FEDERAL COURT OF AUSTRALIA

Batten v CTMS Ltd [2000] FCA 915

PRACTICE AND PROCEDURE  -  validity of representative proceedings  - where group members do not make identical claims against all respondents  -  absence of single transaction or series of transactions  -  analysis of proceedings as comprising distinct applications by separate groups  -  availability of leave to join applications

Federal Court of Australia Act 1976 (Cth)  ss 33C, 33N, 33ZG

Philip Morris (Australia) Ltd v. Nixon [2000] FCA 229  discussed

Batten v CTMS Ltd [1999] FCA 1576 cited

Wong v Silkfield Pty Ltd (1999) 165 ALR 373 cited

Bishop v. Bridgelands Securities (1990) 25 FCR 311 cited

ROBERT GEORGE BATTEN and ANTHONY WAYNE GRAHAME V CTMS LTD, FYNWEST PTY LTD, MICHAEL WELLS, PETER KILFOYLE, ALAN WILSON, PATRICK STEVEDORES NO 1 PTY LTD, PATRICK STEVEDORES NO 2 PTY LTD, PATRICK STEVEDORES NO 3 PTY LTD, NATIONAL STEVEDORING TASMANIA PTY LTD, PATRICK STEVEDORES OPERATIONS NO 2 PTY LTD, LANG CORPORATION LIMITED, STRANG PATRICK HOLDINGS PTY LTD NATIONAL STEVEDORING HOLDINGS PTY LTD, PIZEN PTY LTD, INTRAVEST PTY LTD, CUMBERLANE HOLDINGS PTY LTD, EQUITIUS PTY LTD, JAMISON EQUITY LIMITED, SERENADE PTY LTD, SCARABUS PTY LTD, PATRICK STEVEDORES HOLDINGS PTY LTD, PATRICK STEVEDORES OPERATIONS PTY LTD, CHRISTOPHER D’ARCY CORRIGAN, WILLIAM CLAYTON, ROBERT DUNN, PCS OPERATIONS PTY LTD, PCS RESOURCES PTY LTD, P & C STEVEDORES PTY LTD, DONALD GORDON MCGOUCHIE, PAUL XAVIER HOULIHAN and JAMES WILLIAM FERGUSON

KIEFEL J

7 JULY 2000

BRISBANE

THE COURT ORDERS THAT:

1.         The applicants have leave nunc pro tunc to join each other and each of the respondents to the proceedings.

2.         The motion filed on 23 February 2000 and the amended notice of motion filed on 11 May 2000 be dismissed.

3.         The applicants deliver any further amended Statement of Claim on or before 18 August 2000.

4.         The matter be listed for directions at 9.30am on Thursday, 7 September 2000.

5.         The costs of the application be the parties’ costs in the proceedings.

REASONS FOR JUDGMENT

1                     Two of the ‘sets’ of respondents have brought motions to strike out or stay the applicants’ proceedings as against them - the ‘Lang respondents’ (also referred to as the ‘Patrick companies and their directors - the tenth to twenty-fifth respondents) and the ‘PCS respondents’ (the PCS companies and their directors - the twenty-sixth, twenty-seventh, twenty-ninth, and the thirty-first to thirty-third respondents).  The proceedings as against the sixth to ninth respondents, companies under a Deed of Company Arrangement have been stayed). The bases for the orders sought were deficiencies in the Third Further Amended Statement of Claim and the applicants’ inability to constitute this proceeding as a representative proceeding under Part IVA Federal Court of Australia Act 1976 (“FCA”), following the decision of a Full Court of this Court in Philip Morris (Australia) Ltd v Nixon [2000] FCA 229.

2                     At the hearing of the motions, Senior Counsel for the applicants advised that a number of further concessions were to be made by them.  The result would be that a further amended statement or statements of claim would be necessary, depending on the outcome of the attack mounted upon the proceedings as truly representative.  For the Lang and PCS respondents, it was properly conceded that the applicants could not yet be said to be debarred from seeking the Court’s leave to further amend, although they reserved their right to maintain any objection to the grant of that leave on other grounds.  In any event, the only matter raised by the motions which presently requires determination is whether the proceedings are proper to be brought as representative proceedings.

3                     The Statement of Claim presently pleaded refers to two groups.  The first applicant sues on his own behalf and on behalf of the persons called the ‘Dubai group’; the second applicant on behalf of the ‘Webb Dock group’.  I have previously outlined the action, when I dealt with motions to strike out brought on behalf of other respondents:  [1999] FCA 1576.  The first-mentioned group were persons who were recruited to be trained in Dubai as non-union stevedoring labour following representations made to them, to which I shall shortly refer.  They largely comprise persons having a connexion with the armed forces.  The second group were later recruited following a series of representations and were to be trained at Webb Dock, Melbourne.  It is of some importance to the arguments that not all the members of the first group are alleged to be members of the second group.  The history of the matter, as pleaded, is that after the existence of the Dubai group became public, there was an agreement reached amongst some of the respondents that employment would be terminated and other employment with the PCS companies offered - as it was to the other, additional, recruits making up the Webb Dock group.  Not all of the Dubai group members took up the second invitation to employment.

4                     The first applicant’s claims and that of each of the members of the Dubai group, are:

§             Against CTMS or Fynwest as the representors; and

§             Against Wells, Kilfoyle and Wilson, directors or other agents of CTMS or Fynwest, under the provisions for extended liability (s 75B Trade Practices Act 1974);

§             Against the Lang or Patrick companies and the three directors - Corrigan, Clayton and Dunn, under the extended liability provisions.

The applicability of s 75B to the facts of the case and the method of calculating damages are matters which may remain in contention, but it is not necessary to address them now.  Whilst the amount may differ, the loss and damage is said to have been brought about by the actions of those respondents. 

5                     The case against the Patrick companies and their directors is that they knew that the representations were intended to be made, that they were then made and they were false or misleading and that the Dubai group had no means of ascertaining that.  A reference to Schedule C to the pleading discloses that the representations were made by different representors and on different occasions, although they are all attributed to the directors of the companies CTMS or Fynwest. 

6                     The actions taken by the group members as a result of the representations, by reference to Schedules D1, D2, E, E1, E2, F1 and F2, differs.  Some resigned their employment with the Army; others their other employment; it differed because of their individual circumstances when they received the representations.

7                     Additionally, there is a claim against Fynwest and perhaps extending to Wells, Kilfoyle and Corrigan (par 60) for breach (or perhaps inducing breach) of the Dubai employment agreements arising out of those respondents agreement that Fynwest would terminate the employment and either the Patrick or PCS companies would offer work to the Dubai group, and others.  It is not apparent that respondents other than those respondents (the second, third, fourth and twenty-third respondents) are the subject of this claim.  Other conduct alleged on the part of the PCS companies and their directors (par 66-69) appears to be pleaded in aid of the allegations that the later representations to the Webb Dock group were false.  It is not entirely clear.

8                     Similarly, the claims made by the Webb Dock group are:

§             Against the PCS companies and the directors as the representors, or those on behalf of whom they were made.

§             Against the PCS directors and against the Patrick companies and those directors under s 75B.

§             Against the Patrick companies, Corrigan, the PCS companies and those directors, for breach of the employment agreements.

Summary - Claims against Respondents

9                     The first applicant and the other Dubai group members bring claims against all respondents except for the PCS companies and their directors.  Of the respondents who are sued, not all are subject to the claim in contract.  A similar position maintains with respect to the second applicant - the Webb Dock group - the respondents excepted from the claims are CTMS, Fynwest and the directors Wells, Kilfoyle and Wilson.

The Law

10                  Section 33C(1) FCA provides:

“ 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.”

The focus here is upon paragraph (a).

11                  Senior Counsel for the applicants also referred to s 33ZG(c)(iii) in the same Part, which provides:

“Except as otherwise provided by this Part, nothing in this Part affects:

            …

  (c)  the operation of any law relating to:

   …

     (iii) joinder of parties …”;

and then to Order 6 rule 2 Federal Court Rules:

“ Two or more persons may be joined as applicants or respondents in any proceeding -

(a)  where -

       (i)    if a separate proceeding were brought by or against each of them, as the case may be, some common question of law or of fact would arise in all the proceedings; and

       (ii)   all rights to relief claimed in the proceeding (whether they are joint, several or alternative) are in respect of or arise out of the same transaction or series of transactions; or

(b)  where the Court gives leave to do so.”

The Contentions

12                  The respondents submitted that the proceeding is not properly constituted under Part IVA FCA because, as the Full Court held in the Philip Morris case, it is necessary that it be alleged that each applicant and group member has a claim against each respondent.  In these proceedings, it may be seen that the 1^st applicant (and the group members he represents) does not have a claim against the PCS companies or their directors, and the 2^nd applicant and his group) has none against the 1^st to 5^th respondents.  The proceedings cannot therefore be continued as representative proceedings.  Senior counsel for the PCS companies and directors did not pursue an alternative submission, that the Court should order the proceeding not to continue as a representative proceeding because it was in the interests of justice to do so (s 33N FCA).

13                  In the Philip Morris case there were three sets of respondents to the representative proceedings.  They were manufacturers and distributors of cigarettes in Australia.  The named applicants and the group members claimed to have contracted a smoking-related disease as a consequence of the respondents’ conduct.  Of significance on the appeal was the submission made by Philip Morris that s 33C(1)(a) had not been complied with because some applicants may not have claims against some of the respondents by reason that they did not smoke the cigarettes manufactured or distributed by that respondent.  The primary judge however described the applicants’ case as one ‘painted on a larger canvas’ and involving a course of conduct by the three sets of respondents, individually and collectively, designed to create a false community perception about the risks associated with cigarette smoking.

14                  It was accepted by the applicants on the appeal that to satisfy the “threshold requirements” of s 33C(1) FCA (Wong v Silkfield Pty Ltd (1999) 165 ALR 373, 381), it was necessary to plead that the applicant and every represented party had a claim against every respondent.  In the view of Sackville J (with whom Spender and Hill JJ agreed), s 33C(1)(a) implemented the Australian Law Reform Commission’s recommendation that group proceedings should only be available when the applicant and group members seek relief against the same respondent.  It did not envisage that the procedure should be employed “to bring a proceeding against more than one respondent, in circumstances where some members of the group make the claim against one respondent only and others make a claim against another respondent”.  As his Honour later observed, if there was more than one respondent, it would be necessary for there to be a claim by the group members against all of them.  His Honour went on:

“It follows that s 33C(1)(a) is not satisfied if some applicants and group members have claims against one respondent (or group of respondents) while other applicants and group members have claims against another respondent (or group of respondents).  The requirement in s 33C(1)(b), that the claims of all group members are in respect of or arise out of the same, similar or related circumstances, is a necessary but not sufficient condition for the commencement of representative proceedings.  Of course, if there are two sets of claims against two sets of respondents, it may well be that each can be the subject of representative proceedings.  It may even be that directions can be made for them to be heard together:  Ryan v Great Lakes Council (1997) 149 ALR 45, at 48, per Wilcox J.  But they cannot both be the subject of the same representative proceedings.”

15                  If these proceedings were viewed as one action, it is clear that s 33C(1)(a) is not satisfied.  In reality, however, it comprises two actions brought by two different applicants on behalf of two distinct groups.  The companies and persons they are brought against are not identical.  It is also of importance, as Philip Morris confirms, that there be at least one “substantial common issue of law or fact” in each group member’s claim for s 33C(1)(c) to be satisfied.  The pleading is deficient in that respect, although Senior Counsel for the applicants submitted that in each of the actions the common question was whether the representations made (the ‘Dubai’ and the ‘Webb Dock’ representations) contravened s 52 Trade Practices Act.

16                  The applicants accepted, and indeed relied upon, the fact that the proceedings involved two separate claims.  They submitted that the proceedings were competent given the provisions of O 6 r 2 Federal Court Rules relating to the joinder of parties and of actions which, by reason of  s 33ZG(c)(iii), is not affected by the provisions relating to representative proceedings.  The judgment of Sackville J in Philip Morris at least recognises that there may be two sets of claims against two sets of respondents, each of which can be the subject of representative proceedings.  Whilst his Honour did not deal expressly with the rules relating to joinder of parties and causes, his Honour was of the view that the two sets of claims could not be regarded as one or a composite proceeding.

17                  In my view, the provisions of O 6 r 2(a) do not assist the applicants.  The two applicants and their group members claims do not arise out of the “same transaction” nor a series of transactions.  There is no one transaction to which they were all parties, nor a claim by any one of them to which all respondents were a party: see Payne v Young (1980) 145 CLR 609, Barwick CJ.  Mason J in that case referred with approval to the statement of the effect of the equivalent rule in Stroud v Lawson [1898] 2 QB 44, 54-55.  It is not necessary that the whole of the transaction be involved in each of the causes of action joined.  The rule does extend to a case where there are a series of transactions in respect of which one plaintiff or applicant was interested up to one point, and others not only to that point but beyond - the entire  transaction or series of transactions from beginning to end.  The claims of all applicants must arise out of the same transaction or series of transactions: Bishop v Bridgelands Securities (1990) 25 FCR 311, 314.  It may also be observed that the individual claims in what are effectively two separate actions might not be joined under this rule, but it is not necessary to further consider that question since I do not understand their separate constitution as representative proceedings to be under attack.

18                  That leaves the question whether it is appropriate to grant leave to join the parties under O 6 r 2(b).  In my view it is appropriate to do so. Considerations such as costs, delay and unfairness are relevant to the exercise of this discretion (Bishop v Bridges, 314).  Whilst the link, or overlap, between the two sets of claims presently comprises what I regard as a dubious claim for breach of, or inducement to breach, the first (the Dubai) contract, in order to offer the second contract, or at least one which is not fully pleaded so far as concerns what those applicants did in consequence of that breach, the matter is pleaded as something of a continuum.  It does not seem to me that the respondents are in any way disadvantaged by the claims being pleaded together, although it is to be hoped that the applicants will address the deficiencies which remain in them and refine the claims to their true limits.  At that point the matter could more swiftly be moved towards a hearing.  Nothing would seem to me to be gained by separating the claims at this stage and further costs would be unnecessarily incurred.

19                  In granting leave I have not put out of question the prospect that the matters be separated at hearing, if that appears to be the more efficient course - that is to say that the Dubai claim be heard prior to the Webb Dock claim.  At present I see some merit in it, but I have not had the benefit of submissions on the matter.

20                  I will order that there be liberty for each of the applicants and the remaining respondents to be joined in the procedings.  In view of the applicants’ relative success on this aspect of the motions, but their concessions as to the need for further amendment, I propose to order that the costs of the motions be the parties’ costs in the proceedings.   I will, however, allow the parties seven days to submit written argument to the contrary, should they wish to do so.  In otherwise dismissing the motions, I do not foreclose the respondents from making the same submissions with respect to the following statement of claim.  There will be a direction that the applicants deliver their further amended Statement of Claim within a specified time, and I will discuss that and any further necessary directions with the parties’ legal representatives.

Associate:

Dated:              7 July 2000