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Wong v Silkfield Pty Ltd

Wong v Silkfield Pty Ltd

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Case Copied 9 September 1999 22 min read

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HIGH COURT OF AUSTRALIA

GLEESON CJ,
McHUGH, GUMMOW, KIRBY AND CALLINAN JJ

WONG & ORS APPELLANTS

AND

SILKFIELD PTY LTD RESPONDENT

Wong v Silkfield Pty Ltd [1999] HCA 48
9 September 1999
B26/1999

ORDER

Appeal allowed with costs.

Set aside order 2 of the orders of the Full Court of the Federal Court of Australia made 20 November 1998, together with the declaration made by that Court, and in lieu thereof, save as to the direction by that Court as to the future conduct and procedure in the matter, order that the appeal to that Court be dismissed with costs.

On appeal from the Federal Court of Australia

Representation:

D F Jackson QC with D A Savage for the appellants (instructed by
Attwood Marshall)

B W Walker SC with J K Bond for the respondent (instructed by
Clayton Utz)

Notice: This copy of the Court’s Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Wong v Silkfield Pty Ltd

Practice and procedure – Federal Court of Australia – Representative proceedings – Commencement – Misleading and deceptive conduct pleaded – Whether alleged common misrepresentation a "substantial common issue of law or fact".

Words and phrases – "substantial".

Federal Court of Australia Act 1976 (Cth), s 33C, Pt IVA.
Trade Practices Act 1974 (Cth), s 52.

GLEESON CJ, McHUGH, GUMMOW, KIRBY AND CALLINAN JJ. This appeal is brought from the allowance by the Full Court of the Federal Court of Australia (O'Loughlin and Drummond JJ; Foster J dissenting[1]) of an interlocutory appeal from a judge of that Court (Spender J). It presents an issue of construction of s 33C of the Federal Court of Australia Act 1976 (Cth) ("the Act"). This provision is included in Pt IVA (ss 33A-33ZJ) which is headed "REPRESENTATIVE PROCEEDINGS". Part IVA creates new procedures and confers upon the Federal Court new powers in relation to the exercise of jurisdiction with which it has been invested by another law made by the Parliament[2]. In the present case the jurisdiction of the Federal Court was conferred by s 86 of the Trade Practices Act 1974 (Cth) ("the Trade Practices Act") in respect of matters arising under that statute, relevantly s 52.
[1]Silkfield Pty Ltd v Wong (1998) 159 ALR 329.
[2]Poignand v NZI Securities Australia Ltd (1992) 37 FCR 363 at 364-365.
The facts
By their Application and Statement of Claim, both filed 24 October 1997, the appellants seek relief including a declaration that the respondent ("Silkfield") has engaged in misleading and deceptive conduct in respect of the sale or proposed sale of lots in a residential building known as "the Phoenician North Tower" situated at Broadbeach in the State of Queensland, and an award of damages pursuant to s 82 of the Trade Practices Act. The building comprises 166 strata title lots and contracts for 124 of the residential lots were entered into by Silkfield through the agency of Skye Court Pty Ltd ("Skye").
The…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1999] HCA 48
Decision Date: 9 September 1999

CaseChat Overview and Summary

This appeal concerned a representative proceeding brought in the Federal Court of Australia by the appellants against the respondent, Silkfield Pty Ltd. The appellants sought declarations and damages for misleading and deceptive conduct under section 52 of the *Trade Practices Act 1974* (Cth) in relation to the sale of residential lots in a building known as "the Phoenician North Tower". The core of the appellants' complaint was that statements provided by the respondent pursuant to section 49 of the *Building Units and Group Titles Act 1980* (Qld) were inaccurate, failing to disclose material agreements concerning lift facilities and a public carpark. The appeal to the High Court of Australia arose from an interlocutory decision of the Full Court of the Federal Court, which had allowed an appeal from a single judge and set aside a declaration made by that judge.

The central legal issue before the High Court was the construction of section 33C(1)(c) of the *Federal Court of Australia Act 1976* (Cth), which governs representative proceedings. Specifically, the Court had to determine what constitutes a "substantial common issue of law or fact" for the purposes of authorising such proceedings. This involved interpreting the legislative intent behind Part IVA of the Act, which introduced new procedures for representative proceedings, and considering whether the common issue identified by the appellants met the threshold of being "substantial" as required by the legislation.

The High Court, in allowing the appeal, reasoned that the Full Court had erred in its interpretation of section 33C(1)(c). While acknowledging that Part IVA was intended to provide efficient procedures for dealing with multiple claims, the Court noted that Parliament had deliberately imposed the requirement that a common issue be "substantial," distinguishing it from recommendations of the Australian Law Reform Commission. The Full Court had interpreted "substantial" to mean an issue likely to have a "major impact on the conduct and outcome of the litigation" or be "at the core of the dispute." However, the High Court found that the Full Court had applied this test too narrowly in the present case. The Court concluded that the common issue regarding the accuracy of the section 49 statements, while common to all group members, was not likely to resolve wholly or to a significant degree the claims of all group members, and therefore did not meet the threshold of being substantial.

Consequently, the High Court allowed the appeal, set aside the orders of the Full Court, and ordered that the appeal to the Full Court be dismissed with costs.

Orders

Orders of the court

Appeal allowed with costs.

Set aside order 2 of the orders of the Full Court of the Federal Court of Australia made 20 November 1998, together with the declaration made by that Court, and in lieu thereof, save as to the direction by that Court as to the future conduct and procedure in the matter, order that the appeal to that Court be dismissed with costs.

Background

Background to the litigation

GLEESON CJ, Mc This appeal is brought from the allowance by the Full Court of the Federal Court of Australia (O'Loughlin and Drummond JJ; Foster J dissenting[1]) of an interlocutory appeal from a judge of that Court (Spender J). It presents an issue of construction of s 33C of the Federal Court of Australia Act 1976 (Cth) ("the Act"). This provision is included in Pt IVA (ss 33A-33ZJ) which is headed "REPRESENTATIVE PROCEEDINGS". Part IVA creates new procedures and confers upon the Federal Court new powers in relation to the exercise of jurisdiction with which it has been invested by another law made by the Parliament[2]. In the present case the jurisdiction of the Federal Court was conferred by s 86 of the Trade Practices Act 1974 (Cth) ("the Trade Practices Act") in respect of matters arising under that statute, relevantly s 52.[1]Silkfield Pty Ltd v Wong (1998) 159 ALR 329.[2]Poignand v NZI Securities Australia Ltd (1992) 37 FCR 363 at 364-365.The facts By their Application and Statement of Claim, both filed 24 October 1997, the appellants seek relief including a declaration that the respondent ("Silkfield") has engaged in misleading and deceptive conduct in respect of the sale or proposed sale of lots in a residential building known as "the Phoenician North Tower" situated at Broadbeach in the State of Queensland, and an award of damages pursuant to s 82 of the Trade Practices Act. The building comprises 166 strata title lots and contracts for 124 of the residential lots were entered into by Silkfield through the agency of Skye Court Pty Ltd ("Skye"). The Application states that it is brought by the appellants as a "representative party" and the group members to whom the proceeding relates are identified in par 4 of the Statement of Claim. They are all said to be persons who entered into contracts to purchase lots in the building from Silkfield, by or through the agency of Skye, prior to the date of registration of the plan in respect of the building and who were provided by Silkfield with a statement purportedly made pursuant to s 49 of the Building Units and Group Titles Act 1980 (Qld) ("the Building Units Act"). A list of the presently identified members of the group is annexed to the Statement of Claim and comprises 26 individuals. Section 49 of the Building Units Act requires an original proprietor of land, the subject of a building units plan or a group titles plan which is registered or proposed to be registered, to give to the purchaser a written statement setting out certain information. The appellants complain that, in the course of its agency on behalf of Silkfield, Skye represented to members of the group that, among other matters, the written statements delivered pursuant to s 49 ("the s 49 statements") were accurate whereas in truth they were inaccurate. It is alleged that each s 49 statement (which were in common form) failed to disclose (i) an agreement or agreements for the service and maintenance of lift facilities within the building between Silkfield and a third party and (ii) an agreement or agreements for the provision of a public carpark by the Gold Coast City Council made between Silkfield and that body.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

HUGH, GUMMOW, KIRBY AND CALLINAN JJ (dissent)

Part IVA establishes a regime which supplants these procedures, but the phrase in par (c) of s 33C(1) "a substantial common issue of law or fact" gives rise to issues of construction which reflect the disparate interests which the old procedures had sought to accommodate.The decision of the Full Court In the Full Court, O'Loughlin and Drummond JJ emphasised that, whilst Pt IVA was introduced in response to Report No 46 of the Australian Law Reform Commission, Grouped Proceedings in the Federal Court, it did not adopt all the recommendations made by the Commission. In particular, their Honours emphasised that the requirement that the common issue be "substantial" was a departure made by the Parliament. Their Honours said[22]:"The imposition of this requirement demonstrates a clear intention on the part of the [P]arliament to restrict the wider availability of the representative procedure recommended by the [Australian] Law Reform Commission, the better to achieve the objectives of the new procedure.By rejecting the Commission's proposal in this respect, [P]arliament showed that it intended that a common issue would be justification for the use of the new procedure only where it was an issue with some special significance for the resolution of the claims of all the group members. It is by reference to the objectives of Pt IVA of the Act that we consider the evaluative judgment whether a common issue is a substantial one must be made. In our opinion, those objectives cannot be achieved unless determination of the issue or issues common to the claims of all group members is likely to have a major impact on the conduct and outcome of the litigation." (Emphasis added)[22](1998) 159 ALR 329 at 343-344. In the second reading speech of the Bill for the Federal Court of Australia Amendment Act 1991 (Cth), which introduced Pt IVA, the purposes of the Bill were identified as follows[23]:"The Bill gives the Federal Court an efficient and effective procedure to deal with multiple claims. Such a procedure is needed for two purposes. The first is to provide a real remedy where, although many people are affected and the total amount at issue is significant, each person's loss is small and not economically viable to recover in individual actions. It will thus give access to the courts to those in the community who have been effectively denied justice because of the high cost of taking action.The second purpose of the Bill is to deal efficiently with the situation where the damages sought by each claimant are large enough to justify individual actions and a large number of persons wish to sue the respondent. The new procedure will mean that groups of persons, whether they be shareholders or investors, or people pursuing consumer claims, will be able to obtain redress and do so more cheaply and efficiently than would be the case with individual actions."[23]Australia, House of Representatives, Parliamentary Debates (Hansard), 14 November 1991 at 3174-3175. With respect to this statement of purpose, O'Loughlin and Drummond JJ used the phrases "some special significance for the resolution of the claims" and "likely to have a major impact on the conduct and outcome of the litigation"[24]. Later in their joint judgment their Honours gave two further formulations. They said[25]:"Determination of the issue may not necessarily result in resolution of the whole of the group members' claims or even of an element of those claims such as the liability of the respondent to all. But where such an issue can be seen, in the circumstances of the particular case, to be a matter the resolution of which will have a major impact on the litigation because it is an issue at the core of the dispute between the respondent and each group member, then it can properly be described as being a 'substantial' common issue." (Emphasis added)Their Honours concluded[26]:"In the present case, there is only one question, viz, that concerning the accuracy of the representations made in the common form s 49 statement given to all that is both a live issue and common to the claims of all group members, identified as well as unidentified. However, there is no reason to think that litigation of this common issue would be likely to resolve wholly or to any significant degree the claims of all group members." (Emphasis added)[24](1998) 159 ALR 329 at 344.[25](1998) 159 ALR 329 at 345.[26](1998) 159 ALR 329 at 345-346.

Ratio Decidendi

Legal Principle Established

Established by:

Full text does not contain this section.