Coffs Harbour City Council v Australian and New Zealand Banking Group Limited

The Council's privilege argument 13 The Council initially argued that it was entitled to claim legal professional privilege at common law over the redacted portions of the funding agreement, in addition to maintaining its right to rely on the redactions to protect its interests in accordance with the intent of cl 3.6 of practice note CM 17 to prevent disclosure of information that might reasonably be expected to confer a tactical advantage on its opponents. 14 Legal professional privilege is an important common law right, or immunity: The Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at 553 [11] per Gleeson CJ, Gaudron, Gummow and Hayne JJ.

Consideration - privilege 15 In Marshall v Prescott [2013] NSWCA 152 at [85]-[88] Barrett JA, with whom McColl and Ward JJA agreed, held (following CSR Ltd v Eddy (2008) 70 NSWLR 725 at 740 [66] per Basten JA with whom Hodgson and McColl JJA agreed) that, in general, a funding agreement is not a document that attracts legal professional privilege. Barrett JA also followed what Lindgren J said in Cook v Pasminco Pty Limited (No 2) (2000) 107 FCR 44 at 53 [47], namely, that such an agreement "is not created for the dominant purpose of the giving or receiving of legal advice or of being used in existing or anticipated legal proceedings" ([2013] NSWCA 152 at [80]). 16 There is nothing in the redacted matter that is protected from disclosure because of legal professional privilege. The funding agreement was a document that dealt with the relationship between the various interests of parties on the Council's side of the class action, being the funder, the lawyer, the representative party and members of the class. 17 In my opinion, there is no basis in any of the matter that the Council sought to be redacted to suggest that the matter was subject to any sustainable claim for legal professional privilege.

The Bank's and Standard & Poor's' submissions - confidentiality 18 Both the Bank and Standard & Poor's argued that the practice note CM 17 and the draft practice note identified some special class of information that transcended the concept of confidential information, that the Council had to establish existed in order to justify any redactions of the funding agreement. They argued that this was the consequence of the use of the words "information which might reasonably be expected to confer a tactical advantage on the other party" in cl 3.6 of practice note CM 17, and expressions that had been used in previous judgments on this issue. They relied on what Goldberg J had said in Kingsheath Club of the Clubs Limited (in liq) [2003] FCA 1034 at [33], concerning the right to keep private the details of a party's "war chest" available to fund it in litigation, and to what Sundberg J had said in Spatialinfo Pty Limited v Telstra Corporation Limited [2005] FCA 455 at [70]-[71], concerning protection of information such as the amount and level of funding, that could unfairly assist respondents or defendants. The Bank and Standard & Poor's contended that these expressions created some guiding principle that governed the ability of the party resisting disclosure of the full contents of the document from being able to do so. 19 After I ordered the Council to produce the unredacted funding agreement, I determined that a number of the redactions could not be justified after hearing argument from the Council's counsel. The Council's solicitors then prepared and provided to the Bank and Standard & Poor's, over the luncheon adjournment, a newly redacted version that revealed the matter that I had found should not have been concealed. Neither the Bank nor Standard & Poor's advanced any substantive argument for further disclosure based on the newly revealed matter.

Consideration - confidentiality 20 The evident purpose of the order made on 23 June 2015 for provision of the funding agreement pursuant to cl 3.6 of practice note CM 17 and, indeed of both the current and draft practice notes, is to strike a balance between the rights and interests of the parties as they are, or may be, affected by the involvement of, relevantly, the funder, in the six proceedings. The current practice note addresses that balance by creating an expectation of some transparency in respect of the funder's role and involvement in the conduct of a representative proceeding or class action. In ordinary experience, such proceedings are often complex, expensive and lengthy cases. 21 However, cl 3.6 recognises that some aspects of the relationships between the representative party, or applicant, his, her or its lawyers, the group members or class and the funder should not be revealed at the outset of the litigation. The Court has currently identified an expectation of limited transparency of the funder's involvement as between the parties to representative proceedings in the current practice note that, however, retains flexibility and, in particular, is subject to the Court's control in any individual proceeding. The use of such a procedure conforms with what Gummow, Hayne and Crennan JJ (with whom, on this aspect, Gleeson CJ at 407 [1] and Kirby J at 451 [146] agreed) in Campbells Cash and Carry Pty Limited and Fostif Pty Limited (2006) 229 CLR 386 at 435 [95] said, namely: The difficulties thought to inhere in the prosecution of an action which, if successful, would produce a large award of damages but which, to defend, would take a very long time and very large resources, is a problem that the courts confront in many different circumstances, not just when the named plaintiffs represent others and not just when named plaintiffs receive financial support from third party funders. The solution to that problem (if there is one) does not lie in treating actions financially supported by third parties differently from other actions. And if there is a particular aspect of the problem that is to be observed principally in actions where a plaintiff represents others, that is a problem to be solved, in the first instance, through the procedures that are employed in that kind of action. (emphasis added) 22 I am of opinion that the rationale for permitting redactions to be made to funding agreements contemplated by the terms of cl 3.6 of practice note CM 17, cl 6.3 of the draft practice note and the authorities to which I have referred, is the protection of confidential information. One reason why such information may be confidential in a particular case is that its disclosure would confer a tactical advantage or would reveal the amount of resources available to the funded party or would reveal information of a kind referred to in the relevant provisions of current and draft practice notes. The basis on which such information may be confidential will depend on the facts in any particular case, and the means for making any assessment of that basis may vary from case to case: cf Hodges v Waters (No 7) (2015) 232 FCR 97 at 118-119 [104] per Perram J; O'Brien v Komesaroff (1982) 150 CLR 310 at 326-327 per Mason J with whom Murphy, Aickin, Wilson and Brennan JJ agreed. 23 Sometimes, information that a person seeks to say is confidential, has been disclosed previously, or its general nature has been disclosed, so as to blow the gaff (to use Lord Russell of Killowen's description in Attorney-General v Leveller Magazine Ltd [1979] AC 440 at 468F-G) and thus deprive those who would otherwise seek to assert its confidentiality from being able to do so. 24 In the course of managing representative proceedings such as this, if the Court requires a person to disclose a funding agreement or similar document but allows redactions from it, that person must be able to justify the redactions and, as Gummow, Hayne and Crennan JJ indicated in Fostif 229 CLR at 435 [95], the Court can manage the process and determine whether or not the redactions are appropriate to protect matter that is, or should be treated as, confidential. 25 During the course of argument, I indicated to the Council that portions of what it had redacted did not appear to have any particular confidential aspect to them. Some were clauses of a boilerplate or common kind that appear routinely in documents of this nature. For example, cll 4.8-4.11 provided a conventional dispute resolution regime for issues that might arise between the funder, a claimant in the class or the representative party as to the appropriateness of a settlement offer or process. In such cases, it is common for senior counsel to be briefed to give advice on the reasonableness of an offer and for his or her decision to be binding. The issues that such a brief may include can, and often would be expected to, involve advice as to the strengths and weaknesses of various claims by funded persons, the quantum of their claims, the recoverability of a judgment sum from the respondents, the extent to which legal costs would be likely to be recoverable and the risk of the funder being ordered to pay costs in the proceedings. I considered that the same applied to the unsuccessful attempt of the Council to suppress details of another settlement mechanism in cll 12.3-12.11, with the exception of part of cl 12.8. 26 Originally, the Council had sought to suppress the whole of the provisions in the funding agreement dealing with financial matters. For example, it sought to redact the whole of cl 1.37, which reads, with the only redaction that I considered to be confidential because it dealt with part of the quantum of reward for the funder: 1.37. "Project Management Fee" means a fee, payable as Consideration for the Project Management, calculated as ██% of the sum of the total Legal Costs. 27 In cll 11.1(c) and (d), the funding agreement specified percentage amounts and other potential rewards to which the funder might be entitled in particular contingencies. In my opinion, the nature of that information was such that were it disclosed, the Bank and Standard & Poor's could gain, or be in a position to exploit, a tactical advantage in the conduct of settlement discussions. That was because the detail of those clauses could be used by one or both of them in structuring particular offers or seeking to exploit differences in the positions of various persons in the represented class, the lawyers or the funder. Those persons' interests may not all coincide at the particular point of time at which any particular offer might be made. The matter in those clauses appeared to fall within the kinds of confidential information that cl 3.6 of practice note CM 17 and cl 6.3(b) of the draft practice note recognise can be protected in such situations. 28 Likewise, cl 12.8 dealt with the precise details of the agreed settlement mechanism in a manner that appeared to be susceptible of exploitation by the Bank or Standard & Poor's in a way that could confer on each a tactical advantage. As the Council suggested, by way of example in the course of argument, if an opposing party knew that a particular barrister would be briefed or appointed to give advice or make a decision under the funding agreement dispute resolution clause, that opposing party may structure its offer in the expectation that the barrister would be likely to act consistently with his or her known inclinations as to approaches to issues in dispute in dealing with the task he or she may have to perform. 29 Similarly, I considered that cl 12.12 contained a provision that was particularly tailored to the circumstances of those on the Council's side of the record that ought not be disclosed because it might reveal tactical or other considerations, the revelation of which could advantage the Bank or Standard & Poor's. 30 Clauses 18 and 19 dealt with circumstances in which each of the funder, the Council and a claimant, or claimants, could terminate the funding agreement and with some of the consequences of termination. Once again, I was of opinion that the provisions that had been redacted were of such a nature that their revelation to the Bank and Standard & Poor's could confer tactical advantages or insights of which they would not otherwise have knowledge.

Conclusion 31 The rulings that I have made in respect of redactions deal with the situation of the litigation at this particular point in time. There may come a point, for example, if or when a judgment or settlement occurs that requires the Court to determine the appropriateness of the reward for which the funder has bargained in the funding agreement so that it becomes public: cf Hodges 232 FCR 118-119 at [104]. Likewise, for example, there may also come a time at which the provisions in the funding agreement dealing with arrangements for settlement or termination that have now been redacted no longer have any confidential aspect to them. 32 Accordingly, the suppression and non-publication orders that I will make to preserve confidentiality of the redacted portions should operate until further order. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares.