A v Schulberg

[2014] VSC 180

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMON LAW DIVISION
MAJOR TORTS LIST

S CI 2012 2791

A	Plaintiff
v
DR MARK SCHULBERG & ORS	Defendants

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JUDGE:	BEACH JA
WHERE HELD:	Melbourne
DATE OF HEARING:	23 April 2014
DATE OF JUDGMENT:	23 April 2014
CASE MAY BE CITED AS:	A v Schulberg & Ors
MEDIUM NEUTRAL CITATION:	[2014] VSC 180

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PRACTICE AND PROCEDURE – Group proceeding – Proposed settlement of group proceeding – Whether individual plaintiff can be compelled to join group proceeding – Supreme Court Act 1986, Part 4A, ss 33J, 33KA and 33ZF – Civil Procedure Act 2010, ss 19, 20, 22, 23 and 24.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D.E. Curtain QC with Mr D.B. Bongiorno	Slater & Gordon Limited
For Dr Mark Schulberg, Croydon Hospital Pty Ltd and Ms Carol Richards	Mr M.D. Wilson QC with Mr D. Wallis	Tress Cox Lawyers
For the Australian Health Practitioner Regulation Agency	Mr S.A O’Meara QC with Mr C. Archibald	Norton Rose Fulbright Australia
For the plaintiff in proceeding S CI 2011 6574	Mr A.D.B. Ingram with Mr R.B. Harper	Melbourne Injury Lawyers

HIS HONOUR:

1. The trial of this group proceeding[1] is fixed for hearing next Monday, 28 April 2014.  There is also an individual proceeding[2] (‘the individual proceeding’), due to be heard at the same time, brought by a plaintiff who has ceased to be a group member pursuant to an order of the Court made under s 33KA of the Supreme Court Act 1986.[3]

   [1]See Part 4A of the Supreme Court Act 1986.

   [2]S CI 2011 06574.

   [3]Order made 26 August 2013.

1. Last Thursday, the parties informed the Court that settlement discussions had advanced to a point where the defendants had made an offer that the plaintiff in the group proceeding wished to accept, subject to the approval of the Court.  The approval of the Court is needed because of the terms of s 33V of the Act.  The Court was informed that the plaintiff in the group proceeding and all group members wish to accept an offer made by the defendants.  However, the Court was also informed that the defendants’ offer was an offer to settle not only the group proceeding, but also the individual proceeding.  Indeed, it was said that the proposed settlement was conditional upon the plaintiffs in both proceedings accepting the defendants’ offer.

1. The plaintiff in the individual proceeding does not wish to accept the defendants’ offer.  The defendants say that they will not make an offer that does not contain an allowance for the plaintiff in the individual proceeding.  An impasse appears to have been reached in the negotiations between the parties.

1. At the hearing last Thursday, the plaintiff in the group proceeding made an application that pre-trial orders requiring her to serve material, to be relied upon by her in the group proceeding, on the plaintiff in the individual proceeding, be stayed.  It was submitted that the group proceeding plaintiff’s compliance with these orders[4] ‘may hamper settlement discussions in the group proceeding’.  The foundation for this submission no doubt lies in a perception, that the group proceeding plaintiff has, that the defendants might be more likely to settle the group proceeding, if they know that the plaintiff in the individual proceeding will not have at her disposal all of the material the plaintiff in the group proceeding currently has in her possession to prosecute a claim against the defendants.

   [4]Order 6 (only so far as it applies to the plaintiff in the individual proceeding), and orders 11 and 12 of the orders made in the group proceeding on 4 April 2014.

1. The position that currently confronts the parties and the Court is that, unless the present impasse between the parties can be resolved, the plaintiff in the group proceeding (and all group members) will be forced to litigate the group proceeding in circumstances where each of them is happy (subject to the Court’s approval) to accept an offer that has been made by the defendants.

1. There can be no doubt that this will be expensive and time-consuming litigation for the parties.  No doubt the parties to the group proceeding wish to avoid this.  Additionally, the Court has an interest in seeing that scarce and valuable public resources are put to good use, and not wasted.

1. During the hearing last Thursday, I raised with the parties the prospect of revoking the Court’s previous order that was made under s 33KA of the Act and/or making an order under s 33ZF that would have the effect of bringing the plaintiff in the individual proceeding back into the group proceeding, thus making her bound by any order the Court may make on an application to approve the proposed compromise. On its terms, s 33ZF enables the Court to ‘make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding’.

1. If the plaintiff in the individual proceeding was to be brought back into the group proceeding, she would then have the capacity to appear on, and oppose, the application to approve the compromise of the group proceeding.  But she would be bound by the result of that application.

1. The proposal to bring the plaintiff in the individual proceeding back into the group proceeding has found some favour with the defendants and with the plaintiff in the group proceeding.  However, it has not found favour with the plaintiff in the individual proceeding.  The plaintiff in the individual proceeding has maintained what she says is her right to be separately represented by different solicitors from the plaintiff in the group proceeding, and her right to bring a separate proceeding against the defendants.[5]

   [5]See Royall v Croydon Hospital & Ors [2013] VSC 453.

1. There is much to be said for folding the plaintiff in the individual proceeding back into the group proceeding.  Many of the objectives and overarching obligations of the Civil Procedure Act 2010 would likely be met by adopting such a course.[6]  Further, not to adopt such a course carries with it the very real prospect of requiring parties, who are willing to resolve their disputes, to litigate instead of settling.  If the plaintiff was brought back into the group proceeding, the application for the approval of the proposed compromise could be made.  This application would then be determined by the application of conventional principles: namely, by considering whether the proposed compromise is fair as between the parties, and whether it is also fair as between the plaintiff and group members.[7]

   [6]See for example, ss 19, 20, 22, 23 and 24 of the Civil Procedure Act 2010.

   [7]See Australian Competition and Consumer Commission v Chats House Investments Pty Ltd (1996) 71 FCR 250, 258; Williams v FAI Home Security Pty Ltd (No 4) (2000) 180 ALR 459; Darwalla Milling Co Pty Ltd v F Hoffman La Roche Limited (No 2) (2006) 236 ALR 322 (but in particular at 339[50]); Wheelahan v City of Casey [2011] VSC 215, [59]-[61]; and Perry v Powercor[2012] VSC 113, [9]-[16].

1. All of that said, it is, of course, the defendants’ choice not to settle with the plaintiff in the group proceeding or any group members, unless the plaintiff in the individual proceeding is a party to the settlement.

1. Part 4A of the Act set up a procedure for class actions (called group proceedings) that involves members of a defined group being bound by the result of a relevant group proceeding if they do not opt out within a specified time.[8]  This has been described by some judges and writers as ‘the opt out model’, under which parties who do not wish to be bound are permitted to opt out of the proceeding.[9] However, there is nothing in Part 4A that suggests it was ever the intention of the Parliament that individuals who did not want to participate in a group proceeding might be compelled to join in, and be bound by the result of, such a proceeding. Indeed, while s 33KA of the Act permits the Court to make an order that a person cease to be a group member, there is no provision in Part 4A that, in terms, permits the Court to order a person to be a group member.

   [8]See s 33J of the Act.

   [9]See P Dawson Nominees Pty Ltd v Multiplex Ltd & Anor (2007) 242 ALR 111, 121-2 [40]-[44].

1. The terms of s 33ZF are very wide, enabling the Court to make ‘any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding’. It is, of course, to be noted that the power given by s 33ZF is a power given to ensure that justice is done in the group proceeding. Further, the power is not unlimited. Specifically, there is nothing in s 33ZF (or Part 4A of the Act) that permits an order to be made in some other proceeding, either to ensure justice is done in the group proceeding, or at all.

1. The plaintiff in the individual proceeding failed to opt out within the time specified under an order made pursuant to s 33J of the Act. This failure was explained by her in an affidavit in opposition to an application by the defendants to stay her individual proceeding as an abuse of process.[10] As a result, and in order that she might continue her individual proceeding, which was issued before the group proceeding was issued, an order was made under s 33KA removing her from the group.

   [10]See Royallv Croydon Hospital & Ors [2013] VSC 453, [13].

1. There is no basis for now revoking that order.  The order was regularly made, following the receipt of such evidence as the parties chose to tender, and after hearing submissions from all affected parties.  While one might wish it were otherwise, the mere fact that it is now seen to be in the interests of the plaintiff in the group proceeding, the group members and the defendants, that the plaintiff in the individual proceeding be brought back into the group for the purpose of effecting a proposed compromise, these matters alone cannot, without more, form a basis for over-riding the will and rights of the plaintiff in the individual proceeding.

1. Further, and in any event, I take leave to doubt that s 33ZF permits the Court to compel a person who does not want to be a group member (and who has validly opted out or been made the subject of a s 33KA order) to be a group member. Such a course appears to me to be contrary to the whole scheme of Part 4A of the Act.[11] In the absence of a specific statutory provision permitting a court to compel an unwilling group member to be a group member (or to be bound by the result of a group proceeding), I do not think Part 4A permits the Court to make any such order. Additionally, any such order would, in any event, have to, at least, contemplate the staying of any individual proceeding that might be brought by a person who is to be the subject of such an order. While the provisions of the Civil Procedure Act 2010 are important and should be given full effect, the provisions are of general application and cannot be allowed to override the more specific provisions of Part 4A of the Supreme Court Act or an individual’s substantive rights.[12]

   [11]As to which, see generally, P Dawson Nominees Pty Ltd v Multiplex Ltd & Anor (2007) 242 ALR 111, and on appeal Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd & Anor (2007) 164 FCR 275.

   [12]See Trevor Roller Shutter Service Pty Ltd v Crowe (2011) 31 VR 249. Cf s 24 of the Charter of Human Rights and Responsibilities.

1. That said, in the circumstances of the present case, it is not necessary to finally decide this point (whether or not the Court has the necessary power).  The causes of action alleged by the plaintiffs and group members[13] in these proceedings are not of the often seen kind that involve relatively small  (and sometimes fixed or easily ascertainable) sums of money claimed by a large group of people, none of whom could justify expending the necessary costs to litigate their claims in individual proceedings.[14]  Each of the plaintiffs and group members in the present proceedings has a claim against the defendants that they (the plaintiffs and group members) were negligently infected with the hepatitis C virus.  Without in any way wishing to downplay the significance of the causes of action alleged in other group proceedings of the kind to which I have referred, each of the hepatitis C cases covered by the present proceedings is, at least arguably, a substantial claim of significant importance to all of the parties involved in it.

   [13]Or more correctly, on behalf of group members.

   [14]See the first of the two purposes referred to by Finkelstein J in P Dawson Nominees Pty Ltd v Multiplex Ltd & Anor (2007) 242 ALR 111, 120[36].

1. While there may be arguments as to the wisdom of the plaintiff in the individual proceeding standing outside the group proceeding, and while there may be argument about whether it is in her interests to not accept or be a part of the current settlement proposal, notwithstanding my invocation to her counsel last Thursday, I see nothing in this case that would permit this Court, acting judicially, to compel the plaintiff in the individual proceeding to re-join the group and be bound by the result of any application to approve the compromise of the proposed settlement.

1. It follows that I will not revoke the order, previously made under s 33KA of the Act, that removed the plaintiff in the individual proceeding from the group; nor will I make any other order bringing the plaintiff in the individual proceeding back into the group.

1. However, I will stay, until the commencement of the trial of the group proceeding,[15] the operation of the pre-trial orders requiring the plaintiff in the group proceeding to serve material on the plaintiff in the individual proceeding.[16]  I will grant such a stay because I accept the argument made on behalf of the plaintiff in the group proceeding that staying the orders requiring the plaintiff in the group proceeding to serve material on the plaintiff in the individual proceeding has the capacity to facilitate a settlement of the group proceeding (perhaps on terms that the plaintiff in the group proceeding provide no assistance to the plaintiff in the individual proceeding).

   [15]After which time, it will be a matter for the trial judge.

   [16]Order 6 (so far as it relates to the plaintiff in the individual proceeding), and orders 11 an12 of the orders made on 4 April 2014 in the group proceeding.

1. Such a stay does not involve any injustice to the plaintiff in the individual proceeding.  The material currently in the hands of the plaintiff in the group proceeding is the work product of the solicitors acting on her behalf. The plaintiff in the individual proceeding has not paid for any of this.  While there may be good reason to require this material to be given to the plaintiff in the individual proceeding if the trial of the group proceeding goes ahead, there is no reason why the plaintiff in the group proceeding or her solicitors should not be permitted to make whatever use they see fit of their own material in an endeavour to settle the group proceeding (including, as I have said, on terms that might involve the plaintiff in the group proceeding and her solicitors not giving assistance to the plaintiff in the individual proceeding).  If the group proceeding does not settle then the relevant material may be given to the plaintiff in the individual proceeding once the trial of the group proceeding has commenced.

1. Subject to any further applications or submissions, both proceedings will otherwise remain fixed for trial commencing on Monday next, 28 April 2014.