The Owners - Strata Plan No 87231 v 3A Composites GmbH (No 3)
[2020] FCA 748
•1 June 2020
FEDERAL COURT OF AUSTRALIA
The Owners – Strata Plan No 87231 v 3A Composites GmbH (No 3)
[2020] FCA 748
File number: NSD 215 of 2019 Judge: WIGNEY J Date of judgment: 1 June 2020 Catchwords: CONSUMER LAW – representative proceedings pursuant to Pt IVA of the Federal Court of Australia Act 1976 (Cth) – where applicant alleges products were not fit for purpose or not of merchantable or acceptable quality – where applicant claims loss or damage suffered arising out of defective building work – claims for statutory compensation and damages under the Trade Practices Act 1974 (Cth), the Competition and Consumer Act 2010 (Cth) and the Australian Consumer Law
PRACTICE AND PROCEDURE – representative proceedings under Part IVA of the Federal Court of Australia Act 1976 (Cth) (FCA Act) – where order sought requires group members to register and provide certain information – whether Court has power to make such an order under s 33ZF of the FCA Act – whether order is appropriate to ensure that justice is done in the proceeding
PRACTICE AND PROCEDURE – representative proceedings under Part IVA of the FCA Act – where order sought was that only group members who registered and provided certain information would be eligible to receive any distribution from a settlement or judgment in the proceeding – whether Court has power to make such an order under s 33ZF of the FCA Act – whether order is appropriate to ensure that justice is done in the proceeding – the significance of prejudice concerning limitation periods on third party contribution claims
PRACTICE AND PROCEDURE – claim for contribution – where State and Territory statutes provided a right of action between tortfeasors or wrongdoers – whether group members suffered damage as a result of a tort and whether the respondents are tortfeasors under the relevant legislation
PRACTICE AND PROCEDURE – limitation provisions – whether claims for contribution affected by limitation periods in various State and Territory legislation – whether claim for contribution is an action for loss or damage – whether “long stop” limitation provisions relating to defective building work applied to potential claims for contribution
Legislation: Civil Procedure Act 2005 (NSW) ss 173, 177, 179(b), 183
Competition and Consumer Act 2010 (Cth) Sch 2 Australian Consumer Law ss 18, 29, 33, 54, 271, 236, 271, 327
Building Act 1993 (NT) ss 159, 160(1)
Building Act 1993 (Vic) ss 129, 134
Building Act 2004 (ACT) ss 140, 142
Building Act 2016 (Tas) s 327
Development Act 1993 (SA) s 73
Environmental Planning and Assessment Act 1979 (NSW) ss 6.1, 6.14(e)(i), 6.14(e)(iv), 6.19, 6.20, 6.20(1), 109ZK
Federal Court of Australia Act 1976 (Cth) ss 33C, 33J, 33K, 33N, 33N(1)(a), 33N(1)(b), 33N(1)(c), 33N(1)(d), 33P, 33P(a), 33P(b), 33V, 33X, 33Z, 33ZB, 33ZB(b), 33ZE, 33ZF
Home Building Act 1989 (NSW)
Judiciary Act 1903 (Cth) ss 79, 80
Law Reform Act 1995 (Qld) s 6
Law Reform (Contributory Negligence and Tortfeasors’ Contribution) Act1947 (WA) s 7
Law Reform (Miscellaneous Provisions) Act 1946 (NSW) ss 5, 5(1), 5(1)(c), 6
Law Reform (Miscellaneous Provisions) Act1956 (NT) ss 12, 13
Limitation Act 1969 (NSW) ss 26, 26(1), 26(1)(a), 26(1)(b), 26(2)
Limitation Act 1974 (Tas) ss 4, 4(1)(d), 7
Queensland Building and Construction Commission Act 1991 (Qld) Schedule 1B ss 20, 22, 29(1), 29(3)
Railways Acts 1914 to 1955 (Qld) s 121
Trade Practices Act 1974 (Cth) ss 52, 53, 55 74D, 82, 87
Wrongs Act 1954 (Tas) ss 3(5), 3(6)
Wrongs Act 1958 (Vic) ss 23B, 23B(1), 24(4), 24(4)(a)
Cases cited: Australia and New Zealand Banking Group Ltd v Turnbull (1991) 33 FCR 265; [1991] FCA 920
Australian Breeders Co-Operative Society Ltd v Jones (1997) 150 ALR 488; [1997] FCA 1405
Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485; [1993] HCA 15
Bialkower v Acohs Pty Ltd (1998) 154 ALR 534; [1998] FCA 446
Bitumen and Oil Refineries (Australia) Limited v Commissioner for Government Transport (1955) 92 CLR 200
Blunden v Commonwealth (2003) 218 CLR 330; [2003] HCA 73
BMW Australia Ltd v Brewster (2019) 94 ALJR 51; [2019] HCA 45
Bray v F Hoffman-La Roche Ltd [2003] FCA 1505
Bright v Femcare Limited (2002) 195 ALR 574; [2002] FCAFC 243
Bryan v Maloney (1995) 182 CLR 609
Burke v LFOTPty Ltd (2000) 178 ALR 161; [2000] FCA 1155
Burke v LFOTPty Ltd (2002) 209 CLR 282; [2002] HCA 17
Bywater v Appco Group Australia Pty Ltd [2018] FCA 707
CAL No 14 Pty Ltd v Motor Accidents Insurance Board (2009) 239 CLR 390; [2009] HCA 47
Capic v Ford Motor Company of Australia Ltd [2016] FCA 1020
Coomblas v Gee (1998) 157 ALR 640; [1998] SASC 6894
Darcy v Medtel Pty Limited [2002] FCA 925
Dino Dinov v Allianz Australia Insurance Limited (2017) 96 NSWLR 98; [2017] NSWCA 270
Dorrough v Bank of Melbourne Ltd (1995) ATPR (Digest) 46-152
Earglow Pty Ltd v Newcrest Mining Ltd (2015) 230 FCR 469; [2015] FCA 328
Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22
Fisher (trustee for the Tramik Super Fund Trust) v Vocus Group Limited (No 2) [2020] FCA 579
Gallager Bassett Services NSW Pty Limited v Murdock (2013) 86 NSWLR 13; [2013] NSWCA 386
Genders v Government Insurance Office of New South Wales (1959) 102 CLR 363
Guglielmin v Trescowthick (No 2) (2005) 20 ALR 515; [2005] FCA 138
Haselhurst v Toyota Motor Corporation Ltd t/as Toyota Australia [2020] NSWCA 66
Hasler v Singtel Optus Pty Limited (2014) 87 NSWLR 609; [2014] NSWCA 266
Hopkins v AECOM Australia Pty Ltd (No 2) (2013) 92 ASCR 677; [2013] FCA 115
Inabu Pty Ltd as trustee for the Alidas Superannuation Fund v CIMIC Group Ltd [2020] FCA 510
James Hardie & Coy Pty Ltd v Seltsam Pty Ltd (1998) 196 CLR 53; [1998] HCA 78
Jenkins v Northern Territory of Australia [2017] FCA 1263
John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503; [2000] HCA 36
Jonstan Pty Limited v Nicholson (2003) 58 NSWLR 223; [2003] NSWSC 500
Marshall v Director-General, Department of Transport (2001) 205 CLR 603; [2001] HCA 37
McMullin v ICI Australia Operations Pty Ltd (No 6) (1998) 84 FCR 1; [1998] FCA 658
Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd (2017) 252 FCR 1; [2017] FCAFC 98
Mirkazemi v Manns [2008] TASSC 63
Mitsub Pty Limited v McGraw-Hill Financial Inc (No 2) [2016] FCA 1285
Mobil Oil Australia Pty Limited v Victoria (2002) 211 CLR 1
Money Max Int Pty Ltd (as trustee for the Goldie Superannuation Fund) v QBE Insurance Group Limited (2016) 245 FCR 191; [2016] FCAFC 148
Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd (2007) 164 FCR 275; [2007] FCAFC 200
National Mutual Fire Insurance Co Ltd v Commonwealth of Australia [1981] 1 NSWLR 400
Newstart 123 Pty Limited v Billabong International Ltd (2016) 343 ALR 662; [2016] FCA 1194
Nguyen v Dragicevic [2015] VCAT 1629
Owners Corporation 1 PA538430Y v H building Pty Ltd (under external administration) [2019] VCAT 680
Owners Corporation No. 1 of PS613436T v LU Simon Builders Pty Ltd (Building and Property) [2019] VCAT 286
P Dawson Nominees Pty Ltd v Brookfield Multiplex Limited (No 2) [2010] FCA 176
P Dawson Nominees Pty Ltd v Multiplex Ltd (2007) 242 ALR 111; [2007] FCA 1061
Redbro Investments Pty Ltd v Ceva Logistics (Australia) Pty Ltd (2015) 89 NSWLR 104; [2015] NSWCA 73
RW Miller & Co Pty Ltd v Krupp (Australia) (unreported, Giles J, 9 June 1992)
Sweedman v Transport Accident Commission (2006) 226 CLR 362; [2006] HCA 8
The Owners – SP 67635 v Metlej Developments Pty Ltd [2013] NSWSC 1564
The Owners – Strata Plan 76841 v Ceerose Pty Ltd [2016] NSWSC 1545
The Owners – Strata Plan 76841 v Ceerose Pty Ltd [2017] NSWCA 140
The Owners – Strata Plan No 87231 v 3A Composites GmbH (No 2) [2020] FCA 333
Unsworth v Commissioner for Railways (1958) 101 CLR 73; [1958] HCA 41
Westpac Banking Corporation v Lenthall (2019) 265 FCR 21; [2019] FCAFC 34
Winterford v Pfizer Pty Ltd [2012] FCA 1199
J C Campbell, ‘Contribution, Contributory Negligence and Section 52 of the Trade Practices Act – Part I’ 67 Australian Law Journal 87
P H Winfield, Law of Torts (1st ed, Sweet & Maxwell, 1937)
R Arora, ‘Contribution between wrongdoers of mixed liability: Discerning the role of equity and statute’ (2018) 45 Australian Bar Review 130
Date of hearing: 4-5 November 2019 and 19 May 2020 Date of last submissions: 1 May 2020 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Category: Catchwords Number of paragraphs: 294 Counsel for the Applicant: Mr J T Gleeson SC with Mr W A D Edwards, Mr J K S Entwisle and Mr T L Bagley Solicitor for the Applicant: William Roberts Lawyers Counsel for the First Respondent: Mr M J Darke SC with Ms A E Smith Solicitor for the First Respondent: King & Wood Mallesons Counsel for the Second Respondent: Mr N J Owens SC with Ms N Simpson and Mr S A Adair Solicitor for the Second Respondent: Sparke Helmore Lawyers ORDERS
NSD 215 of 2019 BETWEEN: THE OWNERS - STRATA PLAN NO 87231
Applicant
AND: 3A COMPOSITES GMBH
First Respondent
HALIFAX VOGEL GROUP PTY LIMITED ACN 104 808 853
Second Respondent
JUDGE:
WIGNEY J
DATE OF ORDER:
1 JUNE 2020
THE COURT ORDERS THAT:
1.Within two weeks of the date of these orders, the parties are to confer with a view to agreeing on the orders to give effect to this judgment.
2.If the parties are able to agree on the orders to give effect to this judgment, within three weeks of the date of these orders they are to provide a draft of those orders to the Court and arrange to have the matter listed for a case management hearing at which the proposed orders can be considered and, if considered appropriate, made by the Court.
3.If the parties are unable to agree on the orders to give effect to this judgment, within three weeks of the date of these orders they are to file and serve written submissions, not exceeding ten pages, which annex their respective proposed orders and address the areas of disagreement, and arrange to have the matter listed for the hearing and determination of the issues dividing the parties in respect of the orders.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
WIGNEY J:
The applicant in this representative proceeding, The Owners – Strata Plan No 87231, claims that the first respondent, 3A Composites GmbH, and the second respondent, Halifax Vogel Group Pty Limited, are liable to pay it, and the group members on whose behalf the proceeding has been commenced, statutory compensation and damages under the Trade Practices Act 1974 (Cth) (TPA), the Competition and Consumer Act 2010 (Cth) (CCA), and the Australian Consumer Law (Schedule 2 to the CCA) (ACL). Owners’ claims relate to, or arise from, their alleged acquisition of aluminium composite panels, with the brand name “Alucobond PE” and “Alucobond Plus”, which were manufactured by 3A and distributed in Australia by Halifax. Alucobond panels were fitted to apartments and other types of buildings throughout the States and Territories of Australia, including the building the common property of which is owned by Owners. The group members in the proceeding are persons who, like Owners, at some point have had an ownership or leasehold interest in a building to which Alucobond panels have been affixed.
In simple terms, Owners alleges that the relevant Alucobond panels were not fit for purpose or not of merchantable or acceptable quality because they were flammable or combustible and therefore dangerous and liable or prone to be banned by regulatory agencies in the States and Territories. They claim that 3A and Halifax are liable to compensate it and group members for loss and damage that they have suffered as a result of the panels not being of merchantable quality (s 74D of the TPA) or acceptable quality (ss 54 and 271 of the ACL). In its recently amended pleading, Owners also alleges that 3A and Halifax made misleading representations or engaged in misleading conduct concerning the nature of the Alucobond panels contrary to ss 53 and 55 of the TPA and ss 29 and 33 of the ACL. Owners claims damages pursuant to s 82 of the TPA and s 236 of the ACL or compensation pursuant to s 87 of the TPA and s 237 of the ACL arising from those contraventions.
An interlocutory issue has arisen in the conduct of the proceeding which needs to be resolved. 3A contends that it is likely to have potential contribution claims against various third parties in respect of the case brought against it by Owners and, perhaps more significantly, the claims of all group members. The potential contribution claims are against developers, builders, façade subcontractors, architects, private certifiers, fire or fire safety engineers or consultants, and other building consultants who were engaged in relation to the planning, development, construction, and certification of buildings to which Alucobond panels were affixed. 3A alleges that if it is liable in respect of any loss or damage suffered by Owners and the group members, those professionals who provided services or advice in relation to the use of Alucobond panels in or on the relevant buildings would, if sued by Owners and the group members, be liable in respect of the same damage. In those circumstances, 3A claims that it may seek to recover statutory contribution from them. Owners wishes to investigate and take appropriate steps in relation to those potential claims.
3A’s contention that it wishes to investigate those potential contribution claims has given rise to two issues: one being relatively immediate but not entirely intractable; the other being more contentious and capable of giving rise to at least a risk of prejudice to 3A if not resolved in the near future.
The first issue is that 3A needs information from the relevant building owners or lessees concerning the third parties against whom it has potential contribution claims. It has requested Owners to provide that information in respect of its building and, while some information has been provided in response to that request, there is an issue, albeit a relatively minor one, concerning whether its request has been fully satisfied.
This issue, however, is somewhat more complex when it comes to the claims of group members. That is because 3A does not know who the group members are, or at least does not know who all of them are. Nor, needless to say, does it know what professionals were retained in respect of the design, development, or construction of the properties in which the group members have a relevant interest. To make matters worse, even if it did know who the group members were, 3A would not necessarily be able to compel group members to provide the information it needs to investigate its potential claims.
3A sought to remedy this situation by applying for the approval of a notice to group members which would request or invite them to register their claims in this proceeding and, in doing so, provide the information which 3A needs to explore the potential contribution claims. Owners opposed that application, though it ultimately acknowledged that some form of registration regime, which also involved registering group members providing relevant information concerning their claims, may be appropriate in the circumstances.
The second issue, however, is more difficult and somewhat more pressing. 3A contended that a registration regime alone would not suffice. That was said to be because certain limitation provisions in various State and Territory statutes may apply to its potential contribution claims. Those limitation provisions, which apply to proceedings relating to, or arising from, building defects, are referred to as “long stop” limitation provisions because the limitation provisions which they create are generally not able to be extended. In those circumstances, 3A submitted that if the limitation provisions apply and have commenced to run, there was a real risk that unless it takes immediate action, some of its contribution claims may become statute barred in the relatively near future. More significantly, 3A submitted that if any registration process was not effectively mandatory, it faced the prospect of group members only identifying themselves after the trial of the common questions and after the relevant limitation periods had expired. That would, in its submission, cause it irremediable prejudice.
3A sought to remedy that situation by seeking an order which had the effect of “closing the class”. The order sought by 3A in that regard provided that group members who had not registered their claims and provided the requested information within a specified period would not be able to receive any distribution from any settlement or judgment in the proceeding. Those non-registering group members would nevertheless be bound by the terms of the settlement or judgment. Owners strenuously opposed the making of any such order. This was undoubtedly the most contentious aspect of 3A’s application.
3A also sought a number of alternative orders in the event that the Court was unable or unwilling to make the proposed class closure order. Those alternative orders included an order requiring Owners to amend the group member definition and an order that the proceeding not proceed as a representative proceeding. There were also a number of ancillary issues concerning the manner in which group members were to be notified of the need to register.
The resolution of 3A’s interlocutory application was complicated and delayed by the fact that, after the initial hearing of the application, Owners’ sought, and was ultimately granted, leave to amend its originating application and statement of claim. The amendments to the pleading were extensive: see The Owners – Strata Plan No 87231 v 3A Composites GmbH (No 2) [2020] FCA 333 (Owners (No 2)). The issues raised by this interlocutory application have been approached and resolved by reference to the amended pleading.
Halifax did not file its own interlocutory application. It supported 3A’s application, but did not advance any submissions of substance in its own right. Such submissions as it did advance related to the suggestion, raised by Owners, that one way to resolve the issue concerning the identification of the group members was to require Halifax to discover documents which would disclose the buildings in Australia to which Alucobond panels had been affixed. That would, in turn, allow the group members to be identified. Halifax contended that ordering it to discover such documents would not resolve the issue and would, in any event, be unduly burdensome and costly. As will be seen, it is ultimately unnecessary to resolve this issue. Given Halifax’s limited role in this interlocutory dispute, these reasons will refer to 3A as the relevant moving party.
The issues raised by this interlocutory dispute were by no means straightforward or easy to resolve. It is necessary to give close attention to: the scope and nature of the representative proceeding; the nature of the potential contribution claims by 3A; the potential applicability and effect of the relevant limitation provisions; the Court’s power to make the orders sought by 3A; the appropriateness of the orders sought by 3A; and the availability and appropriateness of other orders to address any potential prejudice arising from the potential operation of the limitation provisions.
After the hearing of the application, the Court of Appeal of the New South Wales Supreme Court handed down a judgment in Haselhurst v Toyota Motor Corporation Ltd t/as Toyota Australia [2020] NSWCA 66. That judgment had a potentially significant bearing on the question whether this Court has the power to make the class closure order sought by 3A. The parties were invited to make supplementary submissions in relation to the impact of the decision in Haselhurst. They also requested a further oral hearing. The submissions advanced by the parties addressed not only Haselhurst, but also the significance of the recent decision of the High Court in BMW Australia Ltd v Brewster (2019) 94 ALJR 51; [2019] HCA 45.
NATURE AND SCOPE OF THE REPRESENTATIVE PROCEEDING
The nature and scope of the representative proceeding commenced by Owners is referred to at some length in Owners (No 2). It is unnecessary to repeat what was said there. The following short summary is essentially based on the Concise Statement recently filed by Owners. It should perhaps be noted, however, that this summary of the case advanced by Owners tends to belie the factual and legal complexity of the case as pleaded. Needless to say, the facts as outlined here are, at this stage, mere allegations and are, or may be, disputed by 3A and Halifax.
During the ten year period preceding the commencement of this proceeding, 3A manufactured two types of aluminium composite panels. Those panels were branded and marketed as “Alucobond PE” and “Alucobond Plus”. While those two products were different in certain respects, they will, for the sake of simplicity, generally be referred to collectively as the Alucobond panels unless further specificity is required. The Alucobond panels were exclusively distributed in Australia by Halifax.
The Alucobond panels were a form of light-weight architectural cladding. They were said to be suitable for a wide variety of uses on residential, commercial, and public buildings. The essence or main thrust of the case advanced by Owners is that Alucobond panels were in fact not suitable for use on any such buildings because they posed significant fire risks and were an inherently dangerous building product. That is alleged to be the case because the core of the panels comprised or included a proportion of polyethylene, which is a highly flammable plastic with a calorific value similar to that of petrol or diesel fuel. When subjected to the heat of a building fire, the aluminium coversheets which are glued to the core are, so it is alleged, prone to degrade and delaminate, thereby exposing the flammable polyethylene core. The core, once ignited as a result of that process, then burns fiercely causing the building fire to spread rapidly.
Owners alleges that, given the fire risks posed by Alucobond panels, there was always a risk that the relevant State or Territory building regulatory authorities in Australia could or would ban or prevent the use of the product, or find that the product did not comply with relevant building codes or standards. Perhaps more significantly, it is alleged that there was always a risk that those authorities could or would direct the owners of buildings to which Alucobond panels have been affixed to remove or replace the panels at their own cost.
The principal causes of action relied on by Owners are causes of action based on s 74D of the TPA and s 54 of the ACL. Those provisions require, in general terms, that goods relevantly supplied to, or acquired by, consumers are to be of merchantable or acceptable quality, respectively. That in turn requires, in simple or summary terms, that the goods be fit for all the purposes for which such goods are commonly bought. Owners alleges, in essence, that Alucobond panels were not fit for purpose and were not of merchantable or acceptable quality because they created or posed both a fire risk and a material risk that the relevant authorities might require them to be removed from buildings.
Owners is the owner of the common property of an apartment building upon which Alucobond panels have been affixed as part of, or as an attachment to, the external walls. The group members upon whose behalf the proceeding has been commenced are defined as persons who either own or have previously owned, or have or have previously had an ownership or leasehold interest in, a building in Australia which had been fitted with Alucobond panels where those panels were supplied within the ten year period preceding the commencement of the proceeding. It should perhaps be emphasised, at this point, that on just about any view, the size and scope of the proceeding is, or is likely to be, large and broad given the group member definition. Of particular significance, given the potential importance of limitation periods, is that the claims of some group members may relate to Alucobond panels supplied as long ago as 2009.
It is alleged that Owners and the group members suffered loss or damage arising from the fact that the Alucobond panels which they acquired, by reason of their ownership or leasehold interest in buildings upon which the panels were affixed, were not of acceptable or merchantable quality. The loss or damage is said to include the cost of removing and replacing the Alucobond panels, or otherwise rectifying the issues caused by them, or the reduction in the value of the building.
Owners now also relies on causes of action under s 53 of the TPA and s 29 of the ACL. It alleges that 3A and Halifax made misleading representations and engaged in misleading conduct concerning the nature of Alucobond panels. The alleged misleading representations concern, in general terms, the suitability, fabrication, and fire performance qualities of Alucobond panels, as well as their compliance with relevant building codes. The alleged misleading conduct concerns, in general terms, the failure to warn Owners and the group members about the suitability, fabrication and fire performance qualities (or the lack thereof, as the case may be) of Alucobond panels, and the fact that the panels did not, or might not, comply with relevant building codes.
The defences filed by 3A and Halifax to date join issue with many, if not most, of the key allegations made in Owners’ pleading. They also aver, among other things, that Alucobond panels were capable of being used safely and in compliance with relevant building codes, particularly when used in accordance with designs, plans, and specifications prepared by appropriately qualified and certified professionals.
The evidence filed by the parties in relation to the interlocutory application suggests that there is likely to be more, perhaps many more, than 1,000 group members and that the potential damages claims may total many billions of dollars.
THE POTENTIAL CONTRIBUTION CLAIMS
The potential contribution claims that 3A wishes to investigate are detailed at length in an affidavit sworn by its solicitor, Mr Samuel James Dundas. It is unnecessary to consider Mr Dundas’ evidence concerning the potential contribution claims in any great detail. While in its written submissions Owners asserted that 3A had not “properly articulated” any cross claims and that “it is difficult to see how any reasonably arguable cross claims could properly be brought”, Owners did not seek to cross-examine Mr Dundas or to otherwise challenge his evidence. Nor did it explain, in its written or oral submissions, exactly why the potential contribution claims articulated in Mr Dundas’ affidavit could not be said to be reasonably arguable, or were at least not worthy of proper investigation by 3A. Owners’ submissions, rather, focussed essentially on the limitation issues which formed the main basis of 3A’s application.
It is nevertheless necessary to give some more detailed consideration to the potential contribution claims that 3A claims it wishes to investigate.
The factual basis of the potential contribution claims
In relation to Owners’ claims, Mr Dundas’ evidence was that 3A wishes to investigate the availability of cross claims for contribution or indemnity against a number of third party professionals or tradesmen who were involved in the design, construction, or certification of the Shore building, which is the building upon which Alucobond panels have been affixed and in which Owners has a relevant ownership interest. Those third parties include the developers, the builders, the relevant façade subcontractors, the architects, the private certifiers, the fire or fire safety engineers and consultants, and the BCA [Building Code of Australia] consultants. The contribution claims that 3A may have against those third parties are said to be based on, or arise from, claims that Owners might or would have against them for breach of contractual or statutory warranties, negligence, or misleading or deceptive conduct contrary to the TPA or ACL.
The essence of 3A’s contention concerning the potential availability of contribution claims against the third parties is that some or all of them owed common law, contractual, or statutory duties or obligations in respect of the design, construction, and certification of the Shore building, including the use and affixation of Alucobond panels. If, as Owners contends, the Alucobond panels that were affixed to the Shore building were dangerous, defective, or not of acceptable quality, 3A contends that it may well be the case that the third parties breached their duties, or failed to comply with their relevant obligations. For example, by using Alucobond panels in those circumstances, the developer and builder may have breached statutory warranties imposed by provisions in the Home Building Act 1989 (NSW). Likewise, the architect may have acted negligently or engaged in misleading conduct if the advice or services provided in relation to the design or supervision of the construction included advice concerning the use of Alucobond panels. The same can be said in relation to the advice and services provided by engineers, construction or BCA consultants and certifiers.
The evidence of Mr Dundas was that he had been able to ascertain the identity, or likely identity, of the developer, the builder, the façade subcontractors, the architect, the private certifier, the fire consultant, and the BCA consultant involved in the design, development, and construction of the Shore building. He said, however, that he had insufficient information and documentation to properly advise 3A as to the preparation or filing of contribution claims against any of those third parties. That was the basis of the application for orders that would require Owners to provide further information or documentation relevant to the potential claims.
The effect of Mr Dundas’ evidence was that he had even less information in relation to potential third party contribution claims arising from, or relating to, the claims of the group members. While it would appear that there are likely to be more than 1,000 group members and therefore more than 1,000 buildings to which Alucobond panels have been affixed, Mr Dundas’ evidence was that he does not know the identity of the group members, or the location of the affected buildings. Mr Dundas also said that he anticipated that professionals or tradesmen such as developers, builders, façade subcontractors, architects, certifiers, fire or fire safety engineers or consultants, and construction consultants were likely to have been involved in the design, development, building, and certification of the buildings owned by group members. The services and advice provided by those professionals or tradesmen was likely to have included services and advice concerning the use of Alucobond panels. The difficulty, however, was that he was unaware of the identity of those third parties. It followed that, while 3A wished to investigate and take appropriate steps to preserve its rights with respect to any claims for contribution that it may have against some or all of those third parties, Mr Dundas had insufficient information or documents to advise 3A as to the availability of 3A’s claims in that regard.
There could be little doubt that Mr Dundas has a paucity of information and documents concerning the involvement of third parties in the design, development, construction, and certification of buildings to which Alucobond panels have been affixed throughout the States and Territories. In all the circumstances, however, there would appear to be reasonable grounds for Mr Dundas to expect or anticipate that 3A may have a proper factual basis upon which to pursue potential contribution claims against third parties in respect of the claims that Owners and the group members have against it. If, as Owners contends, Alucobond panels were dangerous, defective, or not of acceptable quality for affixation to buildings, it is unrealistic to expect that third parties such as developers, builders, façade subcontractors, architects, certifiers, and fire and constructions consultants might not also bear some liability for any loss or damage suffered by Owners and group members arising from the use of the panels in buildings owned or leased by them.
Indeed, the potential availability of such third party contribution claims is amply illustrated by the decision of the Victorian Civil and Administrative Tribunal in Owners Corporation No. 1 of PS613436T v LU Simon Builders Pty Ltd (Building and Property) [2019] VCAT 286. That case concerned the “attribution of responsibility to (and among) the eight respondents for the damage caused” by a fire which occurred in a building in La Trobe Street, Docklands in Victoria (at [3]). It was found that the rapid spread of the fire was in part a result of the fact that aluminium composite panels with a core containing polyethylene were installed on the external walls of the building (at [244]). The eight respondents included the builder, the building surveyor, the architects, and the fire engineer who were responsible for the design and construction of the building. A number of the respondents were found liable and the damages payable by them were apportioned between them (see the summary at [7]). Of course, this decision is simply illustrative of the potential liability of building and construction professionals arising from the use of materials found to be defective, deficient, or of unacceptable quality. It does, however, provide a fairly sound basis upon which it might be expected that 3A may have contribution claims against similar professionals and tradesmen if it is found liable to Owners and group members.
The legal basis of the potential contribution claims
The evidence of Mr Dundas did not really address the legal basis upon which it was said that 3A could pursue contribution claims against professionals such as developers, builders, façade subcontractors, architects, private certifiers, fire or fire safety engineers or consultants who were engaged in respect of the buildings upon which Alucobond panels were affixed. That issue was, however, addressed in 3A’s submissions. 3A contended that the legal basis for its potential contribution claims was the existence of statutory provisions in the States and Territories which provided a right of action for contribution between tortfeasors or wrongdoers.
There are, however, some potential issues in relation to the application of those State and Territory provisions, or at least some of them, to situations where, as here, the wrongdoers who are alleged to have caused damage to the applicant may not necessarily be said to be “tortfeasors”, or where the wrongdoers are alleged to be liable or potentially liable under different causes of action to those founding the applicant’s claims. The issues are particularly acute in New South Wales, where the relevant legislation has been described as being “a piece of law reform which seems itself to call somewhat urgently for reform” (Bitumen and Oil Refineries (Australia) Limited v Commissioner for Government Transport (1955) 92 CLR 200 at 211) and as being “notorious for the conceptual and practical difficulties it engenders”: James Hardie & Coy Pty Ltd v Seltsam Pty Ltd (1998) 196 CLR 53; [1998] HCA 78 at [7]; see Rahul Arora, ‘Contribution between wrongdoers of mixed liability: Discerning the role of equity and statute’ (2018) 45 Australian Bar Review 130.
In New South Wales, subs 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) (LRMP Act) relevantly provides as follows:
Proceedings against and contribution between joint and several tort-feasors
(1) Where damage is suffered by any person as a result of a tort (whether a crime or not):
…
(c)any tort-feasor liable in respect of that damage may recover contribution from any other tort-feasor who is, or would if sued have been liable, in respect of the same damage ...
There are some potential issues in applying this provision to the claims against 3A and its proposed contribution claims.
One issue is whether it can be said, in the context of the case pleaded against 3A, that Owners and the group members have suffered damage as a result of a “tort” and whether 3A can be said to be a “tortfeasor” (or alleged tortfeasor) in respect of that damage. It will be recalled that the case pleaded against 3A is that it is liable to pay Owners’ and the group members’ damages or compensation under the TPA and ACL arising from their acquisition of goods that were not of merchantable or acceptable quality and as a result of misleading representations or conduct. The question is whether those statutory actions under the TPA and ACL can be said, for the purposes of the LRMP Act, to be “torts” and whether 3A can be said to be a “tortfeasor” if found liable under those provisions.
It is not necessary, for present purposes, to reach a concluded view in relation to that question. It is necessary only to consider whether the circumstances are such that it is reasonably arguable that subs 5(1)(c) of the LRMP Act may be engaged such as to give 3A a right to seek contribution from other tortfeasors who may also be liable in respect of the same damage suffered by Owners and the group members.
It is at least reasonably arguable that 3A may be considered to be a tortfeasor in respect of the claims by Owners and the group members for the purposes of subs 5(1)(c) of the LRMP Act. That is so for at least two reasons.
First, it would appear to be relatively well-settled that the application of subs 5(1)(c) of the LRMP Act does not depend upon a successful action in tort against the alleged tortfeasor by the person suffering damage. A defendant or respondent against whom an action for damages is brought may seek contribution even if the case pleaded against them is or was not a tort so long as they can demonstrate that they could also be held liable in tort for the same damages: Australian Breeders Co-Operative Society Ltd v Jones (1997) 150 ALR 488; [1997] FCA 1405 at 548-549. As Giles J put it in RW Miller & Co Pty Ltd v Krupp (Australia) (unreported, Giles J, 9 June 1992): “[i]t is enough that [the defendant] is a tortfeasor in respect of the plaintiff’s loss (although not held liable in tort at the suit of the plaintiff) and liable in respect of the plaintiff’s loss (although held liable in contract at the suit of the plaintiff)” and that “a defendant’s rights should [not] depend on how the plaintiff chooses to proceed”.
The clearest case in which this principle may apply is where a defendant is sued for breaching a contractual obligation which is co-extensive with a duty in tort. A defendant in such a case would be able to seek contribution under subs 5(1)(c) of the LRMP Act from a third party who is or may be liable to the plaintiff in tort for the same damage. There is, however, no immediately apparent reason why the principle would not apply equally in the case where a defendant is liable or potentially liable for damages in respect of a statutory cause of action if that action involves a breach of a statutory obligation or standard which corresponds or is co-extensive with a common law obligation or standard breach of which would constitute a tort. It would therefore perhaps be open to 3A to argue that, while Owners and the group members have sued it for damages or compensation under the TPA and ACL, they may equally have relied on a cause of action in tort and may have been held liable in tort.
Second, while there have been conflicting decisions over the years on this point, there is at least some authority to suggest that an action for damages under s 82 of the TPA for breach of s 52 of the TPA (a statutory prohibition of misleading or deceptive conduct) can be regarded as a “tort” and that the person who breached s 52 of the TPA may be considered to be a “tortfeasor” for the purposes of subs 5(1)(c) of the LRMP Act. In Australia and New Zealand Banking Group Ltd v Turnbull (1991) 33 FCR 265; [1991] FCA 920, Sheppard J held (at 277) that an action for breach of s 52 of the TPA was entirely statutory and not a tort. In Dorrough v Bank of Melbourne Ltd (1995) ATPR (Digest) 46-152, however, Cooper J said that there was a “substantial argument” that an action for breach of s 52 was a tort. His Honour was particularly influenced by an article by Mr J C Campbell (subsequently Campbell JA of the Court of Appeal of the Supreme Court of New South Wales), ‘Contribution, Contributory Negligence and Section 52 of the Trade Practices Act – Part I’ 67 Australian Law Journal 87. In Bialkower v Acohs Pty Ltd (1998) 154 ALR 534; [1998] FCA 446, the Full Court said that it preferred the views of Sheppard J in Turnbull, though it was unnecessary for the court to decide the matter. The same view was expressed by Lehane J in Burke v LFOTPty Ltd (2000) 178 ALR 161; [2000] FCA 1155 at [131], though s 5 of the LRMP Act was not in issue in that case and nothing relevant was said in relation to it on appeal: (2002) 209 CLR 282; [2002] HCA 17.
In Jonstan Pty Limited v Nicholson (2003) 58 NSWLR 223; [2003] NSWSC 500, Hulme J gave detailed consideration to whether a breach of s 52 of the TPA was a tort and whether a person who breached that provision was a tortfeasor for the purposes of s 5 of the LRMP Act. Two defendants in that case had been found to be liable to the plaintiff for contravening s 52 of the TPA. The question was whether those defendants were tortfeasors and liable for, or entitled to, contribution, pursuant to s 5 of the LRMP Act. Hulme J found that they were.
Hulme J observed that there was no precise and universally accepted definition of “tort” at the time of the enactment of the legislation in the United Kingdom which was adopted verbatim in s 5 of the LRMP Act. His Honour referred, in that regard, to various definitions that had been included in well-known texts over the years. His Honour also referred to extrinsic material in relation to the enactment of s 5 of the LRMP Act which, in his Honour’s view, suggested that “no narrow meaning was intended to be given to the terms “tort” and “tortfeasor” and that “tort” was being used in contradistinction to contract”: Jonstan at [96].
Hulme J also considered the previous decisions which had addressed whether breach of s 52 of the TPA was a tort, including Turnbull, Dorrough and Bialkower. While his Honour did not say so in terms, his Honour appears to have concluded that the decisions in Turnbull and Bialkower adopted an overly narrow definition of “tort” that was not supported by the legislative intention suggested by the extrinsic material. His Honour was ultimately disposed to give the word “tort” in s 5 of the LRMP Act the meaning assigned to it in P H Winfield, Law of Torts (1st ed, Sweet & Maxwell, 1937): “[t]ortious liability arises from the breach of a duty primarily fixed by law; this duty is towards persons generally and its breach is redressible by an action for unliquidated damages”. His Honour noted (at [75]), in that context, that the statutory obligation created by s 52 of the TPA was “one which, absent s 82 … would be regarded as one the breach of which gives rise to a cause of action and amounts to a tort”. Upon detailed analysis, his Honour concluded that the presence of s 82 did not compel the conclusion that a breach of s 52 was not a tort.
It is unnecessary, for present purposes, to determine the correctness of Hulme J’s finding in Jonstan or to seek to reconcile it with the earlier contrary views expressed in this Court in Turnbull and Bialkower, noting that the view expressed by the Full Court in Bialkower was plainly dicta and is therefore not binding. It suffices to say that the decision in Jonstan indicates that it is at the very least reasonably arguable that a breach of s 52 of the TPA is a “tort” and the person who breaches s 52 is a “tortfeasor” for the purposes of s 5 of the LRMP Act. It would equally follow that it is at least reasonably arguable that, for the purposes of s 5 of the LRMP Act, an action under s 74D of the TPA for damages for the supply of goods which were not of merchantable quality, and an action for damages under s 271 of the ACL for non-compliance with an acceptable quality guarantee under s 54 of the ACL, are both actions in tort and the defendant or respondent in such actions is a “tortfeasor”. It is therefore reasonably arguable that 3A can have resort to s 5 of the LRMP Act and seek contribution from any other tortfeasor who caused Owners and group members to suffer loss or damage arising from the affixation of Alucobond panels to buildings in which they have an interest.
Another potential issue in relation to the application of subs 5(1)(c) of the LRMP Act is that the party against whom contribution is sought must also be a tortfeasor liable in respect of the same damage. It may be noted, in this context, that the causes of action against the third party professionals which 3A wishes to investigate as the basis of its claims for contribution include actions for “common law negligence”, breach of statutory warranties imposed by State and Territory building or environmental legislation including, for example, the Home Building Act, and claims under ss 18 and 29 of the ACL and ss 52 and 53 of the TPA. Obviously a third party professional who is alleged to be liable for negligence would be a tortfeasor for the purposes of subs 5(1)(c) of the LRMP Act. As for claims for breach of warranties under legislation such as the Home Building Act, many of the warranties imposed by that legislation are co-extensive with duties in tort, so the third party professionals could arguably be considered to be tortfeasors for the purposes of the application of subs 5(1)(c) of the LRMP Act on the basis of the principle in Australian Breeders referred to earlier. As for the claims based on causes of action under the ACL and TPA, the third party professionals could arguably be considered to be tortfeasors on the basis of the decision in Jonstan.
It follows that, despite the potential issues which may arise in applying subs 5(1)(c) of the LRMP Act, it is at least arguable that 3A may have statutory contribution claims against relevant third party professionals which can be brought under that provision.
There are provisions which are in similar terms to subs 5(1)(c) of the LRMP Act in Queensland, Western Australia, and the Northern Territory: s 6 of the Law Reform Act 1995 (Qld); s 7 of the Law Reform (Contributory Negligence and Tortfeasors’ Contribution) Act1947 (WA); ss 12-13 of the Law Reform (Miscellaneous Provisions) Act1956 (NT). The same issues accordingly may arise in the application of those provisions to the contribution claims that 3A wishes to investigate in respect of group member claims in Queensland, Western Australia, and the Northern Territory. For the reasons just given in the context of the application of subs 5(1)(c) of the LRMP Act in New South Wales, however, it is at least arguable that 3A has a proper legal basis upon which to make contribution claims against relevant third party professionals in Queensland, Western Australia, and the Northern Territory.
The position is somewhat clearer in relation to statutory provisions concerning contribution claims in the other States and Territories. That is because those provisions tend not to be restricted to torts and tortfeasors.
Subsection 23B(1) of the Wrongs Act 1958 (Vic), for example, provides as follows:
Entitlement to Contribution
(1) Subject to the following provisions of this section, a person liable in respect of any damage suffered by another person may recover contribution from any other person liable in respect of the same damage (whether jointly with the first-mentioned person or otherwise).
Some of the others subsections of s 23B of the Wrongs Act deal with limitation issues. Those provisions will be considered later in these reasons. It suffices to note, for present purposes, that having regard to the nature of the claims by Owners and the group members, 3A could be said to be “a person liable in respect of any damage suffered” by Owners and the group members. It can therefore recover contribution from “any other person liable in respect of the same damage”. That arguably could include professionals such as developers, builders, façade subcontractors, architects, private certifiers, fire or fire safety engineers or consultants who provided relevant advice and services concerning the buildings to which Alucobond panels were affixed. Unlike in New South Wales, no issues arise as to whether 3A or those third party professionals are liable in tort or are tortfeasors.
The cognate provisions in South Australia, Tasmania, and the Australian Capital Territory are in not dissimilar terms.
It follows that there would appear to be a proper legal basis upon which 3A could make claims for contribution against relevant third party professionals in Victoria, South Australia, Tasmania, and the Australian Capital Territory.
Contribution claims worthy of investigation
3A did not go so far as to contend that it had viable or reasonably arguable contribution claims. It could not go that far because it did not have sufficient information to enable it to advance that contention. It did, however, in effect contend that it had a proper basis upon which to believe that it may have contribution claims and that those claims were worthy of further investigation. For the reasons just given, that contention should be accepted.
Owners’ submission that “it is difficult to see how any reasonably arguable cross claims could properly be brought” has no merit and must be rejected. Its contention that there was no evidence to suggest that 3A intends to file any cross claims is equally unmeritorious. While it is true that 3A has not filed any contribution claims in respect of Owners’ claim against it, Mr Dundas explained that this was simply the result of the fact that he had not been provided with sufficient information and documentation to date to allow him to properly advise 3A in relation to the filing of any such claim. It is also true that Mr Dundas’ evidence was only that, at this stage, 3A wished to investigate and take appropriate steps to preserve its rights with respect to contribution claims that it might have against third parties. It may readily be inferred, however, that if 3A is able to obtain sufficient information and documentation to establish that any such claims are viable, it intends to file cross claims.
The question whether the Court has power to require Owners and, perhaps more significantly, group members to divulge information and documents which may assist 3A in considering whether it has available and viable third party contribution claims is considered in detail below. Before addressing that issue, it is necessary to consider whether there are potential limitations issues in relation to any such claims that 3A wishes to pursue.
THE POTENTIAL LIMITATION ISSUES
The interlocutory relief sought by 3A was premised on there being an at least reasonably arguable case that the limitation periods in respect of at least some of its potential contribution claims were running and that there was a real risk that some of those claims would become statute barred, either by the time of the hearing of Owners’ case in respect of the common questions, or by the time that the group members would, in the ordinary course, be required to reveal their identities and register their claims. 3A submitted that it was not necessary for it to establish that the relevant limitation provisions definitely applied to its potential contribution claims, or that the limitation periods are definitely running and may expire prior to it being able to bring those actions. Indeed, it was submitted, in effect, that it would be inappropriate or inapposite to definitively determine those questions in the abstract, without proper details of the claims, and in the absence of the parties against whom those claims may be brought.
Owners, on the other hand, contended, in effect, that the Court could and should determine that the limitation periods identified by 3A did not apply to 3A’s potential contribution claims, or that, if they did apply, time had not yet started to run and would not do so until 3A’s liability, if any, had “crystallised”. In Owners’ submission, the limitation arguments advanced by 3A were not reasonably arguable and provided no basis for the interlocutory orders which were sought by 3A.
The issue concerning the potential applicability of particular limitation periods to the potential contribution claims identified by 3A is by no means easy to resolve. Even putting to one side the fact that the issue must be considered in the abstract, not in the context of an actual contribution claim, the difficulty is that the applicable limitation periods for the potential contribution claims will differ according to which State or Territory has the closest connection with the alleged obligation to make contribution. And, as will be seen, there are differences between the applicable limitation provisions in the States and Territories. The only common feature is that none of them are particularly easy to apply in the case of contribution claims relating to building defects.
This Court is obviously exercising federal jurisdiction given the nature of the causes of action pleaded by Owners. In those circumstances, the applicable law in respect of limitation periods for the potential contribution claims by 3A against persons in different States and Territories is to be determined in accordance with ss 79 and 80 of the Judiciary Act 1903 (Cth): John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503; [2000] HCA 36 at [53]; Sweedman v Transport Accident Commission (2006) 226 CLR 362; [2006] HCA 8 at [33]. The starting point is s 80 which, in simple terms, directs attention to the common law unless relevantly modified by statute: Blunden v Commonwealth (2003) 218 CLR 330; [2003] HCA 73 at [16]-[18]; Sweedman at [33]. If the common law choice of law rules are not modified by statute in the State or Territory in which the Court is sitting, and the common law rules require the application of the statute law of another State or Territory, then it is that statute law that is to be applied.
There is much to be said for the view that the character of an action for statutory contribution is quasi-contractual, so that the applicable law will be that of the State or Territory with which the wrongdoer’s obligation to make contribution has the closest connection: Redbro Investments Pty Ltd v Ceva Logistics (Australia) Pty Ltd (2015) 89 NSWLR 104; [2015] NSWCA 73 at [1], [17]-[19], [94]. The law of the State or Territory with which the obligation on the part of the relevant third party professionals to make contribution to 3A has the closest connection is likely to be the State or Territory where the conduct giving rise to that obligation arose: Redbro at [19]. In most, if not all, cases, that is likely to be the State or Territory in which the relevant professional services were provided, which in most cases is likely to be the State or Territory in which the building the subject of the claim against 3A is located.
The evidence suggests that the properties the subject of the group members’ claims against 3A are located in each of the States and mainland Territories. It is therefore necessary to consider the laws of each of the States and mainland Territories to ascertain the relevant limitation laws that may apply. Regrettably, the limitation laws in each of the States or Territories in relation to contribution claims are not always easy to construe or apply, particularly in the present context which involves not only representative proceedings, but also involves claims that, on one view at least, could be characterised as claims arising out of, or in connection with, defective building work. The particular difficulty in that regard is that many of the States or Territories have so-called long stop limitation periods in relation to claims for defective building work. The critical question is whether those provisions apply to contribution claims that arise out of defective building work.
New South Wales
The limitation period for contribution claims pursuant to subs 5(1) of the LRMP Act is specified in s 26 of the Limitation Act 1969 (NSW). It is unnecessary to consider that provision. That is because 3A conceded that, because the limitation period operates by reference to the limitation period for the principal cause of action (relevantly, the action by Owners and group members against 3A), the running of the limitation period under s 26 has effectively been suspended by operation of s 33ZE of the Federal Court of Australia Act 1976 (Cth) (FCA Act).
The potential difficulty for 3A arises, in its submission, as a result of the possible or likely operation of subs 6.20(1) of the Environmental Planning and Assessment Act 1979 (NSW) (EPA Act). That section provides as follows:
Limitation on time when action for defective building or subdivision work may be brought
(1) A civil action for loss or damage arising out of or in connection with defective building work or defective subdivision work cannot be brought more than 10 years after the completion of the work.
Section 6.19 of the EPA Act defines “building work” as including “the design or inspection of building work and the issue of a complying development certificate or a certificate under this Part [Part 6] in respect of building work”. Certificates issued under Part 6 include a certificate that any completed building work complies with particular standards or requirements and a certificate that any aspect of a development complies with particular standards or requirements: see subss 6.14(e)(i) and (iv) of the EPA Act. “Civil action” is defined in s 6.19 as including a counter-claim.
The critical question is whether an action by 3A to recover contribution from a third party professional, such as an architect, or builder, or certifier, can be said to be a “civil action for loss or damage arising out of or in connection with defective building work”.
It is, or would appear to be, at least reasonably arguable that an action concerning the affixation to a building of allegedly combustible or otherwise defective panels would be an action arising out of or in connection with defective “building work” as defined in ss 6.1 and 6.19. But is an action by one tortfeasor to recover statutory contribution from another tortfeasor able to be characterised as a “civil action for loss or damage”? 3A contended that it is at least reasonably arguable that it is and that therefore s 6.20 would apply and fix a ten year limitation period for such an action. Owners submitted that an action for statutory contribution is not an action for loss or damage and therefore s 6.20 would not apply.
There is some authority which supports 3A’s contention that an action for contribution can properly be characterised as an action for loss or damage.
In The Owners – SP 67635 v Metlej Developments Pty Ltd [2013] NSWSC 1564, Sackar J refused an application by the plaintiff building owner to amend its claim against the defendant builder to include additional building defects. The main reason given by Sackar J for refusing leave to amend was that “viable and realistic” cross claims for contribution that the builder potentially had against subcontractors in relation to the additional building defects were statute barred by s 109ZK of the EPA Act: Metlej at [20]. That provision was the predecessor to, and was in relevantly the same terms as, s 6.20 of the EPA Act. Stevenson J arrived at essentially the same conclusion in similar circumstances in The Owners – Strata Plan 76841 v Ceerose Pty Ltd [2016] NSWSC 1545 (leave to appeal in relation to this aspect of the decision refused by the Court of Appeal, see The Owners – Strata Plan 76841 v Ceerose Pty Ltd [2017] NSWCA 140).
It is true, as Owners pointed out, that in Metlej, the plaintiff conceded that s 109ZK of the EPA Act applied to the proposed cross claims for contribution. There is accordingly no consideration, in the reasons of Sackar J, of the question of whether a contribution claim could be said to be an action for loss or damage. It is also true that Stevenson J in Ceerose did not give detailed consideration to that question. It is nevertheless clear that those two highly experienced commercial list judges plainly proceeded on the basis that s 109ZK of the EPA Act applied, which meant that they proceeded on the basis that a contribution claim may properly be characterised as an action for loss or damage.
For its part, Owners relied on the decision of the Court of Appeal of the Supreme Court of New South Wales in Dino Dinov v Allianz Australia Insurance Limited (2017) 96 NSWLR 98; [2017] NSWCA 270. In that case, a building owner made a claim against a builders’ home warranty insurance policy in respect of defective building work carried out by a building company which had since been deregistered. The insurance company then sued the directors of the building company under indemnities granted by the directors to the insurer against its liability under the policy. The question was whether that action was a building action that was time barred by s 109ZK of the EPA Act. The trial judge and the Court of Appeal held that it was not.
It is, however, readily apparent that the reason why the action by the insurance company was not time barred by s 109ZK of the EPA Act was that it was not itself an action for any harm or injury sustained as a direct or indirect consequence of the happening of the defective building work. That was because none of the parties to the action, namely the insurance company and the directors, had contracted to perform, or had performed, any building work. Rather, the action by the insurance company was an action for a remedy in relation to the harm that the insurance company would suffer if the indemnity under the policy was not performed at [18]-[19] per Meagher JA; see also [108] per McDougall J; Beazley P agreeing).
The Court of Appeal did not, however, hold that the action under the indemnity did not fall within s 109ZK of the EPA Act because it was not an action for loss or damage. Indeed, the reasoning of Meagher JA indicates that his Honour did consider that the action was for “loss or damage”. His Honour held (at [12]) that the reference to “loss or damage” in s 109ZK is a reference to “harm or injury, as distinct from damages which are compensation claimed for harm or injury”. His Honour added that an “action will be ‘for’ harm or injury if it claims a remedy, usually compensation, in relation to or because of it”. His Honour then observed (at [18]) that to the extent that the insurance company’s “claim is for loss or damage, it is for the damage it would otherwise suffer if the indemnity were not performed”.
If the reasoning of Meagher JA is applied to the circumstances of this case, it is at least arguable that an action for contribution by 3A against one of the third party professionals is an action for harm or injury, and therefore “loss of damage” for the purposes of s 6.20 of the EPA Act. That is because that action would be for a remedy in relation to the harm or injury that 3A would suffer if it is held liable to pay all the loss or damage suffered by a group member in circumstances where the third party, if sued, would have been liable for the same damage.
It should also be noted that McDougall J, in his reasons, referred (at [75]-[76]) to the “mischief” that s 109ZK of the EPA Act was intended to address. That mischief was said to be twofold: first, that a plaintiff in a building action could select a defendant with the “deepest pockets” and seek to recover the whole of its damages from them; and second, that there was a potential for “indeterminate” liability for building professionals to successors in title in cases involving latent defects having regard to the decision in Bryan v Maloney (1995) 182 CLR 609; [1995] HCA 17. 3A submitted that the mischief identified by McDougall J would not be addressed, and the object of s 109ZK of the EPA Act (and therefore s 6.20 of the EPA Act) would not be achieved, if that provision did not apply to statutory contribution claims.
Owners also relied on the decision of the High Court in Unsworth v Commissioner for Railways (1958) 101 CLR 73; [1958] HCA 41. In that case, both Fullagar J and Taylor J unequivocally found that a claim for contribution pursuant to subs 5(1)(c) of the LRMP Act was not “an action to recover damages or compensation in respect of personal injury” within s 121 of the Railways Acts 1914 to 1955 (Qld): at 86 (per Fullagar J) and at 91 (per Taylor J). Fullagar J (at 86) said that proceedings to recover damages or compensation are “proceedings taken to enforce liability for acts or omissions which are wrongful against the person taking those proceedings” and that proceedings to recover contribution are not such proceedings. Taylor J (at 91) characterised a claim for contribution as “in effect a claim of partial indemnity” and observed that “although one of the ingredients which must be established is that the person against whom the claim is made is a person ‘who is, or would if sued have been, liable in respect of the same damage’, it is in no sense an action to recover damages in respect of personal injury”. Unsworth was followed by the Supreme Court of South Australia in Coomblas v Gee (1998) 157 ALR 640; [1998] SASC 6894 at [66] (per Wicks J, Prior and Lander JJ agreeing).
There are, however, some indications that a broader view of the nature of an action for contribution has subsequently been taken in other cases, including cases in the High Court, notwithstanding what was said in Unsworth. That was certainly the view of Glass JA (with whom Moffitt P and Samuels JA agreed) in National Mutual Fire Insurance Co Ltd v Commonwealth of Australia [1981] 1 NSWLR 400. The issue in National Mutual was whether the language “contract of insurance by which he is indemnified against liability to pay any damages or compensation” in s 6 of the LRMP Act was “ample enough in point of construction to include the liability of one tortfeasor to pay contribution to another” under s 5 of the LRMP Act (at 404-405). His Honour held that it was.
Glass JA referred (at 406) to Unsworth as one of the “early decisions” which emphasised the difference between a proceeding for a contribution and an action for damages. His Honour then referred to a subsequent decision of the High Court in Genders v Government Insurance Office of New South Wales (1959) 102 CLR 363 as being the “turning point leading to a broader view of the tortfeasor’s liability”. His Honour then referred to a number of other subsequent High Court cases and said (at 407-408):
The effect of all these decisions shows a strong tidal movement in the direction of treating an indemnity against liability for damages, whether in the field of employers’ liability, third party liability or public liability, as a contract under which the insurer covers the insured against the whole of his liability arising out of the insurable incident, whether it be incurred directly to the injured party or indirectly to other tortfeasors liable to the latter. As between him and the injured party, whatever the tortfeasor is liable to pay is payable by way of damages properly so called. Anything due from him to another tortfeasor is to be regarded as part of his liability by way of damages in respect of the plaintiff’s injury even though in point of law the amount due under a contribution is payable by way of debt: State Government Insurance Office (Queensland) v Brisbane Stevedoring Pty Ltd (1971) 123 CLR 228, per Kitto J, at p 245. None of these decisions is exactly in point since none of the policy indemnities was expressed in language identical with that contained in the section. But since a tortfeasor’s liability to pay a contribution to another tortfeasor has been included within contractual phrases such as his “liability in respect of death or bodily injury” (Genders (1959) 102 CLR 363) and his “liability by way of damages” (Brisbane Stevedoring (1971) 123 CLR 228) it would, I think, be pedantic to exclude it from the statutory description of “liability to pay any damages”.
(Emphasis added.)
While the decision in National Mutual is not directly on point because it concerned the construction of s 6 of the LRMP Act, it does provide some contextual support for 3A’s contention that it is at least reasonably arguable that an action for contribution could properly be characterised as an “action for loss or damage” for the purposes of s 6.20 of the EPA Act. It is an action for loss or damage suffered by the plaintiff (the injured party), albeit that it is an action by one tortfeasor against another in respect of that loss or damage. The argument, in the present case, would be that an action for contribution pursuant to subs 5(1)(c) of the LRMP Act commenced by 3A against one of the third party professionals, such as an architect, builder, or certifier, can be properly characterised as an action for loss or damage suffered by the relevant group member for the purposes of s 6.20 of the EPA, albeit that it is an action between tortfeasors about the extent of their respective liabilities in respect of that damage.
In all the circumstances, there is merit in 3A’s contention that it is at least arguable that any action for contribution it may have against third party professionals may be considered to be an action for loss or damage in respect of defective building work for the purposes of s 6.20 of the EPA Act.
Putting to one side the question of whether an action for contribution can properly be characterised as an action for loss or damage, Owners argued that, in any event, if s 6.20 of the EPA Act was held to apply to actions for contribution, the result in some cases would be “incoherent”. That was said to be because in some cases, the result would be that the ten year time limit imposed by s 6.20 would expire before any judgment, award, or agreement “crystallised” the liability of the party seeking contribution. That allegedly incoherent result was said to militate against construing s 6.20 in such a way that it applied to actions for contribution.
There are, however, a number of possible flaws in that argument.
The first problem is that there is nothing “incoherent” about the fact that a claim for contribution may become statute barred prior to there being a judgment, award, or settlement of a plaintiff’s claim against the party who wishes to seek contribution. Indeed, such a situation appears to be specifically envisaged in subs 26(1) of the Limitation Act, which provides that the limitation period for an action for contribution under subs 5(1) of the LRMP Act is the first to expire of either: (a) a period of two years running from the date on which the cause of action for contribution first accrues; or (b) a period of four years from the date of the expiration of the limitation period for the principal cause of action. The date on which the cause of action first accrues is the date that any judgment, award, or settlement agreement is made in respect of the damage for which contribution is claimed: subs 26(2) of the Limitation Act; see Gallager Bassett Services NSW Pty Limited v Murdock (2013) 86 NSWLR 13; [2013] NSWCA 386. The limitation period for the principal cause of action is the limitation period fixed for that cause of action by any enactment. If the limitation period for the principal cause of action is fairly short, it is at least conceivable that the period specified in subs 26(1)(b) may expire before the period in subs 26(1)(a).
The second problem is that the Owners’ analysis hinges on the proposition that s 6.20 of the EPA Act is, or can be, the limitation period for the principal cause of action for the purposes of subs 26(1)(b) of the Limitation Act. That proposition is incorrect. The principal causes of action for the purposes of subs 26(1)(b) in this case are the causes of action under the TPA and ACL that are pleaded against 3A. The limitation periods for those causes of action are fixed by provisions in the TPA and the ACL. It follows that, but for the operation of s 33ZE of the FCA Act, the period fixed by subs 26(1)(b) would be four years from the expiration of the limitation periods fixed in the TPA and the ACL for the causes of action pleaded against 3A.
It may be accepted that the potential construction of s 6.20 of the EPA Act advanced by 3A, and the potential interaction of that section, as so construed, with subs 26(1) of the Limitation Act and s 33ZE of the FCA Act, may produce a somewhat anomalous or incongruous result in the case of representative proceedings which involve defective building work and potential contribution claims by a respondent in respect of a claim by group members. That anomalous or incongruous result is that the potential contribution claims in respect of a group member’s claims may become statute barred before the group member’s claim is statute barred and before the particulars of the group member’s claim are even known to the respondent. That anomaly, however, is essentially a product of the fact that s 33ZE of the FCA Act only suspends the running of any limitation period that applies to “the claim of a group member to which the proceeding relates”. It does not appear to operate to suspend any contribution claim that a respondent to such a representative proceeding might have in respect of any group member’s claim.
That said, it might perhaps be arguable that s 33ZE of the FCA Act is expressed in sufficiently broad terms to suspend the operation of any limitation period that applies to such a contribution claim. While a contribution claim is not a claim by a group member, it nonetheless could be said to relate to, or arise from, a claim of a group member because it relates to the loss or damage suffered by the group member. It might therefore be arguable that a limitation period which applies to a contribution claim relating to loss or damage suffered by a group member is a limitation period that “applies to the claim of a group member”. It is, however, undesirable to express any view about the merits of such an argument, particularly as it was not one that was advanced by Owners.
There could be little doubt that the application and operation of s 26 of Limitation Act and the potential operation of s 6.20 of the EPA Act raises complex and difficult issues in the particular and somewhat unique facts and circumstances of this case. There are arguments for and against the proposition that s 6.20 of the EPA Act can or would apply to provide a “hard time bar” for any actions for contribution that 3A may have against third party professionals who were involved in providing advice or services relating to the affixation of Alucobond panels to any of the buildings owned by group members. For the reasons already given, it is unnecessary and undesirable for any concluded position to be arrived at to resolve the present interlocutory application. It is necessary only to be satisfied that there is a reasonable argument that s 6.20 of the EPA Act may apply and may preclude 3A from pursuing some potential contribution claims if it is not able to begin to investigate those claims in the not too distant future. 3A has, in all the circumstances, demonstrated that there is at least a reasonable argument that that is the case.
Victoria
The position in relation to the limitation period for any potential contribution claims that 3A may have in respect of group member properties located in Victoria is even more complex and difficult.
The relevant limitation period for contribution claims is specified in subs 24(4)(a) of the Wrongs Act. It provides as follows:
Recovery of contribution
(4) Notwithstanding any provision in any statute requiring a notice to be given before action or prescribing the period within which an action may be brought, where under section 23B any person becomes entitled to a right to recover contribution in respect of any damage from any other person, proceedings to recover contribution by virtue of that right may be commenced by the first-mentioned person—
(a) at any time within the period—
(i)within which the action against the first-mentioned person might have been commenced; or
(ii)within the period of twelve months after the writ in the action against the first-mentioned person was served on him—
whichever is the longer; …
It can be seen that the limitation period is the longer of two periods: first, the period within which the action against the party seeking contribution (in this case 3A) might have been commenced; or second, the period of twelve months after the writ in the action against the party seeking contribution was served. 3A initially conceded that the running of the first of those two periods had been suspended by operation of s 33ZE of the FCA Act; that is, the running of the limitation period that applied to group members’ claims against 3A was suspended. If that is so, it would follow that the limitation period in subs 24(4)(a) of the Wrongs Act in respect of any claim for contribution 3A may have would also be suspended.
In its oral submissions, however, 3A sought to resile from that concession and argue that s 33ZE of the FCA Act did not apply as subs 24(4) of the Wrongs Act is not a limitation period that applies to the claim of any group member. That argument was only faintly put and appears to have little, if any, merit. The fact that subs 24(4) of the Wrongs Act may not be a limitation period which applies to a claim by a group member against 3A is effectively immaterial. The point is that the limitation period for contribution claims by 3A is fixed in part by reference to the limitation period applicable to the claims against 3A by group members. As that limitation period is suspended, it follows that the limitation period for 3A’s contribution claims is effectively suspended.
It might also be added that it is somewhat difficult to see how the second period referred to in subs 24(4) of the Wrongs Act can operate in the circumstances of this case when it comes to the claims of group members. It could only operate if the service by Owners of its originating application and pleading could be said to constitute not only the service of a writ in Owners’ action against 3A, but also the service of a writ in respect of each group members’ claim against 3A. It is, however, somewhat difficult to see how that could be the case, given that many, if not most, group members may not even know that they have a claim against 3A, let alone that a writ has been served on 3A on their behalf. In any event, this issue is considered later in the context of the relevant limitation provisions in Tasmania, which also hinge to an extent on the service of a writ.
3A’s main argument in relation to the relevant limitation provisions in Victoria concerned the potential operation of s 134 of the Building Act 1993 (Vic). That provision creates a long stop limitation period similar to that imposed in New South Wales by s 6.20 of the EPA Act. Section 134 of the Building Act provides as follows:
Limitation on time when building action may be brought
Despite any thing to the contrary in the Limitation of Actions Act 1958 or in any other Act or law, a building action cannot be brought more than 10 years after the date of issue of the occupancy permit in respect of the building work (whether or not the occupancy permit is subsequently cancelled or varied) or, if an occupancy permit is not issued, the date of issue under Part 4 of the certificate of final inspection of the building work.
A “building action” is defined in s 129 of the Building Act as meaning “an action (including a counter-claim) for damages for loss or damage arising out of or concerning defective building work”. The expression “building work” is defined in s 129 as including “the design, inspection and issuing of a permit in respect of building work”.
It would appear that third party professionals such as architects, builders, consultants, and certifiers who provided advice and services concerning the affixation of Alucobond panels to buildings owned by group members in Victoria are likely to have engaged in “building work” as defined. There is, however, an issue as to whether any action by 3A for contribution against any of those professionals could properly be characterised as an action “for damages for loss or damage” arising out of that work. 3A contended that it was at least reasonably arguable that any such contribution claim could be so characterised and that s 134 of the Building Act applied. Owners submitted that an action for contribution could not properly be considered to be an action for damages for loss or damage.
The parties’ respective arguments in relation to that issue were, for the most part, the same as those advanced in respect of the potential operation and application of s 6.20 of the EPA Act in New South Wales. It is unnecessary to repeat those arguments. There is, however, one difference between the wording in s 6.20 of the EPA Act and s 134 of the Building Act. That difference is that s 6.20 of the EPA Act applies to an action “for loss or damage”, whereas s 134 applies of the Building Act (by reason of the definition of building action in s 129) to an action “for damages for loss or damage”. While at first blush that difference appears to be relatively minor, it is nevertheless potentially important. As discussed earlier, Meagher JA in Dinov explained that “loss or damage” in this context means “harm or injury” and an action can be considered to be one for harm or injury if it claims a remedy in relation to that loss or injury. It is arguable that an action for contribution is such an action because a remedy is sought to avoid the harm or injury that the party seeking contribution would otherwise suffer if held wholly liable for damage suffered by a person as a result of the wrongdoing by multiple people. It is, however, somewhat more difficult to see how an action for contribution could be said to be an action for “damages for loss or damage”. That is because it is difficult to characterise the remedy sought in an action for contribution as one for “damages”.
It is possible that the circumstances may change at some later point in this proceeding so as to justify an order similar to Order 7, assuming of course that the Court has the power to make such an order. It may, for example, be the case that at some later point 3A will be able to demonstrate that the risk of prejudice it faces as a result of available contribution claims becoming time barred is more significant or substantial than it is presently able to show. It may, for example, as a result of further investigations in conjunction with Halifax, be in a position to identify actual group members who have not registered or provided information or documentation in relation to their claims. It may also be able to point to specific or concrete examples of contribution claims it has in respect of those group members’ claims which may become statute barred if cross claims are not filed. Whether that occurs, however, remains to be seen.
It follows from the above reasoning that 3A’s submission that the class closure order was not a draconian or disproportionate response to the risk of it being deprived of a fair trial by losing its rights to cross claim against third parties must be rejected. It may be, and has been, accepted that there is a risk that 3A may be deprived of some possible or potential claims for contribution if it is not able to investigate and prosecute any such claims in the relatively near future. As has been explained, however, there is a significant degree of uncertainty as to whether 3A will ever in fact suffer any prejudice as a result of otherwise viable contribution claims being found to be statute barred. It must also be accepted that there is a degree of certainty that, if the class closure order proposed by 3A is made, some group members who have actual claims against 3A will be effectively deprived of the ability to prosecute their claims, possibly without ever knowing or appreciating that to be the case. There is, in all the circumstances, considerable merit in Owners’ submission that the order proposed by 3A is disproportionate.
It should finally be noted that, even if it was considered to be necessary or appropriate to make an order like Order 7, it would also be appropriate to require the notification process to involve far more than simply placing advertisements in various newspapers, which is the form of notification proposed by 3A. It would also be appropriate to provide group members with a much longer period within which to register than the six week period proposed by 3A. These issues are discussed in more detail later in these reasons.
ALTERNATIVE RELIEF
The principal relief sought by 3A was the regime which involved the service of opt out and registration notices together with a requirement that registering group members provide certain information and documentation. That regime also included Order 7. For the reasons already given, there is no reason in principle why the regime involving the service of opt out and registration notices, coupled with an information and documentation request, should not be put into effect. The difficulty is with Order 7 which, for the reasons given, is beyond power. Even if it were not, it is not, in any event, an order which is either necessary or appropriate, or should be made, at this early stage of the proceedings.
The orders sought by 3A included three alternatives to the principal relief; first, an alternative opt out and registration regime that applied only in relation to States and Territories where there was a potential limitation issue; second, an order amending the definition of group members in Owners’ pleading to restrict group members to persons who relevantly own an affected property in Western Australia; and third, an order under s 33N of the FCA Act that the proceeding no longer proceed under Pt IVA of the FCA Act. In its supplementary submissions, 3A flagged yet a further alternative, which involved an order which deemed group members who had not registered as having opted out of the proceeding.
It is necessary to briefly address each of those alternatives.
Alternative opt out and registration regime
The first alternative was an opt out and registration regime which applied only to those States and Territories which have long stop limitation provisions which were the main cause or source of 3A’s complaint concerning the risk of prejudice. The alternative regime included an order, Order 24, which was in relevantly identical terms to Order 7. Like Order 7, that order is beyond power and not, in any event, appropriate or necessary at this stage of the proceeding.
Amendment of the group member definition
The second alternative to the principal relief was an order which required the amendment of the group member definition such that only persons who own or have previously owned affected properties in Western Australia could be group members. The asserted reason for that rather drastic enforced narrowing of the group member definition was that only Western Australia did not have a long stop limitation period which could potentially apply to any claims for contribution which 3A may wish to prosecute.
This alternative relief was only faintly pressed by 3A and was not the subject of any detailed submissions. It accordingly can, and will, be dealt with shortly.
It was asserted that the Court had power under s 33ZF of the FCA Act to require an applicant to amend its pleading, on the application of a respondent and over objection, to narrow the group member definition. Two cases were cited in support of that proposition: Darcy v Medtel Pty Limited [2002] FCA 925 and P Dawson Nominees Pty Ltd v Multiplex Ltd (2007) 242 ALR 111; [2007] FCA 1061. Neither of those cases provide any support for the proposition that s 33ZF can be relied on to require an applicant to narrow the pleaded definition of the group members. P Dawson Nominees in fact suggests (at [55]) that the provision was only used in circumstances where the definition was enlarged.
In its supplementary submissions, 3A contended, in effect, that the Court of Appeal in Haselhurst had acknowledged that the Court had power under s 183 of the CPA (and therefore s 33ZF of the FCA Act) to make an order requiring a representative party to amend its pleading to narrow the group member definition. That is not correct.
It is true that in Haselhurst, Payne JA referred (at [72]) to the amendment of the definition of group members to be “one way in which a class may be ‘closed’”, however, none of the cases referred to by his Honour in that context involved an application by a respondent to require the representative party to narrow the group member definition. Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd (2007) 164 FCR 275; [2007] FCAFC 200 concerned an application under s 33N of the FCA Act for an order that a proceeding no longer proceed under Pt IVA of the FCA Act, the basis for which was said to be that the group members were confined to persons who had entered into a particular litigation funding agreement. Bray v F Hoffman-La Roche Ltd [2003] FCA 1505 concerned an application to amend by the representative party pursuant to s 33K of the FCA Act.
Bell P also referred (at [17]) to the amendment of the “class definition”, however his Honour’s observations were limited to that occurring, presumably by consent, as part of a settlement.
The reasoning of the majority in Brewster would also suggest that s 33ZF would not empower the Court to make such an order. Part IVA of the FCA Act contains a specific provision which deals with the amendment of an application to alter the description of the group. That provision, s 33K, provides only for such an amendment on the application of the representative party. It is, in those circumstances, difficult to accept that s 33ZF could be said to be “the source of power to do work beyond that done by the specific provisions which the text and structure of the legislation show it was intended to supplement”: Brewster at [70].
Even if the Court was empowered by s 33ZF of the FCA Act to amend and narrow the group member definition in Owners’ pleading over its objection, it would not be appropriate to make such an order in all the circumstances at this early stage of the proceeding. It may be accepted that the narrowing of the class which would result from the amendment would ameliorate, if not eliminate, any risk of prejudice to 3A arising from the potential operation of long stop limitation periods in respect of possible contribution claims that 3A might have. However, for essentially the same reasons as those given earlier in the context of whether Order 7 should be made in the exercise of the Court’s discretion, the risk of prejudice to 3A has not been shown to be sufficiently significant or substantial to warrant or justify the rather drastic remedy of compelling Owners, as the representative party, to substantially narrow the class.
“De-classing” pursuant to s 33N of the FCA Act
The third alternative to the principal relief sought by 3A was an order under subs 33N(1)(d) of the FCA Act that the proceeding no longer continue under Pt IVA as a representative proceeding. Like the second alternative, this alternative form of relief was also only faintly pressed and was not the subject of detailed submissions by 3A.
Subsection 33N(1)(d) relevantly provides as follows:
Order that proceeding not continue as representative proceeding where costs excessive etc.
(1) The Court may, on application by the respondent or of its own motion, order that a proceeding no longer continue under this Part where it is satisfied that it is in the interests of justice to do so because:
…
(d)it is otherwise inappropriate that the claims be pursued by means of a representative proceeding.
3A contended that it was both not in the interests of justice and inappropriate for the proceeding to continue as a representative proceeding because “it is the character of the proceedings as representative proceedings which leads to the prejudice currently faced” by it. It submitted that if the proceeding was not a representative proceeding, each of the separate claims by those who are presently group members would be pleaded and particularised and it would therefore have available to it “the usual procedural steps to obtain information for the purpose of investigating and prosecuting claims for contribution”.
It should be noted, in this context, that the evidence adduced in relation to the interlocutory application indicated that there were upwards of 1,000 group members. Accordingly, what 3A appears to be suggesting is that it is in the interests of justice for there to be upwards of 1,000 separately pleaded and particularised claims by each of the group members. It may also be presumed that 3A envisages upwards of 1,000 separate trials.
While the parties did not provide the Court with detailed submissions concerning s 33N, it is nonetheless necessary to say something briefly concerning the relevant principles in relation to it. The following brief summary of the principles is largely taken from the summary given in Bywater v Appco Group Australia Pty Ltd [2018] FCA 707 at [13]-[19].
A representative proceeding that is found to have met the requirements of s 33C of the FCA Act may nevertheless be the subject of an order under s 33N: Bright v Femcare Limited (2002) 195 ALR 574; [2002] FCAFC 243 at [128] (per Kiefel J).
The consequence of an order made under subs 33N(1) is that the proceeding may be continued as a proceeding by the representative party on his or her own behalf against the respondent: subs 33P(a) of the FCA Act. The Court can also order, on the application of a person who was a group member, that the group member be joined as an applicant in the proceeding: subs 33P(b) of the FCA Act.
The question posed by subs 33N(1) is not whether the continuance of the representative proceeding can be seen to be efficient, but whether the Court is satisfied that it is in the interests of justice to order its discontinuance as a proceeding under Part IVA for the reasons listed in subss 33N(1)(a)-(d): Bright at [128]. Subsection 33N(1) is not intended to be applied unless the requisite level of satisfaction is reached: Bright at [130]. It is not, however, necessary for a respondent who seeks an order under subs 33N(1) to demonstrate that the proceeding is an abuse of process: Bright at [130]. Nor is an application under s 33N an application for summary dismissal: Bright at [20].
Subsection 33N(1) “envisages that the Court will engage in a comparison between how the factors specified in grounds (a) to (d) apply to the existing representative proceeding and how they would apply to a hypothetical non-representative proceeding: Multiplex at [128]. The need for the Court to engage in that sort of comparison exercise might mean that an application for a s 33N order will be required to adduce detailed evidence of the likely course or form of the comparator proceeding: Multiplex at [129]; cf Bright at [76]. It may, however, not always be necessary for the Court to give detailed consideration to the likely course of the comparator proceedings, particularly in a case where “the inefficiency or inappropriateness of the claims as a representative proceeding will be so great that the only possible order is to ‘de-class’ the proceeding”: Multiplex at [131].
In considering the “inefficiency” and “inappropriateness” grounds in subss 33N(1)(c) and (d), the Court “will focus more closely on matters such as the commonality and non-commonality of issues raised in the representative proceeding, as well as the purpose of that proceeding”: Multiplex at [130].
It may be difficult for the Court to reach the requisite level of satisfaction required by subs 33N(1) where the proceeding is at an early stage: Bright at [18], [149]; Jenkins v Northern Territory of Australia [2017] FCA 1263 at [97]; Guglielmin v Trescowthick (No 2) (2005) 20 ALR 515; [2005] FCA 138 at [76].
It cannot be accepted, having regard to these principles, that it is in the interests of justice to order that the proceeding no longer continue as a representative proceeding, either because it is inappropriate that the claims be pursued by means of a representative proceeding or for any other reason.
For the reasons already given in the context of the principal relief sought by 3A, it may be accepted that there is at least a risk that 3A may suffer some prejudice if it is not able to investigate and, if thought appropriate, prosecute any viable contribution claims relating to group member claims within the relatively not too distant future. It cannot, however, be accepted at this early stage of the proceeding that that risk of prejudice is such as to make it inappropriate that the claims be pursued by means of a representative proceeding, or that it is in the interests of justice that the proceeding not continue under Part IVA.
That is so for essentially the same reasons as those given earlier in the context of the principal relief sought by 3A. In short, 3A has not demonstrated that the risk of prejudice is anything more than theoretical or remote. It has not demonstrated that it is significant or substantial. Nor can it be accepted, at least at this stage of the proceeding, that the making of an order under s 33N is a reasonable, let alone the only reasonable, means by which to address the potential prejudice to 3A. For the reasons already given, it is appropriate or necessary to make orders which have the effect that group members will be requested to register their claims and provide information and documentation which will assist 3A to investigate any potential contribution claims it may have against third parties in respect of the claims of registered group members. That procedure may not entirely eliminate the risk of prejudice to 3A arising from the possibility that some contribution claims may become statute barred. It will, however, significantly minimise or ameliorate the risk. 3A is only likely to suffer any prejudice if any group members choose not to register initially and later change their mind and come forward at a time when any possible contribution claims may be statute barred. Even then, 3A will only suffer actual prejudice if the contribution claims are found to be viable and are positively held to be statute barred.
Of course, the other side of the equation is to consider the appropriateness, efficiency, and effectiveness of the group members claims being pursued other than by way of a representative proceeding. It is difficult to see how it could possibly be said to be in the interests of justice for there to be potentially upwards of 1,000 separate proceedings, which would be the result if an order was made under s 33N. That is all the more so given that it appears likely that there will be at least some substantial common issues of law and fact arising from the group members’ claims. While the precise nature and scope of the common questions is still a potentially live issue in the wake of the recent substantial amendments to both the originating application and the pleading, 3A has effectively conceded that there are likely to be at least some substantial common issues. It is highly desirable that those common issues be determined in a representative proceeding.
Deemed opt out
In its further supplementary submissions, 3A applied for an order in the following terms:
Pursuant to s 33ZF of the FCA [Act], any Group Member who fails to opt-out in accordance with Order [3 in the first set of orders or 20 in the second set of orders], or to register in accordance with Order [6 in the first set of orders or 23 in the second set of orders], by the Class Deadline, shall be deemed to have opted out of the Proceeding and shall not be entitled to receive any distribution from any settlement of, or judgment in, the proceeding.
This was not an order sought in 3A’s interlocutory application. No application was made to amend the interlocutory application. 3A was given leave to file supplementary submissions in relation to the implications of the decision in Haselhurst. It was not given leave to pursue further alternative orders in light of the decision in Haselhurst.
Putting those procedural issues to one side, it is highly doubtful and difficult to accept, in light of the reasoning of the majority in Brewster, that the making of this order would fall within the power conferred by s 33ZF of the FCA Act. There is a specific provision in the statutory scheme in Pt IVA concerning group members opting out of representative proceedings. That provision, s 33J, provides that the Court must fix a date before which a group member may opt out of a representative proceeding and that a group member may opt out before the date so fixed. There is nothing in s 33J or the statutory scheme generally to suggest that the Court may deem a group member who does not register their claim to have opted out of the proceeding. It might reasonably be expected that “legislation intended to enlist the court in a task of this kind would make specific provision in that regard” and the fact that it has not done so “is itself some contextual indication that the power to make such an order is not to be discerned in ‘gap filling’ provisions such as s 33ZF”: Brewster at [69] (footnote omitted).
Perhaps more significantly, the effect of a deemed opt out order of the sort suggested by 3A would be to effectively turn the statutory scheme on its head. It would have the effect of converting what is and was plainly intended to be an opt out scheme for representative proceedings into an opt in scheme. Deeming a group member who has not positively responded to a notice requiring registration to have opted out is, for all intents and purposes, practically indistinguishable from requiring a group member to opt in. Whether that makes a deemed opt out order an oxymoron, as Owners submitted, is perhaps linguistically debatable. It is, however, clear that such an order, if made for the purpose advanced by 3A, effectively “rewrites” Pt IVA.
3A was unable to identify any previous case which supported the proposition that the Court was empowered by s 33ZF, or any other provision in the FCA Act, to make a deemed opt out order of the sort it proposed. It referred to orders made by Rares J in Mitsub Pty Limited v McGraw-Hill Financial Inc (No 2) [2016] FCA 1285, one of which included an order which was to the effect that a group member who registered for one class action was deemed, for the purposes of a mediation, to have opted out of other related and overlapping class actions. Putting aside the fundamentally different circumstances and purposes for which that order appears to have been made, it was made by consent and without any consideration or argument about the Court’s power to make it. It was also made before the decision in Brewster. It provides no support for 3A’s case that the Court has power to make a deemed opt out order.
In all the circumstances, Owners’ submission that the Court does not have power to make the order proposed by 3A must be accepted.
In any event, even if the Court was empowered by s 33ZF to deem a group member who has not registered as having opted out, it cannot be accepted, in all the circumstances, that such an order should be made in the exercise of the Court’s discretion at this early stage of the proceeding. It may be accepted that such an order would significantly ameliorate any risk of prejudice to 3A arising from the potential operation of long stop limitation periods in respect of possible contribution claims it might have. It may also be accepted that a deemed opt out order of the sort proposed by 3A is not as drastic a remedy as Order 7 because group members who are deemed to have opted out do not have their causes of action against 3A extinguished. It is, nevertheless, an order which could operate to the significant detriment of group members affected by it. The effect would be that the suspension of any applicable limitation provisions would no longer apply to those group members, who would also then have to then commence their own separate proceedings against 3A. For the reasons given earlier in the context of the proposed Order 7, 3A has not demonstrated that the risk of prejudice to it is such as to warrant or justify the making of an order which would have that potential detrimental effect on some group members at this early stage of the proceeding.
ANCILLIARY ISSUES – METHOD OF NOTIFICATION AND NOTICE PERIOD
Owners and 3A were at odds in relation to a number of ancillary issues, including the method of notification and the notice period. It is neither necessary nor desirable to deal at length with those issues. The position previously taken by the parties in relation to those issues may well change as a result of the findings made in this judgment. The parties might also reasonably be expected to confer, in light of this judgment, in an effort to reach some common or middle ground in relation to issues such as the form and content of the relevant notice, the manner in which the notice can best be sent to, or brought to the attention of, group members, and the period of time that group members should be given to respond to the notice. There is always room for optimism, even in this matter, that the parties will take a reasonable and sensible approach in relation to such issues. To facilitate that occurring, it may assist if some preliminary or tentative views about those issues are proffered.
Method of notification
3A proposed that the opt out and registration notices should be “distributed” to group members in two ways: first, by displaying the notice on the website of Owners’ solicitors; and second, by causing an abridged version of the notice to be published in a number of major newspapers: The Australian, The Australian Financial Review, The West Australian, The Advertiser, The Age, The Mercury, The Sydney Morning Herald, The Canberra Times, the Courier Mail, and the Northern Territory News.
Owners submitted that the publication of the notice in major newspapers was not the most efficient or effective method of bringing the notice to the attention of group members. It contended that a “more tailored” form of notification based on records held by 3A and Halifax would be preferable. What was envisaged in that regard was that 3A and Halifax would, or should somehow be compelled to, compile a list of buildings to which the relevant Alucobond panels were affixed. The notices would then be sent to those buildings, or the owners of them, if that was able to be ascertained.
The method of notification proposed by 3A would appear to be substantially unsatisfactory and deficient having regard to the particular nature and circumstances of this case. That would be all the more so if the Court were, contrary to the conclusion that has been arrived at, to make an order in the nature of the proposed Order 7 (or Order 24), or an order that deemed a group member who did not register in response to the notice to have opted out. It is doubtful that the publication, in major daily newspapers, of a notice to group members such as that proposed in this matter would be likely to come to the attention of all, or even the majority, of group members. That is particularly so as the readership and prominence of newspapers as a source of news and information wanes in the face of other electronic means of communication, such as social media. It is perhaps equally doubtful that publication in newspapers is the best method by which to prompt some response from group members; that is, there is a risk that even group members who read daily newspapers may not immediately appreciate that a notice published in the newspaper is relevant to them or their circumstances.
That is not to say that publication in major newspapers should not be one of the means by which notification is to be accomplished. It just should not be the only means.
The method of notification proposed by Owners is, at first blush at least, likely to be a more effective and efficient means of notification. There was, however, evidence which suggested that it would be extremely time consuming, costly, and perhaps not even particularly fruitful, for Halifax to interrogate its business records with a view to identifying buildings in Australia to which the relevant Alucobond panels were affixed over the years covered by the Owners’ pleading. The interrogation of 3A’s records concerning supplies to Australia, such as they are, was likely to be even less fruitful. It is unnecessary to detail the evidence in relation to that issue. It would, in short, not be unfair to summarise the position as being that the method proposed by Owners was easier said than done.
That said, the issue concerning the identification of group members to this point appears to have been addressed in an unfortunately adversarial and combative way, as if what was being proposed was some sort of contested discovery exercise. It is plainly in the best interests of not only Owners and the group members, but also 3A and Halifax, for the notice to group members to be distributed in a manner that is most likely to bring the notice to the attention of all group members, as well as in such a way as to prompt an appropriate response; be it opting out or registration. With that in mind, it is difficult to accept that if the parties put their heads together and act in a cooperative and common sense way, they will not be able to come up with some effective, efficient, and relatively economical means by which a list of potential group members could be compiled from the business records of 3A and Halifax. That list may not be complete or even comprehensive, but it would be a start. The notice could then be sent directly to those group members, or potential group members.
The parties should also think laterally and explore other means by which potential group members may be able to be identified. There appears, for example, to have been some inquiries or investigations by various regulatory, government, or industry bodies or agencies which may have touched upon some of the issues that may arise in this proceeding. While issues may arise in relation to the confidentiality of information compiled by those bodies or agencies, it is difficult to accept that those potential sources of information cannot be utilised in some way.
The compilation of lists of possible group members may not be a complete answer to the issue of notification. It may also turn out to be necessary to publish the notice in major newspapers and perhaps other media outlets or forms. It might, for example, be necessary to consider the utilisation in some way of social media.
The parties should confer with a view to exploring the options and hopefully coming to a common position in relation to the most efficient and effective method or methods of notification in all the circumstances.
Content of notices
The parties did not make any detailed submissions in respect of the content of the proposed notices. It will, in any event, be necessary for the parties to consider the content of the notices in light of this judgment.
It is necessary to address only one issue concerning the content of the notice to group members.
The parties adduced evidence concerning the potential difficulties that some group members, or possible group members, may have in determining whether the cladding affixed to their building is the particular Alucobond panels which are the subject matter of this proceeding. It is unnecessary to consider that evidence in any great detail. The evidence indicated that there were several types or brands of aluminium composite panels in Australia and that many of them do not have any obvious external label or identifying feature which distinguish them from other brands. Alucobond panels generally have a label on the rear side of the panel. It followed that potential group members who wished to determine whether the panels affixed to their building are Alucobond panels might have to engage a relevantly qualified building professional to remove a panel or panels to see if there is any label on the underside. If there is no such label, the professional may then have to perform “composition testing” to identify the product. That is a potentially costly or time consuming exercise.
This is a potentially significant issue. A group member or possible group member who receives or become aware of the notice may not respond appropriately to it, or be capable of responding to it, if they do not know, or cannot readily ascertain, whether they are in fact a group member because the panels affixed to their building are in fact one of the relevant Alucobond panels. They may, in those circumstances, just ignore the notice. That is not in the interests of any of the parties. The notices proposed by 3A do not include any information that would assist group members, or possible group members, who receive the notice to ascertain whether the cladding affixed to their building is the cladding which is the subject of the proceeding. It would seem to be sensible for the notice to include some information in that regard.
The parties should confer and consider what information should be included in the notice to address this issue.
Notice period
3A proposed that the notice give group members six weeks in which to respond and register or opt out. It submitted that a six week period was reasonable and appropriate, particularly given that the long stop limitation periods were arguably running and that some potential contribution claims may become statute barred if any further time was allowed for a response to the notice.
Owners contended that a six week period was far too short. It submitted that a period of nine to twelve months was more appropriate.
There could be little doubt that, having regard to the particular circumstances of this case, a period of six weeks for group members to respond to the notice and either opt out or register would not be reasonable or appropriate. That would be all the more so if an order similar to Order 7 (or Order 24) was to be made. Group members who receive or become aware of the notice may have to ascertain whether the panels affixed to their building are in fact the relevant Alucobond panels. In some cases that may take time. Given the particular nature and complexity of the proceeding, it would also not be unreasonable to expect that some group members may wish to confer with others and take advice, including legal advice, about the appropriate response to the notice. A six week period is unlikely to be sufficient to enable or allow that to occur.
By the same token, a period of nine to twelve months appears to be somewhat excessive in all the circumstances. That is all the more so given that the main reason for requesting registration is to enable 3A to investigate potential contribution claims that may be subject to limitation periods. Owners’ contention that a period of six to twelve months was appropriate may have been the product of legitimate concerns about the effect and implications of Order 7. That is no longer an issue. It may be, in those circumstances, that Owners might temper its view about the appropriate notice period.
The parties should confer with a view to agreeing on the appropriate notice period in light of the findings made in this judgment.
CONCLUSION AND DISPOSITION
Owners did not oppose the fixing of a time by which group members may opt out of the proceeding. Nor did it take issue with the form of the notice proposed by 3A in that regard.
It was also essentially common ground that it would in all the circumstances be appropriate to request group members to identify themselves by registering their claims with Owners’ solicitors. Owners also effectively conceded that it would be appropriate to request registering group members to provide some information and documentation in relation to their claims so as to enable 3A and Halifax to investigate any possible contribution claims.
The Court has the power under s 33ZF of the FCA Act to make an order inviting or requesting group members to register their claims, even at this relatively early stage of the proceedings, if such an order is appropriate or necessary to ensure that justice is done in the proceeding. In the particular and somewhat unique circumstances of this case, it is appropriate or necessary to make such an order. The parties should confer with a view to agreeing on the form of notice that should be given to group members in that regard and the method by which that notice is to be brought to the attention of group members.
The Court does not, however, have power to require or compel group members to register at this early stage, or to order that group members who do not register within a particular time will not be able to receive any distribution from any settlement of, or judgment in, the proceeding, but will nevertheless be bound by any such settlement or judgment. Even if the Court did have the power to make such an order, 3A has not demonstrated that such an order should, in all the circumstances, be made at this early stage of the proceeding. Nor has 3A demonstrated that the Court can or should make an order that non-registering parties should be deemed to have opted out of the proceeding. There is also no sound legal or factual basis for compelling Owners to narrow the definition of group members so as to effectively exclude persons who own properties other than in Western Australia, and no sound basis to make an order “de-classing” the proceeding under s 33N of the FCA Act.
The parties should confer with a view to agreeing on the appropriate orders to give effect to this judgment, including in relation to the costs of the interlocutory application. If the parties are able to agree on the appropriate orders within two weeks of the date of this judgment, a draft of those orders should be provided to the Court and arrangements made to have the matter listed for a case management hearing on a suitable date at which those proposed orders will be considered and, if considered appropriate, made by the Court. If no agreement can be reached within two weeks of the date of this judgment, the parties should each prepare brief written submissions (not exceeding five pages) annexing a copy of their proposed orders and provide them to the Court within three weeks of the date of this judgment. The matter will then be fixed for further hearing to resolve the outstanding issues.
I certify that the preceding two hundred and ninety-four (294) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wigney. Associate:
Dated: 1 June 2020
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