FEDERAL COURT OF AUSTRALIA

Femcare Ltd v Bright [2000] FCA 512

CONSTITUTIONAL LAW – representative proceedings – validity of Pt IVA of the Federal Court of Australia Act 1976 (Cth) – whether contrary to Chapter III of the Constitution – judicial power – whether Pt IVA purports to authorise the Court to exercise power in a manner not in accordance with judicial process – whether Pt IVA accords procedural fairness – whether group members provided with adequate notice – whether autonomy of group members infringed – whether abuse of process to make a claim for a collateral purpose – whether Pt IVA representative proceeding falls outside the concept of a “matter” – whether Pt IVA purports to authorise the Court to exercise power in relation to hypothetical questions –– whether operation of Pt IVA permits an acquisition of property otherwise than on “just terms”

WORDS & PHRASES – “judicial power”, “matter”

The Constitution (62 & 63 Vict. c. 12), Ch III, ss 51(xxxi) 75, 76, 77

Federal Court of Australia Act 1976 (Cth), Pt IVA, ss 33A, 33B, 33C, 33D, 33H, 33E, 33J, 33N, 33Q, 33T, 33X, 33Y, 33Z, 33ZB, 33ZF, 33ZG,

Federal Court Rules, O 43 rr 1 & 5

Trade Practices Act 1974 (Cth), Pt V, s 82(2)

Supreme Court Rules (NSW), Pt 8 r 13(1), Pt 63 rr 2 & 3

Federal Rules of Civil Procedure (US), r 23(c)(2)

Bright v Femcare Ltd (1999) 166 ALR 743 cited

Phillip Morris (Australia) Ltd v Nixon [2000] FCA 229 referred to

Wong v Silkfield Pty Ltd (1999) 165 ALR 373 referred to

Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 cited

Eisen v Carlisle 417 US 156 (1973) considered

Bateman’s Bay Local Aboriginal Land Council v The Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247 considered

Nelungaloo Pty Ltd v The Commonwealth (1952) 85 CLR 545 cited

Sue v Hill (1999) 163 ALR 648 cited

Bass v Permanent Trustee Co Limited (1999) 161 ALR 399 discussed

The Queen v Kirby; Ex parte Boilermakers’ Society of Australia (1956) 94 CLR 254 referred to

Hilton v Wells (1985) 157 CLR 57 referred to

Chu Kheng Lim v Minister for Immigration, Local Government & Ethnic Affairs (1992) 176 CLR 1 considered

Harris v Caladine (1991) 172 CLR 84 discussed

Re Nolan; Ex parte Young (1991) 172 CLR 460 considered

Nicholas v The Queen (1998) 193 CLR 173 considered

Grollo v Palmer (1995) 184 CLR 348 considered

Wilson v Minister for Aboriginal & Torres Strait Islander Affairs (1996) 189 CLR 1 referred to

Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 considered

Huddart, Parker & Co Pty Ltd v Moorehead (1909) 8 CLR 330 cited

Reg v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361 cited

The Queen v Davison (1954) 90 CLR 353 cited

Carnie v Esanda Finance Corporation Ltd (1995) 182 CLR 398 considered

Duke of Bedford v Ellis [1901] AC 1 considered

Ellis v Duke of Bedford [1899] 1 Ch 494 cited

Hichens v Congreve (1828) 4 Russ 562, 38 ER 917 considered

John v Rees [1970] Ch 345 cited

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

Naken v General Motors of Canada Ltd (1983) 144 DLR 385 cited

Phillips Petroleum Co v Shutts 472 US 497 (1985) considered

Swan Hill Corporation v Bradbury (1937) 56 CLR 746 referred to

Mullane v Central Hanover Bank & Trust Co 339 US 306 (1950) considered

Markt & Co Ltd v Knight Steamship Co Ltd [1910] 2 KB 1021 referred to

Abebe v Commonwealth (1999) 162 ALR 1 considered

Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd [2000] HCA 11 referred to

Hooper v Kirella Pty Ltd (1999) 167 ALR 358 cited

Fencott v Muller (1983) 152 CLR 570 cited

Watt v Barnett (1878) 3 QBD 183 cited

Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502

Daniell’s Chancery Practice 8th ed. 1914 Vol 1

Yeazel, “From Group Litigation to Class Action, Part I” (1980) 27 UCLA L Rev 514

Law Reform Commission – Australia Report No 46 Grouped Proceedings in the Federal Court 1988

FEMCARE LIMITED v KERRIE BRIGHT

N 1275 OF 1999

BLACK CJ, SACKVILLE & EMMETT JJ

SYDNEY

19 APRIL 2000

THE COURT ORDERS THAT:

1.         The appeal be dismissed.

2.         The appellant pay the respondent’s costs.

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

REASONS FOR JUDGMENT

THE COURT:

1                     The respondent to this appeal, Kerrie Bright (“Ms Bright”), has commenced representative proceedings pursuant to Part IVA of the Federal Court of Australia Act 1976 (Cth) (“Federal Court Act”).  Ms Bright claims compensation for injury, loss and damage on her own behalf and on behalf of a group of other women.  Each of Ms Bright and the other women is alleged to have undergone a sterilisation procedure using goods known as “Filshie applicators” and “Filshie clips”.  Those goods are manufactured by Femcare Limited (“Femcare”), the appellant in this appeal and the first respondent in the representative proceedings.  The goods are distributed by Endovasive Pty Limited (“Endovasive”), the second respondent in the representative proceedings.  Ms Bright alleges that, in connection with those goods, Femcare and Endovasive engaged, inter alia, in conduct in contravention of Part V of the Trade Practices Act 1974 (Cth) (“Trade Practices Act”).

2                     The proposed further Amended Statement of Claim referred to below describes the represented group as women who underwent sterilisation procedures in Australia in which the goods were used, and who suffered damage therefrom on or after 10 May 1996.  Presumably this date was chosen because of the three year limitation period for an action for damages imposed by s 82(2) of the Trade Practices Act.  Ms Bright commenced the representative proceedings on 10 May 1999.

3                     By notice of motion filed in the proceedings on 8 September 1999, Femcare sought declarations that the entirety of Part IVA of the Federal Court Act is, or alternatively, that ss 33J and 33ZB of the Federal Court Act are, invalid as being beyond the legislative competence of the Commonwealth Parliament.  On 6 October 1999, Lehane J refused to make such declarations.  The decision is reported: Bright v Femcare Ltd (1999) 166 ALR 743.

4                     On 2 November 1999, Femcare was granted leave to appeal from the orders made on 6 October 1999.  Pursuant to that leave, Femcare has filed notice of appeal seeking:

·        orders that the orders of 6 October 1999 be set aside; and

·        declarations in the form originally sought from the primary Judge. 

5                     Before the primary Judge Femcare also sought summary dismissal of the proceedings and, in the alternative, orders that the amended statement of claim and amended application filed by Ms Bright be struck out.  The latter orders were sought on the basis of what are said to be deficiencies in Ms Bright’s pleading and in her compliance with the threshold requirements of Part IVA of the Federal Court Act for representative proceedings.

6                     When the motion for hearing came on before the primary Judge, counsel for Ms Bright handed up a proposed Further Amended Application and a proposed Further Amended Statement of Claim.  However, the primary Judge deferred consideration of those documents and confined himself to a consideration of Femcare’s application for declaratory relief.

7                     Nevertheless, in the course of his reasons, the primary Judge said, at 750:

“There is nothing in Part IVA which dispenses with the requirement that the applicant plead the material facts on which all claims for relief are made on behalf of each group member.  To the extent that that is not done the pleading, like a pleading in any other proceeding, is liable to be struck out.  Equally, if a claim made on behalf of any group member is to succeed, the factual basis of each element of the cause of action will have to be established by evidence.” (Footnotes omitted.)

8                     Femcare contended that that passage is a correct statement of law. The Solicitor-General, intervening on behalf of the Commonwealth, contended that, on one construction of the first sentence of the passage, it goes too far.  Depending upon the proper construction to be given to the passage, Ms Bright did not dispute that it is correct.  Femcare contended that if, properly construed, the passage is not a correct statement, an additional ground of constitutional invalidity is raised.

9                     The meaning of the passage, and its correctness, however, are not issues that are properly before us.  It is inappropriate to say anything at this stage concerning any ground of invalidity other than those that have been the subject of argument before us.  Before dealing with those grounds, it is desirable to outline the provisions of Part IVA of the Federal Court Act.

SCHEME OF PART IVA

10                  Part IVA of the Federal Court Act follows broadly, but by no means precisely, the scheme for grouped proceedings proposed by the Law Reform Commission of Australia (“LRC”) in its report Grouped Proceedings in the Federal Court (Report No 46, 1988) (“Grouped Proceedings”): see Philip Morris (Australia) Ltd v Nixon [2000] FCA 229 (“Phillip Morris v Nixon”).  The general objectives of Part IVA were identified in the second reading speech for the Federal Court of Australia Amendment Bill 1991 (Cth Parl Deb, HR, 14 November 1991, at 3174-3175), in a passage quoted by the High Court in Wong v Silkfield Pty Ltd (1999) 165 ALR 373 at 379:

“‘The Bill gives the Federal Court an efficient and effective procedure to deal with multiple claims.  Such a procedure is needed for two purposes.  The first is to provide a real remedy where, although many people are affected and the total amount at issue is significant, each person’s loss is small and not economically viable to recover in individual actions.  It will thus give access to the courts to those in the community who have been effectively denied justice because of the high cost of taking action.

The second purpose of the Bill is to deal efficiently with the situation where the damages sought by each claimant are large enough to justify individual actions and a large number of persons wish to sue the respondent.  The new procedure will mean that groups of persons, whether they be shareholders or investors, or people pursuing consumer claims, will be able to obtain redress and do so more cheaply and efficiently than would be the case with individual actions’.”

11                  Part IVA was inserted into the Federal Court Act in 1991 by the Federal Court of Australia Amendment Act 1991 (Cth), which commenced on 4 March 1992.  Proceedings may be brought under Part IVA only in respect of a cause of action arising after that date: s 33B.

12                  Section 33A of the Federal Court Act defines a “representative proceeding” to mean a proceeding commenced under s 33C.  Section 33C(1) specifies the criteria that must be satisfied at the commencement of the proceeding: Wong v Silkfield Pty Ltd (above), at 380; Philip Morris v Nixon, at [125].  It provides as follows:

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

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

(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.”

13                  Section 33H sets out the requirements for the originating process in a representative proceeding:

“33H(1)          An application commencing a representative proceeding, or a document filed in support of such an application, must, in addition to any other matters required to be included:

(a)       describe or otherwise identify the group members to whom the proceeding relates; and

(b)       specify the nature of the claims made on behalf of the group members and the relief claimed; and

(c)        specify the questions of law or fact common to the claims of the group members.

(2)       In describing or otherwise identifying group members for the purposes of subsection (1), it is not necessary to name, or specify the number of, the group members.”

14                  The consent of a person to be a group member in a representative proceeding is not required, except for limited classes of persons: s 33E(1), (2).  Nor is it necessary for a person under a disability to have a next friend or committee merely to be a group member: s 33F(1).  However, a group member who is under a disability may only take a step in the representative proceeding, or conduct part of the proceeding, by his or her next friend or committee: s 33F(2).

15                  While a person’s consent is not required to be a group member and he or she need not be named in the originating process, a group member may opt out of the representative proceeding by written notice given under the Rules of Court: s 33J(2).  The Court must fix a date before which a group member may opt out of a representative proceeding: s 33J(1).  The Court may extend the period for opting out: s 33J(3).  Except with the leave of the Court, the hearing of a representative proceeding must not commence earlier than the date before which a group member may opt out of the proceeding: s 33J(4).

16                  Section 33D addresses the standing of the applicant to commence and continue a representative proceeding on behalf of the represented group:

“33D(1)          A person referred to in paragraph 33C(1)(a) who has a sufficient interest to commence a proceeding on his or her own behalf against another person has a sufficient interest to commence a representative proceeding against that other person on behalf of other persons referred to in that paragraph.

(2)                Where a person has commenced a representative proceeding, the person retains a sufficient interest:

(a)               to continue that proceeding; and

(b)               to bring an appeal from a judgment in that proceeding;

even though the person ceases to have a claim against the respondent.”

17                  The Court has power to order that a representative proceeding no longer continue under Part IVA where it is satisfied that it is in the interests of justice to do so for any of four specified reasons: 33N(1).  The power is available, for example, where the representative proceeding will not provide an efficient and effective means of dealing with the claims of group members or it otherwise is inappropriate that the claims be pursued by means of a representative proceeding: s 33N(1)(c), (d).  The Court also has power, if it appears that determination of the issue or issues common to all group members will not finally determine the claims of all group members, to give directions in relation to the determination of the remaining issues: s 33Q(1).  Consequential directions can also be given: ss 33R, 33S.

18                  Section 33T provides that if, on an application by a group member, a representative party is not able adequately to represent the interests of the group members, the Court may substitute another group member as a representative party and may make such other orders as it thinks fit.

19                  Division 3 of Part IVA provides for notice to group members.  Section 33X(1) provides as follows:

“33X(1)           Notice must be given to group members of the following matters in relation to a representative proceeding:

(a)               the commencement of the proceeding and the right of the group members to opt out of the proceeding before a specified date, being the date fixed under subsection 33J(1);”

20                  The Court may dispense with compliance with any or all of the requirements of s 33X(1) where the relief sought in a proceeding does not include a claim for damages: s 33X(2).  However, the Court also has power at any stage to order that notice of any matter be given to a group member or group members: s 33X(5).  Notice under s 33X(1) must be given as soon as practicable after the happening of the event to which the notice relates: s 33X(6).

21                  It will be seen that s 33X is concerned with the giving of notice to group members, and not with the form of any notice.  Section 33Y(1) provides that s 33Y “is concerned with notices under [s]33X” (emphasis added).  The form and content of a notice must be as approved by the Court: s 33Y(2).  The Court must, by order, specify who is to give the notice and the way in which the notice is to be given: s 33Y(3).  An order under s 33Y(3) may require that notice be given by means of press advertisement, radio or television broadcast or by other means.

22                  Subsections 33Y(5) and (8) received close attention in argument.  They provide as follows:

“33Y(5)           The Court may not order that notice be given personally to each group member unless it is satisfied that it is reasonably practicable, and not unduly expensive, to do so.

…

(8)                   The failure of a group member to receive or respond to a notice does not affect a step taken, an order made, or a judgment given, in a proceeding.”

23                  Because s 33Y played a prominent part in the argument, it is convenient to refer to the recommendations of the LRC Report which led to s 33Y taking the form it does.  After considering when notice should be given to group members (Grouped Proceedings, par 188), the LRC considered who should give the notice and how it should be given (pars 190, 192):

“190.   The most appropriate and cost effective method of notice will depend on the circumstances of the case.  The objective should be to find the most economical means of ensuring that the group members are informed of the proceedings and of their rights.  The more at stake for each person, the more effective the notice should be.  Individual notice is likely to be most effective method of giving notice but it is also likely to be the most costly.  In the United States individual notice is required, where members can be identified through reasonable effort, to inform them of their right to opt out: Federal Rules of Civil Procedure (US) r 23(c)(2).  The consequences of this requirement can be significant.  In Eisen v Carlisle and Jacquelin, 417 US 156 (1974), proceedings were commenced by the plaintiff, whose individual claim amounted to $70, on behalf of a class which comprised six million members.  The names and addresses of over two million of the class could be ascertained from the defendant’s records.  The cost of requiring that individual notice be given was calculated to be in excess of $300,000 for postage alone.  It was argued by the class plaintiff that because the amounts in question were so small it would be extremely unlikely that class members would seek to opt out and accordingly individual notices were unnecessary.  The argument was rejected by the Supreme Court, which held that the express wording of the Rule required individual notice to all identifiable class members regardless of the economic or other costs.  The effect was to require the class plaintiff to discontinue the action.  It is thus clear that requiring individual notice may mean that the action cannot proceed.  The costs of such a requirement may be out of all proportion to its benefits to group members; in some circumstances the requirement of individual notice could prevent them from obtaining a remedy.

…

192.     Recommendation.  The Court should be able to order any party to give notice.  The Court should not order that notice be given personally to each group member unless it is satisfied that it is reasonably practicable, and not unduly expensive to do so.  Notice should be able to be given by press advertisement or radio or television broadcast or otherwise.  The Court should have a discretion to make orders relating to the costs of notice.”

24                  Section 33Z(1) provides that the Court may, in determining a matter in a representative proceeding, do any one or more of the following:

·        determine an issue of law;

·        determine an issue of fact;

·        make a declaration of liability;

·        grant any equitable relief;

·        make an award of damages for group members, being damages consisting of specified amounts or amounts worked out in such manner as the Court specifies;

·        award damages in an aggregate amount without specifying amounts awarded in respect of individual group members;

·        make such other order as the Court thinks just.

However, the Court is not to make an award of damages in an aggregate amount without specifying amounts awarded in respect of individual group members unless a reasonably accurate assessment can be made of the total amount to which group members will be entitled under the judgment: s 33Z(3).

25                  In one sense, the pivotal provision of Part IVA is s 33ZB, which provides for the effect of a judgment given in representative proceedings.  Section 33ZB is in the following terms:

“A judgment given in a representative proceeding:

(a)       must describe or otherwise identify the group members who will be affected by it; and

(b)       binds all such persons other than any person who has opted out of the proceeding under section 33J.”

26                  Section 33ZE(1) provides that, upon the commencement of a representative proceeding, the running of any limitation period that applies to the claim of a group member to which the proceeding relates is suspended.  The limitation period does not begin to run again unless either the member opts out of the proceeding under s 33J or the proceeding, and any appeals arising from the proceeding, are determined without finally disposing of the group member’s claim: s 33ZE(2).

27                  In any proceeding under Part IVA, the Court may, of its own motion or otherwise, make any order it thinks appropriate or necessary to ensure that justice is done in the proceeding: s 33ZF.  Section 33ZG, however, specifically states that nothing in Part IVA affects, inter alia:

“(b)     the Court’s powers under provisions other than this Part, for example, its powers in relation to a proceeding in which no reasonable cause of action is disclosed or that is oppressive, vexatious, frivolous or an abuse of the process of the Court.”

FEMCARE’S SUBMISSIONS

Summary

28                  Femcare eschewed any contention that it is beyond the legislative power of the Commonwealth to enact a procedure for representative proceedings in the Federal Court of Australia.  Rather, Femcare contended that Part IVA in its present form is, or alternatively ss 33J and 33ZB in their present form together are, constitutionally invalid.  First, Femcare contended that the provisions are invalid because, contrary to the requirements of Chapter III of the Constitution, they purport to authorise the Federal Court of Australia to:

·        exercise power in a manner not in accordance with “judicial process”;

·        make adjudications on issues or questions where there is no “matter”;

·        exercise power in relation to “hypothetical questions”.

In addition, Femcare contended that ss 33J and 33ZB effect an acquisition of property otherwise than on the just terms required by s 51(xxxi) of the Constitution.  Before dealing with those contentions, it is convenient to state Femcare’s submissions in some further detail.

Judicial Process

29                  Femcare submitted that Part IVA of the Federal Court Act fails to comply with the requirements of Chapter III of the Constitution in that it requires the Court to act in a manner inconsistent with the judicial process.  Femcare contended that Part IVA departed from the requirements of the judicial process in three respects.

30                  First, it was said that Part IVA departs from the fundamental requirement that the judicial process must accord procedural fairness.  In particular, it fails to ensure that group members receive adequate notice of the representative proceeding.  Senior counsel for Femcare submitted that it is inevitable that a significant proportion of the represented group in any proceeding will not receive notice of the commencement of the proceeding and other relevant steps, at least if notice is provided only by media advertisements.  The consequence is that what counsel described as the “ignorant, passive group member” – that is, a group member who does not in fact receive notice of the commencement of the representative proceeding and who does not otherwise come to know of it – will be bound by an adverse determination in the representative proceeding by the operation of s 33ZB of the Federal Court Act. 

31                  The effect of Part IVA, especially ss 33Y (the form of notices) and 33ZB (effect of judgment) was said to be that the legal rights of a group member can be determined:

·        under a procedure whereby that member may not have been informed that the determination was to take place;

·        without reference to particular facts that might affect any claim of the group member;

·        without that member having a choice of legal representatives; and

·        without that member having the opportunity to make any contribution to, or exercise any control over, the manner and form of the proceeding. 

32                  The effect of this injustice, so it was said, would be magnified by the likely application of an Anshun estoppel (Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589), whereby the ignorant, passive group member would be prevented from later seeking to argue any point that could reasonably have been raised by the representative party, but was not.

33                  Femcare accepted that the requirements of Chapter III would be satisfied by a provision in the form of r 23(c)(2) of the Federal Rules of Civil Procedure (US), referred to by the LRC in Grouped Proceedings.  Sub-rules 23(a) and (b) permit a suit to be maintained as a class action if certain prerequisites are satisfied.  Rule 23(c)(2) provides as follows:

“(2)     In any class action maintained under subdivision (b)(3), the court shall direct to the members of the class the best notice practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort.  The notice shall advise each member that (A) the court will exclude the member from the class if the member so requests by a specified date; (B) the judgment, whether favourable or not, will include all members who do not request exclusion; and (C) any member who does not request exclusion may, if the member desires, enter an appearance through counsel.”

34                  In Eisen v Carlisle, 417 US 156 (1973), the Supreme Court of the United States held (at 175) that the unambiguous language of r 23(c)(2) left no doubt that individual notice had to be provided to those class members who are identifiable through reasonable effort. Individual notice to identifiable class members was not a discretionary consideration to be waived in a particular case.  It followed that since the names and addresses of 2,250,000 class members were known and there was nothing to show that individual notice could not be mailed to each, individual notice was the “best notice practicable” within the meaning of r 23(c)(2).

35                  Femcare argued that Part IVA of the Federal Court Act provides fewer safeguards for group members than r 23(c)(2).  In particular, s 33Y(5) forbids the Court from ordering that notice be given personally to each group member unless it is satisfied that it is reasonably practicable and not unduly expensive to do so.  The Court therefore cannot order that notice be given personally unless affirmatively satisfied of the two conditions specified in the sub-section.  This, it was said, creates a serious risk that group members will never actually become aware of the representative proceedings.

36                  Secondly, Femcare contended that Part IVA of the Federal Court Act infringes the autonomy of group members in controlling their affairs and grievances.  This result comes about, so it was argued, because group members have no say in the choice of lawyers to conduct the proceedings on their behalf, unless they take the drastic step of seeking to have the representative party removed pursuant to s 33T.  Moreover, members might be unwillingly “dragged by others into public legal processes”.  Part IVA, so Femcare submitted, involved a “paternalistic interference in the autonomy of citizens” by allowing a litigant to pursue a “new charter of rights which the litigants think they ought to have”.

37                  Femcare said that the importance to the judicial process of protecting a citizen’s autonomy is reflected in the common law doctrine of standing.  It relied on the statement in the joint judgment of the High Court in Bateman’s Bay Local Aboriginal Land Council v The Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247, at 264 that:

“[i]n private law there is, in general, no separation of standing from the elements in a cause of action”.

It was said to be implicit in this statement that only the affected parties can assert a breach of some private right held by them.  Although Femcare did not expressly advert to s 33D in its written submissions on this issue, its argument seems to challenge the statutory conferral of standing on an applicant to commence and conduct proceedings on behalf of group members.

38                  Thirdly, Femcare argued that a representative party may be required to plead causes of action on behalf of others, when the representative party is not in a position to know whether there is a reasonable basis to believe that the causes of action can be made out.  Femcare accepted that it is not an abuse of process to make a claim which turns out not to be supported by evidence, but said that it is an abuse of process to make a claim for a collateral purpose, knowing that it is hopeless.  It was said that members of a represented group will frequently know that they have no cause of action.  It follows, according to the submission, that Part IVA of the Federal Court Act authorises the Federal Court to act in a manner contrary to the constitutional requirements of the judicial process.

Absence of a “Matter”

39                  Femcare submitted that ss 33J and 33ZB of the Federal Court Act are inconsistent with the requirement in s 77(i) of the Constitution, that jurisdiction can be conferred on the Federal Court only in respect of a “matter” of the kind identified in ss 75 and 76.  According to Femcare, there can be no “matter” in the constitutional sense unless there is a controversy or dispute.  Part IVA was likely to encompass issues relating to individuals who are not actually in dispute with the respondents because they:

·        have never heard of the representative proceeding;

·        have no right to claim because their cause of action has not yet accrued; or

·        do not wish to be involved in the litigation.

In these circumstances, so it was said, there is no “genuine controversy” between the parties.  Alternatively, there could be no immediate right, duty or liability for determination and thus no “matter” for the Court to resolve.

Hypothetical Questions

40                  Femcare submitted that the scheme of Part IVA is such as to permit the judicial answering of purportedly common questions of fact and law in a hypothetical manner.  The provisions involve the preliminary and isolated determination of distinct, purportedly common questions.  Femcare relies on the proposition that nothing is so apt to promote confusion and difficulty as an attempt to dissect out of an entire legal question one of the component issues it involves and to submit it for a decision in artificial isolation: Nelungaloo Pty Ltd v The Commonwealth (1952) 85 CLR 545 at 571.  The reference and determination of discrete questions isolated from the ultimate question of legal liability is impermissible: Sue v Hill (1999) 163 ALR 648 per Gaudron J at 687, par [138]. 

41                  In a representative proceeding under Part IVA, the Court will often, if not usually, be required to determine the supposed common questions without having evidence of the particular circumstances of particular claims before the Court.  Femcare submitted that if such questions involve anything other than pure questions of law, it is more likely than not that the common determination will not apply precisely to, or not accurately represent, the true position in some of the individual cases of group members. 

42                  The exercise of judicial power to resolve “matters” involves the binding resolution of a controversy between parties as to their legal rights and obligations.  However, a determination of a purportedly common question which may, in fact, not be applicable to the particular case, does not decide any question as between any particular parties or classes of person.  If all the facts potentially relevant to the issues have not been identified, then the resolution of a preliminary question will be hypothetical.  The Court will subsequently be required to engage in the process of determining how any newly identified facts affect the preliminary determination: Bass v Permanent Trustee Co Limited (1999) 161 ALR 399 at 415-416, pars [49]-[53].

Acquisition of Property

43                  Section 51 of the Constitution provides that the Parliament has power to make laws with respect to, inter alia, the following:

“(xxxi) the acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws”

Femcare submitted that under the provisions of Part IVA there would be an acquisition of property otherwise than on just terms which would not be authorised by s 51(xxxi).  The acquisition is said to be the conferring upon the representative party the right to “use” property of a group member, being the chose in action consisting of the group member’s claim against the respondent in a representative proceeding.  The use of the property, so it was said, is the prosecution of the cause of action.  The use terminates when the property is returned to the group member in the form of a judgment, whether successful or otherwise, at the conclusion of the representative proceeding.

REASONING ON JUDICIAL PROCESS

The General Principles

44                  It is not permissible under the Constitution for Parliament to confer any non-judicial power on a court established under Chapter III of the Constitution, unless the power is merely ancillary or incidental to the exercise of judicial power: The Queen v Kirby; Ex parte Boilermakers’ Society of Australia (1956) 94 CLR 254, at 270; Hilton v Wells (1985) 157 CLR 57, at 67, per Gibbs CJ, Wilson and Dawson JJ.  Nor do the grants of legislative power conferred on Parliament by s 51 of the Constitution:

“extend to the making of a law which requires or authorizes the courts in which the judicial power of the Commonwealth is exclusively vested to exercise judicial power in a manner which is inconsistent with the essential character of a court or with the nature of judicial power” (Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1, at 27, per Brennan, Deane and Dawson JJ (with whom Gaudron J agreed) (“Lim v Minister”))

45                  In Bass v Permanent Trustee Co Ltd (above), six members of the High Court, in a joint judgment, applied the principle that it is contrary to the judicial process, and is no part of the judicial power, to effect a determination of rights by applying the law to facts neither agreed nor determined by reference to the evidence in the case.  The judgment explained (at 417, par [56]) that:

“[j]udicial power involves the application of the relevant law to facts as found in proceedings conducted in accordance with the judicial process.  And that requires that the parties be given an opportunity to present their evidence and to challenge the evidence led against them”.  (Footnotes omitted).

46                  The authorities cited by the High Court in this passage elaborate on the concept of judicial process and its relationship to judicial power.  In Harris v Caladine (1991) 172 CLR 84, at 150, Gaudron J said:

“Judicial power is usually defined in terms of its subject matter, but it is a power that, for complete definition, requires description of its dominant and essential characteristic, namely, that it is exercised in accordance with the process which is referred to as ‘the judicial process’.  Thus, in general terms, it is a power which cannot be exercised until the ‘tribunal which has power…is called upon to take action’, which (subject to limited exceptions) proceeds by way of open and public inquiry, which involves the application of the rules of natural justice and which is directed to ascertaining ‘the law as it is and the facts as they are, followed by an application of the law as determined to the facts as determined.”  (Footnotes omitted.)

In Re Nolan; Ex parte Young (1991) 172 CLR 460, her Honour repeated those remarks, and added the further observation at 496 that:

“[b]ecause it is an essential feature of judicial power that it be exercised in accordance with the judicial process, Ch III provides a guarantee, albeit only by implication, of a fair trial of those offences created by a law of the Commonwealth which must be tried in the courts named or indicated in s 71 [of the Constitution].”

Although that observation was directed to criminal trials, it suggests that there may be a guarantee of at least a minimum standard of procedural fairness in relation to civil matters in respect of which jurisdiction is vested in a federal court under s 77(i) of the Constitution. 

47                  In Nicholas v The Queen (1998) 193 CLR 173, at 209, Gaudron J observed that consistency with the essential character of a court and with the nature of judicial power means:

“that a court cannot be required or authorised to proceed in any manner which involves an abuse of process, which would render its proceedings inefficacious, or which brings or tends to bring the administration of justice into disrepute”.

48                  An illustration of the application of these general principles is provided by Lim v Minister at 37, per Brennan, Deane and Dawson JJ (with whom Guadron J agreed).  There, a majority of the High Court held that s 54R of the Migration Act 1958 (Cth), which provided that a court was not to order the release from custody of a “designated person”, invalidly purported to direct the courts as to the manner on which they were to exercise their jurisdiction.  This constituted an impermissible intrusion into the judicial power which Chapter III of the Constitution vests exclusively in the courts specified therein.

49                  The notion that courts cannot be asked to do that which diminishes public confidence in the integrity of the judiciary as an institution, or in the capacity of an individual judge to perform his or her judicial functions with integrity, has played an important part in the development of the so-called doctrine of incompatibility of functions: Grollo v Palmer (1995) 184 CLR 348, at 365, per Brennan CJ, Deane, Dawson and Toohey JJ.  For example, it has been said that public confidence in the judiciary is achieved by a separation of the judges from the persons exercising the political functions of government: Wilson v Minister for Aboriginal and Torres Strait Islander Affairs (1996) 189 CLR 1, at 16, per Brennan CJ, Dawson, Toohey, McHugh and Gummow JJ.  For this reason, no function can be conferred on a Chapter III judge that would breach that separation.  In Wilson, the function conferred on a person who held office as a Federal Court judge (that of preparing a report for presentation to a Minister), was held to infringe the principle.  In Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 (“Kable v DPP”), State legislation was held invalid because it required the Supreme Court of New South Wales (which was held to be exercising federal jurisdiction) to participate in the making of a preventive detention order without any determination of criminal guilt having been made against the person concerned: at 98, per Toohey J; at 108, per Gaudron J (holding that the State legislation made “a mockery of [the judicial] process and, inevitably, weaken[ed] public confidence in it”); at 121-122, per McHugh J; at 132-134, per Gummow J.

50                  The principles on which Femcare relied have been stated by the High Court, as illustrated in the cases above, of necessity, in somewhat general terms.  The critical question is how the principles are to be applied to the circumstances of an individual case.  The objects and nature of the legislation considered in Lim v Minister or Kable v DPP, for example, were very different from those of Part IVA of the Federal Court Act.

51                  In this connection, the High Court has recognised that the line between judicial and non-judicial power is difficult to draw.  In Lim v Minister, McHugh J pointed to the imprecision in the well-known descriptions of judicial power put forward by Griffith CJ in Huddart, Parker & Co Pty Ltd v Moorehead (1909) 8 CLR 330, at 357, and Kitto J in Reg v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361, at 374-375.  McHugh J continued (at 67):

“The line between judicial power and executive power in particular is very blurred.  Prescriptively separating the three powers has proved impossible.  The classification of the exercise of a power as legislative, executive or judicial frequently depends upon a value judgment as to whether the particular power, having regard to the circumstances which call for its exercise, falls into one category rather than another.  The application of analytical tests and descriptions does not always determine the correct classification.  Historical practice plays an important, sometimes decisive, part in determining whether the exercise of a particular power is legislative, executive or judicial in character.” (Footnotes omitted.)

See also Lim v Minister, at 27, per Brennan, Deane and Dawson JJ.

52                  In Nicholas v The Queen, Gummow J said this (at 233):

“[Windeyer J in Tasmanian Breweries (at 394)] said that the concept of judicial power (and, one should add, that of impermissible intrusions upon the manner and outcome of its exercise) transcends ‘purely abstract conceptual analysis’ and ‘inevitably attracts consideration of predominant characteristics’, together with ‘comparison with the historic functions and processes of courts of law’.”

53                  For other statements of the significance of historical functions and processes, see The Queen v Davison (1954) 90 CLR 353, at 369-370, per Dixon CJ and McTiernan J; The Queen v Kirby; Ex parte Boilermakers’ Society of Australia, (above)at 278; per Dixon CJ, McTiernan, Fullagar and Kitto JJ.

Procedural Fairness

Procedures in Representative Proceedings

54                  Since historical practice plays an important part in questions of classification, it is useful to consider the procedures developed by the courts, before the enactment of legislation such as Part IVA of the Federal Court Act, to enable them to resolve grievances held by a number of people in common.  In particular, the development of the representative procedure, first by the Court of Chancery and then by Rules of Court, sheds considerable light on the procedural requirements inherent in the judicial process.

55                  In Carnie v Esanda Finance Corporation Ltd (1995) 182 CLR 398 (“Carnie”), the High Court gave a liberal interpretation to Part 8 r 13(1) of the Supreme Court Rules (NSW).  That sub-rule provides as follows:

“[w]here numerous persons have the same interest in any proceedings the proceedings may be commenced, and, unless the Court otherwise orders, continued, by or against any one or more of them as representing all or as representing all except one or more of them.”

The Court held that numerous persons can have “the same interest” in proceedings notwithstanding that they have separate causes of action in contract or in tort: at 404, per Mason CJ, Deane and Dawson JJ; at 421-422, 426, per Toohey and Gaudron JJ.

56                  As Toohey and Gaudron JJ pointed out (at 415), Part 8 r 13(1) of the Supreme Court Rules (NSW) is derived from English rules, which in turn were based on the practice of the Court of Chancery.  The practice was described by Lord Macnaughten in Duke of Bedford v Ellis [1901] AC 1, at 8, in a well-known passage quoted by Toohey and Gaudron JJ:

“The old rule in the Court of Chancery was very simple and perfectly well understood.  Under the old practice the Court required the presence of all parties interested in the matter in suit, in order that a final end might be made of the controversy.  But when the parties were so numerous that you never could ‘come at justice’, to use an expression in one of the older cases, if everybody interested was made a party, the rule was not allowed to stand in the way.  It was originally a rule of convenience; for the sake of convenience it was relaxed.  Given a common interest and a common grievance, a representative suit was in order if the relief sought was in its nature beneficial to all whom the plaintiff proposed to represent.”

57                  There is nothing in this passage that suggests that the practice of the Court of Chancery, or the practice under Order XVI r 9 (the relevant rule in force in 1900), required represented parties to be individually notified of the representative proceeding taken on their behalf.  On the contrary, Lord Macnaughten specifically held in Duke of Bedford v Ellis (above)that it was no barrier to a proceeding brought by plaintiffs on behalf of growers of fruit, flowers and vegetables within the meaning of the Covent Garden Market Act 1828 (UK) that the growers were such a fluctuating and indefinite body that it was impossible to tell who was or was not a grower.  His Lordship said (at 11) that he was not:

“much impressed with that difficulty.  It seems to me that the description of the persons apparently intended to be favoured by the Act is sufficient for all practical purposes.  It may be difficult or impossible to compile a catalogue of growers.  But there cannot, I think, be much difficulty in determining whether a particular person who claims a preferential right to a vacant stand in the market is a grower or not.”

This language strongly suggests that it was not an essential part of the representative procedure that the members of the represented group be personally served with notice or otherwise receive individual notification of the proceedings.  Certainly there is nothing in the report of the proceedings before Romer J or the Court of Appeal indicating that the represented group had received or were intended to receive individual notification of the proceedings: Ellis v Duke of Bedford [1899] 1 Ch 494.

58                  In Carnie, McHugh J, at 429, traced the origin and scope of the representative action in Chancery, in terms later endorsed by the Court in Wong v Silkfield Pty Ltd (above), at 376-377.  McHugh J, drawing on the analysis of Professor Yeazell (S C Yeazell, “From Group Litigation to Class Action, Part I” (1980) 27 UCLA L Rev 514), summarised the position as follows:

“The procedure of the representative action was ‘invented by Chancery in the seventeenth century to cope with disputes between rural tenants and landlords, parishioners and parsons’.  A reading of the cases in the eighteenth and nineteenth centuries indicates that the Court of Chancery often allowed the representative action to be used so that groups of individuals who had suffered similar wrongs could redress the economic harm which they had collectively suffered.  In many cases, the Court allowed persons with the same or common interest to be joined in a representative action only because the defendant insisted that the suit was bad for want of parties and it was inconvenient to make all interested persons parties to the action.  In some cases the represented parties had consented to and encouraged the plaintiff to bring the action as a representative action.  But in other cases the Court allowed the plaintiff to represent persons with similar interests whether or not they consented or even knew of the action.  This was particularly true of actions arising from the activities of joint stock companies and friendly societies.  In that situation, as Yeazell points out, ‘the represented must rely on the congruence of their interests with those of the representatives as the incentive for effective representation; the self-interest of the representative rather than the consent and supervision of the represented drives the active party’.”  (Fotnotes omitted and emphasis added.)

59                  As McHugh J recognises in this passage, the representative procedure could be utilised in circumstances where the members of the represented class not only did not consent to the procedure but knew nothing of it.  The authorities referred to by Professor Yeazell and McHugh J support the proposition that the representative procedure did not require individual notification to each of the group members.  Indeed it is not clear that any form of notice to the group members was necessarily required.

60                  Thus, in Hichens v Congreve (1828) 4 Russ 562, 38 ER 917, Lyndhurst LC permitted an action based on an alleged fraud by company promoters to be brought by a small number of shareholders on behalf of all shareholders.  Lyndhurst LC had no doubt as to the utility of the procedure (ER at 922):

“It is said that there is nothing on the face of the bill which shews that the shareholders are so numerous, that they could not all be joined as parties without inconvenience.  I think it does appear sufficiently, that, if all were joined, the number of complainants would be inconveniently great; first, because the shares are six thousand in number, and, secondly, because it appears by the act of parliament that there were then upwards of two hundred shareholders.  It is clear, therefore, that justice would be unattainable, if all the shareholders were required to be parties to the suit.

It is said, each shareholder might file a bill to recover his proportion of the money.  Such a course would produce enormous inconvenience.  Are two hundred bills to be filed, in order to do justice in this matter?  If justice can be done in one suit the Court will sustain such a proceeding; for to require all the shareholders to be parties, or to leave each shareholder to file a separate bill to redress his own wrong, would, in substance, be a denial of justice.

In the present case, it appears to me that justice may be done in one suit.  All the shareholders stand in the same situation; the property has been taken out of their common fund; they are entitled to have that property brought back again for the benefit of the concern.  When all parties stand in the same situation, and have one common right, and one common interest, in what respect can it be inconvenient that two, or three, or more, should sue in their own names for the benefit of all?”

61                  It is clear that the Court was not aware of the precise number of shareholders in the company.  There is nothing to suggest that the plaintiffs were required to notify, let alone serve individually, the general body of shareholders.  Indeed, to impose such a requirement would have limited the utility of the procedure for the very situation in which it was required, namely, where the persons interested were too numerous to bring before the Court.  Moreover, it was a requirement, as Lord Macnaughton said in Duke of Bedford v Ellis (above), that the relief sought was in its nature beneficial to all whom the plaintiff proposed to represent: see Daniell’s Chancery Practice, 8^th ed, 1914, vol 1, at 176.

62                  Given that the rationale for the representative procedure was to enable justice to be done, it is not surprising that the procedure was permitted in a variety of circumstances.  The represented groups found in reported decisions include not only shareholders, but the inhabitants of a parish, legatees and next of kin, tenants of a manor and many others: Daniell’s Chancery Practice (above), vol 1, at 175-176.  In short, as Megarry J said of the successor to O XVI r 9, the rules permitting representative procedures were treated as “a flexible tool of convenience in the administration of justice”: John v Rees [1970] Ch 345, at 370.

63                  The historical development and refinement of the representative action is difficult to reconcile with Femcare’s submission that the judicial process requires, except in very unusual circumstances, individual notice to persons whose rights might be adversely affected by a representative proceeding.  By 1900, the courts had devised flexible procedures for the resolution of common grievances held by members of a group.  These procedures did not necessarily require individual notice to members of the represented group.  The paramount consideration was the justice of the case, in particular the need to avoid the inconvenience associated with a large number of individual actions.

64                  Femcare correctly pointed out that s 33ZB of the Federal Court Act explicitly provides that a judgment in a representative proceeding binds all group members other than those who have opted out under s 33J.  To that extent Part IVA goes further than the old representative procedure.  But in Carnie, Toohey and Gaudron JJ specifically accepted (at 423-424) that the principle of res judicata applies to a representative proceeding under Part 8 r 13(1) of the Supreme Court Rules (NSW) and equivalent provisions.  Their Honours saw no prejudice to members of the represented group in being included, other than in the “obvious sense that they would be bound by a judgment acceding to or rejecting the claim for relief”.  As their Honours remarked earlier (at 423), the effect of an adverse decision is simply that the group member in any event has no such right as he or she claims.  See also Zhang v Minister for Immigration, Local Government and Ethnic Affairs (1993) 45 FCR 384 at 401-402, per French J; Naken v General Motors of Canada Ltd (1983) 144 DLR 385 (S Ct Can), at 406-407, per Estey J.

65                  The historical developments reflect the fact that the courts, in this as in other areas, have been concerned to develop procedures designed to do justice.  The representative procedure was designed to vindicate rights that otherwise could not be pursued, or could be pursued only with great inconvenience and expense.  It recognised, at least implicitly, that there is a critical difference between proceedings seeking relief against a person and those seeking to vindicate rights he or she holds in common with others: see Phillips Petroleum Co v Shutts 472 US 797 (1985), at 808, per Rehnquist J.  The price of providing a mechanism for the vindication of rights held in common with others may be departure to some extent from the procedures ordinarily applicable in litigation inter partes.

The Notice Provisions of Part IVA

66                  As we have noted, Part IVA of the Federal Court Act distinguishes between notice of matters relating to representative proceedings and the notices that are to be given.  Section 33X(1) provides that notice must be given to group members of a number of matters.  These matters include:

·        the commencement of the proceedings and the right of a group member to opt out; and

·        any application by the respondent to dismiss the proceeding for want of persecution.

The Court may at any stage order that notice of any matter be given to group members or a group member: s 33X(5).

67                  Section 33X(2) qualifies s 33X(1) by empowering the Court to dispense with all or any of the requirements of that sub-section where the relief sought in a proceeding does not include a claim for damages.  The discretion conferred by s 33X(2) must, of course, be exercised judicially.  Although framed in broad terms, it is not unlimited.  In particular, the Court exercising the discretion is bound to have regard to the purpose for which the discretion is conferred and, to this end, to take account of the terms and subject matter of Part IVA: Swan Hill Corporation v Bradbury (1937) 56 CLR 746, at 757-758, per Dixon J.

68                  A Court exercising the discretion would be bound, in our view, to take account of the consequences for a group member of being bound by an adverse determination.  Doubtless, in some cases an adverse determination will be of little practical consequence to an individual group member.  In others, for example, where declaratory relief is sought as to the interpretation of an important contractual provision, the consequences might be significant.  In the latter case, the Court is very likely not to be favourably disposed towards an application to dispense with the notice requirement.  Section 33X(2) is not a charter for the infliction of injustice.

69                  Section 33Y(1) says that s 33Y is concerned with “notices under section 33X”.  In a sense this language is curious, since s 33X is not concerned with notices as such, but with the giving of notice.  In any event, s 33Y(2) requires the form and content of a notice to be approved by the Court.  The Court must specify who is to give the notice and the way in which the notice is to be given: s 33Y(3).  Subsections 33Y(4) and (5) then revert to the concept of notice by providing that:

·        an order under s 33Y(3) may require that notice be given by means of press advertisement, radio or television broadcast or by any other means (s 33Y(4));

·        the Court may not order that notice be “given personally” to each group member unless it is satisfied that it is “reasonably practicable, and not unduly expensive to do so” (s 33Y(5)).

70                  Section 33Y(6) and 33Y(7) prescribe the contents of certain notices.  Section 33Y(8) provides that the failure of a group member to receive or respond to a notice does not affect a step taken, an order made, or a judgment given, in a proceeding.

71                  It is undoubtedly true, as Femcare submitted, that the combined effect of subss 33Y(5) and (8) is that a group member may not be given or receive “notice…personally” of the commencement of the representative proceeding yet will be bound by an adverse (or favourable) outcome.  Of course, that group member may well learn of the representative proceeding nonetheless, either because he or she receives some other form of notice or the proceeding comes to his or her attention by other means.  But there is at least a possibility that some group members will be bound by the outcome of a representative proceeding without ever knowing that it has been commenced or conducted on their behalf.

72                  It is important to appreciate, however, that s 33Y(5) does not prohibit the giving of “notice…personally” to each group member.  The Court may order notice be given personally to each group member if satisfied that it is reasonably practicable and not unduly expensive to do so.  Even if the Court decides that personal notice should not be given, it may require other steps, perhaps of an elaborate and extensive kind, to be taken by the representative party.  The only limitation is that the Court, unless satisfied of the matters referred to in s 33Y(5), may not order that notice be given “personally”.  A question of construction may arise as to what comes within the concept of the giving of notice personally, but none of the submissions suggested that the question is material to the constitutional issue.

73                  In determining what is “reasonably” practicable and not “unduly” expensive for the purposes of s 33Y(5), the Court is bound in our view, to take account of the possible adverse consequences to a group member of the representative proceeding as well as any possible benefits.  A value judgment is required.  Plainly the Court would be more likely to be satisfied that personal notice is reasonably practicable and not unduly expensive if an adverse determination will have significant consequences for a group member.  Moreover, s 33Y(5) must be understood in its statutory context.  This includes s 33ZF, which empowers the Court to make any order it thinks appropriate to ensure that justice is done in the proceeding.

74                  In assessing the requirements of the judicial process it is also important to bear in mind the objects underlying s 33Y(5).  As the extract from the LRC’s Grouped Proceedings report referred to in par [23] above shows, the objective is to find the most economical means of ensuring that the group members are informed of the proceeding and their rights.  The LRC considered that “the more at stake for each person, the more effective the notice should be”.  It also took the view that the procedures adopted should not shut out the very cases for which the representative procedure is most appropriate – claims involving small individual claims which are large in aggregate.

75                  It is hard to see why the requirements of the judicial process are to be interpreted so rigidly as to produce the consequence, as in Eisen v Carlisle (above), that the representative action is simply rendered impracticable in the very case in which it is needed.  The rationale underlying the judicial process doctrine is the need to avoid bringing the administration of justice into disrepute or the infliction of injustice on individuals.  Part IVA of the Federal Court Act aims to enhance access to justice by establishing procedures that enable legitimate common grievances to be remedied.  These procedures provide advantages to group members whose claims would otherwise be without practical redress.  The legislation in this respect seeks to strike a balance between the impracticality of requiring personal notice in every case and the need to give effective notice of the proceeding to group members.  In doing so, it follows the pattern set over at least the last two centuries by courts of equity and the judges exercising rule-making powers.

76                  Mr Gageler, who appeared for Femcare on the last two days of the hearing, accepted that s 33Y(5) would not infringe the requirements of the judicial process if it simply provided that the Court must order that notice be given personally to each group member unless affirmatively satisfied that it is not reasonably practicable or unduly expensive to do so.  By making this concession, Femcare accepted that there would be no departure from constitutional requirements if notice were not given personally to each group member because such notice would not be reasonably practicable or would be unduly expensive.  Its complaint, therefore, merely concerns what can be described as the reversal of onus provided for in s 33Y(5).

77                  In our view, it is difficult to discern a rationale for the distinction drawn by Femcare.  The reversal of onus effected by s 33Y(5) does not alter the structure of Part IVA in general, nor of ss 33X and 33Y in particular.  It is part of the balancing process to which we have referred.  The issue remains whether it is reasonably practicable and not unduly expensive for notice to be given to group members personally.  If so, the Court may order that personal notice be given.  In our view, s 33Y(5) neither brings the judicial system into disrepute nor, having regard to the advantages of representative proceedings for group members, inflicts injustice of a kind that causes the legislation to infringe minimum constitutional standards.

Due Process in the United States

78                  Femcare’s submissions appeared to assume that the content of the “judicial process”, for the purposes of Chapter III jurisprudence, incorporates the minimum standards required by the Due Process Clause of the United States Constitution (the Fourteenth Amendment).  This is a very large assumption, which seems not to be supported by any Australian authority.  It is not, however, necessary to consider the validity of the assumption in the present case.

79                  Femcare relied on Eisen v Carlisle (above) as demonstrating the requirements of the Due Process Clause.  Eisen v Carlisle concerned the Federal Rules of Civil Procedure (US), r 23(c)(2), the terms of which have been referred to in par [33] above.  The Supreme Court held that r 23(c)(2), as a matter of construction, required individual notice to be given to class members who were identifiable through reasonable effort.  Since the names and addresses of 2,250,000 class members in that case were “easily ascertainable”, individual notice had to be given to each by mail.

80                  Eisen v Carlisle (above)is not an authority on the content of the Due Process Clause.  The holding was simply that individual notice to identifiable class members was an “unambiguous requirement” of r 23 (at 176).  The fact that the Advisory Committee’s Note to r 23 stated that subdivision (c)(2) was “designed to fulfil requirements of due process” (see at 173) does not establish that r 23(c)(2) goes no further than complying with the minimum constitutional standard mandated by the Due Process Clause.

81                  The scope of the procedural requirements of the Due Process Clause was considered in Mullane v Central Hanover Bank & Trust Co 339 US 306 (1950).  A trust company, which had exclusive control of a common trust fund, sought orders for accounts intended to bind everyone who had an interest in the fund.  The only notice given to beneficiaries was a newspaper advertisement.  It was held that the notice by publication was sufficient as to beneficiaries whose interests or addresses were unknown to the trustee.  However, the notice was held not to comply with the Fourteenth Amendment in relation to those beneficiaries whose whereabouts were known to the trustee.

82                  Jackson J, writing for the Court, observed (at 313) that at a minimum the Due Process Clause required that deprivation of property by adjudication be preceded by “notice and opportunity for hearing appropriate to the nature of the case”.  He elaborated on this general proposition as follows (at 314-315):

“Personal service has not in all circumstances been regarded as indispensable to the process due to residents, and it has more often been held unnecessary as to nonresidents….  No decision constitutes a controlling or even a very illuminating precedent for the case before us.  But a few general principles stand out in the books.

An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.  The notice must be of such nature as reasonably to convey the required information, and it must afford a reasonable time for those interested to make their appearance. But if the due regard for the practicalities and peculiarities of the case these conditions are reasonably met, the constitutional requirements are satisfied….

But when notice is a person’s due, process which is a mere gesture is not due process.  The means employed must be such as one desirous of actually informing the absentee might reasonably adopt to accomplish it.  The reasonableness and hence the constitutional validity of any chosen method may be defended on the ground that it is in itself reasonably certain to inform those affected, or, where conditions do not reasonably permit such notice, that the form chosen is not substantially less likely to bring home notice than other of the feasible and customary substitutes.”  (Citations omitted.)

83                  In Phillips Petroleum Co v Shutts (above), a class action was commenced in a Kansas state court on behalf of royalty owners.  The class ultimately consisted of 28,000 royalty owners, each of whom was notified of the proceeding by mail, with an explanation of the right to ‘opt out’.  This procedure was held to satisfy the Fourteenth Amendment.  Rehnquist J, speaking for the Court, said this (at 811-812):

“If the forum State wishes to bind an absent plaintiff concerning a claim for money damages or similar relief at law, it must provide minimal procedural due process protection.  The plaintiff must receive notice plus an opportunity to be heard and participate in the litigation, whether in person or through counsel.  The notice must be the best practicable, ‘reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.’…  Additionally, we hold that due process requires at a minimum that an absent plaintiff be provided with an opportunity to remove himself from the class by executing and returning an ‘opt out’ or ‘request for exclusion’ form to the court.”  (Citations omitted.)

A footnote makes it clear that the Court was considering the requirements of the Due Process Clause only in relation to class actions concerning money claims: at 811, n 3.

84                  The concepts of “best practicable notice” and “reasonableness” having “due regard to the practicalities and peculiarities of the case”, referred to in these cases, are not appreciably different from the concepts employed in Part IVA of the Federal Court Act of “reasonably practicable” and “unduly expensive”.  Each is concerned with what is practicable and just having regard to the nature of the particular proceeding and the numbers and identifiability of the group members.  It is not in our view correct to say that provisions in the form of s 33X(2) or s 33Y(5) of the Federal Court Act would necessarily infringe the Due Process Clause of the United States Constitution.

Autonomy

85                  Femcare did not identify the foundation for the proposition that judicial power cannot be exercised in a manner which infringes the “autonomy” of a citizen.  No such principle has been enunciated by the High Court or, for that matter, in any other appellate court in Australia.  Doubtless, there may be circumstances in which legislation that could be said to infringe a person’s autonomy will be held to confer functions on a Chapter III court that are outside the scope of judicial power.  But that result will not follow from the application of a free-standing principle that it is inconsistent with the judicial process for courts to infringe a citizen’s autonomy.  The legislation would be struck down because it confers functions on a court that are inconsistent with the characteristics of judicial power or of the judicial process.

86                  In any event, Femcare’s submission overlooks the provisions in Part IVA of the Federal Court Act that are designed to preserve a group member’s freedom of choice.  It is true that the consent of a person to be a group member in the representative proceeding is not generally required: s 33E(1).  But a group member may opt out of the representative proceeding simply by giving notice at any time prior to the date for opting out fixed by the Court: s 33J(1), (2).  The time limit for opting out of the proceedings may be extended, in accordance with s 33J(3).  Section 33T provides a remedy for a group member who considers that a representative party is not able adequately to represent the interests of the group members.  In those circumstances, the Court may substitute another group member as a representative party.  In view of these provisions, it is not clear why a group member’s autonomy is infringed by his or her being included within the represented group.

87                  Femcare’s submissions also pay insufficient regard to the historical role played by representative proceedings.  In Markt & Co Ltd v Knight Steamship Co Ltd [1910] 2 KB 1021, at 1039, Fletcher Moulton LJ pointed out that in representative proceedings the plaintiff was the self-elected representative of the represented group and did not have to obtain their consent.  As McHugh J pointed out in Carnie at 429, a person could be represented in such proceedings without ever having learned of their existence.  The representative procedure stemming from the practice of the Court of Chancery did not make provision for a represented party to opt out.  Yet it seems never to have been suggested that the representative procedure somehow infringed the autonomy of represented persons.

88                  Nor does it ever seem to have been suggested that the representative procedure involved a departure from accepted principles of standing.  The representative party was accorded standing to raise common questions on behalf of the represented group.  As we have noted, Femcare referred to the observation in the joint judgment in Bateman’s Bay v Aboriginal Community Benefit Fund (above), at 264, that in private law, in general, there is no separation of standing from the elements in a cause of action.  But the same judgment explicitly addressed the relationship between the representative procedure and the notion of standing.  Their Honours said (at 259) that, in considering the development of the law with respect to that sufficiency of interest necessary to support a suit for equitable relief independently of the Attorney-General, two principles upon which the Court of Chancery acted had to be kept in mind.  The first was that all parties materially interested in the subject ought generally to be made parties to the suit, either as plaintiffs or defendants.  The second was that, where there were numerous parties in the same or a common interest, representative orders might be made in the manner discussed by McHugh J in Carnie. 

89                  In short, the Court acknowledged that a representative party had standing to raise common issues on behalf of members of the represented group.  Section 33D of the Federal Court Act is intended to achieve a similar result.  There is, in our view, no substance to Femcare’s implicit attack on the standing provisions contained in s 33D.

Abuse of Process

90                  A court exercising the judicial power of the Commonwealth under Chapter III of the Constitution cannot be required or authorised to proceed in a manner that involves an abuse of process: Nicholas v The Queen (above), at 209, per Gaudron J; at 226, per McHugh J; at 265, per Kirby J.  However, in our view, there is no foundation for Femcare’s submission that Part IVA of the Federal Court Act infringes that principle.

91                  Part IVA expressly preserves the Court’s powers in relation to a proceeding in which no reasonable cause of action is disclosed or that is an abuse of the process of the Court: s 33ZG(b).  As was pointed out by Sackville J in Philip Morris v Nixon at par [122], s 33ZG gives effect to the specific recommendation made by the LRC in par 149 of Grouped Proceedings, that the Court’s general powers to protect against abuse of process should apply to representative proceedings.  The recommendation, in turn, was based on the policy that the Court must leave adequate power to ensure that the representative procedure is not abused or used inappropriately or inefficiently: Grouped Proceedings par 148. 

92                  Moreover, s 33C(1) imposes a criterion that must be satisfied at the commencement of the representative proceeding: Wong v Silkfield Pty Ltd (above), at 380.  Thus the applicants must show, inter alia, that seven or more persons have claims against the same person and that the claims of all those persons give rise to a substantial common issue of law or fact: s 33C(1)(a), (c).  Section 33H requires, inter alia, that the application commencing a representative proceeding, or a supporting document, specify the nature of the claims made on behalf of group members: s 33H(1)(b).

93                  If a respondent is able to establish not merely that there is uncertainty as to whether the claims of all group members will be made out, but that some claims on behalf of group members have not been made in good faith, or otherwise constitute an abuse of the Court’s process, the likelihood is that the threshold requirements of s 33C will not have been satisfied.

REASONING ON ABSENCE OF A “MATTER”

94                  The jurisprudence relating to the constitutional conception of a matter was summarised in the judgments in Abebe v Commonwealth (1999) 162 ALR 1.  Gleeson CJ and McHugh J (who formed part of the majority) said (at 9):

“The jurisprudence of this court makes it clear that federal jurisdiction is limited to deciding ‘matters’.  Central to the notion of a ‘matter’ is the determination of rights, duties, liabilities and obligations in a legal proceeding. In Re Judiciary and Navigation Acts, a majority of this court pointed out that the term ‘matter’ in s 76 did not mean ‘a legal proceeding, but rather the subject matter for determination in a legal proceeding’.  In Stack v Coast Securities (No 9) Pty Ltd, Mason, Brennan and Deane JJ, after referring to this passage, said ‘that a court does not begin to exercise federal jurisdiction until a ‘matter’ within s 75 or s 76 is raised in the proceedings and that the federal jurisdiction then exercised by the court is coextensive with the content of that “matter”’.  Similarly, in South Australia v Victoria, Griffith CJ said that ‘[t]he word “matters” was in 1900 in common use as the widest term to denote controversies which might come before a court of justice’.  The Chief Justice went on to say that the matter ‘must be such that it can be determined upon principles of law’.

A ‘matter’ is therefore ordinarily concerned with ‘some immediate right, duty or liability to be established by the determination of the court’.  This accords with the statement of Mason, Wilson, Brennan, Deane and Dawson JJ in Attorney-General (NSW) v Commonwealth Savings Bank of Australia ‘that “matter” is wide enough to include any subject matter for determination in legal proceedings, whether the proceedings be proceedings at first instance or proceedings by way of an appeal’…. [T]he determination of rights, duties and liabilities by reference to legal rules, principles or standards in curial proceedings is at the heart of the notion of a ‘matter’ for constitutional purposes.  It follows that the parliament is acting within the power conferred by s 77 of the Constitution whenever it authorises a federal or State court to determine, by reference to a legal rule, principle or standard, the rights, duties or liabilities of litigants which arise out of controversies that fall within any of the descriptions in paras (i)-(v) of s 75 or paras (i)-(iv) of s 76 of the Constitution.” (Footnotes omitted.)

95                  Gummow and Hayne JJ (who dissented) expressed the principles in general terms (at 46):

“Since the decision in Re Judiciary and Navigation Acts, it has been accepted that there can be no matter ‘unless there is some immediate right, duty or liability to be established by the determination of the Court’.  And it has long been recognised that an important aspect of federal judicial power is that, by its exercise, a controversy between the parties about some immediate right, duty or liability is quelled.  In Huddart, Parker & Co Pty Ltd v Moorehead, Griffith CJ said that:

            the words ‘judicial power’ as used in s 71 of the Constitution mean the power which every sovereign authority must of necessity have to decide controversies between its subjects, or between itself and its subjects, whether the rights relate to life, liberty or property.

And as the majority in Fencott v Muller said:

            The unique and essential function of the judicial power is the quelling of such controversies [that is, controversies of the kind described by Griffith CJ in Huddart Parker] by ascertainment of the facts, by application of the law and by exercise, where appropriate, of judicial discretion.

The contention that Pt 8 of the [Migration] Act confers jurisdiction on the Federal Court with respect to a ‘matter’ requires, in this case, consideration of three questions: first, what is the subject matter for determination in a proceeding; secondly, what right, duty or liability is to be established; thirdly, what is the controversy between the parties?  But although each may be considered separately, all are related aspects of the single question: is there a ‘matter’?” (Footnotes omitted.)

96                  The difficulty is not stating the principles, but in applying them to particular circumstances.  Femcare’s submissions read into the notion of “controversy” a requirement that the parties to the controversy are conscious that they are in dispute.  But even if that step is correct, it leaves open the question of whose “consciousness” is important.  In the context of a representative proceeding, it is necessary to take account of s 33D of the Federal Court Act,which confers standing on an applicant to commence and continue a representative proceeding on behalf of members of the represented group.

97                  There is nothing unusual about the judicial power being exercised in relation to controversies generated by one person on behalf of another.  An obvious example is a person under disability who can make claims or carry on proceedings only through a tutor, next friend or guardian: see, for example, Federal Court Rules, O 43 rr 1, 5; Supreme Court Rules (NSW) Part 63 rr 2,3.  More to the point for present purposes is the fact that, as we have seen, the representative procedure developed in the Court of Chancery accorded the representative party standing to make claims on behalf of members of the represented group.  Section 33D merely continues and adapts the same long-standing principle.  If consciousness of a dispute is a necessary prerequisite for the exercise of judicial power, there is no reason why the dispute cannot be created by the conscious actions of a person who is authorised by statute to seek relief on behalf of the claimant.

98                  Once ss 33D is taken into account, there is no difficulty in a representative proceeding in answering the three questions posed by Gummow and Hayne JJ in Abebe v Commonwealth (above).  It must be remembered that the proceeding will not be properly constituted unless the threshold requirements specified in ss 33C and 33H have been satisfied.  If they are satisfied, and if the claim is properly pleaded in accordance with the principles discussed by Sackville J in Philip Morris v Nixon, at pars [123]-[137], the Court and the parties will be able to identify

·        the subject matter for determination in the proceeding;

·        what right, duty or liability is sought to be established; and

·        the nature of the controversy between the parties.

99                  In particular, the controversy will be that which is asserted and pleaded or otherwise particularised by the representative party on his or her own behalf and on behalf of the members of the represented group.  It may be that the asserted claim will fail.  It may be that a group member will opt out of the proceeding, thereby terminating the authority conferred on the representative party by s 33D.  But until that occurs, there will be a controversy to be quelled.

100               We have thus far approached the issue of whether jurisdiction is conferred on the Court in respect of a “matter” on the assumption that Femcare is correct to contend that there can be no matter unless the parties are conscious of a dispute between them.  It should not be thought, however, that we endorse that contention.  As Kirby J noted recently in Truth About Motorways Pty Limited v Macquarie Infrastructure Investment Management Limited [2000] HCA 11 at par [56], “[it] is undesirable that the word [matter] should be subjected to excessive refinement or submitted to inappropriate elaboration leading to unnecessary constitutional rigidity”.  See also per Callinan J at pars [209] & [210].

101               It is true that there is a distinction between a “matter” and the legal proceedings in which the matter might be determined: see Hooper v Kirella Pty Ltd (1999) 167 ALR 358, at 369-370 and cases cited there.  It is also true that the essence of a matter in the constitutional sense is a justiciable controversy: Fencott v Muller (1983) 152 CLR 570, at 608.  But there can be a controversy, such as to enliven the exercise of judicial power under Chapter III of the Constitution, without the parties “consciously” being in dispute.

102               One example is where an action is brought by or against a disabled person who is unable to form a view about the dispute.  This, however, is not the only illustration.  Thus, a respondent may be served by substituted service and orders made in the proceeding in the regular exercise of judicial power, even though the respondent does not actually learn of the proceeding: Watt v Barnett (1878) 3 QBD 183 (aspects of this decision were disapproved of in Laurie v Carroll (1958) 98 CLR 310, at 325-327, per Dixon CJ, Williams and Webb JJ, but the general proposition was not challenged).

103               Similarly, the making of a consent order by a Judge is an exercise of the judicial power of the Commonwealth: Harris v Caladine (above), at 101, per Brennan J (dissenting, but not on this question).  This is so even where the respondent may be delighted to consent to a judgment in the terms sought by the applicant because of collateral advantages thought to flow from the cause of action merging in the judgment: see Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502.

104               For these reasons, we conclude that a representative proceeding, if properly constituted in accordance with Part IVA of the Federal Court Act, does not fall outside the concept of a “matter” in Chapter III of the Constitution.

REASONING ON HYPOTHETICAL QUESTIONS

105               Femcare’s contentions ignore the requirements of s 33C.  A proceeding will not be within Part IVA unless the claims that are asserted give rise to a substantial common issue of law or fact.  If that prerequisite is not satisfied, the question of a proceeding under Part IVA cannot arise.  In order to ascertain whether the prerequisite is satisfied, it will be necessary for the Court to undertake a careful analysis of the matters included, pursuant to s 33H, in an application or other document filed in support of the application in order to isolate the common questions of fact or law.  The determination of those questions, properly formulated, is not the determination of a hypothetical question.  It is, ex hypothesi, a determination of a true question that arises in respect of each group member’s claim.

106               The determination of some questions separately from other questions has for some time been authorised by provisions such as Order 29 of the Federal Court Rules.  Order 29 r 2(a) provides that the Court may make orders for the decision of any question separately from any other question, whether before, at or after any trial or any further trial in a proceeding.  The term “question” in that context includes any question or issue in any proceeding, whether of fact or law.  While the formulation of separate questions is fraught with difficulty, it is not impossible, in an appropriate case, to formulate a question that can be decided separately from other questions in a proceeding.

107               If it is not possible to formulate a satisfactory question that arises for all group members, then either s 33C has not been satisfied in the first place, or the proceeding should, pursuant to s 33N, no longer continue under Part IVA.  In other words, Part IVA is not to be construed as authorising the determination of a hypothetical question just because there may be difficulties, in any given proceeding, in determining whether there are indeed questions that are common to the claims of all group members.  There is no substance in this submission of Femcare.

REASONING ON ACQUISITION OF PROPERTY

108               It may well be that the conferring on one person of the right to use property of another person, whether real property or chattels, involves an acquisition of property.  Such an acquisition is not an acquisition of ownership or dominium.  Rather, it is the creation of a ius in re aliena.  That is to say, it is the creation of a proprietary right in respect of property owned by another.  Thus, a leasehold interest, and a life estate are both property.  The carving out of the fee simple, or unencumbered ownership, of such a right and conferring that limited right on a third party is clearly capable of being an acquisition of property.

109               However, a chose in action, or an obligation, is not something that is capable of “use”.  It may be enforced.  Nevertheless, absent any assignment, where enforcement of a chose in action or obligation is for the benefit of the owner of the chose in action or obligation, it is an unwarranted extension of language to suggest that a person who is authorised to enforce the chose in action or obligation on behalf of another person has the “use” of that obligation.  The submission that there is an alienation of an interest in a chose in action by the grant of authority to enforce that chose in action in litigation in a court on behalf of the holder is completely without substance.

CONCLUSION

110               It follows from the above that Lehane J was correct.  Accordingly, the present appeal from the orders made by his Honour on 6 October 1999, refusing declarations of invalidity on the grounds outlined above, should be dismissed with costs.

Associate:

Dated:              19 April 2000