Schutt Flying Academy (Australia) Pty Ltd v Mobil Oil Australia Limited

Schutt Flying Academy (Australia) Pty Ltd v Mobil Oil Australia Limited - [2000] VSCA 103 - VSCA 2000 case summary — Zoe

[19]

"18A.25 Judgment of the Court (1) The Court may, in determining a matter in a group proceeding - (a) determine a question of law; (b) determine a question of fact; (c) make a declaration of liability; (d) grant any equitable relief; (e) make an award of damages for group members, sub-group members or individual group members, being damages consisting of specified amounts or amounts worked out in such manner as the Court specifies; (f) award damages in an aggregate amount without specifying amounts awarded in respect of individual group members; (g) make such other order as is just. (2) In making an order for an award of damages, the Court shall make provision for the payment or distribution of the money to the group members entitled. (3) Subject to Rule 18A.20, the Court shall not make an award of damages under paragraph (1)(f) unless a reasonably accurate assessment can be made of the total amount to which group members will be entitled under the judgment. (4) Where the Court has made an award of damages, the Court may give directions in relation to - (a) the manner in which a group member or sub-group member is to establish his or her entitlement to share in the damages; and (b) the manner in which any dispute regarding the entitlement of a group member or sub-group member to share in the damages is to be determined. 18A.26 Constitution etc. of fund (1) Without limiting the operation of Rule 18A.25(2), in making provision for the distribution of money to group members, the Court may provide for - (a) the constitution and administration of a fund consisting of the money to be distributed; and (b) either - (i) the payment by the defendant of a fixed sum of money into the fund; or (ii) the payment by the defendant into the fund of such instalments, on such terms, as the Court directs to meet the claims of group members; and (c) entitlements to interest earned on the money in the fund. (2) The costs of administering a fund are to be borne by the fund or the defendant, or by both, as the Court directs. (3) Where the Court orders the constitution of a fund mentioned in paragraph (1), the order shall - (a) require notice to be given to group members in such manner as is specified in the order; (b) specify the manner in which a group member is to make a claim for payment out of the fund and establish his or her entitlement to the payment; (c) specify a day (which is six months or more after the day on which the order is made) on or before which the group members are to make a claim for payment out of the fund; and (d) make provision in relation to the day before which the fund is to be distributed to group members who have established an entitlement to be paid out of the fund. (4) The Court may, if it is just, allow a group member to make a claim after the day fixed under paragraph (3)(c) if the fund has not already been fully distributed. (5) On application by the defendant after the day fixed under paragraph (3)(d), the Court may make such orders as it thinks fit for the payment from the fund to the defendant of the money remaining in the fund."

[23]

It is essentially para. (f) of Rule 25(1) that is the foundation of the defendant's argument that the rules authorise the assessment and award of damages otherwise than in accordance with the principles of law governing the assessment of damages. Paragraph (3) of Rule 25 is important. It contains a limitation - and, indeed, the only express limitation - on the power of the Court to award damages in an aggregate amount by prohibiting the making of such an award unless a reasonably accurate assessment can be made of the total amount to which group members will be entitled under the judgment. I shall have to return to this important provision. Paragraph (4) of Rule 25, with its reference in both of its sub-paragraphs to entitlement to "share" in the damages, undoubtedly applies to awards of damages in an aggregate amount under para. (1)(f). It may be that, notwithstanding the use of the word "share", it is also capable of application to some awards under para. (1)(e). Rule 26 empowers the Court to provide for the constitution of a fund in making provision for the distribution to group members of money awarded as damages. There is no doubt that a fund may be constituted where damages in an aggregate amount have been awarded. The Law Reform Commission appears to have contemplated[8] that it was only in the case of an aggregate award that a fund might be constituted and that where an aggregate award was made the choice was between the constitution of a fund and distribution by the respondent. It is fair to say that the argument before us proceeded on the basis that Rule 26 empowered the constitution of a fund only where an aggregate amount had been awarded. If the fund proves too large for the meeting of all claims for payment out of it which are established, the Court may, by Rule 26(5), order payment of the surplus to the defendant. If the fund proves to be too small to satisfy all claims for payment which are established, it is clear that the defendant cannot be required to make any further payment, either by way of additional contribution to the fund or by way of direct payment to a claimant. The liability of the defendant merges in the judgment and there is no provision for subsequent variation of the judgment by way of requiring additional contributions or direct payments. This was recognised by the Commission[9].

[27]

Were it not for the extrinsic material shortly to be mentioned, I should have thought there was much to be said for the view that a provision in Rules of Court requiring as a condition of an award of damages in an aggregate amount that a reasonably accurate assessment could be made should be read as not contemplating any departure, or at all events any significant departure, from the principles governing assessment of damages. "Reasonably accurate assessment" is not a term of art in the law. It would be possible to pray in aid numerous decisions about damages in support of an argument that the words "a reasonably accurate assessment" do not contemplate any departure from principle. So it might be argued that cases where a precise assessment of damages is possible present no difficulty (since a precise assessment answers the less stringent requirement of a reasonably accurate one) and that in other cases the best that a tribunal of fact can ever do is make a reasonably accurate assessment, it often not even being possible to do this; see the decisions cited in J.L.W. (Vic.) Pty. Ltd. v. Tsiloglou[17]. As regards the assessment of damages for personal injuries, I refer to the decisions cited in Mobilio v. Balliotis[18]. It should be noted that in Commonwealth v. Amann Aviation Pty. Ltd.[19] Toohey, J., adopting the words of Burchett, J., spoke of awarding damages for wasted expenditure where a breach of contract prevented "an assessment, or a reasonably accurate assessment, being made in the normal way". As to this, to say that a breach prevents "an assessment" of damages being made prima facie means an assessment which the law will regard as satisfactory, and I am, with respect, in some doubt about the contrast evidently drawn between "an assessment" and "a reasonably accurate assessment". Perhaps "an assessment" means "a precise assessment" and is contrasted with one which is merely reasonably accurate but nevertheless good enough in law. Perhaps the word "or" is epexegetical, the idea being that an assessment need not be precise and need only be reasonably accurate.

[41]

It is legitimate, and indeed necessary, to have regard to this extrinsic material in construing Rule 25(3), and I think it should be construed as permitting an aggregate award to be made notwithstanding that it is at the time of assessment impossible to make the kind of assessment which would be appropriate under the law if the Court was at that stage seeking to assess the damages to be awarded to each individual group member. This may be said to be, from one point of view, not a surprising conclusion. While an enormous variety of cases can fall within Order 18A, Rules 25 and 26 contemplate that an aggregate award of damages may be made at a time when the names and number of group members are unknown and when it is not known which or how many group members will establish entitlement to share in the damages. It is very difficult to see how, in cases of this kind, it would be possible to make a "reasonably accurate assessment" in the sense of the kind of assessment that would have been required had the draft Bill in Ontario been enacted. In many cases there will be two variables - the number of group members and the damage which individual members have suffered. One or other or both of these variables will be present in most cases in which a group assessment is sought, and the presence of either of them will, as it seems to me, make it impossible, subject to a possible de minimis exception, to arrive at a group assessment which gives individual group members what they would be entitled to on individual assessments according to law. This makes me think that, as the Commission said, "reasonably accurate assessment" was intended to authorise departure from the principles governing individual assessment. Indeed, as the discussion by the Ontario Law Commission of monetary relief shows, in the controversy in various jurisdictions about aggregate assessments it has generally been accepted that those assessments are intended to depart from the principles governing individual assessments. Moreover, as a matter of textual construction, while an assessment of damages may in some classes of case be or resemble a discretionary determination, and in other classes of case be necessarily very imprecise, the impression conveyed to my mind by the words "reasonably accurate assessment" is that something less than a "proper" assessment will do. An assessment will be proper - by which I mean in accordance with law - even if it necessarily contains a discretionary element and even if it is made in a matter in which precision is impossible. But the words "reasonably accurate", especially in their context in Order 18A and in the wider context in which Order 18A must be placed, suggest to my mind that the aggregate assessment will be less accurate - less reliable or sound - than the product of individual assessments.

[56]

A wider attack was made on these rules. It was said that they purported to go beyond the territorial competence of the delegating authority, namely the Parliament of Victoria, inasmuch as any judgments or orders made thereunder might on their natural construction be capable of binding persons outside Victoria, indeed outside Australia. Thus it was argued that persons having no connection with Victoria might be bound by the Court's order without being served in accordance with the Rules and without any knowledge of the proceedings. No doubt the plaintiff here seeks to represent and thus bind such persons, at least a fair reading of its statement of claim would so imply, but the question here is whether the Order is valid. It was said that it could not be read other than as attempting to assert the Court's jurisdiction beyond the four corners of the State whenever such a proceeding is brought, for any class on its natural construction will ordinarily cover people living outside Victoria, often including those overseas. It is, however, accepted law that legislation, especially delegated legislation, will not be construed so as to exceed the competence of the body making the law. That is not to say that the Court cannot exercise jurisdiction in relation to persons and events beyond the jurisdiction. If a defendant can be served within the jurisdiction there is no reason, short of abuse of process, why a court should not resolve any dispute raised by a plaintiff, wheresoever that plaintiff lives and notwithstanding that the events took place outside this State. If a claim comes within those described in the Service and Execution of Process Act 1992 or Rule 7.01 of the Rules there is ordinarily no reason why a plaintiff should not invoke this Court's jurisdiction to have it resolved, subject to the well-known safeguards. There are many aspects to this problem but at the end of the day the Court's judgment will remain enforceable in Victoria and its enforceability elsewhere will depend on the rules of private international law, as modified by treaty. If a judgment exceeds this Court's jurisdiction, it will to that extent be invalid, but Order 18A will not.

[73]

It is implicit in the foregoing that in my view Order 18A can be sustained as a rule of practice and procedure, within the meaning of s.25(1)(f)(i) of the Supreme Court Act 1986. It was submitted on behalf of the defendant that that could not be so because Order 18A in effect "annihilated" an injured person's right to sue, at his own choice, compelling him or her instead to join in a group proceeding in which he or she was included, at the whim of the plaintiff. By this means, it was contended, Order 18A converted what was a choice - or at least "a right to choose" - into a series of discretions vested in the Court. On this aspect, however, the requirement for notice, which is fundamental to Order 18A, becomes critical and in my view that requirement was under-valued by the defendant's submission. Notice, if properly given, will alert those within the group described by the plaintiff to what is being done - or sought to be done - on their behalf, and any person within that group, as so described, may elect to "opt out". All this means is that within the time allowed (and even beyond it if there is reason to extend the time) one whom the plaintiff seeks to represent may signify that, so far as he or she is concerned, there is no consent to participating. Conversely, the failure to "opt out", where notice has been properly given, may be tantamount to consent. Under Order 18, the Court would assume jurisdiction even over a defendant who, though not served, was given notice of the order once made and it seems to me little different in kind to assume that one for whose benefit the proceeding is brought (at least according to the plaintiff) accepts that position if, once given the opportunity to abstain from participating, he or she does not do so. No doubt in this respect the procedure described in Order 18A is somewhat novel, but that is only to measure it against prior practice. These days we hear so often that the Courts must adapt and move with the times and such novelty as exists in Order 18A does not, I think, mean that the new rules go beyond what may fairly be called rules of practice and procedure.

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