The Council for the City of the Gold Coast v Pioneer Concrete (Qld) Pty Ltd
[1997] FCA 599
•9 JULY 1997
FEDERAL COURT OF AUSTRALIA
CIVIL PROCEDURE - whether proceedings should continue as representative action when no evidence that any possible member of class is interested in recovering its losses by means of the representative action - whether costs of representative proceedings outweigh benefits - time limitations - whether limitation questions should be decided in interlocutory proceedings.
Evidence Act 1995 (Cth) - s 144
Federal Court of Australia Act 1976 (Cth) - ss 22, 33B, 33C(1)(a), 33N, 33Z
Limitation of Actions Act 1974 (Qld)
Trade Practices Act 1974 (Cth) - ss 45, 52, 82(2)
Australian Competition and Consumer Commission v Pioneer Concrete (1996) ATPR 41-457, considered
Australian Competition and Consumer Commission v Hymix (1996) ATPR 41-465, considered
Wardley Australia Ltd v Western Australia (1992) 175 CLR 514, considered and applied
State of Western Australia v Wardley Australia Ltd (1991) 30 FCR 245, distinguished
Karedis Enterprises Pty Ltd v Antoniou (1995) 59 FCR 35, referred to
THE COUNCIL FOR THE CITY OF THE GOLD COAST v PIONEER CONCRETE (QLD) PTY LTD & ORS
QG 190 OF 1996
DRUMMOND J
BRISBANE
9 JULY 1997
IN THE FEDERAL COURT OF AUSTRALIA QG 190 of 1996
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
BETWEEN:THE COUNCIL FOR THE CITY OF THE GOLD COAST on its own behalf and in a representative capacity on behalf of all persons (natural or corporate) who directly or indirectly acquired for value pre-mix concrete ('product') originally manufactured and/or supplied by one or more of the respondents in the geographical area encompassed by the present territorial unit of the local government of the Council for the City of The Gold Coast between the period from June 1989 to July 1994 (inclusive) but excluding:
(a)persons who have acquired concrete from an end consumer solely by reason of the acquisition of land on which a concrete structure had, prior to such acquisition, been erected; and
(b)persons who acquired quantities of product totalling in aggregate less than 1,000 cubic meters during the period June 1989 to July 1994 inclusive; and
(c)persons who were able to pass on to other consumers in the chain of commerce all product costs incurred.
Applicant
AND:PIONEER CONCRETE (QLD) PTY LTD (ACN 009 679 734)
BORAL RESOURCES (QLD) PTY LIMITED (ACN 009 671 809)
CSR LIMITED (ACN 000 001 276)
HYMIX INDUSTRIES PTY LIMITED (ACN 000 582 221)
Respondents
CORAM:Drummond J
DATE:9 July 1997
PLACE:Brisbane
MINUTES OF ORDERS
THE COURT:
Orders that this proceeding no longer continue as a proceeding under Part IVA the Federal Court of Australia Act 1976 (Cth).
Declares that the proceeding may be continued as a proceeding by the Council for the City of the Gold Coast on its own behalf against the respondents.
Orders that the statement of claim filed herein be struck out.
Directs that if the applicant wishes to continue the proceeding on its own behalf, it file and serve an amended originating application and statement of claim by 30 July 1997.
Orders that the applicant pay half the respondents' costs of and incidental to the respondents' notices of motion.
NOTE:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA QG 190 of 1996
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
BETWEEN:THE COUNCIL FOR THE CITY OF THE GOLD COAST on its own behalf and in a representative capacity on behalf of all persons (natural or corporate) who directly or indirectly acquired for value pre-mix concrete ('product') originally manufactured and/or supplied by one or more of the respondents in the geographical area encompassed by the present territorial unit of the local government of the Council for the City of The Gold Coast between the period from June 1989 to July 1994 (inclusive) but excluding:
(a)persons who have acquired concrete from an end consumer solely by reason of the acquisition of land on which a concrete structure had, prior to such acquisition, been erected; and
(b)persons who acquired quantities of product totalling in aggregate less than 1,000 cubic meters during the period June 1989 to July 1994 inclusive; and
(c)persons who were able to pass on to other consumers in the chain of commerce all product costs incurred.
Applicant
AND:PIONEER CONCRETE (QLD) PTY LTD (ACN 009 679 734)
BORAL RESOURCES (QLD) PTY LIMITED (ACN 009 671 809)
CSR LIMITED (ACN 000 001 276)
HYMIX INDUSTRIES PTY LIMITED (ACN 000 582 221)
Respondents
CORAM:Drummond J
DATE:9 July 1997
PLACE:Brisbane
REASONS FOR JUDGMENT
This case arises out of proceedings brought in 1996 by the Trade Practices Commission against the respondents. Those proceedings were heard by Lockhart J (reported at (1996) ATPR 41-457, so far as the first, second and third respondents are concerned, and at (1996) ATPR 41-465, as to the fourth respondent). On 4 December 1995, his Honour ordered that each of the first three respondents pay $6.6M as a penalty for its contraventions of s 45 the Trade Practices Act 1974 (Cth) that appear to include those the subject of the applicant's complaint in the present action and that the fourth respondent pay $400,000 penalty for its contraventions of the Act, which also appear to include those the subject of that complaint by the applicant.
The Gold Coast City Council has brought these proceedings as a representative action under Part IVA the Federal Court of Australia Act 1976 (Cth). Each of the four respondents applies on motion for various orders designed to terminate this action, in so far as it is a representative action. In addition, the applicant's statement of claim is attacked as embarrassing and it is said that the action is, in any event, time-barred by reason of s 82(2) the Trade Practices Act.
The applicant seeks declarations that between June 1989 and July 1994 (which it refers to as "the cartel period") each respondent contravened the provisions of s 45 the Trade Practices Act by engaging in collusive pricing and collusive tendering in respect of pre-mix concrete in a variety of grades ranging between 15 and 60 mpa, which each supplied to the group members during the cartel period. A declaration is also sought to the effect that such conduct by the respondents resulted in the supply of this pre-mix concrete at a higher cost than would have been the case, had the respondents not contravened the provisions of s 45 of the Act. Declarations are sought to the effect that the conduct of the respondents said to have contravened s 45 of the Act also constituted a tortious conspiracy to injure "the consumers", misleading or deceptive conduct in contravention of s 52 of the Act and tortious deceit of these consumers. A declaration is also sought to the effect that "the consumers" have incurred loss or damage by reason of these various contraventions and tortious conduct, as well as a declaration "that one or more of the respondents is/are liable to pay compensation [to] the consumers for such loss and damage". (The Council's application defines "the consumers" as "the group members".) In addition to the general declaratory relief to which I have referred, the applicant also seeks an order that "one or more of the respondents pay compensation and/or damages" to the group members, or to sub-groups of them, in such amount as the Court deems appropriate pursuant to s 82 the Trade Practices Act, or that they pay to the group members "an aggregate amount pursuant to s 33Z(1)(f) and/or s 22 and/or s 33Z of The Federal Court of Australia Act". In addition, an order is sought that "some or all of the respondents" pay exemplary and/or aggravated damages, interest on damages and costs on an indemnity basis.
The respondents carried on business at relevant times as producers and suppliers of pre-mix concrete in the local government area administered by the Gold Coast City Council, and elsewhere. The case alleged in the statement of claim is that, so far as contraventions of s 45 are concerned, the respondents, by reason of their combined market share for the supply of the concrete product, were able to lessen competition and maintain and regulate the sale price of such concrete by entering into and giving effect to an arrangement or understanding that contravened s 45 of the Act. It is alleged that, "during the cartel period", each respondent systematically made arrangements or arrived at understandings with each other resulting in the fixing, controlling or maintaining the prices for the supply of the concrete in the area in question and for allocating to particular respondents the supply of concrete required by a particular user or particular users in this area. It is alleged that such activity included not competing with each other to entice certain large customers of individual respondents away from those respondents and collusive tendering for major construction projects.
While at various points in its pleading it is alleged that such activities continued throughout the cartel period, ie, throughout the period from June 1989 to July 1994, it is apparent from the pleading that the applicant's case is that the arrangements complained of between the respondents were interrupted by what is called a "price war" between them which was apparently provoked by competition following the entry into the Gold Coast market for pre-mix concrete of a fifth supplier. The period of the price war ran from June 1992 to September 1993. At the hearing, the applicant confirmed that it makes no claim to any relief in respect of the period of the price war, save that it does claim relief in respect of concrete ordered before the price war broke out but supplied at cartel prices during the period of the price war.
The pleading gives particulars of the officers of each of the respondents who entered into and implemented or "monitored", as it is termed in the pleading, the arrangement or understanding of which complaint is made. Particulars are given to the effect that this arrangement or understanding "was entered into and monitored" at regular meetings held at short intervals and by other frequent communications during the cartel period, but not, in effect, during the period of the price war. It is also alleged that the arrangements or understandings between the respondents to maintain their respective market shares and thereby regulate and maintain the market price for concrete within the Gold Coast area was given effect to by various activities of the respondents, including the engagement of external accountants to provide regular reports to each respondent on the other's production figures. Nine projects involving a total of nearly 120,000 m3 of concrete are particularised as some of the projects in respect of which the respondents engaged in collusive tendering.
So far as the tortious conspiracy alleged against the respondents and based upon the arrangement or understanding the subject of the Trade Practices Act, s 45, claim, the applicant alleges that it was carried into effect not only by the actions already referred to, but by keeping secret the existence of these arrangements and understandings so as to dupe group members into believing they were acquiring pre-mix concrete at competitive prices. The cases sought to be made by the applicant in deceit and in reliance on s 52 the Trade Practices Act turn on the same activity which is said to involve false and misleading or deceptive representations that the respondents were engaged in price competition with each other.
It is alleged that the conduct in breach of s 45 and the conduct constituting tortious conspiracy both, in effect, resulted in group members acquiring pre-mix concrete at higher prices than they would have paid in a truly competitive market. There is a general claim (para 24) that by reason of all the conduct complained of, the group members suffered loss and damage by having to pay higher prices for pre-mix concrete "within the stream of commerce between the initial supply and the final end consumption of the product". Allegations are made in support of the claims in deceit and, based on contraventions of s 52, of reliance by group members on relevant misrepresentations by the respondents and of such misrepresentations and reliance causing them loss. These particulars are identical and are as follows (taking the particulars given in support of the deceit claim):
(c) Particulars of reliance.
(i)Consumers acted in reliance upon the conduct referred to in (a) above by:
(A)accepting tenders, quotations and prices supplied by the respondents; and
(B)acquiring product from the respondents at the prices tendered, quoted and offered by the respondents; and
(C)paying the prices tendered, quoted and priced by the respondents; and
(D)not taking earlier or timely action to enforce their legal rights arising from the true nature and effect of the arrangements or understandings referred to in paragraph 15.
(d)Particulars of causation of loss to consumers by reliance on the said representations:
(i)By providing collusive tenders, quotations and prices to consumers who were unaware of the existence of the arrangements or understandings between the respondents the respondents:
(A)induced unwitting consumers to acquire product at prices which consumers believed were a result of free competition between the respondents in a truly competitive market; and
(B)imposed higher product costs on consumers than would have otherwise been the case in a truly competitive market; and
(C)denied to consumers the right and opportunity to take timely action to recover their losses by legal action for breach of the Act or otherwise."
In the general claim in paragraph 24 for loss and damage, there is in the particulars of damage an inappropriate reference to the impact of the price war on the respondents' prices to group members and an allegation that the Council estimates "the average total price of product" supplied by each of the respondents to it and the other group members during the period of the arrangement or understanding was in the region of between 10% to 20% higher than would otherwise have been the case, but for the actions of the respondents the subject of complaint. The Council goes on to allege that it cannot further particularise the extent of the damage it and the other group members suffered until discovery by the respondents of their records, including but not limited to those relating to:
"(i)quantities of product of each grade sold during the cartel period;
(ii)prices at which each grade of product was sold from time to time during the cartel period;
(iii)identity of all consignees of all product shipped during the cartel period;
(iv)quantity and price of all product of each grade supplied during the cartel period by each respondent to each consumer."
The Council's originating application defines the "group members" as:
"all persons (natural or corporate) who directly or indirectly acquired for value pre-mix concrete ('product') originally manufactured and/or supplied by one or more of the respondents in the geographical area encompassed by the present territorial unit of the local government of the Council for the City of The Gold Coast (the 'market') between the period from June 1989 to July 1994 inclusive (the 'cartel period') but excluding:
(a)persons who have acquired concrete from an end consumer solely by reason of the acquisition of land on which a concrete structure had, prior to such acquisition, been erected; and
(b)persons who acquired quantities of product totalling in aggregate less than 1,000 cubic meters during the period June 1989 to July 1994 inclusive; and
(c)persons who were able to pass on to other consumers in the chain of commerce all product costs incurred."
The reason why this definition of "group members" was adopted and, in particular, why exclusion (c) was incorporated in it, emerges from the affidavit of Mr Davis, the applicant's solicitor. He says: "the consumers who likely suffered the majority of the losses from the respondents' conduct (and are therefore eligible class members) are developers, project owners and speculative builders who, on a declining property market, were precluded from passing those costs to the ultimate consumers" and Government instrumentalities and local government authorities. Mr Davis adds: "most direct consumers (ie the intervening builders and construction contractors) would have passed on the cost of the concrete product to these "downstream" consumers and, to that extent, would not themselves be eligible participants in the class action", although he suggests that some of these direct consumers may be eligible for membership of the group, in so far as they may be a developer who went bankrupt during construction or a developer or a speculative builder caught with stock on a declining market. But he comments: "As a rule, however, I anticipate that in most cases the loss would have been passed on to the indirect consumer." The evidence before me suggests only a limited number of public bodies in addition to the applicant might be within the group definition: they are various Queensland government instrumentalities (such as Queensland Rail and the Queensland Department of Transport), the Tweed Shire Council and the New South Wales Department of Main Roads.
The applicant does not explain why the definition of "group members" includes exclusion (a). But where a person purchased from a developer a concrete structure, such as a hotel of the kind that has been built in recent years on the Gold Coast, it would no doubt be an extremely complicated task to identify what loss that purchaser suffered from the respondents' conduct, even if the structure sold by the developer incorporated concrete supplied to the developer or its own builder at inflated prices. The measure of the loss suffered by such a person would appear to be the difference, if any, between the price actually paid by that person (a price presumably arrived at by reference to the relevant segment of the real estate market at the time of purchase) and the price that he would be likely to have paid, if his developer-vendor had passed on the whole or some of any savings the vendor may have made, if the structure had been built with fairly-priced concrete.
The object of exclusion (b) seems clearly enough to be to limit the size of the group to major victims of the respondents' allegedly wrongful conduct.
The definition of "group members" that has been adopted by the applicant is productive of difficulty for the applicant in justifying the decision to bring the action as a representative one.
An issue that assumed importance at the hearing was whether this proceeding was one within s 33C(1)(a) the Federal Court of Australia Act, ie, whether the Court could be satisfied that there were at least seven persons who had the same claims against the same person. As to the second point, it appears from the pleading that, so long as each respondent was a party to the various kinds of misconduct I have referred to, that will be sufficient to make it jointly liable with the other respondent participants to group members. The issue of critical concern here is whether there are at least seven victims of the cartel activities alleged against the respondents.
I can take notice, pursuant to s 144 the Evidence Act 1995 (Cth), that the Gold Coast local government area is very large, heavily populated and one in which a great deal of building and other construction activity has occurred throughout the whole of the period June 1989 to July 1994. The statement of claim alleges that the combined market share of the respondents during the cartel period comprised between approximately 84% and 97% of the market for the supply of this pre-mix concrete in this local government area to consumers who included builders, other concrete fabricators and contractors, property developers and "local government authorities" (sic). It would therefore appear easy to infer that the group members comprise at least seven persons, with claims against each respondent.
But the position in this respect is complicated due, in large part, to the way the applicant has chosen to define the group members. Mr Davis refers, in what might be thought to be an unexceptional statement, in view of the nature of the case the applicant has pleaded against the respondents, to what he describes as the impossibility of providing the particulars identifying class members that have been sought by the respondents until after discovery. He goes on to say that before discovery, only the respondents have the capacity to identify all direct consumers of pre-mix concrete during the cartel period who are group members; he says that indirect consumers or "downstream" consumers, who themselves acquired concrete from those persons directly supplied by the respondents, can only be identified by means such as non-party discovery against the direct consumers (to the extent that they comprise builders and contractors who were able to pass on the whole of the inflated costs of concrete incurred by them to project owners and developers), once they have been identified from discovery against the respondents themselves and by advertising, to encourage "downstream" consumers who are eligible to be regarded as group members to come forward and identify themselves. Mr Davis also says that, even after identification of eligible "downstream" consumers, identification by the particulars sought by the respondents of group members will be difficult until completion of both inter-party and non-party discovery: I have set out what Mr Davis has to say to the effect that it is unlikely that purchasers of minimum quantities of 1,000 m3 of concrete from any of the respondents suffered loss from the respondents' cartel activities and that the only persons within the "group" as defined who may have suffered such loss are those developers and speculative builders prevented by a declining market from passing on all those losses to their own purchasers.
Mr Davis also gives evidence of the fluctuations in the Gold Coast real estate development market and, in particular, that a development boom peaked in about December 1989 with a sudden decline in the market resulting in a severe contraction of activity and in developers and project owners suffering large losses until about mid 1992. His opinion is that only developers and speculative builders who sold in the depressed market between about December 1989 and mid June 1992 are likely to have suffered losses from the respondents' conduct not recouped in sale proceeds and to otherwise be within the "group" definition.
It is appropriate to mention here the argument of the respondents that s 33B the Federal Court of Australia Act only permits a proceeding to be brought as a representative proceeding under Part IVA "in respect of a cause of action arising after" the commencement of the relevant amendment to that Act, ie, after 5 March 1992. Given that declarations are sought in respect of conduct commencing in June 1989, it is said that the cause of action for each of those declarations arose before 5 March 1992. That may well be a good answer to the action as presently pleaded. But I think the action, if it continues as a representative one, can be repleaded to claim on each cause of action that arose upon the purchase after 5 March 1992 by each group member of concrete at cartel prices. The third respondent accepts that and, despite some confusion, the first respondent also appears to accept that in para 49 of its outline of argument. However, the recasting of the action in that way emphasises the difficulties in justifying its continuance as a class action. The range of persons eligible to be group members whom Mr Davis identifies as also likely to have suffered loss due to the respondents' conduct is confined to speculators who had to sell on the depressed market that ended in about June 1992. If Mr Davis is right in identifying the group members who have suffered loss, only those speculators who sold in a quite short period of a few months after March 1992 are likely to have any claim against the respondents.
The question whether the applicant can show the existence of a group of at least seven members has long been identified to the applicant as an issue requiring its attention. The Council has long been on the clearest notice that it should identify, if it can, at least seven persons or organisations who are group members and who are interested in using the representative proceedings to recover losses.
In November 1996 the first respondent, for example, sought particulars of the statement of claim, including the best particulars the applicant could give to identify the class members. There was no response. So the first respondent's solicitors wrote, on 24 December 1996, to ask for particulars of the statement of claim, including particulars identifying "so far as is known to the applicant" each member of the group and certain other information concerning group members. This request was made, so the applicant was told, to enable the first respondent to formulate the application which has now come before me for determination. It was made after the directions hearing of 6 December at which directions were given with respect to the making of that application by the respondents. It produced a response from the applicant's solicitor on 7 January to the effect that the request of 24 December was belated, given that the first respondent had, in November, requested particulars and had failed to raise that matter at the directions hearing on 6 December. The respondents were not content with that. In support of the applications now before me, they have put in affidavits, which were all filed by mid February last, asserting that the qualification for group membership that requires a member to have purchased a minimum quantity of 1,000 m3 in the cartel period means that only substantial consumers of concrete are eligible for group membership: 1,000 m3 equates to the concrete in about 20 average sized houses. They have also explained why they believe that it is unlikely that there are as many as seven persons or organisations who are within the applicant's definition of the group it claims to represent. For example, the General Manager, South East Queensland, for the second respondent explained in detail why he said "almost all customers for sales totalling above 1,000 m3 in the period July 1991 to June 1994 were to builders, concrete placers and civil contractors, which persons are excluded from the group definition" because they are likely to have passed on all the costs incurred by them for pre-mix concrete to others "in the chain of commerce". He also says that the only purchasers of concrete from the second respondent "who do not appear to fall within the exclusion as to the group definition are the [applicant], the Tweed Shire Council and the Department of Transport". He explains that the second respondent only has computerised records for the period from July 1991 and that records prior to that are difficult to access; he expresses the opinion that it is unlikely that an analysis of the records for June 1989 to July 1994 would reveal other customers of the second respondent within the group definition other than "local authorities or State Government bodies". The Gold Coast Sales Manager of the third respondent says: "I am not aware of any persons other than the applicant and the State of Queensland (more particularly the Department of Main Roads) who falls within" the group member definition. He offers a detailed explanation for this opinion, which is based, in part, on his examination of the third respondent's records for the period 1991 to July 1994. The Queensland Manager for the fourth respondent has sworn to reviewing that respondent's sales records for the period June 1989 to August 1994, a review he says shows that, apart from sales to the applicant and to the Department of Main Roads, all sales by the fourth respondent totalling more than 1,000 m3 to individual customers in the period June 1989 to July 1994 were sales to builders, concrete contractors and builder/developers, ie, to persons likely to come within exclusion (c) of the group definition.
The respondents' evidence also shows that both the applicant's solicitors and the applicant have extensively publicised the present action for the express purpose of inviting persons possibly eligible to be group members to identify themselves; publicity has been given to the fact that prompt action was required because time limits apply to proceedings like the present and to the fact that the proceedings are being mounted by agreement between the applicant and its solicitors on a "contingency basis", with payment of legal costs to those solicitors hinging on a successful outcome, as an encouragement to possible group members to identify themselves to the applicant and its solicitors. The steps the applicant has taken in an attempt to identify possible group members include writing to individuals who are possible members of the group, such as builders, urging the recipients of the letters to consider becoming involved in the class action. This material was disseminated between March and November 1996.
As I have said, it might be thought that in an area as large as the City of the Gold Coast, there would be, at the very least, seven persons who would fall within the class defined by the applicant. But the Gold Coast City Council, despite the attack made on the representative proceedings in this respect, has not produced any evidence confirming the existence of any person or organisation within the definition of group membership interested in recovering losses suffered as a result of the respondent's conduct by means of the representative action. It is, of course, well placed, as the building authority for the city of the Gold Coast, to be able to identify persons and organisations who might be qualified to be group members. Yet in spite of the respondents' quite precise challenge that there are not, in fact, seven persons within the group membership definition who are interested in recovering losses they may have suffered as a result of the respondents' activities by participating in the representative proceeding, the applicant has not provided evidence confirming the existence of a single such person.
It emerged during the hearing that, well prior to the applicant bringing these proceedings, the State of Queensland and Queensland Rail separately commenced actions in the Supreme Court against the four respondents and others seeking damages of the kind which are also sought by the applicant in the representative action to be recovered on their behalf. It is highly probable that the State of Queensland and Queensland Rail will opt out of the representative action, if it proceeds and an opt out notice is published: this probability is increased to a virtual certainty, in my opinion, by the failure of the applicant, in the face of detailed and elaborate challenge by the respondents to the proposition that there are as many as seven members of the class defined by the applicant to produce any evidence of having approached any Queensland governmental instrumentality and having obtained confirmation of that instrumentality's willingness to seek to recover damages through the class action. The only other public bodies, apart from the applicant, likely to be members of the class, on the evidence before me, are the Tweed Shire Council and New South Wales Department of Main Roads: once again, despite the attack mounted by the respondents, there is an absence of any evidence that either body is interested in recouping any damages it may have suffered as a result of the respondents' conduct, through this representative action.
I am prepared to find that there is no public body, apart from the applicant, interested in using this class action to recover losses it may have suffered as a result of the respondents' activities. But, notwithstanding the state of the evidence which strongly suggests that there may not exist at least seven group members, I am not prepared to go further and draw that inference. However, that is not the end of the matter.
Under s 33N, the Court is given a discretion to declare that representative proceedings should no longer continue as such.
It is apparent, from the evidence put before me by the applicant, that, if these proceedings continue as representative proceedings, the applicant intends to use the mechanism of discovery to the fullest. Those costs are likely to be very great. Discovery itself, including non-party discovery, is likely to give rise to complex and protracted interlocutory litigation. Yet there is an absence of any indication in the proofs offered by the applicant that such a complex and expensive proceeding is likely to produce benefits for anyone other than the applicant, when it should be well within the Council's capacity to produce some evidence showing that there are a number of others who would benefit and when it has long been aware of the pressing need to do that, if that is truly the position. The action taken by some public authorities to commence their own proceedings and the lack of interest by all other public and private persons and organisations in supporting those proceedings, notwithstanding the extensive publicity given by the applicant and its solicitors to the representative action, suggests that, if these proceedings continue, the benefits to be derived, which are very likely to be confined to benefits to the applicant, will be very greatly outweighed by the costs burdens inflicted on the respondents. The applicant is fully entitled to pursue the respondents for its own losses in an action brought for its sole benefit. Such an action will, in my opinion, be significantly less costly to all parties than the proceedings as presently framed.
It is plain that the assessment of damages in respect of group members will involve the litigation of individual circumstances, as the respondents submit is the case. It can be expected that this phase of the litigation, if it is dealt with under the umbrella of the representative proceedings, will be complex, even if by party and non-party discovery the applicant were ultimately able to point to the possible existence of a number of persons and organisations eligible to be regarded as group members. It was also submitted on behalf of the first respondent that issues of reliance and causation in relation to the claim in deceit and those based on s 52 the Trade Practices Act may well involve the investigation of a wide range of individual circumstances. It was said, by way of hypothetical example, that particular consumers may have special arrangements with particular respondents which would have led them to purchase concrete at the inflated prices they did buy it at even if they had known of the cartel arrangements. This may turn out to be so, at least in relation to some consumers. But there is no evidence to which I was referred to suggest that that is anything other than a hypothetical possibility at the moment. Nor was I referred to any other evidence that would suggest that issues of reliance and causation may involve the litigation of an extensive range of individual circumstances. That may, of course, also turn out to be the case when further information is available. But I must decide the present motions on the limited evidence before me. The position as I see it is that the case presently pleaded by the applicant as to reliance in relation to the deceit and s 52 claims and causation in relation to all claims is one which is by no means inherently improbable, but instead alleges outcomes that, prima facie, can be accepted as those likely to result from the various kinds of misconduct alleged against the respondents.
I would not regard those factors as sufficient to justify refusing to allow these proceedings to continue as representative proceedings.
But in the unusual circumstances of this case, I am not prepared to allow the proceedings to so continue. I am satisfied, for the reasons given, that it is not in the interests of justice for the proceedings to so continue because the costs that would be incurred if the action continues as a representative proceeding are likely to exceed the costs that would be incurred if each group member conducted a separate proceeding: see s 33N(1)(a).
There is no reason why the proceedings should not continue as an action brought by the applicant for its sole benefit against the respondents, although it should replead its case, if it wishes to do that. The only consideration that would bear upon the appropriateness of allowing the action to proceed as one brought by the applicant for its sole benefit arises from the contentions of the respondents that such an action in so far as its object is to recover loss suffered by the applicant based on s 82(1) the Trade Practices Act, is time-barred by s 82(2) of that Act. It is unlikely that that argument, even if sound, would prevent the applicant obtaining an extension of the limitation periods applicable to its common law claims under s 38(1) the Limitation of Actions Act 1974 (Qld), given the clandestine nature of the respondents' misconduct that is at the core of these causes of action. And quite apart from whether it seeks such an extension, the applicant may well be able to plead a case that would entitle it to recover losses incurred by it in respect of all purchases of concrete at cartel prices from 5 November 1993, ie, within three years of commencing the present proceedings.
But it is, in any event, inappropriate to rule now on the validity of the respondents' arguments based on s 82(2), as an answer to any claim the applicant may bring within the current action based on conduct of the respondents contravening ss 45 and 52 the Trade Practices Act. In such cases, the comments of the High Court in Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 533 are in point:
"We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question."
The discussion by the Full Court of this Court in State of Western Australia v Wardley Australia Ltd in (1991) 30 FCR 245 at 268-270 shows that there are other reasons why it would be wrong to rule on a limitation point before a defence and a reply have been filed (and before even the statement of claim is in its final form).
I should say that I reject the applicant's argument that the High Court's decision in Wardley, properly understood, and the comment by Sackville J in Karedis Enterprises Pty Ltd v Antoniou (1995) 59 FCR 35 at 48, is authority for the proposition that, because the applicant could not have known that it had a cause of action until the respondents' misconduct was revealed by Lockhart J's judgment on 4 December 1995, the various statutory causes of action could only be said to have arisen then. Wardley, in my opinion, deals only with the case where misconduct has occurred, but the question whether it will result in loss or damage depends upon whether particular events occur subsequent to that misconduct, being events which may or may not occur. Wardley shows that a cause of action so founded may well only arise when it is known that future events of that character have in fact occurred. The present case is quite different: given the complaints made, the applicant undoubtedly suffered loss for the first time when it first purchased concrete at artificially inflated prices from the respondents. The mere fact that the applicant may have been unaware, because knowledge was concealed from it by the clandestine nature of the respondents' misconduct, that it was suffering loss by reason of that misconduct does not mean that the cause of action had not then arisen. At common law, a cause of action can be complete even though the victim is unaware that loss has already ensued, although this rule is ameliorated by various provisions of State Limitation Acts which empower the Court to extend relevant limitation periods, where knowledge of decisive facts is acquired by the victim only after expiry of the relevant period.
I certify that this and the preceding 21
pages are a true copy of the reasons
for judgment herein of the Honourable
Justice Drummond.
Associate:
Date:9 July 1997
Counsel for the applicant: J A Griffin QC
Solicitor for the applicant: Attwood Marshall Lawyers
Counsel for the first respondent: I D F Callinan QC
Solicitor for the first respondent: Minter Ellison
Counsel for the second respondent: K A Barlow
Solicitor for the second respondent: Blake Dawson Waldron
Counsel for the third respondent: J D McKenna
Solicitor for the third respondent: Mallesons Stephen Jacques
Counsel for the fourth respondent: P H Morrison QC
Solicitor for the fourth respondent: Allen Allen & Hemsley
Dates of hearing: 19 and 20 June 1997
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