FEDERAL COURT OF AUSTRALIA

Jarra Creek Central Packing Shed Pty Ltd v Amcor Limited [2008] FCA 575

REPRESENTATIVE PROCEEDINGS – opt out process – integrity of process affected by statements of legal representative – whether statements misled group members – need for correcting publication.

Federal Court of Australia Act 1976 (Cth) ss 23, 33J, 33K, 33X

Australian Competition and Consumer Commission v Visy Industries Holdings Pty Limited (No 3) [2007] FCA 1617 cited

Johnstone v HIH Limited [2004] FCA 190 considered

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

JARRA CREEK CENTRAL PACKING SHED PTY LTD (ACN 085 691 425) v AMCOR LIMITED (ACN 000 017 372), AMCOR PACKAGING (AUSTRALIA) PTY LIMITED (ACN 004 275 165), FIBRE CONTAINERS (QUEENSLAND) PTY LIMITED (ACN 051 607 517), VISY BOARD PTY LIMITED (ACN 005 787 913), VISY INDUSTRIES HOLDINGS PTY LTD (ACN 005 787 968), VISY INDUSTRIES AUSTRALIA PTY LTD (ACN 004 337 615)

NSD 702 OF 2006

TAMBERLIN J

29 APRIL 2008

SYDNEY

THE COURT ORDERS THAT:

1.                  The applicant, by its legal representatives, issue a notice (“the Correcting Notice”) in accordance with these reasons.

2.                  The opt out date in this proceeding, previously set by Order 1 of 13 March 2008, be extended from 4 pm on 30 April 2008 to 4 pm on 30 May 2008.

3.                  The application be otherwise dismissed.

4.                  The applicant bear the costs of issuing the Correcting Notice.

5.                  The costs of this application be reserved.

THE COURT DIRECTS THAT:

6.                  The parties consult with a view to agreeing upon the form and content of the Correcting Notice, and send to my Associate in chambers within three days of the date of these reasons the Agreed Correcting Notice for approval by the Court.

7.                  The parties, if unable to agree on the form and content of the Correcting Notice, send to my Associate in chambers within three days of the date of these reasons competing versions of the Correcting Notice with brief reasons for settlement by the Court.

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

REASONS FOR JUDGMENT

1                     The fourth to sixth respondents (“the Visy parties”) filed a Notice of Motion on 11 April 2008 which seeks orders that:

·                    Mr Slade of Maurice Blackburn Pty Ltd (“Maurice Blackburn”), solicitor for the applicant (“Jarra Creek”), file and serve an affidavit to identify statements that he, or any other representative of that law firm, have made to the press in relation to this proceeding;

·                    The date by which group members may opt out of this proceeding be extended from 4 pm on 30 April 2008 to 4 pm on 30 May 2008;

·                    Maurice Blackburn publish at its own cost a notice correcting inaccurate and misleading statements made by Mr Slade in relation to this proceeding; and

·                    Maurice Blackburn be restrained from making statements to the press that repeat inaccurate and misleading statements previously made.

2                     The orders sought in the Notice of Motion are opposed on the basis that such orders are neither justified nor necessary.  I note that, since orders are sought against Maurice Blackburn, they have the necessary standing to appear and make submissions on this application.

Relevant Background

3                     Jarra Creek brought a class action proceeding against the first to third respondents (“the Amcor parties”) and the Visy parties seeking damages and compensation suffered as a consequence of alleged participation in cartel arrangements over a period from January 2000 until September 2004.  The case as presently constituted is set out in the Further Amended Statement of Claim (filed on 3 December 2007), which describes the group members as those persons who purchased and paid more than $100,000 for corrugated fibreboard packaging products in Australia during the period 1 May 2001 to 1 May 2005.  As required by s 33X(1)(a) of the Federal Court of Australia Act 1976 (Cth) (“the Federal Court Act”), a notice to opt out of the representative proceeding was given to group members.  By orders of 13 March 2008, I ordered that the notice be published by no later than 28 March 2008, and fixed the time and date by which a group member could opt out of the proceedings as 4 pm on 30 April 2008.  The form of the notice was, after some discussion at the hearing, agreed by the parties, and provided information to group members about the nature of the proceedings and their rights in respect of it.  On 26 March 2008, the opt out notice was duly published in nine metropolitan and regional newspapers around Australia. 

4                     After 13 March 2008, Mr Slade made public statements to various media bodies concerning the anticipated amount of damages he thought the Court might award if Jarra Creek were successful in the proceeding.  The Visy parties contend that such statements were inaccurate, misleading and detrimental to the integrity of the opt out procedure.

5                     An example of such comments is found in the publication, “The Weekly Times”, in which Mr Slade was quoted as saying on 19 March 2008:

‘The ACCC alleges an overcharge of between 8 and 23 per cent ... if it was 10 per cent then being a $2 billion annual market and with the cartel running for five years the amount taken from the Australian economy would be $1 billion.’

The making of this statement is not denied by Mr Slade, who did not appear to give evidence on this application.  In addition, it is common ground between the parties that the ACCC never made any statement to the above effect. 

6                     In response to these comments, the solicitors for the Visy parties wrote to Mr Slade on 31 March 2008 and complained of the misleading and inaccurate nature of the statements published in “The Weekly Times”.  Notwithstanding this letter, Mr Slade gave an interview on ABC local radio in Mildura-Swan Hill on 2 April 2008, in which he made the following comments:

‘… if you add up the general overcharge alleged by the Australian Competition and Consumer Commission to non-contract customers over the period of the cartel, it’s between 8 and 23 per cent ... we’ve been saying publicly that we think this case is worth between $200 and $300 million’.

In the interview, Mr Slade also said that this estimate may be “wildly incorrect”, and that it was “very, very difficult to tell” how much money a group member might receive.  This qualification was not present in the article published in “The Weekly Times”.

7                     On 7 April 2008, Maurice Blackburn replied to the letter of 31 March 2008 and agreed that the article in “The Weekly Times” was not accurate in stating that the ACCC made the statements attributed to it.  Maurice Blackburn acknowledged that the article should have stated that Jarra Creek alleged an overcharge of between 8 and 23 per cent during the relevant period, but rejected any suggestion that the inaccuracy could cause a person to be misled in any relevant way.  In addition, Maurice Blackburn offered an undertaking to the Visy parties that it would not in the future say that the ACCC alleged an overcharge of between 8 and 23 per cent.  Maurice Blackburn also pointed to Mr Slade’s qualifications of his comments, which made it clear that he considered that the range of the overcharge was open to different estimates, and to the various publications of the ACCC which refer to estimates of “typical cartel overcharges” of 10 per cent or more. 

8                     The next event was the filing of the Notice of Motion by the Visy parties on 11 April 2008.

Legal Principles

9                     It is not contentious that the Court has power under the Federal Court Act (see ss 23, 33J, 33K and 33X) to make orders, where appropriate, to protect the integrity of the opt out process.  I referred to the relevant principles in Johnstone v HIH Limited [2004] FCA 190, where I said at [105]:

‘The Court has an important and continuing role in managing representative proceedings in the public interest to rectify any potentially misleading communications to class members or potential class members, in order to ensure that there is no misunderstanding engendered by such communications, particularly when they emanate from legal advisers, as to rights and obligations and procedures to be followed by recipients of such communications.’

10                  The principle was also expressed by Goldberg J in Williams v FAI Home Security Pty Ltd (No 3) [2000] FCA 1438 at [24] in the following way:

‘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.’

11                  Evident from both the above comments is the necessity of protecting the integrity of the opt out process by ensuring the accuracy of public representations made during the period of that process.

CONSIDERATION

12                  The Visy parties refer to the Further Amended Statement of Claim and say that the statements of Mr Slade are inaccurate and misleading because they incorrectly attributed to the ACCC a comment that the alleged cartel activity of the Visy parties and the Amcor parties resulted in an overcharge of between 8 and 23 per cent.  In particular, the Visy parties say that the references by Mr Slade to damages in the amount of hundreds of million, or even a billion, dollars could not be reasonably supported and should not have been attributed to the ACCC.  The Visy parties also emphasise that Mr Slade’s comments that Maurice Blackburn wanted people to know what possible benefits they might obtain as a result of their decision to remain in the group or to opt out of it indicates that Mr Slade was conscious of the importance and potential effect of his statements vis-à-vis the opt out process.

13                  In relation to Mr Slade’s references to a range of figures between 8 and 23 per cent, the Visy parties also say that these statements are misleading because they convey that the percentages relate to an assessment of loss on a per annum basis rather than in respect of the total five year period.

14                  Although the attribution of the statements to the ACCC is acknowledged to be incorrect, counsel for Maurice Blackburn sought to minimise the importance of such an attribution.  Counsel argued that the ACCC had made several statements in various publications which, taken together with inferences which can be drawn from the judgment of Heerey J in the proceeding between the ACCC and the Visy parties and others (see Australian Competition and Consumer Commission v Visy Industries Holdings Pty Limited (No 3) [2007] FCA 1617), support the inference that the ACCC held a view that an overcharge in the order of 10 per cent existed in this case.  Counsel for Maurice Blackburn also submitted that there was some qualification of the range of between 8 and 23 per cent overcharge in the Further Amended Statement of Claim at [100]-[103], which points to the necessity for discovery before damages can be further particularised.

15                  Counsel for Maurice Blackburn further submitted that, when considering the effect of the statements, regard should be had to the fact that the group members, as defined, are not simply a general cross-section of the public, but rather the specific group of persons or entities who have contracted for more than $100,000 worth of packaging products over the five year period.  It is said that such persons should be treated as a “sophisticated” class of people who would be more likely to consult legal advisers and rely on their own business acumen rather than accept, without qualification, broad assertions by Mr Slade.  I am not persuaded that such an inference can reasonably be drawn in the present case.  The fact that someone pays $100,000 or more for packaging products does not, in my view, mean that they are more or less astute or more or less likely to be influenced by false representations in this matter than any other members of the community.

16                  In considering this application, I am conscious of the uncertainty which must surround any quantification of damages at such an early stage in the proceeding, before the settlement of pleadings, return of subpoenas, full discovery and filing of evidence.  However, it is necessary to ensure that the appraisal by an applicant (or any group member in a representative proceeding) of its position is not artificially inflated as to the likely monetary rewards which will flow from the litigation.  This is particularly important in a complex representative proceeding, where it might be said that a group member will generally be less likely to opt out of the proceeding when the return, in its perception, is likely to be great.  Of course, this may not always be so, and there may be particular circumstances apart from the amount of the prospective return, such as a desire to exercise greater control over the litigation process or the ventilation of specific issues, which could have an impact upon the decision to opt out.

17                  Notwithstanding attempts by counsel for Maurice Blackburn to downplay the significance of the incorrect attribution to the ACCC, I consider that it was an important misrepresentation.  This is because it is reasonable to conclude that the view of the ACCC – given its detailed knowledge of the alleged cartel arrangement, its resources and its statutory function – would carry significant weight with the group members in this case, and perhaps engender in them an erroneous assumption that the view of Mr Slade or Jarra Creek in relation to the eventual outcome of the case is a view shared by the ACCC.  Although Maurice Blackburn has not hesitated to acknowledge the inaccuracy of the attribution of the relevant comments to the ACCC and has also offered not to repeat those comments, no satisfactory public acknowledgment has been made.  Moreover, Mr Slade has not given any explanation of the basis on which the comments were made and what mechanisms are now in place to ensure they are not repeated.

18                  In my view, the statements by Mr Slade are capable, on one reading, of misleading group members.  In particular, the incorrect attribution of their content to the ACCC imparts to those statements a quality of authority that they would not otherwise attract if they were seen as coming only from Jarra Creek or its legal representatives.  Indeed, this impression of greater authority is especially important when statements are made in the context of an opt out procedure, where group members are attempting to decide whether it is in their best interests to remain a part of the group or seek to conduct separate litigation.  In particular, the reference to a total overcharge of one billion dollars could have a significant impact on a group member’s opt out decision.

19                  In this case, I consider that there is a need to publish a correction of the misstatements and that as a consequence the date by which a notification of opting out should be given to the Court is deferred by one month.  I do not think that an inter partes undertaking by Maurice Blackburn to the Visy parties is sufficient to remedy the potential impact of the false statement in this case.  Accordingly, I shall order that a correcting statement be published forthwith.  The form and content of that correcting notice should be the subject of discussion between the parties, however it should as a minimum include (i) a correction of the misstated attribution; (ii) a statement that the opt out date has been extended from 4 pm on 30 April 2008 to 4 pm on 30 May 2008; and (iii) a statement of the difficulty of quantifying at this stage the amount of damages that might eventually be awarded by the Court if the representative proceeding is successful.  I direct that, once the parties agree on the form of the notice, it should be sent to my Associate in chambers within three days of the date of these reasons for approval by the Court.  If agreement cannot be reached, the points of difference should be identified, and the competing forms of notice sent to my Associate in chambers within three days of the date of these reasons, with brief reasons, for settlement by the Court.  By adopting this course, the Court seeks to make it perfectly clear to anyone presently within the group that the integrity of the opt out process is closely monitored by the Court in order to ensure that it is properly carried out. 

20                  With respect to the other relief sought by the Visy parties, I do not think that an injunction against Maurice Blackburn is necessary.  As I have noted, Maurice Blackburn proffered an undertaking not to repeat the comments which attribute certain representations to the ACCC.  A restraining order would, in my view, be inappropriate in such circumstances.  I have no doubt that this judgment will induce caution on the part of Maurice Blackburn in the future.  In addition, I do not consider that there are reasonable grounds established for any inference that Mr Slade has made other similar statements, and so I am not prepared to order that he file an affidavit particularising any such further statements.  

21                  I consider that the applicant should bear the costs of correcting the statement in relation to the ACCC.

22                  The costs of this application are reserved.

Associate:

Dated:         29 April 2008