Lowe v Mack Trucks Australia Pty Ltd

REASONS FOR JUDGMENT 1 On 7 June 2000, a Deputy Registrar relevantly ordered that: 1. The applicant file and serve an amended statement of claim on or before 28 July 2000. 2. If the statement of claim is not provided on or before 28 July 2000, then the application stand dismissed. Application has been made, by notice of motion dated 18 December 2000, for the following orders: 1. An extension of time within which to comply with order 1 made by [the] Registrar … on 7 June 2000 and consequential amendment of order 2 made by the Registrar. 2. Leave for the representative applicant and other group members to file applications and statements of claim should they so wish. 3. Slater & Gordon to pay such of the respondent's costs as the Court orders. The application was supported by affidavits of Mark Jonathan Walter sworn on 19 February 2001 and on 22 March 2001, and by an affidavit of Patrick Kevin Over sworn on 22 March 2001. There is an affidavit in opposition sworn by Anthony John Deane on 20 March 2001. 2 The proceeding has been on foot since 17 May 1999. The pleadings have not yet approached completion. The applicants, Graham and Erica Lowe, commenced a representative proceeding under Part IVA of the Federal Court of Australia Act 1976 (Cth) seeking damages and compensation from the respondent, Mack Trucks Australia Pty Ltd, on a number of grounds, including under the Trade Practices Act 1974 (Cth). The application was brought by the applicants as representing all other persons who, as at 17 May 1999, had purchased or acquired a right to immediate possession of a Mack truck. Mack trucks were alleged to be of a defective design or construction. 3 There have been two principal points of contention between the applicants and the respondent since the proceeding began. The first was whether the Victoria District Registry of the Court was the appropriate Registry out of which the proceeding was to be conducted. The second was whether the applicants had succeeded in pleading a tenable statement of claim. Only the first of these questions has been determined to date. 4 A brief history of the proceeding is as follows. On 8 July 1999, the respondent's solicitors faxed a letter to the applicants' solicitors, alleging that there were deficiencies in the statement of claim and raising issues in relation to venue. The applicants' solicitors indicated that whilst they did not consider the pleading to be deficient, they would be happy to discuss the matter further. On 13 July 1999, the applicants filed and served an affidavit seeking orders under Part IVA of the Federal Court of Australia Act. On 14 July 1999, the Deputy Registrar adjourned the directions hearing to 4 August 1999, by consent of the parties. 5 On 23 July 1999, the respondent's solicitors gave the applicants' solicitors a written statement of what they perceived to be the deficiencies in the statement of claim. The applicants' solicitors responded by indicating they were considering their position. There was no detailed response from the applicants' solicitors prior to 4 August 1999, although they informed the respondent's solicitors that the applicants proposed to amend their pleading. The directions hearing was adjourned by consent to 8 September 1999 and then to 3 November 1999. In the meantime the applicants' solicitors reiterated that they would provide an amended statement of claim. 6 On 1 November 1999, the respondent filed a notice of motion dated 29 October 1999 seeking the following orders: 1. The within statement of claim be struck out; 2. The Court certify the matter within the meaning of S 33N of the Federal Court of Australia Act as a matter not to proceed as a representative proceeding; 3. That the proceedings be transferred to the Brisbane Registry; 4. Such further directions for the conduct of the matter as the Court deems appropriate; and 5. Costs. Also that day the applicants' solicitors received a complete copy of a supporting affidavit. 7 On 3 November 1999, the applicants were ordered to file and serve an amended statement of claim by 8 November 1999. For some unstated reason (given that this was the first time they were amending their statement of claim) the applicants, on 8 November 1999, filed what they described as a "Proposed Amended Statement of Claim": see Federal Court Rules ("the Rules"), O 13, r 3(1). 8 A Deputy Registrar heard the respondent's transfer application on 24 November 1999. That application failed. 9 In early February 2000, orders were made requiring the respondent to notify the applicants' solicitors of their complaints about the 8 November 1999 proposed amended statement of claim, and dismissing the respondent's notice of motion of 29 October 1999. Complaints about the statement of claim and the applicants' responses to them continued to be discussed by the parties' solicitors up to June 2000. The respondent's solicitors gave notice to the applicants' solicitors, by letter dated 1 June 2000, that they would seek a guillotine order in relation to the filing of any amended statement of claim at the next directions hearing. On 6 June 2000, the applicants' solicitors responded by letter stating that counsel was finalising a statement of claim which would be provided within seven to fourteen days. The parties remained at issue about the tenability of the applicants' statement of claim until 7 June 2000 when they again came before the Deputy Registrar who made the guillotine order in the form set out earlier, upon the application of the respondent. The order was not opposed by the applicants. 10 As it happened, the applicants did not file or serve an amended statement of claim by 28 July 2000. Instead they filed a notice of motion on that day. By that notice of motion, they sought the following relief: 1. That the proceeding no longer continue as a representative proceeding pursuant to Section 33C of the Federal Court of Australia Act 1976. 2. That the Applicants have leave to proceed on their own behalf pursuant to Section 33(a) of the Federal Court of Australia Act 1976. 3. That the Applicants file and serve an Amended Application and Statement of Claim. 4. Such other Orders as the Court deems meet. On 15 June 2000, the applicants' solicitors wrote to the applicants and other group members who had retained them, informing them that a final version of the statement of claim was required to be filed by 28 July 2000. Counsel was briefed to draw and settle the pleading. Mr Walter, who had the conduct of the matter until December 2000, deposed that: I honestly believed that [counsel] would draft and settle an amended statement of claim for filing on or before 28 July 2000 and that he had sufficient time to do so. Between the directions hearing on 7 June 2000 and 28 July 2000 I telephoned [counsel] three or four times seeking an update on the status of his amendments to the statement of claim. I was unable to speak with [counsel] and although I left messages for him each time he did not return my calls until 28 July 2000. On 28 July 2000 I spoke with [counsel]. I had two or three telephone conversations with him that day. He told me that he had concluded that he could not articulate amendments to the statement of claim in such a form that they would not be susceptible to being struck out, which was the purpose of the amendment. He advised me that the matters could proceed individually and that the appropriate course of action was to make an application to have the proceeding no longer continue as a representative proceeding. I recall that we both examined the Federal Court Rules to find out how this could be done in a representative proceeding. After speaking with [counsel] I telephoned the applicants, Mr and Mrs Lowe, and advised them of Counsel's advice and sought their instructions to apply to the Court to have the proceeding no longer continue as a representative proceeding. They gave me instructions to do this. On 28 July 2000 I issued a Notice of Motion in the Melbourne Registry of the Federal Court of Australia. The aim of the Motion was to have the Court order that the proceeding no longer continue in a representative capacity and to allow group members to pursue individual proceedings. In hindsight I concede that the Notice of Motion was defective. On 28 July 2000, after the notice of motion was filed, my Associate telephoned the applicants' solicitors to ask whether the applicants would be applying to extend the time for compliance with the Deputy Registrar's order of 7 June 2000. According to Mr Walter, he inquired of counsel whether such an application should be made and counsel replied that the notice of motion "ought to be sufficient to deal with the proceeding and any other orders could be the subject of an amendment to the Notice". Mr Walter deposed: I had an honest belief that the effect of filing the Notice of Motion on 28 July 2000 meant that the representative proceeding remained on foot until the Court … determined the Motion. I did not believe the representative proceeding had been struck out. According to Mr Walter, it was for this reason that he did not discuss the self-executing order with any other member of his firm. The notice of motion dated 28 July 2000 was first listed to be heard on 9 August 2000 but was adjourned by consent of the parties to a date to be fixed. The motion finally came before me on 30 November 2000. 11 New counsel appeared for the applicants on 30 November 2000. Although briefed at short notice, counsel appreciated the true position in which the applicants found themselves. The notice of motion of 28 July 2000 was dismissed but the applicants were granted leave to serve a notice of motion in appropriate terms together with supporting affidavit material. On 18 December 2000, the applicants filed the notice of motion seeking the orders referred to at the start of these reasons. 12 The applicants now concede that the notice of motion of 28 July 2000 did not prevent the time running under the orders of 7 June 2000 and that the application has stood dismissed since 28 July 2000. 13 As already noted, by their 18 December 2000 notice of motion, the applicants first sought an extension of time within which they might file and serve an amended statement of claim. There is little doubt that, pursuant to O 3, r 3 of the Rules, the Court has power to extend the time for compliance with an order such as that made by the Deputy Registrar on 7 June 2000: see FAI General Insurance Company Ltd v Southern Cross Exploration NL (1988) 165 CLR 268 at 283-284 (concerning a rule of the New South Wales Supreme Court which is not relevantly distinguishable from O 3, r 3 of the Rules); Lenijamar Pty Ltd v AGC (Advances) Limited (1990) 27 FCR 388 at 401; and Sammy Russo Meat Supplies Pty Ltd v Australian Safeway Stores Pty Ltd [1999] FCA 1381 at par 13. An extension of time may be granted, even when time has expired, "to prevent injustice in circumstances where the party subject to a conditional order ought to be excused from non compliance": FAI General Insurance at284. 14 The applicants' counsel submitted (and I accept) that the applicants' failure to comply with par 1 of the Deputy Registrar's order was neither contumelious nor intentional in the sense that the applicants intended to breach it. I accept that the applicants' solicitors proceeded under the belief, which turned out to be ill-founded, that counsel would prepare the relevant pleading by the due date. I also accept, although not without some difficulty, that when that did not occur, the responsible solicitor believed that, by filing the notice of motion of 28 July 2000, the applicants would prevent the guillotine order from taking effect. The applicants' solicitors have properly accepted that none of the blame lies with their clients, but all the blame is attributable to their legal advisers. This is, plainly enough, a relevant factor in considering the position of the applicants and those they claim to represent. 15 In this case, counsel for the applicants supported the extension of time application on the ground that the order of 7 June 2000 should never have been made. They submitted that an application for a "self-executing" or "guillotine" order must be made by notice of motion. They also submitted that, if such an order were to be made, there should have been an advertising of the respondent's intention to apply for it. 16 Order 10, r 7(1)(a) provides that: Where a party fails to comply with an order of the Court directing that party to take a step in the proceeding, any other party may move the Court on notice … for an order that the proceeding be … dismissed … . In this case, however, the applicants were not in default of an order of the Court on 7 June 2000 and, in consequence, O 10, r 7(1)(a) did not apply. The matter was governed by O 10, r 7(2) which reads: The Court may make an order of the kind mentioned in sub-rule (1) or any other order or may give such directions, and specify such consequences for non-compliance with the order, as the Court thinks just. As we have seen, although there was no notice of motion before the Deputy Registrar, the respondent had notified the applicants of its intention to apply for a guillotine order on 7 June 2000 by letter dated 1 June 2000. The applicants did not oppose the 7 June 2000 orders on the basis they were sought without notice of motion or that they were taken by surprise. Save for the matter about to be discussed, it was, I think, open to the Deputy Registrar to make the orders he did, and there is no substance in the applicants' first objection. 17 There is substance in the applicants' second complaint. Section 33X(1)(b) of the Federal Court of Australia Act 1976 requires that notice must be given to group members of an application by a respondent in a representative proceeding for the dismissal of a proceeding on the ground of want of prosecution. Presumably, there is this notice requirement because the application, if successful, might prejudice the rights of group members. For example, some group members might have causes of action that could be adversely affected by limitation of actions provisions if the representative proceeding was determined without notice to them. Although a limitation period is suspended on the commencement of a representative proceeding, a limitation period will run again where the proceeding is determined, without finally disposing of a group member's claim: see s 33ZE. Similar considerations may apply where a self-executing or guillotine order is sought. If the order is made and, as in this case, comes into effect because of a specified default, there may be group members whose rights would be adversely affected by the revival of limitation periods. Although the representative proceeding provisions of the Act do not make notice a prerequisite to an application for a self-executing order, there is provision in s 33X(5) for the Court to order that notice of any matter be given to group members at any stage of the proceeding. Bearing in mind the possible consequences for group members of an order of this kind, some consideration should have been given in this case to the question whether notice ought first to have been given to group members. None of the parties made any submission to this effect before the Deputy Registrar. Instead, the respondent invited him to make these orders upon the basis that the applicants had been persistently dilatory in taking steps in the proceeding. Absent other considerations, this is an accepted basis for making a guillotine order: see Lenijamar Pty Ltd v AGC (Advances) Limited (1990) 27 FCR 388 at 396. The applicants' former counsel said nothing of the need to give particular consideration to matters pertinent to the representative nature of the proceeding, including the giving of notice. Generally speaking, a self-executing order should not be made in a representative proceeding unless the Court has first considered whether notice should be given to group members, either of the respondent's application or of any self-executing order to be made, or otherwise. Accordingly, I accept the applicants' submission that the orders made by the Deputy Registrar ought not to have been made in this case. 18 In opposition to the relief now sought by the applicants, the respondent contended that there would be no disadvantage to the members of any class if they were now required to initiate individual actions. Accordingly, so the respondent submitted, matters were best left as they were. According to Patrick Over, a solicitor who has had the conduct of the matter since early December 2000, Mr and Mrs Lowe can institute a new non-representative proceeding without any time-bar operating against them. Mr Over deposed that this is the position of nine other group members. The position of two other group members has not, so he deposed, been prejudiced by the guillotine order. In one case, Mr Over has had no communication from a person who had been told that he was a represented group member, and Mr Over could not therefore advise whether that individual would suffer from any time-bar. According to Mr Over, there were some 14 other individuals who had not retained the applicants' solicitors, although they had made contact with them in relation to the representative proceeding. Their positions with respect to limitation of actions difficulties are unknown, since none responded to correspondence from the applicants' solicitors seeking to ascertain their positions. The applicants' counsel submitted that there may well be other unknown persons who believe they are represented in the representative proceeding and who may, by reason of limitation periods, be adversely affected by the dismissal of the proceeding pursuant to the Deputy Registrar's orders. 19 The applicants' stated purpose in making these applications was to protect the rights of those persons who might have been within the group and whose causes of action might have become statue-barred or be otherwise adversely affected on the determination of the representative proceeding. Bearing in mind that in this case the self-executing order ought not to have made without first considering whether notice should be given to group members, this seems to me an entirely appropriate concern on the applicants' part. Although there has been no advertising of the proceeding for the purpose of the opting out procedure, counsel said that there had been substantial publicity about the proceeding. That is reflected in par 10 of the affidavit of Mr Deane. I accept that there is a real risk that there may be persons, unknown to the applicants' solicitors, who have heard of the proceeding and are relying on it to protect their interests. The proceeding has, after all, been on foot for almost two years. 20 The respondent submitted that there was no point in the extension of time application because the applicants have conceded that they cannot plead a defensible statement of claim since they cannot plead an interest common to the class. There is much force in the respondent's submission that the Court should not be invited to make an order at the applicants' behest when the applicants concede they cannot perform it. 21 When this matter came on for hearing, counsel for the applicants was given leave to amend the applicants' 18 December 2000 notice of motion "to seek an order that there be an extension of time until today, that is 29 March, for the applicants to make application to set aside [the Registrar's] order made 7 June 2000; secondly, an order setting aside [pars 1 and 2 of] the Registrar's order". 22 I thought at first that an appropriate course might be to grant an extension of time in order to permit the applicants to do what they ought to have done prior to the guillotine order taking effect, namely, to apply to set aside pars 1 and 2 of the Deputy Registrar's order. On reflection, it seemed to me that this would not meet the respondent's objection, namely that the Court should not make an order with which the applicants, on their own admission, cannot comply. The circumstance distinguishes this case from many other cases in which application is made for an extension of time, after the time has expired. In cases such as FAI General Insurance, Lenijamar and Sammy Russo Meat Supplies (referred to earlier), an extension of time was sought in order to remedy the default upon which the operation of the self-executing order depended. In this case, the applicants have no intention of remedying the default, since, so they say, that cannot properly be done. Accordingly, I have dealt with the matter more directly, ordering: