Federal Court of Australia

ISG Management Pty Ltd v Mutch [2020] FCAFC 213

ORDERS

THE COURT ORDERS THAT:

1.    The application for leave to appeal be dismissed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

A    INTRODUCTION

1    The applicant (ISG) seeks leave to appeal against an order of the primary judge dismissing an interlocutory application by which ISG sought: (a) a declaration that a class action brought by the respondent, Mr Mutch, was not properly commenced under Pt IVA of the Federal Court of Australia Act 1976 (Cth) (Act) because it does not satisfy the requirements of s 33C of the Act (Invalidity Application); and alternatively (b) an order under s 33N of the Act that the proceeding not continue as a class action under Pt IVA (Declassing Application). The primary judge also dismissed a further alternative application for an order under s 33ZF of the Act that the proceeding only continue as an “opt-in” class action, but no challenge is maintained in relation to this last aspect of his Honour’s determination.

2    The relevant principles attending applications for leave to appeal are well settled and not in dispute. As was observed in Nationwide News Pty Ltd v Rush [2018] FCAFC 70 (at [2]–[6] per Lee J, Allsop CJ and Rares J agreeing):

The principles informing the determination of whether to grant leave to appeal from a decision of a single judge of this Court are not novel. The starting point is that in exercising the power to grant leave, regard must be had to the statutory charge in s 37M(3) of the [Act] that the power must be exercised or carried out in the way that best promotes the overarching purpose, being the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible.

Consistently with the facilitation of a just resolution, an applicant must usually show that: (a) in all the circumstances, the decision to be appealed is attended with sufficient doubt to warrant its reconsideration on appeal; and (b) supposing the decision to be wrong, substantial injustice would result if leave were refused: Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-399 (Sheppard, Burchett and Heerey JJ). The sufficiency of the doubt in respect of the decision to be appealed and the question of substantial injustice bear upon each other so that the degree of doubt which is sufficient in one case may be different from that required in another. It has also been said that the considerations are cumulative such that leave ought not be granted unless each limb is made out: Rawson Finances Pty Ltd v Deputy Commissioner of Taxation [2010] FCAFC 139; (2010) 81 ATR 36 at 38 [5] (Ryan, Stone and Jagot JJ); Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd [2017] FCAFC 98; (2017) 252 FCR 1 at 4 [3] (Jagot, Yates and Murphy JJ).

Additionally, consistent with the facilitation of a quick, inexpensive and efficient resolution is the principle which emerges from the oft-cited warning of Jordan CJ in In re the Will of F. B. Gilbert (Deceased) (1946) 46 SR (NSW) 318 at 323, that if a tight rein is not kept upon the interference with orders of judges at first instance in the exercise of discretion on a point of practice and procedure, the result will be “disastrous to the proper administration of justice”.

…

Even if it was reasonably arguable that the primary judge’s discretion miscarried, that would not, in and of itself, be a sufficient basis for the grant of leave.

(Emphasis in original)

3    It is appropriate to deal initially with the question as to whether the proposed grounds of appeal which seek to impugn the rejection by the primary judge of the Invalidity Application or the Declassing Application have any merit, and then, shortly deal with the issue of substantial injustice.

B    THE INVALIDITY APPLICATION

4    The contention of ISG below was that the claims of all group members did not give rise to a substantial common issue of law or fact as required by s 33C(1)(c). The primary judge correctly noted (at [84]) that this threshold requirement requires identification of only one substantial common issue and that the determination of that issue need not resolve, to any significant degree, the claims of all group members. The question as to whether the class action was validly commenced is a binary assessment and does not call for the exercise of any discretion.

5    The key question in the proceeding is whether telecommunications technicians (Mr Mutch and the group members) were employees of ISG or were employees of various corporations which provided services to ISG. As the primary judge noted (at [63]), Mr Mutch contends that the parties to the relevant agreements pursuant to which work was conducted were ISG and the relevant technician (and that the relationship between the parties to those agreements was a relationship of employment); whereas ISG contends, again by reference to Mr Mutch and all group members, that the technicians did not provide services to ISG but rather provided their services to entities engaged by ISG to perform what was described as the “I&M Services”.

6    The primary judge observed that there was a “common nucleus of facts said to be applicable to all technicians”: at [87]. His Honour reasoned that it will be necessary for the Court in due course to make a series of findings as to how ISG dealt with the technicians and the work practices relevant to the technicians generally. This will include the capacity to control and direct, and the manner in which the technicians generally performed work. In this limited sense, the case advanced by Mr Mutch on his own behalf and in a representative capacity is a “systems” case, reliant on the systems and relevant work practices employed by ISG in dealing with its technicians.

7    ISG contends that “a common question in the requisite sense will not arise merely because a question raises a ‘common nucleus’ of relevant matters universally applicable to all group members”. It submits that “[i]f the question also raises matters which are not universally applicable, it cannot be determined irrespective of individual group member circumstances” and hence is not common.

8    ISG’s submission that the primary judge erred in concluding that Mr Mutch had commenced a valid class action has no substance.

9    It has been said that the pleadings must adequately indicate the basis upon which it is claimed that Pt IVA is engaged, but this statement cannot be literally correct as a class action may be commenced without a statement of claim being filed. The correct position was explained in Bright v Femcare Ltd [2002] FCAFC 243; (2002) 195 ALR 574, where Lindgren J noted (at 578 [14]):

Careful compliance with this requirement [that is, s 33H(1)(c), which can occur in the application or other document filed in support] is of the greatest importance. Its purpose is to elicit the identity of questions, the answering of which in the representative party’s claim can be expected also to perform the useful purpose of answering them in the claims of the represented parties.

To this it is worth adding that the purpose of s 33H is to assist the Court and the respondent to ascertain whether the “gateway” requirements have been met; having passed through the entrance, further common questions may become evident and in most cases of any complexity, the common questions will likely change after issue is joined on any pleadings, and factual issues are brought into focus upon evidence being filed.

10    In this case, in purported accordance with s 33H, 17 common questions were identified upon commencement. His Honour was satisfied there was a common issue (question 3) as to “[w]hether the economic activity carried out by [the technicians] was portrayed as that of [ISG]”. Mr Mutch’s pleaded case is that the economic activity that was carried out by the technicians was portrayed as that of ISG by reason of: (a) the technicians being required to wear a uniform containing ISG branding; (b) the technicians being required to use ISG branding on their vehicles; and (c) the technicians being required to have identification with ISG and Telstra branding. These requirements and work practices relied upon are, on Mr Mutch’s case, common and applicable to all technicians. This is denied by ISG. Whether this allegation is right or wrong does not matter; what matters is that it raises an issue of substance to be determined.

11    Although this conclusion would have been sufficient to reject the Invalidity Application, as it turned out, the primary judge found there was another common question (question 1), as to whether ISG “controlled and directed, or had the capacity to control and direct, the manner in which [the technicians] performed work”.  His Honour found that in making the claim that ISG had used that capacity, Mr Mutch’s pleading relied upon a common nucleus of facts said to be applicable to all technicians and, on the basis of the pleading, the question did not call for any individual-by-individual assessment. Again, Mr Mutch’s allegations may ultimately be misconceived, but the allegation raises an issue of substance to be determined.

12    Put more generally, the existence or otherwise of the “common nucleus of facts said to be applicable to all technicians” identified by his Honour is, of itself, a common issue of substance, although the answer to it will or may give rise to issues which are not common. It may be accepted that the making of findings in relation to the allegations identified by the primary judge will not determine individual claims of group members against ISG, but this is not to the point. As has been observed on a number of occasions, most recently in Dyczynski v Gibson [2020] FCAFC 120; (2020) 381 ALR 1 (at 41 [163]–[164] per Murphy and Colvin JJ, at 77 [331] per Lee J), when understanding the structure of Pt IVA, it is important to bear in mind that the “gateway” requirements to commencing a class action are deliberately undemanding.

13    It is not seriously arguable that all the “gateway” requirements, including the existence of at least one substantial common issue, were wanting in the present case and leave to appeal should be refused in relation to the rejection by the primary judge of the Invalidity Application.

C    THE DECLASSING APPLICATION

14    ISG framed the Declassing Application as an alternative to the Invalidity Application: it was right to do so. Section 33N(1) provides that the Court may order that a proceeding under Pt IVA be declassed where it is satisfied that it is in the interests of justice to do so because it is established on the material before the Court that one or more of four factors are present. It follows that it is only if Pt IVA has been properly engaged, and a class action has been validly commenced, that s 33N has any applicability.

15    The Declassing Application was expressly put below on the basis that all of the grounds in s 33N(1)(a) to (d) of the Act were engaged. Accordingly, the contention of ISG is that the primary judge ought to have been satisfied that it was in the interests of justice to declass the proceeding because:

(a)    the costs that would be incurred if the proceeding were to continue as a representative proceeding are likely to exceed the costs that would be incurred if each group member conducted a separate proceeding (Costs Ground);

(b)    all the relief sought can be obtained by means of a proceeding other than a representative proceeding under Pt IVA (Individual Proceeding Ground);

(c)    the representative proceeding will not provide an efficient and effective means of dealing with the claims of group members (Efficiency Ground); and

(d)    it is otherwise inappropriate that the claims be pursued by means of a representative proceeding (Alternative Ground).

16    The basis articulated as to why each ground was established was explained in the written submissions below as follows:

(a)    Costs Ground: it was submitted that given the need to determine each of the so-called common questions separately for each and every single worker, having regard to the totality of the relationship then “the costs that would be incurred if the proceeding continued as a representative proceeding would be no less than the costs that would be incurred if each group member conducted a separate proceeding” and that “given the foreshadowed cross-claims which [ISG] may need to bring against each worker … the costs of the group proceeding would be significantly greater than separate proceedings”;

(b)    Individual Proceeding Ground: it was said that “all the relief sought in the representative proceeding could be obtained by separate proceedings brought by those individual workers who wish to make a claim” (it is worth noting that this ground is almost always present in a class action);

(c)    Efficiency Ground: it was contended that because of the overall lack of commonality the determination of any group member’s claim as part of a class action “will be delayed by (and made more costly by) the need to hear evidence and submissions about the circumstances of every single other worker (and those of the Subcontracting Company for which each worker worked, and the circumstances of the relevant Tickets of Work Agreements under which each worker worked)”;

(d)    Alternative Ground: it was submitted there was a “real possibility for prejudice to group members from remaining involuntarily involved in the proceeding, and conflict between group members’ interests” such that it is otherwise inappropriate that the claims be pursued by means of a class action.

17    Having identified these bases, the way the argument was advanced by ISG before the primary judge was far more general and focussed on an overall assessment of what it was said the interests of justice required. Regrettably, this approach had the tendency to elide the distinction between the three logical stages of a s 33N enquiry: first, whether or not any or all of the matters specified in s 33N(1)(a) to (c) (the Costs Ground and/or the Individual Proceeding Ground and/or the Efficiency Ground) are made out; secondly, consideration as to whether there was another, that is, different reason why it is inappropriate that the claims be pursued by means of a class action (that is, whether the Alternative Ground is made out); and thirdly, if one or other of the grounds are made out whether, because of that established ground or grounds, the primary judge should reach a level of satisfaction that it is in the interests of justice to declass the proceeding.

18    Reflecting the way the Declassing Application was argued below, the primary judge rejected the three arguments advanced as to why “it is in the interests of justice that the claim not continue under Part IVA” (at [89]) being: first, there is limited utility in the class action because most, if not all, of the key issues are not capable of being determined on a common basis; secondly, there is a real possibility for prejudice to group members from being involuntarily exposed to cross-claims as a result of being involved in the class action; and thirdly, there is a conflict of the interests of group members, which warrants declassing.

19    Although not put before the primary judge in this way, it is appropriate to characterise the first of these arguments as the reason why the Efficiency Ground was made out, and the second and third arguments as the basis upon which the Alternative Ground was made out and, because of these established grounds, the primary judge ought to have been satisfied it was in the interests of justice to declass. ISG persists in advancing only the first of these three arguments rejected below.

20    One reason why it is important not to elide these distinct aspects of a s 33N application is that such an elision can obscure the nature of the preliminary findings and the ultimate decision made, and hence the applicable standard of appellate review.

21    Even if satisfied that one or more of the grounds were made out (findings which demanded a unique outcome), the state of satisfaction that the interests of justice warranted declassing involved “a degree of subjectivity” such that the decision could, in a “broad sense”, be described as a discretionary decision: Coal and Allied Operations Pty Limited v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194 (at 205 [20] per Gleeson CJ, Gaudron and Hayne JJ); Minister for Immigration and Border Protection v SZVFW [2018] HCA 30; (2018) 264 CLR 541 (at 563 [49] per Gageler J). This is reinforced by the subsection providing that “the court may” make a declassing order (emphasis added); the word “may” suggests that the court can make a declassing order “at the discretion of the … court” (Acts Interpretation Act 1901 (Cth) s 33(2A)). It follows that in order to impugn successfully the decision made by the primary judge to reject the Declassing Application (in contradistinction to the Invalidity Application) the “House standard” applies: see House v The King (1936) 55 CLR 499 (at 504–5 per Dixon J, Evatt and McTiernan JJ).

22    Seven proposed grounds are pressed by ISG – all of which relate to the proposition that the key issues are not capable of being determined on a common basis. Each of the grounds can be dealt with shortly, but then it will become necessary to deal with the overarching complaint made by ISG that the interests of justice required declassing.

23    First, it was contended that the primary judge erred in not giving sufficient consideration or weight to the totality of the evidence and the defence which went “to the range of different arrangements of the various workers of whom Mr Mutch was alleged to be representative”, and “the range of different contractual and other arrangements pursuant to which group members were engaged”. But it is evident his Honour was clearly alive to the fact that there may be a wide range of indicators or factors relevant in the application of multifactorial assessments required in determining whether a worker was in a contractual relationship of employment with ISG (see [90]). Further, the primary judge expressly accepted that this would involve consideration of factors personal to individual group members and the weight that might be given to one factor in an overall assessment may vary between group members. But as the primary judge explained (at [30]), to support the allegation that a relationship of employment existed between ISG and each group member technician, the further amended statement of claim relied upon: (a) a wide range of asserted facts and circumstances which related to how ISG controlled and directed or had the capacity to control and direct the way in which all technicians performed work (including in respect of a number of specified matters); (b) the extent to which ISG superintended the finances of the technicians (again by reference to a number of specified matters); (c) how the economic activity carried on by the technicians was portrayed (again by reference to a number of specified matters); (d) specifying a number of matters by reason of which each technician was integrated into the business of ISG and did not conduct a business on their own; and (e) the contention that there was no goodwill enjoyed by the technicians by reason of the services they provided. Although the significance of each of these matters on an individualised basis may differ, it is clear that a number of these allegations, made in a generalised way, would either be made out on the evidence at the initial trial, or not. As noted above, following a finding made under s 33ZB of the Act, this would assist (but not necessarily be determinative of) the claim of that technician.

24    His Honour was correct to approach the matter in this way and did not lose sight of the fact that each technician’s case may not be resolved by determination of one or the other common issues. There was no arguable error in the way in which his Honour approached his task in this regard.

25    Secondly, it was claimed that the primary judge erred in finding that there would likely be utility in determining collectively the matter referred to in the judgment at [94], in the light of the admissions in the defence at [219(t)]. This is without merit. What his Honour did was to take “a simple example” of how a finding in relation to a general matter may help inform a determination of whether a group member was an employee. The example his Honour used at [94] was that ISG “required technicians to wear and utilise [ISG] branding on the uniforms they wore and the vehicles they used”. It was said that the admission in the defence at [219(t)] meant that there was no issue joined in this regard. But it is evident from a review of the pleading that what his Honour was referring to was the allegation that the economic activity carried on by the technicians (including Mr Mutch) was portrayed as that of ISG by reason of, among other things, the facts that: (a) the technicians were required to wear a uniform containing ISG branding; and (b) the technicians were required to use ISG branding on their vehicles. The plea made in the defence to the relevant part of the FASOC was as follows:

As to paragraph 222, it denies that it had any contract with, or that any contractual term referred to therein applied to, the Representatives of the Subcontracting Companies further or alternatively the “workers” (as that term is defined at paragraph 1A of the FASOC) and, under cover of that denial, it says further as follows:

(a)    it denies subparagraph (a) and repeats subparagraph 219(t);

(b)    it denies subparagraph (b) and says that:

(i)    Subcontracting Companies were provided with removable magnets and stickers bearing ISGM’s and Telstra’s insignia for use by their Representatives;

(ii)    Subcontracting Companies and/or their Representatives were not required to use the removable magnets and stickers but could elect to do so;

(iii)    Subcontracting Companies were able to have their own branding on their vehicles;

(iv)    it otherwise denies subparagraph (b); and

(c)    as to subparagraph (c), it refers to and repeats subparagraph 219(z) hereof and otherwise denies subparagraph (c).

26    There are clearly issues that arise in relation to the allegations in these paragraphs and his Honour did not fall into error in conceiving that there may be utility in these allegations, which were pitched at a general level, being determined at an initial trial.

27    Thirdly, it is asserted that his Honour was incorrect to conclude (at [95]) that “the pleadings and other material before me suggest a high degree of commonality in the circumstances attending the technicians that are likely to be relevant to the multi-factorial assessments required to assess the claims made for all technicians”. This third alleged error is not really different to those already dealt with above: it was clearly open for his Honour to find that answers to the questions concerning the way in which ISG dealt with the technicians as a whole could be relevant in determining the claims of individual group members.

28    Having said this, one aspect of the case to which reference was made by ISG in support of this proposed ground deserves specific mention. The group membership is large and diverse. ISG contends that it made agreements with various entities which engaged the technicians by varying modes and in varying numbers. Some of the entities apparently had officers who were technicians, or engaged multiple technicians (indeed, in the case of one group member, the evidence suggests that 129 technicians were engaged). At first glance it might be thought that there may be real and perhaps decisive differences between the position of a technician engaged by such an entity and a technician in the position of Mr Mutch. In those circumstances, there may be real utility in the claims of one or more sub-group representatives or a sample group member or members being determined at the initial trial. But Pt IVA accommodates diverse claims provided they give rise to a substantial common issue; this flexibility is a strength of the class action regime and is not necessarily to be seen as a reason why a proceeding brought under it is inapt even where real differences in group member characteristics and the apparent merit of subsets of claims can be identified. No doubt when formulating orders for an initial trial, such matters will receive attention in ensuring the hearing is as utile as possible.

29    Fourthly, it was said that the primary judge was in error “in relying on the mere potential for useful common questions to be formulated at a future time” having regard to his Honour’s finding (at [98]) that the common questions as drafted were inappropriately general. But this complaint pays insufficient regard to how class actions usually operate. As noted above, there is a difference between common questions identified at commencement and the questions to be determined at the initial trial. In due course, it will be necessary to identify the common questions or issues of commonality that will be determined at that trial. Much has been written on this topic, including the utility of those issues being revisited close to the initial trial because issues can evolve following joinder, any amendment of pleadings and the exchange of evidence. Orders of this type prior to an initial trial are commonly called “Merck Orders”, taking this appellation from Merck Sharp & Dohme (Australia) Pty Ltd v Peterson [2009] FCAFC 26; (2009) 355 ALR 20 (at 23 [8]–[9] per Moore, Sundberg and Tracey JJ). If issues are framed as questions, precise s 33ZB orders can be made specifying the metes and bounds of any “statutory estoppel” and this precision also allows a party disaffected by the determination to challenge answers by way of appeal, as contemplated by s 33ZC(1) of the Act.  It was orthodox and appropriate for the primary judge to have regard to the likely common issues that would be determined at the time of an initial trial rather than having, as his sole focus, the common issues identified at the commencement as required by s 33H. There is no substance in this contention.

30    Fifthly, it was said that given pleadings were closed and extensive evidence was before the Court, the primary judge erred in finding (at [99]) that the Declassing Application was premature. His Honour could only deal with the application at the time that it was brought. All his Honour was doing at [99] was averting to the possibility that his expectation that there will be utility in determining common questions may develop or change as the case progresses. His Honour noted that in certain circumstances it is “often unhelpful” to be considering the s 33N application at an early stage of the proceeding. It is a fact dependent inquiry and the assessment has to take place on the material then in existence. Far from this being an error, what his Honour was doing was making an observation that he saw no difficulty in the question of declassing being revisited if it turns out to be the case that his Honour’s initial view was mistaken.

31    Sixthly, it is asserted error is demonstrated (at [98]) because the primary judge expected “tens of useful common questions will be formulated prior to the initial trial”. For reasons already explained above, there is often an element of prognostication when it comes to identifying what common questions will be formulated prior to an initial trial. There was nothing remotely erroneous about his Honour conceiving that in the present circumstances there may be a very large number of common questions or issues of commonality that could be determined at an initial trial.

32    Seventhly, the primary judge is said to have erred (at [100]) in proceeding on the basis that ISG’s submission was that all of Mr Mutch’s proposed common questions “are dependent upon and affected by question 8 considerations”. What in fact his Honour said at ([100]–[101]) was as follows:

The problem with [ISG]’s submission is that it is premised upon the idea that the initial trial in the proceedings will be a trial of the common questions listed in the AOA including question 8. Question 8 poses the question at the core of the claims made by Mr Mutch of whether the technicians were each employees of [ISG]. On the premise that question 8 will be a common question and that other common questions are dependent upon and affected by question 8 considerations, [ISG] contended that the proceeding was inutile. That was so because on the postulated premise, the initial trial of the proceeding would entail an examination of the entirety of the relevant circumstances of each and every technician. An exercise which was said to be no less costly than if each technician conducted her or his own separate proceeding and an exercise said also to likely involve greater delay in the determination of the claims of the technicians. For those reasons, [ISG] contended that this proceeding as a class action would not provide an efficient and effective means of dealing with the claims of group members (s 33N(1)(c)) and is otherwise inappropriate (s 33N(1)(d)).

To reverse a well-known idiom, the submission fails to see the trees for the wood. It concentrates on the whole and fails to see its numerous component parts. [ISG] ignores the potentially significant utility of many, if not most, of those component parts being determined once and once only in a single proceeding.

33    His Honour was correct in rejecting this submission of ISG. Apart from anything else, it proceeded on a false premise, that is, that the initial trial would involve determination of whether each of the technicians were employees of ISG. This is not the type of initial trial that would be contemplated given the nature of the issues at play and the need for there to be an individualised analysis in order to determine whether or not an individual technician was an employee. At the initial trial it will be the claim of Mr Mutch (and any sub-group representative or sample group member) that will be determined in its entirety (other than any individual claim for statutory compensation or for the imposition of a pecuniary penalty). In determining these aspects of any representative liability case or cases, it will be necessary for the Court to deal with a number of common questions or “issues of commonality” which arise: see Dillon v RBS Group (Australia) Pty Ltd [2017] FCA 896; (2017) FCR 150 (164–5 [63]–[67] per Lee J). His Honour did not err in concluding that there may be significant utility in many, if not most, of the questions that arise on the representative claim or claims (which also apply to the claims of all or some group members) being determined once and once only in a single proceeding.

34    Incidentally, by way of passing, it is also noteworthy that, as the last sentence of [100] reveals, ISG’s argument below misapprehended the relationship between s 33N(1)(c) and s 33N(1)(d). As explained above, the Alternative Ground cannot be established if the Efficiency Ground is established because the point of departure of any Alternative Ground is that it is otherwise inappropriate for the proceeding to continue as a class action.

35    Having dealt with the seven proposed grounds, it is necessary to deal with the more general arguments advanced before the Full Court that the declassing was required in the interests of justice because of inefficiencies.

36    Focussing on the terms of s 33N, as explained above, insofar as the Efficiency Ground was concerned, it was up to ISG to prove that this class action proceeding will not provide an efficient and effective means of dealing with the claims of group members. As is by now already evident, the way ISG sought to prove this fact below (see [16(c)] above) was to say that because of the overall lack of commonality, the determination of any group member’s claim in the class action will take longer and be more expensive. This was an argument focussing on utility. Thus, it was said that even if sub-groups could sensibly be formed, having found that an individual technician falls within a particular sub-group would not progress the multifactorial analysis because it would still leave at large all the variability as to individual circumstances that might arise within a sub-group.

37    There was a further argument which, although relevant to efficiency, was somewhat broader: absent declassing, the necessary multifactorial assessment would be split into two stages: the initial stage involving findings as to factors common to some or all group members, and the second stage dealing with the balance of factors at an individual level. It was said that “the second stage likely would need to be undertaken by various different judges, given the number of group members potentially involved”. This bifurcated process was said to mean findings made at the first stage would need to be “somewhat mechanistically adopted at the second stage, without necessarily having the benefit of the full context and detail informing those findings” and the judge ultimately called upon to evaluate the relationship as a whole would be impaired in making a “nuanced and impressionistic analysis of all of the facts, relying to a significant extent on what is said in another judge’s reasons for judgment, and without having heard the relevant evidence”.

38    The Efficiency Ground invites a comparison between the efficiency and effectiveness of dealing with the claims of group members in the class action or otherwise. The assessment of how a comparator proceeding would deal with the claims may be relevant for the purposes of the Efficiency Ground (Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd [2007] FCAFC 200 (2007) 164 FCR 275 (at 277–8 [4]–[5], 279 [13] per Lindgren J, at 293–4 [126], [129]–[131] per Jacobson J) but in some cases, it will also be relevant to consider the practical question as to whether the group member claims would likely be advanced outside of a class action at all.

39    In dealing above with the proposed appeal grounds, it has already been explained why there is some utility in common questions being determined notwithstanding the likely need for later individual examination of group members’ claims at a secondary stage should the matter not settle. But there are two further difficulties with ISG’s arguments. The first is that any comparison made by ISG was incomplete and unrealistic because it was premised on the notion that the individual claims of group members would necessarily be resolved following the examination of individual circumstances at one of a series of secondary trials. But as was recently pointed out by the Full Court of this Court in Davaria Pty Limited v 7-Eleven Stores Pty Ltd [2020] FCAFC 183 (at [26] per Lee J, Middleton and Moshinsky JJ agreeing), “[e]xperience suggests that the three most likely outcomes of a class action are (a) global settlement before an initial trial; (b) global settlement after an initial trial (if common issues are resolved in favour of the applicant); or (c) dismissal (if common issues are resolved adversely to an applicant).” Rarely do class actions proceed to the entry of an individual judgment in favour of group members or the dismissal of the individual claim – indeed, in over 27 years, there are less than a handful of cases that proceeded to any secondary hearings.  Further, Lee J explained (at [48]) that mediations were of particular significance in class actions because:

a court approved settlement is the way the Court quells the controversies litigated by the class action in the vast bulk of cases, and they should be viewed as “an integral part of the Court’s adjudicative processes”: see the Hon Spigelman, J J, “Mediation and the Court” (2001) 39(2) LSJ 63. 

40    There is little doubt that the quelling of all group member claims by settlement is likely to be promoted and expedited by a mediation being conducted in the context of a class action either before or after the initial trial.

41    The second difficulty is related to the first, and concerns the contention that the fact finding in relation to an individual claim will be either less efficient or compromised because it is bifurcated. This contention should also be rejected. In the unlikely event a secondary trial is held of a group member claim, some aspects of the controversy will not be in dispute because of the existence of s 33ZB orders. The Court will take account of those findings together with any other later individual findings and make an assessment as to whether the group member claim is successful. Just because this later assessment may be conducted by another judge is no reason to believe that the result will somehow be compromised. Although the characterisation as to whether or not a technician is an employee may be an impressionistic one, it is an impression formed after the finding of facts. These facts alleged to be relevant to the characterisation enquiry will either not be in dispute (because of the existence of orders binding the parties) or will be found at any secondary trial.

42    The Declassing Application failed because ISG failed to discharge its burden of proving that the representative proceeding will not provide an efficient and effective means of dealing with the claims of group members for the reasons relied upon below. Although, given the way argument was advanced below, the primary judge also concluded that the alleged lack of utility asserted by ISG was not a basis for concluding that it was in the interests of justice to declass the proceeding. The dismissal of the Declassing Application is not attended with sufficient doubt to warrant its reconsideration on appeal.

D    SUBSTANTIAL INJUSTICE

43    It would be inimical to facilitating the overarching purpose for leave to be granted. Supposing the decision of the primary judge as to declassing to be wrong, no substantial injustice would result if leave were refused. In the event that matters develop or emerge which present reasons of substance as to why the class action will not provide an efficient and effective means of dealing with the claims of group members, then such an application can be brought before the primary judge at a later time on the basis of further evidence.

44    As to the Invalidity Application, the only prejudice is said to be that a class action is being brought to resolve the claims in circumstances where individual claims could be brought. Even assuming that this amounted to substantial injustice (which is far from clear) the two Decor considerations are cumulative such that leave ought not be granted unless each limb is made out: Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 (at 398–9 per Sheppard, Burchett and Heerey JJ). The weakness of the Invalidity Application is decisive in refusing the grant of leave.

E    ORDERS

45    For the reasons explained above the application for leave to appeal should be dismissed.

46    Given this is a matter arising under the Fair Work Act 2009 (Cth), there should be no order as to costs.

Associate:

Dated:    30 November 2020