Webb v GetSwift Limited

LEE J: 1 These ex tempore reasons are provided during the course of a case management hearing. This is an unusual step to take, but I have been asked to deliver reasons by an intervener. At heart it involves an issue of practice and procedure and the exercise of case management powers to ensure the efficient interlocutory progress of this Part IVA proceeding. 2 On 23 May 2018, I made orders which had the effect of staying the Perera proceedings. In these reasons I will adopt the abbreviations I used in my earlier judgment (Perera v GetSwift Limited [2018] FCA 732; (2018) 357 ALR 586 (stay judgment)) which sets out some of the background. 3 At the time of delivery of the stay judgment, I foreshadowed I proposed to make orders arranging for the interlocutory progression of this proceeding (the Webb proceeding), and directed the provision of a draft opt-out notice and foreshadowed fixing a date for an interlocutory hearing, at which time an opt-out notice would be approved. I also granted leave for Mr Perera, the McTaggart applicants, and the funders to appear at that hearing for the purpose of making submissions as to the form of the opt-out notice. 4 The stay judgment, however, was the subject of an application for leave to appeal. Although leave to appeal was granted, the appeal was dismissed. Prior to the making of orders by the Full Court consequent upon the dismissal of the appeal, a further case management hearing was held, at which time I was asked to fix a date for opt-out immediately. Mr Darke SC, who appeared for the respondent, urged that course upon me as it would allow his client to have a degree of certainty as to the number of group members who remain following opt-out. This would mean that consideration could be given, consistently with the obligations of the parties, as to whether there could be some extra-curial resolution of this controversy. 5 This course was opposed by Mr Perera, who was granted leave to intervene. What became evident during the course of that interlocutory hearing last December, was that there had been a series of directions made by the Court which (lamentably) had not been complied with by the applicant. This included a failure to advance, in a prompt way, the provision of an amended statement of claim and service of affidavit evidence. In all the circumstances, it seemed to me that the appropriate course was to make directions for the filing of further pleadings and bring the matter back today for the purpose of ascertaining whether or not orders could be made for the future progression of the proceeding towards a hearing date this year including orders for a mediation of the matter as soon as practicable. In furtherance of this objective, on 19 December 2018, I made a variety of orders including that by 4pm on 5 February 2019, the parties provide to my Associate and to Mr Perera's solicitors, a proposed draft form of opt-out notice. This order was complied with, albeit slightly late. 6 This morning, prior to the case management hearing which was listed at 2.15pm, my Associate provided a further version of draft orders to the parties which established a regime leading up to an initial trial in the latter part of this year. Following discussion between the parties this morning, my intention is to set down the initial trial for a period of one month, commencing on 1 October 2019. 7 It is notoriously difficult in representative proceedings to work out an optimal time for a mediation to take place. When the issue of a stay was being considered, all the proposals before the Court envisaged the prospect of there being either an "early" or "late" mediation. 8 Choosing the best time for a mediation in securities class action cases assumes particular importance because experience suggests that it is far more likely than not that this class action will settle by the payment of some monetary sum to group members. I make this point not to suggest that GetSwift will necessarily make a monetary offer to group members. Nor do I suggest it should do so by reason of the allegations made. No conclusion as to likely settlement is informed by the substantive merits of the case. I make this comment simply as a reflection of the empirical data which suggests that no securities class action has thus far been resolved by a judgment following an initial trial (although I am aware that one such case is presently reserved following hearing before another judge of this Court). 9 Working on this assumption of a likely settlement - the sooner any mediation occurs, the better. Particularly when it is the respondent that seeks to facilitate settlement discussions sooner rather than later. 10 Put bluntly, every cent spent in collateral disputation between now and a mediation date will, in my judgment, involve a potential diminution of the amount available to be paid to group members in any settlement. I have no detailed evidence as to the insurance position, nor do I have any other information as to the subject of any "without prejudice" discussions, but speaking from experience in matters such as this, the amount of costs expended by a respondent may rationally affect any amount that the respondent is prepared or able to pay in order to resolve the litigation. 11 Apart from facilitating settlement discussions, the orders to be made today will provide for a detailed interlocutory regime for the determination of contested legal and factual issues. I also require the parties to spend time identifying the issues in the proceeding which are, as presently advised, proposed to be the subject of opinion evidence. I intend to bring the matter back as soon as practicable for a determination as to how opinion evidence ought be presented before the Court, including the prospect of orders being made pursuant to s 54A of the Federal Court of Australia Act 1976 (Cth) (to appoint a referee or referees in relation to one or other contested factual issues). I have no fixed view as to whether any s 54A order should be made, but that can be the subject of further debate. 12 Despite any efforts being made to reduce the amount of legal costs incurred before any initial trial, including by the possible appointment of referees, it is plain that there is likely to be very considerable and accelerating expenditure between now and October on legal costs, being outlays that will be diminished or avoided in the event of an earlier settlement of the matter. This again points to the need to facilitate settlement discussions as soon as possible. One part of assisting settlement is to resolve the issue as to which group members wish to participate by undertaking the process of opt-out. 13 There are essentially four points advanced by Mr Edwards as to why I should, yet again, defer opt-out. The first is that my original intention, reflected in the prior orders of the Court, had been to distribute opt-out notices once appeal rights had been exhausted and there is presently an application for special leave to appeal to the High Court against the orders made by the Full Court dismissing the appeal from the stay judgment. The evidence read on the application discloses that following the filing of reply submissions by the applicant for leave (Mr Perera), and the completion of application books, the High Court registry will then allocate a time for the hearing of the special leave application. This, of course, presupposes that there will be an oral hearing of the application for leave, something which has not yet, obviously enough, been communicated to the parties. In any event, it is presently unclear on the evidence as to when the press of the High Court's business will allow any special leave application to be determined, irrespective as to whether there will be an oral application for leave listed. 14 When I distributed the draft orders this morning, I did so in circumstances where I had assumed that the parties, in an informed and considered fashion, had determined that it would not be appropriate for there to be a mediation of this matter until September. In these circumstances, I was initially prepared to fall in with such a timetable, notwithstanding my preference was for an earlier mediation date. I had thought that the September date reflected some aspect of the case of which I was unaware. It now appears that I was acting on a misapprehension and the respondent, GetSwift, in fact wishes a mediation to occur as soon as practicable but cannot proceed to engage constructively in making any offer at such a mediation until it obtains some certainty as to the metes and bounds of the group membership who are maintaining claims against it. 15 This submission has a great deal of force as, although it is possible to mediate matters prior to opt-out, in a case such as this, it is difficult to envisage that mediation prospects will be optimal unless there is certainty as to the ultimate aggregate claim made against GetSwift. Of course, at the time that I had reached the preliminary view that it was best for me to defer opt-out until the exhaustion of appeal rights, I was anticipating that there would be no further disputation after the Full Court's determination and that opt-out could proceed immediately. Things have now changed. 16 The second point made by Mr Edwards was that there was no evidence to substantiate the submission made by Mr Darke SC, that a failure to conduct opt-out would be a fundamental obstacle that would greatly inhibit the possibility of settlement. In essence, I have already dealt with this submission in noting that the real question is: when will the prospects of settlement be optimised? If the respondent says that it wants a mediation after opt-out and the applicant agrees, I do not think I should gainsay this assessment by experienced Part IVA practitioners. Opt-out is not invariably completed before mediation (although it usually is); but here both parties agree that settlement prospects are best once the opt-out process is completed - this points to opt out occurring now. No claim is made here, for example, for aggregate damages where the utility of opt-out may assume less importance. 17 Thirdly, Mr Edwards made the point that the applicant, Mr Webb, was initially "quite content" with the orders that I proposed which deferred opt-out until early June. No doubt this was done conscious of the obligation under s 37N(2) of the Federal Court of Australia Act 1976 (Cth) (Act) that the lawyers for the applicant must assist Mr Webb to conduct the proceeding, including negotiations for settlement, in a way that is consistent with the quick, inexpensive and efficient resolution of the case. However, the position put by Mr Collins QC, on behalf of Mr Webb, was somewhat more nuanced than how it was characterised by the intervener. Mr Collins stressed that the applicant wished to do what he could to ensure GetSwift be put in a position to make an offer as soon as possible. One would expect no less. 18 Fourthly, Mr Edwards placed a great deal of emphasis on the overriding imperative for the notice to be as clear as possible and the fact that there was an extant special leave application (or, if special leave was granted, an appeal) would complicate the process of opt-out, requiring the insertion of material than would not otherwise be included if: (a) opt-out is deferred and the special leave application had been determined adversely to Mr Perera at the time notice was despatched; or (b) opt-out was deferred until after any appeal had been determined. A successful appeal would, of course, require different material to be communicated to group members. 19 Although there is some force in this point, and an opt-out notice would be somewhat simpler in circumstances where it occurred following proceedings being determined one way or another by the High Court, I consider that any opt-out notice could now be crafted in such a way as to make the present position clear to recipients so they can make an informed decision as to whether to opt-out. 20 In addition to my consideration of these four points, there seem to me to be a number of factors which weigh significantly in favour of opt-out proceeding now. 21 The first is that opt-out is currently occurring. Evidence on the application makes it clear that even without an opt-out date being set, 15 group members have already opted-out. As part of my protective and supervisory role, I consider that any opt-outs should take place in circumstances where those making this important decision have been apprised of all relevant information. We have reached the stage in the proceeding where, in the ordinary course, opt-out would be appropriate, and there does not seem to me to be any sound reason to allow group members to be left in ignorance of matters which might conceivably be material to such a decision. 22 Secondly, as noted above, it is likely this matter will resolve at mediation, although I may be mistaken. Such a settlement, if it occurs quickly, will avoid further demands on public as well as private resources. 23 Thirdly, and connected to the last point, 37M(3) of the Act provides that practice and procedure powers must be exercised or carried out in a way that best promotes the overarching purpose of the just resolution of this dispute according to law, and as quickly, inexpensively and efficiently as possible. The promotion of steps to facilitate the efficient conduct of a mediation as soon as possible is consistent with this statutory mandate. 24 In these circumstances, I will hear from the parties now as to what orders should be made to facilitate opt-out commencing in the course of the next few weeks. Following my rulings, and after having heard from the parties and the intervener, I will direct the parties to provide a form of notice. In doing so, my intention will be to approve a notice which provides all the information that is required to be given to the Webb group members which is material to their decision to opt-out. Needless to say, in approving these documents, I am cognisant of the fact that if the High Court was to grant leave and allow the appeal (and the Perera proceeding came back to this Court), it would, of course, be necessary for group members to be apprised of further information in order to give them an informed choice as to the proceedings then before the Court. This would involve a further opportunity being given to group members to opt-out given these changed circumstances. Hence the notice I will approve will ensure that the group members have accurate information as to the position that exists at present, but will foreshadow that further information may be provided identifying the options that may be available to them should matters change. 25 An order for costs is sought by GetSwift in relation to the interlocutory application dated 19 December 2018. This was the process before the Court identifying the orders sought by the intervener. Although I propose to dismiss prayers for relief 1 to 4 in that application, I would not be disposed to order costs against the intervener. This is because Mr Perera was partly successful in deferring opt-out for a period for the reasons I have already explained and, in any event, today's case management hearing was necessary. Although the argument today has taken a considerable period of time, it has been necessary (at least in part) so as to ensure that I am provided with all available assistance in ensuring the group members are provided with all the material they need in order to make an informed decision concerning opt-out. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lee.