Medical Device Technologies Pty Ltd v Health Administration Corporation (No 2)

[2023] NSWSC 742

Supreme Court

New South Wales

Medium Neutral Citation:

Medical Device Technologies Pty Ltd v Health Administration Corporation (No 2) [2023] NSWSC 742

Hearing dates:

28 June 2023

Date of orders:

28 June 2023

Decision date:

28 June 2023

Jurisdiction:

Equity - Commercial List

Before:

Stevenson J

Decision:

Amended Summons dismissed; judgment for cross-claimant against cross-defendant for $11,746,194.22; plaintiff/cross-defendant to pay defendant’s/cross-claimant’s costs of the proceedings

Catchwords:

COSTS – where only a binary outcome possible in proceedings – winner takes all – where defendant/cross-claimant successful – whether plaintiff/cross-defendant should nonetheless only be liable for a proportion of defendant/cross-claimant’s costs

Legislation Cited:

Sale of Goods Act 1923 (NSW)

Cases Cited:

Hockey v Fairfax Media Publications Pty Limited (2015) 237 FCR 33; [2015] FCA 750

Medical Device Technologies Pty Ltd v Health Administration Corporation [2023] NSWSC 602

Category:

Consequential orders

Parties:

Medical Device Technologies Pty Ltd (Plaintiff/Cross-Defendant)
Health Administration Corporation (Defendant/Cross-Claimant)

Representation:

Counsel:
J R Clarke SC with T J Kane (Plaintiff/Cross-Defendant)
D B Studdy SC with C Ernst (Defendant/Cross-Claimant)

Solicitors:
Johnson Winter Slattery (Plaintiff/Cross-Defendant)
Gilbert + Tobin (Defendant/Cross-Claimant)

File Number(s):

2020/268161

EX TEMPORE JUDGMENT (REVISED)

1. I gave judgment in these proceedings on 7 June 2023. ^[1] I shall use the same abbreviations here.

   1. Medical Device Technologies Pty Limited v Health Administration Corporation [2023] NSWSC 602.

2. It is common ground that to give effect to my reasons, I should make these orders:

1. The Amended Summons be dismissed; and

2. There be judgment for the cross-claimant and against the cross-defendant on the Amended Cross Summons in the sum of $11,746,194.22.

3. I make that order and enter that judgment.

4. What remains for consideration is the question of the costs of the proceedings and the question of any stay of those orders.

5. HealthShare seeks an order that MDT pay its costs of the proceedings on the basis that the usual rule is that costs follow the event.

6. MDT seeks an order that it pay only a “proportion” of HealthShare’s costs. It suggests no more than 50%, on the basis that, although HealthShare has won, it did on a narrower basis than that for which it contended. MDT points to the observations of many judicial officers to the effect that there can be occasions where it may be appropriate to deprive a successful party of a proportion of their costs.

7. In particular, MDT referred to the observations of White J in Hockey v Fairfax Media Publications Pty Limited (No 2) that:^[2]

“…courts are now more ready to apportion the costs awarded to a party who succeeds in only some of the claims he or she brings. This may reflect the increasing factual and legal complexity of modern litigation and the multiplicity of factual and legal issues it entails, and the tendency of applicants to pursue multiple claims involving different factual enquiries in the one proceeding. It may also reflect an encouragement by the courts to applicants to exercise some discrimination in their selection of the claims they litigate. It is to be remembered that the inclusion of multiple causes of action in the one proceeding, even if based on a common substratum of fact, adds to the costs of the pleadings, interlocutory activity, preparation and presentation of the evidence at trial as well as of the trial itself. Nowadays, courts are particularly conscious of their role in attempting to control the cost of litigation.”

2. (2015) 237 FCR 127; [2015] FCA 750 at [88].

8. Obviously, the question of what order for costs should be made will depend on careful analysis of the facts in each case. I should observe that in Hockey, the plaintiff achieved only partial success in a defamation proceeding and “failed on the matters which were the real core of his claim.”^[3]

   3. Ibid at [118].

9. Here, MDT points to three features of this case that it contends would warrant HealthShare only being awarded a proportion of its costs.

10. The first is that HealthShare put in issue many issues of fact and law on which it was not successful, including whether the Purchase Order Terms and Conditions were incorporated into the Agreements and other matters which are set out in detail in MDT’s submissions.

11. However, the difficulty of that submission is that HealthShare was successful in establishing its core case that the Shangrila Ventilators were not fit for purpose within the meaning of s 19 of the Sale of Goods Act 1923 (NSW) and were not fit for use in any clinical setting for treating patients with COVID-19. That was HealthShare's core case from beginning to end. It established that case.

12. It is true, as MDT points out, that HealthShare did not succeed in relation to all of the shortcomings in the Shangrila Ventilators for which it contended. That is also reflected in the fact that HealthShare did not succeed in establishing all of the elements of its claim for misleading or deceptive conduct. HealthShare also failed to establish that there had been a sale by description, although that was a relatively minor matter in the proceedings.

13. However, on any view of the case, HealthShare has won. This was a “winner takes all” case. There could only have been a binary outcome. Either MDT would succeed in recovering the balance of the purchase price of the Shangrila Ventilators, $10.395 million plus interest, or would be liable to repay, with interest, the amount paid by HealthShare on account of the purchase price; also, $10.395 million. I have found that the latter is the correct conclusion.

14. Second, MDT pointed to what it said was “significant evidence, which was within [HealthShare’s] possession, which was relevant to explaining the important issues in the proceedings, but which appeared nowhere in [HealthShare’s] adduced evidence and only put into evidence (or at least in large part only put into evidence) through MDT obtaining that evidence through documentary disclosure and putting it to [HealthShare’s] witnesses”.

15. I cannot see how that circumstance could bear upon the question of whether MDT should pay only a proportion of costs. If there is a veiled suggestion in that submission that HealthShare engaged in some kind of forensic misconduct, I do not accept it.

16. Finally, MDT submitted that the proceedings were “much longer and more complex as a result of the extensive additional evidence” filed by HealthShare from some of the medical witnesses it called because the evidence of those witnesses was held by me to be inadmissible. That may be a reason why, on assessment of costs, HealthShare ought not to recover all of those costs in procuring that inadmissible material. But that is not a reason for me now to engage on some kind of exercise to work out what proportion of costs was referable to that circumstance.

17. Overall, this is not a case where a party has achieved only partial success. HealthShare’s case has been vindicated. I see no basis for there to be an apportionment of costs.

18. My order is that the plaintiff/cross-defendant pay the defendant’s/cross-claimant's costs.

19. There has been debate before me as to whether I should order a stay of the orders that I have made in view of the fact that MDT has informed HealthShare and me that it proposes to appeal my decision.

20. HealthShare has given an undertaking to the Court not to seek to enforce orders two and three, which I have just made, for 35 days. I regard that as being sufficient protection for MDT whilst it formulates its Notice of Appeal now that orders have been made. If the parties wish to approach me within that 35 day period for further orders, then they may do so on short notice.

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Endnotes

Decision last updated: 29 June 2023