30 Moon is a strong case because there the representative proceedings came entirely to an end and only the personal proceedings of Mrs Art continued, which would have been barred by the statute of limitations if the substitution order had not been made.
31 In Zurek, Gressier M followed Moon and made an order substituting the representative plaintiff in reliance on the amendment power in SCR Part 20 r 1, the former equivalent of s 64(1) of the CPA.
32 The defendants submit that Moon is distinguishable because there the representative plaintiff did not wish to continue. That is a factual difference, however, the order made in Moon was one of substitution and no order granting leave to discontinue was made. I do not think that the factual difference distinguishes the case in point of principle in circumstances where the representative plaintiff is not willing to proceed in that capacity but wishes to remain as one of the represented group. Thus, in Zurek the representative plaintiff was substituted notwithstanding that he had not otherwise obtained leave to discontinue.
33 The alternative reliance in Moon on a general power of amendment in a provision equivalent to s 64 of the CPA receives indirect support from the principle that rules of a general kind such a s 64 should be given as full a meaning as they can reasonably bear in their context: McInnes v Wingecarribee Shire Council (1987) 10 NSWLR 660 (CA). In that case Mr McInnes appealed to the Land and Environment Court against a council refusal of a development application. He applied for leave to amend by substituting others in a group that he represented as applicants for himself in the proceedings. The Court of Appeal held that the amendment could be made pursuant to the then Land and Environment Court Rules 1980 Pt 10(3) which they interpreted very widely. Part 10 was very similar to the current s 64(1) of the CPA. Priestley JA (the other members of the Court agreeing) said at 668:
"The courts have adopted, when construing rules of the general kind in question in the present case, an approach which gives the empowering words in such rules as full a meaning as they can reasonably bear in their context. This approach is not new; it can I think be said to have been required by the substance of the Supreme Court of Judicature Act 1873 (UK) and all the descendants of that Act in their many jurisdictions. It took a long time for the more restrictive common law approaches of earlier years to die out…it seems to me, that the preferred approach at the present time is to give courts very ample jurisdiction to grant amendments, including those which as a matter of simple fact allow causes of action to be litigated which could not be litigated if the amendment were not allowed, leaving it to the discretion of the court to decide when justice requires that such an amendment should or should not be granted. This is in contrast to the earlier approach of leaving the rules rather than the court's discretion to determine whether or not particular causes of action should be litigated."
34 On the authority of Moon and Zurek, there is power to order substitution of a representative plaintiff. If there is power then the discretionary consideration strongly favouring substitution is that Mr Ford is unwilling to continue as the representative plaintiff and is in serious ill-health.
35 However, the defendants made detailed submissions that (notwithstanding the authorities) there is no power to make the orders sought or that, in the discretion of the Court, the power should not be exercised. Before addressing their submissions I would mention two matters.
36 First, although it does not matter in the present case, the Moon view that represented persons are parties but not full parties may be compared with the view expressed in Australian cases that represented persons are not parties: Mobil Oil Australia Pty Ltd v The State of Victoria [2002] HCA 27, 211 CLR 1 at [50]; Courtney v Medtel Pty Ltd [2002] FCA 957, 122 FCR 168 at [36]; Johnson Tiles Pty Ltd v Esso Australia Ltd [1999] FCA 1363, 94 FCR 167 at [31]; Cameron v National Mutual Life Association of Australasia Ltd (No 2) [1992] 1 Qd R 133 at 141, 144; O'Sullivan v Challenger Managed Investments Ltd [2007] NSWSC 383, 214 FLR 1 at [50]. UCPR r 7.4(4C) may suggest that a represented person is not a party. But the question whether a represented person may be a party for the purpose of any of the rules is not entirely clear because there is no definition of a "party" in the CPA or the UCPR; a "party" under the CPA and UCPR is not necessarily a person named as a party on the record eg it includes a subpoenaed person who contests access for the purposes of the UCPR r 42.3(1): In the matter of Bauhaus Pyrmont Pty Ltd (in liq) [2006] NSWSC 879, 67 NSWLR 289 (Austin J); and the court may give directions in the representative proceedings for the determination of issues relating only to individual represented persons: r 7.4(4A). It is unnecessary to consider this question further in the present case.
37 Secondly, if the only way out for Mr Ford were the discontinuance way proposed by the defendants referred to at [13(c)] above, and if he were to go that way, I would be minded to grant leave to discontinue but would not attach the proposed condition that he relinquish his personal claim. That would be unjust because he had no option but to make that claim in order to be the representative plaintiff; he has always presented as one of the represented group and wishes to remain in it; but he can no longer adequately represent the group's interests as he is unwilling to continue as the representative plaintiff, particularly having regard to his ill health. If the common issues were to be decided adversely to the 2003 Investors, then none of their personal claims can succeed.
Rule 6.24(1)
38 Rule 6.24(1) permits joinder of a person "whose joinder as a party is necessary to the determination of all matters in dispute in any proceedings". The applicants submit that Mr Michell can be joined as plaintiff pursuant to r 6.24(1) because his joinder is "necessary" to the determination of all matters in dispute. The defendants submit that r 6.24(1) does not permit the joinder of Mr Michell because:
(a) mere reluctance by Mr Ford to prosecute his own claim does not make Mr Michell a "necessary" party and no application has been made under r 7.8 for the conduct of the proceedings to be given to another person;
(b) even if Mr Ford were given leave to discontinue the proceedings or otherwise be removed as a party, r 6.24(1) would not permit Mr Michell's joinder because (like the old SCR r 8(1)(b) which it replaced) that rule is concerned with the addition of parties which is ancillary to, and not in substitution for, the proceedings as constituted: Knight v McCann-Erickson Pty Ltd ( Supreme Court of New South Wales, McClelland J, 26 August 1991, unreported). In Knight this view of the rule led McClelland J to conclude that it did not "authorise the reconstitution of proceedings by the substitution of a new plaintiff with a new cause of action for an old plaintiff whose cause of action is no longer maintainable". The defendants argue that equally it does not authorise substitution of a new plaintiff (Mr Michell) with a new cause of action for an old plaintiff (Mr Ford) who no longer wishes to maintain his cause of action. They submit that to the extent that Knight is inconsistent with Moon, Knight should be followed. It is implicit in the submission that Zurek should also not be followed.
39 Knight is distinguishable and is not inconsistent with Moon. Knight did not concern representative proceedings, Moon and Zurek did. Knight concerned competing proceedings by two liquidators with separate causes of action occurring on different dates on the basis of separate orders in different jurisdictions. In the present case, the orders sought by the applicants would not reconstitute the proceedings in the sense addressed in Knight. The special character of representative proceedings has always required a flexible approach, as the High Court in Carnie recognised. A representative plaintiff like Mr Ford who is unwilling to continue in that capacity, particularly one who is in ill health, will no longer adequately represent the represented parties. It is therefore necessary to replace him. Mr Michell is the only candidate and is a member of the represented group. The joinder of Mr Michell is necessary to protect the interests of the represented parties. Consequently, r 6.24(1) empowers the Court to order the joinder of Mr Michell. It is appropriate to join him.
Rule 6.19(1)
40 The applicants alternatively submit that the joinder of Mr Michell is permissible under r 6.19(1). The defendants submit that r 6.19(1)(a) and (b) do not permit the joinder of Mr Michell as his rights of relief are not in respect of or do not arise out of "the same transaction or series of transactions" as those claimed by the other plaintiffs. That is said to be because his claimed rights of relief would arise out of his acquisition of units within a trust which held the securities, whereas the first plaintiff, Oasis, acquired the securities: Dean-Willcocks v Air Transit International Pty Ltd [2002] NSWSC 525, 55 NSWLR 64 at [21]-[27]. They concede that if Mr Ford were to obtain leave to discontinue, it may be appropriate to join Mr Michell in a representative capacity pursuant to the closing words of r 6.19, but point out that no discontinuance application has been made.
41 It is unnecessary to consider the niceties of subrules (a) and (b) of r 6.19(1). The closing words of r 6.19 contain a discrete and unconditional power to join persons if the court gives leave. In my opinion, this is a suitable case for granting leave to Mr Michell to be joined pursuant to that power.
Rule 6.29(b)
42 The applicants submit that r 6.29(b) permits the Court to remove Mr Ford because he has ceased to be "a proper or necessary party".
43 The defendants submit that Mr Ford sues on his own cause of action and not on the cause of action of the represented persons; and therefore, even if Mr Michell were to be joined as the representative plaintiff, in terms of r 6.29(b) Mr Ford would remain a "proper" and "necessary" party to his own cause of action and can only withdraw from that action by obtaining leave to discontinue pursuant to r 12.1. They cite O'Sullivan v Challenger [2007] NSWSC 383, 214 FLR 1 at [48]-[50], [53] per White J, particularly his Honour's dictum that for represented persons to obtain damages they would "ultimately have to become parties to proceedings brought either severally or together pursuant to r 6.19": at [49]. That is, the represented persons could not recover damages by means of the representative proceedings. They submit that it follows that even if the joinder of Mr Michell were permitted, Mr Ford remains, in terms of r 6.29, a "proper" and "necessary" party to his own cause of action.
44 I do not accept the submission substantially for the reasons submitted by the applicants. The UCPR rules considered in O'Sullivan were subsequently substantially amended such that O'Sullivan is now relevantly distinguishable. The amendments to r 7.4 comprised amendments to sub-rule (1) and the insertion of sub-rules (4A), (4B), (4C) and (4D). Sub-rule 7.5(1) has also been amended. The amended rules establish that when a plaintiff sues in a representative capacity, he sues on all causes of action of the represented persons that are within the scope of the pleadings including each represented person's claim for damages notwithstanding that each represented person's claim for damages may be personal to him or her. Provided the pleadings meet the new and more liberal threshold in r 7.4(1) and the proceedings are commenced by a person representing other persons under r 7.4(2), as the proceedings brought by Mr Ford do, they are representative proceedings. The new r 7.4(2A) provides that representative proceedings may be commenced:
"(a) whether or not the relief sought:
…
(ii) consists of, or includes, damages, or
(iii) includes claims for damages that would require individual assessment, or
(iv) is the same for each represented person, and
(b) whether or not the proceedings:
(i) are concerned with separate contracts or transactions between the defendant in the proceedings and individual represented persons, or
(ii) involve separate acts or omissions of the defendant done or omitted to be done in relation to individual represented persons."
45 By r 7.4(2A)(b), substantial issues that are individual to the claims of represented persons may be encompassed within the representative proceedings. By r 7.4(2A)(a), representative proceedings can incorporate for determination, claims for relief that differ as between represented persons including claims for damages on behalf of represented persons, even where those claims for damages require individual assessment.
46 In the present case, the Amended Summons and the Amended Commercial List Statement state that Mr Ford sues on his own behalf and as representative party for the 2003 Investors. This Statement addresses not only the facts as they relate to Mr Ford but also as they relate to all the 2003 Investors. The Amended Summons indicates that the plaintiffs (which include Mr Ford in his representative capacity) seek, among other things, declarations of contravention and compensation pursuant to s 82 or s 87 of the Trade Practices Act 1974 (Cth) and analogues in other legislation.
47 Thus, the proceedings commenced by Mr Ford are proceedings in which the claims of the 2003 Investors for declarations for compensation, including the claims of Mr Michell, are brought for determination. That is so even though there are issues that cannot be determined as common issues such as whether each of the 2003 Investors suffered loss by the alleged misleading or deceptive conduct of the defendants.
48 Procedurally, in any representative proceedings there will be a hearing of the issues common to the representative persons. The hearing of the common issues may also involve hearing some individual issues for reasons of practicality and convenience such as avoiding the necessity of a party giving evidence in split hearings: Oasis Fund Management Ltd v ABN Amro Bank [2009] NSWSC 1322 at [16]-[17] and [25]-[28] per Einstein J.
49 Where the initial hearing in representative proceedings does not determine all claims of the represented persons, a procedural basis for the disposal of the remaining individual issues is found in the new r 7.4(4A) (identical to s 33Q(1) of the Federal Court of Australia Act):
"(4A) If it appears to the court that determination of the issue or issues common to all the represented persons will not finally determine the claims of all the represented persons, the court may give directions in relation to the determination of the remaining issues".
50 The discretion conferred by r 7.4(4A) may include directions that represented persons who wish to prove individual issues in their claims, such as reliance or loss, be joined as named plaintiffs in the proceedings, or be bound by orders or undertakings as to the costs of proof of such individual issues.
51 In support of the proposition that a representative plaintiff does not sue on the causes of action of the represented persons, the defendants cite Jameson v Professional Investment Services Pty Ltd [2009] NSWCA 28, 72 NSWLR 281. There the Court of Appeal considered the discretion to "otherwise order" under r 7.4(2). Spigelman CJ (Allsop P and Ipp JA agreeing) said that the importance of the allegedly misleading and deceptive features of the representation was "likely as a practical matter to reduce the salience of issues of reliance and damages in the conduct of the individual cases". That statement was not made in the context of discussion of the instant issue and the better view is that the reference to "individual cases" refers to the individual issues that remain following determination of the common issues. Elsewhere the Chief Justice commented on the fact that the decision with respect to r 7.4(2) reflected a "choice…between the present proceedings and an array of individual proceedings by each of the persons affected": at [121]. This comment indicates that representative proceedings do not eventually require a multitude of individual proceedings by representative persons seeking damages.
52 For these reasons, Mr Michell's cause of action and claims for relief are already before the court in the proceedings; and the first and second defendants' contention that Mr Ford has sued only on the cause of action individual to him and not on the causes of action of the represented persons is erroneous.
53 It is mandatory that for r 7.4 to operate the representative plaintiff himself has a cause of action against the defendant, not merely that the represented persons do. In that sense, Mr Ford sues on his own behalf. He could not be a representative plaintiff otherwise. The use of the orthodox wording "sues on behalf of himself and the other group members" does not indicate that he is suing in his own right additionally and separately to suing in a representative capacity. The effect of r 7.5 is that an order or judgment could not be made concerning common issues which bound Mr Ford in an individual capacity but not in a representative capacity.
54 By reason of his inclusion in the group of represented person, Mr Ford's claims for relief are represented in the proceedings and will remain within the matters to be determined in them regardless of whether he continues as a representative plaintiff or not. Likewise with Mr Michell's claims.
55 Accordingly, there is no discontinuance of Mr Ford's individual claims by reason of his removal or substitution as a plaintiff. Once such joinder and substitution is effected, there is no utility in maintaining Mr Ford as a plaintiff. His claims being already represented in the proceedings, he is not a "necessary" party on his individual claims in the absence of orders pursuant to r 7.4(4A) following the determination of the common issues. He is also not a "necessary" party once Mr Michell is joined and the representative persons have a representative plaintiff. Nor is Mr Ford a "proper party" by reason of his unwillingness to continue. Therefore, the conditions for his removal pursuant to r 6.29(b) are satisfied.
Rule 6.32(1)(d)
56 Rule 6.32(1)(d) permits "the substitution of one party for another party or former party "if the Court makes an order under (inter alia) Division 6 (which includes rr 6.24, 6.19 and 6.29). The applicants invoke the substitution power in r 6.32(1)(d). The first and second defendants submit that substitution cannot be ordered under r 6.32(1)(d) because, first, that rule only applies where an order for joinder or removal of parties has been made under Division 6 and no such antecedent order can be made; and secondly, Mr Michell cannot be substituted for Mr Ford given that their claims, while having some common issues, are separate and discrete.
57 As I have decided that a joinder order and a removal order can and should be made under Division 6 the first submission cannot be accepted. The second submission seems to go to discretion rather than power and, in my view, is insufficient reason not to exercise the discretion in favour of substitution in the circumstances of this case.
Section 64(1)
58 The applicants submit that the general power of amendment in s 64(1) of the CPA permits the substitution. Moon supports the submission: see [27]-[30] above.
59 The defendants rely on Fernance v Nominal Defendant (1989) 17 NSWLR 710 and Amaca Pty Ltd v Cremer [2006] NSWCA 164, 66 NSWLR 400 as authority for the principle that s 64 does not permit amendment by way of joinder, removal or substitution of parties other than as provided for within Divisions 5 to 7 of Part 6 UCPR.
60 Fernance concerned the question whether a statement of claim could be amended pursuant to Pt 20 r 1 of the Supreme Court Rules 1970 - the precursor to s 64 of the CPA - to add the name of a person as a defendant in circumstances where proceedings against that person would otherwise be statute barred. SCR Pt 8 r 11(3) -worded similarly to UCPR r 6.28 - provided that where a party was joined under SCR Pt 8 r 8 - the precursor to UCPR r 6.24 - the date of commencement of the proceedings so far as concerns that person "shall be the date of filing of the originating process amended so as to add him as a party or, where an amended originating process is not filed, the date of the amendment adding him as a party". Therefore, an amendment pursuant to SCR Pt 20 r 1 would have the effect of permitting proceedings against the defendant notwithstanding that if the order were made under Pt 8 r 8 it would be statute barred. It was "the inconsistency in the presently relevant respect between the provisions of Pt 8 on the one hand, and those of Pt 20 on the other [that made] it impossible to treat Pt 20, r 1 as an alternative source of the power to make the kind of amendment specifically dealt with by Pt 8": at 721 per Gleeson CJ (with whom Clarke J A agreed).
61 In Fernance it was also significant that the amendment proposed to the statement of claim "was not a simple amendment that could be effected by writing Mrs Vaneck's name on the statement of claim. It required the preparation and filing of a further statement of claim": at 717-718 per Gleeson CJ. Hence, Gleeson CJ was not satisfied that the order that Mrs Vaneck "be joined as a defendant" made by the Master below, even if made under Pt 20 r 1, in fact had the effect that the proceedings were commenced on that date as against her: at 717.
62 Amaca does not relevantly add anything to the reasoning in Fernance.
63 Fernance and Amaca are distinguishable for two reasons relating to representative proceedings.
64 First, there is no inconsistency in the case of representative proceedings between s 64 and the provisions of Divisions 5 to 7 of Part 6 of the UCPR that would result in the conclusion, expressed in Fernance, that s 64 could not permit the amendment sought in this case. That is because r 7.4(4C) provides that a represented person "is taken to have brought proceedings on the day on which the person became a represented person on all of the person's causes of action that may be determined by judgment in the proceedings." Rule 7.4(4C) will apply to representative proceedings such as these to the exclusion of the contrary r 6.28 applicable to other proceedings because r 7.4(4C) is a specific provision dealing with a particular subject matter (representative proceedings) that is repugnant to the operation of r 6.28: Fernance at 720 D.
65 Secondly, this is a case where the amendment could be effected to the present Summons and Amended Commercial List Statement merely by crossing out the name of Mr Ford and writing in the name of Mr Michell.
Rule 7.8
66 Rule 7.8 empowers the court "to give the conduct of the whole or any part of the proceedings to such person as it thinks fit". It appears that that person might be a non-party although it is difficult to imagine that the conduct of proceedings would be given to a non party without also joining the person as a party, as was envisaged on a non-party's r 7.8 application in Lemery Holdings Pty Ltd v Reliance Financial Services Pty Ltd [2008] NSWSC 1344, 74 NSWLR 550 at [7], [57]. Rule 7.8 does not itself appear to be a source of power to join or substitute parties. The parties' submissions analysed cases cited in the commentary to the rule in Ritchie's Uniform Civil Procedure Rules NSW and other cases concerned with the rule r 7.8 or its precursors, but the cases do not go so far as to suggest that the rule itself is a source of power to join or substitute a party. It is unnecessary to consider r 7.8 further.
Rule 2.1
67 The applicants alternatively submit that r 2.1 permits the Court to order the substitution of parties. There is no authority for that proposition and I do not think that r 2.1 goes so far.
A relinquishment condition?
68 There is a residual question whether, as the defendants submit, any order for removal, joinder or substitution should be made subject to a condition that Mr Ford forever relinquish his personal claim against the defendants. Such orders are sometimes made when leave is granted to discontinue proceedings. The defendants argue that the condition is appropriate because they enjoy a forensic advantage in the separate questions as he is a "sophisticated investor". I think this is an insufficient reason. Any such forensic advantage is irrelevant to the definition of the common issues or to his capacity to act as the investors' representative. To allow him to remain as a represented person does not prejudice the defendants. I do not think that the proposed condition is justified in the circumstances of the present case provided that the defendants are adequately protected in costs. Here the claims of a large group of investors are incorporated in the proceedings. One of them had to be the representative plaintiff. Mr Ford agreed to be that person but is now unwilling to continue in that role, primarily because of serious health problems. Consequently, he can no longer adequately represent and protect the interests of the group. Another member of the group, Mr Michell, is willing to take his place. Mr Ford wishes to sink back into the represented group. In the circumstances, in my view, he should be allowed to do so without suffering the loss of his own claim, but on terms as to any wasted costs.
COSTS
69 The applicants accept that Mr Ford should be liable for costs thrown away relating to individual aspects of his claim by reason of the substitution of Mr Michell, and that Mr Michell should be liable for all costs (including past costs) in respect of the common issues affecting the claims of the 2003 Investors.
70 I note that in Tongue v Tamworth City Council [2004] FCA 1702, 141 FCR 233 at [53] Jacobson J, in substituting a representative plaintiff who was in ill health, declined to attach a condition (urged by the incoming representative plaintiff) that the outgoing representative plaintiff be solely liable for past costs.
71 As requested by the defendants, I will give them the opportunity to be heard on costs before making any costs order.
CONCLUSION
72 The applicants have been successful. I direct the parties to bring in agreed or competing short minutes of order to give effect to these reasons and for costs by 8.30am on 8 June 2010. The proceedings will be listed before me at 9:30am on that date to make orders. The exhibits may be returned.