Bendigo and Adelaide Bank Ltd v Pekell Delaire Holdings Pty Ltd
[2017] VSCA 51
•17 March 2017
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2016 0148
| BENDIGO AND ADELAIDE BANK LTD | Applicant |
| v | |
| PEKELL DELAIRE HOLDINGS PTY LTD | Respondent |
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| JUDGES: | SANTAMARIA, FERGUSON and McLEISH JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 17 February 2017 |
| DATE OF JUDGMENT: | 17 March 2017 |
| MEDIUM NEUTRAL CITATION: | [2017] VSCA 51 |
| JUDGMENT APPEALED FROM: | [2016] VSC 570 (Randall AsJ) |
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CORPORATIONS – Application to set aside statutory demand – Settlement of group proceedings relating to collapse of managed investment schemes – Respondent’s investment in schemes financed by loans assigned to applicant – Whether ‘genuine dispute’ or ‘offsetting claim’ established – Whether case presented short point of law – Corporations Act 2001 (Cth) s 459G.
PRACTICE AND PROCEDURE – Group proceedings – Settlement – Whether deed of settlement precluded respondent from advancing genuine dispute or offsetting claim not litigated in group proceedings – Supreme Court Act 1986 ss 33V, 33ZB, 33ZF – Byrne v Javelin Asset Management Pty Ltd [2016] VSCA 214; Timbercorp Finance Pty Ltd (in liq) v Collins (2016) 339 ALR 11, discussed.
COURTS AND JUDGES – Orders – Interpretation – Whether orders approving settlement may be read down to avoid exceeding jurisdiction – New South Wales v Kable (2013) 252 CLR 118, discussed.
PRACTICE AND PROCEDURE – Group proceedings – Opting out – Evidence opt out notice completed and sent – Respondent’s name not on Court list of persons opting out – Whether contention that respondent opted out of proceeding constituted ‘genuine dispute’ – Onus on respondent – Sufficiency of evidence – No genuine dispute established – Appeal allowed.
PRACTICE AND PROCEDURE – Application to adduce further evidence – Application made in support of request for declaratory relief as to effect of deed of settlement on all group members – Application refused.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr P D Crutchfield QC with Mr D C Gration | Allens |
| For the Respondent | Mr S Rubenstein | Livaditis & Co |
SANTAMARIA JA
FERGUSON JA
McLEISH JA:
On 21 September 2016, an associate judge made orders setting aside a statutory demand served by the applicant on the respondent. The demand concerned sums said to be outstanding on loans relating to the respondent’s investments in two managed investment schemes run by the Great Southern group of companies. As is well‑known, group proceedings were commenced against those companies (and other entities, including the present applicant) following the collapse of the schemes. Those proceedings were settled in late 2014.
The present application for leave to appeal concerns the effect of that settlement upon the respondent’s application to have the statutory demand set aside. The applicant contends that the settlement binds the respondent so as to preclude it from contesting the alleged debts. The respondent denies that the settlement is capable of having that effect because it could only have resolved the claims made in the group proceeding which were litigated on behalf of group members; it says that, in any event, it was not a group member as relevantly defined.
The respondent’s loans
The respondent executed two applications for term finance with Great Southern Finance Pty Ltd (‘GSF’). By those applications it sought to borrow money from GSF to acquire interests in two managed investment schemes called the 2006 Organic Olives Income Project (‘2006 Olives Project’) and the 2006 Wine Grape Income Project (‘2006 Wine Project’). Each application was dated 11 July 2006. Clause 6 of each application provided that the respondent agreed to appoint GSF as its attorney for the purpose of, relevantly, entry into and execution of a loan deed in the form attached to the application.
The loan deed with respect to the 2006 Olives Project, executed by GSF on its own behalf and on behalf of the respondent, was dated 15 June 2006. The applicant led evidence before the associate judge, to which objection was taken, that $16,243.33 was loaned by GSF to the respondent in respect of the 2006 Olives Project on that date. It will be noticed that both the execution of the loan deed and the alleged advance pre-date the respondent’s execution of the loan application granting GSF the power of attorney.
The loan deed with respect to the 2006 Wine Project, also executed by GSF on its own behalf and on behalf of the respondent, was dated 2 October 2008. The applicant led evidence, to which the respondent again raised objection, that $15,839.33 was advanced by GSF to the respondent in respect of the 2006 Wine Project on 15 June 2006. Again, neither the loan application nor the loan deed had been executed by that date.
GSF’s rights under the loan applications and the loan deeds were assigned to the applicant.[1] The respondent failed to make repayments as required in respect of the two loans. The applicant served the respondent with a statutory demand dated 25 May 2016 for the sum of $53,580.33. The respondent sought to have the statutory demand set aside and, as noted, succeeded in doing so before the associate judge.
[1]However, as mentioned below, the respondent challenges the effectiveness of the assignment in respect of the 2006 Wine Project.
It is convenient briefly to describe the Great Southern proceedings and their eventual settlement.
The Great Southern proceedings
The 2006 Olives Project and the 2006 Wine Project,[2] along with a number of other managed investment schemes involving the Great Southern group of companies, were the subject of group proceedings in the Trial Division. The statement of claim in each proceeding defined the group members relevantly to include persons who acquired or held an interest in the relevant scheme between 16 December 2005 and 15 June 2006 (in the case of the 2006 Olives Project proceeding), and between 12 May 2006 and 15 June 2006 (in the case of the 2006 Wine Project proceeding).
[2]S CI 2011 5049 and S CI 2011 4916 respectively.
In the proceedings, investors alleged (in broad terms) that the product disclosure statements in respect of the relevant schemes were misleading and deceptive and that the defendants (which included the current applicant) were liable for losses suffered by group members in reliance on them. Among other relief, the plaintiffs sought declarations that the loans in question were unenforceable and orders for the return of investors’ moneys or compensation under the Corporations Act 2001 (Cth).
As mentioned, the proceedings were settled in December 2014. The deed of settlement was approved by Croft J under s 33V(1) of the Supreme Court Act 1986.[3] Order 1 of the orders dated 11 December 2014 approved the settlement. Order 2 gave the plaintiffs in the group proceedings
the authority of the ‘Group Members’ (as that term is defined in each of the Group Proceedings), nunc pro tunc, to enter into and give effect to the deed of settlement and the transactions contemplated thereby for and on behalf of the Group Members.
[3]See Clarke v Great Southern Finance Pty Ltd (recs and mgrs apptd) (in liq) [2014] VSC 516 (‘Clarke v GSF’).
The deed of settlement includes the following terms:
1DEFINITIONS AND INTERPRETATION
1.1In this Deed of Settlement the following definitions apply:
…
’Claim’ means any claim, demand, action, suit or proceeding for damages, debt, restitution, equitable compensation, account, injunctive relief, specific performance, declaratory relief or any other remedy, whether by original claim, cross‑claim, claim for contribution or otherwise whether presently known or unknown and whether arising at common law, in equity, under statute or otherwise and whether involving a third party or party to this Agreement and all liabilities, losses, damages, costs (including legal costs on a full indemnity basis), interest, fees, and penalties of whatever description (whether actual, contingent or prospective) arising out of, or in connection with the contents of or the facts giving rise to, the PDSs, the Loan Agreements and or the allegations made in or the facts giving rise to each of the Proceedings.
…
’Group Members’ means each person or entity falling within the definition of a group member in any one or more of the Group Proceedings and who has not opted out of the Group Proceeding.
…
4SETTLEMENT OF CLAIMS INVOLVING BEN PARTIES[4] AND JAVELIN
4.1On and from the Approval Date,[5] all Claims[6] against the BEN Parties and Javelin and any of their respective Related Bodies Corporate will be settled as follows:
…
4.1.4The Lead Plaintiffs for and on behalf of themselves and all Group Members acknowledge and admit the validity and enforceability of the Lead Plaintiffs’ Loan Deeds and the Group Members’ Loan Deeds.
…
4.1.10The Lead Plaintiffs for and on behalf of themselves and on behalf of all Group Members release the BEN Parties and their Related Entities and Javelin and its Related Entities from all Claims.
…
4.1.13Each of the BEN Parties and their Related Entities and Javelin and its Related Entities may plead this Deed as a bar or defence to any claim or action (including a claim for costs) brought by any of the Lead Plaintiffs, the Group Members or the M+K Counterclaim Claimants relating to a Claim.
[4]The applicant falls within the definition of ‘BEN Parties’.
[5]Defined to mean the date upon which the Court approved the settlement, ie 11 December 2014.
[6]The respondent accepts that, if the deed otherwise binds it, the issues in dispute fall within this definition.
The definition of ‘Group Members’ refers to group members as defined in the relevant proceedings. The definitions appear in the pleadings in each proceeding.[7]
[7]See [8] above.
The respondent’s name appears in a schedule to the deed as one of the ‘M+K Clients’. That expression is not used in the definition of ‘Group Members’ or in cl 4 of the deed of settlement. Its main purpose appears to be to identify the persons affected by the settlement of claims against Great Southern companies under cl 6, rather than the settlement involving BEN Parties under cl 4.
The application to set aside
The respondent brought an application to set aside the statutory demand under s 459G of the Corporations Act, which provides:
459G Company may apply
(1)A company may apply to the Court for an order setting aside a statutory demand served on the company.
(2)An application may only be made within 21 days after the demand is so served.
(3)An application is made in accordance with this section only if, within those 21 days:
(a)an affidavit supporting the application is filed with the Court; and
(b)a copy of the application, and a copy of the supporting affidavit, are served on the person who served the demand on the company.
Section 459H of the Corporations Act relevantly provides:
459HDetermination of application where there is a dispute or offsetting claim
(1)This section applies where, on an application under section 459G, the Court is satisfied of either or both of the following:
(a)that there is a genuine dispute between the company and the respondent about the existence or amount of a debt to which the demand relates;
(b)that the company has an offsetting claim.
…
(4)If the substantiated amount[8] is at least as great as the statutory minimum, the Court may make an order:
[8]The ‘substantiated amount’ is defined by a formula in sub-s (2) which subtracts the amount of any genuine offsetting claims from the amount of the alleged debt that is not subject to a genuine dispute.
(a)varying the demand as specified in the order; and
(b)declaring the demand to have had effect, as so varied, as from when the demand was served on the company.
(5)In this section:
…
offsetting claim means a genuine claim that the company has against the respondent by way of counterclaim, set‑off or cross‑demand (even if it does not arise out of the same transaction or circumstances as a debt to which the demand relates).
respondent means the person who served the demand on the company.
(6)This section has effect subject to section 459J.
Section 459J states:
459JSetting aside demand on other grounds
(1)On an application under section 459G, the Court may by order set aside the demand if it is satisfied that:
(a)because of a defect in the demand, substantial injustice will be caused unless the demand is set aside; or
(b)there is some other reason why the demand should be set aside.
(2)Except as provided in subsection (1), the Court must not set aside a statutory demand merely because of a defect.
Before the associate judge, the respondent submitted that the statutory demand should be set aside because it was vitiated by defects[9] and because there was a genuine dispute about the existence of the debt and an offsetting claim for misrepresentation.[10] It is not necessary to say more about the alleged defects or dispute[11] or the offsetting claim for misrepresentation.[12] The argument in this Court concerned the effect of the deed of settlement, and the orders made by Croft J in respect of it. The applicant contends that the deed operates to make plain the respondent’s liability, irrespective of the alleged disputes and claims. It accepts that if it is wrong in that contention, those disputes and claims would constitute ‘genuine’ disputes and claims for the purpose of s 459G.
[9]See Corporations Act s 459J(1)(a).
[10]See ibid s 459H(1).
[11]The respondent noted that the loan deed in respect of the 2006 Olives Project pre‑dated the loan application. It had therefore been executed prior to GSF being granted a power of attorney by the respondent. It contended that GSF had no authority to execute the loan deed in that way. It said in respect of the 2006 Wine Project that the loan deed was executed more than a year after GSF’s rights in the loan deed were assigned to the applicant.
[12]The respondent alleged misleading and deceptive conduct on the part of GSF and its representatives.
At first instance the respondent submitted that it had opted out of the relevant group proceedings and was therefore not affected by the settlement deed. One of its directors, Peter Delis, deposed that he had completed opt out notices and provided them to his personal assistant to be posted to the Court. He said his personal assistant had told him that she had done so. In response, the applicant relied on an affidavit filed by the personal assistant in a separate proceeding concerning a debt arising out of a different Great Southern scheme in which she deposed only that she had no reason not to believe that she posted any document given to her for posting by Mr Delis in accordance with his instructions. Mr Delis had deposed that the plaintiff in that other proceeding, Javelin Asset Management Pty Ltd, had withdrawn statutory demands on the basis of such evidence. Additionally, Mr Delis said that the respondent was not a client of M + K Lawyers (the law firm that represented the plaintiffs in the Great Southern proceedings).
The respondent further contended that, even if it were a group member, the applicant was unable to enforce the deed of settlement against it in respect of the respondent’s individual claims and defences. It submitted that the deed was only effective to resolve the common issues which comprised the foundation, and the ambit, of the group proceedings.
The applicant submitted that the respondent had not opted out of the proceedings. Its name did not appear in the Court’s list of persons who had opted out. There was no reason for M + K Lawyers to list the respondent as one of its clients, as the respondent was described in the deed of settlement, unless it was actually a client. Moreover, the respondent had not applied for an extension of time to opt out of the group proceedings after it became aware that the Court had not received any opt out notice. The applicant contended that the only direct evidence regarding the posting of the opt out notices was that of the respondent’s personal assistant, which ought to be given little (if any) weight. It submitted further that the notices allegedly sent did not opt out of the proceeding in respect of the 2006 Wine Project, and so at least in respect of that project the respondent was bound by the deed of settlement.
The applicant submitted that the defences and offsetting claims that the respondent sought to raise could not be maintained, by reason of the deed of settlement. The effect of the deed of settlement, and in particular cls 4.1.4, 4.1.10 and 4.1.13, was to preclude the respondent from raising defences or offsetting claims in respect of the loans.
In the course of canvassing the evidence and submissions on the application, the associate judge held that the defects alleged by the respondent were overcome by the applicant’s evidence.[13] In relation to the matters in dispute, he indicated that he would have found that the circumstances of the execution of the loan agreement for the 2006 Olives Project and the assignment of the loan in respect of the 2006 Wine Project required further investigation.[14] He did not make a finding in respect of the misrepresentation claim.
[13]Pekell Delaire Holdings Pty Ltd v Bendigo and Adelaide Bank Ltd [2016] VSC 570 [44] (‘Reasons’).
[14]Ibid [47].
The associate judge then referred to the approach to be taken to s 459G applications.[15] In particular, he noted the following passage in the judgment of Cohen J in Delnorth Pty Ltd v State Bank of New South Wales:
Although questions of disputed fact will not be decided on an application to set aside a statutory demand, the issue of whether there is a genuine dispute can be resolved on that application when the question arises on a short point of law or the construction of documents or agreed facts.[16]
[15]Ibid [67]–[69].
[16](1995) 17 ACSR 379, 384 (‘Delnorth’).
He then discussed the approach to Anshun estoppel[17] and abuse of process taken in Kelly v Willmott Forests Ltd (in liq) [No 4][18] and Timbercorp Finance Pty Ltd (in liq) v Collins (‘Timbercorp’).[19] From these cases the associate judge drew the following conclusions:
[17]See Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.
[18](2016) 335 ALR 439.
[19][2016] VSCA 128. See Reasons [78]–[82].
(a)there is a distinction between settlement of and a judgment in a group proceeding. While s 33ZB [of the Supreme Court Act 1986] operates with respect to a judgment, there is no equivalent provision which bears upon settlement;
(b)the failure to opt out may not be fatal. The records of this Court lead to the conclusion that [the respondent] remained a group member. The onus is upon [the respondent] to demonstrate otherwise. In any event, I decline to determine the issue of whether or not [the respondent] had attempted to opt out and what ensues from such attempt. I do not need to determine that issue given the conclusions in this judgment;
(c)lead plaintiffs are not the privies of group members. The lead plaintiffs did not represent the group members in respect of unpleaded defences and claims;
(d)the lead plaintiffs could not propound the individual group members’ claims as such claims do not have the commonality required by s 33C;
(e)a settlement by the lead plaintiffs will not have any binding effect on group members except insofar as group members take the benefit, they must also share in its burden. That is, settlement may be binding in respect to the group issues;
(f)in considering whether an Anshun estoppel might apply, careful consideration needs to be given to the form of the opt out notice. In this particular instance the opt out notice did not clearly specify all the consequences of opting out;
(g)even if the opt out notice had provided an adequate warning about Anshun estoppel, Part 4A does not treat group members as if they were parties except to the extent provided for in s 33ZB. [20]
[20]Reasons [84].
The associate judge held that it was ‘genuinely arguable that notwithstanding the order approving [settlement] regard must still be had to whether or not the same precludes the [respondent] from raising a defence or off-setting claim personal to it’.[21] Finally, he referred to the Court of Appeal’s decision in Byrne v Javelin Asset Management Pty Ltd (‘Byrne’)[22] and stated that he discerned a difference in approach between Timbercorp and Byrne. He found that the two decisions were ‘difficult to rationalise’, but that it was unnecessary to resolve that tension to dispose of the application.[23] Rather, it was sufficient to state that the issue whether the respondent was barred from raising a defence or an offsetting claim was ‘genuinely arguable and warrant[ed] further investigation’.[24]
The decisions in Timbercorp and Byrne
[21]Ibid [85].
[22][2016] VSCA 214. See Reasons [86].
[23]Ibid [88].
[24]Ibid.
Before turning to the arguments arising in the present application for leave to appeal, it is convenient briefly to refer to the decisions in Timbercorp and Byrne.
In Timbercorp, the plaintiff in a group proceeding represented group members who had taken part in unsuccessful managed investment schemes. It was alleged that the proponents of the schemes had failed to disclose material facts to investors, and had made related misrepresentations. The proceeding went to trial and the trial judge made orders dismissing the claims.[25] When Timbercorp Finance Pty Ltd sought to recover the amounts outstanding from participants in the managed investment schemes who had been group members in the proceeding, they argued that they were under no obligation to pay by virtue of defences available to them which had not been argued at the trial of the group proceeding. Timbercorp Finance Pty Ltd contended that the investors were precluded by Anshun estoppel from advancing the further claims. They should either have advanced their individual claims themselves in the group proceeding, or they were bound by the conduct of the proceeding by the lead plaintiff, as his privy in interest by virtue of the very nature of group proceedings.
[25]Woodcroft-Brown v Timbercorp Securities Ltd (2011) 253 FLR 240. An appeal was dismissed, as was an application for special leave: Woodcroft-Brown v Timbercorp Securities Ltd (2013) 96 ACSR 307; Woodcroft-Brown v Timbercorp Securities Ltd (in liq) [2014] HCATrans 85.
Both this Court and, after the associate judge’s decision, the High Court held that the defences could be advanced. It had not been unreasonable for the relevant group members not to pursue them in the group proceeding. Moreover, the lead plaintiff was not the privy of the group members in respect of their individual claims. French CJ, Kiefel, Keane and Nettle JJ explained:
Part 4A creates its own kind of statutory estoppel. Section 33ZB requires that a judgment in a group proceeding identify the group members affected by it and, subject to a provision not presently relevant, provides that that judgment ‘binds all persons who are such group members at the time the judgment is given’. In order to understand that to which the group members are bound, it is necessary to read s 33ZB in the context of Pt 4A as a whole and ss 33C(1) and 33H in particular. By that process it will be seen that group members are bound by the determination of the claims giving rise to the common questions.
The provisions of Pt 4A therefore confirm that a plaintiff in group proceedings represents group members only with respect to the claim the subject of that proceeding, but not with respect to their individual claims. The lead plaintiff is not a privy in interest with respect to the respondents’ claims. This is so regardless of whether they should have been raised in the group proceeding. That leaves for consideration the question whether the respondents themselves are estopped from raising them in these proceedings.[26]
[26](2016) 339 ALR 11, 23 [52]–[53]; see also at 37 [141]–[142] (Gordon J).
As elaborated further below, the respondent seeks to apply the above reasoning to the present case, permitting it to raise defences which were not the subject of the group proceedings. It argues that the plaintiffs could not settle the proceedings so as to bind group members in respect of the claims underlying such defences.
Before the High Court decided Timbercorp, but after this Court’s decision in that litigation, this Court decided Byrne. Javelin Asset Management Pty Ltd (‘Javelin’), which was one of the assignee lenders the subject of cl 4 of the deed in the present matter, had been a party to some, but not all, of the group proceedings in the Great Southern litigation which were settled by virtue of the deed and the orders already described.
Relevantly for present purposes, the issue in Byrne was whether Javelin could take the benefit of the deed in respect of claims raised in a group proceeding to which it was not a party. Both parties in Byrne argued that s 33ZB of the Supreme Court Act 1986 made the deed binding on group members, noting that ‘judgment’ includes an order and would therefore encompass an order approving a settlement under s 33V.[27] Section 33ZB provides:
[27]See s 3(1). Section 33V provides:
33V Settlement and discontinuance
(1)A group proceeding may not be settled or discontinued without the approval of the Court.
(2)If the Court gives such approval, it may make such orders as it thinks fit with respect to the distribution of money, including interest, paid under a settlement or paid into court.
33ZB Effect of judgment
A judgment given in a group proceeding—
(a)must describe or otherwise identify the group members who will be affected by it; and
(b)subject to section 33KA,[28] binds all persons who are such group members at the time the judgment is given.
[28]Section 33KA relates to the powers of the Court concerning group membership.
The Court declined to determine whether s 33ZB had the effect of binding group members to a settlement approved under the Supreme Court Act 1986. It held instead that orders binding group members to settlements of group proceedings might be made under s 33ZF. The Court explained:
it is common for orders to be made declaring that a plaintiff, group members and other parties are bound by the settlement pursuant to s 33ZF, which provides for the Court to make any order it thinks ‘appropriate or necessary to ensure that justice is done in the proceeding’. Alternatively, there are many instances, of which the present case is one, where the Court has made an order authorising a plaintiff to enter into and give effect to the settlement on behalf of group members. Again, s 33ZF is an available source of power for such an order. In approving the present deed of settlement, Croft J ordered, among other things, that the plaintiffs in the group proceedings ‘have the authority’ of the group members ‘nunc pro tunc, to enter into and give effect to the deed of settlement and the transactions contemplated thereby for and on behalf of’ the group members.[29]
[29]Byrne [2016] VSCA 214 [55] (citations omitted) (Hansen, Ferguson and McLeish JJA).
The Court went on to explain why Javelin could take the benefit of the settlement deed in respect of the proceeding to which it had not been a party:
The first [reason] is that parties to a deed of settlement are bound by the settlement, once it is approved by the Court, by virtue of being parties to the deed. The respondent was so bound here. By the further operation of the statute, whether directly through s 33ZB or indirectly by orders made under s 33ZF, group members as well become bound to the deed of settlement. The terms of the deed then apply to the group members and the other parties to the deed take the benefit of the obligations which group members thereby owe. But the rights of other contractual parties as against group members flow from the deed which the Court has approved, not from such other contractual parties having been parties to the anterior proceeding. Their status as parties to the proceeding, or otherwise, is of no relevance. As the respondent submitted, persons who were not parties to the group proceeding at all may none the less be parties to the settlement of that proceeding.
The second reason is that it is not in doubt that the respondent was entitled to the benefit of the deed of settlement by virtue of its status as a party in group proceedings other than the Wine Grape proceeding. In that circumstance, there was no reason why, as part of the settlement of those proceedings to which the respondent was a party, the parties to the deed of settlement could not also settle other disputes, including disputes being litigated in proceedings to which the respondent was not a party. Having done so, the group members became bound by the settlement once the orders of the Court were made.[30]
[30]Ibid [58]–[59].
As explained further below, the applicant relies on this analysis of the orders in the present matter, distinguishing the position that obtains when a group proceeding is settled from the consequences which flow from the giving of judgment.
Contentions of the parties on the proposed appeal
The proposed grounds of appeal are as follows:[31]
[31]Citations to the reasons of the associate judge are omitted.
1.The learned associate judge erred in finding that:
(a)section 33ZB of the Supreme Court Act 1986 (‘the Act’) did not apply to an order approving settlement of a group proceeding under s 33V of the Act;
(b)order 2 made by Croft J on 11 December 2014 was not effective to authorise the plaintiffs in the group proceedings to enter and [sic] into and give effect to the deed of settlement and the transactions contemplated thereby for and on behalf of group members;
(c)a settlement by the plaintiff in a group proceeding will not have binding effect on group members, except possibly in respect of ‘group issues’;
(d)the deed of settlement was not binding on group members in accordance with its terms; and
(e)the opt out notice did not clearly specify all the consequences of opting out.
2.The learned associate judge ought to have found that:
(a)section 33ZF of the Act conferred power on Croft J to approve the settlement of the Great Southern group proceedings in the terms of the orders made on 11 December 2014;
(b)by virtue of the definition of ‘judgment’ in s 3 of the Act and pursuant to s 33ZB of the Act, the orders made on 11 December 2014 bound all persons who were group members at the time the orders were made;
(c)the deed of settlement approved under those orders was binding on group members in accordance with its terms; and
(d)the opt out notice appropriately specified the consequences of opting out of the group proceedings.
3.The learned associate judge ought further to have found that:
(a)the respondent was a group member in the Great Southern group proceedings and had not opted out of the group proceedings pursuant to s 33J of the Act;
(b)the respondent, as a group member, is bound by the deed of settlement in accordance with its terms;
(c)the respondent is not able to dispute the existence or amount of the debt owing to the applicant, to which the statutory demand dated 4 May 2016 relates, on grounds that are inconsistent with the respondent’s:
(i)acknowledgment and admission that his loan deeds are valid and enforceable; or
(ii)release of the applicant from all claims;
(d)in the circumstances, for the purposes of s 459H of the Corporations Act 2001 (Cth):
(i)there was no genuine dispute between the applicant and the respondent about the existence or amount of the debt owing by the respondent to the applicant; and
(ii)the respondent did not have an offsetting claim;
(e)there was no defect in the demand or other reason why the applicant’s statutory demand should be set aside under s 459J of the Corporations Act 2001 (Cth); and
(f)the respondent’s application to set aside the statutory demand should be dismissed.
The applicant submitted that, because of the deed of settlement, there was no genuine dispute or offsetting claim to justify setting aside the statutory demand. The issue could be decided on an application under s 459G because it was a short point[32] and the respondent’s contrary contention was ‘patently feeble’.[33] The deed of settlement was in clear terms and became binding on group members once it was approved by the Court. That result could be reached by applying the decision in Byrne;[34] if necessary, resort could be had to the manner in which the group proceeding was conducted to assist in interpreting the deed. Byrne also established that it was permissible for a deed of settlement to go beyond the matters in issue in the group proceedings and that such a deed ought not be construed on the assumption that it did not do so.[35] Nothing said in Timbercorp concerned the potential terms upon which group proceedings could be settled. The associate judge erred to the extent that he held otherwise.
[32]Delnorth (1995) 17 ACSR 379, 384 (Cohen J).
[33]Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785, 787 (McLelland CJ in Eq) (‘Eyota’), quoted in Wellnora Pty Ltd v Fiorentino (2008) 66 ACSR 229, 239 [49] (Barrett J) (‘Wellnora’).
[34][2016] VSCA 214 [6], [31] (Hansen, Ferguson and McLeish JJA).
[35]Ibid [32], [37].
The applicant submitted that, even if it was wrong in the above submissions, the respondent was impermissibly seeking to displace the order of the Court approving the deed of settlement, and in particular the order authorising the plaintiffs in the group proceedings to execute the deed on behalf of all group members. In effect, the order appointed the plaintiffs as the respondent’s attorney to enter into the deed, and the respondent was, as a result, bound not only by the order but also by the deed. That order had not been appealed against, and could not be collaterally challenged in the present appeal.
The applicant submitted that the associate judge found that the respondent was a group member. Alternatively, he ought to have done so. The Court received no opt out notice, nor was an extension of time to opt out sought; the evidence as to the posting of the opt out notice differed as between Mr Delis and his personal assistant, such that it should be given little if any weight; the respondent was listed as an ‘M + K Client’ in a schedule to the deed of settlement; and, in any event, the opt out notice did not seek to opt out of the 2006 Wine Project proceeding.
The applicant also filed an application to adduce fresh evidence, which was heard together with the application for leave to appeal. The evidence concerned the manner in which the Financial Ombudsman Service had dealt with claims against group members in the Great Southern proceedings similar to that made by the applicant against the respondent. It was submitted that this material bore upon the question whether the Court should grant declaratory relief sought by the applicant in the event that its proposed appeal was successful. By that relief, the applicant seeks declarations that the deed of settlement in the Great Southern proceedings ‘is binding in accordance with its terms on group members’ at its date and that ‘group members are not able to maintain defences to recovery actions against them’ which are inconsistent with the admissions and releases in the deed.
The respondent contended that the applicant sought the resolution of a difficult question of law, being whether the deed of settlement was binding on all group members in respect of both common issues and defences and claims personal to group members. The very fact that this was a difficult question supported the associate judge’s decision, having regard to the approach to be taken to s 459G applications.
Alternatively, the respondent contended that the order approving the deed of settlement had to be read down so that it applied only to the settlement of the common issues in the group proceedings, and excluded personal defences and claims. This argument was based on the statements by the High Court in Timbercorp, set out above, to the effect that a plaintiff only represents group members with respect to the claims the subject of the group proceeding, and that the plaintiff is not a privy in interest of group members’ individual claims.[36] The respondent submitted that these statements applied also to an order authorising a plaintiff to enter into a settlement agreement on behalf of group members. The power to make that order had to be read in light of ss 33C and 33H of the Supreme Court Act 1986, so that any settlement could go no further than the common issues. Neither s 33V nor s 33ZF permitted the Court to make orders in respect of a settlement having a wider operation. Any other approach would produce inconsistency, as a group member would not be bound in respect of individual claims if the proceeding continued to judgment. Since group members have no control over settlement negotiations, it would be unjust for them to be bound by settlements of issues other than those the subject of the group proceeding, in respect of which the plaintiff was their privy.
[36](2016) 339 ALR 11, 23 [52]–[53] (French CJ, Kiefel, Keane and Nettle JJ). See [28] above.
The respondent submitted that this approach was not inconsistent with Byrne, which was said not to decide whether the deed of settlement was binding in respect of common issues only. Alternatively, the respondent invited the Court not to follow Byrne if it was inconsistent with the High Court’s subsequent decision in Timbercorp.
Finally, the respondent contended that the associate judge had not determined whether the respondent had opted out of the group proceedings. Nor did reference to the respondent as an ‘M+K Client’ in the deed of settlement establish that it was a ‘Group Member’ under the deed. The releases upon which the applicant relied applied to ‘Group Members’ rather than ‘M+K Clients’. The statutory demand ought to have been set aside at least in respect of the debt pertaining to the 2006 Olives Project, as the evidence showed a genuine dispute as to whether the respondent had opted out with respect to the proceeding involving that project. There was evidence that the respondent had sent an opt out notice to the Court within time. It did not receive confirmation of receipt, but believed that it was no longer a group member. The fact that the Court’s spreadsheet of persons who had opted out did not contain the respondent’s name was not conclusive; the Registry may simply have failed to record receipt of the respondent’s opt out notice. In the circumstances, the respondent’s evidence was sufficient to raise for investigation the question whether it had opted out of the 2006 Olives Project proceeding and was therefore not bound by the deed of settlement in that capacity.
The respondent also filed a notice of contention stating that the associate judge’s decision should be affirmed on the basis that, as a threshold issue, it was for the applicant to establish that the respondent was a group member in the relevant group proceedings within the definition of that term in the deed of settlement. The applicant did not establish that matter, and so failed to establish that the respondent was bound by the deed of settlement.
In that regard, the respondent submitted that there was no direct evidence that the respondent had acquired or held interests in the 2006 Olive Project and the 2006 Wine Project during the period for the acquisition or holding of interests specified in the respective statements of claim (each of which periods ended on 15 June 2006 inclusive), by reference to which ‘Group Members’ in the deed was defined. In fact, there was indirect evidence suggesting the contrary; the respondent’s loan applications in respect of the 2006 Olive Project and the 2006 Wine Project were dated 11 July 2006. The applicant had therefore failed to establish that the respondent was a group member. The applicant conceded before the associate judge that if the respondent was not bound by the deed of settlement there would be grounds for the statutory demand to be set aside. That being so, the appeal ought to be dismissed.
In response to the notice of contention, the applicant submitted that the onus was on the respondent to establish a genuine dispute as to the existence or amount of the debt, or that it had an offsetting claim.[37] The respondent was now well out of time to raise new matters.[38] Apart from asserting that it had opted out, the respondent had not given evidence or submitted before the associate judge that it was not a group member. If it had, the applicant could (and would) have adduced evidence to meet that point,[39] including evidence to show that the relevant loans were advanced within the periods required by the definition of ‘Group Members’ in the deed. The applicant submitted that the respondent should not be permitted to raise this new point on appeal.
[37]See Corporations Act s 459H(1)(a).
[38]The applicant relied on the 21 day period prescribed by s 459G and Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 70 FCR 452 (‘Graywinter’).
[39]The applicant relied on Whisprun Pty Ltd v Dixon (2003) 200 ALR 447, 461 [51] (Gleeson CJ, McHugh and Gummow JJ) (‘Whisprun’).
Applications under s 459G
In determining an application under s 459G, the Court’s function is to identify whether a genuine dispute or offsetting claim exists, not to determine any such dispute or claim. This means that the applicant under s 459G is required only to establish a ‘plausible contention requiring investigation’ of the existence of a genuine dispute or claim.[40] The application will fail only if the contended dispute or claim is ‘so devoid of substance that no further investigation is warranted’.[41] The resolution of the application should generally not involve the deciding of disputed questions of fact, but might require determination of short points of law.[42]
[40]Britten-Norman Pty Ltd v Analysis & Technology Australia Pty Ltd (2013) 85 NSWLR 601, 608 [31], 609 [36], 613 [54]–[55], 615 [70] (Beazley P, Meagher and Gleeson JJA) (‘Britten-Norman’). See also TR Administration Pty Ltd v Frank Marchetti & Sons Pty Ltd (2008) 66 ACSR 67, 79 [71] (Dodds-Streeton JA; Neave and Kellam JJA agreeing) (‘TR Administration’); Malec Holdings Pty Ltd v Scotts Agencies Pty Ltd (in liq) [2015] VSCA 330 [48] (Kyrou, Ferguson and Kaye JJA) (‘Malec’); GoConnect Ltd v Sino Strategic International Ltd (in liq) [2016] VSCA 315 [45] (Santamaria and Kyrou JJA and Elliott AJA) (‘GoConnect’).
[41]Solarite Air Conditioning Pty Ltd v York [2002] NSWSC 411 [23] (Barrett J), quoted in Malec [2015] VSCA 330 [51].
[42]Delnorth (1995) 17 ACSR 379, 384 (Cohen J); Wellnora (2008) 66 ACSR 229, 239–40 [47]–[52] (Barrett J).
In one sense, the question in the present matter is not so much whether there are genuine disputes or offsetting claims, as whether the respondent is precluded from advancing those disputes and claims by virtue of the deed of settlement. However, that issue in itself is germane to whether the disputes and offsetting claims are genuine — indeed, having regard to the applicant’s concession,[43] it is determinative of that question.
[43]See [17] above.
Effect of the deed of settlement
The applicant contends that the deed of settlement is unequivocal and that it binds the respondent in accordance with its terms. Moreover, it derives its effect from the orders made by the Court approving the settlement and authorising the plaintiffs in the group proceedings to execute the deed on behalf of all group members. The respondent contends that the Court order must be ‘read down’ so as not to extend to issues other than the common claims in the group proceeding. Alternatively, the respondent contends that the deed does not apply to it because it does not fall within the definition of ‘Group Members’, either because it opted out or by virtue of the argument in its notice of contention. The respondent submits that it would suffice for it to succeed on the application if those matters warrant further investigation.
The respondent’s contention that the Court order must be read down in the manner suggested raises a short point of law which must be answered adversely to the respondent for two reasons.
First, the authority of the plaintiffs to bind the group members to the deed approved by the Court derives directly from paragraph 2 of the extant order of Croft J made on 11 December 2014. The orders of a superior court of record such as this Court are ‘valid until set aside, even if the orders are in excess of jurisdiction (whether on constitutional grounds or for reasons of some statutory limitation on jurisdiction)’.[44] The effect of an order made beyond jurisdiction derives not from the law which purported to confer jurisdiction but from ‘the status or nature of the court making the order (as a superior court of record)’.[45]
[44]New South Wales v Kable (2013) 252 CLR 118, 133 [32] (French CJ, Hayne, Crennan, Kiefel, Bell and Keane JJ); see also at 140–1 [55]–[57] (Gageler J).
[45]Ibid 134 [36].
The making of the orders of 11 December 2014 was a judicial act, resolving not only the proceedings themselves but also a dispute between parties appearing on that occasion as to whether the deed should be approved. It follows that the orders of 11 December 2014 have effect irrespective of whether there is any excess of jurisdiction. In contrast, in Love v Attorney-General (NSW), the High Court held that the issuing of a warrant by the Supreme Court of New South Wales authorising use of a listening device was not a judicial act and the warrant was an instrument made pursuant to a ‘circumscribed statutory authority’ whose effect depended entirely on the empowering legislation.[46] As such, the warrant was not an order of the Court and its operation was confined by reference to the width of the enabling statutory provision.
[46](1990) 169 CLR 307, 323.
Of course, the judicial orders of a superior court may still require interpretation and it may be relevant to the task of interpretation that one possible construction would mean that the order exceeded the court’s jurisdiction. But the respondent’s submissions went well beyond that case, by proposing a process more akin to severance than interpretation. No authority was cited for treating an order of a superior court in this manner. Counsel for the respondent submitted that the order authorising the plaintiffs to execute the deed on behalf of group members was to be read as if it provided such authority ‘in so far as those transactions contemplated by the deed are transactions that are contemplated by the pleadings in the case to which the group members authorised [the] lead plaintiffs to be privies’. The gist of the submission was that the order be confined so as to confer authority to enter into the deed only in so far as the deed dealt with the issues identified in the pleadings.
Such a construction of the order would have the effect of fundamentally altering the commercial arrangements embodied in the deed. In particular, the definition of ‘Claims’ travels well beyond those pleaded issues. It embraces ‘any claim, demand, action, suit or proceeding for damages, debt, restitution … or any other remedy’ as well as ‘all liabilities, losses, damages, costs …, interest, fees, and penalties of whatever description (whether actual, contingent or prospective) arising out of, or in connection with the contents of or the facts giving rise to, the [Product Disclosure Statements], the Loan Agreements and or the allegations made in or the facts giving rise to each of the Proceedings’.[47] To read the order down as proposed would profoundly alter the meaning of that central defined term in the deed, with consequent alteration to the terms of the releases in particular. A fundamentally different deed would take the place of the one contemplated by the order. That would be to amend, rather than construe, the order.
[47]Emphasis added.
Secondly, and in any event, the argument that the orders of 11 December 2014 were made in excess of jurisdiction is without substance. It is true, as the respondent submitted, that in Timbercorp the plurality said:
The provisions of Pt 4A … confirm that a plaintiff in group proceedings represents group members only with respect to the claim the subject of that proceeding, but not with respect to their individual claims. The lead plaintiff is not a privy in interest with respect to the respondents’ claims.[48]
[48](2016) 339 ALR 11, 23 [53] (French CJ, Kiefel, Keane, and Nettle JJ).
However, it does not follow from those propositions that a plaintiff in a group proceeding cannot settle that proceeding in a manner that affects the individual claims of group members. Part 4A protects the interests of group members by requiring that they be given notice of an application to approve a settlement.[49] Apart from the requirement in s 33V that any settlement of a group proceeding requires the Court’s approval, s 33KA enables a group member to apply to the Court at any time before or after judgment for an order that the person ceases to be a group member (including on the basis that it is just and expedient to make such an order). Doubtless the fact that a proposed settlement will affect the individual claims of such members will provoke anxious consideration, as it did in the present case, by the judge asked to approve the settlement.[50] But nothing in pt 4A circumscribes the power of the Court to approve such a settlement. The respondent was not able to point to any provision having that effect. Its arguments proceeded on the erroneous assumption that the observations of the High Court in Timbercorp, a case in which the group proceeding went to judgment, apply with equal force to group proceedings which are settled.[51]
[49]Supreme Court Act 1986 s 33X(4). The Court may dispense with such notice if satisfied that it is just to do so.
[50]Clarke v GSF [2014] VSC 516 [87]–[132] (Croft J).
[51]Nor did anything in this Court’s reasons in Timbercorp indicate that a group proceeding could not be settled on terms extending beyond the common issues. The Court disagreed with the reasons of Croft J in the course of approving the present settlement only ‘to the extent’ that those reasons suggested that failure to opt out of a group proceeding under pt 4A necessarily gave rise to an estoppel: [2016] VSCA 128 [186]–[187] (Warren CJ, Santamaria and McLeish JJA). On one reading of the relevant passage, the judge did not decide the point on that basis in any event: see Clarke v GSF [2014] VSC 516 [132].
It would be highly surprising if pt 4A precluded parties to a group proceeding from resolving the common claims between them on terms which also bring finality to other issues outstanding between those parties or, in the case of a plaintiff, the group members that plaintiff represents. Full releases of all outstanding claims, whether at issue in the relevant proceedings or not, are not uncommon.[52] The respondent’s submission, if correct, would impose a remarkable constraint on those negotiating settlements of group proceedings.
[52]The same observation was made by Gordon J, in the course of approving a proposed settlement of a group proceeding, in Harrison v Sandhurst Trustees Ltd [2011] FCA 541 [26], which was cited with approval by Croft J in his reasons for making the 11 December 2014 orders: Clarke v GSF [2014] VSC 516 [101]. See also Byrne [2016] VSCA 214 [59] (Hansen, Ferguson and McLeish JJA).
The respondent submitted that s 33ZF of the Supreme Court Act 1986, which empowers the Court to make any order it thinks ‘appropriate or necessary to ensure that justice is done in the proceeding’, is to be confined by its reference to justice being done ‘in the proceeding’. However, that argument advances no further than repeating the assertion that the proceeding could not be settled so as to bind group members except in respect of the common claims. For the reasons given, there is no basis for that assertion. Instead, as explained in Byrne,[53] s 33ZF enables a Court approving a proposed settlement of a group proceeding to make orders binding a plaintiff, group members and other parties to the settlement or authorising a plaintiff to enter into and give effect to the settlement on behalf of group members. Such an order supplies the privity which, as the High Court observed in Timbercorp, is otherwise absent in respect of the individual claims of group members. This then enables the group proceeding to be settled on whatever terms the parties have agreed and the Court has approved. Because the privity which is absent in respect of a judgment is able to be provided by virtue of the Court’s orders when approving a settlement, Timbercorp and Byrne are addressed to different situations. The respondent’s submission that the decisions are inconsistent must therefore be rejected.
[53]See [32] above.
For each of the above reasons, the deed of settlement applies in accordance with its terms. To the extent it applies to the respondent, the deed is effective to preclude it from advancing the disputes and claims upon which it relies. The first two proposed grounds of appeal should be upheld.
Application of the deed of settlement to the respondent
The remaining question is whether the deed applies to the respondent. That involves the issue whether the respondent opted out of the 2006 Wine Project proceeding, and the submission by way of notice of contention that the respondent did not fall within the definition of ‘Group Members’ in any event. It is convenient to consider the latter issue first.
The applicant contended that the respondent should not be permitted to advance this argument, for two reasons.
First, the applicant submitted that the respondent was seeking to add a new ground upon which the statutory demand should be set aside, well outside the 21 day period in s 459G(3) for the filing of evidence in support of its application. It submitted that the respondent should not be permitted to do so, by virtue of the principle in Graywinter.[54] By that principle, if an affidavit in support of an application under s 459G does not state material facts sufficient to show the existence of a genuine dispute or offsetting claim, the Court lacks jurisdiction to entertain the application unless the deficiency is repaired within the 21 day period. A corollary of that principle is that an affidavit may also not be filed outside the 21 day period in order to raise a new ground for setting aside the statutory demand.[55] Further evidence at that time must be confined to supplementing evidence filed within time which already discloses the general nature of the case being advanced.[56]
[54](1996) 70 FCR 452.
[55]Energy Equity Corporation Ltd v Sinedie Pty Ltd (2001) 166 FLR 179, 185 [29] (Wallwork J; Steytler J and Olsson AUJ agreeing). See also Malec [2015] VSCA 330 [57] (Kyrou, Ferguson and Kaye JJA); GoConnect [2016] VSCA 315 [40] (Santamaria and Kyrou JJA and Elliott AJA).
[56](1996) 70 FCR 452, 460 (Sundberg J); GoConnect [2016] VSCA 315 [40].
The Graywinter principle has no application to the argument sought to be raised by the notice of contention. The respondent is not seeking to advance a further ground for setting aside the statutory demand. Rather, it seeks to rebut the applicant’s argument that its existing grounds lack merit. Moreover, it seeks to do so in reliance on the material already before the Court, rather than by filing further evidentiary material.
Secondly, as mentioned above, the applicant objects to the respondent raising the issue in its notice of contention on the basis that it is a new point that was not argued before the associate judge and one which, had it been raised, the applicant could have responded to by leading evidence of its own. The applicant gave by way of example evidence (beyond that which had been led and to which objection had been taken) that the respondent received loan funds within the periods delimited in the statements of claim.
This objection should be upheld. The respondent did not contend before the associate judge that the deed of settlement did not apply to it because it was not a ‘group member’ as defined in the statement of claim. Such an argument would have raised for determination whether the respondent had become a participant in the relevant managed investment schemes by 15 June 2006. The respondent sought to rely on the fact that documents had been signed after that date. The applicant would have sought to prove that, notwithstanding the dates on those documents, moneys had already been advanced when they were signed and the respondent had become a participant in the schemes accordingly. The applicant might well have had resort to further evidence in support of that contention. That circumstance calls for a strict application of the principle that parties are ordinarily not permitted to argue on appeal points which were not taken at first instance.[57] There is no reason in the present case to depart from that approach.
[57]Whisprun (2003) 200 ALR 447, 461 [51] (Gleeson CJ, McHugh and Gummow JJ); Water Board v Moustakas (1988) 180 CLR 491, 497 (Mason CJ, Wilson, Brennan and Dawson JJ); Glass (a pseudonym) v Chief Examiner [2015] VSCA 127 [78] (Santamaria, Ferguson and McLeish JJA).
There remains for consideration the respondent’s argument that, despite the deed of settlement, a genuine dispute still existed because there was evidence that it had opted out of the group proceedings. As such, it was not bound either by the deed of settlement (not being a ‘Group Member’ as defined) or by the orders of 11 December 2014 (which adopt the same definition).
The applicant sought to meet this argument in the first instance by pointing to the appearance of the respondent’s name in the list of ‘M+K Clients’ in one of the schedules to the deed of settlement. It was suggested that this foreclosed the argument that the respondent had in fact opted out of the proceedings. However, as mentioned earlier, the critical provisions of cl 4 of the deed, and the Court’s orders, operate by reference to the defined expression ‘Group Members’, not ‘M+K Clients’. While it might well be assumed that the ‘M+K Clients’ were also group members, neither the deed of settlement nor the orders say so in terms. Instead, each of them operates by reference to the definition of ‘group member’ in the statement of claim, subject of course to the person in question having opted out. In the circumstances, the reference to the respondent in a schedule to the deed the subject of the orders, without more, does not constitute a judicial determination that the respondent was a group member.
The question is then whether a genuine dispute exists as to the respondent having opted out of the proceedings. The Supreme Court Act 1986 provides for group members to have a right to opt out of a group proceeding. Section 33J(2) provides that a group member may opt out of the group proceeding by notice in writing before the date fixed by the Court for doing so. It is implicit in pt 4A that a person who has opted out ceases to be a ‘group member’. In particular, s 33ZB(b) provides that a judgment given in a group proceeding binds all persons who are described or identified as group members in that judgment ‘at the time the judgment is given’. This provision is subject to s 33KA, which as already mentioned enables the Court to order, before or after judgment, that a person cease to be a group member, relevantly because it is just or expedient to do so.
The question whether a person has opted out is a question of fact. The respondent points to the evidence of Mr Delis, who deposes to having received the opt out notice in or about March 2012. The notice lists both the 2006 Wine Project proceeding and the 2006 Olives Project proceeding in a list of 16 proceedings in the relevant schedule, albeit that where the notice itself provides for particularity in the case of the respondent the words ‘[mail merge Group Proceeding No(s) in which Investor a Group Member]’ appear. It may be accepted for present purposes that the document exhibited to the affidavit served as the opt out notice for the present proceedings. It provided for the respondent to return notice of its intention to opt out by 27 April 2012.
Mr Delis then deposes to having completed and signed notices opting out of the proceedings on or about 23 March 2012. He exhibits three such notices dated 23 March 2012 which together list several proceedings. One of those is the 2006 Olives Project proceeding. The 2006 Wine Project proceeding is not listed.[58] Mr Delis states that he gave the notices with a covering letter addressed to the Prothonotary to his personal assistant to be posted and believes, having made inquiries of her, that she posted them on around 23 March 2012. He heard nothing further from the Court. It will be recalled that the evidence of Mr Delis’s assistant, which was tendered by the applicant in the form of an affidavit she had sworn in related proceedings, was equivocal. Perhaps not surprisingly, she was able to say no more than that, had she been asked by Mr Delis to post the documents, she has no reason to believe that she would not have done so.
[58]One notice purports to opt out of a proceeding with a different number which Mr Delis describes as ‘’06 Wine Grape Income Project’, with the notation ‘(Bendigo & Adelaide Bank Defendant)’. The principal defendant in the 2006 Wine Project proceeding with which the present appeal is concerned is GSF.
The applicant relied on evidence of Stephen Flamer-Smith, a senior employee of the applicant, that he had examined a ‘spread sheet provided by the Court showing group members from whom opt out notices had been received’. The respondent’s name did not appear on this spreadsheet.
The parties differed as to whether the associate judge had resolved the opt out issue as argued before him. He reviewed the submissions of the parties without expressing conclusions in respect of them and then concluded as follows:
the failure to opt out may not be fatal. The records of this Court lead to the conclusion that [the respondent] remained a group member. The onus is upon [the respondent] to demonstrate otherwise. In any event, I decline to determine the issue of whether or not [the respondent] had attempted to opt out and what ensues from such attempt. I do not need to determine that issue given the conclusions in this judgment.[59]
[59]Reasons [84(b)].
The applicant emphasised the associate judge’s observation that the records of the Court ‘lead to the conclusion that [the respondent] remained a group member’ and that there was a ‘failure to opt out’. The respondent pointed out that the reasons go on to ‘decline to determine the issue of whether or not [the respondent] had attempted to opt out’.
The better view is that the associate judge did not decide whether there was a genuine dispute regarding the opting out issue. The reference to the records of the Court is best understood as describing the evidentiary force of those records, rather than a positive conclusion that the respondent had failed to opt out. It is clear enough from the words ‘[i]n any event’ that the associate judge chose not to determine whether the respondent had demonstrated to the requisite standard that it had opted out. As the matter was argued in this Court, it therefore falls to us to decide that issue ourselves.
The respondent relies on the evidence of Mr Delis that he sent the notice required for the respondent to opt out of one of the group proceedings within the time fixed for doing so. It contends that the notice was not processed administratively by the Court and that it cannot be said that the notice was never received.[60]
[60]The parties agreed, in the summary filed for the purpose of the present appeal, that the Court ‘has notified the applicant that it did not receive an opt out notice from the respondent in respect of either group proceeding’. In light of the respondent’s argument as to administrative error, the respondent’s agreement to that fact evidently does not extend to the accuracy of the Court’s notification.
The status of the respondent as a group member or otherwise depends first on whether the notices opting out of the proceeding were sent as Mr Delis deposes. What might have happened to the notices, if sent, which could have caused the Court either not to receive them or to fail to take proper account of their receipt, was not explored before the associate judge. The summary document upon which the applicant relies is described only as a ‘spread sheet provided by the Court’. Its exact provenance or the manner of its preparation is undisclosed.
The evidence of Mr Delis, if accepted, raises the possibility that a notice opting out of the 2006 Olives Project proceeding was sent. If so, it is not possible to say whether the notice was received by the Court or, if it was received, whether it was for some reason not recorded in the list of notices received. However, the mere raising of a possibility in this manner is not sufficient. Section 459G places the onus on the recipient of a statutory demand to show the existence of a genuine dispute. On a fair reading of the affidavit upon which the respondent relies, it raises more questions than it answers. First, while Mr Delis deposes to his assistant having told him that she posted the opt out notices, her own evidence (sworn over a year earlier) falls well short of saying as much. Secondly, Mr Delis says nothing as to whether or not he received subsequent communications or had any other further dealings relating to the group proceedings (including the 2006 Wine Project proceeding, from which he had not opted out). This makes his statement that he was not a client of M+K Lawyers ‘in any of the Great Southern Group Proceedings’ and that he thought ‘after sending the opt-out notices’ that the respondent ‘was no longer part of the Group Proceedings’ simply conclusionary and mere assertion. Thirdly, reference was made before the associate judge to a notice of the proposed settlement having been sent to the respondent (although the affidavit in respect of that matter was not put before this Court).[61] No mention of any such communication, or the respondent’s actions in respect of it, is found in the affidavit. The evidence is simply silent as to when Mr Delis first became aware that the respondent might not have opted out of either proceeding.
[61]Reasons [40(b)].
At a theoretical level these factual matters concerning the sending of an opt out notice and what may have happened to it give the appearance of warranting further investigation. However, in our opinion the evidence relied on by the respondent falls short of establishing a genuine dispute. The respondent did not have to put on full evidence. But the onus rested on the respondent to provide a sufficient account of its dealings in relation to the group proceedings to raise a genuine dispute and take the matter beyond mere assertion.[62] In this regard, more was required than the equivocal evidence as to the sending of the opt out notice, together with the fact that Mr Delis thought (at least at one time) that his actions had been effective to cause the respondent to opt out.
[62]Eyota (1994) 12 ACSR 785, 787 (McLellan CJ in Eq); TR Administration (2008) 66 ACSR 67, 79 [71] (Dodds-Streeton JA; Neave and Kellam JJA agreeing).
For that reason, the respondent has failed to establish that there is a genuine dispute as to the amount claimed which is the subject of the 2006 Olives Project proceeding. There is no suggestion that the respondent opted out of the 2006 Wine Project proceeding.
Conclusion
It follows that leave to appeal should be granted and the appeal should be allowed. The orders of the associate judge should be set aside and in their place it should be ordered that the application to set aside the statutory demand be dismissed.
The applicant should be refused the declaratory relief it seeks in the appeal. The relief sought extends to declaring the binding nature of the deed of settlement against all group members. Such relief was not sought in the originating motion or before the associate judge. More fundamentally, the respondent does not represent other group members, in the two proceedings presently relevant or at all. Those group members are not on notice of the application for declaratory relief. It would not be appropriate to entertain the application in those circumstances.
It follows that the application for leave to adduce further evidence, which related primarily to the declaratory relief, should be refused.[63]
[63]To the extent that the further evidence was said to support the grant of leave to appeal, it is unnecessary to receive it in light of the conclusion that leave should be granted in any event.
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