New South Wales Supreme Court CITATION : Barbara Ann O'Sullivan v Challenger Managed Investments Ltd [2007] NSWSC 383 HEARING DATE(S) : 12/12/06 JUDGMENT DATE : 24 April 2007 JURISDICTION : Equity Division Corporations List JUDGMENT OF : White J DECISION : See paragraphs 74-75 of judgment. CATCHWORDS : PROCEDURE – Supreme Court procedure – New South Wales – Procedure under Rules of court – Parties – Representative orders – "Same interest" – What constitutes – Parties have the "same interest" where declaration sought in which represented persons have a "common interest" and would benefit from such declaration – Claim for damages cannot be maintained on behalf of represented persons – Order that leave to bring representative action will be granted if pleadings amended so that representative action only brought in respect of declaration in which represented persons have the same interest – Uniform Civil Procedure Rules 2005 (NSW) r 7.4. - PROCEDURE – Supreme Court procedure – New South Wales – Procedure under Rules of court – Parties – Whether court should order that proceedings not be carried on as representative proceedings – Potential for multiplicity of proceedings – No less convenient for proceedings to be brought as representative proceedings than as an action with multiple plaintiffs under r 6.19 – No sufficient reason to order that plaintiff cannot seek declaration in representative action – Uniform Civil Procedure Rules 2005 (NSW) r 6.19, r 7.5. Uniform Civil Procedure Rules 2005 (NSW) Australian Securities and Investments Commission Act 2001 (Cth) LEGISLATION CITED : Supreme Court Act 1970 (NSW) Fair Trading Act 1987 (NSW) Credit Act 1984 (NSW) Trade Practices Act 1974 (Cth) Carnie v Esanda Finance Corporation Ltd (1995) 182 CLR 398 Campbell's Cash & Carry Pty Ltd v Fostif Pty Ltd (2006) 80 ALJR 1441 Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404 A & M Short Pty Ltd v Prestige Residential Marketing Pty Ltd (2005) 194 FLR 32; 54 ACSR 760 The Duke of Bedford v Ellis [1901] AC 1 Fostif Pty Ltd v Campbell's Cash & Carry Pty Ltd (2005) 67 NSWLR 203 Shepherd v Australian and New Zealand Banking Group Ltd (1996) 20 ACSR 81 CASES CITED : Wong v Silkfield Pty Ltd (1999) 199 CLR 255 Lord Aberconway v Whetnall (1918) 87 LJCh 524 Prudential Assurance Co Ltd v Newman Industries Ltd [1981] 1 Ch 229 Beeching v Lloyd (1855) 3 Drew 227; 61 ER 890 Markt & Co Ltd v Knight Steamship Co Ltd [1910] 2 KB 1021 Jones v Cory Bros & Co Ltd; Thomas v Great Mountain Collieries Co (1921) 56 L Jo 302; 152 LT Jo 70 Cameron v National Mutual Life Association of Australasia Ltd (No. 2) [1992] 1 Qd R 133 Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (2000) 200 CLR 591 Payne v Young (1980) 145 CLR 609 Barbara Ann O'Sullivan PARTIES : v Challenger Managed Investments Ltd FILE NUMBER(S) : SC 4799/06 COUNSEL : Plaintiff: A Leopold, S Ipp Defendant: P Whitford, M Henry, K Barrett SOLICITORS : Plaintiff: Maurice Blackburn Cashman Defendant: Arnold Bloch Leibler IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST WHITE J Tuesday, 24 April 2007 4799/06 Barbara Ann O'Sullivan v Challenger Managed Investments Ltd JUDGMENT 1 HIS HONOUR: This is an application by the defendant ("Challenger") for an order that the proceedings be dismissed insofar as they purport to be representative proceedings commenced pursuant to r 7.4 of the Uniform Civil Procedure Rules 2005 (NSW). Alternatively, Challenger seeks an order pursuant to r 7.4(2) of the Rules that the proceedings not be carried on by the plaintiff as representing any of the "Represented Persons" listed in the schedule to the originating process. Challenger seeks a further order that paragraphs 15 to 18 of the statement of claim be struck out insofar as those paragraphs referred to the "Represented Persons" listed in a schedule to the originating process. 2 The plaintiff seeks leave to amend the schedule to the originating process by substituting a new schedule containing additional Represented Persons. 3 The issues on the present application are whether the proceedings have been properly commenced as representative proceedings pursuant to r 7.4 of the Uniform Civil Procedure Rules, and if so, whether the Court should order that the proceedings not be carried on as representative proceedings. These questions are distinct (Carnie v Esanda Finance Corporation Ltd (1995) 182 CLR 398). The Originating Process 4 The proceedings were commenced by an originating process filed on 13 September 2006. The plaintiff is described as "Barbara Ann O'Sullivan in her own right and as representative for the persons in schedule A". The application is described as being made under ss 12GF and 12GN of the Australian Securities and Investments Commission Act 2001 (Cth) ("the ASIC Act") and under ss 68 and 72 of the Fair Trading Act 1987 (NSW), and, insofar as it seeks declaratory relief, under s 75 of the Supreme Court Act 1970 (NSW) and in the inherent jurisdiction of the Court. The originating process describes the application as one in which "the plaintiff and each of the Represented Persons … subscribed for units in the Challenger Howard Property Trust for the Penrith Mega Homemaker Centre Sydney." This is said to be a special purpose trust facilitating investments in the Penrith Mega Homemaker Centre. The originating process claims that the defendant engaged in misleading or deceptive conduct in contravention of s 12DA of the ASIC Act and s 42 of the Fair Trading Act which caused the plaintiff and the Represented Persons to subscribe for units in the trust, as a result of which each of them suffered loss or damage. The relief sought includes: (b) a declaration that by the issuing of the prospectus, the defendant engaged in conduct which was misleading or alternatively which was misleading or deceptive, or likely to mislead or deceive in contravention of s 12DA of the ASIC Act and/or s 42 of the Fair Trading Act ; (c) damages pursuant to s 12GF of the ASIC Act and s 68 of the Fair Trading Act or alternatively compensation pursuant to s 12GN of the ASIC Act and s 72 of the Fair Trading Act . 5 The originating process includes the following paragraph: " The plaintiff and each of the Represented Persons each has the same interest in the proceedings in that each claims the same declaratory relief, and each claims damages or compensation, all of which claims require a resolution of the following questions of law or fact common to the claims of the plaintiff and each of the Represented Persons: (a) Whether the conduct of the defendant in issuing the Prospectus was in trade or commerce within the meaning of the ASIC Act and/or the FTA . (b) Whether the conduct of the defendant in issuing the Prospectus was in relation to ' financial services ' within the meaning of the ASIC Act . (c) Whether each of the representations referred to in paragraph 11 of the draft statement of claim was made. (d) Whether the making of each of those representations is to be taken to be misleading, in contravention of section 12DA of the ASIC Act and/or section 42 of the FTA . (e) Whether the conduct of the defendant as a whole, in issuing the Prospectus, was misleading or deceptive or likely to mislead or deceive, in contravention of section 12DA of the ASIC Act and/or section 42 of the FTA . " The Pleadings 6 A statement of claim and defence have been filed. It is admitted that the defendant is the responsible entity of the Challenger Howard Property Trust for Penrith Mega Homemaker Centre Sydney. It issued a prospectus on 27 November 2002 to members of the public who were potential subscribers for units in the trust, inviting applications for the acquisition of units in the trust. The prospectus was issued in trade or commerce. The prospectus stated that the trust was raising $31,800,000 from unitholders to fund the acquisition of the Penrith Mega Homemaker Centre and the expenses of establishing the trust. The prospectus stated that funds raised from an investor would be added to those of other unit holders to create a pool of capital to be invested by Challenger in the Centre. The purchase price of the Property (that is the Centre) was $65,500,000. It is also admitted on the pleadings that the conduct of the defendant in issuing the prospectus for the trust was conduct that was in relation to "financial services" as that term is defined in s 12BAB of the ASIC Act for the purposes of Division 2 of Part 2 of that Act. 7 Paragraph 9 of the statement of claim alleges various representations said to have been made expressly in the prospectus. Many of these are admitted. The representations admittedly contained in the prospectus included a forecast of an income and capital distribution yield of 8.3% per annum in the year ending 30 June 2003 rising to 9.1% per annum in the year ending 30 June 2008, the equivalent pre-tax annualised returns, and a forecast internal rate of return of 10.71% based on the forecast distributions over the six-year life of the Trust and the sale of the Centre for its forecast valuation in 2008, and the subsequent distribution of net capital to unitholders. Another admitted representation in the prospectus was that the Centre had been substantially leased to a variety of high-profile national and regional retailers, that unlet tenancies were subject to a twelve-month rental guarantee from the developer, and that terms had been agreed with prospective tenants for a substantial proportion of the vacant space. It was alleged that the prospectus contained detailed forecast financial returns based on stated assumptions. (Statement of claim, paragraph 9(a), (b), (e), (f) and (i)). 8 Paragraph 10 of the statement of claim alleged that the statements in paragraph 9 were made in circumstances in which, in issuing the prospectus, the defendant did not, in or in connection with the prospectus, make any statement or give any information or warning as to certain matters. The matters about which it is alleged the defendant did not give any information or warning were that: (a) the floor space requirement for each tenancy was limited to 1000m ² which was less than that required in practice to attract tenants and therefore customers to a bulky goods retail centre; (b) the Centre had poor visibility to passing traffic which was contended to be a key factor in attracting prospective tenants, and in the rent which they would pay, and in attracting customers and accordingly creating custom and turnover at such a centre; (c) the range of products that could be sold from the centre was restricted and excluded agricultural products, beverages, clothing, footwear, leisure goods, paper or stationery products, small electrical appliances, electronic goods and toys; (d) two of the tenancies at the Centre could in practice only be used for warehousing, and not for retailing; (e) in these circumstances, there was a real risk that there would be substantial difficulty in attracting tenants to the Centre and in attracting customers, which would adversely affect rentals and increase vacancies, and there was a real risk that the vacancy level as at the date of the prospectus would not be filled by the time the rental guarantee expired, or there would be a significant difficulty in eliminating the vacancy level or in doing so at the rentals forecast in the prospectus; (f) there was a real risk there would be significant difficulty in achieving the rental projections in the prospectus, given that the projections were based on the Centre being almost fully tenanted at the rentals specified and forecast, and to that extent the projections of net rental income in the forecast were not reasonable; (g) there was a real risk that the distributable income projected in the forecast would not be achieved and there was no real likelihood of a capital gain being achieved by investors. 9 The allegation that the defendant did not in connection with the prospectus make any statement or give any information or warning to the effect of those pleaded in paragraph 10 of the statement of claim was not admitted. 10 In paragraph 11 of the statement of claim, the plaintiff alleged that by its conduct in publishing the prospectus containing the express representations alleged, and in the circumstances referred to in paragraph 10, (that is, in circumstances where the defendant allegedly did not convey the information or warnings alleged in paragraph 10), the defendant made representations to the public who were potential subscribers to the units in the trust that: (a) the forecast distribution yield was reasonably achievable by a person who acquired units in the trust; and (b) a significant capital gain reflecting a rate of return over 10% per annum for about six years was reasonably achievable by such persons. 11 The defendant denies that such representations were conveyed. 12 The representations alleged in paragraph 11 of the statement of claim, being representations which are said to be partly expressed and partly implied, are alleged to be representations as to future matters and to be misleading and in contravention of s 12DA of the ASIC Act and s 42 of the Fair Trading Act. 13 In paragraph 14 of the statement of claim, the same express representations in the prospectus and non-disclosure of matters said to make the prospectus misleading are relied upon as constituting misleading or deceptive conduct. The claim is pleaded in the alternative. Instead of constructing representations as to future matters (as alleged in paragraphs 11 to 13), the pleader alleges that by making the express representations in the prospectus in the circumstances referred to in paragraph 10 (that is, by the non-disclosure of matters alleged in paragraph 10), the defendant made the representations alleged in paragraph 11 to members of the public who were potential subscribers to the units in the trust, that each of the matters referred to in paragraph 10 was a fact as at November 2002 which was not disclosed in the prospectus, and that those facts meant that the forecast distribution yields were not reasonably achievable, that a significant capital gain reflecting a rate of return of over 10% per annum for about six years was not reasonably achievable, that the purchase price paid for the Centre was not a reasonable reflection of its value as at November 2002, and that an increase in the value of the Centre up to the time of its anticipated sale in around six years to an amount of more than $65,500,000, was not reasonably achievable. As I understand it, the only difference in the secondary way in which the plaintiff's claim is pleaded is there is no reliance upon s 12BB of the ASIC Act and s 41 of the Fair Trading Act that a representation about a future matter is taken to be misleading if the person making the representation did not have reasonable grounds for making it, the onus being on that person to establish such reasonable grounds. 14 Paragraphs 15 to 18 of the statement of claim allege that the plaintiff and each of the Represented Persons subscribed for units in the trust by completing the application form in the prospectus, that the representations alleged in paragraph 11 were material to their decision to do so, that if the matters allegedly not disclosed as pleaded in paragraph 10 had been disclosed, they would not have acquired the units, and that they thereby suffered loss and damage. 15 In essentials, the plaintiff's pleading is as follows: (a) the prospectus contained statements of forecast returns; (b) the defendant failed to disclose matters which created a real risk that the forecast returns would not be achieved and failed to disclose such risks; (c) the combination of the express statements and non-disclosures amounted to representations that the forecast yields and capital gain were reasonably achievable; (d) these were representations as to future matters which are presumed to be misleading unless the defendant proves the contrary; (e) in any event, the facts not disclosed meant that the forecast in the prospectus were not reasonably achievable; (f) the defendant thereby engaged in conduct which was misleading and deceptive; and (g) the plaintiff and each of the Represented Persons thereby suffered loss and damage. 16 Schedule A to the originating process named 31 persons or couples as represented persons. They subscribed for units or received transfers of units in the trust between 16 December 2002 and 5 December 2003. Twenty-three of the investors acquired units in the trust through fourteen different financial advisers. 17 Since the originating process was filed on 13 September 2006, the plaintiff's solicitors have been retained by another 53 clients who are sought to be added as Represented Persons. They acquired units in the trust by subscription or transfer between 13 December 2002 and 3 August 2003. Thirty-five of those clients acquired units in the trust through 19 different financial advisers. Some of the Represented Persons, or persons who are sought to be added as Represented Persons, are companies. Some are trustees of superannuation funds. One is an executor of an estate where the units were acquired by the deceased. Some persons hold units jointly. Relevant Provisions 18 Rules 7.4 and 7.5 of the Uniform Civil Procedure Rules 2005 (NSW) provide as follows: "7.4 Representation of concurrent interests (cf SCR Part 8, rule 13; DCR Part 7, rule 15) (1) This rule applies to any matter in which numerous persons have the same interest or same liability in any proceedings. (2) Unless the court orders otherwise, the proceedings may be commenced and carried on by or against any one or more persons as representing any one or more of them. (3) At any stage of the proceedings, the plaintiff may apply to the court for an order appointing one or more of the defendants or one or more of the other persons to represent any one or more of them. (4) If a person who is not a party to the proceedings is appointed as referred to in subrule (3), that person must be joined as a party under rule 6.24. (5) This rule does not apply to proceedings concerning: (a) the administration of a deceased person's estate, or (b) property the subject of a trust. 7.5 Judgments and orders in proceedings bind represented persons (cf SCR Part 8, rule 13; DCR Part 7, rule 15) (1) A judgment or order made in proceedings in which a party has, by an order under rule 7.4, been appointed to represent a number of persons binds all of those persons, but is not enforceable against any of those persons who is not a party except by leave of the court. (2) Notice of motion for an application for leave under subrule (1) must be personally served on the person against whom the judgment or order is sought to be enforced. (3) Subrule (1) does not prevent a person against whom the judgment or order is sought to be enforced from disputing liability by reference to circumstances peculiar to his or her case. " 19 The proceedings were only properly commenced under r 7.4 if the plaintiff, and the persons whom she purports to represent, have the same interest in the proceedings. The defendant submitted that the plaintiff and the Represented Persons did not have the same interest in the proceedings because the relief sought was not in its nature beneficial to all of them, and, because no judgment in the proceedings would bind the Represented Persons having regard to the terms of r 7.5(1). 20 It is convenient to deal with the second point first. Would the Represented Persons be Bound by a Judgment? 21 It is clear that a mistake was made in the drafting of rule 7.5(1). The previous rule from which rule 7.4 and 7.5 were taken was Pt 8 r 13 of the Supreme Court Rules 1970 (NSW). Part 8 rule 13(4) provided: " A judgment entered or order made in proceedings pursuant to this rule shall be binding on all the persons as representing whom the plaintiff sue or, as the case may be, the defendants are sued but shall not be enforced against any person not a party to the proceedings except with the leave of the Court. " 22 Under the previous Rules, express provision was made that any order made in proceedings commenced and continued as representative proceedings was binding on all represented persons. The draftsman of r 7.5 appears to have thought that the former Pt 8 r 13(4) was referring to the entry or making of a judgment pursuant to Pt 8 r 13, rather than the entry or making of a judgment in proceedings commenced or continued under Pt 8 r 13. 23 Literally construed, r 7.5(1) would only make a judgment or order in representative proceedings binding upon the represented persons in a case to which r 7.4(3) applied. That is to say, on a literal reading, judgments or orders in the proceedings would only be binding upon defendants where an order was made for the appointment of one or more of the defendants to represent other defendants. The rules would be silent as to whether a judgment or order made in representative proceedings would be binding on represented persons in any other circumstance. 24 However, such a literal interpretation must give way to the evident purpose of the provision. The purpose of representative proceedings is to avoid the multiplicity of proceedings and to provide for the efficient and final determination of controversies in which persons have the same interest (Campbell's Cash & Carry Pty Ltd v Fostif Pty Ltd (2006) 80 ALJR 1441; 229 ALR 58 at [55]). That can only be achieved if the determination is binding on the represented persons. 25 Where it is clear that the intention in the drafting of r 7.5 has miscarried, words can be supplied and omitted to ensure that the legislative purpose is achieved (Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404 at 421-424; A & M Short Pty Ltd v Prestige Residential Marketing Pty Ltd (2005) 194 FLR 32; 54 ACSR 760 at 35 [13]-[16], 762 [13]-[16]). That is particularly so where, as in the present case, the rules were not intended to effect a substantive change in the Court's procedures. In the second reading speech for the Civil Procedure Bill, which Bill included the Uniform Civil Procedure Rules in its Schedule 7, the Hon Mr Bob Debus stated that: " The working party's aim was to consolidate provisions about civil proceedings into a single bill and develop a common set of rules, simplified but without radical changes in substance or form. The bill and rules largely reflect existing provisions and continue to use phrases that have a settled legal meaning. Where there is change, much of it can be attributed to the fact that drafting styles have changed over the past 30 years. Parties should not be arguing that a rule has changed because a modern drafting style has been adopted if the substance of the rule remains the same. " (New South Wales, Parliamentary Debates, Legislative Assembly, 6 April 2005, 15115 (Bob Debus, Attorney General, Minister for the Environment)). 26 In referring specifically to part 7 of the rules, Mr Debus stated that "the rules in relation to parties are grouped together in part 7 instead of being scattered throughout the rules". The second reading speech also referred members of Parliament to a website, www.lawlink.nsw.gov.au, which contains the Information Paper on the bill and rules (Jenny Atkinson and Stephen Olischlager, An Introduction to Civil Procedure Act 2005; Uniform Civil Procedure Rules (2005) Lawlink New South Wales, http://www.lawlink.nsw.gov.au/lawlink/spu/ll_ucpr.nsf/pages/ucpr_publications at 19 April 2007). That paper relevantly provides that "UCPR Part 7 gathers together the party rules …" (at 26). It makes no mention of any substantive change to rules 7.4 or 7.5. 27 Rule 7.5(1) should be construed as if it provided that a judgment or order made in proceedings, in which a person has pursuant to rule 7.4 represented a number of persons, binds all of these persons but is not enforceable against any of those persons who is not a party except by leave of the Court. Relief Beneficial to All 28 Senior counsel for the defendant submitted that although nominally, the claim for a declaration was made purportedly on behalf of the plaintiff for herself and for the represented persons, the only relief she could properly claim was damages for herself. The plaintiff's and the Represented Persons' claims for damages were distinct and individual to each of them. The plaintiff could not claim damages as a representative of other persons who claimed to have relied upon misrepresentations made in the prospectus, and to the extent she purported to do so, the proceedings should be dismissed or struck out. Senior counsel for the defendant submitted that the claim for declaratory relief was surplusage and should not disguise the fact that the proceedings were in substance brought to recover the separate monetary losses claimed by the plaintiff and each represented person. 29 Counsel for the plaintiff submitted that, to satisfy the test that the plaintiff and the represented persons had the same interest in the proceedings, it was sufficient to show that they had a common interest in the resolution of material common questions of fact or law relating to the determination of the question whether the defendant contravened the relevant statutory provisions proscribing misleading or deceptive conduct. It was submitted that it was not essential to show that the relief sought would be beneficial to all of the plaintiff and the Represented Persons. However, if it were necessary to show that the relief claimed was "relief beneficial to all", such a requirement should be understood in a broad sense that if the relief were granted to one person it would operate to the benefit of all persons represented by resolving particular issues, which would lead the way to other of the represented persons being entitled to their own relief. Understood in such a broad sense, any such requirement was no different in substance from a test that the plaintiff and the represented persons have a common interest in the establishment of a cause of action, or ingredients of a cause of action, common to all. In any event, counsel submitted, if there be a more stringent requirement that the plaintiff claim relief beneficial to all, that requirement was satisfied by the claim for declaratory relief. 30 In The Duke of Bedford v Ellis [1901] AC 1, six persons joined as co-plaintiffs on behalf of themselves and all other growers of certain produce to seek to compel the Duke of Bedford to grant them, and the persons whom they purported to represent, preferential rights in the Covent Garden market. They sought a declaration as to the true construction of the Act regulating the market, an injunction to restrain the infringement of their alleged statutory rights, and an account of the moneys by which they alleged they had been severally overcharged (at 7). The rule of Court under which they claimed to act as representatives for other growers provided that "where there are numerous persons having the same interest in one cause or matter, one or more of such persons may sue or be sued … on behalf or for the benefit of all the persons so interested." (at 3). Lord Macnaghten said (at 8): " But it seems to me that there is no reason whatever for so restricting the rule, which was only meant to apply the practice of the Court of Chancery to all divisions of the High Court. The old rule in the Court of Chancery was very simple and perfectly well understood. Under the old practice the Court required the presence of all parties interested in the matter in suit, in order that a final end might be made of the controversy. But when the parties were so numerous that you never could "come at justice," to use an expression in one of the older cases, if everybody interested was made a party, the rule was not allowed to stand in the way. It was originally a rule of convenience: for the sake of convenience it was relaxed. Given a common interest and a common grievance, a representative suit was in order if the relief sought was in its nature beneficial to all whom the plaintiff proposed to represent . " (Emphasis added.) 31 It was submitted for the plaintiff that later authorities, in particular, Carnie v Esanda Finance Corporation Ltd and the Court of Appeal's decision in Fostif Pty Ltd v Campbell's Cash & Carry Pty Ltd (2005) 63 NSWLR 203, have held that it is sufficient to establish that the plaintiff and the represented persons have the same interest in the proceedings if the claims for relief by each of them involve significant common questions of fact or law. Counsel for the plaintiff submitted that this principle was not disturbed by the decision of the High Court in Fostif Pty Ltd v Campbell's Cash & Carry Pty Ltd. Hence, it was said, Lord Macnaghten's requirement that the relief sought be of a nature beneficial to all whom the plaintiff proposed to represent was not a requirement which went beyond establishing the existence of a material issue of fact or law common to the claims of all of the plaintiff and persons to whom the plaintiff represented. This was said to follow from the judgment of Toohey and Gaudron JJ in Carnie v Esanda Finance Corporation Ltd at 421 and from the judgment of Mason CJ, Deane and Dawson JJ at 404. McHugh J (at 430), with whom Brennan J agreed (at 408) also said that the represented persons had the "same interest" in the proceedings if they had a "community of interest in the determination of some substantial issue of law or fact." 32 In Carnie, the plaintiffs sued for themselves and on behalf of all others who had entered into certain loan or credit sale contracts with the defendant which had been varied in ways which were said not to comply with the requirements of the Credit Act 1984 (NSW). The relief claimed included a declaration that no represented debtor was required to pay to the respondent any amount on account of credit charges in relation to such varied contracts. Toohey and Gaudron JJ said (at 421) that: "There are many persons who have entered into variation agreements with the respondent. They have the "same interest" in testing those agreements against the Act to see if the method of calculating the amount owed was correct. If that method was not in accordance with the Act, then those persons have a common interest in obtaining the relief of being released from liability for the credit charges. That is, they have the same interest in these proceedings in the sense that there is a significant question common to all members of the class and they stand to be equally affected by the declaratory relief which the appellants seek." 33 Mason CJ, Deane and Dawson JJ agreed (at 403) with the reasons given by Toohey and Gaudron JJ for allowing the appeal, subject to the comments which followed. One of those comments was that: " It may be [that the expression 'same interest'] extends to a significant common interest in the resolution of any question of law or fact arising in the relevant proceedings. " (At 404.) 34 Brennan J said (at 408) that: " I respectfully agree with McHugh J that the test for determining whether an action is within the scope of Pt 8, r 13(1) is whether the plaintiff and the members of the represented class have a community of interest in the determination of some substantial issue of law or fact. " 35 In the Court of Appeal in Fostif, Mason P said at 243, [187], that the decision in Carnie did not support a requirement that it be possible to formulate some claim to relief that was beneficial to all plaintiffs. His Honour said that the true principle was stated by Brennan J in Carnie, namely, that the requirement for the represented persons to have the same interest in the proceeding did not necessarily require the same cause of action, nor an entitlement to have, or to share in, the same relief. His Honour said (at 245, [198]) that representative proceedings did not have to include a composite prayer for relief. Sheller and Hodgson JJA agreed with these reasons. 36 Counsel for the plaintiffs also referred to the judgment of Bryson J (as his Honour then was) in Shepherd v Australian and New Zealand Banking Group Ltd (1996) 20 ACSR 81 at 97-98 where his Honour accepted that in order to establish that represented persons have the same interest in proceedings, it was sufficient to demonstrate a "commonality of interest" in the principal matters to be determined in the proceedings. 37 Counsel for the plaintiff submitted that: " 16. Although in Fostif in the High Court Callinan and Heydon JJ at [214] may have adopted narrower strands of the reasoning in Carnie , nothing else said in the High Court in Fostif undermined any of the reasoning summarised above. On the contrary, Gleeson CJ at [20] agreed with it; Gummow, Hayne and Crennan JJ at [50] strongly indicated that the test is whether there a question of fact or law, common to a number of claims, can be shown to exist, regardless of whether or not it may be simply resolved; and Kirby J at, e.g., [161] embraced the ' community of interest' approach. 17. Accordingly, the broad test laid down in the Court of Appeal in Fostif at the very least represents a persuasive precedent here. The unanimity underlying the decision makes it highly persuasive. Unless it is plainly wrong, it should be followed. " 38 As the plaintiffs' submissions acknowledged, in Fostif, Callinan and Heydon JJ plainly held that for the numerous persons to have the same interest in the proceedings, it was necessary that the relief sought be in the nature beneficial to all whom the plaintiff proposed to represent. When the summons was filed, the plaintiff, Fostif, was making a monetary claim for the moneys which it had paid the defendant. The monetary claim which it made was not beneficial to all the persons it purported to represent. Callinan and Heydon JJ held that the crucial factor in the outcome of Carnie v Esanda Finance Corporation Ltd was the claim made in that case for declaratory relief (at 115, [225]). However, their Honours said that in Fostif not only was no declaration sought, but it could not have been properly sought as any declaration would have been mere surplusage (at 115, [226]). 39 In Fostif, Gummow, Hayne and Crennan JJ held that the expression "the same interest" in the rule was not intended to have any narrower operation than the former Chancery practice where the practice was described by reference to the parties having a "common interest" (at 69, [45]). Their Honours said (at 70, [50]) that: " … the bare fact that the claims made by those who are represented by the named plaintiff in a representative action arise out of separate contracts does not necessarily deny the existence of a common interest between the represented parties and the defendant. In this case, a common issue of fact and law could be found to exist in deciding which particular transactions undertaken by the parties fell within the principles decided in Roxborough . The appellants' submissions assumed that that inquiry would be very simple. That may or may not be so, but even if it is, the fact that an issue may be simply resolved does not deny its existence, and does not demonstrate that it is not an issue common to a number of claims arising out of separate contracts. " 40 However, I do not accept the plaintiff's submission that Gummow, Hayne and Crennan JJ indicated that the test was whether there was a question of fact or law common to a number of claims. Their Honours went on to say that Pt 8 r 13(1) required that, at the time proceedings were commenced, there be numerous persons having the same interest in the proceedings. The relief sought by the plaintiff in Fostif was judgment for a money sum for the plaintiff. The originating process contemplated that any persons who chose later to opt into the proceedings would be able to make like claims. Their Honours said (at [57]-[59]): "[57] At the time the summons was issued there were persons, other than Fostif, whom it could be said would be 'affected' by a decision of the claim made by Fostif against Campbells. The most obvious persons 'affected' were any other persons who had bought tobacco products from Campbells by transactions relevantly identical to the transactions identified as having been made between Fostif and Campbells. But when the proceedings were instituted, Fostif made no claim on behalf of any of those other purchasers. Their participation in the proceedings, and any consequence for their rights, depended upon them choosing to join the proceedings. Deciding Fostif's claim would decide no issue between any of those other purchasers and Campbells unless or until those others chose to participate in the proceedings. The only effect that the decision of Fostif's claim would have would be its precedential value. [58] At the time the summons was issued to commence the Fostif proceedings, there were no persons, other than Fostif , who had an interest in the proceedings which were instituted, as distinct from an interest in knowing which way the issues raised in those proceedings were decided. No other person had an interest in those proceedings because no order made or judgment given in the proceedings would bind that other person. No grant of declaratory relief was sought to resolve or determine any question ( Wong v Silkfield Pty Ltd (1999) 199 CLR 255 at 266-267, [27], 73 ALJR 1427) common to the 'numerous persons' alleged to have 'the same interest in the proceedings'. The summons is thus to be distinguished from the statement of claim in Carnie , where the plaintiffs claimed declarations for the common benefit of 'the represented debtors' ( Esanda Finance Corporation Ltd v Carnie (1992) 29 NSWLR 382 at 386). No doubt it was hoped that the procedures for 'opting-in', which the summonses contemplated would be followed after the proceedings had been instituted, would lead to there being numerous persons with the same interest, but that was a hope or expectation about future events. [59] It may readily be accepted that, when the proceedings in Carnie were issued, it may have been difficult to list all of the persons whom the plaintiffs represented. And some who met the relevant criteria may later have sought exclusion from representation. In that sense, one could not say at the time the proceedings in Carnie were issued who the plaintiffs represented. But it was clear that there were numerous persons who were represented. By contrast, in the Fostif proceedings, where it was sought to represent only those from within the class of represented retailers who actively chose to be bound, it could not be said that there was any person, let alone numerous persons, whom the plaintiff would represent." 41 It appears to me to follow from the last two sentences of paragraph [57] and from paragraph [58] quoted above, that in Fostif, Gummow, Hayne and Crennan JJ accepted that the plaintiff and the represented persons had a common interest in the issues raised by the plaintiffs' claim. However, that was not enough to give them the same interest in the proceedings, because "no order made or judgment given in the proceedings would bind that other person". It was the combination of the fact that the class of represented persons was defined by reference to those who would later choose to "opt in", rather than by reference to matters that defined the class at the date the proceedings were instituted, and the fact that no relief was sought which would resolve or determine any question which was common to all such persons, which meant that the proceedings were not properly constituted as a representative action under Pt 8 r 13(1). In my view, the effect of the decision of the majority of the justices of the High Court in Fostif, and their reiteration of the principle stated in The Duke of Bedford v Ellis, is that it is not sufficient to show that the proceedings give rise to some question of law or fact in which all represented persons have a common interest. Rather, to show that all such persons have the same interest in the proceedings relief must be claimed which is "beneficial to all", that is, the relief claimed must be common to all. 42 In Wong v Silkfield Pty Ltd (1999) 199 CLR 255, the High Court described the Chancery practice involving representative actions as follows (at 261-262, [14]): "[14] The strict application of the rule as to the presence of all necessary parties led, as the authorities referred to by McHugh J in Carnie ((1995) 182 CLR 398 at 427-429. See also the judgments of Chancellor Kent in Wendell v Van Rensselaer (1815) 1 Johns Ch 344 at 349-350 and of Story J in West v Randall (1820) 29 Fed Cas 718 at 721-722) show, to a relaxation. For example, a plaintiff might sue on behalf of himself and all the others of a class, of which he was one, on the allegation that they were too numerous all to be made parties (Daniell, The Practice of the High Court of Chancery , 5th ed (1871), vol 1, p 172). However, difficulties with this procedure arose where each of the members of the class had a distinct demand in equity. Thus, demurrers were allowed in respect of representative actions by shareholders who complained of misrepresentations in the prospectus upon which they had relied. This was because, whilst the prospectus may have been false, the case of each person deceived would be peculiar to himself and would depend upon its own circumstances ( Jones v Garcia del Rio (1823) 1 Turn & R 297 [37 ER 1113]; Croskey v Bank of Wales (1863) 4 Giff 314 at 330 [66 ER 726 at 732-733]; Hallows v Fernie (1868) LR 3 Ch App 467 at 471; Calvert, A Treatise Upon the Law Respecting Parties to Suits in Equity, 2nd ed (1847), pp 41-42; Spencer Bower, The Law Relating to Actionable Non-Disclosure (1915), pp 538-539; Kerr on Fraud and Mistake , 7th ed (1952), p 541; cf Beeching v Lloyd (1855) 3 Drew 227 [61 ER 890]). … " 43 In Lord Aberconway v Whetnall (1918) 87 LJCh 524, three plaintiffs who had subscribed money to a fund for the benefit of the defendant on the face of what was said to be a false representation, sued on their own behalves and purportedly as representatives of all other subscribers, to recover the money subscribed. Eve J held that although such subscribers as who wished to sue might be able to be joined together as co-plaintiffs, under the rule whose modern equivalent in this State is r 6.19, the action could not be maintained as a representative action. Eve J said (at 526): " A dozen different reasons may have prompted favourable replies to the appeal, not one of which would have entitled the donor to a return of his contribution, if he had been a plaintiff in this action; and yet if the argument is sound that this is a proper representative action, such a one although he could not recover his money were he himself a plaintiff must still have his contribution returned to him because three other persons, who for this purpose I am content to assume can successfully maintain an action for the recovery of their money, have chosen to elect themselves as his representatives. The position is an impossible one. It may well be that all the contributors who claim to have their contributions returned could have joined in one action under rule 1 of Order XVI, but in such an action each individual would have to establish his own right to relief by proving the propositions I have already stated. This is really an attempt to obtain relief for over 200 individuals by proving the right of three of there thereto. Such an attempt cannot and ought not to succeed. This action, which, after all, is nothing more than an action to recover damages for misrepresentation, does not possess the essential conditions of a representative action, and in my opinion it is misconceived. " 44 His Lordship's observations point to a feature of representative actions which tends to be overlooked. That is, that the represented persons do not become parties by virtue of being represented. It is for this reason that they are not liable to pay the defendant's costs. 45 Counsel for the plaintiff disclaimed any suggestion that if the proceedings continued as representative proceedings under r 7.4, no damages could be awarded to the represented persons unless and until they established that they had relied upon the alleged misrepresentations, or that they otherwise established a causal relationship between their loss and the alleged misleading conduct of the defendant. This highlights the interrelationship between r 7.4 and r 6.19. I will return to that relationship later in these reasons. 46 In Prudential Assurance Co Ltd v Newman Industries Ltd [1981] 1 Ch 229, Vinelott J cited the passage I have quoted above from Lord Aberconway v Whetnall and said (at 251-252): " Indeed in that case the claim by a plaintiff to sue in a representative capacity was absurd. The plaintiff could not, on behalf of all members of the class, claim to recover all subscriptions that had been made for it was an essential ingredient of the cause of action of any person seeking to recover that he had himself been deceived by a misrepresentation into making his subscription. This difficulty could not have been overcome by limiting the relief to a declaration that any subscriber who had been induced by a misrepresentation to contribute to the fund was entitled to recover because the declaration would have accomplished nothing. Each plaintiff would still have had to establish in separate proceedings that he had been so induced in order to rely on the judgment in the representative action. These cases, in my judgment, establish two propositions. First, no order will be made in favour of a representative plaintiff if the order might in any circumstances have the effect of conferring on a member of the class represented a right which he could not have claimed in a separate action or of barring a defence which the defendant could have raised in such proceedings. Secondly, no order will be made in favour of a representative plaintiff unless there is some element common to the claims of all members of the class which he purports to represent. " 47 The practice was not uniform. In Beeching v Lloyd (1855) 3 Drew 227; 61 ER 890, a representative action was allowed by two investors acting on behalf of themselves and other persons intending to subscribe for shares in a proposed company to recover moneys subscribed for the shares, where it was alleged that the investments had been obtained by fraud. Beeching v Lloyd was distinguished in Markt & Co Ltd v Knight Steamship Co Ltd [1910] 2 KB 1021 at 1031-1032, but the latter case has itself been criticised as too narrow. Nonetheless, as the High Court's citation of authority in Wong v Silkfield (at 261, [14]) shows, Beeching v Lloyd falls outside the mainstream of authority. 48 Representative actions have been allowed where the represented persons have a common interest in obtaining declarations that the conduct of the defendant was unlawful, leaving it open to the represented persons subsequently to sue individually for damages, being entitled to rely upon the declaration as res judicata (Jones v Cory Bros & Co Ltd; Thomas v Great Mountain Collieries Co (1921) 56 L Jo 302; 152 LT Jo 70; Prudential Assurance Co Ltd v Newman Industries Ltd at 255-257). 49 In my view, if the plaintiff and the represented persons have the same interest in the declaration which is sought, the proceedings have been properly commenced as representative proceedings, even though in order to obtain their several damages, the represented persons will ultimately have to become parties to proceedings brought either severally, or together pursuant to r 6.19. In Prudential Assurance Co Ltd v Newman Industries Ltd Vinelott J said (at 255) that the limitation periods for the recovery of damages would continue to run against any member of the class of represented persons until he or she brought his or her own action. 50 The represented persons are not parties to the action. They do not commence their own action by being represented by the plaintiff. In Cameron v National Mutual Life Association of Australasia Ltd (No. 2) [1992] 1 Qd R 133 proceedings for the recovery of damages in tort and contract were improperly commenced as representative proceedings on behalf of unnamed persons. McPherson SPJ, with whom Moynihan J agreed, held (at 136-138) that the institution of proceedings, although defective, amounted to the bringing of an action on a cause of action founded on tort or contract, so as to stop the running of the limitation period. 51 The question of limitation periods is not before me. But, with respect, it is difficult to see how an action can be said to have been brought, although it has only been purportedly brought, and by someone who might have no authority to do so. Prudential Assurance Co Ltd v Newman Industries Ltd was not referred to in Cameron. I cannot reconcile Vinelott J's conclusion in Prudential Assurance, that limitation periods continue to run with respect to causes of action that are not properly maintainable in a representative proceeding, with the conclusion in Cameron that bringing an action which is not properly constituted as a representative proceeding stops the running of limitation periods for the causes of action of the persons purportedly represented. 52 In Fostif in the Court of Appeal, Mason P held (at 214-215,[44] and 246, [201]) that where the rule for the commencement of representative proceedings was properly engaged, limitation periods stop for the whole of the represented group. Logically, this would only follow if the institution of representative proceedings under r 7.4 (or Pt 8 r 13) was the commencement of an action on a cause of action for damages (in the present case) or for restitution (in Fostif). Mason P neither approved nor disapproved of the conclusion in Cameron that the limitation periods stop if proceedings for the recovery of damages on the individual causes of action of represented persons are improperly commenced as representative proceedings. 53 In the present case, if the plaintiff and the represented persons have a claim for relief beneficial to all, it is a claim for a declaration that the defendant has engaged in misleading or deceptive conduct in contravention of s 12DA of the ASIC Act or s 42 of the Fair Trading Act. The claims for damages are not beneficial or common to all of the represented persons. If the contraventions are established, it will still be necessary for the individual represented persons to establish that the contraventions were causative of any loss. Any losses established will be several to each represented person. Accordingly, if the proceedings continue as a representative action, so that the represented persons are not parties who have commenced their own action on causes of action for the recovery of damages, and the purported commencement of such a proceeding by the plaintiff was not authorised by r 7.4, it is at least seriously arguable that limitation periods will continue to run. 54 The difficulty in saying that the plaintiff and the represented persons have a common interest in the claim for a declaration is in the way the statement of claim alleges that the defendant engaged in misleading or deceptive conduct. The defendant's conduct is alleged to have been misleading by a combination of what was expressly represented in the prospectus, and what was not disclosed to potential investors. The allegations in paragraphs 10 and 11 of the statement of claim assert a non-disclosure of risk, as well as the non-disclosure of alleged facts which are said to make the alleged forecasts misleading. 55 As the pleading is presently cast, no declaration could be made in the terms sought in the originating process, as it is not the issuing of the prospectus which is alleged to be the engaging in misleading and deceptive conduct. A declaration that the defendant engaged in misleading and deceptive conduct by making the representations alleged in paragraph 11 of the statement of claim could only be made in respect of each individual with respect to whom it was established that the matters alleged in paragraph 10 were not disclosed. The allegation that the defendant engaged in misleading or deceptive conduct by not disclosing information to the individual investors means that it would not be appropriate to make declarations except as to whether the defendant engaged in misleading or deceptive conduct in relation to each such person. The represented persons would not have the same interest in such declaratory relief. 56 If the claim were that the forecasts in the prospectus as to prospective earnings from the investment were misleading or deceptive because there was not a reasonable basis for them by reason of the matters alleged in paragraph 10 of the statement of claim, or, that those representations were representations as to future matters which are to be taken to be misleading unless the defendant proves the contrary, then all of the investors who may have suffered loss as a result of relying on the prospectus would have a common interest in the determination of those issues. However, that is not how the claim is presently pleaded. Rather, the alleged misleading conduct is the making of the express representations in the prospectus and the non-disclosure to potential investors of the matters which are said to make the prospectus misleading. It may be that the pleader wished to pre-empt possible defences that an investor did not suffer loss in reliance on the prospectus because he or she was informed of the matters alleged to make the prospectus misleading. However, that is not how the pleading is cast. 57 However, I understand counsel for the plaintiff to say that the intention was to plead that the representations conveyed by the prospectus were misleading, and the purpose of pleading that matters had not been disclosed to potential investors was to pre-empt defences to that claim. The plaintiffs should have the opportunity to amend the statement of claim, if so advised, to plead facts common to all of the represented persons from which a claim for declaratory relief beneficial to them all could be maintained. 58 I do not accept that such a claim for declaratory relief must be refused as mere surplusage. There is force in the submission of counsel for the plaintiff that a representative action should only be rejected on such a ground if the case was so clear that it would warrant a summary dismissal of the claim for declaratory relief. The fact that the plaintiff and the represented persons will be seeking a monetary remedy does not mean that they do not have a legitimate basis for also claiming declaratory relief. In Prudential Assurance Co v Newman Industries Ltd, the plaintiff was permitted to sue in both its personal capacity and as representing all shareholders other than the two named defendants, to claim declarations that the defendants had made false representations and had conspired to injure either the plaintiff company or the other shareholders, or to induce a breach by the defendant company of its contractual duty to shareholders. Such declarations were contemplated as being a prelude to individual claims which either the shareholders, or the company, or both, might have against the defendant (at 256-257). It is not an objection to such a declaration that the real gist of the action is the recovery of damages. 59 That is so a fortiori where Parliament has expressly provided that a person may institute a proceeding for a declaration in relation to a defendant's contravention of provisions prohibiting conduct which is misleading or deceptive, or likely to mislead or deceive (ASIC Act, s 12HD(1)(a)). Such a declaration is made in the protection of the public interest. In Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (2000) 200 CLR 591, Gleeson CJ and McHugh J observed (at 602, [17]) referring to s 163A of the Trade Practices Act 1974 (Cth) that: " As Bowen CJ observed in Phelps v Western Mining Corporation Ltd (74), the purpose of s 52 is to protect the public from being misled or deceived. An application for injunctive relief under s 80 is, in its nature, one for the protection of the public interest. The same may be said of s 163A. Any public protection of the applicant's own business or other interests is incidental or collateral. What is sought to be established by the determination of a court is a violation by the respondent of a statutory norm of conduct, and the existence of a duty or liability. " 60 In my view, the represented persons have the same interest in both seeking to vindicate the public interest and in obtaining a collateral advantage from a determination of the Court as to whether or not the defendant has violated the statutory norms of conduct prescribed by s 12DA of the ASIC Act and s 42 of the Fair Trading Act. 61 Accordingly, unless it is appropriate to make a contrary order under r 7.4(2) that the proceedings not continue as representative proceedings, the appropriate course is to allow the plaintiff, if so advised, to amend her pleading to provide the appropriate foundation for a claim for declaratory relief which is not dependent upon findings of what was not disclosed to each individual represented person, but is based upon alleged contraventions of s 42 of the Fair Trading Act and s 12DA of the ASIC Act which is common to all. Should Paragraphs 15 to 18 of the Statement of Claim be Struck Out? 62 Paragraphs 15 to 18 of the statement of claim allege, in substance, that the plaintiff and each of the represented persons acquired units in the trust in reliance upon the "Representations" and have thereby suffered loss and damage. The "Representations" are those pleaded in paragraph 11 of the statement of claim, namely, that the forecasts of future distribution yields and capital gains were reasonably achievable, without disclosing the risks attached to those forecasts. 63 I have accepted that the plaintiffs cannot maintain in a representative action the causes of action of each of the represented persons for damages. Relief by the way of damages is not relief beneficial to all, but is individual to each person. It is seriously arguable that limitation periods continue to run in respect of such claims. The proceedings might continue as representative proceedings for declaratory relief. However, there is no advantage in not striking out the claims for damages. If the plaintiff in a representative action obtains declaratory relief that the defendant has engaged in misleading or deceptive conduct, it will still be necessary for each of the representative persons to commence his and her own actions in order to recover damages, either individually or as co-plaintiffs pursuant to r 6.19. 64 If the proceedings continue as representative proceedings under rule 7.4, rather than being reconstituted under rule 6.19, I will order that paragraphs 15 to 18 of the statement of claim be struck out, in so far as those paragraphs refer to the "Represented Persons" listed in Schedule A to the originating process. Should a Contrary Order be Made Under r 7.4(2)? 65 The consequence of the proceedings not continuing as representative proceedings under r 7.4 would not be that each investor would be required to commence his or her own separate proceeding. There would not be a multiplicity of separate proceedings. Rule 6.19 provides: " 19 Proceedings involving common questions of law or fact (cf SCR Part 8, rule 2; DCR Part 7, rule 2; LCR Part 6, rule 2) (1) Two or more persons may be joined as plaintiffs or defendants in any originating process if: (a) separate proceedings by or against each of them would give rise to a common question of law or fact, and (b) all rights of relief claimed in the originating process are in respect of, or arise out of, the same transaction or series of transactions, or if the court gives leave for them to be joined. (2) Leave under subrule (1) may be granted before or after the originating process is filed. " 66 If separate proceedings were brought by each represented person against the defendant, such proceedings would give rise to common questions of law and fact. Whether or not the relief claimed in the originating process would be in respect of, or arise out of, the same transaction or series of transactions, (as distinct from a series of similar transactions, Payne v Young (1980) 145 CLR 609 at 615, 618), this would be an appropriate case for the grant of leave for the joinder of all such claims in the one proceeding. Whether the proceedings were brought as a representative action with one plaintiff and eighty-four represented persons, or as a single proceeding with eighty-five plaintiffs, there would be no material difference in the directions to be made for the conduct of the proceedings. The same issues will be determined in the same sequence and with the same pre-trial interlocutory procedures whether the action proceeds as a representative action under r 7.4 or as an action with co-plaintiffs under r 6.19. 67 If the plaintiff is able to formulate a claim for declaratory relief which is appropriate for a representative action, and if she succeeds in that claim, then it is inevitable that the several claims of the represented persons for damages will proceed pursuant to r 6.19. 68 The only substantive issues which appear to arise as to whether the proceedings should continue under r 7.4 or should be reconstituted with each of the represented persons joined as plaintiffs under r 6.19, is that in the latter case, all of such persons would be potentially liable to an order for costs, and the claim of each of them could only be settled with his or her own consent. Because represented persons are not parties to the proceedings, they are not amenable to a costs order (Uniform Civil Procedure Rules, r 42.3(1) (Carnie v Esanda Finance Corp Ltd at 420; Markt & Co Ltd v Knight Steamship Co Ltd at 1039). Although a plaintiff in a representative action may have duties to persons whom he or she represents as to how such proceedings may be settled, that should not affect the power of the plaintiff to reach agreement with the defendant for the settlement of the proceedings. 69 I do not consider that these considerations are sufficient, either alone or in combination, to warrant making an order under r 7.4(2). The defendant does not complain that the plaintiff may be unable to meet any costs order which may be made against her. I was told that the proceedings are being funded by a litigation funder who has agreed to indemnify the plaintiff against any liability she may incur to pay the defendant's costs. I should not assume that either with or without the benefit of that indemnity, she will be unable to satisfy such an order. 70 The only persons who might be adversely affected by the plaintiff being entitled to settle the proceedings with the defendant at her discretion are the represented persons. In this case, the class of represented persons comprises only those who have elected to be named as such. It is open to all such persons to make their own arrangements as to the basis upon which the plaintiff may be entitled to settle the proceedings for declaratory relief. 71 Counsel for the plaintiff submitted that there are practical advantages in the running of the litigation in the solicitors having a single client, albeit who represented numerous other persons, rather than all such persons being joined as plaintiffs. No doubt there is a great convenience in the legal representatives taking instructions from one person, although I find it hard to see why, if persons are willing to be named as represented persons and to entrust the giving of instructions to the plaintiff, they would not also be willing to entrust the giving of instructions to the plaintiff if they were joined as parties to the action. 72 It is clearly more appropriate for the proceedings to continue as representative proceedings than that separate actions be brought by all of the represented persons. It is no less convenient for the claim for declaratory relief to be brought as a representative action under r 7.4 than it is to be brought as part of the relief sought in an action with multiple plaintiffs under r 6.19. If the proceedings continue as a representative proceeding under r 7.4 for declaratory relief, it is probable that the plaintiff and the Represented Persons will bring a separate proceeding for damages pursuant to r 6.19. That proceeding would no doubt be stayed until the representative proceeding for declaratory relief is determined. If the proceedings were reconstituted under r 6.19, the claims for damages would still await the determination of common questions of law and fact involved in the claim for declaratory relief. The difference between there being one proceeding and two is not substantial. I decline to make an order that the proceeding not continue as a representative proceeding. 73 There may be a question whether the plaintiff wishes the action to continue as a representative action for a claim for declaratory relief having regard to my conclusion that the individual claims of the represented persons for damages cannot be brought in a representative action, and there is a risk that limitation periods continue to run. Conclusion 74 As the matter is presently constituted, I have concluded that paragraphs 15 to 18 of the statement of claim should be struck out insofar as those paragraphs refer to the "Represented Persons" listed in schedule A to the originating process. If the plaintiff wishes to proceed with the claim for declaratory relief as a representative action, she should be given the opportunity to amend the statement of claim, if so advised, as indicated in these reasons. If the plaintiff and the represented persons seek to be joined as plaintiffs pursuant to r 6.19, then, to the extent leave might be required, I would give leave for them to be so joined. 75 I will stand over the proceedings to a convenient date so that the plaintiff and her legal representatives can consider their position. At that time, I will hear the parties on costs. ****** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.