Femcare Ltd v Bright

[2000] HCATrans 566

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S110 of 2000

B e t w e e n -

FEMCARE LIMITED

Applicant

and

KERRIE BRIGHT

First Respondent

ENDOVASIVE PTY LIMITED

Second Respondent

Application for special leave to appeal

GAUDRON J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 15 DECEMBER 2000, AT 4.23 PM

Copyright in the High Court of Australia

MR B.W. WALKER, SC:   May it please your Honours, I appear with my learned friends, MR M.A. FRIEDGUT, and MR J.K. KIRK, for the applicant.  (instructed by Freehills)

MR A.J.L. BANNON, SC:   May it please the Court, I appear with my learned friend, MR J.R. CLARKE, for the respondent.  (instructed by Maurice Blackburn Cashman)

GAUDRON J:   Thank you.

MR WALKER:   Your Honour, by consent, may I hand up some short minutes of order and form of amendment application by which Endovasive Pty Limited is joined as second respondent.  My learned friend, Mr Deakin, is here.  I hope to indicate that he does not oppose anything I say.

MR P.J. DEAKIN, QC:   Indeed.  We seek leave, that order having been made by consent, to file appearances on behalf of the second respondent.  We do consent to the application, subject, of course, to the Court.   (instructed by Sparke Helmore)

GAUDRON J:   I am sorry; you consent to which application?

MR DEAKIN:   The application to join us and the application, so your Honour need not call on us again.

GAUDRON J:   Thank you.  Orders will be made in accordance with the – you do not object; you cannot object to that, Mr Bannon, can you.

MR BANNON:   We do not.

GAUDRON J:   Orders will be made in accordance with the short minutes of orders handed up in Court this day and Mr Deakin’s appearance is noted.  Yes, Mr Walker.

CALLINAN J:   Mr Walker, before you start, can I just ask you a couple of questions, please?  Your challenge seems to be to the totality of Part IVA, is that correct?

MR WALKER:   That is the primary way we put it.  As your Honour has seen, there are alternatives, but it is as well to make it the whole of Part IVA because of the schematic nature of it.

CALLINAN J:   Yes.  In this case, the causes of action include non‑federal causes of action, as it were.  Is that right?

MR WALKER:   Yes.  One could be forgiven for thinking they are the main ones.

CALLINAN J:   Well, do you challenge, for example, separately or in the alternative, do you challenge to Part IVA, for example, 37ZE, which purports to suspend limitation periods?  Is there any question of the operation of that upon, if I can put it this way, non-federal causes of action?

MR WALKER:   We have not.  It has not been a matter which, even with the perversity we may be thought already to have exhibited, that is, to be protesting the interest of group members, it has not yet fallen to us as a respondent to raise the question of limitation periods for people whose existence we know nothing about.  There certainly are issues which, to my knowledge, have not yet been ventilated in the appellant proceedings on the basis of actual facts about the breadth of 37E in terms ‑ ‑ ‑

CALLINAN J:   Well, I only select that as an example ‑ ‑ ‑

MR WALKER:   Whether or not, for example, the running, by which I mean the continued running of the limitation period is a right of a kind which might fall, for example, within an extended 51(xxxi) analysis, has not been advanced by anybody, and not by us.  That does not mean, of course, that it is not imminent in these provisions that there may be some such problem.

CALLINAN J:   I am not really inviting you to do that, but am just expressing a concern, perhaps, that the proper way to challenge Part IVA is to challenge it on facts that relate to particular sections.  Now, I know to some extent you seek to do that, but ‑ ‑ ‑

MR WALKER:   First, we accept and embrace, with great respect, that all challenges, constitutional or otherwise, to lawfulness of forensic conduct are best done on the basis of facts rather than assumed facts, and facts rather than hypothetical facts.  But there is nothing assumed or hypothetical about the state of affairs which confronts us as a respondent to this kind of case at the stage where these issues were determined.  The stage where these issues are determined, the number of persons, if there are any beyond the applicant and the, query, six or seven others, who may fall within the defined group, depending upon how the group is defined from time to time, is and was, in the nature of things, unknown and unknowable, with no possibility for us to compel information about that from the applicant who, of course, is in a position to say, and very logically so, “How do we know?  We have not yet published notices?”.

CALLINAN J:   The reference to 33ZE might assist you then.

MR WALKER:   Yes.

CALLINAN J:   For example;  there may be other provisions.

MR WALKER:   We simply are quite incapable – and this is a position that respondents in cases like this have to grapple with – of knowing the scale of matters, the range of real facts, the areas where real investigation and real forensic effort should go into, because we are shown one and one only case.  The other matters are matters which belong to what is, under this legislation, hypothesised as the existence of other cases.  We do stress “hypothesised”.  But that is a real, not an assumed or hypothetical fact for the determination of these issues.  It is a real fact that we are faced with that position.

Now, your Honours, by 1901, the Chancery Courts ‑ ‑ ‑

GAUDRON J:   Mr Walker, we might come back to you, but I think we would be assisted by hearing from Mr Bannon.  Having said that, that does not mean that special leave ‑ ‑ ‑

MR WALKER:   No.

GAUDRON J:   Mr Bannon, we need to hear from Mr Walker on this.  I suppose I should invite Mr Walker before I – if we were to do anything with this application, other than dismiss it, we would be minded to refer the application to a Full Bench to be argued as if on an appeal, so would you address your remarks to that.  Mr Walker may or may not want to speak to that at a later stage.

MR BANNON:   Does your Honour wish me to address that now or ‑ ‑ ‑

GAUDRON J:   Yes, I think so.

MR BANNON:   I think, your Honours, that the point we raise in response to the application for special leave is the insufficient prospects of success.

GAUDRON J:   Well, prospects of success – it is an important question.  It is a constitutional question, it is not going to go away, I suppose.

CALLINAN J:   It has been in the shadows for a while, has it not?  There is a matter of speculation about it.

MR BANNON:   In one sense it has not.  The legislation has been on foot since 1992.  We fully accept, and do not suggest otherwise, than a successful challenge would have obviously significant ramifications for many actual cases, and potential cases.  But what we do say is that up until very recently, and up until the making of this application when raising the issue in front of the trial judge, there was not an air of uncertainty over the legislation and had stood firm since 1992.

GAUDRON J:   Had not been challenged, you mean.

MR BANNON:   Had not been challenged, but there had not been whispers in a written form or otherwise, and there had been many cases passing through the courts.  The difficulty with the grant of special leave is that it creates an air of uncertainty which is not here now.

GAUDRON J:   Well, that is so in every case.

MR BANNON:   Quite.

GAUDRON J:   That is inevitably what happens when there is a constitutional challenge, as this is.

CALLINAN J:   And then it is crystal clear afterwards.

MR BANNON:   Absolutely.  Our point, in a sense, which we make on the special leave application, addresses what your Honours raise as a possibility, namely - and just to finish it off - there is no uncertainty which jumps out of the judgment of Justice Lehane or the Full Court.  It is a clear judgment and we say clearly correct.  The grant of special leave means that that uncertainty is created and put off to a significantly further date.  Now, in the ordinary circumstances, accepting it is a constitutional question, but also accepting the mere fact that a constitutional question does not guarantee a grant of special leave, the consideration of special leave in those circumstances would warrant at least a reasonably close consideration of the prospects of success.  I suppose if an alternative is a reasonably adjacent Full Court hearing which would consider both ‑ ‑ ‑

GAUDRON J:   No, there is nothing reasonably adjacent in prospect, I am sorry.

CALLINAN J:   I think 15 to 20 per cent of the Court’s sitting time next year is going to be taken up with two cases.

MR BANNON:   The uncertainty by the raising of the constitutional question will disappear if the special leave application is dismissed.

GAUDRON J:   No, it will not.  It will just come back at a later stage.  There will still be a challenge.  Assume you get a judgment, the only way it will go away in your case is if you finally lose.

MR BANNON:   Yes.  If it is dismissed on the basis of insufficient prospect of success, your Honour is perfectly correct, with respect, that we still do not have that guarantee but we would have a considerable degree of comfort.  Beyond saying what I have said in relation to your Honour’s suggested approach, I would then proceed to argue in brief compass what we would say about the special leave application.

GAUDRON J:   Yes, well, please feel free to do that.

MR BANNON:   The issue, as raised in the argument to date, resolves to two points.  One concerns the notice point, and the second is whether there is a matter.  So far as the notice point is concerned, what we submit is that the content of the debate is so narrow as to be, we would submit, illusory.  If one looks at the application book at page 49, there is a reference in paragraph 76 of the Full Court judgment to a concession which was made as to what would be a valid piece of legislation which would not authorise conduct, or something beyond an exercise of judicial power.  That is, that if section 33Y(5), which is the notice provision which has attracted the keen attention of the applicant, was in terms that:

the Court must order that notice be given personally to each group member unless affirmatively satisfied that it is not reasonably practicable or unduly expensive to do so.

Their Honours dealt with that at paragraph 77 and following, in effect to say that it is very hard to see the difference.  With respect, we support what their Honours said.  If one turns to the provisions of 33X and 33Y, one sees firstly the context in which that Y(5) appears.  Those provisions are conveniently set out in the application book at pages 6 and 7 in the judgment of Justice Lehane.  Section 33X(1) is the first provision, and that is imperative that, “Notice must be given to group members”, of:

(a) the commencement of the proceeding and the right…..to opt out”.

Section 33Y, which appears on the following page, commends to the court, at least in part, the task of ensuring that that notice is given.  Section 33X(1) is not a directive to either party, it is just a general directive and must apply to the court.  Section 33Y(2) says:

The form and content of a notice must be as approved by the Court.
(3)  The Court must, by order, specify:
(a)  who is to give the notice; and
(b)  the way in which the notice is to be given –

again, indicating in clear terms that the court is charged with the responsibility of ensuring that the appropriate notice is given.  It is in that context that 33Y(5) must be understood.  In other words, it is a context in which the court must make an order of a form and method of notice.

Speaking generally, a court cannot make an order and will not make an order, regardless of the attitude of the parties, unless it is satisfied it is an order which is capable of being enforced and which is reasonably certain and clear.  If members of a class cannot be identified at the time at which the notice is to be given, plainly a court will not make an order that members be given personal notice.  Section 33Y(5) is not so much a provision dealing with onus, it is a provision which, in effect, directs the court to consider what it must inevitably consider in making any order, but in particular an order in the context of these types of proceedings.  Firstly, the court must be satisfied that the order it makes about notice is one which is reasonably practicable.  Secondly, that – and this is not the wording of the section – the order is not in itself an instrument, or potentially an instrument, of injustice.

The applicant prays in aid the provision of the United States and, in particular, the discussion of that provision in the Eisen decision.  The provision in the United States does not say that all members of a class shall have personal notice.  What it says is that members who can be identified through reasonable effort shall have individual notice.  That element of reasonableness, or ability to identify, is inherent in the giving of any order about notice, but it is inherent and embraced, at least in part, in the expression “reasonably practicable” in our provision.

Secondly, what the US does not have is the element of “unduly expensive”, but on the other hand, we have here, and courts of equity have long considered as appropriate, representative proceedings which permit the conduct of proceedings in such a way that a person can commence them on behalf of numerous parties without any requirement of prior notice to those parties in circumstances where such a procedure is designed to promote generally the interest of justice.  Now, that element of ensuring that a court not make an order which is, in effect, going to result in fulfilment of it being unduly expensive, is something which is embraced within the long standing acceptance of the logic and rationale behind representative proceedings in equity for many years.

So considered, we submit, the distinction, which is described really as one of onus by the applicant, is a distinction which is illusory.  As to the first element, it is a matter, that is reasonable practicality, which a court necessarily has to be satisfied of.  As to being unduly expensive, it is something within the purview of what has been regarded as part of an exercise of judicial power by reference to the representative suit procedure for many years.  Ultimately, the issue is whether, in those circumstances, it can be said that the procedure codified by these provisions authorises conduct which is an exercise of something other than judicial power.  Having regard to those matters we say, on any view, it could not.

The very nature of these sorts of representative proceedings as well involves the identification of classes in general terms, as was acknowledged in Carnie v Esanda and, secondly, terms which will make it difficult to list the people involved, for example, because they may involve a causal element.  They will require, say, somebody hurt by a gas explosion to identify themselves as having been in the vicinity and having been hurt by something to do with the gas explosion.  That does not mean a general description of somebody affected by a gas explosion on a certain day cannot be within the class.  It is the sort of example which warrants and led to these sorts of provisions being enacted.

The second part of the context in which 33Y(5) and all of the provisions are to be regarded is, firstly, the court supervision, the checks and balances which are inherent in the terms of the various provisions, in particular section 33N of the legislation, permits the court at any time, of its own motion, to terminate the proceedings.

CALLINAN J:   I wondered about that section, whether that is judicial power.

GAUDRON J:   That may be one of the more worrying aspects of the provision.

CALLINAN J:   Exactly.

MR BANNON:   In Carnie v Esanda there was discussion about the very flexibility of the representative procedure, which predated this.  One of the problems which had been identified by the New South Wales Court of Appeal in Carnie v Esanda was that the relevant rule in the Supreme Court Rules was not sufficiently detailed to accommodate what the Court described as a class action.  In some of the judgments in Carnie v Esanda there was reference to that very flexibility as being a hallmark of the courts’ control over these sorts of proceedings historically to ensure that justice is served.

CALLINAN J:   But that may or may not be a question, or it may not answer the question whether it is a proper exercise of judicial power.  The court can proceed of its own motion under 33N to decide any of the matters in (a) to (d); the court on its own motion, creating an issue, and then deciding it.  That does not look very much like judicial power to me at first sight.

MR BANNON:   In circumstances where it satisfies the interests of justice to do so, and in the context of proceedings which are ‑ ‑ ‑

CALLINAN J:   I am always very concerned at the ideas of courts acting on their own motion.

MR BANNON:   Neither party has given copies of Carnie v Esanda.  We have brought up some photocopies.  Could I just refer to the two passages I have mind in relation to this particular point.  The first is a passage in the judgment of Justice Brennan at page 408:

However, it is precisely because of the flexible utility of the representative action that judicial control of its conduct is important, to ensure not only that the litigation as between the plaintiff and the defendant is efficiently disposed of but also that the interests of those who are absent but represented are not prejudiced by the conduct of the litigation on their behalf.  The self‑proclaimed carrier of a litigious banner may prove to be an indolent –

etc.  Towards the end of that paragraph, his Honour adds:

I would add that if, for any reason, the court is not satisfied that the interest of the absent but represented class are being properly advanced, the court should exclude the represented persons from the action.  That power can be exercised at any time before the judgment is perfected.

GAUDRON J:   Yes, well, that is all very well in a context in which – or it might be all right with the statute of limitation.  One would have to check about that statute of limitations provisions.

MR BANNON:   That is not a provision we have addressed.

CALLINAN J:   It might be that these provisions can and must have to be read down so that the provision with respect to limitations is to be taken as a suspension of the limitation period only in respect of federal actions.  But on its face, it does not purport to do that; it says ‑ ‑ ‑

MR BANNON:   Or under the accrued jurisdiction.

CALLINAN J:   Well, that is a question.  I would need a lot of persuasion at the moment that simply because a matter is a matter of accrued jurisdiction, the State limitations Acts do not apply.  Mr Walker tells us that it looks, in this case, as if the real claims are claims not under the Trade Practices Act, that the real claims are non-federal claims.  I am not expressing any concluded view about any of that, but these are the sorts of issues that arise.  I am interested in, say, 33C also, which says a representative “proceeding may be commenced”.  If you look at (2)(b):

whether or not the proceeding:

(i)  is concerned with separate contracts or transactions –

an action in contract itself will not be a federal cause of action.  Whether that is meant to apply to, say, some contract that is involved in, say, some of the monopoly proceedings or something of that kind.  But, at first sight, the breadth of some of these provisions, unless they are to be read down, is very, very wide, strikingly wide, astonishingly wide, perhaps even.

MR BANNON:   The breadth of, I suppose, all the provisions of the Federal Court Act fall into the same category – I think it is section 22 or section 23 permits the Federal Court to make such orders as it shall deem appropriate in any circumstances.  There is no provision, for example, which requires the Federal Court to only undertake matters which are started with a particular form of notice.  There is not ‑ ‑ ‑

CALLINAN J:   There is another section, 33R, in giving directions under section 33Q, “the Court may permit an individual group member to appear in the proceeding”.  That might raise a question too, because it really implies that an individual group member has no right of appearance, he has no right to pursue his claim unless, as a matter of discretion, the court says, “Well, we will may let him pursue his claim if first the court is satisfied that his claim, or her claim, relates only to that member”.

MR BANNON:   An individual member is not bound to the group; they can opt out.

CALLINAN J:   Yes, I understand that, but this provision may imply that unless an individual group member does opt out, the court still might not exercise its discretion – I am sorry, even if the group member does opt out, the court still might exercise a discretion not to hear that person on his or her own claim.

MR BANNON:   But if the person does opt out, then their claim will not be part of the proceeding.  The second passage in Carnie v Esanda, is from the joint judgment of Justice Toohey and your Honour Justice Gaudron.  It is at page 422 and is under the heading “Adequacy of r. 13” and, particularly, the sentence a few lines from the bottom:

The simplicity of the rule is also one of its strengths, allowing it to be treated as a flexible rule of convenience in the administration of justice and applied “to the exigencies of modern life as occasion requires”.

There are, undoubtedly, general provisions in the whole of the scheme; they are all to be exercised judicially, we would submit.  They are provisions which fall either squarely within, or only incrementally beyond, what was considered in Carnie v Esanda.  In Wong v Silkfield the Court considered not the constitutionality of the provisions, however, they considered the underlying rationale of the provisions.

CALLINAN J:   Take 33ZF, “The court, on its own motion, can make any order it likes”.

MR BANNON:   Yes, it can do that under the Federal Court Act, as well.

CALLINAN J:   Well, the Act may say that, whether it is constitutional may be another question.

MR BANNON:   It would be a wide consideration of the – well, it would involve ‑ ‑ ‑

CALLINAN J:   Well, this idea that courts make orders of their own motion is a fairly modern concept.  That is nothing against it for that reason alone, but it is not something that has been around for a long time that courts could jump in, get into the arena and say, “We are going to make this order”.  I do not know, that may or may not be a proper exercise of judicial power.

MR BANNON:   We do rely – I notice the time; I am not quite sure whether I have any extra for the part as to the procedural element, but perhaps I could just make two points.  One is that on this particular issue, Carnie v Esanda did in a particular deal, we submit, with the power of the court to supervise proceedings to ensure that the represented parties’ interests are properly looked after.  That seemed to be as a hallmark of the exercise of judicial power – that must be the court acting on its own motion.

GAUDRON J:   Thank you.

MR BANNON:   Perhaps lastly, in Hamilton v Oades the Court has said that it is an incidental and necessary power for a statutory court to supervise its own proceedings to prevent, in that case, an abuse of its own process.

GAUDRON J:   Thank you, Mr Bannon.  Mr Walker, do you want to persuade us that we should not refer this matter to a Full Court to be argued as if on appeal?

MR WALKER:   No.

CALLINAN J:   Mr Walker, before you sit down, I must say that when it comes to the argument for myself - it may not apply to the others - I would be assisted by some argument, some written submissions in advance on the sections that have been mentioned in the course of argument today, as well.  Your application does not relate specifically, I think, in the alternative to some of the sections that I have mentioned.

MR WALKER:   It is not long before Christmas, your Honour.  Listening to your Honour has been like finding more than one sixpence in the pudding.

GAUDRON J:   When I said it will be argued as if on an appeal, there will be full written submissions as if on an appeal.  That is the order that will be made, that the matter be referred to a Full Court for hearing as if on appeal.

AT 4.54 PM THE MATTER WAS CONCLUDED