Bartlett v Commonwealth of Australia

1. The issue of the reserved costs of the common fund application be adjourned to a case management hearing to be listed on a date to be fixed by the Registrar. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

LEE J: 1 On 12 April 2019, I dismissed an application made by the applicant in this representative proceeding for a common fund order after it was withdrawn on instructions by counsel for the applicants. The circumstances by which this eventuality came to pass is explained in Bartlett v Commonwealth of Australia [2019] FCA 571, especially at [24]-[26] (primary judgment). 2 Put shortly, on 12 April 2019, following the short adjournment I referred to in the primary judgment at [25], and after indicating my preliminary view that I required additional assistance, I invited a submission as to whether the applicant would oppose adjourning the application for a common fund order to 11am the following Wednesday (T33.18-26): …on the basis that in the meantime the submissions of the parties, the transcript of both today and the last occasion and the affidavit material on the application would be provided to an amicus who would indicate by 12 noon on Tuesday whether [the amicus wished] to be heard by way of submission, either in writing or orally, and to the extent that it is in writing, then I would want [the amicus] to provide the written submissions by close of business on Tuesday and if [the amicus wished] to be heard orally, then I would hear oral submissions at 11 am on 17 April with a view, after hearing those oral submissions, to make a determination. 3 Counsel for the applicant indicated, on the basis of what I infer were considered instructions, that the applicant opposed such a course. 4 As I indicated in the primary judgment, I was disposed to make a common fund order but believed in circumstances where lengthy material had been served shortly before the hearing, it would be prudent to ensure that a Court appointed amicus, acting on behalf of group members, could quickly review the material and make a decision as to whether or not the amicus wished to be heard in opposition to it. I thought such a course was prudent for a number of reasons, three of which deserve particular emphasis: first, to allow for proper analysis of lengthy material provided to me shortly before the hearing. Secondly, because the Commonwealth, although providing submissions as to why it considered an intervener should be appointed, did not consider it appropriate to challenge any evidence on the application (a state of affairs referred to more than once in the course of submissions of the applicant, as a basis upon which the "unchallenged" evidence adduced by the applicant should be accepted and a common fund order be made). 5 Thirdly, and perhaps most importantly, was a broader consideration. A common fund order involves visiting obligations on group members. At least as the law presently stands, if the Court considers that the preconditions for making such an order are enlivened, then power exists to make such an order, but historically they have usually been made following a process where a notice has been sent out to group members giving them the opportunity to be heard on such an application. Given the short period before the hearing of the present application, no separate notice prior to the making of a common fund order was proposed. Although I did not believe that this presented any insuperable barrier to making an order which, as a matter of substance, imposed obligations of group members, it brought into sharp focus the need to ensure that the protective and supervisory role of the Court in respect of group members was discharged carefully and properly. 6 It was for this same reason that I considered that adequate details of the common fund order, including a proposed rate, be provided in the opt-out notice to ensure that group members can make an informed decision as to whether or not they wish to opt-out. With respect to the careful and compelling evidence which was filed on behalf of the application, and the highly experienced legal practitioners acting for the applicant, it remains surprising to me that the applicant initially resisted the notion of giving specificity to the common fund order, and moreover, on the hearing of the application, resisted the course of the Court getting the limited and relatively inexpensive assistance suggested, in order to allow me to be satisfied that the Court's protective function had been discharged properly. 7 In any event, the withdrawal of the application on instructions from the applicant has in my view, occasioned wasted costs and in those circumstances I invited submissions from the parties as to what costs order should be made. 8 The Commonwealth seeks an order that the applicant should pay the respondent's costs of and incidental to the interlocutory application filed on 19 March 2019, up to the conclusion of the hearing on 12 April 2019. The applicant contends that no adverse costs order should be made, and that it is premature to determine how the applicants' costs of the common fund application should be treated vis a vis group members. I do not propose to take either course proposed. 9 As noted above, one reason I sought an amicus was because the Commonwealth took the stance that it was not opposing the application, rather indicating that the Court should receive further assistance. I did not agree with the proposition that the Court should receive further assistance by way of an intervener, nor that I conduct a further hearing as extensive as that suggested by the Commonwealth, however, I did require some limited, further assistance. This was because the Commonwealth was not, strictly speaking, an opposing party on the application. More importantly, it is inaccurate to submit that the Commonwealth had "success" on the application in the usual sense. In circumstances where the Commonwealth did not take the role of challenging evidence nor act as contradictor, it seems to me it ought not to be entitled to its costs of appearing and making submissions on the application for a common fund order. 10 Having noted this, I reject the submission of the applicant that it is premature to determine how the costs of the withdrawn common fund application should be treated. The funding agreement was in evidence on the application. Absent any order or undertaking to the contrary, the costs incurred on the withdrawn common fund application will be "Project Costs" as defined in the funding agreement that approximately 20% of the group members have signed. Those costs would be payable by those group members out of any Resolution Sum as well as forming part of the multiple component of the funding rates payable to the funder: see (d) and (f) of the "Project Costs" definition in the Funding Agreement and cll 8.1, 12.1.1(b), 12.1.3 and sch 5 of the Funding Agreement. 11 Additionally, in the event that a common fund order is made which is premised on the notion that the Project Costs form the basis of any common fund order, the costs of the withdrawn common fund order may, in the absence of being dealt with specifically, form part of the costs burden visited upon group members. 12 The submissions of the parties proceeded on the basis that an application for a common fund order is likely to be made in the future. This was appropriate given that this course was expressly referred to by counsel for the applicant. As I have indicated elsewhere, it is unclear who will be dealing with any further application for a common fund order, and given that it may be me, it would be inappropriate to form or express any views, even of a preliminary nature, as to how the applicant's conduct in withdrawing the common fund order in the circumstances I have recounted should impact upon the discretionary consideration as to whether a common fund order should be made in the future. Despite this, I consider that there should be certainty in ensuring that a consequence of the forensic decision made to withdraw the application should not be imposed upon group members at any time. Accordingly, my preliminary view was to take steps to ensure that the applicant's own costs of and incidental to the common fund order application be borne by the applicant (subject to any contractual right of indemnity the applicant has from the funder, IMF Bentham Limited (IMF)), and neither the applicant (nor IMF) should be entitled to seek any contribution towards the reimbursement of those costs from group members, notwithstanding any term of any agreement which may provide to the contrary. 13 Having reached the preliminary view that an order of the type proposed may be made, I indicated to the applicant that given such an order may affect the interests of IMF, it should have the right to make any submissions. On 27 May 2019, my Associate received submissions which in part repeated the submissions of the applicant, but went further and stated that IMF will not seek to recover from group members any costs "thrown away" by virtue of the applicants withdrawing the common fund application. 14 If I may say so, this is a sensible approach for IMF to take and, subject to clarification, may obviate the need for an order to be made. Provided that this position is confirmed by way of an undertaking to the Court, which can be received when the matter is next before the Court, and the undertaking expressly extends to IMF not recovering from group members any of the costs of or incidental to the withdrawn common fund application, then there will be no need for any order to be made. 15 Accordingly, at present, the only order required to be made is to adjourn the issue of the reserved costs of the common fund order application to a case management hearing to be listed on a date to be fixed by the Registrar. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lee.