Plaintiff v Defendant

2 The Practice Note relevantly provides as follows (emphasis added):

1. Disclosure of costs agreements and litigation funding agreements to the Court and other parties

13.1 Any costs agreement applicable to a group proceeding and any Litigation Funding Agreement must be in writing.

13.2 The plaintiff's solicitor is required to disclose to the Court and to the other parties to the proceeding, copies of the costs agreement between the plaintiff and their solicitor, and any Litigation Funding Agreement. They must do so prior to the initial CMC, and must provide copies of any updated costs or funding agreements as those agreements change. Disclosure to the Court is made by email to the chambers of the Case Management Judge.

13.3 Where the plaintiff's solicitor considers that the disclosure of a costs agreement or a Litigation Funding Agreement to the other parties may give rise to material prejudice or is inconsistent with the maintenance of client legal privilege, they may propose a sensible redaction process or object to making the required disclosure. Any proposed objection or redaction process should be raised with the court and other parties, so that the matter may be determined by the Court. ...

13.7 No later than seven clear business days prior to the initial CMC the plaintiff's solicitor must serve a copy of the costs agreement and any Litigation Funding Agreement on all other parties. The disclosure may be redacted to conceal any information that might reasonably be expected to confer a tactical advantage on another party to the proceeding including, without limitation, information:

(a) as to the budget or estimate of costs for the litigation or the funds available to the plaintiff in total or for any step or stage in the proceeding;

(b) that might reasonably be expected to indicate an assessment of the risks or merits of the proceeding or any claim in, or aspect of, the proceeding.

3 The plaintiff submits that disclosure of Clause 13 would confer a tactical advantage on the defendant and accordingly, its redaction is in keeping with clause 13.7 of the Practice Note. The nature of the "tactical advantage" was not described. The plaintiff refers to a number of authorities in which the compulsory production of insurance and like documents by one party to another (in various contexts) has been refused, including where the result would be to create an unequal bargaining position between the parties.[2] Separately, the plaintiff said that he was concerned "not to voluntarily disclose aspects of the costs agreement that could lead to a waiver of privilege over or loss of confidentiality in any underlying documents and/or related communications".

4 In response to a clarification sought by my chambers, the plaintiff advised that Clause 13 is not the subject of a claim for client legal privilege and that he does not contend that he could properly resist an order for production of that part of the costs agreement if sought in connection with an application by the defendant for security for costs. Rather, the plaintiff resists production "on the basis of confidentiality".

5 The defendant has made an application for security for costs. Orders are in place for the filing of material relevant to the application, which will be determined by an Associate Judge in the near future.

6 The defendant says that it can be reasonably inferred from the unmasked content of the costs agreement that Clause 13 concerns the subject of adverse costs that might be awarded against the plaintiff, and that the question of who is providing funds to meet any adverse costs orders is relevant to whether an order for security for costs should be made. In the defendant's submission, disclosure of a fact that might assist a party to establish that it is entitled to relief that it seeks in the proceeding ought not be characterised as the conferral on that party of a tactical advantage. Conferral of the kind of tactical advantage that the Practice Note seeks to avoid is, rather, the arming of one party with knowledge that it might use to engage in manoeuvring calculated to wear down, stymie or exert undue pressure on the other party. The Practice Note itself illustrates information that might confer such an advantage, such as budget estimates or the costs of the litigation (often described as revealing the contents of a party's 'war chest'[3]) or information concerning the risks or merits of the proceeding.

7 In the course of considering the equivalent Practice Note published at that time by the Federal Court,[4] Rares J said in Coffs Harbour City Council,[5] that the evident purpose of such requirements was to strike a balance between the rights and interests of the parties as they are or may be affected by the involvement of a funder, by creating an expectation of some transparency in respect of the funder's role, but recognising that some aspects of the relationships between a representative party, its lawyers, group members and any funder should not be revealed at the outset of the litigation. The application of such a practice direction must be flexible and is necessarily subject to the Court's control in any individual proceeding. Rares J went on to say that the rationale for permitting redactions to funding agreements contemplated by the terms of the Federal Court Practice Note was the protection of confidential information, and that one reason why such information may be confidential in a particular case was that its disclosure would confer a tactical advantage on the opposite party.[6]

8 The Practice Note reflects a philosophy that favours transparency in relation to questions of funding in group proceedings, subject to the protections identified.[7] It should be recalled that the publication of practice directions and the clear expectation that parties will adhere to them reflects the Court's inherent jurisdiction to control its own procedures, but practice directions must nevertheless be understood and applied in the context of the general law, legislation and rules of court within which they exist.[8] Practice directions may, of course, acquire authority as a statement of principle, as they are approved by courts over time.[9]

9 Stating the position in the abstract, I accept that in some circumstances the disclosure of information about a plaintiff's position vis-à-vis adverse costs might confer an advantage on a defendant insofar as it would assist the defendant to understand a material element of the risk undertaken by the plaintiff in assuming its role as representative party. That is, however, to state the proposition only at the highest level of generality. Depending upon the information in question, its provision may or may not afford the defendant an opportunity to tactically exploit the existence of risk on the plaintiff's side of the dispute. In any given case, the actual position - the extent to which the plaintiff or some other person may become liable for any adverse costs awarded against the plaintiff - might be assessed as one of relative strength or relative weakness for the plaintiff.

10 To state the position in the abstract does not take the matter very far, however. I accept the defendant's submission that the Practice Note calls for a practical assessment of whether disclosure of the relevant information is likely to confer a tactical advantage on the opposite party. In this case, it is not said that the production of the redacted clause could be resisted on any substantive basis in connection with the defendant's application for security for costs. In those circumstances, the difficulty with the plaintiff's submission is that he is contending that information to which the defendant would in any event be entitled on an application which is to be heard and determined shortly, should not be disclosed. While I do not accept that there is any bright line between information that might assist a party to establish that it is entitled to relief and information that might impermissibly confer a tactical advantage, in this case no real purpose would be served by concealing the redacted information from the defendant, and no particular tactical advantage that would arise by its disclosure has been identified, save in the most abstract of terms.

11 I will accordingly direct that the plaintiff produce a copy of his costs agreement to the defendant in which Clause 13 is un-redacted.

12 I would not have so ordered had the plaintiff pressed a claim for privilege in respect of the redacted material or in the event it was contended that the production of the redacted material could be properly resisted in the context of a forthcoming security for costs application on any other substantive basis. In those circumstances, I would have determined the dispute in the context of a properly formulated application by the defendant for production of the material in relation to the security for costs application, on which the plaintiff would have been required to substantiate any claims to privilege. In this case, to require the defendant to make an application for discovery of the disputed material would be productive only of inefficiency.

13 I emphasise however, that, generally speaking, disputes over the production of material under the Practice Note should not become de facto discovery disputes. Where there are contested questions, including as to relevance and privilege, they should be brought in connection with the relevant substantive application.

[2] See, for example, Evans v Davantage Group Pty Ltd (No 2) [2020] FCA 473 [74]-[75].

[3] Kingsheath Club of the Clubs Ltd (in liq) [2003] FCA 1034 at [33] per Goldberg J; Spatialinfo Pty Ltd v Telstra Corporation Ltd [2005] FCA 455 at [69]- [71] per Sundberg J.

[4] CM17 at Clause 3.6; the equivalent provision is now Clause 6.4 of Practice Note GPN-CA.

[5] Coffs Harbour City Council v Australia and New Zealand Banking Group Ltd [2016] FCA 306 at [20]- [22].

[6] Coffs Harbour at [22] and the authorities there cited.

[7] This aspect of the Practice Note reflects, in substance, relevant parts of the recommendations of the Victorian Law Reform Commission report on Access to Justice - Litigation Funding and Group Proceedings, March 2018.

[8] See, for example, Baulderstone Hornibrook Pty Limited v HBO+DC Pty Limited [2001] NSWSC 821 at [14] per Bergin J; Maurici v Chief Commissioner of State Revenue New South Wales [2001] NSWCA 78; [2001] 51 NSWLR 673 at [40]- [52] per Handley JA (Beazley and Giles JJA agreeing) (Maurici was overturned on unrelated grounds in [2003] HCA 8; (2003) 212 CLR 111; the Court's analysis has subsequently been cited with approval). See also the discussion in Herzfeld & Prince, Interpretation (2nd edition, Law Book Co, 2020) at 37.10-37.40.

[9] Brook v Reed [2011] EWCA Civ 331; [2012] 1 WLR 419 at [45] per David Richards J, Arden and Black LJJ agreeing.