Mobil Oil Australia Pty Ltd v Victoria [2002] HCA 27

What the court decided

Mobil Oil Australia Pty Ltd (Mobil), a company incorporated in Victoria, was the defendant to a group proceeding in the Supreme Court of Victoria over aviation fuel, alleged to be contaminated, that it manufactured in Victoria and supplied in Victoria and other States and Territories [3]. The Courts and Tribunals Legislation (Miscellaneous Amendments) Act 2000 (Vic), by section 13, inserted Part 4A into the Supreme Court Act 1986 (Vic) [26]. The amending Act was deemed to have commenced on 1 January 2000 [149]. If valid, the Part therefore governed the proceeding, although the proceeding began before the amending Act was passed [29], [149]. The State of Victoria and Tasfast Air Freight Pty Ltd (Tasfast), the substituted representative plaintiff, demurred to Mobil's amended statement of claim in the High Court seeking a declaration of invalidity [30]–[31]. The demurrers were decided on the pleaded facts, under which Mobil was incorporated and served in Victoria and the fuel was made there [43], [91].

The Part, as inserted, allowed a group proceeding to be commenced where seven or more persons had claims against the same person arising out of the same, similar or related circumstances and giving rise to a substantial common question of law or fact [35], [157]. Subject to exceptions, a person's consent to be a group member was not required [38]. Group members could opt out before a date fixed by the court [41]. The court could order that a person cease to be, or not become, a group member if the person lacked sufficient connection with Australia or if that was just or expedient [41], [162]. Notice could be given by press advertisement or broadcast, so some group members might remain unaware of the proceeding [39]. A judgment bound all persons who were group members when it was given [41]. Limitation periods for the claims of group members were suspended on commencement of the proceeding [167].

Gleeson CJ held that the territorial connection between Part 4A and Victoria was direct and specific, because Part 4A concerned the Supreme Court's jurisdiction, which it took as it found it [10]. He held that the section 73 argument failed at both of its steps [19]. He also held that Part 4A was not repugnant to the exercise of judicial power [21].

Gaudron, Gummow and Hayne JJ, in joint reasons, held that the power to make laws "in and for Victoria" is plenary [46]. Where the defendant is served within the jurisdiction, the territorial nexus is found in its presence at the time of service, whether or not every claim is actively promoted by the person entitled to make it [55]. The connection of a claimant or a claim with the State does not bear on the court's authority to decide a claim against a defendant so served, though it may bear on choice of law [56]. A law regulating the procedure for dealing with claims made, or that could be made, against a defendant amenable to the court on any of the established bases is therefore a law "in and for" Victoria [61]. Absent a contrary order, a judgment under Part 4A bound the class regardless of knowledge and was an exercise of judicial power [65]. A separate argument, which may have been raised before Mobil amended its pleading, was not pursued [67].

Kirby J agreed in the orders proposed in the joint reasons [144]. His Honour held that Mobil's argument based on the Court's appellate jurisdiction failed at its first step, because it is not uncommon for judgments to bind persons who took no active part in the proceeding [83]–[84]. He described the separate argument, about the regime's compatibility with the role of State courts in federal jurisdiction, as abandoned [78]–[79]. On territoriality, however, he held that Mobil's amenability to the Supreme Court did not by itself answer the argument [99]. He accepted that extraterritorial State legislation may contradict limits implied in the federal Constitution, but held that Mobil had not shown Part 4A did so [141]. His Honour relied on the court's discretions, including its power to exclude interstate members whose rights differed under another State's law [134], [137].

Callinan J dissented in part, holding Part 4A valid only as read down [190], [196]. His Honour would have confined it to group members who reside, carry on business or are registered or incorporated in Victoria, and to others who positively elect to be group members, where the defendant is amenable to the court's jurisdiction [190]. He considered that a wider operation would go beyond even a remote connection with Victoria, and that section 118 of the Constitution would be offended if, for example, the court could suspend another State's limitation provision [191]. He declined to decide the separate argument [195]. He would have allowed the demurrer in part with no order as to costs [196].

Why it matters

Five of the six Justices would have allowed each demurrer with costs, and only Callinan J would have read the Part down [25], [68], [144], [190]. Gleeson CJ and the joint reasons, but not Kirby J, locate the territorial nexus in the defendant's amenability to process rather than in each group member's connection with Victoria [10], [55]–[56], [99]. On that approach, interstate group members who had not opted out could be bound under the regime as it then stood, subject to the court's powers over membership [41]–[42], [61]. Kirby J left open, without deciding, whether an interstate group member who was unaware of the proceeding and refused leave to opt out could invoke implied due process requirements in Chapter III of the Constitution [89]. He also said his conclusion could be reviewed if an operational inconsistency with another State's laws were later established [142]. Readers should check the current provisions, which this note states only as they then stood.

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.