Johnson Tiles Pty Ltd v Esso Australia Ltd

REASONS FOR JUDGMENT 1 This is an application by the respondents Esso Australia Ltd and Esso Australia Resources Ltd (collectively "Esso") for leave to appeal against interlocutory orders made by Merkel J on 5 February 1999. 2 Esso had applied for orders that the consolidated proceeding which had been brought against them, originally as two separate proceedings, not continue as a representative proceeding. There were two bases for that application. First it was alleged that the two proceedings, at the time of commencement, did not satisfy the requirements of s 33C(1) of the Federal Court of Australia Act 1976 (Cth). Secondly, it was contended that Esso was entitled to such an order under s 33N(1) because it was inappropriate that the claims made in the proceeding continue in that form. 3 Section 33C(1) provides: "(1) Subject to this Part, 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 those persons give rise to a substantial common issue of law or fact; a proceeding may be commenced by one or more of those persons as representing some or all of them." 4 Section 33N(1) provides that: "(1) The Court may, on application by the respondent or of its own motion, order that a proceeding no longer continue under this Part where it is satisfied that it is in the interests of justice to do so because: (a) the costs that would be incurred if the proceeding were to continue as a representative proceeding are likely to exceed the costs that would be incurred if each group member conducted a separate proceeding; or (b) all the relief sought can be obtained by means of a proceeding other than a representative proceeding under this Part; or (c) the representative proceeding will not provide an efficient and effective means of dealing with the claims of group members; or (d) it is otherwise inappropriate that the claims be pursued by means of a representative proceeding." 5 Esso also sought an order that the proceeding be dismissed as an abuse of process. The alleged abuse was that when the two proceedings were issued, the representative parties were not aware of any material facts that would justify them alleging that they had any cause of action against Esso. It was said that the two proceedings were solely "fishing". Each of these contentions was rejected by the trial judge. 6 In our view leave should not be granted to appeal from the order of the trial judge dismissing Esso's application for the reason that the decision is not attended with sufficient doubt to warrant its reconsideration. 7 The claims in the two proceedings arise out of the explosion and fire that occurred at the Longford gas facility owned and operated by Esso. In the proceeding commenced by the representative party Johnson Tiles Pty Ltd ("Johnson Tiles"), various causes of action are relied upon, but for present purposes it is only necessary to mention one of them, namely that founded on the tort of negligence. In the statement of claim it is alleged that Esso owed the applicants a duty of care to ensure that the gas produced at the Longford facility would be supplied to the applicants continuously, and a duty that Esso would properly maintain and manage the Longford facility so as to prevent or avoid incidents that would interrupt the continuous supply of gas. It is said that Esso was in breach of those duties. 8 The action commenced by Johnson Tiles was brought on behalf of the representative parties and a group described as "all other persons who have suffered injury, loss or damage as a consequence" of the explosion and fire. 9 In the second proceeding, commenced by Gregory Alan Dean, various causes of action are relied upon including a claim in negligence. In that proceeding the group members are more specifically defined as, in substance: workers who were stood down from their employment as a result of the interruption or cessation of the supply of gas; domestic users of gas who suffered pecuniary loss as a result of the interruption of supply; persons who conducted particular businesses who suffered loss as the result of the interruption or cessation of supply and persons who conducted manufacturing concerns who also suffered loss as a result of the interruption or cessation of the supply of gas. 10 The principal point made by Esso is that neither proceeding satisfied at its commencement the requirements of a representative proceeding because none of the claims made gave rise to "a substantial common issue of law or fact": s 33C(1)(c). 11 Although counsel for Esso criticised the decision of the trial judge in various respects, in the end one principal point emerged. Counsel for Esso accepted that in the negligence claim it was essential for the applicants to show what caused the fire and explosion and to prove that for one reason or another the fire and explosion had been caused or contributed to by the act or omission of Esso. 12 Thus the question is whether, as claimed by the applicants, the fire and explosion had been caused or contributed to by the act or omission of Esso, admittedly a common issue of fact in the claims of all persons on whose behalf the two proceedings were commenced, was a "substantial issue". 13 Here the argument was in substance as follows. Counsel for Esso accepted that if there was only one action involving one plaintiff, the issue to which we have referred would be "substantial". Indeed, it could not be characterised in any other way. If the plaintiff failed to show that the explosion and fire had been caused or contributed to by the act or omission of Esso, its claim would fail. Here, however, Esso contended that because the members of the various groups exceeded more than one million in number, that prevented the "common" issue of fact from being a "substantial" issue. The reason for this, so it was said, was that in order to determine whether a duty of care was owed to the applicants, and further, in order to determine what was the content of that duty, the court would be required to consider the individual circumstances of each member of the group. This was said to be such an overwhelming task that it "swamped" all other issues in the case. That is to say, because most of the Court's time would be taken up with resolving questions relating to the existence and extent of any duty that might be owed, that diminished what would otherwise be the significance or substantiality of the issue of whether any act or omission by Esso caused or contributed to the explosion and fire. 14 The circumstances in which an issue of law or fact is to be regarded as substantial were considered by a Full Court of this court in Silkfield Pty Ltd v Wong (1998) 159 ALR 329 ("Silkfield"). In that case a majority of the court, O'Loughlin and Drummond JJ, said at 345: "But where such an issue can be seen, in the circumstances of the particular case, to be a matter the resolution of which will have a major impact on the litigation because it is an issue at the core of the dispute between the respondent and each group member, then it can properly be described as being a "substantial" common issue. This will particularly be the case where the determination of the issue involves a complex factual inquiry. Such a common issue will have this quality of substantiality even if other issues, including complex ones, are raised by the claims of individual group members which will have to be determined before each can be finally disposed of." 15 The High Court has granted leave to appeal in Silkfield, it having been argued in support of the grant of leave that the Court in Silkfield had construed too narrowly the meaning of "a substantial common issue of law or fact" in s 33C(1)(c). Accepting, however, the narrow construction of s 33C(1)(c) adopted by the majority in Silkfield, there was at least one substantial common issue of fact, at the commencement of the proceedings, to which the claims of all members of the group on behalf of whom the two actions were commenced, gave rise. That is the issue whether any act or omission of Esso caused or contributed to the explosion and fire at the Longford facility. 16 It would be a strange result indeed if an issue which was clearly a substantial issue if litigated by one party ceased to be a substantial issue merely by reason of the fact that it was being litigated by many parties. If that were so, the benefits to be derived from Part IVA of the Federal Court of Australia Act, namely the saving of court time, the saving of parties' costs, the efficient administration of justice and so on, would be available to a small group in a case such as this, but would be lost if the group were very large. That is not an approach that could have been intended. 17 It may be accepted that the scope and number of individual issues that arise for consideration in the representative proceeding are relevant factors in determining whether the common issue or issues said to exist are substantial, but we do not think it is conclusive. In Silkfield the majority said at 344: "… the making of that comparison [between individual issues and common issues] is only one way by which a decision can be made on whether a common issue is a 'substantial' one." 18 However, in this case the resolution of the question whether an act or omission of Esso had caused or contributed to the occurrence of the explosion and fire is substantial, not only because of the complexity of the evidence that will be led on this point, but also because if it is resolved in favour of Esso, the cause of action in negligence will fail. In short, if fault is not proved, Esso cannot be made liable at the suit of the applicants. 19 The remaining two issues can be dealt with quite shortly. 20 Whether an order should be made that it is inappropriate that the claims be pursued by means of a representative proceeding was a matter peculiarly within the discretion of the trial judge. It has not been shown that his discretion miscarried in any way. 21 In this regard, we note that the pleadings in the proceeding have not closed. The applicants have only recently delivered a further amended statement of claim and Esso has not yet filed a defence. Esso is, however, attacking that further amended statement of claim, and that attack is proceeding at least to a stage of an application for leave to appeal. It may be that at some point in time when the pleading issue has been finally resolved, it will emerge that, for one reason or another, the proceeding should not go on as a representative proceeding. If that is so, then Esso can renew its application. 22 The final submission was that the proceeding should be dismissed as an abuse of process because the two initial proceedings were commenced to "fish" for a cause of action. In support of this contention, Esso relied upon the practice of the Courts of Chancery which condemned what were called "fishing bills". The practice of obtaining discovery by production of documents originated in chancery and was first adopted by the common law courts of England by the Common Law Procedure Act 1854. However, the rules which formerly guided the Courts of Chancery subsisted after the Common Law Procedure Act 1854 and, except to the extent that they were modified by statute or rule, continued to be implemented after the Judicature Act 1873. By condemning "fishing bills", the Court of Chancery would not order production of documents. Common law courts followed this practice by not ordering discovery until the statement of claim. In Cashin v Craddock [1876] 2 ChD 140 at 146, Bacon V-C said of the so‑called rule that the Court of Chancery condemned fishing bills that: "…the true meaning of the rule is, that until the Plaintiff has delivered a statement of claim, he is not in a condition to interrogate the Defendant, for the Defendant may demur to the statement." 23 It seems to us, therefore, that the reference to the practice of the Courts of Chancery does not assist Esso on this point. But in any event, we are by no means persuaded that when an action is commenced by a party whose genuine purpose is to pursue it, but at the time of commencement that party is not necessarily aware of the existence of all of the material facts that would establish the cause or causes of action relied upon, that action is an abuse of process. 24 Moreover, if the proceeding were dismissed, the only consequence would be that it would soon be recommenced. Even assuming that the applicants could not properly instruct their lawyers about the necessary facts to justify pleading a case against Esso when the case was first commenced a very short time after the explosion and fire, that cannot now be true. It is not asserted, and could not be asserted, that a proceeding commenced now in the terms of the current second amended statement of claim would be an abuse of process. Thus dismissing the proceeding as an alleged abuse of process would be futile. 25 For these reasons we would refuse leave to appeal, and we therefore dismiss the application for leave with costs. We do not consider that there should be any order that the costs be paid forthwith pursuant to O 62 r 3(2) of the Federal Court Rules. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Black, the Honourable Justice North and the Honourable Justice Finkelstein.