FEDERAL COURT OF AUSTRALIA Batten v Container Terminal Management Services Limited [2001] FCA 1493 PRACTICE AND PROCEDURE - representative proceedings - whether common issues of law or fact - whether common issues substantial - whether representations substantially the same - issues of reliance - accessorial liability - relevant factors when considering whether representative proceedings appropriate Statutes Federal Court of Australia Act 1976 (Cth) ss 33C, 33N Cases Hunter Valley Community Investments Pty Ltd v Bell (2001) 37 ACSR 326 Considered King v GIO Australia Holdings Ltd (2000) 100 FCR 209 Referred to Murphy v Overton Investments Pty Ltd [1999] FCA 1123 Referred to Philip Morris (Australia) Ltd v Nixon (2000) 170 ALR 487 Cited Silkfield v Wong (1998) 159 ALR 329 Referred to Wong v Silkfield (1999) 199 CLR 255 Applied ROBERT GEORGE BATTEN v CONTAINER TERMINAL MANAGEMENT SERVICES LIMITED, FYNWEST PTY LTD, MICHAEL WELLS, PETER KILFOYLE, PATRICK STEVEDORES NO 1 PTY LTD, PATRICK STEVEDORES NO 2 PTY LTD, PATRICK STEVEDORES NO 3 PTY LTD, NATIONAL STEVEDORING TASMANIA PTY LTD, PATRICK STEVEDORES OPERATIONS NO 2 PTY LTD, LANG CORPORATION LIMITED, STRANG PATRICK HOLDINGS PTY LTD, NATIONAL STEVEDORING HOLDINGS PTY LTD, PLZEN PTY LTD, INTRAVEST PTY LTD, CUMBERLANE HOLDINGS PTY LTD, EQUITIUS PTY LTD, JAMISON EQUITY LIMITED, SERENADE PTY LTD, SCARABUS PTY LTD, PATRICK STEVEDORES HOLDINGS PTY LTD, PATRICK STEVEDORES OPERATIONS PTY LTD, CHRISTOPHER D'ARCY CORRIGAN, WILLIAM CLAYTON, ROBERT DUNN QG 177 of 1998 AND ANTHONY WAYNE GRAHAME v LANG CORPORATION LIMITED, CHRISTOPHER D'ARCY CORRIGAN, PCS OPERATIONS PTY LTD, PSC RESOURCES PTY LTD, P AND C STEVEDORES PTY LTD, DONALD GORDON McGAUCHIE, PAUL XAVIER HOULIHAN and JAMES WILLIAM FERGUSON Q132 of 2000 KIEFEL J 22 OCTOBER 2001 BRISBANE IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QG177 OF 1998 BETWEEN: ROBERT GEORGE BATTEN APPLICANT AND: CONTAINER TERMINAL MANAGEMENT SERVICES LIMITED FIRST RESPONDENT FYNWEST PTY LTD ACN 080 502 343 SECOND RESPONDENT MICHAEL WELLS THIRD RESPONDENT PETER KILFOYLE FOURTH RESPONDENT PATRICK STEVEDORES NO 1 PTY LTD ACN 003 621 645 (Under Administration) SIXTH RESPONDENT PATRICK STEVEDORES NO 2 PTY LTD ACN 003 893 141 (Under Administration) SEVENTH RESPONDENT PATRICK STEVEDORES NO 3 PTY LTD ACN 010 815 362 (Under Administration) EIGHTH RESPONDENT NATIONAL STEVEDORING TASMANIA PTY LTD ACN 009 477 150 (Under Administration) NINTH RESPONDENT PATRICK STEVEDORES OPERATIONS NO 2 PTY LTD ACN 156 292 687 TENTH RESPONDENT LANG CORPORATION LIMITED ACN 008 660 124 ELEVENTH RESPONDENT STRANG PATRICK HOLDINGS PTY LTD ACN 003 893 847 TWELFTH RESPONDENT NATIONAL STEVEDORING HOLDINGS PTY LTD ACN 060 623 529 THIRTEENTH RESPONDENT PLZEN PTY LTD ACN 065 905 571 FOURTEENTH RESPONDENT INTRAVEST PTY LTD ACN 001 726 496 FIFTEENTH RESPONDENT CUMBERLANE HOLDINGS PTY LTD ACN 000 079 078 SIXTEENTH RESPONDENT EQUITIUS PTY LTD ACN 065 981 526 SEVENTEENTH RESPONDENT JAMISON EQUITY LIMITED ACN 008 648 655 EIGHTEENTH RESPONDENT SERENADE PTY LTD ACN 008 644 655 NINETEENTH RESPONDENT SCARABUS PTY LTD ACN 008 645 387 TWENTIETH RESPONDENT PATRICK STEVEDORES HOLDINGS PTY LTD ACN 060 462 919 TWENTY-FIRST RESPONDENT PATRICK STEVEDORES OPERATIONS PTY LTD ACN 065 375 840 TWENTY-SECOND RESPONDENT CHRISTOPHER D'ARCY CORRIGAN TWENTY-THIRD RESPONDENT WILLIAM CLAYTON TWENTY-FOURTH RESPONDENT ROBERT DUNN TWENTY-FIFTH RESPONDENT AND: IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY Q132 OF 2000 BETWEEN: ANTHONY WAYNE GRAHAME APPLICANT AND: LANG CORPORATION LIMITED (ACN 008 660 124) FIRST RESPONDENT CHRISTOPHER D'ARCY CORRIGAN SECOND RESPONDENT PCS OPERATIONS PTY LTD (ACN 081 231 049) THIRD RESPONDENT PSC RESOURCES PTY LTD (ACN 081 231 021) FOURTH RESPONDENT P AND C STEVEDORES PTY LTD (ACN 081 225 078) FIFTH RESPONDENT DONALD GORDON McGAUCHIE SIXTH RESPONDENT PAUL XAVIER HOULIHAN SEVENTH RESPONDENT JAMES WILLIAM FERGUSON EIGHTH RESPONDENT JUDGE: KIEFEL J DATE: 22 OCTOBER 2001 PLACE: BRISBANE REASONS FOR JUDGMENT Ex Tempore 1 On 19 October 2001 I made orders dismissing the Lang and the PCS respondents' motions, to strike out each of the proceedings as representative. I then advised the parties that I would provide short written reasons for doing so. the batten proceedings 2 The applicant brings these proceedings on behalf of about 56 others, persons who were recruited to be trained in stevedoring work (the "Dubai Group"). I have outlined the general nature of the claim in previous decisions, but it is necessary to do so briefly again. 3 The applicant alleges that Mr Corrigan, of the Lang companies, at all relevant times had the objective of replacing the companies' union workforce with non-union labour. There followed an agreement with others to recruit and train persons as stevedores. In that process it is alleged that those recruiting were instructed by Mr Corrigan to inform potential recruits, as they did, that (summarising paragraph 17 of the statement of claim): (a) there would be an excellent career for them; (b) it was a job for life; (c) it was a permanent position; (d) employment was with a stevedoring company offering services and competition with other companies. 4 It is also alleged that there were no reasonable grounds for making such representations. The representations are said to have been made in advertisements, orally and at recruitment meetings. It is alleged that Mr Corrigan and others were knowingly concerned in the making of those representations. The applicant claims loss, having given up his employment to take up the position offered. Statements of all of the group members concerning the issue of reliance have been filed pursuant to a previous direction. 5 The applicant's case is that the Lang respondents' plan was to use the recruits as a replacement non-union workforce and that this would have operated as a strong disincentive to potential recruits. The omission of any reference to the plan, from the directions given concerning the representations to be made to possible recruits, implies that the recruiters were not to tell them and it is alleged they were complicit in this. I understand the pleading to say that, without that information, the representations were misleading and deceptive. Approached as a future representation, the applicant is saying that, given the plan and what it involved, there could have been no basis for Mr Corrigan and the others believing that the representations could be made good. That is to say, the representations were intended only to be inducements. 6 The Lang respondents (referred to in the pleadings as "the Patrick Companies") now apply to have the proceedings struck out as representative proceedings for non-compliance within s 33C(1)(c) of the Federal Court of Australia Act 1976 (Cth) or pursuant to s 33N. 7 The application identifies the following as the issues of law or fact common to the claims of the group members for the purposes of s 33C(1)(c): 1. Whether the first, second, third or fourth respondents made the representations pleaded in paragraph 17 of the statement of claim; 2. Whether the representations constituted misleading and deceptive conduct within the meaning of that term as used in the Act; 3. Whether the applicant is entitled to relief for a breach of the Act; 4. Whether the third, fourth, tenth, eleventh, twelfth, thirteenth, fourteenth, fifteenth, sixteenth, seventeenth, eighteenth, nineteenth, twentieth, twenty-first, twenty-second, twenty-third, twenty-fourth and twenty-fifth respondents were knowingly concerned in the contravention within the meaning of section 75B of the Act." 8 The Lang respondents submit that if representations are relied upon as providing the common issues of fact, they have to be the same and to have been made in the same circumstances. What is involved here, it is submitted, is a number of different cases grouped together. 9 In order to make this out, the respondents undertook an analysis of the group members' reliance statements. From it they identified twenty-seven group members who saw an advertisement, but noting that none of them said that they relied upon it; fifty-two who identified the representation in paragraph 17(d), which spoke of a new company functioning in competition with others; twenty-nine of the group members identified the representation in 17(b), that it was a job for life; nine identified the representation as to the permanency of the position; and eight of them, the representation concerning the provision of an excellent career. These figures were amended somewhat by a later submission that some group members had not identified a representation at all. The general picture however is that most group members are said to have been told that the company to hire them was to compete on the waterfront, which might imply that it was a new company in this area; and that they were also told something which implied security, if not permanency, in the employment offered. The respondents point to thirty or forty different occasions when the representations, or a combination of them, were made. Many of them occurred in a meeting, or interview, between a group member and a recruiter and not in large-scale recruitment meetings. 10 A consideration of the statements of the group members said not to have identified any pleaded representations shows the respondents' analysis to be unduly restrictive, to say the least. In any event it seems to me that, whilst those group members' claims may be affected if they do not establish something approximating what is pleaded, they are not relevant to the larger question - whether the proceeding is truly representative. 11 The applicant does not accept the Lang respondents' analysis of the group members' statements and will contend at the trial that each of them shows each group member to have received each of the representations. Much, it is submitted, will be a matter of the impression to be gleaned by the Court of the evidence. I have however proceeded on the basis that the respondents may be able to show some lack of coincidence in the representations made. Even so, it seems to me, the respondents' case fails to recognise the common factual areas in the events leading to the making of the representations and these are sufficient for the purposes of s 33C(1)(c). 12 In Wong v Silkfield (1999) 199 CLR 255, it was held that it is not necessary that an issue be a core issue, or that it have a major impact on the litigation, for it to be seen as a common issue (at 266- 268), but rather that it be "real or of substance". The objectives of the representative procedure in Part IVA of the Act include the reduction of costs and the promotion of efficiency in the use of the Court's resources. A proceeding which reduces a substantial amount of evidence which would need to be tendered and considered in a large number of cases would come within that objective. 13 The respondents relied upon the decision of Emmett J in Murphy v Overton Investments Pty Ltd [1999] FCA 1123, and his Honour's observation at [73] that, where a critical question in a case is whether a particular representation is misleading, it will be necessary to show that the same representation was in fact made to all group members in virtually identical circumstances. His Honour's decision pre-dates that of the High Court in Wong v Silkfield. His Honour applied the decision of the Full Court in Silkfield v Wong (1998) 159 ALR 329, which had held that an issue needed to be at the core of the dispute before it could be regarded as substantial. Nevertheless, in a case where the only common issue is whether particular representations could themselves be misleading and deceptive, practical considerations would seem to me to require that they be substantially the same before the issue could be said to be "common", let alone substantial. 14 In the present case however it is factors which are said to give the representations the quality of being misleading and deceptive which are said to be common. They arise from the plan or objective of Mr Corrigan and the instructions given and carried out, as outlined in par [5] above. It does not matter whether all or only some of the representations were made to group members, because the focus of the case is upon what was not said. This would colour the representations, alone and together. The evidence to be led by the applicant on these matters will be the same in each case, and a determination of them may provide a basis for the resolution of the questions as to whether the representations were likely to have been made and as to the quality of the conduct. It may also go some way towards a conclusion as to whether reliance was likely to have been placed upon the representations. 15 In his application the applicant did identify, as one of the issues said to be common, the question whether the representations amounted to misleading and deceptive conduct. The claim that the making of the representations involves a common issue awaits resolution at trial. The remaining two claims listed there would not seem to me to identify a common or substantial issue. That in par 3 refers only to the relief which each group member might be entitled to. Paragraph 4 refers to accessorial liability which would not arise for consideration unless the principal claim was made out. It is to those proceedings that one should then turn when considering whether efficiencies might be achieved. 16 In the applicant's written and oral submissions the issues concerning the nature of the conduct were identified with greater precision. The application needs to be amended to identify them and this may give rise to questions of costs. I shall return to that topic later. 17 My view as to the practical effect of determining the issues identified in these proceedings largely resolves the question whether it is appropriate that the proceeding continues as a representative one under s 33N. The Lang respondents also submit, in that connexion, that it would be inappropriate for it to continue because it can be seen that some group members were also representors. This may be seen from the schedules to the statement of claim, which were furnished some time ago. This may add another factor to the case, if their authority to do so or other legal basis for liability is challenged by the respondents, but it does not seem to me to bear upon the question whether the proceedings are appropriate as representative proceedings. the grahame proceedings 18 It is alleged on this second occasion of recruitment, which followed upon the events involving the Dubai group, that Mr Corrigan's intention was again to substitute union workers with a non-union workforce. In this endeavour the PCS companies and directors were involved. The representations to the "Webb Dock Group", following instructions from Mr Corrigan, are alleged to be, that (summarising paragraph 10 of the statement of claim): (a) the employee would not be used as part of a substitute labour force for union workers; (b) the employee would form part of a labour force which would compete on an equal footing with the union workers; (c) it would be a job for life. 19 The application lists the following as common issues of law or fact: "1. Whether the sixth, seventh and/or eighth respondents and persons acting for the third, fourth and fifth respondents made the representations more fully pleaded in paragraph 10 of the accompanying statement of claim; 2. Whether the making of the representations constituted misleading and deceptive conduct within the meaning of that term as used in the Act; 3. Whether the making of the representations was likely to mislead or deceive the applicant and the other members of the Webb Dock group, within the meaning of that term as used in the Act; 4. Whether the applicants are entitled to relief for a breach of the Act; 5. Whether the first, second, sixth, seventh and/or eighth respondents were knowingly concerned in the contravention within the meaning of section 75B of the Act." 20 So far as concerns the application of s 33C(1)(c), a similar exercise to that undertaken by the respondents in the Batten proceedings was undertaken here of the 138 group members. Forty-three of them identify the paragraph 10(b) representation only; fourteen the paragraph 10(a) representation only; and fifty-three of them, 10(b) and (c). Smaller numbers are involved in other combinations. Seventeen were said not to have identified any pleaded representations; but analysis of some of them puts that assertion in doubt. Other features present in the Batten proceedings are also present here. The statements were said to have occurred at "one on one" meetings and not recruiting meetings as alleged, and at different locations and on different dates. 21 In these proceedings the PCS respondents also submitted that none of the requirements of s 33C(1) were made out on the applicant's case. 22 As to the requirement that the claims of group members be against the same persons (s 33C(1)(a) and see Philip Morris (Australia) Ltd v Nixon (2000) 170 ALR 487), the PCS respondents contend that the group members' statements show only that one director, Mr McGauchie, was involved. This seems to me to raise a different question than that as to whether all the claims are against the same respondents. In any event, a conclusion that some are not shown to have been involved would involve the evaluation of all of the evidence to be presented at trial which may not be confined to that of the group members. 23 It was also submitted that each claim is founded on a separate set of factual circumstances which would require individual consideration. The contention does not however show that the claims cannot come within s 33C(1)(b), as arising out of similar or related circumstances. There is no doubt that the issue of reliance will need to be determined separately in each case, as will the question of loss and damage. It is not, however, apparent to me how it could be said that the claims of persons alleged to have been recruited by the same group of people, acting under the same instructions from the same source, do not arise out of circumstances which are similar or related. 24 Whether there are common issues of fact, for the purposes of s 33C(1)(c), is resolved upon the same basis as outlined in the Batten proceedings. The determination of the issues of fact relating to the plan, the instructions and the representations is likely to resolve substantial questions in the case. It would obviate the need for the same evidence in some 138 separate proceedings. The application should however be amended to better identify the common issues. 25 The PCS respondents additionally submitted that the claim to accessorial liability cannot involve a common issue of fact when it is relevant to only some of the respondents (referring to Hunter Valley Community Investments Pty Ltd v Bell (2001) 37 ACSR 326 where Sackville J at [57] and [58] discussed Moore J's approach in King v GIO Australia Holdings Ltd (2000) 100 FCR 209). As I have indicated in the Batten proceedings, in my view, accessorial claims are not likely to be regarded as satisfying the test that the common issue be substantial in its effect. It would be difficult to say that a determination of them would be useful if there was otherwise no common element in the principal proceedings, upon which accessorial liability depends. 26 Each of the respondents submitted that the Grahame proceedings should be discontinued, as inappropriate to be a representative proceeding, under s 33N. The Lang respondents relied upon Mr Grahame's lack of representation, on behalf of other group members, as founding the basis for such an order. It is pointed out that he did not say that he read the advertisements or took part in the recruiting meetings. The fact that he may not have received the representations alleged from the same sources as others would not seem to me to weigh very strongly against these proceedings continuing as representative. COSTS 27 The parties are to address the question of costs after considering my reasons for dismissing the motions. I provide the view I presently hold so that they may address them directly. 28 I am presently inclined to the view that the Lang and PCS respondents should pay the applicants' costs in the proceedings. Leave to amend the application will not be opposed and I would not expect the applicants to contend that they are not liable for the costs thrown away by the amendments, such as they might be. The costs of the hearing are however likely to be substantial, since it involved substantial research and preparation and a full day's hearing. In determining to bring these motions the respondents would have had to consider what common factual issues might be said to arise, even if the application expressed them generally. The events leading to the making of the representations seem to me to have been an obvious basis, and some of the submissions made by the respondents show that they were considered and dismissed as mere background. It is not that the respondents could not glean what each applicant's case was. The prospect that both sets of respondents turned their face against an analysis which tended to show the proceedings to be representative seems to me to have been underscored by their persistence with the motions in the face of the applicants' written submissions which more clearly identified the areas of fact. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kiefel . Associate: Dated: 22 October 2001 IN THE MATTER: QG 177 of 1998 Counsel for the Applicant: Mr H Fraser QC and Mr M Jarrett Solicitors for the Applicant: Klooger Phillips Scott Counsel for the Tenth to Twenty-Fifth Respondents: Mr CM Scerri QC and Mr RM Peters Solicitors for the Tenth to Twenty-Fifth Respondents: Arnold Bloch Leibler AND: IN THE MATTER: QG 132 of 2000 Counsel for the Applicant: Mr H Fraser QC and Mr M Jarrett Solicitors for the Applicant: Klooger Phillips Scott Counsel for the First and Second Respondents: Mr CM Scerri QC and Mr RM Peters Solicitors for the First and Second Respondents: Arnold Bloch Leibler Counsel for the Third to Eighth Respondents: Mr P Jopling QC and Mr J Bourke Solicitors for the Third to Eighth Respondents: Minter Ellison Date of Hearing: 19 October 2001 Date of Judgment: 22 October 2001