Sreika v Cardinal Financial Securities Ltd

REASONS FOR JUDGMENT 1 The first respondent, supported by the fifth, seventh and eighth respondents ("the respondents"), moves to strike out the Application and Statement of Claim in this matter and to have the proceeding dismissed. 2 In addition to an number of other flaws, the respondents submit that the Application and Statement of Claim purport to commence a representative proceeding but are contrary to the requirements of s 33H of the Federal Court of Australia Act 1976 ("the Act") and of O 73 r 3 of the Federal Court Rules ("the Rules "). That rule, in mandatory terms, prescribes a Form of Application which is Form 129 set out in the First Schedule to the Act 3 The relevant provisions of the Act and the Rules for present purposes are as follows: "33H (1) An application commencing a representative proceeding, or a document filed in support of such an application, must, in addition to any other matters required to be included: (a) describe or otherwise identify the group members to whom the proceedings relates; and (b) specify the nature of the claims made on behalf of the group members and the relief claimed; and (c) specify the questions of law or fact common to the claims of the group members. (2) In describing or otherwise identifying group members for the purposes of subsection (1), it is not necessary to name, or specify the number of, the group members." O 13 r2 (1) Subject to the following provisions of this rule, the Court may, at any stage of any proceeding, on application by any party or of its own motion, order that any document in the proceeding be amended, or that any party have leave to amend any document in the proceeding, in either case in such manner as the Court thinks fit. (2) All necessary amendments shall be made for the purpose of determining the real questions raised by or otherwise depending on the proceeding, or of correcting any defect or error in any proceeding, or of avoiding multiplicity of proceedings. O 73 r 3 Commencement of proceedings 3. Representative proceedings must be commenced by filing an application in accordance with Form 129." (Emphasis added) 4 Form 129 requires that an application to commence a representative action must contain detailed particulars which, it is common ground, are not provided in the present Application and Statement of Claim. 5 Before me the applicant conceded that the pleadings are flawed in a number of critical respects and they should be struck out. However, the applicant seeks to amend the application by substituting for the present Application and Statement of Claim pleadings which comply with the requirements of s 33H of the Act and O73 r 3 of the Rules. 6 The respondents submit that the Court does not have jurisdiction to permit such an amendment because to do so would be contrary to the Act and Rules and that the proceeding must be dismissed and a fresh representative proceeding commenced. The Court, it is said, cannot convert an existing action into a representative action in view of the above provisions. The respondents point to the mandatory form of the statutory requirements for commencement of a representative action and contend that the Court's power of amendment does not extend to varying the express requirements of the Act or the Rules. 7 A similar question was considered by O'Connor J in Finance Sector Union of Australia v Commonwealth Bank of Australia (1999) 89 FCR 417. The question posed in that case was whether in individual proceedings under the Workplace Relations Act 1996 (Cth) the applicants could obtain leave for an order permitting them to commence representative proceedings under s 33C of the Act. That section is the central provision of Part IVA of the Act which enables the commencement of representative proceedings where seven or more persons have claims against the same person in respect of similar or related circumstances, and those claims give rise to a substantial common question of fact or law. In that case the respondent challenged the application for leave on the basis that Part IVA of the Act prescribed an exclusive code for commencement of representative proceedings and that it was therefore not permissible to convert individual proceedings, commenced outside that Part, to representative proceedings within Part IVA. 8 Her Honour decided that leave could and should be granted and that Part IVA was not an exclusive code. In the course of her judgment her Honour referred to the provisions of ss 22 and 23 of the Act which require the Court to avoid multiplicity of proceedings and which confer broad powers on the Court for that purpose and her Honour noted that those powers are not expressly excluded by Part IVA. Order 13 r 2(2) which gives a power of amendment is to similar effect. Her Honour generally accepted the submissions of Counsel for the applicant as to the flexibility found in Part IVA with respect to the joinder of representative proceedings with other proceedings and the power to allow representative proceedings to be amended, discontinued and converted to individual proceedings in an appropriate case: see ss 33K to 33P inclusive of the Act. 9 Justice O'Connor also referred to the Second Reading Speech of the Attorney-General in relation to the Federal Court of Australia Amendment Bill1991 where he explained that representative proceedings were intended to enable groups of persons to obtain redress and pursue claims more cheaply and efficiently than would otherwise be the case with individual actions: Australia, House of Representatives, 14 November 1991, Debates,at 3174. The legislation was clearly directed to minimise complexity, difficulty and expense in litigation and this end would not be furthered by dismissing proceedings such as those both in the proceeding before her Honour and in this case. 10 Her Honour also referred to and applied the remarks of Kirby J in Emanuele v Australian Securities Commission (1997) 188 CLR 114 at 146-147 in relation to the need to give effect to the purpose of Parliament as expressed in the language of the enactment under consideration. Recently, Lehane J in Bright v Femcare [2000] FCA 1179 at par 14 expressed a similar view to that of O'Connor J case as to the effect of s 33C of the Act and that Part IVA was not a code. 11 In my view the reasoning and conclusions of O'Connor J in Finance Sector Union are apposite to the case before me. Section 33H imposes requirements for an application and, provided that the specific matters referred to in that section are covered by a fresh application, I am satisfied that the section can be complied with in this case. I do not think that the Court is deprived of jurisdiction by the existence of Part IVA and the requirements of ss 33C or 33H from granting leave to make such an amendment. To dismiss the present proceeding entirely and to require a fresh action to be commenced, rather than to permit an amendment, involves unnecessary delay and expense and is an unduly rigid approach. The section is not concerned with whether there is an existing proceeding on foot or how the requirements are satisfied, either as a consequence of amendment or otherwise. Furthermore, to preclude the Court from granting leave to file an amended application in compliance with Part IVA may in some circumstances prove highly inconvenient and inappropriate. By way of example, one could envisage a situation where a proceeding is instituted by several applicants, either jointly or individually, and upon the existence of that action being more widely known other persons may wish to join the proceedings and convert it to a representative action by substituting a new application. It may not be appropriate, in my view, in such circumstances to dismiss the individual proceeding and require a new proceeding to be instituted as opposed to permitting an amendment. I can identify no useful purpose which would be served by such a limitation especially in circumstances where the requirements of s 33H can be satisfied by the filing of a fresh application. There is no reason why a Judge should not have a discretionary power to grant leave in appropriate circumstances. Considerations of procedural efficiency and economy support a contrary conclusion to that advanced by the respondents and this is consistent with the underlying principle leading to the enactment of Part IVA. 12 In view of the applicant's election not to pursue the original Application and Statement of Claim, I order that that Application and the Statement of Claim be struck out as against all respondents and I order the applicant to pay the first and eighth respondents' costs thrown away as the result of the filing of those documents on an indemnity basis. I reserve the issue as to costs in relation to the present application to dismiss the proceedings on the ground that they contravene Part IVA. I grant leave to the applicant to file and serve an Amended Application and an Amended Statement of Claim by 4.00 pm on Friday 24 November 2000 and I stand the matter over to Thursday 7 December 2000 at 9.30 am for further directions 13 I would also add that the proceedings against the fifth respondent (W M Moyes) and the seventh respondent (Neil A Wilson) have been dismissed. It is not now proposed to proceed against those parties. I have already ordered that costs on an indemnity basis should be paid by the applicant in relation to those respondents because in my view the initiation of proceedings against them clearly fell within the principles enunciated in the leading cases concerning the award of indemnity costs. In this case those respondents were unnecessarily embroiled in the litigation and therefore they should recover all their costs resulting from the proceedings initially brought against them and then abandoned without any satisfactory explanation. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin.