Nguyen v Rickhuss

1. [1]

   THE COURT: The proceedings pending in the Common Law Division of this Court giving rise to this interlocutory appeal were commenced as representative proceedings under Part 10 of the Civil Procedure Act 2005 (NSW) so long ago as 2017. There are twelve plaintiffs who sue for themselves and on behalf of group members all of whom had breast augmentation surgery using the “TCI System”, a term defined in the pleading and central to this application to which we shall return. “TCI” stands for The Cosmetic Institute, and the fifth defendant Dr Eddy Dona is alleged to have been a surgical director of the first, second, third and fourth defendants, all of which are companies in liquidation with “The Cosmetic Institute” or “TCI” in their names. Dr Dona is also alleged to have devised and conducted the training of the medical practitioners who were joined as the seventh to sixteenth defendants, and who are the applicants in this Court. Many or most of the plaintiffs and group members had their surgery performed by the seventh to sixteenth defendants.

2. [2]

   In late 2022, those ten medical practitioner defendants applied to the primary judge for a suite of orders, including orders that the litigation no longer proceed under Part 10. The primary judge dismissed that application: Rickhuss v The Cosmetic Institute Pty Ltd (No 4) [2023] NSWSC 666 at [48]-[118]. A number of issues were raised before the primary judge which have not been pursued in this Court, the application for leave being confined to the dismissal of the motion that the litigation no longer proceed under Part 10.

3. [3]

   The application is propounded on two bases: either there are no substantial common questions, such that the criterion in s 157(1)(c) of the Civil Procedure Act is not satisfied, or alternatively, the Court erred in not ordering pursuant to s 166 that the proceeding no longer continue as a representative proceeding under Part 10. The proposed grounds of appeal are that:

   1. (1)

      The primary judge erred in concluding that each of questions 1 to 45 of the Plaintiffs’ List of Proposed Questions dated 1 June 2023 gave rise to common questions of law or fact, or alternatively substantial common questions of law or fact, in relation to the claims brought on behalf of the group members against the appellants.

   2. (2)

      The primary judge erred in failing to conclude that the proceeding against the appellants should no longer continue as representative proceedings, or alternatively that there should be a stay of the representative proceedings against the appellants.

4. [4]

   The first proposed ground of appeal turns on the construction of s 157, and in particular the words “give rise to a substantial common question of law or fact”, in light of the pleadings. The second proposed ground of appeal requires identifying House v The King error in the exercise of discretion to dismiss an application that the proceeding no longer proceed under Part 10.

5. [5]

   Leave to appeal is required because the decision was interlocutory: Supreme Court Act 1970 (NSW), s 101(2)(e). The application for leave to appeal was listed expeditiously and concurrently with the proposed appeal, and all parties co-operated in an exchange of submissions and otherwise readying the matter for hearing, less than three months after judgment was delivered. The trial has been vacated and is listed for a hearing commencing in April 2024.

6. [6]

   We have concluded that there are a number of substantial common questions and there is no basis for interfering with the decision of the primary judge that the proceedings should continue under Part 10.

The pleadings

1. [7]

   The statement of claim is complex, quite possibly more complex than it need be, and it is unnecessary to summarise it in any detail. The 12 representative plaintiffs bring claims on behalf of people who underwent breast augmentation surgery on or before 29 October 2017, at premises associated with one of the TCI companies. A criterion of group membership is to have undergone breast augmentation surgery performed by the medical practitioners who are the applicants in this Court, or alternatively by Dr Eddy Dona or Dr Niroshan Sivathasan.

2. [8]

   Very significantly, group members must also be persons whose breast augmentation surgery was carried out in accordance with the “One Size Fits All Approach”, which is an aspect of “the TCI System”. The system is defined in paragraph 24C1 of the pleading as comprising the following elements:

3. [9]

   The “TCI Facilities” are described in paragraph 16 of the pleading as possessing a number of characteristics, including “inadequate infection control procedures”, “no capacity to access urgent surgical or medical assistance in the event of emergency”, and, in the case of the premises at Parramatta and Bondi, “no capacity to legally administer general anaesthesia or convert twilight sedation to general anaesthesia”. The applicants together with Dr Sivathasan are “TCI Surgeons”. The other defined terms do not greatly matter for present purposes, save for the “One Size Fits All Approach”.

4. [10]

   The plaintiffs allege amongst other things that the medical practitioners were negligent when carrying out breast augmentation surgery because the “One Size Fits All Approach” carried with it a significantly higher risk of complications, and further that that risk was not disclosed to patients. The “One Size Fits All Approach” was defined in the pleading as follows, with paragraph (f) which was at the forefront of the submissions in bold:

Reasons of the primary judge

1. [11]

   The essence of the reasoning of the primary judge appeared at [112]-[115] as follows:

2. [12]

   As foreshadowed, his Honour identified 45 common questions of fact or law in a schedule to his reasons. Those questions included, “Did the BAS [breast augmentation surgery] which was performed at the TCI Premises adopt the TCI System?”, “Can the adoption of the TCI System increase the risk of BAS Complications?”, “Was designing, implementing and/or applying the TCI System in breach of the first to fifth defendants’ duty of care to patients of TCI?”, “Was training the TCI Surgeons to adopt the TCI System in breach of the first to fifth defendants’ duty of care to patients of TCI?” and “Was adopting the TCI System, of itself, in breach of a TCI Surgeon’s duty of care to each patient?” (these were common questions 1, 3, 6, 7 and 8). There were also corresponding questions based on breaches of the Australian Consumer Law (questions 9-19), questions based on representations made to the public (questions 20-24) and to patients (questions 25-26) and whether those representations were misleading or deceptive, and a series of questions turning on insurance (questions 29-45).

Applicants’ submissions

1. [13]

   The applicants’ submissions had a number of strands. One was that the issues arising on the pleading were not common questions of fact and law, but rather inherently individualistic questions, which turned in each case on the circumstances of the particular group member. They drew a distinction between what was a “common” question, and what was an “individualistic” question, and insisted that the primary judge erred in failing to hold that the word “common” where used in s 157(1)(c) in respect of a common question of law or fact meant shared and not individualistic.

2. [14]

   A second strand turned on whether the “TCI System” was applied universally to group members. The applicants denied that it had been applied universally, but maintained that that did not give rise to a common question. That was because it turned, ultimately, on the particular characteristics of the group member. The applicants emphasised paragraph (f) of the definition of the One Size Fits All Approach above, and the fact that at least for many or most women, the procedure adopted was appropriate and accorded with peer professional practice. There was the following exchange at the outset of the hearing:

3. [15]

   It was also said that the pleading reversed the onus in establishing breach of duty. That was because in order to disprove the allegation that the same “TCI System” was applied in each case, it would be necessary for the medical practitioners to look at the records of each case. Thus it was said:

4. [16]

   The applicants also resisted the submission that the TCI System, if adopted, resulted in an increased risk of harm to patients. They did so once again on the basis that in each case that would turn on the individual circumstances of each group member.

5. [17]

   A third main strand of the applicants’ submissions was a novel proposition, namely, that in order to determine whether s 157(1)(c) is satisfied, it is necessary first to hypothesise that each group member proceeds separately, secondly, to identify all legal and factual questions that would arise in the process of adjudicating each group member’s claims and, thirdly, determine whether there is a question that would recur in each action. Only then, so it is said, can any “common question of law or fact” be identified. Only at that stage does the Court ask whether it and any other such questions are “substantial” in the sense mandated by Wong v Silkfield Pty Ltd (1999) 199 CLR 255; [1999] HCA 48. Thus it was said:

6. [18]

   This approach was said to flow from Universities of Oxford and Cambridge v George Gill & Sons [1899] 1 Ch 55. Mr McInerney SC, who appeared for the applicants before the primary judge and in this Court, accepted that there was no Australian authority for that test, although he maintained that it was implicit in the approach which was in fact undertaken when issues under s 157(1)(c) or s 166 or their counterparts were raised.

7. [19]

   It is fair to say that the plaintiffs’ contentions that there was a single system, which was applied irrespective of the particular characteristics of each group member, and which increased the risk of harm, each aspect of which is denied, is at the heart of the dispute, and which enables us to proceed directly to the applicants’ submissions on the appeal.

8. [20]

   It will not be necessary to summarise the respondents’ submissions, which in large measure are reflected in our reasons.

The statutory provisions

1. [21]

   Proceedings may be commenced under Part 10 of the Civil Procedure Act if they satisfy s 157:

2. [22]

   The requirements in s 157(1) are cumulative. The only one in issue in this litigation is that in s 157(1)(c). It will be seen that s 157(2) makes it clear that the absence of commonality in the relief sought, or in the transaction or contract which gives rise to the dispute, or in the nature of the breach, does not stand in the way of the conclusion that s 157(1)(c) is satisfied. In short, the force of s 157(2) is to confirm the generality of the approach in s 157(1).

3. [23]

   If proceedings are commenced under Part 10, then s 161 imposes certain formal requirements:

4. [24]

   The requirement to specify the matters in paragraphs (a), (b) and (c) of s 161(1) loosely corresponds with the criteria in the paragraphs in s 157(1).

5. [25]

   The consequence of a proceeding being a representative proceeding under Part 10 is that, in addition to the parties, there will be a class of group members whose rights are significantly affected by the litigation albeit they are not parties, did not consent to be members of the group and may well not even be aware of the litigation. To that end, there are important obligations concerning notification and the exercise of the right to optout: ss 162 and 175. Representative proceedings may not be settled or discontinued without the Court’s leave: s 173. All group members who have not opted out will be bound by a judgment made in the proceeding, even if the group members are not parties: s 179, and the running of limitation periods for all group members in respect of those claims (speaking generally) is suspended until the group member opts out or the claim is determined: s 182. The regime is accompanied by a deal of flexibility, and is to be construed bearing in mind that there is wide variation between the subject matter of such proceedings, the number of group members, the nature of the claims made and relief sought.

6. [26]

   Finally, s 166 provides as follows:

Proposed ground 1: s 157

1. [27]

   We do not accept the applicants’ submission that whether the TCI System was deployed upon all patients, irrespective of their personal characteristics, is not a common question of fact. There is no basis in the text or context to construe “common question of law or fact” in s 157(1)(c) narrowly. There is certainly no reason to introduce a supposed dichotomy between questions which are “common” and questions which are “individualistic” and then to read down s 157(1)(c) so that if the question is regarded as “individualistic” it cannot be “common”. To the contrary, whether or not s 157(1)(c) is satisfied turns merely on whether the questions arising on the pleading comprise one or more common questions of law or fact and, if so, whether they are “substantial”. In the present case, the representative plaintiffs allege, and the applicant medical practitioners deny, that the breast augmentation surgery was carried out in a materially identical way. The issue is the same across the class. That means it is a common question. A question can be common even if the defendants choose to adduce different evidence in respect of each aspect of the claim.

2. [28]

   Those conclusions accord with authority, and indeed submissions resembling those advanced by the applicants have previously been rejected in terms. Indeed, they were raised and rejected in relation to the predecessor to Part 10, namely, Part 8, r 13 of the Supreme Court Rules 1970 (NSW), which permitted a representative action where “numerous persons [had] the same interest in any proceedings”: see Carnie v Esanda Finance Corporation Ltd (1995) 182 CLR 398 at 404; [1995] HCA 9, where it was posited by Mason CJ, Deane and Dawson JJ that the phrase “same interest” may extend to “a significant common interest in the resolution of any question of law or fact arising in the relevant proceedings”. In response to a complaint by the defendant (Esanda) that there may be individual issues raised as to whether the loan contracts in issue were supported by consideration, Brennan J observed at 410:

3. [29]

   In relation to the modern rule, in Bright v Femcare Ltd [2002] FCAFC 243; 195 ALR 574, Lindgren J said at [28]:

4. [30]

   It is settled law that s 157(1)(c) (and its federal counterpart, s 33C(1) of the Federal Court of Australia Act 1976 (Cth)) “is concerned with the commencement, not subsequent conduct, of litigation using the procedures provided in Part IVA. In terms, s 33C(1) looks to the claims made by seven or more persons against the same person, being claims which are in respect of, or arise out of, the same, similar or related circumstances, and asks whether claims so understood give rise to a substantial common issue of law or fact”: Wong v Silkfield Pty Ltd (1999) 199 CLR 255; [1999] HCA 48 at [26]. In Bright v Femcare Kiefel J (with whom Lindgren J agreed) said at [126] that:

5. [31]

   That passage was endorsed by Spigelman CJ with the agreement of Allsop P and Ipp JA in Jameson v Professional Investment Services Pty Ltd (2009) 72 NSWLR 281; [2009] NSWCA 28 at [52].

6. [32]

   Those settled principles are applicable here. Whether or not the TCI System was applied universally and undiscriminatingly to group members is in issue on the pleadings. The fact that the applicants may in due course resist that allegation by reference to evidence from particular cases does not thereby stand in the way of the conclusion that it is a common question of fact.

7. [33]

   Even if that were not so, the separate question whether the TCI System increased the risk of harm to patients is a common question of fact. That is so even if in fact the position turns out to be more nuanced. Perhaps there is an increased risk to a particular subclass of patients (perhaps, those whose breasts had particular characteristics, or those whose surgeries were performed at particular premises where emergency general anaesthesia was not legally available). That does not detract from the conclusion that if, as is alleged, the TCI System was applied to all group members, and if as is alleged it was a system which increased the risk of harm to at least some group members, that gives rise to a common question of fact. Indeed, it seems to us that that is a question which is central to the entire dispute, because it is the increased risk of harm which drives the allegations of breach of duty and contraventions of the Australian Consumer Law.

8. [34]

   Turning to the strand of the applicants’ argument based on the Universities case, that decision concerned Order XVI r 1 of the Rules of the Supreme Court, which Stirling J explained had only be made in 1896, and which provided:

9. [35]

   The other rule which was sought to be invoked in the Universities case was Order XVIII r 8:

10. [36]

    Order XVI r 1 employed the term “common question of law or fact” but did so in a different context from s 157(1)(c). The 1896 rule extended to joinder of causes of action, thereby making the persons who were plaintiffs and defendants to each cause of action parties to the one proceeding, and thus with the rights and obligations of parties in respect of matters such as discovery, rights of appearance, and liability to pay costs. Section 157(1)(c) is a criterion which must be satisfied if litigation is to be a representative proceeding, but it does not make group members parties to litigation.

11. [37]

    Indeed, the modern counterpart to the 1896 rule is r 6.19 of the Uniform Civil Procedure Rules:

12. [38]

    Two points may be noted from the modern counterpart. The first is that the existence of r 6.19 alongside Part 10 of the Civil Procedure Act tends to demonstrate that the purpose of Order XVI r 1 and the mischief to which it was directed is different from the purpose and mischief to which s 157(1)(c) is directed. Secondly, r 6.19 is materially broader than Order XVI r 1, insofar as power is conferred to grant leave to permit joinder of parties even where there are no common questions of fact or law. Once again, that tends to deny a continuing application in the modern procedural rules of some limitation found in an ex tempore interlocutory decision of 1899.

13. [39]

    Likewise, the modern counterpart to Order XVIII r 8 is r 6.22 of the Uniform Civil Procedure Rules 2005 (NSW):

14. [40]

    It would be remarkable if, after some three decades of representative proceedings brought pursuant to provisions cognate with Part IVA of the Federal Court of Australia Act 1976 (Cth), it had been overlooked that the issue whether there was a “common question of law or fact” was required to be determined by the methodology said to derive from the Universities case. Perhaps with that in mind, the applicants noted that the Universities case had been cited by the High Court in Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1; [2002] HCA 27 at [32]. However, the citation, in the joint judgment of Gaudron, Gummow and Hayne JJ, falls far short of a resounding endorsement that the restriction is applicable to modern representative proceedings. The passage is as follows:

15. [41]

    Their Honours thereafter turned to the relevant topic, namely, the operation of the more modern provisions, which are differently drafted from the rule considered in the Universities case, saying at [34]:

16. [42]

    Thus, everything which was said was obiter, for the only question before the High Court concerned the constitutional validity of the modern rules. Without pausing to express a view as to whether the earlier procedural rules were as narrow as they had been regarded to be, their Honours moved to the relevant question, which was the operation of the modern provisions, central among which was the counterpart (s 33C of Part 4A of the Supreme Court Act 1986 (Vic)) to s 157(1)(c).

17. [43]

    The applicants also relied upon the work of an American academic, who contended that the 1896 amendments to the UK Rules of the Supreme Court were the source of the “common question concept” in r 23 of the US Federal Rules of Civil Procedure, and thus the Universities case was relevant to federal class actions: B Spencer, “Class Actions, Heightened Commonality, and Declining Access to Justice” (2013) 93 Boston University Law Review 441, 457.

18. [44]

    The submissions based on the Universities case are unpersuasive. A power to order joinder where there is “any common question of law or fact” was conferred by the 1896 amendments, and the Universities case makes it clear that that power was construed broadly. But that is quite different from the condition in s 157(1)(c) to proceeding under Part 10, namely that the claims of persons “give rise to a substantial common question of law or fact”. One difference, as was pointed out in the hearing, is that the former concerns the ability to join a person as a party, while the latter concerns the ability of a representative plaintiff to litigate on behalf of, and bind, group members who are not parties. Another difference is that the rule considered in the Universities case involved a discretionary power to order separate trials in relation to a particular defendant. It makes sense in such cases to seek to identify the issues which arise in the two separate proceedings, identify whether one or more is common (in which case, there is a power to join) and then (in the event the defendant asks for a separate trial) to identify the other issues with a view to determining whether on the whole the joinder would lead to embarrassment or delay. That does not make sense when dealing with the threshold issue posed by s 157(1)(c), which is asked at the outset and is binary, for either a proceeding may proceed under Part 10 or it may not.

19. [45]

    There is nothing to suggest that some three-stage test from Stirling J’s reasons was applicable to the new question posed by s 157(1)(c). The provisions address a simpler question, which necessarily, in light of s 161, must be addressed at the time the statement of claim is drafted, namely, whether group members’ claims give rise to a substantial common question of law or fact.

20. [46]

    Another way of putting this is that why ever would one identify all of the issues of fact and law that would arise in a proceeding under Part 10 at the outset? Instead, one asks in accordance with the plain text of the provision whether there are one or more “substantial” questions of law or fact, bearing in mind that Wong v Silkfield Pty Ltd (1999) 199 CLR 255; [1999] HCA 48 at [21] and [28] held that it was sufficient for the issue to be “real or of substance”, and found that the majority of the Full Court of the Federal Court had erred in requiring it to “have a major impact on the litigation because it is an issue at the core of the dispute” or “likely to resolve wholly or to any significant degree the claims of all group members”.

21. [47]

    More generally, the provisions in Part 10 should not be construed as creating obstacles to the adjudication of claims involving multiple parties. As noted in Wong v Silkfield Pty Ltd at [28], the purpose of the new regime was “not to narrow access to the new form of representative proceedings beyond that which applied under” traditional regimes considered in cases such as Carnie v Esanda. Those rules were intended to enhance access to justice and are to be applied flexibly to guide a variety of disputes. There has long been a tendency for defendants to representative proceedings to fasten upon the provisions authorising that new procedure as restrictions. That is antithetical to the regime’s beneficial purpose.

22. [48]

    There is a final reason for rejecting the applicants’ submissions. On the narrow approach adopted to “common question of law or fact” advanced by the applicants, there was no way in which the claims sought to be advanced on behalf of group members could be advanced other than in a large number of separate proceedings. Senior counsel for the applicants candidly conceded as much. Not lightly should it be concluded that a claim that many persons have been treated in substantially the same way, according to a system which was negligent, must be litigated as a series of individual claims.

Proposed ground 2: s 166

1. [49]

   The fallback submission that if, contrary to the applicants’ primary position there were one or more substantial common questions of law or fact, nonetheless the primary judge’s discretion had miscarried, were very much subordinate to the question of power. That was an appropriate course to take. It is not necessary to descend into the individual questions identified by the primary judge. Whether or not the TCI System was used, whether or not the TCI System was applied irrespective of differences in individual group members, and whether or not the TCI System increased the risk of harm to group members are central to the dispute, and it was open to the primary judge to determine that it was appropriate, at this stage, for the proceedings to continue under Part 10.

2. [50]

   We would add that on the facts of the present case, which was commenced in 2017, there is also the capacity for hardship if the orders sought by the applicants are made. The Court was told that many surgeries took place in 2013, 2014, and 2015. For many years the limitation periods applicable to those claims have been suspended. There is a real risk of hardship to persons who have claims against the medical practitioners and who have been group members for the last seven years, if the litigation were now to cease as a representative proceeding with the result that if they wish to sue the medical practitioners they must act very rapidly to do so before the limitation period expires.

Conclusions and orders

1. [51]

   The point was fully argued. There should be a grant of leave, but the appeal must be dismissed.

2. [52]

   The 19th respondent (Newline), the insurer of the companies in liquidation, neither consented nor opposed the grant of leave and made no submission on the matters referred to above. However, it filed a contingent notice of contention, against the possibility that the appeal might be allowed in part, on a fallback case advanced by the applicants, with the result that the proceeding continued under Part 10 against the companies but not against the applicants. Newline said that s 166 did not empower the Court to make a partial “declassing” order. It had done the same before the primary judge, who declined to address a point which did not arise.

3. [53]

   The notice of contention does not arise here, either. However, some of the submissions which were advanced should be noticed so that courts are not subsequently burdened by their repetition.

4. [54]

   Newline relied upon a statement by John Dixon J in Agnello v Heritage Care Pty Ltd [2021] VSC 838 at [104] to the effect that the Victorian equivalent of s 166 “does not appear to empower a court to make an order that parts of a proceeding, or particular claims within a proceeding, no longer continue under Part 4A”. It is more than possible that this recorded a submission, as opposed to being an observation by his Honour, because it is found in a section headed “Defendant’s contention”, and the structure of the paragraphs under that heading for the most part contain sentences introduced by “The defendant contended” or words to similar effect, but sometimes, at least when it is plain that his Honour is continuing to summarise the submission, those words are omitted. Whether or not that be the correct characterisation of [104], it is pellucidly clear from [109] that his Honour did not decide the point. Nor is it supported by any reasoning, save for a reference to the second decision upon which Newline relied.

5. [55]

   In Community & Public Sector Union v Crown in Right of Victoria (1999) 90 IR 4, Marshall J adopted the submissions of a party that there was no power to order that part of a representative proceeding not continue as such.

6. [56]

   Two points may be made in response. First, Newline made a submission said to be based on the approach adopted in Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 at 492; [1993] HCA 15: “As superior courts of the states and the Federal Court should interpret uniform legislation in a consistent manner, the Court should not depart lightly from the decisions of Community and Public Sector Union and Agnello”. That submission is, with respect, nonsense. Part 10 of the Civil Procedure Act 2005 (NSW) is cognate legislation with Part IVA of the Federal Court of Australia Act 1976 (Cth) and Part 4A of the Supreme Court Act 1986 (Vic). It is plainly desirable that provisions common to all be given the same meaning. But nothing in Marlborough Gold Mines Ltd, or the more recent decisions in respect of the construction of federal or uniform statutory regimes, should be taken to mean that an intermediate appellate court should defer to the construction given earlier in time by a first instance decision of another jurisdiction. That is not how the rules of precedent work.

7. [57]

   Secondly, and with no disrespect whatsoever to the reasoning in Agnello and CPSU v Victoria, their Honours did not, and did not purport to, address anything like an elaborate argument on the point. There is power when a proceeding contains multiple causes of action to order separate trials or for a Court to “make such other order as it thinks fit”: UCPR, r 6.22. There is no reason why that power might not, in an appropriate case, extend to ordering that a single proceeding should be reconstituted as two proceedings. Newline accepted as much as soon as this was raised. Accordingly, even if s 166 was as narrowly circumscribed as Newline contended, it would be possible by first ordering a proceeding under Part 10 to continue as two separate proceedings to achieve the effect of a partial “declassing” order, because once the two separate proceedings had been brought into existence, one could then be the subject of an exercise of the s 166 power.

8. [58]

   The principal issues argued, and the only issues determined, were those raised in the notice of appeal, rather than the notice of contention. The respondents other than the first to twelfth respondents played no substantial role on those issues. They appeared by counsel, as was their right, but they did not seek to be heard. The appropriate order as to costs is that the applicants should pay the costs of the first to twelfth respondents, and that there should be no other order as to costs, with the intent that the other respondents should bear their own costs.

9. [59]

   For those reasons, the Court’s orders are: