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High Court of Australia Transcripts |
Last Updated: 4 April 2006
IN THE HIGH COURT OF AUSTRALIA
Office of the
Registry
Sydney No S514 of 2005
B e t w e e n -
CAMPBELLS CASH AND CARRY PTY LIMITED
Appellant
and
FOSTIF PTY LIMITED
Respondent
Office of the Registry
Sydney No S515 of 2005
B e t w e e n -
AUSTRALIAN LIQUOR MARKETERS PTY LIMITED
Appellant
and
DALE LESLIE BERNEY
Respondent
Office of the Registry
Sydney No S516 of 2005
B e t w e e n -
IGA DISTRIBUTION (VIC) PTY LIMITED
Appellant
and
WHELAN & HAWKING PTY LIMITED
Respondent
Office of the Registry
Sydney No S517 of 2005
B e t w e e n -
QUEENSLAND INDEPENDENT WHOLESALERS PTY LTD
Appellant
and
SYDNEY RICHARD VEITCH MURRAY
First Respondent
LINDA MURRAY
Second Respondent
Office of the Registry
Sydney No S518 of 2005
B e t w e e n -
IGA DISTRIBUTION (SA) PTY LIMITED
Appellant
and
PAUL ASHLEY NEINDORF
First Respondent
JO-ANNE GAIL NEINDORF
Second Respondent
Office of the Registry
Sydney No S519 of 2005
B e t w e e n -
COMPOSITE BUYERS PTY LIMITED
Appellant
and
BARRY GEORGE WILLIAMSON
First Respondent
LYN MARGARET WILLIAMSON
Second Respondent
Office of the Registry
Sydney No S520 of 2005
B e t w e e n -
IGA DISTRIBUTION PTY LIMITED
Appellant
and
JOANNE MARGARET GOW
First Respondent
IAN RODGER GOW
Second Respondent
PHILLIPA COMINO
Third Respondent
LYNNETTE MAREE GREEN
Fourth Respondent
PETER LAURENCE GREEN
Fifth Respondent
Office of the Registry
Sydney No S523 of 2005
B e t w e e n -
MOBIL OIL AUSTRALIA PTY LIMITED
Appellant
and
TRENDLEN PTY LIMITED
Respondent
GLEESON CJ
GUMMOW J
KIRBY J
HAYNE
J
HEYDON J
CRENNAN
J
TRANSCRIPT OF PROCEEDINGS
AT CANBERRA ON TUESDAY, 4 APRIL 2006, AT 10.18 AM
Copyright in the High Court of Australia
MR A.J. MYERS, QC: May it please the Court, I appear with MR H.K. INSALL, SC and MS A.E. RYAN in all those appeals for the appellants, except the last-mentioned of them. (instructed by Freehills)
MR J.T. GLEESON, SC: May it please the Court, I appear with MR J.K. KIRK for Mobil in the last-mentioned appeal. (instructed by Black Dawson Waldron)
MR S.J. GAGELER, SC If the Court pleases, I appear with MR M.J. LEEMING for the respondent or respondents in each matter. (instructed by Robert Richards & Associates)
MR H.C. BURMESTER, QC: If it please the Court, I appear with MS R.A. PEPPER for the Attorney-General for the Commonwealth intervening in all matters. (instructed by Australian Government Solicitor)
MR B.W. WALKER, SC: If it please the Court, I appear with my friend, MS M.C. WALKER, for IMF (Australia) Limited, seeking leave to intervene pursuant to a summons in each of the matters apart from the last upon the grounds set out in the affidavit of John Francis Walker, sworn 14 February 2006, and in order to present the written submissions which have been filed and served and by arrangement with Mr Gageler, were the Court so minded, to use some of the time that would have been his to follow him in brief address. (instructed by McMahons National Lawyers)
MS K.P. HAMSCOMBE, SC: May it please the Court, I appear with MR L.W.L. ARMSTRONG and MS K.W. DAWSON in the first six mentioned matters, seeking leave to be heard as amicus curiae for the Australian Consumers Association. Although the summonses in each of those matters sought leave to present both written and oral submissions, we do not press for leave to present oral submissions and, if leave were granted, would rely upon our written submissions. (instructed by Public Interest Advocacy Centre)
GLEESON CJ: Thank you, Ms Hanscombe.
MS HANSCOMBE: If the Court please.
GLEESON CJ: In relation to Mr Walker’s application which, as I understand it, is made on the basis that he has an agreement with Mr Gageler to share the time for oral argument, does anybody oppose that application?
MR MYERS: We oppose the application on the grounds in our written submissions which we do not want to add to, your Honour.
GLEESON CJ: In relation to Ms Hanscombe’s application which is made on the basis that she is content to rely on her written submissions, does anybody oppose that application?
MR MYERS: We oppose the application again on the grounds in our written submissions, your Honour.
GLEESON CJ: Both applications are granted. Yes, Mr Myers.
MR MYERS: Thank you, your Honours.
GLEESON CJ: Mr Myers and Mr Gageler and Mr Gleeson, Justice Callinan is unable to be here today for reasons of health. I will ask a question and you do not need to answer that question now, but you can answer it in due course either during the day or within seven days if you need that time. Do the parties agree to Justice Callinan participating in the decision in this case upon the basis of a reading of the written materials and a transcript of the oral argument?
MR MYERS: I had better get instructions, your Honours. Thank you, your Honours. The primary submission put on behalf of the appellants for whom I appear is that the continuation of the proceedings as a representative action is an abuse of the process of the Court and contrary to public interest. We say in short that the judge at first instance was correct in the orders that he made. Before developing that submission, may I refer your Honours to some parts of the appeal books, first of all, volume 3 of the appeal book, if I could ask your Honours to take it up, at page 824.
KIRBY J: Are we really going to need all of these appeal books? It does seem as though some more economical use of paper might have been attempted.
MR MYERS: I would not say a word against your Honour’s observations and there are about half a dozen documents that I would like to direct attention to in two of the volumes.
KIRBY J: Quite.
MR MYERS: Your Honours at page 824 and following pages, there are set out the mail-outs, as they are called, from Firmstone & Feil to encourage persons to join in the project, as it was called, for the refund of tobacco licence fees. There is a variety of forms that the documents take and some of them, as time marched on, became somewhat extravagant in their claims or promises. If I could ask your Honours to go to page 857, for example.
KIRBY J: There is no challenge to Roxborough, nor any attempt to reopen Roxborough in the written submissions?
MR MYERS: No, there is not.
KIRBY J: Everyone accepts Roxborough?
MR MYERS: Indeed. For example, at
page 857 we have a document apparently received on 15 September 2002.
It is headed “TOBACCO LICENCE
FEE REFUND PROJECT”:
You should be aware that you should be entitled to a substantial refund –
do certain things early –
Don’t miss out. RECOVERY ACTION has commenced but it’s still not too late for you.
GUMMOW J: Does your client deny
these entitlements?
MR MYERS: Yes, we do, in respect of the claimant; that is, the plaintiff. There is no evidence yet as to the invoices and whether the amount of the tax was a separate and identifiable amount, and there is no evidence about any of the transactions that may have occurred which would have involved a giving up of that right. We simply do not know at the moment, your Honour. We accept the decision in Roxborough though, but I apprehend that that was not what your Honour - - -
GUMMOW J: Roxborough did not allow, though it was urged that it should - and we followed Mason’s Case - for so-called passing on defence.
MR MYERS: No, we are not - - -
GUMMOW J: All I am saying is this whole complexity of litigation is a sequel to that.
MR MYERS: Yes, it is, but whether the facts fit within - - -
GUMMOW J: It is odd that there cannot be some commercial resolution of these sorts of disputes, really.
MR MYERS: Well, when your Honour begins
to speak about commercial resolution of the disputes that is pertinent. It is a
matter to which I will
come. Quite apart from questions of legal rights there
is no doubt that some of those who paid the tax in the relevant period to
my
clients do not want to proceed with representative or any actions. By way of
distraction from what I am saying could I ask your
Honours to go to
page 813, since we are more or less in the vicinity. This is a letter from
Ritchies dated 4 June 2003. Indeed,
it is the only evidence about
whether people want to join in legal proceedings:
Dear Adrian,
After further discussion with my fellow Directors, I am writing to inform you that we have decided against pursuing Metcash for potential cigarette monies.
On balance, we believe it very important to have a strong and healthy relationship with Metcash, particularly in our expansionary mode, as we do rely on their support from time to time.
KIRBY J: That is their decision. That can be given weight, but what is the relevance of it? Others have decided they do want to opt in.
MR MYERS: There is no evidence that anyone has decided he wishes to opt in.
KIRBY J: Could one not infer that there will be some who will and there will be some who will not?
MR MYERS: There may be some who will wish to opt in but at the moment - - -
GUMMOW J: Otherwise you would not be here, surely?
MR MYERS: It may be. One expects so.
KIRBY J: We are very realistic here.
MR MYERS: But nonetheless, at the moment, we have one plaintiff. One plaintiff. May I go back to just taking your Honours to a few of these pages.
HAYNE J: Let us avoid reality, come to the pages.
KIRBY J: I have never before seen you disconcerted.
MR MYERS: Reality
should not come too early in anything, your Honour. One should have an
opportunity to mature. May I go to pages 994 and
995. This is the letter
of authority signed by Fostif and it is in these terms:
I hereby authorize Firmstone & Feil to act on behalf of FOSTIF . . . (“the Business”) in all dealings with all parties, including tobacco suppliers, in relation to all tobacco licence fee and related matters.
I also authorize Firmstone & Feil to receive on behalf of the Business all monies in respect of tobacco licence fees and interest in relation thereto.
It is signed. It was attached to the document that is the
left-hand side and it is also signed and it refers to the “success
fee”:
In the event that legal costs are awarded in any court proceedings, we will retain this amount . . .
What you will need to do
1. Please retain all invoices from all of the tobacco suppliers to your business . . . While we don’t think we’ll need them, you should keep them just in case.
The reference to “While we don’t think you will need
them, you should keep them just in case” we understand to be
based on a
belief that it probably will not be necessary to institute legal proceedings in
which they will need to be referred to.
There is an affidavit at
page 1026, the affidavit of Michael James Proud, and at
page 1036, if I could ask your Honours to go to
that, Mr Proud
recounts the conversation with Mr George of Fostif and we saw
Mr George’s signature:
Sometime in May or June 2003, I telephoned Brian George. We had a conversation in words substantially to the following effect:
I said: “I am from Firmstone & Feil and I am ringing in
relation to the recovery of tobacco licence fees. I believe you would have had a discussion recently with either Peter Gibson or Ian Ferguson of Horwaths GST about court action we are intending to take against Campbells Cash and Carry on behalf of our clients.”
Brian George said: “That’s right.
I said: “Ok. What we are intending to do is to
commence on behalf of our clients who purchased from Campbells Cash and Carry a representative case to sue them for the tobacco licence fee that they paid. Under the proceedings that are planned all of our clients will be plaintiffs but they will represent the other clients. To begin with one of the retailers has to start the process by being the representative party on the summons. Eventually all of our clients will be named as parties to the summons, but someone has to go first. Are you prepared to be the lead plaintiff?”
KIRBY J: Do you agree that the fact that it is an opt-in representative action takes a lot of the sting of your public policy objection out of the case on the basis that any settlement that was anticipated by the letter you took us to earlier could only affect those who had opted in by that time?
MR MYERS: Your Honour, we say really to the contrary. The fact that it is an opt-in proceeding is one of the evils of this proceeding.
KIRBY J: I took submissions to be putting to us that one of the biggest evils is that the solicitor is seeking to settle the case for quite a considerable sum and that that will affect a lot of people, but it will only affect those who decided to opt in.
MR MYERS: Well, as it is proposed that the - - -
KIRBY J: If it was an opt-out system it would be different.
MR MYERS: As it is proposed that the proceedings will be constituted, it is an opt-in proceeding. It must be said that the decision whether it is to go forward as an opt-in proceeding has not been made.
KIRBY J: We can only deal with it as it is presented to us and the inferences from what is presented.
MR MYERS: Quite so, your Honour, but your Honour said it is an opt-in proceeding. In fact, what is proposed is that it is an opt-in proceeding and we will be putting to your Honours that that is one of the evils of the matter. Certainly, because of the nature of the claim, the proceedings can only go forward, as your Honours will see from the summons, as proceedings in which the amount of each claim is separately proved so that if a party did not turn up with its invoice, for example, it could never be proved that it was a person that fell within the Roxborough principle.
KIRBY J: But the evil of the settlement of claims that other people might have – the statute of limitations would appear to present a problem – is removed if the only people who would be affected by a settlement would be those who have opted in. One would then infer that the solicitor would inform those who have settled of their share of whatever is settled.
MR MYERS: That is so. If it continues as an opt-in proceeding, then it is only those who - - -
KIRBY J: Maybe you will come to it.
MR MYERS: - - - opt in who will be able to take the benefit of it but, in fact, because of the nature of the proceeding, it is only those who prove their invoice who will be able to take the benefit of the proceeding in any event. Although this is in one way constructed as a representative proceeding, it is really a whole lot of separate actions. The Roxborough principle is not in issue and really this proceeding is just about lots of people proving that they fall within the Roxborough principle individually.
KIRBY J: I may be wrong, but I would infer that the solicitor would be bound, perhaps under a fiduciary obligation, to inform all of those who had by the time of the settlement opted in and tell them what they will get out of the kitty.
MR MYERS: Yes, your Honour.
KIRBY J: What is wrong with that?
MR MYERS: There are a lot of things wrong with it because it is constituted as a project in which the court is an active part to make money for Firmstone.
KIRBY J: So what? These are the legal rights of the clients and they would not get their legal rights unless organised.
MR MYERS: Your Honour, with respect, there is no evidence that they would not get their legal rights.
KIRBY J: Yes, but we do not leave our common sense outside the door.
MR MYERS: Your Honour, I am not suggesting that that should be so; to the contrary. Every one of these claims as a claim under the Roxborough principle will have to be proved by producing the invoice and showing the terms of the contract.
HAYNE J: There are many methods of proof, Mr Myers: discovery, notices to admit, all manner of procedures directed to methods of proof. Why does the matter of proof matter a jot for the principle that you advance?
MR MYERS: The method of proof matters because in truth, your Honour, each of these is a separate and distinct claim which has to be separately proved, by whatever method it is proved. Now, just taking your Honour’s question to me about leaving common sense at the door – I hope no one has left common sense at the door. If someone was a retailer who had a claim of $4,000 and took their invoices along to the Local Court, they could quickly and cheaply and efficiently assert their claim. In our respectful submission, there is no doubt about that if they wanted to. This is a very simple claim.
The principle of law upon which they rely is clearly established and all they have to do is show an identifiable and separate amount, for example, through the invoice, and there would be nothing to stop any of those persons doing that and confronted, if it happened, with hundreds or even thousands of claims, one might expect, as perhaps your Honour Justice Hayne is suggesting, that those on the other side would quickly find a better way to resolve the matter.
KIRBY J: I will not take you further off your track, but that seems to be just a direct attack on any form of representative proceeding. It may be the constitutional question will just have to be confronted, but we have a society of mass production of products, mass production of problems, and representative proceedings we know are the way that you get the law applied for people whose claims are of such a size that it is just not worth their while to go in individual claims. It is an aspect of the mass-produced society.
MR MYERS: We are not attacking all representative proceedings. We are not attacking all - - -
KIRBY J: It sounds like it.
MR MYERS: Well, your Honour, we are not. We are not attacking all litigation funding, but we are attacking the use of representative proceedings in this sort of litigation funding which makes the court and the court’s processes but an instrument in a larger commercial activity involving, as it does, the stirring up of litigation which has not otherwise been commenced and we would add it is something that is likely to bring the legal processes and the courts into disrepute.
KIRBY J: How could it ever be in disrepute to bring people to courts of law for justice according to law?
MR MYERS: Because the court is being used in these proceedings as an instrument in what is primarily a profit-making activity on behalf of the litigation funder.
GUMMOW J: Do you say this answers the requirements for the tort of abuse of process?
MR MYERS: Yes, your Honour.
GUMMOW J: For the tort of abuse of process?
MR MYERS: We are not putting that today but if - - -
GUMMOW J: I know, it is a ghost that runs across these submissions. Is this a Grainger v Hill case? This use of emotive language that runs through the submissions seemed to suggest to me that what was being mounted was some sort of tort case.
MR MYERS: No, it is not a tort case, your Honour.
GUMMOW J: A conscious misuse of the court’s processes.
MR MYERS: We are putting to your Honours that there is a misuse of the court’s processes here and in due course I will - - -
GUMMOW J: A conscious misuse of the court’s processes. That is what the tort is about.
MR MYERS: A conscious misuse, yes, your Honour.
GUMMOW J: All right.
MR MYERS:
May I take your Honours to appeal book 1 at page 251. This is
the summons by which the proceeding was commenced. On page 252
it is
said:
The plaintiff claims:
1. Judgment against the defendant in favour of the plaintiff together with interest pursuant to section 94 of the Supreme Court Act –
That is a very unusual way and an efficient of
putting the claim. On page 254 the nature of the dispute is set
out:
The plaintiff claims the relief set out in this Summons on behalf of themselves and the class of unnamed persons referred to in paragraph 2 of the plaintiff’s contentions below whom the plaintiff represents in the proceedings pursuant to the Supreme Court Rules 1970, Part 8, rule 13.
I will go to that part of the contentions in a
moment, but while on that page may I ask your Honours to note what is said
about “opt-in”:
By reason of the “opt-in” procedures referred to below, at the time of judgment there will be no unnamed person in respect of whom judgment is sought. Once a member of the class of represented retailers has signed and returned an “opt-in” notice to the plaintiff’s solicitor that person will become a named plaintiff in the proceedings entitled to judgment in his, her or its favour.
May I pause there. The promise that
was made, or the statement that was made, at least, to Mr George by
Mr Proud, recounted in the
affidavit, was that all clients would be named
persons, not that it would be necessary to opt in. Presumably, that statement
is
not being given effect to because it was unclear that the commercial scheme
involving a right to one-third of the proceeds plus the
costs would be achieved
without a formal so-called opt-in notice.
The plaintiff proposes to give the unnamed members of the class whom the plaintiff represents an opportunity to decide whether they wish to be involved in the proceedings by the sending of an “opt-in” notice to these persons. The members of the class will be required to sign and return the “opt-in” notice to the solicitors for the plaintiff in order for those persons to become involved as a plaintiff in the proceedings.
Now, this is only a proposal at the moment and that statement
contradicts the first sentence of the first paragraph where it is said
that the
action is brought “on behalf of themselves and the class of unnamed
persons referred to in paragraph 2”. Paragraph
2, which is on
page 257, says that:
The plaintiff who is the person listed in Schedule 1 to this Summons brings these proceedings on behalf of themselves and all other persons (the “represented retailers”) who:
(a) during the whole or some part of the Relevant Period:
(i) were retailers of tobacco products . . .
(ii) purchased tobacco products sold to them by the defendant;
(iii) paid to the defendant the amount of the licence fee referable to the sales in (ii) as separately identifiable and severable parts of the consideration payable in respect of each sale;
(b) have not recovered from the defendant an amount or amounts referable to the licence fees –
et cetera. So the class are those who fit within the terms of the decision in Roxborough. So this is a proceeding on behalf of the plaintiff and everyone who was within the Roxborough principle. Thus, the only issue in these representative proceedings, so-called, is whether each of those persons in fact satisfies the criteria set out in 2, and probably that amounts to the payment to the defendant of an amount of a “licence fee referable to sales . . . separately identifiable and severable”. So that the issue in the proceedings in respect of each of the represented persons is simply whether – I am putting it colloquially – they can produce an invoice that shows that there are “separately identifiable and severable parts of the consideration”.
If I could invite your Honours to go to
page 270, at the bottom of the page:
Relief
19. The plaintiffs are entitled to be paid the amounts referred to in paragraph 15 above.
Paragraph 15 above:
the total amount of the licence fee identified or included in the invoices to the plaintiffs.
Plus interest.
HAYNE J: Now, is the point you make some point of procedure, pleading or form, or is there a point of substance that is being made when you take us through these parts of the summons?
MR MYERS: Your Honour, I am going to develop it but there are two points basically. The first relates to the general question of whether there is an abuse and the second relates to whether these proceedings fall within the part of the Rules of Court for representative proceedings in any event. Your Honour, the opt-in procedures are set out - - -
KIRBY J: I read the special leave transcript and that did not loom large. It appeared on the special leave transcript that the matter which the appellants were bringing was the matter of general principle.
MR MYERS: But it is one of the grounds on which special leave was - - -
KIRBY J: I mean, we would not normally give a pleading point leave to be considered by us.
MR MYERS: It is not a pleading point, your Honour, and it is part of the grounds upon which special leave was granted.
KIRBY J: But there are potentially so many grounds - - -
MR MYERS: It is, I think, the fourth paragraph of those grounds.
KIRBY J: It does concern me. There are lots of little grounds, such as the limitation point. I mean, the constitutional point is a big ground and I concede that there is a big ground in the representative action, but there are lots of little points here that would not normally engage our attention.
MR MYERS: Your Honour, in my respectful submission, it is not a little point. It goes to the whole nature of this proceeding.
KIRBY J: Take the limitation point. Would that not be something which would normally be sorted out by others on a case-by-case basis if there is a problem with people opting in?
MR MYERS: We do not intend to pursue the limitation point in this appeal. It is a matter that has not been dealt with by the court below yet. I do not want to damage the submissions that anyone else is about to make, but we do not pursue this point in this appeal. We do appeal the - - -
HAYNE J: You do it caringly. You fail to pursue it caringly.
KIRBY J: Everything is there, everything, and every page of the transcript.
MR MYERS: Your Honour, I hope not. I genuinely believe that I would be an hour on my feet and I still think I can achieve that, but I do want to take your Honours to a few of the documents that are crucial to the submissions that I want to make. Now, the proposed opt-in notice is at pages 145 to 148 of the book. There is a letter addressed “Dear Tobacco Retailer” at pages 145 and 146. I will not read it to your Honours, but it is a selling letter and it says what are the advantages that you are going to get if you join us and opt in and you will not have to pay any costs and so on and - - -
KIRBY J: I see they say, “We have the High Court on our side”. The smokers do not.
MR MYERS: “We have the High Court on our side.” It may be that they were correct in that, your Honour. At page 147 there is the so-called “OPT-IN NOTICE AUTHORITY and AGREEMENT”:
1. consent to the representative proceedings no’s [to be completed] together with any appeal or further appeal . . . being continued on his/her/their/its behalf –
The words that next follow were struck out at some stage in the proceedings. They were, I am assured, your Honours, that the opt-in notice is not intended to proceed with those words there.
GUMMOW J: Which words?
MR MYERS: The words “and to being named
as a plaintiff in the representative proceedings”. That, presumably, is
because of the
way the first paragraph of the representative proceedings are set
out.
2. authorise Firmstones Pty Ltd trading as Firmstone & Feil (“Firmstone & Feil”) to act on my/our/its behalf in relation to:
(i) the conduct of and the giving of instructions in the representative proceedings;
(ii) entering into settlement agreement(s) with the defendant(s) (provided the amount is not less that 75% of the principal amount claimed from the defendant(s));
(iii) to receive on my behalf all monies . . .
(iv) to pay the said monies and any costs awarded to plaintiffs into a trust account and to deduct therefrom the fees and costs referred to in 4(c) and (d).
3. undertake . . . to execute Deeds of Settlement . . .
4. agree to the terms and conditions set out below:
(a) Firmstone & Feil will pay all
costs . . .
(b) Firmstone & Feil will meet all costs orders made against the
plaintiffs . . .
(c) Firmstone & Feil will receive 33⅓% of any amounts
recovered . . .
(d) Firmstone & Feil will retain any amounts awarded to the plaintiffs (including the represented retailers) in the representative proceedings as costs.
Now, there was a notice of motion to which I wish also to refer
your Honours, which is at page 275 of the appeal book. It is the
same
appeal book. It is paragraph 2 in particular that I refer to. This seeks
an order for discovery in the terms of Schedule A
and Schedule A is an
order that the defendant, amongst other things:
discover all documents in its possession which:
(a) disclose or record the names and addresses of the represented retailers to whom the defendant sold tobacco products during the Relevant Period;
Your Honours, may I put what we
say are the characteristics that make this representative proceeding an abuse of
the process of the
court. First of all, there is solicitation of litigants.
Secondly, the person promoting the litigation has no prior connection
with the
litigants, the claimants, nor with the subject matter of the litigation.
Thirdly - - -
KIRBY J: You are going to deal with these individually later, are you, because I can see a connection?
MR MYERS: I was not going to. I was going to suggest that the - - -
KIRBY J: How can you say there is no connection with the subject matter of the litigation? If they opt in and if they have no limitation or constitution or other problem they get money. They get it out of you. They have got it unconstitutionally.
MR MYERS: Your Honour, I am saying that Firmstones have no – I am not saying that the tobacco retailers do not have a connection with the subject matter of the litigation but Firmstones – the persons whom I hope to demonstrate and I hope I have demonstrated – are promoting and controlling the litigation.
KIRBY J: They are solicitors for a client who is setting up an opt-in system. Their client is the one who has become the named plaintiff.
MR MYERS: They are not solicitors, your Honour. They are not solicitors. Firmstones are not solicitors. Firmstones are a commercial organisation set up to make profit out of promoting litigation. They are not solicitors and this is - - -
KIRBY J: That removes one of the problems I had in my mind.
MR MYERS: This is one of the – I was just about - - -
KIRBY J: They are a generous spirited company who are trying to bring people to justice.
MR MYERS: I was just about to point out to your Honours that Firmstones are not solicitors, they are not legal practitioners, but they are conducting a business and the litigation is but a part of a business operation which they are conducting with a view of profit.
KIRBY J: I interrupted you. You were up to the third.
MR MYERS: Yes, I was and that is it, I have just put it to your Honours. Fourth, we say that the manner of the conduct of the litigation, or how it is constituted, means that it is firmly under the control of Firmstones.
KIRBY J: Is that quite correct? Once they get into a court it is under the control of the court.
MR MYERS: Can I come to that in a moment because I do want to say something about how well equipped courts are to control people like Firmstone. They can control their officers, that we readily acknowledge, and their officers owe ethical duties to the client and to the court but not so with persons who are conducting independent business enterprises of which the litigation is but part. We do say that the litigation is firmly under the control of Firmstone.
First of all, it is a representative action set up with an opt-in procedure so it means only those who agree to Firmstone’s terms, including fees, may benefit from the litigation and that is notwithstanding that it is said to be commenced on behalf of all persons within that class identified in the summons by reference to paragraph 2 of the contentions.
The Court might note that, for example, the Federal Court Act which deals with representative proceedings, and this is in the written submissions, and the Supreme Court Act (Vic) which deals with representative proceedings do not have an opt-in possibility. It is opt-out. Next, we point out that Firmstones did not do what they said they would do.
GUMMOW J: Is this the fifth point, Mr Myers?
MR MYERS: No, no, I am just making some observations under the manner of the conduct of the litigation, the control aspect.
GUMMOW J: This is under the fourth point.
MR MYERS: I beg your Honour’s pardon, I was not clear. I am sorry about that. We draw attention again to the circumstance that although Mr Proud telephoned on behalf of Firmstones to get Mr George to have Fostif be the plaintiff and said that the litigation would be commenced on behalf of all clients, it was not, and we say that the proper inference in the circumstances is that it was not so commenced because the notices that had been sent back by Fostif and others did not clearly enough bind them to Firmstones’s terms in relation to litigation. Indeed, it may be doubtful whether that notice to represent us generally does authorise the conduct of litigation on behalf of the parties in any event.
Next we point out, as is the fact, that the solicitor involved in these proceedings was engaged by Firmstones with the limited role that was pointed out by the judge at first instance. Mr Richards’ engagement was said to be on the same terms as he had been engaged in the past and there is in evidence at pages 70 to 77 a couple of letters where he had been engaged in the past by Firmstones.
KIRBY J: Is this any different from the solicitors who are “engaged” by the labour councils around the country to represent members of trade unions and bring proceedings on their behalf once the client has been passed into the hands of the solicitors? What is the difference?
MR MYERS: Well, in this case - - -
KIRBY J: This Court has said that is acceptable.
MR MYERS: It is not expected that there will be contact between Mr Richards and those who are represented. Mr Richards is engaged by Firmstones and he is answerable to them.
KIRBY J: Yes, but he would have to have contact with them if they are named in a schedule to proceedings brought on their behalf.
MR MYERS: Well, with respect, your Honour, he should have, but must have is, we say, a different proposition.
KIRBY J: Why would we not assume that an enrolled solicitor would act in a proper, lawful and fiduciary way in respect of people whose rights and interests are affected by litigation where he is proceeding with them as opt-in participants in a litigation before the court?
MR MYERS: Well, because he is engaged by Firmstones and he is answerable - - -
KIRBY J: But that cannot relieve him of his duties as a legal practitioner.
MR MYERS: But he is
answerable primarily to them. If I could take your Honour to page 76,
for example – and this is in relation to
another matter but the evidence
is that this is the way Mr Richards was engaged. It is at the top of the
page:
You have asked me to assume responsibility for the carriage of these matters.
I have agreed to assume responsibility for these matters and have filed Notices of Change of Solicitor with the Federal Court –
It is
another matter:
Whilst you are acting for your client you have engaged me as principal and not as agent for your clients.
Responsibilities
My responsibilities in respect of the matter include (but may not be limited to):
(1) overall supervision of each matter;
(2) attendance to the preparation of documents . . .
(3) liaison with counsel;
(4) appearance . . .
I understand that you and your staff will provide assistance to me in respect of the matters.
In particular –
• you will be responsible for the day to day carriage of the matters. However you make copies of all documents (in respect of the matters) between yourself and your clients available to me. You will inform me of all material oral communications between yourself and your clients.
• you will liaise with your clients. I will not directly liaise with your clients.
• you will provide sufficient staff to support any court hearings . . .
Notification to clients
I understand that you have notified your clients as to my involvement in the matter and they have agreed to me representing them.
Well,
your Honour, that is not a normal
satisfactory - - -
KIRBY J: “Agreed to me representing them”.
MR MYERS: Yes, your Honour.
KIRBY J: He can have understandings, but if he is representing them, he has to act as an officer of the court does to a – it is a fair point that you make. It is a fair point that it is a very different arrangement to the arrangement of the labour councils with their clients. It is a very different arrangement.
MR MYERS: Yes, “I will not directly liaise with your clients” – “with your clients”.
KIRBY J: But he does go on to say “they have agreed to me representing them”, so there is a little bit for everyone in that.
MR MYERS: Yes, they have agreed through Mr Firmstsone by signing that little letter and sending it back. Generally in connection with the way in which the proceedings are established, we say this, that the proceedings are firmly under the control of Firmstone, and it means really that it is Firmstone’s purpose in the conduct of this litigation which is pertinent to determining whether it is an abuse or not, rather than the client’s. We point out as - - -
KIRBY J: On the other hand if you - - -
GUMMOW J: On the other fifth point.
MR MYERS: This is the sixth. I am leaving five, your Honour.
GUMMOW J: What was five?
MR MYERS: I am sorry, I am getting on to five.
GUMMOW J: Yes, that is what I thought.
MR MYERS: I have numbered my points that - I have missed point two.
GUMMOW J: The fifth point is that it is Firmstone’s purposes to which we look - - -
MR MYERS: Yes, it is, your Honour.
GUMMOW J: - - - in considering abuse.
MR MYERS: Finally, the use of the court processes of discovery to identify potential plaintiffs means that the court is being used, or its processes are being used, to facilitate this profit-making scheme.
KIRBY J: Well, unlike the large corporations who have the appellants here, what is so wrong with a profit-making scheme if it brings people to – take for example the Voyager Cases. If only there had been someone at that time who organised the plaintiffs and brought proceedings on them, a great deal of pain and a great deal of loss and a huge amount of litigation, including Limitation Act litigation, might have been avoided, and a lot of justice would have been done.
MR MYERS: That is true, your Honour, justice according to law.
KIRBY J: Yes, but you have a kitty, it is a kitty that should not have come to you and under the Constitution you should not have had it and now people are trying to get it from you who paid it.
MR MYERS: Your Honour, with respect, Mr Firmstone is trying to get it from us. No single person with whom we deal attempted to get it from us, no single one, and the only evidence that we have is in relation to Ritchies, which I understand to be quite a considerable enterprise where the amounts involved are probably very large, and they say, “We do not want litigation. We prefer a good commercial relationship.”
KIRBY J: Fine, that is their choice, but others by inference and potentially a considerable number of them do not make that choice. They want their money.
MR MYERS: But they did make that choice - - -
KIRBY J: They paid their money under a constitutional error. They want it back.
MR MYERS: With respect, your Honour, they did make that choice. They did not commence proceedings.
KIRBY J: They want to.
MR MYERS: We do not know, but undoubtedly some will when they get a document which says, “If you send a note to us you will likely get a cheque in the mail for something in a few months time and you will not be liable for any costs”. In the meantime, the court proceedings merely become part of an overall profit-making scheme for Mr Firmstone, and the court’s procedures are manipulated to that end.
HAYNE J: If that proposition is good that the fact of control by Firmstone plus the opportunity for profit how does that sit with assignments of debt, assignments of debt where perhaps the debt is discounted, discounted heavily?
MR MYERS: Your Honour, assignments of debt are undoubtedly possible and one of the things that is said in this case by the learned President of the Court of Appeal below was, well, Firmstone could have acquired these debts. Yes, they could have acquired these debts but they would have had to outlay 75 per cent or whatever was the price for the discount. Instead, they do not. They use the court’s processes and the court is asked to facilitate their commercial enterprise through its processes, and they do it without outlaying any money.
HAYNE J: Is it the presence of commercial motive about which the case hinges or is it the fact of control by Firmstone?
MR MYERS: Your Honour, I do not want to put the submission that there is a single criterion. However, the fact of control by Firmstone and the commercial enterprise and the use of the court’s procedures to facilitate that commercial enterprise, and the fact that none of the claimants had undertaken to commence proceedings, I think they are the most crucial features of it - I will come to another point in a moment. I am getting too excited, your Honour. Your Honour Justice Kirby has aroused my passions.
KIRBY J: I will try to do better.
MR MYERS: The next matter that we simply wish to advert to is this, that it is said – and really, this is the nub of the Court of Appeal’s decision – that this is not an abuse of process because it enables persons without funds to vindicate their legal rights. In this case, there is no evidence that any person either was without funds or could not vindicate their legal rights. The only evidence is that they chose not to, and we have a letter from one substantial person who said that they wanted to maintain a commercial relationship.
KIRBY J: That just seems an unrealistic submission because of the fact that it is a question of marginal cost. The marginal cost of bringing a proceeding for an individual’s entitlement under Roxborough makes it unworth the while to bring the proceedings but if the marginal costs are in proportion then the group will bring it and the individual will recover.
MR MYERS: We do not know what individual persons could recover. Ritchies may have had hundreds of thousands of dollars. What we do know is that there is an average $4,000, but everything is concealed within an average. I mean, an average in this sense does not mean anything really. There may be persons who did have claims of $500, but is it so important that everyone who has a claim of $500 should be able to vindicate that claim in the courts.
KIRBY J: Is that not equality before the law?
MR MYERS: There is equality before the law but it does not mean that every small action should be fought to the High Court. The multiplication of litigation is not a good thing, your Honour.
KIRBY J: I can understand how you would say the multiplication into a big litigation is not a good thing because that puts a little bit of pressure on you.
MR MYERS: Your Honour, this is the one last thing I wanted to say about this. The fact is that 95 per cent of the potential claimants against my clients are still customers of Metcash and they have not brought proceedings. they did not bring proceedings - 95 per cent, 19 out of 20.
KIRBY J: Access to justice is one of the biggest problems in the common law system because of its adversarial character. If you have an inquisitorial system then it can be done much more cheaply, but in our system it is expensive and that is why the move in the United States, by the way, began for representative proceedings.
MR MYERS: Again, your Honour, justice, say in the Napoleonic countries that have the Napoleonic system, it is drawing a very long bow to say that justice there is cheap. Inquisitorial proceedings go on forever at enormous cost to - - -
KIRBY J: That is true but most inquisitorial lawyers I have spoken to think ours is a Rolls Royce system. They may have a slow Volkswagen but it at least gets there, but - - -
MR MYERS: Rolls Royces are very good cars.
KIRBY J: Yes, I know, but only for the very rich, the very few, or the publicly supported and we all know that, particularly since Dietrich public funds for civil litigation are very small.
MR MYERS: We also say - and this is a separate contention that I advance and I advance it concisely, I hope – that the use of the representative proceedings in the way in which they are used here is against public policy and for several reasons. First, the legal system, the courts and the representative proceedings and the mechanism for discovery, are being used as a means of profit making by a person having no interest in the subject matter of the litigation. We do assert that this will reduce public confidence in the legal system and ultimately bring it into disrepute.
KIRBY J: But does it not bring the legal system into disrepute that there are many people who have relatively small claims who cannot pursue their claims, in practice?
MR MYERS: No, with respect, your Honour.
KIRBY J: They have a theoretical right, individually, but in practice the marginal cost is greater than the marginal utility.
MR MYERS: But that is, if I may say, a fact of life. There is no interest that the community has in the litigation of every small claim.
KIRBY J: Yes, but this is an attempt to change the facts of life, get more people to justice and to organise them to reduce the public cost of courts by bringing them in one action instead of a multitude of actions.
MR MYERS: Your Honours, we say, secondly, that the courts exist to quell or determine disputes, not to lead to the multiplication of them and in this case the court procedures are being used to create an extensive dispute, or really many disputes, because what is going to happen, must happen, is that the circumstances of each person’s small claim, or large claim, will need to be looked at separately.
The third thing that we say is that this litigation is being maintained and supported by someone who is not subject to the ethical and fiduciary requirements that legal practitioners are and is not subject to the same level of control. Mr Firmstone is not a lawyer, he is not acting as a lawyer, he is not directly subject to the court’s control in the way in which its officers are and, indeed, it would be illegal for a legal practitioner to do what he has done, advertising, as he has, and soliciting litigation. It is sometimes put - - -
KIRBY J: Illegal in Victoria?
MR MYERS: Yes, your Honour, and certainly in New South Wales as well.
KIRBY J: New South Wales has some regulations which we looked at recently in the APLA litigation.
MR MYERS: Yes.
KIRBY J: But what would make it illegal for a legal practitioner in Victoria?
MR MYERS: I cannot answer that question, your Honour, but I do believe it is illegal. I could try and supply the answer. Certainly it is in New South Wales.
KIRBY J: Under the APLA decision it would be illegal in New South Wales to write a letter of this kind.
MR MYERS: Yes, and that is - - -
GLEESON CJ: The APLA decision was concerned with regulations concerning claims for damages for personal injuries.
MR MYERS: And this is not.
GLEESON CJ: No.
KIRBY J: What would render it unlawful in New South Wales and Victoria?
HEYDON J: Is not to charge 33⅓ per cent of that $45 million in recovery - - -
MR MYERS: That is illegal.
HEYDON J: - - - something which would lead to being struck off as soon as the - - -
MR MYERS: Well, it is certainly illegal in Victoria.
KIRBY J: Victoria has legislation abolishing champerty and maintenance?
MR MYERS: Yes, it does, in the same terms as the New South Wales legislation.
KIRBY J: Perhaps you might find at some stage - - -
MR MYERS: I will, and there is a schedule somewhere, which I will ask others to find, which neatly sets out what the position in relation to these sorts of things is in every State.
GLEESON CJ: A solicitor in New South Wales would be subject to a maximum uplift of 25 per cent.
MR MYERS: That is what it is in Victoria too, your Honour. I cannot say what provision of what Act does that. It is a maximum uplift of 25 per cent. I want to bring to your Honours’ attention one authority which was not on our list which has been provided to the Court, and I understand to my learned friends. It is a judgment of Chief Justice Posner in the Rhone-Poulenc matter. The facts are different. It is a decision of the United States Court of Appeal’s Seventh Circuit. What his Honour does in the course of dealing with this matter is to point out that in relation to representative proceedings like this – at page 1297 in column B he begins in the last paragraph and then he continues over the next page and completes this matter at page 1299.
What he says is this, these sorts of proceedings involve such a risk for the defendant that the defendant is forced to capitulate and to settle for something rather than run the risk of a judgment that would financially destroy the defendant, even when the defendant is a very large corporation, and that there is a risk in enabling representative proceedings to be supported in this way that they will be used for what he calls blackmail.
GUMMOW J: Now, this is one view in the United States but there are others. Chief Justice Posner tends to be a focus of one particular attitude to this. There are a whole lot of cases dealing with asbestos litigation, are there not, class actions in that?
MR MYERS: Yes, there are, your Honour.
GUMMOW J: We would need to have the other side of the picture in the United States, I think. The other side of the picture in the United States goes back to the progressive movement which said that this sort of procedure is a trade off for the populace against the very great power of large corporations in the United States system and that this “empowers” little people. This is a very real idea in the United States. That, along with jury trials, is one of the things that is a balance.
MR MYERS: This is an identifiable risk of these sort of proceedings and a judge with the eminence of Chief Justice Posner puts it - - -
GUMMOW J: He is both eminent and controversial. That is all I am putting to you.
HAYNE J: I suspect if you go and look at writings of Judge Weinstein in Eastern District New York you will find the opposite view expressed and I rather expect it will have gone up to the Second Circuit on appeal. You will find in Second Circuit decisions, I suspect, a contrary view.
MR MYERS: A different view, your Honour. What I am pointing out to this Court is the risk of these sorts of proceedings being used for what Chief Justice Posner calls blackmail, the risk of proceedings being commenced potentially on behalf of a very large number of people, regardless of merit, the defendant is unable to take the risk of prosecuting the proceeding to judgment. It is in a different context, this case. It is in a different context, but in considering the public policy that is involved in these matters we respectfully urge the Court to take into account that matter.
May I
then deal with very briefly with the question whether in any event this is a
proceeding properly constituted as a representative
proceeding within the New
South Wales Rules. This is dealt with by the judge at first instance. If I
could just give your Honours
this reference, without going to it, in appeal
book 4 at page 1238 to 1239? In order for there to be a properly
constituted representative
proceeding, the parties represented must have the
same interests, and we refer, in determining what is the proper test for the
same
interest, to what Justice Brennan said in the Carnie Case at
page 408 – it is the passage that seems most commonly to be
cited:
the plaintiff and the members of the represented class have a community of interest in the determination of some substantial issue of law or fact.
Now, here there is not that.
GUMMOW J: Where do we see the text to the actual rule of court?
MR MYERS: As a schedule to the submissions for the appellant, for example.
GUMMOW J: Yes, thank you. Page 22?
MR MYERS: Yes, page 22,
your Honour. Part 8 rule 13:
Where numerous persons have the same interest in any proceedings –
et cetera, and the new Uniform Civil Procedure Rules
applies where numerous persons have the same interest in any proceedings, and
it
is at the bottom of the page.
HAYNE J: Is your focus upon identity of interest in that - - -
MR MYERS: Yes, it is, your Honour. There are just two things we say about it. First of all, because of the way the proceeding has been constituted, there is no substantial issue of law or fact which has to be determined in which the parties have a common interest. The proceeding is framed in terms of the Roxborough test. The only question is the question of fact.
GLEESON CJ: There is a paradox in that. It seems to be being said by your clients that the reason these people do not have a community of interest is that it is so obvious they are entitled to their money back.
MR MYERS: No, your Honour.
GLEESON CJ: That is why the issues are so narrow.
MR MYERS: No, we do not say that they are entitled to their money back.
GLEESON CJ: Some of them are entitled to their money back.
MR MYERS: They have to establish the facts which entitle them to their money back.
GLEESON CJ: Well, some of them are entitled to their money back, and one thing is clear, that your client is not offering it to them.
MR MYERS: That is true but - - -
GLEESON CJ: Well, they have to come and get it.
MR MYERS: But, your Honour, the question that I am addressing is whether there is some common issue of fact or law. There is no issue of law in dispute, none at all. There is no common issue of law that needs to be determined. That has been determined.
KIRBY J: Well, insofar as there is a constitutional question in this litigation, there is a common question.
MR MYERS: That may be another matter. There is no common issue of fact because all their facts are different.
GLEESON CJ: But the only reason there is no issue of law is because your clients say that, provided they can establish certain basic facts, it is perfectly obvious they are entitled to their money back.
MR MYERS: That is so, your Honour.
GLEESON CJ: But at the same time your client is saying, “But we are not going to offer it to them”.
MR MYERS: No, because my client says they cannot establish those facts and if they do want to establish those facts, they will have to show that there is a separate and identifiable consideration which has not been bargained away in some way in the dealings between my client and them in the meantime. So there are different facts for every person. That is the point.
GUMMOW J: Looking at, by way of comparison maybe, to section 33C of the Federal Court of Australia Act, that talks about – that is in Part IVA obviously – “the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances”.
MR MYERS: Yes, it is a different test.
GUMMOW J: You say that would be enough, do you not?
MR MYERS: It is a different test, your Honour, and it may well be that the submission - - -
GUMMOW J: Yes, New South Wales has a very old-fashioned provision.
MR MYERS: They have recently refreshed it and it is still the old-fashioned provision, as I understand the Uniform Procedure Rules. But that is the point. The second thing that we say is there is no common relief that is sought. Each of them is going to get, and must get, a judgment for a separate money sum. This is just – I am going back to the beginning in saying this – a commercial operation organised by Mr Firmstone within the Rules of the Court to earn himself - - -
KIRBY J: What if you do not have the same reaction of repulsion to commercial enterprise, making profit, bringing matters to justice? Equality of arms it is often called in England and in the European Court. What is so wrong with - - -
MR MYERS: Yes, but the court procedures exist not to make profits for persons who do not have an interest in the subject matter of the litigation but to determine disputes.
KIRBY J: Yes, but the reality is unless you can organise the plaintiffs – I read Judge Posner’s opinion and I have a lot of respect for Judge Posner, but unless you do, you (a) exclude very large numbers of people from ever bringing it because on the amount at stake they will not do it and (b) you reserve to yourself as a large corporation the entitlement to pick them off individually as distinct from having to face them as one large side of the table against another large side of the table.
MR MYERS: No, your Honour, with respect, they will all have to be dealt with individually.
KIRBY J: But within the boundaries, if this proceeding goes ahead as a representative action, of the one case where they secure equality of arms with you?
MR MYERS: Your Honour, the notion that they do not have equality of arms or that some of them do not have equality of arms, for example, Ritchies, we say with respect, may not be correct.
KIRBY J: But if some or just a few do not have equality of arms why should they not be able to be organised and secure it, and get their money back, which you do not dispute if they can prove the facts they are entitled.
MR MYERS: That really has been what I have been putting to your Honour for the last hour, and I do not think that I can put the submissions any differently.
KIRBY J: Nor could you have put them better.
MR MYERS: Your Honour is flattering.
KIRBY J: That was not necessary flattery.
MR MYERS: Your Honours, there are just two other things that I wish to mention before I sit down. We do contend that the order for discovery is bad as a separate submission because it does not relate to any matter or fact in issue, and for other reasons. I do not want to add to the written submissions in that. They are set out in paragraphs 5.55 to 5.59.
KIRBY J: As I read the special leave transcript, the respondent said that they had other ways of getting the information they want, that is to say, the names and addresses of those who could be invited to opt in?
MR MYERS: It may be, but in any event, they are attempting to use the Court Rules - - -
KIRBY J: That would be the most efficient way to get it, one would think?
MR MYERS: Yes, but we say simply it is not a proper order for discovery.
KIRBY J: I understand that. What is the position if in Victoria you cannot have an opt-in representative action?
MR MYERS: You can opt out, as - - -
KIRBY J: But that requires an initiative which is the same problem as the initiative to opt in?
MR MYERS: It is not exactly the same problem. Opting in, looking at it from Mr Firmstone’s point of view, the only people who get the benefit of the order are those who have signed up for the 33 and a third per cent. If you have an opt-out procedure there will be lots of persons who have – he might say – not properly contributed to his commercial enterprise who will get the benefit of the judgment. That is the only reason for the opt-in suggestion.
KIRBY J: The action here in this case is brought in the Supreme Court of New South Wales.
MR MYERS: Yes, it is.
KIRBY J: With the contemplation that there will be an opt-in of people around the country?
MR MYERS: Yes, that is so.
KIRBY J: So that they are commencing the proceedings, they are entitled to the Supreme Court of New South Wales, they are subject to the test expounded in that court or set out in the Rules, so that that is the nature of the beast we are looking at.
MR MYERS: Yes, it is, your Honour.
GUMMOW J: Now, the original jurisdiction of the Federal Court now includes any matter arising under the Constitution or involving its interpretation. This is one such case. Now, that being so I cannot see at the moment why this action could not have been commenced under Part IVA, but you say, well, it was not - - -
MR MYERS: It could have been but then there would not have been an opt-in procedure, your Honour.
GUMMOW J: Exactly.
MR MYERS: Then Mr Firmstone’s enterprise could not have been carried out.
HAYNE J: Under the New South Wales Rules, is there any equivalent to 33V of the Federal Court Act, namely, a limitation on settlement and discontinuance? I am not conscious of one.
MR MYERS: No, your Honour, there is not. The last matter that I wish to deal with, your Honours, knowing that there are lot of persons who want to say something today, we have sought leave to amend our notice of appeal to raise the constitutional issues. My learned friends, on behalf of Mobil, have put submissions concerning the constitutional issues in writing and they are going to put oral submissions. We adopt the written submissions and we adopt the oral submissions, so, as it were, there has been that division of labour. If the Court pleases, they are the submissions on behalf of my clients.
GLEESON CJ: Thank you, Mr Myers. Yes,
Mr Gleeson.
MR GLEESON: Your Honours, I propose to
start with the topic of abuse of process and if it is convenient, identify the
factual areas where our
case is, we submit, as good as Fostif but
stronger. Just before I do that, to answer a question from the Bench about the
position if a solicitor did this, we have given
your Honour’s
associates a table of the legal profession regulation provisions across
Australia which indicates that in all
States and Territories there is either
legislation or rule prohibiting contingency cost agreements. In some there is a
provision
permitting an uplift on ordinary fees. Could I note that in New South
Wales very recently the 25 per cent uplift is now no longer
permitted
in claims for damages.
KIRBY J: That is personal injury damages?
MR GLEESON: No. It is no longer permitted in any claim for damages under the amended section 324.
KIRBY J: So you cannot tell people in New South Wales that they can come and get a first consultation and be advised of any legal rights they may think they have and you cannot have an uplift to bring that type of claim or any claim for damages?
MR GLEESON: Yes. You can have a conditional costs agreement. You cannot do the advertising that your Honours have dealt with in the previous case, you cannot have the uplift in a claim for damages but you otherwise can have a 25 per cent uplift. Coming to the facts of our case, and I will itemise them – could I ask your Honours to go to the third appeal book in our matter at page 820.
The first fact is found at paragraph 60 of the judgment which was at the date of commencement of these proceedings no retailer had made any demand on Mobil for refund. That appears from paragraph 60 and I will give an additional reference, volume 1, page 67 at paragraph 7. So the critical differences is that because this action was started so late on 11 July 2003 at that date no one, no retailer, was actually in legal dispute with Mobil.
The second fact appears from paragraph 61 at line 39 that when Firmstones obtained instructions from Trendlen they ascertained that Trendlen did not have relevant documents. The importance of that, your Honours, is this. In the petrol case, unlike the tobacco cases, there were no invoices separately identifying a licence fee. His Honour found that at page 809, paragraph 29. So that the first critical question for the Roxborough cause of action here was going to be, given it was not separately identified on the invoice, was there something else in the contractual documentation passing between each retailer and Mobil which satisfied the legal test in Roxborough?
Accepting fully your Honour Justice Hayne’s point about there being many modes of proof, the critical question in Roxborough is did the contractual documentation sufficiently identify it as severable? So we know the invoices did not and we know in respect of Trendlen – I am coming back to page 820 – that Mr Firmstone did not get any documents from it. The short point is Mr Firmstone did not know whether his first retailer, Trendlen, in fact, had a good cause of action under Roxborough and he would never know that until some process was conducted of inspecting documents of this transaction. The only way he could get them would be by way of Trendlen bringing a preliminary discovery application in a jurisdiction which gave information discovery.
KIRBY J: New South Wales is such a jurisdiction.
MR GLEESON: Not at the time, your Honour. It is under the recent amendments, but that is now outside the limitation period, so it is too late.
GLEESON CJ: Mr Gleeson, under New South Wales procedure at the moment, does the solicitor for a plaintiff, when a statement of claim is filed, have to certify to some belief in the substance of the cause of action?
MR GLEESON: The answer to your Honour’s question is in three parts. If it is a statement of claim, then there would be ordinary verification provisions by way of affidavit, but that is not the solicitor.
GLEESON CJ: What are they, those ordinary verification provisions? I think they are later than my time, certainly later than my time at the Bar.
MR GLEESON: That is under Part 15, a reasonable belief by a deponent from the principal that the facts alleged are true. So that is the client. In terms of certification by the solicitor, that is section 198L of the old Legal Profession Act.
GLEESON CJ: Does that apply to all causes of action or only actions of a certain kind?
MR GLEESON: It applies to causes of action for damages, again using that generic term.
GLEESON CJ: Can you avoid that requirement by filing a summons?
MR GLEESON: The answer to that is no. What happened here was, at this point Mr Firmstone says no one is in dispute between retailers and Mobil. I found one person, Trendlen, who I know has paid the price for petrol almost six years ago. I do not know whether that person has any documentation which would satisfy Roxborough, but I will use that person as my so-called lead plaintiff.
The third fact, your Honours, is on page 821 at
paragraph 62 which is that:
When these proceedings were instituted, Mr Firmstone himself had not spoken to anyone who might fall within the represented class, and it appears that the only retailer within the class that had given instructions to bring a claim was Trendlen.
Stopping there and coming back to your Honour Justice Gummow’s question, this action could not have been commenced in the Federal Court in July 2003 because it would not have satisfied the requirement that seven persons had claims with the relevant similarity. What there was, at best, was one person - - -
GUMMOW J: Where do we see that in Part IVA?
MR GLEESON: Section 33C(1)(a). As a short textual point, that is why it never met Part 8 rule 13 because at the date of commencement there were not numerous persons who had the relevant similarity of interest in any question. Now, this is where, to come back to your Honour Justice Kirby’s question - - -
GUMMOW J: Just before you leave that, section 33T has provisions about adequacy of representation.
MR GLEESON: Yes.
GUMMOW J: And 33V has special provisions about settlement which might have inhibited your opponent’s arrangements.
MR GLEESON: Exactly, your Honour, because on the settlement of all the other matters what came out in our case, but was not known to the Court of Appeal when Fostif was decided, was that in a significant number of them Mr Firmstone said to the defendant “Settle this case on the basis that you pay me X per cent of the claims of the people who so far have been solicited by me” – this was before the discovery order was attained – “and pay me Y dollars personally in exchange for me giving up the representative action”. What is said in the submissions to this Court is that because of the peculiarity of the Supreme Court Rules that was not a breach of the Rules and therefore, it is said, so what?
Now, coming to your Honour Justice Gummow’s question it could not have been done in the Federal Court and the only basis on which it was done in the Supreme Court – and this comes back to your Honour Justice Hayne’s question – is under Part 21 rule 2, of which we have copies. You can only discontinue an action without leave if a solicitor certifies that the plaintiff “does not represent any other person” in the action - Part 21 rule 2(a). So what must have happened in the other matters, unknown to the Court of Appeal in Fostif, is that either the nominal plaintiff or his solicitor, Mr Richards, certified that he did not represent anyone else.
HAYNE J: But did it go by discontinuance - - -
MR GLEESON: Yes.
HAYNE J: - - - or did it go by consent order?
MR GLEESON: No, by discontinuance.
GUMMOW J: Do we know that?
MR GLEESON: That is what apparent from the submission by the respondent, a discontinuance at first instance and then a discontinuance of the appeal. The way it was justified was at the time they discontinued, which was after the appeal had been argued but before judgment, the extant orders were those of the trial judge dismissing it as a representative action. Therefore, there were no represented persons, therefore you could do it without leave and without telling the court about the lump sum payment and - - -
HAYNE J: I think Castanho v Brown & Root in the House of Lords says something about discontinuance in those circumstances.
MR GLEESON: Exactly, your Honour, but the proposition being put was that Mr Firmstone, who was driving those actions, Mr Richards as the solicitor, could run the case in the Court of Appeal arguing that this was a proper representative action, that all these people were beneficiaries of it, and yet they could at the same time turn around, take Justice Einstein’s order at face value and say they are not represented, and therefore discontinue without telling the court about the lump sum. Now, I am going to come back to that, but it will illustrate that when Mr Firmstone then made the same offer to Mobil, it was an abusive offer, but it was also an offer which stamped or characterised the entirety of the proceeding.
Your Honours, I have come to the third fact, which is page 821, paragraph 62, and that has enabled me to make the short textual submission that at the time the proceedings were commenced there were not numerous persons having a common interest in any question.
Then the
fourth fact is in the second part of paragraph 62, that Mr Firmstone
admitted in cross-examination that:
his dominant purpose in initiating the proceedings was his company’s own profit (T 33.55); and that he was stirring up controversy where none existed (T 34.25), and using the Court’s process for that purpose (T 34.30).
The fifth fact is the finding at 63 about
control. What is significant there is it is Mr Firmstone with control; it
is not Trendlen.
I just mention that because, as a textual matter, Part 8
rule 13 says if you have the numerous persons, one of them can be the
representative, and it is that person who is charged with the
position of trust,
like a tutor, to conduct the action on behalf of all. If that control is in
fact being exercised by a third party,
Mr Firmstone, who has no justiciable
controversy with Mobil, that is another reason why it is simply not within the
rule.
HAYNE J: Just before you go on – I am sorry, I am no doubt being slow about the Supreme Court Rules – is there anything explicit in the Rules that provides for opt in, or opt out, for that matter?
MR GLEESON: No.
HAYNE J: Does it follow that the position at the date of institution was that the named plaintiff said, “There will in the future be others who by executing an opt-in notice have an interest which is the same interest I have in this proceeding”?
MR GLEESON: At the highest, it is that, your Honour. I say “at the highest” because how we would characterise it is the named plaintiff did nothing. Trendlen had no view about whether - - -
HAYNE J: I understand that separate point.
MR GLEESON: Yes. So Mr Firmstone at the highest had a hypothesis, and this is getting us closer to the constitutional point. He had a hypothesis that there may be people out there who were retailers who had let their causes of action slumber for almost six years, who were about to have them extinguished under section 63 of the New South Wales Act if they were New South Wales causes of action.
I mention that because New South Wales is one of the States where there is extinguishment under the limitation period if you do not bring action within the period. Mr Firmstone’s hypothesis was there may be retailers who are going to allow their causes of action to be extinguished. The date upon which that would happen, your Honours, does not need to be resolved precisely here. If the recovery of imposts point is correct, they were extinguished already, but leaving that aside, under the ordinary six-year period, they were expiring some time between 1 July and 5 August. By 5 August at the latest all the causes of action were expired, six years after Ha. So Mr Firmstone’s hypothesis is, “There may be people out there who are allowing their causes of action to slumber, almost fatally. I found one person who may or may not have a bona fide claim. What I am going to do is set the court’s process in motion claiming that there are numerous people who may have those claims”, not knowing in fact of anyone other than Trendlen, not knowing whether any of them had good causes of action, because that would depend upon their own contractual documentation which he had never seen, and not knowing whether any of them desired to have this question determined. But with that hypothesis in mind, he said, “I will launch an action” – and we submit directly – “launch an action pretending that there is a controversy within Part 8 rule 13 for a purpose”. Now, what was his purpose?
His purpose was that once he had got it launched he could start to solicit people to join, and the solicitation occurred, your Honours, by way of direct mail, letters, newspaper advertisements, but most fundamentally the purpose was, direct solicitation will only get you so many people. I come back to your Honour Justice Kirby’s question. Yes, he was going to go out and solicit, and that is the role of Horwath. You may have seen Horwath in the paper. They are there to solicit and they share part of Mr Firmstone’s fee. But for his project to work for him he did not want to remain with himself and Horwath.
What he wanted to do was after the limitation period had expired ask the court to exercise judicial power to compel Mobil to disgorge the names and addresses of all persons who were retailers in that period. These are all people who have allowed their causes of action to be extinguished under the New South Wales provision or otherwise failed to take a step on them within time giving Mobil a valid defence. Asking the court to exercise judicial power to compel that information to be delivered up for the purpose of him then soliciting them further under a court approved notice to try and get them to join his action.
Now, your Honours, the next fact is in paragraph 66 on
page 822. We submit it is a critical finding of fact which is unchallenged
and unchallengeable:
the better view is that it is unlikely that there would have been any legal controversy apart from Mr Firmstone’s actions.
Now, many of your Honour Justice Kirby’s questions, with respect, have assumed that there are many people who wish to have a claim brought against a big defendant but cannot afford it.
KIRBY J: Who is retaining money that they paid to the big defendant and which you accept that if they can establish the claim you have to pay them back.
MR GLEESON: No, your Honour, we are different to Mr Myers because our case does not have the critical document that in Roxborough was thought to make it severable. There is no invoice. So the critical question is: is there something else in the contractual documentation which does the work which the invoice did in that case?
KIRBY J: But presumably there would be invoices to those to whom you sold petroleum products?
MR GLEESON: There are, your Honour, and they are in the appeal book. I will give your Honours the reference.
KIRBY J: What is your point about these documents, to distinguish them from - - -
MR GLEESON: The point is that, unlike Roxborough, no invoice separately identified petroleum licence fee. Volume 2, page 399 through to 403.
HAYNE J: Does the validity of this last proposition turn upon the validity of the premise or the competing premises that are taken? The plaintiff’s premise is that there are numerous persons represented. Your premise, as I understand it thus far, is that there are not numerous persons represented because, although the summons refers to a class of unnamed persons, in truth, there is no identifiable class of persons then existing, for the persons then cannot be identified – not simply have not been, but cannot be – because there is a subsequent contingency to fulfil, namely, execution of an opt-in notice. Do not the submissions about discovery and so on hinge about the premise for debate in the respect I have just identified?
MR GLEESON: They do, your Honour, accepting that the steps that are necessary to identify whether there are any persons who might be in the class are multiple. The critical step is, first of all, apart from direct solicitation, can or should there be an exercise of judicial power to compel a defendant, after a limitation period has expired, to disgorge names and addresses of potential class members.
GUMMOW J: No, Mr Gleeson. Look at Part 8 rule 13(1). This is in your favour. You have to have numerous persons who have the same interest – have at the time of commencement.
MR GLEESON: Yes.
GUMMOW J: It seems to be that the discovery sideshow is a sideshow because the need for the discovery illustrates, and the need for the discovery and the need for the execution of the opt-in notices indicates the absence of the numerous persons with the same interest at the time of the commencement of the proceedings, and therefore indicates, perhaps, the inapplicability of Part 8 rule 13(1).
MR GLEESON: Yes, your Honour.
HAYNE J: And all of the points about representation, obligations of those representing, again either have life or no life according to the premise from which you begin, about the application of Part 8 rule 13(1).
GUMMOW J: And that is another reflection of what you said to us about section 33C(1) of the Federal Court Act, namely, “7 or more persons have claims”.
MR GLEESON: Yes, must have claims, and in a number of cases in the Federal Court the dispute is, “Are there seven with claims or are there three or four?” That is the criteria. Your Honours have upheld this constitutionally against a number of challenges in other cases and, with respect, the way we would rationalise that is that the criteria of seven or more, which is a real criteria, is the touchstone for there being a real justiciable controversy which does have numerous persons and the seven is the touchstone which makes valid the later provisions in Part IVA.
KIRBY J: The rule of seven does not seem very convincing. If you have seven, why not 10, why not four?
MR GLEESON: I am not saying it has to be seven, your Honour, but it is a touchstone chosen by the legislature which your Honours have not rejected.
KIRBY J: It does not seem to be a constitutional criterion.
MR GLEESON: I will leave that.
GUMMOW J: Do you say, for example, that section 33ZE would be invalid? That permits suspension of limitation periods.
MR GLEESON: That was one of the questions argued on the special leave in Femcare, a special leave which did not go ahead. It may be is the answer, but that is not our issue here. While your Honour is on that, can I just deal with 33ZE. The way the Federal Court scheme works – and this comes to one of our hurdles to the representative action – you need the seven to get in the door and they must have sufficiently identical claims. Under section 33D there is a provision designed to reverse the common law standing principle. Your Honour Justice Gummow in Truth About Motorways dealt with the proposition that at common law standing is an element of the cause of action and at common law A cannot sue on B’s cause of action for money against C.
Section 33D is a means to ameliorate that provision and of itself it might raise questions, “How is it that that can occur?”, but there are then some safeguards. For example, 33J you can opt out, 33Q and R there are means to determine separate issues, and under 33R an individual member can appear. Against that context 33ZE purports to be, and on its face is, a so-called stopping of the clock. What it appears to say is that once a - - -
GUMMOW J: The clock only runs because some statute says it runs. Why cannot a law of the Commonwealth deal with that? It is not a common law business. There is no common law limitations.
MR GLEESON: Your Honour, I am not taking on a constitutional argument I do not need. I am just trying to indicate that if one took this section - - -
GUMMOW J: I am concerned that you are trailing your coat in such a way that is seeking to induce us to cast some shadows on Part IVA, which I would be very loath to do without the fullest argument.
MR GLEESON: Can I just complete the submission, your Honour. If 33ZE is valid, it works in this way. The Limitation Act (NSW) would extinguish the cause of action.
GUMMOW J: If picked up.
MR GLEESON: If picked up.
GUMMOW J: Only if picked up.
MR GLEESON: Only if picked up. The federal Act says, provided you have a valid representative action, the limitation period is suspended for all actions, and that seems to be not only within the Federal Court action, but for all other purposes. The purpose of that is that if and when the person opts out of the federal action or it otherwise does not dispose of their claim – this is 33ZE(2) – the limitation period commences to run again. So the way of protecting the person’s rights is through this mechanism.
I do not want to say anything more about whether that is valid or not, but what I want to say, your Honour, is this, that what the President has done in Fostif – and this is why we submit the limitation point is important here – is that he has construed Part 8 rule 13 as if it contained section 33ZE and he has used the language of stopping the clock. He has construed Part 8 rule 13 as if, assuming there is a valid representative action, it has stopped the clock. It is not clear whether his Honour says for the purpose of the representative action or for the purpose of - - -
GUMMOW J: He relies on the judgment of Justice McPherson, does he not, in Queensland?
MR GLEESON: Yes, and the critical thing, with respect, that those judgments did not consider was what your Honour said in Truth About Motorways about standing and parties. At common law A could not bring a claim on B’s restitutionary cause of action against C. The question is whether, through the representative procedure, the representative is authorised by commencing the action, not only to seek relief which is beneficial to all, not only to seek a determination of a common question of fact or law, but to actually bring action on the individual causes of action of every person in the class. If the answer to that question is yes, then the limitation clock has, in a sense, “stopped”. It has been satisfied – not stopped, but it has been satisfied.
So where his Honour says, “I will treat this section as stopping the clock”, what his Honour is really saying is, “I will treat this section as meaning Trendlen has brought action on the causes of action for restitution of this whole group of people of whom it has no knowledge”. That, we submit, when one traces back through the representative cases, was never the position under any of the Chancery antecedents of this provision. If that is right, it is an additional reason why the discovery order should never be made because it is futile.
Your Honour, the next factual matter I wish to go to, and hopefully it is the last, is the letter itself, that is the settlement letter. It is in the first book at page 126. The third paragraph of the letter invites Mobil to consider that there is a window of opportunity where the “unknown plaintiffs” – they are the people who the discovery order is meant to find – might be ignored by the court if the action was discontinued.
The fourth paragraph makes the offer, which
is 85 per cent for the people who have been identified and then
$1 million plus GST to
Mr Firmstone in consideration for his firm
forgoing its interests in relation to the unknown plaintiffs:
In return, we would discontinue the representative proceedings –
“You have to act quickly because once the Court of Appeal decision comes down, if they accept our arguments, we will then have to look after these unknown people and we could not take this payment at their expense.”
Now, we make these propositions about it. First, it is a clear breach of a fiduciary duty by Mr Firmstone to the unknown people. He claims to represent them. He does represent them on the face of the summons. He is arguing in the Court of Appeal in the analogous matter. He represents these people. He takes a personal gain of $1 million at their expense without fully informed consent. So that is just them, and your Honours might say, “Why is Mobil crying tears over them?” The answer to that is that in terms of the conduct of the person charged with this representative action, he has shown himself not to be a fit person, and he has shown all the vices that occur when a person who is unregulated, undisciplined, unlicensed and taking a contingency fee gets the chance to negotiate the settlement. This could not happen - - -
KIRBY J: That is one reason why Mobil might not deserve tears, but there may be other reasons.
MR GLEESON: Yes. Your Honour, just stopping there, we submit, contrary to what President Mason said, a defendant is entitled to come to the court and say, “The person who is moving this judicial process against me is a person who is shown to behave in an improper manner”. President Mason acted on the view that courts should just assume that funding will be okay and unless someone can come and prove an abuse it should all be allowed.
Here is evidence where a defendant comes forward and says, “The controller of this action behaves in this fashion. The controller of this action is a person with whom Mobil has no justiciable dispute. Why should we be exposed to an action being driven by this man?” That is the first point.
GUMMOW J: This discontinuance would not work, would it, looking at page 127, line 4, “we would discontinue”. They would have to comply with Part 21 rule 2, would they not?
MR GLEESON: And the way they would do it, based on - - -
GUMMOW J: There would have to be a certification from the solicitor.
MR GLEESON: This is why the evil of the other matter is what is being replicated. The theory is while ever the window of opportunity is still open and the Court of Appeal has not said we won, we can go with straight face, with a solicitor’s certificate, to Justice Einstein or Bergin and say, “We represent no one and we represent no one because Justice Einstein’s order in the other matter remains a good order to be followed until upset by an Appeal Court”. That is the first problem with it.
Your Honours, the second problem is, what is the threat implicit in the letter, and this is more than just tears for Mobil. The real threat in this letter is this. Firmstones has launched this juggernaut. The juggernaut at the moment has found a certain number of retailers. The real threat is, “If we can get the discovery order, all those people who have let their causes of action expire can be solicited into this controversy. We know they cannot sue anywhere else because the limitation period has expired and the theory is they can sue here.” That may be wrong, as we submit, but that is the theory. “You, Mobil, would be very sensible to pay Mr Firmstone $1 million personally if he were to dispose of the potential liabilities he has crated against you.”
It does come back to what Justice Posner was saying, which we accept is only one of two views. This is the very sort of blackmail which says, “You are Mobil. You have hundreds of retailers. We have only found a small number. If we can use the judicial process to get them all, this claim will be worth many tens of millions of dollars. Pay us a million now to go away early and we think we have got a device where the court doesn’t need to know that the unknown plaintiffs are being sold down the river”. Now, that is abusive conduct directly directed to Mobil. It is an abuse of the court’s process. When the court sees that has happened we submit that it is not correct, as the trial judge did, just to say, “Oh, that doesn’t matter”.
Your Honours, in case there be any doubt, the cross-examination, volume 1, made clear what I have just put. If I could very briefly, your Honours, go to page 191 and just at lightning speed, line 50, Mr Firmstone admitted he owed fiduciary obligations to these people. At 192 at line 10 is when the voir dire commenced, and this is the material we submit should have been accepted into evidence. At 193 at the top, he understood that the limitation period for the unknown people had expired, so they could not bring action anywhere else. Line 25, he had a view that he had a good prospect of winning in the Court of Appeal and, if he won, the representative action would go forward for the benefit of everyone. Line 35, he knew these people had not commenced suit elsewhere, so they did not have any other action. Line 45, he understood the various possibilities.
At 194 at line 15 he accepted that, by
virtue of his offer, if accepted, these people would lose at least a potential
benefit. Line
25, potential benefit, he agrees. Line 35, that
potential detriment to them was associated with $1 million for him.
Line 40, it
was a potentially significant attraction to Mobil because they
would be free of the possibility of claims. So there is the blackmail
point:
Q. And what you understood you were conveying to Mobil was, if I give you the benefit of freeing yourself from these potential claims from a large number of persons, I want you to pay me personally $1 million?
A. Yes.
At 195 at line 15, he was going to share
50 per cent with Horwath, so that is the solicitor of plaintiffs.
They would get 50 per
cent out of this. Line 35, he told
Mr Bradstreet – that is Trendlen – that he would be getting
$1 million, so Trendlen
acquiesces in the matter. Now, 196 is where he
explains what happened in the other cases:
And in those tobacco matters did it follow the same plan . . . that the tobacco defendants would gain the benefit of a discontinuation and the unknown represented persons would lose the potentially significant benefit of an action commenced in time?
A. Yes.
Where was that followed? He identifies the
proceedings. Line 30:
Q. In all these cases may we take it the defendant paid, as part of the settlement, a lump sum which went to your firm and they got in consideration the benefit of a discontinuation which, therefore, shut out the unnamed represented parties?
A. Yes.
Then he is asked at the foot of the page:
Q. What are the interests that your firm might have in relation to the unknown plaintiffs?
A. That would be the interests concerning the fee in relation to the unknown persons, assuming that the plaintiffs were successful in the appeal.
Then he says in 197 they were discontinued but no order as to
costs.
Q. Was the Court told in any of those matters the effect that the discontinuance was expected to have on the unknown represented parties?
A. I don’t know but I don’t believe so . . .
Q. And you did not instruct your lawyers to inform the Court of that, did you?
A. I don’t believe so . . .
Q. --may we take it you did not inform the Court of Appeal that you had received a lump sum payment as part of the settlement?
He agrees with
that. At 198 Mr Richards is adverted to and this is the solicitor which
your Honour Justice Kirby put should ordinarily
be assumed to be an
independent bulwark against illegitimate funded behaviour.
Line 20:
Q. Did you inform Mr Richards you were making this offer?
A. Yes.
Q. And in particular did you tell him of the lump sum component of it?
A. Yes.
* Q. did you have any discussion with Mr Richards whether it was proper for you, as the funder, and Trendlen, as the named plaintiff, to put forward such an offer?
At 199, line 15:
A. The answer is No.
We say if this solicitor ever had an occasion
to stand up to Mr Firmstone and represent properly these people the time
was when this
letter was sent out. The letter said, “There is only a
small time to accept this offer”. Mr Richards should have spoken.
Line 20 on that page:
you perceived that you had a window of opportunity -
It
was going to shut soon, more of the same. Over the page, line 5:
Q. You knew that these rights would be lost without their knowledge or consent?
A. Yes.
Q. And you knew they would be lost in exchange for your private gain, $1 million, didn’t you?
A. Yes.
So that is Maguire v Makaronis. “You agree you had
fiduciary obligations – yes”. Then at the foot of the
page:
Q. Let us break it down: you knew that you were selling out the rights that they had by making this offer, didn’t you?
A. Yes.
Q. You knew you were selling them out for your private gain?
A. Yes.
Q. And you knew you were doing it without their knowledge or consent?
A. Yes . . .
I don’t know whether the Court was told or not.
The summary is on page 202, lines 15 to 40. At
line 30, perhaps most remarkably:
Q. Even today you are quite comfortable with the conduct reported in this letter, are you?
A. Yes.
So there is absolutely no repentance. The man says, “That is the right way to treat these unnamed people. There is no suggestion I have reformed. No suggestion these abuses will not continue”. As to when the other people would be told about the $1 million dollars that is page 203, lines 30 to 45. At 204, lines 10 to 15 is the blackmail point again.
GUMMOW J: What is the evidentiary position for us of this voir dire material?
MR GLEESON: The position is that in our submission (a) his Honour did not admit in the trial; (b) his Honour erred and should have admitted it under two sources, firstly, section 11 of the Evidence Act and secondly, section 131(2)(k) because (a) it went to establish an abuse of the court’s process and (b) it established a deliberate abuse of a power and his Honour erred in not admitting the material.
The reason his Honour gave for not admitting it is briefly expressed in volume 3, page 827, paragraphs 83 to 84. There seem to be two reasons. The first is that if it is a breach of fiduciary duty, which I do not decide, that does not make it an act in furtherance of an abuse. Secondly, it does not characterise the commencement of the action.
Our submission is that when one views both the threat in the letter, the threat to continue, the solicitation of what is really a bribe, nothing better than that, the following conclusions are to be drawn from the letter. One, Mr Firmstone has shown himself incapable of exercising the trust imposed on a representative. Two, he has total control over this action, he decides what happens. Three, it evidences the abusive nature of the claimed discovery order. It is not there to facilitate access to justice. They are people who have let their claims go. It is there as a device to try and get money for Firmstone. Four, it evidences the abusive nature of the champerty. The very thing which the solicitor cannot do, because of Clyne’s Case and legislation, take a share of the spoils, is what has tempted this funder into improper conduct. Finally, it shows more generally - - -
KIRBY J: Did you put your submissions that you are now advancing to this Court concerning the solicitor to him during the proceedings?
MR GLEESON: What occurred was this, your Honour. We obtained that – and I should be precise. The abuse of process and the misconduct we are putting is directed against Firmstone.
KIRBY J: I realise that but you said some things about the solicitor to the court.
MR GLEESON: The proposition we are putting in respect to Mr Richards is this, that on an occasion when he ought to have spoken he did not. The evidence to found that submission are the lines I have taken your Honours to. At the trial a question was raised by Mr Gageler whether this was a proper submission we could make. In these circumstances, Mr Richards had filed an affidavit which had not been read so I was unable to put it to him in cross-examination.
We, in submissions, said that we had no objection to Firmstone’s reopening the case to lead any explanation from Mr Richards for his conduct. That is volume 1, page 221. That was not taken up. Your Honour, the final point on this is this shows more generally what happens when the Court does allow its process to become the tool of the entrepreneur.
KIRBY J: There are two questions here. One is the question of the process and the other is the question that is exercised in this particular case.
MR GLEESON: Yes. Mr Myers has made a point this morning on the documentation that what Mr Firmstone really has set up is a settlement. What he wants is to create something which looks so big and vast that he gets paid. If he has to litigate this thing to the end that is the last thing he wants.
KIRBY J: That is just an objection to the representative action procedure. That is a different issue. You have been taking us to its exercise in this particular case.
HAYNE J: It assumes that a representative plaintiff can compromise without leave of the Court, is that right? I have just sent for Re Calgary and Medicine Hat Land Company, Limited, Pigeon v Calgary and Medicine Hat Land Company [1908] 2 Ch 652 which is at least cited for the proposition that it seems that a representative plaintiff cannot compromise the action without leave of the Court.
MR GLEESON: Your Honour, we would agree that that would be the correct legal principle. Mr Firmstone’s conduct, as actually practised, and as threatened - - -
HAYNE J: You can ask a question, Mr Gleeson. You can always ask, whether the question is answered one way or another. Mr Firmstone could ask for the other side to walk up the cathedral steps on its knees.
MR GLEESON: What we have more than that, your Honour, is his admission that in the other matters that is how he did it, and we have a letter offering to do the same thing. Your Honours, I am conscious of the time. The next topic that I wanted to move to is three short points on the discovery order. The first is, as your Honour Justice Gummow put, if the textual requirements of Part 8 rule 13 are not met then there is no basis for the order.
GUMMOW J: What do you say about the treatment of this phrase “the same interest” by Justices Toohey and Gaudron in Carnie[1995] HCA 9; , 182 CLR 398 at 421. Carnie concerned a number of contracts of loan which were seen not to comply with the Credit Act.
MR GLEESON: Your Honours, in Carnie there was a single question which arose under every contract. Did they not comply with the Act by reason of the terms of the section? What was framed in the High Court - - -
GUMMOW J: This particular passage at 421 about point 8, “There are many persons”. Now, you say that does not apply to this case?
MR GLEESON: Yes.
GUMMOW J: Why?
MR GLEESON: We know in fact when it was commenced there were not many persons.
GUMMOW J: But that is a separate point. Assuming there were?
MR GLEESON: Assuming there were, the third of the three hurdles we have sought to identify is this, that we have the finding of fact that the invoices do not itemise the fee so that if there is a common question it could only lie in the area of, is there something else in the contractual documentation passing between people which is sufficient in law to satisfy the Roxborough test? We put on evidence from Mr Davidson to say that there are a multitude of contractual arrangements, many, many different forms, and on our search of them we could not find material which might be the basis for an itemisation argument. There is one exception to that that I will come to.
GUMMOW J: It depends at the level at which you abstract the interest, though, does it not?
MR GLEESON: It does, your Honour.
GUMMOW J: Your client has the money, should not have it – the Constitution says it should not have it.
MR GLEESON: Your Honour, that does, with respect, elide the question. The Constitution says we should not have it if it was paid to us as an identifiable and severable part of the transaction. Your Honour said in Roxborough that is a function of looking at the contractual documentation that passed between A and B and Roxborough in a sense was an easy case. It was on the invoice.
What we raised through Mr Davidson was there is a multitude of contractual arrangements. Nothing was put forward by Firmstones to show that any one or more of the persons that they had already found had a common contractual provision that they were going to put forward as satisfying the Roxborough test, or how many such variants there were. Now, the answer that is given in the submissions is, you can always generate subclasses as you find out what the issues are.
Our
point was that at the date it was commenced and at the date of this motion some
three years into the matter they could not point
to a single piece of
contractual documentation and say, here are a number of people who have all
entered that piece of documentation,
and arguably that documentation satisfies
Roxborough. They could not say how many such cases there were and,
your Honour, in one of the Canadian decisions, Western Canadian Shopping
Centres v Dutton [2001] 2 SCR 534 which gives a liberal view to
the rule from Chancery, this was a case where – and I will point to
this against us – paragraph
34, where the court lacks a
statutory scheme:
the courts must fill the void –
Then could I come
to the four requirements, paragraphs 38 to 41. Paragraph 38
is:
First, the class must be capable of clear definition.
Now, in this case, as Mr Myers pointed out, the class is
only defined by a self-fulfilling legal prophecy. It is the people who have
a
good cause of action under Roxborough and that is an approach that is
rejected here because this is said:
It is essential, therefore, that the class be defined clearly at the outset of the litigation. The definition should state objective criteria by which members of the class can be identified. While the criteria should bear a rational relationship to the common issues asserted by all class members, the criteria should not depend on the outcome of the litigation.
Now, in the present case, because they have not identified any
contractual documentation that they say is common to a number of people,
they
have simply defined the class by reference to the outcome. That is the first
problem. Paragraph 39, common issues of fact
or law should be construed
purposively:
The underlying question is whether allowing the suit to proceed as a representative one will avoid duplication of fact-finding or legal analysis. Thus an issue will be “common” only where its resolution is necessary to the resolution of each class member’s claim.
They cannot in the present case point to a single issue of fact which is common to the cases of any number of persons other than the self-fulfilling legal prophecy. If they are proved to be within Roxborough, they are.
KIRBY J: That is one way of putting it. The other way is there is a class, the class of those who paid you the excise tax, and that class is sufficiently defined by that group. It is simply a matter of seeing where the particular individuals fall within it. I do not see why, if there is some court process that allows them to get to your records, they should not be allowed to do that. I do not see that that is an abuse of the process of the court or a wrong act. It is simply getting out of the person who is best in a position to show it who are members of that class. After all, you are hanging on – we must not lose sight of the fact your client is hanging onto money which this Court has said it is not constitutionally entitled to have.
MR GLEESON: I must disagree with your Honour. This Court has not said that. First of all, there has not been a decision in the petrol legislation - - -
KIRBY J: The Constitution says it.
MR GLEESON: Secondly, the Constitution only says that if it was an identifiable and severable part of the consideration. If it was not, then it was simply part of the purchase price and the Constitution is irrelevant. Thirdly, the limitation period has expired. Not a single person has sued; leave Trendlen aside. The whole purpose of limitation periods is that there comes a point where a defendant, for better or worse, can say, “I am freed of those claims, whether they be good or bad. The most extreme aspect of our facts is that not a single person other than Trendlen wanted to have a controversy with us prior to the expiry of that period”.
As your Honour the Chief Justice pointed out in McBain, it is a fact of life that not all people who have legal rights choose to engage in disputes and not all disputes choose to come before the court. For better or worse, in our case at least, all of these disputes were never going to come before any court. That is the finding of fact, but for Mr Firmstone.
KIRBY J: Well, it is the worse for you that the system of representative procedures has been provided. As far as I am concerned, I am very doubtful that the constitutional deficit can be overcome by a statute of limitations.
MR GLEESON: Your Honour, could I
complete the case? Paragraph 41 is the importance of the propriety of the
representative’s conduct.
Paragraph 47, the earlier decision of
Naken, which is now regarded as a narrow decision, is reviewed, but is
not criticised. It is a case decided on the basis that:
While each plaintiff raised the same claims against the defendant, the resolution of those claims would have required particularized evidence and fact-finding at both the liability and damages stages of the litigation.
That is what we advert to, and they have not
taken up the challenge to say there are any common facts which apply across
different
class members.
GUMMOW J: Whereabouts are you reading from in Western Canadian?
MR GLEESON: At 47, and then 50
- your Honours, I accept this is not an exhaustive statement but it is
stated that:
Generally, individual issues will be resolved in individual proceedings.
We submit that gives some support for the notion
that where people need to bring action on causes of action, that has to be done
by
way of them becoming parties either conjoined with the representative action
or in a separate action. Then in 52:
Who falls within the class can be ascertained on the basis of documentary evidence that the parties have put before the court.
Now, that test is just not capable of being satisfied in our
case. Later on in that paragraph:
Third, at this stage of the proceedings, it appears that resolving one class member’s breach of fiduciary claim would effectively resolve the claims of every class member.
It is impossible at this stage of this matter to form any view on that question because they have not brought forward the contractual documentation for a single retailer and said, “Here is documentation. It is not the documentation that the Court considered in Roxborough but it is good enough”.
GUMMOW J: The rule that was being considered in the Rules of Alberta appears at paragraph 10 of the judgment. That is in similar terms, is it, to the New South Wales rule?
MR GLEESON: It is very close, your Honour. It is basically in the same Chancery precedent.
GUMMOW J: It says “a common interest” not “same interest”. So it is broader – well, maybe, I do not know.
MR GLEESON: Your Honours, there were two matters I wished to complete on the discovery order. If we are correct about the limitation period requiring action to be brought on the cause of action, then it is futile. Next could I identify the constitutional point and how it relates to discovery? Could I go to McBain [2002] HCA 16; 209 CLR 372 and draw attention to the key passages. Your Honour the Chief Justice at paragraph 7, 22 and 25; your Honour Justice Gummow and Justice Gaudron between paragraphs 62 and 72, and also 78; and your Honour Justice Hayne at paragraphs 243 to 246.
We submit that, as your Honours have said in Agtrack, one must look at the pleading and the facts closely to identify whether there is a constitutional matter. I have taken some time to go through the facts because they are critical to this argument. If one simply read the summons, the argument would not go very far. When one looks at the surrounding facts, these are the conclusions. Immediately prior to filing the summons there was no justiciable controversy between any retailer and Mobil. Secondly, the filing of the summons evidenced Firmstones provoking a controversy with Mobil. The controversy was essentially by Firmstones’ claim that a lot of retailers may - - -
GUMMOW J: All of this assumes a construction against you of Part 8 rule 13, does it not?
MR GLEESON: Your Honour is correct.
GUMMOW J: If we accept your construction arguments on Part 8 rule 13, we do not get to this.
MR GLEESON: We do not, your Honour. I am just identifying what is the controversy that Firmstone is stirring up. The controversy is, “We, Firmstones, think a lot of retailers may have causes of action which are slumbering and we want to get money from you by reference to those causes of action and, admittedly, we will pay some of it to some of those people if we can find any of them”.
In McBain your Honours dealt with the case where there had been an exercise of judicial power between A and B, and C, as a matter of principle it is said, wanted a court to exercise judicial power to reverse the first decision. That is not quite our case. In our case there are two differences. One is there has not yet been an exercise of judicial power on the claims between the retailers and Mobil and there never would be but for Mr Firmstone. Secondly, Mr Firmstone’s motive is not principle, but profit. Leave that aside.
If one correctly characterises the controversy as one that Mr Firmstone has created with Mobil, then Mr Firmstone is like the Catholic Bishops. There is no justiciable issue between him and Mobil. There is a controversy, but it is not a justiciable issue. He has no right to have any court determine whether retailers have good causes of action absent some assignment of those causes of action to him, assuming that is permissible. So that is the first problem.
The next issue then is that the use of Part 8 rule 13 and the claimed discovery order can properly be characterised as ancillary to the resolution of Mr Firmstone’s controversy with Mobil, the non-justiciable controversy, and as such they are not an exercise of judicial power and they are not directed to quelling a controversy.
GUMMOW J: You would have to allow, if Part 8 rule 13 has the construction of which you complain and that is the correct construction – the construction of which you complain, assume that it is correct for a moment – you run into this problem, I think, that Part 8 rule 13 follow Order 16 rule 9 of the Judicature Act Rules set out on page 3 of the Duke of Bedford’s Case [1901] AC 1 – and that rule was said by Lord Macnaghten to be no more than what they have been doing in Chancery for a long time – you run into a Davison Case type problem, do you not, with judicial power?
MR GLEESON: Your Honour, it may be - - -
GUMMOW J: Because looking at the history of how these things have been done, if this construction is correct, it has been done and been able to be done for a long time before Federation.
MR GLEESON: Yes. However, it is raised in the particular context which we have not found in any of the old cases where a third party who in common law would just be called a champertor and maintainer, but in constitutional terms is like the Catholic Bishops, has no right to stir up someone else’s controversy, is the person driving the representative action and it is in that particular context - - -
HAYNE J: But that assumes it is a representative action. Leave aside the points of colour that you make about champertors and maintainers et cetera. Is it in accordance with received knowledge about representative actions under the old Chancery practice for a plaintiff to sue as representative of a class whose members are described in the fashion in which this class is?
MR GLEESON: We would submit not.
HAYNE J: What is the best or closest analogy you can draw from the cases?
MR GLEESON: Your Honours, we have referred to Wilson v Church (1878) 9 Ch 552 which was a case where a representative defendant was struck out and the court said, briefly admittedly, you cannot be a representative without a constituency, and on the facts there was no constituency. It is at 559 point 2.
HAYNE J: There may or may not be some support for
that approach to the Rules by the necessity, or the perceived necessity, to have
particular
rules dealing with classes of unborns, but absent a specific rule
dealing with classes of unborns in particular kinds of litigation,
there maybe
be difficulty in suing or being sued to represent a class which extends to the
unborns.
MR GLEESON: Yes. As your Honours pointed out in
Wong v Silkfield, when one looks at Chancery, the action was used either
in the auxiliary jurisdiction where there was a real risk of a multiplicity
of
common law actions which needed to be avoided by an equitable action which
usually was a bill of peace and it usually was the
prospective defendant who
would start the action or, in pure equitable claims, the rule was there as a
relaxation of the strict rule
that all persons interested in the suit should be
present.
Just before your Honours adjourn, can I test the constitutional point this way, with this hypothetical law passed by the Parliament in 2006. It is the High Court Amendment Act. Section 1: The High Court may, if it considers one or more legal wrongs are being left unremedied, issue a subpoena to any citizen requiring the citizen to disgorge the names and addresses of persons who may have a legal claim against him and relevant documents. Section 2: The High Court may thereafter issue notices to the persons whose names and addresses have been obtained under 1, informing them of their potential claims against the citizen and how they might vindicate their claims. Section 3: The High Court may charge a fee, including a success fee, to the notified persons for rendering the service under section 2.
KIRBY J: I just do not think this is in any way analogous. This is somebody out there who is coming to the courts. It is not the court taking an initiative. Maybe we should have such provisions, but that is the inquisitorial system.
MR GLEESON: Your Honour, the only differences between that hypothetical statute and our case are these. It is the funder, a person who is like the Catholic Bishops, who has made the judgment that claims are being allowed to lapse. The notice is being issued by the funder, but under court sanction – the notice here does have court sanction attached to it – and the funder takes the fee.
GUMMOW J: At page 11 of the Duke of Bedford’s Case, there was an argument that these growers at Covent Gardens with their stalls there were a fluctuating and indefinite body and that that was the circumstance that took the complaint outside the rule. That was rejected.
MR GLEESON: And the common question is identified in Duke of Bedford which was capable of definition and of a declaration. Then, your Honours, the individual causes of action of six plaintiffs were allowed to be co-joined with them as parties. Our submission is that on this question of individual causes of action, if you trace Duke of Bedford through to Prudential Assurance v Newman, Lord Justice Buckley in dissent in Markt, which is the liberal view, Justices Toohey and Gaudron in Carnie, Supreme Court of Canada in Dutton and Justice Handley’s book, in Spencer Bower, Turner, they lead to a proposition that this representative action was never a means for the so-called representative to bring action on the causes of action of other persons. It was a means to determine the common questions.
GLEESON CJ: How long do you think you will need to finish your argument?
MR GLEESON: About 15 minutes, your Honour.
GLEESON CJ: We will hold you to that and we will adjourn now and resume at 2.00 pm.
AT 12.49 PM LUNCHEON ADJOURNMENT
UPON RESUMING AT 2.02 PM:
GLEESON CJ: Yes, Mr Gleeson.
MR
GLEESON: Your Honours, I put these propositions on maintenance and
champerty. Firstly, these concepts still exist in our law. Secondly, the
definition of them in broad terms is that given by Lord Mustill in Giles
v Thompson [1993] UKHL 2; [1994] 1 AC 142 at 164D. Thirdly, what constitutes
wanton and officious intermeddling in the disputes of others or assistance
rendered without justification
or excuse may alter from time to time in
accordance with the policy of the law and the ingenuity of intermeddlers to find
new forms
of intermeddling. Fourthly, as one example of wanton and officious
intermeddling, the law was correctly stated in Canada in the
Ontario Court of
Appeal in McIntyre Estate v Ontario (Attorney-General), which should be
on one of the lists, at paragraph [33] where this was said:
Whatever its historical origin, the authorities, both English and Canadian, have consistently treated champerty as a form of maintenance requiring proof not only of an agreement to share in the proceeds but also –
and I emphasise –
the element of encouraging litigation that the parties would not otherwise be disposed to commence.
And that is sufficient to establish our case.
KIRBY J: What does “disposed” mean though? It may be that they just cannot afford it or think it is too costly. You know, it is a costly procedure and becomes more costly every year.
MR GLEESON: “Disposed” meaning having done something to initiate or claim a right to a legal remedy from the defendant.
HAYNE J: That would necessarily encompass within its reach the ordinary debenture holder or bond holder’s action which has been known to the law for over a century, because the individual debenture holder may not have sufficient financial reason to institute proceedings, but the representative suit brought on behalf of debenture holders is a common place - - -
MR GLEESON: In your Honour’s example there will be, to attract the representative procedure, both the representative plaintiff and there will be the requisite number of numerous persons who are, to use this language, disposed to commence the action. Our point is in the present case neither Trendlen nor any other person was disposed to commence an action but for the activity of Mr Firmstone. That is the finding of fact. Fifthly, your Honour, we put that the concepts of maintenance and champerty remain part of our law in a number of different areas and should not be abolished, either directly or by a side swipe.
GUMMOW J: Has anyone said it should be abolished?
MR GLEESON: In some of the interveners’ submissions the proposition is that we should all be terribly modern and recognise that there is no real reason for these concepts any more and there is simply a more general amorphous abuse of process concept that requires a proven misuse of the court’s process in fact and nothing less. That is the proposition I am stating briefly. It may not be controverted by all.
Can I just identify three areas where it remains part of the law. The first is it is a ground to avoid a contract between the maintainer and the party. Secondly, it is a reason to deny the assignability of some causes of action. In tort the law remains in this Court as stated obiter by Poulton 89 CLR 540 at 602 that causes of action in tort cannot be assigned. The position is the same in Canada: Fredrickson (1986) 28 DLR (4th) 414. Whether a cause of action in restitution is assignable we submit is an open question in this Court. In Mutual Pools - - -
GUMMOW J: What do you mean by “cause of action in restitution”?
MR GLEESON: Whether the cause of action asserted in this case for recovery of money paid on the basis of a consideration that has failed is assignable.
GUMMOW J: That adds some precision to it.
MR GLEESON: We submit it is an open question in this Court. In Mutual Pools v The Commonwealth [1994] HCA 9; (1994) 179 CLR 155 Chief Justice Mason said briefly that a claim for mistake was not assignable – that is page 173 – whereas Justice Brennan at 176 took the view that they were assignable but, in any event, at least for some causes of action, their non-assignability is a reflection of maintenance and champerty. A third area, as mentioned earlier today, is the law’s opposition to contingency fees for lawyers. At general law that is the position declared by this Court in Clyne’s Case and its statute – we have given the references.
KIRBY J: It is a rather complacent view of the law though. You may condemn it as modern to look for ways around it, but some may say we just should not be complacent about the fact that in our society a lot of the law is just not enforceable because most people cannot afford it.
MR GLEESON: Your Honour, we submit Clyne’s Case remains the law in terms of the professional conduct of solicitors and it has been reinforced by statute, subject to the very limited exception for the 25 per cent uplift in certain jurisdictions. The next proposition is that if a lawyer is not to be permitted to be tempted by the conflict arising from the share of the spoils, the position is even stronger with a funder who is unlicensed, undisciplined and not an officer of the court.
The second-last proposition is that if there is maintenance in champerty, giving the concepts of officious intermeddling their proper meaning, that is the basis for a stay of the action without a further inquiry by the court. Stays have been granted in England in Grovewood Holdings v James Capel [1995] Ch 80 and in the Full Court in Western Australia in Clairs Keeley v Treacy [2003] WASCA 299; (2003) 28 WAR 139. I would draw attention to, without reading, certain paragraphs which put the view of public policy in the area of funding, which is the other side of the coin put by your Honour Justice Kirby, paragraphs 193 and 196. In that case there was found to be maintenance and champerty between paragraphs 201 and 207. There was an abuse of process constituted by that maintenance and champerty and a stay was granted. That case went to the Western Australian Full Court two further times. The second time the stay was reaffirmed: [2004] WASCA 277; (2004) 29 WAR 479, particularly at paragraphs 71 and 134. The stay was lifted in the third judgment on 10 May 2005.
The final proposition is that if there is maintenance and champerty, there is no need to find additional evidence of a risk to the court’s process. The maintenance and champerty provide the risk. If there is need for additional evidence, we have it here.
GLEESON CJ: This may have no bearing on this particular case, but maintenance and champerty does not require intermeddling, does it? Take the straightforward case of a solicitor who acted for a client on the basis of a share in the proceeds of the outcome. That would be champertous, would it not?
MR GLEESON: That would be champertous.
GLEESON CJ: But it would not involve intermeddling.
MR GLEESON: Depending which way one views it, it is either not intermeddling or it is maintenance, but maintenance for a proper motive.
GLEESON CJ: The only reason I asked the question is that that subject was dealt with by the Court of Appeal of New South Wales in a case called Smits and Leslie v Roach, which was before us a few weeks ago, but not on that point. But there they considered the consequences for enforceability of a contract, for example, of a champertous nature.
MR
GLEESON: Yes, another example where the concept remains alive.
Your Honours, the final matters in the time are some references on matters
I put this morning, if I could just list them and then sit down. Firstly, on
our first hurdle to the representative action, we would
refer to
Justice Starke’s judgment in Templeton [1921] HCA 55; (1921)
30 CLR 34 at 77 which your Honour the Chief Justice cited in
Mobil. Secondly, in terms of the proposition that the representative
action does not allow the pursuit of individual causes of action
absent persons
being joined as parties, in Prudential Assurance v Newman Industries
[1981] 1 Ch 229 at 255 Justice Vinelott so held. In particular he
said:
Any member of the class will have to bring his own action to establish damage within six years from the date when the cause of action accrued. The only effect of an order in favour of the plaintiff in its representative capacity will be that the issues covered by that order will be res judicata.
This was said specifically:
the Limitation Act 1939 will continue to operate in the same way as it would have operated if no order had been made in the representative action.
And that ties the link between they must be parties,
they must bring action and Part 8 rule 13 does not “stop the
clock”.
Against us on this topic is Irish Shipping which we
submit is a case of one plaintiff, not many represented parties. Next, I put
the proposition this morning that there was
an absence of evidence of common
interest. I referred to Mr Davidson’s affidavit, volume 1 at
pages 66 to 73. There is one
example of a possible contractual term which
the funder may seize upon which is at page 778. Our proposition is that it
has not
been identified
how many retailers have that term, whether that term
is the source of the Roxborough cause of action or that term plus other
contractual documentation, or what common question arises out of
it.
Your Honours, we accept that the summons did not need to be verified or certified having regard to the provisions I referred to this morning. On the Limitation Act on our researches only New South Wales has the extinction provision: section 63. The United States Supreme Court authority relied upon by the President on the Limitation Act at paragraph 45 is, with respect, not applicable because under the class action scheme established in the United States the represented persons become parties.
Finally, two formal matters, the appellant is wrongly named as Mobil Oil Australian Pty Limited, and we have lodged documents to have that formally changed to Mobil Oil Australia Pty Limited. Lastly, the point has been taken in the respondent’s submissions that the Limitation Act issue is not squarely enough raised in the notice of appeal. We have given the references in our submissions in-chief to why we say it is. If it is not, we seek leave to raise it squarely and we have provided a draft document to Mr Gageler.
GLEESON CJ: Do you want us to make an order about the name?
MR GLEESON: Yes.
GLEESON CJ: What is the order that you want us to make? Just tell us.
MR GLEESON: That the name of the appellant in the proceedings be changed to Mobil Oil Australia Pty Limited.
GLEESON CJ: Yes, we make that order.
MR GLEESON: May it please the Court.
GLEESON
CJ: Yes, Mr Gageler.
MR GAGELER: Your Honours,
conscious of the need to divide the field with Mr Walker and
Mr Burmester, I propose to deal first and principally with
the constitution
of the proceedings as representative proceedings, then separately with abuse of
process, which Mr Walker will address
as well, and then very briefly with
the question of discovery.
Your Honours, in dealing with the constitution of the proceedings as representative proceedings, can we start by seeking to place Part 8 rule 13 within the context of the Rules as they existed at the relevant time. Could I ask your Honours to look at the extracts of the Rules which we have provided. Part 42 rule 10, which is on the last page that has been handed up, your Honours will see, provided that in any proceedings a person who was not a party could enforce an order made in his or her favour in those proceedings.
Your Honours will see, turning back a page, again Part 21 rule 2, which in representative proceedings in every case required the leave of the court to discontinue and significantly it relied for its operation not on the goodwill of a party or an agent of a party, but on the certification of a solicitor, being an officer of the Court, and although it is a matter to which I will return under the abuse of process head, can I say this, that there is not the slightest doubt that had the Mobil offer been taken up and discontinuance been sought to result from the taking up of that offer, leave to discontinue would have been required under Part 21 rule 2. In our submission, there is not the slightest reason in the evidence for taking the view that that leave would not have been sought or that full disclosure would not have been made at the time of seeking that leave.
Can I say this as well, your Honours, that in the respondent’s bundle of materials which have been separately provided to the Court, if your Honours go to page 1, there is an extract from the transcript of the first day of the hearing before Justice Einstein and it is an example of Part 21 rule 2 in operation in the present proceedings, and that was where leave was sought from Justice Einstein to discontinue proceedings against the Tasmanian wholesaler on its undertaking on the first day of the hearing to refund 100 per cent of the claimed licence fee to its retailers.
GLEESON CJ: What would have been the considerations relevant to a decision whether to grant leave if the offer had been accepted?
MR GAGELER: There would have been the decision of Justice Einstein which had held that the proceedings were not properly constituted as representative proceedings in the analogous tobacco cases. There would have been the pending appeal to the Court of Appeal in those proceedings. There would have been the question in the light of that circumstance whether the Court in the Mobil Case should follow Justice Einstein’s view and say, “Well, despite the formal constitution of these proceedings as representative proceedings, they are not properly so constituted and therefore no leave is required”, or as perhaps would have been more likely the case, the Court could have stood over the matter to await the outcome of the Court of Appeal’s decision.
Beyond that, if the view was taken that the proceedings were properly constituted as representative proceedings, then frankly it is difficult to see how the leave of the Court would be granted in the circumstances of the offer.
HAYNE J: What disclosure would have been made in respect of the asserted representative nature of the proceedings about - what disclosure should have been made about the identity of the persons whom it was asserted were represented?
MR GAGELER: Well, your Honour is talking about a hypothetical where there was an agreement between Trendlen and Mobil in circumstances where Trendlen could do its best to bring before the Court the circumstances of the settlement and the full details of the settlement and what it knew and what Firmstones knew about the represented class and where Mobil was in a position to supplement that information as best it could.
HAYNE J: If the criterion specified in the originating process were applied at the date of commencement of proceedings or at the date of this hypothetical application for leave to discontinue, what actual person could be identified as satisfying that criterion?
MR GAGELER: Your Honour needs to look at the criterion stated in paragraph 2 of the summons which – we are talking about Mobil now, your Honour, volume 1, page 8, and the criterion in substance is a criterion which refers to persons who as at the date of the commencement of the proceedings have outstanding, meaning unresolved, causes of action of an asserted identical nature against the defendant, asserted further on in the pleading, particularly in paragraphs 18, 19 and 20, to arise out of materially identical, factual circumstances.
HAYNE J: I simply do not understand how you draw that from those words without striking out from the summons such matters as the last sentence of paragraph 1 appearing at page 4.
MR GAGELER: Delighted to do that, your Honour, delighted to do that.
HAYNE J: No doubt you would, hence my question, Mr Gageler. What actual person at the date of commencement of the proceedings satisfied the criterion specified in the summons?
MR GAGELER: Your Honour, I think that that is a point to which I propose to come in a moment and I will deal with your Honour’s question because I know where it is coming from and I know where it is going. While I am dealing with the Rules, can I take your Honours to Part 8 rule 17 which your Honours will see allowed the Court to give the conduct of the whole or any part of proceedings to such person as it saw fit. That is significant for two purposes. One is that, in our submission, it provides an appropriate remedy for any delinquency or perceived delinquency on the part of a plaintiff or an agent of the plaintiff and it allows, if needs be, for the splitting of the class into separate and separately represented groups.
Then, your Honours, Part 1 rule 13 we have also provided. It allowed the Court to give directions where the procedure under the Rules was wanting or in doubt, thereby allowing the Court to pick up some of the language of Sir Frederick Jordan. Your Honours will see it at the bottom of the page, allowing the Court to devise ad hoc procedures doing the best it can with the means available.
Then, your Honours, overarching all of that, from January 2000 was the statement of overriding purpose in Part 1 rule 3, that being in subrule (1) to which the Court was required to give effect by subrule (2) both in interpreting the Rules and in exercising discretions under them.
Now, can I return to Part 8 rule 13(1) and attempt, I hope, to deal squarely with your Honour Justice Hayne’s question. It is important in looking at rule 13(1) to recognise that it deals with two things. It deals with the commencement of representative proceedings and it deals with the continuation of representative proceedings. It deals with the commencement of representative proceedings in every case as a matter of right where the same interest criterion is fulfilled. It deals with the continuation of representative proceedings in every case as a matter of discretion of the court.
In each of the cases before the court the proceedings were commenced on behalf of a class of persons described or identified in paragraph 2 of the summons. There is a question which I will address as to whether those persons have the same interest. The plaintiffs - - -
GUMMOW J: Paragraph 2 of the summons?
HEYDON J: Paragraph 2 of the plaintiff’s contentions.
MR GAGELER: I am so sorry, paragraph 2 of the plaintiff’s contentions, and I may have misled your Honour Justice Hayne by wrongly referring to paragraph 24 - paragraph 2 at page 8, for example, in the Mobil Case. But the plaintiff’s proposal, transparent from the beginning, was at an appropriate time there be an order in the discretion of the court that the proceedings continue only in respect of some of the persons on whose behalf the proceedings had been brought, that is, those who chose to opt in, but before I go back to the identification of the class for the purpose of the commencement of the proceedings, can I say something about that proposal as to the exercise of the court’s discretion as to the continuation of the proceedings. They are really four fairly short points to make.
The first is that your Honour Justice Hayne is correct in pointing out that at the end of paragraph 1 of the summons under the heading “NATURE OF THE DISPUTE” there is a reference to represented persons becoming named plaintiffs in the proceedings.
Your Honours will note that the notice of motion that was before Justice Einstein in the Fostif group of proceedings and before Justice McDougall in the Mobil Case in paragraph 5 in each case foreshadowed only an order that the proceedings be continued as representative proceedings in respect of those who opt in. There was no suggestion or application that they become named plaintiffs.
Your Honours will see these documents in the Campbells appeals, volume 1, page 276; in the Mobil appeal, volume 1, page 130. They are the notices of motion. That was what was being sought and if there was any ambiguity, your Honours, that was clarified before Justice Einstein in what his Honour saw fit to label “the Late Procedural Change”. Your Honours will see that volume 4, page 1230, and what was made clear to his Honour was that there was a proposal that the opt-in notice be amended, as Mr Myers indicated to the Court this morning, to make clear that there was no intention that those who opt in become parties.
It simply was not necessary to do so in the light of Part 8 rule 13(4) which says that a judgment in representative proceedings is binding upon those represented and not necessary in the light of Part 42 rule 10 to which I have already taken your Honours which says that a person can take the benefit of an order without needing to be a plaintiff.
GLEESON CJ: Mr Gageler, the opt-in procedure is based entirely on the language of rule 13(1), is that right?
MR GAGELER: Yes, that is right.
GLEESON
CJ: I just want to understand how that works with the text:
the proceedings may be . . . continued, by or against any one or more of them –
that is, the persons who have the same interest, that is the
persons on whose behalf they were commenced –
as representing all –
of them, that is as representing all of the persons on whose behalf they were commenced.
MR GAGELER: Yes.
GLEESON CJ: I thought the continuation was only to be as representing the persons who had opted in.
MR GAGELER: Your Honour, it says:
representing all or as representing all except one or more of them.
So the class could be defined as all except those who have not chosen - - -
GLEESON CJ: Those who opted out or those who did not opt in.
MR GAGELER: Who did not opt in or it could be defined more directly as those who opt in. Your Honours, the second point we wanted to make about the proposed procedure is that during the hearing before the Court of Appeal the suggestion was made by Justice Hodgson which was subsequently reflected in his Honour’s judgment at paragraph 298 of the decision of the Court of Appeal, the suggestion being that represented persons should be notified of the option of rejecting Firmstone’s proposed opt-in terms and coming along themselves and making application to run the proceedings for their own claims if they so wish.
That is something that we embraced at the time the proposal was made. It is a course that is facilitated by Part 8 rule 17, to which I have taken your Honours. It was embraced, as I said, by the plaintiffs in the Campbells group of proceedings and it was actively taken up by the plaintiff in the subsequent Mobil proceedings and you will see an affidavit explaining that in the Mobil appeal books, volume 3, page 138.
The third point, and it really follows from the second, is that the opt-in proposal at this stage has been flagged but it has not at this stage been pursued, that is, paragraph 5 of the notice of motion lies ahead. It was not moved upon in the courts below and the precise form of the notice to represented persons and the precise form of opt-in procedure, if there is to be one, we accept are entirely matters that lie within the discretion of the court.
The fourth thing really follows from the third and that is as
in our submission is demonstrated from the form of the plaintiff’s
proposal, as is demonstrated from the transparency of the role of
Firmstone’s which was entirely up front in the evidence,
the
plaintiff’s openly embrace the broad scope of the supervisory power of the
Court in proceedings under Part 8 rule 13.
Your Honour the
Chief Justice in Mobil [2002] HCA 27; 211 CLR 1 at
paragraph 21 – that is the first Mobil case – in an
analogous field quoted Justice Brennan in Carnie as having:
pointed out that it was “precisely because of the flexible utility of the representative action that judicial control of its conduct is important, to ensure not only that the litigation as between the plaintiff and defendant is efficiently disposed of but also that the interests of those who are absent but represented are not prejudiced by the conduct of the litigation on their behalf”.
We accept that. Indeed, we seek to invoke it.
May I go then back to the issue concerning the regularity of the commencement of the proceedings, the identification of the class and whether the class of retailers referred to in paragraph 2 of the contentions can be described as numerous persons who have the same interest within the meaning of the Rules? I have sought already to make the point that the class identified in paragraph 2 is not identified by reference to some outcome or contingency. It is identified by reference to persons who, as at the date of the summons, have an outstanding or unresolved cause of action that is then pleaded in the balance of the summons.
It is said against us, well, there was really no dispute as a
matter of reality and that no one except Firmstones was agitating this
cause of
action. The difficulty with that is it overlooks what was at least implicit in
Carnie and made explicit, as we understand it, in MobiI. If
your Honours look at [2002] HCA 27; 211 CLR 1, particularly at paragraph 22
immediately following the passage I have already read to your Honours, the
second sentence at paragraph
22 where your Honour the
Chief Justice said:
Limitation on the ability of group members to control the manner in which the proceedings are conducted, and potential lack of involvement in or even awareness of proceedings, were features of the procedural rules considered in Carnie –
Your Honour goes on in the last
sentence to say:
It is not unknown for judicial decisions to determine the rights of people who are unaware of their existence, or even of people who were unborn at the time of the decision.
In the joint judgment there are a number of
passages. May I take your Honours just to one of them. Page 30
towards the end of paragraph
33 your Honours are here referring to
Chancery practice and your Honours say, about point 2:
A common example of its use was by one or more creditors of a deceased person seeking an account of the deceased’s estate, ascertainment of the deceased’s debts and an order for their payment, and its use extended to cases in which members of the class on whose behalf the suit was brought were “perfectly ignorant of the proceedings, and of what is really going on”.
Mention was made this morning of the decision of
Sir George Jessel in Wilson v Church (1878)
9 Ch D 552. At the bottom of page 558 and at the top of
page 559, Sir George Jessel was dealing with the proposition put
to him that there cannot
be a representative without some form of active
constituency. Your Honours will see 559, about point 3,
his Lordship says:
That is not the modern practice of legislation or pleading -
It is next said here this group
of - - -
GUMMOW J: That was a bondholder’s action, was it not?
MR GAGELER: Yes. It is next said here, your Honours, these - - -
GUMMOW J: No doubt that there would be numerous persons having the same interests of the bondholder.
MR GAGELER: That is right, the same legal interest. That is the point, the same legal interest. Not same interest in agitating the legal rights, but the same legal rights or interest, as the case may be. Your Honours, it is put against us here that the group of retailers - - -
GUMMOW J: I am not sure I understand that last distinction you were just putting that you say gets you over the line.
MR GAGELER: What I am dealing with is whether it is necessary to have people who are in actual active dispute about their legal rights or need to have a representative who is already in some way acting - - -
GUMMOW J: I think it was put against you, at least at one stage, one did not know, at least in the Mobil Oil Case, whether there was any persons having the same interest in getting their money back because of the uncertainty as to trading arrangements.
MR GAGELER: Yes, I am coming to deal with that now, your Honour. I wanted to put aside the subjective interest in the dispute point. That deals with that. Now, the different trading arrangements point really comes down to this, that it is asserted in the pleading that these represented retailers not only have a materially identical cause of action, that is, it is the Roxborough cause of action, but that their causes of action arise out of materially identical circumstances – not identical necessarily in every respect, but materially identical circumstances. That is the way in which the claim was pleaded.
Now, in our respectful submission, the question is: does the class as so defined have a common interest, being a common legal interest, within the meaning of Part 8 rule 13? For that, one has to unpack what is meant by “common interest”. That is something that has already been done in Carnie, as very usefully explained in Wong v Silkfield. If your Honours go to Wong v Silkfield [1999] HCA 48; (1999) 199 CLR 255 at paragraph 27, without reading it to your Honours, what is there extracted very usefully are the various formulations that were used in Carnie. What they really come down to is this, that all that is necessary to establish the same legal interest for the purposes of Part 8 rule 13(1) is that there be the same interest or a community of interest in the determination of some question of law or fact which is not trivial to the resolution of the claims of members within the class.
GLEESON CJ: Is it the case that in all this litigation the taxes in question were passed on to the consumers?
MR GAGELER: Yes.
GLEESON CJ: What we are now dealing with is a dispute between the wholesalers and the retailers as to which of them is entitled to the windfall gain?
MR GAGELER: Yes.
GLEESON CJ: That entitlement, according to Roxborough, depends upon the precise contractual arrangements that one entered into between the parties?
MR GAGELER: Yes.
GLEESON CJ: So how do you characterise the interest, in terms of the claim or in terms of the contractual relations?
MR GAGELER: Your Honour, the same interest need only be in the determination of a common question of law or fact. If I can confine myself for a moment to the common questions of law, your Honours will note that in a Fostif judgment in the Court of Appeal at paragraphs 213 and 214 President Mason identified a number of common questions of law which his Honour accepted as arising. That which is identified in paragraph 213, that is, putting it in another way, what is the nature of the cause of action in Roxborough, is something that has been glossed over in the submissions of the appellants before your Honours today, but there was at an interlocutory stage before Justice Einstein and before the Court of Appeal in the Campbells’ Case and before Justice McDougall in the Mobil Case a very real issue about the nature and extent of the cause of action in Roxborough.
Your Honours will see in the Fostif decision itself, from paragraphs 226 through to 255, the President dealt with what he introduces at paragraph 226 as another legal issue common to all represented persons, that is, whether the nature of the cause of action in Roxborough turned entirely on the objective circumstances or the subjective intent of the individual retailers. The equivalent of that – it was not quite the same point, but the equivalent in Mobil, your Honours, is a very large slab of Justice McDougall’s judgment that has not been referred to in argument before your Honours, paragraphs 36 through to 51 where his Honour dealt with the question of whether the pleading to which I have already referred, paragraphs 18, 19 and 20, which did not rely upon separately identified consideration but simply separately ascertainable elements of consideration, were sufficient to satisfy the Roxborough cause of action. So there is a very real issue – it may remain a very real issue – between the parties as to the nature of the cause of action.
Your Honours will also see that his Honour at paragraph 214 identified a number of other issues but included within those was the effect, if any, of sections 2 and 3 of the Recovery of Imposts Act – that is a special limitation period point – and, again, if your Honours were to look at the judgment of Justice McDougall, your Honours will see that he was grappling, amongst other things, with an argument that all of the claims on behalf of all of the retailers were barred, not because of the limitation period argument now put to this Court, but because of the operation of sections 2 and 3 of the Recovery of Imposts Act or the equivalent in other States.
So, your Honours, if the test, as we take it, was settled in Carnie and repeated in Wong v Silkfield, are there common questions, be it of law or of fact which are not trivial that are involved in the resolution of the claims, we comfortably get over that hurdle simply by pointing to those common questions of law.
Your Honours, we would not shrink from the proposition that, so far as the facts are concerned, to assert facts that are facts to be materially identical is itself sufficient to raise a common question of fact for the purposes - - -
GUMMOW J: Is there any equivalent in the Supreme Court Rules of section 33Q of the Federal Court Act which provides for this problem, that there may be some issues in common, but a lot that are not, and those which are not can be hived out.
MR GAGELER: That is exactly right.
GUMMOW J: But does the State court system provide that?
MR GAGELER: Well, not expressly, but it is something that is able to be done by way of stating separate – there is provision in the Rules in the State system for the stating of separate questions.
GLEESON CJ: Were all those breast implant cases conducted as representative proceedings? There the most obvious difference was the measure of damages in each case.
MR GAGELER: I just do not know the answer to that. Mr Walker will know the answer to that. But your Honours might recall the case of Wong v Silkfield. It was a - - -
GUMMOW J: That is a Part IVA case.
MR GAGELER: No, it was not – I am sorry, I am thinking of another case, your Honour, Muin v Refugee Review Tribunal [2002] HCA 30; 190 ALR 601. I do not want to take you to it, but your Honours might recall that it was a case that concerned whether the processes of the Refugee Review Tribunal complied with the Migration Act in various respects and your Honours may recall that that was a proceeding that was constituted as a representative proceeding under Order 6 rule 12 of the old High Court Rules, the precise equivalent in precisely identical terms to Part 8 rule 13, and your Honours will recall the way in which that case was managed.
It was done by dividing the class into groups, by determining a question reserved in respect of a representative case in each group, and then of course remitting the balance to the Federal Court for the details to be sorted out. But that is the way in which these proceedings can be very simply managed without the need for any particularly prescriptive approach as one finds in Part IVA of the Federal Court Rules.
GUMMOW J: But what in fact would happen in terms of these Rules? You have mentioned separate questions in the Supreme Court system. There is no equivalent to 33Q. You say there is somehow to be devised by reference to Sir Frederick Jordan’s ad hoc ideas.
MR GAGELER: Well, if you need to go to that, yes, but, your Honours, nor was there any particular procedure in the Muin Case that allowed that group - - -
GUMMOW J: I know. Muin has not had the happiest of legacies actually.
MR GAGELER: Perhaps, but so far as your Honours are concerned, your Honours were able to manage it with no particular difficulty.
GUMMOW J: I was not managing it.
MR GAGELER: Can I just say this,
your Honours were taken to a Canadian case, the Western Canadian
Shopping Centres Case (2001) 201 DLR (4th) 385. Can I take
your Honours back to that just for a moment. It was asserted, as we
understood it, that this case stood for the equivalent
rule in Canada being
interpreted quite narrowly. We do not read it as so holding. The rule
your Honours I think have been taken
to is set out in paragraph 31.
That is within the Alberta Rules of Court. Your Honours were taken to
paragraph 35 where a number
of conditions are referred to. We do not read
the subsequent paragraphs as treating those conditions as being particularly
narrow
or restrictive. But, importantly, a passage your Honours were not
taken to is paragraph 43 – and of course we are dealing
here
with Alberta. It is said in paragraph 43:
The class action codes that have been adopted by British Columbia and Ontario offer some guidance as to factors that would generally not constitute arguments against allowing an action to proceed as a representative one. Both state that certification should not be denied on the grounds that: (1) the relief claimed includes a demand for money damages that would require individual assessment after determination of the common issues; (2) the relief claimed relates to separate contracts involving different members of the class; (3) different class members seek different remedies; (4) the number of class members or the identity of every class member is unknown; or (5) the class includes subgroups that have claims or defences that raise common issues not shared by all members of the class.
They are all reasons that are not
good enough for not allowing proceedings to continue as representative
proceedings and it is said,
following that”
Common sense suggests that these factors should no more bar a class action suit in Alberta than in Ontario or British Columbia.
So, under
the equivalent rule, none of those reasons were seen as
sufficient.
GLEESON CJ: Does that mean that if you go back to paragraph 35, condition (3) goes?
MR GAGELER: Yes, or condition (3) is given such little – yes, it is hard to see how condition (3) can be given any real content in the light of that. Of course, 35 is describing the history, your Honours. Paragraph 35 is not stated in a propositional form. Paragraph 35 is saying what Alberta courts move to do.
GLEESON CJ: Presumably part of the thinking behind condition (3) when it was originally imposed was consideration of what would happen on settlement.
MR GAGELER: Possibly.
GLEESON CJ: I presume it is a bit difficult to negotiate a settlement of a representative action where some plaintiffs are in a materially different position from others.
MR GAGELER: That is something that has been grappled with in the Federal Court. It is difficult. Sometimes you would have to make distinctions, yes. Your Honours, the argument that is now put, and it is put in different forms, to the effect that to have the same interest – you cannot have several claims and you cannot have several relief is really inconsistent with the Canadian approach. It is not the principle as formulated in Carnie and it is entirely inconsistent with the history upon which the Carnie principle was based.
Your Honours, I am conscious of the time. Can I very
quickly take your Honours to Justice McHugh’s judgment in
Carnie [1995] HCA 9; (1995) 182 CLR 398 relevantly at page 428,
point 9. There is at the bottom of page 428 a quotation from the
Taff Vale Case which is reported in the same volume as the
Duke of Bedford Case. There is then at page 429 a statement that
begins at about point 3 – this is referring to the old Chancery
practice:
In many cases, the Court allowed persons with the same or common interest to be joined in a representative action only because the defendant insisted that the suit was bad for want of parties –
et cetera. That is where Mobil wishes to leave the
historical antecedents, but his Honour went on:
In some cases the represented parties had consented to and encouraged the plaintiff to bring the action as a representative action. But in other cases the Court allowed the plaintiff to represent persons with similar interests whether or not they consented or even knew of the action. This was particularly true of actions arising from the activities of joint stock companies and friendly societies
We have given your Honours an example of just such a case in the reference in paragraph 42 of our submissions in Mobil, Cockburn v Thompson, where the represented group was defined in the bill as other proprietors of an institution who shall come in and seek relief by and contribute to the expense of the suit – just an illustration of the flexibility that existed in the old Equity practice.
At the bottom of
page 429, your Honours will see in Carnie v Esanda in
Justice McHugh’s judgment a passage that begins “In the Age of
Consumerism”, a reference to contemporary commercial
reality which we
embrace, and at page 430 your Honours will see the way his Honour
in this case identified the common question.
He says:
The entire object of the present action is to obtain a judicial determination as to whether the method that Esanda used in dealing with variations of loan or credit sale contracts complied with the Act.
In our submission, if one needs to look for a common question of fact, that in itself is a sufficient common question of fact. His Honour then goes on to refer to the old case of Markt and says that that no longer represents the law. It has already been conceded, I think, that the propositions put as to the need for several relief are inconsistent with Irish Shipping. Can I simply give your Honours the references in Irish Shipping [1991] 2 QB 206. Your Honours would see the relief sought at 217C, the argument as to the need to have common relief that was ultimately rejected at page 222F. At page 224C your Honours will see that reliance was particularly put upon the Markt decision and the judgment of Lord Justice Fletcher Moulton in that case and your Honours will see at 227B the rejection of the argument, and it is really the argument which Mobil puts in the present case.
GUMMOW J: What was going to happen in Carnie appears at page 399 about point 9. There was to be a declaration that the debtors were not required to pay any amount of the credit charges, and that was the common question.
MR GAGELER: No, with respect, it was not the common question. It was one of the forms of relief that was jointly beneficial, but the common questions were the common questions of law and fact. That is really what the case held.
GUMMOW J: Where it was going to go was to end up in this declaration, was it not? I am trying to find out what the judgment or order is going to be under this rule here in this case. I can understand what it was in Carnie.
MR GAGELER: The judgment will be – we do not shy aware from it – several judgments in favour of the plaintiff and the several represented persons. In the course of getting to those several judgments - - -
GUMMOW J: Judgments for what?
MR GAGELER: Money.
HAYNE J: That is Part 8 rule 13(4) will not be engaged?
MR GAGELER: Part 8 rule 13(4) will be engaged.
HAYNE J: How?
MR GAGELER: With respect to any judgment given in favour of a represented person. Part 8 will also be engaged by any judgment given against a represented person. Once engaged, your Honours, the represented person can, under Part 42 rule 10, enforce the judgment without need of being a party.
GUMMOW J: You are going to have a proliferation of judgments for different sums of money.
MR GAGELER: Yes.
GUMMOW J: All binding on this miscellany of people. So if any one of them dies or becomes insolvent, the liquidator can say, “Pay me, please”.
MR GAGELER: Your Honours, Part 8 rule 13(4) has plenty of work to do. Part 8 rule 13(4) could easily be engaged by stating the separate question for determination in the proceedings: are the claims statute barred by the general limitation period statutes or by the Recovery of Imposts Act?
GUMMOW J: I understand that.
MR GAGELER: The judgment, one way or the other, will be binding on - - -
GUMMOW J: I know, but I am just trying to inquire specifically what it might be. You said money, but you are now saying declaration.
MR GAGELER: I am sorry, that is the ultimate relief sought in the proceedings, yes, but there may be judgments that will be binding on the parties on the way to seeking that ultimate relief. But, your Honours, to say that Part 8 rule 13 is not engaged where the relief is several is to go back to exactly where the Court of Appeal was in the Markt decision which time has left behind.
GUMMOW J: Where the Court of Appeal was where?
MR GAGELER: In the Markt decision.
GUMMOW J: The Duke of Bedford?
MR GAGELER: No, after that. The Duke of Bedford was given a particularly narrow interpretation in Markt v Knight Steamship Co Ltd. That is the case that was referred to by Justice McHugh and by other members of the Court in Carnie, but Justice McHugh at page 430. I am sorry, I probably do need to take your Honours back to Irish Shipping [1991] 2 QB 206.
HEYDON J: Just for the record, Markt & Co Ltd v Knight Steamship Co Ltd [1910] 2 KB 1021.
MR GAGELER: Thank you, your Honour.
Irish Shipping [1991] 2 QB 206. I mentioned the argument that
was put and here there was one plaintiff seeking to sue defendants in a
representative capacity.
It is really the same question. Page 217C was
the claim that was made. Page 222F your Honours will see the argument
that was grappled
with, the same argument in this case:
First it is submitted that a case can never be within the rule where damages or debt are claimed against all the defendants severally.
It is said at page 224C the strongest authority in support
of that proposition is the judgment of Lord Justice Fletcher Moulton
in
Markt & Co Ltd v Knight, and you will see the quotation from
Lord Justice Fletcher Moulton that took a particularly narrow
view of one of the requirements
stated by Lord Macnaghten in the Duke of
Bedford Case to the effect that you could not have a class action where you
were seeking several relief or suing upon several causes of action.
That is
discussed over the next couple of pages and it is rejected at page 227B
where it is said:
In that state of the authorities it is not, in my judgment, the law that claims for debt or damages are automatically to be excluded from a representative action, merely because they are made by numerous plaintiffs severally or resisted by numerous defendants severally.
Now, that was really the end of it.
GUMMOW J: What was going to happen?
MR GAGELER: If the proceedings continue, what will happen - - -
GUMMOW J: In this case, in the Irish Shipping Case, what was going to happen?
MR GAGELER: What would happen ultimately would be that if certain common questions of law and fact were decided in favour of the plaintiff, then it was likely that the plaintiff would obtain judgment against all or some of the defendants within the represented class.
GUMMOW J: In differing sums of money?
MR GAGELER: In differing sums of money, yes.
GUMMOW J: How does that square with the language of subrule (4) of the New South Wales Rules?
MR GAGELER: Your Honour, it may well be that one need not get to subrule (4) to be able to obtain the judgment on behalf of the represented person in the proceedings.
GUMMOW J: All of this, to my mind, illustrates the wisdom in Part IVA.
MR GAGELER: And, your Honour, that is to return to the Chief Justice’s view, then as Chief Justice of New South Wales in Carnie.
GUMMOW J: Why should one have to scratch around with all these improvisations?
MR GAGELER: It is really working comfortably within a scheme of the Rules. In those circumstances, your Honour, to obtain a several money judgment in representative proceedings, it may well not be necessary to rely upon Part 8 rule 13(4). It is certainly not necessary to become a party to enforce a judgment. Your Honours, I see the time and I am - - -
GLEESON CJ: Do not let us detain you?
MR GAGELER: No, no. I will deal with the limitation issue very quickly. In our submission, there are two strands of it. One question is whether the proceedings were brought or commenced on behalf of the represented class within the meaning of the general limitation statutes. In our submission, that was correctly dealt with by Justice Mason at paragraphs 36 to 45 of the judgment and was dealt with on this basis. First, that it is the Rules of Court that determine when an action is brought or commenced for the purposes of the Limitation Act, and if one simply looks to the language of Part 8 rule 13(1) it is concerned with allowing proceedings to be commenced, the language of the Rule, by one representing all.
It is not insignificant that at the time that Carnie got to this Court all of the money claims in Carnie - there was not simply the declaratory relief that was claimed in Carnie, there were several money claims that were claimed in Carnie - all of those would have been statute barred at the time of the order for remitter from this Court.
GUMMOW J: Do you know what happened in Carnie after this Court?
MR GAGELER: Yes, there is a reported judgment of Justice Young when the matter went back. His Honour said we need to give notice to all these represented persons, who is going to pay, and the plaintiffs were not prepared to pay and the case did not go on.
GUMMOW J: There is a moral in that.
MR GAGELER: Your Honours, there is a separate argument that for represented persons to obtain judgment they need to be added as parties, in our submission, and they say as part of that argument that that would fall foul of the now repealed Rule of Court, Part 8 rule 11(3). The short answer to that is that the argument fails at the threshold. There is no need to become a party to obtain judgment. Your Honours, I am about to move to abuse of process. I think in the time available to me I will just deal perhaps with the Mobil offer and leave it at that.
The Mobil offer needs to be considered in this context, your Honours, that it was contained in a letter sent after the judgment of Justice Einstein and before the judgment of the Court of Appeal. The last paragraph of the letter, your Honours will recall, at volume 1 of the Mobil appeal book page 126 said we could not do this if the judgment of the Court of Appeal goes in our favour. Three weeks later that is exactly what happened and on any fair reading of the cross-examination of Mr Firmstone, parts of which your Honours have been taken to, what emerges from it is this that when the proceedings were commenced he regarded himself as under a fiduciary duty to treat all class members, known and unknown, equally. He said that almost exactly in those terms, volume 1, page 191, line 45.
He said after the
decision of Justice Einstein he regarded things differently and he took the
view that Justice Einstein, or another
judge of the Supreme Court would be
likely to follow the same view as Justice Einstein, unless that had been
overturned by the Court
of Appeal. He said as much, volume 1,
page 200, line 35. He said, in fact:
I assumed that the order Einstein gave would, absent the result of the appeal, be the same.
As is apparent from the terms of the letter itself, he knew that if the judgment of Justice Einstein was overturned by the Court of Appeal then things would go back exactly the way they were.
Your Honours, there is no doubt that if the offer had been taken up at the time then leave to discontinue would have needed to have been sought under Part 21 rule 2. It could not have occurred without the approval of the Court and there is simply no basis in the evidence, and it was not even put to Mr Firmstone in cross-examination, that the leave of the court would not have been sought and that appropriate disclosure would not have been made.
HEYDON J: Would the disclosure have included the letter of 9 March 2005?
MR GAGELER: Yes, it would need it, yes.
HEYDON J: Why precisely do you say that would have happened?
MR GAGELER: Your Honour, because Part 21 rule 2 would have continued to apply because the proceedings were constituted as representative proceedings. The only proper advice a solicitor could have given would have been to the effect that these are constituted as representative proceedings, there is an issue in the light of the analogous proceedings in the tobacco cases as to whether they are properly so constituted, you must bring that issue before the Court and seek leave, if leave is necessary to discontinue. If the Court pleases.
GLEESON CJ: Thank you,
Mr Gageler. Yes, Mr Walker.
MR WALKER: May it please
your Honours. The common law which obtained in the decision of these cases
in which we intervene was a common law
modified by statute, as your Honours
appreciate. Section 4 of the Abolition Act removed the existence of a
tort and of an offence
or crime. Section 6 of the Abolition Act, as
your Honours are aware, preserved – my word, not its, relevantly
– the
effect as a matter of – the vitiating effect of a policy
of the law on the validity or enforcement of a contract, together
with what is
described as another effect of illegality.
KIRBY J: But insofar as you are appealing to principles of the common law the statutes have not operated throughout Australia. In fact, in the majority of States there is no abolition by statute. So we have to state the common law for the whole country.
MR WALKER: Quite so. The common law is modified in New South Wales where these cases were decided. It is also modified in exactly similar fashion in other parts of the country but as Justice Kirby has, with great respect, correctly pointed out, not so as to do anything other than operate, work a statutory modification of the common law, not any other modification.
GUMMOW J: We are talking about sections 79 and 80 of the Judiciary Act. That is what we are talking about.
MR WALKER: Yes. Quite. It is a statutory modification within section 80 terms. The common law is still there to be discerned. The question in this case, as so often, was of the effect of the interaction of the common law, which is the common law in and of Australia and the relevant statutory modification which is in this case is of New South Wales. The position in which we have called the abolition States and the non-abolition States is set out in paragraph 4 of our written submission.
Now, there was no question directly or relevantly in any other way – that is, not by some other indirect course was it suggested that the validity or enforcement of the funding arrangements in the cases in which we intervene gave rise to a need, for example, for a permanent stay or indeed even a conditional stay of the kind that one sees recorded in some of the 19th century cases, such as “This case will not be entertained until the champertous arrangement is rescinded”. There was none of that in this case so that it left the issue raised as one on which we intervene so as to address the issue set out in paragraph 2 of our written submissions in the light of the grounds of appeal 2(a), (b) and (c) in those Fostif appeals.
Ground of appeal 2(c) explicitly relates to representative proceedings but not in a way that is of any concern of our intervention as your Honours have seen from our written submission. It is simply that it is the application in the context of disallowing proceedings or preventing proceedings from continuing as representative proceedings of the possibility of an abuse of process itself given rise to by the arguable presence of maintenance or champerty. Our comments, our intervention, have nothing to do with the resort to, let alone the particular use of representative proceedings.
Of course, if we are correct in the position we urge in relation to both the common law and the common law as modified by the relevant statute, then it will be as well applicable in representative proceedings as in any proceedings just as any lawful arrangement for the provision of legal services and services in relation to litigation will be as well deployed in representative as in other forms of proceedings.
Your Honours, it is for that reason, namely the modification of the common law, that the position in New South Wales that was presented for these cases, bears a resemblance in terms of the components of positive law or legal doctrine to be considered with the position peculiar to parts of India when appeals lay from, amongst other places, the High Court at Bengal and your Honours have seen our citation of the judicial committee’s decision in Ram Coomar Coondoo v Chunder Canto - - -
GUMMOW J: It was not the A grade panel?
MR WALKER: Your Honour, there is nothing we can do about the personnel who decided it has to be said that presiding was a former Chief Justice of the same court and it is what I have got.
Now, there is a review of the overt reference to the policy of the law, albeit in the particular context of the reception of some aspects of the law into that territory, in that decision in a number of previous cases – I am not going to go to those particular references – and it is suffice to say as at 1876 the position struck that board as unclear and as requiring decision explicitly in relation to (1) the reception of the common law. That is of no direct relevance to us except that it brings about the position, evocative we submit, that they were looking at a state of affairs without a tort and without an offence of maintenance in champerty, and asking what is the effect of those qualities which would arguably have rendered conduct tortious or criminal in terms of the law that does not apply, namely, in English law of maintenance and champerty, what is the effect of that on litigation which is conducted under the auspices of an arrangement exhibiting those characteristics? Their answer was, specifically in relation to whether there was a legal wrong committed, that there was not a wrong committed.
It is therefore not directly applicable to our present case except insofar as it reveals, in our submission, the position that this Court ought to find of what I call the vestigial, perhaps the Cheshire cat aspect of the law of maintenance and champerty left by the operation of section 6. The tort has gone; it is not a legal wrong. The crime has gone; it is not an offence. But something, so Parliament says, unless it has spoken in vain in section 6, has survived.
In our submission, whatever has survived ought to be subsumed, as the Court of Appeal did in this case, by resort to the protective tenets of abuse of process. May I take your Honours in the report of the judicial committee’s advice which is found in [1876] 2 App Cas 186, to the brief statement of the relevant facts, because they are, in our submission, entirely and utterly mercantile and commercial in the so-called funding arrangement. The analogy that we have urged for example with the position of insurers, either before or after the event does not matter, is one which is therefore able to be contrasted in this decision with an extremely commercial arrangement.
One sees the outline of it on page 188 of the report – 187 and 188, I should say. There is an arrangement by which one-third share is to be obtained. There are living expenses in the meantime. There is 12 per cent interest on advances and disbursements, one-third, as I say, of the clear net proceeds, a covenant not to – and the word is certainly loaded – intermeddle with the suit being brought in their name except so long as Mr McQueen in effect gave his whole attention to it. The second-last paragraph on page 188, he was to have its “management and conduct” although, as one there sees, under the control of Mr Mookerjee, the funder. Otherwise there was a power of attorney which would give him the whip hand.
Now, later on in the reported reasons, the members of the judicial committee refer to that at page 211 about point 4 as him being in “virtual control” or “supreme control” of the litigation. So again it is a case which raises exactly the same kind of characteristics which are said to constitute in 2005, 2006, reasons of policy in the law bringing to a halt, without any decision on the merits, certain litigation. In our submission, it is a decision and the reasoning and approach in it stands against that outcome, and powerfully so.
Could I take
your Honours – I do not want to take your Honours to the
detail of the preceding law which the judicial committee
was attempting to
reconcile or in some cases to make preferences among - can I take
your Honours to page 208 where they have come
closer in time to when
they were sitting. There is a quotation there from Chedambara Chetty at
the top of that page, and one of their members is quoted as having been the
progenitor of a so-called “true principle”,
about point 4 on
that page, namely that the:
Courts will consider whether the transaction is merely the acquisition of an interest in the subject of litigation bonâ fide entered into –
Now, whether that is the litigation bona fide entered into or
the transaction bona fide entered into does not much matter. It is
explained
later, probably to mean the litigation bona fide entered into, but that
introduced by the expression “merely”
clearly indicates this is not
objectionable:
or whether it is an unfair or illegitimate transaction got up for the purpose merely of spoil –
and it turns out that that is not intended to mean that the
legitimate ones cannot be for mercenary motives because the decision in
this
case was that this intensely mercenary exercise was entirely legitimate:
or of litigation disturbing the peace of families and carried on from a corrupt and improper motive -
which is significantly a reference
which clearly imports exactly the same kind of considerations as those which
halfway through last
century moved this Court in Clyne’s Case
simply to require a bona fide belief in the merit of the funded case, that is,
when the case is being funded or supported by solicitors
on speculative
grounds.
Their Lordships refer at the foot of pages 208, 209 to what we called an extremely potted version of the history, but it conjures up, of course, reference when one considers merely opprobrious epithets, as we would now put it, such as “intermeddling”, that the law of maintenance when first reaching its height before – leaving aside its origins in the 12th and 13th century, by the time, say, of Henry VII, that it was still a keenly observed requirement thought to make it very dangerous to give evidence in a case unless you did it under compulsion.
Now,
“intermeddling”, in short, is a concept and an epithet which has
altered radically in its content, in our submission.
The same is true of others
such as “wanton” and “officious” and “without
justification”. Certainly,
in the position as obtained in this intensely
commercial exercise in Bengal, at the foot of page 209 and then over to
page 210, the
position is then squarely reached about one-third or almost
halfway down on page 210 where the requirement as between the parties
to
the funding arrangement is for those matters which would relate to what nowadays
might be called a Contracts Review Act style, perhaps in some cases a
catching bargain approach, namely, they should be “carefully
watched” so as not to be
“extortionate and unconscionable”,
but otherwise the proper object is described as follows:
made, not with the bonâ fide object of assisting a claim believed to be just –
there is the requirement that one finds also captured in
Clyne’s Case –
and of obtaining a reasonable recompense therefor –
there is the mercantile approach –
but for improper objects, as for the purpose of gambling in litigation –
Now, the concept of gambling in litigation is one which is
clearly not exactly the same as a speculative suit because that it is by
that
very word “speculative” and by use of the word “chance”
this Court upheld in Clyne as perfectly proper for officers of the court.
Indeed, not only perfectly proper but in the highest traditions. Continuing in
their
description of what was proper:
or of injuring or oppressing others by abetting and encouraging unrighteous suits –
Again, the notion that one must have a belief in the suit - I do not mean that you are a true believer in the sense of having signed on to believe as true those things that have only been reported to you but as understanding in the way a solicitor giving a certificate nowadays has to understand that there is substance in that which is said to justify litigation.
Your Honours, “injuring or oppressing others” is, of course, another of these opprobrious expressions which could well describe the unhappy outcome for a defendant against whom a cause of action, good in itself, is pressed to a result which might not otherwise have been litigated because the plaintiff could not afford to do so or was not prepared to take the risk. That is clearly not what is being referred to - “injuring and oppressing others” in the context of this case in particular, which went off badly for all parties it turns out, culminating in no order for costs in the judicial committee because there had been a slip early, perhaps two or three slips, both judicial and by those advising one of the parties, as to whether or not security for costs could be required from the funder.
So the injury or oppressing, which is classically the case, for example, in Neville’s Case, the damage which was permitted in Neville’s Case, namely, the irrecoverable costs which was the basic damages being sought in this case, is one which nowadays has to take into account the well-established practice often imposed of ordering third parties of a particular status or relation to litigation to pay costs. In our submission, in that modern context it can be seen that the approach taken as a matter of the policy of the law in the absence of a tort or crime in this Indian decision is one which is on all fours with the way in which the Court of Appeal approached the matter here.
That also stands, with respect, against the proposition that there is something detrimentally or contrary to good practice in what my learned friend, Mr Gleeson, I think, referred to as a modern approach. There is nothing particularly modern unless one takes the extremely proper view that the late 19th century was, for all practical purposes, the modern era. Your Honours, in Clyne’s Case your Honours will remember the - - -
KIRBY J: There are some who still believe that.
MR WALKER: Quite, your Honour, and the 18th century is the age of enlightenment.
KIRBY J: A special cost order was made in the Privy Council, was it not, in that case, the Indian case?
MR WALKER: No order as to costs because there should have been more frankness earlier by the funder.
KIRBY J: But there is still the lingering concern that has been expressed to us about the fact that a cost funder may be tempted in a way a lawyer may not be tempted because the lawyer is subject to the disciplines of the court and that is a concern that, I must admit, I feel with a greater understanding of the facts.
MR WALKER: Yes, well, in the Indian case that was a concern not as to the integrity of the litigation, but as to the fairness or conscionability of the terms, commercial terms, agreed between the funded litigant and the funding supplier or maintainer.
In our submission, it needs to be recognised that in the “speculative” action” – now, that is the very word quoted from Lord Russell in the famous passage in Clyne [1960] HCA 40; (1960) 104 CLR 186 at 204, point 3 or thereabouts - and the reference to “chance” which is found in the New Zealand citation from Justice Ostler in Sievwright, also set out by the High Court at the top of page 205 in the report of Clyne, it is clear that the speculation or chance upon which the whole of the fees and disbursements for which credit is given in the one case and which is actually advanced in the other case by a solicitor acting in the highest tradition turns upon success in the case.
But that did not strike the High Court as representing some pervasive inherent tendency to corrupt the processes of the Court so as to call for it to be arrested without demonstration of an actual characteristic of that kind in the particular case.
It does not matter whether you are getting a share in the take or not, if you are foregoing fees, that is giving credit to somebody who will not be able to pay except with a win, and if you are actually outlaying disbursements on a promise of reimbursement by a person who will not be able to pay unless they actually win, there is, of course, the same weight of financial exposure and yet this Court has held, as long ago as 1960, that that was not merely not dishonourable but it was consistent with a most honourable course.
For those reasons, in our submission, there is nothing to be deprecated in the so-called modernity of the approach which is exhibited in the Court of Appeal. It could be seen to be relatively old and, in our submission, certainly respectable.
Your Honours, the only other matter I wanted to add to that which then otherwise appears in our written submissions is the notion that that which is intermeddling or officious or without justification is tested simply by asking whether the litigation would have been commenced but for the financial assistance with the commercial degree of control which is reasonable being both given and exercised by the funder.
That picks upon a most arbitrary quality in prospective litigation: would it have been commenced without a certain thing happening? It does not pick upon a quality that has anything to do with the quality of the cause of action, the merit of the cause of action, and it has nothing to do with the ease of proof. Classically, with relatively small claims against very well resourced defendants who are inclined, as it were, to the view that possession is nine-tenths of the law with somebody else’s money, it is that it is simply not worthwhile undertaking the trouble because it is like betting on odds-on chances at the horse races.
For those reasons, in our submission, there is a policy of the law to be seen not interstitially from legislation such as in representative proceedings of Part IVA but in those judicial practices which predated and provided the precedent for just those kinds of legislative systems, classically, in Equity the representative proceedings discussed in Carnie. The notion that people, even classes fuzzy at the edges such as the Covent Garden stallholders, may still, nonetheless, be able to have cases presented, in some cases, no doubt, willy-nilly, the actual individuals because of the nature of the genus and the fact that they have not got notice or knowledge, strongly supports the proposition that there is nothing in itself wrong about the proposition that litigation would go ahead which would not otherwise have gone ahead by reason of the funding which is impugned.
In our submission, there is a great deal to be said, rather, for the approach which one finds at page 210 in Ram Coomar Coondoo, namely that in certain circumstances that is a positive good. For our purposes all that matters, in our submission, is that pleading to the rule or test which the Court of Appeal would have, namely that abuse of process provides all that is necessary to protect the administration of justice against such supposed vices. All that needs to be observed is that no abuse is perpetrated by such practices.
For those
reasons, in our submission, when one looks at the way in which the exceptions to
the supposed rule against maintenance
and
champerty have expanded so as to
include not only funding arrangements but a commonality of interest stretches
any strictly legal
category – your Honours have seen the list of
exceptions in our written submissions – it is appropriate for this
Court
to rule that the preservation in section 6 of the legislation which
is in nearly common form in the abolition States is not a preservation
that can
ever require a stay of proceedings simply upon demonstration that there is what
would once upon a time have been called
a champertous arrangement for the
commercial funding of litigation. May it please
your Honours.
GLEESON CJ: Thank you, Mr Walker. Yes,
Mr Burmester.
MR BURMESTER: If it please the Court.
Your Honours, in our submission, the attempt by the appellants in these
matters to intrude the Constitution as relevant to the settlement of the issues
before this Court is in error. In our submission, there is no reason why
recourse has
to be had to the concept of matter or to some constitutionally
entrenched concept of abuse of rights in order to reach a resolution
of the
matters before this Court.
In particular, it is not correct to assert that a justiciable controversy constituting a matter has to relate to some known or fully formed dispute. A justiciable controversy involving some right, duty or liability can exist if it might come before the Court, and that is clear from South Australia v Victoria, one of the early cases referred to in paragraph 15 of our written submissions. It is also clear in the discussion in Hooper v Kirella [1999] FCA 1584; (1999) 96 FCR 1 at 15, point 5, where the point is made that one does not have to have instituted proceedings claiming substantive relief before one can have a matter. In the Femcare Case [2000] FCA 512; (2000) 100 FCR 331, which dealt with Part IVA, the court also made it clear at 355 in paragraph 101 that one does not have to be consciously in dispute before one can have a dispute for the purposes of Chapter III.
So, your Honours, in our
submission, this is not akin to the McBain Case where an existing
controversy had already been quelled and settled by the exercise of judicial
power. It is not correct to characterise
the justiciable dispute in these
proceedings as between the litigation funder and the other parties concerned.
The justiciable dispute
is between the person holding the money and the
individuals who are seeking recovery of that money. One cannot avoid the proper
exercise of jurisdiction in those proceedings by looking outside the dispute
that is constituted by the proceedings and alleging
that it is really a dispute
between somebody else. It is not that dispute, the controversy between the
funder and the individuals,
which is before the Court or which will be quelled.
It is the dispute involving the existing rights, duties and liabilities which
the Court will be required to quell. So, in our submission, the powers in
question here, particularly the
discovery power, are being used in order to
further resolve a justiciable controversy.
Your Honours, as the arguments unfolded today there has not been reference made to Chapter III entrenching some minimum standard or some form of abuse of rights which would be infringed. Our written submissions make the simple point that in this area there are competing public policies and the legislatures and the courts should be free to set an appropriate balance between the various interests at stake and should not be constrained in doing that by implications that are not clearly there in Chapter III of the Constitution. Your Honours, those are my submissions.
GLEESON CJ: Thank you, Mr Burmester. Yes, Mr Myers.
MR MYERS: Your Honours, two matters. I was asked a question about contingent fee arrangements and legislation affecting that throughout Australia. We have prepared a sheet which sets out the legislation and it may be of assistance to your Honours.
GLEESON CJ: Thank you.
MR MYERS: It is really a crib sheet. The other matter, we have no objection to Justice Callinan participating in the decision of the Court. If the Court pleases.
GLEESON CJ: Thank you. Yes, Mr Gleeson.
MR GLEESON: Our position is the same in respect of Justice Callinan. On the limitation point, Mr Gageler has not orally opposed our making those arguments within the proceedings. I should formally seek the leave to amend the notice of appeal to introduce expressly that argument.
GLEESON CJ: Is that the position, Mr Gageler, that it is not opposed?
MR GAGELER: We have handed up papers.
GLEESON CJ: Yes, you have that leave.
MR GLEESON: Thank you, your Honour.
GLEESON CJ: You will have to formally amend.
MR GLEESON: Yes, if your Honours please. In relation to Part 8 rule 13, as the argument has developed, we submit that the respondent is unable to answer the question as of the date of commencement of the proceedings who are the persons, if any, other than Trendlen who have the same interest in the proceedings. Secondly, the second limb of Part 8 rule 13 which allows the proceedings to continue in a certain manner speaks of continuance by one or more of the persons in the class identified by the first limb of the rule on behalf of all or some of the others. The respondents cannot satisfy that limb either because they cannot identify at the date of commencement any persons who satisfy the first limb and, further - - -
GUMMOW J: What is the purpose, as you see it, of the injection of the court order to the second limb?
MR GLEESON: That the court order would, if made, stop the action, not that the court order is a means to devise wholly new court procedures for disposing of claims which it is now apparent do not have a common interest or a same interest test satisfied.
HAYNE J: Stop the proceeding absolutely or simply have it continue in the name of those who at that point were identified as plaintiffs making the claims that the plaintiffs then identified had disclosed?
MR GLEESON: It would certainly be within the discretion to allow it to continue in the name of Trendlen, being a person who had brought the action. If there was, in truth, a common question like in Carnie and if at the time of the order, say, 10 people had been identified as having an interest in that question, subject to the limitation period, the court might require them to be made co-plaintiffs under Part 8 rule 2. Possibly the court might do what your Honour Justice Hayne posited: allow it to continue as a smaller form of representative action. But we submit, really, that alternative is what is picked up by the second limb, that it can continue in one of two ways, either for one of the number or more representing all or representing all but some and, absent that approach, the “otherwise order” is designed to eliminate its status as a representative action.
What is also now clear is that it is Firmstones who is seeking to continue this action, not Trendlen – Trendlen is a mere cipher – and Firmstone does not meet the test of being one or more of the persons who have the same interest in the action.
HAYNE J: Just to revert to the “otherwise order”, it would encompass cases like Fraser v Cooper, Hall (1882) 21 Ch D 718 where a bondholder came along and said, “No, I want to support the defendant. I don’t want to support the plaintiff”, and that bondholder was moved over and made, in fact, representative for the dissentients.
MR GLEESON: Yes. Your Honours, reference was made to Justice Hodgson’s suggestion that one of the vices of this arrangement which was you could only opt in on Firmstone’s terms could be cured by creating a second option which was to opt in and represent yourself or have your own solicitor.
Could I just refer to the document which now contains that suggestion. It is at page 144 of volume 1. The point of the submission is that when one reads the two options that are proposed in the letter each of them falls outside Part 8 rule 13. The first option is to have your representative action continued on your behalf by Firmstone, not by Trendlen but by Firmstone, a person who does not meet the same interest test.
The second option is to write to the registrar of the court and tell him you wish to opt in and then act for yourself or appoint your legal advisers. There is no mechanism, we submit, within Part 8 rule 13 to allow that.
Your Honours, finally, on the common interest Mr Gageler sought to identify various questions where the same interest test was met. In our submission, the critical failure was that he could not point to contractual documentation which was common to any retailers which could be addressed by the Court and the subject of a declaration as per Carnie.
What this action is inviting is in fact all the problems identified in Bass v Permanent Trustee. There are meant to be, we are now told, some separate questions. We do not know what they are and we cannot because we do not know what the facts are, and it is hoped that they will in some way resolve the controversy.
Mr Gageler referred to Irish Shipping and said that is really the high point against us on the representative action. As your Honours will have observed, that was a case of a single plaintiff bringing action on causes of action against underwriters who all signed the same contract of insurance in defined proportions. It did not raise the problem we raise here.
In respect to the letter, what has been said is that there is no basis to infer that Mr Firmstone would not have done the right thing at the right time. The basis for the inference is what he actually did in the other matters. Volume 1, pages 196 and 197, he did not disclose the lump sum to the Court of Appeal. One of the matters where he took the lump sum was the Stewart Alexander Case which Mr Hutley had appeared in. Justice Mason refers at paragraph 205 of Fostif to the fact that those proceedings were discontinued on undisclosed terms. It is perfectly clear the court was not told then and the proposition was squarely put to him, why would one think he would act differently now.
Your Honours,
Mr Walker’s submissions are not in our appeal and we apprehend him
not to say that our factual case for abuse
of process is
one that he puts
any arguments on. There were two legal points, however, which may flow over to
ours. The first is Clyne’s Case and the suggestion that a lawyer
having a share of the take is no different to a lawyer foregoing an ordinary fee
we submit is the
antithesis of Clyne’s Case.
Secondly, he suggested in the modern context third party costs orders can be made and that cures any potential abuse. Could I refer to Wentworth’s Case in the Court of Appeal where your Honour Justice Heydon dealt with Part 52 rule 4(5) of the Supreme Court Rules and the limited nature in which third party costs orders can be made. The only possible relevant order there is under subparagraph (d) which allows third party costs orders against persons who commit an “abuse of process of the Court”. On one reading of it that is in fact picking up Ram Coomar and that line of territory in relation to maintenance.
Finally, your Honours, on the constitutional point, Hooper’s Case is cited against us. We do not challenge Hooper. Hooper says that if in truth there is a justiciable controversy being that a person believes they have a right to section 52 relief against an unnamed defendant, the preliminary discovery order is ancillary to the proper exercise of the judicial process because it enables the defendant to be discovered. If, however, the true controversy is, as we have characterised it, between Mobil and the funder, then the discovery order is ancillary to the determination of a non-justiciable dispute.
Mr Burmester has said the Court cannot look beyond the summons to
characterise the dispute. We would refer to Agtrack (NT) Pty Limited v
Hatfield [2005] HCA 38; (2005) 79 ALJR 1389 at [32] which said:
Immediate ascertainment of the factual basis of a justiciable controversy and of the attraction of federal jurisdiction in a proceeding will not always be possible by regard simply to allegations pleaded.
May it
please your Honour.
GLEESON CJ: Yes, Mr Gageler.
MR GAGELER: Your Honours, we are content
for Justice Callinan to participate.
GLEESON CJ: Thank
you, Mr Gageler. We will reserve our decision in this matter and we will
adjourn until 10.15 tomorrow.
AT 3.57 PM THE MATTERS WERE
ADJOURNED
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