Hardy v Reckitt Benckiser

1. The respondent's interlocutory application filed 10 March 2017 be dismissed with costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

NICHOLAS J: 1 Before me is an interlocutory application filed by the respondent in a representative proceeding commenced under Pt IVA of the Federal Court of Australia Act 1976 (Cth) ("the Act') seeking what is colloquially known as a "class closure" order under s 33ZF(1) of the Act. A similar application was refused by Jagot J in this proceeding on 25 November 2016. The initial trial is fixed to commence on 1 August 2017 with an estimate of two to three days. 2 The respondent's proposed order effectively requires group members to positively indicate whether they wish to advance a claim in the proceeding or participate in a potential settlement. Under the terms of the respondent's proposed order they will, in the absence of any such positive indication, be excluded from any settlement and precluded from seeking any relief in the proceeding without the leave of the Court. 3 The respondent says that it seeks the class closure order to facilitate a productive mediation prior to the determination of the applicants' claim and the resolution of the common questions following the initial trial. The applicants oppose the making of any form of class closure order prior to the initial trial. 4 The group members are consumers as defined by s 3 of the Australian Consumer Law ("ACL") who purchased any of the following products in the Nurofen Specific Pain Range ("NSPR") between 1 January 2011 and 31 December 2015: Nurofen Migraine Pain ibuprofen lysine 342 mg tablet blister pack; Nurofen Tension Headache ibuprofen lysine 342 mg tablet blister pack; Nurofen Period Pain ibuprofen lysine 342 mg tablet blister pack; and Nurofen Back Pain ibuprofen lysine 342 mg tablet blister pack, in packaging that the applicants allege was misleading or deceptive or likely to mislead or deceive. The packaging in issue included the statement "Fast Targeted Relief from Pain". The respondent has admitted that this statement, as it appeared on packaging used in the relevant period, was misleading or deceptive or likely to mislead or deceive. It does not admit that the applicants suffered loss as a result of the respondent's misleading conduct. 5 There were, as at 16 November 2016, 578 group members who have registered with the applicants' solicitors. These registered group members have purchased 58,618 packets of the NSPR products which accounts for approximately 1% of the 5.9 million packets sold by the respondent in the period between 1 January 2011 and 31 December 2015. The recommended retail prices of the NSPR products during this period were $11.29 for packets of 24 caplets and $6.29 - $6.59 for packets of 12 caplets. 6 One group member, Mr Keith Hardy, who is now the first applicant in place of Mr Phillips, has said in his affidavit that he purchased and used the NSPR product for migraine pain on a regular basis between 2011 and 2015, but that he ceased taking the product when he became aware that it was the same as the respondent's standard (cheaper) Nurofen product. He has also said that he would have purchased less expensive products in lieu of the NSPR products were it not for the respondent's misleading conduct. Mr Hardy claims to have suffered a loss of between $185.90 and $363.35 depending on which of these less expensive products was purchased. So Mr Hardy's claim is for a relatively modest sum of money. The claims of other group members are also likely to be modest. 7 The respondent submitted that it is a relatively simple task to work out what is its maximum theoretical liability to group members, but that in circumstances where it cannot know which of the group members claim to have suffered loss as a result of the respondent's misleading packaging, it cannot make a proper assessment of its overall exposure. It says that a mediation is likely to be futile unless an order is first made closing the class which should enable it to make a realistic assessment of its overall exposure. 8 It may be accepted that the Court has power to make a class closure order to facilitate a mediation of a representative proceeding. Indeed, this is the reason most often given for making a class closure order prior to the determination at the initial trial of the applicant's claim and the common questions. 9 In Jones v Treasury Wine Estates Limited (No 2) [2017] FCA 296 ("Jones") Foster J said at [43]: While there may be something to be said for the proposition that the Court does not have the power to make any kind of class closure order or preclusion order (whether for the purposes of settlement or judgment), I think that the better view is that it does have that power, at least for the purposes of settlement and probably also in connection with a judgment after a contested trial. The authorities in this Court and in the Supreme Courts of the States speak with one voice on this issue. Those authorities are too well-established for a single judge of this Court to revisit the point now, especially when the parties in this matter agreed that the Court has power to make such an order for the purposes of settlement. 10 The question whether the Court has power to make a class closure order that excludes any group members from participating in, or benefiting from, the representative proceeding in circumstances where the mediation that the class closure order is intended to facilitate is unsuccessful was also discussed in Jones. After referring at [44] to what was said by Gaudron, Gummow and Hayne JJ in Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1 at [38]-[41], Foster J later said at [58]: I doubt that this Court has power to make an order before the initial trial of a Pt IVA proceeding which provides that a group member's rights to share in the fruits of a subsequent judgment in that proceeding will be extinguished or extinguished subject to being revived "with the leave of the Court" unless the group member registers in accordance with a registration process ordered by the Court under s 33ZF or s 33V or under some other section in the FCA Act. It seems to me at the moment that such a proposition is inconsistent with the terms of Pt IVA as an opt out scheme and inconsistent with the reasoning of the High Court in Mobil. 11 The question whether the Court has power to make a class closure order that precludes group members who do not register from asserting any claim in a representative proceeding without the leave of the Court in circumstances where there is no settlement before the initial trial does not need to be decided. This is because I am not satisfied that the relevant discretionary considerations favour the making of such an order. 12 The applicants submitted that if they are successful, and that the answers to the common questions are favourable to group members, then advertisements that invited group members to register following judgment given after the initial trial are likely to encourage more group members to register. The respondent submitted that this is mere speculation. 13 I agree that the applicants' submission is speculative. I simply do not know how many more group members (if any) are likely to register after judgment or whether there will be some who register after judgment who would not have registered before judgment. However, I do not think this advances the respondent's case for making a class closure order at this stage of the proceeding. 14 I accept that a class closure order may assist the respondent in estimating its potential liability and that this may help to promote a settlement. I also accept that this is a relevant consideration when deciding whether or not to make a class closure order. But as Finkelstein J observed in P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 2) [2010] FCA 176 at [31] "… it is a common, if not an inevitable, feature of class actions that the defendant will be faced with uncertainty regarding the quantum of potential group member claims." 15 The group is likely to be very large. There may be thousands of consumers within the group. It seems to be accepted by all parties that there is no practical way to identify group members other than through the publication of advertisements inviting them to register with the applicants' solicitors. 16 Not all group members will claim to have been misled or to have suffered loss as a result of the respondent's conduct. Nevertheless, I regard the likely size of the group and the possibility that there may be many group members with modest claims who have not yet registered as a consideration that weighs against the making of a class closure order before the initial trial. 17 One feature of this representative proceeding that distinguishes it from many others is the fact that the initial trial will only occupy two or three days of hearing time. This is not a case in which either party can say that a class closure order is desirable in order to facilitate a settlement aimed at avoiding a relatively long and expensive hearing. 18 I reject the respondent's suggestion that mediation before class closure would be futile. It is open to the parties to participate in a mediation prior to the initial trial even if no class closure order is made. One of the matters that is open to be considered in the context of such a mediation is what the terms of any agreed class closure should be: for example, what advertising should take place, how much time group members should be allowed to register, and what mechanism should be adopted for assessing the claims of group members following class closure. 19 I am not satisfied that it is in the interests of justice to make any form of class closure order at this stage of the proceeding. 20 The respondent's interlocutory application will be dismissed with costs. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholas.