Nixon v Philip Morris

BETWEEN: MICHAEL CHRISTOPHER NIXON, ALEX TALAY, ROBERT MILNE, VICTOR BRUCE WILLIAMS, SANDRA SHEPHARD and GREGORY DURKIN (for themselves and as representing the persons referred to in paragraph 1 of the Statement of Claim)

AND: PHILIP MORRIS (AUSTRALIA) LTD and PHILIP MORRIS LTD

W D & H O WILLS HOLDINGS LTD and W D & H O WILLS (AUSTRALIA) LTD

ROTHMANS HOLDINGS LTD and ROTHMANS OF PALL MALL (AUSTRALIA) LTD

REASONS FOR JUDGMENT 1 WILCOX J: Strike out applications are made by each of the three sets of respondents in this proceeding, Philip Morris (Australia) Ltd and Philip Morris Ltd (collectively "Philip Morris", the first respondent), W D & H O Wills Holdings Ltd and W D & H O Wills (Australia) Ltd (collectively "Wills", the second respondent) and Rothmans Holdings Ltd and Rothmans of Pall Mall (Australia) Ltd (collectively "Rothmans", the third respondent). A number of matters are argued. Before dealing with them it is desirable to say something about the history of the principal proceeding and the nature of the applicants' claim.

The proceeding 2 The proceeding is a representative proceeding brought under Part IVA of the Federal Court of Australia Act 1976. There are six named applicants, Michael Christopher Nixon, Alex Talay, Robert Milne, Victor Bruce Williams, Sandra Shepherd and Gregory Durkin. They sue each of the respondents on their own behalf and as representing the group members described in para 1 of the Statement of Claim. That description has undergone some metamorphosis. In the Statement of Claim filed on 16 April 1999, with the Application that initiated the proceeding, the group was described as: "all other persons who between 16 April 1996 and 16 April 1999 contracted cancer of the lung, larynx, pharynx and/or tongue ('smoking related cancer') and/or contracted lung disease (including emphysema) and vascular disease ('smoking related malignant disease') as a consequence of the use of the cigarettes between January 1960 and 16 April 1999." 3 That Statement of Claim included a claim under s52 of the Trade Practices Act 1974 (paras 18 to 22) and two negligence claims. The Trade Practices Act claim was limited to conduct after 1 October 1974, the date of commencement of that Act. The first negligence claim (paras 23 to 27) substantially mirrored the Trade Practices Act claim except that it related to the period January 1960 to 16 April 1999. The second negligence claim (paras 28 to 32) complained of the respondents' failure to reduce, to tolerable levels, the tar levels in their cigarettes. 4 When the matter came before the Court on 20 April 1999 for directions, the Statement of Claim was subjected to some criticisms, notably in relation to its description of the group. Harkening to those criticisms, on 3 May 1999, the applicants' solicitors filed an Amended Statement of Claim. This document contained an amended group description. However, at the next directions hearing on 7 May, the amended description also attracted criticism. Counsel appearing for the respondents foreshadowed strike out applications. Counsel for the applicants indicated a wish further to revise the pleading. I directed, amongst other things, that another Amended Statement of Claim be filed by 28 May 1999 and that any Notice of Motion to strike out the action or that pleading, or for an order under s33N of the Federal Court of Australia Act, or otherwise with regard to pleading matters, be filed and served by 18 June 1999. I fixed 26 July for the hearing of any such Notices of Motion. 5 On 1 June 1999 another Amended Statement of Claim was filed. At the request of the respondents, I relisted the matter on 17 June. As a result of some discussion that day, during which I extended the date for filing Notices of Motion, on 1 July 1999 yet another Amended Statement of Claim was filed, along with an Amended Application. These documents defined the group in this way: "all persons, including themselves, who: (a) between 16 April 1996 and 16 April 1999 contracted cancer of the lung, larynx, pharynx, tongue and/or oesophagus ('smoking related cancer') and/or emphysema, chronic bronchitis, airflow obstruction, peripheral vascular disease and/or coronary vascular disease and/or cerebral vascular disease ('smoking related non-malignant disease') as a consequence of smoking, within Australia, between January 1960 and 16 April 1999, the cigarettes referred to in paragraph 5 hereof; and (b) between 16 April 1996 and 16 April 1999 were first diagnosed as having contracted smoking related cancer and/or smoking related non-malignant disease; and (c) began or continued such smoking, or failed to quit such smoking, by reason of the conduct of the Respondents referred to in paragraph 8 hereof; and (d) on 16 April 1999 were living within Australia." 6 On 2 July 1999 each set of respondents filed one or more Notices of Motion seeking to strike out the proceeding, or the Amended Application and Amended Statement of Claim or part of the Amended Statement of Claim. These Notices of Motion were all made returnable on 26 July. 7 Each of the parties filed affidavit evidence. The affidavits filed on behalf of the respondents came mainly from medical experts. They dealt with aspects of the relationship between smoking cigarettes and one or more of the diseases referred to in para (a) of the description of group members. The deponents indicated that the effect of smoking varies from one individual to another and it is often difficult to determine whether a particular person's medical condition is a consequence of smoking or some other cause. The respondents' point, of course, is that any consideration of the causal relationship between smoking and a particular person's condition must be undertaken on an individual basis. At the hearing of the motion, counsel for the applicants indicated they did not dispute the respondents' proposition, although they suggested epidemiological studies would be relevant to such a consideration. 8 Solicitors acting on behalf of the various respondents furnished evidence as to the brands of cigarettes marketed in Australia by their clients between January 1960 and April 1999. The deponents suggested there was a considerable variation in the characteristics of these cigarettes. 9 The applicants also filed affidavit evidence. Some of this was medical evidence. One affidavit was made by Peter Gordon, a member of the firm of solicitors acting on behalf of the applicants. Mr Gordon referred to some official reports that contained estimates of the incidence of smoking-related diseases. Those reports suggest that, each year in Australia, about 18,000 deaths and 140,000 hospital admissions are attributable to cigarette smoking. Mr Gordon also referred to documents that indicated that, in the years 1960 to 1975, the respondents were collectively responsible for the manufacture and/or distribution of approximately 80-90% of all cigarettes sold to consumers in Australia and the proportion rose to 95-100% between 1976 and 1998. 10 Pursuant to a direction I had made on 7 May, each of the parties filed an "Outline of Submissions"; actually, in each case, the document contained a full written argument. I found these submissions extremely helpful. I had the opportunity to read and consider them before the day appointed for the hearing of the Notices of Motion, with a consequent reduction in the time required for that hearing. 11 When the hearing commenced on 26 July, after some discussion, all counsel indicated they did not seek to cross-examine any of the affidavit deponents. I then raised with counsel for the applicants some possible difficulties with the 1 July Amended Statement of Claim. The first of these difficulties related to the description of group members. Another major question concerned the second negligence claim. This was a common law claim. It did not depend upon federal law. It seemed to me doubtful that this claim arose out of the same substratum of facts as the Trade Practices Act claim; if it did not, it was not within the accrued jurisdiction conferred on the Court by s32 of the Federal Court of Australia Act. It would follow the Court lacked jurisdiction to determine the claim. Furthermore, even if the claim was within jurisdiction, it presented some problems. First, there was no reason why such a claim should be restricted to people who were influenced to begin or continue smoking by the respondents' conduct: see para (c) of the then group definition. Second, determination of this claim would require evaluation of the characteristics of each of the cigarette products marketed by the respondents during the period 1960 to 1999. Apparently, there were some 200 different products. It seemed likely this task would swamp determination of the issues of liability common to all group members, which primarily concerned the conduct of the respondents in relation to promotion of cigarettes. After discussion, and submissions from counsel for Philip Morris, counsel for the applicants sought the opportunity once again to revise the Statement of Claim. There being no objection, I adjourned the hearing until the following day. 12 On Tuesday, 27 July counsel for the applicants brought in a draft of a further Amended Statement of Claim ("the revised draft") . This draft contains the following description of group members: "all persons: (a) who suffer (and have been medically diagnosed as suffering) from one or more of the following diseases: cancer of the lung, larynx, pharynx, tongue, emphysema, chronic bronchitis, airflow obstruction, peripheral vascular disease and/or coronary vascular disease and/or cerebral vascular disease ('smoking related disease') and (b) whose condition: (i) first manifested clinically observable symptoms between 16 April 1996 and 16 April 1999; and (ii) was caused in whole or in part by the person smoking (between 1 October 1974 and the date of the condition first manifesting clinically observable symptoms) cigarettes manufactured or distributed by any of the Respondents; and (c) who commenced, continued, or failed to quit such smoking wholly or partly because of: (i) the conduct of any one or more of the respondents in advertising, marketing and/or promoting the cigarettes as enhancing life and the enjoyment of life; and/or (ii) the conduct or any one or more of the respondents in advertising, marketing or promoting the cigarettes as (1) healthy and/or; (2) healthier than other cigarettes and/or; (3) safe to smoke and/or; (4) safer to smoke than other cigarettes; and/or (iii) The conduct of any one or more of the respondents in making or causing to be made public statements (1) denying that there existed any or any reliable evidence linking cigarette smoking to any risk to health, and in particular to smoking related disease; (2) casting doubt on evidence or reports linking cigarette smoking to any risk to health and in particular to smoking related disease; (3) denying that there existed any or any reliable evidence that the nicotine contained in cigarettes was addictive; and/or (iv) The absence or inadequacy of warnings about the risks associated with smoking the cigarettes; and (d) who are present in Australia at any time during the month of …… 1999." 13 Counsel contemplate the insertion in para (d) of the name of the month during which there will be Court-directed advertising of the entitlement of group members to opt out of the proceedings; the idea being to ensure that all group members have an opportunity to learn about the proceeding and consider whether they wish to opt out of it. 14 The revised draft omits the second negligence claim. The negligence action is now confined to a claim substantially mirroring the Trade Practices Act claim. It continues to apply to conduct from January 1960 to 16 April 1999, not just conduct between 1 October 1974 and 16 April 1999. 15 The revised draft also involves a number of minor variations from the Amended Statement of Claim filed on 1 July. 16 Even the revised draft was subjected to criticism from counsel for the respondents. During the course of argument, counsel for the applicants indicated they accepted some of those criticisms. There was discussion about further amendment. Counsel indicated a feeling of constraint because of the order and numbering of the paragraphs in the 1 July draft. However, I said the ultimate form of the document ought not be dictated by historical factors; it was better to get the pleading as clear as possible. Having by then reached the conclusion that it would not be appropriate summarily to dismiss the whole proceeding, I suggested counsel should again revise the draft in the light of the further discussion and my reasons on the argued issues; their further revision should be made available to counsel for the respondents and, if any counsel felt the further revision involved some new difficulty or failed to reflect my reasons, the issue should be referred to me for determination. 17 I said that, after the form of the Statement of Claim was finally resolved, defences should be filed and steps taken to prepare the matter for a trial at the earliest practical date next year. There is some urgency about the trial. Each of the six named applicants is said to suffer from lung cancer. I understand the health of two of them is rapidly declining. No doubt many group members are in a similar position.

The nature of the applicants' case 18 Paragraphs 2, 3 and 4 of the revised draft contain allegations about the incorporation of the respondents. The particulars to those paragraphs suggest one of the companies in each group of respondents existed in 1960; the other company in each group is said to have been incorporated after that date. Paragraph 5 alleges that "[d]uring the relevant period" - that is, from January 1960 (or later incorporation of a particular company) to 16 April 1999 - each set of respondents manufactured and/or distributed the brands of cigarettes listed in particular Schedules to the Statement of Claim. 19 Paragraph 6 claims that, during the relevant period: "(a) smoking the cigarettes caused smoking related disease; and (b) persons who smoked the cigarettes, including the Applicants and represented persons, had as a consequence of such smoking a material increase in their risk of contracting smoking related disease." 20 The term "smoking related disease" is defined in para 1(a) of the document, as meaning one or more of the following diseases: "cancer of the lung, larynx, pharynx, (or) tongue, emphysema, chronic bronchitis, airflow obstruction, peripheral vascular disease and/or coronary vascular disease and/or cerebral vascular disease". The words "the cigarettes" in relation to a particular respondent, refer to the cigarettes manufactured and/or distributed by that respondent: see para 5. Paragraph 7 alleges that, during the relevant period, the applicants and represented persons smoked the cigarettes. 21 Paragraph 8 of the revised draft is a pivotal provision. It alleges that, during the relevant period, each of the respondents "engaged in conduct promoting the benefits and pleasures of smoking, the purpose of which was to encourage smoking of the cigarettes by consumers including the Applicants and represented persons". This conduct ("the para 8 conduct") is said to comprise six elements which may be summarised shortly as: (a) advertising, marketing and promoting the cigarettes, in various media, "as enhancing life and enjoyment of life of consumers of the cigarettes"; (b) advertising, marketing and promoting certain brands of cigarettes as healthy or safe, or healthier or safer than other cigarettes; (c) making of statements denying the existence of reliable evidence linking cigarette smoking to "smoking related disease", or that the nicotine contained in cigarettes is addictive, or casting doubt on evidence or reports concerning such matters; (d) lobbying of various Australian governments not to restrict the marketing of cigarettes or require the giving of warnings about health risks, with the result that restrictions and warnings were introduced later, or were less demanding, than would otherwise have been the case; (e) intentionally remaining silent about and/or concealing the respondents' knowledge about the addictive effect of nicotine, the relationship between smoking and "smoking related disease" and the presence in cigarettes of two "harmful substances", nitrosamines and polyaromatic hydrocarbons; and (f) maximising the effect of the conduct summarised above by such activities as placing cigarette vending machines where they were accessible to young people, issuing free and sample cigarettes and advertising. 22 Paragraph 9 alleges each respondent engaged in this conduct in the knowledge that the other respondents were engaged in similar conduct. 23 Paragraph 10 reads: "10. The Applicants and represented persons (a) saw and/or (b) heard and/or (c) were aware of the conduct and/or (d) were influenced by others who saw and/or heard and/or were made aware of the conduct ('the influence') and by reason of the conduct and/or the influence (i) commenced to smoke the cigarettes and/or (ii) continued to smoke the cigarettes and/or (iii) failed to quit smoking the cigarettes." 24 Paragraphs 12 to 15 relate to the allegedly addictive effect of nicotine and the respondents' alleged knowledge of that effect. Paragraph 16 contains allegations about the respondents' knowledge of a causal relationship between smoking and "smoking related disease" or a material increase in the risk of contracting such disease. 25 The above allegations effectively claim the respondents deceived the public; knowing the opposite was true, they represented the smoking of cigarettes enhanced life and the enjoyment of life and was not unhealthy. The Schedules to the Statement of Claim identify numerous documents said to support this contention. 26 Paragraph 18 of the revised draft alleges the respondents engaged in the para 8 conduct, in trade and/or commerce, between 1 October 1974 and 16 April 1999. 27 Paragraph 19 spells out the manner in which this conduct is said to be misleading. The paragraph is currently framed in terms of what the conduct communicated to consumers and potential consumers. However, counsel for the applicants indicated they would amend this paragraph so as to make it a statement as to reasons why the conduct was misleading. No objection was raised to that proposal. It would be a drafting improvement. 28 Paragraph 20 alleges the para 8 conduct caused the applicants and group members to commence or continue to smoke the cigarettes or to fail to quit smoking them. This is then said, in para 21, to have caused the applicants and group members personal injury, loss and damage. (The present draft mentions "the matters referred to in paragraphs 6-14 and 18-20 hereof". That reference is too wide. The essence of the claim is that the commencement, continuation or failure to quit caused the injury; so I think the causal connection alleged in para 21 should refer only to para 20 or its re-numbered equivalent.) 29 Paragraph 22 is an aiding and abetting count. The pleader's apparent intention is to make each respondent liable for the actions of the others: see s75B and s82(1) of the Trade Practices Act. 30 I do not think it is necessary to detail paras 23 to 27, dealing with the negligence claim. These paragraphs repeat the substance of the Trade Practices Act claim but in the form of allegations of the existence of a duty of care, breach of that duty and the suffering of damage. Only two matters require mention. First, the claim pertains to conduct throughout the whole of "the relevant period"; that is, from January 1960 to 16 April 1999. In a moment, I will discuss whether this creates a jurisdictional difficulty. Second, para 26 alleges the respondents acted jointly in their breaches of duty and are therefore jointly liable to the applicants and group members. 31 Paragraphs 28 to 32 are remnants of the abandoned second negligence claim. These remnants survive as allegations about knowledge of the harmful substances, rather than as part of the specification of a cause of action. As such they are awkwardly placed. Comprehension would be aided if all the allegations of knowledge were collected together and pleaded at an early stage of the document. 32 The revised draft concludes by claiming "the relief set out in the Application". Paragraph 4 of the Amended Application seeks the following relief: "(a) Damages pursuant to Section 82 of the Act; (b) Damages pursuant to Section 87 of the Act; (c) Damages at common law for negligence; (d) Exemplary damages; (e) Costs; (f) Such further or other relief as this Court deems fit."

Jurisdiction: the non-federal claims 33 The written submissions of both Philip Morris and Wills argue the negligence claims are outside the jurisdiction of the Federal Court. Upon reading those submissions, I found myself attracted to that argument in relation to the second negligence claim. As already recounted, I mentioned my reaction to counsel for the applicants and, after discussion, that claim was abandoned. The question whether the negligence action is within jurisdiction now arises only in relation to the first negligence claim. 34 Counsel for Philip Morris accept it would be possible to frame a negligence count, reflecting the substance of the conduct mentioned in the Trade Practices Act claim, that would fall within the accrued jurisdiction of the Court. But they submit such a count would necessarily be confined to the same conduct as is the subject of the Trade Practices Act claim; that is, conduct between 1 October 1974 and 16 April 1999. Counsel for Philip Morris say: "the temporal period of 1 October 1974 to 16 April 1999 delimits the boundaries of the substratum of facts that are essential for this controversy's determination". They contend investigation of the respondents' conduct from January 1960 to 30 September 1974 "is not essential or incidental, and is different, unconnected and wholly irrelevant, to a determination of the federal claim." 35 Counsel for Wills do not concede any negligence claim would fall within the Court's accrued jurisdiction; but they, too, focus particular attention on the period before 1 October 1974. They also make the point that the group defined in the 1 July documents includes "people who began smoking after 1960, became addicted before the commencement in 1974 of the TPA and have no TPA claims because their addiction prevented them acting on whatever information they should have been provided with after 1974". They say the Court has no accrued jurisdiction in respect of those persons' claims. 36 In response to these submissions, counsel for the applicants argue: "The matter is the cause or causes of the diseases of the Applicants and group members, the disease having arisen in the period of three years prior to the date of issue. The negligence case is inextricably interwoven with the TPA claims. The fact that the negligence case may involve proof of additional facts not required for the TPA claims is irrelevant." 37 In evaluating these submissions, it is not necessary to go back to the cases in which the High Court of Australia elucidated the concept of substratum of fact: Philip Morris Incorporated v Adam P Brown Male Fashions Proprietary Limited (1981) 148 CLR 457 and Fencott v Muller (1983) 152 CLR 570. The High Court recently returned to the concept in Re Wakim; Ex parte McNally [1999] HCA 27; 163 ALR 270. In a passage that seems to have attracted the support of Gleeson CJ and Gaudron J, Gummow and Hayne JJ referred at para [140] to Fencott v Muller and went on: "What is a single controversy 'depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships'. There is but a single matter if different claims arise out of 'common transactions and facts' or 'a common substratum of facts', notwithstanding that the facts upon which the claims depend 'do not wholly coincide'. So, too, there is but one matter where different claims are so related that the determination of one is essential to the determination of the other, as, for example, in the case of third party proceedings or where there are alternative claims for the same damage and the determination of one will either render the other otiose or necessitate its determination. Conversely, claims which are 'completely disparate'; 'completely separate and distinct' or 'distinct and unrelated' are not part of the same matter." 38 But for this recent exposition, I might have accepted the respondents' submission that their conduct prior to 1 October 1974 was incapable of giving rise to an action within the accrued jurisdiction of the Court; as distinct from the conduct possibly being relevant to a determination about conduct after 1 October 1974, for example, by showing the state of the market, or of a respondent's knowledge, at that date. I might have incorporated a temporal element into the ambit of the "matter". However, the quoted passage from Gummow and Hayne JJ suggests this would be too narrow a view. Their Honours make the point that there is but a single matter if different claims arise out of "common transactions" or "a common substratum of fact", both of which notions imply the existence of a common temporal span. But they go on to say: "So, too, [that is, in addition] there is but one matter where different claims are so related that the determination of one is essential to the determination of the other". They do not import into that description any requirement of commonality of facts or temporal span. They illustrate the additional category of "matter" by two examples: third party proceedings and alternative claims for the same damage. Third party proceedings often involve facts additional to those relevant to the principal proceeding. Those additional facts may have occurred at a different time; similarly in regard to alternative claims for the same damage. 39 The present case provides an example of what Gummow and Hayne JJ seem to have had in mind. Assume a person who claims to have commenced smoking after 1960, but before 1 October 1974; and to have continued to smoke after that date. The person claims to have been induced to commence or continue smoking by the wrongful conduct of the respondents occurring throughout the whole period. The person claims to have contracted a smoking related disease; but it is uncertain whether the physiological change that eventually manifested itself in this disease occurred before or after 1 October 1974. On these allegations, if the physiological change occurred after 1 October 1974, the person could recover damages under s82 of the Trade Practices Act; if the physiological change occurred before that date, he or she could recover damages in an action for negligence in State jurisdiction. In each case the asserted damage is identical; the person has "alternative claims for the same damage". The determination of one claim in the person's favour will render the other otiose. Furthermore, the determination of the Trade Practices Act claim will necessitate determination of a major element of any negligence claim: the date of the critical physiological change. 40 I conclude that the Trade Practices Act claim and the remaining negligence claim constitute but a single "matter". The negligence claim is within the Court's jurisdiction. 41 However, it will be apparent from the above discussion that, even in the revised draft, there is a problem about the description of group members. Subparagraph (b)(ii) of the description refers to people whose condition was caused in whole or in part by the person smoking the respondents' cigarettes between 1 October 1974 and the date of the first clinically observable symptoms. So a person whose condition was caused by pre-1974 smoking would fall outside the group. Yet paras 23 to 27 seek to cover such a person, provided only that he or she smoked after 1 October 1974. 42 If the description of group members is to accord with the claims made in paras 23 to 27, it is necessary to discard the limitation in the parenthesis in subpara (b)(ii). However, if only that was done, the description would apply to group members who smoked the respondents' cigarettes at any time. A person who ceased to smoke the cigarettes before 1 October 1974 would fall within the description, yet clearly would have no accrued jurisdiction claim. 43 The obvious answer is to link the period after 1 October 1974 to smoking, rather than causation of the disease. This could be done by omitting the words in parenthesis in subpara (b)(ii), adding a new subpara (c) "who smoked such cigarettes between 1 October 1974 and the date of the condition first manifesting clinically observable symptoms", and renumbering the existing subparas (c) and (d).

Jurisdiction: hypothetical questions 44 Section 33C(1) of the Federal Court of Australia Act sets out the conditions upon which a representative proceeding may be instituted. It 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." 45 In an endeavour to demonstrate satisfaction of para (c), the present applicants included in their Amended Application the following paragraph: "5. The questions of law or fact common to the claims of the Applicants and the represented persons (group members) are the following: a) Whether as a matter of fact smoking the cigarettes causes smoking related disease; b) Whether as a matter of fact smoking the cigarettes increases the risk of contracting smoking related disease; c) Whether, as a matter of fact the Respondents individually, and/or collectively possessed the knowledge referred to in paragraphs 15, 16, 24 and 28 of the Statement of Claim; d) Whether, as a matter of fact, nicotine has the properties and consequences pleaded in paragraphs 12 of the Statement of Claim; e) Whether, as a matter of fact, the Respondents individually and/or collectively conducted themselves as alleged in paragraph 8 of the statement of claim, and whether each Respondent was aware of the conduct of the other Respondents as pleaded in paragraph 9 of the Statement of Claim; f) Whether, as a matter of law and fact, the conduct of the Respondents referred to in paragraph 8 of the Statement of Claim was misleading or deceptive or likely to mislead or deceive as alleged in paragraph 19 of the Statement of Claim; g) Whether, as a matter of law and fact, the Respondents aided and abetted or were directly or indirectly knowingly concerned in any of the misleading and deceptive conduct of any of the other Respondents referred to in paragraph 19 of the Statement of Claim; h) Whether, as a matter of law and fact, the Respondents owed the duties of care referred to in paragraph 23, and further and alternatively paragraph 29, of the Statement of Claim; i) Whether, as a matter of law and fact, the Respondents breached the said duties of care as alleged in paragraph 25, and further and alternatively in paragraph 30 of the Statement of Claim." 46 This paragraph led both Philip Morris and Wills to contend the Court is being asked in this proceeding to deal with one or more hypothetical questions. The point is encapsulated in Philip Morris' submission: "14. In order for the determination of the questions specified in paragraph 5 of the Amended Application to be within the judicial power of the Commonwealth each question and its determination must constitute a 'matter' within the meaning of sections 75 and 76 of the Constitution." Counsel go on to refer to High Court decisions to the effect that only jurisdiction in respect of a "matter" may be conferred upon a court constituted under Chapter III of the Constitution, as is this Court: see In Re Judiciary and Navigation Act (1921) 29 CLR 257 and Wakim. They say "[a]n abstract or hypothetical question that is divorced from an attempt to administer the law is not a 'matter' within the meaning of Chapter III of the Constitution" and, therefore, falls outside the jurisdiction of the Court. Counsel submit that a question is to be regarded as abstract or hypothetical: "if answering the question will not: (a) establish an immediate right, duty or liability of a body or person; (b) constitute an integral and influential, if not decisive, step in the judicial determination of the rights and liabilities in issue in litigation; or (c) be based on an exhaustive statement of all relevant facts, found or agreed, such that facts determinative of the issue are left open, resulting in an answer that does not finally resolve the dispute or constitute a step that will necessarily dictate the result of the proceedings." Counsel go on to assert: "18. The determination of the questions identified in sub-paragraphs 5(a), (b) and (d) of the Amended Application will not determine or establish any of the rights or liabilities in issue in this representative proceeding, nor will it constitute an important, influential or decisive step towards the determination any of those rights or liabilities (see affidavits of Blacket, Lee, Morton, Mizerski, Power, Crabtree and Davies). Consequently, each of the questions identified in sub-paragraphs 5(a), (b) and (d) of the Amended Application are so abstract that their determination does not constitute an exercise of the judicial power of the Commonwealth and is not within the Court's power." The references are to affidavits concerning medical facts and the variations in the characteristics of Philip Morris' cigarettes. 47 Counsel for Wills support this argument. They point out that findings in relation to the issues listed in para 5 of the Amended Application may vary as between particular applicants and group members and assert this may make an issue hypothetical. They say: "unless and until the court finds that there is a group member to whom a particular issue relates, that issue is merely a hypothetical one. For example, presently all the applicants are said to suffer from lung cancer but it is not alleged that they suffer any other 'smoking related disease'. Unless and until the court finds that there are people with other 'smoking related diseases', the court cannot determine questions in relation to those other diseases. Similarly, for example, the court could not make a finding that any particular representation was made without identifying some group member who alleges reliance on that particular representation." 48 The applicants' response to these arguments is fourfold. First, counsel say, the argument misconceives the meaning of the word "matter": "The matter is not a determination of one or more of the common issues. The determination of one or more of the common issues is only part of the matter. The matter is the area of controversy arising from an individual's claim. Part IVA permits the 'matter' giving rise to each individual's claim to be dealt with in the one proceeding with the 'matter' giving rise to each other individual's claims. The resolution of each matter (properly described) involves a resolution of each individual claim. There is nothing hypothetical about that." [Original emphasis] 49 Second, argue counsel, the unstated premise of the respondents' argument is that there is no common issue; all issues are individual issues. They do not accept that premise. They illustrate the point by reference to the observation of the second respondent that the named applicants all claim to suffer from lung cancer, but not from any other smoking related disease. They go on: "It is therefore said that the resolution of questions 5(a) and (b) in relation to other diseases is hypothetical. But that mis-states the Applicants' case. The Applicants' case inter-alia is that the Respondents' conduct was misleading because they failed to inform smokers that smoking causes 'smoking related diseases' (being all the diseases) even though ultimately an individual may have only suffered from one. The casual (sic: causal) connection between smoking and each of the diseases is relevant to the case of each Applicant and each group member even though they may only have suffered from one of the diseases." [Original emphasis] Counsel add that "resolution of the common issues is a necessary anterior step in the resolution of all claims. They do not involve purely hypothetical issues for the group members." 50 Counsel then argue that, as a matter of constitutional theory, it is wrong to assert that a "matter" cannot embrace determination of a hypothetical issue; "[t]he consideration is whether the issue is too hypothetical". [Original emphasis] 51 Finally, counsel submit: "all that Part IVA does is to enable multiple claims to be dealt with at the one time. It does not purport to extend the concept of 'matter' beyond Sections 76 and 77 of the Constitution nor broaden the notion of Federal judicial power nor give the Court greater powers than a Chapter III Court can exercise. In relation to its implementation and operation, the Court has adequate power to ensure that the procedures are used to ensure that real issues are determined and matters litigated and disposed of in a manner appropriate to the exercise of judicial power. If there are real common issues that affect the interests of all group members, then a trial of the same would be an exercise of judicial power. At the least it would be an exercise of judicial power in relation to the Applicants' case. Its binding effect will depend upon Sections 33Z and 33ZB, but these sections are empowering and do not create additional power which is not Federal judicial power. Part IVA itself cannot be unconstitutional. It merely empowers the Court to do certain things." 52 I prefer to put aside the question of degree involved in the applicants' third point. The other responses to the respondents' argument are plainly correct. Part IVA of the Federal Court of Australia Act merely provides a mechanism for determining, in the one proceeding, a bundle of individual claims, each of which must itself constitute a "matter" within the meaning of ss76 and 77 of the Constitution. Section 33C of the Act permits that course to be taken only when certain conditions are met. One of the conditions is that all the claims "give rise to a substantial common issue of law or fact". That formula implies there may also be issues not common to all claims. An issue that requires determination in one or more claims, but not in others, is not hypothetical in relation to the latter claims; it merely does not arise in relation to them. 53 The point may be illustrated by the present case. The claim is made that some applicants and group members suffer from lung cancer, and this has been caused by smoking. If one or more of the respondents disputes that smoking can cause lung cancer, all those applicants and group members would have a common interest in the resolution of the issue thereby created. In relation to group members who claim to suffer emphysema, the question would not be hypothetical; it would merely be irrelevant to their claims. 54 I reject the contention that the proceeding involves the determination of hypothetical questions and, for that reason, falls outside the jurisdiction of the Court.

Section 33C(1)(a): the proper approach 55 All three sets of respondents contend the proceeding was not well commenced. They say the applicants have not satisfied the requirements of any of the three paragraphs in s33C(1) of the Federal Court of Australia Act. The terms of s33C(1) are set out in para 44 above. 56 Paragraph (a) requires that "7 or more persons have claims against the same person". In Symington v Hoechst Schering Agrero Pty Ltd (1997) 78 FCR 164, I held this paragraph requires that the applicant, or each one of several applicants, and each group member must have a claim against each respondent; it is not sufficient for one applicant to make a claim against one respondent and another applicant or a group member to make a claim against some other respondent. In Tropical Shine Holdings Pty Ltd v Lake Gesture Pty Ltd (1993) 45 FCR 457, I considered how the requirement of s33C(1)(a) might be reconciled with the statement in s33H(2) of the Act that, in describing or otherwise identifying the group members for the purposes of an application initiating a representative proceeding, "it is not necessary to name, or specify the number of, the group members". After considering various possible approaches, at 462, I said: "I think the only way of making sense of s33C(1)(a) is to interpret it as restricting the use of Pt IVA to claims that, by their nature and assuming that they have substance, are shared by at least seven persons. I use the word 'shared' in the sense explained by pars (b) and (c); that is, that the claims of all the persons are in respect of, or arise out of, the same, similar or related circumstances and give rise to a substantial common issue of law or fact. Interpreted in this way, the paragraph fulfils the function of weeding out cases that should clearly not be brought as representative proceedings because it is obvious that less than seven people share the claim, whilst preserving the principle embodied in s33H." 57 Counsel for Philip Morris submit this approach is not correct. They say "[t]he burden is on the Applicants to satisfy the Court that the requirement is made out and a representative proceeding may not be commenced unless it is". I understand counsel to mean that, at the time of commencing an action, an applicant must satisfy the Court that at least seven people have a good claim against each respondent; in other words, an applicant must establish the liability of the respondent or respondents at the time of filing the Application. Counsel do not explain how this might be accomplished; there will not yet have been a hearing. On counsel's argument, it would not be enough even to file affidavits demonstrating a prima facie case. That would not enable the Court to find the claims established; cross-examination or rebutting evidence might destroy the claimed case. If, contrary to my understanding, the argument is it would suffice to prove a prima facie case on behalf of at least seven persons, this would be incompatible with s33H(2) of the Act. In order to do that, it would be necessary to identify at least seven group members. 58 The decision in Tropical Shine was given several years ago, early in the life of Part IVA of the Act. The passage quoted above has been applied in a number of cases. So far as I am aware, it has escaped judicial criticism. It was mentioned, with apparent approval, in the joint judgment of O'Loughlin and Drummond JJ in Silkfield Pty Ltd v Wong (1998) 159 ALR 329 at 342. It is not inconsistent with an approach enunciated by Beaumont J in Cameron v Qantas Airways Limited (1993) ATPR 41-251 at 41,370: "… in order that a matter may properly proceed under Part IVA, it is necessary that the pleadings filed on behalf of the applicant, or applicants, adequately indicate the basis upon which it is claimed that the procedures mentioned in Part IVA are said to be available." [Emphasis added] This passage was endorsed in Silkfield by O'Loughlin and Drummond JJ. They commented: "If a representative applicant has complied with these obligations, it will be possible for the court to determine, by reference to the application and supporting statement of claim, whether an action brought under Pt IVA meets the requirements of s33C(1)(b) and (c)." [Emphasis added] Plainly, their Honours did not think it is necessary for an applicant to establish that seven or more people have valid claims; it was sufficient to plead facts that indicate the likely existence of those claims. Until an appellate court rules it is incorrect, the appropriate course is to continue to apply Tropical Shine. 59 Counsel for Philip Morris argue that, even so, the applicants have not satisfied para (a); "the claims are not of such a nature that it would be appropriate to be satisfied that seven or more persons have claims against all of the Respondents. Some of the Applicants may not have claims against some of the Respondents by reason of the fact that they did not smoke the cigarettes of that Respondent or the Respondent did not manufacture or distribute the cigarettes." They point out that the Schedule to the pleading shows one applicant makes no claim to have smoked Philip Morris' cigarettes. 60 This submission seems to misapprehend the nature of the applicants' case. The applicants do not seek to make a product liability case, in which it would be essential to relate the injury suffered by a particular claimant to a deficiency in the product of a particular manufacturer or distributor. Neither do they base either their Trade Practices Act claim or their negligence claim on the conduct of a particular manufacturer or distributor, acting in that capacity, towards a particular consumer. The applicants' case is painted on a larger canvas. They claim the three sets of respondents - who, they say, at all relevant times dominated the Australian retail cigarette market - embarked individually and collectively on a course of conduct designed to create a false community perception about the risks associated with cigarette smoking. If that claim can be made good, it would seem not to matter that a particular claimant smoked cigarettes manufactured by only one of the respondents; indeed, logically, by none of them, although the present claim is not so wide. The claimant would establish a s52 claim if he or she established: (a) the publication by a particular respondent or respondents of misleading information; (b) that this information caused the claimant to commence, or continue, to smoke cigarettes; and (c) that such smoking - that is, the smoking caused by the misleading conduct of a particular respondent or respondents - caused the claimant to contract a particular disease. For the purposes of the s52 claim - although perhaps not the negligence claim - it would seem unnecessary for a claimant to establish an identicality between the respondent (if only one) whose promotional material caused him or her to commence or continue smoking and the respondent whose product caused the relevant disease. 61 At this stage I have no idea whether it will be possible for the applicants to establish the claim I have just described. However, if they can do so, it is likely that more than seven individuals will be able to establish a causal connection between the respondents' conduct and their incurring a smoking related disease. The evidence of Mr Gordon suggests that, each year in Australia, many thousands of people die from smoking related diseases. If the respondents have engaged in widespread deception of the Australian community, as the applicants claim, it is impossible to doubt this has affected many of the people who have died or who, although still alive, suffer one of the diseases mentioned in para (a) of the description of group members in the revised draft.

Section 33C(1)(a): the date of the damage 62 Philip Morris submits it is not apparent that any of the claimants has a valid claim against any of the respondents. The description of group members in para 2(a) of the 1 July Amended Application referred to "persons who … between 16 April 1996 and 19 April 1999 contracted" the relevant disease. Counsel say that, if the word "contracted" implies causation, each applicant and group member would need to demonstrate he or she first suffered an "injury beyond what can be regarded as negligible" in the period 16 April 1996 to 16 April 1999. They cite Cartledge v E Jopling & Sons Limited [1963] AC 758 and Scanlon v American Cigarette Company (Overseas) Pty Ltd (No.1) [1987] VR 261. 63 The revised draft reformulates the description by referring to people whose condition "first manifested clinically observable symptoms between 16 April 1996 and 16 April 1999" and was caused by smoking between 1 October 1974 and that date. This reformulation changes the focus of the argument; nonetheless the issue remains important for three reasons. First, s82(2) of the Trade Practices Act limits the right to recover damages for contravention of Part V of the Act, which includes s52, to actions commenced "within 3 years after the date on which the cause of action accrued". Second, a six year limitation period applies to the negligence claims of the various applicants under the applicable State or Territorial Limitation Act, although this is subject to the possibility of extension in some cases. Third, a representative action may be brought under Part IVA of the Federal Court of Australia Act only in respect of a cause of action arising after the commencement of that Part on 5 March 1992: see s33B of that Act 64 In Wardley Australia Limited v State of Western Australia (1992) 175 CLR 514 the High Court of Australia considered the question when a cause of action accrues, for the purposes of s82(2) of the Trade Practices Act. The claim in that case was for economic loss; there was no claim of personal injury. The judgments must be read with that distinction in mind; nonetheless, they contain some relevant statements of principle. 65 At 525 Mason CJ, Dawson J, Gaudron J and McHugh J observed: "As loss or damage is the gist of the statutory cause of action for which s82(1) provides, the cause of action does not accrue until actual loss or damage is sustained". They went on to say that "s82(1) should be understood as taking up the common law practical or common-sense concept of causation recently discussed by this Court in March v E & M H Stramare Pty Ltd (1991) 171 CLR 506, except in so far as that concept is modified or supplemented expressly or impliedly by the provisions of the Act". 66 Their Honours went on to say (at 526) that, "[i]n determining when a plaintiff first suffers economic loss or damage in an action under s82(1) based on misleading conduct constituting a contravention of s52, it is necessary to have regard to the applicable measure of damages". They said that, under s82(1), as under the common law, "a plaintiff can only recover compensation for actual loss or damage incurred, as distinct from potential or likely damage"; a risk of loss is not itself a category of damage. 67 At 527 their Honours entered into a discussion of the concept of loss or damage in the context of misrepresentation. They said: "When a plaintiff is induced by a misrepresentation to enter into an agreement which is, or proves to be, to his or her disadvantage, the plaintiff sustains a detriment in a general sense on entry into the agreement. That is because the agreement subjects the plaintiff to obligations and liabilities which exceed the value or worth of the rights and benefits which it confers upon the plaintiff. But … detriment in this general sense has not universally been equated with the legal concept of 'loss or damage'. And that is just as well. In many instances the disadvantageous character or effect of the agreement cannot be ascertained until some future date when its impact upon events as they unfold becomes known or apparent and, by then, the relevant limitation period may have expired. To compel a plaintiff to institute proceedings before the existence of his or her loss is ascertained or ascertainable would be unjust. Moreover, it would increase the possibility that the courts would be forced to estimate damages on the basis of likelihood or probability instead of assessing damages by reference to established events. In such a situation, there would be an ever-present risk of undercompensation or overcompensation, the risk of the former being the greater." 68 In separate judgments Brennan, Deane and Toohey JJ expressed similar views. At 545 Deane J echoed the view expressed in the joint judgment about the undesirability of compelling a plaintiff to institute an action "before it was known whether any concrete loss or damage would ever come home, in order to avoid the possible injustice of a legitimate claim being barred if action was not instituted until it could be seen whether the contingent liability would result in ultimate loss." 69 As I have said, Wardley was not concerned with a personal injury claim. And I am not aware of any authoritative statement about the application of s82(2) in a personal injury context. I adverted to the issue briefly in E v Australian Red Cross Society (1991) 27 FCR 310. The blood transfusion that introduced the HIV virus into the applicant's body was administered sometime on 12 or 13 October 1984. I said at 351: "As the process of sero-conversation was then inevitable, it is strongly arguable that the relevant loss or damage was sustained at that time. But it is not necessary to decide that point. The applicant had an illness consistent with sero-conversion between 13 October and his discharge from hospital on 1 November. He reacted positively to two HIV tests in October 1985. On any view, damage had been sustained by then. So the cause of action was complete. Yet the proceeding was not commenced until 8 November 1989, over four years later. It is clear that the claims under ss 52 and 55A are out of time." That case went on appeal - see (1991) 31 FCR 299- but not in relation to the s52 and s55A claims. So the Full Court did not consider the application of s82(2) to personal injury cases. 70 Cartledge, the first of the two authorities cited by Philip Morris, was a decision of the House of Lords concerning the application of s2(1) of the Limitation Act 1939 (UK). That subsection provided that actions in tort "shall not be brought after the expiration of six years from the date on which the cause of action accrued". The House held that, in such cases, the cause of action accrues, in the words of Lord Reid at 771-772, "as soon as a wrongful act has caused personal injury beyond what can be regarded as negligible, even when that injury is unknown to and cannot be discovered by the sufferer …" Lord Reid deplored that result, saying at 772: "It appears to me to be unreasonable and unjustifiable in principle that a cause of action should be held to accrue before it is possible to discover any injury and, therefore, before it is possible to raise any action. If this were a matter governed by the common law I would hold that a cause of action ought not to be held to accrue until either the injured person has discovered the injury or it would be possible for him to discover it if he took such steps as were reasonable in the circumstances. The common law ought never to produce a wholly unreasonable result, nor ought existing authorities to be read so literally as to produce such a result in circumstances never contemplated when they were decided." 71 The formula used in s2(1) of the United Kingdom Act, "cause of action accrued", is identical to that contained in s82(2) of the Trade Practices Act. It is therefore understandable that counsel for Philip Morris rely heavily on Cartledge. However, it should be noted that Lord Reid felt constrained to his conclusion by the terms of s26 of the United Kingdom Act, a section also mentioned by Lord Morris at 776. Lord Reid said, also at 772: "But the present question depends on statute, the Limitation Act, 1939, and section 26 of that Act appears to me to make it impossible to reach the result which I have indicated. That section makes special provisions where fraud or mistake is involved: it provides that time shall not begin to run until the fraud has been or could with reasonable diligence have been discovered. Fraud here has been given a wide interpretation, but obviously it could not be extended to cover this case. The necessary implication from that section is that, where fraud or mistake is not involved, time begins to run whether or not the damage could be discovered. So the mischief in the present case can only be prevented by further legislation." Lord Hodson agreed with Lord Reid. 72 Lord Pearce delivered a speech which commanded the concurrence of all the members of the House. He said at 778 it was: "impossible to hold that a man who has no knowledge of the secret onset of pneumoconiosis and suffers no present inconvenience from it cannot have suffered any actionable harm. So to hold might possibly on the wording of the Fatal Accidents Act deprive of all remedy a widow whose husband dies of pneumoconiosis without having had any knowledge or symptom of the disease". Referring at 779 to an observation by Lord Reid in Bonnington Castings Ltd v Wardlaw [1956] AC 613 at 621 about material injury being a matter of degree, Lord Pearce said: "Although those words were spoken with reference to the emission of the harmful dust, they are equally applicable to the injuries caused by it. It is a question of fact in each case whether a man has suffered material damage by any physical changes in his body. Evidence that those changes are not felt by him and may never be felt tells in favour of the damage coming within the principle of de minimis no curat lex. On the other hand, evidence that in unusual exertion or at the onslaught of disease he may suffer from his hidden impairment tells in favour of the damage being substantial. There is no legal principle that lack of knowledge in the plaintiff must reduce the damage to nothing or make it minimal. Moreover, throughout this contention runs the difficulty in the present cases that since the pneumoconiosis did not increase of itself, whatever was the harm for which the judge awarded damages must have existed before October, 1950, when the cause of it ceased." 73 Following the House of Lords decision in Cartledge, the United Kingdom legislation was amended in such a way as to allow extensions of time in personal injury cases. Cartledge continued to apply to other claims and it was followed by the House of Lords in Pirelli General Cable Works Ltd v Oscar Faber & Partners [1983] 2 AC 1, a defective building case. However, in an Australian defective building case, Pullen v Gutteridge Haskins and Davey Pty Ltd [1993] 1 VR 27, the Appeal Division of the Supreme Court of Victoria (Brooking, Tadgell and Hayne JJ) declined to follow Pirelli. At 71 their Honours said: "Time began to run in the present case when the latent defect first became known or manifest. The latent defect was the inadequacy or unsuitability of the footings." Their Honours went on (at 77) to hold that a defendant who pleaded the Limitations of Actions Act bore the onus of proving the cause of action arose outside the limitation period. 74 Extension of time provisions have been enacted in most Australian jurisdictions: see Limitation Act 1969(NSW) ss60F-62; Limitation of Actions Act 1958 (Vic) s23A, Limitation of Actions Act 1974 (Qld), s31, Limitation of Actions Act 1936 (SA) s48, Limitation Act 1935 (WA) s38A, Limitation Act 1985 (ACT) ss35-36, Limitation Act 1981 (NT) s44. 75 There are several decisions in which Australian judges, sitting at first instance, considered the application of Cartledge to limitation periods, and extension of time to institute proceedings, in relation to insidious diseases such as cancer and mesothelioma. 76 In Footner v Broken Hill Associated Smelters Pty Ltd [1983] 33 SASR 58, Jacobs J of the South Australian Supreme Court held that a workman who had been exposed to asbestos particles and fibres between 1944 and 1952, but was not diagnosed as suffering from mesothelioma until 1982, did not sustain damage before 19 May 1969, the date of commencement of legislation permitting the Court to grant an extension of time for instituting proceedings. At 73-74 Jacobs J distinguished Cartledge on the basis that the factual finding in that case was that the physical injury sustained by the plaintiff occurred outside the limitation period, whereas "any damage to the plaintiff in this case was not merely undiscoverable, but was so infinitesimal as to be negligible in the eyes of the law". 77 In Scanlon Nicholson J, then of the Supreme Court of Victoria, held that an applicant for an extension of the limitation period prescribed by the Victorian Limitation of Actions Act was not aware of material facts relating to her cause of action until a date later than two years after the cause of action occurred. The damage claimed in that case was the contraction of lung cancer as a result of smoking the defendant's cigarettes. It appears from Nicholson J's reasons that it was common ground between the parties that Cartledge applied; the issue was only the date when the known facts indicated damage. 78 Derrington J of the Supreme Court of Queensland reviewed the case law in another mesothelioma case, Martindale v Burrows [1997] 1 Qd R 243. He held an extension of time was necessary, if the plaintiff was to maintain the proceeding. He granted the extension. At 246 his Honour referred to the High Court's decision in Wardley that "vulnerability to injury or the potential for harm does not itself amount to an injury", but he commented: "… that is different from the position where a morbid condition is initiated, leading naturally to more serious developments at a later stage. It is not a matter of potentiality in such a case simply because in other cases such a consequence might not follow. In Wardley, no harm whatever was done at the earlier stage and it was only when another event in the form of a trigger occurred that any harm followed. There is authority on the point. It has been held that where there has been an inhalation of asbestos that has led to pleural thickening of the lung which, by the time of trial, has caused no physical discomfort or disability and has only the potential for more serious developments, the physiological changes wrought to that stage could not be said to have amounted to an injury because of the lack of any established harm, and the potential for more harmful developments could not alter that situation: Battaglia v. James Hardie & Co. Pty Ltd (unreported, Vincent J., Supreme Court of Victoria, 12 March 1987); Papadopoulos v. James Hardie & Co. Pty Ltd (unreported, Kaye J., Supreme Court of Victoria, 12 February 1988). It does not follow that if it is established that the condition has developed into mesothelioma, there will have been no relevant injury until the commencement of that development. The appearance of that condition establishes that the earlier morbid changes were indeed so serious as to be productive of mesothelioma at the later stage and were not merely potentially so. This means that the early changes did cause harm substantial enough to amount to injury at law." 79 American Home Assurance v Saunders (1987) 11 NSWLR 363 was a decision of the New South Wales Court of Appeal, dealing with mesothelioma in the context of a claim under an insurance policy. The policy covered a "bodily injury" that satisfied specified criteria. The respondent had been exposed to asbestos fibres during the course of his employment between 1950 and 1955 and again in 1959 and 1960. In December 1985 the respondent began to suffer fatigue. He was diagnosed as suffering from mesothelioma and ceased work. All three members of the Court held the injury was sustained after the commencement of the policy cover on 24 June 1985, but there was a division of opinion as to whether the injury satisfied all the specified criteria. Mahoney JA, with whom McHugh JA agreed, at 379 noted a concession by counsel: "… that the physiological process may be seen as involving three steps: inhalation of the relevant fibres into the lungs; after a considerable time, the penetration of the lungs by the fibres and their lodgment in the pleura; and the development of mesothelioma. If the fibres are inhaled into the lungs, they do not always penetrate the lung or lodge in the pleura. And, if they are lodged in the pleura, mesothelioma does not always develop; fibres may either produce no condition or produce merely pleural plaques." At 381 his Honour said: "The disease of mesothelioma is caused by an outside factor, viz, the inhalation of and the penetration of the lung by the asbestos fibres. As was said by Dr Lee in the evidence to which I have referred, when the relevant fibres penetrate the periphery of the lung the malignant disease mesothelioma develops on the outer covering of the lung and, sometimes, on the inner wall of the thoracic cavity. There is then the accumulation of fluid and shortness of breath which leads to incapacity. Dr Lee said that, when that happens, 'there is a malignant disease called mesothelioma which develops on the outer covering of the lung'". These passages indicate that Mahoney JA thought there was no "injury" until the fibres penetrated the lung or lodged in the pleura and thereby caused the development of mesothelioma. It was not to the point that the fibres, which were the ultimate cause of the mesothelioma, had been present in the respondent's body for many years before that time. 80 I make four observations about the authorities I have mentioned. First, Cartledge seems an uncertain foundation for a rule of general application. As will be apparent from the passages from his speech set out above, Lord Reid rested his decision squarely upon s26 of the United Kingdom statute. Lord Hodson agreed with him and Lord Morris also relied on s26. Lord Reid emphasised the matter was not governed by the common law and indicated that, if it were, he would hold that a cause of action did not accrue until the injured person discovered, or should have discovered, the injury. Yet he also agreed with Lord Pearce, as did Lord Morris. Lord Pearce thought that, in determining "whether a man has suffered material damage by any physical changes", it is relevant that the "changes are not felt by him and may never be felt". This seems difficult to reconcile with Lord Reid's view that a cause of action accrues "as soon as a wrongful act has caused personal injury beyond what can be regarded as negligible, even when that injury is unknown to and cannot be discovered by the sufferer". Such an injury obviously will be one in respect of which physical changes are not felt by the sufferer. Perhaps Lord Reid had in mind Lord Pearce's words "may never be felt", and intended to make his general principle apply to cases where the physiological change that had occurred prior to the expiration of the limitation period made inevitable the onset of debilitating injury. If that is the way in which the two speeches are to be reconciled, it would appear from American Home Assurance that Cartledge has no application to mesothelioma cases. Whether it has any application to the cases of the present applicants and group members cannot be determined in advance of taking evidence about them. 81 Second, although Cartledge has routinely been mentioned by Australian judges sitting at first instance, usually in the determination of an application for extension of a limitation period, it has not been upheld or applied by the High Court of Australia or (so far as I am aware) any Australian intermediate court of appeal. In the United Kingdom, Cartledge continues to apply to defective building cases; but the House of Lords' application of the decision in that context, in Pirelli, was not followed by the Appeal Division of the Victorian Supreme Court in Pullen. 82 Third, there seem to be good reasons why an Australian appellate court might decide not to follow Cartledge. The view of at least three members of the House (Lord Reid, Lord Morris and Lord Hodson) was heavily influenced by s26 of the United Kingdom Act. Even Lord Pearce referred to this section in the context of approving (at 783) a decision, R B Policies at Lloyds v Butler [1950] 1 KB 76, based on that section. Perhaps more importantly, since 1969 there have been major advances in diagnostic techniques; it is now much more likely that a person will become aware of an asymptomatic physiological change in his or her body, which causes no disability and may never do so. For all the reasons articulated in Wardley, in relation to economic loss, it seems undesirable policy to force such a person into immediate litigation. 83 The problems inherent in Cartledge are illustrated by the first instance decisions to which I have referred. As Derrington J mentioned in Martindale, in two unreported Victorian cases, Battaglia and Papadopoulos, judges held the plaintiffs did not have a cause of action because no damage had yet accrued; and this despite the fact that the inhalation of asbestos had led to a pleural thickening of the lung. They so held because the pleural thickening had not yet caused, and might never cause, physical discomfort or disability. Yet Derrington J thought that, if such a condition subsequently developed into mesothelioma, that development would establish "that the earlier morbid changes were indeed so serious as to be productive of mesothelioma at the later stage … [and] did cause harm substantial enough to amount to injury at law". In other words, the question whether particular physiological changes in a person's body amount to an accrual of damage in the eyes of the law depends upon later events. This seems to be an unsatisfactory position. A plaintiff who sues immediately he or she becomes aware of a non-symptomatic physiological change is likely to be met with a defence that no damage has accrued; a plaintiff who waits until the physiological change becomes symptomatic may be met with a defence that the claim is now statute-barred. 84 Finally, if one thing is clear, it is that an issue whether a claim is out of time ought not be determined on a strike-out application. In Cartledge all the other members of the House of Lords agreed with Lord Pearce's statement that the question is one of fact in each case. It follows it ought to be decided at trial. In Wardley at 533, Mason CJ, Dawson J, Gaudron J and McHugh J said the same thing, in express and emphatic terms and in the context of s82(2) of the Trade Practices Act: "We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question." 85 I decline to hold that the present case ought to be struck out on the basis that the causes of action of the applicants arose outside the three year period specified in s82(2) of the Trade Practices Act, or the limitation period specified in the relevant State Act in respect of the negligence claims of the various applicants, or before 5 March 1992.

Section 33C(1)(b): "same, similar or related circumstances" 86 Section 33C(1)(b) of the Federal Court of Australia Act requires that the claims of the "7 or more persons" referred to in para (a) of that subsection be "in respect of, or arise out of, the same, similar or related circumstances". French J discussed this requirement in Zhang v Minister for Immigration, Local Government and Ethnic Affairs (1993) 45 FCR 384-385: "The outer limits of eligibility for participation in representative proceedings are defined by reference to claims in respect of or arising out of related circumstances. The word 'related' suggests a connection wider than identity or similarity. In each case there is a threshold judgment on whether the similarities or relationships between circumstances giving rise to each claim are sufficient to merit their grouping as a representative proceeding. At the margins, these will be practical judgments informed by the policy and purpose of the legislation. At some point along the spectrum of possible classes of claim, the relationship between the circumstances of each claim will be incapable of definition at a sufficient level of particularity, or too tenuous or remote to attract the application of the legislation." 87 French J went on to say that, in the case before him, "the relationship between the circumstances of each group member is defined by a few common integers which leaves room for considerable diversity in circumstances which might support individual claims to set aside the review decisions". Notwithstanding that circumstance, French J held "that the claims of the members of the group … are connected by circumstances sufficiently related to warrant the use of the (representative) procedure …". His Honour explained: "In so holding, I have regard to the need for a purposive approach to the construction of s33C(1)(b), bearing in mind the utility of determining the common issue in this way. If the application were to succeed, all group members would be entitled to the offer of an oral hearing by the decision-maker. In the event, other aspects of individual claims to which I have referred might not be pursued. If the application fails, then a principle applicable to each group member would be established, namely that there is no entitlement in any member of the group to an oral hearing by reason only of the fact that the member is an applicant for administrative review of the refusal to grant refugee status." 88 Counsel for each of the respondents argue that the present claims fail to surmount even the threshold of relatedness. They support that argument by emphasising the differences between individual claims: in relation to the claimants' smoking histories, reaction to the respondents' conduct, habituation and medical histories. Those differences exist. But in determining whether claims are related, primary attention ought to be paid to matters of commonality rather than difference. That was the point made in Zhang. 89 The present case is factually removed from Zhang. But similar considerations apply. If the allegation of breach of s52 or breach of a duty of care succeeds, the claims of all the applicants and group members will be advanced. It will still be incumbent on them to prove important individual issues, notably reliance and damage. But they will have succeeded in relation to a major issue, common to all the claims. If the allegations of breach of s52 and breach of duty fail, all the claims will fail, regardless of the situation concerning individual elements of the claims. It seems to me the applicants comfortably satisfy the requirement of s33C(1)(b). The claims made by the applicants arise out of "related" circumstances, at least.

Section 33C(1)(c): "substantial common issue of law or fact" 90 The respondents submit s33C(1)(c) is not satisfied in the present case. In so doing, once again, they draw attention to the individual elements of the various claims. But para (c) does not exclude claims that contain individual elements; if it did, Part IVA would have little practical utility. The paragraph requires the Court to consider matters of commonality, not matters of difference. 91 There has been some divergence of opinion in this Court on the question of what constitutes a substantial common issue. The cases are discussed in Silkfield. The majority of the Full Court there treated the word "substantial" as imposing a more onerous requirement than I think to be justified. Their view is currently under consideration by the High Court. In the meantime, it is appropriate I follow it. Even so, the present applicants comfortably satisfy the requirements of the paragraph. At 344 O'Loughlin and Drummond JJ suggested the objectives of Part IVA of the Act "cannot be achieved unless determination of the issue or issues common to the claims of all group members is likely to have a major impact on the conduct and outcome of the litigation". That can be said in the present case. Failure by the applicants on the issues critical to all claims, breach of s52 and breach of the duty of care, will cause all the claims to fail. It is possible directly to apply what was said by O'Loughlin and Drummond JJ in Silkfield at 344-345: "The circumstances of the particular case may show that while resolution of the common issue may not determine the liability of the respondent to all group members, it may nevertheless determine what is, in a practical sense, an issue that is the, or one of the, key issues in the dispute between the respondent and all group members. For example, a critical issue may be whether a disease or other harm of the kind suffered by each of the group members is capable of being caused by the respondent's product or whether the respondent owed persons in the situation of group members a duty to take care to avoid such harm; in another case, the critical question may be whether a particular representation is misleading. Determination of the issue may not necessarily result in resolution of the whole of the group members' 'claims or even of an element of those claims such as the liability of the respondent to all. 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." 92 I have reservations about whether each of the issues listed in para 5 of the Amended Application is common to all the claims. But some certainly are. I refer particularly to those relating to the knowledge, conduct and duties of the respondents (subparas (c), (e), (f), (g) and (h)). Those issues go to the heart of the applicants' case on liability. 93 The common issues were summarised in the Outline of Submissions of counsel for the applicants: "(a) Whether as a matter of fact smoking the cigarettes causes smoking related diseases; (b) Whether as a matter of fact smoking the cigarettes increases the risk of contracting smoking related disease; (c) Whether, as a matter of fact the Respondents individually, and/or collectively possessed the knowledge referred to in paragraphs 15, 16, 24 and 28 of the Statement of Claim; (d) Whether, as a matter of fact, nicotine has the properties and consequences pleaded in paragraphs 12 of the Statement of Claim; (e) Whether, as a matter of fact, the Respondents individually and/or collectively conducted themselves as alleged in paragraph 8 of the statement of claim, and whether each Respondent was aware of the conduct of the other Respondents as pleaded in paragraph 9 of the Statement of Claim; (f) Whether, as a matter of law and fact, the conduct of the Respondents referred to in paragraph 8 of the Statement of Claim was misleading or deceptive or likely to mislead or deceive as alleged in paragraph 19 of the Statement of Claim; (g) Whether, as a matter of law and fact, the Respondents aided and abetted or were directly or indirectly knowingly concerned in any of the misleading and deceptive conduct of any of the other Respondents referred to in paragraph 19 of the Statement of Claim; (h) Whether, as a matter of law and fact, the Respondents owed the duties of care referred to in paragraph 23, and further and alternatively paragraph 29, of the Statement of Claim; (i) Whether, as a matter of law and fact, the Respondents breached the said duties of care as alleged in paragraph 25, and further and alternatively in paragraph 30 of the Statement of Claim." 94 Counsel for Philip Morris referred me to the requirements of Rule 23 of the United States Federal Rules of Civil Procedure dealing with certification of class actions. The reference is not helpful. The wording of that Rule is substantially different to that of s33C(1) of the Federal Court of Australia Act. Moreover, there are substantial differences between practices that apply in United States Federal District Courts and those that apply in this Court; not least the routine (although not invariable) use of juries to determine class actions and the frequency, and size, of awards of punitive damages. 95 In my opinion, the present case satisfies the requirements of s33C(1) of the Federal Court of Australia Act.

Exemplary damages: Part V of the Trade Practices Act 96 As noted in para 32 above, the revised draft, like its predecessors, claims exemplary damages. Philip Morris and Wills both submit that, as a matter of law, exemplary damages are not available in a Part IV proceeding. Although it is not essential to do so, it seems convenient to deal with that submission at this stage. Resolution of the question might play some part in the approach to the case of one or more of the parties. In dealing with the issue, I emphasise I am addressing only the question of law whether damages are available in a Part IVA proceeding. I do not express any opinion as to whether such damages ought to be awarded in this, or any other, particular case. 97 Section 82(1) of the Trade Practices Act provides that a "person who suffers loss or damage" by conduct of another person contravening Part V (amongst other provisions) "may recover the amount of the loss or damage" by action against that other person or any person involved in the contravention. In Musca v Astle Corporation Pty Ltd (1988) 80 ALR 251 at 262, French J held that exemplary damages are not available for contraventions of Part V of the Trade Practices Act. That view was approved by a Full Court (Fisher, Gummow and Lee JJ) in Munchies Management Pty Ltd v Belperio (1988) 84 ALR 700 at 713. In the High Court Gaudron J spoke to similar effect in Marks v GIO Australia Holdings Ltd [1998] HCA 69; 158 ALR 333 at para [9]. 98 In Musca French J went on to note s22 of the Federal Court of Australia Act. He held this section gave the Court power to award exemplary damages in respect of an associated claim of deceit that fell within the Court's jurisdiction pursuant to s32 of the Federal Court of Australia Act. His Honour awarded one applicant a small sum for exemplary damages. 99 In the present case, counsel for the applicants accept that exemplary damages are not recoverable under s82 or s87 of the Trade Practices Act. But they argue, in effect, that French J's approach leads logically to the conclusion that exemplary damages are available under s22 even in relation to a contravention of Part V of the Trade Practices Act. They say: "Having been granted power under Section 22 (a power which should be given a liberal construction - see French J at 263) to grant such remedies as are necessary to resolve disputes before it, why should that power not extend to granting an award of exemplary damages where appropriate, pursuant not to Section 82, or Section 87, but to that power?" 100 Alternatively, counsel suggest, exemplary damages ought to be regarded as compensatory in character, at least in part. In support of that submission, they refer to comments in various cases about the role of exemplary damages in assuaging victims' feelings. 101 I reject both these submissions. French J took some trouble to explore and explain the limits on damages awards imposed by the terms of ss82 and 87 of the Trade Practices Act. Section 22 is an exhortatory provision requiring the Court, in every matter before it, to grant "all remedies to which any of the parties appears to be entitled in respect of a legal or equitable claim properly brought forward by him in the matter", so as to avoid multiplicity of proceedings. It ought to be construed liberally: see the Full Court decision in McLeish v Faure (1979) 25 ALR 403 at 413-414. However, s22 does not confer on the Court any additional jurisdiction: see Philip Morris Incorporated v Adam P Brown Male Fashions Proprietary Limited (1981) 148 CLR 457 at 489-490 (Gibbs J), 505-506 (Mason J) and 529 (Aickin J). Section 22 does not give the Court a general charter to make whatever orders it might think to be just, independently of any legal or equitable claim the parties may succeed in establishing. In determining Musca, French J was aware of the existence and limitations of s22. His approach has been endorsed at Full Court level and is supported by Gaudron J's observation in Marks. Having regard to these circumstances, I would follow his Honour even if I had reservations about the correctness of his view. I do not; I think he was plainly correct. 102 In relation to the second submission, it is true that some judges have drawn attention to the role of exemplary damages in assuaging the feeling of hurt or outrage which is often experienced by victims of tortious conduct. In a sense, that role might be regarded as compensatory. However, the distinction between compensatory (including aggravated) damages and exemplary damages is deeply entrenched. It is enough to recall the decision of the House of Lords in Rookes v Barnard [1964] AC 1129 and the reaction to that decision of the High Court of Australia in Uren v John Fairfax & Sons Pty Limited (1966) 117 CLR 118. In considering the matter of aggravated damages, the Court examines the effect of the defendant's conduct on the plaintiff; in considering exemplary damages it focuses on the conduct itself. The distinction was succinctly explained by the High Court in Lamb v Cotogno (1987) 164 CLR 1 at 8: "Aggravated damages, in contrast to exemplary damages, are compensatory in nature, being awarded for injury to the plaintiff's feelings caused by insult, humiliation and the like. Exemplary damages, on the other hand, go beyond compensation and are awarded 'as a punishment to the guilty, to deter from any such proceeding for the future, and as a proof of the detestation of the jury to the action itself.'" 103 I accept it may be possible, in an appropriate case, to recover aggravated damages as "loss or damage", within the meaning of s82 or s87 of the Trade Practices Act. However, it seems to me clear that exemplary damages cannot fall into that category. I am of the opinion that, in the present case, it is not open to any of the applicants or group members to recover exemplary damages in relation to any contravention of s52 of the Trade Practices Act they may prove.

Exemplary damages: negligence claims in representative proceedings 104 It is, I think, equally clear that, as a matter of legal theory, it would be possible for the Court to award damages, in a non-representative proceeding, to any one or more of the applicants or group members who succeeded in proving negligence. An award of exemplary damages for negligent conduct would be a rare event, requiring strong facts; but the High Court has consistently rejected invitations to confine the categories of common law cases in which exemplary damages are available: see Uren and Lamb. There is no decision that rules out the possibility of exemplary damages in a negligence case. 105 However, the present proceeding is a representative proceeding under Part IVA of the Federal Court of Australia Act. Philip Morris and Wills both contend that, whatever might be the position in a non-representative proceeding, Part IVA evinces an intention to exclude an award of exemplary damages; especially when that Part is read in its historical context. 106 The starting point of the respondents' argument is, necessarily, s33Z of the Federal Court of Australia Act. Subsection (1) of that section provides: "(1) The Court may, in determining a matter in a representative proceeding, do any one or more of the following: (a) determine an issue of law; (b) determine an issue of fact; (c) make a declaration of liability; (d) grant any equitable relief; (e) make an award of damages for group members, sub-group members or individual group members, being damages consisting of specified amounts or amounts worked out in such manner as the Court specifies; (f) award damages in an aggregate amount without specifying amounts awarded in respect of individual group members; (g) make such other order as the Court thinks just." (Emphasis added.) Subsections (2), (3) and (4) impose and confer some procedural requirements, limitations and powers in relation to awards of damages, but they are not contended to be relevant to the present issues. 107 Counsel for Philip Morris contrast s33Z and s33ZF which, they suggest, confers power only in relation to interlocutory orders. They argue s33Z "is exhaustive of the power of the Federal Court to grant final relief. It is comprehensive in its terms and definitive in its tone". Counsel say: "… no room is left for the operation of section 22 in this context. To the extent that any cause of action gives rise to an entitlement to final relief that is broader than the final relief that the Federal Court has power to order under section 33Z, section 33Z operates to limit the final relief that may be ordered, when that cause of action is pursued in a Part IVA proceeding. In the alternative, the effect of section 33Z of the FCAA is not only to limit the power of the Federal Court, in a Part IVA proceeding, to grant the final relief enumerated thereunder, it serves also to limit the entitlements which accrue in respect of any cause of action which may be pursued in a Part IVA proceeding. For example, the final relief provided for under section 33Z displaces and replaces the relief permitted under sections 82 and 87 of the TPA for a contravention of section 52 of the TPA. On either construction, whatever cause of action is raised in a Part IVA proceeding, where an award of damages is sought, section 33Z of the FCAA limits those damages to compensatory damages. Exemplary damages are not available." 108 Counsel go on to argue that this approach is supported by reference to extrinsic materials: the Second Reading Speech for the Bill that enacted Part IVA and the Report of the Australian Law Reform Commission Grouped Proceedings in the Federal Court (ALRC 46, 1988). That report was the genesis of Part IVA, although the Bill presented to Parliament departed in significant respects from the Commission's recommendations. 109 The Second Reading Speech was delivered by the then Attorney General, Mr Michael Duffy MP. Counsel draw attention to this passage (House of Representatives Debates, 14 November 1991, p3174): "The new representative proceeding provided in the Bill is based on the existing representative action procedure in the Federal Court and in State supreme courts. The Bill gives the Federal Court an efficient and effective procedure to deal with multiple claims. Such a procedure is needed for two purposes. The first is to provide a real remedy where, although many people are affected and the total amount at issue is significant, each person's loss is small and not economically viable to recover in individual actions. It will thus give access to the courts to those in the community who have been effectively denied justice because of the high cost of taking action." 110 The Commission's report contains no express reference to exemplary damages. However, counsel suggest two paragraphs of the report support their contention that the Commission did not intend exemplary damages to be available under the procedure it was recommending. In the course of a discussion about the effect of its recommendation of an "opt out" procedure, whereby claims could be made by a representative party on behalf of group members without first obtaining their consent, the Commission said: "116. Liability is not 'at large'. One feature of opt out proceedings in the United States is that judgment has, on some occasions, been given for the payment of damages for the entire class rather than giving individual awards to each class member. The court may then order the defendant to disburse the money in a prescribed way or to temporarily lower the price of particular goods or services until it has disgorged an amount equal to the total damages: see Daar v Yellow Cab Company 67 Cal 2d 695 (1967). The justification for depriving the respondent of this money is to deter any repetition of the conduct which led to the remedy being obtained and to ensure that the respondent does not profit from wrongdoing. It is, in a sense, a punitive measure. While deterrence of behaviour is a secondary effect of requiring a respondent to compensate those who have sufferred [sic] loss or damage, the principle adopted by the Commission is that the respondent is liable to pay monetary relief only to those who come forward and establish their claim." I have highlighted the words emphasised by counsel for Philip Morris. 111 The second passage mentioned by counsel is para 323. This paragraph is contained in the final chapter of the report headed "Evaluation of the proposal". Under the sub-heading 'Remedies, not punishment'", the Commission said: "323 The grouped proceedings scheme is a procedural innovation designed to enable individuals who have suffered loss or damage as a result of a multiple wrong to have access to the remedy the law prescribes. Its purpose is not to punish respondents or to deter behaviour to any greater extent than can be achieved by enforcement of the law. The expansion of access to legal remedies may lead to greater enforcement of legal liabilities and as a result increase the amount of monetary relief paid. This may have a deterrent effect on the respondent's behaviour, but that is incidental. The primary goal of the recommendations is to enable identified persons who establish their loss to secure the legal remedy the law provides. In the United States, by way of contrast, the effect of class actions is sometimes as much to deter the respondent's conduct as it is to provide a remedy to individuals. In some cases courts give a lump sum award of damages assessed with reference to the entire class rather than giving individual awards to each class member. It then orders the defendant to disburse the money in a prescribed way or to lower temporarily the price of a particular good or service until it has disgorged an amount equal to the total damages. The rationale is to require the respondent to disgorge any unlawfully obtained gains and to deter similar conduct. While the recommendations include a facility for aggregate assessment of damages in certain circumstances, it is permitted only to the extent that group members will be directly compensated. Windfall benefits may otherwise enure to persons who did not suffer at all." Once again I have highlighted the words emphasised by counsel. 112 Counsel say it is clear the Commission intended that awards of damages in representative proceedings would be confined to compensatory damages, and Parliament must be taken to have adopted that limitation. 113 I do not think the Commission did evince the intention counsel assert. Paragraph 116 of the Commission's report appears in a section headed "Effect on respondents". It was concerned with the question whether there would be any unfairness to respondents in adopting an "opt out", rather than an "opt in", procedure. During the course of its reference, the Commission received many submissions and comments deprecating the practice, in some American jurisdictions, of assessing damages in class actions on the basis of ensuring the defendant did not retain the profits of its wrongdoing, regardless of whether or not all the people who suffered loss as a result of the wrongdoing came forward to claim reimbursement. That course was taken in Daar, cited in para 116 of the Commission's report. The purpose of the paragraph was to make clear that the Commission did not propose that course be available in Australia: "the principle adopted by the Commission is that the respondent is liable to pay monetary relief only to those who come forward and establish their claim". The Commission said nothing about the content of that claim. 114 In para 323 of its report, the Commission took pains to emphasise that the purpose of the proposed procedure was to enable recovery by people who had suffered loss or damage as a result of unlawful conduct, rather than to punish wrongdoers. However, a key sentence is that last emphasised in para 323, especially the words "to secure the legal remedy the law provides". If the law provides a remedy of exemplary damages in relation to a particular cause of action, it would not be inconsistent with this sentence to allow recovery of those damages in a representative proceeding. Nor would it be inconsistent with the general tenor of the Commission's remarks to allow persons who have suffered loss or damage "to have access to the remedy the law prescribes", even if that remedy has a punitive aspect. This would be quite different to the establishment of a wholly punitive regime; for example, by imposing penalties for unlawful behaviour recoverable by public authorities or non-victims. 115 So far as I recall, the Commission did not expressly consider the relationship between the proposed new regime and exemplary damages; probably because exemplary damages are infrequently awarded in Australia. Had the Commission formed a view about that relationship, it would have said so in plain terms. Had it thought it desirable to exclude the recoverability of exemplary damages in representative proceedings, it not only would have said so; it would have included such a provision in the draft Bill set out in Appendix A to the report. 116 Bearing in mind that, in drafting the Bill eventually presented to Parliament, the Government departed from the Commission's model in several important respects, it is a large assumption to ascribe to the Government all the Commission's views. Although the Commission's report undoubtedly provides relevant background to the Government's proposal, on matters of detail the Government must be allowed to speak for itself. In that regard, contrary to the submission of counsel for Philip Morris, I cannot read the Second Reading speech as indicating a Government view about the recoverability of exemplary damages. The Attorney was doing no more than explaining to Parliament one of the justifications for the adoption of the new procedure. 117 Neither can I accept that s33Z contains any implied confinement of the scope of the damages available under the representative procedure. As counsel for the applicants pointed out in argument, it would be a serious step for the Parliament, in the guise of providing an additional procedure for the litigation of claims, actually to limit claimants' substantive rights. A question might arise as to the constitutional validity of such a course, in the absence of compensation: see Constitution s51(xxxi) and Georgiadis v Australian and Overseas Telecommunication Corporation (1994) 179 CLR 297. Certainly it might be expected that any such intention would be expressly stated in the legislation and drawn to the attention of the Parliament. 118 Paragraph (e) of s33Z(1) empowers the Court, in a representative proceeding, to "make an award of damages for group members". I see no reason to read down that power so as to exclude the award of exemplary damages in a proper case. 119 During discussion on 17 June, the senior counsel who then appeared for Philip Morris contended there was an inherent difficulty in awarding damages in a representative proceeding: until compensatory damages had been assessed in respect of all claimants, the Court would not be able to determine whether or not it was appropriate to add something to any claim by way of exemplary damages. Counsel had in mind the principle that, in determining whether it is appropriate to award exemplary damages --and, if so, how much - a court must consider the effect on the defendant of liability for compensatory damages. However, counsel who appeared on 27 July did not pursue this argument. They accepted that each group member's claim was distinct; if exemplary damages are available, the principle to which I have referred must be applied in relation to each group member. I think this concession is correct. A defendant cannot answer X's claim for exemplary damages by showing it has incurred a heavy damages liability to Y, in respect of the same or similar conduct.

Pleading matters 120 Many of the pleading issues raised by the respondents were resolved at the hearing; mostly by counsel for the applicants offering to make suitable amendments. Other issues may remain; it will not be possible to make a final evaluation of the position until after examination of the new Further Amended Statement of Claim to which I referred in para 16 above. However, some comments may usefully be made. 121 Counsel for Philip Morris claim the applicants must plead the existence of a duty to warn, if it is part of their case that the respondents should have warned cigarette users of the health risks associated with smoking; they must also plead the response that would have been made by each claimant to any warning that might have been given. Counsel refer to cases where members of the High Court have referred to the need for a plaintiff to give evidence as to what would have happened if requisite information had been given, notably a passage from the judgment of Gaudron J in Chappel v Hart [1998] HCA 55, 156 ALR 517 at para [9]: "Where there is a duty to inform it is, of course, necessary for a plaintiff to give evidence as to what would or would not have happened if the information in question had been provided." 122 Counsel for the applicants respond this is not really a "failure to warn" case; it would be misleading to pick out that element, in pleading their case concerning the respondents' conduct. They say their case is not merely that the respondents failed to warn; their case is that the respondents, over a lengthy period, engaged in a campaign of deceit dominated by positive actions, rather than omissions. Counsel accept that, if they are successful on the common issues, it will be necessary for them to call evidence of causation, in relation to each applicant and group member, in order to establish the liability of any of the respondents towards that claimant. They foreshadow this will typically be in the force of evidence from the claimant himself or herself, but suggest there may be occasions when they will have to resort to other evidence. 123 I make no comment about the form of the evidence required to prove causation; clearly it will be essential for the applicants to tender cogent evidence in relation to each claimant. It is enough for me to say, in relation to the pleading issue, that I am not persuaded it is incumbent on the applicants to make a separate allegation about failure to warn and about each claimant's response to any warning that might have been given. 124 Counsel for Philip Morris put a similar submission in relation to the alleged inadequacies of government warnings. I take the same view about that submission. 125 Another Philip Morris complaint arises out of the fact that subpara (c) of the definition of group members in the revised draft refers to people "who commenced, continued, or failed to quit such smoking wholly or partly because of" the respondents' conduct. Counsel say this ingredient in the definition depends upon a subjective matter; it will not be known whether a particular person fulfils the criterion stated in subpara (c) until that person gives evidence. If the person fails to establish the causal link referred to in subpara (c), it will follow the person is not a group member and, therefore, is not bound by the result of the proceeding. The person would be free to bring a later proceeding against the respondents or any of them. 126 The argument has a superficial charm. But it fails to sustain analysis. The result suggested by counsel is correct. However, the person could not base a later proceeding on either of the causes of action pleaded in this case. Both those causes of action depend upon the person having been influenced to commence or continue smoking, or to fail to quit smoking, by the conduct of one or more of the respondents. If it is held in this proceeding that a particular person was not so influenced, the doctrine of issue estoppel would prevent the person contending to the contrary in a later action. Of course, the person would not be precluded from bringing a later action on a different cause of action, one that did not depend upon establishing a link between a respondent's conduct and the commencement or continuation of smoking; for example, a product liability claim. But it is always true that a group member is free to bring a second action against the same defendant in relation to a different cause of action. 127 The effect of acceptance of the respondents' submission would be that the representative procedure could never be used in relation to a cause of action whose elements included reliance. A court's determination of reliance always involves assessment of a subjective element: the effect (if any) of particular actions on the mind of a particular person or persons. Given that many of the causes of action provided by the Trade Practices Act involve reliance, this would represent a major limitation on the utility of Part IVA of the Federal Court of Australia Act. 128 Counsel say para 10 of the revised draft uses two words, "aware" and "influenced", that are vague and embarrassing. I do not agree. I think the allegation is plain. I do not know how the applicants will prove, by admissible evidence, that the "others" referred to in para 10(d) "saw and/or heard and/or were made aware of the conduct". But that is not a matter requiring attention at this time. 129 In their Outline of Submissions counsel for Philip Morris make some legitimate criticisms of the way in which the Amended Statement of Claim deals with the respondents' alleged knowledge. These matters need to be tidied up, as I understand the applicants accept. 130 The pleading matters raised by counsel for Wills were, I think, sufficiently discussed during argument. I apprehend the fresh draft will take account of them. That observation certainly extends to counsel's criticism of the description of group members, which was discussed and amended during the hearing on 26 and 27 July. I wish only to comment on a suggestion (para 214 of the Outline) of conflict of interest. Counsel say: "… the group as defined will include members with conflicting interests. Some members may wish to argue that they were able to cease smoking and, but for the respondents' misleading or deceptive conduct, would have done so. Other group members might instead prefer to argue that, even though aware of the dangers of smoking, because of the addictive nature of nicotine they could not cease to smoke and they suffered injury because of failure by the respondents to reduce 'harmful substances' in cigarettes. There is therefore prejudice or embarrassment to some group members in exposure to having issues presented in a way which suits some group members but not others." 131 There is no longer a claim of breach of duty because of failure by the respondent to reduce harmful substances in cigarettes. Nonetheless, it may be expected there will be considerable variations in the cases concerning causation and damages of individual group members. That does not necessarily mean there will be a conflict of interest between group members. It may only mean that, assuming the applicants succeed on the common issues, some claims will be more difficult to establish than others. If at any stage a conflict of interest emerges, between particular classes of group members or particular individuals, that will not necessarily make it impossible or inappropriate to maintain the proceeding as a representative action. It might prove possible to meet any difficulty by the constitution of sub-groups, and the appointment of sub-group representatives, under ss33Q and 33R of the Federal Court of Australia Act. If that will not suffice, the Court can give consideration to an order under s33N that the proceeding no longer continue under Part IVA. No application for such an order has yet been made. I can make such an order of my own motion, but there is no reason to do so at this stage. 132 The Outline of Submissions prepared by counsel for Rothmans also raises a number of matters sufficiently ventilated in argument. However, some comments are apposite. First, counsel complain that the allegation of misleading conduct by silence in para 8(E) is incomplete because it fails to identify the particular fact known to each respondent that gave rise to an obligation to speak. This is more than a "misleading conduct by silence case", such as Collins Marrickville Pty Ltd v Henjo Investments Pty Ltd (1987) 72 ALR 601 (affirmed on liability issues at 79 ALR 83); nonetheless, the respondents' silence on health risks is claimed to be an important part of their pattern of misleading conduct. That being so, I think the pleading should spell out the basis upon which it is claimed the respondents had a duty to speak, including a reference to any relevant knowledge. 133 Counsel for Rothmans also criticise para 22 of the revised draft. This paragraph seeks to invoke s75B of the Trade Practices Act. It claims each respondent knew of the conduct of each other respondent and that its own conduct aided and abetted the conduct of the others. However, Rothmans complain, para 22 does not contain any allegation that any of the respondents knew the alleged conduct was misleading, as is required by Yorke v Lucas (1985) 158 CLR 661. There is substance in this criticism. The omission ought to be rectified in the fresh draft.

Disposition of the motions 134 None of the respondents has made out a case for summary dismissal of the proceeding. However, the respondents have made some valid criticisms of the extent that each respondent seeks such an order, their motions will be dismissed definition of group members in the Amended Application filed on 1 July 1999, of the Amended Statement of Claim filed on that day, and even of the revised draft presented during the hearing of the Notices of Motion. In the light of those criticisms, I will strike out both the 1 July documents. I will allow the applicants a further opportunity to amend. Any Further Amended Application should be filed within seven days. Against the possibility that one or more of the respondents will consider the new Statement of Claim raises a fresh problem, I think it advisable the respondents examine the new draft before it is filed. I propose to direct that an unfiled draft of a Further Amended Statement of Claim be provided to the solicitors for each of the respondents not later than Friday, 20 August 1999. I suggest this draft should be structured in the clearest possible way, without concern to reproduce the paragraph numbering used in earlier versions; but it should not raise a new case. I also suggest the new draft should ignore the convention about underlining new material and revealing omitted material. Having regard to the likely extent of the required reorganisation, adherence to that convention would probably confuse readers rather than enlighten them. 135 If any respondent considers the new draft raises a problem not previously raised, or fails to comply with any ruling or assumption contained in these reasons, its solicitors must notify the applicants' solicitors, and my associate, of that fact, and its basis, not later than Thursday, 26 August 1999. In that event, the new draft is not to be filed until after a directions hearing I will appoint for Tuesday, 31 August 1999. If no respondent notifies a problem by the close of business on 26 August 1999, the applicants' solicitors should forthwith file and serve a Further Amended Statement of Claim that accords with that draft. 136 Since the hearing on 26 and 27 July, the solicitors for the applicants have supplied to my associate a set of draft directions. I understand there is dispute about some items, especially in relation to the stages of discovery and the dates by which various steps are to be completed. Accordingly, I will defer making any directions until the hearing on 31 August. However, the parties should work on the assumption that, at that time, I will probably direct the filing of defences within 14 days of that day, or the date of any later filing of an acceptable Further Amended Statement of Claim. Also I will probably direct newspaper advertising during the month of September 1999, with an opt out period to expire on 30 November 1999. The solicitors for the applicants should provide a draft of a suitable newspaper advertisement. 137 In this hard fought litigation it is conceivable that one or more of the parties will wish to challenge one or more of the rulings contained in these reasons. In order to facilitate any challenge to my views about exemplary damages, I will make formal declarations as to the position. In relation to that matter, and also some other aspects of the case, I would be disposed, if asked, to grant leave to appeal to a Full Court. However, in considering any such application, I would be concerned to ensure that an appeal would not interfere with preparation for the trial or the holding of the trial at the earliest practical date. Accordingly, I would make it a condition of any leave being granted that the solicitors for the applicants for leave undertake to do all things necessary to have the appeal listed for hearing in the sittings of the Full Court due to commence on 8 November 1999, if that be possible from the Court's point of view, in either Sydney or Melbourne, as the Chief Justice may determine. It would also be a condition of leave that the parties continue preparation for trial in accordance with whatever directions are made on 31 August. 138 In accordance with a request by counsel, at this stage I reserve the costs of the motions. If any party decides to seek an order for costs, the solicitors for that party should so notify the affected opponent and my associate not later than 31 August. Not later than 15 September, the moving party should forward written submissions to my associate, with a copy to the solicitors for the opponent. Those solicitors should respond by 29 September. Any submissions in reply should be supplied by 13 October 1999. I will then consider the matter of costs and make any appropriate order or orders. I certify that the preceding one hundred and thirty-eight (138) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wilcox.

Counsel for the Applicants: T Tobin QC, J Burnside QC, J Beach and J Gordon

Solicitor for the Applicants: Slater & Gordon

Counsel for the First Respondent: J Sacker QC, J Ruskin and S O'Meara

Solicitor for the First Respondent: Arthur Robinson & Hedderwicks

Counsel for the Second C Gee QC and D Beach Respondent:

Solicitor for the Second Respondent: Mallesons Stephen Jaques

Counsel for the Third N Hutley SC and I Jackman Respondent:

Date of Hearing: 26 and 27 July 1999