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[2015] VSC 461
Supreme Court of Victoria
2015-09-02
Robson J
Original judgment source is linked above.
PRACTICE AND PROCEDURE - Preliminary question - Whether defendants in debt recovery proceedings are entitled to raise defences that were not raised in earlier group proceedings - Defendants had not opted out of the group proceedings - Consideration of principles espoused in Henderson v Henderson - Consideration of Anshun estoppel - Consideration of principles of abuse of process - Whether defendants could have raised the defences in the group proceedings - Whether not unreasonable for the defendants not to have had the defences raised for directions in the group proceedings - Consideration of Part 4A of the Supreme Court Act 1986 - Consideration of 'preclusionary principles' - Whether 'opt out' provisions in Part 4A made it unreasonable for the defendants to rely on individual defences - Whether 'op out' notices properly informed the defendants of their options in the group proceedings - Held defendants entitled to plead individual defences.
1 The plaintiff, Timbercorp Finance Pty Ltd (in liquidation) ('Timbercorp Finance') was a member of the Timbercorp Group of companies. Timbercorp Limited ('Timbercorp Limited') was the parent company. The other main member of the group was Timbercorp Securities (in liquidation), ('Timbercorp Securities'), the responsible entity for relevant Timbercorp investment schemes. Between 1992 and its collapse in 2009, the Timbercorp Group invested more than $2 billion in agribusiness projects on behalf of some 18,500 investors. Many investors borrowed moneys from Timbercorp Finance to finance their investments in the schemes, including the defendants (Mr & Mrs Collins[1] and Mr Tomes[2] respectively).
2 On 23 April 2009, partners of KordaMentha were appointed administrators of the Timbercorp Group companies. At a meeting on 29 June 2009, the creditors resolved to wind up the companies, and the administrators became liquidators. At the time the Timbercorp Group collapsed, Timbercorp Finance's loan book had over 14,500 outstanding loans to over 7,500 borrowers totalling $477.8 million, including loans to Mr & Mrs Collins and Mr Tomes.
3 On 13 June 2014, Timbercorp Finance commenced proceedings against Mr & Mrs Collins to recover an alleged loan of $90,501.68 plus interest. On 12 September 2014, Timbercorp commenced proceedings against Mr Tomes to recover alleged loans of $1,760,378.34 and $448,260.00 plus interest.
4 In early 2009, the liquidators of Timbercorp Finance commenced proceedings against other borrowers to recover loans. Shortly thereafter, Mr Woodcroft-Brown, on his own behalf and on behalf of other Timbercorp scheme investors brought a group proceeding under Part 4A of the Supreme Court Act 1986 (Vic) ('Supreme Court Act') against Timbercorp Limited, Timbercorp Securities, Timbercorp Finance and three of their directors, inter alia, challenging the validity and enforceability of the Timbercorp loan agreements with investors in proceeding S CI 9807 of 2009 ('the group proceeding'). Mr Woodcroft-Brown and many group members had retained Macpherson + Kelley Lawyers ('M+K').
A further unusual feature of the case was the way in which the plaintiff's case developed. In his attempt to cover every possible combination or permutation of fact and law, attributing principal liability to Timbercorp Securities and accessorial liability to Timbercorp Finance and the directors, the plaintiff constructed an elaborate and sometimes illusive web of allegations. The complexity was compounded by the failure of the statement of claim to record a coherent narrative and the extensive and often confusing use of cross referencing.
By reference to his statement of claim, the plaintiff advanced more than a dozen principal claims, before accessorial liability was brought to account. Having regard to the way in which the plaintiff advanced his case at trial, it had the potential to be made relatively straightforward, although with a material change to which the defendants took exception. Unfortunately, any potential for simplification was not realised, because the plaintiff expressly refused to abandon any element of his pleaded case. The change to his case, explained below, did not result in an application to amend the statement of claim. The plaintiff maintained that his case at trial fell within his existing pleading.
Put simply, the plaintiff's case as pleaded was that the Responsible Entity, Timbercorp Securities, had failed to disclose information about risks it was required to disclose in compliance with its statutory obligations. The plaintiff argued that the Group business model involved risks associated with its financial structure that should have been disclosed to existing and potential scheme investors, because the risks were significant or might have had a material influence on a decision to invest in a scheme. This was described as a structural risk; a risk that the Group might fail because of insufficient cash, with a consequential risk to the viability of the schemes managed by Timbercorp Securities.
The plaintiff argued at trial that on and after 6 February 2007, events occurred that put the business of the Group at further or heightened risk of failure. Those events included an announcement by a Commonwealth government Minister on 6 February 2007, of a proposal by the Australian Taxation Office to change its position on the deductibility of up-front fees paid by investors. This event became known as the tax announcement. It was the first so-called adverse matter. The second such matter was the tightening of global credit markets, which the plaintiff said commenced in the second half of 2007. This was sometimes referred to as the Global Financial Crisis. There were other events, although the two mentioned are by far the most important.
The plaintiff argued that had he been informed of the structural risk or any of the adverse matters he would not have invested in the schemes and would not have borrowed from Timbercorp Finance to do so. The relief claimed by the plaintiff includes an order that he and Group members are not liable for repayment of their loans from Timbercorp Finance.
6 The relief sought included an order that the investor loan agreements with Timbercorp Finance were void and otherwise unenforceable. Importantly, no aspect of the loans themselves were challenged. Rather, the plaintiffs claimed that entering into the loan agreements was merely a consequence of the investors investing in one or other of the schemes. The claims challenged the entry into the schemes. The loan agreements were challenged merely as a consequence of the investor entering into the schemes and, in particular, being induced to do so allegedly as a result of misleading information or of the investors not being properly informed
7 The case was confined to defects in the Product Disclosure Statements and whether they omitted information or contained misleading information.
8 Timbercorp Finance, by its defence and counterclaim, sought to set off and claim moneys owing by Mr Woodcroft-Brown on the loans he obtained in respect of the 'Olive and Timber Loan Agreement'. The loans to group members other than Mr Woodcroft-Brown were not raised in the defence and counterclaim.
9 In summary, the group proceeding did not raise any issues concerning the validity or enforceability of the loans arising out of the lending process or the advancement of moneys under the loans, which are the issues raised by the defendants in this case, as will be explained below.
10 On 27 October 2011, this court dismissed the claim in the group proceeding, in both Mr Woodcroft-Brown's individual and representative capacities. Timbercorp Finance's counterclaim was adjourned sine die with the costs of the counterclaim reserved.
11 After Mr Woodcroft-Brown had exhausted the avenues of appeal in the group proceeding, Timbercorp Finance commenced further recovery proceedings against borrowers, including the defendants in the two proceedings currently before the court, each of whom was a group member in the earlier group proceeding. The two defendants, as well as other borrowers against whom Timbercorp Finance has commenced recovery action, have now, by their pleadings filed in their respective proceedings, sought to raise claims and defences challenging the validity and enforceability of the loan agreements not raised in the group proceeding.
12 In replies filed in each of the two proceedings, Timbercorp Finance has pleaded that each of the defendants is precluded from raising the matters contained in their defences, by reason of their participation as group members in the group proceeding. Each of the defendants has denied that claim by way of rejoinder.
13 On 1 April 2015, Judd J ordered in each of the two proceedings that the following question[5] be determined as a separate question under rule 47.04 of the Supreme Court (General Civil Procedure) Rules 2005:
Are the defendants precluded from raising any and if so what defences pleaded by them in this proceeding by reason of their participation as group members within the meaning of [Part 4A] of the Supreme Court Act 1986 (Vic) in proceeding S CI 9807 of 2009 [the group proceeding]?
14 The defendants referred to in the order were Mr & Mrs Collins, Mr Tomes and Mr Gryuters. Mr Gryuters subsequently withdrew from the proceeding. No submissions were made, and I was not asked to make any finding, as to the impact of this withdrawal.
15 Timbercorp Finance submits that in each of the two proceedings the answer to the question should be that the defendant or defendants is or are precluded from raising all of the defences pleaded by them. In fact, it goes further. It says not only are the defendants precluded from raising those defences, they are precluded from raising any defences.[6]
16 In summary, Timbercorp Finance submits that, in the circumstances established by the evidence and having due regard to the content and purpose of the provisions of Part 4A of the Supreme Court Act, the defendants are precluded as a matter of law from raising their pleaded defences, by Anshun estoppel, and/or because raising the defences constitutes an abuse of process.
17 There is no issue that if Mr & Mrs Collins and Mr Tomes had opted out of the group proceeding, they would not be denied the right to plead the defences they do on any Anshun or abuse of process ground. Where convenient I will refer to Mr & Mrs Collins and Mr Tomes as the defendants.
18 Mr & Mrs Collins submit that Timbercorp Finance has misconceived both Part 4A and the principles of abuse of process in asserting that they have lost their right to defend the claims of indebtedness to Timbercorp Finance as they did not opt out of the group proceeding.
19 Timbercorp Finance contends that the defendants were entitled to have the claims they now make challenging the validity of the loan agreements they have with Timbercorp Finance 'case managed' by the judge hearing the group proceeding. Timbercorp Finance contends that if their claims were 'case managed' the claims of the defendants may have been heard or determined in the group proceeding or in other proceedings as directed by the judge.
20 Timbercorp Finance contends that applying the principles of Anshun and abuse of process, the failure of the defendants to apply to have their 'claims' in relation to the validity and enforceability of the loan agreements with Timbercorp Finance case managed by the judge hearing the group proceeding precludes the defendants from raising those claims in their defence. It is expressly not submitted that they are precluded by res judicata or issue estoppel.
21 Timbercorp Finance further contends that the defendants had a right to opt out of the group proceeding and that by their failure to do so they are estopped by the principles of Anshun or abuse of process from raising any defence to the claim by Timbercorp Finance under the loan agreements with the defendants.
22 The defendants submit that in the circumstances they were not entitled to seek to have their claims case managed by the judge hearing the group proceeding by seeking directions in respect of those claims. They submit that in any event if they were so entitled, their failure to do so does not preclude them from raising those defences in Timbercorp Finance's proceedings against them. The defendants further contend that the failure to opt out does not lead to the consequences alleged by Timbercorp Finance.
23 In the six months following the date on which administrators were appointed to the Timbercorp Group companies:
(a) borrowers under approximately 8,470 Timbercorp loans (totalling approximately $243 million) first failed to meet their loan repayment obligations;
(b) Timbercorp Finance notified the borrowers in each of those loans that they had failed to meet repayment obligations and that they were in default of their loan obligations; and
(c) Timbercorp Finance issued final demand notices to borrowers in respect of approximately 1,480 of those loans.
24 On 13 May 2009, M+K published a circular to investors in Timbercorp management schemes which appears to have been directed to the clients of Garnaut Private Clients Advisers.
McPherson + Kelly has a strategy which will provide welcome relief, especially for growers, who took out loans from Timbercorp Finance Pty Ltd in 2008 (and possibly even 2007). The strategy will allow you to hold on to your cash that you would otherwise be using to meet repayments on those loans.
The strategy is based on the failure of Timbercorp Securities Limited to disclose to growers the extremely poor financial position of the Timbercorp group. By law, the responsible entity should have told growers of the parent companies having been in default under bank covenants at the time that Timbercorp Invoices were sent to growers.
If you want to take advantage of this offer, McPherson + Kelly would write letters on your behalf to the Timbercorp administrators, KordaMentha. The letters would press your claims against Timbercorp Securities Limited and Timbercorp Finance Pty Ltd, relying on specialist areas of law dealing with joint venture agreements, trade practices legislation, the _Corporations Ac_t and the Australian Securities and Investments Commission Act.
Expected benefits of pursuing your legal rights
To take advantage of this offer
...
Your cheque should be made payable to McPherson + Kelly Trust Account in the amount of $275 (including GST).
Your instructions and payment can be submitted either to Ron Willemsen of our office or via Garnaut Private Clients Advisers.
26 In or about June 2009, the liquidators of Timbercorp received correspondence from M+K on behalf of numerous persons and entities who had invested in Timbercorp schemes and who had entered into loans with Timbercorp Finance.
27 On 17 June 2009, M+K wrote to Messrs Korda and Shepard advising them that they acted on behalf of Douglas Collins as trustee for the D & J Consulting Superannuation Fund.
28 The letter asserted that at the very time Timbercorp Securities (the responsible entity) invoiced their client on 1 October 2008 (and possibly from a time even considerably earlier), by reason of the financial strain felt by the company's parent Timbercorp Limited, there were very real risks, including that:
29 In substance, the letter complained of Timbercorp Securities' failure to disclose material financial information and facts to their client, and also breaches of fiduciary duties owed to their client as a participant in the schemes.
30 M+K alleged that had their client known of Timbercorp's true financial position the decision may well have been taken to walk away from the projects so as to cut their client's losses.
31 The letter also alleged misleading and deceptive conduct. This related to representations to all investors that Timbercorp was financially sound. The letter did not allege any specific representations made solely to the defendants individually. The letter also made claims based on s 601FC of the Corporations Act 2001 (Cth) ('Corporations Act'). The letter indicated that a copy was being sent to Timbercorp Finance, with a request that it refrain from taking any steps against their client to recover any money outstanding under the loans made to their client.
32 A further letter of 17 June 2009 was sent to the liquidators on behalf of Mr Collins by M+K which stated, among other things:
By reason of offsetting claims which our client has, as outlined in this letter, he is not required to make any further payments in respect of loans taken out by our client from Timbercorp Finance Pty Ltd to fund the invoices rendered in 2008 (and possibly 2007 as well) in respect of any of the projects in which our client invested. ...
In light of all these matters, our client requests that Timbercorp Finance refrain from taking any steps against our client to recover any money outstanding under loans made to our client in respect of any relevant projects.
Our client's position is that the subject loans ought to be written off as unrecoverable.
...
If Timbercorp Finance seeks to recover arrears and default charges, our client's instructions are to vigorously defend. Further, our client would join Timbercorp Securities as a third party to any court proceeding brought by Timbercorp Finance so that the court could rule that ultimate responsibility for losses occasioned in this situation should fully or partly rest with Timbercorp Securities.
If Timbercorp Finance takes court action to recover arrears and default charges from our client, we expect our client (and all other clients for whom we act) will instruct us to make application to the Federal Court of Australia for an injunction to stop the debt recovery action from proceeding until such time as the Federal Court itself heard and determined our client's claims outlined in this letter.
33 On or about 9 June 2009, M+K issued a circular to managed investment scheme investors. That circular stated, among other things:
(a) not making further loan repayments to Timbercorp Finance ... especially for loans obtained in 2008 (and perhaps earlier).
34 On or about 22 June 2009, M+K issued a circular to investors in Timbercorp schemes and Great Southern Managed Investment Scheme (MIS) projects. Again the circular advised clients to withhold loan payments and informed clients that if the matter goes to court then it would be argued that the subject loans are invalid, the subject loans being those taken out in 2008 and possibly also those in 2007.
35 In early July 2009, Timbercorp Finance commenced proceedings in the Supreme Court against twenty borrowers in default of their loan obligations (the initial proceedings.) Each of the initial proceedings was managed by Judd J. In each of the initial proceedings, Timbercorp Finance alleged, among other things, that there were loan agreements between it and the named defendants, that the defendants had defaulted under their obligations in those loan agreements and that moneys owing under the loan agreements were due and payable. Following service of the initial proceedings, M+K filed appearances in nine of the initial proceedings.
36 On or about 6 July 2009, M+K issued a circular to investors in Timbercorp schemes and Great Southern MIS projects. The circular noted that KordaMentha had elected not to respond to the hundreds of letters M+K wrote on behalf of their clients concerning invalidity of particular loans. The circular reported that instead a handful of clients had been sued in the Supreme Court. M+K said that they would be writing to KordaMentha's lawyers asking that those cases in the Supreme Court be stayed or suspended until a representative proceeding or test case was decided by the Federal Court. The circular stated:
In that way we can have a single court make a definitive ruling applicable to borrowers across the whole country which covers the issue of validity or invalidity of the loans.
37 The circular went on to say that the Federal Court of Australia would be the most appropriate court and then stated:
If KordaMentha does not agree to our suggested course it will be desirable for a representative action to be commenced as soon as possible on behalf of all affected investors being people who borrowed money through Timbercorp Finance (especially since 2007).
38 On or about 20 July 2009, M+K issued a circular to investors in Timbercorp schemes. The circular referred to final demands being issued by Mills Oakley Lawyers on behalf of KordaMentha under the loan agreements. The circular stated that formal steps now needed to be taken on behalf of all M+K clients to stop the liquidators' premature court proceedings and eliminate the threat of further individual court actions against investors/borrowers. The circular stated that the time had come to commence a representative class action in the Federal Court of Australia so that all investors' interests could be protected. The circular stated that such proceedings would encompass claims against the Timbercorp directors as well. The circular stated that the proceedings would deal with loan enforceability issues as well as compensation issues.
39 On or about 21 July 2009, Mills Oakley Lawyers received numerous letters from M+K in relation to final demands issued by Timbercorp Finance to their clients. Those letters were in identical form and asserted that in each case the demand was 'invalid' and 'cannot be of any effect or cannot be enforced if, as our client maintains, the loan agreement on which it is based is itself void or unenforceable.' The letters went on to state:
To avoid the matter proceeding to court we request your client to either immediately withdraw the demand or agree not to take any further steps in reliance on the demand until such time as a definitive court ruling is obtained. Our client's case will be part of a representative proceeding shortly to be commenced in the Federal Court.
40 A directions hearing for the initial proceedings by Timbercorp Finance against twenty borrowers occurred on 24 July 2009 before Judd J. During this directions hearing, counsel for the M+K defendants informed the Court that M+K had some 1,600 clients with respect to the Timbercorp Group, and foreshadowed the commencement by an M+K client of a group proceeding against Timbercorp Securities and Timbercorp Finance. Judd J ordered, among other things, that the defendants to the initial proceedings file and serve defences and any counterclaims. His Honour also ordered that in the initial proceedings commenced against one of M+K's clients, Mr Pham, Mr Pham specify details about the foreshadowed group proceeding.
41 On or about 24 July 2009, M+K issued a circular to investors in Timbercorp schemes and Great Southern MIS projects. Among other things, the circular raised similar points to those made in the 6 July 2009 circular. Information was also provided about the directions hearing that occurred that day in the initial proceedings.
42 On or about 5 August 2009, M+K issued a circular to investors in Timbercorp schemes and the Great Southern MIS projects. The circular provided information about the directions hearing that occurred on 24 July 2009, and stated, among other things:
McPherson + Kelly expects to be able to formally commence a representative court proceeding (or class action) next month.
43 On or about 13 August 2009, M+K issued a circular to investors in Timbercorp schemes and Great Southern MIS projects. The circular outlined various matters being investigated by M+K in relation to various Timbercorp MIS projects and in respect of the foreshadowed group proceeding. The circular stated:
We continue working hard to ensure we can advance our clients' interests efficiently and at fair and reasonable fees. We are preparing material that will aid in the orderly case management of the proposed class action. Common issues across all 1,600 of our clients' cases will be handled through a single case so our clients don't have to suffer individual court cases. Individual aspects of each client's case will then be handled within the framework of that same single class action so that each individual's separate and unique claim is assessed and resolved.
44 On or about 25 August 2009, M+K provided a draft statement of claim in the foreshadowed group proceeding, and the M+K defendants filed and served defences and counterclaims in the initial proceedings. These defences and counterclaims referred to and adopted the allegations to be put in the foreshadowed group proceeding. By way of example only, Mr Pham's defence and counterclaim stated: ...
(a) against any and all sums found to be owing to him pursuant to the counterclaim filed herein; and/or
(b) pursuant to section 553C of the Corporations Act 2001.
45 The draft statement of claim in the group proceeding contained proposed claims against Timbercorp Securities, Timbercorp Finance and Garry William Liddell, Robert James Hance and Saul Charles Rabinowicz (directors). The relief sought against Timbercorp Finance included orders declaring that the plaintiff's and group members' respective loans entered into with Timbercorp Finance be declared void or otherwise unenforceable. As against Timbercorp Securities, the relief sought included orders declaring that the plaintiff and group members were not liable for any fees or costs in connection with any schemes from late 2007. Relief was also sought against the directors.
46 A directions hearing in the initial proceedings occurred on 27 August 2009 before Judd J. During this directions hearing, counsel for the M+K defendants informed the court that the foreshadowed group proceeding had not yet been issued. The transcript of that directions hearing records that senior counsel for the M+K defendants stated:
... we don't have the identity of the lead plaintiff - identified we've got to go through the usual hoops that any class action faces and fine [sic] the appropriate lead plaintiffs, someone who's willing to put their name on the proceeding.
47 Judd J directed in the initial proceeding against Mr Pham that, among other things, the foreshadowed group proceeding and any application pursuant to the Corporations Act, where leave to proceed with that proceeding would be sought, be filed by 25 September 2009 and entered into List B of the Commercial Court.
48 In about September 2009, an article was posted on the Timbercorp Growers' Group Website ('TGG website') titled, 'Class action against Timbercorp by MacPherson and Kelly'. The article stated, amongst other things:
Mark Korda, as Timbercorp's liquidator, recently stated at one of the grower meetings that he would press for recovery of outstanding amounts under loans made to growers. He said 'Timbercorp Finance is advised to collect the money.
...
The most economical way for M+K's clients to advance their own individual claim is within the framework of a class action. Every client's case can ultimately be resolved, and we are confident of a favourable resolution, through a class action. The class action is as much about the group's claim as it is about resolving each individual's own claim within a single case.
It needs to formally commence by 25 September 2009, so as to tiein with a number of cases in the Victorian Supreme Court already under way, where KordaMentha sued 'defaulting borrowers.' We have only 16 days to arrange for the required number of clients to fund their own cases within the framework of a single case - a class action. ... As a matter of urgency you are asked to consider our invitation to choose whether or not you would now like to retain M+K as your lawyers to pursue your individual claims under the banner of the class action.
49 In early October 2009, M+K filed notices of ceasing to act for all bar one of the M+K defendants (Mr Pham). On 2 October 2009, Mr Pham filed and served a defence and counterclaim in the initial proceeding against him which materially adopted the allegations advanced in the draft group proceeding statement of claim circulated by M+K on 25 August 2009. An application for leave to proceed with a counterclaim against Timbercorp Securities and Timbercorp Finance was also filed.
50 At a directions hearing of the initial proceedings on 12 October 2009 before Judd J, the court was informed by counsel for Mr Pham that his instructors were having difficulty in organising the plaintiff for the group proceeding.
51 Justice Judd directed in the proceeding against Mr Pham that, among other things, the foreshadowed group proceeding and any application pursuant to the Corporations Act for leave to proceed with that proceeding be filed by 28 October 2009 and entered into List B of the Commercial Court.
52 An affidavit was sworn by Ms Louise Hardwick, of Mills Oakley Lawyers, in the Collins Proceeding on behalf of Timbercorp Finance. Ms Hardwick gave the following evidence about the group proceeding. The group proceeding was commenced on or about 27 October 2009, by writ and statement of claim. It was commenced under Part 4A of the Supreme Court Act by Alan Rodney WoodcroftBrown on his own behalf and on behalf of all persons who,
(a) at any time during the period between 6 February 2007 and 23 April 2009 (the relevant period) acquired and/or held an interest in a managed investment scheme in which Timbercorp Securities was the responsible entity (scheme member);
(b) incurred a liability for management fees as a scheme member;
(c) suffered loss or damage by the conduct of the defendants (as alleged) therein;
(d) are not:
(i) defendants to the proceeding;
(ii) parents, siblings, spouses or children of the defendants;
(iii) bodies corporate of which a defendant is an officer or a majority shareholder (defendant's company) at any time during the relevant period;
(iv) beneficiaries of any trust, the trustee of which is or at time during the relevant period was a defendant or a defendant company; and
(v) a financial planner and/or accountant who has had or has a client who is a scheme member.
(group members)
53 The defendants to the group proceeding were Timbercorp Limited, Timbercorp Finance, Timbercorp Securities and the directors. The relief sought against Timbercorp Finance included orders declaring that the plaintiff's and group members' respective loans entered into with Timbercorp Finance be declared void or otherwise unenforceable. As against Timbercorp Securities, the relief sought included orders declaring that the plaintiff and group members not be liable for any fees or costs in connection with any schemes from February 2007. Similar relief was also sought against the directors.
54 The solicitors for Mr WoodcroftBrown in the group proceeding at all times were M+K, who continued to act for him, including in the High Court special leave application. M+K remain the solicitors on the record in the group proceeding for Mr WoodcroftBrown. Mr WoodcroftBrown was not a defendant to any of the initial proceedings.
55 On or about 27 October 2009, Mr WoodcroftBrown sought leave by summons to proceed with the group proceedings against Timbercorp Securities and Timbercorp Finance. Leave was granted on condition that any judgment against those parties not be enforced without the leave of the court.
56 On or about 21 December 2009, M+K issued a circular to investors in the Timbercorp schemes and Great Southern MIS projects. The circular referred to a directions hearing before Judd J and said that the court wanted to hear submissions as to whether the existing claim would be expanded to include any new claims based on misleading or deceptive conduct in connection with the promotion and sale of interests in particular projects that were fundamentally flawed from the beginning.
We had already flagged the table grape products of 2004 and 2005 as a distinct possibility in that category. We continue examining other projects and will draw those to the attention of the court on 18 February 2010 in connection with possibly linking new claims in with the existing court proceeding.
58 On or about 3 June 2010, M+K issued a circular to M+K Timbercorp investors. The circular said, amongst other things, that joint submissions were being prepared ahead of the next case management hearing that addressed such things as whether there ought to be any sub-groups formed to tackle specific aspects of the case, and what is to happen with counter-claims made by any of the defendants. The circular also said that consideration would be given to the manner of dealing with any claims the defendants might want to bring against third parties.
59 On or about 18 June 2010, Timbercorp Finance filed and served, among other things:
(a) a defence to the group proceeding and a counterclaim against Mr WoodcroftBrown personally;[7]
(b) a notice of counterclaim against Mrs WoodcroftBrown;
(c) a notice of counterclaim seeking indemnity and/or contribution against Timbercorp Securities and the directors; and
(d) a third party notice and statement of claim against Timbercorp Limited and entities involved in the provision of financial advice to Mr & Mrs WoodcroftBrown.
60 In the counterclaim against Mr & Mrs WoodcroftBrown, Timbercorp Finance claimed alleged breaches under their loan agreements and sought payment for the outstanding loans plus interest and costs.
61 On about 9 July 2010, Mr & Mrs WoodcroftBrown filed a reply in defence to Timbercorp Finance's defence and counterclaim.
62 On or about 3 August 2010, M+K issued a circular to investors in Timbercorp's schemes and Great Southern MIS projects which, among other things, referred to thought being given to the need for an early subgroup investor representative party.
63 On 11 October 2010, a directions hearing was held in the group proceedings. At the directions hearing, Judd J fixed a date by which a group member could opt out of the proceeding and approved the content of the optout notice. A draft order had been circulated which stated 'you will not be able to sue on the same claim in any other proceeding.' Judd J was informed that the parties had had discussions and the transcript records:
Mr O'Bryan: It will be bound by the outcome of the class action. Then in the last line, your Honour, where it says you will not be able to sue on, that will become make, to deal with cross claims or defences or -
His Honour: To make the same claim?
Mr O'Bryan: To make the same claim, yes. So it's not only where you are a plaintiff of course, you're bound in any capacity in any subsequent pleading.
64 The opt-out notice contained in the order provided:
If you are a group member and you do not give notice to opt out by 4.00pm on 10 December 2010, you will be taken to have not opted out and will, under Australian law, be bound by the outcome of the class action and any judgment or determination made in it. If the class action is unsuccessful or is not as successful as you might have wished, you will not be able to make the same claim in any other proceeding.[8]
65 There was no discussion when the order was being considered by the court and the parties about what would happen if the group proceeding was unsuccessful and Timbercorp Finance sued group members on their loan agreements and in particular whether or not a group member would be able to raise a defence to such a claim by Timbercorp Finance that was not the subject of the group proceeding. Timbercorp Finance was separately represented by senior counsel at the hearing when the opt-out notice was settled, and it supplied the draft order that was subsequently adopted save for the amendment referred to above.
66 On 29 October 2010, M+K issued a circular to investors in Timbercorp's schemes and Great Southern MIS projects. The circular dealt with the optout notice, and said, in part, as follows:
67 On 5 November 2010, the group proceeding was fixed for trial on 3 May 2011, on an estimate of eight to ten weeks. The optout notice was published in the 13-14 November 2010 edition of the Weekend Australian.
68 In or about December 2010, the Supreme Court registry prepared a list of those who had opted out. It recorded that over 850 persons or entities had filed optout notices with the court.
69 In January 2011, the plaintiff in the group proceeding filed an application for leave to file and serve a fifth further amended statement of claim. The application sought, among other things, to add new causes of action concerning material nondisclosure across a nineyear period in relation to the financial structures of the Timbercorp Group of companies.
70 On 9 February 2011, at a directions hearing, Judd J ordered, among other matters, that the crossclaims in the third party proceedings be tried separately from the main proceeding after determination of the common questions to be determined in the group proceeding set out in Annexure A to those orders.
71 On 11 March 2011, Judd J approved the publication of a revised optout notice. The revised optout notice was occasioned by amendments made to the statement of claim. The relevant warning about the consequences of not opting out was as follows:
If you are a group member then the class action will determine your rights, if any, to compensation or other relief unless you choose to opt out of the class action.
72 As with the first opt-out notice, the revised notice did not directly address the position of the group members in any subsequent litigation brought by Timbercorp Finance under the loan agreements against group members. This is significant as Timbercorp Finance was the author of the document in its original form.
73 The revised optout notice was published in the 26th to 27th edition of the West Australian. As a result of the revised optout notice, a further 250 persons or entities filed optout notices, and 200 persons filed withdrawal of optout notices.
74 On or about 21 April 2011, Mr WoodcroftBrown filed the sixth further amended statement of claim.
75 The hearing of the group proceeding commenced on 23 May 2011 and concluded in early July 2011, having approximately 23 sitting days. On 1 September 2011, Judd J delivered his reasons for judgment.
76 On 6 October 2011, Judd J heard submissions from the parties as to, among other things, the declarations and orders to be made by the court, including as to the common questions and the provision of notice of his Honour's decision to group members pursuant to s 33ZH(1) of the Supreme Court Act.
77 According to the transcript of this hearing, no person or entity other than the plaintiff and the defendants came forward at the hearing on 6 October 2011 to be heard on the matters referred to. No group member appeared to seek directions under ss 33Q(1), 33R or 33S of the Supreme Court Act.
78 On 27 October 2011, Judd J delivered reasons for his decision in relation to the common questions, costs and the orders to be made in light of the decision (final decision). His Honour:
(a) made a declaration pursuant to s 33ZB(a) of the Supreme Court Act as to the persons affected and bound by the orders;
(b) approved the form and content of a notice to be given to group members of the final decision and of the orders made (judgment notice);
(i) Mr WoodcroftBrown's claim, in both his individual and representative capacity, against the defendants be dismissed;
(ii) the claim of Francis Jeremy van Hough against the defendants be dismissed;
(iii) the common questions be answered in the form attached to his order (common questions and answers);
(iv) the making of consequential orders in respect of the defendant's third party proceedings and proceedings seeking contribution stand reserved;
(v) the making of directions with respect to the further conduct of Timbercorp Finance's counterclaim against Mr & Mrs Woodcroft-Brown stand reserved and be adjourned sine die;
(vi) Mr WoodcroftBrown pay the defendants' costs of and incidental to the claim against the defendants, including reserved costs on a party party basis
(vii) the judgment notice in the form annexed to the order was approved for the purpose of giving notice to group members of the court's decision.
79 The plaintiff and Timbercorp Finance (who had filed a counterclaim against the plaintiff), agreed to stay the further hearing of the counterclaim.
82 Since the disposition of the High Court application, Timbercorp Finance has commenced 1,288 proceedings for the recovery of moneys owing under loans consisting of:
(a) 1109 remain extant as at the date of Ms Hardwick's affidavit of 24 April 2015;
(b) M+K are the solicitors on the record in 296 proceedings, 195 of which raised defences, setoffs and other allegations equivalent to those raised by Mr & Mrs Collins in their defence;
(c) Slater + Gordon are solicitors on the record in 16 proceedings; some of those parties raise defences, setoffs and other allegations.
84 The liquidators of Timbercorp have advised that there are approximately 360 additional borrowers whose loans are in default in respect of whom proceedings are yet to be issued.
85 In the group proceeding, Timbercorp Finance was the fifth defendant. As against it, the plaintiff and group members sought, inter alia, damages and an order declaring that the plaintiff and group members not be liable for any loans, fees or costs in connection with any of the schemes from February 2007 and that any loans entered into with Timbercorp Finance in this period as a result of the breach of statutory duty be declared void or otherwise unenforceable.
86 Mr Collins swore two affidavits on his own and his wife Janet's behalf.
87 The following is the substance of Mr Collins' evidence on which he was not challenged.
88 Through a completed and signed loan application form dated 12 June 2008, Mr & Mrs Collins applied to Timbercorp Finance for a loan of $51,300 for the acquisition of 10 grove lots in the 2008 early Timbercorp olive project ('2008 Timbercorp olive project'). That amount was 90 per cent of the total cost of the lots, with Mr & Mrs Collins having themselves paid a 10 per cent deposit of $5,700 to Timbercorp Securities.
89 By letter dated 15 June 2008, Mr & Mrs Collins were notified that their application for finance had been accepted. Basic details of the finance were provided in a onepage attachment to that acceptance letter.
90 By Confirmation Notice/Tax Invoice dated 15 June 2008, Mr Collins was advised by Timbercorp Securities that the application by him and his wife for 10 grove lots in the 2008 early Timbercorp olive project was accepted. The document confirmed the date of acquisition as 15 June 2008.
91 Also dated 15 June 2008, was a Timbercorp grove lot statement issued by Timbercorp Securities, which named Mr & Mrs Collins as growers in the project as to 10 grove lots. The Timbercorp grove lot statement identified the subscription amount of $57,000 as having been paid on 15 June 2008.
92 It also states in respect of the 10 grove lots bearing numerical suffixes 5317 through to 5326 that:
Each homogenous lot comprises part of the groves known as Boundary Bend Grove, Andersons (planted September 2006) and any one or more of the 2007 plantings situated on Ryan, Westmore and Sutton (planted September 2007). Your lots on each grove had the same suffix.
93 Monthly repayments of $690.22 were made to Timbercorp Finance from July 2008 to May 2009.
94 In respect of the financial year 2007-2008, Mr Collins received a Tax Summary Information document, dated 22 July 2008, issued by Timbercorp Securities, Timbercorp Finance and Timbercorp Limited. The document outlined that income earned by Mr & Mrs Collins in relation to the project was nil, and deductible expenditure incurred by them was $57,000 (including GST of $5,181.80).
95 Among the notes to that document was note 2, which stated:
In preparing this summary, Timbercorp Finance has assumed that the expenses shown above (other than depreciation on trees which are noncash items) have been paid in full by 30 June 2008. We recommend that you do not claim a deduction for any unpaid expenses.
96 Mr & Mrs Collins duly claimed a tax deduction for the amount that they believed they were entitled to claim in respect of the costs of acquiring the 10 olive grove lots.
97 Mr Collins accepted the documents he had received to be accurate.
98 Between the time that Mr Collins received the first of those documents and July 2014, Mr Collins had no reason to doubt that:
(a) he and Mrs Collins had acquired 10 grove lots as described in the Timbercorp grove lot statement as at 15 June 2008;
(b) the necessary documentation had been prepared correctly by Timbercorp Securities;
(c) he and Mrs Collins had received a loan from Timbercorp Finance in the amount of $51,300; and
(d) any money loaned to them by the plaintiff had been paid where it should have been paid in accordance with the constitution of the 2008 Timbercorp olive project.
99 Mr Collins did not have any knowledge of whether and if so what parcels of land were the subject of a licence agreement to which he and his wife were named parties. No licence agreement was ever provided to him or his wife for signature.
100 On 12 June 2009, Mr & Mrs Collins gave an authority to M+K to act on their behalf to pursue rights and remedies against the Timbercorp Group. M+K provided a retainer letter to Mr & Mrs Collins on 9 September 2009, signed by Mr Collins on 18 September 2009. Relevantly the letter provided:
(a) M+K would 'represent [Mr & Mrs Collins's] interests when dealing in first instance with the issues common to all participants in the class action and then with [their] unique issues within the framework of the class action' [1(b)];
(b) 'the instructions given to Macpherson + Kelley in respect of common issues affecting all represented claimants will primarily be given by the Plaintiff named in the proceeding who instructs M+K on behalf of himself/herself and on behalf of all represented claimants.' [2]
(c) '[Mr & Mrs Collins] specifically instruct and retain M+K to make necessary decisions as to the procedural, investigative, preparatory, tactical and strategic decisions in relation to the conduct of the proceeding and, if specific instructions are required from anyone, then to seek those specific instructions as appropriate.' [2]
(d) in addition to the 'class action file' that would be used 'for the handling of issues common to all represented claimants in the class action' an 'individual file' that would be conducted for Mr & Mrs Collins 'in relation to issues, evidence and negotiations that are unique to [Mr & Mrs Collins]'. [6]
101 M+K sent a letter to KordaMentha (then the administrators of Timbercorp Finance) dated 17 June 2009 on behalf of Mr Collins as trustee for D & J Consulting Superannuation Fund asserting that Timbercorp Securities had engaged in misleading or deceptive conduct and that Timbercorp Finance was involved in that misleading or deceptive conduct under s 79 of the Trace Practices Act 1974 (Cth). M+K alleged that their client suffered or was likely to suffer loss and damage by reason of having entered into loan contracts with Timbercorp Finance in reliance on the representations made by Timbercorp Securities to investors.
102 In that letter M&K informed KordaMentha that 'other orders under section 87 of the Trade Practices Act' may be sought against Timbercorp Finance including orders that 'the loan contract between our client and Timbercorp Finance ... be declared void, alternatively an order which would preclude Timbercorp from enforcing provisions of the loan contract'.
If Timbercorp Finance takes Court action to recover arrears and default charges from our client we expect our client (and all other clients for whom we act) will instruct us to make application to the Federal Court of Australia for an injunction to stop the debt recovery actions from proceeding until such time as the Federal Court itself heard and determined our client's claims outlined in this letter. This will allow for a single, definitive ruling to be made about the situation affecting thousands of investors who took out borrowing from Timbercorp Finance. It avoids multiplicity of investors proceedings throughout Australia and eliminates the risk of having inconsistent rulings made by different Courts in different jurisdictions about essentially the same factual circumstances.
104 A copy of the 17 June 2009 letter was provided to Mr Collins.
105 On 27 October 2009, Mr Woodcroft-Brown commenced the group proceeding. Throughout the duration of the group proceeding, M+K provided a series of reports to all possible class members, including Mr & Mrs Collins, which reports were addressed to 'all MIS investors represented by Macpherson + Kelley' or 'Investors in Timbercorp and Great Southern MIS Projects'.
106 In some of the reports observations were made that the Timbercorp loans were invalid because Timbercorp Finance had been involved in Timbercorp Securities' misleading and deceptive conduct. For example:
We would seek orders from the Court declaring project loans unenforceable if they were loans freshly made in 2007 or 2008. The case is that investors would not have entered into those fresh financial commitments if they had been informed by Timbercorp that it was on the verge of collapse. Our case is that Timbercorp was legally obliged to provide such critical financial information to investors. Timbercorp failed to discharge its duties in that regard.
107 Mr & Mrs Collins did not receive copies of the pleadings in the group proceeding nor any separate advices, and were denied any reports of or updates about the mediation discussions: 'Confidentiality obligations imposed on all parties who attended the mediation preclude us from being able to report on the discussions held'.[11]
108 Mr & Mrs Collins did not assume any liability for the legal costs of the defendants to the group proceeding. As class members, Mr & Mrs Collins' contribution to the legal costs of the group proceeding was $3,170.[12]
109 Mr Collins did not provide instructions to M+K, nor did M+K seek instructions from him.
110 Among the reports Mr Collins received from M+K was a report dated 29 October 2010, which informed group members of the 'opt-out' procedure and further that the 'group will be bound by whatever decisions are made about 'common issues' in any trial in a class action' and that 'the common issues will affect everyone participating in the case'. Mr Collins was content for M+K to continue representing him in the group proceeding and in respect of individual investor issues that were to be resolved under the claim. At the time, Mr Collins was not aware of any individual investor issues concerning Mr & Mrs Collins that were not covered by the common questions. Mr Collins therefore did not take any steps to opt out.
111 Mr & Mrs Collins' loan agreement with Timbercorp Finance was entered into after February 2007 and was a subject of the group proceeding and included in the claim by the plaintiff on behalf of the group members (including Mr & Mrs Collins) that the loan agreement was 'void or otherwise unenforceable'.
112 In November 2010, Mr Collins received a copy of the optout notice, issued pursuant to the court's order made on 11 October 2010. Nothing in that notice caused him to reconsider his decision to remain a client of M+K for the purposes of the group proceeding and individual investor issues that were to be resolved under the claim. Mr Collins remained of the belief that there were no individual investor issues concerning Mr & Mrs Collins that were not covered by the common questions.
113 The first opt-out notice described the claims in the group proceeding as a nondisclosure case in the following terms:
The Plaintiff alleges that he and group members suffered financial loss because, during the period commencing 6 February 2007 and ending 23 April 2009 ("the Relevant Period"), the Defendants failed to disclose various matters that affected, or were likely to materially affect, investments made in the following Timbercorp managed investments schemes...
...
The Plaintiff also alleges that during the Relevant Period, he and group members suffered financial loss because the Defendants made false, misleading, or deceptive representations to him and to group members, in relation to the Schemes.
114 Following amendment to the pleading, the second opt-out notice altered the last paragraph quoted above to read as follows:
The Plaintiff also alleges that he and group members suffered financial loss because, between 4 April 2000 and 23 April 2009, the Defendants made false, misleading, or deceptive representations to him and to group members, in relation to the Schemes."
115 In July 2014, M+K received from Timbercorp Securities a set of executed licence agreements in respect of the 2008 Timbercorp olive project. This was the project invested in by Mr & Mrs Collins. None of those licence agreements named Mr or Mrs Collins in the schedule.
116 In July 2014, M+K also received from Timbercorp Securities a series of letters variously dated May and June 2008 concerning instructions given to Trust Company of Australia Ltd ('Trust Company') in respect of the flow of application moneys relating to olive grove lots that had been allocated in the 2008 Timbercorp olive project. The schedules for that series of letters were redacted documents with neither Mr nor Mrs Collins' name appearing on any of them. Mr Collins was unable to say whether his wife or he, but for the redactions, were among the identified growers in any of the schedules (to the letters) which listed persons said to have been allocated lots in the project.
117 On 6 March 2015, M+K received from Timbercorp Securities an executed copy of the grove lot management agreement for the 2008 Timbercorp olive project.
118 Throughout the conduct of the group proceeding, neither Mr nor Mrs Collins had any meetings with anyone from M+K, nor did they receive any advice from them regarding their specific circumstances. Mr & Mrs Collins had no control of the issues raised in the group proceeding. Mr & Mrs Collins had no involvement in the formulation of any of the common issues of fact or law that were determined in that proceeding. Mr & Mrs Collins had no say in how or when the counterclaim filed in that proceeding by Timbercorp would be heard or determined, or in whether and how the determination of that counterclaim would affect Mr & Mrs Collins so far as concerned the loan they had sought from Timbercorp Finance.
119 Mr Collins has made a search of his records for a copy of a signing page of the loan agreement with Timbercorp Finance and a standard form set of provisions described in the footer of each page as 'Loan Explanation and Loan Terms' issued by Timbercorp Finance. Mr Collins has been unable to find such a document and cannot recall ever seeing such a document. On 1 October 2014, M+K received from another of their clients such a document pertaining to that other client's application for finance for acquisition of grove lots in the 2008 Timbercorp olive project.
120 On 15 April 2015, M+K received from Timbercorp a copy of a signing page to a loan agreement naming Mr & Mrs Collins as 'Borrower' and a standard form set of provisions described in the footer of each page as 'Loan Explanation and Loan Terms' issued by Timbercorp Finance. Mr Collins cannot recall every seeing such a signing page for he and his wife, or such a provisions document.
121 In the light of information provided to Mr Collins during the current financial year by M+K, as he has referred to, and in light of the amended defence his wife and he filed in the Collins Proceeding on 12 February 2015, Mr Collins anticipates it is likely the Deputy Commissioner for Taxation would reassess them for tax, without the benefit of their previously claimed deduction that was based on the Timbercorp Securities Confirmation Notice/Tax Invoice of 15 June 2008.
122 Mr Collins' inclination is to write to the Australian Tax Office to disclose the things he now knows about the grove lots allocated to them and about the flow of project subscription funds (as explained further below), which he did not and could not have known at the time he lodged his tax return for the 2008 tax year. The timing for Mr Collins sending such a letter is problematic, because Timbercorp Finance's position as he understands it is that his wife and he are not entitled to defend this proceeding at all, and in any event, their amended defence has been strongly challenged by Timbercorp Finance.
123 Evidence was given by Ron Willemsen, by affidavit sworn 27 April 2015, on behalf of Mr & Mrs Collins. Mr Willemsen is a principal at M+K. He has the care and conduct of this proceeding. Mr Willemsen had and continues to have the care and conduct of the group proceeding. Mr Willemsen deposed as follows.
124 During the conduct of the group proceeding, a directions hearing was held before Judd J on 11 October 2010. During this hearing, Judd J approved and ordered, among other things, that an optout notice (as contained within annexure A to his Honour's orders of that day) be published and sent to specified investors.
125 Later on 11 October 2010, Robert Downey, a principal at M+K, received from Mr Darren James of Freehills (as it was then known) an email enclosing a copy of the proposed amended opt-out notice and asking if M+K had any concerns about the proposed opt-out notice. Freehills were the solicitors for Timbercorp Finance during the WoodcroftBrown proceeding.
126 On 11 March 2011, a directions hearing was held before Judd J. During this directions hearing, Judd J approved, among other things, that a revised optout notice (as contained within annexure A to his Honour's order of that date) be published and sent to specified investors.
127 Mr Willemsen, by further affidavit of 29 April 2015, gave further evidence on behalf of Mr & Mrs Collins. He deposed as follows.
128 On 16 May 2014, Mr Willemsen wrote a letter to Arnold Bloch Leibler, as lawyers for Timbercorp Securities in respect of the 2008 Timbercorp olive project. He tendered the letter of 16 May 2014.
129 On 15 July 2014, Mr Willemsen received emails from Arnold Bloch Leibler in response to his letter that included certain documents. Mr Willemsen refers to the affidavit of Maureen Adele Duffy, sworn 24 April 2014. The copy of Timbercorp Securities' clearing accounts issued by the ANZ Bank were provided to M+K on 15 July 2014 by Arnold Bloch Leibler. As for the question whether they were or were not made available for use by Mr WoodcroftBrown during the running of the WoodcroftBrown proceeding, Mr Willemsen said he could say nothing more than objection was taken by Timbercorp Finance on the ground of nonrelevance to a matter in issue in the WoodcroftBrown proceeding.
130 Mr Willemsen says that the corporate cash flow difficulties highlighted in note 1 to the Group's financial statements for the financial year ended 30 September 2008 and at page 51 of the 2008 annual report of Timbercorp Limited, and the timing of them leading up to the collapse of the Group on 23 April 2009, occupied a large portion of the trial of the WoodcroftBrown proceeding. The evidence in that proceeding was focused on the ability of the corporate group to meet its cash flow needs from such sources as bank borrowings, equity fundraising and proceeds from the sale of assets. The evidence did not focus on the flow of money arising in the relationship between, on the one hand, a person who sought an investment in a Timbercorp project and Timbercorp Finance and Timbercorp Limited, on the other hand.
131 Under a writ dated 13 June 2014, Timbercorp Finance claims against Mr & Mrs Collins moneys outstanding under loan agreement L0026087 in respect of the 2008 Timbercorp olive project for the sum of $51,300. In the 'Loan Explanation and Loan Terms' which Mr Collins cannot recall seeing, clause 1 provided, inter alia, that [w]e agree to lend you the loan amount by paying it to [Timbercorp Securities] (or as it directs) as payment of the balance of your application money ...'. Timbercorp Finance alleges, inter alia, that on or about 30 June 2008, the loan amount was paid to Trust Company as custodian and agent for Timbercorp Securities and thereby loaned to Mr & Mrs Collins in accordance with the terms of the loan agreement.
132 Timbercorp Finance alleges that between 31 July 2008 and 28 May 2009, Mr & Mrs Collins paid the first loan instalments under the loan agreement.
133 Timbercorp Finance alleges that on or about 1 July 2009 Mr & Mrs Collins defaulted under the loan agreement by failing to pay the instalment when due and payable.
134 Timbercorp Finance alleges that on 19 March 2010 it made a demand for the total amount owing under the loan agreement and that Mr & Mrs Collins have failed to meet the demand.
135 Timbercorp Finance says that by letter dated 2 May 2014, Timbercorp Finance wrote to Mr & Mrs Collins confirming that they remained in default of their payment obligations under the loan agreement and advising that Timbercorp intended to issue proceedings.
136 The plaintiff claims $90,501.68 plus costs and interest.
137 By a defence and counterclaim of 12 August 2014, Mr & Mrs Collins delivered a defence limited to admissions and denials. Under the counterclaim, Mr & Mrs Collins made a long and detailed claim alleging duties and breaches by Timbercorp Securities; Timbercorp Finance's involvement in Timbercorp Securities' alleged breaches under the Corporations Act; Timbercorp Finance's knowing involvement in the alleged breaches by Timbercorp Securities of fiduciary duties, illegality, restitution; and unjust enrichment by Timbercorp Finance and unconscionable conduct by Timbercorp Finance. Mr & Mrs Collins claimed, inter alia, an order declaring that Mr & Mrs Collins' loan agreement is unenforceable and void.
138 On 4 March 2015, Mr & Mrs Collins gave notice of their intention to discontinue the counterclaim.
139 By their amended defence dated 12 February 2015, Mr & Mrs Collins admit applying for the loan, but allege that, inter alia, due to the flow of the application moneys between Timbercorp entities and the lack of a valid licence agreement (as explained further below), there was no loan advanced to Mr & Mrs Collins and they did not acquire an interest in the 2008 Timbercorp olive project. It was alleged in the amended defence that, upon receiving Mr & Mrs Collins' loan application form, Timbercorp Finance drew down upon a facility it had with the ANZ Bank in an amount equal to the alleged loan to Mr & Mrs Collins ('Timbercorp Finance drawdown'). Timbercorp Finance then directed the ANZ Bank to pay the sum to the Trust Company, which under the direction of officers of Timbercorp Limited, instructed the moneys to be paid to Timbercorp Limited. Mr & Mrs Collins allege that upon receipt of the money, Timbercorp Limited used the moneys in the course of the conduct of its business. Mr & Mrs Collins therefore allege that the loan was not advanced by way of a payment of the Timbercorp Finance drawdown to Timbercorp Securities ('no loan defence').
140 Under the heading of 'Mr & Mrs Collins's defence - the project's constitution', Mr & Mrs Collins allege that upon accepting Mr & Mrs Collins's application for grove lots, Timbercorp Securities was required under the 2008 olive project constitution to prepare licence agreements and a grower management agreement in accordance with the details specified in the application (under clauses 1.1 and 9.1 of the 2008 olive project constitution).
141 Mr & Mrs Collins allege that pursuant to clause 9.2(a) of the 2008 olive project constitution, before Timbercorp Securities could release the application moneys, Timbercorp Securities was required to reasonably satisfy itself that there were in place for Mr & Mrs Collins licence agreements and a grove lot management agreement in the form required by the 2008 olive project constitution duly entered into by all the parties ('the clause 9.2(a) requirement').
142 Under the heading 'Mr & Mrs Collins defence - No olive grovelot licence agreements', Mr and Collins allege that on 15 July 2014, Timbercorp Securities provided to them documents including those titled: (a) "executed Custody Agreement in respect of the Project", (b) "executed Licence Agreement in respect of the Project", and (c) "Grower Schedule".
143 Mr & Mrs Collins allege that they could only be a party to a licence agreement in respect of the 2008 olive project if named or otherwise described in the schedule at the time the licence was executed by Timbercorp Securities as agent and attorney for and on behalf of the parties named in the schedule.
144 Mr & Mrs Collins allege that the schedule of the alleged licence agreement provided to Mr & Mrs Collins on 15 July 2014 does not name Mr & Mrs Collins.
145 Mr & Mrs Collins allege that by reason of that matter, the alleged licence failed to comply with cl 9.1(a) the 2008 olive project constitution.
146 Mr & Mrs Collins allege that in the circumstances, Timbercorp Securities could not at any time prior to 30 July 2008, reasonably satisfy itself of the clause 9.2(a) requirement.
147 Mr & Mrs Collins allege that accordingly at no time prior to 30 July 2008 were there fees payable under management or licence agreements.
148 Mr & Mrs Collins allege that as a result, Timbercorp Securities was at all material times required by the 2008 olive project constitution to hold and retain as trustee for Mr & Mrs Collins the alleged loan amount.
149 Under the heading 'Mr & Mrs Collin's defence - relevant events', Mr & Mrs Collins also allege in their defence certain financial difficulties they allege that Timbercorp was experiencing in May/June 2008.
150 Mr & Mrs Collins allege that at all material times Timbercorp Finance required Mr & Mrs Collins to assign to Timbercorp Finance by way of security Mr & Mrs Collins' interest in each grove lot applied for.
151 Under the heading 'Mr & Mrs Collins defence - no loan made to Mr & Mrs Collins', Mr & Mrs Collins allege that Timbercorp Finance at no time paid to Timbercorp Securities the Timbercorp Finance drawdown as payment of the balance of Mr & Mrs Collins' application moneys for lots or otherwise. Further or alternatively, Timbercorp Finance has not at any time made an advance or loan to Mr & Mrs Collins within the loan terms (as set out in the 'Loan Explanation and Loan Terms').
152 Under the heading of 'Mr & Mrs Collins defence - [Timbercorp Finance's] breach of duty of care', Mr & Mrs Collins also allege that by reason of financial difficulties being experienced by Timbercorp Limited, as and from the time that Timbercorp Finance received Mr & Mrs Collins' loan application, it was reasonably foreseeable that if Timbercorp Finance made the Timbercorp Finance drawdown available to Timbercorp Limited Mr & Mrs Collins were at risk of suffering economic loss.
153 Mr & Mrs Collins allege that Timbercorp Finance at all material times had a duty of care to Mr & Mrs Collins not to make the Timbercorp Finance drawdowns and not to direct the ANZ Bank to pay the Timbercorp Finance drawdowns into and out from the Trust Company application account unless Timbercorp Finance was first satisfied that Timbercorp Securities had granted a valid licence for grove lots in the 2008 olive project to Mr & Mrs Collins.
154 Mr & Mrs Collins allege that Timbercorp Finance could not be satisfied that Timbercorp Securities had granted to Mr & Mrs Collins a valid licence for the grove lots in the 2008 olive project which Mr & Mrs Collins had applied for.
155 Mr & Mrs Collins allege that Timbercorp Finance had breached its duty of care to Mr & Mrs Collins.
156 Mr & Mrs Collins allege that they have suffered loss and damage.
157 Mr & Mrs Collins also allege that due to their weak bargaining position in other matters, Timbercorp Finance has engaged in and is engaged in unconscionable conduct in contravention of s 12CB of the ASIC Act 2001 (Cth) ('ASIC Act') and accordingly Mr & Mrs Collins have suffered loss and damage.
158 Mr & Mrs Collins do not allege that the loan agreement was void and unenforceable as claimed in the group proceeding.
159 Mr Tomes gave evidence by way of an affidavit sworn 8 April 2015. His evidence was not challenged. He said as follows.
160 In or about May 2008, Mr Tomes subscribed to 74 almond lots in the 2007 Timbercorp almond lot project and 77 grove lots in the 2008 Timbercorp olive project (his investments).
161 The total cost of his subscription was $1,104,900. At around the same time, Mr Tomes made application to Timbercorp Finance for a loan of $994,410 to finance his subscription. He refers to the affidavit of Mark Ryckmans, sworn on 12 February 2015, and in particular the documents that form part of the exhibits to that affidavit.
162 Mr Tomes received a letter of acceptance from Timbercorp Finance dated 20 May 2008.
163 Mr Tomes understood from the loan application form that he signed that subject to his application being approved, the funds that he would be borrowing would be specifically applied towards his investments which he had subscribed for in both the almond project and the olive project.
164 Mr Tomes is aware that the Timbercorp Group collapsed in or about April 2009 and that Timbercorp group companies went into administration and then a month or two later into liquidation.
165 On or about 9 September 2009, Mr Tomes agreed to participate as a group member in a proposed class action against Timbercorp Securities, Garry Liddell, Robert Hance, Saul Rabinowicz, John Vaughan and Timbercorp Finance, which proceeding was to be commenced on behalf of group members by M+K.
166 As mentioned earlier , the group proceeding was commenced on 28 October 2009 on behalf of group members by Mr & Mrs WoodcroftBrown, who were lead plaintiffs, and claims were made on behalf of all group members against various defendants, including Timbercorp Finance, in the group proceeding.
167 Mr Tomes was a passive participant in the conduct of the group proceeding. However, Mr Tomes had facts peculiar to him concerning how he came to make his investments. These facts related to things that he was told about his investments and the financing of those investments by the authorised representative of Timbercorp with whom he had all of the relevant dealings which led him to make his investments.
168 Mr Tomes brought these matters to the attention of M+K in an email that he sent on 20 November 2009, which he exhibited. The email is addressed to Ms Slivka because he had received an update to investors from her earlier that day.
169 Mr Tomes informed Ms Slivka that with respect to his illfated investment in Timbercorp, there were various aspects that he hoped she may already know. He said he asked the financial advisor what Timbercorp would do if he fell on bad times with a million dollar debt to Timbercorp. He said the answer was that they would not take legal action to recover funds, and they would take back the asset the subject of the investment which by that time would have appreciated for on selling at a profit to Timbercorp.
170 With respect to repayment of the loan, Mr Tomes again asked what would happen if he fell on quiet times (not bad times). Mr Tomes was informed that the income from the project would repay the capital and interest and would be selfsustaining until he was in a position to pay off the principal, and that he would be deprived of the income until he had put the investment into a positive position.
171 Mr Tomes said that he was never comfortable about taking on a million dollar debt and never would have, but when he was told of the 'named options' above, he knew he would not be 'financially trapped'. Mr Tomes said while there was nothing in writing pertaining to those matters, the answers were very plausible and logical.
172 Mr Tomes said that whilst he was shown a prospectus, he was never shown the Timbercorp charter referred to in the prospectus. He concluded his email by saying:
As it turned out I have been treated for cancer throughout this year and didn't (word(s) missing) this extra worry however I trust I am in good hands with your legal company.
173 From enquiries made on his behalf by his solicitors, Somerset Ryckmans, Mr Tomes is now aware that M+K did nothing to bring these matters to the attention of the court on his behalf during the trial of the group proceeding. Mr Tomes says he is now aware that Timbercorp is endeavouring to preclude him from relying upon these and other matters that were contained in the amended defence that has been filed on his behalf in the proceeding.
174 Mr Tomes exhibited a copy of an optout notice, which he believes he received some time in October 2010. Mr Tomes is unable to say with any assurance whether it was emailed or posted to him. Mr Tomes read the notice. It made no mention of any loan agreement, or that by not signing and returning it, that might result in Mr Tomes being shut out later on from resisting any recovery proceedings that might be brought against him. Mr Tomes did not sign it.
175 On 29 October 2010, Mr Tomes received an update that referred to the optout procedure, which he read.
176 Whilst the update talked about 'going it alone', there was no mention in the update of the fact that if a person (including Mr Tomes) failed to opt out, that would stop him/her from later raising any defences to any recovery action that might be brought against him/her by Timbercorp Finance. Mr Tomes took comfort from the fact that the update provided that:
For everyone who remains a client of McPherson + Kelly and who does not send an optout notice to the court we will continue handling their individual file and the ancillary class action file.
177 At the time Mr Tomes read the update, he took that sentence to mean that his own specific case was being looked after, including what he had raised in his email on 20 November 2009.
178 Mr Tomes refers to another update dated 16 March 2011. Mr Tomes is unable to say with assurance whether he received this update in the mail or by email. The update makes reference at (c) on the first page to a revised form of an optout notice. Mr Tomes received the notice around the same time as this update. For the same reasons he gave earlier, Mr Tomes did not sign and return the revised opt-out notice to the court. Mr Tomes refers to the sixth further amended statement of claim, dated 29 April 2011, the fifth defendant's/plaintiff by counterclaim defence and counterclaim dated 18 June 2010 and reply to the fifth defendant's amended defence and defence to counterclaim dated 5 April 2011 in the group proceeding.
179 Mr Tomes says that M+K has never informed him as to how the matters being relied upon by the lead plaintiffs, contained in the court documents referred to, might impact upon his own personal circumstances.
180 Mr Tomes said that if at any stage he had been told by M+K of the risks that his ability to defend any recovery proceeding brought by Timbercorp could be affected by his role as a passive participant in the group proceeding, or if either of the optout notices contained such a warning, he would have sought independent legal advice.
181 Mr Mark Ryckmans also swore an affidavit dated 13 April 2015 on behalf of Mr Tomes. He exhibits a copy of the 2007 Timbercorp almond project constitution and the 2008 Timbercorp olive project constitution.
182 Mr Ryckmans also swore a further affidavit on behalf of Mr Tomes, dated 22 April 2015. In that affidavit, Mr Ryckmans exhibits an email from M+K which attached the reply to the fifth defendant's amended defence and defence to counterclaim.
183 Mr Ryckmans said he contacted Mr Tomes and asked him whether he knew about the existence of that document or its contents, including what was contained in the defence or the counterclaim to which he had responded. Mr Tomes told Mr Ryckmans that he had no knowledge of either the existence of the document or any of its contents or of the counterclaim and that this was the first time he had become aware of the existence of the document and of the counterclaim.
184 By a writ dated 12 September 2014, issued in the Supreme Court of Victoria, Timbercorp makes two claims against Mr Tomes: the first under a loan agreement L0025296 to part fund his investment in the 2007 almond post June project and the 2008 olive early project; and a loan agreement L0028248. Loan L0028248 was a loan of $247,545 to fund the payment of loan fees, management costs, rent and other amounts owing by Mr Tomes to Timbercorp relating to his investments in the 2007 almond post June and 2008 olive early projects.
185 The amount Timbercorp claimed was as follows: under loan agreement L0025296, the sum of $1,760,368.34 plus interest; under loan agreement L0028248, the sum of $448,280 plus interest, including costs of the premium on a full indemnity basis pursuant to the terms of each of the respective loan agreements.
186 Mr Tomes filed a defence and counterclaim on 10 February 2015. The defence pleads that Timbercorp Securities was the holder of an Australian Financial Services Licence. It also pleads that Spencer Broad was an authorised representative of Timbercorp Securities and a financial planner and/or adviser. It pleads that Spencer Broad provided financial advice to Mr Tomes in that capacity, including in relation to investing in the managed investment schemes operated by Timbercorp Securities, Timbercorp generally, and borrowing money from Timbercorp Finance in relation to such investments. Further, it pleads that Spencer Broad was the agent of Timbercorp Finance.
187 Mr Tomes admits signing the relevant loan application in the presence of Mr Broad.
188 Mr Tomes alleges that on or about 8 May 2008, prior to signing the loan applications, he met with Mr Broad in relation to his proposed investment in managed investment schemes operated by Timbercorp Securities. During the course of that meeting, he alleges that Timbercorp Finance, by Mr Broad its agent, made representations to Mr Tomes about his proposed investment and the proposed loan, which Mr Tomes believed to be true. Particulars are given of the representations, including that they were made in trade or commerce and that they were continuing representations.
189 Mr Tomes alleges that acting upon the representations and induced thereby, he signed the loan application forms. Mr Tomes alleges that insofar as the representations were as to future matters, Timbercorp Finance did not have reasonable grounds for making any or all of the representations. Mr Tomes alleges that the representations were misleading and deceptive and in contravention of the ASIC Act. Further, Mr Tomes alleges that Timbercorp Finance engaged in unconscionable conduct in contravention of the ASIC Act.
190 Mr Tomes alleges that if the loan agreements were made, the terms of the agreement required that the money for the advance be paid by Timbercorp Finance to Timbercorp Securities (or as directed) and solely as payment for the balance of Mr Tomes' application money for the lots and the loan application fee (in relation to the loan under loan agreement L0025296, the 'loan L0025296 permitted purpose').
191 Mr Tomes alleges that, unknown to him until after the appointment of the administrators to Timbercorp Finance, the moneys purportedly advanced by Timbercorp Finance were not applied to the loan L0025296 permitted purpose but were applied for the purpose of Timbercorp generally, in breach of the alleged loan agreement L0025296.
192 Mr Tomes alleges that Timbercorp Finance took no steps or no adequate steps to ensure that the moneys purportedly advanced were applied to the loan L0025296 permitted purpose.
193 Mr Tomes pleads that that failure amounted to a breach by Timbercorp Finance of its obligations under the alleged loan L0025296. Mr Tomes alleges that in the circumstances, Timbercorp Finance repudiated the loan agreement L0025296 (the existence of which he denies) which repudiation was thereby accepted and in the premises the loan agreement L0025296 is void ab initio.
194 As to loan L0028248, Mr Tomes admits that on or about 31 October 2008 he signed the loan application form to fund payment of loan fees, management costs, rent and other amounts in relation to his investment in the 2007 almond post June and 2008 olive early projects but says he did so acting on the faith of the representations previously made by Mr Broad on or about 8 May 2008.
195 Mr Tomes alleges, inter alia, that he met with Mr Broad on 31 October 2008 (which was the day he applied for the finance) and that at that meeting Timbercorp Finance, by Mr Broad as its agent, engaged in unconscionable conduct in contravention of s 12CA(1) or alternatively s 12C(1) of the ASIC Act.
196 Mr Tomes alleges in particulars that Mr Broad did not explain to him any of the matters set out in relevant sections of the loan application form. Mr Tomes relies on the particulars of the representations previously referred to. Mr Tomes also raises the same defence in respect of L0028248 in relation to the advancing of the loan moneys as he did in relation to L0025296, and pleads that the loan agreement L0028248 is void ab initio on the same basis (being the repudiation of the loan arising from the failure by Timbercorp Finance to ensure it was applied in accordance with the permitted purpose).
197 Mr Tomes also alleges that the moneys advanced to Timbercorp Securities were to be held on trust by Timbercorp Securities to be applied only for the relevant scheme and not otherwise. Mr Tomes alleges that Timbercorp applied the moneys otherwise and thereby breached the Corporations Act. Mr Tomes alleges that Timbercorp Finance was involved in the contraventions of the Corporations Act.
198 Mr Tomes also makes a counterclaim relying on the matters pleaded in the defence in respect of payments made under mistake that the loan agreements had been validly executed, there being a total failure of consideration, unjust enrichment and a resulting and constructive trust. Mr Tomes pleads that he will seek to set off against the loans any sums recovered under the counterclaim.
199 By its reply dated 17 March 2015, Timbercorp Finance pleads that consistently with the order of Judd J made on 13 February 2015, Timbercorp only pleads in the reply to Mr Tomes' defence, and will plead to the counterclaim if and when Mr Tomes obtains leave to proceed under s 500(2) of the Corporations Act.
200 Timbercorp Finance pleads that the defendant is precluded from raising the pleaded defences by reason that he was a group member within the meaning of Part 4A of the Supreme Court Act in the group proceeding. Under particulars, Timbercorp Finance pleads that the preclusion arises as a matter of law upon a proper application of the principles derived from Henderson v Henderson.[13] The reply pleads extensively to the balance of the defence.
201 By rejoinder to the reply dated 26 March 2015, Mr Tomes admits that he was at all relevant times a group member in the group proceeding.
202 Mr Tomes pleads further that by reason of the common questions determined by the court adversely to the plaintiff and the group members in the group proceeding, the occasion to bring forward the defence as now raised by him in this proceeding had not yet arisen. Further, Mr Tomes alleges that as Timbercorp did not prosecute its counterclaim dated 18 June 2010 in the group proceeding, no defences to it nor common questions in relation to it were heard and determined. Further, Mr Tomes alleges that even if Timbercorp Finance's counterclaim in the group proceeding had been determined by the court and/or common questions in relation to it had been determined by the court, some of the defences now advanced by Mr Tomes would not have been considered by the court in the group proceeding as they are peculiar to Mr Tomes.
203 Further, Mr Tomes alleges that Timbercorp Finance is precluded and/or estopped from bringing the proceeding against Mr Tomes as Timbercorp Finance had previously commenced and then abandoned and/or elected not to proceed to prosecute proceedings concerning the two loan agreements with Mr Tomes.
204 By its amended reply dated 9 April 2015, Timbercorp Finance amended the particulars to read that the preclusion arose as a matter of law and deleted the reference to Henderson v Henderson.
205 The recognised foundation of the principle, now known as Anshun estoppel, was enunciated by Sir James Wigram VC in Henderson v Henderson:
... where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matters which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.[14]
206 This principle was endorsed by the High Court in the joint judgment of Gibbs CJ, Mason and Aickin JJ in Port of Melbourne Authority v Anshun Pty Ltd:[15]
... there will be no estoppel unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it. Generally speaking, it would be unreasonable not to plead a defence if, having regard to the nature of the plaintiff's claim, and its subject matter it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in the one proceeding.[16]
207 Having said 'there will be no estoppel unless' that test is satisfied, their Honours were moreover at pains to emphasise that there are numerous reasons why a party might justifiably choose not to litigate an issue in the first proceeding:
... we need to recall that there are a variety of circumstances, some referred to in the earlier cases, why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings, eg expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few. [17]
208 On the issue of whether or not it is unreasonable for a party asserting a cause of action in a later proceeding not to have done so in an earlier proceeding, Kenny JA in Gibbs v Kinna[18] affirmed the dependence of Anshun estoppel on the particular facts of each case. Her Honour said:
Whether or not it is unreasonable for a party asserting a cause of action in a later proceeding not to have done so in an earlier proceeding depends almost entirely on the particular circumstances. It seems, however, that there are two matters which must first be established before it can be said that the failure to raise a cause of action earlier might be said to have been unreasonable. The first is that the cause of action must be one that could have been raised in the previous proceeding... Secondly, it must appear that the same or substantially the same facts will arise for consideration in the second as in the first proceeding.[19]
...
Whilst the likelihood of inconsistent judgments would, generally speaking, satisfy the criterion of unreasonableness, I assume for the purposes of this case that the criterion may be satisfied even when no such likelihood arises. If this be correct, then, in cases where there is no risk of inconsistent judgments, to decide whether or not it was unreasonable for a plaintiff not to litigate closely related issues in the one proceeding requires consideration of all the relevant facts, including the character of the previous proceeding, the scope of any pleadings, the length and complexity of any trial, any real or reasonably perceived difficulties in raising the relevant claim earlier, and any other explanation for the failure to raise the claim previously... [20]
209 Similarly, Ormiston JA, who agreed with Kenny JA, held the following:
The issue is whether it was unreasonable to defer reliance upon the defence or cause of action, so, if it cannot be shown to have been unreasonable not to have relied earlier on the defence or cause of action, then the principle stated by the majority in Anshun's case will not shut out a party's later reliance on the defence or cause of action, unless some other principle of estoppel or the law can be called in aid. Only if deferring reliance can be shown to be unreasonable, will the party be shut out. Frequently there is no clear answer as to what was possible and reasonable in the earlier proceedings; sometimes it will have been technically possible for the party to have relied on a particular defence or set up a particular claim, but nevertheless it may not have been demonstrated that it was unreasonable in all the circumstances not to have relied on that defence or not to have set up the claim. The answer depends not so much on legalities as practicalities.[21]
...
But the law is not concerned so much with hypothetical circumstances as with actual facts. Thus the question is not whether it would have been reasonable to have taken a different course but whether it was unreasonable to pursue the course that the respondent in fact took, by not then relying on the causes of action now the subject of proceedings in the Magistrates' Court. [22]
210 As can be seen in these passages, the test adopted in Anshun is not as strict as that put forward in Henderson.
211 One final principle should be referred to. Anshun principles do not require a defendant to raise a counterclaim that it has open to it in defending a proceeding:
A plaintiff who has an unadjudicated cause of action which can be enforced only in fresh proceedings (Duedu v Yiboe [1961] 1 WLR 1040 at 1046) cannot be precluded from taking fresh proceedings merely because he could have and, if you will, should have counterclaimed on that cause of action in a forum chosen by the opposite party in proceedings in which the opposite party sued him. We do not read the majority judgment in Port of Melbourne Authority v Anshun Pty Ltd as holding the contrary, except in a case where the relief claimed in the second proceeding is inconsistent with the judgment in the first.[23]
212 Timbercorp Finance also contends that defences raised in each proceeding constitute an 'abuse of process'.
213 French CJ observed in Aon Risk Services Australia Ltd v Australian National University:
[a]buse of process principles may be invoked to prevent attempts to litigate that which should have been litigated in earlier proceedings as well as attempts to re-litigate that which has already been determined.[24]
214 Timbercorp submits that some catalogues of preclusionary principles omit reference to abuse of process,[25] but Timbercorp contends that the 'omission does not bespeak its irrelevance in this field of discourse'.
215 Timbercorp Finance submits that '[i]t has been rightly said that "the principles of abuse of process are not confined by the doctrines of res judicata, issue estoppel and Anshun estoppel"'.[26] It would be odd if it were otherwise. Timbercorp Finance further submits that '[w]hat amounts to abuse of court process is insusceptible of a formulation comprising closed categories'.[27] The power 'exist[s] to enable the courts to protect themselves and thereby safeguard the administration of justice'[28] and it is available to be exercised 'as and when the administration of justice demands'.[29]
216 Timbercorp Finance submits that while abuse of process cannot be exhaustively defined, the High Court has approved of three non-exhaustive categories:
(1) the court's procedures are invoked for an illegitimate purpose;
(2) the use of the court's procedures is unjustifiably oppressive to one of the parties; or
(3) the use of the court's procedures would bring the administration of justice into disrepute.[30]
217 Timbercorp Finance says that here, both the second and third of these categories are, and the first is perhaps, engaged.
The guiding considerations are oppression and unfairness to the other party to the litigation and concern for the integrity of the system of administration of justice. Regard may be had to:
(a) the importance of the issue in and to the earlier proceeding, including whether it is an evidentiary or ultimate issue;
(b) the opportunity available and taken to fully litigate the issue;
(c) the terms and finality of the finding as to the issue;
(d) the identity between the relevant issues in the two proceedings;
(e) any plea of fresh evidence, including the nature and significance of the evidence and the reason why it was not part of the earlier proceeding;
(f) the extent of the oppression and unfairness to the other party if the issue was re-litigated and the impact of the re-litigation upon the principle of finality of judicial determination and public confidence in the administration of justice; and
(g) an overall balancing of justice to the alleged abuser against the matters supportive of abuse of process ...[33]
219 These principles have been cited with approval by other courts.[34] To them must be added two further propositions. The first was mentioned by me elsewhere in Kermani: '[i]n considering abuse of process where second proceedings are taken raising the same or similar issues, it is not necessary that the plaintiffs or claimants be the same, if they are otherwise connected'.[35] The second directs attention to any applicable statutory context, and was articulated by Brennan J in Walton v Gardiner as follows: '[t]he administration of justice ... is the administration of justice according to law including, of course, statutory law'.[36]
Accordingly, it has been recognised that making a claim or raising an issue which was made or raised and determined in an earlier proceeding, or which ought reasonably to have been made or raised for determination in that earlier proceeding, can constitute an abuse of process even where the earlier proceeding might not have given rise to an estoppel. Similarly, it has been recognised that making such a claim or raising such an issue can constitute an abuse of process where the party seeking to make the claim or to raise the issue in the later proceeding was neither a party to that earlier proceeding, nor the privy of a party to that earlier proceeding, and therefore could not be precluded by an estoppel.[39]
221 In Zhang v Minister for Immigration, Local Government and Ethnic Affairs,[40] French J had before him a representative proceeding taken under Part IVA of the Federal Court Act 1976 which is similar to, but does not exactly mirror, Part 4A of the Supreme Court Act.
222 The applicant Mr Zhang, who claimed to be a refugee, contended that he was denied natural justice by not being given an oral hearing by the relevant decision maker in support of his application for refugee status. Mr Zhang commenced a group proceeding on behalf of himself and all persons who had been refused refugee status since Part IVA came into effect and who had been denied an oral hearing. French J considered whether the claim was properly the subject of a group proceeding and in doing so addressed the fact that the members of the group were likely to have other individual claims relating to their claims for refugee status.
223 French J addressed the application of res judicata extended by Anshun in respect of representative and group proceedings. His Honour concluded:[41]
The question whether the extended principle of res judicata is capable of application to representative proceedings confined as these have been to a common issue of law or fact remains open.
It is instructive, however, to examine how French J came to that conclusion.
224 French J considered decisions prior to the enactment of Part IVA where representative proceedings had been instituted under the rules of court and in particular the requirement that the persons represented should have the 'same interest'. French J referred to the English statutory ancestor, Order 16 r 9 of the Rules of the Supreme Court (Eng). French J said that rule was made after the Judicature Act 1873 (UK) was introduced and intended to apply the previous Chancery practice to all divisions of the High Court of Judicature.
... described Chancery practice as requiring the presence of all parties interested in the matter in suit "in order that a final end might be made of the controversy". The inconvenience of joining everybody interested as a party where their numbers were numerous was overcome by the representative action:
"Given a common interest and a common grievance, a representative suit was in order if the relief sought was in its nature beneficial to all whom the plaintiff proposed to represent."[44]
226 French J said that the Court of Appeal in Markt & Co Ltd v Knight Steamship & Co[45] gave a less liberal view of the post-Judicature Act rule saying that the rule had to be considered according to its terms and 'not merely as a vessel conveying Chancery practice to the common law courts'. French J said:[46]
Fletcher Moulton LJ concluded that the representative action was not available where relief was claimed by way of damages. For in such a case, the plaintiff's claim was for "personal relief, applicable to him alone". The presence of a "common question of law or fact" which would support a joinder of action was not sufficient to meet the requirements of the rule (Vaughan Williams LJ). Other case law of the time suggested that the procedure was not available for claims for damages in tort ...
227 After discussing cases where representative actions had been permitted seeking declarations relating to tortious claims, French J said:
The possible impact on representative actions of the doctrine of res judicata and the extended principle discussed in Port of Melbourne Authority v. Anshun Pty Ltd,[48] however, requires careful consideration. In the Second Edition of Spencer Bower and Turner, The Doctrine of Res Judicata,[49] it is pointed out that, in the case of a representative action, a judicial decision inter partes operates as an estoppel in favour of or so as to bind all members of the class whom a party purports to represent or all persons who have given their consent to be bound by the result.
228 French J also considered the application of the estoppel doctrine in Canada to representative proceedings in Naken v General Motors Canada[50] based on Rules of Practice of the Supreme Court of Ontario which substantially reflected the English rule Order 16 r 9. Esprey J (who delivered the judgment of the court ) held that the estoppel doctrine applied to representative proceedings saying:[51]
The operation of the defence of res judicata has a long history in our courts, and no authority was drawn to the attention of the court wherein a court ignored such a plea in the case of a class action. It is true that there is a discretion in the courts where the defence of res judicata is raised, but such a discretion must be very limited in application ... Rule 75 is silent as to the issue, and, failing some specific provision by statute, regulation or otherwise, the defence of res judicata would continue to apply. The fact that the action may be in contract of one kind or another would appear to represent no basis for the selective application of the defence of res judicata. If the courts were to adopt a principle whereby class actions estopped participants from future action only to the extent of claims made in the class action, one of the root purposes of the class action would be defeated. The inherent benefit of the representative action sadly produces this serious side effect. This is no doubt the most important factor which excited legislatures elsewhere to action in defining and describing this action and its conduct.
229 French J considered the position in the United States of America under r 23 of the Federal Rules of Civil Procedure. He observed that the doctrine of res judicata has been held to apply to Title VII Anti-Discrimination Actions. His Honour then addressed the rule as to res judicata and its extension in Henderson v Henderson as cited in Anshun. French J said that the principles seems to have been applied in a case analogous to a representative action by Palles CB in Cox v Dublin City Distillery Co Ltd (No 2).[52]
230 French J then considered Part IVA and the report entitled 'Grouped Proceedings in the Federal Court' which was published in 1988, by the Australian Law Reform Commission.[53] His Honour concluded there was no reference in the report to using the group proceedings to challenge administrative decisions but there was nothing in the language of Part IVA to prevent its application to administrative decisions. It is clear from the decision, that his Honour was concerned about whether the individual complaints of the group members would be prejudiced if the group proceedings were permitted to continue.
A challenge to the lawfulness of an administrative policy or practice affecting the exercise of statutory power may raise, as does this case, a narrow point for decision. Individual claims in relation to particular determinations under the power are left unheard if the representative action fails. The possibility arises of the extended principle of res judicata affecting issues wider than those ventilated in the representative proceeding. Having regard to that possibility, the utility of the representative action in judicial review requires scrutiny. The question must be asked in each case whether members of the group and the decision-makers are likely to be better off with a determination which binds them all on one issue but fails to deal with individual claims. Where the lawfulness of a policy is contested by an individual, that test case may, pending an appeal, establish the law. However, it does not provide as firm a bulwark against re-litigation of the same point in like cases as does the determination in representative proceedings which directly binds the decision-maker and members of the group. The costs and benefits of representative proceedings in the area of judicial review will have to be assessed on a case by case basis.
232 His Honour recognised that the claim of each refugee may be based on different facts and considerations. He said:
Each claim is based on a set of facts which may include acts, omissions, contracts, transactions and other events. As appears from s.33C(2)[55], the circumstances giving rise to claims by potential group members do not fall outside the scope of the legislation simply because they involve separate contracts or transactions between individual group members and the respondent or involve separate acts or omissions of the respondent done or omitted to be done in relation to individual group members.
233 His Honour decided that group proceedings could be instituted. Importantly, he addressed the implications that that might have for the individual claims of the refugees:[56]
The question of res judicata and the extended principle to which I have referred earlier remains. A judgment, once made on the common issue, is binding on all members of the group and on the Minister. That arises explicitly by virtue of s.33ZB(b). The question whether the extended principle of res judicata is capable of application to representative proceedings confined as these have been to a common issue of law or fact remains open. Section 33Q contemplates the hiving off of individual claims when the common determination does not finally determine the claims of all group members. That may support a view that the extended principle may operate when the claims are not hived off under that section. In a case in which the group members have not raised individual claims but have been defined into the group on their related circumstances and the common issue, it is necessary that care be taken to ensure that claims based on individual circumstances of which the Court knows nothing are not prejudiced. In my opinion, that concern may be dealt with by determining the common issue and giving judgment on that issue as required by s.33ZB. Thereafter, I am inclined to make an order under s.33N(1)(d)[57] that the proceeding otherwise no longer continue under Pt. IVA. While Mr Zhang's claim will be disposed of, the claims, if any, of other members of the group to set aside the decisions affecting them individually may be pursued by their individual applications. As this matter was not argued before me, I will allow the parties liberty to make submissions on the final form of the orders disposing of the proceedings.
234 Thus, French J recognised that the application of Anshun principles to representative proceedings confined as they were before him was uncertain. French J acknowledged that care must be taken to ensure that individual claims based on individual circumstances of which the court knows nothing were not prejudiced.
235 These observations may have relevance in this case, as the group proceeding only dealt with matters common to all group members and did not deal with any individual claims based on individual circumstances of a borrower or borrowers.
236 Zhang was cited with approval by the majority in the High Court in Tomlinson. I will discuss the relevance of this when considering the application of Tomlinson to this case, below.
237 In Mobil Oil Australia Pty Ltd v Victoria[58] Mobil challenged the constitutional validity of Part 4A. It is not necessary to address those issues. In considering the legislation, the High Court made several relevant observations on Part 4A.
238 Gaudron, Gummow and Hayne JJ in a joint judgment canvassed the history of provisions for the joinder of plaintiffs for representative proceedings. Their Honours observed that Rules of Court drawn on the pattern of the English Rules of 1883 had long provided for the joinder in one action of all persons 'in whom any right to relief in respect of or arising out of the same transaction or series of transactions is alleged to exist', quoting from the Victorian Rules of 1957.
239 Their Honours said the procedure 'permitted several plaintiffs to bring a single action against a defendant for the determination of the individual claims of the plaintiffs'. The plurality referred to the Chancery practice and said:[59]
The Chancery practice and the rules governing representative proceedings permitted the bringing of a single action that would decide the rights and duties of all who fell within the class of persons represented by the representative plaintiff.
240 Referring to Part 4A the plurality said:[60]
Provision has now been made in more than one Australian jurisdiction for "class" or "group" actions[61]. By this kind of action the claims that are made, or could be made, against the defendant by all those in the "class" or "group" that is identified in the proceeding would be decided ...
241 The plurality emphasised that claims that could be made would be decided in the proceeding. The plurality examined the structure of Part 4A. As to the distinction between the plaintiffs to a group proceeding and the group members they said:
[37] ... Obviously, those who are named as plaintiffs in a group proceeding must know of and require the commencement of the proceeding. In general, it is they who may appeal[62] and who are liable in costs[63]. They stand to gain from any benefit obtained by the proceeding but they are at risk of bearing the burden of costs.
[38] The position of the plaintiffs in the proceeding may be contrasted with those whom they represent - the group members. Subject to some exceptions that do not matter for present purposes, the consent of a person to be a group member is not required[64]. Group members may neither know of the commencement of the proceeding nor wish that it be brought or prosecuted, although Pt 4A does provide for notice to be given to group members of (among other things) the commencement of the proceeding[65].
242 Elaborating on the fact that some group members may not know that they are group members in the proceeding, the plurality said:
[39] ... There is, therefore, a real possibility that some group members would remain "perfectly ignorant of the proceedings, and of what is really going on"[66]. That is, some of those who would benefit from success in the proceeding (but thereby lose the opportunity to pursue their individual claim in some way, or to some effect, different from the group proceeding) may have their rights affected without their knowing or consenting to that being done.
[40] So much follows from the fact that Pt 4A provides for what is sometimes called an "opt out", rather than an "opt in", procedure. That is, persons who are group members may opt out of the proceeding and, if they do, they are taken never to have been a group member (unless the Court otherwise orders)[67]. Group members, however, need take no positive step in the prosecution of the proceeding to judgment to gain whatever benefit its prosecution may bring.
243 Mobil contended that Part 4A denied residents of other states the chance to bring claims in the courts of states other than Victoria and bound them in a result over which they had no control. The plurality said that this was not an accurate representation of the operation of Part 4A. They said:
[50] ... The provisions of Pt 4A do not seek to make the Supreme Court of Victoria a national court. They do not deny anyone the opportunity to institute proceedings in any other court. A group member is not a plaintiff. It is right to say that a judgment obtained in the proceeding would bind those who had not opted out but to say that such persons had "no control" over their part in the proceeding falls well short of fully describing the way in which Pt 4A works.
[51] Although a proceeding under Pt 4A may affect the rights both of those who know of and support the prosecution of the proceeding and of those who do not know of it, Pt 4A does not compel the unwilling to continue to remain a group member. The unwilling may seek to opt out. Further, in affecting the rights of those who know of the proceeding and those who do not, a proceeding under Pt 4A is no different from representative proceedings of a kind common in the State Supreme Courts since federation and in their colonial predecessors.
244 In Clarke v Great Southern Finance Pty Ltd (in liq) (No 2),[68] Croft J considered an application by the Bendigo and Adelaide Bank parties in a group proceeding for orders under s 33KA and/or s 33ZF of the Supreme Court Act that certain specified members of the group proceedings instituted against the Bendigo and Adelaide Bank parties be removed as group members.
245 Those individual members were also defendants to proceedings by the Bendigo and Adelaide Bank parties for the recovery of loans that were advanced to enable the members to invest in Great Southern managed investment schemes. Those members had raised by way of defence similar issues to those raised in the group proceeding.
246 Croft J refused the application and in doing so took into account the impact of Anshun and abuse of process principles on the ability of the members to maintain their defences in the loan recovery proceedings.
247 In doing so Croft J endorsed submissions by the Adelaide and Bendigo Bank parties that:
The principles in relation to Anshun estoppel are also relevant in these circumstances where the Listed Members have not opted out of the relevant group proceedings and seek to maintain claims in the individual proceedings that are additional or different to the claims in the group proceedings.[69]
248 His Honour made clear his view that Anshun estoppel and abuse of process would have work to do in precluding subsequent litigation by group members:
[16] .... I am of the opinion that it is more than likely that if any party, sought to pursue the individual proceedings involving issues determined by - or in the process of being determined by the Group Proceedings - the individual proceeding or proceedings would be stayed on the basis of abuse of process, Anshun estoppel or, perhaps, election depending on the particular circumstances. ...
[18] A further consideration is that it is, in reality, the opponents of this application [the group members] who bear the risk of not being able to agitate all aspects of their defences or counterclaims by electing to remain group members. The risk they run is that on determination of the Group Proceedings, they will not be permitted - on the basis of abuse of process, Anshun estoppel, election or perhaps on other bases - to pursue all or any aspects of their defences or counterclaims in the individual proceedings.[70]
249 In Clarke v Great Southern Finance Pty Ltd (in liq) (No 3),[71] Judd J considered an application by some group members in a group proceeding to cease to be members of the group after the group proceeding had been settled but before the settlement had been approved by the court as was required under the Act. The group proceeding concerned managed investment schemes similar to the Timbercorp schemes. Investors challenged the validity of loan agreements.
250 The terms of settlement acknowledged the validity and enforceability of the loan agreements. Judd J refused the application by the applicants to cease to be group members and thus not be bound by the terms of settlement. The applicants applied under s 33KA and s 33ZF. His Honour found that they, as group members, had no right to apply under those provisions.
251 His Honour nevertheless considered the matters raised by the applicants under his own motion. As indicated, it was unnecessary for his Honour to do so to decide the application. Accordingly, the observations of his Honour on Anshun estoppel and the like were technically obiter dicta, but obviously deserve careful consideration by me.
252 In Clarke v Great Southern(No 2),[72] group proceedings were taken by an investor in horticultural managed investment schemes, much like those promoted by Timbercorp. The common issues raised in that case were not dissimilar to those raised in the Timbercorp proceedings, relating to the alleged failure by Great Southern to disclose financial information bearing on the risk of entering into the horticultural managed investment schemes.
253 After a very lengthy hearing, and on the eve of the trial judge delivering his judgment, the defendants settled with the plaintiff. Naturally, judgment was withheld. The settlement required court approval pursuant to Part 4A of the Supreme Court Act 1986. If the settlement was not approved, the trial judge would have been able to deliver his judgment.
254 Shortly after the plaintiff and the defendants in the group proceeding announced they had reached a settlement, several group members applied to cease to be group members under s 33KA, alternatively s 33ZF of Part 4A of the Supreme Court Act.
255 Some of the objectors contended that they had not had the opportunity to raise, in the group proceeding, non-common issues because the proceeding had not reached the stage at which the common issues had been determined.
256 At the commencement of the group proceeding trial there existed a number of debt recovery proceedings brought by the owner of the debt.
257 Under the terms of settlement, the defences to these proceedings would not be permitted to proceed. Thus the applicants would not have been able to run the defences that were not subject to the group proceeding.
258 Judd J took the view that existing and potential defences were subsumed in the group proceeding. His Honour said that was the purpose of the group proceeding. Judd J held that to permit a number of group members, who were dissatisfied with the terms of the deed of settlement, to withdraw as group members, would be inconsistent with the benefits they had enjoyed as group members throughout the trial. His Honour said that the term in the deed of settlement binding group members to repay loan obligations did not in his view constitute a material change in the scope of the group proceedings. Judd J said that group members would have been precluded from advancing new novel individual defences had the case proceeded to judgment.
259 In his judgment, Judd J made observations of particular relevance to the issues before me. His Honour said:
[39] The fact that in some group proceedings, 'matters peculiar to the claims of individual group members must subsequently be determined', does not overcome the ordinary application of the broad rule of public policy that would prevent a group member from agitating, in another proceeding, separate claims that might properly have been brought forward in the group proceeding. In Zhang v Minister for Immigration, Local Government and Ethnic Affairs, French J considered whether persons who sought review of decisions to refuse their refugee applications, and whose applications had been refused on a review, constituted a group of persons who had claims arising out of the same, similar or related circumstances so as to support a representative action on behalf of the members of the group. In doing so, his Honour considered the application of the defence of res judicata in group proceedings, referring to Canadian authority and authorities and academic papers in the United States, concluding:
The rule as to res judicata in Australia was restated by Fullagar J in Jackson v Goldsmith in a passage approved in the joint judgment of Gibbs CJ, Mason and Aickin JJ in Port of Melbourne Authority v Anshun. Fullagar J had said:
"where an action has been brought and judgment has been entered in that action, no other proceedings can thereafter be maintained on the same cause of action. The rule is not, to my mind, correctly classified under the heading of estoppel at all. It is a broad rule of public policy ... "
The doctrine of res judicata is extended by the principle in Henderson v Henderson cited in Anshun:
"where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time."
[40] In Oliver & Anor v Commonwealth Bank of Australia, Perram J considered an application by the respondent bank that proceedings commenced by the applicants ought to be dismissed as an abuse of process. At the time the proceeding was commenced, the applicants were members of a class in a representative proceeding that dealt with substantially the same subject matter. Perram J said:
'It is prima facie vexatious and oppressive, in the strict sense of those terms, to commence a second or subsequent action in the courts of this country if an action is already pending with respect to the matter in issue': Henry v Henry. Consequently, it lies upon the party bringing the second action to show that is not so: Moore v Inglis per Mason J, citing the dissenting judgment of Lord Esher MR in The Christiansborg; Henry v Henry.
Representative proceedings give rise to complexities in this area because of the possibility that proceedings by the representatives, on the one hand, and separate proceedings brought by those represented, on the other, may infringe the above principle. In this Court representative proceedings operate on an 'opt-out' basis; that is, persons remain in the class of those represented unless they take the affirmative step of indicating they do not wish to be in that class: Federal Court of Australia Act 1976 (Cth), s 33J(2). Even though that is the case, however, class members are not parties to the proceeding unless they choose to be one of the nominated representative parties: s 33C(1): King v AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd); Courtney v Medtel Pty Ltd.
Consequently, the view in this Court is that the existence of proceedings by a class member (not being a representative party) at the same time as a representative proceeding in which that class member is represented is not necessarily an immediate abuse of process. In Johnson Tiles Pty Ltd v Esso Australia Ltd per Merkel J, albeit in the context of competing representative proceedings, thought that at least at an early stage the Court should determine which of the proceedings should be permitted and it was not necessarily the case that the proceeding which was filed first should be the proceeding which would go forward. On the other hand, Lehane J thought that, after a party had failed to opt out of a representative proceeding, it was likely that the Court would prevent further pursuit of presently subsisting and overlapping ordinary proceedings: Bright v Femcare Ltd. Considerations of common sense and these two decisions suggest, therefore, that it is prima facie vexatious and oppressive for a person who has not opted out of a representative proceeding (when the opt-out time has passed) to maintain ordinary proceedings against the same respondent dealing with substantially the same subject matter. I so conclude.
[41] In Kirby v Centro Properties Ltd, Finkelstein J had before him three representative actions brought against the Centro group to recover losses suffered as a consequence of a substantial fall in the price of securities. The applicants accused the group of making misleading statements about their respective financial positions, and of failing to make disclosure required by the ASX Listing Rules, thereby causing the price of the securities to be inflated. All three actions shared the same operative facts, although there were points of difference between them. The issue for determination was whether all three actions should be permitted to proceed. Finkelstein J expressed doubt as to whether a party against whom an issue was decided in one proceeding would be free to litigate the same issue in another, concluding:
But it is unlikely that any court would permit a party to relitigate a question or issue which has already been decided against him even though the other side cannot strictly satisfy the requirements of res judicata or issue estoppel.
[42] Finkelstein J went on to consider United States and Canadian authorities on 'nonmutual collateral estoppel', concluding that if not part of a general doctrine of issue estoppel in Australia, there was ample power under s 33ZF(1) of the Federal Court Act, or its inherent jurisdiction, to prevent an abuse of process. Though plainly obiter, his Honour said:
In the United States in Parklane Hosiery Co Inc v Shore, which was itself a class action case, the US Supreme Court held that the court has broad discretion to allow offensive, "non-mutual collateral estoppel"--that is, a plaintiff in a later action may, where it would promote judicial economy, consistency of result and would not otherwise be unfair, invoke issue estoppel against a defendant such as Centro to bar relitigation of an issue even if the plaintiff was not joined in the earlier action or in privity with a party to that action: Parklane; see also V Morabito, "Defendant Class Actions and the Right to Opt Out: Lessons for Canada from the United States" (2004) 14 Duke J of Comp & Intl L 197, 228 (collecting the US and Canadian authorities on "non-mutual collateral estoppel" or inherent jurisdiction to bar re-litigation of issues especially as applied in class actions).
Moreover, even if the principle identified in Parklane is not a part of the general doctrine of issue estoppel in Australia, I would certainly consider adopting it at least in the limited context of class actions, either pursuant to the Court's authority under s 33ZF(1) of the Federal Court Act or possibly under the Court's inherent jurisdiction to prevent an abuse of process. With respect to the latter, see Saffron v Commissioner of Taxation, where the Full Court suggested that while the Parklane principle was not a part of issue estoppel jurisprudence under Anglo-Australian law, it appeared to perform the same function and yield the same result as would obtain under the Australian abuse of process doctrine.
[43] The applicants contended that the Anshun estoppel principle should not be applied with its full rigour in the present circumstances, because group proceedings contemplate the advancement of particular claims, peculiar to individual group members in a group proceeding, after the conclusion of the case advanced by the lead plaintiffs and answers to the common questions. The applicants contended that, just as individual group members may be required to advance particular circumstances relevant to reliance, they should be permitted to advance defences in a recovery proceeding that were not specifically addressed by a lead plaintiff in a group proceeding or otherwise the subject of a common question.
[44] In Zhang, French J, referring to pt IVA of the Federal Court of Australia Act, said:
The question of res judicata and the extended principle to which I have referred earlier remains. A judgment, once made on the common issue, is binding on all members of the group and on the Minister. That arises explicitly by virtue of s 33ZB(b). The question whether the extended principle of res judicata is capable of application to representative proceedings confined as these have been to a common issue of law or fact remains open. Section 33Q contemplates the hiving off of individual claims when the common determination does not finally determine the claims of all group members. That may support a view that the extended principle may operate when the claims are not hived off under that section. In a case in which the group members have not raised individual claims but have been defined into the group on their related circumstances and the common issue, it is necessary that care be taken to ensure that claims based on individual circumstances of which the Court knows nothing are not prejudiced. In my opinion, that concern may be dealt with by determining the common issue and giving judgment on that issue as required by s 33ZB. Thereafter, I am inclined to make an order under s 33N(1)(d) that the proceeding otherwise no longer continue under Pt IVA. While Mr Zhang's claim will be disposed of, the claims, if any, of other members of the group to set aside the decisions affecting them individually may be pursued by their individual applications. As this matter was not argued before me, I will allow the parties liberty to make submissions on the final form of the orders disposing of the proceedings.
[45] The applicants relied on the foregoing passage to advance the status of individual claims in group proceedings. It is, of course, necessary that care be taken to ensure that claims based on individual circumstances, of which the court knows nothing, are not prejudiced. The circumstances in Zhang were unusual. The common issue concerned the extent to which refugees were entitled to a particular standard of procedural fairness. The proceeding did not purport to determine the status of their applications.
[46] In my opinion, the concern expressed by his Honour, that individual claims should be appropriately protected, is adequately achieved through the opt out process, provided the opt out notice is sufficient to define the scope of the proceeding and permit a meaningful decision. The notices were sufficient for that purpose. Had the applicants a viable basis to resist their obligations under the loan agreements, on grounds other than those pleaded in the group proceeding, they had an adequate informed opportunity to choose whether to opt out prior to the commencement of the trial, and ought to have done so. Nor was there any ambiguity about the prospect of settlement. ERA Legal was under no illusion as to their clients' prospects for maintaining individual defences while remaining a member of the group.
....
[50] While it is true that the proposed individual defences might theoretically be raised in existing proceedings that have been stayed, this group proceeding was unusual. It took the form of a collective defence to the Bank's rights of recovery under loan agreements. Existing and potential defences were subsumed in the group proceeding. That was the intended purpose of the group proceeding. The mere existence of a prior recovery proceeding brought by the Bank, or a counterclaim, does not assist the applicants.
[51] The nature of the group proceeding was defensive. The plaintiffs alleged that the loan agreements were void and unenforceable. The Bank contended to the contrary. Group members had an opportunity to opt out of the proceeding, insofar as they might wish to maintain a different or novel defence. Upon judgment, group members would be bound by answers to the common questions, and thereafter precluded from litigating other defences to the obligations under the loan agreements. [73]
260 In Clarke v Great Southern Finance Pty Ltd (in liq) (No 4),[74] Croft J considered an application for Court approval of a Deed of Settlement whereby the proceedings the subject of a group proceeding were settled. Croft J referred to the proceedings as 'the Great Southern proceedings'.
261 The trial of the Great Southern proceedings was heard by Croft J. The trial commenced on 29 October 2012 and extended over 90 days. Judgment was reserved and was listed for delivery on Friday 25 July 2014. Shortly before judgment was to be delivered, the parties settled the Great Southern proceedings.
262 As indicated above, in Clarke v Great Southern (No 3), Judd J heard an application by some group members in the Great Southern proceedings to cease to be members of the group after the group proceedings had been settled but before the settlement had been approved by the court as required by the Act. The matter the subject of Clarke v Great Southern (No 4) was hearing of the application for approval by the court of the settlement.
263 The judgment in Clarke v Great Southern (No 3) was delivered by Judd J on 14 November 2014, and Clarke v Great Southern (No 4) was delivered by Croft J on 11 December 2014.
264 In Clarke v Great Southern (No 4), Croft J heard the application that the court approve the terms of settlement. Croft J approved the terms of settlement reached in the Great Southern proceeding. There were 21,000 group members. 1,545 of those group members objected to the settlement being approved; 167 of those objecting group members objected on the basis that the settlement may cause prejudice to their alternative defences in subsequent debt recovery proceedings. As mentioned above, under the terms of settlement, the defences in existing debt recovery proceedings would not be permitted to proceed. The settlement deed included a provision that the plaintiffs on their own behalf and on behalf of all group members acknowledge and admit that the loan agreements with the group members are valid and enforceable and that the plaintiffs are liable to pay the loan balances under the loan agreements.
265 A number of objectors raised objections to these provisions including that those provisions would prevent them from raising individual defences or counterclaims relating to the Great Southern loans in the context of any subsequent debt recovery proceedings commenced by the parties who made loans to the investors to enter into the investment schemes.
266 Croft J rejected this submission as a relevant consideration as to whether or not he should approve the settlement. His Honour found that this ground of objection was raised on a theoretical or hypothetical basis. Croft J held that it was incumbent on the objectors to provide particulars of those individual defences and counterclaims, which they had not done. Croft J also held it would be necessary for those objectors to establish why any such claims would not be barred in any event.
267 Croft J went on, however, to consider whether if there was some reality in the assertions of the objectors that there were individual claims that were not entirely theoretical or hypothetical, whether such claimants would now be able to pursue these claims. To this extent, therefore, his reasons were obiter as he had already found that the individual claims were theoretical or hypothetical.
268 In doing so, Croft J amplified upon his previous expressed opinion in Clarke v Great Southern (No 2) that any party to the group proceeding who sought to pursue individual proceedings involving issues determined in the group proceedings would be stayed on the basis of 'abuse of process, Anshun estoppel or, perhaps, election depending on the particular circumstances.'[75]
269 Croft J held that by not opting out of the group proceedings, the group members should be taken to have elected to be bound by the claims made in the group proceedings. He found that this conclusion followed from a consideration of the purpose of the opt out procedure in the context of the group proceedings legislation as a whole.
270 After considering the Australian Law Reform Commission report Grouped Proceedings in the Federal Court,[76] Croft J held that the purpose of the opt out procedure was to preserve the right of individuals with claims that arise from the same subject matter as the group proceeding to choose whether to commence individual proceedings. His Honour held that the 'necessary corollary of this for group members who do not opt out is that they must be taken to have chosen to be bound by the issues raised in the group proceedings and their ultimate resolution.'[77] Croft J said that if this were not so, the purpose of the group proceedings would be frustrated.
271 Croft J cited from D'Orta-Ekenaike v Victoria Legal Aid[78] that it is a 'central and pervading tenet of the judicial system [that] controversies, once resolved, are not to be reopened except in a few, narrowly defined, circumstances.'[79] He said that this principle is reflected in the doctrines of issue estoppel, Anshun estoppel and abuse of process.
272 Croft J held that the enforceability clauses were consistent with the doctrines of issue estoppel, Anshun estoppel and abuse of process. Croft J held that these doctrines would have variously operated to bar subsequent claims or defences by group members that their loan agreements were unenforceable. He held that the enforceability clauses merely 'provide certainty for all parties as to where the group members stand.'[80]
273 Croft J then considered issue estoppel, Anshun estoppel and abuse of process in turn. As to issue estoppel, His Honour held that in the group proceedings the group members alleged that acting in reliance on misleading statements in the PDS, they entered into the relevant loan agreements. Thus, any claim that the loan agreements were not entered into voluntarily or that their consent was otherwise vitiated would be inconsistent with the allegation of reliance in the group proceeding and the resolution of that issue, and the claim or defence would be barred by issue estoppel.[81]
274 On the issue of Anshun estoppel and abuse of process, Croft J posed the relevant issue as follows:
Thus, in the context of group proceedings, the proper question is whether it is unreasonable or otherwise an abuse of process for a group member who wishes to put his or her case differently to the relevant plaintiff or plaintiffs to remain in the group and, if dissatisfied with the outcome of the group proceedings, to raise fresh issues regarding the same subject matter in a subsequent individual proceeding.[82]
For the preceding reasons, any group members with purported claims or defences different to those pleaded in the group proceedings, and who wished to pursue those claims or defences, could have and should have opted out. By not opting out group members must be taken to have accepted that the claims as pleaded in the group proceedings represent all of the claims reasonably available to them. That being so, it follows, that the [lender parties] are entitled to assume that the only challenges to the enforceability of the [loan agreement group members] wished to pursue were those in the group proceedings. It would not be reasonable for group members to raise different claims or defences in subsequent proceedings. Further, the [lender parties] should be entitled to seek and achieve a complete settlement of the matters in dispute between them and the group members regarding the [loan agreements]. It would be an abuse of the Court's process, especially having regard to the opt-out procedure, for any group members to frustrate this entitlement by bringing subsequent claims or defences regarding the [loan agreements].[83]
276 The High Court decision in Tomlinson v Ramsey Food Processing Pty Ltd[84] was handed down after argument was completed in these proceedings. In view of its relevance to these proceedings, I invited the parties to make written submissions on the decision if they so chose. I received submissions from each of the parties on Tomlinson.
277 Mr Tomlinson had been employed at an abattoir. He brought a claim against Ramsey Food Processing Pty Ltd for injuries sustained at the abattoir in June 2008. In November 2006, Mr Tomlinson was told that he was no longer employed by Ramsey but employed by Tempus Holdings Pty Ltd. In November 2008, he was laid off when told that Tempus was no longer supplying labour to Ramsey.
278 The Fair Work Ombudsman instituted civil penalty proceedings in the Federal Court against Ramsey alleging Ramsey not Tempus was the employer of Mr Tomlinson and ten other workers at the abattoir. The Federal Court held that Ramsey was the employer, that it was in breach of the award, and made orders ordering Ramsey to pay Mr Tomlinson and the other specified amounts and imposed a civil penalty on Ramsey.
279 Mr Tomlinson subsequently brought proceedings against Ramsey in the District Court of New South Wales, in which Mr Tomlinson alleged that he sustained injuries through the breach of duty by Ramsey but also alleged that he was employed by Tempus. Mr Ramsey was not entitled under New South Wales law to make the claim against Ramsey if Ramsey was his employer.
280 Ramsey contended that Mr Tomlinson was estopped by the declarations made in the Federal Court from denying Ramsey was his employer. The District Court rejected the estoppel defence, but the Court of Appeal of New South Wales held that Mr Tomlinson was estopped.
281 On appeal to the High Court, the High Court held that Mr Tomlinson was not estopped from denying Ramsey was his employer.
282 The plurality dealt at length with issues of whether the Fair Work Ombudsman was the privy of Mr Tomlinson and whether the principles of estoppel estopped Mr Tomlinson from denying Ramsey was his employee. In doing so, the plurality canvassed various types of estoppel.
283 It must be borne in mind when considering the observations of the High Court that the court was addressing whether an issue resolved in the Federal Court could be raised by Mr Tomlinson in seeking a contrary decision in the New South Wales proceeding. The case did not concern issues that were not raised but could have been raised such as is relevant in Anshun estoppel. However, this did not preclude the High Court canvassing Anshun estoppel and abuse of process.
284 The plurality said that with a final judgment the rights and obligations in controversy as between the parties cease to have an independent existence and they 'merge' in the final judgment.[85]
285 The plurality proceeded to address estoppel in relation to judicial determinations:
Estoppel in relation to judicial determinations is of a different nature. It is a common law doctrine informed, in its relevant application, by similar considerations of finality and fairness. Yet its operation is not confined to an exercise of judicial power; it also operates in the context of a final judgment having been rendered in other adversarial proceedings. It operates in such a context as estoppel operates in other contexts: as a rule of law, to preclude the assertion of a right or obligation or the raising of an issue of fact or law.
Three forms of estoppel have now been recognised by the common law of Australia as having the potential to result from the rendering of a final judgment in an adversarial proceeding. The first is sometimes referred to as "cause of action estoppel". Estoppel in that form operates to preclude assertion in a subsequent proceeding of a claim to a right or obligation which was asserted in the proceeding and which was determined by the judgment. It is largely redundant where the final judgment was rendered in the exercise of judicial power, and where res judicata in the strict sense therefore applies to result in the merger of the right or obligation in the judgment. The second form of estoppel is almost always now referred to as "issue estoppel". Estoppel in that form operates to preclude the raising in a subsequent proceeding of an ultimate issue of fact or law which was necessarily resolved as a step in reaching the determination made in the judgment. The classic expression of the primary consequence of its operation is that a "judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies". The third form of estoppel is now most often referred to as "Anshun estoppel", although it is still sometimes referred to as the "extended principle" in Henderson v Henderson. That third form of estoppel is an extension of the first and of the second. Estoppel in that extended form operates to preclude the assertion of a claim, or the raising of an issue of fact or law, if that claim or issue was so connected with the subject matter of the first proceeding as to have made it unreasonable in the context of that first proceeding for the claim not to have been made or the issue not to have been raised in that proceeding. The extended form has been treated in Australia as a "true estoppel" and not as a form of res judicata in the strict sense. Considerations similar to those which underpin this form of estoppel may support a preclusive abuse of process argument.[86]
286 The plurality then turned to the relationship between the doctrine of estoppel and the doctrine of abuse of process:
The present significance of the recognition of those three forms of estoppel is that each has the potential to preclude assertion of a right or obligation, or the raising of an issue of fact or law, between parties to a proceeding or their privies. Absent a principled basis for distinction - and none has been suggested - one principle must govern the identification of privies for the purpose of all forms of estoppel which result from the rendering of a final judgment in an adversarial proceeding.
To explain contemporary adherence to the comparatively narrow principle in Ramsay v Pigram, it is appropriate also to explain the relationship between the doctrine of estoppel and the doctrine of abuse of process as it has since come to be recognised and applied in Australia. The doctrine of abuse of process is informed in part by similar considerations of finality and fairness. Applied to the assertion of rights or obligations, or to the raising of issues in successive proceedings, it overlaps with the doctrine of estoppel. Thus, the assertion of a right or obligation, or the raising of an issue of fact or law, in a subsequent proceeding can be simultaneously: (1) the subject of an estoppel which has resulted from a final judgment in an earlier proceeding; and (2) conduct which constitutes an abuse of process in the subsequent proceeding.
Abuse of process, which may be invoked in areas in which estoppels also apply, is inherently broader and more flexible than estoppel. Although insusceptible of a formulation which comprises closed categories, abuse of process is capable of application in any circumstances in which the use of a court's procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute. It can for that reason be available to relieve against injustice to a party or impairment to the system of administration of justice which might otherwise be occasioned in circumstances where a party to a subsequent proceeding is not bound by an estoppel.
Accordingly, it has been recognised that making a claim or raising an issue which was made or raised and determined in an earlier proceeding, or which ought reasonably to have been made or raised for determination in that earlier proceeding, can constitute an abuse of process even where the earlier proceeding might not have given rise to an estoppel. Similarly, it has been recognised that making such a claim or raising such an issue can constitute an abuse of process where the party seeking to make the claim or to raise the issue in the later proceeding was neither a party to that earlier proceeding, nor the privy of a party to that earlier proceeding, and therefore could not be precluded by an estoppel.[87]
287 Further the plurality recognised that to enliven privity the interest of the privy must be legal. The plurality said: [88]
Subsequent applications of the principle in Ramsay v Pigram have for the most part correctly emphasised that the interest of the privy must in each case be a legal interest: an economic or other interest on the part of A in the outcome of the earlier proceeding is insufficient. Those applications have also correctly emphasised that, absent a legal interest, such influence as A might have had over the conduct of the earlier proceeding is irrelevant even if that influence amounted to control. ... The constraint on the conduct of A in such circumstances lies not in an estoppel but, in an appropriate case, in abuse of process[89].
288 The plurality addressed the legal principles that should apply in determining whether the Fair Work Ombudsman was the privy of Mr Tomlinson. In doing so they referred to Young v Public Service Board.[90] There, government employees claiming a declaration that their employer, the Public Service Board, had not determined their ordinary hours of work were held not to be estopped by a contrary finding of fact that had been made in an earlier dispute between the Public Service Board and an industrial association of which they were members.
289 Lee J held that they were not estopped as the employees had no capacity to appear in or control the proceedings which resulted in the resolution of the dispute. The High Court said:
[37] The first strand of the reasoning in Young illustrates that a person does not become bound by an estoppel by reason of a party having represented legal interests of that person in an earlier proceeding merely as a consequence of that party having lawfully asserted a claim which, if accepted, would have resulted in a determination enhancing or enforcing a legal entitlement of the person. In the absence of the person having authorised the assertion of the claim, the representation must at least have been of such nature as to have protected the person from being unjustifiably subjected to an unwanted estoppel.[91]
290 The plurality then went on to examine why this was so, and in doing so made observations about group proceedings which are plainly relevant to the proceedings before me.
[38] Why that should be so is not difficult to explain. It is a principle at the core of our legal system that a party claiming or denying the existence of a legal right or obligation should have an opportunity to present evidence and arguments to establish the facts and law on which the claim or denial is founded. There are countervailing considerations, some of which operate to create exceptions to that principle. Finality and fairness, including maintaining the certainty of past adjudicated outcomes and ensuring the predictability of future adjudicated outcomes, are amongst those countervailing considerations, and the estoppels informed by those considerations are amongst the exceptions to the principle. The operation of an estoppel, it must be remembered, is to preclude the assertion in a subsequent proceeding of what is claimed to be the truth.
[39] The justice of binding to an estoppel a person who was a party to an earlier proceeding is readily apparent: the person has already had an opportunity to present evidence and arguments. The justice of binding to an estoppel a person whose legal interests stood to benefit from the making or defending of a claim by someone else in an earlier proceeding will often also be apparent. With the benefit of the claim or defence also comes the detriment of the estoppel. That, at least, is the underlying theory. But it is a theory which has limitations. It would be quite unjust for such a person to be precluded from asserting what the person claims to be the truth if the person did not have an opportunity to exercise control over the presentation of evidence and the making of arguments in the earlier proceeding and if the potential detriment to the person from creating such an estoppel was not fairly taken into account in the decision to make or defend the claim in the earlier proceeding or in the conduct of the earlier proceeding.
[40] Traditional forms of representation which bind those represented to estoppels include representation by an agent, representation by a trustee, representation by a tutor or a guardian, and representation by another person under rules of court which permit representation of numerous persons who have the same interest in a proceeding[92]. To those traditional forms of representation can be added representation by a representative party in a modern class action[93]. Each of those forms of representation is typically the subject of fiduciary duties imposed on the representing party or of procedures overseen by the court (of which opt-in or opt-out procedures and approval of settlements in representative or class actions are examples), or of both, which guard against collateral risks of representation, including the risk to a represented person of the detriment of an estoppel operating in a subsequent proceeding outweighing the benefit to that person of participating in the current proceeding.[94]
291 Thus, the plurality accepted that in group proceedings the plaintiff acts as the privy of the group members and the proceedings bind those represented to estoppels. Again it must be remembered, that the plurality were addressing circumstances where the same issue was sought to be relitigated: in the case before them, whether or not Mr Tomlinson was employed by Ramsey. As it is, the same effect is achieved under Part 4A by s 33ZB.
292 On the other hand, the plurality recognised the core principle of our legal system that a party claiming or denying the existence of a legal right or obligation should have an opportunity to present evidence and arguments to establish the facts and law on which the claim or denial is founded. Although, they accepted there are 'countervailing considerations'.
293 The court held that Tomlinson was not estopped from contending that he was employed by Tempus and not Ramsey at the time of his injury. The issue ultimately turned on whether the Fair Work Ombudsman was not Mr Tomlinson's privy in the Federal Court proceeding.
294 The plurality referred to the fact that the Fair Work Ombudsman may be required to consider different interests than those of the person it is said that he is the privy of. The plurality said:
[42] Were a person whose legal entitlement the statutory entity or office-holder claimed to enforce thereby to be privy in interest with the entity or office-holder for the purpose of the common law doctrine of estoppel, pursuit of the claim by the statutory entity might foreclose not only the pursuit of the same and other claims by that person, but also the raising by that person of issues of fact or of law in defence of claims brought against that person. The entity or office-holder, in acting within its statutorily defined area of responsibility, might in that way unwittingly preclude the future enforcement of other rights or obligations of far more value to that person.
[43] For the conduct of the statutory entity or statutory office-holder to constrain the future conduct of the person would therefore have the real potential not only to occasion injustice to that person but to impose a practical impediment to the performance of the entity or statutory office-holder's statutory responsibilities. If such a result is not imposed by the statute under which the entity or office-holder acts, then such a result should not be superimposed by the common law of estoppel.[95]
295 As mentioned above, the High Court was only considering issue estoppel. The question arises, however, to what extent its decision illuminates the application of Anshun estoppel and abuse of process in this case. I will discuss this issue below after I have addressed the submissions of the parties and considered the provisions of Part 4A in further detail.
296 Mr & Mrs Collins advance several reasons why they should not be shut out from raising the defences they plead.
297 First, Mr & Mrs Collins submit that the defences they now seek to raise fall outside the ambit of the group proceeding and accordingly they are not precluded from raising them by reason of any preclusion principles.
298 Mr & Mrs Collins submit that the group proceeding was limited to issues around Timbercorp Securities' alleged non-disclosure/misleading and deceptive conduct and otherwise limited to Timbercorp Finance's participation in that behaviour.
299 Mr & Mrs Collins submit that no aspect of the group proceeding involved any challenge to the efficacy of the loan agreement upon which Timbercorp Finance now relies against Mr & Mrs Collins.
300 Mr & Mrs Collins contend that their response to Timbercorp Finance's allegations that they are indebted to it were never in issue in the group proceeding and the findings in that proceeding were arrived at upon different facts and evidence from those that are sought to be adduced by Mr & Mrs Collins in this proceeding.[96] This is not a case where this court will be 'raking over the coals' of the group proceeding.[97]
301 Mr & Mrs Collins contend that Timbercorp Finance deliberately refrained from seeking to determine the efficacy of the various alleged loan agreements upon which it proposed to rely against 'group members'. Mr & Mrs Collins contend that if their defence succeeds they would not have been group members. Accordingly, Timbercorp Finance's attempt to preclude Mr & Mrs Collins from challenging Timbercorp Finance's failure to make any payment to Timbercorp Securities for their benefit:
... amounts to deplorable misuse of this court's "procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people."[98]
302 Mr & Mrs Collins submit that for the Anshun principle to apply there must be a risk of inconsistent judgments and in this case a decision that no loan was made would not be inconsistent with any of the decisions on the common questions that were decided in the group proceeding.
303 Mr & Mrs Collins submit that preclusionary principles do not apply as:
(a) The group proceeding case that the Timbercorp Finance loans were invalid by reason of misleading and deceptive conduct was a fundamentally different proposition to Mr & Mrs Collins' no loan defence;
(b) Mr & Mrs Collins did not receive copies of pleadings in the group proceeding nor any separate advices, and were denied reports about the mediation discussions; and
(c) Mr & Mrs Collins did not provide instructions to M+K, nor did M+K seek instructions from them.
304 Mr & Mrs Collins submit that the content of the opt-out notices does not support any contention that in failing to opt-out of the group proceeding, Mr & Mrs Collins made an election not to pursue the no loan defence.
305 The first opt-out notice described the claims in the group proceeding as a nondisclosure case in the following terms:
The Plaintiff alleges that he and group members suffered financial loss because, during the period commencing 6 February 2007 and ending 23 April 2009 ("the Relevant Period"), the Defendants failed to disclose various matters that affected, or were likely to materially affect, investments made in the following Timbercorp managed investments schemes ...
...
The Plaintiff also alleges that during the Relevant Period, he and group members suffered financial loss because the Defendants made false, misleading, or deceptive representations to him and to group members, in relation to the Schemes.
306 Following amendment to the pleading, the second opt-out notice altered the last paragraph quoted above to read as follows:
The Plaintiff also alleges that he and group members suffered financial loss because, between 4 April 2000 and 23 April 2009, the Defendants made false, misleading, or deceptive representations to him and to group members, in relation to the Schemes.
307 Mr & Mrs Collins submit that this was the ambit of Mr Woodcroft-Brown's case as Mr & Mrs Collins could have understood it at the time of deciding whether or not to opt out.
308 Mr & Mrs Collins contend that the opt-out notices, in their terms, did not provide sufficient information to alert Mr & Mrs Collins to the possibility that if the group proceeding failed and thereafter Timbercorp Finance pursued them, asserting an entitlement under the alleged loan agreement, they might be precluded from challenging the efficacy of that agreement.
309 They submit that, in no sense did the opt-out notices alert them to the proposition that if they did not opt out they would be prevented from ever challenging Timbercorp Finance's entitlement to recover moneys from them on a basis different to the non-disclosure claims being made in the group proceeding.
310 Mr & Mrs Collins submit that they were not provided with any warning that they may be deprived of the ability to do this, which, they say, is not surprising given that pursuant to Part 4A members of the class being represented play no active role in the conduct of the group proceeding.
311 The warning contained within the opt-out notices that unless Mr & Mrs Collins opted out, upon the conclusion of the group proceeding Mr & Mrs Collins would be deprived of the ability to pursue their own claims, was limited to warning that they would be deprived of running 'the same' claims as those raised in the group proceeding. The warning in the opt-out notices was in the following terms:
If you are a group member and you do not give notice to opt out by [date], you will be taken not to have opted out and will, under Australian law, be bound by the outcome of the class action and any judgment or determination made in it. If the class action is unsuccessful or is not as successful as you might have wished, you will not be able to make the same claim in any other proceedings. (emphasis added)
312 Mr & Mrs Collins contend that the preclusionary principles do not apply to the no loan defence as they did not receive the documents that informed them of the no loan defence until July 2014, which was after Timbercorp Finance commenced this proceeding in June 2014.
313 Furthermore in considering Mr & Mrs Collins' right to defend the claims now made against them by Timbercorp Finance, they are in the position of defendants who have unadjudicated issues and who cannot be precluded from prosecuting those issues in fresh proceedings commenced by Timbercorp Finance:
A plaintiff who has an unadjudicated cause of action which can be enforced only in fresh proceedings (Duedu v Yiboe [1961] 1 WLR 1040 at 1046) cannot be precluded from taking fresh proceedings merely because he could have and, if you will, should have counterclaimed on that cause of action in a forum chosen by the opposite party in proceedings in which the opposite party sued him. We do not read the majority judgment in Port of Melbourne Authority v Anshun Pty Ltd as holding the contrary, except in a case where the relief claimed in the second proceeding is inconsistent with the judgment in the first.[99]
314 Mr & Mrs Collins contend that neither Part 4A, nor the doctrines of abuse of process, res judicata, issue estoppel, or 'Henderson/Anshun' estoppel provide any basis in law for precluding Mr & Mrs Collins from pursuing in this proceeding their no loan defence to Timbercorp Finance's allegations of indebtedness.
315 Mr & Mrs Collins contend that Part 4A does not require individual claims to be resolved by group members although provision is made for them to be resolved if they are raised.
316 They submit that Part 4A does not include any provision which in unmistakable and unambiguous language interferes with Mr & Mrs Collins' most basic right to pursue such defences as may be available to them in the face of Timbercorp Finance's allegations of indebtedness when that issue did not arise for determination in the group proceeding. They say that Part 4A expressly recognises that individual class members may have claims that do not arise for determination in the group proceeding.[100]
317 Mr & Mrs Collins submit that Part 4A does not prevent or prohibit individual class members from litigating issues that did not arise for determination as common issues. In addition, the Parliament has determined that control of the group proceeding is the responsibility of the representative plaintiff alone.[101]
318 Mr & Mrs Collins contend that the Parliament has determined that group members have little or no active involvement in a group proceeding. Their involvement is limited to the following circumstances:
(a) the right to 'opt-out' by a prescribed cut-off date (see s 33J);
(b) if the court forms the view that it should allow an individual group member's claims to be heard during the group proceeding (see ss 33S and 33R);
(c) if the court determines to appoint a group member as a sub-group representative party (see s 33Q);
(d) group members may make an application seeking substitution of the representative plaintiff (see s 33T); and
(e) group members may, subject to standing, raise objections to settlement of a group proceeding (see s 33W).
319 Mr & Mrs Collins submit that, pursuant to Part 4A, construed in accordance with principle, group members have no right to appear or to make decisions concerning the conduct by the representative plaintiff of the group proceeding.
320 Part 4A contemplates that there is every possibility that group members may become bound by a judgment in circumstances where:
(a) a claim was pursued on their behalf without their knowledge;
(b) they had no opportunity to withdraw from the proceeding;
(c) they had no opportunity to participate in the proceeding; and
(d) they had no opportunity to influence the conduct of the proceeding.
321 As Finkelstein J observed in P Dawson Nominees v Brookfield Multiplex Limited[102] in relation to Part IVA of the Federal Court of Australia Act 1976 (Cth) which, as mentioned earlier, mirrors Part 4A of the Supreme Court Act:
The starting point is that the class actions regime under Pt IVA of the Federal Court Act is designed to require little or no active involvement by group members. A group member is a group member principally for the limited purposes of taking the benefit, or suffering the burden, of findings on common questions (ie questions that are common to the claim brought by the named applicant and claims that may be pressed by group members). In an action where money relief may be sought by a group member, the group member will generally only be required to provide specifics about the quantum of his or her claim after the common questions have been resolved and that may be in a separate action.[103]
322 Mr & Mrs Collins submit that it is evident from the provisions of Part 4A that it concerns the efficient determination of common questions and not all the disputes between group members of the representative proceedings. Its underlying policy is to achieve efficient and effective access to justice when otherwise the cost of litigation would be prohibitive.
323 The purposes of the equivalent provisions in the Commonwealth jurisdiction were set out in the second reading speech for the Federal Court of Australia Amendment Act 1991 (Cth):[104]
...
(e) 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.
(f) To deal efficiently with the situation where the damages sought by each claimant are large enough to justify individual actions and a large number of persons wish to sue the respondent. The new procedure will mean that groups of persons, whether they be shareholders or investors, or people pursuing consumer claims, would be able to obtain redress and do so more cheaply and efficiently than would be the case with individual actions.
324 During the second reading speech, the Commonwealth Attorney-General also said the following:
The Government believes that an opt out procedure is preferable on grounds of both equity and efficiency. It ensures that people, particularly those who are poor or less educated, can obtain redress where they may be unable to take the positive step of having themselves included in the proceedings. It also achieved the goals of obtaining a common, binding decision while leaving a person who wishes to do so free to leave the group and pursue his or her claim separately.[105]
325 Mr & Mrs Collins submit that, put another way, the primary object: 'is to avoid multiplicity of actions, and to provide a means by which, where there are many people who have claims against a defendant, those claims may be dealt with, consistently with the requirements of fairness and individual justice, together' (emphasis added).[106] However, it is well recognised that:
There will be cases where a representative proceeding will not resolve all issues in a dispute. Commonly, for example, a representative proceeding will be suitable to try issues of liability while proof of damage and other remedies may be left to each individual member of the class to establish. Sometimes the benefit of a representative proceeding will be even less than that. There will be cases where a class action will do no more than resolve certain issues relating to liability, leaving others to be dealt with on an individual basis.[107]
326 The normal right of every defendant is the right to defend an action brought against him or her.[108]
327 Mr & Mrs Collins referred to Batistatos v Roads and Traffic Authority of New South Wales,[109] in which Gleeson CJ, Gummow, Hayne and Crennan JJ spoke of the impermissibility of a court denying a defendant its right to raise a defence by imputing to the legislature an intent not expressed in the words of the legislation:
... The difficulty is in the expression "a legal right". The plaintiff certainly has a "right" to institute a proceeding. But the defendant also has "rights". One is to plead in defence an available limitation defence. Another distinct "right" is to seek the exercise of the power of the court to stay its processes in certain circumstances. On its part, the court has an obligation owed to both sides to quell their controversy according to law.
[64] It is a long, and impermissible, step to deny the existence of what may be the countervailing right of a defendant by imputation to the legislature of an intent, not manifested in the statutory text ...[110]
328 Mr & Mrs Collins submit that the abrogation of rights by the Parliament requires a clear and unambiguous statement of legislative intention.[111] No such clear and unambiguous statement is to be found in any provision of Part 4A. Those provisions do not in any sense abrogate the rights of group members to maintain individual defences, or common defences premised upon issues that did not form part of the common issues determined in the group proceeding.
329 Mr Tomes contends that the primary objective of Part 4A as identified by Gleeson CJ in Mobil v State of Victoria, namely 'to avoid multiplicity of actions and to provide a means by which many people with claims against a defendant can have their claims dealt with together, consistently with the requirements of fairness and individual justice',[112] is facilitative and not preclusionary.
330 Mr Tomes contends that Timbercorp Finance is not estopped on Anshun principles from instituting the claim that they now make against Mr Tomes under the loan agreement as it did not pursue a counterclaim in the group proceeding making that claim.[113] Mr Tomes submits that the corollary of the principle set out in Tanning's case is that the group member in the group proceeding is not prevented from defending the second action (here, the Tomes Proceeding brought by Timbercorp Finance) just as the plaintiff in the second action (Timbercorp Finance) is not estopped by reason that the plaintiff in the current proceeding did not raise the claim by counterclaim in the group proceeding.
331 Mr Tomes contends that Timbercorp Finance has on foot two proceedings concerning his alleged loan agreements. Mr Tomes says that it is not open to Timbercorp Finance to seek to preclude Mr Tomes from defending this proceeding when he has not had any opportunity to defend the counterclaim made in the group proceeding and there has been no adjudication or determination of the counterclaim or the defences to that counterclaim.
332 In the group proceeding, Timbercorp Finance counterclaimed against Mr Woodcroft-Brown claiming moneys owed under his loan agreement. Mr Tomes contends that the counterclaim was brought against Mr Woodcroft-Brown in a representative capacity. Accordingly, Mr Tomes contends, further or alternatively, that Timbercorp Finance is precluded and/or estopped from bringing the Tomes Proceeding against him by reason that it has previously commenced and has abandoned and/or elected not to prosecute proceedings concerning the alleged Loan Agreement L0025296 or the alleged Loan Agreement L0028248 against him in his capacity as a group member in the Group Proceeding.
333 The counterclaim was stayed. Further the only relief sought under the counterclaim was against Mr Woodcroft-Brown personally.
334 Mr Tomes submits that the opt-out notice and the amended opt-out notice did not make any reference to any loan agreements or that a group member could potentially be shut out from defending recovery proceedings if he or she did not opt out. Mr Tomes says that the opt-out notices only refer to investments made in various Timbercorp management investment schemes, and to financial loss alleged to be suffered by reason of false, misleading or deceptive representations in relation to those schemes.
335 Mr Tomes says that neither he nor any other group member was put on notice that he or she might be precluded in future from defending any recovery proceeding brought by Timbercorp Finance. Mr Tomes submits that accordingly he was denied an adequate opportunity to opt out of the group proceeding based upon an informed decision about his rights and the consequences of not exercising his right to opt out.
336 Mr Tomes says the failure of the opt-out notices to adequately warn Mr Tomes that he would or may be estopped from raising defences to his loan agreement bears particularly on whether the Anshun estoppel principles apply. Mr Tomes says his decision not to opt out or to seek to actively participate in the group proceeding was not unreasonable given the form and content of the opt-out notices that he received.
337 Timbercorp Finance contends that Anshun principles and abuse of process principles preclude Mr & Mrs Collins and Mr Tomes from raising their pleaded defences.
338 Timbercorp Finance submits that the purpose of Part 4A is to avoid a multiplicity of proceedings and to ensure the court's resources are used efficiently and expeditiously. Timbercorp Finance contends that Part 4A gives effect to those objectives by moving away from the previous requirement that represented parties have the 'same interest'. Part 4A does that by requiring only that 'the claims of all those persons give rise to a substantial common question of law or fact'.[114] Timbercorp Finance submits that '[p]art 4A improves upon the former representative rules by making provision to permit the Court to determine all issues arising from the same, similar or related circumstances.'[115]
339 Further, Timbercorp Finance contends that Part 4A enables or, indeed requires, individual issues arising from the same, similar or related circumstances, to be determined even where they are peculiar to a sub group of members or even only to one group member. Timbercorp Finance says that these provisions manifest a legislative policy to ensure that a multiplicity of proceedings is avoided.
340 Timbercorp Finance submits that the manifest benefits of Part 4A to group members, and to the courts and the administration of justice, carry with them 'related burdens'. The procedure may expose the defendant to complex, costly and protracted civil litigation. Timbercorp Finance submits that such considerations make it all the more essential that the purpose of the provisions to avoid multiplicity of proceedings and ensure the expeditious determination of all related claims at the one time be recognised and achieved.
341 Timbercorp Finance submits that where one or more of the preclusionary principles are in question, the scope and application of the principles should be determined in a fashion that takes account of these considerations and ensures that a defendant exposed to the burdens mentioned not be vexed subsequently with further litigation concerning the same subject matter.
342 Timbercorp Finance submits that recognising that these policies underpin and motivate Part 4A squarely fits within the mainstream of policy thought underpinning the development of representative proceedings in equity. Timbercorp Finance submits that in equity 'the principle was that all persons materially interested in the subject matter of the suit ought generally to be made parties to it either as plaintiffs or defendants so as to settle the controversy by binding those interested to the final decree'.[116]
343 Timbercorp Finance submits that the extensive powers given to the court to manage group proceedings is consistent with and supports the legislative policy evident in Part 4A of determining all issues arising from the same, similar or related circumstances within the confines of the group proceeding. Timbercorp Finance points to the powers in ss 33Q, 33R, 33S and the additional '[g]eneral power of [the] court to make orders' in s 33ZF.
344 Timbercorp Finance submits that a feature of Part 4A is that it enables the primacy of judicial control over the management of the proceedings that has always been necessary to ensure that the litigation is efficiently disposed of and that the interests of those who are absent but represented are not prejudiced by the conduct of the litigation on their behalf.[117]
345 Applying these principles to this case, Timbercorp Finance submits that the general law doctrines of both Anshun estoppel and prevention of abuse of process, informed by the legislative context, apply in the circumstances of these matters to preclude the defendants from raising their pleaded defences.
346 Timbercorp Finance accepts that a group member is not a plaintiff. Timbercorp Finance submits, however, that it is well accepted that preclusionary principles can apply to persons who were not parties in the relevant antecedent litigation but are otherwise sufficiently connected to the plaintiff.[118] Timbercorp Finance says that a group member is defined to mean 'a member of a group on whose behalf a group proceeding has been commenced'.[119] 'Plaintiff' is defined to mean 'a person who commences a group proceeding as a representative party'. Timbercorp Finance submits that there is clearly a close connection between the lead plaintiff and group members.
347 Timbercorp Finance submits that s 33ZB, by expressly providing that group members are bound by the judgment delivered in the group proceeding, manifests a legislative intention and effect of expressly assimilating group members to the position of a party in relation to the effect of a judgment. Timbercorp Finance submits that that effect includes its preclusive effect. Timbercorp Finance says that this provision illustrates how close the overall position of group members is to that of a party.
348 Timbercorp Finance submits that the judgment handed down in a group proceeding is no different from that handed down in any ordinary civil proceeding.[120]
349 Timbercorp Finance submits that group members can avoid or reduce the binding and preclusive effect of the judgment by the statutory mechanisms available to them. In particular, the requirement to give notice of the opportunity to opt out, the facility to opt out and the entitlement to apply to the court if the plaintiff is not adequately representing the group's or sub-group's interests. Further, the court has power to give directions under ss 33Q and 33R where there are issues which are not common to the group to determine.[121] Timbercorp Finance submits that group members may make an application for the court to exercise such powers.[122]
350 Timbercorp Finance submits that accordingly group proceedings require all issues to be raised with the court for case management or those issues are precluded from case management in future proceedings.[123]
351 Timbercorp Finance submits that when each group member's loss is so small that it is not economically viable for each person to bring an action, group proceeding legislation promotes access to justice. Timbercorp Finance submits that requiring group members to make known other common issues, sub-group issues or individual issues or risk losing the opportunity to litigate them later does not work an injustice upon those group members.
352 Timbercorp Finance submits that the premise is that group members' individual claims are economically unviable without the benefit of a group proceeding mechanism. Timbercorp Finance says that raising all issues for the court to determine or risk losing the opportunity to do so later is a small price to pay for having access to that mechanism. Timbercorp Finance says that group members must take the bitter with the sweet.
353 Timbercorp Finance submits that when each group member's loss is large enough to justify individual actions being brought, the group proceeding legislation promotes efficiency and reduces costs for litigants and the courts. Timbercorp Finance says that precisely because each individual claim is sufficiently significant in its own right to justify individual action, it is not a significant burden to require each individual to raise all issues with the court to ensure that costs reductions and efficiency gains are optimised.
354 Timbercorp Finance submits that to permit group members in later proceedings to raise claims and defences that could have been raised in the group proceeding itself would undermine the legislative policies that underpin Part 4A, which are subject only to the particular modifying statutory mechanisms found in ss 33Q, 33R and 33S which mark the limit of the alternatives available to group members other than opting out entirely.
355 Timbercorp Finance submits that to permit the lead plaintiff and the group members to split their issues through the expedient of simply not raising them during the group proceeding is to commit the management of proceedings to the parties and to condone fragmentation of claims and multiplicity of proceedings when Part 4A gives every indication that group proceedings are for the court to manage, and that the issues are to be determined within the one proceeding.
356 Timbercorp Finance contends that for the lead plaintiff and group members not to raise all issues for consideration, if not determination, during the group proceeding is to fly in the face of the statutory improvements upon the former representative proceeding provisions concerning determination of all issues in the one proceeding.
357 Timbercorp Finance submits that the Civil Procedure Act 2010 (Vic) ('Civil Procedure Act') which was in force when the group proceeding commenced on 23 May 2011, applied and that the overarching purpose set out in the Civil Procedure Act 'to facilitate the just, efficient, timely and cost effective resolution of the real issues in dispute' applied.[124] Timbercorp Finance submits that in the context of a group proceeding, Part 4A makes it clear that the 'real issues' comprise all issues whether common, sub-group or individual, so long as they arise from the same, similar or related circumstances. Timbercorp Finance says that the Civil Procedure Act reinforces the policies that underpin Part 4A.[125]
358 Timbercorp Finance contends that the subject matter of the group proceeding should be broadly described as 'an attempt by borrowers to avoid their loan obligations.' At the hearing, submissions were made which gave further definition to Timbercorp Finance's contentions as to the scope of the group proceeding and, therefore, the issues which should have been brought forward or raised for case management within it.
359 Timbercorp's written submissions noted that '[t]he group proceeding provided the occasion for all possible means of avoiding [Timbercorp Finance] loan obligations to be litigated.' Nevertheless, counsel for Timbercorp Finance said in oral submissions that the group proceeding would not result in a 'global' stay. Defendants could still agitate certain matters, for example:
(a) Timbercorp Finance would still be required to prove its debt claim in each recovery proceeding. If there was an 'integer missing' from those proofs, an investor would be permitted to point to this.
(b) If a loan agreement had been novated to another individual, the original investor would be permitted to press that Timbercorp Finance was pursuing the wrong defendant.
(c) If there had been a settlement between Timbercorp Finance and an investor, the investor would 'likely' be permitted to raise this.
360 In these further submissions Timbercorp Finance appears to contend that the group proceeding should have encompassed all issues relating to avoidance of loans arising from circumstances in which the loan agreements were made, but need not have addressed other very discrete claims challenging indebtedness under loan agreements. However, Timbercorp Finance does contend that claims raised by the defendants were canvassed in the group proceeding.
Further detail of Timbercorp's contentions in relation to the defendant's defences
361 Turning to the two defendants, Timbercorp Finance says the doctrine of Anshun is engaged and they are further prevented from raising their defences in order that the process of the court is not abused.
362 Timbercorp Finance says that the court is confronted with 700 separate proceedings with more to be issued. Timbercorp Finance says that the purpose of the group proceeding was to allow borrowers to avoid their loan obligations. Timbercorp Finance says that it is the same purpose lying behind the defences in the two proceedings the subject of this hearing.
363 Timbercorp Finance submits that the purpose of the group proceeding was clear from the prayer for relief in the Sixth Further Amended Statement of Claim by which orders were sought 'declaring that the Plaintiff and Group Members not be liable for any loans, fees or costs in connection with any of the schemes from February 2007 and any loans entered into with Timbercorp in the relevant period'.
364 Timbercorp Finance says that this purpose was clearly identified in the retainer, authority and costs agreement sent by the plaintiff's solicitors, M+K, to group members and in a letter sent by M+K to investors on 28 May 2009 which identified the object of legitimately resisting payment of future loan instalments on loans obtained from Timbercorp Finance and other lenders connected to a Timbercorp company.
365 Timbercorp Finance submits that '[b]eyond the common result being sought, the similarities in the subject matter of the claims in the group proceeding and in the current proceedings are stark'. Timbercorp Finance submits that Mr Woodcroft-Brown's case had as its core the proposition that the Timbercorp Group's financial position exposed each scheme to risk of failure. Timbercorp Finance contends that this issue involved detailed consideration of the 'structure of the schemes and their constituent documents as well as extensive evidence ... about the financial position of and the flow of funds within the Timbercorp Group in relevant periods'. It submits that these are matters upon which the defendants' base their defences in the present proceedings.
366 Timbercorp Finance submits that Mr & Mrs Collins' defence rests upon an alleged defect in the execution of a category of the constituent documents of the scheme, being the licence agreements. Further, Timbercorp Finance contends that as part of their defence, Mr & Mrs Collins put in issue the financial position of Timbercorp Securities and Timbercorp Finance in May and June 2008.
367 Timbercorp Finance says that Mr Woodcroft-Brown pleaded contributions would be applied to fund the relevant scheme. Mr Tomes alleges that a term of the loan agreements was that the loan advance was to be applied for the purpose of his investment in the scheme.
368 Timbercorp Finance accepts that the defences raised by the defendants were not adjudicated upon in the group proceeding and that, for the greater part, the common questions determined by the trial judge did not encompass them (although as noted above, it contends that some issues raised in the defences were canvassed in the group proceeding). Timbercorp Finance submits, however, that they should have been raised, as the very purpose of the proceeding was for group members to avoid paying the amounts borrowed from Timbercorp Finance.
369 Timbercorp Finance says that the group proceeding provided the occasion for all possible means of avoiding Timbercorp Finance loan obligations to be litigated, including the bases now relied upon by the defendants.
370 Timbercorp Finance submits that there were no limits on the scope of the group proceeding pleadings other than those which the plaintiff and group members or their advisers chose to impose. Judd J described the group proceedings as follows: 'the case was pleaded in a scatter gun approach to litigation. It was complex, involving numerous separate claims for primary and accessorial liability. Every conceivable combination or permutation of statutory duty and remedy was explored'.[126]
371 Timbercorp Finance submits that the group proceeding assumed that the loan agreements were valid and sought to relieve the group members from their obligations. Mr & Mrs Collins and Mr Tomes now seek to argue that there was no valid loan agreement, an allegation inconsistent with the one made on their behalf in the group proceeding.
372 Timbercorp Finance submits that of course such a pleading could have been made in the group proceeding in the alternative. Timbercorp Finance says that it is common practice to make such a plea in the alternative. Timbercorp Finance submits, however, that it is not open to the defendants to argue as against Timbercorp Finance that there was a loan agreement in one proceeding and then in another proceeding argue as against Timbercorp Finance that there was no loan agreement.
373 Timbercorp Finance says that in the group proceeding it was alleged that representations were made that the moneys used to acquire units in a scheme would be used solely for that scheme: in other words 'ring fenced'. Judd J found that there was no such representation. Mr Tomes now seeks to argue that it was a term of his agreement with Timbercorp Finance that loan moneys used to purchase the units would be 'ring fenced'. Timbercorp Finance says that the basic underlying issue remains the same: that is, were funds used to acquire units in a scheme to be 'ring fenced'? Timbercorp Finance says that there is no justification for a group member not raising any variation on that basic proposition in the group proceeding.
374 Timbercorp Finance submits that Mr Tomes deposes that his individual issues were known to him during the group proceeding and that he had made them known to M+K, his retained solicitors, who were also the solicitors for Mr Woodcroft-Brown and in the group proceeding generally.
375 Timbercorp Finance submits that Mr Tomes alleges that he was induced to invest in the scheme by the misleading and deceptive representations of a financial adviser said to be Timbercorp Finance's agent. Mr Tomes elected not to opt out when the group proceeding relied on non-disclosures in the scheme PDSs. Timbercorp Finance says that having made that election Mr Tomes should not be permitted to adopt this inconsistent course.
376 Timbercorp Finance says that inconsistency with the issues canvassed and judgment in an earlier proceeding is the paradigm instance in which the Anshun principle is engaged.
377 In relation to Mr & Mrs Collins, Timbercorp Finance submits that the defendants and M+K had or could have had in their possession the relevant documents with which to formulate and advance their defences. The solicitors had a broad retainer from each of the defendants.
378 Timbercorp Finance says that the defences were readily identifiable before the present proceedings. Timbercorp Finance refers to the extensive discovery given by the Timbercorp Group. Timbercorp Finance says that so far as the Collins Proceeding is concerned, the evidence of Ms Duffy establishes that M+K had access to, and with reasonable diligence could have located, the documents that they now rely on to establish that the loan moneys were transferred to Timbercorp Limited rather than to Timbercorp Finance.
379 Timbercorp Finance submits that the defences involve the same subject of litigation, the validity of the loans. Timbercorp Finance says that the matters now relied upon might have been brought forward in the group proceeding. Timbercorp Finance submits that points which properly belonged to the subject there in contest and which using reasonable diligence might have been brought forward were not.
380 Timbercorp Finance submits that if they were not brought forward in the group proceeding, that is through negligence of the solicitors in the group proceeding, that in no way derogates from the conclusion. Timbercorp Finance says that it is irrelevant that the first action was, in form, not a defence but a pre-emptive offensive proceeding. Anshun estoppel proceeds by reference to substance, and that is a matter only of formality. Indeed, Timbercorp Finance says that where what is in issue is whether a group member in an earlier group proceeding is precluded, that will necessarily be the position as a matter of form, given that under Part 4A group proceedings are provided only for claims not defences.
381 Timbercorp Finance submits that such a result is consistent with and required by the statutory context of Part 4A of the Supreme Court Act, as well as the Civil Procedure Act.
382 Timbercorp Finance says that the legislative policy discerned from the text, structure and history of the former, and the express content of the latter, each as set out below, mean that it is so unreasonable for the group members not to have raised the defences within the confines of the group proceeding that they are now precluded from doing so.
383 Timbercorp Finance says that such a result is likewise supported by reference to the position of Timbercorp Finance which as a defendant in the group proceeding bore the burdens imposed by that proceeding, and ought in fairness not have to face further litigation about the same subject matter.
Consideration of Timbercorp Finance contentions
384 As identified above, Timbercorp Finance contends that group proceedings require that all issues that group members have against the defendants to group proceedings in respect of the common questions of law or fact arising from 'same, similar or related circumstances' must be brought forward[127] for case management (although not necessarily determined), or be precluded from determination in future proceedings between the group members and the defendants.
385 Timbercorp Finance's contention is based on several key propositions.
386 First, as noted, Timbercorp Finance contends that '[o]nce there is a substantial common question of law or fact, the group proceeding becomes the vehicle for the determination of all issues that arise from the same, similar or related circumstances'. Timbercorp Finance's contention is that the legislative policy of Part 4A requires this, and that there is a 'parallel policy' in favour of judicial case management.
387 Secondly, as discussed above, Timbercorp Finance defines the common questions of law or fact arising from 'same, similar or related circumstances' (which are subject to the alleged legislative policies described above) broadly in this case to include litigation arising from the entry into the loans with Timbercorp Finance. Timbercorp Finance contends that this definition of the issues in the group proceeding, and the matters which it canvassed, encompass the claims made by the defendants in these proceedings.
388 Third, Timbercorp Finance contends that group members in a proceeding are subject to the same preclusionary principles to which a party to the proceeding is subject. That is, the decision in the group proceeding raises res judicata and issue estoppel in relation to the issues decided and Anshun estoppel and abuse of process principles preclude the parties from raising in subsequent litigation issues that should have been brought forward in the group proceeding, unless any recognised exception is available. Timbercorp Finance only relies on the last two of these preclusionary principles in its challenge to the defences raised by Mr & Mrs Collins and Mr Tomes.
389 Timbercorp Finance relies on s 33ZB of the Act which expressly provides that group members are bound by the judgment delivered in the group proceeding. Timbercorp Finance submits that accordingly group members are in the same position as if they were a party to the proceedings and subject to the same exclusionary principles as a party to the proceeding.
390 Timbercorp Finance says that the Supreme Court Act provides 'statutory mechanisms' that enable a group member to avoid the preclusionary effect of the judgment in the group proceeding by seeking 'case management' of their question or claim. Timbercorp Finance refers to three statutory mechanisms. First, Timbercorp Finance says that group members may opt out entirely under s 33J. Timbercorp says that the group member who opts out is no longer subject to s 33ZB and the resulting exclusionary effects.
391 Secondly, Timbercorp Finance says that a group member who does not opt out is entitled under s 33T to apply to the court if the plaintiff is not adequately representing the group's or sub-group's interests.
392 Thirdly, Timbercorp Finance says that the court may give directions on the application of a group member under ss 33Q, 33R , 33S, 33T and 33ZF, where there are issues that a group member has to be determined, which are not common to the group proceeding or are otherwise not raised in the group proceeding.
393 Timbercorp Finance also contends that not only may an application for directions or orders under ss 33Q, 33R, 33S, 33T or 33ZF enable a group member to avoid the preclusionary effect of the judgment in the group proceeding, but that a failure of a group member to seek case management of a claim, under ss 33Q, 33R, 33S, 333T or 33ZF, that a group member has (from the same, similar or related circumstances to those the subject of the group proceeding) that is not determined by the group proceeding, by itself will enliven Anshun estoppel and abuse of process principles.
394 As mentioned, Timbercorp Finance relies on the opt-out provision as a 'statutory mechanism' to avoid the preclusionary effects flowing from s 33ZB. It will be necessary therefore to further consider the approach of Judd J and Croft J to the enlivenment of preclusionary principles along with Timbercorp Finance's propositions.
395 As discussed above, in Clarke v Great Southern (No 3), Judd J identified the opt-out provision as the means by which a group member could ensure that any individual claim that the group member had, could be preserved for later litigation. Judd J did not refer to any of the provisions now relied upon by Timbercorp Finance to suggest that Part 4A provided a mechanism for group members' individual claims to be raised. Rather, Judd J found that by not opting out the group member was bound by the results of the group proceeding as instituted by the plaintiff in the group proceeding. As his Honour said, 'group members had an opportunity to opt out of the proceeding, insofar as they might wish to maintain a different or novel defence'.
396 As already mentioned, and discussed further below, the approach of Judd J was adopted and expanded on by Croft J in Clarke v Great Southern Finance (No 4).
397 Finally, Timbercorp Finance contends that certain issues raised in the individual defences in these proceedings were encompassed by the decisions in the group proceeding and that the defendants are estopped from raising those issues again, even though Timbercorp Finance does not rely on res judicata or issue estoppel principles in so contending.
Structure of analysis and the issue for determination
398 It is convenient to set out the structure of the reasons that follow and, in doing so, set out preliminary conclusions on the main issues. As noted previously in these reasons, the issue before me is whether the defendants are precluded from raising their defences by Anshun estoppel or abuse of process because they did not seek to have their individual claims 'case managed' in the group proceeding. Timbercorp Finance did not submit that the defendants were precluded by res judicata or issue estoppel.
399 In my view, the essence of the plaintiff's case concerns the question of whether a group member in the defendants' circumstances was able or, indeed, required to avail themselves of the statutory mechanisms put forward by Timbercorp Finance as the means by which all issues arising in connection with the 'same, similar or related circumstances' should have been brought forward to the court for case management. I find that Timbercorp's claim that such means were available to the group members are not borne out by a close reading of the Supreme Court Act.
400 Timbercorp Finance did not merely contend that the group member could avail themselves of the statutory mechanisms referred to above but that they needed to do so in order to forestall the preclusionary effect of the judgment in the group proceeding on their individual claims. This contention depended on Timbercorp Finance's construction of the relevant mechanisms in the Supreme Court Act and the legislative context. It also depended on Timbercorp Finance's definition of the scope of the group proceeding and the issues that should have been raised within it. Timbercorp Finance defines the scope of the group proceeding broadly. It contends that at least some of the defendants' claims were capable of being brought forward within it and that, even if not, they are precluded based on the commonality of the issues.
401 This discussion also encompasses consideration of whether the legislative policy for which Timbercorp Finance contended (in short, that Part 4A not only permits but requires all issues arising out of the 'same, similar or related circumstances' to be brought forward for case management) is evident. I consider the relevant statutory provisions in the Supreme Court Act and the legislative policy underpinning those provisions and conclude that no such legislative policy is evident in relation to group members. I also discuss recent authorities of this court regarding whether a failure to opt out can, by itself, preclude group members from raising individual claims.
402 Notwithstanding that I have found that the defendants' claims are not precluded on the specific basis alleged by Timbercorp Finance, these reasons also deal with the question of the application of relevant preclusionary principles to group members in the context of group proceedings under Part 4A. This involves further consideration of common law principles regarding privies in a litigation. In this connection, the High Court's recent decision in Tomlinson is discussed further below. I find that, in the context of Part 4A, the concept of a 'privy' is narrowly drawn (and the compass of preclusionary principles is similarly limited) and there is otherwise insufficiently clear evidence of a legislative intent to abrogate the fundamental common law right of an individual to seek a hearing in respect of their rights and obligations.
403 In applying the relevant preclusionary principles, I find that the group members did not act unreasonably in not raising their individual questions in the group proceeding such as to give rise to Anshun estoppel. Similarly, I do not find that their subsequent defences constitute an abuse of process. The final sections of these reasons set out these and other conclusions.
404 It is convenient at this stage to examine the provisions of the Act.
Seeking directions under the Supreme Court Act
405 Timbercorp Finance contends that a group member has an entitlement under the Supreme Court Act to seek directions about the determination of a claim or a question arising from an individual claim that the group member has against the defendant in respect of 'all issues arising from the same, similar or related circumstances within the confines of the group proceeding' irrespective of whether or not the claim could have been raised in the group proceeding. Timbercorp Finance contends that the failure of the group member to seek such directions will preclude it from thereafter raising the claim or question arising out of the claim in proceedings with the defendant to the group proceeding.
406 Timbercorp Finance's contention does not hold good if ss 33Q, 33R, 33S, 33T or 33ZF only permit the court to make directions or orders about claims or questions raised in the group proceeding by the parties and do not entitle a group member to seek directions or orders in respect of a claim or question that the group member has in relation to the defendant that was not raised in the group proceeding by the parties.
407 If that is the case, then Timbercorp Finance's case that the defendants had an entitlement to seek directions and case management of their claims in the group proceeding falls away as the claims raised by Mr & Mrs Collins and Mr Tomes in their defences were not raised by the plaintiff in the group proceeding.[128]
408 Alternatively, Timbercorp Finance's argument also does not hold good if a group member is entitled to seek directions under ss 33Q, 33R, 33S, 33T or 33ZF in respect of a claim or question not raised in the group proceeding by the parties (but that relates to the matters raised in the proceeding) but is not required to do so in the sense that the failure of a group member to raise such a claim or question does not preclude the group member from raising the claim or question in subsequent proceedings to which the group member is a party.
409 There are several issues to be addressed in these questions. First, the issue arises of what applications for directions or case management of a claim may be made under Part 4A. This raises the further question of whether an application can be made for directions in respect of a claim that has not been raised in the group proceeding. Further, this raises the issue of whether or not the application for directions can be made by a group member who was not a party to the proceeding. Further again, the issue arises as to when an application maybe made and in what circumstances. Finally, there is a question whether the group member is under any expectation to do so. In other words, there is a question whether it can be said that the group member 'ought' to make such application.
410 It is first convenient to deal with the various means Timbercorp Finance suggests there are for enlivening the court's jurisdiction to make directions or case manage the claims of group members.
411 A central tenet of Timbercorp Finance's case is that to avoid preclusion of an individual claim or question that a group member has with the defendant, it should be 'raised' or 'brought forward' for case management in the group proceeding.
412 Timbercorp Finance does not suggest that a group member has an entitlement or right to have its individual claim determined in the group proceeding. Rather, Timbercorp Finance contends that the group member has an entitlement or right to seek directions in the group proceeding with respect to its individual claim with the possibility that the court may, in its discretion, direct that the group member's claim be determined in the group proceeding or, at the court's discretion, in another proceeding.
414 I shall deal with s 33ZF first as it is easiest to dispose of. Section s 33ZF provides as follows:
General power of court to make orders
In any proceeding (including an appeal) conducted under this Part the Court may, of its own motion or on application by a party, make an order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding.
415 The provision enables the court on its own motion, or on application by a party, to enliven the court's power under s 33ZF. No provision is made for an application by a group member who is not a party. This tells strongly against the group member's failure to make an application under s 33ZF precluding it by reason of this provision from raising a claim in subsequent proceedings. If the group member is not entitled to make the application, why should he/she be prejudiced if a party to the proceeding or the court of its own motion did not raise the issue?
416 Further, to enliven the power to make an order the court must think it appropriate or necessary to ensure justice is done in 'the proceeding'. Although a broad power, it does not appear to enable general case management. In Earglow Pty Ltd v Newcrest Mining Ltd,[129] Beach J distinguished between orders that facilitate or improve the efficiency of the resolution of issues and those that are 'appropriate or necessary to ensure justice is done in the proceeding' which is the necessary prerequisite to enliven s 33ZF.
417 Section 33ZF makes it clear that that section could not be availed of to obtain case management orders in relation to an extraneous claim or question. The jurisdiction of the court under s 33ZF is only enlivened if the court thinks it appropriate or necessary to ensure that justice is done 'in the proceeding'. Thus, s 33ZF would be of no avail to a group member who wished to obtain directions in respect of a claim that was not the subject of the group proceeding, or in particular, to Mr & Mrs Collins or Mr Tomes in respect of their individual claims that were not raised in the group proceeding.
Claims or questions arising out of claims made in the group proceedings
418 Timbercorp Finance relies on s 33Q, which provides as follows:
Where not all questions common
(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.
419 Timbercorp Finance's case assumes that 'the claims of all group members' referred to in s 33Q extends to 'all issues arising from the same, similar or related circumstances', including claims that the plaintiff has not put forward in the group proceeding, but otherwise arise from the same, similar or related circumstances as the claims that the plaintiff has put forward in the group proceeding.
420 The wording of s 33Q tells against this construction. The court may only give directions in relation to 'the remaining questions'. The reference to 'the remaining questions' suggests that the questions are those which form part of the claim pressed by the plaintiff, which are left remaining after the determination of 'the questions or questions common to all group members'.
421 Further it must appear to the court that the common question will not 'finally determine' the claims The use of the word 'finally' suggests that the claims have already been the subject of some consideration in the group proceeding. Otherwise the section might simply have said 'it must appear to the court that [determination of the common questions] will not determine the claims of all group members'. Section 33Q does not refer to 'all the claims of group members'.
422 In a negligence class action concerning an allegedly toxic food product, the group proceeding might determine common questions such as whether the product was in fact toxic and whether its sale breached a duty of care to the purchaser. However, the group proceeding might not determine residual individual components of that claim such as whether each group member in fact consumed the product and whether consumption caused illness, and if so, the extent of the injury suffered.
423 If, as Timbercorp Finance contends, s 33Q extends a right to seek directions in relation to claims of group members not made in the group proceedings, one would have expected that such a right would be clearly set out.
424 The power to appoint sub-groups in s 33Q(2) in respect of questions common to the claims of some only of the group members also suggests that these are claims that were made in the group proceeding.
425 Section 33R suggests that the 'claims of group members' are those within the group proceeding. This is because if s 33Q is enlivened and the court is giving directions under s 33Q, s 33R provides that the court may permit the group member to take part in the proceeding for the purpose of determining a question that relates to the claim of that member. The provision that permits the group member to take part in the group proceeding assumes that the claim has been made in the group proceeding. This again is a strong indicator that the claims referred to in s 33Q are limited to those remaining claims made in the group proceedings.
426 Section 33R further reinforces the construction that the claims referred to in s 33Q only relate to claims made in the group proceedings. Under s 33R, in giving directions under s 33Q, 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. In such a case, the individual group member, and not the plaintiff, is liable for the costs associated with the determination that question.
427 In group proceedings, the plaintiff is liable for costs of the group proceeding. If an individual group member were permitted to take part in the group proceeding for the purpose of determining only a question relating to them, which question did not form part of the group proceeding, the plaintiff would not be liable for those costs. In that situation, it would not be necessary for s 33R to say that the individual group member is liable for the costs of determining the separate question. The fact that s 33R does say that, suggests that otherwise the plaintiff would be liable for the determination of the separate question under s 33R. This suggests that s 33R is referring to a claim made in the group proceeding, such that the general rule that the plaintiff is liable for costs would apply. It was therefore necessary for s 33R to provide that the individual group member would be liable for costs.
Operation of section 33Q
428 Timbercorp Finance's submissions assume that 'the claims of all group members' referred to in s 33Q, includes claims of group members that were not raised in the group proceeding but which it says should have been so far as they arose in the 'same, similar or related circumstances'. I have dealt with this issue above. This is a fundamental assumption to Timbercorp Finance's submissions in respect of Mr & Mrs Collins and Mr Tomes as the claims the subject of these proceedings were not raised in the group proceeding. As set out above, I find that the claims to which this sections refers are claims already raised within the group proceeding and that, on that basis, the provision does not operate to allow group members to seek directions in respect of claims not already raised in the group proceeding. Notwithstanding this, it is instructive to consider how the provision operates. In doing so, it becomes apparent that, even if directions could be sought in relation to claims other than those in the group proceeding, there are further limitations to the section, properly construed. Section 33Q makes no express provision for a group member who is not a party to apply for directions. Assuming that a group member may apply for directions (an issue that I also deal with below) and assuming that 'the claims of all group members' includes claims not raised in the group proceeding, it is informative to know when such an application may be made. There is no dispute that directions could be sought by a party to the group proceeding. Nor is there any dispute that the claims of all group members includes claims made in the group proceeding.
429 Under s 33Q(1), the court's power to make directions is only enlivened when 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. 'Will' is prescribed as distinct from 'may' or 'might'. The court must be satisfied that the determination of the question or questions common to all group members will not finally determine the claims of all group members. The requirement encompasses all questions common to all group members.
430 In the group proceeding in this case, the plaintiff on behalf of the group members, on the basis of the common questions raised, sought an order that the individual loan contracts between the group members (including Mr Tomes and Mr & Mrs Collins) and Timbercorp Finance be declared void and unenforceable. If the group members had been successful in that application, then there would be no proceeding by Timbercorp Finance against Mr Tomes and Mr & Mrs Collins. There would then be no need for Mr & Mrs Collins and Mr Tomes to raise their defences to a claim by Timbercorp Finance under the loan contracts.
431 On the other hand, it could not appear to the court that determination of the question or questions common to all group members would not finally determine the claims of Mr Tomes or Mr & Mrs Collins (as required by s 33Q(1)) until the court had determined that the group members' claim that the loan agreements be declared void and unenforceable had failed. It would only be if that claim failed that the court could find that the determination of the question or questions common to all group members 'will not' finally determine the claims of Mr Tomes and Mr & Mrs Collins involving defences premised on the existence of the loan agreements. Only at that point would the scope of the 'remaining questions' (for present purposes, construed broadly to include claims of group members not in the group proceeding) referred to in s 33Q(1) become apparent.
432 Thus, it can be seen that in this case, directions could not be sought by group members (assuming that they were entitled to apply in respect of claims not raised in the group pleadings) until after the court had determined the common questions in the group proceeding. Until that time, it would not have appeared to the court that determination of the common questions would not finally determine the claims of all group members.
433 On that basis, Mr Tomes and Mr & Mrs Collins would have needed to be informed of the decision of the court on the determination of the question or questions common to all group members and then apply for directions or otherwise keep abreast of the proceedings to be aware that the common questions had been answered. The court would not have power to make directions before that time under s 33Q(1).
434 The court gave reasons in September 2011 and answered the common questions by order dated 27 October 2011. Judd J ordered a notice to be given to all group investors (whether group members or not) under s 33AH(1).
436 Section 33ZF provides:
General power of court to make orders
In any proceeding (including an appeal) conducted under this Part the Court may, of its own motion or on application by a party, make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding.
437 Section 33ZG provides:
Order may specify a date by which group members must take a step
Without limiting the operation of section 33ZF, an order made under that section may -
(a) set out a step that group members or a specified class of group members must take to be entitled to -
(i) any relief under section 33Z; or
(ii) any payment out of a fund constituted under section 33ZA; or
(iii) obtain any other benefit arising out of the proceeding -
irrespective of whether the Court has made a decision on liability or there has been an admission by the defendant on liability;
(b) specify a date after which, if the step referred to in paragraph (a) has not been taken by a group member to whom the order applies, the group member is not entitled to any relief or payment or to obtain any other benefit referred to in that paragraph.
438 Section 33ZH provides:
Order in event of decision or admission on liability
(1) Without limiting the operation of sections 33ZF and 33ZG, if the Court has made a decision on liability or there has been an admission by the defendant on liability, an order made under section 33ZF may require notice of that decision or admission to be given to group members or a specified class of group members.
(2) Subject to subsection (3), the form and content of the notice must be approved by the Court.
(3) If the Court has made an order of a kind referred to in section 33ZG, the notice must set out the effect of the order.
(4) An order under section 33ZF may require that a notice referred to in this section be given by means of press advertisement, radio or television broadcast, or by any other means.
439 Although I am here dealing with issues of construction of Part 4A, I will interpose what happened in this case with respect to complying with s 33ZH(1).
440 Judd J ordered that pursuant to s 33ZH(1) a notice of the judgment be given to each of the investors in the relevant schemes. Those listed included the schemes that Mr & Mrs Collins and Mr Tomes invested in. The notice informed the investors of the claims made in the proceedings. In particular, the notice stated that the plaintiff alleged that he and group members suffered financial loss because, during a defined period, the defendants failed to disclose various matters that affected, or were likely to materially affect, investments made in certain Timbercorp managed investment schemes. These notices were then set out.
441 The notice also advised that the plaintiff further alleged that he and group members suffered financial loss because, between 4 April 2000 and 23 April 2009, the defendants failed to disclose risks, associated with the financial structure and operations of Timbercorp Group of Companies, that affected or were likely to affect, the safety prospects of investments in the schemes. Further, the notice advised that the plaintiff alleged that he and group members suffered financial loss because the defendants made false, misleading or deceptive representations to him and to group members in relation to the schemes.
442 The investors were advised that these claims were dismissed. Investors were advised where they could inspect the reasons for judgment, who was affected by the judgment and who was a group member. The notice did not inform group members that the plaintiff's claim to find the loan agreements of the group members void and unenforceable had failed, a matter that would have been of particular interest to those with individual defences to the validity and enforceability of the loan agreements.
443 Under the heading of 'legal advice', the investors were advised that if they believed that they may be a group member, 'you may wish to obtain your own legal advice'.
444 No notice was given that if an investor considered that it had a claim that was not finally determined by the decision in respect of Timbercorp and their loan agreement, they should seek directions in the group proceeding for the future determination of its claim and, failing that, it would or might be precluded from thereafter raising the claim in any future proceeding between it and the defendants in the group proceeding or either of them.
445 Returning to the issue of construction of Part 4A, Part 4A does not prescribe that any such a notice should be given. Such an omission suggests that a purpose of the Act was not to ensure that all issues that group members have against the defendants to group proceedings must be raised with the court for case management or be excluded from determination in future proceedings between the group members and the defendants as contended by Timbercorp Finance.
446 The Act provides for notice to be given to group members as follows:
33X When notice to be given
(1) Notice must be given to group members of the following matters in relation to a group proceeding -
(a) the commencement of the proceeding and the right of the group members to opt out of the proceeding before a specified date, being the date fixed under section 33J(1);
(b) an application by the defendant for the dismissal of the proceeding on the ground of want of prosecution;
(c) an application by the plaintiff seeking leave under section 33W.
...
(3) If the Court so orders, notice must be given to group members of any offer to compromise the proceeding.
(4) Unless the Court is satisfied that it is just to do so, an application for approval under section 33V must not be determined unless notice has been given to group members.
(5) The Court may, at any stage, order that notice of any matter be given to a group member or group members.
...
33Y Notices under section 33X
(1) The form and content of a notice under section 33X must be approved by the Court.
(2) The Court must, by order, specify -
(a) who is to give the notice; and
(b) the manner in which the notice is to be given -
(c) directing a party to provide information relevant to the giving of the notice; and
(d) relating to the costs of notice.
(3) An order under subsection (2) may require that notice be given by means of press advertisement, radio or television broadcast, or by any other means.
(4) The Court must not order that notice be given personally to each group member unless it is satisfied that it is reasonably practicable, and not unduly expensive, to do so.
(5) A notice that concerns a matter for which the Court's leave is required must specify the period within which a group member or other person may apply to the Court, or take some other step, in relation to the matter.
(6) A notice that includes or concerns conditions must specify the conditions and the period, if any, for compliance.
(7) The failure of a group member to receive or respond to a notice does not affect a step taken, an order made, or a judgment given, in a proceeding.
447 The omission of any requirement in Part 4A for the plaintiff (or anybody) to inform group members that they should seek directions in relation to questions for case management, reconciles more naturally with the view that there is not a legislative policy evident in Part 4A of determining all issues arising from the same, similar or related circumstances within the confines of the group proceeding in the manner contended by Timbercorp Finance (that is, by precluding subsequent redress for an issue or question which was not raised for case management). The legislative policy of Part 4A is discussed further below.
Individual questions
(1) In giving directions under section 33Q, 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.
449 It is apparent that s 33R is only enlivened if directions are being given under s 33Q. Section 33R does not give rise to a further independent avenue to seek directions.
Directions for further proceedings
(1) If a question cannot properly or conveniently be dealt with under section 33Q or 33R, the Court may give directions for the commencement and conduct of another proceeding, whether or not a group proceeding.
451 As s 33S is directed to 'a question' that cannot properly or conveniently be dealt with under ss 33Q or 33R, this question, by definition, is only a 'remaining' question that arises in the group proceeding as referred to in s 33Q. As set out above, I consider that these 'remaining questions' are limited to claims already made in the group proceeding.
452 Section 33S provides an additional power to supplement those powers provided for in ss 33Q and 33R. Section 33Q does not give power for the remaining question to be determined in a proceeding other than the group proceeding. Section 33S, however, does so, by giving power for the court to give directions for the commencement and conduct of another proceeding, whether or not a group proceeding.
453 In any event, in the case of the defences of Mr & Mrs Collins and Mr Tomes, it would not be known whether or not their claims 'cannot' be properly or conveniently dealt with under ss 33Q or 33R until the common questions were decided. If the court were to find that the loan agreements were void and unenforceable, then no defence would remain to be determined as Timbercorp Finance would have no claim under the loan agreements.
454 For completeness I should also refer to s 33T that provides:
(1) If, on an application by a group member, it appears to the Court that the plaintiff is not able adequately to represent the interests of the group members, the Court may substitute another group member as plaintiff and may make such other orders as it thinks fit.
(2) If, on an application by a sub-group member, it appears to the Court that the sub-group representative party is not able adequately to represent the interests of the sub-group members, the Court may substitute another person as sub-group representative party and may make such other orders as it thinks fit.
455 Timbercorp relies on this provision as part of the armoury of the 'means' by which a group member could 'bring forward' its individual defences (or claims) for determination in the group proceeding. It is obvious that by itself the section does no such thing. It merely allows a group member to be substituted as plaintiff if it 'appears to the Court that the plaintiff is not able to adequately to represent the interest of the group members'. The provision does not permit a group member to apply because his or her interests are not adequately being represented. The section deals with the group interests not individual defences (or claims).
(1) Subject to this Part, if -
(a) seven 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 question of law or fact -
a proceeding may be commenced by one or more of those persons as representing some or all of them.
(2) A group proceeding may be commenced -
(i) is, or includes, equitable relief; or
(ii) consists of, or includes, damages; or
(iii) includes claims for damages that would require individual assessment; or
(iv) is the same for each person represented; and
(i) is concerned with separate contracts or transactions between the defendant and individual group members; or
(ii) involves separate acts or omissions of the defendant done or omitted to be done in relation to individual group members.
457 Timbercorp Finance places importance on the reference to 'the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances' in s 33C(1)(b).
458 Before I go on, there is one observation that should be made, lest there be any confusion about the effect of sub-section (2). The purpose of sub-section (2) is not to enable individual claims other than those raised by the plaintiff to be agitated in the group proceeding. Section 33C(2) was designed in consideration of historical limitations on class action regimes,[132] which required class members to have 'identical' interests. This was somewhat restrictive. Class actions for damages were not permitted, as each individual's entitlement would have to be independently assessed.[133]
459 The ALRC report proposed a new representative proceeding regime that would overcome such restrictions. The common aspects of people's claims could be dealt with in common, notwithstanding the fact that other aspects of the cause of action might be individualised. The ALRC report listed several examples of such claims,[134] which it might be desirable for the new group proceeding regime to encompass, in contrast to the historical class action regime. One was of allegedly misleading and deceptive conduct in a pamphlet for persons entering into loans with a credit union. Another was of 300 workers affected by asbestos-related mesothelioma. Another was of bushfire damage. Another was of a particular software product being distributed to numerous individual recipients, which transpired to be defective. In each of these examples, the contracts, transactions, acts and omissions are separate for each group member, but there are questions which are common to each of the claimants.
460 This is the concern reflected in s 33C(2), which makes clear that although each contract may have been entered into separately, or separate acts or omissions are involved, that alone is not a bar to using the Part 4A group proceeding regime. The contracts, transactions, acts or omissions, may be separate. What is critical is that there is a common question that applies to each of the contracts, transactions, acts or omissions, despite the fact that they are separate.
462 Mr & Mrs Collins and Mr Tomes point to the requirement for at least seven people to have claims against the defendant that give rise to a substantial common question of law or fact. They submit that those seven people need not have the same cause of action. They might have different causes of action, as long as all of them arise out of the same, similar or related circumstances, per 33C(1)(b). However, the defendants point to a further crucial requirement. The claims of all seven people must give rise to 'a substantial common question of law or fact' per 33C (1)(c). A group proceeding can encompass issues which have both common and idiosyncratic dimensions.
463 I need not decide whether the seven people's claims can relate to different causes of action or not. But the defendants are correct that there must be seven people with a claim against the same defendant, which claims are in respect of, or arise out of, the same, similar or related circumstances and gives rise to a substantial common question of law or fact.
464 Further, under s 33C(1), the plaintiff in the group proceeding must be one of the group members (seven at a minimum) having the claim that gives rise to the substantial common question of law or fact.
465 Group proceedings cannot encompass idiosyncratic claims that lack even this minimum degree of commonality.
466 The consequences of these requirements can be seen in the defence sought to be raised by Mr Tomes. Mr Tomes' defence relies, in part, on representations made to him by a Timbercorp Finance representative to induce him to take out the loan with Timbercorp Finance. That defence could not have been the subject of a common question. There were not seven people listening to the representations of the Timbercorp Finance representative and thus seven people could not raise the issue as a common question. Further, the plaintiff, Mr Woodcroft-Browne, could not have made that claim in the group proceeding as he had no such claim.[135]
467 Accordingly, the defence sought to be raised by Mr Tomes could not have been resolved in the claims made by the plaintiff in the group proceeding. This issue is discussed further below in relation to whether, even if the means were available under the Supreme Court Act to seek directions in relation to issues not raised (or capable of being raised) in the group proceeding, it was incumbent on the defendants to do so.
468 If it was the legislative intention of the Act to determine all issues arising from the same, similar or related circumstances within the confines of the group proceeding, including issues that could not be the subject of the group proceeding, one would expect the legislation would have contained precise provisions governing the determination of issues that could not be raised by the plaintiff on behalf of the group members in the group proceeding.
469 Sections 33Q, 33R, 33S, 33T and 33ZF fall well short of doing so. Rather, the purpose of those sections is made clearer when it is accepted that claims that are made by the plaintiff on behalf of group members will normally have remaining issues that may not be resolved by the determination of the common questions. I have given the example of a tort claim above.
470 Timbercorp Finance's contention that it was the legislature's intention that claims that could not be made in the group proceedings but nevertheless arose from the same or similar or related circumstances should be determined, is not met by provisions that are clearly directed to determining the 'remaining questions' in the group proceedings, and in any event, merely provide for the making of directions.
471 As discussed above, the 'remaining questions' are clearly those questions that will naturally arise when the common issues are resolved in the proceedings brought by the plaintiff on behalf of the group members. The 'remaining questions' clearly do not refer to issues that could not have been raised in the group proceeding by the plaintiff on behalf of the group members.
472 The above reasons deal with the mechanics of the Supreme Court Act and whether, as Timbercorp Finance contends, those provisions permit a group member to seek directions in relation to a claim not raised in the group proceeding (or even a claim which could not have been raised in the group proceeding). I now turn to discuss the historical and legislative context which is said to underpin Timbercorp Finance's contention that Part 4A is intended to ensure that all group members' common issues of law or fact arising from the 'same, similar or related circumstances, are brought before the court in one proceeding.
473 Timbercorp Finance pointed to the Chancery rules historically governing representative proceedings in equity in support of its argument that Part 4A proceedings are intended to resolve all issues such that no further litigation of claims arising out of the same, similar or related circumstances is permissible.
474 Timbercorp Finance pointed to the emphasis on finality under Chancery practice. It pointed to the general principle of equity that a Court of Equity, in all cases, delights to do complete justice, and not by halves; and that a Court of Equity not merely makes a decision on one individual question, but also arranges all the rights that the decision immediately affects.
475 Timbercorp Finance contended that, in the context of these general principles of equity, Chancery representative proceedings 'could' prevent a represented person from pressing claims subsequently. Timbercorp Finance relies on the following commentary in Daniell's Chancery Practice:
A judgment in an action by, or against, or between the representatives of a class is binding on other members of the class in any subsequent action in respect of the rights affected by the judgment. It is, however, open to any member of the class alleged to be represented to show that his interest was in fact not represented in the previous action, or that there was fraud and collusion in such action, so that the matter was not fairly brought before the Court.[136]
476 Timbercorp Finance included the latter sentence in the quote it relied upon. As can be seen, in light of the parts emphasised, this statement does not take matters very far.
The old rule in the Court of Chancery was very simple and perfectly well understood. Under the old practice the Court required the presence of all parties interested in the matter in suit, in order that a final end might be made of the controversy. But when the parties were so numerous that you never could 'come at justice,' to use an expression in one of the older cases, if everybody interested was made a party, the rule was not allowed to stand in the way. It was originally a rule of convenience: for the sake of convenience it was relaxed. Given a common interest and a common grievance, a representative suit was in order if the relief sought was in its nature beneficial to all whom the plaintiff proposed to represent.
478 As can be seen from Lord Macnaghten's remarks, the usual approach in the Courts of Equity was that the goal of putting a final end to a controversy would be facilitated by the convenience of having all parties present. Representative proceedings were a departure from this usual approach. Far from reflecting a highlevel position that representative proceedings in equity constituted a final determination of all rights connected with the subject matter, representative proceedings lacked the advantages of having all parties present - but this downside was not allowed to 'stand in the way' in appropriate cases, as there were other convenience considerations to be traded off against it. Speaking of a previous case, his Lordship described the choice between whether to initiate an ordinary proceeding or representative proceeding as a 'choice ... between two evils'.[139] The decision to pursue a representative proceeding under Chancery rules involved a trade-off that potentially undermined equity's normal emphasis on putting a final end to controversies.
479 This hardly suggests a clear, considered position under Chancery practice that representative proceedings did, or were intended to, put a final end to controversies. Indeed, Timbercorp Finance did not submit that anything so absolute was Chancery practice. The extent to which Timbercorp Finance has attempted to describe any firm rule about finality and preclusion, under Chancery representative proceedings, was limited at best.
480 Again highlighting the trade-off, Lord Macnaghten stated:
I think the rule as to representative suits remains very much as it was a hundred years ago. From the time it was first established it has been recognised as a simple rule resting merely upon convenience. It is impossible, I think, to read such judgments as those delivered by Lord Eldon in Adair v New River Co, in 1805, and in Cockburn v Thompson in 1809, without seeing that Lord Eldon took as broad and liberal a view on this subject as anybody could desire. 'The strict rule,' he said, 'was that all persons materially interested in the subject of the suit, however numerous, ought to be parties ... but that being a general rule established for the convenient administration of justice must not be adhered to in cases to which consistently with practical convenience it is incapable of application.' 'It was better,' he added, 'to go as far as possible towards justice than to deny it altogether.'[140]
481 Even if the comments about Chancery practice illuminated a clearer position, I would have real doubts about the extent to which Chancery practice could be applied to construe Part 4A. Nor did Timbercorp Finance address whether historical representative proceeding regimes were capable of accommodating tortious claims,[141] in order to say whether one can meaningfully compare the Part 4A group proceeding regime, which is clearly and explicitly capable of dealing with such claims per s 33C(2). As the submissions made about Chancery practice, however, are limited, vague and tenuous, I need not decide the extent to which it is appropriate to take guidance about Part 4A from Chancery practice.
482 Timbercorp Finance submitted that the purpose they ascribe to Part 4A is supported by the ALRC report as follows.
483 As is well known, the Part 4A group proceeding in the Supreme Court Act traces back to the ALRC Report. The report was published in 1988. No legislation was passed immediately. However, in 1991, Part IVA was inserted in the Federal Court of Australia Act 1976 (Cth). A copycat regime was adopted in Victoria via Order 18A of the Supreme Court (General Civil Procedure) Rules 1996 in 2000.
484 Due to concerns about the efficacy of inserting it in the Rules as opposed to an Act of Parliament, later in 2000 the regime was inserted into the Supreme Court Act 1986 (Vic) as Part 4A. It is therefore unsurprising that Timbercorp Finance pointed to the ALRC report rather than to extrinsic Victorian materials. The same has been done in a number of judgments relating to the Victorian regime and the New South Wales regime, which like Victoria's, is adopted from the Part IVA federal regime.
485 Timbercorp Finance contends that Parliament intends for Part 4A class actions to be a group member's one and only chance for litigation, and that the ALRC report supports this understanding (the 'one shot' theory). This is said to be the direct legislative intent of Part 4A. Further, Timbercorp Finance submits that Part 4A 'abhors a multiplicity of proceedings'. This is said to lead to the same result: the group proceeding is supposed to be the one and only opportunity to litigate. Yet further, it says that the ALRC report indicates a legislative concern with efficient use of judicial resources and fairness to respondents, such that all subsequent litigation is precluded.
486 This submission of Timbercorp Finance attributes an intention to Parliament that was not required to solve the problem of the determination of common issues. Previously, common issues to various parties could not be determined commonly unless all parties were joined. Otherwise, the common issues along with individual issues had to be determined individually.
487 It was not necessary to resolve the issue of providing for a mechanism to resolve common issues for the legislature to also deprive individuals of their common law right to have individual issues resolved individually. In fact there is a presumption that the legislature would not have intended such a consequence unless the legislature clearly and unambiguously so expressed the legislation (the principle of legality is discussed further below).
488 It is difficult to see, therefore, where Timbercorp Finance could have derived such notions. It did not point to any express statements to this effect in the ALRC report. I need not spend time discussing Timbercorp Finance's theories about the ALRC report. It is plain that these alleged purposes are incompatible with Part 4A itself, and any indication from the ALRC report cannot prevail over the clear meaning of the Act.
489 It is convenient, however, to set out Timbercorp Finance's written submissions as to the ALRC report, to briefly explain why, in my opinion, they are misguided. It submits, quoting intermittently from the report:
The purpose of Part 4A 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 their resources, and to ensure that the Court's resources are used efficiently and expeditiously". According to the Australian Law Reform Commission (ALRC), whose report ultimately led to the Federal Court provisions upon which Part 4A is based, a "significant objective" of its proposals was "to achieve efficiency and economy in the use of resources by enabling common issues to be determined at one time for all concerned."
A specific goal is to avoid multiplicity of proceedings. "If all group members have an unfettered right to pursue their claims individually, the goal of judicial economy will not be fulfilled." The "[e]fficient use of judicial resources and fairness to respondents requires that lawyers and individuals be encouraged to bring similar or related claims in one set of proceedings."
490 It is correct to say that Part 4A is concerned with efficiency. However, that does not entail that group members should only have 'one shot' at litigation, regardless of the nature of the group proceeding, the broader circumstances or the nature of the defence. It would be a leap to say that the 'one shot' at litigation must include seeking case management of claims which have not already been made in that group proceeding but which arise from the 'same, similar or related circumstances', lest they be precluded. Likewise, a concern with use of court resources and fairness to the defendants does not necessitate blanket preclusion. It might even be counterproductive.
491 Efficiency cuts both ways. In many circumstances, it might be more efficient to confine a group proceeding to a selection of issues with a high degree of commonality and leave other issues to be dealt with in individual or smaller group proceedings, rather than attempt to squeeze all issues into one group proceeding. I am not persuaded that a concern with efficiency equates to wholesale condemnation of having more than one proceeding in any circumstance.
492 I will return to what Part 4A itself indicates about this in due course.
493 The broader context of these remarks in the report and the co-existing considerations noted in the report strengthen my view that the concern with efficiency does not entail a 'one shot' approach to litigation.
494 Another factor should be born in mind. The ALRC report is the report which ultimately formed the basis of Part IVA of the federal legislation, and the New South Wales and Victorian legislation in turn. However, the recommendations were of course not adopted in their entirety, without modification. The report has been noted in many judgments, and it provides useful guidance in a number of respects. However, it cannot be relied on unquestioningly.
495 For instance, the ALRC report contemplated what should happen if the plaintiff defined the class narrowly, such that a number of people would not count as group members although they wished to be able to join the group. The ALRC considered that '[i]n most cases it will be in the interests of both the respondent and group members that the group be defined to include all relevant persons'.[142] It recommended that 'potential group members' be given the power to apply for the definition of the group to be broadened. At the same time, the ALRC noted the problems that this could cause in conducting proceedings, and recommended that there be a leave requirement. It recommended that a clause to that effect be included in the legislation.[143]
496 There is, of course, no such section in Part 4A. This recommendation has no special significance in itself, but serves as a reminder that care must be taken in considering the report.
497 Timbercorp Finance submits that the purpose of Part 4A is to avoid multiplicity of proceedings and ensure the expeditious determination of all related claims at the one time.
498 Timbercorp Finance submits that alongside the legislative policy evidenced in Part 4A of determining all issues arising from the same, similar or related circumstances within the confines of the group proceeding, is the parallel policy in favour of judicial management.
499 Timbercorp Finance's submissions to the effect that Part 4A is concerned with determining 'all issues arising from the same, similar or related circumstances' are not quoting the actual words of any of the provisions of Part 4A.
500 Timbercorp submits that the wider interpretation of 'the claims of all group members' is supported by the purpose of the Act.
501 For the following reasons, the Act, however, does not tend to support such a purpose.
502 Section 33ZE contemplates that a group member's claim may remain alive to some extent at the conclusion of a group proceeding.
503 Section 33ZE provides for suspension of limitation periods applying to group members' claims, to which the proceeding relates, during the currency of a group proceeding as follows:
(1) Upon the commencement of a group proceeding, the running of any limitation period that applies to the claim of a group member to which the proceeding relates is suspended.
(2) The limitation period does not begin to run again unless either the member opts out of the proceeding under section 33J or the proceeding, and any appeals arising from the proceeding, are determined without finally disposing of the group member's claim.
504 The provision only applies to a claim by a group member 'to which the proceeding relates'. Presumably that means that the group member's claim is made in the group proceeding.
505 Subsection (2) contemplates group members' claims surviving the determination of a group proceeding, and appeal from the same.
506 Part 4A provides various powers and mechanisms to deal with what would otherwise be outstanding issues. It is a separate question whether Part 4A compels or intends for such issues to be dealt with where possible.
507 Sections 33Q, 33R, 33Sm 33T and 33ZF are all described in permissive terms, as powers the court 'may' use. The permissive character of the provisions tells against the submission that the object of Part 4A is to ensure that the group proceeding becomes the vehicle for determination of all issues that arise from the same, similar or related circumstances.
508 If such was the object of the Act, surely the Act would have mandated that group members must raise for directions and possible determination all claims and questions not otherwise covered by the plaintiff's claims in the group proceeding and all claims and questions not resolved by the determination of the group question or questions common to all group members.
509 As noted above, before the Part 4A regime was introduced, class actions were unlikely to get off the ground if group members' claims had idiosyncratic dimensions and did not enjoy sufficient commonality. To resolve this Parliament only needed to establish a regime under which class actions could be brought despite idiosyncratic dimensions and individual claims. It would be a much greater step, and indeed a step that was not required to resolve the difficulties facing plaintiffs wishing to bring a group proceeding, to establish a regime under which all idiosyncratic dimensions and individual claims must be raised and determined within the group proceeding. The concern of Part 4A was to ensure that idiosyncratic dimensions and individual claims do not prevent the initiation of a group proceeding.
510 It is one thing for Parliament to acknowledge that the difficulties arising from idiosyncratic dimensions and individual claims should not prevent group proceedings from occurring, but it is another thing entirely for Parliament to say that all individual questions and claims must be brought into the group proceeding. The second proposition would result in group proceedings becoming lengthier and more complex, thereby exacerbating the problems sought to be addressed by the Part 4A regime. The second proposition would also tend to undermine the basic common law right of an individual to have her or his individual legal disputes resolved by a court of law in which the individual is entitled to appear to control the conduct of his or her own case.
511 In Certain Lloyds' Underwriters v Cross,[144] French CJ and Hayne J warned against the practice of ascribing a purpose for the Act not from the text of the relevant provisions the sections but from some other policy objective and then seeking to interpret the provisions according to that purpose.
It is not legitimate to identify a legislative purpose not apparent from the text of the relevant provisions (or in this case even expressed in some extrinsic material), to examine extrinsic material and notice that there is nothing positively inconsistent with the identified purpose, and then to answer the question of construction by reference to the purpose that was initially assumed. That reasoning is not sound. It is reasoning of the kind of which Spigelman CJ rightly disapproved in the extra-curial writing set out earlier in these reasons. Statutory "purpose" and "intention" are to be identified according to the principles that were described earlier under the heading "Some basic principles". Once that is done, it becomes apparent that the text and context of the relevant provisions point towards the construction supported by the appellants in these appeals: a claim for personal injury damages includes any and every form of claim for damages that relate to the death of or personal or bodily injury to a person caused by the fault of another person whether it be a failure to take reasonable care or the commission of an intentional act with intent to injure.[145]
512 The approach of Timbercorp Finance has, in my view, adopted a process whereby a purpose for Part 4A has been derived from extraneous sources and Part 4A is sought to be construed in the light of that purpose. If the sections are examined first, however, it is apparent that the purpose ascribed by Timbercorp Finance is plainly absent. The 'means' Timbercorp Finance depends on to mount its case that the purpose of Part 4A is to ensure all disputes arising out of the matter are dealt with in the group proceedings are plainly absent.
The Civil Procedure Act 2010 (Vic)
513 Timbercorp Finance submits that the Civil Procedure Act applies to the Timbercorp group proceeding. This was not disputed. Timbercorp Finance points particularly to ss 7(1) and 9(1)(d) and (g).
514 It relies on the Civil Procedure Act to make a similar argument to that regarding the underlying purpose of Part 4A based on the ALRC report and the Supreme Court Act itself. As will be seen, its argument boils down to a contention that the Civil Procedure Act promotes a 'once and for all' approach to litigation, where it is considered undesirable that there be a subsequent proceeding.
515 Timbercorp Finance says that 'in substance' the Civil Procedure Act 'reinforces the traditional rationales for Anshun estoppel'. It claims that these traditional rationales for Anshun include:
(c) promoting efficient use of court resources and time;
(e) 'avoiding vexing a party more than once'; and
(f) 'recognising decisions as incontrovertibly correct unless overturned on appeal'.
516 For the purposes of considering Timbercorp Finance's argument about the Civil Procedure Act, I need not enter into a discussion of whether these claims about Anshun are correct.
517 As to the Civil Procedure Act itself, Timbercorp Finance relies on the overarching purpose; namely that the 'overarching purpose' of the Civil Procedure Act is 'to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute'.[146]
518 Specifically, Timbercorp Finance says the Civil Procedure Act promotes:
(a) efficient use of judicial and administrative resources;
(b) dealing with the proceeding in a manner proportionate to the complexity or importance of the issues and amount in dispute; and
(c) having regard to the effect upon the court and other litigants when deciding how proceedings are to run.
519 It says that, in this case, the overarching purpose 'called for' Mr and Mrs Collins' and Tomes' defences to be 'raised and determined' in the group proceeding. It says that it is 'contrary to the efficient use of judicial and administrative resources for the courts to hear and determine defences in instalments'. Timbercorp Finance does not develop its argument any further than this.
520 There is no suggestion in the Civil Procedure Act that the Civil Procedure Act seeks to undermine the common law right of an individual to have her or his legal rights determined by a court of law in which the individual has the right to appear personally or by counsel. Indeed, s 6 of the Civil Procedure Act states that 'nothing in that Act is intended to override the Charter of Human Rights and Responsibilities Act 2006 (Vic)', which expressly preserves the right to a fair hearing in s 24:
A person charged with a criminal offence or a party to a civil proceeding has the right to have the charge or proceeding decided by a competent, independent and impartial court or tribunal after a fair and public hearing.
521 I do not accept that the Civil Procedure Act militates against initiating any subsequent proceeding. There is nothing directly to that effect in the Civil Procedure Act. Nor does it follow from the Civil Procedure Act's concern with efficiency, efficient use of court resources, and so forth. In this sense, Timbercorp Finance's submissions about the Civil Procedure Act strongly mirror its submissions about the ALRC report, and for similar reasons I am unpersuaded.
522 Justice Beach of the Federal Court of Australia recently made a relevant observation about the comparable 'overarching purpose' under s 37M of the Federal Court of Australia Act 1976 (Cth) in Earglow Pty Ltd v Newcrest Mining Ltd.[147] Earglow concerned a group proceeding in relation to shareholdings. The defendant sought orders for two group members' individual claims to be determined at the first stage trial of the group proceeding, including potentially under s 33ZF.
523 It contended that s 33ZF was controlled by, or had to be read subject to, the s 37M overarching obligation. Section 37M requires the just resolution of disputes 'according to law' and 'as quickly, inexpensively and efficiently as possible'. Justice Beach was not persuaded that adding the claims of these two group members would promote the overarching purpose per s 37M.[148] On the contrary, he found:[149]
Finally, if s 37M(3) is controlling or s 33ZF is to be read subject thereto such that part of ensuring that justice is done in the proceeding requires me to consider whether the orders sought are conducive to the resolution of the proceeding 'as quickly, inexpensively and efficiently as possible,' in my view they are not so conducive. First, they are likely at the least to cause the acceleration of the incurring of costs or additional costs that may otherwise (on some contingencies) never need to be incurred ... . Second, I cannot say that they would quicken the resolution of the proceedings; on one view they may even extend the first stage trial. Third, I also cannot be satisfied that the proceedings would run more efficiently if the orders were made.
524 Similar concerns would arise here. Such concerns would certainly arise if group members proposed to add their many and varied claims to the group proceeding itself. But they would arise even if group members merely wished to obtain directions under s 33Q, 33R or 33S. The time, cost, inefficiency and delay of side-tracking the group proceeding to hold case management directions for any interested group member on any question arising out of the same, similar or related circumstances might well be contrary to the overarching obligation under the Civil Procedure Act.
525 Counsel for Mr Tomes put it vividly.[150] Putting it at its most extreme for the sake of illustration, he said:
[Imagine Mr Tomes were to] wave his hands in the air and say to Justice Judd, 'Just a minute, your Honour, stop this court right now. I'm Mr Tomes, I'm a group member, I know that the legislation by which this proceeding had commenced doesn't permit me because I'm not a party to be involved in this proceeding. Yes, I'm bound by the outcome but just a minute, I want to bring my own claims.'
And then imagine, your Honour, if following Mr Tomes were the 700 other borrowers all standing in line, all marching into court behind him saying exactly the same thing. And that's what, at the end of the day, our learned friends say should have or ought to have happened.
526 Again, this underlines that the 'one shot' theory is not supported by the Civil Procedure Act and, indeed, would often conflict with it.
527 I reject Timbercorp Finance's Civil Procedure Act argument for these reasons alone. However, I further note that the overarching purpose requires consideration of a number of factors that Timbercorp Finance did not grapple with. For instance, sub-section (2) requires consideration of:
(d) the degree to which any lack of promptness by a party in undertaking the proceeding has arisen from circumstances beyond the control of that party;
(f) any prejudice that may be suffered by a party as a consequence of any order proposed to be made or direction proposed to be given by the court;
(h) the extent to which the parties have had the benefit of legal advice and representation.
528 These are directed at parties - which is, perhaps, telling in itself. Putting that to one side, however, one might question the ability of group members to 'control' a group proceeding. One might consider not only the undesirability of defendants having to face multiple proceedings, but also the serious prejudice that would be suffered by group members if they were precluded from raising other claims or defences. In many group proceedings, one might consider that many group members had not had the benefit of legal advice and representation. Some may not even have received notification that a group proceeding had been initiated. However, as I said, I need not consider these things.
529 Finally, Timbercorp Finance relies on the following sentence from a decision of Croft J, as follows:[151]
The provisions of the Civil Procedure Act directed to achieving expedition and cost effectiveness in litigation also militate against a multiplicity of proceedings.
530 Timbercorp Finance seeks to elevate this to a general rule.
531 Justice Croft was there concerned with an application in the Great Southern litigation. Certain defendants to a group proceeding sought orders for certain group members to cease to be group members under s 33KA (which specifically provides for such orders) or under the general power in s 33ZF.
532 Justice Croft tabulated the particular group proceedings and other ordinary proceedings in which the group members were involved. The defendants complained that it was an abuse of process for certain group members to remain in the group proceeding when they had individual defences and a counterclaim in another proceeding which were 'not on all fours' with the claim in the group proceeding.[152] The defendants submitted that the group proceeding overlapped with the other proceeding, such that the ordinary proceedings would 'involve the determination of issues that will be disposed of by the Group Proceedings'.[153] For this reason, they contended it was an abuse of process for the ordinary proceedings to continue unless those group members were excluded from the group proceeding.
533 Justice Croft agreed that there was significant overlap between them. His Honour said that in these particular proceedings:[154]
A critical matter that does, in my opinion, appear to be clear in the present context is that the Group Proceedings will - with a trial commencing on 29 October 2012 - be heard and determined before the hearing and determination of any of the individual proceedings - in whichever court the individual proceedings are now or in which they remain. Given significant commonality of issues - or at least likely critical issues - it is reasonable to expect that resolution of the Group Proceedings will assist in the complete resolution of the individual proceedings without trial, or by trial on a greatly reduced number of issues.
534 Again emphasising the degree of overlap between the proceedings, his Honour made the following remarks, ending with the one on which Timbercorp Finance now relies:[155]
For these reasons, having regard to the likely extent of common issues as between the Group Proceedings and the individual proceedings, the cost and expense involved in agitating these issues in separate proceedings and the risk of the administration of justice being brought into disrepute as a result of inconsistent findings, it is more than highly desirable that this situation be avoided if possible. The provisions of the Civil Procedure Act directed to achieving expedition and cost effectiveness in litigation also militate against a multiplicity of proceedings.
535 This was the sole reference his Honour made to the Civil Procedure Act. He did not elaborate on it.
536 In my view, this remark was no more than a finding about the effect of the Civil Procedure Act in the particular circumstances before him. His Honour was not suggesting a general rule that the Civil Procedure Act calls for a 'one shot only' approach to litigation. On the contrary, his Honour was acutely conscious of the specific circumstances of the constellation of proceedings in question and the degree of overlap, the risk of inconsistent findings, and the other factors arising in that particular instance.
537 A similar observation about s 37M is put by Allsop CJ, Katzmann and Gleeson JJ in Truthful Endeavour Pty Ltd v Condon.[156] In Truthful Endeavour, there was a question of whether Anshun precluded an ordinary proceeding from being initiated where there had already been another ordinary proceeding in relation to the same subject matter. As their Honours summarise:
Truthful Endeavour submitted ... that it would ordinarily be against the proper administration of justice to permit a matter which could have been raised in earlier proceedings to be litigated in later proceedings because of the risk of inconsistent findings 'in respect of the same issues'. It pointed to the provisions of s 56 of the Civil Procedure Act 2005 (NSW) ('CP Act') and ss 37M and 37N of the Federal Court of Australia Act 1976 (Cth) ('FCA Act'), which provide that in civil proceedings the 'overarching' (FCA Act) or 'overriding' (CP Act) purpose of the Act and the rules made under it is to facilitate the resolution of disputes justly, quickly and inexpensively. Consequently, it submitted, 'in the absence of any or any proper explanation as to the fact that the issues were not raised in the earlier proceedings, a close connection between the facts in separate sets of proceedings may make it unreasonable not to have agitated the issue in the earlier proceedings and hence raise the estoppel.'[157]
538 Their Honours were far from persuaded. They found:
The obligations of the Supreme Court to dispose of Ms Lewis's action justly, quickly and cheaply, having regard to the real issues (CPA s 56), were unlikely to be served by the introduction of an additional issue which was, at best, peripheral to the questions raised in the pleadings. Moreover, the just resolution of the issues in dispute (FCA Act s 37M) would not be served by denying Mr Condon the chance to have them resolved at all when his earlier attempt to raise them had been opposed by those who now insist that he should have raised them at that time. [158]
539 Analogously, it is unlikely to serve the Victorian Civil Procedure Act to require 700 group members to come to court for 'case management' of even peripheral issues. It only becomes more improbable when one considers that the group members may not yet know whether they will wish to litigate those issues. It is yet worse when one considers that the matters may not be capable of being added to the group proceeding, given the issues I have discussed in relation to ss 33C, 33Q, 33R, 33S and 33ZF.
540 The above reasons deal with Timbercorp Finance's submissions that the legislative policy of Part 4A of the Supreme Court Act and cognate legislation is to prescribe a 'one-shot' approach to litigation for group members. As noted above, I am not convinced that this legislative intention is evident. To be clear, the issue is whether there is evident a legislative intent to require group members and, not just parties, to raise all issues in relation to the same, similar or related circumstances in the one proceeding. The issue of whether, and to what extent, preclusionary principles apply to parties and group members in the context of Part 4A is discussed further below.
541 The plaintiff is a party to the group proceeding. Group members are not.
542 Part 4A provisions tend to contemplate applications by parties and not refer to group members.[159] Indeed, the only provisions that explicitly contemplate group members acting of their own motion are those dealing with opting out,[160] applying for extensions of the opt out period,[161] applying for the plaintiff to be substituted where the plaintiff is not able to adequately represent the group,[162] applying to take over as plaintiff where the existing plaintiff seeks to settle his individual claim,[163] or initiating an appeal in respect of a group proceeding after the plaintiff's[164] time to appeal has lapsed.[165]
543 The court may order group members to take a step by a certain date, including steps in order to be entitled to relief upon judgment or 'any other benefit arising out of the proceeding'.[166] The court also has a general power to make any order it thinks appropriate or necessary 'to ensure that justice is done' in the proceeding.[167]
544 On the other hand, if contrary to my view, a claim by a group member not made in the group proceeding could be raised under s 33Q, I accept Timbercorp Finance's submission that a group member could make an application for directions. If the group member did not make the application, who would?
546 I will now turn to consider issues more generally relating to the relevance of preclusionary principles in the context of Part 4A and, in particular, the High Court's recent decision in Tomlinson.
547 I have discussed Tomlinson above. It was necessary, however, to leave the issue of Tomlinson's effect on the issues raised in this proceeding until after I had dealt with the matters on the application of Part 4A.
548 Tomlinson raises the issue of whether the group plaintiff was the defendants' privy for the purpose of the defendants' individual defences and whether or not the group plaintiff's failure to raise the defendants' individual defences engages the principles of Anshun estoppel.
549 In considering this principle, I put to one side the contention (which I accepted) that before the group plaintiff could raise the individual defences the group plaintiff would have to establish that seven or more group members had the same common issue to satisfy the common interest requirement in s 33C. As discussed above, that would be difficult to achieve in the case of Mr Tomes who relies on personal conversations with an alleged agent of Timbercorp Finance in his individual defences.
550 I will address Tomlinson in two stages. First, on the issue of the purpose for which the group plaintiff was the defendants' privy. As discussed below, I find that the group plaintiff was only the defendants' privy for estoppel purposes in relation to the issues raised by the group plaintiff in the group proceeding and that accordingly Anshun estoppel is not raised in relation to the group plaintiff's failure to raise in the group proceeding the individual defences of the defendants.
551 If I am wrong, and the group plaintiff's failure to raise the individual defences of the defendants in the group proceeding did enliven considerations of Anshun estoppel, then I address whether or not it was not unreasonable for the group plaintiff to have done so or for the defendants not to have procured the group plaintiff to have done so. For reasons strongly supported by Tomlinson, I find that it was not unreasonable for the individual defences not to have been raised by the defendants or the group plaintiff in the group proceeding.
552 Before embarking on these issues it should be observed that at no stage in this proceeding before me did Timbercorp Finance rely on the argument that because the group plaintiff did not raise the individual defences of the defendants that the group members were Anshun estopped from doing so in the Timbercorp Finance proceedings against them.
553 Rather, as discussed above, Timbercorp Finance's case was that Part 4A provided the 'means' by which group members could 'bring forward' their individual defences for determination. The 'means' referred to by Timbercorp Finance were not through the actions of the group plaintiff (although Timbercorp did not say that could not be done) but rather through the individual group member bringing forward their individual claims for determination under ss 33Q, 33R, 33S, 33T and 33ZF.
554 Be that as it may, Timbercorp Finance in its submissions made on Tomlinson contends that the 'acceptance by the majority in Tomlinson that the representative party and group members are privies, and thus on like basis are bound to estoppels, powerfully supports [Timbercorp Finance's] submission'.
555 As discussed below, Tomlinson raises issues that require closer consideration of the approach taken in Clarke v Great Southern No 4, where the learned judge held that by not opting out of the group proceedings, the group members should be taken to have elected to be bound by the claims made in the group proceedings.
556 Croft J's conclusion did not rely on Anshun estoppel but on the narrower basis of the group members electing to be bound by the claims made in the group proceedings.
557 In Tomlinson the majority said that each of the three forms of estoppel (cause of action estoppel/res judicata, issue estoppel, and Anshun estoppel) 'has the potential to preclude assertion of a right or obligation, or the raising of an issue of fact or law, between parties to a proceeding or their privies'.[168]
558 'Privies' means the same thing in each form of estoppel. The majority said that 'one principle' governs the identification of privies for the purpose of all three forms of estoppel.[169] It seems, therefore, that at common law, if a person is a privy for the purposes of one of the three estoppels, they will be a privy for the purposes of all.
559 The starting point when considering privies and estoppel is the following comments made by the majority:
It is a principle at the core of our legal system that a party claiming or denying the existence of a legal right or obligation should have an opportunity to present evidence and arguments to establish the facts and law on which the claim or denial is founded. There are countervailing considerations, some of which operate to create exceptions to that principle. Finality and fairness, including maintaining the certainty of past adjudicated outcomes and ensuring the predictability of future adjudicated outcomes, are amongst those countervailing considerations, and the estoppels informed by those considerations are amongst the exceptions to the principle. The operation of an estoppel, it must be remembered, is to preclude the assertion in a subsequent proceeding of what is claimed to be the truth.[170]
560 The three estoppels take away from that core principle and fundamental common law right.
561 According to the majority, there are at least two bases on which to conclude that a party to a later proceeding, A, can be privy in interest with a party to an earlier proceeding, B.[171] In the Timbercorp group proceeding, the first half of the first basis is relevant. That is, A had some legal interest in the outcome of the earlier proceeding which was represented by B.[172] In the Timbercorp group proceeding, A is Mr & Mrs Collins and Mr Tomes, and B is Mr Woodcroft-Browne.
563 According to the majority, establishing that A had a legal interest in the outcome of the earlier proceeding is not sufficient to establish A and B are privies. Other factors must be considered, because the theory of estoppel has limitations.[174] According to the majority, factors that must be considered when determining whether A and B are privies include:
(a) The level of influence A had over the conduct of the earlier proceeding;[175]
(b) A's capacity to appear in or control the earlier proceedings;[176]
(c) A's opportunity to exercise control over the presentation of evidence and the making of arguments in the earlier proceeding;[177]
(d) Whether A authorised the assertion of the claim B made in the earlier proceeding;[178]
(e) Whether A authorised B to act as his/her agent;[179]
(f) Whether B's representation of A's legal interest was of such a nature as to have protected A from being unjustifiably subjected to an unwanted estoppel;[180]
(g) Whether the potential detriment to A from creating an estoppel was not fairly taken into account in the decision to make or defend the claim in the earlier proceeding or in the conduct of the earlier proceeding;[181]
(h) Whether B is required or authorised to make his/her/its claim as a representative of another person;[182]
(i) Whether B is required or even permitted to consider the interests of A beyond the interests B is pursuing in the earlier proceeding;[183]
(j) Whether B owes fiduciary duties to A that guard against collateral risks of representation, including the risk to A of the detriment of an estoppel operating in a subsequent proceeding outweighing the benefit to A of participating in the earlier proceeding;[184]
(k) Whether B's representation of A's legal interest is the subject of procedures overseen by the court (of which opt-in or opt-out procedures and approval of settlements are examples) that guard against collateral risks of representation, including the risk to A of the detriment of an estoppel operating in a subsequent proceeding outweighing the benefit to A of participating in the earlier proceeding;[185]
(l) Whether A's wider legal interests are protected by the procedures that govern the exercise of power on the part of an eligible court;[186]
(m) Whether B, in pursuing its interests in the earlier proceeding, might unwittingly preclude the future enforcement of other rights or obligations of far more value to A.[187]
It would be quite unjust for such a person to be precluded from asserting what the person claims to be the truth if the person did not have an opportunity to exercise control over the presentation of evidence and the making of arguments in the earlier proceeding and if the potential detriment to the person from creating such an estoppel was not fairly taken into account in the decision to make or defend the claim in the earlier proceeding or in the conduct of the earlier proceeding.[188]
565 On determining whether A and B are privies in interest, Nettle J said:
The approach in this country, therefore, remains one of identifying characteristics of a relationship between party and privy which, although not amounting to a shared same interest or established legal or equitable relationship like agency or trusteeship, are sufficiently analogous to the established categories of sufficient connection to warrant inclusion in the concept. And, for present purposes, the important characteristics of the established forms of representation which emerge from the decided cases appear to be that a principal is generally able to control the conduct of an agent, and that the imposition of fiduciary duties on certain kinds of representatives has the effect of guiding the representative's conduct and providing remedies to the principal on default.[189]
566 The majority listed traditional forms of representation which bind those represented to estoppels, including representation by another person under rules of court which permit representation of numerous persons who have the same interest in a proceeding. To that list the majority said 'representation by a representative party in a modern class action' can be added.[190]
567 The basis for the majority adding 'representation by a representative party in a modern class action' to the list of 'forms of representation which bind those represented to estoppels' was Zhang.[191]
568 Neither the High Court in Tomlinson, nor the Federal Court in Zhang, engaged in a detailed analysis of Part 4A. In fact, in Zhang, French J only said that the 'possibility arises of [Anshun estoppel] affecting issues wider than those ventilated in the representative proceeding', and the question whether Anshun estoppel 'is capable of application to representative proceedings confined as these have been to a common issue of law or fact remains open'.[192]
569 Zhang did not determine the question. Nor did Zhang or the High Court in Tomlinson consider the position of Part 4A group members in light of the common law principles applicable to the determination of whether A and B are privy in interest. I do not consider the majority's reference to Zhang and its suggested answer to the questions left open by French J to be seriously considered obiter.
570 Timbercorp Finance contends that the majority was in effect saying that group members and the representative plaintiff are common law privies. In my view, however, the majority were saying that by virtue of s 33ZB, they are some form of privies. In the light of the discussion above of principles applicable to common law privies, it is difficult to see how group members and the representative plaintiff could be common law privies.
572 First, group members do not authorise the plaintiff to represent them. That is the consequence of the opt-out regime. Were it an opt-in regime, group members could be said to authorise the plaintiff to represent them. Failure to opt out cannot be taken to mean the group member authorised the plaintiff to represent him/her. The High Court has recognised that the consequence of the opt-out regime is that some group members will not realise they are group members. Part 4A does not deem failure to opt out to be consent or authorisation. Rather, s 33E(1) states 'the consent of a person to be a group member is not required'.
573 Second, the plaintiff is not the subject of fiduciary duties owed to group members.
574 Third, the plaintiff is not required to consider the wider interests of group members.
575 Fourth, the procedures under Part 4A do not adequately guard against collateral risks of representation, including the risk to group members of the detriment of an estoppel operating in a subsequent proceeding outweighing the benefit to group members of participating in the group proceeding. Court processes that could potentially offer that protection are ss 33Q, 33R, and 33S. As discussed above, the 'remaining questions' referred to in s 33Q refers to questions which form part of the claim pressed by the plaintiff, and which are left remaining after the determination of 'the questions or questions common to all group members'. Section 33Q does not apply to group members' individual claims/defences that were not part of the claim pressed by the group plaintiff. In any event, as discussed above, in this case s 33Q would only have been available in the group proceeding once the common questions had been determined. As discussed above, ss 33R and 33S are subject to the limitations of s 33Q.
576 Part 4A does not require that group members be informed of any preclusive effects of judgment in terms the three forms of estoppels. Nor does it require the group members to be notified of any right to raise their individual claims/defences for directions (which right I have found not to be created by Part 4A). Even if Part 4A did those things, there would still be the problem that some group members may not know that they are group members. Part 4A does not adequately protect the wider interests of group members.
577 Further, no matter how they are interpreted, those provisions in Part 4A cannot protect the wider interests of a group member who does not know he/she is a group member.
578 It may be suggested that s 33T offers a measure of protection. However, even with a substituted plaintiff, group members are still unable to raise for directions their individual claims/defences. Further, to take advantage of s 33T, a group member must know that they are a group member, be following the conduct of the group proceeding, and most likely obtain legal advice in order to determine whether their interests are being adequately represented by the plaintiff and decide whether to make application under s 33T.
579 Fifth, were group members and the group plaintiff held to be privies, there is a real chance that the group plaintiff, in pursuing its interests in the group proceeding, might unwittingly preclude the future enforcement of other rights or obligations of far more value to group members.
580 Sixth, while the group plaintiff is permitted to consider the interests of group members beyond his/her own interests, the group plaintiff may be precluded by s 33C(1) from pursuing those interests in the group proceeding. That is, a group member's individual claim/defence may not be shared by six or more other group members, or it may not give rise to a substantial common question of law or fact. Further, the plaintiff may not be one of the those persons with such a claim. So while a group plaintiff may wish to consider and pursue the interests of group members, he/she may be prevented from doing so by the Part 4A regime.
581 Based on the above, in my opinion, it is extremely difficult to see how, without s 33ZB, group members and the plaintiff could be categorised as common law privies. Without s 33ZB, the position is most likely that they are not common law privies, and their fundamental common law right to have their rights and obligations determined by a court, are preserved.
583 Section 33ZB appears to extend to group members the effect of judgment on the common issues of law and fact in the group proceeding. Section 33ZB may therefore have the same effect as issue estoppel. It does not say, however, that group members are common law privies. Group members may be considered to be 's 33ZB privies', but the statute does not say that they are common law privies. To interpret s 33ZB expansively to have the effect that group members are common law privies would be to impinge on their fundamental common law right in circumstances where Parliament did not legislate unambiguously to that effect. (Although not expressly stated by Croft J in Clarke v Great Southern (No 4), this is in substance the result of his analysis as discussed below.)
584 The majority said that group members and representative plaintiffs can be added to the list of privies. With the benefit of the view expressed by the majority (that I have set out above) on the issues that should be taken into account as to whether the relationship of privy is established, I understand that statement by the majority to be a shorthand reference to the fact that group members are privies by virtue of s 33ZB.
585 Section 33ZB looks a lot like issue estoppel. Therefore, in my opinion, it was convenient for the majority to call group members privies. While at common law a privy for the purposes of issue estoppel will be a privy for the purposes of all estoppels, in my opinion, group members are not common law privies; they are s 33ZB privies. Had s 33ZB said that group members are to be considered as privies in interest with the plaintiff within the meaning of the general law, the position would be different.
586 In my opinion, my conclusion is supported by the majority's reference to Young v Public Service Board,[193] a case they cited with approval. There, employees and an industrial association were held not to be privies. They were not privies despite the fact that the award obtained by the industrial association in the context of the earlier dispute was made binding on the employees by statute. The majority said:
The first strand of the reasoning in Young illustrates that a person does not become bound by an estoppel by reason of a party having represented legal interests of that person in an earlier proceeding merely as a consequence of that party having lawfully asserted a claim which, if accepted, would have resulted in a determination enhancing or enforcing a legal entitlement of the person.[194]
587 Young demonstrates that a statutory provision making binding on A a determination in an earlier proceeding involving B, does not itself have the result that A and B are common law privies.
588 The submissions of Mr & Mrs Collins on Tomlinson reach a similar conclusion on the ambit of the estoppel. They contend that the reference by the majority that 'representation by a representative party in a modern class action can be added to traditional forms of representation that bind those represented,' is a reference to estoppel on the common issues. They said this is made clear by Zhang where French J said:
A judgment, once made on the common issue, is binding on all members of the group and on the Minister. That rises explicitly by virtue of s 33AB(b). The question whether the extended principle of res judicata is capable of application to representative proceedings confined as these have been to common issues of law or fact remains open.[195]
589 Mr & Mrs Collins contend that such an estoppel is consistent with the intention of the Parliament expressed in s 33C(c) and s 33H(2) which requires that 'the questions of law or fact common to the claims of the group members' to be specified in the endorsement on the writ (statement of claim). They say that the legislation has by this limited the subject matter of the class action.
590 In his submissions on Tomlinson, Mr Tomes refers to the following from the majority in Tomlinson:
Traditional forms of representation which bind those represented to estoppels include representation by an agent, representation by a trustee, representation by a tutor or a guardian, and representation by another person under rules of court which permit representation of numerous persons who have the same interest in a proceeding[196]. To those traditional forms of representation can be added representation by a representative party in a modern class action[197]. Each of those forms of representation is typically the subject of fiduciary duties imposed on the representing party or of procedures overseen by the court (of which opt-in or opt-out procedures and approval of settlements in representative or class actions are examples), or of both, which guard against collateral risks of representation, including the risk to a represented person of the detriment of an estoppel operating in a subsequent proceeding outweighing the benefit to that person of participating in the current proceeding.[198]
591 Mr Tomes contends that the 'collateral risks of representation' referred to would be visited on the defendants if they are precluded from raising their individual claims. Mr Tomes submits further that '[t]hose risks, being the detriment flowing from an inability to defend the loan recovery proceeding by virtue of being a privy of [the plaintiff in the group proceeding], would lead to an abuse of process itself' on the basis that the opt-out notices were inadequate to alert group members to the risks referred to by the High Court. This is discussed further below.
Observations on Clarke v Great Southern (No 3)
592 I have quoted the judgment of Judd J in Clarke v Great Southern (No 3) at some length as his observations are particularly apt to this case. There are several observations that may be made about that case.
593 First, that according to the authorities examined in the reasons the learned judge found that there are no grounds for excluding group proceedings from the application of Anshun principles, although as discussed below, the nature of particular group proceedings may bear on whether or not the application of Anshun should be moderated.
594 Secondly, 'in a case in which the group members have not raised individual claims but have been defined into the group on their related circumstances and the common issue, it is necessary that care be taken to ensure that claims based on individual circumstances of which the court knows nothing are not prejudiced'.[199] The learned judge accepted the above proposition.[200]
595 Thirdly, the learned judge said that individuals should be appropriately protected and that could be achieved through the opt out process, 'provided the opt out notice is sufficient to define the scope of the proceeding and permit a meaningful decision'.[201]
Observations on Clarke v Great Southern (No 4)
596 The reasoning of Croft J in Clarke v Great Southern (No 4) deserves careful consideration even if it be obiter dicta. The reasons for judgment in Clarke v Great Southern (No 4) were not referred to by Timbercorp Finance in their submissions to the court.
597 This may be because Timbercorp Finance saw the reasoning in Clarke v Great Southern (No 4) as inconsistent with Timbercorp Finance's case or aspects of it. The learned judge reasoned that a group member who had not opted out would be precluded on the basis of issue estoppel, Anshun estoppel and abuse of process from pursuing individual proceedings.[202]
598 On the other hand, Timbercorp Finance submits that a group member who had not opted out and who had individual claims not raised in the group proceeding against or in defence to a claim by Timbercorp on the relevant loan agreement, could and should raise them for determination in the group proceeding by seeking directions or orders under ss 33Q, 33R, 33S, 33T or 33ZF. Further, Timbercorp Finance contends that if a group member with individual claims or defences to Timbercorp Finance's claims under the loan agreements did not seek such directions, they would then be estopped under Anshun estoppel or abuse of process from thereafter raising them in proceedings taken against them by Timbercorp Finance seeking to recover under the relevant loan agreements with the group member.
599 Further, in Clarke v Great Southern (No 4) the learned judge also held that the principles of issue estoppel applied to prevent group members who had not opted out from pursuing individual claims, whereas Timbercorp Finance does not contend issue estoppel is applicable to prevent the defendants from pursuing their defences but rather they are prevented by Anshun estoppel or abuse of process if they fail to avail themselves of the means provided under Part 4A to bring forward their claims (which means I have held are of no avail).
600 I did not hear any argument on the issues raised in the reasons in Clarke v Great Southern (No 4). Without the benefit of argument, it appears to me, however, that the reasoning in Clarke v Great Southern (No 4) would lead to the conclusion that a group member who had individual defences to a claim by Timbercorp Finance under the relevant loan agreements who had not opted out would be thereafter barred from seeking to raise any defence to a claim by Timbercorp Finance. He would be barred as by not opting out he would be taken 'to have accepted that the claims as pleaded in the group proceedings represent all of the claims reasonably available to [him]'.[203]
601 The reasoning in Clarke v Great Southern (No 4) does not permit the group member (that is, by definition, a group member who has not opted out) to seek directions in relation to an individual claim that was not made in the group proceeding. Applying the reasoning in Clarke v Great Southern (No 4), Timbercorp Finance would be entitled to assume that 'the only challenges to the enforceability of the [loan agreement that group members] wished to pursue were those in the group proceedings.'[204]
602 The approach taken in Clarke v Great Southern (No 4) is akin to that taken by in Clarke v Great Southern (No 3), where the learned judge said that the existing and potential defences of the investors who had borrowed from Timbercorp Finance were 'subsumed' in the group proceeding.[205]
603 As discussed above, the reasoning in Clarke v Great Southern (No 3) was similar to that in Clarke v Great Southern (No 4). Speaking broadly, the first proposition identified in Clarke v Great Southern (No 4) was that the group proceedings were intended to resolve all issues outstanding between the parties to the group proceeding relating to the subject matter of the group proceeding. Secondly, that the opt-out provision enables a group member to opt out and preserve and raise individual issues not covered by the group proceeding. Thirdly, by not opting out any individual issues that the group member has are treated as being resolved by, and subsumed in, the outcome of the group proceeding.
604 One of the difficulties with the approach adopted in Clarke v Great Southern (No 4) is that, in my view, if s 33C is not satisfied, relevant claims of individual group members arising out of the same, similar or related circumstances the subject of the group proceeding may not be able to be raised in the group proceeding nor may they be brought forward as suggested by Timbercorp Finance.
605 In other words, it appears that Part 4A was not designed to enable all claims arising out of the same, similar or related circumstances the subject of the group proceeding to be dealt with under Part 4A. Accordingly, it appears to me that a group member who does not opt out is not precluded from thereafter raising claims that could not have been brought under the auspices of Part 4A. It is not necessary for me to finally resolve these issues, as all that I have to decide is whether or not the contentions of Timbercorp Finance are correct.
606 As discussed, in my opinion, Timbercorp Finance has eschewed the line of reasoning in Clarke v Great Southern (No 4). On the contrary, Timbercorp Finance accepts that a group member (who has not opted out) may pursue individual claims outside those raised in the group proceeding but that to do so the group member (who has not opted out) must bring forward the claim for determination in the group proceeding by seeking directions or orders for their determination under ss 33Q, 33R, 33S, 33T and 33ZF, or otherwise be precluded from pursuing the individual claim. In Timbercorp Finance's case, it is the failure to seek such directions or orders that leads to Anshun estoppel and abuse of process denying to the group member the right to pursue the individual defence to Timbercorp Finance's claims under the loan agreements.
607 According to the reasoning in Clarke v Great Southern (No 3) and (No 4), it is the failure to opt out that leads to issue estoppel, Anshun estoppel and abuse of process denying the group member the right to subsequently raise individual defences to Timbercorp Finance's claims under the loan agreements.
608 As I have already said, in this proceeding, Timbercorp Finance did not contend that the defendants by not opting out were precluded from raising their defences by reason of the doctrines of issue estoppel, Anshun estoppel or abuse of process. Rather, Timbercorp, contended that the defendants were precluded by Anshun estoppel and abuse of process, from raising their defences, even though they had not opted out, as they failed to bring forward their individual claims for determination under the means Timbercorp Finance alleges are provided by Part 4A.
609 As noted above, the view expressed in Clarke v Great Southern (No 4) that the principles of abuse of process, issue estoppel and Anshun estoppel would preclude the group members raising individual defences to debt recovery claims under relevant loan agreements because they had not opted out. Despite this view being expressed in a case with similar circumstances, Timbercorp Finance elected not to pursue this argument in the matter before me.
610 As discussed above, I have found that contrary to the contentions of Timbercorp Finance the defendants could not have brought forward for determination their individual defences in the group proceeding and thus could not be subject to Anshun and abuse of process principles for failing to do so.
611 Further, I have found that by reason of the plaintiff in the group proceeding being the privy of the group members (which I have found is limited to s 33ZB) and the plaintiff in the group proceeding not raising for determination in his claim in the group proceeding, the individual defences of the defendants, the defendants are not estopped on Anshun principles (subject to the test of unreasonableness) from raising their defences against Timbercorp in these proceedings.
612 Even if the defendants were entitled to raise for determination their defences in the group proceeding (contrary to my finding) and/or even if group members and the group plaintiff are common law privies for all purposes (contrary to my finding), and Anshun estoppel is therefore engaged, there remains the issue of whether it was unreasonable for them not to do so.
613 If the defendants could have raised or brought forward their claims (ie their defences) for determination under Part 4A, under the means alleged by Timbercorp Finance (contrary to my earlier findings), was the defendants' failure to do so, not unreasonable under the Anshun principles?
614 I repeat again the relevant test as laid down in Anshun as follows:
... there will be no estoppel unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it. Generally speaking, it would be unreasonable not to plead a defence if, having regard to the nature of the plaintiff's claim, and its subject matter it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in the one proceeding.[206]
616 In my opinion, it is unlikely that a court would have directed that the defences be tried in the group proceeding, when the group proceeding had all but concluded. Rather, it is likely that the court would have directed that the defences be raised when and if Timbercorp Finance took proceedings to enforce the loan agreements.
617 Accordingly, in my opinion, there was no real prejudice to Timbercorp Finance in the group proceeding caused by the defendants not raising their individual defences to the loan agreements for determination until after the common issues had been determined. If the defendants did not raise their defences for determination in the group proceeding, there would be no risk of inconsistent findings if they raised the defences in the proceedings against them by Timbercorp Finance. In those circumstances, Kenny JA in Gibbs v Kinna found that:
... to decide whether or not it was unreasonable for a plaintiff not to litigate closely related issues in the one proceeding requires consideration of all the relevant facts, including the character of the previous proceeding, the scope of any pleadings, the length and complexity of any trial, any real or reasonably perceived difficulties in raising the relevant claim earlier, and any other explanation for the failure to raise the claim previously...[207]
618 Neither the opt-out notices nor the notice under s 33ZH(1) gave adequate or proper notice to the defendants. The opt-out notices did not warn the defendants that unless they opted out they would be or may be precluded from raising any defences to the claims of Timbercorp Finance under their loan agreements. This was a critically important issue to the defendants and the notices failed to address this issue. Mr Tomes had expressly raised with his solicitors that he had individual claims.
619 The notice given under s 33ZH(1), after the common questions were answered, did not warn the defendants that unless they sought directions from the court in respect of their defences to any future claim by Timbercorp Finance under the loan agreements, they may be precluded from raising those defences in any action by Timbercorp Finance to recover the loans and they should seek legal advice about their position.
620 The failure to give adequate notice in the opt-out notices was aggravated by the fact that the opt-out notices purported to warn the group members of the consequences of not opting out and remaining as members of the group. The recipient would have expected that the warning was comprehensive and not merely selective of some of the adverse consequences that might flow from not opting out while omitting other adverse consequences.
621 Timbercorp Finance was the author of the opt out notices (although approved by the court) and did not see fit to inform the group members that they would or may be precluded from defending the claims Timbercorp Finance intended to make against group members, who were borrowers from Timbercorp Finance, if the group proceeding failed to have the loan agreements declared void and unenforceable. Nevertheless, Timbercorp Finance now seeks to preclude the group members' defences despite its failure to so warn the group members.
622 As will be discussed below, even if the opt-out notice stated that failure to opt out or seek directions for the determination of individual defences would or might preclude group members from raising those individual defences later, I doubt that group members would be so precluded.
623 Further, in substance the claims made by the plaintiff on behalf of the group members against Timbercorp Finance did not raise any issues relating to the lending process engaged in by Timbercorp Finance but only sought relief against Timbercorp Finance on an accessory basis to the actions of Timbercorp Securities based on the information in, and omitted from, the PDS issued by Timbercorp Securities and other related actions and omissions of Timbercorp Securities.
624 I have touched on the difficulty in raising the defences earlier. The defendants would have had to closely examine the claims made in the group proceeding. This probably would have involved retaining lawyers and taking advice.
625 Importantly, the defendants themselves had no entitlement to raise the defences in the group proceeding nor, as discussed above, could the plaintiff have raised individual defences as the required element in a group proceeding of the question being in common to six further group members, including the plaintiff, would not have existed.
626 There was no risk of inconsistent judgments as the group proceeding did not raise the defendants' defences. There was no suggestion by Timbercorp Finance that the same or substantially the same facts would arise for consideration in the group proceeding and the proceeding in which the defendants' defences would be considered.[208] Timbercorp Finance does not rely on issue estoppel in resisting the defendants raising their defences.
627 In those circumstances, it would be unreasonable and unfair on the defendants to deny them their otherwise common law right to defend the claims now made by Timbercorp Finance.
628 In the test applied by Anshun, I find that the defendants failure to raise their defences to a claim by Timbercorp Finance under the loan agreements for directions and determination was not unreasonable in the circumstances and that accordingly, Anshun estoppel would not prevent the defendants from pursuing their defences.
629 I find that it was not unreasonable for the defendants to defer reliance upon the defences the defendants now rely on, until proceedings had been brought against them by Timbercorp Finance for the recovery of loans under the loan agreements.
Was it unreasonable if the group plaintiff was their privy?
630 I now turn to consider the situation, if that the plaintiff in the group proceeding was the common law privy of the defendants (which I do not accept) and it is suggested that Anshun estoppel arises in respect of the defendants' defences as the plaintiff in the group proceeding failed to bring forward the defendants defences for resolution in the group proceeding.
631 The majority in Tomlinson laid down factors (which I listed from (a) to (m) above) which should be taken into account in determining whether A was the privy of B for common law purposes. If contrary to my view, the plaintiff was the common law privy of the defendants in the group proceeding, in my opinion, it was not unreasonable for the individual defences of the defendants not to be raised in the group proceeding by the plaintiff. In so finding, I rely on the factors listed from (a) to (m) above.
632 I will not recite the factors relied upon by the majority in Tomlinson again, but I will mention a few. The defendants had no control over the plaintiff in the group proceeding and how their claims would be put by that plaintiff. Mr Tomes referred to this in his submissions on Tomlinson. The defendants did not have the right to appear or to be heard or to present evidence in the group proceeding (save the limited right given by s 33T).
633 Importantly, the plaintiff in the group proceeding may have considered that it was not in the interests of the group proceeding to pursue individual defences as the group members may have wished. In fact, the plaintiff in the group proceeding may have run the group proceeding in a way that was contrary to the individual defences that the defendants wish to run.
634 If the plaintiff in the group proceeding was the defendants' common law privy for the purpose of the defendants' individual claims, the plaintiff would have been prevented from pursuing the claims of the defendants in the group proceedings, such as Mr Tomes' defences rely on the personal representations made to him, that did not satisfy s 33C.
635 If the defendants were estopped from raising their defences in the proceedings brought against them by Timbercorp Finance, by reason of the plaintiff in the group proceeding being their common law privy, the defendants would be denied their basic common law right recognised by the majority in Tomlinson when they said:
It is a principle at the core of our legal system that a party claiming or denying the existence of a legal right or obligation should have an opportunity to present evidence and arguments to establish the facts and law on which the claim or denial is founded.[209]
636 For these reasons, I find that even if the plaintiff in the group proceeding was the common law privy of the defendants, it was not unreasonable for the defences now sought to be raised by the defendants not be raised in the group proceeding by the plaintiff.
Further consideration of Anshun and group proceedings
637 One of the arguments in favour of Anshun estoppel applying to group members in group proceedings is that Timbercorp Finance advances one of Part 4A's purposes, namely preventing a multiplicity of litigation. Timbercorp Finance relied heavily on this purpose. On a closer analysis, however, Anshun estoppel may fail to serve that purpose, for at least three reasons.
638 First, the wider the preclusive effect of judgment in a group proceeding, the more likely potential group members are to opt out. If the opt-out notice explains in plain English the full preclusive effect of judgment in the group proceeding, and that effect is extensive, would-be group members will be more hesitant to 'stay in'. The consequence of people opting out is that the defendant may face multiple proceedings on the common questions. If the preclusive effect of judgment in a group proceeding is narrower, group members are less likely to opt out, and the defendant is less likely to face subsequent litigation on the common questions.
639 Second, the application of Anshun estoppel will depend on all the circumstances of the case. If group members bring individual claims or raise individual defences after the group proceeding is concluded, the question of whether it was unreasonable for those group members not to raise their individual claims/defences in the group proceeding must be determined separately in respect of each group member and each individual claim/defence. When determining whether Anshun estoppel precludes each group member from bringing his/her individual claim or defence, courts will be required to consider, among other factors:
(b) whether the group member was aware of the group proceeding;
(c) how well he/she understood the opt-out notice and group proceedings;
(e) whether the group member sought legal advice;
(f) whether the group member was represented by the same solicitors acting for the representative plaintiff;
(g) the extent of the group member's involvement in the conduct of the group proceeding;
(h) the similarity and relationship between the individual claim/defence and the claims and questions dealt with in the group proceeding;
(i) when the group member became aware of their individual claim/defence;
(j) the reason why the group member did not raise the individual claim/defence in the group proceeding;
(k) how the court would have managed the individual claim/defence had it been raised in the group proceeding; and
(l) the prejudice, if any, to the defendants to the group proceeding caused by the failure to raise the individual claim/defence in the group proceeding.
640 The resolution of issues relating to the defences of Mr & Mrs Collins and Mr Tomes will not determine whether or not the defences raised by other borrowers are open to claims by Timbercorp Finance.
641 Clearly, determination of the Anshun estoppel unreasonableness test is a fact intensive investigation. Conducting such a fact intensive analysis in relation to each individual claim/defence raised by each group member can hardly be said to achieve the purpose of preventing a multiplicity of litigation.
642 Third, if Anshun estoppel applies, its effects should be set out clearly in the opt-out notice. As explained above, the reaction to such a notice may be an increased opt-out rate. But another reaction may be that a large number of group members try to raise their individual claims/defences within the group proceeding. The result may be that subgroups are created, or their claims/defences are determined after the common question, or directions are made for the claims/defences to be determined in a separate proceeding. The result may also be that the individual issues suddenly predominate over the common issues and the group proceeding mechanism becomes an unmanageable vehicle for the determination of the common questions. In any event, if a detailed opt-out notice explains the applicability of Anshun estoppel and the reaction to that notice is that a large number of group members try to raise their individual claims/defences within the group proceeding, the result would not be prevention of multiplicity of proceedings.
643 Applying Anshun estoppel to achieve Part 4A's purpose of preventing a multiplicity of proceedings would be short-sighted reasoning. If the defendants in this proceeding were precluded from relying on their individual defences, a multiplicity of proceedings may be prevented. But that is only because Anshun estoppel would have caught the group members unawares.
644 There would, however, be a fundamental difference between the next group proceeding and the Timbercorp and Great Southern group proceedings. That is, in contrast to the Timbercorp and Great Southern group proceedings, the next group proceeding would be conducted on the basis that Anshun estoppel applies (because there would be Supreme Court authority to that effect) and if individual claims/defences are not raised in the group proceeding, they will be precluded. The group members in the next group proceeding are therefore likely to behave differently to the group members in the Timbercorp and Great Southern group proceedings. While applying Anshun estoppel in this case may catch the defendants unawares and prevent a multiplicity of proceedings, it is unlikely to do so in the next group proceeding.
Does judgment have preclusionary effect on the defendants?
645 The starting proposition of Timbercorp Finance was that s 33ZB has the effect of the defendants being bound by the judgment as if a party and subject to the same exclusionary effects that a party would be subject to as a consequence of the judgment. Timbercorp Finance sought to infer from s 33ZB that Parliament intended that group members should be treated like parties more generally.
646 I accept that judgment in the group proceeding may have a preclusionary effect on the plaintiff in relation to other issues that ought to have been raised by the plaintiff in the proceeding.[210] I do not accept, however, that judgment in the group proceeding has a similar effect on the defendants.
647 Timbercorp Finance's submissions based on s 33ZB, fail to recognise that the starting point is that group members are not parties to the group proceeding, and are not to be treated as though they are parties to the group proceeding. Arguments based on preclusionary principles applicable to plaintiffs are inapt, because group members are not parties to the proceeding. Group members are only to be treated as parties where Part 4A expressly provides for such treatment. Section 33ZB expressly provides for treatment as though group members were a party. However, s 33ZB does not state that group members should be treated like parties to proceedings more generally. Rather, in terms of any preclusionary effect on group members in relation to other issues that ought to have been raised by them in the proceeding, Part 4A is silent. In terms of preclusionary effects of judgment, group members are group members, not parties. As Part 4A is silent, principles applicable to parties to proceedings do not apply to group members.
648 There are good reasons for not treating group members as parties to the proceeding. As indicated by the High Court in Mobil v State of Victoria, a group member may not even know that he/she is a group member. Further, the plaintiff would most likely not know of the individual claims that the group defendants individually had. This was recognised by French J in Zhang. Importantly s 33ZB, or the Act otherwise, does not say that a judgment will have effect as if the group member was a party or to like effect.
649 The plaintiff had every opportunity to formulate its claim by being the plaintiff and instructing its solicitors. The defendants did not have any opportunity to formulate the plaintiff's claim. The defendants were not parties and Timbercorp Finance recognises that fact. The defendants had no power to influence the way the case was run, to determine what evidence was led or what issues were resolved. In fact, the plaintiff could not have raised many of the defences sought to be raised by the defendants and particularly Mr Tomes by reason of the necessity for the claim to be common to seven group members including the plaintiff.
650 Timbercorp Finance has cited no authority or principle of law that would make the defendants subject to the same exclusionary principles as a party save to say that the proposition is consistent with the legislative policy of determining all issues arising from the same, similar or related circumstances within the confines of group proceedings. As discussed above, the provisions of the Act do not support the view that there is such a legislative policy inherent in the Act.
651 Rejection of this contention of Timbercorp Finance still leaves open the arguments that failing to opt out and failing to seek directions would enliven the application of Anshun estoppel and abuse of process principles.
Did the failure to opt-out preclude the defendants from raising their defences?
652 In my opinion, the failure of the defendants to opt out does not preclude the defendants from raising their individual defences.
653 In Clarke v Great Southern (No 3), it was held that existing and potential defences were subsumed in the group proceeding.[211] In Clarke v Great Southern (No 4), it was held that by not opting out, any individual issues that the group member had were treated as being resolved and subsumed in the outcome of the group proceeding. The learned judge even said that the defendants were precluded by issue estoppel from maintaining any defences (other than technical defences that the plaintiff has not proved the elements of the cause of action). As discussed earlier, issue estopped is not relied on by Timbercorp Finance in these proceedings.
654 For the reasons given above, I do not consider that a group member's individual claims (not raised in the group proceedings) are subsumed in the group proceeding just as I do not consider that the effect of the judgment in the group proceeding affects the group member as if he/she was a party. As I said when dealing with Timbercorp Finance's submissions, there is no statutory basis for finding that claims that are not made by a group member in the group proceeding are to be treated as being subsumed in the group proceeding or being subject to s 33ZB. The argument that they are is premised solely on a view that such a result is required by the 'legislative policy evident in Part 4A'. As discussed, I find that no such 'legislative policy' is suggested by the actual provisions of Part 4A.
Could the defendants have raised their individual defences in the group proceeding?
655 I do not consider that in the group proceeding the defendants were able to raise the defences now raised to Timbercorp Finance's proceedings, for directions by the court under Part 4A. This is because the defences or the questions now raised by the defendants were not 'claims' or 'remaining questions' of a group member within the meaning of s 33Q and thus, also, could not be the subject of any direction under ss 33R or 33S. As explained above, s 33ZF would have been of no use to the defendants.
656 If that be the case, then there is no basis for Timbercorp Finance asserting that the group proceeding required all issues that the defendants have against Timbercorp Finance, that were not the subject of the group proceeding, to be raised with the court for case management.
657 If I am wrong on this finding and the construction of Part 4A that led me to this finding, and the defendants were therefore able to raise for directions defences they now seek to raise against the claims of Timbercorp Finance, I nevertheless find that the defendants are not precluded from raising those defences in the proceedings brought against them by Timbercorp Finance.
658 In Henderson v Henderson, Sir James Wigram VC said:
Where a given matter becomes the subject of litigation in, and of adjudication by the court of competent jurisdiction, the court requires the parties in that litigation to bring forward their whole case.
He further said that the plea of res judicata estoppel applies to every point 'which the parties, exercising reasonable diligence, might have brought forward at the time'.
659 Under Part 4A, according to Timbercorp Finance, the defendants only had the entitlement to seek directions. Assuming the defendants could have sought directions as submitted by Timbercorp Finance (which I have not accepted) the defendants had no entitlement or right at law to bring forward a claim or question raised by the defences they now seek to raise against Timbercorp Finance for determination.
660 In Anshun, the plurality of the High Court of Australia spoke of a defendant not pleading a defence that it would be expected the defendant would raise. In this case, the defendants had no entitlement or right to plead the defences they now raise in the group proceeding. As mentioned, at its highest, according to Timbercorp Finance, the defendants had an entitlement to seek directions. It was in the court's discretion whether or not any directions would be given for the determination of the claim or question raised by the group member.
661 Further, in my opinion for reasons already discussed, Part 4A does not by its terms suggest that the Part was designed or intended to ensure that all issues that the defendants had against Timbercorp Finance be determined in the group proceeding so as to avoid a multiplicity of proceedings and ensure the court's resources were efficiently used.
662 If Part 4A were so designed or intended, why does Part 4A not give an entitlement to the defendants to have such issues raised for determination? Further, if that was so, why would the defendants not be able to raise the claim or question for determination until after the common issues had been resolved? Why did Part 4A require the defendants to be informed that they should raise for directions all claims arising from the same, similar or related circumstances to those the subject to the group proceeding, or run the risk of claims not being able to be raised in their defences to any claims under the loan agreements?
663 Even if the opt-out notice did provide warnings about Anshun estoppel and explain that group members should raise for directions all claims/defences arising from the same, similar or related circumstances to those the subject to the group proceeding, lest the group members be precluded from doing so later, I do not think the group proceeding judgment would have that effect.
664 As stated above, group members are not to be treated as parties unless Part 4A expressly says so. Section 33ZB says a group proceeding judgment binds all persons who are group members at the time of judgment. It goes no further. An opt-out notice, drafted by the parties and approved by the court, cannot extend the application of preclusionary principles to group members, if those principles do not otherwise apply to group members. Unless Part 4A so provides, the parties and the court do not have the power to agree that group members, who are not parties to the proceedings, will suffer the effects of Anshun estoppel. The effect of judgment on group members is provided for in s 33ZB. Opt-out notices may properly give notice of that effect but do not by themselves extend the ambit of the Act.
665 In Clarke v Great Southern (No 2), the learned judge expressed the opinion that it was more than likely:
... that if any party sought to pursue individual proceedings involving issues determined by - or in the process of being determined by the group proceedings - the individual group proceeding or group proceeding would be stayed on the basis of abuse of process, Anshun estoppel or perhaps, election depending on the particular circumstances.[212]
It is clear from these observations, however, that Croft J was addressing in this passage claims that were raised in group proceedings.
666 Nevertheless, his Honour did endorse submissions that 'the principles in relation to Anshun estoppel are also relevant in these circumstances where the listed members have not opted out of the relevant proceedings'.
667 In Clarke v Great Southern (No 3), the learned judge identified the opt out provision as the means by which a group member could ensure that any individual claim that the group member had, could be preserved for later litigation. His Honour did not refer to any of the provisions now relied upon by Timbercorp Finance to suggest that Part 4A provided a mechanism for group members' individual claims to be raised.
668 Rather, his Honour found that by not opting out the group member was bound by the results of the group proceeding as instituted by the plaintiff in the group proceeding. As his Honour said, 'group members had an opportunity to opt out of the proceeding, insofar as they might wish to maintain a different or novel defence'.
669 His Honour did not address the entitlement of a group member who had not opted out to apply for directions or orders under ss 33Q, 33R, s 33S, s 33T or 33ZF, which are the provisions relied upon by Timbercorp Finance to support their contentions that a group member was obliged to avail itself of those opportunities if it wished its individual defences to be resolved, otherwise it would be precluded from raising those defences in subsequent litigation with Timbercorp Finance. The same comments apply to the judgment in Clarke v Great Southern (No 4).
670 There are several reasons why I do not consider that the failure to exercise the optout provision precludes the defendants from raising their individual defences. First, it has been accepted by the High Court in Mobil that a group member may not even know he is a group member and may not receive the opt out notice or become aware of it.
671 In my opinion, clear, unambiguous statutory terms would be required to deprive a group member (who may not have received notices) from exercising their common law right to resist in court legal claims made against them.
672 Further, such an interpretation would place an onus on a group member to carefully examine the group proceeding to see exactly what claims the proceeding made and whether the group member's individual claims were made. This exercise would probably involve individual group members retaining a lawyer, and would be contrary to one of the Part 4A's purposes; ensuring that people, particularly those who are vulnerable, lack the means or are less aware of legal niceties, of obtaining redress, where they may be unable to take the positive step of having themselves included in the proceedings.
673 If the failure to exercise the opt out provisions were intended to have Anshun and abuse of process issues, it is not consistent with this objective that Part 4A does not contain any requirement to inform group members of these consequences. In fact, as discussed above, the opt out notices drafted by Timbercorp Finance and approved in the Timbercorp proceedings did not contain such a warning.
674 As discussed above, Anshun speaks of a defendant not pleading a defence and Henderson speaks of a party to a proceeding not raising a point. The defendants were not a party to the group proceeding, were not entitled to plead or entitled to raise a claim (and in some cases the claim could not be raised in the group proceeding because the claim did not satisfy the requirements giving rise to a common question of substantial law or fact).
675 In my view, neither abuse of process nor Anshun estoppel is enlivened by the defendants not opting out of the group proceeding.
676 I mention these points although the opt-out argument was not relied on by Timbercorp Finance. In fact the opt-out argument does not sit easily with the submissions made by Timbercorp Finance. Timbercorp Finance's submissions rest on the assumption that a group member who has not opted out is not precluded from raising a defence not raised in the group proceeding (contrary to the view that the failure to opt out does have that effect) if the group member seeks directions or orders under ss 33Q, 33R, 33S, 33T or 33ZF in the group proceeding seeking to have the defence issues determined in the group proceedings or other proceedings as the court directs.
677 As discussed above, the reasoning adopted the obiter statements in Clarke v Great Southern (No 4) leads to the conclusion that by reason of not opting out the group members should be taken to have elected to be bound by the claims made in the group proceedings, and thus group members would be estopped from seeking to raise new claims not raised in the group proceedings (although arising out of related to the issues in the group proceedings) by seeking directions or orders under s 33Q, 33R, 33S, 33T or 33ZF as suggested by Timbercorp Finance.
678 Although Timbercorp Finance did not argue that failure to opt out, in itself, precludes the defendants from relying on the defences they now rely on, something more should be said about such an argument in the event that it is submitted that I should have dealt with this argument.
679 With the greatest respect, I disagree with the obiter statements in Clarke v Great Southern (No 4), that by not opting out of the group proceedings, group members are thereafter precluded from raising any subsequent claims or defences regarding the loan agreements, and the obiter statements to similar effect in Clarke v Great Southern (No 3).
680 In group proceedings, Anshun estoppel has its usual application to the plaintiff. In relation to group members, however, Anshun estoppel has an awkward, if any, application. This is especially so in a group proceedings regime that adopts an opt-out procedure.
681 It must be accepted that in any group proceeding, despite the extensive notice requirements in the Part 4A regime, there is an appreciable risk that there will be some people who are unknowingly caught by the group proceeding. That is, they are group members without realising it. As a result, they will fail to opt out and they will be bound in some way by the judgment in the group proceeding. In enacting the Part 4A regime, Parliament has decided that the unfairness occasioned to such unknowing group members is outweighed by the benefits of the opt-out regime. The premise of Part 4A is not that the notification requirements result in all potential group members being notified such that failure to opt out may be treated as a conscious decision to 'stay in'. Rather, the premise of Part 4A is that the benefits of the opt-out regime outweigh any unfairness caused by that regime.
682 In my opinion, Courts should be wary of reading too much into a failure to opt out. A group member may fail to opt out because, as was said in Clarke v Great Southern (No 4) that he/she has 'accepted that the claims as pleaded in the group proceedings represent all of the claims reasonably available to' him/her. However, a group member may also fail to opt out because he/she did not realise he/she was a group member. There are myriad reasons why a group member may fail to opt out. It is not possible to infer from such a failure that the group member does not have any individual claims/defences or does not wish to pursue any such claims/defences. Nor does such a failure amount to a representation that the group member does not have any individual claims/defences or does not wish to pursue any such claims/defences.
683 Further, in circumstances where an opt-out notice does not explain the effects of Anshun estoppel, and it has not authoritatively been held that Anshun estoppel applies to preclude group members from raising individual claims/defences in subsequent proceedings, a failure to opt out does not readily support an inference that group members accepted the application of Anshun estoppel to their claims/defences.
684 Had Part 4A adopted an opt-in procedure, Anshun estoppel would have a much easier and more justifiable application to group members in group proceedings. In an opt-in regime, group members may more readily be assimilated to the position of parties to proceedings, and inferences may more readily be drawn from group members failing to raise related claims/defences. This is because group members would have made a conscious decision to opt in to the group proceeding.
685 As it is, Part 4A adopts an opt-out regime. Legislating to extend the binding effect of a judgment to individuals who are not party to a proceeding and who may not be aware of the proceeding is a radical step. It is an extension that could not be achieved without legislation, and one that should go no further than expressly provided for in the legislation.
686 I have dealt with Timbercorp Finance's general arguments on Anshun estoppel. In addition, Timbercorp Finance put forward submissions that some of the issues raised in the defences were in substance dealt with in the proceedings and accordingly Anshun estoppel arises by reason of those facts.
Were any of the defences resolved in the group proceedings?
687 As discussed above, Timbercorp Finance primarily submitted that Anshun principles gave rise to blanket preclusion of individual defences following a group proceeding. However, it also made submissions about specific features of some of the defences in question which it says warrant Anshun estoppel. It did not make clear whether it put these specifics forward as examples of how the alleged blanket preclusion would apply, or whether it put these reasons forward as additional and separate to the general rule. Nor did it make submissions about all of the individual defences raised by Mr & Mrs Collins or Mr Tomes. To the extent that it did not address a particular defence specifically, it appears that it relied on its general submissions alone. Given that Timbercorp Finance bears the onus of establishing that there is Anshun estoppel, I will not go beyond its submissions in considering aspects of the individual cases.
688 Timbercorp Finance concedes in its submissions that the defences now raised by the defendants were not adjudicated on in the group proceeding and for the greater part the common questions determined in Woodcroft-Brown v Timbercorp did not encompass them.
The claims against Timbercorp Finance in the group proceeding
689 The defendants to the group proceeding were Timbercorp Securities, three directors, Timbercorp Finance, and Timbercorp Limited. Essentially the plaintiff alleged that certain representations were made about the viability of the Timbercorp Group. It was alleged that Timbercorp Finance was a party to the representations. The representations were alleged to be in the relevant product disclosure statements. Some representations were allegedly made by omission.
690 Relevantly, to the claims made in the defences, one group of representations were entitled 'TSL scheme contributions representations'. The plaintiff alleged that by reason of matters previously alleged (which I will come to) the offering of loans by Timbercorp Finance to finance the scheme contributions constituted representations that:
(a) the scheme contributions equalled or exceeded the true costs of the establishment and ongoing management of that recent scheme;
(b) the scheme members' payment of the scheme contributions would be applied to fund the relevant scheme;
(c) the scheme contributions would be sufficient to fund the relevant scheme.
(the TSL scheme contributions representations)
691 There were no particulars of the representation save for the reference to paragraphs 8B, 8C and 8E, 32, 33A and 38A. Paragraphs 8B, 8C and 8E alleged that TSL and Timbercorp Finance were important companies in the Timbercorp Group that operated in tandem. Paragraphs 32, 33A and 38A alleged that Timbercorp Finance authorised TSL promoting its finance services and pleadings about the PDS statements.
692 The plaintiff alleged that the offering of loans by Timbercorp Finance to finance the scheme contributions constituted representations by Timbercorp Finance that:
(a) the scheme contributions equalled or exceeded the true costs of the establishment and ongoing management of that recent scheme;
(b) the scheme members' payment of the scheme contributions would be applied to fund the relevant recent scheme;
(c) the scheme contributions would be sufficient to fund the relevant recent scheme.
(the TFL scheme contributions representations).
693 The plaintiff alleged that each of the TSL scheme contributions representations and the TFL scheme contribution representation was false and/or misleading in that:
(a) at the time they were made, there was no reasonable basis for making them;
(b) the scheme contributions were not sufficient to fund the relevant recent scheme.
694 The particulars provided in support of this plea included the following:
(c) the fact that prior to the appointment of KordaMentha as administrators of the Timbercorp Group in April 2009, the Timbercorp Group operated all Scheme cash flows through a central bank account and that fees and expenses paid in respect of one scheme were being used to fund the operations of another or other expense of the Timbercorp Group.
695 Under the heading of causation, the plaintiff alleged, inter alia, that in reliance on the Timbercorp Finance 'scheme costs representations', the plaintiff, inter alia, entered into loan agreements with Timbercorp Finance or another lender in 2007 and/or 2008 to fund scheme project payments whether in recent schemes or existing schemes.
696 One of the common issues of law or fact pleaded by the plaintiff was:
Whether the TFL scheme representations were made and if, so whether the TFL financial representations were misleading or deceptive in contravention of [certain statutory provisions.]
697 As mentioned earlier, the relief sought by the plaintiff on his own behalf and on behalf of the group members was in respect of both the alleged breaches of statutory duties and in respect of the alleged misleading and deceptive conduct that any loans entered into with TFL during the relevant period were void or otherwise unenforceable.
698 The learned trial judge in the group proceeding found that the TFL scheme contribution representations alleged were not made.
699 The no loan defence raised by the defendants in the instant proceedings is, in effect, that the defendants agreed with Timbercorp Finance that it would lend to the defendants a certain sum that was to be advanced to Timbercorp Securities in discharge of a liability owed by the defendants for the purchase of an interest in various schemes. The defendants allege that the loan was not made as, contrary to the agreement, the moneys were advanced to Timbercorp Group.
700 Timbercorp Finance says that this defence is at odds with the foundation of the group proceeding that there was a loan but that loan ought to be set aside or excused. Timbercorp Finance says that the defence is in effect an alternative defence to that pleaded in the group proceeding. Further, Timbercorp submits that there was no element of the no loan defence that precluded them being raised in the group proceeding .
701 As it is, the no loan defence was not raised in the group proceeding. Timbercorp Finance concedes that no issue estoppel issues are raised by it. It appears, rather, to be a twofold argument. The first aspect is the same as that discussed above: that the defendants could and should have raised this defence in the group proceeding. The second is an argument that Anshun arises because (in the view of Timbercorp Finance) this defence closely overlaps with the substance of a contradictory positive assertion made in the group proceeding.
702 Accordingly, if I am wrong and the defendants could have sought directions to seek to have resolved issues not raised in the group proceeding, then I accept the similarity in the issue would have been a relevant matter to be taken into account in considering whether or not the Anshun estoppel was enlivened to prevent them pleading the matter in their defence to the claim by Timbercorp Finance.
703 However, in my opinion, the submission of Timbercorp Finance is subject to the same response that I have made earlier when dealing with whether or not it was not unreasonable to seek directions on issues not raised in the group proceeding (on the assumption group members could, which assumption I reject).
704 Accordingly, I find that the defendants are not estopped under Anshun principles from now raising the issues of no loans or loan moneys not being advanced to Timbercorp Securities in their defences as it was not unreasonable for them not to raise the issue for directions for the reasons discussed above.
705 Timbercorp Finance says the 'ringfencing' defence overlaps with allegations in the group proceeding that Timbercorp Finance falsely represented to group members that payments would be applied to fund the relevant scheme. It submits that the fact that the representations in the group proceeding and those in the defences now in question are from different alleged sources is unimportant. Likewise, it submits that it is inconsequential that one is a misrepresentation claim and the other is a contractual defence.
706 For the reasons I have already discussed in general, and for reasons analogous to those concerning the 'no loan' defence, I am not persuaded that the defendants could or should have raised the ring-fencing defence for case management in the group proceeding.
707 Additionally, I am not persuaded that there is a risk of inconsistent judgments. Timbercorp Finance did not point to any specific finding in the group proceeding or any specific potential finding on the ring-fencing defence that might contradict each other.
708 One can imagine that there would have been a risk of inconsistent judgments if, for instance, Judd J had found that ring-fencing representations had been made but they were not misleading, yet a court in another proceeding subsequently found that other ring-fencing representations had been made and were misleading. However, that is not the case. Judd J found that the representations alleged in the group proceeding were not made. Even if a court now found that ring-fencing representations were made by another source, I do not see a risk of inconsistent judgments.
709 Timbercorp Finance says that Mr Tomes' 'non-recourse' defence is similar to the issues raised in the group proceeding in that it alleges a false representation, and that if Mr Tomes was ever to raise this issue, it should have been in the group proceeding.
710 For the reasons above, both in relation to the operation of Part 4A generally and analogously to the 'no loan' and 'ring-fencing' defences, I am not persuaded.
711 Timbercorp Finance also places significance on the retainers Mr & Mrs Collins and Mr Tomes respectively had with M+K Lawyers. It also points to correspondence from M+K to Timbercorp Finance's liquidators and to client group members in the group proceeding. The latter includes circulars distributed by M+K to client group members, including Mr & Mrs Collins and Mr Tomes.
712 In part, it submits that the M+K retainers and correspondence illuminate and confirm the nature of the group proceeding. These submissions mirror those it makes directly about the group proceeding. Specifically, Timbercorp Finance says it confirms firstly the 'non-liability' subject matter and secondly the 'once and for all' approach to litigation. It says that the correspondence shows that M+K considered or intended the group proceeding to provide a 'single definitive ruling'.
713 Even assuming for the sake of argument that the retainers and correspondence show that M+K considered non-liability to be the subject matter of the group proceeding, for analogous reasons to those above, that does not preclude Mr & Mrs Collins or Mr Tomes from raising the defences now in question.
714 As for the 'single definitive ruling' argument, I have some doubt that the correspondence bears out an intention that there would be no other litigation in any circumstance. It does not seem to me that M+K was suggesting that, if the group proceeding should fail and Timbercorp Finance should bring recovery proceedings, M+K intended that its clients should nevertheless abandon defences that were otherwise available to them. The comments in the correspondence are not detailed or highly developed. However, if anything, they seem to me to suggest that M+K hoped (or intended) that the group proceeding would succeed, thus resolving the matter once and for all, for instance in that success would forestall any recovery proceedings. However, even if there is doubt about what intentions the correspondence reflects, the views of a plaintiff's solicitor cannot, without more, change what would otherwise be the legal position. Merely saying them aloud to clients or other parties does not give them force. For instance, this was not a term of settlement.[213] Accordingly, I am not persuaded that any suggestion in the correspondence that M+K saw the group proceeding as 'once and for all' can, of its own force, create a blanket bar on litigation or defence. Indeed, that submission would be hard to reconcile with Timbercorp Finance's own submission that certain defences must still be available, as discussed above.
715 Thirdly, Timbercorp Finance submits that the retainers and correspondence show that the group proceeding was to encapsulate not only common questions but also idiosyncratic individual issues. Consequently, it says that M+K had an obligation to investigate and pursue the best interests of its clients.
716 Without reaching a concluded view, I have some doubt that the retainers were such that M+K was supposed to deal with clients' idiosyncratic issues within the group proceeding.
717 But even if that were so, Timbercorp Finance did not explain how that could translate into Anshun estoppel, rather than perhaps some cause of action between Mr & Mrs Collins and Mr Tomes. I am not persuaded that it would.
718 Anshun estoppel is chiefly informed by what issues were so relevant to those in the original proceeding that it would have been unreasonable not to raise them at the same time. Those issues are either relevant or not. The degree of relevance is not transformed by whether they fell within the scope of a retainer or not.
719 I have already found that the defences now in question are not so closely related to the group proceeding that an Anshun estoppel arises, given the context of the limited and the non-existent ability of a group member to raise additional issues under Part 4A.
720 Of course, preclusionary principles may still operate against a non-party who has indirect control of litigation. The scope of a retainer could plausibly speak to a person's ability to influence or control litigation. However, that was not the case here. Mr & Mrs Collins and Mr Tomes did not have control of, or influence over, the direction of the group proceeding.
721 Timbercorp Finance further argues that M+K had prior awareness of the non-pooling issue and of Mr Tomes' potential defences. However, for the same reasons as those I have expressed in relation to the issue of the retainers, I am not persuaded that any choice on M+K's part not to pursue those matters within the group proceeding creates an Anshun estoppel where one would otherwise not exist.
722 For the above reasons, I find that the defendants are not estopped by Anshun principles from pleading the defences in these proceedings on the two grounds: first, that Anshun was not engaged in the first place and, secondly, if it was then the carve out applied under the unreasonableness test.
723 The relevant principles are set out above. In view of my findings with respect to the construction of the Act and the application of Anshun principles, I do not consider that the pleading of the defences to the claims of Timbercorp Finance is an abuse of process by either of the defendants.
724 In particular, I have found that the defendants are not estopped from raising their defences. I have found that the 'means' of raising their defences in the group proceeding as alleged by Timbercorp Finance was in fact not open to them. I have also found that the group plaintiff was a statutory privy only to the extent as provided by the statute under s 33ZB.
725 On the other hand, the defendants are entitled to their common law rights to present evidence and argue in court their defences to Timbercorp Finance's claims. It is clearly not an abuse for them to exercise their fundamental common law rights and I so find.
726 There is a related issue to the no loan defence that attracted a good deal of evidence in the hearing. Mr & Mrs Collins contend that they only became aware of the fact that the moneys they borrowed were not advance to Timbercorp Securities but was instead advance to Timbercorp Limited after the group proceeding had concluded.
727 Timbercorp Finance contends that if the documents discovered by it in the group proceeding were carefully examined by Mr & Mrs Collins, or their solicitors, Mr & Mrs Collins could have ascertained that in fact that the moneys they borrowed were not advance to Timbercorp Securities but was instead advance to Timbercorp Limited.
728 Timbercorp Finance sought to use this fact to support its contention that if Mr & Mrs Collins sought to argue that it was not unreasonable for them not to raise for directions the no loan defence, in answer to Anshun estoppel, then the fact that they could have discovered the true state of affairs during the group proceeding would undermine their claim.
729 It was assumed that Mr & Mrs Collins would be entitled to examine the discovered documents for the purpose of making a claim that was not raised in the group proceeding. No submission was made in support of this contention. There was no discussion of the Harman principles and whether or not Mr & Mrs Collins (who were not parties to the litigation)could inspect the documents to raise a claim not raised by the plaintiff in the group proceeding.
730 Assuming that Mr & Mrs Collins could have inspected the discovered documents and assuming that if they had inspected them they would have discovered that the loan moneys they were to borrow were not advanced as agreed, then I accept that would have been a relevant matter to be taken into account in considering whether or not the Anshun estoppel was enlivened to prevent them pleading the matter in their defence to the claim by Timbercorp Finance.
731 Notwithstanding those matters, if I am wrong and the defendants could have sought directions to seek to have resolved issues not raised in the group proceeding, I am still of the opinion for the reasons given earlier that it was not unreasonable for Mr & Mrs Collins not to have raised that defence for directions for the reasons I have given earlier and accordingly I find that they are not estopped under Anshun principles from now doing so in their defences to the claims of Timbercorp Finance.
732 Objections were taken by the defendants to the affidavits relied on by Timbercorp on the grounds that they contained much by way of hearsay evidence. Timbercorp accepted that this was the case, but submitted that I should receive them into evidence under s 189 (3) of the Evidence Act 2008. As it is, the defendants have been successful and none of the hearsay matters were genuinely in dispute. Further the application of the provisions referred to in s 189(1) would, in my opinion, have caused or involved unnecessary expense or delay.
733 In making those findings I have considered the importance of the evidence in the proceeding, the nature of the proceeding and the probative value of the evidence. In my opinion, the defendants have not been prejudiced in the conduct of the proceeding by the admission of the plaintiff's affidavit material.
734 I accept that if the defendants (and other group members) are entitled to raise individual defences that Timbercorp Finance will be faced with long and lengthy litigation. I also accept that this may put great stress on the resources of the Court. Nevertheless, for the reasons given, I do not find that the defendants should be denied the opportunity to maintain the defences that they do against the claims made against them by Timbercorp Finance. The principle of legality is, of course, the rule of statutory construction that Parliament does not intend to interfere with common law rights and freedoms unless such an intention is demonstrated by clear and unequivocal language.[214] It was described by French CJ in Momcilovic v The Queen[215] as follows:
735 The opportunity for Mr & Mrs Collins and Mr Tomes to raise their individual defences falls within such a right. As the High Court of Australia held in Tomlinson v Ramsey Food Processing Ltd:
It is a principle at the core of our legal system that a party claiming or denying the existence of a legal right or obligation should have an opportunity to present evidence and arguments to establish the facts and law on which the claim or denial is founded.[216]
736 As is evident from the detailed discussion of the legislation above, there is no clear and unequivocal language indicating such an intention in Part 4A. On the contrary, the silence speaks volumes, and the detailed provisions are far more easily reconciled with the view that Part 4A does not so operate.
737 Timbercorp Finance referred to what may be important consequences arising from the decision in the proceedings before me. Timbercorp Finance submits that the position contended for by it would prevent inappropriate and wasteful re-litigation of subject matter properly within the scope of a group proceeding. Timbercorp Finance contends that to any extent to which the position it argues for tended to encourage the raising of further matters within the confines of a given group proceeding, that would be both positively desirable given the policy which Timbercorp Finance says underlines the Act (to resolve all issues arising out the matter) and as a matter of practicality would readily be able to be managed in the appropriate fashion by the court in particular proceedings pursuant to the broad and flexible case management powers bestowed under Part 4A of the Act.
738 I do not agree. For a start, the court does not have broad and flexible case management powers bestowed on it under Part 4A as I discuss above. More importantly, the approach of Timbercorp Finance would be to deny individual investors (many of whom have suffered badly through the mismanagement of the Timbercorp Group) their day in court (which every person is otherwise entitled to at common law) to resist the claims of Timbercorp Finance which if successful will only add to the woes of the investors.
739 In my opinion, to require all the individual defences to be dealt with in the group proceeding would be to undermine the main purpose of group proceedings which is to resolve common issues between prospective plaintiffs against a prospective defendant to avoid a multiplicity of proceedings on the same common issues.[217] In fact as discussed above, under Part 4A that may not be permissible in respect of some individual defences where the plaintiff and six other group members do not have such a defence.
740 For these reasons, I would answer the preliminary question in each of proceeding no 2972 of 2014 and 4921 of 2014 as follows: the defendants are not precluded from raising any of the defences pleaded to the claims of Timbercorp Finance in the proceeding; and I so order.
[1] The defendants in matter no 02972 ('Collins Proceeding').
[2] The defendant in matter no 04921 ('Tomes Proceeding').
[3] Woodcroft-Brown v Timbercorp Securities Ltd [2011] VSC 427 ('the group proceeding judgment').
[5] Or, in the proceedings involving only one defendant, a like question framed in the singular.
[6] As discussed below, Timbercorp Finance later appeared to refine this position, carving out a few defences which it said could still be raised, such as prior settlement of the matter or novation of the loan agreement.
[7] As discussed below, Mr Tomes contends that the counterclaim may have been against Mr Woodcroft-Brown representing all group members.
[8] Mr Tomes submitted that the intended form of the order was as follows:
If you are a group member and you do not give notice to opt out by 4.00pm on 10 December 2010, you will be taken to have not opted out and will, under Australian law, be bound by the outcome of the class action and any judgment or determination made in it. If the class action is unsuccessful or is not as successful as you might have wished, you will not be able to deal with cross-claims or defences, or make the same claim in any other proceeding.
[11] 28 April 2011 report issued by M+K Lawyers.
[12] This contribution covered the costs of the trial, the costs of the appeal to the Victorian Court of Appeal and the special leave application to the High Court.
[14] [1843] EngR 917; (1843) 3 Hare 100, 115; [1843] EngR 917; 67 ER 313, 319.
[15] [1981] HCA 45; (1981) 147 CLR 589 ('Anshun').
[18] [1998] VSCA 52; (1999) 2 VR 19 ('Gibbs v Kinna').
[19] [1998] VSCA 52; (1999) 2 VR 19, 26 [23].
[20] [1998] VSCA 52; (1999) 2 VR 19, 28 [28].
[21] [1998] VSCA 52; (1999) 2 VR 19, 20 [1].
[23] Tanning Research Laboratories Inc v O'Brien [1990] HCA 8; (1990) 169 CLR 332, 346 ('Tanning Research').
[24] [2009] HCA 27; (2009) 239 CLR 175, 193 [33]. See also Plaintiff S3/2013 v Minister for Immigration and Citizenship (2013)87 ALJR 676, 678 [11]-[12] (Gageler J).
[25] See, eg, Dow Jones and Co Inc v Gutnick (2002) 210 CLR 575, 604 [36]; Shaw v Gadens Lawyers [2014] VSCA 74, [59] (Maxwell P, Tate JA and Garde AJA agreeing).
[26] Sheraz Pty Ltd v Vegas Enterprises Pty Ltd [2015] WASCA 4, [11] (Buss JA). See also Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2013] UKSC 46; [2014] AC 160, 180 [17] (Lord Sumption JSC); Telesto Investments Ltd v UBS AG (2013) 94 ACSR 29, 77 [248] (Sackar J); Habib v Radio 2UE Sydney Pty Ltd [2009] NSWCA 231, [89] (McColl JA, Giles and Campbell JJA agreeing); Spalla v St George Motor Finance Ltd [No 6] [2004] FCA 1699, [66] (French J).
[27] Moti v The Queen [2011] HCA 50; (2011) 245 CLR 456, 463 [10]; Michael Wilson & Partners Ltd v Nicholls [2011] HCA 48; (2011) 244 CLR 427, 452 [89].
[28] Moti v The Queen [2011] HCA 50; (2011) 245 CLR 456, 464 [11].
[29] Jago v District Court (NSW) [1989] HCA 46; (1989) 168 CLR 23, 74 (Gaudron J); Walton v Gardiner [1993] HCA 77; (1993) 177 CLR 378, 394.
[30] Moti v The Queen [2011] HCA 50; (2011) 245 CLR 456, 463-4 [10]; Michael Wilson & Partners Ltd v Nicholls [2011] HCA 48; (2011) 244 CLR 427, 452 [89].
[31] [2012] VSCA 42; (2012) 36 VR 130, 153-5 [97] (Robson AJA, Neave and Harper JJA agreeing) ('Kermani').
[32] [2009] VSC 566; (2009) 76 ACSR 181, 228-9.
[34] See Sheraz Pty Ltd v Vegas Enterprises Pty Ltd [2015] WASCA 4, [134] (Murphy JA, Buss JA and Chaney J agreeing); Burns v Ingram [2012] NSWSC 418, [85]-[86] (Hallen AsJ). See also Ekes v Commonwealth Bank of Australia (2014) 313 ALR 665, 698-9 [139] (Bathurst CJ, Beazley P and Emmett JA agreeing).
[35] Kermani, 157 [112] (Robson AJA, Neave and Harper JJA agreeing); Burns v Ingram [2012] NSWSC 418, [86] (Hallen AsJ); Habib v Radio 2UE Sydney Pty Ltd [2009] NSWCA 231, [89] (McColl JA, Giles and Campbell JJA agreeing); Sheraz Pty Ltd v Vegas Enterprises Pty Ltd [2015] WASCA 4, [120] (Murphy JA, Buss JA and Chaney J agreeing).
[36] [1993] HCA 77; (1993) 177 CLR 378, 407.
[37] [2015] HCA 28 ('Tomlinson').
[40] [1993] FCA 489; (1993) 45 FCR 384 ('Zhang').
47 [2000] VSCA 103; (2000) 1 VR 545, 565-6.
[48] Anshun[1981] HCA 45; , (1981) 147 CLR 589.
[52] [1915] 1 IR 345 ,372.
[53] Australian Law Reform Commission, Grouped Proceedings in the Federal Court (ALRC Report No 46) (1988) ('ALRC report').
[55] Section 33C(2)(b) is the equivalent provision in Pt 4A, Supreme Court Act.
[57] This provision is the same as s 33N(1)(d) of Pt 4A.
[58] (2002) 211 CLR 1; [2002] HCA 27 ('Mobil v State of Victoria').
[59] Mobil v State of Victoria [33].
[60] Mobil v State of Victoria [34].
[61] For example, Federal Court of Australia Act 1976 (Cth), Pt IVA.
[66] Powell v Wright [1844] EngR 415; (1844) 7 Beav 444, per Lord Langdale MR at 446-7; [1844] EngR 415; 49 ER 1137 at 1138.
[68] [2012] VSC 338 (Clarke v Great Southern (No 2)).
[69] Clarke v Great Southern (No 2), [7].
[70] Clarke v Great Southern (No 2), [16]-[18].
[71] [2014] VSC 569 (Clarke v Great Southern (No 3)). There have been several judgments delivered in the Great Southern proceedings. I have called Clarke v Great Southern [2014] VSC 516, Clarke v Great Southern (No 4) as previously Croft J had delivered on 12 August 2012 Clarke v Great Southern (No 2) [2012] VSC 338 (as discussed above). Judd J then delivered a further judgment in the Great Southern proceedings entitled Clarke v Great Southern [2014] VSC 569 on 14 November 2014, which for convenience I will call Clarke v Great Southern (No 3).
[72] As there were several reasons for decisions delivered in this matter, I am here referring to the proceedings themselves rather than any particular published reasons.
[73] Clarke v Great Southern (No 3), [39]-[52] (citations omitted).
[74] [2014] VSC 516 (Clarke v Great Southern (No 4)) delivered 11 December 2014_._ The definitions of each do the several judgments delivered in the Great Southern proceedings are set out at footnote 70.
[75] Clarke v Great Southern (No 2), [16]-[18].
[77] Clarke v Great Southern (No 4), [123].
[78] [2005] HCA 12; (2005) 223 CLR 1, 17 [34] (Gleeson CJ, Gummow, Hayne and Heydon JJ).
[79] Clarke v Great Southern (No 4), [125].
[80] Clarke v Great Southern (No 4), [126].
[81] Clarke v Great Southern (No 4), [129].
[82] Clarke v Great Southern (No 4), [132].
[83] Clarke v Great Southern (No 4), [132].
[85] Victorian Stevedoring and General Contracting Co Pty Ltd and Meakes v Dignan [1931] HCA 34; (1931) 46 CLR 73 at 106; [1931] HCA 34; Blair v Curran [1939] HCA 23; (1939) 62 CLR 464 at 532; [1939] HCA 23; Chamberlain v Deputy Commissioner of Taxation [1988] HCA 21; (1988) 164 CLR 502 at 510; [1988] HCA 21.
[86] Tomlinson, [21]-[22] (citations omitted).
[87] Tomlinson, [23]-[26] (citations omitted).
[89] Cf Johnson v Gore Wood & Co [2002] 2 AC 1 at 30-1.
[92] As to the latter, see Carnie v Esanda Finance Corporation Ltd [1995] HCA 9; (1995) 182 CLR 398 at 423-4; [1995] HCA 9.
[96] City of Swan v McGraw-Hill Companies (2014) 223 FCR 295 at [78], [92], [99], [100]-[101] (Rares J). An application for leave to appeal the decision was refused in McGraw-Hill Financial Inc v City of Swan [2014] FCA 665.
[97] City of Swan v McGraw-Hill Companies (2014) 223 FCR 295 at [96] (Rares J).
[98] Per Lord Diplock in Hunter v Chief Constable of the West Midland Police [1981] UKHL 13; [1982] AC 529 (the Birmingham Bombers' case) (at 536); Mr & Mrs Collins written submissions, [15].
[99] Tanning Research Laboratories Inc v O'Brien [1990] HCA 8; (1990) 169 CLR 332, 346.
[102] P Dawson Nominees Pty Ltd v Brookfield Multiplex Limited (No 2) [2010] FCA 176.
[104] That Act introduced Part IVA into the Federal Court of Australia Act 1976. Those provisions are essentially the same as the provisions of Part 4A of the Supreme Court Act 1986. See Wong v Silkfield [1999] HCA 48; (1999) 199 CLR 255, [20]; Thomas v Powercor Australia [2010] VSC 489, [27].
[105] Quoted in Thomas v Powercor Australia [2010] VSC 489, [26].
[106] Mobil v State of Victoria', [12], Gleeson CJ.
[107] Bright v Femcare [2002] FCAFC 243; (2002) 195 ALR 574, [153] (Finkelstein J).
[108] The Cloverdell Lumber Company Pty Ltd v Abbott [1924] HCA 4; (1924) 34 CLR 122, 129, 124 and 135 (Isaacs J).
[109] Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256.
[110] Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256, [63]-[64].
[111] Sargood Bros v Commonwealth [1910] HCA 45; (1910) 11 CLR 258, 279 (O'Connor J); Construction, Forestry, Mining And Energy Union v Boral Resources (Vic) Pty Ltd [2014] VSCA 348, [58].
[112] Mobil Oil Australia Pty Ltd v The State of Victoria [2002] HCA 27; (2002) 211 CLR 1, [12]. See also [17].
[113] Tanning Research, 346 (Brennan and Dawson JJ).
[116] Wong v Silkfield Pty Ltd [1999] HCA 48; (1999) 199 CLR 255, 261 [13] (Gleeson CJ, McHugh Gummow, Kirby and Callinan JJ). See also Mobil Oil Australia Pty Ltd v Victoria [2002] HCA 27; (2002) 211 CLR 1, 30 [33] (Gaudron, Gummow and Hayne JJ).
[117] Carnie v Esanda Finance Corporation Ltd [1995] HCA 9; (1995) 182 CLR 398, 408 per Brennan J.
[120] Mobil Oil v Victoria [65] per Gaudron, Gummow and Hayne JJ.
[121] Schutt Flying v Mobil [59] per Phillips JA; Femcare Ltd v Bright (2000) FCR 331, [86]; Mobil v Victoria, [51] per Gaudron, Gummow and Hayne JJ.
[122] Plaintiff S10/2011 v Minister for Immigration and Citizenship [2012] HCA 31; (2012) 246 CLR 636, [31].
[123] Zhang 405; Mobil v Victoria [39] per Gaudron, Gummow and Hayne JJ; Clarke v Great Southern (No 2) and Clarke v Great Southern [46], [49]-[51]; and Earglow Pty Ltd v Newcrest Mining Ltd [2015] FCA 328, [32] per Beach J.
[125] Clarke v Great Southern (No 2), [17].
[126] Woodcroft v Timbercorp Securities Ltd (in liq) [82].
[127] 'Brought forward' is the expression used in Henderson v Henderson.
[128] I put to one side for the moment any argument that some of the defences raised by the defendants were the subject of the group proceeding.
[129] [2015] FCA 328 ('Earglow'), [33].
[132] See ALRC report, especially [132]-[138].
[133] See ALRC report, especially [5], [40]-[42].
[135] As discussed below, this construction of s 33C undermines the reasoning in Clarke v Great Southern (No 4) that by not opting out a group member accepts that all its claims are being resolved in the group proceeding as under Part 4A not all individual claims of group members were are able to be resolved in the group proceeding.
[136] The Practice of the Chancery Division of the High Court of Justice (7th ed, 1901) 171-2.
[138] [1901] AC 1, 8.
[141] See for example, Zhang, 400-1.
[143] ALRC report, 157-8, clause 14 of the proposed bill.
[144] Certain Lloyd's Underwriters v Cross (2012) 248 CLR 378, [2012] HCA 56.
[145] Certain Lloyd's Underwriters v Cross [2012] HCA 56; (2012) 248 CLR 378, [41].
[150] Albeit in relation to Timbercorp Finance's arguments generally, rather than the Civil Procedure Act specifically.
[151] Clarke v Great Southern Finance Pty Ltd (No 2), [17].
[152] Clarke v Great Southern Finance Pty Ltd (No 2), [12].
[153] Ibid [13], setting out inter alia [16] of the submissions.
[156] [2015] FCAFC 70. Counsel for Mr Tomes brought this decision to the attention of the court and other parties subsequent to the hearing of this separate question, shortly after judgment was given. No party sought to make submissions on it.
[159] See eg ss 33K (application by plaintiff), 33KA (application of a party) and 33N (application by defendant) of the Supreme Court Act 1986.
[193] [1982] 2 NSWLR 456 ('Young').
[196] As to the latter, see Carnie v Esanda Finance Corporation Ltd [1995] HCA 9; (1995) 182 CLR 398 at 423-4; [1995] HCA 9.
[198] Tomlinson, [40] (emphasis added).
[200] Clarke v Great Southern (No 3), [45].
[201] Clarke v Great Southern (No 3), [46].
[202] Clarke v Great Southern (No 4), [23]-[132].
[203] Clarke v Great Southern (No 4), [132].
[204] Clarke v Great Southern (No 4), [132].
[205] Clarke v Great Southern (No 3), [50].
[206] Anshun, 602 (Gibbs CJ, Mason and Aickin JJ).
[208] See tests laid down by Kenny JA in Gibbs v Kinna, [23].
[210] It is not necessary for me to decide this issue.
[211] Clarke v Great Southern, [50].
[212] Clarke v Great Southern (No 2), [16].
[213] I need not, and do not, express a view about the effect of such a term of settlement. I raise the example merely to note that it would raise different considerations.
[214] Momcilovic v The Queen (2011) 245 CLR 1, per French CJ at [43]-[44]; Watson v AWB Ltd [2009] FCA 1174; (2009) 181 FCR 96; and Re Australian Property Custodian Holdings Limited (in liquidation) (receivers and managers appointed) No 3 [2013] VSC 154.
[215] Momcilovic v The Queen (2011) 245 CLR 1, [42].
[216] [2015] HCA 28, per French CJ, Bell, Gageler and Keane JJ at [38].
[217] Mobil v State of Victoria, [12] per Gleeson CJ.
Timbercorp Finance Pty Ltd (In Liq)
Collins and Tomes [2015] VSC 461
(1981) 147 CLR 589
(1999) 2 VR 19
(1990) 169 CLR 332
(2009) 239 CLR 175
(2002) 210 CLR 575
(2011) 245 CLR 456
(2011) 244 CLR 427
(1989) 168 CLR 23
(1993) 177 CLR 378
(2012) 36 VR 130
(2014) 313 ALR 665
(1993) 45 FCR 384
(2000) 1 VR 545
(2002) 211 CLR 1
(2005) 223 CLR 1
(1931) 46 CLR 73
(1939) 62 CLR 464
(1988) 164 CLR 502
(1995) 182 CLR 398
(2014) 223 FCR 295
(1999) 199 CLR 255
(2002) 195 ALR 574
(1924) 34 CLR 122
(2006) 226 CLR 256
(1910) 11 CLR 258
(2012) 246 CLR 636
(2012) 248 CLR 378
(2011) 245 CLR 1
(2009) 181 FCR 96