FEDERAL COURT OF AUSTRALIA
Gill v Ethicon Sàrl (No 14) [2024] FCA 1524
File numbers: NSD 1590 of 2012
NSD 310 of 2021
NSD 244 of 2021Judgment of: LEE J Date of judgment: 23 December 2024 Catchwords: REPRESENTATIVE PROCEEDINGS – settlement distribution scheme – identification of proper party to Medicare bulk payment agreements – where respondents contend they are no longer “notifiable persons” under the Health and Other Services (Compensation) Act 1995 (Cth) following settlement approval – observations as to how the “claims” of group members are resolved – where administrators are the “notifiable person” Legislation: Federal Court of Australia Act 1976 (Cth) Pt IVA, ss 33C, 33V(1), 33V(2), 33ZB
Health and Other Services (Compensation) Act 1995 (Cth) ss 3, 3(a), 3(b), 22, 23, 34
Federal Court Rules 2011 (Cth) r 39.05(h)
Cases cited: Asirifi-Otchere v Swann Insurance (Aust) Pty Ltd (No 3) [2020] FCA 1885; (2020) 385 ALR 625
Dyczynski v Gibson [2020] FCAFC 120; (2020) 280 FCR 583
Fowkes v Boston Scientific Corporation [2023] FCA 230
Gill v Ethicon Sàrl (No 10) [2023] FCA 228
J & J Richards Super Pty Ltd v Linchpin Capital Group Limited (Settlement Approval) [2023] FCA 656
Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Number of paragraphs: 26 Date of hearing: 23 December 2024 Counsel for the administrators: Mr G Donnellan with Ms K Morris Solicitors for the administrators: JGA Saddler
Slater and GordonCounsel for the respondents (NSD 244 of 2021): Ms J Findlay Solicitor for the respondents (NSD 244 of 2021): Herbert Smith Freehills Counsel for the respondents (NSD 1590 of 2012 and NSD 310 of 2021): Mr D Wong Solicitor for the respondents (NSD 1590 of 2012 and NSD 310 of 2021): Clayton Utz ORDERS
NSD 1590 of 2012 BETWEEN: KATHRYN GILL
First Applicant
DIANE DAWSON
Second Applicant
ANN SANDERS
Third Applicant
AND: ETHICON SÀRL
First Respondent
ETHICON, INC.
Second Respondent
JOHNSON & JOHNSON MEDICAL PTY LIMITED (ACN 000 160 403)
Third Respondent
NSD 310 of 2021 BETWEEN: LISA TALBOT
Applicant
AND: ETHICON SÀRL
First Respondent
ETHICON, INC.
Second Respondent
JOHNSON & JOHNSON MEDICAL PTY LIMITED (ACN 000 160 403)
Third Respondent
NSD 244 of 2021 BETWEEN: DEBRA FOWKES
Applicant
AND: BOSTON SCIENTIFIC CORPORATION
First Respondent
BOSTON SCIENTIFIC PTY LIMITED
Second Respondent
ORDER MADE BY:
LEE J
DATE OF ORDER:
23 DECEMBER 2024
THE COURT DIRECTS THAT:
In NSD 1590 of 2012 and NSD 310 of 2021:
1.As to Orders 1, 2(a) and 7–9 of these Orders, those Orders:
(a)are not to be entered until 4:00pm 22 January 2025;
(b)will be formally entered on 4:00pm 22 January 2025 unless on or before that time an application is filed by any Group Member to these proceedings opposing the making of Order 1 (Application);
(c)if any such Application is filed, are not to be entered until further order of the Court.
2.As to Order 2(b) of these Orders:
(a)that Order is entered and effective today other…
Keep reading for free
Create a free CaseChat account to read Gill v Ethicon Sàrl (No 14) and more:
- Read every judgment in full
- Ask AI and get answers linked to paragraphs
- See how each paragraph was cited in later cases
- Download judgments as PDF or Word
One click creates your free account or signs you in.
By continuing you agree to the Terms and Privacy Policy.
- Case
- [2024] FCA 1524
- Decision Date
CaseChat Overview and Summary
The court held that the administrators were the “notifiable person” under the Act. The rationale was that the effect of the settlement approval orders was to extinguish the previous claims of the group members and substitute them with a right to participate in the settlement fund. The court emphasised that the rights of the group members had transformed, and the administrators were now the ones against whom the current claims were made. The court further noted that the settlement distribution scheme was designed to maximise efficiency and minimise costs to the group members, and recognising the administrators as the notifiable person streamlined the process. Additionally, the court found that the administrators were the only ones capable of fulfilling the obligations under the Medicare bulk payment agreements.
The court's decision resolved the legal issues by declaring that the respondents were no longer “notifiable persons” under the Act in relation to any claims made by group members in the proceeding. It also declared that the respondents were not “notifiable persons” in relation to any claims made by group members against the settlement fund. Conversely, the court declared that the administrators were the “notifiable persons” in relation to any claims made against the settlement fund.
The final orders of the court included the approval of the settlement deed and distribution scheme, the appointment of the administrators, the final approval of certain costs, and the declaration regarding the status of the notifiable persons under the Act.
Orders
Orders of the court
Settlement Deed and Settlement Scheme
1. Pursuant to r 39.05(h) Federal Court Rules 2011 (Cth) (FCR), the Court orders nunc pro tunc that pursuant to s 33ZB of the Federal Court of Australia Act 1976 (Cth) (FCA Act), on and from 16 March 2023, the persons affected and bound by the settlement of the proceedings be the applicant, the respondents and group members as defined in paragraph 1 of the Amended Statement of Claim dated 7 June 2022.
2. Pursuant to s 33ZF of the Federal Court of Australia Act 1976 (Cth):
(a) Order 1 of the orders made on 16 March 2023, be amended so as to read:
Pursuant to s 33V(1) of the Federal Court Act 1976 (Cth), the settlement of the proceedings between the parties on the terms set out in the Settlement Deed executed 12 July 2022 (as varied by the Deed of Variation of Settlement Deed executed 26 October 2022) and as varied as set out in Annexure A to the orders made on 23 December 2024, be approved.
(b) the amended settlement distribution scheme at Annexure B to these orders be approved (Amended Settlement Scheme).
3. Order 4 of the Orders made on 21 September 2023 be amended to appoint Janice Saddler of JGA Saddler Pty Ltd (ABN 50 664 863 861) (JGA Saddler), Andrew Fielding of BDO Business Restructuring Pty Ltd (ABN 90 134 036 507) (BDO) and Rory Walsh of Slater and Gordon Limited (ABN 93 097 297 400) (Slater and Gordon), jointly and severally, to administer the Amended Settlement Scheme in accordance with their terms.
Approval of Deductions from Settlement Fund
4. Pursuant to s 33V(2) of the Federal Court of Australia Act 1976 (Cth), the amount of $637,684.34 (GST incl) previously approved by the Court on an interim basis on 5 November 2024 as the costs incurred by the Administrators in conducting the administration for the period 21 September 2023 to 31 July 2024 (Interim Costs Order) is approved on a final basis.
5. Pursuant to s 33V(2) of the Federal Court of Australia Act 1976 (Cth), the following costs are approved and may be deducted from the interest accrued on the settlement sum to date:
(a) Administration Costs for the period 21 September 2023 to 31 July 2024 (other than those falling within the Interim Costs Order) in the amount of $271,396.78 (GST incl);
(b) for the period 1 August 2024 to 30 November 2024:
(i) Administration Costs in the amount of $969,309.40 (GST incl);
(ii) disbursements incurred by the joint Administrators in the course of administering this settlement between 1 August 2024 and 30 November 2024 in the amount of $180,425.60 (GST incl).
(c) for the period 1 December 2024 to 18 December 2024, on an interim basis, and subject to further order by which the Court may increase or decrease the amount of such approved costs, the Administration Costs incurred by JGA Saddler in the amount of $11,257.13 (GST incl); and
(d) the cost of the DGT Costs Lawyers report dated 20 December 2024 in the amount of $7,480.00 (GST incl).
6. Pursuant to s 33V(2) of the FCA Act, the Administrators be permitted, on an interim basis at the end of each quarter, to recover:
(a) 75% of their future administration costs in administering the settlement; and
(b) 100% of their future disbursements incurred in the course of administering the settlement;
subject to further order by which the Court may increase or decrease the amount of such approved costs.
Orders for Production
7. Pursuant to ss 33X(5) and 33ZF of the FCA Act, the registrants and group members listed in Confidential Annexure C:
(a) if they have already been assessed as an eligible group member, will continue to be a group member for the purposes of the Proceedings but will only be entitled to receive the first interim payment and will not be entitled to receive any further distributions from the settlement;
(b) if they were not otherwise eligible to participate in the Proceedings as a group member, will be deemed to have been assessed as an ineligible registrant and will not be entitled to receive any distributions from the settlement.
Declarations as to Notifiable Persons
8. Pursuant to s 21, s 33V(2), and/or s 33ZF of the FCA Act, or alternatively pursuant to the Court’s implied jurisdiction, the Court declares that:
(a) on 16 March 2023 upon the making of the order pursuant to s 33V(1) of the Federal Court of Australia Act 1976 (Cth) that the settlement of the proceedings between the parties on the terms set out in the Settlement Deed executed 12 July 2022 (as varied by the Deed of Variation of Settlement Deed executed 26 October 2022) be approved; and
(b) the making of the order in paragraph 1 above,
the respondents ceased to be “notifiable persons” within the meaning of s 3 of the Health and Other Services (Compensation) Act 1995 (Cth) (HOSC Act) in relation to any Claims made by Group Members in this proceeding.
9. Pursuant to s 21, s 33V(2), and/or s 33ZF of the Federal Court of Australia Act 1976 (Cth), or alternatively pursuant to the Court’s implied jurisdiction, the Court declares that the respondents are not “notifiable persons” within the meaning of s 3 of the HOSC Act in relation to any claims made by Group Members against the Settlement Fund.
10. Pursuant to s 21, s 33V(2), and/or s 33ZF of the Federal Court of Australia Act 1976 (Cth), or alternatively pursuant to the Court’s implied jurisdiction, the Court declares that the Administrators are “notifiable persons” within the meaning of s 3 of the HOSC Act in relation to any claims made against the Settlement Fund.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
The analogy between group members and cestuis que trust pursuant to an express trust is one that is obvious, but here the rights are perhaps broader than those rights in equity, and the group members have a legal right to ensure that the administrators administer the fund according to the terms of the approved deed. It is unnecessary to go into further detail as to precise questions of characterisation. The point of this exercise is simply to illustrate that the rights against the respondents have been wholly extinguished and there is no longer extant (to use the words of the definition of a “notifiable person” under the HOSC Act) a “claim for compensation” against the respondents (or, indeed, against anyone else).D CONSIDERATION The contentions advanced on behalf of the respondents ought to be accepted for the following reasons. First, it is tolerably plain that the administrators are the “notifiable person” within the meaning of the HOSC Act because the group members’ claims to participate in the settlement fund are made against them. This is because in order to determine the “notifiable person”, one must first identify the “claim for compensation” to which that status of notifiable person relates. Having identified the “claim for compensation” one then considers “against whom the claim is made” and then (if applicable) that person’s (a) insurance; or (b) membership of a representative organisation (HOSC Act, s 3(a) and 3(b)). Secondly, as explained above, the effect of the settlement approval orders is that the previous “claims for compensation” have now been substituted for a right to participate in the settlement fund. As I said in Asirifi-Otchere v Swann Insurance (Aust) Pty Ltd (No 3) [2020] FCA 1885; (2020) 385 ALR 625 (at 629–630 [17]):Upon approval of a settlement the underlying claims of group members generally merge in the settlement, and they receive substituted rights to receive that for which the settlement approved under s 33V(1) provides, or which the Court otherwise provides. Thirdly, and relatedly, the persons against whom the current claims are made must be the administrators. Under the HOSC Act a “claim” is defined as “a claim in writing” (see above (at [8])). Further, the respective schemes support the respondents’ construction because the administrators, among other things: (1) determine eligibility of group members; (2) assess and determine “claims”; (3) are subject to a right of review should a group member not agree with a determination of their claim; and (4) subject to the Court’s approval, control the Settlement Fund against which the Court has given the group members rights in substitution of their original claims. Fourthly, to the extent that it matters, there are other contextual factors which favour the conclusion that the administrators are the “notifiable person” under the HOSC Act. The “overarching purpose” of a settlement distribution scheme is to “maximise efficiency and minimise cost to group members”. Conversely, settlement distribution schemes can become cumbrous. Concluding the administrators are the notifiable person under the HOSC Act, which streamlines the settlement distribution scheme, achieves this overarching purpose and avoids a more complex process. Section 34 requires the “person” who enters into the BPA to “pay the Commonwealth” and “give the Chief Executive Medicare information” about the group members or compensable persons (see above (at [11])). As the respondents correctly note: (1) under the relevant schemes, the only person able to pay the Commonwealth are the administrators, who are in control of the funds; and (2) the only person who can give the Commonwealth information about the group members are the administrators. The schemes provide for the administrators to gather such information, not the respondents.