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David William Pallas & Julie Ann Pallas as trustees for the Pallas Family Superannuation Fund v Lendlease Corporation Limited; Martin John Fletcher v Lendlease Corporation Limited - [2019] NSWSC 1631 - NSWSC 2019 case summary — Zoe
David William Pallas & Julie Ann Pallas as trustees for the Pallas Family Superannuation Fund v Lendlease Corporation Limited; Martin John Fletcher v Lendlease Corporation Limited
[2019] NSWSC 1631
Supreme Court of NSW|2019-11-21|Before: Hammerschlag J
Solicitors:
Maurice Blackburn Lawyers - Plaintiffs in proceedings 2019/122037
Phi Finney McDonald - Plaintiff in proceedings 2019/244030
Herbert Smith Freehills - First and Second Defendants in both proceedings
File Number(s): 2019/122037 2019/244030
[2]
Introduction
HIS HONOUR: This is yet another fight about rights to run a class action.
This time, it transpires to be mostly about who should be the plaintiffs' solicitors on the record.
Two class actions have been started in the Court against two related defendants (Lendlease).
The first case (Pallas) was started on 18 April 2019. Rebecca Gilsenan of the law firm Maurice Blackburn is the solicitor on the record. The second case (Fletcher) was started on 6 August 2019. Brett Spiegel of the law firm Phi Finney McDonald is the solicitor on the record. Each has litigation funding from a different funder.
The two cases are, for present purposes, duplicates. They are brought by persons who acquired securities in Lendlease. They allege that Lendlease fell short of its continuous disclosure obligations by failing to inform the market about developments concerning projects in which it was engaged and the effects those projects were having on Lendlease's financial performance and results. They claim that they suffered loss and seek compensation. The group in Fletcher will, it seems, comprise mostly institutional investors, numbering some thousands.
In both Pallas and Fletcher, the plaintiffs move the Court for orders intended to reflect and incorporate a "package" of consensual terms which have been reached between them as to how the actions will run. These include how the two litigation funders will participate. A central plank of these arrangements is that the solicitors presently on the record in each case will be on the record jointly in the consolidated proceedings.
Plainly, there should be only one case.
I think that it is appropriate to consolidate the proceedings. I had initially understood that the plaintiffs supported consolidation. However, it emerged in argument that they only supported it if the Court sanctioned their entire consensual package, including joint representation. They modified their position during argument to one of not opposing consolidation, if the Court permitted joint representation but did not make any orders otherwise implementing their package. But they identified no factor against consolidation. Lendlease supports it. Lendlease opposes there being more than one solicitor on the record in the action.
Affidavits were read by both sides. The Court has had the benefit of comprehensive written submissions from both sides and oral argument.
[3]
The one lawyer for a plaintiff rule
There is a longstanding rule of practice that plaintiffs are to be represented by one solicitor: Wedderburn v Wedderburn (1853) 17 Beav 158, 51 ER 993; Herbert v Badgery (1893) 14 LR (NSW) Eq 321; Lewis v Daily Telegraph Ltd (No 2) [1964] 2 QB 601; Goold & Porter Pty Ltd v Housing Commission [1974] VR 102.
This means that a single plaintiff must not have multiple solicitors on the record and a group of plaintiffs must have only one.
The rule is soundly based in policy. Amongst others, it avoids fragmentation of position between plaintiffs and it gives the Court the comfort and certainty of being able to look to one designated legal practitioner on the record (for persons in the same interest) to be responsible to discharge the important duties to the Court resting on legal practitioners.
In Konneh v New South Wales (No 2) [2013] NSWSC 390, Garling J observed at [77] that whilst there are no specific rules in the Uniform Civil Procedure Rules 2005 (UCPR) which provide for or authorise a party to be represented by two solicitors on the record simultaneously, there are many rules, particularly those in pt 4 and pt 7 of the UCPR which, when they refer to a solicitor, do so in the singular, and as expressed, are incompatible with the concept of a party being represented by more than one solicitor simultaneously. [1]
But the one lawyer for plaintiffs rule is not irrefrangible. Justice may dictate that it be departed from. No more than this is required to warrant departure.
To the extent that the rule is implied in the UCPR, s 14 of the Civil Procedure Act 2005 (NSW) (CPA) is the gateway to departure from it. It provides:
14 Court may dispense with rules in particular cases
In relation to particular civil proceedings, the court may, by order, dispense with any requirement of rules of court if satisfied that it is appropriate to do so in the circumstances of the case.
An example of when departure from the rule may be warranted is where, as a consequence of separate proceedings being consolidated, not all plaintiffs are in precisely the same interest. Each case depends on its own circumstances.
[4]
The argument for relaxation
The plaintiffs argue that the rule should be relaxed so that each set of plaintiffs can keep their own lawyers and the group will get the benefit of not one but two experienced class action law firms. The plaintiffs and the group, they say, will be getting the benefit of two for the price of one.
They propose that representation be divided between the two firms to be on the record on the terms of a "litigation protocol", which will regulate their co-operation and respective functions. The protocol is a comprehensive document, providing for the appointment of a litigation committee to make major decisions and to manage the litigation. It contains a procedure for resolving disputes within the litigation committee and for assistance to be provided to any costs referee who might be appointed by the Court to conduct periodic inquiries into whether there has been unnecessary or excessive work performed by the lawyers.
They accept "at least a theoretical risk of increased costs", but point to provisions in the protocol intended to protect group members from unnecessary or excessive work or duplication.
They argue that the possibility of a relatively limited increase in legal costs is outweighed by the costs and delay that would be caused by a "carriage motion" (and a possible appeal) to determine which of the plaintiffs and their legal representatives should have conduct of the proceedings.
They argue that the Court should give cognisance to their contractual arrangements.
They raise the possibility that if the institutional investors do not get their own way with respect to the package, they might opt out of Fletcher and start new proceedings, which will entail further duplication, expense and inconvenience. Institutional investors have signed up on the footing that, amongst others, they will have their own solicitors in the case.
The plaintiffs cited cases in which joint representation, with a co-operation protocol, has been permitted, including, Southernwood v Brambles Ltd (2019) 137 ACSR 540 and Zonia Holdings Pty Ltd v Commonwealth Bank of Australia Ltd (No 2) [2019] FCA 1061. The course taken in those cases was undoubtedly open and considered to be appropriate for the particular circumstances before the court. I observe that in Carnie v Esanda Finance Corporation Ltd (1996) 38 NSWLR 465, Young J said that that the Court will waive the rule only in the most extreme circumstances. However, in Southernwood v Brambles, Murphy J considered that a requirement for extreme circumstances is plainly wrong. I respectfully agree with Murphy J.
[5]
Decision
I am not persuaded that the Court should depart from the well-established rule of practice in this case. The suggested benefits of departure are illusory. The threat of a lengthy, complex or expensive carriage motion is empty. The downside of allowing departure is real. Departure in this case would be inimical to good case management. In short, there is no good reason in principle to depart from the rule and every good reason to adhere to it.
Departure from the rule should not be encouraged generally, but especially not where there is no suggestion of any divergence of interests between plaintiffs. To the contrary, the plaintiffs' position presupposes identity of interests.
The interests of the parties and the Court are better served by avoiding any potential question as to which one of two solicitors has carriage of, or responsibility to the Court for, any particular aspect.
The spectre of duplication and increased costs is not theoretical. It is real. CPA ss 56(1) and (2) require the Court to determine the real issues justly, quickly and, relevantly here, cheaply. [2]
The availability of procedures which might ex post facto assuage any excessive charging or duplication as a result of joint representation does not, in my view, justify taking a course which has a propensity to increase costs in the first place.
The solicitor who will be on the record for the plaintiffs can, on instructions, enter into arrangements with the other firm to be consulted or for the workload to be shared. Nothing inhibits the entry into of a protocol to regulate any such arrangement. The terms of it are a matter for parties, not for the Court. Joint representation on the record is not needed to get the benefit, if they want it, of additional legal expertise which is otherwise available. The plaintiffs' ultimate position was that if joint representation, but nothing more in relation to carriage, was ordered, their arrangements could be left to them.
The current application arises because two class actions aiming to assuage the same alleged wrong at the suit of the same community of complainants have been commenced, with different solicitors on the record. If the approach urged by the plaintiffs was sound (which I do not think it is), it would follow that where there are multiple class actions, there should be so many solicitors on the record as there are class actions so that the group members could get, say, five for the price of one and each plaintiff could keep its own solicitors. Their contractual intentions can be fulfilled inter partes.
The suggested benefit of the respective plaintiffs having their own solicitor is illusory. Both law firms are highly experienced in this field. The plaintiffs can expect to be equally served by either. Additionally, it is in the nature of class actions that many group members will have no direct personal relationship with the solicitor or firm which runs the case. There will henceforth be one group, not two.
Agreement between parties to depart from the rule is immaterial where departure is otherwise not warranted. I observe that there are other aspects of the proposed arrangements sought to be included in the form of orders prayed for which I would not incorporate in orders of the Court because they are in substance matters between the parties, into which I do not think the Court should intrude.
I am not persuaded that the risk of decampment by institutional investors is substantial but if that eventuality comes to pass, the Court will manage it. Decamping may have the effect that those institutions do not get a hearing of their cases as expeditiously as will happen with the consolidated proceedings.
Justice does not dictate that the rule be departed from. Rather, it dictates that it be adhered to.
I will give the parties an opportunity to reach agreement on which solicitor will be on the record. Agreement on this question may need agreement on other aspects. There is no reason to believe that the two camps will act other than rationally and sensibly.
However, if the respective plaintiff camps find that they are unable to agree, I will determine who the solicitors will be.
The procedure which I intend to adopt will be of the expeditious and abbreviated type envisaged by Lord Templeman in Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460 and approved by the High Court in Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 at 565 for forum non conveniens applications. The parties will provide me with a written summary identification of the relevant factors they contend should be taken into account in determining which solicitor should be on the record and identify, in abbreviated form, any facts which are said to support the existence of each factor. I have in mind a document or documents in the form of a modified Scott Schedule along the lines of the one which appears at the end of these reasons. [3]
Upon receiving such a document, the Court will determine the question on the papers, unless there is some compelling reason for any additional evidence or oral submissions.
A lengthy, complex and expensive carriage motion will not happen.
The plaintiffs' suggestion that departure from the rule will also avoid the delay and cost of a possible appeal from a carriage motion ruling, is misconceived. Their proposed order is as susceptible to a possible appeal as would be one on a carriage motion and Lendlease has the same entitlement to seek leave to appeal any order as do they. Moreover, the possibility of an appeal is enhanced by departure from principle rather than adherence to it.
I order that Pallas and Fletcher be consolidated.
Prayer 3 of the Motion seeking leave for Maurice Blackburn and Phi Finney McDonald to be jointly named as solicitors on the record in the consolidated proceedings is dismissed.
Until agreement or resolution of who will be the solicitor on the record, the solicitor will be the solicitor presently on the record in Pallas.
I will stand the matter over to a convenient date to afford an opportunity for agreement to be reached on who will be the solicitor on the record.
The costs, if any, of Lendlease thrown away by having filed a Commercial List Response in Pallas, will be their costs in the cause.
I will make ancillary directions to facilitate expeditious promotion of the consolidated proceedings. I will hear the parties on any further directions and orders which may be required.
P.S. His Honour stood the proceedings over to 29 November 2019 to enable the parties to reach consensus.
[6]
Factors supporting orders sought Facts relied upon Other parties' response (agree or disagree) Other parties' factual support for disagreement
(1)
(2)
(3)
Directly pertinent legal authorities relied on (citation only)
[7]
Factors opposing orders sought or in support of other orders Facts relied upon Other parties' response (agree or disagree) Other parties' factual support for disagreement
(1)
(2)
(3)
Directly pertinent legal authorities relied on (citation only)
[8]
Endnotes
See also: Spotlight Pty Ltd v Maintek Roofing Pty Ltd [2017] NSWSC 165. The form of Summons under the UCPR - Form 4A - has provision to nominate one solicitor on the record and to provide the name of a firm.
CPA ss 56(1) and (2) provide:
[9]
(1) The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.
[10]
(2) The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule.
…
3. See UCPR r 15.2 and Form 13.
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Decision last updated: 21 November 2019