Nelson v Beach Energy Ltd [2025] VSC 339

(a) any group member who wishes to seek any benefit pursuant to any in-principle settlement reached at the mediation of the proceeding presently scheduled for early 2026, must be a registered group member (as defined);

(b) any group member who does not opt out and who has not become registered by the Class Deadline shall not, without leave of the Court, be permitted to seek any benefit pursuant to any settlement reached on or before 21 September 2026 (being two weeks before trial is to commence), but shall remain a group member for the purposes of the proceeding.

3 This Court has express power under ss 33ZF and 33ZG of the Act to make orders of the kind sought. Section 33ZG provides:

33ZG 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.

4 This provision is unique to Victoria; it does not appear in cognate legislative regimes in the Federal or other state jurisdictions.

5 Section 33ZG elaborates upon the power conferred by s 33ZF, by which the Court may make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding. The principles that should inform an exercise of power under ss 33ZG and 33ZF are well established. I refer to the summary of those principles set out in Fox v Westpac; O'Brien v ANZ; Nathan v Macquarie [2023] VSC 414 which in turn refer to the analysis of J Forrest J in Matthews v SPI Electricity Pty Ltd,[1] among other decisions.

6 The application was supported by affidavits of the plaintiffs' solicitor Kirsten Morrison, a Practice Group Leader of Slater & Gordon Limited affirmed 22 May 2025, 3 June 2025 and 11 June 2025, and the defendants' solicitor, Jason Betts, a partner of Herbert Smith Freehills, affirmed 23 May 2025. Both are senior lawyers with considerable experience in the conduct of representative proceedings.

7 I consider, for the reasons now set out, that class closure orders are appropriate to ensure that justice is done in the proceeding.

8 The plaintiffs allege that between no later than September 2018 and April 2021 the defendant intentionally developed and used a model for estimating its oil reserves in the Bauer oil field and other oil fields of the Western Flank (Bauer Model). Use of the Bauer Model resulted in estimates of the defendant's oil reserves that were larger than its previous estimates in a number of oil fields and formed the basis of representations the defendant provided to the securities market between August 2020 and February 2021. The plaintiffs allege that the information and representations the defendant provided to the market inflated the share price and were misleading, causing plaintiffs loss and damage. The defendant admits that in around 2018, it undertook a campaign of appraisal drilling around the Bauer oil field for the purpose of obtaining information about the field limit and that data obtained from this appraisal provided the defendant with updated information. The defendant otherwise denies the allegations concerning the Bauer Model and denies that the information and representations it provided to the market caused the plaintiffs loss and damage.

9 The plaintiffs bring these proceedings on their own behalf and on the behalf of persons who during the period between 17 August 2020 and 29 April 2021 acquired an interest in, or entered into a contract to acquire an interest in, ordinary shares in the defendant (Beach Shares), and are alleged to have suffered loss or damage by reason of the conduct of the defendant. Those persons said to have acquired an interest in Beach shares are said to comprise three sub-classes,[2] namely person who acquired:

(a) an interest in fully paid up ordinary shares in Beach traded on the Australian Stock Exchange;

(b) American Depository Receipts that 'represented' ordinary shares in Beach;

(c) long exposure to Beach Shares by entering equity swap confirmations in respect of Beach Shares.

10 The characteristics of the represented group are relevant to the sufficiency of the notice to be given to group members of the proposed class closure, to which I return below.

11 The proceeding was commenced in November 2021 and preparation for trial is well advanced. Discovery is substantially complete, the plaintiffs have filed lay evidence and the defendant has provided certain particulars of its defence. The plaintiffs are to file their expert evidence in July and August 2025. The defendant is to file its lay evidence in October 2025 and expert evidence in November 2025. A mediation is to occur by 30 April 2026. The trial is listed to commence on 5 October 2026 with an estimated duration of eight weeks. The trial date is later than might have been expected given the time by which evidence will be filed but it accommodates the parties' availabilities.

12 The parties supported the application by evidence of their respective solicitor's opinions and descriptions of certain aspects of the proceedings. The opinions were substantially to the same effect. The plaintiffs' submissions reflected the substance of the evidence. It is unnecessary to set out the evidence here, save in broad terms.

13 It was submitted (and contended by way of opinion) that it is appropriate and in the interests of group members as a whole, to make the orders sought, for these reasons:

(a) A class closure procedure allows the parties to have a better understanding of the total quantum in issue, permits any settlement amount to be capped by reference to the number of registered group members and assists in achieving finality for plaintiffs, group members and defendants.

(b) It is the assessment of the parties' legal representatives that without class closure orders there is a level of uncertainty that creates a very significant obstacle to a settlement being achieved.

(c) The proceeding is factually and legally complex and the trial is set down for a relatively long period. In an action of this size, duration and complexity, promoting settlement is clearly a desirable object.

(d) It is in the interests of the plaintiffs and group members to have the opportunity to participate in a potential settlement as an alternative to the risks and uncertainty of a trial.

(e) The proceeding commenced in November 2021 and preparation is reasonably advanced. The parties seek that mediation take place by no later than 30 April 2026 (extended from 27 March 2026) and the trial to commence on 5 October 2026. Accordingly, the parties will be in an informed position to assess their respective prospects prior to a mediation in late April 2026.

(f) It is appropriate that the class be closed from 7 November 2025 until the day before trial to enable the parties to attempt to reach settlement. That period will maximise the window of opportunity for the parties to reach a settlement. The parties are more likely to negotiate meaningfully in the period leading up to trial, as their respective cases crystalise. The proposed timeline will allow around five months between a mediation, occurring in late April 2026, and the commencement of trial, for the parties to engage in meaningful settlement discussions prior to trial. Indeed, the proposed class closure period facilitates the parties reaching a settlement even after the Court‑ordered mediation and before trial.

(g) The proposed registration process is not overly burdensome to group members. Group members may engage with the registration process in a number of ways, depending on their preference.

(h) Group members will have adequate notice of the proposed class closure and a reasonable amount of time, 12 weeks in length, in which to determine whether to join the class. Notice is to be provided by the parties, via their solicitors, by a number of mechanisms.

(a) The subject matter of the litigation is technically complex, raising issues involving oil and gas production and reserve estimates. Ms Morrison expects the defendant to call a large number of lay witnesses. There are a number of legal issues in securities class actions relevant to liability, materiality, causation and loss that Ms Morrison expects to be contested in light of recent case law including the recent Federal Court appeal decision in Zonia[3] and the current Federal Court appeal in Worley.[4]

(b) Her opinion is that it is in the interests of the plaintiffs and group members to have the opportunity to participate in a potential settlement as an alternative to the risks and uncertainty of a trial.

(c) Slater & Gordon's rationale for seeking class closure on behalf of the plaintiffs and group members is to provide certainty as to Registered Group Members' aggregate loss so that the Court-ordered mediation can proceed with a rational basis to either make or assess any settlement offers. In Ms Morrison's opinion, the prospects of settlement at a mediation in this case would be poorer absent class closure primality because a class closure order will allow the parties to have a better understanding of the total potential quantum, permitting a settlement amount to be referable to the number of registered group members.

(d) It is preferable to undertake one comprehensive notice process on the basis of a clear disclosure to actual and potential group members that the class is to remain closed until trial, rather than applying to the Court to seek to extend the class closure period by Court order in order to facilitate any further settlement negotiations that may occur between mediation and trial. The least preferable option in this case would be to distribute multiple notices, or close the class multiple times, as this would increase time, cost and effort involved in notice distribution and group member registration. In Ms Morrison's experience, extending class closure between mediation and trial, as is sought in this proceeding, can maximise the window of opportunity for the parties to reach a settlement. In each of Slater & Gordon's three most recent securities class actions, settlement was not reach at the Court scheduled mediation and was instead reached late in the proceeding.

15 Ms Morrison gave evidence about the proposed form of notice to group members, to which I refer below.

(a) In his experience, where settlement discussions occur absent a form of class closure, it is more difficult to properly and meaningfully address and assess questions of quantum and accordingly, the discussions are poorly informed and any settlement reached does not necessarily deliver finality to the parties.

(b) Because the closure regime envisaged will require the plaintiffs to provide the Herbert Smith Freehills with trading data of Registered Group Members by 2 December 2025, it will allow the defendant to assess the possible quantum of Registered Group Members' claims and a potential settlement range at the mediation.

(c) In his experience, parties are more likely to negotiate meaningfully in the period leading up to trial. It is common that during this period the true issues in dispute and the relative strength of each parties case become more apparent. Therefore, extending the operative period of the class closure orders to the date before trial is facilitative of settlement discussions and, in his view, in the interests of justice. Where the operative period ceases some weeks or months following a mediation date, this can cause any further negotiations to occur without the certainty and finality of class closure, and require further notices to be distributed to group members, in turn requiring further time and expense.

17 The considerations to which the solicitors advert in their evidence support the making of orders requiring group members to register an interest in the proceeding in order to participate in any settlement reached before trial.

18 The issues raised by the proceedings are complex, both legally and factually. All litigation carries risk. As complexity increases, risk to both parties, increases. Should the proceedings not settle, the costs of conducting the trial (set down for 8 weeks) will be very substantial. If the proceedings are resolved on terms that meet Court approval, group members will have obtained an outcome judged to be in their interests while avoiding the significant additional costs of trial and the risks and uncertainties inherent in litigation. A step that is judged to be likely to assist the parties to resolve the proceedings is a step towards producing a tangible benefit for group members. I accept, for the reasons given in evidence by the parties' solicitors, that closing the class in each case is a step likely to assist the parties to resolve the proceedings. As the Court of Appeal said in Regent Holdings, the more accurate and complete the available information as to quantum, the more likely that rational settlements will be achieved.[5] Where a class closure order operates, as in this case, to facilitate the desirable ends of settlement, it may be reasonably adapted to the purpose of seeking or obtaining justice in a proceeding and may therefore be regarded as an order that is appropriate to ensure that justice is done in the proceeding, under ss 33ZF and 33ZG of the Act. In such circumstances, orders closing the class in each case also serve the overarching purpose.[6]

19 The orders are subject to further order. At this point, group members are to be notified that upon reaching any agreement to settle the proceedings prior to trial, any Group Member who by the Class Deadline has not registered or has not opted out of the proceeding in accordance with the Court's orders, will remain a Group Member for all purposes of this proceeding but shall not, without leave of the Court, be permitted to seek any benefit pursuant to that settlement. If any group member can demonstrate unfair prejudice to them in the operation of the orders, they may apply to participate in the settlement. Whether such group members ought be permitted to participate will require consideration (at least) when the Court comes to exercise its discretion in approving any settlement reached, under s 33V of the Act.

20 I accept that in the circumstances of this case it is appropriate to allow the class to remain closed until close to trial, for the reasons given by Ms Morrison and in the plaintiffs' submissions. However, I will fix the end date for class closure at 2 weeks before the commencement of the trial. That will still allow 4 and a half months after mediation for the parties to negotiate. The parties' lawyers' experience is that meaningful negotiations are mostly likely to occur shortly before trial. That generally accords with the Court's observations about the time at which settlements in group proceedings tend to occur. This is of course not a universal rule. By the date which is two weeks before the trial is due to commence the parties should well and truly have crystallised the issues and made assessments about whether and at what amount they are prepared to settle. 'Re-opening' the class two weeks before the trial is to commence ought provide some incentive to the parties in the form of the opportunity to avoid a two week period of heavy costs expenditure. It will also assist the Court to reallocate available hearing time in the event the proceeding settles. The allocation of judicial resources between litigants is a matter properly to be taken into account in the administration of justice.

21 Despite those considerations, orders 'closing the class' would not be appropriate were I not satisfied that the procedures for notification of the orders to group members were adequate. It will be recalled that the represented group comprises three 'sub‑classes', namely those who acquired interests in fully paid ordinary shares in Beach, those who acquired American Depository Receipts said to 'represent' ordinary shares in Beach (ADR's) and those who acquired long exposure to Beach Shares by entering equity swap confirmations in respect of Beach Shares (Equity Swaps).

22 Group members who acquired ordinary shares will be notified personally, through the defendant's share registry. The share registry administrator has contact details for all registered shareholders who acquired shares during the Relevant Period. Boardroom will send the notice to all 12,973 registered shareholders (including former registered shareholders) who acquired shares during the claim period. Where email distribution fails, it will send the notice via ordinary post. Additionally, Slater & Gordon will distribute the notice to potential group members who have registered their interest with the firm.

23 It is not possible to identify from the share registry the holders of ADR's or Equity Swaps.

24 It was proposed that 'general notice' to potential group members (as opposed to personal notice) be provided by publication on Slater & Gordon's website and social media accounts and also in the Australian Financial Review (AFR) on 15 August 2025 and again 3 to 4 weeks prior to the registration deadline.

25 Equity Swaps are complex financial instruments that (according to Ms Morrison's evidence) would typically be entered into by sophisticated investors such as institutional investors, financial institutions and large corporations. They are off‑market confirmations recorded in contracts entered into by the investor (putative group member) directly with the shareholder and as such are not recorded in the defendant's share register. It was contended, and I accept, that because group members who purchased Equity Swaps in Beach Shares are likely to be sophisticated large institutions that likely track Australian securities, advertisement through the Australian Financial Review is likely to be the best means and is an adequate method of providing notice to group members who acquired their interest in Beach Shares through Equity Swaps. The advertising is to occur twice, at the beginning and close to the end of the 12 week notice period.

26 Ms Morrison's evidence was that American Depository Receipts are issued by American depositary banks and traded on American financial markets, allowing American investors to invest in foreign companies without directly dealing with foreign stock exchanges. Once issued by the offering bank, ADR's are traded on the New York Stock Exchange (NYSE), the National Association of Securities Dealers Automated Quotations (NASDAQ) exchange and over the counter. Both the NYSE and the NASDAQ are headquartered in New York City, New York. The underlying securities are held by or on behalf of the American depository bank that issues the ADR's.[7] The Notice distributed by the defendant's share registry will go to the registered shareholder of the securities that underlie the ADR or an Australian based custodian, but not to the person or entity who holds ADR's. It is not possible to use the defendant's share registry to identify holders of ADR's. Accordingly, ADR group members will only be provided notice via the general notice mechanisms.

27 Initially the plaintiffs proposed (with the defendant's agreement) that no additional advertising occur beyond that described so far. However, having considered the evidence and submissions I informed the parties that I would not make orders for class closure affecting ADR holders unless notice was also given in suitable media published in the United States of America. Ultimately the plaintiffs did not contend against that position. As directed, Ms Morrison caused inquiries to be made about subscription and circulation figures of the Wall Street Journal and the New York Times.

28 I will direct that a notice be published in the Wall Street Journal, as more particularly described in Ms Morrison's evidence. The securities the subject of the action are traded on the NYSE and NASDAQ, not on an Australian exchange. Slater & Gordon (who will publish the notice on its social media accounts and website) has no presence in the United States. Conceivably, group members not based in Australia might subscribed to the Australian Financial Review, but it is reasonable to conclude that a notice published in the Wall Street Journal will have a greater chance of coming to the attention of those group members who hold ADR's, than advertisements in the AFR.

29 An argument was advanced that advertising twice in the Wall Street Journal would be disproportionate because the cost of doing so was considerably more expensive than the cost of advertising in the AFR, and that Slater & Gordon's expectation was that there would likely be a limited number of ADR holders who might be eligible to register in this proceeding. The latter proposition was based on Slater & Gordon's experience that 'ADR's are not commonly held by group members in securities class actions run by Slater & Gordon.' That in turn was based on the experience (described in very general terms) that few had registered in other (unidentified) actions. The evidence provided no sensible basis on which to support the proposition that few ADR holders would be eligible to participate. If previous actions were conducted on notification regimes of the limited kind initially proposed in this case, the contention would be inherently circular. Having heard my views on the issue (at a mention called for this purpose) the plaintiffs, sensibly, did not press the proportionality argument and agreed that the notification regime for ADR holders should be equivalent to that which applied to Equity Swap holders. I have set out this issue in these Reasons to record the importance of giving notice to group members whose rights the plaintiffs seeks to affect in asking the Court for orders of this kind. The regime originally proposed did not adequately protect the interests of group members who are ADR holders.

30 The proposed notice period provided to group members is 12 weeks, a demonstrably adequate period within which group members may consider their positions and register their interests if they wish to do so.

31 On that basis I am satisfied that group members will receive appropriate and sufficient notice of the 'class closure.'

32 In Lendlease Corporation Ltd v Pallas,[8] the High Court recently considered the power of the New South Wales Supreme Court under s 175(5) of the Civil Procedure Act 2005 (NSW) to issue a notice advising group members of the defendant's intention to seek an order, if the proceeding settled, that group members who had neither opted out nor registered to participate in the proceeding would remain group members but would not without leave, be permitted to seek any benefit pursuant to any settlement occurring before final judgment. In the course of doing so Gageler CJ, Gleeson and Jagot JJ described the practical utility of orders of that kind, from the perspective of relevant parties, in these terms:

[17] ... [I]t is apparent that the concept of "opting out" of a representative proceeding is part of the statutory scheme. ...

[18] In contrast, being "registered" or "unregistered" as a group member is not a part of the statutory scheme. The concept of "registering" as a group member is a result of the practical operation of several aspects of the statutory scheme. The statutory process of a group member opting out of group membership means that the representative plaintiff and the representative plaintiff's lawyers will know the number of people who are not group members but, without something more, will not know the number of group members. In some cases, estimating the number of group members with a reasonable degree of accuracy may be simple. In other cases, estimating the number of group members with a reasonable degree of accuracy may be impossible. The representative plaintiff and the representative plaintiff's lawyers have an interest in being able to estimate the number of group members with a reasonable degree of accuracy for several purposes, including: negotiating an appropriate settlement (for example, to ensure that the settlement negotiated involves an amount appropriate for distribution between all participating group members); facilitating the Court approving the settlement; facilitating the Court making such orders as are just with respect to the distribution of any money paid under the settlement; and, if the case does not settle, facilitating the Court working out the award of damages and making orders for the payment or distribution of the money to the group members entitled (including the establishment of such entitlement by group members and providing for the constitution and administration of a fund consisting of the money to be distributed to group members who are so entitled).

[19] The defendant and the defendant's lawyers also have an interest in being able to estimate the number of group members with a reasonable degree of accuracy for the same reasons as the representative plaintiff and the representative plaintiff's lawyers, and for the additional reason of taking maximum advantage of the effect of s 179(b) of the CPA.[9] From the perspective of the defendant and the defendant's lawyers, facilitating registration of group members' participation in the representative proceeding enables the defendant and the defendant's lawyers, in particular, to: (a) better estimate the defendant's total potential liability to those who are group members (and its potential liability to those who opt out of the representative proceeding in order to preserve their own cause of action against the defendant); (b) negotiate a settlement with the representative plaintiff with greater confidence as to that total potential liability, including by minimising the risk of group members who have neither registered their participation in nor opted out of the representative proceeding, after settlement, seeking to benefit from the terms of the settlement; and (c) by maximising the number of group members known to the defendant and the defendant's lawyers before a settlement is negotiated, ensuring the settlement can be tailored accordingly and ensuring that the maximum number of group members are bound by any approved settlement in accordance with s 179(b) of the CPA. From the perspective of the defendant and the defendant's lawyers, for example, it would be undesirable: to negotiate a settlement with a relatively small proportion of the potential group members; and after negotiating such a settlement and seeking approval for it, to become aware of numerous other group members who either want to share in or increase the settlement amount or want to be permitted to opt out of the proceeding in order to preserve their own cause of action against the defendant.

33 As their Honours explained, the interests of the parties, their lawyers and of group members may be either congruent or inconsistent at times throughout a proceeding. The potential for inconsistencies of interest is inherent in the statutory scheme and is to be managed by the Court in the interests of the administration of justice as they appear in the circumstances of each case.[10] Lendlease was concerned with a different issue (the giving of notice, not the making of an order now to be made under s 33G of the Victorian Act) but the observations are nevertheless informative of the underlying issues on an application of this kind.

34 I am mindful that defendants to group proceedings will, almost inevitably, support regimes that potentially limit their exposure to damages and which facilitate their ability to negotiate - whether or not they ultimately decide to settle the proceeding. Plaintiffs and their solicitors, on the other hand, also commonly recognise the importance and benefits of negotiated outcomes and that (for the reasons discussed) obtaining a real ability to achieve a settlement may well be interests in of group members. The interests of plaintiffs, their solicitors and group members are not, however, always aligned or precisely aligned. It is essential that the appropriateness of orders of this kind to ensure that justice is done in the proceeding be considered according to the circumstances of each case. In this case, I am satisfied that the orders sought are appropriate in that sense, with the adjustments I have made.

[1] Matthews v SPI Electricity Pty Ltd [2013] VSC 17; (2013) 39 VR 255 (Matthews). In Matthews, the Court granted an application by consent to close what had been an open class group proceeding, by permitting amendments to the group definition so as to exclude the claims of those group members who did not register their claims by a court-ordered deadline. J Forrest J set out more generally, the principles said to inform an exercise of the power to require group members to take a step in the proceeding in order to be entitled to claim any benefit in relation to it, whether or not such step was accompanied by an amendment to the relevant group definition.

[2] I use the term 'sub-classes' but these are not constituted as sub-groups for the purpose of Part 4A of the Act.

[3] Zonia Holdings Pty Ltd v Commonwealth Bank of Australia Limited [2025] FCAFC 63.

[4] Appeal to the Full Court of the Federal Court filed February 2024 from the decision of Crowley v Worley Limited (No 2) [2023] FCA 1613.

[5] Regent Holdings Pty Ltd v State of Victoria and Anor [2012] VSCA 221; (2012) 36 VR 424, 429-430 [20]-[23].

[6] See Civil Procedure Act 2010 (Vic) s 7.

[7] It is unclear how it is said that holders of ADR's acquired an 'interest' in Beach Shares but that is not an issue on this application.

[8] Lendlease Corporation Ltd v Pallas [2025] HCA 19 (Lendlease), [18]-[19].

[9] The equivalent of s 33ZB(b) of the Supreme Court Act 1986 (Vic): A judgment given in a group proceeding must describe or otherwise identify the group members who will be affected by it and subject to section 33KA, binds all persons who are such group members at the time the judgment is given.