Plaintiff v Defendant

CIVIL PROCEDURE - Group proceedings - In considering an application for approval of a settlement of a group proceeding under s 33V of the Supreme Court Act 1986, whether or not group members object, is a relevant and significant factor, but by no means determinative - Re Banksia Securities Limited (recs and mgrs apptd) [2017] VSC 148 (31 March 2017) considered - Re Banksia Securities Ltd (recs and mgrs apptd) (in liq) (No 2) [2018] VSC 47 (16 February 2018) considered.

WAIVER - Principles of waiver addressed - Commonwealth v Verwayen (1990) 170 CLR 394 considered - Uren v Uren [2018] VSCA 41 considered.

1 Wendy Botsman holds debentures in Banksia Securities Ltd ('Banksia'). Banksia was a non-bank property lender which carried on its business in Kyabram. In October 2012, Banksia collapsed owing approximately $660 million to investors. Trust Company (Nominees) Ltd ('Trust Co') was the trustee for the Banksia debenture fund. In October 2012, Trust Co appointed receivers and managers to Banksia.

2 In December 2012, a group proceeding[1] was commenced in this Court against the directors of Banksia, Banksia auditors, and the trustee for the debenture-holders. The plaintiff was Lawrence John Bolitho on his own behalf and on behalf of all debenture-holders in Banksia as at October 2012. Mrs Botsman was one of those debenture-holders. I will refer to this proceeding as the 'Bolitho Group Proceeding'. Initially, the representative plaintiff's solicitor, Mr Mark Elliott, who acted on a 'no win, no fee' basis, had been responsible for the payment of all external costs and disbursements. On 13 March 2014, Mr Bolitho and a litigation funder now called Australian Funding Partners ('AFPL') entered into a litigation funding agreement. The proceedings were thereafter conducted by AFPL, which had been incorporated for the purpose of funding this particular litigation. AFPL was controlled and run by Mr Mark Elliott, who held a 76-per-cent interest in it. AFPL encouraged debenture-holders to enter into a funding agreement. Some 5600 odd of the approximately 15,622 debenture-holders entered into funding agreements.[2]

3 In June 2014, AFPL sent to Mrs Botsman a document entitled 'Banksia Class Action - Litigation Funding Agreement'. Mrs Botsman admits to having read this document.[3] On 25 March 2015, Mrs Botsman signed a document entitled 'Acknowledgment and Acceptance of Litigation Funding Terms and Conditions' ('Acknowledgment and Acceptance Form').[4] I will refer to these two documents collectively as the 'Litigation Funding Agreement' or the 'LFA'.

4 The plaintiff in this proceeding is AFPL, the litigation funder. AFPL seeks an injunction, both interlocutory and permanent, restraining Mrs Botsman from proceeding with the application for leave to appeal, and any appeal.[5] AFPL alternatively seeks damages in lieu of the injunction pursuant to s 38 of the Supreme Court Act 1986 (Vic). Further, AFPL seeks damages for Mrs Botsman's alleged breach of the Litigation Funding Agreement.

The Bolitho Group Proceeding and the Banksia Proceeding

5 It will be helpful at this point to explain the difference between the related proceedings that involve Banksia. There are two which are relevant: the 'Banksia Proceeding',[6] and the 'Bolitho Group Proceeding'.[7] In the Banksia Proceeding, Banksia, through its receivers and later its special purpose receivers and liquidators,[8] has sought to recover losses allegedly suffered by the company itself as a result of the trustee company's breach of certain duties allegedly owed to Banksia. The Bolitho Group Proceeding, on the other hand, is a group proceeding in which the representative plaintiff, Mr Bolitho, has made claims on behalf of all debenture-holders against Banksia, its directors, its auditors, legal advisors, and others, following the collapse of Banksia.

6 On 12 April 2016, Banksia's special purpose receivers caused Banksia to settle its claims against its directors and officers, its auditors, and its legal advisors, in what has come to be referred to as the 'partial settlement'. The settlement amount was $13.25 million, which I approved on 26 August 2016.[9] The proceedings against the trust company and the auditors continued. The proceeding against the trust company and the auditors was complicated, as mentioned above, because Banksia, by special purpose receivers, itself instituted proceedings against the trust company and Banksia's auditors.

7 On 8 December 2017, Croft J made orders in the Bolitho Group Proceeding providing for the notification to debenture-holders of the proposed settlement with Trust Co.[10] The notification informed the debenture-holders of the procedure to be followed by anyone who wished to object to the proposed settlement. No distinction was drawn between those debenture-holders who had made a funding agreement with AFPL, and those who had not made such an agreement. Appearing at the hearing on 8 December 2017 for the representative plaintiff, Mr Bolitho, was Mr M W L Symons of counsel, junior counsel to Mr N J O'Bryan SC, instructed by solicitors from Portfolio Law.[11]

8 On 19 January 2018, Mrs Botsman filed with the Court a document of submissions prepared by her son Christopher Botsman of counsel, in opposition to the approval of the settlement, and giving grounds for her objection.[12] The submission filed with the Court was unsigned and comprised 15 paragraphs.[13] Mrs Botsman signed a final version of the submission comprising 17 paragraphs, which was filed with the Court on 24 January 2018, replacing the earlier one.[14] Both versions of the submission were referred to by counsel for the representative plaintiff in the Bolitho Group Proceedings, and the representative plaintiff did not challenge Mrs Botsman raising objections to the settlement.[15] In its reply pleadings, AFPL claims that the final version of the submissions was filed in the evening of 24 January 2018, and that it was materially different to the earlier version.[16] This is despite the fact that in the settlement approval hearing of 30 January 2018, Mr O'Bryan SC submitted to the Court that, although there were a few minor differences between the first and second versions, 'nothing of substance' had changed.[17] As discussed later, it is contended by AFPL that Mrs Botsman's objections were out of time.[18]

9 On 30 January 2018, this Court approved the settlement between Mr Bolitho and the trust company and auditors,[19] and later gave detailed and comprehensive reasons for doing so.[20] Croft J ordered that AFPL be paid a commission of $12.8 million (plus GST) and $4.75 million (plus GST) for legal costs and disbursements incurred. On 26 March 2018, Mrs Botsman sought leave to appeal against the decision of his Honour. The application for leave to appeal is to be heard on 8 June 2018.

10 Neither Mrs Botsman nor her son attended the hearing on 30 January 2018 at which the settlement was approved.[21] The written submissions filed with the Court foreshadowed and explained her absence.[22] AFPL claims that neither Mrs Botsman nor Mr Botsman made any attempt to appear by video link or telephone.[23] As for the reasons published by Croft J on 16 February 2018,[24] Mrs Botsman claims that those reasons do not address the objections which she raised to the settlement.[25]

11 On 20 March 2018, Mrs Botsman caused an application to be filed in the Court of Appeal seeking leave to appeal the orders of Croft J dated 30 January 2018.[26] Mrs Botsman claims that the period for appealing from those orders did not expire until 3 April 2018.[27] Mrs Botsman claims that as a result of s 33ZC(5) of the Supreme Court Act 1986 (Vic) and of a 'Notice to Profession',[28] the appeal period did not expire until 3 April 2018. AFPL denies this, claiming that the Notice to Profession published by the Court of Appeal and titled 'Applications for Extension of Time under Rule 64.08 of the Supreme Court (General Civil Procedure) Rules 2015' only addresses the procedures for applying for an extension of time.[29] AFPL submits that the Notice to Profession does not extend the time within which to commence an appeal.

12 As mentioned above, AFPL seeks by this proceeding, in which it is the plaintiff, a mandatory injunction against Mrs Botsman, the defendant, to restrain her from seeking leave to appeal against the decision of Croft J to approve the settlement of Mr Bolitho's representative claim against the trust company and the auditors.

The terms of the Litigation Funding Agreement

14 The central issue in the hearing before me is whether Mrs Botsman's application for leave to appeal breaches the LFA. Although it is agreed by both parties that the following clauses appear in the written document, the construction and effect of those clauses are disputed.[30]

15 In bringing these proceedings against Mrs Botsman, AFPL does not rely on any grounds other than those founded in the terms of the LFA. AFPL does not challenge Mrs Botsman's standing to apply for leave to appeal; nor does AFPL allege in these proceedings that Mrs Botsman's appeal is hopeless.[31]

17 The LFA defines 'Lawyers' to mean Mark Elliott of Level 2, 90 William Street, Melbourne, 3000, or any other solicitors appointed in his place, as agreed between the funder and the representative plaintiff.

18 The representative plaintiff was defined as Lawrence Bolitho of Kyabram.

19 The LFA defines 'Plaintiff' relevantly to mean 'any company or individual who has agreed with [AFPL] to be bound by this Agreement.' I will refer to any person who has agreed to be bound by the LFA as a 'funded group member'.

20 Clause 5.1(a) of the LFA states that a funded group member agrees that 'the Lawyers' and AFPL will determine what claims should be pursued in the proceedings. Clause 5.1(b) states that:

[AFPL] will give day-to-day instructions to the Lawyers on all matters concerning the Claims and the Proceedings and may give binding instructions to the Lawyers and make binding decisions on behalf of the [funded group member] in relation to the Claims.

AFPL and Mrs Botsman particularly disagree as to the construction and effect of this clause of the LFA.[32] Mrs Botsman alleges that if the clause is to be constructed as AFPL alleges it should, then it is void as against public policy.[33]

21 Clause 6 of the LFA sets out the obligations of funded group members. Clause 6.1 relevantly states that:

For the duration of [the LFA], the [funded group member] must:

(a) subject to [the LFA], follow all reasonable legal advice given by the Lawyers and by counsel retained by the Lawyers in relation to the Proceedings and the Claims;

...

(e) comply with all orders of the Court and all statutory provisions ... which apply to the [funded group member] in relation to the Claims and Proceedings;

...

(i) take all appropriate action to diligently enforce any judgment obtained in the Proceedings against any Defendant.

For the duration of [the LFA], the [funded group member] must not, without the prior written consent of [AFPL]:

(a) discontinue, abandon, withdraw or settle the Proceedings or the Claims against any Defendant or make any admission in relation to the Claims;

(b) subject to clause 13, reject any Settlement offer made by any Defendant;

...

(d) terminate the retainer of the Lawyers or retain any other solicitors in place of the Lawyers.

23 Clause 6.3(a) of the LFA relevantly states that for the duration of the LFA, the funded group member instructs 'the Lawyers' to 'comply with all instructions' given by AFPL or as set out in the LFA, subject to cl 13.

24 Clause 13 of the LFA is titled 'The Lawyers' Retainer and Settlement.' Clause 13.2 relevantly states that:

[AFPL] will give day-to-day instructions to the Lawyers on all matters concerning the Claims and the Proceedings, however the [funded group member] may override any instructions given by [AFPL] in so far as it concerns any Claim of the [funded group member] by the [funded group member] giving instructions to the Lawyers.

25 Clause 13.5 provides a mechanism for resolving disagreements between the litigation funder and funded group members in relation to proposed settlements. The LFA prescribes that the opinion of counsel should be sought, and followed, to resolve such disagreements, '[i]n recognition of the fact that [AFPL] has an interest in the Resolution Sum.' The phrase 'Resolution Sum' is defined in the LFA to mean 'any money received or payment made to settle, compromise or resolve one or more or all of the Claims'.

26 Clause 13.5 merits a more detailed explanation. It relevantly states that if a funded group member wants to settle the proceedings for less than AFPL 'considers appropriate', or does not want to settle the proceedings, when AFPL 'considers it appropriate to do so', then the funded group member and AFPL must 'seek to resolve their difference of opinion' by referring it to counsel. Counsel will then advise whether, in counsel's opinion, the terms of the proposed settlement are 'fair and reasonable in all of the circumstances.'

If Counsel's opinion is that the Settlement is fair and reasonable then the [funded group member] and [AFPL] agree that the Lawyers will be instructed to do all that is necessary to settle the Class Action provided that the approval of the Court is sought and obtained.

28 As stated above,[34] Croft J approved the settlement on 30 January 2018.[35] In doing so, his Honour ordered that AFPL be paid a commission of $12.8 million (plus GST) and $4.75 million (plus GST) for legal costs and disbursements incurred. These distributions have not occurred because Mrs Botsman has applied for leave to appeal. AFPL submits that it is 'suffering loss or damage because it has been held out of the money that Justice Croft ordered should be paid to it.'[36]

29 AFPL submits that Mrs Botsman's application for leave to appeal from Croft J's decision constitutes a breach of the Litigation Funding Agreement. AFPL bases this submission on a 'bare textual analysis of the contract',[37] relying especially on five points.

30 First, AFPL refers to its empowerment under the LFA to give 'day-to-day instructions' to 'the Lawyers' and to make binding decisions on behalf of funded group members.[38] AFPL also cites cl 6.3(a) of the LFA, under which funded group members purportedly instruct 'the Lawyers' to 'comply with all instructions' given by AFPL, subject to cl 13.[39] AFPL submits that this purported instruction 'extends to deciding whether to settle the proceeding.'[40]

31 Secondly, AFPL cites the alleged contractual obligation of funded group members 'to follow all reasonable legal advice given by the Lawyers and by counsel retained by the Lawyers.'[41] AFPL asserts that the advice 'was evidently to settle the proceeding on the terms of the settlement deed.'[42]

32 Thirdly, AFPL refers to the alleged contractual obligations of funded group members to comply with Court orders and to 'take all appropriate action to diligently enforce any judgment obtained in the Proceedings against any Defendant.'[43] AFPL submits that these clauses oblige Mrs Botsman to 'abide by' Croft J's decision to approve the settlement.[44]

33 Fourthly, AFPL refers to the contractual mechanism for resolving disagreements between AFPL and funded group members as to proposed settlements.[45] A crucial factual submission in AFPL's case, is that this mechanism was available to Mrs Botsman, but that she chose not to avail herself of it.[46] AFPL further submits that the inclusion of this mechanism in the LFA implies a 'negative stipulation that a dispute between funder and funded group member not be determined through court process.'[47]

34 Fifthly, AFPL refers to cl 16.1, which provides that neither party will do anything 'likely to deprive any party of the benefit for which the party entered into [the LFA].'[48] AFPL points to Croft J's decision approving the settlement, and submits that Mrs Botsman's application for leave to appeal deprives it of the benefit of the LFA.[49]

35 AFPL contends that its interpretation of the LFA is supported by the LFA's context and purpose.[50] AFPL submits, in relation to the LFA, that '[i]ts very nature and evident purpose is to clothe [AFPL] as the agent of [Mrs Botsman] in pursuing the Bolitho Group Proceeding.'

36 In addition, AFPL submits that the construction of the contract for which it contends should be preferred, because it is the reasonable commercial construction. AFPL submits that Mrs Botsman did not make use of this mechanism. AFPL submits that when funded group members fail to raise objections via the mechanism in cls 13.5-13.6 of the LFA, then '[i]t is in the very nature of funding agreements that funded group members are taken to have authorised the pursuit of the proceeding, including to settlement.'[51] AFPL submits that '[a] funded representative proceeding [such as the Bolitho Group Proceeding] could not realistically operate otherwise.'[52]

37 Mrs Botsman raises three defences. First, she submits that AFPL has waived any rights it now pleads that it has to prevent Mrs Botsman from prosecuting her application for leave to appeal and her appeal.[53] Secondly, she makes an argument that the relevant provisions of the LFA are void, for being against public policy.[54] Thirdly, Mrs Botsman alleges that these proceedings constitute an abuse of process, having been commenced by AFPL for the dominant and collateral purpose of pressuring her into withdrawing her application for leave to appeal.[55]

38 Mrs Botsman raises five reasons why AFPL's 'reliance on the terms of the [LFA] is misconceived.'[56] Firstly, Mrs Botsman claims that AFPL has itself breached an allegedly essential term of the LFA, namely cl 13.5.[57] In Mrs Botsman's submission, this clause envisages that AFPL will show the settlement terms to group members before the deed of settlement is entered into. Mrs Botsman alleges that AFPL breached this clause in that it did not disclose the terms of the settlement to her prior to execution of the settlement deed.[58] This is denied by AFPL.[59] Mrs Botsman claims that group members were only advised of some, and not all, of the features of the settlement in the context of Court approval. Alternatively, if cl 13.5 is to be construed as envisaging that group members would be consulted at the stage when the settlement goes to the Court for approval, then Mrs Botsman claims that AFPL failed to deploy the resolution mechanism required by clause 13.5,[60] and thereby itself breached the LFA.[61] Mrs Botsman claims that she was 'effectively blindfolded' due to the broad nature of the confidentiality regime imposed by AFPL.[62] Mrs Botsman alleges that AFPL was the only party in a position to identify differences of opinion and invoke the resolution mechanism.

39 Secondly, Mrs Botsman claims that no evidence has been adduced of instructions or decisions prohibiting Mrs Botsman from filing the application for leave to appeal.[63] Mrs Botsman claims that the evidence is that she was advised by a court-approved statutory notice issued by Portfolio Law that she could object to settlement.[64] Mrs Botsman claims that this undermines the allegation that her actions have breached cl 5.1 of the LFA.

40 Thirdly, Mrs Botsman claims that there is no evidence of her having been advised, by Mr Bolitho's lawyers, not to file the application for leave to appeal.[65] Mrs Botsman claims that this undermines the allegation that her actions have breached cl 6.1(a) of the LFA.[66]

41 Fourthly, Mrs Botsman claims that there is no evidence that AFPL instructed her not to appeal, and that 'it cannot sensibly be suggested that the Approval Orders [of Croft J] thereby abrogated [her] statutory or general rights of appeal.'[67] Mrs Botsman claims that this undermines the allegation that her actions have breached cls 6.3(a) and (b) of the LFA.[68]

42 Fifthly, Mrs Botsman refers to the divergence in interests of group members and AFPL at settlement. She claims AFPL's commission and entitlement to legal costs in the Bolitho Group Proceeding should be reduced, because it was the special purpose receivers (prosecuting the Banksia Proceeding) who 'shouldered most of the practical, evidentiary and financial burden of the conduct of the proceedings.'[69] A reduction in AFPL's entitlement to payment would be a benefit to group members. Mrs Botsman claims that this undermines the allegation that her actions have breached cl 16.1 of the LFA.[70]

43 Mrs Botsman further claims that there is currently no settlement sum that would trigger the operation of cls 9.1-9.3 of the LFA.[71] This is because there is an ongoing dispute about provisions of the Settlement Deed which makes the distribution conditional on the final determination of appeals. Mrs Botsman claims that these factors undermine the allegations that her actions have breached cls 9.1-9.3 of the LFA.[72]

44 AFPL claims that by reason of the alleged breached of the LFA, it has suffered and will suffer loss and damage.[73] In answer to this, Mrs Botsman denies that she has breached the contract, and says further that no claim for loss or damage can arise in the circumstances of these proceedings.

45 Mrs Botsman claims that the doctrine of waiver is relevant in these proceedings. She claims that AFPL 'has acted in a manner that is wholly inconsistent with the assertion of any supposed contractual right to prevent [her] from exercising her statutory rights of objection and appeal.'[74] Mrs Botsman points to two acts of AFPL's that she claims are inconsistent with any right of AFPL to preclude her from applying for leave to appeal. First, AFPL invited group members to make objections. AFPL did this via the court-approved notice to debenture-holders issued under s 33X of the Supreme Court Act 1986 (Vic).[75] Secondly, AFPL appeared at the approval hearing and did not raise any argument that the making of such objections by Mrs Botsman was a breach of the LFA.[76]

46 The word 'waiver' is a flexible term that has several senses.[77] The two main senses of waiver are estoppel and election.[78] The sense that is relevant in these proceedings is that of estoppel. There are several situations in which an estoppel-type waiver may occur. One of them is where a party, by reason of words or conduct, becomes disentitled to enforce a right conferred by a contract.[79] This will be the case where the conduct of one party renders it unfair, inequitable or unconscionable for that party to insist on the right.[80]

47 The High Court considered the principle of waiver in the decision of Commonwealth v Verwayen.[81] The High Court split 4:3 in this case, with each of the seven judges writing his or her own judgment.

48 Mason CJ stated that, '[a]ccording to its strict legal connotation, waiver is an intentional act done with knowledge whereby a person abandons a right by acting in a manner inconsistent with that right'.[82]

49 Brennan J stated that 'a right is waived only when the time comes for its exercise and the party for whose sole benefit it has been introduced, knowingly abstains from exercising it.'[83]

[A] party to litigation will be held to a position previously taken (that position having been intentionally taken with knowledge) if, as a result of that earlier position, the relationship of the parties has changed ... By analogy with the general law of estoppel, one may treat the doctrine as operating by reference to an assumption that a particular relationship has been constituted, which assumption has been occasioned by the deliberate failure to take an available point when it comes to notice. But the doctrine does not require proof that detriment will be suffered. Rather, to continue the analogy, it presumes that putting the parties back in some earlier relationship is, itself, a detriment.[84]

51 The waiver issue in the current proceedings, then, is whether AFPL's invitation to group members to make objections, and its decision not to take issue with the objections of Mrs Botsman, constitute intentional acts, performed with knowledge, that are inconsistent with the alleged right to preclude Mrs Botsman from prosecuting her application for leave to appeal and her appeal. Did AFPL, for whose sole benefit the right of preclusion allegedly exists, knowingly abstain from exercising that right when the time for exercising it arose?

52 At this point it is helpful to consider the statutory regime in place to regulate group proceedings. Part 4A of the Supreme Court Act 1986 (Vic) is titled 'Group proceeding'. It was inserted into the Act in 2000,[85] and was deemed to have come into operation on 1 January 2000.[86] It is based on 33V of pt IVA of the Federal Court of Australia Act 1976 (Cth).

53 In the decision of Johnson Tiles Pty Ltd v Esso Australia Pty Ltd,[87] Gillard J described the object of group proceedings as follows:[88]

The object of a group proceeding procedure is to enable a proceeding to be brought by a substantial number of victims of an alleged wrong committed by the same wrongdoer, thereby pooling resources and ensuring the Court's resources are used efficiently and expeditiously. It has been recognised that an individual may be deterred from taking on a large financially secure party and the group proceeding legislation is aimed at enabling individuals to band together to bring a proceeding. The guiding principle of Part 4A, is justice.

54 Section 33V of the Supreme Court Act 1986 (Vic) provides relevantly that in order for a group proceeding to be settled, the court's approval must be obtained. The role of the court under s 33V, is to consider whether the settlement is in the interests of all group members. To that end, the court must consider whether the settlement is fair and reasonable, and in doing so must have regard to the claims made on behalf of the group members who would be bound by the settlement.[89]

55 Mrs Botsman claims that she was authorised by s 33ZC(5) of the Supreme Court Act 1986 (Vic) to file an application for leave to appeal on behalf of other group members.[90] Section 33ZC(5) relevantly provides that if the representative plaintiff of a group proceeding does not commence an appeal within the time provided, another member of the group may, within a further 21 days, commence an appeal as representing the group members.

56 Mrs Botsman submits that the statutory regime providing for objections is a mechanism for group members to raise concerns as to the proposed settlement. She submits further that '[t]he right to appeal any decision approving the settlement is the logical extension of the right to make an objection.'[91]

57 As mentioned above,[92] group members were given notice of the Trust Co settlement in the manner ordered by Croft J on 8 December 2017. The seven-page notice disclosed the terms of the proposed settlement in detail, including AFPL's proposed commission of $12.8 million.[93] The notice also informs group members that they have the right to object. In bold, and in a prominent part of the notice, appears the following text: 'If you are a Group Member, you have the right to object to or support the settlement of the Banksia Group Proceeding. If you support the settlement, you do not need to take any action.'

58 On the fifth page of the notice appears the following paragraph, in bold:

If you are a Group Member and you wish to oppose the proposed settlement, you may need to attend and make submissions to the Court in Melbourne on 30 January 2018. On that day the Court will hear the application for approval of the proposed settlement. If you intend to oppose the proposed settlement, you must first deliver to Portfolio Law Pty Ltd and the Supreme Court of Victoria, at the addresses below, by no later than 4.00pm (AEST) on 19 January 2018:

(a) written notice of your objection;

(b) any reasons for objecting; and

(c) any affidavit or other evidence on which you intend to rely.

59 On the final page of the notice, beneath the heading 'Further information', appear the words: 'If you require further information about the proposed settlement, you may contact Portfolio Law Pty Ltd who are the solicitors for the Plaintiff.' The notice then gives the address and telephone number of Portfolio Law Pty Ltd. The notice continues: 'Further information and relevant documents are also available from the website www.banksiaclassaction.com.au.'

60 In my opinion, it is implicit in a group member having the right to object and appear, upon the hearing by the plaintiff in a group proceeding for an order that the settlement be approved by the Court under s 33V of the Supreme Court Act 1986 (Vic), that the objecting group member, has such appeal rights that the law affords, in the event that the objection is unsuccessful, or on such other ground that the law recognises.

61 Under cross-examination, Mr Elliott gave evidence that he saw the notice before it was sent to group members, and he agreed that he had approved it.[94] He gave evidence that he saw that the notice declared itself to have two purposes: first, to inform group members that the representative plaintiff had settled the claims, subject to court approval; and secondly, to inform them that they had a right to object to the proposed settlement.[95]

62 It is AFPL's conduct of sending out the notice which Mrs Botsman points to as being one of the acts that is inconsistent with any right AFPL may have had to prevent her from prosecuting her leave to appeal.[96] I find that by sending of this notice to Mrs Botsman (and other group members) to inform her of her statutory rights, AFPL has acted in a manner that would make it fundamentally unfair, inequitable or unconscionable for it to assert subsequently that Mrs Botsman's exercise of her rights was contrary to the LFA. Mrs Botsman has lodged objections, filed a notice for leave to appeal, and appeared for direction in the Court of Appeal.

63 The second act pointed to by Mrs Botsman is AFPL's decision not to take issue with her objections to the proposed settlement at the hearing on 30 January 2018. AFPL sought and was granted leave to appear at this hearing.[97] It was represented by Mr K Loxley of counsel, instructed by Elliott Legal Pty Ltd. Elliott Legal Pty Ltd is a small law firm owned by Mr Elliott.[98] It is clear, then, that the interests of AFPL were amply represented at this hearing.

64 Mr Elliott gave evidence that he did not attend the settlement approval hearing.[99] He was aware, however, that AFPL sought and obtained leave to appear, and that it was represented by counsel. In relation to the two documents of submissions which Mrs Botsman filed with the Court on 19 and 24 January 2018,[100] Mr Elliott gave evidence that the issue of whether the documents constituted valid objections was brought to the attention of Croft J.[101] Mr Elliott did, however, agree that at the hearing on 30 January 2018, counsel for AFPL did not make submissions that those documents were invalid as objections.[102] More specifically, Mr Elliott agreed that neither counsel for AFPL nor counsel for Mr Bolitho made a point at the hearing of 30 January 2018 about Mrs Botsman's documents not being lodged on time.

65 At this hearing, neither counsel for the representative plaintiff nor counsel for AFPL suggested to the Court that Mrs Botsman or any other group member had entered into arrangements which would preclude them from objecting to the settlement.[103] Nor did they, at this hearing, display any opposition to Mrs Botsman's objections to the proposed settlement.[104] At no point prior to Mrs Botsman's filing of the application for leave to appeal, did AFPL advise her that any such application would constitute a breach of the LFA.[105] It was only much later, after Mrs Botsman had filed her application for leave to appeal on 20 March 2018,[106] that AFPL took issue with her objections to the proposed settlement. AFPL filed its originating process in these proceedings on 29 March 2018.

66 I will now describe some of the evidence which Mr Elliott gave under cross-examination. This evidence goes to establishing that Mr Elliott believed that AFPL had the power under the LFA to run the representative plaintiff's case in the Bolitho Group Proceeding, including to settle claims. The belief of Mr Elliott, as a director of AFPL, that he had the right to settle claims, subject to court approval, and provided that no funded group member invoked cl 13.5 of the LFA, demonstrates that when AFPL decided not to take issue with the raising of objections by Mrs Botsman, it did so with the requisite intent and knowledge to constitute a waiver of the aforementioned right.

67 Mr Elliott gave evidence that he views the LFA as an agency agreement.[107] He considers himself empowered under the LFA to 'run the litigation' as he sees fit, 'subject to all of the caveats and protections' of the LFA. Mr Elliott said, in reference to the Bolitho Group Proceedings, that he has responsibility for 'the day-to-day conduct and management of the proceedings.'[108] He considers that he has 'authority to settle' the proceedings.[109]

68 Under cross-examination, Mr Elliott gave evidence that he believes the LFA gives him authority to settle proceedings, subject to court approval:[110]

Clauses 5 and 6 give me conduct of the proceeding, including actual authority to settle the proceeding, and in particular cl 16 gives me protection to ensure that I am not deprived of the benefit of the bargain.

69 AFPL's decision not to take issue with Mrs Botsman's objections at the settlement approval hearing of 30 January 2018 evokes the principle of Anshun estoppel.[111] The case of Port of Melbourne Authority v Anshun Pty Ltd stands for the proposition that a plaintiff will be estopped from pursuing a claim if the claim or issue was so connected to the subject matter of an earlier proceeding as to make it unreasonable, in the context of that earlier proceeding, for the claim or issue not to have been made or raised in it.[112]

70 AFPL had an opportunity at the hearing of 30 January 2018 to take issue with Mrs Botsman's objection. It should have used that opportunity to express any concerns it had that Mrs Botsman's objections (and, by extension, any application for leave to appeal which flowed from that objection) constituted a breach of the LFA. To have allowed Mrs Botsman's objections to go unremarked upon at the approval hearing, and then to obstruct her from appealing the decision of Croft J, would constitute unconscionable conduct.

71 I infer that AFPL waived any right it had for tactical purposes to obtain the Court's approval of the proposed settlement. AFPL's decision not to take issue with Mrs Botsman's objection at the settlement approval hearing on 30 January 2018 may have been motivated by self-interest. It is reasonable to suggest that the Court may have been reluctant to approve the proposed settlement in circumstances where the funded group members were not entitled to object to the proposed settlement. This is particularly so when there is nothing in the Supreme Court Act 1986 (Vic), which is the statute establishing the group proceeding regime in this jurisdiction, to suggest that a group member should not be allowed to object to a proposed settlement or appeal against the approval thereof.

72 In view of the opinion which I expressed in my reasons for approving the partial settlement in the Bolitho Group Proceeding,[113] it may be that AFPL was motivated by its desire to secure the Court's approval, and thus to receive the $18,025,000 to which the deed of settlement would entitle it.[114] In my reasons for approving the partial settlement in the Bolitho Group Proceeding, I took into consideration the fact that none of the group members had made objections.[115] I held that the extent to which group members make objections is 'relevant and significant', but 'by no means determinative.'[116] As a result of my having expressed this view, AFPL may be said to have been made keenly aware of how the group members' objections were relevant to the Court's consideration of whether or not to approve the settlement.

73 AFPL's awareness suggests that it made a deliberate, knowing decision not to inform the Court that it regarded funded group members as being contractually restrained from exercising their statutory rights to object (and, by extension, to apply for leave to appeal).

74 As it happens, Croft J did indeed take into account the objections made against the proposed settlement.[117] His Honour found that the objections of group members were relevant to his decision to approve the settlement (as I also found in my decision approving the partial settlement).[118] There are five instances in the reasons of Croft J where his Honour takes into consideration the number of objections from group members,[119] most prominently at paragraph [18], where his Honour notes that:

Only two objections to the proposed settlement, and the granting of this application, were received as a result of the giving of notice of the hearing of the application for approval of this settlement, namely from Mr Chris Botsman on behalf of his mother, Ms Wendy Botsman, a Banksia debenture holder, and from Mr Keith Pitman and also on behalf of his wife, both also debenture holders.

75 Now that AFPL has secured the benefit of the Court's approval of the settlement - approval which the Court granted after considering the entitlement and proclivity of group members to object - AFPL seeks to deny the existence of that entitlement for funded group members.

76 I should at this point note that my references to the reasons of Croft J should not be understood as a review of his Honour's judgment or an assessment of the merits of Mrs Botsman's grounds of appeal. Rather, I refer to the reasons of Croft J to support my finding, that the conduct constituting AFPL's waiver was intentional. I should by no means be taken to be critiquing his Honour's judgment or assessing the merits of Mrs Botsman's grounds of appeal.

77 I find that AFPL's actions, as described above,[120] are inconsistent with any right AFPL may have had to prevent Mrs Botsman from objecting to the settlement. As a result, AFPL has waived any such right. The consequence of AFPL's waiver is that it has relinquished any right that it may have had to preclude Mrs Botsman from advancing her application for leave to appeal and her appeal.

Construction of the Litigation Funding Agreement

78 Given that AFPL's submissions focused on how the LFA should be constructed,[121] I will make a few observations on that issue.

79 It is not necessary for me to decide whether there is a contractual term which confers rights on AFPL to preclude Mrs Botsman from pursuing her application for leave to appeal and her appeal. If it is the case that there is a term which, when properly constructed, confers such a right on AFPL, then AFPL has waived that right by reason of the estoppel. If there is no term conferring such a right on AFPL, then Mrs Botsman is free to prosecute her appeal. Either way, the LFA will not afford to AFPL an avenue for obtaining the sought injunction against Mrs Botsman.

80 There are other factors that have contributed to my decision not to make findings on the construction of the terms of the LFA. First, there is the pressure of time in these proceedings, namely the need to hand down judgment before 8 June 2018, when Mrs Botsman's application is listed for hearing in the Court of Appeal. Secondly, I have been conscious of the possibility that the Court of Appeal may find it necessary in its deliberations to consider issues of construction in the appeal against the decision of Croft J. It is not my role to review the accuracy or errors of his Honour's reasons for judgment; that is a job reserved for the Court of Appeal.

81 I will make one further observation on the construction of the LFA. As discussed above,[122] AFPL contends that the LFA's 'very nature' and 'evident purpose' support a certain construction of its terms.[123] I note that courts take an objective approach to the construction of contracts: the aim is to give effect to the parties' intentions, but those intentions are to be determined objectively.[124] Evidence as to the circumstances in which the contract was made, such as its 'purpose', may only be admitted in cases where the meaning of a term is ambiguous.[125] Whether the relevant terms of the LFA are ambiguous, and whether there is extraneous material demonstrating that the 'evident purpose' of the LFA supports a construction that would limit the rights of funded group members to object and appeal, are not questions that I have addressed in these reasons.

82 I will make orders dismissing AFPL's application for an injunction and for damages. I will hear the parties on costs.

[2] See Re Banksia Securities Ltd (recs and mgrs apptd) (in liq) (No 2) [2018] VSC 47 (16 February 2018) [1] (Croft J).

[3] Botsman, Amended Defence to Statement of Claim, 25 May 2018, [4a].

[4] Botsman, Amended Defence to Statement of Claim, 25 May 2018, [4b].

[5] See proceeding S APCI 2018 0037 in the Court of Appeal.

[8] Special purpose receivers were appointed to Banksia by order of Black J of the Supreme Court of New South Wales.

[9] Re Banksia Securities Ltd (recs and mgrs apptd) [2017] VSC 148 (31 March 2017).

[10] The order was made pursuant to the Supreme Court Act 1986 (Vic) s 33Y(1).

[11] Although the schedule of appearances attached to the orders of Croft J dated 8 December 2017 indicate that senior counsel Mr N J O'Bryan SC appeared, it is evident from the transcript that he was not present: see Transcript of Proceedings, Bolitho v Banksia Securities Ltd (Supreme Court of Victoria, S CI 2012 07185, Croft J, 8 December 2017) 18.

[12] AFPL, Amended Statement of Claim, 24 May 2018, [8]; Botsman, Amended Defence to Statement of Claim, 24 May 2018, [8(a)].

[13] Botsman, Amended Defence to Statement of Claim, 24 May 2018, [8(b)]; AFPL, Reply, 20 April 2018, [4(a)].

[14] Botsman, Amended Defence to Statement of Claim, 24 May 2018, [8(c)]; AFPL, Reply, 20 April 2018, [4(b)].

[15] Botsman, Amended Defence to Statement of Claim, 24 May 2018, [8(d)]; AFPL, Reply, 20 April 2018, [4(c)].

[16] AFPL, Reply, 20 April 2018, [4(b)(i)-(ii)].

[17] Transcript of Proceedings (Supreme Court of Victoria, S CI 2012 07185 and S CI 2017 05023, 30 January 2018) 3 (N O'Bryan).

[18] See below at [64].

[19] Orders of Croft J dated 30 January 2018 in proceedings S CI 2017 05023 and S CI 2012 07185.

[20] Re Banksia Securities Ltd (recs and mgrs apptd) (in liq) (No 2) [2018] VSC 47 (16 February 2018).

[21] AFPL, Amended Statement of Claim, 24 May 2018, [9]; Botsman, Amended Defence to Statement of Claim, 24 May 2018, [9(b)].

[22] Botsman, Amended Defence to Statement of Claim, 24 May 2018, [9(c)]; AFPL, Reply, 20 April 2018, [5].

[23] AFPL, Reply, 20 April 2018, [5].

[24] Re Banksia Securities Ltd (recs and mgrs apptd) (in liq) (No 2) [2018] VSC 47 (16 February 2018).

[25] Botsman, 'Amended Defence to Statement of Claim, 24 May 2018, [10(b)].

[26] AFPL, Amended Statement of Claim, 24 May 2018, [11]; Botsman, Amended Defence to Statement of Claim, 24 May 2018, [11].

[27] Botsman, Amended Defence to Statement of Claim, 24 May 2018, [11(b)], [12(b)].

[28] See Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 64.08.

[29] AFPL, Reply, 20 April 2018, [6].

[30] Botsman, Amended Defence to Statement of Claim, 24 May 2018, [5].

[31] Transcript of Proceedings (S ECI 2018 00076, Robson J, 25 May 2018) 109 (S R Horgan).

[32] Botsman, Amended Defence to Statement of Claim, 24 May 2018, [5(a)].

[33] Botsman, Amended Defence to Statement of Claim, 24 May 2018, [5(a)]. See also below at [37].

[34] See above at [9].

[35] Re Banksia Securities Ltd (recs and mgrs apptd) (in liq) (No 2) [2018] VSC 47 (16 February 2018).

[36] AFPL, 'Opening Submissions of the Plaintiff', 18 May 2018, [7].

[37] AFPL, 'Opening Submissions of the Plaintiff', 18 May 2018, [10].

[38] Clause 5.1, discussed above at [20]; AFPL, Amended Statement of Claim, 24 May 2018, [13(a)].

[39] See above at [23].

[40] AFPL, 'Opening Submissions of the Plaintiff', 18 May 2018, [11].

[41] Clause 6.1(a), discussed above at [21]; AFPL, Amended Statement of Claim, 24 May 2018, [13(b)].

[42] AFPL, 'Opening Submissions of the Plaintiff', 18 May 2018, [12].

[43] Clauses 6.1(e), (i), discussed above at [21].

[44] AFPL, 'Opening Submissions of the Plaintiff', 18 May 2018, [13].

[45] Clauses 13.5-13.6, discussed above at [25]-[27].

[46] Transcript of Proceedings (24 May 2018) 48-49 (M Elliott).

[47] AFPL, 'Opening Submissions of the Plaintiff', 18 May 2018, [14].

[48] AFPL, Amended Statement of Claim, 24 May 2018, [13(e)].

[49] AFPL, 'Opening Submissions of the Plaintiff', 18 May 2018, [15].

[50] AFPL, 'Opening Submissions of the Plaintiff', 18 May 2018, [16].

[51] AFPL, 'Opening Submissions of the Plaintiff', 18 May 2018, [16].

[52] AFPL, 'Opening Submissions of the Plaintiff', 18 May 2018, [16]. See also Transcript of Proceedings (S ECI 2018 00076, Robson J, 25 May 2018) 248 (S R Horgan).

[53] Botsman, 'Amended Defence to Statement of Claim', 24 May 2018, [31].

[54] Botsman, 'Amended Defence to Statement of Claim', 24 May 2018, [16], [32]-[33].

[55] Botsman, 'Amended Defence to Statement of Claim', 24 May 2018, [44].

[56] Botsman, 'Mrs Botsman's Outline of Submissions for Hearing on 24-25 May 2018', 19 May 2018, [14].

[57] Botsman, 'Mrs Botsman's Outline of Submissions for Hearing on 24-25 May 2018', 19 May 2018, [15].

[58] Botsman, Amended Defence to Statement of Claim, 24 May 2018, [18].

[59] AFPL, Reply, 20 April 2018, [11].

[60] Botsman, 'Mrs Botsman's Outline of Submissions for Hearing on 24-25 May 2018', 19 May 2018, [15].

[61] Botsman, 'Mrs Botsman's Outline of Submissions for Hearing on 24-25 May 2018', 19 May 2018, [19].

[62] Botsman, 'Mrs Botsman's Outline of Submissions for Hearing on 24-25 May 2018', 19 May 2018, [15].

[63] Botsman, 'Mrs Botsman's Outline of Submissions for Hearing on 24-25 May 2018', 19 May 2018, [16].

[64] See below at [57]-[59].

[65] Botsman, 'Mrs Botsman's Outline of Submissions for Hearing on 24-25 May 2018', 19 May 2018, [17].

[66] AFPL, Amended Statement of Claim, 24 May 2018, [13(b)].

[67] Botsman, 'Mrs Botsman's Outline of Submissions for Hearing on 24-25 May 2018', 19 May 2018, [18].

[68] AFPL, Amended Statement of Claim, 24 May 2018, [13(c)].

[69] Botsman, Application for Leave to Appeal, in S APCI 2018 0037, 20 March 2018.

[70] AFPL, Amended Statement of Claim, 24 May 2018, [13(e)].

[71] Botsman, 'Mrs Botsman's Outline of Submissions for Hearing on 24-25 May 2018', 19 May 2018, [20].

[72] AFPL, Amended Statement of Claim, 24 May 2018, [13(e)].

[73] AFPL, Amended Statement of Claim, 24 May 2018, [15].

[74] Botsman, 'Mrs Botsman's Outline of Submissions for Hearing on 24-25 May 2018', 19 May 2018, [21].

[75] Botsman, 'Mrs Botsman's Outline of Submissions for Hearing on 24-25 May 2018', 19 May 2018, [23].

[76] Botsman, 'Mrs Botsman's Outline of Submissions for Hearing on 24-25 May 2018', 19 May 2018, [23].

[77] Mulcahy v Hoyne [1925] HCA 17; (1925) 36 CLR 41, 53 (Isaacs J).

[78] Commonwealth v Verwayen (1990) 170 CLR 394, 472 (Toohey J) ('Verwayen'), quoting Butterworths, Halsbury's Laws of England, vol 16 (4th ed, 1976) 7 Equitable Defences, '2 Release and Waiver' [1471]. See further Uren v Uren [2018] VSCA 141 (1 June 2018) [156] (Santamaria, Kyrou and Ashley JJA).

[79] Another example of a case that may fall within the estoppel sense of waiver is the creation of positive rights through acquiescence or proprietary estoppel: see, eg, Atlantic Shipping &Trading Co Ltd v Louis Dreyfus & Co [1922] 2 AC 250, 261-2; [1922] All ER Rep 559. See further LexisNexis, Halsbury's Laws of Australia, (at 30 March 2015) 110 Contract, '6 Promissory Estoppel' [110-910].

[80] See, eg, Panoutsos v Raymond Hadley Corp of New York [1917] 2 KB 473; Charles Rickards Ltd v Oppenhaim [1950] 1 KB 616.

[82] Verwayen (1990) 170 CLR 394, 406-7. See further Uren v Uren [2018] VSCA 141 (1 June 2018) [152]-[158] (Santamaria, Kyrou and Ashley JJA).

[83] Verwayen (1990) 170 CLR 394, 426-7.

[84] Verwayen (1990) 170 CLR 394, 484-5.

[85] Courts and Tribunals Legislation (Miscellaneous Amendment) Act 2000 (Vic) s 13.

[86] Supreme Court Act 1986 (Vic) s 2; see also Cook v Pasminco Ltd [2000] VSC 534 (15 December 2000) [10] (Hedigan J).

[87] [2003] VSC 27 (20 February 2003).

[88] [2003] VSC 27 (20 February 2003) [41], citing Supreme Court Act 1986 (Vic) s 33ZF.

[89] Wheelahan v City of Casey [2011] VSC 215 (23 May 2011) [58]-[60] (Emerton J), relying on Williams v FAI Home Security Pty Ltd [2000] FCA 1925; (2000) 180 ALR 459, 465 (Goldberg J). See also Pathway Investments Pty Ltd v National Australia Bank Ltd (No 3) [2012] VSC 625 (19 December 2012), [2] (Pagone J), relying on Gordon J in Harrison v Sandhurst Trustees Ltd [2011] FCA 541 (20 May 2011) [13]; Matthews v AusNet Electricity Services Pty Ltd [2014] VSC 663 (23 December 2014) [34] (Osborn JA).

[90] Botsman, Amended Defence to Statement of Claim, 24 May 2018, [29].

[91] Botsman, 'Mrs Botsman's Outline of Submissions for Hearing on 24-25 May 2018', 19 May 2018, [22].

[92] See above at [7].

[93] 'Class Action Notice to Group Members: Banksia Securities Limited Debenture Holders', 15 December 2017. See also Re Banksia Securities Ltd (recs and mgrs apptd) (in liq) (No 2) [2018] VSC 47 (16 February 2018) [37] (Croft J).

[94] Transcript of Proceedings (S ECI 2018 00076, Robson J, 24 May 2018) 73.

[95] Transcript of Proceedings (S ECI 2018 00076, Robson J, 24 May 2018) 64.

[96] Botsman, 'Mrs Botsman's Outline of Submissions for Hearing on 24-25 May 2018', 19 May 2018, [23].

[97] Schedule of appearances attached to the orders of Croft J dated 30 January 2018 in proceeding number S CI 2012 07185; Transcript of Proceedings (S ECI 2018 00076, Robson J, 24 May 2018) 62.

[98] Transcript of Proceedings (S ECI 2018 00076, Robson J, 24 May 2018) 34.

[99] Transcript of Proceedings (S ECI 2018 00076, Robson J, 24 May 2018) 62.

[100] See above at [8].

[101] Transcript of Proceedings (S ECI 2018 00076, Robson J, 24 May 2018) 62.

[102] Transcript of Proceedings (S ECI 2018 00076, Robson J, 24 May 2018) 62-3.

[103] Botsman, Amended Defence to Statement of Claim, 24 May 2018, [22]; AFPL, Reply, 20 April 2018, [15].

[104] Botsman, Amended Defence to Statement of Claim, 24 May 2018, [25]; AFPL, Reply, 20 April 2018, [16].

[105] Botsman, Amended Defence to Statement of Claim, 24 May 2018, [26]; AFPL, Reply, 20 April 2018, [17].

[106] Botsman, Application for Leave to Appeal, in proceeding S APCI 2018 0037, 20 March 2018.

[107] Transcript of Proceedings (S ECI 2018 00076, Robson J, 24 May 2018) 36.

[108] Transcript of Proceedings (S ECI 2018 00076, Robson J, 24 May 2018) 83.

[109] Transcript of Proceedings (S ECI 2018 00076, Robson J, 24 May 2018) 83.

[110] Transcript of Proceedings (S ECI 2018 00076, Robson J, 24 May 2018) 36.

[111] Tomlinson v Ramsey Food Processing Pty Limited [2015] HCA 28; (2015) 256 CLR 507, [22], [25].

[112] Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589, 602 (Gibbs CJ, Mason and Aickin JJ) ('Anshun Case'). See also Tomlinson v Ramsey Food Processing Pty Limited [2015] HCA 28; (2015) 256 CLR 507, 517-18 [22] ('Tomlinson'); Timbercorp (2016) 259 CLR 212, 229 [27] (French CJ, Kiefel, Keane, and Nettle JJ).

[113] Re Banksia Securities Limited (recs and mgrs apptd) [2017] VSC 148 (31 March 2017) [77], n 38.

[114] See the orders of Croft J dated 30 January 2018 in proceeding S CI 2018 07185.

[115] Re Banksia Securities Limited (recs and mgrs apptd) [2017] VSC 148 (31 March 2017) [77].

[116] Re Banksia Securities Limited (recs and mgrs apptd) [2017] VSC 148 (31 March 2017) n 38.

[117] Re Banksia Securities Ltd (recs and mgrs apptd) (in liq) (No 2) [2018] VSC 47 (16 February 2018) [18], [40]-[41], [56], [93].

[118] See Re Banksia Securities Limited (recs and mgrs apptd) [2017] VSC 148 (31 March 2017) [77], n 38.

[119] Re Banksia Securities Ltd (recs and mgrs apptd) (in liq) (No 2) [2018] VSC 47 (16 February 2018) [18], [40]-[41], [56], [93].

[120] See above at [62]-[63].

[121] As discussed above at [29]-[34].

[122] See above at [35].

[123] AFPL, 'Opening Submissions of the Plaintiff', 18 May 2018, [16].

[124] Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451, 461-2.

[125] Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, 352 (Mason J).