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The Bill gives the Federal Court an efficient and effective procedure to deal with multiple claims. Such a procedure is needed for two purposes. The first is to provide a real remedy where, although many people are affected and the total amount at issue is significant, each person's loss is small and not economically viable to recover in individual actions. It will thus give access to the courts to those in the community who have been effectively denied justice because of the high cost of taking action. The second purpose of the Bill is to deal efficiently with the situation where the damages sought by each claimant are large enough to justify individual actions and a large number of persons wish to sue the respondent. The new procedure will mean that groups of persons, whether they be shareholders or investors, or people pursuing consumer claims, will be able to obtain redress and do so more cheaply and efficiently than would be the case with individual actions.[1]
The comments above were made by the Australian Attorney-General in Parliament in 1991, when explaining the objectives of the new class action regime[2] that his government was introducing in the Federal Court of Australia, through the addition of a new Part IVA[3] to the Federal Court of Australia Act 1976 (Cth).[4] During the 12 years or so that the Part IVA regime[5] has been in operation, a number of important and difficult issues, concerning the interpretation and application of Part IVA, have emerged.[6] The aim of this article is to explore three such issues:
(a) Where it is proposed to bring a class proceeding against multiple defendants,[7] should the availability of the Part IVA regime be dependent on compliance with the requirement that each representative plaintiff and each class member have a cause of action against each of the defendants?;
(b) Can the Part IVA regime be employed to enforce 'public' rights where, for instance, reliance is placed on a statutory provision which allows 'any person' to seek injunctive relief to enforce statutory provisions enacted in the public interest?; and
(c) Should defendants, facing a class action brought pursuant to Part IVA, be able to obtain from the Court an order that the representative plaintiffs provide security for any costs that may be awarded in favour of the defendants in the event of an unfavourable outcome for the class?
The analysis of these three issues is desirable, in the author's view, because these issues were recently considered by the Full Federal Court of Australia[8] and because this analysis will provide an accurate picture of the way in which Part IVA has generally operated since its commencement in March 1992. It will be shown that Part IVA has operated in an unsatisfactory manner whenever courts have failed to interpret and apply its provisions in a manner that will facilitate the attainment of the benefits that Part IVA was designed to secure. The evaluation of the three issues in question will also reveal that, unfortunately, the unsatisfactory judicial approach mentioned above has been more prevalent than a purposive interpretation and application of Part IVA.
representative or class actions are civil actions brought by one or more representative plaintiffs on behalf of others having similar grievances. Members of the class each have a cause of action under the substantive law and each have locus standi to prosecute the particular cause of action. The latter point is significant: a person with no individual right to sue cannot sue as representing others.[9]
The description above, formulated by a Canadian commentator, constitutes the traditional view as to how the rules governing standing to sue are to apply in the context of class actions. Pursuant to this view, each named plaintiff and each member of the class/group represented by the plaintiff must have a cause of action against the defendant. The passage above is also instructive to the extent that it highlights how class actions are primarily viewed as proceedings initiated on behalf of numerous claimants against a defendant. Little or no attention is usually given to how the standing rules are to apply where a class proceeding is brought against more than one defendant.
Clear evidence of this unsatisfactory state of affairs is provided by the fact that the comprehensive class action regimes that have been introduced over the last 40 years or so in the US, Canada and Australia fail to deal with this issue. Courts in these three countries have therefore been forced to consider, with no guidance from the drafters of the legal frameworks governing class actions, when class actions against multiple defendants are to be permitted. Not surprisingly, varying responses have been provided by courts. In British Columbia, for instance, a multiple defendant class action may be brought where the representative plaintiff has a cause of action against at least one named defendant and there are class members with a cause of action against the other defendants.[10] In Ontario and in the US, a more restrictive approach has been embraced. In Ontario, 'a statement of claim must disclose a cause of action against each defendant. Thus in a proposed class action, there must a representative plaintiff with a claim against each defendant'.[11] In the US, the principle governing this issue is that:
Under proper circumstances, the plaintiff may represent all those suffering an injury similar to his own inflicted by the defendant responsible for the plaintiff's injury, but in our view he cannot represent those having causes of action against other defendants against whom the plaintiff has no cause of action and from whose hands he suffered no injury ... obviously this position does not embrace situations in which all injuries are the result of a conspiracy or concerted schemes between the defendants at whose hands the class suffered injury. Nor is it intended to apply in instances in which all defendants are juridically related in a manner that suggests a single resolution of the dispute would be expeditious.[12]
Part IV below provides an analysis of how the Federal Court of Australia has dealt with this issue in the context of Part IVA actions.
In England, the Lord Chancellor's Department has noted that:
At present in private law cases claimants must show that they themselves have a legal right that they are seeking to enforce. Consequently neither another person nor an organisation, for example a consumer group, can take action on behalf of an unnamed claimant or represent an individual whose rights have been infringed. Only that individual has the right to take action. However, in public law cases anyone with a sufficient interest may apply for judicial review.[13]
But the distinction between private and public law is becoming increasingly blurred. This becomes apparent when one considers the class action device itself and recent developments in the European Union. The definition of class actions, quoted at the beginning of Part II, placed emphasis on the members of the class having individual causes of action. This seems to suggest, quite clearly, circumstances where the rights of the claimants have been directly affected by the defendant. But, at the same time, a device that allows one or more persons to represent what is frequently a large group of persons can be seen to have a clear 'public' dimension.
The increasing difficulty entailed in determining whether a legal right falls in the public sphere or in the private sphere is highlighted by recent developments in Europe. A number of directives have been issued by the European Union which 'incorporate the principle of representative claims as a tool to defend the rights of consumers or individuals or for environmental protection'.[14]
Article 7 of the EC Directive on Unfair Terms in Consumer Contracts, for instance, requires the Member States to ensure that adequate and effective means exist to prevent the continued use of unfair terms in contracts including:
Provisions whereby persons or organizations, having a legitimate interest under national law in protecting consumers, may take action according to the national law concerned before the national courts or before competent administrative bodies for a decision as to whether contractual terms drawn up for general use are unfair, so that they can apply appropriate and effective means to prevent the continued use of such terms.[15]
In light of the above, a fascinating issue is whether a class action should be permitted where the representative plaintiffs and/or the class members are acting pursuant to statutory locus standi and have no personal rights that have been affected by the conduct that is being challenged in the proposed class proceedings. How the Federal Court of Australia has grappled with this difficult issue, in the context of Part IVA proceedings, is the subject of Part V below.
As was indicated by the US Supreme Court in 1940:
it is a principle of general application in Anglo-American jurisprudence that one is not bound by a judgment inpersonam in litigation in which he is not designated as a party or to which he has not been made a party ....
To these general rules there is a recognised exception that... the judgment in a 'class' or 'representative' suit, to which some members of the class are parties [the representative plaintiffs], may bind some members of the class or those represented who were not made parties to it.[16]
In light of the fact that class members are not formal parties to the proceedings, they enjoy immunity from adverse costs orders.[17] Given that Australia uses what many US commentators have described as the 'English rule' - pursuant to which the losing litigant is required to pay a significant portion of the legal costs incurred by the winning adversary - the inability of victorious defendants to seek compensation from the class members confers great importance on the financial means of the representative plaintiffs.
The power of courts to order representative plaintiffs to provide security for costs, that is, to pay into court an amount equal to the estimated costs of the proceedings, therefore, assumes great importance for defendants facing a class proceeding. The significance of this power is explicitly recognised in the group action regime proposed by the Norwegian Civil Procedure Commission in February 2000. Under this proposed regime, a group action needs to be approved by the court. This approval 'may be made dependent on the group placing security for any liability for costs in relation to the opposing party'.[18] Similarly, the regimes governing class actions in Louisiana[19] and Montana[20] expressly empower the court to make security for costs orders in favour of defendants in class actions. Fairness to defendants would suggest that such an order should be issued whenever the class representatives are impecunious.[21] But other important considerations would support the view that this power should be exercised sparingly. This is because such orders may not be compatible with both the costs immunity enjoyed by class members and the ability of the class action procedure to enhance access to justice. Part VI below will explore how the Federal Court of Australia has dealt with these important and conflicting considerations, when assessing applications for security for costs lodged by defendants in Part IVA proceedings.
Section 33C(1) sets out what the High Court of Australia (Australia's highest court) has recently described as the 'threshold requirements' to be satisfied for the maintenance of a proceeding under Part IVA.[22] It provides that 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.
Section 33D(1) addresses the standing of the plaintiff to commence and continue a class action on behalf of the represented group:
(1) A person referred to in paragraph 33C(1)(a) who has a sufficient interest to commence a proceeding on his or her own behalf against another person has a sufficient interest to commence a representative proceeding against that other person on behalf of other persons referred to in that paragraph.[23]
Section 33C(1) reflects a deliberate decision by the Australian Parliament not to impose on potential class representatives the requirement of seeking leave from the Federal Court before they may proceed with a class suit under Part IVA. This rejection of a certification regime[24] was based upon the recommendations of the Australian Law Reform Commission ('ALRC'),[25] whose 1988 report led to the enactment of Part IVA. However, Part IVA confers upon the Federal Court extensive powers to order that properly instituted class suits[26] no longer continue as class suits. Section 33N, for instance, allows the Court, on application by the defendant or of its own motion, to order that the action no longer continue as a class action where:
it is satisfied that it is in the interests of justice to do so because:
(a) the costs that would be incurred if the proceeding were to continue as a representative proceeding are likely to exceed the costs that would be incurred if each group member conducted a separate proceeding; or
(b) all the relief sought can be obtained by means of a proceeding other than a representative proceeding under this Part; or
(c) the representative proceeding will not provide an efficient and effective means of dealing with the claims of group members; or
(d) it is otherwise inappropriate that the claims be pursued by means of a representative proceeding.[27]
Section 33P provides that where the Court orders the discontinuance of a class suit, under ss 33L, 33M or 33N, the proceeding may be continued as a proceeding by the representative party on his/her own behalf and 'on the application of a person who was a group member for the purposes of the proceeding, the Court may order that the person be joined as an applicant in the proceeding'. O'Loughlin and Drummond JJ of the Full Federal Court have explained that:
where the Court determines that a proceeding commenced under Part IVA is not authorised by s 33C to be commenced as a representative proceeding or where it orders, under any of ss 33L, 33M or 33N, that a representative proceeding no longer continue under Part IVA, the effect of such a determination is to extinguish the representative aspect of the proceeding but to leave unaffected its character as a proceeding brought for the benefit of the representative party itself. The implication in each of ss 33L(b), 33M(c) and 33N(1) is that once an order terminating the representative character of a proceeding brought under Part IVA is made, that same proceeding continues, but as an action brought by and for the sole benefit of the representative party. What is implied in these provisions is expressly stated in s 33P(a).[28]
As was noted in Part III above, one of the requirements for the commencement of Part IVA proceedings, found in s 33C(1)(a), is that seven persons have claims against the same person. But s 33C(1)(a) provides no express guidance as to an important issue concerning class actions initiated against more than one person. The issue in question is whether a multiple defendant class action may be brought where the representative plaintiffs do not have a cause of action against all of the defendants but each defendant has some class members who have a cause of action against that defendant.[30]
It was not until 2000 that the Full Federal Court was required to grapple with this important but difficult issue. In Philip Morris (Australia) Ltd v Nixon,[31] Sackville J (with whose reasons Spender and Hill JJ agreed) held 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. This conclusion follows from the language of s 33C(1)(a) itself and is consistent with the approach taken by the [ALRC] in Grouped Proceedings. It is also consistent with the structure of the legislation. For example, s 33D(1)(a) (which provides that a person who has a sufficient interest to commence a proceeding on his or her own behalf against another person has a sufficient interest to commence a representative proceeding against that person on behalf of other persons referred to in s 33C(1)(a)) is clearly drafted on the assumption that all applicants and represented persons will have claims against the same person.
It follows that s 33C(1)(a) is not satisfied if some applicants and group members have claims against one respondent (or group of respondents) while other applicants and group members have claims against another respondent (or group of respondents). ... Of course, if there are two sets of claims against two sets of respondents, it may well be that each can be the subject of representative proceedings. It may even be that directions can be made for them to be heard together: Ryan v Great Lakes Council (1997) 149 ALR 45, at 48, per Wilcox J. But they cannot both be the subject of the same representative proceedings.[32]
This issue was considered again, in July 2003, by a differently constituted Full Federal Court. Carr and Finkelstein JJ indicated, in Bray v F Hoffmann-La Roche Ltd,[33] that Philip Morris should not be followed to the extent that it is authority for the proposition that, where there is more than one defendant, every representative plaintiff and every class member must have a claim against every defendant in a Part IVA proceeding. This is because their Honours concluded that Philip Morris was clearly wrong on that point.[34]
The other justice of the Full Federal Court in Bray, Branson J, indicated that Philip Morris should be followed unless and until the High Court of Australia takes a different view as to the proper interpretation of s 33C(1). However, she added '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)'. With all due respect, Branson J's views on this issue are extremely unclear as the example she provided of a multiple defendant class action that may be brought under the Part IVA regime is directly in conflict with Philip Morris, a case she supported. In fact, in the example she furnished it cannot be said that each class member had a claim against each defendant as the members of one subgroup do not appear to have claims against the defendants who harmed the members of the other subgroup.[36] A major ground relied upon by the majority in Bray to reject the principle formulated in Philip Morris was that its implementation would produce the following undesirable scenario:
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.[37]
The cogency of this line of reasoning becomes apparent when account is taken of the fact that the proceeding in Philip Morris itself,[38] as well as a number of other multiple defendant class actions initiated under Part IVA, were terminated as class proceedings by the Federal Court, primarily as a result of the inability of the representative plaintiffs to demonstrate that every representative plaintiff and every class member had a personal claim against every defendant.[39] The practical result of Philip Morris has been to restrict Part IVA proceedings, involving multiple defendants, to claims relating to a single transaction, act or event;[40] a single document;[41] or, perhaps, a limited number of very similar transactions, acts or events.[42] Similar problems were created by the adoption of a principle, similar to that embraced in Philip Morris, with respect to the Victorian class action regime that was governed by the now repealed ss 34 and 35 of the Supreme Court Act 1986 (Vic).[43]
The problems created by any principle of law which requires courts to focus on the claims of every class member, at the outset of the class proceeding, were explained as follows by an American commentator:
To require the class representative to show that every class member's claim presents an actual controversy would place a formidable, if not insurmountable, threshold burden on the courts and parties. Moreover... to require proof of the existence of individualized 'cases' would in essence be treating the class members as parties. To do that is inconsistent with the representative character of the proceedings.[44]
Emphasis was placed by Finkelstein J in Bray on the fact that the terms of s 33C(1)(a) do not compel the result arrived at in Philip Morris:
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.[45]
Carr J pointed out that the rejection of Philip Morris would not result in the Part IVA regime being abused by plaintiffs:
There are sufficient procedural safeguards in s 33C(1)(b) and (c) to protect the integrity of the Court's processes, ie 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.[46]
The accuracy of Carr J's last comment, concerning the existence of adequate safeguards in Part IVA, becomes obvious when one considers provisions such as ss 33N, 33Q, 33R, 33S, 33ZF(1) and 33ZG(b). Section 33Q(1) empowers the Court to give directions in relation to the determination of issues which have been left unresolved by the determination of the common issues.[47] Section 33Q(2) allows the Court to establish sub-groups so as to deal with issues common to the claims of some only of the group members.[48] As was aptly explained by the trial judge in Philip Morris:
if any stage a conflict of interest emerges, between particular classes of group members or particular individuals, that will not necessarily make it impossible or inappropriate to maintain the proceeding as a representative action. It might prove possible to meet any difficulty by the constitution of sub-groups, and the appointment of sub-group representatives.[49]
Section 33R(1) allows individual group members to appear in the class proceeding for the purpose of determining an issue that relates only to the claims of that member. Section 33S comes into play where an issue cannot properly or conveniently be dealt with under s 33Q or s 33R. Section 33S(a) provides that if the issue concerns only the claim of a particular member, the Court may give directions relating to the commencement and conduct of a separate proceeding by that member; whilst s 33S(b) provides that if the issue in question is common to the claims of all members of a sub-group, the Court may give directions relating to the commencement and conduct of a class proceeding in relation to the claims of those members.[50] Furthermore, s 33ZG(b) provides that nothing in Part IVA affects 'the Court's powers under provisions other than this Part, for example, its powers in relation to a proceeding in which no reasonable cause of action is disclosed or that is oppressive, vexatious, frivolous or an abuse of the process of the Court'.[51] As was recently explained by the Full Federal Court,
s 33ZG gives effect to the specific recommendation made by the [ALRC] that the Court's general powers to protect against abuse of process should apply to representative proceedings. The recommendation, in turn, was based on the policy that the Court must leave adequate power to ensure that the representative procedure is not abused or used inappropriately or inefficiently.[52]
But perhaps the most important provision is s 33ZF(1) which empowers the Federal Court to make 'any order... [it] thinks appropriate or necessary to ensure that justice is done in the proceedings'.[53] Provisions similar to s 33ZF(1) can be found in the detailed regimes governing class actions in the US and Canada.[54] These provisions have been justified on two grounds. The first justification stems from an acceptance of the simple reality that it is impossible to anticipate all the circumstances arising in a class proceeding where the intervention of the Court is appropriate or desirable.[55] A second rationale was articulated by the Ontario Law Reform Commission ('OLRC'):
in addition to these specific provisions, however, we are of the view that the court should have a broad general power in order to enable it to respond to the many management problems that are likely to arise at the various stages of a class action. Only if judges are empowered expressly to assume an active role can this type of complex litigation be handled efficiently and the interests of absent class members be protected against unnecessary dismissal of a class action because of manageability problems.[56]
If these safeguards are not sufficient in a given class action, the Court may terminate the representative nature of the proceedings pursuant to the power conferred upon it by s 33N.[57]
In light of the safeguards set out above, it is not surprising that a number of pre-Philip Morris Part IVA proceedings, where it could not be said that all representative plaintiffs and class members had claims against each defendant, proceeded to judgment without creating any problems for the Court in managing the litigation and without resulting in unfairness for either class members or defendants.[58] It is also important to note that the rejection of the requirement that each class member have a claim against each defendant is consistent with the principles enunciated, on this issue, by US Federal Courts and courts in the Canadian provinces of Ontario and British Columbia.[59]
The abandonment in Bray, of the requirement that all representative plaintiffs and class members must have claims against each of the defendants, is also in accordance with the clear intendment of the Part IVA regime to allow the maintenance of group proceedings in relation to claims which would fall outside the purview of the traditional representative action procedure.[60] In the Federal Court, representative proceedings are governed by Order 6 rule 13, which provides that:
where numerous persons have the same interest in any proceeding the proceeding may be commenced, and, unless the Court otherwise orders, continued, by or against any one or more of them as representing all or as representing all except one or more of them.[61]
Similar provisions may be found in the rules of procedure that currently govern litigation in most Canadian[62] and Australian jurisdictions.[63] Anumber of problems have been experienced with representative proceedings.[64] For present purposes, the most relevant problem concerns the narrow judicial construction of the 'same interest' prerequisite.[65] Part IVA was intended to address this problem: (a) by providing more liberal and precise requirements for the commencement of a class proceeding (which, of course, are found in s 33C(1)); and (b) by making it clear that a number of judicial principles, which significantly restricted the circumstances in which the 'same interest' requirement could be adhered to, could not be applied to restrict access to the Part IVA regime.[66] This latter aim was achieved through s 33C(2) which provides that a class suit 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.[67]
It appears that in relation to representative proceedings brought under Order 6 rule 13, against multiple defendants, there is no requirement that each represented person have a claim against each defendant.[68] Consequently, Philip Morris has resulted in the commencement requirements for Part IVA proceedings being more restrictive, in relation to multiple defendant class actions, than the prerequisites for the commencement of representative proceedings. As indicated above, this state of affairs is diametrically opposed to what was envisaged by the ALRC and the Australian Parliament.
The defendants in Bray unsuccessfully applied for leave to appeal to the High Court. The High Court's decision, in June 2004, was not based on a preference for the approach adopted in Bray to that followed in Philip Morris. The refusal to grant leave to appeal was instead based on the fact that the proceedings had moved on, since the application to the High Court was lodged by the defendants, as the pleadings the subject of the dispute were no longer relevant. In fact, in December 2003 Merkel J of the Federal Court had granted Bray's request that the class represented in this proceeding be significantly narrowed and that three companies be substituted for Bray as representative plaintiffs.[69] In March 2004 Tamberlin J of the Federal Court was required to choose between Philip Morris and Bray, in determining whether each class member in Part IVA proceedings was required to have a cause of action against each of the defendants. Unfortuantely, his Honour concluded that the relevant comments in Bray 'were by way of obiter and I consider that I am bound by the reasoning in Philip Morris'.[70]
The concept of having claims plays a central role in s 33C(1) and, therefore, in determining what type of litigation may be maintained as a class action under Part IVA. In light of the importance of this concept, it is disappointing that no indication is provided in Part IVA as to what this concept entails. In a number of cases, the Federal Court was asked to consider the ambit of this concept, in the context of determining whether the Australian Competition and Consumer Commission ('ACCC') was entitled to commence a Part IVA proceeding seeking injunctive relief and the payment of damages to the class members other than the ACCC. The ACCC had no interest of its own to protect in these Part IVA cases and its individual standing to sue was only statutory. In fact, s 80(1) of the Trade Practices Act 1974 (Cth) ('TPA')[72] provides that:
Subject to subsections (1A), (1AAA) and (1B), where, on the application of the [ACCC] 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 ... a provision of Part IV, IVB or V [or] section 75AU;
(b) attempting to contravene such a provision;
(c) aiding, abetting, counselling or procuring a person to contravene such a provision;
the Court may grant an injunction in such terms as the Court determines to be appropriate.[73]
In Australian Competition and Consumer Commission v Chats House Investment Pty Ltd[74] and Australian Competition and Consumer Commission v Golden Sphere International,[75] Branson and O'Loughlin JJ, respectively, held that the fact that the ACCC was seeking to protect public interests did not prevent compliance with the requirements of s 33C(1).[76] A different conclusion was reached by Lindgren J in Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd.[77]
As was the case in Chats House and Golden Sphere, the ACCC commenced, in Giraffe World, a proceeding under Part IVA seeking injunctive relief and the payment of damages to the class members. The ACCC was not, according to Lindgren J, entitled to act as representative plaintiff where it had no interest of its own to protect and had only statutory standing to apply for a remedy which will protect a public interest. This conclusion was based on his Honour's understanding of the ambit of the concept of a claim for the purposes of Part IVA:
I think that the having of a 'claim' to which s 33C(1)(a) refers and the having of a 'sufficient interest' on one's own behalf to which s 33D(1) refers, are notions which are not apt to catch simply being 'any person' authorised by such provisions as s 80 of the TP Act to seek injunctive relief to enforce statutory provisions enacted in the public interest.
As is well known, under s 80 of the TP Act, where a person has engaged or is proposing to engage in conduct that constitutes a contravention of a provision of Part IV, IVA or V of that Act, the Court may grant an injunction on the application of the ACCC 'or any other person'. If this statutory locus standi is a 'claim' for the purposes of s 33C(1)(a), the whole world has 'claims' against the contravener or intending contravener, and any person in the world is authorised by s 33C(1) to commence a proceeding on his or her own behalf and on behalf of all other persons in the world ... [accordingly] not only the ACCC but also 'any other person', albeit one who makes no claim to have suffered loss, would, by reason of the locus standi accorded by s 80 of the TP Act, be entitled to commence a representative proceeding seeking out not only injunctive relief but, as well, compensatory relief on behalf of loss sufferers.[78]
This narrow delineation of the concept of a claim was, in his Honour's view, consistent with the Second Reading Speech on Part IVA 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'.[79] However, Lindgren J followed Chats House and Golden Sphere as he felt that those decisions were not plainly wrong and may be accepted by the Full Federal Court in preference to his own views. The Full Federal Court did, in fact, decline to adopt the principles formulated by Lindgren J in Giraffe World in Finance Sector Union of Australia v Commonwealth Bank of Australia.[80] In this case, the class representative, whose right to initiate a Part IVA proceeding was challenged by the defendant, was not the ACCC, but instead a union. The Finance Sector Union of Australia ('FSU') and a member of FSU brought a Part IVA proceeding on behalf of 71 members of FSU seconded by the defendant to perform work for another company. Two claims were advanced by the representative plaintiffs. The first claim was made pursuant to s 178 of the Workplace Relations Act 1996 (Cth). The relevant parts of this provision are as follows:
(1) Subject to section 182, where an organisation or person bound by an award, an order of the Commission or a certified agreement breaches a term of the award, order or agreement, a penalty may be imposed by the Court or, except in the case of a breach of a bans clause, by a court of competent jurisdiction.
(5) A penalty for a breach of a term of an award or order may be sued for and recovered by:
(a) an inspector;
(b) a party to the award or order;
(c) an employer who is a member of an organisation and who is affected by the breach;
(ca) a person ... whose employment is, or at the time of the breach was, subject to the award; and ... who is affected by the breach;
(d) an organisation that is affected, or any of whose members are affected, by the breach; or
(e) an officer or employee of an organisation that is affected, or any of whose members are affected, by the breach where the officer or employee is authorised, under the rules of the organisation, to sue on behalf of the organisation.
(6) where, in a proceeding against an employer under this section, it appears to the Court concerned that an employee of the employer has not been paid an amount that the employer was required to pay under an award, order or agreement, the Court may order the employer to pay to the employee the amount of the underpayment.
The named plaintiffs sought the imposition of a penalty on the defendant, pursuant to s 178(1), for breach of an award. They also sought, pursuant to s 178(6), that the defendant pay to each of the 71 employees the amount owing to them under the award in question. The second claim was made pursuant to the Court's accrued jurisdiction. It was claimed that the contracts of employment between the defendant and the 71 group members incorporated the terms of an agreement between FSU and the defendant. These terms were said to provide more generous benefits than those available under the award.
The defendant placed reliance on Giraffe World in its submission that the lack of any interest of its own to protect meant that FSU was not entitled to initiate a Part IVA proceeding. This submission was rejected, in no uncertain terms, by Wilcox, Ryan and Madgwick JJ in their joint judgment:
the comments made in Chats House and Golden Sphere may readily be applied to the present case, in which FSU has a more confined interest than Mr Macey and the named group members. FSU is interested (in the legal sense) only in enforcement of the award. While it may be taken that Mr Macey and the group members are also keen to see the award enforced, they have an additional interest as well: obtaining payment of any moneys underpaid by [the defendant]. That does not create a problem, any more than it did in Tropical Shine, Chats House or Golden Sphere. To the extent that Lindgren J suggested otherwise in Giraffe World, we respectfully disagree. We see no reason for interpreting the words 'sufficient interest to commence a proceeding on his or her own behalf’ in s 33D(1) as invoking the limited and technical concept of standing applied in cases like Boyce v Paddington Borough Council [1902] UKLawRpCh 174; [1903] 1 Ch 109 and Australian Conservation Foundation Inc v Commonwealth (1980) 146 CLR 493; 28 ALR 257. If a statutory provision, like s 80 of the Trade Practices Act, allows 'any person' to bring an action for contravention, this means that any person has a sufficient interest to commence a proceeding on his or her own behalf. Section 33D(1) is satisfied. The person may act as a representative applicant on behalf of others.[81]
The defendant also argued that Part IVA had not been complied with as the fact that FSU had no contract claim against the defendant meant that the plaintiff, contrary to Part IVA, was unable to assert a common cause of action in relation to each claim against the defendant. The Full Federal Court also rejected this line of reasoning:
FSU has a claim against the respondent, although not an accrued claim. Both parties accept the two claims constitute but a single 'matter'. We think this understanding is correct... From this and from the wording of s 33C(1) it follows that FSU is entitled to bring the claims in the 'matter' before the Court, notwithstanding that it would not be entitled to take any personal benefit from the success of one of them, the contract claim, and notwithstanding that it has no contract claim of its own. There is no reason to read down the plain words of s 33C(1).[82]
The Court added that the acceptance by the Court of the defendant's submission, noted in the paragraph above, would not have had any practical significance in this case. This is because, 'the second applicant, Mr Macey, has a personal claim for an order under s 178(6). He is therefore entitled to represent the group members, who have similar claims. It would be immaterial that there happened to be another applicant who was not so entitled'.[83]
The defendant also argued that it is not permissible to use Part IVA as a vehicle for a claim involving the imposition of a penalty. This submission placed reliance on the argument that in a proceeding for a penalty for breach of an award, the plaintiff acts as a kind of public prosecutor. The Court persuasively rejected this submission on two grounds: (a) the practical adverse impact which such a principle would have on access to Part IVA;[84] and (b) the fact that the term claim 'is used to encompass everything that might lawfully be brought before the court for a remedy. There is no reason to think that the same word was not used with the same general sense in s 33C'.[85]
The litigation in Bray entailed a factual difference from the cases mentioned above. In Bray the representative plaintiff and all the class members relied on the general standing provided by s 80(1) to seek injunctive relief against each of the defendants.[86] The defendants argued that the proceedings in Bray had failed to comply with s 33C(1) as the concept of claims, for the purposes of that section, was not intended by Parliament to encompass the enforcement of public rights. This submission was rejected by Carr and Finkelstein JJ but, surprisingly, was accepted by Branson J who, it will be recalled, was the judge who held that the proceedings in Chats House were properly constituted as Part IVA proceedings.
Finkelstein J held that the word claim, for the purposes of s 33C(1), was not intended to refer to the remedy sought by the plaintiffs. Instead,
The better view ... 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.[87]
Carr J viewed this issue from the perspective of the impact, on the ability of Part IVA to fulfil its objectives, of the narrow construction of the term claim advanced by the defendants. He concluded, correctly in the author's view, that such interpretation would be inconsistent with the aims of Part IVA:
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... 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 .... 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.[88]
Branson J distinguished her own decision in Chats House and that of O'Loughlin J in Golden Sphere by relying on the fact that in those cases the class members had personally suffered loss from conduct in breach of the TPA and it was only the representative plaintiff that had sought to protect the public interest. In Bray, on the other hand, the only claims made by each of the class members against each of the defendants were claims of a public nature. Having distinguished Chats House and Golden Sphere, Branson J concluded 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)... envisages a situation in which each group has an individual claim.[89]
Unfortunately, no explanation was given by Branson J, as to how her interpretation of the word claims could possibly be consistent with either the objectives of Part IVA or the Full Federal Court's decision in Finance Sector. Furthermore, her reasoning, concerning the differences between Bray, on the one hand, and Chats House and Golden Sphere, on the other hand, is, with all due respect, unpersuasive. The fact that in the latter cases only the representative plaintiff was seeking to enforce a public right does not alter the fact that the judicial conclusion reached in Chats House and Golden Sphere, that s 33C(1) had been complied with, meant that the standing to sue, conferred upon the ACCC by s 80(1), constituted a claim for the purposes of s 33C(1). This is because the requirement set out in s 33C(1)(a), of having a claim, is imposed on all members of the relevant class, including the representative plaintiffs.[90] This is confirmed by the following comments appearing in the judgments in Golden Sphere and Chats House, respectively:
I am of the opinion that the ACCC has a right to institute proceedings and, in that sense, has a claim against each of the respondents.[91]
[It was] plain that the applicant has a sufficient interest to commence a proceeding on its own behalf against the respondent: Trade Practices Act 1974 s 80. In such circumstance s 33D(1) provides that it has a sufficient interest to commence a representative proceeding against the respondent on behalf of the other group members.[92]
In addition to facilitating the attainment of the policy goals of Part IVA, the judicial delineation in Bray of broad parameters for the concept of claims has the virtue of ensuring that Part IVA adheres to recent international developments concerning the category of persons who should be permitted to initiate public interest litigation. In recent times legislatures have placed greater reliance on what Americans call 'private Attorneys General'[93] for the enforcement of laws[94] and courts have displayed a willingness to liberalise the laws on standing in public interest litigation[95] whilst law reform bodies have advocated even more significant changes to the rules governing standing.[96] In this environment, adopting an interpretation of the concept of having a claim, which is entirely dependent on the traditional notion of the claimant being someone who has a direct and personal interest in the outcome of the litigation, would constitute a retrograde step.[97] This anomaly would be intensified where, as is the case here, the statutory provision in question forms part of a regime that governs the class action device, a device which can be said to have a clear 'public interest' dimension.[98] The author's submission is also supported by the following analysis recently articulated by Gidi:
There are many bases on which to identify an appropriate representative for the group's interests. The law may vest this power in an individual (whether or not a member of the group), a private association (whether or not previously authorised by the government, by the court or by its members), or the government (through agencies or public officials, the ombudsman, or the office of the Attorney General)... A combination of the three options, enabling individuals as well as public and private entities to have 'collective standing', promotes the positive aspects of each approach while mitigating the inherent problems and risks of the others.[99]
In Australia, costs are generally awarded against the losing litigant.[101] Consequently,
legal costs are of importance to all parties to litigation, though in practice the risk of an unfavourable costs order is not shared equally. While a plaintiff has a choice whether or not to litigate, a defendant is in a less advantageous position for, in order to avoid default judgment, the defendant is compelled to litigate or settle, whether the plaintiff has available assets sufficient to pay the costs of a successful defence or otherwise. Courts have sought to redress this imbalance and any consequential abuse of process, by ordering security for costs, both at first instance and on appeal.[102]
The only provision of Part IVA which deals with security for costs is s 33ZG(c)(v) which provides that, except as otherwise provided by Part IVA, nothing in Part IVA affects the operation of any law relating to security for costs.[103] Security for costs in proceedings before the Federal Court are governed by s 56 of the Federal Court of Australia Act 1976 (Cth) ('FCA'), Order 28 of the Federal Court Rules and s 1335(1) of the Corporations Law. Section 56 provides that:
(1) The Court or a Judge may order an applicant in a proceeding in the Court or an appellant in an appeal to the Court to give security for the payment of costs that may be awarded against him or her.
(2) The security shall be of such amount, and given at such time and in such manner and form, as the Court or Judge directs. ...
(4) If security, or further security, is not given in accordance with an order under this section, the Court or a Judge may order that the proceeding or appeal be dismissed.
Order 28 r 3(1) provides that:
(1) Where, in any proceeding, it appears to the Court on the application of a respondent:
(a) that an applicant is ordinarily resident outside Australia;
(b) that an applicant is suing, not for his own benefit, but for the benefit of some other person and there is reason to believe that the applicant will be unable to pay the costs of the respondent if ordered to do so; or
(c) subject to sub-rule (2), that the address of an applicant is not stated or is mis stated in his originating process;[104] or
(d) that an applicant has changed his address after the commencement of the proceeding with a view to avoiding the consequences of the proceeding,
the Court may order the applicant to give such security as the Court thinks fit for the costs of the respondents of and incidental to the proceeding.[105]
Order 28 r 5(1) provides that where an order for security for costs is made, the Court may order:
(a) that the proceeding on any claims by the applicant for relief be stayed until security is provided; or
(b) that if the applicant fails to comply with the order to provide security within the time limited in the order, the proceeding be thereafter stayed or dismissed.
Where security for costs is sought from a corporation, account must also be taken of s 1335(1) of the Corporations Law, which provides that:
Where a corporation is plaintiff in any action or other legal proceeding, the Court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his, her or its defence, require sufficient security to be given for those costs and stay all proceedings until the security is given.[106]
The approach of the Federal Court to this issue was, until recently, one of extreme reluctance to exercise the power to order security for costs in Part IVA proceedings.[107] A review of the early judicial pronouncements reveals that this approach was based on two grounds. The first ground was a concern that security for costs orders against Part IVA plaintiffs were likely to have an adverse impact upon the ability of the class action device to attain the goals, such as access to justice, which it is expected to secure.[108] As Sharp has recently pointed out:
the Court has been acutely conscious that an order for security for costs has the potential effectively to prevent a proceeding continuing, thereby inhibiting the public interest aspect of the procedure.[109]
The reluctance of the Court to grant security for costs in Part IVA proceedings also displays a judicial appreciation of the real risk that an order to provide security may force absent class members to share, with the named plaintiff, the financial burdens imposed by such an order and thereby effectively lose the immunity, from costs orders, conferred upon them by s 43(1A) of the FCA.[110] Section 43(1A) provides that:
In a representative proceeding commenced under Part IVA or a proceeding of a representative character commenced under any other Act that authorises the commencement of a proceeding of that character, the Court or Judge may not award costs against a person on whose behalf the proceeding has been commenced (other than a party to the proceeding who is representing such a person) except as authorised by:
(a) in the case of a representative proceeding commenced under Part IVA — section 33Qor33R;or
(b) in the case of a proceeding of a representative character commenced under another Act — any provision in that Act.[111]
The importance of s 43(1 A) to the Court's discretion to order security for costs against Part IVA plaintiffs becomes apparent from the following comments of Merkel J in Woodhouse v McPhee:[112]
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 2000 the Federal Court issued, in Tobacco Control Coalition Inc v Philip Morris (Australia) Ltd,[113] its first security for costs order in a Part IVA proceeding.[114] One reason for this order was Wilcox J's assessment that the proceedings did not enjoy a high probability of success and would be unlikely to be allowed to proceed under Part IVA. Other reasons for the order were explained as follows by Wilcox J:
TCCI is admittedly impecunious and unlikely to be able to meet any costs order that might eventually be made against it. Although the action is a representative proceeding pursuant to Part IVA..., brought for the benefit of group members who have the general immunity in respect of costs conferred by s 43(1 A) of that Act, that circumstance does not preclude the making of a security order, especially bearing in mind that the proceeding has been structured so as to immunise from costs orders the organisations whose officers control TCCI.[115]
This decision appears to be consistent with the previous cases where no such orders were granted. In fact, in some of the earlier cases dicta comments were made to the effect that the Court would order security for costs in Part IVA actions where a 'person of straw', ie a person with no assets, was appointed as class representative in order to either immunise persons of substance from costs orders[116] or to shelter class members, such as impecunious companies and foreign plaintiffs, from potential orders for security.[117] The need for judicial intervention in scenarios such as the ones highlighted above was aptly explained by a Canadian judge:
It must be recognised that, in a class proceeding, there is a real vulnerability that an impecunious representative plaintiff will be put forward with [the] purpose in mind [of avoiding an adverse costs award]. Such a plaintiff is, strictly speaking, a real plaintiff in the sense of having an interest the same as others in the class, while at the same time being immune from costs sanctions. In such circumstances, the court must exercise its supervisory jurisdiction with vigilance and, where circumstances dictate, apply the appropriate principles of law.[118]
In 2001 another security for costs order was issued by a single justice of the Federal Court in a Part IVA proceeding.[119] In issuing this order, reliance was predominantly placed on the Court's conclusion that the representative plaintiff, a company, may have been deliberately selected as an impecunious representative party.[120] Emphasis was also placed on the fact that it was not likely that the security for costs order would bring the proceedings to an end.[121] This was an important consideration in light of the Court's conclusion that the claims, advanced on behalf of the class, were arguable.[122]
It was not until the recent class action in Bray that the Full Federal Court was asked to consider how the provisions and principles governing security for costs were to be applied in the context of Part IVA proceedings. Unfortunately, the Full Federal Court in Bray displayed an insufficient appreciation of the adverse impact that security for costs orders can have on the ability to utilise the Part IVAregime. The trial judge in Bray, Merkel J, refused to order the representative plaintiff to provide security for the costs of one of the defendants. His Honour was of the view that the evidence did not establish that the plaintiff was selected because he was a person of straw who could effectively immunise other persons from the costs risks they would face had they been named plaintiffs. Nor was the Court satisfied that there were any particular persons of substance, for whose benefit the proceedings had been brought, who were 'standing behind' the plaintiff, that is, funding the proceeding. Merkel J also noted that it would be inconsistent with 'the general policy of Pt IVA to regard group members for whose benefit a representative proceeding is brought as "standing behind" an applicant'.[123] Importance was also placed on the fact that the representative plaintiff had established a prima facie case for relief under the TPA and that 'public policy considerations weigh strongly against an order for security for costs that might impede or hinder the group members' claim for injunctive relief and for damages'.[124] But a different approach was, unfortunately, followed by the Full Federal Court in Bray. Carr J indicated that:
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(1 A). 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.[125]
Carr J was critical of the fact that Merkel J appeared to have acted on the basis that the defendant bore the burden of proof. He also noted that the plaintiff chose not to adduce evidence about who was funding the action and indicated that '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'.[126] Merkel J's approach was also criticised, by Carr J, for having elevated to the status of a condition precedent the scenario of the deliberate selection, as representative party, of an impecunious person.
Finkelstein J agreed with Carr J's approach[127] and provided a list of factors that are to be considered by the Court. One factor is that the general rule that an order for security for costs should not be made against an impecunious natural person may have little application to many class actions. This was because Finkelstein J considered that the characteristics of the class should be taken into account. Finkelstein J was also of the view that in class actions, it is usually class counsel who stands behind, in the sense of funding, the proceedings. This factor was regarded as 'a relevant, though not a decisive, consideration when deciding whether security should be ordered'.[128] Finkelstein J also made the following general observation:
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.[129]
The comments of Finkelstein J, quoted above, display an unsatisfactory shift as to the rationale for such orders in Part IVA actions. Such orders are now to be used to discourage, what are sometimes called blackmail suits,[130] and not simply to ensure that the immunity of class members from costs orders is not manipulated to the detriment of the defendants. It is not clear why it is necessary to employ security for costs, as a means of preventing abuse of the Part IVA procedure when one considers that, as indicated above, s 33ZG(b) expressly provides that nothing in Part IVA affects 'the Court's powers under provisions other than this Part, for example, its powers in relation to a proceeding in which no reasonable cause of action is disclosed or that is oppressive, vexatious, frivolous or an abuse of the process of the Court'.
It is submitted that there are other problems with the principles enunciated by Finkelstein and Carr JJ. The expansion of the circumstances in which security may be ordered, beyond the deliberate selection of a person of straw as representative plaintiff; placing the onus on the representative plaintiff to adduce relevant evidence in relation to an order sought, not by the plaintiff but by the defendant; and the focus on the financial means of the class members and class counsel, all combine to render likely, a security for costs order, whenever the representative plaintiffs are impecunious. It is submitted that this scenario is inconsistent with (a) one of the most important principles governing security for costs; (b) the views of the ALRC; (c) the need not to create significant obstacles to the availability of the Part IVA regime;[131] and (d) the importance of not removing, in practice, the immunity from costs that is extended to class members by s 43(1A).
In relation to point (a) above, reference may be made to the fact that one of the most fundamental propositions in this area is that impecuniosity on the part of the plaintiff does not justify an order for security for costs. As was noted by Megarry VC in Pearson v Naydler:
The basic rule that a natural person who sues will not be ordered to give security for costs, however poor he is, is ancient and well-established. As Bowen LJ said in Cowell v Taylor ((1885) [1885] UKLawRpCh 237; 31 Ch D 34 at 38), both at law and in equity 'the general rule is that poverty is no bar to a litigant'. The power to require security for costs ought not to be used so as to bar even the poorest man from the courts.[132]
Point (b) above may be substantiated by drawing attention to cl 31(2) of the Federal Court (Grouped Proceedings) Bill 1988 drafted by the ALRC. Clause 31(2) provides that:
... an order for security for costs may not be made against the principal applicant on the ground that the proceeding is for the benefit of the group member ...
In the Explanatory Memorandum to its draft Bill, the ALRC explained that cl 31(2) would prevent an order for security for costs being made on the sole basis that the proceeding conducted by the representative party benefits other persons, namely, the class members.[133] The incompatibility of Bray with the access to justice goal of Part IVA and the immunity provided by s 43(1A) (points (c) and (d) above) may best be illustrated by considering the analysis found in the judgment of Wilcox J in Ryan v Great Lakes Council. In this Part IVA proceeding the evidence clearly showed that the representative party would be unable to pay the costs of the defendants if ordered to do so. The proposal of the defendants for provision of security for costs out of a financial pool created by the class members was opposed by the class representative on the basis that such scenario, although not directly in contravention of s 43(1 A), would conflict with its spirit. Wilcox J indicated that:
s 43(1A) ought generally to be regarded as a substantial impediment to the 'financial pool' approach urged [on behalf of the defendants]. That approach would have the effect of exerting substantial pressure on group members to make a contribution to securing the respondents' costs, even though s 43(1A) expressly exempts them from liability to meet those costs. Moreover, it may do so after the termination of the opt-out period: see s 33 J of the Act.[135] The group members may have decided to remain in the representative proceeding, and not opt out or embark on a separate action, in reliance on the protection afforded by s 43(1A) ...
If an order [for security for costs] were made, it would have one of two consequences. Either it would stultify the continuance of the actions, at least as representative proceedings, leading to abandonment of what seem to be genuine and arguable group members' claims, or it would force on the parties a multitude of individual actions. Either result would be at odds with the purposes of Pt IVA outlined by the Attorney-General.[136]
Another problem with Bray may be identified by reviewing another pre-Bray judgment, that of Lindgren J in Ryan v Great Lakes Council.[137] His Honour noted that if the representative plaintiff had brought the proceeding for his own benefit alone, he would not have been ordered to provide security. Similarly, if the other class members had also sued in separate actions, none of them would have been ordered to provide security as they would have all been individuals ordinarily resident within the jurisdiction[138] suing for their own benefit. Accordingly, it was apparent that:
if security were to be ordered on a ground analogous to the impecunious nominal plaintiff ground, ... [the defendants] would be better off on the issue of security for costs by having been sued in a representative proceeding under Pt IVA than they would have been if sued by the group members in separate actions.[139]
This consideration led his Honour to formulate this principle of general application:
It might... be found useful in some cases to inquire whether security would have been ordered if separate actions had been brought by the group members. If the group members or some of them were impecunious companies or persons ordinarily resident outside Australia and a 'person of straw' had been deliberately chosen to be the representative party, it might be appropriate to order that the representative party provide security and that the proceeding be stayed until the security was provided.[140]
It is vital to note that in Bray the representative plaintiff and the class members were not impecunious companies or persons ordinarily resident outside Australia. It was unfortunate that the Court in Bray failed to appreciate that:
in many cases an application for security for costs operates as a sword as well as a shield, as the plaintiff may not have sufficient means either to provide security or to defend an application for security. Often this situation will have been contributed to, or caused by, the conduct of the defendant which is the subject of the proceeding. Where the plaintiff is impecunious, the defendant wealthy and the amount in dispute minimal, an application for security may be the straw that breaks the camel's back, so that the plaintiff accepts a paltry settlement or simply abandons its action altogether.[141]
Before concluding this discussion of security for costs, an inconsistency in the pre-Bray approach of the Federal Court should be noted. As was indicated above, the Federal Court has held that the deliberate selection of an impecunious person as a Part IVA plaintiff may justify a security for costs order against such plaintiff. But, at the same time, the following comments were made by Lindgren J of the Federal Court in Cook v Pasminco Ltd (No 2):
Assume now that one prospective representative party is a person whose means appear to be sufficient to meet, wholly or partially, an adverse costs order, while another is almost insolvent. Solicitors are not subject to any legal or ethical obligation to choose the former. Certainly they could not be criticised for choosing the latter. It might even be suggested (I express no view) that they owe a duty to the former to choose the latter, unless other factors suggest a different choice.[142]
The ALRC, on the other hand, recommended that the Federal Court should consider drafting guidelines or a practice note, relating to the practices of lawyers and parties in class proceedings, addressing, among other things, 'the choice of the representative party, who should not be chosen primarily as a "person of straw”’.[143]
The three important issues, raised by the operation of Part IVA, which have been canvassed in this article have highlighted the conflicting approaches that have been adopted by the Federal Court of Australia in relation to class actions brought pursuant to the Part IVA regime. The imposition of the requirement that, in multiple defendant class actions, every representative plaintiff and every class member must have a cause of action against each defendant, before Part IVA may be employed, provides an illustration of the unduly restrictive and conservative interpretation of Part IVA that has been formulated by some Federal Court justices. The approach of a differently constituted Full Federal Court in Bray, with respect to security for costs, has been shown to be equally unsatisfactory and in conflict with the policy goals of Part IVA. But the complexity of the Federal Court's philosophy, with respect to class actions, is vividly highlighted by the fact that a majority of the Court in Bray repudiated the Philip Morris principle mentioned above, concerning the availability of the Part IVA regime in multiple defendant class actions, and embraced a liberal interpretation of the crucial concept of having a claim.
It is hoped that the High Court will, in the near future, consider the issues considered in this article. Once that happens, the Court should: (a) reject a construction of Part IVA, pursuant to which multiple defendant class actions may only be brought where the unusual scenario, of each named plaintiff and each class member having a claim against each defendant, is encountered; (b) endorse the broad interpretation of the concept of claim enunciated in Finance Sector and confirmed in Bray by the Full Federal Court; and (c) discourage the exercise of the power to order Part IVA plaintiffs to provide security for costs. In addition to removing unsatisfactory principles, such a stance by Australia's highest court would have the beneficial effect of sending a clear message to the Federal Court that a construction of the provisions of Part IVA, which will facilitate the attainment of the policy goals of Part IVA, is always to be preferred.
[*] BEc, LLB (Hons), LLM, PhD (Monash University); Associate Professor, Department of Business Law and Taxation, Monash University (Victoria, Australia).
[1] Commonwealth, Parliamentary Debates, House of Representatives, 14 November 1991, 3174 (Mr Michael Duffy, Attorney-General). Similar reasoning was embraced by the Victorian Attorney- General, Mr Hulls, when he introduced in the Victorian Parliament Victoria's counterpart to Part IVA, Part 4A of the Supreme Court Act 1986 (Vic): Victoria, Parliamentary Debates, Legislative Assembly, 31 October 2000, 1252. These two objectives of the class action device have been recognised internationally. See Hollick v Toronto (City) (2001) 205 DLR (4th) 19, 28-29 (McLachlin CJ); Western Canadian Shopping Centres Inc v Bennett Jones Verchere (2001) 201 DLR (4th) 385, 397 (McLachlin CJ); D A Crerar, 'The Restitutionary Class Action: Canadian Class Proceedings Legislation as a Vehicle for the Restitution of Unlawfully Demanded Payments, Ultra Vires Taxes, and Other Unjust Enrichments' (1998) 56 University of Toronto Faculty of Law Review 47, 79; J S Emerson, 'Class Actions' (1989) 19 Victoria University of Wellington Law Review 183, 187-189; Manitoba Law Reform Commission, Class Proceedings, ReportNo 100 (1999), 23-30 ('MLRC Report'); Ontario Law Reform Commission, Report on Class Actions, Report No 48 (1982), 117-146 ('OLRC Report'); Hawaii v Standard Oil Co, [1972] USSC 51; 405 US 251, 266 (1972); Gottlieb v Wiles, [1993] USCA10 1437; 11 F3d 1004, 1009 (1993); Scottish Law Commission, Multi-Party Actions, ReportNo 154 (1996), para 2.10 ('SLC Report').
[2] The essential differences between a traditional proceeding and a class action have recently been described as follows: 'in an ordinary action, each litigant is a party in their own right. In a class action, one party commences an action on behalf of other persons who have a claim to a remedy for the same or similar perceived wrong. That party conducts the action as "representative plaintiff”. Only the "representative plaintiff” is a party. Other persons having claims that share questions of law and fact in common with those of the representative plaintiff are members of the "class". Once the class has been determined, the class members are bound by the outcome of the litigation even though, for the most part, they do not participate in the proceedings. Anumber of statutory safeguards and an expanded role for the court help to ensure that the interests of the class members are protected. Instead of multiple separate proceedings deciding the same issues against the same defendant or defendants in proceedings brought by different plaintiffs, class actions decide common issues in one courtroom at one time:' Alberta Law Reform Institute, Class Actions, Report No 85 (2000), para 57 ('ALRI Report').
[3] 'Part IVA assumes the investment by another law of the Parliament of this court with jurisdiction to entertain the subject matter of the representative proceeding. Part IVA creates new procedures and gives the court new powers, in relation to the particular exercise of that jurisdiction. The new legislation exemplifies the distinction to be made between the jurisdiction of the court to hear and determine a matter and the powers and procedures of the court in relation to the exercise of that jurisdiction': Poignand v NZI Securities Australia Ltd [1992] FCA 369; (1992) 37 FCR 363, 364-365 (Gummow J). Similar comments were recently made by the High Court of Australia: Wong v SilkfieldPty Ltd [1999] HCA 48; (1999) 165 ALR 373, 374 (Gleeson CJ, McHugh, Gummow, Kirby and Callinan JJ). See also Explanatory Memorandum to the Federal Court of Australia (Amendment) Bill 1991 (Cth), para 3: 'the procedural reforms in the Bill confer no new legal rights'. The background to Part IVA is quite fascinating. In February 1977 the then Liberal Attorney-General, RJ Ellicott QC, asked the Australian Law Reform Commission ('ALRC') to report on class actions in Federal Courts and other courts whilst exercising federal jurisdiction or in courts exercising jurisdiction under any law of any Territory: Australian Law Reform Commission, Grouped Proceedings in the Federal Court, Report No 46 (1988), para 1 ('ALRC Report'). It was not until December 1988 that the ALRC's report was tabled in Parliament. In December 1989, Senator Janine Haines, the then Leader of the Australian Democrats, adopted the ALRC's proposed legislation and introduced it into the Senate as a private member's Bill, the Federal Court (Grouped Proceedings) Bill 1989: see Commonwealth, Parliamentary Debates, Senate, 11 December 1989, 4233. The Labour Government took no action in relation to the ALRC's proposals until 12 September 1991 when the Federal Court of Australia (Amendment) Bill 1991 was introduced into the Senate. The Government refused to implement any of the amendments proposed by the Liberals and the Democrats and the legislation received the royal assent on 4 December 1991, attracting the criticism that 'the fact that general proposals have been around for some time does not excuse the need for specific legislation to be able to be examined in greater detail': R Baxt, 'Class Action Legislation - A Mirage for the Consumer?' (1992) 66 Australian Law Journal 223, 224.
'The rules permitting joinder of plaintiffs in one action and the rules providing for representative actions ... came, so it would seem, to be seen as not flexible enough to accommodate all cases in which it would be convenient for there to be only one action to determine all the claims that were or could be made by a large number of persons against a defendant.... Provision has now been made in more than one Australian jurisdiction for "class" or "group" actions': Mobil Oil Australia Pty Ltd v Victoria [2002] HCA 27; (2002) 189 ALR 161, 169 (Gaudron, Gummow and Hayne JJ). In 1994, a committee established by the Australian Parliament concluded that 'fair and efficient representative action procedures should be available in all Australian jurisdictions. The Commonwealth provision for representative actions in the Federal Court [Part IVA] is, we think, a suitable model': Access to Justice Advisory Committee, Access to Justice - An Action Plan (1994), para 2.105.
See generally, S S Clark and C Harris, 'Multi-Plaintiff Litigation in Australia - A Comparative Perspective' (2001) 11 Duke Journal of Comparative and International Law 289; B Lipp, 'Mass Tort Class Actions under the Federal Court of Australia Act: Justice for All or Justice Denied?' (2002) 28 Monash University Law Review 360.
In the Federal Court of Australia, plaintiffs are referred to as applicants whilst defendants are known as respondents. But in this article the conventional terms of plaintiffs and defendants will be employed.
[8] Bray v F Hoffmann-La Roche Ltd [2003] FCAFC 153; (2003) 200 ALR 607.
[9] P P Mercer, 'Group Actions in Civil Procedure in Canada' in Institute of Comparative Law, Contemporary Law - Canadian Reports to the 1990 International Congress of Comparative Law (1990) 249, 250-251.
[10] Campbell vFlexwatt Corp (1997) 44 BCLR (3d) 343, para 42 (Cumming, Newbury and Huddart JJ).
[11] Hughes v Sunbeam Corp (Canada) Ltd (2002) 61 OR (3d) 433, para 18 (Laskin, Catzman and Doherty JJA).
[12] La Mar vH&B Novelty & Loan Co[1973] USCA9 596; , 489 F2d 461, 462 (1973).
[13] Lord Chancellor's Department, Representative Claims: Proposed New Procedures, Consultation Paper (2001), para 1.
[14] Ibid para 8.
[15] Law Reform Commission of Ireland, Consultation Paper on Multi-Party Litigation (Class Actions), LRC CP 25 (2003), para 1.22 ('LRCI Report'). See also Lord Chancellor's Department, above n 13, para 9: 'the EC Directive on combating late payment in commercial transactions (Directive 2000/35/EC) allows organisations that are officially recognised as having a legitimate interest in representing small and medium-sized enterprises (SME's) the right to take action before the courts or competent administrative bodies to prevent the continued use of grossly unfair terms'.
[16] Hansberry v Lee, [1940] USSC 116; 311 US 32, 40-41 (1940). See also ALRI Report, above n 2, para 57; Martin v Wilks, [1989] USSC 153; 490 US 755, 762 n2 (1989); Research Corp v Pfister Associated Growers Inc, 301 FSupp 497, 501 (1969): 'the very nature of a class action ... [is] to bind parties not before the court in person'.
[17] The Law Reform Commission of Ireland has explained that the class action 'procedure is essentially a trade-off: the members of the class forsake autonomy over the conduct of proceedings and the legal representation of their choice and in return they are guaranteed a passive role in proceedings, the benefit of any resolution in favour of the class, and protection from an award of costs against them individually on the common issues. In addition, the procedure incorporates certain safeguards to protect the interests of class members, notably, a strong judicial presence': LRCI Report, above n 15, para 4.05.
[18] Norwegian Civil Procedure Commission, ProposedRules Concerning Group Action (Provisional Draft), (2000), 1.
[19] 'The court, on a contradictory motion at any stage of the proceeding in the trial court prior to judgment, may require the plaintiff in a class action to furnish security for the court costs which a defendant may be compelled to pay. This security for costs may be increased or decreased by the court, on contradictory motion of any interested party, on a showing that the security furnished has become inadequate or excessive': Louisiana Code of Civil Procedure, art 595(B).
[20] 'Security for costs and charges, which may be awarded against a representative party, may be required by an opposing party. When required, all proceedings in the action must be stayed until an undertaking, executed by two or more persons, is filed with the clerk, to the effect that they will pay such costs and charges as may be awarded against the representative party by judgment, or in the progress of the action, not exceeding the sum of $1,000. A new or an additional undertaking may be ordered by the court or judge, upon proof that the original undertaking is insufficient security, and proceedings in the action stayed until such new or additional undertaking is executed and filed': Montana Rules of Civil Procedure, r 23(f).
[21] 'The class plaintiff should ideally be selected for reasons other than his impecuniosity': LRCI Report, above n 15, para 4.106.
[22] Wong v Silkfield Pty Ltd [1999] HCA 48; (1999) 165 ALR 373, 381 (Gleeson CJ, McHugh, Gummow, Kirby and Callinan JJ). Consequently, 'a proceeding is not properly commenced unless it satisfies each of the three threshold requirements specified in s 33C(1). If the proceeding does not comply with these requirements ... the proceeding is liable to be dismissed or the applicants' pleading struck out. (An alternative procedure was adopted in Silkfield v Wong, where the Full Federal Court made a declaration that the proceedings continue as proceedings brought by the respondents on their own behalf, to give effect to the majority holding that s 33C(1)(c) had not been complied with ...)': Philip Morris (Australia) Ltd v Nixon [2000] FCA 229; (2000) 170 ALR 487, 514 (Sackville J).
[23] In Symington v Hoechst Schering Agrevo Pty Ltd (1997) 149 ALR 261, 264 Wilcox J noted that the evident purpose of s 33D(1) was to overcome the common law standing rule pursuant to which A may not bring a damages action on behalf of B against C. See also Femcare Ltd v Bright [2000] FCA 512; (2000) 172 ALR 713, para 97 (Black CJ, Sackville and Emmett JJ): 'the representative procedure developed in the Court of Chancery accorded the representative party standing to make claims on behalf of members of the represented group. Section 33D merely continues and adapts the same long-standing principle'.
[24] The Manitoba Law Reform Commission has recently indicated that the existing class proceedings regimes in Canada and 'the United States, as well as those recommended in Scotland, England, and South Africa, all require certification of a class proceeding. Only in Australia have legislators and law reformers seen fit to dispense with mandatory certification': MLRC Report, above n 1, 42. Reference should also be made to the class action regime in South Australia which provides that 'the representative parties must within twenty-eight days after the day upon which the defendant filed the appearance ... apply to the Court for: (a) an order authorising the action to be maintained as a representative action; and (b) directions as to the conduct of the action': Supreme Court Rules 1987 (SA), Rule 34.02.
[25] ALRC Report, above n 4, para 147.
[26] This term is meant to indicate compliance with the threshold requirements in s 33C(1).
[27] See also s 33L which provides that where, at any stage of the class action, it appears likely that there are fewer than 7 class members, the Court is empowered to order (a) that the proceeding continue as a class action or (b) that the proceeding no longer continue as a class action under Part IVA and s 33M which empowers the Court to order the termination of a class action where the cost to the defendant of identifying the class members and distributing to them the damages won by the representative plaintiff would be excessive.
[28] Silkfield Pty Ltd v Wong (Unreported, Federal Court, O'Loughlin and Drummond JJ, 17 December 1998), 3. See also Huang v Minister for Immigration and Multicultural Affairs (1997) 50 ALD 134, 138 (Lehane J); Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd (No 2) [1999] FCA 1161; (1999) 166 ALR 74, 122 (Lindgren J).
[29] The discussion in this Part is partly based on the analysis found in V Morabito, 'Class Actions Against Multiple Respondents' (2002) 30 Federal Law Review 295.
[30] The report of the ALRC also provides no real assistance. The ALRC recommended the employment of a grouped proceeding regime pursuant to which the class representatives and the class members would all be parties to the proceeding: ALRC Report, above n 4, para 94. Under this regime, 'no problems concerning standing would arise. In grouped proceedings, by definition, each group member would have the requisite standing. The fact that the principal applicant, rather than the group member, has the conduct of the proceedings is irrelevant to standing': Ibid para 96. For more details see Morabito, above n 29, 300-302.
[31] [2000] FCA 229; (2000) 170 ALR 487.
[32] Ibid 514. In this case a class action was launched against Australian manufacturers and distributors of cigarettes on behalf of persons suffering the ill effects of smoking.
[33] [2003] FCAFC 153; (2003) 200 ALR 607. In this case, the representative plaintiff commenced a Part IVA proceeding against 13 defendants claiming damages and injunctive relief in respect of an international price fixing and market sharing arrangement concerning a number of vitamin products. The group members were described in the pleadings as follows: 'persons who between 5 March 1992 and 5 July 1999 purchased in Australia all or some of vitamins ... either directly or indirectly by way of purchase of foods, beverages, vitamin pills or capsules or other products which contained one or more class vitamins supplied by one or more of the respondents' (Bray v F Hoffmann-La Roche Ltd [2002] FCA 243; (2002) 190 ALR 1, para 2 (Merkel J)).
[34] [2003] FCAFC 153; (2003) 200 ALR 607, paras 122-130 (Carr J), 246-248 (Finkelstein J). Carr J's views were obiter dicta as he held that in the class proceedings before him Philip Morris had been complied with as each class member had a claim against each defendant.
[35] Ibid para 200.
[36] See Batten v CTMS Ltd [2000] FCA 915; Hunter Valley Community Investments Pty Ltd v Bell [2001] FCA 201; Milfull v Terranora Lakes Country Club Limited [2002] FCA 178; Cook v Pasminco Ltd [2000] VSC 534. Each of these four cases entailed class proceedings, similar to the example provided by Branson J, and single justices of the Federal Court and of the Supreme Court of Victoria held that the proceedings were inconsistent with Philip Morris.
[37] [2003] FCAFC 153; (2003) 200 ALR 607, para 248 (Finkelstein J). See also Bray [2002] FCA 243; (2002) 190 ALR 1, para 9 (Merkel J): 'the present case affords a good example of how the strict application of s 33C(1)(a), in a case involving more than one respondent, might give rise to requirements and limitations that have little to do with the purpose or efficacy of Pt IVA’; Lipp, above n 6, 383-384.
[38] According to Sackville J, s 33C(1)(a) had not been satisfied in Philip Morris because 'the statement of claim pleads that some applicants and group members have claims against one respondent, while others have claims against the other individual respondents': Philip Morris [2000] FCA 229; (2000) 170 ALR 487, 520-521.
[39] See Bright v Femcare Ltd [2000] FCA 742, para 81 (Lehane J); Batten v CTMS Ltd [2000] FCA 915; Hunter Valley Community Investments Pty Ltd v Bell [2001] FCA 201, [2001] FCA 1148; Sereika v Cardinal Financial Services Ltd [2001] FCA 1715; Milfull v Terranora Lakes Country Club Limited [2002] FCA 178. The application of Philip Morris by the Supreme Court of Victoria to Victoria's Part 4A has also resulted in the termination of a multiple defendant class action in Cook v Pasminco Ltd [2000] VSC 534.
[40] See, for instance, Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [1999] FCA 56 (class proceedings with respect to a gas explosion in Melbourne). See also K Sutherland, I Dallen and M Flood, 'Class Actions: the Increasing Risk for Manufacturers and Suppliers' (2000) 3 Inhouse Counsel 113, 114; Clark and Harris, above n 6, 317.
[41] See, for instance, King v GIO Australia Holdings Ltd [2000] FCA 617; (2000) 100 FCR 209 (concerning statements contained in a document issued by, among others, directors of a company); Patrick v Capital Finance Corporation (Australasia) Pty Ltd [2001] FCA 1073, para 13 (Heerey J): 'I am satisfied that this is an appropriate case for a representative proceeding under Pt IVA. Indeed it seems typical of the kinds of claim which the legislature probably had in mind .... The complaint of the investors revolves around the one prospectus and what is said to be misuse of funds invested in a way contrary to what the prospectus stated'.
[42] See, for instance, Batten v CTMS Ltd [2001] FCA 1493; Philip Morris [2000] FCA 229; (2000) 170 ALR 487, para 174 (Sackville J).
[43] Zentahope Pty Ltd v Bellotti (Unreported, Supreme Court of Victoria, Appeal Division, Brooking, Fullagar and Tadgell JJ, 2 March 1992). See also V Morabito and J Epstein, Class Actions in Victoria - Time for a New Approach (Report commissioned by the Victorian Attorney-General's Law Reform Advisory Council; 1997), paras 3.7, 3.8.
[44] M K Kane, 'Standing, Mootness and Federal Rule 23 - Balancing Perspectives' (1977) 26 Buffalo Law Review 83, 96.
[45] [2003] FCAFC 153; (2003) 200 ALR 607, para 248. See also Bray [2002] FCA 243; (2002) 190 ALR 1, para 9 (Merkel J): 'while it is clear that s 33C(1)(a) requires that the applicant and each group member have a claim against the respondent it is not altogether clear that the same requirement was intended to apply where there were multiple respondents'.
[46] [2003] FCAFC 153; (2003) 200 ALR 607, para 130.
[47] See Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (No 3) [2001] VSC 372, para 37 (Gillard J): '[s 33Q] gives a wide power to the Court to give directions in relation to questions. In my view, the wide power given in sub-s 1 is not made subject to sub-s 2. Sub-section (2) merely indicates that the Court may, if it so desires, include directions establishing a sub-group. But that does not seem to me to qualify or read down the wide power given to the Court to decide other questions, which will not finally determine the claims of all group members'.
[48] See Report of the Attorney-General's Advisory Committee on Class Action Reform (1990), 33: 'sub-classing is a process by which the larger class is divided into more distinct and representative groups. A sub-class will have an issue of law or fact common to itself and therefore requires separate representation in order to protect interests that it has separate from the larger class. Inherent in sub-classing is the need to ensure that the sub-class is not prejudiced by being in conflict with the larger classes' interests'.
[49] Nixon v Philip Morris (Australia) Ltd [1999] FCA 1107; (1999) 165 ALR 515, 546 (Wilcox J).
[50] 'A representative proceeding can be issued without leave of the Court, although the Court can order that a proceeding no longer continue as a representative proceeding under Pt IVA (see ss 33L, 33M and 33N) or that individual issues or issues that are not common issues be determined separately (see ss 33Q, 33R and 33S)': Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [1999] FCA 56, para 13 (Merkel J).
[51] ' [The Court] will retain all its current powers including the power to stay or dismiss any application it considers to be vexatious, oppressive or trivial': Commonwealth, Parliamentary Debates, House of Representatives, 14 November 1991, 3175 (Mr Michael Duffy, Attorney-General).
[52] Femcare Ltd v Bright [2000] FCA 512; (2000) 172 ALR 713, 734 (Black CJ, Sackville and Emmett JJ). See also ALRC Report, above n 4, para 149.
[53] 'There are good reasons to give s 33ZF a generous interpretation. The section is couched in broad terms. Moreover, the Court is given power to act on its own motion. The language, which is described in the Explanatory Memorandum as "wide", doubtless reflects the drafter's perception that the new statutory procedure for representative proceedings was likely to throw up novel problems that would require class supervision by the Court': Courtney v Medtel Pty Limited [2002] FCA 957, para 48 (Sackville J).
[54] See United States Federal Rules of Civil Procedure, r 23(d)(4); Code of Civil Procedure of Quebec, RSQ, c C-25, Book IX, art 1045; Class Proceedings Act, SO 1992, c 6 (Ontario), s 12; Class Proceedings Act, RSBC 1996, c 50 (British Columbia), s 12; Class Actions Act, SS 2001, c C-12.01 (Saskatchewan), s 14; Class Actions Act, RSN 2001, c C-18.1 (Newfoundland), s 13; Class Proceedings Act, SM 2002, c 14 - Cap C130 (Manitoba), s 12; and Class Proceedings Act, SA 2003, c C-16.5 (Alberta), s 12.
[55] See McMullin v ICI Australia Operations Pty Ltd [1998] FCA 658; (1998) 156 ALR 257, 260 (Wilcox J).
[56] OLRC Report, above n 1, 449-450. See also MLRC Report, above n 1, 88; and SLC Report, above n 1, para 4.85.
[57] In fact, even with the Philip Morris principle in force, s 33N is more likely to be employed by the Court in multiple respondents suits than in single respondent suits: see J Beach, 'Representative Proceedings - Some Current Issues' (Paper presented at a Seminar on Recent Developments in Class Actions, Melbourne, October 2000), 28-29.
[58] See Morabito, above n 29, 308-313.
[59] See Part II above.
[60] Wong [1999] HCA 48; (1999) 165 ALR 373, 380-381 (Gleeson CJ, McHugh, Gummow, Kirby and Callinan JJ); Mobil Oil [2002] HCA 27; (2002) 189 ALR 161, para 34 (Gaudron, Gummow and Hayne JJ). The differences between the class action procedure and the traditional representative action procedure have been described as follows: 'modern class action statutes elaborate and improve upon the "representative action" procedure. Like the historic action, in a modern class action a representative plaintiff conducts the proceeding on behalf of other persons. However, a class member's claim need only be similar to the representative plaintiff's claim; it need not be exactly the same. Here again, all members of the class are bound by the outcome on the common issues. However, provision is made for the formation of subclasses and the separate resolution of issues relating to individual class members in addition to the resolution of issues common to the main class or a subclass. A number of statutory safeguards and an expanded role for the court help to ensure that the interests of the class members are protected' (ALRI Report, above n 2, xix-xx).
[61] As was indicated by the US Supreme Court in 1940: 'the class suit was an invention of equity to enable it to proceed to a decree in suits where the number of those interested in the subject of the litigation is so great that their joinder as parties in conformity to the usual rules of procedure is impracticable. Courts are not infrequently called upon to proceed with causes in which the number of those interested in the litigation is so great as to make difficult or impossible the joinder of all because some are not within the jurisdiction or because their whereabouts is unknown or where if all were made parties to the suit its continued abatement by the death of some would prevent or unduly delay a decree. In such cases where the interests of those not joined are of the same class as the interests of those who are, and where it is considered that the latter fairly represent the former in the prosecution of the litigation of the issues in which all have a common interest, the court will proceed to a decree' (Hansberry v Lee[1940] USSC 116; , 311 US 32, 41-42 (1940)).
[62] See Crerar, above n 1, 78, n147; Rules Committee of the Federal Court of Canada, Class Proceedings in the Federal Court of Canada, Discussion Paper (2000) 6; Western Canadian (2001) 201 DLR (4th) 385, 398 (McLachlin CJ); C Gillespie, 'The Scope of the Class Action in Canada' (1981) 11 Manitoba Law Journal 215.
[63] See Justice S Charles, 'Class Actions in Australia' (Paper presented at the Australian Bar Association Conference, San Francisco, 1996), 2-4; Clark and Harris, above n 6, 293; M Doyle, 'The Nature of Representative or Class Actions in the Context of Compensation Claims Against Resources and Utilities Companies' in Australian Mining and Petroleum Law Association Yearbook 1999 (2000) 277, 278; M Tilbury, 'The Possibilities for Class Actions in Australian Law' (Paper delivered at the 1993 Australian Legal Convention in Hobart), 4; Lipp, above n 6, 362-363.
[64] 'The absence of comprehensive legislation means that courts are forced to rely heavily on individual case management to structure class proceedings. This taxes judicial resources and denies the parties ex ante certainty as to their procedural rights': Western Canadian (2001) 201 DLR (4th) 385, 399 (McLachlin CJ). See also Mobil Oil [2002] HCA 27; (2002) 189 ALR 161, 169 (Gleeson CJ); Pauli v Ace Ina Insurance (2002) 322 AR 126, paras 22-33 (Rooke J); ALRI Report, above n 2, paras 99-100; Kainaiwa/Blood Tribe v Canada, 2001 FTR LEXIS 1385, 8-10 (Lafreniere, Prothonotary); Naken v General Motors of Canada Ltd (1983) 144 DLR (3d) 385; J J Chapman, 'Class Proceedings for Prospectus Misrepresentations' (1994) 73 Canadian Bar Review 492, 504; Holtslag v Alberta (2000) 263 AR 394, paras 4-6 (Binder J); Western Canadian Shopping Centres Inc v Bennett Jones Verchere (1998) 228 AR 188, para 20; Lloyd v Imperial Oil Ltd (2001) 289 AR 293, para 39 (Clarke J); Ho-A-Shoo v Attorney-General of Canada, 2000 Ont Sup CJ LEXIS 71, 22 (Cumming J).
[65] In Markt and Co Ltd v Knight Steamship Co Ltd [1910] 2KB 1021, the English Courtof Appeal held that the 'same interest' requirement, under the traditional representative action procedure, meant that the procedure was unavailable in actions where separate and individual contracts were involved or in cases where damages were claimed.
[66] ALRC Report, above n 4, paras 132-138.
[67] Gleeson CJ, McHugh, Gummow, Kirby and Callinan JJ of the High Court have recently indicated that 'section 33C attempts to resolve issues which bedevilled representative procedures as they had been developed, particularly by courts of equity. This is apparent from the terms of s 33C(2). Thus, the relief may consist only of damages and may not include equitable relief and the proceeding may be concerned with separate contracts or transactions and involve separate acts or omissions. What is required is that the claims give rise to a common issue of law or fact which is "substantial"': Wong [1999] HCA 48; (1999) 165 ALR 373, 376. See also Justice D Ryan, 'The Development of Representative Proceedings in the Federal Court' (1993) 9 Australian Bar Review 131, 137: 'the added flexibility inherent in s 33C(2) is most desirable and conforms with the general policy ... of promoting the efficient use of court resources and minimising the cost of litigation to the parties'.
[68] In fact, in SZ v Minister for Immigration & Multicultural Affairs, Lehane J of the Federal Court recently noted that 'although it is by no means clear that claims are asserted by all the represented persons against all respondents, there is no explicit requirement under ... FCR O6 r 13 ... that all applicants claim against all respondents (compare s 33C(1)(a) of the Federal Court of Australia Act...)': [2000] FCA458, para 7. A similar approach appears to have been taken by the Supreme Court of Canada in relation to Alberta's counterpart to Order 6 rule 13: Western Canadian (2001) 201 DLR (4th) 385.
[69] Bray v F Hoffmann-La Roche Ltd [2003] FCA 1505.
[70] Johnstone v HIH Limited [2004] FCA 190, para 38.
[71] The discussion in this Part is partly based on the analysis found in V Morabito, 'Ideological Plaintiffs and Class Actions - An Australian Perspective' (2001) 34 University of British Columbia Law Review 459.
[72] 'This section is wider in scope than s 16 of the Clayton Act 1914 (US) which entitles a private party to seek injunctive relief against "threatened loss or damage by violation of the antitrust laws"’: Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd [2000] HCA 11; (2000) 169 ALR 616, para 67 (Gummow J). In Ireland, Regulation 8 of the European Communities (Unfair Terms in Consumer Contracts) Regulations 1995 empowers 'the Director of Consumer Affairs to seek injunctive relief in the High Court against the use of unfair terms in consumer contracts [and as a result of recent amendments] also allows consumer organisations to seek injunctive relief on the same basis as the Director': LRCI Report, aboven 15,para 1.23. 'A similar provision in the British legislation ... vests the right to seek injunctions exclusively on the Office of Fair Trading': Ibid n31.
[73] 'It has been established for more than 20 years that s 80 means what it says. In Phelps v Western Mining Corporation Ltd [(1978) 20 ALR 183] the Full Court of the Federal Court rejected an argument that the words "any other person" in s 80 should be read down as meaning that only persons who are affected by a contravention of Pt V [of the TPA] could seek relief under s 80': Truth About Motorways [2000] HCA 11; (2000) 169 ALR 616, para 13 (Gleeson CJ and McHugh J).
[74] [1996] FCA 1119; (1996) 142 ALR 177.
[75] [1998] FCA 598; (1998) 83 FCR 424.
[76] The Court in both cases placed emphasis on the judgment of Wilcox J in Tropical Shine Holdings Pty Ltd v Lake Gesture Pty Ltd (1993) 118 ALR 510. In this case the representative plaintiff's personal claim was different in nature to any claims of the group members. This difference was described as follows by Wilcox J: 'the case is unusual in that the claim made by the applicant on its own behalf differs in kind from that available to group members. The applicant purchased two items of furniture from Federation Furniture Company. But it did so in order to have them technically analysed, not because it relied on anything said in the advertisements... the applicant's personal case on damages is that it lost sales because people who would otherwise have dealt with it were beguiled by the advertisements into purchasing their furniture from Federation Furniture Company instead. The case suggested on behalf of the group members is that each was induced by false statements in the advertisements to purchase furniture from Federation Furniture Company for more than it was worth' (ibid 517).
[77] [1998] FCA 819; (1998) 156 ALR 273.
[78] Ibid 283.
[79] Ibid. See, for instance, Commonwealth, Parliamentary Debates, House of Representatives, 14 November 1991, 3174 (Mr Michael Duffy, Attorney-General): 'the new procedure will mean that groups of persons, whether they be shareholders or investors, or people pursuing consumer claims, will be able to obtain redress'.
[80] [1999] FCA 1250; (1999) 166 ALR 141.
[81] Ibid 146-147.
[82] Ibid 148.
[83] Ibid.
[84] 'If that is the position, it imposes a significant limitation on the utility of Pt IVA. There are many statutory provisions that empower the court to impose penalties, either by way of primary relief or in conjunction with other orders ... However, it seems to us this is not the position: there is nothing in the Federal Court Act that excludes the use of Pt IVA in a proceeding for a penalty': ibid 145.
[85] Ibid 147.
[86] The class members were also seeking damages (see note 32 above). But most, if not all, class members had personal claims for damages against some, but not all, of the defendants. This state of affairs was, of course, inconsistent with the requirements of Philip Morris. Consequently, the only way in which the class could persuade the Court that the proceedings satisfied Philip Morris was by placing reliance on the fact that each class member was seeking injunctive relief against each defendant pursuant to s 80(1) of the TPA.
[87] [2003] FCAFC 153; (2003) 200 ALR 607, para 245.
[88] Ibid para 119.
[89] Ibid para 210.
[90] See Ryan v Great Lakes Council (1997) 149 ALR45, 48 (Wilcox J): 'subsection (1) of 33D may have been inserted out of an abundance of legislative caution. The standing it confers may be implicit in the closing words of s 33C(1) anyway; nonetheless, in confirming that standing, s 33D(1) also limits it. The subsection takes one of the seven or more claimants referred to in s 33C(1)(a) (the first person) whose individual interest is sufficient to support a proceeding brought by the first person against a particular person, and gives the first person the further entitlement to make claims on behalf of others against "that other person". The "other person" is the person referred to earlier in s 33D(1) as "another person", that is, the person against whom seven or more members, including the applicant, have claims'. In Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd [1998] FCA 819; (1998) 156 ALR 273, 276 Lindgren J indicated that 'the representative party is necessarily one of the group of seven or more persons "on whose behalf a representative proceeding is commenced”’.
[91] [1998] FCA 598; (1998) 83 FCR 424, 426.
[92] [1996] FCA 1119; (1996) 142 ALR 177, 181.
[93] 'The term "private attorney general" came from Jerome Frank's opinion in the famous case of Associated Industries v Ickes [134 F2d 694, 704 (1943)]. The case itself was about the standing of a membership corporation interested in keeping down the price of coal, but the often-quoted term was used there to refer to any private person who would "vindicate the public interest"’: B Garth, I H Nagel and S J Plager, 'The Institution of the Private Attorney General: Perspectives From An Empirical Study of Class Action Litigation' (1988) 61 Southern California Law Review 353, 357-358. Class representatives are frequently referred to as private attorneys general: see, for instance, D R Hensler et al, Class Action Dilemmas - Pursuing Public Goals for Private Gain (Executive Summary; RAND Institute for Civil Justice) (1999), 8-9: 'many believe that [private class actions for money damages, particularly those lawsuits in which each class member claims a small loss but aggregate claimed losses are significant] serve important public purposes by supplementing the work of government regulators whose budgets are usually quite limited and who are subject to political constraints. Hence they are sometimes called "private attorneys general" lawsuits'.
[94] 'The effective enforcement of Federal civil rights statutes depends largely on the efforts of private citizens. Although some agencies of the United States have civil rights responsibilities, their authority and resources are limited. In many instances where these laws are violated, it is necessary for the citizen to initiate court action to correct the illegality': Report of the US House Committee on the Judiciary on the Civil Rights Attorney's Fees Awards Act 1976 HR Rep No 1558, 94th Cong, 2nd Sess, 1 (1976). See also Truth About Motorways [2000] HCA 11; (2000) 169 ALR 616, paras 133, 162 (Kirby J); Australian Law Reform Commission, Beyond the Door-Keeper: Standing to Sue for Public Remedies, Report No 78 (1996), paras 2.33, 2.36, 4.15 ('Door-keeper'); A Gidi,
'Class Actions in Brazil - A Model for Civil Law Countries' (2003) 51 American Journal of Comparative Law 311, 383 ('in limited circumstances, American law gives unions or organisations "associational standing" to bring an injunctive class action to protect their members' interests with no claim of injury to their own interest').
[95] In Canada, for instance, it has been noted that 'with its decisions in Thorson [v Canada (AG) (No 2) [1975] 1 SCR 138], MacNeil [v Nova Scotia (Board of Censors) [1976] 2 SCR 265], [Canada (AG) v] Borowski [[1981] 2 SCR 575], and Finlay [v Canada (Minister of Finance) [1986] 2 SCR 607], the Supreme Court of Canada ushered in anew period of liberalized standing rules. These cases, known collectively as the "standing quartet", expanded the categories of parties with a right to challenge a law beyond persons with a strictly personal or private interest. This development has provided an impetus for litigation in the public interest' (L Friedlander, 'Costs and the Public Interest Litigant' (1995) 40 McGill Law Journal 55, 55).
In relation to Australia, see Door-keeper, above n 94, para 3.5; P Cerexhe, 'Phantom Floodgates of Public Interest Litigation' (1999) 10(4) Australian Product Liability Reporter 42; E Campbell, 'Public Interest Cost Orders' [1998] AdelLawRw 20; (1998) 20 Adelaide Law Review 245; R Baird, 'Public Interest Groups and Costs: Have the Flood Gates Been Opened?' (1998) 15 Environment and Planning Law Journal 294.
[96] See, for instance, Ontario Law Reform Commission, Report on the Law of Standing (1989), recommendation 1(3); Door-keeper, above n 94, para 1.15; English Law Commission, Administrative Law: Judicial Review and Statutory Appeals, No 226 (1994), para 5.16; Law Reform Commission of Ireland, Judicial Review of Administrative Actions: the Problem of Remedies, Working Paper No 8 (1979) para 6.7; Public Administration and Law Reform Committee of New Zealand, Standing in Administrative Law, Report No 11 (1978) para 52; Law Reform Commission of British Columbia, Report on Civil Litigation in the Public Interest, LRC 46 (1980), ch 7; Manitoba Law Reform Commission, Report on Administrative Law; Part II: Judicial Review of Administrative Action, Report No 69 (1987) recommendation 8.
[97] As was noted by an English judge: 'the obligation on a State to provide justice is not discharged by devising a single and inflexible mode of trial whose cost is beyond the reach of the ordinary citizen. Its obligation is to provide as many modes of trial as are necessary to cover the variety of disputes that may commonly arise so that for each type there may be selected a mode that will offer a reasonable standard of justice at a reasonable cost. To neglect this obligation in pursuit of a single mode which is considered to be the best is bound to end in a denial of justice to many' (Lord Devlin, The Judge (1979) 69 as quoted in B M Debelle, 'Class Actions for Australia? Do They Already Exist?' (1980) 54 Australian Law Journal 508, 516). See also Mercer, above n 9, 272.
[98] See Kane, above n 44, 91-93; Mercer, above n 9, 251; A Homburger, 'Private Suits in the Public Interest in the United States of America' (1974) 23 Buffalo Law Review 343, 347-348; J A Jolowicz, 'Some Twentieth Century Developments in Anglo-American Civil Procedure' (1978) 7 Anglo-American Law Review 163, 215; Door-keeper, above n 94, para 5.12.
[99] Gidi, above n 94, 365.
[100] The discussion in this Part is partly based on the discussion found in V Morabito, "Security for Costs and Class Actions in the Federal Court of Australia" (2001) 20 Civil Justice Quarterly 225.
[101] See V Morabito, 'Federal Class Actions, Contingency Fees, and the Rules Governing Litigation Costs' [1995] MonashULawRw 10; (1995) 21 Monash University Law Review 231, 255-259.
[102] S Colbran, 'Security for Costs Against Corporations - Section 1335 of the Corporations Law' (1993) 11 Company and Securities Law Journal 273, 273. See also Lord Chancellor's Department, Security for Costs, Consultation Paper (1997), para 2 ('the general principle underlying the court's power to make security for costs orders is that claimants (ie "plaintiffs" under the current rules) who take advantage of the court system should demonstrate their willingness (or at least do not demonstrate unwillingness) to comply with the court's decision on costs, even if the case is lost. The system is undermined if a claimant can use it for his benefit, but escape liability if he does not succeed on his claim').
[103] 'This section [s 33ZG] reflects the fact that while the new Part provides a new procedure for bringing and conducting a representative procedure, it does not change existing laws that apply generally to proceedings in the Federal Court unless those changes are provided for in Part IVA': Explanatory Memorandum to the Federal Court of Australia (Amendment) Bill 1991 (Cth), para 51.
[104] Order 28 r 3(2) provides that 'the Court shall not order an applicant to give security by reason only of paragraph (1)(c) if it appears to the Court that the failure to state his address or the mis- statement of his address was made without intention to deceive'.
[105] The Full Federal Court made it clear, in Bell Wholesale Co Pty Ltd v Gates Export Corp, that an order may be made under s 56 against an individual plaintiff on grounds other than those set out in Order 28; that is to say, Order 28 could not operate so as to limit the wide power conferred by s 56: (1984) 2 FCR 1, 3 (Sheppard, Morling and Neaves JJ). See also R v Commercial Bank of Australia Ltd [1920] HCA 62; (1920) 28 CLR 289, 292 (Rich J). However, in the vast majority of cases, security for costs orders are made in relation to scenarios which fall within Order 28. As was recently pointed out by Lehane J of the Federal Court, 'the scope of the power ... of the Federal Court... is broad enough to authorise the making of orders in cases other than those listed in the rules. An order may, for example, be made against an applicant or plaintiff who is a natural person resident in the jurisdiction if the Court is satisfied that special circumstances exist justifying such an order (see Rajski v Computer Manufacture and Design Pty Ltd [1983] 2 NSWLR 122). Such cases, however, are rare' (J Lehane, 'Security for Costs' (1999) 37 Law Society Journal 54, 54). See also R Douglas, 'Ordering Personal Litigants To Provide Security for Costs' (1997) 18
[106] Queensland Lawyer 86.
[107] Provisions like s 1335(1) 'have been enacted in England and throughout Australia. It proceeds by reference to the limitation of liability which is provided to corporations in the conduct of their affairs and the distinction between that limitation of liability and the unlimited liability of private persons. In general the impecunious condition of a litigant who is a natural person is not a ground for security for costs. But the section provides, in itself, authority to make an order for security for costs where all that is shown is that the company will be unable to pay the costs should it fail. If it is going too far to say ... that the discretion conferred by the section should be exercised merely with a predisposition in favour of the defendant party, nevertheless, the discretion is for the protection of the defendant from the unfair and possibly burdensome consequences of an unsuccessful claim made against him by an impecunious company': Sent v Jet Corporation of Australia Pty Ltd [1984] FCA 178; (1984) 2 FCR 201, 217 (Smithers J). See also Harpur v Ariadne Australia Ltd (1984) 2 ACLC 356; Pearson v Naydler [1977] 3 All ER 531, 536-537 (Megarry VC).
[107] See Clark and Harris, above n 6, 302.
[108] See, for instance, Woodhouse v McPhee [1997] FCA 1509; (1997) 80 FCR 529, 534 (Merkel J); Ryan v Great Lakes Council (1998) 154 ALR 584, 589 (Wilcox J).
[109] D Sharp, 'Aspects of Class Actions' (Paper presented at a seminar on Recent Developments in Class Actions held in Melbourne in October 2000), para 3.
[110] See, for instance, Ryan v Great Lakes Council (1998) 154 ALR 584, 589 (Wilcox J).
[111] 'The Bill will amend the Federal Court of Australia Act 1976 to make it clear that a person represented in a representative proceeding under Part IVA of that Act or in a proceeding of a representative character authorised by another Act cannot be ordered to pay costs except in special circumstances. This amendment reaffirms a long line of judicial authority which was said to be wrong in a recent judgment of the Supreme Court of Victoria in respect of statutory provisions in that State dealing with the power of that Court to award costs. The amendment will remove any doubts that may have been created by that decision for proceedings of this kind': Commonwealth, Parliamentary Debates, Senate, 9 November 1992, 2534 (Senator McMullan). A similar immunity from costs is enjoyed by class members in Canada and the US: see V Morabito, 'Judicial Supervision of Individual Settlements with Class Members in Australia, Canada and the United States' (2003) 38 Texas International Law Journal 664, 670.
[112] [1997] FCA 1509; (1997) 80 FCR 529, 533.
[114] One commentator has noted that as a result of this case, 'a precedent now having been established, applicants will need to consider seriously the likelihood that future applications, particularly the more speculative ones, will need to be able to meet such orders [for security for costs] in order to proceed': Sharp, above n 109, para 6.
[115] [2000] FCA 1004, para 74.
[116] See, for instance, Woodhouse vMcPhee [1997] FCA 1509; (1997) 80 FCR 529, 534 (Merkel J). See also Clark and Harris, above n 6, 302.
[117] See Ryan v Great Lakes Council [1998] FCA 646; (1998) 155 ALR 447, 456 (Lindgren J). Defendant lawyers have recently lamented, to the ALRC, that 'the application of Part IVA of the Federal Court Act which prevents a respondent from recovering other than against the named applicant, coupled with the tendency on the part of applicant's solicitors to invariably select a man or woman of straw as the representative applicant ensure that there is often no prospect of a respondent recovering their costs': Australian Law Reform Commission, Managing Justice - A Review of the Federal Civil Justice System, Report No 89 (2000) para 7.111 ('ALRC 2000 Report').
[118] Smith v Canadian Tire Acceptance Ltd (1995) 22 OR (3d) 433, 450 (Winkler J). See also Justice M Wilcox, 'Representative Proceedings in the Federal Court of Australia - a Progress Report' (1997) 15 Australian Bar Review 91, 94: 'only the representative party can be ordered to pay costs ... this may encourage the selection of a "straw" representative party. But nothing in the representative proceeding provisions affects the Court's ordinary powers to order security for costs, including the power to stay the proceeding pending compliance with the order. Since respondents to group actions tend to be relatively well-resourced corporations whose lawyers can be expected to take the point, claimants should ensure from the beginning that they have sufficient funds to conduct the action and provide security, if necessary'.
[119] Nendy Enterprises Pty Ltd v New Holland Australia Pty Ltd [2001] FCA582, [2002] FCA550.
[120] Ibid [2001] FCA 582, para 4 (Whitlam J); [2002] FCA 550, para 11 (Tamberlin J).
[121] [2001] FCA 582, para 8 (Whitlam J).
[122] Ibid para 7.
[123] [2002] FCA 243; (2002) 190 ALR 1, para 73.
[124] Ibid para 75.
[125] [2003] FCAFC 153; (2003) 200 ALR 607, para 141.
[126] Ibid para 142.
[127] Branson J simply indicated that she was 'in substantial agreement with what is said by both Carr and Finkelstein JJ on this issue': Ibid para 213.
[128] Ibid para 252.
[129] Ibid.
[130] 'In a strike action, a class proceeding is commenced "where the merits of the claim are not apparent but the nature of the claim and targeted transaction is such that a sizeable settlement can be achieved with some degree of probability" because the defendant chooses to defray the costs of litigating or the public relations consequences by settling': ALRI Report, above n 2, para 117. See also ALRC Report, above n 4, para 351; LRCI Report, above n 15, paras 2.13, 2.15; Note, 'Developments in the Law - The Paths of Civil Litigation: IV. Class Action Reform: An Assessment of Recent Judicial Decisions and Legislative Initiatives' (2000) 113 Harvard Law Review 1806, 1812, 1817; OLRC Report, above n 1, 146-148.
[131] 'The practical effect of allowing security for costs could be to deter meritorious actions where the plaintiff possesses a modest personal stake in the suit': OLRC Report, above n 1, 746.
[132] [1977] 3 All ER 531, 533. See also Cook v Whellock [1890] UKLawRpKQB 52; (1890) 24 QBD 658, 661 (Lord Esher MR); Barton v Minister for Foreign Affairs [1984] FCA 89; (1984) 2 FCR 463, 469 (Morling J); Camerons Units Services Pty Ltd v Kevin R Whelpton and Associates Australia Pty Ltd (1986) 13 FCR 46, 53 (Burchett J); Weston v Beaufils [1993] FCA 331; (1993) 43 FCR 292, 298 (Burchett J).
[133] ALRC Report, above n 4, p 181.
[135] It should be noted, however, that the Court possesses the power under s 33J(3) to extend the period within which group members may opt out.
[136] (1998) 154 ALR 584, 589.
[137] [1998] FCA 646; (1998) 155 ALR 447.
[138] The traditional rationale for the power to order security against foreign plaintiffs was described as follows by Denning J in Kohn v Rinson & Stafford (Brod) Limited [1947] 2 All ER 839, 840: 'it is plain that it is in the discretion of the court to order security for costs ... when a plaintiff is out of the jurisdiction, the reason being that, if a judgment is obtained by the defendant against the plaintiff for costs, such an order cannot be enforced by the direct processes of these courts'. See also Lord Chancellor's Department, above n 99, paras 9 and 10: 'the practical problems often encountered in trying to enforce judgments abroad are such that it is desirable to retain a general criterion based simply on residence abroad. The apparent crudeness of such a rule is tempered by the fact that the court would not be bound to make an order even if the claimant did reside abroad. In any particular case the court might consider that problems of enforcement are in fact unlikely to arise, eg if the claimant is clearly prepared to pay any costs awarded against him'.
[139] [1998] FCA 646; (1998) 155 ALR 447, 453. In relation to the so-called impecunious nominal plaintiff rule, it has been noted that 'in such cases it is usually contended by the applicant for security that security should be ordered as, in reality, a particular impecunious applicant is bringing a claim for the benefit of others who are not "parties" to the proceeding and therefore are not, in the usual course, directly liable for costs orders': Woodhouse v McPhee [1997] FCA 1509; (1997) 80 FCR 529, 531 (Merkel J).
[140] [1998] FCA 646; (1998) 155 ALR 447, 456.
[141] J Batrouney, 'Security for Costs - Shield or Sword?' (1992) 66 Law Institute Journal 284, 284.
[142] [2000] FCA 1819, para 30.
[143] ALRC Report 2000, above n 117, recommendation 78.
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