Fakhouri v NSW Ministry of Health

Relevant Legislation

1. Section 166 of the Act is in the following form: "166 Court may order discontinuance of proceedings in certain circumstances (1) The Court may, on application by the defendant or of its own motion, order that proceedings no longer continue under this Part if it is satisfied that it is in the interests of justice to do so because - (a) the costs that would be incurred if the proceedings were to continue as representative proceedings are likely to exceed the costs that would be incurred if each group member conducted a separate proceeding, or (b) all the relief sought can be obtained by means of proceedings other than representative proceedings under this Part, or (c) the representative proceedings will not provide an efficient and effective means of dealing with the claims of group members, or (d) a representative party is not able to adequately represent the interests of the group members, or (e) it is otherwise inappropriate that the claims be pursued by means of representative proceedings."
2. Some other features of the Act ought be noticed. Part 10 clearly contemplates that questions nominated or identified as common may not finally determine the claims of all group members. Section 168 provides the Court with a power to give directions in relation to the determination of the remaining questions. As well, s 169 of the Act provides that an individual group member may appear in proceedings for the purpose of determining a question that relates only to the claims of that group member.
3. Finally, s 177 of the Act gives the Court a very broad power in granting relief in representative proceedings. That power includes determining a question of law or fact, making a declaration of liability, granting any equitable relief and making awards of damages either in individual sums for each group member, or in an aggregate amount for the entirety of the group.
4. The application by the defendants in this Motion is based upon the "efficiency ground" contained in s 166(1)(c) of the Act which is set out above.
5. Orders made under Pt 10 of the Act need to attend to the overriding purpose set out in s 56 of the Act, namely to promote the just, quick and cheap resolution of the real issues in the proceedings.

Authorities

1. The efficiency ground was considered by the Full Court of the Federal Court (dealing with the equivalent provision in s 33N(1) of the Federal Court of Australia Act 1976 (Cth), in ISG Management Pty Ltd v Mutch [2020] FCAFC 213; (2020) 385 ALR 146, said at [38]: "38. The Efficiency Ground invites a comparison between the efficiency and effectiveness of dealing with the claims of group members in the class action or otherwise. The assessment of how a comparator proceeding would deal with the claims may be relevant for the purposes of the Efficiency Ground … but in some cases, it will also be relevant to consider the practical question as to whether the group member claims would likely be advanced outside of a class action at all."
2. That comparison exercise, which calls into question the hypothetical non‑representative proceeding, does not always entail detailed evidence of the likely course or form of the comparative proceedings: Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd (2007) 164 FCR 275; [2007] FCAFC 200 at [128]-[129].
3. The efficiency ground was also considered by the Full Court of the Federal Court in Perera v GetSwift Ltd (2018) 263 FCR 92; [2018] FCAFC 202, where it said, at [61], this: "It seems to us that the requirements of s 33N(1) were not satisfied in relation to any of the three competing proceedings before the primary judge. … Similarly, s 33N(1)(c) is not satisfied because, by comparison to hypothetical individual actions, each of the competing class actions is an efficient and effective process to resolve common issues. Section 33N(1)(c) does not involve a comparison between the representative proceedings and another identical or hypothetical set of representative proceedings. The efficiencies referred to in s 33N(1)(c) are focussed on whether the representative proceedings are an efficient mechanism to resolve the claims and common issues, which requires considering the representative applicant's case and a comparison between the representative proceedings and the hypothetical non‑representative proceedings. The enquiry is not whether the common proceedings might be more efficiently resolved by way of some other representative proceedings." (emphasis in original)

Submissions of the State

1. The State submits that these representative proceedings do not provide an efficient and effective means of dealing with the claims of group members because: 1. to the extent that there are common issues in the claims of the plaintiff and the group members, the resolution of those issues are not such as to be of any real benefit for, or utility to, the ultimate determination of the claims of the group members; 2. the range of individual issues are such that these proceedings are not efficient, given the number of potential group members identified by the State (26,091 junior medical officers), each of whom would have been employed at different times at one of 65 hospitals or health services across multiple departments and specialities on contracts with varying fixed terms where different administrative requirements may have been identified; and 3. the cost and time associated with the preparation for, and resolution of, the plaintiff's proceedings will be significant with little benefit to the resolution of the claims of the group members as a whole.
2. The State points to the fact that to quantify her claim and establish it, the plaintiff has served nine affidavits and the State has served 29 affidavits, from personnel across numerous departments of the hospitals in which the plaintiff worked. The State estimates that if the plaintiff succeeds and establishes all of her claims, she will obtain an order for damages in the amount of $33,486 exclusive of interest. The State contends that similar preparation would be necessary for other group members, and that other group members are likely to have claims of about the same or lesser amounts of money.
3. Put differently, the State draws attention to the fact that these proceedings involve a potentially large number of relatively low-value claims.
4. The State submits that the procedure in the Local Court, particularly in the Small Claims Division is less expensive and less formal. It submits that claims would be dealt with more expeditiously. As a consequence, it submits that the Local Court hearing individual claims is the preferrable procedure in the interests of justice.
5. The State contends that the alternative forum for claims if pursued individually, pursuant to s 365 or s 369 of the IR Act would be in the Local Court. If the claim is up to $20,000, the Small Claims Division of the Local Court would deal with the matter. If claims were over $20,000 but did not exceed $100,000, then the Local Court in its General Division would deal with the matter.
6. The State submits that, having regard to the length of the hearing of the plaintiff's claim, the likely quantum of individual group member's claims and case management efficiencies of proceeding in the Local Court, the commencement of individual proceedings by group members is likely to result in a much more expeditious and less expensive determination of their claims than for the proceedings to continue as a class action.

Plaintiff's Submissions

1. The plaintiff opposes the relief sought. The plaintiff submits that the State has not discharged the onus of persuading the Court that the ground set out in s 166(1)(c) of the Act, the efficiency ground, has been made out. She also submits that even if that ground has been established, it is nevertheless not in the interests of justice for an order to be made of the kind sought by the State.
2. The plaintiff's submissions draw attention to the following: 1. the focus of s 166(1)(c) is whether the Court is satisfied that the representative proceeding will not provide an efficient and effective means for dealing with the claims of group members when compared with multiple individual proceedings; 2. the proper comparator for the purposes of s 166(1)(c) is the "assumption, even if unfounded in fact, that all the individuals constituting the group members would have brought separate proceedings against the defendants": Ryan v Great Lakes Council (1998) 155 ALR 447 at 456 per Lindgren J. They point to the fact that the policy behind the legislation providing for representative proceedings is that where individual claims are relatively small, and may not be litigated by individual group members of their own initiative, the defendant should nevertheless not benefit from such a circumstance; 3. the mere fact that such common issues as are adjudicated upon in a representative proceeding will not necessarily be determinative of the whole of the claim of any group member to finality is not a substantial consideration because the Act contemplates the contrary; 4. that it is a mistake to approach the assessment of the efficiency ground on the basis it involves a weighing of common issues against individual issues. Rather, she submits that the correct question is whether there are common issues which the group proceedings can efficiently and effectively determine before deciding what to do with any remaining individual issues. This raised a question of whether the Motion seeking the order under s 166 of the Act was premature; 5. that the determination of the common issues which have been identified in this matter include questions of law, the determination of which would be capable of giving rise to an estoppel to the benefit of either the group members, if their interpretation is accepted, or the State, if its interpretation is accepted; and 6. where representative proceedings are conducted in a practical manner, that the determination of many questions of law and fact which have a degree of commonality can be decided in a way which will permit, once the representative proceedings are completed, an individual litigant to have the benefit of findings of law or fact to assist them in obtaining relief.

Discernment

1. As indicated earlier, I concluded at the end of the submissions that the orders sought by the defendants ought not be made.
2. The first reason for my decision was that on the pleadings, there is likely to arise a number of substantial questions of fact or law (or perhaps mixed fact and law) which will need to be resolved in the plaintiff's claim, and which are likely to be common to the claims of group members. The Industrial Awards covering the plaintiff and group members are essentially those made annually between 2014 and 2021. The relevant terms did not vary significantly between those Awards.
3. As well, during the relevant period of the Awards, the defendants seek to rely on a number of Department of Health Policy Directives covering the disputed areas in respect of which claims for payment have been made. As well, the provisions of the relevant superannuation legislation in place at the various times, applied identically to the plaintiff and all of the group members. Questions arise on the pleadings about the proper interpretation of the various provisions of the Awards, interaction between the Policy Directives which were issued and the entitlements under the Awards, and also the practicalities of how the Awards and Policy Directives were put into place, and how they operated in the workplace.
4. True it is, as the State submits, that there are a large number of hospitals identified as being the places at which the plaintiff and group members worked. It may also be readily accepted that within those hospitals there were different departments and that there may have been many individual circumstances as to how junior medical officers were treated, the hours they worked, and expectations with respect to lodging of claims for overtime. But there is little doubt that overarching provisions of the applicable legislation, the Awards and the Policy Directives when properly determined will be applicable to all claims, no matter the hospital where each group member was performing their work obligations.
5. A single determination of those common questions will, I am satisfied, be the most efficient way of resolving them. A single determination will also, conveniently, give rise to an ability to appeal, subject to a grant of leave, against those findings and determinations so that the question of the proper interpretation of them can ultimately be resolved, including on an appeal, efficiently and effectively.
6. If individual claims were brought in the Local Court (either in the General Division or Small Claims Division), given the large number of potential claims, there is a real risk that conflicting decisions may be given about the meaning of the contested provisions, and that manifest injustice could occur where claimants in almost identical positions end up with entirely different and potentially inconsistent outcomes of their claims. The capacity to appeal from claims determined in the Small Claims Division is very limited, as well any appeal from the Local Court in its General Division on a question of law comes to this Court as of right, or else by leave on questions of fact or mixed questions of law and fact.
7. A further matter is one closely allied with the fact just discussed, of substantial common questions of fact or law (or mixed fact and law). The provisions in Pt 10 of the Act provide this Court a great deal of flexibility with respect to pre-trial management, the taking of evidence during the trial, and post-trial determination of findings of fact or law. Each of those functions is to be exercised having regard to the overriding purpose in s 56 of the Act, to ensure the just, quick and cheap determination of the real issues in the proceedings. A Pt 10 proceeding provides the Court with a flexible and highly efficient method of determining a large number of claims which have a relatively low value. Although the State identifies approximately 26,000 other possible claimants, even if ultimately only one quarter of those make claims and pursue them (which I regard as a conservative estimate) the impact of 6,000 or 7,000 individual claims in the Local Court would be significant. The fact that this Court has the power to make an order for a single judgment in respect of all of those claims by assessing them in a lump sum, is a significant factor pointing to the efficiency of the determination of the proceedings in their present form. As well, the familiarity and experience of this Court in engaging in alternative methods of resolution of multiple claims where an assessment of damages (or underpayment) is made points also to the efficiency of these proceedings.
8. Thirdly, even if, contrary to my view, these proceedings are not a completely efficient and effective way of determining the claims, the alternative, namely that a large number of individuals would lodge individual proceedings in the Local Court is simply not in the interests of justice. First, the plaintiffs would incur significant sums, in the millions of dollars, in filing fees. Secondly, considering the question of resources of the justice system as a whole, the oversight of representative proceedings of this kind, i.e., a large number of relatively low value claims, by a single judge in the Supreme Court involves far less intrusion into the judicial resources of the State than would the determination of many thousands of individual claims by individual Magistrates sitting in the Local Court. As well, in a representative proceeding there is a single set of lawyers for the plaintiff and group members, and a single set of lawyers for the defendants.
9. In individual proceedings it cannot be assumed that the same would apply. It is much more likely that there would be many different lawyers acting for individual plaintiffs. Each lawyer would need to become fully informed about all of the issues in the proceedings, and it is likely that there would be fewer efficiencies in the preparation and presentation of a plaintiff's case. In that circumstance, as I see it, the overall cost of legal fees is likely to be significantly higher if claims are made individually, than if they are made as a representative proceeding.
10. It is not in the interests of justice that a procedure be adopted which involves significantly higher legal costs to the individual claimants, and which has a far more substantial impact upon judicial resources.
11. In making these findings, I accept that at some point in time it will be necessary, assuming that the plaintiff's claims are established favourably to her and to group members, for there to be individual assessments of the claims of the group members. However, there are steps by way of efficiency that could be implemented in a representative proceeding to address such individual assessments. The Court could refer out the assessment of such claims to expert panels or expert referees; the Court could, subject to appropriate and proper proof, make an aggregate award of damages and make orders for distribution of those amongst group members where satisfied that such awards were just and fair; the Court could choose to address claims of individual members in groups, particularly where the same hospitals or the same departments of hospitals were involved.
12. Alternatively, having considered such matters, it may be that the Court concludes that the claims have to be assessed individually. At that time, it may be able to be established that it is not in the interests of justice for the proceedings to continue as representative proceedings.
13. Accordingly, I am satisfied that, at present, it is in the interests of justice for the matter to proceed as a representative proceeding. In my view, this application is premature and, in the circumstances of this case, more properly falls to be considered after the hearing of the plaintiff's case and the determination of any questions of fact or law which are determined to be common.
14. In those circumstances, I have considered whether or not the proper course to follow is to dismiss the Notice of Motion or else to adjourn it to the hearing of the proceedings after which time it could be restored to the list and argued.
15. I determined that the proper course was to dismiss it. The fact is that the State has not established to my satisfaction that an order under s 166(1) of the Act should be made. On the contrary, I am persuaded that it is in the interests of justice that the representative proceedings should continue.
16. I was not asked to make, and I have not made, an order pursuant to s 166(3) of the Act to the effect that no further application under that section can be made by the State except with leave of the Court. On the contrary, in my view, there may come a time when it is proper and appropriate for the State to make such an application. I see no reason to require them to obtain the leave of the Court so to do.
17. The matter has been fully argued, the Court has considered the Motion and come to a concluded view. In those circumstances, I determined that the appropriate course to follow was to dismiss the Motion.
18. Accordingly, these are the reasons for the orders which were made on 27 June 2023.

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