Cook v Pasminco Ltd [2000] VSC 534

Cook v Pasminco Ltd [2000] VSC 534 - VSC 2000 case summary — Zoe

[20]

The submission appeared to be that the legislation to which I have referred (and at that time a fortiori the sub-delegated legislation encompassed by the Rules made pursuant to s.25 of the Supreme Court Act) is incapable of having extra-territorial effect on substantive rights. This arose, it was put, by reason of the general law imposing known limitations on the legislative competence of State Parliaments. The essence of the argument is that such legislation is capable of extra-territorial effect only when there is some sufficient connection between the State and the extra-territorial person, thing or event on which the legislation operates. Reliance was placed upon statements made by the High Court in Port Macdonnell Professional Fishermen's Association Inc. v. South Australia[2]. It was further argued that s.16 of the Constitution Act 1975 of the State of Victoria, which provides in specific terms that the Victorian Parliaments have the power to make laws in and for Victoria in all cases whatsoever, was subject to implied limitations on the extra-territorial powers of State legislatures, alleged to arise by virtue of the Commonwealth Constitution. Other than that claim, namely, that State legislative powers were limited so as to render impermissible extra-territorial effect, no detailed argument was advanced to explain why s.2(1) of the Australia Act 1986 of the Commonwealth of Australia (which makes specific provision that the legislative powers of the State Parliaments include full power to make laws for the peace, order and good government of the States that have extra-territorial operation) did not have application in this case. The general argument was that that enactment did not overcome the limits imposed by the Commonwealth Constitution, although the section or sections of the Constitution was not specifically identified. I therefore deem it that the argument was really founded upon the limits necessary to be imposed on State legislation in a federation where the Federal Parliament has itself a Federal sphere of legislative activity. With regard to this part of the argument, counsel for the defendants made no submissions at all.

[29]

There is of course no Federal jurisdiction being exercised in this case and accordingly ss.79 and 80 of the Judiciary Act are not relevant. Part 4A does not create the civil wrong or wrongs sued on in this case nor does it declare that any relevant act or omissions shall be wrongful. Part 4A creates a procedure for determining and enforcing rights of a wider kind. That does not make the statute purely procedural because its effect in a case of non-opt out is to bind all group members whether they actually know of the proceeding or not. Thus it affects substantive rights, or at least may do so.[8] The establishment by Part 4A of the group proceeding mechanism is the creation by this State of a means of enforcing obligations arising from acts arguably done both inside and outside the territorial jurisdiction of the State of Victoria. It is to be noted that there is nothing in Part 4A to denote the limitations relied on by the defendants. It is enabling legislation which confers rights upon group members who are not named parties to the proceeding and as such the legislation operates with respect to persons. Whilst there might be arguably good policy reasons for limiting the ambit of Part 4A, Part 4A does not itself create any limitation. On the contrary Part 4A in fact contains and confers on the Court a power which is additional to any power purported to be created by Rule 18A in that s.33KA expands the Court powers concerning group membership by enabling the Court, either on the application of a party to a group proceeding or of its own motion, and whether before or after judgment, to order (a) that a person cease to be a group member, or (b) that a person not become a group member, if it is of the opinion that the person does not have sufficient connection with Australia to justify inclusion as a group member or (c) for any other reason that is just or expedient that the person should not be or should not become a group member. One notes that the Act did not make provision for a court to make an order under sub-s.(1) if it was of the opinion that the relevant group member did not have sufficient connection with Victoria, to justify inclusion as a group member.

[39]

"The second principal objection to Order 18A was that it purports to extend the jurisdiction of the Court in a manner not authorised by s.25. In essence the complaint rested on two elements, first, that persons could be joined effectively as plaintiffs without their consent, and, second, that the result of a group proceeding is intended to bind conclusively all members (except those who are able to and choose to opt out), so as to create res judicata between them and the defendant. Indeed, r.18A.27 requires the Court at the time of judgment to 'describe or otherwise identify' all such group members who by para (b) are explicitly stated to be bound. The defendant asserts that under O.18A parties may be so affected who have no knowledge whatever of the proceedings and who will not have been served under the conventional rules as to service, including those permitting substituted service. In my opinion there is no reason why the Court should not effectuate by rule of court these consequences of group proceedings. Unless it be asserting jurisdiction over persons outside the jurisdiction..., this Court may make rules as to how parties are joined and are represented in proceedings in the Court. Substituted service not infrequently is ineffective to bring proceedings to a party's notice..., but the Court recognises that that may be a necessary consequence of enabling certain plaintiffs to obtain relief to which they are entitled. There is no direct equivalent for plaintiffs, but the practice has existed for many years of binding unwilling plaintiffs by joining them as defendants to whom substituted service may be directed. More importantly, in the present context, for many centuries... the courts have permitted, in one way or another, parties to sue (and be sued) by representatives who have either claimed the right to sue on behalf of others or, more frequently (but not invariably) and in recognition of such claims, have been authorised or permitted by the courts in more recent centuries to sue or be sued on their behalf.... The Chancery practice, later adopted in Judicature Act rules, has been authoritatively expounded in relation to both the 'traditional' representative suit... and Part IVA of the Federal Court Act in, respectively, Carnie v. Esanda Finance Corp Ltd.... and Wong v. Silkfield...." Joinder is clearly a matter for courts to prescribe as a matter of practice and procedure, but one may concede that the binding effect of judgments and the principles of merger of judgments, res judicata and issue estoppel are substantive. Insofar as O. 18A purports to change or expand those rules then one could only justify r.27 if it were possible to treat this attempt to bind absent parties as no different in substance from that recognised as flowing from the effect given to orders under O.18 and the like. Doubtless the classes represented by 'group members' as defined by the new Order... are wider than even the High Court... was prepared to encompass under the existing procedures, but the means of communicating with them and their rights to opt out are more extensive. ... More importantly Rule 18.04, unlike the former O.XVI r.9, specifically provides in para (1) that judgments and orders under that rule "shall bind the parties and all persons as representing whom the parties sue or are sued", though leave is required before the judgment or order is enforced. The binding force of such orders is thus dealt with explicitly and the rule-making power ought to taken as extending to justify r.18A.27, unless the subject-matter of the new Order is to be seen as something quite different in character. No doubt the procedure is more elaborate and its scope is significantly wider, but in my opinion it is essentially an order permitting representation of absent parties, as are Orders 18 and 16. Whatever be its practical effect, Order 18A merely creates a "new form of representative proceedings", as their history demonstrates and as the High Court described the almost identical provisions of the Federal Court Act Part IVA in Wong.... I do not accept the defendant's analysis of the new procedure embodied in Order 18A. Consequently in these respects it did not go beyond the Court's rule-making power."

[52]

The argument to me by Mr Rowe for the plaintiffs was that the first defendant did dominate the second and third defendants so that they were mere conduits for the parent, and that the exercise of dominance over the management and operation of the smelter had the effect of creating and increasing the risk of injury to the plaintiffs and the group members, thus rendering the first defendant responsible in the whole of the circumstances. In support of these general propositions, the plaintiffs relied upon the reports to which I have referred (certain features of which I will shortly identify), and historical company searches that showed some commonality of directors. He also submitted that the effect of the Annual Reports and the environment reports led to the conclusion of control. It was submitted for the plaintiffs that the Pasminco Environment Report for the year 1999 specifically referred to Pasminco Ltd as the entity which "operates and markets the output from three primary smelters in Australia - the Cockle Creek ISF Zinc and Lead Smelter, the Hobart Electric Zinc Smelter and the Port Pirie Lead and Zinc Smelter". He claimed that it was clear on reading that report that it was the first defendant which accepted international responsibility on environment matters. It was noted that the "feedback" form annexed to that report was addressed to, and to be posted to, Pasminco Ltd. and not to the subsidiaries. He paid particular attention to the Annual Report of the year 2000 referring to the reference on page 2 to "The company operates and markets the output from the three primary smelters in Australia", to the detailed references to the operations of the subsidiaries and to the statement of the Chairman and Managing Director of the first defendant as to the "introduction of company-wide safety management standards and beliefs" and the work of the parent company in significantly raising the awareness of safety issues across the group. Attention was drawn to the distinction made from time to time between the group and the first defendant (see pages 6-7). He argued that the way in which the operations were treated showed that the group was an entity, referring to multiple references in the report including "Pasminco's safety and management standards and beliefs were rolled out and integrated across the group". He relied on statements on page 50, under the heading "Risk Assessment and Management": "The Board as a whole monitors and receives advice on areas of operation and financial risk ...". He relied on the principles of consolidation referred to in most of the financial statements to the effect that the consolidated accounts incorporated the assets and liabilities of all entities controlled by Pasminco Ltd, thus the subsidiaries.

[60]

I therefore turn to the argument derived from the terms of s.33C(1)(a). The defendants contend that the law is that in order to satisfy s.33C(1)(a) each named plaintiff in a group proceeding must have a claim against each defendant. Reliance was placed upon Philip Australia Ltd. v. Nixon[28]; Bright v. Femcare[29]; King v. GIO Holdings[30] and additionally Ryan v. Great Lakes Council[31] and Tropical Shine Holdings Pty.Ltd. v. Lake Gesture Pty Ltd.[32] The fundamental submission of the defendants is that the first and second plaintiffs are claiming only against the first and second defendants and the third and fourth defendants are claiming only against the first and third defendants. I put aside the argument advanced that none of the plaintiffs can have a claim against the first defendant. I have already indicated that on the basis of the present material I am prepared to conclude that there is an arguable case for the first defendant having control of the second and third defendants permit it to be inferred for the present purpose that it operates the relevant smelters. Alternatively, but to the same effect, that the defendants should be regarded as a single entity. Notwithstanding that, the case as argued for the defendants was that an inability to comply with the threshold requirements of s.33C(1)(a) exists because the first and second plaintiffs have a connection only with Cockle Creek and none with Port Pirie, and the third and fourth plaintiffs have a connection with Port Pirie and none with Cockle Creek. Thus, it is said, the first and second plaintiffs could have no claim against the third defendant and the third and fourth plaintiffs could have no claim against the second defendant. If the argument is correct, then the defect is not confined to the statement of claim but is embodied in the writ. As a corollary to the argument that it is self-evident that the plaintiffs themselves do not each have a claim against each defendant, it is submitted that that same proposition is applicable to the group members because of the way in which they are described and defined. It is to be observed that the statement of claim deals separately with two distinct groups.

[69]

The defendants argue that there is no authority in support of the claim, said to be here made, that plaintiffs and group members may have entirely different causes of action against the same defendant or defendants. The proposition thus was that one could not have a properly constituted group proceeding in which a cause of action, if not open to a named plaintiff, could be maintained on behalf of the group members. The plaintiffs complained that, if this were so, it was being alleged that even if the second, third and fourth plaintiffs had standing to bring a claim for property damage and diminution of its value they could not represent the Cockle Creek group members in any such claims. Reliance was placed on statements of Moore, J. in King v. GIO Holdings[38] in which his Honour appeared to place some limits on the decision of Philip Morris v. Nixon namely that although each member must have a claim against the respondent, the claim for the purposes of s.33C(1)(a) does not necessitate the same relief being obtained nor need it be based upon the same conduct because it may arise out of different transactions with the respondent. His Honour identified the important feature as being that the claims must have unifying characteristics to come within Part IVA, to be founded on the same or related circumstances and to give rise to substantial common issues of either fact or law. Thus his Honour in that case declined to construe the word "claim" narrowly and concluded that and that the proceeding might still be brought if even one applicant could not maintain one of the causes of action pursued in the proceeding (pursued by other applicants and members of the representative group). He declined to treat the word "group" as requiring or meaning a common cause of action, because members of the group might have different causes of action against the same respondent which would not inhibit the proceeding as a group proceeding. Clearly the claims must have sufficient in common to satisfy s.33C(1)(b) and (c).

[74]

The defendants argued that the bare fact that the plaintiffs and the groups members effectively fell into two separate classes, one in New South Wales at Cockle Creek and one in South Australia at Port Pirie was itself enough to preclude compliance with s.33C(1)(b). Expressed as starkly as that, that proposition may be doubted. But it is the plaintiffs who have to make it appear that the relevant relationship of circumstances exists. It does not strike my mind as reasonable to conclude that the circumstances were related simply because there was a common defendant or defendants and that smelting was taking place. Some form of emissions is bound to be produced by all forms of smelting. It can hardly be said that the claims of the first group arising from the environment affected by the emissions at Cockle Creek arising from the operation of the first and second defendant, are related to the events in Port Pirie where the smelter is operated by first and the third defendants. Apart from the claims of personal and property damage and the fact that smelting was taking place in each location, there does not appear to be any connection between the circumstances from which the claims of the various group members arise other than that the claims are made against the defendants. I leave aside the difficulties that may arise in denoting sufficient circumstantial connexion between a person claiming damages for diminution of property value with those asserting the sustaining of physical injury. That may be capable of being concluded favourably to the plaintiff. But a more specific difficulty is that the varied nature and extent of the facts which underpin the claims of the various plaintiffs and group members, the broad and inexact delineation of the relevant area (five kilometre radius from the smelters), the absence of any described period of time over which the torts and the losses allegedly occurred and the likely variety of circumstances that prevailed at different times and places in each place. These constitute a formidable obstacle to a reasoned conclusion that the claims of all of the plaintiffs and group members are in respect of or arising out of related circumstances. Put simply, the circumstances are so mixed as to parties, events, losses, factors of time and place that make the perception of the similarities of circumstances verging on the impossible.

At a glance

Court

Decision date

Before

Source

Judgment (125 paragraphs)

Parties