Parkin v Boral Limited

1. The parties are to provide a short minute of order and a form of opt out notice giving effect to these reasons and the oral exchange on 27 April 2021. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

LEE J: 1 In CJMcG Pty Ltd as Trustee for the CJMcG Superannuation Fund v Boral Limited (No 2) [2021] FCA 350 (at [98]-[104]), I fastened upon the appropriate remedial response to the issue of multiplicity and found that the Parkin proceeding was the best vehicle through which group members' claims are to be advanced. A key factor in this determination was that the Parkin proceeding was likely to produce the greatest return to group members in the very significant majority of conceivable scenarios: see [66]. 2 As I indicated in Boral (No 2), I was persuaded that by reason of the significant number of institutional investors that had signed up with Phi Finney McDonald, I should not permanently stay the Martini proceeding, at least at that stage. The question with which I am currently presented is the mechanism by which to provide notice to the group members in both the Parkin and Martini proceedings in relation to what has occurred and the steps that need to be taken if the clients of Phi Finney McDonald (who presently are group members in both proceedings) wish to continue to advance their claims in the Martini proceeding. 3 It is unnecessary for me to detail at any length the extensive debate before me today. It suffices to note that the argument eventually focussed upon which of the following two options should be adopted: (1) a bespoke notice be issued to those group members in the Parkin proceeding who are also group members in the Martini proceeding (Spanning Group Members); or (2) an opt out notice be sent to all group members in both the Parkin proceeding and the Martini proceeding. 4 I had anticipated the latter of these options would be adopted at the time of delivery of judgment in Boral (No 2). However, there were three reasons advanced as to why this course should not be adopted: (1) an opt out notice sent in both proceedings would be premature, particularly in circumstances where if an opt out notice is to be sent in both proceedings to all group members, this should only occur once; (2) the cost associated with sending opt out notices to all persons who held shares during the relevant period is likely to be very considerable, and would likely require the reconstruction of data from the share register; and (3) the provision of a broader opt out process is likely to be conducive of some delay in identifying with specificity those (including those of the Spanning Group Members) who actively wish to pursue any claim outside the Parkin proceeding, and also will defer the application foreshadowed by Mr Parkin to seek a temporary stay or adjournment of the Martini proceeding until the determination of common issues in the Parkin proceeding. 5 In addition to these three matters, a further issue has arisen: the power of the Court to adopt the course of sending a bespoke notice to just the Spanning Group Members. It is convenient to deal with this issue immediately because, after hearing argument, I am satisfied that I have power to issue a notice and fix an opt out date in relation to a subset of group members. 6 I reach this conclusion by reference to the relevant text, the context and the purpose of Pt IVA. 7 It is useful to commence with the text. Section 33J of the Federal Court of Australia Act 1976 (Cth) (Act) is in the following terms: 33J Right of group member to opt out (1) The Court must fix a date before which a group member may opt out of a representative proceeding. (2) A group member may opt out of the representative proceeding by written notice given under the Rules of Court before the date so fixed. (3) The Court, on the application of a group member, the representative party or the respondent in the proceeding, may fix another date so as to extend the period during which a group member may opt out of the representative proceeding. (4) Except with the leave of the Court, the hearing of a representative proceeding must not commence earlier than the date before which a group member may opt out of the proceeding. (Emphasis added). 8 Further, s 33X is in the following terms: 33X Notice to be given of certain matters (1) Notice must be given to group members of the following matters in relation to a representative proceeding: (a) the commencement of the proceeding and the right of the group members to opt out of the proceeding before a specified date, being the date fixed under subsection 33J(1); … (5) The Court may, at any stage, order that notice of any matter be given to a group member or group members. (6) Notice under this section must be given as soon as practicable after the happening of the event to which the notice relates. (Emphasis added). 9 The use of the term "a group member" in s 33J(1), in contradistinction to the reference to "group members" generally in s 33X(1), suggests that it is possible to fix an opt out date by reference to some group members only, and to provide notice of the fixing of that opt out date in relation to those group members. 10 When one has regard to context, this also makes sense. Section 33J(3) contemplates that there may be differing opt out dates and s 33K contemplates that there can be amendment from time to time of the group description, which suggests that the right to opt out and notice of that right could occur at different times in the proceeding. 11 Further, such a construction is consistent with the purpose of Pt IVA. This is because the legislative regime is premised on ensuring that group members are given the information necessary to make a choice about whether to opt out of a proceeding, rather than mandating that they provide their consent in order to commence a proceeding - the scheme is one of opt out, not opt in. 12 In an opt out model, where the identity of group members is necessarily unknown at the time the proceeding is commenced, the role of notices is central and critical. A court-sanctioned notice is the official means by which group members are to be informed about the proceeding, the way in which it can impact upon their rights, and how they can exercise their rights. Importantly, like in this case, the matters that may need to be communicated may differ as between subsets of group members. These differences may have some significance for a group member making an informed decision as to whether they should opt out. 13 When it is appreciated that the need to apprise all group members (including subsets of group members who may have different characteristics) of the information necessary to make an informed decision is central to the statutory scheme, it is immediately apparent that ss 33E (which provides that a proceeding can be commenced without the consent of a group member) and 33X (which deals with notices to be given to group members in relation to certain matters) are closely aligned. The Australian Law Reform Commission explicitly tied the two concepts together when it observed (Australian Law Reform Commission, 'Grouped Proceedings in the Federal Court' (Report No 46, 1988)) (at [126]): A fair balance will be struck between the interests of group members and respondents if proceedings can be commenced without the consent of group members as long as notice is given to group members and they have an opportunity to withdraw from the proceedings or litigate individually. 14 The explanatory memorandum accompanying the Federal Court of Australia Amendment Bill 1991 (Cth) (Explanatory Memorandum, Federal Court of Australia Amendment Bill 1991 (Cth)) (at [33]) said of s 33X (and s 33Y) that its purpose was to: … set out the requirements for giving notice, in the most efficient and effective way, to group members at the commencement of the representative proceeding and of other events during the course of the proceeding which may affect their rights. 15 In the second reading speech in the House of Representatives (Commonwealth, Parliamentary Debates, House of Representatives, Second Reading Speech, 14 November 1991) (at 3174), the Attorney-General, Mr M Duffy, after noting that business groups had concerns about the opt out model, stated: The Government believes that an opt out procedure is preferable on grounds both of equity and efficiency. It ensures that people, particularly those who are poor or less educated, can obtain redress where they may be unable to take the positive step of having themselves included in the proceedings. It also achieves the goals of obtaining a common, binding decision while leaving a person who wishes to do so free to leave the group and pursue his or her claim separately. 16 From the above, it is evident that the legislature was clearly proceeding on the basis that: (1) group members who do not opt out are bound by the proceeding; (2) Pt IVA was directed at removing a practical barrier to access to justice; and (3) a notice approved by the Court, published by a means approved by the Court, is an adequate way of ensuring that group members are told of the information necessary to exercise the most fundamental right in relation to the proceeding - whether to opt out of it or remain in it and be bound. 17 There is nothing about the notion of fixing a date for only some group members which undermines the purpose behind these provisions. Indeed the opposite is true if one bears in mind the fact that the group membership in a class action can have significant heterogeneity (subject to the requirements of s 33C of the Act). A further example of the ability to fix more than one opt out date is illustrated by the scenario where there is an amendment under s 33K and new group members come into the proceeding. It would be a curious thing if one was required to send a notice to all group members in circumstances where it is only the rights of the newly added group members that need to be protected. 18 In these circumstances, I am satisfied that I have the power to proceed to fix a date for opt out for the Spanning Group Members and to give notice to those group members in accordance with the form of opt out notice that has been discussed during the course of today. 19 There is a further issue that is worth mentioning. The cost associated with giving a notice to all group members in this proceeding, I am told, is very significant. In order for a mediation to occur efficiently and effectively at some stage prior to an initial trial, it will likely be necessary to obtain the details of some group members' claims. Commonly, this has occurred by way of a registration process. 20 It may well be that in the context of a registration process, the suggestion is made that some form of "soft class closure" order should be made, consistently with similar orders made in a very large number of cases in this Court in recent years. The rationale behind these orders was recently explained in Gill v Ethicon Sàrl (No 2) [2019] FCA 177; (2019) 134 ACSR 649 (at 651 [3]). 21 There is presently real doubt as to the ability of the Court to make such an order in the wake of two decisions of the Court of Appeal of New South Wales in Haselhurst v Toyota Motor Corporation Australia Ltd [2020] NSWCA 66; (2020) 101 NSWLR 890 (Bell P, Macfarlan, Leeming and Payne JJA, Emmett AJA) and Wigmans v AMP Ltd [2020] NSWCA 104; (2020) 102 NSWLR 199 (Macfarlan, Leeming and White JJA). In more than one recent case in this Court, there has been some debate as to the views expressed by the Court of Appeal (which chartered a different course to that which had emerged in a long line of cases in this Court) - but it has been unnecessary to resolve any issue in this regard. Given the course I have adopted, there is no present need to form a view one way or the other as to whether or not it is open to the Court to provide for a registration process with a "soft closure" in advance of a mediation, but if such a course is proposed, it will need to be the subject of detailed argument at a later time and I will give consideration as to whether this issue should be raised with the Chief Justice as being suitable for a direction under s 20(1A) of the Act. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Lee.