F) L AWYERS & ADR
6) REPRESENTATIVE PROCEEDINGS (GROUPS AS PARTIES)
WHAT IS IT?
• There are 3 ways to have multiple people in one party o 1) Joinder/Addition (discussed above)
o 2) Order 18 Same Interest Proceedings o 3) Part 4A Class Actions
• This topic will discussion Order 18 and Part 4A CONTEXT
• Look at joinder first
o If Joinder is inconvenient or impossible, look at order 18 or part 4A
• If more than 7 Ps, look at Part 4A
• If you want D as the representative party use Order 18
GENERAL RULES
• If, under Order 9, joinder of several parties would be inconvenient or impossible o Two types of proceedings to consider:
Traditional ‘same interest’ proceedings (Order 18 SCR)
Class actions:
• FC ‘opt out’ proceedings (Part IV A Federal Court Act)
• VSC ‘opt out’ proceedings (Part 4A Supreme Court Act)
‘SAME INTEREST’ PROCEEDINGS
WHAT IS IT?
• Where numerous Ps or Ds have the same interest in a proceeding they can all have their interest represented by some of all of the Ps/Ds
CONTEXT
• Less than 7 Ps where all Ps are not identifiable
• Can be used by P and D
EXAM
• Leading line
• Does P/D have the same interest?
• Define the class
• Courts discretion to refuse
SAME INTEREST PROCEEDING
• Leading Line
o Numerous Ps
Where numerous Ps have the same interest in a proceeding
18.01(a) the proceeding may be commenced by any one or more Ps with the SI, representing some or all of them 18.02
o Numerous Ds
Where numerous Ds have the same interest in a proceeding
18.01(a) the proceeding may be commenced against any one or more Ds with the SI as representing some or all of them 18.02
• Estate of a Deceased Person / Property Subject to a Trust o Same applies for proceedings regarding the:
Administration of the estate of a deceased person 18.01(a)(i) OR
Property subject to a trust 18.01(b)(ii)
• Defining ‘Same Interest’
o Previously
Narrow interpretation
• Will not be satisfied where proceedings brought on behalf of P’s under separate but otherwise identical contracts Markt (UK COA)
o Requires common interest, grievance and remedy o This prohibits proceedings where claims arise out of
separate contracts, and the remedy sought is damages
o Now
Broad interpretation (overruled Markt)
• Satisfied where there is a “community of interests between the plaintiffs and the class” (Brennan J) in any substantial question of law or fact Carnie v Esanda (HCA)
Analysis
• P’s Affected in the same way
o All Ps were affected in the same way if the Ps received judgment, and therefore there is a community of interest Brennan J in Carnie
• Should be interpreted in light of its purpose
o Facilitating administration of justice by enabling parties to have SI to secure a determination in one action Per
Mason CJ, Deane and Dawson JJ in Carnie
• Common question and equally effected
o SI where there is a significant question common to all members of the class and they stand to be equally affected by the declaratory relief which the appellant seeks Per Toohey and Gaudron JJ in Carnie
Separate Contracts
• Is NOT a bar to SI Carnie
Where Damages are Sought
• Carnie has no claim of damages – thus it is possible the Markt narrow interpretation will still apply in defining SI in a seeking damages where individual assessment of those damages for each P is required
• Although given the courts focus on convenience and flexibility its possible a broad view would be preferred anyway
• As it turns out, irrelevant because of S33C(2)(a)(iii) Only applies to class actions with 7+
• Define the Class o Rule
There is NO need to ID every member of the class, although they much be identified with sufficient particularly Carnie (Per Toohey &
Gaudron JJ)
E.g. Class is all people who have tapped your mum (this is NOT ok – no sufficient particularity, unless your mum kept a list?)
E.g. Class is those people with a loan agreement with the D, which is inconsistent with the Credit Act (this is ok)
E.g. Class is all members of the St Kilda Tennis Club as at 3 June 2001 (this is ok)
• Courts Discretion (quick) o Rule
Court has discretion to disallow representative proceedings r18.02 o Considerations
The effect that being represented has on the pool of Ps and Ds
More likely to allow where declaration is sought as in Carnie LEADING CASES
• Markt v Knight Steamship (1910) Eng COA (Overruled by HCA in Carnie) o Facts:
Defendant was a ship and carried large cargo from 45 different customers
Ship sunk by Russian war ship during Russo-Japanese war
Ps all lost cargo and sued under UK equivalent of order 18 in a
representative capacity for breach of contract and negligence on the part of the shipping company
• I.e. P applied to represent its own interest and interest of other 44 victims
Each P had their own contract – 45 separate contracts
• Cargo being shipped to different destinations
P alleged they had suffered a common wrong
• I.e. One wrongful act which affected all Ps o Held:
P loses – RP are NOT allowed
Even though terms identical, each contract had different cargo and prices etc…
So each claim had to be examined on its individual merits
Fletcher Moulton LJ:
• Damages are by their nature a personal remedy, and so no representative action should lie where damages is the main remedy sought
• Carnie v Esanda (1995) HCA o Facts:
Mr and Mrs C (farmers) borrowed money from Esanda Finance to buy farm equipment
Fell behind in payment so re-financed with a revised loan agreement with Esanda to enable them to pay according to their now-reduced means
• This agreement had to comply with certain statutory requirements
When they finally defaulted on the new agreement, they sought to set this new agreement aside on the basis that it did not comply with those statutory requirements
• Esanda were supposed to disclose certain fees, which were not disclosed, thus the Carnies sought to have it declared void
They did so on their own behalf and behalf of many others who had also entered such agreements with Esanda
o Held:
This was an appropriate case for the representative proceeding on the basis of the NSW equivalent of order 18
• O 18 is a “flexible rule of convenience”
• Should not be interpreted restrictively
Even though Carnies & represented parties had separate contracts, did not eliminate convenience of finding a common right to a release
Not necessary for representatives to identify every member of the class; just identify class with sufficient particularity
• SOC described it as “Those who have a credit, sale or loan contract with respondent that has been varied in a manner inconsistent with the Credit Act.”
Remitted to NSW Supreme Court, and Justice Young required notice to be given to all prospective members of that class
Then the matter settled o Analysis
One of the problems of Markt was removed, re separate contract
But the issue of damages was not resolved, as not seeking damages in that case
• Still unlikely that you could use Order 18 if seeking damages
• As it turns out, won’t need to because of S33C(2)(a)(iii) Only applies to class actions with 7+
CLASS ACTIONS
WHAT IS IT?
• 7+ Ps are represented by one/some Ps
• Brought in to replace Order 18 Same Interest CONTEXT
• 7+ Ps represented by one/some Ps
• Note that rules are for the FEDERAL COURT and SUPREME COURT only o Use the right set of rules!
EXAM
• Does P meet the Requirements to Bring a Class Action
• Process of Commencing
• Opt Out / Notice
• Discontinue
• Costs
FEDERAL COURT: OPT-OUT PROCEEDINGS (FEDERAL COURT ACT PART IVA) DEFINITIONS
• From S33A
o Representative Proceedings
Proceedings that part IVA allows for are o Representative Party
Person who commences the proceeding
o Group Members
Members of group on whose behalf the proceeding is commenced
• Applicant AND Respondent
REQUIREMENTS TO COMMENCE CLASS ACTIONS
• 3 Requirements to Commence Proceedings (from S33C(1)) – Must have all 3 o 7+ Ps have Claim Against the Same R
Numbers of Ps
• Rule
o There must be 7+ Ps who have claim against same R 33C(1)(a)
• If Less than 7?
o If less than 7 use joinder
• 7 or 8?
o Where there are 7 or 8, might want to use joinder as if any 1 or 2 Ps drop out then class action fails
All Ps have Claim Against all Rs
• Rule
o Each member of the group must have a claim against every respondent Sackville J in Philip Morris (followed by Rod Investments)
• Criticism
o Heavily criticised by Finkelstein J in Bray v Hoffman-La Roche (VLRC agrees with Finkelstein)
o Argued it has effect of defeating purpose of s33C
o Suggested that so long as everyone has an action against someone else, the section should apply (as long as
requirements met) o Similar/Related Circumstances
Rule
• The claims are all in respect of, or arise out of, the same, similar or related circumstances 33C(1)(b)
o Substantial Issue of Law or Fact
Rule
• The claims of all Ps give rise to a substantial issue of law or fact 33C(1)(c)
Multiple Issues?
• Where multiple issues, just have to show that one of them is substantial Johnson Tiles v Esso
PROCESS OF COMMENCING
• Things that don’t Affect RP
o Relief Sought does NOT affect RP
RP can be commenced whether or not the relief sought is:
• Equitable S33C(2)(a)(i)
• Consists of damages S33C(2)(a)(ii)
• Includes claims for damages that required individual assessment S33C(2)(a)(iii)
o Note this addresses the Markt/Carnie problem – RP can apply for proceedings seeking damages that need to be individually assessed
• The same or different for each person represented S33C(2)(a) (iv)
o Separate K’s/Transactions/Acts/Omissions does NOT affect RP
RP can be commenced whether or not the proceeding:
• is concerned with separate Ks/transactions between R and individual group members S33C(2)(b)(i)
• involves separate acts/omissions of R in relation to individual group members S33C(2)(b)(ii)
• Originating Process o Writ
Must be commenced by writ (not originating motion) s33H(1) o Endorsement on the Writ
Endorsement on the writ must include: s33H(2) FCA
• (a) describe or otherwise identify the group members to whom the proceeding relates; AND
• (b) specify nature of the claims made on behalf of group members and the relief claimed; AND
• (c) specify the questions of law or fact common to the claims of the group members
o Names and Numbers in the Group
Not necessary to name the members or specify the number of people in the group s33H(3)
o Standing
All Ps must have sufficient standing to commence proceedings on their own behalf s33D FCA
OPTING OUT + NOTICE
• Opting Out o Policy
Potential RJC issues as if P1 is a member of a group in a proceeding that is brought, P1 is bound by the decision of that proceeding and can NOT reopen the case
System could either be opt-in or opt-out
• Opt-in: members of the representative group must elect to join the group
• Opt-out: members bound by judgment unless they opt-out (used in Aus)
o Opt-Out Rules
Rule
• Group member may opt out of the representative proceeding by giving written notice s33J(2)
Court to Fix Opt-Out Date
• Court must have fixed a date before which a group member can opt out s33J(1)
• Except with leave of the Court, trial must not commence earlier than the opt out date s33J(4)
• Court can extend the period to opt out s33J(3)
Notice
• Notice must be given to group members in relation to:
s33X(1)
o The commencement of proceeding o The right of group members to opt out o The opt out date
• Can be given by any means (I.e. ad in the newspaper)
• Court should not order personal service, unless satisfied that is reasonably practicable and not unduly expensive s33Y(4) DISCONTINUATION OF PROCEEDINGS
• Rule
o Court can order the proceeding discontinue where:
Group number drops below 7 s33L FCA
Costs of identifying and distributing proceeds would be excessive s33M FCA:
Interests of justice require it because s33N FCA
• (a) costs would exceed costs of individual proceedings; OR
• (b) relief can be obtained by means of proceeding other than representative proceeding; OR
• (c) Won’t provide efficient & effective means of dealing with claims of group member; OR
• (d) Otherwise inappropriate that claims be pursued by means of a RP
• Discretion Required
o Cannot discontinue representative proceedings or settle unless get approval from the Court s33V
COSTS
• Group Members and Costs
o Can be ordered against representative party (P) or respondent (D) but not against the group member s43(1A)
Federal Court Act: s 43(1A)
Supreme Court Act: s 33ZD
o Exception: sub-groups – ss 33Q & 33R what is this
Court can create a sub-group within the RP if there are specific issues to be isolated within the group
The court may elect P1 to be RP of the sub-group
• If court does this, P1 is liable for costs associated with the sub-group instead of the main P representing the whole class
LEADING CASE
• Phillip Morris v Nixon (2000) FFC o Facts
Representative proceeding commenced on behalf of a group of people who suffered a disease caused by smoking
Ps claimed to have been induced to begin/continue smoking by the actions of one or more of the three tobacco companies they names as respondents
o Problem
Conduct of respondents was not collective conduct
Three separate companies all running their own businesses, producing their own ads, all had same sort of product and same goal
Each P smoked different brands, changed brands, induced to start and continue for different reasons
• But all applicants didn’t have claim against all R’s
o Held
Sackville J: If the individual claims of each member of the represented group had to be pleaded by reference to specific dates and events, the representative procedure might well be rendered ineffective for the very kind of group claim it is intended to facilitate.
Each group member must have a claim against every respondent
SUPREME COURT ‘OPT OUT’ PROCEEDINGS: SAME RULES APPLY SAME
• Relevant section is Part 4A Supreme Court Act
o Exactly the same sections as FCA, but using the SCA
• Came into operation in 2000
• Based on Part IVA of the FCA – also an opt out system