Tobacco Control Coalition Inc v Philip Morris

Federal Court of Australia|2000-07-27|Before: Wilcox J

REASONS FOR JUDGMENT (NO.2) 1 WILCOX J: These reasons for judgment deal with two interlocutory applications: first, an application by the applicant in the principal proceeding, Tobacco Control Coalition Incorporated ("TCCI"), for leave to file an Amended Application following a particular form; and, second, an application by each of the three sets of respondents to the proceeding that TCCI provide security for costs. TCCI concedes it has no substantial assets and would be unable to meet any general order for costs that might be made against it at the conclusion of the case. Nevertheless, TCCI contends no order for security should be made, having regard to the nature and history of the proceeding and its likely result.

The history of the proceeding 2 TCCI was incorporated, under the Associations Incorporation Act 1984 (NSW), on 10 September 1999. Its members comprise five people, all of whom are associated with organisations concerned about the extent of cigarette smoking in the Australian community and the effect of the practice on public health. The purposes for which TCCI was incorporated include the promotion of tobacco control, and securing funding for those purposes. 3 Section 15(2) of the Associations Incorporation Act provides that an association incorporated under the Act: "(a) is capable forthwith of performing all the functions of the body corporate, (b) is capable of suing and being sued, (c) has perpetual succession and shall have a common seal, and (d) has power to acquire, hold and dispose of property." 4 On 22 September 1999, TCCI filed an Application in this Court in which it named three sets of respondents, Philip Morris (Australia) Ltd and Philip Morris Ltd (collectively "Philip Morris"), W D & H O Wills Holdings Ltd and W D & H O Wills (Australia) Ltd (collectively "Wills"), and Rothmans Holdings Ltd and Rothmans of Pall Mall (Australia) Ltd (collectively "Rothmans"). The Application was filed on behalf of TCCI by its solicitors, McCabes. 5 The proceeding thus commenced was brought under Part IVA of the Federal Court of Australia Act 1976. TCCI sued on its own behalf and, also, as a representative party on behalf of the group members identified in Schedule A, or described in Schedule B, to the Application. Schedule A contained a list of 65 organisations described as "Health and Medical Groups and Organisations". Some of those organisations may be incorporated bodies; some may not be incorporated. Some of these organisations are apparently subject to government influence or control; many, clearly, are not. Schedule B identified additional group members, not by name but by the following description: "Persons who are Australia Citizens or who are a Resident in Australia as of the date of filing this Application and who: (1) Have smoked or may smoke cigarettes manufactured, advertised, marketed and promoted, distributed for sale, sold by or placed into the stream of commerce by any of the respondents; and (2) Have not yet experienced symptoms of or been diagnosed with smoking related disease." 6 The matter came before me for directions on 5 October 1999. There was discussion about the nature of the claim and the form of the Application. I directed that a Statement of Claim be filed and served on the respondents as soon as possible, but not later than 3 December 1999. I stood the matter over for further directions on 17 December 1999. 7 A Statement of Claim was filed on 2 December 1999. On the following day, McCabes filed a Notice of Motion, on behalf of TCCI, returnable on 17 December 1999. The motion sought leave to amend the Application in accordance with a draft Amended Application annexed to an affidavit of Stephen John Moss, the solicitor handling the matter at the office of McCabes. 8 When the matter came before the Court in 17 December 1999, counsel for each of the three sets of respondents complained about the form of both the original, filed, Application and the draft Amended Application. They also criticised the Statement of Claim. Counsel suggested the proceeding was misconceived and devoid of prospect of success. Mr N Francey of counsel, who appeared for TCCI on the instructions of McCabes, defended the form of all these documents. He not only disputed the respondents' claim that the case must fail; he asserted, on the contrary, that the allegations about the respondents' conduct made in the Statement of Claim were so obviously well-founded as to make success almost a certainty. 9 During the course of his submissions, senior counsel for Philip Morris, Mr J Sher QC, said the motion for leave to amend the Application "in itself is an abuse of process, which involves us in looking at all the issues thrown up in what we say is this bizarre pleading of a hopeless case insofar as you can tell what it is". He said he did not believe "we can look at the application as it were without looking at the Statement of Claim". Mr Sher went on: "If we are going to have to do all that, well perhaps I should make our position clear, we will be seeking costs in this matter and if necessary we will be seeking them against McCabes because it is clear on the documents thus far filed their client is a person of straw." 10 Mr Sher did not seek such an order that day. Nor did any other counsel. However, counsel for each of the three sets of respondents intimated that their clients wished to obtain an order for security for costs. Having regard to that intimation, I directed that any Notice of Motion seeking security for costs, and any affidavits in support, be filed and served on or before 21 January 2000, and any such Notice of Motion be made returnable for hearing on 21 February 2000. I set a timetable for other evidence and for written submissions. I adjourned TCCI's motion seeking leave to amend the Application until 21 February 2000. 11 Following the directions hearing on 17 December, McCabes wrote a letter to Arthur Robinson & Hedderwicks, solicitors for Philip Morris. The letter referred to the directions hearing that had been held that morning and went on: "We are most concerned about the threat made by Mr Sher QC to the effect that the Respondents, or at least the First Respondents, may be seeking to have an order for costs made against McCabes. We do not agree that the proceedings are 'bizarre' or 'hopeless' asserted by Mr Sher. On the contrary, we are of the view that they have merit and have been conducted in a bona fide and responsible manner. In this regard, we have been reassured by an opinion independently obtained from senior counsel. In these circumstances, we can see no basis on which a claim for costs could be made against McCabes as the solicitors for the Applicant. Nevertheless, the threat has been made and we take it seriously. In order to enable us to assess the matter in a responsible way please advise us no later than 5.00pm today whether or not the threat by Mr Sher was made on instructions and is seriously made or whether it was not made on instructions and is withdrawn and will not again be propounded without further notice. If the threat is maintained, we would have to consider our position as solicitors on the record and may feel obliged to file a Notice of Ceasing to Act. Should this eventuate there are important implications for the administration of justice and conduct of important public interest litigation." 12 Arthur Robinson & Hedderwicks replied on the same day: "No 'threats' were made in Court today by Senior Counsel appearing on behalf of our clients. As [sic] this time, our clients have not made any application to the Court for their costs to be paid by TCCI or any non-party, including your firm. As and when appropriate, our clients will consider their entitlement to seek orders for the recovery of their legal costs in this matter from TCCI and/or relevant non-parties." 13 McCabes also sought assurances from Wills' and Rothmans' solicitors that they would not, at any stage, seek costs against McCabes. Both firms of solicitors made non-committal responses. 14 McCabes were apparently not reassured by the replies to their letters. On 20 December 1999 they served TCCI with a Notice of Intention of Ceasing to Act. On 30 December McCabes filed and served a Notice of Change of Solicitor in which they stated that TCCI "who has hitherto employed McCabes Lawyers, as its solicitor in this action is no longer represented by that firm". 15 Despite its title, the Notice of Change of Solicitor did not identify any substitute solicitors. The notice gave an address for service at Woolloomooloo, which, I understand, is the address of the New South Wales Cancer Council, one of the organisations listed in Schedule A of the Application. The Chief Executive Officer of the New South Wales Cancer Council, Dr Andrew Graham Penman, is Convenor of TCCI. So far as I am aware, Dr Penman is not a qualified lawyer. 16 McCabes' action created an immediate problem for TCCI. Order 4 rule 14(2) of the Federal Court Rules says that, except as provided by or under an Act, "a corporation may not, without the leave of the Court, commence or carry on any proceeding otherwise than by a solicitor". The term "corporation" is defined in Order 1 rule 4 as including "any artificial person", other than an organisation registered under the Workplace Relations Act 1996. TCCI accepted, rightly I believe, that the term encompassed an association incorporated under the Associations Incorporation Act. Accordingly, on 18 January 2000, TCCI filed a Notice of Motion, made returnable on 9 February 2000, seeking an order that it be granted leave, pursuant to Order 4 rule 14(2), to carry on the subject proceeding otherwise than by a solicitor. 17 On 21 January 2000 each of the three sets of respondents filed a Notice of Motion seeking orders for the provision of various amounts of security, and staying the proceeding against that set of respondents until security was provided. 18 When TCCI's motion under Order 4 rule 14(2) came before the Court on 9 February 2000, Mr N Francey and Ms R Rana of counsel sought leave to appear for TCCI on the motion. I granted leave and heard submissions which ranged widely over the issues likely to arise in the proceeding. At the conclusion of the argument, I granted leave to TCCI, pursuant to Order 4 rule 14(2), "to carry on the proceeding without a solicitor; but limited to preparation for, and attendance at, the hearing of the motions listed for 21 February 2000 and limited, in point of time, to the conclusion of that hearing". I gave extempore reasons for that order: see Tobacco Control Coalition Inc v Philip Morris (Australia) Ltd and Others [2000] FCA 131. I said in those reasons that the hearing on 21 February 2000 would be confined to: "(i) an application by the applicant to file an amended application in accordance with a document annexed to the affidavit of Stephen John Moss of 3 December 1999, and (2) applications made by each of the respondents for orders that the applicant provide security for their costs." 19 Prior to 21 February, Mr Francey supplied written submissions in which he conceded the Court's power to order TCCI to provide security for the respondents' costs, and to stay the action until security was provided. However, on various grounds, he contended no such order should be made. 20 On 21 February, Mr Francey again appeared on behalf of TCCI, this time without Ms Rana. There was discussion about the terms of the draft Amended Application. Mr Francey pointed out the new document recasted the two Schedules. Instead of Schedule A exhaustively naming the relevant groups and organisations, it now referred to: "All persons, bodies corporate, agencies, entities, groups, organisations and other bodies in Australia: (a) who have incurred costs and/or expended monies: (i) on tobacco control measures in Australia; and/or (ii) on treating persons suffering from smoking related disease (as defined in the Statement of Claim); and/or (b) who will incur such costs and/or expend such money in the future; wholly or partly by reason of the contravening conduct (as defined in the Statement of Claim) of the Respondents, including, but not limited to, the following Health and Medical Groups and Organisations." Schedule A then listed 58 groups and organisations. The list substantially corresponded with the list of groups and organisations in Schedule A to the original Application. However, as the new description emphasised, the list was no longer exhaustive. The form envisaged by the draft Amended Application included any person, body corporate, agency, entity, group, organisation or other body in Australia (apparently, whether incorporated or not) that had incurred, or will incur, costs or expenditure for either stated purpose. 21 The draft Amended Application also proposed the amendment of Schedule B; but in this case, arguably, to narrow its reach. The new Schedule B read: "Persons who were Australian Citizens, or who were Resident in Australia, as at 22 September 1999: (1)(a) who, on or after 1 October 1974, commenced smoking, or may, on or after the date of filing of this Amended Application, commence smoking, cigarettes - manufactured, advertised, marketed, promoted, distributed for sale, sold, or placed into the market by way of trade or commerce, directly or indirectly, by the Respondents or any of them or by the companies represented by the Respondents (the cigarettes); and/or (b) who, on or after 1 October 1974, have contemplated ceasing to smoke and/or quitting to smoke, and/or attempted unsuccessfully to cease smoking and/or to quit smoking the cigarettes, or may, on or after the date of filing of this Amended Application, contemplate ceasing to smoke and/or quitting to smoke, and/or attempt to cease smoking and/or to quit smoking, and/or attempt unsuccessfully to cease smoking and/or to quit smoking the cigarettes. AND (3) who, on or after 1 October 1974, smoked the cigarettes and/or who on or after 1 October 1974, commenced, continued, recommenced, and/or failed to cease to smoke and/or quit such smoking - wholly or partly because of the contravening conduct (as defined in the Statement of Claim) of the Respondents. AND (3) who have not yet experienced symptoms of, or been diagnosed with, smoking related disease and yet who are likely to suffer loss or damage, generally but including by contracting smoking related disease - wholly or partly by reason of the contravening conduct of the Respondents."

The critical first issue 22 A considerable amount of material was placed before the Court concerning TCCI's financial position. It is unnecessary for me to detail that material. Impecuniosity was conceded. In his written submissions concerning security for costs, Mr Francey stated: "The Applicant concedes that its current assets and expected resources during the pendency of these proceedings are such that it will be unable to pay the costs of the Respondents if ordered to do so." However, Mr Francey argued, this concession should not be regarded as determinative of the question whether security for costs should be ordered; the Court always retains a discretion as to whether or not to make such an order. Mr Francey referred to some comments made by Morling J in Barton v Minister for Foreign Affairs (1984) 54 ALR 586 at 590-591. He pointed out the discretion applies even in relation to corporate applicants, citing Bell Wholesale Co Pty Limited v Gates Export Corporation (1984) 2 FCR 1 and various first instance decisions. In Bell Wholesale a Full Court (Sheppard, Morling and Neaves JJ) held that s56 of the Federal Court of Australia Act conferred on the Court a "wide power" to order security for costs that was not limited by anything in the Rules of Court. Their Honours said: "The discretion to make orders under s56 must be exercised judicially, but that is the only relevant limitation". Mr Francey contended that, in the present case, the Court ought to exercise its discretion by declining to order security for costs, at least at this stage; the reason being that any order for security for costs would have the effect of stifling a claim that was legally meritorious and brought in the public interest. 23 Mr Francey said it was important to get quickly to the merit of the allegations made by TCCI in relation to the respondents' conduct; so the Court should direct each of the respondents to file defences: "in each case verified by the most senior Director resident in Australia and containing a certificate from the most senior solicitor having carriage of the matter certifying that. (i) The solicitor has read and explained each of the paragraphs of the Statement of Claim relevant to the particular Respondent or Respondents to the Director verifying the Defence. (ii) The solicitor is personally satisfied that the Director verifying the defence on behalf of the particular Respondent or Respondents understood the explanation and the significance of verifying the defence. (iii) The solicitor has personally satisfied himself or herself that the Director verifying the defence has made all appropriate inquiries in order to ascertain whether or not the allegation in each particular paragraph is admitted or is genuinely in dispute. (iv) The solicitor is personally satisfied on his or her own review of relevant material that there is a reliable basis for the defence pleaded and the verification thereof by the Director of the Respondent or Respondents in question." 24 Mr Francey submitted the Court should otherwise stand the matter over "for consideration as to the appropriate method of trial including by way of determining contraventions prior to any consideration of relief and for the making of appropriate directions for the preparation for hearing". In Mr Francey's submission, the Court should defer further consideration of security for costs "on the basis that any such application will only be considered against the background of the considerations which gave rise to the current refusal to order security for costs". 25 Mr Francey cited several cases in which courts have declined to make costs orders against plaintiffs who have unsuccessfully brought public interest claims. Most of these cases were mentioned, at least by counsel, in Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72. The purpose of Mr Francey's citations was to suggest it was unlikely that costs would be awarded against TCCI, even if its case failed. 26 In their written submissions, counsel for each set of respondents contested every step in Mr Francey's argument. They also pointed out that no evidence had been offered concerning the financial situation of those who "stood behind" the litigation. Counsel included in that category all the group members. But they placed special emphasis on the organisations of whom a senior officer was a member of TCCI. Counsel referred to a passage in Bell Wholesale at 4: "In our opinion a court is not justified in declining to order security on the ground that to do so will frustrate the litigation unless a company in the position of the appellant here establishes that those who stand behind it and who will benefit from the litigation if it is successful (whether they be shareholders or creditors or, as in this case, beneficiaries under a trust) are also without means. It is not for the party seeking security to raise the matter; it is an essential part of the case of a company seeking to resist an order for security on the ground that the granting of security will frustrate the litigation to raise the issue of the impecuniosity of those whom the litigation will benefit and to prove the necessary facts." 27 When I read the written submissions, it seemed to me there was a question as to the extent that I ought to be concerned about non-disclosure of the financial position of group members, as such. I had in mind views expressed by Merkel J, in Woodhouse v McPhee (1997) 80 FCR 529, as to the relationship between the general requirement to consider those who "stand behind" litigation and the general costs immunity of group members in a representative proceeding, conferred by s43(1A) of the Federal Court of Australia Act. That subsection relevantly reads: "(1A) In a representative proceeding commenced under Part IVA … the Court or Judge may not award costs against a person on whose behalf the proceeding has been commenced (other than a party to the proceeding who is representing such a person) except as authorised by: (a) in the case of a representative proceeding commenced under Part IVA - section 33Q or 33R; …" 28 At 533, Merkel J said:

"Section 56 confers a broad discretion on the Court which is to be exercised by reference to the particular circumstances arising in each case. Accordingly, the Court should be cautious about enunciating general rules that might fetter that discretion. However, in my view there is no reason why, in general, the fact that a proceeding is brought for the benefit of others under Pt IVA ought not to be a consideration which together with other considerations can favour the ordering of security. Indeed, s33ZG(c)(v) provides that, except as otherwise provided by Pt IVA, nothing in the Part affects the operation of any law relating to security for costs. Consequently nothing in Pt IVA is to affect the operation of s56 and O 28 in relation to security for costs or is to impede orders being made for security for costs in Pt IVA cases on the same basis as may be ordered in other cases.

On the other hand it would be incongruous and anomalous for Parliament specially to confer a direct costs immunity under s43(1A), inter alia to afford represented persons greater access to justice, and then for the courts indirectly to remove the effect of that immunity by making orders for security for costs on the basis that the applicant is bringing the proceedings for the benefit of others who ought to bear their share of the potential costs liability to other parties. In my view, in order to deal with that incongruity and anomaly the fact that an impecunious applicant is bringing a Pt IVA proceeding for the benefit of represented persons, whilst a relevant consideration in favour of granting security, ought not of itself be as significant a consideration as it might otherwise be in favour of the granting of security." [Original emphasis] 29 In Ryan v Great Lakes Council and Others (1998) 154 ALR 584 at 587-589, I adopted the views expressed by Merkel J. In refusing leave to appeal against my decision, Lindgren J endorsed that course: see Ryan v Great Lakes Council and Others (1998) 155 ALR 447 at 454-455. Unless and until a Full Court, or the High Court of Australia, says otherwise, it seems to me proper for a single Judge of this Court to follow the approach enunciated by Merkel J. But it is necessary to note it has two aspects: (i) while the fact that an action is a representative proceeding brought for the benefit of group members, as well as the applicant, is a relevant matter in relation to security for costs, it would run counter to the policy underlying s43(1A) of the Federal Court of Australia Act for the Court to adopt a general position that treats group members as persons who "stand behind" the proceeding, in the sense of that term used in the relevant authorities; (ii) whether security for costs ought to be ordered, in a representative proceeding as in a non-representative proceeding, is a question to be determined by reference to the whole of the circumstances including the applicant's prospects of success. 30 Having regard to these matters, it seemed to me critical to examine, at an early stage, the claim made by TCCI. This would bear on Mr Francey's argument about stifling a meritorious claim, and also his suggestion that the case ought to be regarded as being brought in the public interest. Furthermore, the basis of the respondents' opposition to the filing of the draft Amended Application was that this document, read with the Statement of Claim, did not assert a viable cause of action. It was plainly necessary to deal with that submission before contemplating the course, urged by Mr Francey, of requiring the respondents to file verified defences. As the viability of TCCI's claim was a critical first issue, I asked Mr Francey to address first.

TCCI's claim 31 In his address, Mr Francey took me through the Statement of Claim filed by TCCI on 2 December 1999. The document is lengthy and complex. The pleading itself runs to 133 pages. It attaches eight schedules comprising a further 414 pages. The Schedules are intended to impart a high degree of particularity to TCCI's case, especially in relation to the conduct of the respondents and those whom they are said to represent for the purposes of the proceeding. So the length of the Schedules is not, in itself, a matter for criticism. 32 The Statement of Claim uses the term "the class members" to refer to those group members who fall within the description contained in Schedule B of the draft Amended Application; that is, the (unnamed) individual smokers, as distinct from the persons and collective entities described to in Schedule A. 33 A note at the beginning of the Statement of Claim contains some definitions. It is necessary to mention only that "the relevant period" is defined as the period of time from January 1960 to 22 September 1999, the date of commencement of the proceeding. 34 The Statement of Claim is divided into seven sections. They are entitled: "1. Overview 2. Background 3. Primary Pleading 4. Australian Companies Represented by the Respondents 5. Overseas Companies Represented by the Respondents 6. Secondary Pleading 7. Relief" 35 Section 1 of the Statement of Claim states that TCCI sues on its own behalf and on behalf of the group members, and sues the respondents (which are all Australian companies) both in their own right and as representing companies identified in Schedule C to the draft Amended Application. That schedule seeks to have eight companies (two Australian and six overseas) represented by Philip Morris, eleven companies (four Australian and seven overseas) represented by Wills and six companies (two Australian and four overseas) represented by Rothmans. 36 Section 2 of the Statement of Claim contains assertions concerning the characteristics of tobacco, the growth of the practice of smoking cigarettes, both generally and in Australia, and the link between that practice and the incidence of various diseases, which are identified in the Statement of Claim and called "smoking related diseases". The section contains detailed assertions about the prevalence of cigarette smoking in Australia and its consequences for public health. 37 Section 3 of the Statement of Claim, called "Primary Pleading", sets out what is presumably the main case sought to be made by TCCI: contraventions of various provisions of the Trade Practices Act 1974. 38 This section of the Statement of Claim alleges that each of the respondents is a "corporation" within the meaning of the Trade Practices Act and, during the "relevant period", was a manufacturer and/or distributor of cigarettes intended for sale to consumers within Australia. The brand names used by the various respondents are identified. The pleading alleges that each of the respondents intended and knew that its cigarettes would be smoked by consumers, including the class members, in the condition in which they were sold. Further, it is alleged, throughout the "relevant period", each of the respondents knew that the tobacco used in the cigarettes contained nicotine; that nicotine is addictive; and that smoking cigarettes caused, or could cause, smoking related diseases. Notwithstanding that knowledge, it is said, each of the respondents: (i) promoted the sale of cigarettes on the basis that cigarettes enhanced, or would enhance, the life and enjoyment of life of consumers of the cigarettes; (ii) represented certain brands of cigarettes as less hazardous, or more healthy, or safer than other cigarettes, when this was not the case; (iii) made false statements about evidence of the relationship between cigarette smoking and health problems; (iv) lobbied governments against control measures; (v) remained silent about, and/or intentionally concealed, the respondent's knowledge of the addictive qualities of nicotine and the health consequences of smoking; and (vi) actively encouraged people to commence (or not cease) smoking, by the provision of cigarette vending machines accessible to young people and by marketing and promotional campaigns. 39 The Statement of Claim alleges that persons, including the class members, were influenced by the respondents' conduct directly, in that they saw and/or heard or "were aware of the Respondents' conduct", and/or "indirectly, in that they were influenced by others who saw and/or heard and/or were aware of the Respondents' conduct and/or were influenced by others who were so influenced". 40 In this context, the Statement of Claim alleges various contraventions of the Trade Practices Act: s52 (misleading or deceptive conduct), s51AB (unconscionable conduct) and s75B (involvement in contraventions by others). It is claimed there is a causal relationship between those contraventions and the suffering of loss or damage by the class members. 41 The Statement of Claim also alleges that each respondent was involved in the contravening conduct of others, the other persons being in three categories: other respondents, "Australian companies represented by the Respondents, or one or more of them", and "Overseas companies represented by the Respondents, or one or more of them". In relation to the first category, it seems tolerably clear that the Statement of Claim seeks to make each respondent liable only in respect of damage flowing from its own conduct, reliance being placed on s75B of the Trade Practices Act or an equivalent provision of a State Fair Trading Act. However, this is not clear in relation to the second or third category. The Statement of Claim appears to impute liability to the respondents for damage that resulted from actions of the companies they are said to represent. The Statement of Claim does not explain the basis from which that liability is said to arise. 42 Section 4 of the Statement of Claim identifies various "Australian companies" said to be represented by a respondent. As I follow the pleading, it is not suggested in section 4 that any of the respondents was involved in the activities of any of those companies, but it is said that, by reason of a particular respondent's "ownership and/or control" of a particular Australian company, or the fact that a particular respondent and a particular Australian company were both owned or controlled by a particular overseas company, the conduct of particular "Australian companies" was conduct of, or conduct engaged in at the direction of, particular respondents. 43 Section 5 identifies various "Overseas companies" said to be "represented by" the respondents. The section goes on to set out, at considerable length, actions (mostly outside Australia) taken by the "Overseas companies". The pleading does not make clear what legal significance is attached to those actions. The Statement of Claim does not allege that any of the "Overseas companies" acted as agent for a respondent. Indeed, the contrary; paras 5.60 to 5.62 suggest that, by reason of control exercised over the respondents by "Overseas companies", the acts of the respondents were acts done on behalf of the "Overseas companies". It is not made clear how that circumstance imposes any liability on the respondents they would not otherwise have. 44 The "Secondary Pleading" in Section 6 also contains obscurities. It alleges conduct extending over many years by various foreign and Australian companies, this conduct being called "the Conspiracy". Paragraph 6.8 of the Statement of Claim refers to "the Conspiracy" functioning "to achieve, through illegal means, the shared goals of maximising their profits and avoiding the consequences of their actions". It is said the scheme of the conspirators included making misleading and deceptive statements to the public (apparently both in Australia and elsewhere) and, in the United States, in congressional, judicial and federal agency proceedings. This conduct is said to have caused consumers of the foreign companies' products (including customers in Australia who purchased those products) to suffer or be likely to suffer dangerous diseases and injuries and thereby loss or damage. 45 After a lengthy catalogue of the acts and omissions that are said to evidence "the Conspiracy", the Statement of Claim applies labels to that conduct. The conduct is said to have constituted fraud, fraudulent misrepresentation, concealment, non-disclosure, unconscionable conduct and misleading or deceptive conduct. There is also a claim that the foreign companies negligently performed "voluntary undertakings" they had made. Finally, there is an allegation that the conduct constituted "civil conspiracy". I take this to be a reference to the tort of conspiracy. 46 So far as I can tell, there is no allegation in section 6 of the Statement of Claim that the respondents to this proceeding are responsible in law for the conduct alleged in the section. As Section 6 is so long and complex, I may have missed that allegation. However, if it is made, this is certainly not clear. Nor is it clear on what basis the respondents, or any of them, might be liable to the group members in respect of that conduct. 47 Section 7 of the Statement of Claim sets out the relief sought by TCCI in the proceeding. Consistently with both the original Application and the draft Amended Application, the relief claimed in the Statement of Claim comprises declarations, injunctions, orders under s87 of the Trade Practices Act and orders regarding costs. However, there are significant differences, as between the Statement of Claim on the one hand and the Application and draft Amended Application on the other, as to the extent of the desired declarations, injunctive relief and s87 orders. 48 The scheme of the Federal Court Rules is to require the Application, rather than the Statement of Claim, to specify the relief claimed: see Order 4 rule 3. For present purposes, therefore, I will take the desired relief from the draft Amended Application. That document claims the following relief: "(a) A declaration or declarations that the Respondents, or one or more of them, and/or the companies represented by the Respondents, engaged in conduct in contravention of s.52, s.51AB and/or s.52A [sic: s51A?, s53(a)?] of the Trade Practices Act, and/or equivalent provisions in State and/or Territory Fair Trading legislation, and/or that the Respondents and/or the companies represented by the Respondents were involved in any such contravention and/or contraventions, as alleged in the Statement of Claim; (b) An injunction or injunctions in such terms as the Court determines to be appropriate in respect of the alleged contravention and/or contraventions of s.52, s.51AB or s.52A [sic] of the Trade Practices Act, and/or equivalent provisions in State and/or Territory Fair Trading legislation, and/or the involvement of the Respondents and/or the companies represented by the Respondents in such contravention or contraventions; (c) Such order or orders under s.87 of the of the Trade Practices Act, and/or equivalent provision in State and/or Territory Fair Trading legislation, as the Court thinks appropriate as will compensate the Applicant and Schedule 'A' group members in whole or in part for the loss or damage that has been suffered by them or will prevent or reduce the loss or damage that is likely to be suffered by them by the conduct the subject of the foregoing declarations, including as sought by way of relief in the Statement of Claim; (d) Such order or orders under s.87 of the Trade Practices Act, and/or equivalent provision in State and/or Territory Fair Trading legislation, as the Court thinks appropriate as will prevent or reduce the loss or damage likely to be suffered by the Schedule 'B' group members by the conduct the subject of the foregoing declarations; (e) Costs; and (f) Such other or further orders and/or declarations as the Court thinks fit."

TCCI's submissions 49 The written submissions provided by Mr Francey on behalf of TCCI contain some statements about the membership and financial resources of TCCI. The affidavits read in connection with the present applications do not cover all the matters mentioned by Mr Francey, but I have no reason to suppose any of his statements to be inaccurate. 50 Mr Francey's purpose in setting out this information appears to be twofold. First, he desires the Court to appreciate that TCCI is run by reputable people who are involved, in other capacities, in the fight against cancer and other smoking related diseases; accordingly, the Court is invited to assume, these people are well informed, and genuinely concerned, about the public health effects of cigarette smoking. Second, Mr Francey wishes the Court to realise that TCCI has limited financial resources. He said "… the Applicant is an impecunious entity whose projected income corresponds with projected expenses and it is without substantial assets". Mr Francey drew attention to s16 of the Associations Incorporation Act. That section provides that, subject to the Act and the rules of the particular incorporated association, "a member or officer of an incorporated association shall not by reason only of being such a member or officer be liable to contribute towards the payment of the debts and liabilities of the incorporated association …" Presumably there is no relevant rule, because Mr Francey submitted that TCCI's members "have an immunity from liability" for its debits and liabilities. 51 Mr Francey described the Schedule B group members as "essentially persons who smoked, have smoked or may smoke … wholly or partly because of the contravening conduct (as defined in the Statement of Claim) of the Respondents and who have not yet experienced symptoms of, or have been diagnosed with, smoking related disease and yet who are likely to suffer loss or damage, generally but including by contracting smoking related disease - wholly or partly by reason of the contravening conduct of the Respondents". 52 It is important to note that, although Schedule B covers people, and only people, who have not yet experienced symptoms of, or been diagnosed with, smoking related disease, it provides no insight as to how it will be possible to identify, from amongst the whole body of smokers, those presently asymptomatic individuals who are likely to suffer loss or damage as a result of their habit; this being the first step in establishing they are likely to suffer loss or damage by reason of the conduct of one or more of the respondents. 53 In para 54 of his written submissions Mr Francey said that, in order to succeed, TCCI would need to establish: "at least the following: (a) That the Respondents engaged in the conduct set out in G of the Statement of Claim. (b) That the Respondents' conduct was unconscionable or was misleading or deceptive or likely to mislead or deceive. (c) That the Respondents' contravening conduct had the effect set out in L of the Statement of Claim, essentially causing or contributing to a greater number of class members smoking than otherwise would be the case. (d) That by reason of the foregoing, it is likely that the Schedule 'B' Group members will suffer loss or damage." 54 At para 57 Mr Francey asserted Schedule B group members "are likely to suffer loss or damage insofar as they are likely to contract smoking related disease, with all the attendant consequences thereof, including but not limited to: pain and suffering, medical and hospital expenses, loss of income and loss of enjoyment and amenity of life". However, despite the width of this assertion, I do not understand Mr Francey to suggest that each and every one of the Schedule B group members is likely to contract a smoking related disease. As is made clear by para (c) of the submission quoted in the preceding paragraph, TCCI's case is that it may be predicted, with a high degree of confidence, that a significant proportion of the people described in Schedule B will contract one or more smoking related diseases; and that the number of people who will do so will be higher than it would have been absent the respondents' contravening conduct. 55 In para 58 Mr Francey said: "If it is assumed that: (a) that the Respondents engaged in the conduct alleged; (b) that conduct was unconscionable and/or misleading or deceptive or likely to mislead or deceive; (c) that the contravening conduct had the effect of increasing the number of schedule 'B' group members who smoked than otherwise would be the case; (d) that smoking causes smoking related disease (as described in the Statement of Claim) and as a result of the Respondents' contravening conduct a greater number of schedule 'B' group members would contact [sic: contract] smoking related disease; then it is likely that the Applicant would be successful and that relief of the kind sought would be granted." 56 Dealing specifically with the matter of security for costs, Mr Francey said: "73. There is an obvious interrelationship between exercising jurisdiction toward [sic: to award] a security for costs and the jurisdiction of the Court to award costs. 74. So far as jurisdiction to award costs against the Applicant is concerned, it is by no means clear that costs would be awarded against the Applicant even if it is unsuccessful. Nothing could be clearer than that this case has been pursued in the public interest. If the allegations the Applicant makes are made out and if the conduct of the Respondents had the effect alleged, then there is an enormous public interest in this case being brought. Given the results of similar cases in the United States, both by way of jury verdict and settlement, it seems that there is a reasonable basis for maintaining an action of the subject kind in Australia. The related Nixon proceedings addresses similar issues but the TCC proceedings address the issues involved far more comprehensively. Furthermore, the Nixon proceedings focuses on compensation for persons who have suffered loss or damage whereas the TCC proceedings focuses on preventing loss or damage. Moreover, the class members in the TCC proceedings, and therefore the potential benefits to be obtained from the litigation, are far greater in scope than the Nixon proceedings. 75. In all the circumstances, this is a case in which it would be possible to determine in advance that an award of costs against the Applicant, if unsuccessful, would be declined, or would be in a limited amount, or at least would be declined or limited other than in exceptional circumstances e.g. if it ultimately transpired that the proceedings were commenced in the knowledge that they were hopeless or the Applicants conduct of the proceedings significantly contributed to unnecessary wastage of costs." 57 The reference to the "Nixon proceedings" is a reference to a case styled, at first instance, Nixon v Philip Morris (Australia) Ltd and Others [1999] FCA 1107; 165 ALR 515 and, on appeal, Philip Morris (Australia) Ltd and Others v Nixon [2000] FCA 229. In that case I dismissed a motion to strike out a proceeding brought by six people as representative parties on behalf of group members who had been diagnosed as suffering from one or more diseases caused in whole or in part from smoking cigarettes, between certain dates; and who had commenced to smoke, or failed to cease smoking, because of particular conduct of the respondents. On appeal, a Full Court held the Statement of Claim was defective and should be struck out. By majority (Spender and Hill JJ, Sackville J dissenting) the Full Court declared it was inappropriate that the claims of the applicants in the principal proceeding be pursued by means of a representative proceeding. The High Court refused an application for special leave to appeal against that decision. 58 Mr Francey's written submissions contended there was: "no basis presently existing which would suggest that costs could or should be ordered against the Applicant's former, present or future legal representatives other than in the exceptional case that it transpires those legal representatives had no genuine belief that the Applicant's case was worthwhile or that they seriously contributed to an unnecessary expenditure of costs or conducted the litigation on the basis of an unauthorised fee arrangement. There is no evidence of the latter and give [sic: given] the Court's power to manage Part IVA representative proceedings, including under s.33ZJ, it is unlikely that the latter circumstance will arise." 59 Mr Francey also submitted that the respondents should have sought security for costs at an earlier point of time, before TCCI "incurred the time, trouble and expense of preparing what was foreshadowed to be a comprehensive Statement of Claim". 60 Mr Francey also said: "There is no evidence of any persons standing behind the Applicant who is willing to provide security. On the other hand, this is not a case in which it could properly be said that any of the persons standing behind the Applicant are likely to benefit from the litigation in the sense of obtaining some personal financial gain. On the contrary, on the basis of the evidence that has been adduced, any of the persons or entities who could conceivably be said to be 'standing behind the Applicant' appear to be motivated purely by altruistic concerns and could not reasonably be expected to provide security much less be exposed to any adverse costs order." 61 Mr Francey said the application for security for costs was oppressive. He referred to the public interest: "Clearly there is a very real risk that any significant amount of security would shut the Applicant out from the litigation. Having regard to the public interest nature of the litigation and its prospects of success which, unusually, can be gaged [sic] at least to some extent at this early stage, ordering security for costs could represent a serious impediment to a genuine claim being advanced. Furthermore, despite the evidence that certain of the named schedule 'A' group members may have assets which are not insignificant, those assets are essentially dedicated for charitable or benevolent objects and, in any event, pale into insignificance as compared to the assets of the Respondents (see Section E above). In the circumstances it can be said that ordering any amount of security would be oppressive. … If the allegations and evidence of the Applicant adduced thus far is accepted, it would be difficult to conceive of a case of greater public interest to the Australian population. The extent of mortality and morbidity from tobacco smokers deposed to by Dr Penman in his Affidavit of 21 September 1999 is sufficient to demonstrate this. Further, the gross disparity between revenue the Federal Government derives from tobacco taxes as compared to money spent on anti-smoking campaigns and education as deposed to by Dr Penman in that Affidavit represents what can only be described as a major public health scandal. It is almost inconceivable that a responsible government could derive such revenue and yet do so little to avoid the pain and suffering which must be inflicted by the extent of death and disease caused by smoking. Quite apart from anything else, the imposition on the public health system must be such that government policy in this regard is, at least in the long term, wholly irrational. This is to say nothing of the utterly inhuman consequence of one in two smokers dying prematurely or about 1˝ million of the current Australian population. The fact that this has gone on for the last fifty years is bad enough but, if a case by the Applicant is established, it is imperative that it not persist into the next century without comprehensive measures being taken of the kind the Applicant seeks to have implemented." 62 During the course of oral submissions on 21 February 2000, Mr Francey elaborated on some the matters mentioned in his written submissions. He made clear that TCCI sought an order under s87 of the Trade Practices Act that would provide funds to the persons and organisations mentioned in Schedule A, this being to enable them to prevent loss or damage being suffered by persons who are, or may become, cigarette smokers. Mr Francey contended the operation of s87 is not confined to cases in which the Court is able to identify the particular person who is, or persons who are, likely to suffer loss or damage as a result of conduct contravening the Act; it is enough that the Court can say that, as a matter of probability, some persons or persons will suffer such loss or damage. 63 In relation to the allegations made in the Statement of Claim about overseas companies, Mr Francey agreed their liability is limited to their involvement in breaches of Australian law - whether the Trade Practices Act or the common law concerning conspiracy - but he insisted it was not necessary for those companies to be made parties to the proceeding. He said it was sufficient they be represented by the respondents named in the proceeding, who would be liable for losses stemming from the conduct of the represented companies. He did not succeed in making me understand the basis on which the respondents would be so liable. 64 Finally, I should mention that, on 21 February 2000, Mr Francey proffered a third version of Schedule B. The major difference between this version and that in the draft Amended Application is in its coverage of future smokers. The most recent version covers persons who: (i) commenced smoking cigarettes on or after 1 October 1974; or (ii) being under the age of 18 years as at 22 September 1999, may thereafter commence smoking cigarettes; or (iii) commenced smoking prior to 22 September 1999 and, on or after 1 October 1974, (including at any time after 22 September 1999) failed to quit smoking; or (iv) were under the age of 18 years at 22 September 1999 and may thereafter cease to quit; and, in each case, the commencement of smoking or failure to quit was wholly or partly caused by the respondents' conduct. 65 Mr Francey did not seek to amend his Notice of Motion so as to make the application for leave extend to this third version of Schedule B. So I am not asked to rule on this version. Notwithstanding that, if the third version resolved the difficulties inherent in its predecessors, I would take that fact into account in framing appropriate orders. Unfortunately, it does not do so.

The respondents' submissions 66 As I have said, counsel for the respondent resisted every step in TCCI's argument. Understandably, their written submissions overlapped; similar points were made in more than one submission. I need not examine the points seriatim. It is enough to note their substance. 67 The respondents emphasised the impecuniosity of TCCI and its failure to disclose the resources of those who "stand behind" it. Counsel referred to documents exhibited to a solicitor's affidavit which indicate that: (i) all TCCI's members are officeholders of one or both of the New South Wales Cancer Council or Action on Smoking and Health (Australia) Limited ("ASH"), both of which are Schedule A group members; (ii) ASH receives grants from the New South Wales Cancer Council; and (iii) the New South Wales Cancer Council had total assets at 30 June 1999 of $26,464,000 and an operating income for the year ended that day of $24,393,000; although I note that, in that year, the income was exceeded slightly by the operating expenditure. 68 Counsel cited the statement in Bell Wholesale quoted in para 26 above. They also referred to the following comment by Merkel J, in Woodhouse v McPhee at 534: "There may be circumstances which arise in a particular case under Pt IVA that may warrant a different approach to that set out above. For example if the claim was spurious, oppressive or clearly disproportionate to the costs involved in pursuing it or if the proceedings were structured so as to immunise persons of substance from costs orders I would not consider the fact that the represented persons were entitled to the benefit of s43(1A) to be a consideration which in any way operates against an order for security in such cases." As counsel pointed out, this comment, also, was endorsed in Ryan v Great Lakes Council by both myself and Lindgren J. 69 Counsel for the respondents suggested the present proceeding was structured to immunise persons of substance (especially New South Wales Cancer Council) from liability for costs. They noted that TCCI was incorporated only a few days before the commencement of the proceeding and after the obtaining of legal advice. They referred to a letter written by Dr Penman to a supporter in which he said: "The TCC has been created as a vehicle for the litigation in order to protect health and medical groups such as the Cancer Council from potentially adverse costs orders." 70 Counsel made numerous criticisms of the nature of the case sought to be advanced by TCCI and the form of the draft Amended Application and Statement of Claim. They also submitted it was inaccurate to characterise this proceeding as "public interest" litigation. Counsel asserted that public policy decisions in relation to the Australian tobacco industry, including tobacco control measures and their funding, were matters for the legislature.

The withdrawal of TCCI's solicitors 71 The statement made by Mr Sher on 17 December 1999 about a possible application for a costs order against TCCI's solicitors seems to have had the effect of causing McCabes to withdraw their representation of TCCI. TCCI has apparently been unable to arrange alternative legal representation. So the withdrawal causes a problem, not only to TCCI but to the Court. As the respondents' counsel have repeatedly emphasised, the claim pleaded by TCCI is complex. It involves difficult legal issues and allegations of fact that are numerous, complicated and likely to be strenuously disputed. Even with all parties represented by skilled and co-operative solicitors, the case presents management challenges; without this, satisfactory management may be impossible to achieve. 72 Because of considerations such as these, the conflicts between interest and duty that may be created by threats about costs and the propensity of threats against solicitors to cut off access (in a practical sense) to the court, such threats may amount to contempt of court: see Orchard v South Eastern Electricity Board [1987] 1 QB 565. That decision was cited with approval by a Full Court of this Court (Wilcox, Burchett and Tamberlin JJ) in Levick v Deputy Commissioner of Taxation [2000] FCA 674, in which case there is a comprehensive discussion about the circumstances under which courts will make costs orders against solicitors. The possibility of a threat amounting to contempt of court is, possibly, at its greatest in a case where a party represented by the threatened solicitors is likely to experience difficulty, through impecuniosity or otherwise, in replacing them. 73 Although Mr Francey raised the matter of Mr Sher's "threat" during the course of his submissions, there currently is no application before the Court in respect of the matter. TCCI has not sought an order that Mr Sher, or his instructing solicitors or clients, be adjudged guilty of contempt of court. Nor is there an application by any respondent that the members of McCabes be ordered to pay its costs. Under those circumstances, it is unnecessary for me to express any view about the validity of Mr Francey's complaint. At this stage, I will say no more about it.

Security for costs: the competing arguments 74 There is no question as to the power of the Court to order that TCCI, as applicant in the proceeding, provide security for the respondents' costs and that, in default, the action be stayed or dismissed. There are powerful arguments in favour of taking that course: TCCI is admittedly impecunious and unlikely to be able to meet any costs order that might eventually be made against it. Although the action is a representative proceeding pursuant to Part IVA of the Federal Court of Australia Act, brought for the benefit of group members who have the general immunity in respect of costs conferred by s43(1A) of that Act, that circumstance does not preclude the making of a security order, especially bearing in mind that the proceeding has been structured so as to immunise from costs orders the organisations whose officers control TCCI. I do not accept Mr Francey's suggestion that the applications for security were left too late. The applications were foreshadowed at the first directions hearing after delivery of the Statement of Claim, and were made in accordance with a timetable then laid down. 75 Against these considerations, it seems to me, Mr Francey has only two arguments warranting consideration: (i) the proceeding has a high prospect of success, so that an order for security would stifle a valid claim; and, anyway, this makes it unlikely the respondents will ever become entitled to recover costs; and (ii) this is "public interest" litigation; even if the claim fails, the Court is unlikely to order TCCI to pay the respondents' costs.

If there is substance in either of these arguments, it may be an appropriate exercise of the Court's discretion for me to refuse the applications for security for costs. I must, therefore, analyse them in some detail.

TCCI's prospects of success: assumptions 76 Although some of the statements of fact made by Mr Francey in his written submissions are not established by evidence, I accept that the persons who control TCCI are actuated by high motives. I have no doubt they genuinely believe that cigarette smoking is a cause of, or contributor to, several life-threatening diseases and that, in Australia and elsewhere, smoking routinely exacts an enormous toll in terms of mortality, sickness and public expense. Further, I accept such a belief may be regarded as reasonable. The people who control TCCI appear to have considerable expertise in this area; and there can, surely, no longer be room for dispute about the existence of a link between cigarette smoking and, at least, some potentially fatal diseases. 77 For present purposes, I am prepared to assume that epidemiological evidence would enable TCCI to establish that many (if not most) of the people described in Schedule B to the draft Amended Application (or its later revision) are likely eventually to exhibit symptoms of one or more of the "smoking related diseases" identified in the Statement of Claim and that, in a significant proportion of cases, they are likely to succumb to a smoking related disease. 78 I am also prepared to assume (but without making any judgment about the matter), that TCCI would be able to prove that, during the period of almost 25 years that elapsed between the commencement of the Trade Practices Act and the institution of this proceeding, one or more of the respondents engaged in conduct that contravened s52 or s51AB of that Act, or constituted an involvement in contraventions by others, within the reach of s75B of that Act. 79 Although this would require attention to the history of individual smokers, I am prepared also to assume, for present purposes, that TCCI could establish that at least some presently asymptomatic Australian smokers were caused to commence smoking, or to fail to quit smoking, because of contraventions of the Act by one or more of the respondents. 80 For present purposes, I also assume the possibility that TCCI could establish the existence of a conspiracy to carry out unlawful acts, actionable at the suit of any person who suffered resultant damage. 81 Even so, there are major problems about TCCI's claim, at least as presently framed.

TCCI's prospects of success: the descriptions of group members 82 The first major problem lies in the descriptions of group members. Schedule A of the draft Amended Application refers to all "persons, bodies corporate, agencies, entities, groups, organisations and other bodies in Australia" who have incurred, or will incur, costs (or who have expended or will expend monies) "on tobacco control measures in Australia; and/or on treating persons suffering from smoking related disease". The persons, bodies corporate etc include the 58 listed health and medical groups and organisations but they are not limited to them. Anybody who has incurred, or will hereafter incur, cost or expense is included. There must be a great number of such persons. The description would cover a multitude of governmental, charitable and welfare agencies and probably most hospitals and medical practitioners. 83 But that is not the main objection to the description. Numerosity may present management problems, but it is not necessarily fatal to an action continuing as a representative proceeding. However, it is a fatal objection if it is impossible for anybody to determine who falls within the described group. That is the position in relation to this description. Nobody can say, at this point of time, what persons, bodies corporate etc will, in the future, incur costs or expend monies in connection with "tobacco control measures" (whatever they may be) or on treating people suffering from one of the identified smoking related diseases. No doubt some of the persons, bodies corporate etc have already incurred relevant costs or expended relevant monies; so their identities may be ascertainable on that basis. However, to the extent the description enlarges membership of the group by referring to future costs and expenditure, it refers to unidentifiable persons. How will those persons be able to make the opt-out decision envisaged by s33J of the Federal Court of Australia Act? Some of the persons and bodies covered by the description may not yet exist. 84 The description contained in Schedule A contains the limitation that the persons, bodies corporate etc must have incurred the costs or expended the monies, or must in the future incur the costs or expend the monies, "wholly or partly by reason of the contravening conduct" of one or more of the respondents. If the words "by reason of" include the notion that there must be a causal connection between the contravening conduct and the behaviour of smokers that gave rise, or will give rise, to the need to incur costs or expend monies on tobacco control measures or on the treatment of persons suffering smoking related diseases, this limitation creates a further problem of group member identification. In order to determine whether he, she or it fell within the description, a prospective group member would need to ascertain the reason why particular persons commenced to smoke or failed to quit. In most cases, this would be an onerous task; sometimes, for example where the relevant person has died, the task would be impossible to fulfil. 85 On the other hand, if the words "by reason of" are not intended to include the need for a causal link between the respondents' conduct and persons commencing to smoke or failing to quit smoking, Schedule A describes the group too widely. It is not a sufficient basis for the compensation order sought in para (c) of TCCI's claim for relief (set out in para 48 above) that one or more of the respondents has contravened the Trade Practices Act. As para (c) accepts, TCCI must show that the loss or damage in relation to which compensation is sought stems from that contravention. Inevitably, that means that TCCI must show a causal connection between the conduct of one or more of the respondents and the commencement of smoking, or failing to quit smoking, of persons in respect of whom the costs were (or will be) incurred or the monies were (or will be) expended. 86 Schedule B contains similar problems. The form of Schedule B in the draft Amended Application includes people who may, in the future, commence smoking, or fail to quit smoking, by reason of the respondents' conduct. The same thing may be said about the revised version, proffered at the hearing on 21 February; moreover, that version refers to people who may, after the filing of the Amended Application but without any specified cut off date, contemplate ceasing to smoke but fail to do so because of the respondents' conduct. On either version, membership of the group is dependent, to some extent, on future events. How would it be possible now to ascertain the identity of the relevant people? 87 Criticisms of the original description of Schedule B group members were made at the first directions hearing on 5 October 1999. The draft Amended Application was presumably intended to meet those criticisms. But it failed to do so; instead, it introduced problems in relation to Schedule A that did not exist when that schedule consisted solely of a list of named groups and organisations. 88 Even the revised version of the draft Amended Application that was proffered at the hearing of the motions on 21 February 2000 retains most of the problems of the December draft. It, also, is unsatisfactory. 89 It is fundamental to the proper management of a representative proceeding that the Court insist upon an identification of group members that will leave people in no doubt as to whether or not it is appropriate for them to claim to fall within the group. None of the versions of the Application yet supplied by TCCI provides such an identification. This statement applies to the version that is the subject of the Notice of Motion filed on behalf of TCCI on 3 December 1999; that is, the draft Amended Application annexed to Mr Moss' affidavit of that day. I must reject TCCI's application for leave to file that document.

TCCI's prospects of success: the declaratory and injunctive relief claimed 90 Even if TCCI achieved satisfactory description of the group members, serious problems would remain. These problems concern the claims for relief; even the claims for declaratory and injunctive relief. 91 The proposed relief relates only to conduct in contravention of the Trade Practices Act or State or Territory Fair Trading legislation, not conduct constituting the common law tort of conspiracy. The relevant conduct is said to contravene Part IVA or Part V of the Trade Practices Act. Section 80(1) of the Trade Practices Act permits the Court to grant an injunction to restrain conduct, or threatened conduct,in contravention (inter alia) of Part IVA or Part V. The Court may make such an order on the application of "any other person". That term means what it says: see Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 and The Queen v Federal Court of Australia; Ex parte Pilkington ACI (Operations) Pty Limited (1978) 142 CLR 113. It is a valid provision: see Truth About Motorways Pty Ltd v Macquarie Infrastructure Management Ltd [2000] HCA 11. So it follows, in the present case, that it would be open to the Court, at the suit of TCCI, to grant an injunction against any respondent that has engaged, or is proposing to engage, in conduct that constitutes, or would constitute, a contravention of the relevant provisions of the Trade Practices Act. The power to make such an injunction is not confined to a case where the contravening conduct is continuing or threatened: see s80(4) of the Trade Practices Act. However, the question whether contravening conduct is continuing or threatened is material to the exercise of the Court's discretion, in relation to granting an injunction: see ICI Australia Operations Pty Limited v Trade Practices Commission (1992) 38 FCR 248 at 258. Lockhart J there said: "The evident intent of s80 is to place the weapon of an injunction in the discretionary armoury of the court together with the award of damages and wide ranging orders of the kind specified in s87." 92 If it were useful to do so, the Court could support any injunction by making an appropriate declaration. 93 I have not considered the relevant provisions of the various Fair Trading statutes; for present purposes, I assume they provide similar powers. 94 However, TCCI's claims for declaratory and injunctive relief extend to conduct beyond that of the respondents, or any of them. They include contraventions of the relevant legislation by "companies represented by the Respondents". As I have noted, the Statement of Claim attributes a representative function to the respondents in relation to numerous companies (some Australian, some foreign) which are not themselves parties, and without condescending to indicate the basis of that representative function. I do not understand how s80(1) may be said to authorise the Court to grant an injunction against a respondent, not in relation to conduct in which it has engaged, or proposes to engage, but in respect of conduct engaged in by someone else. Of course, if a particular respondent is involved, in any of the ways referred to in s75B(1) of the Trade Practices Act, in the contravening conduct of someone else, that will provide a basis for the grant of an injunction under s80(1) against that respondent. But that will be because of the respondent's own acts of involvement. And there may be cases in which a relationship between a respondent and a contravener, or threatened contravener, is such that the Court is able to be satisfied, as a matter of fact, that the act of the contravener is also the act of the respondent. However, in such a case, the basis of any relief is that the respondent itself has engaged, or is proposing to engage, in contravening conduct; not that it is representing the contravener. 95 If the only thing at stake was a few words in proposed orders, words that could be ignored when the Court framed any final orders granting relief, I would not have bothered to mention this problem at this stage. However, a large proportion of the Statement of Claim is devoted to the alleged conduct of companies other than the respondents, in respect of which conduct the respondents are said to be liable on a representational basis. Investigation of issues raised by those allegations would be likely greatly to increase the duration and complexity of the trial. If, as I believe, TCCI has failed to plead any arguable legal basis for making the respondents, or any of them, liable for the consequences of that conduct, it would be wrong to allow those issues to go to trial. 96 Similar problems attend the conspiracy allegations. Curiously, as I have noted, no claim for relief is made in relation to the conspiracy allegations. No doubt that omission could be rectified, if desired. It may be possible for TCCI to demonstrate that the respondents, or some of them, were parties to a conspiracy giving rise to a cause of action recognised by Australian common law. If the facts evidencing the existence of such a conspiracy are closely related to the facts demonstrating contraventions of the Trade Practices Act, it may be possible for TCCI successfully to contend that both causes of action arise out of a "matter" constituted by a single controversy; so the conspiracy claim falls within the associated jurisdiction of this Court: see Fencott v Muller (1983) 152 CLR 570, Stack v Coast Securities [No.9] Proprietary Limited (1983) 154 CLR 261. However, any liability that would thereby fall on a respondent would arise because it was itself a party to the conspiracy, not because it "represented" a conspirator. 97 In short, it seems to me, the declaratory and injunctive relief claimed in the draft Amended Application goes beyond what can possibly be obtained by TCCI, even if TCCI succeeds in making out the factual allegations which I have assumed in its favour; and this excess is likely to cause major embarrassment and unnecessary expense at trial. There is need for heavy pruning of the allegations made in the Statement of Claim, so as to confine them to contraventions or wrongs for which one or more of the respondents may be made responsible.

TCCI's prospects of success: the claimed s87 orders 98 The draft Amended Application seeks orders under s87 of the Trade Practices Act for two purposes: (i) to "compensate the Applicant and Schedule A group members in whole or in part for the loss or damage that has been suffered by them or will prevent or reduce the loss or damage that is likely to be suffered by them by the conduct the subject of the foregoing declarations"; and (ii) to "prevent or reduce the loss or damage likely to be suffered by the Schedule B group members by the conduct the subject of the foregoing declarations". 99 Section 87 of the Trade Practices Act relevantly provides: "(1) … where, in a proceeding instituted under, … this Part, the Court finds that a person who is a party to the proceeding has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in … in contravention of a provision of Part IV, IVA, IVB or V, the Court may … make such order or orders as it thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention (including all or any of the orders mentioned in subsection (2) of this section) if the Court considers that the order or orders concerned will compensate the first-mentioned person in whole or in part for the loss or damage or will prevent or reduce the loss or damage. (1A) … the Court may, on the application of a person who has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in … in contravention of a provision of Part IVA, IVB or V … make such order or orders as the Court thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention (including all or any of the orders mentioned in subsection (2)) if the Court considers that the order or orders concerned will compensate the person who made the application, or the person or any of the persons on whose behalf the application was made, in whole or in part for the loss or damage, or will prevent or reduce the loss or damage suffered, or likely to be suffered, by such a person. (1B) … (1C) … (ICA) An application under subsection (1A) may be commenced: (a) in the case of conduct in contravention of Part IVA - at any time within 2 years after the day on which the cause of action accrued; or (b) in any other case - at any time within 3 years after the day on which the cause of action accrued. (1D) For the purpose of determining whether to make an order under this section in relation to a contravention of Part IVA, the Court may have regard to the conduct of parties to the proceeding since the contravention occurred. (2) The orders referred to in subsection (1) and (1A) are: (a) … (b) … (ba) … (c) … (d) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to pay to the person who suffered the loss or damage the amount of the loss or damage; (e) … (f) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct, at his or her own expense, to supply specified services to the person who suffered, or is likely to suffer, the loss or damage; and (g) …" 100 It will be noted that the powers conferred by s87 are enlivened (subs (1)) "where … the Court finds that a person who is a party to the proceeding", or (subs (1A)) "on the application of a person who", "has suffered, or is likely to suffer, loss or damage by conduct of another person" that contravened (inter alia)Part IVA or V of the Act. There must be a causal connection between the contravening conduct and the loss or damage suffered, or likely to be suffered, by the person who seeks compensation. The point was made by McHugh, Hayne and Callinan JJ in Marks v GIO Australia Holdings Limited [1998] HCA 69; 196 CLR 494 at para 38: "It can be seen, therefore, that both ss82 and 87 require examination of whether a person has suffered (or, in the case of s87, is likely to suffer) loss or damage 'by conduct of another person' that was engaged in the contravention of one of the identified provisions of the Act. That inquiry is one that seeks to identify a causal connection between the loss or damage that it is alleged has been or is likely to be suffered and the contravening conduct." See also per Gaudron J at para 19 and Gummow J at paras 105-106. 101 In para 22 of her reasons for judgment in Marks, Gaudron J pointed out that s87 operates, not only where a person has suffered loss or damage as a result of a contravener's conduct, but also where a person is "likely to suffer" loss or damage. She added: "And as a matter of ordinary language, the expression 'likely to suffer' imports only that loss or damage is a real chance or possibility, not that it is more likely than not." Subject to the operation of s87(1CA) in relation to s87(1A), in the present case the powers of the Court under s87(1) or s87(1A) would be triggered if the Court was satisfied that contravening conduct of one or more of the respondents has caused, or is a real chance to cause, TCCI or a properly identified group member to suffer loss or damage. 102 This does not mean it would be necessary for TCCI to show that it, or a group member, was misled by a respondent, or was the immediate victim of unconscionable conduct. As Lockhart J pointed out in Janssen-Cilag Pty Limited v Pfizer Pty Limited (1992) 37 FCR 526 at 529: "applicants may claim compensation when the contravener's conduct caused other persons to act in a way that led to loss or damage to the applicant." However, there must be a close relationship between the conduct and the damage. This is apparent from what Lockhart J went on to say in Janssen-Cilag at 530. He was speaking about s82(1) of the Act (the damages provision), rather than s87(1) or s87(1A); however, each of the latter subsections uses the same formula as s82(1) "by conduct of another person". Omitting citations, his Honour said: "The use of the preposition 'by' in s82(1) is important; it indicates the requirement that there be a sufficient cause or link between the respondent's conduct and the recoverable loss or damage: … 'By' is used in s52(1) [sic: 82(1)] in the sense of 'by reason of' or 'as a result of': …Loss or damage must directly result from or be caused by the respondent's conduct. The respondent's conduct must be the real or direct or effective cause of the applicant's loss; it must have been 'brought about by virtue of' the conduct which is in contravention of s52." 103 It is possible to envisage circumstances under which one legal person ("the claimant") might obtain a s87 compensatory order against another person ("the contravener") in respect of loss or damage suffered, or likely to be suffered, by the claimant as a result of the claimant incurring expenditure in connection with the smoking habit of a third person ("the smoker"). However, that would be the case only where it was established that: (i) as a matter of probability, the smoker was caused to commence smoking, or to fail to cease smoking at a relevant time, by conduct of the contravener; and (iii) as a direct result of that behaviour by the smoker, the claimant incurred, or was likely to incur, the expenditure. 104 One situation in which such a claim might succeed would be where the claimant (perhaps a health fund or other insurer) had a contractual obligation to bear expense occasioned by the smoker suffering a smoking-caused disease. Another example might be a claim made by a government agency which incurred, or was likely to incur, the relevant expense pursuant to a statutory duty or function. 105 I emphasise that, regardless of the claimant's circumstances, it would be essential for the claimant to establish the existence of a causal relationship between the contravening conduct and the onset of the smoker's disease. It would not be sufficient merely to prove that: (a) the contravener had contravened the Trade Practices Act in relation to the manufacture and/or promotion and/or distribution of cigarettes; and (b) the claimant had incurred, or was likely to incur, expenditure consequentially upon the smoker suffering a smoking related disease. 106 There is an interesting question whether it would be possible to establish a case such as this on the basis of sample evidence, or whether it would be essential to adduce evidence about the smoking history of each individual in relation to whom the applicant claimed to recover incurred expenditure. Supposing a health fund made a claim under s87 against cigarette manufacturers and established: (i) its total expenditure, over a particular period, in relation to smoking caused diseases suffered by a particular cohort of persons, perhaps defined by reference to birth within a particular span of years; (ii) by epidemiological and statistical evidence, that a random sample of a particular size, and having other particular characteristics, was likely fairly to reflect the range and incidence of smoking experiences throughout the whole of that cohort, and fairly reflect the average per capita expenditure of the whole cohort; and (iv) by evidence from each individual in the sample group, that x% of them had been caused to commence smoking, or to fail to quit smoking early enough to avoid suffering a smoking related disease, by the conduct of one or more particular respondents. Would that evidence suffice to make out a claim against the particular respondent or respondents for x% of the total expenditure? 107 As the Court would be concerned to determine probabilities, not certainties, my tentative view is that it may be possible to establish a s87 claim in that way. However, it would be necessary to ensure the sample group was sufficiently large, and its members truly selected on a random basis. 108 This question is well removed from the current claim. As I have noted, the Statement of Claim alleges breaches, by all respondents, of Parts IVA and V of the Trade Practices Act. It also alleges (by para 3.18A) that the contravening conduct had the effect of "causing and/or contributing to the class members" - that is, the group members described in Schedule B of the Application - commencing to smoke or failing to cease smoking. The Statement of Claim further alleges (by para 3.19A) that, as a consequence of their commencing, or failing to cease, smoking, "the class members are likely to suffer loss and damage". Particulars of that allegation refer to the class members being "likely to contract smoking related disease", with various consequences thereof. 109 It seems to me that, if Schedule B of the Application was amended in such a way as to restrict the "class members" to people who have been caused, by the respondents' alleged contravening conduct, to commence smoking, or not to quit smoking, the claim of those members would fall within s87(1) or (1A) of the Trade Practices Act. Even though, by definition, none of the class members could establish that he or she was symptomatic prior to the commencement of the proceeding, all the members would be smokers; and each member's smoking would, allegedly, be causally connected to the contravening conduct of the respondents. Although it would not be alleged (and could not be established) that all the class members would contract a smoking related disease, it would be alleged they are all likelyto do so, and thus likely to suffer loss or damage. Epidemiological evidence might establish the validity of that claim, attributing to the word "likely" the meaning adopted by Gaudron J in Marks: a "real chance or possibility", as distinct from a probability. 110 However, it is one thing to accept the possibility of the present case being so amended as to fall within the words used in s87(1) or (1A). It is another thing to envisage the Court exercising, in favour of such a class member, the discretion conferred by either of those subsections. I find it difficult to believe any judge would make a substantial compensatory order in favour of a person who was not yet symptomatic, and might never become symptomatic; who might suffer substantial loss or damage, but might not. I also think there would be an unwillingness to grant token compensation. This might be thought to preclude, or complicate, any proceeding for substantial compensation or damages that might be brought by, or on behalf of, the person if he or she was later diagnosed as actually suffering from a smoking related disease. 111 It is neither necessary nor desirable, at this stage of the present case, to reach any final conclusion as to the availability of s87 relief to asymptomatic smokers, even assuming the description of group members in Schedule B was appropriately revised. It is sufficient for me to say, as I do, that it is far from apparent that the claim for s87 relief would succeed, insofar as Schedule B group members are concerned. 112 In relation to TCCI and the group members described in Schedule A, I note that para 3.19B of the Statement of Claim alleges these persons "have suffered and/or are likely to suffer loss or damage". Particulars are supplied but they are uninformative. The particulars merely state that: "The Applicant and/or Schedule A group members: (a) have incurred costs and/or expended monies: (i) on tobacco control measures in Australia; and/or (ii) on treating persons suffering from smoking-related disease; and/or (b) will incur such costs and/or expend such monies in the future." 113 Paragraph 3.19B concludes with the promise that further and better particulars will be provided in due course. However, it seems unlikely they will indicate that TCCI, for one, expended any substantial sum for either of the stated purposes during the few days that elapsed between its incorporation and the commencement of the proceeding. No doubt some of the persons or organisations referred to in Schedule A have expended substantial sums on campaigns designed to inform people of the costs and risks inherent in cigarette smoking, and to suggest the desirability of imposing restrictions on, or deterrents to, that practice. Presumably, this is what is meant, in the Statement of Claim, by the words, "tobacco control measures". However, it is not clear that all such expenditure may properly be regarded as a direct result of the alleged contravening conduct of the present respondents. There might, in any event, have been a need for some such expenditure. 114 There may be a clearer link in relation to expenditure on the treatment of persons suffering from smoking related diseases. As I have indicated, it may be possible to reformulate the claim in such a way as to provide a remedy for some of the persons covered by Schedule A. But it would not be appropriate for me to evaluate Mr Francey's submission about TCCI's prospects of success, not by reference to the claim it in fact makes (and which it has been unwilling substantially to modify), but by reference to a claim that, perhaps, might be made.

TCCI's prospects of success: conclusion 115 Having regard to the problems I have outlined, it cannot properly be said that the proceeding, as presently framed, enjoys a high possibility of success. Indeed, unless and until the descriptions of group members are radically revised, the action ought not be allowed to proceed at all; at least as a representative action. Even if that revision took place, major difficulties would remain. The first, and major, basis of Mr Francey's resistance to the respondents' applications for security for costs must be rejected.

"Public interest" litigation 116 As Mr Francey noted in argument, there have been cases in which courts (including this Court) refrained from making costs orders against unsuccessful plaintiffs because they perceived the claim to have been brought in the "public interest", rather than for private ends. The cases were collected and analysed by Stein J, at first instance in Oshlack: see Oshlack v Richmond River Shire Council and Iron Gates Developments Pty Ltd (1994) 82 LGERA 236. His Honour was there exercising the discretion as to costs conferred upon him by s69(2) of the Land and Environment Court Act 1979 (NSW). That subsection provides: "Subject to the rules and subject to any other Act: (a) costs are in the discretion of the Court; (b) the Court may determine by whom and to what extent costs are to be paid; and (c) the Court may order costs to be taxed or otherwise ascertained on a party and party basis or on any other basis." 117 At 245 Stein J held that the subject matter of that proceeding was one of public interest. However, he did not rest his decision to refuse costs only on that circumstance. He took into account that "a significant issue in the case" concerned the meaning and legal certainty of a development consent issued by the respondent council. He thought the submissions, on that issue, made on behalf of Mr Oshlack "were respectable and in no way unarguable". Submissions made on other aspects of the case "were eminently arguable although unsuccessful". The case was also one of the first challenges under certain recently-enacted legislation and its determination would be "helpful to the future administration of the provisions and enforcement". His Honour also noted the considerable local controversy concerning development of the subject land. He thought it relevant that Mr Oshlack had no pecuniary interest in the outcome of the case, and "was motivated by his desire to uphold the public interest in ensuring obedience to environmental law which he claimed was breached". He said Mr Oshlack was also motivated by a desire to "preserve the habitat of the endangered koala on and around the site", a stance shared "by a significant number of members of the public although they did not join in the challenge". 118 The New South Wales Court of Appeal reversed Stein J's decision: see Richmond River Council v Oshlack (1996) 39 NSWLR 622. However, the High Court, by majority (Gaudron, Gummow and Kirby JJ; Brennan CJ and McHugh J dissenting), reinstated his Honour's order. 119 In their joint judgment, Gaudron and Gummow JJ referred to the discretion conferred by s69 of the Land and Environment Court Act. At para 36 they posed the question "whether rules of practice with respect to similarly expressed provisions in legislation applicable in other species of litigation have so hardened (that they) render irrelevant to the exercise of the discretion conferred by s69 those considerations" referred to by Stein J. They held they had not. At paras 40 their Honours said: "There is no absolute rule with respect to the exercise of the power conferred by a provision such as s69 of the Court Act that, in the absence of disentitling conduct, a successful party is to be compensated by the unsuccessful party. Nor is there any rule that there is no jurisdiction to order a successful party to bear the costs of the unsuccessful party." 120 Gaudron and Gummow JJ held at para 45 that s69 of the Land and Environment Court Act "is not to be narrowly construed … it is applicable to new species of litigation and the discretion it confers is to be exercised so as to allow for the varied interests at stake in such litigation". They concluded Stein J's discretion had not miscarried. 121 Kirby J expressed similar views. 122 Much of what was said in Oshlack is potentially applicable to this case. Section 43 of the Federal Court of Australia Act, which provides for costs orders in this Court, is couched in somewhat different language to s69 of the Land and Environment Court Act. However, the effect is much the same. Subsection (1) confers jurisdiction "to award costs in all proceedings before the Court"; subject to some presently irrelevant exceptions. Subsection (2) states that, except as provided by any other Act, "the award of costs is in the discretion of the Court or Judge". As Stein J noted in Oshlack, there have been cases in this Court in which judges have departed from the usual practice as to costs. 123 The claim sought to be litigated by TCCI is one of public importance. It is brought by an association controlled by people who have a sincere and informed interest in the subject matter of the litigation and who appear to be motivated by concern for the public interest, rather than any pecuniary or other private interest. If the litigation were successful, it might provide funds valuable for the amelioration of a major public health problem. Moreover, the litigation has the potential to contribute to professional and public understanding of a provision of the Trade Practices Act (s87) that contains some unresolved problems and, perhaps for that reason, is utilised less often than might have been expected. 124 However, a factor that would have to be taken into account, in exercising the Court's discretion as to costs, would be the extent of the allegations made by TCCI and the conduct of the litigation. It is not enough for litigants and their advisers, both zealous in the public interest, to have their hearts in the right place; their heads must be there also. 125 Those who litigate in the public interest need to be dedicated to their cause and enthusiastic in its pursuit. But dedication and enthusiasm are not enough; public interest claims also require strict professionalism, with rigorous attention to any legal problems inherent in the proposed claim. Sadly, in the present case, this is lacking. The claim, as presently framed, is prolix and confused. In its present form it could not possibly be regarded as "eminently arguable", as was the situation in Oshlack. If the present claim was allowed to go to trial, and failed, it would, I think, be extremely difficult to persuade a judge that the circumstances warranted departure from the usual practice whereby costs follow the event. 126 There is no substance in Mr Francey's second argument against an order for security for costs.

Disposition 127 For the reasons set out above, I am of the opinion, first, that TCCI's application to file the draft Amended Application should be refused and, second, that I should accede to the respondents' applications for security for costs. 128 There is a question (which may be academic) about the amount of the security. Plainly, the litigation will be expensive; especially if TCCI retains all the allegations contained in its present Statement of Claim. However, that situation may change. Accordingly, it is desirable to select a relatively low figure at this stage. The amount may be increased, if necessary, at a later time. I think the appropriate order to make, in response to the current motions, is that, on or before 30 September 2000, TCCI provide security in the sum of $100,000 in respect of the costs of each of the three sets of respondents; $300,000 in all. This security is to be provided in such manner as may be approved by the New South Wales District Registrar of the Court. In considering whether to grant approval, the District Registrar will, no doubt, take into account any views expressed by the solicitors acting for the relevant set of respondents. In default of provision of the security by 30 September 2000, in respect of any particular set of respondents, subject to any contrary order of a judge of the Court, the proceeding shall stand dismissed, with costs, as against that set of respondents. There will be liberty to apply in relation to the security. 129 TCCI must pay the costs of the respondents in respect of both its motion for leave to file the draft Amended Application and the motions for security for costs. I certify that the preceding one hundred and twenty-nine (129) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wilcox.

Associate: Dated: 27 July 2000 Counsel for the Applicant: N Francey

Counsel for the First Respondent: J Sher QC and S O'Meara

Solicitor for the First Respondent: Arthur Robinson & Hedderwicks

Counsel for the Second Respondent: C G Gee QC and D Beach

Solicitor for the Second Respondent: Mallesons Stephen Jaques

Counsel for the Third Respondent: S G Finch SC and I Jackman

Date of Hearing: 21 February 2000

Associations Incorporation Act 1984(NSW)

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