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[2019] FCA 1021
Federal Court of Australia
2019-06-28
Murphy J
Original judgment source is linked above.
Number of paragraphs: 77
Counsel for the Applicant in VID 972 of 2018: Mr B Quinn QC and Mr T Chalk
Solicitor for the Applicant in VID 972 of 2018: Slater & Gordon Lawyers
Counsel for the Applicant in VID 1006 of 2018: Mr W A D Edwards
Solicitor for the Applicant in VID 1006 of 2018: Maurice Blackburn Lawyers
Counsel for the Respondent: Dr C Button and Dr O Bigos
Solicitor for the Respondent: Allens
BETWEEN: HOLLY SOUTHERNWOOD Applicant AND: BRAMBLES LIMITED Respondent
JUDGE: MURPHY J DATE OF ORDER: 8 May 2019
Consolidation
Common Fund Order 7. Subject to further order, pursuant to sections 23 and 33ZF of the Act and rule 1.32 of the Rules, the Funding Terms in Annexure A be approved and be binding upon the Joint Applicants, the group members, IMF, Harbour, and the Lawyers (as defined in the Funding Terms). 8. Order 7 is subject to the provision of an undertaking by each of IMF, the Southernwood Applicant, Slater and Gordon, Harbour, the Kidd Applicants and Maurice Blackburn to each other and to the Court that they will comply with their obligations under the Funding Terms, being those in Annexure A (as may be further modified as the Court thinks fit).
Pleadings 9. Pursuant to rules 8.21 and 16.51 of the Rules, the Joint Applicants in the Consolidated Proceeding are granted leave to file and serve by 4.00 pm on 13 May 2019: (a) a consolidated originating application that is in substantially the same form as the amended originating application filed in the Kidd Proceeding on 27 March 2019; and (b) a consolidated statement of claim that is in substantially the same form as the amended statement of claim filed in the Kidd Proceeding on 14 March 2019. 10. Pursuant to rule 1.34 of the Rules: (a) the requirements of rule 8.23(2)(a) of the Rules are dispensed with for the purpose of the consolidated originating application to be filed by the Joint Applicants in the proposed Consolidated Proceeding; (b) the requirements of rule 16.59(2)(a) of the Rules are dispensed with for the purpose of the consolidated statement of claim to be filed by the Joint Applicants in the Consolidated Proceeding. 11. By 4.00 pm on 13 May 2019, the Joint Applicants in the Consolidated Proceeding are to file and serve a consolidated originating application and a consolidated statement of claim. 12. By 4.00 pm on 6 June 2019, the Respondent file its defence to the consolidated statement of claim.
Costs Reference 13. Pursuant to sections 33ZF(1) and 37P(2) of the Act, Cate Dealehr, Legal Costs Consultant, is appointed as an independent costs referee (Costs Referee) for the purpose of: (a) conducting inquiries every four months (commencing from the date of these Orders) as to the question of whether there is unnecessary or excessive duplication in the work being performed by the Lawyers in the Consolidated Proceeding, having regard to the matters set out in paragraphs (i) to (iii) of Order 3 above; and (b) providing confidential written reports to the Lawyers and to the Court every four months (commencing from after the date of these Orders) stating the Costs Referee's opinion on the question set out at 13(a) above, including any recommendations for reducing duplication where identified. 14. The Lawyers must cooperate and provide such information, access to personnel and access to documents as the Costs Referee may reasonably require. 15. Without affecting the powers of the Court as to costs, IMF and Harbour are to be jointly and severally liable for the reasonable fees of the Costs Referee in the first instance, which fees will become part of the Joint Applicants' costs. 16. Subject to any further order of the Court, for the purpose of any order made pursuant to sections 33V or 33ZJ of the Act approving payment or part-payment of the Joint Applicants' legal costs and disbursements out of any settlement sum or Court award of damages in the Consolidated Proceeding, the total amount so approved will not include an amount that is referable to work performed by the Lawyers that has been identified by the Costs Referee as being unnecessarily or excessively duplicative.
Other 17. The Consolidated Proceeding is listed for a further case management hearing on 4 October 2019 at 9.30 am, or such earlier date as either party requests. 18. The parties' costs of the Respondent's interlocutory application dated 18 October 2018, the Applicant's interlocutory application dated 20 March 2019, and the Kidd Applicants' application for case management orders, are reserved. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. ANNEXURE A BRAMBLES LTD SHAREHOLDER CLASS ACTION FUNDING TERMS
1.2. Unless the context otherwise requires, the following rules of interpretation apply to these Funding Terms: 1.2.1. a reference to any agreement or document is a reference to such agreement or document as validly amended, varied, restated, assigned or novated from time to time (in each case, other than in breach of the relevant agreement or the provisions of these Funding Terms, in which case it shall remain a reference to such agreement or document immediately prior to such amendment); and 1.2.2. a reference to any legislation or legislative provision includes any statutory modification, amendment or re-enactment of that legislation or legislative provision, and includes any subordinate legislation or regulations issued under that legislation or legislative provision. 2. Professional Fees and Existing Agreements 2.1. Where there are any differences in comparable professional fee rates charged by Slater and Gordon and Maurice Blackburn in accordance with their respective Retainer Agreements, the lower applicable rate shall prevail such that the fee rates charged by both Slater and Gordon and Maurice Blackburn will be the same. 2.2. For the duration of the Funding Period, these Funding Terms will prevail over the Funding Agreements. 2.3. Upon the request of a Group Member, Maurice Blackburn and/or Slater and Gordon shall provide that Group Member with a copy of their respective Retainer Agreements on a confidential basis. 3. Obligations of the Funders 3.1. IMF must pay the IMF Project Costs. 3.2. Harbour must pay the Harbour Project Costs. 3.3. IMF and Harbour must pay the Joint Project Costs in the following proportions: 3.3.1. IMF shall pay 50% of the Joint Project Costs; and 3.3.2. Harbour shall pay 50% of the Joint Project Costs. 3.4. Subject to any Court order to the contrary, IMF and Harbour will each meet any Costs Order incurred in the Consolidated Proceeding after the Funding Period in the following proportions: 3.4.1. IMF shall pay 50% of any such costs; and 3.4.2. Harbour shall pay 50% of any such costs. 3.5. If the Joint Applicants agree or are ordered to provide security for costs in the Consolidated Proceeding, they will each or together provide a form of security for costs that shall be acceptable to the Respondent (and any other applicable party to the Consolidated Proceeding), or as otherwise ordered by the Court, and in the following proportions: 3.5.1. IMF (or the IMF Parent) to provide 50%; and 3.5.2. Harbour to provide 50%. 3.6. Each of IMF and Harbour will bear its own costs in relation to the provision of security for costs and will not seek reimbursement of those costs from any Resolution Sum. 3.7. The Funders will not be obliged to fund any appeal or defence of appeal of the Consolidated Proceeding but will have the option of doing so. 3.8. The Funders will not be obliged to accept adverse Costs Order exposure in respect of an additional respondent but will have the option of doing so. 4. Costs and Commission 4.1. Subject to further order, and pursuant to sections 23 and 33ZF of the Act and rule 1.32 of the Rules, upon Resolution the Funders and the Lawyers are entitled to be paid or to have distributed the following amounts from the Resolution Sum, to be paid or distributed in order of priority listed below and with all payments within a priority level to be made pari passu and pro rata: 4.1.1. first: (a) reimburse Harbour for all paid and Court-approved Harbour Project Costs including any additional amount on account of GST; and (b) reimburse IMF for all paid and Court-approved IMF Project Costs, including any additional amount on account of GST. 4.1.2. second, pay to the Funders, as consideration for the funding of the Consolidated Proceeding, a total amount, to be expressed as a percentage of the aggregate Resolution Sums as the Court considers reasonable of no more than: (a) [an amount to be determined by the Court] of the Resolution Sum, where Resolution is before the first day of commencement of a trial in relation to the Consolidated Proceeding; (b) [an amount to be determined by the Court] of the Resolution Sum, where Resolution is on or after the first day of the commencement of trial in relation to the Consolidated Proceeding, with the amounts payable to the Funders to be equally apportioned to each of IMF and Harbour, and including any additional amount on account of GST. 4.1.3. third, pay Slater and Gordon and Maurice Blackburn for any court approved unpaid Disbursements, GST, interest and Slater and Gordon Remaining Costs (if applicable) in accordance with the Slater and Gordon Retainer Agreement and Maurice Blackburn Remaining Costs (if applicable) in accordance with the Maurice Blackburn Retainer Agreement; 4.1.4. fourth, pay to the Joint Applicants any unpaid expenses (including fair and reasonable compensation for their time) incurred as a result of their acting as representative in the Consolidated Proceeding, as approved by the Court; and 4.1.5. fifth, the remainder of the Resolution Sum be distributed to Group Members on a pro rata basis. 4.2. The amounts referred to in clause 4.1 above will not become due or owing by the Joint Applicants and Group Members unless and until a Resolution occurs and must not exceed the aggregate Resolution Sums. 4.3. All Resolution Sums are to be paid to, and received by, the Lawyers and paid immediately into a Trust Account opened jointly by the Lawyers and kept for that purpose. 4.4. If, despite clause 4.3 above, the Joint Applicants or any Group Member directly receive any amounts, assets or benefits in respect of a Settlement or judgment of some or all of the Claims, he, she or it will cause the amounts, assets or benefits to be paid or directed to the Lawyers to be dealt with as part of the Resolution Sum including, if appropriate, the realisation of the market value of any such assets or benefits. 4.5. The Lawyers will pay out of any Resolution Sum held on the Trust Account the amounts referred to in clause 4.1 above in accordance with these Funding Terms prior to any distribution to the Joint Applicants and Group Members in accordance with any distribution scheme approved by the Court. 4.6. The Group Members will not seek to encumber any part of the Resolution Sum in a manner which adversely affects the Funders' entitlements under the Funding Terms. 5. Relationship Between the Joint Applicants, Lawyers and Funders 5.1. Slater and Gordon's professional duties are owed to the Southernwood Applicant and not to IMF. 5.2. Maurice Blackburn's professional duties are owed to the Kidd Applicants and not to Harbour. 5.3. IMF may at its discretion give day-to-day instructions to Slater and Gordon on all matters concerning the Claims and the Consolidated Proceeding, subject to clauses 5.4 and 5.5, clause 7 and clause 9. IMF shall generally give day-to-day instructions to Slater and Gordon and Harbour shall defer to the instructions of the Kidd Applicants and the advice of Maurice Blackburn. 5.4. The Southernwood Applicant may override any instruction given by IMF, subject to clauses 7 and 9 below. The Southernwood Applicant may give binding instructions to Slater and Gordon and make binding decisions on behalf of the Group Members in relation to the Claims up to the time of any court approval of Settlement of the Claims or the delivery of judgment in respect of the common issues in the Consolidated Proceeding (including, but not limited to, instructions and decisions in relation to Settlement), save where, in the reasonable professional opinion of Slater and Gordon, separate instructions are required from the Group Members. 5.5. The Kidd Applicants may override any instruction given by IMF, subject to clauses 7 and 9 below. The Kidd Applicants may give binding instructions to Maurice Blackburn and make binding decisions on behalf of the Group Members in relation to the Claims up to the time of any court approval of Settlement of the Claims or the delivery of judgment in respect of the common issues in the Consolidated Proceeding (including, but not limited to, instructions and decisions in relation to Settlement), save where, in the reasonable professional opinion of Maurice Blackburn, separate instructions are required from the Group Members. 5.6. Subject to clauses 7 and 9, if the Lawyers notify the Funders and the Joint Applicants that the Lawyers believe that circumstances have arisen such that they may be in a position of conflict with respect to any obligations they owe to the Joint Applicants and any obligations they owe to the Funders, then the Lawyers' obligations to the Joint Applicants prevail (and for the avoidance of doubt, the Lawyers can continue to offer advice to and take instructions from the Joint Applicants in such circumstances). 5.7. The Lawyers will: 5.7.1. keep the Funders fully informed of all matters concerning the Claims and the Consolidated Proceeding, including any mediation and settlement discussions; and 5.7.2. ensure that the Funders and Joint Applicants are given all necessary information and advice in order for the Funders to make informed assessments and, in respect of IMF, to provide informed instructions. 5.8. The Funders will: 5.8.1. implement their respective conflict management protocols so as to comply with the Corporations Amendment Regulation 2012 (No. 6) (Cth); 5.8.2. agree that, should any conflict arise as between the interests of the Funders and the interests of the Joint Applicants and Group Members, then the Lawyers may continue to provide the Legal Work to the Joint Applicants and Group Members and the Funders will raise no objection to them doing so; 5.8.3. provide the Joint Applicants with timely and clear disclosure of any material breach of the Corporations Amendment Regulation 2012 (No. 6) (Cth); 5.8.4. not retain the Lawyers as their solicitors for any purpose connected with the Consolidated Proceeding; 5.8.5. upon the request of a Group Member, provide that Group Member with a copy of the current and applicable conflict management protocols as referred to above at clause 5.8.1. 6. Confidentiality 6.1. The Funders shall strictly maintain the confidentiality of any information provided to the Funders by the Joint Applicants or the Lawyers for a purpose connected to the Consolidated Proceedings, and shall adopt proper and effective procedures for maintaining the confidentiality and safe custody of the information. 6.2. Where any information is provided to the Funders, the Funders shall: 6.2.1. adopt proper and effective procedures for maintaining the confidentiality and safe custody of that information; 6.2.2. only use that information for purposes for which the information was provided; and 6.2.3. not disclose the information contained therein to any person other than the Joint Applicants, Lawyers or counsel retained in the Consolidated Proceeding and any third parties it is required to disclose information to in the course of, and for the purpose of, the Consolidated Proceeding, including to any provider of after the event insurance, advisor, sub-litigation advisor, attorney, consultant, associated company, insurer, shareholder or agent - provided it takes reasonable steps to ensure that any third party also retain the confidentiality of the documents. 7. Settlement 7.1. If there is disagreement between the Funders and the Joint Applicants as to whether to settle the Consolidated Proceeding, or as to the appropriate terms for the Settlement of the Consolidated Proceeding, within 5 days of either of the Funders or the Joint Applicants providing notice of any such disagreement: 7.1.1. the Lawyers will brief the most senior counsel of those retained by the Lawyers to advise as to whether, in senior counsel's opinion, settlement of the Consolidated Proceeding on the terms is fair and reasonable in all of the circumstances; 7.1.2. representatives of the Funders may attend any conference with Senior Counsel at which the issue is to be discussed; 7.1.3. the legal costs of obtaining senior counsel's advice shall by met by the Funders as part of the Joint Project Costs; and 7.1.4. the advice of senior counsel will be final and binding on both the Joint Applicants and the Funders. 7.2. Under clause 7.1 above, in determining whether a proposed settlement is reasonable having regard to all the circumstances, senior counsel may proceed as he or she sees fit to inform himself or herself before forming and delivering his or her advice, but any such determination shall include the following considerations: 7.2.1. the strengths and weaknesses of the claims of all Group Members; 7.2.2. the quantum of the claims of all Group Members and any difficulties which might exist in proving that quantum; 7.2.3. the recoverability of a judgment sum from the Respondent; 7.2.4. the extent to which further legal costs incurred in the Consolidated Proceeding are likely to be recoverable from the Respondent; 7.2.5. the risk of the Funders being ordered to pay adverse costs and the quantum of such costs. Counsel will have regard to this factor as though all Group Members carried such risk rather than the Funders; 7.2.6. the matters set out at paragraph [248/95] of the Australian Securities and Investments Commission's Regulatory Guide 248: Litigation schemes and proof of debt schemes: Managing conflicts of interest (April 2013); and 7.2.7. any other matters senior counsel considers relevant. 8. Termination 8.1. These Funding Terms may only be terminated by order of the Court on application by the Joint Applicants, Group Members, Harbour or IMF, and upon notice given to the Joint Applicants, the Funders and such other persons as ordered by the Court. 8.2. If the Funding Terms are terminated under clause 8.1 above then (subject to any contrary order of the Court) all obligations of the Joint Applicants, the relevant Group Members, the Funders and the Lawyers under these Funding Terms will cease on the Termination Date, save for the following: 8.2.1. where there has been no material breach of these Funding Terms by the Funders and the application pursuant to clause 8.1 is made by a Group Member, the Funders will continue to be entitled to receive payment from any Resolution Sums (whether received before or after the Termination Date) pursuant to clause 4 unless otherwise ordered by the Court; 8.2.2. where there has been a material breach of these Funding Terms by IMF and/or Harbour, the relevant funder will only be entitled to receive payment from any Resolution Sum (whether received before or after the Termination Date) as ordered by the Court; 8.2.3. where there has been no material breach of these Funding Terms by IMF and/or Harbour and the application pursuant to clause 8.1 is made by IMF and/or Harbour, the relevant funder will continue to be entitled to receive payment from any Resolution Sums (whether received before or after the Termination Date) pursuant to clauses 4.1.1 and 4.1.2 unless otherwise ordered by the Court; and 8.2.4. IMF and/or Harbour must pay: (a) any outstanding costs pursuant to clauses 3.1, 3.2 and 3.3 above incurred up to the Termination Date; and (b) to the extent such amounts are not captured by clause 8.2.4(a) above, any quantified Costs Order against the Joint Applicants in respect of costs which arise in, or are attributed to, the period ending on the Termination Date. 9. Dispute Resolution 9.1. Subject to clause 7 and clause 9.2, any dispute arising between any of IMF, Harbour, the Joint Applicants and/or the Lawyers (including a dispute between members of the litigation committee) regarding the conduct of the Consolidated Proceeding that cannot be resolved within a reasonable period of time will be referred to the most senior counsel of those retained by the Lawyers for a final decision, which the Funders, the Joint Applicants and the Lawyers agree will bind them. 9.2. If a dispute arises which would be referred to senior counsel pursuant to clause 9.1 and IMF, Harbour, the Joint Applicants, the Lawyers or counsel considers that it is not appropriate for counsel to advise on or determine the dispute, the Lawyers may refer the dispute to an independent adjudicator, save that, failing agreement within a reasonable time by the Funders, the Joint Applicants and the Lawyers as to such independent adjudicator, the dispute is to be referred to an independent adjudicator to be appointed by the President of the Law Institute of Victoria for a final decision, which the Funders, the Joint Applicants the Lawyers agree will bind them. 9.3. For the avoidance of doubt, the disputes regulated pursuant to this clause include: 9.3.1. any appeal of the Consolidated Proceeding; 9.3.2. the addition or removal of Respondents to or from the Consolidated Proceeding; 9.3.3. the termination of the Lawyers' appointment; or 9.3.4. the appointment of alternative Lawyers.
BETWEEN: WILLIAM VINCENT KIDD AND MARY AGNES COLUMM AS TRUSTEES FOR THE MAGNESS-BENNETT SUPERANNUATION FUND Applicant AND: BRAMBLES LIMITED Respondent
JUDGE: MURPHY J DATE OF ORDER: 8 May 2019
INTRODUCTION 1 In these two proceedings Ms Holly Southernwood (Southernwood or the Southernwood applicant) and William Vincent Kidd and Mary Agnes Columm as trustees for the Magness-Bennett Superannuation Fund (the Kidd applicants), represented by two different firms of solicitors and supported by two different litigation funders, each commenced an 'open' securities class actions against the respondent, Brambles Limited (Brambles), doing so in respect of substantially the same claims and the same class members, within a week of each other. The Kidd proceeding had a shorter claim period at its commencement but the Kidd applicants subsequently amended their pleadings so that the claims and claim period in the two proceedings are identical and the class members wholly overlap. 2 Each of the parties proposed a different solution for the case management difficulties and other problems presented by the competing class actions. 3 Brambles argued that it should not be vexed by two proceedings by effectively the same persons for the same alleged wrongs and that two 'open' class proceedings should not be permitted to go forward. It said that it should not be prejudiced by being exposed to higher legal costs, and other difficulties including impediments to settlement, by there being two firms of solicitors and two litigation funders involved in the case. Brambles's initial stance was that either the Southernwood or Kidd proceeding should be permanently stayed and only one of the proceedings be permitted to go forward (the stay application). 4 Southernwood opposed the stay application and sought orders to consolidate the two proceedings with two firms of solicitors for the applicants, together with related orders aimed at reducing the risk of duplicated costs that might arise (the consolidation application). She made this application notwithstanding that the Kidd applicants did not agree to their proceeding being consolidated with the Southernwood proceeding. Southernwood also sought a common fund order as a necessary adjunct to the proposed consolidation orders. 5 The Kidd applicants opposed both of the stay application and the consolidation application. Instead they sought detailed case management orders setting a regime for cooperation between the respective solicitors in advancing the two proceedings efficiently and without duplicated costs (the cooperation orders). They contended that consolidation orders were unnecessary in light of the cooperation that would be achieved through the proposed cooperation orders. 6 Brambles ultimately accepted that it was appropriate to consolidate the two proceedings, but with the proviso that only one firm of solicitors be permitted to represent the applicants in the consolidated proceeding. If the Court was to make consolidation orders which allowed two firms of solicitors on the record for the applicants, Brambles argued for various orders to protect its position in relation to costs. 7 In some circumstances it will be appropriate to address the case management difficulties and other problems associated with competing class actions through orders to stay one or more of the proceedings and allow only one proceeding to go ahead: see Perera v GetSwift Limited [2018] FCA 732; (2018) 357 ALR 586 (Lee J) approved in Perera v GetSwift Limited [2018] FCAFC 202; (2018) 363 ALR 394 (GetSwift) (Middleton, Murphy and Beach JJ). But there are a range of potential solutions to the difficulties that may arise from overlapping class actions and no one right answer. 8 In the circumstances of this case I would have made orders to permanently stay one of the competing class actions except for the fact that the applicants and many class members, both in number and claim value, have retained different solicitors and entered into litigation funding agreements with different funders. In the Southernwood proceeding more than 4,900 persons have entered into funding agreements with IMF Bentham Limited (IMF) and retainer agreements with Slater & Gordon (S&G). In the Kidd proceeding more than 2,400 persons have entered into funding agreements with Harbour Fund III LP (Harbour) and retainer agreements with Maurice Blackburn (MB). The applicants in the respective proceedings estimated the aggregate claim value of the 'signed up' class members as approximately $100 million in the Southernwood proceeding and approximately $107 million in the Kidd proceeding, on a FIFO basis. Such circumstances distinguish the present case from those in GetSwift: at [197]. 9 Allowing Brambles' application would mean that one of the proceedings, brought on behalf of more than either 4,900 or 2,400 persons with claims estimated at approximately $100 million, would be permanently stayed. Class members in the stayed proceeding who prefer their existing arrangements with a law firm and/or funder may opt out of the ongoing proceeding and bring a claim on an individual or test case basis, or join with other 'opt outs' in bringing another class action, in respect of the same claims: see McKay Super Solutions Pty Ltd (Trustee) v Bellamy's Australia Ltd [2017] FCA 947 (Bellamy's) at [34], [39] and [96]-[97] (Beach J); GetSwift at [197]. There are thus various permutations in which a multiplicity of proceedings may persist if I were to stay one of the proceedings, which is undesirable. Even if any class members in the stayed proceeding that opt out of the ongoing class action do not immediately commence another proceeding of some kind, the existence of a group of class members with sizeable aggregate claims sitting outside the ongoing class action is likely to make it more difficult to settle that proceeding. These possible outcomes tend against ordering a permanent stay of one or other of the overlapping proceedings. 10 In my view the outcome that will best promote the overarching purpose to facilitate the just resolution of the dispute as quickly, inexpensively and efficiently as possible under s 37M of the Federal Court of Australia Act 1976 (Cth) (the Act), and which is appropriate to ensure that justice is done in the proceedings under s 33ZF of the Act, is to: (a) order the consolidation of the two competing class actions and to permit MB and S&G to jointly represent the applicants, coupled with orders directed to ensuring that there is no unnecessary or excessive duplication in the work performed or the costs incurred by having two sets of solicitors on the record; and (b) make a common fund order so that the funding arrangements and the obligations of the applicants, solicitors, funders and class members in the consolidated proceeding are fixed. In the particular circumstances of this case I consider consolidation is appropriate notwithstanding that the Kidd applicants did not agree to it. While there was no agreement as to consolidation, the evidence shows that the applicants, solicitors and funders are willing and able to work cooperatively. 11 The orders and the Court-approved Cooperative Litigation Protocol (the Protocol) include provisions: (a) which require: (i) one address for service for the solicitors for the applicants; (ii) joint retention of one set of counsel; (iii) joint interlocutory applications and joint responses to the respondent's interlocutory applications; (iv) joint retention and briefing of expert witnesses; (v) joint conduct of the discovery process; and (vi) the respondent being required to produce only one set of discoverable documents; (b) to establish a Litigation Committee, comprising solicitors from both law firms retained by the respective applicants, which will be responsible for making major strategic decisions in the litigation, managing the litigation and allocating tasks between the solicitors; (c) in order to reduce the duplication of costs and effort, to require: work to be distributed between the respective applicant law firms in a manner which so far as possible ensures equal distribution (by reference to hours of work performed); the number and seniority of the lawyers conducting a task to be no more than if there was only a single representative proceeding; and that the interests of the class members to be the primary determinant for the allocation of work between the respective law firms, having regard to: (i) the skills and experience of the solicitors and their respective staff; (ii) the objective of ensuring that the total legal costs are reasonable and proportionate; and (iii) the objective of minimising, to the greatest extent possible, the legal costs incurred through overlapping or duplicated work; (d) to appoint a costs referee to conduct an inquiry every four months regarding whether there is unnecessary or excessive duplication in the work being performed by the applicants' solicitors in the consolidated proceeding with regard to the factors identified in (c) above and to make any recommendation for reducing duplication. This is not intended to be a bureaucratic or expensive process and it is only if the referee considers that unnecessary or excessive duplication is occurring that a more detailed inquiry and recommendations will be required. 12 These provisions should substantially address the risk of unnecessary or excessive duplicated costs, but if they do not have that effect that concern can be revisited. With these safeguards in place there is little remaining force in Brambles' contention that a consolidation order is only appropriate if the applicants are represented by one set of solicitors. 13 I have no difficulty in accepting that, depending upon the circumstances, consolidation may be inappropriate where there is no agreement between the respective applicants, solicitors and funders. But that does not mean that such orders should only be made when those on the applicants' side have reached agreement in respect of all aspects of the necessary logistical arrangements. It is usually the commercial interests of the solicitors and funders, rather than those of the applicants and class members, which stand in the way of consolidation, and it is the applicants' and class members' interests which should be at the forefront. Where consolidation appears to be a suitable solution to overlapping funded class actions it may be appropriate for the Court to recommend to the solicitors and funders that they work through any difficulties that exist, in the interests of the applicants and class members. 14 While I understand they may do so, a decision to prefer consolidation in the circumstances of this case should not be seen as an incentive for solicitors and funders to engage in 'book-building'. As the Full Court said in GetSwift at [178(d)], where a common fund order is being sought, having class members enter into funding agreements serves little useful purpose and involves a waste of costs. The decision to prefer consolidation in this case merely recognises the reality that the large number and aggregate claim value of signed up class members in each competing proceeding is a factor militating against permanently staying one of them: see Bellamy's at [34], [39], [96]-[97]. In this context it is also worth noting that the respective solicitors and funders commenced investigating the class action and signing up class members prior to the decision in GetSwift at first instance and on appeal. 15 I thank the parties for the quality of their written and oral submissions, upon which I have directly drawn at some points of these reasons.
THE EVIDENCE 16 The parties relied upon the following material: (a) Brambles filed an interlocutory application dated 15 October 2018 seeking a permanent stay of one of the proceedings, and relied on affidavits of Mr Paul Nichols, a partner of Allens, the solicitors for Brambles in the proceeding, made 12 October 2018 and 28 March 2019, and affidavits of Mr James Campbell and Mr Alex Tolliday, both senior associates with Allens, made 21 February 2019 and 21 March 2019 respectively, and submissions; (b) Southernwood filed an interlocutory application dated 20 March 2019 seeking consolidation of the proceedings, and relied on affidavits by Mr Andrew Paull, a lawyer in the employ of S&G, made 20 February, 20 March, 22 March and 1 April 2019, and submissions; and (c) the Kidd applicants relied on affidavits by Ms Brooke Dellavedova, a principal with MB, made 19 February, 22 February, 21 March, 25 March and 1 April 2019, two of which were partly confidential, and an affidavit of Mr Ronald Koo, a senior associate with MB, made 13 March 2019, and submissions seeking what I have called 'cooperation orders'.
THE PROCEDURAL HISTORY 17 On 8 August 2018 Southernwood filed the Southernwood proceeding and on 14 August 2018 the Kidd applicants filed the Kidd proceeding. As noted above, by the time the competing interlocutory applications were before the Court for decision more than 4,900 class members had entered into funding agreements with IMF and retainer agreements with S&G, and more than 2,400 class members had done so with Harbour and MB. 18 Both proceedings were 'open' class actions and made claims arising from the same factual substratum. They both concerned the guidance that Brambles issued for FY2017 and for its FY2019 medium-term targets, the revised FY2017 guidance issued on 23 January 2017 and Brambles' withdrawal of its medium-term targets on 20 February 2017, and they alleged that Brambles breached its continuous disclosure obligations and engaged in conduct that was misleading or deceptive. 19 The claim period in the Southernwood proceeding commenced on 18 August 2016 and ended on 17 February 2017. The claim period in the Kidd proceeding at the time it was filed was 20 October 2016 until 19 February 2017. Although there were differing claim periods there was a substantial overlap in class membership. 20 On 15 October 2018, shortly before the first case management hearing on 26 October, Brambles filed a stay application in each proceeding, seeking an order that only one of the proceedings be allowed to proceed. In effect, the stay application required the Court to decide between the various available options for dealing with overlapping class actions, which include: (a) consolidation of the proceedings; (b) de-classing of one of the proceedings; (c) a joint trial of all proceedings with each left as they are presently constituted as 'open' class proceedings which is the 'wait and see' approach adopted in Cantor v Audi Australia Pty Ltd (No 2) [2017] FCA 1042; (d) 'closing' the class in one of the proceedings and leaving the other proceeding as an 'open' class action, with a joint trial of the two proceedings, as adopted in Bellamy's; and (e) a permanent stay of one of the proceedings, as adopted in GetSwift. 21 At the case management hearing I indicated to the applicants (or more accurately to the solicitors and funders standing behind them) that they should make every effort to reach an agreement on consolidation. I fixed the stay application for hearing on 27 February 2019 and set a timetable for the exchange of evidence and submissions. 22 On 21 December 2018 the applicants informed Chambers that they had reached an in-principle agreement regarding consolidation and requested further time to finalise the proposed consolidation arrangement. Brambles did not oppose that request, and the timetabling orders for the stay application were vacated. 23 However, as it eventuated, no agreed proposal for the consolidation of the proceedings was forthcoming from the applicants. The proceedings were accordingly relisted for a case management hearing on 22 February 2019. Shortly prior to that hearing the Kidd applicants filed a partly confidential affidavit of Ms Dellavedova in which she deposed to the reasons the applicants had been unable to reach an agreement regarding consolidation. I made orders pursuant to ss 37AF and 37AG of the Act to treat that material as confidential on the grounds that it was necessary to prevent prejudice to the proper administration of justice. The reasons that the applicants were unable to reach an agreement on consolidation must remain confidential, but it is worth noting that they do not include any lack of willingness or ability to cooperate with each other. 24 At the case management hearing on 22 February, Brambles sought orders timetabling its stay application for hearing, Southernwood pursued her consolidation application and the Kidd applicants proposed the cooperation orders. The Kidd applicants also sought and were given leave to file and serve an amended statement of claim to harmonise the allegations and claims made in the Kidd proceeding with those made in the Southernwood proceeding. 25 Brambles and Southernwood opposed the cooperation orders sought by the Kidd applicants. Brambles argued that the proposed cooperation orders did not go far enough to address the issue of duplication of costs. Brambles also contended, with Southernwood's support, that it would be wasteful to make detailed case management orders requiring cooperation which would be required to be unpicked if Brambles or Southernwood were successful in their respective applications for a stay or consolidation. 26 I considered that the best course was to hear the consolidation application before the stay application because, in my preliminary view , the number and estimated claim value of the signed up class members in each proceeding pointed away from staying one of them. If the consolidation application was successful there would be no requirement for each applicant to prepare and put on the necessary detailed and substantial material to show why it was appropriate that their proceeding go forward and the other proceeding be stayed. Brambles, however, opposed the separation of the stay and consolidation applications. 27 In the finish, I listed the applications for hearing on 2 April 2019, which allowed the applicants a further month to see if they could agree on consolidation. When the applications came on for hearing, the applicants remained unable to reach an agreement regarding consolidation of the proceedings. The Kidd applicants filed another confidential affidavit of Ms Dellavedova which expanded on the (unchanged) reason for that inability. The parties continued to seek different orders and their respective positions were as follows: (a) Southernwood sought consolidation of the proceedings, and a common fund order in part as an adjunct to those orders; (b) the Kidd applicants opposed the consolidation application. They continued to pursue their proposed cooperation orders and did not agree to a common fund order, at least at that stage; (c) Brambles' position changed. It: (i) no longer pursued its application to permanently stay one of the proceedings in preference to a consolidation order; (ii) did not oppose consolidation of the proceedings provided only one firm of solicitors (rather than both MB and S&G) was on the record for the applicants; (iii) in the alternative, if the Court allowed a consolidated proceeding to go forward with two sets of solicitors for the applicants, it sought orders in relation to the decision-making and dispute resolution process of the Litigation Committee with a view to reducing duplicated costs, and to cap its liability for the applicants' costs; and (iv) opposed the Kidd applicants' proposed cooperation orders. In the event that the consolidation application was unsuccessful, Brambles pressed the stay application in preference to the cooperation orders. Brambles did not oppose a common fund order.
THE PARTIES' SUBMISSIONS IN RELATION TO CONSOLIDATION
Brambles' submissions 28 Brambles accepted that consolidation of the two proceedings was appropriate, provided that only one firm of solicitors was permitted to represent the joint applicants. In effect it accepted that consolidation addressed the problem of overlapping class membership between the two proceedings and meant it would not be vexed with two proceedings concerning the same alleged wrongs brought on behalf of the same persons. 29 Brambles only continued to pursue the stay application if the consolidation application was to be unsuccessful. It argued that a stay of one of the proceedings was preferable to the Kidd applicants' proposed cooperation orders which it said did not properly address any of its concerns.
The risk of increased costs associated with two firms of solicitors 30 Brambles argued that the principal difficulty with the consolidation application was that it involved two firms of solicitors jointly acting for the applicants, which would generate greater legal costs than would be incurred if one firm of solicitors did so, in circumstances where there was no reason for Brambles or class members to suffer that prejudice. It noted that, if the consolidated proceeding was ultimately successful, the increased legal costs would be paid by class members out of the same pool of available settlement or judgment monies. 31 After the consolidation application was filed the Full Court handed down judgment in the GetSwift appeal. Brambles relied on the observation (at [274(a)]) that: …even when the parties agree to consolidation of the competing proceedings, depending on the agreement reached, there may be wastage of costs and inefficiency. The most efficient outcome is where the competing funders agree to a percentage division of the funding expenses and any funding commission that becomes payable and there is only one set of applicant's solicitors and counsel running the case. Where the agreement provides for joint solicitors under a joint-venture agreement there can be serious inefficiencies and wastage of costs as solicitors from different firms, often with no love lost between them, incur costs by checking each other's work and arguing about the many forensic decisions that are involved in large and complex litigation. (Brambles' emphasis.) 32 It submitted that each of MB and S&G are well resourced and experienced in the conduct of class action litigation, and therefore capable of running a consolidated action for the benefit of all class members. It noted that a difficulty arose because the proposed orders anticipated that, while both MB and S&G would represent the applicants, S&G would owe professional duties to Southernwood and MB would owe professional duties to the Kidd applicants. It contended that it was not in the interests of justice in the consolidated proceeding that costs are wasted by having two firms involved. It submitted that it was an "inescapable reality" that, if both firms are on the record in the consolidated proceeding, the costs to which Brambles stood to be exposed, whether by a costs order or by the practical realities attendant on settling such a class action, would be higher. 33 Brambles also argued that leave is required in order for there to be two sets of solicitors for a party, and that such leave shall not be given absent compelling justification. It relied on Lewis v Daily Telegraph (No 2) [1964] 2 QB 601 (Lewis) at 619 where the Court of Appeal said that allowing two firms to represent the plaintiff was not regular, not in accordance with proper practice and "very odd". It noted that Lewis has been applied in Australia and said that the general rule is that all applicants must act by the same solicitor and counsel, unless leave is given: see Kirby v Centro Properties [2008] FCA 1505; (2018) 253 ALR 65 (Centro) at [10]-[11] (Finkelstein J); Buses and 4WD Hire Pty Ltd v Oz Snow Adventures Pty Ltd [2016] NSWSC 1017 at [28] (Adamson J). Brambles also relied on Carnie v Esanda Finance Corp Ltd (1996) 38 NSWLR 465 (Carnie) at 470 where Young J said that "under the rules of court, all plaintiffs must act by the same solicitor and counsel and that the Court will waive this rule only in the most extreme circumstances and that different views of plaintiffs in representative proceedings are not such a circumstance." 34 Brambles acknowledged that representation by two sets of solicitors had been permitted under orders made by the Federal Court to consolidate several competing class actions, but noted that, in two recent examples (the Sirtex and Quintis class actions), the proceedings were consolidated on the basis that a single firm of solicitors represented the joint applicants. Brambles argued that no evidence had been placed before the Court to justify why dual representation should be permitted in the present case.
The existence of a large number of 'signed up' class members 35 Brambles noted that the proposed common fund order was an integral component of the consolidation application, and that the Kidd applicants had also foreshadowed applying for a common fund at an appropriate time. It argued that the fact that the consolidated proceeding was likely to be funded by way of a common fund order meant that the number of class members that signed up with each funder or solicitor was irrelevant or at least not significant to deciding whether to allow two firms of applicants' solicitors on the record. It noted that in GetSwift (at [177]) the Full Court said that a common fund order would largely supersede any funding agreements and, as such, the number of class members who had signed a funding agreement was not a significant matter to the exercise of the discretion as to which class action should be allowed to go forward. 36 Brambles submitted that in GetSwift (at [178(a)]) the Full Court said that the level of choice exercised by group members in deciding to have their claims funded by a particular funder or prosecuted by a particular law firm was overstated. Their Honours said that: A well-established class action law firm or funder may have a relationship with or be attractive to a repeat claimant in class actions such as an institutional investor, but other than that book building is to a large extent just marketing driven. It said that there was no evidence that the relative level of sign up between the two proceedings was anything other than marketing-driven and the Court could not proceed on an unproven assumption that having one reputable class action plaintiff firm run the proceeding rather than the other would trouble class members in either action. 37 Brambles also said that, notwithstanding that both applicants intended to make a common fund application at some point, neither of them provided an explanation for the substantial book building exercises that both law firms and funders had engaged in. Brambles submitted that allowing both firms to represent the applicants, on the basis that a large number of class members had signed agreements with a particular funder and retainers with a particular law firm, would set a precedent which would undermine the admonition in GetSwift (at [279]) to avoid the wasted costs associated with book building. 38 Brambles also argued that both firms remaining involved in the consolidated proceeding was not in the interests of the class members as a whole. Even if it was supposed that some class members had a genuine or material attachment to the firm of solicitors they had retained, there was nothing to indicate that the interests of that subset should overtake or subsume the interests of the class as a whole, which clearly lay in limiting legal fees so as to maximise their net return under any prospective settlement.
The absence of the Kidd applicant's agreement to consolidation 39 Brambles further argued that the fact that Southernwood proposed consolidation of the two proceedings without the agreement of the Kidd applicants also presented cause for concern and stood as a further justification for only having one set of solicitors for the applicants. 40 Brambles relied on the observation of Beach J in Bellamy's (at [14]) where his Honour said: Generally, consolidation orders are unusual, if only because of the complexity involved in implementing such a mechanism. But in the present context, compounding the usual difficulties are the dimensions of different solicitors, different funders, different funding models and ultimately the circumstance that there is no agreement to this option. I have considered whether if I nevertheless made a consolidation order without first solving these difficulties, the parties would have the incentive if not the necessity to work through these difficult logistics. But I cannot rightly so assume. In the circumstances, the option of consolidation can be put to one side. 41 It also noted that in GetSwift the Full Court said (at [48]-[51]): [48]…Where there is no agreement between the parties in competing class actions as to consolidation, and different lawyers for the applicants and different funders in each of the actions, there are a number of difficulties in relation to consolidation. For example, what uniform funding model would operate for the consolidated proceedings given the different sets of signed up group members in each of the proceedings, when considered from the perspective of signed up group members, the unsigned group members or the funders? And, absent leave being given for separate representation for each of the applicants, what uniform legal representation for the applicants would be used? [49] In Johnson Tiles two open class actions were consolidated and the two law firms were permitted to jointly represent the plaintiffs and group members. However those law firms had entered into a joint-venture agreement in which they agreed to work cooperatively together, the agreement contained a procedure to resolve disputes and deadlocks between the law firms, and they agreed to engage the one set of counsel. In those cases, because the actions were conducted on a no win-no fee basis and there was no funder, it was not necessary for the consolidation order to deal with the problem of separate funders and how consolidation would operate in the scenario that a significant number of group members in each case may have signed up to different funding arrangements. The order did not deal with how funded group members would be affected by consolidation. The case does not assist to answer questions such as: What would be the position for those who had not signed up? What funding model would apply? And what type of common fund order would be sought, and to reflect what proposed funding mechanism? [50] For a consolidation order to be made in competing funded class proceedings, a mechanism would need to be determined for resolving such issues, including so as to achieve equity between the group members in each of the proceedings. In circumstances where the litigation funders may be jointly and severally liable (at least indirectly) for adverse costs, it may not be possible for consolidation to occur without assurances that each funder has adequate finances or insurance arrangements to meet any order which might be made in respect of the consolidated proceedings. Amongst other things, each litigation funder is likely to require sufficient information to form a view as to the co-funder's financial position and in particular its capacity to meet any order for adverse costs. [51] The result is that consolidation orders are unlikely to be made in the absence of agreement between the different applicants, funders and solicitors. There was no agreement in the present case and the primary judge did not consider consolidation to be a viable option. In circumstances where no party contended for consolidation, this option may be put to one side. (Brambles' emphasis.) 42 Brambles also relied on the observation of Moshinsky J in Impiombato v BHP Billiton Ltd (No 2) [2018] FCA 2045 (at [123]) where his Honour said: Consolidation of proceedings would not be appropriate given that there is no agreement between the parties in the competing class actions as to consolidation, and there are different lawyers and funders in relation to each proceeding. 43 While Brambles accepted that the Court has power to order consolidation of the two proceedings without the agreement of the Kidd applicants, it argued that the fact that the consolidation application was only made by Southernwood pointed away from making an order to allow representation by two sets of solicitors. It submitted that there was a degree of competition between S&G and MB and that their differing approaches to consolidation demonstrated that divergent views were already being taken by them.
Avoiding any requirement for the Court to become involved in disputes between the solicitors for the applicants 44 Brambles also submitted that consolidation with one set of solicitors acting for the applicants would avoid the risk of the Court being dragged into resolving disputes between two sets of solicitors. It noted that the proposed orders provide for a Litigation Committee comprising solicitors from each law firm, which is to operate by unanimous decision and queried the processes which would apply if unanimity could not be reached. It argued that the Court would need to resolve such disputes, of which it said there may be many and which would need to be determined by a judicial officer other than the trial judge. 45 Brambles argued that the proposed consolidation orders required the solicitors to work together to reduce duplication while ensuring sufficient oversight over the work performed by the other, which it contended amounted to "legislating for cooperation". It contended that such orders could not be enforced, yet the consequence of non-compliance with orders was a contempt of court. It submitted that having a single set of solicitors presented a much cleaner, clearer and more definite solution.
Brambles' alternative submissions 46 In the event that the Court decided to grant leave for two firms of solicitors to act for the applicants, Brambles sought further orders to address the risk of duplicated costs, including: (a) a costs capping order so that Brambles is not exposed to additional costs by reason of the proceedings being conducted by two sets of solicitors acting for the applicants rather than by a single firm; (b) appointing a costs referee to assess the reasonableness of the applicants' legal costs on an ongoing basis and to report to the Court on the costs incurred, including whether duplication is becoming excessive or if excessive costs are being incurred in protracted consultation or dispute resolution processes between the firms; (c) allocating primary carriage of the proceeding to one firm with the other firm having a consulting role, akin to the division commonly adopted in insured cases; and (d) adjusting the consolidation orders so it is clear that the Litigation Committee needs to allocate substantial tasks (such as reviewing discovery) to only one firm.
Kidd's opposition to consolidation and its proposed cooperation orders 47 The Kidd applicants opposed the consolidation application. They submitted that the two proceedings should be allowed to continue, at least for the present, and that the risk of unnecessary or excessive duplicated costs should be addressed through orders directed to cooperation between the applicants and their solicitors. They argued that the detailed cooperation orders they proposed essentially had the same effect as the proposed consolidation orders, and thus consolidation was unnecessary. In light of the harmonised pleadings they argued that the proposed cooperation orders were an appropriate way to progress the litigation with a minimum of expense and delay and that such orders would properly accommodate Brambles concerns about having to defend two proceedings with overlapping class membership. 48 Importantly, the Kidd applicants accepted that there was no discretionary reason for the Court to decline to consolidate the proceedings on the basis that it was not satisfied that the applicants and their solicitors were willing to cooperate and to comply with the conditions imposed under a consolidation order. They argued, and I accept, that the evidence shows that there is no difficulty with such cooperation, including that: (a) Ms Dellavedova had explained in her confidential affidavits why there had been no agreement reached on consolidation; (b) the applicants and their solicitors were already cooperating in relation to the litigation and that it was likely that such cooperation would continue; and (c) although there was no agreement on cooperation, there are good reasons to think that the applicants, solicitors and funders would comply with any conditions of consolidation that the Court imposed. 49 In the event that the Court decided that it was preferable to consolidate the two proceedings rather than make the cooperation orders, the Kidd applicants sought some changes to the proposed consolidation orders. Amongst other things, they noted that the proposed consolidation orders provided that each firm should do 50% of the work, and they submitted in that regard that it was neither necessary nor desirable for the Court to make specific orders requiring the solicitors to divide up work in any particular way, or according to any particular fixed percentage. They contended that a fixed work split appeared to be directed to the interests of the solicitors rather than class members and that it was likely to import a rigidity which was inappropriate to an endeavour as inherently dynamic as litigation. They submitted that the allocation of tasks in litigation is best worked out iteratively via the Litigation Committee. By and large I found the changes the Kidd applicants proposed to be appropriate. 50 The Kidd applicants also submitted that there was no immediate need for the Court to make a common fund order, but that if such an order was to be made, various changes to the proposed orders were appropriate.
CONSIDERATION REGARDING CONSOLIDATION 51 I consider it appropriate to make orders to consolidate the competing class actions, coupled with a common fund order to set out the funding arrangements and the obligations of the applicants, class members, solicitors and funders in the consolidated proceeding. In my view the orders will best promote the overarching purpose of facilitating the just resolution of the dispute as quickly, inexpensively and efficiently as possible. They strike an appropriate balance between protecting the interests of the applicants and class members in prosecuting their claims through solicitors and funders they have engaged, Brambles' interest in avoiding a requirement to defend overlapping class actions brought on behalf of the same class members in respect of the same alleged wrongs, and both the interests of class members and Brambles in avoiding unnecessary or duplicated costs. The orders are appropriate to ensure that justice is done in the proceedings under s 33ZF. 52 Brambles did not oppose consolidation per se. Instead its submissions centred on the risk of unnecessary or duplicated costs which it argued would arise from having two sets of solicitors acting for the applicants. In my view Brambles misunderstood the authorities concerning permitting joint solicitors on the record in a consolidated class action and it overstated the risk of duplicated costs having regard to the provisions of the orders requiring cooperation and dealing with the risk of such duplication. 53 First, Brambles' concerns regarding the risk that it and class members may face duplicated costs is based, to an extent, in the unstated premise that if the Court does not grant leave for both firms of solicitors to be on the record for the applicants, Brambles will face only one class action conducted by one firm of solicitors. That is not the case. Part IVA of the Act does not guarantee that a respondent will only ever be faced with and incur costs in one class action for any alleged wrong. As the Full Court in GetSwift said (at [146]-[147]): Part IVA contemplates that there may be more than one proceeding against the same respondent in respect of the same subject matter and the same cause(s) of action (Bellamy's at [34]). A claimant has a choice whether to bring representative proceedings on behalf of "some or all" persons. If that choice is not made, one or more claimants may bring separate individual proceedings against the one respondent in respect of the same claims or may aggregate their claims into another representative proceeding. Thus the Part contemplates the possibility of a multiplicity of proceedings. Moreover, even if representative proceedings are brought, one or more group members may opt out and bring their own individual proceedings, resulting in multiple proceedings against the same respondent. Indeed, such group members who have opted out may bring their own separate representative proceedings. Nothing in Part IVA precludes such an option. And to do so would neither be invalid nor an abuse of process. In other words, the structure of Part IVA permits of multiple proceedings including multiple representative proceedings. 54 Second, Brambles was wrong in understanding the authorities to provide that, where there are competing class actions, an order to consolidate the proceedings should not be made unless the applicants act through the same solicitor, absent "the most extreme circumstances" or some compelling justification. Lewis and that line of authority is not rooted in the jurisprudence of representative proceedings, and those decisions cannot be treated as derogating from the broad powers of the Court under s 33ZF to make any order the Court thinks appropriate or necessary to ensure that justice is done in such proceedings and under and s 37M to make orders that best promote the overarching purpose. 55 The Court has regularly made orders to consolidate competing class actions, and permitted two firms of solicitors to represent the applicants in the consolidated proceeding, including in: (a) Johnson Tiles Pty Ltd v Esso Australia Limited (1999) FCA 56; (1999) 56 ATPR 41-679 (Johnson Tiles) where Merkel J made orders on 5 February 1999 to consolidate two representative proceedings with MB and S&G jointly representing the applicants. His Honour said (at [70]) that provided the solicitors agreed to appoint one set of counsel the existence of two firms of solicitors on the record was not a factor to warrant refusing to order consolidation. As I have said, the proposed consolidation orders in the present case provide for one set of counsel to represent the joint applicants; (b) Hadchiti and Ors v Nufarm Ltd VID 24 of 2011 where Middleton J made orders on 9 August 2011 to consolidate two representative proceedings and for MB and S&G to jointly represent the applicants; (c) Stanford and Another v DePuy International Ltd NSD 213 of 2011 where Emmett J made orders on 20 April 2012 to consolidate two representative proceedings and for MB and Shine Lawyers to jointly represent the applicants; and (d) Whittenbury and Karageorgiou v Vocation Ltd (in liquidation) VID 434 of 2015 where Middleton J made orders on 17 March 2017 to consolidate two representative proceedings and for MB and S&G to jointly represent the applicants. 56 There is no force in Brambles' contention that the Court has more recently turned away from allowing two firms of solicitors in a consolidated class action. To make out that contention Brambles pointed to the Sirtex and Quintis class actions where consolidation was ordered with only one firm of solicitors representing the applicants, but did not seek to show why those orders were made. I will not speculate as to the reasons for the orders in Quintis but I was the docket judge in Kuterba v Sirtex Limited VID 1375 of 2017 when, on 30 April 2018, orders were made to consolidate two overlapping class actions with one firm of solicitors representing the joint applicants. I made those orders by consent of the applicants in both proceedings. 57 Brambles' reliance on the decision in Centro is also misplaced. In that case Finkelstein J referred (at [10]) to Lewis and a rule of practice that, without leave, separate representation is not permitted on the applicants' side. However, that does not take Brambles' argument very far. First, Finkelstein J identified that the authorities to which he referred arose in the context of what he described as "ordinary civil litigation" rather than representative proceedings. Second, it can be accepted that leave is required for joint representation but that does not show that leave should only be given in the "most extreme circumstances". Third, and importantly, his Honour accepted (at [11]) that joint representation is sometimes allowed in class actions and noted that Merkel J permitted two sets of solicitors to jointly represent the plaintiffs in Johnson Tiles (at [70]) provided that they agreed to jointly engage one set of counsel, as under the proposed consolidation orders in the present case. Fourth, the reasons his Honour gave for refusing to make orders to stay one of the competing class actions in that case did not concern whether or not the joint applicants in a consolidated proceeding could be represented by two firms of solicitors. In short, Centro does not stand for the proposition Brambles advanced. 58 In my respectful view Young J was plainly wrong in concluding in Carnie that it is only in the "most extreme circumstances" that leave should be granted to allow more than one firm of solicitors to represent joint applicants in a representative proceeding. It is worth noting that Carnie predates all of the decisions of this Court set out above, none of which involved extreme circumstances. 59 Third, it should be kept in mind that the proposed consolidation orders do not involve Brambles being faced with two legal firms of solicitors doubling up on the work to be done. They essentially involve the joint applicants resourcing the litigation as if they were running a single action against Brambles. The proposed consolidation orders provide that at least in relation to matters inter partes the solicitors will act as one. 60 I have no difficulty in accepting that allowing two firms of solicitors to jointly represent the applicants involves a risk of duplicated legal work and higher costs than if they are represented by one firm of solicitors. Having said this: (a) the consolidation orders and Protocol require the solicitors to work together to reduce duplication in the work undertaken and seek to avoid doubling up by the measures set out in [11(a)-(d)] above. While the orders and Protocol provide for an even work split between MB and S&G by reference to hours of work performed by each law firm, the primary determinant of the allocation of work must however be the interests of group members having regard to: (i) the skills and experience of the lawyers and their respective staff; (ii) the objective of ensuring that the total legal costs are reasonable and proportionate; and (iii) the objective of minimising, to the greatest extent possible, the legal costs incurred through overlapping or duplicated work. The Protocol also requires that the number and seniority of legal personnel conducting a task in relation to the common issues will be no more than if there was only a single representative proceeding against Brambles. MB and S&G are required to interpret and give effect to the protocol "in a manner whereby the primary consideration shall be the interests of group members". These provisions address the concern raised by the Kidd applicants regarding the proposed 50:50 work split, and provide appropriate protections for Brambles and class members against the risk of unnecessary or excessive duplication of costs; (b) the orders and the Protocol further manage the risk of unnecessary or excessive duplication in the work performed by the solicitors through the appointment of a costs referee to report on that question every four months through the life of the proceeding. This provides further protection against the risk of unnecessary or excessive duplication of costs; and (c) any unnecessary or excessive duplication can also be identified at the stage of settlement approval or distribution of judgment monies, and only such reasonable costs as are approved by the Court will be required to be paid by either Brambles or the class members. This provides further protection against duplicated costs. Brambles' submissions did not pay sufficient regard to the protections embedded in the terms of the proposed consolidation orders or the Protocol (although, in fairness, it must be noted that it was not provided with a copy of the Protocol which was, at least at that stage, treated as confidential). In my view, if there is any duplication of costs it is unlikely to be substantial. 61 Brambles' contentions regarding the risk of unnecessary or excessive duplication in the work are also, to an extent, based in the assumption that MB and S&G are unable or unwilling to work efficiently together. There is no basis in the evidence for that assumption. First, as noted above at [53], the two firms have cooperated in the conduct of consolidated class actions on a number of previous occasions. Second, Ms Dellavedova explained the inability of the applicants to reach an agreement on consolidation, which had nothing to do with any inability or unwillingness to cooperate. Third, the evidence shows that the applicants are willing to work cooperatively, including by doing so in the early stages of these proceedings. 62 Brambles' submissions are also based, to an extent, on the false premise that the counterfactual is a single firm acting for the joint applicants, in which there is never any disagreement or difference within the legal team as to the appropriate strategy or the best way forward. In large complex commercial class action litigation like the consolidated proceeding, even if there is only one set of solicitors acting for the applicants, there will almost inevitably be some divergences in view which will require discussion and resolution - within the solicitors' team, between solicitors and counsel, and between the solicitors and funder. While I accept that such divergences may be accentuated through separate law firms jointly acting for the applicants (particularly where there is "no love lost between them" and they "incur costs by checking each other's work and arguing about the many forensic decisions that are involved": see GetSwift at [274(a)]) there is no evidence of such disagreements between the relevant solicitors at MB and S&G. The evidence tends to demonstrate a cooperative approach to date and an expectation that cooperation will continue. Further, the proposed orders address the risk of unnecessary or excessive duplication of work by appointment of a costs referee to report to the Court every four months. 63 In my view it is unnecessary at this stage of the proceedings to make the cost-capping orders which Brambles seeks. If a problem of unnecessary or excessive duplication of work emerges the issue will be raised by the costs referee in her regular reports to the Court and addressed once it has been raised. Nor is there any requirement to direct that substantial tasks, such as reviewing discovery, be allocated to only one firm. The process of work allocation is best undertaken iteratively. There is no evidence that MB and S&G are unable or unwilling to work cooperatively and efficiently together, and no proper basis to constrain their work by a judicial direction as to the division of labour between the two firms. 64 I do not accept Brambles' contention that it is likely that the Court will be required to deal with disputes between the joint solicitors. The proposed Funding Terms provide for a mechanism for any dispute arising between any of the funders, the joint applicants or the solicitors, including any disputes between members of the litigation committee, regarding the conduct of the consolidated proceeding. Such disputes must be referred to the most senior counsel of those retained for a final decision which the funders, the joint applicants and the solicitors agree will bind them. That process does not require recourse to the Court. Further, as Merkel J recognised in Johnson Tiles at [70], should joint representation give rise to repeated disputes the Court can revisit the decision to allow joint representation. 65 Fourth, Brambles placed too much reliance on the passage in GetSwift (at [274(a)]). In that paragraph the Full Court recognised that even where consolidation orders are made there may be wastage of costs and inefficiency, in effect noting that, at least prima facie, consolidation is an efficient option. Their Honours made that observation in the context of noting (at [274]-[275]) that there is no 'silver bullet' solution to the case management problems of competing class actions and that all of the 'solutions' can be said to have some or other problem. Any analysis of the desirability of consolidating competing class actions and permitting two sets of solicitors to jointly represent applicants must be undertaken by comparison with the other practical alternatives. In the present case there are practical obstacles to an outcome in which only one firm of solicitors represents the applicants and class members (outlined at [9] above), and the risk of unnecessary or excessive duplication of work can be addressed by other mechanisms. 66 Fifth, the proposed consolidation and common fund orders address the difficulties which may arise in the consolidation of funded class actions recognised in Bellamy's (at [11]-[14]) and GetSwift (at [48]-[51]). If the proposed orders are made the applicants will be jointly represented by two firms of solicitors who have agreed to work cooperatively under the Court-approved Protocol which includes a procedure to resolve disputes and deadlocks, and to engage one set of counsel. The proposed orders set the parameters of the funding arrangements for the consolidated proceeding which will be jointly funded by IMF and Harbour who will each be liable for half of the Joint Project Costs, half of any adverse costs order and half of any order for security for costs. The Court will approve a reasonable funding rate, most likely at the point of settlement approval or distribution of judgment monies, and that rate will be the same for all class members so that there is equity as between the class members in the Southernwood and Kidd proceedings and as between 'signed up' and unsigned class members. 67 In passing I note that the terms of the Protocol provide for it to be kept confidential except that a copy may be provided to the Court, class members on request, the costs referee, an independent person appointed to determine any disputes between the parties and any other person as agreed to by the Litigation Committee. I allowed the Protocol to be filed with the Court on a confidential basis but my preliminary view, subject to hearing further from the parties in this regard, is that a continuing confidentiality order should not be made. I can see nothing in the Protocol which would give an advantage to Brambles in the litigation or, more importantly, nothing to indicate that a confidentiality order regarding it is necessary to prevent prejudice to the proper administration of justice: see s 37AG(1)(a) of the Act and Zantran Pty Ltd v Crown Resorts Limited [2019] FCA 641 at [34]-[41]. I will allow the applicants seven days to put on submissions if they seek that the Protocol or any part thereof remain confidential, and should the applicants elect to do so, I allow Brambles seven days from that date to put on responsive submissions.
THE COMMON FUND APPLICATION 68 Southernwood sought a common fund order. The Kidd applicants acknowledged that in due course they intended to also seek a common fund order, but submitted that it was unnecessary for such an order to be made at this stage. If a common fund order was to be made, they opposed some aspects of the proposed orders. Brambles did not oppose the common fund order per se, but it pointed to some aspects of the proposed orders which it said required careful consideration by the Court. 69 No party submitted that the Court lacked power to make the proposed common fund order and that issue has been considered at an appellate level in Money Max Int Pty Ltd v QBE Insurance Group Ltd [2016] FCAFC 148; (2016) 245 FCR 191 (Money Max) at [160] to [175] (Murphy, Gleeson and Beach JJ), Brewster v BMW Australia Ltd [2019] NSWCA 35; (2019) 366 ALR 171 at [82] (Meagher, Ward and Leeming JJA) and Westpac Banking Corp v Lenthall [2019] FCAFC 34; (2019) 366 ALR 136 at [85] to [96] (Allsop CJ, Middleton and Robertson JJ). Leave to appeal to the High Court has been granted in Brewster and Lenthall but the Court must apply the law as it is. 70 I am satisfied that the proposed common fund order is appropriate to ensure that justice is done in the proceeding pursuant to s 33ZF of the Act. 71 First, the common fund order will mean that all class members will pay the same pro rata share of legal costs and funding commission from any settlement or judgment. It is in the interests of justice in the proceeding that the burden of the legal costs and funding charges incurred in achieving any successful outcome in the consolidated proceeding fall equally on all class members who stand to benefit: see Pearson v State of Queensland [2017] FCA 1096 (Pearson) at [22]; Petersen v Bank of Queensland (No 3) [2018] FCA 1842; (2018) 132 ACSR 258; (Petersen) at [221]. 72 Second, the common fund order allows the Court to later approve a reasonable funding rate. Class members will thereby have the protection inherent in judicial oversight of the funding commission to be charged, which approval will be made when the Court is armed with: information as to the litigation risks of providing funding in the proceeding; the quantum of adverse costs exposure that the funders assumed; the legal costs expended and the security for costs provided; the quantum or likely quantum of any settlement or judgment; and how the funding rate compares to the rate funded class members would have paid under their funding agreements: see Pearson at [23]; Money Max at [79]-[80]. 73 Third, unless a common fund order is made there are likely to be four groups of class members in the consolidated proceeding, being those who: (a) have signed a funding agreement with IMF; (b) have signed a funding agreement with Harbour; (c) have not signed a funding agreement but who register in a later class member registration process; and (d) have not signed a funding agreement and who do not register. The conflicts of interest which may arise between these different types of class members are avoided through a common fund order: see Money Max at [189]-[191] and [197]-[199]; Pearson at [28]. 74 Relatedly, depending upon the stage at which a settlement is reached unless a common fund order is made class members who have signed a funding agreement with IMF will be charged a different funding rate to those who have signed a funding agreement with Harbour. Those who have not signed a funding agreement will not pay a funding commission, although they may suffer a deduction from any recovery they make through a funding equalisation order. A common fund order is a simple and transparent mechanism for fairly apportioning funding charges across the class: Petersen at [222]. 75 Fourth, the common fund order will be made at an early stage and class members in the consolidated proceeding will have the benefit of being informed of the requirement to later pay a reasonable Court-approved funding commission before they must decide whether to opt out: Pearson at [26]. 76 Fifth, the proposed common fund order has a number of provisions which operate to protect class member's interests and which may be expected to operate to reduce overall costs to class members. The aspects of cost reduction include an equalisation of the professional rates charged by the solicitors, a prohibition on recovering 'uplift' on any conditional fees and a prohibition on the funders seeking to recover costs incurred in the provision of security for costs. 77 Finally, having regard to the consolidation application there is no requirement to consider the counterfactual possibility that a funding equalisation order might be made at some point in the future: see Blairgowrie Trading Limited & Another v Allco Finance Group Ltd (recs and mgrs appointed) (in liquidation) (No 3) [2017] FCA 330; (2017) 118 ACSR 614 at [102]-[105] (Beach J); Pearson at [30]-[32]. For the reasons explained in Bellamy's (at [11]-[14]) and GetSwift (at [46]-[51]), it is difficult to consolidate funded competing class actions without fixing the parameters of the funding arrangements to apply. Making the common fund order is a necessary adjunct of the consolidation orders and a funding equalisation order would not be appropriate in the circumstances. I certify that the preceding seventy-seven (77) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Murphy.
Southernwood
Brambles Limited
(2019) 366 ALR 171
(1996) 38 NSWLR 465
(2018) 253 ALR 65
(2016) 245 FCR 191
(2018) 357 ALR 586
(2018) 363 ALR 394
(2019) 366 ALR 136