O'Donnell v Commonwealth of Australia

Federal Court of Australia|2023-10-11|Before: Murphy J

THE COURT ORDERS THAT:

The settlement of the proceeding be approved in the terms set out in the Heads of Agreement forming Annexure DLB-1 to the Affidavit of David Leighton Barnden affirmed 14 August 2023.
Pursuant to r 26.12 of the Federal Court Rules 2011 (Cth) leave be granted to the Applicant to discontinue the proceeding by filing a Notice of Discontinuance.
There be no order as to costs of the proceeding or the application.
Pursuant to ss 37AF and 37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth), in order to prevent the prejudice to the proper administration of justice, the Confidential Opinion of Counsel for the Applicant forming Annexure DLB-2 to the Affidavit of David Leighton Barnden affirmed 14 August 2023 be treated as confidential and not be made available to or disclosed to any persons other than the Court, the Applicant and her legal representatives. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 This is an application for Court approval of the proposed settlement of a representative proceeding brought under Div 9.2 of the Federal Court Rules 2011 (Cth) (the Rules). The applicant, Kathleen O'Donnell, brings the proceeding against the respondent, the Commonwealth of Australia, doing so on her own behalf and on behalf of all persons who at any time on or since 7 July 2020 have acquired one or more Exchange-traded Australian Government Bonds units (exchange traded government bonds) in the form of an eTIB with code GSIC50; and/or one or more government bonds in the form of an eTB with code GSBE47, and who continue to hold one or more government bond as at the date of the fourth amended pleading, 20 December 2022 (group members). 2 The proceeding relates to the real, but until more recently, underacknowledged risks that climate change poses to Australia's financial position. It alleges that the Commonwealth published information to investors and potential investors in exchange traded government bonds via "Information Statements", "Term Sheets", "Information Memoranda", and a relevant website, and that the Commonwealth failed to disclose information about: (a) the alleged physical risks of climate change, meaning impacts caused directly by a changing climate, and associated costs; and/or (b) the alleged transition risks of climate change, meaning the impact of global and domestic efforts to reduce greenhouse emissions, and associated costs. 3 The proceeding alleges that the existence of those risks mean that there was and is a real, rather than remote, risk that before the maturity dates of the exchange traded government bonds held by the applicant, there will be significantly increased Commonwealth budget deficits (by reason of reduced revenue and increased expenditure) relative to Australia's annual GDP; and a significant increase in Commonwealth government borrowing, and accordingly a significant increase in government debt (relative to Australia's annual GDP). In turn, and as a result of those risks, prior to the maturity date of the exchange traded government bonds held by the applicant and group members, it is alleged that there will be or is likely to be: (a) a material and negative impact on the Commonwealth's status and reputation as a reliable, safe and relatively risk-free insurer of sovereign debt securities; (b) a higher risk of the Commonwealth not having the capacity to discharge its interest and principal obligations under the exchange traded government bonds held by the applicant and by the other persons holding exchange traded government bonds at the material times; (c) a material and negative impact on the Commonwealth's capacity to maintain its AAA status as an issuer of sovereign debt securities; and (d) a likelihood of the Commonwealth heaving to pay higher interest rates than would otherwise be the case in respect of any new issue of exchange traded government bonds. 4 It is alleged that by failing to disclose material climate change information (being information that might reasonably be expected to have a material influence on the holders of exchange traded government bonds as to whether to hold or dispose of them and decisions by potential investors as to whether to purchase such bonds) the Commonwealth engaged in and continues to engage in conduct that is misleading or deceptive and/or likely to mislead or deceive in breach of s 12DA(1) of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act). 5 The proceeding seeks a declaration that the Commonwealth has engaged in misleading or deceptive conduct, but not damages. 6 Under the proposed settlement the Commonwealth has agreed to make a public statement in agreed terms regarding the systemic risk climate change poses to Australia's financial and economic position, to be published on the website of the Department of Treasury within seven days. In return the applicants have agreed to seek Court approval of the proposed settlement and to seek leave to discontinue the proceeding on the basis that there be no order as to costs. The Commonwealth has agreed to support that application. 7 The agreed public statement includes the following: 4. Climate change is a systemic risk that presents significant risks and opportunities for Australia's economy, regions, industries and communities. Achieving Australia's emissions reduction commitments and realising the opportunities that accompany the transition will require significant investment by governments and the private sector. Uncertainty around the magnitude and timing of the physical impacts of climate change and the global transition to net zero emissions translates to uncertainty about the fiscal impacts of climate change. And, as a consequence, there is uncertainty about whether the fiscal impacts of climate change may affect (if at all) the value of Commonwealth Government Securities (also known as Australian Government Bonds or AGBs) and, in turn, eAGBs. 5. The economic and climatic changes brought about by climate change will have fiscal impacts. For example, the new industries and jobs emerging from the net zero transformation will impact the structure of the economy and, in turn, the tax base. Extreme weather events are also expected to occur with increased severity and frequency, which will increase demand for disaster relief payments and infrastructure repairs. … 7. The Government is developing a package of sustainable finance reforms, including the establishment of a sovereign green bonds program and regulatory reforms, to increase the transparency and credibility of Australia's growing sustainable finance market. The Government's intention is that these reforms will assist investors to align their investment decisions with net zero emissions targets and increase the flow of capital towards new opportunities that support Australia's net zero pathway. 8. In accordance with the requirements of the Climate Change Act 2022 (Cth), the Commonwealth will continue to publish an Annual Climate Change Statement. Among other things, the Annual Climate Change Statement addresses the risks to Australia from climate change impacts, such as those relating to Australia's economy. The first Annual Climate Change Statement was tabled in Parliament on 1 December 2022 and may be found at . …

The EVIDENCE 8 The applicant relies on: (a) the affidavits of David Barnden, a principal of Equity Generation Lawyers, the solicitors for the applicant, made 14 August 2023 and 28 September 2023. A copy of the Heads of Agreement between the parties entered into on 8 June 2023 and the confidential opinion of Ron Merkel KC and Thomas Wood of counsel dated 28 July 2023 in support of settlement approval are annexed to the first Barnden affidavit (the first and second Barnden affidavits); and (b) the affidavit of Daniel Welsh, a Lawyer with the Australian Government Solicitor, the solicitors for the respondent, made 4 September 2023 and 19 September 2023, which concern the notice of the proposed settlement provided to group members (the first and second Welsh affidavits). 9 Both parties put on submissions in support of settlement approval.

The Notice of Proposed Settlement 10 By orders made on 23 August 2023, a court-approved Notice of Proposed Settlement was required to be sent to all persons who meet or appear to meet the definition of "Represented Persons" in the Fourth Further Amended Statement of Claim, doing so by email; or where no email address was held by the Commonwealth by standard post to their last known postal address; and also on the website of the applicant's solicitors. The Commonwealth consented to the form of the Notice. 11 The first and second Welsh affidavits explain the creation of the list of represented persons to whom the Notice was to be sent, and compliance with the regime that was ordered for provision of the Notice to group members. The Notice together with the Heads of Agreement was sent to group members on 24 and 25 August 2023. 12 By consent of the parties, the Notice informed group members as follows: 10. As part of the proposed settlement, Ms O'Donnell has now applied to the Court for permission to discontinue the class action. 11 If the Court permits Ms O'Donnell to discontinue the class action: (a) The proceeding will cease; (b) However, you will still be able to bring your own case to make the same claims, either just for yourself, or also on behalf of other group members, if you wish. If this is something you think you might want to do then you should get legal advice What options are available to you? 12. You have two options. The options are: (a) Do nothing, in which case the Court will proceed to consider whether to approve the proposed settlement (including whether to give Ms O'Donnell permission to discontinue the class action). If you choose this option, you will still be able to bring your own case in relation to these issues, provided you meet any applicable deadline for bringing such a case; or (b) Object to or oppose the proposed settlement of the class action. 13 The Notice informed group members that if they wished to object to or oppose the proposed settlement they were required to inform the applicant's solicitors by email as soon as possible and ideally before 26 September 2023, and could also tell the Court their concerns at the settlement approval hearing on 11 October 2023. 14 Having regard to the second Welsh affidavit and the second Barnden affidavit I am satisfied that the Notice was provided to group members in accordance with the orders, and that no group member has notified any objection or opposition to the proposed settlement. No group member appeared at the approval hearing to make any objection.

The relevant principles 15 This is a representative proceeding brought under Div 9.2 of the Rules. Rule 9.21 relevantly provides: Representative party - general (1) A proceeding may be started and continued by or against one or more persons who have the same interest in the proceeding, as representing all or some of the persons who have the same interest and could have been parties to the proceeding. (2) The applicant may apply to the Court for an order appointing one or more of the respondents or other persons to represent all or some of the persons against whom the proceeding is brought. Unlike s 33C in Part IVA of the Federal Court of Australia Act 1976 (Cth) (the Act), the rule contemplates representative proceedings brought by either an applicant or a respondent. 16 Rule 9.22 relevantly provides: Enforcement of order for or against representative party (1) An order made in a proceeding for or against a representative party is binding on each person represented by the representative party. (2) However, the order can be enforced against a person who is not a party only if the Court gives leave. (3) An application for leave under subrule (2) must be served personally on the person against whom it is sought to enforce the order. (4) A person who is served with a notice under subrule (3) may dispute liability to have the order to which the notice relates enforced against the person on the ground that facts and matters particular to the person entitle the person to be exempt from liability. 17 Nothing in Div 9.2 requires leave or approval of the Court before a representative applicant (or representative respondent) can settle a representative proceeding brought under the Division. There is no provision akin to s 33V of Part IVA of the Act. Rule 26.12(4), however, provides that "a representative party must not discontinue a party's claim without first obtaining the leave of the Court." 18 As I explained in Sister Marie Brigid Arthur (Litigation Representative) v Northern Territory of Australia (No 2) [2020] FCA 215 at [74]-[79], the authorities indicate that an applicant in a Div 9.2 representative proceeding has little or no power to compromise a claim without leave of the Court. Div 9.2 is to be treated as "a flexible rule of convenience" with the Court retaining "the power to reshape proceedings at a later stage": see Carnie v Esanda Finance Corporation Ltd [1995] HCA 9; (1995) 182 CLR 398 at 422 (Toohey and Gaudron JJ). In my view, it is appropriate to approach a proposed settlement of a Div 9.2 representative proceeding on the same, or at least a similar, basis to a proposed settlement of a modern class action brought under Part IVA of the Act. Doing so is in the interests of justice as it protects the interests of absent group members, who are not before the Court, may not be aware of the proposed compromise, and may not even be aware of the representative proceeding. 19 That issue, however, does not arise here. In light of the fact that this is a representative proceeding under Div 9.2 of the Rules and given the decision in Arthur, the parties have proceeded on the basis that the proposed settlement requires approval of the Court, and that the proposed discontinuance of the proceeding requires leave of the Court under rule 26.12(4). 20 The applicable principles in relation to settlement approval under s 33V of the Act are well-established, and it is appropriate to apply the same or at least a similar approach to a proposed settlement of a Div 9.2 representative proceeding. As I said recently in Webb v GetSwift Limited (No 7) [2023] FCA 90 at [15]-[16]: The Court's fundamental task is to determine whether the settlement is fair and reasonable and in the interests of the group members who will be bound by it, including as between the group members inter se: see for example, Australian Securities and Investments Commission v Richards [2013] FCAFC 89 at [7]-[8]; Kelly v Willmott Forests Ltd (in liquidation) (No 4) [2016] FCA 323; 335 ALR 439 at [68]-[77]; Camilleri v The Trust Company (Nominees) Ltd [2015] FCA 1468 at [5]; Blairgowrie Trading Ltd v Allco Finance Group Ltd (Receivers & Managers Appointed) (In Liq) (No 3) [2017] FCA 330 at [81]; Caason Investments Pty Ltd v Cao (No 2) [2018] FCA 527 at [12]; McKenzie v Cash Converters International Ltd (No 3) [2019] FCA 10 at [23]-[24]; Smith v Commonwealth of Australia (No 2) [2020] FCA 837 at [6]-[12]; and Prygodicz v Commonwealth of Australia (No 2) [2021] FCA 634 at [85]-[88]. In undertaking that task, the Court: (a) assumes an onerous and protective role in relation to group members' interests, in some ways similar to Court approval of settlements on behalf of persons with a legal disability; (b) must be astute to recognise that the interests of the parties before it, and those of the group as a whole (or as between some members of the group and other members), may not wholly coincide; (c) relatedly to the second point, should be alive to the possibility that a settlement may reflect conflicts of interest or conflicts of duty and interest between participants in the common enterprise which has conducted the representative proceeding; (d) should understand that at the point of settlement approval, the interests of the parties will ordinarily have merged in the settlement. It is likely that they both will have become "friends of the deal". As a result, both sides may not critique the settlement from the perspectives of any group members who may suffer a detriment or obtain lesser benefits through the settlement; and (e) must decide whether the proposed settlement is within the range of reasonable outcomes, rather than whether it is the best outcome which might have been won by better bargaining. 21 It is often useful to assess a proposed settlement using the factors set out in the Class Actions Practice Note as a guide. Here, it is appropriate to consider (a) the complexity and likely duration of the litigation; (b) the stage reached in the proceeding when the settlement was agreed; (c) the risks of establishing liability; and (d) the reasonableness of the proposed settlement, in light of the best recovery if the matter were to proceed to trial and all the attendant risks of the litigation. It is not necessary to consider the risks of establishing causation and loss and damage in the amounts claimed or the ability of the respondent to withstand a greater judgment as the proceeding seeks declaratory relief only.

Should the proposed settlement be approved? 22 For the reasons that follow I consider that the proposed settlement is fair and reasonable in the interests of group members and as between them. 23 First, I have had the benefit of considering the Confidential Opinion of Ron Merkel KC and Thomas Wood of counsel dated 28 July 2023 (Confidential Opinion). That opinion was provided on a confidential basis to assist the Court in deciding whether the proposed settlement is fair and reasonable in the interests of group members, and counsel were obliged to provide the opinion as officers of the Court, rather than as an advocate for the applicant and group members. That required counsel to candidly canvass the matters relevant to settlement approval and particularly in relation to the prospects of success in the proceeding. It is appropriate to give substantial weight to the Confidential Opinion. 24 Because the opinion is confidential I cannot go into the detail of it. It must suffice to note that the opinion sets out counsels' view, including in relation to the prospects of success of the applicant's claim. Counsel concluded that the terms of the proposed settlement are fair and reasonable in the interests of the group members and as between them. 25 Second, the applicant makes no claim for damages or monetary relief in the proceeding, and the absence of any monetary compensation does not point away from the settlement approval. 26 Third, the terms of settlement provide for the applicant's claim to be discontinued by consent. It is common ground between the parties that there will have been no hearing or judicial determination in relation to the merits of group member's claims, and therefore no question of res judicata, issue estoppel or Anshun estoppel arises. In the Notice group members were informed that upon discontinuance they will continue to be able to sue the Commonwealth for the same claims. That means they will be put back in the same position they were in prior to commencement of the proceeding, except for the running of any applicable limitation periods. The limitation periods applicable to group member's claims have continued to run as Div 9.2 of the Rules does not contain a provision equivalent to s 33ZC of the Act. 27 However, in written submissions for the approval application the Commonwealth contended that under the principles in Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507 at [24]-[25] (French CJ, Bell, Gageler and Keane JJ) there is, at least, a real possibility that it would be an abuse of process for a group member to bring the same proceeding in the future because it would be unjustifiably oppressive for the Commonwealth to be forced to again defend the same claim by a group member, who will have had a reasonable opportunity to advance their claim in this proceeding. The Commonwealth said that because group members have had reasonable notice of the proposed settlement, there can be no injustice that would prevent the settlement being approved. 28 I take a different view. The Commonwealth consented to the form of the Notice to group members which expressly advised them that if the proceeding was discontinued they would continue to be able to make the "same claims" in an individual proceeding or in another representative proceeding. In my view it would be plainly contrary to the interests of justice if a group member who, having been so informed, decided not to object to the proposed settlement and instead decided to commence an individual proceeding or another class action making the same claims, that he or she could then be met by a Commonwealth defence that doing so amounted to an abuse of process. In oral submissions senior counsel for the Commonwealth "walked back" its submission to an extent but did not entirely withdraw it. 29 It is a matter for another day, but if the Commonwealth wished to be able to argue in the future that a group member who brings another proceeding making the same claims is committing an abuse of process it should not have consented to the form of the Notice. To my mind that argument will not be available to the Commonwealth, and as a model litigant it should not make it. 30 I consider that granting leave to discontinue the proceeding will not affect the rights of members to pursue the claims the subject of this proceeding in another proceeding, subject to any applicable limitation periods. Except in relation to any limitation periods they will be put back in the position they were in before the class action was commenced. 31 Fourth, because the only relief sought is declaratory there is no basis to conclude that there could be any issues as between group members. 32 Fifth, group members have been informed of the terms of the proposed settlement and no group member has communicated any objection or opposition to it. 33 Sixth, the proposed settlement has been reached in circumstances where the proceeding has been on foot for over three years. The applicant has had the benefit of extensive discovery but neither party has yet put on their lay or expert evidence. The case has serious factual and legal complexities, and it is likely to involve a substantial body of expert evidence and a lengthy and expensive trial. That points in favour of settlement approval. 34 Seventh, the parties reached the proposed settlement after the close of pleadings, after the applicant had the benefit of reviewing extensive discovery, following a strikeout application in which the Commonwealth was partially successful, and following mediation. In my view the parties are in a position to assess the strengths and weaknesses of their respective positions. 35 Eighth, in my view the applicant (and therefore the group members) faces a real risk that the case will not succeed on liability. 36 In its defence the Commonwealth raised two main obstacles to the success of the applicant's claim: (a) first, the Commonwealth disputes the allegation that it relevantly "carries on a business" which is a requirement for it to be liable for misleading or deceptive conduct under s 12DA of the ASIC Act; and (b) second, the Commonwealth disputes its conduct was misleading or deceptive or likely to mislead or deceive within the meaning of s 12DA. 37 The Commonwealth contends that the first point is an insurmountable weakness in the applicant's case. It says that it does not derive any pecuniary benefit from exchange traded government bonds, which are not wholesale bonds issued by the Commonwealth but rather the beneficial ownership of a relatively small number of those bonds traded on a secondary retail market. It says that it established the secondary retail market for macro-economic governmental purposes to stimulate the retail debt market in Australia including by providing a pricing benchmark for corporate bonds and enhancing the liquidity of the bond market. It says that in doing so it was not performing any "commercial function": see, Roo Roofing Pty Ltd v Commonwealth [2019] VSC 331 at [614]-[616] (Dixon J). 38 On the materials before me I am not in a position to assess the applicant's prospects of establishing that the Commonwealth was relevantly "carrying on a business" or acting "in trade or commerce", which the applicant must establish for the Commonwealth to be liable under s 12DA of the ASIC Act. Both issues are highly fact dependent requiring a muti-factorial analysis and matters of nuance. See: Murphy v Victoria (2014) 45 VR 119 at [44]-[63] (Nettle AP, Santamaria and Beach JJA) in relation to "carrying on a business". I cannot make an assessment of the applicant's prospects but, having regard to the facts of the case as I understand them at present, those questions seem likely to present a serious obstacle for the applicant. 39 Turning then to the Commonwealth's second point, it submits that another core difficulty with the applicant's case is that it takes, in isolation, one possible cause of risks for the Australian economy and seeks to extrapolate from those risks an unpleaded and unprovable effect on exchange traded government bonds. It argues that after at least four attempts to plead her case over three years the applicant has still not been able to articulate: (a) what risks she alleges the Commonwealth should have disclosed; (b) what obligations she alleges the Commonwealth would not be able to honour (for example, the annual interest or the redemption of the exchange traded government bonds at maturity) and why, and when; (c) how it is alleged that the Commonwealth would not be able to perform its obligations with respect to the applicant's exchange traded government bonds considering that the Commonwealth has never defaulted on sovereign debt even in circumstances of global economic downturn; (d) why the alleged climate change related risks would give rise to a reasonable expectation that those matters would be disclosed considering that the Commonwealth may have increases in expenditure and decreases in revenue caused by number of domestic and global circumstances and events including natural disasters, wars and pandemics unrelated to climate change; and (e) how the information the applicant alleges the Commonwealth has not disclosed would have a material effect on the price of the exchange traded government bonds being traded on the market when the information she alleges has not been disclosed by the Commonwealth must be publicly known (if it is true) because it is referred to in the statement of claim in the proceedings. 40 These contentions are not without force, but they overstate the position. I doubt that it will be as difficult as the Commonwealth submits to establish that global warming and climate change gives rise to real, systemic risks to the Commonwealth's coffers and therefore to the value of the change traded government bonds. For the purposes of the application I take judicial notice of the fact that the consensus position of leading climate scientists around the world is that global warming and climate change brings risks of more frequent and more intense bushfires, storm surges, coastal flooding, inland flooding, cyclones, droughts and other extreme weather events. To my mind, it seems likely that such events will give rise to a huge drain on Commonwealth resources and on the tax base over a very lengthy period, perhaps forever, and therefore also weigh on forecasts in relation to the Commonwealth's financial and economic position. 41 I note that in Sharma v Minister for the Environment [2021] FCA 560; 391 ALR 1, Professor William Steffen, Emeritus Professor at the Fenner School of Environment and Society at the Australian National University gave unchallenged evidence that "[a]s an overview, the planet's atmosphere and ocean are heating at an increasing rate, polar ice is melting, extreme weather events are becoming more extreme, sea levels are rising, and ecosystems and species are being lost or degraded" (at [54]). He gave evidence that, if over multiple decades the global average surface temperature could be stabilised at or very close to 2°C above the pre-industrial level (which was the best available outcome, and there are real risks it may not be achieved) the effects for Australia would include a significant increase in the likelihood in any given year of extreme weather events: a 77% likelihood of severe heatwaves, power blackouts and bushfires; and a 74% likelihood of severe droughts, water restrictions and reduced crop yields (at [67]). 42 Based on climate modelling by the CSIRO and the Commonwealth Bureau of Meteorology he projected the following changes to Australia's climate over the next few decades (at [67]): • Continued warming, with more extremely hot days and fewer extremely cool days. • A decrease in cool season rainfall across many regions of the south and east, likely leading to more time spent in drought. • A longer fire season for the south and east and an increase in the number of dangerous fire weather days. • More intense short-duration heavy rainfall events throughout the country. • Fewer tropical cyclones, but a greater proportion projected to be of high intensity, with ongoing large variations from year to year. • Fewer east coast lows particularly during the cooler months of the year. For events that do occur, sea level rise will increase the severity of some coastal impacts. • More frequent, extensive, intense and longer-lasting marine heatwaves leading to increased risk of more frequent and severe bleaching events for coral reefs, including the Great Barrier and Ningaloo reefs. • Continued warming and acidification of its surrounding oceans. • Ongoing sea level rise. Recent research on potential ice loss from the Antarctic ice sheet suggests that the upper end of projected global mean sea level rise could be higher than previously assessed (as high as 0.61 to 1.10 m global average by the end of the century for a high emissions pathway, although these changes vary by location). • More frequent extreme sea levels. For most of the Australian coast, extreme sea levels that had a probability of occurring once in a hundred years are projected to become an annual event by the end of this century with lower emissions, and by mid-century for higher emissions. Professor Steffen projected much worse effects if the global average surface temperature could not be stabilised at a 2°C increase, and instead increased by about 3°C or 4°C: at [68] and [69]. 43 The respondent in that proceeding was the Commonwealth Minister for the Environment. The Minister made no challenge to the scientific evidence advanced by the applicants, and by and large did not dispute "the nature of the risks and the dangers from global warning, including the possible catastrophe that may engulf the world and humanity": see Minister for the Environment v Sharma [2022] FCAFC 35; 291 FCR 311 at [2]. There are good reasons to doubt that the Commonwealth would take any different stance in the present case in relation to the risks posed by climate change. 44 To my mind, it does not stretch imagination to think that the applicant may be able to establish that climate change bringing rising sea levels and coastal erosion, storm surges causing sea flooding of low-lying areas, more intense and more regular fires and floods, and droughts caused by increased temperatures and reduced rainfall, carries a real risk that it will have a substantial impact on communities, business, government infrastructure and the environment. In some areas insurance against bushfires and extreme weather events may become unavailable, or prohibitively expensive such that it is effectively unavailable. There may be an exodus of residents and businesses from some areas because of repeated and intense fires, floods, and other extreme weather events or the risk thereof. There must be a risk that the government will be forced to meet the substantial costs that result where individuals and businesses cannot do so, including through home buyback schemes, public housing projects, farm relocation assistance and the like. And it seems likely that there will be substantial costs for the Commonwealth government in protecting government infrastructure from such events, repairing or remediating government infrastructure after such events, and relocating core government services such as schools and hospitals. And if businesses and employment opportunities are degraded the tax base available to fund government expenditure reduces. 45 Of course, in a wealthy country like Australia, which has never defaulted on its sovereign debt obligations, it is likely to be complex and difficult for the applicant to establish that catastrophes of the nature described are likely to be such a drain on the public purse that there is a material risk that the Commonwealth may, in the future, be unable to perform its obligations with respect to exchange traded government bonds. Doing so will require the applicant to call expert witnesses about the relationship between such catastrophes, or the likelihood of them, on Australia's financial and economic position and the likely effect on the value of exchange traded government bonds, in circumstances where there is no internationally agreed framework for assessing such risks. And it will be necessary for the applicant to prove any underlying assumptions about Australia's economic and financial position and assessments about that position in the future so that the experts engaged in her case can express their opinions in terms applicable to Australia's particular circumstances. This will be far from straightforward, and it will involve real complexities and difficulties for the applicant. There must be a real risk that the applicant will be unable to establish this. 46 Ninth, the applicant's case has always been that the Commonwealth provided no information whatsoever to investors and potential investors about any risks of material adverse impacts on the Commonwealth's financial position and to the value of the relevant exchange traded government bonds as a result of climate change. The information to be provided by way of the agreed public statement is some information about such risks. Whether, in the event the applicant is successful in the proceeding, the Commonwealth would be required to provide more extensive information than this will depend upon the evidence advanced about the extent of any risk found to exist. Put another way, the agreed public statement arguably falls within the range of reasonable outcomes in the proceeding in terms of the disclosure of the risks posed by climate change to the value of exchange traded government bonds. 47 I have accordingly made orders to approve the proposed settlement and to grant leave to the applicant to discontinue the proceeding with no order as to costs. I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Murphy.

Federal Court Rules 2011(Cth)rr 9.21, 9.22, 26.12

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