Class Actions Landscape Australia
December 2020 The class action battleground of 2020
Australia has a fair and effective class actions system which has delivered access to justice and billions in compensation to millions of Australians over the life of the regime. So it is disappointing that in this year when there were so many other important things on which to focus, the intense political and ideological battle waged on the Australian class action regime by some conservative politicians and the powerful business interests they represent continued.
At a time when Government and community resources everywhere are required to address the needs of a global health and economic crisis, it has been appalling to see some business lobbyists wage an opportunistic war against class actions seeking to exploit the pandemic by pushing an agenda which will lower corporate governance standards, reduce accountability for wrongdoing and reduce transparency in the market. It is an even greater pity to see the Federal Government accede to that agenda. Rather than implement the advice and recommendations of independent reports by the Productivity Commission, the Victorian Law Reform Commission and the Australian Law Reform Commission, the Federal Government decided to implement changes aimed at restricting access to justice, water down continuous disclosure laws and hastily convene a Parliamentary Inquiry into the very same issues which the independent inquiries had addressed. Government members of that committee have shown themselves to be partisan and uninterested in the evidence of the benefits of class actions for claimants and for corporate governance. Sadly it is clear this Parliamentary Inquiry is designed not with a view to deliver good policy but in search of a political outcome.
We have seen signs of progress in other quarters. The Justice Legislation Miscellaneous Amendments Bill 2019 (Vic) commenced operation on 1 July 2020, permitting contingency fees in class actions in the Supreme Court of Victoria. This legislation follows the recommendations of the three independent agencies (the Productivity Commission, the Victorian Law Reform Commission, and the Australian Law Reform Commission) who each found that contingency fees would deliver increased access to justice and lower costs for class action members. Next year will continue to pose challenges to the legal sector and to society more broadly. We at Maurice Blackburn will do all we can to ensure that Australia’s system remains fair and effective and that we continue delivering compensation for the victims of mass wrongs by holding corporate wrongdoers to account.
It has been an extraordinary year. Let’s hope 2021 is so much better (for society generally and for the debate around class actions).
Andrew Watson National Head of Class Actions Maurice Blackburn Lawyers Index
Maurice Blackburn files second class action against Crown Resorts over money laundering risk allegations 2
Australian Securities and Investments Commission v Big Star Energy Ltd (No 3) [2020] FCA 1442 3
Stallard v Treasury Wine Estates Ltd [2020] VSC 679 6
Arnold Bloch Leibler (a firm) v Slater & Gordon Ltd [2020] FCA 1496; Hall v Arnold Bloch Leibler (a firm) [2020] FCA 1495 8
Crowley v Worley Ltd [2020] FCA 1522 11
Brewster v BMW Australia Ltd [2020] NSWCA 272 13
Bywater v Appco Group Australia Pty Ltd [2020] FCA 1537 14
Rodriguez & Sons Pty Ltd v Queensland Bulk Water Supply Authority t/as Seqwater (No 25) [2020] NSWSC 1544 15
Stewart v Uber Technologies Inc [2020] NSWCA 208 17
Webb v GetSwift Ltd (No 6) [2020] FCA 1292 18
Brewster v BMW Australia Ltd [2020] NSWSC 1261 19
Kenquist Nominees Pty Ltd atf The Kenquist Superannuation Fund v Campbell (No 6) [2020] FCA 1388 20
Jones v Treasury Wine Estates Ltd; In the Matter of Treasury Wine Estates Ltd (No 4) [2020] FCA 1131 22
Plaintiff M83A/2019 v Morrison (No 2) [2020] FCA 1198 25
Mutch v ISG Management Pty Ltd (No 2) [2020] FCA 954 27
DBE17 (by his litigation guardian Marie Theresa Arthur) v Commonwealth of Australia [2020] FCA 958 29
Uber Australia Pty v Andrianakis [2020] VSCA 186 31
Zantran Pty Ltd v Crown Resorts Ltd (No 2) [2020] FCA 1024 34
New Class Actions Practice Note – Supreme Court of Victoria 36
CJMCG Pty Ltd (as trustee for CJMCG Superannuation Fund) v Boral Ltd [2020] FCA 914 37
Contingency Fees in Victoria 39
Cantor v Audi Australia Pty Ltd (No 5) [2020] FCA 637 40
Uren v RMBL Investments Ltd (No 2) [2020] FCA 647 44
Gill v Ethicon Sàrl (No 7) [2020] FCA 700 46
Rodriguez & Sons Pty Ltd v Queensland Bulk Water Supply Authority t/as Seqwater (No 23) [2020] NSWSC 650 47
Komlotex Pty Ltd v AMP Ltd [2020] NSWSC 504; Wigmans v AMP Ltd [2020] NSWCA 104 49
Class Actions Landscape Australia | Issue 3 1 December 2020
Maurice Blackburn files second class action against Crown Resorts over money laundering risk allegations
Maurice Blackburn Lawyers has filed a second class The new class action claim alleges that Crown engaged action against Crown Resorts Limited (ASX:CWN) – with in misleading and deceptive conduct; breached its the new action targeting Crown over alleged money continuous disclosure obligations; and conducted its laundering allegations following explosive evidence affairs contrary to the interests of members as a whole in by Crown directors and executives at the NSW Casino the period. Inquiry this year, and a concession from Crown it was “more probable than not” that criminals had laundered This new class action has been launched following money through bank accounts of its subsidiaries. Crown’s ASX announcement early on 19 October 2020 that the anti-money laundering regulator, AUSTRAC, Filed in the Supreme Court of Victoria, the claim covers had initiated a formal enforcement investigation into a lengthy period from 11 December 2014 to 18 October Crown having identified potential non-compliance 2020, and alleges Crown had inadequate systems and in relation to ongoing customer due diligence, and processes for ensuring compliance with its obligations adopting, maintaining and complying with an anti- under anti-money laundering laws, including as money laundering / counter terrorism financing program. they applied to its VIP international business and Following that announcement, there was a significant engagement with overseas junket tour operators. At the market response, with a decline in the Crown share price AGM on 22 October 2020, chairwoman Helen Coonan of over 8% on 19 October 2020. “unreservedly apologised” for Crown’s “governance and risk management failings”. The class action aims to recover compensation from the company, seeks the potential buy-back of investors’ shares at a fair value, and seeks that Crown implement a proper anti-money laundering training program.
Applicants’ Solicitors Maurice Blackburn
Applicants’ Funder The case is being run by the law firm without a litigation funder
More information | Media release
2 Maurice Blackburn October 2020
The Australian matrix of public and private corporate conduct enforcement works – ASIC takes on Big Star
Federal Court holds director breached duties, ASIC alleged that Antares contravened the continuous and should have disclosed details regarding the disclosure provisions by failing to disclose: (i) the name sale of assets and identity of purchaser. of the prospective purchaser under the contracts; or (ii) alternatively, the name of the prospective purchaser, the fact that Mr Cruickshank had specifically been told that Whilst not a class action, this was a civil penalty the purchaser did not have financial approval in place proceeding brought by the Australian Securities and for both relevant acquisitions, and that Antares had not Investments Commission (ASIC) alleging that the otherwise independently verified or determined the first respondent (then known as Antares Energy Ltd) capacity of the purchaser to complete the acquisitions. (Antares) and its Chairman and Chief Executive Officer ASIC further alleged that Mr Cruickshank was ‘involved’ (Mr Cruickshank) had contravened the continuous in those contraventions and/or breached his duties disclosure provisions of the Corporations Act 2001 (Cth) as a director of Antares (by failing to cause Antares to (CA). Antares itself did not defend the proceeding, such comply with its continuous disclosure obligations). that Mr Cruickshank was the only active respondent. Mr Cruickshank asserted that disclosure of the In short, the facts were that Antares was an oil and gas purchaser’s identity would potentially have prejudiced exploration and production company listed on the the transactions, and that the purchaser insisted on its Australian Securities Exchange (ASX). Its assets included identity being kept confidential (despite the fact that certain oil and gas properties in Texas, USA, known as neither of the contracts expressly imposed any such the ‘Northern Star Assets’ and the ‘Big Star Assets’. On 5 obligation). September 2015 (a Saturday) Antares entered into two The judgment is lengthy, running to some 534 contracts with Wade Energy Corporation to sell those paragraphs(103 pages). However, some of the key points assets for a combined total in excess of US$250 million to note are: (an amount which was, at that time, 15 times Antares’ market capitalisation). On the following Monday (7 • Mr Cruickshank sought to draw comfort from the ASX’s September 2015) Antares announced to the ASX the entry Guidance Note 8 concerning continuous disclosure, in into those two contracts. The announcement, however, contending that the identity of the purchaser was not did not disclose the identity of the purchaser under required to be disclosed. As to this, Banks-Smith J said the contracts, nor any other information concerning (at [225]): the purchaser’s ability to complete the contracts. A I do not accept that the wording of Guidance further announcement was issued by Antares a few Note 8 introduces a level of ambiguity or choice days’ later which again failed to disclose the identity of as to whether or not certain information is to be the purchaser, but did state that there “are no conditions disclosed. It must be recalled that there may well precedent to be effected prior to settlement”. A few days’ be circumstances where information does not later, the shares of Antares were placed in a trading need to be disclosed: Listing Rule 3.1A expressly halt, when ASIC and ASX insisted that the identity of provides for this. Further, some of the information the purchaser must be disclosed. The shares were listed in cl 4.15 of Guidance Note 8 may be trivial subsequently suspended from trading. The identity or may not be relevant or material depending on of the purchaser was eventually disclosed to the ASX the circumstances of a particular transaction. The on 4 December 2015, in the context of disclosing an drafting of Guidance Note 8 (and recalling it is not amendment to the contracts to extend the date for a legislative provision) allows for such potential, completion. Ultimately, however, the contracts did not whilst guiding the reader as to matters to be given complete. attention. It does not modify or ameliorate the The above announcements caused a massive increase obligations under Listing Rule 3.1. Any assessment in the trading volume of Antares’ shares, together with a of disclosure must have regard to the particular massive increase in Antares’ share price (which rose from commercial terms of the relevant transaction $0.09 on 4 September 2015, to $0.315 on 7 September 2015, and the obligations of Listing Rule 3.1. It would be and to $0.50 on 10 September 2015). contrary to the intent of the Listing Rules … and the legislative scheme if Guidance Note 8 were to be understood in such a way that it diluted the obligations of continuous disclosure.
Class Actions Landscape Australia | Issue 3 3 • At [230]ff his Honour set out the general principles, • At [275]ff his Honour found that Mr Cruickshank was distilled from previous cases, relating to continuous aware, prior to the relevant announcements, that the disclosure. purchaser did not yet have financial approval in place for the acquisitions, and that Antares had also not • At [240] his Honour stated, contrary to Mr carried out due diligence or otherwise determined the Cruickshank’s submission, that the question capacity of the purchaser to complete the contracts, as of ‘materiality’ (i.e. whether information, had it had been alleged by ASIC. been generally available, would be expected by a reasonable person to have a material effect on the • At [306]ff his Honour found that the information in price or value of a company’s shares) is a matter question did not fall within the exceptions in ASX that is appropriately a subject for expert evidence. Listing Rule 3.1A. In that regard, ASIC led expert evidence from a Mr • At [455]-[456] his Honour concluded that Antares Lee Bowers, whose qualifications are set out at [332] had contravened s 674(2) of the CA in both of the ff. Mr Cruickshank challenged Mr Bowers’ expertise, alternative respects (as set out above) alleged by ASIC. but his Honour rejected that challenge and generally accepted Mr Bowers’ evidence. • At [457]ff his Honour dealt with the case against Mr Cruickshank. The parties differed as to the applicable • At [243] his Honour stated that the continuous principles. ASIC contended that in order to contravene disclosure provisions in the CA are remedial or s 674(2A) of the CA, and having regard to s 79 of the protective provisions which “should be construed CA, a person must be aware of the existence of the beneficially to the investing public and in a manner information to which it is alleged Listing Rule 3.1 which gives the fullest relief that the fair meaning of their applies and that such information was not generally language allows”. available; and must know of the underlying facts from • At [258] his Honour noted the importance, in which the Court could infer that a reasonable person continuous disclosure cases, of “identify[ing] with some would have expected that the information would have precision the information which the plaintiff alleges the been likely to influence an investor in making a decision company was aware of and should have disclosed”. whether to acquire or dispose of securities in Antares,
4 Maurice Blackburn if it had been generally available. Mr Cruickshank, on the [498] In order for ASIC to establish that a reasonable other hand, contended that ASIC must prove that he person would expect the information to have the had actual knowledge of the information, the fact the requisite materiality, it was necessary to receive information was not generally available and that the and accept the detailed evidence of Mr Bowers [the information was information that a reasonable person materiality expert] as to the manner in which the would have expected, if it were generally available, information would have impacted on the decision to have had a material effect on Antares’ share price. making processes of the Relevant Investors. It might His Honour ultimately accepted Mr Cruickshank’s seem attractive to conclude that the technical contention, and thus set what could only be described nature of the expert evidence in this case – with its as a very high bar for proving ‘involvement’ in a assessment of the class and the relevance of pieces continuous disclosure contravention (at [493]-[498]): of information to the identification of mispricing and the assessment of completion risks – reveals [493] It is necessary to establish that Mr the difficulty of assessing the impact of information Cruickshank knew the particular information; on the market such that a director should not be knew that it was not information that was assumed to have such knowledge. exempted from disclosure by Listing Rule 3.1A; that it was not generally available and that it was • In the end result, therefore, his Honour was information that, in the context of what was being not satisfied that ASIC had established that Mr disclosed by way of the … Announcements and Cruickshank was ‘involved’ in Antares’ continuous what was otherwise publicly available to the disclosure contraventions; but nevertheless, his market, a reasonable person would have expected, Honour held that Mr Cruickshank had breached his if it were generally available, to have had a material duties as a director of Antares by causing Antares to effect on the company’s share price, or would be contravene its continuous disclosure obligations likely to influence persons who commonly invest in (and that the ‘business judgment’ defence, on which shares to acquire or dispose of shares. Mr Cruickshank had relied, was not available). [494] It is not necessary to prove that Mr Cruickshank knew that Antares was in breach of its continuous disclosure obligations, described in that manner. It is not necessary that he knew that the facts could be characterised in that manner. Nor must ASIC establish that Mr Cruickshank acted with the purpose or intent of influencing investors. [495] However, the essential elements of the contraventions are such that the bar may be high in a case such as this for ASIC to establish the requisite knowledge…
Australian Securities and Investments Commission v Big Star Energy Ltd (No 3) [2020] FCA 1442
Federal Court of Australia | Banks-Smith J | 9 October 2020
Applicants’ Solicitors Australian Securities and Investments Commission
Second Respondent’s Solicitors DLA Piper
Applicants’ Funder N/A
Austlii link
Class Actions Landscape Australia | Issue 3 5 October 2020
Victorian Supreme Court allows consolidation of ‘Treasury 2’ class actions
VSC delays appointment of costs referee, There was no submission that the Court lacked the but holds that the proposed consolidation power to consolidate the proceedings, but rather whether adequately protects and promotes the interests it was appropriate to do so under s 33ZF of the Supreme of class members, does not detriment of the Court Act 1986 (Vic) in this instance. TWE initially opposed the consolidation (preferring a stay of one of the interests of the defendant, and gives effect to the proceedings) but later agreed to the consolidation but ‘overarching purpose’. opposed joint representation. The plaintiffs submitted that the proposed mechanism for joint representation This decision arises in the ‘Treasury 2’ class actions would ensure that class members’ interests “were brought by Maurice Blackburn (MB) (the ‘Napier’ properly, efficiently and effectively advanced in the proceeding) and Slater & Gordon (S&G) (the ‘Stallard’ litigation” (at [10]). In contrast, TWE submitted that joint proceeding) on behalf of shareholders of Treasury representation would increase costs. Wine Estates Ltd (TWE) who acquired TWE shares In discussing the general principle of the application of between 30 June 2018 and 28 January 2020. Both the s 33ZF to the issue of resolving multiplicity, her Honour proceedings were brought on behalf of an open class commented (at [20], footnotes omitted): and are unfunded, with both firms indicating that they may seek a ‘group costs order’. The central issue before In exercising a power of this kind the court has a Nichols J was whether to permit the consolidation of the protective role in respect of group members, whose two proceedings and to appoint both MB and S&G as joint interests are to be given primary consideration. Where solicitors for the plaintiffs in the consolidated proceeding a proposal to resolve a multiplicity problem affects the (as proposed by the plaintiffs). In this particular case, her defendant, its interests are also relevant. The interests of Honour held that the proposed consolidation would finders and law-firms acting in representative proceedings properly protect and promote the interests of class are not. members, would not be to the detriment of the interests of the defendant and would give effect to the ‘overarching purpose’.
6 Maurice Blackburn Her Honour also affirmed that the management of On the issue of costs, there was some controversy as multiplicity issues “is quintessentially a case management to what would be considered ‘duplicated costs’ and issue to be answered by reference to the circumstances at ‘duplicated work’ under the litigation protocol (see [60]- hand” (at [24]). Whilst acknowledging that special leave [66]). Ultimately, her Honour accepted (at [67]) TWE’s to appeal the decision in Wigmans v AMP Ltd (2019) 373 submission that any leave for joint representation should ALR 323; [2019] NSWCA 243 (Wigmans) had been granted make it clear that ‘duplicated work’ meant any work by the High Court, her Honour noted that in Wigmans performed by reason of the appointment of two rather consolidation was not sought by the parties and was not than one firm and that costs of the duplicated work are in issue (at [26]). Further, TWE had attempted to argue that not to be borne by either TWE or class members, making previous Federal Court decisions regarding consolidation orders to this effect. and multiplicity had wrongly (in light of the High Court’s TWE had also submitted that a carriage motion could also decision in BMW Australia Ltd v Brewster (2019) 374 ALR be readily decided on the papers and that the seeking of 627; [2019] HCA 45) taken into account the interests of joint representation was disingenuous and threatening. funders and law firms. Her Honour disagreed, holding Again, this was dismissed by her Honour who held (at that TWE had been unable to demonstrate this line of [84]) that a disputed carriage motion would “likely entail reasoning. considerable costs and the expenditure of the resources of TWE also attempted to argue that based on the interests the Court and the parties”. On the issue of class member of funders and law firms being irrelevant, the proposal choice, her Honour also held that the evidence before her for joint representation ought to be rejected. This too did not support a conclusion either way as to a choice was met with disapproval by her Honour, who held being exercised by class members. that line of reasoning to be flawed because (at [45]) …it“ Both S&G and MB identified Cate Dealehr and Liz Harris incorrectly assumed that were the Court to make an order as potential costs referees. Although her Honour did in the present circumstances, the only purpose or rationale not appoint a costs referee at the time of approving the for doing so would be to advance the interests of the consolidation, her Honour allowed each of Ms Dealehr respective plaintiffs’ solicitor”. The proposed mechanism and Ms Harris to provide a note as to their costs and for consolidation was typical of other recent consolidated methodology to the Court, following which orders would class action proceedings, involving the establishment be made for the appointment of one of them. It is also of a litigation protocol and litigation committee, the worth noting that TWE had sought access to the reports retaining of one set of counsel and work and expenses to of the costs referee. This was not granted by her Honour, be shared between the two firms. It was also proposed for who considered that it was not appropriate to grant TWE an independent costs referee to be appointed to provide access on a rolling basis, instead allowing for access to reports to the court every six months on the issue of them “when and if the costs payable by the defendant is in duplication of work. issue” (at [103]). TWE had also attempted to argue that consolidated proceedings led to lower returns to class members. This too was met with some scepticism by her Honour, who stated (at [58]): “It is not possible to draw from the material presented by [TWE], a conclusion that joint representation leads to lower returns to group members. There are too many variables in the equation to permit cases of joint and single representation to be compared on a like for like basis, at least on the material before me.”.
Stallard v Treasury Wine Estates Ltd [2020] VSC 679
Supreme Court of Victoria | Nichols J | 15 October 2020
Plaintiffs’ Solicitors Maurice Blackburn and Slater & Gordon
Defendant’s Solicitors Herbert Smith Freehills
Plaintiffs’ Funder N/A
Austlii link
Class Actions Landscape Australia | Issue 3 7 October 2020
Decisions published in Arnold Bloch Leibler class actions
Both decisions arise from the class action it had verified). Section 11 of the Due Diligence Planning against Arnold Bloch Leibler on behalf of Memorandum (DDPM) required ABL to retain “a file” of persons who acquired shares in Slate & Gordon documents relating to the due diligence process to allow Ltd during 2015. Court holds production of Legal DDC members to defend any actual or potential claim in connection with the Offer Documents or Entitlement Opinion Letter did not constitute associated Offer. During the course of the SGH Class Action, SGH material waiver. produced copies of board reports and due diligence materials (including versions of the DDPM, Due Diligence As noted above, Hall also argued that SGH’s production of Report and Legal Opinion Letter) to the applicant the Legal Opinion Letter constituted associated material (Produced Documents). As part of the settlement of waiver of all materials associated with ABL’s work that the SGH Class Action, the Court made orders releasing was the subject of the Legal Opinion Letter and the the applicant from the Harman obligation, allowing him documents cited in it. His Honour did not agree, holding to use the Produced Documents in future proceedings that no associated material waiver had occurred. His (Harman Release Orders), which were a condition Honour reached this position because, according to his precedent to the settlement and which were consented Honour, the Legal Opinion Letter itself was not initially to by SGH. The settlement was structured to release SGH confidential and privileged (Hall decision, [51]) and as from all future claims but allowed the applicant to bring such its production could not give rise to an associated apportionable ‘permitted claims’ against third parties waiver. His Honour further held that even if the Legal (such as ABL). Opinion Letter were privileged, any associated waiver The ABL Class Action alleges that the Offer Documents would only extend to DDC documents, and not the were not accurate and were misleading, because documents sought by Hall (Hall decision, [52]). they omitted to disclose that the PSD was exposed to These two decisions (published contemporaneously) a significant regulatory risk. It is alleged that this risk arise from the class action against Arnold Bloch Leibler was explicitly noted in a due diligence report made (ABL) on behalf of persons who acquired shares in available to SGH and the DDC. It is alleged that ABL was Slater & Gordon Ltd (SGH) between 30 March 2015 and both negligent and engaged in misleading or deceptive 25 November 2015 (ABL Class Action). conduct in respect of its role on the DDC. The Produced Documents are extensively relied upon in the pleadings A previous class action against SGH (SGH Class Action) in the ABL Class Action. was settled in 2017 (Hall v Slater & Gordon Ltd [2018] FCA 2071), which shares the same factual substratum as the In its proceeding against SGH, ABL sought a declaration ABL Class Action. Before discussing the two decisions, it from the Court that it be released from its obligations of is necessary to set out the background to the ABL Class confidence owed to SGH as a former client in respect Action. of the documents in certain legal files held by ABL regarding the Entitlement Offer, the PSD Acquisition and On 30 March 2015, SGH announced to the ASX that the DDC and due diligence process. ABL sought such a it was acquiring the Professional Services Division release to allow it to defend the ABL Class Action. SGH (PSD) of Quindell plc (PSD Acquisition) and would be objected, claiming that the material was subject to legal offering existing SGH shareholders the opportunity to professional privilege. In response, ABL claimed SGH participate in a rights offering to fund the PSD Acquisition had impliedly waived privilege and that section 11 of the (Entitlement Offer). As the Entitlement Offer was to be DDPM permitted the use of the documents as “files” for made without a prospectus, a due diligence committee the purpose of defending the ABL Class Action. In the (DDC) was set up to ensure that the “Offer Documents” ABL Class Action, ABL produced a list of documents (being the materials published to the ASX announcing to be discovered, a subset of which SGH claimed legal the PSD Acquisition), were accurate. ABL had, in effect, professional privilege over. Hall claimed, in addition to two roles in the lead up to the announcement of the implied waiver (as argued by ABL), that the production of PSD Acquisition – the firm acted as SGH’s legal adviser in the Legal Opinion Letter by SGH constituted associated relation to the acquisition and was a member of the DDC material waiver of any privilege attached to those (in which capacity it provided a Due Diligence Report documents. and Legal Opinion Letter to SGH’s Board regarding the accuracy of the Offer Documents, which ABL had said
8 Maurice Blackburn Implied Waiver the test for implied waiver over material over which legal professional privilege is claimed is different. His It was argued that the following conduct by SGH in the Honour noted that, per the High Court’s decision in SGH Class Action gave rise to implied waiver: Mann v Carnell (1999) 201 CLR 1; [1999] HCA 66 at [29] • the discovery of the Produced Documents; where the High Court stated that “[w]hat brings about the waiver is the inconsistency, which the courts, where • settling the SGH Class Action on the basis of the necessary informed by considerations of fairness, perceive, Harman Release Orders being a condition precedent between the conduct of the client and maintenance of the to the settlement; and confidentiality; not some overriding principle of fairness • consenting to the making of the Harman Release operating at large”. His Honour also cited the High Court’s Orders. decision in Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd In the ABL decision ([2020] FCA 1496), Middleton J (2013) 250 CLR 303; [2013] HCA 46 at [30] where it was held discussed the distinction between material over which that the Court “… will impute an intention [to waive privilege] a duty of confidence is asserted and material over where the actions of a party are plainly inconsistent with which legal professional privilege is asserted (of which the maintenance of the confidentiality which the privilege confidentiality is a necessary pre-requisite). Regarding is intended to protect”. His Honour noted (ABL decision, the protection of confidential information not subject to [71]) that an example of ‘plain inconsistency’ would arise a claim of legal professional privilege, his Honour noted in circumstances where a client brings a professional that a balance is to be made between the legitimate negligence claim against their solicitor but then attempts interests of the party seeking to maintain the confidence to assert legal professional privilege over material sought of the information and the legitimate interests of the to be used by the solicitor to defend themselves. party seeking to make use of the confidential information (ABL decision, [55]). In contrast, his Honour noted that
Class Actions Landscape Australia | Issue 3 9 On application to the facts in the proceedings, his Honour Associated Material Waiver held that there had been no implied waiver by SGH. As noted above, Hall also argued that SGH’s production of His Honour stated that, regardless of the production by the Legal Opinion Letter constituted associated material agreement, the discovery of the Produced Documents waiver of all materials associated with ABL’s work that was in any event an obligation on SGH. Regarding was the subject of the Legal Opinion Letter and the the Harman Release Orders and their status as a pre- documents cited in it. His Honour did not agree, holding condition of the settlement, ABL had argued “arming” Hall that no associated material waiver had occurred. His with the produced documents was equivalent to a client Honour reached this position because, according to his suing their solicitor, such that there was an implied waiver Honour, the Legal Opinion Letter itself was not initially by SGH. His Honour disagreed, drawing a distinction confidential and privileged (Hall decision, [51]) and as by noting that the ABL Class Action was not a situation such its production could not give rise to an associated where the Court was being asked to “directly adjudicate” waiver. His Honour further held that even if the Legal on the client/solicitor relationship (ABL decision, [89]- Opinion Letter were privileged, any associated waiver [93]). As to the consenting to the making of the Harman would only extend to DDC documents, and not the Release Orders, his Honour again found that there had documents sought by Hall (Hall decision, [52]). been no implied waiver on the basis that “it is the court that ultimately determines whether to release the Harman undertaking, and on what terms” (ABL decision, [95]).
The DDPM Both Hall and ABL argued (albeit for slightly different purposes) that section 11 of the DDPM permitted access to “other documents which are material to the due diligence process” to defend claims. His Honour held that section 11 did not have such a broad application, and that it only related to those documents specifically retained by ABL in “the files” (Hall decision [2020] FCA 1495, [31]-[34]).
Arnold Bloch Leibler (a firm) v Slater & Gordon Ltd [2020] FCA 1496; Hall v Arnold Bloch Leibler (a firm) [2020] FCA 1495
Federal Court of Australia | Middleton J | 16 October 2020
Lead Applicant’s Solicitors Maurice Blackburn
Arnold Bloch Leibler’s Solicitors Norton Rose
Slater & Gordon’s Solicitors Minter Ellison
Funder ILP
Austlii link
10 Maurice Blackburn October 2020
Worley action alleging baseless budget and earnings guidance fails
Court finds the applicant failed to establish that The applicant alleged that Worley did not have a Worley lacked a reasonable basis for its budget reasonable basis for the earnings guidance at the time and earnings guidance. it was given; or alternatively, if it did, as at various dates during the relevant period, it had ceased to have a reasonable basis for maintaining the earnings guidance. This was a class action on behalf of persons who acquired shares in the respondent (Worley) between 14 August Although the judgment runs to some 700 paragraphs 2013 and 20 November 2013. On the former date, Worley (171 pages), it contains very little by way of analysis of issued an announcement which stated that it expected the relevant legal principles. Instead, the judgment is its “geographic and sector diversification to provide a solid heavily focussed on the particular facts of the case. foundation to deliver increased earnings in FY2014”. Thus, Nevertheless, at [59], Gleeson J did say that the “allegation although the earnings guidance did not specify a figure that a publicly listed company did not have reasonable (or even a range), it did indicate that earnings in FY14 grounds for its earnings guidance is a relatively serious one”, would be greater than in FY13 (in which Worley generated which thereby attracts the principle stated in Briginshaw v earnings of $322 million). That guidance was repeated Briginshaw (1938) 60 CLR 336. on several occasions in October 2013. However, on 20 Her Honour undertook a detailed analysis of the November 2013 Worley announced that it “now expects evidence relating to the preparation of the budget on underlying NPAT in the range of $260 million to $300 which Worley’s earnings guidance was based, and million with first half underlying NPAT in the range of ultimately concluded that the applicant had failed to $90 million to $110 million”. That announcement caused a establish that the budget lacked a reasonable basis (and significant fall in Worley’s share price from $21.59 to $16.00 therefore that the earnings guidance lacked a reasonable (approximately 26%). basis), either at the time the earnings guidance was first given, or at any time subsequently up until 20 November 2013 when it was withdrawn. Accordingly, the applicant’s claims failed in their entirety.
Class Actions Landscape Australia | Issue 3 11 Whilst her Honour’s decision was obviously based on the • there were several contemporaneous internal facts and evidence in this particular case, the decision documents authored by Worley’s Chief Financial (if correct) is somewhat concerning for other earnings Officer that were highly critical of Worley’s budgeting guidance cases in circumstances where the evidence process, one of which concluded: indicated, inter alia, that: ... in many cases, the bottom up build that the • the budget on which the earnings guidance was based locations submit does not match the expectations was, following a series of ‘management adjustments’, of growth from senior management. In order significantly greater (by some $100 million (or 40%) to meet these expectations, the most common at the EBIT level) than the aggregate of the original response is for locations to simply include a greater business unit budgets that had been prepared by each level of “blue sky” revenue in the second half of of the individual business units and transmitted to their budget period. In essence, locations are head office; further, a large part of those ‘management ending up budgeting on the hope that work will adjustments’ represented ‘blue sky’ revenue from materialise, rather than any real expectation that it as yet unidentified projects / sources, and there was will. Therefore, the probability that the budget will evidence which indicated that at least some of the be met decreases… This is supported by the fact that individual business units felt compelled by senior we have missed budget five out of the last six years. management to provide budgets which they did not and: actually believe were realistic; … our budget assumes that everything will go right • Worley had a fairly consistent track record, over in a world where we know things will go wrong. several years, of overestimating its revenue and profit and, thus, not meeting its budgets / forecasts (such that • at a relatively early stage in the financial year Worley’s it had, in the previous financial year, been required to financial performance was such that the H1:H2 issue two earnings downgrades), and notwithstanding earnings split had shifted from approximately 45:55 that history, there had been no material changes to its to approximately 38:62 (i.e. by early in the financial budgeting process; year, and well before 20 November 2013, Worley’s H1 performance was significantly behind budget, such that substantial improvement would be required in H2 in order for the budget / earnings guidance to be achieved). As indicated above, notwithstanding those facts, her Honour found that the applicant had failed to establish that Worley lacked a reasonable basis for its budget and earnings guidance.
(Postscript: Perhaps not surprisingly, on 19 November 2020 the applicant filed a Notice of Appeal from her Honour’s judgment.)
Crowley v Worley Ltd [2020] FCA 1522
Federal Court of Australia | Gleeson J | 22 October 2020
Applicant’s Solicitors ACA Lawyers (Shine Lawyers)
Respondent’s Solicitors Herbert Smith Freehills
Applicant’s Funder N/A
Austlii link
12 Maurice Blackburn October 2020
Court of Appeal declines to answer whether Court has power make ‘common fund order’ at settlement, issues remains in need of clarification
In this matter the New South Wales Court of The defendant (BMW), which pushed for determination Appeal declined to answer in the hypothetical of the separate question, submitted that any CFO at whether the Court had power to make a settlement would be relevantly equivalent to the orders ‘common fund order’ (CFO) at settlement, found to not be authorised by the High Court, and the answer to the separate question should therefore be “no”. in the latest judgment concerning a set of representative proceedings regarding defective The plaintiff, on the other hand, submitted that the motor vehicle airbags. question should not be answered as there was no ‘matter’ in the constitutional sense. The referred question was said to not represent a present controversy to be On 16 September 2020 Sackar J removed the determined, as it presupposed a settlement that may not following separate question to the Court of Appeal for occur. Even if there was the power to answer the question, determination: the plaintiff submitted the Court should exercise its Does the Court have the power pursuant to s 173 discretion to not answer it. This was because the Court of the Civil Procedure Act 2005 (NSW) to make an should wait for the emergence of facts relevant to order requiring group members in this matter who whether such an order would be ‘just’ under s 173(2), such have not signed a litigation funding agreement with as settlement quantum and the form of any proposed Regency Funding Pty Ltd to pay an amount to that order. The plaintiff contended that, if the Court of Appeal funder out of the proceeds of any settlement by way did determine it would answer the question, it should of return on expenditure, commission or other similar not be answered in the negative; the reasoning of the remuneration to the funder? High Court in Brewster concerned orders at an early stage of proceedings and did not automatically apply to the This followed the High Court’s decision in BMW context of an order following settlement. Australia Ltd v Brewster (2019) 374 ALR 627; [2019] HCA 45 (Brewster), which held that neither s 183 of the Civil The Court of Appeal determined it was not appropriate Procedure Act 2005 (NSW) nor the materially similar to answer the question, having regard to the ‘evidentiary s 33ZF of the Federal Court of Australia Act 1976 (Cth) vacuum’, the fact there may not be a settlement, and the permitted the making of a CFO at an early stage of lack of a proposed form of order to consider. Further, the proceedings. A key aspect of the majority’s reasoning Court of Appeal noted that the ratio decidendi of Brewster involved construing s 183 as a general ‘gap filling’ power. was limited to a CFO prior to settlement or judgment, and it was “far from obvious” that the majority of the High Court President Bell (with Bathurst CJ and Payne JA agreeing) was addressing the power of the Court under s 173. observed that, by contrast, s 173 is specifically concerned with the Court’s approval of settlement of representative The Court left open the possibility of making a CFO under proceedings. Further, s 173(2) permits the Court to make s 173 when armed with the ‘hard’ information of an actual “such orders as are just with respect to the distribution of settlement proposal. In doing so, the Court noted that any money”. the majority judgments in Brewster did not expressly preclude such an order, and all but Gordon J’s did not do so by implication either.
Brewster v BMW Australia Ltd [2020] NSWCA 272
New South Wales Court of Appeal | Bathurst CJ, Bell P and Payne JA | 30 October 2020
Plaintiff’s Solicitors Quinn Emanuel
Defendant’s Solicitors Ashurst Australia
Plaintiff’s Funder Regency Funding Pty Ltd
Austlii link
Class Actions Landscape Australia | Issue 3 13 October 2020
Recovery issues plague Appco class action resolution
This decision arises in the context of the Appco Markham gave evidence in which he stated that the class action, being one of a series of class actions prospects of recovery against other sources were not commenced by Adero Law under the Fair Work very strong, noting that he had not undertaken further Act 2009 (Cth). investigations to ascertain whether transactions entered into were voidable. In part, this was due to the funder declining to fund those investigations. This was met with In this case, it was alleged that the applicant and class strong criticism from Lee J, who stated (at [11]): “…on the members were employees of the respondent (Appco) current state of the evidence, I am left with the impression and by dint of that ought to have been paid in accordance that, in effect, the solicitors for the applicant are relying on with the applicable award. nothing more than representations made by the solicitors The matter came before Lee J for the approval of an for the respondent as to the true financial position of in-principle settlement in the amount of $1.9 million, of the company”. His Honour was highly critical of the which 50% was sought for the funder. After payment settlement, describing the return to class members as of expected administration costs, it was estimated that “derisory” and “diddly squat” (at [12]). His Honour stated (at $910,000 would be left for distribution to class members. [13]): “If the settlement amount was of a different character, In contrast, the claims of class members were estimated it may be that I would take a different view, but given the to be in the vicinity of $65 million and were assessed amount already spent on this litigation and the issues as by counsel for the applicant as having ‘good liability I understand them, I am very far from satisfied that the prospects’. The significant discount on recovery was proposed settlement, on the current state of the evidence, is due to the only current source of recovery being Appco’s fair and reasonable and in the interests of group members”. current net assets of $2.1 million. The solicitor for the Given the absence of proper investigation of the sources applicant (Markham) had not pursued recovery from of recovery (and the refusal by the funder or Adero to Appco’s insurance policies on the belief that could not be pay for that investigation to occur), his Honour initially brought within a Part IVA proceeding as it “would require proposed that a contradictor be appointed. This was the establishment of individual circumstances” (at [6]). initially opposed by Adero. However, following his Honour During the course of the proceeding, transactions were indicating that he proposed to dismiss the application entered into by Appco under which a new company was for approval and give notice to class members, Adero created (Indigo8), an Appco company was voluntarily acceded and agreed to conduct the investigation. His deregistered, and Appco had disposed of some of its Honour hesitantly agreed for this to occur and adjourned assets at a loss. the application for approval of the settlement, providing the parties the opportunity to put on further evidence.
Bywater v Appco Group Australia Pty Ltd [2020] FCA 1537
Federal Court of Australia | Lee J | 9 October 2020
Applicant’s Solicitors Adero Law
Respondent’s Solicitors Baker McKenzie
Applicant’s Funder Harbour
Austlii link
14 Maurice Blackburn October 2020
Judgement reached on competing notices of motion in Queensland Floods class action
The Court made a series of directions, to the total value of the loss suffered by reason of the including: Restricting requirements on existing negligence of the defendants for 264 class members referees and class members; withholding the selected by the plaintiff, with an intention to use the specification of a reporting date and extension damages assessments for the purpose of extrapolating aggregate damages for the entire group of class member of the reference to the balance of the S4 claims; claims. The plaintiff contended that the 264 claims and undertaking to appoint further referees were randomly selected on expert advice in stratified where appropriate. categories as follows:
This judgment in the Queensland Floods class action Stratum Self-assessed Number of Suggested concerned the parties’ competing notices of motion loss claimants sample size concerning the referral of various class member claims S1 <$100k 3,370 34 for assessment by a referee. S2 $100k – $300k 2,050 41 There are approximately 6,870 class members in the class action and the plaintiff has foreshadowed pursuing S3 $300k – $1m 825 54 an application under s 177(1)(f) of the Civil Procedure Act S4 $1m – $10m 244 161 2005 (NSW) seeking an award of damages in an aggregate amount without specifying amounts awarded in respect S5 >$10m 11 11 of individual class members. It was proposed that three ex‑judicial officers be initially By this application the plaintiff sought orders for the appointed as referees. referral under Part 20, rule 14 of the Uniform Civil Procedure Rules 2005 (NSW) for enquiry and report as
Class Actions Landscape Australia | Issue 3 15 Justice Beech-Jones noted that a “fragile détente” was was observed by McDougall J in Baulderstone v QIC [2012] reached to the effect that it was not necessary to NSWSC 235, “to require a referee to be bound by the rules determine at this point whether an order under s 177(1) of evidence is to undo one of the major benefits of the (f) should be made and also that it was not necessary to process” (at [27]). determine whether the 264 claims represented a suitable Ultimately, his Honour determined that: or random sample and that those questions could be agitated later. • the 264 claims nominated by the plaintiff should be referred; The respective defendants held different positions but they collectively sought that the rules of evidence be • there should not be a direction requiring the referees applied to any referral and that all S4 claims be referred. to apply the rules of evidence;
His Honour rejected the contention that the existence of • there should not be a direction requiring the referees large claims necessitated a strict adherence to the rules to allow cross‑examination; of evidence given that the reference was to be conducted • there should not be a direction requiring the class by ex‑judicial officers who would be bound to afford the members to plead or specify their claims in a parties procedural fairness, stating as follows (at [22]): particular form; The multitude of claims and their potential differences • no reporting date should be specified at this stage but means that the achievement of the objectives stated in s the reference should not be delayed on account of the 56 of the CPA point overwhelmingly to retaining flexibility current appeal on foot from the primary judgment; in the process adopted by the referee to determine the best means of determining a particular claim. To impose a • at this point the reference will not extend to include requirement to apply the rules of evidence on the referee the balance of the S4 claims; and applicable to all claims, or even all claims in a particular • the Court will appoint multiple referees and nominate category, would undermine the very flexibility that is one a senior referee but otherwise allow the referees to of the principal advantages of the reference process. As determine whether more are required.
Rodriguez & Sons Pty Ltd v Queensland Bulk Water Supply Authority t/as Seqwater (No 25) [2020] NSWSC 1544
Supreme Court of New South Wales | Beech-Jones J | 3 November 2020
Plaintiff’s Solicitors Maurice Blackburn
First Defendant’s Solicitors King & Wood Mallesons
Second Defendant’s Solicitors Norton Rose Fulbright
Third Defendant’s Solicitors Crown Solicitor for the State of Queensland
16 Maurice Blackburn September 2020
Protective proceeding in Uber class action is driven out of NSW
With doubt as to whether Supreme Court Act At [14]-[15] President Bell acknowledged the importance of 1986 (Vic), s 33ZE applies to claims of non- the tolling of limitation periods: Victorian class members, mirror proceeding [14] The suspension of limitation periods is a feature commenced in New South Wales is transferred of class action legislation… It is functionally important to Victoria. because, although group members are not strictly parties to group or class action proceedings, their claims are “in play”, as it were, and not necessarily to This decision arises in the context of the Uber Class their knowledge or approval. Action. The Uber Class Action was commenced in the Supreme Court of Victoria on behalf of taxi and hire [15] Even if they have knowledge and are happy to car industry participants in Victoria, New South Wales be a member of the group or the class, they may, at a and Queensland. In their defences, the Australian Uber subsequent stage of the proceedings, elect to opt out of entities (being the defendants incorporated in Australia) the class or group, and the legislatures have taken the pleaded that the filing of the proceeding in the Supreme view that they should not be at the risk of limitation Court of Victoria did not operate to toll the limitation periods having either expired or continued to run in period for non-Victorian class members – in other words, such circumstances. that s 33ZE of the Supreme Court Act 1986 (Vic) does not Following the hearing, both the Australian Uber entities operate in respect of claims where the governing law in and the foreign Uber entities (who after the hearing respect of the claim is other than Victoria. filed unconditional appearances) agreed to provide an Accordingly, a protective proceeding (NSW Proceeding) undertaking that they would not rely on any defence was filed in the Supreme Court of New South Wales on that s 182 of the CPA ceased to operate following the behalf of NSW class members. The NSW Proceeding was transfer of the NSW Proceeding to the Supreme Court of referred to the Court of Appeal for consideration as to Victoria. Following this, the plaintiff agreed to the form whether the NSW Proceeding ought to be transferred of the undertaking and did not oppose the transfer in back to the Supreme Court of Victoria. The transfer circumstances where the undertakings were provided. was opposed by the plaintiff who argued that it would As such, the issue was resolved without the need for cause NSW class members to lose the protection of s 182 the Court to rule upon the issue (noting however that in of the Civil Procedure Act 2005 (NSW) (CPA) (the NSW obiter at [40], Garling J commented that the issue ought to equivalent of s 33ZE) as a result of the initial filing of the be resolved by way of uniform legislative reform across NSW Proceeding, and that in those circumstances the Australia). Court could not be affirmatively satisfied that it was in the interests of justice to transfer the NSW Proceeding.
Stewart v Uber Technologies Inc [2020] NSWCA 208
New South Wales Court of Appeal | Bell P, Meagher JA and Garling J | 3 September 2020
Plaintiff’s Solicitors Maurice Blackburn
Defendants’ Solicitors Herbert Smith Freehills
Plaintiff’s Funder Harbour
Austlii link
Class Actions Landscape Australia | Issue 3 17 September 2020
Application to disqualify judge is dismissed
Questions raised over whether same judge Nonetheless, the respondents were said to have should hear civil penalty proceeding relating to overstated the issue of extraneous information. His substantially same issues part-heard. Honour considered that it was highly likely that the factual findings would turn on the documentary evidence, which was substantially common in both The respondents applied for Lee J to disqualify himself proceedings. The trial judge is not required to put “core” from the initial hearing of this class action on the basis documentary evidence and known common facts out of that a reasonable apprehension of bias existed. His mind. None of the ASIC witnesses were cross-examined Honour had previously determined that he would hear as to their credit. Therefore, a reasonable observer would the class action as well as the related ASIC civil penalty not apprehend the possibility of bias having regard proceeding (Webb v GetSwift Ltd (No 5) [2019] FCA 1533), to the type of extraneous information in his Honour’s which concerns substantially the same underlying possession. Further, the relevant facts were said to be allegations. Judgment in each proceeding was to be only neither complex nor in substantial dispute, with the based upon the evidence and argument put forward in contest primarily concerning the application of legal that individual proceeding. The trial of the class action norms. was scheduled to commence while judgment on liability in the ASIC proceeding was reserved. It was relevant to his Honour’s consideration that no definitive conclusions had been reached in the form of a The respondents submitted that a reasonable written judgment. observer would be disinclined to believe that a judge would bring an impartial mind to the class action in His Honour acknowledged that the authorities encourage these circumstances. The possibility of a reasonable a cautious approach in such applications, but stated that apprehension of prejudgment was said to be heightened substantial grounds still needed to be established for where there were a large number of factual issues in disqualification to occur. contention that were common to both proceedings. His Honour granted the respondents leave to appeal the Further, the respondents submitted that his Honour decision, and the class action hearing date was vacated would be in possession of “vast and substantial” to allow for the possibility of such an appeal. His Honour extraneous information from the ASIC proceeding. noted that, in any event, the Victorian COVID-19 lockdown In determining that he would not disqualify himself, would have created difficulties had the trial proceeded his Honour considered that it was not the case that “the as scheduled. A Notice of Appeal was filed by the relevant observer might reasonably apprehend that the respondents on 23 September 2020. judge might not bring an impartial mind” (at [38]). Finally, his Honour considered there was a public policy His Honour accepted that there were differences in the consideration for refusing the application. It is becoming expert and lay material in the proceedings. In particular, more common for class actions to arise out of the same the applicant in the class action intended to call seven facts as civil penalty proceedings instituted by regulators. out of the 19 lay witnesses that were called in the ASIC As such litigation is large and time consuming, efficiencies proceeding, and at least four of those lay witnesses would can be achieved by the same judge presiding over both be cross-examined again. proceedings where they involve the same underlying facts.
Webb v GetSwift Ltd (No 6) [2020] FCA 1292
Federal Court of Australia | Lee J | 9 September 2020
Applicants’ Solicitors Phi Finney McDonald
Respondents’ Solicitors Quinn Emanuel Urquhart & Sullivan
Applicants’ Funder Therium Capital Management Ltd
Austlii link
18 Maurice Blackburn September 2020
The Court’s authority to make ‘common fund’ orders continues to be questioned
A cross-summons seeks declaration that the His Honour granted leave and referred the question of Court has no power to make common fund whether the Court has power to make a common fund orders at settlement. order under s 173 of the CPA to be determined by the Court of Appeal. In doing so, his Honour said that “[t]here is no doubt in my mind that any defendant in any class This is one of several class actions relating to allegedly action, given the High Court’s decision in BMW Australis defective Takata airbags. Ltd v Brewster [2019] HCA 45; (2019) 94 ALJR 51, has a This decision concerned a cross-summons filed by the real interest in the question of whether there is in fact defendant seeking a declaration by the New South Wales jurisdiction to make a common fund order” (at [12]). His Court of Appeal that s 173 of the Civil Procedure Act 2005 Honour acknowledged that evidence from the plaintiff’s (NSW) (CPA) does not authorise the Supreme Court of solicitors to the effect that they had not come to a view as New South Wales to make a common fund order at the to whether the making of a common fund order would conclusion of a proceeding. be a precondition to settlement or if they would seek the defendant’s consent to such an order pointed away The issue that confronted Sackar J was whether there from there being a real controversy that could found was a real controversy between the parties which would declaratory relief. However, his Honour held that “just by be sufficient to enliven an application for declaratory way of fine balance” that evidence “does not sufficiently relief, and whether his Honour should grant leave for the in my mind take the issue off the table so as to remove in a bringing of the cross-summons. practical sense a controversy between the parties” (at [13]). In referring the question to the Court of Appeal, his Honour said that he would seek to ensure the matter will receive sufficient expedition given the fact that mediation is set to take place in March of 2021.
Brewster v BMW Australia Ltd [2020] NSWSC 1261
Supreme Court of New South Wales | Sackar J | 16 September 2020
Plaintiff’s Solicitors Quinn Emanuel Urquhart & Sullivan
Defendant’s Solicitors Ashurst Australia
Plaintiff’s Funder Regency Funding Pty Ltd
Austlii link
Class Actions Landscape Australia | Issue 3 19 September 2020
Largely deducted shareholder class action settlement is approved
Settlement of a shareholder class action has • the legal costs of the applicant’s solicitor in the sum been approved where proposed deductions of $3,435,901.96 (after they agreed to limit their comprise large proportion of settlement sum. professional fees to 75% of the amount invoiced); • payments to the funder in respect of ATE insurance in This proceeding was a shareholder class action brought the sum of $833,859.53; on behalf of persons who purchased shares in an • settlement administration costs of $155,000.00; and ASX-listed pharmaceutical company, QRxPharma Ltd, during the period 6 November 2009 to 25 June 2012. The • reimbursement to the lead applicant in the sum of applicant alleged that the company, through its directors, $4,500. and financial and legal advisers, failed to disclose material There was also a delay between in-principle settlement information to potential investors. and settlement approval, during which time the decision Justice McKerracher noted that the outcome (at [3]): in Haselhurst v Toyota Motor Corporation Australia Ltd (2020) 379 ALR 556; [2020] NSWCA 66 was handed …has not been as favourable as may have been hoped down. That decision held that pre-settlement class by some at the outset; despite this, there is no reason, closure orders were beyond power, and necessitated having regard to the steps taken and investigations an additional registration process to occur in this conducted, to consider that a better settlement would proceeding. be achievable. After the various deductions, the net settlement amount The proceeding was said to be factually and legally available to class members would be approximately complex and encompassed issues concerning $2,340,837.60, or 33.44% of the total settlement. Although pharmacological matters, United States law and his Honour noted the percentage of the settlement going regulatory processes, and legal issues concerning the to class members was towards the low end of the range scope of liability of directors and advisors under the law which courts have been prepared to approve, his Honour of statutory knowing involvement, together with market- held that the proportion wasn’t so low as to not be fair and based causation. reasonable. The principle issue for his Honour was the fairness of His Honour approved the settlement and appointed a the proposed deductions from the $7 million settlement, partner from KPMG as settlement administrator, who which included: agreed to cap their costs at the approved amount.
20 Maurice Blackburn Kenquist Nominees Pty Ltd atf The Kenquist Superannuation Fund v Campbell (No 6) [2020] FCA 1388
Federal Court of Australia | McKerracher J | 29 September 2020
Applicant’s Solicitors Corrs Chambers Westgarth
First – Third Respondents’ Solicitors Norton Rose Fulbright
Fourth Respondent’s Solicitors Wotton + Kearney
Fifth Respondent’s Solicitors Sparke Helmore
Applicant’s Funder JustKapital Portfolio Pty Ltd
Funder’s Solicitor Roberts & Partners Lawyers
Austlii link
Class Actions Landscape Australia | Issue 3 21 August 2020
Second class action against Treasury Wine Estates granted leave to proceed
Court considers whether solicitors and counsel Further Amended Defence (Jones 2FAD) filed in the breached an undertaking by using in later Jones Proceeding. The relevant information in the action material contained in pleadings filed in Jones 3FASOC and the Jones 2FAD was derived from earlier action. information contained in documents discovered by TWE in the Jones Proceeding.
This decision concerned two shareholder class In June 2020, TWE filed a summons in the Napier Proceeding seeking to stay that proceeding on the basis actions against Treasury Wine Estates Ltd (TWE). The first proceeding was filed in the Federal Court in July that, by using information contained in the Jones 3FASOC 2014, settled in November 2017 for $49 million, and and the Jones 2FAD to prepare the Napier SOC, MB and Mr Donnellan had breached the implied undertaking not was subsequently dismissed in August 2018 (Jones to use documents obtained from TWE in the course of Proceeding). The second proceeding was filed in May 2020 in the Supreme Court of Victoria and is ongoing discovery in the Jones Proceeding for any collateral or ulterior purpose. This obligation is colloquially known (Napier Proceeding). Maurice Blackburn (MB) acted for the applicant in the Jones Proceeding and acts for the as the ‘Harman undertaking’ (named after the decision applicant in the Napier Proceeding. Mr Guy Donnellan of the House of Lords in Harman v Secretary of State was briefed as Junior Counsel for the applicants in both for the Home Department [1983] 1 AC 280). In Hearne v the Jones and Napier Proceedings. Street (2008) 235 CLR 125; [2008] HCA 36, the High Court confirmed the application of theHarman undertaking In preparing the Statement of Claim filed in the Napier under Australian law. Justice Foster thus referred to the Proceeding (Napier SOC), MB and Mr Donnellan used implied undertaking as the ‘Hearne v Street obligation’ in information contained in the Third Further Amended his Honour’s reasons. Statement of Claim (Jones 3FASOC) and the Second
22 Maurice Blackburn The filing of the summons and other interlocutory steps On the other hand, TWE submitted, inter alia, that: taken by TWE effectively stultified any real progress in the a the Hearne v Street obligation extends to pleadings Napier Proceeding. In response, MB, Mr Donnellan and filed in the Federal Court; Mr Napier filed interlocutory applications in the Jones Proceeding seeking: b the Hearne v Street obligation applies not only to discovered documents but also to information derived a a declaration that no Hearne v Street obligation from those documents, and any document which applied to the Jones 3FASOC and the Jones 2FAD embodies information derived from a discovered or any information contained within them (Jones document (including a pleading) cannot be regarded Information); and as a secondary or independent source of that b in the alternative, orders releasing MB, Mr Donnellan information; and and Mr Napier from any applicable Hearne v Street c the fact that third parties were able to access the Jones obligation, and granting them leave to use the Jones 3FASOC and the Jones 2FAD on the Federal Court Information in the Napier Proceeding. website, and use that information as they pleased, did In support of their applications, MB, Mr Donnellan and Mr not have the effect that theHearne v Street obligation Napier submitted, inter alia, that: imposed upon MB, Mr Donnellan and Mr Napier ceased to operate. a no Hearne v Street obligation applies to pleadings filed in the Federal Court, primarily because r 2.32(2) and In light of the above principles, TWE submitted that (3) of the Federal Court Rules 2011 (Cth) provide that MB and Mr Donnellan breached the Hearne v Street any member of the public is permitted to inspect any obligation because: pleading filed in the Federal Court unless an order has a TWE discovered documents in the Jones Proceeding been made denying access; and provided particulars of its defence under b once the information derived from TWE’s discovered compulsion of court order; documents was incorporated into the Jones 3FASOC b MB and Mr Donnellan were subject to the Hearne v and the Jones 2FAD, it thereafter took its character for Street obligation in respect of those documents, and the purposes of a Hearne v Street analysis from the fact the information derived from them; that it was contained in pleadings rather than in the underlying discovered documents provided by TWE c that information was used to prepare parts of the under compulsion; Jones 3FASOC, and was embodied in that pleading; c if a Hearne v Street obligation did apply to the Jones d this was a use made possible by TWE’s discovery Information, it did not survive: (and by the provision of TWE’s further particulars of defence), and the Jones 3FASOC could not be regarded i the publication of the Jones 3FASOC and the Jones as an independent source of the information derived 2FAD on the Federal Court’s website, where they from TWE’s discovery and further particulars, to which were made available to class members and the the Hearne v Street obligation applied and continued to general public pursuant to orders of the Court; apply; and ii the making of settlement approval orders in the e MB and Mr Donnellan used the information derived Jones Proceeding; and from TWE’s discovery and particulars of defence – iii the Second Further Amended Statement of Claim which had been embodied in the Jones 3FASOC – to (Jones 2FASOC), which was materially identical to draft the Napier SOC. the Jones 3FASOC, being admitted into evidence in connection with an application by the applicant in the Jones Proceeding in April 2017 to amend his Statement of Claim; and d the Court should exercise its discretion to release MB, Mr Donnellan and Mr Napier from any Hearne v Street obligation that applied to the Jones Information in circumstances where the Jones 3FASOC and the Jones 2FAD remain publicly available on the Federal Court’s website and where MB, Mr Donnellan and Mr Napier are, according to TWE, the only persons in the entire world who are unable to use the Jones Information as they please.
Class Actions Landscape Australia | Issue 3 23 Justice Foster overwhelmingly accepted the submissions His Honour further held that, if he was wrong and a made by MB, Mr Donnellan and Mr Napier, and rejected Hearne v Street obligation did exist, it nevertheless ceased those made by TWE. His Honour found that the Jones to be enforceable when the pleadings were published Information was not subject to a Hearne v Street on the Federal Court website and when the Jones obligation. In so finding, his Honour said (at [75]): 2FASOC was admitted into evidence at the amendment application in the Jones Proceeding in April 2017. His In this Court, pleadings are available for inspection Honour thus made the declaration sought by MB, Mr by any member of the public. In addition, in the Donnellan and Mr Napier. present case, the information originally sourced in discovered documents which found its way into the Although strictly unnecessary, his Honour also made Jones 3FASOC and the Jones 2FAD was included in orders to the effect that, if anyHearne v Street obligation those pleadings as a result of amendments sought applied to the Jones Information, MB, Mr Donnellan by the relevant parties and granted by the Court and and Mr Napier be released from that obligation and be were so included as a result of the legitimate and granted leave to use the Jones Information in the Napier quite proper exercise of the parties’ rights to seek Proceeding. such amendments in light of information gained from (Postscript – on 20 August 2020 TWE filed an appeal from reading and considering discovered documents. No Foster J’s decision.) restriction was sought or placed upon public access to the information which had been included in the Jones 3FASOC and the Jones 2FAD which had been taken from discovered documents and that material was available for inspection by any member of the public as part of those pleadings. MB and Mr Donnellan did not access the primary source for that information (viz discovered documents) when they came to draft the Napier SOC. The only documents used by them for the purpose of drafting the Napier SOC were the Jones 3FASOC and the Jones 2FAD. The only information used by them for that purpose was information contained in those pleadings. Those pleadings were not subject to any Hearne v Street obligation insofar as MB and Mr Donnellan were concerned. Nor was the information in those pleadings extracted from discovered documents subject to any such obligation.
Jones v Treasury Wine Estates Ltd; In the Matter of Treasury Wine Estates Ltd (No 4) [2020] FCA 1131
Federal Court of Australia | Foster J | 6 August 2020
Applicant’s Solicitors in the Jones Maurice Blackburn and Napier Proceeding
Mr Donnellan’s Solicitors Moray & Agnew
Respondent’s Solicitors in the Herbert Smith Freehills Jones and Napier Proceeding
Applicant’s Funder in the Jones N/A and Napier Proceeding
Austlii link
24 Maurice Blackburn August 2020
Asylum seekers’ allegation of misfeasance in public office is struck out
Class action arises out of applications for, The allegations of misfeasance in public office were and granting of, visas in respect of asylum that the respondents acted unlawfully in applying for seekers transferred to Nauru, with allegation of and requesting visas on behalf of the class for reasons misfeasance in public office, but application by including that: the respondents lacked power to do so; the process failed to afford procedural fairness to the respondents to strike out statement of claim and applicants and class members; the conduct failed to for summary dismissal of the proceeding ensure that the applicants and class members would be is granted. treated in detention in Nauru in accordance with relevant human rights standards; and such a breach of those This class action was brought on behalf of certain asylum standards was exacerbated in circumstances where the seekers who were taken from Australia to Nauru pursuant class member was a child. to the off-shore processing arrangements contained in The respondents applied for orders that the proceeding Australia’s immigration regime. be summarily dismissed pursuant to r 26.01 of the Federal The respondents were three members of Parliament Court Rules 2011 (Cth) (FCR) and s 31A(2) of the Federal who during the relevant period held the (variously titled) Court of Australia Act 1976 (Cth), that judgment be entered Ministerial position of Minister for Immigration, and two in their favour, and additional orders pursuant to FCR public servants who held the position of Secretary of the 16.21 that the applicants’ further amended statement of corresponding Department, and the Commonwealth. claim be struck out in its entirety, and leave to re-plead be refused. It was common ground that transfer to Nauru occurred against the will of those asylum seekers and that the The respondents submitted that the applicants failed Commonwealth secured Nauruan visas for those to plead facts which could make good the alleged individuals to facilitate the transfer process. The tort of misfeasance in public office and that the bulk proceeding alleged that that practice was unlawful, that of the claims had no reasonable prospect of success its enactment and execution amounted to the tort of because they relied on a construction of ‘unlawfulness’ misfeasance in public office and that the Commonwealth that was contrary to binding High Court authority. was vicariously liable for the conduct of the named The respondents argued that the deficiencies were so Ministers and Secretaries. fundamental and incurable that the pleading should be struck out and summary judgment given.
Class Actions Landscape Australia | Issue 3 25 The applicants contended that the Court should take However, in circumstances where the applicants account of principles of modern case management which conceded they had no factual basis to allege the requisite encompassed less strict rules relating to pleading, that the state of mind and were in fact relying on such evidence respondents misunderstood the thrust of the High Court emerging during discovery, her Honour said the following authority, and that further particulars would be provided (at [122]): after discovery to clarify aspects of the claim. In the context of any proceeding, let alone one making Justice Mortimer accepted the respondents’ submission the grave allegation of misfeasance in public office that each allegation had no reasonable prospect of against Commonwealth Ministers and Departmental success because the pleaded case was incapable of Secretaries, the hope that a basis for a cause of action satisfying the mental element of the tort, which her might emerge in the witness box will be unlikely ever Honour described as the “irredeemable flaw in [the] to justify permitting applicants to re-plead their case, pleadings” and considered that itself was sufficient to and proceed to trial so as to keep the possibility of that dispose of the applications in the respondents’ favour. In moment in the witness box alive. reaching that view, her Honour acknowledged that the Her Honour was strikingly critical of the approach of the proceeding was at an early stage and involved complex applicants’ lawyers to pleading and the case generally, questions of law and fact, which factors would generally which informed her decision that it was appropriate to militate against such a course. strike out the entirety of the applicants’ further amended statement of claim with no leave to re-plead, to summarily dismiss the proceeding and to enter judgment in favour of the respondents.
Plaintiff M83A/2019 v Morrison (No 2) [2020] FCA 1198
Federal Court of Australia | Mortimer J | 21 August 2020
Applicants’ Solicitors Phi Finney McDonald
Respondents’ Solicitors Australian Government Solicitor
Applicants’ Funder N/A
Austlii link
26 Maurice Blackburn July 2020
Adverse costs should not stand in the way of access to justice
Court considers appropriateness of costs orders Because the proceeding is a proceeding under the FWA, in proceedings under the Fair Work Act 2009 the starting point was s 570 of the FWA, which relevantly (Cth). provides that costs may not be awarded in relation to a matter arising under the FWA unless the court is satisfied that: This is a class action on behalf of more than 3,000 telecommunications workers against ISG Management a the proceeding was instituted vexatiously or without Pty Ltd (ISG). ISG is a workforce management company reasonable cause; or that holds contracts with Telstra, Foxtel, NBN Co and b a party’s unreasonable act or omission caused the others. The applicant alleges that he and the class other party to incur the costs. members, who were purportedly engaged by ISG as ‘independent contractors’, were in fact ‘employees’ and In this matter, both parties relied on sub-para (b) in that, contrary to the Fair Work Act 2009 (Cth) (FWA) contending that costs should be awarded against the and the relevant industrial award, ISG had failed to pay party whose application was dismissed. or provide him and the class members with various His Honour noted (at [7]-[8]) that the purpose of s 570 is employee entitlements. “to provide access to justice by ensuring that the fear of In an earlier judgment (Mutch v ISG Management Pty Ltd an adverse costs order does not discourage litigants from [2020] FCA 362), Bromberg J relevantly: pursuing good claims”, and thus the occasions upon which costs will be awarded under s 570 are likely to i dismissed an application by ISG for a declaration that be “exceptional”. ISG placed particular reliance on the the proceeding was not properly commenced as a fact that the applicant was funded by a litigation funder, representative proceeding pursuant to s 33C(1) of the relying on what Lee J had earlier said on that topic in Federal Court of Australia Act 1976 (Cth) (FCAA), and/ Bywater v Appco Group Australia Pty Ltd [2019] FCA 799 or an order that the proceeding be declassed pursuant and Turner v Tesa Mining (NSW) Pty Ltd (2019) 290 IR to s 33N of the FCAA, and/or orders for class-closure 388; [2019] FCA 1644. In relation to that issue, however, his pursuant to an opt-in process; and Honour said (at [13]-[14]): ii dismissed an application by the applicant for a common fund order (CFO), which became futile following the High Court’s decision in BMW Australia Ltd v Brewster (2019) 374 ALR 627; [2019] HCA 45 (Brewster). In this judgment, Bromberg J dealt with questions as to the appropriate orders for costs arising out of that earlier judgment.
Class Actions Landscape Australia | Issue 3 27 Whilst litigation funders fund litigation to derive profit, In relation to each of the applications that were dismissed that they do so serves to facilitate access to justice for in his earlier judgment, his Honour found that there was individuals who may otherwise not have been able to nothing which could be described as ‘unreasonable’ afford the cost of litigating good claims. The activities so as to warrant a costs order being made under s of litigation funders in funding Fair Work litigation is, in 570. Although each of the applications was ultimately that respect, aligned with the policy objective which dismissed (and, in that sense, could be said to have lacked underlies s 570 of the [FWA]. merit), that alone was not enough to warrant a costs order – his Honour concluded that the lack of merit in relation It would be antithetical to that policy objective if cost to each application, and the conduct of the parties in orders against litigants who are funded by litigation relation to those applications, was not such as to amount funders became the rule rather than the exception to an ‘unreasonable’ act or omission so as to justify a costs in Fair Work litigation. If that were so, the willingness order. In relation to the application for a CFO in particular, of litigation funders to participate in funding Fair that application was made before the decision in Brewster Work litigation may diminish and the capacity of (when CFOs were routinely made), and following the prospective litigants to use litigation funders may also decision in Brewster, it was sensibly not pressed. diminish because of the higher fees or commissions which litigation funders will likely charge. Further, that Accordingly, his Honour dismissed both parties’ adverse cost orders should be more readily available applications for costs, and instead ordered that there against applicants than respondents conflicts with the be no orders as to costs in relation to the dismissed scheme of s 570 which is primarily directed to assisting applications. applicants, but in doing so, recognises the importance of an even-handed approach to the question of legal costs. An even-handed approach must have been seen as integral to the broad acceptance of Fair Work litigation as primarily a “no costs” jurisdiction. Carving out exceptions to the even-handed approach taken by s 570 may serve to undermine the regime that s 570 seeks to promote.
Mutch v ISG Management Pty Ltd (No 2) [2020] FCA 954
Federal Court of Australia | Bromberg J | 8 July 2020
Applicant’s Solicitors Shine Lawyers
Respondent’s Solicitors Lander & Rogers
Applicant’s Funder Litigation Lending Services Ltd
Austlii link
28 Maurice Blackburn July 2020
Court allows false imprisonment class action to proceed
Commonwealth attempts to strike out class The key dispute between the parties pertained to the action on behalf of immigrants alleging their proper construction of s 196(1) of the Migration Act, which detention was unlawful – application dismissed. requires that an unlawful non-citizen detained (under s 189 of the Migration Act) must be kept in detention until:
This is a class action on behalf of asylum seekers a they are removed from Australia, including removal to who were detained by the Commonwealth under the a regional processing country; Migration Act 1958 (Cth) (Migration Act) between 2011 b they are deported; or and 2020. The applicant claims that his detention – and the detention of the class members – was for some period c they are granted a visa. unlawful and seeks damages for false imprisonment for The applicant’s case is premised on the proposition that himself and on behalf of the class. detention can become unlawful where one or more of This judgment concerned an application filed by the the purposes set out in s 196(1) is incapable of fulfilment Commonwealth for orders that: or not being pursued and carried into effect as soon as reasonably practicable. a the proceeding be summarily dismissed pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth) The Commonwealth’s position, on the other hand, is or r 26.01(1)(a) and (c) of the Federal Court Rules 2011 that the duration of detention is irrelevant. Assuming (Cth) (FCR) and that there be summary judgment in its the applicant was taken into detention lawfully, the favour; and Commonwealth contends, detention will be lawful until one of the end points in s 196(1) is reached. Further, b the applicant’s Amended Statement of Claim (ASOC) following the High Court’s decision in Al-Kateb v Godwin be struck out in its entirety, or alternatively struck out (2004) 219 CLR 562; [2004] HCA 37 (‘Al-Kateb’), detention in part, pursuant to FCR 16.21. may be authorised by the Migration Act regardless of whether it is (or is likely to become) reasonably practicable to remove a person from Australia. The Commonwealth thus sought summary judgment on the basis that the applicant’s case has no reasonable prospects of success.
Class Actions Landscape Australia | Issue 3 29 Justice Mortimer dismissed the Commonwealth’s Her Honour also dismissed the Commonwealth’s strike application for summary judgment. Her Honour held (at out application. In doing so, her Honour: [48]): • said she was “satisfied the Commonwealth well In my opinion although the Commonwealth’s understands the case it has to meet” (at [64]); contention about the proper construction [of] s 196 • accepted that there was a sufficient basis to plead has force, there is sufficient cogency in the applicant’s certain matters in the ASOC pertaining to the question competing arguments that it is appropriate to allow of when detention may be rendered unlawful (see [65], the matter to proceed to trial, and for the Court to [66] and [70]); and perform its function as the finder of fact at trial, so that an adequate foundation is laid not only for its own • rejected the Commonwealth’s argument that certain consideration of the application of the law to the facts paragraphs in the ASOC defining the class members as found, but for consideration by appellate courts. and the sub-groups into which they are divided should be struck out on the basis that the sub-groups Her Honour also cited the following factors as weighing do not capture all hypothetical class members. Her against summary dismissal: Honour observed that both the applicant and the • the allegations made in the proceeding are novel, Commonwealth accepted that it is not possible as yet and none of the authorities relied upon by the to know if such class members exist, or if the problem Commonwealth (including Al-Kateb) considered the is merely theoretical. Her Honour held this was question of unlawful detention in the context raised sufficient to dismiss the Commonwealth’s application, by the applicant; and and observed that the Commonwealth may be entitled to seek further particulars or require the applicant to • the question of whether the relevant provisions of amend his pleading in the event such class members the Migration Act should be construed as impliedly are identified in the future. limiting the duration of lawful detention “concerns one of the most fundamental rights recognised by the common law, and … the nature and extent of the supervisory power of the judicial branch over the circumstances in which the Executive can interfere with that right” (at [53]). In these circumstances, her Honour said that “[t]he position would, in my respectful opinion, have to be unmistakably clear before these kinds of questions of law could be decided summarily under s 31A. I am satisfied the existing High Court authorities … do not reach that level of clarity” (also at [53]).
DBE17 (by his litigation guardian Marie Theresa Arthur) v Commonwealth of Australia [2020] FCA 958
Federal Court of Australia | Mortimer J | 10 July 2020
Applicants’ Solicitors Maurice Blackburn
Respondent’s Solicitors Australian Government
Applicants’ Funder N/A
Austlii link
30 Maurice Blackburn July 2020
Class action against Uber continues after all four grounds of appeal are dismissed
Uber appeals unlawful means conspiracy, Appeals Grounds 1 & 2 – Strike Out threshold requirements, the meaning of ‘claims’ Grounds 1 & 2 of the appeal centred on Macaulay J’s in s 33C and whether service on foreign Uber refusal to strike out the pleadings. In considering the entities should be set aside. applicable law regarding striking out pleadings, the Court stated (at [35]) “… where there is a contentious or debatable point of law which arises on a pleading, it is usually Background inappropriate for a trial judge or the Court of Appeal to This decision arises from the appeal of Andrianakis determine the issue on a strike-out application, particularly v Uber Technologies (Ruling No 1) [2019] VSC 850. where the answer may depend upon the factual context” There, Macaulay J dismissed summonses filed by the – an approach consistent with the High Court’s authority defendants in the Uber Class Action (the Uber Entities) in Trkulja v Google LLC (2018) 263 CLR 149; [2018] HCA seeking: 25. The Court of Appeal also endorsed the reasoning of John Dixon J in Wheelahan v City of Casey (No 12) [2013] • that the statement of claim be struck out for failing VSC 316 concerning the general principles regarding the to disclose a cause of action (but granting leave to sufficiency of pleadings. replead the formulation of intention); Regarding the intention element, the cause of action • the proceeding be declassed under s 33N of the in the Uber Class Action is the tort of conspiracy by Supreme Court Act 1986 (Vic) (SCA); and unlawful means. A central element of the cause of action • further or alternatively, the lead plaintiff be directed is the requirement that, by partaking in unlawful means, pursuant to s 33ZF of the SCA to amend the class the defendants intended to cause harm to the plaintiff/s. member definition to remove class members outside At first instance, Macaulay J considered the relevant of Victoria. authorities, stating that for the tort of conspiracy by unlawful means it is not necessary that the intention to An additional summons was filed by those Uber Entities cause harm to the plaintiff be the predominant intention. not incorporated in Australia (Foreign Uber Entities), As noted above, although Macaulay J refused to strike who sought to have service on them set aside. That out the pleadings, he granted the plaintiff leave to replead summons was also dismissed by Macaulay J. the formulation of intention, finding that there was a The Uber Entities raised four grounds of appeal, “discernible case”. On appeal, the Uber Entities argued contending that the primary judge: that the primary judge misstated the intention element of the tort in suggesting that intention could be established 1 Erred in his statement of the intention element of the in circumstances of unlawful competition where it would tort of conspiracy by unlawful means. consequentially cause loss. The Uber Entities argued that 2 Erred in refusing to strike out the pleading which the even when repleaded, the pleadings still failed to meet Uber Entities claimed was embarrassing. the requisite standard by alleging that the loss suffered was consequential. This narrow reading of the amended 3 Erred in considering that the requirements of s 33C(1) pleadings was rejected by their Honours, who (at [40]) of the SCA had been made out. endorsed Macaulay J’s reasoning where his Honour 4 As submitted by the Foreign Uber Entities only, erred summarised that the case was: in refusing to set aside service on the Foreign Uber • that Uber intended to establish its business by means Entities because: of Uber drivers unlawfully competing with the a the claim did not have sufficient prospects of plaintiff and the other class members ‘in an otherwise success; and exclusive market’;
b the SCA did not give the Court the power to make r • in circumstances where the economic advantages of 7.02 of the Supreme Court (General Civil Procedure) that exclusivity were critical to the maintenance of Rules 2015 (Vic), which permits service out of their incomes and business values; and Australia in circumstances where the claim arises • ‘so that [i.e. with the intention that] the intrusion of the on a tort done or which occurred in Australia or unlawful competition would necessarily cause them where damage occurred in Australia. loss’. All four grounds of appeal were unanimously dismissed.
Class Actions Landscape Australia | Issue 3 31 At [42], the Court of Appeal summarised the intention In respect of their second ground of appeal, the Uber element as follows: Entities took objection to the use of the language of “one or more” of the Uber Entities performing acts, which In summary, to establish an unlawful means demonstrated the requisite agreement or combination conspiracy, a plaintiff is required to establish that aspect of the conspiracy element of the tort. The Uber the purpose of the defendants in combining to Entities sought to argue that the plaintiff ought to have engage in or to be complicit in the unlawful conduct stated which of the Uber Entities performed the specific included an intention to injure the plaintiff, and that acts pleaded and that it was not for the Uber Entities to the plaintiff in fact suffered injury by reason of the “try and work out, or speculate, which allegation is made unlawful conduct. The defendants’ intention to injure against which defendant” (at [60]). This line of argument the plaintiff need not be the predominant motive for was promptly dismissed by the Court of Appeal, with engaging in the unlawful conduct, but may be mixed their Honours stating (also at [60]) that “it is in the nature of with other purposes or motives — such as the pursuit conspiracy allegations that the precise facts are not within of gain for the defendant or others — which may be the the knowledge of the plaintiff. All that the plaintiff can do predominant motive. is plead the overt acts which were performed and rely on Their Honours continued, noting (at [43]) that where inferences from the evidence as a whole at trial to establish there were a number of motives for engaging in the the necessary elements of the tort.”. unlawful conduct, the intent could be made out where the plaintiff is able to prove that the unlawful conduct was aimed or directed at the plaintiff. Their Honours further emphasised (at [45]) that the intention of the conspirator to injure the plaintiff will …“ almost always be a matter of inference drawn from the evidence as a whole”.
32 Maurice Blackburn Appeal Ground 3 – s 33C Appeal Grounds 4a and 4b – Foreign Service The third appeal ground centred on the primary judge’s Appeal Ground 4a was dismissed for the same reasons refusal to make an order under s 33ZF of the SCA to direct given by the Court in dismissing Ground 1. As to Ground the plaintiff to amend the class member definition to 4b – the argument by the Foreign Uber Entities that the exclude non-Victorian class members. The Uber Entities Court did not have rule making power to make a rule argued that the primary judge erred in considering that regarding service out of the jurisdiction – the Court of s 33C(1) had been satisfied. At [79] of their reasons, their Appeal also dismissed this ground. Their Honours held Honours set out the core principles underpinning s 33C. (at [109]) that s 25(1) of the SCA (which grants the Court the power to make rules) “… must be construed broadly, The Uber Entities argued that the claims of the lead consistently with the general principle that a grant of power plaintiff, a Victorian taxi licence owner, operator and to a court (including the conferral of jurisdiction) should not driver could not be representative of those of non- be construed as subject to a limitation not appearing in the Victorian class members because they did not arise words of that grant”. An additional argument was also put from similar or related circumstances. The Uber by the Foreign Uber Entities, being that the Parliament Entities posited that the ruling of Finklestein J in Bray of Victoria did not have the power to enact s 25(1) of the v F Hoffman-La Roche Ltd (2003) 130 FCR 317; [2003] SCA. This too was dismissed by their Honours, who held FCAFC 153 concerning the concept of “similar or (at [118]) that “…a law providing for service of process out of related circumstances” ought be to “only those facts and Victoria in respect of a proceeding over which the Supreme circumstances that constitute the essential material facts Court has jurisdiction under the cross-vesting legislation … that provide the cause of action” ([at 85]). This argument is clearly a law ‘in and for Victoria’.”, applying Gleeson CJ’s was dismissed by the Court of Appeal, who emphasised reasons in Mobil Oil Australia Pty Ltd v Victoria (2002) that the concept of a claim is much broader and that 211 CLR 1; [2002] HCA 27 (which concerned a similar issue the connection between them by reason of similar or as to the power of the Parliament to enact Part 4A of the related circumstances “may arise by reference to either SCA). underlying facts or underlying legal principles” (at [87]). At [89]-[90] their Honours summarised those facts which were common between all of the class members and not directly referrable to Victoria. The Uber Entities contended that those common facts were superficial and that there were “radical differences” between the different state based claims on the basis of the different legislative frameworks which were the underpinning of the “unlawful means” element of the tort in each of the states. This too was dismissed by the Court of Appeal, who held (at [92]) that there was a similarity of issues based on “the obvious intention of the legislative provisions in each state”.
Uber Australia Pty v Andrianakis [2020] VSCA 186
Victorian Court of Appeal | Niall, Hargrave and Emerton JJA | 21 July 2020
Plaintiff’s / Respondent’s Solicitors Maurice Blackburn
Defendants’ / Applicants’ Solicitors Jones Day
Plaintiff’s Funder Harbour
Austlii link
Class Actions Landscape Australia | Issue 3 33 July 2020
Court finds sufficient evidence to support privilege claims in Crown class action
‘Associated material’ waiver application in As a threshold matter, his Honour considered the Crown class action for production of documents question of whether or not there is a recognised species over which privilege is claimed is granted in of waiver called “associated material waiver”. Zantran relied on the judgment of Young J in AWB Ltd v Cole part but otherwise dismissed. (No 5) (2006) 155 FCR 30; [2006] FCA 1234 (and the authorities cited therein) for the proposition that the This is a shareholder class action arising from allegedly voluntary provision of one privileged communication criminal activities undertaken by the respondent (Crown) gives rise to a waiver of legal professional privilege over and its employees in the People’s Republic of China. all other privileged communications relevant to the same issue or subject matter as the communication voluntarily This judgment concerned an application filed by the provided. After reviewing the relevant authorities, applicant (Zantran) for production and inspection of O’Callaghan J held that there is no separate species of certain documents over which Crown had claimed legal “associated material waiver” in the sense propounded by professional privilege. Zantran. His Honour said (at [42]): At the heart of the dispute were witness statements filed When waiver is express, as it is here, and an issue on behalf of Crown by three of its employees who were arises about whether and to what extent privilege involved, in one way or another, in the management has also been waived with respect to “related” non- or oversight of Crown’s operations in China during the disclosed documents, the documents in the latter relevant period. In their witness statements, the witnesses category may, consistently with Mann v Carnell, be referred to legal advice Crown obtained from an described as “associated material”. However, I do not American law firm based in China, WilmerHale, in relation read anything that Young J said in AWB Ltd v Cole as to the legality of Crown’s operations in China during the suggesting, as Zantran contends, that there is some relevant period. In essence, the witnesses said that, based species of waiver involving so-called “associated on this advice, they believed that Crown’s activities in material” that involves an expansion of the principles China did not contravene Chinese law and therefore did in Mann v Carnell. not give rise to a material risk that Crown’s operations would be shut down. Consistent with the High Court’s decision in Mann v Carnell, when determining whether or not privilege has Although Crown produced copies of the documents been waived over “associated material” the fundamental recording the legal advice to which express reference was question is whether the party claiming privilege has acted made in the witness statements, it resisted the production in a matter that is inconsistent with the maintenance of a number of otherwise discoverable documents on the of the confidentiality of the associated material, which ground of legal professional privilege. The documents the privilege is intended to protect. At [41], O’Callaghan J the subject of dispute between the parties fell into four observed: categories: It may be that the difference between the submissions • communications during the relevant period regarding advanced by the parties … with respect to so-called the enforcement of gambling debts in China, in respect “associated material waiver” is more apparent than of which Zantran submitted Crown had waived real. Zantran’s submission that the test to be applied privilege pursuant to “associated material waiver” or is “whether the material that the party has chosen the inconsistency principle in Mann v Carnell (1999) to release from privilege represents the whole of the 201 CLR 1; [1999] HCA 66 (‘Mann v Carnell’); material relevant to the same issue or subject-matter” • communications with WilmerHale after the relevant may be said, on one view, not to invite a different period, in respect of which Zantran submitted Crown question to the inconsistency test in Mann v Carnell. In had waived privilege for the same reasons as the either case, the critical anterior question is to identify documents in category (1) above; the relevant issue or subject matter.
• communications during the relevant period in respect Turning to the categories of disputed documents, his of which Zantran submitted it was not possible to tell Honour held that: from the evidence adduced by Crown whether or not they were privileged; and
• communications in respect of which Zantran submitted Crown’s claims of privilege had not been supported by proper evidence.
34 Maurice Blackburn 1 Crown had not waived privilege over advice obtained Once earlier advices are purposefully during the relevant period regarding the enforcement incorporated into a post-Relevant Period privileged of gambling debts in China. His Honour found that, communication, those communications are contrary to Zantran’s submissions, Zantran did not privileged and necessarily can have nothing to plead a case founded on the proposition that Crown do with the formation of Crown’s relevant state of knew it was enforcing gambling debts in China mind during the Relevant Period. No issue of waiver contrary to Chinese law. Because “the relevant enquiry therefore arises. is confined by the terms of [Zantran’s] pleaded case” (at 3 Crown had supported its privilege claims with [55]), his Honour held that there was no inconsistency sufficient evidenceby “ identifying the capacity or role involved in the witnesses stating that based on the in which relevant people asked for, gave or passed on legal advice Crown obtained, they believed China legal advice, together with hearsay evidence of the legal was operating lawfully under Chinese law, and Crown practitioners about the communications’ dominant withholding legal advice regarding the enforcement of purpose” (at [26]). gambling debts in China. After inspecting the disputed documents, his Honour 2 Crown had not waived privilege over communications held that certain email exchanges contained in two of with WilmerHale after the relevant period. Zantran the disputed documents were not privileged and thus submitted that if a document, such as a covering email ordered that Crown produce them for inspection. His dated after the relevant period, includes as part of Honour otherwise dismissed Zantran’s application, on the its email “thread” legal advice given during or prior basis that the remainder of the disputed documents were to the relevant period that reveals Crown’s state of either privileged or irrelevant to the proceeding. mind during the relevant period, privilege over such documents may be waived if withholding them would be relevantly inconsistent with the express waiver. In rejecting Zantran’s submission, his Honour said (at [60]):
Zantran Pty Ltd v Crown Resorts Ltd (No 2) [2020] FCA 1024
Federal Court of Australia | O’Callaghan J | 21 July 2020
Applicant’s Solicitors Maurice Blackburn
Respondent’s Solicitors Minter Ellison
Applicant’s Funder ILFP
Austlii link
Class Actions Landscape Australia | Issue 3 35 July 2020
New Class Actions Practice Note – Supreme Court of Victoria
On 1 July 2020 the Supreme Court of Victoria issued a • At paras [7.8]-[7.10] the Practice Note sets out how the revised Practice Note (SC Gen 10) for proceedings (Group Court will deal with and manage competing class Proceeding) under Part 4A of the Supreme Court Act 1986 actions. (Vic) (SCA). Key points to note about the revised Practice • Similar to other jurisdictions, the Practice Note Note, in comparison to its predecessor, are: requires early disclosure of litigation funding • Upon commencement of a Group Proceeding, the agreements and charges, subject to appropriate plaintiff’s solicitor must file, with the writ, a ‘class action redactions (Parts 11 and 12). summary statement’ setting out various information • In Part 13, the Practice Note deals with applications for (Part 5 of the Practice Note), and (where applicable) a a ‘group costs order’ under the brand new s 33ZDA of ‘funding information summary statement’ (Part 6). the SCA. • The Court may order, at an early stage of the proceeding and pursuant to s 65A of the Civil Procedure Act 2010 (Vic), a party or parties to provide to the Court a memorandum of estimated future legal costs and disbursements for the proceeding (para [7.7]).
36 Maurice Blackburn June 2020
New class action against Boral Ltd faces multiplicity issues
What is the duty of solicitors to notify Court The second proceeding was commenced by Maurice of competing (or potentially competing) class Blackburn on 28 May 2020 (MB Proceeding). No actions, and should the resolution of multiplicity prior notice had been given to the Court that the MB Proceeding would be commenced, or was likely to be issues await determination of the High Court? commenced. It also appears that a third proceeding may be commenced by Phi Finney McDonald (PFM), but no In this matter there are two largely duplicative open class such proceeding has, as yet, been commenced. actions, and potentially a third duplicative open class In circumstances where both MB and PFM were aware action coming. The first proceeding was commenced by of the initial case management hearing to be conducted Quinn Emanuel Urquhart & Sullivan (QE Proceeding). in the QE Proceeding on 23 April 2020, Lee J was critical The QE Proceeding was commenced on 19 March 2020, of both firms for not having notified the Court of the and was listed for an initial case management hearing on likelihood or possibility that they would be commencing 23 April 2020, at which time various timetabling orders a competing class action, and instead allowing the were made for the filing of pleadings, and in relation to Court to proceed to make timetabling orders in the QE discovery. At that time, the Court was unaware of the Proceeding. His Honour said (at [10]): prospect of there being any competing class action(s).
Class Actions Landscape Australia | Issue 3 37 These multiplicity disputes present challenges for the His Honour then indicated that, in ordinary Court. They have delayed, sometimes substantially, circumstances, he would be inclined to resolve the the progress of matters both in this Court and in multiplicity issue swiftly, and at a minimum of cost. For other courts. The time has long passed, if it ever the time being, however, his Honour ordered that: existed, where firms of solicitors can sit back and stay • the extant timetabling orders in the QE Proceeding schtum when a not unrealistic prospect exists that a be vacated, and the QE Proceeding and the MB substantially duplicative open class proceeding will Proceeding be case managed together; be commenced. In the present circumstances, both experienced class action firms stayed mute when the • any applications filed by the parties, and any matter was first before the Court. Such a course should competing class action commenced by PFM, be made not happen again – it amounts to conduct inimical to returnable before his Honour on 10 July 2020; and the resolution of the disputes between claimants and • at that time he will determine whether it is appropriate a respondent as quickly, inexpensively and efficiently to resolve the multiplicity issue promptly, or as possible. Indeed, these events have necessitated whether any resolution of that issue should await the vacation of the substantive orders made on 23 the determination by the High Court of the appeal April 2020, with the consequence that the underlying in Wigmans v AMP Ltd (as contended by both the dispute remains in stasis while plaintiff lawyers and applicant in the QE Proceeding and by the respondent, funders consider their respective positions. and which his Honour indicated (at [15]) that “there may His Honour (at [11]) also once again deprecated any ‘first in be some merit” in doing). time’ rule: The relevant professional obligations of lawyers, and the encouragement of mature reflection and proper pleading of claims, has informed the view (expressed by judges on a number of occasions), that to approach carriage of open class proceedings in a way which encourages a race to the “courthouse steps” would be highly unfortunate and potentially deleterious to the administration of justice.
CJMCG Pty Ltd (as trustee for CJMCG Superannuation Fund) v Boral Ltd [2020] FCA 914
Federal Court of Australia | Lee J | 19 June 2020
Applicants’ Solicitors Quinn Emanuel Urquhart & Sullivan / Maurice Blackburn
Respondent’s Solicitors Herbert Smith Freehills
Applicants’ Funder N/A
Austlii link
38 Maurice Blackburn June 2020
Contingency Fees in Victoria
The Justice Legislation Miscellaneous Amendments Bill • the plaintiff applies, at an early stage of the proceeding, 2019 (Vic) was, on 18 June 2020, passed by the Legislative for a ‘group costs order’, which specifies the Council (having previously been passed by the contingency fee percentage to be paid to the plaintiff’s Legislative Assembly on 20 February 2020). It received lawyers upon success (sub-s (1)); the Royal Assent on 30 June 2020, and commenced • if such an order is made, the plaintiff’s lawyers operation on the following day. Section 5 inserts a new s are liable to pay any adverse costs orders in the 33ZDA into the Supreme Court Act 1986 (Vic) permitting proceeding in favour of the defendant(s), and must contingency fees in class actions in the Supreme Court of provide any security for costs in the proceeding (sub-s Victoria. The structure of the new s 33ZDA is that: (2)); and
• the Court may, at any stage of the proceeding, vary such an order (including the contingency fee percentage) (sub-s (3)).
Class Actions Landscape Australia | Issue 3 39 May 2020
‘Dieselgate’ class action victory as settlement approved for over $100 million
Settlement, applicants’ legal costs and of Volkswagen and Audi). In the MB Proceedings, reimbursement payments approved in the VW foreign Volkswagen group companies were also named ‘Dieselgate’ class action. But can and should as respondents. Both sets of proceedings were case managed and heard together. Parallel enforcement the Court make a ‘common fund order’ at proceedings were commenced by the Australian settlement? Competition and Consumer Commission in which VW made certain admissions and following which Foster J Background imposed a $125 million penalty on VW (see Australian Competition and Consumer Commission v Volkswagen This decision involves the approval of the VW ‘dieselgate’ Aktiengesellschaft [2019] FCA 2166). References in this class actions. The ‘dieselgate’ scandal was estimated summary to “VW” refer to the Volkswagen Group, not the to affect 10.7 million to 11.5 million vehicles worldwide, Volkswagen brand. approximately 100,000 of which were in Australia (branded as Volkswagen, Audi and Skoda). The ‘dieselgate’ scandal arose out of VW’s development of a particular Features of the Settlement diesel engine, the EA189. The Volkswagen Group were An in-principle settlement of both the MB Proceedings unable to engineer the engines to be both efficient and and Bannister Proceedings was agreed in September powerful and also compliant with emissions standards. 2019. Under the settlement, a registration process was To get around this, VW developed what was known as established, which required class members to register a ‘Two Mode Software’ which caused affected vehicles to claim for affected vehicles by a registration deadline set operate in one mode on the road (with significantly higher by the Court (initially 10 March 2020, later extended to 26 emissions) and a second mode during test conditions March 2020). Notice was given to class members by each (where the emissions produced were within the regulated of the applicants as well as VW, who used the NEVDIS range) – the software was so advanced as to be able to national vehicle database and internal records to identify detect when testing conditions were present and would class members. not revert to the “on road” mode during this time. The presence of the ‘Two Mode Software’ was deliberately The aggregate settlement sum (being the amount of concealed by VW from regulators, consumers and the the settlement, exclusive of costs) to be paid by VW public, and was described by Foster J as “… corporate was to be between $87 and $127 million, depending on conduct of the worst possible kind” (at [224]). His Honour the number of vehicles registered by the registration noted that “[t]he consequence of VWAG’s conduct was deadline. As at the date of the settlement approval that almost 100,000 diesel powered Volkswagen-branded, hearing approximately 42,500 vehicles had registered, Audi-branded and Skoda-branded vehicles were let loose which produced an aggregate settlement sum of on Australian roads at the behest of VWAG and its affiliates approximately $120.7 million. VW agreed to pay the for reasons of profit in circumstances where those vehicles legal costs and disbursements (as approved by an would emit NOx in substantially higher quantities than was independent costs expert) on top of the aggregate permitted… Those consumers who had purchased one of settlement sum, comprising approximately $43.3 million the affected vehicles would have done so in ignorance of the in the MB Proceedings and approximately $7.8 million circumstances that the vehicle was non-compliant and had in the Bannister Proceedings. VW also agreed to pay the no doubt assumed that the vehicle was, in fact, compliant” reasonable costs of the administration of the settlement (at [225]). scheme. Although the implementation of the scheme is ongoing, the evidence put before the Court was that the In total, five class actions were commenced against average settlement payment per vehicle is estimated various respondents belonging to the Volkswagen Group; to be approximately $2,800 with the range of payments three actions were brought by Maurice Blackburn being $1,589 to $6,554, depending on the age, make and (MB Proceedings) (against each of Volkswagen, Audi model of the vehicle. His Honour was complimentary of and Skoda) and the remaining two were brought by the settlement distribution processes that had been set Bannister Law (Bannister Proceedings) (against each up to assess and determine claims.
40 Maurice Blackburn Settlement Approval Consideration vehicles as at September/October 2015”. His Honour considered that in these circumstances “the settlement The settlement was reached between the parties which has been agreed compares very favourably indeed…” following a stage 1 trial (as to whether the ‘Two Mode (at [231]). His Honour ultimately approved the settlement, Software’ constituted a defeat device) and shortly before finding it fair and reasonable in the circumstances. commencement of a stage 2 trial concerning loss. His Honour’s judgment on the stage 1 trial had been reserved His Honour also considered the decision of the New (and as a result of the settlement, was abandoned and South Wales Court of Appeal in Haselhurst v Toyota Motor would not be delivered) – nevertheless, his Honour noted Corporation Australia Ltd [2020] NSWCA 66 (Haselhurst), (at [196]) that “having considered the issue very carefully, and endorsed Moshinsky J’s comments in Fisher I am in a position to express a conclusion on the point: In (trustee for the Tramik Super Fund Trust) v Vocus Group my opinion, the Two Mode Software was a defeat device… Ltd (No 2) [2020] FCA 279 (Vocus), that Haselhurst was the applicants would have succeeded on this crucial distinguishable on the basis that it was not concerned foundational issue”. with the availability of class closure orders under s 33V of the Federal Court of Australia Act 1976 (Cth) (FCAA) at the His Honour, however, explained that success for the time of settlement approval. applicants was not guaranteed despite that finding, and that there were still a number of elements of the case, including loss, that still needed to be established. His Honour further elaborated on the prospects of proving loss, noting (at [231]) “[t]he applicants were genuinely at risk of coming up short and failing to prove any loss. Furthermore, there was considerable force in the proposition that, ultimately, such loss as could be proven was no more than about 10% of the market value of affected
Class Actions Landscape Australia | Issue 3 41 Funding Orders On the point as to whether s 33V(2) of the FCAA empowered the court to make a CFO, his Honour Although the MB Proceedings were unfunded and considered a series of Federal Court settlement approval conducted on a ‘no win, no fee’ basis, the Bannister decisions handed down since Brewster where judges of Proceedings were funded by Grosvenor Litigation the Federal Court had considered whether to make a CFO Services (Grosvenor). At settlement approval, Grosvenor at the time of settlement approval under s 33V(2) of the requested the Court make what was in essence a FCAA – including Vocus and McKay Super Solutions Pty common fund order (CFO), under s 33V of the FCAA. In Ltd (Trustee) v Bellamy’s Australia Ltd (No 3) [2020] FCA the alternative to a CFO, orders were sought under ss 33V 461. His Honour was particularly critical of the practice of and 33ZF of the FCAA for a funding equalisation order adopting the term ‘expense sharing order’ to distinguish (FEO). His Honour declined to make either the CFO or from a CFO. His Honour said (at [395]): FEO sought. At all relevant times up to and including the date of His Honour considered, at great length, the decisions in the High Court decision in Brewster, the essential Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) features of a CFO and the essential features of a FEO 245 FCR 191; [2016] FCAFC 148 (Money Max) and BMW (as explained by the High Court in Brewster) were Australia Ltd v Brewster (2019) 374 ALR 627; [2019] HCA well understood. Since Brewster was decided, there 45 (Brewster) and in light of Brewster, whether a CFO has been a tendency for judges to redefine these (or ‘expense sharing order’) could be made at the time terms and to introduce other terms (such as “expense of settlement approval under s 33V of the FCAA. In his sharing orders”) into the relevant discourse. This is review of Money Max, Foster J noted (at [318]) that the apt to cause confusion. Consistency in the use of the Full Court had made it clear that it considered that the terms CFO and FEO should be maintained and those Court’s power to make a CFO was derived from ss 23 and terms should be used to identify the types of orders 33ZF of the FCAA “and from no other source…”; the Court which the High Court had in mind when it deployed in Money Max did not consider the power to make a those terms. CFO was “…upon notions of unjust enrichment or general equitable principles or principles seen to be analogous His Honour was also critical of the views of Murphy, to such principles. The source of the relevant power was Beach and Lee JJ that the Court can still make a CFO at considered to be found in the provisions of the [FCAA] the conclusion of a proceeding. His Honour stated (at itself”. In considering Brewster, his Honour emphasised [405]): that the plurality had held that a FEO addressed the issue Their Honours are of the opinion that the judgments of of free riders and that “[t]here is no reason why additional the majority in Brewster did not go so far as to decide amounts deducted from unfunded group members’ awards that this Court has no power to make a CFO at any should then be paid to a litigation funder at any time, let time. With great respect to my colleagues, I do not alone at the outside of a proceeding… [t]he litigation funder think that the position is so clear. has no right to such money under contract or under equitable principles… [t]he obvious solution to the problem Notwithstanding his view that the Court does not have of “free riding” is not the making of a CFO” (at [355]). His the power to make a CFO at settlement, his Honour Honour also emphasised that a similar conclusion was considered that even if the Court did have the power, it expressed by Gordon J, albeit in more express terms. His was not appropriate to exercise it in the circumstances Honour stated (at [363]) that “[t]he conclusion expressed of the case before him (a view supported by the by her Honour in the last sentence of 660 [135] is quite independent contradictors appointed by the Court). unequivocal: Having described the essence of a CFO, her Evidence was before the Court that of the approximately Honour said that Courts do not have power to make such an 90,000 – 95,000 class members, only 692 had entered order. Her Honour did not make any temporal qualification into funding agreements with Grosvenor. By comparison, to that remark.”. His Honour was of the view that Gordon 17,830 class members had retained Maurice Blackburn. J’s ruling also clearly set out that a CFO could not be made Grosvenor sought to argue that it had relied upon para under s 33V(2) of the FCAA. [15.4] of the Class Actions Practice Note (GPN-CA) and was entitled to expect that the Court would make a CFO. This was swiftly dismissed by his Honour (at [441]):
42 Maurice Blackburn A Practice Note cannot be used to overrule or Grosvenor went to extraordinary lengths to maintain circumvent principles of law laid down in judgments the [Bannister Proceedings] not for the benefit of group of the Courts. This is particularly the case in respect members in those proceedings but for its own benefit. of judgments of the High Court. Paragraph 15.4 of The arrangements which it made with Vannin were the Class Actions Practice Note is expressed in very utterly imprudent and can only be seen as a last ditch general terms. It should not be construed as a binding effort to prop up its ever dwindling hope of sharing in a indication from the Court that a funding equalisation substantial settlement of the Volkswagen litigation. Its mechanism of some kind will invariably be deployed conduct should not now be rewarded by the making at the conclusion of class actions proceedings, of the CFO which it seeks. In the proper exercise of particularly when the Court is called upon to approve the Court’s discretion, the Court should not sanction a settlement of such proceedings. In addition, it such entrepreneurial activity entered into solely for should not be construed as an invitation to parties to the financial benefit of Grosvenor and in complete class actions litigation or to litigation funders to make disregard of the interests of group members. application for a CFO at the conclusion of class action proceedings. In terms, par 15.4 says no such thing and is merely meant to indicate that the Court will consider appropriate applications for orders sharing the costs of class actions at the conclusion of such proceedings. There was also evidence before the Court that in January 2018 Grosvenor had effectively reached its limit to fund the Bannister Proceedings and had entered into what his Honour described (at [464]) as “an extraordinarily disadvantageous financial arrangement with Vannin” under which it incurred a liability of $3.5 million. His Honour agreed that it was not appropriate to make a CFO because Grosvenor had not consistently acted in the interests of class members and had only minimally contributed to the proceedings and had enlarged the costs of the proceedings. His Honour condemned the actions of Grosvenor, stating (at [472]):
Cantor v Audi Australia Pty Ltd (No 5) [2020] FCA 637
Federal Court of Australia | Foster J | 1 April 2020 (Orders) | 13 May 2020 (Reasons)
Applicants’ Solicitors Maurice Blackburn / Bannister Law
Respondent’s Solicitors Clayton Utz
Applicants’ Funder (Maurice Blackburn) N/A
Applicants’ Funder (Bannister Law) Grosvenor Litigation Services
Funder’s Solicitors Corrs Chambers Westgarth
Independent Contradictors Nicholas Owens SC & Robert Yezerski
Austlii link
Class Actions Landscape Australia | Issue 3 43 May 2020
The ‘common fund’ debate – does the Court have the power?
Approval of settlement, legal costs, and • his Honour held that the Court had power, exploring whether the Court has the power to notwithstanding the decision of the High Court in BMW make a ‘common fund’ or ‘expense sharing’ Australia Ltd v Brewster (2019) 374 ALR 627; [2019] HCA 45 (Brewster), to make a common fund order (CFO) order at settlement. (a.k.a an ‘expense sharing’ order) under s 33V of the Federal Court of Australia Act 1976 (Cth) (FCAA). In this matter, Murphy J approved a settlement of the In relation to class closure, his Honour held that the order RMBL class action, including the applicant’s legal costs which he had made (and which had not been challenged) and a reimbursement payment to the applicant in the was enforceable as an order of a superior court amount of $5,000. His Honour found (at [6] and [43]) that notwithstanding the subsequent decision in Haselhurst v the settlement fell “comfortably at the high end of the Toyota Motor Corporation Australia Ltd [2020] NSWCA 66 range of possible settlements of the case”, and was “plainly (Haselhurst); and further, in any event, the order (being fair and reasonable”. The most notable features of the one that was made after the settlement had been agreed), judgment, however, were the fact that: was not precluded by Haselhurst. His Honour said (at [26]): • following the proposed settlement, a ‘class closure’ order had been made (which extinguished the rights of any class members who failed to register prior to a specified deadline); and
44 Maurice Blackburn I consider the preclusion of unregistered class funder’s commission, but left that to be determined at the members was appropriate at the time the orders conclusion of the proceeding. As such, it was necessary were made. It is strictly unnecessary to decide this for his Honour to consider whether such an order could question in circumstances where there has been no be made at the conclusion of the proceeding under s 33V challenge to the class closure order and it remains of the FCAA. The funder sought a commission equal to valid. Were it necessary to decide, in my view it would 25% of the gross settlement sum. His Honour held that: be appropriate to make orders as part of the settlement • such an order was ‘just’ under s 33V(2) of the FCAA (at approval application under ss 33V and 33ZB to bind [47]); class members who neither opted out nor registered into the settlement of the proceeding, but to preclude • neither the ratio of Brewster, nor the considered dicta them from recovering compensation through the of the majority, stand for the proposition that the settlement… [T]he decision in Haselhurst can be Court has no power to make a CFO upon approval of a distinguished on the basis that it concerned a pre-trial settlement under s 33V(2) of the FCAA (at [50]-[51]); class closure order, and different considerations apply • the proper scope of the decision in Brewster was at the settlement approval stage. recognised in para [15.4] of the Class Actions Practice In relation to the CFO, no bookbuild had been Note (GPN-CA), which provides for the making of a CFO undertaken at any stage of the proceeding, and in those (at [53]); and circumstances a ‘funding equalisation’ order would • class members were notified of the amount of the have served no purpose; and although a CFO had been funding commission that would be sought, and none made at an early stage of the proceeding (and had not had objected to it (at [67]). been set aside), the CFO did not fix the amount of the
Uren v RMBL Investments Ltd (No 2) [2020] FCA 647
Federal Court of Australia | Murphy J | 13 May 2020
Applicant’s Solicitors Maurice Blackburn
Respondent’s Solicitors Hope & Co
Applicant’s Funder Litigation Lending Services Ltd
Austlii link
Class Actions Landscape Australia | Issue 3 45 May 2020
Pelvic mesh case drawn out over costs
Court considers whether respondents’ conduct …the respondents’ denials created false issues, such that it is was so unreasonable as to warrant an order for appropriate to make a special costs order… the respondents indemnity costs and whether quantification made a forensic decision to deny key elements of the of costs should await outcome of appeal from applicants’ case when there was no reasonable basis for doing so… The respondents elected to put the applicants to principal judgment. proof about the risk profile of the devices despite the fact that they knew the applicants’ allegations were soundly This decision stems from the Johnson & Johnson pelvic based. The respondents’ decision to do so caused the mesh class action and concerns orders as to costs applicants to incur unnecessary costs. It also unduly following Katzmann J’s decision in Gill v Ethicon Sàrl prolonged the trial. It was inconsistent with their obligations (No 5) [2019] FCA 1905. In that decision, her Honour under s 37N of the FCA Act. found that the applicants had made out their claims in Although not opposed in principle, the respondents negligence as well as their statutory claims that the mesh sought to have the making of the lump sum costs order had a defect. The applicants pressed two applications: stood over until the outcome of an extant appeal and first, an order that the respondents pay 90% of their costs mediation was known. However, her Honour held that the on an indemnity basis, and second, that costs be paid in a order ought not be deferred because: lump sum amount. • the proceeding had been going for almost eight years Her Honour indicated that she was prepared to make and the appeal was not to be heard until February 2021 an order for costs on an indemnity basis, however, she – there was a likelihood it would potentially be further needed more evidence to demonstrate what percentage appealed to the High Court; of costs ought be payable. In deciding that she was open to making an order for indemnity costs, her Honour • the applicants’ solicitors ought not wait longer to was extremely critical of the respondents’ conduct in recover their costs – doing so would set a precedent seeking to have the applicants prove some of the key which could deter other lawyers from acting via factual issues. Although the respondents argued against conditional fee arrangements, which would have a indemnity costs, her Honour scolded the conduct of the chilling effect on access to justice; and respondents, stating (at [36]): • the making of a lump sum costs order could, contrary to the respondents’ argument, aid in reducing the barriers to settlement.
Gill v Ethicon Sàrl (No 7) [2020] FCA 700
Federal Court of Australia | Katzmann J | 25 May 2020
Applicants’ Solicitors Shine Lawyers
Respondents’ Solicitors Clayton Utz
Applicants’ Funder N/A
Austlii link
46 Maurice Blackburn May 2020
Queensland flood victims get some answers
The Court deals with residual issues, the In relation to the Interest Issue, his Honour held (at [6]- apportionment of liability and answers to [34]) that the plaintiff was not entitled to pre-judgment common questions. interest. His Honour (at [19]) did not find it necessary to determine whether the relevant interest provision was that applicable in Queensland (where the tort occurred) In this judgment Beech-Jones J dealt with some or in New South Wales (where the proceeding was residual issues arising from his primary judgment in the conducted), given the similarity between the respective Queensland floods class action Rodriguez( & Sons Pty Ltd provisions. His Honour reviewed the principles relating v Queensland Bulk Water Supply Authority t/as Seqwater to the award of interest, noting in particular that such (No 22) [2019] NSWSC 1657) (Primary Judgment). Those an award is both compensatory and discretionary, and issues were: concluded that no such award was appropriate in the • whether the plaintiff was entitled to pre-judgment plaintiff’s circumstances (but that such an award might interest on that portion of its damages ($89,074) that still be appropriate in relation to any class members reflected flood damage to its fixtures and fittings and who expended their own labour in repairing damaged which was calculated by reference to the commercial property). cost of the volunteer labour of others that repaired that In relation to the Apportionment Issue, his Honour held damage (Interest Issue); and (at [35]-[112]) that the appropriate apportionment was:
• the appropriate apportionment of liability between the • Seqwater: 50%; three respective defendants (Apportionment Issue). • SunWater: 30%; and • State of Queensland: 20%.
Class Actions Landscape Australia | Issue 3 47 His Honour began by finding (at [35]) that the Queensland Finally, in relation to the common questions to be (not New South Wales) apportionment legislation was answered by the Court, his Honour said (at [115]): to be applied, and then (at [36]-[40]) addressed the … the questions that were posed reflected the principles relating to apportionment, noting in particular competing versions of the questions posed by the the nature of the exercise as a broad weighing of different parties. As is often the case in proceedings of this considerations, and (at [38], footnotes omitted): kind, the parties could not agree on the formulation This approach has been described as involving of the relevant common questions. Underlying this consideration being given to such matters as which disagreement can be, and in this case were, profound of the wrongdoers was more actively engaged in the disagreements as to the effect of the pleaded case activity causing loss and which of the wrongdoers was and the substantive law. In some cases, and this more able effectively to prevent the loss happening in was one, if the Court determined to resolve those order to reach a conclusion as to which wrongdoer “is, differences at the time of formulating the common or in a real and pragmatic sense, more to blame than the separate questions it would be finally determining an other”. underlying issue between the parties prematurely. This common facet of representative actions needs Both the plaintiff and Seqwater contended that liability to be borne in mind and balanced against the between the defendants should be apportioned equally observation of the Court of Appeal in Scenic Tours (i.e. 33.3% each). SunWater’s primary contention was to [Pty Ltd v Moore (2018) 361 ALR 456; [2018] NSWCA apportion liability equally amongst the four respective 238 at [77]], which refers to the dangers of leaving the flood engineers, which would result in an apportionment finalisation of common questions of law and fact to of 50% to Seqwater (which employed two of the four flood the end of the hearing. The approach adopted in this engineers) and 25% to each of the other two defendants. case was to formulate questions by reference to all The State, on the other hand, contended that its share of the competing versions suggested by the parties. This liability should be far less than the other defendants (in ensured the parties were on notice of all the issues particular, less than 5%). for determination including what the other parties At [52] his Honour noted that attempts to mathematically contended were the issues for determination. It determine the causal potency of each flood engineer’s follows from that approach that ultimately a number breaches were either conceptually flawed or, at best, of questions, mostly posed by the defendants, were offered limited guidance. His Honour then proceeded answered “does not arise” because they were premised to make his own determination of the ‘relative causal on an interpretation of the [Statement of Claim] or the contribution’ of each flood engineer’s actions on the substantive law that I rejected. shifts they performed, by reference to his findings in the Primary Judgment, which resulted in a combined apportionment of 50% to the two flood engineers employed by Seqwater, 30% to the flood engineer employed by SunWater, and 20% to the flood engineer employed by the State.
Rodriguez & Sons Pty Ltd v Queensland Bulk Water Supply Authority t/as Seqwater (No 23) [2020] NSWSC 650
Supreme Court of New South Wales | Beech Jones J | 29 May 2020
Plaintiff’s Solicitors Maurice Blackburn
Defendants’ Solicitors King & Wood Mallesons / Norton Rose Fulbright / Queensland Crown Solicitor
Plaintiff’s Funder N/A
Austlii link
48 Maurice Blackburn May 2020
The AMP carriage fight continues
Two recent judgments have arisen out of the Shortly thereafter, on 21 April 2020, Ms Wigmans filed a carriage fight for the AMP shareholder class motion seeking that the March and April Orders providing action. for opt out, registration, class closure and mediation be vacated, pending the determination of her appeal to the High Court. The proceeding has a complex procedural history, to put it mildly. Following a series of transfer applications To complicate matters further, on 22 April 2020, the New and interlocutory skirmishes, an initial carriage fight was South Wales Court of Appeal handed down its decision in held before Ward CJ in Eq. In Wigmans v AMP Ltd [2019] Haselhurst v Toyota Motor Corporation Australia Ltd [2020] NSWSC 603, her Honour ordered that the proceedings NSWCA 66 (Haselhurst), in which it held that s 183 of the filed by Maurice Blackburn and Slater & Gordon be Civil Procedure Act 2005 (NSW) (CPA) does not confer consolidated, with Maurice Blackburn to thereafter have power on a court to make a pre-trial class closure order sole carriage of the consolidated proceeding (Komlotex for the purpose of facilitating settlement at mediation, Proceeding). Her Honour also ordered that all of the where such order would give rise to a contingent competing proceedings be permanently stayed. An extinguishment of unregistered class members’ rights. appeal from that decision by the representative plaintiff in On 27 April 2020, the plaintiffs in the Komlotex the stayed proceeding filed by Quinn Emanuel Urquhart Proceeding filed a motion to amend the March and April & Sullivan (Ms Wigmans) was subsequently dismissed by Orders to, in effect, ensure that they did not fall foul of the the New South Wales Court of Appeal in Wigmans v AMP decision in Haselhurst. Put simply, the amended orders Ltd (2019) 373 ALR 323; [2019] NSWCA 243. would not themselves contingently extinguish the rights Following the dismissal of Ms Wigmans’ appeal, Ward of class members who do not register to participate in CJ made orders in the Komlotex Proceeding on 12 the proceeding by the class deadline (Unregistered March 2020 providing for, inter alia, opt out, registration Class Members) in the event a settlement is reached at and class closure for the purpose of mediation (March mediation or before trial; rather, they provided that in Orders). The March Orders were subsequently amended the event a settlement of the proceeding is achieved, by orders made on 9 April 2020 (April Orders). the parties intend to apply to the Court for an order that Unregistered Class Members be bound by the settlement However, on 17 April 2020, Ms Wigmans obtained special but not be entitled to receive any benefit pursuant to leave to appeal to the High Court from the decision of the the settlement. The opt out notices to be sent to class Court of Appeal regarding carriage of the class action. members pursuant to the orders were also re-drafted accordingly. Ms Wigmans opposed the motion.
Class Actions Landscape Australia | Issue 3 49 Komlotex Pty Ltd v AMP Ltd [2020] NSWSC 504 • it could be argued that the opt out notices would be misleading if they did not communicate the parties’ At first instance, Ward CJ dismissed Ms Wigmans’ motion present intention to seek an order extinguishing and made the amended orders sought by the Komlotex Unregistered Class Members’ rights in the event a plaintiffs. settlement is reached. Her Honour rejected Ms Wigmans’ submission there Finally, her Honour rejected Ms Wigmans’ argument that was a real risk that the exercise of her right to appeal the opt out notices were misleading in certain respects. following the grant of special leave would be rendered nugatory or prejudiced by making the orders sought by the Komlotex plaintiffs. Indeed, her Honour said that she Wigmans v AMP Ltd [2020] NSWCA 104 had “no doubt” that it would be possible to “unscramble the Ms Wigmans sought leave to appeal against Ward CJ’s egg” in the event Ms Wigmans’ appeal is successful and decision. the Komlotex Proceeding is stayed or the carriage fight is remitted to be determined afresh (at [214]). Her Honour The key issue on appeal was whether the orders were also rejected Ms Wigmans’ submission that the High beyond power for substantially the same reasons Court would be constrained in the relief it could grant in given by the Court of Appeal in Haselhurst. The Court the event that steps have been taken to effect registration, (Macfarlan, Leeming and White JJA) unanimously held opt out, class closure and mediation in the Komlotex that they were, and thus allowed Ms Wigmans’ appeal. Proceeding. The Court agreed with Ward CJ’s finding at first instance Her Honour also rejected Ms Wigmans’ argument that that, unlike the impugned orders in Haselhurst, the orders the re-drafted class closure orders were beyond power, would not themselves contingently extinguish the rights having regard to the Court of Appeal’s decision in of Unregistered Class Members in the event a settlement Haselhurst. Her Honour held that: is reached at mediation or before trial. Another factor distinguishing the present case from Haselhurst, the Court • unlike the orders in Haselhurst, the orders would not acknowledged, was that s 183 of the CPA (the provision have the effect of contingently extinguishing the rights the subject of the Court’s ruling in Haselhurst) was not of Unregistered Class Members; relied on to sustain the orders sought by the Komlotex • the orders were consistent with the opt out regime plaintiffs. Rather, the power for the orders was sourced put in place by Part 10 of the CPA, in that they would in ss 175 and 176 of the CPA, which provide for notice of notify class members of their entitlement to opt out opt out to be provided to class members. In contrast to of the proceeding, would not require class members s 183, which requires that the Court think the orders are who wish to participate in the proceeding to take “appropriate or necessary to ensure that justice is done in any positive step in order to do so, and would not the proceedings”, s 175(5) contains no express limitation, themselves have any impact on Unregistered Class and states that “[t]he Court may, at any stage, order that Members’ rights. Her Honour observed that making notice of any matter be given to a group member or group the orders would not mandate the outcome of any members” (emphasis added). future application made by the parties for an order However, the Court found that these distinguishing that Unregistered Class Members be bound by, but factors were not determinative. Rather, the key question not entitled to participate in, any settlement of the was whether the practical effect of the orders conforms proceeding reached at mediation or before trial. with the statutory regime put in place by Part 10 of the Further, any Unregistered Class Member would have CPA. The Court said that the orders would have been an opportunity at that time to be heard in relation to within power if they simply established a regime for their ability to share in the settlement. Her Honour the distribution of notices concerning an opt out date said that “[t]he proposed opt out notice does no more and provided for the registration of class members’ than alert group members to the intention (or present claims. However, the vice in the orders was said to be the intention, and hence only the possibility) that the parties inclusion of the parties’ joint present intention to apply may move in the manner described in the notice” for an order extinguishing the claims of Unregistered (at [211]); Class Members if a settlement occurs. The Court held • the orders would not create an insoluble conflict of that if what was contemplated by the parties comes to interest between registered and Unregistered Class pass, Unregistered Class Members would gain no benefit Members, on the basis that settlement could be from any settlement but have their rights extinguished. negotiated to depend upon the ultimate size of the This, the Court held, “is contrary to the essence of the opt class or its composition, and separate interests could out regime” and “prima facie falls squarely within what was be independently pursued at mediation (perhaps with held in Haselhurst” (at [95]). The Court held that the orders separate representation); and would “subvert two fundamental aspects of the regime, which is that Komlotex acts for all group members, and that group members may do nothing prior to a settlement and still reap its benefits” (at [131]).
50 Maurice Blackburn The Court also rejected the argument that it would be Finally, the Court considered the relevance of three premature to invalidate the orders for want of power at recent decisions of the Federal Court distinguishing this stage of the proceeding. It held that the form of the Haselhurst, being Inabu Pty Ltd as trustee for the Alidas orders and opt out notices would have a real impact on Superannuation Fund v CIMIC Group Ltd [2020] FCA the decision-making of class members. The Court also 510, Fisher (trustee for the Tramik Super Fund Trust) held that the orders would give rise to a conflict of interest v Vocus Group Ltd (No 2) [2020] FCA 579, and Uren v at mediation (at [120]): RMBL Investments Ltd (No 2) [2020] FCA 647. The Court held that these decisions were of no assistance to the The interests of the representative plaintiff (and Komlotex plaintiffs because the Court inHaselhurst all other registered group members) are served by held that Melbourne City Investments Pty Ltd v Treasury promoting the settlement. So too are the interests of Wine Estates Ltd (2017) 252 FCR 1; [2017] FCAFC 98 was the defendant. But the representative plaintiff is – at inapplicable in the Supreme Court of New South Wales. the same time it asks for the settlement to be approved Further, each of the decisions proceeded by consent, and – meant to be representing unregistered group were thus of no precedential authority. members, who, by reason of the very settlement which the representative plaintiff is propounding, will receive In light of the Court’s finding with respect to power, it was nothing and whose rights will be extinguished. The not required to determine Ms Wigmans’ other grounds conflict is real, immediate and direct. The interests of of appeal. However, the Court did indicate that these the representative plaintiff are diametrically opposed grounds would likely not have been upheld, had they to those of group members who have not registered. required determination. The Court was also not convinced that the orders were necessary for mediation to be worthwhile, because: i if the parties wish to settle the proceeding by reference to the claims of registered class members only, they can apply for an order closing the class; ii useful steps may nevertheless be taken to narrow the issues in dispute, including the exchange of expert reports; and iii there is no reason why the claims of all class members could not be settled at mediation for a particular sum without the orders, whereby a process for identifying class members would take place in the lead-up to settlement approval.
Komlotex Pty Ltd v AMP Ltd [2020] NSWSC 504; Wigmans v AMP Ltd [2020] NSWCA 104
Supreme Court of New South Wales | Ward CJ | 8 May 2020
New South Wales Court of Appeal | Macfarlan, Leeming and White JJA | 4 June 2020
Plaintiffs’ Solicitors Maurice Blackburn
Defendant’s Solicitors Herbert Smith Freehills
Applicant’s Solicitors Quinn Emanuel Urquhart & Sullivan
Plaintiffs’ Funder N/A
Austlii link (Supreme Court of New South Wales) | Austlii link (New South Wales Court of Appeal)
Class Actions Landscape Australia | Issue 3 51 mauriceblackburn.com.au