Conclusion and reasons
14 I am persuaded that approval to discontinue should be given in the present case. I accept that it is impracticable for the applicants to continue to prosecute the proceeding in the absence of funding and in the face of what seems to be, on Mr Petrovski's evidence, the unlikelihood of alternative funding being obtained.
15 The respondent says that IMF's withdrawal of funding stands as recognition that the applicants' case is based on a fundamental factual error concerning the alleged change to the respondent's accounting policy. The sequence of events in relation to the provision of the respondent's documents to IMF, and the timing of IMF's decision to withdraw funding, would support that conclusion. Indeed, IMF's announcement to the ASX (quoted at [6] above) draws a direct connection between the receipt of this information and its decision to cease funding the action. Be that as it may, the immediate fact is that the applicants are now without future funding and there does not seem to be any realistic prospect of alternative funding being obtained, even if the applicants were minded to seek such funding (which, on the evidence, they are not).
16 I am satisfied that, by giving the approval that is sought, the interests of group members will not be adversely, materially affected. The applicants have entered into a confidential agreement with the respondent that does not purport to release any claims that group members might have against the respondent. The funded group members will not be liable to pay any of the costs of the proceeding. IMF has also waived its right to seek recoupment for costs from funds which the funded group members might recover against the respondent in other proceedings.
17 William Roberts Lawyers and IMF have corresponded, separately, with funded group members, informing them of the application for approval to discontinue. Previously, IMF had also issued the ASX release to which I have referred. No funded group member has indicated an interest to be heard on the application or has indicated an interest to replace the applicants as representative parties.
18 There is no looming limitation problem should any group member wish to privately pursue the respondent on the claims pleaded in the statement of claim, although the viability of those claims is clearly in doubt given the circumstances in which the present application comes to be made.
19 Section 33X(4) of the Act requires that, unless the Court is satisfied that it is just to do so, an application for approval of a settlement under s 33V must not be determined unless notice has been given to group members. The absence of reference to notice being required in relation to an application under s 33V(1) to discontinue a proceeding is conspicuous. In this connection, s 33X(4) of the Act stands in contrast to the corresponding provision (s 33X(4)) of the Supreme Court Act 1986 (Vic), which requires notice to be given in relation to both approvals of settlements and approvals to discontinue, subject to the Supreme Court's discretion to dispense with such notice: see, in that connection, Laine at [36]-[41]. I am satisfied that s 33X(4) of the Act does not require notice of the present application to be given to group members.
20 I note, however, that s 33X(5) of the Act provides that the Court may, at any stage, order that notice of any matter be given to a group member or group members. The parties have not suggested that, here, notice of the application for approval to discontinue should be given under s 33X(5). Indeed, on the assumption that, contrary to their own submission, s 33X(4) requires notice to be given, the applicants in fact argue that any such requirement should be dispensed with in the particular circumstances of this case.
21 Before dealing with those arguments, I note that s 33Y(5) of the Act provides that the Court may not order that notice be given personally to each group member unless it is satisfied that it is reasonably practicable, and not unduly expensive, to do so. Certainly in the case of opt out notices, it is the practice of the Court that, where group members are, or are likely to be, identifiable from a respondent's shareholder records, the parties should, subject to any clear statutory or legal obligations requiring otherwise, cooperate with a view to using those records as the basis for a direct mail or email distribution of such notices: GPN-CA, 11.3.
22 Here, the evidence suggests that the identity of the group members, other than the funded group members, is not known. Given the particular circumstances of the present application, I am not inclined to put the parties to further expense in seeking to ascertain the identity and addresses of all possible group members for the purposes of giving notice of the present application. Thus, if notice were to be given, I would not be persuaded that personal notice to each group member is practicable or can be given without undue expense. It would only be practicable for notice to be given by public means, such as those noted in s 33Y(4) of the Act, namely by press advertisement, or radio or television broadcast.
23 Returning to the applicants' arguments for dispensation of any requirement to give notice, the applicants point, firstly, to the lack of response from the funded group members who were given notice of the applicants' intention to discontinue the proceeding. The applicants argue that the lack of response from these group members is indicative of a likely lack of response from other group member should separate notice of the present application be given.
24 Secondly, in respect of unfunded group members who are unaware of the present proceeding, the applicants argue that such a notice is likely to be confusing. I doubt that that would be so. It is more likely that such group members would be oblivious to the kind of public notice that would be given in the present case, thus bringing into question, at the outset, the utility of such a notice.
25 Thirdly, in respect of unfunded group members who might be aware of the present proceeding, the applicants argue that it is likely that such group members will, in due course, receive opt out notices from the other proceeding in the Court to which I have referred and, if confused about the status of the present proceeding, contact the solicitors for the applicants in the other proceeding for clarification.
26 I do not consider that argument to be at all persuasive. First, I cannot speculate about what may happen in the other proceeding or about what notices may or may not be given, or when they might be given, in that context. Secondly, although the definition of group members in each proceeding is similar it is not the same. Thirdly, if notice were required to be given in relation to the present application, or if I came to the view that notice should be given in any event, I do not think that the obligation to do so would be satisfactorily discharged by the incidental means suggested by the applicants.
27 I have come to the view that there is little utility in giving notice of the present application to group members. As I have stated, from the point of view of expense and convenience it would only be practicable to give such a notice by public means. The only persons likely to have an interest in such a notice would be unfunded group members who not only have knowledge of the proceeding but an active interest in it. I have no way of knowing how large (or small) that group might be or, indeed, if there are any such persons. However, I can confidently predict that members of this cohort, if any, are unlikely to voice any real or substantive objection to approval being given, having regard to the fact that:
funding has been withdrawn and alternative funding is unlikely to be obtained, seen in the context of the overall likely cost of the litigation;
the only effect of the discontinuance will be to return group members to the position they were in before the proceeding commenced;
such persons are likely to conclude, reasonably, that IMF's funding was withdrawn because of a reappraisal of the viability of the proceeding in light of new information coming to hand after the proceeding had been commenced.
28 I think it is also reasonable to assume that, if there are any such persons, they will take steps to inform themselves of the status of the proceeding, including by communicating with the applicants' solicitors. I infer from Mr Petrovski's evidence that the only persons who have thus far expressed real interest in the proceeding are the funded group members.
29 The applicants also seek a declaration that the approval of the discontinuance does not affect any rights of the applicants or any group member to pursue the claims in this proceeding in another proceeding. In Wotton, Rares J granted a similar kind of declaration in the unusual circumstances of the case before him. Although the circumstances are quite different here, I nevertheless think there is utility in making such an order. I accept that it is desirable that group members are not left in any doubt that any rights they might have against the respondent are left intact and are not affected by the discontinuance that is approved.
30 There remains a question as to the confidentiality of Mr Petrovski's second affidavit. The applicants seek an order that the entirety of the affidavit and its exhibits be kept confidential. In my view, the order that is sought is far too broad, particularly as a number of matters disclosed in the text of the affidavit have been repeated in the applicants' written submissions that were deployed in open court to support the application. The applicants' oral submissions also canvassed, in open court, a number of matters claimed to be confidential. Nevertheless, I am satisfied that it would be appropriate to make a confidentiality order in respect of the documents that are exhibited to the affidavit as "BP 2". I note that the documents in this exhibit comprise arguably privileged material and also a copy of a confidential deed entered into between the applicants and the respondent. The respondent supports the maintenance of confidentiality in respect of that document.