#5176 - Distillers V. Thompson - Conflict of Laws BCL

Distillers v. Thompson

Facts

The appellants are the first defendants, the Distillers Company (Biochemicals) Ltd., who are an English company and not in any sense resident in New South Wales. The plaintiff has proceeded against them by virtue of section 18 of the Act of 1899 in an action against a person not resident within the jurisdiction of the court.

If the defendant does not appear to the writ of summons within the time prescribed, a judge, upon being satisfied:- (a) that there is a cause of action which arose within the jurisdiction or in respect of the breach of a contract made within the jurisdiction: and (b) that service of the writ or notice thereof, as the case may be, was duly effected or that the writ or the notice thereof came to the defendant's knowledge, may, if he thinks fit, by order, permit the plaintiff to proceed to sign final or interlocutory judgment in such manner and subject to such conditions as may be prescribed or as he in all the circumstances may deem fit.

The English company is incorporated in Great Britain where it has its registered office and carries on business. As part of its activities it manufactures pharmaceutical preparations. Some of its preparations contain thalidomide, a substance which the English company obtains in bulk from German manufacturers. The company's products are sold in Australia but not by it. The second-named defendant (called the Australian company) markets and sells the products in Australia.

One of the products manufactured by the English company and distributed in Australia by the Australian company was a sedative and sleep-inducing drug, the principal ingredient of which is thalidomide, this was marketed under the name Distaval. They are sold to the Australian company in the form in which they are to reach the ultimate consumer.

The plaintiff, an infant, sues by her next friend, her father. Her mother says that in August 1961 when she was pregnant with the plaintiff her doctor prescribed for her Distaval and this she took. Her child, the plaintiff, was born on April 10, 1962, without arms and with defective eyesight. It is claimed on her behalf that the drug thalidomide has a harmful effect on the foetus of an unborn child during the first three months of pregnancy and that as a result she was born malformed and with defective vision.

The second-named defendant, the Australian company, is sued as the distributor of the preparation Distaval in New South Wales.

Question

Next to be considered is the question of principle - what is required in order to show, for the purpose of section 18 (4) (a) of the Act of 1899, "that there is a cause of action which arose within the jurisdiction." There seem to be three possible theories: (i) that the "cause of action" must be the whole cause of action, so that every part of it, every ingredient of it, must have occurred within the jurisdiction; (ii) that it is necessary and sufficient that the last ingredient of the cause of action, the event which completes a cause of action and brings it into being, has occurred within the jurisdiction; and (iii) that the act on the part of the defendant which gives the plaintiff his cause of complaint must have occurred within the jurisdiction.

Holding

Citing Jackson v. Spittall (1870) L.R. 5 C.P. 542:

The conclusion was that the phrase “cause of action” in these sections did not mean the whole cause of action but meant the act on the part of the defendant which gives the plaintiff his cause of complaint.

Theory 1: Whole of the cause of action

That rules out no. (i) of the three possible theories set out above - the theory that "cause of action" means the whole cause of action and the courts of a country do not have jurisdiction unless all the ingredients of the cause of action occurred within the country (unless the defendant happens to be present in the country). In any case that theory is too restrictive for the needs of modern times. The defendant has no major grievance if he is sued in the country where most of the ingredients of the cause of action against him took place. In such a case, if the theory no. (i) were accepted, the plaintiff, if lacking time and money for following the defendant to the defendant's country and suing him there, would be deprived of any remedy.

Theory 2: Where the last event occurred

No. (ii) of the three possible theories - viz., that it is necessary and sufficient that the last ingredient of the cause of action, the event which completes it and brings it into being, has occurred within the jurisdiction - seems to their Lordships to be wrong as a theory. The last event might happen in a particular case to be the determining factor on its own merits, by reason of its inherent importance, but not because it is the last event. Decisions under statutes of limitation are not applicable. The question in that context being when did the cause of action accrue so that the plaintiff became able to sue, the answer is that the cause of action accrued when it became complete, as the plaintiff could not sue before then. But when the question is which country's courts should have jurisdiction to try the action, the approach should be different: the search is for the most appropriate court to try the action, and the degree of connection between the cause of action and the country concerned should be the determining factor.

In a negligence case the happening of damage to the plaintiff is a necessary ingredient in the cause of action, and it is the last event completing the cause of action. But the place where it happens may be quite fortuitous and should not by itself be the sole determinant of jurisdiction. The defendant very soon afterwards gives up his business and retires to live in another country or state: the plaintiff's mother after purchasing the packet goes on holiday to any country in the world, say South Africa, and there consumes the Distaval whereby (it is assumed) the damage to the plaintiff is caused: the plaintiff's mother returns to her home in New South Wales. On those facts, if the theory were right, the courts of New South Wales would have no jurisdiction and the courts of South Africa (if there was a South African statute containing provisions similar to section 18 (4) (a) of the Act of 1899) would have jurisdiction to entertain the action, though perhaps in the exercise of their discretion they might decline to entertain it.

Theory 3: Where the wrong was committed

It is manifestly just and...