BRIAN McMULLIN and LEONE MARGARET McMULLIN v ICI AUSTRALIA OPERATIONS PTY LTD, ICI AUSTRALIA LIMITED and CROP CARE AUSTRALIA PTY LIMITED

EXTEMPORE REASONS FOR JUDGMENT (NO.6) WILCOX J: This morning I handed down Reasons for Judgment (No.5) dealing with the quantum of liability in relation to claims by the applicants, on their own behalf and on behalf of six group members. I determined the issues relating to quantum that were still in contention and left to the parties the task of making the arithmetical calculations as to amounts, on the basis that payment would be made on or before 12 December 1997. This afternoon I was handed a document called "Terms of Settlement" whereby amounts were ascribed to the claims of each of the six group members. Those amounts reflect the previously agreed figures, with additional figures based on my rulings on contentious matters. The document provided that, in respect of each of the group member claims, each party should bear its own costs of the litigation. These claims were heard on days after 5 November 1997. I understand this agreement reflects what has passed between the parties in regard to those claims. I do not seek to impose any different result on the parties. The document also contained a clause whereby the parties, and their legal advisers, agreed the amounts payable to the claimants, and the amounts of offers made by the respondents to the claimants, should be kept confidential. I have no problem about the parties agreeing to maintain the confidentiality of offers but I do have a problem about an agreement concerning confidentiality as to amounts payable. These amounts were not the product of an out of court settlement. They are a reflection of rulings made by the Court. If courts are to take seriously the obligation to act in public, it is wrong to deny members of the public access to information regarding the results of their determinations. Accordingly I am not prepared to make the confidentiality order relating to payments. I propose to make an order in accordance with a draft of short minutes which I attached to my reasons this morning, inserting the agreed amounts. I will pronounce that order shortly. The other matter raised this afternoon concerns costs. No costs order has yet been made between the applicants and the first three respondents, the ICI respondents. Mr Rowe, on behalf of the applicants, now seeks an order and submits it should be on an indemnity basis. In support of that latter submission he says the case took longer than if Mr and Mrs McMullin had brought a case solely on their own behalf and, looking at the matter from the respondents' point of view, the combined costs of a representative proceeding are less than would be the case if each of the group members instituted a separate proceeding. I do not doubt it is correct to say the case took longer than if Mr and Mrs McMullin had sued only on their own behalf. Whether they would have done so is another matter. Their damages have been assessed at $79,600. I hesitate to assume they would have been prepared to embark on this complex, difficult and expensive litigation for such a stake. I think this highlights the questionability of the second leg of Mr Rowe's submission. Usually two reasons are given in support of the existence of representative proceedings. They tend to conflict. On the one hand it is said it is a more efficient use of court time to hear a single action, in which common issues of fact or law are determined, than if separate actions were brought. The assumption underlying that statement is that, absent any available representative procedure, separate actions would be brought. On the other hand it is frequently said a representative proceeding is the only way in which numerous small claimants can obtain justice. That statement assumes that, absent a representative procedure, claims would not be brought to court. I have no way of knowing what would have happened in the present case. I think the representative procedure has been useful in this case in resolving, in a comparatively short time, issues of liability involving a large number of people, but I do not think this factor justifies an order for indemnity costs. I have no idea of the ramifications of an indemnity costs order in this case. I am unpersuaded that I should make an order at this stage other than on a party/party basis. When I indicated this attitude to Mr Rowe, he intimated his instructions were to ask me to make a party/party order, rather than to adjourn the application for costs until additional evidence could be provided. Mr Habersberger, on behalf of the respondents, submitted I should not make any costs order at this stage; it might turn out, when all of the damages claims are assessed, they total less than an offer that, I gather, was made by his clients to the applicants prior to the commencement of the liability hearing last March. Mr Habersberger's approach is familiar in civil litigation. Prior to the incurring of major costs, a respondent often makes an offer to the applicant, "without prejudice except as to costs". The idea is that, if the applicant ends up with a less beneficial result, the respondent may be able to resist an adverse order for costs - or even conceivably obtain a favourable order - by establishing the applicant has not succeeded in beating the offer. There is no problem about that approach in ordinary litigation, but I think it presents a major problem in relation to a representative proceeding under Part IVA of the Federal Court of Australia Act 1976, especially where there are unidentified group members. Section 33V(1) of the Act provides: "A representative proceeding may not be settled or discontinued without the approval of the Court." If the offer made to Mr and Mrs McMullin last March had attracted them, and they had applied for approval of the settlement, or discontinuance of the proceeding in order to give effect to the terms of the offer, I would have been unable to deal with the application until I had information regarding the identity of the group members and the likely value of their claims. I would not have been prepared to approve a monetary settlement without having some idea whether this represented fair value, from the point of view of group members; in other words, whether the amount that individual group members would receive reasonably reflected the hazards of their claims. Counsel for the applicants would not have been able to provide the necessary information without proceeding with the case. Mr Habersberger says the effect of such an approach is serious, from a respondent's point of view. Respondents will be deprived of a major method of resolving litigation, the making of sensible pre-trial offers. I appreciate the point. However, if respondents in representative proceedings are prepared to take a realistic approach, ways remain for them to reduce the extent of the litigation and their potential costs liability. For example, there may be cases where it seems the claim is likely to succeed in relation to liability. In such a case a respondent might think it worthwhile admitting liability, thereby saving the costs of a hearing on liability, and leaving only the determination of individual damages claims. Alternatively, a respondent might offer to compromise liability by suggesting to the representative party that a discount of a given percentage should be applied to all assessments of damages. At a later stage, if offers were made, in a specific amount, in respect of individual group members' damages and the offers were not exceeded in the result, there would be a substantial argument for not awarding the applicant the costs of the hearing at which the damages were assessed. In the present case, the ICI respondents, as they were entitled to do, strenuously contested each step in the applicants' case on liability. In that situation it is not unfair they should meet the costs of the hearing on liability irrespective of whether, when all the group members are identified and their claims assessed, the total amount awarded is greater or less than the global offer ICI apparently made before the liability hearing. I am not persuaded to refrain from making a costs order because of the factor mentioned by Mr Habersberger. I propose to order the damages that have now been assessed be paid to the solicitors for the applicants. What happens after that is primarily a matter between the solicitors, their clients and the various group members, to all of whom the solicitors have a fiduciary duty. I see no impediment to the solicitors ensuring any difference between the costs recovered under the party/party order and the costs reasonably charged by them in respect of the litigation is met out of recovered damages. However, it will be necessary for them to apply to the Court before appropriating any part of the group members' damages to solicitor/client costs. Section 33ZJ permits the Court to make an order that an amount equal to the whole, or a part, of the difference between the costs incurred in a representative proceeding and the costs recoverable from the respondent be paid out of the damages awarded. This provision was obviously intended to ensure a solicitor is covered for costs reasonably incurred, while allowing the Court an opportunity to ensure there is no exploitation of group members. In advance of an order, arrangements can be made for a portion of damages, as they are paid, to be held in trust pending a final computation of costs and the obtaining of an order under s 33ZJ. In this case, an application under s 33ZJ is a matter for the future; it will be some time before all the damages are determined. I certify that this and the preceding three (3) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Wilcox