11 October, 2013

McDonald’s Australia Limited v Janine Watson and Others [2013] VSC 502

WHAT YOU NEED TO KNOW

• The liberal procedures available in class actions are equally available to assist parties who are aggrieved by the conduct of a group of persons.
• In such defendant representative proceedings, it will ordinarily be in the interest of the applicants to seek a broad class definition. This is particularly so when identification of the relevant individuals is difficult, as orders cannot be made against unidentified persons who are not the subject of proceedings.
• There are few limits on the Court’s jurisdiction to order that a matter proceed in a representative fashion. The only preconditions are that there be a sufficient number of persons to be represented (“numerous” in Victoria, seven in the Federal Court), and a sufficient congruence of interest between the defendants and the persons to be appointed as representatives.
• Though courts will generally consider an array of factors in determining whether a representative proceeding is appropriate, these factors are, for the most part, discretionary.

Introduction: A Fast Feud

When McDonald’s sought a planning permit to open a restaurant in Tecoma, at the foot of the Dandenong Ranges, the application was met with fierce public protest. Councillors of the Shire of Yarra Ranges Council unanimously rejected the application.

The Victorian Civil and Administrative Tribunal (VCAT) allowed McDonald’s’ appeal. Presiding Member Rundell, with Member Carew, had regard to the community objections, as well as planning and environmental considerations.

No appeal from VCAT’s decision has been filed, but vehement opposition to the development has persisted. Members of the protest group have, for example, released a CD titled “Resistance is Fertile – No Maccas in Tecoma”, and operate a Facebook group titled “Get Mactivated”.

Commencement Of Proceedings, And Interlocutory Injunction

When preparatory work for the demolition of the existing buildings began in July 2013, protesters sought to thwart it. People trespassed on McDonald’s’ land, and on neighbouring land, including by climbing onto the roofs of the buildings to be demolished and refusing to come down. Others obstructed vehicles and workers from entering the property.

Two weeks after commencement of the demolition work had first been attempted, McDonald’s commenced a representative proceeding in the Supreme Court of Victoria. The writ named eight defendants, and identified two as representative of larger groups. The first named defendant, Ms Watson, was claimed to be representative of those who had climbed roofs on McDonald’s’ land. The seventh named defendant, Ms Stewart, was claimed to be representative of those who had impeded the access of workers to the land.

On 18 July 2013, Kyrou J made orders appointing Ms Watson and Ms Stewart as representative defendants, and granting McDonald’s an interim injunction restraining the defendants and the represented groups from trespassing on, or interfering with McDonald’s enjoyment of, the land. Justice Kyrou designated the group Ms Watson represented as the “Trespass” group, and Ms Stewart’s group the “Nuisance” group.

Substantive Hearing

The defendants did not contest the continuation of the injunction against them, but submitted that the representative orders should be vacated on the ground that the Court did not have jurisdiction to make them. McDonald’s sought a permanent injunction against the Trespass and Nuisance representative groups.

McDonald’s also sought to expand the definitions of those groups to include persons who had trespassed on its land, or impeded the access of its workers, during the period between the grant of the interim injunction and the hearing.

(McDonald’s also argued that it should be able to obtain an injunction against unnamed persons, in the absence of a representative proceeding, but that argument was rejected).

Appointment Of Representative Persons: Discretionary Considerations, And Preconditions

In reviewing the appropriateness of the representative orders, Kyrou J considered a number of relevant legal principles, beginning with the overarching purpose of proceedings in the Supreme Court generally,¹ and of representative proceedings specifically.

His Honour referred extensively to Carnie v Esanda Finance Corporation Ltd (1995) 182 CLR 398, in which Toohey and Gaudron JJ, and McHugh J (in a separate judgment) traced the history of representative actions. Justice Kyrou also examined three requirements identified by Hunt J in Amos Removals & Storage Pty Ltd v Small [1981] 2 NSWLR 525, decided prior to Carnie, two of which are no longer preconditions to the Court’s jurisdiction to make a representative order.

Discretionary: An Identifiable Group or Class

The first principle identified by Hunt J in Amos was that the persons to be represented form an identifiable group or class. Kyrou J’s view was that the principle adopted by Toohey J and Gaudron JJ in Carnie was preferable: “the onus is on the party seeking the representative order to identify the represented group with sufficient particularity, not to identify every member of the class” ([39], citing Carnie 422). Accordingly, the fact that McDonald’s had not named or sought to name every member of the Trespass and Nuisance groups was relevant to the exercise of the Court’s discretion, but not its jurisdiction ([43]).

Discretionary: Management Of The Group Or Class

The second Amos principle was that the selected representatives must be shown to be managing the group or class and have control of its funds. Justice Kyrou was critical of this point, noting that while “Hunt J stated that this requirement was laid down by authorities, he did not identify any authorities” ([44]).

Precondition: Common Interest²

The final Amos precondition is reflected in the Supreme Court Rules: there must be a common, or same, interest between the representative and the represented persons. Justice Kyrou referred to the observations of the High Court on point in Carnie, including that this should be taken as meaning that “the representative and represented group must have a community of interest in the determination of any substantial question of law or fact that arises in the proceeding” and that the same interest need not equate to the same cause of action, or an entitlement to a share of the same relief. His Honour also noted a judgment in which it had been held that it was no bar to instituting a representative proceeding that some of the persons to be represented knew nothing of the proceeding (Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386 at 421), and in which, because the cause of action pleaded and relief sought required consideration of each defendant’s position individually, there was no community of interest (Geelong Wool Combing Ltd v Textile, Clothing and Footwear Union of Australia (2003) 130 FCR 447, [12]).

Justice Kyrou separately addressed (at [72], [73]) the suggestion by Hunt J in Amos that, for an action in tort, represented persons should have identical liability (Carnie, 404). His Honour’s position was that the broad interpretation of commonality of interest adopted in Carnie was preferable, though he noted that the fact that only an injunction was sought in this case assisted in establishing a commonality of interest.

Precondition: Numerous Persons³

His Honour then examined a further precondition required by the Rules: that there be “numerous persons” with the same interest in the proceeding. Justice Kyrou noted that, in Cauvin v Philip Morris Ltd [2003] NSWSC 631, the circumstances of the case led Bell J to conclude that the seven defendants, representing 11 overseas companies, could be conveniently joined to the proceeding if the plaintiff wished to do so, and so should not be considered numerous. In his Honour’s opinion, where “the identity of the persons to be represented is known… the size of the class may need to be larger than when the identity is not known”, as in the latter case “a representative proceeding may be the only means by which relief could be obtained” (at [64]).

Discretionary: Willingness To Represent, Or Be Represented

Justice Kyrou considered the willingness of persons to act as a representative or be represented to be a discretionary, but not determinative, factor. His Honour noted that it could not be otherwise, as in most cases most defendants would not wish to be appointed as representatives ([67]). In this case, the identity of some of the represented persons was not known to McDonald’s, and so their willingness to be joined could not be determinative ([71]).

Discretionary: Possibility Of Different Defences

The possibility of different defences in a defendant representative proceeding is an apparent difficulty. In this case, however, as McDonald’s only sought a permanent injunction to prevent trespass and nuisance, the point was less relevant ([76]).

Discretionary: Suitability Of The Person To Be Selected⁴

Kyrou J finally noted that the suitability of the person selected to be the representative is a relevant discretionary factor, having regard to the decision in Commonwealth v Doyle (Unreported, Supreme Court of Victoria, Brooking J, 4 October 1983). In Doyle, a woman was proposed to be representative of a group of squatters occupying the plaintiff’s property. Despite never having slept at the property, Brooking J was satisfied that her close connection with the squatters meant that she had ‘shown herself to be acting in concert’ with them, and her appointment therefore fitting ([79], citing Doyle, 8).

Temporal Extension Of The Class Definition

McDonald’s sought to extend the definition of the Trespass and Nuisance groups from the time that the interlocutory injunction was ordered to the date of the directions hearing.
His Honour noted a number of authorities which emphasise that the critical time to assess whether there are numerous persons having the same interest is the time at which the proceeding is commenced. In his Honour’s opinion, however, this did not mean that the claim must remain fixed at the time of commencement: amendment is available to cover events occurring after commencement ([88], [89]).

Application Of Principles To Ms Watson And Ms Stewart

Justice Kyrou found that the persons who fell within the classes to be represented by the Trespass and Nuisance defendants had the same interest in the proceedings as those representatives, being “to prevent the making of an injunction and, if an injunction were to be granted, to limit its ambit and thus maximise the scope of protest action that could be lawfully pursued” (at [119]).

In his Honour’s view, this proceeding was apt for the exercise of the discretion in favour of making such a representative order, without which “the plaintiff would be left without a remedy against unnamed protestors who are flagrantly interfering with its legal rights as part of an ongoing coordinated campaign” ([121]).

Though the proposed representatives of the Protest and Nuisance groups did not wish to be appointed, Kyrou J found that it was appropriate that orders appointing them be made. In Kyrou J’s view, the Supreme Court Rules do not impose any obligation upon a representative in relation to represented proceedings; instead, the rules assume (at [136]):

“that, as the representative and the represented persons have the same interest in the proceeding, the representative will always act to protect his or her interests in the same manner as the interests of the represented persons.”

1 Section 7 of the Civil Procedure Act 2010 (Vic) requires the “just, efficient, timely and cost-effective resolution of the real issues in dispute.” This provision is similar to s 37M in the Federal Court of Australia Act 1976 (Cth), which states the overarching purpose of the civil practice and procedure provisions to include the “just resolution of disputes… according to law; and… as quickly, inexpensively and efficiently as possible.”

2 In the Federal Court, two threshold requirements in s 33C cover similar terrain: first, the claims must arise out of the same, similar or related circumstances; and secondly, there must be a substantial common issue of law or fact.
3 Section 33C(1)(a) of the Federal Court Rules requires that there be seven persons, though, pursuant to s 33L, representative proceedings may continue with less than seven persons in limited circumstances.

4 Section 33T of the Federal Court Rules provides that, in circumstances where “it appears to the Court that a representative party is not able adequately to represent the interests of the group members”, the Court may substitute an alternate representative.

For further information, please contact:

Ashley Wharton, Partner, Ashurst
[email protected]

Claire Roberts, Ashurst
[email protected]

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