Cook v Pasminco Ltd

SUPREME COURT OF VICTORIA

COMMON LAW DIVISION

No. 5364 of 2000

ROSLYN GAY COOK & ORS	Plaintiffs
v
PASMINCO LTD. & ORS	Defendants

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JUDGE:	HEDIGAN, J.
WHERE HELD:	Melbourne
DATE OF HEARING:	2-8 November 2000
DATE OF JUDGMENT:	15 December 2000
CASE MAY BE CITED AS:	As above
MEDIUM NEUTRAL CITATION:	[2000] VSC 534

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Group proceeding – Part 4A of the Supreme Court Act as amended by Act No. 78 of 2000 – Whether Part 4A purports to have extra-territorial effect – Whether proceeding as pleaded complies with the requirements of s.33C(1)(a) and (b) – Whether writ and statement of claim should be dismissed or struck out for non-compliance with the statutory requirements and rules of pleading – Writ inappropriately seeking to join unconnected claims – Failure to delineate group membership criteria – Failure to separate issues and parties – Identification of related matters and common issues of fact and law not possible – Proceeding dismissed with right to re-commence by way of separate proceedings.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J. Rowe	Coleman Grieg
For the Defendant	Mr D. Habersberger, Q.C. Mr D. Batt	Arthur Robinson Hedderwicks

HIS HONOUR:

This proceeding No. 5364 was brought by four plaintiffs as a group proceeding pursuant to Rule 18A of the Supreme Court (General Civil Procedure) Rules of this Court. The first and second plaintiffs Roslyn and Samantha Cook purport to bring this action as representatives of (a) a group of owners and occupiers of property within a five kilometre radius of land alleged to be occupied by the first defendant Pasminco Ltd. and the second defendant Pasminco Cockle Creek Smelter Pty. Ltd. at Cockle Creek in New South Wales (not far from Newcastle) who claim loss and damage to and a diminution of the value of their property; (b) all persons who suffered injury from exposure to harmful emissions from the first and second defendants' Cockle Creek lands. Roslyn Cook, the first plaintiff, was born on 6 July 1958 and the second plaintiff, Samantha Cook, was born on 5 July 1992. She is therefore only eight years of age and an infant at law. The third and fourth plaintiffs, Vicki Blaid and Ashleigh Agars, in the proceedings are representatives of (a) a group of owners and occupiers of property within a five kilometre radius of lands occupied by the first and third defendants at Port Pirie in South Australia who claim loss and damage to or a diminution of the value of their property and (b) all persons who suffered injury from exposure to harmful emissions from the first and third defendants' Port Pirie lands.

Pasminco Ltd, the first defendant, is a public company and wholly owns the second and third defendants. There has been a dispute before me as to whether or not the first defendant can be fairly described as operating the smelters respectively at Cockle Creek and Port Pirie. I will refer to this aspect later.

The first and second plaintiffs live in Girvan in New South Wales and the third and fourth plaintiffs live at Port Pirie in the State of South Australia. The writ avers that the group members exceed seven, as required by Rule 18A.03(a) of the Rules. The proceeding is expansively brought by the relevant plaintiffs as representatives of persons living in or about the respective places referred to, namely Cockle Creek and Port Pirie. The writ claims that the defendants wrongfully caused and permitted emissions of offensive and noxious vapours and gases, containing lead, sulphur dioxide and other pollutants ("the emissions") from the lands, these being allegedly toxic fumes. It is also alleged that they wrongfully caused or committed noise and vibration to escape from their land about the premises of the plaintiffs. Thus their claim purports to be founded in negligence (general particulars of which are given) and nuisance, the claim being made that the premises of the plaintiffs were contaminated and rendered unhealthy, interfering with their use and enjoyment of them. It is also alleged that the plaintiffs and "members of their family" have suffered trouble, inconvenience and personal injury, occasioning loss and damage. The injuries are described as involving lead poisoning, bowel problems, respiratory problems, sleep deprivation and brain damage. The property damage is said to constitute damage to roof, walls and cars. Paragraph 38 of the statement of claim purports to describe ten substantial common issues of law and/or fact that arise.

By summons of 19th June the defendants sought orders that (1) the writ be set aside or the proceeding be dismissed or stayed; (2) orders that the proceeding not continue as a group proceeding under Order 18A and that paragraphs 1, 2, 3, 4, parts of 9 and 12, and paragraphs 27 and 38 be struck out or alternately the whole of the statement of claim be struck out. The parties filed substantial affidavits from experts ranging from medical practitioners to chemists, toxicologists, expressing differing views on many aspects of the claims made.

Those somewhat less than cordial exchanges of differences of opinion have little to do with the matters which I must address on these applications and I am not likely to refer to them again, save in the most general terms. I assume that the dispute between the medical practitioners and scientists is directed to a matter not much argued before me at the present time, as to whether or not the issue that the emissions caused, aggravated or exacerbated respiratory problems must be judged on a case-by-case basis, because it was not possible to make an assessment of causation in respect of a class of persons living within a defined area or whether, to the contrary, the matter fell to be determined within the group proceeding rubric.

The attack made on the proceeding by the defendants is wide and elaborate. The orders are sought on the following three grounds; (1) the validity of Order 18A and/or its operation; (2) the purported nature of the proceeding as a group proceeding under Order 18A; and (c) a broad-ranging attack on the form of the statement of claim as a pleading. The summons of the defendants was supported by an affidavit of Andrew Robson, their solicitor. In view of the return day of both the summons for directions in the matter (this being a proceeding in the Major Torts List of the Common Law Division) and of the defendants' summons to which I have referred, the time for service by the defendants of their defences was extended. None have been filed or served at this point of time.

The submissions made on behalf of the defendants before me may be summarized as follows:

(a)Order 18A is invalid and a group proceeding such as the present proceeding cannot be validly constituted and maintained in this Court;
(b)Alternatively, if Order 18A is valid, the proceeding cannot effectively be constituted and proceeded with as a group proceeding because, having regard to certain features of Order 18A and because all, or nearly all, of the group members are outside the State of Victoria and have no connection with it, the proceeding as a group proceeding cannot be maintained because to maintain it would necessitate Order 18A having an extra-territorial effect which is beyond the legislature of Victoria to provide, either in its own enactments or by way of delegated legislation, that is the rule-making power of this Court.
(c)Even if those submissions are not upheld, it is argued that the proceeding does not meet any of the threshold requirements which Order 18A imposes in order for a proceeding to be commenced and maintained as a group proceeding pursuant to that order.
(d)The case against the first defendant should be dismissed or the pleading against it struck out as there is no possible basis for the claim sought to be made against it.
(e)The statement of claim ought to be struck out in its entirety as not disclosing any cause of action and as being so defective and embarrassing in its pleading that the defendants cannot and should not be required to plead to it.

The defendants through the affidavit of Mr Robson propose possible orders that might be made to give effect to these submissions and it is not necessary for me to consider that aspect until I have dealt with the submissions as to the type of orders that might be made (that is, not striking out the proceeding but conceivably ordering it not continue as a group proceeding, or making other orders in relation to the statement of claim amounting to striking out the proceeding.

I commence with the defendants' submissions.

(a) Is Order 18A invalid?

This was the form in which the issue was raised before me but in terms of appropriate expression, it has been overtaken by events. As is well-known, a five-member bench of the Court of Appeal in Schutt Flying Academy (Australia) Pty.Ltd. v. Mobil Oil Australia Ltd[1] upheld the validity of Order 18A by a majority. An application for special leave to the High Court of Australia against that decision is in progress. It has not yet been heard. Subsequently the Victorian Government announced that, in order to resolve the doubt as to the validity of Order 18A, it would introduce legislation providing a statutory basis for group proceedings in Victoria. That legislation has now been enacted and has received Royal assent (Act No. 789 of 2000, the Courts and Tribunals Legislation (Miscellaneous Amendments) Act 2000 hereinafter called "the Act"). The Act came into operation on the date of the assent, namely 28 November 2000, except s.13 of the Act which is deemed, by s.2 of the Act, to have come into operation on 1 January 2000. Section 13 of the Act inserts after Part 4 of the Supreme Court Act 1986 a new Part 4A, entitled "Part 4A – Group Proceeding. Part 4A of the Act substantially reproduces Order 18A although there are some differences. Section 33ZK of the Act is a transitional provision. It provides that a proceeding commenced under Rule 18A.03 of Chapter 1 of the Rules on or after 1 January 2000 and before the passing of the new Act must be taken for all purpose to have been commenced under this Part on the day on which it was commenced under that Rule. Thus this proceeding will now be dealt under Part 4A of the Supreme Court Act and not under Order 18A of the Rules.
[1][2000] VSCA 103 (unreported, Court of Appeal, 8th June 2000).

In argument before me the submission was made that Order 18A was invalid and that a group proceeding in that form could not be maintained in the Court. That argument was not much developed, although formally made, because the decision of the Court of Appeal in Schutt, although subject to an application for special leave to appeal, bound me as a judge sitting at first instance. Fundamentally, the defendants with respect to the claimed invalidity of Order 18A identified the five main grounds for invalidity that had been advanced in Schutt. Nevertheless, two of the arguments advanced to the Court of Appeal in Schutt were argued to be unaffected by the proposed amending legislation, now passed. These arguments are respectively (1) that Order 18A (now presumably Part 4A of the Act) purports to have extra-territorial effect beyond the legislative competence of the Victorian Parliament, and (2) that both Order 18A (and now the Act) are contrary to the requirements of Chapter 3 of the CommonwealthConstitution because both the Order and the Act purport or require or authorize the Supreme Court to exercise judicial power in a manner inconsistent with the judicial process. The defendants specifically reserved their right to make a challenge to invalidity in respect of the new Act when passed, as it now has been. Thus, although at the time of argument before me all parties referred to Order 18A, these reasons will address the relevant sections to be found in Part 4A of the Supreme Court Act as amended by Act No. 78 of 2000.

(b) Impermissible Extra-territorial Effect

The defendants argued that Part 4A is ineffective to support the proceeding as a group proceeding and that any orders made by the Court in the proceeding purporting to bind the group members in this case would be of no effect. Thus it was submitted that the proceeding should be permanently stayed, or dismissed, or those elements of it purporting to constitute it as a group proceeding and founded upon its claimed group nature, be struck out. This is an argument with respect to the claimed ineradicable vice of extra-territoriality in the operation of the Act in this case. As I understood the argument, it commences with the proposition that Part 4A modifies the rights of persons who are group members in a group proceeding brought pursuant to Part 4A. Specifically, its effect is that a judgment in a group proceeding binds all of the group members who have not opted out; see s.33ZB. Thus it was put that a judgment in a group proceeding determines the right of group members in respect of the issues arising in and decided in the proceeding. To the extent that any group members sought to put in issue in some subsequent proceeding matters determined by the court in the group proceeding, a plea of res judicata and/or issue estoppel would be made. The submission was that it therefore followed that in any proceeding purporting to be brought as a group proceeding under Part 4A in which the group members were outside Victoria, and had no connection with Victoria, the procedure provided by Order 18A would necessarily be being employed by the relevant plaintiffs in a manner purporting to have extra-territorial effect on substantive rights. Although it was not specified, I deem that the rights there referred to are the rights of the plaintiffs in other States to bring their own proceedings as individuals.

It was submitted that from the description in the statement of claim of the group which the plaintiffs purport to represent (see paragraphs 2 and 3) it is obvious that all or virtually all of the group members were outside Victoria and have no connection with this jurisdiction. In addition, the conduct of the defendants alleged to constitute the wrongs, all occurred outside this State. I deem that this is a key element of the submission. The description of the group in the plaintiffs' proceeding is such as to permit the inference that the group members are outside Victoria, that is either in the State of New South Wales or the State of South Australia. This is not absolutely certain because of the failure of the statement of claim adequately to describe the group membership to enable it to be determined who falls within the group. This inadequacy is said to derive from an absence of defining elements of time and place. It will be necessary for me at a later stage to re-address this aspect.

The submission appeared to be that the legislation to which I have referred (and at that time a fortiori the sub-delegated legislation encompassed by the Rules made pursuant to s.25 of the Supreme Court Act) is incapable of having extra-territorial effect on substantive rights. This arose, it was put, by reason of the general law imposing known limitations on the legislative competence of State Parliaments. The essence of the argument is that such legislation is capable of extra-territorial effect only when there is some sufficient connection between the State and the extra-territorial person, thing or event on which the legislation operates. Reliance was placed upon statements made by the High Court in Port Macdonnell Professional Fishermen's Association Inc. v. South Australia[2]. It was further argued that s.16 of the Constitution Act 1975 of the State of Victoria, which provides in specific terms that the Victorian Parliaments have the power to make laws in and for Victoria in all cases whatsoever, was subject to implied limitations on the extra-territorial powers of State legislatures, alleged to arise by virtue of the Commonwealth Constitution. Other than that claim, namely, that State legislative powers were limited so as to render impermissible extra-territorial effect, no detailed argument was advanced to explain why s.2(1) of the Australia Act 1986 of the Commonwealth of Australia (which makes specific provision that the legislative powers of the State Parliaments include full power to make laws for the peace, order and good government of the States that have extra-territorial operation) did not have application in this case. The general argument was that that enactment did not overcome the limits imposed by the Commonwealth Constitution, although the section or sections of the Constitution was not specifically identified. I therefore deem it that the argument was really founded upon the limits necessary to be imposed on State legislation in a federation where the Federal Parliament has itself a Federal sphere of legislative activity. With regard to this part of the argument, counsel for the defendants made no submissions at all.
[2](1989) 168 C.L.R. 340 at 372.

The argument also involves the proposition that the connection between the State of Victoria and the extra-territorial person cannot be derived as a consequence of the State proceeding being served upon a defendant or defendants carrying on business in and being a corporate resident of the State. In my view, this proposition may be doubted as the legislation might be thought to be open to be applied to and for the benefit of persons residing out of the State of Victoria but able to commence a proceeding against a defendant carrying on or having a place of business in Victoria, even though the relevant activity may have occurred outside the State of Victoria. But the argument that was advanced was that with respect to the requirement of a sufficient connection, that must be derivable from the legislation itself. Thus it was submitted that the group proceedings established by Part 4A are such that group members are within the proceeding and are bound by judgments in it, without any action by them or service upon them of any originating process. The focus was on this point, namely, that the relevant question is the connection between the State of Victoria and the group members whose rights are affected by the group proceeding.

The argument also appeared to be advanced, although it was not much developed, that there was a presumption that State legislation was intended by the Parliament to apply only to activities within the territory under the direct control of the State, subject to displacement by clear contrary intention. However, what the legislation here provides is a legal proceeding of a special kind. There is no reason to suppose that the Parliament did not intend that persons outside the State of Victoria could not be group members in the case where a Victorian defendant has been sued and served within the State. In Schutt itself, the aircraft owners buying Avgas in other States may have had no connection at all with the State of Victoria, although the Avgas originated at Yarraville, in Victoria. It is true that the legislature may not have specifically envisaged large numbers of persons wholly outside the State constituting a group for the purpose of Part 4A, perhaps even more particularly so when the acts allegedly causing the losses also occurred outside the State. That is of limited assistance when endeavouring to decide the issue here raised.

The recent decision of the High Court of Australia in John Pfeiffer Pty. Ltd. v. Rogerson[3] definitively abandoned the double-actionability rule of private international law (the Rule in Phillips v. Eyre) the Court deciding that all matters affecting the existence, extent and enforceability of the rights and duties of the parties to an action, where the matters were concerned with issues of substance and not procedure, were to be determined in accordance with the lex loci delicti. Only the rules directed to governing or regulating the mode or conduct of court proceedings were procedural. Thus all questions as to the type and amount of damages recoverable were matters of substance governed by the law of the place of the tort.
[3][2000] 172 A.L.R. 625.

In addition, the Court in Pfeiffer placed some emphasis on the necessity of understanding the language of private international law in the Australian federal context, that is, each State as a component of a federation and part of a federal compact. It is now beyond doubt (if it were ever to be doubted) that there is but one common law in Australia and, subject to some exceptions, any person may sue in any State the courts of which will have jurisdiction in personal actions. The defendant is served with the court's originating process within the territorial boundaries of the court's jurisdiction. Thus jurisdiction fundamentally depends upon the defendant's presence in the territorial jurisdiction at the time of service of the originating process and it is not necessary to show any other connection with the jurisdiction for that purpose.

It was stated in the joint judgment of Gleeson, C.J., Gaudron, McHugh, Gummow and Hayne, JJ.[4] as follows:

"In by far the majority of cases the jurisdiction of Australian courts in personal actions depends on the defendant's presence in the territorial jurisdiction at the time of service of the originating process. In such cases it is not necessary to show any other connection with the jurisdiction. Thus, questions can arise as to the law to be applied to determine the consequences which attach to an act or omission which occurred in a State or Territory other than that in which the proceedings are brought. Those questions can arise whether the proceedings are in federal or non-federal jurisdiction.
No question as to the law to be applied arises for State or Territory courts if the events which give rise to the proceeding all occurred within the territory of the court's jurisdiction. It is the body of law comprising the Constitution, applicable Commonwealth legislation, applicable legislation of the State or Territory concerned, and the common law of Australia. But if the parties or the events have some relevant connection with another Australian jurisdiction, there is a question whether any of the legislation of that other jurisdiction should be taken into account in deciding any of the three issues of existence, extent or enforceability of rights and obligations. No question can arise about the other sources of law: effect must always be given by a State or Territory court to the Constitution and to any applicable Commonwealth legislation, and subject to what follows, because there is a single common law of Aust, there will be no difference in the parties' right or obligations on that account, no matter where in Australia those rights or obligations are litigated.
There may be cases where, although the common law applies both in the law area in which a particular case is litigated and in the law area in which the relevant events occurred, it may have been modified in one of them in some relevant particular."

Pfeiffer was a decision primarily concerned with choice of law or, since the proceeding had been commenced in Federal jurisdiction, the identification of the applicable law.

[4]Paras 14, 15 and 16.

Whilst cases such as Koop v. Bebb[5], McKain v. R.W. Miller & Co. SA Pty Ltd.[6], and Stevens v. Head[7] were not followed in Pfeiffer, the double actionability rule being discarded, the Court, in the joint judgment referred to, considered that the view expressed in Koop v. Bebb that the law of the forum was enforcing an obligation of its own creation in respect of an act done outside the territorial jurisdiction of the forum was correct, i.e. if the act had been a civil wrong, it would have been a civil wrong if done in the territory of the forum. I do not deem this to be any impediment to the plaintiff's claim in substance as it appears to me that the acts complained of if done in the State of Victoria would be a tort under local law.
[5](1951) 84 C.L.R. 629.
[6](1991) 174 C.L.R. 1.
[7](1993) 176 C.L.R. 433.

There is of course no Federal jurisdiction being exercised in this case and accordingly ss.79 and 80 of the Judiciary Act are not relevant. Part 4A does not create the civil wrong or wrongs sued on in this case nor does it declare that any relevant act or omissions shall be wrongful. Part 4A creates a procedure for determining and enforcing rights of a wider kind. That does not make the statute purely procedural because its effect in a case of non-opt out is to bind all group members whether they actually know of the proceeding or not. Thus it affects substantive rights, or at least may do so.[8] The establishment by Part 4A of the group proceeding mechanism is the creation by this State of a means of enforcing obligations arising from acts arguably done both inside and outside the territorial jurisdiction of the State of Victoria. It is to be noted that there is nothing in Part 4A to denote the limitations relied on by the defendants. It is enabling legislation which confers rights upon group members who are not named parties to the proceeding and as such the legislation operates with respect to persons. Whilst there might be arguably good policy reasons for limiting the ambit of Part 4A, Part 4A does not itself create any limitation. On the contrary Part 4A in fact contains and confers on the Court a power which is additional to any power purported to be created by Rule 18A in that s.33KA expands the Court powers concerning group membership by enabling the Court, either on the application of a party to a group proceeding or of its own motion, and whether before or after judgment, to order (a) that a person cease to be a group member, or (b) that a person not become a group member, if it is of the opinion that the person does not have sufficient connection with Australia to justify inclusion as a group member or (c) for any other reason that is just or expedient that the person should not be or should not become a group member. One notes that the Act did not make provision for a court to make an order under sub-s.(1) if it was of the opinion that the relevant group member did not have sufficient connection with Victoria, to justify inclusion as a group member.
[8]See the discussion by Ormiston, J.A. in Schutt paras [38]-[41].

It was accepted by the defendants that (subject to some technical matters concerning minority property ownership and the like, which I will subsequently address) the plaintiffs could individually have commenced a proceeding in the State of Victoria founded upon civil wrongs committed out of State against them by the defendants in served the State of Victoria. That is, service on the relevant defendants would be sufficient to confer jurisdiction to deal with the proceeding, although the applicable law will be the law of the place where the wrong occurred. The defendants contend the reach of the State's legislative power cannot go so far unless there is some connection between the State of the forum and the persons, events or things on which this legislation operates. The argument was also buttressed by the contention that the group membership must be defined so as to disclose the Victorian connection existing in all members of the group. The defendants sought to justify the difference in the approach called for in the group proceeding from an individual action on the basis that the effect of determination in a group proceeding is to bind all persons within the group who have not opted out, even if they were not aware of the group proceeding, so that they lost their right to individual suit. However this possibility exists even in a case where all the members of the group are or were defined to be in the State of Victoria and even if the events giving rise to claims in the action all occurred in Victoria. The risk of that claimed injustice, that is of the loss of rights without knowledge, is in effect part of the policy trade-off to enable large numbers of affected persons to be included in a mass action rather than being prevented by economic or status considerations from taking individual action.

Thus I consider the real point to the defendant's real argument to be founded upon its argument as to the effect of the authorities, including Port McDonnell. However my view is that the connection referred to arising from the legislation must be between the State and its enacting legislation and the extra-territorial person adversely affected by the legislation. The defendants in their examination of the authorities, relied upon in Broken Hill South Ltd. (Public Officer) v. Commissioner of Taxation (New South Wales)[9]. In that case, Dixon, J. stated:
[9](1936) 156 C.L.R. 337 at 375.

"It is within the competence of the State legislature to make any fact circumstance occurrence or thing in or connected with the territory the occasion of the imposition upon any person concerned therein of a liability to taxation or of any other liability. It is also within the competence of the legislature to base the imposition of liability on no more than the relation of the person to the territory. The relation may consist impressions within the territory, resident domicile, and carrying on business there or even remoter connections."

This statement was later approved in Union Steamship Company of Australia Pty Ltd v. King[10]. Reliance was placed by the defendants on statements made in Balajan v. Nikitin[11], a case concerned with assets outside the jurisdiction purported to be dealt with by the Family Provision legislation. In that case Windeyer, J. stated:
"But the fact, circumstance occurrence or thing generally needs to be connected with the person or subject matter of the action upon whom and upon which liability is to be attached, not just the chance of the action being commenced by a particular person in this State."

Windeyer, J. cited statements of McHugh, J.A. in Flaherty v. Girgis[12] to this effect:
"The question is the extent to which a Parliament with power to make laws for the peace, welfare and good government of the State can validly legislate to affect persons or property out of the State has come before the courts on many occasions. The governing principle is that the criterion of liability must have a real connection with the State .... Domiciles, residents or even presence within the jurisdiction is always sufficient to give the legislature power to impose any liability whatsoever on the person so residing domiciled or present. But in respect of persons who do not reside and are not domiciled or present in the State, the liability must be imposed by reference to a fact event thing or transaction which has a direct connection with the State. Sufficient connection can be found in the ownership or control of the beneficial interest in property situated within the jurisdiction or in the participation, directly or through an agent, in an event or transaction occurring in the jurisdiction. But it is not enough that indirectly the person from whom the liability is imposed obtain to benefit from the use of property or the occurrence of an event within the jurisdiction. ..."

Other cases relied on, Robinson v. Western Australian Museum[13], Welcher v. Hewitt[14] and Dempster v. National Companies and Securities Commission[15], were all concerned with penalties of one kind or another being sought to be imposed extra-territorially. The defendant's argument, as I have suggested, is that group members almost entirely outside Victoria without any connection with the State of Victoria come within the proceeding and are bound by judgments in it, without any action by them or service upon them of any originating process. As I have indicated, that situation exists in the same way with intra-State group members. I am not prepared to take the view that interstate groups are excluded from the operation of Part 4A. The legislation is intended to be enabling, not restrictive. It was also contended that in cases where the group members are outside Victoria s.33ZB does not make effective provision to bind those group members to a judgment in a group proceeding. I am not prepared to accede to that submission as I do not accept that the judgment of the Supreme Court of Victoria can never bind group members in New South Wales or South Australia. In any event, if questions arose in those States concerning enforcement or res judicata issues, the decision about that would have to be made by the courts in those States. It is not a matter for the Supreme Court of Victoria to determine at this point of time.

[10](1988) 166 C.L.R. 1.

[11](1994) 35 N.S.W.L.R.

[12](1985) 4 N.S.W.L.R. 248 at 267.

[13](1977) 138 C.L.R. 283.

[14](1969) 127 C.L.R.(??) 503.

[15](1993) 9 W.A.R. 215

The majority in Schutt rejected an argument that the then Order 18A was itself invalid on the basis that it necessarily authorized group proceedings with extra-territorial operation. The defendants here contended that a decision was not specifically made that in any proceeding where the group members were outside Victoria, Order 18A (or now the Act) would be effective to support the proceeding. That was not necessary to decide but statements by Ormiston, J.A. (with whom Charles, J.A. concurred) and Phillips, J.A. do not lend much support to the defendants' submission made to this Court. Ormiston, J.A. stated:

"The second principal objection to Order 18A was that it purports to extend the jurisdiction of the Court in a manner not authorised by s.25. In essence the complaint rested on two elements, first, that persons could be joined effectively as plaintiffs without their consent, and, second, that the result of a group proceeding is intended to bind conclusively all members (except those who are able to and choose to opt out), so as to create res judicata between them and the defendant. Indeed, r.18A.27 requires the Court at the time of judgment to 'describe or otherwise identify' all such group members who by para (b) are explicitly stated to be bound. The defendant asserts that under O.18A parties may be so affected who have no knowledge whatever of the proceedings and who will not have been served under the conventional rules as to service, including those permitting substituted service.
In my opinion there is no reason why the Court should not effectuate by rule of court these consequences of group proceedings. Unless it be asserting jurisdiction over persons outside the jurisdiction..., this Court may make rules as to how parties are joined and are represented in proceedings in the Court. Substituted service not infrequently is ineffective to bring proceedings to a party’s notice..., but the Court recognises that that may be a necessary consequence of enabling certain plaintiffs to obtain relief to which they are entitled. There is no direct equivalent for plaintiffs, but the practice has existed for many years of binding unwilling plaintiffs by joining them as defendants to whom substituted service may be directed. More importantly, in the present context, for many centuries... the courts have permitted, in one way or another, parties to sue (and be sued) by representatives who have either claimed the right to sue on behalf of others or, more frequently (but not invariably) and in recognition of such claims, have been authorised or permitted by the courts in more recent centuries to sue or be sued on their behalf.... The Chancery practice, later adopted in Judicature Act rules, has been authoritatively expounded in relation to both the 'traditional' representative suit... and Part IVA of the Federal Court Act in, respectively, Carnie v. Esanda Finance Corp Ltd.... and Wong v. Silkfield...."
Joinder is clearly a matter for courts to prescribe as a matter of practice and procedure, but one may concede that the binding effect of judgments and the principles of merger of judgments, res judicata and issue estoppel are substantive. Insofar as O. 18A purports to change or expand those rules then one could only justify r.27 if it were possible to treat this attempt to bind absent parties as no different in substance from that recognised as flowing from the effect given to orders under O.18 and the like. Doubtless the classes represented by 'group members' as defined by the new Order... are wider than even the High Court... was prepared to encompass under the existing procedures, but the means of communicating with them and their rights to opt out are more extensive.
...
More importantly Rule 18.04, unlike the former O.XVI r.9, specifically provides in para (1) that judgments and orders under that rule "shall bind the parties and all persons as representing whom the parties sue or are sued", though leave is required before the judgment or order is enforced. The binding force of such orders is thus dealt with explicitly and the rule-making power ought to taken as extending to justify r.18A.27, unless the subject-matter of the new Order is to be seen as something quite different in character. No doubt the procedure is more elaborate and its scope is significantly wider, but in my opinion it is essentially an order permitting representation of absent parties, as are Orders 18 and 16. Whatever be its practical effect, Order 18A merely creates a "new form of representative proceedings", as their history demonstrates and as the High Court described the almost identical provisions of the Federal Court Act Part IVA in Wong.... I do not accept the defendant’s analysis of the new procedure embodied in Order 18A. Consequently in these respects it did not go beyond the Court’s rule-making power."

As will appear subsequently, in view of the conclusions which I have reached concerning defects in the proceeding by virtue of the attempt to combine two separate group proceedings in the one proceeding and the difficulties of compliance with the requirements as common issues and to related subject matters and other matters later addressed by me in these reasons, it is not necessary for me to reach any final opinion concerning the claimed extra-territorial incompetence of the legislation that form part of the defendants' submissions.

My present view is that the defendants' submissions are incorrect but I reserve my right to reconsider and express my final view when it is necessary to do so. I have said what I have said in deference to the submissions on behalf of the parties and because, if the plaintiffs otherwise sought to appeal against the conclusions I have otherwise reached, the defendants would be enabled to argue this point by way of a cross-contention in the Court of Appeal.

I turn next to the arguments advanced that there is no basis for any of the claims made in the statement of claim against the first defendant Pasminco Ltd and that therefore those claims and the case against that defendant should be dismissed pursuant to Rule 23.01. There is some justification in the complaint of the defendants that the relevant parts of the statement of claim which purport to erect the case against that defendant are vague and unclear. Nevertheless, it appears to be intended by the statement of claim to allege that the first defendant is the occupant of the land on which the relevant smelters are situated and that from those lands it conducts and operates the business of smelting leading to the emissions, noise and vibrations which are the cause of the claims for personal injury and a nuisance.

The statement of claim in many respects pleads the cases against the defendants collectively, without drawing any distinction in the pleading between the activities respectively performed, that is, they are treated together and indistinguishably as carrying on the business of smelting in both New South Wales and South Australian locations, and are thereby each liable in negligence and nuisance. The phrases such as "the defendants' carrying on their business" are examples of this.

The first defendant (through the affidavit of Mr Robson averring the facts) rely upon the fact that the first defendant does not own or occupy, and never has owned or occupied, the relevant lands. It is claimed that it does not own or operate and has never owned or operated either of the relevant smelters. That being the case, it is said that there is no basis for the first defendant to be sued in respect of them and the case should be dismissed as against it.

It is an agreed fact that the second and third defendants are wholly owned subsidiaries of the first defendant. The plaintiffs relied heavily upon the Annual Report of the first defendant for the years ending 30th June 1999 and 2000 and certain news releases made by the first defendant (Exhibit 3 in these proceedings) as leading to or affording grounds for the conclusion that, properly read, the references in the reports to Pasminco really are references to the controlling company Pasminco Ltd, the first defendant, as operating the smelters. The defendants argued the word "Pasminco" means the group, does not mean Pasminco Ltd and does not refer to it. The defendants also argued that Pasminco Ltd, the first defendant, does not operate the smelters but the second and third defendants do so, respectively. The argument was also advanced for the defendants that the language used in the Annual Reports referred has no legal effect. However, for my purposes at the present time, the reports have a legal significance, even subject to the limitations of them being an Annual Report for the group, including consolidated accounts. Such reports are authorized and published to the world at large and make statements which one is entitled to assume are thought to be accurate and true.

The plaintiffs' arguments before me appeared to primarily focus upon an entitlement "to lift the corporate veil" and call upon the Court to look beyond the separate legal entities of the three companies and instead focus on the group as a whole so that the first defendant could not be, for the present purpose, separately treated. Substantial reliance was placed by the plaintiffs on D.H.N. Food Distributors Ltd v. Tower Hamlets London Borough Council[16], a case in which three companies in a group of food distributors were treated by the Court as one economic unity. Reliance was placed upon statements by the Master of the Rolls, Lord Denning[17], and statements, linked to the facts prevailing in the case, of Goff, L.J., agreeing that the corporation should not be treated separately, that "the two subsidiaries were both wholly owned; further they had no separate business operations whatsoever". Reliance was also placed upon statements in Gower's Modern Company Law concerning the alleged general tendency:

"to ignore the separate legal entities of various companies within the group, and to look instead at the economic entity of the whole group. This is especially the case when the parent company owns all the shares of the subsidiaries – so much so that it controls every movement of the subsidiaries. These subsidiaries are bound hand and foot to the parent company and must do just what the parent says. ... They should not be treated separately so as to be defeated on a technical point."

[16](1976) 3 All E.R. 462.

[17]At 860.

In Briggs v. James Hardie Co. Pty Ltd[18], Rogers, A.J.A. considered a number of authorities concerned with the so-called attempts to pierce the corporate veil, his Honour stating that it was not possible to identify a common unifying principle underwriting the decisions of courts to pierce the corporate veil. He referred to statements in Smith, Stone and Knight Ltd. v. Birmingham Corp.[19], in which case Atkinson, J. had identified criteria (six in number) as a guide to the determination of who was really carrying on a business. Generally speaking, the law's approach has been to maintain the separate corporate distinctions involved in separate incorporation unless it is all a mere façade. There are reported cases (and one might assume even unreported ones) in which the distinction between a parent and its subsidiary has been ignored when the latter is so controlled by the former as to be the agent for the purposes of liability. But the ultimate control which a parent company has over its subsidiaries may not be sufficient, if other facts lead to the conclusion that the subsidiaries exercised on-the-ground control of particular operations, as a separate and independent legal entities.
[18](1989) 16 N.S.W.L.R. 549.
[19](1939) 4 All E.R. 116.

Few of these cases are cases in tort in which persons have sustained personal injuries, probably because whether the control or dominance was by the holding company or a subsidiary would not create or increase a foreseeable risk of injury. Rogers, A.J.A in Briggs thought the proposition that the separation of the corporate veil in holding company/subsidiary company situations may occur if the exercise of dominance resulted in inadequate safety precautions being taken. His Honour in that case referred to Craig v. Lake Asbestos of Quebec Ltd[20] that one of the requirements for piercing the corporate veil was that the parents so dominated its subsidiary that it had no separate existence and was merely a conduit for the parent company. The plaintiffs here argued that a more significant statement in Briggs was that of Hope J.A. (554) (it was an extension of time case) stating:

"But where a plaintiff brings an action against two defendants alleging that one or both are liable, and there is some evidence to connect each defendant with the events the subject of the action, then provided the plaintiff established the prima facie against one of the defendants the other defendant will not be dismissed from the action until the whole of the evidence has been heard. As it seems to me this means that the plaintiff is entitled to bring an action against two defendants if he has evidence to establish a prima facie case against one and has evidence pointed at the possibility of the other defendant being liable."

The significance of this in a group proceeding may not be the same. Moreover the passage relied upon does not focus upon the relevant criteria.

[20]843 F 2d 145

The argument to me by Mr Rowe for the plaintiffs was that the first defendant did dominate the second and third defendants so that they were mere conduits for the parent, and that the exercise of dominance over the management and operation of the smelter had the effect of creating and increasing the risk of injury to the plaintiffs and the group members, thus rendering the first defendant responsible in the whole of the circumstances. In support of these general propositions, the plaintiffs relied upon the reports to which I have referred (certain features of which I will shortly identify), and historical company searches that showed some commonality of directors. He also submitted that the effect of the Annual Reports and the environment reports led to the conclusion of control. It was submitted for the plaintiffs that the Pasminco Environment Report for the year 1999 specifically referred to Pasminco Ltd as the entity which "operates and markets the output from three primary smelters in Australia – the Cockle Creek ISF Zinc and Lead Smelter, the Hobart Electric Zinc Smelter and the Port Pirie Lead and Zinc Smelter". He claimed that it was clear on reading that report that it was the first defendant which accepted international responsibility on environment matters. It was noted that the "feedback" form annexed to that report was addressed to, and to be posted to, Pasminco Ltd. and not to the subsidiaries. He paid particular attention to the Annual Report of the year 2000 referring to the reference on page 2 to "The company operates and markets the output from the three primary smelters in Australia", to the detailed references to the operations of the subsidiaries and to the statement of the Chairman and Managing Director of the first defendant as to the "introduction of company-wide safety management standards and beliefs" and the work of the parent company in significantly raising the awareness of safety issues across the group. Attention was drawn to the distinction made from time to time between the group and the first defendant (see pages 6-7). He argued that the way in which the operations were treated showed that the group was an entity, referring to multiple references in the report including "Pasminco's safety and management standards and beliefs were rolled out and integrated across the group". He relied on statements on page 50, under the heading "Risk Assessment and Management": "The Board as a whole monitors and receives advice on areas of operation and financial risk ...". He relied on the principles of consolidation referred to in most of the financial statements to the effect that the consolidated accounts incorporated the assets and liabilities of all entities controlled by Pasminco Ltd, thus the subsidiaries.

Mr Habersberger, Q.C., for the defendants claimed that the statement of claim did not put the case on the basis that the second and third defendants were mere conduits of the first defendant. It was now being claimed for the first time that the first defendant controlled the second and third defendants. He also argued there was no basis articulated that there was other than corporate separateness in relation to the activities. That is, the second and third defendants operated independently.

Essentially, the defendants complained that the argument presented, namely that the first defendant dominated and controlled the second and third defendants, was a new case and that none of the facts necessary to support the argument had been pleaded. If pleaded, they were capable of being met by appropriate material.

Whilst there is substance in the complaint that the statement of claim appeared to put the case on a different basis to the one argued before me, there was material exhibited to the affidavit of Mr Makris. Arguments have been advanced on the basis of those exhibits, coupled with some hyperbole. Notwithstanding that, I am not prepared to take the view at the present time that there is no arguable case made out on the necessary standard against the first defendant. It has adopted the position as the international spokesman for all three companies on environmental matters and, even allowing for the general rather than specific way in which the activities of companies within the group are dealt with in annual reports and associated documents, I am of the view that there is sufficient material prima facie to suggest that the first defendant either controlled the second and third defendant or that they operated in such a way that it would be unjust and unreal to regard the first defendant as being detached and separated from the control of the operations of the two smelters concerned. Moreover, there has necessarily been no discovery of documents at this time. I would not favour dismissal of the proceeding against the holding company which, on the basis of the exhibits to the Makris affidavit, is very active in the conduct of the group's affairs. Accordingly I am not prepared to accept the defendants' submissions on this aspect, although the pleading is deficient in a number of respects.

The defendants' next submission is that the proceeding fails in limine for non-compliance with the requirements of s.33C(1)(a). Paragraph 2 of the statement of claim pleads that the first and second plaintiffs bring the action as representatives of (a) the group of owners and occupiers of property situated within a five kilometre radius of lands occupied by the first and second defendants at Cockle Creek who claim loss and damage and diminution of the value of their property; and (b) all persons who have suffered injury from exposure from emissions for the first and second defendants' Cockle Creek land.

Paragraph 3 deals with the third and fourth plaintiffs distinctly and separately from the first and second plaintiffs, whilst making similar allegations with respect to lands allegedly occupied by the first and third defendants at Port Pirie. The defendants' submissions are that the s.33C conditions for the requirements for the bringing the proceeding as a group proceeding, (since s.33C is in effect the reproduction of s.33C in Part IVA of the Federal Court of Australia Act) the decisions concerning the threshold requirements in the Federal Court of Australia should be followed by this Court. In particular, the argument was advanced that the special requirements of s.33C have to be satisfied to enable the proceeding to be properly brought as a group proceeding and that the Court's satisfaction as to that aspect must be derived from an examination of the statement of claim. Reliance was placed upon Wong v. Silkfield[21] and King v. GIO Australia Holdings Ltd.[22]. The critical submission here is founded upon the language of s.33C of the Act which provides as follows:
[21]At [29].
[22][2999] FCA 617 (unreported, Moore, J., 12 May 2000) at [12].

"Subject to this Part where:
(a)seven or more persons have claims against the same person;
(b)the claims of all of 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 question of law or fact,

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

In my view the weight of authority which is relevant supports the argument that the Court must be able to conclude from the plaintiff's pleading that at the commencement of the proceeding the requirements of s.33C are satisfied. See Wong v. Silkfield (above), Philip Morris (Australia) Ltd. v. Nixon[23]; Femcare Ltd v. Bright[24]; Johnson Tiles Pty. Ltd. v. Esso Australia Ltd.[25]; Cameron v. Qantas Airways Ltd.[26] and Murphy v. Overton Investments Pty.Ltd.[27]. The defendants' submission is that in this case the definition and description of the group of seven or more persons on whose behalf the plaintiffs are said to bring the proceeding is defective. They argue that the assertion that the claims of all of those persons arise out of the same, similar or related circumstances, and also the specification of the supposedly common issues of law or fact to which all of those claims are said to give rise are "profoundly deficient".
[23][2000] 170 A.L.R. 487 at [40], [125], [128] and [138].
[24][2000] 172 A.L.R. 713 at [12] and [132].
[25][1989] A.T.P.R. 41-679.
[26][1993] A.T.P.R. 41-251.
[27][1999] FCA 1123 (unreported, Emmett, J., 17 August 1999) at [64].

I therefore turn to the argument derived from the terms of s.33C(1)(a). The defendants contend that the law is that in order to satisfy s.33C(1)(a) each named plaintiff in a group proceeding must have a claim against each defendant. Reliance was placed upon Philip Australia Ltd. v. Nixon[28]; Bright v. Femcare[29]; King v. GIO Holdings[30] and additionally Ryan v. Great Lakes Council[31] and Tropical Shine Holdings Pty.Ltd. v. Lake Gesture Pty Ltd.[32] The fundamental submission of the defendants is that the first and second plaintiffs are claiming only against the first and second defendants and the third and fourth defendants are claiming only against the first and third defendants. I put aside the argument advanced that none of the plaintiffs can have a claim against the first defendant. I have already indicated that on the basis of the present material I am prepared to conclude that there is an arguable case for the first defendant having control of the second and third defendants permit it to be inferred for the present purpose that it operates the relevant smelters. Alternatively, but to the same effect, that the defendants should be regarded as a single entity. Notwithstanding that, the case as argued for the defendants was that an inability to comply with the threshold requirements of s.33C(1)(a) exists because the first and second plaintiffs have a connection only with Cockle Creek and none with Port Pirie, and the third and fourth plaintiffs have a connection with Port Pirie and none with Cockle Creek. Thus, it is said, the first and second plaintiffs could have no claim against the third defendant and the third and fourth plaintiffs could have no claim against the second defendant. If the argument is correct, then the defect is not confined to the statement of claim but is embodied in the writ. As a corollary to the argument that it is self-evident that the plaintiffs themselves do not each have a claim against each defendant, it is submitted that that same proposition is applicable to the group members because of the way in which they are described and defined. It is to be observed that the statement of claim deals separately with two distinct groups.
[28]At [126]-[128].
[29]At [82].
[30]At [13] and [29].
[31][1997] 78 F.C.R. 309 at 312.
[32][1993] 45 F.C.R. 457 at 462.

For the present purpose, I ignore another difficulty created by the form of the pleading which is that, notwithstanding that the statement of claim identifies two separate sets of plaintiffs and two separate groups, the balance of the statement of claim proceeds as though the earlier part had not made the division and for the purpose of the pleading, in any event, dealt with all plaintiffs on behalf of all group members against all defendants. The substance of the submission at this level is really that two entirely separate possible group proceedings have been "collapsed" into the one proceeding brought by two unconnected sets of plaintiffs for two unconnected groups, the link between them being the claimed connection with the defendants. In Philip Morris v. Nixon, a case in which the respondents in the appeal had brought representative proceedings against the manufacturers and distributors of cigarettes in respect of smoking-related diseases allegedly contracted, the substance of the applicant's case was that the group of respondents had embarked individually and collectively on a tortious course of conduct giving rise to claims for relief under the general law and the Trade Practices Act. On appeal from the primary judge, the Appeal Court agreed that the representative proceeding brought under Part IVA of the Federal Act failed to comply with a number of the threshold requirements specified in the Act. Sackville, J. (with whose reasons with respect to the principal matters Spender and Hill, JJ. agreed) examined and analysed many of the threshold and procedural requirements arising under Part IVA of the Federal Act and which, as a consequence of Part IVA of the amended Supreme Court Act, might be applied in this case.

Relevantly to the present issue, the Court held that the proceeding must be such as to satisfy each of the three threshold requirements specified, that the pleading must demonstrate that each of the conditions laid down in s.33C(1) was satisfied. One of those requirements was stated to be that s.33C(1)(a) requires every applicant and represented party to have claims against all respondents. The Court also incidently concluded that Part IVA did not abrogate the general pleading requirements applicable to the proceedings in the Court. Sackville, J. stated[33]:
[33]At [127].

"It follows that s.33C(1)(a) is not satisfied if some applicants and group members have claims against one respondent or group of respondents while other applicants and group members have claims against another respondent (or group of respondents). The requirement in s.33C(1)(b) that the claims of all group members are in respect of or arise out of the same, similar or related circumstances, is a necessary but not sufficient condition for the commencement of representative proceedings. Of course, if there are two sets of claims against two sets of respondents, it may well be that each can be the subject of representative proceedings. It may even be that directions can be made for them to be heard together Ryan v. Great Lakes Council (1997) 149 A.L.R. 45 at 48, per Wilcox, J. But they cannot both be the subject of the same representative proceedings."

44 Mr Rowe for the plaintiffs argued that statements by Wilcox, J. in Ryan v. Great Lakes Council expressed a different view relying upon the statement made[34]:

"Nor is there any reason why an applicant could not, within the one action, use the Part IVA procedure against one or more respondents but not against others; the action is in the applicant's name alone and it might be convenient to determine connected non-representative claims at the same time as the claims the applicant brings for the benefit of the group. Nor is it forbidden to consolidate the hearing of two or more representative proceedings, brought by different representative that having, as between them, such similarity as to warrant their being heard together. It is not difficult to imagine cases being handled in that way. There are many possibilities; the proper management would depend on considerations of convenience, having regard to all the circumstances."

However, even accepting the correctness of those observations of Wilcox, J., the present case is not one of the consolidation of the hearing of two or more representative proceedings brought by different representatives but having a relevant similarity. These claims are in the one proceeding. The matter is not simply one of proper management by the Court having regard to considerations of convenience. The issue here goes to the heart of compliance with the threshold requirements, not with the method of managing separate representative proceedings with similarities that might provide opportunity for convenient and economic trial management. I note that it would appear that the governing law as to the substantial issues of liability and damage will be the law of the State of New South Wales in respect of the first group of claims and the law of the State of South Australia on the other. See Pfeiffer (above).

[34]At page 48.

The argument for the plaintiffs was that in the present case there were two groups of represented parties with similar actions arising out of the same activity, namely smelters operated by the one entity. In the alternative it was submitted that the two groups could be divided into two separate proceedings, to be heard together. In my view, there is a non-compliance in this case with the requirements of s.33C(1). The consequence is that this proceeding cannot proceed as a group proceeding in the present form. The inherent vice is in the writ founding the proceeding, as well as the statement of claim. It would be possible, subject to other matters which I have to address, to permit the present proceeding to continue as a group proceeding but by eliminating from it, say, the third and fourth plaintiffs as plaintiffs and commencing another proceeding to separate the two unconnected proceedings and groups. It would, of course, be more compliant to start again with two proceedings.

The attack on the pleadings is not limited to the matters to which I have just referred. Evidence from the affidavit of Mr Robson indicates that the first plaintiff, Gay Roslyn Cook, was an undischarged bankrupt before the commencement of the proceeding and is still an undischarged bankrupt. Whilst an undischarged bankrupt may claim in a proceeding for personal injuries, he or she has no standing to commence or maintain any other form of proceeding, because all causes of action, vested in a bankrupt either at the time of bankruptcy or subsequently acquired, vest in the trustee who is the only one who can pursue those causes of action. See Cummings v. Claremont Petroleum NL.[35] If proceedings are tainted by this defect, it is an incurable nullity. See Minister of State of the Interior v. The R.T. Company Pty Ltd.[36] The relevant exception under the Bankruptcy Act s.116(2)G would enable the cause of action for personal injury of the first plaintiff arguably to survive but not the claim for damage to property or economic loss. See Cox v. Journeaux No. 2.[37] This would appear to lead to the consequence that that part of the statement of claim by which the first plaintiff claims for herself (and representatively damages) for relief in relation to damage to property ought be struck out. If this were correct, the first plaintiff could not represent group members for any claim of that kind. See s.33D. However, the law does not appear to be that the plaintiffs and their group members have all to seek the same relief as each other member, nor have an identical interest, provided that they all have claims against each defendant.
[35](1995) 185 C.L.R. 124.
[36](1961) 107 C.L.R. 1.
[37](1935) 52 C.L.R. 713.

The defendants argue that there is no authority in support of the claim, said to be here made, that plaintiffs and group members may have entirely different causes of action against the same defendant or defendants. The proposition thus was that one could not have a properly constituted group proceeding in which a cause of action, if not open to a named plaintiff, could be maintained on behalf of the group members. The plaintiffs complained that, if this were so, it was being alleged that even if the second, third and fourth plaintiffs had standing to bring a claim for property damage and diminution of its value they could not represent the Cockle Creek group members in any such claims. Reliance was placed on statements of Moore, J. in King v. GIO Holdings[38] in which his Honour appeared to place some limits on the decision of Philip Morris v. Nixon namely that although each member must have a claim against the respondent, the claim for the purposes of s.33C(1)(a) does not necessitate the same relief being obtained nor need it be based upon the same conduct because it may arise out of different transactions with the respondent. His Honour identified the important feature as being that the claims must have unifying characteristics to come within Part IVA, to be founded on the same or related circumstances and to give rise to substantial common issues of either fact or law. Thus his Honour in that case declined to construe the word "claim" narrowly and concluded that and that the proceeding might still be brought if even one applicant could not maintain one of the causes of action pursued in the proceeding (pursued by other applicants and members of the representative group). He declined to treat the word "group" as requiring or meaning a common cause of action, because members of the group might have different causes of action against the same respondent which would not inhibit the proceeding as a group proceeding. Clearly the claims must have sufficient in common to satisfy s.33C(1)(b) and (c).
[38]See [29].and [30].

I do not find it necessary to elaborate further my consideration of this part. It is only the first plaintiff in the statement of claim who is alleged to own or to have owned property. She is the only plaintiff who makes a claim for property damage or special damage for diminution in the value of her property. Thus there is no named plaintiff who could represent any of the group members in any claim for property damage or economic loss on the basis that that plaintiff has a claim maintainable at law for it. It would be, it seems to me, unacceptable to permit a group proceeding to be maintained in which causes of action which were not open to or made by any named plaintiff could be advanced on behalf of group members.

In this case, in any event, even if the second, third or fourth plaintiffs had claimed for property damage or diminution it could not avail the Cockle Creek group members. The second and fourth plaintiffs are, having regard to the dates of birth pleaded, minors and could not own real property. The plaintiffs argued that the second plaintiff had sufficient standing to represent the claims of all Cockle Creek group members, founded upon a claim in negligence. This argument must mean that the second plaintiff, although a minor incapable of owning property, has standing to represent the claims of Cockle Creek group members who may have sustained diminution in the value of their property. That is, once she has standing she has it for all purposes of the group. I should say that there is no pleading claiming any property damage on behalf of Samantha Cook. Even if that were incorrect, Samantha Cook could not represent Port Pirie group members in respect of whom property damage or diminution to value of property might be sought. I do not propose to take this aspect further because other matters I address will make it unnecessary to decide this aspect.

The defendants argue that it cannot be maintained that all claims of the plaintiffs and group members are in respect of, or arise out of, the same similar or related circumstances as required by s.33C(1)(b). It is put that if the proceeding is not appropriately commenced it cannot be permitted to continue as a group proceeding. The progenitor of s.33C(1)(b) (the Federal Court Act) has been the subject of some consideration in Zhang v. Ministor for Immigration and Local Government and Ethnic Affairs[39], a decision referred to by the High Court with approval in Wong v. Silkfield and by the Federal Court of Appeal in Philip Morris v. Nixon. It appears to be accepted that "related" has the widest meaning of the three phrases identified. If it were established by the plaintiffs that all claims arose from circumstances which are related in that way, that would be sufficient. In Zhang, French, J.[40] concluded that a practical estimation is required as to whether or not the similarity or relationships between circumstances giving rise to each claim is enough to merit their grouping as a representative proceeding, that that was of the essence of the judicial function at this point.
[39](1993) 45 F.C.R. 384.
[40]At 185.

The plaintiffs argued that the relationship between the circumstances of each group member were sufficient to attract the necessary element. It was contended that it was sufficient that if the applicants and group members relied on a series of related but not identical transactions.[41] It must be accepted, however, that it is necessary that the pleadings filed on behalf of the plaintiffs adequately indicate the basis upon which it is claimed that the group proceeding features are fulfilled and available. The joinder in one proceeding of a number of different causes of action (not themselves created by the Act) is permitted, even if vested in different persons, if the claims are in respect of or arise out of similar or related circumstances and give rise to a substantial common issue of law or fact. Counsel for the plaintiffs urged that this case was not like Nixon because the case here was based on the actions of one economic group comprised of three companies conducting and operating the business of smelting at two locations. It was claimed that their methods in each location was similar, the toxic emissions escaping from both locations were similar, that in effect the same events were happening in the two places to similar groups. It might be said that the case does not appear to have been pleaded in that way. In any event it is a matter of fact, as gleaned from the statement of claim, that it would be difficult to find that circumstances were the same, similar or related (in particular related) simply because a claim was made that in two places a thousand kilometres apart smelting operations were taking place. There is some evidence in the material before me that would indicate that the levels of the metals extracted and smelted at the various places are by no means the same, nor are the metals the necessarily the same either in presence or proportion.
[41]See Sackville, J. in Philip Morris v. Nixon, para. 165.

The defendants argued that the bare fact that the plaintiffs and the groups members effectively fell into two separate classes, one in New South Wales at Cockle Creek and one in South Australia at Port Pirie was itself enough to preclude compliance with s.33C(1)(b). Expressed as starkly as that, that proposition may be doubted. But it is the plaintiffs who have to make it appear that the relevant relationship of circumstances exists. It does not strike my mind as reasonable to conclude that the circumstances were related simply because there was a common defendant or defendants and that smelting was taking place. Some form of emissions is bound to be produced by all forms of smelting. It can hardly be said that the claims of the first group arising from the environment affected by the emissions at Cockle Creek arising from the operation of the first and second defendant, are related to the events in Port Pirie where the smelter is operated by first and the third defendants. Apart from the claims of personal and property damage and the fact that smelting was taking place in each location, there does not appear to be any connection between the circumstances from which the claims of the various group members arise other than that the claims are made against the defendants. I leave aside the difficulties that may arise in denoting sufficient circumstantial connexion between a person claiming damages for diminution of property value with those asserting the sustaining of physical injury. That may be capable of being concluded favourably to the plaintiff. But a more specific difficulty is that the varied nature and extent of the facts which underpin the claims of the various plaintiffs and group members, the broad and inexact delineation of the relevant area (five kilometre radius from the smelters), the absence of any described period of time over which the torts and the losses allegedly occurred and the likely variety of circumstances that prevailed at different times and places in each place. These constitute a formidable obstacle to a reasoned conclusion that the claims of all of the plaintiffs and group members are in respect of or arising out of related circumstances. Put simply, the circumstances are so mixed as to parties, events, losses, factors of time and place that make the perception of the similarities of circumstances verging on the impossible.

Paragraph 37 of the statement of claim pleads the relevant aspect in the following way:

"The claims of the plaintiffs and represented parties are in respect of, or arise out of, the same similar or related circumstances being the ingestion in relation to toxic emissions from the land and the affect (sic) of the emissions noise and vibrations on the premises and the plaintiffs."

To plead the matter in that way, in my judgment, makes the necessary relationship of circumstance too wide and tenuous. Spender, J. in Philip Morris v. Nixon[42] and Sackville, J.[43] discussed some of the difficulties inherent in perceiving the relevant relationship. See also Cameron v. Qantas Airways.[44] Moreover, paragraph 37 appears to plead the consequences rather than circumstances of the claims although doubtless that is remediable in the pleading sense. The plea in paragraph 37 merely identifies the encountering of emissions with consequences. Oddly enough it does not identify by even the most general description what persons, or even whether the group members, ingested or inhaled the emissions. The pleading appears inextricably to mix up the negligence and nuisance claims. Further the description of the groups in paragraphs 2 and 3 of the statement of claim, already reproduced in these reasons, does not appear to refer to persons affected by noise and vibrations.

[42]See paragraphs 7-9.

[43]At paragraph 166.

[44](1993) A.T.P.R. 41,251 at 41,370.

The final matter argued for by the defendants in relation to this aspect is that the s.33A(1)(c) has not been complied with because on the pleading there is no substantial issue of law or fact common to the claims of all of the plaintiffs and group members. The defendants argue that it is inherently impossible in the proceeding as constituted for there to be any substantial or common issue in the claims made uniformly against all defendants because one group is connected with Cockle Creek and the other with Port Pirie. It must be said that the statement of claim posits a variety of claims of damage, that is personal injury, damage to property and the enjoyment of property and economic loss, all arising in different cases and different circumstances. The claims are undoubtedly raised but the doubt is whether they raise common issues.

Paragraph 38 essays the task of identifying the alleged substantial common issues arising from the claims made. The issues purported to be identified do not obviously arise from the matters earlier pleaded, and seem to lack clarity and relevance. The defendants embarked upon a detailed examination of the purported common issues and contended that self-evident defects were compounded or multiplied by the other inherent defects, that is a proceeding by two different groups of plaintiffs in respect to two different groups of members arising from two different places in respect of three defendants' activities.

Many of the questions (some of which I will shortly set out) are too general, address matters probably not in contention, address issues that are merely sub-sets of the principal matters in issue and, on occasions have the air of an examination question rather than focussing upon the real disputes between the parties. However, I view the defendants' criticisms as excessively technical in many respects. Part of this, so it seems to me, was a consequence of an over-elaboration of the questions and a lack of obvious point to them. Questions such as: Do the defendants manufacture deleterious substances?[45] Is there a link between elevated lead level and intellectual and behavioural problems? Do the emissions cause or aggravate cancer liver problems, respiratory problems and other illnesses? When did the danger of the emissions become known in the public domain? seem to me to be substantially removed from the realities of the litigation, although they raise matters that might be considered as steps along the way in the course of expert evidence or other evidence. But the proceeding is not one of general scientific inquiry. In a general way questions concerning the issue as to whether acts or omissions by the defendants caused or permitted the escape from its premises of dangerous and noxious vapours causing or likely to cause personal injuries and, arguably damage or diminution in the value of property, are what is required.
[45]Paragraph 38(a).

In my view, although not all the criticisms made by the defendants of the plaintiffs' formulation of the substantial common issues are valid, the formulation of the issues leaves much to be desired. I have that view notwithstanding my own opinion that the approach to the consideration of the common issues both in substance and articulation should not be over-technical or, to use the language of Merkel, J. in Johnson Tiles Pty Ltd v. Esso Ltd[46], overly legalistic. Nevertheless, as the High Court emphasized in Wong v. Silkfield, this issue is one to be addressed at the outset because it is a threshold issue and as such is concerned at the commencement of the litigation with whether or not the claims, once understood, give rise to a substantial common issue of law or fact. The issues that would ordinarily be regarded as arising from the general description given in the statement of claim of the defendants' activities must be being real and of substance.
[46](1999) F.C.A. 66 at paragraph 49.

The Court does not have to be satisfied at this point of time that litigation about the common issues would be likely to resolve to a significant degree the claims of all group members. This aspect is a matter for re-pleading in my view and when I make the relevant orders I will deal with it.

The defendants strongly attacked the failure of the statement of claim adequately to describe or otherwise identify the group members, in accordance with s.33H(2)(a). It is beyond doubt that in a group proceeding the description of a group membership must be such so that it is at least possible to determine who falls within the group as described. Persons contemplated as being within the group would themselves not understand whether they were within it, unless the definition of the group is intelligible, although not necessarily exact. Members of the group are entitled to know what constitutes the essentials of the group. A decision concerning opt-out cannot be sensibly made unless it is known what it is that is being opted out from.

The principal defects, to my mind, of the group description derive from an absence of adequate definition of time and place. No element of time is stated in paragraphs 2(a) and (b), and 3(a) and (b), that is, the scope and extent of the group is not defined or limited by reference to the time at which the claims arose or at which there was suffered the claimed loss and damage. In the absence of some limiting description with respect to the time at which the impugned acts and the claimed damage ensued, it would be extraordinarily difficult to know who was in the group and not in the group unless it were deemed to be constituted by every person in the place where smelting took place. Difficulties would arise concerning statutes of limitation and prejudice, although it may be premature to consider that at this stage.

The second defect in group description is the absence of adequate reference to the place. The plaintiffs appear to have been aware of the necessity, for the purpose of defining the group, to denote the physical features of the lands referred to in the statement of claim. The phrase used in the statement of claim is "certain lands" which are not defined although one might assume that it is meant to be the lands on which the smelters are situated. The draftsman employed the language being within a "five kilometre radius" of the certain lands. Nothing is denoted as a starting point of the five kilometre radius, e.g. what boundary, or what part of the 'smelting' lands. Put another way, there is no commencing point of physical reference. In many cases, perhaps, this may not be of great significance but it has some significance here because part of the claim involves damage to property; that is property fixed within the area. Thus the reference to owners and occupiers of property claiming loss and damage or diminution of the value of their property has no ascertainable meaning. The situation of the property in that respect would constitute known group membership for that claim. There is no statement as to what it is that the persons (called from time to time owners and occupiers) are claiming and against whom they claim it. Strangely, the statement of claim nowhere claims relief on behalf of group members, as distinct from the plaintiffs. This may simply have been an oversight but the claim ought be made. See Batten v. CTMS Ltd[47]. The nuisance claim does not even purport to be annexed to group members although the statement of claim, where it deals with the circumstances of the claims and common issues alleged to arise, does proceed on the basis that the nuisance claims are brought on behalf of all the group members. In my view these are serious defects concerning a fundamental element in the constitution of the group for this proceeding.
[47](1999) F.C.A. 1576, Kiefel, J., unreported, 12 November 1999).

The defendants launched a wide-ranging attack upon the defects of the statement of claim in conventional pleading terms, that is not based upon the special group proceeding requirements. Put another way, the criticisms were made under the rubric of Rule 23.02 of the Rules of this Court. The defendants accept, as I understood the submissions, that in a group proceeding because of the mass claim aspects necessarily associated with it there must be less specificity than will ordinarily be required. Notwithstanding that, there are many cases which insist that in those parts of the statement of claim which relate to the claims of plaintiffs and their causes of action must accord with the ordinary pleading requirements. See Philip Morris v. Nixon[48]; Bright v. Femcare[49]; Cameron v. Qantas Airways[50]; Williams v. FAI Home Security Pty Ltd (No.2)[51]. Indeed it may be thought that the need for appropriate pleadings is greater in a group proceeding as the purview of the statement of claim determines the nature and width of the proceedings often different in many respects but against the same defendants. Some of the claimed defects have already been referred to by me, e.g. the way in which the pleading treats the three defendants collectively, making joint claims in negligence against all three in relation to the alleged consequences of the smelting activities at the two different places.
[48]At 129-30.
[49]At paragraph 18.
[50]At 41,370.
[51][2000] F.C.A. 726 at paras. 14-15.

Mr Robson's affidavit stated that the second defendants never had anything to do with Port Pirie and the third defendant has never had anything to do with Cockle Creek. It is claimed that the second and third defendants each separately operate a smelters on one State, without involvement with the smelter operated in a different State by the other defendant. The statement of claim thereafter, following on this flaw, pleads the two separate claims as though they are one, and treats the conduct of the defendants as being the same, or joint. I have already referred to the absence of any temporal limits. The defendants in this part of their submissions contended that the statement of claim was confusing and unclear, and therefore embarrassing in the legal sense, by ignoring its own relatively sparse description of the "Cockle Creek lands" and "Port Pirie lands" while coalescing them into the defendants' lands at various points. Similarly, phrases such as the "plaintiff's premises" are unaccompanied by any definition that would give precision to the reach of the pleading and by frequently combining all four plaintiffs into the one description appears to plead the cause of action a nuisance on behalf of all four.

Other arguments involved attacks upon the pleading as apparently claiming damages for nuisance (both personal injury and damage to property) without any plea that would entitle anyone other than the first plaintiff arguably to found any claim in nuisance as not holding any relevant interest in property. It also complained that the claim of each of the plaintiffs in respect of damages for injury confuses the claims arising from negligence with those of alleged nuisance.

Mr Rowe for the plaintiffs declined to embark upon answering these technical attacks on the pleading apparently either expecting the Court to regulate the form of the pleading, if the more fundamental attacks upon the proceeding as a group proceeding failed. No application to amend the writ so as to alter the description of either group has been made. However, I have no doubt that this proceeding cannot be permitted to continue in its present form.

The Court has ample powers to mould the proceeding including giving directions as to questions, appointing a sub-group or give directions for the commencement and conduct of another proceeding, whether or not a group proceeding.

The defendants have sought orders that the present proceeding should be dismissed or permanently stayed, or the statement of claim struck out. The plaintiffs, of course, oppose this course, but I construe counsel for the plaintiffs' response to the attacks on the pleading as in effect accepting that many of the vices identified would be required to be remedied. His statements appeared at one point almost to suggest that the Court should re-model the pleading but that is a matter for the plaintiffs. I do not favour striking out the pleading and granting leave to file and serve an amended statement of claim, because of the views which I have expressed about the separation of the Cockle Creek claims from the Port Pirie claims and because there are so many defects in it that it is incapable of repair. Furthermore some of the defects are in the writ itself.. I therefore propose to dismiss this proceeding and to grant leave to the plaintiffs to bring fresh group proceedings by separate actions, pleaded in appropriate form and having regard to opinions already expressed by me. The appropriateness of any new proceedings will have to be considered if and when they are commenced. I also state that any questions as to the continuation of any fresh and re-pleaded proceedings will necessarily depend upon a number of issues not yet raised or determined, e.g. matters arising under s.33N.

My present view is that the plaintiffs must pay the defendants' costs of this dismissed proceeding but I will hear counsel, if they wish to make submissions as to the appropriate form of the orders and costs.

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[2000] VSC 534

15 December 2000