Webb v GetSwift Limited

A Introduction & Relevant Background 1 Filed in Court and returnable instanter is an interlocutory application filed by the applicant (Mr Webb), which seeks the following relief: Pursuant to section 33ZF of the Federal Court of Australia Act 2011 (Cth), the legal representatives and litigation funder (and its related entities) of the applicant in NSD 226 of 2018 (Perera Applicant) be restrained from communicating with group members in this proceeding concerning any opt-out of this proceeding until further order of the court. (Errors and bolding in original) 2 For reasons that follow, I am not prepared to make the order in the terms sought in the interlocutory application. I am, however, prepared to grant some relief which seeks to preserve the status quo, pending the hearing, on 8 June 2018, of an application to put in place a regime for opt out. Subject to hearing further argument, I have foreshowed that this regime will have, as a component part, the notion that all communications to group members in this proceeding, for the purposes of opt out, should be communications that are complete, accurate and have been approved by the Court. 3 This novel application arises in the following way. On 23 May 2018, I delivered judgment on an application in this and two related class actions: Perera v GetSwift Limited [2018] FCA 732. In Section K.4 of that judgment, at [362]-[370], I dealt with an issue that was of relevance to my decision to stay permanently NSD226/2018 Perera v GetSwift Limited (Perera Proceeding) and NSD440/2018 McTaggart v GetSwift Limited (McTaggart Proceeding). These reasons assume a familiarity with that earlier judgment. 4 In the paragraphs to which I have just referred, I pointed to the fact that in both the Perera Proceeding and the McTaggart Proceeding there were a number of funded group members who had signed funding agreements with litigation funders. These were described in the judgment as the 'Perera Funded GMs' and the 'McTaggart Funded GMs'. I further made reference to the fact that the funding agreements put in place a contractual regime whereby it was arguable that even if a group member's claim is vindicated by, and recovered in, this Webb Proceeding, it may be that an obligation nevertheless rests upon the Perera Funded GMs and the McTaggart Funded GMs to pay an amount to the litigation funders of the stayed proceedings (that is, to International Litigation Partners No 18 Pte Ltd (ILP18) in the Perera Proceeding and to Vannin Capital Operations Limited (Vannin) in the McTaggart Proceeding). Any such amount would be in addition to the amount that would be required to be paid pursuant to the terms of the common fund order that I propose to make in this proceeding. In Perera at [364]-[370], I said the following: It is inappropriate that I express any views, at present, as to the ability of either ILP18 or Vannin to enforce any apparent promise requiring payment in the circumstances of a payment made to Perera Funded GMs or the McTaggart Funded GMs by settlement or other resolution of their claims in the Webb Proceeding. No party addressed this issue in submissions and it would be premature for me to express even preliminary views as to the nature of the relevant contractual provisions and, if an obligation exists, what, if anything, should be done about it. It is presently relevant only to the extent it bears upon whether the course I have decided upon is practicable, and also as to the issue of what should be said in any opt out notice to the Perera Funded GMs and the McTaggart Funded GMs as to the possibility, notwithstanding the making of a common fund order, that they may be subject to some future claim by ILP18 and/or Vannin. This Court has already expressed views about its ability to use various powers to amend funding agreements when it considers it necessary or appropriate to do so: see Earglow Pty Ltd v Newcrest Mining Limited [2016] FCA 1433 (Murphy J); Blairgowrie (No 3) (Beach J) and Mitic v OZ Minerals Limited (No 2) [2017] FCA 409 (Middleton J). Other larger issues may arise as to varying funding agreements and as to the ability of a funder to seek to enforce promises given in the course of a common enterprise to use the processes of the Court in circumstances where the proceeding, contemplated by the common enterprise, is stayed and does not constitute the vehicle pursuant to which the group member recovers compensation. These questions may need to be addressed in due course and I will say no more about the topic for present purposes other than to make two points. First, as I have already foreshadowed, it will be necessary for something to be said concerning this issue in the course of opt out and it is for this reason that I will give leave to Mr Perera (and ILP18) and the McTaggart applicants (and Vannin) to make any submissions that they wish to make as to what should be communicated to group members, including the Perera Funded GMs and the McTaggart Funded GMs. Additionally, subject to hearing argument on approval of an opt out notice, it may be appropriate for consideration to be given to a regime being put in place whereby the only communication made to any group members concerning opt out is to be a communication approved by the Court. The purpose of this would be to ensure there is discipline and precision in the messages communicated. Additional consideration ought to be given as to whether, in these unusual circumstances, it is appropriate that an independent lawyer (possibly a junior barrister) to be appointed to answer any queries that the group members may have concerning the terms of the opt out notice. I am conscious that this may raise novel issues in circumstances where, in the case of the Perera Proceeding, the Perera Funded GMs are also, as I understand it, clients of SPB. Secondly, I mentioned above that this issue is relevant to the extent it bears upon consideration as to whether the course of staying funded proceedings is practicable. In making orders for the parties to put forward proposed funding arrangements, I was conscious of the comments of Beach J in Bellamy's at [23] where his Honour, in dealing with the differences between Australia and the United States, noted that any sealed bid process could not have a meaningful utility "given the existence, magnitude and exposure" of the contractual arrangements that were entered into in that case between two litigation funders. Here, of course, the problem that arises in relation to the existing contractual arrangements does not loom in the same way as it did in Bellamy's because of the relatively small number of funded group members. But another point made by Beach J (at [39]) in this context has present relevance. This was that group members who have entered into funding arrangements may wish to opt out of the non-stayed proceeding and run their own actions or may seek to join, together with other funded group members, an attempt to commence a further class action. As Beach J observed, such a result would be unsatisfactory. Indeed, left unchecked it could lead to a different type of multiplicity and would serve to undermine the protective steps I have taken and the cost and efficiency goals achieved in allowing only one open class proceeding to go forward. Fundamental to Part IVA is that each group member has a statutory right to opt out. The right represents a protection for group members in circumstances where consent is not required for an applicant to represent them. People may have an array of reasons for opting out, for example, scruples about being involved in any litigation, a corporate desire not to be involved in securities litigation, an unhappiness about the basis upon which the litigation is to be funded or conducted, and so on. It is not the place of the Court to interfere with any group member making a bona fide decision to opt out, irrespective of whether the Court may consider the group member is acting idiosyncratically or even contrary to what might objectively be perceived as being in their interests. Protection is not paternalism. What would be troubling, however, in circumstances where a funded proceeding has been stayed, would be for a funder of stayed proceedings to use what are alleged to be the benefit of their contractual rights under funding agreements to, in effect, 'force' opt out, as the price of providing comfort to funded group members that they will not be saddled with two sets of imposts. It would, in my view, be similarly undesirable for the promotors of stayed proceedings to 'lobby' group members or encourage opt out for the reason of commercial promotion of a further competing class action. I hasten to say that I do not think there is any basis for believing that either ILP18 or Vannin or their agents or the solicitors would rely on the provisions of the funding agreement in some sort of minatory way or act otherwise than conscientiously. I make these points merely to stress, as a matter of process, that great care needs to be taken in communicating Court approved messages to the funded group members about the relative advantages and disadvantages of opting out of the non-stayed proceeding and that the Court should take an active role in ensuring that correct, independent and complete information is given in order to allow group members to exercise an informed decision as to opt out. For one thing, those opting out should be aware of the prospect, subject to hearing submissions, that if they opt out, consistently with Part VB case management objectives, their individual proceeding may be adjourned pending a mediation (and if then unresolved) pending the determination of common issues in the open class proceeding. The existence of the problems occasioned by the existence of funding agreements entered into by a book building programme raises novel issues, but ones that, with active case management, will be able to be surmounted. It follows that this complication does not serve to outweigh the desirability of only one class action going ahead and, to the extent relevant, this was taken into account in my consideration of whether permanent stays or other relief should be ordered. (Italics in original) 5 Part of the orders I made when delivering judgment was for there to be a case management hearing on 8 June 2018 as to the form of the opt out notices, and allowing Mr Perera, the McTaggart applicants, ILP18 and Vannin to appear to advance any interests that they had in relation to the terms of the notice and as to opt out generally. Counsel appearing for both Mr Perera and the McTaggart applicants indicated to the Court that they had sufficient instructions to indicate that this right to intervention would be exercised, and that I would have before me, on 8 June 2018, Mr Perera, the McTaggart applicants and, at least insofar as I understood it, ILP18 and Vannin. 6 Immediately prior to the case management hearing scheduled for the afternoon of 23 May 2018, at 2.37 pm, my Associate received a communication from the solicitors for Mr Webb in the following terms: We refer to the judgment of his Honour handed down this morning, and in particular, paragraph [366] thereof. Having regard to the matters raised in that paragraph, the Webb Applicant will submit at this afternoon's case management hearing that the following further order be made in each of the Perera Proceeding and the McTaggert Proceeding: "3. That the solicitors for the applicant and the applicant's litigation funder be restrained, until further order, from communicating with group members in proceeding NSD 580/2018 concerning opt out of those proceedings without first obtaining the approval of the Court to do so." 7 Discussion took place at the case management hearing as to this application which was, in effect, an application for an injunction. I indicated that I was not prepared to make an order in such broad terms, but that I would consider an application if it became necessary and appropriate for me to do so in order to preserve the integrity of the proposed opt out process. In this regard, the following exchange occurred on 23 May 2018 (T 26-8): HIS HONOUR: Well, I wouldn't make an order in the nature of an injunction anyway. What I would…contemplate doing, if I thought it was necessary and appropriate to do so, would be make an order under section 33ZF, which would be an order simply restricting discussion as to opting-out pending the argument on the 8th as to the opt-out when, hopefully, subject to any other application ..... to make or the like, an opt-out notice will communicate that information, but I hear what you say. Mr Collins, before I call on Mr Edwards, you've heard what Mr Brereton said, it's a lengthy judgment and Mr Brereton says, well, he should have at least a chance of taking informed instructions as to whether or not there ..... comfort given. I'm inclined - particularly given the funders aren't before the court anyway, I'm inclined to, perhaps, give a period, say, overnight in order to allow instructions to be given and that be communicated to you as to whether or not there is any intention of communications of the type that I'm concerned about, if comfort can be given, well, that's fine, if it can't be given, then, you can relist it and I will - you can file an application - well, you can bring an application you wish to make under section 33ZF along the lines that I've talked about. Is that suitable? MR COLLINS: Yes, your Honour. We don't press the application and will adopt that course. HIS HONOUR: All right. Is that - is that suitable, Mr Edwards, from your perspective? That is - that is that you can obtain - you can obtain instructions and provide to Mr Collins' instructing solicitors whether or not some comfort along those lines can be provided and they can take whatever action, depending upon that communication, they wish to take. MR EDWARDS: Yes. I think that's suitable, your Honour, although there's - - - HIS HONOUR: I mean, in order - - - MR EDWARDS: There is some - - - HIS HONOUR: I would regard - - - MR EDWARDS: - - - difficulty, though, I should say with possibly tomorrow, I'm not certain where the funder is and which - whether he's overseas, or not - the authorised representative of the funder. So - - - HIS HONOUR: I see. MR EDWARDS: Although, we will get those instructions as soon as we can. HIS HONOUR: As soon as practicable. Yes. Well, I - can I say from my perspective I would regard an order along the lines I've talked about as very much a last resort and only when other steps have been exhausted, and if that takes tracking Mr Lindholm down somewhere, then you should have time to be able to do that. MR EDWARDS: Does your Honour contemplate any sort of order that - or anything that affects the solicitors because there's a real practical difficulty if Ms Banton has to go and speak to all of the partners of Squire Patton Boggs worldwide and ensure that they're not - I mean, an interlocutory - - - HIS HONOUR: Why would they be interested in having a discussion about opt-out in this case? MR EDWARDS: Well, what has been proposed this afternoon was about half a minute's notice before your Honour is that the firm be restrained in some way. HIS HONOUR: Well, I'm not going to restrain people by way of an injunction. What I will do, if it's absolutely necessary - and I hope it's not necessary - subject to hearing further argument, but this is certainly my - what might be described as my preliminary view that I would make an order under section 33ZF, if I thought it was appropriate and necessary in the interests of justice in order to preserve the integrity of the opt-out process, but I would calibrate that in such a way as to do minimum violence to allowing your client as a solicitor to communicate with her clients and with people - with recognising a reality that there's a good possibility that funded group members will be making unsolicited communications. So the order would need to be calibrated in a very, very granular way to make sure that there could be no doubt about your solicitors' ability in those circumstances to communicate as much you can to her solicitors without trespassing on what I regard as the difficult area, but, hopefully, as we say, that might all go away. All right. Yes. 8 As can be seen from my exchange with Mr Edwards, I indicated that I would only regard an order along the lines proposed as "very much a last resort and only when other steps have been exhausted". 9 The evidence then discloses that I said the following to Mr Collins QC, who appeared on behalf of Mr Webb at that case management hearing (T 26-7): Mr Collins, before I call on Mr Edwards, you've heard what Mr Brereton said, it's a lengthy judgment and Mr Brereton says, well, he should have at least a chance of taking informed instructions as to whether or not there [is] comfort given. I'm inclined - particularly given the funders aren't before the court anyway, I'm inclined to, perhaps, give a period, say, overnight in order to allow instructions to be given and that be communicated to you as to whether or not there is any intention of communications of the type that I'm concerned about, if comfort can be given, well, that's fine, if it can't be given, then, you can relist it and I will - you can file an application - well, you can bring an application you wish to make under section 33ZF along the lines that I've talked about. 10 It appears that the following day, on 24 May 2018, the solicitors for Mr Webb did not receive any communication from the solicitors for Mr Perera or the McTaggart applicants concerning the present issue. At 6.40 pm on Thursday, 24 May 2018, Mr Webb's solicitors caused to be sent a letter to the other parties requesting that they confirm their position by 12 pm the following day, namely Friday, 25 May 2018, failing which Mr Webb would apply to the Court for an order. 11 Thereupon an exchange took place by way of both email and telephone between Corrs Chambers Westgarth (the solicitors for the McTaggart applicants) and the solicitors for Mr Webb, from which emerged a satisfactory arrangement. No comfort was provided by the solicitors for Mr Perera, Squire Pattern Boggs (SPB), as to the position of Mr Perera, SPB or ILP18. 12 At 4.46 pm on 25 May 2018, a communication was sent to my Associate attaching a minute of proposed order along the lines of the current interlocutory application, requesting that I make such an order in chambers. I pause to note that I would not have regarded it as appropriate for such an order to be made otherwise than in open court and after hearing further from those proposed to be restrained. In any event, shortly thereafter, at 6.03 pm, an email in the following terms was sent by Mr James Fraser of SPB to my Associate, copying the other interested parties: Dear Associate We refer to the order proposed by the Webb Applicant that is attached to the below email. We note that the proposed undertaking was only provided to us yesterday after hours. We have not been able to obtain instructions from the litigation funder, or the Squire Patton Boggs' partnership in relation to that undertaking. In any event, we understand that the Webb Applicant was directed to proceed by way of interlocutory application in the event that the undertaking was not agreed between the parties. As neither Squire Patton Boggs nor the litigation funder were represented at the directions hearing on Wednesday 23 May 2018, we consider that the Webb Applicant should be required to file an application in relation to the proposed order so that both Squire Patton Boggs and the litigation funder can be represented and be heard on the application before the order is made by the Court. … 13 These communications came to my attention on the morning of 28 May 2018 and, at approximately 9 am, I directed my Associate to communicate to the parties in the following terms: Dear Practitioners, I refer to the below emails, which I have drawn to his Honour's attention this morning. Assuming that the solicitors for Mr Webb still seek relief in terms of the minute of proposed order then his Honour will deal with the matter at 2.30 pm this afternoon. Leave is granted for an interlocutory application to be returnable at that time. Any party who wishes to appear has leave to do so via video link. … 14 Shortly thereafter, Mr Fraser sent a further email to my Associate in the following terms: Dear Associate Thank you for your email. Neither this firm, Squire Patton Boggs, nor the litigation funder are parties to the Perera or Webb Proceedings. We also note that the Perera Proceedings have been permanently suspended (sic). Whilst we are prepared to cooperate in any way possible we consider that the Webb Applicant is required to file a properly constituted application. Accordingly we consider it will be necessary for the Webb Applicant to prepare an Originating Application and supporting affidavit and that both entities will require representation on the application. In the circumstances we do not understand that any application can proceed today in the absence of those documents being served on those entities. … 15 The matter was called on at 2.30 pm on 28 May 2018 and Dr Bigos moved on an interlocutory application. Ms Fox appeared on behalf of the first respondent (GetSwift) and the second respondent, Mr Edwards appeared on behalf of Mr Perera. Mr Edwards did not appear on behalf of SPB or ILP18, nor were those entities separately represented at the interlocutory hearing. 16 It is unfortunate that the issue of preserving the status quo until the hearing on 8 June 2018 of argument in relation to the content of opt out notices and the mode for distribution of those opt out notices (being a little over a week from the hearing of this interlocutory application), could not have been resolved by some sensible arrangement being put in place. Having said this, based on the assertion of Mr Fraser (see [12] above), the evidence appears to be that SPB had "not been able to obtain instructions from the litigation funder". In order for that to be said to the Court, it seems to me that it is only reasonable to infer that until 6.03 pm on 25 May 2018, there had been no communication with ILP18 in relation to obtaining comfort that the status quo would be maintained (the issue raised when I refused to make an order for interim relief at the case management hearing on 23 May 2018, in order to allow such instructions to be obtained). Be that as it may, the position is that there was no appearance on behalf of ILP18 and I am unaware one way or the other as to whether or not ILP18 is prepared to give some degree of comfort that group members in this proceeding will not be contacted in relation to the exercise of group members' rights to opt out from this proceeding prior to 8 June 2018.

B.2 Ex Parte Relief 20 Having dealt with the issue of the inter partes relief sought against Mr Perera, I now turn to the question of the ex parte relief sought against ILP18. I need not here expand further on the width of the power conferred pursuant to s 33ZF of the Act, other than to repeat what I set out in Perera at [142] as follows: s 33ZF…is a deliberately general power which operates as a 'gap-filler' where specific powers in Part IVA are not apt to resolve the relevant issue which is presented. It represents a legislative intention to equip the Court with the "widest possible power" such that the Court can resolve the peculiar difficulties encountered in representative proceedings: McMullin v ICI Australia Operations Pty Ltd (1998) 84 FCR 1 at 4C-4D per Wilcox J. Moreover, as with any provision conferring jurisdiction or granting powers to a Court, s 33ZF should not be construed narrowly by the making of implications or imposing of limitations not found in its express words: The Owners of the Ship "Shin Kobe Maru" v Empire Shipping Company Inc (1994) 181 CLR 404 at 421. An example of its width in a not entirely dissimilar circumstance can be seen by its use to make directions for the formation of a litigation committee constituted by group members to oversee an action and provide the views of the group members to the Court: Kirby at 74 [37] per Finkelstein J. 21 The relevant inquiry is whether or not I am satisfied that it is appropriate or necessary in order to ensure that justice is done in this proceeding to make the order preserving the current position pending finalisation of the opt out regime to be put in place. I am more than comfortably satisfied that it is appropriate or necessary to do so to ensure that justice is done in the proceeding. In the absence of any undertaking or other comfort being given by ILP18, to decline to make an interim order may render nugatory a possible outcome of the hearing of the application for an approved opt out process (being a requirement that any information concerning opt out conveyed to group members in this proceeding will be an entirely disinterested one, approved by the Court). 22 Looking at this from a different perspective, if I was to approach the question of whether or not the order was appropriate by determining whether there was a serious question to be tried and separately assessing the balance of convenience, I would come to the same conclusion. Although I have not formed any final views at all as to the opt out regime to be put in place, there is a real and not insubstantial prospect that I will ensure that all communications with group members are restricted only to those communications that have been approved by the Court. There is also a prospect that I may appoint an independent lawyer in order to provide advice concerning opt out to group members. By 'independent' in this context, I mean a solicitor who has not been otherwise connected to the matter, nor been part of any tripartite arrangements for the pursuit of the stayed proceedings. 23 This last point raises novel and, indeed, unprecedented questions as to the relationship between group members and their chosen legal representatives, the real nature of the retainer between those group members and those solicitors and the ability of the solicitors, in circumstances where they are party to arrangements to conduct another proceeding, to give disinterested, conflict-free advice to group members concerning their rights in this proceeding. I have formed no views about these questions, but they raise real issues and potentially controversial questions that will need to be the subject of full argument. 24 Given that there are serious questions to be dealt with in the context of the approval of an appropriate opt out process, I then turn to the issue of the balance of convenience and, more specifically, any downside in granting ex parte relief. In the absence of any appearance by ILP18, I have attempted to identify any prejudice that would be occasioned by preserving the status quo. None of any significance is evident to me. This is not a case where anyone has suggested that it is necessary for ILP18 to communicate with group members about the topic of opt out from the Webb Proceeding (this is obviously an entirely different category of communication from those concerning the future conduct of any application for leave to appeal in the Perera Proceeding, or as to submissions to be made on 8 June 2018). As I have explained, there should be no fetter on communications of this latter type at all. 25 Whether looked at through the prism of what is appropriate or necessary to ensure that justice is done in the proceeding, or through a process of analysis as to whether there is a serious question to be tried and then identifying where the balance of convenience lies, I come to the same conclusion: that I should grant an order under s 33ZF of the Act restraining ILP18, its servants and agents, from communicating with group members in this proceeding solely in relation to the issue of whether that group member should exercise its right to opt out of this proceeding pursuant to s 33J of the Act. The order will only be in place for a defined period, namely until 4.15 pm on 8 June 2018. However, in contrast to the position of Mr Perera, ILP18 will have the liberty to contact my Associate upon being served if it wishes to move for an urgent discharge or variation of this ex parte relief (and in this regard it should have the ability to put forward any material it wishes to put forward on any such application). 26 Finally, I note that although I have made this order under s 33ZF of the Act, it did seem to me appropriate that, in the exercise of my discretion, I should request Mr Webb through his counsel to give the usual undertaking as to damages, and he has done so.

At a glance

Court

Decision date

Before

Source

Judgment (7 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (5)