The issue of power
15 In response to the various sources of power relied on by the applicants, the respondent says:
(1) The power conferred by s 23 is not an unlimited or unfettered power that permits the Court to ignore other limitations that are imposed upon granting relief. Those other limitations include, in this case, the provisions of Pt IVA itself. Section 23 is not a plenary power providing a panacea for any perceived procedural or substantive ill. It does not supply power to do what the applicants ask the Court to do here.
(2) Section 33ZF of the FCA Act has no application to this proceeding. By its express language it applies to "any proceeding … conducted under this Part". The reference to "this Part" is a reference to Pt IVA of the FCA Act. This proceeding ceased to be conducted under that Part upon the making of the s 33N order on 27 April 2012.
(3) The power under s 37P to give directions about practice and procedure does not permit the Court to override the statutory limitations inherent within Pt IVA itself. Like s 23 of the FCA Act, it does not empower the Court to grant the relief sought here.
(4) Rule 1.21 does not assist for two reasons:
(a) First, it cannot permit the Court to override the statutory limitations inherent within Pt IVA itself; and
(b) secondly, it applies only where "the procedure is not prescribed by the Act", and in this case, the procedure is prohibited by the scheme of Pt IVA.
(5) Rules 1.31 and 1.32 also do not assist the applicants, and do not permit the Court to override the statutory limitations inherent within Pt IVA itself.
16 In support of the orders sought in prayer 1 of the interlocutory application, the applicants referred to a number of authorities, which allowed an existing proceeding in the Court not filed as a proceeding under Pt IVA of the FCA Act to be converted into such a proceeding.
17 In Finance Sector Union of Australia v Commonwealth Bank of Australia (1999) 89 FCR 417, O'Connor J came to the conclusion that there was "no jurisdictional impediment" to making an order (at [19]) as Pt IVA was not a complete code in itself. Her Honour relied on the Second Reading Speech when Pt IVA was introduced into the FCA Act, which emphasised "the legislative intent of creating an efficient and effective procedure to deal with multiple claims" (at [13]).
18 This decision was followed in Sreika v Cardinal Financial Securities Limited [2000] FCA 1647, where what was described as a "jurisdictional argument" (presumably, more accurately, an argument as to power) was raised. Tamberlin J followed Financial Sector Union and held (at [11]):
I do not think that the Court is deprived of jurisdiction by the existence of Part IVA and the requirements of ss 33C or 33H from granting leave to make such an amendment. To dismiss the present proceeding entirely and to require a fresh action to be commenced, rather than to permit an amendment, involves unnecessary delaying expenses and is an unduly rigid approach. The section is not concerned with whether there is an existing proceeding on foot or how the requirements are satisfied, either as a consequence of amendment or otherwise. Furthermore, to preclude the Court from granting leave to file an amended application in compliance with Part IVA may in some circumstances prove highly inconvenient and inappropriate ..I can identify no useful purpose which would be served by such a limitation especially in circumstances where the requirements of s 33H can be satisfied by the filing of a fresh application. There is no reason why a judge should not have a discretionary power to grant leave in appropriate circumstances. Considerations of procedural efficiency and economy support a contrary conclusion to that advanced by the respondents and this is consistent with the underlying principle leading to the enactment of Part IVA.
(Emphasis added.)
19 In Watson v AWB Limited [2007] FCA 1367, Gyles J doubted the correctness of the decisions in Financial Sector Union and Sreika, but was not prepared to hold that the decisions were "clearly wrong" (at [6]). His Honour permitted the conversion of an existing proceeding into a Pt IVA proceeding.
20 In Wingecarribee Shire Council v Lehman Brothers Australia Limited (No 3) [2010] FCA 747, Rares J made orders converting an existing proceeding into a Pt IVA proceeding. Rares J noted the decision of Gyles J in Watson v AWB Limited but declined to engage in any reconsideration of the authorities (at [5]). His Honour observed (at [6]):
Section 33C(1) enables proceedings to be commenced under Part IVA. The section does not require that any proceedings brought under the Part must always originate as proceedings under it. There is a reasonable basis to consider that the section is intended to be expansive, rather than constrictive, of the Court's powers. It is quite inappropriate to read provisions conferring jurisdiction or conferring powers on the Court by making implications or imposing limitations that are not found in the express words: Owners of 'Shin Kobe Maru' v Empire Shipping Co Inc (1994) 181 CLR 504 at 421 ... In addition, the Court has powers to permit the amendment of proceedings. Those powers of amendment are not displaced by anything expressly said in Part IVA.
(Emphasis added.)
21 The applicants acknowledge that the present proceeding is slightly different in that it commenced as a Pt VIA proceeding, was subsequently the subject of an order under s 33N and now an order is sought (re)constituting it as a Pt IVA proceeding. They were the same facts which came before Lindgren J in Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd (1999) 95 FCR 302 which, the respondent says, correctly, is the only authority directly on point. At [219]-[221], his Honour said:
The ACCC submits that circumstances have changed since 24 July 1998 and that it is appropriate now that the proceeding be again a representative proceeding under Pt IVA of the FCA Act.
In my opinion, I do not have power to make the order sought. There is no provision in the FCA Act expressly permitting me to do so. Part IVA contemplates only the commencement of proceedings as representative proceedings: cf ss 33A (definitions of "group member", "representative party" and "representative proceeding"), 33C, 33D, 33G, 33H and 33K. In particular, s 33A defines "representative proceeding" as "a proceeding commenced under section 33C". Of course, proceeding NG 421 of 1998 satisfies the literal terms of that definition. But in my view, the order under s 33N made on 24 July 1998, unless and until set aside, has the effect that the proceeding can no longer be regarded as being within the definition. An order achieving the result now sought by the ACCC would be inconsistent with my order of 24 July 1998.
Section 33P … contemplates as the only relevant "consequences of [an] order that [a] proceeding not continue under [Pt IVA]", that if the proceeding is to continue at all, it is to continue otherwise than under Pt IVA.
22 The applicants point out that even leaving aside subsequent amendment to both the FCA Act and the FCR, Financial Sector Union and Sreika both disavowed the construction relied on by Lingdren J that Pt IVA is a code limited to proceedings commenced as a representative proceeding. Similarly, as Rares J held in Wingecarribee Shire Council, there is nothing in the terms of Pt IVA which limited the application before him nor are the Court's powers of amendment circumscribed by the terms of Pt IVA (at [6]).
23 In any event the applicants submit, what is presently before the Court is a civil proceeding in the General Division of the Court. The fact that it was previously under Pt IVA but is no longer, does not give its current status a different character than an ordinary civil proceeding in the General Division of the Court amenable to the same raft of orders that were available to the Court in Financial Services Union, Sreika, AWB and Wingecarribee Shire Council.
24 The applicants point to the fact that the interlocutory order sought in para a. of prayer 1 of the interlocutory application actually seeks the vacation of the s 33N order made on 22 April 2012. I would regard this as an application to set aside the s 33N order pursuant to r 39.05, which if made, would, according to the applicants, enable the Court to then make an order under s 33ZF. They referred to Delta Metallics Pty Ltd v King [2012] FCA 1119 where Middleton J eschewed any need to establish exceptional circumstances in setting aside an interlocutory order. Rather, his Honour was concerned that (at [9]):
[It] needs to be done on a proper juridical basis. Again, it will depend on all the circumstances, which will include - relevantly in this Application - the actions of [the first respondent], and the circumstances of any prejudice that may arise in relation to the party that has an order or judgment in its favour.
25 According to the applicants, there can be no prejudice to the respondent from an order setting aside the order of 27 April 2012 (which was procedural in nature and given that it has been compensated already with a costs order), if in its place is an order in terms of prayer 1 of the interlocutory application and the Court is otherwise satisfied that such orders will be consistent with and meet the requirements of the overarching purpose provided for in s 37M of the FCA Act.
26 For its part, the respondent submits that the applicants' attempt to circumvent the limitation arising by virtue of the s 33N order recognised by Lindgren J in Giraffe World by seeking to "vacate" the s 33N order should not be permitted. The s 33N order was appropriate when made well over a year ago. The applicants sought leave to appeal from that order, and leave was refused. The various changes of circumstance that have occurred since do not warrant an attempt to achieve, by a back door, what the applicants cannot achieve directly. There is no basis to disturb that order.
27 According to the respondent, the present application to reconstitute the proceeding is also inconsistent with Multiple Funds Management Ltd v P Dawson Nominees Pty Ltd (2007) 164 FCR 275 at [142]. The Full Court held that a group definition that allowed a person to take a positive step of "opting in" after the commencement of the proceeding would be inconsistent with one or more of ss 33C, 33H, 33J and 33K. In the present case, unless the proceedings are reconstituted with the same representative applicant, namely Ms Meaden, and the same closed class as existed at the start of the proceedings (or at least one with only group members who were group members when the proceedings commenced), then the proceedings will not meet the requirements of Pt IVA for a closed class proceeding in the manner required as described by the Full Court in Multiplex. The new proposed second further amended statement of claim in Annexure "VAM-5" to Mr Moulis' 19 April 2013 affidavit defines the group members as: "the persons identified in Schedule A". There is in fact no Schedule A to Annexure "VAM-5" but it is plain that the group is different from the group originally defined in the original application and statement of claim; see the Court's first judgment: Meaden v Bell Potter Securities Limited [2011] FCA 136 at [7]. The Court cannot permit that in the case of a closed class.
28 In response to this last point, the applicants contend, with respect, that the respondent's argument proceeds on a misapprehension as to what was in issue in Multiplex. According to the applicants, nothing in Multiplex prevents or is directed to the issue of a change of group members during the currency of a proceeding. Indeed, unsurprisingly, given that consent is not required to commence a representative proceeding on behalf of a group member (s 33E), various provisions within Pt IVA expressly contemplate changes in the composition of group members. The issue in Multiplex was directed not to the progress of a Part IVA proceeding or the question of conversion, but the quite distinct question of the necessary preconditions for a representative proceeding to be brought and, in particular, whether a particular criterion of group membership, subverted the underlying policy of Pt IVA. The Court rejected a criterion for group membership expressed in the pleading in such a way as to make it ambulatory (which would allow for a shifting composition of the group after commencement) that has nothing whatever to do with what is proposed here.
29 It may be correct to say, as the applicants do, that what Jacobson J, with whom French and Lindgren JJ agreed, said at [142] of Multiplex, namely, that under Pt IVA, a group definition that allowed a person to take a positive step to "opt in" after the commencement of the proceeding would be inconsistent with one or more of ss 33C, 33H, 33J and 33K and therefore was not permissible "has nothing to do with what is proposed here", but had the proceeding remained a Pt IVA proceeding what is sought to be achieved by the suite of orders in prayer 1 of the interlocutory application, could not have occurred. It would not have been possible for Mr Brett Tyack, who was not a group member, as defined in para 2 of the originating application and statement of claim, to be appointed representative of the group. I will return to the relevance of this consideration below.
30 I am satisfied that I have the power under r 39.05 to vacate or set aside the s 33N order made on 27 July 2012 as sought in para a. of prayer 1 of the interlocutory application, but I am less confident that I have the power to make the further or alternative order sought in para b. of prayer 1. My lack of confidence in relation to para b. stems from what Lindgren J said in the extract from his Honour's reasons in Giraffe World at [219]-[221] reproduced in [21] above, a case directly on point, and the doubts expressed by Gyles J in Watson v AWB Limited at [6].
31 However, as a matter of discretion, I would not be prepared to exercise the power to vacate or set aside the s 33N order made on 27 July 2012 if, as it would be, the effect of such vacation or setting aside was to reconstitute the proceeding with the same representative applicant, namely, Ms Meaden. Nothing has changed with respect to her unsuitability as the representative of the group and the applicants implicitly accept this by the order they seek in para c. of prayer 1. But the order that is sought in para c. of prayer 1 is not an order which I am satisfied I have the power to make and even if I am wrong in that regard, it is not an order which, in the exercise of my discretion, I would make.
32 There is no real doubt that once the proceeding is reconstituted as a proceeding under Pt IVA by the vacation or setting aside of the s 33N order, the power of the Court under s 33ZF of the FCA Act is enlivened. It relevantly provides:
(1) In any proceeding (including an appeal) conducted under this Part, the Court may, of its own motion or on application by a party or a group member, make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding.
(2) …
33 There is also no real doubt that, pursuant to s 33ZF(1) of the FCA Act, the Court could appoint a group member, as defined in para 2 of the application and statement of claim, as representative of the group in place of Ms Meaden. Whether the Court would do so, in the exercise of its discretion, would depend on the suitability of the appointee as representative of the group and that would in turn depend on whether I was satisfied that the trial of the representative action will determine for all group members the common question or common questions. If I was of the view, as I was in the case of Ms Meaden, that there was such a lack of commonality that any determination of the proposed appointee's claim would offer no real guide as to how the balance of the claims by the claimants would be determined were they to proceed to be determined individually, I would decline to exercise my discretion.
34 However, Mr Tyack is not a group member (as defined) and never has been. He was joined as an applicant when the proceeding ceased to be a Pt IVA proceeding and became a multi-applicant proceeding, but that joinder did not provide him with the status of a member of the group, the class of which had closed when the proceeding commenced. By the order sought in para c. of prayer 1, the applicants seek to overcome the impediment to Mr Tyack becoming a group member after the commencement of the proceeding. That is not something which, in my view, the Court has power to do, but if it has, as a matter or discretion, it should not be exercised.
35 For these reasons, insofar as the interlocutory application seeks the orders in prayer 1, it must be dismissed. As the orders in prayers 2 and 3 are consequential on the orders in prayer 1 being made, the interlocutory application must, to that extent as well, be dismissed.