Johnson Tiles Pty Ltd v Esso Australia Pty Ltd

Supreme Court of Victoria|2001-10-05|Before: Gillard J

GROUP PROCEEDINGS - Part 4A Supreme Court Act 1986 - whether a group must have a member as a party - calling members of group as witnesses - third party proceeding to be heard separately - bound by findings in proceeding - questions to be determined - procedural orders.

A similar representative proceeding was instituted 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).

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

When this proceeding was instituted, there were three plaintiffs and each was a member of, and represented members of, a particular group. The groups as defined are business users, domestic users and stood-down workers. Each of the three plaintiffs brought the proceedings on behalf of itself or himself and members of a particular group, seeking damages for losses and expenses suffered and incurred as a result of an explosion, which occurred on 25 September 1998 at the Longford Plant operated by the defendants. As a result of the explosion, the gas supply from that plant, which supplies most of the gas consumers in this State, was interrupted and not restored for a period of some 14 days.

The second plaintiff in the proceeding was Douglas Chalmers. Mr Chalmers was an applicant in the Federal Court proceeding. He expressly authorised the plaintiffs' solicitors to bring the proceeding in that Court. In July 2001, he informed the parties, the plaintiffs' solicitors and the Court, that he did not authorise the bringing of the proceeding in this Court.

On 21 September 2001, I ordered that he cease to be a party, other than as one of the group members on whose behalf the proceeding is brought.

Having made that order, counsel for the remaining plaintiffs applied for leave to file an amended statement of claim.

The first plaintiff, Johnson Tiles Pty Ltd ("Johnson Tiles"), is and was, at all material times, a business user, namely, a company which, on 25 September 1998, was a gas user for the purpose of operating a business, and is alleged to have suffered damage to property and/or pecuniary loss as a result of the interruption or cessation of supply of gas from the plant on and after 25 September 1998.

The proceeding is brought by Johnson Tiles on behalf of the first plaintiff, and also group members who constitute the group known as "Business users".

Mr Chalmers, when a party to the proceeding, being the second plaintiff, was alleged to be a domestic user, who is a person who, on the relevant date, used gas for domestic purposes and suffered damage to property and/or pecuniary loss as a result of the stoppage. The proceeding was brought on his behalf and all members of the group who were "Domestic users".

The then third plaintiff, Gregory Alan Dean ("Mr Dean"), now the second plaintiff, was a person who was described as a stood-down worker who, as a result of the stoppage, was stood down from his employment and suffered pecuniary loss as a result. The proceeding was brought on behalf of Mr Dean and the stood-down workers as a group.

At the directions hearing held on 21 September 2001, a number of issues were debated with respect to the pleadings, the questions that should be considered and determined at the trial and the procedural orders that should be made in relation to the preparation and conduct of the litigation. The Court requested the parties, in August, to provide questions to be considered, and the parties provided those for the directions hearing in August. At that hearing, I produced for the consideration of all parties, a set of draft questions which were compiled from the questions put by the parties, guided by what Wilcox J did in the case of McMullin v ICI Australia Operations Pty Ltd, an unreported decision delivered 18 November 1996. In addition, the Court provided proposed orders concerning preparation and the conduct of the trial, for the consideration of the parties. After some debate, the issues were adjourned, to enable the parties to give further thought to the matters raised and to make further submissions at the directions hearing held on 21 September 2001.

In addition to the matters referred to above, another issue that was raised during the last directions hearing was the proposal by the plaintiffs to call, what might be described as, sample group members to give evidence in respect of factual issues, which were not necessarily the same as the factual issues raised by the two remaining plaintiffs. It was also proposed by plaintiffs' counsel, Mr David Collins, who appeared with Mr Geoff McArthur, that Mr Dean, who was now the second plaintiff, should not only bring the proceeding in his own right as a stood-down worker, but also as a domestic user. In the normal course of things, this would not have created any problem with the proposed amended statement of claim. But there was an affidavit before the Court, sworn by a solicitor, Bernard Michael Murphy, on behalf of the plaintiffs, which revealed that although Mr Dean was a domestic user, he did not suffer any property damage as a domestic user as a result of the stoppage. What was proposed by plaintiffs' counsel was that another group member, who was not a party to the proceeding, would give evidence that he or she suffered property damage as a domestic user as a result of the stoppage. This course was opposed by defendants' counsel. They submitted that the member of the domestic users group should be joined as a plaintiff. It was submitted that it was unfair to the defendants to permit that course to be followed, because that person would not be liable for costs if he or she failed in respect of the particular claim. Further, that that approach was contrary to the group proceeding legislation and the spirit of it. It was said that a plaintiff could not bring the proceeding on behalf of a defined group, unless the plaintiff was a member of the group and had the same cause of action as other members of the same group.

This raised the interesting question of whether such a course should be permitted in a group proceeding, in the absence of the witness being a party or subject to a special order under the legislation permitting the course to be followed, with a risk that if the sample group member failed in the proceeding, he or she would be liable for costs.

This question also impinged upon the application by the plaintiffs to obtain leave to file an amended statement of claim.

As presently constituted, there are two plaintiffs in the proceeding. The proceeding is brought on behalf of members of three defined groups. The first plaintiff, Johnson Tiles, is a business user, and sues on its own behalf and on behalf of similar group members. Mr Dean, the second plaintiff, is a stood-down worker, and sues on his own behalf and on behalf of those who fit into that category of group members. The proposed amended statement of claim alleges that he is a domestic user and sues on his own behalf with respect to loss as a domestic user, and represents the domestic users group.

The proposed amended statement of claim addresses these issues.

The evidence before the Court shows that he did not suffer property damage as a domestic user. One of the issues in the proceeding is whether a duty of care is owed to domestic users who suffered property damage.

It is common ground and clearly correct, that the plaintiffs may call any person as a witness, even if that person is a member of a group, to give evidence which is relevant and admissible to either of the plaintiffs' claims. Of the questions that will be answered at trial, one concerns the duty of care owed by the defendants to the plaintiffs and the group users. Another question concerns causation, if the plaintiffs establish that the interruption of the gas supply was caused by the negligence of the defendants.

A number of important and substantial issues in the case concern the duties of care owed by the defendants to the ultimate consumers of gas in this State. It is clear that a substantial number of persons and corporations have suffered economic loss and accordingly, there is the difficult question of whether the defendants owed a duty of care, on and after 25 September 1998, to those consumers. This area of the law is complex, and is in a state of evolution. On the other hand, the law relating to the duty of care owed to avoid physical or property damage to a victim is less difficult, less complex and reasonably straightforward.

What the plaintiffs' counsel seek to do, is to call, by way of example, a witness who can give evidence with respect to property damage suffered by domestic users. It is accepted at this stage, that Mr Dean could not give such evidence. Mr Middleton QC, who appears on behalf of the defendants, with a multitude of counsel, submits that that course should not be permitted unless either the person is made a party to the proceeding, or is the subject of a special order which would expose that person to an order for costs in the event that the person failed. He has submitted that that was the fair approach, that the interests of both the plaintiffs and the defendants cannot be overlooked, and that a person should not be able to give evidence on an important and alleged common issue, hide behind being a group member and never be exposed to any order for costs.

It is clear that an order for costs cannot be made against an unsuccessful group member. See s.33ZD. Of course, that provision only applies during the course of a group proceeding. Once all common questions of law and fact are decided, the general rule is that any member of a group who wishes to recover damages and needs to prove same, becomes an individual plaintiff in the proceeding to finalise his entitlement pursuant to an order made under s.33N - see, by way of example, Zhang v Minister for Immigration [1993] FCA 489; (1993) 45 FCR 384 at 405 (see form of orders on p.411) - referred to by the High Court in Wong v Silkfield Pty Ltd [1999] HCA 48; (1999) 199 CLR 255 at 266. In those circumstances, that person could be liable to pay costs in respect of that part of the claim, if circumstances warrant it.

In addition, plaintiffs' counsel also wish to call a number of members of the groups on the question of causation, because of the defences raised by the defendants. It is pleaded by the defendants that they are not liable to the ultimate consumers because of a break in the chain of causation, assuming, of course, negligence is established. It is submitted on behalf of the plaintiffs, that it would be appropriate to call a number of sample group members to prove different factual circumstances in relation to causation. It is said that those sample group members would adduce evidence which would be common to a number of other members of the group. Again, the plaintiffs' counsel do not wish to have those persons joined as parties or made a subject of any special order.

The course proposed by the plaintiffs of calling other members on the issue of duty of care, was followed by Wilcox J in the McMullin v ICI case at trial, which is reported at (1997) 72 FCR 1. This is clear from what His Honour said at p.69 of the report, where His Honour was dealing with the duty of care which was owed to various claimants. His Honour noted -

"All counsel recognise that the claimants - applicants and group members - fall into different categories. Various divisions are offered. I think there are seven categories."

His Honour then set out the seven categories. In that case, there were two applicants. It followed that five of the categories were concerned with members of various groups who suffered loss in a certain way. Witnesses were called from each group, and no objection was made to that course. His Honour then made findings on the duty of care in respect of each category.

It was submitted that this Court should follow that course. That course appears to have been accepted by all counsel in that case, and was an appropriate and practical course to follow.

In that case, ICI manufactured and sold an insecticide called Helix Insecticide. The insecticide was sprayed on cotton crops. It contained a chemical which was bio-accumulative and by various means, the chemical got into the body tissue of cattle that were subsequently slaughtered for meat. The meat was rejected. The various categories of complainants covered graziers, whose cattle became contaminated by grazing, either by eating grass next to cotton farms which were affected by the Helix or drinking water out of contaminated streams, or by eating cotton trash as a food; and claimants who purchased already contaminated cattle. There were meat processors and exporters who were left with contaminated meat, and there were claimants whose cattle had eaten trash pellets which contained the chemical. As I say, it was convenient and practical in that case for His Honour to consider each separate category, and evidence was called by witnesses from each particular category.

Here, it is said that it is not quite as simple to divide up the categories. In response to a question from the Bench, Mr Collins frankly admitted that persons and organisations were reluctant to become parties to the proceeding because of the financial risks involved, especially against a very large and financially strong defendant. On the other hand, as Mr Middleton QC pointed out, the legislation is there to do justice between parties and the interests of the defendants should be taken into account in considering the question.

At the outset, it must be borne in mind that a group proceeding is only available where seven or more persons have claims against the one person and the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances, and more importantly, the claims of all the persons give rise to a substantial common question of law or fact. See s.33C.

In many cases, a victim of damage has a cause of action which has a number of elements of proof, and one or more elements of the proof is peculiar and specific to that party. That means that if there are multiple victims, a proceeding which is brought by way of a group proceeding is a hybrid of the group proceeding and the particular victim's claim. Hence, in a negligence case, there may be a common question of duty of care and negligence, but the issues of causation and quantification of damage and a plea of contributory negligence are fact specific to the particular victim. Hence, the proceeding may commence as a group proceeding and once all common questions of law and fact have been decided, the proceeding is no longer a group proceeding and thereafter, each victim must come forward and progress his, her or its claim to the end as an individual party.

At the moment, I am only concerned with the group proceeding.

Part 4A of the Act deals with the group proceeding, and the group proceeding is the subject of statute. Accordingly, issues of what are the nature of the jurisdiction and the procedures are governed by the provisions of the statute. In determining the various issues in the proceeding, and in particular how it should be conducted, what questions should be decided and any other procedural matters, it is important that the Court gives effect to the purpose of the group proceeding procedure, which is to enable a proceeding to be brought by a substantial number of victims of an alleged wrong committed by the same wrongdoer, thereby pooling their resources, and to ensure that the Court's resources are used efficiently and expeditiously. It has been recognised that an individual would be deterred by taking on a large, financially secure corporation, and the group proceeding legislation is aimed to enable individuals to band together to take on the large defendant. The guiding principle of Part 4A is justice, and this is made clear by s.33ZF, which provides -

"33ZF. In any proceeding (including an appeal) conducted under this Part the court may, of its own motion or on application by a party, make any order the court thinks appropriate or necessary to ensure that justice is done in the proceeding."

That, of course, means justice to all parties, whose interests must be considered, but it is important that the Court approach the group proceeding litigation in a practical manner and ensure that as many questions of law and fact, that have a degree of commonality, are decided, so that when the group proceeding is completed and if the individual proceeding is to go forward, the individual litigant has the benefit of findings of law or fact to assist the victim in obtaining relief. In making that observation, of course, I am proceeding on the assumption that the common questions of fact and law answered by the Court result in a success by some or all of the parties and the group members.

In a group proceeding, costs can only be awarded in certain circumstances. Section 33ZD provides -

(a) may order the plaintiff or the defendant to pay costs;

(b) except as authorised by s.33Q or 33R, may not order a group member or a sub-group member to pay costs."

It is necessary to consider what can be done pursuant to ss.33Q and 33R.

"33Q(1). If it appears to the court that determination of the question or questions common to all group members will not finally determine the claims of all group members, the court may give directions in relation to the determination of the remaining questions.

(2) In the case of questions common to the claims of some only of the group members, the directions given by the court may include directions establishing a sub-group consisting of those group members and appointing a person who consents to the appointment to be the sub-group representative party on behalf of the sub-group members.

(3) If the court appoints a person other than the plaintiff to be a sub-group respondent party, that person, and not the plaintiff, is liable for costs associated with the determination of the question or questions common to the sub-group members."

That section gives a wide power to the Court to give directions in relation to questions. In my view, the wide power given in sub-s.(1) is not made subject to sub-s.(2). Sub-section (2) merely indicates that the Court may, if it so desires, include directions establishing a sub-group. But that does not seem to me to qualify or read down the wide power given to the Court to decide other questions, which will not finally determine the claims of all group members. The Court, of course, may decide to establish a sub-group and appoint a person to represent that sub-group, and if that be so, then that person may be liable for costs.

Section 33R enables the Court to permit an individual group member to take part in the proceeding in certain circumstances and again, if that was to happen, that individual group member may be liable for costs. Section 33R provides -

"33R(1) In giving directions under s.33Q, the court may permit an individual group member to take party in the proceeding for the purpose of determining a question that relates only to the claim of that member.

(2) In such a case, the individual group member, and not the plaintiff, is liable for costs associated with the determination of the question."

In my opinion, s.33R does not apply in the present proceeding, because what the plaintiffs' counsel have in mind is calling a member of a group who will give evidence, which not only relates to that person's claim but relates to the claims of other group members.

The provisions relating to costs do restrict who is liable if a defendant is successful. But that is the effect of the legislation, and can hardly be a basis for not permitting group members to give evidence in respect of a question to be decided affecting that group member, or requiring that group member to become a party to the litigation.

If it is unfair to the defendant, that is a consequence of the legislation. But the fact that the right to recover costs is restricted, is no basis for concluding that it is necessary to add plaintiffs to enable the successful defendant to have somebody to pay the costs.

At the outset, it is important to note what the circumstances are which bring persons together to enable a group proceeding to be commenced. First, the claims of all persons must be in respect of, or arise out of, the same or related circumstances. In other words, there has to be a connection between the claims of all persons and the circumstances which led to the claims. Secondly, these persons are united by having claims against the same person. But it is clear that the circumstances do not have to be precisely the same. See s.33C(1)(a) and (b).

Thirdly, the claims of all persons must give rise "to a substantial common question of law or fact". But there only has to be one common question of law or fact - see s.33C(c).

Importantly, as s.33C provides, a proceeding may be commenced by "one or more" of the persons, ie. at least the seven or more persons who have claims, "as representing some or all of them". Hence, there could be one plaintiff representing all the persons who have claims.

As stated, there have to be three connecting features between the claimants. First, that all the claims are against the same defendant; secondly, that they arise out of related circumstances; and, thirdly, that they give rise to the substantial common question. But a group proceeding may be commenced, as s.33C(2) makes clear, even though each claimant has different relief to any other claimant and, more importantly, whether or not the proceeding is concerned "with separate contracts or transactions between the defendant and individual group members" or, "involves separate acts or omissions of the defendant done or omitted to be done in relation to individual group members." See s.33(2)(a) and (b). Hence, if the three connecting features are present, the mere fact that a claimant is claiming different relief to any other claimant, and, secondly, has claims arising out of different acts or omissions, does not preclude the proceeding being a "group proceeding".

The plaintiff must have a sufficient interest to commence a proceeding against the defendant, ie. a cause of action, and if he does, he has sufficient interest to commence a group proceeding on behalf of the other claimants who are connected by the three threshold features - see s.33(D)(1). Indeed, the right to conduct the proceeding on behalf of others is preserved even though the party ceases to have a claim against the defendant - see s.33(D)(2).

It is necessary, in the endorsement on the writ commencing the claim, to describe or otherwise identify the group members and, inter alia, to specify the common questions to the claims of the group members - see s.33(H)(2)(a). Power is given to the Court to alter the description of the group - see s.33(K)(1).

In my opinion, there is nothing in Part 4A of the Act which requires that there has to be a plaintiff for each group. Certain prerequisites have to be satisfied, but there is nothing which precludes a plaintiff whose claim is the same as those constituting one group, also bringing the proceeding on behalf of other members of another group, so long as the three threshold features are present. In my view, the provisions referred to above make that clear.

In my opinion, it follows that it is open to a plaintiff to call a witness who may give evidence of factual matters, which do not assist that plaintiff's claim but do raise for consideration and determination, a question of fact or law which is common to some or all members of a group.

In my view, the Court should endeavour to decide as many common questions of fact and law in a group proceeding, to facilitate the outcome of the litigation. If some questions are only relevant to some group members and not all, or to one group and not the other, so be it. As long as it may have some substantial practical effect in the determination of the litigation, one of the objects of group litigation is achieved.

It follows that, in my opinion, the plaintiffs are entitled to call, as witnesses, any member of a group in order to adduce evidence which is relevant to any issue raised, and a plaintiff may represent a group even though he is not a member of that group. Of course, he must have a claim against the defendant.

Counsel for the defendants referred to two authorities, which they submitted supported their submission that there had to be a party for each defined group. They relied upon what was said in Philip Morris (Australia) Ltd v Nixon [2000] FCA 229; (2000) 170 ALR 487 at para 128. What Sackville J said does not support their contention. In Cook v Pasminco (2000) VSC 534 at para 48, Hedigan J expressed the view that "it seems to me, unacceptable to permit a group proceeding to be maintained in which causes of action which were not open to or made by any named plaintiff, could be advanced on behalf of group members". His Honour's observation is not authority for the proposition that the legislation does not permit what is proposed by the plaintiffs.

Accordingly, I am prepared to grant leave to the plaintiffs to file an amended statement of claim, and although Mr Dean represents the domestic users and cannot prove property damage, he is entitled to adduce evidence from others who have suffered property damage to enable that question to be determined in the group proceeding, that question being a common question to all those domestic users who have suffered property damage.

In addition, the plaintiffs are permitted to call a number of witnesses to raise issues of fact or law which are common to some or all of group members on the questions of duty of care and causation, and the procedural orders will ensure that their statements of evidence are made available to all other parties to avoid surprise and to given them the opportunity of meeting those particular claims.

The number of witnesses, and who are to be called as witnesses, are matters for the plaintiffs and their advisers. I do not propose to put any restrictions on the number of witnesses they may wish to call. However, in making that decision, I exhort the plaintiffs and their advisers to keep the number of witnesses to a minimum, to ensure that the litigation is manageable.

If necessary, orders can be made for further discovery, to ensure that those witnesses discover all relevant documents and that all other parties discover relevant documents to those witnesses.

All told, the defendants have joined 26 third parties, and orders have been made progressing the interlocutory steps in the third party proceedings. Although I have not made any order that the third party proceeding be tried separately from the main proceeding, I have nevertheless, on a number of occasions during the course of earlier directions' hearings, stated that that is what I propose to do. I have made it clear that to permit the third party proceedings to be heard at the same time would prolong the trial, as there are so many parties and issues raised by the third party proceedings. In addition, they do not raise what could be described as group proceeding common questions.

The third parties have not disagreed with that approach, and do not oppose orders that the third party proceeding be tried separately from the main proceeding.

I also foreshadowed, in the suggested orders, that the third parties should be bound in the third party proceeding by the determinations made in the group proceeding.

Mr Nettle QC, who appears with Mr S. Anderson of Counsel for the first to sixteenth third parties, opposes the proposed order and suggests that an order be made which limits the matters that bind the third parties. It is submitted that a general order, to the effect that the third parties be bound in the third party proceeding by the determination made in the proceeding, be made, but subject to a further order to the effect that the first to sixteenth third parties would not be bound by determinations or findings of fact or law made in respect of issues pleaded in paragraphs 9, 13 and 16 of the amended statement of claim, and the same paragraphs in the amended defences.

The defendants support the submissions put by the first to sixteenth third parties, as do the other third parties.

At the outset, it is necessary to identify what the plaintiffs and defendants have put in issue in the said paragraphs. In paragraph 9, the plaintiffs allege that at all material times, the defendants owed a duty of care to the plaintiffs and members of each group, and facts are particularised in support of the allegations. Paragraph 13 alleges that as a result of the explosion, the supply of gas ceased until 8 October 1998. Paragraph 16 alleges that by reason of the matters pleaded in the preceding paragraphs, the defendants owed a duty of care to the plaintiffs and the group members.

Each paragraph of the amended statement of claim is short and to the point.

The same cannot be said of the new paragraphs in the amended defence. In answer to paragraph 9, the defendants deny the allegations and assert many paragraphs of facts which they rely upon as being relevant to the question whether there was a duty of care. The same can be said of paragraph 13.

The Court gave leave to the defendants to amend their defence, and the amendments raised factual matters which the plaintiffs and the third parties submitted were irrelevant to the issue of duty of care. In particular, a number of the new paragraphs allege that some of the entities who are the third parties "ought to have known", a fact which it is alleged was relevant to the issue of the duty of care.

What is proposed by the first to sixteenth third parties is that they should not be bound by the findings of fact or law made in respect of the issues pleaded in paragraphs 9, 13 and 16 of the amended statement of claim and amended defence.

It is submitted that an order to that effect should be made because, first, there could be no split in effect between the main proceeding and the third party proceeding, the said third parties would be compelled to produce voluminous evidence at the trial, and, finally, to compile the evidence, the State entities would be required to go over facts and circumstances in a period in excess of 30 years of State policy and development.

Before considering the submissions, it is important to set out what is likely to occur at trial. The plaintiffs have the burden of establishing the duty of care. The defendants have alleged, inter alia, that because of acts and omissions of some of the third parties, certain consequences flow which are relevant to the issue of duty of care. They are factual matters which are raised by the defendants and hence they have, at least, the evidentiary burden of proving them. No onus rests on the third parties. It is in the interests of those parties to assist the defendants to defeat the plaintiffs' claims. The third parties are not obliged to adduce evidence to assist any party. Whether they seek to provide evidence is a matter for their decision. What the plaintiffs do to prepare themselves to meet these allegations again is a matter for them.

In the proceeding, the "new facts", if relevant, may be taken into account on the issue of law, namely, whether there is a duty of care. If a finding is made that there is a duty of care, then that finding will bind all parties. If a finding of fact is made as to what the third parties knew or should have known, those facts, in so far as they are relevant, would bind the third parties in the third party proceeding.

As Mr Collins pointed out on behalf of the plaintiffs, the third parties want a bit both ways. It would be in their interests to support the defendants and establish that there had been a break in the causation or that there was no duty of care owed to the various consumers of gas at the relevant time, and do this by assisting the defendants in their endeavour. If successful, and the defendants succeed, then there is no question of any liability in the third parties. On the other hand, if the defendants fail, even though supported in their endeavours by the third parties, the third parties would then wish to adopt a different approach to the issues in question. This could lead to the vice of inconsistent results, which the law strives to avoid. This is one of the reasons why there are third party proceedings and in particular, why orders are made that in the third party proceeding, the various matters found in the main proceeding and which are relevant to the third party proceeding, bind the third party.

In my opinion, the fact that the pleadings in the main proceeding may involve the third parties in considerable work in preparation or a greater involvement in the main trial, does not seem to me to be a valid reason why I should not adopt the usual rule, requiring the third parties to be bound by the relevant findings in the main proceeding. There is the question of the vice of inconsistent verdicts, but there is a more practical reason and that is that the same issues will be fought on two separate occasions, with a consequential use of much time and the incurring of much expense.

I do not accept that if no order is made, as sought by the third parties, there would be no split in effect between the main proceeding and the third party proceeding. I have some difficulty in comprehending what is meant by "split". The very fact that there are third parties and the very fact that they are involved in the main proceeding, means that, in the normal course of events, there is no split. The fact is that findings are made in the main proceeding and those findings, in so far as they are relevant to any issue in the third party proceedings, binds the parties to those proceedings.

I note the concern of the third parties about preparation and the necessity to go through much material spread over many years. In order to confine the issue, it is my opinion that the defendants should provide to the plaintiffs, further and better particulars of the facts which the defendants rely upon to establish that the relevant third parties "ought to have known at all material times" certain matters which the defendants rely upon. The plaintiffs are entitled to these particulars in order to prepare their case. The provision of such particulars will no doubt assist the third parties as to the amount of preparation they need to do for the main proceeding. It will be necessary for the plaintiffs' advisers to go through each paragraph of the defence, which raises the issue as to what the third parties knew or ought to have known, and to specify what sub-paragraphs must be particularised in relation to that issue.

I am not prepared to make an order other than the usual order, that the third parties be bound in the third party proceedings by any relevant matter which is decided in the main proceeding.

A number of issues arose with respect to the proposed questions.

The first point that was made by the defendants was that the proceeding by each plaintiff should be decided on all issues, which include quantification of damages and contributory negligence. If one was to approach a group proceeding in that way, there would be no difference between a group proceeding and what may be described as a test case. As I have already stated, a group proceeding proceeds so far and a point is reached where it is no longer a group proceeding, because all common questions are decided. Thereafter, if appropriate, it proceeds as individual claims by the named plaintiffs and any members of the group who wish to come forward to obtain an order in their favour.

Mr Middleton QC referred to the various authorities which warned against dividing out issues in a case. There is no doubt that appellate courts have said that from time to time, and I refer by way of example to Dunstan v Simmie & Co Pty Ltd [1978] VicRp 62; (1978) VR 669. I accept that, as a general rule, it is unwise to decide separate questions unless, of course, the determination would result in the litigation being shortened or finalised.

In Bass v Permanent Trustee Co Ltd (1999) 198 CLR 34 at para 49, the High Court warned against hearing separate issues. But what the High Court said in that case was not referrable to a group proceeding and unless separate issues are considered and determined, the object of group proceedings would be emasculated.

However, the Court has to proceed with caution. Group proceedings are appropriate for having common questions decided. Not all questions in a cause of action fall within that description.

I reject the submission by the defendants that the Court should proceed to hear the whole cases of the two plaintiffs.

I propose to state questions, which will be considered and determined at the hearing. The questions are general, are not to be the subject of construction arguments, are to be applied in a common sense way, and will be subject to change if the circumstances demand it. But the circumstances would have to be exceptional. As I have said, and I repeat, one must approach a group proceeding in a practical way and decide as many common questions of law and fact as possible.

Once having put to one side the objections by the defendants to hearing separate issues and also their objection to Mr Dean representing the domestic users group, the parties generally agreed as to the questions, with some disagreement as to form, save and except for question 6.

Question 6 deals with the question of causation and the assertion by the defendants that the chain of causation was broken by the actions and omissions of others, before any of the plaintiffs and members of the groups suffered any loss or damage. The third parties submit that the question should not be decided in the proceeding because the question of causation will be fact specific to each individual plaintiff and group member. I note the submissions, and accept that there is some force in the contention that the claims brought by some group users will involve different issues on causation. Paragraph 13 of the amended defence alleges that certain events and decisions concerning the management of the gas supply system, and certain contractual arrangements involving certain parties, all had the effect of breaking the chain of causation. In my view, there will be some common questions of law and fact relating to causation and in my view, the question should be asked and answered. The issues raised in the amended defence concerning the break in causation are not unique to each particular group member, and there will be many group members whose claims will raise common issues of fact and law in relation to causation.

I have carefully considered the submissions of the parties with respect to the questions, and I conclude that the questions which are set out as schedule A to these reasons should be answered at the hearing.

I have carefully considered the submissions put on behalf of the parties as to procedural orders and after due deliberation, I propose to make the orders set out hereafter.

1. That issues concerning liability, which are set out in Annexure A to these orders, be heard separately from all other issues including the issues concerning damages.

2. That the third party proceedings be tried separately from the main proceeding and after the determination of the issues, ordered to be heard in this proceeding.

3. That each of the third parties may attend and take part in the trial of the proceeding.

4. That each of the third parties shall be bound in the third party proceeding by the determinations made in the proceeding.

5. That the trial of the issues hereinafter ordered is fixed for hearing on 1 May 2002.

6. That at the hearing, the issues set out in Annexure A to these orders are to be determined separately and in advance of the determination of all other issues against the defendants.

7. The plaintiffs' solicitors shall serve on the defendants' solicitors and file for the use of the Judge, by 15 March 2002, a paginated and indexed Court Book comprising the current pleadings and particulars and a copy of all documents in date order referred to in the pleadings and particulars.

8. The plaintiffs' solicitors have available at the hearing, a copy of the Court Book for the use of witnesses during their examination.

9. In the event of any party wishing to tender in evidence documents other than those referred to in the Court Book, that party shall, at trial, make a copy of the proposed exhibit available to the other parties and make two copies available to the Court.

10. The plaintiffs file and serve on the other parties, by 25 January 2002, a list of witnesses to be called at the hearing and a copy of a statement in the form of a proof of relevant and admissible evidence of each witness, and produce the unsigned original of each statement at the hearing.

11. The defendants file and serve on the other parties, by 12 February 2002, a list of witnesses to be called at the hearing and a copy of a statement in the form of relevant and admissible evidence of each witness, and provide the unsigned original of each statement at the hearing.

12. The first to sixteenth third parties file and serve on the other parties, by 1 March 2002, a list of witnesses to be called at the hearing and a copy of the statement in the form of relevant and admissible evidence of each witness, and provide the unsigned original of each statement at the hearing.

13. The seventeenth to twenty sixth third parties file and serve on the other parties, by 22 March 2002, a list of witnesses to be called at the hearing and a copy of a statement in the form of relevant and admissible evidence of each witness, and provide the unsigned original of each statement at the hearing.

14. A copy of each document, which is to be tendered in evidence through the witness, shall be attached to the witness's statement.

(a) the plaintiffs' solicitors file and serve upon the defendants' solicitors and deliver to the Judge's Associate, an appropriate chronology of the relevant facts and events;

(b) each party exchange with each other party a brief written outline of submissions concerning the issues in the proceeding, and deliver a copy to the Judge's Associate.

16. Save with the leave of the Court or by consent of the parties, no party shall, except in cross-examination, adduce from any witness at the trial of the proceeding any evidence to which this order applies, unless that party shall have filed and served a statement of evidence of the witness in accordance with this order.

17. That any notices seeking or making admissions pursuant to Order 35 of the Rules of Court be filed and served no later than 15 November 2001.

18. That the proceeding be referred for mediation to a mediator to be agreed to by the parties and failing agreement to be appointed by the Hon. Justice E.W. Gillard.

19. The mediator must, before proceeding, inform all parties of the amount of the fees of the mediation and such fees in the first place shall be paid equally by the parties, and the mediator may decline to proceed until the whole of the fees are paid.

20. That otherwise the costs of the mediation be reserved.

21. Each party must attend the mediation and co-operate with the mediator in a bona fide endeavour to compromise the issues.

22. Each of the parties must have present at the mediation, such person or persons who have the ultimate responsibility and the authority for deciding to settle the dispute in the terms of settlement.

23. That the mediation be completed by 14 December 2001.

24. That the mediator file a written report with the Court stating whether the mediation is finished.

25. Leave to apply generally on five days' written notice to all parties.

26. That the remaining issues in the proceeding be determined after the issues set out in Annexure A are determined.

27. That the plaintiffs have leave to file and deliver an amended statement of claim consequent upon the plaintiff Douglas Chalmers ceasing to be a party.

28. That the plaintiffs deliver a request for particulars of the defendants' allegations in their amended defence that some of the third parties ought to have known a fact on or before 19 October 2001.

29. That the defendants file and deliver to all parties their further and better particulars by 4.00 p.m. on 15 November 2001.

30. That the costs of the directions' hearing this day be reserved.

31. That the directions' hearing be adjourned to 17 December 2001.

1. Did the defendants owe a duty to exercise reasonable skill and care in designing, installing, operating and maintaining the Longford Plant to avoid -

(ii) economic loss resulting from damage to property of; and/or

(iii) economic loss which did not result from damage to property of -

leaving aside any fact relevant to the issues which are peculiar to the said plaintiff or a particular group member?

2. Did the defendants owe a duty to exercise reasonable skill and care in designing, installing, operating and maintaining the Longford Plant to avoid -

(ii) economic loss resulting from damage to property of; and/or

(iii) economic loss which did not result from damage to property of -

domestic users leaving aside any fact relevant to the issues which are peculiar to a particular group member?

3. Did the defendants owe a duty to exercise reasonable skill and care in designing, installing, operating and maintaining the Longford Plant to avoid stood down workers losing wages or annual leave entitlements as a result of being stood down from their employment by reason of the September stoppage, leaving aside any fact relevant to the issues which are peculiar to the second plaintiff or a particular group member?

4. Was the interruption to the gas supply from the Longford Plant on or after 25 September 1998 caused by the negligence of the defendants, their employees and/or agents?

5. Did the first and second plaintiffs and any group members who give evidence as sample group members, suffer some loss as a result of the interruption or cessation of the gas supply on or after 25 September 1998 (unquantified)?

6. If the defendants or either of them breached any duty of care to the plaintiffs and any group members who suffered damage from the interruption or cessation of the supply, was the negligence a cause of the damage suffered by -

(i) the first plaintiff and/or the business user group members who are permitted to give evidence as sample group members;

(ii) the second plaintiff and/or the domestic user group members who are permitted to give evidence as sample group members;

(iii) the second plaintiff and/or any stood down worker group members who are permitted to give evidence as sample group members -

or was the chain of causation broken by the act or omission of someone other than the defendants, leaving aside any fact relevant to the issues which are peculiar to any plaintiff or a particular group member?

Jurisdiction of Courts Cross-Vesting Act 1987(Cth)

At a glance

Court

Decision date

Before

Source

Judgment (143 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (5)