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[2025] FCA 1018
General information, not legal advice.
Federal Court of Australia
2025-08-15
Beach J
Original judgment source is linked above.
It does not follow that, simply because a group member who dealt directly with one or more of the respondents was charged a higher rate as a result of the alleged cartel arrangement, that group member suffered any loss. If the group member who had dealt directly with a respondent had passed on the full cost of the international airfreight services to all of its clients in the relevant period it would seem to have suffered no loss. Similarly any clients who passed on the charges further along the distribution chain would seem to have suffered no loss. These possibilities highlight the need for the applicant to clarify the case to which the respondents will be required to respond. Whilst the applicant may not and cannot know the precise particulars which will be relied on by each group member to support a claim of economic loss, it is certainly in a position to plead the material facts upon which it seeks to establish its own claim. It has not done so.
It has yet to be determined authoritatively whether a respondent who is facing a loss and damages claim under s 82 has a defence if it is shown that the applicant has passed on to customers or clients all additional costs occasioned by the implementation of an agreement made in contravention of a provision of the Act.
United States anti-trust jurisprudence denies a passing on defence to respondents who have dealt directly with applicants. On the other hand, it has been held that indirect purchasers of goods and services have no standing to sue for damages for anti-trust breaches under federal anti-trust law save for some immaterial exceptions: see Hanover Shoe, Inc v United Machinery Corp [1968] USSC 185; 392 US 481 (1968); Illinois Brick Co v Illinois [1977] USSC 168; 431 US 720 (1977). The passing on defence is not available to those who have dealt directly with an applicant for a variety of reasons. They include the difficulty in analysing price and output decisions in the "real economic world" and the evidentiary complexities and uncertainties involved in analysing the impact of an overcharge on a firm's profits. The refusal to grant standing to indirect purchasers is justified on the ground that a respondent should not be exposed to multiple liability and double recovery in respect of the same conduct.
It remains to be seen whether a similar approach will be adopted by Australian courts. In Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd [1994] HCA 61; (1994) 182 CLR 51; 126 ALR 1 the High Court held that a "passing on" defence was not available to a defendant to a restitutionary claim where the plaintiff had passed on the burden of excessive workers' compensation premiums. It may be doubted that this decision will have any impact on the liability of the present respondents for damages under s 82 of the Act. This is because restitutionary relief is not designed to provide compensation for loss. Rather it is designed to restore to the plaintiff that which has been transferred to the defendant thereby unjustly enriching the defendant: see M Rush, The Defence of Passing On, Hart Publishing, Oxford, 2006, pp 43-7. ...
Ms Nishimura's evidence describes the deterrent effect that the proposed class closure orders will have on group members registering their interest in participating in this proceeding prior to any settlement offer.
Based on her experience, Ms Nishimura opines that group members in this proceeding, including institutional investors, are more likely to register if there is an in-principle settlement. Group members with pre-existing and continuing commercial relationships with the respondents would, in that scenario, be less concerned about being seen as participating in active litigation against the respondents; and the cost / benefit analysis of taking a step to participate in settlement would be much clearer once the quantum of proposed settlement is known. Further, the reticence of some group members to register before settlement is exacerbated here by the respondents' proposal that registration involve the identification of individual group members, and the resulting loss of anonymity hitherto enjoyed by group members in the proceeding.
Further, the evidence of Mr Michael Lange, an experienced class actions lawyer now employed by leading claims aggregator firm FRT, is to the same effect. Mr Lange gives evidence, based on his experience and interactions with claimants in this case and other class action proceedings in Australia, that the registration process, including the prospect of individual group member identification, will deter otherwise interested and willing group members from registering their interest to participate in any potential settlement of a class action proceeding. This is due to group members' existing commercial relationships with the respondents and the reputational risk that may occur if they were known to take adversarial positions to the respondent banks in active litigation.
Now although Mr Lange's evidence comprises generalised statements, it is said that those statements represent opinions based on his substantial experience.
The applicant says that it follows from the evidence of Ms Nishimura and Mr Lange that group members' interests do stand to be prejudiced by the proposed class closure orders. It is said that prejudice to group members arises in several ways.
First, it is said that there is the potential exclusion from any eventual settlement of a proportion of group members, including institutions with potentially large claims.
Second, it is said that there is the prospect that any settlement discussions will not be productive in circumstances where the legal representatives for the applicant apprehend that the registration process has, due to the "chilling effect" predicted by Mr Lange's evidence, yielded an unrealistically small claim pool.
Third, it is said that even if an in-principle settlement is reached, there is the risk that there will be a flurry of applicants for late registration following any settlement, which may result in compensation available to those who registered through the class closure process being diluted.
Fourth, it is said that the class closure orders proposed will likely affect a significant number of qualifying group members who are not directly notified.
Fifth, it is said that to the extent that the respondents suggest that there is no real difference between registration now and registration following settlement, there is likely to be greater publicity and greater interest in registration following settlement.
Now I have taken into account the applicant's evidence and concerns. But they are overstated to a large extent, and in any event do not carry the day.
First, the prospect in this case of distributing monies to group members from any approved settlement without a registration process is remote. The same features of the group definition which make it impossible for the respondents to ascertain the identity of all group members, including their own customers, would also make it impossible to identify group members to whom settlement monies should be distributed. Thus, the real effect of the proposed orders with respect to registration (apart from improving the prospects of a successful mediation) is to bring forward the timing of a registration process that inevitably would need to take place in the event of a settlement.
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Second, the applicant contends that group members will be discouraged from registering now. This appears to be based on a theory advanced by Mr Lange at FRT, which is a firm that helps institutional investors identify eligibility, file claims and collect funds in class actions. The existence of a firm such as FRT reveals the sophisticated assistance which has developed to help group members identify and participate in class actions, including obtaining the relevant data. Accordingly, Mr Lange does not appear to suggest that group members would not register in this proceeding because they would be unaware of the process. Instead, he suggests that some may not register because of "the risks of registration". It appears that these risks are the potential impairment of current or future relationships with the respondents or "criticism in the press and by those in the business community hostile to class actions".
But the suggestion that an institutional investor who registers as a group member would have its relationship with the respondents impaired is an unsubstantiated contention. There is no proper basis to suggest that registration in this proceeding would cause the client service teams of the respondents to treat any registrant any differently than if they had not registered. Among other reasons, each of the respondents operates in competitive markets where they have a number of competitors who are not respondents. Further, the suggestion that a registrant would be the subject of media or other criticism is not supported by a single example.
Moreover, to the extent that any group member represented by FRT perceives such risks, it is plain that FRT's clients are highly sophisticated entities. If, for example, a sovereign wealth fund represented by FRT decided not to register in this proceeding, then it can be safely assumed that it did so for its own sound commercial reasons. The fact that such an institutional investor may make that calculation in its own interest does not mean that the registration process is somehow unfair for the respondents and for group members who do choose to register, particularly given the benefits in terms of the possibility of an early resolution that comes from the facilitation of an effective mediation at this point in the proceeding.
Further, to the extent that group members are discouraged from registering by reason of a risk that the respondents or the media will be hostile to them, then that is a risk that remains present at the time of the registration process that would inevitably have to occur after any settlement sum was agreed.
I have to say that I found this so-called chilling effect argument underwhelming.
First, I am concerned with what is in the interests of all group members rather than just the interests of the few. And in my view the interests of all group members justify the orders sought in terms of opt-out and registration now.
Second, if some group members are so concerned about registering now, then they can opt out of the proceeding.
Third, the price of registering at this stage is a reasonable price to pay in order to obtain the potential fruits of any settlement. But in any event, this is not necessarily a "once and for all" occasion.
Further, in terms of the quantification of this risk and the impact on registration, the high watermark of Mr Lange's evidence appears to be where he states that, even with those risks, "some" of his clients would register while "others considered it likely" that "at least some ... boards would choose not to register given the risks". He makes no effort to quantify the number of clients who will register and the number who will not. He says that some would be "discouraged" from registering, but does not say that they will not do so.
But why, as Ms Wendy Harris KC for UBS put it, should the interests of the few trump the interests of the many?
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Further, to the extent it is said that the announcement of a settlement may cause additional group members to register having regard to Ms Nishimura's experience in the Woolworths and Crown class actions, those cases were different from the present one. Unlike those cases, the present proceedings follow extensive litigation in various jurisdictions in which settlements have already been reached. By definition, group members are likely to be relatively sophisticated given the minimum transaction volume of AUD500,000. Indeed, Mr Lange's evidence tends to confirm the relative sophistication of group members.
Section 33ZF(1) has been the source of power by which the Federal Court has regularly made class closure and registration orders. For example, it was the basis of the Full Court's decision endorsing such orders in Melbourne City Investments Pty Ltd v Treasury Wine Estates [2017] FCAFC 98; (2017) 252 FCR 1 at [74] and [75] per Jagot, Yates and Murphy JJ, being an order of the kind made in the present proceeding by the March 2020 orders.
But in the wake of BMW, a challenge was made to the making of such orders under the cognate s 183 of the Civil Procedure Act 2005 (NSW). That question was referred to the NSW Court of Appeal in Haselhurst v Toyota Motor Corporation Australia Ltd [2020] NSWCA 66; (2020) 101 NSWLR 890, where the Court answered the question in the negative on 22 April 2020, on the basis that the order in that case effected a contingent extinguishment of group members' choses in action and so could not be said to be necessary or appropriate to ensure that justice was done in the proceeding.
Subsequently, there was a further decision of the NSW Court of Appeal in Wigmans v AMP Ltd [2020] NSWCA 104; (2020) 102 NSWLR 199, where Haselhurst was fortified. In Wigmans there was lukewarm acceptance of what I had said in Newstart 123 Pty Ltd v Billabong International [2016] FCA 1194; (2016) 343 ALR 662 ...
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By reason of BMW, Haselhurst determined that the barring order made as part of the class closure orders in that case was beyond power under s 183. The Court found that the purpose and effect of the order at issue (order 16) was to effect a contingent extinguishment of unregistered group members' rights of action against the respondents. The Court said that an order which destroyed a person's cause of action within the limitation period, without a hearing and with no guarantee that the person would necessarily know of the outcome or consequence of their failure to register, was not an order that was "necessary to ensure that justice is done in the proceedings" or "appropriate ... to ensure that justice is done in the proceedings". It was found that s 183 was not a source of power to extinguish group members' rights before settlement of the proceedings or a judgment in the proceedings. But these observations were all in the context of the Court analysing the particular order before it.
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Now the order impugned in Haselhurst, which was said to effect an impermissible extinguishment of the claims of group members, is quite different to the March 2020 orders made by the docket judge in the present case. ...
There are two significant differences between the March 2020 orders in this case, and the orders in Haselhurst.
First, the March 2020 orders do not use the language of extinguishment or "barring", but rather are expressed in terms of a group member not being "permitted to seek any benefit pursuant to any settlement (subject to Court approval)". So, the orders are expressly in anticipation of the exercise of power that must occur at the s 33V stage, where the Court must consider whether it is just to distribute the settlement only to those who have manifested an interest by registering.
Second, the March 2020 orders are expressly conditioned by the words "without leave of the Court", to indicate that the question as to whether unregistered group members ought receive a distribution is a question that the Court will need to consider in future. Of course, that would be at the time of the later s 33V application.
So, the March 2020 orders are not orders which effect an extinguishment of group member claims, contingently or otherwise. The true position is that the claims of group members would not be extinguished until such time as the settlement was approved under s 33V and those claims merged in the settlement as approved by judgment of the Court, with the otherwise consequent dismissal of the claims. This would then be made binding on them under s 33ZB. It may be noted that at that point, which follows group members being afforded an opportunity to be heard, what is occurring is that the Court is making an order under s 33V. The fact that unregistered group members' rights merge in the settlement and consequent dismissal without them receiving anything is no more than the consequence of the exercise of power under s 33V with respect to a just distribution of the settlement.
In my view, the construction adopted by the Court of the particular orders before it in Haselhurst does not apply in the present case. The decision is readily distinguishable for that important reason alone.
But I would venture to also observe, with respect, the following.
First, an order of the kind under consideration, as was made by the docket judge, does not effect a contingent extinguishment of group member choses in action at all. Indeed, the notion of a contingent extinguishment is to my mind problematic in any event. If there is a contingency, nothing has been extinguished. But there is more. If that contingency is expressed in an interlocutory order, which is susceptible to variation, it is unclear how anything could be said to be extinguished if the contingency itself may be redefined or removed by a later and final order.
Second, BMW was directed to a different problem, where the purpose of the early common fund order was said to be to ensure the economic viability of a proceeding and to put it on a stable foundation so that it could go ahead. It was said that such a purpose was extraneous to dealing with the substantive rights of group members in the proceeding. Now I might say that in many cases where early common fund orders have been made, that was not the purpose. But in any event, a class closure order is not in the same category. Its purpose is not extraneous to dealing with the substantive rights of group members in the proceeding. Indeed, the opposite. Its very focus is on how those substantive rights are to be adjusted inter se in the event that the proceeding settles.
Further, it is one thing to conclude that a supplementary or gap-filling provision such as s 183 of the CPA does not enable the Supreme Court to make an order, before settlement negotiations, contingently extinguishing the rights of group members who have neither opted out nor registered their participation in a representative proceeding (as in Haselhurst). The making of such an order before a hearing to approve any settlement is readily able to be characterised as impermissibly usurping the capacity of the Court subsequently, at a hearing for the approval of any settlement, to perform the function which s 173(2) requires, namely for the Court to make "such orders as are just with respect to the distribution of any money". The making of such an order is therefore impermissible because it denies the Court the subsequent capacity, at the hearing for the approval of any settlement, to discharge its functions in accordance with s 173(2)...
Order may specify a date by which group members must take a step
Without limiting the operation of section 33ZF, an order made under that section may -
(a) set out a step that group members or a specified class of group members must take to be entitled to -
(i) any relief under section 33Z; or
(ii) any payment out of a fund constituted under section 33ZA; or
(iii) obtain any other benefit arising out of the proceeding -
irrespective of whether the Court has made a decision on liability or there has been an admission by the defendant on liability;
(b) specify a date after which, if the step referred to in paragraph (a) has not been taken by a group member to whom the order applies, the group member is not entitled to any relief or payment or to obtain any other benefit referred to in that paragraph.
But what is claimed for legal costs should not be disproportionate to the nature of the context, the litigation involved and the expected benefit. The Court should not approve an amount that is disproportionate. But such an assessment cannot be made on the simplistic basis that the costs claimed are high in absolute dollar terms or high as a percentage of the total recovery. In the latter case, spending $0.50 to recover an expected $1.00 may be proportionate if it is necessary to spend the $0.50. In the former case, the absolute dollar amount as a free-standing figure is an irrelevant metric. The question is to compare it with the benefit sought to be gained from the litigation. Moreover, one should be careful not to use hindsight bias. The question is the benefit reasonably expected to be achieved, not the benefit actually achieved. Proportionality looks to the expected realistic return at the time the work being charged for was performed, not the known return at a time remote from when the work was performed; at the later time, circumstances may have changed to alter the calculus, but that would not deny that the work performed and its cost was proportionate at the time it was performed. Perhaps the costs claimed can be compared with the known return, but such a comparison ought not to be confused with a true proportionality analysis. Nevertheless, any disparity with the known return may invite the question whether the costs were disproportionate, but would not sufficiently answer that question.
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Now it may be suggested that the concept of avoiding hindsight bias has no part to play in considering the "fairness" of the legal costs. The concept of "fairness" is the overarching theme for judicial approval of settlements under s 33V, albeit not the statutory language as such. But fairness is a broad concept. And the integers feeding into that overall assessment need to be assessed, qualitatively and quantitatively, and then balanced overall to consider whether the settlement and net recoveries to group members are fair. But let me assume for the moment that each integer of the settlement needs to be "fair" to group members (as distinct from some only being "fair", but nevertheless the overall settlement being "fair"). And let me assume for the moment that one is addressing one integer, being legal costs, and its fairness. Feeding into the question of fairness of legal costs are many factors. It is difficult to see why you would not consider the fairness and reasonableness of the work at the time it was performed and in the context of the returns then expected. It is difficult to see why the applicant or group member would perceive that to be anything other than fair. No doubt the actual outcome of a case may also feed into the question of fairness. But in a case where the applicant and lawyer are not co-venturers, and with contingency fees not being allowed under the Australian model, it is difficult to see why the lawyer's fees should be artificially taxed down by the actual outcome; the actual outcome is a risk borne by the applicant and group members (and the litigation funder if there is one), but not the independent lawyer who is not sharing in the returns of the enterprise.
... An adverse costs order is a material risk faced by the representative applicant and the applicant's solicitors. The acquisition of ATE insurance to mitigate that risk is a reasonable step to be taken by the applicant and the applicant's solicitors. The solicitors ought to be permitted to recover the costs of an ATE insurance policy if the Court is satisfied that the costs are reasonable and that the costs are not otherwise being recovered through the solicitors' success fee. The costs would be assessed as reasonable if the terms of the policy are appropriate in the context of the proceeding and the premium charged for the policy has been determined in a competitive market setting. ...
Settlement distribution scheme administrator and administration costs
I certify that the preceding one hundred and three (103) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Beach.
J Wisbey & Associates Pty Ltd
UBS AG
Auskay International Manufacturing & Trade Pty Ltd v Qantas Airways Ltd [2008] FCA 1458; (2008) 251 ALR 166
Barclays Bank v WJ Simms Son & Cooke (Southern) Ltd [1980] QB 677
Blairgowrie Trading Ltd v Allco Finance Group Ltd (Receivers & Managers Appointed) (in liq) (No 3) [2017] FCA 330; (2017) 343 ALR 476
Camilleri v The Trust Company (Nominees) Limited [2015] FCA 1468
Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd [1994] HCA 61; (1994) 182 CLR 51
David Securities v Commonwealth Bank [1992] HCA 48; (1992) 175 CLR 353
Foley v Gay [2016] FCA 273
Hanover Shoe Inc v United Shoe Machinery Corp [1968] USSC 185; 392 US 481 (1968)
Haselhurst v Toyota Motor Corporation Australia Ltd [2020] NSWCA 66; (2020) 101 NSWLR 890
Illinois Brick Co v Illinois [1977] USSC 168; 431 US 720 (1977)
J Wisbey & Associates Pty Ltd v UBS AG (No 2) [2024] FCA 147
Kemp v Westpac (No 4) [2023] FCA 830
Lumbers v W Cook Builders [2008] HCA 27; (2008) 232 CLR 635
McDonald v Commonwealth of Australia [2025] FCA 380
Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494
Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; (2001) 208 CLR 516
Wetdal Pty Ltd v Estia Health Limited [2021] FCA 475
(2008) 251 ALR 166
(1994) 182 CLR 51
(2020) 101 NSWLR 890
(1997) 6 Tas R 396
(2001) 208 CLR 516
(2017) 252 FCR 1
(2017) 343 ALR 476
(1992) 175 CLR 353
(2002) 210 CLR 109
(2025) 423 ALR 23
(2008) 232 CLR 635
(1998) 196 CLR 494
(2001) 109 FCR 528
(2020) 102 NSWLR 199
(2016) 343 ALR 662