Bray v F Hoffmann-La Roche Ltd [2003] FCAFC 153

What the court decided

Ms Bray commenced a representative proceeding under Part IVA over an international vitamins price fixing and market sharing arrangement [3], [7]. She claimed damages and other relief under the Trade Practices Act 1974 (Cth) [217]. The respondents incorporated in Australia (the Australian respondents) sought orders that the proceeding be struck out or not continue under Part IVA [12].

Under section 33C(1)(a), seven or more persons must have claims against the same person [101]. The primary judge was bound by the Full Court’s decision in Philip Morris (Australia) Ltd v Nixon [2000] FCA 229 (‘Philip Morris’) that, where there is more than one respondent, every group member must have a claim against all respondents [198]. His Honour accepted that some group members might not have a claim for damages against every respondent, but held the requirement met because all group members claimed injunctive relief against all respondents [103].

The Court granted the Australian respondents leave to appeal against an order of the primary judge, Merkel J, of 15 November 2002 and dismissed those appeals with costs, except that the appeal of Aventis Animal Nutrition Pty Ltd on security for costs was allowed and its application was remitted to Merkel J (orders 3 to 7). The orders contain no order granting leave to amend. Finkelstein J agreed with the orders proposed by Carr J and Branson J [253]. Security for costs, service outside Australia and jurisdiction are outside the scope of this note.

Carr J held that, assuming Philip Morris was right that every group member must have a claim against every respondent, the primary judge was right to treat the injunction claims as sufficient [110]–[111]. In his Honour’s view, the word claim is not limited to a cause of action and includes a demand for relief such as an injunction [113]. Carr J said it was strictly not necessary to decide whether each group member must have a claim against each respondent, but expressed the view that Philip Morris was wrongly decided on that point and agreed with Finkelstein J’s reasons [122], [130].

Branson J was unable to accept that Philip Morris was clearly wrong, and considered it should be followed unless and until the High Court took a different view [199]. Proceeding on the Philip Morris basis, her Honour noted that the only claims all group members made against all respondents were claims of a public nature, and left aside any special position of the Australian Competition and Consumer Commission [201], [207]–[208]. Her Honour concluded, with considerable hesitation, that persons invoking the same power to make an order in the public interest do not have claims of the kind section 33C(1) requires [210]. On that basis Branson J held that the primary judge erred in treating the claims for injunctive relief under section 80(1) of the Trade Practices Act, and possibly for declaratory relief under section 163A of that Act, as sufficient [211]. That conclusion was not fatal to the proceeding and did not require that it be struck out or not continue as a representative proceeding, and her Honour would give the applicant leave to amend [212].

Finkelstein J held that section 33C(1)(a) requires a group of seven or more persons each of whom has a claim against one person, and that is all it requires [248]. His Honour noted that the primary judge read claim as the relief sought, there an injunction under section 80(1) of the Trade Practices Act [243]. His Honour considered that unlikely; in his Honour’s view, the word means the facts giving rise to the action as well as its legal basis [245]. His Honour would not construe section 33C as requiring a separate proceeding where some group members also have claims against another person that satisfy section 33C(1)(b) and (c) [248]. His Honour held that the current application and statement of claim did not conform with section 33C and would grant leave to amend once more [249].

Carr J held, and Branson J agreed, that the claims gave rise to substantial common issues of law or fact under section 33C(1)(c) [133], [213].

Why it matters

Carr J and Finkelstein J would not follow Philip Morris on whether every group member must have a claim against every respondent, Carr J agreeing with Finkelstein J’s reasons [122], [248]. Carr J said it was strictly not necessary for him to decide the point, and Branson J would follow Philip Morris until the High Court decided otherwise, so the rejection of Philip Morris does not rest on a majority holding [122], [130], [199]. The applicants in Philip Morris had accepted the requirement, so it was decided there without contrary argument [123], [246]. Carr J held the injunction claims sufficient, Branson J held them insufficient and Finkelstein J held that the pleading did not conform with section 33C [121], [211], [249].

In my view, solicitors framing a group against several respondents should not rely on a universal statutory standing to seek an injunction as the common claim. The cautious course is to frame the group so that every member has an individual claim against every respondent, or to consider subgroups, a course Carr J approved in remarks unnecessary to his decision and Finkelstein J’s construction allows, and which Branson J left open without deciding [127]–[129], [200], [248]. Later authority on these competing views should be checked before advising.

This note concerns the representative proceeding provisions of the Federal Court of Australia Act 1976 (Cth) [1]. The decision did not consider the Victorian group proceeding provisions, which must be read on their own terms, as must the current text of any provision relied on.

Numbers in square brackets are paragraph numbers of the judgment. This note summarises a decided case for education and is not legal advice. See how the notes are written.