Caruth, R. v Roche Products Pty Ltd

[1992] FCA 142

Re: ROY CARUTH
And: ROCHE PRODUCTS PTY LTD; F. HOFFMAN - LA ROCHE A.G. and NEVILLE HOFFMAN
No. G297 of 1991
FED No. 142
Federal Jurisdiction - Practice and Procedure

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Gummow J.(1)

CATCHWORDS

Federal Jurisdiction - application for leave to file Amended Application and Further Amended Statement of Claim - matter involved claims for contravention of s. 52 and breaches of ss. 74B and 74D of the Trade Practices Act 1974, and claims under non - federal law - whether federal jurisdiction lost because claim which attracted jurisdiction cannot be substantiated or has been displaced - whether applicant may replead claims under s. 52 - whether the applicant able to rely on Jurisdiction of Courts (Cross-Vesting) Act 1987 (W.A.), s. 4 (1) or Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth), s. 9 (2).

Practice and Procedure - whether claims not previously pleaded were out of time - whether "causation" sufficiently pleaded - whether certain claims embarrassing to third respondent - whether proposed pleading provided fresh factual base for claims - whether relevant procedural provisions are Rules of Supreme Court 1971 (W.A.) or Federal Court Rules - whether proposed pleading disclosed any cause of action based on Fair Trading Act 1987 (W.A.), s. 40.

Trade Practices Act 1974

Federal Court of Australia Act 1976

Fair Trading Act 1987 (W.A.)

Jurisdiction of Courts (Cross-Vesting) Act 1987 (W.A.)

Federal Court Rules

Rules of the Supreme Court 1971 (W.A.)

State of Western Australia v Wardley Australia Limited (1991) 30 FCR 845 applied.

Crouch v Commissioner for Railways (Queensland) (1985) 159 CLR 22 applied.

Kennedy v Australasian Coal and Shale Employees Federation (1983) 50 ALR 735 applied.

Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212 applied.

West Australian Psychiatric Nurses' Association (Union of Workers) v Australian Nursing Federation (1991) 102 ALR 265 referred to.

General Steel Industries Inc. v Commissioner for Railways (N.S.W.) (1964) 112 CLR 125 applied.

HEARING

SYDNEY

#DATE 24:3:1992

Counsel and solicitors Mr P.R. Garling and
for the applicant: Miss I. Parsons instructed

by Barker Gosling.

Counsel and solicitors Dr G.A. Flick and
for the first respondent: Mr R. de Robillard instructed

by Clayton Utz.

Counsel and solicitors Mr R.L. Ingram instructed
for the third respondent: by Minter Ellison.

ORDER

1. Upon the motion filed 11 March 1992, the applicant have leave to file an Amended Application, and a Further Amended Statement of Claim in terms consistent with the Reasons for Judgment delivered today.

2. The pleadings referred to in Order 1 be filed within seven days.

3. There be no order as to costs of the motion.

4. The matter be stood over for directions to 13 April 1992 at 9.30 a.m. before Gummow J.
Note: Settlement and entry of orders is dealt with by Order 36 of the Federal Court Rules.

JUDGE1

This proceeding was commenced by Application and Statement of Claim filed 12 June 1991. The third respondent is a medical practitioner carrying on a specialist practice in Perth. He was consulted by the applicant on 22 April 1988. At that consultation, the applicant complained of gastro-intestinal symptoms and the third respondent prescribed for him the drug marketed in Australia and elsewhere under the name "Tiberal". The applicant pleads that, on the same day as he attended the third respondent, he had the prescription given him by the third respondent filled by a pharmacist and that he received three 500 mg. tablets of Tiberal. The applicant further pleads that some weeks later, on or about 12 June 1988, he ingested those three tablets. The applicant alleges that as a result, he has suffered and continues to suffer severe injuries and physiological harm. Particulars are given under three heads, the first relating to a condition which developed on or about 14 June 1988, and the second and third each "in or about June, 1988".

1. The first respondent is incorporated in New South Wales. It is a related corporation of the second respondent which is incorporated in Switzerland. The applicant alleges that since about July 1983, the first respondent, or alternatively the second respondent, has marketed, distributed and sold Tiberal in Australia. Damages and other relief are sought against the three respondents.

2. The second respondent has not been served with any process.

3. On 31 July 1991, an Amended Statement of Claim was filed. This was followed on the 3rd September 1991 by a second Further Amended Statement of Claim. On 17 September 1991, Hill J. ordered the striking out from this pleading of paras 17 - 25, 26 - 29, 30 and paras 30A - 30D. His Honour gave leave to the applicant to amend its Statement of Claim, and this leave was availed of by the applicant. However, when the matter came before me for directions on 13 November 1991, counsel for the applicant, who had recently come into the matter, told the Court that in his view yet a Further Amended Statement of Claim was necessary.

4. What is now before the Court is a Motion filed in Court on 11 March 1992 in which the applicant seeks leave, pursuant to Order 13 Rule 2 (1), to file an Amended Application and a Further Amended Statement of Claim. That application is resisted by the first and third respondents.

5. The first respondent founds its resistance upon submissions as to the effect of the orders of Hill J. It is necessary, therefore, first to consider the pleading the subject of those orders, as it affected the first respondent. Paragraphs 1 - 16 narrate the factual basis for the applicant's complaint, the substance of which I have described earlier in these reasons. These paragraphs were not struck out. Paragraphs 17 - 25 and 26 - 29 appeared to allege actions against the first and second respondents for breaches of s. 74B and s. 74D of the Trade Practices Act 1974 ("the TP Act"). These provisions are contained in Division 2A of Part V, and are not within the investment of jurisdiction in this Court by Part VI of the Act.

6. Paragraph 30 alleged contravention by the first and second respondent of s. 52 of the TP Act, and this allegation was developed in paras. 30A - 30G. Paragraphs 30 and 30A - 30D were struck out. There followed the pleading of a cause of action in negligence against the first and second respondents (paras 30I - 30K). This material was not struck out. Finally, in paras 31 and succeeding paragraphs, there was pleaded against the third respondent a cause of action for negligent breach of his retainer and engagement by the applicant, together with a cause of action in tort for negligence. These paragraphs were not struck out.

7. The claims of contravention of s. 52 and to damages under s. 82 meant that jurisdiction of the Court was attracted by s. 86 of the TP Act in respect of the "matter". The elements of that matter were to be found in the factual base I have described. In State of Western Australia v Wardley Australia Limited (1991) 30 FCR 245 at 258, the Full Court said:
   

"Sections 82 and 87 of the (TP) Act . . . have a bearing on the nature of the 'matter' in respect of which jurisdiction is conferred by s. 86. But neither s. 82 nor s. 87 confines the concept of 'matter' in respect of which jurisdiction is conferred by s. 86 to the controversy as to the right to obtain merely the particular relief provided by ss. 82 and 87.

The federal jurisdiction conferred or invested is jurisdiction to determine all claims and issues comprising the whole of the matter arising under the (TP) Act. The jurisdiction conferred on this Court thus is one to determine the whole of the controversy before it,

including accrued or pendent claims, and the controversy is defined by a factual base or substratum. It is federal jurisdiction in this inclusive sense which becomes exercisable upon the institution of proceedings in this Court. The court is not seized of jurisdiction simply in respect of the 'cause of action' referred in s. 82. And the content of the 'matter' may be more than the 'action' of which s. 82 speaks."

Thus, in the present case, the claims for contravention of s. 52 and for breaches of s. 74B and s. 74D of the TP Act, and the claims under non-federal law, were all part of the one 'matter' in the constitutional sense. This focuses attention upon the substance of the dispute between the parties: Crouch v Commissioner for Railways (Queensland) (1985) 159 CLR 22 at 37. Counsel for the first respondent submitted to me that the non-federal claims against his client comprised a distinct "matter". But all claims rested upon a common substratum of fact within the meaning of the High Court authorities. There was but the one "matter" in the constitutional sense: Kennedy v Australasian Coal and Shale Employees Federation (1983) 50 ALR 735 at 742-4.

1. It is unnecessary to consider whether the alleged breaches of ss. 7 4B and 74D were an associated matter within the meaning of s. 32 of the Federal Court of Australia Act 1976, so that jurisdiction also was attracted by that means. Once federal jurisdiction has been attracted, it will not be lost because the claim or assertion which attracted it in this Court (here, contravention of s. 52) has not or cannot be substantiated or has been displaced by some countervailing claim or assertion: Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212 at 218-9.

2. In any event, in the present case, there was no dismissal on a final basis of the claim of contravention of s. 52. On their face, the orders of Hill J. of 17 September 1991 provided that the applicant was at liberty to replead its case based upon contravention of s. 52. The transcript of the hearing on that day bears out that this was the intention of the Court; Transcript p 38.

3. Counsel for the first respondent submitted that whilst the Court maintains jurisdiction, this having been properly invoked in accordance with the principles I have described, the Court retains "no procedural power to permit the repleading of a matter struck out in its entirety". One answer to this is that, as I have indicated, the "matter" in its entirety was not struck out. Another answer is that the orders made on 17 September 1991 were plainly interlocutory, rather than final. If the leave granted to replead had not been availed of, then no doubt it would have been open for the first respondent to have sought final orders disposing of the litigation. That is not what happened. The Court having been seized of jurisdiction in the "matter", the conduct of the proceeding until the making of final orders, including the process of pleading, is a question of procedure placed under the control of the Rules of Court: State of Western Australia v Wardley Australia Limited supra at 267.

4. I turn now to consider the Further Amended Statement of Claim for the filing of which the applicant seeks leave. The first respondent accepts that if the submissions considered above were not accepted, leave should be given subject to any question of costs. However, counsel for the third respondent opposed leave on a number of other grounds.

5. In the new pleading there is an allegation against the first and second respondents of breach of a duty to take reasonable measures to ensure that Tiberal tablets manufactured and distributed in Australia did not cause harm when prescribed for and ingested by the applicant. Next, there is an allegation of contravention of s. 52 of the TP Act which is bolstered by allegations (to an extent covering the ground of the old paras 30B - 30E, which were struck out) that when, in or about March 1977, the first and second respondents applied to the appropriate federal authorities in Australia for approval of the marketing in this country of Tiberal, false representations as to recommended dosage and side effects and other matters were made to the authorities. It is also alleged that there had been a failure by the respondents to carry out adequate clinical studies and laboratory experiments. The applicant alleges that had these misrepresentations not been made, Tiberal would not have been approved for marketing in this country and the applicant would not have taken the drug and suffered the effects of which he complains. This is a development of the s. 52 claim, beyond the terms of the old s. 30G, which was struck out.

6. Thirdly, there are actions for breaches of the warranties in ss. 74D (merchantable quality) and 74G (failure to comply with express warranties) of Division 2A of Part V of the TP Act. In such cases, s. 74J provides that a cause of action shall be deemed to have accrued when the customer became aware or ought reasonably to have become aware respectively that the goods were not of merchantable quality and there had been a failure to comply with the express warranty. The action may be commenced at any time within three years after the day on which the relevant cause of action accrued.

7. Against the third respondent, there is now a complaint of contravention of s. 10 of the Fair Trading Act 1987 (W.A.) ("the W.A. Act"). This states:
   

"10 (1) A person shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

(2) Nothing in this Part shall be taken as limiting by implication the generality of subsection (1)."

There are also now actions against the third respondent on the warranties implied by s. 40 of the W.A. Act. The allegations founded on the W.A. Act are fresh. Finally, there are allegations against the third respondent of negligent breach of contract, and of tortious negligence; claims of this character were made in the earlier pleading.

1. The applicant relies (paras. 5A, 5B) upon s. 4 (1) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (W.A.). No reliance is placed upon s. 9 (2) of the federal law. There are difficulties in the course so taken; see the judgment of Lee J. in West Australian Psychiatric Nurses' Association (Union of Workers) v Australian Nursing Federation (1991) 102 ALR 265. But, in any event, this legislation is not in point. This is because the Court is seized of jurisdiction, which is federal in character, in respect of all claims federal and non-federal, comprising the "matter". This includes the claims against the third respondent, as explained in Kennedy v Australasian Coal and Shale Employees Federation supra. I would not grant leave to file a pleading containing paras. 5A, 5B as they are now propounded.

2. Sub-sections 82 (1) and (2) of the TP Act are in the following terms:
   

"82 (1) A person who suffers loss or damage by conduct of another person that was done in contra-vention of a provision of Part IV or V may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.

(2) An action under sub-section (1) may be commenced at any time within 3 years after the date on which the cause of action accrued."

1. In respect of actions for damages for contravention of s. 10 of the W.A. Act, s. 79 thereof is in terms matching, for present purposes, those of s. 82 of the TP Act. The three year time limits specified in these provisions are to be regarded as procedural rather than substantive in character: State of Western Australia v Wardley Australia Limited supra at 254-5, 259; see also McKain v R.W. Miller and Co. (South Australia) Pty Ltd (1991) 66 ALJR 186 at 198-200.

2. Section 40 of the W.A. Act is as follows:
   

"40 (1) In every contract for the supply by a person 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 connection with those services will be reasonably fit for the purpose for which they are supplied.

(2) Where a person supplies services (other than services of a professional nature provided by a qualified architect or engineer) to a consumer in the course of a business and the consumer, expressly or by implication, makes known to the supplier 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 connection 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 supplier's skill or judgment.

(3) A reference in this section to services does not include a reference to services that are, or are to be, provided, granted or conferred under -

(a) a contract for or in relation to the transportation or storage of goods for the purposes of a business, trade, profession or occupation carried on or engaged in by the person for whom the goods are transported or stored;

(b) a contract of insurance."

1. In sub-s. 5 (1), the term "business" is defined as including:
   

"(a) a business not carried on for profit; and

(b) a trade or profession."

1. This may be compared with the position as regards professions under Part V of the TP Act; see Helco Pty Limited v O'Haire (1991) 28 FCR 230 at 236 where there is reference to the authorities construing the expression "in trade or commerce".

2. One of the grounds relied upon by the third respondent in its attack on the proposed further pleading was that "causation" was insufficiently pleaded for any of the claims against him. I accept the submission for the applicant that the facts pleaded in paras 23 - 31, 33, 53, 54, 54A, 59, 65 and 75 provide a chain of events, namely consultation with and medical advice from the third respondent, prescription of medication, the repetition of the symptoms which occasioned the initial attendance upon the third respondent, and ingestion of the drug prescribed by the third respondent, from which the Court might properly infer causation of the injuries and physiological harm alleged by the applicant; see generally March v E. and M.H. Stramare Pty Limited (1991) 171 CLR 506.

3. Next, the third respondent pointed to paras. 55 - 59. They are introduced by the heading "Breach of Duty (First and Second Respondents)". I accept that the references in paras 57 and 58 to the third respondent are embarrassing. These references should be struck from any pleading to be filed upon the success of this present application.

4. Two other grounds of objection were pressed. The first of these arises in the following way. It was previously alleged that on or about 12 June 1988 the applicant took three tablets of Tiberal, and that this was in accordance with the prescription of the third respondent. That allegation is renewed (para 30). It is now also asserted that on 13 June 1988 at about 8 - 9 p.m. the applicant consumed about two glasses of beer (para 32), that before taking the tablets he had experienced the same symptoms as those at the time of his attendance on the third respondent on or about 22 April 1988 (para 29) and that there are to be implied from the conduct of that consultation false representations by the third respondent to the applicant. These include the representations that a single dose of Tiberal could safely be ingested by the applicant if his symptoms recurred, and alcohol could safely be consumed by him at the time or within a short period thereafter taking the recommended dose of Tiberal (paras 25 (d), (e), 26).

1. Order 13 Rule 2 (1) of the Federal Court Rules confers a power to control amendments which is broad enough to ensure that those amendments are restricted so as to reflect causes of action which provide claims within the matter over which the Court obtained jurisdiction upon the institution of this proceeding: State of Western Australia v Wardley Australia Limited supra at 267-8. However, counsel for the third respondent submits that the developments in the presently proposed pleading I have described would provide a fresh factual base to that previously relied upon. Therefore, he contends, the claims founded upon that fresh factual base are barred, whether pursuant to ss. 74J and 82 of the TP Act or s. 79 of the W.A. Act.

2. In particular, counsel stresses that there was previously no reliance in terms against his client upon any provisions of the W.A. Act. However, counsel for the applicant pointed to allegations in the earlier pleading that the third respondent was carrying on his profession (which therefore was a "business" as referred to in sub-s. 5 (1) of the W.A. Act), and he also refers to the allegations in paras 9, 10, 31 and 34 of the earlier pleading as indicating a sufficient factual base for the additional claims to relief which are now made. I accept that submission.

3. On one branch of his argument, counsel for the third respondent submitted that in this Court as regards the claims pursuant to the W.A. Act, the relevant procedural provisions were not those of the Federal Court Rules. He contended that in this Court the Rules of the Supreme Court of Western Australia were "picked up". It will be apparent from what I have earlier said in these reasons that I do not accept that submission. Nevertheless, I should consider the consequences of its acceptance for this case.

4. Amendments under such provisions are not allowed as of course, there being a discretion in the Court. However, in the present case, there were no arguments strongly put against the exercise of discretion, the concentration being upon the alleged lack of power. This was true both as regards the State rules and Order 13 Rule 2 (1) of the Federal Court Rules.

5. Together with the rules in various Supreme Courts, such as New South Wales (Order 20 Rule 4 (5)) and Queensland (Order 32 Rule 1 (5)), the Rules of the Supreme Court 1971 (W.A.) provide in Order 21 Rule 5 for the allowance of amendments to a writ or pleading notwithstanding that the effect of the amendment will be to add or substitute a new cause of action. The new cause of action must arise "out of the same facts or substantially the same facts" as a cause of action in respect of which relief already has been claimed in the action by the party which seeks to make the amendment. The authorities in which that phrase has been construed include the decisions of Full Courts in Stone James (a firm) v Pioneer Concrete (W.A.) Pty Limited (1985) WAR 233 at 240-1, and Adam v Shiavon (1985) 1 Qd R 1 at 8-9. Had it been necessary to do so, I would have considered the claims now propounded in the proposed Further Amended Statement of Claim as arising out of substantially the same facts as the claims pleaded earlier.

6. Finally, the third respondent submits that the proposed pleading did not disclose any cause of action based on s. 40 of the W.A. Act, upon the proper construction of that legislation. I have set out the terms of s. 40 earlier in these reasons. In paras 66 - 75, the applicant pleads the existence and breach of an implied warranty based

7. The third respondent contends that, in each case, whilst he may have rendered or supplied services to the applicant, no materials were "supplied in connection with" those services within the meaning s. 40. This is said to be because the prescription supplied by the third respondent was, on the pleading, filled by a pharmacist, so that it was from the pharmacist that the applicant received the three tablets of Tiberal.

8. The response of the applicant is that it is sufficient for the purpose of s. 40 that, on the facts as pleaded, the materials were supplied by the pharmacist to fill the third respondent's prescription. If those facts are established, then materials will have been supplied in connection with the services provided by the third respondent to the applicant. Further, and less persuasively, it was submitted for the applicant that on the facts as pleaded the third respondent himself supplied the materials because in dispensing the prescription and delivering the Tiberal to the applicant, the pharmacist was supplying the materials at the direction of the third respondent.

9. I see considerable force in the first of those propositions advanced for the applicant. Certainly, there is a real question to be determined. Counsel for the third respondent accepted that I should approach the present application pursuant to the principles discussed in General Steel Industries Inc. v Commissioner for Railways (N.S.W.) (1964) 112 CLR 125 at 128-30. In my view, the applicant passes those tests more than adequately.

10. Counsel for the third respondent also submitted that neither warranty contained in sub-s. (1) and sub-s. (2) of s. 40 of the W.A. Act would be implied unless there was both a rendering or supply of services together with a supply of materials. On the footing that on the facts pleaded there was no supply of materials, counsel submitted that in each case there was no room for the implication of any warranty. I do not accept that submission. The phrase "any materials" which appears in each sub-section sufficiently indicates that if there is no supply of materials, nevertheless there may be, in a given case, room for the implication of a warranty as to the services in question. In my view, on no footing would this argument succeed in meeting the applicant's case under s.40.

11. My conclusion is that upon his motion filed 11 March 1992, the applicant should have leave to file an Amended Application, and a Further Amended Statement of Claim in terms consistent with what has been said in these reasons. Those pleadings should be filed within seven days.

12. As will be apparent, it has taken many attempts for the applicant to produce an adequate statement of claim. Although their opposition to the present motion, to a very large degree, has been unsuccessful, I would not, in the circumstances of this litigation, make an order for costs against the first and third respondents. I will make no order as to costs of the motion.

13. The matter will stand over for directions before me at 9.30 a.m. on 13 April 1992. The applicant may then make such application as it may be advised for an order for service outside the jurisdiction upon the second respondent.