Petrusevski v Bulldogs Rugby League Club Limited

the point of contact for group members 4 The applicants propose that the following paragraph should be included in the opt out notice: "If you are not sure whether you are a group member, or whether you should Opt Out of the proceedings, you may contact your solicitor or the Applicants' solicitor, Matthew Hourn of Clinch, Neville Long at 99 York Street, Sydney, NSW on telephone: 9279 4888." 5 The respondent objects to this formulation because, as appears to be common ground, Clinch Neville Long are substantially funding the proceedings and doing so on a "no win no fee" basis. It also appears to be common ground that in these circumstances the firm may be able to charge a premium on its usual charge out rate in the event of a successful outcome. 6 Mr Leopold, who prepared written submissions on behalf of the respondent, contended that in these circumstances Mr Hourn would face an obvious conflict. On the one hand, it would be in the interests of the firm to enter fee agreements with as many group members as possible; on the other hand, Mr Hourn would be required to give any group members seeking assistance objective advice as to whether he or she should opt out. 7 There is, in my view, a potential for a conflict of interest and duty should a group member approach the solicitors acting for the applicants in representative proceedings in order to obtain advice about his or her situation. This is so for the reasons identified by Mr Leopold. But if a group member seeks advice as to whether he or she should opt out, it could hardly be doubted that the solicitor would owe a fiduciary duty to that group member in relation to any advice given: cf King v AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd) (2002) 121 FCR 480, at 488 [24], 489 [27] per Moore J; Courtney v Medtel Pty Ltd (2002) 122 FCR 168, at 182 [49], 184-185 [57], per Sackville J. There is no basis for concluding that Mr Hourn would not faithfully discharge the duties imposed on him notwithstanding the potential conflict to which I have referred. 8 In addition, as Ms Culkoff for the applicants pointed out, there are practical reasons for the opt out notice nominating the applicants' solicitor as a point of reference. Many group members are unlikely to be prepared to go to the trouble and expense of engaging a solicitor with no previous knowledge of the proceedings to advise them as to whether they should opt out of the proceedings. They may, however, be prepared to contact a solicitor who would obviously be familiar with the issues. On balance I think it preferable that group members have that option. Accordingly, I think that the paragraph proposed by the applicants should remain in the opt out notice.

costs 9 The parties agreed that the opt out notice should contain a reference to the Court's power under s 33ZJ of the Federal Court Act to order that costs be paid out of any damages awarded to group members. They disagreed, however, as to whether the notice should refer to the terms of s 33R of the Federal Court Act. The respondent suggested the addition of the bolded words in the following paragraph: "You will not be liable for any legal costs merely by remaining a Group Member. That, however, is subject to two qualifications. The first is that the Court has power under s 33ZJ of the Act to order that the costs reasonably incurred by the Applicants in prosecuting the claim on their behalf and on behalf of the Group Members be paid out of any damages awarded to Group Members in the proceedings, to the extent that they may exceed the costs recoverable by the Applicants from the Bulldogs. The second qualification is that, if you seek to prove that you suffered loss or damage due to the conduct of the Bulldogs, and you are unsuccessful, you could be liable under section 33R of the Act for costs associated with the determination of issues concerned only with you as an individual." 10 Mr Leopold argued that this is a case where it is inevitable that individual group members will be required to prove issues of reliance, causation and damage on an individual basis. As he pointed out, ss 33Q and 33R of the Federal Court Act empower the Court to give directions permitting an individual group member to appear in the proceeding for the purpose of determining an issue that relates only to the claims of that member. In such a case, s 33R(2) provides that the individual group member, and not the representative party, is liable for the costs associated with the determination of the issue. 11 Ms Culkoff submitted that I should adopt the approach taken by Moore J in King v GIO Australia Holdings Ltd [2000] FCA 1869. In that case, his Honour had expressed the tentative view in argument that it was desirable that the opt out notice should contain some information on the question of costs. He ultimately decided, however, that the notice should not address the question. In his opinion, any summary of the various permutations and combinations that could arise if the point was ever reached where individual reliance and loss had to be proved made it impossible to deal with this issue in a simple and straightforward way, particularly having regard to the fee agreement proposed to be used by the applicant's solicitors. His Honour said this (at [18]): "The fee agreement is a lengthy document which contains many features. The danger in endeavouring to summarise the essence of the fee agreement is that the summary may highlight either attractive or unattractive features (or both). Attempting to create a balanced summary may involve reference to detail that destroys the summary's utility. I have made several attempts to do so as part of describing the position a group member may be in at a point, if it is ever reached, where individual reliance and loss must be proved. However, each attempt has resulted in a summary that is either too complex or fails to deal, in a simple and straightforward way, with the various combinations and permutations that could arise. I have ultimately decided that the notice should not endeavour to explain to a recipient what the consequences are of not opting out other than the important legal consequence of the group member being bound by the judgment. I have, at the conclusion of the approved notice, repeated (and I hope emphasised) the legal significance of the notice and the desirability of a recipient getting advice if that is what the recipient was minded to do." The Full Court declined to grant leave to appeal on this point: King v GIO Australia Holdings Ltd [2001] FCA 270, at [11]. 12 The formulation proposed by Mr Leopold is not free from the difficulty identified by Moore J in King v GIO. Under s 33R of the Federal Court Act, the individual group member is liable for costs not only when his or her individual claim is unsuccessful. The group member is liable for his or her own costs, even if the individual claim is successful, although of course in that situation the group member would ordinarily obtain the benefit of a costs order against the respondent. 13 I think that it is desirable for the opt out notice to refer to s 33R of the Federal Court Act. I appreciate that it is impossible to do so in terms that explain the operation of the fee agreement the applicants' solicitors propose to use, not least because there was no evidence before me as to the content of the fee agreement. However, I think that a reference can be made in terms which, although general, are not misleading. In my view, the following formulation is appropriate: "If you do not opt out of the proceedings, you will not be liable for any legal costs merely by remaining a Group Member. That, however, is subject to the qualification that the Court has power under s 33ZJ of the Act to order that the costs reasonably incurred by the Applicants in prosecuting the claim on their behalf and on behalf of the Group Members be paid out of any damages awarded to Group Members in the proceedings, to the extent that they may exceed the costs recoverable by the Applicants from the Bulldogs. In addition, if you seek to prove that you suffered individual loss or damage due to the conduct of the Bulldogs, it is necessary to bear in mind s 33R(2) of the Act, which provides that a group member is liable for costs associated with the determination of issues concerned only with that group member as an individual."

necessity for proof of individual loss or damage 14 There was a minor disagreement as to the form of a paragraph dealing with the need to prove individual loss or damage. I think an appropriate paragraph is as follows: "Unless the proceedings against the Bulldogs are settled, you will need to prove that you have individually suffered loss or damage due to conduct of the Bulldogs described earlier in this notice. To do this you are likely to need legal representation. You are of course free to select your own legal representative. If, however, you wish Clinch Neville Long to act on your behalf for this purpose you will need to enter into a fee agreement with them. To obtain a copy of the fee agreement contact Clinch Neville Long on 9279 4888."

other matters 15 The parties are in agreement that the opt out notice should be available on the websites of both the National Rugby League and the respondent. There is a minor disagreement as to the extent of newspaper publications. In my view, it is appropriate that the opt out notice be published in a national newspaper and in the publication Big League which has (so I am informed) national distribution.

orders 16 I propose to make the following orders:

1. Pursuant to s 33J of the Federal Court Australia Act 1976 ("Federal Court Act"), 4 pm on 19 December 2003 is fixed as the date by which a Group Member may opt out of these proceedings.
2. The form and content of the Notice which is Annexure "A" to these Orders ("Notice") be approved for the purposes of s 33Y of the Federal Court Act.
3. The Notice be placed in the following newspapers and journals/magazines during the week commencing 13 October 2003:
4. 1. Big League Journal,
   2. The Australian newspaper.
5. The Notice be made available on the websites of the National Rugby League Ltd (www.nrl.com.au) and the Bulldogs Rugby League Club Ltd (www.bulldogs.com.au) as from 13 October 2003 until 19 December 2003 or further order.
6. A copy of the Fourth Amended Statement of Claim and Third Amended Application be available for inspection at the offices of Clinch Neville Long, 5th Floor, 99 York Street, Sydney, New South Wales. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville.

Associate: Dated: 3 October 2003 Counsel for the Applicant: Ms V Culkoff

Solicitor for the Applicant: Clinch Neville Long Lawyers

Date of Hearing: 19 September 2003 Date of final submissions: 24 September 2003

ANNEXURE A CLASS ACTION - BULLDOGS RUGBY LEAGUE CLUB LIMITED 2002 PREMIERSHIP ALLEGATIONS OF SALARY CAP BREACHES 1. This notice is issued to you pursuant to the orders of Justice Sackville dated 3 October 2003 and in accordance with the rules of the Federal Court of Australia which govern the conduct of representative proceedings ("Class Actions"). 2. This notice is a very important document which may affect your legal rights. You should read it carefully and, if you do not understand any part of it, you may wish to seek legal advice in relation to its contents. 3. On 17 September 2002 Robert Petrusevski and Robert Spirkovski ("the Applicants") commenced representative proceedings under Part IVA of the Federal Court of Australia Act 1976 ("the Act") in the Federal Court of Australia against the Bulldogs Rugby League Club Limited ("Bulldogs"). 4. The proceedings were commenced on behalf of the Applicants and other Group Members who claim to have suffered financial loss caused by the conduct of the Bulldogs in allegedly making a representation that the Bulldogs were properly eligible to field a team in the 2002 NRL Rugby League Premiership which would entitle the Bulldogs to the sporting and commercial benefits attached to competition points. The representation is said to have been made because of various things said and not said by the Bulldogs on or before 19 August 2002. The representation is said to have been false because (so it is claimed) the Bulldogs breached the salary cap imposed by the NRL for the 2002 Competition. The salary cap breaches and other conduct by the Bulldogs allegedly caused the NRL to strip the Bulldogs of all of their Competition points, placing them last in the Competition. Such conduct is said to have caused loss to the Applicants and other Group Members who had placed bets on the Competition, for which the Applicants seek damages and other relief on behalf of themselves and the Group Members. The Bulldogs do not accept these allegations and are defending the proceedings. 5. Clinch Neville Long are the solicitors acting for the Applicants and some Group Members. Their address is 5th Floor, 99 York Street, Sydney (Telephone: 9279 4888). 6. If you would like to inspect the current Application and Statement of Claim which have been filed with the Court by the Applicants, you may do so at the offices of Clinch Neville Long at the above address between the hours of 9 am and 5 pm Monday to Friday or by inspecting them on an Internet website located at [insert website address]. If you are not connected to the Internet you could enquire at your local public library for Internet access and assistance. The action is numbered N 962 of 2002. WHO IS A GROUP MEMBER: You are a Group Member if you, on or before 19 August 2002: 1. lawfully placed a sum of money by way of a wager or bet ("Bet") on the Bulldogs for the 2002 Competition other than for the Wooden Spoon; 2. lawfully placed a Bet on any team except the Bulldogs to win the Wooden Spoon in the 2002 Competition; 3. placed those Bets by reason of conduct of the Bulldogs generally described above and described more particularly in the Statement of Claim; 4. did not know of the breaches of the salary cap by the Bulldogs which endangered the Competition points; 5. expected the Bulldogs to comply with the requirements of the salary cap; and 6. suffered financial loss as a consequence. If you are a Group Member as defined in these proceedings, you have the right to exclude yourself ("OPT OUT") from these proceedings. Pursuant to Section 33J(1) of the Act the Court has fixed 4 p.m. on 19 December 2003 as the time by which you may Opt Out of the proceedings. If you are not sure whether you are a group member, or whether you should Opt Out of the proceedings, you may contact your solicitor or the Applicants' solicitor, Matthew Hourn of Clinch Neville Long at 99 York Street, Sydney, NSW on telephone: 9279 4888.

IF YOU WISH TO OPT OUT OF THE PROCEEDINGS YOU MUST: Send a Notice in the form below to the following address: The Registrar, New South Wales District Registry Federal Court of Australia Level 16, Law Courts Building Queens Square SYDNEY NSW 2000 The Notice must arrive there by 4 pm on 19 December 2003.

IF YOU DO NOT OPT OUT If you do not Opt Out of the proceedings and you are a Group Member, you will be bound by any judgment made in the proceedings and you will be one of the Group Members on whose behalf the Applicants are conducting the proceedings. If you do not opt out of the proceedings, you will not be liable for any legal costs merely by remaining a Group Member. That, however, is subject to the qualification that the Court has power under s 33ZJ of the Act to order that the costs reasonably incurred by the Applicants in prosecuting the claim on their behalf and on behalf of the Group Members be paid out of any damages awarded to Group Members in the proceedings, to the extent that they may exceed the costs recoverable by the Applicants from the Bulldogs. In addition, if you seek to prove that you suffered individual loss or damage due to the conduct of the Bulldogs, it is necessary to bear in mind s 33R(2) of the Act, which provides that a group member is liable for costs associated with the determination of issues concerned only with that group member as an individual. Unless the proceedings against the Bulldogs are settled, you will need to prove that you have individually suffered loss or damage due to conduct of the Bulldogs described earlier in this notice. To do this you are likely to need legal representation. You are of course free to select your own legal representative. If, however, you wish Clinch Neville Long to act on your behalf for this purpose you will need to enter into a fee agreement with them. To obtain a copy of the fee agreement contact Clinch Neville Long on 9279 4888. As stated above, this Notice is a very important document which may affect your legal rights. You may wish to seek legal advice about this document and, in particular, whether you should Opt Out and the consequences of not opting out.

NOTICE OF OPTING OUT BY GROUP MEMBER Order 73 Rule 6 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY No N 962 of 2002 BETWEEN ROBERT PETRUSEVSKI First Applicant ROBERT SPIRKOVSKI Second Applicant AND BULLDOGS RUGBY LEAGUE CLUB LIMITED Respondent TO: The Registrar Federal Court of Australia New South Wales District Registry Level 16, Law Courts Building Queens Square SYDNEY NSW 2000

I,………………………………………………………………….. [insert full name] a Group Member in the above representative proceedings give notice under Section 88J of the Federal Court of Australia Act 1976 that I am opting out of the proceedings. ……………………………………..[signature of Group Member, or his/her solicitor

……………………………………..[insert address of Group Member] …………………………………….. DATE: ……………………………...