Rickhuss v The Cosmetic Institute Pty Ltd

Supreme Court of NSW|2019-10-25|Before: Garling J

Solicitors: Turner Freeman Lawyers (P) Meridian Lawyers (D5) File Number(s): 2017/279308 Publication restriction: Not Applicable

Judgment

These are representative proceedings commenced by five plaintiffs by way of a Statement of Claim filed on 14 September 2017.
The Group Members are defined as being persons who during an identified period underwent breast augmentation surgery ("BAS") at premises operated by the 1st to 4th defendants in NSW and Queensland. The 1st to 4th defendants, which are associated companies, are all now in liquidation. Leave to proceed against the companies has been granted. They have not appeared in this litigation or taken any part in it. They can be referred to as the TCI parties.
The 5th defendant (Dr Eddie Dona) is a registered medical practitioner who practised as a plastic and reconstructive surgeon. At the relevant times he was a director and the beneficial shareholder of some of the companies, and was said to hold the position of Surgical Director of the TCI parties. Simply put, he is said by the plaintiffs to be the architect of the method of BAS utilised by the TCI parties and to have had control over the way in which those parties carried out their BAS.
An earlier judgment of this Court, Rickhuss v The Cosmetic Institute Pty Ltd [2018] NSWSC 1848, was delivered on 4 December 2018. That judgment dealt principally with the question of whether the proceedings should remain as representative proceedings. The effect of that judgment was that the proceedings should continue as representative proceedings for the time being. This judgment assumes familiarity with that earlier judgment.

Proposed Amendment - Paragraph 93A

In the course of the proceedings, the plaintiff sought leave to amend the Statement of Claim. As previously noted, the 5th defendant did not oppose leave being granted for all the proposed amendments except for one, that being the addition of a paragraph 93A.
The most efficient way to deal with the plaintiff's application for leave was to permit the unopposed amendments to be reproduced as the 4th FASOC and then to consider submissions on the appropriateness of the proposed paragraph 93A.
In the 4th FASOC, the plaintiffs pleaded as against all five defendants a common law cause of action seeking damages assessed in accordance with the relevant civil liability legislation. Those causes of action are unaffected by the proposed paragraph 93A and any consequences of this amendment, and therefore can be put to one side.
The plaintiffs additionally pleaded in the 4th FASOC a claim for damages pursuant to the provisions of ss 236, 237, 238 and, as well, pursuant to the provisions of ss 267(3) and/or 267(4) of the Australian Consumer Law ("the ACL").
The context of the contested amendment is a pleading by the plaintiffs that the TCI parties failed to achieve various statutory guarantees under ss 60 and 61 of the ACL. It will be necessary to come to the detail of the failures by the TCI parties to achieve the various statutory guarantees in due course.
However, in relation to the claim for damages under the ACL, it should be noted that the conduct said to constitute the failure of the TCI parties to achieve the statutory guarantees is also the conduct relied upon as constituting misleading or deceptive conduct in contravention of s 18 of the ACL, and as false and misleading representations in contravention of s 29(1)(b), s 29(1)(m) and s 34 of the ACL. These alleged contraventions of ss 18, 29 and 34 form the basis for the statutory claim for damages referred to at [11] pursuant to the provisions of ss 236, 237, 238 of the ACL.
The proposed amendment does not directly impact in any way upon these statutorily based claims for damages. It is to be observed that the conduct relied upon as described above is also said to have contravened the identified provisions of the ACL. However, these claims provide context for the proposed amendment.
It is now appropriate to return to the alleged failures to achieve the statutory guarantees. In paragraph 93 of the 4th FASOC, the plaintiffs allege against each of the TCI parties, separately as principals, that the BAS services were provided: 1. in breach of the due skill and care guarantee in s 60 of the ACL; 2. in breach of the fitness for purpose guarantee in s 61(1) of the ACL; and 3. in breach of the result guarantee within s 61(2) of the ACL.
These three provisions can reasonably be described as the "consumer guarantees".
By reference to the facts, matters and circumstances pleaded about the BAS services provided to each of the five plaintiffs, it can be seen that it is pleaded that the BAS services were acquired from, and provided by, one of the TCI parties and not by the 5th defendant.
The pleading more generally makes it clear that the BAS was performed by one of the TCI surgeons. The 5th defendant is not alleged to be one of those surgeons. Rather, it is pleaded that he was responsible for the accreditation and training of the TCI surgeons.
The proposed paragraph 93A is in the following terms: "Further, and in the alternative, by reason of the matters referred to in paragraphs 14(b)-(h), 17 and/or 19(a) above, [the 5th defendant] was involved, within the meaning of s 2(1) of the ACL, in the breaches of the guarantees in ss 60, 61(1) and/or 61(2) of the ACL, by the Cosmetic Institute, TCI Parramatta, TCI Southport, and/or TCI Bondi, and/or TCI Surgeons."
This proposed amendment provides the sole basis upon which, if allowed, the plaintiffs and group members would have a claim against the 5th defendant for those causes of action involving a failure of the BAS services to meet the consumer guarantee.
Prior to considering the terms of the relevant provisions of the ACL, it is important to note that, differently from the pleading of other statutorily based causes of action (see [13] above), here the plaintiffs do not plead that the breaches of the guarantees in and of themselves constitute a contravention of any provision of the ACL.
In order to consider the submissions about the proposed amendment, it is necessary to set out the relevant parts of the ACL.

Relevant Provisions of the Australian Consumer Law

The ACL is found in Schedule 2 of the Competition and Consumer Act 2010 (Cth). The ACL is divided into Chapters and Parts, which provide a useful skeleton for an understanding of the scheme of the ACL.
Chapter 2 provides for "General Protections" dealing with misleading deceptive conduct (including s 18), unconscionable conduct and unfair contract terms.
Chapter 4, which is of no relevance here, deals with "Offences". Chapter 5 to part of which it will be necessary to return deals with "Remedies and Enforcement".
Chapter 3 contains some central provisions. It is entitled "Specific Protections" Part 3-1 of Chapter 3 deals with "Unfair Practices", and includes provisions prohibiting the making of false or misleading representations (such as s 29), unsolicited supply of goods or services, and other schemes and unfair practices.
Part 3-2 of Chapter 3 deals with consumer transactions. Division 1 of this Part provides for the consumer guarantees. Section 60, which is found in Division 1, is one of the legal bases of the proposed amendment. It is in the following form: "60 Guarantee as to due care and skill If a person supplies, in trade or commerce, services to a consumer, there is a guarantee that the services will be rendered with due care and skill."
This section was formerly to be found in s 74(1) of the Trade Practices Act 1974 (Cth) ("the TPA"). The structure of that previous section was that it imposed a similarly worded guarantee but did so as an implied term of the consumer contract for the supply of the services.
Section 61 provides the other bases relied upon for the proposed amendment and is in the following form: "61 Guarantees as to fitness for a particular purpose etc. (1) If: (a) a person (the supplier) supplies, in trade or commerce, services to a consumer; and (b) the consumer, expressly or by implication, makes known to the supplier any particular purpose for which the services are being acquired by the consumer; there is a guarantee that the services, and any product resulting from the services, will be reasonably fit for that purpose. (2) If: (a) a person (the supplier) supplies, in trade or commerce, services to a consumer; and (b) the consumer makes known, expressly or by implication, to: (i) the supplier; or (ii) a person by whom any prior negotiations or arrangements in relation to the acquisition of the services were conducted or made; the result that the consumer wishes the services to achieve; there is a guarantee that the services, and any product resulting from the services, will be of such a nature, and quality, state or condition, that they might reasonably be expected to achieve that result. (3) This section does not apply if the circumstances show that the consumer did not rely on, or that it was unreasonable for the consumer to rely on, the skill or judgment of the supplier. (4) …"
These provisions were also previously to be found in s 74(2) of the TPA.
The words used in the consumer guarantee provisions found in ss 60 and 61 can be contrasted with the language used in the various provisions found in Chapter 2 of the ACL. By way of example, s 18 of the ACL, which is in the following form, uses quite different words: "18 Misleading or deceptive conduct A person must not, in trade or commerce, engaged in conduct that is misleading or deceptive or is likely to mislead or deceive."
The words used in the consumer guarantee provisions also contrast with those used in the provisions in Part 3-1 of Chapter 3, such as s 29 - which commences in this way: "29 False or misleading representations about goods or services (1) A person must not, in trade or commerce … : (a) make a false or misleading representation …"
Evidently, ss 60 and 61 are framed as guarantees of quality or outcome standards whereas other provisions of the ACL use language which is explicitly prohibitive or mandatory in nature.
The proposed amendment to the 4th FASOC also relies upon the definition of "involved" found in s 2(1) of the ACL. That definition is: "involved: a person is involved, in a contravention of the provision of this Schedule or in conduct that constitutes a contravention, if the person: (a) has aided, abetted, counselled or procured the contravention; (b) has induced … the contravention; (c) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or (d) has conspired with others to effect the contravention."
The definition of "involved" clearly denotes that it applies in cases of "contravention". "Contravening conduct" is defined in s 2(1) of the ACL only by reference to the provisions of s 239(1)(a)(i). That section, which is to be found in Part 5-2 of Chapter 5 (which deals with Remedies), provides that upon an application by a Regulator, the Court has the power to make orders including a sum of damages to a class of persons who may be "non-party consumers". This provision is of no direct relevance to the claims in these proceedings. It is noteworthy, therefore, that "contravening conduct" as defined in s 2(1) of the ACL does not include conducting relating to the provisions Division 1 of Part 3-2, where the consumer guarantees are to be found. Accordingly, that definition does not cast any direct light on to the question which arises here.
The 5th defendant, in opposing the amendment, draws attention to and relies upon the provisions of s 15 of the ACL, which is in the following form: "15 Contravention of this Schedule Conduct is not taken, for the purposes of this Schedule, to contravene a provision of this Schedule merely because of the application of: (a) section 23(1); or (b) a provision of Division 1 of Part 3-2 (other than section 66(2)); or (c) a provision of Part 3-5."
The interpretation of s 15 is central to the issue in dispute between the parties. The parties' respective submissions on s 15 will therefore be considered in greater detail below.
The plaintiffs also rely on various provisions of the ACL as giving them an entitlement to damages. The first group of provisions, ss 236, 237 and 238, are to be found in Division 3 - Damages, of Part 5-2 of Chapter 5 of the ACL. These provisions variously enable a Court to make an order for damages, or an order for compensation to one or more individuals, or else a compensation order arising out of other proceedings.
Each of these sections enables an order to be made against a person who (or which), amongst other things is "…engaged in a contravention of a provision of Chapter 2, 3 or 4; …". These provisions do not provide for an entitlement to damages for a failure of services to comply with the consumer guarantees.
It is important to note that Division 1 of Part 5-2, which provides for pecuniary penalties to be imposed where a court is satisfied "… that a person has contravened any of the following provisions …", does not include any reference to the relevant consumer guarantee provisions. Section 66(2) of the ACL is included, but that is of no relevance here.
The other provisions relied upon by the plaintiffs (at present, only against the TCI parties) as giving rise to their entitlement to damages are to be found in ss 267(3) and 267(4) which are in the following terms: "267 Action against suppliers of services (1) … (2) … (3) If a failure to comply with a guarantee cannot be remedied, or is a major failure, the consumer may: (a) …; (b) by action against the supplier, recover compensation for any reduction in the value of the services below the price paid or payable by the consumer for the services. (4) The consumer may by action against the supplier, recover damages for any loss or damage suffered by the consumer because of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure."
Section 267 of the ACL is to be found in Chapter 5 - Enforcement and Remedies, Part 5-4, which is entitled "Remedies relating to Guarantees".
The other Parts of the Chapter deal with separate remedies. Part 5-1 of the ACL provides for Enforcement and Part 5-2 provides for Remedies. Within Part 5-2 there are provisions for Pecuniary Penalties (Division 1), Injunctions (Division 2); Damages (Division 3) which includes the provisions referred to in [41] above, Compensation Orders (Division 4) and Other Remedies (Division 5). Part 5-3 and Part 5-5 are irrelevant to these claims and provide for "Country of Original Representations" and the "Liability of Suppliers and Credit Providers".

Submissions for the Plaintiffs

The plaintiffs submitted that, particularly at this stage of the proceedings, an amendment to a Statement of Claim would (subject to costs) ordinarily be allowed in the absence of specific identified prejudice to the 5th defendant. In making this submissions the plaintiffs rely, in particular, upon the provisions of s 64(2) of the Civil Procedure Act 2005 ("the CP Act").
The plaintiffs accepted that if the proposed amendment was so obviously futile that it would have been liable to be struck out had it appeared in the original pleading, that it should not be allowed: Nandutu v University of Sydney [2017] NSWSC 509 at [31]; McGuirk v the University of New South Wales [2009] NSWSC 1424 at [18]; Horton v Jones (No.2) (1939) 39 SR (NSW) 305 at 309‑310.
However, they submitted that in considering this issue, the 5th defendant bears a heavy onus to show that the proposed amendment is futile because the Court is obliged to apply the test referred to in General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125 at 129. For this proposition, the plaintiffs rely on the decision of Barrett J (as His Honour then was) in Alamdo Holdings Pty Ltd v Australian Window Furnishings (NSW) Pty Ltd [2006] NSWSC 1073 at [11]. Such a proposition is also to be found in the judgment of Badgery-Parker J in Gibson v Parkes District Hospital (1991) 26 NSWLR 9 at 15C .
The plaintiffs submitted that the proposed amendment could not be regarded as futile or hopeless or any other description of the General Steel kind. They drew attention to the existence of the phrase "merely because" in s 15 of the ACL as giving rise to the proposition that conduct which is in breach of a guarantee may amount to a contravention of the ACL because "… of some other factor".
Further, the plaintiffs submitted that as s 15 has not been the subject of judicial consideration, little guidance existed as to the proper scope of s 15. In particular, the plaintiffs submitted that an unanswered question was: "… where the boundary [is] between a 'mere' breach of a guarantee and conduct that is both in breach of a guarantee and or 'contravention' of a provisions of the ACL."
The plaintiffs submitted that the determination of the issue identified was inextricably linked to, and could not be divorced from, the underlying factual disputes in the proceedings. Hence, the plaintiffs submitted the amendment ought to be permitted and could not be determined at this stage to be futile.
Finally, the plaintiffs submitted that, if it be the case that s 236 did not apply to a breach of a consumer guarantee, a real question then arose as to whether Parliament had inadvertently omitted reference to persons "involved" in a supply from s 267(4) of the ACL. The plaintiffs argued that such a contention, and the consequences of it for the application of the principles of statutory interpretation, is not appropriate to be ruled out at this stage of the proceedings by refusing the amendment.

Submissions of the 5th Defendant

The first submission of the 5th defendant is a contextual one. He submitted that on a proper construction of the various provisions of the ACL, a failure to comply with a consumer guarantee is not a contravention of a provision of Chapter 3, such as to give rise to a claim for damages pursuant to s 236 of the ACL or any other provisions.
Secondly, the 5th defendant submitted, in reliance on s 15 of the ACL, that before a claimant can establish an entitlement to damages or compensation, a contravention of the ACL must be established independently by reference to any provision except those which provide for the consumer guarantees. Put differently, the 5th defendant submitted that a failure to comply with a consumer guarantee is not of itself, and without more, a contravention of a provision of the ACL.
The 5th defendant drew the Court's attention to the decision of the New South Wales Civil and Administrative Tribunal Appeal Panel, presided over by Wright J, in Lam v Steve Jarvin Motors Pty Ltd [2016] NSWCATAP 186. He submitted that whilst the decision was not binding on the court, the reasoning was nevertheless highly persuasive and correct. It is to be noted that this is the only decision found by the parties which relates to the question in issue.
In Lam, the Appeal Panel said, at [ 73]ff: "73. If a consumer has established each of the elements required to be satisfied to obtain the benefit of a consumer guarantee, the remedies to which the consumer may be entitled are not found in Pt 3-2. Some of the consequences which flow from failure to comply with a consumer guarantee are dealt with in a different Part of the ACL NSW, namely, Pt 5-4. 74. At this point, it should be observed that, as a result of the operation of s 15 of the ACL NSW, a failure to comply with a consumer guarantee is not taken to constitute a contravention of the ACL NSW. Section 15 relevantly provides: '15 Contraventions of this Schedule Conduct is not taken, for the purposes of this Schedule, to contravene a provision of this Schedule merely because of the application of: … (b) a provision of Division 1 of Part 3-2 (other than section 66(2)); or …' 75. The significance of this observation is that the availability of the general remedial provisions of the ACL NSW found in Pt 5-2, ss 224 to 253, depends in most cases on there being a "contravention of a provision" of designated Parts of the ACL NSW. A failure to comply with a consumer guarantee does not constitute such a contravention, because of s 15. Consequently, the general remedial provisions in the ACL NSW, which are dependent upon a contravention being established, do not apply in respect of a failure to comply with a consumer guarantee. Thus, there is no right to recover damages under s 236 or other compensatory orders, under ss 237 and 243 of the ACL NSW, including orders for a refund (available under s 243(d)), for a failure to comply with a consumer guarantee. 76. In this regard the consumer guarantee provisions of the ACL NSW are also similar to the implied conditions and warranties under Div 4 Pt 4 of the FT Act, in its pre-2011 form. A breach of a contractual condition or warranty implied under that Division was not a contravention of the FT Act giving rise to a cause of action under the general remedial provisions formerly contained in the FT Act (see, for example, ss 68 and 72 in their pre-2011 form). 77. The remedial provisions of the ACL NSW applicable if there is a failure to comply with a consumer guarantee are found in Pt 5‑4, ss 259 - 277."
The 5th defendant also submitted that independent support for his position can be seen in the text of ss 259 to 277 (inclusive) which are in Part 5-4 of the ACL. He submitted that the text of these provisions, each of which is carefully drafted, avoids the language of "contravention" and uses the phrase "failure to comply" instead. Consequently, he submitted that within the ACL there is one regime for contraventions of a provision of the ACL and a separate and distinct regime for a failure to comply with the consumer guarantees
The 5th defendant submitted that the result of this argument, if accepted by the Court, was that the proposed amendment ought to be refused. This is because it would be futile to allow such an argument, as it propounds a cause of action unknown within the terms of the ACL.

Discernment

In my opinion the argument for the 5th defendant is plainly correct. It is not open to the plaintiffs to plead that a person can be "involved" within the meaning of s 2(1) of the ACL in the failure of a corporation to comply with the consumer guarantees contained in ss 60 and 61 of the ACL.
This conclusion, which for me is not attended by any doubt, means that the proposed amendment to the 4th FASOC is futile and ought not be permitted.
I reach this conclusion on the basis of four reasons. First, it seems to me that as a matter of textual interpretation, the contravention of a provision of the ACL is something which is entirely distinct from the supply of services in a manner which does not achieve a quality or nature of a kind which complies with guarantees provided for by the statute.
The concept of contravention of a provision contemplates that there is a provision which either mandates or prohibits particular identified conduct or a form of behaviour or conduct. Section 18 is an example of a prohibition: "a person must not … engage in conduct that is misleading or deceptive…". Section 29 of the ACL provides another similar example. Section 32(2) of the ACL mandates an obligation where a person is offered any rebate, gift or prize to provide that rebate, gift or prize within a reasonable time after making the offer. As previously noted at [331], this can be contrasted with the language found in ss 60 and 61.
Secondly, this difference in language is maintained in the structure in Chapter 5 of the ACL for enforcement and remedies. On the one hand, contraventions of a provision give rise to a range of remedies such as pecuniary penalties, injunctions and compensation orders. Division 6 of Part 5.2 provides for certain defences with respect to asserted contraventions.
On the other hand, remedies relating to guarantees are provided for in a separate part of the ACL (Pt 5.4). Nowhere in that Part is the text of "contravention of a provision" used. Rather, Part 5.4 relates to the provision of remedies where there has been a failure to comply with one or other of the consumer guarantees. Put differently, the structure of the ACL with respect to remedies recognises that separate and different remedies apply where there has been a contravention of a provision of the ACL to where there has been a failure to comply with a consumer guarantee. If these were similar concepts, there would be no need to have a distinct and parallel system of remedies.
Thirdly, the provisions of s 15 of the ACL strongly point against the interpretation contended for by the plaintiffs. That section has the substantive effect that where conduct results in a failure to comply with a consumer guarantee, it is not taken thereby to contravene a provision of the ACL.
Fourthly, the definition of involvement of a person in a contravention of a provision of the ACL (which is set out in s 2(1) of the ACL) makes it plain that the contravention of the provision does not include all conduct covered by the ACL. It is clear that one can only be a person involved if there is in fact a contravention of a provision. There is no room in that definition for a conclusion that a person can be "involved" in conduct which results in a failure to comply with a consumer guarantee. On the contrary, the language refers only to a person being "involved" in a contravention of a provision.
For these reasons I have come to the conclusion expressed above that the amendment sought by the plaintiffs is futile and ought not be permitted as it does not disclose a cause of action known to the law.
In reaching this conclusion, I have kept in mind the stringency of the General Steel test, and also the caution noted by Badgery-Parker J in Gibson at 17B that just because a proposed cause of action is novel, that does not necessarily compel a decision adverse to a plaintiff. See also: Champtaloup v Thomas [1976] 2 NSWLR 264 at 271 per Glass JA.
However, I note (as did Badgery-Parker J) that the fact that a cause of action has never been successfully relied upon in this State or elsewhere in Australia is a fact highly relevant to the question of whether the proposed cause of action in fact exists.

Common Questions

The next issue which is to be determined is the identification of the common questions which are to be heard in the proceedings during the period commencing 31 August 2020.
It is clear that in a representative proceeding of the kind pleaded in this case, it is not possible to determine all claims of all group members at a single hearing.
One reasonable and efficient way of proceeding, which does not appear to be in issue in these proceedings, is that the entirety of the claims of each of the named plaintiffs are heard in full at the same time.
The parties anticipate that any such hearing will involve the proof of facts. Those facts will also be necessary to prove in the cases of all other group members. It will then be a matter for the Court to determine in due course what facts have been established by the plaintiffs and to which members of the group those findings of fact will apply: s 179 the CP Act.
Prior to the trial commencing, it becomes necessary to identify the questions which are likely to be common. This can be done either by consent or, in the absence of consent, by a determination of the Court.
By identifying common questions, the parties will have a scaffold to which they can make reference when preparing for the hearing, particularly in the preparation of the evidence they propose to adduce, the witnesses they propose to call and the submissions which they will need to make.
Of course, it may be that an issue thought to be common to some or all of the group members at this stage of the proceedings may not ultimately prove to be so. In that case, the Court can so determine after the taking of the evidence and the receipt of submissions. The specification now, at this interlocutory stage, of the questions which are considered to be common does not finally bind the Court hearing the trial.
This is the approach which commended itself to the Full Court of the Federal Court in dealing with a similar issue in Merck Sharp and Dohme (Australia) Pty Ltd v Petersen [2009] FCAFC 26.
In this matter, the plaintiffs provided a list of the questions which they submitted were common. This list comprised of 120 separate questions occupying over nine pages.
The 5th defendant identified 17 questions as common. These questions concentrated on the topics of whether he was the person responsible for, in effect, the "one size fits all" approach to the BAS provided by the TCI parties and whether he made relevant representations (and, if so, whether he is liable in respect of such representations).
Having regard to the view I have formed about the futility of the proposed amendment to the 4th FASOC, it seems to me that the appropriate questions are those advanced by the 5th defendant.
For determination of each of the five plaintiffs' cases in full, it will be necessary to add to those 17 questions. Further, it will be necessary to frame the questions in a way which would permit the trial Judge to express a view that the questions asked were not common to all of the group members or only common to an identifiable number of them.
Counsel will need to bring in Short Minutes of Order to give effect to this conclusion.

Soft Closure

The plaintiffs submitted that, in order to facilitate settlement negotiations, it would be appropriate for the Court to order what has become known as a "soft closure" of the members of the group on whose behalf the plaintiffs have brought the proceedings.
Traditionally, opt out representative proceedings, such as this one, would not involve any closure of the group at this stage of the proceedings. That is to say, the finalisation and identification of the group members in the class would not occur until a time after the conclusion of the initial opt out period and after a determination of whether or not the plaintiff (or plaintiffs) have succeeded, and if so, to what extent. It is only once the defendant (or defendants) has (or have) been found liable to the representative group that ordinarily, membership of the group would be closed.
Sometimes, closure can occur after a settlement of a particular kind has been negotiated and which has been proffered to the Court for its approval. In the course of determining the approval of that settlement or agreement, the Court may order the closure of the membership of the group to facilitate the final determination of any damages to which any individual group member or members may be entitled under the settlement. Sometimes, closure occurs so that the Court where no agreement exists can proceed to an assessment of the appropriate award of damages.
As is apparent from the earlier parts of this judgment, these proceedings are at a relatively early stage. There has been no determination of liability nor has there been any agreement between the parties, of which the Court has been informed, that the 5th defendant is liable to compensate the plaintiffs or any members of the group.
The plaintiffs submit that it would be appropriate that they and the 5th defendant engage in settlement discussions with the assistance of a mediator, at an early stage in the proceedings before significant sums of legal costs have been incurred.
Such an approach is always attractive to the Court and to the participants in the litigation. It complies with the overriding purpose of the CP Act.
However, the plaintiffs submit that it cannot engage in fruitful settlement negotiations with the 5th defendant unless there has first been a "soft closure" process. The plaintiffs submit this would allow them to have a firm idea of the number of claimants who would fall into the representative group, at least a broad statement of their medical procedures undertaken with the 1st to 4th defendants, any complications which arose, the nature of those complications and how that has in general terms affected each claimant.
The plaintiffs submit that only then would they be able to engage in a rational estimate of the size of the total pool of damages claimed. This would allow the plaintiffs to know how the negotiations with the 5th defendant could or should proceed and would facilitate an assessment of an appropriate settlement figure.
The effect of the plaintiffs' proposals is that if a group member does not identify themselves and provide particulars to the plaintiffs' solicitors prior to any mediation, then they would be excluded from participating in the proceeds of any settlement.
Though soft closure has occurred in a number of proceedings in this Court and in the Federal Court of Australia, there is a degree of controversy as to whether this Court has the power to make orders of the kind sought by the plaintiffs.
That issue was not the subject of submissions on the part of either of the active parties to this litigation and, accordingly, it is inappropriate for me to come to any conclusion about the existence of a power to do that which the plaintiffs seek.
Assuming that the Court has the power, the exercise of such a power is discretionary and I am not persuaded that the Court should exercise the power at this stage of these proceedings.
There are a number of reasons for this but, essentially, I am wholly unpersuaded that the plaintiffs are presently unaware of a very high percentage of the individuals who are likely to constitute the group. I come to this conclusion having regard to the evidence of the number of the potential members of the group, and the numbers of members for whom the solicitors for the plaintiffs hold details through a registration process which has been conducted by them.
I similarly remain unconvinced that settlement discussions could not take place with the current extent of the knowledge of the solicitors for the plaintiffs about the likely numbers of the group. Through the discovery process, the plaintiffs are capable of ascertaining with a reasonable degree of precision, the number of procedures which were undertaken by the TCI parties and the period during which those procedures took place, and are thereby in a reasonable position to estimate the number of claimants likely to form part of the group.
As well, having regard to the knowledge of the members and the details of those members of which they are presently aware, I am not persuaded that the plaintiffs are unable to make a proper assessment of the range of complications which have arisen from the surgery and the effects on individuals, and thereby make a judgement as to whether or not any offer of settlement which may be made by the 5th defendant is an appropriate one.
Finally I'm also not persuaded that, having regard to the nature of the settlements which did take place in representative proceedings, the parties cannot engage in settlement negotiations within the current arrangement. For example, it would also be possible to engage in a settlement negotiation in which the 5th defendant makes available (having regard to his capacity to fund the litigation and any judgment against him if one is made) a fixed sum of money which is then assessed to be appropriate and divided amongst claimants. Conversely, if a fixed sum is deemed inappropriate having regard to the size and nature of the group, it is possible to engage in negotiations which result in a system of calculating damages rather than a fixed sum. For example, an agreed formula for the calculation of damages to be paid to an individual group member by reference to the occurrence of identifiable features which influence the calculation of damages. For these reasons, I do not accept that the only way for the plaintiffs to engage in settlement negotiations is a soft closure of the class.
I am unpersuaded the Court should at this stage make orders of the kind sought by the plaintiffs to effect a soft closure of the class.

Further Orders

As indicated earlier, the amendments to the 4th FASOC will require further advertising and notification. The Short Minutes of Order will need take account of this, in accordance with previous similar orders of the Court, adjusted for the appropriate time intervals according to the current environment.

Costs

Costs of and related to the arguments about the proposed amendment ought to follow the event. The usual orders for costs of and occasioned by the amendment of pleadings should be made. Otherwise, the costs should be in the cause.
I make the following orders: 1. The application of the plaintiffs to amend the 4th Further Amended Statement of Claim to include paragraph 93A is refused. 2. Plaintiffs to pay the costs of and occasioned by the amendments which constitute the 4th Further Amended Statement of Claim. 3. Plaintiff to pay the 5th defendant's costs of and relating to the unsuccessful application to amend the 4th Further Amended Statement of Claim by inclusion of paragraph 93A. 4. Counsel to bring in Short Minutes of Order to reflect the giving of further notices to Group Members, and to reflect the common questions to be determined in August 2020. 5. Otherwise, costs in the cause. 6. Stand proceedings over for further directions to 9.30am on Friday 1 May 2020.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 April 2020

Trade Practices Act 1974(Cth)

At a glance

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Judgment (12 paragraphs)

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Cases Cited (8)

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