FEDERAL COURT OF AUSTRALIA

Williams v FAI Home Security Pty Ltd (No 3) [2000] FCA 1438

REPRESENTATIVE PROCEEDING – a respondent made public statements about status of proceeding and solicitors – statements inaccurate – effect of statements – whether publication of a correction notice necessary – whether publication of opt out notice would remove need for correction notice.

REPRESENTATIVE PROCEEDING – direct communication with group members by a respondent – effect of communication – whether injunction warranted. 

Federal Court of Australia Act 1976 (Cth):  Pt IVA, s 33X, s 33Y

State of Victoria v The Australian Building Construction Employees’ and Builders Labourers’ Federation (1982) 152 CLR 25 referred to

TIMOTHY WILLIAMS and SUSAN WILLIAMS v FAI HOME SECURITY PTY LTD & ANOR (No 3)

V 383 of 1999

GOLDBERG J

13 OCTOBER 2000

MELBOURNE

REASONS FOR JUDGMENT

1                     By a notice of motion filed 26 July 2000 the applicants sought an order that the respondents be ordered to send a “Correction Notice” to persons who received documents headed “A FAIR GO”, published and distributed by the first respondent and that they be restrained from communicating with group members in relation to the proceeding.  They also sought other injunctive and procedural relief.  In order to understand how the issue arises it is necessary to rehearse some of the events which have occurred since this proceeding commenced.

2                     On 9 July 1999 the applicants filed an application, bringing a proceeding pursuant to Pt IVA of the Federal Court of Australia Act 1976 (Cth) (“the Act”), as a representative party.  The group members to whom the proceeding relates are persons who on or after 1 July 1993 purchased home alarm systems known as Security Guard I and Security Guard II from the first respondent (“FAI Home Security”), who entered into loan contracts with the second respondent (“FAI Finance”) to finance the purchase of the systems and to whom representations in respect of the systems were alleged to have been made and who acted on the faith of the representations, entered into the sales contracts and loan contracts and thereby suffered loss and damage.  The application claimed relief by way of damages and ancillary relief against the respondents on the grounds set out in the statement of claim, which was filed at the same time as the application. It was alleged in the statement of claim that FAI Home Security established a network of distributors to sell the systems and that the distributors made representations that the systems were the best on the market, the latest technology and for sale at much less than comparable systems.  It was alleged that the representations were made by the distributors as agents for the respondents and that the representations were false. 

3                     On 16 November 1999 the applicants filed an amended application and amended statement of claim in which they alleged that it was represented to all group members that the systems were the latest technology available and that it was represented to some of the group members that the systems were the best on the market and for sale at a price much less than comparable systems.  On 19 November 1999 the respondents filed a motion seeking an order that the amended application and amended statement of claim be struck out or alternatively that certain paragraphs of the amended statement of claim be struck out.  On 30 November 1999 the respondents filed an amended notice of motion seeking an order that the amended application and amended statement of claim be struck out and the proceeding be dismissed or alternatively that certain paragraphs of the amended statement of claim be struck out.  The amended notice of motion came on for hearing on 14 December 1999 when I ordered that:

“1.       The applicants have leave to file and serve a further amended statement of claim by 4.00 pm on 22 December 1999.

2.         The applicants file and serve by 4.00 pm on 22 December 1999 further and better particulars of paras 9, 11, 16 and 18 of the amended statement of claim or of such paragraphs as are equivalent paragraphs in any further amended statement of claim.

3.         The respondents file and serve an amended defence by 4.00 pm on 31 January 2000.

4.         The directions hearing be adjourned to 2 February 2000.

5.         Any costs thrown away by the filing and service of a further amended statement of claim be reserved.

6.         The applicants pay the respondents’ costs of the amended notice of motion filed 30 November 1999.”

4                     On 22 December 1999 the applicants filed and served a further amended statement of claim and further and better particulars of the statement of claim.  On 14 February 2000 the respondents filed a motion seeking orders that certain paragraphs in the further amended statement of claim be struck out and that further and better particulars of certain other paragraphs be provided.  On 7 June 2000 I ordered, inter alia, that the applicants have leave to deliver an amended statement of claim on or before 19 June 2000.  That statement of claim was delivered on 22 June 2000 and the respondents delivered their defences to it on 2 August 2000. 

5                     At a directions hearing on 2 August 2000 the form of the proposed “opt out” notice for the purpose of complying with s 33X of the Act was raised and the form of that notice was substantially settled.  At a further hearing on 3 October 2000 I approved the form and content of the notice to be given to group members pursuant to s 33X of the Act and made orders providing for notice to be given to group members by way of publication in a number of daily newspapers throughout Australia on 14 and 21 November 2000.  Group members will have the right to opt out of the proceeding before 20 December 2000. 

The “A FAIR GO” documents

6                     I now turn to the genesis of the circumstances which have led to the applicants’ contention that a correction notice should be sent to the persons who received the “A FAIR GO” documents. On 7 February 2000 at 6.30 pm the National Nine Television Network broadcast its “A Current Affair” program which included a segment relating to the manner in which FAI Home Security had marketed and sold its alarm systems.  It was also said in the program that the alarm systems were of poor quality and were ineffective.  It was claimed that the price of the alarm systems was exorbitant.  Put shortly, the program was critical of the actions of FAI Home Security and the alarm systems.  There was also a reference to the existence of this proceeding and a statement made by FAI Home Security that it will challenge the proceeding.  A follow‑up segment was broadcast on “A Current Affair” on 10 February 2000 in which four purchasers of the alarm systems complained about their effectiveness. 

7                     In the first segment a member of the firm of solicitors acting for the applicants in this proceeding said:

“The members of the class are ordinary Australians who have purchased FAI Security Guard home alarms in good faith.

…

Well it’s a very important case for consumers.  A hundred and fifty thousand devices of this type were sold throughout Australia and New Zealand.  It’s a big case.”

8                     As a result of these television programs FAI Home Security prepared two documents.  The first document is one page printed on both sides of the page.  On one side there is a letter from Dawn Fraser AO, MBE dated 15 February 2000.  It is not addressed to any particular person and it bears the FAI Home Security logo in the following form:

The letter referred to the “A Current Affair” programs, was supportive of FAI Home Security and urged the recipient of the letter:

“to give your support to Brad Cooper and FAI Home Security in the future as I do.”

Apparently Brad Cooper is the chief executive officer of FAI Home Security.

9                     On the other side of the page there appears the following:

A FAIR GO

RECENTLY OUR COMPANY WAS PORTRAYED AS SELLING INFERIOR SECURITY SYSTEMS

A CURRENT AFFAIRS (‘ACA’) TELEVISION PROGRAM ATTACKED OUR INTEGRITY, CAUSING UNDUE CONCERN TO MANY OF OUR CUSTOMERS

It is only par 7 which is relevant for present purposes. 

10                  I do not know the manner in which, or the extent to which, this document was distributed by or on behalf of FAI Home Security.  I use the expression “on behalf of” because the letter from Dawn Fraser is on the letterhead of “Authorised Area Distributor for FAI HOME SECURITY” with a Mildura address and Mildura telephone and facsimile numbers.  The applicants’ solicitors were provided with a copy of the document on 2 March 2000 by a representative of the Mallee Tenancy and Consumer Advice Service in Mildura who informed the solicitors that the document was being distributed to persons with FAI Home Security alarms in the Mildura region.  Two group members living in Mildura told the applicants’ solicitors that they had received a copy of the document.

11                  Another group member received a different version of the document attached to a letter from FAI Home Security on its North Sydney letterhead addressed to the group member personally.  The letter referred to the group member’s enquiry concerning the “A Current Affair” program.  It included the letter from Dawn Fraser and enclosed a summary of what it said “was reported and more importantly what wasn’t reported”.  The summary was in the same format and terms as the first document save for par 7 which was in the following terms:

The statement that the Federal Court ordered Maurice Blackburn to replead the class action as it was too vague replaced the statement that the Federal Court struck out the first statement of claim.

12                  I do not know how many persons were sent a letter in a similar form or who were sent or given a copy of the summary.

13                  The concern of the applicants and their solicitors is that there are incorrect statements in these two documents which may persuade or influence group members to opt out of the proceeding on an erroneous basis.  The incorrect statements are found in the box numbered “7” in each document.  The Federal Court did not strike out the first statement of claim in this proceeding in November 1999 or at any other time nor was FAI Home Security awarded costs against Maurice Blackburn solicitors:  see the order made on 14 December 1999 in par 3 above.  This is not disputed by the respondents.  It is also not disputed that it was incorrect to say that Maurice Blackburn utilises the American system of engaging clients on a contingency fee basis, that is that they share a percentage of any judgment.  The group members who have signed fee and retainer agreements with the applicants’ solicitors have done so on what is expressed to be a “no‑win no‑charge” basis.  These group members will not be charged professional costs unless there is a successful outcome for them in the proceeding.  In those circumstances the fee and retainer agreements make provision for the calculation of the fees to be paid to the applicants’ solicitors on an hourly scale with an increase of the hourly rates of up to 25% for conducting the case on a no‑win no‑charge basis.  Such a fee basis is allowed pursuant to the provisions of the Legal Practice Act 1996 (Vic). 

14                  The applicants submitted that the erroneous statements in the “A FAIR GO” documents might have a tendency to induce in the mind of a recipient a belief that as the first statement of claim was struck out and costs were awarded against the solicitors either there is no substance in the proceeding or the solicitors are not conducting the case properly.  The applicants submitted that a statement that costs had been awarded against the solicitors could suggest that the solicitors had incurred the opprobrium of the Court either by reason of incompetence or misconduct.

15                  They also submitted that the incorrect statement as to the solicitors using the American contingency fee basis is calculated to evoke the repugnancy to American contingency fee litigation which is widespread in Australia and was an assertion of an unlawful champertous agreement.

16                  The applicants submitted that it was reasonable to conclude that a significant number of the potential group members could conclude the proceeding either has or is about to conclude or is without substance and that it would it be wise to opt out in order to avoid any possible liability as to costs and that the solicitors were incompetent or misconducted themselves or had very high fees.  In short it was said that there was a real risk that the persons who received the documents might not approach the decision whether to opt out of the proceeding with a clear mind.

17                  The respondents submitted that the sending of a correction notice was unnecessary.  FAI Home Security is prepared to undertake to the Court not to distribute further the documents complained of or otherwise provide them to any person (other than to their legal advisers or as may otherwise be required).  The respondents contended that because an opt out notice will shortly be published in daily newspapers and thereby brought to the attention of group members, it would be quite apparent to group members that the proceeding was going ahead and any inference or impression created by the incorrect statements in the two documents would be thereby dispelled.  The respondents acknowledged and accepted that the statements complained of were incorrect but submitted that the lapse of time between the making of the statements and the publication of the opt out notice was such that the opt out notice made it unnecessary for any correction notice to be sent.

18                  The respondents rejected the applicants’ contention that the documents tended to persuade recipients to exercise their right to opt out of the proceeding.  The respondents said that it was a disingenuous contention because of the lapse of almost five months between the time the applicants’ solicitors became aware of the documents and the time the notice of motion seeking an order for the sending of the correction notice was filed and because of the fact that the time for the opt out procedure had not yet arrived.

19                  The submissions of the respondents would have some force if the recipients of the two documents, and the group members to whom the opt out notice will be addressed, were either members of the legal profession or otherwise have immediate and easy access to legal advice.  To such persons the opt out notice would make the position clear.  However, I do not consider that the same situation obtains in relation to persons without legal training or legal experience or immediate and easy access to legal advice.  Much language used by the legal profession and in legal and court documents is not easily understood by non‑lawyers.  It would be apparent to a lawyer that if a first statement of claim was struck out, in all probability leave would have been given to file a further statement of claim.  Such an understanding would not necessarily be held by a non‑lawyer.  A lawyer would understand, in the context of an order striking out a statement of claim, that an order for costs would not necessarily carry with it any suggestion of improper conduct although the statement that costs are awarded against solicitors, rather than a party, in the context of a strike out application does carry with it an inference of incompetent conduct. 

20                  I consider a statement that a statement of claim has been struck out, without explanation, carries a negative message to a non‑lawyer and one which is calculated to induce a negative or pessimistic view of the proceeding.  When it is coupled with a statement that costs have been awarded against solicitors it carries the further message either that the proceeding is at an end or that there is no substance in it and that the solicitors have in some way been neglectful or have not conducted the case properly.  The negative nature of the message is exacerbated by reference to the solicitors being engaged on a contingency fee basis.  There may be differing views as to the value or justification of such a basis for charging fees, on which matter I express no view.  The fact is that such a fee basis is illegal: see, for example, s 99 of the Legal Practice Act 1996 (Vic).  That incorrect statement, in context, is calculated to engender antipathy towards the proceeding, certainly in the minds of non‑lawyers.

21                  The context in which the statements made in the “A FAIR GO” documents appear lead me to the conclusion that they were calculated and intended to be persuasive and to carry significance for the recipients of them.  The incorrect statements placed opposite the words:

“The program referred to a class action suit by Maurice Blackburn solicitors”

carry a clear message which is calculated to influence the recipient either not to participate in the class action or to shy away from it.  I do not consider that the lapse of time since the dissemination of those documents will necessarily have dissipated that message.  Although the opt out notice makes it clear that the proceeding is continuing, recipients of the “A FAIR GO” documents will still be left with the negative incorrect statements and message uncorrected.  There will therefore be the potential for confusion as to the basis on which the proceeding is continuing.  The second document refers to a repleading of the statement of claim rather than it being struck out, but it contains the same references as the first document in relation to the order for costs and the charging of a contingency fee.  There will also be left, uncorrected, the negative impression created by the incorrect statements as to the order for costs and the charging of a contingency fee.

22                  The respondents submitted that it was apparent from the segments on “A Current Affair” and the documents that the respective interests of the group members and the respondents are the subject of vigorous presentation in the marketplace and that both sets of interests are complaining of incorrect statements.  That may be an overstatement of the activities of the applicants and the group members but, in my view, it is not a relevant consideration to take into account when complaint is made of incorrect statements.  Parties are entitled, at their peril, to engage in public or extra‑curial dialogue about pending legal proceedings.  However, once incorrect statements are made particularly in relation to representative proceedings the Court must be astute to ensure that parties to proceedings and persons who might be affected by the outcome of the proceedings are not misled by those statements as to the nature of those proceedings. 

23                  I do not regard the lapse of time which occurred before the motion was filed or the nature of such dialogue as has occurred extra‑curially as being relevant to the protection of the interests of those group members who will be the beneficiaries of the rights created by the publication of the opt out notice.  Those group members have not caused the delay nor have they been involved in such dialogue as has occurred extra‑curially. 

24                  The nature of class actions brought pursuant to provisions of Pt IVA of the Act are such that it is imperative that any communications made to group members, in whatever form, be accurate especially in relation to the rights which they have in relation to class actions of which they are a group member and the rights which they have to opt out of such proceedings.

25                  I am satisfied that the incorrect statements in the two documents are such that they may influence the group members in reaching a decision whether to opt out of the proceeding once the opt out notice is published and comes to their attention.  Notwithstanding the lapse of time since the dissemination of the two documents I am satisfied that the incorrect statements are such as to be present in the minds of the persons who received them at the time they come to read the opt out notice, consider their options and decide which way to act.  Unless the statements are corrected I consider that a recipient of one of the two documents might think that something has happened to raise doubts about the integrity of the proceeding or the value of being bound by the proceeding because of the Court order striking out the first statement of claim, the order for costs against the solicitors personally and the fact that the solicitors will receive their costs by way of a percentage share of any judgment.  Such incorrect thoughts would provide a false basis for a group member to make a decision whether to opt out of the proceeding.  The incorrect statements should be corrected before group members are called upon to decide whether to opt out of the proceeding.

26                  It was not contended that the Court does not have jurisdiction to order the respondents to send a correction notice; rather it was contended that the circumstances of this case did not warrant such an order.  There is a specific statutory jurisdiction to order such a correction notice in s 33X of the Act which provides for the sending of notices to group members in relation to a representative proceeding.  Section 33X(5) provides:

“The Court may, at any stage, order that notice of any matter be given to a group member or group members”.

I consider that the jurisdiction to order the sending of a correction notice is also encompassed by the more general provision in s 33ZF(1) which provides:

“In any proceeding (including an appeal) conducted under this Part, the Court may, of its own motion or on application by a party or a group member, make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding.”

27                  The respondents did not deny the existence of this jurisdiction, submitting that the Court always had jurisdiction to protect the integrity of the administration of justice in any proceeding before it.  The respondents submitted that in the circumstances of this case there was no necessity to protect the integrity of the administration of justice.  The respondents referred to a number of authorities in support of this proposition and submitted that the jurisdiction was to be exercised with great circumspection where there was a real need to prevent real prejudice to the administration of justice.  The respondents drew an analogy with the principles relevant to the jurisdiction exercised where there was a contempt of court.  Reference was made to the State of Victoria v The Australian Building Construction Employees’ and Builders Labourers’ Federation (1982) 152 CLR 25 where at 56 Gibbs CJ said:

“There is a contempt of court of the kind relevant to the present case only when there is an actual interference with the administration of justice, or ‘a real risk, as opposed to a remote possibility’ that justice will be interfered with:  cf. Attorney‑General v. Times Newspapers Ltd. [[1974] AC at 299].  The essence of this kind of contempt is a ‘real and definite tendency to prejudice or embarrass pending proceedings’:  John Fairfax & Sons Pty. Ltd. v. McRae [(1955) 93 CLR 351].  The law as to contempts of court of the kind now under consideration reflects two conflicting principles of public policy:  on the one hand, the need to safeguard the proper administration of justice and on the other the protection of freedom of speech (and this principle must extend to freedom of inquiry).  This question has recently been discussed in Attorney‑General v. Times Newspapers Ltd., although similar views had earlier been expressed in New South Wales:  Ex parte Bread Manufacturers Ltd.; Re Truth and Sportsman Ltd [(1937) 37 SR (NSW) 242]; Ex parte Dawson; Re Consolidated Press [[1961] SR (NSW) 573].  The law strikes a balance; in the interest of the due administration of justice it will curb freedom of speech, but only to the extent that is necessary to prevent a real prejudice to the administration of justice.”

Although I am not faced with an issue giving rise to a contempt of court, I am faced with an issue relating to the integrity of a representative proceeding brought under Pt IVA of the Act.  I consider the integrity of the proceeding may be undermined if a correction notice is not sent to the recipients of the two documents who may be induced or influenced to make a decision whether or not to opt out of the proceeding by their recollection of the incorrect statements and the message they convey.

28                  The respondents submitted that as a matter of discretion I should not order the sending of a correction notice because the applicants had other remedies available to them in respect of the incorrect statements.  That may be so, but the purpose of sending out the correction notice in the circumstances of this case is not so much to give the present applicants a remedy for the infringement of their rights in respect of a wrong done to them, but rather to protect the integrity of the opt out process for group members provided by Pt IVA of the Act.  It is to ensure that persons, presently not identified, will be able to exercise rights given to them by Pt IVA of the Act in a fully informed manner without any concern that they may be acting on an erroneous or mistaken basis induced by the incorrect statements in the two documents.

29                  I am therefore satisfied that the circumstances warrant an order that FAI Home Security send a correction notice to those persons who were the recipients of the two documents.  I was not informed by the respondents as to the identity of the recipients of the two documents or as to the manner in which they were distributed.  I infer from the contents of the two documents that they were sent to persons who had purchased alarm systems from FAI Home Security and who may also have financed those purchases with FAI Finance.  I also infer from the document on the back of the Dawn Fraser letter that it was made available by FAI Home Security to its authorised distributors who in turn distributed it to purchasers of the alarm systems.  In such circumstances I consider that it is appropriate to order that the correction notice be sent by FAI Home Security to each person who was sent either of the two documents and to each person to whom any of its authorised distributors sent either of the two documents.  It is a matter for FAI Home Security to satisfy itself by information supplied to it by its authorised distributors that it is able to identify such persons.  The correction notices must go out in the form of a notice printed on the same letterhead as the letter addressed to Mr Bannerman dated 29 February 2000 which is exhibit VW6 to the affidavit of Vivian Waller sworn 26 July 2000.

30                  Having regard to the undertaking offered by FAI Home Security I am not disposed to grant an injunction restraining the further dissemination of the two documents.

31                  The form of the correction notice propounded by the applicants contained a number of provisions which required amendment.  Subject to any submissions the parties may wish to make the correction notice should be in the following terms:

“FAI Home Security Pty Ltd previously provided to you a document headed “A Fair Go”.  Part of that document contained statements about the class action commenced against FAI Home Security and FAI Finance Pty Ltd in relation to FAI Home Security Alarms.  Those statements were incorrect.  To correct those statements, we inform you of the following matters:

1.         A class action against FAI Home Security and FAI Finance is currently in progress and the statement of claim has not, at any time, been struck out by the Court nor has FAI Home Security been awarded costs against Maurice Blackburn Cashman solicitors.

2.         Maurice Blackburn Cashman are the solicitors for the class.  The statement “Maurice Blackburn Cashman solicitors utilise the American system of engaging clients on a contingency fee basis; that is, they share a % of any judgment” is incorrect.

3.         Maurice Blackburn Cashman offer a No‑Win, No‑Charge fee arrangement.  Under this arrangement, clients will not be charged professional costs unless there is a successful outcome.  If there is a successful outcome, the Fee and Retainer Agreement signed by persons who retain Maurice Blackburn Cashman makes provision for the calculation of the fees on an hourly scale with a 25% increase in the hourly rates for conducting the case on a No‑Win, No‑Charge basis.  This is allowed pursuant to the Legal Practice Act 1996 (Vic).  A copy of the fee and retainer agreement is available from Maurice Blackburn Cashman.

If you have any questions about this arrangement you should contact Maurice Blackburn Cashman on (03) 9345 2802.”

32                  Having regard to the fact that the opt out notice will be published for the first time on 14 November 2000 it is desirable that the correction notice be sent and received by those persons who were the recipients of the two documents no later than 13 November 2000.  Because I was not informed as to the number of persons to whom the two documents were sent I do not know how long it will take FAI Home Security to ensure that the correction notice is received by the relevant persons.  I will hear the parties as to the date by which the correction notices are to be sent. 

33                  I also consider that a mechanism should be in place so that the Court may be satisfied that the recipients of the two documents have been sent the correction notice.  I therefore consider it necessary that FAI Home Security provide the Court with information as to who were the persons who were the recipients of either of the two documents and the manner in which, and the dates upon which, the correction notice was sent to those persons.  I have the power under s 33Y(3)(c) of the Act to make such an order.  Section 33Y(1) provides that s 33Y is concerned with “notices under section 33X”.  Such notices include not only an opt out notice as such:  s 33X(1)(a), but also notices of any matter to be given to a group member or group members:  s 33X(5).  It will therefore be part of the order, in accordance with s 33Y(3), that FAI Home Security is to send the correction notices and I will hear the parties as to the manner in which the notices are to be given for the purposes of complying with s 33Y(3)(b) of the Act.  It will also be part of the order that FAI Home Security, by its proper officer, make, file and serve an affidavit verifying the identity of the persons who were sent or given either of the two documents and verifying the manner in which the correction notice was given to them.  Subject to hearing from the parties I would propose that such affidavit be filed and served by 14 November 2000.

Communication with group members

34                  The applicants also seek orders:

“8.       That the Respondents not communicate with the seven identified group members without the leave of the Court.

9.         That the Respondents not communicate with consumers who;

(a)        entered into a sales contract to purchase a FAI Home Security Guard I or FAI Home Security Guard II (‘the alarm systems’) on or after 9 July 1993; and

(b)        entered into a loan contract with FAI Finance to finance the purchase of the alarm system

about the representative proceedings without the leave of the Court.”

That relief is sought by reason of the following circumstances.  Mrs Susan Williams, the second applicant, received a telephone call on or about 19 April 2000 from a person who said that he was from FAI and gave a name which Mrs Williams is unable to recall.  The caller asked words to the effect “What is going on with the case at the moment?”  Mrs Williams told the caller to contact Mr David Niven, a solicitor from Maurice Blackburn Cashman.  The caller said that he was a personal friend of Mr Niven and that he would direct his enquiry to Mr Niven.  Mr Niven did not receive any phone call of this nature from FAI Home Security or FAI Finance on or about 19 April 2000.

35                  In or about March 1999 FAI Home Security commenced a proceeding in the Supreme Court of Victoria against Maurice Blackburn & Co, the predecessor firm of the applicants’ solicitors, seeking orders for discovery of a list of purchasers of FAI Home Security alarms which FAI Home Security believed the firm possessed or previously possessed.  In the course of those proceedings FAI Home Security filed an affidavit sworn by Mr Stewart Clissold on 18 March 1999 in which he deposed to receiving telephone calls from Maurice Blackburn & Co asking whether he had any problems with his FAI Home Security alarm or FAI Finance and whether he would help the firm in taking action against FAI Home Security in relation to the security alarms.  The applicants contend that at the time of these communications FAI Home Security knew that Mr Clissold was a group member and a client of Maurice Blackburn & Co.  The affidavit sworn by Mr Clissold does not bear any solicitor’s endorsement and Clayton Utz, FAI Home Security’s solicitors, denied that anyone from its firm had any communication with Mr Clissold and said that it was a representative of FAI Home Security and one of its authorised distributors who spoke to Mr Clissold.  I accept that evidence.

36                  Mr Graham Stieler purchased an FAI Home Security alarm and financed the purchase with a loan from FAI Finance approximately fifteen months ago.  Between April and 11 September 2000 Mr Stieler had a number of telephone calls with either FAI Home Security’s or FAI Finance’s Sydney office for the purpose of seeking to renegotiate the repayment of his loan.  He said that during these negotiations he said he was aware that “a class action was going against FAI in relation to the alarms”.  Mr Stieler said that he was informed that “The class action has failed, you can forget about that, it is not going ahead”.  At that time he had not been in contact with the applicants’ solicitors.  Records of telephone conversations kept by FAI Finance show that in a telephone conversation with an FAI Finance employee on 8 September 2000 Mr Stieler raised the fact that there was a court case in progress but the note does not record any response along the lines asserted by Mr Stieler. 

37                  I am not satisfied that the state of the evidence in relation to communications with the applicants or group members is such that I should grant an injunction restraining the respondents from communicating with any group member about the current proceeding.  None of the conversations to which Mrs Williams, Mr Clissold and Mr Stieler refer contain any suggestion that they were being persuaded or influenced not to participate in any proceeding against the respondents or either of them.  Although Mr Steiler said he was told that the class action had failed and that he could forget about it going ahead, FAI Finance’s credit manager has said that he has not issued instructions that customers of FAI Finance should be informed that the proceeding has failed or is no longer active. 

38                  I would only be prepared to grant an injunction against the respondents restraining them from communicating with any group members about the current proceeding if I was satisfied that there was more than an isolated incident such as occurred with Mr Steiler.  There is nothing in the conversations with Mrs Williams or Mr Clissold which suggest that there was any improper pressure or any improper influence being brought to bear upon them, nor is there any suggestion that the conversations constituted an attempt to persuade them from being involved in the current proceeding.  The conversation with Mrs Williams may have been imprudent but it did not quite reach the stage of particular improper conduct.  I also take into account that I have ordered that a correction notice be sent to the persons who received the two documents and that an opt out notice is to be published on 14 and 21 November 2000.

39                  I will hear the parties as to the form of order to be made in relation to the sending of the correction notice and as to the costs of the motion.

Associate:

Dated:              13 October 2000