Clarke & Ors v Great Southern Finance Pty Ltd [2012] VSC 338 | Case summary

Supreme Court of Victoria|2012-08-10|Before: CROFT J

PRACTICE AND PROCEDURE - Group proceedings - whether particular group members of Group Proceedings should cease to be group members - whether 'just and convenient', an 'abuse of process' or in the interests of justice to remove particular group members from Group Proceedings - applications dismissed - Bryant v Commonwealth Bank of Australia [1995] FCA 1299; (1995) 57 FCR 287 - Bright v Femcare Ltd (2000) 175 ALR 50 - Supreme Court Act 1986 ss 33KA, 33ZF

EQUITY -Anshun estoppel - risk assumed by particular group members to potential claims of Anschun estoppel in relation to their respective claims in the individual proceedings upon determination of the relevant Group Proceedings - Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589

For Elite Advertising Group Pty Ltd, Adam Cairncross, Orkun Ankara, Bruno Luciani, Elizabeth Penter and Edgar Penter

1 This is an application by the Bendigo and Adelaide Bank parties for orders under s 33KA and/or s 33ZF of the Supreme Court Act 1986 that certain specified persons cease to be members of the relevant Group Proceedings.

2 The applications are made by summons filed on 30 May 2012 in each relevant group proceeding listed in the attached Schedule of Relevant Group Proceedings. The parties rely on affidavit evidence filed to date and which is referred to in their written submissions. Although these reasons are formally addressed to these proceedings, the Clarke proceedings, there are other proceedings before the Court which are the subject of similar applications. It was accepted that these reasons will be substantially applicable to and dispose of the applications in the other proceedings. On this basis, these reasons are intended to have broader application than the Clarke proceedings.

3 It is uncontroversial in the present application that the Court has very broad powers under s 33KA and/or 33ZF to do whatever is appropriate and necessary in representative proceedings such as these: "to do whatever is appropriate or necessary in the interests of justice ...", to echo the words of Wilcox J in McMullin v ICI Australia Operations Pty Ltd.[1]

4 Section 33KA gives the Court a discretion to order that a person cease to be a group member,[2] which discretion is exercisable in "very wide" circumstances.[3] The considerations to be reviewed in exercising the discretion are broad due to the width of the power under s 33KA.[4] However, the overall consideration is the ascertainment of what is just and expedient in the circumstances of the case.[5]

5 Where the maintenance of a member in a group proceeding gives rise to an abuse of process, the Court will exercise its powers under ss 33KA and/or 33ZF and make orders modifying the manner in which a group proceeding proceeds to ensure that it is carried on in a just and expedient manner and that justice is done. The principles in relation to abuse of process and Anshun estoppel,[6] principles applicable to proceedings in general, are also relevant in the present context. The Court's wide powers under ss 33KA and/or 33ZF, are compatible with and exercisable in circumstances consistent with the exercise of the Court's inherent jurisdiction to prevent abuses of process and ensure the administration of justice.[7]

6 The Bendigo and Adelaide Bank parties helpfully summarise some important authorities in relation to abuse of process and refer to the principles in relation to Anshun estoppel, with reference to Anshun's case and also, by way of example, Bryant v Commonwealth Bank of Australia[8] and Bright v Femcare Ltd.[9]

7 Having regard to the authorities, I accept the statement of the position and relevant principles, in the present context, in relation to abuse of process and Anshun estoppel as set out in the Bendigo and Adelaide Bank parties' submissions, particularly the following:

"12. In general terms, the Court's inherent jurisdiction to stay proceedings on the grounds of abuse of process extends to all those categories of case in which the processes and procedures of the Court, which exist to administer justice with fairness and impartiality, may be converted into instruments of injustice or unfairness.[10]

...

14. A well recognised class of 'abuse of process' is where proceedings are instituted against a party in a second forum when there are proceedings against that party pending in another forum.[11] In those circumstances, the continuance of the second proceeding constitutes an abuse of the process of the first.[12]

18. The principles in relation to Anshun estoppel are also relevant in these circumstances where the Listed Members have not opted out of the relevant group proceedings and seek to maintain claims in the individual proceedings that are additional or different to the claims in the group proceedings.

8 Returning now to the more specific aspects of this particular application, I begin by making reference to the Outline of Submissions for the Defendants/Opponents to the Summonses.[13]

9 In paragraph 2 of those Submissions, reference is made to the nature of the defences and counter/cross claims in the relevant proceedings which it is observed are defensive and ultimately seek to impugn the Loan Deeds sued upon. The relevant Group Proceedings to which the defendants/opponents to the summonses are currently group members and the individual proceedings to which they are a party are respectively tabulated in paragraph 3 of those Submissions as follows:

Supreme Court of New South Wales Proceeding No. 2010/291335

Supreme Court of New South Wales Proceeding No. 2010/298443

County Court of Victoria Proceeding No. CI 11 00607

County Court of Victoria Proceeding No. CI 11 00543

County Court of Victoria Proceeding No. CI 11 02122

County Court of Victoria Proceeding No. CI 11 02139

10 It is acknowledged in paragraph 7 of those submissions that the pleadings in the individual proceedings are nevertheless not on "all fours" with the pleadings in the Group Proceedings. However, it is submitted that all pleadings share substantial common issues of law or fact between each group member on the one hand and the Bendigo and Adelaide Bank parties on the other hand. In my opinion, this position is supported by the affidavit material - and exhibits - before the Court in the Clarke Group Proceedings and other applications.

11 The submissions in opposition contend that for the reasons set out (in paragraphs 4 to 9 particularly), it would not be in the interests of justice to accede to the application. Particular reference should be made to the matters set out in paragraphs 5, 8 and 9 in these submissions, as follows:

"5. Each application by the Bendigo and Adelaide Bank Parties is contrary to the prime purpose of the class action legislation.[14] At the risk of restating what is apparent, class actions allow a person to take legal action on behalf of a group of people who have claims against the same person or persons, arising in related circumstances and dealing with common issues of law or fact. They save the court and parties' time and expense by aggregating litigation. They provide group members with access to the courts where they otherwise may not have had access.

...

8. It is not in the interests of justice to order that 6 of the group members cease to be group members. Ultimately, each application is advanced on the grounds that the Bendigo and Adelaide Bank Parties have commenced debt recovery actions against the 6 specified group members who have defended the claims by filing defences and counter/cross claims. The grounds upon which the Bendigo and Adelaide Bank Parties seemingly bring each application do not deal with the incontrovertible position that there are common issues to be resolved and it cannot be in the interest of judicial efficiency or the public interest to deal with them in separate proceedings. One of the two core purposes of the Part IVA legislation stated by the Commonwealth Attorney General Mr Michael Duffy in the second reading speech[15] (on the enactment of class action legislation in 1992) was to enhance judicial efficiency by encouraging the adjudication of individual claims in a single proceeding.
9. In Bright v Ferncare [2002] FCAFC 243, Lindgren J noted at [28] '[A]n issue itself can be common even if the respondents establish that they will adduce different evidence from claim to claim in dealing with it' and Finkelstein J said at [156] 'I simply do not accept that one action can cost more than what may amount to hundreds of actions.'."

12 The submissions in opposition also observe that the Bendigo and Adelaide Bank parties have asserted in relation to the proceedings in the Victorian County Court that "[I]n circumstances where your client has pleaded his individual defences and counterclaim in the County Court proceedings on terms that are not on all fours with the claims in the Group Proceedings, it would be an abuse of process for him to remain a member of the Group Proceedings".[16]

"12. The suggestion that the use the Court's procedures (by filing defences and counter/cross claims in proceedings instituted before the commencement of the foreshadowed Group Proceedings) would bring the administration of justice into disrepute should be rejected.

13. In Rogers v The Queen[17] Mason CJ at [256] identified two aspects of abuse of process, namely:

'... first, the aspect of vexation, oppression and unfairness to the other party to the litigation and, secondly, the fact that the matter complained of will bring the administration of justice into disrepute.'

14. His Honour noted at [255] the recognition by the majority of the High Court in Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509, that:

'the concept [of abuse of process] extends beyond use of court processes for ulterior purposes to the use of such processes so as to cause vexation or oppression'.

15. The Bendigo and Adelaide Bank Parties will not discontinue or stay the other proceedings pending the outcome of the Group Proceedings. The Group Proceedings have been fixed for hearing commencing on 17 September 2012. In the other proceedings, the pleadings have recently closed and (except for the proceedings in the Supreme Court of New South Wales where the Bendigo and Adelaide Bank Parties have served evidence) directions have not been made for the service of evidence or discovery.
16. Assuming for the purpose of argument that the 6 group members are excluded and the other proceedings continue, the Group Proceedings are likely to be determined before the other proceedings. Having regard to the common issues of fact and law and the fact that the Bendigo and Adelaide Bank Parties will be bound by any judgment in the Group Proceedings, the continuance of the other proceeding would be unjustifiably vexatious and oppressive for the reason that it will involve the determination of issues that will be disposed of by the Group Proceedings."

14 Reference is then made in these submissions (paragraph 17) to the unsatisfactory consequences that would, on this basis, flow from making the orders sought by the Bendigo and Adelaide Bank parties.[18] There is, in my view, much force in these submissions.

15 A critical matter that does, in my opinion, appear to be clear in the present context is that the Group Proceedings will - with a trial commencing on 29 October 2012 - be heard and determined before the hearing and determination of any of the individual proceedings[19] - in whichever court the individual proceedings are now or in which they remain. Given significant commonality of issues - or at least likely critical issues - it is reasonable to expect that resolution of the Group Proceedings will assist in the complete resolution of the individual proceedings without trial, or by trial on a greatly reduced number of issues.

16 On the basis of the principles and authorities to which reference has been made, I am of the opinion that it is more than likely that if any party, sought to pursue the individual proceedings involving issues determined by - or in the process of being determined by the Group Proceedings - the individual proceeding or proceedings would be stayed on the basis of abuse of process, Anshun estoppel or, perhaps, election depending on the particular circumstances. I do not accept that the comment by Lehane J in Bright v Fermcare[20] detracts from this position in the present circumstances - where the Group Proceedings will be heard and determined prior to the individual proceedings being pursued.

17 For these reasons, having regard to the likely extent of common issues as between the Group Proceedings and the individual proceedings, the cost and expense involved in agitating these issues in separate proceedings and the risk of the administration of justice being brought into disrepute as a result of inconsistent findings, it is more than highly desirable that this situation be avoided if possible. The provisions of the Civil Procedure Act directed to achieving expedition and cost effectiveness in litigation also militate against a multiplicity of proceedings.

18 A further consideration is that it is, in reality, the opponents of this application who bear the risk of not being able to agitate all aspects of their defences or counterclaims by electing to remain group members. The risk they run is that on determination of the Group Proceedings, they will not be permitted - on the basis of abuse of process, Anshun estoppel, election or perhaps on other bases - to pursue all or any aspects of their defences or counterclaims in the individual proceedings.

19 The Bendigo and Adelaide Bank parties identified no prejudice other than uncertainty whether a party to the individual proceedings would seek to pursue further issues in those proceedings. Whilst one might understand that the Bendigo and Adelaide Bank parties would prefer to resolve the uncertainties associated with possible further litigation as soon as possible, this does not, in my view, render it "just and expedient" to exclude the parties to the individual proceedings from participation in the Group Proceedings. This exclusion at this stage would, having regard to the magnitude of the issues raised in the Group Proceedings and the discovery process and interlocutory steps involved, be likely to deprive these parties of the chance to pursue their position against the Bendigo and Adelaide Bank parties. This is a very significant and serious potential prejudice which could not be undone - unlike any possible prejudice to the Bendigo and Adelaide Bank parties which, for the reasons I have indicated, is insignificant in this context in terms of uncertainty, concerns and, more substantially, is unlikely to arise in any event. Further, as indicated, it can be addressed if it does arise. Moreover some reassurance may be derived by the Bendigo and Adelaide Bank parties from submissions in the course of the present applications.[21]

20 In summary, I see no prejudice to the Bendigo and Adelaide Bank parties in allowing the parties to the individual proceedings to take the risk of being unable to pursue those proceedings by remaining as group members.

21 For these reasons, I am of the opinion that the Court should refuse the application of the Bendigo and Adelaide Bank parties. Consequently, and absent any circumstances providing any basis to depart from the usual rule, costs will follow the event. Orders have been made accordingly.

GREAT SOUTHERN FINANCE PTY LTD (RECIEVERS & MANAGERS APPOINTED) (IN LIQUIDATION)