Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd - [2006] HCA 41

HIGH COURT OF AUSTRALIA
GLEESON CJ
GUMMOW, KIRBY, HAYNE, CALLINAN, HEYDON AND CRENNAN JJ
Matter No S514/2005
CAMPBELLS CASH AND CARRY PTY LIMITED   APPELLANT
AND
FOSTIF PTY LIMITED   RESPONDENT
Matter No S515/2005
AUSTRALIAN LIQUOR MARKETERS PTY LIMITED        APPELLANT
AND
DALE LESLIE BERNEY              RESPONDENT
Matter No S516/2005
IGA DISTRIBUTION (VIC) PTY LIMITED  APPELLANT
AND
WHELAN & HAWKING PTY LIMITED  RESPONDENT
Matter No S517/2005
QUEENSLAND INDEPENDENT WHOLESALERS PTY LTD      APPELLANT
AND
SYDNEY RICHARD VEITCH MURRAY & ANOR   RESPONDENTS
Matter No S518/2005
IGA DISTRIBUTION (SA) PTY LIMITED      APPELLANT
AND
PAUL ASHLEY NEINDORF & ANOR  RESPONDENTS
Matter No S519/2005
COMPOSITE BUYERS PTY LIMITED   APPELLANT
AND
BARRY GEORGE WILLIAMSON & ANOR  RESPONDENTS
Matter No S520/2005
IGA DISTRIBUTION PTY LIMITED   APPELLANT
AND
JOANNE MARGARET GOW & ORS  RESPONDENTS
Campbells Cash and Carry Pty Limited v Fostif Pty Limited
Australian Liquor Marketers Pty Limited v Berney
IGA Distribution (Vic) Pty Limited v Whelan & Hawking Pty Limited
Queensland Independent Wholesalers Pty Ltd v Murray
IGA Distribution (SA) Pty Limited v Neindorf
Composite Buyers Pty Limited v Williamson
IGA Distribution Pty Limited v Gow
[2006] HCA 41
30 August 2006
S514/2005 to S520/2005
ORDER
In each matter:
1.Appeal allowed with costs.
2.Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales made on 31 March 2005 and in their place order that the appeal to that Court be dismissed with costs.

On appeal from the Supreme Court of New South Wales
Representation
A J Myers QC with H K Insall SC and A E Ryan for the appellants (instructed by Freehills)
S J Gageler SC with M J Leeming for the respondents (instructed by Robert Richards & Associates)
Interveners
H C Burmester QC with R A Pepper for the Attorney-General of the Commonwealth intervening in all matters (instructed by Australian Government Solicitor)
B W Walker SC with M C Walker seeking leave to intervene on behalf of IMF (Australia) Limited (instructed by McMahons National Lawyers)
K P Hanscombe SC with L W L Armstrong and K W Dawson seeking leave to be heard as amicus curiae for the Australian Consumers Association (instructed by Public Interest Advocacy Centre)
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS
Campbells Cash and Carry Pty Limited v Fostif Pty Limited
Practice – Representative proceedings – Supreme Court Rules 1970 (NSW), Pt 8 r 13 – Representative proceedings brought in each case by a licensed tobacco retailer to recover from its wholesaler licence fees paid from the beginning of the financial year commencing 1 July 1997 until the decision in Ha v State of New South Wales which declared the licensing scheme invalid and which licence fees were not paid to the taxing authorities – Proceedings financed by litigation funder – Proceedings intended to be conducted by litigation funder on behalf of those retailers who "opted-in".
Practice – Representative proceedings – Supreme Court Rules 1970 (NSW), Pt 8 r 13 – Whether provisions for representative proceedings in the Supreme Court Rules were validly engaged – "Same interest" – Common interest of fact or law – Whether there were, at the time the proceedings were commenced, numerous persons who had the same interest in the proceedings – Proceedings intended to be conducted on behalf of those retailers who subsequently "opted-in" – None had "opted-in" when proceedings commenced – Relationship between "same interest" and relief sought.
Practice – Representative proceedings – Stay of proceedings – Abuse of process – Public policy – Proceedings financed by litigation funder – Litigation funder sought out possible claimants – Retailer gave up to funder one-third of its claim – Whether the representative proceedings should be stayed as contrary to public policy or an abuse of process – Maintenance, Champerty and Barratry Abolition Act 1993 (NSW).
Practice – Discovery – Right to administer interrogatories in representative proceedings to identify others with the "same interest" in the proceedings.
Constitutional law (Cth) – Judicial power of Commonwealth – Abuse of process – Consistency of common law doctrine of abuse of process with judicial process.
Words and phrases – "abuse of process", "maintenance and champerty", "public policy", "representative proceedings", "same interest", "trafficking in litigation", "overriding purpose rule".
Maintenance, Champerty and Barratry Abolition Act 1993 (NSW).
Supreme Court Rules 1970 (NSW), Pt 1, r 3; Pt 8, r 13.

GLEESON CJ. The issues in these appeals, and the relevant facts, are set out in the reasons of Gummow, Hayne and Crennan JJ. I agree with what is said in those reasons concerning the issues of public policy and abuse of process. The Court of Appeal's decision, favourable to the respondents, on those issues has not been shown to be in error. The proceedings do not constitute an abuse of process, and there was no reason in public policy why they should have been stayed.
On the issue whether the provisions of the Supreme Court Rules 1970 (NSW), Pt 8 r 13(1), were validly engaged I would uphold the decision of the Court of Appeal. The decision of this Court in Carnie v Esanda Finance Corporation Ltd[1] appears to me to require that conclusion.
[1](1995) 182 CLR 398.
In order to explain why that is so, it is necessary to refer to some details of the litigation in Carnie, which, in certain respects, was a more difficult case for the plaintiffs than the present. The main problem is that the rule of court in question in Carnie, and in the present case, was based on a model taken from the nineteenth century, and was ill-adapted to the exigencies of modern commercial litigation funding. The rule is required to bear a weight for which it was not designed.
In Carnie, the persons on whose behalf the plaintiffs brought their representative action all had separate contracts with Esanda. There was, however, more to the problem than that. The contracts in question were variations of contracts of loan between Esanda, a finance company, and borrowers who were unable to comply with their original obligations, and required some relief. By the variation agreements, they were given an extended time to pay their debts. The plaintiffs originally sought a declaration that their variation agreement, and the variation agreements of other borrowers with whom Esanda had dealt in the same manner, were "null and void and of no effect"[2]. The reason for this was a failure to comply with certain provisions of the Credit Act 1984 (NSW) ("the Credit Act"). The plaintiffs brought the proceedings on behalf of themselves and all other persons who entered into variation agreements which did not comply with the relevant provisions of the Credit Act. The variation agreements, however, to the extent to which they relieved their original position, were beneficial to the borrowers[3]. There was a real doubt whether it was in the interests of the people the plaintiffs were claiming to represent to have their variation agreements declared null and void. The plaintiffs sought to overcome this problem by modifying their claim to relief, but, as will appear, they were unable to make the problem disappear. It resulted from the nature of the contracts of variation. The three reports of the case, when it was before the Court of Appeal, then this Court, then Young J[4], all reveal the difficulty the plaintiffs had in formulating a claim for relief that did not have the capacity to disadvantage at least some of the people said to be represented.
[2]Esanda Finance Corporation Ltd v Carnie (1992) 29 NSWLR 382 at 386.
[3](1992) 29 NSWLR 382 at 385-386.
[4]Carnie v Esanda Finance Corporation Ltd (1996) 38 NSWLR 465.
This Court held that the provisions of Pt 8 r 13 were engaged. It also held, however, that there was a serious question whether the proceedings ought to continue as representative proceedings (a question of discretion as distinct from jurisdiction), and the matter was remitted to the Supreme Court of New South Wales. As Brennan J said[5], the application of the provisions of the Credit Act relied on "could prove to be a pyrrhic victory for a debtor".
[5](1995) 182 CLR 398 at 410.
When the matter went back to the Supreme Court of New South Wales, Young J recorded that a "very worrying aspect of [the] case [was] the possibility that [some borrowers] may, as a result of the plaintiffs' activity, which appears to have been taken without any reference to them, be left with a liability to Esanda"[6]. Young J imposed requirements as to explanatory circulars to be sent out in connection with an opt-in procedure that was devised in the absence of any provision in the rule to cover the situation. Subsequently, the plaintiffs announced that they were unwilling to incur the expense involved in meeting those requirements, and Young J, by consent, ordered that the action should not go ahead as a representative action.
[6]Carnie v Esanda Finance CorporationLtd (1996) 38 NSWLR 465 at 474.
A concern existed, and was recognized at all stages in Carnie, as to whether the proceedings were in the interests of all the other borrowers whom the plaintiffs claimed to represent. Yet this Court held that the rule was engaged and, in particular, that "the represented debtors" and the plaintiffs had the "same interest" in the action[7]. What was described by Mason CJ, Deane and Dawson JJ as "the requisite commonality of interest"[8] was held to follow from the common question of law (whether the variation agreements complied with the requirements of the Credit Act) that affected the rights and obligations that existed between Esanda and each individual borrower. This conclusion was reached knowing that it was possible that some of the people whom the plaintiffs claimed to represent might be worse off if the action succeeded, and might not wish to be represented in the action. Hence the reservation of the discretionary issue, which turned out to be decisive. Yet, in Carnie, there was no other discretionary problem except such as arose from the potentially differing interests of some of "the represented debtors". If they all had the same interest in the broadest sense of that term, it is hard to see why there was any problem about allowing the proceedings to continue on a representative basis.
[7]The statement of claim said that the plaintiffs brought the proceedings on behalf of themselves and "the represented debtors" – see (1992) 29 NSWLR 382 at 385.
[8](1995) 182 CLR 398 at 405.
The inadequacy of the rule in making no prescription as to whether or not consent was required from borrowers who were represented, or as to procedures for opting in or opting out of the action, or as to notice to represented persons, or as to settlement or discontinuance of the proceedings, was treated by this Court as a matter affecting only the discretionary decision as to whether the proceedings should continue as discretionary proceedings, and not as affecting the initial engagement of the rule[9]. In the particular circumstances of that case, such inadequacy was a problem precisely because of the uncertainty about how some borrowers would be affected by the outcome of the action. From the point of view of the present plaintiffs, a notable feature of this Court's decision in Carnie is that the problem that was held to require the reservation and remitter of the discretionary issue was not regarded as standing in the way of a favourable decision on the jurisdictional issue. This Court held that the "same interest" existed, even though it appreciated that at least some of the borrowers, for good reason, might take a different view of where their basic interest lay. The decision to reserve and remit the discretionary issue highlights the decision on the jurisdictional issue.
[9]See, for example, (1995) 182 CLR 398 at 405 per Mason CJ, Deane and Dawson JJ.
On the question whether the rule is engaged, I am unable to distinguish Carnie. The statement of claim in Carnie asserted that the proceedings were brought by the plaintiffs on behalf of themselves and all other persons ("the represented debtors") who had entered into variation agreements which suffered from the same defects (in terms of compliance with the Credit Act) as did the plaintiffs' variation agreement. However, at the commencement of the action it was not known who those people were, or whether all (or any) of them would want to be represented in the action. The rule said nothing about obtaining their consent, or about procedures for opting in or opting out. This Court has left those difficulties to be worked out at the discretionary level of leave to proceed. In the present case the plaintiffs have sought to anticipate the problem. The summons contends that the proceedings are brought on behalf of themselves and all other persons ("the represented retailers") who paid the defendant supplier during the relevant period the invalid excise (licence fee) and have not recovered the fee from the defendant. The summons in that respect appears to have been drafted to follow the form adopted in Carnie. The summons then anticipates an opt-in procedure, and says that the claim for relief will be made on behalf of the plaintiffs and members of the class earlier described who decide to opt in.
In the present case, there are common questions of law and fact affecting the rights and obligations between wholesalers and retailers resulting from the invalidity of the excise. Those identified by Mason P in the Court of Appeal[10] as common issues of law include not only the general matter of the scope of the principle established by Roxborough v Rothmans of Pall Mall Australia Ltd[11] but also the significance to the cause of action upheld in that case of certain specific legislation[12] and the relevance of the intention of individual retailers in evaluating their restitutionary claims. Common issues of fact included the invoicing practices of the defendants.
[10]Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203.
[11](2001) 208 CLR 516.
[12]Business Franchise Licences (Tobacco) Act 1987 (NSW) s 41(3).
The relief sought in this case, unlike the relief sought in Carnie, does not appear to have the potential to harm the financial interests of any retailers. Of course, there may be other reasons why a retailer might prefer not to join in a lawsuit against a supplier. It is therefore, correct to say that participation in the proceedings, and any consequence for the rights of a retailer, is a matter of choice for the retailer. At the time of the commencement of the proceedings, it was not possible to identify any particular person who would opt in, and belong to the represented class. Yet in that respect, as it appears to me, the case is the same as Carnie.
Once it is accepted that the rule is engaged, and that the proceedings do not involve an abuse of process, then there is no independent ground for a conclusion that there should be an order, at least at this stage, that the matter should not proceed as a representative action. Mason P said:
"One traditional function of representative proceedings is the avoidance of multiplicity of actions ... In my view there would have been a costly procedural morass if thousands of separate actions had been commenced by the various retailers ... The matters already addressed in these reasons demonstrate to my satisfaction that it is in the interests of justice to permit them to proceed along the lines of the opt-in basis proposed. Naturally, this will not preclude application for severance with respect to particular issues that may have to be tried touching the rights of individual retailers."
There is no error in that approach.
There was an argument about the orders for discovery sought against the appellants, but to the extent that it raised issues going beyond abuse of process the argument was within a fairly narrow compass. Einstein J, at first instance, had found against the respondents on issues of jurisdiction and abuse of process. Mason P said:
"Einstein J declined to make the orders for discovery/ interrogatories because he had concluded that the representative proceedings had the fundamental flaws discussed above. His Honour nevertheless indicated that there was no objection in principle to such relief, even for the purpose of ascertaining the members of the class. He pointed out that discovery for the purpose of identifying parties is a remedy known to the law."
Mason P went on to conclude that, once the conclusion that the proceedings were fundamentally flawed was rejected, there was no sufficient discretionary reason to refuse discovery in limine. The discretionary decision of the Court of Appeal on this point discloses no error, and should stand.
These appeals were heard together with Mobil Oil Australia Pty Limited v Trendlen Pty Limited. In that case a constitutional argument was raised, and the appellants in these appeals adopted the argument and were given leave to amend their notices of appeal accordingly. It is convenient to deal with the point in these reasons.
The first two steps in the argument are uncontroversial. The first step is that the proceedings involve an exercise of federal jurisdiction. The underlying foundation of the claim made in the proceedings is that the amounts sought to be recovered were duties of excise rendered invalid by s 90 of the Constitution. The second step is that federal jurisdiction can be exercised only in respect of a matter.
The third, and controversial step, is that there is no matter in relation to which federal jurisdiction may be exercised. Rather, it is said, there is a litigation funder seeking, for its own profit, to manufacture controversies between as yet unidentified retailers and their suppliers. In this context, "matter" does not mean a legal proceeding. For there to be a matter there must be "some immediate right, duty or liability to be established by the determination of the Court"[13]. It is not necessary that there be a conscious disagreement between individuals. Representative proceedings, even of the most traditional kind, commonly involve circumstances in which some, perhaps many, group members are not aware of the proceedings. This point was made in Mobil Oil Australia Pty Limited v Victoria[14]. Furthermore, as the Attorney-General of the Commonwealth, intervening, pointed out, it is not unusual for judicial power to be exercised in relation to controversies generated by one person on behalf of another, such as a case where a person under a disability makes a claim through a tutor, next friend or guardian.
[13]In re Judiciary and Navigation Acts (1921) 29 CLR 257 at 265.
[14](2002) 211 CLR 1 at 27 [22].
Because a matter is distinct from legal proceedings, it is "identifiable independently of the proceedings which are brought for its determination"[15]. The rights and liabilities as between retailers and their suppliers in consequence of the imposition of charges on account of an excise later held to be constitutionally invalid are the subject of an actual dispute between some retailers and some suppliers, and of a potential dispute between others. Even if the intervention of a litigation funder, seeking to promote an assertion by more retailers of their rights, be regarded as some form of intermeddling, there is no justification for denying the existence of a matter.
[15]Fencott v Muller (1983) 152 CLR 570 at 603.
An alternative submission, also based on the assumption that what is involved is an exercise of federal jurisdiction, is that the common law doctrine of abuse of process is an inadequate rubric under which to consider the objections that can be taken to this kind of litigation, and that the proceedings offend normative implications to be derived from the structure of Ch III of the Constitution.

In Chu Kheng Lim v Minister for Immigration[16], Brennan, Deane and Dawson JJ identified as a limitation on the exercise of judicial power the requirement of consistency "with the essential character of a court or with the nature of judicial power". For the reasons given by Gummow, Hayne and Crennan JJ in their discussion of the abuse of process argument, with which I agree, there is no inconsistency with the essential character of a court or with the nature of judicial power involved in the exercise of federal jurisdiction invoked in the present case.
[16](1992) 176 CLR 1 at 27.
The appeals should be dismissed with costs.
GUMMOW, HAYNE AND CRENNAN JJ. In 1997, each of the appellants carried on business selling tobacco products by wholesale to supermarkets and other retailers. Together, the appellants had about 21,000 customers. As wholesalers of tobacco products the appellants paid licence fees pursuant to the Business Franchise Licences (Tobacco) Act 1987 (NSW) and equivalent legislation of other States and the Australian Capital Territory. Those licence fees were payable monthly and were calculated as a nominal sum plus a prescribed percentage of the value of tobacco sold in a period preceding the licence period.
On 5 August 1997 this Court held, in Ha v New South Wales[17], that the licence fees were duties of excise within s 90 of the Constitution, and hence were invalid. Subsequently, in Roxborough v Rothmans of Pall Mall Australia Ltd[18], this Court held that retailers, who had bought tobacco products from a licensed wholesaler on terms that the "invoiced cost" comprised the wholesale price of the products and a further amount representing the licence fee, could recover from the wholesaler, as money had and received, the amount paid for the licence fee and which the wholesaler had not remitted to the taxing authority by the date of the decision in Ha. The Court further held, in Roxborough, that the action for money had and received is not defeated simply because the plaintiff had recouped the outgoing from others (as the appellants in Roxborough had when they sold the goods to customers at a price which covered the amount they sought to recover from the wholesaler).
[17](1997) 189 CLR 465.
[18](2001) 208 CLR 516.
Mr Adrian Firmstone is the sole director of Firmstones Pty Ltd ("Firmstones"), a company which trades as "Firmstone & Feil, Consultants". Mr Firmstone said Firmstones provided "advice and assistance in relation to indirect tax matters, including with respect to the recovery for tobacco retailers of amounts referable to state tobacco licence fees paid by tobacco retailers to tobacco wholesalers". During 2002, Firmstones sought to encourage tobacco retailers to claim from wholesalers a refund of tobacco licence fees which the retailers had paid but the wholesalers had not remitted to the relevant taxing authority.
From March 2002, Firmstones wrote to tobacco retailers asking for authority to act on the retailers' behalf in recovering these amounts. The letters took various forms but all said that Firmstones' "success fee" was 33¹/₃ per cent of any money received by the retailer from the tobacco wholesaler. If costs were awarded to the retailer, Firmstones would retain the sum awarded; if costs were awarded against the retailer, Firmstones would bear those costs. Reference was made in the letters to another company (GST Partners Pty Ltd or, later, Horwath GST Pty Ltd) being responsible for "the administration of this project", but it is not necessary to examine what that other company did, or how the fees received by Firmstones were to be divided between Firmstones and the other company.
In about the middle of September 2002, Firmstones retained a solicitor, Robert Richards & Associates, to act in what Mr Firmstone described to the sole principal of that firm, Mr Richards, as "[o]ur tobacco licence fee recovery project". Mr Richards was to be "the project's solicitor".
During 2002 and the first half of 2003, a number of claims were made and settled, but Firmstones believed that there were many retailers who had not considered making a claim. Firmstones formed the view that the limitation period for retailers to make claims against wholesalers expired at the end of June 2003[19].
[19]Limitation Act 1969 (NSW), s 14(1)(a).
The proceedings
On 30 June 2003, Firmstones caused Mr Richards to issue a number of summonses in the Commercial List of the Equity Division of the Supreme Court of New South Wales. Among them were summonses instituting the seven proceedings which give rise to the present appeals. It is not necessary to consider the other proceedings. For all practical purposes, the summonses issued in the seven matters which give rise to the present appeals were identical. It is convenient to take the proceedings between Fostif Pty Limited ("Fostif") as plaintiff, and Campbells Cash and Carry Pty Limited ("Campbells") as defendant, as typical of the others. The steps which have been taken in those proceedings have been taken in the others.
The Fostif proceedings were commenced as representative proceedings pursuant to Pt 8 r 13 of the Supreme Court Rules 1970 (NSW) ("the 1970 Rules")[20]. The plaintiff's contentions, recorded in the summons, alleged that the plaintiff "brings these proceedings on behalf of themselves and all other persons (the 'represented retailers')" who:
[20]Representation of concurrent interests is now dealt with in Div 2 of Pt 7 of the Uniform Civil Procedure Rules 2005 (NSW).
"(a)during the whole or some part of the Relevant Period:
(i)were retailers of tobacco products carrying on business in one or more of New South Wales, Queensland, Victoria, South Australia, Australian Capital Territory and Tasmania;
(ii)purchased tobacco products sold to them by the defendant;
(iii)paid to the defendant the amount of the licence fee referable to the sales in (ii) as separately identifiable and severable parts of the consideration payable in respect of each sale;
(b)have not recovered from the defendant an amount or amounts referable to the licence fees paid to the defendant as referred to in (a)(iii) or otherwise released or agreed to release the defendant from any liability or alleged liability to make payment to them of the amount in (a)(iii)."
No person was named in the summons as a "represented retailer". Rather, the summons provided for what it described as "opt‑in" procedures by which persons might later consent to becoming a plaintiff. This procedure was described in the summons in the following terms:
"1.The plaintiff claims the relief set out in this Summons on behalf of themselves and the class of unnamed persons referred to in paragraph 2 of the plaintiff's contentions below whom the plaintiff represents in the proceedings pursuant to the Supreme Court Rules 1970, Part 8, rule 13. By reason of the 'opt-in' procedures referred to below, at the time of judgment there will be no unnamed person in respect of whom judgment is sought. Once a member of the class of represented retailers has signed and returned an 'opt-in' notice to the plaintiff's solicitor that person will become a named plaintiff in the proceedings entitled to judgment in his, her or its favour.
2.The plaintiff proposes to give the unnamed members of the class whom the plaintiff represents an opportunity to decide whether they wish to be involved in the proceedings by the sending of an 'opt-in' notice to these persons. The members of the class will be required to sign and return the 'opt-in' notice to the solicitors for the plaintiff in order for these persons to become involved as plaintiff in the proceedings. Receipt by the plaintiff's solicitor of a signed 'opt-in' notice will establish that the represented retailer has consented to becoming a plaintiff."
Because the plaintiff and its solicitors were said to know the names and addresses of "some but not all [of] the unnamed members of the class whom the plaintiff represents" it was said that "it will be necessary for the defendant, who possesses this information, to discover it in the proceedings". The plaintiff said, in its summons, that it would "seek orders for such discovery from the Court at the earliest opportunity".
The applications at first instance
As foreshadowed in the summons, the plaintiff applied for orders that the defendant give discovery of documents and discovery by answering interrogatories revealing the names and addresses of "represented retailers" with whom the defendant had dealt between 1 July 1997 and 5 August 1997. The plaintiff further sought directions that, within 28 days of the defendant giving discovery, the plaintiff should send to each represented retailer an opt‑in notice and accompanying letter. Both the draft notice, and the letter which it was proposed should be sent with it, recorded that Firmstones would receive 33¹/₃ per cent of any amounts recovered, together with any amount awarded to the plaintiff as costs. The draft opt‑in notice gave Firmstones authority to act on behalf of the retailer concerned in relation (among other things) to the conduct of, and the giving of instructions in, the proceedings, and "entering into settlement agreement(s) with the defendant(s) (provided the amount is not less than 75% of the principal amount claimed from the defendant(s))".
In response to these applications by the plaintiff, the defendant gave notice of motion for orders that the proceedings be dismissed or stayed as an abuse of process, or that the proceedings be struck out in so far as they purported to be representative proceedings, or alternatively not continue as representative proceedings.
On 11 September 2003, Einstein J published[21] reasons for decision concluding that there was "insufficient commonality of interest demonstrated presently to permit of a finding that it is appropriate for the proceedings to be permitted to go forward as representative proceedings". That conclusion was expressed as founding an order, pursuant to Pt 8 r 13(1), that the proceedings not continue as representative proceedings rather than as a conclusion about whether the rule had been validly engaged at the time the proceedings were commenced. Several distinct reasons were given for the conclusion that the Court should order that the proceedings not continue as representative proceedings. In particular, Einstein J concluded that: (a) the "litigation funding arrangements proposed by the opt‑in procedure are against public policy as well as comprising an abuse of the court process"; (b) the persons whom the plaintiff proposed to represent "cannot be said to have the 'same interest' in the proceedings"; and (c) contrary to the so‑called "overriding purpose rule"[22], to permit the proceedings to go forward as representative proceedings, "far from facilitating the just, quick and cheap resolution of the real issues, would give rise to a procedural morass likely ultimately to be able to be resolved only by a disaggregation of the representative proceedings into separate proceedings". The parties were given leave to address further submissions about the orders that should be made.
[21]Keelhall Pty Ltd t/as "Foodtown Dalmeny" v IGA Distribution Pty Ltd (2003) 54 ATR 75.
[22]Supreme Court Rules 1970 (NSW), Pt 1 r 3, sub‑rr (1) and (2) of which provided:
"(1) The overriding purpose of these rules, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in such proceedings.
(2) The Court must seek to give effect to the overriding purpose when it exercises any power given to it by the rules or when interpreting any rule."
Evidence tendered on the hearing of the applications with which the reasons for decision dealt had revealed that Firmstones had, by that time, already been retained by about 2,100 persons or entities who, so it was asserted, fell within the class of represented retailers described in the summonses that had been issued. After the reasons for decision were published, the plaintiff applied for orders that those who had already been retained by Firmstones should be given leave to elect to be joined as plaintiffs in the proceedings by filing a written consent to joinder.
On 7 November 2003, having considered the further application made by the plaintiff, Einstein J made orders[23] in the Fostif proceedings (and in the other proceedings) that they not continue as representative proceedings, that the plaintiff's applications for discovery and directions for the giving of opt‑in notices be dismissed, and that the application to permit the joinder of additional plaintiffs also be dismissed.
[23]Ekaton Corporation Pty Ltd v Shahin Enterprises Pty Ltd [2003] NSWSC 1018.
Fostif (and the plaintiffs in each of the six other proceedings which give rise to the present appeals) appealed to the Court of Appeal (by leave of that Court) against the orders made by Einstein J. The Court of Appeal (Mason P, Sheller and Hodgson JJA) allowed[24] the appeals, set aside the orders of Einstein J and ordered that the proceedings continue as representative proceedings.
[24]Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203.
By special leave, the respondents in the Court of Appeal appeal to this Court.
The issues in this Court
The issues that arise in the appeal to this Court can be identified as being:
(a)whether the provisions for representative proceedings made by the 1970 Rules were validly engaged;
(b)if those Rules were validly engaged, whether the proceedings nonetheless should have been stayed as being contrary to public policy or as an abuse of process; and
(c)if those Rules were validly engaged, and if the proceedings were not to be stayed, was Einstein J right to order that the proceedings not continue as representative proceedings?
The parties' arguments in this Court were principally directed to the questions about public policy and abuse of process said to arise from the arrangements Firmstones had made, and proposed to make, with "represented retailers". It is convenient to deal first, however, with the issue about the representative character of the proceedings (again by reference to the Fostif proceedings) and to begin by examining the relevant rules of court.
In the submissions, the parties tended to speak of "class actions" as if there were a single, distinct kind of proceedings available by that name. However, the rules governing representative or group proceedings vary greatly from court to court. Two things of present significance follow from this. The first is that close attention must be given to the particular Rules of the Supreme Court upon which this litigation turns. The second is that the outcome of the present proceedings with respect to those Rules is not to be taken necessarily as indicating that there would have been the same outcome in proceedings under the rules of other courts.
The 1970 Rules, Pt 8 r 13
At the time the proceedings were instituted, Pt 8 r 13 of the 1970 Rules provided:
"Representation: concurrent interests
13       (1)      Where numerous persons have the same interest in any proceedings the proceedings 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.
(2)      At any stage of proceedings pursuant to this rule the Court, on the application of the plaintiff, may appoint any one or more of the defendants or other persons (as representing whom the defendants are sued) to represent all, or all except one or more, of those persons in the proceedings.
(3)      Where, under subrule (2), the Court appoints a person who is not a defendant, the Court shall make an order under rule 8 adding him as a defendant.
(4)      A judgment entered or order made in proceedings pursuant to this rule shall be binding on all the persons as representing whom the plaintiffs sue or, as the case may be, the defendants are sued but shall not be enforced against any person not a party to the proceedings except with the leave of the Court.
(5)      An application for leave under subrule (4) shall be made by motion, notice of which shall be served personally on the person against whom it is sought to enforce the judgment or order.
(6)      Notwithstanding that a judgment or order to which an application under subrule (5) relates is binding on the person against whom the application is made, that person may dispute liability to have the judgment or order enforced against him on the ground that by reason of facts and matters particular to his case he is entitled to be exempted from the liability.
(7)      This rule does not apply to proceedings concerning:
(a)the administration of the estate of a deceased person; or
(b)property subject to a trust."
Representative proceedings
The form of Pt 8 r 13 of the 1970 Rules can be traced through O 16 r 9 of the English Rules of the Supreme Court 1883, via r 10 of the Rules of Procedure set out in the schedule to the Supreme Court of Judicature Act 1873 (UK), to the former Chancery practice[25]. The former Chancery practice with respect to representative proceedings was considered by this Court in Wong v Silkfield Pty Ltd[26].
[25]Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1 at 29‑30 [33]‑[34].
[26](1999) 199 CLR 255 at 261‑263 [13]‑[17] per Gleeson CJ, McHugh, Gummow, Kirby and Callinan JJ.
The former Chancery practice was governed by two principles. The first was that all persons materially interested in the subject‑matter of the suit ought generally to be made parties so as to settle the controversy by binding to the final decree those interested. The second principle was that, in observing the first, care was required to avoid embracing in the proceedings parties with an insufficient interest and thereby risking a demurrer on the ground of multifariousness.
These questions of parties were determined "upon considerations of convenience with regard to the circumstances of each particular case"[27].
[27]Coates v Legard (1874) LR 19 Eq Cas 56 at 59 per Sir George Jessel MR. See also Templeton v Leviathan Proprietary Ltd (1921) 30 CLR 34 at 76 per Starke J; Cockburn v Thompson (1809) 16 Ves Jun 321 at 325‑326 [33 ER 1005 at 1007]; Willats v Busby (1842) 5 Beav 193 [49 ER 551].
In 1901, Lord Macnaghten said[28] that "[t]he old rule in the Court of Chancery was very simple and perfectly well understood ... Given a common interest and a common grievance, a representative suit was in order if the relief sought was in its nature beneficial to all whom the plaintiff proposed to represent." Part 8 r 13 of the 1970 Rules, like other rules derived from O 16 of the 1883 English Rules, referred to "numerous persons [having] the same interest in any proceedings". It is not to be supposed that referring to "the same interest" was intended to give the rule a narrower operation than the former Chancery practice when that practice was described by reference to "common interest". Rules like Pt 8 r 13, and the former Chancery practice, were intended to facilitate the administration of justice[29] and neither the Rules nor the former practice was to be restricted "to cases for which an exact precedent can be found in the reports"[30]. The principle on which rules of this kind were based was said[31], in 1901, to be "as applicable to new cases as to old, and ought to be applied to the exigencies of modern life as occasion requires".
[28]Duke of Bedford v Ellis [1901] AC 1 at 8.
[29]Carnie v Esanda Finance Corporation Ltd (1995) 182 CLR 398 at 404 per Mason CJ, Deane and Dawson JJ.
[30]Taff Vale Railway v Amalgamated Society of Railway Servants [1901] AC 426 at 443 per Lord Lindley.
[31]Taff Vale [1901] AC 426 at 443 per Lord Lindley.

Even so, in 1910, the English Court of Appeal held[32] that the rule could not be engaged where plaintiffs sued for damages for breach of separate and individual contracts. But such a narrow approach to Pt 8 r 13 of the 1970 Rules was rejected by this Court in Carnie v Esanda Finance Corporation Ltd[33]. The Court held in Carnie that persons having separate causes of action in contract or tort may have "the same interest" in proceedings for the purposes of Pt 8 r 13(1). The fact that the claims arose under separate contracts was held not sufficient of itself to defeat the rule's requirement that numerous persons have the same interest in the proceedings.
[32]Markt & Co Limited v Knight Steamship Company Limited [1910] 2 KB 1021.
[33](1995) 182 CLR 398.
It is to be noted that Pt 8 r 13 of the 1970 Rules contained few provisions equivalent to those found in the more elaborate regulation of representative proceedings provided by Pt IVA (ss 33A‑33ZJ) of the Federal Court of Australia Act 1976 (Cth). In particular, there are no provisions of the 1970 Rules that are immediately equivalent to the provisions of s 33C(1)(a) (requiring that seven or more persons have claims against the same person for the procedures of Pt IVA to be engaged), s 33J (providing for group members to opt out of representative proceedings), s 33T (empowering the Court to substitute another group member for a representative party not able adequately to represent the interests of the group) or s 33V (in so far as it requires the approval of the Court for settlement or discontinuance of the proceedings).
The absence of more elaborate provisions of the kind made by Pt IVA was held, in Carnie, to be no reason to give Pt 8 r 13 of the 1970 Rules a narrow construction or a narrow operation. As Mason CJ, Deane and Dawson JJ said[34]:
"Much as one might prefer to have a detailed legislative prescription by statute or rule of court regulating the incidents of representative action, r 13 makes provision for an action to proceed as a representative action in a context in which there is no such legislative prescription. The absence of such a prescription does not enable a court to refuse to give effect to the provisions of the rule. Nor, more importantly, does the absence of such prescription provide a sufficient reason for narrowing the scope of the operation of the rule, as the Court of Appeal did^[[35]^], without giving effect to the purpose of the rule in facilitating the administration of justice."
Nevertheless, accepting these general propositions, the question which the present rule presents is, as Toohey and Gaudron JJ pointed out in Carnie[36]:
"Do numerous persons have the same interest in the action which the [plaintiff has] commenced? If they do not then that is the end of the matter. If they do, then the action is properly begun and, unless the Court otherwise orders, it may be continued."
[34](1995) 182 CLR 398 at 404.
[35]Esanda Finance Corporation Ltd v Carnie (1992) 29 NSWLR 382.
[36](1995) 182 CLR 398 at 421.
Numerous persons having the same interest?
In this Court and in the courts below, those who are appellants in this Court (the defendants to the original proceedings) submitted that there were not numerous persons who had the same interest in the proceedings which had been commenced. This submission was put in a number of ways. The appellants emphasised what they submitted was the circular nature of the definition of represented retailers, in effect, as those entitled to judgment against the appellants. This manner of identifying those who were, or were to be, represented was said to reveal that there was no substantial issue of fact or law between the persons thus identified and the appellants that was common to the represented parties. The appellants submitted that the law being settled in Roxborough, all that would be in issue was an examination of the separate contracts which each retailer had made with the appellant concerned.
As noted earlier, the bare fact that the claims made by those who are represented by the named plaintiff in a representative action arise out of separate contracts does not necessarily deny the existence of a common interest between the represented parties and the defendant. In this case, a common issue of fact and law could be found to exist in deciding which particular transactions undertaken by the parties fell within the principles decided in Roxborough. The appellants' submissions assumed that that inquiry would be very simple. That may or may not be so, but even if it is, the fact that an issue may be simply resolved does not deny its existence, and does not demonstrate that it is not an issue common to a number of claims arising out of separate contracts.
In the course of oral argument, however, a more deep‑seated question emerged concerning the application of Pt 8 r 13(1) to the present proceedings. The authority given by Pt 8 r 13(1) to commence representative proceedings depended upon there being, at the time the proceedings were commenced, "numerous persons [having] the same interest" in the proceedings. So much follows from the opening clause of the rule: "[w]here numerous persons have the same interest in any proceedings the proceedings may be commenced". The procedure contemplated in these proceedings was that those who wished to take the benefit of the proceedings must "opt‑in". None had done so when the proceedings commenced. Were there, at the time these proceedings were commenced, numerous persons who had the same interest in the proceedings?
The summons by which the proceedings were commenced first identified the persons on whose behalf the plaintiff brought the proceedings as "themselves and all other persons" who fell within the description given in the summons of "represented retailers". That description, the text of which is set out earlier in these reasons, identified "represented retailers", in effect, as any person who could make a claim against the defendant like the claim made in Roxborough and who had not released the claim or been paid. But the summons went on to describe an "opt‑in" procedure which, if followed, would bring about the result that "at the time of judgment there will be no unnamed person in respect of whom judgment is sought". Read as a whole, it is apparent that the summons sought to institute proceedings the result of which would bind only those from within the class of represented retailers who actively chose to be bound.
That some (even all) of those whom it is alleged have the same interest as the named plaintiff know nothing of proceedings that are instituted on their behalf would not, standing alone, deny that numerous persons have the same interest in the proceedings[37]. Such ignorance (if it persisted) might later be said to be relevant to whether the action should be continued as representative proceedings, but that is beside the present point which looks to the institution of the proceedings, not their continuation.
[37]Wilson v Church (1878) 9 Ch D 552; Fraser v Cooper, Hall & Co (1882) 21 Ch D 718.
Accepting then that the rule did not require the separate identification of, and consent from, those who were said to constitute the "numerous persons", was there, nonetheless, a class of persons sufficiently identified that together could be seen to be "numerous persons [having] the same interest" in the proceedings? That question is not to be asked or answered in the abstract. It is a question that must be asked and answered with respect to the particular proceedings.
In the present cases, that requires consideration of the whole of the summons issued in each matter. Not least is that necessary because questions about the engagement of Pt 8 r 13 must be considered having regard to the purposes of the rule. A central objective of the representative procedures for which Pt 8 r 13 provided was the avoidance of multiplicity of proceedings and the efficient determination, once and for all, of controversies in which parties have the same interest. An important indication of the nature of the interest that numerous persons must have in proceedings instituted under Pt 8 r 13 was given by Pt 8 r 13(4). A judgment entered or order made in the proceedings "shall be binding on all the persons as representing whom the plaintiffs sue". What the rules were intended to achieve was a single judicial determination of common issues in a way that binds those who were interested in those issues. Whether the present matters fell within Pt 8 r 13(1) must be considered having regard to what the summons said about parties, what issues were raised in the proceedings, and what relief was sought in the proceedings.
The summons issued in the Fostif matter contained a prayer for relief claiming "[j]udgment against the defendant in favour of the plaintiff together with interest pursuant to section 94 of the Supreme Court Act (NSW)", "further or other orders", and costs. The nature or form of judgment sought was not further specified in the prayer for relief but it was apparent, from other parts of the summons (particularly the statement of the nature of the dispute and the statement of the plaintiff's contentions), that Fostif claimed judgment for a money sum, and that any who later chose to opt‑in to the proceedings would make like claims. The amount of Fostif's claim was set out in a schedule to the summons. But when instituted, the proceedings made no other claim.
At the time the summons was issued there were persons, other than Fostif, whom it could be said would be "affected" by a decision of the claim made by Fostif against Campbells. The most obvious persons "affected" were any other persons who had bought tobacco products from Campbells by transactions relevantly identical to the transactions identified as having been made between Fostif and Campbells. But when the proceedings were instituted, Fostif made no claim on behalf of any of those other purchasers. Their participation in the proceedings, and any consequence for their rights, depended upon them choosing to join the proceedings. Deciding Fostif's claim would decide no issue between any of those other purchasers and Campbells unless or until those others chose to participate in the proceedings. The only effect that the decision of Fostif's claim would have would be its precedential value.
At the time the summons was issued to commence the Fostif proceedings, there were no persons, other than Fostif, who had an interest in the proceedings which were instituted, as distinct from an interest in knowing which way the issues raised in those proceedings were decided. No other person had an interest in those proceedings because no order made or judgment given in the proceedings would bind that other person. No grant of declaratory relief was sought to resolve or determine any question[38] common to the "numerous persons" alleged to have "the same interest in the proceedings". The summons is thus to be distinguished from the statement of claim in Carnie, where the plaintiffs claimed declarations for the common benefit of "the represented debtors"[39]. No doubt it was hoped that the procedures for "opting‑in", which the summonses contemplated would be followed after the proceedings had been instituted, would lead to there being numerous persons with the same interest, but that was a hope or expectation about future events.
[38]Wong v Silkfield Pty Ltd (1999) 199 CLR 255 at 267 [27].
[39]Esanda Finance Corp v Carnie (1992) 29 NSWLR 382 at 386.
It may readily be accepted that, when the proceedings in Carnie were issued, it may have been difficult to list all of the persons whom the plaintiffs represented. And some who met the relevant criteria may later have sought exclusion from representation. In that sense, one could not say at the time the proceedings in Carnie were issued who the plaintiffs represented. But it was clear that there were numerous persons who were represented. By contrast, in the Fostif proceedings, where it was sought to represent only those from within the class of represented retailers who actively chose to be bound, it could not be said that there was any person, let alone numerous persons, whom the plaintiff would represent.
The requirements of Pt 8 r 13(1) of the 1970 Rules were not met in the present matters. Neither when the proceedings were instituted, nor when Einstein J made his orders, were there numerous persons having the same interest in the proceedings that were commenced. The only persons who then had an interest in the proceedings were the named plaintiffs. That would be reason enough to conclude that the Court of Appeal erred in ordering that the proceedings should continue as representative proceedings. It is as well, however, to go on to consider the larger questions of public policy and abuse of process which were agitated.
Public policy and abuse of process in the courts below
As noted earlier, Einstein J held that the litigation funding arrangements, that had already been made and were proposed to be made by Firmstones, were "against public policy as well as comprising an abuse of the court process". It may be doubted, however, that any clear distinction was drawn at first instance between the principles that were to be applied under those two headings. At the least they were understood as being closely interconnected.
Campbells (and the defendants in the other proceedings) had relied in their notice of motion upon Pt 13 r 5 and Pt 15 r 26 of the 1970 Rules for their application that the proceedings be dismissed as an abuse of the process of the Court. The relationship between the 1970 Rules and the inherent power of the Supreme Court with respect to abuse of its process was considered in Batistatos v Roads and Traffic Authority (NSW) by Gleeson CJ, Gummow, Hayne and Crennan JJ[40]. No point respecting that relationship was taken by the parties in the present appeals. It appears also to have been assumed that what was engaged here by the reliance upon public policy was that category of abuse concerned with invocation of the procedures of the Court for an illegitimate purpose[41].
[40](2006) 80 ALJR 1100 at 1108‑1110 [19]‑[26]; 227 ALR 425 at 431‑433.
[41]Batistatos v Roads and Traffic Authority (NSW) (2006) ALJR 1100 at 1108 [15]; 227 ALR 425 at 430.
The Court of Appeal concluded that neither the role occupied by Firmstones in connection with the litigation, nor the particular funding arrangements that were made and proposed to be made, justified the staying of the proceedings. The Court concluded that whether proceedings funded by a litigation funder are an abuse of process depends on whether the role of that funder "has corrupted or is likely to corrupt the processes of the court to a degree that attracts the extraordinary jurisdiction to dismiss or stay permanently for abuse of process"[42]. In the present matters, the Court of Appeal identified several facts as requiring the conclusion that there was no abuse of process. First, the proceedings were under judicial supervision[43]; second, Firmstones' control of the litigation was "not excessive"[44]; third, Firmstones' fees were not excessive[45]; fourth, there was a solicitor on the record[46]; and fifth, the individual claims were small (making separate recovery processes unlikely[47]).
[42](2005) 63 NSWLR 203 at 234 [132].
[43](2005) 63 NSWLR 203 at 235 [136].
[44](2005) 63 NSWLR 203 at 235 [137].
[45](2005) 63 NSWLR 203 at 236 [144].
[46](2005) 63 NSWLR 203 at 235 [136].
[47](2005) 63 NSWLR 203 at 237 [149].
At first instance, Einstein J had characterised[48] Firmstones' activities as "trafficking in the retailers' litigation", and made[49] a number of more specific criticisms of the relationships that existed between Firmstones, the retailers and the solicitor engaged by Firmstones to act in "the project". Particular emphasis was given to statements made in correspondence between Firmstones and the solicitor to the effect that the solicitor was engaged by Firmstones as principal, not as agent for the retailers, and that Firmstones would "liaise with [its] clients, [the solicitor] will not directly liaise with [Firmstones'] clients".
[48]Keelhall Pty Ltd t/as "Foodtown Dalmeny" v IGA Distribution Pty Ltd (2003) 54 ATR 75 at 100 [60].
[49](2003) 54 ATR 75 at 101 [64].
In the Court of Appeal, Mason P, who gave the principal reasons of the Court, rejected[50] the criticisms made of the relationship between the solicitor and the retailers, concluding that the solicitor had adopted the normal role as a solicitor on the record in the litigation. Questions of public policy were treated[51] as having turned at first instance on whether the funding arrangements were champertous. Mason P said[52] that the policy of the law had changed: "[t]he law now looks favourably on funding arrangements that offer access to justice so long as any tendency to abuse of process is controlled". Mason P concluded[53] that the present litigation should be regarded as falling within the principle that "[p]ublic policy now recognises that it is desirable, in order to facilitate access to justice, that third parties should provide assistance designed to ensure that those who are involved in litigation have the benefit of legal representation"[54].
[50](2005) 63 NSWLR 203 at 223‑224 [86].
[51](2005) 63 NSWLR 203 at 227 [105].
[52](2005) 63 NSWLR 203 at 227 [105].
[53](2005) 63 NSWLR 203 at 227 [105].
[54]Gulf Azov Shipping Co Ltd v Idisi [2004] EWCA Civ 292 at [54] per Lord Phillips MR.
The Maintenance, Champerty and Barratry Abolition Act 1993 (NSW)
Examination of questions of public policy must begin from consideration of the Maintenance, Champerty and Barratry Abolition Act 1993 (NSW) ("the Abolition Act"). By the Abolition Act the offence of maintenance, including champerty that, but for s 3 of the Act, would be punishable by the common law, was abolished. Section 4 of the Abolition Act provided that "[a]n action in tort no longer lies on account of conduct known as maintenance (including champerty)". Sections 3 and 4 indicated that the principles respecting maintenance and champerty were expressed both in the criminal law and the law of tort. But s 6 of the Abolition Act assumed that when the statute was enacted there may have been a more broadly based rule in the Australian common law. Section 6 provided that:
"This Act does not affect any rule of law as to the cases in which a contract is to be treated as contrary to public policy or as otherwise illegal, whether the contract was made before, or is made after, the commencement of this Act."
It is evident from s 6 of the Abolition Act that questions of maintenance and champerty are not to be regarded as always legally irrelevant. Section 6 assumes that considerations of public policy and illegality can still arise in connection with contracts providing for or dealing with maintenance or champerty. The Abolition Act, however, does not state explicitly whether questions of maintenance or champerty are relevant to issues of abuse of process. Nor does it deal directly with what scope is to be given to public policy or doctrines of illegality when the conduct in question is no longer to be characterised as criminal or tortious. To consider what scope might be given to public policy and illegality in this context, it is necessary to look more closely at some aspects of the development of the law of maintenance and champerty.
Some aspects of the development of the law of maintenance and champerty
The law of maintenance and champerty has been traced to the Statute of Westminster the First (3 Edw I c 25) of 1275[55]. Some[56] trace it back to Greek law and Roman law. Be this as it may, Coke identified maintenance as an offence at common law[57] and champerty was a particular species of maintenance[58]. Although traditionally identified as a common law offence, several early statutes are understood as affirming or declaring that common law[59].
[55]Dennis, "The Law of Maintenance and Champerty", (1890) 6 Law Quarterly Review 169 at 171. But see Winfield, "The History of Maintenance and Champerty", (1919) 35 Law Quarterly Review 50; Co Litt 368 b.
[56]Elliott Associates LP v Banco de La Nacion 194 F 3d 363 at 372 (1999); Cohen and Schwartz, "Champerty and Claims Trading", (2003) 11 American Bankruptcy Institute Law Review 197 at 197.
[57]2 Coke's Institutes 208.
[58]Stephen defined the two terms in A Digest of the Criminal Law (Crimes and Punishments), (1877) at 86 as:
"Maintenance is the act of assisting the plaintiff in any legal proceeding in which the person giving the assistance has no valuable interest, or in which he acts from any improper motive.
Champerty is maintenance in which the motive of the maintainor is an agreement that if the proceeding in which the maintenance takes place succeeds, the subject matter of the suit shall be divided between the plaintiff and the maintainor."
[59]The statutes, ranging from 3 Edw I c 25 to 32 Hen VIII c 9 are collected in Lord Phillimore's speech in Neville v London "Express" Newspaper Ltd [1919] AC 368 at 426.

By the 19th century, the law of maintenance was understood by Lord Abinger CB[60] as:
"confined to cases where a man improperly, and for the purpose of stirring up litigation and strife, encourages others either to bring actions, or to make defences which they have no right to make ... [By contrast], if a man were to see a poor person in the street oppressed and abused, and without the means of obtaining redress, and furnished him with money or employed an attorney to obtain redress for his wrongs, it would require a very strong argument to convince me that that man could be said to be stirring up litigation and strife, and to be guilty of the crime of maintenance." (emphasis added)
Yet in Bradlaugh v Newdegate[61], Lord Coleridge CJ held that an action for maintenance at common law existed, but made no reference, in an extensive review of the authorities[62], to any requirement that the claim maintained be an unjust claim. Rather, the exceptions recognised to the general prohibition on maintaining the claim of another were seen as turning on whether the maintainer acted from charitable motives or because the person maintained was near kin, a servant, or in some like relationship to the maintainer[63].
[60]Findon v Parker (1843) 11 M & W 675 at 682‑683 [152 ER 976 at 979].
[61](1883) 11 QBD 1.
[62](1883) 11 QBD 1 at 7-9.
[63](1883) 11 QBD 1 at 11; Harris v Brisco (1886) 17 QBD 504 at 513‑514.
Champerty included every kind of maintenance for reward, whether by sharing of the "thing in plea" or otherwise[64]. This understanding of champerty was originally seen as precluding the assignment of choses in action. The reason given in Coke's report of Lampet's Case[65] was:
"the great wisdom and policy of the sages and founders of our law, who have provided, that no possibility, right, title, nor thing in action, shall be granted or assigned to strangers, for that would be the occasion of multiplying of contentions and suits, of great oppression of the people, and chiefly of terre‑tenants, and the subversion of the due and equal execution of justice."
[64]Dennis, "The Law of Maintenance and Champerty", (1890) 6 Law Quarterly Review 169 at 179.
[65](1613) 10 Co Rep 46b at 48a [77 ER 994 at 997]. See also Co Litt 232b n.1.
As Winfield pointed out[66], Coke's theory was "perilously close to an anachronism". In Norman v Federal Commissioner of Taxation[67], Windeyer J said of Lampet's Case that "[i]t was a somewhat unsophisticated view of legal rights that led the common lawyers to classify choses in action and debts with mere possibilities, and to condemn all assignments of them as leading to maintenance".
[66]Winfield, "Assignment of Choses in Action in Relation to Maintenance and Champerty", (1919) 35 Law Quarterly Review 143 at 143 (Winfield, "Assignment of Choses in Action").
[67](1963) 109 CLR 9 at 26.
Maintenance and champerty, though well known in early English law, "were known almost exclusively as modes of corruption and oppression in the hands of the King's officers and other great men"[68]. And as Buller J noted, in Master v Miller[69], "Courts of Equity from the earliest times thought the doctrine [of maintenance as applied to preclude assignment of choses in action] too absurd for them to adopt; and therefore they always acted in direct contradiction to it". But the law of maintenance and champerty was not wholly expelled from this realm of discourse, either by the course of decisions in equity permitting and giving effect to the assignment of choses in action, or by the provisions of s 25 of the Supreme Court of Judicature Act permitting such assignments.
[68]Winfield, "Assignment of Choses in Action", (1919) 35 Law Quarterly Review 143 at 143 referring to Winfield, "The History of Maintenance and Champerty", (1919) 35 Law Quarterly Review 50 at 65 and following.
[69](1791) 4 TR 320 at 340 [100 ER 1042 at 1053].
Assignment of a chose in action "made with the improper purpose of stirring up litigation"[70] would raise questions of maintenance and champerty. But the mere assignment of the proceeds of litigation would not. If the assignment stipulated that the assignee should participate in the litigation, the assignment was lawful only "if he have some legal interest (independent of that acquired by the assignment itself) in the property in dispute; but that where his interest is generated only by the assignment itself, such a stipulation would be improper"[71].
[70]Winfield, "Assignment of Choses in Action", (1919) 35 Law Quarterly Review 143 at 149.
[71]Winfield, "Assignment of Choses in Action", (1919) 35 Law Quarterly Review 143 at 152‑154 citing, among other cases, Harrington v Long (1833) 2 My & K 590 [39 ER 1069]; Simpson v Lamb (1857) 7 El & Bl 84 [119 ER 1179]; Hutley v Hutley (1873) LR 8 QB 112; Rees v De Bernardy [1896] 2 Ch 437; Glegg v Bromley [1912] 3 KB 474.
The distinction between the assignment of an item of property and the assignment of a bare right to litigate was regarded as fundamental[72] to the application of the law of maintenance and champerty. But drawing that distinction was not always easy[73]. And it was a distinction whose policy roots were not readily discernible, the undesirability of maintenance and champerty being treated as self‑evident. Typical of the way in which the courts expressed this condemnation was the reference by Knight Bruce LJ[74] to the "traffic of merchandizing in quarrels, of huckstering in litigious discord". That the practices were criminal, and also gave rise to civil liability, was treated as sufficient reason to condemn them.
[72]Prosser v Edmonds (1835) 1 Y & C Ex 481 [160 ER 196]; Defries v Milne [1913] 1 Ch 98; Williams, "Is a Right of Action in Tort a Chose in Action?", (1894) 10 Law Quarterly Review 143 at 147; Winfield, "Assignment of Choses in Action", (1919) 35 Law Quarterly Review 143 at 160.
[73]Compare Prosser v Edmonds (1835) 1 Y & C Ex 481 [160 ER 196] and Dickinson v Burrell (1866) LR 1 Eq 337.
[74]Reynell v Sprye (1852) 1 De G M & G 660 at 686 per Knight Bruce LJ [42 ER 710 at 720].
Yet practices no different in substance, from some of those condemned so roundly, became commonplace in the law of insolvency. Bankruptcy legislation[75] was held[76] to permit a trustee in bankruptcy who had commenced an action to sell and assign the subject‑matter of the action to a purchaser for value. And, of course, the development of the doctrine of subrogation as applied to contracts of insurance[77] qualified the apparent generality of rules against maintenance and champerty.
[75]For example, Bankruptcy Act 1869 (UK), s 25.
[76]Seear v Lawson (1880) 15 Ch D 426.
[77]Castellain v Preston (1883) 11 QBD 380.
No doubt it was against this background that, at the end of the 19th century, the courts of India and the Privy Council came to consider the application of the law of maintenance and champerty in a society where one Indian judge (Phear J) is recorded[78] as having said that:
"[s]peculation in law proceedings has assumed the dimensions and respectability of an ordinary trade; a large class in the community fattens and grows rich on the spoils of needy suitors; and litigation is maintained without reference to the wishes or interests of the nominal parties."
In Ram Coomar Coondoo v Chunder Canto Mookerjee[79], the Privy Council held that the English statues, which founded the then state of the English law, did not apply in India and held[80] that:
"a fair agreement to supply funds to carry on a suit in consideration of having a share of the property, if recovered, ought not to be regarded as being, per se, opposed to public policy. Indeed, cases may be easily supposed in which it would be in furtherance of right and justice, and necessary to resist oppression, that a suitor who had a just title to property, and no means except the property itself, should be assisted in this manner."
Yet the Privy Council went on to say[81] that:
"[A]greements of this kind ought to be carefully watched, and when found to be extortionate and unconscionable, so as to be inequitable against the party; or to be made, not with the bonâ fide object of assisting a claim believed to be just, and of obtaining a reasonable recompense therefor, but for improper objects, as for the purpose of gambling in litigation, or of injuring or oppressing others by abetting and encouraging unrighteous suits, so as to be contrary to public policy, – effect ought not to be given to them."
The basis for such careful watching was not further explained.
[78]Dennis, "The Law of Maintenance and Champerty", (1890) 6 Law Quarterly Review 169 at 186.
[79](1876) LR 2 App Cas 186.
[80](1876) LR 2 App Cas 186 at 210.
[81](1876) LR 2 App Cas 186 at 210.
What this brief and incomplete survey of the state of the English law, as it stood by the early years of the 20th century, may be understood as revealing is that the law of maintenance and champerty depended more upon assertion of consequences said to follow from the existence of the common law criminal offences of maintenance and champerty, than it did upon any close analysis or clear exposition of the policy to which the rules were intended to give effect. Thus, in Alabaster v Harness[82], Lord Esher MR said:
"The doctrine of maintenance, which appears in the Year Books, and was discussed briefly by Lord Loughborough in Wallis v Duke of Portland[83], and more elaborately by Lord Coleridge, CJ, in Bradlaugh v Newdegate[84], does not appear to me to be founded so much on general principles of right and wrong or of natural justice as on considerations of public policy. I do not know that, apart from any specific law on the subject, there would necessarily be anything wrong in assisting another man in his litigation. But it seems to have been thought that litigation might be increased in a way that would be mischievous to the public interest if it could be encouraged and assisted by persons who would not be responsible for the consequences of it, when unsuccessful. Lord Loughborough, in Wallis v Duke of Portland, says that the rule is, 'that parties shall not by their countenance aid the prosecution of suits of any kind, which every person must bring upon his own bottom, and at his own expense.'" (emphasis added)
[82][1895] 1 QB 339 at 342, cited by Dixon J in Stevens v Keogh (1946) 72 CLR 1 at 28.
[83](1797) 3 Ves Jun 494 [30 ER 1123].
[84](1883) 11 QBD 1.
By the early 20th century, the law of maintenance and champerty depended upon the application of qualifications and exceptions hinged, for the most part, about what was an item of property as distinct from a bare right to litigate[85] and what sufficed as a common interest between maintainer and the maintained[86]. In British Cash and Parcel Conveyors Limited v Lamson Store Service Company Limited, Fletcher Moulton LJ said[87]:
"The truth of the matter is that the common law doctrine of maintenance took its origin several centuries ago and was formulated by text‑writers and defined by legal decisions in such a way as to indicate plainly the views entertained on the subject by the Courts of those days. But these decisions were based on the notions then existing as to public policy and the proper mode of conducting legal proceedings. Those notions have long since passed away, and it is indisputable that the old common law of maintenance is to a large extent obsolete. ... The present legal doctrine of maintenance is due to an attempt on the part of the Courts to carve out of the old law such remnant as is in consonance with our modern notions of public policy. ... Speaking for myself, I doubt whether any of the attempts at giving definitions of what constitutes maintenance in the present day are either successful or useful. They suffer from the vice of being based upon definitions of ancient date which were framed to express the law at a time when it was radically different from what it is at the present day, and these old definitions are sought to be made serviceable by strings of exceptions which are neither based on any logical principle nor in their nature afford any warrant that they are exhaustive. ... That there is still such a thing as maintenance in the eye of the law and that it constitutes a civil wrong and perhaps a crime is undoubted, and the general character of the mischief against which it is directed is familiar to us all. It is directed against wanton and officious intermeddling with the disputes of others in which the defendant has no interest whatever, and where the assistance he renders to the one or the other party is without justification or excuse. But in my opinion it is far easier to say what is not maintenance than to say what is maintenance."
As was said in a radically different context (of construction of the British North America Act 1867 (Imp))[88]:
"Customs are apt to develop into traditions which are stronger than law and remain unchallenged long after the reason for them has disappeared."
[85]For example, Fitzroy v Cave [1905] 2 KB 364; Glegg v Bromley [1912] 3 KB 474.
[86]cf Holden v Thompson [1907] 2 KB 489 and, later, Martell v Consett Iron Co Ltd [1955] Ch 363.
[87][1908] 1 KB 1006 at 1013‑1014.
[88]Henrietta Muir Edwards v Attorney‑General for Canada [1930] AC 124 at 134.
By ss 13 and 14 of the Criminal Law Act 1967 (UK) criminal and tortious liability for maintenance and champerty were abolished but, like s 6 of the Abolition Act, any rule of law as to the cases in which a contract involving maintenance or champerty is to be treated as contrary to public policy or otherwise illegal was preserved. In 1981, in Trendtex Trading Corporation v Credit Suisse, the House of Lords held[89] that an agreement permitting a bank, which had guaranteed the costs of a party to litigation in which the bank itself was also interested, to sell the party's claims in the litigation "'savours of champerty,' since it involves trafficking in litigation – a type of transaction which, under English law, is contrary to public policy". Accordingly, the assignment of the cause of action was held to be void. Yet effect was given to so much of the agreement as conferred exclusive jurisdiction on a Swiss Court over disputes regarding "its conclusion, interpretation or fulfilment", by staying the action in England with a view to the Swiss Court deciding what effect the invalidity of the assignment, according to English law, had upon the agreement as a whole[90].
[89][1982] AC 679 at 694 per Lord Wilberforce.
[90][1982] AC 679 at 695 per Lord Wilberforce.
In the House of Lords, there was no examination of the content of the rule of public policy that was said to be engaged, beyond the reference made by Lord
Wilberforce to trafficking in litigation[91]. In the courts below, in Trendtex[92], the accepted premise for argument appears to have been that there remained a public policy against at least some forms of maintenance and champerty. The limits of the application of that public policy were identified in the Court of Appeal as to be found in the existence and sufficiency of notions of common interest between the maintainer and the maintained[93].
[91][1982] AC 679 at 694.
[92]Trendtex Trading Corporation v Credit Suisse [1980] 3 WLR 367; [1980] 3 All ER 721 (Robert Goff J); [1980] QB 629 (CA).
[93][1980] QB 629 at 653 per Lord Denning MR, 669 per Oliver LJ (with whose reasons Bridge LJ agreed).
It is important to notice that the House of Lord's conclusion in Trendtex (that the provision permitting sale of the cause of action was contrary to public policy – as "savour[ing] of champerty" and involving "trafficking in litigation") was not held to afford a defence to the claim that was made and was not itself a reason to stay the further prosecution of the action. The order for stay that was made was founded upon the exclusive jurisdiction clause, not upon any consideration of public policy concerning maintenance or champerty.
Indeed, as the respondents pointed out in the argument of the present appeals, before the enactment of the Abolition Act or its United Kingdom progenitor, the Criminal Law Act 1967, maintenance or champerty had not been held to constitute a defence to an action on the claim that was maintained, or a ground for staying such an action[94]. Of course it may be said that, at least for the most part, the cases reported about maintenance and champerty were principally directed to whether the maintenance agreement was to be enforced or to whether the named plaintiff had sufficient title to bring the action that was said to be maintained. But that does not detract from the validity of the observation that there was no case where maintenance or champerty was held to be a defence to, or reason enough to stay, the action that was maintained.
[94]Hodges v State of New South Wales (1988) 62 ALJR 190 at 193 per Brennan J; 77 ALR 1 at 6; Martell v Consett Iron Co Ltd [1955] Ch 363 at 421‑422 per Jenkins LJ; Roux v Australian Broadcasting Commission [1992] 2 VR 577 at 609.
Abuse of process?
In the present matters, the appellants did not contend that maintenance or champerty provided any defence to the claims made against them. But they did contend that the nature of the funding arrangements made and to be made by Firmstones with retailers warranted the conclusion reached by Einstein J that those arrangements constituted an abuse of process.
The appellants sought to encapsulate their submissions on this aspect of the appeals by describing Firmstones' conduct as "trafficking" in the litigation. Expressed in that way, the appellants' submission may be understood as conflating two separate propositions: first, that the funding arrangements constituted maintenance or champerty and, second, that for the maintainer to institute and continue proceedings, in the name of or on behalf of plaintiffs who were thus maintained, was an abuse of process which could be avoided only by ordering a stay of the proceedings. The second of these propositions, about abuse of process, assumed that maintenance and champerty give rise to public policy questions beyond those that would be relevant when considering the enforceability of the agreement for maintenance of the proceedings as between the parties to the agreement.
In jurisdictions where legislation has been enacted to the same effect as the Abolition Act, the premise for the second proposition identified is not valid; there are several reasons to reject it. It is neither necessary nor appropriate to decide what would be the position in those jurisdictions where maintenance and champerty may remain as torts, perhaps[95] even crimes.
[95]But see Clyne v NSW Bar Association (1960) 104 CLR 186 at 203.
First, and foremost, s 6 of the Abolition Act preserved any rule of law as to the cases in which a contract is to be treated as contrary to public policy or as otherwise illegal. It preserved no wider rule of law. The Abolition Act abolished the crimes, and the torts, of maintenance and champerty. By abolishing those crimes, and those torts, any wider rule of public policy (wider, that is, than the particular rule or rules of law preserved by s 6) lost whatever narrow and insecure footing remained for such a rule. As Fletcher Moulton LJ had rightly said[96], nearly a century ago, the law of maintenance and champerty, even then, suffered:
"from the vice of being based upon definitions of ancient date which were framed to express the law at a time when it was radically different from what it is at the present day".
Secondly, the asserted rule of public policy would readily yield no rule more certain than the patchwork of exceptions and qualifications that could be observed to exist in the law of maintenance and champerty at the start of the 20th century. As Fletcher Moulton LJ had also said[97], it was then "far easier to say what is not maintenance than to say what is maintenance". No certain rule would emerge because neither the content nor the basis of the asserted public policy is identified more closely than by the application of condemnatory expressions like "trafficking" or "intermeddling", with or without the addition of epithets like "wanton and officious"[98].
[96]British Cash and Parcel Conveyors Limited v Lamson Store Service Company Limited [1908] 1 KB 1006 at 1013.
[97]British Cash and Parcel Conveyors [1908] 1 KB 1006 at 1014.
[98]Giles v Thompson [1994] 1 AC 142 at 164 per Lord Mustill, citing British Cash and Parcel Conveyors [1908] 1 KB 1006 at 1014.

Firmstone & Feil sought out and encouraged persons to sue who would not otherwise have done so. The retailers did not seek the assistance of Firmstone & Feil to fund the litigation. Instead, Firmstone & Feil sought out the retailers and attempted to persuade them to sue. The key to the persuasion was the intended representation that the plaintiffs who were to join the representative proceedings bore no risk. The explicit language of one item of publicity corresponded with the theme of many others: "WHAT HAVE YOU GOT TO LOSE?????" In conventional litigation some restraint is placed on the desire to start litigation by the risk of having to pay the defendant's costs if the litigation fails. Firmstone & Feil's plan removed that restraint[361]. Although Firmstone & Feil, not being a firm of solicitors, was not able to offer legal advice about the proceedings, the publicity did not provide a balanced description of the nature or consequences of the proposed litigation, which removed further restraints from the retailers agreeing to let Firmstone & Feil go ahead.
[361]See Clairs Keeley (a Firm) v Treacy (2003) 28 WAR 139 at 173 [203] per Pullin J.
The respondents hinted at the almost dishonourable stance of the wholesalers in refusing to pay up in the face of cases against them which were so factually and legally simple as to be open and shut, and made submissions about the smallness and poverty of the retailers and about how commencing litigation, retailer by retailer, to recover small sums would be economically impossible. However, there was no evidence that any retailer solicited by Firmstone & Feil had ever made a claim on a wholesaler who is a defendant in the present proceedings, that any such wholesaler had ever refused to pay, that without Firmstone & Feil's intervention any retailer who has sued would have done so, that any retailer to be invited to opt-in would do so without that intervention, or that any retailer had joined the representative proceedings apart from the lead plaintiffs. The respondents argued that many retailers had made claims against other wholesalers as a result of aid from another litigation funder, but they did not submit that these claims were not themselves the result of solicitation by that funder. Rather they submitted that many or most of the retailers were unaware of their claims, and hence were parties "who most need access to justice". There was in fact no evidence of this supposed unawareness either. The only evidence on the willingness of retailers to join any of the 17 proceedings is one letter from a retailer dated 4 June 2003 advising Mr Firmstone that it did not wish to sue. This retailer was described in argument, without contradiction, as a large organisation. In short, this part of the respondents' argument proceeded by slogan rather than evidence, and by allusions to complex forms of "class" proceedings as if they were relevant to the present proceedings, which for some purposes the respondents chose to characterise as being so simple that it was scandalous that they had to be brought at all. On the evidence, it is clear that Firmstone & Feil sought to create a dispute which did not otherwise exist, to make it the subject of litigation, to wrest control of the conduct of the litigation from the nominal plaintiffs, and to extract as the price for this activity a substantial part of each plaintiff's potential proceeds. Thus it may be said to have engaged in "officious intermeddling" with "the disputes of others" which, but for its conduct, would not have existed and in which it had no interest[362].
[362]See British Cash and Parcel Conveyors Ltd v Lamson Store Service Co Ltd [1908] 1 KB 1006 at 1014 per Fletcher Moulton LJ, adopted in Giles v Thompson [1994] 1 AC 142 at 161 per Lord Mustill (Lords Keith of Kinkel, Ackner, Jauncey of Tullichettle and Lowry agreeing).
Nature and smallness of the plaintiffs' "losses". As has just been noted, the respondents made much of the bona fide nature and validity of the "small but strong" claims of the retailers, of the retailers' ignorance of their claims, of their incapacity, without assistance, to advance their claims because of their smallness balanced against the cost of individual recovery, of the recalcitrance of the wholesalers in not complying with their just obligations, and of the strong incentives for the wholesalers to engage in litigation which would be "nasty, brutish and long"[363]. The respondents submitted that the risk of abuse of process had to be weighed against the plaintiffs' interest in the litigation and the fact that they were suing wholesalers who were unwilling to pay them, and who were experienced, determined and well-resourced. The evidentiary hole behind many of these arguments has already been noted, and the respondents resorted to more abstract contentions. It was said that for the court to stay the litigation was "contrary to the traditional respect of the common law for the autonomy of the individual". Other blessed phrases like "access to justice" and "equality of arms" were referred to in their arguments or were adopted by them. The respondents relied on a statement of the Full Federal Court that there was no cause for instant alarm if, in these circumstances, "a business house, openly and reasonably, wishes to engage in the business of funding litigation and is prepared to meet the costs of the opposing party"[364]. Additionally, the Court of Appeal described the wholesalers' retention of the relevant monies as a "windfall gain"[365], and the respondents took that description up.
[363]Emphasis in respondents' submissions.
[364]Gore v Justice Corporation Pty Ltd (2002) 119 FCR 429 at 451 [59] per O'Loughlin, Whitlam and Marshall JJ.
[365]Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203 at 218 [67] per Mason P (Sheller and Hodgson JJA concurring).
That description is a true one. On the other hand, in Roxborough v Rothmans of Pall Mall Australia Ltd, five members of this Court pointed out that the retailers who obtained the relevant monies by court order were also making "a windfall gain"[366] in view of the difficulties those smokers who bought from the retailers would have in recovering their share of the monies. Here, as there, it cannot be said that the retailers indicated "the slightest interest in recovering the whole, or any part, of the windfall for the benefit of the consumers. They wanted the windfall for themselves."[367] Although the law may permit retailers falling within the class involved in this appeal which can prove their case to enjoy recovery, and although the recovery of sums paid on a consideration which has failed may seem to involve the recovery of "loss", no loss need be proved, and it is wrong to assume that the recovery by the retailers targeted by Firmstone & Feil necessarily equates to recovery by persons who are truly out of pocket. The persons who are truly out of pocket are those who purchased tobacco products from retailers who passed on the licence fee component, and as the respondents conceded, here that component was passed on in every case. Where retailers who make a claim are claiming a windfall gain from wholesalers who wish to retain what is in their hands a windfall gain, there is nothing in that aspect of the position of the former group which weighs favourably in assessing whether the proceedings should be stayed as an abuse of process.
[366](2001) 208 CLR 516 at 522 [5] per Gleeson CJ, Gaudron and Hayne JJ, 559-560 [114]-[116] per Kirby J, 591 [204] per Callinan J.
[367](2001) 208 CLR 516 at 559-560 [114] per Kirby J.
There are other noteworthy aspects of the claims. The sums to be claimed would be claimed, in many cases, by retailers who had been in continuing business relationships with wholesalers and would be likely to wish to remain in them. It is understandable that there is no evidence that any of them wished to make a claim or to sue until Firmstone & Feil persuaded them to do so. Traditionally it has been thought that to provoke litigation to take place which would not otherwise have taken place is undesirable. It is an idea which underlay maintenance and champerty[368]. But it is not limited to those fields. It is one thing to fund plaintiffs who wish to sue independently of the persuasion of the funder. It is another thing to fund plaintiffs who, but for the funding, would not have sued at all. This point was made by Pullin J in Clairs Keeley (a Firm) v Treacy[369]:
"Losses suffered by some members of the community might be regarded by those persons as a vicissitude of life. Those persons, left to their own devices, may choose not to sue. It is not a failure of the system that some members of the community choose not to sue, even if there has been a breach of duty by some person or another. Persons suffering injury should not be encouraged to commence proceedings if they would, left to their own devices and based on their own assessment of the risks, not have contemplated litigation. However, such persons are likely to be willing to pursue litigation if they bear no risk of an adverse outcome."
Whether or not, as the Court of Appeal thought, the law now looks favourably on funding arrangements, it is highly questionable whether the law looks favourably on litigation by a plaintiff to cover small sums of the order of rather less or rather more than $4,000[370]. Lawsuits are to be dreaded "beyond almost anything else short of sickness and death"[371]. Ought not at least Supreme Court litigation of that kind be discouraged, as a foolish way for a plaintiff to spend time and money and nervous energy? If so, litigation instituted by one such plaintiff representing many others is no more attractive. Plaintiffs may sue if they wish, but it is not easy to see why the courts should decline to characterise proceedings as an abuse of process merely because they permit litigation funders avaricious for large recoveries to foment litigation by numerous parties making claims to small sums of money which, although they may be legally entitled to them, they never in truth lost.
[368]See British Cash and Parcel Conveyors Ltd v Lamson Store Service Co Ltd [1908] 1 KB 1006 at 1020 per Buckley LJ.
[369](2003) 28 WAR 139 at 172 [196].
[370]Precisely what sums were claimable is obscure. The figure of $4,000 as being the size of the average claim was one accepted in Mr Firmstone's evidence. That figure is not necessarily falsified by the publicity directed to retailers, which spoke of refunds of at least $10,000 or $11,250 being possible. An advertisement in the Daily Telegraph said: "A typical retailer could expect a refund of about $15,000." The point made in the text stands, even for those claiming more than $4,000. In the seven sets of proceedings affected by the present appeals, Fostif Pty Ltd claimed $3,143.20, Mr Berney claimed $2,039.85, Whelan & Hawking Pty Ltd claimed $7,899.04, the two Murrays claimed $657.47, the two Neindorfs claimed $2,563.35, the two Williamsons claimed $8,947.63, and the five plaintiffs in the Gow and Green proceedings claimed a total of $22,939.58. The Court of Appeal mentioned "an average claim of $1,000 or perhaps a little more", but the evidentiary basis for this is unclear: Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203 at 237 [149] per Mason P (Sheller and Hodgson JJA concurring).
[371]Judge Learned Hand, "The Deficiencies of Trials to Reach the Heart of the Matter", in Rosenberg, Lectures on Legal Topics 1921-1922 (1926) 87 at 105.
Gains hoped for by Firmstone & Feil. The gains which Firmstone & Feil might make from the proceedings are potentially enormous. On the assumption that there are 10,000 retailers each with an average claim of $4,000, and on the assumption that interest would by now amount to at least 50% of the principal sum claimed, if all of them opted-in, Firmstone & Feil would be entitled to about $20 million plus costs recovered from the wholesalers less costs expended but not recovered from the wholesalers. Yet another estimate was at least $100 million for "the amounts the subject of the claims in ... all of the proceedings presently before the court", but it was not clear if this included interest. On that basis, if all went well, Firmstone & Feil would get over $30 million.
Of course the enterprise was attended by risks. Many retailers might not opt-in. Many claims might be unprovable. But, making all allowances and discounts, the potential recovery is on a scale which no solicitor who dealt with clients on these terms could ethically defend. A solicitor who requested retailers to opt-in on Firmstone & Feil's terms, or charged fees of equivalent economic worth, would not long remain on the roll. The respondents did not explain why litigation funders, untrammelled by ethical rules or supervisory professional bodies, should be able to conduct litigation on terms which no solicitor could.
Firmstone & Feil's control of the litigation. It is a factor pointing against an abuse of process that the funder of litigation "does not meddle at all"[372] or by its contract is left "very little room to intermeddle"[373]. Conversely, the more room to intermeddle, the more likely is it that the litigation is an abuse of process. To some extent the respondents challenged that proposition, asserting that Firmstone & Feil were better placed to prosecute the litigation than the retailers. But the respondents did not otherwise explain why the proposition was unsound. Here any retailer agreeing to opt-in to the litigation would do so on terms giving Firmstone & Feil total control of it.
[372]Giles v Thompson [1994] 1 AC 142 at 161 per Lord Mustill (Lords Keith of Kinkel, Ackner, Jauncey of Tullichettle and Lowry agreeing).
[373]QPSX Ltd v Ericsson Australia Pty Ltd (No 3) (2005) 219 ALR 1 at 16 [61] per French J.
The respondents relied on three matters to negate control: Firmstone & Feil could not settle the litigation for less than 75% of the principal claimed; Firmstone & Feil retained a solicitor; Firmstone & Feil took advice from counsel. The fact is that but for the settlement limit, Firmstone & Feil's power to control was absolute, and it exercised it accordingly. Counsel did no more than settle the form of the summonses. The constricted role of the solicitor is noted elsewhere[374]. Mr Proud, an employee of Firmstone & Feil, drafted the summonses, had them settled by counsel, selected retailers to be approached as "lead plaintiffs", persuaded them to act on that basis, and obtained from them some relevant information. Although the retailers were told, or to be told, that Firmstone & Feil would pay the costs associated with the proceedings, they were not told of their potential liability to costs orders, nor of the precise financial capacity of Firmstone & Feil to meet them. That is the fact, even though Firmstone & Feil sought to overcome the difficulty before Einstein J by offering undertakings to the court to submit to such orders as to costs as the court might make, and to meet any orders as to costs as might be made against the plaintiffs or any represented person, and Mr Firmstone offered an undertaking to the court to underwrite any shortfall in payments by Firmstone & Feil up to a limit of $1 million. In addition, the retailers were not told that they or their officers might have to give evidence; they were not given any legal advice received by Firmstone & Feil.
[374]Above at [242]-[245]; below at [282].
Further, Mr Firmstone had not instructed Robert Richards & Associates to inform the plaintiffs in the representative proceedings of the defendants' motions to strike them out, and neither he nor, as far as he knew, Robert Richards & Associates had communicated with them on any subject, although Mr Richards did communicate with some of them by means of a standard form letter in relation to a notice to produce. It enclosed some "Notes on Discovery". That letter suggests an absence of any prior contact, since it commences: "We are the solicitors on record engaged on your behalf by Firmstone & Feil in relation to the representative legal proceedings". There is no evidence that anyone provided any plaintiff with a copy of the relevant summons: Mr Proud did not do this, and as far as he knew no-one else had. The same is true of the plaintiffs' notices of motion for discovery.
The question is not, as the Court of Appeal seemed to think, whether Mr Richards had conformed with his professional obligations: it is not suggested that he did not. The question is whether the limited role assigned to Mr Richards facilitated Firmstone & Feil's control of the proceedings. That role is relevant, in view of an earlier assumption, not as evidencing some breach of duty or unconscionable conduct on the part of Firmstone & Feil towards the retailers and the plaintiffs, but as a badge of Firmstone & Feil's indifference to them. That indifference to the retailers was understandable, for despite the use of the name of the lead plaintiffs, and the proposed use of the names of other retailers in the event that they opted-in, the real character of the proceedings was as a means of earning Firmstone & Feil large sums and each plaintiff only a very small sum. The real character of the proceedings was that they were started by Firmstone & Feil, not by the lead plaintiffs, and that they would be continued by Firmstone & Feil, not by the lead plaintiffs and any extra plaintiffs who opted-in.
Subservience of the retailers' interests to those of Firmstone & Feil. The pursuit of the litigation in such a way as to render the interests of the nominal plaintiffs subservient to those of the funder is capable of being an abuse of process[375]. The respondents denied the possibility of conflicts of interest. The point is not that there may be conflicts of interest between funder and plaintiffs. The point is rather that the subserviency reveals the real nature of the proceedings. Here the large share of recoveries to which Firmstone & Feil were entitled accentuated the disparity between the vast sums which Firmstone & Feil might make and the relatively petty sums each retailer might recover. This, coupled with the control given to Firmstone & Feil, reveals that the proceedings were in truth being employed for a purpose alien to their legitimate function – the advantaging of the interests of the funder in its speculative investment rather than those of the retailers. Of course the retailers had to win for the funder to profit, but their success was only the means to a single end – the profit of Firmstone & Feil. The real character of the proceedings was not the vindication of the plaintiffs' rights, but their employment as a means of generating profit for Firmstone & Feil.
[375]Clairs Keeley (a Firm) v Treacy (2004) 29 WAR 479 at 493 [71] per Steytler, Templeman and McKechnie JJ.
Limited role of plaintiffs' solicitor. The limited role of Robert Richards & Associates, who appeared on the record as solicitors for the retailer plaintiffs, is relevant to the question whether Firmstone & Feil's role created an abuse of process because it is relevant to the issue of control. The authorities have seen as a factor pointing against abuse the fact that the solicitors for plaintiffs are not chosen by the funder, that instructions were given to those solicitors by the plaintiffs and not the funder, and that the retainers of the solicitors were made by the plaintiffs and not the funder[376]. The respondents questioned whether solicitors of this kind lessened the potential for abuse of process, but they did not challenge these authorities. The presence of an independent solicitor dealing directly with the plaintiffs tends to reduce control of the litigation by the funder and leave it in the hands of the plaintiffs. The control given to Firmstone & Feil by reason of the inability of the plaintiffs to make informed decisions and the limited contact which Firmstone & Feil is likely to have had with them could have been alleviated by the presence of solicitors who were independent of the funder, were entitled to advise their clients, and were likely to do so. But Firmstone & Feil had ensured that Robert Richards & Associates were not in that position. The respondents also questioned what level of involvement was appropriate for a solicitor dealing with a $4,000 claim. Perhaps not great; but the ceding of most involvement to a non-solicitor pursuing a one-third share of a multimillion dollar claim arrived at by aggregating many small claims suggests that the proceedings nominally brought for the plaintiffs' benefits are really brought for the non-solicitor's.
[376]Stocznia Gdanska SA v Latreefers Inc (No 2) [2001] 2 BCLC 116 at 152 [62] per Morritt and May LJJ and Wall J; Dorajay Pty Ltd v Aristocrat Leisure Ltd (2005) 147 FCR 394 at 419 [85] per Stone J; QPSX Ltd v Ericsson Australia Pty Ltd (N 3) (2005) 219 ALR 1 at 16 [61] per French J.

Firmstone & Feil's monopoly position. The failure of Firmstone & Feil to attract more retailers into litigation during the time while the limitation period was running led it to adopt the technique of soliciting lead plaintiffs to start representation proceedings just before the limitation period expired. The result – an unintended one, according to Mr Firmstone, whose evidence on this point Einstein J summarised without criticism – is that any retailer who wishes to recover from wholesalers can only do so on the terms put forward by Firmstone & Feil. The constitution of the proceedings as representative proceedings has given Firmstone & Feil, and only Firmstone & Feil, access to a share of the retailers' rights to litigate. Firmstone & Feil has thus used the court's process to give it the chance of a monopoly profit. The attempts of Firmstone & Feil to enlist the aid of the Supreme Court of New South Wales were attempts to get it to permit and facilitate the buying by the retailers of the product which Firmstone & Feil were seeking to sell, and the selling to Firmstone & Feil of the retailers' causes of action on terms which did not appear to be open to negotiation. In particular, the seeking of an order giving discovery of the names of retailers to whom the opt-in offers could be sent was an attempt to use the compulsory processes of the court to identify people with whom Firmstone & Feil might trade in these claims to its advantage.
Analogy with others who profit from litigation? The Court of Appeal downplayed the significance of Firmstone & Feil's profit motive by saying that many people seek profit from assisting the processes of litigation – lawyers, expert witnesses, forensic accountants, printers and couriers. There is no analogy. Those classes of people either have no desire to foment litigation which would not otherwise exist, or are ethically barred from doing so. Those classes are suppliers of particular professional or commercial services to many people. One category of the people supplied comprises people who are parties to litigation, who control that litigation, and who exercise their own judgment as to what services should be supplied. The suppliers do not themselves create disputes out of nothing, decide how those disputes should proceed, and control the proceedings without input from the clients. The price, at least for the professional services supplied, can be hefty, but it is regulated, in part by competitive forces and in part by ethical constraints. Those ethical constraints prevent lawyers stipulating for a share of the fruits of victory. In the circumstances of this case there were in the end no competitive forces, and there are no ethical restraints on litigation funders.
Remaining arguments of the respondents. Finally, the respondents advanced two linked arguments. First, the court had overall supervision of the proceedings – under Pt 8 r 13, it could "otherwise order"; under Pt 8 r 17 it could give the conduct of the proceedings to any person it thought fit; and any settlement resulting in discontinuance depended on court approval under Pt 21 r 2. Secondly, the burden on those seeking to establish an abuse of process and thereby obtain a permanent stay was heavy. It was necessary for the court to be satisfied that there was no other available means of overcoming the abuse of process.
To some extent Firmstone & Feil and the trial judge explored methods of judicial control of the proceedings which could prevent there being an abuse of process, for example the offering of undertakings to the court in relation to costs. The respondents did not suggest any specific regime, using the court's powers under the rules or otherwise, for overcoming the problems described above, and in truth there are none available.
Conclusion. In short, the proceedings as structured by Firmstone & Feil depended on a harnessing of the alleged wrongs of the plaintiffs and of the curial processes established to remedy alleged wrongs for the primary purpose of generating profits for Firmstone & Feil. That was an abuse of process.
That conclusion may justify wider orders than the trial judge made. However, since the appellants do not ask for wider orders, it is not necessary to consider whether or not they should be made.
If that conclusion is thought by those who have power to enact parliamentary or delegated legislation to be unsatisfactory on the ground that the type of litigation funding involved in these appeals is beneficial, then it is open to them to exercise that power by establishing a regime permitting it. It would be for them to decide whether some safeguards against abuse should be incorporated in the relevant legislation.
Other issues
There is no need to deal with other arguments advanced by the appellants relating to whether the attempt to get discovery for the purpose of identifying members of the class to whom invitations to opt-in could be sent was defective for various reasons, and relating to whether there was a "matter" for the purposes of Ch III of the Constitution.
Orders
We agree with the orders formulated by Gummow, Hayne and Crennan JJ.