Kinross, J. v GIO Australia Holdings Ltd
[1995] FCA 331
•21 Apr 1995
IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY ) No. G 379 of 1993
GENERAL DIVISION )
BETWEEN:JEREMY KINROSS in a representative capacity
Applicant
AND:GIO AUSTRALIA HOLDINGS LIMITED ACN 054 573 401
First Respondent
GIO GENERAL LIMITED
ACN 002 861 583
Second Respondent
GIO FINANCE LIMITED
ACN 002 812 704
Third Respondent
REASONS FOR JUDGMENT
EINFELD J SYDNEY 21 APRIL 1995
This matter was commenced as a group or class action under Part IVA of the Federal Court of Australia Act 1976. The original group was designed to include the signatories to certain loan facilities with the old Government Insurance Office of New South Wales (the old GIO) or with the first respondent, its successor in title. As part of the privatisation of the old GIO, covered in more detail in my judgment of 29 November 1994 at an earlier stage of the matter, the business of the old GIO was transferred to, inter alia, the second and third respondents. Causes of action under the Trade Practices Act 1974 were pleaded, as well as the Contracts Review Act 1980 (NSW) and general law. So far as is currently relevant, one of the key allegations made is that
in certain documents and advertising, misleading or deceptive representations were made concerning the stability of the proposed interest rate to be charged on the loans, and that reliance on these misrepresentations caused the members of the group to enter the loan contracts and suffer loss when, contrary to the representations, the interest rate on the facilities was raised. The substance of the claims are detailed in the earlier judgment.
On 10 May 1994 the respondents moved to have the statement of claim struck out on a number of grounds including that the respondents were immune from action by reason of Crown immunity. In my earlier judgment on that aspect alone, I dismissed the claim under the Trade Practices Act against the old GIO involving certain members of the group, including the applicant, and allowed it to continue in respect of the other cases. The remainder of the respondents' motion remains on foot. The principal matter has been listed for hearing in three days in June 1995.
In an attempt to progress the matter and permit it to come to a hearing as planned, the applicants raised the possibility of continuing the proceedings by way of a separate single test case. At a directions hearing on 16 March 1995 at which this proposal was put forward, several practical problems appeared. The respondents pointed out that the proposed statement of claim in the 'test case' included allegations of oral representations that had not previously been pleaded, and that they would be prejudiced by now having to face a substantially different case.
Furthermore, the fact of oral representations would make the case unsuitable for joint hearing or group action or as a test case. The proposed test case would also be unlikely to involve an amount sufficient to suggest that trial in this Court was appropriate. As a result I gave the parties time for further consideration and submissions in writing. In their written submissions the respondents sought in addition an opportunity to make an oral presentation but given the number of directions and hearings already held, the proximity of the trial, the simplicity of the matters raised, and the present time constraints caused by pressure of the Court's business, I have considered that this request ought not to be granted.
The applicants have evidently reconsidered their position. They now ask that the representative action continue with a new applicant, and that those members of the group whose claims were struck out by the earlier judgment, including the erstwhile applicant, be allowed to commence under the Fair Trading Act 1987 (NSW) in this Court and have their claims heard jointly with the representative proceedings. They say that if this procedure is adopted they will not plead oral representations. In reply the respondents argue that the entire matter should be struck out under their original notice of motion.
Suitability for joint hearing
Essentially the respondents argue that the matter is unsuitable for a group action or joint hearing. Factors giving rise to this conclusion include:
RELIANCE AND DAMAGES
Each member of the group and individual applicant would be required to give separate evidence concerning his or her own reliance on the representations and consequent damages. The respondents say that this would subvert the nature of a group proceeding. However, it appears from the submissions of the applicant that reliance is not anticipated to be a complicated evidentiary or forensic exercise. In the circumstances, including the relatively small number in the group, I am not convinced that this matter alone is sufficient to make this case unsuitable for a group proceeding.
CONTRACTS REVIEW ACT
It was argued that it will be impossible to assess whether each contract was unjust without individually analysing each borrower's circumstances at the time, and his/her relationship to the old GIO or first respondent. There seems to me to be some considerable merit in this argument. Certainly the trial cannot be allowed to become a detailed investigation of the individual circumstances of each group member or applicant. However, as I shall make clear shortly, the manner in which the matter has been pleaded will restrict the applicants and ensure that at trial only the generic aspects of each case will be able to be argued. If they are unable on that basis to make out a cause of action under the Contracts Review Act, that claim will fail.
Pleading defects
The respondents also raise a number of 'pleading points' which constitute the remainder of the original notice of motion of 10 May 1994. These points may be summarised in the following manner:
That the contractual causes of action have been pleaded inconsistently with the allegations of misleading conduct.
In my opinion any such failing is not evident from the face of the document. In any event if such a contradiction becomes evident, it is best left to the trial. Without inhibiting the discretion to do justice at all times, the respondents may be reassured that, given the nature of the interlocutory proceedings in this matter, I intend to hold the applicants to the principles of the amended pleadings with which they go to trial.
That reliance has not been properly pleaded.
Once again, this defect is not evident to me from the document as a matter of law. It appears to me that reliance is sufficiently pleaded to allow the respondents to meet the claim. The applicants say that they will be relying on simple affidavit evidence from each individual applicant and each member of the group that they relied on the promotional material and other documents. I am prepared to allow the pleading to stand in this regard with the proviso that, in the absence of extraordinary
circumstances, unpleaded allegations of substance giving rise to reliance in each case will not be permitted to be led in chief by the applicants.
That relevant facts relating to the claims under the Trade Practices, Fair Trading and Contracts Review Acts and of estoppel have not been pleaded.
It appears to me that the pleaded facts are sufficient to maintain an action under either the Trade Practices or Fair Trading Act, and possibly in estoppel. Once again, in the absence of extraordinary circumstances, a strict view of the present pleading will be applied -- if additional substantial matters are sought to be raised at trial that should have been pleaded to support the action under the Contracts Review Act, they will not be admitted into evidence, and submissions not referable to the pleadings will not be permitted.
That the individual contracts have not been pleaded properly.
I assume from the pleading that the contracts to be proved will be identical to all relevant intents and purposes. However, on the basis that the respondents must know what the contracts are, and on the presumption that they are the same or substantially similar, I am prepared again to allow the pleading in this regard to stand.
That paragraph 21 of the amended statement of claim discloses no cause of action. Paragraph 21 relevantly alleges that
... one or all of the Respondents has varied the contract under clause 11.1 of the Conditions of Use, unreasonably.
The applicants will be allowed to amend this paragraph to make clear what cause of action is alleged. Such amendment is to be filed and served by 12 noon on Monday 24 April 1995. In the absence of some alternative order, the paragraph will otherwise be struck out.
Respondents' objection to opting out
The respondents object to two of the group members opting out of the proceedings. These are Hugh Williamson who opted out on 20 July 1994 and Elizabeth Foy who opted out on 1 March 1995. Each of them is a joint signatory to their respective facilities with a spouse, and it is argued by the respondents that if they are allowed to opt out, they could relitigate the same issues relating to the same contract in separate proceedings. The respondents argue that in such a situation either both or neither of the signatories must be members of a group proceeding. No authority was quoted for this proposition and for my part I see no reason why it must be so. If some joint signatories want to opt out, they should have the same right to do so as the other potential members of the group. Any other conclusion would place great difficulties, not intended by the legislation, on those seeking to bring group actions. There is no corresponding principle that in ordinary proceedings one party to a contract cannot bring an action without a joint signatory with a similar cause of action. I reject this argument of the respondents.
Joinder of a fourth respondent
The applicants ask for leave to add as a respondent GIO Building Society Limited. When the business of the old GIO was transferred to its successor companies, the relevant loan facilities were also transferred. It has been unclear from the start which of the successor companies inherited the facilities, and it appears that in addition to the three current respondents it is possible that the GIO Building Society Limited may currently administer some or all of them. The current respondents do not object to the proposed joinder, and I assume that the new respondent will be a party in the same interest as the other three and that its joinder will not therefore delay the case. I will therefore allow it.
Conclusion
I propose to accede to the applicant's proposal to allow the matter to proceed on the amended pleadings as a representative action with a new representative and several separate applicants. Notwithstanding the arguments of the respondents to the contrary, I do not consider the applicant to have substantially caused unduely the interlocutory proceedings in this matter, and do not propose to make an order for costs against him.
I make the following orders subject to the new applicants paying any appropriate filing fees:
Leave is granted to file the fifth amended statement of claim and its accompanying application with such amendments as are required by these reasons for judgment. Filing and service are to be effected by not later than 4pm on Friday 28 April 1995.
Leave to join GIO Building Society Limited as an additional respondent is granted.
To prepare the matter for hearing, the following timetable is ordered:
(a)Any request for further and better particulars is to be served by not later than 4pm on Wednesday 3 May 1995 with the reply by 4pm on Friday 5 May 1995. The parties must be sensible and co-operative in this regard. I will not view favourably unnecessary requests or obstructive or obtuse replies.
(b)Defences are to be filed and served by not later than 4pm Wednesday 10 May 1995. The defences are not to be formal, but must particularise all the actual matters relied on by the respondents to defeat the applicants' claims.
(c)Mutual discovery is to be given by Monday 15 May 1995 with inspection by Friday 19 May 1995.
(d)The applicants' statements, which will constitute the evidence in chief of their witnesses, are to be filed and served by not later than 4pm on Monday 22 May 1995.
(e)The respondents' statements, which are to constitute the evidence in chief of their witnesses, are to be filed and served by not later than 4pm on Monday 29 May 1995.
(f)Any evidence in reply is to be filed and served by not later than 4pm on Wednesday 31 May 1995.
(h)The matter will be listed for directions on Friday 2 June 1995 to ensure that it is ready for the hearing.
(i)The attached practice note will apply to these proceedings. The applicants are to deliver to the respondents an index to the folder(s) of the Judge's copy documents, their written outline of argument (including agreed, assumed or alleged facts), chronology and list of authorities, and confer with the respondents on the agreed bundle of exhibits, by not later than 5pm on Friday June 2 1995. The respondents are to advise the applicants of any additional matters for inclusion in the folder(s) of Judge's copy documents, together with their outline of argument (including facts disputed), alternative chronology and list of authorities by not later than 12 noon on Wednesday June 7 1995. The Judge's copy documents and agreed bundle of exhibits are to be delivered to my Chambers by not later than 12 noon on Friday June 9 1995.
A party failing to comply with this timetable without the consent of the Court will risk a penalty for non-compliance.
The hearing will commence on 13 June 1995 and be listed for three days. It should be assumed that written addresses will be ordered at the conclusion of the hearing, with or without the opportunity for oral supplementation as may be decided.
There will be no order as to costs.
Liberty to apply to all parties on any matter on 72 hours notice.
As the parties have agreed that these matters dispose of the respondents' motion, the motion will be dismissed.
NOTICE TO PRACTITIONERS
The attention of practitioners is drawn to the following practice note of the Court promulgated on 15 September 1988 :
Not later than 21 days before the day set down for the final hearing, or, where the hearing date is less than 21 days after the day on which it is set down, forthwith upon being set down, the solicitor for the applicant is to file a bound or stapled book, to be entitled "Judge's Copy Documents", consisting of legible photocopies of :-
(i)the originating process;
(ii)all pleadings;
(iii)any affidavit to be relied on at the trial (not those for any interlocutory purposes);
(iv)all particulars which have been furnished whether in the form of a court document or a letter, and of the requests for those particulars.
Where amendments have been made to pleadings the copy to be included in the book should be in a consolidated form, not showing any matter which has been excised by amendment.
This notice does not apply to an interlocutory hearing. On allotting a date for an interlocutory hearing, the judge may give appropriate directions for copy documents.
The costs of preparing Judge's Copy Documents will be allowed on taxation.
Although this requirement formally applies only to matters in the General and Industrial jurisdictions, it is his Honour's practice to direct that a full or partial set of Judge's Copy Documents be also supplied in specially fixed contested bankruptcy proceedings of substance, and in interlocutory applications where there are expected to be major or complex issues of fact or law, unless the moving party applies to dispense with this requirement on reasonable grounds.
As convenient to the parties, his Honour is content, for all matters, with a 2 ring binder of documents rather than the book required by the practice note, to save expense and to facilitate the addition or moving of documents.
With regard to the time frame fixed by the practice note, his Honour will normally give a direction as to the last date for compliance. The folder is to be supplied by that date to his Honour's Associate, not to the Registry.
The practice note requires the applicant to take the responsibility for compliance and this will usually apply, but his Honour will on request, as a matter of convenience to the parties, allow the parties to determine between themselves which of them will in fact undertake the task.
Unless otherwise ordered by his Honour, the parties are to supply, for inclusion in the folder, a summary of the facts for which they will be contending, an outline of the submissions they wish to advance, and a list of the authorities to which they expect to refer.
His Honour would be assisted if the documents were generally presented in the following order :
Index
Summaries of facts, Submissions and Authorities
Chronologies
All originating process and amendments
Pleadings and amended pleadings
Particulars
Interlocutory orders
Affidavits/statements as follows :
* Applicant
* Applicant's witnesses
* Respondent
* Respondent's witnesses
Subpoenas
Others
If there are two or more applicants/respondents, the respective documents are to be in order of the parties' naming on the originating process.
(a) All affidavits/statements of the same individual are to be grouped together, in chronological order.
(b)The order of affidavits/statements is to be the parties (or their principal representative) first, followed by other witnesses in alphabetical order.
(c)Annexures/exhibits to affidavits/statements are to be tabulated or otherwise obviously distinguished.
(d)All pages in the binder are to numbered successively and indexed.
It is the intention of this practice note that one only comprehensive set of Judge's Copy Documents be supplied. Hence the initiating party is to furnish the other parties with an advance copy of the index of the documents intended to be supplied to permit the inclusion of any additional documents desired by them.
10.Copies of all affidavits/statements made by each witness are to be available to the person when commencing to give evidence.
11.If there are or are likely to be substantial quantities of documentary evidence, the parties are to produce at the commencement of the hearing, as far as possible by agreement, a set of these documents in a documentary evidence folder for the Judge to use at the trial.
12.Late authorities, submissions etc may be faxed to his Honour's Associate on (02) 221 3238 or delivered personally to the Associate on level 20 of the Law Courts building. The Associate may be telephoned on (02) 230 8405/8406 if there are any inquiries or problems.
13.Late evidence, pleadings or other material not included in the Judge's Copy Documents is to be available at the hearing with an additional copy for insertion into the folder.
14.Additional or disputed documents to be tendered at the hearing are to be available at the time of their tender with extra copies for insertion into the documentary evidence folder if admitted.
15.Submissions and outlines of arguments are to be signed by the persons appearing.
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