Johnson Tiles Pty Ltd and Ors v Esso Australia Pty Ltd and Esso Australia Resources Pty Ltd [2001] VSC 284

6. A similar representative proceeding was instituted by the same plaintiffs in the Federal Court of Australia, some two years ago. On 17 May 2001, Merkel J transferred the proceeding to this Court pursuant to s.5(4) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth).

9. I have ordered, subject to further order, that the cross-vested Federal Court proceeding be stayed. The proceeding in this Court has been progressed.

12. By reason of Division 3 of Part 4A of the Act, notice must be given to group members of the commencement of the proceeding, and the right of any member to opt out of the proceeding before a specified date.

15. There are three plaintiffs in the proceeding, and each represents members of a particular group. The groups are defined as business users, domestic users and stood-down workers. The total number of members in each group could be, potentially, all persons and businesses in this State which used gas supplied from the Longford Plant on 25 September 1998, and suffered damage as a result of the explosion which occurred on that day. The number of members could run into millions.

18. In the Federal Court proceeding, an order had been made that the proceeding be advertised. This was done extensively and at some considerable expense to the plaintiffs.

21. It was necessary, in the present proceeding, to order that notice be given again.

24. On 8 June 2001, I ordered that notice be given to group members before 4.00 p.m. on 30 July 2001, in a form of notice which was set out in a schedule to the Order. I also ordered that notice be given to those group members who had given written notice opting out in the Federal Court proceeding, and to those persons who had registered an interest in the proceeding with the plaintiffs' solicitors. The method of giving notice to unknown members of the groups was by advertisement, to appear in the "News Section" of the Herald Sun, The Age, and The Australian newspapers. The amount and extent of advertising was less than the advertising in the Federal Court proceeding, since extensive advertising had already taken place and specific notice was given to those who had opted out.

27. Counsel for the plaintiffs, Mr D. Collins, made application that the defendants should pay all or part of the costs of the advertising.

31. Power is given to the Court to make an order concerning the costs of notice. Any order would be in respect of who should pay the costs of the notice at this stage, which, of course, would not affect the question of who should ultimately pay the legal costs of the proceeding. The costs of giving notice are a properly incurred cost in the proceeding.

33Y. (1) The form and content of a notice under s.33X must be approved by the Court.

(c) directing a party to provide information relevant to the giving of the notice; and

46. It is noted that the Court has a discretionary power concerning the provision of who should pay the costs of giving the notice. Under the order made on 8 June, the plaintiffs' solicitors were obliged to carry out the directions concerning giving of notice. I reserved the question of who should pay the costs.

49. In my opinion, the Court clearly does have power to order that the costs of giving notice be paid by any or all of the parties. This could include a defendant to the proceeding. The question is, should the defendants be ordered to pay the whole, or part, of the cost of giving notice at this stage?

52. When Merkel J made the order for giving notice in the Federal Court proceeding, a like application was made, which His Honour refused. The plaintiffs had to bear the costs of giving notice.

55. The discretion given to the Court is an unfettered one, and there is no criterion set out in the Act to guide the Court with respect to the relevant matters to consider in the exercise.

58. It is important, at the outset, to put to one side the question of who should pay the costs of the litigation. The general rule is that where costs are in the discretion of a Court, a party has no right to costs until an order is made in his favour. The Court has an absolute and unfettered discretion in respect to awarding costs. See s.24 of the Act and Campbell (Donald) and Co v Pollak (1927) AC 732 at p.811. The general rule, which is well settled, is that in the absence of special circumstances, the successful litigant should receive his costs. Successful parties have been deprived of part or all of their costs where special circumstances are shown.

61. When a litigant issues proceedings in any Court, the litigant has the carriage of the proceeding and is obliged to pay all fees and expenses incurred in relation to that piece of litigation, until an order is made requiring a party to pay any costs. That is the general rule, which is also well established, but there are exceptions. By way of example, in the field of family law, a wife may obtain an order for costs against her husband, before the hearing, because of her inability to provide for her own costs. The power was exercised by reason of the common law and pursuant to statute. See Wilson v Wilson (1966) 9 FLR 1.

64. Here, the Act clearly gives the power to the Court and the question is, under what circumstances should it be exercised?

67. The general rule, in my opinion, must be, that the costs incurred in giving notice be borne by those instituting and prosecuting the litigation. The general rule should be applied, unless special circumstances are established, justifying a departure from that rule.

70. It would be both unwise and impossible to attempt to state an exhaustive list of special circumstances.

73. The Australian Law Reform Commission Report No. 46, "Grouped Proceedings in the Federal Court", suggested, by way of example, that a defendant may be in a position to give notice more easily than the plaintiff and, in those circumstances, it may be appropriate for the defendant to bear those costs. Another example, which may constitute special circumstances, is where the plaintiff does not have the necessary financial resources to bring the proceeding, the defendant is wealthy or a large financial corporation, and the plaintiff may suffer significant hardship if the cost is borne by him.

76. Counsel for the plaintiffs, Mr Burnside QC and Mr D. Collins, submitted that there were special circumstances, and that it would be appropriate, in the circumstances, to require the defendants to pay the cost, or part thereof, of advertising.

79. The plaintiffs' Counsel submitted that the following factors justify a special order, contrary to general practice -

* The defendants obtain a benefit out of the group proceeding, because the effect of the notice is that it closes the group and binds all members with respect to all common questions of law and fact.

* That the circumstances are unusual, in that this is the second proceeding brought by the plaintiffs, and they bore the costs of advertising in the Federal Court proceeding.

* That the defendants were large, financially secure companies, which had the ability to pay the cost of the advertising without in any way affecting their ability to conduct the litigation.

* That the defendants have been the cause of the litigation, by reason of their fault which led to the interruption to the gas supply.

* That the litigation is brought in the public interest.

* That the rule concerning arbitration or mediation, in the course of the proceeding, should apply because all parties benefit from the notice: each party should pay a proportion of the costs.

88. As against this, Mr Derham QC, one of the Counsel appearing for the defendants, submitted that no special order should be made for costs at this stage. He relied upon the following factors -

* It was the plaintiffs' proceeding and, in accordance with the general rule, it should pay all costs and expenses incurred in bringing the litigation.

* That Merkel J had refused a like application in the Federal Court proceeding.

* That one of the objects of giving notice is to enable persons to opt out, which means that the defendants are exposed to more proceedings.

* That at this stage of the proceedings, it cannot be said that the defendants are at fault or that the plaintiffs may succeed.

* That the plaintiffs were precipitous in bringing the proceeding in the Federal Court, and this was made clear when their claim under the Trade Practices Act was struck out.

* That the transfer to this Court was at the instance of the Judge, and that the defendants did not participate in any application to have the matter transferred.

* That there was no public interest element; that the litigation is truly to vindicate private rights.

* That the three plaintiffs are not impecunious; that there was evidence placed before Merkel J which showed that a number of insurers were providing financial support to the plaintiffs, to ensure adequate preparation and representation.

99. Some of the factors, relied upon by both parties, are relevant to the exercise of the discretion. The weight that should be attached to each factor, varies.

102. The defendants do gain some benefit from a group proceeding but, nevertheless, the reality is that the plaintiffs bring the proceeding. The defendants are exposed to further proceedings at the hands of those who opted out. The mere fact that there has been a transfer of the proceeding and the necessity to re-advertise, is something that was beyond the control of both parties, and hardly seems to me to be a basis for ordering the defendants to pay all, or part of, the costs of advertising at this point. In my view, there are no public interest aspects in this proceeding. The case is concerned with claims for damages by many parties.

105. It is premature to talk about fault and liability.

108. The proceeding is different to an arbitration or mediation, where both parties have equal interests in seeking an alternative dispute resolution procedure. These claims are common law claims brought by writ and, at the moment, the method of dispute resolution is by Judge sitting alone.

111. In my view, the most important factor concerns the ability of the parties to pay the substantial expense at this stage, and whether the payment could prejudice the plaintiffs' ability to adequately prepare the proceeding and appear at trial.

114. There is no doubt that the defendants would be able to bear the cost, without any difficulty at all. Evidently, the costs of advertising in the Federal Court were somewhere in the vicinity of $150,000. I understand that the present cost is substantially less than that amount, but is still a substantial cost.

117. The plaintiffs represent three identified groups, one of which is a business user group. It is not known who comprises the group and what arrangements have been made for funding the litigation. If the costs of advertising constituted a substantial financial hardship, the Court expects evidence to that effect. There is none. In addition, the evidence is that some insurers are assisting with the costs of the plaintiffs.

120. I am not persuaded, in those circumstances, that the payment by the plaintiffs of the substantial cost of advertising, at this stage, would constitute a financial hardship, which may affect their ability to properly conduct the litigation.

123. Accordingly, having weighed up the relevant matters and, in particular, in the absence of any evidence of financial hardship suffered by the plaintiffs, I do not propose to make any order with respect to the costs of the advertising. In the normal course of events the costs incurred by the plaintiffs, in complying with the order to give notice, will be costs in the litigation.