FEDERAL COURT OF AUSTRALIA Morris v Alcon Laboratories (Australia) Pty Ltd [2003] FCA 151 TRADE PRACTICES – defective goods – alleged injury to eye from lens – pleading of defect – particularisation limited to fact of injury – intention to argue case on the basis of inference and expert evidence of injury- whether pleading insufficient or further particulars should be ordered PRACTICE AND PROCEDURE – claim of liability for defective goods – pleading of defect – particularisation limited to fact of injury – intention to argue case on basis of inference and expert evidence of injury – whether claim should be dismissed, struck out or further particularisation ordered Trade Practices Act 1974 (Cth) ss 74B, 74D, 75AC, 75AC(1), 75AC(2), 75AC(2)(a)-(f), 75AD Federal Court Rules O 11 r 16, O 20 r 2, O 62 r 3(3), O 62 r 7(1)(c) Australian Competition and Consumer Commission v Glendale Chemical Products Pty Ltd (1998) 40 IPR 619 approved Bright v Femcare Ltd (2000) 175 ALR 50 discussed The Nominal Defendant v Haslbauer (1967) 117 CLR 448 followed Vasyli v AOL International Pty Ltd (Lehane J, 19 August 1996, unreported) referred to Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd (1996) ATPR 41-522 referred to Courtney v Medtel Pty Limited [2003] FCA 36 referred to Stack v Brisbane City Council (1996) 71 FCR 523 distinguished MARGARET MORRIS v ALCON LABORATORIES (AUSTRALIA) PTY LTD and STUART LOCKERBIE W191 of 2002 RD NICHOLSON J 6 MARCH 2003 PERTH IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY W191 OF 2002 BETWEEN: MARGARET MORRIS APPLICANT AND: ALCON LABORATORIES (AUSTRALIA) PTY LTD ACN 000 740 830 FIRST RESPONDENT STUART LOCKERBIE SECOND RESPONDENT JUDGE: RD NICHOLSON J DATE OF ORDER: 6 MARCH 2003 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. The first respondent's motion dated 17 December 2002 be dismissed. 2. The first respondent pay the costs of the applicant. 3. There be no order as to costs in respect of the second respondent. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY W191 OF 2002 BETWEEN: MARGARET MORRIS APPLICANT AND: ALCON LABORATORIES (AUSTRALIA) PTY LTD ACN 000 740 830 FIRST RESPONDENT STUART LOCKERBIE SECOND RESPONDENT JUDGE: RD NICHOLSON J DATE: 6 MARCH 2003 PLACE: PERTH REASONS FOR JUDGMENT 1 In the applicant's statement of claim filed on 21 June 2002 it was pleaded as follows: "28. Further and in the alternative, the applicant's Acrysof FIO lens had a defect. Particulars of Defect The applicant's Acrysof FIO lens was not as safe as persons generally are and were entitled to expect given that it has caused the symptoms set out in paragraph 25 herein. In relation to the expectation of safety that persons were entitled to have concerning the lens, despite the second respondent providing literature to the applicant, prior to her undergoing the surgical implantation of the lens, such literature contained no reference to any possible risk of such symptoms following implantation of the lens." 2 On 19 November 2002 her solicitors responded to the following requests for particulars in the following way: "As to paragraph 28: 4.1 State precisely what the Applicant means when she says that the "Acrysof FIO lens" had a defect. 4.2 Provide full details of all the respects in which the "Acrysof FIO lens" was allegedly defective." 3 The first respondent now brings a motion seeking the dismissal of the application so far as it purports to be based on s 75AD of the Trade Practices Act 1974 (Cth) ("the Act"). The dismissal is sought in reliance on O 20 r 2 of theFederal Court Rules, alternatively on O 11 r 16 or further in the alternative orders for compliance with the directions to provide the particulars. Nature of the claim 4 The first respondent admits in its defence that it supplies Acrysof MA30BA Intraocular lenses of power 24.0 Diopter within Australia and imports the same. The lenses are used for surgical implantation. The second respondent is a medical practitioner who is a specialist ophthalmic surgeon. The applicant claims that, as the consequence of the onset of symptoms in her vision, she was referred to the second respondent for expert ophthalmic assessment and advice around 21 April 1999. At a second consultation he advised her that her cataracts were severe and she required surgery to remove the affected lens in her right eye and to have an Acrysof FIO lens implanted. This she agreed to do and the surgery to that effect took place on 22 June 1999. Since the implantation of the lens the applicant claims to have experienced due to it severe visual disturbances in the form of "shimmering glare effects, a star burst effect and floaters". 5 In relation to the lens, three pleas are made. The third is the one set out above alleging the lens had a defect. The first is of unfitness for the purpose. The second was that it was not of merchantable quality. 6 The claims of the applicant for damages against the first respondent are based on s 74B, 74D and 75AD of the Act. Relevant statutory provision 7 Section 75AD provides that if a corporation, in trade or commerce, supplies goods manufactured by it and "they have a defect" and because of the defect, an individual suffers injuries, the corporation is liable to compensate the individual for the amount of the individual's loss suffered as a result of the injuries. The meaning of goods having a defect is provided for in s 75AC which reads: "75AC (1) For the purposes of this Part, goods have a defect if their safety is not such as persons generally are entitled to expect. (2) In determining the extent of safety of goods, regard is to be given to all relevant circumstances including: (a) the manner in which, and the purposes for which, they have been marketed; and (b) their packaging; and (c) the use of any mark in relation to them; and (d) any instructions for, or warnings with respect to, doing, or refraining from doing, anything with or in relation to them; and (e) what might reasonably be expected to be done with or in relation to them; and (f) the time when they were supplied by their manufacturer. (3) An inference that goods have a defect is not to be made only because of the fact that, after they were supplied by their manufacturer, safer goods of the same kind were supplied. (4) An inference that goods have a defect is not to be made only because: (a) there was compliance with a Commonwealth mandatory standard for them; and (b) that standard was not the safest possible standard having regard to the latest state of scientific or technical knowledge when they were supplied by their manufacturer." 8 It may be observed that the circumstances listed in subs (2) are included within relevant circumstances but relevant circumstances are not confined to them for the purposes of the extent of safety of the goods. Submissions for the respondents 9 The second respondent supports the contentions for the first respondent. 10 The first respondent submits firstly, that as the applicant's particularisation of the defect is limited to that set out above, she cannot possibly succeed on that aspect of her claims. It is said that because Parliament has set out likely circumstances there should be a reference to the particularity of circumstances relied upon. This is said to be necessary because the objective expectations of persons generally of the safety of an intra-ocular lens are considerably different from the expectations in regard to goods which are purchased and used directly by consumers and in relation to which there may be packaging and literature conveying information concerning the goods. This, it is submitted, distinguishes this case from Australian Competition and Consumer Commission v Glendale Chemical Products Pty Ltd (1998) 40 IPR 619. Here the expectation of the applicant, it is said, ought to have been that complications affecting vision sometimes occur and a complete description of such possible complications would be discussed with patients prior to surgery. It is argued that the absence of any expanded pleading of the defect has the consequence that this aspect of her pleading discloses no relevant cause of action. 11 A further chain in the argument is that the pleading is insufficient to draw a link between the lens as a defective object and the applicant, so that there is a failure to make out a case of causation: Bright v Femcare Ltd (2000) 175 ALR 50. It is argued that the alleged failure of the second respondent to warn the applicant of any risks and the fact the second respondent implanted the lens are barriers to any causative link between the applicant and the first respondent. 12 It is then contended that it is simply not enough for inference at the end of evidence to be relied upon to establish the defect from the fact of injury. This is said to be a misapplication of the test in The Nominal Defendant v Haslbauer (1967) 117 CLR 448. The argument is that even if the applicant were to prove the case as pleaded there is nothing pleaded to establish an actual defect in the lens or that there were certain peculiar circumstances which would entitle persons generally to have a particular expectation of the specific lens. 13 The second line of argument repeats the same contentions as the first argument in the context of O 11 of the Federal Court Rules. Reliance is placed on Vasyli v AOL International Pty Ltd (Lehane J, 19 August 1996, unreported) and Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd (1996) ATPR 41-522. 14 Finally it is submitted as a third alternative that at the least the Court should reorder the delivery of proper particulars, subject to a guillotine order, as there has not been compliance with the prior orders. Reasoning 15 I will refer to the contentions for the applicant in the course of setting out my reasoning on the first respondent's contentions. 16 The starting point for resolution of the issues is the language of s 75AC of the Act. The effect of s 75AC(1) is that a defect will be made out under s 75AD where the safety of goods "is not such as persons generally are entitled to expect.". It is to be noted that the defect referred to is not a defect of any particular kind save as to safety. In determining the extent of the safety of goods, s 75AC(2) requires that the court have regard "to all relevant circumstances." 17 The nature of "relevant circumstances" is assisted by pars (a)-(f) of s 75AC(2). But those paragraphs neither set outer parameters of the relevant circumstances nor specify a minimum qualification to be met by such circumstances. That is because they are enumerated as inclusive circumstances only. Whether or not any of the pars can be satisfied in any particular case will depend on whether the evidence in that case gives rise to a finding of one of the inclusive circumstances. Absence of evidence supporting a finding of the existence of any of the matters set out in the pars does not mean that the court is still not to have regard to all the relevant circumstances as they arise in the particular case nor that the requirements of s 75AC(1) necessarily cannot be satisfied. Absent evidence satisfying a finding of any of the circumstances in the pars may mean that an applicant will have more difficulty of making out the requirements of s 75AC(1) understood in the context of the opening words of s 75AC(2). It does not have the necessary consequence that those requirements cannot be made out where the evidence in the case supports the appropriate finding. It means only that the evidence in the case is not of the sort that falls within pars (a)- (f). 18 The pleading of the application of these provisions was considered by Lehane J in Femcare. The allegations there pleaded were summarised by his Honour as follows: "The clips are goods to which the previous apply: that is, they are goods of a kind ordinarily acquired for personal use. Femcare is the manufacturer of the clips. It supplied them to Endovasive who acquired for resupply. A doctor or hospital, having acquired the clips from Endovasive, supplied them to the applicant or a group member, who acquired the goods as a consumer. She expressly or by implication made known the particular purpose for which she required the clips. Being applied inadequately by an applicator which was out of calibration, they were both not reasonably fit for the purpose made known and not of merchantable quality. As a result the applicant, or the group member, suffered the loss or damage pleaded…" The related pleading was to the effect that "the goods were defective in that their safety was not such as doctors, hospitals or patients were generally entitled to expect as provided for in s 75AC". What were described as "particulars of defects" were pleaded as follows: "Particulars of defects (a) the goods were marketed as having a failure rate of 0.3% but had a much higher failure rate; (b) the goods were marketed as an effective means of female sterilisation but were frequently not effective for that purpose; (c) the applicators would not retain calibration despite normal use and when used out of calibration resulted in an increased risk of failed sterilisation due to inadequate clip closure; (d) the goods did not include the means whereby the operator of the applicator could ascertain whether the applicator was properly calibrated before use; and (e) the goods did not have adequate instructions or warnings as to inspection, maintenance, service and recalibration of the applicator or of the increased risk of failed sterilisation due to inadequate clip closure if an applicator which was out of calibration was used." Then followed a pleading that the applicant and each of the group members had suffered loss and damage. Lehane J found the pleadings to be deficient. Firstly they did not relate to the expectations of persons generally but rather to specified categories of persons. That is not applicable to the present pleading. Secondly, the pleading did not address the bases on which Femcare, as an overseas manufacturer, and Endovasive, as an Australian importer, might be liable. This second deficiency is to be understood as a reference to the absence from the pleading there under examination of a pleading that the goods had been supplied or acquired by the consumers who had suffered loss or injury. That also has no direct parallel here. 19 The third deficiency was that there was no clear link pleaded between the particular defective goods and "injury" (not loss or damage). He regarded it as insufficient to plead that a group member suffered "loss and damage" as a result of defects where "such injury and loss would have been avoided in the event of the …applicator not being exposed to the risk of being out of calibration". cf contra Courtney v Medtel Pty Limited [2003] FCA 36 on this aspect. Here it is pleaded that the defect was causative of the injury. What the respondent contends is that something more concerning the nature of the defect is needed to establish the clear link. 20 The submissions concerning the inadequacy of the pleading are to be considered in the context of the statutory provisions together with the statement by counsel for the applicant that the applicant has provided all of the particulars upon which she will seek to rely. I do not consider the statutory provisions require the applicant to bring more than the case the applicant wishes addressed. That is, there is no requirement to bring evidence addressing each of the categories of fact referred to in pars (a)-(f) of s 75AC(2). It is for the applicant to determine what evidence she considers will be sufficient to discharge the onus of proof of the requirements of s 75AD read with s 75AC when all the evidence is in. This is not a case where the applicant is holding back particularisation or in any way endeavouring to take the respondents by surprise. The applicant is committed by counsel to bringing evidence in the way the pleading particularises. Counsel states that when all the evidence in the applicant's case is in, the cause of all of the symptoms in the applicant's eye will be seen to be the lens and that will be sufficient to raise an inference that the safety of the goods is not such as persons generally are entitled to expect. Whether that is sufficient to make the applicant's case is for the applicant to determine in advancing the case. 21 Nevertheless, the case for the first respondent contests that it will be insufficient at the end of the evidence for an inference to be drawn that the goods in causing the injury were defective. This is because it is submitted the applicant is wrongly relying upon Haslbauer as an authority supporting the drawing of such an inference in those circumstances. The passage upon which the applicant relies in that case appear at 452 in the reasons of Barwick CJ where he said: "To make a prima facie case in a claim based on the defendant's negligence, a plaintiff may be content to rely upon such inferences as can be drawn from the fact of the occurrence which he claims to be due to the defendant's negligence. An inference of such negligence may be drawn where, in the ordinary course of human affairs, such an occurrence is unlikely without want of care on the part of a person in the situation of the defendant. In such a case, the occurrence itself may be said to bespeak the lack of care. Or if his pleadings are wide enough, a plaintiff may rely both upon such an inference and upon evidence, beyond that of the occurrence itself, of specific acts or omissions of the defendant indicating a want of care." At 456 the Chief Justice stated that the critical time for the drawing of any inference of negligence is at the close of the evidence. I do not regard the applicant's approach as a misapplication of this dicta. Section 75AC does not mandate the bringing of evidence in any particular way. It is open for the applicant to seek to establish the requirements of the section by inference from the evidence in her case. 22 The applicant's approach seeks support from Glendale. That was a case concerning a failure to include a safety warning on goods and so is distinguishable on that basis from the present matter. Nevertheless at 629 Emmett J said of the section here at issue: "The standard to be adopted in respect of the definition of "defect" in s 75AC is an objective one based upon what the public at large, rather than any particular individual, is entitled to expect. On the other hand, one cannot foresee all possible uses to which consumers will put the goods. The explanatory memorandum published in connection with the Trade Practices Amendment Bill 1992 (Cth) which inserted Pt VA says that s 75AC(1) does not require goods to be absolutely free from risk. The level of safety required is that which the community is entitled to expect. It is thus the objective knowledge and expectations of the community which are to be assessed, not the subjective knowledge and expectations of an injured party: see paras 13 and 14." That makes apparent the consumer protection character of the provision. There is no reason in law or the Act why an evidentiary inference cannot be relied upon to meet the requirements of that provision. 23 In applying s 75AC a court in determining the extent of the safety of the goods, is obliged to have regard to all relevant circumstances. If the evidence was that the goods had been causative of injury, the court would be required to move to a finding of the extent of the safety. Then the court would be required to determine whether that safety was not such as persons generally are entitled to expect. If that was established, the court would move to a finding that the goods had a defect before moving to application of the provisions of s 75AD. There seems no reason in principle why this process could not commence and continue from an evidentiary foundation which was inferential. 24 It follows there is no basis upon which to accede to the first respondent's motion for dismissal or strike out of the claim pursuant to s 75AD. Nor is any point to be served by ordering further particularisation. Costs 25 For the applicant it is submitted that the first respondent should be discouraged from bringing interlocutory motions so that costs in any event should be awarded. In Stack v Brisbane City Council (1996) 71 FCR 523 at 534 Drummond J recognised that the provisions in O 62 r 7(1)(c) relaxed the general rule in O 62 r 3(3) but acted as a brake upon unrestrained interlocutory litigation. I do not regard the present motion as having been brought inappropriately; that is, it has raised an issue which could only properly be raised at this stage of the litigation. It is not in the character of interlocutory litigation requiring restraint. There is no reason to make any order pursuant to O 62 r 3(3). Conclusion 26 For the above reasons the motion brought by the first respondent should be dismissed with costs. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice RD Nicholson. Associate: Dated: 6 March 2003 Counsel for the Applicant: Mr JJ Edelman Solicitor for the Applicant: Julian Johnson Lawyers Counsel for First Respondent: Mr A Musikanth Solicitor for First Respondent: Corrs Chambers Westgarth Counsel for the Second Respondent: Mr J Allan Solicitor for the Second Respondent: Clayton Utz Date of Hearing: 6 February 2003 Date of Judgment: 6 March 2003