Bogan & Anor v The Estate of Peter John Smedley (Deceased) & Ors
[2024] HCATrans 79
[2024] HCATrans 079
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Melbourne No M21 of 2024
B e t w e e n -
ANTHONY BOGAN
First Applicant
MICHAEL THOMAS WALTON
Second Applicant
and
THE ESTATE OF PETER JOHN SMEDLEY (DECEASED)
First Respondent
ANDREW GERARD ROBERTS
Second Respondent
PETER GRAEME NANKERVIS
Third Respondent
JEREMY CHARLES ROY MAYCOCK
Fourth Respondent
KPMG (A FIRM) ABN 51 194 660 183
Fifth Respondent
GAGELER CJ
GORDON J
EDELMAN J
STEWARD J
GLEESON J
JAGOT J
BEECH‑JONES J
TRANSCRIPT OF PROCEEDINGS
AT CANBERRA ON TUESDAY, 12 NOVEMBER 2024, AT 10.00 AM
Copyright in the High Court of Australia
____________________
MR J.T. GLEESON, SC: May it please the Court, I appear with MR S.H. HARTFORD DAVIS and MR M.O. PULSFORD for the applicants. (instructed by Banton Group)
MS T.N. SPENCER BRUCE, SC: May it please the Court, I appear with MR D.P. FARINHA for the first to fourth respondents, the director defendants. (instructed by Baker McKenzie)
MR P.D. HERZFELD, SC: Your Honours, I appear with MS J.L. ROY and MR J.G. WHERRETT for the fifth respondent, KPMG. (instructed by Ashurst Australia)
MR S.P. DONAGHUE, KC, Solicitor‑General of the Commonwealth of Australia: May it please your Honours, I appear with MR S.N. RAJANAYAGAM on behalf of the Attorney‑General of the Commonwealth of Australia, intervening. (instructed by Australian Government Solicitor)
GAGELER CJ: Thank you, Mr Solicitor. Mr Gleeson.
MR HERZFELD: Yes. We have arranged our seating so as to deliberately confuse your Honours. That is a collective effort on the part of all counsel at the Bar table. We are actually sitting where we were told. I am going first, as the moving party.
GAGELER CJ: And can you tell us the order of address from then on?
MR HERZFELD: Yes. After me, it will be Ms Spencer Bruce, and then Mr Gleeson, then the Solicitor‑General, and then I will have a brief reply.
GAGELER CJ: Thank you. Very well. Proceed.
MR HERZFELD: Thank you, your Honours. Your Honours will have seen that there have been removed into this Court proceedings in which the Victorian Court of Appeal gave reasons for answering questions which had been reserved for the consideration of that court. The questions and the answers that that court proposes to give are in the cause removed book at page 24, in the Court of Appeal’s reasons, set out at paragraph 7. Those questions arise from the introduction into the Victorian class action regime of group costs orders.
Your Honours can conveniently see the relevant Victorian provision extracted in the cause removed book at page 31 in the Court of Appeal’s reasons at paragraph 48. Your Honours will see it is section 33ZDA of the Supreme Court Act. Your Honours will see the kind of orders that it empowers in subsection (1). In short, it is a court‑ordered contingency fee.
That being so, subsection (4) displaces the prohibition in the Legal Profession Uniform Law on lawyers entering into agreements that provide for contingency fees. That is a common prohibition throughout Australia. Your Honours will notice, as it will be relevant a little later, that subsection (3) expressly contemplates the amendment of the group costs order during the course of proceedings.
The Court of Appeal has not yet made orders embodying its proposed answers. Rather, the proceedings have been removed into this Court so that this Court can consider for itself the correctness of the answers to the questions reserved, as occurred in O’Toole. That procedural course is necessary in the present context because of the restriction on appeals in section 1337R of the Corporations Act.
Your Honours, we propose to structure our oral submissions as follows. First, we will address your Honours about the connection of the proceedings to New South Wales. The point we make is that, but for any complexity created by the group costs order, it is plain that the more appropriate forum for these proceedings is the Supreme Court of New South Wales.
Secondly, we will address your Honours on question 1, and our submission there is that irrespective of whether the group costs order will travel with the proceedings to the Supreme Court of New South Wales, the fact that it has been made is irrelevant to the determination of our transfer application. If we are correct about that, question 1 should be answered no, and if that is right question 2 would be unnecessary to answer, and a reason not to do so is that question 2 is the question that raises a constitutional point on the applicants’ submissions.
However, thirdly, and in the alternative, we will address your Honours on question 2, which has two sub‑questions, and our submission on that question is that if the proceeding is transferred the group costs order would remain in force and be capable of being enforced by the Supreme Court of New South Wales, subject to any order of that court varying or revoking it. So, if it is necessary to answer question 2, each of questions 2(a) and (b) should be answered yes. It will follow from those points that the proceedings should be transferred to the Supreme Court of New South Wales and question 3 should be answered yes.
So, may we start with the connection of the proceedings to New South Wales. Would your Honours first turn to the cause removed book at page 55. Your Honours will see at paragraph 170 of the Court of Appeal’s reasons the Court of Appeal concluded that, putting aside the group costs order, the factors that we relied upon were “just sufficient”, according to the Court of Appeal, “to persuade” it that New South Wales was “the more appropriate forum for the litigation”.
GLEESON J: Is the assumption underlying this submission that the question of “more appropriateness” is decided by reference to connecting factors?
MR HERZFELD: It is not just an assumption; we will submit that is the appropriate approach. That conclusion of the Court of Appeal is challenged by notice of contention. May we at the outset emphasise to your Honours actually how overwhelming the connection to New South Wales would be but for the group costs order.
May we step your Honours through the key parts of the agreed facts, starting at page 68 of the cause removed book. As part of doing so, I will also take your Honours through the key legislative provisions as they arise. Starting with the agreed facts, as your Honours will see from paragraph 4 on page 68, the underlying proceeding is a shareholder class action brought in the Supreme Court of Victoria on behalf of those who acquired ordinary shares in Arrium Limited in the period there specified. For your Honours’ purposes, a sufficient summary of the nature of the proceedings appears in paragraph 6. Your Honours will see that they concern:
three financial statements . . . and a capital raising –
undertaken by Arrium, and in the last sentence:
The allegations centre around the adequacy of impairments and the carrying value of assets.
The defendants are described in paragraph 8, as your Honours will see – the directors and then KPMG, the auditor. The various causes of action of a typical kind in shareholder class actions are specified in paragraph 9. Broadly speaking, they are species of misleading or deceptive conduct, including contrary to section 1041H of the Corporations Act.
KPMG applied for a transfer of the proceedings to the Supreme Court of New South Wales, pursuant to section 1337H of the Corporations Act. Would your Honours at this point take up the Corporations Act, please? It is book 1 of the authorities, tab 3, if anyone is using that.
GAGELER CJ: We are not – we have separate prints.
MR HERZFELD: If your Honours turn to section 1337H, your Honours will see, first of all, subsection (1) – the application section, or provision – and it is common ground that subsection (1)(a) is satisfied. Without going to it, “Corporations legislation” is defined in section 9, relevantly, to mean the Corporations Act and the ASIC Act. Paragraph (b)(ii) is obviously satisfied. The transfer power itself is at subsection (2):
if it appears to the transferor court that, having regard to the interests of justice, it is more appropriate for –
and relevantly to us:
(a) the relevant proceeding . . .
. . .
to be determined by another court that has jurisdiction in the matters for determination . . . the transferor court may transfer the relevant proceeding –
The provision also refers to transfer of an application in a proceeding. That is unsurprising in a Corporations Act context where quite substantive and separate questions may be raised by an application within existing proceedings. For example, leave to proceed against a company that has become insolvent in the course of proceedings under section 471B, an application to wind up a company under the insolvency provision, 459P, or on other grounds, 462.
Quite apart from the insolvency context, leave by a shareholder to intervene in existing proceedings to which a company is a party and take over those proceedings by way of derivative action – that is under section 236. So, the reference there to applications contemplates that it may be suitable for an application to be determined in a different place to the rest of the proceedings. As I say, in the Corporations Act context, perhaps not surprising.
Would your Honours also notice then section 1337L. Your Honours will see there a non‑exhaustive list of mandatory matters to be considered, and your Honours will see that paragraphs (a) and (b) focus on geographic connections to the body corporate and events the subject of the proceeding. Your Honours will also notice paragraph (c), but that will become relevant to question 2.
While here, can I also identify some other provisions which will become relevant to question 2. First of all, section 1337N. Your Honours will see that it deals with the transfer of documents. That is in paragraph (a), the physical documents. There are also deeming provisions in paragraphs (b)(ii) and (ii) concerning the institution of proceedings and their nature or, if one is dealing with a transferred application, the institution of the application and its nature. Then your Honours will see section 1337P(2). That is a more specifically deeming that:
the transferee court must deal with the proceeding as if, subject to any order of the transferee court, the steps that had been taken for the purposes of the proceeding in the transferor court (including the making of an order), or similar steps, had been taken in the transferee court.
Would your Honours notice that, unlike subsection (1), that subsection is not limited in its application to cases where a court is exercising relevant jurisdiction as defined in subsection (3). Rather, subsection (2) applies whenever there has been a transfer. Finally, as it is relevant to question 2, your Honours will see section 1337Q seeks to deal with any lack of a right of appearance in the transferee court by conferring a right of appearance.
So, returning to 1337H(2), the central question is whether, having regard to the interests of justice, it is more appropriate that the proceedings be determined by another court. As I said, section 1337L evidences the geographic focus of that inquiry. That is consistent, as I will show your Honours in a moment, with the approach to the equivalent provisions in the Cross‑vesting Act. That being so, may we then draw your Honours’ attention to the various connecting factors to New South Wales as evidenced by the agreed facts in the cause removed book, starting on page 69, and may we start with Arrium itself.
EDELMAN J: So, the 1337L factors, to which the court “must have regard”, are connecting factors which are concerned with ability or ease of bringing proceedings, are they not?
MR HERZFELD: They are in part explained in that way, but not only in that way. They are also a reflection of the fact that, for various other reasons under this scheme – as I will show your Honours – proceedings were intended to be instituted in the court of the jurisdiction with the centre of gravity of the events in the proceeding.
EDELMAN J: That is just using a metaphor to try to describe what it going on. I mean, is not the purpose of 1337 to reflect ability or ease of either an applicant to bring proceedings or a respondent to respond to proceedings?
MR HERZFELD: We would not accept that that is the whole of the explanation, but it is at least part of the explanation. I will come back to that.
EDELMAN J: All right.
MR HERZFELD: If your Honours then, at page 69 of the cause removed book, start with Arrium, your Honours will see paragraph 11, its “registered office and principal place of business” in Sydney. Paragraph 12, the place of signing of the 2015 full year results was Sydney. Paragraph 13, the place of signing of the other reports in issue was Sydney. Paragraph 14, all of the features relating to the capital raising connect the matter with New South Wales: Sydney time, address, address of share registry, underwriter’s address, information line and place where the completed application forms need to be posted.
Your Honours will see paragraph 15, the location of Arrium’s share registry in Sydney. Then paragraph 16, the various aspects of the actual functioning of Arrium which are relevant. So, paragraph (a), the place of consolidation and assessment of the financial information by the group finance team; paragraph (c), place of preparation of the finance statements; paragraph (d), the people who constitute the finance team; paragraph (e), the people mentioned there; paragraph (f), the place of board meetings; and paragraph (g), the place of committee meetings.
Just jumping to paragraph 31, your Honours will see that the former CFO and former group financial controller, who it is agreed are:
both likely key witnesses in this proceeding, reside in New South Wales.
Can I then turn to the KPMG side of things. That is addressed in paragraphs 18 to 22 of the agreed facts. Your Honours will see at paragraph 19, the meetings that are referred to there all occurred in New South Wales. Paragraph 20, the “majority of the work” occurred in Sydney. Paragraph 21, all of the people there:
were based in, and worked out of, the Sydney offices of KPMG.
In paragraph 22:
The Lead Auditor’s Independence Declarations . . . were signed . . . in Sydney –
If your Honours jump down again to paragraphs 32 and 33, your Honours will see that each of those people mentioned now still reside in Sydney.
EDELMAN J: Why is all this relevant? I mean, if the inquiry was one into proper law to establish a connection with a particular jurisdiction for the purpose of establishing which law applied, then that may all be relevant, but at the moment I do not quite see why these particular factors are relevant without identifying what the purpose is of the relevant provision.
MR HERZFELD: Well, part of the reason they are relevant is because some of them feed into the mandatory terms of 1337L, that is part of the answer to your Honour’s question. Another part of the answer to your Honour’s question is the convenience matter that your Honour raised with me, so they are relevant in that way. Really, in this matter they are relevant at a foundational level because our submission is that, apart from the group costs order, it would be plain in this case that there would be a transfer to New South Wales and I want to show your Honours how plain that is, particularly given that it is challenged by a notice of contention before your Honours.
EDELMAN J: It is a little bit like saying, apart from the most important factor to one of the parties, everything else points in another direction.
MR HERZFELD: Or can we put it this way, apart from the factor that should be regarded as utterly irrelevant, everything else points in the other direction. I understand I have to demonstrate why it is irrelevant but, as I say, there is actually not even agreement before your Honours that that is the case in light of the notice of contention.
EDELMAN J: Yes.
MR HERZFELD: Then, can I turn to the other parties. If your Honours turn, firstly, to the plaintiffs, paragraphs 23 and 24, your Honours will see they reside in New South Wales. As for the surviving director defendants, it is true that they do not live in New South Wales. Your Honours will see that in paragraphs 26 to 28. Only one lives in Victoria, so that does not provide much of a connection to Victoria. But your Honours will see in paragraph 45 that the director defendants agree that New South Wales is the appropriate:
the Supreme Court of New South Wales is the more appropriate forum –
BEECH‑JONES J: That just begs, why do they agree to that?
MR HERZFELD: It might be ‑ ‑ ‑
BEECH‑JONES J: They might think New South Wales is a better place to stop the GCO and stop the case.
MR HERZFELD: All I am pointing out is that although they do not reside in New South Wales, they are not taking a contrary position to us, which would be apparent from their submissions in any event. But it certainly does not provide a demonstration that Victoria is a more appropriate forum – the fact that one of them happens to live there.
If one broadens focus to the group members, that does not provide a connection to Victoria. Your Honours will see in paragraph 35 the location of signed‑up group members, but their locations are neutral for present purposes for a couple of reasons. The first ‑ ‑ ‑
GORDON J: Sorry, what paragraph is that, Mr Herzfeld?
MR HERZFELD: Paragraph 35, I am sorry, your Honour.
GORDON J: Thank you.
MR HERZFELD: The first is that, as your Honours know, the group members do not actually play any part in the running of the proceeding – that is the whole point of a class action, that it is run by the representative plaintiff. So, the location of group members is entirely neutral. But in any event, the second reason their location is neutral as between Victoria and New South Wales is that their locations are scattered; they do not provide any connection to Victoria above any other jurisdiction. To the extent it is relevant, the highest number of people signed up are in New South Wales but the more basic point is that their locations are irrelevant.
If your Honours look at the broader focus of the liquidators of Arrium, at paragraph 52, your Honours will see that the liquidators and the company’s books and records are based in Sydney – located in Sydney. If we then look at the location of the legal representatives, all are primarily in Sydney ‑ ‑ ‑
GORDON J: Do we take anything from 53?
MR HERZFELD: No, because, given that the liquidators and solicitors are both based in Melbourne and Sydney, it really provides no connection to Victoria over New South Wales. But I am now coming on to the legal representatives, and the short point of that is that the majority are primarily – I will start that again – are primarily based in Sydney and the majority of them have been instructed since the liquidator examinations and, in the case of the director defendants, the various related proceedings. I will not go to all references in the interests of time, but may we refer your Honours simply to these paragraphs: 36, 39 to 40, 42 to 44, and 46 to 48.
Rather tellingly, the plaintiffs’ own legal retainer and funding documents evidence the connection to New South Wales. If your Honours turn back to paragraph 36 the costs agreements issued by the plaintiffs’ solicitor were governed by New South Wales law. In paragraph 38, your Honours will see that all the subsequent retainers up to January 2021 anticipated commencement in New South Wales. I will come back to what happened after that.
If your Honours drop down to paragraph 50, your Honours will see that the litigation funding agreement is governed by New South Wales law and gives the address for the funder as the plaintiffs’ solicitors located in Sydney. Your Honours will see in paragraph 51 the facts about the litigation funder’s agent who provides day‑to‑day instructions – in particular, the second last and last sentences of that paragraph.
In terms of the related proceedings, they all occurred in New South Wales. So, your Honours will see liquidators examinations occurring in the Supreme Court of New South Wales from paragraphs 54 to 65. Within that, your Honours will notice, in paragraphs 62 and 64, the overlap with they Sydney‑based legal representatives for the defendants. Next, the plaintiffs themselves have obtained orders for examination and access to documents in the Supreme Court of New South Wales. Your Honours will see that in paragraphs 66 to 73.
Then thirdly, there have been other related proceedings concerning similar facts heard and determined by the Supreme Court of New South Wales, and your Honours will find them summarised in paragraphs 74 to 81. Your Honours will see in paragraph 77 the overlap with the subject matter of the allegations in these proceedings. May we just interpolate, in paragraph 80, the last sentence says “justice is reserved” in the appeal. That appeal has now been determined on 9 May 2023, and the citation is (2023) 111 NSWLR 304. Your Honours will notice again in paragraph 81 the same Sydney‑based director defendant legal team.
So, why, in the face of this overwhelming connection to New South Wales, did the plaintiffs institute in Victoria? One can see that quite clearly from the facts agreed at paragraph 82. Your Honours will see, in June 2020, the group costs order legislation was passed. It commenced on 1 July 2020, and your Honours will see that the statement of claim was filed in the Supreme Court of Victoria on 14 August 2020. If your Honours go back to paragraph 39, your Honours will see, in the last sentence, in just the same month, the plaintiffs’ solicitors established their Melbourne office.
If your Honours turn to paragraph 98, your Honours will see an extract from an affidavit affirmed by the funder’s agent in the group costs order application. The second paragraph extracted there makes it plain that the reason for instituting in Victoria was the enactment of the group costs order provisions. That reflected a change from what had been intended up until that point, as evidenced by the New South Wales‑governed costs agreement and so on. It is also evidenced by what Ms Banton said herself in the affidavit quoted at paragraph 97, that is, that it had been “anticipated” up until that point that the proceedings would be instituted in New South Wales.
So, in our submission, it is plain that the plaintiffs’ legal team and funder recognised what is obviously the case, that is, that the natural forum for these proceedings is New South Wales, and the reason that they were commenced in Victoria was to take advantage of the group costs order regime available there and nowhere else. And so, to adopt ‑ ‑ ‑
GORDON J: Just before you go on, it is put against you, I think, by the applicants that this is national legislation. They have directors resident in multiple jurisdictions, and you have a national accounting firm. Does that at all detract from the first part of your submission?
MR HERZFELD: Not materially, because, even with national legislation and national causes of actions, it is still contemplated – because of our federal structure – that proceedings can be transferred under the Corporations Act to a more appropriate forum. So, that will always involve a national cause of action and national legislation because it is the Corporations Act. One still looks at the connecting factors to one or other jurisdictions and, here, the connecting factors are overwhelmingly to New South Wales.
GORDON J: What do we do about – do we have to worry, at this aspect, about inconvenience? There is nothing in these agreed facts, as I read them, to suggest that it is inconvenient. Does that affect that first aspect of your argument?
MR HERZFELD: There is some material about inconvenience or convenience in paragraphs 117 to 119. I am saying that as a matter of fairness because they are potentially somewhat cutting against the inconvenience of proceeding in New South Wales. But the reality is that, given the locations of individuals and documents and events, it is inevitable that there will be greater inconvenience in proceeding in Victoria, compared to New South Wales.
GORDON J: The reason why I raise it is that at cause remove book 54, paragraph 166, the Court of Appeal said:
There is nothing in the agreed facts that allows any meaningful judgment to be made about the extent –
et cetera.
MR HERZFELD: Yes, but it is an obvious inference from the locations, really for the reasons that I have already had in an exchange with Justice Edelman.
EDELMAN J: It is a fairly big inconvenience if you cannot bring your action at all.
MR HERZFELD: Of course I have to deal with that. I understand that is the point in issue in the case, so I am going to come to that, but I was really just addressing, I think, the more practical inconvenience questions that Justice Gordon was asking.
EDELMAN J: You have not actually pointed to any inconvenience. I mean, there are video hearings that can be conducted; there is no suggestion that there is any prohibitive or even any unrealistic costs that would be incurred with witnesses flying from one State to another. What is this precise inconvenience of some of the directors being resident in New South Wales or liquidators having electronic documents on a server in New South Wales?
MR HERZFELD: The reality is that conducting proceedings where people are not resident and by video is always more expensive and more inconvenient. One of the reasons for the connecting factors approach – as I will come on to – is not to say, do these connecting factors therefore lead to inconvenience, it is a recognition that connecting factors, of themselves, are a strong evidence of inconvenience. But what was happened here is not just ‑ ‑ ‑
BEECH‑JONES J: Mr Herzfeld, with big firms on both sides and internet, leaving aside debates about forms of affidavit, you could draft the affidavits in Sydney. They are inconveniences when they turn up, are they not, if they are called for cross‑examination?
MR HERZFELD: Absolutely. The fact of legal representatives and flying down and all of those things add dramatically to the costs of proceedings. The more basic point is that the connecting factors point overwhelmingly to New South Wales, and that is enough. It is not just me saying that. The plaintiffs’ solicitors themselves and the funder all recognise that up until the group costs order regime was enacted.
So, what has happened here – to adopt the Court of Appeal’s own language – is that the group costs order acted as a “magnet” for litigation to be conducted in Victoria that would more appropriately be conducted elsewhere. It is a plain demonstration that that is what occurred in this case. It is, with respect, untenable to suggest that there is a reason that these proceedings were instituted in Victoria other than the group costs order.
STEWARD J: Can I ask you two questions. At paragraph 98, the funder gives evidence about this being:
in part, to achieve greater flexibility and certainty –
Do we know what other reasons the funder had in mind for why he supported the ‑ ‑ ‑
MR HERZFELD: That is all that is contained in the agreed facts.
STEWARD J: Okay. All right. Can I next ask you this question. If the representative plaintiff had been someone born and bred in Melbourne, living in Melbourne, and had used a local firm to commence proceedings, would you have any case?
MR HERZFELD: Yes, because there were all sorts of other overwhelming connections to New South Wales, but I am not dealing with that circumstance, in any event. The plaintiffs cannot even point to that. The fact is that your Honours should be under no illusion that the reason this proceeding was commenced where it was, was to obtain a group costs order. One might think that the obvious response to this, which would have avoided the whole of the present dispute, would have been following the procedurally sensible course of determining the transfer application before the group costs order application.
GORDON J: Could you have appealed the group costs order?
MR HERZFELD: The group costs order?
GORDON J: Because there is no appeal against that order of Justice Dixon.
MR HERZFELD: No, and the view ‑ ‑ ‑
GORDON J: Is that fatal to your argument on that aspect?
MR HERZFELD: The ordering aspect?
GORDON J: The failure to appeal that order.
MR HERZFELD: No. What is put against us is that we did not appeal Justice Nichols’ decision to list the group costs order application before the transfer order application. We could have sought leave to do that. It would have almost certainly been refused as a matter of practice and procedure, but more importantly, the order of these applications is relevant now, as I will come on to when I deal with that submission more substantively. But, if nothing else – and I will return to this – the issues which have been generated by the procedural course which has been followed rather suggests that it is a procedural course which should not be repeated.
Can I then move on to question 1. Our point in relation to that question is that, when one is considering a transfer application such as this, the fact that a group costs order has been made and the prospect that it might not continue if the proceeding is transferred are simply irrelevant.
BEECH‑JONES J: And that includes if it may stultify the proceedings.
MR HERZFELD: Yes.
EDELMAN J: So, it is convenience for one side but not really the other.
MR HERZFELD: It is the court not taking a view about whether one side should be able to sue another – and that is the point that I want to make coming out of Schultz. If your Honours take that up, please, that is (2004) 221 CLR 400, or authorities volume 4, tab 44, page 1057.
GORDON J: What is the proposition you just put then? Could you put it again, please, Mr Herzfeld?
MR HERZFELD: Yes. That what is a more appropriate forum in the interests of justice is even‑handed as between the plaintiff and the defendant. So, it is no part of the court’s role to favour one side or the other in whether proceedings can or cannot continue.
EDELMAN J: So, access to justice is not in the interests of justice.
MR HERZFELD: Your Honour is using “access to justice” in a way that we do not accept, and I will show your Honours why in a moment when I have gone through Schultz. The same point can be made about a limitation defence, and I will come to that.
Would your Honours turn, first of all, to paragraph 7 in the reasons in Schultz. Your Honours will see, from paragraph 7 to paragraph 11, there is a discussion of the cross‑vesting scheme, and in paragraph 11, the divergent common law approaches in England and Australia to forum non conveniens. In paragraph 12, there is a discussion of the intention of the Cross‑vesting Acts operating:
in a different juridical context –
of forum non conveniens, and a quote from what Chief Justice Street said in one of the earlier cases. Those passages, as I will show your Honours in a moment, are equally apt for the Corporations Act regime. Can I focus on paragraphs 15 to 16. Your Honours will see that the reasons a plaintiff has commenced:
might, or might not, concern a matter related to the interests of justice.
One example might be where the plaintiff is near death and has a prospect of an earlier hearing:
The interests of justice are not the same as the interests of one party . . . interests of the respective parties, which might in some respects be common . . . and in other respects conflicting, will arise for consideration.
There is the suggestion that if a plaintiff was near death and you had an urgency consideration, that might be relevant to the interests of justice.
GLEESON J: Do they deal with whether the proceedings might be stultified?
MR HERZFELD: In this case?
GLEESON J: In this ‑ ‑ ‑
MR HERZFELD: I will show your Honour an example of where the proceedings would not be able to continue and nonetheless not relevant.
GORDON J: So, where it has:
The justice referred to in s 5 is not disembodied, or divorced from practical reality.
which is the central theme of 15, that is not addressing stultification?
MR HERZFELD: We accept practical reality. What we do not accept is that the prospect of the continuation of litigation because of the policy choice about Victoria concerning funding of litigation, versus the New South Wales policy choice, is something that is relevant. I am coming to this, I promise.
GORDON J: I will stop asking.
MR HERZFELD: Your Honours will see then in paragraph 16, the counterpoint:
there may be conflicting interests of such a kind that justice would not attribute greater weight . . . The advantage which a plaintiff might obtain from proceeding in one court might be matched by a corresponding and commensurate disadvantage –
And your Honours will see what follows from there:
justice may not dictate a preference –
And we rely on what is said there. In paragraphs 18 to 19, there is reference particularly to the connecting factors approach of Lord Goff in Spiliada as being relevant in these kinds of cases, and that connects with the point that I have just made, the point that I took your Honours through with all the facts. “Preponderance of connecting factors” in paragraph 19. All of those things in this matter, apart from the group costs order, would favour New South Wales.
In paragraph 21, your Honours will see there is reference there to a previous Court of Appeal decision involving special procedures of the Dust Diseases Tribunal there and the special procedures being referred to there “to use evidence and experience in past cases” the Court of Appeal said:
were not merely forensic advantages to one party . . . but were factors relevant to a decision under s 5 because they have the capacity to assist both –
parties. The court then comes on to the error in the reasoning of the primary judge, and your Honours will see in paragraph 24 the two errors identified. First, the primary judge’s view that the:
choice of forum was “not lightly to be overridden”; secondly, the “unusual advantages” conferred on a plaintiff by s 11A –
What their Honours were talking about with 11A is the provision extracted at paragraph 6. Your Honours will see it allowed the Tribunal to:
award damages . . . on the assumption that the injured person will not develop another –
disease, and then to:
award further damages at a future date if the injured person –
did develop such a condition.
BEECH‑JONES J: Sorry, Mr Herzfeld, what paragraph was that again?
MR HERZFELD: At paragraph 6 their Honours set out the relevant provision, 11A.
BEECH‑JONES J: Yes.
MR HERZFELD: And their Honours explained why that was irrelevant, as well as the plaintiff’s choice of forum was irrelevant, in paragraphs 25 and 26. Paragraph 25 explains that one cannot preference the choice of the plaintiff in the regular invocation of the proceedings – not the right starting point. And then, in paragraph 26, their Honours dealt with section 11A, and what their Honours pointed to was that there was a section in the South Australian legislation which empowered interim awards of damages. But even on the assumption that section 11A was more favourable to a plaintiff, there was:
no warrant for concluding that the interests of justice dictate that the first respondent should be given, as against the appellant, the benefit of s 11A, or that s 11A of the Tribunal Act should be regarded as a more just dispensation than –
the South Australian Act. And that is just because:
They are different approaches to a similar problem by two legislatures –
EDELMAN J: This is all in relation to substantive law.
MR HERZFELD: But the consequence is that their Honours effectively said, even if the plaintiff is shut out from obtaining the benefit of 11A, access to justice in relation to a future award of damages ‑ ‑ ‑
EDELMAN J: No, no, no, that is not what access to justice means.
MR HERZFELD: Well, in relation to ‑ ‑ ‑
EDELMAN J: Access to justice is the ability to access rights that are conferred by the substantive law, not the substantive law itself.
MR HERZFELD: And the consequence here, because of the different policy choices not being something that one can take into account, is that the plaintiff would not obtain the benefit of being able to sue later. Their Honours said that that was something which had to be put aside. One of the reasons for that, about one third of the way down that paragraph:
If, in a particular respect, the first respondent’s assumed advantage and the appellant’s assumed disadvantage are commensurate . . . that does not advance the matter.
One cannot tip the weight in favour of the plaintiff’s choice, and the problem would be “compounded” if one starts to compare the competing merits of the New South Wales and South Australian approaches. The questions were asked, as your Honours will see, but rather:
the appropriate course would be for the judge to draw back, and to consider the interests of justice by reference to more neutral factors.
BEECH‑JONES J: Mr Herzfeld, I am sure you will come to it, but you will come to tell us why the GCO represents an assumed disadvantage for your client.
MR HERZFELD: I will. Your Honours will see, in the next paragraph, there is discussion of, or approval of, Lord Goff’s discussion in Spiliada of when a legitimate person of juridical advantage might sometimes be relevant. Now, there is similar reasoning in the other reasons. Can I just emphasise these points about Schultz first. Your Honours, may we emphasise that what appears in the reasons of Justice Gummow, with whom Justice Hayne agreed, at paragraph 100, his Honour there again referred to section 11A operating in “favour of one side” and being specifically “designed to do so”.
Next, in the reasons of Justice Callinan in paragraph 217, your Honours will see the explanatory note to the cross‑vesting scheme was referred to, and in the last six lines of that there is a reference to:
The successful operation of the cross‑vesting scheme –
requiring the:
Courts will need to be ruthless in the exercise of their transferral powers to ensure that litigants do not engage in ‘forum‑shopping’ –
I will show your Honours a similar intention expressed with respect to the Corporations Act. Then, finally, in Schultz, if your Honours turn to 258, there is a useful discussion, again about:
one person’s legitimate advantage is another person’s disadvantage –
And that one should not be preferencing the interests of one over the other.
EDELMAN J: Are you going to come to the content of forum shopping at any stage?
MR HERZFELD: I am. In part, can I do that by taking your Honours to the passage in Spiliada from Lord Goff that the joint reasons approved. Spiliada [1987] AC 460.
GORDON J: Just before you leave 258, and I am sure you are going to come back to this, but where it is there talking about:
no presumption . . . in favour of any party –
and it is re‑emphasising:
Courts are required to do equal justice.
It is there dealing with ability of winning. It is not dealing with the institution of the proceeding.
MR HERZFELD: What your Honour says is right, but I will do two things. One, I am about to take your Honour to some cases which are about, effectively, institution of the proceeding.
GORDON J: Thank you.
MR HERZFELD: Then, I also will subsequently explain to your Honours that that distinction breaks down, in any event. So, can I take your Honours to Spiliada, please. That is volume 10 of the authorities, tab 104, page 3928. Can I just take your Honours to the passages that the joint reasons specifically approve, beginning at page 482 of the print. At 482, letter E, Lord Goff referred to typical advantages:
the plaintiff may derive from invoking the English jurisdiction . . . damages awarded on a higher scale . . . discovery . . . interest; a more generous limitation period –
His Lordship first dealt with “discovery”, but what I wanted to point out is really over the next page at 483, dealing with the scale of damages. His Lordship really said that ‑ ‑ ‑
GLEESON J: You have slipped over that – perhaps that is not the right verb – but the observation here is about whether or not a party can be compelled to accept a well‑recognised system applicable in the appropriate forum.
MR HERZFELD: Yes, and what his Lordship said is that the comparative approaches to discovery, even though one might be more generous than the other, is not something that one could take into account. Then, similarly, in relation to ‑ ‑ ‑
JAGOT J: Sorry, Mr Herzfeld, the bit I do not follow is everything assumes that the proceeding will continue subject to advantage or disadvantage, and the reason you get advantage equals disadvantage is because they are different sides of the same coin. So, one person’s plus juridically is the other person’s minus, but that is in the context of proceedings continuing.
None of this is about the practical fact of proceedings not continuing; it is not two sides of one coin, it is one side – the same side for both parties, i.e., the practical fact is the proceedings will not continue, on their side, and from your side the practical fact is the proceedings will not continue.
MR HERZFELD: That is why I was trying to skip over – I think I would prefer to “slip over” – this discussion to come to the discussion of limitation periods, which does engage with the proceedings not continuing at all. His Lordship then begins to discuss that at ‑ ‑ ‑
EDELMAN J: Are limitation periods recognised as substantive or procedural now?
MR HERZFELD: It might depend on the context that your Honour is asking.
EDELMAN J: In any context.
MR HERZFELD: They would be substantive for choice of law purposes but, for example, for section 79 purposes they may have a different character. In a practical sense, what I want to point out at page 483 is what His Lordship says about the prospect of an action not continuing at all, which is the question your Honour Justice Jagot was asking me.
JAGOT J: It still seems to me there is quite a difference between an action which is in the wrong forum because you can take advantage of a different time bar. What we are talking about here is just the practical fact of whether the proceedings can continue at all.
MR HERZFELD: And taking proceedings in a place where you are inevitably time‑barred means the proceedings cannot continue at all, and that is what His Lordship is expressly dealing with.
EDELMAN J: But the same would be the case if you had, for example, particular damages provisions in one jurisdiction which would allow, say, punitive damages in large amounts and in another jurisdiction which did not allow any punitive damages at all. That is the substantive operation of the law which is to the advantage of one party and to the prejudice of another.
MR HERZFELD: It is not the same as a limitation period because the effect, as His Lordship is contemplating, is that the plaintiff will not be able to bring their claim. That is exactly what, on the applicants’ case, we are dealing with here. What His Lordship says is that if – and I am dealing really here with the letter F:
suppose that the plaintiff allowed the limitation period to elapse . . . and came here simply because he wanted to take advantage of a more generous time bar –
And what His Lordship said at letters G to H is the court would not:
hesitate to stay . . . even though . . . the plaintiffs claim would inevitably be defeated –
So, his Lordship ‑ ‑ ‑
BEECH-JONES J: But a time bar is a legitimate thing for a defendant. Does a defendant have a legitimate thing in denying the financial capacity of the other party to bring a case?
MR HERZFELD: There is no distinction substantively because in both cases the defendant does not want to be sued, and does not want to be sued and relies on something which is available to them – the limitation period – to achieve that outcome. There is also the additional consideration here – which I am going to come to – about the competing policy merits of the two approaches.
GLEESON J: But do have a legitimate interest in not wanting to be sued?
MR HERZFELD: Yes.
GLEESON J: Okay.
MR HERZFELD: A defendant, of course, has a legitimate interest in not wanting to be sued.
GLEESON J: I think you will need to explain that.
MR HERZFELD: That is exactly why a defendant relies on a limitation period.
GORDON J: But I do not understand your reliance on 483 at the moment, because 483 is dealing with the situation where someone has let a period lapse and, in default, has made a choice to take advantage of something. That is not this case.
MR HERZFELD: But the point is that the choice of the plaintiff to take advantage of a forum where they could sue when otherwise they would not be able to sue is not something that the court weighs in the balance.
BEECH-JONES J: If you had a plaintiff in Victoria – forget a GCO – who was just an individual plaintiff – no group action, no funder; average income – who simply said, here is my personal income, I can afford to run this case which is very vital to me in Victoria, but if you move it to New South Wales I simply cannot fund a case there. Do you say that would be irrelevant in the interests of justice?
MR HERZFELD: If that is a reflection of different policy choices by the two jurisdictions, and that is what I want to come to.
STEWARD J: In any event, Mr Herzfeld, this is not a case, as I understand it, where if there is a transfer, the proceeding will not continue. It is just that it is probable that it will not continue.
MR HERZFELD: What your Honour says is right. So, let me move immediately then to our five points about why we say that this is irrelevant.
GAGELER CJ: Before you do, Mr Herzfeld, do you say that passage from Lord Goff at the bottom of page 483 was endorsed somehow in this context in Schultz.
MR HERZFELD: Yes, what I was referring to in Schultz was paragraph 27. The passages to which I took your Honours are the passages – in paragraph 27, your Honours will see the reference to Spiliada:
shows the kinds of consideration that might sometimes be relevant . . . as to the appropriateness –
And your Honours will see the page span of 482 to 484. That is why I took your Honours to those passages. Can I then address our five reasons for the irrelevance of this order.
The first is that to keep the proceeding in Victoria because of the Victorian group costs order regime does involve preferencing Victoria’s policy as to whether to permit class action solicitors to take a percentage of a judgment or settlement over that of New South Wales. That point can be seen, assuming – as Justice Steward correctly points out, which is not actually the evidence, but even on the assumption – that the proceeding will not be maintained, or will probably not be maintained.
The Court is necessarily taking the view that Victoria’s policy choice as to the balance to be struck between the action proceeding, on one hand, and the risks associated with contingency fees, on the other, is to be preferred to the different policy choice which has been taken in New South Wales. That is a highly contestable policy choice. That is because the risks associated with contingency fees are well known – for instance, the acute conflict that they create between the solicitor’s self‑interest in maximising any settlement or judgment with the smallest outlay of time and their duty to clients and courts on the other – but the policy choice of New South Wales, and indeed every other State, is that those risks outweigh the benefit in allowing actions to proceed which could be funded, on this hypothesis, only by court‑approved contingency fees.
GORDON J: Do we have to take into account the terms of the Victorian legislation and the terms of the actual GCO order itself? In other words, that it is subject to ability to amend, vary, et cetera, the ability of the court to, as I understand it, at least have some control over it? Is that part of this analysis, or is that coming at a different point in time?
MR HERZFELD: That comes in at a different point. This level of analysis eschews any kind of policy comparison between the two legislative choices, because if one places weight on the proposition that a transfer to New South Wales would mean the loss of the group costs order and the probable end to the action – assuming that that is so – that necessarily favours Victoria’s different policy choice about how to balance the competing considerations over New South Wales. Your Honours can see the Court of Appeal doing precisely this in the cause removed book at page 32.
GORDON J: Just before we come to that, will you come back to the actual facts, which are agreed in the statement of facts, about the significance of the GCO to the prosecution of the proceeding, which is set out at paragraphs 120 to 125? At an appropriate time.
MR HERZFELD: Yes, I will. Your Honours can see, at page 32 of the cause removed book, paragraph 53, down the bottom of the page, a discussion by the Court of Appeal of the legislative judgment embodied by the Victorian provision. Similarly, at page 46, paragraph 113, in the second half of the paragraph, your Honours will see a description of the legislative policy of the Victorian regime. But that really highlights that New South Wales has taken a different legislative policy choice, and to place weight on the group costs order is necessarily preferencing the Victorian policy choice over that of New South Wales.
Now, this point is a more general one, regardless of whether the loss of the group costs order might cause the action to come to an end. Suppose one is dealing with a case where the solicitor and funder have not said that they will or probably will pull out of the action but for a group costs order, they just prefer a group costs order to having to sign up group members and having a funding equalisation order. To the extent that the court places any weight on the group costs order compared to the different arrangements that might be possible to fund litigation of this kind in New South Wales, one is necessarily preferring the Victorian policy as to the methods of class action funding and contingency fees to that of, relevantly, here, New South Wales.
And it is not an answer to this to say, as the applicants do, that because this matter was in federal jurisdiction and a matter arising under the Corporations Act, the Victorian group costs order provisions apply only via section 79 of the Judiciary Act. The point remains that the factor being given weight is the difference between the policy choices being made by the two States as to class action funding and contingency fees, which is exactly ‑ ‑ ‑
GAGELER CJ: Mr Herzfeld, how far does this argument go? Any difference in the statute law of two jurisdictions is going to reflect a difference in policy choices made by the legislatures of those jurisdictions. Do you say that any difference in statute law cannot be weighed by a court in determining the interests of justice, and if you do not say that, how do you stop yourself from saying that?
MR HERZFELD: If it is a difference which, as here, reflects an advantage to one party and a disadvantage to another, it cannot be taken into account. That is really the second point that I wanted to make.
GAGELER CJ: That is the second point, but what is in the first point that is not in your answer to me that invokes the second point?
MR HERZFELD: Well, in Schultz, they were viewed as two points separately, and I am reflecting to your Honours that level of analysis. That is, that one problem with weighing it in the balance is the competing policy argument; another problem is the advantage of one side over the other. And that, as I say, is the second point.
Assume that this transfer would mean that there would be the loss of the group costs order and the prospect that the proceeding will not continue. That operates correspondingly to the disadvantage of the respondents in a number of ways. One, is the one that I have already mentioned, which is that they are required to defend a proceeding that they would otherwise not have to defend. But it is not just that. They are required to do so in a forum which is not the most appropriate one with the attendant costs and inconvenience of doing so, and they are required to do so where the opposing solicitors have self‑interest in maximising the size of the claim which interest would otherwise not be present if the proceedings were in the natural forum.
GLEESON J: Well, that might be another factor to take into account.
MR HERZFELD: Well, in our submission, all of this is a reason why it operates correspondingly to the disadvantage of the respondents and why it is a matter that should not be taken into account at all.
BEECH‑JONES J: That submission sounds like an adverse comment on the policy choice of Victoria.
MR HERZFELD: It is simply a factual matter that the respondents have to deal with if this matter is taken into account.
BEECH‑JONES J: Well, it sounds like, how dare they litigate in Victoria because the solicitors will act unethically down there.
MR HERZFELD: It is undoubtedly the case that the respondent will be facing a proceeding it otherwise, on this assumption, would not have to face with the other features that I have mentioned.
EDELMAN J: Is there any authority that says that being a defendant is itself a legitimate and substantive factor to consider?
MR HERZFELD: Well, that, as I say, is the consequence of a limitation period being able to be relied upon.
EDELMAN J: Except Lord Goff in Spiliada goes on to say that there may be conditions that are imposed which require the defendant to waive the limitation period that would make them a defendant.
MR HERZFELD: But not in the example that I showed your Honours. His Honour was talking about other categories of case.
GORDON J: Just before you go on, how then do you also answer paragraph 113 of the Court of Appeal’s decision, in the sense that you say it is a disadvantage to the respondents. They have to face a claim they would not otherwise face – they have to defend a claim they would not otherwise have to defend, and in the context where there is the GCO considerations – but on the other side – and I do not think it is equal sides of the one coin – is what is 113. Do you dispute the way they have put that about access to justice?
MR HERZFELD: We do.
GORDON J: Why, and how?
MR HERZFELD: So, the pejorative label of denying access to justice can equally be pressed in relation to the defendant who proposes a transfer to a more appropriate jurisdiction with a shorter limitation period that would have expired before the plaintiff commenced their action. In fact, that example is even sterner on the plaintiffs than the present because, in that example, the transfer will necessarily lead to the plaintiff’s action failing. But here, as your Honour Justice Steward pointed out, the agreed facts do not go this far. The highest they go in 121 of the agreed facts is there is a probability if there is no group costs order that the proceeding will be unable to continue due to the funder’s voluntary decision not to fund them. So, the termination of these proceedings would result as a result of the insufficient prospects of the claim as judged by the funder.
GORDON J: I do not know that is – well, only can read 121 on its own, Mr Herzfeld, which is the reason why I asked you to consider 120 through to 125, because it is a bit more nuanced, I think, than that.
MR HERZFELD: I am going to come back to those other paragraphs. The point I was making was the termination of these proceedings, if that is what occurs, will be the result of the funder’s choice not to proceed with the action because of its judgment about their merits, effectively.
Similarly – and I have already touched on this – this Court in Schultz rejected the relevance of section 11A, and that was on the assumption that 11A would nonetheless give the plaintiff a further advantage not available in a more natural forum, which would mean that the plaintiff would actually be cut out of an entire claim if they developed a future disease – dust disease. That was not a permissible consideration, even though, to use the pejorative expression – which we do not accept – the consequence is the plaintiff there would be denied access to justice in relation to that future dust disease. That is because there was a corresponding detriment to the defendant in being exposed to that future claim, and Schultz says it is just an irrelevant matter.
The plaintiffs here also are not comparable to the terminally ill patient in Schultz. For one thing, the imminent death of a plaintiff is not akin to a threat by a funder to withdraw support from a proceeding that it judges to be of such prospects as not to warrant speculation unless the proceeding is maintained in the jurisdiction which gives the plaintiff and the funder and the solicitors the most advantageous remuneration.
But the terminally ill plaintiff in Schultz was actually a case involving mutual considerations between the parties. Their Honours were talking about expedition. Expedition might mean that the plaintiff does not die before the trial, but that does not actually disadvantage the defendant because, in fact, the defendant may prefer the plaintiff to be alive so that they are available for cross‑examination. So, the circumstances here are not equivalent at all to the ‑ ‑ ‑
EDELMAN J: Sorry, a dead plaintiff will continue an action and that would be an advantage to the defendant?
MR HERZFELD: No, I am sorry, I have done that too quickly. Their Honours in Schultz said that the fact that the plaintiff was terminally ill and might get a more expeditious hearing in one forum than another was something which could be taken into account, and – two points: one, actually having the more expeditious hearing may in fact not just advantage the plaintiff, it may advantage all parties because the plaintiff is alive and able to be cross‑examined; secondly, even if the plaintiff dies, their action would actually continue, so you are not dealing with a ‑ ‑ ‑
BEECH‑JONES J: But not their general damages claim.
MR HERZFELD: That is true.
BEECH‑JONES J: A defendant would, I suspect, much prefer that, would they not?
MR HERZFELD: Not necessarily. It will depend, for instance, on a whole range of factors, including the cross‑examination of the plaintiff. So, it is not the case that a terminally ill plaintiff and a more expeditious venue for hearing presents the same kinds of issues as in this case.
EDELMAN J: It is a very ambitious submission.
MR HERZFELD: I am going to take that as a compliment, your Honour.
BEECH‑JONES J: In Spiliada, the qualification was that the time bar would not, effectively, be invoked if it appeared that the one party had acted reasonably in commencing in the relevant forum.
MR HERZFELD: And that – sorry, your Honour.
BEECH‑JONES J: Would that not suggest that if a party had commenced, that had otherwise acted reasonably in Victoria, that the potential loss or shutting‑down of the proceedings from the loss of the GCO would be a factor?
MR HERZFELD: In Spiliada, of course, their Honours are dealing with a different legal test, which has, effectively, a carve‑out, or more flexible carve‑out at the end – point number one. But point number two, what his Lordship was really contemplating was, where it was highly contestable, which was the correct forum, and you have reasonably chosen one, and then the limitation has expired while you litigate about the correctly forum. That is not this circumstance. The circumstance here, as I have shown your Honours, is not a choice of, really, contestable forums but for the GCO.
GORDON J: Can I just ask one more question about this disadvantage point. The cases you have taken us to are looking at what you might call juridical advantages and disadvantages, i.e., it is the changing of rights. What is the juridical disadvantage to you, at all?
MR HERZFELD: In the same way as a defendant who cannot rely on a limitation period, that the action will continue and it will continue in the less appropriate forum, and it will do so with the difficulties or the risks associated with contingency fees that would otherwise not be present. What this ultimately comes down to on this assumption is the court not acting in an even‑handed way between the parties, but preferencing the continuation over the action – over the fact that it cannot take place – and that cannot be regarded as the court dealing even‑handedly.
The third point is that, far from being ruthless in ensuring litigants do not engage in forum shopping, the Court of Appeal recognised that that is what would occur as a result of the group costs order regime. To answer your Honour Justice Edelman’s question about what I mean by that, the instituting in a forum which is not the appropriate one in order to gain an advantage – and that is what is the Court of Appeal said would inevitably happen as a result of taking into account a group costs order which had been made in a decision like this.
GLEESON J: But it is not just an advantage, is it? It is access to justice.
MR HERZFELD: Your Honour, I have made my submissions about why that pejorative label, or beneficent label and the pejorative equivalent, of us denying access to justice is not a ‑ ‑ ‑
GLEESON J: Why do we not use the language of “stultification of proceedings” then.
MR HERZFELD: Causing the proceedings not to be able to continue on that assumption in exactly the same way as relying on the limitation period ‑ ‑ ‑
EDELMAN J: But for reasons – it is not exactly the same, is it? I think this is the point that a number of the questions have been trying to get at. There is a very substantive difference between the content and application of the substantive law and the procedural question about whether or not that substantive law can be litigated.
That seems to me to be a very significant difference between a GCO, on the one hand, and a limitation period on the other – which might be analogised, for example, to legislation in one jurisdiction which says, in this circumstance, you can only recover $1 damages, and legislation in another jurisdiction which says, you can recover $1,000 damages. Even in a limitation period, you can still prosecute your action. The prosecution might lose if the limitation period is pleaded, but that is the question of the substantive law.
MR HERZFELD: Two points. As a practical matter, what Lord Goff was dealing with was inevitable failure of the action because of an obvious limitation bar. In the real world, that distinction breaks down. But secondly, here, prior to the introduction of the group costs order regime, we proceed on the assumption that is relevant to these submissions that the funder will not support this action without the group costs order.
Prior to the introduction of the group costs order regime, it is implicit that the funder would have withdrawn their support for this action. That would not have been an injustice. It does not become one now just because there is now, in a less appropriate court, the group costs order regime. That is another reason why it is just not, with respect, helpful to be concerned about stultification or access to justice because, but for the group costs order regime, the funder would have had the same choice that it had before. So, it is not ‑ ‑ ‑
GLEESON J: But we are talking about the interests of the representative plaintiffs. The funder is making decisions based on market considerations, and they may or may not benefit the group members.
MR HERZFELD: But that rather highlights the irrelevance of the matters, because what has been put is that, because of the funder’s decision about whether this is a viable action or not, it has to proceed in a jurisdiction which has made particular policy choices, as opposed to another one, which is the more appropriate forum, to the commensurate disadvantage of the defendants in facing the action. And that is not the court, with respect, being ruthless, to ensure that litigants do not engage in forum‑shopping.
Now, the Court of Appeal here said that the “concept of forum shopping” has “less potency”, given that the Corporations Act regime confers jurisdiction on each court directly. But, as I said earlier, actions under the Corporations Act involve facts and parties which often have a greater connection to one place or another, in the same way as any other kind of action. And so, it is not the case that the evil of forum shopping just evaporates in a Corporations Act context. It is precisely the same kind of consideration in the Corporations Act transfer regime as it is under the Cross‑vesting Act.
That is evidenced by the explanatory material to the predecessor provisions. In the interests of time, I will just give your Honours the references. I am referring to the explanatory memorandum to the Corporations Legislation Amendment Bill 1990, and I am referring to internal page 60, paragraph 173. It refers to the regime ‑ ‑ ‑
BEECH‑JONES J: Mr Herzfeld, is that in the joint materials?
MR HERZFELD: It is. I was not sure who was using it. Authorities volume 12, tab 118, page 4306.
BEECH‑JONES J: Thank you.
MR HERZFELD: That regime was substantially reproduced in the Corporations Act. On the applicants’ case, they could have commenced this case in New South Wales and then sought a transfer to Victoria in order to get a costs order, even though there were a preponderance of factors connecting the matter with New South Wales. The applicants appeared to embrace that possibility in their written submissions at paragraph 22. It is not just a hypothetical possibility.
In the recent Blue Sky Case, in relation to which your Honours have granted special leave and about which I will say something at the end of my submissions, the Full Court observed at paragraph 14 that the applicants and the solicitors there had agreed to apply to cross‑vest the matter to the Supreme Court of Victoria unless the Federal Court was able to grant a solicitors’ common fund order. That ultimately did not happen, because of the Full Court’s view of its power in that case, but Blue Sky is a real case in which the magnetic effect of the Victorian group costs order regime can be seen even for proceedings commenced elsewhere, where someone is then seeking to transfer them to Victoria.
The fourth point that we make – and this comes onto the facts about which your Honour Justice Gordon I think has asked me a couple of times – is that the applicants are not assisted by the fact that, when determining the group costs order application, Justice Dixon found it was necessary to do justice in the proceeding. His Honour, obviously, was reaching that conclusion in the context of that language in the Victorian provision itself.
It does not follow from the fact that the existence of a group costs order is relevant to the question posed by the Victorian provisions that it is also relevant in a quite different context of deciding which is the more appropriate forum. They are quite different inquiries, notwithstanding the use of the term “justice”. Schultz demonstrates that the meaning of the content of an expression like “interests of justice” depends on the context, and that is important then in understanding what his Honour Justice Dixon said.
If your Honours turn to page 341 of the core appeal book, please. That is his Honour’s reasons, and if your Honours look at paragraph 12 of his Honour’s reasons your Honours will notice here, in paragraph (c), his Honour was distinguishing 33ZDA from the gap‑filling provision which your Honours considered in Brewster – the same language but in a different context and they serve different purposes. Then paragraph (j), his Honour again referred to the fact that – referred, rather, to the specific context of the language “justice is done in the proceeding” in the Victorian legislation.
Similarly, if your Honours turn to paragraph 92 of his Honour’s reasons, in the last sentence, that statement is obviously made in the context of interests of justice under the State legislation, and your Honours can see how strikingly different that kind of conclusion was from the conclusion of this Court in Brewster, notwithstanding the same kind of language, a very different notion of interests of justice because of the particular context.
That is then the context for his Honour’s conclusions at paragraph 105, and in particular his Honour’s conclusion in paragraph 105(e). That conclusion at (e) is all through the prism of the operation of the Victorian Act, and that is then replicated in the paragraphs of the agreed facts, particularly 124 and 125, about which your Honour Justice Gordon asked me.
Just because a conclusion is couched in the language of justice being done in the proceeding does not mean that that translates simply into the terms of section 1337H because they are quite different contexts. The Victorian provision is all about making a group costs order and, therefore, allowing an action to proceed with a group costs order. It is a quite different context than what 1337H is referring to.
GAGELER CJ: Mr Herzfeld, how are we going for time?
MR HERZFELD: I said I had five points, and I have done four of them, about question 1. If that is ‑ ‑ ‑
GAGELER CJ: I am following that. I am asking are you – no doubt the parties have an agreed allocation of time ‑ ‑ ‑
MR HERZFELD: We have, and I will be ‑ ‑ ‑
GAGELER CJ: And you are within your allocation?
MR HERZFELD: I am.
GAGELER CJ: Well, we will take the morning adjournment.
AT 11.21 AM SHORT ADJOURNMENT
UPON RESUMING AT 11.34 AM:
GAGELER CJ: Your fifth point, Mr Herzfeld.
MR HERZFELD: Yes, and that is to return to a point that I already touched on, which is the fact that the difficulties in this proceeding could and should have been avoided by determining the transfer application first. Where a defendant seeks a transfer of proceedings to a more appropriate forum, it undermines the policy of those provisions to determine some other application made by the plaintiff first and thereby provide an anchor to the forum that otherwise would not have existed.
That is, in substance, to add weight to the plaintiff’s choice of forum and, worse, it involves the court at the behest of the plaintiff altering what is in the interests of justice after the application for a transfer has already been made. It would allow the plaintiff to institute in a manifestly inappropriate forum simply to obtain a benefit available there and nowhere else, and then to resist a transfer to what would otherwise have been a plainly more appropriate jurisdiction precisely as a result of its choice in having instituted in the inappropriate forum. So, two things. Firstly, the Court should make clear that the procedural course adopted here ought not to be replicated. But we take the point further.
GORDON J: Always?
MR HERZFELD: Yes, for the reason we have just given. But we take the point further, which is that, to avoid the subversion of the transfer provisions, one has to put aside when considering the transfer application the group costs order, because it would not have been made had the transfer application been determined first, as it should have been.
GORDON J: Can we just test that proposition. If you do the transfer application first, do you take into account the GCO being potentially made or, on your analysis, you just never take it into account?
MR HERZFELD: You never take it into account.
GLEESON J: Why not?
MR HERZFELD: For the reasons that we have given – reasons 1 to 4 – but also because it is something that should never have been available in the first place if the plaintiff had instituted in the correct forum.
GORDON J: “Correct” is not the right word, is it?
MR HERZFELD: I have used “correct” as a shorthand; the more appropriate forum.
GORDON J: And in the submission you just made, you said it was an inappropriate forum. This is not an inappropriate forum. We are not in that territory. So, does that alter the submission you seek to make?
MR HERZFELD: Again, I was using “inappropriate” to mean not the more appropriate forum.
GORDON J: Thank you.
MR HERZFELD: The Court of Appeal really gave a number of reasons against the proposition I have just advanced, and neither would stand scrutiny. One is that we did not seek leave to appeal the decision to grant a group costs order, and that is just irrelevant. It is not about whether the group costs order should have been made on its merits; it is the fact it should not have been a procedure available at all.
Another is that we did not seek leave to appeal the decision about the order of the applications, but the correctness of that procedural course arises now, very much in the same way as one can appeal a final order and, as part of doing that, can complain about interlocutory orders made along the way that affect the final order. We do not, as the Court of Appeal suggested at paragraph 128 of its reasons, seek to have the transfer application decided on a false premise; it is simply a matter of putting aside as irrelevant to the interests of justice an anchor to the forum which exists only as the applicants were effectively successful in their forum shopping.
Can we then pick up some points made by the applicants in this Court but not the Court of Appeal. The applicants seek to distinguish the Cross‑vesting Acts, and hence Schultz, from section 1337H. One way they seek to do that is because section 1337H uses the words “may” transfer, whereas the Cross‑vesting Acts use the language of “shall transfer”. We make two responses to this. The first is that while there are some first‑instance authorities that do suggest that the word “may” confers a residual discretion not to transfer, in contrast to the use of the word “must” in subsection (3), there are real difficulties with that view.
It is hard to see how a court could conclude that a transfer is more appropriate in the interests of justice but then have a discretion not to transfer, and that rather tends in favour of the view that “may” is used in the Julius v Lord Bishop of Oxford sense. If that is right, then there is no difference between the two regimes. Even if there is, however, some residual discretion in the Corporations Act regime, it could not possibly allow taking into account a matter which, if our earlier submissions are correct, must not be taken into account in assessing the interests of justice, because that would cause the provision to be internally incoherent.
The applicants also make a submission that the purpose of section 1337H is fundamentally different from the Cross‑vesting Act. I have already addressed this in part. The applicants point to the fact that the Corporations Act regime operates to the exclusion of the Commonwealth Cross‑vesting Act. That is true, but irrelevant. The Corporations regime has long had its own cross‑vesting provisions, basically because of the different legislative bases upon which the Corporations regime in this country has rested at various different times, over time.
Again, I will just give your Honours a reference to the explanatory memorandum to the Corporations Legislation Amendment Bill 1991, that is authorities book 12, tab 119, at internal page 42, paragraph 138. That explains the reason why there is a special Corporations Act cross‑vesting regime. It is not because it is dealing with a different problem, it was the different legislative bases.
The applicants point to the fact that recitals (a) and (b) of the Cross‑vesting Act (Cth) do not have direct equivalents in the Corporations Act, and they also focus on, rather – I am sorry, paragraphs (b) and (c), but paragraph (c) does nothing more than replicate the text of the provision, and in relation to paragraph (b), one finds exactly the same kind of expression of legislative purpose in the explanatory memorandum that I have already referred your Honours to. So, there is no substantive difference between the cross‑vesting regime and the Corporations Act transfer regime that would make the analysis in Schultz inapplicable.
Finally, in relation to question 1, can I deal with a point rejected by the Court of Appeal but maintained by the applicants in this Court by notice of contention. Would your Honours take up the cause removed book, please, and turn to page 38. Your Honours will see, at paragraphs 73 to 75, the argument summarised. The argument is that:
a transfer can only be made to a court that ‘has jurisdiction in the matters for determination in the relevant proceeding –
And the argument made by the applicants was that:
jurisdiction –
here really:
includes power.
So, the Supreme Court of New South Wales – so the argument runs – does not have jurisdiction in the matters in the proceeding because it does not have power to make group costs orders. That is the argument. The Court of Appeal rejected that argument for the reasons at paragraphs 99 to 101. We support and adopt that process of reasoning.
We rely, in addition, on what we have put in our written submissions at paragraph 66. That is, that the reference to “matters” – to the matter – is not to the court’s individual powers but to the dispute generally. If it were otherwise, an individual State could effectively stymie the cross‑vesting regime or the Corporations Act transfer regime by giving its courts particular powers that no other State court has. That rather points out the fact that, although the language of matters for determination is expressed in the plural, it is really akin to the constitutional concept of a matter. The Federal Court said that in Re Wilcox (1996) 66 FCR 511 at page 520. So, the threshold argument which the applicants maintained in this Court again was correctly rejected by the Court of Appeal.
GAGELER CJ: Mr Herzfeld, can I just try to understand the gist of the argument that you put on question 1. The proposition is that the making of a GCO is not relevant to the exercise of power under section 1337H(2). That must be because you say that that is not a consideration that bears on the interest of justice, as I understand it. What is it exactly that you carve out of the concept of interest of justice? It seems to me one, possibly two things. The possible thing is any consideration that involves a policy choice by a legislature, but I think you have disavowed that. The other is any consideration where there is an advantage to one party that is matched by a disadvantage to another party. Is that it?
MR HERZFELD: I understand your Honour is seeking to encapsulate what I hope is a level of detail but ‑ ‑ ‑
GAGELER CJ: I am hoping to relate it to the statutory language and understand it as an irrelevant consideration.
MR HERZFELD: I understand. The short answer to your Honour’s question is yes, and that is how we understand the reasons in Schultz. The additional aspect of those reasons does focus on the court avoiding having to make policy comparisons, but really does so in the context of advantages and disadvantages. Can I then turn to question 2.
STEWARD J: Just before you do, that is driven by the need for evenhandedness in applying which is the more appropriate forum?
MR HERZFELD: Yes, evenhandedness both between the parties and between policy choices made by different legislatures. The first part of question 2(a) is this: we say that the fact that a group costs order has been made is immaterial to the question of a transfer because section 1337P(2) permits the group costs order which has been made to travel with the proceeding to the Supreme Court of New South Wales.
Would your Honours take that provision up again, please. Read on its terms, it provides that if any order has been made prior to the transfer, which here would include the group costs order, the transferee court must, subject to any order of the transferee court, deal with the proceeding as if that prior order had been made in the transferee court.
BEECH-JONES J: Sorry, where did you read that from?
MR HERZFELD: Section 1337P(2). I am sorry, I was ‑ ‑ ‑
BEECH-JONES J: Paraphrasing.
MR HERZFELD: I was paraphrasing, not reading.
BEECH-JONES J: Yes, because the word is “steps”. You are treating them as synonymous, are you?
MR HERZFELD: Yes, and your Honour will see “including the making of an order” is in brackets. But I am sorry, your Honour, yes, if I was not clear, I was paraphrasing.
BEECH-JONES J: Yes, all right.
MR HERZFELD: So, the Court of Appeal read a qualification into that provision as if it concluded: provided that the transferee court has the power to take those steps or similar steps. We make five points orally as to why that was wrong.
The first is that it reads words of limitation into the provision which simply are not there. It is suggested in reply by the applicants that there is something to be gained from the fact that the provision does not say all steps, but it does not need to because it says “the steps” which have been taken. That is the first point.
The second point is that the limitation recognised by the Court of Appeal is not supported by any aspect of the terms of the provision. The Court of Appeal fixed on the words “or similar steps”. The purpose of those words is to ensure that if subsequent steps in the transferee court are dependent on specific steps having been taken, the transferee court may treat similar steps taken in the transferor court as satisfying that criterion. For example, in New South Wales, interlocutory applications are made by notice of motion and certain steps follow from a notice of motion having been filed.
If a proceeding is transferred from a jurisdiction where interlocutory applications are made by summons, like the Supreme Court of Victoria, a party who has made an application by summons before the transfer does not have to refile that application as a notice of motion if one is transferred to New South Wales because the words “or similar steps” facilitate a smooth transfer in that way. But those words are not rendered otiose by reading this section as covering orders that the transferee court would not itself have power to make. Indeed, the use of those facilitative broadening words rather tends against any narrowing of this provision. That is the second point.
Staying, still, with the terms of 1337P – and this is still part of my second point – the qualification is not supported by the fact that 1337P is a deeming provision. Indeed, that rather supports that the transferee court need not have a source of power to make comparable orders and that is because a deeming which creates a statutory fiction is equally capable of operating whether the orders are ones that the transferee court could or could not have made.
BEECH-JONES J: Mr Herzfeld, I may have this wrong, but I understood one of the arguments against you is not that it is a deeming, but it has the transferor court proceed upon an assumption that the step has been taken.
MR HERZFELD: Yes.
BEECH-JONES J: So, it is not as though order magically springs into life as an order of the Supreme Court. It is simply that the Supreme Court of New South Wales is, in proceeding forward, to assume that those steps have been taken.
MR HERZFELD: Yes.
BEECH-JONES J: Deal with it as you wish, but that is – and maybe I am wrong – what I understand was part of the argument against you.
MR HERZFELD: But whether one refers to it as a “deeming” or an “assumption”, it is this provision which gives to those that assumption not only its content but its legal efficacy, because all of this is occurring, necessarily, in federal jurisdiction where this provision is therefore capable of specifying – this division is capable of effectively empowering the transferee court, if necessary, and relevantly therefore giving legal efficacy to the assumed state of affairs it commands to be adopted.
BEECH-JONES J: I understood the difference would be, in example, say, in New South Wales, you could not take a particular step until the document had been filed. You would assume that the document had been filed, as it were, in Victoria, but it would not bring into life an order not made. The New South Wales court would henceforth proceed as though it had been made, but not actually give it life. That is as I understood it.
MR HERZFELD: Yes.
BEECH-JONES J: But you take your course.
MR HERZFELD: The submission we would make in response is that that is, again, reading a more limited effect to this provision than is required on its terms.
GLEESON J: So, what does “deal with” mean in this context?
MR HERZFELD: So, it is “deal with the proceeding”, so obviously this is on the assumption that the proceeding has been transferred and so “deal with” here simply means conduct, manage here the proceedings. That then brings me onto my third point, which is the evident purpose of this provision. It is to ensure that if there is a transfer, previously taken steps will inure to the benefit of the parties and the transferee court, and it does not best give effect to that purpose, which is what the Acts Interpretation Act requires, to read in the limitation which has the result that some previously taken steps will not do so.
Indeed, on the Court of Appeal’s approach there will inevitably be disputes in the transferee court about whether some previously taken steps do not inure for the benefit of the parties in the transferee court, and that is apt to interrupt the purpose of ensuring a smooth transfer of proceeding. That interruption could be quite radical because the applicants’ position countenances this possibility: suppose that the legislation of one jurisdiction empowers the making of orders for the costs of interlocutory disputes and an order is made after such an interlocutory dispute. There is then a transfer of the proceedings to another court where, on this assumption, the power to make costs orders about interlocutory disputes is limited in some way. For instance, limited only to exceptional circumstances, and those circumstances would not have covered the circumstances here.
On the applicants’ approach, in those circumstances the previous costs order would evaporate, and the same kind of problems will arise because different courts across different jurisdictions in Australia have different powers when it comes to things like security for costs orders against individual residents in Australia as well as costs orders against third parties. Indeed, on the applicants’ approach, the nature of a previous interlocutory order could change.
Suppose you have legislation of one jurisdiction that empowers not only the making of a costs order for an interlocutory dispute but also an order that those costs not be payable until the end of the proceedings such an order is made, but if you have a transfer to another jurisdiction where there is no power to order that interlocutory costs orders are payable only at the end of the proceedings, on the applicants’ approach the costs order of the interlocutory dispute will travel, but the fact that it is not to be payable until the end of the proceedings will not travel and so the costs order is now immediately payable in the transferee court.
All of those complexities are avoided if the provision is simply read on its terms and doing so is consistent with the purpose of ensuring a smooth transfer which is evidenced by provisions like 1337N and 1337Q, to which I already drew your Honours’ attention.
GAGELER CJ: If you are right, that the group costs order travels with the proceeding to New South Wales, can it be amended in New South Wales?
MR HERZFELD: Yes, and that is question 2(b) and I will answer that in a moment. I will explain why. The applicants do not get anything out of 1337L(c). Again, this is using the word “jurisdiction” in the way I explained earlier, so it does not suggest that the transferee court must have power to make the order itself.
There is no – and this is the fourth point – support in any of the extrinsic material for the Court of Appeal’s construction. Again, I will just give your Honours a reference to the explanatory memorandum for the predecessor provision. The predecessor provision was section 54(2) of the Corporations Act1989. The explanatory memorandum is that to the Corporations Legislation Amendment Bill 1990, volume 12, tab 118, page 4306. At internal page 61, paragraph 179, there is a description of the purpose of the provision, and there is no suggestion it is limited in the way that the Court of Appeal said.
The applicants seek to make some point about the fact that the predecessor provision in subsection (1) employed the concept of “relevant jurisdiction”, but it adopted the same structure as 1337P that I pointed out to your Honours. That is, the relevant jurisdiction is only relevant for subsection (1); it has no relevance at all to subsection (2), which is what we are concerned with.
The fifth point we make is that the suggestion by the Court of Appeal of complications if a plain approach to this provision is adopted is considerably overstated. One difficulty the Court of Appeal pointed to was the powers of the transferee court to deal with the order – I will come back to that. Another difficulty the Court of Appeal pointed to was an undetermined application – so, an application made before the transfer – and it is known that if there is a transfer, that application will fall on barren ground because it will not be able to be determined by the transferee court. The answer to that is that the transferor court will know that that is the circumstance and can make a decision about whether it is appropriate to allow that to occur or not. If it decides it is appropriate to allow that to occur, the transfer will proceed.
There was another difficulty which the Court of Appeal pointed to which is, with great respect, difficult to understand. Their Honours seemed to point to some inconsistency or difference between 1337P(2) and section 79 of the Judiciary Act. That is not a difficulty at all, because they are quite different provisions. Section 79 of the Judiciary Act does not create a deeming or an assumption in the way that 1337P(2) does, so it is unsurprising they operate differently. Further, in any case, section 79 of the Judiciary Act is expressly subject to any other Commonwealth law, and section 1337P(2) would be such a law.
STEWARD J: Mr Herzfeld, can I ask you a question. If the order does not travel under 1337P(2), would it be nonetheless open to a court of New South Wales to make an order of the kind that Justice Dixon did with the consent of the parties?
MR HERZFELD: I think the answer to that is no, because the court would not have any power to make the order and the consent could not enlarge the court’s power.
STEWARD J: Why is that? I know what section 183 says.
MR HERZFELD: Your Honour has asked me about the consent of the parties, and if the court does not have power to make the order, the consent could not give it to them.
STEWARD J: I accept that. Why would the court not have power?
MR HERZFELD: That is raising a question a bit like the one that is at issue in the Blue Sky Matters. I want to say something about those at the end of my submissions.
STEWARD J: Very good.
MR HERZFELD: The applicants then maintain, in this Court, that there is some constitutional difficulty if section 1337P(2) is read on its terms. We have addressed this in paragraphs 60 to 62 of our written submissions in chief, and we rely on those submissions as well as those of the Commonwealth at paragraphs 40 to 58 of the Commonwealth’s written submissions. May we make these points very briefly, orally.
The first, is that there is no head of power problem. Either this is an exercise of the Commonwealth’s power to make laws regulating the exercise of federal jurisdiction or, if not, the power was expressly referred by the State parliaments as the text of section 1337P(2) was the express subject of the reference.
As to a Chapter III problem, there is no problem of enlistment of the State Supreme Courts to pursue any legislative or executive policy by reason of the effect of 1337P(2). Quite apart from all the other reasons why this may be so, the transferee court has the power to make an order which displaces the effect of 1337P(2) in terms. So, there can be no enlistment of the court if it is free to discharge itself from the effect of 1337P(2).
Can we then come on to question 2(b). This answers your Honour the Chief Justice’s question. We point to three sources of power to revoke or vary the group costs order. The first is section 1337P(2) itself. It deems the order to be enforced subject to any order of the transferee court, and they are, in our submission, an express conferral of power to displace what would otherwise be the effect of 1337P(2).
Even if they are not an express conferral of power, they imply such a power as it is reasonably necessary in order for the provision to achieve its purpose. Again, that best achieves the purpose of 1337P(2) so as to ensure a smooth transfer and not to leave the continuation of orders dependent on whatever powers may or may not exist in the transferee court.
GAGELER CJ: What are the criteria that govern the exercise of that power?
MR HERZFELD: It is not stated expressly in 1337P. One suggestion might be that it is the interests of justice which is consistent with the transfer provisions itself, and also the general power to deal with previous interlocutory orders. That would seem to be the soundest suggestion.
BEECH-JONES J: Would it not, in New South Wales, be affected by the public policy of that forum, as reflected in section 103 of the Legal Profession Uniform Law?
MR HERZFELD: It would, but that would feed into the question of the interests of justice because the proceedings are now to continue in New South Wales in the more appropriate forum.
BEECH-JONES J: Thereby creating the vulnerability that Mr Gleeson talks about.
MR HERZFELD: That may well be so. We do not contest the fact that the New South Wales Supreme Court would have to consider for itself whether to make an order of this kind. The appropriate way of doing so may well be the appointment of an amicus to assist it, and those kinds of arguments no doubt have to be determined.
BEECH-JONES J: In a very different context to Victoria.
MR HERZFELD: Yes.
GORDON J: Can I ask just so I understand, is your contention that when you say “to make an order”, I had understood that you suggest it could be both power to vary and revoke.
MR HERZFELD: So, I have dealt first of all ‑ ‑ ‑
GORDON J: I had understood what you were to then say was making an order – I just want to understand.
MR HERZFELD: I am sorry. The order that 1337P(2) empowers is an order that would, in substance, displace or revoke the group costs order.
GORDON J: Thank you. In whole or in part?
MR HERZFELD: That is the next point that I was about to make. It could do so – because, effectively, the greater includes the lesser. If it can displace it entirely, it can displace it in part by reason of 1337P(2). That is our first answer as to the source of power. The second answer is that the Supreme Court of New South Wales does have power under section 183 of the Civil Procedure Act, which is the equivalent provision to the one that your Honours considered in Brewster.
Here, we are not dealing with whether the Supreme Court of New South Wales would, by that provision, be given power to make a group costs order. Rather, it is that that provision in its usual gap‑filling role would allow the Supreme Court to vary or discharge a previously made order which is deemed to be in force by reason of 1337P(2). That is a quintessentially gap‑filling role of the kind that section 183 and its equivalents are designed to fill. That is the second source of power.
The third source of power is that it has long been accepted that every court has power to vary or discharge any previously made interlocutory order. Now, that is sometimes said to be an inherent power, but in truth, it is simply a power which is necessary for any court that possesses the power to make interlocutory orders, because those orders are, of their nature, orders that may require revisiting before the conclusion of proceedings.
That power is not contrary to the applicants’ submissions limited to procedural orders. As explained in well‑known cases like Nominal Defendant v Manning, it can extend to orders that affect substantive rights, provided they are interlocutory in the sense that they may require revisiting. For instance, the appointment of a provisional liquidator or the grant of an interlocutory injunction. Those interlocutory orders do affect substantive rights, and yet, nonetheless, can be revisited by a court.
Certainly, both the group costs order legislation and the order itself here contemplate that the group costs order may require revisiting. This is an answer to your Honour Justice Gordon’s question – your Honour asked me about the relevance of that aspect of the orders. In our submission, where it comes in is the fact that it is clear that the group costs order is an interlocutory order which is capable of being varied or revoked.
Now, the power to vary or revoke interlocutory orders that I have just been discussing, we accept, is ordinarily a power to revisit previous interlocutory orders made by that court, but given that the effect of section 1337P(2) is to deem the order to be one that was previously made by the transferee court, that order becomes one by force of the statutory provision, which is subject to the ordinary power of the court to revisit previously‑made interlocutory orders.
EDELMAN J: According to the terms of the legislation under which the order was made?
MR HERZFELD: The question would be the usual question, when it comes to revisiting interlocutory orders, which, in cases like Nominal Defendant v Manning, is expressed as the interests of justice.
BEECH‑JONES J: I thought you disavowed the – I thought the answer to Justice Edelman’s question from mine was no. You accept that a New South Wales court would approach it from a different perspective?
MR HERZFELD: And so, what would feed into the interests of justice in New South Wales would not be the same as the considerations under the Victorian legislation. Your Honour Justice Beech‑Jones is correct.
BEECH‑JONES J: I am sorry, I intervened too early.
MR HERZFELD: No, no, your Honour is correct.
GORDON J: Just so I am clear – different perspective – not by reference to the terms of the Victorian legislation but considerations at large of interests of justice?
MR HERZFELD: Yes.
GORDON J: Is that the only – is that the test?
MR HERZFELD: I have accepted both – that certainly would be the case under the usual power to do with interlocutory orders, and in answer to the Chief Justice, motivated partly by that and also partly by the language of the transfer provision, I accepted that that was the best expression of the test for 1337P(2) itself. It is also the kind of language which is used in section 183 of the Civil Procedure Act, and so that would be the appropriate framework on each of the different sources of power that we rely upon.
GORDON J: You may not need to answer this, and may not want to answer it, but what is taken into account? What are the factors that are relevant to that kind of inquiry absent the legislation that is in place in Victoria?
MR HERZFELD: I think I answered that to the extent that is possible in the abstract in answer to my question to Justice Beech‑Jones, which is that it would include the New South Wales provisions about contingency fees. It would also include, presumably, an argument about the effect that it will have on the proceedings, and these would all be matters that the New South Wales Supreme Court would need to determine how to thrash out, including quite probably the appointment of an amicus. The reason I say that is because, as was the case when the group costs order application was made before Justice Dixon, we, for our part, would propose to take quite a limited role in that kind of application, and the court would probably benefit from the assistance of an amicus.
GAGELER CJ: But one way or another, you would say that the inquiry is a different inquiry from what is necessary to do justice in the proceeding within the meaning of section 33ZDA.
MR HERZFELD: Yes.
GLEESON J: And do you say that the New South Wales Supreme Court would have power to enforce the GCO?
MR HERZFELD: Yes.
GLEESON J: That is entailed in the idea that it can travel.
MR HERZFELD: Yes.
GLEESON J: Yes.
BEECH‑JONES J: Mr Herzfeld, could I ask you just one question about 2(a), just very briefly. I think your – question 2(a), which is about 1337P(2). Is that a convenient time for you? Your argument is that regardless of whether the Supreme Court of New South Wales has power to make the GCO, the effect of that provision is that the order made by the Supreme Court of Victoria becomes an order of the Supreme Court of New South Wales.
MR HERZFELD: Yes.
BEECH‑JONES J: In those circumstances, what work do the words “similar steps” do?
MR HERZFELD: That is, as I said, dealing with a circumstance where there may be New South Wales legislation or provisions that expressly refer to, for example, a notice of motion. So, if what was a previous step that was taken was the filing of a summons, what would happen is that the effect of the deeming is that there was a summons filed in the Supreme Court of New South Wales.
BEECH‑JONES J: I see.
MR HERZFELD: But the provisions on their terms refer to a notice of motion, and so the words “or similar steps” are to deal with that possibility. Two final things, then. If what we have said about either question 1 or question 2 is correct, in our submission, this matter is overwhelmingly connected with New South Wales. If the group costs order is irrelevant because we are right about question 1, that is the end of the inquiry. If it is neutral because we are right about question 2, again that is the end of the inquiry.
BEECH-JONES J: But if you are right about question 2 – yes.
MR HERZFELD: Even if there is some greater risk to the order continuing if the matter is transferred to New South Wales, that is not sufficient to justify refusing a transfer. That is because, one, of the overwhelming connection to New South Wales, the mere risk to the continuation of the order is not enough, but two, whenever there is an order of any kind where there is a transfer, there is always a risk that the transferee court will approach the existing orders differently. Here, it is clear on the terms of the group costs order that it is not inviolable; it is not an immutable right of the plaintiff solicitors, whether transferred or not. So, even if there is a risk to it, nonetheless it follows that there should be a transfer.
I said I would say something very briefly about Blue Sky. The correctness of that decision does not arise in this matter, on our case. As your Honours know, we say that matter should be transferred to the Supreme Court of New South Wales, even if that court cannot make an order like a group costs order. If the Full Court in Blue Sky is correct and that applies in the Supreme Court of New South Wales, that would actually be a further reason to transfer to the Supreme Court of New South Wales, but we do not contend before your Honours that the Full Court in Blue Sky is correct. Indeed, KPMG’s position is that it is incorrect, but even if it is incorrect, the matter should still be transferred to the Supreme Court of New South Wales. So, the correctness of Blue Sky does not arise on our case before your Honours in this matter.
STEWARD J: Can I ask, why the Supreme Court, as distinct from the Sydney Registry of the Federal Court?
MR HERZFELD: There has not been an argument put to suggest it should be. So, there has not been any evidence or argument about the comparison between those two, but we would, if we were pushed, prefer the Sydney Registry of the Federal Court to the Supreme Court of Victoria. That was not our application and there has not been argument or evidence directed to that question.
STEWARD J: Thank you.
MR HERZFELD: Your Honours, those are our oral submissions.
GAGELER CJ: Thank you, Mr Herzfeld. Ms Spencer Bruce.
MS SPENCER BRUCE: Your Honours, the director defendants adopt the submissions of KPMG – that question 1 ought to be answered no – for the reasons given by KPMG, but also for the following additional reason. The factors to be considered in determining the more appropriate court in the interests of justice in section 1337H of the Corporations Act are not limited to the interests of parties. They include the public interest, including public confidence in the integrity and impartiality of the courts.
In my submission, your Honours, that confidence could be undermined here in two ways. The first, if the meaning of the term “the interests of justice” varies depending upon the court in which the application is being heard. Secondly, where an evaluative judgment is made by a court that the legislative policy of one State in the Federation is better than another.
Turning to the first of those two, the need for a consistent meaning to the term “the interests of justice”. Imagine, if you will, that this proceeding was commenced several months earlier, not in Victoria but in New South Wales, as the funder and the plaintiffs’ solicitors originally intended. Having commenced in New South Wales, Victoria then brought in its group costs order regime. Imagine an application was then made in New South Wales to transfer the proceeding to Victoria on the basis that the funder no longer intended to fund the proceeding in New South Wales, but in Victoria a group costs order would be available.
It is hard to imagine that the New South Wales Supreme Court would view it as in the interests of justice for the matter to be transferred, or for Victoria to be viewed as a more appropriate court to hear the matter, simply to obtain contingency fee funding in circumstances where contingency funding is regarded as against public policy in New South Wales. Indeed, the Supreme Court of New South Wales could not reason that way. For the same reason that the Supreme Court of New South Wales cannot reason that way, the Supreme Court of Victoria cannot place weight on the legislative policy of its own State.
BEECH‑JONES J: But on that argument, the New South Wales Supreme Court has placed weight on its own policy argument of its own legislature. Have they not just preferred theirs over Victoria?
MS SPENCER BRUCE: That is true, your Honour, and that is why, in our submission, where there is a competing policy, that factor should be put to one side. It should not form part of the balancing – the evaluative judgment that is being made, the weighing‑up of what is in the interests of justice, because it leads to the second of my points.
If a court in the Federation determines that the policy of its legislature is better than what is on offer elsewhere, that runs up against some constitutional difficulties, as highlighted by this Court in Schultz, because the constitutional context is that you have an integrated national judiciary exercising federal jurisdiction with a need to treat each State’s laws as equally valid, and here they are exercising a cooperative national scheme. The power in section 1337H of the Corporations Act is self‑evidently a co‑operative power because the Act provides that for concurrent jurisdiction between both the State and federal courts in relation to the Corporations Act and specifically provides that the courts will act in aid of one another in exercising that jurisdiction.
GLEESON J: Why would the New South Wales Supreme Court have an interest in whether contingency fee funding is being supplied in Victoria?
MS SPENCER BRUCE: It would not necessarily have an interest, your Honour, but the argument in my hypothetical would be that it is in the interests of justice for the proceeding to go there because of the availability of that contingency fee funding.
EDELMAN J: Does it need to descend to that level of specificity? Could the argument not be put that in the absence of transfer the proceeding will be discontinued, presumably with costs, but with the presence of the transfer the proceedings will be able to be continued without any evaluation of merit or relative merit or advantage or disadvantage?
MS SPENCER BRUCE: In doing that, the court would be blind, though, to the facts of what was occurring, and plainly what would be occurring in that case is that the transfer would be sought in order to achieve a particular funding arrangement. If you move from my hypothetical of the proceeding ceasing to one that we see happening in the Blue Sky Case, as Mr Herzfeld already alluded to, where the funder would simply prefer that funding model – it is a more preferable funding model for the funder – you are not then looking at a circumstance where the proceeding will not continue, rather just that the funder would prefer it to continue in Victoria because it makes more economic sense for the funder to do so.
JAGOT J: But that is not this case. It is not a matter of mere preference, it is a matter of probability.
MS SPENCER BRUCE: The facts go no higher than that, your Honour.
JAGOT J: But probability is difference from preference. Probability is at least a real risk that, if there is no group costs order, this proceeding will halt. That is the very reason Mr Herzfeld’s clients made the application.
MS SPENCER BRUCE: I cannot speak to the reasons that Mr Herzfeld’s clients made the application.
JAGOT J: It is obvious from his own submissions that they see that as a disadvantage. The fact that they have to defend the proceeding is the disadvantage, and therefore, apply to transfer it to a place where, depending on the arguments about subsection 1337P(2), there will not be the group costs order. Otherwise, all this is pointless.
MS SPENCER BRUCE: In my respectful submission, your Honour, there are, as Mr Herzfeld went through, significant connecting factors to New South Wales, and while I do not want to get into the relative advantages and disadvantages for either party, because that is not the core of my submission ‑ ‑ ‑
JAGOT J: No, I understand that. My point is only that this is not a case of mere preference, and on the findings by the Court of Appeal below, it is not a case of a clearly appropriate forum and a clearly inappropriate forum. Leaving aside the group costs order, it was a borderline – that is what the Court of Appeal seems to be saying – in the context of the discretionary “may” based, not “must” based, provision, it was a borderline.
MS SPENCER BRUCE: Keeping in mind, though, your Honour, that the test in section 1337H is not one of inappropriate or otherwise appropriate forum ‑ ‑ ‑
JAGOT J: Sure.
MS SPENCER BRUCE: ‑ ‑ ‑ it is one of: which is the more appropriate forum? There is always going to be one or the other, and the line might be well surpassed or only a small amount surpassed, but one is going to be viewed as more appropriate than the other.
JAGOT J: Does “may” not become relevant, then? The “may”, not “must”?
MS SPENCER BRUCE: I do not wish to advance any different submissions to Mr Herzfeld on that point.
JAGOT J: Thank you.
BEECH‑JONES J: If the criteria being applied is simply a court asking, will the order, as a factor, stultify the proceedings, then the meaning of the words “interests of justice” has the same meaning across the country, and each court just takes the chips as they fall. In this case, a court has been confronted with a GCO having been made, and in your New South Wales example, as Justice Edelman put to you, there would be a fair bit of explaining to do about why they are in New South Wales, having started, but they cannot continue – would they not? If the meaning is “not stultify”, that is what we get to, is it not? Not a question of preferring GCOs over any other form of funding model.
MS SPENCER BRUCE: I think your Honour’s question takes me to my second point, which is why giving weight to the group costs order as a factor involves preferencing the policy of Victoria over the other States. It is not just a different legislative choice made by Victoria, but a fundamental difference in public policy on the question of access to justice, as Justice Edelman described it, or perhaps more neutrally described as access to the courts.
Victoria has made a policy decision by its enactment of section 33ZDA that, in relation to certain group proceedings, the benefits in relation to access to the courts that are facilitated by contingency fees are outweighed by the risks to the administration of justice inherent in those types of fees being charged by lawyers. But every other State in the Federation has made a different choice with respect to that balance, that decision about where the line is to be drawn in terms of access to the courts.
EDELMAN J: Would your submission be exactly the same if, for example, one State had a policy decision that had been made that legal aid would be allocated to a particular area, and other States had not? You would say it would be entirely neutral and not a factor to be regarded whether a person could only litigate in the State where legal aid was available, not being a clearly inappropriate forum?
MS SPENCER BRUCE: No, we would not, your Honour, and that is because legal aid is not regarded as against public policy in any State in the Federation, whereas here, contingency fees are regarded across the country as contrary to public policy, not only in the common law, which you can see by the availability of an order to restrain counsel or lawyers from acting if they are charging a contingency fee due to their conflict, but also in the solicitors’ conduct rules and in the Legal Profession Uniform Law, section 183, which says not only that charging such fees is prohibited, but it is also professional misconduct in which to do so. That is different to legal aid.
EDELMAN J: Yes, if that submission is right, then it is not a neutral factor; it is a negative factor. So, your submission would have to be that the presence of a GCO in your example is actually a reason not to transfer the proceedings.
MS SPENCER BRUCE: Well, it would be if the New South Wales court in my example were to have regard to such a factor but, in my submission, it is fundamentally problematic for the confidence in the integrity and the impartiality of the judiciary for regard to be had to that factor because of the weighing of those choices.
GAGELER CJ: Could I ask you a question that I have asked Mr Herzfeld. Did your submission go so far as to say that wherever the consequences for the parties are the product of different legislative choices made in different States, those consequences cannot be weighed in the interests of justice for a transfer application?
MS SPENCER BRUCE: Your Honour, my submission does not go so far.
GAGELER CJ: Could you explain how then you do not go that far?
MS SPENCER BRUCE: Yes. Perhaps the line is difficult to draw, but it is one of a difference in fundamental policy. A legislative difference that in one State discovery is available and in another it is not would not demonstrate a fundamental difference of public policy, it would be simply a different legislative choice. But here we are talking about something that is seen as fundamentally against public policy in one State and okay in another. I am very conscious of the time that I was ‑ ‑ ‑
GAGELER CJ: I would like an answer to the question. I do not want to stop you from giving an answer.
MS SPENCER BRUCE: Yes. I think that is the answer to that question. I just wanted to give your Honours the reference to paragraph 164 of Schultz where – paraphrasing – Justice Kirby says that while it might be appropriate to take into account whether substantial justice can be done in an inconvenient forum application:
which seek orders that the proceedings be continued in another country . . . the suggestion that –
a party:
could not obtain “substantial justice” –
in another Australian State:
is not only contrary to common experience. It is inconsistent with the hypothesis of the Constitution.
In my submission, your Honours, that is the vice here in giving weight to the group costs order as a factor in determining what is in the interests of justice. It involves reasoning that substantial justice cannot be obtained in New South Wales.
Your Honour Justice Beech‑Jones asked Mr Herzfeld whether his submissions were a criticism of the Victorian group costs order policy. With respect, the observations that have otherwise been made about access to justice are criticisms of New South Wales policy on this question. They rather highlight the point because a judgment of this Court or any other court in the Federation finding that what is available in New South Wales is not in the interest of justice is fundamentally problematic.
GORDON J: Can I ask a question. Section 183 in the Legal Profession Uniform Law (NSW) prohibits a law practice entering into a costs agreement which contains a contingency fee. Does it prohibit courts making orders of that kind?
MS SPENCER BRUCE: Your Honour, this another of the questions that I understand is raised in the Blue Sky appeal.
GORDON J: Assuming you do not have to answer it, does that affect the way in which you look at your argument about public policy?
MS SPENCER BRUCE: No, your Honour, because it reflects the policy of that particular polity and that is, actually, a civil penalty provision, as I understand it, as well. So, whether there is power to do it might be one thing, but when you are looking at whether it is something else against which that legislature test set its face, I think the fact of it being there is special.
STEWARD J: Could it be done with consent of the parties?
MS SPENCER BRUCE: Sorry, your Honour, could what be done with consent?
STEWARD J: The order of the kind that Justice Dixon made here. Could that be done by the consent of the parties in the Supreme Court of New South Wales? Would there be power to do that?
MS SPENCER BRUCE: No, your Honour.
STEWARD J: Why?
MS SPENCER BRUCE: For the reasons given by Mr Herzfeld.
STEWARD J: All right.
MS SPENCER BRUCE: A final observation before I sit down, and that is this: the practical effect of giving weight to the group costs order as a factor in making a transfer decision has the effect, as has already been said,
of making Victoria a magnet to litigate class actions, regardless of their connection to the State, which undermines the legislative policy of other States. That, indeed, has been the practical reality – and I refer your Honours to one of the additional authorities that we provided which was a speech recently given by Chief Justice Bell in that regard. Thank you.
GAGELER CJ: Thank you. Mr Gleeson.
MR GLEESON: We are running about 10 minutes behind, your Honours.
GAGELER CJ: I am sure you will make it up.
MR GLEESON: Your Honours, you were just referred to a speech by Chief Justice Bell. I am not sure if your associates have found it, but I think it is being tendered as a constitutional fact, the views of the Chief Justice.
GAGELER CJ: You do not really have to make a point of that, Mr Gleeson. It was overstated when it was referred to as an authority.
MR GLEESON: In the outline, with respect, your Honour, it is referred to as the basis for a finding of fact that there has been a sharp shift in matters to the Supreme Court of Victoria because of the GCO regime. If that is sought as a finding of fact, it will not take your Honours long to read the article to realise it does not make it good.
Can we start with the interests of justice under section 1337H. The argument you have heard this morning really boils down to three propositions which are different ways of saying the same thing. The first is that “the interests of justice” in that provision do not include whether the proceeding may be stultified if transferred to the other court. The second is that the desire of a defendant not to be sued is a legitimate juridical advantage which bears on the interests of justice. The third is that the making of a GCO is irrelevant to the interests of justice because it is reduced to a mere advantage to the plaintiffs’ side matched by a corresponding detriment to the defendant’s side, not engaging any higher interests. That is essentially the case.
Now, in terms of authorities, could I go to three authorities. The first is Spiliada, which you were taken to part of, but not the relevant part. That is in volume 10 at tab 104, particularly at page 478, which is cited in Schultz. In the context of Lord Goff’s statement of a series of six propositions which had started on page 476, at the top of 478 Lord Goff identifies that one aspect to the inquiry – this is in the stay context – is to look for connecting factors, and some instances are given. Then, dropping down to paragraph (f):
If however the court concludes at that stage that there is some other available forum which prima facie is clearly more appropriate for the trial of the action, it will ordinarily grant a stay unless there are circumstances by reason of which justice requires that a stay should nevertheless not be granted. In this inquiry, the court will consider all the circumstances of the case, including circumstances which go beyond those taken into account when considering connecting factors with other jurisdictions. One such factor can be the fact, if established objectively by cogent evidence, that the plaintiff will not obtain justice in the foreign jurisdiction –
Citing Lord Diplock in The Abidin Daver. So, that neatly tells us that we are looking beyond merely the connecting factors that Mr Herzfeld spent some time on. There is this further question of the larger interests of justice which include whether the plaintiff will not obtain justice in the foreign jurisdiction. Therefore ‑ ‑ ‑
EDELMAN J: That sentence was the basis for most of the Russian litigation flooding into the United Kingdom courts.
MR GLEESON: Yes. It indicates it is part of the analysis. Lord Goff comes back to that at page 482, letter F. You were read part of this passage, but I do not think you were read letter F, which is:
as a general rule . . . the court should be deterred from granting a stay . . . simply because the plaintiff will be deprived of such an advantage, provided that the court is satisfied that substantial justice will be done in the available appropriate forum.
Then, in relation to the discussion of the limitation period, that is distinguishable for the reasons that have been addressed in argument.
There is a more recent authority from the United Kingdom that we have given your Honours in the additional materials, which is, Lungowe v Vedanta Resources Plc (2020) AC 1045. In the speech of Lord Briggs, the critical paragraphs are paragraphs 88 through to 98 and, particularly – which brings it tolerably close to the present case, leaving aside the geographical location of the courts – the House of Lords held that if:
there is a real risk that substantial justice will not be obtainable in that foreign jurisdiction ‑ ‑ ‑
STEWARD J: Sorry, Mr Gleeson, which paragraph?
MR GLEESON: Paragraph 88, letter C to D.
STEWARD J: Thank you.
MR GLEESON: If:
there is a real that substantial justice will be unobtainable –
that is:
generally treated as separate and distinct from the balancing of the connecting factors –
because it requires:
separate and careful analysis of distinctly different evidence . . . If there is a real risk –
of that kind:
it seems to me obvious that it is unlikely to be a forum in which the case can be tried most suitably for the interests of the parties and the ends of justice.
In this case, you will see from paragraph 89, letter F, the reason there was such a risk was that there was a practical impossibility of obtaining funding of the relevant group claims in the other jurisdictions. So, pretty much our case.
GORDON J: Where is that aspect – the last one, please?
MR GLEESON: Paragraph 89, letter E to F:
it derived essentially from two factors: first, the practical impossibility of funding such group claims where the claimants were all in extreme poverty; and secondly, the absence . . . of . . . experienced legal teams –
to litigate against a big, hard defendant.
GORDON J: Did they distinguish between those two considerations?
MR GLEESON: They adopted them together as a sufficient package to say that – the conclusion of paragraph 98 was the judge did not make any error in finding that this was a case where, if you let the matter go ahead in Zambia, it, for practical purposes, could not be litigated because of absence of funding whereas, in the United Kingdom, it could be litigated. So, they are at least two authorities which count against the proposition that is being put.
Your Honours, in terms of Schultz itself, which is in volume 4 at tab 44, we would emphasise, firstly, the different context that I will come back to, but what is in paragraph 15, which is the emphasis on justice being:
not disembodied, or divorced from practical reality.
is the right approach, and the interests of individual parties can be relevant to the larger interests of justice. The attempt to explain away that the giving expedition to the dying plaintiff is neutral, your Honours would reject fairly quickly, for at least one reason raised by your Honour Justice Beech‑Jones: the general damages claim in most, if not all, Australian jurisdictions will die, which is a reason for the defendant to perhaps have a slower, rather than a quicker trial.
Secondly, what expedition does for the dying plaintiff is give that unfortunate person at least the vindication that their claim has been heard, tested and potentially determined, and they can leave those behind them with the comfort of success if they obtain success. So, the dying plaintiff is a good example where the court looks practically and sees the interests of justice are larger than, necessarily, the interests of one party or another.
I should say, in terms of context, your Honours, just before the adjournment, the reason we say it is different is we have done some of the history and writing. We have to all remember that the cross‑vesting scheme – brilliant idea as it was – was ultimately flawed, because the essential notion at the heart of it was that each polity, each State, each Territory and the Commonwealth could vest their own jurisdiction in each other such polity. And that was obviously held to be flawed in Re Wakim in respect to the vesting coming from the States to the Commonwealth.
Now, it was in that context that the original Uniform Corporations scheme in 1990 was also a cross‑vesting scheme, and it is sometimes forgotten that it was also struck down in part under Re Wakim, because the original Corporations scheme had the notion that each State would have its jurisdiction under its own Corporations Act, which was an application of the ACT Act, and then each State and the Commonwealth would cross‑vest their jurisdiction in each other, and that was also flawed under Re Wakim.
So, while many of the phrases look similar as you trace through the three schemes, we now say we are in this fundamentally different context of national legislation grants a federal jurisdiction to each of the courts, Commonwealth and State – courts operating concurrently – and section 79, which has not been spoken about much this morning, now has an absolutely critical role in the scheme which was either suppressed or missing in any of the earlier schemes.
It is Parliament’s choice – which this Court discussed in Gordon v Tolcher – to not adopt a single federal procedural law, but instead to allow section 79 to do its work, that creates the many possibilities for procedural heterogeneity depending upon where the matter is determined. Now, that has been diminished this morning by saying they are just different policy choices and you cannot go there. It is an essential fact of this scheme that because of section 79 there will be many cases where there will be different procedural consequences, depending on where you are.
Just before I adjourn, while we are talking about the GCO, take it in two other instances. Take the whole of Part IVA, that is, the modern group action scheme. That does not exist across all superior courts of the Commonwealth. It does not exist in the Territories, it does not exist in South Australia. It gives opportunities to groups to have their claims vindicated and advances access to justice. Could it seriously be suggested that if a matter was sought to be transferred from the Supreme Court of Victoria to the Supreme Court of the ACT, knowing that in the ACT section 79 will not pick up an equivalent scheme, but yet the court must blind itself to that consequence at the stage of transfer because it is irrelevant to the interests of justice? We would say no.
The third example for the moment is in Masson v Parsons at paragraph 38. Your Honour Justice Edelman took a different view. The majority said that the cut‑through scheme where you can get a direct suit into the insurer in the main action without having to bring a separate action is something which is picked up under section 79 rather than being part of the substantive law of the cause.
So, the effect is there will be many cases in the Commonwealth where, if you start in one court, you will be able to use cut‑through legislation to get the insurer. If you are transferred to another court, you will not get the benefit of that legislation because section 79 is operating on a different State law, and on the argument you have heard today you would ignore that under the interests of justice. We would say the very task of the Court is to take those differences into account so far as relevant and if they bear on the larger interests of justice, as the GCO does, then they can be given due weight.
Is that a convenient time, your Honours?
GAGELER CJ: How are you going? You complained about being 10 minutes short. Have you made it up? Will you make it up?
MR GLEESON: I will attempt to do that, your Honour.
GAGELER CJ: Thank you. The Court will take the luncheon adjournment.
AT 12.48 PM LUNCHEON ADJOURNMENT
UPON RESUMING AT 2.15 PM:
GAGELER CJ: Mr Gleeson.
MR GLEESON: Your Honours, I propose now to do the comparative exercise. That is, if the proceeding remains in Victoria, to explain how the GCO creates the stable funding for the proceeding, and then to show what can be known or predicted about what would happen in New South Wales to that GCO. Having done that, I will deal with section 1337P and its United States antecedents under the 1875 United States Judiciary Act, which provides some insight into how provisions like section 1337P work when the transferee court lacks power to make or enforce the order that is coming across on the file.
As to the GCO, in the Supreme Court Act (Vic) which – I am not sure your Honours have that separately, if not, volume 1 tab 4. At section 33ZD, the starting point is that ordinarily in a group proceeding group members will not be exposed to costs – and that is subject to 33Q and R where they have individual issues being litigated – that is subject to 33ZDA. With that provision, we draw attention, firstly under subsection (1), to the fact that the order is not obtained by the solicitors as, of course, the court has to be positively:
satisfied that it is appropriate or necessary to ensure that justice is done in the proceeding –
before it can make the relevant order. That imposes a significant constraint referable to the doing of justice in the proceeding, and that is why in many cases a GCO may be refused, for example, if there is alternative funding for the proceeding that does not require the solicitors to accept these liabilities. The second feature which is under subsection (1)(a) is that the GCO may order:
that the legal costs payable to the law practice –
Which in theory could include a barrister but in practice will be a solicitor’s firm:
be calculated as a percentage of the amount of any award or settlement . . . being the percentage set out in the order –
The important thing there is that this is an alteration to the ordinary concept of legal costs. It is not simply that a contingency fee is authorised in substitution for legal costs. Legal costs under the order take the form of the payment of that amount of the successful settlement or reward to the lawyers. Following that, under paragraph (b):
that liability for payment of the legal costs must be shared among the plaintiff and all group members.
This is the exception to 33ZD where, if there is a GCO, the plaintiff and all group members become liable to pay legal costs in the form of the percentage if the matter is successful. If the matter is not successful, they do not have any such liability. Subsection (2) says that if the order is made:
the law practice . . . is liable to pay any costs payable to the defendant –
And:
must give any security –
What this is doing is creating a liability upon a third party to the proceedings – the solicitors – to not only pay the costs of the defendant but to give security. Then subsection (3) says the court “may amend” the order, including the percentage. In the answer to your Honour Justice Gordon’s question, an amendment would be governed by the criterion under subsection (1) which justified the order in the first place.
GORDON J: It would in Victoria.
MR GLEESON: In Victoria.
GORDON J: My question is, what would happen if it were transferred to New South Wales? I assume you are going to come to that.
MR GLEESON: Yes, and then we fall into a void of ignorance at best, and something perhaps far worse than that. But in Victoria, we know exactly what happens. If there is an application to, say, reduce the 40 per cent to 30 per cent, the interests of justice which governed the making of the order in the first place will carry through to whether that amendment should be made, and then subsection (4) says it:
has effect despite anything to the contrary in the Legal Profession Uniform Law (Victoria).
Contrary to Mr Herzfeld, this is not an exception to a prohibition upon contingency fees; it is, for the avoidance of doubt, saying that anything that is in the LPUL to the contrary will not operate in preference to these provisions. You see a definition of “legal costs”, it:
has the same meaning as in the Legal Profession Uniform Law –
I will give the reference. Volume 3, page 656, and that confirms that “legal costs” have this special meaning under the GCO. The consequence of all that is that the GCO has created new rights and new liabilities. They are, for the most part, created on the plaintiffs’ side of the record, because they give the plaintiff and the group members the benefit of not having to bear the costs of the action on either side. On the other hand, they are liable to pay the percentage if it is successful.
To the extent the GCO extends across the record, it does not alter any of the issues for determination in the proceedings. It is wholly unlike differential limitation periods or differential damages awards; wholly unlike section 11A in Schultz. The issues are litigated – exactly the same issues – but what it does is give the defendant the benefit of adequate security and costs protection.
BEECH-JONES J: Mr Gleeson, it is not expressly stated, but is it accepted that, with subsection (2), if the group or costs order is made the lead plaintiff is not liable for the defendant’s costs? Do you want to take that on board?
GORDON J: I think it is covered by subsection (2), is it not, Mr Gleeson?
MR GLEESON: We read it as, if the action is unsuccessful, the law practice pays the costs and so the lead plaintiff is relieved ‑ ‑ ‑
BEECH-JONES J: Is relieved.
MR GLEESON: ‑ ‑ ‑ of what would ordinarily be the costs order.
GORDON J: That is, subsection (2) identifies who is to pay it?
MR GLEESON: Yes. So, it has created this new series of rights and liabilities. They are primarily on the plaintiffs’ side of the record, but they extend to protect the defendant and, in that sense, they assist in ensuring justice is done in the proceeding. The rights are substantive but interlocutory in that they could be amended in the Supreme Court of Victoria. They could be varied. They are contingent upon the proceeding remaining in Victoria. As the Full Court correctly found at paragraph 60, the order which the Victorian Parliament has authorised only has effect in terms while the proceeding is in Victoria. Can I then compare what would happen ‑ ‑ ‑
GORDON J: That last proposition in Victoria, is that driven by the text?
MR GLEESON: Yes.
GORDON J: Anything else?
JAGOT J: So, the text of the order or the text of 1337P?
MR GLEESON: The text of this particular provision read in the context of the whole of Part 4A, which is solely regulating group proceedings being conducted in the court in Victoria.
JAGOT J: It seems unusual to say that an order as a matter of construction of the order is only good for the court. I am not referring to anything to do with 1337P(2), I am just saying the Court of Appeal seems to say that, on its construction, the order itself is confined to the Supreme Court of Victoria, but you would say that in one way about every order, but in the face of provisions like the transfer power you would not say that, it seems to me. You know, if it is an order, it is an order.
BEECH‑JONES J: Does it flow from the definition of proceeding, because a proceeding is limited to a matter in that court.
MR GLEESON: Yes, we dealt with this at paragraph 38 in chief. It flows from the definition of proceeding, limited to a matter in the court, and the court, capital C, being the Victorian Supreme Court.
JAGOT J: But would not that write out, the 1337P(2), because every order is an order in a court?
MR GLEESON: I am still going to come to what the assumption is in 1337P, but at the moment I am just at the stage of a Victorian exercise of judicial power. The order is an order which has life so far as it is a Victorian proceeding. It is regulating the exercise of jurisdiction at State jurisdiction, which section 79 then picks up because the matter is in federal jurisdiction.
JAGOT J: Okay, so I am being premature, I should wait until you get to 1337P(2).
MR GLEESON: Yes, I will – just one moment, your Honour. Then, when the matter goes – if it does – to New South Wales, there are two threats to the order. The second is the one that has been focused on, which is: would there be a New South Wales policy against contingency fees which somehow leads a New South Wales court to not recognise or revoke the order? That is one series of questions. We recognise them as real questions. Our submission would be that, probably, it would not fall foul of any such argument, but we will not know the answer to that until, at least, the Blue Sky decision.
The reason we would say, ultimately, the argument would fail – although it is clearly viable – would be that, as your Honour Justice Gordon pointed out, the terms of the prohibition are against a solicitor bargaining with a client for a contingency fee, which the exact reflection of how this Court expressed the problem in Clyne’s Case (1960) 104 CLR 186, at the foot of page 203. Secondly, so the argument would go, when this Court in Campbells Cash and Carry v Fostif – which is at volume 5, tab 48 – at paragraphs 66 and 86, reviewed the Maintenance, Champerty and Barratry Abolition Act 1993, this Court in fact said, particularly at paragraph 86:
s 6 of the Abolition Act preserved any rule of law as to the cases in which a contract is to be treated as contrary to public policy or as otherwise illegal. It preserved no wider rule of law . . . By abolishing those crimes, and those torts, any wider rule of public policy (wider, that is, than the particular rule or rules of law preserved by s 6) lost whatever narrow and insecure footing remained for such a rule.
And that is why funding came to be allowed. That will be one threat. We recognise that as a threat, and it is a reason why the order is at least vulnerable when it goes to New South Wales, but there is a more fundamental reason, which is that the order will be directly inconsistent with binding provisions of New South Wales law which govern legal costs. Can I take your Honours to those provisions.
In volume 2, at tab 18, under the Civil Procedure Act 2005 (NSW) there is a definition of “legal costs” in section 3(1) on page 473 which means:
costs payable in or in relation to the proceedings, and includes fees, disbursements, expenses and remuneration.
So, the concept of costs is the traditional one we would understand where the solicitor charges fees and charges disbursements such as the barristers, charges expenses such as the expert witnesses. None of that matches the concept of a GCO because under the GCO the solicitor has to wear all costs as part of the single reward of a certain percentage of the action. So, that is the first difference we draw attention to.
Secondly – and I think this is common ground – there is no express power that would permit the New South Wales court to make an order as to the remuneration by way of contingency fee of the law practice in the event of success. So, that is an absence of power point.
Thirdly, it is backed by section 98 which your Honours may find in the supplementary materials we sought to hand up – section 98 and 99. Section 98 is the general power to award costs. That is the costs as defined:
(b)the court has full power to determine by whom, to whom and to what extent costs are to be paid, and
(c)the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.
So, there are the traditional concepts. Subsection (2):
a party . . . may not recover costs from any other party otherwise than pursuant to an order –
Then section 99, the only circumstance in which New South Wales contemplates the legal practitioner being ordered to pay costs is in the case of misconduct. The result is that costs, as per the New South Wales regime, are the traditional form of:
fees, disbursements, expenses and remuneration.
They cannot be awarded against the law firm unless there is relevant misconduct. And returning to ‑ ‑ ‑
BEECH‑JONES J: Mr Gleeson, could I ask you this, just about the mechanics in Victoria, which is related to this. If, in Victoria, it proceeds to judgment after a GCO, is there a separate amount for costs orders – or is the argument, no, the plaintiffs do not get any extra legal costs because they are covered by the GCO?
MR GLEESON: What I understand to be the practice is the former, namely, there is an attempt to recover costs from the defendant which would then be assessed on a traditional basis. But if any such costs are ordered, as they might be if it is successful, they go to the group. They do not go to the law firm because it has said, 40 per cent and no more. But one sees the fundamental difference with what is happening here.
Returning to the document – the rest of the Civil Procedure Act at volume 2, tab 18, at section 181, which is the equivalent provision to the ordinary rule in Victoria where there is not a GCO:
the Court may not award costs against a person –
a group member:
except as authorised by sections 168 and 169.
They deal with the group member litigating individual issues. The effect is if the GCO is considered by New South Wales standards, an essential premise of the GCO, which is the costs are awarded against the group in favour of the solicitor if the matter is successful, is directly inconsistent with section 181.
Finally, in volume 2, at tab 26, under the UCPR, at rule 42.21, security costs can be ordered against the plaintiff, but there is no provision to award it against the solicitors. So, the most immediate set of problems the GCO faces, if it arrives in New South Wales, is section 79 of the Judiciary Act says, apply New South Wales law; New South Wales law not only does not authorise the making of the GCO, it has no apparatus for administering a GCO and, finally, the whole of its regime for costs is directly inconsistent with a GCO.
GORDON J: It is a bit stronger than that, on your case, is it not? Sorry, is your submission of “no apparatus” meaning no power, no ‑ ‑ ‑
MR GLEESON: Yes.
GORDON J: Yes.
JAGOT J: Is the consequence, then, they would have to revoke, the New South Wales – what are you saying? You are saying it is not transferred over at all?
MR GLEESON: So, we deal with it on both levels. It is not transferred over at all, because I am going to come to 1337P and say it does not cut across the Judiciary Act.
JAGOT J: Right.
MR GLEESON: But if it did come over, if Justice Hammerschlag was presented with the file on day 1, and, in his customary manner, said, what am I to do with this document on the file, the shortest answer would be the court would behave the way it does in those unusual situations where it finds an order on the file which it knows it had no power to make, and where the proceeding is not yet closed: the court revokes it.
So, our alternative argument is if, in any sense, it arrives through the fiction, there is only one thing the court can and must do. The court has no discretion. The court simply must revoke the order as an order made absent power, and an order that has no standing under New South Wales law picked up by section 79.
GAGELER CJ: Mr Gleeson, I think I understand the absence of power argument, but did you say there is a positive prohibition that is also in play? I did not understand that.
MR GLEESON: What I said was, there is a series of positive provisions as to how legal costs are to be ordered by the court in New South Wales which are directly inconsistent with the GCO. So, the GCO ‑ ‑ ‑
GAGELER CJ: In the sense that they do not authorise the GCO?
MR GLEESON: No, they go further because, for instance, section 181 of the Civil Procedure Act, at volume 2, tab 18, says you cannot order costs against a group member. The GCO has, as its premise, that costs are ordered against the group members if the proceeding is successful.
EDELMAN J: They are, really, flip sides to the same argument, are they not? All of the points which you say would lead to a New South Wales court immediately revoking the order, they are all reasons why you would say that the underlying assumption of 1337P(2) is that there has to have been power for the court to have made the order in the first place.
MR GLEESON: Yes, that is where we go on 1337P(2).
GORDON J: Sorry, just so I can understand in response to your answer to the Chief Justice’s question, it is not only just, is it, the inability to order costs to be payable by a group but it is also dealing with the security for cost provisions as well, is it not?
MR GLEESON: Yes, yes. So, with security for costs, New South Wales law does not permit you to order security for costs against the solicitors. You can only do it against the party. The GCO is directly inconsistent with that. So, that is number one inconsistency. Number two – if your Honours look at the GCO, which is in the cause removed book at page 386, paragraph 2 says:
Liability for payment of the legal costs pursuant to paragraph 1 be shared among the plaintiffs and all group members.
We apprehend that is directly inconsistent with section 181 which says group members are not to wear the costs. That is why, in Victoria, there is express carve‑out from the equivalent to section 181 to allow the GCO to operate.
BEECH‑JONES J: So, your Justice Hammerschlag example is, effectively, it is no different if Justice X, perhaps innocently on their first day in the Supreme Court of New South Wales, did make an order against group members and then the Chief Judge in Equity comes along, picks up a file and says, that order should never have been made, and it would not be any different if it came from a mistake by Judge X in the same division or was transferred over from New South Wales, there would be a file, an order on the file that is directly contrary to 181. Is that the scenario we are looking at?
MR GLEESON: Yes, and so it is set aside or revoked as of right, not as part of a discretion where the New South Wales judge says – and your Honour the Chief Justice asked by what criteria, but the submission this morning seems to be – which is a development on the written submissions – that the judge in the Equity Division picks up page 386 and says, I can now do one of three things. I can enforce this order, in which event I order some extra security for costs this afternoon against the solicitors, and if the matter settles, I order the group members to pay legal costs by way of a contingency fee, or I can vary the order in some unspecified manner, or I can revoke the order.
We sought to point this out in writing and there does not really seem to be an answer to it. The first problem is it is just inconsistent with New South Wales law picked up by section 79, which tells you what the answer to the problem is: you cannot have this order with any force. But, secondly, it has – there is no criteria by which that discretion would be exercised. It seemed to reach this morning the point under questioning that the New South Wales judge by reference to interests of justice – which are not the same as the interests under the Victorian statute – but informed by local New South Wales policy, decides which of those three options to adopt.
Whether that is asking a court to do something which is so antithetical to a court’s basic function because there is no criteria by which the choice is made between the three options – in which event one would be straying into constitutional problems – or whether it is just a construction you would never place on section 1337P in the first place is what I now want to come to. Is there a construction of section 1337P that does not lead to the New South Wales court being placed in that grossly invidious position?
Now, with section 1337P, your Honour Justice Gleeson asked a question about the words “must deal with”, and you have not really heard much of a submission on those words but they are, we would submit, the entry point for construing this provision. What it is doing is imposing a duty – see the word “must” – upon the transferee court when it deals with the proceeding. That is, we would say, when it comes to exercise any and all powers which it has by virtue of section 79 to determine the issues in the proceeding.
So, “must deal with” – the New South Wales judge opens the New South Wales book, the Civil Procedure Act, the UCPR and the like, which are picked up by 79 and says, when I exercise those powers, I have a mandatory constraint upon me that I have to observe a particular fiction. That is the first aspect to it. Then, when you come to the next words:
subject to any order of the transferee court –
they are there to preserve the overriding powers and duties of the New South Wales court to ensure that its laws and procedures are followed. And I will show, in the United States cases, similar language was treated as a confirmation that the transferee court must observe its own law and procedure, and if it is inconsistent with the law and procedure of the court that made the order, it must give preference to its own law and procedure. The next words are:
the steps that had been taken for the purposes of the proceeding in the transferor court (including the making of an order), or similar steps, had been taken in –
the New South Wales Court. Now, we draw attention to the words:
had been taken in the transferee court.
which tends to suggest they are steps which could have been taken in the transferee court. More importantly, the Court of Appeal’s basic insight was that “steps” and “similar steps” work together to say, if it is something done in the Victorian court that could have been done in the New South Wales court, either in terms or through a similar device, then the New South Wales court is to assume that either that step or the similar step had been taken.
So, the example given by Mr Herzfeld, we agree, illuminates part of what this provision is doing. If you do it by notice of motion in Victoria but summons in New South Wales, then the notice of motion in Victoria is to be assumed to be the equivalent to a summons, subject to any other order of the New South Wales court. So, it is dealing with a practical problem. And the basic purpose of the provision is judicial economy – that is, you should not have to do things again that have been done on the assumption that they are things which, in terms or in like terms, could have been done in your court in the first place.
GORDON J: So, for example, discovery orders, ordering of affidavits, witness statements and the like.
MR GLEESON: Yes. All of those things, done in the first court, provided something similar, could have been done in the second court. They stand unless – and this is the “subject to” – the second court says there is a good reason to do that step again. So, if proceedings are commenced by summons in one court but statement of claim in another, the summons will stand as if it were a statement of claim, but the court can say, no, this matter needs more pleading, so I order you to take the step again.
So, all of that works comfortably in terms of judicial economy where the steps or the orders could have been taken in the transferee court. Once you move beyond that to steps or orders, that could never have been taken in the transferee court. You then generate the series of problems which the Court of Appeal correctly identified, and they include what is the standard by which the transferee court then acts? Does it act under its own policy, the policy of the transferor court, some other policy deduced from somewhere else?
Now, at that point, your Honours, I would like just to show you the United States authorities that I am referring to. They become relevant because of the Judiciary Act provisions in Australia which were modelled on the United States provisions. So, if your Honours have volume 2 at tab 15 ‑ ‑ ‑
JAGOT J: Could I just ask one question. If the steps that could be taken in the transferee court were similar steps, not the steps, your construction, does it, means that the “as if” fiction applies to the similar steps, not to the steps, so that you would assume the court makes an order, which is a step.
MR GLEESON: Exactly, your Honour.
JAGOT J: You could not make that order – you have to make similar. It is the similar that gets picked up by the fiction because then the transferee court prevails.
MR GLEESON: Yes. And that illustrates how the fiction is working.
JAGOT J: Yes, I understand.
MR GLEESON: So, your Honours have at volume 2, tab 15 the original Judiciary Act. These provisions were referred to against us by the Commonwealth as illustrations that there is a long history for these provisions and they are consistent with judicial power. You will see the annotations in the margin to the United States 1875 statute following the reconstruction. So, under section 40(2), you have a provision which is one of the origins of section 1337N. That is, you get the material over from one court to another if there is a removal to this Court.
Then, under section 41, you have the origin of section 1337N(b), and you see here the first use of the fiction. At the more general level, you proceed as if it had been commenced in this Court and as if the same proceedings had been taken in this Court as had been taken in the court from which it is removed. You then see expressly the command which we say is still inherent in the current provisions that:
all subsequent proceedings shall be according to the course and practice of the High Court.
What that meant was that if there was a removal into this Court and for some reason an order had been made in the lower court which this Court did not have jurisdictional power to make, then the subsequent proceedings were to follow the course and practice of this Court, not the course and practice of the transferor court.
You see there in the margin that is the origin of section 6 – that goes back to section 6 of the 1875 Act. Then, if we go to section 43, where the cause is removed, the High Court may do various things. Then 44, where it is removed, you have four provisions which preserve in force orders that had been made in the lower court and, in particular, you see under paragraph (d):
all injunctions orders in other proceedings granted made or taken in the cause before the removal shall remain in full force and effect until the High Court otherwise orders.
This is, in a sense, a stronger provision that section 1337P because it is actually continuing the orders in force until this Court orders otherwise. But one can see that it has within it some of the ideas that are in section 1337P(2). And you see it is based on section 4 of the 1875 Act.
Your Honours should have in our additional materials the 1875 Act. You see there the relevant sections that I have just referred to, and that they have been picked up almost word for word in our original Judiciary Act. Then you have three critical authorities which explain the basic point that once the matter is removed to the second court, any order in the first court cannot have any life, or any continuing life, if it is inconsistent with the law governing the second court. That is the general point.
If I could just show your Honours how it comes about. Ex parte Fisk in 1865, from pages 714 to 715 of the reports, was a case where in the State court there was an order made for pretrial deposition – validly made under the law of the State court – which, once the matter was removed into the Federal Circuit Court, was inconsistent with federal law because the relevant law did not permit pretrial depositions and required oral evidence at trial. It is almost a direct parallel to our problem. Victoria permits a GCO. New South Wales has no mechanism or apparatus for a GCO. What do you do when the order comes over to the second court?
Now, it is just important to identify at the foot of 716 and top of 717 there were two arguments which were made by the person effectively in Mr Herzfeld’s position that the deposition order remained in force even though it was contrary to the law of the transferee court.
GORDON J: Where do we see that please?
MR GLEESON: It is at the bottom of 716, it says:
This power can be upheld under two distinct statutes –
GORDON J: Thank you.
MR GLEESON: The first one that is relied upon, section 914 of the 1872 statute, is the equivalent to our section 79 of the Judiciary Act. So, the first argument I tried to run was that once it was removed to Federal Court and once you applied – I will just call it section 79 – the law that it picked up would be consistent with the law of the State court, and the second argument about eight lines down on 717, under the 1875 Act, is the argument based on our section 43(d) or the provision somewhat similar to 1337P. So, they were the two attempts to achieve the argument.
Now, from page 719 at about point 5 where it says “1.”, the arguments are dealt with in the reverse – they are there stated in the reverse order to where they were summarised in the argument. But what is now argument 1 is effectively Mr Herzfeld’s travel metaphor. The order for examination, having been rightly made in the State court:
under its rightful jurisdiction, while the case was pending in it, is still a valid order partially executed, which accompanies the case into the Circuit Court –
So, that is his argument on question 2(a). Then it departs from his argument on question 2(b), it says:
in that court it cannot be reconsidered, but must be enforced.
When I say it departs from his argument, it is part of his argument because his argument – he said to your Honours this morning, your Honour Justice Gleeson, he said yes, it can be enforced in the second court but then he qualified it and said it could also be varied or revoked.
So, they were the two arguments, and relevant to what I will call the 1337P point is the discussion at page 725. So, at the end of the first full paragraph they have rejected the section 79 type argument for the reason that the law binding in the Federal Court is inconsistent with the order made in the State court. But then in the next two paragraphs they come directly to what is our case. They refer to the relevant provision, and they say:
This fully recognizes the power of the latter court over such orders. And it was not intended to enact that an order made in the State court, which affected or might affect the mode of trial yet to be had, could change or modify the express directions of an act of Congress on that subject.
And then, in the next paragraph:
In deciding whether it would continue the execution of this order or decline to execute it further, the Circuit Court –
Federal Circuit Court:
was governed by the federal law.
Here is the critical sentence:
If the law governing the Circuit Court gave it no power to make or continue this examination, but in fact forbade it, then it could not enforce the order.
And indeed, over the page, they say once it has been removed into the Federal Court:
The petitioner . . . has a right to have its further progress governed by the law of the latter court, and not by –
the previous court. So, the effect of the case was that the person who did not want to be examined was not in contempt for disobeying the order, because while it was a valid order in the first court, as soon as matters went to the second court, it no longer had force. Indeed, I will just pass over King v Worthington, which is there – I will come to it – but the last paragraph on that page is particularly strong:
The Circuit Court was, therefore, without authority to make the orders for the examination of petitioner in this case, and equally without authority to enforce these orders by process for contempt. Its order fining him for contempt . . . was without jurisdiction and void, and the prisoner is entitled to his release.
Now, that, we submit, exactly maps on to how section 1337P works. The New South Wales court had no authority under its law, derived through section 79, to make the GCO, it had no authority to enforce the GCO, and any law purporting to enforce it would have been made without authority and void. Now, King v Worthington I can deal with more briefly, but it is an illustration of ‑ ‑ ‑
EDELMAN J: Do the United States courts have an equivalent of Kable (No 2)? It seems to be assumed here that they do not.
MR GLEESON: I am not sure of the direct answer to your Honour’s question. What they are dealing with is a Judiciary Act provision saying orders remain once you remove into Federal Court, subject to other order. Whether you actually have to set aside the piece of paper or whether, as some of this language suggests, you just treat it as of no legal effect because if it was made without relevant authority, they do not seem to explore that issue.
EDELMAN J: But would that mean that, in these circumstances, the – to use the metaphor of “travelling” – the Victorian order still would travel but there would be effectively an obligation on the New South Wales court to set it aside.
MR GLEESON: That is the alternative way we put it. If it, in any sense, travels, there is a duty – a mandatory duty – to set it aside because of the reasons I have given. But the primary way would be to say, looking at section 1337P and what the fiction is trying to do is, is it ever trying to put the court in that position, but the alternative way gets us to the same result.
EDELMAN J: On your primary submission, though, what would bind the parties? If the parties are still subject to an order of the Victorian court, that is an order that the New South Wales court would not respect or enforce.
MR GLEESON: That was my answer to Justice Jagot – correctly or not – that, on the terms of the Victorian statute, when you look at what the capital C court is, and the order being tied to a proceeding, the only authority the Victorian court had from its Parliament was to regulate this proceeding while it was in Victoria. So, on its face, paragraph 60 of the judgment, it is not binding anyone to do anything the moment the proceedings do not continue in Victoria.
GORDON J: There are two answers, though, is there not? There is that answer and then the other answer I thought you made was, when it was transferred to New South Wales – in response to questions from Justice Beech‑Jones – for an abundance of caution, the order would be set aside.
MR GLEESON: Yes, yes. That would be the safest course.
GORDON J: Consistent with that first analysis.
MR GLEESON: Yes.
EDELMAN J: It is spent.
MR GLEESON: It is spent.
EDELMAN J: And if it were not spent, it would then be set aside.
MR GLEESON: Yes, that is it. So, King v Worthington ‑ ‑ ‑
BEECH-JONES J: So, just so I am clear, I thought you were saying, a Victorian order is confined to Victoria. You say, as a matter of power, under subsection (2) it does not come to New South Wales because it can only be an order that New South Wales could make.
MR GLEESON: Yes.
BEECH-JONES J: But if it did come, it would have to be revoked.
MR GLEESON: It must be revoked.
EDELMAN J: And the last part would be, its effect on the parties is spent once the proceeding is transferred to New South Wales.
MR GLEESON: Yes. So, to the extent that it obliges the solicitors to pay security from time to time, that force is spent.
EDELMAN J: Yes.
MR GLEESON: Equally, from the viewpoint of the group members, as soon as it leaves Victoria, their liability for legal costs, which is an exception to the normal rule, is also removed, and the solicitors’ entitlement to the 40 per cent is removed. The whole thing is gone.
The importance of King v Worthington is it illustrates the same proposition in another fact context. This was a case where – as seen at page 46 – under State law, certain persons were prohibited from giving evidence; persons who were interested in the proceeding. Under federal law, page 47, section 858, that prohibition was lifted. The fact context was one where the evidence of the persons had not been received in the State court, and they said that should carry over to the Federal Court. Now, on page 50, in the last full paragraph, the court said:
The Federal court was bound to administer the law of evidence as prescribed by act of Congress, unless what had transpired in the State court presented an insuperable obstacle to that course.
That was the argument made:
They say that the transfer of a case from the State to a Federal court does not vacate what has been done in the State court previously to removal –
And:
what has been decided in the State court is res judicata and cannot be re‑examined.
So, that is the argument being addressed. The court then says the rulings of the Federal Court:
did not reverse or vacate anything which had previously been adjudicated by the State court. The decision of the latter court was that, under the State law, certain witnesses were incompetent in the State court. The Federal court decided that –
under the federal laws, they “were competent”. There was:
no conflict of opinion, and no unsettling of any matter . . . The Federal court was bound to deal with the case according to the rules of practice and evidence prescribed by the acts of Congress.
They are the two original authorities. Then they were further discussed and confirmed by the Supreme Court in Granny Goose, which is volume 10, tab 95. The short facts of that case were that in State court a temporary restraining order had been made up to a certain date and, when the matter was removed into Federal Court, the federal period of a temporary restraining order was shorter than the period in the State court. The argument put at the top of page 434 to 435 is exceptionally close to Mr Herzfeld’s argument on questions 2(a) and 2(b) because the argument was:
that notwithstanding the time limitations of state law, s 1450 keeps all state court injunctions, including ex parte temporary restraining orders, in full force and effect after removal until affirmatively dissolved or modified by the district court.
Relying upon the type of provision we are discussing, the argument was that when it comes into Federal Court, at least for the time being, it remains a valid order which can be enforced unless and until something is done to vary or vacate it, which is how Mr Herzfeld puts it. That is the argument that is rejected, and instead of creating a conflict between 1450 and the like, the court comes up with the harmonious construction. At the middle of this page 435, there is a good explanation of what the purpose of provisions like section 1450 or 1337P is. They are:
designed to deal with the unique problem of a shift in jurisdiction in the middle of a case . . . two basic purposes are served. Judicial economy is promoted by providing that proceedings had in state court shall have force and effect in federal court –
Then they actually give one of the examples we have been discussing:
so that pleadings –
do not need to be replicated. But see footnote 9, in an appropriate case, repleading can be required:
In addition, the statute ensures that interlocutory orders entered by the state court to protect various rights of the parties will not lapse upon removal.
That is why the various:
orders obtained in state court all remain effective after the case is removed to federal court.
So, they are the two purposes. However, what is then said:
there is no basis for believing that s 1450 was designed to give injunctions or other orders greater effect after removal to federal court than they would have had if the case had remained in state court.
That is one proposition. Then, the more important one – this is the top of 437:
once a case has been removed to federal court, it is settled that federal rather than state law governs the future course of proceedings, notwithstanding state court orders . . . Section 1450 implies as much by recognizing the district court’s authority to dissolve or modify injunctions, orders, and all other proceedings –
That is why I said the words “subject to any order” in section 1337P recognise the more basic point that once it is transferred to the second court, it is the law and procedure governing the second court which much prevail. The factual way that was applied on page 438, at about point 5, the:
Union had a right to the protections of the time limitation –
in the federal rule:
once the case was removed to the District Court.
So, they have different time limitations. The federal limitation is shorter but once that federal limitation expired in the Federal Court, then the order was of no effect against them. That is explained further on the following page. So, Granny Goose is a case where the order in the first court can have some life in the second court, but only for a limited period of time. The second court rules prevail. The other two cases are examples where the order in the first court can have no life in the second court and is given no life in the second court by the types of provisions we are contemplating.
So, for that reason, as well as the textual arguments on 1337P, it can comfortably be construed in one of the two ways I have mentioned, with the end result being that once this matter goes to New South Wales, the court will have no power to enforce the GCO. It will be spent. It will not merely be a matter of discretion whether to vary or revoke it. It will have no life.
GAGELER CJ: Mr Gleeson, can we assume an interlocutory injunction in Victoria is granted in favour of the plaintiff against the defendant, pending the determination of the proceeding, does your submission go so far as to say when the proceeding is transferred to New South Wales that interlocutory injunction is automatically spent?
MR GLEESON: No, only if it is granted under a power which does not exist in the New South Wales court. So, a practical example, wind the clock back a few years when freezing order powers varied across the nation. If the freezing order was validly made in Victoria but under New South Wales law there was no power to make such a freezing order, then either section 1337P has no work to do, or the order must be revoked the day it arrives.
EDELMAN J: But of its force as a Victorian order, it is spent in the New South Wales proceeding, so one then needs to get a provision like section 79 or section 1337P to give it force.
MR GLEESON: Yes. So, our submission is that ‑ ‑ ‑
EDELMAN J: And you get within 1337P because there is the same or a similar order that would be made in New South Wales and the fiction attaches, as Justice Jagot put to you, to the New South Wales provision, but not to the Victorian provision.
MR GLEESON: Yes. But we would say that can only work where it is something that a New South Wales court could be asked to do, either in terms or in similar terms.
GORDON J: I.e., you have to find the power within New South Wales that can be picked up by section 79.
MR GLEESON: Yes. I think we are agreed that when you open the New South Wales statute book, you cannot find any power which section 79 can pick up which can authorise a New South Wales court to make or enforce a GCO. So, the only thing that they are left with is whether the fiction in 1337P can be stretched to require you to behave as if you had power to make this order when you never had such power. One immediately gets into these contortions – and the United States cases upon which these provisions are modelled are made perfectly clear. You do not require a court to do something that is contrary to its most basic duty, which is do not make orders without power. So, in the end, we would see it as incredibly practical.
Mr Herzfeld talks about an amicus. I am not sure whether your Honours understand what he has in mind there. He seems to think that somehow if his client funds an amicus to turn up to the New South Wales court to run all of his arguments to destroy the GCO but he does not have to do them directly, that somehow softens the blow. That is why he says an amicus.
What is going to happen if it goes to New South Wales? First day they turn up, the judge says, what am I to do with this order? He funds an amicus. The amicus goes through the argument I have just been through and says, you cannot enforce this order, you probably should revoke it for good order so the next judge is not confused when they see it on the file. You have no discretion to do anything other than revoke this order. That is what the amicus is going to argue, and on the analysis that I have been through, it is almost inevitable that that argument will succeed, and your Honours may determine in this matter that it is correct, and that is the end of this GCO. So, that is the first and primary reason why it is vulnerable.
Once it goes, for the reasons in the agreed facts between 120 to 125 that we rely upon, the proceeding probably goes. In answer to your Honour Justice Steward’s question, the probability of the proceeding being terminated as compared to a jurisdiction where it has a secure footing is a sufficient reason to conclude that the transfer is not to a more appropriate forum. As to your Honour’s question whether by consent ‑ ‑ ‑
STEWARD J: I think you have answered that.
MR GLEESON: Yes, it looks pretty hard to do it by consent.
STEWARD J: You have answered it.
MR GLEESON: Yes. So, you have a vulnerability for the reasons I have mentioned. You have a probability the proceeding will terminate. The Court of Appeal was correct, that the interests of justice do not compel that transfer. The only alternative for that, which I submit is inconsistent with all of this learning, is the argument you have heard today, that the New South Wales court has a discretion which – it is very difficult to understand what constrains the discretion, but apparently it can choose to enforce or vary or revoke for reasons which you cannot find in the New South Wales statute book. We are told you do not find them in the Victorian statute book.
The Commonwealth embrace this argument in their submissions. The only answer they give to this problem of what are the constraints upon the transferee court is a cryptic reference at paragraph 27, last sentence. They are referring here to the possibility of the contingency fee policy argument being relevant, and the Commonwealth disagrees with KPMG because the Commonwealth says you will find:
The matters relevant to the exercise of that power . . . by construing –
the federal law:
not by reference to the “policy” of –
New South Wales. So, you have here further uncertainty. KPMG are saying it is almost unfettered discretion but one that does take into account New South Wales policy. The Commonwealth is saying you find the relevant considerations in federal law, and we ask: which federal law? The only one we know about is it cannot be section 79 of the Judiciary Act because that tells you to apply New South Wales law, so it must be something ‑ ‑ ‑
GORDON J: I am sorry, I thought I understood 27 was – that “that law” was a reference to the New South Wales law.
MR GLEESON: We read it linked to the previous sentence, your Honour, that:
it is relevant that a source of power to make orders in the nature of variation or revocation . . . will be the law of the Commonwealth (in particular, s 1337P(2)). The matters relevant to the exercise of that power –
that is, the 1337P(2) power:
are, in general, to be identified by construing that law, not . . . the “policy” of another polity.
GORDON J: I see.
MR GLEESON: So, in terms of your Honour the Chief Justice’s question, what are the criteria, what are the standards, KPMG says New South Wales policy is relevant but not exhaustive to the exercise; the Commonwealth says you get it out of 1337P(2), and it is pretty hard to find anything in there that tells you whether you should enforce, vary or revoke. The only other possibility is the New South Wales court would be bound to follow the Victorian statute, but that has been disavowed very clearly today.
So, one of the reasons why we raise the constitutional point is we apprehended that the argument that the New South Wales court can enforce the GCO had, as one of its premises, that the fiction somehow bound the New South Wales court to behave as if it were a Victorian court, which at least would have the certainty – you would know what the law is you are construing – but that has been correctly disavowed, so we do not have that on the table any more. So, we do not have an argument, apparently, that 1337P is conscripting the New South Wales court to behave as if it was a functionary of the Victorian Parliament.
So, that is one argument cleared away, as it were, but what are you left with? You are left with, on their view, this wholly uncertain, unconfined discretion which, for the Commonwealth, you get it out of 1337P(2) – we cannot see it – for KPMG, you get it out of the interests of justice informed by New South Wales public policy. Both of those are untenable, and we would invite you to reject them and come back to the simple view that 1337P either says nothing about an order like this or, if it says anything about it, the court has only one thing that it can and must do, which is revoke it. And then, at least it has observed its mandate and it is exercising judicial power, because it is not doing things which it knows are beyond its power.
Your Honours, can I just, in the remaining time, deal with a few other points. Firstly, notice of contention ground 1 – if your Honours have section 1337H again, there is no doubt that jurisdiction is used in some parts of this scheme in the strict sense of the conferral of authority to decide a constitutional matter – and that is apparent in 1337B, for example. When you come to 1337H(2), some different language has been used. The first is that it creates the possibility of transferring the proceeding or an application in the relevant proceeding. The second is the court must be satisfied that the transferee court “has jurisdiction in the matters” – plural – “for determination” in either the proceeding or the application.
Mr Herzfeld, this morning, has said that the ability to transfer an application should be read as limited to applications in matters created under the Corporations Act. He instances a winding‑up application, for example. No doubt that is an example of an application that could be transferred. But the Parliament has not limited to being applications under the Corporations Act in the relevant proceeding – the Parliament has said, applications “in the relevant proceeding”. We see no difficulty in that covering any application that might be made in the proceeding which is litigating the constitutional matter.
For example, there may be a preliminary discovery application in the proceeding, which it is convenient to transfer to, say, New South Wales because other like applications in respect of the same corporation are being litigated in that court. It is convenient to have them all in the one court so there can be a consistent approach to whether the company has to disgorge documents in advance of proceedings. On Mr Herzfeld’s argument, that is not an application, that is not something that can be transferred.
The first difference between us is that we would see “application” read as any application in the relevant proceeding and therefore it could include an application for a GCO. So, for example, in a case where New South Wales and Victoria both have proceedings for the application of a GCO, which is not the current position, this provision would allow the transfer of the application for the GCO from one court to another if there was a good reason to do it, and many other applications could be contemplated.
GORDON J: Is that confirmed by subparagraph (c) of 1337L?
MR GLEESON: Yes, and it operates in exactly the same way which is – what it does is impose a constraint that you have to look at every other court that would have jurisdiction to deal with the proceeding or the application to decide which one is the best one for it to be transferred to, if at all. And the “deal with” in 1337L is the identical language we have in 1337P, “deal with the proceeding”, and that appears to be, exercise the judicial power to determine – to use the language:
the matters for determination in the relevant procedure or application –
And that is the second critical difference between us. The “matters for determination in the relevant proceeding or application”, we would submit, can extend beyond the constitutional matter that has been conferred jurisdiction under 1337B to any matter for determination in the proceeding.
Can I give another example. I mentioned this morning the cut‑through action against the insurer of the defendant, Masson v Parsons, paragraph 38. That could be one of the matters for determination in a relevant proceeding if section 79 picks up such a provision in the relevant State law. So, if you are looking to transfer the proceeding or an application in the proceeding, being the cut‑through application, you have to be satisfied that the transferee court can deal with that matter.
To give it this construction not only matches the words, but it actually matches the beneficial and the protective purposes of the transfer provision. It is beneficial in that you can transfer applications which are part of the proceeding by reason of section 79. It is protective in that you do not cause matters for determination to be lost because they have been sent somewhere where they cannot be determined.
If this is the correct construction, it is the logically anterior point: the GCO comes in at this stage and, therefore, there was never power to transfer. That is one way we put the GCO argument. The alternative way is that, in any event, it would clearly be relevant to the interests of justice. And so, your Honours, in terms of how that works as to the scheme as a whole, if we think of a GCO application, if, as Mr Herzfeld says should have happened, the application for the GCO – sorry, I will take that back and start again.
If your Honours can go to paragraph 148 of the judgment, if you had sought to transfer an application for a GCO to New South Wales before the order had been made, the New South Wales court would not have jurisdiction in the matters for determination in that application. That is common ground. If you sought to transfer the whole proceeding to New South Wales before the GCO had been made, the result would be the same: the New South Wales court would not have jurisdiction for determination in the proceeding, because one of the matters – being the GCO – the New South Wales court did not have jurisdiction to decide.
Finally, if you seek to do the transfer after the GCO has been made, the result is the same because the New South Wales court has no jurisdiction to administer or enforce the GCO. On that point, can I ask your Honours to go to the Commonwealth’s response to this argument.
BEECH‑JONES J: Mr Gleeson, is this a further aspect of your argument about 1337P(2)? You are saying that should be read in conformity with what you said about 1337H?
MR GLEESON: Yes. Yes.
BEECH‑JONES J: Yes. I see.
MR GLEESON: And when your Honour Justice Gleeson asked what does “deal with” mean in 1337P(2), although the answer was not pellucidly clear, the logic of Mr Herzfeld’s position is that the GCO can be brought within 1337P(2) because the court is being asked to deal with the matter, and deal with the GCO. So, “deal with” is then being used consistently across these provisions, and it then matches what has happened in the primary provision.
I just wanted to take your Honours to the Commonwealth’s answer, which is at paragraph 65. Paragraph 65 says the “matters for determination” refer to:
matters the determination of which is pending.
We agree with that:
Put another way, a matter is not “for” determination if it has already been determined.
And then they ask to have some first‑instance authorities overturned:
In this proceeding, the question of whether to make a GCO has already been determined. It is therefore not a matter for determination in the proceeding. Further, insofar as the ongoing status of the GCO can be said to be a matter for determination in the proceeding, for the reasons explained . . . above the NSWSC has power to deal with the GCO, including by making orders in the nature of variation or revocation.
So, our answer to that is that the GCO raised a number of matters for determination in the proceeding. One was: should it be made? A second was: if it was made, how should it be enforced or administered? And the Commonwealth has not, here, pointed to any source of power by which that second matter – namely, how to enforce or administer the GCO – falls within the jurisdiction of the New South Wales court.
Your Honours, this is what we want to say about the constitutional question. If the construction I have advanced, in either form, namely, section 1337P does not speak to the GCO or, if it does, the duty is to revoke it, and there is no discretion in the ring, there is no constitutional difficulty in this case. The constitutional difficulty which we identified arose depending if you were tempted to accept the constructions that were being offered on this side of the Bar table.
If the construction being offered was the New South Wales court was bound to follow the policy of the Victorian court expressed through its Parliament, even though it was contrary to New South Wales commands to the court, there would be basic problem. It would be beyond the express incidental power, and it would be behoving a court to do the unthinkable, which is to disobey its own governing statute.
If that is off the table, your Honours can forget that construction. So, what, then, is left? The construction seems to be that the New South Wales court – according to the Commonwealth – reads section 1337P and finds in that provision some standard by which it is to decide whether to enforce, vary or revoke the order. We submit that is an impossible construction to put on it because you would not read such a provision as conferring such an unconfined, unconstrained task with the criteria just in the ether. If that is what it was, it, again, would be beyond the express incidental power and it would be commanding a court to behave as if it were not a court.
EDELMAN J: Was not 1337P part of the package that was the subject of referred powers?
MR GLEESON: The answer to that is, that is Rizeq: because a State has no power to confer federal jurisdiction, the powers that were referred did not enhance what was in the Commonwealth’s grasp of power to begin with. So, that is the Commonwealth’s construction.
If it is this other construction – that has only really been advanced for the first time today – section 1337P somehow commands the transferee court to decide what to do with the order as between the various options under an unstated test – which we are told is interest of justice, but we are not told how to unpack that – where, apparently, the policy of New South Wales is a relevant consideration but not a binding consideration where, apparently, the court might be able to behave inconsistently with its basic statute in New South Wales. Again, it goes far beyond what the Court said in Rizeq was the scope of the incidental power and creates real difficulties with a court behaving like a court. So, for those reasons, if there were any temptation to accept the constructions that have been proffered today – and will be proffered – your Honours should reject it.
There is one particular aspect of the Commonwealth’s outline I would like to address. Paragraph 2 seems to say that, on its proper construction, 1337P is not requiring the New South Wales court to follow the legislative or executive policies of Victoria. If that is the construction that the Commonwealth is committed to, then we agree there is no invalidity on that ground.
Then, paragraph 3 says, if you do have power to vary or revoke the order, then our argument would have to fail. By what standard that power of variation or revocation – as opposed to enforcement – is to be exercised, is nowhere addressed by the Commonwealth in writing, and without that being addressed, the constitutional argument could not just simply be dismissed. Then, paragraph 4 is an odd submission that:
if the transferee court does not have power to vary or revoke such an order –
So, this seems to be in the alternative to 2 and 3. So, if the order arrives and the New South Wales court is bound by it, even though it has come from the Victorian court under Victorian parliamentary command and even though it is inconsistent with New South Wales law, apparently that is okay.
What I wanted to address within paragraph 4(a) was the reference to Spalvins, which is in volume 8, tab 79. The short point being that Spalvins was a very different form of legislation and does not stand for the proposition that is there set out. In Spalvins, the remedial legislation was set out at paragraph 3. This was to overcome Re Wakim problems. So, it was a State Act. The definition of “relevant order” was:
an order of a federal court . . . dismissing . . . a proceeding relating to a State matter for want of jurisdiction –
So, the idea is if, following Re Wakim, a federal court had been moved and had dismissed a proceeding because jurisdiction was invalidly cross‑vested upon it, then subsection (2) said:
A person who was a party to a proceeding –
in the Federal Court:
may apply to the Supreme Court for an order that the proceeding be treated as a proceeding in the Supreme Court and the Supreme Court may make such an order.
So, what it was creating as a matter of State jurisdiction was a new State matter in which the State court is authorised to make an order treating what had been the federal proceeding as a proceeding of the State court. So, it has a discretion which is given to it, which is governed by law, and if it makes that order then there is a deeming under subsection (3)(b) that the proceeding:
is taken to have been brought in the Supreme Court on the day –
it was started in the Federal Court. If all those things occurred, then in paragraph 5 there was a rule of court where (2)(ii)(B) looks a bit like 1337P(2) but does not use the language, same or “similar steps”, it just says “the same steps”. So, the argument which was put and ultimately rejected is set out in paragraph 21, that this scheme purported:
to effect . . . a unilateral transfer to, or expropriation by, the Supreme Court of a proceeding in a federal court. If that was what s 11 did, it would be invalid –
However, the Court found there was a more generous way to read the provision which did not cause it to fall foul of that constitutional difficulty, albeit it looks like it was a fairly close‑run argument. So, it is very difficult to see that that leads to the conclusion in paragraph 4(a) which is that:
Even if the transferee court does not have the power to vary or revoke such an order –
there would still not be a Chapter III problem. In short, there was nothing in Spalvins to deal with the present problem of can you compel a court to behave as if it has powers which it does not have and which are directly inconsistent with its governing local law.
So, your Honours, the result to the questions, in our submission, would be the Court of Appeal was correct in the answers it gave to the questions, save that an additional ground for the answer to the core question should be found in terms of notice of contention ground 1. That is paragraph 3 of our outline. In terms of the ultimate question 3, the court was perfectly correct to say the proceeding would not be transferred.
If the GCO is relevant, then the reasoning not to transfer it is compelling. If it were not relevant or were neutral, we put the alternative submission, which was that what seemed to be the tipping point for the Court of Appeal – assuming no GCO, and given the very fine balance that your Honour Justice Jagot pointed out – seemed to be the residence of the two group members in Victoria. That, in fact, is either irrelevant or of very little weight in a transfer discretion, for a simple legal reason that the cause of action does not arise in Victoria. It arises in Australia as a single law area in federal jurisdiction, which is Agtrack at paragraphs 6 and 7, and otherwise, the residence of the lead plaintiff is ordinarily regarded as close to irrelevant in these matters – Chief Justice Allsop in Wileypark.
May it please the Court.
GAGELER CJ: Thank you, Mr Gleeson. Mr Solicitor.
MR DONAGHUE: May it please your Honours. In a matter like the proceeding before your Honours arising under the Corporations Act, section 33ZDA of the Supreme Court Act is incapable of applying of its own force. That proposition necessarily follows from this Court’s decision in Rizeq v Western Australia, paragraph 61. I will not take you to it at this point, but that basic point means that nothing that happened in this proceeding happened as a result of a Victorian parliamentary command, notwithstanding the fact that those words have been used quite regularly by the applicant.
The group costs order power could only ever have applied in this matter by reason of section 79 of the Judiciary Act and if it applied in that way it applied as a Commonwealth law, again to use the word of Rizeq at paragraph 81. Part 9.6A of the Corporations Act embodies a Commonwealth legislative policy – not a Victorian or a New South Wales one – to create a single national jurisdiction in matters arising under the Corporations Act, that being a jurisdiction of the Commonwealth Parliament, decided could be exercised by Federal Courts and by State Supreme Courts, and you see the vesting of jurisdiction in 1337B(1) and (2).
As part of the creation of that national jurisdiction exercise by State and Federal Courts, the Commonwealth decided that proceedings could be transferred between those courts if a court decided that it was appropriate in the interests of justice that that occur, and that is the power your Honours have seen in 1337H. If a court in the independent exercise of its judicial power, not directed by anyone, decides that that is appropriate in the interests of justice, then 1337P(2) provides for continuity in the exercise of the single federal national jurisdiction that has been created by deeming – so as to avoid duplication or repetition in the exercise of that jurisdiction – steps that have already been taken by one court in the exercise of federal jurisdiction to – well, I say “deeming”, but to be more precise in the statutory terms, to proceed as if the steps taken in the first court had been taken in the second court, the transferee court. It treats the earlier orders as if they had been made by the second court.
That happens, again, by force of a Commonwealth law. That point, in our submission, is important in light of the way the applicants have developed their case because that submission completely inverts the proper relationship between section 79 of the Judiciary Act and the Corporations Act, because section 79 picks up all the New South Wales laws your Honours have been taken to – the Civil Procedure Act, the costs rules and the various provisions in that Act – only to the extent that Commonwealth law does not otherwise provide.
So, the first question is: what does Commonwealth law in the terms of 1337P(2) provide? Once your Honours answer that, if the answer is it provides that the New South Wales Supreme Court should proceed as if it made the group costs order, if that is inconsistent with the costs regime in the Civil Procedure Act, the Civil Procedure Act is not picked up, because to pick it up would be inconsistent with what Commonwealth law otherwise requires to occur. One cannot use the body of New South Wales law that would be picked up under section 79 and say, well, that tells you about how 1337P works.
EDELMAN J: Except for the fact that 1337P is concerned with the body of law itself. It is concerned with the body of law – a particular body of law – to be picked up and applied.
MR DONAGHUE: In my respectful submission, 1337P(2) is not concerned with that, it is concerned with steps taken in the proceeding in the first court; not with the applicable body of law, but with all those procedural steps, other things that have been made and that have been done.
EDELMAN J: You say, even if those orders or steps could not have otherwise been taken.
MR DONAGHUE: I do say that.
EDELMAN J: But that is a question of construction of 1337P.
MR DONAGHUE: I accept that. So, I agree, your Honours need to construe 1337P and reach an answer to that, and I am about to make a few submissions in relation to what your Honour just put to me. But if one answers it in favour of the group costs order being deemed – or requiring the New South Wales court to proceed as if the group costs order had been made in that court, then the body of New South Wales law does not help you in terms of answering that question of construction. You have to start with the question your Honour Justice Edelman puts to me, and then one does have to confront what the position is, given it is accepted here that the New South Wales court could not have made the GCO.
Our submission is that, bearing in mind the single national jurisdiction to which I have just referred, it would significantly subvert the efficacy of P(2), if I can call it that. In order to know what orders are taken to have been made in the transferee court, one needs to know not just what the orders says on its face but when the power to make that order could have been enlivened, such that if there is a difference between when the power is enlivened in the transferee court and the transferor court the deeming does not operate.
Mr Gleeson’s example rather highlights the point in that he referred your Honours to the position with respect to freezing orders before it became uniform nationally and said, well, if the circumstances in which the freezing order can be made in the first State, where the order is made are such that it could not have been made in the second State, then the freezing order just cannot be continued by 1337P – that was the submission. So, someone who, in a matter under the Corporations Act in federal jurisdiction, goes to the Supreme Court of Victoria and gets a freezing order, the proceeding is transferred and then, by reference to some difference in the enlivening conditions between the two courts, loses the protection of that order without a court doing anything. We say that cannot be right.
What the New South Wales Supreme Court can do is a different question by way of variation, or tidying up, or aligning the order with what it would have done under the New South Wales law. In our submission, the orders that are taken to have been made do not require you to descend into an inquiry as to exactly when it could or could not have been made. One might also give the example of suppression orders as another example where there is still significant difference between some jurisdictions as to the criteria for suppression orders. So, if you get a suppression order in jurisdiction 1, on our friends’ case you lose the protection of it because P(2) does not capture it if on transfer the criteria are relevantly different.
GLEESON J: When are you saying that the GCO could have been made in the transferee court?
MR DONAGHUE: I am not saying it could have been. I am saying the Commonwealth parliamentary command is to assume it was.
EDELMAN J: So, if that construction of 1337P(2) is correct, then the Commonwealth Parliament is conferring by a deeming process effectively substantive powers on one State that that State did not previously have, even if that conferral of power is beyond any subject matter that the Commonwealth is entitled to deal with.
MR DONAGHUE: Your Honour, in my submission, the Commonwealth can confer powers on State courts or federal courts in the exercise of federal jurisdiction if it has a head of power which it ‑ ‑ ‑
EDELMAN J: These are not regulation matters. These are the exercise of substantive powers.
MR DONAGHUE: If it has a head of power, yes, and it does have a head of power here for reasons I will touch on briefly. It has the reference of power, or it has the Rizeq 51(xxxix) power, but there is no gap between those two things, so it has power one way or the other.
GLEESON J: But you are saying that the deeming is that the order had been taken, or the step had been taken, the order had been made in the transferee court – with power or without power?
MR DONAGHUE: Well, it does not matter one way or the other because the legislative assumption is that the orders made in the first court are taken to have been made. The second court, now having jurisdiction in the matter, has to proceed to determine the rights, duties and liabilities in play and, for reasons I am about to come to, it has the power to vary or alter what has happened because what happened earlier was an interlocutory order. But you just do not need to go back into an inquiry into the source of power to do the things that were done by the first court, because this is a continuous national jurisdiction being exercised by different courts, the transfer just having occurred because that was regarded as appropriate in the interests of justice. You do not need to salami slice the jurisdiction up and work out which courts had power to do what. They are all exercising power under Commonwealth law.
STEWARD J: Can the New South Wales court revoke?
MR DONAGHUE: Yes. And that is the matter to which I now wish ‑ ‑ ‑
STEWARD J: And by reference to what criteria?
MR DONAGHUE: Can you give me a minute ‑ ‑ ‑
STEWARD J: Yes, I will let you – yes, of course.
MR DONAGHUE: ‑ ‑ ‑ I am coming right there.
GORDON J: The same with the variation powers.
MR DONAGHUE: Yes. So, revocation, variation – in our submission, the New South Wales court can do that. Your Honour the Chief Justice and Justice Gordon have both asked questions about what standard. We agree with the submissions put by Mr Herzfeld, that the ultimate question is an interests of justice criteria, and we say that for the very straightforward reason that a GCO is, on any view of it, an interlocutory order, and the settled principle is that a court – I think any court, but at least a superior court – has an inherent power to vary interlocutory orders by reference to an interests of justice criterion.
The Court of Appeal – I will not take you to it – in this matter at paragraph 145, cause removed book 51, said it “cannot be doubted” that the GCO was an interlocutory order. Your Honour Justice Gordon, I think, has pointed out that the order itself contemplates that it is subject to future variation. So, in our submission, it is clearly an interlocutory order. Because it is an interlocutory order, 1337P(2) says the New South Wales court “must” proceed as if the order had been made, so the order that it assumes was made was an interlocutory order, and it is subject to variation in the same way as any other interlocutory order. Now, one of the ‑ ‑ ‑
GORDON J: That is not quite right.
BEECH‑JONES J: When you say “assumed”, you mean deemed to have been made?
MR DONAGHUE: Deemed to have been made.
BEECH‑JONES J: By the Supreme Court of New South Wales?
MR DONAGHUE: Deemed by Parliament to have been made by the Supreme Court of New South Wales, yes.
BEECH‑JONES J: Yes, I understand.
MR DONAGHUE: As to the content of the interests of justice criteria in the context of amending interlocutory orders, there are lots of authorities. We have given your Honours – yesterday afternoon, I hope it has made its way to the Court – one recent decision of the New South Wales Court of Criminal Appeal, in Riddell v R [2024] NSWCCA 46. If your Honours could turn to that and go to paragraph 47. I am doing this in part because it is recent and in part because it conveniently collects some relevant authorities. So, at 47 – this is the judgment of the court – the premise is that what is happening can be done:
by virtue of the Court’s jurisdiction to reconsider, vacate or amend its own interlocutory orders.
Then there is a long quote in paragraph 48 from Justice McLelland in Brimaud v Honeysett. Reading from the start of the second paragraph:
The overriding principle governing the approach of the court to interlocutory applications is that the court should do whatever the interests of justice require in the particular circumstances –
Then, skipping down a few lines:
Not all kinds of interlocutory orders attract the same considerations. For present purposes one may put to one side orders of a merely procedural nature –
see Wilkshire. Wilkshire is cited by the appellants in favour of a quite limited power to vary interlocutory orders, but the power is clearly wider, as the rest of this passage shows. The next paragraph down:
In the present case I am dealing with an interlocutory order of a substantive nature made after a contested hearing in contemplation that it would operate until the final disposition of the proceedings. In such a case the ordinary rule of practice is that an application to set aside, vary or discharge the order must be founded on a material change of circumstances since the original application was heard, or the discovery of new material which could not reasonably have been put –
Lots of authorities cited. Over the page, at paragraph 50, there is a reference to a decision of your Honour Justice Beech‑Jones in Obeid, dealing with the phrase “the interests of justice” in the context of varying interlocutory orders, and in the last part of that quote your Honour said – the context is:
the threshold for revisiting a matter already determined. In that context, the “interests of justice” extends to the necessity to avoid the unnecessary re‑agitation of matters already determined so as to avoid a waste of resources, and to respect principles of finality –
So then, in the next paragraph, your Honour is recorded as having decided that material change in circumstances does not exhaust what is in the interests of justice, but it is important. So, the “guiding principle” in deciding whether orders should be reconsidered, vacated or amended – I will not read it – change in circumstances is “not exhaustive” but important.
In our submission, it cannot be said that that is unconstitutional, that kind of principle. It is not so vague or open‑ended; there is a settled body of law about how to deal with interlocutory orders previously made that affect substantive rights. The group costs order, we submit, is an order of that kind.
BEECH-JONES J: What if the order appears to the judge to be directly contrary to a statutory command like section 181 of the Civil Procedure Act?
MR DONAGHUE: The statutory command in the uniform law, as Justice Gordon observed, in terms, is directed to a law practice not entering a costs agreement.
BEECH-JONES J: No, Mr Gleeson talked about, about the Civil Procedure Act. You cannot make cost orders against group members.
MR DONAGHUE: That provision has no application in federal jurisdiction.
GAGELER CJ: But is it not picked up by section 79 of the Judiciary Act?
MR DONAGHUE: Only if to do so would not be inconsistent with 1337P.
GAGELER CJ: But on your argument so far, tracing it through, you have section 1337P making the group costs order applicable in New South Wales, and you say the question for a New South Wales court can be whether it is in the interests of justice to vary that order or revoke it. So, there is an application for variation or revocation, and in support of that application, it is said under section 181 of the Civil Procedure Act, as picked up by section 79 of the Judiciary Act, in respect of this order, which can remain on the books, so to speak, unless varied or revoked, it should be varied or revoked because of this inconsistency. How do you deal with that?
MR DONAGHUE: Your Honour, in my submission, the way that this works is that the policy of continuity embodied in 1337P(2) – finality and determination of matters, not wasting resources, et cetera – is that you do not start from the assumption that the order that is continued by 1337P(2) is infirm or problematic in some way; you start from the proposition that the orders were properly made by the prior court, the latter court can vary them.
In my submission, interests of justice directs you principally to the question in a case of this kind, or has something changed that would warrant varying the order. That does not, in my submission, leave room to say a State provision that operates subject to the order that has been continued by 1337P requires the order that has been continued by 1337P to be revoked. That is the inversion to which I referred earlier, because that is to give priority to the State provision that can only operate in federal jurisdiction if Commonwealth law makes room for it. Commonwealth law has continued the prior order, unless interests of justice require otherwise. That is probably a long‑winded way of saying, in my submission, in a self‑contained way Commonwealth law requires you to ask: is it in the interests of justice to vary or revoke this group costs order?
GORDON J: What is the criteria that I take into account when I ask myself that question? So, as I understand the argument, we have the order made, we have the national scheme, 1337P(2) deems the order to have been made by the New South Wales Supreme Court as part of that national scheme. I do not pick up the New South Wales law because I do not need it. I now decide that there has been a change in circumstances and the interests of justice require me to apply to vary or revoke the GCO. What do I take into account? I have a change of circumstance, assume for the moment, but suddenly realise that the rate is too high.
MR DONAGHUE: Well, there might be variations and variations. So, that the rate too high example ‑ ‑ ‑
GORDON J: May be a bad example, Mr Solicitor.
MR DONAGHUE: It probably brings out a point that is usefully made, your Honours, which is that, as is recognised in Brimaud, not all orders attract the same considerations. So, the GCO itself recognised you might need to change the percentage as further facts came to light. So, you would not need a very high standard to change the percentage in the GCO, but to revoke the order entirely, in my submission, you do need a clearer indication and if – as your Honours were putting to Mr Herzfeld this morning – this GCO was made because it was necessary so as not to stultify the proceedings, in my submission, if the court in New South Wales – unless it thought that was no longer the case, unless it thought that it could revoke the order without stultifying the proceedings, it is hard to see how it conclude it within the interests of justice to do so.
GORDON J: Where am I getting my criteria from, either for revocation or for variation?
MR DONAGHUE: From what is a material change of circumstances on the facts of this case.
GORDON J: So, I am using all of the Victorian provisions?
MR DONAGHUE: You are not applying the Victorian statute, no.
GORDON J: I know that. I am trying to work out what criteria I take into account to identify what is in the interests of justice, to justify this variation or revocation. I know I am being slow, but I just do not understand it.
MR DONAGHUE: Not at all, your Honour. Obviously, the interests of justice criteria is a broad one. It takes much of its content from the particular facts of the matter in which the court is reaching a conclusion about what the interests of justice require, and my submission here is that, where an order has been made because it was necessary not to stultify the proceedings, and if the court is asking itself has there been a material change in circumstances, it would not conclude that there had been if it was still the case that the order was necessary so as not to stultify the proceedings, because that is critical circumstance.
GLEESON J: What laws are you saying would be employed to enforce the GCO?
MR DONAGHUE: Your Honour, it is taken by force of 1337P(2) to be an order of the Supreme Court and it can be enforced pursuant to any of the general powers of the Supreme Court that would allow that to be done, including its inherent powers, which include ‑ ‑ ‑
BEECH-JONES J: So, they are picked up, but 181 gets tossed by the roadside?
MR DONAGHUE: Well, it is not picked up to the extent that it is inconsistent with the order that has been made.
BEECH-JONES J: You are saying it is inconsistent with the order, but are you not assuming, really, that the order picks up the body of law that it was made under, as opposed to just carrying out of the order?
MR DONAGHUE: I am not, your Honour.
GORDON J: Then I do not understand, because the stultification analysis relies upon the very things that are raised by the Victorian Act. The criteria and the analysis reflect that Act. So, when you are looking at the interests of justice and the setting aside or varying of an interlocutory – you are looking at the underlying issue that gave rise to the order in the first place. I cannot, in my mind, compartmentalise that kind of analysis.
MR DONAGHUE: In my submission, one can do what your Honour just put to me without bringing with you the whole body of law. That is just looking at what the court did when it decided to make the order. Of course, yes, it applied the Victorian statute at that time. The Victorian statute has not travelled to New South Wales, it does not need to have; the order has – or it has not travelled, but it is deemed to have been made in New South Wales.
EDELMAN J: The purpose of 1337P(2) is continuity, and continuity requires consistency. The whole premise of your argument is that one ignores consistency entirely when one deals with 1337P(2) – one forgets the whole of the body of law. We are not concerned at all with consistency. And then we pick up all of the Victorian laws, whether they are consistent, that apply within (2), and anything that is inconsistent with that has to be accommodated.
MR DONAGHUE: Your Honour, with respect, I am not putting that. I am not putting that 1337P(2) picks up any law at all. All I am saying is that orders that have been made in the proceeding by the Supreme Court continue. That is all I am saying. I do not need to say that all of the law that was considered by the Supreme Court in making those orders travels to New South Wales ‑ ‑ ‑
EDELMAN J: But continuity requires some degree of consistency, and the degree of consistency is picked up in the words “or similar steps”, so that immediately directs attention to whether or not there are similar powers in the New South Wales court.
MR DONAGHUE: In my submission, it does not, your Honour. In my submission, where, for example, the Victorian Supreme Court has a power to make a freezing order, and the New South Wales court has a power to make a freezing order on slightly different criteria, they are not “similar steps”. The order would be the same in both cases; it is a freezing order in both cases. It does not matter that the criteria are slightly different. The “similar steps” accommodates changes in procedure of the kind that Mr Herzfeld and Mr Gleeson have agreed, but it does not bring with it a requirement to look to the underlying legal framework.
The continuity, the consistency that this calls for, is a federal jurisdiction able to be exercised by reason of the Commonwealth Parliament’s choice to vest it in lots of courts and then to contemplate that the proceeding might move, and to deal with that. Your Honours, I am spending far longer than I have been allotted by the parties, am I not?
GLEESON J: I just have one more question. So, how does this apply in relation to the provision of security for costs by the solicitor?
MR DONAGHUE: Your Honours, there is authority to the effect that the New South Wales Supreme Court has an inherent power to order non‑parties to provide security for costs in circumstances outside those covered by the UCPR. Mitchell v Transport for New South Wales [2022] NSWCA 141 at 6 is one such case. Our submission is in light of that inherent power it might not be using the powers that it would otherwise have exercised, but there is no impediment to the New South Wales court ordering security in terms consistent with the group costs order if it thinks that the justice of the case ‑ ‑ ‑
STEWARD J: Although I do not think Justice Dixon made any order for security.
MR DONAGHUE: No, I think that ‑ ‑ ‑
STEWARD J: So, it has not come across.
MR DONAGHUE: It has not come across, but I understood Justice Gleeson’s question to be, if it needed to be dealt with, how could you deal with it consistently with the group costs order that has been made, and my answer is you could in the inherent jurisdiction. Sorry, I have given your Honours the wrong example. The non‑party case that I should have cited is Turner v Tesa Mining (NSW) Pty Limited [2019] 290 IR 388.
Can I say – in one minute – that as to the head of power challenge, the only reason that it is said that the reference of power does not provide sufficient power – 1337P having been in the tabled text – is because it is said Victoria cannot refer a power it does not have. The reason it is said Victoria does not have the power is that it is said Rizeq recognised an area of exclusive Commonwealth power into which the States could not stray.
That is true, but Rizeq also says that at least section 51(xxxix), the express incidental power, gives the Commonwealth Parliament the power to regulate that area of exclusive Commonwealth power, and it would be a truly bizarre state of affairs if there was an exclusive area of Commonwealth power that the Commonwealth lacked a head of power to legislate within. It may be that there is also power under section 77(i) and (iii) in the implied incidental power. Rizeq at 59 says the only available source of power is 51(xxxix). Whether it might be necessary to revisit that statement in its full width at some point, because of section 77, is an interesting question, but not one that your Honours need to answer now.
If the Court pleases.
GAGELER CJ: Thank you, Mr Solicitor. Mr Herzfeld.
MR HERZFELD: Thank you, your Honours. There are three points in reply. Firstly, we seek a transfer to New South Wales with or without a group costs order. That is why a transfer application was foreshadowed even before a group costs order application had been made. So, I want to be absolutely clear about this: we seek a transfer to the Supreme Court of New South Wales regardless of whether the group costs order continues.
The reason we advanced arguments about what would be the position if the group costs order did not travel was to explain that that is just an irrelevant matter, but ultimately, what we want is a transfer to the Supreme Court of New South Wales. Conversely, on the applicants’ approach, any matter, no matter how unconnected with Victoria, can now be instituted there solely to obtain a group costs order and then, if the funder says they will not fund otherwise, cannot be moved to another State. That is rank forum shopping, directly contrary to the purpose of the Cross‑vesting Act and the transfer provisions.
The second reply point concerns Lungowe. There, it was held that the claimants had shown there was a real risk they would not be able to obtain substantial justice in Zambia, for the reasons explained. On that approach, in this case, the court would need to find that the applicants cannot get substantial justice in New South Wales. That is a finding that should not be made. First, for reasons I have already explained, it is not that justice is unavailable in New South Wales, it is just that it does not look the same as it looks in Victoria, because of the different policy choices that have been made. Secondly, and in any event, Justice Dixon did not find that the proceeding could not be continued at all if a group costs order was not made.
It is not the case that funding is impossible in New South Wales. To the contrary, it is evident that until the group costs order regime commenced in Victoria, the funder had intended that the proceeding occur in New South Wales. The fact that the Victorian regime has, since July 2020, permitted funding that will keep a commercially high‑risk matter on foot more easily than the funding regime available in any other jurisdiction provides no basis to conclude that supposedly even‑handed interests of justice preclude a transfer to New South Wales. New South Wales is not Zambia to Victoria’s United Kingdom.
STEWARD J: Do you also say that it would be an odd conclusion that there would no substantial justice in New South Wales in circumstances where in 2019 this proceeding would have been shaky in all States?
MR HERZFELD: Absolutely, and that was one of the points we made earlier. It cannot become a substantial injustice just because ‑ ‑ ‑
STEWARD J: Because of a law change.
MR HERZFELD: Yes, that is right. The third and final reply point concerns 1337P(2). On the applicants’ construction, any difference in the powers between State courts frustrates the operation of 1337P(2), and indeed, on their notice of contention, frustrates the operation of the transfer provision in 1337H. They supplied no answer to the examples that we gave orally.
Sections 1337H and 1337P(2) are fundamentally contrary to the balkanisation of Corporations Act matters, which lies at the heart of the applicants’ submissions. None of the United States cases support that proposition. Ex parte Fisk dealt with the fact that there was a federal law prohibition prevailing over State laws, which is not applicable here. It did not support the proposition that there had to be a power in the transferee court equivalent to the transferor court’s power. King v Worthington is likewise explicable by the supremacy of federal law. And in Granny Goose, the issue was that the order that had been made only had a temporary operation – it did not operate for any longer after the transfer, but that said nothing about the need for there to be a power.
Here, there is no federal law which provides to the contrary. Furthermore, the limitations in the New South Wales provisions concerning costs are not prohibitions, nor are they as limited as the applicants say. Sections 98 and 99 of the Civil Procedure Act are permissive and not exhaustive. There is no inconsistency with the section 181 prohibition against order and costs against group members because the effect of the group costs order is actually to make the law practice liable for any award of costs, not the group members.
BEECH-JONES J: But what about their own costs? Does it make an order?
MR HERZFELD: Section 181 is only about an award of costs, so it does not deal with that question. Finally, there is no constitutional difficulty for a court to have to act in the interest of justice. It is difficult to see why that would be problematic even if it involved the New South Wales Supreme Court taking into account as part of the interests of justice New South Wales State policy. Indeed, the whole premise of the applicants’ case is that it was permissible for the Victorian Court of Appeal, in deciding what was in the interests of justice for the purposes of 1337H, to take into account Victorian policy.
Those are the three reply points.
GAGELER CJ: Thank you, Mr Herzfeld. The Court will consider its decision in this matter and will adjourn until 10.00 am tomorrow.
AT 4.16 PM THE MATTER WAS ADJOURNED
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