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[2010] FCA 1302
Federal Court of Australia
2010-11-30
Tracey J
Original judgment source is linked above.
Number of paragraphs: 30
Counsel for the Applicant: Dr K Hanscombe SC & Mr M Pesman
Solicitor for the Applicant: Maurice Blackburn
Counsel for the First Respondent: Mr C Corquhoun
Solicitor for the First Respondent: Johnson Winter & Slattery
Counsel for the Second Respondent: Mr B F Quinn
Solicitor for the Second Respondent: Freehills
Counsel for the Third and Fourth Respondents: Mr M O'Bryan
Solicitor for the Third and Fourth Respondents: Minter Ellison
Counsel for the Fifth Respondent: Ms M Sloss SC & Mr A McClelland
Solicitor for the Fifth Respondent: DLA Phillips Fox
Counsel for the Sixth and Seventh Respondents: Ms Carr
Solicitor for the Sixth and Seventh Respondents: Corrs Chambers Westgarth
Counsel for the Ninth Respondent: Mr A J Payne
Solicitor for the Ninth Respondent: Mallesons
IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 12 OF 2007
BETWEEN: AUSKAY INTERNATIONAL MANUFACTURING & TRADE PTY LTD (ACN 078 654 243)
JUDGE: TRACEY J DATE OF ORDER: 30 November 2010 WHERE MADE: MELBOURNE
IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 12 OF 2007
BETWEEN: AUSKAY INTERNATIONAL MANUFACTURING & TRADE PTY LTD (ACN 078 654 243)
JUDGE: TRACEY J DATE: 30 November 2010 PLACE: MELBOURNE
REASONS FOR JUDGMENT 1 Almost three years ago the Applicant commenced a representative proceeding claiming damages and other relief in respect of what were said to be price-fixing arrangements between the Respondents. The Applicant's central allegation was that the Respondents were members of a cartel which had agreed to and did fix charges for international airfreight moving into and out of Australia. It was alleged that, in about January 2000, the Respondents and other airfreight carriers had agreed that each of them would fix and maintain charges and conceal their agreement from others including the Applicant and relevant group members. Prices were increased by the imposition of an agreed fuel surcharge, a security surcharge and a war-risk surcharge. 2 As a result of a series of interlocutory proceedings, the Applicant's application and statement of claim have been amended on a number of occasions: see Auskay International Manufacturing & Trade Pty Ltd v Qantas Airways Limited (2008) 251 ALR 166; Auskay International Manufacturing & Trade Pty Ltd v Qantas Airways Limited (No 5) [2009] FCA 1464 and on appeal [2010] FCAFC 129. 3 Following the Full Court's decision the Applicant has moved the Court for a range of orders which are designed to advance the readiness of the proceeding for trial. 4 These orders relate to: The substitution of applicants; Amendment of the definition of group members; The filing of a third amended application and a fifth amended statement of claim; The making of confidentiality orders in respect of certain schedules to the fifth amended statement of claim; and The fixing of a timetable for the completion of pleadings.
SUBSTITUTION OF APPLICANTS 5 The Applicant proposes that two other companies be substituted as representative applicants in the proceeding. These companies are De Brett Seafood Pty Ltd (CAN 093 552 366) ("De Brett") and J Wisbey & Associates Pty Ltd (ACN 98 052 034 238) ("Wisbey"). De Brett was, at relevant times, an exporter of chilled seafood. Wisbey was an importer of dental equipment. Both companies utilised airfreight services in the course of their business activities. Both companies have expressed a willingness to act as representative applicants. 6 For a reason or reasons which are not disclosed in evidence the present representative applicant ("Auskay") no longer wishes to act in that capacity. It has requested its solicitors to seek orders substituting De Brett and Wisbey as the representative applicants. 7 Senior counsel for Auskay accepted that the Court's power to make an order for substitution of applicants was not to be found in either ss 33T or 33W of the Federal Court of Australia Act 1976 (Cth) ("the Act"). Rather, she relied on the broad power conferred on the Court by s 33Z(1)(g) and on the power, conferred by O 6 of the Federal Court Rules, to remove and add parties to a proceeding. She referred to and relied on the observations of Merkel J in Bray v F Hoffman - La Roche Limited [2003] FCA 1505 at [14] and [29] where his Honour said: "Under the Federal Court Rules the Court has a general discretion to make orders amending the parties to a proceeding (Order 6) … Ordinarily, a bona fide application for an amendment, which complies with the relevant Rules, should be granted, subject to proper terms, unless the proposed amendment is futile or would cause substantial injustice which cannot be compensated for …" … In the present case, whether approval is required under s 33V or leave is required under s 33K or under O 6 …, a court would be concerned to ensure that an appropriate case is made out for the grant of approval or leave having regard to all the circumstances of the case. In determining whether an appropriate case has been made out in the present case I can see no reason for applying different criteria depending on whether the application is for approval or leave." 8 None of the Respondents contended that the Court lacked power to make the substitution order. Nor was it contended that the proposed new representative applicants were unsuitable or should not be permitted, for any other reason, to perform the role of representative applicants in the proceeding. 9 I consider that the Court has the power to make the orders sought, both under s 33Z(1)(g) of the Act and O 6, rr 8 and 9. Given the availability of alternative applicants who are willing to ensure that all issues in dispute are prosecuted in the proceeding, Auskay is no longer to be regarded as a necessary party. In the circumstances, it is just and appropriate that the two willing parties should be substituted as Applicants. 10 Singapore Airlines submitted that additional orders should be made which clarified the costs implications of the substitution of Applicants. It sought orders that Auskay would remain liable for all costs orders made against it in the proceeding to date and that, subject to this order, DeBrett and Wisbey should "otherwise be liable for all costs orders made against them in the proceeding whether the costs to which the orders relate were incurred before or after the date" on which the substitution occurred. 11 These additional orders were sought because of a concern that, if they were not made, Singapore Airlines may not be able to pursue Auskay for costs in the cause which were incurred prior to Auskay ceasing to be a representative party. The concern was founded on an observation of French J in Revian v Dasford Holdings Pty Ltd [2002] FCA 1119 at [15]. In dealing with the consequences of a substitution under s 33T of the Act, his Honour observed that: "Of course, any group member who is substituted as an applicant will become liable to pay the costs of the proceeding thereafter if unsuccessful." 12 Singapore Airlines was concerned that the observation may carry the implication that a substituted representative applicant may not be liable for the costs of the proceeding up to the date of substitution in the event that the Respondents were ultimately to be successful. 13 I do not consider that French J's dictum carries with it any negative implication which would operate to the detriment of Singapore Airlines or any other Respondent. In Tongue v Tamworth City Council (2004) 141 FCR 233 at 239-40, Jacobson J, having set out the passage in French J's judgment, continued: "However, I do not consider that French J was stating a general rule that in all cases the substituted party will only be liable for costs from the date of the substitution. His Honour was addressing the facts of a particular case in which the representative party lacked the capacity upon which she relied to prosecute the proceeding. It may have been appropriate in that case for a substituted party to be liable only for future costs. But, in my view, all that his Honour intended to say by use of the word 'thereafter' was that, from then on, the substituted party would be liable to a costs order which may include costs incurred before the date of the order." 14 His Honour went on to say that any consideration of what costs orders should be made in a representative proceeding in which one representative applicant is substituted for another, "must be a matter to be considered after final judgment is delivered." What orders are then made will depend on the outcome of the trial. 15 I respectfully agree with Jacobson J: nothing said by French J in Revian should be understood as a determination that a substituted representative applicant can only be liable for costs incurred by a successful respondent from the date on which that party became the representative applicant. The Court has a broad discretionary power, in a representative proceeding, to award costs against a person who was acting as a representative party: see s 43 of the Act. In particular, a successful respondent would not be precluded from seeking an order that a substituted applicant should be liable for costs in the cause incurred prior to the substitution. 16 I do not, therefore, consider that it is necessary to make the additional orders sought by Singapore Airlines.
DEFINITION OF GROUP MEMBERS 17 Auskay applied to vary the terms of its definition of "group member" appearing in its second amended application and fourth amended statement of claim. The variation would see the words appearing in italics being added to the definition such that it will read: "The group members to whom this proceeding relates ("the Group Members") are all those persons currently resident in Australia who during the period 1 January 2000 to 11 January 2007 ("the Period") paid identified amounts totalling more than twenty thousand australian dollars (AUD$20,000) for the carriage of goods to or from Australia including in each instance a component by air and who are not related parties to the Respondents or any of them within the meaning of the Corporations Act." These amendments were made in an attempt to rectify problems with the definition which I had identified in Auskay (No 5) at [51]-[62] and [64]. 18 The problems with which I was concerned related to the difficulty which a potential group member might experience in determining whether it fell within the definition. In order to determine whether they had made relevant payments during the period exceeding $20,000, potential group members were required to examine invoices rendered by freight forwarders and others. A sampling of such invoices which had been paid by Auskay disclosed that they were rendered for "freight charges". No distinction was drawn in the invoices between the air and land component of such charges. A recipient of such invoices could not, therefore, know how much of the amount charged could be brought into account for the carriage of goods by air, so as to be able to determine whether or not the $20,000 figure had been exceeded. 19 The amendments proposed by the Applicant overcome these difficulties. The Respondents do not suggest otherwise. 20 British Airways supported by the other Respondents who appeared, criticised the revised definition on the ground that it applied to both direct and indirect acquirers of air-freight services. This, it was contended, gave rise to conflict with parts of the fifth amended statement of claim which deal with the damage allegedly suffered by reason of the Respondents' conduct. It was objected that the combined effect of the revised group definition and the damages allegations was that, in respect of each relevant air-freight service that was supplied during the relevant period, there may have been several persons who were members of the group who would have had a claim for damages in respect of amounts paid for the same service. Both could not claim to have suffered damage to the full extent of any overcharge. 21 These submissions were linked with a submission that the Applicant should be called on to prepare and serve a damages statement so that the Respondents could understand how the alleged losses of group members were calculated and the full extent of the damages claims they were called on to meet. It was submitted that the filing of such a damages statement should be made a condition of the grant of leave to file the fifth amended statement of claim. 22 A group definition will meet the requirements of s 33H(1)(a) of the Act if it contains "objective criteria by reference to which membership or non-membership can be established": Wright Rubber Products Pty Ltd v Bayer AG [2010] FCAFC 85 at [34] (per Moore J with whom Jessup and Dodds-Streeton JJ agreed). The words which it is proposed to add to the definition overcome the deficiencies which I had identified in the preexisting definition. A person who has paid for air-freight services during the relevant period will now be able to know how the monetary calculation is to be made. The identified amounts can be ascertained from invoices (cf fifth amended statement of claim, para 135). So long as a component of the figure attributed to "freight services" includes a charge for airfreight services, the total figure can be brought into account. If the aggregate amount disclosed by invoices exceeds $20,000 the person who has paid for the services will have satisfied the monetary element of the definition. 23 It is important to observe that the amounts paid by group members for services which have an air-freight component will not equate with the amount of any damages claim which any group member is entitled to make. Damages will be limited to, at maximum, the amount by which the air-freight component of any charge has been inflated by alleged overcharging. Even then, any passing-on of part or all of the overcharge will need to be brought into account. 24 The calculation of damages is a matter which, by reason of the proposed amendments to the group definition, is now clearly separated from the question of whether or not a person meets the criteria for group membership. The quantification of damages is an issue which can and will be dealt with at a later stage of the proceeding. The Applicant accepts that, prior to trial, it will be necessary for it to produce a damages statement of the kind ordered by Drummond J in Queensland v Pioneer Concrete (1999) ATPR 41-691. Such a statement will provide the Respondents with the information which they will need and to which they are entitled as to the quantum of damages claimed and the bases on which the calculations have been made. 25 Leave should, therefore, be granted to amend the definition of "group member" in the application and the statement of claim in the terms proposed in the notice of motion. No order requiring the production of a damages statement should be made at this stage.
AMENDMENTS TO THE APPLICATION AND STATEMENT OF CLAIM 26 The Applicant seeks leave to amend its application and statement of claim in order to meet certain objections which I upheld in Auskay (No 5). 27 Save to the extent that the proposed amendments involved changes to the group definition, the Respondents did not oppose the granting of leave to file a third amended application and a fifth amended statement of claim in the terms proposed by the Applicant. 28 Leave should be granted. 29 Two of the Schedules to the fifth amended statement of claim contain commercially sensitive information. The parties were agreed that this information should be protected from disclosure other than to the legal representatives of the Respondents. Orders limiting access to this material should be made.
PLEADINGS 30 The parties accepted that, if leave to amend the application and statement of claim were granted, further orders should be made for the filing and service of defences and any cross-claims and any replies by the Applicants. There was some disagreement as to the time period which should be allowed for the taking of these steps. Some of the Respondents expressed concern about the need to obtain instructions from persons who are resident overseas. It was also necessary to take account of the forthcoming legal vacation. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tracey.
Auskay International Manufacturing & Trade Pty Ltd
Qantas Airways Limited
(2008) 251 ALR 166
(2004) 141 FCR 233