Representative proceedings and orders 1, 1A, 5, 6 and 7
- Representative proceedings, such as the present, are governed by Pt 10 of the CP Act. That Part includes s 173, which provides:
"173 Approval of Court required for settlement and discontinuance
(1) Representative proceedings may not be settled or discontinued without the approval of the Court.
(2) If the Court gives such approval, it may make such orders as are just with respect to the distribution of any money, including interest, paid under a settlement or paid into the Court."
- Accordingly, the Court is required to consider whether the settlement and discontinuance proposed by the plaintiffs and the defendants in this matter should be given effect to by way of the orders agreed to by the parties.
- Orders 1 and 1A provide for the proceedings no longer to continue under Pt 10 of the CP Act, after 5 July 2021. Orders 5, 6 and 7 in effect establish a regime for informing group members that the proceedings will no longer be representative proceedings and that if any group member wishes to bring a claim or to dispute their liability in respect of any guarantee provided by them or monies paid under such a guarantee, they should seek legal advice, including in relation to the expiry of any limitations period which might affect their entitlement to do so.
- Discontinuance as representative poroceedings is relevantly governed by ss 166 and 167 of the CP Act which provide:
"166 Court may order discontinuance of proceedings in certain circumstances
(cf s33N FCA)
(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) It is not, for the purposes of subsection (1) (e), inappropriate for claims to be pursued by means of representative proceedings merely because the persons identified as group members in relation to the proceedings -
(a) do not include all persons on whose behalf those proceedings might have been brought, or
(b) are aggregated together for a particular purpose such as a litigation funding arrangement.
(3) If the Court dismisses an application under this section, the Court may order that no further application under this section be made by the defendant except with the leave of the Court.
(4) Leave for the purposes of subsection (3) may be granted subject to such conditions as to costs as the Court considers just.
167 Effect of discontinuance order under this Part
(cf s33P FCA)
(1) If the Court makes an order under section 164, 165 or 166 that proceedings no longer continue under this Part -
(a) the proceedings may be continued as proceedings by the representative party on the party's own behalf against the defendant, and
(b) on the application of a person who was a group member for the purposes of the proceedings, the Court may order that the person be joined as an applicant in the proceedings.
(2) In this section -
applicant, in relation to proceedings, includes a claimant or plaintiff (as the case may be) in the proceedings."
- The answers to the separate questions in Fernandez v State of New South Wales [2019] NSWSC 1736 resolved the issues that were common to each plaintiff's and each group member's claim. In relation to these common issues, the defendants were, in effect, entirely successful. Nonetheless, there remained issues as to unconscionability, misleading and deceptive conduct and whether the guarantees were "unjust". These non-common issues turned on the particular circumstances in which each of the guarantees was obtained including, for example, what was said to each guarantor at the time of giving the guarantee, the financial circumstances of the patient and the guarantor and what information each guarantor was given before signing the guarantee. Given their nature, these non-common issues were not suitable for determination by way of representative proceedings. As the Court of Appeal observed in Searle v Commonwealth of Australia (2019) 100 NSWLR 55; [2019] NSWCA 127 at [236] (Bell P, Bathurst CJ and Basten JA agreeing):
"The representative proceedings regime [in Pt 10 of the CP Act] is concerned with the common determination of common questions only. The regime directly attends to the inevitability in representative proceedings that parts of the proceedings will not be common." (emphasis in original)
- In the circumstances where all of the common issues had been effectively determined and the proceedings had been entirely resolved as between the plaintiffs and the defendants, it appeared to me that it was in the interests of justice to order that the proceedings no longer continue under Pt 10 as representative proceedings because:
1. all the relief sought could be obtained by means of proceedings other than representative proceedings, within s 166(1)(b) of the CP Act; and
2. it was likely that the costs incurred if the proceedings were to continue as representative proceedings would exceed the costs that would be incurred if each group member conducted a separate proceeding, within s 166(1)(a);
3. the representative proceedings would not provide an efficient and effective means of dealing with the claims of group members, within s 166(1)(c); and
4. the representative plaintiffs would not be able adequately to represent the interests of the group members, within s 166(1)(d).
- Thus, the power to make order 1 was enlivened. In addition to the considerations referred to in the preceding paragraph, in determining whether to make that order, I took into account two further considerations. First, order 1A, together with orders 5, 6 and 7, had the effect of ensuring that group members were informed of the discontinuance of the proceedings as representative proceedings with sufficient time for them to make an application under s 167(1)(b) or to commence individual proceedings, while the running of any limitation period remained suspended under s 182 (to the extent that that might be relevant in any particular case). I was satisfied that, as a result of these orders, the interests of all group members were adequately protected.
- Secondly, I accepted the evidence of Ms Stacey, in her affidavit of 30 April 2021, and the revised form of the notice provided to the Court on 3 May 2021 which established that the form of notice to be sent to group members in accordance with order 5(b) would also include notice of an opportunity for group members to avail themselves of an extra-curial process for reviewing the circumstances in which a relevant guarantee was provided, so that financial relief might be provided to a guarantor where it was determined that the guarantee had been obtained unfairly or there was financial hardship or both.
- Having regard to all of these matters, I determined that it was appropriate to make order 1, as well as orders 1A, 5, 6 and 7.