FEDERAL COURT OF AUSTRALIA

PRACTICE AND PROCEDURE - representative proceedings brought under Part IVA Federal Court of Australia Act 1976 (Cth) for misrepresentation action under Trade Practices Act 1974 (Cth) - claims made on behalf of all group members for damages and declarations that unit purchase contracts validly avoided - whether action properly brought as a representative proceeding - only issue common to the claims for damages of all group members whether a representation that a written statement delivered by appellant to all said to constitute conduct in contravention of s 52 Trade Practices Act 1974 (Cth) was accurate - the presently identified group members relied in addition on differing combinations of other representations - whether common issue a “substantial common issue” within s 33C(1)(c).

Federal Court of Australia Act 1976 (Cth) - ss 33C, 33C(1)(a), 33C(1)(b), 33C(1)(c), 33C(2), 33H(1)(c), 33N, 33N(1)(c), 33N(1)(d), 33P, 33Q, 33R, 33X, Part IVA

Trade Practices Act 1974 (Cth), s 82, Part V

Building Units and Group Titles Act 1980 (Qld), ss 7(1), 49, 49(4), 49(5A)

Peter Schanka & Ors v Employment National (Administration) Pty Ltd (Federal Court of Australia, Moore J, 9 September 1998, unreported), referred to

Sommer v Abatti Holdings Pty Ltd [1992] 1 Qd R 300, applied

Zhang v Minister for Immigration, Local Government and Ethnic Affairs (1993) 45 FCR 384, applied

Connell v Nevada Financial Group Pty Ltd (1996) 139 ALR 723, discussed

Cameron v Qantas Airways Ltd (1993) ATPR 41-251, applied

Tropical Shine Holdings Pty Ltd v Lake Gesture Pty Ltd (1993) 45 FCR 457, referred to

Palser v Grinling [1948] AC 291, referred to

R v Monopolies & Mergers Commission; Ex parte South Yorkshire Transport Ltd [1993] 1 WLR 23, referred to

Marks v GIO Australia Holdings Ltd (1996) 63 FCR 304, referred to

Qantas Airways Ltd v Cameron (1996) 66 FCR 246, referred to

SILKFIELD PTY LTD v JAMES WONG AND JANICE WONG AND ROY JULIAN FLIGHT (for and on behalf of themselves and as representatives of the group referred to in the application)

QG 8 of 1998

FOSTER, O’LOUGHLIN AND DRUMMOND JJ

20 NOVEMBER 1998

PERTH (HEARD IN BRISBANE)

on appeal from a judge of the federal court of australia

THE COURT ORDERS THAT:

1.                  The appellant be granted leave to appeal.

2.                  The appeal be allowed.

THE COURT DECLARES THAT:

1.                  The proceedings, as presently framed, may only be continued as proceedings brought by the respondents on their own behalf.

THE COURT DIRECTS THAT:

1.                  The future conduct and procedure in this matter shall be as determined by the docket judge.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

on appeal from a judge of the federal court of australia

REASONS FOR JUDGMENT

FOSTER J:

The issues raised in this appeal are of sufficient importance to warrant the granting of leave to appeal.  I agree that such leave should be granted and concur in the reasons advanced in this regard in the majority judgment.  All matters relevant to the appeal have been set out in detail in that judgment.  Accordingly I shall not repeat them here.  As I have the misfortune to differ from my brethren, I shall state my reasons for so doing as briefly as possible.

I am in agreement with all aspects of the majority judgment except in relation to the meaning to be attributed to the word “substantial” in s 33C(1)(c) of the Federal Court of Australia Act 1976 (Cth) (“the Act”).  This disagreement, however, results in my coming to a different conclusion as to the outcome of the appeal. 

The careful analysis of the issues arising from the pleadings and particulars undertaken in the majority judgment indicates that the only issue of fact which could be common to the claims of all members of the postulated group, identified and unidentified, would be that raised by paragraph 13(a)(ix) of the statement of claim which is as follows:-

“(a)     whether or not the respondent by itself and its agent engaged in misleading and deceptive conduct in respect of the sale of the lots by making the following representations:

            …

                        (ix)       written statements delivered pursuant to s 49 of the Building Units and Group Titles Act 1980 were accurate;

            …”

I am satisfied that it is reasonable, as suggested in the majority judgment, to read with this pleaded issue, as particulars of it, the matters set out in paragraphs 13(d), (e) and (f).

It also appears that the issues raised in paragraphs 13(a)(ii), (iv), (vi) and (viii), (d), (e) and (f) are common to the claims of the eighteen identified group members.  As the group is presently defined in the pleadings these issues cannot qualify as common issues within the meaning of s 33C(1)(c) but, as I shall indicate later, they are not without significance in determining whether the declaration sought by the appellant should be made. 

It is convenient to set out, at this stage, the whole of s 33C of the Act.  It provides as follows:-

“33C. (1) Subject to this Part, where:

   (a)    7 or more persons have claims against the same person; and

   (b)    the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances; and

   (c)     the claims of all those persons give rise to a substantial common issue of law or fact;

a proceeding may be commenced by one or more of those persons as representing some or all of them.

     (2) A representative proceeding may be commenced:

   (a)    whether or not the relief sought:

            (i)         is, or includes, equitable relief; or

            (ii)        consists of, or includes, damages; or

            (iii)       includes claims for damages that would require individual assessment; or

            (iv)       is the same for each person represented; and

   (b)    whether or not the proceeding:

            (i)         is concerned with separate contracts or transactions between the respondent in the proceeding and individual group members; or

            (ii)        involves separate acts or omissions of the respondent done or omitted to be done in relation to individual group members.”

Put simply, the question for determination is whether the issue raised by paragraph 13(a)(ix), as further particularised, is relevantly “a substantial common issue of … fact” within the meaning of this section. 

With respect, I am not able to agree with the meaning attributed by my brethren to the word “substantial”.  I am satisfied that a common issue can be relevantly “substantial” even though its determination will not have “a major impact on the litigation”.  This formulation, as appears clearly from the majority judgment, is not far removed from the view expounded by Drummond J in Connell v Nevada Financial Group Pty Ltd (1996) 139 ALR 723.  In that case, his Honour stated the opinion that a common issue could not be substantial if it was, in effect, in competition in the litigation with a large number of non-common issues.  It will be observed that this view is not departed from in the majority judgment but it is accepted that it is not an exhaustive test of the substantiality of a common issue.  Irrespective of the number and weight of non-common issues, a common issue can be “substantial” only if its resolution can be seen as largely dispositive of the group litigation.  Whilst I accept that the word “substantial” is imprecise and requires a value judgment to be made, I am not persuaded that the ambit of that judgment should be so restricted.

In Peter Schanka & Ors v Employment National (Administration) Pty Ltd (Federal Court of Australia, 9 September 1998, unreported) Moore J referred to the authorities which have gathered around this question and the related question arising under s 33N of the Act as to whether an order should be made that a proceeding no longer continue as a representative proceeding.  His Honour referred to the cases and their effect in a passage which I respectfully adopt in these reasons:-

“They commence with the judgment of French J in Zhang v Minister for Immigration, Local Government and Ethnic Affairs (1993) 45 FCR 384 and the judgment of Wilcox J given a little less than two weeks later in Tropical Shine Holdings Pty Ltd (trading as KC Country) v Lake Gesture Pty Ltd (1993) 45 FCR 457.  They also include the judgment of Einfeld J in Marks v GIO Australia Holdings Ltd (1996) 63 FCR 304, a Full Court in Qantas Airways Ltd v Cameron (1996) 66 FCR 246, Drummond J in Connell v Nevada Financial Group Pty Ltd (1996) 139 ALR 723, Spender J in Wong v Silkfield Pty Ltd [1998] ATPR 41-613, Kiefel J in Milfull v Teranora Lakes Country Club Ltd, unreported, 16 June 1998, and Lindgren J in Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd, unreported, 14 July 1998.

Two principles emerge from these authorities.  The first is that the fact that the individual circumstances of members of the group might have to be investigated does not preclude the maintenance of a representative proceeding concerning them.  The second is that the suggestion of Drummond J in Connell v Nevada Financial Group Pty Ltd (supra) that a process of balancing common issues with non-common issues in ascertaining whether the proceedings should continue as a representative proceeding under Part IVA has not subsequently found broader judicial acceptance.  It was an approach not accepted by both Spender J in Wong (supra) and Kiefel J in Milfull (supra) and by Wilcox J in extra judicial commentin an article in Australian Product Liability Reporter, vol 8, No 5, entitled “Representative Proceedings in the Federal Court of Australia: A Progress Report”.” [Also in (1997) 15 Australian Bar Review 91]

It is helpful to quote part of what Wilcox J said in this article in relation to the statutory requirement of “a substantial common issue of law or fact”.  Wilcox J said ((1997) 15 ABR at 93):-

“The third requirement, ‘a substantial common issue of law or fact’, was recently considered by Drummond J in Connell v Nevada Financial Group Pty Ltd (Fed C of A, QG 135/95, Drummond J, 5 September 1996, unreported).  His Honour discussed the meaning of ‘substantial’.  He noted the imprecision of the word, and its tendency to leave the relevant matter to the court’s discretion, and said:

            “In my opinion section 33C(2) shows that a common issue can be a substantial one sufficient to satisfy s 33C(1)(c) even though the various group members’ claims involve other issues of liability and damages unique to each of those claims.  But the object of Part IVA would not be served if it was enough for there to be an issue common to each of the group members’ claims that could not be dismissed as trivial or insubstantial, even though that common issue was, when compared with the other non-common issues raised in the various claims as to liability and damages, merely one of a number of issues which had to be resolved before each claim could be determined.  If, in addition to the common issue (or issues), the determination of each group member’s claim involves other non-common issues, the litigation of which will, in a practical sense, have a real impact on the nature and extent of the interlocutory steps likely to be involved in bringing the case to a state of readiness for trial and the nature and duration of the trial, then that common issue will not be “a substantial common issue” within s 33C(1)(c).

I have difficulty with aspects of this passage.  The issue posed by s 33C(1)(c) is whether the various claims give rise to a ‘substantial common issue of law or fact’.  ‘Substantial’ is imprecise; it is an adjective of degree requiring an element of evaluation.  But it is difficult to see why it is necessary, or legitimate, to compare the substantiality of a common issue with the substantiality of any non-common issues.  The words of the paragraph do not invite such a comparison; to take this course is to encourage respondents to raise artificial non-common issues.”

His Honour went on to consider what might be the position if substantial non-common issues tended to swamp a substantial common issue.  He saw this as a possible reason for the proceedings being the subject of an order under s 33N discontinuing them as representative proceedings.  His Honour made the comment, with which I respectfully agree, that the Court would do this “only after evaluating all the circumstances, including the case management tools available to the court, not by deciding that the action was incorrectly commenced”.

His Honour’s views, as indicated in the passage from Moore J’s judgment, have been accepted by Spender J in the judgment the subject of this appeal and Kiefel J in Terence John Milfull v Terranora Lakes Country Club Ltd & Ors (1998) ATPR 41-642 as providing the correct approach to the construction of s 33C(1)(c) of the Act.  In my opinion, this approach militates against a view of the section’s requiring that the relevant “common issue” should be a “major” one in the litigation.

In my opinion, s 33C provides a very wide gateway for the commencement of representative proceedings.  The representative party becomes entitled to commence a representative proceeding once the requirements of subss (1)(a), (b) and (c) are fulfilled.  The width of that entitlement is emphasised by the provisions of subs (2).  In effect, once the requirements of subs (1)(a) and (b) are met, as they are here, and a common issue arises, the only restriction on the width of the gateway is that the common issue should be “substantial”.

The fact that a representative proceeding once properly commenced under s 33C can be terminated by order of the Court under s 33N on the grounds (inter alia) that it will “not provide an efficient and effective means of dealing with the claims of group members” (33N(1)(c))or  “it is otherwise inappropriate that the claims be pursued by means of a representative proceeding” (33N(1)(d)) does not, in my opinion, require that any restrictive view be taken of the meaning of the word “substantial”.  Section 33N only comes into play after the gateway has been passed and the proceedings commenced.

In my view, the word “substantial” indicates no more than that the common issue should not be a merely trivial one but should be of weight and significance.  It need not be a “major” issue.  Once its existence is demonstrated then the representative party, having otherwise complied with s 33C, is entitled to commence the representative proceedings.  The fact that they may later be terminated by order of the Court is not to the point.

Kiefel J in Milfull made reference to s 33Q.  I consider that it is also of relevance in this case.  Much was made in argument of the multiplicity of issues that would be involved in the present proceedings.  Reference was made to a “multitude of mini-trials”.  These arguments have been seen as persuasive in the majority judgment.  For my part I do not find them persuasive.  In my view, the existence of a number of non-common issues is contemplated by ss 33Q and 33R.  They provide as follows:-

  “33Q.  (1) If it appears to the Court that determination of the issue or issues common to all group members will not finally determine the claims of all group members, the Court may give directions in relation to the determination of the remaining issues.

             (2) In the case of issues common to the claims of some only of the group members, the directions given by the Court may include directions establishing a sub-group consisting of those group members and appointing a person to be the sub-group representative party on behalf of the sub-group members.

             (3) Where the Court appoints a person other than the representative party to be a sub-group representative party, that person, and not the representative party, is liable for costs associated with the determination of the issue or issues common to the sub-group members.

    33R. (1) In giving directions under section 33Q, the Court may permit an individual group member to appear in the proceeding for the purpose of determining an issue that relates only to the claims of that member.

            (2) In such a case, the individual group member, and not the representative party, is liable for costs associated with the determination of the issue.”

I have referred to the fact that the eighteen identified members of the group in the present proceedings share common issues over and above that shared by all members of the group.  It may well be that, in the case management of these proceedings, it would be appropriate that s 33Q be utilised and an appropriate sub-group established.  Similarly, in respect of those group members, few in number, who share additional common issues, if a sub-group be deemed to be inappropriate, provision may be made for those issues to be determined in accordance with s 33R.

Whatever may be the position, as the litigation proceeds, in relation to the non-common issues, I am satisfied that the identified common issue constituted by paragraph 13(ix) must properly be regarded as “substantial”.  The allegations made are serious.  Significant and detrimental misrepresentations are claimed.  They constitute a significant common issue sufficient to open the gateway of s 33C and to allow the commencement of these proceedings.  In these circumstances, I am satisfied that it is not appropriate to make the declaration sought.

In relation to the alternative order sought by the appellant, namely that the proceedings should now be discontinued pursuant to s 33N, I am in complete agreement with the decision of Spender J.  It is too early to make any of the decisions called for by that section.  Even if I had some doubt in this regard, I would not be disposed to disturb his Honour’s decision.  It was a decision made in exercise of a discretion and nothing has been shown to indicate that there was any miscarriage in its exercise.

For these reasons I would dismiss this appeal with costs.

Associate:

Dated:              20/11/98

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT

O’LOUGHLIN AND DRUMMOND JJ:

This is an application for leave to appeal an interlocutory decision of Spender J.  His Honour dismissed the appellant’s motion for a declaration that it was not open to the respondents to commence this action as a representative proceeding under Part IVA the Federal Court of Australia Act 1976 (Cth) and, in the alternative, for an order pursuant to s 33N of the Act that the proceeding no longer continue under Part IVA, together with other relief.

The action is brought by the three respondents for themselves and as representatives of the group members, who are described in the application as:

[A]ll persons who entered into contracts to purchase lots in a proposed building to be called ‘The Phoenician-North Tower’ from the [appellant] by or through the agency of Skye Court Pty Ltd … prior to the date of registration of the plan in respect of such building and who were provided by the [appellant] with a statement purportedly made pursuant to s 49 of the Building Units and Group Titles Act 1980 [Qld].

The relief claimed in the application comprises declarations that the appellant has engaged in misleading and deceptive conduct in respect of the sale or proposed sale of lots in the project; relief “including but not limited to an award of damages” pursuant to s 82 the Trade Practices Act 1974 (Cth) and a declaration that the group members:

(i)        had at the date of the application, an accrued right to avoid their respective contracts of sale pursuant to s 49(4) of the Building Units and Group Titles Act 1980 (Qld);

(ii)       have avoided their respective contracts of sale.

The appellant is the developer and vendor of 166 strata title lots in this tower building at Broadbeach on the Gold Coast.  By October 1997, with the assistance of its real estate agent, Skye Court Pty Ltd, it had entered into contracts with a number of purchasers, mostly overseas residents, for the sale of 124 of the residential lots in the project.  The building units plan was registered on 26 September 1997 and the appellant gave notices under each of the contracts fixing 14 October 1997 as its completion date.  All contracts settled, save for those relating to forty one lots.  Thirty nine of these lots were the subject of contracts with the purchasers referred to in the respondents’ statement of claim as “the presently identified members of the group”.  Although the respondents list eighteen such group members in their pleading and its annexure “A”, the list comprises twenty-six individuals:  some of the eighteen group members each comprise two individual joint purchasers (eg, group member 2) and, in one case, a Clarence Joe is by himself group member 3 and jointly with Judy Joe, also group member 4.

Although most of the persons who had, prior to 26 September 1997, contracted to buy the total of 124 residential lots completed their purchases, they are included in the group on whose behalf the action has been brought.  This is so even though it is too late for any of the unidentified group members who have completed their purchases to rely on inaccuracies in the s 49 Building Units and Group Titles Act statement or on any failure by the appellant to give a rectification notice required by s 49(4) to obtain the declaration as to their having an accrued right to avoid their contracts sought in the application:  see s 49(5A) and the definition of “proprietor” in s 7(1) of that Act.  However, it may be the case that some of those group members who completed their purchases are interested in pursuing claims against the appellant based on the complaints similar to at least some of those made by the eighteen identified group members in these proceedings:  Spender J was told, after delivering judgment, that there were ten more persons who wished “to join in the proceedings” and damages claims would still be open to purchasers, even though they completed their contracts.

Although he dismissed the appellant’s motion, it is apparent that Spender J was concerned about the appropriateness of the action continuing as a representative proceeding with the group membership defined as widely as it was and given that it was likely that most of the group would have no interest in making claims on the appellant.  In the course of explaining why he refused to make orders for the future conduct of the representative proceeding (which the present respondents had sought by their own motion), his Honour commented on this case being quite different from the usual representative proceeding because it was probable that all the group members who might wish to claim against the appellant can be precisely identified; he declined at that stage to make an order approving the form of the opt out notice to be given by the respondents under s 33X the Federal Court of Australia Act 1976 (Cth) because he was concerned not to “stir up litigation” or “to cause any anxiety or gratuitous denigration of the vendor by requiring the publication of notices which can have no useful purpose other than to suggest that there might be fault on the vendor’s part in relation to its marketing of the building”.  His Honour indicated that it appeared to be in the interests of all parties to identify as persons to be served with the opt out notice only those purchasers who might be interested in pursuing claims against the appellant.  It is not possible for this suggestion to be implemented unless the definition of the group members is suitably narrowed by amendment:  s 33X requires all group members to be notified.  In any event, this appeal must be disposed of having regard to the way in which the action is currently framed.

We have set out above how group membership is defined in the application in compliance with s 33H(1)(a).  In purported compliance with s 33H(1)(c), both the application and the statement of claim, in para 13, identify the questions of law or fact said to be common to the claims “of the group members” as follows:

(a)       whether or not the respondent by itself and its agent engaged in misleading and deceptive conduct in respect of the sale of the lots by making the following representations:

(i)                 finance was available to purchasers of the proposed lots to the extent of 80% of the list price;

(ii)               there was exceptional resale potential for the proposed lots prior to any settlement of a purchase contract at a considerable profit to the intending purchaser;

(iii)             furniture for furnishing of the proposed lots was available at a cost of no more than $6,000-$10,000;

(iv)             lots could be rented out after settlement and those units would be self-funding, ie, the return from rental would be in excess of the outgoings necessary to meet the financial obligations incidental to acquiring and owning the unit;

(v)               the proposed lots, though not air-conditioned, would not need to be air-conditioned for rental purposes in the holiday rental market on the Gold Coast;

(vi)             a financial projection document prepared by Skye Court Pty Ltd contained projections made upon a reasonable basis;

(vii)           a site adjacent to the site of the proposed lots was the site for a new “Disneyland” theme park;

(viii)         the price of units was to increase rapidly by multiples of $10,000;

(ix)             written statements delivered pursuant to s 49 of the Building Units and Group Titles Act 1980 were accurate;

(b)               Whether the said representations were false or made without reasonable basis.

(c)                Whether the purchasers under such contracts are likely to suffer loss or damage by reason of entering into the said contracts in respect of the building.

(d)               Whether or not a statement purporting to comply with section 49 of the Building Units and Group Titles Act 1981 (Qld) which was annexed to each proposed contract of sale in respect of the building did comply with the aforesaid provision of the said Act, and in particular whether or not the statement was required to disclose:

(i)                 An agreement or agreements for the service and maintenance of lift facilities within the building between Silkfield Pty Ltd and an entity known as Kone Elevators (lift agreement);

(ii)               An agreement or agreements for the provision of a public car park by the Gold Coast City Council made between Silkfield Pty Ltd and that council (the car parking agreement);

(e)        Whether or not Silkfield Pty Ltd was obliged pursuant to s 49(4) of the Building Units and Group Titles Act 1980 (Qld) to publish a variation statement disclosing:

(i)                 The aforesaid lift agreement or arrangement;

(ii)               The aforesaid car parking agreement or arrangement;

(iii)             The estimated costs of prescribed arrangements (disclosed under the original s 49 statement as costs under the disclosed “caretaking agreement”) were not $120,000 but were at least $247,000;

(iv)             Alternatively to (iii) there were further costs to that disclosed as costs of the caretaking agreement under the original s 49 statement or further prescribed arrangements made between Silkfield Pty Ltd and others than disclosed under the original s 49 statement and more particularly set out in a budget dated 3 July 1997 prepared by or for Silkfield for the operation of the building.

(v)               A proposed plan for the building further to that originally disclosed under the purchase contracts which altered prospective building lot owners’ entitlement to common property by vesting exclusive use of all level C carparks which were formerly allocated common property to a newly created building lot 38 which consists of a lot having an area of 12m² with a lot entitlement of 10.

(vi)             A proposed plan for the building further to that disclosed under the original purchase contracts which altered carparking entitlements on level B in the said building by vesting exclusive use of all unallocated carparking spaces originally vested in a resident caretaker in the proprietor of building lot 38 who has entered into an agreement in respect of same with the Gold Coast City Council.

(vii)           A proposed plan for the building further to that disclosed under the original purchase contracts which altered amenity of the building by designating the lots now numbered 20 and 21 as the management lots instead of building lot 22 as first proposed and included a right of the proprietor of building lot 29 to conduct a restaurant on the first floor of the building proximate to residential lots numbered 24-30;

(viii)         A proposed plan for the building further to that disclosed under the original purchase contracts which altered amenity of the building by creating part of the aforesaid building lot 21 on level D in the building and investing that lot with a special privilege over common property so as to enable the proprietor of building lot 21 to conduct the business of a gymnasium on the first floor of the building on a podium constructed on common property and not previously disclosed in the plan;

(ix)             A proposed plan of the building further to that disclosed under the original purchase contracts which altered prospective lot owners’ entitlements to common property by creating building lot 23 which consists of a lot having 15 m² and 10 lot entitlements which lot the respondent has caused to be altered to common property pursuant to a resolution passed at a general meeting of the body corporate held prior to settlement of sale of proposed lots in the proposed plan.

(f)        Whether or not the inaccuracies in the said s 49 statement materially prejudiced group members.

(Para 13(a)(viii) of the statement of claim has been renumbered as (ix), to accommodate the accidental omission of the representation, which should be numbered (viii), that the price of units would increase rapidly by multiples of $10,000.)

A summary prepared by the appellant from the respondents’ pleading shows the respondents’ allegations to be that the representation in para 13(a)(i) was made to twelve of the eighteen identified group members; representation (a)(ii) was made to all eighteen.  (The particulars of the respondents’ pleading show, however, that what is said to be this particular representation was made in quite different words to the various  eighteen group members.)  Representation (a)(iii) was made to thirteen of them; representation (a)(v) was made to only two of them; representation (a)(vii) was made to only one and representation (a)(viii) was made to seven of them.  All these representations are said to have been made orally, although two of the representations are said to have been made to some of the eighteen group members in writing as well.

Although in the pleadings it is said that the representations in para 13(a)(iv) and (a)(vi) were each made to only eleven of the eighteen identified group members, the evidence is that they were made to all eighteen by presentation to all of a common form document containing financial projections, which is annexure “D” to the statement of claim.  There is no basis, however, for inferring that either of these representations was made to any of the presently unidentified group members.  There is evidence that one of these persons, Cranston, relied on a financial projection document given to him by the appellant’s real estate agent in contracting to buy his lot.  But it appears to be a different document from annexure “D”:  the figure in Cranston’s document for a dual letting unit is significantly smaller than the figure for a dual letting unit in annexure “D”.  Another of these persons, Fountain, was also given a document by the appellant’s agent which contained financial projections on which he says he also relied in entering into his contract; but that document is not further identified in the evidence.

It can be inferred, from the likelihood of the appellant having complied with its obligations under s 49(1) the Building Units and Group Titles Act 1980 (Qld), that the written representations referred to in para 13(a)(ix) were made to all group members, presently identified and unidentified.  In any event, it is only those purchasers who received the common form s 49 statement given to all eighteen presently identified group members who can come within the group defined by the respondents in their proceedings.

The assertion in the application and the statement of claim that the questions common to the claims of all group members include the accuracy of each of the five representations referred to in para 13(a)(i), (iii), (v), (vii) and (viii) of the statement of claim is revealed by the respondents’ own pleading to be incorrect, in so far as it is made with respect to the eighteen presently identified group members.  There is no basis, on the available information, for inferring that any of the representations in para 13(a), other than that in para 13(a)(ix), was made to all or indeed to any of the still unidentified group members (save that the evidence also suggests that the representation in para 13(a)(iii) was made to the person named Fountain).  The respondents simply do not know whether any of these representations were made to any one or more of the unidentified group members.  The assertion in the statement of claim that the questions common to all unidentified group members include the making of these eight representations in para 13(a) is therefore incorrect too.

The questions in para 13(b) (which designates the conduct set out in para 13(a) as fraudulent at common law) are no more common to all group members’ claims than are the questions in para 13(a).  Nor does para 13(c) involve, as the respondents assert, an issue common to all group members.  The possibility of loss occurring, so far as that is relevant to whether this action is properly brought as a representative proceeding, is governed by just what are the particular representations of those in para 13(a) that were made to and relied on by each purchaser; it is a question that can only be answered by an examination of each member’s own situation.

Issues (d) and (e), which raise questions as to whether the common-form statement given by the appellant to each group member satisfied the appellant’s obligations under s 49(1) and (4) the Building Units and Group Titles Act, and issue (f) are all directed to whether purchasers are entitled to avoid their contracts in reliance on s 49(5) the Building Units and Group Titles Act.  The test governing whether the issue in para 13(f) is established is an objective one, but it must be applied to the circumstances of each individual purchase:  see Sommer v Abatti Holdings Pty Ltd [1992] 1 Qd R 300 at 302 - 303:  para 13(f) cannot therefore raise an issue common to the claims of the group members.  More importantly, there was nothing in the material before Spender J which would suggest that there are, in addition to the eighteen identified group members, other group members who have preserved the right of avoidance given by s 49(5).  As I have explained, all the group members who completed their contracts in October 1997 have long since lost any right they may have had to avoid their contracts in reliance on s 49(5) the Building Units and Group Titles Act.

In requiring the originating application and statement of claim filed in support to specify “the questions of law or fact common to the claims of the group members”, s 33H(1)(c) the Federal Court of Australia Act is concerned with contentious matters that must be determined in order to resolve those claims.  That is the focus also of s 33C(1)(c) in so far as it refers to the claims of persons giving rise to “a substantial common issue of law or fact”.  Both provisions are concerned with identifying when litigation can properly take the form of a representative proceeding:  questions or issues that are not in contention as between any group member and the respondent are irrelevant when the question of compliance with these two provisions has to be considered.  The questions in para 13(d), (e) and (f) have therefore ceased to be live ones for any of the group members, other than the eighteen identified ones who did take timely avoidance action.  None of these issues is therefore relevant to the claims which it may still be open to any of the unidentified group members to make and none can constitute a common issue or question of the kind the subject of s 33C(1)(c) and s 33H(1).  (Although they have not yet indicated they wish to do so, the respondents may, however, decide to rely on what is said in sub-paras (d) and (e) as identifying the inaccuracies referred to in para 13(a)(ix).  These two sub-paragraphs may accordingly throw up further issues common to the claims of all group members.)

The true position therefore is that the only questions or issues that can be taken to be common to the claims of all group members, identified and unidentified, are as to the correctness of the representations set out in para 13(a)(ix).  As well as these, the issues raised in para 13(a)(ii), (iv), (vi) and 13(d), (e) and (f) may well also be common to the claims of the eighteen identified group members.  But whether the respondents are permitted by s 33C(1) to commence the action as a representative proceeding must be tested by reference to those questions or issues common to the claims of all group members as that class is defined in the application and statement of claim.  The respondents have not made any application to narrow the definition of the group membership.  It is apparent that it is the respondents’ intention to prosecute the action on behalf of the wider range of group members as they have defined that class in both the application and statement of claim.

Spender J described “the key issue” raised by the appellant’s motion as whether the action was properly constituted as a representative proceeding, ie, whether the proceeding satisfied the requirements of s 33C, (1)(b) and (c), it being common ground that s 33(1)(a) was satisfied.  Section 33C provides:

33C. (1)           Subject to this Part, where:

(a)        7 or more persons have claims against the same person; and

(b)        the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances; and

(c)        the claims of all those persons give rise to a substantial common issue of law or fact;

a proceeding may be commenced by one or more of those persons as representing some or all of them.

(2)       A representative proceeding may be commenced:

(a)        whether or not the relief sought:

(i)         is, or includes, equitable relief; or

(ii)        consists of, or includes, damages; or

(iii)       includes claims for damages that would require individual assessment; or

(iii)             is the same for each person represented; and

(b)        whether or not the proceeding:

(i)         is concerned with separate contracts or transactions between the respondent in the proceeding and individual group members; or

(ii)        involves separate acts or omissions of the respondent done or omitted to be done in relation to individual group members.

The appellant contended in both its written submissions and orally that Spender J was in error in holding that it was open to the respondents to bring the proceeding as a representative one because both s 33C(1)(b) and (c) of the Act were satisfied.  No such complaints are contained in the notice of appeal, which lacks clarity.  It appears to be directed to attacking Spender J’s refusal to exercise in the appellant’s favour the discretion conferred on him by s 33N(1), although the notice of appeal repeats, among the orders sought on appeal, the same claim to a declaration that it was not open to the respondents to commence the proceedings as representative proceedings that was made in its notice of motion the subject of Spender J’s judgment.  However, the respondents, while referring to this omission in their written submissions, permitted the appellant to argue these complaints without objection and presented answering submissions.  It should therefore be dealt with by the Court.

As to s 33C(1)(b), his Honour noted that the presently identified members of the group had purchased 39 of the lots in the one building, that all of the representations the subject of the various complaints were made by representatives of the appellant’s real estate agent and nearly all were made in November and December 1996 and that all the presently identified members of the group were given the financial projection document referred to in para 13(a)(vi) of the statement of claim.  He concluded:

… in my view, the claims by the proposed group members in the present proceedings satisfy the requirements of s 33C(1)(b) to the extent that the claim is based on the making of representations concerning resale at a profit before settlement, performance, projections, whether the requirements of s 49 of the [Building Units and Group Titles] Act have been complied with, and the associated question of whether the representations contained by the giving of the Section 49 statements were accurate.

Whether in giving his reasons for rejecting the proposition that s 33C(1)(b) was not complied with, Spender J considered that the action so complied, only in so far as it involved the eighteen identified group members, is not completely clear.  But he here referred only to the claims being based on the making of oral “representations concerning resale at a profit before settlement”, ie, to the one oral representation alleged to have been made to all eighteen and to what appears to be the three representations made to all of them in common form documents:  this suggests that it was on this narrow basis that his Honour held that the action satisfied the sub-section.  It is clear that s 33C(1)(b) was satisfied, in so far as the eighteen group members are concerned.  But each group member, identified as well as unidentified, purchased one or more units in the appellant’s development.  Each is said to have entered into the relevant contract or contracts in reliance on misrepresentations made by employees of the appellant’s real estate agent in writing in the common form s 49 statement given to each on behalf of the appellant.  Some are also said to have relied on other misrepresentations.  All misrepresentations are as to the qualities or characteristics possessed by or associated with the individual units.  Each group member can claim, on the ground of those of the misrepresentations made to each, either the right to cancel its contract and damages or damages only.  Even though only one of the representations relied on was made to all, there is a sufficient connection between these circumstances to warrant them being characterised at least as “related circumstances” within s 33C(1)(b), as the term is explained in Zhang v Minister for Immigration, Local Government and Ethnic Affairs (1993) 45 FCR 384 at 404 - 405.  The action therefore complied with s 33C(1)(b) when it was commenced on behalf of all group members as defined in the application and pleading.

There is more substance in the appellant’s complaint that the learned primary judge was in error in concluding that the requirement of s 33C(1)(c) was satisfied.  His Honour dealt with this provision by setting out what was said by Drummond J in Connell v Nevada Financial Group Pty Ltd (1996) 139 ALR 723 at 731 about the proper construction of the word “substantial” in s 33C(1)(c) and the comments criticising this passage by Wilcox J, writing extrajudicially in (1997) 15 ABR 91 at 93.  In Connell’s case it was held that the mere existence of an issue common to each of the group members’ claim that could not be dismissed as trivial or unsubstantial, did not amount to a “substantial common issue”; it was further held that the common issue must be central to the litigation and not just an issue together with other equally significant non-common issues.  Spender J clearly enough agreed with Wilcox J’s criticisms of the view expressed in Connell, saying:

There is no requirement in Part IVA of the FCA Act similar to r 23(b)(3) of the United States Federal Rules of Civil Procedure, namely, that the common issues of fact or law predominate.  Part IVA is meant to be a flexible procedure to advance the interests of justice.  There will always be a large degree of evaluation concerning commonality and non-commonality of issues and ultimately, if because of the extent of non-common issues, representative proceedings in the assessment of the court are not the preferable means of dealing efficiently and effectively with the claims, the court will no doubt terminate the representative nature of the proceedings in the exercise of the discretion conferred by s 33N(1)(d) of the FCA Act.

It is, in every case, a question of assessing the particular circumstances so as to determine the preferable means of handling the litigation.

As far as the motion filed by the vendor is concerned, I am not prepared at this stage to declare that it is not open to the applicants to commence these proceedings as representative proceedings.

This is a difficult passage.  It appears that his Honour considered that s 33C(1)(c) confers a discretion on the Court to approve the commencement of an action as a representative proceeding unless it was apparent from the then identifiable circumstances of the particular case that it would be preferable for the litigation to be managed as an ordinary proceeding.  It further appears that his Honour considered it would generally be the case that such an evaluation should be left until a later stage, ie, until after the circumstances of the case have been clarified, when consideration can be given to exercising the discretion conferred by s 33N.

But the question whether s 33C(1)(c) is satisfied so as to permit the action to be commenced as a representative proceeding cannot be resolved in this way.  Where it is said that proceedings have been improperly commenced as representative proceedings, the Court cannot avoid making a judgment on the substantiality of the common issue and, in effect, postpone that task until it can see that, notwithstanding how the case might be able to be best managed, its continuance as a representative proceeding will not achieve efficiency either for the litigants or in the use of the legal resources required to resolve the case.

A proceeding may only be commenced under Part IVA if it can then be shown to meet the criteria in s 33C(1).  Section 33H requires the representative applicant to demonstrate in the originating application or supporting pleading, that grounds then exist which show that the action is properly commenced as a representative proceeding.  In Cameron v Qantas Airways Ltd (1993) ATPR 41-251, it was said at 41,370 that “in order that a matter may properly proceed under Part IVA, it is necessary that the pleadings filed on behalf of the applicant, or applicants, adequately indicate the basis upon which it is claimed that the procedures mentioned in Part IVA are said to be available”.  If a representative applicant has complied with these obligations, it will be possible for the Court to determine, by reference to the application and supporting statement of claim, whether an action brought under Part IVA meets the requirements of s 33C(1)(b) and (c).  (As to s 33C(1)(a), see s 33H(2) and Tropical Shine Holdings Pty Ltd v Lake Gesture Pty Ltd (1993) 45 FCR 457 at 461 - 462.)

Section 33C(1)(c) does not permit an action to be commenced under Part IVA merely because there is an issue of fact or law common to the claims of all group members:  the common issue must have the additional quality of being a “substantial” common issue.  It is true that the word “substantial” is imprecise and its application involves an element of evaluation, as Spender J said and as Wilcox J says in 15 ABR 91 at 93.  See also Palser v Grinling [1948] AC 291 and R v Monopolies & Mergers Commission; Ex parte South Yorkshire Transport Ltd [1993] 1 WLR 23, discussed in Connell at 731 - 732.  But some guidance is available as to the range of considerations that are relevant in making this evaluation.

The Minister, in the second reading speech in respect of the Bill for Part IVA of the Federal Court of Australia Act, acknowledged that it was “developed following the report of the Australian Law Reform Commission entitled Grouped Proceedings in the Federal Court, which was tabled in Parliament in December 1988”.  The Commission recommended in favour of the introduction in the Federal Court of a new class procedure it referred to as “grouped proceedings” which it said (para 2):

advances the objectives of access to the courts and judicial economy, while providing safeguards against possible abuse.

It further explained these major objectives of access to the courts and judicial economy in its “Conclusion” in para 69:

An effective grouping procedure is needed as a way of reducing the cost of enforcing legal remedies in cases of multiple wrongdoing.  Such a procedure could enable people who suffer loss or damage in common with others as a result of a wrongful act or omission by the same respondent to enforce their legal rights in the courts in a cost effective manner …  The grouping of claims could also promote efficiency in the use of resources by enabling common issues to be dealt with together …

The Minister, in the second reading speech, identified these same objectives as those of the new Part IV, saying:

The new procedure will enhance access to justice, reduce the costs of proceedings and promote efficiency in the use of court resources.

Section 33N(1), particularly in (a) and (c), reflects these objectives in so far as it makes their non-attainability perceived at any time after institution of the action grounds for ordering that an action properly commenced as a representative proceeding no longer continue as such:  the sub-section is based on the assumption that, when it was commenced, the action could then be seen to further those same objectives.

The objectives of the legislation being clearly identified, the inherently imprecise word “substantial” should be given, in the context of s 33C(1), a meaning that furthers those objectives:  see s 15AA the Acts Interpretation Act 1901 (Cth) and also R v Monopolies & Mergers Commission at 29.

The Law Reform Commission’s recommendations for achieving these objectives are gathered together in the proposed bill incorporated in its Report No 46.  As is apparent from cl 12 of this document, the Commission considered that there would be a link between the applicant’s proceeding and the group members’ proceedings sufficient to justify the use of its proposed group proceedings procedure if the claims for relief all arose out of the same, similar or related material facts, provided that there was a question common to all the proceedings.  But although the Minister identified this Report in the second reading speech as the source of Part IVA, he also then said that the Government was not able to accept all the Commission’s recommendations.  The imposition of the requirement in s 33C(1)(c) that a common issue be a “substantial” common issue before proceedings could be commenced as representative proceedings was one of the departures made by the Parliament from the recommendations of the Law Reform Commission:  see Connell at 731.  The imposition of this requirement demonstrates a clear intention on the part of the Parliament to restrict the wider availability of the representative procedure recommended by the Law Reform Commission, the better to achieve the objectives of the new procedure.

By rejecting the Commission’s proposal in this respect, Parliament showed that it intended that a common issue would be justification for the use of the new procedure only where it was an issue with some special significance for the resolution of the claims of all the group members.  It is by reference to the objectives of Part IVA of the Act that we consider the evaluative judgment whether a common issue is a substantial one must be made.  In our opinion, those objectives cannot be achieved unless determination of the issue or issues common to the claims of all group members is likely to have a major impact on the conduct and outcome of the litigation.

In Connell it was suggested, at 731 and 732, that the only way in which it can be determined whether a common question is a “substantial” one within s 33C(1)(c) is by comparing the impact which litigation of the common issue will have on the conduct of both the interlocutory and trial stages of the proceedings with the impact that litigation of the non-common issues will have on the proceeding and if, as a result of that comparison, it can be seen, at the time the proceedings were commenced, that litigation of the common issue would be swamped by litigation of the non-common issues, then the common issue will not be a “substantial” one within s 33C(1)(c).  In view of the objectives of the legislation to which we have referred, that imprecise word is well capable of making such a comparison a consideration relevant to whether s 33C(1)(c) is satisfied in the particular case, something reinforced by the assumption underlying s 33N(1)(a) and (c) to which we have also referred.  Moreover, the tactics a respondent can only be in a position to adopt after an action has been properly commenced as one satisfying s 33C(1)(c) cannot throw any light on the interpretation of that threshold criterion.  We therefore disagree with Wilcox J’s comments as to the irrelevance of such a comparison to the application of s 33C(1)(c).  But the making of that comparison is only one way by which a decision can be made on whether a common issue is a “substantial” one.  Connell goes too far in suggesting that it is an exhaustive test for determining that matter.

In Zhang it was assumed that the issue there identified as common to all group members’ claims was a substantial one; a decision on that issue in favour of the representative applicant would have finally determined not only his claim, but also the claims of all the group members.  See 45 FCR at 405.  That was enough to make it a substantial common issue for the purposes of s 33C(1)(c) even though if (as happened) the common issue were to be determined adversely to the representative applicant, the claims of the group members could only be resolved by investigation of their individual circumstances.  In Milfull v Terranora Lakes Country Club Ltd (1998) ATPR 41-642, Kiefel J, who there expressed agreement with Wilcox J’s criticism of Connell, held, at 41,104, that the common issues met the requirement of being substantial ones because their determination “would go a considerable distance towards resolving questions of liability with respect to” the causes of action in negligence and those based on contraventions of the Trade Practices Act and the Companies Code; moreover, her Honour considered that, with respect to the claim in contract, “it may be possible, in the event of success on the part of the applicant, to pronounce judgment with damages to be assessed”, a judgment which would be binding on all group members.  Since determination of those common issues was capable of achieving resolution of all or a significant part of the issues of liability raised by the individual claims, the common issues were “substantial” ones.  The circumstances of the particular case may show that while resolution of the common issue may not determine the liability of the respondent to all group members, it may nevertheless determine what is, in a practical sense, an issue that is the, or one of the, key issues in the dispute between the respondent and all group members.  For example, a critical issue may be whether a disease or other harm of the kind suffered by each of the group members is capable of being caused by the respondent’s product or whether the respondent owed persons in the situation of group members a duty to take care to avoid such harm; in another case, the critical question may be whether a particular representation is misleading.  Determination of the issue may not necessarily result in resolution of the whole of the group members’ claims or even of an element of those claims such as the liability of the respondent to all.  But where such an issue can be seen, in the circumstances of the particular case, to be a matter the resolution of which will have a major impact on the litigation because it is an issue at the core of the dispute between the respondent and each group member, then it can properly be described as being a “substantial” common issue.  This will particularly be the case where the determination of the issue involves a complex factual inquiry.  Such a common issue will have this quality of substantiality even if other issues, including complex ones, are raised by the claims of individual group members which will have to be determined before each can be finally disposed of.  If, however, the common issue is only one of a number of issues that has to be determined to resolve each group member’s claims that is of no more importance, practically or legally, to the outcome of all of the member’s claims than any of the non-common issues in each claim, determination of the common issue in representative proceedings is highly unlikely to achieve the purposes of the legislation, ie, the economic disposition of any individual group members claim or the cost effective use of legal resources, including court resources, in disposing of a large number of claims, so it will not be capable of being a “substantial” common issue.

Reference is often made, in justifying the use of the representative procedure, to the general observations of Einfeld J in Marks v GIO Australia Holdings Ltd (1996) 63 FCR 304 at 311, which conclude with his comment that “As far as group actions provided for by Part IVA are concerned, what is relevant is similarity not difference.”.  But, at 315, his Honour also referred to experience showing the special difficulties involved in using the representative procedure as a vehicle for determining claims under Part V the Trade Practices Act 1974 (Cth).  See also Qantas Airways Ltd v Cameron (1996) 66 FCR 246 at 298.  Those difficulties are reduced when, as in Marks itself, the representations on which the case is based are made in common form documents published to all group members.  In Connell it was accepted, at 728, that s 33C(1)(c) might be satisfied even though the representative proceeding is founded on oral representations made on different occasions and in a different form of words to each class member, so long as the representations were all to the same substance and effect.  But the difficulty in achieving any benefit intended by the use of the representative procedure is magnified where the common issue said to justify the use of the procedure is found in such differing representations:  the likelihood is that the representative proceeding will, in such a case, in truth involve the detailed investigation of individual circumstances, a wholly unjustified use of the procedure.

In the present case, there is only one question, viz, that concerning the accuracy of the representations made in the common form s 49 statement given to all that is both a live issue and common to the claims of all group members, identified as well as unidentified.  However, there is no reason to think that litigation of this common issue would be likely to resolve wholly or to any significant degree the claims of all group members.  So far as the presently identified group members are concerned, it is clear that none intends or is prepared to confine his or her case that the appellant is liable to them in damages to this one representation common to all group members and to the additional three representations that are common to all eighteen presently identified group members:  all eighteen are seeking to prove their respective entitlements to damages on the basis of this and other representations.  Whether each has such an entitlement therefore will depend on the examination of their individual circumstances.

So far as the presently unidentified group members are concerned who only have claims for damages available to them on the case as currently framed, determination of the only issue common to them and to the eighteen identified group members will achieve little.  The respondents have so defined group membership in their proceeding that it is open to any group member to raise in it a claim for damages against the respondent on any basis.  No unidentified group member can be confined to claiming a right to damages on the basis of the one common representation.  It cannot be assumed that unidentified group members may wish or be prepared to confine claims to damages to the one common representation so far identified.  The evidence indicates that two of them, Cranston and Fountain, may well wish to prove their respective entitlements to damages not only on the basis of the inaccuracies in their s 49 statements, but also because of inaccuracies in financial projections given to each and (in Fountain’s case) also because of a misrepresentation as to the likely cost of furnishing his unit.  It is simply uncertain whether some of the unidentified group members may also want to claim an entitlement to damages on the basis of additional representations similar to those in para 13(a) or other quite different ones.  It would be unjustifiable, in the circumstances of this case, to expose each of the presently unidentified group members to the estoppels that would arise from a judgment on a damages claim made in the representative action that is based on that one representation:  cf Zhang at 401 - 403.  That ss 33N, 33P, 33Q and 33R might be able to be invoked to prevent such prejudice arising to individual group members only serves to highlight the inappropriateness of the representative procedure in a case such as this.  There is little purpose served by litigating, in the context of a representative proceeding, the accuracy of only one of a number (or possible number) of representations rather than the accuracy of the various representations each relies on and which will govern each group member’s entitlement to damages.  It is therefore impossible to know, when the action was commenced, whether resolution of these common issues would be likely to have a major impact on the litigation in the sense we have referred to.

Although he did not refer specifically to s 33N, it is clear enough that Spender J also declined to make an order under that provision, saying:

It seems to me that the Court can, by giving appropriate directions, consider the correctness of the allegations concerning what I have termed the “common issues” involved in these proceedings and further that the resolution of those common issues will go a long way to determining the claims by Silkfield on the one hand and by the individual group members on the other.

I accept that there are separate questions of reliance and of damages either on the part of the group members or on the part of the vendor but, looking at the matter in a practical sense, I do not anticipate that those matters will cause too much difficulty on the resolution of the common issues.  The cross-claims by the vendor, (should the representative proceedings fail as against the vendor), are matters which I would anticipate would be almost able to be agreed.  Similarly, if the representative proceedings are successful so far as the establishment of misleading and deceptive conduct on behalf of the vendor, then I would think that the question of reliance and the question of the relief to which individual group members might be entitled would not be matters that would cause great difficulty.

In the present case, I am not dealing with a situation where the common matters are not, in a sense, central to the representative proceedings.  The parties are agreed that the costs, (if this matter were to proceed as a representative proceeding), would be of the order of $120,000 and would involve a nine day trial.  The position is that each of the separate claims of each member of the group is not a large claim in itself.  There are advantages to members of the group in being able to contribute to the costs of one action as opposed to each of them having to conduct a separate action against the respondent.  On the other hand, there are obvious tactical advantages to Silkfield if it could force the members of the group to each conduct separate proceedings with the additional cost that that course of action would involve.

It seems to me that it would be considerably cheaper and more efficient if the matters continue as representative proceedings, at least so far as the resolution of the common issues.  The further conduct of the matters can be then looked at in the light of s 33P or, indeed, s 33N of the FCA Act.

The learned primary judge, in considering whether he should make an order under s 33N, therefore made an assessment of the benefits to be obtained from allowing the action to continue as a representative proceeding, compared with the likely position if individual actions were brought; he concluded that it was preferable to allow the action to continue as a representative proceeding.  However, it is plain that, in making this assessment, his Honour confined his attention to the eighteen identified group members.  What his Honour here said cannot therefore be relied on to show that the common issues are substantial ones within s 33C(1)(c), so far as all group members are concerned.

Before concluding, the appellant’s primary submission should be noted.  The appellant submitted that this action did not satisfy the requirements of a representative action because the representative parties could not give sufficient evidence to prove the representations relied on by each of the represented parties:  the classic representative action will be one in which the representative party will be able to call evidence that does justice to the claims of all the group members.  This submission must be rejected.  The kind of case that can best be run as a representative proceeding is one arising out of a “mass wrong”, ie, out of a single act, omission or course of conduct or the same act, omission or course of conduct repeatedly made or engaged in, and thus a case in which one or a handful of representative parties are able themselves to give the evidence necessary to present a large part of the case for all group members.  But s 33C(2) makes it clear that it is permissible to bring a representative action in circumstances in which the claims of each group member are different and arise out of separate transactions or separate acts or omissions by the respondent so that no representative party may be able, by the evidence it relies on, to prove both the liability of the respondent to it and also the liability of the respondent to one or more of the other group members.  Consistently with these indications in s 33C(2), ss 33Q and 33R arm the Court with power to ensure that rights unique to individual group members can be finally determined in a proceeding properly commenced and continued as a representative proceeding.

For the reasons given, his Honour was in error in concluding that the claims of all the group members as defined in the application and statement of claim gave rise to a common issue of law or fact that was a substantial one.  Since he was in error in concluding that the proceedings met the requirements of s 33C(1)(c), his refusal to grant the declaration sought by the applicant that it was not open to the respondents to commence the action as a representative proceeding cannot stand.

It is apparent that important questions of construction of s 33C are involved in the case.  We would therefore grant leave to appeal, allow the appeal, declare that the proceedings as presently framed can only be continued as proceedings brought by the respondents on their own behalf and direct that the future conduct and procedure in this matter be determined by the docket judge.

Associate:

Dated:              20/11/98