KC v Shiley Inc

[1995] FCA 1188

IN THE FEDEM L COURT OF AUSTRALIA

) JUDGMENT No. a........ ........ o 1/88 , oooow.mwa 7-5

NEW SOUTH WALES DISTRICT RE GISTRY ) No. NG 633 of 1995

1

"GENERAL DIVISION 1

BETWEEN : nd ORS

~pplicants

AND: SHITlEY INC & ANOR

Respondents

15 JUNE 1995

REASONS FOR JUDGMENT

LOCKHART J.

The respondents seek to strike out certain paragraphs of the applicant's amended statement of claim filed on 22 February 1995 (the statement of claim) and of the amended application filed on the same day (the application). The motion is made after the filing by the respondents of their defences to the statement of claim. The relevant background facts as taken from the statement of claim may be briefly stated. The first applicant is the widow of the late Alan Kirkwood, the deceased, who died on 19 August 1990. The first applicant married the deceased on 18 June 1977. There are three children of the marriage born in 1982, 1984 and on 7 September 1990 (approximately three weeks after the death of the deceased). It is alleged that each of the applicants was at all material times dependent upon the deceased.

The first respondent is a corporation incorporated in the

State of California, having its principal place of business

there and carrying on business in Australia. The second respondent is a corporation incorporated under the laws of the State of Delaware. It has its principal place of business in the State of New York and does business in Australia. The first respondent has been since March 1979 a wholly owned subsidiary of the second respondent.

The deceased was surgically implanted with a heart valve, known as a Bjork Shiley 31 millimetre 70 degrees C/C, otherwise known as a convex/concave heart valve. On 19 August 1990 the strut in the valve fractured which caused the valve to fail, resulting in the death of the deceased (this is the allegation made in paragraph 32 of the statement of claim).

The applicants claim in their amended application, declarations and damages, also orders for payment of aggravated or exemplary or punitive damages. Their claims for damages are said to be based upon various causes of action, including alleged breaches of common law duties, including duties to take care; causes of action arising under the law of the State of California, or otherwise under United States law; and arising under the Trade Practices A c t 1974 (Cth) and the Fair Trading A c t (NSW) and the Sale of Goods A c t (NSW).

The objections to the statement of claim raised by

counsel for the respondents are summarised in a letter of 6

June 1995, being an annexure to the affidavit of Patrick

Laurence Campbell sworn on 13 June 1995. I see no purpose in discussing the contents of each of those paragraphs; they have been amplified where appropriate by counsel for the respondents in support of the motion to strike out, and I have taken into account the contents of the letter and the submissions of counsel.

The complaints raised by the respondents with respect to the statement of claim may be summarised as follows. Primarily it is said there is an absence of appropriate particulars to large numbers of the assertions in the statement of claim; examples are paragraphs 24 and 38. Objection is made also on the basis of alleged irrelevance of certain allegations including, for example, paragraph 12. It is said there is a failure in the statement of claim to distinguish, in respect of assertions made against them, between the first and the second respondents. It is also said that the statement of claims contains allegations of both fact and law or of law itself, for example, paragraph 9. It is said in a general sense by counsel for the respondents that the statement of claim as a whole is an embarrassing document to plead to.

The case has a degree of background which was referred to in argument and some of which is referred to in, for example, exhibit 1. Again, I see no necessity to outline that in detail, but it is sufficient if I refer to the fact that there

are proceedings on foot in the United States of America between at least the applicants and the second respondent. Indeed, it was the second respondent who moved the United States District Court for the Central District of California, to stay or dismiss the proceeding there instituted on the ground of forum non conveniens. The motion was granted by that Court in November 1994 - I have read the reasons for judgment of the learned Judge of that Court. The Judge took the view that Australia was a suitable alternative forum for the applicantsr claims, and the Judge granted the forum non conveniens motion and stayed the action, rather than dismiss it, subject to certain conditions that are referred to in the reasons for judgment and are summarised in a letter of 22 November 1994 from the United Statesr agents for the solicitors for the applicants. They include conditions of the second respondentsr submission to jurisdiction in this country and compliance with discovery orders of the relevant Australian court, which is this Court, and condition 5, namely :

"The second respondent agrees to make documents in his possession in the United States available for inspection in Australia, as required by Australian law,

at the expense of the second respondent. "

It is not entirely clear to me from the papers whether

the American case is brought against the second respondent

only or was against the second and the first respondents, but

nothing turns on this for present purposes.

In my opinion, the argument as to irrelevant allegations has not been made good. The case is one which plainly raises complex questions of fact and of law. That sufficiently emerges from the pleadings themselves, and indeed, from the argument of counsel for the applicants and for the respondents before the Court today. I am not satisfied that the statement of claim pleads irrelevant matter.

It is true, as counsel for the respondents maintains, that some of the allegations in the statement of claim are either allegations of fact and law or of law, but as I understand them, when allegations of those kinds are made they really are for the purpose of laying the ground for later paragraphs and claims for relief, which it is convenient to see stated in the form in which they are stated, so that the Court and the parties may more properly understand the case pleaded against the respondents. This is not the usual case where allegations of law or mixed questions of fact and law are made in pleadings in impermissible circumstances.

Certain of the allegations are made against both respondents and others against either of them. I do not find any problem with that myself in a case such as this, nor do I see any difficulty in relation to pleading to it, indeed, a difficulty that does not appear to have been envisaged by the

March 1995. It is to be hoped that as a matter of pre-trial management the parties can iron out the issues appropriate for the discovery of documents; but failing that the matter will be resolved by this Court at a directions hearing. I will say something more about that in a moment. It is sufficient for me to say for present purposes that for the reasons I have given the motion filed either on 6 or 11 April, as the case may be (the date is not clear) is dismissed.

The question of costs of the motion arises. Counsel for the respondents does not resist an order that, in the light of the dismissal of the motion, the respondents should pay the costs of the applicants of the motion on a party and party basis; but he does resist an order that is sought by the applicants for the payment of such costs on an indemnity basis. Counsel for the respondents has submitted in particular that he wishes to take me in more depth to certain of the relevant authorities, particularly a recent decision of the Court of Appeal of the Supreme Court of New South Wales.

In the circumstances it seems to me that I should not deal with the question of the application for indemnity costs, today, but should deal with it by directing brief written submissions to be lodged with my associate, first by the respondents and in reply if necessary by the applicants.

Accordingly, the order which I shall make is that the applicants1 costs of this motion be paid by the respondents; but the basis of assessment of those costs, whether party and party, solicitor and client or indemnity should be determined on a later occasion.

Counsel for the applicants also seeks an order that, whatever the basis may be on which the Court allows costs, the order should be made to the effect that the costs may be taxed and should be paid before the commencement of the final hearing of the matter. It seems to me that is a reasonable request in all the circumstances and the order that is to be made by the Court should presently encompass that.

I propose therefore that the Court make an order (leaving aside the question of the basis of the assessment of costs) that the taxing officer be requested to tax the applicants1 costs of this motion as soon as practicable and before the commencement of the final hearing of the matter; that such costs should be paid by the respondents within 28 days after the issue of the certificate of taxation or after agreement has been reached between the parties on the question of the payment of costs, whichever is the earlier.

The Court makes the following orders:

1. That the respondents1 motion to strike out certain

paragraphs of the statement of claim and the application

be dismissed.

2.   That the respondents pay the applicants' costs of this motion including reserved costs, if any.

3.   That the taxing officer be requested to tax the applicants1 bill of costs of the motion as soon as practicable, but before the commencement of the final hearing of the case.

4 . That the respondents pay to the applicants their costs of the motion as taxed within 28 days after the issue of the certificate of taxation or after agreement has been reached as to the payment of costs between the parties if any agreement is in fact reached, and whichever is the earlier.

5.   That the respondents be directed to lodge with my associate brief written submissions resisting an order for indemnity or solicitor and client costs, those submissions to be lodged within seven days of today; and any written submissions of the applicants to be lodged with my associate within seven days thereafter.

6. The Court will then decide the basis on which costs of the motion shall be awarded; but if the Court takes the

view that oral argument is necessary, it will fix a date

for this purpose.

7. That within 14 days of today the respondents serve upon the solicitors for the applicants any request for further and better particulars of paragraphs of the amended statement of claim they may seek.

8. That within a period of 14 days thereafter the applicants furnish such particulars, saving all just exceptions, by letter served upon the solicitors for the respondents.

9.   That within 14 days of today the applicants file and serve a document stating the basis for the application by this Court in this proceeding of the common law of California and S. 3294 of the Californian Civil Code or any other foreign law that may be relied upon by the applicants in this case.

10.  That within 7 days thereafter the respondents file and serve any document setting out their argument in rebuttal of the applicants' case as to the application of foreign law.

11.  That the matter be relisted for the purpose of giving further directions in the matter and for hearing any argument arising out of any of the aforesaid matters on 3

- 12 -

August 1995 at 10.15 am.

I certify that this and the

preceding eleven (11) pages are a true copy of the reasons for judgment herein of the

Honourable Justice Lockhart. n

Associate g&& Dated: 15 June 19 W

Counsel for the Applicants	Mr M L Williams
Solicitors for the Applicants :	Cashman & Partners

Counsel for the Respondents	:	Mr W H Nicholas QC
Solicitors for the Respondents:	Cutler Hughes & Harris
Date of Hearing	15 June 1995
Date of Judgment	15 June 1995