B THE PROCEDURAL HISTORY AND THE APPLICATION IN CONTEXT
8 Some of the procedural background is set out in the Full Court's reasons (at [327]-[337]). It is regrettably necessary to wade into much more of the detail for present purposes.
9 Competing stay applications were filed which, when the proceedings were docketed to me, I brought on for case management together with an application for approval of opt out notices in the Class Action.
10 During this extended case management hearing in December 2022, I indicated that the competing stay applications were premised on the notion the Court was faced with what amounted to a binary choice: first, the Class Action proceeding against only one (albeit the most important) respondent, MAL, to an orthodox trial of common questions plus the individual claims of two lead applicants and, perhaps, one subgroup member (leading to subsequent hearings of individual claims); or secondly, the hearing of some of the SDA Actions, which apparently contemplated various test cases chosen from eight McDonald's stores (engagingly described as "restaurants") following identification of "sample groups" involving nine respondents (including MAL) out of the approximately 330 respondents joined to the SDA Actions. This would be in circumstances where a determinative issue in the test cases is the foundational common question as to whether the Workers were entitled to the ten-minute rest breaks in accordance with the applicable industrial instruments and requirements of the FW Act (central common issue).
11 At the case management hearing, I expressed the need, consistently with Pt VB of the Federal Court of Australia Act 1976 (Cth) (FCA Act), to fasten upon a proportionate and sensible way to progress the resolution of the overall justiciable controversy. To this end, I raised with the parties my preliminary view that each alternative proposed had unsatisfactory aspects. As to the first, there was merit in having all persons who could be liable before the Court at an initial hearing, the regulatory aspect of the matter was of importance and there was a need to ensure that any determination as to the central common issue bound all relevant parties, including all franchisees. As to the second, the SDA's proposal for resolving issues involved an unwieldly hotch-potch of different actions without the manifold procedural benefits of a class action.
12 I expressed the preliminary view that there must be better way. My tentative view was that the best course was to reject the competing applications for a stay and manage the cases towards a joint, limited initial hearing of all proceedings, as quickly as possible. At such a hearing, all parties would be represented, and its outcome would determine the central common issue, any other common issues, and also a small number of representative sample claims for statutory compensation. Although I foreshadowed an initial trial dealing with the circumstances of one franchisee and one non-franchisee store, I proposed to facilitate representation by any franchisee who wished to be heard (given almost all franchisees were represented by one solicitor). Hence, the trial could be conducted in such a way as to have the legal effect of binding everyone, including the non-party group members, to the resolution of all common issues. If the case did not then settle, an aspect of this proposal would be that the entitlement of the balance of group members to statutory compensation would be determined within the Class Action including, at least potentially, by determining any claim for an aggregate award, unless the group member had previously opted out (in which case the individual's compensatory claim would be determined, in the event the applicants prevailed with respect to the central common issue, in the relevant SDA proceeding, along with all other claims advanced in all the SDA Actions, such as pecuniary penalties).
13 This proposed course was the subject of refinement and submissions over thirty pages of transcript, with discussion taking place as to an opt out regime (in circumstances where the draft opt out notice previously proposed by the class action applicants was unsatisfactory). In the course of expressing my preliminary views, the following relevant exchanges then occurred (at T29.15-32.43) (noting Mr Irving KC appeared for the SDA, Ms Kelly for the class action applicants, and Mr Dick SC for MAL):
HIS HONOUR: I'm trying to work out a practical solution that accommodates both proceedings. I know [the SDA] can bring claims for compensation. I know that. And some people may wish you to, in which case they're perfectly entitled to opt out of the class action. All I'm saying is if they don't opt out of the class action, it's going to be determined in the class action.
MR IRVING: But our interest as the SDA is not just - for compensation is not just in relation to those members who come along and say, "We wish to be paid our full award wage." We also have an interest in making sure that those who quite readily say to the employer, "We're quite happy to be paid $100 less a week," the SDA have got an interest in stepping in and saying, "Well, we, the SDA, are not happy that you are receiving compensation." So, you know, the SDA - unions have an interest in not only ensuring that union members receive their full wage or - - -
HIS HONOUR: It's anyone who they're eligible to represent.
MR IRVING: Yes. And unions have an interest in making sure that the compensation and full award wages are paid to - so it's - - -
HIS HONOUR: I understand that.
MR IRVING: And in those circumstances, the - it is not necessary for the class action to, you know, (a) exist, but (b) for any orders to be made in relation to the class action in terms of - - -
HIS HONOUR: Well, it probably was necessary for it to exist, because you didn't actually go around and commence the proceedings in a timely way for a number of years, and you've done it at the heel of the hunt, and so what I've got to do is fashion an appropriate resolution with a laser-like focus on not only - and you make - and this point is made in your submissions and it's exactly what motivated the preliminary view I had, which serves not only the… legitimate public and industrial purposes that you seek to advance on behalf of the union but also best serves the protective and supervisory role I have in respect of those group members. It involves a deal of fashioning. I know what you're entitled to do. I know what the applicant is entitled to do. The question is: what is optimal to be done? And that's why I'm seeking to fashion a solution and why I brought the parties together to give them an idea of my cast of mind to see whether or not this can be resolved. If you want to run a stay application, which seems to me what you're suggesting you want to do, then I will hear it. All I'm saying to you is… this is not the only case where these sort of things have to be resolved… I've got to use whatever case management techniques are available to me in order to best use the resource of the court and… best serve what in a sense are conflicting interests.
MR IRVING: And in terms of the interests of the employees, we're looking at a class of employees who have got two options. They either have an organisation come along and represent them for free - - -
HIS HONOUR: That's exactly the reason why… I make it absolutely clear in any notice that they have a choice, that if they wish their compensation to be determined in your claim, this will be the consequence. If they don't wish to opt out and they have it in the class action, this will be the consequences so they can make a decision, a fully informed decision. I agree with you. That's why I would never countenance in a million years the sending out of the opt out notice that was proposed by the applicant.
MR IRVING: Yes.
HIS HONOUR: Because it didn't give them a proper explanation, in my view, of what the downsides and upsides were of remaining in the class action. And the counterfactual is that they have their claim determined in the SDA action and the consequences of that need to be explained in the opt out notice.
MS KELLY: We've heard you about that, your Honour. We take the criticism and we will deal with it.
HIS HONOUR: Yes. Well, I will deal with it by doing the notice.
MS KELLY: We will assist.
HIS HONOUR: Yes. Thanks.
MR IRVING: Well, the matter is going to be stood down and perhaps we will - - -
HIS HONOUR: Well, if you can consider your position, if you wish me - I've given you an idea of my thinking. I think it's a pragmatic, sensible solution to a practical problem which actually gets with a degree of laser-like focus as quickly as possible to determining the real issues in this case. If you want to have a stay application, then we will have - then I will determine a stay application. I've given you my preliminary views. It doesn't mean that I have - I won't listen to you but I must say to you, my strong view is what I - the solution that has emerged through this very useful discussion this morning seems to me to be one which is a sensible resolution. And that's the key to resolving all of these difficulties which arise whenever you have a clash between proceedings which have a public purpose and proceedings which are motivated essentially - I don't think the applicants would disagree - by a funder that's seeking to make money.
MR IRVING: If the court pleases. If you do contemplate determination of the stay application, are you - is your Honour suggesting we have that now or rather put on material in short form and come back - - -
HIS HONOUR: I'm happy to deal with it now. If you say - I'm happy to hear from you and resolve it today. If you say that causes you some unfairness and you wish to have a stay application, then I can't - particularly in light of the orders that were made before, then I can't shut you out from putting it on, because no doubt you will say to a Full Court that I've denied you procedural fairness. But I would like you to reflect on what I've said this morning, think about whether or not you think a stay application is necessary in those circumstances and then whether or not I can deal with it now and deliver a judgment today. Or alternatively, whether we have to come back another day after you've put on further evidence and further submissions. Whatever happens, I'm not going to deny you procedural fairness.
MR IRVING: Thank you, your Honour. And we certainly will reflect on what your Honour said …
…
HIS HONOUR: Come back with sensible proposals, hopefully and to the extent they're not sensible, then I will resolve any differences and then we will set a trial date for that and work backwards.
MR DICK: Excellent. That's all I wanted to know, your Honour. That makes perfect sense to us.
HIS HONOUR: And by that stage I will know whether I will hear it or somebody else will hear it and then we will work back.
MR DICK: Thank you, your Honour.
HIS HONOUR: And then we hopefully get to dealing with people's substantive rights rather than having procedural stoushes, as quickly as possible. I will adjourn till 12.
14 After resuming half an hour later, the following exchange took place (at T33.15-20):
MS KELLY: - - - we're at the question of whether or not my learned friend Mr Irving wishes to press his client's application for a stay. My concerns are resolved.
HIS HONOUR: All right. Mr Irving.
MR IRVING: No, we do not. That's the short answer.
15 Then, there was some discussion about the involvement of franchisees and the following was said (at T34.15-35.42):
MR IRVING: The next issue is in relation to those who do not opt out, and I notice that the approach taken by Beach J in McKay Super Solutions v Bellamy's, in which - now, one of the ways in which one could deal with the opt-out issue is that of those who don't opt out, the default position may be the SDA matter rather than the class action in that respect, in circumstances in which, no matter how socially media aware and acute the - a notice is sent out to minors and those who have recently been minors, there is an extremely high likelihood that those employees will not respond. No matter what their desires might be, they just won't respond at all. And if the default position is that they are in a system whereby they pay 30 per cent of their very small damages award to the litigation funder and the legal fees accordingly, it is not, in my submission, just to them to - - -
HIS HONOUR: Well, there's several things to say in response to that. (1) There's no guarantee it's 30 per cent. They're people who are not registered, and any common fund order will have regard to the - looking at it ex ante, the risk that the funder is taking in funding the proceedings. So there's no suggestion, in respect of those unregistered group members, it would be anything like 30 per cent given they've got no adverse cost exposure. Secondly, the whole premise of part IVA is that it works on the basis that the statute provides that notification is given and we have an opt-out regime, and the default position, as I indicated earlier, would be that those compensation claims are advanced in the class action.
MR IRVING: Well, but the opt-out procedure doesn't need to occur prior to the resolution of - one could defer the opt-out process until - - -
HIS HONOUR: Until when?
MR IRVING: Until one had an understanding of what the level of liability is in the initial trial.
HIS HONOUR: But we can't do that, because the Act requires me, under section 33J, to fix a date for opt-out before we have any determination of any final issue in the proceeding.
…
HIS HONOUR: it is absolutely imperative that the group members now be apprised of all relevant information in respect of which they need to be apprised to make an informed decision. That's why it's critical that there be different opt-out notices to people who have registered, because they've already taken a step, and we understand that - they will have contact details, being email addresses, and they will be people who have already made a decision. They also need to be - I'm going to provide an opportunity for those people to opt out, of course, because they haven't had an opportunity yet to opt out, and they're going to opt out knowing that if they do opt out, their claim - there are other alternatives to having their claim advanced. So you need have no fear about the fact that these people aren't going to be told the - what alternatives there are.
16 A further exchange then occurred as to opt out as follows (at T37.4-34):
HIS HONOUR: Well, the question is how we move forward. I think the way we move forward is - well, the first step that needs to be talked about is the question of opt-out notices. So I suppose I should ask Ms - am I cutting across anything else you wanted to say, Mr Irving?
MR IRVING: No, your Honour.
HIS HONOUR: … I do not understand why an opt-out notice should be more than a page. Anything more is just going to confuse people.
MS KELLY: Understood, your Honour.
HIS HONOUR: And it has got to give them an appropriate and fair description of the counterfactual. There also has to be need - and you're instructed by solicitors who I've had this conversation with before. I want some sort of animated - - -
MS KELLY: They're setting up a TikTok account right now, your Honour.
HIS HONOUR: Yes, some sort of animated - I don't mean this disrespectfully, but very simple thing which can be distributed by social media, and some real thought be given by your side as to an appropriate mode of distribution of notices, including perhaps notice being displayed in McDonald's stores, perhaps, or some way in which I'm satisfied that people who are affected by this class action have - so how long you would need to think about those things - speak to Mr Dick and also Mr Irving, because I want them to have input into what they think is fairly being said about the counterfactual.
17 Discussion moved to the issues that would be determined at an initial trial. A conferral between counsel prior to the next case management hearing was proposed to facilitate the creation of a document identifying with precision those issues and steps to ready the initial trial for hearing as soon as possible. The following was then relevantly said (at T39.20-40.4):
HIS HONOUR: Well, we're in a new year and we're coming out of today with a new sense of optimism. And hopefully those conferrals can work. If you want me, I will order a conferral in person facilitated by a registrar of the court.
MS KELLY: I'm less concerned about the mode of conferral than the crystallisation of positions in advance of the 17th.
MR DICK: Yes, but that's because in the past these parties have been having a fight about who should have carriage of the case.
HIS HONOUR: Well, that's resolved now.
MR DICK: That's resolved. So I think in terms of what we've been discussing today, which is what's the scope of the initial trial, that is going to be a much easier topic to deal with. So I don't share my learned friend's pessimism about the parties sitting down and trying to work something out. We've already identified for your Honour, we've got probably two stores. We will need to speak with the applicants to see what they've got in mind.
HIS HONOUR: Are you pessimistic or optimistic, Mr Irving?
MR DICK: He's optimistic, very optimistic.
MR IRVING: Sorry?
HIS HONOUR: Are you pessimistic or optimistic about conferral?
MR IRVING: I mean, we've provided a six-page document listing all of the factual issues and given an affidavit saying who's going to be called about what and what discovery is going to be required about it. So I don't know - I think everyone should just, you know, the legwork has been done.
18 Accordingly, in the light of the above, orders were made dismissing the then extant stay applications and requiring conferral upon the terms of opt out notices and the steps necessary to ready the proposed joint initial trial on agreed issues for hearing.
19 Following conferral, the next case management hearing took place on 6 February 2023 commencing at 10:15am. I understood three issues had arisen for resolution that day. The first was leave was sought by the class action applicants to proceed against three franchisees (which was opposed by the SDA); the second related to the pleading of the conduct of the SDA which was alleged to be relevant to the question of relief; and the third was the content and cost of the opt out process, including the costs of an independent lawyer (I had proposed there be an independent person to whom questions as to the opt out process could be directed by group members). I heard argument all morning and then, at 2:46pm, commenced delivery of what I proposed would be an ex tempore judgment in which I said:
… as I have done in cases involving competing class actions, I raised with the parties my intention that there be an independent lawyer appointed who can respond to any queries that members of the class seek assistance - in respect of which group members seek assistance.
There are a couple of lessons from previous experiences that I should note. The first is it is probably appropriate that some sort of FAQ or frequently-asked-questions document be prepared in advance which if not can be agreed by the parties can be settled by me to provide a template response by the independent lawyer to questions that might be regarded as being predictable. My current view is it is probably appropriate that the role is performed why somebody who has had some experience in a similar role in the past, probably a senior, junior barrister, but I am open to suggestions in that regard.
As to the cost, my initial view was it be appropriate … for the costs to be shared between the class action and the SDA on an equal basis. On balance, however, I think it is appropriate that the costs be one borne by the class action applicants. The whole reason why there is opt out is because that is … that that is a fundamental requirement of Part IVA. It is not correct to say that the only reason why there's a need to have an independent lawyer is because at the heel of the hunt the SDA has commenced proceedings against McDonald's. It is unnecessary to review the timing and evolutions of the claims. It is sufficient simple to note that there will be a need for there to be a mechanism for explaining the complexities of these matters to a group member irrespective of whether or not there was an extant claim being advanced on their behalf by the industrial association.
Apart from anything else, I would have considered, consistent with my supervisory and protective role, to apprise group members of the fact that there may be other legal mechanisms available for them to seek to agitate for someone to bring action on their behalf even if the SDA proceedings have not been extant. It does not seem to me to be an appropriate exercise of discretion to require the SDA to contribute to paying the costs of this process.
All parties have behaved sensibly in putting in place a sensible resolution to what in truth is a complex problem. As I noted in Turner v Tesa Mining (NSW) Pty Limited [2019] FCA 1644; 290 IR 388 at 1, compared to other forms of class actions, what can be described as "industrial class actions" have been rare beasts, but it appears this is now changing.
That change continues and the issue of jointly managing "representative" proceedings brought by industrial associations and class actions involving the same issues throws up new challenges which differ in important respects from the jurisprudence that has now developed in relation to competing class actions. It's hoped that when these problems arise in the future, they can be resolved in the same cooperative spirit that has been evident in these proceedings. It is now necessary that I descend to the detail of settling the opt-out notice.
20 After then dealing with argument as to the opt out notices, Ms Costello KC (who appeared with Mr Irving KC for the SDA), then said (at T62.32-64.8):
MS COSTELLO: Your Honour, the position that we took in our submissions was that the form of your optout notice and the optout notice proposed by the class action is a de facto stay in that it - in its form. And so before it might be seen that we consent to the process that you've described as a consensus, pragmatic approach to the shape of the initial trial and the optout notice I've put on the record but it's not.
HIS HONOUR: No. No. No. No. No. No. I know you - well, sorry. There's no further issue in relation to the process. That's why I said the devil is in the detail. I know you don't consent to the optout notice.
MS COSTELLO: Or the process by which the SDA actions are said to be - come second to the class action process.
HIS HONOUR: How did that come second?
MS COSTELLO: Because your Honour's observation just in your ruling now was that - was to propose a binary approach that, unless someone opts out of the class action - - -
HIS HONOUR: That's what was discussed in December. It was consented to.
MS COSTELLO: Well, your Honour, our written submissions that we filed on Friday oppose the binary approach that was the premise underlying your Honour's draft optout notice and the class action's optout notice.
HIS HONOUR: Well, you better show me that and explain why that's not a change of position than the one that emerged at the end of the December hearing.
MS COSTELLO: Because there was no order by your Honour to that effect and nor from my reading of the transcript was there a ruling of the court to that effect.
HIS HONOUR: No. There was no order of the court to that effect. So are you also saying that's not an inconsistent position that was taken?
MS COSTELLO: By whom, your Honour?
HIS HONOUR: By your client.
MS COSTELLO: No. My client is not taking an inconsistent approach. Your Honour, all the - the class action and - - -
HIS HONOUR: Well, I've been working under the misapprehension, I'm afraid. I thought it was quite clear from the transcript on the last occasion. Well, look, I will revoke that ex tempore judgment and we will start again. You want to move on your interlocutory application. Move on your interlocutory application. If you say that's not by - that that process is not by consent, that is the broad principles are not by consent, then what do you seek? A stay or what do you seek?
MS COSTELLO: Well, if your Honour's order is that the first trial will now be a trial of the class action claim against both McDonald's and the franchisees, that is a change in the scenario. That's the order you're making today. And so the thing we may stay is a different thing than we sought the stay for before business.
HIS HONOUR: Okay. All right. Well, if you say that I wasn't sufficiently clear on the last occasion, that is what I had anticipated the class action would be happening. If you say you're under a misapprehension when - or there was some fault on my part in not explaining that, then the compensation claims - sorry. Let me go back a step. The only thing that's new today is that there's a claim being advanced by the class action applicants in respect of the franchisees at the initial trial. That's the only new thing that's being raised today and that was a matter of detail, which was not - which I must say was not in my mind on 15 December. Everything else about those principles was the demarcation between penalties and people opting out or there being - and the class action running the compensation claims was everything was discussed on the 15th. If you say that that new thing changes the goalposts and, in effect, you don't consent to that approach, you're perfectly open to take that position. That's fine but I just want see - I just want to understand with precision what's the alternative. And I will withdraw those ex tempore reasons that I have just set down and I will hear whatever application you wish to make as to how I'm supposed to case manage this case.
(Emphasis added).
21 Although I did not doubt the SDA changed tack and took an inconsistent position as between December 2022 and February 2023, because of the way the proposal had come about in December, and the short time the SDA had to obtain instructions in the course of that case management hearing, I wished to ensure the controversy was determined fairly and considered the SDA should have liberty to re-agitate its position concerning the stay of the Class Action without the necessity to prove a material change in circumstances. The other parties exhibited some understandable frustration but did not formally oppose this course.
22 Hence, it was against this unusual background that the SDA renewed its application for a stay. In this regard, the interlocutory application filed by the SDA on 16 February 2023 goes back to its initial, pre-December position and seeks one substantive order: "[s]ubject to further order of the Court, Elliott-Carde and Dunlop v McDonald's Australia Limited (VID 726 of 2021) be stayed".
23 Given post-December developments, the class action applicants now no longer press for a stay of the SDA Actions but instead propose a series of procedural orders putting in place a joint trial model along the lines contemplated by the December 2022 orders. As I understand the current proposal, the class action applicants now seek, as part of any initial trial, the determination of their claim for aggregate relief in accordance with prayer 5 of the amended originating application, being an order "under s 545 of the FW Act, further or alternatively s 33Z(1)(e), further or alternatively s 33Z(10)(f) of the [FCA Act] that [MAL] pay compensation to the Applicants and Group Members in an aggregate amount" (aggregate award), among other things.
24 In the balance of these reasons, I will describe the general approach now proposed by the class action applicants as the joint trial model.
25 Circumstances were complicated further when the SDA then raised two further issues following the filing of the stay application.
26 The first was a contention advanced in its written submissions that the decision of O'Callaghan J in Davaria Pty Limited v 7-Eleven Stores Pty Ltd (No 13) [2023] FCA 84 threw the Court's power to make a "settlement common fund order" (Settlement CFO) into doubt. The question of power to make such an order is necessarily material to the disposition of the stay application because the basis upon which the Class Action is being conducted assumes the existence of such a power. This caused me to reserve a question for determination by the Full Court (Reserved Question) as to whether, if it was just to do so, the Court has the statutory power to make a Settlement CFO pursuant to s 33V of the FCA Act.
27 A Full Court was constituted at short notice, and orders were made for the service of notices pursuant to s 78B of the Judiciary Act 1903 (Cth). It was initially hoped the power issue could be resolved with alacrity, but several unforeseen matters contributed to some procedural delay. The first of these events was the Full Court receiving confirmation the Commonwealth Attorney-General wished to intervene.
28 Secondly, when the stay application was heard by me as a single judge a few days following the Full Court hearing, the SDA belatedly submitted that ss 539 and 540 of the FW Act exhaustively prescribe the manner in which proceedings may be brought on behalf of employees in relation to their workplace entitlements, such that by implication, those specific provisions exclude the operation of the general provisions in Pt IVA of the FCA Act. This would mean the Court would lack power to make a Settlement CFO in the Class Action. Consequently, the Full Court allowed argument to be re-opened on this topic and gave leave for written submissions to be filed.
29 Ultimately, the Reserved Question was answered in the affirmative and the SDA's contention as to ss 539 and 540 of the FW Act was demonstrated to be misconceived, clearing the way for the stay application to be determined: see McDonald's (at [324] per Beach J, [423] per Lee J and [508] per Colvin J).