Sanda v PTTEP Australasia

PERRAM J: 1 A question has arisen as to whether the Court has the power to make an order pursuant to s 33ZF of the Federal Court of Australia Act 1976 (Cth) ('the Act') dispensing with the need to send a notice to group members informing them of their entitlement to opt out of the proceeding. There is authority that the power in s 33ZF extends to dispensing with the need to send an opt out notice: Vernon v Village Life Ltd [2009] FCA 516 at [57]-[64] per Jacobson J ('Vernon'). There is authority that the relevantly identical power in the Civil Procedure Act 2005 (NSW) does not so extend: TW McConnell Pty Ltd as trustee for the McConnell Superannuation Fund v SurfStitch Group Ltd (subject to deed of company arrangement) (No 3) [2018] NSWSC 1749; 133 ACSR 98 at [19]-[53] per Stevenson J ('TW McConnell'). In the course of his reasons for judgment, Stevenson J concluded that Vernon was wrongly decided. 2 Section 33J of the Act provides: 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. 3 Section 33J does not in terms require that group members be notified of the opt out date which s 33J(1) requires the Court to fix. Instead, the obligation to notify is situated in s 33X of the Act which, relevantly, provides: 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); (b) an application by the respondent in the proceeding for the dismissal of the proceeding on the ground of want of prosecution; (c) an application by a representative party seeking leave to withdraw under section 33W as representative party. (2) The Court may dispense with compliance with any or all of the requirements of subsection (1) where the relief sought in a proceeding does not include any claim for damages. 4 The scheme of these provisions is: a mandatory obligation on the Court to fix an opt out date (s 33J(1)) with no corresponding dispensing power; a mandatory obligation to notify group members of the opt out date with a dispensing power where damages are not sought (ss 33X(1)-(2)); a power to extend the opt out date (s 33J(3)); and a mandatory obligation not to commence the trial of a representative proceeding earlier than the opt out date coupled with a dispensing power (s 33J(4)). It would appear that this means that where a representative proceeding is listed for trial, the opt out date can be no later than the first day of the trial. 5 It will be observed that the provisions contain explicit dispensing provisions but only in relation to two matters. The Court may dispense with notification of the opt out date if damages are not claimed, and it may dispense with the requirement that the trial not commence before the opt out date. By contrast, there is no dispensing power conferred in relation to the obligation of the Court to fix the opt out date or the obligation to notify the group members of that date where damages are claimed. 6 This leads to a curious result. Where damages are not claimed, the Court is nevertheless required to fix an opt out date by s 33J(1) but it may dispense with the need for that date to be notified to group members under s 33X(2). Further, in that circumstance, even though the group members have not been notified of the opt out date, the Court remains subject to an obligation (which can be dispensed with) not to commence the hearing of the action until that date: s 33J(4). It is not self-evident what purpose this serves. 7 In any event, the point for present purposes is that ss 33J and 33X are a detailed scheme dealing with the fixing and notification of the opt out date accompanied by limited powers of dispensation. It is then necessary to turn to the general provisions contained in s 33ZF. It provides: 33ZF General power of Court to make orders (1) In any proceeding (including an appeal) conducted under this Part, the Court may, of its own motion or on application by a party or a group member, make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding. (2) Subsection (1) does not limit the operation of section 22. 8 Making the assumption that s 33ZF can be used to dispense with some of the requirements of Pt IVA, I do not think that it can be used to dispense with the obligation in s 33J(1) to fix an opt out date or the obligation to notify members of that date in s 33X(1). The general power in s 33ZF cannot be used to outflank the limitations of the particular scheme in ss 33J and 33X. In an oft-applied passage in Anthony Hordern and Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia (1932) 47 CLR 1 at 7 ('Anthony Hordern'), Gavan Duffy CJ and Dixon J said: When the Legislature explicitly gives a power by a particular provision which prescribes the mode in which it shall be exercised and the conditions and restrictions which must be observed, it excludes the operation of general expressions in the same instrument which might otherwise have been relied upon for the same power. 9 Consequently, assuming that s 33ZF is in fact a dispensing provision (about which I make no comment one way or the other), it is not available to overcome the specific provisions of ss 33J and 33X. In reaching this conclusion, I do not mean to suggest that other sets of provisions in Pt IVA do (or do not) attract the principle in Anthony Hordern. Each such set of provisions must be examined on their own terms. For example, it has been held on the topic of declassing that s 33N is not a provision which constitutes a 'code' in the Anthony Hordern sense, which would exclude the operation of a general power such as s 33ZF: Perera v GetSwift Limited [2018] FCA 732; 263 FCR 1 at [139]-[143] per Lee J ('Perera'). On the other hand, in Perera v GetSwift Limited (No 2) [2018] FCA 909 at [27], Lee J concluded that s 33ZF could not be used to outflank the prohibition in s 43(1A) on awarding costs against group members. 10 Dealing then with the authorities which have discussed this issue, it will follow that I agree with the conclusion at which Stevenson J arrived in TW McConnell although I would prefer to anchor this in the application of Anthony Hordern. As for Vernon, whilst I would only most hesitantly depart from anything Jacobson J has to say about the operation of Pt IVA, his Honour was dealing with a matter where the orders sought were not opposed, where in consequence, his Honour did not have the benefit of a contradictor and where the relevance of Anthony Hordern appears not to have been canvassed. 11 In that circumstance, I conclude that s 33ZF may not be used to dispense with the obligation to fix an opt out date under s 33J(1) or to send an opt out notice under s 33X(1). This conclusion is consistent with the centrality of opting out to the scheme embodied in Pt IVA. It empowers the representative applicant to commence a proceeding which will ultimately bind those persons represented through the operation of s 33ZB. But it permits this interference in the rights of the group members without their consent first being obtained. The quid pro quo for this interference is that Pt IVA permits the group members to opt out of the action. An essential element in the exercise of that right is that the group members must be notified of its existence. So viewed, opting out is not an ancillary aspect of Pt IVA. It is one of the scheme's fundamental architectural features: Perera at [368] per Lee J. 12 Whilst no doubt in closed class actions the practical need for an opting out procedure retreats, the concept of a closed class action exists outside of Pt IVA. When all is said and done, those who commence closed class actions do so on a framework of provisions which require that the group members be given the opportunity to opt out. 13 In this case the proceeding is a closed class action and 15,482 group members have executed funding agreements. Whilst one can be sympathetic to the practicalities which have led to the opt out date not ever being fixed and no opt out notices ever having been sent, the fact is that Pt IVA requires this to be done. 14 At this point, further problems loom into view. This matter has been tried and judgment delivered. Further, an appeal was filed which was listed for hearing in the current Full Court sittings although vacated when an in principle accommodation was reached between the parties. The matter came before me as duty judge to set in train the hearing of an application for Court approval of the settlement under s 33V. It was during the setting of those procedural steps that the fact that no opt out date has ever been fixed came to light. 15 Since no opt out date has been fixed, it is an open question, engaging perhaps to persons with a particular outlook on life, whether the requirement in s 33J(4) that the trial not commence earlier than the opt out date has been complied with. However, now that it is clear that an opt out date must be fixed, that problem, at least, may be surmounted by fixing an opt out date and then granting leave nunc pro tunc under s 33J(4) to commence the trial at the time at which the trial was in fact commenced. 16 Another problem is less tractable. This is the question of what date the Court should fix as the opt out date. Mr Arnott SC for the Respondent drew my attention to s 33ZB which provides: 33ZB Effect of judgment A judgment given in a representative proceeding: (a) must describe or otherwise identify the group members who will be affected by it; and (b) binds all such persons other than any person who has opted out of the proceeding under section 33J. 17 Once an opt out date is set and the opt out notices are sent there remains the possibility that some group members may in fact opt out. In principle, this is unlikely in this case since all of the group members have already signed funding agreements and because under the settlement (which will also be notified) they are to receive money. However, the group members are a large number of Indonesian seaweed farmers who do not speak English and who are unfamiliar with court process, still less with the intricacies of Pt IVA. There is some possibility that the large quantity of paperwork soon to be conveyed to them for their attention may result in a few accidental decisions to opt out. 18 If any group members opt out then this will create a conundrum under s 33ZB(b). 19 This provision assumes that opting out will have occurred before judgment. If a person opts out after judgment, the binding effect of s 33ZB(b) will continue to apply. So viewed, the opting out has no consequence since the group member will remain bound by s 33ZB(b). This rather suggests that the right to opt out given to the group members will be an empty one, for what kind of right is it to be able to opt out of a proceeding where, even after one opts out, one remains bound by the outcome? I do not think that Pt IVA permits such an empty opt out right given the centrality of opting out to the scheme. 20 Consequently, I conclude that it is not possible to set an opt out date which post-dates the date of the s 33ZB judgment which has been given. In this case, the s 33ZB judgment was given on 15 November 2021. The first conclusion therefore is that the opt out date to be fixed under s 33J(1) cannot be after 15 November 2021. 21 On the other hand, s 33J(2) creates a right to opt out before the opt out date and s 33X(1)(a) refers to this as a right. To set the opt out date in the past frustrates this as it denies the group members a right which Pt IVA clearly contemplates they have. Consequently, I conclude that the opt out date cannot be fixed in the past but must be set in the future. 22 It follows that the language of the statute requires inconsistent outcomes. I must set the opt out date before 15 November 2021 and, at the same time, I must set the opt out date after the date of my orders fixing an opt out date. This is impossible to achieve. That the machinery of the statute results in this outcome is driven by the fact that the Court and the parties overlooked the necessity of fixing the opt out date prior to the s 33ZB judgment and preferably before the start of the trial. 23 Having identified the intractable nature of the problem, it is then necessary to consider the possible solutions. Once it became apparent that this problem existed I called the parties back to discuss it. Ms Hillman for the Applicant submitted that one solution would be for the Court to set aside the judgment to which s 33ZB applies, to fix an opt out date in the future and, at the time that the s 33V application is eventually heard, to make a fresh s 33ZB judgment. Mr Arnott SC for the Respondent agreed that this was the desirable course. 24 This solution solves the problem. The opt out date is fixed in the future, notices can be sent under s 33X(1) and a meaningful right to opt out is afforded to group members. At the same time, s 33ZB is not offended because no s 33ZB judgment is in place. 25 There are only two other options which appear to be available. The first is to make an order under s 33ZF. However, this seems to me potentially problematic. Having concluded that the opt out provisions are a code of provisions to which the Anthony Hordern principle applies, that path is foreclosed at the ss 33J(1) and 33X(1) level. It would therefore be necessary to use s 33ZF to neuter the implication arising from s 33ZB(b). This would be a risky undertaking as I am by no means sure that the power in s 33ZF may be used in that way, particularly in light of the High Court's decision in BMW Australia Limited v Brewster [2019] HCA 45; 269 CLR 574. 26 The second option would be to declass the representative proceeding and to join all of the group members as applicants in what would then be an ordinary proceeding. An advantage of this procedure would be that s 33V approval would no longer be necessary. However, the practical difficulties involved in joining the 15,482 group members as applicants are formidable and make this inappropriate other than as an absolute last resort. 27 In those circumstances, it seems to me that the appropriate course is to vacate the s 33ZB(b) judgment. It was for that reason that on 21 November 2022 I made orders vacating that judgment and providing for the sending out of opt out notices. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Perram.