Paragraph 16 of the statement of claim
9 The respondents criticised par 16 of the statement of claim in a number of respects. They pointed out that although the distributors "said" the representations to each of the consumers, the particulars stated that the representations were partly written, partly oral and partly to be implied. The drafting may not be precise but it is clear from the particulars that the representations relied upon were partly in writing, partly oral and partly to be implied and that the writing is identified, as are the relevant conversations and the matters from which the implications arise. Counsel for the applicants accepted that "represented" should be substituted for "said". The applicants should have leave to amend the statement of claim accordingly.
10 Although the words relied upon in the particulars are not precisely congruent with the allegations in subpars (a) and (b) of par 16, I am satisfied that the paragraph, taken in conjunction with the particulars, sufficiently discloses what are the words constituting the representations, which are relied on by the applicants.
11 The respondents contended that it is not possible to work out whether the particulars of the conversations are words to the effect of what is found in subpars (a) and (b) of par 16 or words to the effect of what is stated in the particulars or a combination of both. Although the drafting is not concise or precise I am satisfied that it is clear what the case is which the respondents have to meet and to what statements they have to respond. It must be remembered that the function of particulars is not to fill in gaps in the allegations of material fact but rather to delineate the boundaries of the subject‑matter relied upon. As was stated in Bruce v Odhams Press Ltd [1936] 1 KB 697 at 712‑713:
"Their [particulars] function is to fill in the picture of the plaintiff's cause of action with information sufficiently detailed to put the defendant on his guard as to the case he has to meet and to enable him to prepare for trial."
In my opinion, this is sufficiently carried out by the particulars under par 16. The particulars define sufficiently the boundaries within which the relevant representations are to be found: see also Trade Practices Commission v George Weston Foods Limited (1979) 39 FLR 182 at 186.
12 Although there may be differences between the actual terms of the statements made to the various group members that is not a bar to the proceeding continuing as a representative proceeding. So long as there is a substantial common issue of law or fact, that is to say an issue which is real or of substance, then s 33C(1)(c) of the Act is satisfied: Wong v Silkfield Pty Ltd (1999) 165 ALR 373 at 381. It is no bar to such a representative proceeding that the claim is brought in respect of representations founded in different conversations made to different members of the class. The threshold criterion is satisfied if the representations, albeit not in the same terms, are directed to substantially the same matters. In Connell v Nevada Financial Group Pty Ltd (1996) 139 ALR 723, Drummond J said at 728:
"It is not, I think, an objection to proceedings being brought as representative proceedings and founded upon an oral (or a written) representation made to the various class members that the representation may have been made on different occasions and in a different form of words to each class member, so long as the court can be satisfied that the substance and effect of what was orally represented is the same. But, in such cases, the court must be satisfied that each class member truly does set up a representation to the same substance and effect."
The relevance of that observation, for present purposes, is that notwithstanding the need for allegations to be formulated in sufficiently precise terms to enable a respondent to understand the case it has to meet, there needs to be some leeway allowed where there have been representations made to various persons of a particular class in circumstances where there will be a divergence in the actual words by which the representations were conveyed. So long as the representations are directly linked to a sufficiently defined subject‑matter and are to the same effect, a pleading should be allowed to stand even though there may be some differences in the actual words spoken to each group member. In this respect I adopt the later observation of Drummond J in Connell v Nevada Financial Group Pty Ltd (supra) at 728:
"Here, I am prepared to accept that the pleading is sufficiently precise and shows that, while oral representations as to the exclusive availability of products were made in different words to the various class members on different occasions, they are all to the same substance and effect and so give rise to one issue of fact common to the claims of all the group members."
13 In the present case the substance of each representation is identified and it is then the subject of elaboration by reference to further words said to have been stated. Taking the first representation as an example, the respondents know that the statement relied upon was to the effect that the system was the latest technology available. There is little substantive difference between that statement and the statements that the system was the latest in wireless infrared technology, a revolutionary new type of radio‑based alarm system, a brand new type of security system, a brand new type of security package and the latest available in electronic surveillance. However, by setting out these particulars the applicants are making it clear that although there is a range of statements upon which they rely, they are relied upon to justify a representation that the system was the latest technology available.
14 Pleadings in proceedings brought under Pt IVA of the Act are liable to be struck out if they do not conform to the basic rules of pleading. In Bright v Femcare (1999) 166 ALR 743 Lehane J said (at 750):
"There is nothing in Pt IVA which dispenses with the requirement that the applicant plead the material facts on which all claims for relief are made on behalf of each group member. To the extent that that is not done the pleading, like a pleading in any other proceeding, is liable to be struck out. Equally, if a claim made on behalf of any group member is to succeed, the factual basis of each element of the cause of action will have to be established by evidence."
This passage was referred to by the Full Court (Femcare Ltd v Bright [2000] FCA 512 at [7]) which upheld Lehane J's decision upholding the constitutional validity of Pt IVA of the Act. The Full Court expressly refrained from considering the correctness of this passage. Although it may be thought, on one view, that this passage supports the proposition that the particular case to be made by each group member must be specifically pleaded, there are passages in Philip Morris (Australia) Ltd v Nixon [2000] FCA 229 which suggest that the pleading in a Pt IV proceeding does not need to plead the case of each individual group member.
15 The relationship between the ordinary rules of pleading and proceedings brought under Pt IVA of the Act was considered by the Full Court of the Federal Court in Philip Morris (Australia) Ltd v Nixon (supra). All the members of the Court concluded that the statement of claim was inadequate and that it should be struck out. The majority (Spender and Hill JJ) held that leave to file a further amended statement of claim should be refused and declared that the proceeding no longer continue under Pt IVA of the Act. Sackville J agreed that the statement of claim be struck out but dissented on the issue of leave to file a further amended statement of claim, which he would have granted. Spender and Hill JJ agreed with Sackville J's reasoning which led to their conclusion that the amended statement of claim should be struck out. Sackville J considered the impact upon the ordinary rules of pleading of the representative procedure established by Pt IVA of the Act (at [131]‑[136]). The passage is lengthy, but as it is directly relevant to the issues before me it merits quoting in full:
"131 The fact that Part IVA of the Federal Court Act preserves the ordinary rules of pleading in representative proceedings does not, however, necessarily mean that the applicant in such proceedings is bound to plead material facts specific to each individual member of the represented class. The principal functions of pleadings are to furnish a statement of the case sufficient to allow the opposing party a fair opportunity to meet it;
· to define the issues for decision in the litigation and thereby enable the relevance and admissibility of evidence to be determined at the trial; and
· to enable the opposing party to understand and assess the pleaded case for the purposes of settling the litigation.
See Dare v Pulham (1982) 148 CLR 658, at 664, per curiam.
132 The requirement imposed by FCR O 11 r2, that a pleading contain a statement in summary form of the material facts on which the party relies, is to be understood by reference to the functions of pleadings. Thus it is a well established rule that the permitted level of generality of a pleading must depend on the general subject matter and on what is required to convey to the opposite party the case that is to be met: Ratcliff v Evans [1892] 2 QB 524 (CA). For example, in some circumstances, it may be permissible to plead a conclusion rather than the material facts underlying the conclusion: Kernel Holdings Pty Ltd v Rothmans of Pall Mall Australia Pty Ltd (French J, 3 September 1991, unreported); Queensland v Pioneer Concrete (Qld) Pty Ltd (1999) ATPR 41‑691 (Drummond J), at 42,829.
133 In the context of representative proceedings, it may be sufficient for the applicant to plead the case of each member of the represented class at a reasonably high level of generality. (I use 'sufficient' in the sense of adequate to enable the applicant to resist an application to strike out the pleading or dismiss the proceedings.) This is illustrated by the sample statement of claim appended to the LRC's report on Grouped Proceedings. As has been explained, the sample statement of claim alleges material facts, such as the purchase of a defective product by group members and their reliance on misleading representations, only in the most general terms.
134 Unless the rules of pleading permit this degree of flexibility, serious inroads would be made into the utility of the representative procedure established by Part IVA of the Federal Court Act. The general objectives of the legislation were identified in the second reading speech for the Federal Court of Australia Amendment Bill 1991 (Cth Parl Deb, HR, 14 November 1991, at 3174‑3175), in a passage quoted by the High Court in Wong v Silkfield, at 379: …"
His Honour then set out this passage and continued:
135 As this extract shows, one of the key objectives of the representative procedure is to provide a genuine remedy where many people suffer small losses, but the total amount at stake may be large. To achieve this objective it may well be necessary and appropriate for the represented group to consist of a very large number of people. By way of example, a catastrophic event at an electricity or gas plant, causing a loss of services to many thousands of people, may give rise to representative proceedings in which the represented group is very large indeed: cf Johnson Tiles Pty Ltd v Esso Australia Ltd (1999) 166 ALR 731 (Merkel J), at 733. If the individual claims of each member of the represented group had to be pleaded by reference to specific dates and events, the representative procedure might well be rendered ineffective for the very kind of group claim it is intended to facilitate.
136 Whether proceedings at a relatively high level of generality are permissible will depend on the circumstances of the particular case and the stage it has reached. The facts material to the claims of each member of the represented group might not be necessary to ensure that the respondent adequately understands the case made on behalf of the represented class and has a fair opportunity to meet that case. This may be the position, for example, where representative proceedings are brought in order to provide a mechanism to enable one or more common issues of law or fact to be resolved in a manner that binds the respondent and all class members, rather than to determine finally the claims of each class member. (See Federal Court Act, ss 33Q, 33R.)."
16 The consequence of Sackville J's reasoning is that one should approach a pleading in a proceeding brought under Pt IVC of the Act, where the substantial common issue of law or fact centres on representations made to a number of group members, with a degree of flexibility. Nevertheless it is important, as Sackville J pointed out in Philip Morris (Australia) Ltd v Nixon (supra), that the pleading define the issues for decision so as to enable the respondents to understand and assess the case made against them.
17 Although the pleading of the allegations in par 16 could be improved and tightened I am satisfied that it adequately exposes for the respondents the allegations as to the substance of the statements said to have been made. The statement of claim makes it clear that the case made against the respondents is based upon statements made to consumers and potential consumers by distributors who were following instructions from the respondents. It is said that the distributors made the statements they did either as agents of FAI Security or that FAI Security, speaking generally, aided or abetted or was knowingly concerned in, the misleading and deceptive conduct relied upon. The nature and thrust of the representations is identified in pars 16(a) and (b) of the statement of claim and the particulars then confine those representations with a greater degree of particularity.
18 Consistently with the reasoning of Sackville J in Philip Morris (Australia) Ltd v Nixon (supra) I do not consider that I should strike out any of the particulars under par 16.
19 The respondents also submitted that the statements in the particulars were not capable of sustaining the representations set out in pars 16(a) and (b). I reject that submission. As I pointed out to counsel in the course of argument, it is a short step from saying that a system is the latest technology available to saying that the system is the latest in wireless infrared technology, or a brand new type of security system. I am unable to say at this stage that the particulars under pars 16(a) and (b) cannot support the allegations of material fact. More particularly is this so when the representations are said to be partly in writing, partly oral and partly to be implied. Much may depend upon any interaction between the spoken word and the written word and the manner in which the sales kit was presented to the group members. It is certainly premature to form a view that the particulars have little or no probative value in relation to the representations pleaded.