Fisher v BT Funds Management Ltd

Counsel for the Second Respondent: K Sharma

Solicitors for the Second Respondent: Herbert Smith Freehills

BETWEEN: DANNYALAN RAYMOND FISHER First Applicant

AND: BT FUNDS MANAGEMENT LTD (ACN 002 916 458) IN ITS CAPACITY AS TRUSTEE FOR THE RETIREMENT WRAP, BT SUPER FOR LIFE, BT SUPER AND ASGARD INDEPENDENCE PLAN DIVISION TWO First Respondent

TAL LIFE INSURANCE SERVICES LIMITED (ACN 003 149 157) Second Respondent

WESTPAC SECURITIES ADMINISTRATION LIMITED (ACN 000 049 472) Third Respondent

order made by: O'BRYAN J DATE OF ORDER: 20 November 2024

Section 33V application

1. Pursuant to s 33V(1) of the Federal Court of Australia Act 1976 (Cth) (Act), discontinuance of the proceeding on the terms set out in the Discontinuance Deed made on 26 September 2024 between the parties, Shine Lawyers Pty Ltd, Woodsford Group Limited and Woodsford Litigation Funding 9 LLP be approved.
2. Pursuant to r 26.12 of the Federal Court Rules 2011 (Cth), leave be granted to the Applicants to discontinue the proceeding by filing a notice of discontinuance with no order as to costs save for orders 4 and 5 below.
3. Pursuant to ss 33V and/or 33ZF of the Act, any limitation period that applies to the claims of any of the Group Members (including the Applicants) to which the proceeding relates shall begin to run again from the date 60 days after the filing of the notice of discontinuance.
4. The First and Third Respondents shall make a payment in respect of the Applicants' costs of the proceeding in the amount of $1.45 million within 7 Business Days of: (a) the expiry of the period for filing any appeal of these orders without an appeal of these orders being filed; or (b) if an appeal of these orders is filed and that appeal has been dismissed, the expiry of the period for filing any further appeal without a further appeal being filed; or (c) if a further appeal is filed, the dismissal of that further appeal.
5. The Second Respondent shall make a payment in respect of the Applicants' costs of the proceeding in the amount of $50,000 within 7 Business Days of: (a) the expiry of the period for filing any appeal of these orders without an appeal of these orders being filed; or (b) if an appeal of these orders is filed and that appeal has been dismissed, the expiry of the period for filing any further appeal without a further appeal being filed; (c) or if a further appeal is filed, the dismissal of that further appeal.

Applicants' confidentiality orders 6. Order 4 of the orders made by the Court on 9 October 2024, providing for an interim order pursuant to s 37AF(1) of the Act, be vacated. 7. Pursuant to s 37AF of the Act, to prevent prejudice to the proper administration of justice, the documents or parts of documents set out in the schedule below are confidential and are not to be published until further order: Document Title Relevant part(s) or paragraph(s) (a) [32(a)]-[32(c)]. Affidavit of Craig Richard Allsopp affirmed 26 September 2024 [35]-[36]. [46] after the words "costs incurred.". [52] after the words "indicates that" until the words "The quantum of loss". (b) Counsel's Advice dated 7 August 2024 (comprising pages 137 to 141 of annexure CRA-2 to the Affidavit of Craig Richard Allsopp affirmed 26 September 2024) Whole document. (c) Litigation Finance Agreement (comprising pages 142 to 160 of annexure CRA-2 to the Affidavit of Craig Richard Allsopp affirmed 26 September 2024, and as filed with the Court pursuant to the Class Action Practice Note) [1.2.1]-[1.2.3], [1.4], [1.16.1]-[1.16.8], [1.18], [1.22.1], [1.22.2], [1.24.1.3], [1.32], [1.36]-[1.37], [1.41], [2]-[3], [7.2]-[7.6], [8.3.1]-[8.3.3], [8.4.1]-[8.4.3], [11.5]-[11.8], [12], [18.2], [26.1]. (d) Costs Disclosure and Conditional Costs Agreement (comprising pages 163 to 177 of annexure CRA-2 to the Affidavit of Craig Richard Allsopp affirmed 26 September 2024, and as filed with the Court pursuant to the Class Action Practice Note) Last two bullet points within the "Summary of key information", [7]-[8], [15]-[16], [18]-[34]. (e) Discontinuance Deed (comprising pages 178 to 199 of annexure CRA-2 to the Affidavit of Craig Richard Allsopp affirmed 26 September 2024) Personal addresses of the applicants (on page 180 of annexure CRA-2 to the Affidavit of Craig Richard Allsopp affirmed 26 September 2024) Bank account details in the definition of "Trust Account" (on page 182 of annexure CRA-2 to the Affidavit of Craig Richard Allsopp affirmed 26 September 2024) (f) BT Financial Group Request for Proposal (comprising pages 85 to 136 of annexure CRA-2 to the Affidavit of Craig Richard Allsopp affirmed 26 September 2024) Whole document. (g) Applicants' submissions dated 26 September 2024 [9(a)]-[9(d)], 13]-[13(f)],", [14] after the words "incurred is" until the words "- although group members", [14] after the words "light of the advice" until the end of the paragraph, [15] after the words "very substantial, and" until the words "Shine will not continue".

8. There be liberty to apply to vary the confidentiality orders on three days' notice. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 These reasons concern an application to approve a discontinuance of the proceeding under s 33V of the Federal Court of Australia Act 1976 (Cth) (Act) and the making of final confidentiality orders. 2 The proceeding is a representative proceeding commenced under Pt IVA of the Act. In broad terms, the applicants claim compensation from the first and third respondents, BT Funds Management Ltd (BTFM) and Westpac Securities Administration Limited (WSAL), in relation to alleged contraventions of trustee and fiduciary duties under the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act) and under the general law, and against the second respondent, TAL Life Insurance Services Limited, on the basis that it was knowingly involved in those contraventions. 3 BTFM was, and is, a subsidiary of Westpac Banking Corporation and the trustee of several superannuation funds, including the funds called Retirement Wrap, BT Lifetime Super and the Asgard Independence Plan Division Two. 4 WSAL was until August 2020 a subsidiary of Westpac Banking Corporation and the trustee of the superannuation fund called the Westpac MasterTrust Superannuation Division. 5 At all material times until 1 August 2022, the second respondent was also a subsidiary of Westpac Banking Corporation and was called Westpac Life Insurance Services Limited (WLISL). WLISL carried on a life insurance business within the meaning of the Life Insurance Act 1995 (Cth) and issued group life plans to related party entities, including BTFM and WSAL. On 1 August 2022, WLISL was acquired by the TAL group and its name was changed to TAL Life Insurance Services Limited. 6 The proceeding concerns group insurance cover offered by BTFM and WSAL to members of the superannuation funds of which they were trustees. The categories of insurance offered included life insurance, death and total and permanent disablement cover, and income protection (also known as salary continuance insurance). More specifically, the proceeding concerned a tender process conducted by BTFM and WSAL in 2016 for the provision of group insurance policies to the members of the superannuation funds of which BTFM and WSAL were trustees. At the conclusion of the tender, the boards of each of BTFM and WSAL resolved to approve WLISL as the insurer and, in 2017, entered into a deed with WLISL governing the provision of insurance. 7 The applicants allege that the decision by BTFM and WSAL to appoint WLISL as the provider of group insurance policies to the members of the superannuation funds of which BTFM and WSAL were trustees contravened their duties under the SIS Act and under the general law. The applicants allege that the premiums that became payable by members of the BTFM and WSAL superannuation funds for the insurance offered through those funds following the appointment of WLISL were higher than the amounts that would have been paid if BTFM and WSAL had properly performed their statutory and general law duties. 8 The group members are persons who were: (a) members of the superannuation funds of which BTFM and WSAL were the trustees; and (b) holders of superannuation products issued by BTFM and WSAL that provided insurance cover under a group policy of insurance issued by WLISL in the period 6 October 2017 until 1 April 2023. 9 The proceeding was commenced on 5 October 2023. It was apparent from the outset that the defendants objected to the adequacy of the pleadings. Despite that, in March 2024 I made orders for the filing of defences and for the provision of discovery in agreed categories. 10 In late April and May 2024, the respondents filed interlocutory applications seeking the summary dismissal of the proceeding or the striking out of the pleadings. A timetable was set for hearing and determining those applications, but orders were also made for the resolution of any disputes with respect to discovery categories. 11 The applications for summary dismissal of the proceeding or the striking out of the pleadings were listed for hearing on 9 August 2024. At that hearing, the Court was informed that there had been discussions between the parties as to the possible resolution of the proceedings. The parties sought an adjournment of the hearing of the applications to enable the continuation of discussions, which was granted. 12 On 22 August 2024, the Court was notified that the parties had reached an in-principle agreement in relation to discontinuance of the proceeding.

The discontinuance application 13 On 26 September 2024, the applicants filed an interlocutory application seeking an order approving the discontinuance of the proceeding pursuant to s 33V(1) of the Act. The applicants also applied, pursuant to ss 33V and/or 33ZF of the Act, for an order that any limitation period that applies to any of the group members (including the applicants) shall begin to run again from 60 days after the approval of the discontinuance. 14 The application was supported by an affidavit of Craig Allsopp of Shine Lawyers, the solicitors for the applicants, affirmed 26 September 2024. The affidavit explained the considerations that led the applicants to apply to discontinue the proceeding, including advice received from counsel with respect to prospects. The affidavit also exhibited a copy of the Discontinuance Deed entered into on 26 September 2024 by the applicants, the respondents, Shine Lawyers and the litigation funding entities in this proceeding, Woodsford Group Limited and Woodsford Litigation Funding 9 LLP (collectively, Woodsford). 15 The applicants also filed submissions on 26 September 2024 in support of the application for discontinuance. 16 The first and third respondents filed submissions on 4 October 2024, indicating their support for the application. No submissions were filed on behalf of the second respondent. 17 The applicants also sought leave under s 33X of the Act to give notice of the application for approval of the discontinuance to persons who had registered their interest in the proceeding with Shine Lawyers and by way of publication on the Shine Lawyers website. The notice advised recipients of the steps that could be taken to oppose the discontinuance of the proceeding, including by completing a "notice of objection" to be sent to Shine Lawyers and the Court. I made those orders on 9 October 2024 and published reasons on 11 October 2024: Fisher v BT Funds Management Ltd [2024] FCA 1166 (Fisher v BT (No 1)). 18 Mr Allsopp affirmed a further affidavit on 18 November 2024. In that affidavit, Mr Allsopp deposed to the steps taken by the applicants to comply with the orders made on 9 October 2024. Mr Allsopp's affidavit describes those steps in some detail, but for the purposes of these reasons it is sufficient to record that: (a) a notice of discontinuance in the form appearing at the annexure to the 9 October 2024 orders was issued to individuals who had registered in the proceeding by way of email and, where the notice was unable to be delivered by email, by express post; and (b) Shine Lawyers' website was updated to include a copy of the notice. 19 Mr Allsopp further deposed that, following the notice of the application being issued in the manner described above, Shine Lawyers received only one notice of objection to the discontinuance, which was subsequently withdrawn when the individual determined that she did not hold a policy of group life insurance issued by WLISL in her superannuation fund during the relevant period, and therefore would not be a group member. That individual subsequently requested that her objection be withdrawn. Shine Lawyers has otherwise not received any objections to the proposed discontinuance. No objections were received by the Court. 20 The application was heard on 20 November 2024. Each of the parties appeared at the hearing in support of the application. No person appeared to oppose the application. I made orders at the hearing approving the discontinuance of the proceeding. My reasons for doing so can be stated relatively briefly.

Discontinuance application 21 Section 33V(1) of the Act stipulates that a representative proceeding may not be settled or discontinued without the approval of the Court. The Court adopts a protective role with respect to the interests of group members who are not directly represented in the proceedings. As stated by Murphy J in Turner v TESA Mining (NSW) Pty Ltd (No 2) [2022] FCA 435 (Turner) (at [6]), an applicant must demonstrate an entitlement to an order for approval even when the order is not opposed, and the Court should be alive to the possibility that the outcome, whether it be settlement or discontinuance, may reflect conflicts of interest or conflicts of duty and interest between the applicant and group members, or between group members. 22 A discontinuance differs in its nature to a settlement, each having different legal consequences. The Court's task in considering whether to approve a discontinuance is therefore different to its task in approving a settlement under s 33V of the Act: Babscay Ptd Ltd v Pitcher Partners [2020] FCA 1610 (Babscay) at [19]. A discontinuance is a unilateral act of the applicant, which (subject to any cost consequences) puts the applicant in the same position as if the proceeding had not been commenced. As there is no agreement by which the proceeding is compromised, there can be no merger of the applicant's rights in the proceeding. As there is no judicial determination, there can be no res judicata or issue estoppel: Babscay at [20]-[22]; Caason Investments Pty Ltd v Cao (No 3) [2020] FCA 91 at [132]; Thirteenth Corp Pty Ltd v State [2006] FCA 979; 232 ALR 491 at [33]. 23 While it is clear that the test for settlement approval requires the Court to be satisfied that the proposed settlement is fair and reasonable and in the interests of affected group members, including as between group members, there has been some uncertainty as to the test to be applied when approval is sought for discontinuance, with two distinct approaches having emerged. 24 In Mercedes Holdings Pty Ltd v Waters (No 1) [2010] FCA 124; 77 ACSR 265 (at [9]-[10]), Perram J concluded that the test is whether the proposed discontinuance would be fair and reasonable not only in the interests of the immediate parties but of the group members as a whole. That test was subsequently adopted in number of decisions: see for example Hodge v Waters (No 4) [2014] FCA 472 at [15]; Adams v Navra Group Pty Ltd [2019] FCA 1157 at [19] and Sister Marie Brigid Arthur (Litigation Representative) v Northern Territory of Australia (No 2) [2020] FCA 215 at [69]-[70]. A second approach was stated by Dixon J in Laine v Thiess Pty Ltd [2016] VSC 689 (Laine) (at [34]) and requires determination of whether the discontinuance would be unfair or unreasonable or adverse to the interests of group members. In Simonetta v Spotless Group Holdings Limited [2017] FCA 1071 (at [12]), Yates J considered it unnecessary to express a concluded view but stated that there was merit in the submission that the test in Laine might be more apt where the practical effect of the proposed discontinuance will be to return group members to the position they were in before the commencement of the proceeding. Support for the test in Laine has been expressed in a number of subsequent decisions in this Court: see Babscay (at [28]) (Anastassiou J); Watson v Maximus Holdings (NSW) Pty Ltd [2021] FCA 87 (Maximus) (at [49]) (Wigney J); Francis (Trustee) v Oculus Accounting Pty Ltd (No 2) [2021] FCA 1275 (Oculus) (at [33]) (Derrington J); and Alford v AMP Superannuation Limited [2024] FCA 332 (Alford) (at [13]) (Anderson J). In Turner, Murphy J expressed the view (at [10]) that, at least in the context of a proposed discontinuance where the practical effect will be to return group members to the position they were in before the commencement of the class action, the test in Laine was appropriate. Lee J expressed his agreement with that view in Lloyd v Belconnen Lakeview Pty Ltd (No 3) [2022] FCA 761 at [6]. It is apparent that, in a case such as the present, the weight of the authorities supports the view that the task of the Court is to assess whether the discontinuance would be unfair or unreasonable or adverse to the interests of group members. 25 For the reasons that follow, I consider that the proposed discontinuance would not be unfair or unreasonable or adverse to the interests of group members. 26 First, the applicants have adduced evidence to the effect that the proceeding was commenced on the foundation of publicly available material obtained from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, where significant information was not available to the applicants and their representatives at the time of commencement. The applicants have now had the benefit of reviewing and considering documents produced by the respondents by way of initial discovery. Further advice on prospects has been obtained. Most relevantly, the litigation funder, Woodsford, has withdrawn its funding for the proceeding. The evidence also indicates that it is unlikely that another commercial third-party funder would agree to fund the proceeding. Shine Lawyers has also confirmed that they are unwilling to self-fund the proceeding. 27 Second, an agreement to discontinue the proceeding has been reached with the respondents on terms which do not prejudice the rights of group members. All group members will be returned to the position they were in prior to the commencement of the proceeding, and their rights against the respondents will not be affected by the discontinuance. There has been no hearing or judicial determination in relation to the merits of their claims and no question of res judicata or issue estoppel arises. Thus, any group member who wishes to commence their own proceeding against one or other of the respondents will be free to do so. 28 Third, group members have been given notice of the proposed discontinuance and of their right to object to the discontinuance and/or to seek substitution as the representative applicant, and no group member has done so. 29 As part of the discontinuance, the parties have reached an agreement (recorded in the Discontinuance Deed) whereby the respondents consent to an order of the Court requiring them to pay an aggregate amount of $1.5 million in respect of the applicants' costs of the proceeding. By the Discontinuance Deed, the parties have agreed that the costs payment is not an admission of liability or wrongdoing by the respondents. It is somewhat unusual for respondents to pay an amount towards the costs of an applicant who has agreed to discontinue a proceeding. The more common position is that a discontinuing applicant will be required to pay the costs of the respondent (see the default position in r 26.12(7) of the Federal Court Rules 2011 (Cth)), but frequently parties reach an agreement to discontinue a proceeding on a "walk away basis" (ie, subject to an order that each party bears their own costs). While it is uncommon for a respondent to agree to pay an amount towards the costs of a discontinuing applicant, I do not consider that the agreement renders the discontinuance unfair or unreasonable or adverse to the interests of group members. The evidence before the Court is that the applicants, and the litigation funders, now assess the prospects of success in the proceeding as insufficient to justify its continuation. Whilst the respondents have agreed to pay an amount towards the applicants' costs as part of the agreement to discontinue the proceeding, they have done so without admission of liability. There is no suggestion that the respondents would be willing to make a payment to the applicants or group members in the context of a discontinuance of the proceeding where the claims of the applicants and group members are not extinguished. 30 In the circumstances, I am satisfied that it is appropriate to approve the discontinuance pursuant to s 33V of the Act and grant leave for the applicants to discontinue the proceeding by filing a notice of discontinuance pursuant to r 26.12.

Suspension of limitation period 31 The Discontinuance Deed required the applicants to seek an order that, if the discontinuance is approved, any limitation period that applies to any of the group members (including the applicants) shall begin to run again from 60 days after the approval of the discontinuance. 32 Section 33ZE(1) of the Act provides that, upon the commencement of a representative proceeding, the running of any limitation period applicable to the claim of a group member is suspended. Subsection (2) provides that the limitation period will not begin to run again until either the group member opts out of the proceeding, or the proceeding and any appeals arising out of the proceeding "are determined without finally disposing of the group member's claim". 33 There is some uncertainty in the authorities in relation to whether an order to discontinue a representative proceeding constitutes a "determination" for the purposes of s 33ZE(2), such that time commences to run again on the discontinuance being approved: see for example Gill v Ethicon Sarl (No 4) [2019] FCA 1814 at [22]; Babscay at [33]-[37]; Maximus at [53]; Oculus at [56]; Turner at [20]; Rota v Fire Rescue Victoria [2024] FCA 424 at [21]. On one view, s 33ZE(2) only applies if there is a judicial determination of the proceeding. On that view, upon the Court approving the discontinuance of a representative proceeding, the respondents will be left in a position where the limitation periods applicable to group members' claims would remain suspended and their claims would never become time-barred, forever exposing respondents to the risk of claims by group members. On the alternate view, the word "determine" includes any legal process by which the proceeding comes to an end. On that view, a discontinuance would also have the effect of determining a proceeding and, therefore, would result in any applicable limitation period beginning to run again. 34 I consider that the better view is the latter. One of the definitions of the verb "determine" in the Macquarie Dictionary, in the context of the law, is "to put an end to" and "terminate". A discontinuance of the proceeding by an applicant brings the proceeding to an end without finally disposing of the group member's claim, as contemplated by s 33ZE(2). The weight of authority referred to above supports that view. 35 It is understandable, however, that the respondents wish to have certainty that any applicable limitation period will begin to run again following the discontinuance of the proceeding. In circumstances where there is some residual doubt about the operation of s 33ZE, I consider it appropriate to make an order pursuant to s 33V, and/or the general power of the Court to make orders under s 33ZF, largely in the form sought by the parties. 36 The parties sought an order that the limitation period begin to run again 60 days from the approval of the discontinuance. I consider it more appropriate to order that the limitation period begin to run again 60 days after the filing of the notice of discontinuance, as it is the filing of the notice of discontinuance that brings the proceeding to an end. With that modification, I consider that the proposed order ensures that group members are not prejudiced by the discontinuance in a practical sense (due to the 60-day period in which they may seek advice prior to the limitation period commencing running), while also affording the respondents certainty that they do not bear indefinite exposure to litigation arising out of the same matters.

Confidentiality orders 37 On 9 October 2024, I made an interim confidentiality order over material filed in support of the application for approval of the discontinuance which the applicants claimed to be confidential or privileged. As I explained in Fisher v BT (No 1), that order was made pending the Court's final determination of confidentiality at the hearing of the application for approval of discontinuance of the proceeding. 38 Prior to the hearing on 20 November 2024, the applicants reduced the scope of the material in respect of which confidentiality orders were sought. In his affidavit affirmed 18 November 2024, Mr Allsopp deposed to the bases on which confidentiality was claimed, principally being: (a) commercially sensitive terms upon which Shine Lawyers and/or Woodsford conduct business; (b) commercially sensitive information related to the respondents' business; and (c) information that is subject to legal professional privilege. 39 The applicants also sought a confidentiality order in respect of the Discontinuance Deed on the basis that the parties are bound by cl 8 of that Deed to keep the document confidential. I do not consider that suppression of the Deed is necessary to prevent prejudice to the proper administration of justice, save for it being appropriate to redact portions of the Deed which state the personal addresses of the applicants and the trust account details of Shine Lawyers. Indeed, in the context of an application for approval of discontinuance on the terms of the Discontinuance Deed, the proper administration of justice requires the public disclosure of the Deed. 40 Otherwise, I am satisfied that the confidentiality claims made by the applicants have been narrowed to those parts of the materials which are genuinely commercially sensitive or which are the subject of a proper claim for legal professional privilege. In that regard, the authorities establish that a confidentiality order is warranted to protect the confidentiality of counsel's opinion tendered in support of settlement or discontinuance approval: Alford v AMP Superannuation Limited [2024] FCA 332 at [18]-[19]. I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Bryan.