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[2019] FCA 1722
Federal Court of Australia
2019-10-22
Project J, Mortimer J
Original judgment source is linked above.
MORTIMER J: 1 These two proceedings were allocated to my docket in early March 2019, following orders made by the High Court on 11 February 2019 remitting both proceedings to the Federal Court. 2 On 7 March 2019, my Chambers wrote to the parties advising them that the proceedings had been listed for first case management hearing on 2 April 2019. 3 On 28 March 2019, the parties provided signed consent orders to Chambers, as well as a letter. That letter addressed a number of procedural matters, and included an acknowledgment that "[t]he parties agree that s 33C and Pt IVA of the Federal Court of Australia Act 1976 (Cth) are capable of governing these two proceedings and can be applied in their terms". 4 The first case management hearing was vacated on account of the consent orders received from the parties. Orders were subsequently made on 3 April 2019 to, amongst other matters, regularise the identities of the applicants (including by assigning pseudonyms) and timetable the exchange of pleadings (including by granting the applicants leave to file and serve any amended statements of claim). The proceedings were re-listed for case management hearing on 3 September 2019. 5 The parties wrote to my Chambers on 5 June 2019, requesting extensions to the timetabling orders made on 3 April 2019. I made orders granting those extensions on 6 June 2019. The parties were informed that they would be expected to have a trial preparation timetable prepared for discussion at the case management hearing on 3 September 2019. 6 On 28 June 2019, the date that amended statements of claim were due to be filed on behalf of the applicants, an email was received from the applicants' legal representatives indicating that the parties were in "discussions" and that the amended statements of claim would not be filed that day. 7 A few days later, on 2 July 2019, I directed that correspondence be sent to the parties requesting an update on the ongoing conduct of the proceedings, indicating that I would consider whether to list the proceedings for an urgent case management hearing. 8 Later that day, correspondence was received from the applicants' legal representatives indicating that the parties were engaged in "serious discussions" in an effort to resolve the proceedings, and noting that the respondent required further time to consider the proposals. 9 In the circumstances, I agreed to make orders vacating the existing timetabling orders. I also made an order re-listing the proceedings for case management hearing on 10 September 2019, at which time the parties were told to be prepared to provide an update to the Court on their "discussions". 10 On 6 September 2019, the respondent's legal representatives wrote to my Chambers requesting an adjournment of the case management hearing listed on 10 September 2019, on the basis that a "short further amount of time" was required for the parties to continue their "discussions". The parties were informed that appearances were still required at the case management hearing. 11 At the case management hearing on 10 September 2019, it was revealed that the applicants had made offers seeking to resolve the proceedings, but the respondent required at least a further two weeks to respond to those offers. In order to avoid further delay in the proceedings, in circumstances where no substantive programming steps had in fact been taken, I made the following order in both proceedings: If, by 4 pm on Friday 13 September 2019, there is no confirmation on behalf of the respondent by email to the Court, copied to the applicant's solicitors, that the respondent will provide a response to the applicant's offer of settlement of the proceeding to the applicant's solicitors on or before 4 pm on 24 September 2019, the proceeding will be referred to a Judicial Registrar for urgent mediation, and any case management in the context of that mediation that the Judicial Registrar considers appropriate. 12 On 13 September 2019, the respondent's legal representatives wrote to my Chambers advising that no instructions had yet been received to confirm the respondent would provide a response to the offers of settlement by 4 pm on 24 September 2019. Accordingly, orders were made that day referring the proceedings to Judicial Registrar Gitsham for urgent mediation. The proceedings were re-listed for case management hearing on 8 October 2019. 13 In the context of that mediation, on 30 September 2019 two notices of discontinuance were provided to Judicial Registrar Gitsham. The notices were provided to my Chambers on 7 October 2019, and were in the following terms: AUB19 and AUC19, the applicants, discontinues the whole of the proceeding. The discontinuance is by consent on the following terms: 1. Each party to bear its own costs of the proceeding. 2. Without prejudice to any claims the plaintiffs may have whether as individuals or representatives. AUE19 and BJF19, the applicants, discontinues the whole of the proceeding. The discontinuance is by consent on the following terms: 1. Each party to bear its own costs of the proceeding. 2. Without prejudice to any claims the plaintiffs may have whether as individuals or representatives. 14 In correspondence to Chambers, the respondent's legal representatives referred to these notices and queried whether appearances were still required at the case management hearing on 8 October 2019. In response, the parties were relevantly advised as follows: … her Honour expects the parties to appear at the case management hearing listed at 9.30am tomorrow to discuss those notices. In particular, her Honour requests that the parties be prepared to address how the requirements of s 33V of the Federal Court of Australia Act 1976 (Cth) are to be met in the circumstances, having regard to the principles relevant to the Court's grant of approval to discontinue representative proceedings as recently summarised by Murphy J in Adams v Navra Group Pty Ltd [2019] FCA 1157 at [19]. 15 Due to issues with counsel availability, and circumstances which led to me being unavailable on an alternative hearing date, the parties were given leave to file written submissions in lieu of appearances.
Discontinuance of representative proceedings 16 The commencement and conduct of representative proceedings is governed by Pt IVA of the Federal Court of Australia Act 1976 (Cth). Section 33V of Pt IVA deals with how a representative proceeding may be settled or discontinued: 33V Settlement and discontinuance - representative proceeding (1) A representative proceeding may not be settled or discontinued without the approval of the Court. (2) If the Court gives such an approval, it may make such orders as are just with respect to the distribution of any money paid under a settlement or paid into the Court. 17 Section 33V(1) requires the Court to approve the discontinuance of a representative proceeding. The principles which guide when a Court may grant such approval were recently summarised by Murphy J in Adams v Navra Group Pty Ltd [2019] FCA 1157 at [19]: Section 33V provides that a representative proceeding may not be settled or discontinued without the approval of the Court. The principles which guide consideration of a settlement approval application are well established. Before a settlement may be approved, the Court must be satisfied that the proposed settlement is fair and reasonable having regard to the interests of class members who will be bound by it, including as between class members: Australian Securities and Investments Commission v Richards [2013] FCAFC 89 at [7]; Williams v FAI Home Security Pty Ltd (No 4) [2000] FCA 1925; (2000) 180 ALR 459 at [19]; Kelly v Willmott Forests Ltd (in liquidation) (No 4) [2016] FCA 323; (2016) 335 ALR 439 at [62]-[77]. The relevant considerations in dealing with an application for discontinuance may be different but the principles are the same. Before discontinuance of the proceeding may be approved, the Court must be satisfied that doing so is fair and reasonable having regard to the interests of affected class members: see Mercedes Holdings Pty Limited v Waters (No 1) [2010] FCA 124; (2010) 77 ACSR 265 at [9]-[10]. (Emphasis added.)
The parties' written submissions 18 The applicants filed written submissions on 14 October 2019. The applicants advanced two main contentions. First, that "there is some uncertainty" as to whether the two proceedings are representative proceedings pursuant to Pt IVA of the Federal Court Act. Second, that if they are representative proceedings, leave of the Court is required for the proceedings to be discontinued; if they are not, however, such leave is not required. 19 At [3]-[13] of their submissions, the applicants summarised the relevant procedural history of the proceedings. Before setting out some relevant excerpts of those submissions, I note the points I have raised above regarding the circumstances leading to the vacation of the first case management hearing in April 2019, and in particular the statement made in the parties' correspondence on 28 March 2019 (see above at [3]). The applicants relevantly submitted: 5. In correspondence with the parties on 7 March 2019, procedural questions were raised by this Honourable Court including as to whether Pt IVA of the Act could be applied in its terms. 6. The Applicants responded that in our submission, Pt IVA of the Act is capable of governing these proceedings. 7. The Respondent's view was that "the effect of s 44(3)(b) of the Judiciary Act 1903 (Cth) and order 2 of the orders made by Justice Nettle on 18 February 2019 is that Part IVA of the Federal Court of Australia Act 1976 (Cth) should govern both of these proceedings and can be applied in its terms". 8. No orders were made in this Court as to whether the Proceedings were to be governed by Part IVA of the Act. 9. At the case management hearing of 10 September 2019, Her Honour observed that the Proceedings had not yet been determined to be Part IVA representative proceedings. 10. There is therefore some uncertainty as to whether the Proceedings are representative proceedings pursuant to Part IVA of the Act. 20 Whilst I agree that no formal orders have been made in this Court specifying that these are representative proceedings, governable under Pt IVA of the Federal Court Act, it is in my view sufficiently clear from at least the parties' correspondence to the Court in March 2019, and indeed from the terms of the statements of claim filed in the High Court (which invoked r 21.09 of the High Court Rules 2004 (Cth)), that the proceedings were commenced and initially pleaded in the form of representative proceedings, and were intended to proceed as such in this Court. The fact the progress of the proceedings (and in particular the timetabled exchange of pleadings) was delayed following their transfer to this Court (due to the commencement of the parties' "discussions" from late June 2019) does not in my view prevent the proceedings from being properly characterised, for the purposes of the question of discontinuance, as representative proceedings. 21 On the assumption that approval of discontinuance was required under s 33V, the applicants made the following submissions (having referred to Murphy J's observations in Adams at [19]): 16. The proposed discontinuance is not pursuant to any settlement agreement binding the Applicants or any class members. 17. The Applicants submit that discontinuance of the Proceedings is fair and reasonable having regard to the interests of all class members. 18. The parties have agreed that the discontinuance occur without the adverse costs implications contemplated by Rule 26.12(7). Accordingly, neither the Applicants nor any class member will be required to pay costs. 19. Further, as both explicitly agreed by the Respondent, and pursuant to Rule 26.14 of the Federal Court Rules, the discontinuation of the Proceedings will not hinder the rights or interests of any of the Applicants or member of the class to pursue any other litigation. Orders are sought as per paragraph [2] of each notice of discontinuance, that the discontinuance is "without prejudice to any claims the plaintiffs may have whether as individuals or representatives". 20. By contrast, if the proceedings are not discontinued, the applicants are exposed to adverse impacts, namely substantial adverse costs orders. 22 Later on 14 October 2019, correspondence was received from the respondent's legal representatives indicating that it consented to the filing of notices of discontinuance in both proceedings and otherwise adopted the submissions made on behalf of the applicants. 23 In that correspondence, the respondent's legal representatives also referred to two affidavits of Dejan Lukic affirmed on 9 October 2019, which were filed with the Court that day. Annexed to both affidavits were copies of correspondence sent by the respondent's legal representatives to the applicants' legal representatives on 15 April 2019, setting out a number of objections to the applicants' statements of claim. It is fair to describe those objections as substantial, and substantive. In particular, an objection was raised by the respondent to the definition of the "groups" in each proceeding. The respondent contended that "the class must be redefined so that the group members are identifiable and their characteristics in existence as from the date of the institution of the proceedings". Again, I consider this another example of the parties working off the assumption - even at this preliminary stage - that these proceedings were being prosecuted as representative proceedings. 24 In my opinion it is clear that the proceedings are, and were always intended to be, representative proceedings. Therefore, the Court's approval for any discontinuance is required. 25 I am satisfied, having regard to the submissions made by the applicants, and again recognising the early stage at which these requests for discontinuance have been made, that the discontinuance of the proceedings is fair and reasonable having regard to the interests of any affected class members (as currently defined in the statements of claim filed in this Court on 22 February 2019). In particular, I note that the effect of a discontinuance, as opposed to a dismissal, is that it is without prejudice to the applicants' and group members' rights. I have made that explicit in the Court's orders. 26 I accept that continuation of the proceedings may have exposed the applicants in each proceeding to the risk of adverse costs orders. In light of the substantial objections made by the respondents to the way the cases were framed, that is not in their best interests. 27 The framing of the orders varies slightly from that submitted by the parties, but with those amendments, I grant approval for the discontinuance of both proceedings. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mortimer.
AUB19
Commonwealth of Australia
(2000) 180 ALR 459
(2016) 335 ALR 439