FEDERAL COURT OF AUSTRALIA

King v AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd)

[2002] FCA 1560

PRACTICE AND PROCEDURE – Group proceedings – whether a respondent in group proceedings can communicate with unrepresented members of the group – whether a respondent in group proceedings can communicate with represented members of the group – form of communication – whether copies of replies to communication should be distributed to all parties – where purpose of communication is to obtain understanding of unrepresented group members’ position.

PRACTICE AND PROCEDURE – Group proceedings – whether there is power under s 33ZF of the Federal Court of Australia Act 1976 (Cth) to permanently stay individual claims within a group proceeding – whether an order for a permanent stay should be made as a matter of discretion – where permanent stay operates as a sanction for failure to respond to communication.

Federal Court of Australia Act 1976 (Cth), ss 33ZE, 33ZF, Part VIA

King v AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd) [2002] FCA 872, (2002) 191 ALR 697 discussed

McMullin v ICI Australia Operations Pty Ltd (1998) 84 FCR 1 discussed

Hurley v McDonald’s Australia Ltd [2001] FCA 209 not followed

Courtney v Medtel Pty Ltd [2002] FCA 957 followed

Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd (1998) 84 FCR 512 referred to

Finance Sector Union of Australia v Commonwealth Bank of Australia (1999) 94 FCR 179 referred to

King v GIO Australia Holdings (2000) 100 FCR 209 cited

Bunnings Forest Products Pty Ltd v Bullen (1994) 54 FCR 342 cited

SHANE ROBERT KING v AG AUSTRALIA HOLDINGS LIMITED (FORMERLY GIO AUSTRALIA HOLDINGS LTD) (ACN 054 573 401), GRANT SAMUEL & ASSOCIATES PTY LTD (ACN 050 036 372), DAVID MORTIMER, BRUCE HOGAN, STEWART STEFFEY, RONALD ASHTON, MARINA DARLING, ANDREW KALDOR, LLOYD LANCE, DAVID O’HALLORAN AND IAN POLLARD

N 955 OF 1999

MOORE J

16 DECEMBER 2002

SYDNEY

THE COURT ORDERS THAT:

1.                  The notice of motion of the applicant of 26 November 2002 be dismissed on the condition that:

a.       The first respondent communicate with the shareholders who have not opted out in the terms of annexure C to this judgment (or, insofar as Form A is concerned, in terms agreed between the applicant and the first respondent)

b.      There be no such communication by the respondents with group members for whom Maurice Blackburn Cashman acts.

2.                  The notice of motion by the second respondent of 18 October 2002 concerning communication with shareholders be dismissed.

3.                  The notice of motion of the first respondent of 25 November 2002 be stood over generally.

4.                  Liberty to apply.

5.                  Costs are reserved.

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

REASONS FOR JUDGMENT

Introduction

1                     In this proceeding I gave judgment on 11 July 2002 concerning communications between the respondents and members of the group: see [2002] FCA 872, (2002) 191 ALR 697.  The nature of the proceeding was sufficiently summarised, for present purposes, in that judgment at [2]-[7].  The first respondent, AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd) (“GIO”) now seeks to communicate with the members of the group (and perhaps shareholders who are not) in one of two ways.  The first and preferred way would arise if orders sought in a notice of motion filed by GIO on 18 October 2002 were made.  In that application, GIO seeks to have each member of the group answer a questionnaire which it characterises as interrogatories and, if not answered, the “claim” of any member who did not respond would be stayed by order of the Court.  A copy of the interrogatories and the accompanying notice are annexure A to this judgment.

2                     The second and alternative way GIO proposes to communicate with group members is by a letter (enclosing a questionnaire in two parts, Form A and Form B).  The proposed letter (and the accompanying questionnaire) is annexure B to this judgment (“the proposed letter”).  As a matter of procedure, this means of communication is contemplated by the orders made on 11 July 2002.  A copy of the proposed letter was sent to Maurice Blackburn Cashman, solicitors for the applicant, also as contemplated by the orders of 11 July 2002.  In the result, the applicant filed a notice of motion on 26 November 2002 seeking to restrain GIO from sending the letter.  GIO also applied, by notice of motion filed 25 November 2002, to vacate orders 2 and 4 made on 11 July 2002.

The form of the interrogatories and their purpose

3                     It is convenient to start by considering whether the orders concerning the interrogatories should be made.  The orders sought were, in terms (but omitting presently immaterial parts), that:

1.                  The Respondents have leave to administer interrogatories in the form of the document styled “questionnaire” which is Schedule “A” to this Notice of Motion to each member of the class represented by the Applicant in these representative proceedings and;

…

(c) did not accept the takeover offer by reason of the various representations and conduct of the Respondents details in the Statement of Claim; and [NB]

(d) suffered a loss as a consequence; and

(e) have a claim against all the Respondents. 

Other than:

            …

(“the persons to be interrogated”) 

2.                  The questionnaire be sent by or on behalf of the First Respondent to the persons to be interrogated by ordinary post, on or before 30 January 2003 to the address for those persons appearing on the register of former shareholders in the First Respondent held by the First Respondent, together with a notice, the form and content of which is Schedule “B” to this Notice of Motion. 

3.                  The First Respondent pay the cost of postage, reply postage, printing and stationery in respect of the interrogatories. 

4.                  The claim of any member of the class represented by the Applicant in these proceedings, apart from the Applicant, who does not cause a completed and signed “Questionnaire”, in accordance with Schedule “A” to be returned to [an independent firm of accountants will be retained to hold the original signed and returned questionnaires pending finalisation of the proceedings – details of who is proposed will be circulated prior to 21.11.02] by 28 February 2003 be permanently stayed, unless otherwise ordered, without further order, with effect from 28 February 2003. 

5.                  A copy of AMP’s Part A Statement and GIO’s Part B Statement be posted on the internet website of the Federal Court of Australia on or before 1 January 2003.”

4                     It can be seen that order 4 contemplates that any member of the "class" who does not complete and sign the questionnaire will have their “claim” permanently stayed.  For convenience I will describe the interrogatories or questionnaire as the compulsory questionnaire.  The reasons advanced by GIO for sending the compulsory questionnaire evolved during the period the issues were being ventilated in the Court.  One reason was that it was necessary to ascertain, at this stage, the basis on which individual members of the might later contend they relied on conduct of the respondents if it was proscribed by the Trade Practices Act 1974 (Cth) or otherwise unlawful (assuming the applicant was successful on the question of liability).  This was to ensure that the individual group members did not later tailor their evidence having regard to findings (or evidence given) which might be made on the question of liability.  Another reason was that the answers might tend to indicate who were members of the group and likely to pursue their claims.  It was desirable for GIO to know this to be better able to assess its commercial exposure in the litigation.  In addition, the automatic staying of the claim of any person who did not answer the compulsory questionnaire would effectively remove individuals who do not wish to pursue their claim, from the group.

The power to make the orders concerning interrogatories

5                     As to the source of power to make the orders, GIO relied on s 33ZF of the Federal Court of Australia Act 1976 (Cth) (“the Act”), the observations of Wilcox J in McMullin v ICI Australia Operations Pty Ltd (1998) 84 FCR 1 and the course adopted by Dowsett J in a matter in which judgment was given on 9 March 2001 on the question of liability: see Hurley v McDonald’s Australia Ltd [2001] FCA 209.  In McMullin v ICI Australia Operations Pty Ltd,Wilcox J considered the power of the Court to make an order closing the class.  The issue arose after the Court had determined the common questions concerning liability and was in the process of determining what damages, if any, members of the group might be awarded.  At that point, his Honour had made orders under s 33Q(2) of the Act constituting 16 sub-groups of particular persons who were maintaining claims for damages of a comparatively small sum and had delegated the assessment of damages for those groups to a Registrar.  Nonetheless there remained for determination the damages claims of other members of the group, though there was no certainty as to precisely who constituted the entire group.  It was in this context that the issue of closing the class arose.  On the question of power to make such an order his Honour said (at 4):

Section 33ZF confers a wide and general power on the Court. That section provides:

“(1) 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.

(2) Subsection (1) does not limit the operation of section 22.”

Section 22 of the Act is concerned with remedies. But I do not think this reference limits the generality of s 33ZF(1). If the subsection had been intended to be limited to orders by way of remedy, it would have been unnecessary; s 33Z(1)(g) would have already conferred the necessary power.

Section 33ZF appears in Division 6 of Part IVA which is headed “Miscellaneous”. It bears the marginal note “General power of Court to make orders”. These two features support the conclusion, that would in any event arise from its wording, that s 33ZF(1) was intended to confer on the Court the widest possible power to do whatever is appropriate or necessary in the interests of justice being achieved in a representative proceeding. It is understandable Parliament should have thought it appropriate to make such a provision. In enacting Part IVA of the Federal Court of Australia Act, Parliament was introducing into Australian law an entirely novel procedure. It was impossible to foresee all the issues that might arise in the operation of the Part. In order to avoid the necessity for frequent resort to Parliament for amendments to the legislation, it was obviously desirable to empower the Court to make the orders necessary to resolve unforeseen difficulties; the only limitation being that the Court must think the order appropriate or necessary to ensure “that justice is done in the proceeding”.

I think an order fixing a date by which claimants must identify themselves is capable of falling within s 33ZF(1). The criterion “justice is done”, involves consideration of the position of all parties. An order preventing unfairness to a particular party may be necessary to ensure justice is done in the proceeding.

6                     The orders made by his Honour were in the following terms:

1.      The Applicants on or before 30 June 1998 at the reasonable cost of the Respondents send by prepaid post to each person listed on a Department of Primary Industry or the Department of Agriculture data base as having had CFZ residues in cattle other than a person:

(a)       listed only as having residues <0.1 ppm; or

(b)       who is a person on the identified list of applicants referred to in paragraph 3; or

(c)        whose claim has been settled or heard,

  a notice in the form “A” annexed to these Minutes.

2.      The Applicants on or before 30 June 1998 at the reasonable cost of the Respondents place on two occasions quarter page advertisements in the form “B” annexed to these Minutes in each of “The Land” and “Queensland Country Life” newspapers.

3.   The solicitors for the Applicants file and serve on or before 16 June 1998 a list of the names and addresses of each person who has engaged them to seek compensation in this proceeding who claims to be entitled to compensation under the judgment given on 24 June 1997 whose claim has not been settled or been heard.

It can be seen that his Honour’s orders do not, in terms, dismiss or stay an individual “claim”.  While it does not appear in the reported version of his Honour’s judgment, the notices sent to the group members (annexure A) and inserted into the newspapers (annexure B) had, as part of their heading, a statement “IF YOU DO NOT COMPLY WITH THIS NOTICE YOU MAY LOSE YOUR RIGHT TO COMPENSATION”.  In the body of the notice was a statement “if you do not give such notice [a notice in writing to the Registrar of the Court by 31 August 1998 indicating a desire to pursue compensation] you will not be entitled to pursue compensation for chlorfluazuron contamination”.  Each notice concluded with a statement “IF YOU DO NOT GIVE NOTICE BY 31 AUGUST 1998 YOU WILL LOSE ALL YOUR RIGHTS TO COMPENSATION”.  One can assume, as a practical matter, the orders together with the notices closed the class.

7                     However by adopting this scheme, his Honour did not have to confront whether an order could be made staying or dismissing claims of individual group members in circumstances where the proceeding was still a representative proceeding.  That is not to say, however, that the scheme adopted by his Honour could not have later been perfected (if it was then thought necessary) by an order “otherwise dismissing” the representative proceeding.  That could have been done, pursuant to s 33Z(1)(g), after a declaration of liability was made or liability was otherwise determined in relation to any individual claim (under s 33Z(1)) and, if liability was established, an award of damages made for an individual claim (under s 33Z(1)), in relation to the claims of those group members who did give notice by 31 August 1998.  Such an order would have meant that the representative proceeding, insofar as it related to claims of group members who did not give notice by 31 August 1998, was dismissed.  Those members would have been bound by that order by operation of s 33ZB.

8                     The approach adopted by Dowsett J in Hurley v McDonald’s Australia Ltd was to make an order which was, in substance, the same as the order proposed by GIO in this proceeding concerning the compulsory questionnaire.  The questionnaire sent to the members of the group in that case was described, in the orders as interrogatories.  The orders included an order that “the claim” of any member of the group who did not cause a completed and signed questionnaire to be returned would be permanently stayed with effect from a specified date without further order unless otherwise ordered.  His Honour, so far as I am aware, did not publish reasons at the time for adopting this approach and, in particular, explaining how power to make the order arose and the consequences of non-compliance (though in his final judgment of 2 June 2000, his Honour explained the rationale for the scheme).  GIO has, in this proceeding, exhibited the transcript in which his Honour was asked to make these orders.  Counsel for the respondent seeking the orders identified s 33Q and s 33ZF as possible sources of power, though it is not entirely clear whether his Honour accepted that one or both sections conferred power to make the orders, or which if only one.  It is fairly clear from the transcript (which was confirmed in his Honour’s final judgment) that the order was sought for a particular purpose.  It was to require members of the representative group to commit themselves to an account of the circumstances in which they obtained the critical games stamps before evidence was given by named claimants or at least before that evidence was evaluated in a judgment.  The respondent wasconcerned, and his Honour accepted, that the evidence of a significant number of members of the group (which totalled 5,000) might be tainted if, when they came to give evidence, they were aware of the evidence of the claimants or how it had been evaluated.

9                     In the present case (and also in Hurley v McDonald’s Australia Ltd), it would appear that the order resulting in the staying of “the claim” of any individual group member who does not reply to the compulsory questionnaire, is intended to be an inducement to group members to answer, or putting it slightly differently, a sanction if they do not.  For my part, and with respect to Dowsett J, I doubt that the Court has power to make such an order even accepting the undoubted width of s 33ZF.  The whole scheme of Part VIA of the Act is that, ordinarily, there is one proceeding, at least until common issues are resolved, and that the members of the group are not parties to that proceeding.  The representative party or parties prosecute the proceeding on behalf of the group.  As I discussed in my judgment of 11 July 2002 at [37]-[38] and Sackville J later discussed in Courtney v Medtel Pty Ltd [2002] FCA 957 at [33]-[36], the legislature adopted, in the face of an Australian Law Reform Commission recommendation to different effect, a scheme in which there is not a discrete proceeding maintained on behalf of each member of the group at least until common issues are resolved (assuming the matter continues as a representative proceeding until then).  That is, there is not a discrete proceeding in relation to any particular “individual claim”.  Nonetheless, it is comparatively clear the scheme contemplates that “individual claims” are not entirely subsumed by the representative proceeding as illustrated by s 33ZE which provides that the running of a limitation period affecting the “claim” of a group member is suspended while, in effect, the representative proceeding remains unresolved (or the individual opts out).

10                  What then might be comprehended by an order that a “claim” of a group member be stayed?  As Lindgren J noted in Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd (1998) 84 FCR 512 at 523:

…whatever the word “claims” in the provision (s 33(1)(c)) denotes, they have an existence independent of, and antecedent to, the commencement of the proceeding, since it is only if seven or more persons have claims against the same person that the proceeding under Pt VIA may be commenced….

The word “claim” has been described as “encompass(ing) everything that might lawfully be brought before the Court for a remedy”: see Finance Sector Union of Australia v Commonwealth Bank of Australia (1999) 94 FCR 179 at 187 and the discussion in an earlier judgment in this matter at (2000) 100 FCR 209 at 221-223.  While it is a word of wide meaning and is not limited to a cause of action, it nonetheless possible to view it as an aggregation of potential rights that might be vindicated in a proceeding brought under Pt VIA.  For my part, I find it difficult, in a conceptual sense, to conceive of an order staying a claim understood in this way which had any legal effect while the representative proceeding continued.  Ordinarily orders are made staying proceedings or orders either temporarily or permanently.  The stay order operates on the proceeding or on the order by suspending or postponing the proceeding or order: Bunnings Forest Products Pty Ltd v Bullen (1994) 54 FCR 342. 

11                  Perhaps an order staying a “claim” would preclude an order under s 33Q, s 33R or s 33S facilitating the determination of the individual group member’s claim for damages (involving determination of causation and loss) after (and assuming) common issues concerning liability had been determined in the representative party’s favour.  If so, one might doubt the power of the Court now to foreclose the exercise of the discretionary power conferred by those sections by a stay order made for a collateral purpose (to induce answers to a questionnaire).  The proposed stay order is “the claim…be permanently stayed, unless otherwise ordered, without further order from 28 February 2003” which appears to contemplate a modification of the stay order by further order, but for what purpose and with what legal effect is not clear.  It may be accepted that in the notice to accompany the compulsory questionnaire GIO proposes to send group members, it is said that the effect of the order is that no further steps could be taken in relation to the individual claim unless, upon application, the individual group member explained to the Court why the compulsory questionnaire was not filled out and returned (and even then there is the caveat that “there is no certainty that if you presented an explanation to the Court that you would be able to proceed with your claim”).  Whether that procedure could be followed in the face of an order permanently staying “a claim” is another matter.

Should the orders concerning interrogatories be made as a matter of discretion

12                  Even if the Court does have power to direct that questions be answered with a sanction that if they are not, an individual group member’s claim will be stayed, I would not make such an order in this proceeding as a matter of discretion.  There could be a multitude of reasons why any particular group member in this proceeding did not answer the compulsory questionnaire.  There may be significant numbers of individual group members in what is a very large and almost certainly quite disparate group who would not complete and return the compulsory questionnaire for reasons which may include that they did not receive it (addresses might have changed), they did not fully understand the need to answer and the nature of the sanction notwithstanding the explanation in the proposed notice (if they read it), or did not read it with care, or at all.  In my opinion, the proposed sanction for not completing, signing and returning the compulsory questionnaire could operate quite unjustly.  In addition, there is an inherent uncertainty in the order because the permanent stay arises if an individual group member does not “cause a completed and signed “Questionnaire” to be returned” by a nominated date.  Does, for example, a failure to answer one sub-question (such as when they may have received advice concerning the takeover) constitute a failure to complete the compulsory questionnaire even if other questions are answered?  That is, is the notion of “completion” to be taken literally or does it allow for some bona fide or genuine attempt to answer the questionnaire?  These various matters do not suggest that the proposed orders will “ensure that justice is done in the proceedings”, even taking into account the stated purposes of the interrogatories.

The proposed letter as an alternative to interrogatories – general principles

13                  I have already indicated in the judgment I gave on 11 July 2002 that the respondents might communicate with group members when I said at [27]:

Plainly MBC has an obligation to conduct the representative proceeding on behalf of Mr King in a way consistent with the interests of members of the representative group whether MBC clients or not.  However that firm does not have a solicitor client relationship with the unrepresented shareholders and, as a matter of principle, could not resist Ebsworth & Ebsworth communicating with members of that group for legitimate forensic reasons.  I accept that those reasons might include asking questions to ascertain whether any particular unrepresented shareholder viewed themselves as satisfying conditions of group membership and asking questions concerning reliance.  Mr Murphy, who is a partner of MBC and has been involved in the conduct of the proceeding in this Court on behalf of Mr King, accepted in cross examination that GIO’s interest would be better served it if it could communicate now with unrepresented group members concerning questions of reliance.

This statement was made as part of my reasoning for making the orders I did on 11 July 2002.  I draw attention to this statement now because counsel for Mr King have made, during this most recent interlocutory hearing, detailed submissions concerning whether there should be any communication with members of the group at all and have referred, in detail, to the procedures in the United States and Canada concerning communication with class members.  Even if that material might have persuaded me to a different view about respondents communicating with group members as a matter of principle, that issue has already been determined by the orders made on 11 July 2002.  The present and remaining issue concerns the terms upon which GIO now seeks to communicate with group members and whether communication is appropriate in the circumstances, having regard to the purpose of the communication.

14                  I should, at this stage, refer to the judgment of Sackville J in Courtney v Medtel Pty Ltd.  The specific issue considered by his Honour in that case was communication by the respondent with group members about settling their claims.  In that matter, the applicant sought orders restraining the respondents from communicating with group members and requiring any offer of settlement be notified to the applicant with a protocol apparently intended to facilitate an agreement about a settlement.  In the course of discussing whether the Court had power to restrict communication between a respondent and group members, his Honour said:

[52]    While s 33ZF(1) of the Federal Court Act should be given a broad construction, that does not mean it can or should become a vehicle for rewriting the legislation.  For example, in my view s 33ZF(1) cannot be read as prohibiting the respondent to a representative proceeding from communicating with a group member unless the Court has given prior approval.  The provision itself merely confers power on the Court to make any order it thinks appropriate or necessary to ensure that justice is done in the proceeding; it does not prohibit conduct which is otherwise lawful.  Accordingly, neither s 33ZF(1) nor any other provision in Part IVA prevents a respondent communicating with a group member in a manner which is not misleading or otherwise unfair and which does not infringe any other law or ethical constraint (such as a professional conduct rule which requires solicitors to communicate with a represented group member through the latter’s own legal representatives).  The principle also applies, in my opinion, to an offer made by a respondent to settle the claims of individual group members.  This reflects the general policy of the law to encourage out of court settlement of disputes and to promote the individual’s right to enter negotiations for settlement without inhibition: Cutts v Head [1984] Ch 290 at 306, per Oliver LJ, S McNicol, Law of Privilege (1992) at 438.

……

[54]    But just as s 33ZF(1) of the Federal Court Act does not prohibit communications between the respondent and a group member in a representative proceeding, the provision does empower the Court to impose constraints on such communications if these are considered necessary or appropriate to ensure that justice is done in the proceeding.  If, for example, there is evidence that an offer is about to be or has been made to group members in terms that are misleading or in circumstances that are unfair to the group members, the Court may take the view that its intervention is necessary or appropriate to avoid injustice to the group members.  Where intervention is considered appropriate, the form of intervention must depend on the circumstances of each case. 

His Honour went on to note (at [62]) that ordinarily it would be appropriate for the terms of an offer of settlement to be communicated to the applicant’s solicitors before they are communicated to unrepresented group members so that the applicant’s solicitors would have an opportunity to restrain the respondents from making the offer because, for example, the offer was in misleading terms or was made in circumstances that were unfair.

15                  For present purposes, it is sufficient to say that I agree with his Honour’s observations in [52] and [54].  Indeed they are consistent with the approach I adopted in the 11 July 2002 judgment (other than, perhaps, in relation to offers of settlement).  It follows that what I should consider is whether the sending of the proposed letter, because of its terms or the circumstances in which it will be sent, would be misleading or otherwise unfair.  Plainly enough, however, if any order is made concerning the communication it will be in exercise of the power conferred by s 33ZF.  Thus, it will ultimately be necessary to apply the statutory yardstick of whether the order is appropriate or necessary to ensure that justice is done in the proceeding.  I will refer to the questionnaire intended to go with the proposed letter as the non compulsory questionnaire.  It comprises Form A and Form B. 

The proposed letter – should its dispatch be prevented or its terms modified

16                  The primary position of the applicant is that the proposed letter should not be sent at all for several reasons.  It was said that many of the group members are elderly, are easily confused and are likely to be confused.  If the proposed letter is sent, there are likely to be extensive enquiries made of Maurice Blackburn Cashman.  Mr Murphy, who is a solicitor in that firm with the principle carriage of this proceeding, gave evidence about the likely consequences of the letter being sent, having regard to his past experiences.  I generally accept his evidence based on his past experiences.  There will be many enquiries made of his firm about the letter, both by group members who have retained that firm and those who have not, which will entail the dedication of significant resources, including staff, to dealing with those enquiries.  If the letter is sent to group members who have retained that firm, it will interfere with the solicitor-client relationship between them.  Time taken in providing advice to group members who are clients of the firm will delay the proceedings though I am somewhat sceptical about his calculations concerning the amount of time and its impact.  I am also sceptical about the suggestion of Mr Murphy that some group members will be discouraged from pursuing their claims by the burden of completing the questionnaire.  I should add that counsel for the applicant also pointed to particular problems with the proposed letter including, for example, that the word “read” in the question “did you read GIO’s Part B Statement” in the non compulsory questionnaire was vague and potentially misleading.

17                  Against these considerations must be weighed the potential advantage to the respondents of securing answers to the questions from at least some of the recipients.  I say some of the recipients for two reasons.  First, I do not consider it is appropriate that the non compulsory questionnaire be sent to group members who have retained Maurice Blackburn Cashman.  They have retained that firm and it can speak on their behalf as and when necessary and on terms of its choosing, subject to any direction of the Court.  Secondly, the response rate is certainly likely to be less than one hundred percent and probably significantly less.  For reasons which I shortly explain, it is inappropriate for a letter to be sent with the inducement to answer which GIO proposes be included in the letter, namely the prospect of an application to permanently stay the claim of any group member who does not respond.

18                  The advantages to the respondents are twofold and related.  The first is that the responses may identify (however imperfectly) how many nominal group members maintain a claim in the proceeding.  I should repeat something I said in my reasons of 11 July 2002 at [7]:

Some recipients of [the notice under s 33X(1)(a) telling group members they could opt out], who were part of the total shareholder group, may have considered they were not group members because they did not satisfy one or all of the conditions of group membership set out in pars (c), (d) and (e) of the description in the notice.  Those recipients who took this view may well have also considered it was unnecessary to complete and return an opt out notice.  Some recipients of the notice may, for example, have known that nothing had been said to them by the respondents during the hostile takeover that caused them to retain their shares.  There may be large institutional shareholders who took independent advice which were in this position.  There may be small shareholders who retained their shares for quite idiosyncratic reasons who were also in this position.  For these reasons no opt out notice may have been returned.  While at the moment, these are essentially matters of speculation (subject to the evidence referred to in the next paragraph), it may be, at least as a matter of fact, that not all members of the representative group believe or assert they have a cause of action (of the type pleaded by Mr King) against the respondents. Other members of the total shareholder group who did not opt out and are not MBC clients or MBC potential clients, may well have conscientiously addressed the notice and considered themselves members of the group having regard to the description in the notice and, for this reason, did not opt out

I still accept that there may be shareholders who did not accept the takeover offer who are assumed to have a claim (of the type pleaded by the applicant) against the respondents (because they did not lodge an opt out notice) but, for the reasons given in the first part of the paragraph just quoted, would not have such a claim nor would they assert such a claim.  The clients of Maurice Blackburn Cashman are in a different position in the sense that they have indicated their desire to pursue their claims by retaining the firm.

19                  The second advantage to the respondents is that it will give them some understanding of the position taken by individuals who have not retained Maurice Blackburn Cashman concerning the use they made of the Part B statement during the hostile takeover which could point to the scope of, in particular, GIO’s liability (concerning causation) in relation to that individual.  Again the clients of Maurice Blackburn Cashman are probably in a different position in that the firm has taken instructions on the basis that the clients are members of the representative group.

20                  I turn to consider whether it is appropriate that Form A in the non compulsory questionnaire be sent.  It may well have the effect of identifying nominal group members (of the type discussed in the preceding paragraphs) who did not maintain a claim against the respondents, though it might be viewed, in effect, as a repetition of the procedures specified in Pt VIA for identifying members of the group.  The Part contains a scheme, an important element of which is the giving of notice under s 33X(1)(a) and the lodgement of an opt out notice under s 33J.  That procedure is intended to identify, for the purposes of the Part, who are members of the group even though, in this case, that procedure has probably not identified all shareholders who do not maintain claims against the respondents.  It might be thought that a procedure which, de facto, substantially replicates and parallels the statutory scheme (at least in part) should not now be followed.

21                  Without adequate explanation, Form A could create considerable confusion amongst existing group members who have received communications from the Court (the notice sent under s 33X(1)(a)) which was the subject of scrutiny not only by me but a Full Court as well.  However, that consequence can probably be avoided by a more careful explanation of what question 1 (a) entails.  But if there is such an explanation I do not see why it is inappropriate for GIO to ask question 1 (a).  A form of words which may be appropriate is included in annexure C to this judgment though I would expect there to be some discussion between the legal representatives of GIO and Mr King to settle on a final form of words.  Question 1 (b) of Form A should not be asked as it cuts across, in a fundamental way, the scheme of Part VIA.  Under that scheme, if a person is a group member and they have not opted out, then their claim is being pursued by the representative parties on their behalf.  To ask the question would be potentially quite confusing and misleading to group members.

22                  Answers to Form B may also allow GIO and other respondents to better assess which members of the group do not, or are unlikely to, maintain a claim of the type pleaded.  If, for example, a group member replies that they did not read the Part B Statement, then it is probable (though I accept not certain) that a person answering in this way would not have and may not even wish to maintain a claim against the respondents.  Answers to other questions may, in combination, enable the respondents to make some assessment, even if only a crude one, of their potential liability in the proceedings.

23                  In these reasons, I have to this point, focused on the advantages to the respondents by reference to their being able to assess their potential liability.  It is this consideration that leads me to conclude it is appropriate that the proposed letter (modified in a way I discuss shortly) be sent with Form A (modified as just discussed) and with Form B.  I do not know whether there is any prospect of this proceeding being settled and nothing has been said by any party which would suggest it will be, at least in the short term.  All parties may be sufficiently confident about the strength of their case that it will be necessary for all issues to be determined by the Court.  Nonetheless if there is any prospect of discussions directed to settlement, then it is desirable, in my opinion, that the respondents have some better understanding of the nature and extent of the case against them.  I obviously cannot say with any certainty that sending a modified version of the proposed letter and non compulsory questionnaire will achieve this result.  However, even if there is only some prospect that it will, I should not intervene and effectively prevent it being sent.  While it is likely to create additional work for Maurice Blackburn Cashman dealing with enquiries which flow from it being sent, that does not, in my opinion, warrant a contrary conclusion.

24                  I should indicate that I do not accept in these proceedings that there is any obvious risk of evidence being tainted in the way Dowsett J thought might occur in Hurley v McDonald’s Australia Ltd.  In that matter there was a particular and critical fact concerning when the stamps were obtained which potential witnesses might lie about.  That was whether the stamps were obtained during the 1998 promotion or the 1999 promotion.  There was an obvious and real risk that witnesses would falsely say they obtained them in the later promotion in order to secure the potential benefit of the proceedings.  I presently do not see these proceedings as having an analogous critical fact so readily susceptible of false evidence.

25                  Because a modified version of Form A will be sent, the third last paragraph on the first page needs to be modified.  In addition, I do not consider it is appropriate that the letter refer to a procedure (an application for a stay) when there is, at best, uncertainty about whether such an order could be made.  This is particularly so when the letter will include, as I think it should, an intimation that the Court is aware that the letter is being sent in the terms finally settled on.  Recipients of the letter may well believe that the Court accepts that a stay order of the type proposed can be made.  There appeared to be no issue that the proposed letter should also say that copies of the answers would be provided not only to the respondents but also the applicant.  I have made some further minor changes to the proposed letter which are in bold (only to identify them).

26                  I should briefly refer to some further matters.  The first concerns further specific criticisms raised by the applicant about the contents of the proposed letter and non compulsory questionnaire.  I accept that the word “read” is, in context, not a word of great precision.  Nonetheless it is adequate for present purposes.  It may be correct, as the applicant contended, that whether a group member received and read the Part A Statement is not relevant.  However that is not a matter I should determine at this stage.  In the absence of any suggestion that questions about the Part A Statement are, themselves, unfair or misleading, it is sufficient for GIO to assert its relevance (on the basis that the Part B Statement was responsive to the Part A Statement).  One suggestion made by counsel for the second respondent that the question about which “part” of the Part B statement was read should refer to “pages” was not embraced by either counsel for GIO or the applicant.  It is not a suggestion I would embrace either as it is potentially too prescriptive. 

Conclusion

27                  One way of dealing with the issues raised in this interlocutory hearing (which was advanced by counsel for GIO), was to approach the matter on the footing that if I considered modifications to the proposed letter needed to be made, I could dismiss the applicant’s notice of motion seeking to restrain the proposed letter being sent but on the condition that variations be made.  This is the course I propose to follow.  I apprehend that in those circumstances no question of an undertaking as to damages arises, which counsel for GIO submitted ought attend any success on the applicant’s part in restraining, by “injunction”, the dispatch of the proposed letter.  If an “injunction” had issued, it would have been, both in form and substance, an order under s 33ZF made to ensure “justice is done in the proceedings”.  While it is not a matter I need now decide, I presently consider it would have been plainly inappropriate to require an undertaking as to damages as a precondition to the exercise of that statutory power.

28                  It is unnecessary to address GIO’s notice of motion of 25 November 2002 concerning orders 2 and 4 made on 11 July 2002.  I propose to order that the notice of motion of the applicant of 26 November 2002 be dismissed on the condition that first, any letter GIO sends be in the terms of annexure C to this judgment (but completed where relevant particulars need to be inserted and subject to any changes to Form A that the solicitors for GIO and Mr King might agree on) and secondly, it not be sent to any group member represented by Maurice Blackburn Cashman.  The applicant sought an order concerning computerised lists of individuals to whom the proposed letter will be sent.  I will, at least initially, leave this matter to the parties to discuss.  If there remains any issue about that matter or the terms of Form A, liberty to apply can be exercised.

Associate:

Dated:              16 December 2002

ANNEXURE A

Class Action GIO Shareholders

This notice is issued to you pursuant to the orders of Justice Moore made on [  ] 2002 and in accordance with the rules of the Federal Court of Australia which govern the conduct of representative proceedings.

In August 1999 Shane Robert King commenced representative proceedings in the Federal Court against GIO Australia Holdings Limited (“GIO”), Grant Samuel & Associates Ltd, and former directors of GIO being David Mortimer, Bruce Hogan, Stewart Steffey, Ronald Ashton, Marina Darling, Andrew Kaldor, Lloyd Lange, David O’Halloran and Ian Pollard.  The representative proceedings by Mr King are on behalf of those former shareholders of GIO, who did not accept AMP’s offer for GIO shares during the takeover bid made for GIO by AMP Insurance Investment Holdings Pty Limited (“AMP”) in 1998 who allege that they suffered financial loss caused by representations and other conduct of the Respondents.  The allegations made by Mr King in these proceedings relate to things that were said and things that were not said in the Part B Statement and in other communications by some of the Respondents to the GIO shareholders during the takeover period.  The Respondents deny these allegations and are defending the proceedings.

You may be a member of that group of persons.  You have not opted out of these proceedings.

It may become necessary for the Court to determine in these proceedings why you did not accept AMP’s offer.  If that occurs you may be required to give sworn evidence, by affidavit, subject to cross examination in support of your claim.

In the meantime, you are required to complete the attached questionnaire and return it in the enclosed envelope by no later than 28 February 2003.  In the event that you do not complete the questionnaire and return it by that date, your claim will be permanently stayed.  What this means is that no further steps will be able to be taken on your behalf to further your claim unless you are permitted to do so by the Court after making an application to the Court.  An application to the Court would require you to:

(a)          prepare specific documents to be presented to the Court explaining why you didn’t fill in the questionnaire and return it; and

(b)          be present in Court or to have someone appear in the Court on your behalf.

There is no certainty that even if you presented an explanation to the Court that you would be able to proceed with your claim.

If you are unable to answer any of the questions, you should write that you are “unable to answer” the question in the space provided.

The information contained on the enclosed questionnaire may be disclosed to the Respondents pursuant to a direction of the Court.  The Respondents have indicated that they wish to have access to your completed questionnaire.

Your answers should be posted in the enclosed Reply Paid envelope to [an independent firm of accountants will be retained to hold the original signed and returned questionnaires pending finalisation of the proceedings – details of who is proposed will be circulated prior to 21.11.02].

You may inspect a copy of AMP’s Part A Statement (referred to in question 1), GIO’s Part B Statement (both Booklets 1 and 2 referred to in question 2) on an internet website located at http://www.fedcourt.gov.au/giocase.html.  If you are not connected to the internet and you wish to inspect those documents, then you should enquire at your local public library for internet access and assistance.

You should direct any questions in relation to the questionnaire to Maurice Blackburn Cashman, the firm of solicitors acting for Mr King, on the following number, [complete] or to your own solicitor.

Schedule “A”

1.      (a)     Did you receive AMP’s Part A Statement setting out its offer to acquire your shares in GIO ?

          (b)     If the answer to (a) is yes, did you read AMP’s Part A Statement ?

2.      (a)     Did you read GIO’s Part B Statement before making a decision to accept or reject AMP’s offer?

          (b)     If the answer to (a) is yes:

(i)                 did you read both Booklet One and Booklet Two of the Part B Statement?

(ii)               if you did not read all of the Part B Statement, which part did you read?

3.      (a)     Did you obtain advice from any person or organisation including from a financial adviser (for example, financial planner, accountant, stock broker or your solicitor) as to whether you should accept the offer by AMP to acquire your shares in GIO?

          (b)     If yes, please identify the person or organisation.

(c)          If yes, when was that advice provided to you.

4.      Did you attempt to accept the AMP offer ?

Dated:

                                                                                                                        …………………………..

                                                                                                                        (signature)

                                                                                                                        …………………………..

                                                                                                                        PRINT NAME

ANNEXURE B

From GIO. 

Please read this letter carefully.

In August 1999 Shane Robert King commenced representative proceedings in the Federal Court of Australia against GIO Australia Holdings Limited (“GIO”), Grant Samuel & Associates Limited, and the former directors of GIO, David Mortimer, Bruce Hogan, Stewart Steffey, Ronald Ashton, Marina Darling, Andrew Kaldor, Lloyd Lange, David O’Halloran and Ian Pollard (the ‘Respondents’).  The representative proceedings by Mr King are on behalf of those former shareholders of GIO, who did not accept AMP’s offer for GIO shares during the takeover bid made for GIO by AMP Insurance Investment Holdings Pty Limited (“AMP”) in 1998 who allege that they suffered financial loss caused by representations and other conduct of the Respondents.  The allegations made by Mr King in these proceedings relate to things that were said and things that were not said in the Part B Statement and in other communications by some of the Respondents to the GIO shareholders during the takeover period.  The Respondents deny these allegations and are defending the proceedings.

As you have not opted out of these proceedings you are potentially a member of the Class.

If you consider yourself to be a member of the Class, it may become necessary for the Court to determine in these proceedings why you did not accept AMP’s offer.  If that occurs you may be required to give sworn evidence. You may (also) be cross examined on any sworn evidence given by you in support of your claim.

If you do not consider yourself to be a member of the Class, or for any other reason do not wish to participate further in the proceedings as a group member would you please sign FORM A enclosed and return it in the ReplyPaid envelope provided.

If you consider yourself to be a member of the Class, so that GIO can prepare its defence to your claim and to enable GIO to consider the merits of your claim, we ask you to complete the FORM B (questionnaire) and return it in the ReplyPaid envelope by no later than 28 February 2003. 

In the event that you do not complete FORM B (questionnaire) and return it by 28 February 2003, GIO will apply to the Court for an order that your claim be permanently stayed.  This means that if you do not complete FORM B (questionnaire) and return it, GIO will request the Court for a stay of your claim. If the Court agrees to GIO’s request, you will be prevented from taking any further part in the proceedings unless you make an application to the  Court and the Court permits you to do so.

If you are unable to answer any of the questions, you should write that you are “unable to answer” the question in the space provided.

Your answers should be posted in the enclosed Reply Paid envelope.  They will be held by an independent firm of accountants pending finalisation of the proceedings.  Copies will be provided to the respondents.

You may inspect a copy of AMP’s Part A Statement (referred to in question 1), GIO’s Part B Statement (both Booklets 1 and 2 referred to in question 2) on an internet website located at http://www.[to be advised].  If you are not connected to the internet and you wish to inspect those documents, then you should enquire at your local public library for internet access and assistance.  A statement as to the requirements necessary to be a group member is also set out on the internet site.

The questionnaire is an important document which may affect your legal rights.  You should read it carefully and you may wish to seek legal advice about its contents. You may direct any questions in relation to the questionnaire or this letter to Maurice Blackburn Cashman, the firm of solicitors acting for Mr King, on the following number, [complete] or to your own solicitor.

The Court is aware that we are writing to you in these terms.

Thank you for taking the time to complete and return the questionnaire.

Yours faithfully

FORM A

Dated:

……………………………….

(signature)

……………………………….

PRINT NAME

……………………………….

Shareholder Registration

Number (SRN)

FORM B

Questionnaire

Dated:

                                                                                                                                                …………………………..

                                                                                                                                                (signature)

                                                                                                                                                …………………………..

                                                                                                                                                PRINT NAME

…………………………..

Shareholder Registration Number (SRN)

ANNEXURE C

From GIO. 

Please read this letter carefully.

In August 1999 Shane Robert King commenced representative proceedings in the Federal Court of Australia against GIO Australia Holdings Limited (“GIO”), Grant Samuel & Associates Limited, and the former directors of GIO, David Mortimer, Bruce Hogan, Stewart Steffey, Ronald Ashton, Marina Darling, Andrew Kaldor, Lloyd Lange, David O’Halloran and Ian Pollard (the ‘Respondents’).  The representative proceedings by Mr King are on behalf of those former shareholders of GIO, who did not accept AMP’s offer for GIO shares during the takeover bid made for GIO by AMP Insurance Investment Holdings Pty Limited (“AMP”) in 1998 who allege that they suffered financial loss caused by representations and other conduct of the Respondents.  These shareholders are, for the purposes of the proceedings, called the group members.  The allegations made by Mr King in these proceedings relate to things that were said and things that were not said in the Part B Statement and in other communications by some of the Respondents to the GIO shareholders during the takeover period.  The Respondents deny these allegations and are defending the proceedings.

As you have not opted out of these proceedings you are potentially one of the group members.

If you do not consider yourself to be a group member would you please answer the question by ticking the box on FORM A which is enclosed, sign it and return it in the reply paid envelope provided.  If you do this it is not necessary to complete FORM B.

If you consider yourself to be a group member, it may become necessary for the Court to determine in these proceedings why you did not accept AMP’s offer.  If that occurs you may be required to give sworn evidence. You may (also) be cross examined on any sworn evidence given by you in support of your claim.  So that GIO can prepare its defence to your claim and to enable GIO to consider the merits of your claim, we ask you to complete FORM B (the questionnaire) and return it in the reply paid envelope by no later than 28 February 2003. 

If you are unable to answer any of the questions, you should write that you are “unable to answer the question” in the space provided.

Your answers should be posted in the enclosed reply paid envelope.  They will be held by an independent firm of accountants pending finalisation of the proceedings.  Copies will be provided to the Respondents and Mr King.

You may inspect a copy of AMP’s Part A Statement (referred to in question 1), GIO’s Part B Statement (both Booklets 1 and 2 referred to in question 2) on an internet website located at http://www.[to be advised].  If you are not connected to the internet and you wish to inspect those documents, then you should enquire at your local public library for internet access and assistance.  A statement as to the requirements necessary to be a group member is also set out on the internet site.

The questionnaire is an important document which may affect your legal rights.  You should read it carefully and you may wish to seek legal advice about its contents. You may direct any questions in relation to the questionnaire or this letter to Maurice Blackburn Cashman, the firm of solicitors acting for Mr King, on the following number, [complete] or to your own solicitor.

The Court is aware that we are writing to you in these terms.

Thank you for taking the time to complete and return the questionnaire.

Yours faithfully

 FORM A

In answering this question, it is important that you carefully read the following description of the representative group.

You are a group member if you:

a)                  were registered as an owner of shares in GIO continuously between 25 August 1998 and 4 January 1999; and

b)                  did not accept the takeover offer for those shares made to you by AMP on 25 August 1998 and varied on 9 December 1998; and

c)                  did not accept the takeover offer by reason of the various representations and conduct of the Respondents detailed in the Statement of Claim; and

d)                  suffered loss as a consequence; and

e)                  have a claim against all the Respondents.

The claim referred to in (e) is the claim summarised in the first large paragraph at the beginning of the letter enclosing this form.

Dated:

……………………………….

(signature)

……………………………….

PRINT NAME

……………………………….

Shareholder Registration

Number (SRN)

FORM B

Questionnaire

Dated:

                                                                                                                                                …………………………..

                                                                                                                                                (signature)

                                                                                                                                                …………………………..

                                                                                                                                                PRINT NAME

…………………………..

Shareholder Registration Number (SRN)