Connell v Nevada Financial Group Pty Ltd

[1996] FCA 801

CATCHWORDS

REPRESENTATIVE PROCEEDINGS - whether it was open to the applicants to commence proceedings for relief under the Trade Practices Act arising out of representations by the respondents in relation to various distributorship agreements with the applicants and others as a representative proceeding under Part IVA the Federal Court of Australia Act 1976 (Cth) - whether the requirements of s 33C of that Act satisfied.

REPRESENTATIVE PROCEEDINGS - whether the claims of all group members give rise to a “substantial common issue of law or fact” as required by s 33C(1)(c) - having regard to the object of Part IVA to enable groups of people to obtain redress more cheaply and efficiently and to encourage efficient use of legal and court resources, necessity to consider nature of non-common issues as well as common issues - if litigation of non-common issues will have real impact on nature and extent of preparation for and conduct of trial, common issue will not be a “substantial common issue”.

PLEADING - representative proceedings - if alleged oral or written representations made in differing words and on different occasions, necessary to plead terms of alleged representations made to various class members precisely to show that the substance and effect of the representations made to each group member is the same.

Federal Court of Australia Act 1976 (Cth) - ss 33C, 33H, 33N, Part IVA

Cases Considered
Kinna v National Australia Bank Ltd (1988) ATPR 40-878
Marks v GIO Australia Holdings Ltd (1996) ATPR 41-471
Palser v Grinling [1948] AC 291
R v Monopolies & Mergers Commission; Ex parte South Yorkshire Transport Ltd [1993] 1 WLR 23
Tillmanns Butcheries Pty Ltd v Australasian Meat Industry Employees Union (1979) 42 FLR 331
Tropical Shine Holdings Pty Limited v Lake Gesture Pty Limited (1993) 45 FCR 457
Zhang v Minister for Immigration, Local Government and Ethnic Affairs (1993) 45 FCR 384

BRIAN CONNELL and LILLIAN CONNELL, STUART VAN ECK and MARLENE VAN ECK, ANDREW BOUCAUT and ANNE BOUCAUT v NEVADA FINANCIAL GROUP PTY LTD & ORS
QG 135 OF 1995

DRUMMOND J
BRISBANE
5 SEPTEMBER 1996

FEDERAL COURT OF AUSTRALIA  No. QG 135 of 1995
QUEENSLAND DISTRICT REGISTRY  
GENERAL DIVISION  

BETWEEN:BRIAN CONNELL and LILLIAN CONNELL,

STUART VAN ECK and MARLENE VAN ECK,

ANDREW BOUCAUT and ANNE BOUCAUT

Applicants

AND:NEVADA FINANCIAL GROUP PTY LTD

(ACN 005 382 105)

First Respondent

AND:TREVOR PHILIP HYLAND

Second Respondent

AND:LINDA ELIZABETH DODD

Third Respondent

MINUTES OF ORDERS

JUDGE MAKING ORDER:  Drummond J
DATE OF ORDER:  5 September 1996
WHERE MADE:  Brisbane

THE COURT DECLARES THAT:

1.  It was not open to the applicants to commence this proceeding as a representative proceeding under Part IVA of the Federal Court of Australia Act 1976 (Cth).

2

THE COURT ORDERS THAT:

2.  Within 14 days the applicants file and serve an amended statement of claim limited to the matters in issue between the six applicants and the three respondents.

3.  Upon the filing of the applicants’ amended statement of claim, the proceedings be transferred to the District Court at Brisbane.

NOTE:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

FEDERAL COURT OF AUSTRALIA  No. QG 135 of 1995
QUEENSLAND DISTRICT REGISTRY  
GENERAL DIVISION  

BETWEEN:BRIAN CONNELL and LILLIAN CONNELL,

STUART VAN ECK and MARLENE VAN ECK,

ANDREW BOUCAUT and ANNE BOUCAUT

Applicants

AND:NEVADA FINANCIAL GROUP PTY LTD

(ACN 005 382 105)

First Respondent

AND:TREVOR PHILIP HYLAND

Second Respondent

AND:LINDA ELIZABETH DODD

Third Respondent

CORAM:Drummond J

DATE:5 September 1996

PLACE:Brisbane

REASONS FOR JUDGMENT

The respondents in the action seek an order pursuant to s 33N the Federal Court of Australia Act 1976 (Cth) (the Act) that the proceeding no longer continue as a representative action under Part IVA of the Act.  By their notice of motion they also sought an order striking out the entire proceeding as not properly brought under Part IVA; at the start of the hearing they abandoned this particular
claim.  At my request, however, counsel for both parties delivered supplementary submissions with respect to this issue, following the hearing.  The respondents’ further application in the notice of motion to strike out the statement of claim on the ground that it does not disclose a reasonable cause of action was adjourned, at their request and without objection from the applicants.

The action was commenced by application under Part IVA by six persons as applicants, representing themselves and 10 other named persons.   These 16 persons comprise 10 separate interests, viz, six married couples, one corporation and three individuals, each of which interests entered into at least one contractual arrangement with the first respondent.  All, save only the applicants S and M Van Eck (group members 8 and 9), entered into a total of nine preliminary area distributorship agreements and nine area distributorship agreements (which replaced the preliminary agreements).  Group members 1 to 9 also entered into a third class of contract, called a “major distributorship agreement”; this was the only arrangement S and M Van Eck entered into.  There are five of these “major” agreements.  Each of these 23 agreements involved the appointment of one or a pair of group members as a distributor in a defined area of certain building products to be supplied by the first respondent.  Three of the distribution areas were on the Sunshine Coast, three in the Rockhampton region and the remaining four in the Mackay region.  Group members 4 and 5, 6 and 7, 10 and 14 also gave a total of four promissory notes to the first respondent securing payment of moneys due under the various distributorship agreements they entered into.

Each of the 16 group members claims damages in respect of the arrangements in which the member is involved, as well as orders avoiding those arrangements under the Trade Practices Act 1974 (Cth), by reason of conduct by the first respondent in which its directors, the second and third respondents, were involved, which conduct is said to contravene ss 52, 53 and 59 of that Act.  Other relief under the Trade Practices Act in the form of declarations that each group member is released from liability to make any payments which would otherwise be due under the relevant distributorship agreements and associated agreements and orders requiring the first respondent to repay moneys received from the group members are also sought, as are damages for deceit.  None of the damages claims has been quantified or otherwise particularised.  It would seem that the main concern of each of the group members is to recover what each has paid to the first respondent and to be released from liability for any further payments that may be due under their agreements (although each claims, in addition, damages in respect of “lost income they would otherwise have earned” if he or she had not entered into contractual arrangements with the first respondent).

The 16 group members have, between them, paid a total of $200,175 to the first respondent pursuant to these various distributorship agreements; whilst six of the group members have paid all moneys due under their agreements, the remaining 10 group members owe a further $117,534, in addition to the moneys they have already paid to the first respondent in respect of their own agreements.  The group member with the smallest exposure is the tenth member, Anderson, who has paid only $2,800 out of a total of $14,500 due in respect of the one area distributorship
agreement he entered into.  The maximum exposure that any one group member has in respect of amounts payable under the agreements is $50,000; some so exposed have paid that amount in full, while others have part-paid the $50,000 due under their particular agreements.

As required by s 33H(1)(c) of the Act, paragraph 4 of the application specifies the questions of law and fact, said to be common to the claims of the group members, as follows:

"(a)the question of the falsity or deceitful or misleading nature of certain oral representations made by the Respondents concerning the exclusive nature of the products supplied by the First Respondent to and distributed by the Members of the group pursuant to certain written distributorship agreements entered into by the Members of the group;

(b)the question of the falsity or deceitful or misleading nature of certain written representations made by the Respondents concerning the exclusive nature of the products supplied by the First Respondent to and distributed by the Members of the group pursuant to certain written distributorship agreements entered into by the Members of the group;

(c) the question of the falsity or deceitful or misleading nature of representations made by the Respondents relating to the place or origin of manufacture of the products to be distributed pursuant to the distributorship agreements;

(d)the question of the falsity or deceitful or misleading nature of oral representations made by the Respondents relating to the particular qualities of the products to be distributed, namely whether they were the First Respondent's products or whether they were in fact available in the market from sources independent of the First Respondent and as to whether certain of the products were cyclone proof or were double glazed;

(e)the question of the falsity or deceitful or misleading nature of representations made orally to the effect that Members who executed distributorship agreements would be given exclusive territory within which to distribute or given territory which was
exclusive in that it was limited to a specified number of persons under the control of the First Respondent;

(f)the question of the falsity or deceitful or misleading nature of written representations to the effect that Members who executed distributorship agreements would be given exclusive territory within which to distribute or given territory which was exclusive in that it was limited to a specified number of persons under the control of the First Respondent;

(g)the question of the falsity or deceitful or misleading nature of written and oral representations to the effect that distributorships would be profitable and produce turnover of particular sums within specified times and further as to whether, in the circumstances the members as distributors were ensured of success in the conduct of their businesses as distributors;

(h)the question of the falsity or deceitful or misleading nature of representations concerning whether the distributorship agreements executed by the Members reflected the nature of the distributorship rights and liabilities as they had been represented by the Respondents to the Members and as to whether such agreements as were executed were of such a character in the circumstances as ought to have led the Members to obtain independent advice upon the effect of such agreements prior to their execution;

(i)the question of whether the representations referred to induced the Members to execute the distributorship agreements and/or act pursuant to the terms of them;

(j)the question of whether the Members are entitled to rescission of the distributorship agreements and ancillary agreements and to damages and the other relief sought in the Application."

Counsel for the applicants has prepared a helpful schedule setting out the details of the group members, the representations made, and references to the statement of claim.  There are four categories of written representations pleaded.  The first two are based on newspaper advertisements in a "long" and "short" form.  The long form advertisement was seen by 11 of the group members (members 1 to 9, 11 and 12).  The short form advertisement was seen by the other five group members
(members 10, 13 to 16).

Both the long and the short form advertisements are alleged to contain a representation that "the relevant business involved working as a single distributor for the referred to area and that inferentially there would be not more than one distributor".  It is alleged that each of the 16 group members, in reliance on this representation that is said to be contained in both advertisements, entered into the loss-causing arrangements with the first respondent.  Perusal of the long form of advertisement suggests that it is arguable that it contains such a representation.  It is more difficult to reach the same conclusion with respect to the short form advertisement.  Inconsistently with the allegation that those group members who responded to the short form of advertisement entered into contractual arrangements with the first respondent in reliance upon a representation as to the distributorships being exclusive ones within the relevant areas, each of these group members (other than group member 10) allege that it was also represented to them orally that they would not have exclusive distributorship rights in the areas in question, but that they would be one of a small number of distributors for the relevant area; these oral representations are said by this particular set of group members to have been relied on by them in entering into their various arrangements with the first respondent.  In my opinion, a representation that a person will have the sole right to distribute a product in an area is materially different from a representation that a person will share, with a small number of others, the right to distribute that product in that area:  there is no question of law or fact concerning written representations as to the extent to which the distributorships would be exclusive within the relevant areas that is common to all the group members.  The
pleader is alert to this inconsistency in the cases of the group members who responded to the short form advertisement, as appears from the manner in which the allegedly common questions of law and fact are described in paragraph 4(e) and (f) of the application referred to above, descriptions which, in any event, reveal the lack of commonality rather than its presence.

It is also alleged that each of these two forms of advertisement contained other representations not repeated in the other form upon which the readers of each relied.  For example, there is said to be a representation in the form of a prediction as to potential earnings and turnover in the short form advertisement that a distributor could earn “up to $1,700 p.w. based upon proven figures, with a potential turnover of around $40,000 per week”; the long form advertisement refers to a turnover of $292,890 in “just 7 weeks, proven figures available”, a quite different representation as to a performance actually achieved in the past.

The third category of written representation is alleged to be contained in brochures for Woodbine steel roofing tiles and Woodbine vinyl weatherboards, two of the range of products distributed by the first respondent, which brochures were provided to members 1 and 2, members 8 and 9, and members 11 and 12, ie, to six of the 16 group members.  The brochures are said to contain a representation that these two products were available only from the first respondent.  The fourth category of written representation is said to be contained in a document described as "the Distributor's Proposal".  The representations contained in the document are alleged to include, among other things, a representation as to the exclusivity of each distribution area.  The Distributor's Proposal was provided to 11 of the 16 group members.  There
is no one representation contained in the two forms of advertisement or in any other document read by and on which all 16 group members claim to have relied.

Numerous oral representations are alleged to have been made on behalf of the first respondent to each of the 16 group members at various times.   On various occasions between October 1994 and February 1995, a particular representation is said to have been made orally by either the second or third respondents or by one of them in the presence of the other on behalf of the first respondent.  The oral representations are to the following effect:

(i)That one or more of the various building products that would be supplied by the first respondent to its distributors were available exclusively from that respondent.  An oral representation to this effect, though not alleged to have been made to each group member in the same words, is said to have been made to all 16 group members before each entered into any arrangement with the first respondent;

(ii)That the distributor appointed would be the exclusive agent of the first respondent in the relevant area.  A representation to this effect is alleged to have been made to 12 of the 16 group members, viz, members 1 to 10 and 15 and 16.

(iii)That there would be four area distributors and one major
distributor for a certain area.  A representation to this effect is alleged to have been made to four of the 16 group members, viz, members 11 to 14.

(iv)Representations are also said to have been made as to the ready saleability of the products, viz, that certain products “were selling well”, to members 1 and 2, and that certain other products were and would be “easy to sell even by persons with no experience” to member 3, ie, to these group members.

(v)Representations are also said to have been made as to the profitability of a distributorship business or capacity of that business to earn income, viz, that “the margins to be made from the sales of the products were extremely good” and that a major distributor was capable of earning $121,680 pa or, in the worst case, $40,560 pa, to members 8 and 9; that distributors’ customers “would pay good prices” and profits would be “high” and the products “would sell themselves”, to members 11 and 12 and that, as distributors, they would earn from between $3,000 and $6,000 per week between them, to members 15 and 16, ie, to six group members.

(vi)Representations as to the place of manufacture of the products or source of importation of various of the products, viz, that the
weatherboards and insulation were made in and imported by the first respondent from Canada and Texas respectively, to members 1 and 2; that insulation would be imported from USA, to  member 3; that the weatherboards were imported from Canada and the tiles were made in Australia exclusively by others for the first respondent, to members 8 and 9; that the weatherboards would be imported from Canada and the tiles and windows were made in Australia in the first respondent’s factory, to members 11 and 12; that the weatherboards would be imported from Canada and the insulation from USA to member 13; that the weatherboards were imported and the tiles made in a factory under the second respondent’s control in Australia, to member 14, ie, to nin e of the group members.

(vii)That the contracts had been examined by lawyers and contained nothing that need concern anyone or cause them to need independent advice, to members 1 to 3.

It is not, I think, an objection to proceedings being brought as representative proceedings and founded upon an oral (or a written) representation made to the various class members that the representation may have been made on different occasions and in a different form of words to each class member, so long as the Court can be satisfied that the substance and effect of what was orally represented is the same.  But, in such cases, the Court must be satisfied that each
class member truly does set up a representation to the same substance and effect. Since the Court can act of its own motion under s 33N(1) to order that a proceeding no longer continue as a representative proceeding and since it has inherent or implied power to ensure that its process is not abused by proceedings being brought as representative proceedings when in truth there is no issue of law or fact common to the claims of the group members, as required by s 33C(1)(c), it is incumbent on the applicants who bring a representative proceeding so based to plead with precision the terms in which the representation was made to each to show that, although made in differing words, the substance and effect of the representation made to each class member is truly the same. A pleading alleging in terms that oral representations were made to the different class members on different occasions to the same substance and effect will plainly not be sufficient to answer a challenge to the inappropriateness of the proceedings being brought as representative proceedings: it would generally be necessary for the applicants facing such a challenge to put in evidence setting out as precisely as possible the statements made that are said to contain each oral (or written) representation, if the pleading does not particularise the precise words said to contain the representation to each group member.

Here, I am prepared to accept that the pleading is sufficiently precise and shows that, while oral representations as to the exclusive availability of products were made in different words to the various class members on different occasions, they are all to the same substance and effect and so give rise to one issue of fact common to the claims of all the group members.  But there are no other oral
representations and no written representations upon which each group member claims to have relied to the member’s detriment that are common to all claims.  I do not think that the statement contained in the application purporting to specify the questions of law and fact common to all the claims is accurate in that regard:  eg, it is not enough to say that there is a question as to “the falsity of certain oral representations” that is common to all the claims, when the representations said to be false were not all made to all group members.  When Wilcox J, in Tropical Shine Holdings Pty Limited v Lake Gesture Pty Limited (1993) 45 FCR 457 at 462, in dealing with a representative action brought by a trader’s rival on its own behalf and on behalf of a large number of customers of that rival, said: “Any such claims would arise out of the same, similar or related circumstances and give rise to at least one substantial common issue of fact; namely the falsity of the material published in the advertisements”, his Honour was speaking of a s 52 case based on similarly worded misrepresentations made in standard form newspaper advertisements (see p 459).

Some of the various representations I have referred to are also alleged to have been repeated at a training course held at Mackay in early February 1995, viz, versions of representations in groups (i), (iv), (vi) and (vii) above.  Arguably, all 16 group members were represented at this training course, although the fifth and eleventh group members did not personally attend.  Prior to this training course, representations similar to those in paragraphs (iv), (vi) and (vii) above had only been made to sub-sets of the 16 group members, not to all of them.  That those three kinds of representation were made on that one occasion to all 16 group members raises the possibility that, in addition to representation (i), there are three other representations
common to the cases all 16 seek to make out against at least the first respondent.  However, four of the group members (group members 8 and 9, 15 and 16) had already executed the agreements they made with the first respondent before attending the course:  their claims do not involve or even permit proof that representations (iv), (vi) or (vii) were made to them at this training course, save that members 8 and 9 could prove that representation (vi) was made at the course, since they also rely on the making of a similar representation prior to entry into their one agreement with the first respondent.  (Even if it could be said that what took place at the training course shows that there are four issues of fact common to the claim of each group member, each of the 16 relies, in addition, on other issues that are not common to all and, as is discussed later, there are so many non-common issues that it would be inappropriate for the action to continue as a representative proceeding.)

Section 33C provides:

"(1)     Subject to this Part, where:

(a)7 or more persons have claims against the same person; and

(b)the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances; and

(c)the claims of all those persons give rise to a substantial common issue of law or fact;

a proceeding may be commenced by one or more of those persons as representing some or all of them.

(2)      A representative proceeding may be commenced:

(a)whether or not the relief sought:

(i)is, or includes, equitable relief; or

(ii)consists of, or includes, damages; or

(iii)includes claims for damages that would require individual assessment; or

(iv)is the same for each person represented; and

(b)whether or not the proceeding:

(i)is concerned with separate contracts or transactions between the respondent in the proceeding and individual group members; or

(ii)involves separate acts or omissions of the respondent done or omitted to be done in relation to individual group members."

Part IVA was inserted in the Federal Court of Australia Act in response to the  Australian Law Reform Commission's Report No 46, entitled "Grouped Proceedings in the Federal Court".  While not adopting all the recommendations made by the Commission, the legislation did give effect to the major objective recommended by the Commission of enabling groups of people to obtain redress from multiple wrongs more cheaply and efficiently than in individual actions, promoting consistency in decision making and encouraging the efficient use of resources by practitioners and the courts:  see paras 61, 64, 66 and 354 of the Commission’s Report No 46 and Zhang v Minister for Immigration, Local Government and Ethnic Affairs (1993) 45 FCR 384 at 403, where French J also observed that Part IVA "significantly widens the scope for representative or class actions" beyond that available under existing procedural rules.

Section 33C(1)(a) is plainly satisfied here. The claim of each group member arises out of a number of different circumstances, so it is necessary to
consider whether they are the "same, similar or related circumstances" within s 33C(1)(b). In Zhang v Minister for Immigration, supra, at 404-405, French J said:

"The question whether the claims of the persons who are proposed as members of a group arise out of 'the same, similar or related circumstances' as required by s 33C(1) is not to be answered by an elaboration of that verbal formula. It contemplates a relationship between the circumstances of each claimant and specifies three sufficient relationships of widening ambit. Each claim is based on a set of facts which may include acts, omissions, contracts, transactions and other events. As appears from s 33C(2), the circumstances giving rise to claims by potential group members do not fall outside the scope of the legislation simply because they involve separate contracts or transactions between individual group members and the respondent or involve separate acts or omissions of the respondent done or omitted to be done in relation to individual group members.

The outer limits of eligibility for participation in representative proceedings are defined by reference to claims in respect of or arising out of related circumstances.  The word ‘related’ suggests a connection wider than identity or similarity.  In each case there is a threshold judgment on whether the similarities or relationships between circumstances giving rise to each claim are sufficient to merit their grouping as a representative proceeding.  At the margins, these will be practical judgments informed by the policy and purpose of the legislation.  At some point along the spectrum of possible classes of claim, the relationship between the circumstances of each claim will be incapable of definition at a sufficient level of particularity, or too tenuous or remote to attract the application of the legislation."

In my opinion, the 10 separate claims of the 16 group members satisfy this second criterion:  each is in respect of or arises out of discussions involving one or both of the same two representatives of the first respondent and each of the various group members concerning their entry into distributorship and associated agreements.  Each claim is based on conduct by one or both of those two persons in breach of s 52, for which the first respondent is said to be responsible, comprising various
representations as to attractive features of these distributorship businesses.  All discussions took place in a relatively short period and the distributorships were in localities in three confined regions in coastal Queensland.

The remaining question is whether the claims of all the group members give rise to “a substantial common issue of law or fact” within s 33C(1)(c). The imposition of this particular criterion, as one of the requirements to be satisfied before Part IVA can be utilised, was one of the departures made by the Parliament from the recommendations of the Law Reform Commission: see Morabito “Class Actions:  The Right to Opt Out” (1994) 19 MULR 615 at 623 where the author comments:

“The use of an ambiguous requirement such as ‘substantial’ adds uncertainty, as it confers upon courts excessive discretion, and it is not necessary as the requirement that there be a ‘common issue of law or fact’ is more than adequate to prevent disparate matters from being brought together.  The reason for the amendment can only be surmised, as it was not debated in Parliament nor explained in the Explanatory Memorandum.”

In my opinion, the imposition of this third criterion demonstrates a clear intention on the part of the Parliament to restrict the availability of the Part IVA procedure.

In Tillmanns Butcheries Pty Ltd v Australasian Meat Industry Employees Union (1979) 42 FLR 331 at 348, Deane J had to consider the meaning of the word “substantial” in the context of s 45D the Trade Practices Act, which
prohibited certain conduct likely to have the effect of causing “substantial loss or damage to the business” the target of the secondary boycott action.  His Honour observed:  “The word ‘substantial’ is not only susceptible of ambiguity:  it is a word calculated to conceal a lack of precision”, and referred to the comments of Viscount Simon in Palserv Grinling [1948] AC 291 but concluded that, in the context of s 45D, the word described “loss or damage that is, in the circumstances, real or of substance and not insubstantial or nominal”. Palser dealt with a statutory provision deeming a dwelling house to be bona fide let at a rent which includes payments in respect of the use of furniture required if the amount of rent fairly attributable to the use of furniture formed “a substantial portion of the whole rent”.  Viscount Simon, at 317, acknowledged that, in an appropriate context, the word “substantial” could mean “not unsubstantial” but said that, in the context of concern in Palser, it had its primary meaning of “considerable, solid, or big”.  He then observed:  “Applying the word in this sense, it must be left to the discretion of the judge of fact to decide as best he can according to the circumstances in each case ¼”

In my opinion, given that the object of Part IVA of the Federal Court of Australia Act is to enable groups of people to obtain redress more cheaply and efficiently than in individual actions and to encourage the efficient use of legal and court resources, the phrase “a substantial common issue of law or fact” is not satisfied by an issue (or a number of issues) common to all the group members’ claims which cannot be dismissed as trivial; whether an issue is a substantial common issue cannot be answered by focusing solely on the common issue, to the exclusion of the non-common issues that will also have to be resolved to determine
the entire action. Section 33C(2) shows that a common issue can be a substantial one sufficient to satisfy s 33C(1)(c) even though the various group members’ claims involve other issues of liability and damages unique to each of those claims. But the object of Part IVA would not be served if it was enough for there to be an issue common to each of the group members’ claims that could not be dismissed as trivial or insubstantial, even though that common issue was, when compared with the other non-common issues raised in the various claims as to liability and damages, merely one of a number of issues which had to be resolved before each claim could be determined. If, in addition to the common issue (or issues), the determination of each group member’s claim involves other non-common issues, the litigation of which will, in a practical sense, have a real impact on the nature and extent of the interlocutory steps likely to be involved in bringing the case to a state of readiness for trial and the nature and duration of the trial, then that common issue will not be “a substantial common issue” within s 33C(1)(c). If a representative proceeding involves, in the context of a s 52 case, the making of a representation that can be seen to be of importance to each claimant’s claim, it will still not, in my opinion, be capable of being a substantial common issue of fact if, in addition to relying upon that representation, each claimant alleges reliance upon other representations on important matters, each of which is likely to involve a considerable amount of time and effort to prepare and litigate. The determination of whether a common issue is substantial in this sense involves, I think, the sort of discretionary judgment that Viscount Simon referred to in Palser, the same sort of judgment which Lord Mustill accepted was involved in determining whether an area identified for consideration
formed “a substantial part of the United Kingdom” within the legislation under consideration in R v Monopolies & Mergers Commission; Ex parte South Yorkshire Transport Ltd [1993] 1 WLR 23 at 29.

There may be a case based on s 52 in which group members do not confine their claims to a common representation or representations, but also rely on other representations unique to each and it may still be able to be said that the representation or representations that are common to all claims do give rise to a substantial common issue of fact sufficient to satisfy s 33C(1)(c): eg, where one or more of the group members rely on additional representations which are related in subject matter to those common to all group members or where one or more of the group members rely upon additional but unrelated representations unique to each group member which are not likely, however, to give rise to much additional evidence or to increase the complexity of preparation or to protract the hearing itself. In such cases, the common representation could still be said to be so central to the litigation as to involve a substantial issue of fact common to the claims of all group members. Everything will depend upon the circumstances of the particular case.

Here, however, that there is a particular representation common to the case of each group member is, in my opinion, insufficient to enable that representation to be characterised as giving rise to a substantial common issue of fact.  The representation to the effect that certain products would be available exclusively from the first respondent, which is common to the claims of each group member, cannot be said to be of any greater significance to the claim by each group
member that the first respondent engaged in conduct in breach of s 52 involving other representations upon which the particular group member relied and which are unique to that particular group member.  There are so many other representations dealing with matters unrelated to the exclusivity of the product and unrelated to each other which are unique to only some of the group members; the litigation of these non-common representations will add substantially to the complexity of preparation for and duration of the trial than would be the position if all claims were based on the one representation common to all 16 claims.  There is therefore no justification for describing the one common representation as giving rise to a substantial common issue of fact.

For the reasons given, this case is not one which can be brought as a representative proceeding under Part IVA of the Federal Court of Australia Act.

If, however, I am wrong in this conclusion, the circumstances that have led me to think that the various group members’ claims do not give rise to a substantial common issue of law or fact show that the area of issues common to all claims is so limited, in comparison with the totality of the issues that have to be resolved both as to liability and relief, as between each of the group members and the respondents, that the present proceedings so much involve an investigation of individual circumstances as to justify an order being made under s 33N that the proceeding no longer continue under Part IVA of the Act. Cf Marks v GIO Australia Holdings Ltd (1996) ATPR 41-471 at 41,792 and 41,795.

The question remains as to the proper order to be made. I have concluded that this is not a case which s 33C permits to be brought as a representative proceeding under Part IVA. But nothing in that Part, in my view, makes the proceeding, in so far as it is brought by the six persons who have sued as applicants, a nullity. It should therefore continue as a proceeding between those six persons, as applicants, and the three respondents, but limited to the matters in issue between those parties. All other allegations will be struck out of the statement of claim. The applicants must file and serve an amended pleading giving effect to this order.

However, in view of the matters in issue between those applicants and the respondents and the cost differential between proceeding in the two Courts, the proceedings should be transferred to the District Court at Brisbane under s 86A the Trade Practices Act.  The District Court has power to grant all the Trade Practices Act relief sought by the six applicants under s 69 the District Courts Act 1967 (Qld), a power not materially different from s 49 the County Court Act (Vic), which was considered in Kinna v National Australia Bank Ltd (1988) ATPR 40-878. Questions of the propriety of the joinder of the six applicants are more appropriately left to the District Court for determination, should they be raised following the transfer.

[DW1] I certify that this and the preceding 20 pages
are a true copy of the reasons for judgment
of the Honourable Justice Drummond.

Associate:

Date:  5 September 1996

Counsel for the applicants:  Mr P J  Roney

Solicitor for the applicants:  Freehill Hollingdale & Page

Counsel for the respondents:                   Mr D A  Savage

Solicitor for the respondents:  Andrew P Abaza

Date of Hearing:  6 February 1996

[DW1]CHECK THAT THE REASONS ARE IN DOUBLE LINE SPACING.