FEDERAL COURT OF AUSTRALIA Guglielmin v Trescowthick (No.2) [2005] FCA 138 PRACTICE AND PROCEDURE – REPRESENTATIVE PROCEEDINGS – representative proceedings under s 33C Federal Court of Australia Act 1976 (Cth) – each group member must have a claim against all respondents – whether each group member must have the same claim against all respondents – meaning of 'claim' – claims must arise of out of similar or related circumstances – claims must give rise to substantial common issues of law or fact – judicial discretion to discontinue the action as a representative proceeding under s 33N Federal Court of Australia Act 1976 (Cth) Australian Securities and Investment Commission Act 1989 (Cth) Trade Practices Act 1974 (Cth) Fair Trading Act 1987 (SA) Federal Court of Australia Amendment Act 1991 (Cth) Building Units and Group Titles Act 1980 (Qld) Guglielman v Trescowthick [2004] FCA 326 Wong v Silkfield Pty Ltd (1999) 199 CLR 255 Phillip Morris (Australia) Ltd v Nixon (2000) 170 ALR 487 Johnstone v HIH Insurance Ltd (In Liquidation) [2004] FCA 190 Petrusevski v Bull Dogs Rugby League Club Limited [2003] FCA 61 Hunter Valley Community Investments Pty Ltd v Bell (2001) 37 ACSR 326 Patrick v Capital Finance Corporation (Australasia) Pty Ltd [2001] FCA 1073 Milfull v Terranora Lakes Country Club Limited [2002] FCA 178 Bray v F Hoffmann-La Roche Ltd (2003) 130 FCR 317 King v GIO Australia Holdings Ltd (2000) 100 FCR 209 King v GIO Australia Holdings Ltd [2000] FCA 1543 Finance Sector Union of Australia v Commonwealth Bank of Australia (1999) 94 FCR 179 King v AG Australia Holdings Ltd [2002] FCA 1560 Zhang v Minister for Immigration, Local Government and Ethnic Affairs (1993) 45 FCR 384 Nixon v Philip Morris (Australia) Ltd (1999) 95 FCR 453 Carnie v Esanda Finance Corporation Limited (1995) 182 CLR 398 Bright v Femcare Ltd (2003) 195 ALR 575 Connell v Nevada Financial Group Pty Ltd (1996) 139 ALR 723 Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd (1998) 84 FCR 512 ELEANOR GUGLIELMIN v ADAM JOHN TRESCOWTHICK, JOHN MAURICE PATTEN, ROSS GRAHAM OAKLEY, ROBERT DAVID MATTINGLY, ROGER ANDREW CURTIS & MARK CHARLES TRESCOWTHICK S 153 of 2002 MANSFIELD J 25 FEBRUARY 2005 ADELAIDE IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY S153 OF 2002 BETWEEN: ELEANOR GUGLIELMIN APPLICANT AND: ADAM JOHN TRESCOWTHICK FIRST RESPONDENT JOHN MAURICE PATTEN SECOND RESPONDENT ROSS GRAHAM OAKLEY THIRD RESPONDENT ROBERT DAVID MATTINGLY FOURTH RESPONDENT ROGER ANDREW CURTIS FIFTH RESPONDENT MARK CHARLES TRESCOWTHICK SIXTH RESPONDENT JUDGE: MANSFIELD DATE OF ORDER: 25 FEBRUARY 2005 WHERE MADE: ADELAIDE THE COURT ORDERS THAT: 1. There be no order on the motion of the second to fifth respondents for an order that this representative proceeding be dismissed. 2. The motion is otherwise adjourned to a date to be fixed with liberty to call it on on reasonable notice. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY S153 OF 2002 BETWEEN: ELEANOR GUGLIELMIN APPLICANT AND: ADAM JOHN TRESCOWTHICK FIRST RESPONDENT JOHN MAURICE PATTEN SECOND RESPONDENT ROSS GRAHAM OAKLEY THIRD RESPONDENT ROBERT DAVID MATTINGLY FOURTH RESPONDENT ROGER ANDREW CURTIS FIFTH RESPONDENT MARK CHARLES TRESCOWTHICK SIXTH RESPONDENT JUDGE: MANSFIELD J DATE: 25 FEBRUARY 2005 PLACE: ADELAIDE REASONS FOR JUDGMENT introduction 1 The second to fifth respondents by motion seek orders that the representative proceeding brought pursuant to s 33C of the Federal Court of Australia Act 1976 (Cth) (the Act) be dismissed. Alternatively the second to fifth respondents seek orders that this proceeding no longer continue under Part IVA of the Act pursuant to s 33N(1)(c) and/or s 33N(1)(d). The first respondent supported the motion of the second to fifth respondents. The orders sought were opposed by the applicant. The sixth respondent did not make any submissions in support of or in opposition to the motion. I will in this judgment refer to the first to fifth respondents as 'the respondents'. 2 The originating application, brought by the applicant as a representative party under Part IVA of the Act, was filed on 7 June 2002. A challenge to the original statement of claim was addressed in the judgment in Guglielman v Trescowthick [2004] FCA 326. Following that judgment, an amended application and an amended statement of claim were filed on 18 May 2004. Although a number of amendments were required the general facts alleged and causes of action relied upon remained the same. 3 The amended application identifies the group members represented by the applicant and are all persons who were the beneficial owners of quoted ED securities in Harris Scarfe Holdings Ltd (Holdings) (Holdings securities) at 3 April 2001 (the day Holdings securities were suspended from quotation by the Australian Stock Exchange (ASX)) who lost the opportunity to dispose of those securities at their true market value prior to those securities becoming valueless, or acquired those securities at greater than their true market value, due to the conduct of the respondents. The amended application also identifies that conduct as making representations and providing information to the group members from time to time as to the operating results and state of affairs of Holdings or as making representations in the market for Holdings securities from time to time as to the operating results and state of affairs of Holdings. The conduct alleged took place between 12 March 1996 and 3 April 2001. The respondents were at material times some of the directors of Holdings. 4 The respondents are alleged to have breached s 12DA of the Australian Securities and Investment Commission Act 1989 (Cth) (ASIC Act), ss 728 and 999 of the Corporations Law (Cth), s 52 of the Trade Practices Act 1974 (Cth) (TP Act), s 56 of the Fair Trading Act 1987 (SA) (FT Act) and the duties imposed at common law and by statute whilst they were directors of Holdings. 5 The amended statement of claim alleges that each of the respondents breached various duties from the time each was appointed as a director of Holdings (they were appointed at various times between about 19 February 1996 and 27 November 1998) until 3 April 2001. It is alleged that misrepresentations or misleading and deceptive representations were made by the respondents in their capacity as directors in various financial statements, directors' statements, annual reports, press releases and other public pronouncements between 12 March 1996 and 3 April 2001. There are some 77 documents upon which the applicant and the group members may have relied in deciding whether to purchase and/or retain their Holdings securities. It is as a result of these representations that the applicant claims damages. Statutory and common law damages, as well as interest and costs have been sought by the applicant. 6 For reasons which appear below, it is necessary to note that it is alleged that the respondents became directors of Holdings at different dates. They all remained directors of Holdings at 3 April 2001. The dates upon which the respondents allegedly became directors of Holdings are: First Respondent 19 February 1996 (Executive Chairman from September 1998) Second Respondent 19 February 1996 Third Respondent 28 July 1997 Fourth Respondent 31 January 1997 Fifth Respondent Prior to 12 March 1996 Sixth Respondent 27 November 1998 7 It is also necessary to note that the publications which are alleged to give rise to liability of the respondents, to the extent they were directors at the time, were made on various dates between 12 March 1996 and 21 November 2000. The publications included the half yearly and final financial reports, directors' statements and directors' reports for each year, the preliminary half-yearly and final reports, various press releases, the addresses of the chairman to the annual general meeting each year (published in the Annual Report each year), and two prospectuses issued on 4 May 1998 and 19 May 2000. 8 There are currently 3,191 group members registered with the applicant's solicitor. From the figures deposed to by the applicant's solicitor it is clear that the majority of the registered group members live in South Australia (2,001), the majority owned less than 5000 shares or convertible notes in Holdings (2,665) and the majority first acquired their Holdings securities between November 1998 and April 2001 (2,142). On 3 April 2001 there were approximately 11,300 Holdings shareholders. There is therefore the potential for the group to increase significantly. The legislation 9 Part IVA of the Act, by which representative proceedings can be brought, was inserted into the Act by the Federal Court of Australia Amendment Act 1991 (Cth) (the Amendment Act) and commenced its operation on 5 March 1992. The purpose of the Amendment Act, as explained in the Second Reading Speech, is twofold. Firstly, Pt IVA is designed to provide a real remedy in situations where many people are affected and the total amount in issue is significant, but each person's loss is small and not economically viable to recover in individual actions. The second purpose of the Amendment Act is to deal with the situation where the damages sought by each claimant are large enough to justify individual actions and where there are a large number of claimants (for instance shareholders or investors). Rather than having a large number of similar actions, the mechanism of representative proceedings was designed to allow for a more efficient process. The Second Reading Speech, and the Amendment Act, appear to be based largely on the conclusions of The Law Reform Commission, Grouped Proceedings in the Federal Court, Report No 46, Canberra 1988 (LRC Report). Not all of the LRC Report recommendations were adopted in the Amendment Act. 10 It is the first of those purposes which these proceedings are intended to achieve. The information in [8] above reveals that there are many in the community who claim to have been affected by delictual conduct of the respondents, but each person's loss would be of relatively small amount so it would not be economically viable to sue individually and so each person would have been effectively denied justice because of the high cost of taking action. The Second Reading Speech expressly contemplated a group action by shareholders or investors which may lead to redress and more cheaply and efficiently than would be the case with individual actions. 11 The nature of the claims pursued by the applicant on behalf of herself and the group members would, at first sight, appear to fulfil the objectives of the Amendment Act. The respondents nevertheless contend that the proceeding is not properly brought as a group or representative action, or that it is inappropriate that it proceed in that manner. Their submissions are broadly based upon the detailed nature of the claims, the breadth of the claim group, and the complexity or scope of the conduct alleged against the respondents. Their contention, if correct, might be seen to produce an ironical outcome. At least in general terms, one purpose of the Amendment Act might be seen as directed to circumstances such as those asserted in the amended statement of claim. But, the respondents contend, that outcome is the consequence of proper consideration of the relevant provisions of the Act, in particular ss 33C and 33N of the Act. If that is the outcome flowing from the construction of those provisions, it must be given effect to. 12 A representative proceeding is defined under s 33A to mean a proceeding commenced under s 33C. Section 33C concerns the commencement of representative proceedings. It provides: '(1) Subject to this Part, where: (a) 7 or more persons have claims against the same person; and (b) the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances; and (c) the claims of all those persons give rise to a substantial common issue of law or fact; a proceeding may be commenced by one or more of those persons as representing some or all of them. (2) A representative proceeding may be commenced: (a) whether or not the relief sought: (i) is, or includes, equitable relief; or (ii) consists of, or includes, damages; or (iii) includes claims for damages that would require individual assessment; or (iv) is the same for each person represented; and (b) whether or not the proceeding: (i) is concerned with separate contracts or transactions between the respondent in the proceeding and individual group members; or (ii) involves separate acts or omissions of the respondent done or omitted to be done in relation to individual group members.' Section 33C(1) therefore sets out the threshold requirements for the commencement of a representative proceeding: see Wong v Silkfield Pty Ltd (1999) 199 CLR 255 (Wong v Silkfield) at 266. The High Court there stated that '[t]hat provision is concerned with the commencement, not subsequent conduct, of litigation using the procedures provided in Part IVA'. Each of the three criteria specified in ss 33C(1)(a) – (c) must be satisfied in order for a representative proceeding to be commenced. 13 Section 33D deals with the issue of standing. Section 33D(1) provides: 'A person referred to in paragraph 33C(1)(a) who has a sufficient interest to commence a proceeding on his or her own behalf against another person has a sufficient interest to commence a representative proceeding against that other person on behalf of other persons referred to in that paragraph.' 14 Subject to a number of exceptions, none of which are currently relevant, a person's consent is not required for that person to be a group member: s 33E of the Act. In this proceeding persons who held Holdings securities on the relevant date are required to 'opt in' to the group by giving notice to the applicant's solicitors. Under s 33J of the Act group members are able to opt out of the group. 15 Section 33H of the Act specifies the information that is required to be provided in the originating application or supporting documents. The group members must be described, and the claims and questions of fact and law must be specified. There is no suggestion here that those requirements have not been met. 16 Section 33N, the other provision in Pt IVA pertinent to this motion, allows for the Court to order that the proceeding not continue as a representative proceeding in certain situations. It is as follows: '(1)The Court may, on application by the respondent or of its own motion, order that a proceeding no longer continue under this Part where it is satisfied that it is in the interests of justice to do so because: (a) the costs that would be incurred if the proceeding were to continue as a representative proceeding are likely to exceed the costs that would be incurred if each group member conducted a separate proceeding; or (b) all the relief sought can be obtained by means of a proceeding other than a representative proceeding under this Part; or (c) the representative proceeding will not provide an efficient and effective means of dealing with the claims of group members; or (d) it is otherwise inappropriate that the claims be pursued by means of a representative proceeding. (2) If the Court dismisses an application under this section, the Court may order that no further application under this section be made by the respondent except with the leave of the Court. (3) Leave for the purposes of subsection (2) may be granted subject to such conditions as to costs as the Court considers just.' 17 Section 33Q contains provisions concerning the making of orders regarding the determination of issues where not all issues in the proceeding are common. Section 33Z specifies the powers of the Court when determining a matter in a representative proceeding. The Court has broad powers to determine issues of law and fact, to make declarations of liability and to grant equitable relief or damages. Finally, s 33ZF allows the Court to make any order it thinks appropriate or necessary to ensure that justice is done in the proceeding. the issues 18 One matter which the respondents complain of, and which the applicant acknowledges, can be put aside. It was not at the forefront of the respondents' submissions. It is that the group membership is defined as the beneficial (my emphasis) owners of Holdings securities at material times. Such publications of material as occurred would have been to the legal owners of Holdings securities. The applicant proposes to remove the word 'beneficial' from the description of the claim group. 19 In essence, the respondents contend that the proceeding was not properly commenced because none of the three criteria specified in s 33C(1)(a)-(c) were met. Each of those three criteria must be satisfied for the proceeding to have been properly instituted under Pt IVA of the Act: see Wong v Silkfield; Phillip Morris (Australia) Ltd v Nixon (2000) 170 ALR 487 (Phillip Morris); Johnstone v HIH Insurance Ltd (In Liquidation) [2004] FCA 190 (Johnstone). The applicant contends that each of those criteria are satisfied. 20 It will be necessary to address each of those criteria in turn. 21 If the Court does not accept the respondents' contentions about s 33C(1)(a)-(c), they alternatively contend that an order should be made under s 33N(1)(c) or (d) that the proceeding should no longer continue as a representative proceeding as it will not provide an efficient and effective means of dealing with the claims of group members, or that it is otherwise inappropriate for it to do so. The applicants also dispute those contentions. section 33c(1)(a): 7 or more persons have claims against the same person 22 The first factor to consider is that contained in s 33C(1)(a), namely whether 7 or more persons have claims against the same person. 23 It is clear on the evidence before the Court that there are 7 or more group members. As stated previously there are currently 3,191 members and there are potentially some 11,300 members. It is not necessary to identify all of the group members, either by name or number: see s 33H(2) of the Act. In Petrusevski v Bull Dogs Rugby League Club Limited [2003] FCA 61 Sackville J at [23] stated that a useful test in order to determine whether the description of the group will satisfy the requirements of s 33H(1)(a) is whether the description is such that a person, with the assistance of a legal adviser if necessary, can ascertain whether he or she is a group member. Clearly here a person can determine whether they held Holdings securities on 3 April 2001. 24 The real issue for determination under this subsection is whether each member of the group has a claim 'against the same person'. As there are multiple respondents, the applicant and each member of the group must have a claim against each respondent. 25 In Philip Morris Sackville J, with whom Spender and Hill JJ agreed, answered that question in the affirmative. His Honour stated at 514, [126] – [127]: 'Thirdly, as the parties accepted, s 33C(1)(a) requires every applicant and represented party to have a claim against the one respondent or, if there is more than one, against all respondents. This conclusion follows from the language of s 33C(1)(a) itself and is consistent with the approach taken by the LRC in Grouped Proceedings. It is also consistent with the structure of the legislation. For example, s 33D(1)(a) (which provides that a person who has a sufficient interest to commence a proceeding on his or her own behalf against another person has a sufficient interest to commence a representative proceeding against that person on behalf of other persons referred to in s 33C(1)(a)) is clearly drafted on the assumption that all applicants and represented persons will have claims against the same person. It follows that s 33C(1)(a) is not satisfied if some applicants and group members have claims against one respondent (or group of respondents) while other applicants and group members have claims against another respondent (or group of respondents). The requirement in s 33C(1)(b), that the claims of all group members are in respect of or arise out of the same, similar or related circumstances, is a necessary but not sufficient condition for the commencement of representative proceedings. Of course, if there are two sets of claims against two sets of respondents, it may well be that each can be the subject of representative proceedings. It may even be that directions can be made for them to be heard together: Ryan v Great Lakes Council (1997) 149 ALR 45 at 48, per Wilcox J. But they cannot both be the subject of the same representative proceedings.' 26 The Full Court decision in Philip Morris has been followed by a number of single judges of this Court. See Hunter Valley Community Investments Pty Ltd v Bell (2001) 37 ACSR 326 (Hunter Valley) at 334, [33] per Sackville J; Patrick v Capital Finance Corporation (Australasia) Pty Ltd [2001] FCA 1073 at [10] per Heerey J; and Milfull v Terranora Lakes Country Club Limited [2002] FCA 178 per Kiefel J at [17]. 27 In Bray v F Hoffmann-La Roche Ltd (2003) 130 FCR 317 (Bray). Finkelstein J (with whom Carr J agreed) disagreed with the earlier Full Court decision in Philip Morris concerning the meaning of s 33C(1)(a). His Honour said at 373-374, [248]: 'It seems to me that if Philip Morris (Australia) Ltd v Nixon be correctly decided, we are heading back in the direction of 1852. This result, so it seems to me, is so undesirable that it should be avoided at all costs unless, of course, parliament has mandated it in clear and unambiguous language. I am of the very firm view that there is nothing in the language of s 33C(1), when considered in isolation or in its setting, which requires that result. It is as well to recall the words of the section. Section 33C(1)(a) provides that "subject to this Part, where seven or more persons have claims against the same person … a proceeding may be commenced by one or more of those persons as representing some or all of them." It can immediately be acknowledged that a properly constituted representative proceeding must involve a group of seven or more persons each of whom has a claim or claims against one person. But that is all the section requires. It simply does not address the situation where some members of the group, say 10 out of a group of 15, also have claims (that is, causes of action) against some other person, being causes of action which satisfy both s 33C(1)(b) (each claim arises out of the same circumstances) and s 33C(1)(c) (each claim gives rise to common issues of law or fact). Is it necessary for the claims of this smaller group to be prosecuted in a separate proceeding or can they be joined in the proceeding brought by the larger group? I will not place a construction on s 33C which requires separate proceedings to be instituted. If it were impermissible to bring such an action, all the objectives of Pt IVA, the reduction of legal costs, the enhancement of access by individuals to legal remedies, the promotion of the efficient use of court resources, ensuring consistency in the determination of common issues, and making the law more enforceable and effective, would be undermined.' 28 That was not the ratio decidendi of the decision on s 33C(1)(a) of the Act. It should also be noted that Branson J at 359, [199] did not accept that Philip Morris on this issue is clearly wrong, and considered it should be followed. 29 Most recently Tamberlin J in Johnstone indicated that the observations of Finkelstein J are obiter dicta, and considered himself bound by Philip Morris. I propose to adopt the same course. The applicant, through senior counsel, did not ask me to act otherwise. 30 It is important however not to read into s 33C(1)(a) more than its wording requires. Moore J in King v GIO Australia Holdings Ltd (2000) 100 FCR 209 at 220 – 221, [29] – [31] (King v GIO) pointed out that although Philip Morris establishes that each group member must have a claim against each respondent, it does not establish that each group member must have the same or a commonclaim against each respondent. Leave to appeal from that decision was refused by the Full Court (Wilcox, Lehane and Merkel JJ): see King v GIO Australia Holdings Ltd [2000] FCA 1543. 31 The Full Court at [7]-[10] said that s 33C(1)(a) was satisfied as the amended statement alleged each group member suffered individual loss by the conduct of each of the respondents, and that each group member would be bound by the result even if their individual claims failed as against one or more of the respondents. Moreover, their Honours pointed out at [7]: 'The fact that a person is ultimately adjudged to be entitled to succeed against only one respondent, does not mean the person makes a claim against only that respondent.' The similarity and commonality of the claims are factors considered in pars (b) and (c) of s 33C(1). Section 33C spells out that the claims need not result in the same relief for each group member: s 33C(2)(a)(iv). Nor need the claims be based on the same conduct of the respondent: s 33C(2)(b)(ii). They may arise out of different transactions with the respondent: s 33C(2)(b)(i). It can therefore be said that claims which are not exactly the same against each respondent, or that do not seek exactly the same outcome against each respondent, may still come within the parameters of s 33C(1)(a). Sackville J in Hunter Valley at 339-340, [58] agreed with the analysis of Moore J in King v GIO. 32 A 'claim' has been described as encompassing 'everything that might lawfully be brought before the Court for a remedy': see Finance Sector Union of Australia v Commonwealth Bank of Australia (1999) 94 FCR 179 at 186. In King v AG Australia Holdings Ltd [2002] FCA 1560 Moore J at [10] stated that 'claim' has a wide meaning and is not limited to a cause of action. 33 The meaning of 'claim' was discussed by Carr and Finkelstein JJ in Bray. Carr J stated at 343, [113]: 'In my opinion the word "claim" is not to be construed as limited to "cause of action". It should be construed as including a cause of action, in the sense of a (stated) basis of one's right to something, and also a demand for what is due by virtue of that right, whether it be damages, an injunction or any other relief.' Finkelstein J stated at 372, [245]: 'In my opinion it is unlikely that the word "claim" in s 33C(1) is intended to be a reference to the remedy sought in the action. Sometimes what is found in the prayer for relief is referred to as the "claim" made in the action. But surely this is loose language. The better view, in my opinion, is that the word means, in this present context, the facts which give rise to the action as well as to the legal basis of the action. That is, s 33C is concerned to establish that the action be sufficiently collective in nature so as to warrant it being brought as a representative or class action.' 34 To address the requirements of s 33C(1), it is necessary to look at how the claim group is described and the allegations in the amended statement of claim: see e.g. Philip Morris at 514-515, [128]; Hunter Valley at 334, [34]. 35 In my view, each member of the claim group has a claim against each of the respondents. The description of the claim group, and the general nature of the allegations in the amended statement of claim are set out above. Although members of the claim group may have acquired their Holdings securities at different times, one of their identifying characteristics is not the date of acquisition of Holdings securities but the fact they were held at 3 April 2001. It may be that members of the claim group acquired their Holdings securities at times when only one or more of the respondents was a director of Holdings. The evidence on the motion confirms that to be the case, although the large majority of registered group members (including the applicant) who held Holdings securities held at 3 April 2001 acquired them after November 1998, that is after each of the respondents had become directors of Holdings. 36 The group is further defined as those owners of Holdings securities at 3 April 2001 who lost the opportunity of selling those securities prior to the securities becoming valueless (which the amended statement of claim identifies as 3 April 2001), or who acquired securities at greater than their true market value, by reason of the conduct of the respondents. The amended statement of claim identifies the representations of the respondents as the conduct alleged. As noted, those representations also encompass a period in which only three of the respondents were directors, as well as periods when only four and then five of the respondents were directors of Holdings. Representations made after 27 November 1998 relate to a period when all respondents were directors. 37 The group members are alleged to have lost the opportunity to dispose of their Holdings securities by conduct of all the respondents engaged in after 27 November 1998, and to the extent to which group members also acquired Holdings securities after that date they are alleged to have done so to their detriment by conduct of all the respondents. The group members do not include persons who in fact disposed of Holdings securities prior to 3 April 2001 (at least, not in that capacity). Each of the group members is alleged to have relied on representations made after 27 November 1998, that is representations made by all the respondents, to their detriment. It is pleaded that the representations allegedly made by the respondents after 27 November 1998 (and, to the extent applicable, the earlier representations) caused the group members to believe that the trading price of Holdings securities reflected their 'true market value' and caused them to lose the opportunity of selling those securities. Each is alleged to have suffered loss as a result. 38 As the respondents point out, some only group members may also have a claim against some only of the respondents. For example, those who acquired Holdings securities between 12 March 1996 and 30 January 1997 allegedly at greater than their 'true market value' relying upon representations made between those dates have claims in respect of that conduct only against the first, second and fifth respondents. Other examples may readily be given. There are therefore additional claims made by some members of the claim group against some of the respondents. That there are other such claims, and perhaps many of them, does not mean s 33C(1)(a) is not satisfied upon the basis already referred to above. Section 33R contemplates that directions given under s 33Q where not all issues are common may address the circumstances of individual group members. Section 33Q provides for directions generally to be given where the determination of issues common to all group members will not finally determine the claims of all group members. The directions may concern the determination of the remaining issues, including the establishment of sub-groups. Section 33Z also contemplates an award of damages for group members or for sub-group members. Whether it is, or may be, appropriate to address sub-grouping orders within the claim group is a matter which may later be addressed. Also, whether it is, or may be, appropriate to make orders about how the hearing should proceed in respect of the issues which do not involve claims by all the claim group against all the respondents is a matter which may later be addressed. 39 For those reasons I consider that s 33C(1)(a) of the Act is satisfied. Section 33C(1)(b): the claims of all persons are in respect of, or arise out of, the same, similar or related circumstances 40 This is the second factor that must be satisfied for this proceeding to continue as a representative one. It is clear that on the face of it the lowest threshold that must be met to satisfy this subsection is that the claims must arise out of 'related circumstances'. Wilcox J in his article 'Representative Proceedings in the Federal Court of Australia: A Progress Report', (1996-1997) 15 ABR 91 stated at 93 that the most important factor is 'relatedness', for without this the rationale of the proceedings would be undermined and any hearing 'would necessarily degenerate into a jumbled trial of disparate actions'. 41 French J in Zhang v Minister for Immigration, Local Government and Ethnic Affairs (1993) 45 FCR 384 (Zhang) said at 404-405: 'The outer limits of eligibility for participation in representative proceedings are defined by reference to claims in respect of or arising out of related circumstances. The word "related" suggests a connection wider than identity or similarity. In each case there is a threshold judgment on whether the similarities or relationships between circumstances giving rise to each claim are sufficient to merit their grouping as a representative proceeding. At the margins, there will be practical judgments informed by the policy and purpose of the legislation. At some point along the spectrum of possible classes of claim, the relationship between the circumstances of each claim will be incapable of definition at a sufficient level of particularity, or too tenuous or remote to attract the application of the legislation.' 42 After citing this passage in Philip Morris, Sackville J explained at 523, [166]: 'In the end … a judgment must be made as to whether the circumstances giving rise to each claim are so disparate as to merit their grouping as a representative proceeding.' 43 In Zhang French J found that there were a few common integers which defined the relationship between the circumstances of each group member, and therefore held that the circumstances were sufficiently related to warrant the use of the representative procedure. His Honour explained at 405: "In so holding, I have regard to the need for a purposive approach to the construction of s 33C(1)(b), bearing in mind the utility of determining the common issue in this way. If the application were to succeed, all group members would be entitled to the offer of an oral hearing by the decision-maker. In that event, other aspects of individual claims to which I have referred might not be pursued. If the application fails, then a principle applicable to each group member would be established, namely that there is no entitlement in any member of the group to an oral hearing by reason only of the fact that the member is an applicant for administrative review of the refusal to grant refugee status." 44 Wilcox J as primary judge in Nixon v Philip Morris (Australia) Ltd (1999) 95 FCR 453 (Philip Morris at first instance) found in the circumstances that, despite the differences between the individuals' claims (their length of time as smokers, the number of cigarettes smoked, their different medical history etc) there was a sufficient relatedness. That was because, if the allegations of a breach of s 52 of the TP Act or breach of duty succeeded, then the claims of all the applicants and group members would be advanced. Alternatively, if these claims failed then all the applicants' claims would fail. These circumstances were therefore found to be sufficiently related. On appeal in Philip Morris, however, Sackville J, with whom Spender and Hill JJ agreed, reached a different view. Sackville J at 523, [164] – [165] pointed to factors such as there being three sets of respondents (each a large tobacco company), a 39-year period, 182 different brands of cigarettes, 77 separate items of public statements and lobbying, different forms of advertising, and different forms of statements ranging from billboards at sporting events to submissions to a Senate Committee, to show that the circumstances were not sufficiently related. 45 In this matter the respondents submitted that the circumstances of the claim group, comprising some 11,300 persons, are incapable of definition at a sufficient level of particularity, and are too tenuous or remote from each other to attract the application of s 33C(1)(b). They point to the fact that the events are alleged to have taken place over five years, the claim group is potentially made up of some 11,300 persons, the different times when these persons bought (and sold) Holdings securities, and the probable differential reliance each may have placed on the various representations in the many published documents pleaded. They pointed out that there are six individual respondents, each respondent being a director of Holdings for a different length of time, one respondent being for part of the time an executive director. 46 Hence, they contend that: 'The circumstances of the members of the supposed group are so diverse, the spectrum of the claims so broad, that they cannot be seen as "in respect of" or arising out of "same", "similar" or "related circumstances".' 47 The applicant submitted that the focus should be upon matters of commonality rather than matters of difference. I think it would be erroneous to focus only on the similarities in the claims of group members without regard to the differences in their claims and the complexity of their claims. Part IVA indicates the circumstances in which a representative action may be commenced, and its provisions must be applied. Nevertheless, as French J said in Zhang, the application of those provisions may involve 'practical judgments informed by the policy and purpose of the legislation'. The policy and purpose of Pt IVA of the Act is, in my view, reflected in the Second Reading Speech to which reference is made in [9] above. 48 In any representative proceeding there may well be differences between the positions of the various group members in respect of their claims against the respondents. That is likely to be the case whenever a complex representative action is instituted, that is a representative action involving a course of conduct rather than one transaction or piece of conduct or a representative action involving a large number of respondents. With an active mind, one could find a plethora of differences in any such representative proceeding. It is the nature of such proceedings that there are differences between the positions of the parties. That is why there is needed a relatedness of circumstances, rather than exactly the same circumstances, in the claims of the group members. Representative proceedings are not intended only to be available in the more straightforward of circumstances where the conduct of one respondent on one occasion is alleged to have resulted in loss to a number of persons. 49 In this matter I have come to the view that the claims of the group members are in respect of, or arise out of, similar or related circumstances. Their claims against all the respondents must (as I found above) relate to conduct of the respondents from 27 November 1998. Their claims against all the respondents involve either the acquisition of Holdings securities or the retention of Holdings securities after that date by reason of their reliance upon the alleged misrepresentations of the respondents about the state of affairs of Holdings. Each of the respondents is alleged to have been complicit in the making of those misrepresentations. 50 True it is that the circumstances of individual group members may differ. One (or more) may have seen or relied upon only one or some of the alleged misrepresentations after that date, and obviously those group members (including the applicant) who claims to have acquired Holdings securities after that date may have relied on a particular alleged misrepresentation or particular misrepresentation in doing so. Such persons may well not have been aware of alleged misrepresentations which significantly preceded the acquisition of their Holdings securities, including those after 27 November 1998 and before the particular securities were acquired. Nevertheless, those persons then retained their Holdings securities until 3 April 2001 and are alleged to have done so in reliance upon the alleged misrepresentations. 51 What is clearly related in all the claims is the alleged conduct of the respondents in presenting a misleading picture about the financial health of Holdings, to the detriment of the holders of its securities at 3 April 2001 and to those who acquired its securities. The detailed nature of the alleged representations will have to be addressed. So too will the detailed issues as to whether those representations were in fact inaccurate. So too will the issues as to whether the respondents, or some or more of them, were in fact the publishers of those representations. I do not intend those comments to exhaustively identify all issues. What to my mind is clear is that those issues on the part of the group members, that is their claims, arise out of similar or related circumstances. If the group members' claims were disaggregated, the evidence in one claim on those issues would be very likely to be relevant in the other claims. Underlying all the claims, apart from the status of the claim group as acquirers or holders of Holdings securities and the status of the respondents as its directors, are the (pleaded) means of Holdings and allegedly the respondents informing its shareholders and the market as to Holdings' financial performance and financial status from time to time, the (pleaded) ongoing misstatements of its financial position its net assets and inventories and the alleged unreasonableness of the opinions on its financial statements made by the respondents, and the (pleaded) effect of those communications upon the market perception of the value of Holdings securities compared to the real value of those securities. Although the individual position of each director may also be different, I think the sorts of issues and the nature of the evidence on those topics will largely overlap and the factual inquiry will cover a largely common period of time and largely involve similar issues. (I use the expression 'unreasonableness' here to encompass the various tests applicable under the statutes relied upon by the applicant and at common law.) Those matters are related. They will not be examined in the vacuum of one communication away from the surrounding circumstances, including earlier communications, and the accountability of each of the respondents for a particular communication will not be examined at one moment in time away from the surrounding circumstances including other conduct and other communications. The impact of the allegedly misleading conduct upon the market price of Holdings securities and the determination of their true value also will involve evidence over a period of time. 52 I have taken into account the matters the respondents referred to indicating that the circumstances of each individual group member will be different, and that therefore it will ultimately be necessary to address their claims separately. That will be particularly so, as senior counsel for the second to fifth respondents pointed out, on issues of reliance. Nevertheless, for the reasons given, I conclude that as a matter of practical judgment the claims of all group members are in respect of, or arise out of, similar or related circumstances. 53 In reaching that view, I have confined my consideration to the group claims that fall within s 33C(1)(a). If I were to extend the consideration of s 33C(1)(b) to all the claims made in the proceeding, I would still reach the conclusion that s 33C(1)(b) is satisfied. I would do so for the same reasons I have already expressed. Section 33C(1)(c): the claims of all those persons give rise to a substantial common issue of law or fact 54 The third and final limb that must be satisfied in order for the requirements of s 33C to be met is there must be a 'substantial common issue of law or fact'. Again the second to fifth respondents, supported by the first respondent, have submitted that this requirement has not been met by the applicant, by the seven nominated persons or by the representative group. The second to fifth respondents have submitted that any hearing in this matter would become fundamentally an investigation of individual circumstances. 55 The meaning of the word 'substantial' was discussed by the High Court (Gleeson CJ, McHugh, Gummow, Kirby and Callinan JJ) in Wong v Silkfield. At 267, [28] the Court said: '…when used to identify the threshold requirements of s 33C(1), "substantial" does not indicate that which is "large" or "of special significance" or would "have a major impact on the … litigation" but, rather, is directed to issues which are "real or of substance". 56 In that case there was an issue of fact common to all the possible members of the group, namely the accuracy of a statement provided by one of the respondents to all applicants pursuant to s 49 of the Building Units and Group Titles Act 1980 (Qld). That issue was held to be one of substance, and therefore the requirements of s 33C(1)(c) were met. It did not matter that there were other claims alleging various misrepresentations, nor did it matter that this might not be the 'core' issue; one common substantial issue such as this was enough. The Court further said at 268, [30]: 'It was not necessary to show that litigation of this common issue would be likely to resolve wholly, or to any significant degree, the claims of all group members.' 57 Their Honours also referred to an earlier judgment of Carnie v Esanda Finance Corporation Limited (1995) 182 CLR 398 where Toohey and Gaudron JJ at 421 treated as being sufficient for s 33C(1)(c) 'a significant question common to all members of the class'. The respondents here contend that there is no significant question which is common to all the claims of the group members. 58 In Bright v Femcare Ltd (2003) 195 ALR 575 (Bright v Femcare) the Full Court (Lindgren, Kiefel and Finkelstein JJ) granted leave to appeal and allowed an appeal from an order pursuant to s 33N that a representative proceeding no longer continue under Part IVA of the Act pursuant to s 33N. That case concerned an application by two groups of 61 women who had undergone an unsuccessful sterilisation procedure. As pleaded, the applicant's case was that the failed sterilisations resulted from the use of improperly calibrated applicators (which applied clips to each fallopian tube), and from the failure of the manufacturer to warn of that risk and to regularly check the applicators. 59 In the course of their reasons, each member of the Full Court referred at a little length to s 33C(1)(c). Each of their Honours was of the view that s 33C(1)(c) was satisfied. Lindgren J at 582, [28] said: 'In the course of considering the twenty-five issues listed in [17] above, her Honour characterised them as either common or not common. In some instances, she characterised issues as not common because she speculated that the respondents would adduce evidence on the issue which would differ as between the respective individual claims. But an issue itself can be common even if the respondents establish that they will adduce different evidence from claim to claim in dealing with it. Perhaps more importantly for s 33N purposes, I think most of the common issues which her Honour thought would provoke responsive evidence differing as between claims, would in fact not do so. This can be seen to be so once one appreciates the limited and general nature of the common issue.' 60 The second to fifth respondents, in support of their submissions, relied on the decision of Drummond J in Connell v Nevada Financial Group Pty Ltd (1996) 139 ALR 723 (Connell). In that case the applicant group of only 16 people were allegedly misled or deceived by numerous representations made by the respondents. His Honour held that as different words were used on different occasions with the different applicants there was no substantial common issue of fact or law. There was no one main representation upon which the claim group in that case had relied. That decision was, of course, based upon its particular facts. So too must this decision, guided by a proper understanding of s 33C(1)(c). That understanding is best derived from the wording of the provision in context, and as explained by the High Court in Wong v Silkfield. The views of Drummond J in Connell on its construction at 731-732, adopted with a minor qualification by his Honour and O'Loughlin J in Silkfield Pty Ltd v Wong (1998) 90 FCR 152 at 168, were not accepted by the High Court in Wong v Silkfield (see at 267-268, [29]-[32]). 61 In accordance with s 33H(1)(c) of the Act, the amended application sets out seven questions of law or fact common to the claims of the group members. They are as follows: 1. Whether the representations made by the respondents in the directors reports, the Holdings financial statements, the directors' statements with respect to Holdings financial statements and the directors' declarations with respect to Holdings financial statements from time to time between about 12 March 1996 and about 3 April 2001 were false or misleading or deceptive or likely to mislead or deceive contrary to s 12DA of the ASIC Act, s 728 of the Corporations Law, s 995 of the Corporations Law, s 52 of the TP Act and s 56 of the FT Act. 1. Whether the representations made by the respondents in press releases and Appendix 4B disclosures to the ASX with respect to Holdings financial performance and state of affairs for each year and half year between about 12 March 1996 and about 3 April 2001 were false or misleading or deceptive or likely to mislead or deceive contrary to s 12DA of the ASIC Act, s 728 of the Corporations Law, s 995 of the Corporations Law, s 52 of the TP Act and s 56 of the FT Act. 1. Whether the representations made by the respondents in press releases with respect to Holdings trading results from time to time between about 12 March 1996 and about 3 April 2001 were false or misleading or deceptive or likely to mislead or deceive contrary to s 12DA of the ASIC Act, s 728 of the Corporations Law, s 995 of the Corporations Law, s 52 of the TP Act and s 56 of the FT Act. 1. Whether the representations made by the respondents in the 4 May 1998 prospectus and the 19 May 2000 prospectus were false or misleading or deceptive or likely to mislead or deceive contrary to s 12DA of the ASIC Act, s 728 of the Corporations Law, s 995 of the Corporations Law, s 52 of the TP Act and s 56 of the FT Act. 1. What was Holdings true trading performance and state of affairs as at the end of each half year and financial year between about 12 March 1996 and about 3 April 2001. 1. What would the market value of Holdings shares and convertible notes have been from time to time between about 12 March 1996 and about 3 April 2001 had the true trading performance and state of affairs of Holdings been disclosed. 1. Do directors owe a common law duty of care to the holders of ED securities with respect to statements made in statutory financial statements, directors' statements in relation to statutory financial statements, directors' declarations in relation to statutory financial statements and statutory directors' reports. 62 In a schedule to the written submissions of the applicant, there are listed 12 issues of law or fact said to be both substantial and common to the claims of all group members. They present a refinement on the issues set out in the amended application, and so provide a useful focus for addressing s 33C(1)(c). They focus partly upon the issue of whether the alleged representations were made by the respondents. 63 The alleged representations are pleaded as including being made by communications to the Australian Stock Exchange (ASX), the securities market and to shareholders by the secretary and later the chief financial officer of Holdings by press release and by pro forma half-yearly reports 'for and on behalf of Holdings and the directors'. They also include the publication of financial statements of Holdings, including the directors' declaration made following the directors' resolution about them, and the directors' report for each year. Those documents are alleged to have been included in the Annual Report and sent to Holdings shareholders and to be lodged with the Australian Securities and Investment Commission and the ASX by the same officer, also 'for and on behalf of Holdings and its directors'. Other documents such as the 19 May 2000 prospectus were allegedly signed by each of the respondents, and the accompanying letter was allegedly signed by the first respondent 'for and on behalf of the directors'. That is not a comprehensive list. It is sufficient to indicate that, common to the claims of the claim group against each of the respondents (discussed in relation to s 33C(1)(a) above) is the common issue of law and fact as to whether such communications in the circumstances are each communications for which the individual respondents may be liable. 64 In addition, I think that material is sufficient to indicate that, common to the claims of the claim group against each of the respondents are the common issues of law and fact – to the extent that such communications included (as they are said in some respects to do) statements as matters of opinion of the directors – whether those opinions were reasonably held, whether the respondents ought reasonably to have known that the statements were materially misleading (s 999, Corporations Law), and whether the respondents exercised reasonable care to ensure the accuracy of the statements. The position of individual respondents may involve additional considerations. For instance, the first respondent was from August 1998 alleged to have been the Executive Chairman of Holdings, but I think that the starting point to consider his position is to treat him as a director of Holdings so his situation involves those common issues of fact and law as well as other considerations. Those issues arise in relation to all the communications alleged in the amended statement of claim, including all those made after 27 November 1998. 65 I also accept the contention of senior counsel for the applicant that the claims of the group members against all the respondents also give rise to common issues of law and fact as to whether, in the circumstances, the directors of Holdings owed a duty of care to its shareholders to ensure the accuracy of statements made in statements and reports required by the Corporations Law, and whether the duty of a director to exercise care and diligence imposed by the Corporations Law entitled shareholders to recover individual losses for its breach. Again, those issues extend before the period commencing on 27 November 1998, but they arise and will need to be addressed in respect of the communications after that date when all the respondents were directors of Holdings. 66 It is correct that the circumstances of each individual group member will differ. Claims may exist in respect of conduct against some only of the respondents. However, I have concluded that in any event each group member has a claim against each respondent. Each of those claims will involve different considerations of reliance and loss, simply because each claim group member may have different circumstances. Nevertheless, in my view, there is shown to be commonality in those issues of fact and law to which I have referred, and they will arise in respect of the claims of each group member against each respondent. 67 In the sense explained in Wong v Silkfield, I am also satisfied that each of those issues is substantial. They give rise to issues which are real and are of substance. 68 There are clearly also substantial issues in the proceedings whether each of the alleged representations (extending between 12 March 1996 and 3 April 2004) was false or misleading or deceptive, or was likely to mislead or deceive. There are various statutory sources for liability in respect of such representations, identified in the amended statement of claim. Those issues do not involve all the claim group nor all the respondents. But, for the reasons given when discussing s 33C(1)(a), those issues are common to the respondents in respect of the alleged representations after 27 November 1998 and to all members of the claim group as they held Holdings securities at 3 April 2001, and who either acquired those securities after 27 November 1998 or refrained from disposing of those securities after 27 November 1998 in reliance upon those alleged representations. Individual circumstances may of course differ; it will be a matter of evidence as to whether a particular person in fact relied upon a particular representation. But the description of the claim group posits such reliance. Those issues also are, in my judgment, substantial common issues of law and fact of which will arise in the proceedings. 69 I note that the applicant referred to other issues which, it was contended, satisfied s 33C(1)(c). I do not need to refer to them. 70 I therefore conclude that s 33C(1)(c) is satisfied. Section 33N 71 The respondents have submitted further, or in the alternative, that the interests of justice require me to exercise my discretion under s 33N, and not allow this proceeding to continue under Part IVA of the Act. It is clear that s 33N is discretionary, even where the conditions for the exercise of the power are made out: see Zhang; Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd (1998) 84 FCR 512. 72 The respondents' submission is based principally on s 33N(1)(c), namely that this proceeding will not provide 'an efficient and effective means of dealing with the claims' of group members. They also rely upon s 33N(1)(d), namely that it is 'otherwise inappropriate' that the claims be pursued in a representative proceeding. No additional or different considerations were said to apply to or arise under s 33N(1)(d). 73 As the respondents point out there may be some 11,300 persons in the claim group, up to 77 documents issued over a five year time frame, including periods involving some only of the respondents. Those owning Holdings securities at 3 April 2001 made decisions to purchase, decisions to make subsequent purchases, or decisions not to sell (ie. to retain) shares at varying times. The determination of reliance by a potentially significant number of persons, with a large number of documents over a five-year time frame may be extremely difficult and tedious. For example, those who acquired Holdings securities prior to May 2000 when 'the May 2000 prospectus' (as defined in the amended statement of claim) was issued and who did not then acquire further Holdings securities on the strength of it may not have relied upon that document. (As I understand the amended statement of claim, the applicant asserts that the material in that document was nevertheless conveyed to owners of Holdings securities and they relied on it not to dispose of their securities.) Ultimately, each individual group claimant's circumstances will have to be addressed to determine whether those persons did in fact rely upon some or all of the communications pleaded to their detriment. It is clear enough that it is unlikely that all group members may have relied upon all the pleaded communications. The respondents further point out that the amended statement of claim gives rise to very broad ranging inquiries related to damages, which they contend are not efficiently and effectively dealt with in a representative proceeding. There are at least two aspects to damages which are likely to be extensive: the market value of Holdings securities from time to time, and the true state of affairs of Holdings at the time of the pleaded communications, in essence at each six monthly reporting date. To encompass the five year period from 12 March 1996 to 3 April 2001 is said to be, as it obviously will be, an extensive, complex and expensive inquiry where it is unclear how many of the group members in fact relied upon each of those communications, and obviously a member (including the applicant) did not acquire their Holdings securities until later in the period of inquiry identified in the amended statement of claim. The respondents submitted, and I accept, that this could potentially become a very involved, costly and time-consuming process. 74 In making a decision under s 33N, I consider the following passage of Lindgren J in Bright v Femcare to be helpful. His Honour stated at 580, [18]: 'The applications under s 33N were made at a procedurally early stage. Defences have not yet been filed. In substance, the applicant commenced a representative proceeding which ex hypothesi, the legislature intended she be entitled to commence because of the presence of substantial common issues of law and fact, yet the Court was immediately asked to accept that the proceeding would not provide an efficient and effective means of dealing with the claim of the Group Members. I do not mean to suggest that an application under s 33N at such an early stage of a properly commenced representative proceeding would always be premature: if there were an incompatibility or conflict between the representative party's case and the cases of the represented parties (cf Tropical Shine Holdings Pty Ltd (t/a KC Country) v Lake Gesture Pty Ltd (1993) 45 FCR 457 at 464; 118 ALR 510) or if the only substantial common issue were one of law on which a decision in the case of one group member would bind the others, it may be thought not efficient or effective for the representative proceeding to continue. But ordinarily one would expect that, in an attempt to give effect to the legislative intention, a means will be sought, by case management techniques, to enable a representative proceeding to continue to the stage of resolution of the substantial common issues on the basis that after that stage is completed, an order under s 33N or directions under s 33Q will be made: cf the order made by French J in Zhang De Yong v Minister for Immigration, Local Government & Ethnic Affairs (1993) 45 FCR 384; 118 ALR 165 at 403, 404, and the course followed by Stone J in Vasram v AMP Life Ltd [2000] FCA 1676; BC 200007043 at [18]).' 75 In the present circumstances I consider it premature to determine that the proceeding not be permitted to continue as a representative action under s 33N(1)(c) of the Act. 76 The matters raised by the respondents are weighty. However, they do not lead to the conclusion in the exercise of my discretion that at present an order should be made under s 33N. The defences are yet to be filed. When they are filed, the real issues between the parties may more readily emerge. The further management of this proceeding may include consideration of the creation of sub-groups within the claim group. It may include consideration of orders for the separate trial of issues. It may include directions that the issues of relevance be refined by reference to the circumstances of particular sub-groups or members of the claim group, as a preliminary step to considering how the hearing should progress. I agree that the inquiry which the proceedings requires should not become (as senior counsel for the first respondent put it) a Royal Commission into the conduct of the affairs of Holdings or the role generally of its directors in the conduct of its affairs. I think further case management will reveal whether that danger can be avoided and an efficient and useful focus applied to the further conduct of the proceedings. 77 I am also mindful that an order under s 33N at this stage would effectively put out of Court the group members. They are large in number. Their claims are relatively small, as on the whole the number of Holdings securities they each held at 3 April 2001 was small. It would simply be uneconomic for their individual claims to be pursued. It would also not be in the public interest including for the efficient and effective use of the Court's resources to hear and determine one claim of one holder of Holdings securities at 3 April 2001, without the other holders of Holdings securities at that time (and the respondents) also being bound by the determination of issues common to those other potential claims. 78 Of course, the position would be clearer if only one communication attributed to the respondents were relied upon. The proceeding would be less complex. In the nature of corporate affairs, however, that is not always necessarily or usually the case. The true state of affairs of a corporation, in the absence of a particularly significant abnormal event, does not change drastically over a period of six or twelve months. The accuracy of the state of affairs as presented at a particular time or from time to time is or may be measured by evidence as to the state of affairs and its trading over a period of time. It is notorious that the causes of corporate failure, to the detriment of shareholders and others, are not usually events immediately preceding the failure but a course of conduct or a range of factors experienced over time. The complexity of the picture which might therefore properly be complained of by these shareholders should not of itself be a reason not to permit a representative proceeding to be maintained. 79 In the LRC Report and in particular the following example from par 65: 'Actions by shareholders in respect of misleading conduct. A group of small shareholders suffer considerable financial loss as a result of misleading advice received from stockbrokers and the directors of the company in which significant amounts of their savings were invested. The shareholders also claim that the company failed to comply with the Australian Stock Exchange listing rules by neglecting to inform the market of factors likely to materially affect the market price of shares. Apart from rights in negligence against the stockbrokers, the shareholders would have had rights against the directors arising from the Companies Codes and the Securities Industry Codes. A grouping procedure could facilitate the recovery of loss by those affected and would offer the advantage of helping to ensure that all concerned were informed of the claim and shared in the result without having to commence individual proceedings.' I consider those observations are pertinent to the present application. 80 For the same reasons, I also do not exercise my discretion to order by reason of s 33N(1)(d) that this proceeding no longer continue as a representative proceeding. conclusion 81 For the reasons given, I decline to order that this representative proceeding be dismissed for failing to comply with s 33C(1) of the Act. I further presently decline to order under s 33N that it no longer continue as a representative proceeding. 82 Subject to any further submissions, I will adjourn the notice of motion of the second to fifth respondents to a date to be fixed with liberty to apply. The intent is that, in the event that those respondents later wish to revive their application under s 33N, they may do so. The order they seek on that motion that the proceedings be dismissed is refused. I also propose, subject to any further submissions, to order that the second to fifth respondents pay to the applicant the costs of that notice of motion to date. I certify that the preceding 82 (eighty-two) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield. Associate: Dated: 25 February 2005 Counsel for the Applicant: WJN Wells QC with AL Dal Cin Solicitor for the Applicant: Duncan Basheer Hannon Counsel for the First Respondent: MM Gordon SC with LWL Armstrong Solicitor for the First Respondent: Clayton Utz Counsel for the Second, Third, Fourth & Fifth Respondents: P Jopling QC with J Delany SC Solicitor for the Second, Third, Fourth & Fifth Respondents: Minter Ellison Counsel for the Sixth Respondent: The sixth respondent did not appear Date of Hearing: 9 June 2004 Date of Judgment: 25 February 2005