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  4. Kranz v Astora Women's Health LLC - [2022] QSC 203

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Kranz v Astora Women's Health LLC[2022] QSC 203

Kranz v Astora Women's Health LLC[2022] QSC 203

SUPREME COURT OF QUEENSLAND

CITATION:

Kranz v Astora Women’s Health LLC [2022] QSC 203

PARTIES:

BELINDA GAIL KRANZ

(plaintiff)

v

ASTORA WOMEN’S HEALTH LLC

(defendant)

FILE NO/S:

BS 10069 of 2022

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court

DELIVERED ON:

23 September 2022

DELIVERED AT:

Brisbane

HEARING DATE:

16 September 2022

JUDGE:

Freeburn J

ORDER:

  1. Pursuant to s 43 of the Personal Injuries Proceedings Act 2002 (Qld), Ms Kranz is granted leave to start a proceeding in the court for damages based on a liability for personal injury, despite noncompliance with PIPA; and
  2. Costs are reserved.

CATCHWORDS:

PRACTICE AND PROCEDURE – SUBSTITUTED SERVICE – JURISDICTION – whether personal service is “practicable” – whether substituted service is possible.

LIMITATION OF ACTIONS – PERSONAL INJURY – LIMITATION PERIOD – EXTENSION – where there was non-compliance with pre-trial procedures  –  where plaintiff opted out of a class action and decided to pursue own action – whether the court ought to exercise its discretion to extend the limitation period – whether the applicant for leave demonstrated a reasonably arguable case for grant of extension.

COUNSEL:

Mr Charles Wilson for the plaintiff

SOLICITORS:

AJB Stevens Lawyers (Sydney) for the plaintiff

REASONS

  1. [1]
    On 25 October 2021, Ms Belinda Kranz attended a webinar conducted by Shine Lawyers. Ms Kranz and other attendees at the webinar were group members in an Australian Federal Court class action being brought by them against a United States company, Astora Women’s Health LLC (Astora).[1]  The class action seeks damages for personal injuries arising out of the use in surgery of faulty pelvic mesh devices.
  2. [2]
    Shine Lawyers informed the webinar attendees that Astora had offered to settle the class action for $27m, inclusive of costs. However, Shine Lawyers’ costs were between $6.25m and $7.5m. The balance of the award was to be shared between 3000 group members. Shine Lawyers told the group members that they would each receive no more than $10,000 each. For Ms Kranz that meant that, after repaying Medicare, her private health insurer, and Centrelink, she would receive little or nothing.
  3. [3]
    A few days later, on 29 October 2021, Ms Kranz instructed her new solicitors, AJB Stevens Lawyers to ‘opt out’ of the Australian Federal Court class action. Ms Kranz decided to pursue her own action against Astora. Unfortunately, Ms Kranz’s separate proceeding must overcome some procedural obstacles. Those obstacles can be summarised as PIPA issues, Hague Convention service issues, Chapter 11 of the Bankruptcy Code of the United States Code (US Bankruptcy Code) issues, stay issues raised by a decision of the United States Bankruptcy Court for the Southern District of New York (New York court), and stay issues raised by s 362 of the US Bankruptcy Code. Each obstacle is considered below.

PIPA Proceeding

  1. [4]
    Ms Kranz’s personal injuries claim for damages is governed by the Personal Injuries Proceedings Act 2002 (Qld) (PIPA). That Act introduced procedures for the speedy resolution of personal injury claims. It promotes the settlement of claims at an early stage wherever possible. Thus, PIPA restricts a person from commencing a proceeding in a court based on a claim, without first: (1) giving written notice of the claim, (2) providing relevant information, documents and expert reports, (3) participating in a compulsory conference, and (4) delivering mandatory final offers.
  2. [5]
    Those PIPA procedures have not been fully undertaken by Ms Kranz. Due to Ms Kranz exercising her option to opt out of the class action, AJB Stevens, on behalf of Ms Kranz, served a notice of claim under PIPA on the Sydney office of Baker McKenzie, Astora’s solicitors in the class action.[2] On 15 June 2022, Baker McKenzie advised AJB Stevens that Ms Kranz’s notice of claim did not comply with s 9(5) of PIPA, as it did not explain the delay in giving the notice. The PIPA proceedings have progressed no further.
  3. [6]
    As Ms Kranz’s counsel explained, there is now some urgency in commencing proceedings, because any extended limitation period will expire on 25 October 2022. It is necessary to explain that proposition. The limitation period has already expired.[3] That is because Ms Kranz’s pain and suffering by reason of the implantation of the pelvic mesh device likely occurred between its surgical insertion on 31 March 2016 and its surgical removal on 17 December 2018. If Ms Kranz were to bring an application to extend the limitation period under s 31(2) of the Limitation of Actions Act 1974 (Qld), then it is likely that Ms Kranz would rely on the information imparted at the webinar as the ‘material fact of a decisive character’ as a precondition to the court exercising its discretion to grant an extension of time for 12 months from 25 October 2021.[4] Therefore, if Ms Kranz were to obtain an extension of the limitation period under s 31(2) of the Limitation of Actions Act 1974 (Qld), that extension would expire on 24 October 2022 – in about one month’s time.
  4. [7]
    Of course, Ms Kranz may not succeed in her proposed application to extend the limitation period under s 31(2) of the Limitation of Actions Act 1974 (Qld). However, it is sufficient to note that the application has some prospects given that Ms Kranz was previously a group member of a class action in the Australian Federal Court and that proceeding was commenced in 2018 and continued at least until an offer was made in October 2021. Given the existence of the class action, the likelihood is that neither party is prejudiced by delay.
  5. [8]
    Because of the urgency created by the limitation problems, Ms Kranz now applies under s 43 of PIPA for leave to start a proceeding in the court for damages based on a liability for personal injury, despite her non-compliance with Chapter 2 Part 1 of PIPA. That non-compliance means that Ms Kranz has not participated in the PIPA pre-court procedures designed to promote the speedy resolution of personal injury claims by notices of claims, exchange of documents, conferences etc.
  6. [9]
    The court can give leave if it is satisfied that there is an urgent need to start the proceeding.
  7. [10]
    The court’s leave under s 43 of PIPA does not mean the proceeding will necessarily proceed.  If leave is given, the proceedings will be immediately stayed: s 43(3) of PIPA.
  8. [11]
    The threshold problem, though, is that Astora was not represented at Ms Kranz’s application pursuant to s 43 of PIPA.

Background to the s 43 Application

  1. [12]
    On 15 June 2022, Baker McKenzie, the solicitors for Astora in the Australian Federal Court class action, emailed AJB Stevens, concerning Ms Kranz’s notice of claim under PIPA. The email reads:

We have been instructed by Astora Women’s Health LLC (Astora) to respond to your client Ms Kranz’s Part 1 notice under the Personal Injuries Proceedings Act 2002 (PIPA).

Astora accepts that, for the purpose of s 10 PIPA, it is a proper respondent to the claim by Ms Kranz.

Astora gives notice that, under s 12 PIPA, it considers that the Part 1 notice delivered by your client is non-compliant.

Your client has not delivered the notice within the time frames prescribed by s 9(3) PIPA and has not provided a reasonable excuse for the delay in the giving of the notice.  Astora requires your client to remedy this non-compliance within 1 month of the date of this email.

Astora reserves its rights to rely on the Limitation of Actions Act 1974.

We note that:

  • We do not have instructions to accept service of any proceedings on behalf of Astora; and
  • Astora is a corporation which is able to be served and has a registered address which is a matter of public record.
  1. [13]
    It is worth noting that in this email Baker McKenzie acknowledge that they were specifically instructed to respond to Ms Kranz’s notice of claim under PIPA. They gave notice under PIPA, required Ms Kranz to remedy her non-compliance with PIPA, and expressly reserved its right to rely on the limitation period.
  2. [14]
    There was subsequent correspondence by way of email in which Baker McKenzie sought a response to its email, and AJB Stevens sought Astora’s consent to the commencement of proceedings.[5] On 23 August 2022, AJB Stevens advised that the application had been set down for 16 September 2022. On 22 August 2022, AJB Stevens sent the application and supporting affidavit to Astora in the United States. On 23 August 2022, Baker McKenzie repeated that they did not have instructions to accept service of any proceedings on behalf of Astora.
  3. [15]
    In the meantime, on 22 August 2022, Baker McKenzie emailed AJB Stevens as follows:

We refer to the claim which you have advanced against Astora Women’s Health, LLC (Astora) on behalf of your client Ms Kranz under the Personal Injuries Proceedings Act 2002.

We are writing to advise that Astora has, on 16 August 2002, filed a case in the United States Bankruptcy Court for the Southern District of New York (Case No. 22-22594), pursuant to Chapter 11 of the United States Bankruptcy Code (Chapter 11 Case).

We understand that the effect of the Chapter 11 Case will be to impose a stay on proceedings against Astora worldwide.

We expect to be instructed to file an application for recognition of the Chapter 11 Case in Australia under the Model Law on Cross-Border Insolvency of the United Nations Commission on International Trade Law.

  1. [16]
    On 13 September 2022, Baker McKenzie emailed, by way of service, applications made in the Australian Federal Court to have the United States Chapter 11 proceedings recognised as a foreign proceeding. One of the orders sought from the Australian Federal Court by Baker McKenzie on behalf of Astora and Mark Thomas Bradley, the foreign representative of Astora, was that notice of the proposed orders be given to:
    1. (1)
      Shine Lawyers on behalf of the Australian Federal Court class action group members; and
    2. (2)
      AJB Stevens on behalf of each of AJB Stevens’ three clients, including Ms Kranz. 
  2. [17]
    Paragraph 52 of Mr Bradley’s affidavit supporting the Australian Federal Court application states:
  1. Astora LLC has also received Notices of Claim pursuant to the Personal Injuries Proceedings Act 2002 (Qld) in respect of three claimants (which I will refer to as “TP”, “KC” and “BK”).  As noted above, I have not disclosed the names of these individuals due to privacy concerns, but could provide the names to the Court in accordance with any applicable privacy legislation if so required.  As of 22 August 2022, two of these claimants have filed applications in the Supreme Court of Queensland seeking leave to start proceedings in that Court.
  1. [18]
    The initials “BK” correspond to Ms Kranz’s initials. The other initials correspond with the other clients of AJB Stevens who have also opted out of the class action.
  2. [19]
    And so, there can be no doubt that Astora and Mr Bradley have received proper notice of Ms Kranz’s personal injuries claim.  
  3. [20]
    The fate of the application to the Australian Federal Court by Astora and Mr Bradley to have the United States Chapter 11 proceedings recognised as a foreign proceeding is not yet known.
  4. [21]
    On 12 September 2022, AJB Stevens wrote to Mr Bradley as the Australian Foreign Representative appointed by the New York court. In the correspondence, AJB Stevens inquired about the Australian Federal Court application, and enclosed, by way of service, Ms Kranz’s application under s 43 of PIPA, including its supporting affidavit. AJB Stevens asked Mr Bradley to advise, as a matter of urgency, whether he had arranged for solicitors to appear at the application. There is no evidence that Mr Bradley responded to this correspondence.
  5. [22]
    On 15 September 2022, further affidavits were sent to Baker McKenzie. AJB Stevens attempted to contact Astora’s London and Philadelphia based lawyers via registered mail. These efforts did not produce an address for service.
  6. [23]
    Ultimately, as previously noted, neither Baker McKenzie nor Mr Bradley appeared on behalf of Astora at the hearing on 16 September 2022.

Is the Hearing Ex Parte Justified?

  1. [24]
    Ms Kranz’s counsel sought to proceed with the s 43 of PIPA application ex parte. Rule 27 of the Uniform Civil Procedure Rules (UCPR) authorises the court to proceed ex parte:

27 Service of application

  1. (1)
    An application must be filed and then served on each respondent at least 3 business days before the day set for hearing the application…
  2. (2)
    However, the time limit in subrule (1) does not apply if—
  1. (a)
    these rules, an Act or another law permit the application to be heard and decided without being served; or
  2. (b)
    the applicant proposes in the application that it be decided without a hearing; or
  3. (c)
    another time is provided for under these rules or an Act.
  1. (3)
    If an application is not served as required by subrule (1), the court must not hear and decide the application unless the court considers it just to hear and decide the application on the day set for hearing and 1 of the following applies—
  1. (a)
    the court is satisfied delay caused by giving notice of the application would cause irreparable or serious mischief to the applicant or another person;
  2. (b)
    the court is satisfied the respondents to the application will suffer no significant prejudice if it hears and decides the application on the day set for hearing;
  3. (c)
    the respondents to the application consent to the court hearing and deciding the application on the day set for hearing.

Example of subrule (3)—

The court may decide subrule (3) has been satisfied if the application is a cross application by a respondent to another application and it is convenient for the applications to be heard together.

  1. (4)
    For an application not served as required by subrule (1)—
  1. (a)
    the court may make an order on an undertaking given by the applicant and acceptable to the court; and
  2. (b)
    a person affected by the order may apply to the court for it to be set aside.[6]
  1. [25]
    Here, the court can be satisfied that the respondent, Astora, “will suffer no significant prejudice if [the court] hears and decides the application on the day set for hearing.” That is for several reasons. Firstly, an application under s 43 of PIPA is, by its nature, an application that is made in a situation of urgency. Here, the urgency arises because of the imminent expiry of an extended limitation period. In that circumstance, PIPA authorises the court to grant leave to start the proceeding. However, that is a limited right because it merely permits the commencement of the proceeding, and the proceeding is immediately stayed. Thus, if Ms Kranz wishes to continue with the proceeding Ms Kranz will need to apply to the court to have the stay lifted.
  2. [26]
    Secondly, as explained, in order to proceed with her case, Ms Kranz will need to apply to extend the limitation period. Thirdly, in any event, Astora, as a person affected by the order, is at liberty to apply to set aside the order under rule 27(4) of the UCPR. Fourthly, Astora had proper notice of this application and of Ms Kranz’s personal injuries claim. Astora specifically instructed its Sydney solicitors, Baker McKenzie to respond to Ms Kranz’s notice of claim under PIPA and to criticise Ms Kranz’s non-compliance with s 9(3) of PIPA. And, on behalf of Astora, Baker McKenzie expressly reserved Astora’s rights to rely on the limitation period as a defence to Ms Kranz’s proposed personal injuries claim. In those circumstances, it seems selective for Astora to choose not to be represented at a hearing of an application under s 43 of PIPA.  
  3. [27]
    Fifthly, it is significant that Astora has had a prior litigation presence in Australia with respect to the Australian Federal Court class action. Baker McKenzie actively promoted Astora’s interests in that class action which, until recently, included Ms Kranz’s claim as a member of the group. An offer was made by Astora to the group. However, Ms Kranz decided to reject the offer and to opt out of the class action. The result is that Astora chooses to participate in litigation in Australia for those that have not opted out, but requires those who have opted out to, in effect, start at the beginning and follow PIPA and then litigation procedures, as if the ‘opt out members had not been participants in the class action. It may be that Astora is entitled to take that stance. But that circumstance is relevant to the question of whether it is, in the language of rule 27 ‘just to hear and decide the application on the day set for hearing’.
  4. [28]
    Sixthly, in these circumstances, particularly given Astora’s active participation in the class action and the PIPA correspondence, it can be inferred that if Astora had considered that it was likely to suffer “significant prejudice”, then it would have appeared on the current application.
  5. [29]
    Counsel for Ms Kranz argued that, if the court was not minded to permit Ms Kranz to proceed ex parte, then an order for substituted service should be made under UCPR 116. Because of the conclusion just reached, it is unnecessary to consider that issue except to note the following:
    1. (1)
      Whilst both Australia and the United States are parties to the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (1965), the practicalities and likely delays, including with the relevant Central Authority, mean that service of the present application would not take place for some weeks or months, by which time an application under s 43 of PIPA to start a proceeding would be pointless because even the extended limitation period would have expired;
    2. (2)
      That means that service via the Hague Convention rules would be impractical;
    3. (3)
      Astora and its solicitors already have notice of Ms Kranz’s claim and her proceeding. Thus, service on Baker McKenzie, Astora’s solicitors in the Australian Federal Court class action, in respect of which Ms Kranz is a former group member, would likely bring the proceeding to Astora’s attention;
    4. (4)
      Astora appears to submit to the jurisdiction of Australian courts in a selective way. Astora sold a product in Australia which led to it defending an Australian Federal Court class action. In that proceeding, it chose to defend claims brought by women who fall within the class action group. However, Astora appears to have decided that women who fall within that group, but who have ‘opted out’, must now commence proceedings afresh and effect service internationally. And, in spite of that, Astora has entered the jurisdiction and sought, from the Australian Federal Court, recognition of its Chapter 11 proceedings.
  6. [30]
    For those reasons, were it necessary to decide the issue of substituted service, I would order that service on Baker McKenzie is sufficient pursuant to rule 116 of the UCPR.

Chapter 11 Proceedings in the United States

  1. [31]
    As mentioned, the Australian Federal Court has not yet heard and determined Astora’s application for the Chapter 11 proceedings to be recognised in Australia. Thus, the question arises as to whether the US Chapter 11 proceedings have any effect on the present application under s 43 of PIPA. There are two aspects: s 362 of the US Bankruptcy Code and the New York court’s order confirming a stay.
  2. [32]
    Section 362 of the US Bankruptcy Code provides as follows:
  1. (a)
    Except as provided in subsection (b) of this section, a petition filed under section 301, 302, or 303 of this title, or an application filed under section 5(a)(3) of the Securities Investor Protection Act of 1970, operates as a stay, applicable to all entities, of –
  1. (1)
    the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title.
  1. [33]
    That US provision is different from the Australian equivalents. Section 471B of the Corporations Act 2001 (Cth), for example, provides that a person may not begin or proceed with a court proceeding or enforcement process without the leave of the court.[7] Thus, the Australian approach is to restrict proceedings to those proceedings that obtain leave. In other words, the court supervises the proceedings that are permitted to continue. On the other hand, the approach in the United States is to stay proceedings, subject to exceptions.
  2. [34]
    Mr Wilson, counsel for Ms Kranz, has referred me to two decisions of United States courts which have held that an automatic stay under s 362 of the US Bankruptcy Code has extraterritorial application.[8] However, in Australia, Commonwealth legislation determines the extent to which Australian courts will aid foreign courts. Section 581 of the Corporations Act 2001 (Cth) provides that courts are to act in aid of each other, unless there are powerful reasons not to assist.[9] As Mr Wilson submits, there are powerful reasons for permitting Ms Kranz to start her proceeding, which will be immediately stayed, so as to preserve her right of action.
  3. [35]
    Similarly, the proceedings by Astora and Mr Bradley for recognition of the Chapter 11 proceedings as a foreign proceeding under the Cross-Border Insolvency Act 2008 (Cth) have not yet been determined. Even if recognition is given, the US Bankruptcy Code’s stay of proceedings is not automatic in its application in Australia. Proceedings will be subject to the grant of leave.[10]  

The Order of the New York Court

  1. [36]
    There is another, related obstacle. In the Chapter 11 proceedings in the United States, an order of the New York court was as follows:

Subject to any relevant provisions or exceptions to the automatic stay contained in section 362(b) of the Bankruptcy Code and applicable law, and the right of any party-in-interest to seek relief from the automatic stay in accordance with section 362(d) of the Bankruptcy Code, all persons (including individuals […] and all those acting on their behalf […] whether of the United States, any state or locality or any territory or possession thereof, or any foreign jurisdiction […] are hereby stayed, restrained, and enjoined from:

  1. (a)
    commencing or continuing any judicial […] action or proceeding […] against the Debtors that was or could have been commenced before the Petition Date […].
  1. [37]
    The question is whether that order of the New York court has extraterritorial operation and, if so, whether it could be regarded as binding Ms Kranz, an Australian citizen. In my view, it is doubtful that the order can apply to Ms Kranz. She has not submitted to the jurisdiction of that court. She has had no contact with the United States.[11]
  2. [38]
    Importantly, the New York court has made an order requesting the assistance of the Australian courts, although the New York court has not yet issued a letter of request under s 581(3) of the Corporations Act 2001 (Cth). Thus, the existence of the request for the assistance of the Australian courts suggests that the New York court contemplates that the reach of the order will only extend into Australia to the extent that Australian courts lend their assistance. The assistance is in the process of being requested and considered.
  3. [39]
    Lending support to that view is the fact that no specific order or injunction or request addresses Ms Kranz’s application under s 43 of PIPA.  
  4. [40]
    Importantly, a grant of leave under s 43 of PIPA would merely permit Ms Kranz to start a proceeding which would be immediately stayed. As a matter of substance, such a grant of leave would not impact on the orderly administration of Astora’s bankruptcy in the United States. That is particularly so given that Ms Kranz’s claim is already recognised in the material Astora tendered in Astora’s Australian Federal Court application for the Chapter 11 proceedings to be recognised in Australia.
  5. [41]
    For those reasons, I will make an order giving leave for Ms Kranz to start a proceeding in the court for damages based on a liability for personal injury, despite noncompliance with PIPA, as I am satisfied there is an urgent need to start the proceeding. That proceeding will then be immediately stayed by operation of s 43(3) of PIPA.  

Footnotes

[1]In fact, the products were manufactured by American Medical Systems LLC, but Astora succeeded the assets and liabilities of American Medical Systems LLC.

[2]The notice of claim was served on 20 May 2022.

[3]In Queensland, s 11 of the Limitations of Actions Act 1974 (Qld) stipulates that all personal injuries claims must be commenced in a court within a three-year period beginning on the date the cause of action arises.

[4]Ms Kranz does not fall within the extension that operates by reason of s 59 of PIPA because she did not deliver a compliant notice of claim before the end of the period of limitation applying to the claim. 

[5]The consent was sought on behalf of Mr Kranz and two other claimants who had opted out of the class action.

[6]Martin J recently considered this rule in Mineralogy Pty Ltd v The State of Western Australia [2020] QSC 344

[7]Sections 58 and 60 of the Bankruptcy Act 1966 (C’th) provide those proceedings cannot commence or proceed in respect of debts that are provable in the bankruptcy and non-provable debts are susceptible of being stayed.

[8]See Milbank v Philips Lighting Electrics North America (In re Elcoteq, Inc) 521 BR 189 (Bankr ND Tex 2014); Nakash v Zue (In re Nakash) 190 BR 763 (Bankr SDNY 1996).

[9]Taylor v Dow Corning Australia Pty Ltd [1999] 1 VR 235.

[10]Section 16 of the Cross-Border Insolvency Act 2008 (C’th).

[11]Ms Kranz’s only connection is that her surgeons used a United States manufactured product when they performed surgery on her – in Australia.

Close

Editorial Notes

  • Published Case Name:

    Kranz v Astora Women's Health LLC

  • Shortened Case Name:

    Kranz v Astora Women's Health LLC

  • MNC:

    [2022] QSC 203

  • Court:

    QSC

  • Judge(s):

    Freeburn J

  • Date:

    23 Sep 2022

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Mineralogy Pty Ltd v The State of Western Australia [2020] QSC 344
1 citation
Jump To
Cite 1 - [2020] QSC 344
Taylor v Dow Corning Australia Pty Ltd [1999] 1 VR 235
1 citation
Jump To
Cite 1 - [1999] 1 VR 235

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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