FEDERAL COURT OF AUSTRALIA

Winterford v Pfizer Australia Pty Ltd [2012] FCA 1199

REASONS FOR JUDGMENT

1    I have before me today two proceedings brought under Part IVA of the Federal Court of Australia Act 1976 (Cth) (“the Act”). Those proceedings are VID 4 of 2010 Winterford v Pfizer Australia Pty Ltd (“the Pfizer matter”) and VID 5 of 2010 Collin v Aspen Pharmacare Australia Pty Ltd and Anor (“the Collin matter”).

2    In each proceeding, the parties seek an order which would have the effect of requiring group members who have not opted out of the proceeding, to register with the solicitors for the applicant. In addition, the following order imposing a sanction upon those group members who fail to register is sought by the parties in the Pfizer matter:

Pursuant to ss 33ZF and 33ZG of the Act and the implied powers of the Court, and subject to further Order, any person who is a group member and who neither opts out nor delivers a completed Registration Notice in accordance with paragraph 5 or paragraph 8 of this Order, respectively, by [[date to be inserted]] will be bound by any judgment in this proceeding, but will not be entitled to share in the benefit of any order or judgment in favour of the applicant and group members and is barred from making any claim against the respondent in respect of or relating to the subject matter of this proceeding.

A similar further order was sought by the parties in the Collin matter.

3    Whilst I am satisfied that the Court has the power to make orders of that kind (see McMullin v ICI Australia Operations Pty Ltd (1998) 84 FCR 1 at 4 (Wilcox J); Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (No.2) [2003] VSC 212 at [65] (Gillard J); cf King v AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd) [2002] FCA 1560 at [9] (Moore J)), for the following reasons I am not prepared to make orders to that effect.

4    The class actions regime under Part IVA of the Act is designed to require little or no active involvement by group members: P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 2) [2010] FCA 176 at [16] (Finkelstein J). Group members need take no positive step in the prosecution of the proceeding to judgment to gain whatever benefit its prosecution may bring: Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1 at [40] (Gaudron, Gummow and Hayne JJ). Group members are group members principally for the limited purpose of taking the benefit, or suffering the burden, of the findings made by the Court on the findings of common questions: P Dawson Nominees at [16] (Finkelstein J).

5    In the context of such a scheme, there must be some compelling reason demonstrated before the Court will order group members to go beyond their essentially passive role: P  Dawson Nominees at [17] (Finkelstein J).

6    A compelling reason which may make it appropriate to require group members to take a positive step in order to close the class of group members is the need to give finality to the proceeding. An example of such a case is McMullin (see in particular at 5) (Wilcox J).

7    In my view, the fact that a respondent says that it is not willing to enter into settlement negotiations because of uncertainty as to the quantum of potential group members’ claims, as is the case in the Collin matter, is not a compelling reason of the kind that would justify requiring a group member to take a positive step so as to enable the class to be closed. As Finkelstein J said in P Dawson Nominees at [31]:

First, it is a common, if not an inevitable, feature of class actions that the defendant will be faced with uncertainty regarding the quantum of potential group member claims. This is partly because of the essentially passive role of group members, already discussed.

Those observations were endorsed by Forrest J in Thomas v Powercor Australia Ltd (No.1) [2010] VSC 489 at [38]:

I adopt, unhesitatingly, the first of the propositions advanced by Finkelstein J. That statement is underpinned by the very nature of the [class actions] model chosen by the legislature.

8    I appreciate that settlement of class actions without the quantification of group members’ claims presents difficulties. There are, however, a multitude of mechanisms available for structuring settlements. Many years of experience in both this country and in countries with other opt-out regimes, demonstrates that respondents are not only able to enter into negotiations without a quantification of group member claims, but can often successfully settle actions in those circumstances.

9    In the Collin matter, pleadings are not yet closed, common questions are yet to be settled, let alone determined, opt-out notices are about to be advertised and no settlement discussions have been undertaken. Nor are such discussions proposed in the absence of the Court making orders which effectively require group members to opt-in. In my view, for the Court to impose upon group members a positive requirement to opt-in, at this juncture, would turn on its head the very nature of the opt-out model chosen by the legislature.

10    The position in the Pfizer matter is somewhat different because settlement discussions have commenced and a sampling process has begun in which the respondent will assess the claims of some group members. It is expected that assessments of some 18 group members may be completed by about 1 February 2013. Whilst that circumstance represents a move down the track, it is not in my view a sufficiently compelling reason at this time to justify requiring a group member to take the positive step of opting-in on punishment of having that member’s claim for compensation potentially barred. It may well be that by February 2013 the parties in the Pfizer matter will be able to demonstrate a compelling reason for such an order because by that time it may be the case that closing the class will be a justifiable step in facilitating the bringing of the proceeding to finality.

11    I have been referred to a number of cases in which judges of this Court and of the Supreme Court of Victoria have made orders of the kind or similar orders to those here proposed. Some of the orders made that I have been referred to are accompanied by reasons for judgment; many are not. Those for which reasons for judgment are available are:

    Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (No.2) (Gillard J);

    King v AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd) (Moore J);

    McMullin v ICI Australia Operations Pty Ltd (Wilcox J);

    Perry v Powercor Australia Ltd [2012] VSC 113 (Beach J); and

    Thomas v Powercor Australia Ltd [2011] VSC 614 (Beach J).

12    All of those cases appear to have reached a far more advanced position towards finality than the position of either of the matters before me.

13    The Court will not make orders, at this juncture, which require group members to   opt-in through a registration process under threat of sanction if they fail to register. I am, however, minded to make orders which include the publication of notices which have the effect of encouraging group members to register with the applicant’s solicitors, but to do so without threat of sanction. I will give the parties in both the Pfizer matter and the Collin matter an opportunity to bring in minutes of proposed orders which reflect these reasons.

Associate:

Dated:    31 October 2012