Bray v F Hoffman-La Roche Ltd  FCAFC 153
(Justices Carr, Branson and Finkelstein, 15.7.03, Full Federal Court)
During the 1990s, three groups comprising the respondents entered into and carried out an international price fixing and market sharing arrangement in relation to vitamin products. This led to several international prosecutions. A number of the companies pleaded guilty to the charges or admitted liability. Several received pecuniary penalties. The applicant applied to commence a representative proceeding under Part IVA of the Federal Court Act (FCA). The group consisted of persons seeking competition in relation to purchases of the relevant vitamins in Australia. One of the issues before the primary judge was the submission by one of the respondents that security for costs be ordered against the applicant.
It was common ground that the applicant (who was a natural person) would be unable to meet an order for security for costs in the amount suggested by the respondents. Section 56 of the FCA confers a broad discretion on the Court to order the provision of security for costs if the circumstances justify such an order. Traditionally, one consideration is whether there are other members of the representative group who have substantial means and who are 'standing behind' the individual applicant in order to avoid liability for costs. The primary judge was unable to conclude that this was happening in the present case. Further, it was found that the applicant had made out a prima facie case for relief and that the group's claims arose from conduct already admitted to by the cartel. His Honour further found public policy considerations weighed against such an order in this case.
On appeal, the Full Court drew attention to the fact that the applicant had not provided any evidence as to who was funding the proceedings or evidence of their means. The Court found a need to balance the legislative policy of not awarding costs against a group member other than the representative party and preventing injustice to a respondent who is unable to recover costs. The Court remained concerned that the solicitors stood to gain from the successful prosecution of the proceedings. In balancing these elements the Court noted that several characteristics of the class would be relevant. These included the number of group members involved, their financial circumstances and whether an order for security for costs would stifle the proceedings. The applicant needed to provide evidence of the detrimental effect of an order for security for costs and in this case the applicant had failed to do so. For the Court to exercise its discretion it needs to carefully take into account the above factors. The appeal was granted on this and several other grounds, to be remitted back to the primary judge for futher consideration.
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