Levitt v Luke

SHARIFF J: 1 The applicant (Levitt Robinson) seeks leave to appeal from the judgment in Luke v Aveo Group Limited (No 3) [2023] FCA 1665 (PJ) and, specifically, from order 1(a) of the orders made by the primary judge on 22 December 2023. 2 The background may be shortly stated. Levitt Robinson acted for the applicants in class action proceedings commenced against the respondent (Aveo) in this Court in September 2017. The proceedings were settled after this Court commenced hearing the substantive proceedings in late March and early April 2023. The application before the primary judge was made on 28 April 2023 under s 33V of the Federal Court of Australia Act 1976 (Cth) (the Act) for approval of the proposed settlement as recorded in a deed of settlement. The settlement sum was approximately $11 million inclusive of interest, legal costs and settlement administration costs. As part of the approval, Levitt Robinson sought payment of an amount of $10,999,558 in respect of legal costs incurred up to the date of settlement and $251,450 in respect of the costs of the settlement approval. The effect of the position taken by Levitt Robinson and the funder, Galactic Aveo LLC (Galactic), was that, upon approval of the proposed settlement, the applicants and group members would get nothing: PJ [5]-[7]. 3 The primary judge took steps to appoint Ms Elizabeth Harris, an experienced costs consultant, as a referee pursuant to s 54A of the Act to inquire and report into the reasonableness of the legal costs that had been incurred, and also appointed Mr Lachlan Armstrong KC and Mr Kane Loxley of Counsel as contradictors in respect of the approval of the proposed settlement. The primary judge heard the settlement approval application on 22 November 2023 and with efficiency delivered judgment a month later on 22 December 2023. Based on Ms Harris' report, the primary judge concluded that the amount of legal fees claimed by Levitt Robinson should be reduced by $1,334,864 (Disallowed Costs): PJ [134], [153]. Further, based on the contentions raised by the contradictors, the primary judge concluded that the legal fees should be further reduced by an amount of $1,141,078 largely on the basis that this amount represented legal costs incurred by Levitt Robinson that were avoidable (Avoidable Costs): PJ [153]. 4 Both in the proceedings below and in this application, Levitt Robinson did not take issue with the primary judge's reasons and orders in relation to the Disallowed Costs. However, Levitt Robinson takes issue with the primary judge's findings in relation to the Avoidable Costs. Without descending into all of the detail, it is sufficient to note that the primary judge concluded that Levitt Robinson's costs should be reduced by the amount of the Avoidable Costs for the following reasons: (a) the case was unlikely to settle until the parties had the benefit of seeing the competing expert evidence: PJ [137]; (b) there was a serious lack of expedition and inefficiency by Levitt Robinson in the preparation of the applicants' expert evidence: PJ [139]; (c) it was seriously derelict for Levitt Robinson to conduct this large, complex and expensive proceeding for more than five years before it obtained a report from an expert property valuer: PJ [141]; (d) it beggared belief that Levitt Robinson would have run up such huge costs when it did not have a proper basis for understanding whether it could establish loss, or the approximate quantum of any loss that it could establish: PJ: [141]; (e) Levitt Robinson failed to obtain and serve the applicants' expert evidence in accordance with repeated pre-trial timetables set by the Court: PJ [144]-[145], [147]; (f) in all the circumstances, Levitt Robinson did not act with due expedition and showed serious inefficiency in the period between November 2021 and July 2022 when pre-trial timetables required the filing and service of expert evidence: PJ [144]-[145], [149]; (g) given the significance of the expert evidence to a critical issue in the proceedings - whether the applicants could establish loss - the content of the expert evidence was pivotal to achieving a settlement: PJ [150]; (h) had Levitt Robinson acted with due expedition and efficiency, it is likely that both the applicants and Aveo would have filed their respective expert evidence in the proceedings prior to the mediation that was held in the matter in December 2022: PJ [144]; (i) there was a lacuna in the evidence upon which Levitt Robinson sought to rely to explain away its failure to serve the applicants' expert evidence in accordance with the first or second pre-trial timetables: PJ [147]; (j) had Levitt Robinson complied with the first or second pre-trial timetables, it is likely that the proceedings would have settled at the mediation in December 2022: PJ [150]; (k) as a result, the $1.141 million in costs incurred from December 2022 to the trial (up to and including entry into the settlement deed) were avoidable. 5 By a draft notice of appeal filed on 24 January 2024, Levitt Robinson contends that, in concluding that its costs should be reduced by the amount of the Avoidable Costs, the primary judge erred in finding that: (a) Levitt Robinson did not act with due expedition between November 2021 and July 2022 by failing to file and serve the applicant's expert evidence (Ground 1); (b) it was likely that the case would have settled at the mediation in December 2022 if Levitt Robinson had done so (Ground 2). 6 In the proceedings below, Mr Levitt sought and was granted leave to file evidence and submissions and to appear by Counsel at the settlement approval hearing. It is now contended that, as his legal rights have been finally determined by the primary judge's decision, he could have and should have been joined as a party to the proceedings, and that this bears some significance on the question of whether to grant leave to appeal. 7 For the purposes of this application, I appointed Mr Armstrong KC and Mr Tom Rawlinson of Counsel as contradictors. Their costs were agreed to be borne by Levitt Robinson, and I so ordered on 5 March 2024. 8 For the purpose of the argument before me, Levitt Robinson and the contradictors were agreed that, as Levitt Robinson was a non-party to the settlement approval application, the following principles from Fortress Credit Corp (Australia) II Pty Ltd v Fletcher [2011] FCAFC 89; (2011) 281 ALR 38 at [35] should be applied: On an application for leave to appeal by a non-party, bearing in mind the widely different circumstances in which an application by a non-party for leave to appeal may be made, several matters are likely to be relevant to the exercise of the discretion, as follows: • first, the nature and subject matter of the proceeding, including whether it concerns public rights or private rights and, if the latter, whether only personal remedies or proprietary remedies are involved; • secondly, whether at first instance the applicant could have but did not seek to be made a party or to be heard, and whether the applicant could or should have been made a party; • thirdly, the rights, interests, liabilities and duties of the applicant that would be affected, and the nature and extent of the effect on the applicant of the orders appealed from; • fourthly, whether the applicant could commence a separate proceeding for the relief claimed and, if so, whether there would or might be a procedural or substantive difficulty arising from the existence of the judgment in respect of which leave to appeal is sought; and • fifthly, whether the proposed grounds of appeal are at least arguable, in the sense that there is a reasonable prospect of success. 9 Levitt Robinson and the contradictors were also agreed that each of the first to fourth criteria in Fortress weighed in favour of the grant of leave to appeal. However, the contradictors opposed the grant of leave to appeal on the basis that Grounds 1 and 2 were without merit and had no reasonable prospects of success. 10 In determining whether to grant leave to appeal, it is significant in my view that, although Levitt Robinson appeared as a non-party in the proceedings below, it may be said that it is a matter in which Levitt Robinson's rights under the deed of settlement have been finally determined: see by analogy August Pool 1 UK Ltd v Williamson [2023] NSWCA 93; (2023) 111 NSWLR 378 at [66]-[68] (Ward P with whom Bell CJ and Adamson JA relevantly agreed). In the ordinary course of things, had Levitt Robinson been joined as a party in the proceedings below, which was open to occur, Levitt Robinson would have an appeal as of right. This is a factor which in my view weighs heavily in favour of the grant of leave to appeal. 11 In relation to the contradictor's contentions regarding the merit of the two appeal grounds, these arguments largely turned upon an examination and evaluation of the evidence before the primary judge. Levitt Robinson accepts that its proposed appeal involves challenges to findings of fact anterior to the exercise of the Court's discretion under s 33V(2) of the Act. It contends that the proposed appeal would be governed by a correctness standard as set out in well-established authorities such as Warren v Coombes (1979) 142 CLR 531, but says that where there are such challenges to findings of fact, the Full Court will be in as good a position to determine those facts: see Minister for Immigration and Border Protection v SZVFW [2018] HCA 30; (2018) 264 CLR 541 at [41] (Gageler J); Warren v Coombes at 552 (Gibbs ACJ, Jacobs and Murphy JJ); Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at [25] (Gleeson CJ, Gummow and Kirby JJ). Whilst the contradictors largely accept this to be the case, they contend that ultimately the primary judge's conclusions involved an evaluative judgment, both in relation to the inferences to be drawn from the facts and the determination as to what was "just" in the circumstances. 12 Given the nature of the proposed appeal and the apparent contest as to the appropriate standard of appellate review to be applied in such an appeal, it would not be appropriate for me on an application for leave to descend into a detailed examination of the merits including the facts: cf Tu'uta Katoa v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2022] HCA 28; (2022) 96 ALJR 819. As stated by Burley J in EBT17 v Minister for Home Affairs [2019] FCA 200 at [4], citing Mortimer J (as her Honour then was) in MZABP v Minister for Immigration and Border Protection [2015] FCA 1391; (2015) 242 FCR 585 at [62]-[63]: The correct approach to the evaluation of the prospects of a party's success on appeal is to consider the proposed grounds of appeal at a reasonably impressionistic level and enquire whether a ground is "sufficiently arguable" or "has reasonable prospects of success". 13 At an impressionistic level, it seems to me that there is a sufficiently arguable case in relation to the first ground of appeal. Although certain underlying facts are not in dispute, there is a sufficiently arguable contest as to whether those facts establish whether Levitt Robinson was dilatory in a way that was relevantly causative in the incurring of the Avoidable Costs. The same position arises in relation to the second ground of appeal. Whether the matter was likely to have settled at a mediation in December 2022 if expert evidence had been served at an earlier point in time is also sufficiently arguable. Levitt Robinson contends that the facts before the primary judge establish that the matter would not have settled but for certain developments that occurred during the trial including in relation to at least one other claim that was unaffected by the service of the expert evidence. It would not be appropriate for me to express any view as to the merits of these arguments, other than to state that I am satisfied that they are, at reasonably impressionistic level, sufficiently arguable. 14 I have reached this conclusion with a degree of hesitation given that the question before the primary judge was one under s 33V(2) of the Act as to whether the settlement was "just" in all the circumstances. I hesitate because the underlying class action proceedings were commenced in 2017 and were not ready for trial until late March 2023. A settlement was reached in April 2023, which involved members of the class receiving nothing. It is now almost the end of May 2024 and the dispute is one about how much more of the settlement sum should be paid to Levitt Robinson. If leave is to be granted, there is to be an unfortunate further delay in the final disposition of these proceedings. I have been troubled by whether abiding this would be consistent with the overarching purposes enshrined in ss 37M and 37N of the Act. 15 Levitt Robinson submitted that the group members' interests would not be prejudiced by a grant of leave. That is because, if leave to appeal is granted and the appeal fails, the funds available to group members will not be reduced. If leave to appeal is granted and the appeal succeeds, the Avoidable Costs a priori ought never to have been deducted so as to be available in the settlement distribution. In those circumstances, the Full Court on the appeal would necessarily have concluded that the "just" order is not one in which the Avoidable Costs should have been deducted. There is some force in these submissions. 16 In order to address the concerns I raised, Senior Counsel for Levitt Robinson on behalf of his client proffered to the Court an undertaking that, if leave was granted, Levitt Robinson would: (a) not seek recovery of its costs of this application and any appeal; and (b) will pay for the costs of the contradictors both in this application and in any appeal. This undertaking ameliorates my concerns about the ongoing cost of the continuation of the proceedings. Those undertakings given by Senior Counsel were later reduced to writing in largely the same form. In view of the undertakings that have been proffered, I am satisfied that leave should be granted in the exercise of my discretion. 17 In light of what I have said about the ongoing delay in this matter, I will refer the matter to the National Judicial Registrar to determine whether the matter can be listed in the next appellate sitting of the Full Court of this Court, if that is possible. Any orders made for case management of those proceedings will need to address the appointment of Mr Armstrong KC together with a junior as contradictors, together with such other procedural and other orders sought by the contradictors for the purpose of the appeal. I wish to record the Court's appreciation for the assistance of Mr Armstrong KC and Mr Rawlinson. 18 Finally, I note that in the proceedings below the primary judge made orders pursuant to ss 37AF and 37AG(1)(a) of the Act prohibiting publication or disclosure of certain confidential materials until further order of the Court or until after the expiry of all periods in which an appeal may be brought from the primary judge's orders of 22 November 2023. At the commencement of the hearing of the application for leave to appeal, I was asked to make orders to similar effect in respect of certain materials filed in support of that application. I make those orders being satisfied that they are necessary to prevent prejudice to the proper administration of justice. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Shariff.

SCHEDULE OF PARTIES VID 59 of 2024 Respondents Fourth Respondent: NEIL BERNARD COLOMBARI (IN HIS CAPACITY AS THE CO-EXECUTOR OF THE ESTATE OF JOAN MARY COLOMBARI, DECEASED) Fifth Respondent: AVEO GROUP LIMITED (ACN 010 729 950)