Ekaton Corporation Pty Ltd v Shahin Enterprises Pty Ltd; William Edwin Hall & Anor v British American Tobacco Australia Services Ltd; Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd, Joanne Margaret Gow & 2 Ors v Stuart Alexander & Co Pty Ltd, Garry George Adams & Anor v Philip Morris Limited, Arrilla Pty Ltd v ACN 001 259 301 Pty Ltd formerly Australian Independent Wholesalers Pty Ltd; Dale Leslie Berney v Australian Liquor Marketers Pty Ltd; Whelan & Hawking Pty Ltd v IGA Distribution - [2003] NSWSC 1018 - NSWSC 2003 case summary

Judgment (25 paragraphs)

[1]

Background 1 These proceedings were before the Court on 3, 4 and 5 September 2003 when a number of notices of motion pressed by disparate parties were heard. A reserved judgment in relation to those motions was delivered on 11 September 2003. It is inappropriate to here repeat those reasons or the record. The altered proposed case management procedure referred to at [168] and following gave rise to limited leave being given to the parties to address on relief [173]. Likewise the parties were given leave to further address in relation to the effect of the reasons on the motions insofar as concerning the Adams proceedings [173]. The new motions 2 The present procedural position may be shortly summarised as follows: · by notices of motion filed on 30 September 2003 in most of the proceedings [and by an amended notice of motion filed on 31 October 2003 in the Ekaton Corporation proceedings] each plaintiff seeks that persons identified in particular lists be given leave to elect to be joined as plaintiffs in the proceedings by filing in the Registry a written consent to being so joined. These are persons referred to during the hearing as "the 2100" said to have already appointed Firmstone as their agent and to have already agreed to the 33 percent fee [168]; · these orders are sought pursuant to the inherent jurisdiction of the Court or, in the alternative, pursuant to section 81 of the Supreme Court Act 1970 or, in the further alternative, pursuant to Part 8 rule (2)(b) of the Supreme Court Rules. [In written submissions the plaintiffs also sought to rely upon Part 8 rule 8] 3 The motions are opposed by the several sets of defendants. They generally seek similar orders along the following lines:

[2]

that the proceedings not continue as representative proceeding;

[3]

that the notices of motion filed on 11 August 2003 and 30 September 2003 be dismissed;

[4]

that the proceedings be dismissed [or alternatively permanently stayed on the basis that they amount to an abuse of process]. Costs 4 All defendants seek orders for costs as against the plaintiffs. Although there are variations in the precise claims, most of the defendants seek orders that in the event that the plaintiffs are unable to pay the defendants costs, those costs be paid by Firmstone with leave, in the event that Firmstone be unable to meet the costs order, for the parties to apply to seek an order against Mr Firmstone in relation to the undertakings. [Exhibits P4 and P 5] The written submissions 5 The parties have between them produced, on my count, over 100 pages of submissions. They extend to cover an impressive range of matters of principle and procedure and further treat with a range of factors going to the exercise of the Court's discretion in what can only be regarded as a likely unique and certainly extremely unusual procedural position. It may be noted that the plaintiffs moved slightly outside the terms of the motions in their written submissions. 6 In the view which I have reached the matter may be dealt with in relatively small compass. The essential question 7 Stripped of the sundry-multi layered attack of the defendants, the essential or at least a critical threshold question concerns the proper construction of particular of the Supreme Court Rules. 8 The plaintiffs immediately accept that in accordance with the Court's reasons it is clearly appropriate for the Court to "otherwise order" pursuant to Part 8 rule 13 (1), so that each of the proceedings no longer continues as representative proceedings. 9 The plaintiffs however contend that the situation which now obtains enlivens the jurisdiction of the Court under Part 8 rule 8 (1) (b) by order to permit the 2100 to be added as parties. It will be recalled that a Part 8 rule 8 (1) is in the following terms:

[5]

8(1) Where a person who is not a party - (a) ought to have been joined as a party; or

[6]

(b) is a person whose joinder as a party is necessary to ensure that all matters in dispute in the proceedings may be effectually and completely determined and adjudicated upon,

[7]

the Court, on application by him or by any party or of its own motion, may order that he be added as a party and make orders for the further conduct of the proceedings." 10 Part 8 rule 2 (b) is also relied on. Part 8 rule 2 provides:

[8]

"Joinder of parties generally Two or more persons may be joined as plaintiffs or defendants in any proceedings - (a) where - (i) if separate proceedings were brought by or against each of them, as the case may be, some common question of law or of fact would arise in all the proceedings; and

[9]

(ii) all rights to relief claimed in the proceedings (whether they are joint, several or alternative) are in respect of or arise out of the same transaction or series of transactions; or (b) where the Court gives leave so to do." 11 The problem then concerns the field of operation of Part 8 rule 11 (3) (b). Part 8 rule 11 (3) provides:

[10]

"3. Where in any proceedings a party is added otherwise than pursuant to an order under rule 10 or Part 20 rule 4 (3), the date of commencement of the proceedings so far as concerns him shall be: (a) where he is added as a defendant - the date on which the amendment adding him as a defendant is made or the date of entry of his appearance or the date of filing his defence, whichever is earliest, (b) otherwise - the date on which the amendment adding him as a party is made." 12 The short proposition for which the plaintiffs contend is that the reference in this sub-rule to "a party [being] added" does not encompass a circumstance where a party is already represented, albeit irregularly, by proceedings commenced under Part 8 rule 13. 13 The defendants contend to the contrary. 14 The matter was treated with in the reserved judgment upon an assumed basis. That treatment [159] - [167] made the point that in Cameron v National Mutual Life Association of Australasia (No 2) [1992] 1 Qd. R 133, McPherson SPJ had not considered it necessary to determine whether the unnamed plaintiffs were also "parties" to the original action, his conclusion having been that the crucial question was whether the action was, within the meaning of the Limitation of Actions Act 1974 (Qld), "brought" by the unnamed plaintiffs at the time the writ was issued. 15 There is a distinction between the two concepts. I do not understand paragraph [167] of the reserved judgment as holding that persons said to be represented in regularly commenced Part 8 rule 13 proceedings are parties to the proceedings within the meaning of the rules examined below. However the matter remaining interlocutory and having been closely re-argued in the further hearing, if and to the extent that the reasoning at [167] may be read as inconsistent with the findings which are set out below, the latter findings represent the Court's reconsidered findings. 16 This cannot in any way affect the result for the reason that as set out below, the finding is that the assumed basis (reserved judgment [156]) upon which the whole of the relevant section of the judgment proceeded, has not been made out, that is to say, the proceedings were not properly commenced within the meaning of Part 8 rule 13 (1). 17 I have reached the conclusion that the defendants' contentions are correct. The reasons are as follows: · first, the proposition for which the plaintiffs contend is misconceived in making the assumption that where representative proceedings are regularly commenced under Part 8 rule 13 by a plaintiff on behalf of numerous persons with the same interest, the persons so represented are to be regarded as parties to the proceedings. For the reasons set out below this is not the case; · however even if this assumption which underpins the plaintiffs proposition be correct, proceedings as here, irregularly commenced, [it presently being taken as a given that the making of an otherwise order is appropriate] cannot confer the status of "parties" to the proceedings upon those whom the plaintiffs, in commencing the proceedings, purported to represent; · this is not to say that the proceedings are a nullity. They are not. But nor are they representative proceedings within the meaning of Part 8 rule 13. Toohey and Gaudron JJ made the point in Carnie v Esanda Finance Corporation Ltd (1995) 182 CLR 398 at 421, where they emphasised that the basic question was whether the rule is applicable: "That question, stated in terms of the rule, is this: Do numerous persons have the same interest in the action which the appellants have commenced? If they do not then that is the end of the matter . If they do, then the action is properly begun and, unless the Court otherwise orders, it may be continued." [emphasis added]; · the proceedings are appropriate presently to be regarded as conventional non-representative proceedings in which the named plaintiffs sue the named defendants - there are no other parties; · the status of a person whom the plaintiffs, in commencing the proceedings, claimed to represent is in the circumstances, that of a non-party. 18 Part 8 rule 2 being inapplicable because it refers to the joinder of plaintiffs at the time of commencement of proceedings, what follows is that the only route available to alter the record so that a person whom the plaintiffs in commencing the proceedings, incorrectly claimed to represent, may become a co-plaintiff, is by an application pursuant to Part 8 rule 8 to add that person as a party [as earlier noted it is Part 8 rule 8 (1) (b) which the plaintiffs seek to mobilise]. 19 The application so pressed should be dismissed for a number of reasons. Futility 20 The first is that the effect of joinder of the 2100 would be that in each case, the proceedings would commence at the time the amendment joining them is made: Part 8 rule 11 (3). As this would be a time after the expiration of the limitation period, the joinder would be futile. The Court will not make a futile order. 21 It is appropriate to refer to the statements in this Court that, subject to some limited exceptions (none of which are presently relevant), the Court's power to add new parties must be exercised within the constraints and subject to the provisions of Part 8 of the Supreme Court Rules: Wenham v General Credits Limited (Supreme Court of New South Wales McClelland J, 16 December 1988 unreported), Fernance v Nominal Defendant (1989) 17 NSWLR 710 at 718 per Gleeson CJ). 22 The interaction between section 81 of the Supreme Court Act and Part 8 rule 11 (3) was considered in Fernance. The plaintiff, in early July 1983, obtained an extension of the limitation period until 23 July 1983 to allow it to add a further defendant, but then failed to file an amended pleading until March 1985. Objection was taken to the filing of the amended pleading and the plaintiff filed a notice of motion seeking leave to amend the pleading. The plaintiff called in aid, section 81 and Part 20 and the defendant Part 8, rule 11(3). 23 The constraints within which the Court's power to add new parties must be exercised was emphasised in the following passage of the judgment of McClelland J in Wenham [cited with approval by Gleeson CJ in Fernance at 718]:

[11]

"In my opinion, except to the limited extent permitted by Pt 20, r 4 (3), (which has no present application), and subject to the question of the existence of any inherent power in the court to grant leave to a non party to intervene (which has no present relevance), the court's power to add new parties must be exercised within the constraints, and subject to the provisions, of Pt 8 of the Supreme Court Rules …." 24 Gleeson CJ went on to observe [at 720] that:

[12]

"It is to be borne in mind that, in New South Wales as in England, it is the Rules of Court which determine when an action is begun for the purposes of the Limitation Act , and not the Act itself. It was argued in this Court that the reference in Pt 8, r 11 (3), to "the date of commencement of the proceedings" may have a purpose and significance in relation to matters other than the limitation of actions. That may well be so, but it is impossible to resist the conclusion that at least one of the principal purposes of the provision is to deal with the subject matter which needs to be addressed by rules permitting the adding of parties to proceedings, that is to say, the question as to when, in that event, an action by order against the new party will be taken to have been commenced for the purpose of the Limitation Act . As has been seen, this is a matter which has long been the subject of specific provision in the English rules." 25 The plaintiffs contend that there is no limitation defence and therefore no futility in the orders being made. This is the contention rejected above that each of the 2100 were and are persons represented in the several sets of proceedings and that until the Court "otherwise orders" pursuant to Part 8 rule 13, each of the 2100 continues so to be represented. Section 81 26 In relation to the same issue the plaintiffs contend that section 81 of the Supreme Court Act is apt to apply to the present circumstances. The proposition is that the words of section 81 (1) are words of generality:

[13]

"Where, in beginning or purporting to begin any proceedings or at any stage in the course of or in connection with any proceedings, there is, by reason of anything done or left undone, a failure to comply with the requirements of this Act or of the rules whether in respect of time, place, manner, form or content or in any other respect… the failure shall be treated as an irregularity and shall not nullify the proceedings, or any step taken in the proceedings or any document, judgment or order in the proceedings…". 27 Gleeson CJ [with whom Clarke JA agreed] in Fernance dealt with the attempt to rely upon section 81 as follows:

[14]

"Finally, the plaintiff relied on s 81 of the Supreme Court Act 1970 which gives the Court power to overlook or rectify irregularities. It was submitted that the consent order made by Master Greenwood should be treated as an implied grant of leave to amend, that by virtue of the provisions of Pt 20 there was then an obligation to file an amended document within fourteen days, and that the failure to comply with that time limit was the relevant irregularity.

[15]

The first difficulty with this submission, and with any attempt to rely on s 81 in the present case, is that there was no "failure to comply with the requirements of (the) Act or of the rules" but merely a failure by the plaintiff to take advantage of an opportunity, limited in point of time, created by the consent order. That order, pursuant to statute, extended by a certain time the limitation period in relation to the plaintiff's claim against Mrs Vaneck and, in effect, gave the plaintiff leave to propound that claim within the specified time. That leave was not taken up.

[16]

There is, however, a more fundamental difficulty about seeking assistance from s 81. The Limitation Act 1969 by its terms operated to extinguish the cause of action against Mrs Vaneck. That cannot, in the circumstances of the present case, be undone by an exercise of the power given by s 81, especially when regard is had to the nature of those powers. I note that the President, whose reasons I have had the advantage of reading, proposes that the intended result be achieved by ordering, pursuant to s 81, that the plaintiff now have leave to file an amended statement of claim against Mrs Vaneck. Such an order would presumably be made pursuant to s 81(1)(b) which empowers the Court to "exercise its powers under this Act and the rules to allow amendments". The relevant power to allow amendments is, however, for the reasons earlier given that contained in Pt 8, r 11, and subr (3) provides that if and when an amended statement of claim is filed the date of commencement of the proceedings against Mrs Vaneck will be the date of such filing. That will be too late. I see nothing in s 81 that empowers this Court to amend Pt 8, r 11. Treating the Rules of Court as slaves rather than masters does not warrant their emasculation." (at 723-724) 28 I reject the plaintiffs proposition that:

[17]

"The Court's finding that the "represented plaintiffs" [a term which for the reasons given above is an inapt description of the 2100 in the circumstances] do not have the same interest within the meaning of Part 8 rule 13 amounts to a failure to comply with the rules insofar as the proceedings as commenced relied upon Part 8 rule 13 and that this enlivens the power under section 81 to make appropriate orders". 29 This is not a case in which there was a "failure to comply with the requirements of (the) Act or the rules" which could properly ground an exercise of power under the rules. As is clear from the evidence given by Mr Firmstone in his affidavit sworn on 8 August 2003 and in cross-examination on 3 September 2003, these proceedings were structured deliberately and carefully so as to achieve a particular end. The Court infers that a deliberate decision was made not to either join additional plaintiffs to the proceedings or to even name persons said to be entitled to opt in as class members. Inherent jurisdiction 30 Next the plaintiffs seek to rely upon the inherent jurisdiction of the Court. Likewise the plaintiffs seek to rely upon the dispensing power in Part 1 rule 12 of the Rules. 31 In Doyle v The Commonwealth (1985) 156 CLR 510, the Full Court of the High Court held that there was no inherent jurisdiction to make an ex parte order for committal for breach of an injunction, in the face of a rule of court that permitted such an ex parte order, but only subject to the court being satisfied that delay caused by proceeding in the ordinary way on notice might entail irreparable mischief. At 518, the Court said:

[18]

"… a judge cannot dispense with the requirements of the Rules of Court unless the Rules give him power to do so, and when a power is expressly conferred on the court subject to a condition, a judge cannot, by relying on inherent powers, escape from the necessity of ensuring that the condition has been fulfilled." 32 It is a requirement of Part 8 rule 11(3) that the amendment shall have effect from the date it is made. The Rules do not appear to me to allow dispensation with this mandatory requirement. 33 Accordingly, there is no room for the operation of the inherent jurisdiction to deny the operation of Part 8 rule 11(3). 34 However even if the Court had jurisdiction to dispense with the rules in the interests of justice and in that regard to dispense with Part 8 rule 11 (3), the strictures in New South Wales Bar Association v Muirhead (1988) 14 NSWLR 173 at 215-216 [per Mahoney JA] require to be borne in mind. As Santow J pointed out in Karam v ANZ (2000) 34 ACSR 545 at [20], Mahoney JA posed the issue as whether the Court would, permissibly be "putting aside procedural irregularities" or impermissibly be "putting aside principles of law, and according to the impression of the case upon the individual judge… to do what in this sense seems appropriate". As did Santow J in Karam, so do I first pose the question as to whether that jurisdiction, if it exists, should be exercised in the manner the plaintiffs seek. In my view that question should clearly be answered in the negative. That answer is appropriate because the plaintiffs are seen to be endeavouring to use, as a fulcrum, a position which even if their own arguments were accepted, is both momentary as well as lacking in merit, namely a claim dependent upon the fact that the otherwise order which must be made following the earlier judgment has not yet been made. 35 I return to the misconception which the plaintiffs have made in terms of the assumption that where representative proceedings are regularly commenced under Part 8 rule 13 by a plaintiff on behalf of numerous persons with the same interest in proceedings, the persons so represented are to be regarded as parties to the proceedings. 36 Mr Jackman SC took the Court through a careful analysis of a number of the relevant rules. The analysis is adopted as correct. Mr Jackman commenced by referring to Part 8 rule 13 (1) which treats with numerous persons having the same interest and the general representation intent. 37 He then made the point that Part 8 rule 13 (2) uses the words "the plaintiff" and "the defendants" and that sub rule 3 refers to "defendants". 38 Sub rule 4 then importantly provides that: "A judgment entered or order made in proceedings pursuant to this rule shall be binding on all persons as representing whom the plaintiffs sue, or as the case may be, the defendants are sued, but shall not be enforced against any person not a party to the proceedings except with the leave of the Court." 39 It is therefore plain that the plaintiff and the defendant are the parties to the proceedings and that the represented persons are not parties. It is for that reason that subrule (4) refers to the need for leave to enforce against a person not a party. These are persons represented by either the plaintiff or the defendant but they are not parties, expressly so, under the rules. 40 Subrules (5) and (6) go on to provide:

[19]

"(5) An application for leave under subrule (4) shall be made by motion, notice of which shall be served personally on the person against whom it is sought to enforce the judgment or order. (6) Notwithstanding that a judgment or order to which an application under subrule (5) relates is binding on the person against whom the application is made, that person may dispute liability to have the judgment or order enforced against him on the grounds that by reason of the facts most particular to his case he is entitled to be exempted from the liability ". 41 These, as Mr Jackman submitted, are references to persons who are not parties. The Court has a discretion to order that a judgment or order not be binding on those persons. 42 Mr Jackman then submitted as follows:

[20]

"Now, that is reinforced if one goes back to Part 8 rule 2. The heading for Part 8 rule 2 is, "Joinder of parties generally". There is a provision of generality. Now, the subheading under the Interpretation Act is not strictly part of the Act, but it is one of the matters to which your Honour can have reference in resolving any ambiguities in construction, …and subrule 2 being headed, "Joinder of parties", then goes on to talk about "two or more persons may be joined as plaintiffs or defendants in any proceedings", … paragraph (b) of subrule (2) is the paragraph which the plaintiffs place reliance upon, recognising, as they do, that subparagraph (a) doesn't apply.

[21]

So under Part 8 rule 2, the provision of generality, we find once again the parties are the plaintiffs or defendants, in the same way that Part 8 rule 13 deals with the parties being plaintiffs and defendants, and the represented persons simply are not parties." Overriding Purpose rule 43 The plaintiffs further sought to invoke the Overriding Purpose rule. The purpose of facilitating the "just, quick and cheap resolution of the real issues" between the parties is said to be served by case management which permits the plaintiffs who can be shown to have made a decision on an informed basis, to pursue their causes of action against particular wholesalers. 44 For all the significance in the Overriding Purpose rule, the plaintiffs' attempts to mobilise it in the present circumstances are misconceived. Limitation periods the subject of legislation are in place for the important purpose of ensuring that there is certainty in terms of when litigation, absent very particular and very exceptional circumstances, may be regarded as no longer something to which putative defendants may be exposed. 45 The Overriding Purpose rule could not undermine the proposition that the Court's power to add new parties must be exercised within the constraints and subject to the provisions of Part 8 of the Supreme Court Rules. Sections 21 and 23 of the Supreme Court Act 46 Nor do sections 21 and 23 of the Supreme Court Act assist in overcoming the above described problems. Attempts to re-litigate. 47 The defendants further attack the plaintiffs for what is said to be an attempt to re-litigate matters said to have been litigated in the original motions. The proposition is that the new motions impermissibly seek to re-litigate findings made against the plaintiffs and that, subject to the reservation of argument on the proposal put towards the end of the original hearing [that the named plaintiffs should be permitted to continue the proceedings as representative of the 2100 persons who had already appointed Firmstone as their agent and had already agreed to the 33 percent fee], the Court's holding was that the plaintiffs were seeking the Court's imprimatur to what would amount to an abuse of process and/or that orders should be made that the proceedings not continue as representative proceedings. The submission is that the orders now sought are inconsistent with that holding. The proposition is that the jurisdiction of the Court to reopen a judgment should be exercised "with great caution, having regard to the importance of the public interest in the finality of litigation". (Autodesk Inc v Dyason [No 2] (1993) 176 CLR 300 at 302.1). It was said in that case that:

[22]

"What must emerge, in order to enliven the exercise of the jurisdiction, is that the court has apparently proceeded according to some misapprehension of the facts or the relevant law and that this misapprehension cannot be attributed solely to the neglect or default of the party seeking the rehearing. The purpose of the jurisdiction is not to provide a backdoor method by which unsuccessful litigants can seek to re-argue their cases." (ibid, at 303.2 per Mason CJ) 48 It is strictly unnecessary for the Court to deal with the submission. It is true that following the delivery of the initial judgment the matter has remained interlocutory. It is also true that the plaintiffs have exhibited considerable vacillation in moving the goalposts as occasion has suggested may be prudent for forensic reasons. But at the end of the day every application requires to be dealt with in accordance with the interests of justice. But for the other reasons for dismissing the defendants new motions earlier set out, I would not have been disposed to dismiss those motions on the basis that upon analysis they amount to a backdoor method by which the plaintiffs seek to re-argue their cases. Abuse of process 49 In the view I have taken it is unnecessary to determine the abuse of process issues pressed by the defendants in relation to the new approach and proposed procedures pursued under cover of the latest round of motions. Reserved rulings on evidence 50 Objection was taken to the reading of annexures "B" and "C" to the affidavit of Mr Carr made on 29 October 2003. As to Annexure " B" it includes a number of hearsay assertions which are impermissible and are rejected. These are to be found in sub-paragraphs (a), (b), and (c) (ii). Sub- paragraph (g) is rejected as having no relevance to the issue. Insofar as this ruling may be incorrect, a section 135 order is appropriate to be and is made for the reason that the probative value of the evidence is substantially outweighed by the danger that the evidence might cause or result in undue waste of time and/or be misleading or confusing and/or be unfairly prejudicial to the defendants. The balance of the document is allowed as relevant to the new set of motions. 51 As to Annexure " B", the letter [save insofar as it implicitly refers to those sections of the previous letter which are now rejected] is admitted into evidence as relevant to the new set of motions. A section 136 limiting order is appropriate to be and is made in that regard limiting the admission into evidence of the later letter accordingly. That order is made because there is a danger that an otherwise use of the evidence would be unfairly prejudicial to the defendants or would be misleading or confusing. Orders 52 Short minutes of order are to be brought in providing that the proceedings not continue as representative proceedings, that the plaintiffs' notices of motion filed in August 2003 and the recent motions be dismissed. 53 The appropriate orders in relation to costs are: · for the plaintiffs to pay the defendant's costs; and · for orders further to be made that in the event that the plaintiffs are unable to pay the defendant's costs, those costs be paid by Firmstone, with leave, in the event that Firmstone be unable to meet the costs orders, for the parties to apply to seek orders against Mr Firmstone by reason of the undertakings given to the Court

[23]

I certify that paragraphs 1 - 53 are a true copy of the reasons for judgment herein of the Hon. Justice Einstein given on 6 November 2003

[24]

      Susan Piggott
      Associate

6 November 2003

[25]

Last Modified: 11/10/2003 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

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