[2025] VSC 159
General information, not legal advice.
Supreme Court of Victoria
2025-04-01
FORBES J
Original judgment source is linked above.
PRACTICE AND PROCEDURE - Group proceeding - Approval of discontinuance - Where discontinuance against one of multiple defendants - Discontinuance or settlement - Notice to the group members - Discontinuance but remain as a party.
(a) all claims against the seventh defendant, being:
(i) the fourth plaintiff, Julie Morrison's claim in negligence;
(ii) the fourth plaintiff's claim that the seventh defendant directly contravened ss 18, 29 and 34 of the Australian Consumer Law (ACL);[1]
(iii) the plaintiffs' claim that the seventh defendant was accessorily liable for DCSS and the second defendant's contraventions of ss 18, 29, and 34 of the ACL; and
(iv) the fourth plaintiff's claim that the seventh defendant breached the statutory guarantees in s 60 and 61 of the ACL.
(b) the following claims made by the fourth plaintiff against DCSS:
(i) in negligence, both direct and vicarious;
(ii) for breach of contract; and
(iii) for breach of statutory guarantee pursuant to s 60 of the ACL.
At least in the context of a proposed discontinuance where the practical effect will be to return group members to the position they were in before the commencement of the class action, I consider the Laine test to be appropriate. It could be said that group members will always have an interest in the applicant being forced to press on with the litigation, even if the prospects of success are remote, because they will share the benefits of any success in the case without having any of the costs and risks. If that approach is taken, a proposed discontinuance may never be positively fair and reasonable in their interests. That would be an unworkable test and in the circumstances of the present case it is appropriate to decide whether to approve the proposed discontinuance through the prism of what would be positively _un_fair or _un_reasonable having regard to group members' interests.[16]
An application for approval of a settlement involves a bargain reached between the parties, where the benefits and drawbacks may be more readily apparent, permitting a balancing exercise to be undertaken between the advantages and disadvantages to group members.
In contrast, a discontinuance is a unilateral decision by a plaintiff to bring to an end some or all claims in the litigation. There is no agreement between the parties that can be assessed through the prism of a fair and reasonable test. Any favourable consequences that may flow to group members are uniform and inherent in the act of withdrawing an issue from judicial determination;...The Court's task in approving a discontinuance, in exercising its protective jurisdiction, is best served by considering whether any detriment would be occasioned by group members that would be unfair, unreasonable or adverse. [17]
The discontinuance of a proceeding in the strict sense is the unilateral act of the applicant. Leaving to one side the cost consequences, the discontinuance of the proceeding puts the applicant in the same position as if the proceeding had not been commenced, save for the effluxion of time in relation to any limitation period within which the action must be brought.
...
The legal effect of a unilateral discontinuance compared with a settlement agreement may be readily summarised as follows. In the case of a discontinuance, the applicant is free to commence a new proceeding against the same respondents if so advised. As there is no agreement by which the proceeding is compromised, there can be no merger of the applicant's rights in the proceeding. Similarly in the absence of any judicial determination, there can be no res judicata or issue estoppel.
In contrast where a settlement agreement has been reached it will be binging upon all group members who have not opted out of the representative proceeding...Subject to Court approval under s 33V of the Act, the rights of group members merge in the settlement agreement, ... merge upon performance of the terms of the agreement. The legal consequences for group members are therefore more significant, as the agreement will operate to extinguish their rights in the proceeding and bar them from bringing later proceedings in relation to the same causes of action. [19]
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.
(a) engagement of a third party mail house within one week;
(b) first defendant to provide the mail house with a list of all persons who according to its records are or may be group members together with contact information within two weeks;
(c) notice be given by the plaintiffs solicitors within three weeks as prescribed; and
(d) an affidavit of compliance be served within four weeks.[25]
(a) They raise the question of adequacy of notice to group members beyond those operated on by Dr Wong as articulated by the second defendant, and submit that discontinuance of the ACL claims against Dr Wong has not been properly notified to group members. Accordingly, they submit that the application ought be adjourned until adequate notice has been given to group members more broadly, which should include the right to object to discontinuance and seek independent legal advice on the terms of discontinuance.
(b) They question whether the plaintiffs are in substance seeking a discontinuance or a settlement. If the former, then the facts at hand are not analogous to Babscay or Turner v TESA Mining as these cases involved discontinuance of the entire proceeding. Where some part of the proceeding remains on foot, the Court must have regard to the interests of the group members vis the other defendants (aside from the seventh defendant). It must also then consider the rights of the group members as a whole. On that analysis, the remaining defendants have extant defences for apportionment against Dr Wong. If Dr Wong is to remain a party to the proceeding as the remaining defendants contend, then any discontinuance should be one on terms identified as matters within the broad discretion conferred by s 33V.
(c) They raise a difficulty in assessing the merit of claims against the seventh defendant prior to discovery and in the absence of open information about any communications between the fourth plaintiff and seventh defendant.
(a) First, and critically, the effect of the proposed orders is that group members are restored to the legal position that existed prior to the joinder of Dr Wong to the group proceeding. The merit of their legal claims against Dr Wong, and group member's ability to prosecute those claims outside the group proceeding, is unaffected by his joinder and discontinuance. Subject to adequate notice of the order discussed below, the discontinuance is not adverse to any individual group member.
(b) Second, the applicable limitations periods that were suspended while Dr Wong was a party to the group proceeding and will commence to run again. However, the suspension will be extended for a period beyond the order granting leave to discontinue in order to afford group members time to take necessary steps to protect their interests should they wish to do so.
(c) Third, Dr Wong raises the outstanding costs orders in his favour in respect of inadequacies in the pleading of claims against him to date in support of his submission that there would be difficulty in articulating or establishing his liability to group members. This is so despite the fact that he has made full discovery to the plaintiffs.
(d) Fourth, discontinuing claims against Dr Wong is principally likely to affect the small number of group members who have received services from Dr Wong. The impact on the larger cohort of group members, confined to the ACL claims that are apportionable claims, will arise only where the defendants succeed in establishing that Dr Wong, is also a wrongdoer by his acts or omissions. The apportionable claims exclude claims for damages for personal injury and so are relatively confined.[30] As Dr Wong's submissions highlight, the pleading difficulties faced by the plaintiffs with respect to Dr Wong are likely to face the other defendants in articulating the arguments that they wish to advance.
(e) Fifth, I have had regard to the confidential advice of Counsel dated 4 November 2024, which maintains that discontinuance is in the interest of the plaintiffs and group members and will not have an adverse impact upon their legal position. Because the group members retain their individual rights outside the group proceeding it is neither desirable nor necessary to canvas the confidential advice save to say that it provided sufficient detail for me to form the necessary conclusion as to the effect upon group members.
G Why the seventh defendant should remain a party
DERMATOLOGY AND COSMETIC SURGERY SERVICES PTY LTD (ACN 055 927 618)
JACQUELINE DARBYSHIRE AND TONY DARBYSHIRE (ON BEHALF OF THE ESTATE OF THE LATE DANIEL DARBYSHIRE)
Delete the words "and/or Seventh Defendant (Wong)" and add the words "Dr George Wong (Wong)" in their place.
After the words "Other Cosmetic Doctor Defendants"
After the words "Other Cosmetic Doctor Defendants" in subparagraphs (aa)-(e) add the words "and Wong"
After the words "Other Cosmetic Doctor Defendants" in subparagraphs (b) and (c) add the words "and Wong"
After the words "Other Cosmetic Doctor Defendants" in subparagraph (c) add the words "and Wong"
After the words "Other Cosmetic Doctor Defendants"
After the words "Other Cosmetic Doctor Defendants"
In the paragraph commencing "the Specialist Surgeon Representation was further conveyed by... " and after the words "the Other Cosmetic Doctor Defendants" add the words "and Wong"
Delete the words "and Wong made the Pre-Eminence and Excellent Service Representations"
Delete all references to Dr Wong, including posts allegedly made by Dr Wong
Delete all words following "As to the allegation at (g)"
Amend to the effect that Ms Morrison no longer claims against DCSS under section 60 of the Australian Consumer Law, in [117), but maintains her claim under section 61 of the Australian Consumer Law, in a new paragraph [117A].
In the paragraph beginning "Morrison refers to... ", delete the words "and paragraphs 136, 184 below".
In the paragraph beginning "Morrison refers to... ", delete the words "and paragraphs 136, 184 below"
Add the words "Because of the Statutory Guarantee Non-Compliance (jnsofar as that arose by contravention of section 61 of the ACL, and as a result of... "
Delete all references to Morrison (including in the particulars)
Delete entire paragraph (note that particulars will need to be moved due to defined term Morrison's Injury, Loss and Damage being used elsewhere in pleading).
Delete the words "each Plaintiff' and "the Plaintiffs" and replace with words "Lombardo, Bonnici and Russell"
Delete the words "the Plaintiffs" and replace with the words "Lombardo, Bonnici and Russell'
Delete the words "the Plaintiffs" and replace with the words "Lombardo, Bonnici and Russell'
Delete the words "the Plaintiffs" and replace with the words "Lombardo, Bonnici and Russell'
Delete the words "the Plaintiffs" and replace with the words "Lombardo, Bonnici and Russell'. Delete the references to paragraph "184" in the particulars.
Delete the words "the Plaintiffs" and replace with the words "Lombardo, Bonnici and Russell'. Delete the references to Morrison in the particulars.
Delete the words "the Plaintiffs" and replace with the words "Lombardo, Bonnici and Russell'. Delete the reference to Morrison in the particulars.
Delete the words "the Plaintiffs" and replace with the words "Lombardo, Bonnici and Russell'.
[1] Schedule 2 of the Competition and Consumer Act 2010 (Cth) (ACL).
[2] Plaintiffs', 'Affidavit of Lydia Margaret Tawse', sworn 4 November 2024 (the first Tawse Affidavit).
[3] See Lombardo v Dermatology and Cosmetic Surgery Services Pty Ltd (summary dismissal and pleadings) [2024] VSC 608.
[5] Plaintiffs', 'Affidavit of Lydia Margaret Tawse', sworn 3 December 2024 (the third Tawse Affidavit). The third Tawse Affidavit is only relevant to this application as at [18] of the affidavit in so far as the plaintiffs' proposed orders do not provide for the filing of any further amended statement of claim.
[6] Plaintiffs', 'Affidavit of Lydia Margaret Tawse', sworn 17 February 2025 (the fifth Tawse Affidavit).
[11] Turner v TESA Mining (NSW) Pty Ltd (No 2) [2022] FCA 435 [6]-[7], citing Parkin v Boral Limited (Class Closure) [2022] FCAFC 47 at [130]-[131] (Murphy and Lee JJ with Beach J agreeing), citing Kelly v Willmott Forests (No 4) [2016] FCA 323.
[12] Section 3 of the Supreme Court Act 1986 and Matthews v SPI Electricity Ltd (Ruling 16) [2013] VSC 74 [8]-[13]; Turner v Bayer [2021] VSC 241 [32].
[13] Turner v TESA Mining (NSW) Pty Ltd (No 2) [2022] FCA 435 (Turner v TESA Mining) quoting Australian Securities and Investments Commission v Richards [2013] FCAFC 89 [7].
[14] See, for example, Mercedes Holdings Pty Ltd v Waters (No 1) [2010] FCA 124.
[15] Laine v Theiss [2016] VSC 689 (Laine), [34] (as described in Turner v Bayer Australia Ltd [2021] VSC 241, [35]).
[17] Turner v Bayer Australia Ltd [2021] VSC 241 [48]-[49].
[18] See Moshinsky J Davaria Pty Limited v 7-Eleven Stores Pty Ltd [2020] FCA 1234 [45] as discussed in Babscay Ptd Ltd v Pitcher Partners [2020] FCA 1610 [25] ('Babscay v Pitcher Partners').
[19] Babscay v Pitcher Partners [20], [22]-[23].
[20] The listed factors are from Dixon J in Matthews v SPI Electricity and SPI Electricity Pty Ltd v Utility Services Corporation (Ruling No 16) [2013] VSC 74.
[21] Plaintiffs, 'Plaintiffs' Outline of Submissions', filed 14 February 2025 (Plaintiffs' Submissions) [1.2].
[22] Turner v Bayer [2021] VSC 241 [48].
[25] Plaintiffs, 'Plaintiffs' Summons', filed 26 November 2024.
[26] Seventh Defendant, 'Submissions of Seventh Defendant', filed 14 February 2025 (Seventh Defendant's submissions).
[27] Second Defendant, 'Affidavit of Nicholas James Driver', sworn 4 February 2025 (the Driver Affidavit).
[28] T 119, referencing the letter dated 6 February 2025.
[30] See s 137C of the ACL, and s 24XX Wrongs Act 1958 (Vic_)_.
[31] Transcript of Proceedings, Lombardo v Dermatology and Cosmetic Surgery Services Pty Ltd (Supreme Court of Victoria, Forbes J, 21 February 2025) 14.21 ('T').
[32] By reference to the Seventh Defendant's submissions at [4(b)(i)] and [4(c)(iv)], and to the Plaintiffs' submissions at [6(a)(i)] and [6(b)(i)]. Although the Plaintiffs' submissions only refer to the fourth plaintiff's claims in these paragraphs, the table of amendments contained in the Fifth Tawse affidavit makes clear that Dr Wong is removed from the definition of 'Other Cosmetic Doctor Defendants' in [7], and therefore excluded from the allegation that the first defendant is vicariously liable for the actions of others as pleaded at [127], together with the removal of [133].
[33] Third, Fourth, Fifth and Sixth Defendants, 'Affidavit of Emily Jane Brett', sworn 4 February 2025 (the Brett Affidavit).
[34] Second Defendant, 'Defence to Amended Statement of Claim', filed 20 December 2024.
[35] The following legislation is pleaded Part VIA of the Competition and Consumer Act 2010 (Cth), Part 4 of the Civil Liability Act 2002 (NSW), Part IVAA of the Wrongs Act 1958 (Vic), Part 1F of the Civil Liability Act 2002 (WA) and Chapter 2, Part 2 of the Civil Liability Act 2003 (Qld).
[36] Plaintiff, 'Discontinuance Application - Annexure A', emailed to the Court and copying in all other parties, on 28 February 2025.
[37] Eighth Defendant, 'Affidavit of Alexandra Doddridge', sworn 7 February 2025 (the Doddridge Affidavit).
[38] Ibid 13, 15-16. Referencing the proposed amended defence through the addition of paragraph [219] and other amendments contained in paragraph [192A].
[39] Ibid 16, referencing s 87CD(4) of the Competition and Consumer Act 2010 (Vic).
[40] By the First Defendant, 'First Defendant's Amended Defence', filed 23 December 2024 at [225]-[228], the first defendant pleads proportionate liability in respect of the misleading or deceptive conduct claims.
Lombardo
Dermatology and Cosmetic Surgery Services Pty Ltd