discarding of blood found to contain hepatitis B core

antibodies."

225. He pointed out in evidence that, although hepatitis rates were high amongst sexually active homosexuals, less than half of such people would return a positive result to such a test. He held the view that it would be impossible to conceal a practice of performing such tests from blood donors. Indeed, he thought that American law compelled such a disclosure. He was concerned that, once the word got about that the blood bank was "testing for AIDS", many people in high risk AIDS groups would donate blood for the specific purpose of ascertaining whether they had an AIDS infection. It was put to Professor Holland that it could have been explained to donors that the test was not specific to AIDS, so that the result did not indicate whether the donor had AIDS. But Professor Holland felt that this distinction would be too subtle for most people.

226. During the course of Professor Holland's evidence reference was made to an article published in NEJM in 1989, to which a passing reference has already been made. This article, by Leitman and others, concerned a sample of Washington DC voluntary blood donors who had tested HIV positive. It appears that, out of 693,000 donors between July 1985 and December 1988, 284 tested HIV positive. The research team evaluated the cases of 236 of these donors. They asked 98 of the donors, all of whom were from high risk groups, why they had given blood despite requests not to do so. Twenty-five donors gave as their reason the desire for an HIV-antibody test. A further 14 donors said that they knew that their blood would be tested and not used if HIV positive.

227. The Leitman article was published, of course, long after 1984. But, when shown the article, Professor Holland commented that it showed that "40 percent of the people donated because the test was there. If the test had not been there they would not have donated".

228. One problem in using the Leitman article as a retrospective justification of the "magnet" argument is that it related to an HIV specific test. After July 1985 it was well known that the blood banks used a specific test. It was that test, on Professor Holland's reasoning, that the 39 donors were seeking. Whether they would have taken the same course in relation to an anti-HBc surrogate test is unknowable; so much depends on what they would have been told.

229. Professor Engelman did not share Professor Holland's concern about the magnet effect. He, of course, carried out T4:T8 testing at Stanford for about two years, until the HIV test became available. He denied any knowledge of a "magnet" effect. Indeed, he said that he did not even hear the term at the time.

230. The Stanford Blood Bank did not inform donors, in advance of their donation, that their blood would be tested. About 2% of all donations showed abnormal T cell ratios and was discarded. But the donors were not immediately informed of this fact. They were called in for interview only where a subsequent donation also showed an abnormal T cell ratio. The donors were then asked about high risk AIDS behaviour. If they denied any such behaviour, they were reassured. If they admitted high risk behaviour they were warned against giving blood in the future and advised to consult their physician. Professor Engleman readily agreed that an intelligent person who was given this advice might guess that he or she had an HIV infection. But he discounted the likelihood that this information would "get out amongst the community in which he lived". It is Professor Engleman's strong view that any disadvantage in having the test, from the point of view of its attracting undesirable blood donors, was outweighed by its potential to identify donors who might belong to high risk categories. Professor Engleman accepts that an anti-HBc surrogate test is "unscientific", in the sense that I have mentioned, but he maintains that nonetheless it happened to be a useful marker of high risk donors.

231. The Court was fortunate to have the arguments about the "magnet" effect expounded by such impressive witnesses as Professor Holland and Professor Engleman. Professor Engleman is also highly intelligent and articulate. Each of these witnesses sincerely holds the view he expressed, as is evident from the fact that each propounded that view in America in 1983-1984. The major difference between them does not arise out of any matter of scientific fact or reasoning but from a difference in perception about the balance between two factors which are probably impossible to determine, which certainly have never been determined: the extent to which high risk persons would be attracted as donors because of their knowledge that a particular blood bank used an anti-HBc test as a surrogate test for AIDS and the number of HIV infected donations which would be discarded as a consequence of testing anti-HBc positive.

232. In relation to the effect of anti-HBc surrogate testing on the blood supply, there was no real disagreement between Professor Holland and Professor Engleman. Both accepted that a policy of discarding anti-HBc positive blood would lead to a loss of 3-5% of all donations.

233. Surprisingly, and this is a criticism made by counsel for the applicant, the United States debate about surrogate testing substantially by-passed Australia. As I have mentioned, surrogate testing was briefly discussed at the Perth symposium of 23 July 1983, Dr Whisson making reference to what Professor Holland called the "magnet" effect. There was some discussion as to how this effect might be off-set. But, so far as the evidence reveals, surrogate testing was not further discussed, in Australia, until after Dr Archer made his decision in August 1984. Further, although there was a general understanding that, as in America, up to 5% of all donations would be anti-HBc positive, nobody appears to have assessed the effects of this wastage on the adequacy of the donor blood supply. Australian blood bankers and health authorities appear to have been content simply to follow the American practice, without asking themselves whether there were relevant differences between the positions in the two countries. Dr Archer said in evidence that he did not consider or discuss the use of an anti-HBc test until August 1984, after the Lokar case. He said that he was not aware "of the kinds of theories that had been discussed in the United States about ... surrogate testing"; although he said that in 1983 and early 1984 he was aware that there had been discussions leading to the conclusion "that nothing was effective".

234. Even in August 1984, although the Lokar case triggered Dr Archer's inquiries as to the possibility of doing something more, his decision to introduce anti-HBc testing was directly influenced by his perception of what was happening in America. He gave this evidence:

Q: "Doctor, in August 1984 you made your decision,

almost by yourself if I might suggest that to be the

case from listening to your evidence, to introduce

surrogate testing by way of core antibody to Sydney, is

that right?

A: "No, that is not correct. The decision was made

on the basis of what the American plasma fractionaters

were doing, particularly on that Cutter internal

leaflet which suggested that all plasma fractionaters

were going to do this, and the information I got from

the Irwin Memorial Blood Bank."

Q: "Well, you did not get any input from the

Australian Red Cross about that, did you?"

A: "No, or the American Red Cross."

Q: "And you had not made any enquiries of the

Australian Red Cross, or the American Red Cross, you

took the Cutter leaflet and decided to pull New South

Wales up by its own bootstraps as it were?"

A: "No, I think - what you said before - I considered

that Sydney was a high risk area as far as Australia

was concerned, and in that respect comparable to San

Francisco, they had taken these steps in their blood

bank, it seemed very reasonable that we do the same in

Sydney."

235. As I previously mentioned, at this time Dr Archer also believed that the American FDA was recommending anti-HBc surrogate testing, a belief which he later discovered to be incorrect.

236. In their final address, counsel for the applicant were critical of what they called the "disorganized nature" of the Australian Red Cross' response to the AIDS problem. They say that, long before the Lokar case, Dr Archer should have assessed for himself the desirability of introducing anti-HBc surrogate testing. They suggest that the first and second respondents should have decided to adopt anti-HBc surrogate testing before August 1984 - indeed, as early as February 1984 - and that, had they done so, the test would have been in place before the making of the donation which infected their client.

237. Dr Archer recognised that he had an obligation to make his own decision about surrogate testing. As he put the matter in one answer: "My job is to ensure the safety of my blood supply, yes". The evidence continued:

Q: "And it does not matter what two thousand blood

bankers are doing in the United States, if they are

making the wrong decision you have still got to make

your decision, is that right?"

A: "That is correct."

Q: "And they are not going to be responsible for you

in the final analysis, they are going to say, well,

tough luck, you are responsible for your blood bank, we

are responsible for ours?"

A: "Correct."

238. Notwithstanding that, at a later point of his evidence he said "in this case I think you ... follow the Americans".

239. I think that there is force in counsels' criticisms of Dr Archer's failure directly to address the issue of surrogate testing before August 1984. But this criticism might equally be made of all those people in Australia who bore responsibility for the integrity of the Australian donated blood supply. Although it could never be contended that anti-HBc was a specific test for the agent now known as HIV, and in that sense it was an "unscientific" test, it was well known that a large proportion of the people in the major high risk group for AIDS were anti-HBc positive. Even more significantly, as long ago as February 1983, JAMA had reported that tests conducted by Dr Thomas Spira of CDC had shown that various categories of AIDS patients had anti-HBc positivity ranging from 90 to 100%. Upon the basis of those figures, a policy of discarding all blood which tested anti-HBc positive would have eliminated a huge proportion of such infected donations as might be received notwithstanding the request for high risk persons not to donate.

240. Of course, it would not be rational to make a decision to institute anti-HBc surrogate testing on the basis only of the JAMA report. The report gave no detail about the tests. In particular, it did not disclose the number of patients involved. But, especially having regard to the source of the study, it surely justified some inquiry about these tests and as to whether any other studies had been conducted. Indeed, it might have been possible to test known Australian AIDS and lymphadenopathy syndrome sufferers for anti-HBc. The number of such persons was small in 1983; but by January 1984 there were 33 reported patients, of whom, apparently, 30 were still alive. Given that any donation of HIV-infected blood was likely to result in the death of all recipients, and that there was more than one recipient of most donations, any measure holding out the prospect of reducing the supply of HIV-infected blood warranted serious examination. It is true that the calculation made by Dr Whisson at the Perth symposium supposed only one infected donation in Australia each 50 years. But its fundamental assumption was that there were only 800 AIDS affected people in the United States not presently in ill-health. If that assumption was ever valid, it could not rationally have survived the rapid increase in reported American cases in the latter half of 1983. Moreover, Dr Whisson's reasoning led to the result that there would be only three infected donations per year in the United States. Yet the August 1983 CDC figures included 19 known transfusees and 15 haemophiliacs with full AIDS. So anybody thinking about the matter should have realised that, if American experience was any guide, the problem in Australia was likely to be much more serious then Dr Whisson had assumed. And there remained his point that one donation used in blood concentrate could infect up to 2,000 people.

241. The benefit of anti-HBc testing would have had to be weighed against its costs. As will emerge, I am not satisfied that, if a rigorous cost-benefit analysis had been made, the preferable decision before August 1984 would have been to embark upon anti-HBc surrogate testing. But I find it remarkable that no such analysis was made; the more so because earlier events would have led an observer to predict that a serious examination of surrogate tests would be made. In their article of 11 June 1983, Dr Mutton and Professor Gust had referred to the possibility of screening, a matter taken up at the Perth symposium in the following month, when there was general support for an investigation of the merits of anti-HBc surrogate testing. Yet it seems that there never was such an investigation. No doubt the NHMRC Working Party on AIDS did much valuable work. But, despite Professor Penington's statement that opinions had to be made "on rather more nebulous criteria than scientific proof", the NHMRC does not appear to have taken up this subject at all. And, although there were Red Cross representatives at the Perth symposium, neither did the Australian Red Cross.

242. I think that Dr Archer's evidence gives clues to the reasons why anti-HBc testing was never considered by the Australian Red Cross. Firstly, Dr Archer said that he believed "the donors would honestly read the information and declare themselves". Although he was worried that the American experience could happen in Australia, he was hopeful that the steps which he had taken would be effective in preventing high risk donors giving blood. Upon several occasions, during the course of cross-examination, he said that, until the Lokar case, there was no "evidence" of a problem in Australia.

243. Dr Archer's attitude is understandable, up to a point. Scientists are accustomed to seek scientific evidence before changing established procedures. They tend to distrust intuitive judgments; perhaps without seeing that, as here, the decision not to change an established procedure is itself the product of an intuitive judgment that the problem will prove manageable. But Dr Archer is more than a scientist. He is, and was in 1983-1984, the administrator of the largest Australian BTS, whose main collecting area was the city with the greatest number of known AIDS sufferers in the country. Where the sufficiency of a precautionary measure is uncertain, the path of prudence is to consider what other steps (if any) might usefully be taken in order to minimise the risk which remains; and at what cost. Dr Archer recognised that there was no certainty that the measures already taken would suffice. He agreed that he would not have been "silly enough ... to say that the risk of somebody being infected through the blood supply would not happen". He agreed that Professor Penny had drawn attention to the similarities between Sydney and San Francisco and that he "had to assume that the same things that were happening in San Francisco might happen in Sydney". He believed that the problem in America was about "two years ahead" of that in New South Wales; and there was "plenty of evidence" by the beginning of 1984 of pollution of the donor blood supply.

244. Secondly, as I have already said, Dr Archer's attitude was that he should "follow the Americans". That attitude may have been shared by others. Once again, the attitude is understandable to a point. There is no doubt that, in 1983-1984, the AIDS problem was much greater in the United States than here. The United States was the centre of AIDS research and the location of much practical experience. It was eminently reasonable for people in Australia who were confronted with problems regarding AIDS to look to the United States for information and advice. They would have been remiss if they had failed to do so. But it is one thing to seek information and advice from another country. It is another thing simply to follow the course taken elsewhere without considering whether factors exist in that country which do not apply in Australia. If any inquiry had been made, Dr Archer would have learned that a major argument put against anti-HBc testing was the "magnet" argument, arising out of a perceived necessity to inform donors of the test. That argument had much less weight in Australia where, as Dr Archer accepted, there was no need to disclose the test. The other major disadvantage of the test was its effect on the blood supply. The loss of up to 5% of all donations was a disadvantage common to both countries. But the effect of such a loss, in terms of enabling hospitals and others to avert loss of life, was not necessarily the same in each country.

245. It seems to me that the information possessed by Dr Archer should have caused him to consider, earlier than August 1984, the desirability of introducing anti-HBc surrogate testing. However, in saying that, I wish to emphasise that my criticism is not directed solely towards Dr Archer. If there was complacency about the effect of AIDS on the blood supply, Dr Archer may have suffered less of it than others. It was he who made the courageous decision of May 1983 to request high risk donors not to donate. It was he who, without any enthusiasm from his colleagues, made the August 1984 decision to adopt anti-HBc testing. Any criticism of Dr Archer applies also to all the other people whose responsibility it was to see that the Australian donor blood supply was kept free from avoidable contamination.

246. But it is one thing to say that anti-HBc testing should have been investigated. It is another thing to say that the failure of the first and second respondents to introduce anti-HBc testing before August 1984 was a breach of their duties of care towards blood recipients. Before I could so conclude I would have to determine, upon the basis of the evidence before me, that "the magnitude of the risk and the degree of probability" of HIV blood-transfusion infection would outweigh "the expense, difficulty and inconvenience" of adopting an anti-HBc program; see Mason J in Shirt.

247. There is no question about the magnitude of the risk, for any particular blood-recipient. As was appreciated at the time, any person who received blood infected by the agent now known as HIV, would be likely to contract an ultimately-fatal disease. But there was considerable difficulty in predicting the chances of infection from a blood transfusion. Although the similarities between Australia and the United States - and especially between Sydney and San Francisco - had been widely noted, Professor Gust said that, for some time, there was a belief that the epidemiology of the disease would be different in Australia. He said:

"In the early stages of the epidemic in Australia, the

first cases that we saw were largely imported cases.

People who had clearly acquired their infection

outside. There was a lot of debate at that time as to

whether or not that was the pattern that we would

continue to see. That is, that it would be largely an

exotic, an imported disease or whether or not we would

develop a local endemic focus of infection."

"You will recall that the original cases that were

described in Australia were people who had a clear

history of contact with the United States and there

were many people who at that time believed that that

was the pattern that we would continue to see."

Q: "But they were rapidly disabused of that notion,

were they not?"

A: "It took quite some time for many of them to be

disabused of that."

Q: "A matter of months?"

A: "No. I think longer than that, not until we had

an antibody test and were able to do some

sero-epidemiology were they disabused of that."

248. There is some ambiguity about the time referred to in the last answer. Professor Gust may have used the pronoun "we" as a reference to the world scientific community, in which case the period to which he referred presumably came to an end about the time of the Gallo announcement in April 1984. He may have meant to refer to Australian researchers, in which case the relevant date was some time later; perhaps as late as August 1984.

249. As I understand this evidence, there was, until that time whenever it was, a belief amongst some qualified people that Australian AIDS cases would be confined to people who had acquired the infection abroad. In our present knowledge, this belief appears quaint, even absurd; but Professor Gust was speaking of a period when little was known about the disease. He is undoubtedly including a period when it was not even clear that the responsible agent was a virus. There was no reported Australian blood transfusion AIDS case until Mr Lokar's diagnosis in July 1984. In contrast to the United States, where haemophiliac AIDS cases emerged at the very beginning of the epidemic, there was no reported Australian haemophiliac AIDS case until the end of 1984. I do not think that these differences sufficiently explain the failure of the Australian authorities even to investigate the possibility of surrogate testing. But, in determining what decision about anti-HBc testing ought to have been made, if the issue had been discussed, it is relevant to remember that there was then a mood of optimism about the extent of the problem in this country. As late as December 1984, a publication of the AIDS Task Force quoted the risk of contracting AIDS through blood transfusion at about one in 100,000. Dr Gatenby described this as "a widely used figure". He added that "only in retrospect we realised that it was incorrect". It is now obvious that it was very incorrect, but my judgment on the question what would have been the responsible decision in early 1984 has to be made by reference to the facts as understood at that time. Even so, the New South Wales BTS received nearly 300,000 donations in 1983-1984. So a rate of one in 100,000 implies two or three HIV transfusion-infections each year; leaving out of account the position of the haemophiliacs put at risk if any one of 2,000 concentrate contributors is infected. In any given year, more than one person was likely to become infected with a fatal disease through the blood donation system. Even having regard to the limited, and erroneous, knowledge of the day, and although anti-HBc could only reduce, not eliminate, the risk, there was a case for its adoption.

250. But the case for adoption of the test had to be set against its disadvantages. The "magnet" factor is extremely difficult to assess; so much would depend upon the way in which testing was handled. The factor cannot be excluded from consideration but I would not give it much weight. There was no legal obligation on Australian blood banks to notify donors that their blood would be subjected to an anti-HBc test. Donated blood was already subjected to a number of tests of which donors were not informed, at least as to the details. To introduce anti-HBc testing would be merely to add one more test. When it did introduce anti-HBc testing, the New South Wales BTS did not tell its donors of that fact. If, nevertheless, the fact became known, it apparently did not cause any influx of undesirable donors. There is no suggestion in the evidence of an actual "magnet" effect in Australia.

251. Anti-HBc testing would, of course, have involved an additional financial cost. But the amount was fairly small. As Professor Holland remarked, the financial cost of surrogate testing was not really an issue in the debate. The real cost would have been the wastage of useable blood.

252. There is not a lot of evidence about the ramifications for the blood supply of anti-HBc testing. According to figures produced by Dr Archer, in the period from 1 July 1983 to 30 June 1984, the twelve months which followed the first Australian AIDS case and the request that homosexual men and intravenous drug users not donate blood, Sydney donations fell by 4,776 (2.45%), as compared with the previous year. Part of this loss was, no doubt, caused by high risk people heeding the request. The remainder was probably occasioned by the unfounded fear of some donors that, in giving blood, they were putting themselves at risk of contracting AIDS. No doubt the loss would have been greater but for a campaign by the New South Wales BTS to recruit new donors, with an emphasis on women. New South Wales country donations rose by 354 units in 1983-1984. So the overall loss was 4,422 units (1.47%).

253. Expressed as a percentage, the 1983-1984 loss is not large. But that loss must be assessed in the context of Dr Archer's unchallenged evidence that, ever since the establishment of the New South Wales BTS, "there has been ... a constantly increasing demand for blood and blood components as a result of the steady rise in the population of New South Wales combined with the greater use of blood and blood components in complicated surgery". Dr Archer explained that the problem was not primarily one of coping with major emergencies, such as the Granville rail disaster. He said that, at such times, large numbers of people come forward to give blood. The problem was to keep up the supply on a day-to-day basis during ordinary times. In that regard he referred to a meeting of the National Blood Transfusion Technical Committee of 22 September 1983 which had set a factor VIII target for each State BTS equal to two units per head of population. This target required the New South Wales BTS to produce over ten million units of factor VIII per year. Dr Archer said that the target was not attained, or ever within reach, in 1984.

254. Dr Archer believed that about 5% of all blood donated in New South Wales would prove positive to an anti-HBc test. The reasonableness of this belief is not challenged. It compares with the already mentioned finding by Burrell and others, reported in November 1983, that 4.85% of 453 routine South Australian blood donors tested positive for hepatitis B surface antibodies. So, a pre-August 1984 decision to introduce anti-HBc tests, and to discard positive donations, would have meant the likely loss of 5% of all donations, on top of the 1.47% already lost. How serious would that situation have been?

255. As Dr Baird commented in his evidence, blood is a "precious resource". Any inadequacy in the supply is a matter of major concern. If blood is not available for transfusion, operations will be postponed. Some postponements may cause mere inconvenience; others may lead to more serious consequences, even death. And of course, hospitals must have enough blood to cope with emergencies, especially accident cases; otherwise deaths will result. But how critical was the last 5% of the supply? In practice, would the loss of a further 5% of blood have caused any problem; and, if so, to what degree? Surprisingly, the evidence does not provide answers to these questions.

256. I have been troubled as to the attitude I should take regarding the lack of evidence about the practical effect of anti-HBc testing on the adequacy of the blood supply. On the one hand, it might have been expected that, if there was a basis for real concern, detailed evidence to that effect would have been adduced by one or more of the respondents. But, on the other hand, there was no challenge to the general statements made by Dr Archer. It was never suggested to him that, whatever the theoretical inadequacy of the available number of units, there was no real practical problem. So, although I would have preferred to rest my judgment on more precise information than is available, I think that I should interpret Dr Archer's general statements as an indication of his perception that any reduction in the available blood supply would have had serious practical effects.

257. Upon that basis, the problem for a person in the position of Dr Archer in, say, February 1984 would be to weigh the concern that contaminated blood will be received by the BTS, despite its appeals to high risk persons not to give blood, against the supply difficulties which would follow the introduction of anti-HBc testing. The Court could only uphold the applicant's claim that the first and second respondents were negligent in failing to introduce surrogate testing at that time if it were satisfied that a prudent person in the position of those respondents would have determined that the concern for contamination outweighed the difficulties which would ensue from reducing the blood supply.

258. When the matter is stated in this way, it seems to me to be apparent that the claim cannot succeed. Although there was ample reason for concern, before the Lokar case there was not yet any known Australian transfusion-related AIDS case. It was not yet certain that there would be a contamination problem. But it was clear that any serious practical effects upon the blood supply might cost lives. Upon the material before the Court, and in the absence of evidence which establishes that a 5% reduction in the blood supply would not have endangered any lives, I cannot be affirmatively satisfied that the first and second respondents breached their duty towards people in the position of the present applicant in failing to decide, in February 1984 or at any later time before August 1984, to adopt anti-HBc surrogate testing.

259. The conclusion which I have just expressed is not in conflict with the opinion of any witness in this case, even any witness called by the applicant. Indeed, to the extent that the witnesses dealt with the time when surrogate testing should have been introduced, their evidence supports the proposition that it was not unreasonable for the first and second respondents to wait until after a transfusion AIDS case had appeared.

260. Counsel for the applicant called four witnesses on surrogate testing. The first of them, Dr Ziegler, gave a deal of helpful evidence, especially with regard to the published literature and the possible surrogate tests. But he was not asked to specify a date by which, in his opinion, it would have been reasonable to adopt surrogate testing. He did say that, in 1981-1982, he himself "erroneously thought that it was unlikely that this problem was going to be a problem in Australia". At the other extreme he criticised an article by Professor Merlin Sayers of the Seattle Blood Bank which, in Dr Ziegler's description, contended that an anti-HBc surrogate test "was unsuitable in the light of the impact that such test might have on the blood supply". Dr Ziegler said of Dr Sayers' article: "That is a value judgment that he made at that time. I think most of us now can see that he was wrong". But Dr Sayers' article followed the Simons and Bankhurst article published in September-October 1984. So Dr Ziegler was not saying anything about the position before August 1984. Dr Ziegler's evidence does not disclose at what time he moved from his 1981-82 belief, when he clearly thought surrogate testing to be inappropriate, to the position expressed in his criticism of Dr Sayers.

261. The second witness to deal with surrogate testing was Dr Gatenby. Dr Gatenby's primary function was to give evidence about his treatment of the applicant. However, he was asked some questions about surrogate testing in the course of which it emerged that Dr Gatenby did not give "any serious thought" to anti-HBc surrogate testing until August 1984, when he learned of Dr Archer's decision at a meeting they attended. He said that, at that time, Dr Archer explained the reason for the test. Dr Gatenby accepted this reason. He said in evidence: "I believe that there was a logical, scientifically based reason for the introduction of that test" but "it was not something that I had thought about of my own accord". Dr Archer's contention was "that it might be helpful in the overall efforts to exclude the dangers of HIV infection in the blood supply". The failure of Dr Gatenby to form any earlier opinion in favour of anti-HBc surrogate testing is particularly significant, since he was involved in the treatment of AIDS cases from an early date. Also, he represented The Royal Prince Alfred Hospital on the Medical Scientific Committee on AIDS established by the New South Wales Health Department. By May 1984 he had published at least two papers relating to AIDS.

262. Dr John Dwyer, Professor of Medicine and Head of the School of Medicine at the University of New South Wales, was also called on behalf of the applicant. Professor Dwyer is an immunologist. Between the years 1978 and 1988 he was Chief of the Clinical Immunology Section of the Departments of Medicine and Paediatrics at the Yale University School of Medicine. Simultaneously, he held positions within the university, first as an Associate Professor and subsequently as Professor of Medicine and Professor of Paediatrics. Professor Dwyer returned to Australia in 1985 to take up his present position. He has since served on a number of committees dealing with AIDS.

263. There is no doubt that Professor Dwyer is well-informed about the nature and dimensions of the current AIDS problem in Australia. However, in addressing the question whether surrogate testing ought to have been introduced in Australia before August 1984 - and, if so, when - he suffers the significant disadvantage that he was then living outside Australia. Living in America, he followed the American debate about surrogate testing. In his affidavit he said that, at the time, it was his belief "that there was potential for this test to be useful" as a"reductionist approach to this problem". In cross-examination Professor Dwyer was challenged on this answer, reference being made to some evidence which he had recently given in Melbourne, during the course of which he said that none of the suggested surrogate markers was reliable and that he was concerned that the use of these might lead to some false sense of security. Professor Dwyer explained that, in the Melbourne case, he was speaking about a time earlier than mid-1984. During the course of this explanation, Professor Dwyer made it clear that his support for surrogate testing in this country was related to the circumstances, as he understood them, that by July 1984 there had been several blood transfusion HIV cases, the first in about January 1984, and that the Australian Red Cross wished to take every means possible to minimise the spread of the disease. Of course, this understanding of the facts was erroneous; July 1984 being the date of the very first Australian case. However, Professor Dwyer's indication of his reasoning shows that his opinion provides no support for the proposition that surrogate testing should have been introduced before the first reported transfusion case.

264. The remaining applicant's witness to deal with surrogate testing was, of course, Professor Engleman. Professor Engleman claimed no knowledge of the Australian scene in 1983-1984 and he was not asked to comment upon the date when it would have been reasonable for Australian blood bankers to introduce surrogate testing. As I have already recounted, Professor Engleman adopted T4:T8 surrogate testing at Stanford in the first half of 1983 and thereafter urged other blood banks to use anti-HBc. But he did not suggest that a blood bank would be remiss in failing immediately to adopt his precept. During the course of cross-examination, he was asked whether he thought that it was a violation of reasonable and prudent medical conduct for blood banks in the United States to fail after January 1984 to introduce surrogate testing. He responded that this depended on location "but certainly in high risk areas I would have felt it was a violation". His evidence continued:

Q: "Not universally?"

A: "No, and I am sorry for being fuzzy on this point

but I feel fuzzy on it. I feel that mid 84 was really

the cut-off for the entire country for surrogate testing."

Q: "For high risk parts of the country?"

A: "No, for all parts of the country by mid 84. For

high risk areas certainly by the beginning of 84."

Q: "So in the four or five months between February 84

and June of 84 do you say that there was a change in

medical information such that you would regard it as

unreasonable and imprudent of any blood bank not to

have a surrogate test, is that right?"

A: "Yes, although it is not merely the change of

information. It is a reflection of how much time has

passed during which information was available and

increasing amounts of information became available."

265. Asked about the particular information which had become available, Professor Engleman referred to the NEJM article of January 1984 dealing with AIDS and haemophilia. He commented that, by the beginning of 1984, CDC had recognised approximately 50 cases of transfusion transmitted AIDS. His evidence went on:

Q: "What I am really asking you is this: what is it

that happened in 1984, or December 83 or earlier, that

you say required them, in effect, to see the light?"

A: "In my view it was a combination of factors.

There was an acknowledgement of the increasing

frequency, geometrically increasing frequency of

transfusion transmitted AIDS cases that were

paralleling the growth in the epidemic as a whole.

There was knowledge of an ever lengthening period of

latency between the time of exposure and the time of

disease manifestations. There was knowledge, at least

amongst blood bankers, of surrogate testing as an issue

and the availability of the Hepatitis B core antibody

test for example. And there was knowledge that the

disease AIDS was a terminal illness from which there

was no defined agent, even thought everyone felt - I

should say almost everyone felt that there was an

infectious agent, a new infectious agent. It had not

been identified, there was no treatment. So I think

those are the issues on which I argue that there was a

transition, or should have been."

Q: "When do you say that those different factors had

matured sufficiently to expect your colleagues to have

responded to them?"

A: "Approximately the middle of 1984."

266. It is not easy to fit New South Wales, and in particular Sydney, into Professor Engleman's range of risk areas. In 1983-1984 Sydney had a substantial homosexual and intravenous drug-user population. No doubt Sydney had, and has, characteristics similar to those of San Francisco. But in 1983-1984 Sydney had nothing like the number of reported AIDS cases which had occurred in San Francisco. If a list of reported cases per city had been compiled, it seems certain that Sydney would have ranked below a large number of American cities. I think that it would not be reasonable to treat Sydney as falling within Professor Engleman's "high risk" category. Moreover, as the above extracts from his evidence make clear, Professor Engleman's reasoning was greatly influenced by his knowledge of the CDC figures on reported transfusion and haemophilia-related AIDS cases. There was no such reported case in Australia until July 1984. Accordingly, I do not think that Professor Engleman's evidence supports the proposition that the failure of the New South Wales BTS to introduce surrogate testing before the Lokar case was a violation of prudent medical practice.

267. The claim that the first and second respondents ought to have decided to adopt anti-HBc surrogate testing earlier than August 1984 suffers from the handicap that it is opposed to the practice which predominated in the United States, the country with the greatest experience of AIDS cases. That handicap is formidable; but, as I have indicated, I would not be prepared to regard it as decisive. If I felt that, upon the evidence available to the Court, the only prudent course for persons in the position of the first and second respondents - in the light of their then knowledge - was to introduce anti-HBc, I would uphold the claim of breach of duty, whatever the American practice. But such a course would involve the Court in making the judgment, without any supporting expert evidence, that a prudent blood banker should have determined that it was better to accept the loss of 5% of the blood supply rather than the mere risk of HIV contamination of the blood supply. Particularly in the absence of evidence as to the consequences of losing 5% of the blood supply, I cannot make that judgment.

268. So far as the third respondent is concerned, it seems to me that it is an even stronger position than the first and second respondents. The Royal Prince Alfred Hospital had no source of blood other than the New South Wales BTS. The New South Wales BTS was an organisation of high reputation with which the hospital had dealt for many years. It had a specialist interest in the maintenance of blood quality. I think that the hospital was entitled to rely upon the judgment of the BTS as to the tests appropriate to be applied to the blood which it supplied.

Negligence: delay in implementing the surrogate testing decision

In the alternative, counsel for the applicant argue that, even if it was not imprudent for the respondents to fail to make an earlier decision about surrogate testing, they were unduly tardy about implementing their decision. They point out that the full testing program, for Sydney donations, was in place by 25 October 1984, only three weeks after the taking of D9's donation. Counsel say that, with greater speed of implementation, that donation would have been tested, found anti-HBc positive and discarded. The last step in this argument is challenged by counsel for the respondents. They point out that the evidence does not establish, with any degree of certainty, whether or not D9 would have tested anti- HBc positive on 3 October 1984.

I accept that there is no certainty as to whether D9 was anti-HBc positive on 3 October 1984. He was anti-HBc positive at the time of his next donation, on 21 March 1985. But he could have become HBV infected after 3 October 1984 or, being infected on that day, have not provided a positive result, either to the hepatitis B surface antigen test which was then made, in accordance with the usual routine, or to any anti- HBc test which might have been put into place.

However, it is now known that the donation given by D9 on 21 September 1983 was HIV positive. As one of the medical witnesses observed, that positivity provides a clue to his lifestyle at that time; the probability being that he was then either a homosexual, an intravenous drug user or a sexual partner of an intravenous drug user. Hepatitis B is common amongst all these groups of people. It is common ground that hepatitis B core antibodies remain within the blood stream for many years after infection. So the hepatitis B antibodies detected in March 1985 could be the result of an infection in 1983 or earlier. Purely upon the basis of opportunities for infection, it is more likely than not that D9 was anti-HBc positive on 3 October 1984.

However, I am unable to accept the earlier propositions in the applicant's alternative argument. I have already detailed the steps taken to implement Dr Archer's decision to introduce anti-HBc testing. I do not think that either he or the NSW Division may reasonably be criticised for delay. Implementation of the decision involved the selection and importation of new equipment and the recruitment and training of three additional technicians. The contemporaneous documents show that a sense of urgency pervaded the procurement of the equipment and there is no reason to think that it was otherwise in relation to the new staff. The period which elapsed from the date of Dr Archer's return from Munich on 31 July 1984, when he set about making his inquiries as to current United States practice, until there was full testing of all Clarence Street donations was about 12 weeks. Bearing in mind all that had to be done, I do not think that this period exceeded what was reasonable.

Finally, counsel for the applicant point out that limited testing was taking place during the period of nine days which elapsed between the taking of D9's donation and the supply of part of that donation, in the form of fresh frozen plasma, to the applicant. The plasma was frozen shortly after the blood was taken from D9. Nonetheless, according to the evidence, it would have been possible to test its anti-HBc positivity, after first thawing a small portion of it. Counsel say that this should have been done. When testing commenced, the BTS should have started with the stock in store. Had it done so, counsel argue, D9's donation would have been tested and discarded.

274. I do not think that this is a reasonable criticism. When regular anti-HBc testing began on 5 October the BTS technical officers at Clarence Street could handle only about 200 tests per day. They were inexperienced. The third new officer had yet to commence. The Clarence Street blood bank was taking about 400 donations each day. So at that stage the testers were not even coping with the new donations. It took about three weeks before they were able to do so. In the meantime, unless substantial quantities of blood were to be held unused, some untested blood would have to be supplied to hospitals. If the officers had tested the blood in store, a greater proportion of new blood would have been left untested. This would have made no sense; especially in the light of Dr Archer's evidence that the testing of already frozen plasma is a much more complicated and time-consuming process than the testing of a new donation in conjunction with its other routine tests. The desirable object was to test as many donations as possible each day, recognising that some donations must, for a time, go untested. Moreover, it was important to guard against errors. Dr Archer said that to take samples out of order "would have caused utmost confusion. If you do not have samples in serial order, you get hopeless confusion for identification". This evidence was given with some feeling. It makes sense and I accept it unhesitatingly.

275. My findings against the applicant, in relation to each of the bases of liability argued on his behalf, require me to dismiss his Application. There being no legal reason to the contrary, the applicant must be ordered to pay the respondents' costs. The question whether that order is enforced depends on matters outside my control.

276. In one sense, it is a cause of satisfaction to reach the conclusion that institutions with the respondents' reputations and history of service to the community have not been proved derelict in their duty towards the applicant. In another sense, the result gives me no satisfaction. During their addresses, counsel for each of the respondents expressed the concern of their client about the future of the applicant. I am sure that, in so doing, they spoke also for themselves and their instructing solicitors. Nobody could have sat through this case without developing a deep sympathy for the applicant and his wife and an admiration for the stoical manner in which they have borne their affliction. No amount of money could compensate them for the injury they have suffered, but a monetary award would have made it easier for them to cope with the problems that lie ahead. However, I must decide the case according to law, and the evidence establishes no basis upon which the respondents may be required to pay damages.

277. Nonetheless, I cannot forebear the comment that this applicant, and any other people who are in a like position, have a strong moral claim upon the community for some financial assistance in coping with their illnesses. Upon the probabilities, the earlier introduction of anti-HBc surrogate testing would have led to the discarding of the donation which caused the applicant to become HIV infected. The only substantial argument against the earlier introduction of anti-HBc testing is that it would have led to the wasting of something like 5% of all donations, most of which were in fact suitable for use. Although surrogate testing was not considered before August 1984, I must dismiss the claim because I am not satisfied that, had it been considered, a reasonable person in the position of the respondents would have decided to introduce anti-HBc testing at an earlier date. This is not because I doubt the foreseeability of HIV infection from a blood transfusion or that anti-HBc surrogate testing had a useful role to play in reducing the risk of such infection. The reason for my conclusion is the possibly serious effect on the blood supply. In the absence of that possibility, I would certainly hold the applicant entitled to recover damages.

278. But this is where the moral claim arises: to take into account the effect upon the blood supply is to say that a person in the position of the first and second respondents was entitled to give priority to the interests of all blood users - and everyone in the community is a potential blood user - over the interests of the relatively small number of individuals who might receive infected blood. To so say is to make the present applicant bear the burden of protecting the wider public interest. In some other areas of activity, in which individuals are sacrificed for the wider public good, the community recognises an obligation to provide some recompense; for example, under war veterans' legislation. Perhaps the same attitude ought to be taken towards those people who contracted AIDS as a result of a blood transfusion or haemophilia treatment. I do not have in mind any extravagant award of money, but something to make up for the income which they have lost or will lose - after taking into account any social service entitlements - and their out-of-pocket expenses. I am aware that a fund has already been established but its adequacy is a matter of controversy. I say nothing about that matter. I merely express the hope that the extent of the benefits available to people in the position of the applicant will be reviewed in the light of these reasons. Apart from anything else, agreement upon a sufficient level of assistance might eliminate the need to determine most of the cases which remain pending in this Court and in other courts; whose litigation will divert into legal costs many millions of dollars which might better be spent on the victims of the problem.

279. The formal order of the Court will be that the Application be dismissed with costs.