Barbara O'Sullivan v Challenger Managed Investments Limited [2008] NSWSC 602 | Case summary

4799/06 Barbara O'Sullivan v Challenger Managed Investments Limited JUDGMENT 1 There is before the Court an application by the plaintiffs for orders for the separate determination pursuant to rule 28.2 of the Uniform Civil Procedure Rules 2005 of a number of particular questions to be determined separately from and before all other questions in the proceedings. 2 The substantive proceeding is a representative proceeding brought by the plaintiff pursuant to rule 7.4 of the Uniform Civil Procedure Rules 2005, in her own right, and as a representative of the persons listed in schedule A to the further amended originating process now dated 10 December 2007. There are 208 represented persons. 3 The plaintiff seeks declaratory relief and damages in her own right and on behalf of each of the represented persons. The basis for the plaintiff's claims is pleaded in the further amended statement of claim filed on 10 December 2007. 4 In short, the plaintiff contends that by the issue of a prospectus the defendant engaged in misleading and deceptive conduct in contravention of s12(d)(a) of the Australian Securities and Investments Commission Act 2001, which caused the plaintiff and the represented persons to subscribe for units in the Challenger Howard Property Trust, as a result of which the plaintiff and each of the represented persons are said to have suffered loss or damage. 5 In a reserved judgment delivered on 24 April 2007 [2007] NSWSC 383, White J had occasion to examine the originating process and to explain as they then stood, the then pleadings, and to deal with a number of close questions concerning strike outs and the proper approach to representative orders. 6 That judgment suffices for present purposes to, in the broad, explain the plaintiff's position at that point in time. 7 On a subsequent occasion White J delivered a supplementary judgment [2007] NSWSC 664, which granted certain leave to the plaintiff to further amend and is also self-explanatory in recording the slight movement away from the position ante of the plaintiff parties. 8 Following a number of small adjustments, the plaintiff today seeks an order pursuant to the rule to which I have referred, that the following questions be determined separately and from and before all other questions in the proceedings.

(d) All other questions and issues arising in relation to the claim by the plaintiff in her own right. 9 During the course of argument, Mr Leopold SC accepted that it would be appropriate to include between the suggested questions (c) and (d), another question [which I can refer to as (c1)], which question when properly framed, would require the Court to determine when causes of action accrued to the named plaintiff in the proceedings. 10 This is not an occasion for an extensive survey of the principles which inform the proper approach to applications for separate question orders. 11 I have had occasion many times over the last few years to address the principled approach to the making of separate question orders. It suffices for present purposes to simply refer to the general principles so applicable, which were outlined in Idoport v National Australia Bank (2000) NSWSC 1215 at paragraph 7-8, most recently adopted in Michael Wilson & Partners Ltd v Robert Colin Nicholls & Ors [2008] NSWSC 501 at paragraphs 25 and following. 12 The purpose of representative proceedings, it may shortly be said, is to avoid the multiplicity of proceedings and facilitate the efficient determination once and for all of controversies in which parties have the same interest: Campbell's Cash & Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386. 13 The procedure for the decision of separate questions under part 28 of the UCPR provides a mechanism for giving effect to this purpose by allowing for the efficient resolution of the common issues in representative proceedings. Unless that procedure is utilised in representative proceedings of the present kind, there would be little, if any, utility in bringing such proceedings in a representative form. 14 In terms of the utility of determining separate questions in this proceeding, it may be said that there are threshold issues common to the plaintiff and all the represented parties going to the question of whether the defendant has violated the statutory norms of conduct prescribed by s12(d)(a) of the ASIC Act. This was recognised by White J in the judgment to which I have already referred in these very proceedings. 15 As Mr Leopold SC has submitted, logic and the policy underlying representative proceedings dictate that these threshold common issues be determined first before any trial of the multiplicity of issues relating to causation and quantum concerning individual represented persons. 16 The application for the decision of separate questions must be considered in light of the overriding purpose of the Civil Procedure Act 2005 and the UCPR, being to facilitate the just, quick and cheap resolution of the real issues in the proceedings: s56 of the Act. 17 In Integral Home Loans Pty Ltd v Interstar Wholesale Finance Pty Ltd [2006] NSWSC 1464 Brereton J at [6] held "while much has been said against the resolution of separate questions in Courts of higher authority, nonetheless since the Civil Procedure Act 2005 (NSW) it is my view that the Court should take a more interventionist role in identifying and separating important issues which can resolve significant parts of the litigation expeditiously". 18 The plaintiff's interlocutory application provides for the isolation and resolution of the threshold common issues. The separate questions seem to me to provide an efficient mechanism for the Court to narrow issues in dispute in the proceeding, if not concluding the proceeding altogether. 19 If the defendant is successful on the common issues, then the proceeding, will be finally determined in favour of the defendant, then there will be no need for the parties and the Court to consider the complex and costly residual issues of causation and quantification. 20 The prospect of such a complete resolution is, of course, a significant consideration in favour of the plaintiff's application: Love v Mirror Newspapers Ltd [1980] 2 NSWLR 112 at 126. 21 If the plaintiff is successful, then the parties will be in a better position to approach the resolution of the residual non-common issues which are individual to the represented persons. Whatever the outcome, the object of the Civil Procedure Act 2005 will be served by an order for the decision of the separate questions. 22 The decision of the Court in respect of question (c), ie the balance of the issues relating to the claim brought by the plaintiff in her own capacity, will provide the parties with significant additional guidance as to the non-common issues of causation and quantification. This will likely lead to a narrowing of the non-common issues, if and when a trial of the non-common issues relating to the represented persons becomes necessary. It will also enhance the possibility of successful settlement negotiations concerning the represented persons, if the plaintiff is successful. The prospect of the resolution of the separate questions will enable the parties to avoid or minimise further litigation, is a further factor in favour of the procedure: Tallglen v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 at 141-2. 23 All of the questions sought to be the subject of separate determination are, it seems to me, clearly severable from the balance of the proceedings: as to the significance of clear severability as a factor in favour of ordering the decision of separate questions, see Matrix Film Investment One Pty Ltd & Ors v Alameda Films LLC and Warner Bros Entertainment and Pictures Inc. [2007] NSWSC 523 at [16]. 24 The utility of the making of separate question orders has in fact been acknowledged by the defendant in its submissions in relation to the present applications. 25 I accept that if no order for the determination of the separate questions was made the parties and the Court would be put to the disproportionate expense and inconvenience of hearing the common issues, together with all of the non-common issues relating to the plaintiff and the 208 represented persons. 26 In that event the procedure under rule 7.4 would have achieved nothing in terms of efficiency or of saving of time or cost. 27 In essence, the submissions put by the defendant to the Court seem to me to go to case management considerations. The defendant, while accepting that it did not oppose the ordering of separate questions at the appropriate time, and in broad terms, agreed to the advantages of separate question orders being made, submitted that it would presently be premature for the Court to so order. 28 Essentially the submissions which came forward from Mr Lazarus amounted, it seemed to me, to the contention that in the present state of affairs where a statement of claim has been served and a defence has been served, the plaintiff ought be obliged first, to file a reply, identifying a number of particular issues which it may or may not take with the current defence. 29 My own view is that as the rules clearly provide, there is taken to be a joinder of issue between the parties. 30 Insofar as other questions of case management are concerned, the orders which are to be made by way of the separate question order regime will include a regime under cover of which the plaintiff will be obliged to file its evidence in relation to the separate questions and in relation to which the defendant will be then obliged to respond with its evidence. 31 Mr Lazarus' several submissions seem to me to amount to the suggestion that the defendant did not really know the nature of the case which it was being asked to meet in terms of what it was that the plaintiff would be saying was incorrect or inappropriate in terms of the defendant's defence: a defence under cover of which, as I have understood Mr Lazarus, the defendant has sought to discharge the evidentiary onus upon it of establishing that its conduct was at all times reasonable. 32 During the course of argument I made clear to Mr Lazarus that the Court would always entertain appropriate applications and deal with them on their merits. Should it be the case that at some stage in coming weeks or months, the defendant determines that notwithstanding the full service upon it of the plaintiff's evidence, it simply is unable to discern the nature of the case which the plaintiff intends to put [in challenging the defendant's suggested reasons for the defendant's conduct having been reasonable], the defendant may always approach the Court on an appropriate application for particulars, interrogatories or one or other of several forensic options. 33 That may not occur and if it does, the defendant may or may not succeed, but these are case management considerations. 34 To my mind the principled exercise of the relevant discretion in this reasonably large piece of litigation involving hundreds of parties and involving huge amounts, is to accede to the separate question regime and to make, on a case management approach basis, appropriate orders in relation to times for the filing of evidence by both parties and to relieve to both parties liberty to restore at short notice as and when required.

Barbara O'Sullivan v Challenger Managed Investments Limited

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