Gray v Cash Converters International Limited

Date of hearing: 3 April 2014

Date of last submissions: 24 April 2014

Place: Sydney

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 137 In NSD 2089 of 2013: Counsel for the Plaintiff: Mr J Sheahan SC and Ms R Francois

Solicitor for the Plaintiff: Maurice Blackburn

Counsel for the Defendants: Mr A Coleman SC and Mr D Sulan

Solicitor for the Defendants: Thomson Geer In NSD 2090 of 2013: Mr J Sheahan SC and Ms R Francois Counsel for the Plaintiff:

Solicitor for the Plaintiff: Maurice Blackburn

Counsel for the First and Second Defendants: Mr A Coleman SC and Mr D Sulan

Solicitor for the First and Second Defendants: Thomson Geer

Counsel for the Third Mr DA Priestley Defendant: Solicitor for the Third DLA Piper Defendant: IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 2089 of 2013

AND: CASH CONVERTERS INTERNATIONAL LIMITED aCn 069 141 546

SAFROCK FINANCE CORPORATION (QLD) PTY LTD ACN 098 566 520

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 2090 of 2013

AND: cash converters international limited aCn 069 141 546

JUDGE: FARRELL J DATE: 2 May 2014 PLACE: SYDNEY

REASONS FOR JUDGMENT 1 On 10 October 2013, the plaintiff (Ms Gray) filed originating process and statements of claim in relation to two proceedings brought under Part IVA of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act). The defendants (other than Ja-Ke Holdings Pty Limited (Ja-Ke Holdings)) filed applications in both proceedings under r 16.21(1) of the Federal Court Rules 2011 (Cth) on 13 December 2013 seeking strike out of the whole or specified paragraphs of the statements of claim. 2 The first proceeding (Personal Loans Action) relates to personal loans made by Safrock Finance Corporation (QLD) Pty Ltd (Safrock) and Cash Converters Personal Finance Pty Ltd (CC Personal Finance). Safrock and CC Personal Finance are subsidiaries of Cash Converters International Pty Ltd (CC International). CC International, Safrock and CC Personal Finance are the first, second and third defendants respectively in the Personal Loans Action. I may refer to either of Safrock and CC Personal Finance as a "Lender" and together they may be referred to as "Lenders". 3 Ms Gray brings the Personal Loans Action on her own behalf (in relation to two personal loans made by Safrock and one made by CC Personal Finance) and on behalf of Group Members, being people who entered into one or more credit contracts in New South Wales with either of Safrock or CC Personal Finance between 1 July 2010 and 30 June 2013 and had any of the following fees or charges debited to their account under the contract: (1) the "nAdmin fee", (2) the "Administration Fee", or (3) the "deferred establishment fee". Ms Gray says the National Credit Code, Sch 1 to the National Consumer Credit Protection Act 2009 (Cth), (Code) applies to the provision of credit under those credit contracts. The claim against CC International is as a person who was involved in alleged contraventions by the Lenders of s 12CB(1) of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act). 4 The parties agree that the pattern of the First Gray Personal Loan was repeated in the case of the other two personal loans which Ms Gray took out with the Lenders: Ms Gray signed the contract for the First Gray Personal Loan on 7 March 2011, on the next day she signed a 'Personal Loan Early Repayment Election' and a direct debit request and credit was advanced after that. 5 The second proceeding (Cash Advances Action) relates to cash advances made by Cash Converters (Cash Advance) Pty Ltd (CC Cash Advance) and by franchisees of Cash Converters Pty Ltd (CCPL) in New South Wales (NSW Franchisees). CCPL and CC Cash Advance are subsidiaries of CC International. Ja-Ke Holdings is a NSW Franchisee of CCPL and trades as 'Cash Converters Penrith'. CC International, CCPL and Ja-Ke Holdings are the first, second and third defendants respectively in the Cash Advances Action. Ja-Ke Holdings made all of the cash advances to Ms Gray (comprising 21 credit contracts entered into between 1 July 2010 and 12 October 2012). Ms Gray also makes claims on behalf of Group Members, being people who entered into credit contracts under which less than $1,000 was advanced by CC Cash Advance or a NSW Franchisee in the period between 1 July 2010 and 30 June 2013 in relation to which the Group Member signed a 'Cash Advance Early Repayment Election'. 6 None of CC Cash Advance or the NSW Franchisees (other than Ja-Ke Holdings) (Other NSW Franchisees) is a party to the Cash Advances Action. Ms Gray claims that CC International and CCPL were involved in the contraventions of s 12CB(1) of the ASIC Act by Ja-Ke Holdings and the Other NSW Franchisees and that CC International is involved in the contravention of s 12CB(1) by CC Cash Advance. 7 I will call CC International, Safrock and CC Personal Finance (in relation to the Personal Loans Action) and CC International and CCPL (in relation to the Cash Advances Action) the "Cash Converters". 8 Cash Converters filed written submissions in relation to both proceedings which they said should be read together. They acknowledged that they did not seek dismissal of Ms Gray's claims; they accepted that if the statements of claim are struck out, Ms Gray should be given leave to re-plead. Ja-Ke Holdings filed written submissions in which it supported the Cash Converters' submissions in the Cash Advances Action (among other things) and Ms Gray filed written submissions in relation to both proceedings. 9 The applications were heard together. Two affidavits sworn by Mr Norman Fryde (a solicitor employed by the solicitors for Cash Converters) dated 13 December 2013 and four affidavits of Mr Ben Slade (a principal in the solicitors for Ms Gray) affirmed on 13 February 2014 (two affidavits), 24 February 2014 and 18 March 2014 were read. An affidavit of Mr Peter Wessels, National Manager of CC Personal Finance, sworn on 13 December 2013 was not read.

Personal Loans Action 10 Ms Gray summarises her claims as: a. By debiting Ms Gray's account with fees identified as "nAdmin" and "Administration Fee" in her statements of account, the Lenders engaged in unconscionable conduct in contravention of s 12CB(1) of the ASIC Act because those fees were not disclosed to her and there was no contractual entitlement to deduct these fees: see [6]-[17], [28]-[39] and [50]-[61] of the statement of claim; b. Further and in the alternative, the provision for payment of a "deferred establishment fee" in Ms Gray's credit contracts is void because it was ascertainable within the meaning of cl 7 of Sch 3 of the Credit (Commonwealth Powers) Act 2010 (NSW) (NSW Act), so that the annual interest rate exceeded the maximum annual percentage rate of 48% in contravention of clause 5(1) of Sch 3 of that Act: see [18]-[20], [40]-[42] and [62]-[64] of the statement of claim; c. Further, if the "nAdmin" and "Administration Fee" are held to be in satisfaction of the "deferred establishment fee", then by debiting and retaining those fees, the Lenders engaged in unconscionable conduct in contravention of s 12CB(1) of the ASIC Act because: (1) the fee is void by reason of the NSW Act; or in the alternative (2) the fee involved an unfair tactic, being a system or practice designed by Cash Converters to prepare contractual documentation with the appearance of a two year loan term but with the intention of a seven month term for the purpose of giving the transaction the appearance of not contravening the NSW Act. See [23]-[24], [45]-[46], [67]-[68] of the statement of claim; d. Further and in the alternative, the "deferred establishment fee" is an unconscionable fee or charge within s 78(4) of the Code: see [26], [48] and [70] of the statement of claim; and e. CC International was knowingly involved (within s 12GF(1)) in the contraventions of s 12CB(1) of the ASIC Act by the Lenders by reason of its control over them, the commonality of officers between those entities and the operation of the system or practices which had the character referred to in c(2) above: see [72]-[78] of the statement of claim. 11 Ms Gray seeks declarations, statutory compensation and annulment or reduction of the "deferred establishment fee" on her own behalf and on behalf of Group Members described in [2] above.

Strike Out Claims 12 Cash Converters say that the statement of claim, or relevant passages, should be struck out on four bases: (1) Ms Gray's claim of non-disclosure of the "nAdmin" and "Administration Fee" is not tenable because that fee was in fact disclosed; (2) The "common intention" pleading at [18], [40] and [62] of the statement of claim is without foundation and irrelevant; (3) The pleading of accessorial liability against CC International does not identify its actual knowledge of each of the elements of the contraventions; and (4) The definition of "Group Members" in [1] of the statement of claim does not conform to the requirements of s 33C(1)(a) of the Federal Court Act because it relates to claims against either Safrock or CC Personal Finance. I will deal with the fourth claim together with the same issue which is raised by Cash Converters in relation to the Cash Advances Action at [102]-[125].

Relevant principles 13 The principles stated by Cash Converters are uncontentious: 8. In Shelton v National Roads & Motorists Assn Ltd (2004) 51 ACSR 278 at [18], Tamberlin J explained the concept of "embarrassment" with respect to pleadings as follows: "Embarrassment in this context refers to a pleading that is susceptible to various meanings, or contains inconsistent allegations, or in which alternatives are confusingly intermixed, or in which irrelevant allegations are made that tend to increase expense." 9. A pleading which is internally inconsistent is embarrassing: see Spiteri v Nine Network Australia [2008] FCA 905 at [23]. 10. A pleading may be struck out as embarrassing if it simply asserts a conclusion to be drawn from the facts not stated and is not saved by using the words '[i]n the premises' to introduce the conclusion: Trade Practices Commission v David Jones (Australia) Pty Ltd (1985) 7 FCR 109 at 114; Davids Holdings Pty Ltd v Coles Myer Ltd (1993) ATPR 41-227. 11. The pleading should enable the respondent to know, with sufficient clarity, the case which it is required to meet: Dare v Pulham (1982) 148 CLR 658 at 664.

"nAdmin" and "Administration Fee" disclosure 14 Because the parties have agreed that the pattern of the three personal loans the subject of Ms Gray's claim is the same (see [4]) (and the manner in which the claims are pleaded for the three personal loans follows the same pattern), for simplicity I will refer only to the First Gray Personal Loan. 15 The First Gray Personal Loan of 7 March 2011 provides: Deferred Establishment Fee The loan term is 2 years (24 months). If the Borrower pays out the loan before the full term, a deferred establishment fee will be charged. The deferred establishment fee will vary depending upon the date on which the loan is fully repaid. If the loan is fully repaid within 7 months, the fee will be 60% of the principal amount but this will be reduced to 35% if paid by direct debit to encourage good fiscal management. If the loan is repaid after 7 months but within 12 months, the fee will be 50% of the principal amount but this will be reduced to 30% if paid by direct debit to encourage good fiscal management. If the loan is repaid after 12 months but within 18 months, the fee will be 40% of the principal amount but this will be reduced to 25% if paid by direct debit to encourage good fiscal management. If the loan is repaid after 18 months there will be no deferred establishment fee. 16 Cash Converters say that when, on 8 March 2011, Ms Gray made the election to repay the First Gray Personal Loan by signing the Personal Loan Early Repayment Election form she acknowledged the "deferred establishment fee". Indeed, it is not in dispute that the "deferred establishment fee" was disclosed because Ms Gray pleads it as an express terms of the contracts (8, 30 and 52 of the statement of claim). 17 At [12]-[14] of the statement of claim, Ms Gray claims that, purporting to act on the direct debit arrangement for the First Gray Personal Loan, Safrock deducted "nAdmin" and "Administration Fees" between 17 March and 13 October 2011. She says that Safrock had no entitlement to do so under that contract. She further claims that between 8 March and 13 October 2011, Safrock charged an annual percentage rate of 48% on the "purported outstanding balances" of the loan account which included the "nAdmin" and "Administration Fee", which Ms Gray paid. Ms Gray then claims, at [15], that for those reasons, the conduct was unconscionable and in contravention of s 12CB(1) of the ASIC Act because: (a) Safrock had no contractual right to require payment of the "nAdmin" and the "Administration Fee" under the First Gray Personal Loan; (b) Safrock gave no notice to Ms Gray of the debiting of those fees or the charging of interest on them; and (c) Safrock engaged in conduct recklessly and without due regard to whether those fees were properly payable. 18 Cash Converters say that once it is appreciated that the "nAdmin" or "Administration Fee" is one and the same as the "deferred establishment fee", the statement of claim is embarrassing because it contains inconsistent allegations (i.e. Ms Gray states that the deferred establishment fee is a term of the contract but says the fee was not disclosed and was not contractually payable). Cash Converters did not provide evidence that establishes that the "nAdmin" or "Administration Fee" which appeared in Ms Gray's statement in fact represented the "deferred establishment fee". They nonetheless contend that theirs is a valid strike out claim on this ground because it appears from [15] of the statement of claim that Ms Gray's real complaint is that there was nothing in the personal loan contract which provided for an "nAdmin" fee or "Administration Fee". Cash Converters then point to [21] of the statement of claim which sets out an alternative claim on the basis that the "nAdmin" and "Administration Fees" were in satisfaction of the "deferred establishment fee" to argue that that fee is void under the NSW Act. 19 They say that this issue should not be left to trial, especially in a representative proceeding for up to 45,000 potential Group Members (on Ms Gray's legal representative's estimation according to its website). They say that striking out the claim now is in the interests of a just, quick and cheap resolution of the proceedings. 20 I do not accept Cash Converters' arguments. I consider that these claims are sufficiently clearly pleaded for Cash Converters to understand what is alleged against them. I also do not accept that the claims are embarrassing because they are inconsistent. Rather, the claimed inconsistencies occur in the context of claims which are clearly stated to be claims in the alternative. 21 First, Ms Gray correctly says that, properly understood, these are claims about unconscionable conduct, not claims in contract. Ms Gray says that it is not clear, for instance, from the First Gray Personal Loan contract how the "deferred establishment fee" would be debited or that any "nAdmin" or "Administration Fee" would be payable at all. In relation to the claim at [15] of the statement of claim, Cash Converters have not yet established that the "nAdmin" or "Administration Fee" is the same as the "deferred establishment fee". Cash Converters have also not established that the manner in which Safrock deducted and retained the "nAdmin" and "Administration Fee" (by instalments, the non-payment of any of which incurs interest, rather than as a single payment falling due when the loan had been repaid) was consistent with the relevant provision of the personal loan contracts. These things properly remain in issue and I accept Ms Gray's argument that they can be addressed appropriately in a defence and by evidence at trial. 22 Second, the claim made by Ms Gray at [21] of the statement of claim is formulated as an alternative claim of unconscionable conduct. Its basis is that if, as Ms Gray expressly does not accept, amounts deducted and retained as "nAdmin" and "Administration Fee" were applied in satisfaction of the "deferred establishment fee" then the provision of the personal loan contracts which deals with the "deferred establishment fee" is void as an ascertainable fee that breaches the NSW Act prohibition on charging annual interest rates in excess of 48%. This is clearly conceptually a different claim from that made in [15] and provides an alternative basis for a claim if, as Cash Converters assert, the "nAdmin" and "Administration Fee" amounts were deducted and retained in satisfaction of a contractual right to be paid the "deferred establishment fee".

Common intention pleading 23 Ms Gray claims that it was the "common intention" of each of the Lenders and Ms Gray in entering into each personal loan that it would be repaid within seven months and not within the 24 month term provided for in the contract. The formulation of this claim in relation to the First Gray Personal Loan is at [18] of the statement of claim (as written): 18. Further in the alternative, it was the common intention of both Safrock and Ms Gray prior to entering into the First Gray Personal Loan that Ms Gray would repay the First Gray Personal Loan within 7 months. Particulars (a) Prior to entering into the First Gray Personal Loan Ms Gray signed a document entitled 'Personal Loan Early Repayment Election' in which she purported to elected to repay the loan 'early'. (b) Safrock (by itself or its agent) conducted Preliminary and Final Assessments of Unsuitability in connection with Ms Gray's loan application on 7 March 2011 by reference to a 7 month period. (c) Safrock drew direct debits of $60.13 per fortnight from Ms Gray's account commencing on 17 March 2011, which debits were sufficient to repay the loan within 7 months. (d) Ms Gray was orally informed at the time she applied for the loan to the effect that the loan term was 7 months and the repayments were approximately $60 per fortnight. (e) Ms Gray was not told that she had the option to repay the First Gray Personal Loan over a 2 year period. (f) CC International stated in a publicly released document entitled 'Response to the Commonwealth Government Green Paper on Consumer Credit Reform - Phase II' dated August 2010 that their short term loan products are only financially viable if a 'large proportion' are repaid early and a deferred establishment fee applies, as if repaid over the 2 year period this results in a 'loss' (page 16). (g) For admission to listing on the Premium Segment of the Official List and to trading on the London Stock Exchange's main market for listed securities CC International stated on 2 August 2011 that the 'approximate' term of unsecured personal loans was 7 months (page 24). (h) CC International's 2012 Annual Report stated that the credit period for personal short term loans varied from 30 days to 7 months (page 54). 24 At [19] of the statement of claim, Ms Gray claims that "in the premises of paragraph 18" the provision in the contract for the First Gray Personal Loan for payment of the "deferred establishment fee" is void. She says this is because it was an ascertainable fee or charge to be included in calculating the maximum annual percentage rate of interest on the loan under cl 7 of Sch 3 of the NSW Act. Inclusion of the "deferred establishment fee" caused the annual interest rate to exceed the rate of 48% allowed under cl 5(1) of Sch 3. At 21 Ms Gray claims that Safrock "knew, or believed, or ought to have known at the time of entry into the First Gray Personal Loan" that this was the case. 25 Cash Converters say that the first difficulty with this claim is that the allegation in [18] "does not seem to be relevant to any substantive claim in the remainder of the" statement of claim. Acknowledging the claims in [19] and 21, Cash Converters say that "intention" of the borrower or the lender is not relevant under cll 5 and 7 of Sch 3 of the NSW Act, nor is knowledge or belief relevant for that purpose: the legislation simply refers to a fee that is "ascertainable" being a "fee or charge that is ascertainable when the annual percentage rate is calculated". As "common intention" is not relevant, it has the potential to cause delay or embarrassment. 26 The second difficulty identified by Cash Converters is that, contrary to paragraph (a) of the particulars to [18], it is apparent from the date of the personal loan contract that it was signed on 7 March 2011 and the 'Personal Loan Early Repayment Election' was signed the next day on 8 March 2011. They say there are no facts pleaded which explain this inconsistency. None of the particulars to [18] in paragraphs (b)-(e) are capable of giving rise to a pleading of intention. The particular in paragraph (f) relates to a statement by CC International and therefore can have no relevance to the intention of Ms Gray or either of the Lenders. When these matters were raised in correspondence between the legal representatives of the parties, Ms Gray's response was that sufficient particulars had been provided. 27 Cash Converters note that the "common intention" issue is included in the common questions applicable to Group Members under [4] and [5] of the Originating Application; they provide as follows: 4. Whether a 'Deferred Establishment Fee' is ascertainable for the purposes of cl 7(2) of Schedule 3 of the NSW Act, in circumstances where, prior to the making of the personal loan, the common intention of Safrock or CC Personal Finance and the consumer (Ms Gray and Group members) was that the loan would be repaid in an ascertained period of less than 2 years? 5. Whether it is unconscionable and in contravention of section 12 CB(1) of the ASIC Act for Safrock or CC Personal Finance to debit or retain a 'Deferred Establishment Fee', in circumstances where prior to the making of the personal loan the common intention of Safrock or CC Personal Finance and the consumer (Ms Gray and Group members) was that the loan would be repaid in an ascertained period of less than 2 years? 28 Cash Converters do not seek to argue the issue of whether either of [4] or [5] is capable of being a common question, but rather submitted that given the prominence of the "common intention" issue in Ms Gray's case, it is fundamental that the claim be relevant and properly pleaded. 29 Ms Gray says that it is not to the point whether the NSW Act imposes a "common intention" requirement: the "common intention" claim is a vehicle for her contention that the "deferred establishment fee" was "ascertainable" for the purpose of calculating the maximum annual percentage rate in accordance with the formula in cl 7(2) of Sch 3 of the NSW Act which uses "ascertainable" in the definition of "Cj" in the formula. She refers also to cl 5(4) of Sch 3 of the NSW Act which imposes an obligation to include "all credit fees and charges imposed or provided for under a credit contract". 30 Ms Gray says that if she can establish that before the contract was entered into she and the Lender had a "common intention" that she would repay the loan within seven months, it must be at least arguable that the "deferred establishment fee" was "ascertainable" at that time. She says that the legislation should not be given a narrow or pedantic construction. She says that the facts in support of this claim include: (1) each of the pleaded contracts was only formed when the Lender advanced money to her under the contract because it is an express term of the contract that the borrower's offer to enter into it is only accepted by the Lender when it advances the credit under the contract; (2) therefore the contract was formed at a time after the personal loan contract and the Personal Loan Early Repayment Election had both been signed; and (3) the Lender had completed Preliminary and Final Assessments of Unsuitability relating to a seven month period on 7 March 2011, the day the contracts were signed. These things are referred to in particulars (a) to (d) of the particulars to [18], [40] and [62]. The Lender's intention that Ms Gray make the election to repay early, including evidence of the business model of Cash Converters which would require it, are particularised in paragraphs (b) to (h) of [18], [40] and [62]. 31 If the function of a pleading is to "state with sufficient clarity the case that must be met …[so that] a party should have the opportunity of meeting the case against him or her and, incidentally, to define the issues for decision" (see Banque Commerciale SA (En Liquidation) v Akhil Holdings Limited (1990) 169 CLR 279 at 286), then I am satisfied that these pleadings plainly raise a question of whether, if the factual matters are made out, notwithstanding the form of the personal loan agreements and early repayment elections, the "deferred establishment fee" should be taken into account as an "ascertainable" charge at the time the contracts were formed. I agree with Ms Gray that the particulars to [18], [40] and [62] disclose the claimed factual foundation. No point was taken by Cash Converters that any of the particulars contained material facts which, as a matter of form, should have been pleaded as such under r 16.02(1)(d): see Australian Automotive Repairers' Association v NRMA Insurance Ltd [2002] FCA 1568 at [13]-[17]. Insofar as particulars (f)-(h) relate to CC International rather than Safrock or CC Personal Finance, they put Cash Converters on notice that, relevant to the "common intention" contention, Ms Gray alleges that the business model adopted by the Lenders necessitates loans of a period less than two years and the statements of CC International as their holding company provides evidence of this motive. 32 I consider that these claims are sufficiently arguable and particularised and are not embarrassing: I decline to strike them out.

Accessorial liability 33 Cash Converters complain that [77] and [78] of the statement of claim are conclusory and there are no particulars provided which support allegations of involvement or knowledge by CC International in alleged contraventions by Safrock or CC Personal Finance. Those paragraphs provide: [77] By reason of paragraphs 72 to 76, CC International was directly or indirectly, knowingly concerned in or party to the Safrock and CC Personal Finance contraventions pleaded above. [78] In the premises, CC International was a person involved in each of the Safrock contraventions and CC Personal Finance contraventions within the meaning of section 12GF(1) of the ASIC Act. 34 Section 12GF(1) of the ASIC Act provides: Actions for damages (1) A person who suffers loss or damage by conduct of another person that contravenes a provision of Subdivision C (sections 12CA to 12CC) or Subdivision D (sections 12DA to 12DN) may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention. 35 Section 79 of the Corporations Act 2001 (Cth) establishes when a person is "involved in a contravention" for the purposes of the ASIC Act by reason of s 5 of the ASIC Act. Section 79 provides: Involvement in contraventions A person is involved in a contravention if, and only if, the person: (a) has aided, abetted, counselled or procured the contravention; or (b) has induced, whether by threats or promises or otherwise, the contravention; or (c) has been in any way, by act or omission, directly or indirectly, knowingly concerned in, or party to the contravention; or (d) has conspired with other to effect the contravention. 36 At [72], Ms Gray claims that since at least October 2006, CC International, the Lenders and Mon-E Pty Ltd (MON-E) (a subsidiary of CC International) have had the same directors and company secretary and at [73] that Mr Peter Wessels was a senior manager at each of the Lenders responsible for, among other things, signing all personal loan contracts, including that of Ms Gray and that he was part of the senior management team of CC International. 37 At [74], Ms Gray claims that at all material times CC International had effective control over the conduct of the Lenders with respect to the system by which they would offer and administer unsecured loans styled as "personal loans" because CC International held 100% of the shares in the Lenders, the matters pleaded in [72] and [73] and the use by the Lenders of the MON-E system for the origination and administration of these loans. Particulars given of the MON-E system are that it is a uniform system which, from at least October 2007, the Lenders had implemented for offering and administering personal loans including by using a software and an internet platform developed and provided by MON-E and that it is currently provided by MON-E in combination with CC Personal Finance. Ms Gray claims at [75] that the Lenders debited the "nAdmin" and/or the "Administration Fee" from Ms Gray's accounts by using the MON-E system. 38 At [76], Ms Gray claims that the system or practice of Cash Converters in relation to the provision of personal loans in New South Wales was that (a) those loans would not run their stated two year terms because that would cause a loss to the lender, (b) consumers would purport to elect to repay the loans within approximately seven months; (c) a direct debit from the consumers' accounts would be put in place so that consumers would repay the loans within approximately seven months; (d) a fee of at least 35% of the moneys lent would be paid by the consumer, in addition to interest, if the loan was repaid within that seven month period; and (e) repayments were structured to ensure the fortnightly recovery of the 35% fee in addition to repayment of the principal amount and interest. The particulars provided in relation to this claim are: Particulars (a) Prior to the commencement of the NSW Act, CC International required a fee of approximately 35% of the principal loaned in credit contracts in NSW to be charged and stated to be for brokerage services. (b) CC International stated in a publicly released document entitled 'Response to the Commonwealth Government Green Paper on Consumer Credit Reform - Phase II' dated August 2010 that their short term loan products are only financially viable if a 'large proportion' are repaid early and a deferred establishment fee applies, as if repaid over the 2 year period this results in a 'loss' (page 16). (c) For admission to listing on the Premium Segment of the Official List and to trading on the London Stock Exchange's main market for listed securities CC International stated on 2 August 2011 that the 'approximate' term of unsecured personal loans was 7 months (page 24). (d) CC International's 2012 Annual Report stated that the credit period for personal short term loans varied from 30 days to 7 months (at page 54). (e) Further particulars may be provided following discovery and the issue of subpoenas and notices to produce. 39 Cash Converters say that in order to establish accessorial liability under s 12GF(1) of the ASIC Act it is necessary for Ms Gray to allege that CC International had actual knowledge of the essential facts giving rise to the alleged contravention by the Lenders. They cite Yorke v Lucas (1985) 158 CLR 661 (Yorke v Lucas) at 667-71 and Quinlivan v Australian Competition and Consumer Commission (2004) 160 FCR 1 at [9] (Quinlivan v ACCC). They also rely on the manner in which Jacobson J applied these concepts in Addenbrooke Pty Ltd v Duncan (No 2) [2013] FCA 820 (Addenbrooke v Duncan) at [3]-[8]: 3. It is well established that the expression "any person involved in the contravention" in s 12GF of the ASIC Act, as defined in s 79 of the Corporations Act 2001 (Cth) (Corporations Act) is relevantly identical to s 75B(1) of the former Trade Practices Act 1974 (Cth) and that jurisprudence that has been developed in relation to that section is applicable to the meaning of the phrase: see Roumanus v Orchard Holdings (NSW) Pty Ltd (in liq) (2012) 90 ACSR 677 at [178]. 4 Thus, what is required to give rise to accessorial liability in the present case is actual knowledge of the falsity of the representation comprising the primary contravention and intentional participation in the contravention. These are essential matters which must be alleged and pleaded: Quinlivan v Australian Competition and Consumer Commission (2004) 160 FCR 1 at [10]-[15]; SAS Financial Services Pty Ltd v Trew [2006] WASCA 252 at [12]. 5 Where, as in the present case, the primary contravention is alleged to involve a misrepresentation as to a future matter it is necessary for a plaintiff or applicant to allege that the accessory had actual knowledge that the person alleged to have made the representation had no reasonable grounds for making it: Quinlivan at [15]. 6 It is important to bear in mind that the concept of accessorial liability under s 79 of the Corporations Act and its analogues imports quasi criminal standards in imposing civil liability: Yorke v Lucas at 667-669. 7 Thus, while I accept that pleadings are a means to an end and that technical objections to pleadings are now received with less enthusiasm than in the past, the authorities to which I have referred make it clear that the essential elements of the claim must be properly pleaded. 8 Observations made by judges as to the blurring of the distinction between a pleading of material facts and a statement of particulars have little or no application to claims of the type made against Mr Kinghorn in the present proceeding: cf Beach Petroleum NL v Johnson (1991) 105 ALR 456 at 466; Australian Automotive Repairers' Association v NRMA Insurance Ltd [2002] FCA 1568 at [13]-[17]. 40 Cash Converters say that in this case CC International had no dealings with Ms Gray; all of her dealings were with the Lenders. They say that the statement of claim does not allege that CC International had actual knowledge of any of the dealings between Ms Gray and the Lenders or of the essential facts of the alleged contravention by the Lenders. Although [76] alleges a system or practice of Cash Converters, none of [72]-[76] pleads facts which CC International is alleged to have known which could give rise to a claim of knowing involvement in alleged unconscionable conduct by the Lenders under s 12CB(1) of the ASIC Act. Cash Converters say that the present pleading does not allow CC International to know what facts it is alleged to have known and therefore how it is alleged by Ms Gray that it was involved. They say they require particulars which identify the relevant knowledge, who it is from CC International that Ms Gray says had that knowledge and when, and the facts upon which it is asserted that that person had the relevant knowledge. They again stress the importance of this clarity where the claims are said to give rise to common questions for all Group Members. 41 Ms Gray does not dispute that she has to plead matters that indicate that CC International had actual knowledge of the elements of the contravention of s 12CB(1). She says that the difference between the parties is the degree of detail required to be pleaded given the issues in the case and the stage of the proceeding. 42 Ms Gray does not accept that in a case of this kind, which she says deals with a system or practice, it is necessary that she particularise knowledge of individual dealings with customers in order to make out her claim that CC International has accessorial liability for the implementation of the system which resulted in the personal loan contracts with her, among others. Ms Gray says it does not matter that CC International had no knowledge of the dealings with her personally. In relation both to the Personal Loans Action and the Cash Advances Action, Ms Gray's case relates to a "top down" system in which CC International's business purpose is linked with its subsidiaries and the Australian franchisees of CCPL who deal with customers. Ms Gray relied on Australian Communications and Media Authority v Mobilegate Ltd A Company Incorporated in Hong Kong (No 8)(2010) 275 ALR 293 (ACMA v Mobilegate). In that case, Logan J found at [172] in relation to the accessorial liability of Mr Phillips for the actions of two companies whose names are abbreviated to "IMP" and "Jobspy": There was debate before me in submissions as to the level of detail of knowledge of contravening conduct which the Authority must prove. As I understood it, the submission made on behalf of Mr Phillips was that the Authority needed to go so far as to prove that he was aware that particular profiles were fictitious and that particular deceptive messages were being sent using that particular fictitious profile. That would involve proof of detailed knowledge of the deceptive quality attending each and every of many thousands of messages. I reject this submission. It is not, in my opinion, supported by Yorke v Lucas. It will be sufficient to prove accessorial liability in respect of the corporate contraventions if the Authority proves that Mr Phillips was aware that IMP and on its behalf Jobspy were employing a system of operations whereby fictitious profiles were being created to the end that each third party consent to the use of the premium shortcode would be procured by a message which was deceptive because of the employment of a fictitious profile. Proof of knowledge at a more detailed level of abstraction is not, in my opinion, essential. 43 Ms Gray says that the concept on which she seeks to rely, and from which Logan J derived support in reaching his conclusion, is captured in two ways at [165] and [168]-[169] of ACMA v Mobilegate. First, Logan J at [165] referred to the passage of Giorgianni v The Queen (1985) 156 CLR 473 in which Mason J (at 493) expressed support for the observation of Cussen ACJ in R v Russell [1933] VLR 59 at 67: All the words abovementioned [aiding, abetting, counselling and procuring] are, I think, instances of one general idea, that the person charged as a principal in the second degree is in some way linked in purpose with the person actually committing the crime, and is by his words or conduct doing something to bring about, or rendering more likely, such commission. For this reason, a person who procures or encourages others to carry out a criminal design or scheme is liable for crimes committed as an accessory: for example, see R v B, FG; R v S, BD (2012) 114 SASR 170 at [15]-[24] per Kourakis CJ. Ms Gray says that [72]-[76] of the statement of claim demonstrate the way in which CC International is "linked in purpose" with the Lenders. 44 Second, at [168]-[169] Logan J referred to the comments of Moore J in Medical Benefits Fund of Australia Ltd v Cassidy (2003) 135 FCR 1 (MBF v Cassidy) at [15]-[16]: 15. ... In a comparatively simple situation, such as the situation considered in Yorke v Lucas, where particular representations were being made to individuals or groups of individuals, knowledge of those matters would almost inevitably result in the alleged accessory also knowing the representations were false or misleading. ... 16. However in a situation where representations are made to the public and whether they are misleading or deceptive is to be approached at a level of abstraction (to use the language of the High Court in Campomar Sociedad, Limitata v Nike International Ltd (2000) 202 CLR 45 (at [101]) it seems inapt to explore the question of whether the alleged accessory knew the representations were false or misleading in some subjective sense. As illustrated by the preceding consideration of the facts of this case, it is probably appropriate to consider, and only consider, the question of whether the alleged accessory knew that the conduct of the principal might lead members of the public to assume a state of affairs which was not the true state of affairs. ... 45 At [17] Mansfield J agreed with Moore J on this issue, but Stone J did not: see [80]-[81] and [85]. There remains a difference of opinion in the authorities over the extent of knowledge required in relation to cases dealing with accessorial liability for misleading and deceptive conduct. Ms Gray says that what is important is that Logan J accepted that there should be a difference of approach in terms of the detail required in assessing what is required for cases of individual representations and a case involving something more systematic. 46 For the sake of completeness I note that Ms Gray conceded that the case is narrower in relation to her claims at [16], [38] and [60]. Those claims relate to the Lenders' alleged unconscionable conduct and are put on the basis that, having regard to s 130 of the Credit Act, the Lenders knew or should have known of Ms Gray's particular circumstances of disability. Those circumstances are said to be her level of education and lack of financial sophistication, that she was in receipt of a disability support pension and that she could not readily discover certain of the fees because the Lenders did not provide regular statements to her. Ms Gray seeks to demonstrate CC International's knowledge at 8, 30 and [73] relying on the position of Mr Wessels.

Accessorial liability - consideration 47 All parties accept that to establish CC International has been "involved in the contravention" within s 12GF(1) of the ASIC Act, Ms Gray is bound by the authority of Yorke v Lucas to demonstrate that CC International had knowledge of the essential matters which make up one of the contraventions referred to in s 12GF(1), in this case s 12CB(1). This reflects the reasoning of Jacobson J in Addenbrooke v Duncan at [39] above. 48 Section 12CB of the ASIC Act was amended by the Competition and Consumer Legislation Amendment Act 2011 (Cth) with effect from 1 January 2012. The First Gray Personal Loan was entered into in March 2011 and all pleaded acts in relation to it appear to have been performed during 2011. The pleadings for the Second Gray Personal Loan and the Third Gray Personal Loan indicate that they were entered into in 2012 (in January and July respectively). 49 Section 12CB as it applied until 31 December 2011 relevantly provided as follows: 12CB Unconscionable conduct (1) A person must not, in trade or commerce, in connection with the supply or possible supply of financial services to a person engage in conduct that is, in all the circumstances, unconscionable. (2) Without limiting the matters to which the court may have regard for the purpose of determining whether a person (the supplier) has contravened subsection (1) in connection with the supply or possible supply of services to a person (the consumer), the court may have regard to: (a) The relative strengths of the bargaining position of the supplier and the consumer; and (b) Whether, as a result of conduct engaged in by the supplier, the consumer was required to comply with the conditions that were not reasonably necessary for the protection of the legitimate interests of the supplier; and (c) Whether the consumer was able to understand any documents relating to the supply or possible supply of the services; and (d) Whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the consumer or a person acting on behalf of the consumer by the supplier or a person acting on behalf of the suppler in relation to the supply or possible supply of the services; and (e) The amount for which, and the circumstances under which, the consumer could have acquired identical or equivalent services from a person other than the supplier. (3) … (4) For the purpose of determining whether a person has contravened subsection (1) in connection with the supply or possible supply of financial services to another person: (a) the court must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention; and (b) the court may have regard to conduct engaged in, or circumstances existing, before the commencement of this section. (5) A reference in this section to financial services is a reference to financial services of a kind ordinarily acquired for personal, domestic or household use. 50 Section 12CB as it applied from 1 January 2012 relevantly provided as follows: 12CB Unconscionable conduct in connection with financial services (1) A person must not, in trade or commerce, in connection with: (a) the supply or possible supply of financial services to a person (other than a listed public company); or (b) the acquisition or possible acquisition of financial services from a person (other than a listed public company); engage in conduct that is, in all the circumstances, unconscionable. (2) … (3) For the purpose of determining whether a person has contravened subsection (1): (a) the court must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention; and (b) the court may have regard to conduct engaged in, or circumstances existing, before the commencement of this section. (4) It is the intention of the Parliament that: (a) this section is not limited by the unwritten law of the States and Territories relating to unconscionable conduct; and (b) this section is capable of applying to a system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged by the conduct or behaviour; and (c) in considering whether conduct to which a contract relates is unconscionable, a court's consideration of the contract may include consideration of: (i) the terms of the contract; and (ii) the manner in which and the extent to which the contract is carried out; and is not limited to consideration of the circumstances relating to formation of the contract. (5) In this section: listed public company has the same meaning as it has in the Income Tax Assessment Act 1997. 51 Since 1 January 2012, the range of factors set out in s 12CC(1) may be taken into account by a Court in determining whether there has been a contravention of s 12CB, though those factors are not an exhaustive list. 52 Parliament has expressed its intention in the amended s 12CB(4)(b) that the contravention created by s 12CB(1) be capable of applying to a system of conduct or a pattern of behaviour, without the need to demonstrate that a particular identified individual is affected by the conduct or behaviour. If it is not necessary to demonstrate that a particular identified individual has been affected by the conduct or behaviour to establish a contravention of s 12CB(1), it is difficult to see why knowledge of particular dealings would be required in order to establish that a person has liability as a "person involved in the contravention" under s 12GF(1). It is true that Yorke v Lucas is a case in which a corporation had primary liability under s 52 of the Trade Practices Act 1974 (Cth) (Trade Practices Act) for a misleading statement made by its employee even though it acted honestly and reasonably but the High Court held that the employee did not have accessorial liability under s 75B because the employee had no knowledge of the falsity of the statement, an essential element of the contravention of s 52. However, having regard to the express terms of s 12CB(4)(b) and adopting the reasoning of Moore J in MBF v Cassidy at [15]-[16] and Logan J in ACMA v Mobilegate at [172], in my view it is open to Ms Gray to argue that at trial she need only demonstrate knowledge of and intentional participation by CC International in a system or practice for the provision of a financial service which is unconscionable to establish accessorial liability in relation to the Second Gray Personal Loan and the Third Gray Personal Loan. 53 By parity of reasoning with the majority of the Full Court in MBF v Cassidy and with Logan J in ACMA v Mobilegate the same result should occur in relation to conduct before 1 January 2012 and therefore it is unnecessary for Ms Gray to demonstrate that CC International had knowledge of Safrock's dealings with her in relation to the First Gray Personal Loan. I find support for this view in the decision of Mansfield J in Australian Competition and Consumer Commission v Excite Mobile Pty Ltd [2013] FCA 350, a case decided under s 51AB of the Trade Practices Act as in force immediately before 1 January 2011 because the alleged acts and omissions occurred prior to that date: Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010 (Cth) Sch 7, item 6. 54 Further support for this conclusion is provided by the Explanatory Memorandum to the Competition and Consumer Legislation Amendment Bill 2011 (Cth), which provides at [2.19] that: Subsection 21(4) of the ACL sets out the intention of Parliament in relation to the interpretation of s 21 of the ACL. Each of the interpretative principles has been drawn from the existing case law. The principles clarify, rather than alter, the effect of the statutory prohibition on unconscionable conduct. Section 21(4) of the Sch 1 of the Competition and Consumer Act 2010 (Cth) (ACL) is in identical terms to s 12CB(4), save that the latter relates to the provision of financial services. 55 I therefore reject Cash Converters' submission that it is necessary for Ms Gray to plead knowledge by CC International of the Lenders' dealings with Ms Gray specifically. 56 Ms Gray says that the pleadings at [3] (which set out the group structure) and [72]-[76] demonstrate that CC International had actual knowledge of the system or practices which resulted in unconscionable conduct and nothing more is required. I take this from [19] of Ms Gray's written submissions where she says: "While the first respondent may not have known the identity of Ms Gray, the pleadings [at [72]-[76]] make it sufficiently plain that it had actual knowledge that the second and third respondents were acting in accordance with the system or practice they had designed". However, Cash Converters correctly point out that there is nowhere in the statement of claim a pleading to the effect that CC International had knowledge of any relevant fact or circumstance. 57 In addition to the cases already cited, Ms Gray relied on comments made by Goldberg J in Williams v FAI Home Security Pty Ltd (No 2) ) [2000] FCA 726 (Williams v FAI Home Security at [20]-[26]. That was a case concerning accessorial liability under s 75B of the Trade Practices Act for misleading and deceptive representations. At [26], Goldberg J noted that the distinction between actual and constructive knowledge can be blurred because in some cases actual knowledge can be inferred from relevant circumstances. However, it is notable that the pleading in that case included an express statement that FAI Security "knew the matters set out in the particulars under paragraph 21" before pleading the conclusion in the next paragraph that "in the premises", FAI Security was involved in the contravention: see Williams v FAI Home Security at [21]. There is no such pleading of knowledge in the statement of claim for the Personal Loans Action. 58 It might be that Ms Gray is able to establish at trial CC International's actual knowledge of and involvement in a system or practice which resulted in unconscionable conduct in contravention of s 12CB(1), for instance, by demonstrating relevant knowledge of its officers in such a way as to attribute that knowledge to CC International or because of an inference from circumstances such as those pleaded at [72]-[76] by which Ms Gray at [77] says CC International was "directly or indirectly knowingly concerned" in the alleged contraventions by the Lenders. However, given the criminal law antecedents of accessorial liability referenced in Yorke v Lucas in relation to equivalent provisions to s 79 of the Corporations Act, it is still necessary for Ms Gray to plead (in whatever manner she says that it is so) that CC International had actual knowledge of the system or practices giving rise to contravention of s 12CB(1) and not simply to plead the conclusions at [77] and [78]. The claim on behalf of Group Members at [85] and [86] suffers from the same defect. In relation to Ms Gray's personal claims at [16], [38] and [60], it is not enough for her to say that she demonstrates CC International's knowledge at 8, 30 and [73] relying on the position of Mr Wessels, she must plead that that is how CC International has knowledge, if that is what she claims. 59 Accordingly [77], [78], [85] and [86] should be struck out unless amended appropriately and Ms Gray has liberty to re-plead. 60 Ms Gray has said that, unusually, the documents provided by CC International to the Commonwealth Government and the London Stock Exchange as well as its Annual Report for 2012, all of which are referred to in [76] of the statement of claim, demonstrate corporate knowledge. She says that it is unnecessary for her to specify which individual person has the relevant knowledge on behalf of CC International, as requested by Cash Converters. However if, contrary to this submission, it is necessary to identify individuals beyond Mr Wessels, Ms Gray says she should only be required to do so after discovery relying on Trade Practices Commission v CC (New South Wales) Pty Ltd (1995) 58 FCR 426 at 439 per Lindgren J, since this is information peculiarly within the knowledge of CC International. 61 It is a matter for Ms Gray whether she claims that CC International had actual knowledge of the systems or practices which make out claims under s 12CB(1) of the ASIC Act directly, or by inference from facts or circumstances, or by relying on the knowledge of individuals such as Mr Wessels or one of the common directors, or in some other way. If Ms Gray elects to re-plead the accessorial liability claims by reference to the knowledge of particular people who are officers of CC International or some other matter peculiarly within the knowledge of Cash Converters which later emerges, I accept that it may be necessary to allow her this opportunity after discovery. 62 However I do note that there is not in the statement of claim for the Personal Loan Action even an equivalent to [29] of the statement of claim in the Cash Advances Action which pleads knowledge of CC International and CCPL of conduct by NSW Franchisees by reference to material in publicly available disclosures to parliamentary committees and the London Stock Exchange (see [78] below). It would also seem possible at this time to plead knowledge by reference to any inferences which Ms Gray considers should be available from the circumstances referred to in [72]-[76].

Cash Advances Action 63 In the statement of claim for the Cash Advances Action Ms Gray claims that she signed a document entitled "Cash Advance Contract" in relation to each of 21 advances made to her by Ja-Ke Holdings (each referred to as a "Gray Cash Advance"): [13]. She claims that the contracts included terms providing for (1) an annual percentage rate of 48%; (2) a loan term of 24 months; and (3) a "deferred establishment fee" which would be payable if Ms Gray paid out the loan before the full term, with the amount of the fee to vary depending on the date on which the loan was fully repaid: [14]. 64 Ms Gray says each time she signed a contract, she also signed a document entitled "Cash Advance Early Repayment Election" which was to the effect that she elected to repay the cash advance within one month: [15]-[16]. Ms Gray claims that she gave the signed contract and early repayment election to Ja-Ke Holdings before she received credit and accordingly each of the 21 contracts was entered into no earlier than the time at which the contract was signed and the election form was received by Ja-Ke Holdings: [17]-[18]. 65 Ms Gray summarises her claims as: a. the provision in Ms Gray's credit contracts with Ja-Ke Holdings for payment of a "deferred establishment fee" is void because it was ascertainable within the meaning of cl 7 of Sch 3 of the NSW Act as then applied so its inclusion caused the annual interest rate to exceed the maximum annual percentage rate of 48% in contravention of cl 5(1) of Sch 3 of that Act: see [11]-[21] of the statement of claim; b. debiting or seeking to debit the "deferred establishment fee" is unconscionable conduct in contravention of s 12CB(1) of the ASIC Act because (in summary): (1) the fee is void under the NSW Act: [22]-[23] of the statement of claim; or in the alternative (2) the fee was not payable under Ms Gray's credit contracts because the loan term was only one month: [24] of the statement of claim; and c. CC International and CCPL were involved (within s 12GF(1)) in the contraventions by Ja-Ke Holdings of s 12CB(1) of the ASIC Act because they had effective control over the conduct of the NSW Franchisees (including Ja-Ke Holdings), the commonality of officers of relevant entities and the operation of the system or practices with Ja-Ke Holdings (including franchise agreements and the use of the MON-E software) which had the effect of causing the conduct described in b. above: [26]-[31] of the statement of claim. 66 Ms Gray seeks declarations and statutory compensation on her own behalf and on behalf of Group Members described at [5] above.

Strike out claims 67 Cash Converters note that all of Ms Gray's dealings were with Ja-Ke Holdings and the only claims against them are for accessorial liability under s 12GF(1). They say that the statement of claim, or relevant passages, should be struck out and the three main issues are: (1) The definition of "Group Members" in [1] of the statement of claim does not conform to the requirements of s 33C(1) of the Federal Court Act because it seeks to include people who have a claim against CC Cash Advance and NSW Franchisees who are not parties to the proceeding. I will deal with this issue at [102]-[124] and [126]-[136] below. (2) The "common intention" pleading at [19] of the statement of claim is insufficiently particularised and the purpose of the pleading is not clear; (3) The claims of accessorial liability against CC International and CCPL do not plead sufficient facts to enable them to know the case they must meet.

Common intention pleading 68 At [19] Ms Gray claims, further and in the alternative, that it was the common intention of both Ja-Ke Holdings and Ms Gray before entering into each of the contracts that Ms Gray would repay the credit provided to her within one month. The particulars pleaded are: Particulars (a) Ms Gray repeats paragraphs 15 and 16. (b) In accordance with the system or practice adopted by all NSW Franchisees and CC Cash Advance pleaded in paragraphs 26 to 29, Ja-Ke Holdings expected and intended that each Gray Cash Advance would be repaid within approximately 1 month (c) All direct debits drawn from Ms Gray's account in respect of the Gray Cash Advance Contracts were in amounts that would repay each contract within one month. 69 Cash Converters' three complaints are as follows. First, the particulars are deficient because (a) neither of [15] or [16] nor the fact that Ms Gray's account was debited provides a factual basis for the common intention which is pleaded, and (b) the mere fact that an alleged system existed does not mean that a common intention on behalf of Ms Gray and Ja-Ke Holdings existed; Ms Gray made the election for early repayment but there is no suggestion that she could not avail herself of the full repayment term or that she was under any form of duress or pressure by Ja-Ke Holdings not to avail herself of that period. Second, the purpose for the common intention pleading is unclear. Third, the question of whether the fee is ascertainable under the NSW Act does not depend on intention of either the lender or the borrower. Ja-Ke Holdings adopted these submissions. 70 I reject these submissions and decline to strike out the claim in [19] essentially for the same reason as I rejected the similar strike out claim in the Personal Loans Action. The pleaded facts in [15] and [16] are that in each of 21 separate contracts Ms Gray first signed a contract form which provided for a 24 month loan term and then made a one month early repayment election before credit was advanced (whether or not she was in fact free not to make the election). When these pleaded facts are taken together with the pleading that direct debits relating to the one month period occurred on each occasion, the business system pleaded at [26]-[29] and evidence that the one month term for loans in the range of $50-$1,000 was both typical and economically necessary pleaded in the particulars to [28], they demonstrate a factual basis that there was a "common intention" between Ja-Ke Holdings and Ms Gray that the loans be repayable within one month. The claim in [19] is an alternative means by which Ms Gray seeks to establish the claim in [20] that the "deferred establishment fee" was ascertainable for the purpose of calculating the maximum annual percentage rate applicable to each of the 21 contracts pursuant to cl 7 of Sch 3 of the NSW Act with the result that the provision in those contracts for the "deferred establishment fee" is void. It is also a vehicle for establishing the claim in [23] that Ja-ke Holdings engaged in unconscionable conduct under s 12CB(1) of the ASIC Act because the provision for the "deferred establishment fee" in the 21 contracts is void. I consider that the claims made in [20] and [23] on the basis of the "common intention" pleaded in [19] are sufficiently arguable and should not be struck out.

Accessorial liability claims 71 The accessorial liability claims in relation to the conduct of Ja-Ke Holdings are set out at [26]-[32] of the statement of claim. The Group Members claim accessorial liability (1) against CC International and CCPL for conduct of NSW Franchisees at [41], relying on [33], 34, [35]; and (2) against CC International for conduct of CC Cash Advance at [40] and [42], relying on [33], 34, [36]-[40]. It is necessary to set them out in some detail. 72 At [26] of the statement of claim, Ms Gray pleads that at all material times CC International and CCPL had effective control over the conduct of NSW Franchisees including Ja-Ke Holdings with respect to the system by which they would offer and administer unsecured loans styled as "cash advances". The particulars pleaded are: Particulars (a) Ms Gray repeats paragraphs 3, 6, 7 and 9 and the particulars thereto. (b) The relationship between CCPL and each NSW Franchisee was regulated inter alia by the terms of the franchise agreement and by an Operations Manual provided to each Franchisee as amended from time to time. Pursuant to these each NSW Franchisee received a uniform business format, uniform business systems, common training and operational support in conducting its business, including its consumer credit business. (c) Safrock and/or CC Personal Finance drew each direct debit from the nominated bank account of each borrower in respect of each unsecured loan styled as a 'cash advance' in New South Wales. (d) Further particulars will be provided following discovery and the issue of subpoenas and notices to produce. 73 Paragraph [3] of the statement of claim sets out the group structure with CC International as holding company and each of CCPL, CC Personal Finance, Safrock, MON-E and CC Cash Advance as a wholly owned subsidiary. 74 Paragraphs [6] and [7] plead that: CC International was the international franchisor of the Cash Converters franchise with 717 Cash Converters branded stores across 21 countries including 55 stores in Australia which are owned by CC International or one of its wholly owned subsidiaries and 94 franchised stores which provide consumer credit and second-hand goods retailing; and CCPL has been the franchisor of the Cash Converters franchise operations in Australia since 1998. 75 Paragraph [9] pleads that each Cash Converters franchisee in Australia, including Ja-Ke Holdings: (a) is permitted pursuant to its franchise agreement to provide credit services to consumers styled as "cash advances"; (b) is required to use the MON-E software to originate and administer cash advances, and (c) has been required to provide a distribution network for unsecured personal loan products provided by Safrock and CC Personal Finance for which the franchisee receives revenue as a credit assistance provider. 76 At [27] of the statement of claim, Ms Gray claims that at all time since April 2009, CC International and CCPL "encouraged or required all franchisees to deal with their customers on terms which included the requirement to pay a fee or charge which amounted to approximately 35% of the amount of the credit loaned [sic] on loans styled as a 'cash advance'." The particulars of this claim are: Particulars (a) Ms Gray repeats paragraphs 9 (a) and 9(b). (b) Prior to the commencement of the NSW Act, CC International and CCPL required a fee of approximately 35% of the principal loaned in credit contracts in NSW, Queensland and the ACT (whether with respect to unsecured loans styled as 'cash advances' or with respect to larger unsecured loans styled as 'personal loans' in which Safrock or CC Personal Finance was the lender) to be charged and stated to be for brokerage services. (c) At all material times since at least April 2009, CC International and CCPL required a fee or charge of approximately 35% of the principal loaned in credit contracts in Victoria to be charged and stated to be for the costs of the lender in connection with Loan Establishment, Documentation, Information Verification, Direct Debits, Loan Maintenance and Data Management. (d) Further particulars will be provided following discovery and the issue of subpoenas and notices to produce. 77 At [28] of the statement of claim, Ms Gray claims that after 1 July 2010, CC International and CCPL "encouraged or required" NSW Franchisees to recover a charge of approximately 35% of the amount of credit lent on an unsecured loan styled as a "cash advance" by requiring payment of a charge styled as a "deferred establishment fee" based on the consumer purporting to elect to repay the credit contract earlier than the contractual period stated in the document entitled 'Cash Advance Contract'. The particulars of that claim (as clarified in Mr Slade's letter of 4 December 2013 set out in annexure NSF-2 to Mr Fryde's affidavit sworn on 13 December 2013) are: Particulars The best particulars the applicant can give prior to discovery are as follows: (a) Ms Gray repeats paragraphs 9(a) and 9(b). (b) CC International stated in a publicly released document entitled 'Response to the Commonwealth Government Green Paper on Consumer Credit Reform - Phase II' dated August 2010 that the cash advance product was only financially viable if the fee applied and the loan was fully repaid within a month (p 16). (c) CC International stated in a publicly released document entitled 'Response to the Commonwealth Government Green Paper on Consumer Credit Reform - Phase II' dated August 2010 that 'Cash Advance loans are loans of less than $1,000 and are one month in duration' (p 5). (d) CC International stated in the 'Admission to Listing on the Premium Segment of the Official List and to trading on the LSE main market for listed securities' dated 2 August 2011 that [each Cash Converters store in Australia offers short term cash advances typically for between $50 and $1,000 and for a term of 30 days] (p 24). (e) Further particulars will be provided following discovery and the issue of subpoenas and notices to produce. 78 At [29] of the statement of claim, Ms Gray claims: CC International and CCPL engaged in the conduct alleged in paragraph 28 with the knowledge that the NSW Franchisees, including Ja-Ke Holdings, would be, and were, requiring the payment of the deferred establishment fee with respect to unsecured loans styled as 'cash advances' despite it being the intention of each NSW Franchisee, including Ja-Ke Holdings, at the time of formation of the credit contract, that the loan would be repaid within one month and not within the period of 2 years stated in the document entitled 'Cash Advance Contract'. Particulars (a) Ms Gray repeats particulars (b), (c) and (d) to paragraph 28. (b) Further particulars will be provided following discovery and the issue of subpoenas and notices to produce. 79 At [30]-[32], Ms Gray claims: [30] By reason of paragraphs 3, 6, 7, 8, 9, 26, 27, 28, 29 and each of them, each of CC International and CCPL was directly or indirectly, knowingly concerned in or party to the contraventions by Ja-Ke Holdings pleaded in paragraphs 23 and 24. [31] In the premises, each of: (a) CC International; and (b) CCPL; was a person involved in the contraventions by Ja-Ke Holdings pleaded in paragraphs 23 and 24 within the meaning of section 12GF(1) of the ASIC Act. 80 Cash Converters claim that [33]-[45] of the statement of claim, which are the Group Members' claims against CC Cash Advance and the NSW Franchisees at [33]-[34] and the accessorial liability claims against CC International and CCPL at [35]-[45], should be struck out. The claims of the Group Members are: [33] Group Members entered into the NSW Cash Advance Contracts which provided for the payment of the 'deferred establishment fee' in circumstances where that fee was void and unconscionable. Particulars The deferred establishment fee formed part of the system or practice of the respondents set out in paragraphs 26 to 29. The material facts and particulars of the claims of the Group Members in respect of the conduct of NSW Franchisees and CC Cash Advance are similar to the material facts and particulars of the claims of Ms Gray against Ja-Ke Holdings and will be provided after a trial of the common issues. [34] Each of: (a) the NSW Franchisees, with respect to any NSW Cash Advance that a NSW Franchisee gave to a Group Member; and (b) CC Cash Advance, with respect to any NSW Cash Advance that CC Cash Advance gave to a Group Member; caused the deferred establishment fee to be paid by Group Members in contravention of section 12CB(1) of the ASIC Act by reason of the same or similar matters pleaded in paragraphs 12 to 24. Particulars The deferred establishment fee formed part of the system or practice of the respondents set out in paragraphs 26 to 29. The debits drawn from Group Members' accounts were in amounts that included, in total, repayment of the loan principal, additional debits totalling approximately 35% of the loan principal, and interest, over a period of approximately one month. Further particulars will be provided following discovery and the issue of subpoenas and notices to produce. The material facts and particulars of the contravening conduct of the NSW Franchisees and CC Cash Advance with respect to the Group Members are similar to the material facts and particulars of the contravening conduct of Ja-Ke Holdings with respect to Ms Gray and will be provided after a trial of the common issues. 81 At [37] the Group Members' claim is that CC International had effective control over the conduct of CC Cash Advance with respect to the system by which it would offer and administer "cash advances" because it held all of the shares in CC Cash Advance, Mr Cumins (since October 2007) and Mr Yeudall (since April 2012) are common directors, CC Cash Advance used the MON-E system for the origination and administration of "cash advances" and direct debits in respect of NSW cash advance contracts were drawn by one of CC Personal Finance or Safrock. 82 At [38] and [39] the Group Members' claim is in relation to conduct of CC Cash Advance which CC International "encouraged or required" in the same terms as the claims at paragraphs [27] and [28] in relation to NSW Franchisees including Ja-Ke Holdings. At [40], Ms Gray claims that CC International engaged in that conduct "with the knowledge" that CC Cash Advance would be and was requiring the payment of the "deferred establishment fee" essentially in the same terms as [29] in relation to NSW Franchisees including Ja-Ke Holdings. 83 At [35] and [36] the Group Members' claim is: 35 Ms Gray repeats paragraphs 3, 6, 7, 8, 9, 26, 27, 29 and 30 and the particulars thereto in relation to the conduct and knowledge of CC International and CCPL with respect to each of the NSW Franchisees' contraventions in respect of the Group Members pleaded at 34(a). 36 Ms Gray repeats paragraphs 3, 6 and 10 and the particulars thereto in relation to the conduct and knowledge of CC International with respect to each of CC Cash Advance's contraventions in respect of the Group Members pleaded in paragraph 34(b). 84 At [41] the Group Members' claim is that by reason of [33], 34 and [35] each of CC International and CCPL was directly or indirectly, knowingly concerned in or party to contraventions by the NSW Franchisees pleaded in 34 and each of CCPL and CC International was accordingly a person involved in those contraventions within the meaning of s 12GF(1) of the ASIC Act. At [42] the Group Members make the same claims by reason of [33], 34, [36], [37], [38], [39] and [40] in relation to CC International's involvement in the contraventions by CC Cash Advance pleaded at 34.

Submissions 85 Ja-Ke Holdings made no submissions in relation to these claims. 86 Cash Converters submit that references to the NSW Franchisees add nothing to the pleading and ought to be struck out. I reject this submission: as Ms Gray's claim is founded on the knowing involvement of CC International and CCPL in a system of conduct or pattern of behaviour which is unconscionable and involves all NSW Franchisees, I do not consider that the references to NSW Franchisees "adds nothing" to the claim. 87 Cash Converters complain that the statement of claim does not identify the facts giving rise to a contravention by Ja-Ke Holdings of which Ms Gray alleges CC International and CCPL had actual knowledge as required to establish accessorial liability in accordance with the decisions in Yorke v Lucas and Quinlivan v ACCC. Rather, the statement of claim pleads facts by which Ms Gray alleges CC International and CCPL have "encouraged or required" Ja-Ke Holdings to engage in particular conduct, such as to recover charges of 35% of the credit advanced (see [27] and [28] of the statement of claim). I consider that this complaint has force and I deal with this issue at [90]-[101] below. 88 Cash Converters say that Ms Gray has refused to explain what she means by "encouraged or required" beyond saying that the words have their ordinary and natural meaning. This complaint should be rejected: those words are in common usage without technical import and this complaint is without substance. 89 Cash Converters complain that the allegations against CC International and CCPL are "rolled up" together and it is not possible to determine the specific allegations against them individually. This complaint is made both about the claims relating to Ja-Ke Holdings' conduct at [27]-[32] and in relation to the Group Members' claims relating to the conduct of NSW Franchisees at [35] and [41]-[42]. To the extent that Ms Gray has made some attempt to provide particulars of CC International's knowledge at [28], there are no particulars of CCPL's knowledge. In relation to this complaint: (a) [42] relates only to the liability of CC International for Group Members' claims in relation to cash advances made by CC Cash Advance, so it is difficult to see how that claim can be properly characterised as "rolled up"; and (b) by his letter of 4 December 2013, Mr Slade confirmed that the allegations in relation to CC International relied on in [30] and [41] (in relation to the claims in 34) are [3], [6], [7], [8], [9], [26], [27], [28] and [29] and in relation to CCPL they are 3(i), [7], [8], [9], [26], [27], [28] and [29]. It is likely that these pleadings may be amended or other pleadings added to deal with the "knowledge" issue but I would otherwise consider that this information satisfies Cash Converters' demand in relation to the "rolled up" complaint. In relation to [28] and particulars of CCPL's "knowledge", see [96] below.

Adequacy of the pleading of "knowledge" 90 At the hearing, Senior Counsel for Ms Gray justified Ms Gray's representation of the Group Members as defined in [1] of the statement of claim on the basis that Group Members who have primary contravention claims against NSW Franchisees have accessorial liability claims against CC International and CCPL, but those who have claims because of their dealings with CC Cash Advance only make an accessorial liability claim against CC International. It is therefore the claim against CC International which is the lynch pin of Ms Gray's claimed right to bring the representative action on behalf of the Group Members as defined. Ms Gray says that this is appropriate because as the international franchisor, CC International is responsible for a business system which is intended to be operated by franchisees in places dotted around the country. The financial imperative of the business system is that those implementing it do so by dealing with their customers in a pattern of behaviour, using the same loans and origination software, with the customers signing up to cash advances and committing to early repayment which results in the cash advances being repaid in one month not the two year term set out in the contracts and the customers incurring the 35% deferred establishment fee. The financial imperative and the one month term is what CC International has reported to official bodies. 91 Ms Gray says that [26] pleads the effective control held by CC International and CCPL over the NSW Franchisees; [27] pleads the design by CC International and CCPL of a general system or practice of all franchisees to be able to recover approximately 35% of amounts lent as a fee or charge; and [28] pleads the specific design in New South Wales to effect the general system or practice by means of the "deferred establishment fee" and the election by the consumer to incur that fee. Ms Gray says that at [29], she pleads that CC International and CCPL engaged in the conduct alleged in [28] with the knowledge that the NSW Franchisees (the primary contraveners) were, in accordance with the system or practice, requiring payment of the 'deferred establishment fee' in circumstances where it was the intention at the time of entering into the contract that the loan would be repaid within one month and not two years as stated in the contract. 92 Ms Gray points out that [30] then pleads the conclusion of accessorial liability by referring to [26]-[29] and to [3] (corporate structure), [6] (the franchising structure), [7] (CCPL's role in franchising in Australia), and [9] (specific requirements imposed on franchisees), all of which are particulars to [26], and [8] (which deals with the common directors and secretaries of CC International and its subsidiaries which are the key corporations in this action). 93 Putting to one side [29] (and therefore also [28], to which [29] refers), Ms Gray has not submitted (nor is it apparent from the pleadings) how [3], [6], [7], [8], [9], [26] and [27] ground the conclusion in [30] that CC International and CCPL are "knowingly concerned in or party to" contraventions by Ja-Ke Holdings by reason of their "knowledge", that is, knowledge of the essential elements of the contravention. As currently pleaded, Ms Gray could only rely on each of these paragraphs to establish involvement in contraventions but not knowledge. If she intends that an inference should be drawn from [3], [6], [7], [8], [9], [26] and [27] that CC International and CCPL had knowledge of the system or pattern of behaviour which gave rise to a contravention of s 12CB(1), or to ground a pleading of knowledge in some other way, then that must be pleaded specifically. I would grant leave to Ms Gray to re-plead to make her intentions clear. 94 Ms Gray correctly points out that [29] does contain a specific pleading of knowledge. She says that this is the essence of the contravening conduct. However, it is not clear how the particulars to [29] are sufficient to make this out consistently with Ms Gray's submissions concerning the nature of her case. Curiously, the particulars for the claim in [29] (which is made in relation to the conduct in [28]) rely on only some of the particulars to [28]: that is, the particulars in (b), (c) and (d) of [28], being CC International's statements to the London Stock Exchange and in response to the Commonwealth Government Green Papers. It does not, for instance, rely on the particulars in paragraph (a) to [28], being the franchise system and uniform MON-E platform claimed to be employed by franchisees to administer cash advances referred to at 9 and (b). So, is the franchise system and MON-E platform an element of the claimed knowledge of the system which gives rise to the contraventions or not? 95 Nor does [29] (or the particulars to it) refer to knowledge which might be imputed or inferred from the means by which CC International or CCPL are alleged to have had control over the conduct of NSW Franchisees referred to in [26]. The particulars to [26] include [3], [6], [7] and [9] which are pleadings relating to the franchise system and MON-E platform, corporate structures and common directors, but curiously not the management personnel who are alleged to have operational involvement referred to in [8]. Nor does [29] appear to claim knowledge through the conduct referred to in [27] (which particularises 9 and (b) relating to the franchise system and MONE-E platform as well as conduct alleged to have occurred in other States but not conduct by a NSW Franchisee). It does not appear consistent with Ms Gray's theory of her case that these matters are not referenced in the "knowledge" pleading (to the extent they have relevance). Although it is obviously a matter for her how she seeks to pursue her case, it should be clear from the pleadings what case it is that the defendants must meet with respect to alleged knowledge, and the facts pleaded should be consistent with her stated case theory if she wishes to rely on them. 96 As mentioned at [60] above, Ms Gray says that the documents referred to in the particulars to [28] and [29] contain corporate admissions concerning the pleaded system or practice. Whether or not those publications provide sufficient evidence to make out the claimed knowledge of the essential elements of the contraventions by CC International is a matter to be established at trial. It is not clear from the particulars how those statements standing on their own may implicate CCPL in knowledge or that they sufficiently ground Ms Gray's case (as she has explained it in submissions). At [29], Ms Gray says that further particulars will be provided following discovery and the issue of subpoenas and notices to produce. At this stage of the proceeding, I do not consider that it would be appropriate to strike out [30] in so far as it relies on the pleading of knowledge by CC International and CCPL in [29] by reason only that the current particulars appear to be limited. Ms Gray foreshadows further particulars which may relate to matters of which she becomes aware only after discovery. In a representative proceeding of this kind where all relevant knowledge is likely to be in the hands of or obtainable by CC International or CCPL, but not Ms Gray except through compulsory process, I consider that a plaintiff in Ms Gray's position should be allowed latitude. However, it would seem that she is in a position now to plead the paragraphs from which she might seek to draw inferences, if that be the case, even if she may seek to supplement those pleadings following discovery. 97 For the same reasons as given in relation to [30], I consider that [41] of the statement of claim would also require reformulation if Ms Gray seeks (through [35]) to rely on [3], [6], [7], [8], [9], [26], [27] and [28] to demonstrate "knowledge". 98 It is also my view that [36] is plainly inadequately pleaded. Notwithstanding the use of the term "conduct and knowledge" there is no "knowledge" pleaded in any of [3] (group structure), [6] (CC International is the international franchisor of the "Cash Converters" franchise), or [10] (CC Cash Advance is the credit provider in stores owned by CC International or one of its subsidiaries in Australia). If Ms Gray wants inferences of knowledge drawn from any of those paragraphs, she must plead it. 99 At [42] the Group Members claim that CC international was "knowingly concerned" in contraventions by CC Cash Advance pleaded at 34 by reason of [33], 34, [36], [37], [38], [39] and [40]. At [40], the claim is that CC International engaged in the conduct pleaded at [38] and [39] knowing that CC Cash Advance would be and was requiring the payment of a deferred establishment fee at the time of formation of the credit contract and that the principal amount would be repaid in one month not two years. At [38] and [39] the Group Members claim (in summary) that CC International "encouraged or required" CC Cash Advance to deal with customers on terms which included the requirement to pay a fee of approximately 35% of the amount of the credit and to recover that charge based on the customer purporting to elect to repay earlier than the contracted term. 100 This is a more extensive pleading of knowledge than that at [29] which relates only to knowledge of the conduct in [28], which is in similar terms to [39]. Paragraph [40] pleads also the knowledge in [38] which is in similar terms to [27]. However, the particulars pleaded to [40] are only the responses to Government Papers and releases to the London Stock Exchange, which are particulars to [28], but not 9 and (b) (the franchise system and MON-E platform) which are particulars to [28] that are included in [39]. This results in the same confusion about whether or not the Group Members would be seeking (or entitled) to rely on the franchise system and MON-E platform to demonstrate the knowledge referred to at [94] above and provides a limited basis for demonstrating the claimed knowledge. Further, the particulars to [38] are said to be those in [27] (again 9 and (b)), which creates the same problem. The particulars to [27] also reference claimed practices of CC International and CCPL in relation to fees charged on "cash advances" and "personal loans" in relation to which CC Personal Finance or Safrock was the lender in NSW, Queensland, and the ACT before the introduction of the NSW Act (27) or an unstated person was the lender in Victoria (27). It is not clear how these particulars relate to conduct of CC Cash Advance or to CC International's knowledge of it. 101 Last, [42] also refers to [36] and [37]. If those paragraphs are components of claimed "knowledge", then that needs to be made clear, if that is how Ms Gray intends to pursue her case.

Section 33C of the Federal Court Act AND 'gROUP mEMBERS' 102 It is not controversial that the applicant must have a claim against all respondents to satisfy s 33C(1)(a) of the Federal Court Act. The controversy lies in whether all Group Members must also have claims against all respondents. 103 Cash Converters say that the definition of "Group Members" in [1] of the statement of claim for the Personal Loans Action is deficient because it includes people who have entered into a credit contract with either Safrock or CC Personal Finance. They say that the definition of "Group Members" in [1] of the statement of claim for the Cash Advances Action is deficient because it captures people who entered into credit contracts in New South Wales between 1 July 2010 and 30 June 2013 with CC Cash Advance or any NSW Franchisee but Ms Gray only entered into contracts with Ja-Ke Holdings. The Group Members' claims for accessorial liability relating to advances made by NSW Franchisees are against CC International and CCPL and the claims relating to advances made by CC Cash Advance are against CC International only. 104 Cash Converters contend that the authorities establish that under s 33C(1)(a) of the Federal Court Act each applicant and each Group Member must have a claim against each respondent. Ja-Ke Holdings supports this position and Cash Converters' submissions in relation to the Cash Advances Action. They rely on the decision of the Full Court in Philip Morris (Australia) Ltd v Nixon (2000) 170 ALR 487 (Philip Morris v Nixon) at [126]-[127] per Sackville J (with whom Spender and Hill JJ agreed) : 126 Thirdly, as the parties accepted, s 33C(1)(a) requires every applicant and represented party to have a claim against the one respondent or, if there is more than one, against all respondents. This conclusion follows from the language of s 33C(1)(a) itself and is consistent with the approach taken by the LRC in Grouped Proceedings. It is also consistent with the structure of the legislation. For example, s 33D(1)(a) (which provides that a person who has a sufficient interest to commence a proceeding on his or her own behalf against another person has a sufficient interest to commence a representative proceeding against that person on behalf of other persons referred to in s 33C(1)(a)) is clearly drafted on the assumption that all applicants and represented persons will have claims against the same person. 127 It follows that s 33C(1)(a) is not satisfied if some applicants and group members have claims against one respondent (or group of respondents) while other applicants and group members have claims against another respondent (or group of respondents). The requirement in s 33C(1)(b), that the claims of all group members are in respect of or arise out of the same, similar or related circumstances, is a necessary but not sufficient condition for the commencement of representative proceedings. Of course, if there are two sets of claims against two sets of respondents, it may well be that each can be the subject of representative proceedings. It may even be that directions can be made for them to be heard together: Ryan v Great Lakes Council (1997) 149 ALR 45, at 48, per Wilcox J. But they cannot both be the subject of the same representative proceedings. 105 Cash Converters acknowledge that the position of the Full Court in Philip Morris v Nixon on this issue was disavowed in Bray v F Hoffman-La Roche Ltd (2003) 130 FCR 317 (Bray v F Hoffman-La Roche) by Finkelstein J at [242]-[249] with whom Carr J agreed. They say that Carr J's remarks at [122]-[130] were obiter dicta and observe that Branson J dissented on this issue at [199]. Cash Converters submit that, for that reason, Bray does not overrule Philip Morris v Nixon. 106 Cash Converters acknowledge that in McBride v Monzie Pty Ltd (2007) 164 FCR 559 (McBride v Monzie) at [4], Finkelstein J took the view that the Full Court in Bray v F Hoffman-La Roche had overruled the decision in Philip Morris v Nixon. They say, however, that Finkelstein J's view in McBride v Monzie has not found favour with single judges of this Court, who have followed the authority of Philip Morris v Nixon on the grounds that the comments in Bray v F Hoffman-La Roche are obiter dicta. Cash Converters cite Johnstone v HIH Ltd [2004] FCA 190 (Johnstone v HIH) at [38]; Guglielmin v Trescowthick (No 2) (2005) 220 ALR 515 (Guglielmin v Trescowthick (No 2)) at [29]; Auskay International Manufacturing & Trade Pty Ltd v Qantas Airways Ltd (2008) 251 ALR 166 (Auskay v Qantas) at [65]; Kirby v Centro Properties Ltd (2010) 189 FCR 301 (Kirby v Centro); and Pampered Paws Connection Pty Ltd v Pets Paradise Franchising (Qld) Pty Ltd (No 3) [2009] FCA 138 (Pampered Paws) in which Mansfield J did not express a concluded view at [105]-[107] and [125]. They say that a single judge of this Court is bound to follow Philip Morris v Nixon. 107 For a useful analysis of the authorities on this question, see Grave D, Adams K, Betts J, Class Actions in Australia (2nd edition, Lawbook Co., 2012) (Class Actions in Australia) at [4.310]-[4.430]. It is summarised at [4.320]: …[T]he primary issue which has given rise to debate and uncertainty is whether it is necessary for every group member to have a claim against each respondent where there are multiple respondents. The issue has some practical significance, because over half of the representative proceedings filed in Australia to date have involved multiple respondents. No clear answer to this important question exists at this time. From the discussion below the following may be distilled: • There is conflicting Full Court authority on the issue of whether s 33C(1)(a) of the Federal Court Act requires each group member to have a claim against each respondent. In Philip Morris (Australia) Ltd v Nixon (2000) 170 ALR 487, the issue was (appropriately, in light of the decision at first instance) conceded and was therefore not argued. The parties (and therefore the court) proceeded on the assumption that it was a requirement of s 33C(1)(a) that every group member have a claim against each respondent. • The issue was first argued at appellate level in a later case, Bray v F Hoffman-La Roche Ltd (2003) 130 FCR 317. In that case, two judges concluded that s 33C(1)(a) did not require each group member to have a claim against each respondent. The views expressed by one of the two judges were arguably dicta (although even that characterisation has been the subject of judicial debate). In light of the consideration of the issue in Bray v F Hoffman-La Roche, the better view would seem to be that there is no requirement for all group members to have a claim against all respondents. • Despite the view expressed above, on the first subsequent occasion that a trial judge came to consider the issue, in Johnstone v HIH Insurance Ltd [2004] FCA 190, the position in Philip Morris was followed. 108 In Johnstone v HIH Ltd at [38] Tamberlin J said simply in relation to Bray v F Hoffman La-Roche that there was "some criticism levelled by the members of the Full Court towards the approach taken in Philip Morris on the basis that it is too restrictive and detracts from the purpose of Part IVA: see Bray at 630-631 and 657-659. Such comments were by way of obiter and I consider that I am bound by the reasoning in Philip Morris." 109 The commentary at [4.320] of Class Actions in Australia then continues: • Subsequent to that decision, Kiefel J in Milfull v Terranora Lakes Country Club Ltd (in liq) (2004) 214 ALR 228, without referring to Johnstone, said in obiter that since Bray v F Hoffman-La Roche it is not necessary for each group member to have a claim against each respondent. • A later single judge decision of the Federal Court expressed agreement with Johnstone v HIH Insurance Ltd [2004] FCA 190, however the judge did not refer to the decision of Kiefel J. A further single judge of the Federal Court was prepared to proceed upon the assumption that Philip Morris was correctly decided although, having noted some of the conflicting authorities, the judge did not reveal the basis for the assumption. 110 I take the first reference to a single judge in the immediately preceding dot point to be a reference to the judgment of Mansfield J in Guglielmin v Trescowthick (No 2). It is not clear to what case the second remark refers. In Guglielmin v Trescowthick (No 2), Mansfield J noted at [26] that Philip Morris v Nixon has been followed by a number of single judge decisions; all of those decisions predated Bray v F Hoffman-La Roche. At [27], Mansfield J then went on to set out Finkelstein J's comments at [248] of Bray v F Hoffman-La Roche, noting that Carr J agreed with them. His Honour then said at [28]-[29] that those comments were not the ratio decidendi of the decision on s 33C(1)(a) and noted that Branson J at [199] of Bray v F Hoffman-La Roche did not accept that Philip Morris v Nixon was clearly wrong on this issue. His Honour noted Tamberlin J's comments in Johnstone v HIH Ltd that Finkelstein J's comments are obiter dicta and that Tamberlin J considered himself bound to follow Philip Morris v Nixon. Mansfield J adopted the same course and said "the applicant, through senior counsel, did not ask me to act otherwise". 111 The commentary at [4.320] of Class Actions in Australia then continues: • The position has been further complicated by three recent decisions: Finkelstein J in McBride v Monzie Pty Ltd (2007) 164 FCR 559 (rejecting the Philip Morris interpretation); Tracey J in Auskay International Manufacturing & Trade Pty Ltd v Qantas Airways Ltd (2008) 251 ALR 166 (supporting the Philip Morris interpretation); and Mansfield J in Pampered Paws Connection Pty Ltd v Pets Paradise Franchising (Qld) Pty Ltd (No 3) [2009] FCA 138 (arguably supporting the views expressed in Philip Morris). • Finally in Kirby v Centro Properties Limited (2010) 189 FCR 301, Ryan J expressed a reluctance to follow the position in Philip Morris, but felt compelled to do so given his characterisation of the contrary position in Bray v F Hoffman-La Roche as obiter dicta. ... This area of representative proceedings requires clarification by the High Court or federal Parliament. … [T]he position appears to have been clarified for proceedings commenced under the New South Wales regime for representative proceedings introduced in 2011. 112 I will come to the decision in McBride v Monzie below. In Auskay v Qantas at [61]-[63], Tracey J supported the Philip Morris v Nixon position. After he had considered the issue of the conflict between Philip Morris v Nixon and Bray v F Hoffman-La Roche, he noted that Branson J had found that Philip Morris v Nixon was not clearly wrong and the single judge decisions in Johnstone v HIH Ltd and Guglielmin v Trescowthick (No 2) in which those judges considered the remarks of Finkelstein J in Bray v F Hoffman-La Roche to be obiter. These remarks were not necessary to Tracey J's decision and he did not refer to McBride v Monzie. 113 In Pampered Paws, Mansfield J at [125] said that it was unnecessary for him to address the significance of any difference in the views of the Full Courts in Philip Morris v Nixon and Bray v F Hoffman-La Roche because all applicants had alleged a claim against all respondents. On that basis, it is difficult to see that this case has anything to say on the issue in contention. 114 In Kirby v Centro, Ryan J gave careful consideration to the judgments in Bray v F Hoffman-La Roche, but considered himself bound to follow Philip Morris v Nixon because comments in Bray v F Hoffman-La Roche disavowing it were obiter dicta (at [11]). He did not refer to McBride v Monzie. 115 Ms Gray submits that the precedential status of Philip Morris v Nixon and Bray v F Hoffman-La Roche has only been given detailed consideration once, by Finkelstein J in McBride v Monzie at [2]-[7]: 1. Section 33C(1) provides that a representative proceeding may be commenced where: "(a) 7 or more persons have claims against the same person; and (b) the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances; and (c) the claims of all of those persons give rise to a substantial common issue of law or fact". In Philip Morris (Australia) Ltd v Nixon (2000) 170 ALR 487 at 514 Sackville J (with whom Spender J agreed at 489 and Hill J agreed at 492) said that s 33C(1)(a) requires every applicant and represented party to have a claim against the respondent and if there is more than one respondent then every applicant and represented party must have a claim against each respondent. The judgment records that this point had been conceded by counsel for the applicants so was not in issue before the Full Court. Nonetheless, Sackville J provided short reasons which justified the construction that counsel had conceded. 2. A different conclusion was reached in Bray v F Hoffman-La Roche Ltd (2003) 130 FCR 317. In that case the respondents applied on several grounds to stop the class action which had been brought against them. The grounds included non-compliance with s 33C(1)(a). Reference was made to Philip Morris 170 ALR 487. The Full Court found against the respondents on all grounds. As regards s 33C, two judges, Carr J (at 344-346) and I (at 373-374), said that to comply with s 33C(1)(a) it was necessary for the applicant to have a claim against all respondents but on its proper construction the section did not require every represented party to have a claim against every respondent. 3. Now, according to the law of precedent, Philip Morris has been overruled by Bray: Young v Bristol Aeroplane Co Ltd [1944] KB 718, 727-729; Campbell v Crawford (1985) 12 FCR 317, 332-333; BC v Minister for Immigration and Multicultural Affairs (2001) 67 ALD 60, 78; Sutherland Re; French Caledonia Travel Service Pty Ltd (in liq) (2003) 59 NSWLR 361, 379. The overruling was not implied (as to the need to adopt a cautious approach to implied overruling see Jacob v Utah Construction and Engineering Pty Ltd (1966) 116 CLR 200, 207; Ratcliffe v Watters [1969] 2 NSWR 146, 152-153). In this instance the majority in Bray referred expressly to what had been said in Philip Morris in relation to the operation of s 33C(1)(a) and disapproved of it. It may be accepted that in Bray the Full Court ruled against the defendants on several grounds. Hence it was not strictly necessary for the Full Court to deal with the correctness of Philip Morris. Still the majority did deal directly with that issue. Carr J said (at 344): "I shall briefly express my views. The question is whether the decision in Phillip Morris was wrong on this point. With respect, I think that it is clear (to the extent required) that it was wrongly decided on this point and should not be followed. I agree with Finkelstein J's reasons for not following it, but would add a few comments." He went on to give reasons. After referring to Philip Morris and what I saw to be the adverse consequences that would flow from its adoption, I said (at 373) that: "I am of the very firm view that there is nothing in the language of s 33C(1), when considered in isolation or in its setting, which requires [the] result [mandated by Philip Morris]." 4. Although Philip Morris 170 ALR 487 has been overruled by Bray 130 FCR 317 there are two cases in which it has been said that the relevant discussion in Bray was only obiter. The cases are Johnstone v HIH Ltd [2004] FCA 190 at [38] and Guglielmin v Trescowthick (No 2) (2005) 220 ALR 515 at 522. In neither case did the judge explain why he thought that the reasons of the majority in Bray were obiter. With great respect, it is, in my view, clear that the ruling on s 33C(1)(a) in Bray 130 FCR 317 forms part of the ratio. 5. The ratio of a case is the ruling on a point of law upon which the judge acts to reach his (or her) conclusion: Cross and Harris, Precedent in English Law (4th ed, 1991) p 72. If a judge gives two or more alternative reasons for reaching his (or her) decision each reason is part of the ratio: Crowther v Thorley (1884) 50 LT 43 at 46; Commissioners of Taxation (New South Wales) v Palmer [1907] AC 179 at 184; Cheater v Cater [1918] 1 KB 247 at 252; London Jewellers Ltd v Attenborough [1934] 2 KB 206 at 222; Jacobs v London County Council [1950] AC 361 at 369; Bristol-Myers Squibb Company v F H Faulding & Company Ltd (2000) 97 FCR 524 at 570-571. There may be some cases where the judge gives additional reasons but indicates that he does not wish them to be part of the ratio and is merely wanting to have his views recorded for the benefit of those who may later be required to consider the point. In that event, what the judge says is not part of the ratio: Behrens v Bertram Mills Circus Ltd [1957] 2 QB 1 at 25. Bray 130 FCR 317, however, is not such a case. The majority tackled Philip Morris head on. 6. The irony in all of this is that what was said about s 33C(1)(a) in Philip Morris is itself obiter. Mr Watson who appeared for the applicant put that argument because the construction of s 33C(1)(a) was not in issue in Philip Morris. What was said, he submitted, could not be part of the ratio. He referred to a passage in the judgment of McHugh J in Coleman v Power (2004) 220 CLR 1, 44-45 where he dealt with the legal effect of a judgment that discussed a point not in issue. McHugh J said: "This Court has no business in determining issues upon which the parties agree. If a point is not in dispute in a case, the decision lays down no legal rule concerning that issue. If the conceded issue is a necessary element of the decision, it creates an issue estoppel that forever binds the parties. But that is all. The case can have no wider ratio decidendi than what was in issue in the case. Its precedent effect is limited to the issues." See also: Coleman per Heydon J at 120 ("The concession may be assumed to be correct for the purposes of the next question, but that assumption implies no decision as to its actual correctness."); Curtis v Corbin 107 A 506, 508 (Connecticut 1919) ("This was assigned for error and was held erroneous. The matter was discussed by counsel, and the court, at the end of the opinion, ruled, though without discussion, and apparently by agreement of the parties, that the taxation should be … this may not be absolutely binding because conceded by counsel …"); Local 144 Nursing Home Pension Fund v Demisay 508 US 581, 592 n5 (1993) (characterising statements in an earlier case that were "uninvited, unargued, and unnecessary to the Court's holdings" as non-binding obiter); Brecht v Abrahamson 507 US 619, 631 (1993) (reaffirming the longstanding rule that if a decision does not "squarely addres[s] [an] issue," a court remains "free to address the issue on the merits" in a subsequent case); National Cable Television Association Inc v American Cinema Editors Inc 937 F2d 1572, 1581 (Fed Cir 1991) ("When an issue is not argued or is ignored in a decision, such decision is not precedent to be followed in a subsequent case in which the issue arises."); 1B Moore's Federal Practice ¶0.402[2], (2nd ed, 1995) ("When an issue is not argued ... the decision does not constitute a precedent to be followed in subsequent cases in which such an issue arises."). It follows that what the Full Court said in Philip Morris about s 33C(1)(a) was not part of the ratio. That leaves the field to Bray. 116 Cash Converters take issue with Finkelstein J's view that what was said about s 33C(1)(a) by Sackville J in Philip Morris v Nixon was obiter. They contend it was the Full Court's obligation to consider the proper interpretation of s 33C(1)(a) and that obligation could not be displaced by the parties' concessions so that Sackville J's reasons at [126]-[127] are ratio decidendi. They relied on statements in Pearce, DC and Geddes, RS Statutory Interpretation in Australia (7th edition, 2011) at [1.5] in support of this contention: Duties of the courts in relation to legislation …This duty cannot be abrogated by agreement between the parties that involves, expressly or by implication, some assumption as to the meaning of the legislation. The constitutional function of a court as the interpreter of the written law compels it to reach its own unfettered decision: Cherwell District Council v Thames Water Board [1975] 1 WLR 448. The task is exercisable by the courts alone. Further, at [1.6]: Court not bound by counsel's argument on interpretation McGarvie J in Accident Towing & Advisory Committee v Combined Motor Industries Pty Ltd [1987] VR 529 at 547 pointed out that responsibility rests with the court for the interpretation to be placed on an enactment. He cited Lord Wilberforce in Saif Ali v Sydney Mitchell & Co (A Firm) [1980] AC 198 at 212; [1978] 3 All ER 1033 at 1037: 'Judges are more than mere selectors between rival views - they are entitled to and do think for themselves'. The fact that counsel have not supported a particular interpretation of legislation does not, indeed must not, prevent a court from adopting that interpretation if the court considers the interpretation to be correct. … … For a more recent statement of the principle spelt out by McGarvie J, see Coleman v Power (2004) 220 CLR 1; 209 ALR 182, in which Kirby J observed, at 94; 243: It is not the judicial obligation to put specifically to parties … every rule of statutory construction relevant to the performance of the judicial task. Subject to considerations of procedural fairness, this Court may adopt a construction of legislation that has not been argued by the parties, and a fortiori it is not restricted to the interpretive principles argued by their representatives. 117 I do not consider that the quoted passages from Statutory Interpretation in Australia support the proposition advanced by Cash Converters. They appear in a context of the duty of the court to resolve obscurity in the interpretation of legislation. Paragraph [1.5] commences: The complexity of the task of the legislative drafter in turn presents problems for the courts. But no matter how obscure an Act or other legislative instrument might be, it is the inescapable duty of the courts to give it some meaning: Scott v Moses (1957) 75 WN (NSW) 101 at 102 per the New South Wales Court of Criminal Appeal … 118 It is in this context that the authors make the remark that "[t]his duty cannot be abrogated". As submitted by counsel for Ms Gray, these passages do not deal with the precedential effect of a decision by a court on a statute, or a statement by a court as to the meaning of a statute, when it has performed its duty to consider for itself what the meaning of that statute is rather than simply accepting the parties' consensus. 119 Ms Gray contends that the correct position is expressed in Cross R and Harris JW, Precedent in English Law (4th edition, Oxford University Press, 1991) at p 72: … A statutory rule, whose interpretation is not in question, may constitute an essential step in a judge's reasoning but it will not, of course, be what is called 'ratio decidendi'. If, however, the meaning of a statute is disputed and the judge rules, as part of the justification for his conclusion, that it has one meaning rather than another, this ruling is his ratio decidendi. In practice, in the present context 'rule' and 'ruling' are used interchangeably. 120 Ms Gray says that this position is supported by the observation of Kirby J in Garcia v National Australia Bank Ltd (1998) (Garcia) 194 CLR 395 at [56] (citations omitted): It is fundamental to the ascertainment of the binding rule of a judicial decision that it should be derived from (1) the reasons of the judges agreeing in the order disposing of the proceedings; (2) upon a matter in issue in the proceedings; (3) upon which a decision is necessary to arrive at that order. … Even so great a Justice of this Court as Dixon J cannot speak for the Court unless his reasoning attracts the support, express or implied, of a majority of the participating Justices (disregarding for this purpose any who did not agree in the order of the Court disposing of the proceedings on the point in question). Even then, the remarks will not be part of a binding rule unless they relate to an issue in contention which had to be decided by the Court to reach its order. 121 This position was relied on by Finkelstein J in McBride v Monzie at [7] (although he did not refer to Garcia). Finkelstein J drew on the authority of Coleman v Power (2004) 220 CLR 1 (Coleman v Power). At [79] McHugh J said: In my view - in constitutional and public law cases as well as private law cases - parties can concede issues even though the issue is a legal issue. The only power with which this Court is invested is judicial power together with such power as is necessary or incidental to the exercise of judicial power in a particular case. The essence of judicial power is the determination of disputes between parties. If parties do not wish to dispute a particular issue, that is their business. This Court has no business in determining issues upon which the parties agree. It is no answer to that proposition to say that this Court has a duty to lay down the law for Australia. Cases are only authorities for what they decide. If a point is not in dispute in a case, the decision lays down no legal rule concerning that issue. If the conceded issue is a necessary element of the decision, it creates an issue estoppel that forever binds the parties. But that is all. The case can have no wider ratio decidendi than what was in issue in the case. Its precedent effect is limited to the issues. Because of the concession, the present case, for example, can be an authority only for a limited rule of constitutional law. ... and at [318] Heydon J said: It would be necessary to examine this concession if the outcome of the appeal turned on its correctness. However, it does not. The concession may be assumed to be correct for the purposes of the next question, but that assumption implies no decision as to its actual correctness. 122 Sackville J plainly felt compelled to go beyond the conceded position of the parties: see [108]-[109]: Secondly, senior counsel for the applicants expressly accepted that in order to satisfy par (a) of what the High Court has described as the "threshold requirements'' imposed by s 33C(1) of the Federal Court Act (Wong v Silkfield at 381, per curiam), it was necessary that the applicants' pleading allege facts that establish that they and every member of the represented class have a claim against every respondent. For their part, the respondents accepted that the expression "the same person" in s 33C(1)(a) is to be read as including more than one person (see Acts Interpretation Act 1901 (Cth) s 23(b)), provided that all applicants and members of the represented class make claims against all respondents to the proceedings. Perhaps because there was no dispute on these questions, the parties did not explore further the relationship between the procedural requirements of Pt IVA of the Federal Court Act and the general principles governing pleadings in the Federal Court. It is nonetheless important to address these questions, as they have a bearing on the outcome of the present appeals. A useful starting point is the report of the Law Reform Commission ("LRC"), Grouped Proceedings in the Federal Court (Report No 46, 1988) ("Grouped Proceedings"). 123 Notwithstanding this, it is clear that it was not an issue in dispute whether s 33C(1)(a) requires that all group members have claims against all respondents, and on the authority of Coleman v Power per McHugh and Heydon JJ and Garcia per Kirby J, Sackville J's views on this issue, even though they were supported by Spender and Hill JJ, did not form part of the ratio of the case for the reasons expressed by Finkelstein J in Monzie v McBride at [7]. 124 Ms Gray contended that the views expressed by Carr and Finkelstein JJ in Bray v F Hoffman-La Roche at [122]-[130] and [246]-[248] formed ratio decidendi of those judgments, and that is clearly Finkelstein J's view in McBride v Monzie at [3]-[4]. It is not the view of the other first instance judges who have considered the issue, albeit apparently without the benefit of the argument considered by Finkelstein J in McBride v Monzie. Those judges whose decisions were made after McBride v Monzie was decided did not refer to that decision. While it is clear that both Carr and Finkelstein JJ thought Philip Morris plainly wrong, at least in Carr J's case it appears that he took the opportunity to express views rather than to set out an alternative basis for his decision (see [122]). However, it is unnecessary for me to form a concluded view because if consideration of the issue of the proper interpretation of s 33C(1)(a) did not form part of the ratio decidendi of Philip Morris v Nixon, the views expressed by the Full Court in that case are superseded by the views expressed in Bray v F Hoffman-La Roche by Carr and Finkelstein JJ even if those views are technically obiter dicta. Notwithstanding that some other single judges of the Court have felt bound to follow Philip Morris, I consider that for these reasons I should follow the interpretation of s 33C(1)(a) approved by Carr and Finklestein JJ in Bray v F Hoffman-La Roche. For the reasons expressed by Carr J at [129]-[130] and Finkelstein J at [248], I consider that their interpretation of the meaning of s 33C(1)(a) is more consistent with the policy of Part IVA and better facilitates the overarching purpose of civil practice and procedure set out in s 37M of the Federal Court Act.

Personal Loans Action 125 For these reasons I decline to strike out that part of the statement of claim which defines Group Members as persons having claims against either Safrock or CC Personal Finance.

Cash Advances Action 126 Ms Gray says that the claims of Group Members are for contraventions of s 12CB(1) by all NSW Franchisees (including Ja-Ke Holdings) and CC Cash Advance arising out of credit contracts under which less than $1,000 was advanced, and where the Group Member signed a document called a 'Cash Advance Early Repayment Election'. Although it is true that she only had dealings with Ja-Ke Holdings and therefore has no claims against Other NSW Franchisees or CC Cash Advance (and they are not parties to the action), Ms Gray says she can bring the representative action because of the common claims of the Group Members against CC International for accessorial liability for a system of conduct or pattern of behaviour which gave rise to the contraventions of s 12CB(1) of the ASIC Act. Section 12GF(1) permits a person who suffers loss or damage by conduct of another person that contravenes s 12CB(1) to recover that loss or damage by action against the "other person" or against "any person involved in the contravention": they are independent claims. 127 I accept that this position is supported by a line of authority which relates primarily to accessorial liability for contravention of s 52 of the Trade Practices Act. In Matheson Engineers Pty Limited v El Raghy (1992) 37 FCR 6 at 9 French J said: The second point of principle raised by counsel for Mr Bond, was that it is not open to an applicant in proceedings for a contravention of s 52 of the Trade Practices Act to sue only the natural persons said to be involved in the relevant contravention without joining the primary corporate contravenor. There was, it was said, no authority on the point. If that is so, it may be because the point is not tenable. Section 82 of the Trade Practices Act creates a cause of action for loss or damage suffered by a person by conduct of another in contravention of a provision of Pt IV or Pt V which the person who has suffered the loss or damage may recover "by action against the other person or against any person involved in the contravention". The words of the section in this respect are clear and do not impose as a condition of accessorial liability a requirement that the primary contravenor be a party to the action. It may be that in many cases a primary corporate contravenor should be joined as a respondent so that the entire dispute may be determined. In other cases the primary contravenor may be a company in liquidation or just insolvent. There may be no point to the joinder of that company in those circumstances which may require leave of the court under the Corporations Law in any event. In my opinion there is no substance to the second point of principle submitted on behalf of Mr Bond. 128 This proposition was relied on in Australian Competition and Consumer Commission v Albert [2005] FCA 1311 at [34] per Jacobson J who declined to make declarations in relation to the conduct of the primary contraveners who were not parties to the proceedings and would be affected by the declarations but did make declarations against respondents in relation to accessorial liability. 129 Many of the cases relate to claims made against individuals for accessorial liability where the corporate primary contravener had become insolvent or liquidated: see Richardson & Wrench (Holdings) Pty Ltd v Ligon No 174 Pty Ltd (1994) 123 ALR 681 at 683 per Burchett J, Australian Competition and Consumer Commission v Black on White Pty Ltd (2001) 110 FCR 1 at [48]-[53] per Spender J and Australian Competition and Consumer Commission v Australian Securities and Investments Commission [2000] NSWSC 316 per Austin J. 130 In Norcast S.Ár.L v Bradken Limited (No 2) [2013] FCA 235 at [296] Gordon J found that the fact that proceedings had not been commenced against a US based corporation which was a primary contravener did not preclude the Court from making findings that two individuals had been involved in a contravention of ss 44ZZRJ and 44ZZRK of the Competition and Consumer Act 2010 (Cth) and made similar findings in relation to misrepresentations by the US corporation at [337]. 131 Ja-Ke Holdings' primary submission was that this claim is not properly brought because of the decision in Philip Morris v Nixon, but that if the Court did not accept that submission then the Court should note the following: (1) there may ultimately be a very large number of Group Members but it is likely that only a very small proportion of them would have claims against Ja-Ke Holdings as Ms Gray suggests that there are at least nine other franchisees in respect of which credit contracts might give rise to claims, yet there is no suggestion of joining those other franchisees as respondents; (2) the quantum of the claim brought by Ms Gray against Ja-Ke Holdings in her own right would be very small and one must assume that all such claims would be small; (3) there is no scope for arguing for a broad interpretation of the concept of "claim" in s 33C(1) because most of the proposed Group Members would have no claim of any description against Ja-Ke Holdings; (4) while contract terms might raise common issues for all Group Members thereby complying with paragraphs (b) and (c) of s 33C(1) in relation to a claim against Ja-Ke Holdings that would not be true if the claims extend to Other NSW Franchisees and CC Cash Advance; and (5) it would be unduly costly, unwieldy and time-consuming for Ja-Ke Holdings to be required to defend an action brought by a very large number of unrelated persons who have no claim against it; such a wide definition of Group Members only serves the interest of cost effectiveness and convenience for Ms Gray. 132 Ja-Ke Holdings says that in the circumstances those parts of the statement of claim that make the proceedings representative under Part IVA should be struck out and leave to re-plead should only be granted on the basis that the definition of Group Members is restricted to those persons who entered into credit contracts with Ja-Ke Holdings directly. Ja-Ke Holdings further submits that any subsequent applications brought on behalf of persons with claims against Other NSW Franchisees and CC Cash Advance to have other proceedings heard together with these proceedings should be considered on their merits but the supplementary provision of s 33F should not be used to circumvent constraints imposed by s 33C. 133 For the reasons set out at [107] to [124], I consider that I should follow the decision of the majority in Bray v F Hoffman-La Roche not Philip Morris v Nixon. The question therefore is whether the "claims" of Ms Gray and Group Members against CC International for accessorial liability in relation to unconscionable conduct by NSW Franchisees (including Ja-Ke Holdings) and CC Cash Advance fall within s 33C(1)(b) as being "in respect of, or arise out of, the same, similar or related circumstances" and s 33C(1)(c), that is: do they "give rise to a substantial common issue of law or fact". I consider that the reasons of Cowdroy J in TMAC Pty Ltd trading as Northstar Property Services v Thomas Ford Trading Pty Ltd trading as Fresh Telecoms [2010] FCA 445 at [18]-[26] correctly state the considerations relevant to these issues (as written, footnotes omitted): 18 It should be observed at the outset that the section does not require that the claims of each person in the relevant group be identical, but only that the claims of such persons arise out of the same, similar or related circumstances and that those claims give rise to substantial common issues of law or fact (see s 33C(b) and (c)). 19 Further, s 33C envisages that the proceeding may be concerned with separate contracts or transactions (see s 33C(b)(i)). Accordingly, it is implicit in such section that the evidence relating to each individual claimant need not be the same. 20 In Australian Competition and Consumer Commission v Giraffe World Australia Pty Limited and Others (1998) 84 FCR 512, Lindgren J at 520 referred to the Second Reading Speech of the Federal Court of Australia Amendment Bill 1991 (Cth) by the Minister for Justice and Consumer Affairs, the passing of which introduced Pt IVA into the Court Act. For present purposes the relevant portions of such speech provide: The Bill gives the Federal Court an efficient and effective procedure to deal with multiple claims. Such a procedure is needed for two purposes. The first is to provide a real remedy where, although many people are affected and the total amount at issue is significant each person's loss is small and not economically viable to recover in individual actions. It will thus give access to the Courts to those in the community who have been effectively denied justice because of the high cost of taking action. The second purpose is to deal efficiently with the situation where the damages sought by each claimant are large enough to justify individual actions and a large number of persons wish to sue the respondent. The new procedure will mean that groups of persons, whether they be shareholders or investors, or people pursuing consumer claims, will be able to obtain redress and do so more cheaply and efficiently than would be the case with individual actions. 21 In Giraffe World, Lindgren J at 539 ordered that the proceedings no longer continue as representative proceedings. However the factual issues in that case were such that it was not even apparent whether any of the 'class' of claimants had suffered loss or damage. In the present proceedings the loss or damage prima facie can be quantified in each case. 22 Although in a different context, in Zhang v Minister for Immigration, Local Government and Ethnic Affairs (1993) 45 FCR 384 French J (as he then was) considered whether a group who sought determination of their status as refugees and who sought to challenge a decision under the Administrative Decisions (Judicial Review) Act 1997 (Cth) had standing to initiate representative proceedings, even though the facts of each individual case would vary. His Honour at 400 referred to the manner in which representative proceedings could be initiated prior to the introduction of Pt IVA and considered further (at 403) the extent to which Part IVA had widened the scope for representative or class actions. His Honour observed at 404: The question of whether the claims of the persons who are proposed as members of a group arise out of "the same, similar or related circumstances" as required by s 33C(1) is not to be answered by an elaboration of that verbal formula. It contemplates a relationship between the circumstances of each claimant and specifies three sufficient relationships of widening ambit. Each claim is based on a set of facts which may include acts, omissions, contracts, transactions and other events. As appears from s 33C(2), the circumstances giving rise to claims by potential group members do not fall outside the scope of the legislation simply because they involve separate contracts or transactions between individual group members and the respondent or involve separate acts or omissions of the respondent done or omitted to be done in relation to individual group members. 23 In McBride v Monzie Pty Ltd and Others (1997) 164 FCR 559 Finkelstein J at [21] repeated the statement he made in Bright v Femcare Ltd and Another (2003] 195 ALR 574 at 606 and said: I said in that case that if the applicants and the group members were not permitted to bring a group claim it was likely that many of them would not pursue an individual claim because the potential gain would not justify incurring the risk of costs. I said that in that sense it would be contrary to the interests of justice to make an order under s 33N. This is an even stronger case, due to the quantum of the individual damages claims, where stopping the group proceeding would work a serious injustice. 24 In Finance Sector Union of Australia and Another v Commonwealth Bank of Australia (1999) 94 FCR 179, the Full Court considered whether a substantial common issue of law or fact had been identified. The critical issue in Finance Sector Union was confined to the interpretation of an award. Had the issue been determined adversely to the representative applicants in the proceeding, the claim would fail in respect of all claimants since the underlying basis of all claims was common. However, if relief was granted, the quantum of damage for each employee would differ. The Full Court observed at [13]: It is a fundamental mistake to argue that the existence of some non-common issues takes a case outside s 33C(1)(c) of the Federal Court Act. Section 33C(2) provides that a representative proceeding may be commenced "whether or not the relief sought ... includes claims for damages that would require individual assessment" (para (a)) and "whether or not the proceeding ... is concerned with separate contracts or transactions ... [or] separate acts or omissions" (para (b). Plainly, Parliament envisaged cases involving non-common material; that was not to be a disqualification from using Part IVA of the Federal Court Act. 25 In Wong and Others v Silkfield Pty Limited (1999) 199 CLR 255, the High Court of Australia sought to address the scope of the requirement under Part IVA that 'substantial common issue of law or fact' exist between the representative parties. At [28] the High Court observed: Clearly, the purpose of the enactment of Pt IVA was not to narrow access to the new form of representative proceedings which applied under regimes considered in cases such as Carnie. This suggests that, when used to identify the threshold requirements of s 33C(1), "substantial" does not indicate that which is "large" or "of special significance" or would "have a major impact of the…litigation" but, rather, is directed to issues which are "real or of substance". [Footnotes Omitted] 26 The High Court further held at [30]: It was not necessary to show that the litigation of this common issue would be likely to resolve wholly, or to any significant degree, the claims of all group members. 134 I reject Ja-Ke Holdings' submissions. As is apparent from the Second Reading Speech for the Federal Court of Australia Amendment Bill 1991 (Cth), the purpose of representative proceedings is to allow efficient dealing with the claims of a large number of people where the total amount at issue may be significant but it may not be economically viable for individuals to pursue recovery of their loss. Given the case theory proposed by Ms Gray it is not apparent why Ja-Ke Holdings need be exposed to significant costs that do not relate to claims by Ms Gray and others who had dealings with Ja-Ke Holdings. At least at this stage it is not apparent why Ms Gray's claims on behalf of the Group Members in relation to the outworking of a franchise system or similar business practices of CC Cash Advance could not be categorised as being in respect of, or arising out of, the same, similar or related circumstances or that they will not give rise to sufficiently common questions of law or fact. In the absence of an application under s 33N, it appears that the interests of justice are best served by the conduct of these proceedings to refine and resolve common issues. The true nature and extent of the common issues will only be tested by evidence or admissions concerning whether credit contracts offered by NSW Franchisees and CC Cash Advance conform to a system or pattern. The implications of any differences fall for determination at a later stage of the proceedings. 135 Cash Converters raised the issue of whether accessorial liability claims are even available in the context of representative proceedings having regard to the reservations expressed in Philip Morris v Nixon by Hill J at [18] and by Sackville J at [161]: 18 Thirdly, there is a difficulty in representative proceedings being brought where some of the respondents are what may be called principal offenders by virtue of breaches of s 52 of the Trade Practices Act 1974 (Cth) committed by those respondents on the one hand and others have an accessory liability on the other. That problem is compounded where the possibility arises that the so-called common issue involves in one case one group of respondents as principals and another group of respondents with accessory liability and in another a quite different group of respondents as principals and another differently constituted group of respondents with accessory liability. It must also be remembered that accessory liability under the Trade Practices Act requires proof that the accessory has knowledge of the misleading and/or deceptive conduct of the person with the principal liability: Yorke v Lucas (1985) 158 CLR 661. The difficulties are both legal and practical and would suggest that it would be preferable that each case be separately pleaded and tried, rather than that an attempt be made to combine each case into a representative application. … 161 I should add that there may be a further question raised by the applicants' contentions. It is by no means clear that s 33C(1)(a) can be satisfied where the statement of claim pleads that some group members have claims under the TP Act against one respondent (A) and others against another respondent (B), even if A and B are each alleged to have aided and abetted the other's contravention of the TP Act. It is not, however, necessary to resolve that question. 136 I accept Ms Gray's submission that despite the reservations expressed by Hill and Sackville JJ it is at least arguable that accessorial liability claims are available in the context of representative proceedings. There may well be practical issues to be managed in the conduct of proceedings involving both principal and accessorial liability claims and they arise in both the Personal Loans Action and the Cash Advances Action. I acknowledge that the issues of management are likely to be greater in the Cash Advances Action because the accessorial liability claims relate to the conduct of alleged primary contraveners who are not parties. However, at this early stage of the proceedings I do not consider that the statement of claim should be struck out or any other steps taken to separate the proceedings on that basis: I am supported in this view by the discussion at [4.640] of Class Actions in Australia and Goldberg J's decision in Williams v FAI Home Security in which he declined to strike out a statement of claim in a representative proceeding in which claims were made for both principal and accessorial liability.

CONCLUSION 137 Having regard to the matters raised in these reasons, I will seek submissions from the parties as to the appropriate nature of the orders to be made. Rather than striking out individual paragraphs of the statement of claim, I am inclined simply to give Ms Gray leave to re-plead the statements of claim having regard to these reasons by a date to be specified. I will also seek submissions on the appropriate costs orders to be made. I certify that the preceding one hundred and thirty-seven (137) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Farrell.