Re E v Australian Red Cross Society; Australian Red Cross Society New South Wales Division and Central Sydney Area Health Service [1991] FCA 20;

Re E v Australian Red Cross Society; Australian Red Cross Society New South Wales Division and Central Sydney Area Health Service [1991] FCA 20; - FCA 1991 case summary — Zoe

[7]

"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.'"

[47]

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.

[131]

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.

[136]

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.

[167]

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.

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Legislation Cited (22)

Cases Cited (25)

Re E v Australian Red Cross Society; Australian Red Cross Society New South Wales Division and Central Sydney Area Health Service [1991] FCA 20; (1991) 13 Atpr 41-085; 99 ALR 601 27 FCR 310 (8 February 1991)