Full text post: Vioxx class action: special leave refused

In 2010 the full court of the Federal Court of Australia overturned a damages award in the VIOXX class action. The decision confirmed the traditional approach to issues of causation – the defendant’s act or omission must be a necessary condition of the plaintiff’s injury (the ‘but for’ test). It also illustrated that causation is no less difficult to prove in large-scale class actions than in individual proceedings.

The applicant sought leave to appeal to the High Court of Australia. On May 15 2012 the court refused special leave to

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appeal from the full court: Peterson v Merck Sharp & Dohme (Australia) Pty Ltd [2012] HCATrans 105. The plaintiff’s avenues of appeal have now been exhausted.

This decision had immediate consequences for the plaintiff, which is now the subject of a substantial costs order. It also had implications for the plaintiff’s lawyers, the publicly listed Slater & Gordon, which announced a loss of A$10 million to the market as a result of having funded the proceedings on a no win, no fee basis since 2005.

Following this decision, it arguably remains more difficult to prosecute successfully representative proceedings raising direct causation questions in Australia than in some other jurisdictions, which have relaxed the requirements of causation in recent years so that, for example, a defendant might be liable if its act or omission:

  • caused the plaintiff’s injury by inference;
  • materially increased the risk of the plaintiff suffering the relevant injury; or
  • materially contributed to the plaintiff’s injury.

That said, Chief Justice French indicated that the court refused special leave because the applications were not suitable vehicles for the consideration of the relevant questions of principle, “having regard to the findings of fact of the primary judge and the full court’s treatment of them”.

This leaves open the possibility that the High Court might relax the requirements of causation if it is given the right set of facts. It is difficult to tell what those might be, since the High Court does not give reasons on special leave applications. One possibility is a set of facts involving fewer potential causes of the plaintiff’s injury; in the VIOXX proceedings, multiple potential causes were alleged. Another possibility is a set of facts involving a circumstance that is by itself sufficient to produce, or at least materially contribute to, the injury; the VIOXX proceedings alleged that the drug increased the risk of the relevant injury.

(This alert was originally prepared by King & Wood Mallesons for the International Law Office: see here. Note, registration may be required to access the International Law Office site).