Mobil Oil Australia Pty Ltd v Victoria

• Jurisdiction: Australia Federal only
• Judge: Gleeson CJ,Gaudron,Gummow,Hayne JJ,Kirby J,Callinan J
• Judgment Date: 26 June 2002
• Neutral Citation: 2002-0626 HCA A,[2002] HCA 27
• Court: High Court
• Docket Number: M141/2000
• Date: 26 June 2002

[2002] HCA 27

HIGH COURT OF AUSTRALIA

Gleeson CJ, Gaudron, Gummow, Kirby, Hayne and Callinan JJ

M141/2000

Mobil Oil Australia Pty Ltd

Plaintiff

and

The State of Victoria & Anor

Defendants

Representation:

D F Jackson QC with G R Kennett for the plaintiff (instructed by Blake Dawson Waldron)

D Graham QC, Solicitor-General for the State of Victoria with C M Kenny for the first defendant (instructed by Victorian Government Solicitor)

J B R Beach QC with B F Quinn and L M Nichols for the second defendant (instructed by Slater & Gordon)

Interveners:

D M J Bennett QC, Solicitor-General of the Commonwealth with K L Eastman and G A Hill intervening on behalf of the Attorney-General of the Commonwealth (instructed by Australian Government Solicitor)

B M Selway QC, Solicitor-General for the State of South Australia with P S Psaltis intervening on behalf of the Attorney-General for the State of South Australia (instructed by Crown Solicitor for the State of South Australia)

M G Sexton SC, Solicitor-General for the State of New South Wales with M J Leeming intervening on behalf of the Attorney-General for the State of New South Wales (instructed by Crown Solicitor for the State of New South Wales)

R M Mitchell intervening on behalf of the Attorney-General for the State of Western Australia (instructed by Crown Solicitor for the State of Western Australia)

Constitution, s 73.

Constitution Act 1975 (Vic), ss 16, 75.

Courts and Tribunals Legislation (Miscellaneous Amendments) Act 2000 (Vic), s 13.

Supreme Court Act 1986 (Vic), Pt 4A.

Mobil Oil Australia Pty Ltd v Victoria

Practice and procedure — Group proceedings — Defendant to group proceeding manufactured defective aviation fuel — Group proceeding commenced against manufacturer alleging breach of contract and negligence — Proceeding arose out of the same or similar circumstances and gave rise to a substantial common question of law or fact — Originating process served on manufacturer within the jurisdiction.

Constitutional law — State — Legislative powers of State parliament — Whether statute providing for group proceedings to bind unaware claimants in other States beyond the legislative power of a State parliament — Whether statute offends the territorial limitations of a State parliament.

Constitutional law — Federal — Whether State group proceedings involve the impermissible exercise of the judicial power of the Commonwealth — Whether judgment given in a group proceeding gives rise to a ‘judgment, decree, order or sentence’ within the meaning of s 73 of the Constitution — Whether group proceedings otherwise incompatible with Ch III of the Constitution.

ORDER

Each of the demurrers to the amended statement of claim is allowed with costs.

1 Gleeson CJ. Demurrers by each of two defendants to an Amended Statement of Claim were set down for hearing before a Full Court. The plaintiff, Mobil Oil Australia Pty Ltd (‘Mobil’), commenced an action in this Court seeking a declaration that the provisions of Pt 4A of the Supreme Court Act 1986 (Vic), which were inserted by the Courts and Tribunals Legislation ( Miscellaneous Amendments) Act 2000 (Vic), are beyond the legislative power of the Parliament of Victoria and are invalid. Two grounds of invalidity were advanced. They were that the provisions:

• (a) exceed the territorial limits on the legislative power of the State arising under the Constitution or otherwise; and

• (b) are inconsistent with the requirements for the exercise of judicial power by the Supreme Court arising under the Constitution.

2 The essential ground of each demurrer is that Pt 4A is within the legislative power of the Victorian Parliament and is valid.

3 Part 4A provides for the commencement and conduct of group proceedings. Mobil, a company incorporated in Victoria, is the defendant in group proceedings commenced in the Supreme Court of Victoria by Schutt Flying Academy (Australia) Pty Ltd (‘Schutt’). The second defendant in the action in this Court was later substituted for Schutt as plaintiff in the group proceedings. The group proceedings arose out of the manufacture in Victoria, by Mobil, of allegedly contaminated aviation fuel, and the subsequent supply of that product to consumers of aviation fuel in Victoria and in other Australian States and Territories. The case is based on allegations of breach of contract and negligence. The contracts of supply were made in various States, and reliance is placed upon terms implied by the Sale of Goods Acts of a number of States. The plaintiff in the group proceedings sues as representative of all the persons to whom contaminated aviation fuel was supplied.

4 The provisions of Pt 4A are substantially the same as those previously found in O 18A of the Supreme Court (General Civil Procedure) Rules 1996 (Vic), which had been subject to unsuccessful challenge in Schutt Flying Academy (Australia) Pty Ltd v Mobil Oil Australia Ltd 1. They are also generally along the lines of Pt IVA of the Federal Court of Australia Act 1976 (Cth), which was considered by this Court in Wong v Silkfield Pty Ltd 2.

5 The features of Pt 4A to which Mobil directs particular attention may be summarised as follows:

• 1. A person does not need to give his or her consent in order to be a group member.

• 2. It is not necessary for the originating process to have, or specify the number of, group members. Part 4A envisages group proceedings being conducted in which not all members of the group have been identified, and even proceedings in which the number of group members is not known.

• 3. Section 33ZE suspends the limitation period in relation to each claim of a group member to which the group proceeding relates. Time begins to run again if the group member ‘opts out’ or if the group proceeding is determined without disposing of that claim.

• 4. A group member may ‘opt out’ of a group proceeding.

• 5. Under s 33KA(1) the Court has a discretion to order that a person cease to be a group member, or not become a group member. That discretion arises when the Court is of the opinion that either the person does not have a sufficient connection with Australia to justify inclusion as a group member or for any other reason it is just and expedient that the person not be or become a group member. This confirms that connection with Victoria is not a test for inclusion in the group and that the location of persons outside Victoria, or even outside Australia, is not necessarily a barrier to their inclusion.

• 6. The Court also has a discretionary power to order that a proceeding no longer continue as a group proceeding under Pt 4A.

• 7. The Court is given power to deal with a situation in which resolution of the common issues will not determine all claims, including by establishing sub-groups, giving directions for the determination of remaining questions, allowing an individual group member to participate, and giving directions for the commencement of further proceedings.

• 8. The Court has power to substitute another group member for the plaintiff if it appears that the plaintiff is not able adequately to represent the interests of the group members. This is not a mechanism for the plaintiff to be replaced on the application of group members who disagree with the way the case is being run.

• 9. The judgment in a group proceeding may determine questions of law and fact, make a declaration of liability, and grant equitable relief, damages or other monetary relief. Damages may be awarded as specific amounts to individuals or in an aggregate amount.

• 10. The judgment must identify the group members who will be affected by it, and binds all persons who are such group members at the time the judgment is given.

6 In order to put the matter into perspective, it is necessary to bear in mind that there is no novelty in the conferring of jurisdiction to hear and determine actions or suits in which a plaintiff or a defendant is appointed to represent others who are not parties to the proceedings. The history of representative actions, and the considerations of justice and convenience which they serve, were matters examined by this Court in Carnie v Esanda Finance Corporation Ltd 3. The purpose of more modern provisions, of the kind found in Pt IVA of the Federal Court of Australia Act, was explained in Wong v Silkfield Pty Ltd 4. Subject to the capacity of the court managing representative proceedings to control the proceedings in such a manner as to ensure fairness, a capacity usually conferred by wide discretionary powers in relation to the conduct of the action, persons represented in such proceedings were not necessarily residents of the local territory in which the proceedings were taken; and they were not even necessarily aware of the proceedings 5.

Extra-territorial reach

7 Mobil contends that Pt 4A represents a constitutionally impermissible attempt to confer upon the Supreme Court of Victoria ‘a national jurisdiction in group proceedings’. Group members may be persons who are non-residents of Victoria, whose claims against Mobil arise from transactions or events outside Victoria, and who have not chosen Victoria as the forum for resolution of those claims in any sense other than that they have failed to ‘opt out’ of the group proceedings, perhaps without knowing that the proceedings were on foot. As to group members who are residents of Victoria, Mobil appears to accept that the fact of such residence would empower the Parliament of Victoria to enact provisions of the kind found in Pt 4A if they were confined to Victorian residents, even though such residents may not know of the group proceedings. But the application of such provisions to group members resident in other States

or Territories is said to exceed legislative power. The position of group members who may reside outside Australia was not explored

8 There were two strands, different but related, to the...