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[2012] VSC 66
Supreme Court of Victoria
2012-03-09
J FORREST J
Original judgment source is linked above.
Matthews v SPI Electricity and SPI Electricity Pty Ltd v Utility Services Corporation Ltd (Ruling No 5)
PRACTICE AND PROCEDURE - Class action - Chapter 4A of the Supreme Court Act 1986 (Vic) - Use of sample group members process at trial - Liability for costs of sample group members - Whether the quantum of sample group members claims should be determined at trial.
1 The trial of this very large class action arising out of the Kilmore East Black Saturday bushfire is now ten months away.
2 Two issues have arisen concerning the role of sample group members (whose function I shall explain in a moment). First, whether the Court should, at trial, assess each of their damages claims and second, whether there should be a declaration at this point in time as to their potential liability for costs in the event that their claims fail.
The use of sample group members in a class action trial
3 One of the purposes of a claim conducted under the group proceeding provisions of Part IVA of the Supreme Court Act 1986 (Vic)[1] is for as many common issues as is practicable to be resolved at the one hearing, thus obviating the necessity for separate trials of the group members' claims. In Johnson Tiles Pty Ltd & Anor v Esso Australia Pty Ltd & Ors,[2] Gillard J said:
The object of a group proceeding procedure is to enable a proceeding to be brought by a substantial number of victims of an alleged wrong committed by the same wrongdoer, thereby pooling resources and ensuring the Court's resources are used efficiently and expeditiously. It has been recognised that an individual may be deterred from taking on a large financially secure party and the group proceeding legislation is aimed at enabling individuals to band together to bring a proceeding. The guiding principle of Part 4A, is justice. See s.33ZF.
In my opinion, it is important that the Court conducts group proceeding litigation in a practical manner and ensures that as many questions of law and fact having a degree of commonality are decided. Once the group proceeding is completed and if an individual claim is to proceed, the individual litigant has the benefit of findings of law or fact to assist him in obtaining relief. It follows that a group proceeding is not concerned with the complete cause of action of a claimant, in the sense that all elements of the cause of action and issues raised are determined in the proceeding. The Court considers and determines the common questions of law and fact.[3] (emphasis added)
4 In practice, notwithstanding that there may be a commonality in the alleged cause of the harm occasioned to the group members, a trial focusing solely on the representative plaintiff's claim may not cover the claims of all group members. To address this problem, a practice has developed to permit other group members to give evidence at trial as to relevant facts concerning his or her claim. This evidence then enables the court to make findings and give judgment in relation to those other claims, which enables binding determinations to be made in respect of most, if not all, group members. It is helpful, I think, to see how this process has been given effect in other cases.
The use of sample group members in other proceedings
5 In McMullin v ICI Australia Operations Pty Ltd,[4] ICI manufactured and distributed an agricultural pesticide, helix, used on cotton crops, that was subsequently fed to cattle. The pesticide contained a chemical, CFZ, which contaminated the body tissue of cattle leading to rejection of the meat harvested from the slaughtered livestock. Representative proceedings were brought on behalf of six categories of claimants:
6 At a hearing shortly prior to the commencement of the trial, Wilcox J permitted a number of sample group members to give evidence at the trial, although his Honour did not use such a phrase. He summarised the purpose of this procedure, as submitted by counsel for the claimants, as follows:
[H]is argument is, and apparently will be at the trial, that if these ingredients are established in connection with some group members, and the factors of general application are also proved, the applicants will be entitled to findings in their favour on liability and it will then be appropriate to move to the next stage of the trial: a one by one examination of the circumstances of each group member, this member being called to prove reliance or causation, as the case may be, and the precise extent of his or her damage.[5]
7 The case then proceeded in that fashion, with evidence given by a number of group members selected on the basis of their representation of the particular categories. After a finding of liability was made against a number of the defendants, individual assessments were carried out of a number of the claims,[6] some of which had been classified into sub-groups.[7]
8 Subsequently, in Johnson Tiles, Gillard J (who had appeared as counsel in McMullin) adopted a similar approach - permitting group members to give evidence in relation to specific categories of claim which would not be dealt with by consideration of the representative plaintiffs' claims alone.
9 His Honour, after considering objections by a number of the defendants to this process concluded in Johnson Tiles (Ruling No 3):[8]
In my opinion, it follows that it is open to a plaintiff to call a witness who may give evidence of factual matters, which do not assist that plaintiff's claim but do raise for consideration and determination, a question of fact or law which is common to some or all members of a group.
In my view, the Court should endeavour to decide as many common questions of fact and law in a group proceeding, to facilitate the outcome of the litigation. If some questions are only relevant to some group members and not all, or to one group and not the other, so be it. As long as it may have some substantial practical effect in the determination of the litigation, one of the objects of group litigation is achieved.
It follows that, in my opinion, the plaintiffs are entitled to call, as witnesses, any member of a group in order to adduce evidence which is relevant to any issue raised ...[9]
10 Accordingly, his Honour permitted the representative plaintiffs to call group members to give evidence relevant to their claims, even though that evidence was not relevant to the claim of these plaintiffs. His Honour described these claimants as "sample group members." At trial, four sample group members, as well as a representative plaintiff, gave evidence concerning the losses of the "business users group". Another representative plaintiff, with two other group members, gave evidence as part of the "domestic users" group. The evidence in relation to the third group, "stood down workers" was given by a representative plaintiff and one other group member.
11 More recently, in Wheelahan v City of Casey & Ors,[10] Osborn J ordered that the personal claims of the representative plaintiffs and sample group members be heard at trial. The group proceeding settled. The compromise was approved by Emerton J.[11] At that hearing, her Honour noted that it was intended, at trial, to call twelve sample group members. [12] The claimants' solicitor informed the Court that:
the sample was intended to represent a fair and broad cross-section of the class of persons on whose behalf the proceeding was brought. Sample group members were selected primarily on the basis of the location of their properties relative to the landfill, because it was thought that their circumstances would represent the sorts of experiences and difficulties that group members have experienced by reason of the escape of landfill gas and the matters for which compensation is sought.[13]
12 The group is defined by [4] of the amended statement of claim[14] and comprises:
(a) claimants who suffered personal injury, be it physical or psychiatric;
(b) claimants with dependency claims or claims under s 29 of the Administration and Probate Act 1958 (Vic);
(d) claimants who suffered economic loss, not being consequent upon injury or loss or damage to property.
13 Determination of the claim of Mrs Matthews, the representative plaintiff, will not cover the field in relation to the potential claims of all members of the class; whilst it involves both personal injury and property damage it does not include a claim for pure economic loss, nor loss of dependency. In addition, Mrs Matthews' property is located near St Andrews and it is possible (and this can only be determined at trial) that there are different considerations in relation to questions of duty, breach, damage and causation which can arise in areas geographically distant from her property.
14 In particular, resolution of Mrs Mathews' case against two of the State parties (CFA and Victoria Police) in relation to the provision of warnings will not resolve the claims of other claimants. Ultimately, as I see that part of the case unfolding, each of those claims will have to be determined individually - by at least a reference to an assessment of what effect, if any, a warning would have had on the particular group member. But before reaching that point, it will be necessary to determine whether there was a duty cast upon CFA or members of Victoria Police to provide such a warning. The nature or scope of that obligation (if established) may vary depending upon the timing and location of the fire and the particular claimants - again, I am unable to say at the present time whether there will be such a variation. If it is so, it may only become apparent at the end of the evidence.
15 It is clearly in the interests of both the claimants and the defendants that sample group members be identified in relation to particular claims and locations, thus maximising the prospects of the judgment covering as many members of the class as possible, as Gillard J considered appropriate in Johnson Tiles.[15]
16 In the course of the case conference on 27 May 2011, I made the following orders in relation to sample group members:
The plaintiff by 12 August 2011 identify sample group members ("the sample group members") for the following categories:
(a) a claimant who has suffered physical, personal injury;
(b) a claimant who has sustained loss of dependency pursuant to Part III of the Wrongs Act;
(c) a claimant who has suffered pure economic loss;
(d) a claimant who alleges that he or she was not the subject of an appropriate warning in relation to the approach of the fire;
(e) a claimant who sustained damage as a result of the fire affecting an outlying area.
17 I was told at the hearing on 10 February 2012 that the solicitors for the claimants have identified sample group members in the first three categories referred to in the orders and that, in relation to the failure to warn case against CFA and Victoria Police, sample group members living at Upper Plenty, Kinglake West and Kinglake have been identified. The solicitors are still endeavouring to identify a claimant living in the Flowerdale area which is said to be a representative outlying area. In addition, SPI has requested that a sample group member being an owner of a timber plantation located within the fire area be added to the list.
18 As both McMullin and Johnson Tiles indicate, there is great utility in employing the sample group member device in this trial. From both the perspective of the claimants and the defendants, the judgment, as far as is practicable, will cover those falling within the various group descriptions. The alternative approach is unpalatable. For instance, it would mean that judgment on Mrs Matthews' claim would not cover claims brought for economic loss, nor claims in relation to the provision of warnings in particular areas - there may well be other examples. That would, in all likelihood, result in orders being made under s 33Q and s 33R of the Act (to which I shall return in a moment) with a further trial or trials of the issues common to those claimants.
19 Consistent with the approach taken in McMullin, Johnson Tiles and Wheelahan, I propose to allow the sample group members identified by Mrs Matthews' solicitors and falling within categories (a) to (d) to give evidence at the trial. In the event that a claimant living in the Flowerdale area can be identified, then that person will also be permitted to give evidence relevant to his or her claim.
Should the sample group members' claims for damages be determined as part of this proceeding?
20 Each of the parties request that the trial judge determine the quantum of the sample group members' claims. This is one of the few issues in the course of this proceeding upon which the parties have been in agreement, indeed, heated agreement.
21 On this issue, unfortunately, I was the sole contradictor, but fortunately it is my decision. Equally as fortunately, there is authority to support the course which I propose to take, namely to assess the damages of Mrs Matthews and to defer the assessment of damages (if that be necessary) of the sample group members.
22 In McMullin, Wilcox J limited the involvement of the sample group members in the trial in the following terms:
Questions arose as to the best method of managing the proceeding. I heard submissions on that subject on 8 November. Ten days later I made detailed directions. I indicated that a hearing (the March hearing), already fixed to commence on 24 March 1997, would be confined to the case made by the applicants against the respondents; but, even then, excluding issues peculiar to the applicants or any particular group member, such as reliance, causation and contributory negligence. I recognised it would be necessary for the applicants to adduce some evidence of damage, because damage was an element of their negligence claims, but I indicated I would not be concerned at the March hearing with quantification of damage. The findings then made would be findings in the action generally, and therefore binding on the cross-respondents, but the Court would not, at the March hearing, consider the merits of the cross-claims.[16]
And that is what happened in practice. Having heard evidence from the representative plaintiff and the sample group members and then determining liability in favour of some of the categories of claimants against the ICI companies, his Honour dealt with the individual claims, giving rulings in cases chosen to "throw up recurring problems or factual situations"[17] and subsequently dividing members of the class into sub-groups and delegating the hearing of those claims to judicial registrars.[18]
23 In Johnson Tiles, Gillard J did not determine the issue of quantum in the liability trial. In that trial, his Honour determined that gas consumers who suffered property damage as a result of the gas stoppage were entitled to claim compensation for property damage and any consequential economic loss. The claims of other group members were denied. His Honour went on to assess the claims of the two successful group members in subsequent proceedings.[19] A settlement agreement approved by his Honour resolved the remaining claims.
24 I should mention that in his orders of 17 December 2010 in Wheelahan, Osborn J ordered that the question of the quantum of the claims of the plaintiffs and sample group members would form part of the main trial. However, his Honour did make the orders - "subject to further order".
25 I accept that the two issues raised by the parties supporting their application have force. Enabling a group member to give his or her evidence on one occasion is clearly preferable to two separate hearings - one concerning the facts relevant to liability and the other as to quantum. I also accept that a ruling on damages, particularly if an aspect of the claim is novel or in hot dispute, may assist the parties in resolving the claims of other group members or narrowing the gap in terms of the disputed issues.
26 However, there are in my view far more persuasive considerations pointing to splitting the trial on liability and quantum, with the exception of the claim of Mrs Matthews.
27 First, the exercise may be fruitless. The claims of some or all of the sample members may fail at the liability stage and the assessment of damages would be rendered unnecessary.
28 Second, permitting five or six sample members to have their damages claims assessed may well lead to an unacceptable lengthening of the trial. Notwithstanding their enthusiasm for the damages assessment to take place in the course of the trial, counsel were unable to provide an estimate as to the additional length of time that may be occupied in determining the quantum of the claims. Indeed, the expression "how long is a piece of rope" may be the answer. It will not be just a question of calling the sample member to establish his or her loss. In the case of a personal injuries claim, supporting evidence will undoubtedly come from a number of medical practitioners. Actuaries and accountants may play a part, as may friends, relatives and employers. In the property damage cases, the same ballooning out is possible. There may be agricultural experts, agronomists and a number of lay witnesses to give evidence as to a particular form of loss. Claims for pure economic loss will involve, one could surmise at least, evidence from a forensic accountant, as well as body of lay evidence. This is to say nothing of the fact that such evidence in any of these cases may be hotly in dispute and contradictory evidence may be called. In my opinion, the length of time that will be occupied by the assessment of damages of sample group members is totally open ended, notwithstanding the reassuring assertions of counsel to present the issues in a succinct fashion.
29 Third, it is not just court time that will be extended by a trial of the quantum of the claims of the sample group members. It is inevitable that there will be a delay of some months between final submissions and the handing down of the judgment on liability. This will be extended by at least weeks, if not months, if the determination extends to the assessment of half a dozen damages claims, particularly if there are significant factual and legal contests. Prolonging the time for handing down the judgment cannot be in anyone's interest.
30 Fourth, in the scheme of this litigation, the inconvenience to the individual group members is not significant. Often in a traditional trial, plaintiffs have their evidence split over days or, on some occasions, months. It is one of the vagaries of our system of justice, notwithstanding that ideally such evidence should be taken on one occasion. In this case, the evidence of each of the sample group members as to liability will, I apprehend, be relatively short, probably no more than one day; if their claims are successful, I do not think requiring these members to return at a later point of time is too much of an imposition.
31 Finally, I think that splitting questions of liability and quantum (with the exception of Mrs Matthews' claim) is consistent with the requirements of s 9(1) of the Civil Procedure Act 2010 (Vic) which require the Court in making an order or giving directions to have regard to the efficient conduct of the business of the Court and the efficient use of judicial and administrative resources, as well as the timely determination of a civil proceeding.
32 In summary, I am of the opinion that, with the exception of the assessment of Mrs Matthews' damages claim, the trial should be confined to the question of the liability of the defendants to Mrs Matthews (with any associated cross-claims) and the sample group members. In the case of sample group members, that may extend to taking a limited portion of their evidence relating to the occurrence of damage, but only to the extent of making out a claim on liability.
Should any order be made concerning the liability for costs of sample group members?
33 Counsel for the claimants sought that I provide a ruling at this point of time as to the potential costs liability, if any, of sample group members in the event that any of their claims fail. Counsel for the defendants opposed this course, with the submissions of SPI being adopted by the other defendants. Its primary point was that it was premature to deal with this issue now, arguing that it was "somewhat puzzling that any question of the sample group members' costs should have generated any significant dispute at this stage of the proceeding".
34 I am not as puzzled by this request on behalf of the sample group members as counsel for SPI. It is a practical and sensible suggestion designed to facilitate a decision by the sample group members as to whether to participate in the trial. It is not theoretical, as will be seen in a moment. Those group members contemplating engaging in the process should know, as Mrs Matthews does,[20] whether they have a potential liability for costs. They should not be left in the dark, as SPI proposes. To put it bluntly, Mrs Matthews knows that if her claim fails then she will be at risk of the application of the general rule that costs follow the event, absent special circumstances. Why, I ask rhetorically, should the group members not know whether they are exposed to similar cost consequences? This is particularly so when absent their participation in the trial the group members are protected by s 33ZD(b).
35 In Johnson Tiles, Gillard J (although in a somewhat different context) ruled on the issue at a preliminary stage. The respondents argued that claimants should not be permitted to give evidence as sample group members unless, either, the claimant was made a party to the proceeding, or the claimant was made the subject of a special order which would expose that person to an order for costs in the event that the claimant failed.[21] It was further contended that "a person should not be able to give evidence on an important and alleged common issue, [and] hide behind being a group member and never be exposed to any order for costs."[22] However, Gillard J found that the legislative provisions prevented a "sample group member" from being liable for costs. The relevant provisions of the Act are s 33ZD, s33Q and s 33R.
(a) may order the plaintiff or the defendant to pay costs;
(b) except as authorised by s33Q or s33R, may not order a group member of a sub-group member to pay costs.
(1) If it appears to the court that determination of the question or questions common to all group members will not finally determine the claims of all group members, the court may give directions in relation to the determination of the remaining questions.
(2) In the case of questions common to the claims of some only of the group members, the directions given by the court may include directions establishing a sub-group consisting of those group members and appointing a person who consents to the appointment to be the sub-group representative party on behalf of the sub-group members.
(3) If the court appoints a person other than the plaintiff to be a sub-group representative party, that person, and not the plaintiff, is liable for costs associated with the determination of the question or questions common to the sub-group members.
(1) In giving directions under s33Q, the court may permit an individual group member to take part in the proceeding for the purpose of determining a question that relates only to the claim of that member.
(2) In such a case, the individual group member, and not the plaintiff_, is liable for costs_ associated with the determination of the question. (emphasis added)
38 Gillard J held that the circumstances in which a group member could be ordered to pay costs were limited to those provided for in ss 33Q and 33R; neither of which applied to sample group members as deployed in that proceeding. His Honour analysed the provisions as follows, commencing with s 33Q:
... that section gives a wide power to the Court to give directions in relation to questions. In my view, the wide power given in sub-s.(1) is not made subject to sub-s.(2). Sub-section (2) merely indicates that the Court may, if it so desires, include directions establishing a sub-group. But that does not seem to me to qualify or read down the wide power given to the Court to decide other questions, which will not finally determine the claims of all group members. The Court, of course, may decide to establish a sub-group and appoint a person to represent that sub-group, and if that be so, then that person may be liable for costs.
In my opinion, s 33R does not apply in the present proceeding, because what the plaintiffs' counsel have in mind is calling a member of a group who will give evidence, which not only relates to that person's claim but relates to the claims of other group members.
The provisions relating to costs do restrict who is liable if a defendant is successful. But that is the effect of the legislation, and can hardly be a basis for not permitting group members to give evidence in respect of a question to be decided affecting that group member, or requiring that group member to become a party to the litigation.
If it is unfair to the defendant, that is a consequence of the legislation. But the fact that the right to recover costs is restricted, is no basis for concluding that it is necessary to add plaintiffs to enable the successful defendant to have somebody to pay the costs.[23] (emphasis added)
39 As the power under s 33Q(1) is engaged without the need to appoint a "sub-group representative" under s33Q(2), there is no liability for costs under s33Q(3) - it is only applicable where a sub-group representative is appointed. The power to order costs under s 33R is engaged only where the group member is taking part in the proceeding for the purpose of determining "a question that relates only to the claim of that member". That is not the case here. As I have tried to explain, the primary purpose of the sample group members' claims being determined at trial is to provide the Court with an appropriate vehicle for ensuring that as many common questions as possible can be resolved in the course of that hearing. This process will not deal with the totality of their individual claims, but rather ensures that there is sufficient breadth in the judgment so as to capture as many of the claims as is practicable - indeed, the benefit of this process seems to be acknowledged by all parties.
40 I have therefore concluded that, there is no basis upon which an order may be made that the sample group members pay costs in the event of a claim failing.
41 I also do not accept that it is inappropriate or beyond the power of the Court to make the declaration sought by the claimants. Section 33ZF permits a court in a Part IVA proceeding to "make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding".
42 In my initial ruling in this proceeding I noted the breadth of the power given to a court under s 33ZF.[24] Rares J in Wotton v State of Queensland[25] said of that power in the cognate provision of the Federal Court of Australia Act 1976 (Cth):
And, the power in s 33ZF(1) enables the court to make any order that it thinks appropriate or necessary to ensure that justice is done in a proceeding under Pt IVA. Wilcox J described the extent of the power in s 33ZF(1) as being "the widest possible" in McMullin. In Courtney, Sackville J examined the scope of the power, and cautioned that s 33ZF(1) should not become a vehicle for rewriting the rest of Pt IVA. This provision, like all provisions conferring jurisdiction or granting powers to a court, should not be construed narrowly by making implications or imposing limitations which are not found in its express words: Owners of the Ship "Shin Kobe Manu" v Empire Shipping Co Inc. (citations omitted)
43 In my opinion it is in the interests of justice, in enabling the Court at trial to deal with as many issues raised in the claim as is practicable , to ensure that the sample group members are aware of the costs consequences of their participation. It is appropriate that a declaration be made as to their potential costs liability.
44 In summary, I am satisfied that I have the power to make the ruling sought and propose to declare that the sample group members have no liability to pay the costs of the defendants in relation to the trial in the event of a claim brought by one or other of them failing. This conclusion does not, however, affect Mrs Matthews' potential liability under s 33ZD(a) to the defendants for costs, which may include those of a failed claim by a sample group member.
45 Counsel for the State parties reminded me of the need for Mrs Matthews and the sample group members to provide particulars of the allegations relating to the failure to warn case against CFA and Victoria Police. There is no issue that such particulars should be provided and, in my view, this should be sooner rather than later. I propose to fix the date for the provision of this material as 27 April 2012, unless the parties agree otherwise.
46 I will also order that Mrs Mathews provide particulars of loss and damage in respect of her claims for personal injury, property damage and any consequential economic loss by 27 April 2012.
47 The issue of the provision of appropriate information to the defendants on these matters raises a global issue: namely, the appropriate level of information which should be provided to the defendants to meet the claimants' case. I remain firmly of the view that in a common law proceeding such as this, the use of witness statements should be avoided. However, and this particularly relates to the case in relation to the provision of warnings, there is little to assist the defendants in meeting the case of Mrs Matthews and sample group members, even allowing for the filing of particulars.
48 There are, I think, two alternatives which the parties may wish to consider. The first is to permit the defendants to administer interrogatories to Mrs Matthews and the sample group members. To some extent, the exchange of interrogatories and answers has the same vice as that associated with witness statements - a paucity of information filtered through a phalanx of lawyers. The second option, which I favour, is to order that Mrs Matthews and the sample group members be deposed before an examiner in accordance with Order 31, dispensing, if necessary, with the question of consent.
49 I will ask the parties to make submissions at the next directions hearing concerning an appropriate procedure to be adopted on this point.
(a) The sample group members identified in paragraphs 4(a) to (e) of my orders of 27 May 2011 be permitted to give evidence as to the question of the liability of the defendants at the trial of the proceeding.
(b) That apart from assessment of the damages of Mrs Matthews, the trial commencing on 29 January 2013 will be confined to the question of the liability of the defendants to the claimants and any cross-claims between the defendants.
(c) A sample group member is not liable to pay the defendants' costs in the event of a claim of that sample group member failing.
(d) Mrs Matthews and the sample group members should provide particulars of their claims by 27 April 2012. The question of the provision of further information beyond that of the filing of the particulars by Mrs Matthews and the sample group members will be the subject of further discussion/argument at the next directions hearing.
[2] [2003] VSC 27 ('Johnson Tiles').
[4] (1997) 72 FCR 1 ('McMullin').
[5] [1996] FCA 991, 10.
[10] [2011] VSC 15 ('Wheelahan').
[16] [1997] 72 FCR 1, 10.
[17] (1997) FCA 1298, 3.
[19] Johnson Tiles (No 3) [2003] VSC 244 at [12]- [13].
[20] Section 33ZD(a) of the Act.
[21] [2001] VSC 372 [21].
[24] Matthews v SPI Electricity (Ruling No 1) [2011] VSC 167, [81] - [82].
(1997) 72 FCR 1