No. 4116 of 2000
- In November and December 1999, many hundreds of light aircraft
throughout Australia were grounded as a consequence of what was
thought to be
contaminated fuel ("Avgas 100/130") released and distributed by the defendant
from its premises at Yarraville in the
State of Victoria. It is claimed that
those who owned, operated or piloted such aircraft have suffered loss or damage
as a result
of using the fuel. The plaintiff, Schutt Flying Academy, is one
of those who claims it has suffered loss.
- By writ filed on 24 January 2000 the plaintiff commenced in
the Supreme Court a "group proceeding" against the defendant. In
doing so, it
has relied upon the procedure established by Order 18A of Chapter 1 of the
Supreme Court (General Civil Procedure) Rules 1996. The Order is
entitled "Group Proceeding" and came into operation on 1 January 2000. These
Rules were made by the Judges
of the Court pursuant to the powers invested in
them by s.25(1) of the Supreme Court Act 1986. It is not suggested
that there is any authorizing power save that found in s.25(1)(f)(i) - that is
the power to make Rules of Court "for or with respect to ... any matter
relating to the practice and procedure of the Court"
- and/or s.25(1)(a) -
namely, the power to make Rules "for or with respect to ... any matter dealt
with in any Rules of Court in force on 1 January 1987".
- On 24 January 2000, and in accordance with Rule 18A.08, the
plaintiff served upon the defendant a summons for directions, returnable
before
Hedigan, J., the judge in charge of the appropriate list in the Trial Division
of the Court. His Honour entertained argument
pursuant to the summons on 31
January 2000 and 4 February 2000. The defendant indicated that it wished to
challenge the validity
of Order 18A, and requested his Honour, pursuant to
s.17B(2) of the Supreme Court Act, to reserve for the consideration of
the Court of Appeal the question of the validity of the Rules contained in the
Order. His
Honour acceded to that request and, on 4 February 2000, directed
that the following question be reserved for the consideration of
the Court of
Appeal:
"Is Order 18A of the General Rules of Civil Procedure
valid?"
- This Court has granted leave pursuant to s.17B(3) of the
Supreme Court Act for the question to be considered. Although, prior
to the hearing, the defendant had given notice that it intended to argue that
Order 18A infringed Chapter III of the Commonwealth Constitution, and
had accordingly served notices on the respective Attorneys-General for the
Commonwealth and States pursuant to s.78B of the Judiciary Act 1903
(Cth.), only the Attorney-General for the State of Victoria desired to
intervene in the proceedings. The Court granted its leave
generally for that
Attorney-General to intervene. Accordingly, the Court received submissions
from counsel for the plaintiff and
the defendant, and from the
Solicitor-General for the State of Victoria, who advanced argument in support
of the validity of the
Rules.
- I have had the advantage of reading, in draft, the reasons for
judgment prepared by Brooking, J.A. I agree with his Honour, and
for the
reasons which he assigns, that Rules 25 and 26 of Order 18A are not a valid
exercise of the rule-making power conferred either by paragraph (a) or
paragraph (f) of s.25 of the Supreme Court Act because they authorize
the court to assess damages otherwise than according to law and, thus, intrude
upon substantive rights of
"group members" who are bound by such assessment.
His Honour, in my opinion, is correct in his conclusion that the authorization
given to the Court by Rule 25(1)(f) to "award damages in an aggregate amount",
subject to the limitation not to do so "unless a reasonably accurate assessment
can be
made of the total amount to which group members will be entitled under
the judgment", cannot be equated with a power to assess reasonable
damages,
according to law, in respect of actual losses suffered by individual group
members. Indeed, it is difficult to see how
it could be so when the "opt-out"
procedures prescribed by the Rules envisage that, at the time when judgment for
an award of damages
in an aggregate amount is given, the number of group
members and the amount of their individual losses will, or may, not be
accurately
known. It seems to me, as it does to Brooking, J.A., that rules
which authorize the Court to assess damages which are incommensurate
with the
actual loss suffered by individual group members are rules which go beyond the
boundaries of permissible rule-making and
intrude into the field of rule-making
with respect to the substantive rights of litigants.[1]
- I also agree with Brooking, J.A. that Rules 25 and 26 are
central to the scheme created by Order 18A, a major purpose of which is to
enable relief to be sought in the nature of common
law damages in respect of
common law causes of action; and that accordingly, if Order 18A is invalid to
the extent to which it authorizes
awards of damages in an aggregate amount, the
Order as a whole is bad and severance cannot sensibly occur.
- In conformity with these reasons, I would answer "No" to the
question referred for the Court's consideration. I have reached
this
conclusion with some regret because the Judges of the Court have clearly made
these rules with a view to avoiding multiplicity
of actions against a common
defendant and, thus, to confine the costs of such litigation in appropriate
cases. If, however, it
is desired to maintain the scheme presently contained
in Order 18A, it will, in my opinion, be necessary for the Parliament to
enshrine
the Rules in a statutory framework.
BROOKING, J. A.:
- Representative proceedings have been with us for three hundred
years. Their history down to 1980 has been traced by Professor
Yeazell in a
stimulating two-part article, "From Group Litigation to Class Action"[2]. In 1982 the Ontario Law Reform Commission
made a significant contribution to the literature on the subject in its
three-volume
Report on Class Actions. In Australia the Law Reform
Commission produced in 1988 its report on Grouped Proceedings in the Federal
Court, which led to the enactment of Part IVA of the Federal Court
of Australia Act 1976, dealing with representative proceedings. In quite
recent times group litigation in England has perhaps awakened from the deep
slumber
deplored by Professor Yeazell[3]. The
same thing has happened in Victoria, although here we have seen new provisions
rather than, as in England, a new approach to
old provisions. The year 1984
saw the enactment in Victoria of s.62(1C) of the Supreme Court Act 1958
by the Supreme Court (Amendment) Act 1984. This was followed by ss.34
and 35 of the Supreme Court Act 1986. But this legislation proved to be
inadequate to give representative actions the expected fillip.
- In 1997 the judges of the Supreme Court suggested to the then
Attorney-General that Parliament should legislate along the lines
of Part IVA
of the Federal Court of Australia Act. The suggestion seemed to be well
received. But by 1999 no legislation had been introduced or even foreshadowed
and so the judges
turned their minds to the introduction of the Federal Court
system by means of Rules of Court. The result was the making of Order
18A of
Chapter I of the Rules of the Supreme Court, made on 9 December 1999 and coming
into operation on 1 January 2000. While some
differences exist, this Order
generally speaking follows very closely the federal legislation on which it is
modelled.
- The first action under the new Victorian procedure was
launched on 24 January, to enforce claims said to have arisen from the
sale
of contaminated aviation fuel by Mobil Oil Australia Ltd. in or about
November and December 1999. The circumstances are, in broad
outline,
notorious. The validity of Order 18A has been challenged by the defendant, the
Mobil company, and on 4 February Hedigan,
J., at the defendant's request,
reserved for the consideration of the Court of Appeal the question whether the
Order is valid. We
have given leave under s.17B(3) of the Supreme Court Act
1958 for the submission of that question and leave to the Attorney-General
for Victoria to intervene generally in the proceedings before
us.
- The judges gave consideration to the question of power to make
the new Order before making it, but of course the question has been
and must be
considered afresh in the light of the submissions made.[4]
- The making of Order 18A is supported by the plaintiff and the
Attorney-General as an exercise of the power conferred by para. (f)
of s.25(1)
of the Supreme Court Act 1986 to make Rules of Court for or with respect
to any matter relating to the practice and procedure of the Court.
Alternatively, reliance
is placed on the power given by para. (a) of that
sub-section to make Rules of Court for or with respect to any matter dealt with
in any Rules of Court in force on 1 January 1987. It is said that, since
representative proceedings were dealt with in Order 18
of the Rules in force on
1 January 1987, para. (a) of s.25(1) may be used to support Order 18A. The
defendant submits that neither of the heads of power relied on by the plaintiff
and the Attorney-General
will support a rule which alters, or at all events
alters in a significant respect, the principles according to which damages are
to be assessed. This argument requires consideration of Rules 25 and 26 - I
shall refer to rules in Order 18A by their number only - and I am afraid
it is necessary to set out these two rules in full:
"18A.25 Judgment of the Court
(1) The Court may, in determining a matter in a group proceeding -
(a) determine a question of law;
(b) determine a question of
fact;
(c) make a declaration of liability;
(d) grant any equitable relief;
(e) make an award of damages for group members, sub-group
members or individual
group members, being damages consisting of specified amounts or amounts worked
out in such manner as the Court
specifies;
(f) award damages in an aggregate amount without specifying amounts awarded in
respect of individual group members;
(g)
make such other order as is just.
(2) In making an order for an award of damages, the Court shall make provision
for the payment
or distribution of the money to the group members entitled.
(3) Subject to Rule 18A.20, the Court shall not make an award of damages
under
paragraph (1)(f) unless a reasonably accurate assessment can be made of the
total amount to which group members will be entitled
under the judgment.
(4) Where the Court has made an award of damages, the Court may give directions
in relation to -
(a) the manner
in which a group member or sub-group member is to establish his
or her entitlement to share in the damages; and
(b) the manner in
which any dispute regarding the entitlement of a group member
or sub-group member to share in the damages is to be determined.
18A.26 Constitution etc. of fund
(1) Without limiting the operation of Rule 18A.25(2), in making provision for
the distribution of money to group members, the Court
may provide for -
(a) the constitution and administration of a fund consisting of the money to be
distributed; and
(b) either -
(i) the payment by the defendant of a fixed sum of money into the fund; or
(ii) the payment by the defendant into the fund of such
instalments, on such
terms, as the Court directs to meet the claims of group members; and
(c) entitlements to interest earned on
the money in the fund.
(2) The costs of administering a fund are to be borne by the fund or the
defendant, or by both, as the Court
directs.
(3) Where the Court orders the constitution of a fund mentioned in paragraph
(1), the order shall -
(a) require notice to
be given to group members in such manner as is specified
in the order;
(b) specify the manner in which a group member is to make
a claim for payment
out of the fund and establish his or her entitlement to the payment;
(c) specify a day (which is six months or
more after the day on which the order
is made) on or before which the group members are to make a claim for payment
out of the fund;
and
(d) make provision in relation to the day before which the fund is to be
distributed to group members who have established an
entitlement to be paid out
of the fund.
(4) The Court may, if it is just, allow a group member to make a claim after
the day fixed
under paragraph (3)(c) if the fund has not already been fully
distributed.
(5) On application by the defendant after the day fixed
under paragraph (3)(d),
the Court may make such orders as it thinks fit for the payment from the fund
to the defendant of the money
remaining in the fund."
- The sections in Part IVA corresponding to Rules 25 and 26 are
ss.33Z and 33ZA respectively. There is no substantial difference
between these
Victorian and federal provisions.
- The short-lived Division 6 of Part XIV of what was formerly
known as the Industrial Relations Act 1988 of the Commonwealth
substantially reproduced Part IVA of the Federal Court Act. I say
"substantially" partly because of the changes made necessary by the fact that
different courts were being dealt with and
partly because of the idiosyncrasies
of the drafter ("if" replacing "when" and "on" supplanting "upon") and a
penchant for simplification
(eliminating "in such manner" and "the operation
of" from the provisions corresponding to s.33Z(1)(e) and s.33ZA(1)
respectively).
There seems to be no authority on the effect of the two
provisions just mentioned. They were in existence only from 22 December
1993,
when s.56 of the Industrial Relations Reform Act 1993, which enacted
Division 6 of Part X1V commenced operation, until 17 January 1997, when that
Division was repealed.[5] For a short account
of the short history of the Industrial Relations Court of Australia (created by
Division 6), see Lane's Commentary
on the Australian Constitution[6]. The matter of representative proceedings in the
Industrial Relations Court's jurisdiction that has been transferred to the
Federal
Court is now presumably governed by Part IVA of the Federal Court of
Australia Act. Compare Macken, McCarry & Sappideen's Law of
Employment[7].
- Rule 25(1) of Order 18A gives the Court a choice if it comes
to award damages. It may either act under para. (e), by making an award of
specified
or ascertainable amounts, or make an aggregate award under para. (f).
Paragraph (e), reproducing the language of para. (e) of s.33Z(1), seems clearly
enough to contemplate that there is to be a specified or ascertainable amount
in respect of each individual. This
view is supported by para. (f), speaking
as it does of an award of damages in an aggregate amount without the
specification of amounts
awarded in respect of individual group members. A
reading of paras 223ff. of the report which led to the enactment of Part IVA
reinforces the view that para. (e) of the federal Act should be taken to
require the determination of amounts for individual members,
either by the
specification of an amount or by the provision of a means whereby an amount is
to be ascertained.
- It is essentially para. (f) of Rule 25(1) that is the
foundation of the defendant's argument that the rules authorise the assessment
and award of damages otherwise than in
accordance with the principles of law
governing the assessment of damages. Paragraph (3) of Rule 25 is important.
It contains a limitation - and, indeed, the only express limitation - on the
power of the Court to award damages in
an aggregate amount by prohibiting the
making of such an award unless a reasonably accurate assessment can be made of
the total amount
to which group members will be entitled under the judgment.
I shall have to return to this important provision. Paragraph (4) of
Rule
25, with its reference in both of its sub-paragraphs to entitlement to "share"
in the damages, undoubtedly applies to awards of damages
in an aggregate amount
under para. (1)(f). It may be that, notwithstanding the use of the word
"share", it is also capable of application
to some awards under para. (1)(e).
Rule 26 empowers the Court to provide for the constitution of a fund in making
provision for the distribution to group members of money awarded
as damages.
There is no doubt that a fund may be constituted where damages in an aggregate
amount have been awarded. The Law Reform
Commission appears to have
contemplated[8] that it was only in the case of
an aggregate award that a fund might be constituted and that where an aggregate
award was made the
choice was between the constitution of a fund and
distribution by the respondent. It is fair to say that the argument before us
proceeded on the basis that Rule 26 empowered the constitution of a fund only
where an aggregate amount had been awarded. If the fund proves too large for
the meeting
of all claims for payment out of it which are established, the
Court may, by Rule 26(5), order payment of the surplus to the defendant. If
the fund proves to be too small to satisfy all claims for payment which are
established,
it is clear that the defendant cannot be required to make any
further payment, either by way of additional contribution to the fund
or by way
of direct payment to a claimant. The liability of the defendant merges in the
judgment and there is no provision for subsequent
variation of the judgment by
way of requiring additional contributions or direct payments. This was
recognised by the Commission[9].
- I note in passing that one question not discussed before us
was that of the application of Rules 25 and 26 to claims for monetary relief
other than damages. Rule 25(1)(g), empowering the Court to make such other
order as is just, authorises the grant of monetary relief other than damages.
The Ontario
Law Reform Commission carefully distinguished between damages and
other forms of monetary relief[10]. Its draft
Bill provided for an aggregate award, not of damages, but of monetary relief[11]. The Australian Commission, on one view,
treats the terms "damages" and "monetary relief" as interchangeable[12]. Its draft Bill authorises aggregate
assessment where the payment of money is claimed[13]. Section 33Z(1)(e) and Rule 25(1)(e) speak only of an
award of damages. Since no argument has been directed to monetary relief other
than damages I say no more about
it.
- One of the paradoxical submissions of the defendant in this
case is that parts at least of Order 18A, if not indeed the whole order,
are
invalid because they may result in an inadequate award of damages against the
defendant, to the prejudice of those whom it has
(as we will assume) wronged.
It is said that each person having a right of action against the defendant is
entitled to have his,
her or its damages assessed on the evidence as led and
the facts as found and by the application of rules of substantive law governing
damages. The scheme of Rules 25 and 26, it is argued, is such as to permit an
award of damages in an aggregate amount which, in many cases at all events,
will not correspond
to the sum which would be awarded if a series of individual
assessments were made in the light of the evidence relevant to the particular
claim. Order 18A, so it is contended, authorises the Court to deprive each
would-be claimant of the right to have damages assessed
and awarded according
to law and to replace that right with an entitlement to participate in the
distribution of a fund in circumstances
in which the amount distributed to the
claimant may differ, and differ greatly, from the damages that would have been
assessed on
ordinary principles. The Law Reform Commission pointed out that
"[t]he risk of an inaccurate award would arise where an aggregate
assessment of
the respondent's liability is made on the basis of an estimate of the number of
group members, the extent of their
loss, or both"[14].
- The only question on this branch of the case is whether the
defendant's contention is met by the condition imposed by Rule 25(3), which
prevents the Court from awarding an aggregate amount unless a reasonably
accurate assessment can be made "of the total amount
to which group members
will be entitled under the judgment". The quoted words are not to be read
literally, for, since damages are
being awarded in an aggregate amount, that
amount is necessarily specified: the amount of the judgment is the total
amount to which
group members will be entitled under the judgment. Nor do I
think that the quoted phrase is to be read down as concerned only with
the
estimation of the number of group members who will establish their entitlement
to participate. The words "the total amount to
which group members will be
entitled under the judgment" must, I think, be taken as meaning "the aggregate
amount of damages". All
parties have assumed this in their submissions. This
was certainly the intention of the Law Reform Commission which drafted the
provision corresponding to Rule 25(3), although the provision it drafted was in
somewhat different terms: "The Court must be satisfied that the aggregate
amount is a
reasonably accurate assessment of the total of the money payable as
relief in those proceedings"[15]. In its
report the Commission observed that the appropriate test to be satisfied as a
condition of the making of an aggregate assessment
of the respondent's
liability should be that the assessment was reasonably accurate[16].
- Were it not for the extrinsic material shortly to be
mentioned, I should have thought there was much to be said for the view that
a
provision in Rules of Court requiring as a condition of an award of damages in
an aggregate amount that a reasonably accurate assessment
could be made should
be read as not contemplating any departure, or at all events any significant
departure, from the principles
governing assessment of damages. "Reasonably
accurate assessment" is not a term of art in the law. It would be possible to
pray
in aid numerous decisions about damages in support of an argument that the
words "a reasonably accurate assessment" do not contemplate
any departure from
principle. So it might be argued that cases where a precise assessment of
damages is possible present no difficulty
(since a precise assessment answers
the less stringent requirement of a reasonably accurate one) and that in other
cases the best
that a tribunal of fact can ever do is make a reasonably
accurate assessment, it often not even being possible to do this; see the
decisions cited in J.L.W. (Vic.) Pty. Ltd. v. Tsiloglou[17]. As regards the assessment of damages for personal
injuries, I refer to the decisions cited in Mobilio v. Balliotis[18]. It should be noted that in Commonwealth
v. Amann Aviation Pty. Ltd.[19] Toohey,
J., adopting the words of Burchett, J., spoke of awarding damages for wasted
expenditure where a breach of contract prevented
"an assessment, or a
reasonably accurate assessment, being made in the normal way". As to this, to
say that a breach prevents "an
assessment" of damages being made prima facie
means an assessment which the law will regard as satisfactory, and I am, with
respect,
in some doubt about the contrast evidently drawn between "an
assessment" and "a reasonably accurate assessment". Perhaps "an assessment"
means "a precise assessment" and is contrasted with one which is merely
reasonably accurate but nevertheless good enough in law.
Perhaps the word "or"
is epexegetical, the idea being that an assessment need not be precise and need
only be reasonably accurate.
- Writing extra-judicially in 1996, Wilcox, J.
observed:
"The Federal Court's group actions procedure remains largely
untried. Few final hearings have taken place and trial practice is still
in
its formative stage. Important questions relating to the assessment and
distribution of damages, for example how to allow for
unidentified group
members, remain wholly unanswered. Nonetheless some principles have emerged
and the practical aspects of group
proceedings are being learned. The
procedure has the potential to handle cases more efficiently than otherwise and
to resolve cases
that might otherwise remain unresolved."[20]
- Whether s.33Z(1)(e) authorised an award of exemplary damages
was considered by Wilcox, J. in Nixon v. Philip Morris (Australia)
Ltd.[21]. (On appeal, the Full Court
expressed no opinion on the point.)[22] At
[106] Wilcox, J. described subss.(2), (3) and (4) of s.33Z as imposing and
conferring "some procedural requirements, limitations and powers" in relation
to awards of damages and said that
no argument had been founded upon them. At
[117] his Honour said this:
"Neither can I accept that s33Z contains any implied confinement of
the scope of the damages available under the representative procedure. As
counsel for the applicants
pointed out in argument, it would be a serious step
for the Parliament, in the guise of providing an additional procedure for the
litigation of claims, actually to limit claimants' substantive rights. A
question might arise as to the constitutional validity
of such a course, in the
absence of compensation: see Constitution s51(xxxi) and Georgiadis v.
Australian and Overseas Telecommunication Corporation (1994) 179 C.L.R.
297. Certainly it might be expected that any such intention would be expressly
stated in the legislation and drawn to the attention of
the
Parliament."
- There appears to be only one authority on the meaning of
"reasonably accurate assessment" in s.33Z(3). In Australian Competition and
Consumer Commission v. Golden Sphere International Inc.[23] O'Loughlin, J. dealt with the matter briefly,
at 448-9:
"The word 'assessment' used in the phrase 'assessment of damages'
imports an element of judicial discretion: assessing damages is
not the
application of mathematical formulae. When it is qualified by the words
'reasonably accurate' it can be said, with confidence,
that the judicial
discretion has been widely extended. I am satisfied that the legislature has
intended that the practical application
of the provisions of Pt IVA of the FCA
is not to be read down through any evidentiary inability to identify every
member of the group
and the relevant amount of damage that each member has or
may have suffered."
- We are of course concerned with the construction of a phrase
used, not in the statute, but in Rules of Court. In an instrument
of the
latter kind, it may be appropriate to approach the case with a strong
predisposition to the view that the principles governing
the assessment of
damages have been left unimpaired. But the instrument with which we are
concerned reproduces in its essentials
the regime laid down by the federal Act.
This is certainly so with Rules 25 and 26, which use the very words of their
federal counterpart.
In making Order 18A, the judges were introducing into
Victoria the federal scheme. In these circumstances it is legitimate to seek
guidance from the report of the Law Reform Commission which led to the
establishment of the federal scheme, notwithstanding that
some of the
Commission's recommendations were not adopted. And when this is done one finds
a clear expression of the intention with
which the Commission coined and
introduced into its draft Bill the phrase "reasonably accurate assessment". I
have read with particular
interest the paragraphs of the report dealing with
the topic "judgment"[24]. It is best to quote
the whole of para. 228:
"Recommendation: degree of accuracy. The risk of an
inaccurate award would arise where an aggregate assessment of the respondent's
liability is made on the basis of
an estimate of the number of group members,
the extent of their loss, or both. Since assessment of damages involves an
element of
estimation in most cases, this is not in itself a ground for
objecting to aggregate assessments (apart from the question of non-claiming
group members) when the degree of accuracy is equal to or higher than that
which would be obtained if individual assessments were
made. The question is
the degree of accuracy that should be required to justify an aggregate
assessment. The Ontario Law Reform
Commission recommended that aggregate
assessment should be permitted where the same degree of accuracy could be
obtained as in an
individual action of the same kind. This may be too strict
given the potential benefits of grouping proceedings. The appropriate
test to
be satisfied as a condition of the Court making an aggregate assessment of the
respondent's liability should be that the
assessment is reasonably accurate.
Such a test would enhance the benefits of an aggregate assessment to all
parties. Even so, there
is room for error in assessing monetary relief in this
way. This can be largely overcome by the Commission's later recommendations
in
relation to residue. Subject to those recommendations, the Court should be
able, in respect of two or more proceedings, to order
an unsuccessful
respondent to pay an aggregate amount without specifying the amount payable in
respect of each proceeding if it is
satisfied that the aggregate assessment is
a reasonably accurate assessment of the total of the monetary relief
recoverable in those
proceedings. To ensure that the order is an order that
has effect in each of the grouped proceedings, the order should be declared
to
be an order in each of these proceedings." (Footnotes
omitted.)
This paragraph is to be read in the
knowledge that the Commission's "grouped proceedings" approach was not adopted
in the legislation.
- It is helpful to go back to the report of the Ontario Law
Reform Commission mentioned in the paragraph just cited. Clause 22 of
the
draft Bill put forward in that report required the Court to determine the
aggregate amount of the defendant's liability in respect
of monetary relief
when three requirements were satisfied, one of them being that "the total
amount of the defendant's liability,
or part thereof, to some or all of the
members of the class can be assessed without proof by the individual members of
the class
with the same degree of accuracy as in an ordinary action". The
matter of aggregate assessment of monetary relief is discussed at
length in
Chapter 14 of the report. It may be noted that at p.536 reference is made to
consideration in the United States of whether
aggregate assessment violates the
constitutional right to due process or constitutes a change in the substantive
law and is therefore
not permitted by the Rules Enabling Act, which forbids the
making of rules that "abridge, enlarge or modify any substantive right".
At
pp.552-6 the Commission worked its way to its conclusion that the propriety of
aggregate awards should be determined by the same
standards as those by which
the propriety of an individual award of damages is decided and accordingly that
aggregate assessment
should not be permitted unless the amount of the
defendant's liability could be assessed without proof by individual class
members
with the same degree of accuracy as in an ordinary
action.
- As regards the provenance of the phrase "a reasonably
accurate assessment" in s.33Z(3), it clearly originated in cl. 30(3) of the
draft Bill of the Australian Commission. It may be possible to trace the
notion of reasonable accuracy back to a clause in a draft
Bill put forward by
Professor N.J. Williams as long ago as 1975:[25]
"10. Assessment of total pecuniary liability
(1) When the question or questions affecting only individual members of the
class and not determined by the judgment for the plaintiff
is or include the
amount of the pecuniary liability of the defendant to each member of the class,
and the total amount of the liability
to all members of the class can be
calculated with reasonable accuracy without individual proof by the members,
the court may determine
the total amount of the liability and order the
defendant to pay the amount into court.
(2) Proceedings after the defendant has paid
money into court pursuant to an
order made under sub-section (1) shall be conducted in accordance with section
9.
(3) If within such
time as the court by order directs, the entire amount paid
by the defendant into court has not been paid or applied in satisfaction
of the
claims of members of the class or the costs and expenses of the action, the
court may dispose of the balance of the amount
as it thinks fit."
- The article containing this draft is mentioned by the Ontario
Commission[26]. The words in cl. 10(1)
("without individual proof by the members") may have affected the drafting of
cl. 22 of the Ontario Commission's
Bill ("without proof by the individual
members of the class"), notwithstanding that the Commission's approach ("with
the same degree
of accuracy as in an ordinary action") differed so markedly
from that of Professor Williams, who favoured the expedient of "fluid
class
recovery"[27]. Since the Australian
Commission was well aware of the work of its Ontario counterpart, and since
Professor Williams made a written
submission to the Australian body, it is
quite possible that the requirement of s.33Z(3) of an assessment that is
"reasonably accurate"
can be traced back, through the Australian Commission, to
the work of Professor Williams. Be that as it may, it is clear that the
Australian Commission, in putting forward the test of a "reasonably accurate
assessment", had rejected the idea that aggregate assessment
should not be
possible unless the same degree of accuracy could be achieved as in an ordinary
action and was recommending that something
less should suffice.
- It is legitimate, and indeed necessary, to have regard to
this extrinsic material in construing Rule 25(3), and I think it should
be
construed as permitting an aggregate award to be made notwithstanding that it
is at the time of assessment impossible to make
the kind of assessment which
would be appropriate under the law if the Court was at that stage seeking to
assess the damages to be
awarded to each individual group member. This may be
said to be, from one point of view, not a surprising conclusion. While an
enormous variety of cases can fall within Order 18A, Rules 25 and 26
contemplate that an aggregate award of damages may be made at
a time when the
names and number of group members are unknown and when it is not known which or
how many group members will establish
entitlement to share in the damages. It
is very difficult to see how, in cases of this kind, it would be possible to
make a "reasonably
accurate assessment" in the sense of the kind of assessment
that would have been required had the draft Bill in Ontario been enacted.
In
many cases there will be two variables - the number of group members and the
damage which individual members have suffered.
One or other or both of these
variables will be present in most cases in which a group assessment is sought,
and the presence of
either of them will, as it seems to me, make it impossible,
subject to a possible de minimis exception, to arrive at a group
assessment which gives individual group members what they would be entitled to
on individual assessments
according to law. This makes me think that, as the
Commission said, "reasonably accurate assessment" was intended to authorise
departure
from the principles governing individual assessment. Indeed, as the
discussion by the Ontario Law Commission of monetary relief
shows, in the
controversy in various jurisdictions about aggregate assessments it has
generally been accepted that those assessments
are intended to depart from the
principles governing individual assessments. Moreover, as a matter of textual
construction, while
an assessment of damages may in some classes of case be or
resemble a discretionary determination, and in other classes of case be
necessarily very imprecise, the impression conveyed to my mind by the words
"reasonably accurate assessment" is that something less
than a "proper"
assessment will do. An assessment will be proper - by which I mean in
accordance with law - even if it necessarily
contains a discretionary element
and even if it is made in a matter in which precision is impossible. But the
words "reasonably
accurate", especially in their context in Order 18A and in
the wider context in which Order 18A must be placed, suggest to my mind
that
the aggregate assessment will be less accurate - less reliable or sound - than
the product of individual assessments.
- In my opinion Rules 25 and 26, by authorising the Court to
assess damages otherwise than according to law, affect substantive
rights in a
way not authorised by the rule-making power in either para. (a) or para. (f) of
s.25(1) of the Supreme Court Act.
- There was some brief discussion before us of the matter of
severance. The submissions made were very largely submissions on behalf
of the
defendant as to why severance would not be possible. It is not without
significance that the plaintiff has failed to put
forward any particular scheme
for severance. As regards the authorities dealing with severance at common law
and the effect of s.22 of the Interpretation of Legislation Act 1984, it
is enough to refer to the discussion by Gobbo, J. in Department of
Premier and Cabinet v. Birrell (No.2)[28]. No submission was put on behalf of the plaintiff
or the Attorney-General as to whether, if some parts of Rule 25 were invalid,
the invalidity extended to Rule 25(2) and Rule 25(4) in whole or in part. I
think it is enough to say that in my opinion, if Order 18A is invalid to the
extent to which it authorises
the award of damages in an aggregate amount, the
Order as a whole is bad, severance being impossible, having regard to the
importance
of the matter of aggregate awards in the scheme of the Order.
ORMISTON, J. A.:
-
The
plaintiff's claim in this group proceeding has led to the reference to this
Court for its determination of this question: "Is
Order 18A of the General
Rules of Civil Procedure of the Supreme Court valid?" The issues may be dealt
with briefly.
- Two aspects of the new Order[29] were primarily relied upon to demonstrate that it was
made beyond power, one, that it diminished plaintiffs' common law rights to
recover damages, and, two, that it wrongly gave power to bind persons, i.e.
group members, both inside and outside the jurisdiction
who had not been made
parties to the proceeding in a way consistent with the Court's powers to
exercise personal or other jurisdiction
over them.
- As to the claim that group members' rights to damages are
detrimentally affected by the rules one must, in my opinion, carefully
distinguish between what substantive principles of the law of damages the Order
might seek to change and what it seeks to effect
by way of altering the means
by which damages are paid. The relevant provisions of the Order, rules 18A.25
and 18A.26, especially
the impugned sub-para 18A.25(1)(f), as read together
with para 18A.25(3), are sought to be justified under paras (a) and (f) of
s.25(1) of the Supreme Court Act 1986. Para (a) requires consideration
of "matters" dealt with in rules of court in force on 1 January 1987, which one
may accept extends
beyond matters relating to "practice and procedure" which
has traditionally been a basis for the rule-making power of the Court.
In my
opinion the relevant rules relate to the "matter" of representative proceedings
of the general kind described in Orders 16
and especially 18 of Chapter I of
the Rules of the Supreme Court then in operation. They are means to the end of
properly resolving
disputes commenced under O.18A as "group
proceedings".
- Additionally and arguably more importantly these damages
rules are properly characterised as rules of practice and procedure.[30] They do not, and do not purport to, change
any principle as to the assessment of damages. The most they do is provide for
what
is hoped to be a simpler and less expensive way of paying properly
calculated damages to each member of the class who chooses to
claim. They are
rules of practice and procedure because they prescribe "the mode of proceeding
by which a legal right is enforced
as distinguished from the law which gives or
defines the right": per Lush L.J. in Poyser v. Minors[31], cited in, e.g., Minister for Army v. Parbury Henty
& Co.[32].
- No provision in the new rules prescribes or even suggests
that damages should be assessed other than according to recognised existing
legal principles. Inasmuch as subpara (1)(f) permits an award of damages "in
an aggregate amount", that refers only to the manner
in which the defendant may
be required to satisfy its obligations, not to the amount to which "individual
group members will be entitled
under the judgment", as referred to in para (4).
Where the subsequent provisions refer to group members establishing their
entitlements
"to share in the damages"[33],
the assumption is that those entitlements will be calculated in accordance with
the general law. Similar views have been taken
as to the meaning of s 33Z of
the Federal Court Act 1976, albeit that that legislation is not
delegated legislation but must be construed having regard to constitutional
limitations.
The Law Reform Commission Discussion paper[34] on "Grouped Proceedings in the Federal Court" (which
recommended a slightly different regime) made clear that the "primary goal"
of
its proposals was to enable "identified persons who establish their loss to
secure the legal remedy the law provides"[35]. The broad thrust of these recommendations was accepted
in the Second Reading speech of the Attorney General[36]. From these materials Wilcox, J. recently concluded that
the federal section (in almost identical terms) contained no "implied
confinement
of the scope of the damages available", for it would be a serious
step for Parliament "in the guise of providing an additional procedure
for the
litigation of claims, actually to limit claimants' substantive rights":
Nixon v. Philip Morris[37].
- I would reach the same conclusion in relation to O.18A. What
was said against that view was that, by permitting the alternative
procedure of
awarding "an aggregate amount" under subpara (f), the quantum of each
claimant's entitlement was thereby either reduced
or rendered capable of
reduction if that aggregate award turned out to be too small. I cannot agree
that thereby the measure of
claimants' rights to damages is altered. I would
concede that such an award may, I repeat may, result in claimants' receiving
somewhat
less than the full measure of their entitlement on some
occasions. But that would occur only if the judge's "reasonably accurate
assessment", which is a condition to such an award, turned
out to be
insufficient. That is not intended, for the rules (as does the federal Act)
provide for the return of any surplus to the
defendant: see r.26(5), which in
turn ensures that defendants are not obliged to pay more than their legal
obligations. It is not
necessary to express any final opinion about
O'Loughlin, J.'s broad-brush approach to the federal equivalent of r.26(3) in
ACCC v. Golden Sphere International Inc.[38], but, whatever was there in fact calculated, I would not
read it as endorsement of the making of awards which are insufficient to
enable
group members to recover their full damages. If it were, I would respectfully
disagree with it.
- Even if the calculation so made turned out to be
insufficient, I would not characterise any deficiencies in the claimants'
recoveries
to be a substantive alteration to the law of damages. The procedure
is intended to provide a cheap and efficient means of recovering
loss for
parties who might (if they do not opt out) be put to great expense in pursuing
their claims, such that their additional
solicitor-client costs might otherwise
well outweigh any potential shortfall in the fund. By allowing the defendant
to retreat from
the contest before damages are assessed for each claimant
considerable cost savings may be anticipated in the ordinary run of case
to
which the subparagraph might be applied. As I would understand it, this
particular procedure is not generally intended for large
or complex claims, but
rather for smaller claims where estimates may be more easily made. The
possibility of a deficiency occurring
might be a ground for staying group
actions under rr.12 and 13 or the inherent power of the Court, but I would
prefer to believe
that it would be a fundamental reason for not making an
aggregate award. If claimants do recover less in a few cases, then I would
not
regard that as other than the unintended consequence of a procedural reform
resulting from the making of particular orders where
the discretion in effect
will have miscarried. In those limited circumstances the rules should not be
considered to have effected
any change to the substantive law of
damages.
- The second principal objection to Order 18A was that it
purports to extend the jurisdiction of the Court in a manner not authorised
by
s.25. In essence the complaint rested on two elements, first, that persons
could be joined effectively as plaintiffs without
their consent, and, second,
that the result of a group proceeding is intended to bind conclusively all
members (except those who
are able to and choose to opt out), so as to create
res judicata between them and the defendant. Indeed, r.18A.27 requires the
Court
at the time of judgment to "describe or otherwise identify" all such
group members who by para (b) are explicitly stated to be bound.
The defendant
asserts that under O.18A parties may be so affected who have no knowledge
whatever of the proceedings and who will
not have been served under the
conventional rules as to service, including those permitting substituted
service.
- In my opinion there is no reason why the Court should not
effectuate by rule of court these consequences of group proceedings.
Unless it
be asserting jurisdiction over persons outside the jurisdiction[39]
4[2]4[4]
, this Court may make rules as to how parties are joined and are
represented in proceedings in the Court. Substituted service not
infrequently
is ineffective to bring proceedings to a party's notice[40], but the Court recognises that that may be a necessary
consequence of enabling certain plaintiffs to obtain relief to which they
are
entitled. There is no direct equivalent for plaintiffs, but the practice has
existed for many years of binding unwilling plaintiffs
by joining them as
defendants to whom substituted service may be directed. More importantly, in
the present context, for many centuries[41]
the courts have permitted, in one way or another, parties to sue (and be sued)
by representatives who have either claimed the right
to sue on behalf of others
or, more frequently (but not invariably) and in recognition of such claims,
have been authorised or permitted
by the courts in more recent centuries to sue
or be sued on their behalf.[42] The Chancery
practice, later adopted in Judicature Act rules, has been
authoritatively expounded in relation to both the "traditional" representative
suit[43] and Part IVA of the Federal Court
Act in, respectively, Carnie v. Esanda Finance Corp Ltd.[44] and Wong v. Silkfield[45].
- Joinder is clearly a matter for courts to prescribe as a
matter of practice and procedure, but one may concede that the binding
effect
of judgments and the principles of merger of judgments, res judicata and issue
estoppel are substantive. Insofar as O. 18A
purports to change or expand those
rules then one could only justify r.27 if it were possible to treat this
attempt to bind absent
parties as no different in substance from that
recognised as flowing from the effect given to orders under O.18 and the like.
Doubtless
the classes represented by "group members" as defined by the new
Order[46] are wider than even the High Court[47] was prepared to encompass under the existing
procedures, but the means of communicating with them and their rights to opt
out are
more extensive. Whether or not para. (1)(f) of s.25 could properly be
prayed in aid of the validity of r.27, I have little doubt
that para (1)(a) of
that section is a sufficient basis for the making of that rule, as it is for
the whole Order. That paragraph
invites consideration of the "matters" dealt
with in the 1987 rules, in particular those rules dealing with representative
proceedings,
especially O.18, although one ought not to ignore O.16. The
latter Order contains three rules each taken in substance from the former
O.XVI, but having the characteristic of laying down rules purporting to bind
absent parties who effectively are represented by specified
or appointed
persons for proceedings in relation to the interpretation of instruments and
the administration of trusts and estates.
- More importantly Rule 18.04, unlike the former O.XVI r.9,
specifically provides in para (1) that judgments and orders under that
rule
"shall bind the parties and all persons as representing whom the parties sue or
are sued", though leave is required before the
judgment or order is enforced.
The binding force of such orders is thus dealt with explicitly and the
rule-making power ought to
taken as extending to justify r.18A.27, unless the
subject-matter of the new Order is to be seen as something quite different in
character. No doubt the procedure is more elaborate and its scope is
significantly wider, but in my opinion it is essentially an
order permitting
representation of absent parties, as are Orders 18 and 16. Whatever be its
practical effect, Order 18A merely creates
a "new form of representative
proceedings", as their history demonstrates and as the High Court described the
almost identical provisions
of the Federal Court Act Part IVA in
Wong[48]. I do not accept the
defendant's analysis of the new procedure embodied in Order 18A. Consequently
in these respects it did not
go beyond the Court's rule-making
power.
-
A
wider attack was made on these rules. It was said that they purported to go
beyond the territorial competence of the delegating
authority, namely the
Parliament of Victoria, inasmuch as any judgments or orders made thereunder
might on their natural construction
be capable of binding persons outside
Victoria, indeed outside Australia. Thus it was argued that persons having no
connection with
Victoria might be bound by the Court's order without being
served in accordance with the Rules and without any knowledge of the
proceedings.
No doubt the plaintiff here seeks to represent and thus bind such
persons, at least a fair reading of its statement of claim would
so imply, but
the question here is whether the Order is valid. It was said that it could not
be read other than as attempting to
assert the Court's jurisdiction beyond the
four corners of the State whenever such a proceeding is brought, for any class
on its
natural construction will ordinarily cover people living outside
Victoria, often including those overseas. It is, however, accepted
law that
legislation, especially delegated legislation, will not be construed so as to
exceed the competence of the body making the
law. That is not to say that the
Court cannot exercise jurisdiction in relation to persons and events beyond the
jurisdiction.
If a defendant can be served within the jurisdiction there is no
reason, short of abuse of process, why a court should not resolve
any dispute
raised by a plaintiff, wheresoever that plaintiff lives and notwithstanding
that the events took place outside this State.
If a claim comes within those
described in the Service and Execution of Process Act 1992 or Rule 7.01
of the Rules there is ordinarily no reason why a plaintiff should not invoke
this Court's jurisdiction to have it resolved,
subject to the well-known
safeguards. There are many aspects to this problem but at the end of the day
the Court's judgment will
remain enforceable in Victoria and its enforceability
elsewhere will depend on the rules of private international law, as modified
by
treaty. If a judgment exceeds this Court's jurisdiction, it will to that
extent be invalid, but Order 18A will not.
- In short I do not believe the objections made on this score
have any relevance to the validity of the rules. It would be unfortunate,
however, if we were to leave the impression that judgments or orders under
O.18A would be unenforceable outside Victoria. No relevant
authority was cited
but I do not see why a properly constituted group proceeding should not lead to
generally enforceable orders,
at least in this country. There would seem
little reason, on present authority, why orders made as a result of such
proceeding should
not be afforded "full faith and credit" under s. 118 of the
Constitution, although it is unnecessary here to decide that. Nor do
I see any
reason why orders made in properly constituted group proceedings should not
have effect according to their tenor, as I
would understand has been the case
with orders made in a variety of representative proceedings in the past, such
as debenture-holders'
suits, to take but one example, where I have not heard it
suggested that the orders would not bind the holders wherever they lived.
The
potential for representative orders to have the widest effect was described in
Templeton v. Leviathan Pty. Ltd.[49].
-
One
should remember that the object, where the plaintiff sues as representative, is
ordinarily to obtain an order to benefit the whole
class and that again the
defendant is either sued in its own jurisdiction or has submitted to that of
another. The suit will be
a waste of time for all unless the rules of private
international law will recognise the ultimate order. Groups can and should be
defined under Rule 18A.07 with any such limits in mind. Under O.18A the court
has wide powers to mould the proceedings so as to
prevent procedural injustice,
indeed to halt them altogether. Although it should not be assumed that all
represented parties will
come to know of proceedings at one stage or another
and make a choice whether they wish to opt out, the Court has sufficient powers
under the rules to control the proceeding or, if necessary, stay it. In all,
therefore, there are safeguards which, though arguably
imperfect, evidence the
rule-making authority's attempt to prescribe a procedure intended to protect
those affected. The validity
of the Order, however, cannot depend on how
effective these may turn out to be in particular cases. Unless the Order
inevitably
by its operation would have an impermissible extra-territorial
effect, it cannot be held invalid for that reason. Here the defendant
has not
established that it has any such effect.
- Next it was contended that the impugned rules were invalid
because they are inconsistent with sections 34 and 35 of the Supreme Court Act.
It was argued, in accordance with well-recognised authority, that where
Parliament has made express provision for a matter, a subordinate
rule-making
authority may not deal with the same subject matter in an inconsistent way. No
doubt that is often the case, but each
case depends on its own circumstances.
Here no such conclusion can be drawn. The sections were inserted at a time
when other representative
actions were already the subject of rules of court.
The added sections did not purport to cover the field of representative
actions,
nor did they purport to exclude or override alternative modes of
proceeding to be found in the rules of court. Moreover nothing
in the
parliamentary debates would support that conclusion. The alleged ground of
invalidity should be rejected.
- Finally it was argued that the provisions of Order 18A were
invalid as being inconsistent with the requirements of Chapter III
of the
Commonwealth Constitution, as expounded in cases such as Kable v. Director
of Public Prosecutions[50]. So it
was said that the Order purported to require the Court to resolve justiciable
controversies in a manner inconsistent with
the proper exercise of judicial
power. Here the effect of proceedings under the Order will be, so it was
contended, to bind many
"parties" to the result of proceedings in which they
will have had no adequate opportunity to participate and where, so far as they
are concerned, that result would be a hypothetical exercise leading to no more
than an impermissible advisory opinion.
- I cannot accept any of these arguments which, if I may say
so, have an air of unreality about them. It is unnecessary to pursue
the issue
whether, if these characterisations of the rules were made out, they would have
the consequences alleged, for they depend
on a view of them which has already
been rejected above. They would also appear inconsistent with the reasoning of
Lehane, J. in
Bright v. Femcare Ltd.[51], as confirmed very recently by the Full Court of
the Federal Court.[52]
- It has already been stated that the protections provided to
members of the group, though arguably open to some criticism, nevertheless
provide sufficient procedural fairness to those members in that they provide
for notice to all, the right to opt out, the right to
challenge representation
and the right to individual assessment of loss and damage, all in the context
of proceedings brought on
behalf of all members and for their benefit. It is
for the Court to ensure that the object of the rules is achieved so far as
possible,
and it should not be assumed that it will fail. Thus it cannot be
properly concluded that they provide for a scheme which is inimical
to the duty
to afford procedural fairness.
- Furthermore I cannot accept that the Order provides for
hypothetical exercises leading only to advisory opinions so far as group
members other than the named plaintiff is concerned. The argument
misapprehends the real nature of a representative action. The
suit is brought
on behalf of all members so as to resolve, in particular, the issues which are
common to their claims. The factual
basis cannot ordinarily be that applicable
only to the named plaintiff for that would be inconsistent with the purpose of
group proceedings.
Even in the unlikely event that both parties were to
acquiesce, the judge ought to stop any misuse of the procedure. So far as
the
group members' individual rights are concerned, they are not ignored but left
to the second stage of the proceeding.
- In short, therefore, there is no basis for the argument that
Order 18A is inconsistent with the Constitution.
- Inasmuch as I have not dealt with all the vast array of
authorities cited to the Court for our assistance, either I have not thought
them to be presently relevant or I have not found it necessary to refer further
to them for the purpose of expressing these reasons.
Those authorities and
counsel's carefully worked out arguments have been considered by me for the
purpose of reaching my conclusion,
but they have not persuaded me that Order
18A is invalid.
- Consequently I would answer the question raised:
"Yes".
PHILLIPS, J.A.:
- I agree with Mr. Justice Ormiston that the question asked
should be answered yes. In many respects the argument which was presented
to
us on behalf of the defendant turned on what might one day be attempted
(whether soundly based or not) in purported reliance upon
Order 18A, as
distinct from what the new rules, in terms, do authorise or require. For
example a general rule conferring a power
of amendment is not invalid because
an amendment is attempted going beyond what may lawfully be done in a
particular case. The rule
will be presumed, very properly, to authorise only
that which is within power. The rule will not be then invalid, only its
purported
application. That distinction was to my mind often ignored in the
defendant's argument.
- It was contended for the defendant that Order 18A went beyond
the legitimate determination at law of claims for damages in that
it authorised
a global assessment of damages, departing from the principle that a plaintiff
could recover - and recover only - damages
for actual loss and damage suffered
and that the defendant should pay neither more nor less than that. If global
assessment resulted
in a sum which was less than the amount due to the
individuals for whom the amount was sought, then the individual claimants must
have their legitimate claims diminished (the argument ran); and if more, the
defendant necessarily suffered an increased - and thus
far unjustified -
burden. And the likelihood of its not being too little or too much was remote,
given that under Order 18A a vast
number of claimants might be brought together
in the one proceeding.
- In my opinion this argument goes not to the validity of Order
18A but to what might be attempted under it (whether correctly or
not). In
terms rule 18A.25(3) requires the Court not to make an award of damages under
paragraph (1)(f) "unless a reasonably accurate
assessment can be made of the
total amount to which group members will be entitled under the judgment", and
thus far it is unexceptionable.
A reasonably accurate assessment of damages is
ordinarily no more and no less than can be made when unliquidated damages are
sought,
and it will be altogether different when liquidated damages are
claimed. Uncertainty might arise in respect of the number of claimants,
but
the Court has the power to cope with that; for having adjudicated on the
liability of the defendant in a general way, the Court
has ample power under
Order 18A to fix the number and identity of those who are claiming compensation
and to make orders accordingly,
calling if it wishes for more precise evidence
of particular losses if such is considered necessary or desirable. There is
even
an express provision for refund to the defendant, should any fund
established to answer the group's claims prove excessive: see
rule 18A.26(5).
- If it matters, in this very proceeding the plaintiff is
proposing (according to the statement of claim, which is all we have as
yet) to
call evidence, from all those represented, of the particular loss and damage
suffered by each, a step which is unexceptionable
and which, if taken, must
undermine the present objection which is built upon other possibilities.
Unless and until there is some
departure from what is presently proposed, the
question whether some other course would or would not be authorised by rule
18A.26
does not seem to me to call for decision yet. It is a legitimate
presumption that the rule-making power has not been exceeded and
as there is no
need in my opinion to read rule 18A.26 as, in terms, authorising or requiring a
step which is beyond power, there
is no reason to conclude by reference to that
rule that Order 18A goes beyond power.
- Much the same can be said, I think, of the other main ground
on which Order 18A was challenged: its territorial operation. It
was
submitted that Order 18A authorised the inclusion in the group represented by
the plaintiff of those who had no recognised connection
with the jurisdiction -
Victoria - and on that account Order 18A went beyond the rule making power of
the Court. Indeed it was said,
no doubt in terrorem, that Order 18A would be
beyond the competence even of a State Parliament. But again the argument seems
to
me to challenge what might be attempted under Order 18A, rather than the new
rules themselves. They are silent as to jurisdictional
limits. I offer no
opinion at all about whether it would be possible for a plaintiff, by
purporting to represent those beyond the
jurisdiction, to bind them to the
result of the proceeding; that is not the question put to us for decision.
Order 18A, on its face,
does not, in terms, authorise or require something
which is beyond the rule-making power and, given the presumption that the rule
making power is not exceeded, I see nothing in the argument about territorial
operation to justify the conclusion that Order 18A
goes beyond power.
- To emphasise the point, the procedure allowed under Order 18A
is one requiring judicial management from the start: Rule 18A.08.
At an early
stage, therefore, the Court will no doubt be looking at the whole question of
the representation asserted by the plaintiff
in the initial pleading, when
considering, as it must, to whom notice should be given and what form that
notice should take: see
rules 18A.22 and 18A.23. The whereabouts of those to
whom the notice is directed will then be a material consideration. The Court
has the power to divide the main group into sub-groups, if appropriate, and
even to order that the proceeding not continue under
Order 18A at all: rule
18A.13. Unless resolved only to settle the proceeding, the defendant will
presumably have an interest in
confining the group being represented as
narrowly as possible and, if there is any doubt about the jurisdiction of this
Court over
those who, for example, reside outside Victoria, I should have
thought that the matter could be dealt with by appropriate orders.
Whether
such doubts are significant these days, particularly in view of the
possibilities of cross-vesting, is of course an altogether
different matter and
one on which I offer no opinion. Again it will be only if a step is attempted
which, according to the one side
or the other, cannot properly be justified by
Order 18A that the Court will be required to determine how far it is lawful, in
the
particular circumstances of the case, to extend the reach of the
proceeding. That is no ground for ruling that Order 18A is itself
beyond
power.
- It is implicit in the foregoing that in my view Order 18A can
be sustained as a rule of practice and procedure, within the meaning
of
s.25(1)(f)(i) of the Supreme Court Act 1986. It was submitted on behalf
of the defendant that that could not be so because Order 18A in effect
"annihilated" an injured person's
right to sue, at his own choice, compelling
him or her instead to join in a group proceeding in which he or she was
included, at
the whim of the plaintiff. By this means, it was contended, Order
18A converted what was a choice - or at least "a right to choose"
- into a
series of discretions vested in the Court. On this aspect, however, the
requirement for notice, which is fundamental to
Order 18A, becomes critical and
in my view that requirement was under-valued by the defendant's submission.
Notice, if properly given,
will alert those within the group described by the
plaintiff to what is being done - or sought to be done - on their behalf, and
any person within that group, as so described, may elect to "opt out". All
this means is that within the time allowed (and even
beyond it if there is
reason to extend the time) one whom the plaintiff seeks to represent may
signify that, so far as he or she
is concerned, there is no consent to
participating. Conversely, the failure to "opt out", where notice has been
properly given,
may be tantamount to consent. Under Order 18, the Court would
assume jurisdiction even over a defendant who, though not served,
was given
notice of the order once made and it seems to me little different in kind to
assume that one for whose benefit the proceeding
is brought (at least according
to the plaintiff) accepts that position if, once given the opportunity to
abstain from participating,
he or she does not do so. No doubt in this respect
the procedure described in Order 18A is somewhat novel, but that is only to
measure
it against prior practice. These days we hear so often that the Courts
must adapt and move with the times and such novelty as exists
in Order 18A does
not, I think, mean that the new rules go beyond what may fairly be called rules
of practice and procedure.
- Were it otherwise, I would agree that Order 18A can be
sustained under s.25(1)(a) of the Supreme Court Act as Ormiston, J.A.
says, on the ground that Order 18A deals with a "matter" that is dealt with in
the Rules of Court that were in
force on 1 January 1987. I refer in
particular to those rules dealing with representative proceedings, especially
Order 18. Of
course Order 18A is more detailed than Order 18 and introduces
procedures that are somewhat novel but the "matter" is nonetheless
the same.
If necessary, s.25(2) could be called in aid, allowing for amendment of those
rules which in 1986 were specifically validated by the Victorian Parliament:
see Supreme Court (Rules of Procedure) Act 1986 s.4. An argument that
s.4 ceased to have effect upon its repeal by the 1986 Act, though advanced
initially, was withdrawn in the
course of argument.
- Subject to the foregoing, I agree in the judgment of
Ormiston, J.A.
CHARLES, J. A.:
- I have had the advantage of reading in draft the reasons for
judgment prepared by Ormiston, J.A. I agree that the question asked
should be
answered yes and for the reasons given by his Honour for arriving at this
conclusion.
[1] cf. Harrington v.
Lowe (1996) 190 C.L.R. 311 at 341-2 per Kirby, J.; Taylor v.
Guttilla (1992) 59 S.A.S.R. 361 at 366-8 per King, C.J.; at 379-80 per
Olsson, J.
[2] (1980) 27 UCLA L.Rev. 514 and 1067.
[3] at 1085
[4] Compare Poyser v. Minors [1881] 7
Q.B.D. 329 per Lush, L.J. at 333 and, especially, Bramwell, L.J. at
337-8.
[5] Workplace Relations and Other Legislation
Amendment Act 1996, Schedule 16, Item 52.
[6] 2nd ed., p.619, and
1st Supp., p.89.
[7] 4th ed., p.488, note 106.
[8] Paras 229-235.
[9] Para. 227.
[10] pp.520-1.
[11] Cl. 22.
[12] Paras 225, 227, 229 and 231.
[13] Cl. 30.
[14] Para. 228.
[15] Draft Bill cl. 30(3).
[16] Para. 228.
[17] [1994] VicRp 16; [1994] 1 V.R. 237.
[18] [1998] 3 V.R. 833.
[19] [1991] HCA 54; (1991) 174 C.L.R. 64 at 137.
[20] "Representative Proceedings in the
Federal Court of Australia", (1996-97) 15 Aust. Bar Rev. 91 at p.97.
[21] [1999] F.C.A. 1107.
[22] [2000] F.C.A. 229.
[23] [1998] FCA 598; (1998) 83 F.C.R. 424.
[24] Paras 223-228.
[25] "Consumer Class Actions in Canada - Some
Proposals for Reform", (1975) 13 Osgoode Hall L.J. 1 at 85,
discussed in the body of the article at p.60.
[26] p.531.
[27] pp.54-62. The fluidity of this
expression was criticised by the Commission at 536-7 of its report. It comes
from the American cases.
See, for example, Eisen v. Carlisle &
Jacquelin [1973] USCA2 348; 479 F. 2d 1005 (Second Circuit, 1973).
[28] [1990] VicRp 5; [1990] V.R. 51.
[29] Inserted by the Supreme Court (Chapter I
Amendment No. 11) Rules 1999, made 9 December 1999.
[30] Within the meaning of para. (f) of
s.25(1).
[31] (1881) 7 Q.B.D. 329 at 333.
[32] [1945] HCA 52; (1945) 70 CLR 459 at 489.
[33] Para (5): cf. r.26(3).
[34] Report No. 46 of the Australian Law
Reform Commission.
[35] Para 323; see also paras 16, 67 and
116
[36] Hansard, House of Representatives,14
December 1991 p.3174
[37] [1999] FCA 1107; 165 ALR 515 at para
117. Although many orders in that case were reversed on appeal, [2000] FCA 229; 170 A.L.R. 487, nothing was said by the Full Court to doubt this
observation.
[38] [1998] FCA 598; (1998) 83 FCR 424.
[39] As to which, see below at paras. [[] to [].
40]
Not by design, but the practical results should be acknowledged.
[41] The present rules were made almost
precisely 800 years after the first recorded (to my knowledge) representative
suit, Master Martin Rector of Barkway v. Parishioners of Nuthampstead
(c.1199) E.S. Roll No. 210 (Ecclesiastical Court of Diocese of London) in
Select Cases from the Ecclesiastical Courts of the Province
of Canterbury, 95
Selden Society 8, ed. Adams and Donahue. Not only were the parishioners made
"defendants" to the rector's claim
but they also made a cross-claim that
spiritualia be provided at a local chapel. The extensive history of
class actions is examined in detail by Professor Stephen Yeazell in Medieval
Group Litigation to the Modern Class Action (1987) Yale University Press and by
Hazard, Gedid & Sowle, in An Historical Analysis
of the Binding Effect of
Class Suits, 146 U. Pa. L. Rev. 1849 (1998).
[42] See the former Rules of the Supreme
Court (1985 and earlier) Order XVI rules 8,9,10,32,40 and 46, and the present
Orders 16 and
18.
[43] Under the N.S.W. equivalents of
O.XVI.r.9 and O.18.
[44] [1995] HCA 9; (1995) 182 C.L.R. 398 at 415-420 and
427-430.
[45] [1999] HCA 48; (1999) 165 A.L.R. 373; HCA 48 at paras
13-18.
[46] See rr.18A.01 and 18A.03.
[47] See Carnie.
[48] At para 28.
[49] [1921] HCA 55; (1921) 30 CLR 34 at 57-58 per Knox C.J.
and at 76-78 per Starke J. Cf. Cox v. Dublin City Distillery Col.. Ltd.
(No. 3) [1917] 1 I.R. 203.
[50] [1996] HCA 24; (1996) 189 CLR 51.
[51] [1999] FCA 1377; (1999) 166 ALR 743.
[52] Femcare Ltd. v. Bright [2000]
F.C.A. 512, decided after argument in the present matter was concluded.
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