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Federal Court of Australia - Full Court Decisions |
Last Updated: 15 July 2003
Bray v F Hoffmann-La Roche Ltd [2003] FCAFC 153
COSTS - security for costs- whether security should be ordered against representative party - factors to be taken into account
PRACTICE AND PROCEDURE - leave to serve out of the jurisdiction - multiple causes of action - need to show prima facie case for relief - relief refers to remedy not cause of action
REPRESENTATIVE PROCEEDINGS - procedural aspects - whether every member of the group must have a claim against every respondent - whether substantial common issue of law or fact
TRADE PRACTICES - jurisdiction - action based on conduct engaged in outside Australia -s 5(1) of Trade Practices Act 1974 (Cth) - whether involving jurisdictional facts
WORDS AND PHRASES - "jurisdiction" - "relief" - "claim"
Acts Interpretation Act 1901 (Cth) ss 21, 38
Federal Court of Australia Act 1976 (Cth) ss 5, 33C, 33ZG(v), 43(1A), 59
Trade Practices Act 1974 (Cth) ss 5, 45, 80, 86(1), 163A,
Federal Court Rules O 8 r 1 and r 2, O 4 r 3
Common Law Procedure Act 1852 (UK) ss 18, 19
Abebe v Commonwealth of Australia (1999) 197 CLR 510; [1999] HCA 14 considered
Agar v Hyde (2000) 201 CLR 552; [2000] HCA 41 cited
AIMS Computer Systems Pty Limited v IPC Corporation (Australia) Pty Limited [1996] FCA 847 considered
Anisminic Ltd v Foreign Compensation Commission [1968] 2 QB 862 applied
Aussie Home Security Pty Ltd v Sales Systems Australia Pty Ltd (2000) 172 ALR 141; [2000] FCA 498 considered
Australian Competition and Consumer Commission v Chats House Investments Pty Limited (1996) 71 FCR 250 referred to
Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd [1998] FCA 819; (1998) 84 FCR 512 referred to
Australian Competition and Consumer Commission v Golden Sphere International Inc (1998) 83 FCR 424 referred to
Barrett v United States 853 F2d 124, 131 (2d Cir 1988) cited
Beck v Value Capital Ltd (No. 2) [1975] 1 WLR 6 applied
Butchers Union Local No. 498 v SDC Investment Inc 788 F2d 535, 540 (9th Cir 1986) cited
Cameron v McBain [1948] VLR 245 cited
Caterpillar Inc. v John Deere Limited (1999) 48 IPR 1; [1999] FCA 1503 considered
Cell Tech Communications Pty Ltd v Nokia Mobile Phones (UK) Ltd (1995) 58 FCR 365 affirmed
Cropper v Knight (1901) 17 TLR 299 cited
Cupit v United States 964 F Supp 1104, 1107 (1997) cited
Data Disc Inc v Systems Technology Associations Inc 557 F2d 1280, 1285 (9th Cir 1977) referred to
Décor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 655; (1991) 33 FCR 397 cited
Fencott v Muller [1983] HCA 12; (1983) 152 CLR 570 considered
Florins v Bank of Victoria Limited (1891) 17 VLR 183 cited
Graham Barclay Oysters Pty Ltd v Ryan [2000] FCA 1099 referred to
Guaranty Trust Company of New York v Hannay & Company [1915] 2 KB 536 applied
Hannay and Co v Smurthwaite [1893] 2 QB 412 cited
Huddart, Parker and Co Pty Ltd v Moorehead [1909] HCA 36; (1909) 8 CLR 330 cited
Insurance Corporation of Ireland Ltd v Compagnie des Bauxites de Guinee 456 US 694, 707-709 (1982) cited
Jumbunna Coal Mine No Liability v Victorian Coal Miners' Association [1908] HCA 87; (1908) 6 CLR 309 referred to
Laurie v Carroll [1958] HCA 4; (1958) 98 CLR 310 cited
Letang v Cooper [1965] 1 QB 232 cited
Malone v Great Northern Railway Co (Ireland) [1931] IR 1 cited
Manitoba & North-West Land Corporation v Allan [1893] 3 Ch 432 cited
Matthews v Kuwait Bechtel Corporation [1959] 2 QB 57 cited
Melville v Craig Nowlan & Associates Pty Ltd [2002] NSWCA 32; (2002) 54 NSWLR 82 cited
Merpro Montassa Ltd v Conoco Specialty Products Inc [1991] FCA 70; (1991) 28 FCR 387 cited
Metall Und Rohstoff A.G. v Donaldson Lufkin & Jenrette Inc [1990] 1 QB 391 applied
Parisienne Basket Shoes Proprietary Limited v Whyte [1938] HCA 7; (1938) 59 CLR 369 cited
Pascoe v Richards (1881) 50 LJ Ch 337 cited
Philip Morris (Australia) Ltd v Nixon [2000] FCA 229; (2000) 170 ALR 487 not followed
Polyukhovich v Commonwealth of Australia [1991] HCA 32; (1991) 172 CLR 501 referred to
Rediffusion (Hong Kong) v Attorney-General of Hong Kong [1970] AC 1136 cited
RGC Mineral Sands Pty Ltd v Wimmera Industrial Minerals Pty Ltd (1998) 89 FCR 458 cited
Robson v Scott [1962] VR 540 cited
Ryan v Great Lakes Council (1997) 149 ALR 45 cited
Ryan v Great Lakes Council [1999] FCA 177 cited
Schneider v Hoechst Schering Agrevo Pty Ltd (2000) Aust Torts Reports 81-560; [2000] FCA 154 considered
SEC v American Capital Investments Inc 98 F 3rd 1133 (9th circ 1996); cert denied sub nom Shelton v Barnes 520 US 1185 (1997) cited
Siderman De Blake v Republic of Argentina 965 F2d 699, 713 (9th Cir 1992); cert denied 507 US 1017 (1993) cited
Siskina (Cargo Owners) v Distos Campania Naviera SA [1983] UKHL 5; [1979] AC 210 cited
Sociétié Générale de Paris v Dreyfus Brothers (1885) 29 ChD 239 discussed
Steel Company v Citizens for a Better Environment [1998] USSC 24; 523 US 83 (1998) cited
Strickland v Rocla Concrete Pipes Ltd [1971] HCA 40; (1971) 124 CLR 468 considered
Sydbank Soenderjylland A/S v Bannerton Holdings Pty Ltd (1996) 68 FCR 539 considered
Symington v Hoechst Schering Agrevo Pty Ltd (1997) 78 FCR 164 discussed
Tassell v Hallen [1892] 1 QB 321 cited
The Hagen [1908] P 189 cited
The Queen v Judges of the Federal Court of Australia; Ex parte Western Australian National Football League (Inc) [1979] HCA 6; (1979) 143 CLR 190 cited
The Washbourne and Moen v Cunard Steamship Company (1889) 5 TLR 592 cited
Thomas v The Duchess Dowager of Hamilton (1886) 17 QBD 592 cited
Trade Practices Commission v Gillette Company (No. 1) (1993) 45 FCR 366 considered
Truth About Motorways Pty Limited v Macquarie Infrastructure Investment Management Limited (2000) 200 CLR 591; [2000] HCA 11 discussed
Tycoon Holdings Ltd v Trencor Jetco Inc [1992] FCA 25; (1992) 34 FCR 31 discussed
United States v North Carolina 180 F3d 574, 580-581 (4th Cir 1990) cited
United States v Swiss American Bank Ltd 274 F3d 610, 625-627 (2001) cited
Williams v FAI Home Security Pty Ltd (No 4) (2000) 180 ALR 459; [2000] FCA 1925 cited
Williams v The Society of Lloyd's [2000] VSCA 38; [1994] 1 VR 274 applied
Western Australia v Vetter Trittler Pty Ltd (In liq) (Receiver and Manager Appointed) (1991) 30 FCR 102 applied
Woodhouse v McPhee (1997) 80 FCR 529 considered
WSGAL Pty Ltd v Trade Practices Commission (1992) 39 FCR 472 considered
Australian Law Reform Commission, Grouped Proceedings in the Federal Court, Report No. 46, (1988)
First Report of the Commissioners Enquiring into the Process, Practice and System of Pleading (1851) (UK)
TRUDY BRAY v F HOFFMANN-LA ROCHE LTD & ORS
V 359 of 1999
CARR, BRANSON & FINKELSTEIN JJ
15 JULY 2003
MELBOURNE
IN THE FEDERAL COURT OF AUSTRALIA |
|
VICTORIA DISTRICT REGISTRY |
|
An Application for Leave to Appeal from a Judge of the Federal Court of Australia
1. F Hoffmann-La Roche Ltd, Roche Vitamins Asia Pacific Pte Ltd, Aventis SA, Aventis Animal Nutrition SA, Aventis Animal Nutrition Asia Pacific Pte Ltd, BASF Aktiengesellschaft, and BASF East Asia Regional Headquarters be granted leave to appeal from paragraphs 1, 3 and 4 of the orders made by Merkel J on 13 March 2002.
2. The appeals brought pursuant to the leave granted by paragraph 1 hereof be dismissed with costs.
3. Roche Products Pty Ltd, Roche Vitamins Australia Pty Ltd, Aventis Animal Nutrition Pty Limited and BASF Australia Limited be granted leave to appeal against paragraph 2 of the order made by Merkel J on 15 November 2002.
4. Aventis Animal Nutrition Pty Ltd be granted leave to appeal against paragraph 6 of the order made by Merkel J on 15 November 2002 to the extent that his Honour ordered Aventis Animal Nutrition Pty Ltd to pay the costs of Trudy Bray of and incidental to its application for security costs.
5. The appeal of Aventis Animal Nutrition Pty Ltd against paragraphs 2 and 6 of the order made by Merkel J on 15 November 2002 be allowed to the extent that his Honour dismissed the application of Aventis Animal Nutrition Pty Ltd for an order that Trudy Bray provide security for costs and ordered Aventis Animal Nutrition Pty Ltd to pay the costs of Trudy Bray of and incidental to its application for security for costs and those orders to be set aside to that extent.
6. The application of Aventis Animal Nutrition Pty Ltd for an order that Trudy Bray provide security for costs be remitted to Merkel J for further consideration.
7. Except as provided by paragraph 5 hereof, the appeals brought pursuant to the leave granted by paragraph 3 hereof be dismissed with costs.
IN THE FEDERAL COURT OF AUSTRALIA |
|
VICTORIA DISTRICT REGISTRY |
VG 359 OF 1999 |
An Application for Leave to Appeal from a Judge of the Federal Court of Australia
JUDGES: |
CARR, BRANSON & FINKELSTEIN JJ |
DATE: |
15 JULY 2003 |
PLACE: |
MELBOURNE |
CARR J:
INTRODUCTION
1 These are motions for leave to appeal against a range of interlocutory orders. The orders were concerned with service of process outside the Commonwealth, the stage during the course of a proceeding at which a Court should decide whether it has jurisdiction, the extended application of the Trade Practices Act 1974 (Cth) ("the TPA"), the requirements for the commencement of a representative proceeding under Part IVA of the Federal Court of Australia Act 1976 (Cth) ("the FCA"), and security for costs in such a proceeding. There were two judgments. The first, delivered on 13 March 2002, dealt with all of the issues other than those arising under Part IVA of the FCA (which included the application for security for costs). The second judgment, delivered on 15 November 2002, dealt with those issues.
FACTUAL AND PROCEDURAL BACKGROUND
2 There are eleven respondents to the originating process. All of them are companies involved in one way or another in the manufacture and sale of vitamin products. They can be conveniently divided into three groups being "Roche", "Aventis" (formerly Rhone Poulenc) and "BASF". There are several respondents in each group, some incorporated in Australia and some overseas.
3 During the 1990s certain companies in each of the three groups entered into and carried into effect an international price fixing and market sharing arrangement ("the Cartel Arrangement") in respect of particular vitamin products. This gave rise to prosecutions in the United States of America, Canada and Europe and pecuniary penalty proceedings in Australia against companies in the three groups. A number of the companies pleaded guilty to the charges or admitted liability. I will describe those proceedings very briefly and give some details of the fines and pecuniary penalties imposed.
4 The first respondent, F Hoffmann-La Roche Ltd ("Roche Europe") and the tenth respondent, BASF Aktiengesellschaft ("BASF Europe") admitted criminal liability under s 1 of the Sherman Antitrust Act and s 45(1)(c) of the Canadian Competition Act. They also admitted infringing the competition law of the European Union. In the American proceedings they agreed to pay fines of US$500 million and US$225 million respectively. In the European proceedings fines were imposed of Eu462 million (about $A900 million) and Eu296.16 million (just under $A600 million) respectively.
5 The sixth respondent, Aventis SA, formerly Rhone Poulenc SA, ("Aventis Europe") pleaded guilty to the same offence in Canada and the same infringement in Europe. Aventis Europe was fined Eu5.04 million (about $A10 million) in the European proceedings. It received more lenient treatment, and was not prosecuted in the USA, because it "blew the whistle" on the Cartel Arrangement by informing the US Justice Department of its existence and because it co-operated in the investigations.
6 In pecuniary penalty proceedings brought by the Australian Competition and Consumer Commission in Australia the third respondent, Roche Vitamins Australia Pty Ltd ("Roche Australia"), the seventh respondent, Aventis Animal Nutrition Pty Ltd ("Aventis Australia") and the eleventh respondent, BASF Australia Ltd ("BASF Australia"), admitted contravening s 45 of the TPA. This Court imposed pecuniary penalties of $15 million, $7.5 million and $3.5 million respectively.
7 The applicant commenced this application as a representative proceeding under Part IVA of the FCA, claiming damages and other relief in respect of the Cartel Arrangement. At this stage it is not necessary to describe the group members other than to say that they include persons who purchased the relevant vitamins in Australia during a period of just over seven years.
8 In summary, the applicant claims that Roche Europe, Aventis Europe [together with the eighth respondent, Aventis Animal Nutrition SA ("AAN Europe")] and BASF Europe entered into the Cartel Arrangement in Europe, that they accepted an obligation vis-à-vis each other to implement that arrangement internationally, including in Australia, and that they did so. That is, those respondents are said to have instructed the Australian subsidiaries to carry out in this country the price fixing and market sharing provisions of the Cartel Arrangement.
9 The applicant alleges that some of those instructions were passed on through or originated from an Asian-based company in each of the three groups. Those companies were the fourth respondent, Roche Vitamins Asia Pacific Pte Ltd ("Roche Asia Pacific"), the ninth respondent, Aventis Animal Nutrition Asia Pacific Pty Ltd (Aventis Asia Pacific") and the thirteenth respondent, BASF East Asia Regional Headquarters Limited ("BASF East Asia"). There are thus seven respondents ("the Foreign Respondents") to this application who are foreign corporations which could not be served with originating process in the Commonwealth. Accordingly, the applicant applied ex parte for, and obtained, an order under O 8 r 2(2) of the Federal Court Rules to serve the amended application and the amended statement of claim on the Foreign Respondents outside of the Commonwealth.
10 Several of the Foreign Respondents filed conditional appearances. All of them applied under O 9 r 7 to set aside service of the originating process upon them, alternatively to discharge the order giving leave to serve that process.
11 Roche Europe, Roche Asia Pacific, BASF Europe and BASF East Asia have also applied under O 9 r 7 to set aside the originating process in so far as it relates to them. They contend that the proceeding should be struck out or dismissed as the Court has no jurisdiction in respect of claims made against them under the TPA.
12 The respondents incorporated in Australia ("the Australian Respondents") applied to the learned primary judge for orders, in effect, that the proceeding be struck out, or alternatively, that the proceeding not continue as a representative proceeding on the ground that the proceeding did not comply with the requirements of Part IVA of the FCA.
WHETHER LEAVE TO APPEAL SHOULD BE GRANTED
13 In my view, leave to appeal should be granted in respect of all the orders which the respondents seek to challenge. Important matters of public law are involved, in an area where it cannot be said that the law has been clearly settled. I think that this case thus raises "special considerations" - see Decor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 655; (1991) 33 FCR 397 at 399, applied (for example) by a Full Court in RGC Mineral Sands Pty Ltd v Wimmera Industrial Minerals Pty Ltd (1998) 89 FCR 458 at 464.
whether the requirements of order 8 rule 2(2) had been satisfied
14 Order 8 rule 2(2) relevantly provides that leave to serve originating process outside the Commonwealth may be given:
"... if the Court is satisfied that:(a) the Court has jurisdiction in the proceeding; and
(b) rule 1 applies to the proceeding; and
(c) the party seeking leave has a prima facie case for the relief sought by the party in the proceeding."
15 The issues between the parties at first instance were whether:
* the Court "has jurisdiction in the proceeding" in respect of the claims against the Foreign Respondents; and
* the applicant had a "prima facie case for the relief sought" against the Foreign Respondents;
16 As the primary judge noted, at [10] of his reasons in the first judgment:
"If sub-paras (a) and (c) of O 8 r 2(2) are satisfied little difficulty arises in respect of sub-para (b) as O 8 r 1 provides for originating process to be served outside of the Commonwealth, inter alia:(c) where the proceeding is founded on a breach, wherever occurring, of an Act, and is brought in respect of, or for the recovery of, damage suffered wholly or partly in the Commonwealth;"
17 His Honour, citing well-known authorities, adopted the approach that a prima facie case for relief is made out if, on the material before the court, inferences are open which if translated into findings of fact, would support the relief claimed - Western Australia v Vetter Trittler Pty Ltd (in liq) (1991) 30 FCR 102 at 110. There is no suggestion from the Foreign Respondents that his Honour erred in doing so.
18 However, the Aventis Foreign Respondents and the Roche Foreign Respondents do challenge the next step in his Honour's reasoning. His Honour, after referring to conflicting authorities, held that it was sufficient if a prima facie case for relief was made out on one (and not necessarily all) of the causes of action relied upon.
19 Next his Honour considered whether the motions brought by the Foreign Respondents were interlocutory in nature. This was for the purpose of deciding whether to admit hearsay evidence. His Honour held that in so far as the relief sought by the Foreign Respondents under O 9 r 7 related to whether the requirements in O 8 r 2(2)(a), (b) and (c) had been satisfied, that relief was interlocutory in character. His Honour applied what was then Order 33(3)(a) of the Federal Court Rules to admit the hearsay evidence (referred to in some detail later in these reasons) save in respect of the involvement of Aventis Europe. As his Honour observed, little turned on that exception as some of the relevant evidence was admissible as admissions by Aventis Europe and the balance was admissible under s 75 of the Evidence Act 1995 (Cth). His Honour made it clear that if he was in error in admitting the hearsay evidence under Order 33 rule 3(a), he would admit it under s 75 of the Evidence Act.
20 His Honour held that in so far as the Roche and BASF foreign respondents were applying to set aside the proceeding on the ground that the Court did not have jurisdiction in the matter which was the subject of the proceeding, that aspect of their applications was final rather than interlocutory in character.
21 His Honour then considered whether the applicant had a prima facie case for the relief sought against any of the Foreign Respondents. That involved two issues. The first was whether their conduct was engaged in outside of Australia in which case the extra-territorial operation of the TPA provided for in s 5(1) arose for consideration. The second was whether they had engaged in conduct within Australia, in which event s 45 could apply without resort to s 5(1). Section 5(1) of the TPA provides:
"(1) Part IV, Part IVA, Part V (other than Division 1AA), Part VB and Part VC extend to the engaging in conduct outside Australia by bodies corporate incorporated or carrying on business within Australia or by Australian citizens or persons ordinarily resident within Australia."
22 As none of the Foreign Respondents was incorporated within Australia, the issue was narrowed down to the question whether there was sufficient material before the Court for it to be satisfied, on a prima facie basis, that the Foreign Respondents were "carrying on business within Australia". His Honour, after reviewing the authorities and the evidence, decided that this was not so. His Honour's conclusions, at [80]-[82] were as follows:
"In my view something more than the indirect legal and commercial capacity of the parent companies to control and direct the subsidiaries, plus the parent's involvement in implementing the cartel arrangement, is required to lift the corporate veil between the subsidiaries and their parents or to find that each of the subsidiaries is carrying on its business as agent for the parent. That is particularly so where it is contended (as it is in the present case) that the parent, rather than the subsidiary, is carrying on business in Australia or, put another way, the subsidiary is engaging in all of its commercial activities on behalf of, and therefore as agent for, the parent.At this stage, I am not satisfied that the evidence establishes that the foreign respondents carried on business in Australia through their subsidiaries or that those subsidiaries conducted their businesses as agents for their parents. It may well be that after further investigation this matter may require reconsideration. For example, the applicant might be able to establish that some of the foreign respondents engaged in sufficient business activity in Australia in their own right (eg by supplying group products to an Australian subsidiary) or that the parent's involvement in the implementation of the cartel arrangement in Australia was sufficient to constitute carrying on business in Australia. That, however, is of no assistance to the applicant at this stage.
Accordingly, if the applicant is to uphold its service on the foreign respondents out of the jurisdiction it must be on the basis of conduct by those respondents within Australia."
23 His Honour then reviewed the evidence on the question whether, again on a prima facie basis, it was open to him to be satisfied that the Foreign Respondents had engaged in conduct within Australia. In relation to each of the applicants for leave to appeal his Honour found:
"[158] The combination of the conduct constituting communications by the relevant parent to officers of the subsidiaries in Australia (ie directions, instruction etc) and internal implementation of the cartel arrangement by officers of the subsidiaries in Australia on a regular and ongoing basis over a significant period constitutes, in my view, conduct by way of implementation of the cartel arrangement in Australia that, for the purposes of s 45(2)(b), can be inferred to be conduct of the foreign parent in Australia."
24 His Honour held that that conduct was sufficient to constitute giving effect by the Foreign Respondents to a provision of the Cartel Arrangement in Australia. He also held that the evidence justified an inference that, to the extent that the conduct implementing the Cartel Arrangement was not "giving effect" to it, that conduct amounted to "involvement" under s 75B of the TPA, at least on a prima facie case basis.
THE ISSUES IN THE APPEALS AGAINST THE FIRST JUDGMENT
25 Not surprisingly, there was a considerable degree of overlap between the submissions made on behalf of the three groups of Foreign Respondents. This was accentuated by the extent to which, during the course of oral submissions, arguments put by one set of Foreign Respondents were adopted by the others. Although the overlap was not complete, it is convenient to treat the issues raised as having been raised by all of the Foreign Respondents, save for the jurisdictional issue raised only by the Roche and BASF Foreign Respondents.
26 The issues raised in the appeals against the First Judgment can be summarised as being whether his Honour had erred in the following respects:
* in concluding that s 5(1) of the TPA did not specify a statutory precondition to the invocation of the Court's jurisdiction under the TPA in respect of conduct engaged in outside Australia and to defer determination of the issue whether s 5(1) applied to that conduct;
* in concluding, for the purposes of Order 8 rule 2(2)(a), that the Court had jurisdiction in the proceeding on the basis of conduct engaged in by the Foreign Respondents in Australia;
* in holding that it was sufficient for the purposes of Order 8 rule 2(2)(d) to be satisfied that the applicant had a prima facie case for relief on the basis of any of the causes of action relied upon by her (i.e. not necessarily all of them) against each of the Foreign Respondents;
* in being satisfied that the evidence disclosed a prima facie case for relief against each of the Foreign Respondents who appealed against his Honour's orders.
JURISDICTION
SUBMISSIONS ON BEHALF OF THE ROCHE AND BASF FOREIGN RESPONDENTS
27 The Roche and BASF Foreign Respondents submitted that his Honour erred in finding that the issue of whether the Court was satisfied that it had jurisdiction in the proceeding [within the meaning of O 8 r 2(2)(a)] was to be decided as an interlocutory matter and also erred in deciding to admit hearsay evidence in relation to that issue.
28 They contended that the jurisdiction of the Court over them depended upon satisfaction of the particular facts prescribed by s 5(1) of the TPA, relevantly whether they were carrying on business in Australia. As they had raised that question of jurisdiction, the Court was, so they submitted, required to determine it on a final basis before permitting the applicant to take further steps in the proceeding against them. They contended that his Honour had erred in concluding that s 5(1) of the TPA did not specify a statutory pre-condition to the invocation of the Court's jurisdiction under that Act in respect of conduct engaged in outside Australia which required determination before any further step in the proceeding was taken against the parties raising the objection. A decision to defer the issue was, so it was put, wholly inappropriate in the case of foreign respondents contending that the originating process, or service of that process, should be set aside. The effect was to cause conditional appearances to become unconditional, with the result that the Roche and BASF Foreign Respondents were subjected to compulsory processes and costs before the argument on jurisdiction was determined. As almost none of the evidence relied upon by the applicant against them was admissible in the final hearing, his Honour should have held that the Court had no jurisdiction to hear and determine the applicant's claims against them under s 45 of the TPA.
MY REASONING
29 I have had the advantage of reading, in draft form, the reasons for judgment of Branson J. I agree, respectfully, with her Honour's reasoning on the question whether this Court has jurisdiction over the subject-matter of this proceeding, save that I prefer not to express any view about whether such jurisdiction might also be conferred by s 163A of the TPA. I agree that it is not necessary to decide that point.
30 I would reject the submissions on the part of the BASF and Roche Foreign Respondents to the effect that the jurisdiction of the Court over them depended upon satisfaction of particular facts, relevantly whether they were carrying on business in Australia, as prescribed by s 5(1) of the TPA.
31 It is true that a determination that those respondents had not carried on business in Australia would dispose of so much of the applicant's claims against them as were based upon conduct engaged in outside Australia. But in my view, as his Honour held, that is not a jurisdictional question. In my opinion, the reference to "jurisdiction" in Order 8 rule 2(2) is, almost without exception, a reference to jurisdiction over the subject matter of the proceeding, not to jurisdiction over the person sued. The whole point of Order 8 is to define the circumstances in which persons not within the jurisdiction may be subjected to the processes of this Court in matters which are perceived to have a sufficient connection with Australia. I put to one side, for the purposes of this case, questions of sovereign or diplomatic immunity. No such questions arise here. They may constitute exceptions to the general proposition which I have just stated. The Court has jurisdiction to hear a claim that there has been conduct contravening the Act by the relevant respondents whether in Australia or outside Australia. If, for example, the Court were to dismiss the claims of contravention by conduct in Australia on the basis that the conduct had not been proved, that would not mean that the Court lacked jurisdiction. The same applies if either upon an application for summary judgment, or upon determination of a preliminary question, or after trial, it were to be found that the claimed conduct outside Australia had not occurred or that the relevant respondents had not carried on business in Australia. Those issues are all part of the justiciable controversy to be determined.
32 I think that it is useful to keep in mind that the primary judge held that the evidence did not support an inference on a prima facie basis that the Foreign Respondents carried on business in Australia through the Australian respondents or that those respondents conducted their businesses as agents for the Foreign Respondents. That is, all of the business or businesses as distinct from simply implementing the Cartel Arrangement. His Honour's conclusion accordingly was that the applicant's claims to have served the Foreign Respondents validly, failed under Order 8 rule 2(2)(c) in so far as her case was based on extra-territorial conduct (see paragraphs [81] and [82] of his Honour's reasons when read with paragraph [58]).
33 In essence, the BASF and Roche Foreign Respondents, by seeking to have his Honour decide forthwith the issue of whether they had been carrying on business within Australia, were moving for summary dismissal of those of the claims which were based upon conduct engaged in outside Australia. His Honour, realising the final nature of the relief sought by the respondents, acceded to what was in effect an application by the applicant for an adjournment of that part of the motions (see paragraph [169] of his Honour's reasons), but did so by dismissing them. The applicant sought an adjournment because she had prepared her material on the basis that the application was an interlocutory proceeding to establish the jurisdictional and prima facie case requirements of Order 8 rule 2(2)(a) and (c). The Roche and BASF Foreign Respondents did not dispute that the applicant might have been entitled to interlocutory procedures, such as discovery, to assist her in contesting the so-called "jurisdictional" issue, but contended that she had elected to contest their application without resort to those procedures and that it was too late for her to resile from that position.
34 In seeking what was, in essence, an order for summary dismissal of the claims against them, the BASF and Roche Foreign Respondents bore the substantial burden of establishing that they were entitled to such an order at that stage of the proceedings. They had to show that, in so far as the applicant's case was based on an assertion that they were carrying on business within Australia, it was hopeless to the extent that it should not be permitted to go to trial. They chose not to go into evidence on that issue. The real question is whether his Honour erred in deciding to dismiss the motions. His decision to do so appears to have been based on consideration of the following factors:
* the facts relevant to whether the Roche and BASF Foreign Respondents engaged in conduct in Australia, or were carrying on business in Australia were inherently within their knowledge and not within the applicant's knowledge;
* in a practical sense, the applicant would not be able properly to contest those factual issues without recourse to the Court's discovery procedures;
* resort to those procedures was premature until determination (in the same motions that raised the "jurisdictional" issue) of the issue whether the relevant parties had been duly served, remained parties to the proceeding and were subject to the Court's jurisdiction in respect of those procedures; and
* evidence as to the nature and extent of the involvement of the Foreign Respondents in the implementation of the Cartel Arrangement in Australia between 1992-1999 would bear upon both contravention and "jurisdiction" and it was clearly inappropriate to hear and determine those issues as preliminary issues on a final basis at that stage of the proceedings.
35 I would have been inclined to adjourn the motions. But the question whether they were so premature as to warrant dismissal was discretionary in nature. In my view, the Roche and BASF Foreign Respondents have not demonstrated any error in the exercise of his Honour's discretion to dismiss their motions.
WHETHER A PRIMA FACIE CASE FOR RELIEF HAS TO BE MADE OUT IN RESPECT OF ALL CAUSES OF ACTION RELIED UPON
36 The Foreign Respondents submitted that the primary judge erred when he held that, in respect of the condition in Order 8 rule 2(2)(c), it was sufficient if a prima facie case for relief was made out on one (and not necessarily all) of the causes of action relied upon by the applicant.
37 The question was whether his Honour was correct in following Lindgren J's decision to that effect in Cell Tech Communications Pty Ltd v Nokia Mobile Phones (UK) Ltd (1995) 58 FCR 365 rather than Wilcox J's different conclusion in Tycoon Holdings Ltd v Trencor Jetco Inc [1992] FCA 25; (1992) 34 FCR 31.
MY REASONING
38 I have read, in draft form, that portion of the reasons for judgment of Finkelstein J in which this question is discussed. I regret that I have come to a different answer.
39 In my view, with the exception of Wilcox J's decision in Tycoon Holdings Ltd, there is a consistent line of authority to the effect that it is sufficient, for the purposes of Order 8 rule 2(2)(c), to make out a prima facie case in respect of one, not necessarily all, of the causes of action relied upon. The cases start with Western Australia v Vetter Trittler Pty Ltd (1991) 30 FCR 102, a decision of French J. His Honour (at 110) was satisfied that there was sufficient evidence to support a claim for relief under the TPA, the Fair Trading Act 1987 (W.A.) and s 556 of the Companies (Western Australia) Code. There was a further claim, based upon conspiracy. His Honour thought that claim was open to doubt, but noted that the relief claimed under that head was the same as claimed under the TPA. For that reason he held that it was not necessary, for the purposes of applying Order 8 rule 2(2), to find that there was a prima facie case in relation to the conspiracy plea.
40 In Trade Practices Commission v The Gillette Company (No 1) (1993) 45 FCR 366 at 371 Burchett J said this:
In Tycoon Holdings Ltd v Trencor Jet Co Inc [1992] FCA 25; (1992) 34 FCR 31 at 36 Wilcox J also expressed agreement with the view of a prima facie case taken in Merpro Montassa Ltd, but his Honour (at 35) suggested that, at least in some circumstances, par (c) would have to be read as requiring a prima facie case in respect of each cause of action alleged. This may be contrary to Western Australia v Vetter Trittler Pty Ltd which does not appear to have been cited. There (at 110) a cause of action not supported by a finding of a prima facie case was expressly allowed to be maintained on the basis that "the relief claimed under that head is the same" as relief claimed under another head which was sufficiently evidenced. With respect, I would follow Western Australia v Vetter Trittler Pty Ltd as according better with the language of the rule, except perhaps in the kind of extreme case which Wilcox J instanced."
41 The extreme case which Wilcox J instanced in Tycoon Holdings (at 35) was one in which an applicant might be allowed to litigate causes of action which it could not show to have substance, simply because it joined with those claims some other, perhaps trifling, claim which did have merit. His Honour had earlier on the same page referred to the perceived convenience for an applicant, having brought a particular respondent before the Court on a cause of action which fell within rule 1, to be able simultaneously to litigate other causes of action, but then referred to the underlying principle applicable to such a situation, in the following terms:
"But that consideration of convenience has to be weighed against the possible embarrassment to international comity which might result from an Australian court exercising jurisdiction against a foreigner in respect of a cause of action which has no real connection with Australia."
42 I shall return to that point below. But in the meantime there are three other authorities to consider.
43 In Caterpillar Inc v John Deere Ltd [1999] FCA 1503 at 34 a Full Court of this Court observed:
"It was, of course, enough for the purposes of O 8 r 2(2)(c) of the Rules that Caterpillar made out a prima facie case for relief on one (and not necessarily all) of the causes of action relied upon by it: see Cell Tech Communications Pty Ltd v Nokia Mobile Phones (UK) Ltd (1995) 58 FCR 365 at 373."[I acknowledge that this point was not argued.]
44 In AIMS Computer Systems Pty Limited v IPC Corporation (Australia) Pty Limited [1996] FCA 847 at p 14 Lehane J referred to the differing views in Tycoon Holdings and Cell Tech and, having held that leave had properly been granted for service out in relation to a claim under the TPA, declined to set aside service of so much of the application as was based on a cause of action arising under a guarantee.
45 In Aussie Home Security Pty Ltd v Sales Systems Australia Pty Ltd [2000] FCA 498 at 32 Katz J said:
"It is accepted in the cases that, where (as here) a party seeking leave to serve originating process outside the Commonwealth under O 8 of the Rules relies on multiple causes of action in the proceeding, it is sufficient that that party "ma[k]e out a prima facie case for relief on one (and not necessarily all) of the causes of action relied upon by it": see Caterpillar Inc v John Deere Ltd [1999] FCA 1503 (Carr, Sundberg and Kenny JJ, 1 November 1999, unreported) at [34]."
46 I would construe the word "proceeding" in Order 8 rule 2(2) as meaning a proceeding in the Court. This is consistent with the definition of "proceeding" in s 4 of the Federal Court of Australia Act 1976 (Cth). As Wilcox J said in Tycoon Holdings (again at p 35):
"The `proceeding' is, of course, the case itself: not any particular pleading or other document."
47 Accordingly, once the Court is satisfied that it has jurisdiction in the proceeding and that one or other of the various cases referred to in Order 8 rule 1 apply, then, in my opinion, the party seeking leave or resisting a revocation of such leave, need only show a prima facie case for the relief sought in the proceeding. In this matter sub-paragraph (c) was the relevant sub-paragraph. It reads:
"(c) where the proceeding is founded on a breach, wherever occurring, of an Act, and is brought in respect of, or for the recovery of, damage suffered wholly or partly in the Commonwealth;"
48 As the primary judge noted at [11] of his reasons, the applicant's proceeding is founded on breaches in Australia of s 45 of the TPA (in summary , giving effect to the Cartel Arrangement by making agreements containing price-fixing and market-sharing provisions and giving effect to those provisions) and is brought in respect of, and for the recovery of, damage suffered by the group members in the Commonwealth.
49 Senior counsel for the Aventis Foreign Respondents submitted that the causes of action against those respondents were disparate. One set of claims was based on a series of communications between them and the Australian Aventis Respondents. The other was put on the basis that the Aventis Foreign Respondents were at all times active in Australia.
50 But there was no submission that the applicant was seeking to litigate matters which had no real connection with Australia, or that the applicant had joined a trifling claim having merit and falling within rule 1, with other claims without substance which did not fall within rule 1.
51 The underlying principle which, as I understand it, forms the basis for the cautious approach taken by a court in matters such as this, is the possible embarrassment to international comity to which Wilcox J referred in Tycoon Holdings. As Finkelstein J has pointed out, by referring to Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552, in Australia the same degree of caution as traditionally exercised in the English cases may no longer govern the approach taken by a court.
52 In that case the High Court was considering Part X of the Rules of the Supreme Court of New South Wales. Under Part X, leave is not required for service out of the jurisdiction, but is required where a plaintiff seeks to proceed against a defendant served outside Australia who has not entered an appearance. In the course of discussing how a Court might approach an application to set aside service, Gaudron, McHugh, Gummow and Hayne JJ referred to the prospects of success of a claim. This was one basis for setting aside service, notwithstanding that the Court had not been persuaded that it was an inappropriate forum for a trial of the proceedings (in the course of which the Court would have considered matters of comity and restraint). Their Honours held that when assessing the prospects of success, the same test should be applied in deciding whether originating process served outside Australia made claims which had such poor prospects of success that the proceeding should not go to trial, as is applied in an application for summary judgment by a defendant served locally - see paragraph [60] of their Honours' reasons.
53 When this Court hears an application under Order 9 rule 7, it conducts, by way of a re-hearing, a review of the original decision to grant leave - see Wilcox J in Tycoon Holdings at p 33. That process would include the exercise of the residual discretion to grant leave. If it could be shown by a respondent that the applicant had joined claims which did not fall within rule 1 to claims which did fall within that rule, in such a manner as to offend the underlying basis upon which the Court exercises this extra-territorial jurisdiction, for example no real connection with Australia, then the leave might be revoked or appropriate conditions might be imposed. Similarly, if the foreign respondent could show that the case was hopeless to the requisite extent explained in Agar, then those claims would be struck out.
54 In an increasingly global economy, such an approach would seem to be an efficient means of balancing the interest of an applicant in having all of its claims against a foreign respondent resolved in the one proceeding (even though some of them on their own might not be viewed as having sufficient nexus with Australia) with what in earlier times might have been regarded as a breach of international comity.
55 In my view, the primary judge did not err in holding that it was sufficient, for the purposes of Order 8 rule 2(2)(c), to be satisfied that the applicant had a prima face case for relief on the basis of any of the causes of action relied upon by her against each of the Foreign Respondents.
WHETHER THE APPLICANT HAS A PRIMA FACIE CASE FOR THE RELIEF SOUGHT
Whether hearsay evidence was admissible
56 It will be recalled that, after reviewing the authorities, his Honour held that the relief sought in the motions by the Foreign Respondents under Order 9 rule 7 based upon failure to satisfy the requirements of Order 8 rule 2(2), or to set aside the proceeding as not disclosing a reasonable cause of action, (the latter not being an issue in these appeals) was interlocutory in nature, with the consequence that the notices of motion seeking that relief were interlocutory proceedings. In those circumstances, his Honour held that the hearsay rule did not apply to the evidence adduced in relation to the issues under Order 8 rule 2(2) if the party who adduced that evidence also adduced evidence of its source. His Honour relied on Order 33 rule 3(a) on the basis that almost all of the factual matters were not bona fide in dispute. He also relied on s 75 of the Evidence Act 1995 (Cth).
57 His Honour contrasted that situation with the applications by the Roche Foreign Respondents and the BASF Foreign Respondents to set aside the proceeding on the ground that the Court did not have jurisdiction over the subject matter of the proceeding. Those applications, were, so his Honour held, final rather than interlocutory.
MY REASONING ON WHETHER THE MOTIONS UNDER ORDER 9 RULE 7 WERE INTERLOCUTORY AND WHETHER HIS HONOUR ERRED IN ADMITTING HEARSAY EVIDENCE
58 In my view, his Honour was clearly correct in characterising the first set of applications as being interlocutory in nature. That proposition was clearly established by the authorities to which his Honour referred and in particular the authorities at paragraph [31] of his reasons. I see no point in repeating here those portions of his Honour's reasoning. In my opinion, the hearsay evidence admitted by his Honour was admissible in accordance with s 75 of the Evidence Act and also under the since-repealed Order 33 rule 2 when read with s 9(1) of the Evidence Act. See also the observations of Heerey J in Merpro Montassa Ltd v Conoco Specialty Products Inc [1991] FCA 70; (1991) 28 FCR 387 at 389-391. In those circumstances, I do not need to consider whether Order 33 rule 3(a) applied.
59 Although the Roche and BASF Foreign Respondents contended that the primary judge had erred by admitting hearsay evidence, I think it is fair to say that the main thrust of their objection was that his Honour should have immediately heard their jurisdictional objection (based on their assertions that they had neither carried on business in Australia nor engaged in conduct in Australia), being an application final in nature and should not have admitted any hearsay evidence on the question whether the Court had jurisdiction over them. I have dealt above with the issue of whether his Honour erred in dismissing the motions to deal finally with the question of jurisdiction
MY REASONING ON THE SUFFICIENCY OF THE EVIDENCE
60 Mr G McArthur SC, senior counsel for the applicant, contended that the primary judge had found, on two bases, that the applicant had a prima facie case for the relief which she sought against the Foreign Respondents in respect of conduct engaged in by them in Australia. The first basis was facsimile, e-mail, letter, telephonic, telex or other communications from overseas parent companies to officers of the Australian respondents which were received in Australia. The second basis was that the conduct of the Australian respondents was on behalf of the Foreign Respondents. Mr McArthur submitted that it was only if his Honour was in error on both these issues that service out of the jurisdiction would not be justified.
61 I do not accept that submission. In my mind, it is clear from paragraph [158] of his Honour's reasons that it was the combination of the communications from the Foreign Respondents instructing the Australian respondents to implement the terms of the Cartel Arrangement and the actual implementation of the Cartel Arrangement by the Australian respondents which his Honour inferred to be conduct by the Foreign Respondents in Australia. His Honour did not rest his inference separately on each basis i.e. communication and implementation.
62 Next I should say something further about the admissibility of the evidence. His Honour assessed the evidence of the involvement of each of the Foreign Respondents to some extent as a separate exercise: see for example paragraphs [150] and [151] and [164] to [167] of his reasons. However, it seems to me (see paragraph [108] of his reasons) that his Honour treated much of the evidence upon which he relied as being evidence against all of the Foreign Respondents, whether by way of admission or otherwise, despite the fact that the evidence had as its source only one of the three sets of Foreign Respondents. We were told (and given copies of pages from the transcript) that at first instance submissions were made on behalf of the Roche Foreign Respondents that s 83 of the Evidence Act 1995 (Cth) applied so that admissions by other respondents were not admissible against them.
63 Section 81 of the Evidence Act relevantly provides that the hearsay rule does not apply to evidence of an admission. Section 83 relevantly provides that s 81 does not prevent the application of the hearsay rule to evidence of an admission in respect of the case of a third party. A "third party" means a party to the proceeding other than the party who made the admission or adduced the evidence.
64 His Honour appears to have taken the approach that once the evidence, although hearsay, was admitted under s 75 of the Evidence Act (because the relevant parts of the proceedings were interlocutory) then it was evidence of facts from which he could draw the inference relevant to satisfaction of the matters referred to in Order 8 rule 2(2). He foreshadowed taking that course at p 93 of the transcript of the proceedings at first instance.
65 In my view, his Honour did not err in doing so at such an interlocutory stage of the proceedings. To the extent that a deponent to an affidavit, for example, Mr Raymond Johnson (former Managing Director of Aventis Australia) gave evidence of what transpired at a meeting, attended by him, with representatives of one or other of the Foreign Respondents (as he did in paragraph 51 of his affidavit) that evidence was admissible, in my opinion, as direct evidence of those facts. Admissible not just against the Roche Foreign Respondents, but also, in that instance, against the BASF Foreign Respondents represented at that particular meeting.
66 The same applies, in my opinion, to Mr Johnson's evidence of what Mr Kevin Hall (Mr Hall was, first, Aventis Europe's Area Manager for vitamins and amino acids in the Asia Pacific Region, then Aventis Asia Pacific's Core Products Manager for vitamins) told him about how the Cartel Arrangement was implemented. This was initially by discussions among the European respondents, followed by instructions to the respective Australian companies and later by similar discussions among, and instructions from, the regional respondents. This evidence cannot, of course, be described as direct evidence of what transpired, but it did not need to be direct evidence to be admissible. It came in via s 75 of the Evidence Act.
67 I have read the written submissions of the Foreign Respondents and the transcript of their oral submissions in the appeal to the effect that the evidence before the primary judge was insufficient to give him the requisite satisfaction that the applicant has a prima facie case for the relief which she seeks. There is no point in reciting those submissions here, but I shall refer to particular points where necessary. I have also read the evidence relied upon by the applicant.
68 The evidence comprises:
* The agreements ("the US Plea Agreements") in which Roche Europe and BASF Europe respectively admitted violating section 1 of the Sherman Act.
* The agreements ("the Canadian Plea Agreements") in which, by means of an agreed statement of facts, Roche Europe, Aventis Europe and BASF Europe admitted criminal liability under s 45(1)(c) of the Canadian Competition Act.
* The Statement of Agreed Facts and Admissions of Contraventions by Roche Australia, Aventis Australia and BASF Australia ("the Australian Plea Agreements") in the Australian proceedings in which those respondents admitted contravening s 45 of the TPA.
* The Report of the New Zealand Commerce Commission in relation to its Vitamin Investigation ("the NZ Commission Report"). The NZ Commission Report included information provided by Messrs Baker & McKenzie, solicitors for Aventis Australia and an Aventis New Zealand subsidiary.
* The affidavit evidence of Mr Raymond Johnson and Mr Stuart G Dowel (Mr Dowel was employed by BASF Australia between 1993 and 1999, primarily as the Business Group Manager for the Plastic Business Unit). Although Mr Dowel had little relevant knowledge concerning the supply in Australia of the class vitamins, he provided detail as to the manner in which the BASF group's worldwide distribution of its products was conducted through regional headquarters. In that context, as his Honour noted, he stated that the BASF organisation charts disclosed, and he was informed by senior BASF officers, that the Managing Director of BASF Australia was "directed and supervised by the Regional President"; and
* The Roche, Aventis and BASF Consolidated Group Accounts and Annual Reports.
* A press release ("the EC Press Release") from the European Commission which described the circumstances which resulted in Roche Europe, Aventis Europe and BASF Europe admitting contraventions of the competition law of the European Union.
69 His Honour reviewed each of the above documents in his reasons and quoted extensively from them.
70 In summary, the US Plea Agreements showed that Roche Europe and BASF Europe participated in a conspiracy to suppress and eliminate competition by fixing, increasing and maintaining the price for, and allocating the volume of, certain vitamins sold in the United States and elsewhere between January 1990 and February 1999.
71 Mr P J Jopling QC, senior counsel for the Roche Foreign Respondents, submitted that although the admissions spoke of "elsewhere", they did not identify conduct "in the context of Australia". Nor did they refer to Roche Asia Pacific.
72 That is quite true. But in my view this piece of evidence is only the starting point. It has to be seen in the context of other evidence which suggests the implementation of this criminal conspiracy on a regional basis. The fact that Roche Australia, Aventis Australia and BASF Australia entered into price fixing and market sharing agreements in the class vitamins in much the same way as did Roche Europe and BASF Europe in the United States and elsewhere is, on a prima facie basis, a pointer to the likelihood that Australia was encompassed in the conspiracy.
73 The role of Roche Asia Pacific appears in the Australian Plea Agreement and in particular at the paragraphs set out on pages 32 and 33 of his Honour's reasons. Again in summary, that was evidence that Roche, Aventis and BASF agreed to implement the Cartel Arrangement through their respective affiliates or subsidiary companies in the relevant parts of the world. Roche Asia Pacific, based in Singapore, had responsibility for the region which included Australia and had a supervisory role over that company, in relation to its budgets (including projected sales) and selling prices.
74 In the Canadian Plea Agreements Roche Europe, Aventis Europe and BASF Europe agreed that their senior executives and employees had engaged in conversations and meetings at which unlawful agreements were reached:
* to allocate the market share or to set specific volumes of certain bulk vitamins that each company would supply for the world, by region, which included Canada; and
* to fix, increase and maintain prices and to coordinate the price increases for the world, by region, which included Canada, at which each company would sell bulk vitamins to customers.
75 Mr Jopling submitted that the expression "for the world" did not necessarily mean each country. That may be so, but the expression was "for the world, by region" and there was other evidence, some of which I have mentioned above, which, on a prima facie basis suggests that Australia fell within one of the regions relevant to the Foreign Respondents when they supplied vitamins to the world, namely the Asia Pacific region.
76 His Honour noted that the Roche, Aventis and BASF Canadian subsidiaries were expressly excluded from the Canadian charges. He took that, in my view correctly, to be an indication that the relevant conduct in that country was that of Roche Europe, Aventis Europe and BASF Europe as distinct from that of the Canadian companies.
77 Each of the three Australian Plea Agreements contained detailed admissions and descriptions about how the Cartel Arrangement was carried into effect. This included by the accommodation of instructions from Europe, by meetings between the regional companies in each group and by the regional companies overseeing the implementation of the price-fixing and market sharing arrangements of Roche Australia, Aventis Australia and BASF Australia. His Honour set out many relevant paragraphs from the Australian Plea Agreement relating to Roche Australia and the Aventis Australia. He also summarised the contents of those agreements.
78 The NZ Commission Report referred to an investigation conducted by the Australian Competition and Consumer Commission as having shown that, in addition to the global meetings and agreements (both in Europe and Asia), the vitamin companies had further meetings within Australia where they reached various agreements.
79 The Report also quoted information provided by Messrs Baker & McKenzie which described how the Cartel Arrangement was initiated by meetings in Europe followed by exchange of sales data and meetings between the regional companies to discuss the regional markets and attain the market share that had been set at the European meetings. His Honour set out numerous paragraphs from the Baker & McKenzie information at pages 37 to 39 of his reasons. In my view, they provide very detailed information, on a prima facie basis, showing the steps by which the Foreign Respondents caused the Cartel Arrangement to be implemented in Australia through the four Australian companies (there were two such companies in the Roche group).
80 There was confirmatory information about the Cartel Arrangement in the EC Press Release, although no specific mention of Australia.
81 More specific information as to how the Cartel Arrangement came to be implemented in Australia is to be found in Mr Johnson's affidavit, numerous extracts of which are set out between pages 44 and 47 of his Honour's reasons.
82 It is true that much of the evidence was general in nature, but in my view there was sufficient specific information to link the conduct of Roche Europe and Roche Asia Pacific to the contravening conduct in which Roche Australia engaged.
83 Mr N C Hutley SC, senior counsel for the Aventis Foreign Respondents submitted that the primary judge had reversed the onus of proof in relation to Aventis Europe. This was a reference to the following paragraph of his Honour's reasons.
"150 There is some uncertainty in relation to the involvement of A Europe. The evidence filed on behalf of the Aventis foreign respondents on the motions is to the effect that A Europe is only a holding company and that the business of manufacturing and supplying the relevant vitamins was conducted by AAN Europe, rather than A Europe. Aventis' Australian plea agreement treats the cartel party as AAN Europe. Rhone Poulenc Europe (ie A Europe) was not a party to a US plea agreement but was a party to the Canadian and European plea agreements that resulted in its conviction and the imposition of fines. The 1998 Rhone Poulenc Europe Annual Report states that Rhone Poulenc Animal Nutrition is under investigation by the US Department of Justice and that Rhone Poulenc and Rhone Poulenc Animal Nutrition have "co-operated fully and voluntarily with the investigation". While the evidence is that the Aventis parent directly involved in the worldwide implementation of the cartel arrangement was AAN Europe I am not satisfied that that has the consequence that A Europe, which held all of the issued capital in AAN Europe, had no involvement. Rather, the fact that A Europe has pleaded guilty to charges in Canada and Europe warrants the inference that it was also involved in making and implementing the cartel agreement, albeit by agents that included AAN Europe and its servants and agents."
84 I concede that, taken on their own, the last 1½ lines of the second last sentence in that paragraph would suggest that his Honour did reverse the required satisfaction. But, taking the paragraph as a whole, it can be seen that his Honour placed reliance on the fact that Aventis Europe pleaded guilty to charges in Canada and Europe warranting the inference that it was involved in making the Cartel Arrangement. In the context of Roche Europe, Aventis Europe and BASF Europe agreeing to cause the Cartel Arrangement to be implemented on a worldwide basis, and the evidence that AAN Europe was initially the company which carried out the implementation, in my view, it was open to his Honour to be satisfied that AAN Europe did so as agent for Aventis Europe. Contrary to Mr Hutley's submission, I consider that Mr Johnson's affidavit was properly admitted, for the reasons earlier stated. It provided sufficient evidence of the specific arrangements entered into in respect of the Australian market through the collusive behaviour of the regional companies including AAN Europe and Aventis Asia Pacific.
85 Mr Hutley argued that his Honour had not identified any communication or series of communications from any of the Aventis Foreign Respondents and related them to particular loss or damage suffered by the applicant. I think a sufficient answer to the first part of that submission is that there are numerous references in Mr Johnson's affidavit to communications from Mr Hall initially when he worked at AAN Europe and, from 1993, in his capacity as Core Products Manager of Aventis Asia Pacific based in Singapore. In my view, the applicant was not obliged to identify her particular loss or damage with any such communication or series of communications for the purposes of satisfying the requirements of Order 8 rule 2(2)(c). I think that she was entitled to put her case, at that stage, on the basis that but for the illegal conduct of the Foreign Respondents she would have paid less for any class vitamins which she consumed during the relevant period and thereby suffered loss.
86 The basic submission on behalf of the BASF Foreign Respondents was that there was no proper evidence to justify a "finding" that either of them had engaged in any contravening conduct in Australia in relation to the class vitamins. Those particular "findings" were identified in detail in the written submissions filed by those respondents.
87 The BASF Foreign Respondents submitted that at its highest, from the applicant's point of view, the evidence showed no more than that there was no single cartel that applied to class vitamins throughout the world; various companies entered into different price-fixing or market sharing arrangements in different places and times with respect to different vitamins. The companies involved in those arrangements sometimes included some of the present respondents and other persons not parties to these proceedings.
88 In relation to the documentary and other evidence relied upon by the applicant and the primary judge, the BASF Foreign Respondents made similar submissions to the other Foreign Respondents about the conduct in which they were alleged to have engaged in Australia.
89 There were also submissions in relation to BASF East Asia. That company had not existed until four years into the alleged period of the Cartel. His Honour, so it was submitted, made no attempt to explain how the Cartel Arrangement operated prior to BASF East Asia's incorporation, or when, how or why that company came to be involved in the Cartel Arrangement. The statement of agreed facts in relation to the Australian Plea Agreements did not refer to BASF East Asia and, so it was contended, there was no evidence before the primary judge which identified BASF East Asia as being involved in the Cartel Arrangement.
90 Mr A C Archibald QC, senior counsel for the BASF Foreign Respondents, took us to paragraph [166] of his Honour's reasons where he dealt with the role of BASF East Asia. That paragraph reads as follows:
"The BASF affidavits acknowledge that regional marketing for vitamins sold in Australia was the responsibility of BASF East Asia, which was based in Hong Kong. The NZ Commission Report (at [98]-[100]) confirms the part played by BASF East Asia in implementing the cartel arrangement in the region. The details of the role of BASF East Asia set out in [122]-[124] and [127]-[134] of the report are based on information provided by Managers of BASF New Zealand to the Commission. The relevant information is admissible on the same basis as I have admitted other parts of the Report."
91 Mr Archibald said that there was some material which showed that BASF East Asia carried out marketing support functions for Australia, but he took us to other evidence (at p A171 of the Application Book) which, so he submitted, showed that "the region which [BASF East Asia] addressed was the far east, not Australia". He submitted (without contradiction) that there was nothing in paragraphs [98]-[100] of the NZ Commission Report about conduct in Australia. Mr Archibald also pointed out that paragraphs [122]-[124] and [127]-[134] of the Report had not been tendered in evidence.
92 In my opinion, even without the material which was not in evidence before his Honour, there was sufficient to enable him to infer that BASF East Asia relevantly engaged in conduct in Australia by instructing BASF Australia to implement the terms of the Cartel Arrangement. First there is the evidence of Mr Harald Feltkamp, an attorney employed in the legal department of BASF East Asia. Feltkamp relevantly deposed as follows:
"6.9 I am further informed by Dr Funk and believe, the following. Since 1995, BEA's main task has been to provide assistance to BASF Business Units at a Regional level to encourage consistency of operating structures, a closer focus to local customers and to explore and develop regional and local business opportunities.6.10 I am also informed by Dr Funk and believe that, throughout the relevant period, BEA only support (sic) to BAL consisted of Regional Marketing activities for certain Business Units, starting in 1995."
93 Paragraphs 7 and 95-100 of the NZ Commission Report were in the following terms:
"7. The South East Asia Region Division [of BASF AG] is headquartered in Singapore with the marketing carried on from Hong Kong ("BASF Hong Kong"). This division comprises ASEAN countries as well as India, Pakistan, Bangladesh, Sri Lanka, Australia and New Zealand. In 1997, BASF Hong Kong's consolidated net sales in Asia Pacific totalled DM5.2 billion. BASF Hong Kong's region, which includes New Zealand, has more than 50 wholly owned and joint venture companies operating in the region, employing around 11,000 people....
95 Following the meetings in Europe, BASF AG, Roche Swiss and RPAN also instituted regional meetings to discuss the regional markets and sales in detail, and to give the parties confidence that each region would meet or attain the market share that had been set at the European meetings.
96. Regional meetings commenced in late 1992 or early 1993 and were usually held about four times a year. The global market was broken into four regions including Asia Pacific which included New Zealand.
97. Rhone Asia was established in Singapore in early 1992. Prior to that time, all of Rhone Asia's relevant business had been conducted out of RPAN's headquarters in France. In late 1993, the animal vitamin business unit for Rhone Asia was conducted out of Singapore.
98. In late 1993 or early 1994 meetings were held in the Asia Pacific Region including in Japan, Hong Kong and Singapore in which business in the Asia Pacific Region was discussed ("Asia Region meetings").
99. The Asia Pacific Region was divided into zones comprising Japan, China, Australia/New Zealand and the remainder of Asia. The pre-determined price for particular vitamins and market share in the Asia Pacific Region for each of BASF Hong Kong, Roche Asia and Rhone Asia was sent from France quarterly for each zone in that region.
100. Representatives from BASF Hong Kong, Roche Asia and Rhone Asia continued to meet two to four times a year from 1994 until the end of 1997 in Hong Kong and Singapore. After each Asia Region meeting, Rhone Asia's representative reported back to RPAN in France."
94 Mr McArthur took us to Mr Dowel's affidavit. By reference to paragraphs 6, 15, 46 and 47 of that affidavit it can be seen that there was indeed evidence that BASF East Asia had a direct managerial responsibility for the vitamin sales effected by BASF Australia.
95 In relation to the point that BASF East Asia was not incorporated until 15 August 1995, that still leaves nearly four years of the relevant period in which the Cartel Arrangement was implemented in Australia.
96 In my view, a basic problem with the submissions advanced by the Foreign Respondents was to refer to there being no proper evidence to justify a "finding" (the language used on behalf of the BASF Foreign Respondents) that a particular Foreign Respondent had engaged in any contravening conduct in Australia in relation to the class vitamins.
97 Such an approach, in my view, misapplies the approach explained by the Full Court in Sydbank Soenderjylland A/S v Bannerton Holdings Pty Ltd (1996) 68 FCR 539 at 549, by French J in Western Australia and Vetter Trittler Pty Ltd at 110 and by Beaumont J in WSGAL Pty Ltd v Trade Practices Commission (1992) 39 FCR 472 at 476. The question is whether, on the material before the Court, inferences were open which, if translated into findings of fact, would support the relief claimed. The scrutiny is not that which would occur in a submission of no case to answer following the closure of an applicant's case at trial. A Court can draw inferences more readily in favour of an applicant, bearing in mind, among other things, that the applicant will not have had the advantage of discovery and other procedural aids. The kind of evidence to be adduced should be in proportion to the nature of such an interlocutory issue by way of a mini rather than a mega trial.
98 In my opinion, the Foreign Respondents have not shown that his Honour erred in drawing the inferences upon which he relied in finding that the applicant had a prima facie case for the relief sought against each of them in the proceedings.
99 In those circumstances it is not necessary to consider the applicant's cross-contention that his Honour erred in failing to find that the Foreign Respondents were "carrying on business within Australia" within the meaning of s 5(1) of the Act.
100 The appeals against the second judgment raise the following issues:
* is the circumstance that each of the group members seeks injunctions against each of the respondents sufficient (as his Honour held) to satisfy the requirements of s 33C(1)(a) of the FCA?
* (as part of that issue) must a claim of the type referred to in s 33C(1)(a) exist before the representative proceedings are commenced?
* if the answer to the first question is no - must each group member have a claim against each respondent, in order to satisfy s 33C(1)(a)?
* whether the claims of the group members against the respondents in this application give rise to a substantive common issue of law or fact?
* whether his Honour erred in refusing to make an order that the applicant provide security for the costs of Aventis Australia (being the only respondent who has made such an application).
SECTION 33C OF THE FEDERAL COURT OF AUSTRALIA ACT
101 Section 33C of the FCA provides as follows:
"33C.(1) Subject to this Part, where:
(a) 7 or more persons have claims against the same person; and
(b) the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances; and
(c) the claims of all those persons give rise to a substantial common issue of law or fact;
a proceeding may be commenced by one or more of those persons as representing some or all of them.
(2) A representative proceeding may be commenced:
(a) whether or not the relief sought:
(i) is, or includes, equitable relief; or
(ii) consists of, or includes, damages; or
(iii) includes claims for damages that would require individual assessment; or
(iv) is the same for each person represented; and
(b) whether or not the proceeding:
(i) is concerned with separate contracts or transactions between the respondent in the proceeding and individual group members; or
(ii) involves separate acts or omissions of the respondent done or omitted to be done in relation to individual group members.
THE JUDGMENT AT FIRST INSTANCE
102 His Honour noted that it had been held by a Full Court in Phillip Morris (Australia) Ltd v Nixon [2000] FCA 229; (2000) 170 ALR 487 that s 33C(1)(a) requires every applicant and represented party to have a claim against the one respondent or, if there is more than one, against all respondents. He observed that the present case afforded a good example of how what his Honour called the strict application of s 33C(1)(a) might give rise to requirements and limitations that had "little to do with the purpose or efficacy of Part IVA", but he acknowledged that he was bound to apply the principles enunciated by the Full Court in Phillip Morris.
103 His Honour accepted that some group members might not have a claim for damages against all of the respondents. However, because all of the group members claimed injunctive relief against all of the respondents, his Honour concluded that the requirements of s 33C(1)(a) were satisfied. The two Australian Roche respondents (the second and third respondents), Aventis Australia and BASF Australia challenge that conclusion.
104 The respondents had also asserted that the requirements of s 33C(1)(c) were not satisfied, because the claims of all of the group members did not give rise to a substantial common issue of law or fact. His Honour held that they did. I refer below to his reasoning on that point.
105 Aventis Australia and BASF Australia challenge his Honour's conclusion that the claims of the group members gave rise to a substantial common issue of law of fact within the meaning of s 33C(1)(c).
106 Aventis Australia had sought an order that the applicant provide security for its costs. His Honour reviewed some of the cases in which the making of orders for security for costs in a representative proceeding had been considered and, in the exercise of his discretion, declined to make such an order. In the discussion below I refer to the relevant passages of his Honour's reasons and the factors which he took into account.
107 Aventis appeals from the order dismissing its application for security for costs.
THE RESPONDENTS' CONTENTIONS IN RELATION TO SATISFACTION OF THE REQUIREMENTS OF S 33C(1)(a) AND (c)
108 The respondents submit that the requirement in s 33C(1)(a) of the FCA that the group members have claims against the same person can only be satisfied if each group member possesses an independent and personal cause of action against each respondent. It was not sufficient, so it was put, for a group member simply to fall within the expression "any person" within the terms of s 80 of the TPA. Otherwise, so it was submitted, in every case in which a contravention of the TPA was alleged, a representative proceeding under Part IVA could be commenced on behalf of an unlimited group, each member of which - while entirely unaffected by the contravening conduct - would be entitled to apply for an injunction.
109 Aventis Australia and BASF Australia submitted that there was little commonality between the claims of group members. The applicant was alleging a series of discrete allegations against each of the respondents, often in circumstances where some respondents played no part. They acknowledged that a high level of generality might be permissible in pleading a representative action, but submitted that there must be a sufficient level of commonality between the group members and the alleged conduct of all respondents. The common question framed by his Honour was, so BASF Australia contended, framed at such a high level of generality as to make redundant the concept of "commonality".
MY REASONING
The "Claims" Point
110 It will be recalled that his Honour was obliged to apply the proposition, stated by a Full Court in Phillip Morris, that where there is more than one respondent every applicant and represented party (i.e. every group member) must have a claim against all respondents. On that assumption his Honour held that the fact that all of the group members were seeking an injunction against all the respondents was sufficient to satisfy s 33C(1)(a) of the FCA.
111 Assuming, for the moment, that Phillip Morris was correctly decided on that point, I think his Honour was correct.
112 The noun "claim" has a wide range of meaning. Relevantly it includes a demand for something as being due and also a statement of one's right to something - see The New Shorter Oxford English Dictionary p 409, the Macquarie Dictionary (2 ed) 332. That is, a demand for a payment or other relief and a statement of the basis upon which that demand is made.
113 In my opinion, the word "claim" is not to be construed as limited to "cause of action". It should be construed as including a cause of action, in the sense of a (stated) basis of one's right to something, and also a demand for what is due by virtue of that right, whether it be damages, an injunction or any other relief.
114 I think that this conclusion is supported by the statutory context comprising Part IVA, although I agree that the indicators are not all one way.
115 In s 33C(2)(iii) there is reference to "claims for damages". On the other hand, in s 33H(1)(b) a distinction appears to be drawn between the claims made on behalf of the group members and the relief claimed.
116 Section 33K deals with causes of action accruing after the commencement of a representative proceeding. It refers not to claims but to causes of action. But that is, in my view, quite consistent with "claims" extending more widely than, but including, causes of action.
117 Section 33ZE, which refers to suspension of limitation periods, refers to "any limitation period that applies to the claim of a group member". As the respondents pointed out, a limitation period applies to a cause of action. But it might equally bar a claim for particular relief especially where the source of that relief is statutory. An example might be a claim under the Inheritance Family Provision legislation which is required to be brought within a particular period from the grant of probate.
118 At one stage of the argument, Mr Archibald submitted that s 33C(1) was exclusively concerned with private actions or private rights and the enforcement of private rights, not public rights. This was because, so he submitted, there was no need for a representative action to protect the public interest. It was sufficient (relevant to the present case) for one person to claim an injunction under s 80 of the TPA.
119 I see no reason why the word "claim" should be read narrowly so as to exclude a claim to enforce the performance of a statutory duty or to restrain the contravention of a statutory provision. One of the purposes of the introduction of Part IVA into the FCA was to give access to the Courts to those in the community who have been effectively denied justice because of the high cost of taking individual action - see the Attorney General's Second Reading Speech, House of Representatives, 14 November 1991, pp 3174-3176. Such a narrow construction would be contrary to that purpose. It might also lead to a multiplicity of proceedings by individuals seeking to enforce public duties under, in this case, the TPA.
120 The respondents submitted that the use of the word "have" in s 33C(1)(a) meant that the relevant persons had to have a claim, that is, it had to exist before the representative proceedings were commenced.
121 For the reasons set out above, it is not necessary to consider that point. All of the group members had claims to enforce the relevant provisions of the Trade Practices Act by means of obtaining an injunction against all of the respondents before the commencement of the proceedings. In my view, his Honour was not in error in so concluding.
MUST EACH GROUP MEMBER HAVE A CLAIM AGAINST EACH RESPONDENT?
122 As I have held that each group member in this application has a relevant claim against all of the respondents, it is strictly not necessary for me to decide this question. However, I shall briefly express my views. The question is whether the decision in Phillip Morris was wrong on this point. With respect, I think that it is clear (to the extent required) that it was wrongly decided on this point and should not be followed. I agree with Finkelstein J's reasons for not following it, but would add a few comments.
123 First, it should be noted that the applicants in Phillip Morris accepted as a threshold requirement that their pleading had to allege facts that established that they and every member of the represented class had a claim against every respondent - see Spender J at [3] and Sackville J at [108] and [126].
124 Secondly, as Mr McArthur pointed out, the decision in Phillip Morris at first instance on this point was based on a misunderstanding by Wilcox J about what he had decided in his earlier decision in Symington v Hoechst Schering Agrevo Pty Ltd (1997) 78 FCR 164. In Phillip Morris at first instance [1999] FCA 1107; (1999) 95 FCR 453 at [56], in part of a passage cited by Sackville J on appeal, Wilcox J relied upon his decision in Symington as being one in which he held that s 33C(1)(a):
"... requires that the applicant, or each one of several applicants, and each group member must have a claim against each respondent; it is not sufficient for one applicant to make a claim against one respondent and another applicant or a group member to make a claim against some other respondent."
125 That is not what his Honour had held in Symington. In Symington, Mr and Mrs Symington, who were graziers, sued various respondents on behalf of themselves and other persons who suffered loss when their cattle ingested a pesticide supplied as an ingredient in different products by the various respondents. The applicants claimed that the particular product containing the pesticide which contaminated their cattle was that supplied to their neighbour by the first respondent. They conceded that they personally had no claim against the other six remaining respondents. Wilcox J held that as there was more than one respondent, the applicants had to have standing to sue each of them. As this was not so, he dismissed the applicants' claims as against the other six respondents. What his Honour held in Symington appears at p 167, where, having referred to s 33D(1) as being designed to abrogate the common law rule that a person can only bring an action for damages on his or her own behalf, his Honour said this:
"The first thing to note about the subsection [s 33D(1)] is that it refers to a person, referred to in paragraph 33C(1)(a), who has "a sufficient interest to commence a proceeding on his or her own behalf". That is, one of the seven or more persons who have claims against "the same person" can bring a representative proceeding against that other person "on behalf of" the other six or more persons referred to in that paragraph. As I interpret this provision, it means that where there is a group of seven or more persons, all of whom have claims against a particular person, then any one of those seven or more persons has a sufficient interest to commence a representative proceeding against that person on behalf of the other members of the group. I think it is clear that the applicant - that is to say, the representative party - must himself or herself have standing to sue the particular respondent and, where there is more than one respondent, each of them. It is not enough that the applicant has standing to sue one respondent and other people have claims against some other respondent which arise out of similar or related circumstances and give rise to a substantial common issue of law or fact."
126 His Honour did not have to decide in Symington that every group member must have a claim against every respondent. The problem was more basic than that. The problem was that Mr and Mrs Symington lack standing to sue the other six respondents. His Honour had reached a similar conclusion in similar circumstances in Ryan v Great Lakes Council (1997) 149 ALR 45.
127 As Professor V Morabito points out in an article entitled "Class Actions Against Multiple Respondents" (2002) 30 Federal Law Review 295 at 311-313, the problem identified in cases such as Symington and Ryan has been resolved in at least two subsequent proceedings quite simply. In Schneider v Hoechst Schering Agrevo Pty Ltd [2000] FCA 154 there were two respondents, namely, the manufacturer of a particular chemical herbicide and the retailer. The applicant had a claim against both respondents. He brought representative proceedings against the manufacturer on behalf of all affected farmers and also brought, in the one application, representative proceedings against the retailer on behalf of a sub-group of the represented parties, namely those who had purchased the chemical herbicide from the retailer. It would appear that not all of the represented persons had a claim against the retailer, but the matter proceeded to judgment.
128 Similarly, later in the Ryan proceedings, Mr Ryan was given leave to amend to join additional applicants, each of whom made a personal claim against a particular grower or distributor and was therefore competent to represent other group members who had claims against that grower or distributor - see Ryan v Great Lakes Council [1999] FCA 177. Wilcox J subsequently delivered a judgment after trial and the matter went to a Full Court. As Lindgren J noted in Graham Barclay Oysters Pty Ltd v Ryan [2000] FCA 1099 at [84] not all of the group members claimed against a particular grower or distributor of oysters. But that factor does not appear to have played any part in the outcome of the case.
129 In my view, such a course fits squarely with the language of s 33C(1) and at the same time satisfies the policy behind the introduction of Part IVA.
130 There are sufficient procedural safeguards in s 33C(1)(b) and (c) to protect the integrity of the Court's processes, i.e. that the claims arise out of the same, similar or related circumstances and give rise to a substantial common issue of law or fact. There are other procedural safeguards in Part IVA to ensure that representative proceedings are not misused. For those reasons, were it necessary for me to decide the point, I would decline to follow Phillip Morris to the extent that it is authority for the proposition that, where there is more than one respondent, every group member must have a claim against every respondent in a representative proceeding, on the basis that it was clearly wrong on that point.
WAS THERE A COMMON ISSUE OF LAW OR FACT?
131 In its written submissions BASF Australia referred to the wide range of varying circumstances in which the group members make their claims and submitted that, if his Honour were correct, the requirements of s 33C(1)(c) would be met by posing the question "have the respondents breached s 45 of the TPA?"
132 His Honour's ruling on the point was in the following terms (at [54]):
"In my view the statutory requirement in s 33C(1)(c) is plainly satisfied in the present case. The cartel arrangement alleged against the respondents involved agreements, arrangements and understandings for ongoing price fixing and market allocation in Australia between the three respondent groups of companies. Whether those agreements, arrangements or understandings gave rise to contraventions of s 45 of the TPA and, if so, the extent to which those contraventions resulted in the price of the class vitamins and of products which contain those vitamins being higher than they would otherwise have been are common issues of law and fact that arise out of the claims of all group members. Plainly, those issues are real and of substance and are common to the claims of all of the group members. In my view "the required degree of commonality" (see Phillip Morris at [174]-[175]) exists in the present case."
133 In my opinion, his Honour's conclusion was correct. The claims of the group clearly give rise to the substantial common issues of law or fact which he identified in the above paragraph.
SECURITY FOR COSTS
134 The following were matters of common ground. The applicant has net assets of $73 000. Her only current source of income is a Canadian invalid pension which amounts to $931.40 per month. The applicant would not be able to meet an order for security for costs in the amount suggested by Aventis Australia ($300 000 - $400 000). The applicant's solicitors stated that "they do not hold instructions from any group member(s) that they or any of them would be able to provide security".
135 His Honour cited six cases in which the question of security for costs in a representative proceedings had been considered. He then set out a passage from his own decision in one of those cases, Woodhouse v McPhee (1997) 80 FCR 529 at 533, which was in the following terms:
"Section 56 confers a broad discretion on the Court which is to be exercised by reference to the particular circumstances arising in each case. Accordingly, the Court should be cautious about enunciating general rules that might fetter that discretion. However, in my view there is no reason why, in general, the fact that a proceeding is brought for the benefit of others under Pt IVA ought not to be a consideration which together with other considerations can favour the ordering of security. Indeed, s 33ZG(c)(v) provides that, except as otherwise provided by Pt IVA, nothing in the Part affects the operation of any law relating to security for costs. Consequently nothing in Pt IVA is to affect the operation of s 56 and O 28 in relation to security for costs or is to impede orders being made for security for costs in Pt IVA cases on the same basis as may be ordered in other cases.On the other hand it would be incongruous and anomalous for Parliament specially to confer a direct costs immunity under s 43(1A), inter alia to afford represented persons greater access to justice, and then for the courts indirectly to remove the effect of that immunity by making orders for security for costs on the basis that the applicant is bringing the proceedings for the benefit of others who ought to bear their share of the potential costs liability to other parties. In my view, in order to deal with that incongruity and anomaly the fact that an impecunious applicant is bringing a Pt IVA proceeding for the benefit of represented persons, whilst a relevant consideration in favour of granting security, ought not of itself be as significant a consideration as it might otherwise be in favour of the granting of security."
136 His Honour then reasoned as follows:
"68. In general, the cases establish that a representative party, including an individual, may be ordered to provide security for costs if the circumstances justify or warrant the making of such an order. Such circumstances might exist where, for example, a "person of straw" had been deliberately selected to be a representative party in order to immunise from costs orders particular group members who have substantial means and for whose particular benefit the proceeding is being brought.. . .
72. The difficulty confronting the submissions of AAN Australia is that the evidence does not establish, nor does it enable me to infer, that:
· there are any particular persons of substance for whose benefit the proceeding has been brought who are "standing behind" the applicant; or that
· the applicant was selected because she was a "person of straw" who could effectively immunise such persons from the cost risks they would face had they been applicants.
73. Further, as was observed by Wilcox J in Tobacco Control Coalition at [29], it would run counter to the general policy of Pt IVA to regard group members for whose benefit a representative proceeding is brought as "standing behind" an applicant in the sense that term is used in security for costs cases. See also Lindgren J in Ryan at 456.
74. While it is unclear as to who is financing the present litigation, it may well be that it is being funded by the applicant's solicitors, rather than by any particular group members. Thus, the present case is not one where the Court can be satisfied on the evidence presently before it that those who stand to benefit from the proceeding have selected an impecunious applicant to conduct the proceeding in order to immunise themselves from the risk of costs which would follow from the proceeding being unsuccessful.
75. Several factors have led me to conclude that, in the circumstances, it is inappropriate to make the order for security for costs sought by AAN Australia:
· the individual applicant has made out a prima facie case for relief under the TPA;
· the claims of the group members arise out of an unlawful price fixing cartel which has been admitted to;
· public policy considerations weigh strongly against an order for security of costs that might impede or hinder the group members' claim for injunctive relief and for damages resulting from the cartel arrangement;
· the kind of circumstances that might warrant an order for security for costs against an impecunious individual bringing a representative proceeding are absent in the present case.
76. Accordingly, I decline to accede to the application of AAN Australia for an order of security for costs."
MY REASONING
137 In my view, with great respect to the primary judge, the above reasoning discloses an error of principle embodied in the third and fourth of the factors referred to in paragraph 75 reproduced above.
138 As to the third factor, it was clear that the applicant was relevantly impecunious to the extent that only an insignificant amount of costs could be recovered if she were unsuccessful in her claim against Aventis Australia. She is not in a position to fund what is obviously very expensive litigation. Someone else must be funding it.
139 The applicant chose not to adduce any evidence about who was funding the proceedings or what means they might have.
140 It is true that s 43(1A) if the FCA precludes, subject to certain qualifications not here relevant, an award of costs against a group member other than the representative party. But as his Honour noted in the extract from his reasons in Woodhouse reproduced above, s 33ZG(c)(v) provides that, except as otherwise provided in Part IVA, nothing in that Part affects the operation of any law relating to security for costs.
141 Depending upon the particular circumstances, I do not think that an order providing reasonable security for costs necessarily operates indirectly to remove the effect of the immunity provided by s 43(1A). It is one thing for a group member to be saddled with an order for what might be joint and several liability for a very substantial costs order at the end of the hearing of a representative proceeding, but it is another thing to have the choice of contributing what might be a modest amount to a pool by which the applicant might provide security for costs. It is a question of balancing the policy reflected in s 43(1A) against the risk of injustice to a respondent, in this case Aventis Australia, which, on the admitted facts, has no chance of recovering very substantial costs from the applicant if it is successful in defending the proceedings.
142 Much would depend upon the number of group members involved, their financial circumstances and in particular whether an order for security for costs might stifle the proceedings. In that regard, in my opinion, it was for the applicant to adduce evidence about the likely effect of any order for security for costs. She chose not to do so and in my view, in those circumstances, the discretion having miscarried, it should be exercised again.
143 In relation to the fourth factor, I think that his Honour was referring to the circumstances instanced in paragraph 68 of his reasons (reproduced above) as being circumstances which might justify or warrant the making of an order for security for costs. At that stage, it is clear that he was only treating those circumstances as an example.
144 However, my impression, from reading paragraph 72, is that his Honour elevated that example to the status of a condition precedent. Furthermore it is implicit that his Honour regarded the matters referred to in paragraph 72 as being those in respect of which Aventis Australia bore the burden of proof.
145 I would set aside so much of his Honour's orders as dismissed Aventis Australia's application for security for costs and remit that motion for further consideration.
I certify that the preceding one hundred and forty-five (145) numbered paragraphs are a true copy of the Reasons for Judgment herein of Justice Carr. |
Associate:
Dated: 15 July 2003
IN THE FEDERAL COURT OF AUSTRALIA |
|
VICTORIAN DISTRICT REGISTRY |
VG 359 of 1999 |
AN APPLICATION FOR LEAVE TO APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA |
|
BETWEEN: |
F HOFFMANN-LA ROCHE LTD, ROCHE PRODUCTS PTY LTD, ROCHE VITAMINS AUSTRALIA PTY LTD, ROCHE VITAMINS ASIA PACIFIC PTE LTD, AVENTIS SA, AVENTIS ANIMAL NUTRITION PTY LTD, AVENTIS ANIMAL NUTRITION SA, AVENTIS ANIMAL NUTRITION ASIA PACIFIC PTE LTD, BASF AKTIENGESELLSCHAFT, BASF AUSTRALIA LTD and BASF EAST ASIA REGIONAL HEADQUARTERS LTD Applicants/Appellants |
AND: |
TRUDY BRAY Respondent |
JUDGES: |
CARR, BRANSON & FINKELSTEIN JJ |
DATE: |
15 JULY 2003 |
PLACE: |
MELBOURNE |
BRANSON J
INTRODUCTION
146 I gratefully adopt the summary contained in the reasons for judgment of Carr J of the factual and procedural background to these motions for leave to appeal, including his Honour's summary of the judgments of the learned primary judge and the submissions of the parties. In these reasons for judgment I will use the terminology and abbreviations used by Carr J including using `applicant' to refer to the applicant before the primary judge (the respondent to these motions for leave to appeal) and `respondents' for the applicants for leave to appeal who were the respondents before the primary judge.
WHETHER LEAVE TO APPEAL SHOULD BE GRANTED
147 I agree, for the reasons given by Carr J, that leave to appeal should be granted in respect of all of the orders which the respondents seek to challenge.
THE COURT'S JURISDICTION
148 The BASF and Roche Foreign Respondents challenged before the learned primary judge, and challenge again before this Court, that the Court has jurisdiction in the proceeding. I consider it convenient to turn to the issue of jurisdiction first. In my view, it is appropriate to adopt a different approach to this issue from that which the primary judge adopted.
149 As the Federal Court of Australia is a court of limited jurisdiction, an undifferentiated challenge to the jurisdiction of the Court in respect of an action in personam has two aspects. First, does the Court have jurisdiction in respect of the subject matter of the proceeding and secondly, does the Court have jurisdiction over the respondent? Order 8 of the Federal Court Rules (`the Rules'), which is concerned with service outside of the jurisdiction, recognises these two aspects of any analysis of the Court's jurisdiction in respect of a proceeding.
150 The Foreign Respondents did not question the validity of O 8 of the Rules or any part of the order. It is convenient to set out relevant parts of O 8.
151 Order 8 r 1 relevantly provides:
`Subject to rule 2 ..., originating process may be served outside the Commonwealth in the following cases -(a) where the proceeding is founded on a cause of action arising in the Commonwealth;
...
(b) where the proceeding is founded on a breach of an Act, where the breach is committed in the Commonwealth;
(c) where the proceeding is founded on a breach, wherever occurring, of an Act, and is brought in respect of, or for the recovery of, damage suffered wholly or partly in the Commonwealth;
...
(g) where the proceeding is properly brought against a person served or to be served in the Commonwealth and the person to be served outside the Commonwealth is properly joined as a party to the proceeding;
...
(j) where the proceeding is for an injunction as to anything to be done in the Commonwealth or against the doing of any act in the Commonwealth, whether damages are also sought or not;
...
(l) where the proceeding concerns the construction, effect or enforcement of an Act ...;
...
(n) where the proceeding, so far as concerns the person to be served, falls partly within one of the foregoing paragraphs and falls, as to the residue, within one or more of the others of the foregoing paragraphs.'
152 Order 1 of the Rules gives `Commonwealth', when used in a geographic sense, the meaning of the Commonwealth of Australia including external territories. An `Act' within the meaning of the Rules is an Act passed by the Parliament of the Commonwealth (s 38(1) of the Acts Interpretation Act 1901 (Cth) (`Acts Interpretation Act')).
153 Order 8 r 2 relevantly provides:
`(1) Service outside the Commonwealth of originating process is not valid under this Order unless -(a) the service is in accordance with the prior leave of the Court given under Sub-rule (2);
...
(2) The Court may, by order, give leave to serve originating process outside the Commonwealth ... on such terms and conditions as it considers appropriate, if the Court is satisfied that:
(a) the Court has jurisdiction in the proceeding; and
(b) rule 1 applies to the proceeding; and
(c) the party seeking leave has a prima facie case for the relief sought by the party in the proceeding.
....'
The application by the Foreign Respondents for the service on them of the originating process in this proceeding to be set aside or alternatively for the order granting leave to serve the originating process outside Australia to be discharged was based on contentions that the Court could not properly be satisfied with respect to the requirements of either O 8 r 2(2)(a) or (c).
Order 8 Rule 2(2)(a)
154 Order 8 r 2(2)(a) is concerned with the Court's jurisdiction in respect of the subject matter of the proceeding. An examination of the question of whether the Court has jurisdiction in respect of the subject matter of the proceeding must start with the Constitution. Section 71 of the Constitution vests the judicial power of the Commonwealth in `the High Court of Australia, and in such other federal courts as the Parliament creates, and in such other courts as it invests with federal jurisdiction'. The Parliament, by s 5 of the FCA, created the Federal Court of Australia as a federal court. Upon the creation of the Court, the judicial power of the Commonwealth was vested in the Court by operation of s 71 of the Constitution. The extent of the Court's jurisdiction to exercise that power, as s 19 of the FCA confirmed, remained to be determined by a law or laws of the Parliament.
155 Section 77 of the Constitution relevantly provides:
`With respect to any of the matters mentioned in the last two sections the Parliament may make laws -(i) Defining the jurisdiction of any federal court other than the High Court:
....'
156 One of the matters mentioned in s 76 of the Constitution is a matter `[a]rising under any laws made by the Parliament:'
157 As Gleeson CJ and McHugh J observed in Abebe v Commonwealth of Australia [1999] HCA 14; 197 CLR 510 at [24]:
`When s 77(i) of the Constitution empowers the Parliament to make laws "defining the jurisdiction of any federal court other than the High Court" with respect to any of the "matters" mentioned in ss 75 and 76 of the Constitution, it means that the Parliament may make laws giving federal courts authority to decide subject matters that answer any of the descriptions in pars (i) - (v) of s 75 or pars (i) - (iv) of s 76 of the Constitution. Jurisdiction is the authority to decide. The jurisprudence of this Court makes it clear that federal jurisdiction is limited to deciding "matters". Central to the notion of a "matter" is the determination of rights, duties, liabilities and obligations in a legal proceeding. In re Judiciary and Navigation Acts, a majority of this court pointed out that the term "matter" in s 76 did not mean "a legal proceeding, but rather the subject matter for determination in a legal proceeding". In Stack v Coast Securities (No 9) Pty Ltd, Mason, Brennan and Deane JJ, after referring to this passage, said "that a court does not begin to exercise federal jurisdiction until a `matter' within s 75 or s 76 is raised in the proceedings and that the federal jurisdiction then exercised by the court is coextensive with the content of that `matter'". Similarly, in South Australia v Victoria, Griffith CJ said that "[t]he word `matters' was in 1900 in common use as the widest term to denote controversies which might come before a Court of Justice".'
158 The TPA consists of laws made by the Parliament. No question presently arises as to the constitutional validity of the TPA or any of its provisions. Section 86(1) of the TPA, which is found in Part VI of the TPA, provides:
`Jurisdiction is conferred on the Federal Court in any matter arising under this Act in respect of which a civil proceeding has, whether before or after the commencement of this section, been instituted under this Part.'
159 Part VI of the TPA is headed `Enforcement and Remedies'. The Second Amended Application in this proceeding discloses that the applicant claims relief on her own behalf, and on behalf of the group members, against the respondents under ss 80, 82, 87 and 163A of the TPA in respect of alleged contraventions of s 45 of the TPA. The claims advanced by the applicant under ss 80, 82 and 87 of the TPA are claims under Part VI of the TPA.
160 In Fencott v Muller [1983] HCA 12; (1983) 152 CLR 570, a case in which relief was claimed in reliance on ss 52, 75B, 82 and 84 of the TPA, the High Court gave consideration to s 86 of the TPA as it was then worded. Although Fencott v Muller was not complicated by the involvement of a foreign corporation, no member of the High Court doubted that the jurisdiction of the Court was dependent on s 86 (see Gibbs CJ at 581; Mason, Murphy, Brennan and Deane JJ at 602; Wilson J at 612 and Dawson J at 625). Further, as the majority judgment makes clear at 597 and 602, jurisdiction in respect of matters arising under particular provisions of the TPA clearly involves jurisdiction to determine issues as to the proper construction and ambit of those provisions. Were it otherwise, of course, the difficulty discussed by Dixon J in the well known, and frequently applied, passage from Parisienne Basket Shoes Proprietary Limited v Whyte [1938] HCA 7; (1938) 59 CLR 369 at 391 would arise.
161 This proceeding, so far as the applicant seeks relief under ss 80, 82 and 87 of the TPA, is a civil proceeding instituted under Part VI of the Act within the meaning of s 86(1) of the TPA. The subsection discloses an intention to confer jurisdiction on the Court in the `matter' arising under the TPA in respect of which the proceeding has been instituted. The `matter' is the justiciable controversy, identifiable independently of the proceeding which is brought for its determination, which encompasses all claims made within the scope of that controversy (Abebe v Commonwealth of Australia per Gummow and Hayne JJ at [140]). The contentions of the BASF and Roche Foreign Respondents call for consideration to be given to the ambit of the justiciable controversy between the applicant and the BASF and Roche Foreign Respondents.
162 Section 45 of the TPA, upon which all of the applicant's claims for relief depend, prescribes norms of corporate conduct. The section is silent as to whether its operation is limited to conduct undertaken in Australia. The legislative power conferred on the Parliament by s 51 of the Constitution is not subject to territorial limitation (Polyukhovich v Commonwealth of Australia [1991] HCA 32; (1991) 172 CLR 501 per Mason CJ at 529, Brennan J at 550, Deane J at 606, Dawson J at 635-636, Gaudron J at 695 and McHugh J at 713-714). However, as a matter of construction, there is a common law presumption against the extraterritorial operation of legislation (Jumbunna Coal Mine No Liability v Victorian Coal Miners' Association [1908] HCA 87; (1908) 6 CLR 309 per O'Connor J at 363). This presumption is reflected in s 21 of the Acts Interpretation Act which relevantly provides:
`(1) In any Act, unless the contrary intention appears:(a) ...
(b) references to localities jurisdictions and other matters and things shall be construed as references to such localities jurisdictions and other matters and things in and of the Commonwealth.'
....'
163 So far as the TPA is concerned, s 5 discloses an intention that many of the provisions of the Act extend to some conduct engaged in outside Australia. Section 5(1) relevantly provides:
`Part IV, Part IVA, Part V (other than Division 1AA), Part VB and Part VC extend to the engaging in conduct outside Australia by bodies corporate incorporated or carrying on business within Australia ... .'
164 Section 45 is found in Part IV of the TPA and thus the section has the extended territorial operation for which s 5(1) provides.
165 The applicant, as the Second Amended Statement of Claim discloses, asserts that the BASF and Roche Foreign Respondents are bodies corporate `carrying on business within Australia' within the meaning of s 5(1) of the TPA. The applicant alternatively alleges that the BASF and Roche Foreign Respondents engaged in conduct within Australia which involved them in a contravention of s 45 of the TPA. In this circumstance there is a justiciable controversy, in the sense of a controversy which is amenable to judicial determination of rights and duties, between the applicant and the BASF and Roche Foreign Respondents which arises under the TPA as to whether the applicant is entitled to the relief that she claims in this proceeding. The justiciable controversy calls for the determination, amongst other things, of whether the BASF and Roche Foreign Respondents, or any of them, are bodies corporate carrying on business within Australia or bodies corporate which engaged in conduct in Australia.
166 The conferral by s 86(1) of the TPA on the Court of jurisdiction in respect of the `matter', in the sense of all of the claims within the justiciable controversy identified above, would appear to indicate that the Court's jurisdiction under s 86(1) of the TPA includes jurisdiction to hear and determine not only the applicant's claims under Part VI of the TPA but also her claim under s 163A(1) for declaratory relief.
167 It is, in my view, arguable that s 163A of the TPA is an alternative conferral of jurisdiction on the Court in respect of the subject matter of this proceeding. Section 163A relevantly provides:
`(1) Subject to this section, a person may, in relation to a matter arising under this Act, institute a proceeding in a court having jurisdiction to hear and determine proceedings under this section seeking the making of:(a) a declaration in relation to the operation or effect of any provision of this Act other than the following provisions:
(i) Division 2, 2A or 3 of Part V;
(ia) Part VB;
(ii) Part XIB;
(iii) Part XIC; or
(aa) a declaration in relation to the validity of any act or thing done, proposed to be done or purporting to have been done under this Act; ...
...
(3A) In so far as this section has effect as a law of the Commonwealth, the Federal Court has jurisdiction to hear and determine proceedings under this section.
....'
168 For present purposes, the opening words of s 163A(3A) may be disregarded. They recognise that certain provisions of the TPA have application as a law of a State (i.e. as part of a State Competition Code or Price Exploitation Code). They are designed to make it clear that federal jurisdiction only is conferred on the Court by the section (see Jurisdiction of Courts Legislation Amendment Bill 2000 - Explanatory Memorandum). They have no present relevance.
169 The effect of s 163A(1) and (3A) is, arguably, to confer on the Court jurisdiction to hear and determine proceedings in relation to a `matter' arising under the TPA in which a declaration under s 163A is sought. For the reasons discussed above, the present proceeding is such a proceeding. It is not, however, presently necessary to reach a concluded view as to the effect of s 163A so far as the Court's jurisdiction generally in this proceeding is concerned.
170 In my view, it is plain beyond doubt that s 86(1) of the TPA gives the Court jurisdiction in respect of the subject matter of this proceeding. Any problems of proof that the applicant may have do not reach to the Court's jurisdiction. Should it appear in any case (I do not suggest that it does in this case) that the claims made against a respondent are untenable and cannot possibly succeed, that respondent may move the Court for a stay or summary dismissal of the proceeding under O 20 r 2 of the Federal Court Rules. So far as a respondent required to be served outside of the Commonwealth is concerned, O 8 r 2(2)(c) is apt to prevent valid service on the respondent in such a case.
Order 8 Rule 2(2)(c)
171 The second aspect of the jurisdiction of the Court in respect of an action in personam is whether the Court has jurisdiction over the respondent. As the High Court observed in Laurie v Carroll [1958] HCA 4; (1958) 98 CLR 310 at 323, citing Dicey - Conflict of Laws 6th ed (1949) at 172:
`Where a writ cannot legally be served upon a defendant the court can exercise no jurisdiction over him. In an action in personam the converse of this statement holds good, and wherever a defendant can be legally served with a writ, there the court, on service being effected has jurisdiction to entertain an action against him.'
172 At common law the jurisdiction of a court depended upon the amenability of the defendant to the writ of summons issued in the name of the Sovereign by the court. The common law doctrine was that the writ did not run beyond the limits of the State (Laurie v Carroll at 322-323).
173 The common law position so far as this Court is concerned has now been changed by O 8 of the Rules. The legislative authority which supports O 8 is found in s 59 of the FCA. Section 59 of the FCA authorises the Judges of the Court, or a majority of them to make Rules of Court, not inconsistent with the FCA, making provision for or in relation to, amongst other things:
`the service and execution of the process of the Court, including the manner in which and the extent to which the process of the Court, or notice of any such process, may be served out of the jurisdiction of the Court.' (see s 59(2)(g))
174 The Foreign Respondents were served out of the jurisdiction of the Court pursuant to an order made under O 8 r 2(2). Order 8 r 2(2) authorises service out of the jurisdiction of the Court where the Court is satisfied of each of the matters identified in paragraphs (a), (b) and (c) of the subrule.
175 The requirement of O 8 r 2(2)(a) is discussed above. It is accepted that O 8 r 1 applies to the proceeding (see O 8 r 2(2)(b)). The remaining requirement for an order giving leave to serve outside the Commonwealth is that the Court is satisfied that `the party seeking leave has a prima facie case for the relief sought by the party in the proceeding' (O 8 r 2(2)(c)).
176 It was argued on the appeal that before the Court can have the satisfaction required by O 8 r 2(2)(c), it is necessary for the Court to be satisfied that the party seeking leave has a prima facie case for the relief sought pursuant to each of the causes of action relied upon. The alternative possibility is that it is sufficient that a prima facie case for the relief sought is made out on one of the causes of action relied upon.
177 In Cell Tech Communications Pty Ltd v Nokia Mobile Phones (UK) Ltd (1995) 58 FCR 365 Lindgren J at 373 said:
`The preponderance of authority favours the view that except in extreme cases, the provision does not require a prima facie case in respect of each cause of action pleaded or contended for, and that if a prima facie case for a particular form of relief is made out on one cause of action, it is immaterial that a prima facie case for the same relief on another cause of action is not made out: see Western Australia v Vetter Trittler Pty Ltd (in liq), at 110 and Trade Practices Commission v Gillette Co (No 1) at 371; but see Tycoon Holdings Ltd v Trencor Jetco Inc at 35.With respect, the preponderant view is supported by several considerations. First, it accords with the plain words of para (c) of r 2(2).
Secondly, the originating process may be accompanied by affidavits rather than by a statement of claim and in such a case "causes of action" may be referred to only in the course of argument or submissions. It would be odd in such a case that leave to serve outside the jurisdiction should not be granted for no reason other than that the Court rejected a submission that a prima facie case for the relief sought existed on a particular cause of action while accepting a submission that a prima facie case for the same relief was made out on a different cause of action.
Thirdly, the preponderant view is consistent with the rule's concern with the coercive power invoked by the issue and service of the originating process, rather than with the accompanying statement of claim or affidavits.
Fourthly, it sometimes occurs that the same facts are said to give rise to more than one cause of action, such as breach of a general law duty of care and breach of an implied contractual duty of care. It would be odd that leave to serve an originating process outside the jurisdiction should be refused because, for whatever reason, one of the causes of action is thought to lie and the other not.'
178 The Full Court (Carr, Sundberg and Kenny ) in Caterpillar Inc. v John Deere Limited [1999] FCA 1503; 48 IPR 1 at [34] referred with approval to the decision of Lindgren J in Cell Tech Communications Pty Ltd v Nokia Mobile Phones (UK) Ltd but it appears that the issue was not the subject of argument in that case.
179 A different conclusion had been reached by Wilcox J in Tycoon Holdings Ltd v Trencor Jetco Inc [1992] FCA 25; (1992) 34 FCR 31. His Honour at 35 observed:
`The third point arises out of r 2(2)(c). In terms, the paragraph does not require an applicant to demonstrate a prima facie case in respect of each of the causes of action upon which the proceeding is founded or any of them. Read literally, the rule merely requires that the applicant demonstrate a prima facie entitlement to the particular relief which he or she claims; that is to say, claims in the proceeding as a whole. On this reading, if an applicant claims damages, it is necessary only to show a prima facie entitlement to damages, not a prima facie case in respect of each cause of action. However, I have come to the conclusion that r 2(2)(c) should not be read this way. I think that the intent of the paragraph is to enable an extraterritorial respondent to restrict the litigation against him or her to causes of action in connection with which the applicant can show a prima facie case. It would be burdensome, sometimes almost absurd, to allow the litigation of causes of action which the applicant could not show to have substance simply because the applicant joined with those claims some other, perhaps trifling, claim which did have merit.'
180 The proper construction of O 8 r 2(2)(c) must, in my view, be determined having regard primarily to the ordinary meaning of the words of the clause seen in their context within the Rules. Order 8 r 1 and r 2 are concerned with the service outside the Commonwealth of originating process. Order 8 r 1A defines `originating process' to mean:
`an application or, if a cross-claim is made against a person not previously a party to the proceeding in which it is made, the cross-claim.'
181 Order 1 r 4 of the Rules contains definitions relevant to the interpretation of the Rules. The following definition there appears:
`pleading includes a statement of claim and a cross-claim to which Order 5 applies and subsequent pleadings, but does not include an application, notice of motion or affidavit;'
182 Order 4 r 3 of the Rules, which is concerned with what must be specified in an applications provides:
`(1) An application must specify:(a) the relief claimed by the applicant; and
(b) if the relief depends on a provision of an Act -- the Act and the provision.
(2) Where the claim for relief includes a claim for the determination or direction of the Court on any question, the application shall state the question.
(3) Costs need not be specifically claimed.
(4) Exemplary damages shall be specifically claimed.'
183 Significantly, O 4 r 3 does not require that each cause of action upon which the applicant relies be identified in the application; only statutory causes of action are required to be identified. For this reason, it seems to me that the reference in O 4 r 3 to `the relief claimed by the applicant' must be a reference to the remedy sought by the applicant in the proceeding (see Pascoe v Richards (1881) 50 LJ Ch 337).
184 In my view, at least where the relevant originating process is an application, the inference is strong that the expression `the relief sought by the party in the proceeding' in O 8 r 2(2)(c) is intended to carry the same meaning as the expression `the relief claimed by the applicant' in O 4 r 3(1)(a). As is mentioned above, that meaning is the remedy sought by the applicant in the proceeding rather than the relief sought pursuant to each cause of action to be relied upon.
185 The above conclusion is consistent with the failure of the Rules to define a cross-claim against an existing party as an originating process. In a case in which the applicant has joined more than one respondent, one respondent may cross-claim against another respondent, even if that respondent is a foreign respondent, without obtaining leave under O 8 r 2(2); the cross-claim is not in such circumstances an originating process.
186 It is significant, in my view, that O 8 r 2(2) does not give rise to an entitlement to serve originating process outside the Commonwealth; it gives the Court a discretion to give leave which may only be exercised if the Court is satisfied as to the matters identified in the subrule. The Court might be satisfied of those matters but nonetheless decide, in the exercise of its discretion, to refuse leave to serve outside of the Commonwealth. Alternatively, the Court could give leave to serve outside the Commonwealth but make such leave subject to terms and conditions which the Court considered appropriate. I am not presently able to think of any reason why a condition imposed on the leave to serve could not, in an appropriate case, limit the causes of action which the applicant was entitled to plead in the statement of claim or rely upon in the affidavit should a statement of claim not be appropriate (O 4 r 6).
187 I recognise that the above approach to the proper construction of O 8 r 2(2) is inconsistent with the conclusion of Finkelstein J that `each condition of r 2 must be satisfied in respect of each cause of action raised in the proceeding' (see [12] of his Honour's reasons for judgment). However, in my respectful view, a reading of O 8 as a whole suggests against the conclusion reached by Finkelstein J.
188 Order 8 r 2(2) is concerned with leave to serve `originating process', that is leave to serve a particular document. The types of originating process in respect of which leave may be granted for service outside of the Commonwealth are those identified in the various paragraphs of O 8 r 1 (see [151] above). Each of those paragraphs open with the words `where the proceeding ...'. The `proceeding' referred to in each of the paragraphs is plainly a proceeding commenced by the filing of an application in the Court (O 4 r 1). Order 8 r 1 recognises that a proceeding may be founded on one cause of action (eg O 8 r 1(a)) or on more than one cause of action (eg O 8 r 1(n)). As to the meaning of `founded on' in a context of this kind see Agar v Hyde [2000] HCA 41; 201 CLR 552 per Gaudron, McHugh, Gummow and Hayne JJ at [50].
189 It seems to me that O 8 has been drawn on the basis that the proceeding itself (i.e. the proceeding initiated by the originating process) must be of a type which falls within one of the paragraphs of O 8 r 1. If the proceeding falls only partly within any paragraph other than (n), it must, by reason of (n), fall as to the residue within one or more of the preceding paragraphs. If the proceeding is one which falls within O 8 r 1(n) then `rule 1 applies to the proceeding' within the meaning of O 8 r 2(2).
190 I conclude that it is not necessary, before the Court can have the satisfaction required by O 8 r 2(2)(c), that the Court be satisfied that the party seeking leave to serve originating process outside the Commonwealth has a prima facie case for the relief sought pursuant to each of the causes of action relied upon. In my view, O 8 r 2(2)(c) requires the Court to be satisfied that the party has a prima facie case for the remedy sought by the applicant in the proceeding.
191 The relief sought by the applicant in this proceeding is identified by paragraph 4 of the Second Amended Application. That relief is declaratory relief pursuant to s 163A of the TPA, damages pursuant to s 82(1) of the TPA, injunctions under s 80(1) and possibly, relief under s 87(1) of the TPA. I agree, for the reasons given by Carr J, that it was open to the primary judge to be satisfied that the applicant has a prima facie case for the relief sought by her in the proceeding within the meaning of O 8 r 2(2)(c) of the Rules.
192 It was not contended that, if the primary judge was properly satisfied of the matters identified in O 8 r 2(2), the primary judge should nonetheless have set aside service of the originating process on the Foreign Respondents.
193 I reject the contention of the BASF and Roche Foreign Respondents that the Court does not have jurisdiction in this proceeding. I further reject the contention of the Foreign Respondents that the order giving leave to serve the originating process outside the Commonwealth should be discharged, or alternatively that the service on them respectively of the originating process in the proceeding should be set aside or in the further alternative that the originating process should be set aside as against them.
SECTION 33C OF THE FEDERAL COURT OF AUSTRALIA ACT
194 Section 33C of the FCA provides:
`(1) Subject to this Part, where:(a) 7 or more persons have claims against the same person; and
(b) the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances; and
(c) the claims of all those persons give rise to a substantial common issue of law or fact;
a proceeding may be commenced by one or more of those persons as representing some or all of them.
(2) A representative proceeding may be commenced:
(a) whether or not the relief sought:
(i) is, or includes, equitable relief; or
(ii) consists of, or includes, damages; or
(iii) includes claims for damages that would require individual assessment; or
(iv) is the same for each person represented; and
(b) whether or not the proceeding:
(i) is concerned with separate contracts or transactions between the respondent in the proceeding and individual group members; or
(ii) involves separate acts or omissions of the respondent done or omitted to be done in relation to individual group members.'
195 The Australian Respondents contend that the primary judge was in error in concluding that the requirement of s 33C(1)(a) for seven or more persons to have claims against the same person should be construed literally. It was argued before this Court, as it was before his Honour, that the statutory entitlement to seek an injunction given to `the Commission or any other person' by s 80 of the TPA is not a claim of the kind to which s 33C refers.
196 This was the view for whom Lindgren J expressed a preference in Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd [1998] FCA 819; (1998) 84 FCR 512 at 523-524. His Honour at 524 said:
`In my view, the preferable construction of ss 33C(1)(a) and 33D(1) is that a statutory locus standi of the kind given by s 80 of the TP Act, by itself and without more, lies outside those provisions. This view is consistent with the Second Reading Speech set out earlier which evinced an intention that Part IVA would be used by persons who brought proceedings to prevent, or obtain relief for, loss or damage to their own interests and the interests of other group members, rather than by persons who sought only to protect public interests and whose private interests had not been specially affected at all.'
In the event, however, his Honour deferred to differing views that had earlier been expressed by O'Loughlin J in Australian Competition and Consumer Commission v Golden Sphere International Inc (1998) 83 FCR 424 (`Golden Sphere') and by me in Australian Competition and Consumer Commission v Chats House Investments Pty Limited (1996) 71 FCR 250 (`Chats House').
197 In the present context it is significant to note that neither in Golden Sphere nor in Chats House were the individual group members persons who sought to protect public interests. In both cases the individual group members had personally suffered loss arising from conduct in breach of the TPA which they sought to recover in the proceeding. In each case it was the representative party, that is, the Australian Competition and Consumer Commission (`the ACCC'), that sought to protect the public interest. The relevant issue with which I was principally concerned to deal in Chats House was that of whether the difference between the nature of the claim of the ACCC and the nature of the claims of the other members of the group disentitled the applicant from commencing the representative proceedings on behalf of the group. I concluded, although without the benefit of hearing a contradictor, that the difference in the nature of the claims did not disentitle the applicant from commencing the proceeding. Similarly, in Golden Sphere O'Loughlin J was required to address an argument that the claims of the various members of the group must share a measure of `commonality'. His Honour rejected the submission.
198 The primary judge in this case was bound by the decision of the Full Court (Spender, Hill and Sackville JJ) in Philip Morris (Australia) Ltd v Nixon [2000] FCA 229; 170 ALR 487 (`Philip Morris') that s 33C(1) requires the applicant and every group member to have a claim against the same respondent, or if there is more than one respondent, all respondents. It was for this reason that his Honour concentrated on the claims made by the applicant, on her own behalf and on behalf of the group members, for relief under ss 80 and 163A of the TPA.
199 It was argued before this Court by the applicant that Philip Morris was, to the above extent, clearly wrongly decided. Each of Carr and Finkelstein JJ has indicated that he accepts the above argument. I do not feel able to accept the argument that Philip Morris is, in this regard, clearly wrong. While the decision has attracted criticism, it reflects a construction of Part IVA of the FCA which, in my view, is plainly open. I consider that Philip Morris should be followed by this Court unless and until the High Court takes a different view of the proper construction of s 33C(1) of the FCA.
200 I should add that, notwithstanding my view that this Court should follow Philip Morris, I would not reject the possibility that s 33C(1) allows an applicant who has a claim against more than one respondent to commencing a representative proceeding on behalf of more than one group (eg on behalf of two subgroups of members where within each subgroup each member has a claim against the same respondent or respondents). Perhaps less contentiously, I would also not reject the possibility of two proceedings commenced under s 33C being consolidated or ordered to be heard together. However, full argument was not addressed to the Court on these possibilities, nor were they called in aid by the applicant. For these reasons I express no concluded view concerning them.
201 Like the primary judge, I therefore proceed on the basis that for this proceeding to continue as a representative proceeding under Part IVA of the FCA, the applicant and every group member must have a claim against every respondent. On this basis it is necessary to give consideration whether the claim made by the applicant on her own behalf, and on behalf of the group members, against the respondents for relief under s 80 of the TPA is sufficient, as the primary judge found, to enable the proceeding to be brought as representative proceeding under Part IVA of the FCA.
202 Section 80 of the TPA relevantly provides:
`(1) Subject to subsections (1A), (1AAA) and (1B), where, on the application of the Commission or any other person, the Court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute:(a) a contravention of any of the following provisions:
(i) a provision of Part IV, ...;
(ii) ...;
(b) attempting to contravene such a provision;
(c) aiding, abetting, counselling or procuring a person to contravene such a provision;
(d) inducing, or attempting to induce, whether by threats, promises or otherwise, a person to contravene such a provision;
(e) being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such a provision; or
(f) conspiring with others to contravene such a provision;
the Court may grant an injunction in such terms as the Court determines to be appropriate.'
203 In the second judgment the primary judge at [32] observed:
`Section 33C(1) requires that each group member must "have" a claim against each of the respondents. A person will have a claim against a respondent if that person has pleaded or established that the person has a reasonably arguable cause of action for the relief claimed against that respondent.'
His Honour was satisfied that the claims made on behalf of all group members for injunctive relief under s 80(1) of the TPA, and possibly the claims made by all group members under s 163A of the TPA (see [166] above), meant that all group members had claims against each of the respondents.
204 The Australian Respondents contended on the appeal that the requirement of s 33C(1)(a) of the FCA could not be satisfied by claims for an injunction or a declaration against each respondent. It was argued that the universal statutory standing to apply for relief under s 80(1) and s 163A of the TPA was insufficient to characterise an applicant as having a claim against the respondents for the purposes of s 33C(1) of the FCA. To conclude otherwise, it was suggested, would be to subvert the important statutory requirement of s 33C(1)(a).
205 It was not open to any respondent to argue that ss 80(1) and 163A of the TPA do not authorise persons not injured or affected by a breach of a relevant provision of the TPA to institute proceedings under those provisions. In Truth About Motorways Pty Limited v Macquarie Infrastructure Investment Management Limited [2000] HCA 11; 200 CLR 591 (`Truth About Motorways') Gleeson CJ and McHugh J at [17] said:
`An application for injunctive relief under s 80 is, in its nature, one for the protection of the public interest. The same may be said of s 163A. Any public protection of the applicant's own business or other interests is incidental or collateral. What is sought to be established by the determination of a court is a violation by the respondent of a statutory norm of conduct, and the existence of a duty or liability. .... Parliament, by conferring standing upon any person to invoke the jurisdiction of the court has, at the one time, created the potential for a justiciable controversy and conferred jurisdiction to determine the controversy. This is a common feature of legislation.'
206 Gummow J at [120]-[121] observed:
`... it is unnecessary for there to be a "matter" that there be imposed upon the respondent any obligation or "duty" not to contravene any of those Parts of the Act stipulated in ss 80 and 163A by injuring or threatening to injure the personal, economic or other individual interests or "rights" of that "person" who actually sues for contravention of the Act.It is not the case that the only members of the class who may institute and prosecute proceedings under ss 80 and 163A are those who complain of such an injury. As Bowen CJ explained ... the relevant injury is that to the public interest in the observance of the requirements of the Act. The competence of the applicant and the liability of the respondent to adjudication of the alleged contravention of the Act are manifested at different levels in the process of the adjudication of the "matter" arising under the Act.' (citation omitted)
See also Gaudron J at [50] and Kirby J at [176].
207 In this case, unlike Chats House and Golden Sphere, the only claims made by all group members against all respondents are claims of a public nature. That is, the only claims made by all group members are claims of a kind that would be satisfied by the making of orders on the application of one person only.
208 It is not necessary for present purposes to give consideration to whether the ACCC is in a special position in respect to proceedings brought by it under provisions of the TPA which specifically recognise its role in protecting the public interest. Nor is it necessary to give consideration to cases in which all group members have claims for damages or other compensatory relief against the respondent, or if there is more than one respondent, all respondents. If all group members have claims for damages or other compensatory relief against all respondents which satisfy the requirements of s 33C(1)(b) and (c), they will not need to invoke the jurisdiction of the Court under ss 80 and 163A to establish their entitlement to proceed under Part IVA of the FCA.
209 The issue which arises in this proceeding is, on the approach which I have adopted, whether seven or more persons can satisfy the requirement of s 33C(1) by all invoking the power of the Court under s 80 or s 163A to make orders of a kind calculated to protect the public interest rather than their respective private interests.
210 The issue, in my view, is a difficult one. I have concluded, not without considerable hesitation, that persons who seek to invoke the same power in the Court to make an order under the TPA in the public interest against a respondent or respondents are not `persons [who] have claims' against that respondent or those respondents of the kind required by s 33C(1). Rather, I have concluded, they are persons who all make the same claim against the respondent or the respondents. Section 33C(1)(a), as it seems to me, envisages a situation in which each group member has an individual claim. Section 33C(1)(b) and (c) then operates to ensure that the claims of the group members are of a kind that a representative proceeding is, prima facie, an appropriate way for the various individual claims to be adjudicated. As Goldberg J observed in Williams v FAI Home Security Pty Ltd (No 4) [2000] FCA 1925; (2000) 180 ALR 459 at [39]:
`The whole purpose of a representative proceeding is to enable persons with relatively small claims to have their claims pursued, where the costs of pursuing individual claims is impractical having regard either to the quantum or nature of the claim.'
211 For the above reasons, I conclude that the primary judge erred in concluding that the claims made on behalf of the group members for injunctive relief under s 80(1), and possibly for declaratory relief under s 163A, were sufficient to bring this proceeding within s 33C(1)(a) of the FCA.
212 The above conclusion is not one which is fatal to the validity of the proceeding. It does not require that the application and statement of claim be struck out or that it be immediately ordered that the proceeding no longer continue under Part IVA of the FCA. I would grant the applicant leave to further amend her application and statement of claim. This would allow her an opportunity, should she wish to take it, to bring them into conformity with s 33C. However, like Finkelstein J, I consider that interlocutory manoeuvring in this matter ought soon to come to an end.
Section 33C(1)(c)
213 I agree with Carr J that the conclusion of the primary judge that the requirement of s 33C(1)(c) of the FCA was satisfied in this case was correct for the reason that the primary judge gave.
SECURITY FOR COSTS
214 I am in substantial agreement with what is said by both Carr and Finkelstein JJ on this issue. I would set aside so much of the orders of the primary judge as dismissed Aventis Australia's application for security for costs and remit that motion to his Honour for further consideration.
ORDERS
215 The orders appropriate to be made on the appeals, in my view, are as follows:
1. F Hoffmann-La Roche Ltd, Roche Vitamins Asia Pacific Pte Ltd, Aventis SA, Aventis Animal Nutrition SA, Aventis Animal Nutrition Asia Pacific Pty Ltd, BASF Aktiengesellschaft, and BASF East Asia Regional Headquarters be granted leave to appeal from paragraphs 1, 3 and 4 of the orders made by Merkel J on 13 March 2002.
2. The appeals brought pursuant to the leave granted by paragraph 1 hereof be dismissed with costs.
3. Roche Products Pty Ltd, Roche Vitamins Australia Pty Ltd, Aventis Animal Nutrition Pty Limited and BASF Australia Limited be granted leave to appeal against paragraph 2 of the order made by Merkel J on 15 November 2002.
4. Aventis Animal Nutrition Pty Ltd be granted leave to appeal against paragraph 6 of the order made by Merkel J on 15 November 2002 to the extent that his Honour ordered Aventis Animal Nutrition Pty Ltd to pay the costs of Trudy Bray of and incidental to its application for security costs.
5. That the appeal of Aventis Animal Nutrition Pty Ltd against paragraphs 2 and 6 of the order made by Merkel J on 15 November 2002 be allowed to the extent that his Honour dismissed the application of Aventis Animal Nutrition Pty Ltd for an order that Trudy Bray provide security for costs and ordered Aventis Animal Nutrition Pty Ltd to pay the costs of Trudy Bray of and incidental to its application for security for costs and those orders to be set aside to that extent.
6. The application of Aventis Animal Nutrition Pty Ltd for an order that Trudy Bray provide security for costs be remitted to Merkel J for further consideration.
7. Except as provided by paragraph 5 hereof, the appeals brought pursuant to the leave granted by paragraph 3 hereof be dismissed with costs.
I certify that the preceding seventy (70) paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Branson. |
Associate:
Date: 15 July 2003
IN THE FEDERAL COURT OF AUSTRALIA |
|
VICTORIA DISTRICT REGISTRY |
|
An Application for Leave to Appeal from a Judge of the Federal Court of Australia
FINKELSTEIN J
216 This is a case which raises a number of important issues that are by no means easy to resolve. The respondent (as applicant) obtained leave to serve the originating process on the appellants (strictly speaking they are applicants for leave to appeal but, for reasons which will soon become apparent, leave must be granted) being those respondents who are out of the jurisdiction. The appellants applied for the service to be set aside. That application was refused. They have now sought leave to appeal alleging that the decision not to set aside the service out of the jurisdiction is wrong in the circumstances of this case. If they are unsuccessful on this account, they raise other important issues about the form of the proceeding and whether the respondent should give security for their costs.
217 What follows is a brief description of the claims made in the proceeding. It is taken from the third amended statement of claim. The respondent has indicated that she will seek to file a further amended statement of claim. It is unlikely, however, that her allegations will change substantially. Three corporate groups (the F Hoffman-La Roche group, the Aventis group and the BASF group) manufacture and distribute most of the world's vitamin products. These products are used in the animal feed industry (adding the ingredients to compound feeds), the food industry (using the ingredients as additives for fortifying, stabilising and colouring processed foods), the pharmaceutical industry (for the production of vitamin supplements) and the cosmetic industry (adding vitamins to cosmetics and toiletries). Between 1992 and 1999, members of each group (in particular, companies which are not incorporated in Australia) made a number of agreements fixing the prices and volumes of sales of vitamins throughout the world, including Australia. Related companies gave effect to the agreements in Australia. It is alleged that the groups contravened s 45(2)(a)(i) and (ii) of the Trade Practices Act 1974 (Cth) (which proscribe arrangements that contain an exclusionary provision or that will substantially lessen competition) and s 45(2)(b)(ii) of the Act (which renders it illegal to give effect to such arrangements). It is also alleged that certain subsidiaries in each group aided and abetted the principal contraventions. The respondent brings the claim as a representative party under Pt IVA of the Federal Court of Australia Act 1976 (Cth). The members of the group she represents are persons who, between 1992 and 1999, purchased in Australia all or some of the vitamins described in the amended statement of claim. The relief the respondent seeks both for herself and the group she represents is a declaration that the appellants have contravened the Trade Practices Act, damages under the Trade Practices Act, injunctions restraining the appellants from further breaching the legislation and other relief.
218 The action then is in personam. In such an action, the general rule is that the jurisdiction of a superior court of record over persons is territorial. Jurisdiction depends "upon the amenability of the defendant to the writ expressing the Sovereign's command in right of the State ... The common law doctrine is that the writ does not run beyond the limits of the State": Laurie v Carrol [1958] HCA 4; (1958) 98 CLR 310, 322. There are exceptions to the general rule. The exceptions can be traced back to the Common Law Procedure Act 1852 (UK). Until that enactment, there was no provision for the service of a writ out of the jurisdiction. There was only the practice of outlawry which, by the middle of the 19th century, was regarded as "unworthy of the jurisprudence of a civilised country": First Report of the Commissioners Enquiring into the Process, Practice and System of Pleading (1851) (UK) at p 6. The change was brought about by s 18 (if the defendant was a British subject) and s 19 (for foreigners) of the Procedure Act in the case of actions which arose within the jurisdiction or which related to a breach of contract made within the jurisdiction (though not if the defendant were in Scotland or Ireland).
219 In the Federal Court the exceptions are to be found in O 8 of the Rules. Order 8 authorises the court to grant leave to serve its process upon a person outside the Commonwealth in those cases specified in rule 1. This jurisdiction is to be exercised with some caution. The traditional approach was explained by Pearson J in Sociétié Générale de Paris v Dreyfus Brothers (1885) 29 ChD 239, 242-243 as follows: "[I]t becomes a very serious question, and ought always to be considered a very serious question, whether or not... it is necessary for the jurisdiction of the Court to be invoked, and whether this Court ought to put a foreigner, who owes no allegiance here, to the inconvenience and annoyance of being brought to contest his rights in this country, and I for one say, most distinctly, that I think this court ought to be exceedingly careful before it allows a writ to be served out of the jurisdiction." See also Cropper v Knight (1901) 17 TLR 299. According to this approach, if there exists any doubt about the meaning of the rules, they are to be strictly construed in favour of the foreigner: The Hagen [1908] P 189, 201. This is still the position in England (Siskina (Cargo Owners) v Distos Campania Naviera SA [1983] UKHL 5; [1979] AC 210, 254-255), although in Australia the same degree of caution need not be shown (Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552, 571).
220 In order to obtain leave to serve out of the jurisdiction three conditions must be met. The court must be satisfied: "(a) that the proceeding is a proceeding in which the court has jurisdiction; (b) that the proceeding is a proceeding to which rule 1 applies; and (c) that the applicant has a prima facie case for the relief which he seeks." The appellants contend that on the material before the judge he could not have been satisfied that the court had jurisdiction in the proceeding (O 8, r 2(a)) or that there was a prima facie case against them for the relief sought by the respondent (O 8, r 2(c)).
221 It is convenient, though logically out of order, to begin by considering whether the respondent has made out a prima facie case for relief. Here, the first issue that arises is the proper construction of the rule. The respondent sues on a number of causes of action and each cause falls within one of the categories in O 8, r 1. In the trial below, the case proceeded on the basis that the respondent was only required to establish the existence of a prima facie case for relief in respect of one cause of action. The question is whether this approach is correct. Surprisingly, there is little authority in point, and the few cases which exist are conflicting. The leading case which supports the position taken below is Cell Tech Communications Pty Ltd v Nokia Mobile Phones (UK) Limited (1995) 58 FCR 365. This was a decision of Lindgren J who is well known for his extensive knowledge of the court's rules. His decision was cited with approval by the Full Court in Caterpillar Inc v John Deere Limited [1999] FCA 1503; (1999) 48 IPR 1, though without any discussion.
222 With great respect for the opinion of Lindgren J, I feel I cannot follow it. It is necessary for me to explain why this is so. For this purpose I will set out the following passages in Lindgren J's judgment (at 373) where he explains the reasons for his conclusion:
"The preponderance of authority favours the view that except in extreme cases, the provision does not require a prima facie case in respect of each cause of action pleaded or contended for, and that if a prima facie case for a particular form of relief is made out on one cause of action, it is immaterial that a prima facie case for the same relief on another cause of action is not made out: see Western Australia v Vetter Trittler Pty Ltd (In liq), at 110 and Trade Practices Commission v Gillette Co (No 1), at 371; but see Tycoon Holdings Ltd v Trencor Jetco Inc, at 35.
With respect, the preponderant view is supported by several considerations. First, it accords with the plain words of para (c) of r 2(2).
Secondly, the originating process may be accompanied by affidavits rather than by a statement of claim and in such a case "causes of action" may be referred to only in the course of argument or submissions. It would be odd in such a case that leave to serve outside the jurisdiction should not be granted for no reason other than that the court rejected a submission that a prima facie case for the relief sought existed on a particular cause of action while accepting a submission that a prima facie case for the same relief was made out on a different cause of action.
Thirdly, the preponderant view is consistent with the rule's concern with the coercive power invoked by the issue and service of the originating process, rather than with the accompanying statement of claim or affidavits.
Fourthly, it sometimes occurs that the same facts are said to give rise to more than one cause of action, such as breach of a general law duty of care and breach of an implied contractual duty of care. It would be odd that leave to serve an originating process outside the jurisdiction should be refused because, for whatever reason, one of the causes of action is thought to lie and the other not."
223 It is convenient, in the first instance, to consider the "preponderance of authority" to which reference is made. Prior to 1995, the point had been considered in the Federal Court on only three occasions. Two of the cases, Western Australia v Vetter Trittler Pty Ltd (In liq) (Receiver and Manager Appointed) (1991) 30 FCR 102 and Trade Practices Commission v Gillette Company (No. 1) (1993) 45 FCR 366 support the conclusion reached by Lindgren J. In Western Australia v Vetter Trittler, however, the point appears not to have been argued and French J's conclusion is not supported by detailed analysis. Conversely, in Trade Practices Commission v Gillette (No. 1), Burchett J undertook a comprehensive analysis of the issue, however, it is not clear whether the point was in contest.
224 By way of contrast, the Supreme Court of Victoria has taken the opposite view, although admittedly on a differently worded rule. In Williams v The Society of Lloyd's [2000] VSCA 38; [1994] 1 VR 274 McDonald J held, after argument, that in such applications the plaintiff must persuade the court that there is a strong arguable case (in Victoria it is not necessary to establish a prima facie case) for each cause of action on which he relies. There are authorities in England which suggest, but do not hold, this to be the correct approach. I have in mind two cases. The first is Beck v Value Capital Ltd (No. 2) [1975] 1 WLR 6. In that case, the plaintiff had obtained leave to serve a foreign defendant out of the jurisdiction and then sought leave to amend his pleadings. The defendant raised a number of objections to this, one of which was that a new cause of action could not be added unless it was in respect of a cause for which the plaintiff would have obtained leave under O 11. As to this Goulding J said (at 15):
"No authority directly on the point has been cited. In principle I find Mr Wilmer's proposition unacceptable. It seems to me manifestly unfair to a foreign defendant, and it would often enable a plaintiff to circumvent the court's discretion under R.S.C., Ord. 11, by the familiar device of throwing a sprat to catch a mackerel. I do not know that it is necessary to formulate the contrary proposition in quite the way that I have just stated it. It is enough to say that the discretion to allow an amendment under R.S.C., Ord. 20, will not be exercised if an injustice to the opposite party will result, and that it is in general unjust to amend a writ served under R.S.C., Ord. 11, by adding something which the court would probably have refused to sanction under R.S.C., Ord. 11."
225 The second case is Metall Und Rohstoff A.G. v Donaldson Lufkin & Jenrette Inc [1990] 1 QB 391. This was a very complicated case involving an application to set aside the grant of leave to serve the proceeding upon two defendants in New York. Gatehouse J, the trial judge, said that the skeletons of argument alone took up seventy pages, oral submissions by three leading counsel occupied eight days and a very large number of authorities were referred to. Fortunately, it is not necessary to do more than provide a very brief summary of the facts which I take substantially from the headnote. The plaintiff was a metals trader. Its chief aluminium trader opened up a number of accounts and traded them in fraud of the plaintiff allegedly with the knowledge of the defendants. The plaintiff instituted the action claiming damages for conspiracy without alleging that the purpose of the conspiracy was to harm the plaintiff. The plaintiff also claimed damages for inducing breach of contract, abuse of process and asked for an accounting by the defendants as constructive trustees and for procuring breaches of trust. One of the issues which arose on the application to set aside leave concerned the manner in which the plaintiff intended to run its case. It was argued that some of the points alleged were not open on the pleading. The Court of Appeal said (at 436):
"In our judgment, if the draftsman of a pleading intended to be served out of the jurisdiction under Ord. 11, r. 1(1)(f) (or indeed under any other sub-paragraph) can be reasonably understood as presenting a particular head of claim on one specific legal basis only, the plaintiff cannot thereafter, for the purpose of justifying his application under Ord. 11, r. 1(1)(f), be permitted to contend that that head of claim can also be justified on another legal basis (unless, perhaps, the alternative basis has been specifically referred to in his affidavit evidence, which it was not in the present case). With this possible exception, if he specifically states in his pleading the legal result of what he has pleaded, he is in our judgment limited to what he has pleaded, for the purpose of an Order 11 application. To permit him to take a different course would be to encourage circumvention of the Order 11 procedure, which is designed to ensure that both the court is fully and clearly apprised as to the nature of the legal claim with which it is invited to deal on the ex parte application, and the defendant is likewise apprised as to the nature of the claim which he has to meet, if and when he seeks to discharge an order for service out of the jurisdiction."
226 Moving from the decided cases, it seems to me that there is error in at least three of the four considerations that were the basis for Lindgren J's conclusion. The error in the second and fourth considerations lies in the assumption upon which each consideration is based. Lindgren J proceeds on the assumption that if a plaintiff fails to make out a case for each cause of action, leave to serve out of the jurisdiction would be refused. But this is not so. It has always been the case that a court can impose terms when granting leave: The Washbourne and Moen v Cunard Steamship Company (1889) 5 TLR 592. So, the order might limit the plaintiff's claim to those causes of action in respect of which a prima facie case has been made out: Thomas v The Duchess Dowager of Hamilton (1886) 17 QBD 592 (where the judge refused to set aside an order for service out of jurisdiction and instead ordered that the plaintiff's claim be limited to breaches of contract occurring within the jurisdiction); Manitoba & North-West Land Corporation v Allan [1893] 3 Ch 432 (where the court decided that the plaintiff was not entitled to relief for those parts of the claim that were outside O 11).
227 With respect, I also disagree with Lindgren J's first consideration, namely that the preponderant view "accords with the plain words of para (c) of rule 2(2)". Each paragraph of O 8, r 1 is independent and complete in itself. That is, each paragraph creates a separate jurisdiction to grant leave: Tassell v Hallen [1892] 1 QB 321; Matthews v Kuwait Bechtel Corporation [1959] 2 QB 57. For this reason, each condition in r 2 must be satisfied in respect of each cause of action raised in the proceeding. That, with respect, is the plain reading of the rule. In any event, if any ambiguity were to be found in the rule, it should, in accordance with well established (but now somewhat weakened) authority, be read against the plaintiff.
228 The third Federal Court decision is one which, to a degree, supports the construction I favour. The case is Tycoon Holdings Ltd v Trencor Jetco Inc [1992] FCA 25; (1992) 34 FCR 31. There Wilcox J said (at 35) that, in terms, r 2(2)(c) did not require an applicant to demonstrate a prima facie case in respect of each cause of action upon which the proceeding is founded. He said that the intention of r 2(2)(c) "is to enable an extraterritorial respondent to restrict the litigation against him or her to causes of action in connection with which the applicant can show a prima facie case" and held that the paragraph should be read accordingly. He went on to say (also at 35) that "[i]t would be burdensome, sometimes almost absurd, to allow the litigation of causes of action which the applicant could not show to have substance simply because the applicant joined with those claims some other, perhaps trifling, claim which did have merit." I agree with Wilcox J save that, in my opinion, a literal reading of the rule would also produce the result which he says is the correct result.
229 A different construction has been placed on O 8 r 2(2)(c) by the other judges. In their opinion, if an applicant makes out a prima facie case for the relief (that is, the remedy) he seeks the condition will be satisfied, whether or not that relief is based on more than one cause of action. I accept, of course, that this construction of the rule is open, though it is not the construction which I prefer. Moreover, it is a construction which has the potential to bring about some unusual results. Let it be assumed that three plaintiffs each bring an action for two causes, one in contract and the other in tort, and that each cause of action arises out of the same facts. In one case the plaintiff seeks specific performance of the contract and damages for the tort. This plaintiff will be required to establish a prima facie case in respect of each cause of action because each gives rise to different relief. The second plaintiff claims damages for breach of contract and tort and, let it be assumed, when properly assessed the measure of those damages will be the same for each cause. This plaintiff will only be required to establish a prima facie case for one cause of action. The third plaintiff is in the same situation as the second save that the measure of damages for each cause is different. It is not clear what this plaintiff must prove to satisfy the condition. He may be required to establish a prima facie case for each cause of action because the measure of damages is different. On the other hand, the answer may depend upon the manner in which this plaintiff has formulated his relief; for example, he may only seek "Damages" or he may describe the nature of those damages in a way which indicates they are different. Whatever be the position, I see no reason in principle why any one of these plaintiffs should be treated differently from the others. On the construction of O 8 r 2(2)(c) which I prefer each will be treated in the same way.
230 Turning to the existence of a prima facie case, in virtue of the fact that the other judges agree that the respondent needs only to make good a prima facie case for one cause of action, I agree completely with what Carr J has said in respect of that cause. For the record, I should point out that Carr J's analysis and the facts to which he refers indicate that the respondent would have shown a prima facie case for her other causes of action as well. His analysis also demonstrates that there are common issues of law or fact underlying the various claims. There is nothing I am able usefully to add to his analysis.
231 Next I will deal with the issue of jurisdiction. As we have seen, an applicant who seeks leave to serve process out of the jurisdiction must establish, to the court's satisfaction, that the court has "jurisdiction" over the proceeding. No doubt this means the court must be satisfied, on balance, that it has jurisdiction over the subject matter of the proceeding as well as jurisdiction over the person to be served (apart from his amenability to service which is a separate condition to be satisfied) so that the court is able to impose on that person, by way of judgment, an obligation in favour of the plaintiff.
232 The primary case against the appellants is that they have contravened s 45 of the Trade Practices Act by engaging in particular conduct in Australia. There is, however, an alternative basis upon which the s 45 case is being run against the appellants in the event that it is found that the conduct complained of occurred outside the Commonwealth. It is this alternative basis for formulating the claim which is said to be beyond jurisdiction.
233 In relation to jurisdiction, reference should be made to Strickland v Rocla Concrete Pipes Ltd [1971] HCA 40; (1971) 124 CLR 468. There the High Court held that the corporations power in s 51(xx) of the Constitution supports the enactment of legislation which regulates the trading activities of foreign corporations and trading and financial corporations formed within Australia so as to preserve competition. Huddart, Parker and Co Pty Ltd v Moorehead [1909] HCA 36; (1909) 8 CLR 330 was overruled. The Trade Practices Act, therefore, is based on the corporations power. Section 45 of the Trade Practices Act provides, in substance, that a corporation shall not in Australia enter into an arrangement which has an exclusionary provision (as defined) or a provision which would have the effect of lessening competition in an Australian market. It also forbids giving effect to such a provision. This is the primary operation of the section. The section also has an extended operation. One extension is made by s 5(1). The effect of s 5(1) is to broaden the operation of Pt IV of the Trade Practices Act, where s 45 is found, to conduct engaged in outside Australia by any body corporate which is incorporated in or carrying on business within Australia. It is this extended operation, based upon the assertion that the appellants carry on business in Australia, which is the alternative basis for the respondent's claim.
234 Section 45(2) read in light of s 5(1) relevantly provides:
"A corporation shall not within Australia and a body corporate incorporated or carrying on business within Australia shall not outside Australia:(a) make a contract or arrangement, or arrive at an understanding if:
(i) the proposed contract, arrangement or understanding contains an exclusionary provision; or
(ii) a provision of the proposed contract, arrangement or understanding has the purpose, or would have or be likely to have the effect, of substantially lessening competition in Australia; or
(b) give effect to a provision of a contract, arrangement or understanding, whether the contract or arrangement was made, or the understanding was arrived at, before or after the commencement of this section, if that provision:
(i) is an exclusionary provision; or
(ii) has the purpose, or has or is likely to have the effect, of substantially lessening competition in Australia."
The Roche and BASF appellants say the requirement that the body corporate must be "carrying on business in Australia" is "jurisdictional". They also say that because they have put in issue the allegation that they were carrying on any business here, that matter must be determined immediately. They contend that in the resolution of that issue, the rules relating to evidence on interlocutory applications cannot be applied.
235 It is convenient to examine more precisely what is meant by the word "jurisdiction". It is a slippery word. It has a variety of meanings and, as lawyers will always explain, its meaning is dependent upon the context in which the word is used. The sense in which the word is used by the Roche appellants is the power of the court to deal with and decide the claim against them. As Pickford LJ said in Guaranty Trust Company of New York v Hannay & Company [1915] 2 KB 536, 563: "[this is] the only really correct sense of the expression." See also the observations of Diplock LJ (as he then was) in Anisminic Ltd v Foreign Compensation Commission [1968] 2 QB 862, 889:
"'Jurisdiction' is an expression which is used in a variety of senses and takes its colour from its context. In the present appeal ... we are concerned only with the statutory jurisdiction in the sense of an authority conferred by statute upon a person to determine, after inquiry into a case of a kind described in the statute conferring that authority and submitted to him for decision, whether or not there exists a situation, of a kind described in the statute, the existence of which is a condition precedent to a right or liability of an individual who is a party to the inquiry, to which effect will or may be given by the executive branch of Government."
236 In other words, jurisdiction in its narrow sense means both the power to entertain a suit and to render a judgment. In the case of a constitutional court, such as the Federal Court, it is the authority of the court to exercise the judicial power of the Commonwealth (as to which see s 71 of the Constitution) in specific cases. The cases are those defined by the Federal Parliament in legislation enacted under s 77 of the Constitution, when read with s 75 and s 76. A constitutional court may also have "accrued jurisdiction" over non-federal claims which are elements of the controversy between the parties and that arise out of "the matter" the subject of its federal jurisdiction. (Here I use the word "jurisdiction" to refer to the constitutional court's source of power).
237 Jurisdiction in respect of matters arising under the Trade Practices Act is vested in the Federal Court by s 86 of that Act. As regards the conduct of the Roche and BASF appellants within the Commonwealth, that jurisdiction depends upon them being foreign corporations because none of them are trading or financial corporations established within the Commonwealth. As each Roche and BASF appellant is admittedly a foreign corporation then, subject to the case falling within one of the categories mentioned in O 8 r 1, the Federal Court has jurisdiction over that corporation in respect of the claim based on its activities in Australia. If there were a dispute about whether or not a Roche or BASF appellant was a foreign corporation, the resolution of that dispute could not finally be determined by the Federal Court. Sometimes it is possible to confer on a tribunal the power to decide whether a jurisdictional fact exists. But that cannot be so in the case of a constitutional court when the jurisdictional fact itself defines the legislative power conferring its jurisdiction. This is what was decided by the High Court in The Queen v Judges of the Federal Court of Australia; Ex parte Western Australian National Football League (Inc) [1979] HCA 6; (1979) 143 CLR 190.
238 The extended operation of s 45 is not dependent upon the corporations power in s 51(xx). The additional operation of the Act relies upon the trade and commerce power in s 51(i), in which event the competence of the court does not depend upon a finding that the Roche appellants are bodies corporate or that they are carrying on business in Australia. As regards this extended operation of s 45 (that is, its operation in respect of a body corporate carrying on business within Australia) the facts which need to be established to bring a body within the section ((i) that the respondent is a body corporate and (ii) that it is carrying on business in Australia) are not jurisdictional facts. The establishment of those facts forms part of the elements of the cause of action which the respondent must make out to succeed in this part of her claim. In other words, it is "simply [part of] a factual situation the existence of which entitles one person to obtain from the court a remedy against another person": Letang v Cooper [1965] 1 QB 232, 242-243 per Diplock LJ.
239 However, if I am wrong in characterising the requirement of carrying on business in Australia as non-jurisdictional, the judge was not entitled to put off his determination of that issue unless, in the meantime, all steps in the proceeding were deferred pending the resolution of the jurisdictional issue. It is the duty of every statutory court to be satisfied that it has jurisdiction to deal with each matter that is brought before it. In most cases the existence of jurisdiction will be obvious and the matter will proceed without the need for a specific inquiry. If a query about jurisdiction is raised, or if it is identified by the court, the court must satisfy itself that it has jurisdiction before it proceeds any further with the matter: Ex parte Western Australian National Football League at 215; Ex parte Transport Workers Union of Australia (New South Wales); Re Gallagher (1964) 82 WN (NSW) (Part 2) 58, 67. As Lord Diplock explained in Rediffusion (Hong Kong) v Attorney-General of Hong Kong [1970] AC 1136, 1151:
"'Jurisdiction' is the right of the court to enter upon the inquiry as to whether or not a cause of action exists in the plaintiff and, if a cause of action does exist, to grant or, if the relief is discretionary, to withhold the relief applied for. Conversely, lack of jurisdiction is absence of any right in the court to enter upon such an inquiry at all."
That is to say, until the court's jurisdiction has been established, the court cannot know whether it has the "right" to enter upon the inquiry. It is only when the right is established that the case can proceed.
240 The position is different in the United States. At one time, if jurisdiction was disputed, federal courts thought it was permissible to assume, without deciding, the existence of jurisdiction and deal with the merits of the case. This so-called "hypothetical jurisdiction" could be assumed if the following requirements were satisfied: (1) The jurisdictional question must be difficult; (2) The decision on the merits must be clear; (3) The case must be resolved against the party asserting jurisdiction; and (4) Undertaking a resolution on the merits as opposed to dealing with the application to dismiss for want of jurisdiction must not affect the outcome: see eg SEC v American Capital Investments Inc 98 F 3rd 1133 (9th circ 1996); cert denied sub nom Shelton v Barnes 520 US 1185 (1997). The practice was struck down by the Supreme Court in Steel Company v Citizens for a Better Environment [1998] USSC 24; 523 US 83 (1998). Scalia J, who delivered the principal judgment on behalf of the majority, confirmed the necessity of determining jurisdiction before proceeding to the merits of the case. He said (at 231) that "jurisdiction is always an antecedent question" and it is not possible for "a court to resolve contested questions of law when its jurisdiction is in doubt". This notwithstanding, many United States cases have held that in an appropriate case it is permissible to leave the determination of jurisdiction to the trial of the action, especially when the jurisdictional facts and the merits are intertwined: eg Barrett v United States 853 F2d 124, 131 (2d Cir 1988); United States v North Carolina 180 F3d 574, 580-581 (4th Cir 1990); Cupit v United States 964 F Supp 1104, 1107 (1997).
241 I should also mention the still unresolved question relating to use which may be made of the court's processes of discovery for the purposes of determining the existence of a jurisdictional fact. The Roche and BASF appellants did not deny the respondent the ability to have recourse to the totality of the court's powers to help her establish a jurisdictional fact. It is unnecessary to determine whether this concession was properly made in the absence of full argument. I do note, however, that there are decisions in the United States which support the position taken by the parties: see eg Insurance Corporation of Ireland Ltd v Compagnie des Bauxites de Guinee 456 US 694, 707-709 (1982); United States v Swiss American Bank Ltd 274 F3d 610, 625-627 (2001); Siderman De Blake v Republic of Argentina 965 F2d 699, 713 (9th Cir 1992); cert denied 507 US 1017 (1993) ("where pertinent facts bearing on the question of jurisdiction are in dispute, discovery should be allowed"); Butchers Union Local No. 498 v SDC Investment Inc 788 F2d 535, 540 (9th Cir 1986) ("[d]iscovery should ordinarily be granted where `pertinent facts bearing on the question of jurisdiction are controverted or where a more satisfactory showing of the facts is necessary'") citing Data Disc Inc v Systems Technology Associations Inc 557 F2d 1280, 1285 (9th Cir 1977).
242 I now turn to the submission that, as presently constituted, the action does not satisfy the requirements of s 33C(1) of the Federal Court Act. That section specifies three criteria which must be satisfied for a representative proceeding to be commenced. Such a proceeding may be instituted where: "(a) seven or more persons have claims against the same person; and (b) the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances; and (c) the claims of all those persons give rise to a substantial common issue of law or fact."
243 There are authorities which hold that s 33C(1) requires every applicant and represented party to have a claim against the respondent and, if there is more than one respondent, to have a claim against every respondent. In his reasons Carr J has identified a significant problem with these cases. They have proceeded on an incorrect view of what was decided in Symington v Hoechst Schering Agrevo Pty Ltd (1997) 78 FCR 164. For this reason it is necessary to consider afresh what is the true effect of s 33C(1). Before undertaking that task, however, there is another issue that arises in relation to the construction of s 33C(1) which must be dealt with. It will be seen that each criterion in s 33C(1) is concerned with the "claim" which the seven or more persons must have. It is not at all clear what is meant by the word "claim" in this context. The judge took a very narrow meaning of the word. He said that "claim" referred to the relief which was sought in the proceeding. He pointed out, as is the fact, that in this case every applicant seeks an injunction under s 80(1) of the Trade Practices Act. This, according to the judge, was sufficient to satisfy the statute.
244 It is, I suppose, possible that the word "claim" might be intended to refer to the relief sought. That, however, is not the usual meaning which is given to the word "claim" in a context such as the present. In the Supreme Court of Victoria, for example, under the old rules a plaintiff might indorse a claim on a writ of summons or deliver a statement of claim. If the writ was indorsed the statement had to give sufficient notice of the nature of the claim, its cause and the relief or remedy required in the action: Robson v Scott [1962] VR 540. If the plaintiff elected to deliver a statement of claim (which was quite different from an indorsement) the rules relating to the contents of a statement of claim had to be complied with. In particular, the statement of claim was required to state in a summary form the material facts relied on, but not the evidence by which these facts were to be proved: Florins v Bank of Victoria Limited (1891) 17 VLR 183, 185. Other rules relating to the content of pleadings were contained in the rules of court, including rules relating to particulars, the performance of conditions precedent, documents, allegations of malice, fraudulent intent, knowledge or other condition of mind and so on. In the Federal Court, a case may be commenced by an application which must be in accordance with the prescribed form. The application must specify the relief claimed. The application may be served with an affidavit or a statement of claim, whichever is appropriate. The rules relating to the contents of the statement of claim are broadly similar to those found in the Rules of the Victorian Supreme Court. In none of these contexts is the word "claim" used to refer to what a party seeks in his prayer for relief.
245 In my opinion it is unlikely that the word "claim" in s 33C(1) is intended to be a reference to the remedy sought in the action. Sometimes what is found in the prayer for relief is referred to as the "claim" made in the action. But surely this is loose language. The better view, in my opinion, is that the word means, in this present context, the facts which give rise to the action as well as to the legal basis of the action. That is, s 33C is concerned to establish that the action be sufficiently collective in nature so as to warrant it being brought as a representative or class action. For an action to be "collective in nature" I mean that it involves claims which are closely connected either by reference to the underlying facts (inevitably there will be differences) or to the underlying legal principles (where there might also be differences) that are raised by the facts. This approach appears to be mandated both by the language of s 33C(1) as well as its context. It is also of interest to note that the draft Federal Court (Grouped Proceedings) Bill 1988, which formed part of the recommendations made by the Australian Law Reform Commission (Report No. 46) specifically provided that the relief sought by a group member need not be the same as the relief sought by the principal applicant: cl 9 of the draft Bill.
246 Let me now return to the problem at hand. Is it necessary for every applicant and every represented party to have a claim against all respondents if there is more than one respondent? In Philip Morris (Australia) Ltd v Nixon [2000] FCA 229; (2000) 170 ALR 487 the Full Court said that the answer to this question was in the affirmative. The point was not, however, in dispute between the parties, so the Full Court did not have the benefit of any argument putting a contrary view. Sackville J delivered the principal judgment of the Full Court. He said that this construction of s 33C(1) was supported by the language of the section and was consistent with both the structure of Pt IVA and the approach taken by the Law Reform Commission's Report No. 46 on Group Proceedings in the Federal Court. It was that report which led to the enactment of Pt IVA, though not precisely along the lines recommended by the Commission. According to Sackville J, the Commission's "...recommendations were specifically designed to provide an effective procedure to enable people suffering loss or damage in common with others as a result of a wrongful act or omission by the same respondent..." (at 511-512). So, the judge said (at 512) that the Commission "...plainly did not envisage that the grouped procedure could be employed to bring a proceeding against more than one respondent, in circumstances where some members of the group make a claim against one respondent only and others make a claim against another respondent."
247 It is convenient to consider these observations in their historical setting. According to the common law, no two causes could be joined in one action, the exceptions being that the debt could be joined with detinue and an action on the case could be joined with trover. One of the great reforms brought about by the Common Law Procedure Act 1852 (UK) was to get rid of this highly undesirable state of affairs by allowing a plaintiff to bring one action with different causes provided they could conveniently be tried together: Common Law Procedure Act, s 41. The common law also denied to two or more plaintiffs the ability to bring an action against one defendant (Hannay and Co v Smurthwaite [1893] 2 QB 412) or one plaintiff to bring an action against two or more defendants (Malone v Great Northern Railway Co (Ireland) [1931] IR 1; Cameron v McBain [1948] VLR 245). The court simply lacked jurisdiction to entertain such claims. The undesirability, indeed the injustice, of the common law position was obvious. By the end of the 1800s, both the Judicature Acts and rules of court had altered the common law. As a result, it is now permissible in every superior court for causes of action to be combined or actions to be consolidated so that: (1) if a plaintiff has a number of complaints against a defendant, he is no longer compelled to bring one action for each complaint; and (2) where there are causes of action between different parties which raise common issues of law or fact, it is no longer necessary for these causes to be tried separately by different judges or juries. That is to say, both sensible and practical considerations led to the view that, at least in certain circumstances, "a writ should be like an omnibus travelling on a certain route into which any number of persons may get as passengers for the journey": Hannay and Co v Smurthwaite [1893] 2 QB at 422, where on the rules a different view was taken. If this view had not been accepted, and the rules of court not modernised, courts would be even more inundated with litigation than they already are, and the expense to parties wishing to try cases would be so burdensome as to deny to all but the very rich the ability to obtain redress for legal wrongs.
248 It seems to me that if Philip Morris (Australia) Ltd v Nixon be correctly decided, we are heading back in the direction of 1852. This result, so it seems to me, is so undesirable that it should be avoided at all costs unless, of course, parliament has mandated it in clear and unambiguous language. I am of the very firm view that there is nothing in the language of s 33C(1), when considered in isolation or in its setting, which requires that result. It is as well to recall the words of the section. Section 33C(1)(a) provides that "subject to this Part, where seven or more persons have claims against the same person ... a proceeding may be commenced by one or more of those persons as representing some or all of them." It can immediately be acknowledged that a properly constituted representative proceeding must involve a group of seven or more persons each of whom has a claim or claims against one person. But that is all the section requires. It simply does not address the situation where some members of the group, say ten out of a group of fifteen, also have claims (that is, causes of action) against some other person, being causes of action which satisfy both s 33C(1)(b) (each claim arises out of the same circumstances) and s 33C(1)(c) (each claim gives rise to common issues of law or fact). Is it necessary for the claims of this smaller group to be prosecuted in a separate proceeding or can they be joined in the proceeding brought by the larger group? I will not place a construction on s 33C which requires separate proceedings to be instituted. If it were impermissible to bring such an action, all the objectives of Pt IVA, the reduction of legal costs, the enhancement of access by individuals to legal remedies, the promotion of the efficient use of court resources, ensuring consistency in the determination of common issues, and making the law more enforceable and effective, would be undermined.
249 The current versions of the application and statement of claim do not conform with s 33C. I would grant leave to permit the respondent yet again to amend her application and pleading to bring it in line with s 33C. (I have ready noted that she proposes to make some amendments in any event). Although I cannot foreclose any future application to amend the pleading, it does seem to me that the respondent has been given sufficient opportunity to plead her case and she should, after one further round of amendments, be required to get on with her action.
250 The final issue I propose to consider is security for costs. Before his discretionary decision can be set aside, it is necessary to show that the judge erred in law in some respect. There is, in my view, an error of that kind. In this respect I agree substantially with what is said by Carr J, especially as regards the relationship of s 33ZG(v) and s 43(1A) of the Federal Court Act. The effect of the first provision is to ensure that an application for security for costs is not confronted with any special hurdle based on the type of proceeding (a group proceeding) in which it is made. The effect of the second is to protect represented parties in relation to any costs order which may be made in the action. There is no overlap between the two sections. The judge was of the opinion that the effect of s 43(1A) would be undermined if a security order was made. The judge said it would be "incongruous and anomalous" to make an order for security in light of s 43(1A). But if it be correct that the two sections operate independently of one another, there can be no such incongruity or anomaly.
251 This is not to say that the fact that a proceeding is a group proceeding is irrelevant to the question whether security should be granted. To the contrary, the character of such a proceeding sometimes gives rise to features not found in ordinary civil litigation which may go against or in favour of the provision of security. What follows is not intended to be an exhaustive list of these features, but they are some of the ones.
252 Dependent upon the type of proceeding, the represented group may be quite diverse. The group may include corporations as well as natural persons. The members of the group, whether corporate or not, may be rich or poor. In my view, the characteristics of the group should be taken into account on an application for security. Accordingly, if there is still a rule that an order for security should not be made against an impecunious natural person (for a criticism of the absoluteness of this rule see Melville v Craig Nowlan & Associates Pty Ltd [2002] NSWCA 32; (2002) 54 NSWLR 82), the rule may have little application to many class actions. Another matter that should be taken into account is that, contrary to parliament's intention, many class actions become bogged down by interminable and expensive interlocutory applications and protracted and even more expensive appeals from interlocutory orders. It may be necessary to consider which party is responsible for this state of affairs when dealing with the quantum of any security costs that may be ordered. It is also appropriate to bear in mind that it is commonly the case in a class action that a person will stand behind (I mean fund) the applicant. Usually this will be the applicant's solicitor, who will sometimes charge what is referred to as a "contingency fee" for the privilege. When a proceeding is brought by a "nominal plaintiff" that is a plaintiff who will not himself benefit from the action but is making the claim for the benefit of someone else, an order for security is usually made. A party who is being funded by his solicitor is not really a "nominal plaintiff". Nevertheless, the solicitor does stand to benefit from the action (especially as regards the additional fee) if the action is ultimately successful, as the solicitor will then be able to recover his costs. That is a relevant, though not a decisive, consideration when deciding whether security should be ordered. In many cases, it will also be relevant to consider the merits of the claim. I think that the court should not shy away from undertaking a preliminary evaluation of the merits. That task is not as difficult as it might seem. Every day judges are required to decide whether or not a party has made out a prima facie case, or has raised a serious issue to be tried, in an application for an interlocutory injunction, the appointment of a receiver or other serious forms of relief. While class actions provide many benefits to the community, they have their attendant dangers. They can be used as an instrument of oppression. It is not unknown for a class action to be brought in relation to an unmeritorious claim in the hope of compelling the defendant to agree to a settlement to avoid the enormous expense of fighting the case. Those types of actions can be discouraged by an appropriate order for security.
253 I agree with the orders proposed by Carr and Branson JJ.
I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein. |
Associate:
Dated: 15 July 2003
Counsel for the 1st, 2nd, 3rd & 4th Applicants/Appellants: |
Mr P J Jopling QC Mr C M Caleo |
Solicitor for the 1st, 2nd, 3rd & 4th Applicants/Appellants: |
Clayton Utz |
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Counsel for the 6th, 7th, 8th & 9th Applicants/Appellants: |
Mr N C Hutley SC Mr P J Brereton |
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Solicitor for the 6th, 7th, 8th & 9th Applicants/Appellants: |
Baker & McKenzie |
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Counsel for the 10th, 11th & 13th Applicants/Appellants: |
Mr A C Archibald QC Ms E J Hollingworth SC |
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Solicitor for the 10th, 11th & 13th Applicants/Appellants: |
Blake Dawson Waldron |
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Counsel for the Australian Competition and Consumer Commission (Intervenor): |
Mr R A Brett QC Mr M J O'Bryan |
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Solicitor for the Australian Competition and Consumer Commission (Intervenor): |
Australian Government Solicitor |
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Counsel for the Respondent: |
Mr G G McArthur SC Mr L W L Armstrong |
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Solicitor for the Respondent: |
Maurice Blackburn Cashman |
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Date of Hearing: |
17, 18 & 19 February 2003 |
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Date of Judgment: |
15 July 2003 |
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URL: http://www.austlii.edu.au/au/cases/cth/FCAFC/2003/153.html