Koh Chong Chiah and others v Treasure Resort Pte Ltd

1. Chao Hick Tin JA (delivering the judgment of the court):

2. Introduction

3. [1]

   [1] The present appeal raises the question of the scope and application of O 15 r 12(1) of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (“the Rules of Court”), which concerns when a representative action may be brought.

4. The facts

5. Background to the originating suit

6. [2]

   [2] The suit from which this appeal arises, Suit No 849 of 2009 (“Suit 849”), was commenced pursuant to O 15 r 12(1) of the Rules of Court (“O 15 r 12(1)”) by seven persons, viz, Koh Chong Chiah, Soh Kah Wah alias Vincent Leow, Ong Hong Poh Cecilia, Yip Kum Thong, Tsu Pei Yuke, Yeo Choon Hock Christopher and Rozario Roland Charles (“the Representative Plaintiffs”), on behalf of themselves as well as 202 other persons listed in Schedule 2 of the Statement of Claim (Amendment No 2) dated 9 April 2012 (“SOC No 2”), all of whom were members of Sijori Resort Club, Sentosa (“the Club”). The Representative Plaintiffs are the appellants in the present appeal. In this judgment, we shall refer to the 202 persons listed in Schedule 2 of SOC No 2 as “the Represented Persons”, and to the Representative Plaintiffs and the Represented Persons collectively as “the Claimants”.

7. [3]

   [3] Treasure Resort Pte Ltd (“Treasure”) is the first defendant in Suit 849 and the respondent in the present appeal. Colony Members Service Club Pte Ltd (“Colony”) is the second defendant in that suit, but it is not a respondent in this appeal. Both Treasure and Colony are subsidiaries of Maxz Universal Development Group Pte Ltd.

8. [4]

   [4] The land on which the Club’s premises and facilities are situated (“the Land”) was leased by Sentosa Development Corporation (“SDC”) to Sijori Resort (Sentosa) Pte Ltd (“Sijori”) for a period of 81 years until 2075 pursuant to a building agreement dated 21 October 1994 (“the Building Agreement”).

9. [5]

   [5] Between 1994 and 2004, Sijori, through various means, including brochures, marketing agents and tie-ups with credit card companies, invited the public to apply for membership of the Club. Individuals who wished to become Club members had to submit a membership application form and pay an entrance fee to Sijori. There were eight different versions of the membership application form (numbered “M1” to “M8” in Schedule 3 of SOC No 2) in use during that period to enable the public to apply for Club membership. The entrance fees paid by Club members ranged from $10,000 to $25,750. Club members also had to pay a monthly subscription fee of $30 for an individual membership and $50 for a family membership.

10. [6]

    [6] On 26 January 2006, Sijori sold the Club to Treasure pursuant to an option to purchase of the same date (“the OTP”). Under the terms of the OTP, Sijori also granted Treasure an option to purchase the property on the Land. Clause 2(g) of the OTP provided as follows in relation to the status of the Club members:

11. In July 2006, Sijori and Treasure agreed to amend cl 2(g) of the OTP by deleting the words in italics above.

12. [7]

    [7] The sale was subject to the novation of the Building Agreement to Treasure in order for it to operate a hotel on the Land. On 14 November 2006, Treasure, Sijori and SDC signed a deed of novation under which Treasure became the new lessee of the Land and agreed to perform the Building Agreement in place of Sijori. On the same day, Treasure and SDC also entered into a supplemental agreement under which SDC leased to Treasure a piece of land adjacent to the Land (“the Additional Land”), and Treasure further agreed to redevelop the existing property on the Land and the Additional Land into a hotel development.

13. [8]

    [8] On 16 November 2006, Sijori and Treasure concluded a membership management transfer agreement (“the Transfer Agreement”) covering the Club members, which then numbered approximately 1,591. The Transfer Agreement was expressed to be “supplemental to the conditions stated in [the OTP] with reference to membership concerns”. Pursuant to the Transfer Agreement, Treasure agreed to take over the management of the Club’s membership with effect from 16 November 2006, and also to accord “substantially similar terms and conditions of membership” to the Club members with reference to certain membership privileges, including complimentary room vouchers for three nights yearly and free use of the swimming pool and the gymnasium.

14. [9]

    [9] Pursuant to cl 11 of the Transfer Agreement, on 16 December 2006, Treasure wrote to inform all the Club members that (inter alia):

15. (a) it was the new owner of the Land;

16. (b) Club members would be able to continue enjoying the membership privileges accorded to them under their existing membership with the Club as long as they continued to pay their monthly subscription fees to Treasure;

17. (c) the membership privileges which Club members would continue to enjoy included all existing benefits extended to them when the Club was owned by Sijori; and

18. (d) Treasure would correspond with the Club members in due course and was “making the necessary paperwork arrangements for the transfer to be completed by end January 2007”.

19. On 18 December 2006, Sijori sent a letter with broadly similar contents to the Club members.

20. [10]

    [10] On 27 December 2006, Treasure wrote to inform the Club members to direct their monthly subscription fees to it with effect from January 2007. Accordingly, from January 2007 onwards, the Club members, including the Representative Plaintiffs, made payment of their monthly subscription fees to Treasure.

21. [11]

    [11] On 4 February 2008, Treasure wrote to inform the Club members, including the Representative Plaintiffs, of an offer of a new Club membership contract through Colony in lieu of their existing Club membership contracts. The offer and the terms of the new Club membership contract were set out in Colony’s letter of the same date to the Club members. Amongst the changes, the monthly subscription fees under the new Club membership contract would be $165 for an individual membership and $275 for a family membership, a more than five-fold increase from the original monthly subscription fees (see [5] above). Club members were given until 5 March 2008 to accept the offer; they were also informed that those who rejected the offer would not be entitled to any rights and privileges as a member of Colony, and would have to look to Sijori for any recourse.

22. [12]

    [12] Eventually, on 12 October 2009, the Representative Plaintiffs, on behalf of themselves and 198 Club members, filed Suit 849 against Treasure and Colony. Of the causes of action pleaded in the Representative Plaintiffs’ Statement of Claim dated 12 October 2009 (“the Original SOC”), those which are material for the purposes of this appeal are the following:

23. (a) vis-à-vis Treasure – breach of contract, repudiation of contract and misrepresentation; and

24. (b) vis-à-vis Treasure and Colony jointly – conspiracy to injure.

25. In respect of their contractual claims, the Representative Plaintiffs alleged that from January 2007 onwards, Treasure acted in breach of the terms of the Club members’ membership agreements with Sijori (“the Original Membership Agreements”), which membership agreements had been novated to Treasure (the Original Membership Agreements will be referred to as “the Novated Membership Agreements” after their alleged novation to Treasure). The Representative Plaintiffs further pleaded that on or around 4 February 2008, Treasure, by reason of (inter alia) its letter of the same date to the Club members, repudiated the Novated Membership Agreements. With regard to their claim for misrepresentation, the Representative Plaintiffs pleaded that Treasure made the representations set out at [9(b)]–[9(d)] above (“the Representations”) fraudulently; they also relied on s 2 of the Misrepresentation Act (Cap 390, 1994 Rev Ed) in the alternative. As for the claim based on conspiracy to injure, that was based on Treasure’s alleged breach and repudiation of the Novated Membership Agreements as well as the matters outlined at [11] above. The Original SOC was later amended on 2 December 2009 to add four more persons to the list of Club members set out in Schedule 2.

26. [13]

    [13] As we see it, the reliefs sought in respect of the above causes of action are, in brief:

27. (a) a declaration that each of the Claimants is entitled to damages (to be assessed separately at the assessment of damages stage) from Treasure for breach and repudiation of contract, as well as for misrepresentation; and

28. (b) a declaration that Treasure and Colony are jointly and severally liable to each of the Claimants in damages (likewise to be assessed separately at the assessment of damages stage) for conspiracy to injure by lawful or unlawful means.

29. Treasure’s interlocutory applications

30. [14]

    [14] On 28 June 2010, Treasure filed Summons No 2965 of 2010 for an order that Suit 849 be discontinued pursuant to O 15 r 12(1) (“the Discontinuation Application”), and Summons No 2967 of 2010 for an order that certain paragraphs of the Representative Plaintiffs’ then statement of claim (viz, Statement of Claim (Amendment No 1) dated 2 December 2009 (“SOC No 1”)) be struck out (“the Striking-Out Application”).

31. [15]

    [15] The same assistant registrar (“the AR”) heard both applications and dismissed both of them in his decision issued on 27 June 2011. Dissatisfied, Treasure appealed against both decisions of the AR by way of Registrar’s Appeal No 209 of 2011 (“RA 209”) vis-à-vis the Discontinuation Application and Registrar’s Appeal No 210 of 2011 (“RA 210”) vis-à-vis the Striking-Out Application. The same High Court judge (“the Judge”) heard both appeals. She allowed RA 209 in full, and allowed RA 210 in so far as while she did not grant the relief prayed for in the Striking-Out Application, she ordered the Representative Plaintiffs to amend those paragraphs of SOC No 1 which were the subject matter of that application. The result is that as the Judge’s decision currently stands, Suit 849 will not continue as a representative action.

32. The decision below

33. [16]

    [16] As the Representative Plaintiffs appealed to this court only in respect of the Judge’s decision in RA 209, the Judge’s written grounds of decision, Koh Chong Chiah and others v Treasure Resort Pte Ltd and another [2013] 1 SLR 1069 (“the GD”), dealt with that registrar’s appeal alone. In brief, the Judge held that the Representative Plaintiffs were unable to show that the Claimants had the requisite “same interest in [the] proceedings”, an essential prerequisite stipulated in O 15 r 12(1) for the institution of a representative action. The Judge noted that the Claimants became Club members at different times and under different arrangements (see the GD at [31], [41] and [63]), having signed different versions of the membership application form whose terms were not identical. The membership benefits accorded to each Claimant thus differed, depending on the specific version of the membership application form which he or she had signed (see the GD at [41]). The Judge rejected the Representative Plaintiffs’ pleaded case that the Claimants’ entitlement to membership benefits was based on either express and/or implied terms as this would have, in her view, placed Treasure in an invidious position (see the GD at [30]).

34. [17]

    [17] The Judge further found that the Representative Plaintiffs’ contention that Treasure had denied the Claimants their membership privileges and thereby breached the Novated Membership Agreements was fraught with difficulty as the Claimants were relying not on one, but on a number of defaulting incidents which were not common to all of them (see the GD at [35]). Addressing the specific alleged breach arising from Treasure’s non-provision of complimentary room vouchers between January 2007 and February 2008, she held that if an individual Claimant had not even attempted to make use of his or her complimentary room vouchers, he or she would have no basis to be party to the complaint of being denied this particular membership privilege.

35. [18]

    [18] Further and related to the lack of commonality in the circumstances of Treasure’s alleged breaches of the Novated Membership Agreements was the Judge’s concern that Treasure would be deprived of defences specific to each defaulting incident. She noted, for instance, that where a particular Claimant was denied a complimentary room stay because of renovation works at the Club or a lack of room availability, Treasure could raise the defence that the complimentary room stay was subject to room availability (see the GD at [38]).

36. [19]

    [19] The Judge also briefly considered the Representative Plaintiffs’ misrepresentation claim and noted the difficulties faced by the Representative Plaintiffs in establishing that the Representations (as defined at [12] above) had indeed been made by Treasure to all the Claimants. Difficulties as to proof also existed vis-à-vis whether the Claimants had in fact relied on the Representations, and if so, to what extent (see the GD at [42]).

37. [20]

    [20] Finally, the Judge held that for Suit 849 to proceed as a representative action, each and every one of the Claimants must have suffered “the same loss or … an identical loss to the same extent” (see the GD at [43]). She opined that a representative action would clearly be unsuitable as, should the Representative Plaintiffs succeed, each Claimant would have to return to court to prove individually the damages or loss which he or she had suffered as a result of Treasure’s breach and repudiation of contract and/or misrepresentation (see, likewise, [43] of the GD).

38. [21]

    [21] For the above reasons, the Judge allowed RA 209, thereby discontinuing Suit 849 as a representative action, albeit without prejudice to each of the Represented Persons commencing a separate action in his or her own right in either the High Court or the Subordinate Courts (see the GD at [3]).

39. The parties’ submissions in this appeal

40. [22]

    [22] We turn now to the parties’ submissions in this appeal. In brief, the Representative Plaintiffs (the appellants in this appeal) submit that the Judge erred in law and in fact in discontinuing Suit 849 as a representative action for the following reasons. First, contrary to recent Commonwealth judicial pronouncements on provisions similar to our O 15 r 12(1), the Judge adopted a “fine-toothed comb” approach in determining if the “same interest in [the] proceedings” requirement in O 15 r 12(1) (“the ‘same interest’ requirement”) had been met, and therefore failed to give sufficient weight to the underlying rationale and policy of that provision. Second, the Judge incorrectly found that: (a) the allegedly dissimilar terms of the various versions of the membership application form in use at the material time (ie, from 1994 to 2004) meant that there was a lack of common interest among the Claimants; and (b) such dissimilar terms were incapable of establishing commonality in a representative action. Thirdly, the Representative Plaintiffs submit that contrary to what the Judge held, there was sufficient generality in the alleged breaches of Treasure’s obligations to the Claimants for a common grievance to be found. Finally, they submit that the declaratory reliefs sought will be beneficial to all the Claimants, and that the discontinuation of Suit 849 as a representative action will severely prejudice each of the Claimants.

41. [23]

    [23] In contrast, Treasure submits that the Judge’s decision below is correct as the Representative Plaintiffs failed to establish that the claims set out in SOC No 2 gave rise to the same issues to be determined by the court as a matter of fact. First, Treasure submits that given the different versions of the membership application form in use at the material time, the Claimants did not execute a common membership agreement and thus could not have a common interest. Second, Treasure contends that the Judge was correct in focusing on the circumstances surrounding the alleged breaches of Treasure’s obligations to the Claimants as this was critical to the question of liability. Treasure emphasises that in the light of the different circumstances surrounding the alleged breaches, the Claimants cannot be claiming for the same breaches. Finally, Treasure submits that the Representative Plaintiffs failed to demonstrate how the Judge improperly exercised her discretion under O 15 r 12(1) to discontinue Suit 849 as a representative action.

42. [24]

    [24] The following issues therefore arise in relation to this appeal:

43. (a) the nature and extent of the “same interest” requirement in O 15 r 12(1);

44. (b) the nature of the court’s discretion in O 15 r 12(1); and

45. (c) whether, on the facts of the present case, Suit 849 was properly commenced as a representative action, and if so, whether it should be allowed to proceed as such with regard to the Representative Plaintiffs’ claims for breach and repudiation of contract, misrepresentation and conspiracy to injure.

46. The law on representative actions

47. Overview

48. [25]

    [25] We think it expedient to first address the nature of a representative action. In this regard, O 15 r 12(1) is germane:

49. For ease of reference, we shall, in discussing this provision, use the following terms where appropriate to the context:

50. (a) “representative plaintiff” to denote the plaintiff who seeks to bring a representative action;

51. (b) “representative defendant” to denote the defendant who is sued in a representative capacity;

52. (c) “represented persons” to denote the persons whom the representative plaintiff purports to represent;

53. (d) “represented defendants” to denote the persons whom the representative defendant purports to represent; and

54. (e) “claimants” to denote the representative plaintiff and the represented persons collectively (in the context of representative actions brought by representative plaintiffs).

55. We should also point out that as this appeal concerns a representative action brought by representative plaintiffs against two defendants sued in their individual capacities (as opposed to against representative defendants), our discussion of O 15 r 12(1) will, unless otherwise indicated, be from the viewpoint of representative actions (brought by representative plaintiffs) which do not involve representative defendants.

56. [26]

    [26] Essentially, what is sought in a representative action is a final determination of the rights of all the claimants vis-à-vis the defendant and vice versa based solely on the claims brought by the representative plaintiff and the defence raised by the defendant. Therefore, all the claimants in a representative action will succeed or fail based on the strength of the case mounted by the representative plaintiff and the defence pleaded by the defendant. Order 15 r 12(3) further provides:

57. In the words of Jeffrey Pinsler SC, Singapore Court Practice 2009 (LexisNexis, 2009) at para 15/12/1, “[t]he representative action was introduced so that persons interested in the proceedings could be directly involved, not by being parties themselves, but through representation”. Hence, the “same interest” requirement is really the crux of O 15 r 12(1). But, as will be elaborated in a moment, this does not mean that the interests of the claimants must be identical in all respects before this requirement is met. The main thing is that the claimants must share some common interests in relation to a substantial question (or questions) of fact or law. That said, we ought to also underscore that a representative action should not be allowed to proceed where it is in reality a composite of completely disparate actions.

58. [27]

    [27] Order 15 r 12(1) also vests a residual discretion in the court to refuse to permit proceedings to be continued in the form of a representative action even where it is found that the claimants have the same interest in the proceedings. This discretion is apparent from the words “unless the Court otherwise orders” in the provision, and has been recognised in various common law authorities including J Bollinger SA and Another v Goldwell Limited [1971] RPC 412, which considered the application of O 15 r 12(1) of the Rules of the Supreme Court 1965 (SI 1965 No 1776) (UK) (“RSC 1965 (UK)”), a provision in pari materia with our O 15 r 12(1). In that case, Megarry J stated (at 420):

59. [28]

    [28] In the Australian High Court case of Carnie and another v Esanda Finance Corporation Limited (1995) 182 CLR 398 (“Carnie”), a representative action was brought under Part 8, r 13(1) of the Supreme Court Rules 1970 (NSW) (“the 1970 NSW Rules”), a provision materially similar to our O 15 r 12(1). Part 8, r 13(1) of the 1970 NSW Rules provided as follows:

60. McHugh J noted (at 427):

61. [29]

    [29] Therefore, O 15 r 12(1) operates in two stages – a jurisdictional stage, followed by a discretionary stage. At the first (jurisdictional) stage, the threshold requirement that the claimants have the same interest in the proceedings (ie, the “same interest” requirement) must be met. It is only after the “same interest” requirement is met and the representative action properly commenced that we come to the second (discretionary) stage. At this stage, the court may exercise its discretion to discontinue the proceedings in question as a representative action where the overall circumstances of the case so justify.

62. The origin and rationale of O 15 r 12(1)

63. [30]

    [30] Any inquiry into the nature and scope of O 15 r 12(1) must necessarily be informed by an understanding of its history and the policy behind it. This is a matter which we shall now consider.

64. [31]

    [31] Representative actions were first developed by the Courts of Chancery in response to the injustice arising from the insistence that all the parties interested in the outcome of a case must be joined in the proceedings. As explained by Lord Macnaghten in the seminal English case The Duke of Bedford v Ellis and Others [1901] AC 1 (“Bedford”) at 8:

65. Following the Supreme Court of Judicature Act 1873 (c 66) (UK) (“the 1873 UK Act”), the representative action rule which existed in the Chancery Courts was extended to common law actions through r 10 of the Rules of Procedure set out in the Schedule to the 1873 UK Act, which rule was subsequently replaced by O 16 r 9 of the Rules of the Supreme Court 1883 (UK) (“RSC 1883 (UK)”). The latter rule remained in force until it was replaced by O 15 r 12(1) of the Rules of the Supreme Court (Revision) 1962 (SI 1962 No 2145) (UK), which in turn subsequently became O 15 r 12(1) of RSC 1965 (UK).

66. [32]

    [32] Given the equitable origin of O 15 r 12(1), we are of the view that its application should be broad and flexible. The words of Vinelott J in Prudential Assurance Co Ltd v Newman Industries Ltd and Others [1981] 1 Ch 229 (“Prudential Assurance”) at 245 come to mind – “[c]onsideration of the history of the rule … militates against any narrow construction of it”. As was further observed in Peter Cashman, Class Action Law and Practice (The Federation Press, 2007) at para 3.2.1:

67. [33]

    [33] We therefore concur with Megarry J’s view in John v Rees and Others [1970] Ch 345 (at 370) that “the rule is to be treated as being not a rigid matter of principle but a flexible tool of convenience in the administration of justice”. In this regard, we find it significant that unlike the new English Civil Procedure Rules (“CPR”) which provide for the mechanism of a group litigation order to manage claims which give rise to common or related issues of fact or law (see CPR rr 19.10–19.15), there is no such mechanism in Singapore. As Jeffrey Pinsler SC, commenting on our O 15 r 12(1), opined in Principles of Civil Procedure (Academy Publishing, 2013) at para 07.053:

68. In a similar vein, Mason CJ, Deane and Dawson JJ of the Australian High Court observed in Carnie (at 404) vis-à-vis the representative action rule in Part 8, r 13(1) of the 1970 NSW Rules:

69. [36]

    [36] However, we emphasise that the competing interests of the defendant in a representative action ought not to be overlooked. In particular, it must be borne in mind that represented persons are not deemed to be “parties” before the court: see Singapore Civil Procedure 2013 (G P Selvam gen ed) (Sweet & Maxwell Asia, 2013) at vol 1, para 15/12/8, citing Ventouris v Mountain [1990] 1 WLR 1370. This could in turn give rise to several prejudicial consequences for the defendant in a representative action. For instance:

70. (a) the represented persons are not obliged to give discovery or evidence relating to the claims in the representative action;

71. (b) the defendant will not be entitled to cross-examine the represented persons; and

72. (c) the defendant will not be entitled to seek costs against the represented persons in the event that he succeeds in defending the representative action.

73. [37]

    [37] Moreover, representative actions suffer from several procedural limitations in contrast to the statutory class action device. The latter typically includes express provisions that provide further statutory protection to both the claimants and the defendants in a class action. As Mulheron noted in her article “From representative rule to class action: Steps rather than leaps” [2005] CJQ 424 (at p 448):

74. [38]

    [38] Ultimately, therefore, O 15 r 12(1) envisages the court striving to strike a balance between the interests of both parties, bearing in mind the purpose of the provision, which is to facilitate access to and the efficacious administration of justice.

75. The “same interest” requirement

76. [39]

    [39] This brings us to the first issue which arises in this appeal (see [24(a)] above) – the nature and extent of the “same interest” requirement in O 15 r 12(1). It would appear that O 15 r 12(1) has not hitherto been examined in depth in our local jurisprudence. However, there are helpful precedents from other Commonwealth jurisdictions where provisions similar to our O 15 r 12(1) apply. As we embark on a survey of these authorities, we think it vital to bear in mind Lord Lindley’s caution in The Taff Vale Railway Company v The Amalgamated Society of Railway Servants [1901] AC 426 (at 443):

77. [40]

    [40] The classic pronouncement on the “same interest” requirement was made by Lord Macnaghten in the seminal English case of Bedford at 8 (see also [31] above):

78. Thus, the claimants in a representative action must all share a common interest and a common grievance, as well as benefit from the relief sought in the action. Applying this test, the House of Lords in Bedford held that a representative action by a group of growers of agricultural produce, on behalf of themselves and other growers, against the owner of a statute-regulated market for contravening the statute governing their commercial relationship was properly instituted.

79. [41]

    [41] However, as aptly observed by Jillaine Seymour in “Representative Procedures and the Future of Multi-Party Actions” (1999) 62 Mod L Rev 564 (at p 570), the above test “is a paraphrase which does not serve to elucidate the circumstances in which the procedure will be available”. The courts must therefore further give the “same interest” requirement some content. In this regard, the key question to be determined is the degree of commonality required before a representative action may be commenced.

80. [42]

    [42] We turn first to consider the scenario where the claims in a representative action arise from separate contracts. Strictly speaking, where claims arise from separate contracts, the source of each claimant’s rights would differ. Nevertheless, the House of Lords in Bedford, in line with the object behind representative actions, adopted a liberal approach and allowed such an action to be brought for claims arising from separate contracts between each claimant grower and the defendant owner of a statute-regulated market.

81. [43]

    [43] This liberal approach suffered a setback in Markt & Co, Limited v Knight Steamship Company, Limited [1910] 2 KB 1021 (“Markt”), which concerned a representative action by a group of plaintiff shippers, on behalf of themselves and “others [sic] owners of cargo lately laden on board the steamship Knight Commander” (at 1033), against the shipowner for the loss of their cargo at sea. The majority of the English Court of Appeal (namely, Vaughan Williams and Fletcher Moulton LJJ) took a considerably narrower view of the “same interest” requirement in O 16 r 9 of RSC 1883 (UK), the then English equivalent of our O 15 r 12(1), and held that the action should not be allowed to continue as a representative action. Fletcher Moulton LJ stated (at 1039–1040):

82. [44]

    [44] Markt thus appeared to stand for the proposition that no representative action could be brought pursuant to O 16 r 9 of RSC 1883 (UK) where the claims in question emanated from separate contracts of shipment, even though the separate contracts were similar or potentially identical and were terminated by the same event. Bedford was distinguished by the majority of the English Court of Appeal in Markt on the basis that all the claimants in Bedford had the same rights arising from the same statute. However, what is equally interesting are the dissenting views of Buckley LJ in Markt, where he said (at 1047–1048):

83. The approach enunciated by Buckley LJ pointed the way forward and was adopted in subsequent cases.

84. [45]

    [45] Since Markt, there seems to have been a reversion to the liberal approach adopted in Bedford. For example, in Cobbold v Time Canada Ltd (1976) 13 OR (2d) 567 and Irish Shipping Ltd v Commercial Union Assurance Co plc and Another [1991] 2 QB 206 (“Irish Shipping”), the Ontario Supreme Court and the English Court of Appeal respectively held that the representative actions in question had been validly commenced even though the claims arose from multiple separate contracts. The extension of “same interest” to encompass interests arising from separate causes of action in contract has similarly occurred in tort. There was previously resistance against allowing claims in tort to proceed on a representative basis where the claims of the claimants arose not from a joint cause of action, but from separate causes of action. However, in the landmark case of Prudential Assurance, Vinelott J held that a representative action could be brought as regards claims in tort even where each claimant had a separate cause of action.

85. [46]

    [46] Treasure does not dispute the Representative Plaintiffs’ contention that claims arising from separate contracts or separate causes of action in tort would not necessarily defeat the “same interest” requirement. However, it submits that a representative action may only be brought where the claims present identical issues to be decided. Treasure thus argues (vis-à-vis contractual claims in representative actions) that a high degree of similarity between the separate contracts, verging on their being identical, is required before the court will find that the claimants have the same interest. For this proposition, Treasure relies on the decision of the Supreme Court of Canada in General Motors of Canada Limited v Helen Naken, Stephen Cranson, William J Pearce and Roberto Bandiera suing on behalf of themselves and suing on behalf of all other persons who have purchased new 1971 and 1972 Firenza motor vehicles in Ontario [1983] 1 SCR 72 (“Naken”), which concerned a representative action instituted pursuant to r 75 of the Rules of Practice of the Supreme Court of Ontario for damages for breach of warranty and misrepresentation. That rule stated:

86. The claimants in Naken had entered into contracts of sale of an automobile of a certain make and model with the defendant. Delivering the judgment of the court disallowing the proceedings from continuing as a representative action, Estey J held (at 103):

87. [47]

    [47] Upon closer examination, the decision of the court in Naken appeared to be premised on the view that a representative action might only be properly commenced where all that was required was a process to identify the members of the group of represented persons. As Estey J held (at 98):

88. [48]

    [48] Naken aside, Treasure avers that Irish Shipping should also be read as requiring that contractual claims in a representative action must arise from identical contracts. Irish Shipping concerned a charterparty under which the plaintiff shipowners chartered their ship to the charterers on terms that, inter alia, cargo claims were to be the charterers’ liability. The charterers took out insurance policies with 77 insurers in respect of such liability. The charterers later went into liquidation and failed to indemnify the shipowners in respect of certain cargo claims which the shipowners had paid. The shipowners commenced proceedings against the leading underwriter and another insurer, suing them “on their own behalf and on behalf of all other liability insurers subscribing to the insurances of [the charterers]” (see Irish Shipping at 217) for the sums owed by the charterers. The English Court of Appeal allowed the proceedings to continue as a representative action. It emphasised that the different insurance contracts, whilst executed separately by each individual insurer, were on identical terms save for the proportion of risk undertaken by each insurer, and included a “leading underwriter clause” whereby each insurer undertook to be bound by the acts of the leading underwriter and to be liable for its share in respect of all decisions taken against the leading underwriter. Staughton LJ noted (at 227) that “[f]or all practical purposes this is one claim upon one contract, which the shipowners have an interest in pursuing and the insurers all have the same interest in resisting”.

89. [49]

    [49] As regards claims in tort, Treasure maintains that in order for a representative action to be brought, the cause of action must be shown to arise from the same facts for each claimant. In this regard, Treasure cites Eve J’s decision in Aberconway (Lord) v Whetnall [1918] 87 LJ Ch 524. There, the representative plaintiffs, on behalf of themselves and “the subscribers to the fund called the Whetnall Fund” (at 526), brought an action against the defendant for misrepresentation. Eve J held that the proceedings could not continue as a representative action, reasoning that (at 526):

90. Treasure argues that a representative action in tort will not lie if an assessment of the individual circumstances of each claimant is necessary for the establishment of a cause of action for each claimant.

91. [50]

    [50] We are not persuaded that the approach canvassed by Treasure is the correct one to adopt as it evinces nothing more than a superficial shift away from the reasoning in Markt and would confine the use of the representative action procedure to an extremely narrow band of cases. This is incongruous, given the importance of representative litigation in this modern age as a means for the courts to efficiently dispense justice. Our view is further buttressed by the two more recent authorities from Australia (Carnie) and Canada (Dutton) (referred to earlier at [28] and [35] above respectively) that promulgated an expansive interpretation of the “same interest” requirement. We shall now examine these two cases a little more.

92. [51]

    [51] Carnie concerned two representative plaintiffs who had entered into loan contracts that were subject to the Credit Act 1984 (NSW) (“the NSW Credit Act”) with the defendant. The representative plaintiffs fell into arrears with repayment. The parties then executed a variation agreement extending the time for repayment. The representative plaintiffs alleged that various matters were not disclosed in the variation agreement in contravention of the NSW Credit Act, and brought a representative action on behalf of themselves and all other borrowers who had executed different variation agreements with the defendant but also subject to the same Act. The representative plaintiffs sought a declaration that as a result of the defendant’s breach, none of the claimants was liable to pay the credit charge for which his or her variation agreement with the defendant provided. The defendant sought to strike out the statement of claim in so far as it purported to plead a representative action. That application was dismissed at first instance, but was allowed on appeal to the New South Wales Court of Appeal. The representative plaintiffs then appealed to the High Court of Australia.

93. [52]

    [52] The High Court of Australia allowed the representative plaintiffs’ appeal, although it also remitted the case to the New South Wales Court of Appeal to consider whether it should “otherwise order”, pursuant to Part 8, r 13(1) of the 1970 NSW Rules, that the action not be permitted to continue as a representative action. On the “same interest” requirement, McHugh J opined (at 427) that the requirement was met where the representative plaintiffs and the represented persons “have a community of interest in the determination of any substantial question of law or fact that arises in the proceedings”. In a similar vein, Toohey and Gaudron JJ, having perused various common law authorities, held (at 421):

94. [53]

    [53] With respect, we do not agree with the Judge’s observation (at [59] of the GD) that “Carnie … is not particularly helpful”. Notwithstanding the fact that the case was remitted to the New South Wales Court of Appeal to consider whether it should exercise its discretion to order that the action not be allowed to continue as a representative action, the High Court of Australia clearly endorsed a broad interpretation of what would constitute “same interest”. Indeed, this broad approach was endorsed in the subsequent decision by Young J in Carnie v Esanda Finance Corporation Ltd (1996) 38 NSWLR 465 (at 468). Although the Judge was correct in noting (at [59] of the GD) Toohey and Gaudron JJ’s observation in Carnie (at 416) that the “broad and liberal” approach to representative actions adopted in Bedford suffered a setback in Markt, their observation must be seen in the context of the paragraph which immediately follows that observation, where Toohey and Gaudron JJ stated emphatically (at 417 of Carnie), “[b]ut the subsequent history of representative actions evidences a greater readiness to sanction them”.

95. [54]

    [54] An expansive interpretation of the “same interest” requirement was also adopted by the Supreme Court of Canada in Dutton, which concerned a representative action brought by a group of representative plaintiffs, on behalf of themselves and 229 other investors, against the defendants for breach of fiduciary duty. The applicable statutory provision governing representative actions was r 42 of the Alberta Rules of Court (Alta Reg 390/68) (“the Alberta Rules of Court”), which provided:

96. In Dutton, the representative plaintiffs and the 229 other investors had purchased debentures in a corporation at different times pursuant to different offering memoranda presented to them by different defendants. The Supreme Court of Canada held that the institution of the representative action was nonetheless proper.

97. [55]

    [55] In the court below, the Judge sought to distinguish Dutton on the ground that the critical words used in the applicable Alberta provision were “common interest”, whereas the operative words in our O 15 r 12(1) are “same interest”. We do not agree that this is a valid distinction. First, as noted by McLachlin CJ at [31] of Dutton, r 42 of the Alberta Rules of Court was based on r 10 of the Rules of Procedure set out in the Schedule to the 1873 UK Act, which was the forerunner of our O 15 r 12(1). Second, the test for “same interest” as articulated in Bedford and consistently applied in multiple common law jurisdictions since then has been formulated in terms of “common interest” and “common grievance”. Thus, any difference in phraseology between “common interest” and “same interest” is purely an issue of semantics. Finally, such a distinction flies in the face of numerous authorities which advocate that a broad and flexible purposive interpretation be given to the concept of “same interest” in O 15 r 12(1) (see also above at [32]–[33]).

98. [56]

    [56] Recognising the importance of the representative action (which was termed a “class action” in Dutton) as a procedural tool in modern litigation, the Supreme Court of Canada in Dutton expressly rejected (at [46]) the approach in Naken. McLachlin CJ addressed the question of commonality as follows (at [39] of Dutton):

99. [57]

    [57] From Carnie and Dutton, it is clear that the claimants in a representative action in contract do not need to be identically situated vis-à-vis the defendant. Rather, all that is needed to meet the “same interest” requirement is that there are one or more significant issues of fact or law common to all the claimants for determination by the court.

100. [58]

     [58] Where the claims in a representative action arise in tort, there needs to be a common ingredient in the cause of action of each member of the class of represented persons. This was held by Vinelott J in Prudential Assurance (at 255) to be one of three conditions that needed to be satisfied in order for a representative action in tort to be brought:

101. Although Vinelott J phrased the “same interest” requirement in terms of “a common ingredient in the cause of action” in relation to a representative action in tort, we are of the view that there is no discernible difference between that requirement and the requirement (vis-à-vis a representative action in contract) of a common issue of fact or law between the claimants for determination by the court.

102. [59]

     [59] Whether an issue is common between the claimants in a representative action is largely fact-dependent and will have to be determined on a case-by-case basis. Nonetheless, as a general guideline, where the legal and factual inquiry required for the determination of an issue in a claim in a representative action is also relevant to the determination of the same issue in the other claims in the representative action, we think it highly probable that the issue is common to all the claimants.

103. [60]

     [60] In our judgment, a shift in focus towards the commonality of issues is the proper approach to take in deciding whether an action has been properly commenced as a representative action, bearing in mind the representative action’s roots in equity and its function as a flexible tool of convenience in the administration of justice. To demand that all the claimants in a representative action should have identical interests would render O 15 r 12(1) otiose. As articulated by McLachlin CJ at [39] of Dutton (see [56] above), in each representative action, the court will have to embark on an inquiry into the significance of the common issues between the claimants in relation to the individual and/or different issues to determine if the “same interest” requirement has been met – ie, the court must compare the significance of the common issues between the claimants with the significance of the issues which differ as between them. Where the latter clearly outweighs the former, the “same interest” requirement would not be met.

104. [61]

     [61] We stress that in carrying out the aforesaid inquiry, the focus of the court’s attention should be on what is common between the claimants, and not what differentiates the cases of individual claimants: see Lord Macnaghten in Bedford (at 7), cited with approval by Toohey and Gaudron JJ in Carnie (at 422). The court, as McLachlin CJ noted in Dutton at [39], has to be mindful of the difficulties which a representative plaintiff would face in pleading the claims of each member of the class of represented persons with the same particularity as would be required in an individual suit.

105. [62]

     [62] We would further observe that the need to compare common and differing issues is not an unusual exercise – it is required in relation to consolidation of causes or matters pursuant to O 4 r 1 of the Rules of Court and joinder of parties as of right pursuant to O 15 r 4(1) of the Rules of Court. In this regard, we find it significant that both O 4 r 1(1)(a) and O 15 r 4(1)(a) of the Rules of Court contain the similar condition of “common question of law or fact”. The court practice in relation to these two procedural rules would certainly be relevant for the purposes of O 15 r 12(1): see generally Daws v Daily Sketch and Daily Graphic Ltd and Another [1960] 1 WLR 126, Lewis and Another v Daily Telegraph Ltd (No 2) [1964] 2 QB 601 and Payne v British Time Recorder Company, Limited, and W W Curtis, Limited [1921] 2 KB 1.

106. [63]

     [63] Before moving on, we shall touch briefly on another point canvassed by Treasure, which is that representative actions are improperly commenced where defences which would otherwise be available if the claims were brought separately are foreclosed. The term “defences” is used loosely here, in the sense that it refers to facts and circumstances specific to each claimant in a representative action which may defeat the claims of that particular claimant. The perceived difficulty with a situation where separate defences may be raised against different claimants is that a number of individual trials might be required and liability would not be determined in one single action. Moreover, if the defendant were unable to raise the defences available vis-à-vis a particular claimant against the representative plaintiff(s), it would amount to an unjust bar to defences that might have been available in a unitary action. This was the concern of Vinelott J in Prudential Assurance, where he noted (at 254) that one of the three conditions to be satisfied in order for a representative action in tort to be brought was that the defendant must not be barred from raising a defence which would otherwise have been available to him if there had been separate individual actions. We do not dispute this proposition.

107. [64]

     [64] At this juncture, we emphasise that the present appeal is not concerned with the situation where represented defendants seek to raise specific defences that differ from those of the representative defendant. For that situation, it is plain that the “same interest” requirement would apply to determine if such a representative action should be allowed. Hence, the cases of Roche v Sherrington and Others [1982] 1 WLR 599 and Mercantile Marine Service Association v Toms and Others [1916] 2 KB 243 (which Treasure sought to rely on), as well as Palmco Holding Bhd v Sakapp Commodities (M) Sdn Bhd & Ors [1988] 2 MLJ 624 (which the Representative Plaintiffs sought to rely on) are not entirely on point.

108. [65]

     [65] Several English authorities appear to endorse the proposition that where the defendant in a representative action may have claimant-specific defences, it is indicative of there being no common interest and/or no common grievance between the claimants in the action. In Markt, the majority of the English Court of Appeal placed some emphasis on the fact that the defendant shipowner could potentially raise different defences against various claimant shippers that did not exist against other claimant shippers. Vaughan Williams LJ highlighted (at 1030):

109. In fact, Fletcher Moulton LJ appeared to suggest (at 1040) that the theoretical possibility of the defendant shipowner having different defences against different claimant shippers could be sufficient to prevent any finding of a common interest among all the claimant shippers.

110. [66]

     [66] More recently, in Emerald Supplies Ltd and another v British Airways plc [2011] Ch 345 (“Emerald Supplies”), the English Court of Appeal upheld the decision of the court below to disallow a representative action brought under CPR r 19.6 by two representative plaintiffs on behalf of themselves and all other direct and indirect purchasers of air freight services from the defendant. Mummery LJ found (at [64]) that if defences existed against some members of the class of represented persons but not against others, the members of the represented class could not be considered to have the same interest in the action. The Canadian courts have similarly held thus in Van Audenhove v Nova Scotia (Attorney General) (1994) 28 CPC (3d) 305 and Ker v Auto Marine Electric Ltd (1990) 43 CPC (2d) 278.

111. [67]

     [67] With respect, it seems to us that the approach taken in Emerald Supplies might be too broad. The mere fact that a particular defence is available against only some but not all of the claimants in a representative action should not necessarily suffice for the court to hold that there is no common issue warranting the institution of a representative action. The mere existence of issues which are not common between the claimants does not mean that there cannot be common issues arising from the claims of the claimants. There need not be complete identity in the claimants’ claims before a representative action is allowed. The more important question, therefore, is whether there are common issues of fact or law which arise from each claimant’s claims. Moreover, the courts have allowed a representative action to proceed even where the defendant has theoretically lost the opportunity to raise a defence against one or more of the claimants. For example, in Wyld and Others v Silver [1963] Ch 243, a representative action on behalf of the inhabitants of the parish of Wraysbury for a declaration that they had a right to hold a fair or wake on wasteland was allowed to proceed even though the defendant lost the opportunity to argue that any one of the claimants had not come to court with clean hands.

112. [68]

     [68] In Carnie and Dutton, the respective courts held that a representative action was properly commenced so long as the requisite community of interest was present in any substantial question of law or fact arising in the proceedings. But, the fact that the defendant has separate defences against different claimants will be a factor to be considered by the court in determining whether to exercise its discretion to discontinue the action as a representative action. In Carnie, Mason CJ, Deane and Dawson JJ held (at 405):

113. Toohey and Gaudron JJ further observed (at 424 of Carnie) that “[i]f it did appear that other rights [which one or more members of the class of represented persons might have against the defendant] would be affected, it would be a matter for consideration in determining whether the Court should otherwise order”. Likewise, in Dutton, McLachlin CJ noted (at [42]) that the fact that the defendant might wish to raise different defences with respect to different groups of claimants was a factor that might weigh against the court allowing the action to proceed in a representative form.

114. [69]

     [69] Although regarding the issue of separate defences against different claimants as a matter to be considered only at the second (discretionary) stage of O 15 r 12(1), as opposed to at the first (threshold jurisdictional) stage, will not obviate uncertainty as to whether the court will allow a representative action which has been properly commenced to continue in a representative form, we think this alternative approach is clearly advantageous. Instead of invoking the issue of separate defences against different claimants to shut the gate at the threshold stage, this issue can, in our view, be considered more holistically at the discretionary stage. In this way, the court will be best placed to strike a balance between the interests of the claimants (in litigating the action as a group) and those of the defendants (in defending the claims of the different claimants separately) by weighing the pros and cons of the various options available to it – for example, by splitting the original representative action into two or more smaller representative proceedings to deal with distinct defences separately, or even sub-classing the claimants.

115. [70]

     [70] When considering whether separate defences may be raised against different claimants, the courts should adopt a practical and realistic approach, and not indulge in speculation on hypothetical possibilities that separate defences could be raised. In Irish Shipping, for instance, Staughton LJ noted (at 222–223) that while it was theoretically possible that any one of the represented defendants might raise separate defences, there was no indication on the facts of the case that such a contention would be made. His Lordship continued (at 223) that he would disregard “theoretical possibilities” and deal with what were likely in practice to be the issues. Likewise, in R J Flowers Ltd v Burns [1987] 1 NZLR 260, a decision of the New Zealand High Court, McGechan J observed (at 271–272):

116. [71]

     [71] We now turn to the final condition elucidated in Bedford for a representative action to be brought, namely, that the relief sought must, in its nature, be beneficial to all the persons whom the representative plaintiff(s) proposed to represent. Both the Supreme Court of Canada in Dutton (at [40]) and Vinelott J in Prudential Assurance (at 255) recognised that all the members of the class of represented persons must benefit from the relief granted by the court. Therefore, where there are divided views between the members of the class of represented persons as to what outcome they are hoping to achieve in the litigation or as to the desirability of seeking a particular remedy, then a representative action cannot be maintained.

117. [72]

     [72] On this point, we note that the Judge was clearly troubled by the fact that the Representative Plaintiffs were only seeking declarations that the Claimants were entitled to damages, and that each of the Claimants would have to return to court (if the Representative Plaintiffs succeeded in Suit 849) to individually prove the damages or loss which he or she had suffered (see the GD at [43]).

118. [73]

     [73] Some authorities do appear to support the proposition that a representative action for damages can never be brought. For instance, in Markt, Fletcher Moulton LJ stated (at 1040–1041):

119. [74]

     [74] Another example is Electrical, Electronic, Telecommunication and Plumbing Union v Times Newspapers Ltd and Others [1980] 1 QB 585, where a trade union, on behalf of itself and each of its individual members, commenced a representative action against a newspaper, seeking damages for libel. The English High Court held that the representative action was improperly commenced. O’Connor J explained (at 601):

120. [75]

     [75] In a similar vein, Jessup JA observed in Farnham et al v Fingold et al (1973) 33 DLR (3d) 156 (at 160):

121. [76]

     [76] It is apparent to us from the above authorities and other cases like Stephenson v Air Canada (1979) 103 DLR (3d) 148 that it is not the fact that damages are sought which is offensive to a representative action, but the need for assessment on a personal basis of the damages due to each claimant. This was noted by McGillivray CJA in Alberta Pork Producers Marketing Board et al v Swift Canadian Co Ltd, Canada Packers Inc, Burns Foods Limited, Intercontinental Packers Limited, Burns Meats Ltd, Gainers Foods Ltd, Fletcher’s Fine Foods Ltd, Fletcher’s Limited, Fletcher’s (Alberta) Limited, Cummings, Robertson and Telford (1984) 53 AR 284 (indexed as “Alberta Pork Producers Marketing Bd v Swift et el” and referred to hereafter in this judgment as “Alberta Pork”), where he quoted (at [20]) the decision of the chambers judge below:

122. In Alberta Pork, where the representative action in question was allowed to continue in its representative form, the damages determined in relation to any of the transactions concerned would form part of a fund, which would then be allocated to each claimant appropriately. There was thus no need for assessment of damages on a personal basis. Similarly, in the case of EMI Records Ltd v Riley and Others [1981] 1 WLR 923, the damages sought were for the total loss of all the claimants and were to be distributed subsequently amongst them. In both cases, the appropriate allocation of damages to each claimant could be determined at a later stage.

123. [77]

     [77] By the same token, the reliefs sought in the present case are declarations that the Claimants are entitled to damages, with an assessment of the damages due to each Claimant to be carried out separately on a non-representative basis at a later stage. We think it pertinent to highlight Vinelott J’s decision in Prudential Assurance (at 255–256) that where a common element of a cause of action is proved, any of the claimants would be entitled to rely on the judgment as res judicata and prove the remainder of the elements of the cause of action in separate proceedings. Where there is a common issue or issues in the claims of numerous individuals and those issues are crucial in the determination of liability, it makes absolute sense and is expedient that those issues are determined on a representative basis. Otherwise, it will be a waste of judicial time if those same issues are canvassed many times over in separate actions, with the attendant risk of inconsistent decisions. This was the position in Carnie, where the High Court of Australia held that although the amount of credit charges ultimately forfeited by the defendant lender would vary based on the terms of each individual variation agreement, this would not prevent the claimants from seeking a right to a release from the general liability to pay credit charges, which general liability (although not the exact degree of liability) was common to all of them. In this regard, we endorse the observations of Staughton LJ in Irish Shipping (at 227) that:

124. Whether it would be efficacious and just to allow a group of claimants to seek, by way of a representative action, only declaratory relief, with each claimant subsequently (if the representative action were to succeed) bringing separate individual proceedings to prove his or her loss is, in our view, a matter best left to the trial court’s discretion as opposed to being a threshold requirement. We are thus unable to concur with the Judge’s ruling (at [43] of the GD) that a representative action “[c]learly … would not be suitable” where, if the representative action succeeded, each claimant would have to return to court to prove individually the damages or loss which he or she had suffered.

125. [78]

     [78] To summarise, it is clear that the courts of various common law jurisdictions have in recent years taken a more expansive view of the “same interest” requirement. The following legal principles may be discerned from authorities like Dutton:

126. (a) The class of represented persons must be capable of clear definition. This is critical because it identifies the individuals who are entitled to relief and who will be bound by the judgment – members of the class of represented persons must be identified by an objective criterion which bears a rational relationship to the common issues being asserted.

127. (b) As a corollary of O 15 r 12(3), the proposed representative plaintiffs must adequately represent the interests of the class of represented persons, and must vigorously and capably prosecute the interests of the entire class.

128. (c) There must be significant issues of fact or law common to all the claimants in a representative action. To this end, the courts must carry out a comparison of the significance of the common issues between the claimants with the significance of the issues which differ between them.

129. (d) All the claimants in a representative action must benefit from the relief granted by the court, ie, they must have the same interest in the relief granted by the court.

130. [79]

     [79] We note Treasure’s concern that such a broad and flexible interpretation of the “same interest” requirement would result in a flood of disparate claims being brought under the guise of representative actions. However, we are not persuaded by this floodgates argument, especially since the courts retain a residual discretion under O 15 r 12(1) to order that a representative action which has been properly commenced should nevertheless not be allowed to continue in a representative form. It is to this exercise of discretion which we now turn.

131. The court’s discretion under O 15 r 12(1)

132. [80]

     [80] In our opinion, the standard of “plain and obvious case” which applies to the court’s exercise of its discretion to strike out an action should not apply to the court’s exercise of its discretion under O 15 r 12(1) to discontinue an action as a representative action. This is because once an action is struck out, that will sound the death knell as far as the claims pleaded in the action are concerned. That is not the case where a representative action is not allowed to continue on a representative basis. Prejudice to the claimants aside, the discontinuation of a representative action in its representative form will not bar the claimants from making the same claims in separate individual actions.

133. [81]

     [81] As stated above at [29], once the threshold requirement of “same interest” is met, the court will proceed to determine whether there are other reasons not to allow a representative action to proceed in its representative form. In the words of McLachlin CJ in Dutton (at [44]):

134. Thus, in respect of the exercise of the court’s discretion under O 15 r 12(1), much hinges on the “suitability” of the representative proceedings and the need for the court to strike a balance between efficiency and fairness.

135. [82]

     [82] As mentioned above, the real possibility that the defendant could raise separate defences against different claimants is one factor which the court will take into consideration in deciding whether to exercise its discretion to disallow a representative action from continuing in its representative form. In Dutton, McLachlin CJ briefly observed (at [42]):

136. [85]

     [85] Finally, we would cite Smith and Others v Cardiff Corporation [1954] 1 QB 210, where the English Court of Appeal, endorsing the decision of the English High Court, refused to allow the action to proceed as a representative action on the ground that the claimants did not all have a common grievance since the purported claimants in fact constituted two classes whose interests were in conflict (at 221–222). However, the action was allowed to continue as a suit brought by the four named representative plaintiffs in their individual capacities. What is interesting is that the English Court of Appeal suggested (at 223), and the defendant seemed to have agreed, that the case could be treated as a test case on the interpretation of a certain provision in the Housing Act 1936 (c 51) (UK).

137. [86]

     [86] Ultimately, it must be borne in mind that O 15 r 12(1) is a facilitative provision for the efficient and speedy administration of justice. While it must be applied flexibly and sensibly, the court should still discontinue an action as a representative action where the representative action procedure will not provide an efficient or effective means of dealing with the claims in question, or where it is otherwise inappropriate in the circumstances.

138. Our decision on this appeal

139. [87]

     [87] Having set out the broad framework of the applicable legal principles above, we now apply them to the facts of the present appeal as follows: first, we shall determine if Suit 849 meets the “same interest” requirement. Second, if we find that Suit 849 was in fact properly commenced as a representative action, it remains for us to decide if we should nevertheless exercise our discretion to refuse to reinstate the suit as a representative action.

140. [88]

     [88] As mentioned earlier at [3] above, Colony is not a respondent in this appeal despite being a joint defendant with Treasure to the Representative Plaintiffs’ conspiracy claim in Suit 849. As regards the conspiracy claim, Treasure’s position is that that claim is premised on the Representative Plaintiffs proving the alleged novation of the Original Membership Agreements (as defined at [12] above) to Treasure, and Treasure’s subsequent breach and repudiation of the Novated Membership Agreements (as defined at, likewise, [12] above). Hence, if those issues cannot be determined by way of a representative action, it would follow that the conspiracy claim cannot be pursued in a representative action. We agree that this must be the case, and further observe that there is no difficulty in dealing, by way of a representative action, with the question of whether there was an intention on the part of the alleged conspirators (ie, Treasure and Colony) to injure the Claimants. Therefore, should we find that Suit 849 was properly commenced as a representative action in respect of the Representative Plaintiffs’ contractual and misrepresentation claims and, further, should be allowed to continue on a representative basis vis-à-vis those claims, we shall make the same finding in respect of the conspiracy claim.

141. [89]

     [89] At this juncture, we think it important to emphasise the interlocutory nature of the present proceedings. In this regard, the following observations of the Hong Kong High Court in Hong Kong Kam Lan Koon Ltd v Realray Investments Ltd [2005] 1 HKC 565 (at [16]) are instructive:

142. [90]

     [90] We should also address a concern expressed by Mr Adrian Tan (“Mr Tan”), counsel for Treasure, at the hearing before this court, viz, that some of the Represented Persons did not even come within the definition of the class of Claimants, ie, “the 202 other members of the Club whose names are listed in Schedule 2 [of SOC No 2]” [strikethrough text and underlining in original omitted]. Mr Tan averred that Treasure had no record of six of the Claimants ever having been Club members or ever having paid their monthly subscription fees. Ms Koh Swee Yen (“Ms Koh”), counsel for the Representative Plaintiffs, countered that all the Claimants held membership cards and had paid their monthly subscription fees. She further pointed out that Treasure itself had been able to make reference to the membership numbers of all the Claimants, including the six Claimants whose membership it was disputing.

143. [91]

     [91] We would have thought that as the status of only six of the Claimants was in issue, their inclusion in Suit 849 (as Represented Persons) was a matter which could have been easily resolved between the parties’ counsel. In any case, without proposing to make a finding at this interlocutory stage, we are not persuaded that Treasure’s allegation would be an insurmountable barrier to our allowing Suit 849 to proceed as a representative action vis-à-vis all the Claimants if it were otherwise warranted. As mentioned earlier at [37] above, O 15 r 12(1) is flexible enough such that the court retains its power to reshape the proceedings at a later stage. Treasure is not foreclosed at the trial stage from arguing the preliminary point that the aforesaid six Claimants were not Club members at the material time and therefore did not fall within the definition of the class of Claimants. Should the trial judge eventually agree, he or she can then discontinue Suit 849 as a representative action vis-à-vis those six Claimants.

144. Whether the “same interest” requirement has been satisfied

145. The claims in contract

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