Powell v DePuy International Ltd - [2019] SASC 116

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
POWELL v DEPUY INTERNATIONAL LTD & ANOR
[2019] SASC 116
Judgment of The Honourable Justice Parker
9 July 2019
TRADE AND COMMERCE - TRADE PRACTICES ACT 1974 (CTH) AND RELATED LEGISLATION - PROCEDURE - JURISDICTION
COURTS AND JUDGES - COURTS - JURISDICTION AND POWERS - CONCURRENT JURISDICTION OF DIFFERENT COURTS - TRANSFER OF PROCEEDINGS UNDER CROSS-VESTING LEGISLATION - SPECIAL FEDERAL MATTER
COURTS AND JUDGES - COURTS - JURISDICTION AND POWERS - CONCURRENT JURISDICTION OF DIFFERENT COURTS - TRANSFER OF PROCEEDINGS UNDER CROSS-VESTING LEGISLATION - WHERE APPROPRIATE AND IN INTERESTS OF JUSTICE
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - JURISDICTION AND GENERALLY
HIGH COURT AND FEDERAL COURT - FEDERAL COURT - ORIGINAL JURISDICTION - MATTERS ARISING UNDER LAWS MADE BY PARLIAMENT
This is an application by the defendants to transfer a civil claim to the Federal Court under the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) (Cross-vesting Act). The application was originally brought under both ss 5 and 6 of the Cross-vesting Act, but the defendants now only press the application under s 5.
The plaintiff alleges that the defendants were negligent in relation to the manufacture, supply or fitting of a surgical hip implant. Her statement of claim seeks damages in negligence, for breach of statutory warranty under s 4 of the Manufacturers Warranties Act 1974 (SA) and under ss 74B and 74D of the Trade Practices Act 1974 (Cth) (TPA) (which is now entitled the Competition and Consumer Act 2010 (Cth)).
Held, per Parker J, dismissing the application:
1. But for s 39B(1A)(c) of the Judiciary Act 1903 (Cth), the Federal Court would not have jurisdiction over claims under ss 74B and 74D of the TPA (at [48]-[64]).
2. Because a claim founded upon an alleged breach of a condition implied into a contract by s 74B or 74D of the TPA arises under a law made by the Commonwealth Parliament, the Federal Court has jurisdiction under s 39B(1A)(c) of the Judiciary Act (at [48]-[64]).
3. Section 39(2) of the Judiciary Act grants jurisdiction to the courts of the States and Territories in respect of claims under ss 74B and 74D of the TPA (at [48]-[64]).
4. A claim for loss and damage based upon the alleged failure to comply with the terms implied into the relevant contracts by ss 74B and 74D of the TPA is not a special federal matter (at [65]-[70]).
5. If it appears to the Court that any one of the three criteria in s 5(1)(b) of the Cross-vesting Act are satisfied, it must transfer the proceedings to the Federal Court (at [72], [78]).
6. The Court must ensure that the proceedings are heard in the court dictated by the interests of justice. It is not necessary to consider whether this Court is an inappropriate forum, but rather whether the Federal Court is the more appropriate forum. The answer to that question does not involve the exercise of a discretion but rather the formation of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2019] SASC 116
Decision Date: 9 July 2019

CaseChat Overview and Summary

In Powell v DePuy International Ltd, the plaintiff, Teresa Jane Powell, initiated proceedings against the defendants, DePuy International Ltd and Johnson & Johnson Medical Pty Ltd, in the Supreme Court of South Australia. Powell alleged that the hip replacement systems implanted in her during surgery were defective, resulting in significant health complications. The defendants sought to transfer the case to the Federal Court, arguing that it involved matters arising under Commonwealth legislation, specifically the Trade Practices Act 1974 (Cth) (TPA). Powell opposed the transfer, maintaining that the majority of her claims were governed by South Australian statute law and that the interests of justice did not favour a transfer to the Federal Court.

The central legal issue in this case was whether the Supreme Court of South Australia should transfer the proceedings to the Federal Court under section 5 of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) (Cross-vesting Act). The court had to determine whether the claim constituted a "special federal matter" and whether the transfer was in the interests of justice. Given that significant aspects of Powell's claim involved South Australian law, particularly the application of the Wrongs Act 1936 (SA), the court considered whether the minor convenience to the defendants' solicitors outweighed the broader implications of the jurisdictional dispute.

The court found that the claim was not a "special federal matter" as defined under section 39B(1A) of the Judiciary Act 1903 (Cth), as it did not involve the "conduct" of a person within the meaning of section 82 of the TPA. Instead, the claim arose from an implied condition in a contract, which falls under state jurisdiction. Furthermore, the court concluded that transferring the case to the Federal Court was not in the interests of justice, given the predominant application of South Australian law to the claim. Therefore, the application to transfer the proceedings was dismissed.

In light of the above reasoning, the Supreme Court of South Australia upheld its jurisdiction over the proceedings. The court did not find it appropriate to transfer the matter to the Federal Court, thereby allowing the case to continue in the Supreme Court of South Australia.

Orders

Orders of the court

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Background

Background to the litigation

At all times the plaintiff has opposed transfer of the proceedings to the Federal Court.Background The plaintiff, Teresa Jane Powell, underwent hip replacement surgery on 28 January 2010 at the Flinders Private Hospital, performed by an orthopaedic surgeon, Dr Matthew Liptak. The hip replacement surgery involved the surgical implant of parts from two metal-on-metal hip prosthetic systems, i.e. the DePuy Pinnacle hip system and the DePuy Corail hip system. The plaintiff has collectively referred to those items as the Corail Pinnacle system. I will adopt the same terminology. The first defendant, DePuy, manufactured, distributed and sold the Corail Pinnacle system. DePuy is incorporated in the United Kingdom and is, thus, alleged to be a “foreign corporation” within the meaning of s 4 of the TPA. The plaintiff further alleges that DePuy carried on the business of supplying, selling, distributing, promoting, marketing and obtaining regulatory approval for the Corail Pinnacle system in conjunction with the second defendant, Johnson and Johnson Medical Pty Ltd. Johnson and Johnson is alleged to be a trading corporation within the meaning of s 4 of the TPA and, in that capacity, marketed, distributed and supplied medical devices such as the Corail Pinnacle system. The plaintiff alleges that excessive wear occurred at the articulating surfaces of the Corail Pinnacle system. The excessive wear is alleged to have caused metal shavings to leach into the plaintiff’s bloodstream and the tissue surrounding the prosthesis. Blood tests undertaking in March 2015 allegedly showed that the plaintiff had grossly elevated concentrations of cobalt and chromium in her blood. This is said to have caused a wide range of symptoms, including pain, infection and disability, that have impaired the plaintiff’s ability to participate in employment and a range of social and recreational activities. The central issue in these proceedings is whether the Corail Pinnacle system was defective. The plaintiff commenced proceedings in the District Court on 28 April 2016. The plaintiff consented to the transfer of the proceedings from the District Court to the Supreme Court. However, she disputed the initial contention of the defendants that the Supreme Court does not have jurisdiction to determine the claim and also maintains her contention that the interests of justice do not require that the matter be transferred to the Federal Court. Statutory provisionsThe Trade Practices Act 1974 The TPA became the Competition and Consumer Act with effect from 1 January 2011. It is common ground between the parties that cl 6 of Schedule 7 of the Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010 (Cth) operates to apply the TPA as in force immediately prior to 1 January 2011 to these proceedings. Clause 6(2) of Schedule 7 provides that action may be taken under or in relation to Part VC or VI of the TPA as in force prior to 1 January 2011. Part VI deals with enforcement and remedies.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

In light of the matters to which I have referred in paragraphs [91] to [107], I am not persuaded that is in the interests of justice for the proceedings to be transferred to the Federal Court. The fact that significant aspects of the claim will be subject to South Australian statute law outweighs any relatively minor short-term convenience to the defendants’ solicitors that may accrue if the matter were to be transferred to the Federal Court. Conclusion For these reasons, I find under s 5(1)(b)(iii) of the Cross‑vesting Act that the interests of justice do not require this Court to transfer the plaintiff’s claim to the Federal Court of Australia for determination. I therefore dismiss the application by the defendants

Ratio Decidendi

Legal Principle Established

The issue in Prentice v AGL Sales was whether a claim for damages under s 74B of the TPA came within the meaning of a “tort” in certain Queensland legislation that allowed a contribution to be ordered where damage had been suffered as a result of a tort.[13] In the course of deciding that question, Martin J of the Supreme Court of Queensland followed Zaravinos v Dairy Farmers insofar as Lockhart J had held that s 74B of the TPA did not prohibit conduct of any kind and thus a claim could not be brought under s 82 of the TPA.[13] (2015) 296 FLR 202.Consideration as to whether a special federal matter The plaintiff advances a claim for loss and damage under s 74B and 74D of the TPA on the basis that the Coral Pinnacle system was not reasonably fit for purpose and of merchantable quality. The clear effect of Arturi v Zupps and the other authorities to which I have referred is that those claims would not have been within the jurisdiction of the Federal Court but for an amendment made in 1997 to s 39B of the Judiciary Act. Section 39B(1A) was added to the Judiciary Act by cl 1 of Schedule 11 to the Law and Justice Legislation Amendment Act 1997 (Cth) with effect from 17 April 1997. As originally enacted in 1997, s 39B(1A) provided as follows:The original jurisdiction of the Federal Court of Australia also includes jurisdiction in any matter:(a)in which the Commonwealth is seeking an injunction or a declaration; or(b)arising under the Constitution, or involving its interpretation; or(c)arising under any laws made by the Parliament.[14][14] With effect from 13 October 1999, the words “other than a matter in respect of which a criminal prosecution is instituted or any other criminal matter” were added to s 39B(1A)(c) by the Law and Justice Legislation Amendment Act 1999 (Cth). That amendment is not relevant for present purposes but I simply note it for completeness. Section 39(2) of the Judiciary Act invests Federal jurisdiction upon State and Territory courts in all matters in respect of which the High Court is capable of being conferred with original jurisdiction. Section 76(ii) of the Constitution provides that original jurisdiction may be conferred upon the High Court in all matters arising under laws made by the Commonwealth Parliament. Claims under ss 74B and 74D of the TPA are matters arising under laws made by the Commonwealth Parliament. Thus, s 39(2) of the Judiciary Act operates to confer jurisdiction upon State and Territory courts in respect of claims under ss 74B and 74D of the TPA. In summary, the position with respect to jurisdiction over claims made under ss 74B and 74D of the TPA (and also other similar provisions) is as follows:(a)subject to paragraph (b) below, the Federal Court would not have jurisdiction over such claims, because they do not relate to the “conduct” of a person within the meaning of s 82 of the TPA but operate by implying a condition into a contract that falls within the scope of those provisions;(b)because a claim founded upon an alleged breach of a condition implied into a contract by ss 74B or 74D arises under a law made by the Commonwealth Parliament, the Federal Court has jurisdiction under s 39B(1A)(c) of the Judiciary Act; and(c)s 39(2) of the Judiciary Act grants jurisdiction to the courts of the States and Territories in respect of claims under ss 74B and 74D of the TPA.