White v UGL Operations and Maintenance Pty Ltd

COLVIN J: 1 Mr Brad White claims to have been a casual employee of UGL Operations and Maintenance Pty Ltd (UGL) between November 2016 and March 2019. He says that he worked at the Wagerup operations of Alcoa of Australia Ltd as a welder. He claims that under the applicable enterprise agreement he was entitled to payment at rates above his ordinary rate of pay when working overtime. He says that the pay slips provided to him should have specified when the overtime loading on his pay was applicable and applied but that did not occur. He alleges underpayment by UGL for overtime worked. 2 Mr White has brought proceedings against UGL both on his own behalf and as a representative applicant pursuant to Part VIA of the Federal Court of Australia Act 1976 (Cth) on behalf of named applicants who are said to have similar claims (Class Action Claims). 3 The Class Action Claims are being funded by the Automotive, Food, Metals, Engineering. Printing and Kindred Industries Union and the Construction, Forestry, Maritime, Mining and Energy Union (together, Unions). The funding arrangements are recorded in an agreement dated 21 December 2020 (Funding Agreement). 4 UGL claims that by entering into the Funding Agreement, the Unions contravened the laws regulating the provision of financial services. It says that the Unions required an Australian financial services licence for dealing in litigation funding schemes or the Funding Agreement was required to be registered. The Unions dispute those claims. 5 UGL proposes to commence proceedings under s 1324 of the Corporations Act 2001 (Cth) concerning its claims about the Funding Agreement. UGL was provided with a copy of the Funding Agreement for the purposes of the representative proceedings brought by Mr White as representative applicant. It is common ground that the Funding Agreement is subject to what is commonly known as the 'implied undertaking', namely the obligation that it be used only for the purposes of the proceedings in the course of which it was produced to UGL. The obligation is a substantive one which arises irrespective of whether an undertaking was given and regardless of the intentions of the parties: Frigger v Trenfield (No 5) [2020] FCA 827 at [19] (Jackson J). 6 UGL seeks to be released from the implied undertaking to allow it to use the Funding Agreement to commence the foreshadowed proceedings against the Unions. 7 Mr White maintains that a 'good reason' has not been demonstrated for the release of UGL from the undertaking because the appropriate course is for UGL to raise its complaint against the Unions by way of cross-claim in the representative proceedings commenced by Mr White. No other objection is raised. 8 Although good reason must be shown in order for a party to be released from the implied undertaking, the Court has a broad discretion as to whether to do so that is to be exercised in all the circumstances of the case: Liberty Funding Pty Ltd v Phoenix Capital Ltd [2005] FCAFC 3 at [31]. In expressing that view, the Court approved the matters listed by Wilcox J in Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217 at 225 as a helpful guide. As has been indicated, no reliance is placed on those matters in opposing the application. 9 In my view, the mere fact that it would be open to UGL to bring its complaint by way of cross-claim in the present proceedings, is not a reason for refusing the present application. The submission does not rise to a complaint that it would be an abuse of process for the separate claim to be commenced or that the pursuit of separate proceedings is being contemplated for some improper purpose. This is not a case where it might be said to be an abuse of process to multiply the proceedings. 10 The nature of the complaint to be made against the Unions is discrete in the sense that its merit does not depend upon the merit of the claims raised by Mr White. There is no overlap in the forensic matters to be addressed in order to resolve the representative proceedings on the one hand and the manner in which they are being funded on the other. It has not been demonstrated that there would be additional expense or delay or complexity if the discrete issue concerning the Funding Agreement was to be the subject of separate proceedings. The substantive respondent to the proceedings that UGL proposes to bring will be the Unions, although Mr White will have an interest in those proceedings as representative applicant bringing the funded claims. In either case steps will need to be taken to articulate a claim against the Unions whether it be by way of cross-claim in the existing proceedings or by way of the foreshadowed proceedings. In either case, the Unions who are not existing parties will need to be brought in to the litigation. The subject matter of those claims will concern provisions of the Corporations Act of a kind that are entirely distinct from the issues raised by the existing proceedings. 11 It was submitted for Mr White that there was some overlap between the issues raised by UGL's complaint about the Funding Agreement and the representative claims because the terms of the agreement allowed the Unions to keep any penalties that may be awarded. Therefore, if there were issues with that aspect of the Funding Agreement it may have consequences for the present proceedings. However, that is to point to a consequence for these proceedings of the relief sought by UGL if it was successful; not some form of overlap in the issues to be determined. 12 It may be observed that the commencement of separate proceedings was the course followed in Brookfield Multiplex Limited v International Litigation Funding Partners Pte Ltd [2009] FCAFC 147; (2009) 180 FCR 11 when a similar application was brought in a context where proceedings were funded. It appears that the issues in those proceedings concerned the funding of two separate sets of proceedings but there was no suggestion that the complaints raised should have been advanced by way of cross-claim in those proceedings. 13 To allow the complaints about funding to be raised by separate application will have the advantage of keeping distinct claims separate. Logically, the complaints about the Funding Agreement will need to be dealt with before the Class Action Claims are substantially advanced. If the claims are kept separate then the extent to which the Class Action Claims are to proceed pending the outcome of the claims against the Unions and the manner in which they should proceed can be determined taking account of the progress of the claim that UGL seeks to bring. For example, it may be appropriate that the claims that UGL proposes to bring give rise to questions that should be referred to a Full Court. 14 Mr White says that the advancement of the claim against the Unions should take place within the context of the representative claims which, in the ordinary course, would proceed on a no costs basis by reason of the terms of s 570 of the Fair Work Act 2009 (Cth). He says, effectively on behalf of the Unions, that any complaint about the Funding Agreement should be raised in the present proceedings so that it too is considered within the no costs framework established by the legislation. The premise for that submission may well be contestable. That is to say, it is by no means clear that if the complaint against the Unions were brought by way of cross-claim that the proceedings would be governed by s 570. A cross-claim is a distinct and separate proceeding: McDonnell and East Ltd v McGregor (1936) 56 CLR 50 at 60-61; and Aurel Forras Pty Ltd v Graham Karp Developments Pty Ltd [1975] VR 202 at 218. In this Court the distinct nature of a cross‑claim is expressly recognised by the Federal Court Rules 2011 (Cth): Carna Group Pty Ltd v Griffin Coal Mining Company [2019] FCA 1276 at [15]. 15 In any event, costs are discretionary and if s 570 is applicable or is relevantly to be brought to account in determining the appropriate cost order on the application that UGL seeks to bring against the Unions then that is a matter that can be brought to account even though the issues about the Funding Agreement are raised in separate proceedings. Therefore, that is a matter that will not be affected in a substantive way by the form of the proceedings and can be addressed if and when the issue arises. 16 UGL also sought a stay of the present proceedings. However, it was made clear that such relief was only sought as an alternative to the order allowing UGL to use the Funding Agreement in the foreshadowed proceedings. The question as to what should occur with the current proceedings if the foreshadowed proceedings are commenced need not be considered. Whether it is appropriate for steps to be taken in these proceedings pending the determination of the issues that UGL seeks to raise can be considered if and when the foreshadowed proceedings have been commenced. Without deciding the question, I observe that it is quite possible that it may be appropriate for some steps to be taken in the present proceedings even though resolution of the issue concerning the Funding Agreement is pending. Much may depend upon whether there is prejudice to UGL arising from the manner in which these proceedings are being funded given the stage of the proceedings and a consideration of the merits of the claim to be advanced against the Unions, a matter not addressed on the present interlocutory application. 17 For those reasons, the order sought by UGL being otherwise not opposed there will be an order substantially in terms of paragraph 2 of the application. The order will be as follows: In respect of the 'UGL (Alcoa) Class Action Funding Agreement' dated 21 December 2020 and disclosed by the applicant on 6 April 2021 in accordance with the Class Actions Practice Note (GPN-CA) dated 20 December 2019, the respondent be released from the implied undertaking that this document only be used for the purpose for which it was disclosed such that the respondent is permitted to use the document to commence and conduct proceedings under s 1324 of the Corporations Act 2001 (Cth) in the terms set out in its interlocutory application dated 6 May 2021. 18 I raised with the parties their availability for an early hearing of the claims that UGL seeks to bring. However, those matters are best addressed when the foreshadowed proceedings have been commenced and lawyers have been appointed to represent the interests of the Unions. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Colvin.