Gill v Ethicon Sàrl (No 7)

The case of Gill v Ethicon Sàrl (No 7) involved a representative action concerning the sale of nine urogynaecological medical devices made of polypropylene mesh, designed for permanent implantation in the female pelvis to treat stress urinary incontinence or pelvic organ prolapse. The devices were manufactured by Ethicon Sàrl and Ethicon Inc., and sold in Australia by Johnson & Johnson Medical Pty Ltd. The applicants alleged that the respondents contravened the Trade Practices Act 1974 and the Australian Consumer Law, and breached their common law duty to take reasonable care, resulting in injury, loss, and damage to the applicants. The case reached the Federal Court of Australia, where the applicants succeeded in their claims, leading to an order for the respondents to pay the applicants’ costs. This judgment addressed two specific matters arising from that order: an application by the applicants for indemnity costs and an application for a lump sum costs order.

The primary legal issue before the court was whether the respondents' conduct was unreasonable enough to warrant an indemnity costs order for 90% of the applicants' costs. The applicants argued that the respondents had denied allegations that the medical devices could cause complications, despite admissions made during cross-examination that the respondents had been aware of the potential complications before the devices were released to the Australian market. The second issue was whether the assessment of costs and determination of the amount should await the final disposition of the pending appeals, or if the directions should proceed in the meantime.

The court reasoned that the overarching purpose of the civil procedure provisions is to facilitate the just resolution of disputes according to law and as quickly, inexpensively, and efficiently as possible. In exercising its discretion to award costs, the court must take account of any failure to comply with the duty imposed by the relevant sections of the Federal Court of Australia Act 1976. However, the court held that the question of what proportion of the costs should be paid on an indemnity basis should be reserved, and the applicants were given a deadline to notify the court if they sought leave to file evidence regarding the proportion of costs to be awarded on an indemnity basis. The court also directed that the amount of the lump sum be determined by a Registrar and that the respondents pay the costs of the applicants' interlocutory application. The costs of the indemnity costs application were reserved.

In conclusion, the court issued several orders to address the applicants' requests for costs, including fixing the costs in a lump sum, reserving the question of what proportion of those costs should be paid on an indemnity basis, and granting leave to the applicants and respondents to file and serve evidence and submissions regarding the costs. The court also directed that a Registrar determine the amount of the lump sum in a manner deemed appropriate, including on the papers.